<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
November 10, 1999
REINSURANCE GROUP OF AMERICA, INCORPORATED
(Exact name of registrant as specified in its charter)
Missouri
(State or other jurisdiction of incorporation)
1-11848 43-1627032
------- ----------
(Commission File Number) (I.R. S. Employer Identification No.)
1370 Timberlake Manor Parkway, Chesterfield, Missouri 63017-6039
(Address of principal executive offices) (zip code)
(636) 736-7000
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 1. CHANGES IN CONTROL
A description of the arrangement that may result in a change in control
of GenAmerica Corporation ("GenAmerica"), and thus Reinsurance Group of America,
Incorporated (the "Company"), is set forth in Item 3 below, which description is
incorporated herein by reference.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Item 3(b) of Form 8-K requires a registrant to disclose certain
information if an order confirming a plan of reorganization is entered by a
court having supervision or jurisdiction over the business of the registrant's
parent. General American Mutual Holding Company ("GAMHC") is the ultimate
beneficial owner of approximately 48.3% of the shares of outstanding common
stock of the Company. GAMHC is a Missouri mutual insurance holding company and
is the parent of GenAmerica. General American Life Insurance Company ("General
American Life") (a subsidiary of GenAmerica) is a Missouri life insurance
company.
As previously reported by the Company in its Current Report on Form 8-K
dated August 10, 1999 (filed August 25, 1999) (File No. 1-11848), incorporated
herein by reference, on August 10, 1999, General American Life became subject to
an order of administrative supervision from the Missouri Department of Insurance
(the "Department"), which remains in effect. As reported and described in the
Proxy Statement Supplement filed by the Company on September 2, 1999 (File No.
1-11848), and the Company's Current Report on Form 8-K dated August 26, 1999
(filed September 10, 1999) (File No. 1-11848), each incorporated herein by
reference, on August 26, 1999, GenAmerica announced that GAMHC had entered into
a Stock Purchase Agreement with Metropolitan Life Insurance Company ("MetLife"),
whereby MetLife will acquire GenAmerica, including GenAmerica's beneficial
ownership of a majority of the outstanding shares of common stock of the
Company. On September 16, 1999, GAMHC and MetLife executed an amendment to the
Stock Purchase Agreement, which deleted the provisions requiring an escrow
agreement and account, and clarified and corrected several other provisions. As
previously reported by the Company in its Current Report on Form 8-K dated
September 17, 1999 (filed September 30, 1999) (File No. 1-11848), incorporated
herein by reference, on September 17, 1999, the Circuit Court of Cole County,
Missouri (the "Court"), entered an order (the "Order of Rehabilitation") placing
GAMHC into rehabilitation and approving notice of a hearing to approve a Plan of
Reorganization ("Plan"). The purpose of the Order of Rehabilitation is to
facilitate the sale of all of the issued and outstanding shares of capital stock
of GenAmerica to MetLife in accordance with the terms of the Stock Purchase
Agreement, as amended. The Order of Rehabilitation also appoints the Director of
the Department as "Rehabilitator" of GAMHC.
On November 10, 1999, the Court held a hearing in connection with the
Rehabilitator's Application for Approval of the Plan, and after reviewing the
Plan, as amended, entered a Judgment Confirming Plan of Reorganization
("Judgment"). A copy of the Judgment entered by the Court is filed as Exhibit
2.1 and incorporated herein by reference. The Plan, as amended, is filed
herewith as an exhibit to the Judgment and (i) provides for MetLife to
participate in the rehabilitation of GAMHC by acquiring all of the issued and
outstanding shares of capital stock of GenAmerica from GAMHC in exchange for
$1.2 billion in cash, (ii) approves the distribution of the $1.2 billion sale
proceeds to pay expenses of the rehabilitation, taxes, MetLife if certain
indemnification rights apply, creditors (if any) of GAMHC, and as to any
residual, to the members of GAMHC in accordance with their membership interests,
and (iii) provides for the eventual liquidation of GAMHC.
As a mutual insurance holding company, GAMHC does not have common stock
or any form of shares authorized, issued or outstanding. GenAmerica has 1,000
shares issued and outstanding, none of which are reserved for future issuance
under the Plan. No specific information relating to the assets and liabilities
of GAMHC was presented to the Court. However, as of September 30, 1999, GAMHC
had assets of $22.6 billion, liabilities of $21.6 billion, and policyholders'
surplus of $1.0 billion.
<PAGE> 3
ITEM 7. EXHIBITS.
(c) The following exhibits are filed as part of this report on
Form 8-K.
Exhibit 2.1 Judgment Confirming Plan of Reorganization
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 24, 1999 REINSURANCE GROUP OF AMERICA,
INCORPORATED
By: /s/ Jack B. Lay
Name: Jack B. Lay
Title: Executive Vice President
and Chief Financial Officer
<PAGE> 1
EXHIBIT 2.1
IN THE CIRCUIT COURT OF COLE COUNTY
STATE OF MISSOURI
KEITH WENZEL, Director, Department of )
Insurance, State of Missouri, )
)
Plaintiff, )
) Case No. CV 99 323050
v. )
)
GENERAL AMERICAN MUTUAL )
HOLDING COMPANY, a Missouri )
mutual holding company, )
)
Defendant. )
JUDGMENT CONFIRMING PLAN OF REORGANIZATION
------------------------------------------
This matter comes before the Court on the Rehabilitator's Application for
Approval of Reorganization Plan (the "Application") in connection with the
rehabilitation of General American Mutual Holding Company, a Missouri mutual
holding company ("GAMHC"). The Court, having reviewed the Application, the
Declarations submitted in support thereof and the record of this proceeding,
finds and concludes as follows:
A. Plaintiff Keith Wenzel, Director of the Department of Insurance for the
State of Missouri (the "Rehabilitator"), was appointed rehabilitator for GAMHC
pursuant to that certain Verified Petition for Rehabilitation filed by the
Rehabilitator on September 17, 1999 (the "Verified Petition"), and that certain
Order (1) Placing General American Mutual Holding Company into Rehabilitation;
and (2) Approving notice of the Hearing to Approve Plan of Reorganization (the
"Rehabilitation Order") entered by this Court on September 17, 1999.
B. Concurrent with the filing of the application to commence this case, the
Rehabilitator filed his proposed plan of reorganization (the "Plan") for GAMHC
pursuant to Mo.
<PAGE> 2
Rev. Stat. ss.375.l168.1 GAMHC consented to the commencement of this
rehabilitation proceeding and to the Plan.
C. The Court has jurisdiction over this proceeding pursuant to Mo. Rev.
Stat. ss.ss.375.1150 to 375.1246, and, over the Application in particular,
pursuant to Mo. Rev. Stat. ss.375.l168.
D. The purpose of the rehabilitation proceeding -- and of the Plan -- is to
facilitate the sale of the stock of GAMHC's wholly-owned subsidiary, GenAmerica
Corporation ("GAC") to Metropolitan Life Insurance Company, a New York mutual
life insurance company ("MetLife") pursuant to that certain Stock Purchase
Agreement entered into by and between GAMHC and MetLife dated as of August 26,
1999, as amended (the "Stock Purchase Agreement"). The principal asset of GAC is
the stock of General American Life Insurance Company ("GALIC").
E. Prior to the commencement -- but in anticipation -- of this
rehabilitation proceeding, GAMHC entered into the Stock Purchase Agreement,
which provides for the sale of the stock of GAC to MetLife, subject to
appropriate approvals, including from this Court. GAC owns 100% of the stock of
GALIC and various other subsidiaries, and owns, indirectly, the majority of the
stock of certain other subsidiaries. The sale of the stock of GAC will be
consummated concurrently with the consummation of the Plan.
F. The Plan provides for the sale of GAMHC's principal asset, its stock in
GAC, to MetLife pursuant to the Stock Purchase Agreement. The Purchase Price
proceeds will be held by
November 10, 1999
2
- ----------
1 A copy of the Plan is on file with the Court. Otherwise undefined capitalized
terms used in this Judgment have the meaning ascribed to them in the Plan.
<PAGE> 3
GAMHC for the expenses of the administration of GAMHC's rehabilitation
proceeding, for payment of taxes owed by GAMHC, for distribution to MetLife on
account of any indemnity claims under the Stock Purchase Agreement, for payment
to any creditors of GAMHC, and, as to any residual, to GAMHC's members. In
addition, MetLife's indemnity claims will be secured by a perfected, first
priority lien on the Purchase Price proceeds, subject to the terms of the Plan.
G. The Rehabilitator has determined that the reorganization of GAMHC
through the Plan is appropriate and is fair and equitable to all parties
concerned, and that failure to implement the Plan would substantially increase
the risk of loss to GAMHC's members, to any creditors, and to GALIC's
policyholders.
H. Full and fair notice of the hearing on the Plan was provided, in
accordance with the Rehabilitation Order, through (i) mailed notices to all of
GAMHC's members and to all policyholders of GALIC, and (ii) through publication
of notices in USA Today, in the national edition of the Wall Street Journal and
in newspapers of general circulation in St. Louis and Kansas City. Accordingly,
full and fair notice of the hearing was provided to all interested parties, and
all interested parties had a full and fair opportunity to present objections
pertaining to the Plan. In addition, both the mailed notice and the published
notice provided notice that the Stock Purchase Agreement with MetLife was
subject to overbid. Accordingly, full and fair notice of the opportunity to make
overbids was provided. The Court has received no objections to the Plan, and no
overbids were delivered to the Rehabilitator, GALIC and MetLife in accordance
with the Court's Order Approving Certain Matters as to the Acquisition of
GenAmerica Corporation by Metropolitan Life Insurance Company entered September
17, 1999, or filed with or otherwise received by the Court.
3
November 10, 1909
<PAGE> 4
I. The Stock Purchase Agreement is the result of good faith, arms
length negotiations between the parties thereto. The consideration paid by
MetLife for the Shares is fair.
J. Based on the financial condition of GAMHC and, in particular, the
restrictions placed on it as a mutual holding company under Missouri law, the
alternatives to the Plan could be a liquidation of GAMHC and GALIC, which would
more than likely result in a significantly reduced recovery for both members of
GAMHC and policyholders of GALIC from the recovery under the Plan.
K. Mo. Rev. Stat. ss.ss.375.1168 and 376.1322 provide the Rehabilitator
with the authority to reorganize, convert, consolidate or transform an insurer
or, under the circumstances present here, its holding company, through a plan of
rehabilitation. The Plan and the Rehabilitator's proposal to sell the stock in
GAC to MetLife fall within these statutes. The Plan is not in conflict with the
requirement that, outside a proceeding of the kind specified in Rev. Mo. Stat.
ss.ss.375.1 150 to 375.1246, a mutual holding company such as GAMHC own,
directly or through an intermediate holding company, a majority of the voting
shares of a life insurance company. This is because, from and after the
effectiveness of the Plan and the reorganization of GAMHC, GAMHC will no longer
be a mutual holding company, and rights of individuals who were formerly members
will be solely to receive their ratable share of the Purchase Price proceeds in
accordance with the Plan.
L. The Plan is fair and equitable to all parties concerned and is
consistent with the Missouri statutes regarding the rehabilitation of insurance
companies.
4
November 10, 1909
<PAGE> 5
WHEREFORE, it is ADJUDGED and DECREED as follows:
The Plan is hereby confirmed and approved and made effective as of this
date, subject to the terms of this Judgment.
2. The Stock Purchase Agreement is hereby approved in all respects, and the
Rehabilitator is authorized to consummate the Stock Purchase Agreement in
accordance with its terms.
3. The sale of the Shares pursuant to the Stock Purchase Agreement is free
and clear of any and all liens, Claims and encumbrances, all as set forth in,
and subject to the terms of, the Plan, with all such liens, Claims and
encumbrances to attach to the Purchase Price proceeds, subject to the prior lien
thereon in favor of MetLife. All persons having or asserting a Claim, lien or
encumbrance on or against the Shares are hereby permanently enjoined from
asserting such lien, Claim or encumbrance on or against the Shares or in any
other manner except as expressly permitted under the Plan. From and after the
transfer of the Shares to MetLife at the Closing under and pursuant to the Stock
Purchase Agreement, title to the Shares shall vest in MetLife free and clear of
all liens, Claims and encumbrances, without any further order, notice or other
act or requirement.
4. The terms of the Plan and of the Stock Purchase Agreement, and the
transactions contemplated thereby, are fully enforceable.
5. No "closed block" will be required for any policyholders of GALIC in
connection with the sale of the Shares or the transfer of GALIC to the control
of MetLife.
6. MetLife shall be entitled to enforce those provisions of the Plan which
grant it rights, benefits or protections.
5
November 10, 1999
<PAGE> 6
7. The perfection, priority and validity of the perfected, first
priority lien on and perfected, first priority security interest in the Purchase
Price proceeds and other items described as the Collateral in Article 11 of the
Plan in favor of MetLife to secure the Indemnification Obligations are hereby
granted and confirmed in accordance with the terms of the Plan, and such lien
shall be effective without any further action by MetLife or any other party.
8. That certain Administrative Services Agreement dated as of November 10,
1999 between GAMHC and GALIC is hereby approved. (A copy of the Agreement as
executed will be lodged with the Court.) Except as otherwise provided in the
Plan, MetLife and MetLife's affiliates and their respective directors, officers,
employees, agents, representatives, professionals, attorneys, accountants and
financial advisors (acting in such capacity) shall be afforded the immunity
specified in Mo. Rev. Stat. ss.375.1166.4 when acting pursuant to the
Administrative Services Agreement.
9. To the fullest extent permitted by Mo. Rev. Stat. ss.ss.375.1150 to
375.1246, all of GAMHC's liabilities existing prior to the date hereof are
hereby discharged and replaced with the rights afforded under the Plan.
10. The parties are authorized to modify, amend or supplement, by agreement
of MetLife and the Rehabilitator, the Stock Purchase Agreement and any related
document, subject to the approval of the Court.
11. Clause (iii) of Section 11.6 of the Plan is hereby deleted and replaced
in its entirety with the following: "such other investments as (w) are proposed
by the Rehabilitator and approved by the Rehabilitation Court after notice to
MetLife, (x) are of a kind as might be made by a trustee exercising the power to
invest trust assets in accordance with Mo. Rev. Stat.
6
November 10, 1999
<PAGE> 7
ss.456.902, (y) are of a kind that could be made subject to the MetLife Lien,
and (z) are made in such a manner as to be subject to the MetLife Lien."
12. This Judgment is not an order of liquidation for GAMHC. The
Rehabilitator may subsequently seek an order to liquidate GAMHC at such time as
the Rehabilitator deems that liquidation would be advisable.
13. This Court shall retain jurisdiction of the Rehabilitation Proceedings
and all related proceedings for all purposes including, without limitation, with
respect to any petition pursuant to Mo. Rev. Stat. ss.375.1155, to supervise the
implementation of the Plan and Stock Purchase Agreement, to resolve disputes in
the manner provided in the Plan, or in connection with the sale of GAMHC's stock
in GAC.
14. All prior injunctions and orders of this Court, except to the extent
expressly modified hereby, are reaffirmed and remain in full force and effect.
All powers and authority granted to the Rehabilitator by this Judgment are in
addition to and not in limitation of the powers of the Rehabilitator under
applicable law.
So ordered this 10th day of November, 1999 at Jefferson City, Missouri.
NOVEMBER 10, 1999
7
<PAGE> 8
GENERAL AMERICAN MUTUAL HOLDING COMPANY
PLAN OF REORGANIZATION
This Plan of Reorganization dated as of September 17, 1999 (the
"Reorganization Plan"), is submitted for review and approval, disapproval or
modification by the Rehabilitation Court (as defined below) in accordance with
Section 375.1168.4 of the Insurance Code by Keith Wenzel, Director of Insurance
of the State of Missouri (the "Director"), unless otherwise specifically
indicated, acting solely in his capacity as the statutory
rehabilitator("Rehabilitator") of General American Mutual holding Company, a
Missouri mutual insurance holding company ("GAMHC"), as agreed to by GAMHC and
Metropolitan Life Insurance Company ("MetLife"), a New York mutual life
insurance company.
RECITALS
A. Whereas, on August 10, 1999, the Director placed General American Life
Insurance Company, a Missouri stock life insurance company ("GALIC") in
supervision proceedings (the "Supervision Proceedings"). GALIC is a wholly-owned
subsidiary of GenAmerica Corporation, a Missouri corporation ("GAC") which, in
turn, is a wholly-owned subsidiary of GAMHC. Concurrent with the filing of this
Reorganization Plan, pursuant to Section 375.1166 of the Insurance Code, an
order of rehabilitation (as the same may, from time to time be amended, the
"Rehabilitation Order") was entered with respect to GAMHC by the Circuit Court
of Cole County, State of Missouri in an action styled Keith Wenzel, Director,
Department of Insurance. State of Missouri v. General American Mutual Holding
Company, upon the petition of the Director, and with the consent of the Board of
Directors of GAMHC. The Director was appointed as the Rehabilitator of GAMHC.
The court proceedings pursuant to the petition and Rehabilitation Order shall be
referred to herein as the "Rehabilitation Proceedings" and the Court handling
the Rehabilitation Proceedings shall be referred to as the "Rehabilitation
Court."
B. Whereas, the Rehabilitator, having determined it to be in the best
interests of the members and creditors of GAMHC, and in the best interests of
the policyholders of GALIC and of its insurance company subsidiaries, has
approved (I) MetLife's participation in the rehabilitation of GAMHC, through the
sale of all the issued and outstanding shares of common stock of GAC by GAMHC to
MetLife, (ii) the reorganization of GAMHC, and (iii) the distribution of the
proceeds of such sale (x) to certain creditors of GAMHC, (y) to MetLife on
account of certain indemnification rights, and (z) as to any residual, to the
Members of GAMHC in accordance with their Membership Interests.
C. Whereas, the Rehabilitator has proposed, and GAMHC and MetLife have
agreed to support, this Reorganization Plan to facilitate, effectuate and cause
the rehabilitation and reorganization of GAMHC as set forth in this
Reorganization Plan and the schedules and exhibits hereto.
D. Whereas, pursuant to the Stock Purchase Agreement, MetLife will (I)
acquire 100% of the issued and outstanding stock of GAC from GAMIIC, and (ii)
contribute up to $120
1
<PAGE> 9
million as capital to GALIC under the terms contemplated by Section 6.20 of the
Stock Purchase Agreement.
E. Whereas, the Director has committed to process expeditiously the
applications of MetLife for approval of the change of control for GALIC
contemplated by the Stock Purchase Agreement.
F. Whereas, the Rehabilitator may seek an order of liquidation of GAMHC as
authorized by Section 375.1175 of the Insurance Code and may seek to create a
liquidating trust or other entity to implement such liquidation and the
distribution of the proceeds of the sale of the Shares on account of the
Indemnification Obligations, the Excluded Claims and the Membership Interests in
GAMHC (the "GAMHC Liquidating Trust").
G. Whereas, the Rehabilitator has determined that this Reorganization Plan
and the Stock Purchase Agreement, assuming the procedures set forth in the
Reorganization Plan and the Rehabilitation Order are followed, are fair and
equitable to all parties concerned.
ARTICLE 1
DEFINITIONS AND INTERPRETATION
Section 1.1 Definitions. In this Reorganization Plan, unless otherwise
specifically provided or the context so requires, the following terms shall have
the meanings ascribed to them below:
"Account" has the meaning set forth in Section 11.3 hereof.
"Account Fund" has the meaning set forth in Section 11.3 hereof.
"Affiliate" means, with respect to any Person, any other Person who
directly or indirectly controls, or is controlled by or is under common control
with such Person. "Control," for purposes of this definition, means the power to
direct or cause the direction of management or policies of the controlled
Person.
"Approvals" means the consents and approvals of any governmental authority,
as defined in the Stock Purchase Agreement, whose consent or approval is
necessary or advisable for the consummation of the transactions contemplated by
the Stock Purchase Agreement or this Reorganization Plan.
"Claim" means a right to payment, whether or not such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured, and includes a
right to an equitable remedy for breach of performance if such right gives rise
to a right to payment.
"Closing" has the meaning set forth in Section 3.1 of the Stock Purchase
Agreement.
2
<PAGE> 10
"Closing Date" means the date of the Closing.
"Conning" means Conning Corporation, a Missouri corporation.
"Conning Subsidiaries" means the Persons listed on Schedule 1.1(c) of the
Stock Purchase Agreement.
"Director" has the meaning specified in the first paragraph hereof.
"Excluded Claims" has the meaning set forth in Section 6.1 hereof.
"Excluded Claims Channeling Order" has the meaning set forth in Section 6.3
hereof.
"Final Indemnity Amount" has the meaning set forth in Section 11.4(c)(iii)
hereof.
"Final Indemnity Estimates" has the meaning set forth in Section 11.5.4(c)
(iii) hereof.
"Final Plan Confirmation Judgment" means the Plan Confirmation Judgment (I)
after such Plan Confirmation Judgment has become final and non-appealable, or
(ii) the period for appealing such Plan Confirmation Judgment shall have passed,
one or more appeals of such Plan Confirmation Judgment shall have been timely
taken and not withdrawn, such Plan Confirmation Judgment shall not have been
stayed or reversed as of the Closing, and MetLife has determined, in its sole
discretion, exercised in good faith, that such appeals are unlikely to
invalidate MetLife's title to the Shares.
"GAC" has the meaning set forth in Recital A hereof.
"GALIC" has the meaning set forth in Recital A hereof.
"GAMHC" has the meaning set forth in the first paragraph hereof, or a
successor in interest.
"GAMHC Bar Date" has the meaning set forth in Section 6.4 hereof.
"GAMHC Liquidating Trust" has the meaning set forth in Recital F hereof.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"Indemnification Obligations" means any obligation of GAMHC to indemnify
MetLife under and in accordance with the Stock Purchase Agreement.
"Indemnity Amount" has the meaning set forth in Section 11.4(a) hereof.
3
<PAGE> 11
"Indemnity Claim" has the meaning set forth in Section 11.4(a) hereof.
"Indemnity Estimates" has the meaning set forth in Section 11.5.4(a)
hereof.
"Insurance Code" means title XXIV of the Revised Missouri Statutes, Chapter
374 et seq., as amended from time to time to the extent such amendment is made
applicable to the Rehabilitation Proceedings.
"Interim Agreements" means the agreements entered into by and between
Seller and MetLife pursuant to Article VII of the Stock Purchase Agreement.
"Member" means, as of any date specified herein or fixed by the
Rehabilitator or the Rehabilitation Court, as the case may be, any Person
determined to be a member of GAMHC or entitled to the benefits of membership of
GAMHC on the basis of GALIC's records as of such date and Article VI of GAMHC's
Articles of Incorporation or such other or additional methods or procedures as
are specified by the Rehabilitator and approved by the Rehabilitation Court;
provided, however, that no Person shall become a member solely by acquiring a
policy or contract issued by GALIC on or after the Closing Date.
"Membership Interests" means the membership interests of the Members as
determined in accordance with this Reorganization Plan and as evidenced in the
Membership Schedule.
"Membership Schedule" has the meaning set forth in Section 4.2 hereof.
"MetLife" means Metropolitan Life Insurance Company, a New York mutual
life insurance company, and any wholly-owned subsidiary to which it may assign
its rights under the Stock Purchase Agreement.
"Notice of Resolution" has the meaning set forth in Section 11.5.5(a)
hereof.
"Notification Package" has the meaning set forth in Section 4.1 hereof.
"Overbid" has the meaning set forth in the Sale Procedures Order.
"Person" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
public, governmental, judicial or regulatory authority or body or other entity.
"Plan Confirmation Judgment" means a written judgment of the Rehabilitation
Court approving the Reorganization Plan and Stock Purchase Agreement and
containing the terms set forth in Section 8.2 hereof.
"Plan Confirmation Hearing" is the hearing at which the Rehabilitation
Court considers the Rehabilitator's request that the Rehabilitation Court
approve this Reorganization Plan.
4
<PAGE> 12
"Purchase Price" means $1,200,000,000 subject to Overbid, and subject to
any adjustment in accordance with Section 2.2 of the Stock Purchase Agreement.
"Recalculated Indemnity Amount" has the meaning set forth in Section
11.4(c)(I) hereof.
"Recalculated Indemnity Estimates" has the meaning set forth in Section
11.5.4(c)(I) hereof.
"Rehabilitation Court" has the meaning set forth in Recital A hereof.
"Rehabilitation Order" means that certain Order (1) Placing General
American Mutual Holding Company into Rehabilitation; and (2) Approving Notice of
the Hearing to Approve Plan of Reorganization entered September 17,1999, as such
order may from time to be time be modified, amended or supplemented.
"Rehabilitation Proceedings" has the meaning set forth in Recital A of this
Reorganization Plan.
"Rehabilitator" has the meaning set forth in the first paragraph of this
Reorganization Plan.
"Reorganization Plan" means this Plan of Reorganization, the Stock Purchase
Agreement, the Ancillary Agreements (as such term is used in the Stock Purchase
Agreement), any motions and supporting documents filed by the Rehabilitator with
respect to the Reorganization Plan and the Plan Confirmation Judgment.
"RGA" means Reinsurance Group of America, Incorporated, a Missouri
corporation.
"RGA Subsidiaries" means the entities listed on Schedule 1.1(d) of the
Stock Purchase Agreement.
"Sale Procedures Order" means that certain Order Approving Certain Matters
as to the Acquisition of GenAmerica Corporation by Metropolitan Life Insurance
Company entered by the Rehabilitation Court on or about September 17, 1999.
"Shares" means the 1,000 shares of the common stock of GAC, which shares
constitute all of the issued and outstanding shares of GAC's capital stock.
"Special Master" has the meaning set forth in Section 11 .4(c)(iii) hereof.
"Stable Value Business" means funding agreements and guaranteed investment
contracts issued by GALIC.
5
<PAGE> 13
"Stock Purchase Agreement" means that certain agreement dated as of August
26, 1999, together with all exhibits and schedules thereto and as amended from
time to time, pursuant to which MetLife is purchasing, and GAMHC is selling, the
Shares, a true and correct copy of which is attached hereto as Exhibit "A."
"Subsidiaries" means the entities listed on Schedule 1.1(b) of the Stock
Purchase Agreement.
"Supervision Proceedings" has the meaning set forth in Recital A hereof.
"Three Year Indemnity Claims" has the meaning set forth in Section
11.5.4(a) hereof.
"Total Indemnity Cost" has the meaning set forth in Section 11.5.5(a)
hereof.
"Two Year Indemnity Claims" has the meaning set forth in Section 11.5.3
hereof.
"Value" has the meaning set forth in Section 11.5.6 hereof.
Section 1.2 Rules of Interpretation. For purposes of this Reorganization
Plan: (a) whenever it appears appropriate from the context, each term, whether
stated in the singular or the plural, shall include both the singular and the
plural; (b) any reference in this Reorganization Plan to a contract, instrument,
release or other agreement or document being in a particular form or on
particular terms and conditions means that such document shall be substantially
in such form or substantially on such terms and conditions; provided, however,
that any change to such form, terms, or conditions which is material to a party
to such document shall not be modified without such party's consent; (c) any
reference in this Reorganization Plan to an existing document or exhibit filed
or to be filed means such document or exhibit, as it may have been or may be
amended, modified or supplemented; (d) unless otherwise specified in a
particular reference, all references in this Reorganization Plan to paragraphs,
Articles and Exhibits are references to paragraphs, Articles and Exhibits of or
to this Reorganization Plan; (e) the words "herein," "hereof," "hereto,"
"hereunder" and others of similar import refer to this Reorganization Plan in
its entirety rather than to only a particular portion of this Reorganization
Plan; and (f) captions and headings to Articles and paragraphs are inserted for
convenience of reference only and are not intended to be a part of or to affect
the interpretation of this Reorganization Plan.
ARTICLE 2
AUTHORITY TO ACT
Section 2.1 Valid Appointment. The Rehabilitator has been duly and
validly appointed to be the Rehabilitator of GAMHC as that term is used in
Section 375.1166 of the Insurance Code.
6
<PAGE> 14
Section 2.2 Authorization: Enforceable Obligations. The Rehabilitator has
all requisite power, authority and legal right necessary to apply for court
approval of this Reorganization Plan and the Stock Purchase Agreement, and
subject to the entry of a Final Plan Confirmation Judgment and approval of the
Rehabilitation Court, to perform and carry out the transactions contemplated by
this Reorganization Plan and the Stock Purchase Agreement upon the terms and
subject to the conditions of this Reorganization Plan and the Stock Purchase
Agreement.
ARTICLE 3
CORPORATE AUTHORITY
Section 3.1 Re-Capitalization of GALIC. Following the Closing, MetLife
shall make a capital contribution of up to $120 million to GALIC (or to cause
one of its subsidiaries to make such a contribution to GALIC) in accordance
with, and to the extent contemplated by, Section 6.20 of the Stock Purchase
Agreement.
Section 3.2 Director Best Efforts. The Rehabilitator, in his capacity as
Director, shall use his best reasonable efforts to (a) process the request for
approval of the change of control for GALIC, RGA and any Missouri-domiciled
Subsidiaries within forty-five (45) days of the submission by MetLife of
complete applications for such a change of ownership, and; (b) provide
reasonable assistance to MetLife in coordinating with other states with respect
to expeditiously processing requests by MetLife for Approvals in any other state
in which GALIC or the affected Subsidiary currently does business; and (c)
expeditiously process any other requests for Approvals submitted to the
Director. In addition, the Rehabilitator will seek an order of the
Rehabilitation Court providing that, if the Missouri Department of Insurance
approves the change of control application of MetLife prior to the Plan
Confirmation Hearing, any appeal thereof will be heard by the Rehabilitation
Court in connection with the Plan Confirmation Hearing.
ARTICLE 4
NOTICES TO MEMBERS; POLICYHOLDERS;
AND HOLDERS OF EXCLUDED CLAIMS
Section 4.1 Delivery of Notification Package. The Rehabilitator shall mail
to each Member as of August 31, 1999 at the last known address of such Member as
shown on GAMHC's records and to each policyholder of GALIC, (x) general
information concerning this Reorganization Plan and the Stock Purchase
Agreement, including the last date to file an objection to its approval by the
Rehabilitation Court and the form and manner of any such objection and the date,
time and place of the hearing to consider the approval of the Reorganization
Plan; and (y) any other material reasonably deemed necessary or advisable by the
Rehabilitator, to assist Members of GAMHC or policyholders of GALIC in
understanding the transaction contemplated by this Reorganization Plan and the
Stock Purchase Agreement (such information and material hereinafter referred to
as the "Notification Package"). MetLife shall have the opportunity to review the
Notification Package prior to its mailing, and shall cooperate
7
<PAGE> 15
with the Rehabilitator in preparing the Notification Package. The
Rehabilitator will provide MetLife with a copy of any notice proposed to be sent
to Members generally, and an opportunity to comment thereon before sending such
notice.
Section 4.2 Distributions to Members. The Rehabilitator shall formulate a
schedule of the Members and the Membership Interests (the "Membership Schedule")
based upon the books and records of GAMHC and after consultation with actuaries
and other appropriate consultants. Such formulation shall, in the judgment of
the Rehabilitator, be fair and equitable to the Members. When the Membership
Schedule is complete, the Rehabilitator shall give notice to each Member of the
basis for determining the amount of Members' Membership Interests. The
Rehabilitator shall apply to the Rehabilitation Court for procedures to give the
Members notice of the basis for determining the amount of their Membership
Interest and an opportunity to object thereto. In the absence of an objection,
or after resolution of any objection, the Membership Schedule shall be final and
shall be used to allocate any assets to be distributed to Members under this
Reorganization Plan. Any distributions made to Members on account of their
Membership Interests prior to senior Claims being paid or reserved for in full
shall be subject to approval by the Rehabilitation Court. Distributions to
Members shall be made as ordered by the Court.
Section 4.3 Holders of Excluded Claims. The Rehabilitator shall give notice
to all Members, and any holder of an Excluded Claim known to the Rehabilitator
(after due consultation with GAMHC and a review of the books and records of
GAMHC), and shall provide publication notice in such fashion as the
Rehabilitation Court shall approve so as to provide notice reasonably calculated
to advise any and all holders of Excluded Claims of the last date by which
Excluded Claims must be filed, and of the consequences of the failure to so
file.
ARTICLE 5
TRANSFERRED ASSETS; ACCESS TO BOOKS AND RECORDS
Section 5.1 Transfer of Assets by Rehabilitator on Behalf of GAMHC. Subject
to the terms and conditions herein, at the Closing, the Rehabilitator shall
cause GAMHC to, and GAMHC shall, convey to MetLife all of the Rehabilitator's
and GAMHC's right, title and interest to the Shares, free and clear of all
liens, Claims and encumbrances existing as at the Closing Date, including,
without limitation, Claims against or relating to GAMHC, the assets of GAMHC or
the interests of the Members in GAMHC or the value thereof.
Section 5.2 Access to Books and Records. The Rehabilitator shall retain
the corporate books and records of GAMHC; provided, however, that he shall
provide MetLife access to such books and records for reasonable business
purposes and the right to copy same upon reasonable notice. MetLife, GAC, GALIC
and the Subsidiaries shall provide the Rehabilitator access to the books, files
and other data and materials transferred pursuant to the Stock Purchase
Agreement for reasonable business purposes and the right to copy same upon
reasonable notice.
8
<PAGE> 16
ARTICLE 6
EXCLUDED CLAIMS AND ASSUMED CONTRACTS
Section 6.1 Excluded Claims. An "Excluded Claim" is any Claim (I) which is
asserted by a Person other than MetLife, (ii) for which MetLife has the right to
be indemnified under the Stock Purchase Agreement, and (iii) which is asserted
or assertable against GAMHC or MetLife.
Section 6.2 Failure to File Excluded Claims: Consequences. The failure to
file an Excluded Claim in the manner and by the date required by the
Rehabilitation Court shall result in that Claim being forever barred from being
asserted against GAMHC, the GAMHC Liquidating Trust, or MetLife; it being the
express intention that any and all such Claims are to be asserted against GAMHC
or its successor, the GAMHC Liquidating Trust, by the date required by the
Rehabilitation Court; provided, however, that the foregoing prohibition shall
not prevent any payment from the proceeds of any policy of insurance that covers
the liability associated with such Excluded Claim.
Section 6.3 Order in Aid of Channeling Excluded Claims. In addition to the
channeling of Claims provided by the Plan Confirmation Judgment, the
Rehabilitator shall seek an order from the Rehabilitation Court pursuant to
Section 375.1155 of the Insurance Code forever enjoining the assertion of
Excluded Claims except as provided for in this Plan (the "Excluded Claims
Channeling Order").
Section 6.4 Bar Date for Claims Against GAMHC. The Rehabilitator shall
seek an order of the Rehabilitation Court fixing the last date by which Claims
must be filed against GAMHC (the "GAMHC Bar Date") , and approving the form and
manner of notice thereof. The Rehabilitator shall provide notice of the GAMHC
Bar Date in accordance with the Rehabilitation Court's order. Failure to file a
Claim by the GAMHC Bar Date in accordance with the procedures specified by the
Rehabilitation Court will result in such Claim being forever barred from being
asserted against GAMHC, its assets or its successors.
ARTICLE 7
LIQUIDATION OF GAMHC
Section 7.1 Order of Liquidation. The Rehabilitator may, consistent with
his existing contractual and other obligations, at such time as he deems
appropriate after the Closing, apply to the Rehabilitation Court for an order to
de-mutualize, liquidate and/or dissolve GAMHC. The Rehabilitator shall provide
prior written notice to MetLife of the filing of an application to the
Rehabilitation Court for an order to de-mutualize, liquidate and/or dissolve
GAMHC. Any such order shall not adversely affect MetLife's rights under the
Stock Purchase Agreement or this Reorganization Plan.
Section 7.2 Liquidating Trust. The Rehabilitator may, at his sole option,
but consistent with his existing contractual and other obligations, apply to the
Rehabilitation Court for an order transferring GAMHC's remaining assets,
following the consummation of the transactions
9
<PAGE> 17
contemplated by this Reorganization Plan and Stock Purchase Agreement, including
the Purchase Price proceeds and the Account, to the GAMHC Liquidating Trust;
provided, however, that the GAMHC Liquidating Trust shall assume all obligations
of GAMHC under this Reorganization Plan and the Stock Purchase Agreement
(specifically including, without limitation, the Indemnification Obligations,
and the satisfaction of such obligations shall receive the highest statutorily-
permitted priority). Any such order shall not adversely affect MetLife's rights
under the Stock Purchase Agreement or this Reorganization Plan.
ARTICLE 8
CONDITIONS PRECEDENT TO CLOSING; TERMINATION
Conditions Precedent to Closing. Except as otherwise expressly provided
herein, the Closing shall not occur unless, prior to or at the Closing, each of
the following conditions precedent and the conditions precedent set forth in the
Stock Purchase Agreement, is satisfied or, if waivable, waived:
Section 8.1 Final Plan Confirmation Judgment. There shall be a Final Plan
Confirmation Judgment.
Section 8.2 Terms of the Final Plan Confirmation Judgment. The Final Plan
Confirmation Judgment shall be reasonably satisfactory to the Rehabilitator and
MetLife and shall contain the following provisions: (I) that the terms and
conditions of this Reorganization Plan and the Stock Purchase Agreement and the
transactions contemplated hereby and thereby are fully enforceable; (ii) finding
that the consideration received is fair; (iii) holding that the sale of the
Shares is free and clear of liens, Claims and encumbrances in accordance with
the terms hereof; (iv) finding that this Reorganization Plan and the Stock
Purchase Agreement are fair and equitable to all parties concerned; (v)
approving the Stock Purchase Agreement; (vi) holding that no closed block will
be required to be established for any policyholders of GALIC; (vii) providing
that MetLife shall be entitled to enforce the terms of this Reorganization Plan
which grant it rights, benefits or protections; (viii) granting a judicial lien
in favor of MetLife on the Account and the Account Fund to secure the
Indemnification Obligations pursuant to Article 11 hereof; and (ix) containing
such other matters relating to this Reorganization Plan or the Stock Purchase
Agreement and the transactions contemplated hereby and thereby as the
Rehabilitator shall deem necessary or desirable.
Section 8.3 Orders. The Rehabilitator shall have obtained from the
Rehabilitation Court any further orders as are necessary or appropriate to the
implementation of this Reorganization Plan, the Stock Purchase Agreement, and
the transactions contemplated hereby and thereby.
Section 8.4 Notification Package. The Notification Package shall have been
sent to each Member and policyholder in accordance with Section 4.1.
10
<PAGE> 18
Section 8.5 No Prohibition. No temporary restraining order, preliminary or
permanent injunction or other order, issued by a court of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of the
transactions contemplated by this Reorganization Plan shall be in effect.
Further, all Approvals of Governmental Authorities (as such term is defined in
the Stock Purchase Agreement) required to consummate the transactions
contemplated hereby shall have been obtained and shall remain in full force and
effect and all statutory waiting periods in respect thereof shall have expired.
ARTICLE 9
ADDITIONAL COVENANTS OF THE REHABILITATOR
Section 9.1 Final Plan Confirmation Judgment. The Rehabilitator shall take
all reasonable actions to make the Final Plan Confirmation Judgment and Excluded
Claims Channeling Order binding on all interested parties and subject to full
faith and credit in all state and Federal courts and any other applicable
jurisdictions.
Section 9.2 Rehabilitator to Use Best Efforts to Obtain Final Plan
Confirmation Judgment. The Rehabilitator shall use his best efforts to obtain
the Final Plan Confirmation Judgment with respect to this Reorganization Plan
and the Stock Purchase Agreement as promptly as possible.
Section 9.3 Cooperation to Obtain Orders and Judgments. The Rehabilitator
and MetLife shall cooperate with and assist each other in securing such orders
and judgments from the Rehabilitation Court as are reasonably deemed necessary
or desirable in order to carry out the provisions of this Reorganization Plan
and the Stock Purchase Agreement.
Section 9.4 Delivery of Motion, Notice, etc. Copies of any motion or notice
filed with the Rehabilitation Court or with any other Person by the
Rehabilitator as contemplated by this Reorganization Plan and of any order
issued by the Rehabilitation Court to the Rehabilitator shall be provided to
MetLife and its counsel by the Rehabilitator. The Rehabilitator shall make his
best effort to provide copies of motions or notices to MetLife prior to filing
them with the Rehabilitation Court.
Section 9.5 Operation of GAMHC. GAMHC shall operate its business consistent
with the terms and conditions of this Reorganization Plan and the Stock Purchase
Agreement from the date of this Reorganization Plan through the Closing Date.
The parties acknowledge that the Rehabilitation Proceedings may impose
restrictions on the operation of the business of GAMHC and the Supervision
Proceedings may impose restrictions on GALIC.
Section 9.6 Orderly Transition. Prior to Closing, the Rehabilitator and the
Director, as administrative supervisor of GALIC, shall permit MetLife and its
employees, agents and consultants to assist the Rehabilitator in the management
and operation of GALIC in order to facilitate an effective and orderly
transition of the GALIC business.
11
<PAGE> 19
ARTICLE 10
CLOSING
Section 10.1 Closing. The Closing shall take place as provided in Article 3
of the Stock Purchase Agreement.
ARTICLE 11
ADMINISTRATION OF PURCHASE PRICE PROCEEDS
Section 11.1 Receipt of Purchase Price. The Purchase Price proceeds shall
be immediately paid into the Account (as defined below) by or at the direction
of the Rehabilitator, to be held and administered pursuant to this Article.
Section 11.2 Liens. Title to the Purchase Price proceeds shall vest in the
Rehabilitator pursuant to Section 375.1166.1 of the Insurance Code, subject to a
perfected, first priority judicial lien upon such Purchase Price proceeds, the
Account (as defined below), all assets comprising the Account Fund (as defined
below), all additions to, and proceeds, renewals, investments, reinvestments and
substitutions of the foregoing, and all instruments, receipts and certificates
evidencing any of the foregoing (collectively, the "Collateral") in favor of
MetLife, which lien shall be created or confirmed by the Plan Confirmation
Judgment. In addition, effective upon the occurrence of the Closing and the
payment of the Purchase Price in accordance with the terms of this
Reorganization Plan, the Rehabilitator hereby grants a perfected, first priority
security interest in favor of MetLife in the Collateral. The foregoing security
interest shall be created or confirmed as a perfected, first priority security
interest by the Plan Confirmation Judgment. The foregoing perfected, first
priority judicial lien and perfected, first priority security interest are
collectively referred to as the MetLife Lien. The MetLife Lien shall secure the
Indemnification Obligations in accordance with the terms of this Article 11.
MetLife shall not be permitted to exercise the remedies of a secured creditor in
respect of the MetLife Lien without permission from the Rehabilitation Court.
Notwithstanding the foregoing, the MetLife Lien shall be deemed released,
without any additional act or requirement, from that portion of the Collateral
disbursed from the Account in accordance with Sections 11.5, 11.8 or 11.9
hereof, such release to take effect at the time of such disbursement.
Section 11.3 Securities Account. The Purchase Price proceeds shall at all
times be maintained in a securities account ("the Account"), which shall be
administered as set forth in this Article. The Account shall be established in
the name of General American Mutual Holding Company In Rehabilitation at such
Missouri commercial banking institution as the Rehabilitation Court shall
designate. The Purchase Price proceeds, as invested and as increased by the
earnings thereon and reduced by any distributions pursuant to this Article shall
be referred to as the "Account Fund." Only the Account Fund shall be kept in the
Account.
12
<PAGE> 20
Section 11.4 Distributions from the Account Fund to MetLife.
(a) From time to time MetLife (on its own behalf or on behalf of any of
MetLife's directors, officers, employees or Affiliates, or any successor or
assign of any of them) may deliver to the Rehabilitator a notice that MetLife is
making an indemnity claim under Section 8.1 or Section 10.2 of the Stock
Purchase Agreement in accordance with the terms set forth in Article VIII and
Article X thereof (an "Indemnity Claim"), which notice shall set forth the
amount of the Indemnity Claim as determined by MetLife in good faith (the
"Indemnity Amount"), and shall include information in reasonable detail showing
the basis of the Indemnity Claim and the calculation of the Indemnity Amount.
(b) Within thirty days after receipt of notice of an Indemnity Claim, the
Rehabilitator shall notify MetLife in writing whether the Rehabilitator agrees
or disagrees with the Indemnity Claim or Indemnity Amount. In the event that the
Rehabilitator agrees with the Indemnity Claim and Indemnity Amount, the
Rehabilitator shall promptly request approval of the Rehabilitation Court to
distribute the Indemnity Amount to MetLife. Within five business days after
receiving the approval (and the exhaustion of any appeal rights), the
Rehabilitator shall pay out of the Account Fund (by wire transfer of immediately
available funds) the Indemnity Amount to MetLife.
(e) In the event that the Rehabilitator disagrees with the Indemnity Claim
or Indemnity Amount:
(I) The Rehabilitator's notice to MetLife of such disagreement shall
specify the nature of such disagreement, the reason therefor and the amount, if
any, of the Indemnity Claim as determined by the Rehabilitator in good faith
(the "Recalculated Indemnity Amount"), and shall include information in
reasonable detail showing the calculation of the Recalculated Indemnity Amount.
The Rehabilitator's notice shall also include the names of three people with
reputations for expertise in the area relating to the Indemnity Claim.
(ii) Within ten days after receipt of the Rehabilitator's notice of
disagreement, MetLife shall send a notice to the Rehabilitator setting forth the
names of three people with reputations for expertise in the area relating to the
Indemnity Claim.
(iii) Within five days after receipt of MetLife's notice of names,
MetLife and the Rehabilitator shall present to the Rehabilitation Court the
names of up to four people, up to two of whom shall be selected by the
Rehabilitator from MetLife's list and up to two of whom shall be selected by
MetLife from the Rehabilitator's list. The Rehabilitation Court may either hear
the dispute itself or it may select one of such people, or another person, to
serve as the special master (the "Special Master") to evaluate the Claim and to
deliver to MetLife and the Rehabilitator its determination of the amount of the
Indemnity Claim (the "Final Indemnity Amount"); provided, however, that the
Final Indemnity Amount shall not be higher or lower than
13
<PAGE> 21
the range determined by the Indemnity Amount and the Recalculated Indemnity
Amount of such Indemnity Claim. Subject to any appeal to the Rehabilitation
Court within five days after the Special Master's determination, and the
Rehabilitation Court's review and approval or redetermination, and subject to
any further appeals to which the parties are entitled, the determination of the
Final Indemnity Amount shall be final and binding upon the Rehabilitator and
MetLife. Within five business days after the receipt of the determination of the
Final Indemnity Amount or the later approval or redetermination of the
Rehabilitation Court and the exhaustion of any further appeal rights, the
Rehabilitator shall pay out of the Account Fund (by wire transfer of immediately
available funds) the Final Indemnity Amount or the redetermined Final Indemnity
Amount to MetLife.
Section 11.5 Distributions from the Account Fund to the Rehabilitator.
Section 11.5.1 Expenses and Taxes. From time to time the Rehabilitator may
deliver to MetLife a request for disbursement from the Account Fund of the
reasonable out-of-pocket costs and expenses incurred by the Rehabilitator and
GAMHC in rehabilitation in connection with the Rehabilitation Proceedings,
reasonable out-of-pocket expenses incurred in the ordinary course of business by
the Rehabilitator and GAMHC in rehabilitation, the valid statutory and
contractual obligations of GAMHC in rehabilitation and any and all Taxes (as
such term is defined in the Stock Purchase Agreement) which become due and
payable and for which the Rehabilitator or GAMHC becomes obligated. Within
thirty days after receipt of the Rehabilitator's request, MetLife shall notify
the Rehabilitator in writing whether MetLife agrees or disagrees with the
request. In the event that MetLife agrees with the request, it shall provide a
notice to the Rehabilitator so stating and the Rehabilitator may withdraw the
requested amount from the Account Fund and deposit it in the Rehabilitator's
general account free and clear of the MetLife Lien and of the Indemnification
Obligations. In the event that MetLife disagrees with the request, the
disagreement shall be submitted to the Rehabilitation Court for review and
determination of the amount to be released pursuant to this Section 11.5.1. In
the event that the procedures set forth in this section do not permit the
Rehabilitator to pay in a timely manner the reasonable, out-of-pocket expenses
incurred by the Rehabilitator or by GAMHC in rehabilitation in connection with
the Rehabilitation Proceedings, and the reasonable, out-of-pocket expenses
incurred in the ordinary course of business of GAMHC in rehabilitation, the
Rehabilitator may petition the Rehabilitation Court for such changes in such
procedures as will allow the Rehabilitator to make such payments in a timely
manner.
Section 11.5.2 Initial Distribution. On a date that is 60 days after the
Closing Date, and subject to the receipt of all necessary Rehabilitation Court
and regulatory approvals therefor, which shall be certified to the
Rehabilitation Court by the Rehabilitator, the Rehabilitator may withdraw from
the Account and deposit in the Rehabilitator's general account, free and clear
of the MetLife Lien and of the Indemnification Obligations, an amount equal to
20% of the Account Fund on such date.
14
<PAGE> 22
Section 11.5.3 Two Year Distribution. Not later than the fifth business day
following the second anniversary of the Closing Date, MetLife shall deliver to
the Rehabilitator a summary analysis of the Indemnity Claims pending on or
actually threatened as of such date (the "Two Year Indemnity Claims"), which
analysis shall include MetLife's estimate of the aggregate Value of all Two Year
Indemnity Claims. Based upon such summary analysis, in the sole discretion of
MetLife, MetLife may determine to release the MetLife Lien and Indemnification
Obligations with respect to a portion of the Account Fund.
Section 11.5.4 Three Year Distribution.
(a) Not later than the fifth business day following the third
anniversary of the Closing Date, MetLife shall deliver to the Rehabilitator a
list of Indemnity Claims pending on or actually threatened as of such date (the
"Three Year Indemnity Claims") and an estimate of the Value of each such Three
Year Indemnity Claim as determined by MetLife in good faith (collectively, the
"Indemnity Estimates"), along with information in reasonable detail showing the
basis of the Three Year Indemnity Claims and the calculation of the Indemnity
Estimates.
(b) Within thirty days after receipt of the Indemnity Estimates, the
Rehabilitator shall notify MetLife in writing whether the Rehabilitator agrees
with all of the Indemnity Estimates or disagrees with any of the Indemnity
Estimates. In the event that Rehabilitator agrees with all of the Indemnity
Estimates, the Rehabilitator shall so notify MetLife and the Rehabilitator may
then withdraw from the Account and deposit in the Rehabilitator's general
account free and clear of the MetLife Lien and of the Indemnification
Obligations, the difference between the Account Fund on such date and the
Indemnity Estimates.
(c) In the event that the Rehabilitator disagrees with any of the
Indemnity Estimates:
(I) The Rehabilitator's notice to MetLife of such disagreement
shall specify the particular Three Year Claims the Indemnity Estimates with
respect to which the Rehabilitator disagrees, the nature of such disagreements,
the reasons therefor and an estimate of the Value, if any, of each such Three
Year Claim as determined by the Rehabilitator in good faith (collectively, the
"Recalculated Indemnity Estimates"), and shall include information in reasonable
detail showing the calculation of the Recalculated Indemnity Estimates. The
Rehabilitator's notice shall also include the names of three people with
reputations for expertise in each of the areas relating to the Three Year
Indemnity Claims in dispute. Upon so notifying MetLife, the Rehabilitator may
withdraw from the Account and deposit in the Rehabilitator's general account
free and clear of the MetLife Lien and of the Indemnification Obligations, the
difference between the Account Fund on such date and the Indemnity Estimates.
15
<PAGE> 23
(ii) Within ten days after receipt of the Rehabilitator's
notice of disagreement, MetLife shall send a notice to the Rehabilitator setting
forth the names of three people with reputations for expertise in each of the
areas relating to the Three Year Indemnity Claims in dispute.
(iii) MetLife and the Rehabilitator shall present to the
Rehabilitation Court the names of up to four people for each of the areas
relating to the Three Year Indemnity Claims in dispute, up to two of whom shall
be selected by the Rehabilitator from MetLife's list and up to two of whom shall
be selected by MetLife from the Rehabilitator's list. The Rehabilitation Court
may either hear the dispute itself or it may select one of such people, or
another person, to serve as the Special Master to evaluate the Three Year
Indemnity Claims in dispute in his or her area of expertise. The Special Master
shall deliver to MetLife, the Rehabilitator and the Rehabilitation Court its
determination of the estimate of the Value of each such Three Year Indemnity
Claim (the "Final Indemnity Estimates"); provided, however, that the Final
Estimate for each such Three Year Indemnity Claim shall not be higher or lower
than the range determined by the Indemnity Estimate and the Recalculated
Indemnity Estimate of such Three Year Indemnity Claim. Subject to any appeal to
the Rehabilitation Court within five days after the Special Master's
determination, and the Rehabilitation Court's review and approval or
redetermination, and subject to any further appeals to which the parties are
entitled, the determination of the Final Indemnity Estimates shall be final and
binding upon the Rehabilitator and MetLife. After the receipt of the
Rehabilitation Court's approval of the determination of the Final Indemnity
Estimates or the later redetermination of the Rehabilitation Court and the
exhaustion of any further appeal rights, the Rehabilitator may withdraw from the
Account and deposit in the Rehabilitator's general account free and clear of the
MetLife Lien and of the Indemnification Obligations, the difference between
MetLife's Indemnity Estimates for the Three Year Indemnity Claims in dispute and
the Final Indemnity Estimates for such Three Year Indemnity Claims or the
redetermination of such difference.
Section 11.5.5 Releases Upon Resolution of Three Year Indemnity Claims.
(a) Within five days after the final and non-appealable
resolution of each Three Year Indemnity Claim and the distribution by the
Rehabilitator of all Indemnity Amounts and Final Indemnity Amounts in respect of
such Three Year Indemnity Claim to MetLife (collectively, the "Total Indemnity
Cost"), MetLife shall notify the Rehabilitator in writing of the resolution, the
Total Indemnity Cost, and the Final Indemnity Estimate or the Indemnity Estimate
(as the case may be) of such Three Year Indemnity Claim ("Notice of
Resolution").
(b) If the Total Indemnity Cost is less than the Final Indemnity
Estimate or the Estimate (as the case may be) of such Three Year Indemnity
Claim, the Rehabilitator may withdraw from the Account Fund and deposit in the
Rehabilitator's general account free and clear of the MetLife Lien and of the
Indemnification Obligations, the difference between the Total Indemnity Cost and
the Final Indemnity Estimate or the Indemnity Estimate (as the case may be) of
such Three Year Indemnity Claim.
16
<PAGE> 24
Section 11.5.6 Definition of Value. For purposes of this Article 11,
"Value" means a reasonable worst case total cost of the relevant Three Year
Indemnity Claim or Claims upon the final, non-appealable resolution thereof.
Section 11.6 Investment. The Account Fund shall be invested in one or more
of the following: (I) marketable direct obligations of, or obligations the
principal and interest on which are unconditionally guaranteed by, the United
States of America or any agency or instrumentality thereof; (ii) commercial
paper rated at the time of purchase in the single highest classification by not
less than two standard rating services and maturing not more than 270 days after
the date of purchase; and (iii) such other investments (x) which constitute
investment property of the type specified in clauses (I), (ii) or (iii) of the
definition of investment property set forth in Article 9 of the Missouri Uniform
Commercial Code, (y) are subject to the MetLife Lien, and (z) as are recommended
by the Rehabilitator, reasonably agreed to by MetLife, and approved by the
Rehabilitation Court.
Section 11.7 Information. The Rehabilitator shall furnish to MetLife any
information regarding the Account Fund which MetLife may reasonably request.
Section 11.8 Fees and Expenses of the Depository Bank. All expenses
incurred by the Rehabilitator to maintain and administer the Account, including
the fees and expenses of the depository bank, shall be payable out of the
Account Fund, subject to approval of the Rehabilitation Court, free and clear of
the MetLife Lien and of the Indemnification Obligations.
Section 11.9 Fees and Expenses of Special Masters. The fees and expenses of
any special master appointed pursuant to this Article 11 shall be payable out of
the Account Fund, subject to the approval of the Rehabilitation Court, free and
clear of the MetLife Lien and of the Indemnification Obligations.
Section 11.10 Further Assurances. The Rehabilitator shall provide
reasonable assistance to MetLife to implement and to give effect to the
provisions of this Article, including without limitation executing,
acknowledging, delivering, filing and recording such other documents or
instruments as MetLife may reasonably request to further evidence and to give
further notice of the MetLife Lien; provided, however, that such acts shall
expressly not include executing or permitting the execution of a control
agreement with respect to the Account or any other document or instrument of
similar import or which expands MetLife's rights beyond those intended to be
granted hereby.
ARTICLE 12
GENERAL PROVISIONS
Section 12.1 Entire Document. This Reorganization Plan and the Stock
Purchase Agreement (including the exhibits and schedules attached hereto and
thereto, and any Ancillary Agreements or Interim Agreements entered into
pursuant to the Stock Purchase Agreement)
17
<PAGE> 25
constitute the entire agreements among the parties with respect to the subject
matter hereof and supersede all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the parties. There are no
representations, promises, warranties, covenants or undertakings, other than
those expressly set forth or referred to in this Reorganization Plan or the
Stock Purchase Agreement.
Section 12.2 No Assignment. None of the rights or obligations of any person
under this Reorganization Plan may be assigned or transferred to or assumed by
any other person, except as expressly provided herein or in the Stock Purchase
Agreement.
Section 12.3 Governing Law. This Reorganization Plan shall be governed and
construed in accordance with the laws of the State of Missouri, including the
Insurance Code, applicable to agreements made and to be performed entirely
within the State of Missouri, without giving effect to the principles of
conflicts of law thereof, and jurisdiction and venue for any action arising
under this Reorganization Plan shall be in the Rehabilitation Court.
Section 12.4 No Benefits to Others. Any representations, warranties,
covenants and agreements contained in this Reorganization Plan, and in the
certificate appended hereto, are for the sole benefit of the Rehabilitator,
GAMHC, and MetLife and their permitted successors and assigns, and they shall
not be construed as conferring any rights on any other Person.
Section 12.5 Notices. Any notice, request, demand, waiver, consent,
approval or other communication required or permitted to be made hereunder shall
be in writing and shall be deemed given only if delivered by hand, or mailed by
certified or registered mail with postage prepaid and return receipt requested,
or sent by facsimile transmission, as follows:
(a) If to the Director, the Rehabilitator or GAMHC, to:
General American Mutual Holding Company
700 Market Street
St. Louis, MO 63101
Att'n: Robert Banstetter, Esq.
with concurrent copies to:
Missouri Department of Insurance
Harry S Truman State Office Building, Room 630
301 West High Street
Jefferson City, MO 65102
Attention: Eric A. Martin, Esq., General Counsel
18
<PAGE> 26
Sidley & Austin
One First National Plaza
55th Floor
Chicago, IL 60603
Attention: Richard G. Clemens,Esq.
James R. Stinson, Esq.
Sidley & Austin
555 West Fifth Street
40th Floor
Los Angeles, CA. 90013
Attention: Thomas E. Patterson, Esq.
LeBoeuf, Lamb, Greene & MacRae, LLP
1875 Connecticut Ave. N.W.
Washington, D.C. 20009
Att'n: Cecilia Kempler, Esq.
Carson & Coil, P.C.
515 E. High Street
P.O. Box 28
Jefferson City, MO 65102
Att'n: Dana L. Frese
(b) If to MetLife, to:
Metropolitan Life Insurance Company
One Madison Avenue
New York, N.Y. 10010-3690
Att'n: Robert Einstein
with concurrent copies to
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, N.Y. 10019
Att'n: Jonathan L. Freedman, Esq.
Jeff S. Liebmann, Esq.
Polsinelli, White, Vardeman & Shalton
127 E. High Street
P.O. Box 275
Jefferson City, MO 65101
Att'n: Lewis E. Melahn
19
<PAGE> 27
or to such other address as may be designated by a person by written notice to
the other persons set forth in this notice provision. Such notice, request,
demand, waiver, consent, approval or other communication will be deemed to have
been given as of the date so delivered, sent by facsimile (with confirmation of
receipt) or mailed.
Section 12.6 Severability. If any provision of this Reorganization Plan is
held by a court of competent jurisdiction to be invalid, illegal or
unenforceable, the remainder of the provisions of this Reorganization Plan shall
remain in full force and effect. The parties shall endeavor in good faith
negotiations to replace any invalid, illegal or unenforceable provision with a
valid, legal and enforceable provision, the economic effect of which comes as
close as possible to that of the invalid, illegal or unenforceable provision.
Section 12.7 Counterparts. This Reorganization Plan may be executed in
any number of counterparts, each of which executed and delivered shall be deemed
to be an original and all of which counterparts taken together shall constitute
but one and the same instrument. It shall not be necessary that any one
counterpart be signed by all of the parties hereto as long as each of the
parties hereto has signed at least one counterpart.
Section 12.8 Liability of the Rehabilitator. The Rehabilitator proposes
this Reorganization Plan only in his representative capacity as Rehabilitator of
GAMHC and not individually, and the parties hereto agree and acknowledge that
the Rehabilitator shall not have any personal liability in any capacity for any
matters or obligations hereunder, and further that the State of Missouri and
shall have no liability with respect hereto.
Section 12.9 Modification of the Reorganization Plan. In the event
there is a Qualifying Competing Proposal (as such term is defined in the Sale
Procedures Order) which is approved by the Rehabilitation Court, this
Reorganization Plan may be amended to the extent necessary to give effect and to
implement such Qualifying Competing Proposal without further notice. The Plan
may also be modified to cure an ambiguity or inconsistency, to correct any
mistake, or to correct a manifest omission without further notice.
IN WITNESS WHEREOF, the parties hereto have executed this Reorganization
Plan as of the day and year first above written.
KEITH WENZEL, Director of Insurance, State of Missouri, in his
capacity as Rehabilitator and not in his individual capacity
By: /s/ Keith Wenzel
Title:
20
<PAGE> 28
GENERAL AMERICAN MUTUAL HOLDING COMPANY
by Keith Wenzel, in his capacity as
Rehabilitator and not in his individual
capacity
By: /s/ Keith Wenzel
21
<PAGE> 29
CERTIFICATE OF METROPOLITAN LIFE INSURANCE COMPANY
1. This Certificate is made as of September 17, 1999 by Metropolitan Life
Insurance Company. (Otherwise undefined capitalized terms have the meaning
ascribed to them in the Plan of Reorganization to which this Certificate is
appended.) MetLife hereby certifies (i) that, upon entry of the Final Plan
Confirmation Judgment, the General American Mutual Holding Company Plan of
Reorganization to which this Certificate is appended satisfies the condition
specified in Section 9.3(e) of the Stock Purchase Agreement and any other
condition or covenant of GAMHC to the extent it concerns the Reorganization
Proceeding or a Reorganization Plan contained in the Stock Purchase Agreement,
(ii) that the entry of the Final Plan Confirmation Judgment will satisfy any
condition or covenant pertaining to Missouri judicial approvals required with
respect to the Reorganization Proceeding or the Reorganization Plan, and (iii)
hereby makes, as of August 26, 1999, to the Rehabilitator the representations
and warranties made by MetLife to Seller in the Stock Purchase Agreement as
though fully set forth in this Certificate.
2. MetLife covenants to take the following actions: (i) to act in mutual
cooperation with the Rehabilitator and provide to the Rehabilitator all
reasonable assistance in furtherance of the implementation and effectuation of
this Reorganization Plan and the Stock Purchase Agreement; (ii) to use
commercially reasonable efforts to obtain all necessary approvals of this
Reorganization Plan and the Stock Purchase Agreement and to satisfy the
conditions to closing set forth in the Stock Purchase Agreement; and (iii) to
perform all acts in accordance with Section 6.7 of the Stock Purchase Agreement.
3. Subject only to the terms of Article 11 of the Reorganization Plan, so
long as the Rehabilitation Court has jurisdiction over the Rehabilitation
Proceedings, MetLife agrees, to the maximum extent permitted by law, to submit
to the exclusive jurisdiction of and venue in the Rehabilitation Court with
respect to any disputes arising out of or relating to the Reorganization Plan or
the Stock Purchase Agreement, that is (i) between MetLife and the Rehabilitator,
or (ii) among (x) the Rehabilitator or MetLife, on the one hand, and ) any
creditors, shareholders, Members or policyholders of GAMHC or the Subsidiaries,
on the other hand (other than a proceeding in which, of the foregoing entities,
only MetLife and one or more Subsidiaries, RGA, any RGA Subsidiary, Conning or
any Conning Subsidiary, are parties, except to the extent the Claims in such
action give rise to an Indemnification Obligation).
4. MetLife covenants, following the Closing Date, as follows: (i) all
guaranteed benefits under policies of GALIC shall remain general obligations of
GALIC in accordance with the terms of such policies; (ii) policyholder
obligations will remain the obligation of GALIC or
22
<PAGE> 30
the applicable insurance company subsidiary; and (iii) premiums, benefits,
guarantees, interest crediting rates, values, dividend rights or other terms of
insurance policies or contracts will not be changed as a direct result of the
sale to MetLife.
METROPOLITAN LIFE INSURANCE COMPANY
a New York mutual life insurance company
By: /s/ Terence I. Lennon
---------------------
Name:Terence I. Lennon
Title: Executive Vice President
23
<PAGE> 31
- -------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
GENERAL AMERICAN MUTUAL HOLDING COMPANY
AND
METROPOLITAN LIFE INSURANCE COMPANY
DATED AS OF AUGUST 26, 1999
- -------------------------------------------------------------------------------
<PAGE> 32
PAGE
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.........................................1
ARTICLE II
PURCHASE OF SHARES
Section 2.1 Purchase of Shares.................................11
Section 2.2 Adjustment of Purchase Price.......................11
ARTICLE III
THE CLOSING
Section 3.1 Closing............................................12
Section 3.2 Closing Deliveries.................................12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 4.1 Organization and Related Matters...................13
Section 4.2 Subsidiaries.......................................14
Section 4.3 Authority; No Violation............................15
Section 4.4 Consents and Approvals.............................15
Section 4.5 Stock Ownership....................................16
Section 4.6 Financial Statements...............................17
Section 4.7 No Other Broker....................................19
Section 4.8 Legal Proceedings..................................19
Section 4.9 Undisclosed Liabilities............................20
Section 4.10 Compliance with Applicable Law;
Insurance Operations...............................20
Section 4.11 Absence of Certain Changes.........................21
Section 4.12 Technology and Intellectual Property...............23
Section 4.13 Employee Benefit Plans; ERISA......................24
Section 4.14 Taxes..............................................25
Section 4.15 Contracts..........................................26
Section 4.16 Portfolio Investments..............................26
Section 4.17 Liabilities and Reserves...........................26
Section 4.18 Title to Assets....................................28
Section 4.19 Transactions with Certain Persons..................28
Section 4.20 Reinsurance and Retrocessions......................28
Section 4.21 Environmental Laws.................................29
Section 4.22 Insurance Coverage.................................30
Section 4.23 Year 2000..........................................30
Section 4.24 RGA and Conning....................................30
Section 4.25 State Takeover Statutes and Shareholder
Rights Plans.......................................30
Section 4.26 Insurance Issued...................................31
<PAGE> 33
PAGE
Section 4.27 Real Property......................................33
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 5.1 Organization and Related Matters...................33
Section 5.2 Authority; No Violation............................33
Section 5.3 Consents and Approvals.............................34
Section 5.4 Legal Proceedings..................................34
Section 5.5 Investment Intent of Buyer.........................35
Section 5.6 No Other Broker....................................35
Section 5.7 Financing..........................................35
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business................................35
Section 6.2 Public Announcements...............................36
Section 6.3 Expenses...........................................36
Section 6.4 Access; Certain Communications.....................36
Section 6.5 Reorganization Plan................................38
Section 6.6 Regulatory Matters; Third Party
Consents...........................................38
Section 6.7 Further Assurances.................................40
Section 6.8 Notification of Certain Matters....................40
Section 6.9 Maintenance of Records.............................41
Section 6.10 Service Under Employee Plans.......................41
Section 6.11 Benefits Under Employee Plans......................42
Section 6.12 Company Confidentiality Agreements.................42
Section 6.13 No Solicitations...................................42
Section 6.14 Policy Credits and Dividends in Respect
of Tax-Qualified Retirement Contract...............44
Section 6.15 Alternative Structure..............................44
Section 6.16 Employment.........................................44
Section 6.17 Headquarters; Local Activities.....................44
Section 6.18 Dividends..........................................44
Section 6.19 Investment Advisory Agreements.....................45
Section 6.20 Capital Contribution...............................45
Section 6.21 Change of Control Agreements.......................45
ARTICLE VII
INTERIM ARRANGEMENT
Section 7.1 Interim Agreements.................................45
<PAGE> 34
PAGE
ARTICLE VIII
TAX MATTERS
Section 8.1 Indemnity..........................................46
Section 8.2 Tax Allocation Agreement Payments..................48
Section 8.3 Returns and Payments...............................49
Section 8.4 Refunds............................................50
Section 8.5 Contests...........................................50
Section 8.6 Section 338(h)(10) Election........................50
Section 8.7 Time of Payment....................................52
Section 8.8 Cooperation and Exchange of Information............53
Section 8.9 Conveyance Taxes...................................53
Section 8.10 Miscellaneous......................................54
ARTICLE IX
CONDITIONS TO CLOSING
Section 9.1 Conditions to Buyer's Obligations..................54
Section 9.2 Conditions to Seller's Obligations.................55
Section 9.3 Mutual Conditions..................................56
ARTICLE X
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS; INDEMNIFICATION
Section 10.1 Survival...........................................57
Section 10.2 Obligation of Seller to Indemnify..................57
Section 10.3 Obligation of Buyer to Indemnify...................58
Section 10.4 Notice and Opportunity to Defend Against
Third Party Claims.................................58
Section 10.5 Net Indemnity......................................59
Section 10.6 Tax Indemnification................................59
Section 10.7 Limits on Indemnification..........................59
ARTICLE XI
TERMINATION
Section 11.1 Termination........................................60
Section 11.2 Obligations upon Termination.......................62
Section 11.3 Termination Fee....................................62
ARTICLE XII
MISCELLANEOUS
Section 12.1 Amendments.........................................62
Section 12.2 Entire Agreement...................................62
Section 12.3 Interpretation.....................................63
<PAGE> 35
PAGE
Section 12.4 Severability.......................................63
Section 12.5 Notices............................................63
Section 12.6 Binding Effect; Persons Benefitting; No
Assignment.........................................64
Section 12.7 Counterparts.......................................64
Section 12.8 No Prejudice.......................................65
Section 12.9 Governing Law......................................65
Section 12.10 Specific Performance...............................65
<PAGE> 36
SCHEDULES
Schedule 1.1(a) Life Insurance Subsidiaries
Schedule 1.1(b) Subsidiaries
Schedule 1.1(c) Conning Subsidiaries
Schedule 1.1(d) RGA Subsidiaries
Schedule 1.1(e) Tax Allocation Agreements
Schedule 3.2(b) Good Standing Certificates
Schedule 4.2 Subsidiary Information
Schedule 4.3(b) No Violation, Conflicts or Breaches
Schedule 4.4 Consents and Approvals
Schedule 4.5 Stock Ownership
Schedule 4.8 Legal Proceedings
Schedule 4.9 Undisclosed Liabilities
Schedule 4.10 Compliance with Applicable Law;
Insurance Operations
Schedule 4.11 Absence of Certain Changes
Schedule 4.12 Technology and Intellectual Property
Schedule 4.13 Employee Benefit Plans; ERISA
Schedule 4.14 Taxes
Schedule 4.15 Contracts
Schedule 4.17(a) Liabilities
Schedule 4.17(b) Reserves
Schedule 4.18 Title to Assets
Schedule 4.19 Transactions with Certain Persons
Schedule 4.20 Reinsurance and Retrocessions
Schedule 4.21 Environmental Laws
Schedule 4.23 Year 2000
Schedule 4.24 SEC Agreements
Schedule 4.26 Insurance Issued
Schedule 4.27 Real Property
Schedule 5.3 Buyer's Consents and Approvals
Schedule 6.10 Service Under Employee Plans
EXHIBITS
Exhibit A Certain Terms of Plan of Reorganization
Exhibit B Form of Escrow Agreement
<PAGE> 37
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of August 26, 1999, by and between
GENERAL AMERICAN MUTUAL HOLDING COMPANY, a Missouri mutual insurance holding
company ("Seller"), and METROPOLITAN LIFE INSURANCE COMPANY, a New York mutual
life insurance company ("Buyer").
RECITALS
WHEREAS, Seller is the owner of 1,000 shares (the "Shares") of the
common stock, no par value, of GenAmerica Corporation, a Missouri corporation
(the "Company"), which Shares constitute all of the issued and outstanding
shares of the Company's capital stock; and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, the
Shares, upon the terms and subject to the conditions set forth herein and
pursuant to a plan of reorganization containing the terms specified in Exhibit A
and such other terms as are reasonably acceptable to Buyer and Seller (as
amended from time to time, the "Reorganization Plan") to be implemented through
a proceeding (the "Reorganization Proceeding") proposed to be commenced under
the Missouri Insurance Code.
NOW THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be bound hereby, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For all purposes of this Agreement, the
following terms shall have the respective meanings set forth in this Section 1.1
(such definitions to be equally applicable to both the singular and plural forms
of the terms herein defined):
"Action" means any legal, administrative, arbitration or other similar
proceeding, claim, action or governmental or regulatory investigation of any
nature.
"Actual Section 338(h)(10) Tax Liability" has the meaning set forth in
Section 8.6(c).
<PAGE> 38
"Affiliate" means, with respect to any Person, any other Person who
directly or indirectly controls, is controlled by or is under common control
with such Person. The term "control", for the purposes of this definition, means
the power to direct or cause the direction of the management or policies of the
controlled Person.
"Agreement" means this Stock Purchase Agreement, including the
Schedules and Exhibits hereto, as it may hereafter be amended from time to time.
"Allocation" has the meaning set forth in Section 8.6(b).
"Alternative Transaction" has the meaning set forth in Section 6.13(b).
"Ancillary Agreements" means the Escrow Agreement, and any other
agreements entered into by Buyer and Seller in connection with the interim
arrangements described in Article VII.
"Applicable Insurance Laws" has the meaning set forth in Section
4.17(b).
"Applicable Law" means any federal, state, local or foreign law
(including common law), statute, ordinance, rule, regulation, permit, regulatory
agreement with a Governmental Authority, order, writ, injunction, judgment or
decree applicable to a Person or any such Person's subsidiaries, properties,
assets, officers, directors, employees or agents.
"Asserted Liability" has the meaning set forth in Section 10.4(a).
"Audit" has the meaning set forth in Section 4.14(e).
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banks in St. Louis, Missouri or New York, New York are required to be
closed for regular banking business.
"Buyer" has the meaning set forth in the first paragraph of this
Agreement.
"Claims Notice" has the meaning set forth in Section 10.4(a).
"Closing" has the meaning set forth in Section 3.1.
"Closing Date" means the date of the Closing.
2
<PAGE> 39
"COBRA" means Title X of the Consolidated Omnibus Budget Reconciliation
Act of 1985.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor statute.
"Company" has the meaning set forth in the Recitals of this Agreement.
"Company Confidentiality Agreements" means those certain agreements
between Seller and the potential bidders for the Shares with respect to the
confidentiality of information about Seller, the Company and their respective
Affiliates and other related Persons that were provided to such potential
bidders by or at the request of Seller or the Company, as such agreements may be
amended from time to time.
"Company Employees" means those current or former employees of the
Company, any Subsidiary, Conning, any Conning Subsidiary, RGA or any RGA
Subsidiary, each of whom, on the Closing Date, is either:
(a) actively employed by the Company, any Subsidiary, Conning, any
Conning Subsidiary, RGA or any RGA Subsidiary, including an employee who,
on the Closing Date, is absent from employment due to illness, vacation,
injury, military service or other authorized absence (including an employee
who is "disabled" within the meaning of either the short-term or the
long-term disability plan currently applicable to such employee
(collectively, the "Disability Plans") or who is on approved leave under
the Family Medical and Leave Act);
(b) a former employee who, on the Closing Date, is receiving long-term
disability benefits under the Disability Plans;
(c) a former employee who, on the Closing Date, has previously
satisfied the requirements for retiree medical and/or life insurance
coverage under the retiree medical and/or life insurance plans currently
applicable to the Company, any Subsidiary, Conning, any Conning Subsidiary,
RGA or any RGA Subsidiary;
(d) a former employee who, on the Closing Date, is receiving COBRA
benefits or who is in an election period following a COBRA qualifying event
under the terms of the plans currently applicable to the Company, any
Subsidiary, Conning, any Conning Subsidiary, RGA or any RGA Subsidiary; or
(e) a former employee who, on the Closing Date, has previously
satisfied the requirements for benefits under the
3
<PAGE> 40
terms of the retirement plan and profit sharing/401(k) plan currently
applicable to the Company, any Subsidiary, Conning, any Conning Subsidiary,
RGA or any RGA Subsidiary; but does not mean (i) other former employees and
(ii) Persons not otherwise actively employed by the Company, any
Subsidiary, Conning, any Conning Subsidiary, RGA or any RGA Subsidiary
(other than any employee specifically included above).
"Company GAAP Financial Statements" has the meaning set forth in
Section 4.6(a).
"Confidentiality Agreement" means that certain agreement dated August
13, 1999, between Buyer and Seller with respect to the confidentiality of
information about Seller, the Company and their respective Affiliates and other
related Persons which was provided to Buyer by or at the request of Seller or
the Company, as such agreement may be amended from time to time.
"Conning" means Conning Corporation, a Missouri corporation.
"Conning GAAP Financial Statements" has the meaning set forth in
Section 4.6(c).
"Conning Interim Financial Statements" has the meaning set forth in
Section 4.6(c).
"Conning Subsidiary" means the Persons listed on Schedule 1.1(c).
"Consolidated Return" has the meaning set forth in Section 8.3(a).
"Contacts" has the meaning set forth in Section 6.1(a).
"Contest" has the meaning set forth in Section 8.5(a).
"Control Transaction" has the meaning set forth in Section 6.13(b).
"Contracts" has the meaning set forth in Section 4.15(a).
"Department" means the Missouri Department of Insurance.
"Director" means the Director of the Department.
"Disability Plans" has the meaning set forth in the definition of
"Company Employees."
"Election" has the meaning set forth in Section 8.6(a).
4
<PAGE> 41
"Encumbrance" means any lien, pledge, security interest, claim,
easement, limitation, restriction or encumbrance of any kind or nature
whatsoever, or any agreement to give any of the foregoing; provided, however,
that this definition of "Encumbrance" shall not include: (a) with respect to all
property other than the Shares,(i) the Supervision Order, (ii) liens for current
Taxes and assessments not yet due and payable, including, without limitation,
liens for nondelinquent ad valorem Taxes and nondelinquent statutory liens
arising other than by reason of any default on the part of Seller, the Company
or any Subsidiary for which appropriate reserves have been established and are
reflected on the relevant financial statements, (iii) such liens, minor
imperfections of title or easements on real property, leasehold estates or
personalty as do not detract from the value thereof in a material respect and do
not interfere in a material respect with the present use of the property subject
thereto, and (iv) materialmen's, mechanics', workmen's, repairmen's, employees',
carriers', warehousemen's and other like liens arising in the ordinary course of
business or relating to any construction, rebuilding or repair of any property
leased pursuant to any lease agreement, so long as any such lien does not
materially impair the value of such leased property; and (b) with respect to the
Shares only, (i) any such lien, pledge, security interest, claim, easement,
limitation, restriction or encumbrance arising solely as a result of any action
taken by Buyer or any of its Affiliates, and (ii) any limitation or restriction
imposed upon the transfer of the Shares by any registration provision of the
Securities Act of 1933, as amended, or any applicable state securities or
insurance law regulating the disposition of the Shares.
"Environmental Laws" means any Applicable Law that relates to or
otherwise imposes liability or standards of conduct concerning the environment
(including ambient air, surface water, groundwater, land and subsurface strata),
natural resources or human health and safety, each with respect to the
discharges, emissions, releases, or threatened releases, presence, manufacture,
processing, generation, distribution, use, treatment, storage, disposal,
cleanup, transport or handling of Hazardous Materials, including the
Comprehensive Environmental Response, Compensation and Liability Act, as amended
by the Superfund Amendments and Reauthorization Act, as amended, the Resource
Conservation and Recovery Act, as amended, the Toxic Substances Control Act, as
amended, the Federal Water Pollution Control Act, as amended, the Clean Water
Act, as amended, the Clean Air Act, as amended, any so-called "Superlien" law,
and any other similar federal, state or local law currently in effect.
"Environmental Permits" means all permits, approvals, identification
numbers, licenses and other authorizations required under any Environmental Law.
5
<PAGE> 42
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.
"ERISA Affiliate" as to any Person means any entity required to be
aggregated with such Person pursuant to Section 414(b) or (c) of the Code and/or
Section 4001(b) of ERISA.
"Escrow" means the escrow account created pursuant to and intended to
operate in accordance with the terms of the Escrow Agreement.
"Escrow Agent" means the Escrow Agent identified in the Escrow
Agreement, which Escrow Agent shall be a commercial banking institution with
capital equal to at least $100 million and mutually agreed to by Buyer and
Seller prior to the Closing.
"Escrow Agreement" means an Escrow Agreement substantially in the form
of Exhibit B hereto.
"GAAP" means generally accepted accounting principles as used in the
United States of America as in effect at the time any applicable financial
statements were prepared or any act requiring the application of GAAP was
performed.
"GALIC" means General American Life Insurance Company, a Missouri
insurance company.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Hazardous Material" means any (i) hazardous substance, toxic
substance, chemical substance, hazardous waste, hazardous material, contaminant,
toxic pollutant, extremely hazardous substance, chemical or pollutant (as such
terms are defined by or within the meaning of any Environmental Law), (ii) any
other substance (including any product), in relevant quantity or concentration,
regulated as harmful or potentially harmful to human health or the environment,
(iii) petroleum, petroleum products, by-products or additives, crude oil or
fraction thereof, (iv) asbestos and asbestos-containing material, (v)
polychlorinated biphenyls, (vi) lead-based paint, or (vii) radioactive material.
"Hypothetical Stock Sales Tax Liability" has the meaning set forth in
Section 8.6(c).
6
<PAGE> 43
"Indemnified Litigation" has the meaning set forth in Section 10.2.
"Indemnifying Party" has the meaning set forth in Section 10.4(a).
"Indemnitee" has the meaning set forth in Section 10.4(a).
"Independent Accounting Firm" has the meaning set forth in Section
8.6(b).
"Intellectual Property Right" has the meaning set forth in Section
4.12(a).
"Interim Financial Statements" has the meaning set forth in Section
4.6(a).
"IRS" means the Internal Revenue Service.
"Leased Real Property" means the real property leased by the Company or
any Subsidiary, as tenant, together with, to the extent leased by the Company or
any Subsidiary, all buildings and other structures, facilities or improvements
currently located thereon.
"Life Insurance Subsidiaries" means the Persons listed on Schedule
1.1(a).
"Loss" means any and all claims, losses, liabilities, damages, costs
and expenses (including attorney's, accountant's, consultant's and expert's fees
and expenses) that are imposed upon or otherwise incurred or suffered by the
relevant party.
"Material Adverse Effect" means a material adverse effect on the
financial condition or results of operations of the Company, the Subsidiaries,
Conning, the Conning Subsidiaries, RGA and the RGA Subsidiaries, taken as a
whole; provided, however, to the extent such effect results from any of the
following, such effect shall not be considered a Material Adverse Effect: (i)
general conditions applicable to the economy of the United States or elsewhere,
including changes in interest rates and changes in the stock or other financial
markets; (ii) conditions generally affecting the life insurance, life
reinsurance or securities industries; or (iii) conditions or effects resulting
from or relating to the announcement or the existence or terms of this Agreement
or the consummation of the transactions contemplated hereby (including, without
limitation, any indication by any rating agency that the claims paying ability
rating of the Company or any Subsidiary will be adversely affected as result of
the consummation of the transactions contemplated hereby); and provided,
further, none of the following shall be considered a Material Adverse Effect:
(a) the
7
<PAGE> 44
inability or any limit on the ability of any of the Life Insurance Subsidiaries
or RGA or any RGA Subsidiary to write new or renewal insurance or reinsurance
business, provided that any such limit imposed by a state insurance department
is reasonably likely to be removed prior to 60 days after the Closing Date (it
being understood that Buyer will use all commercially reasonable efforts to have
any such limit removed); (b) any changes prior to the date hereof in the value
of the investment portfolios of the Company, any Life Insurance Subsidiary, RGA,
any RGA Subsidiary, Conning or any Conning Subsidiary; (c) the Supervision Order
and the Reorganization Proceeding including any rehabilitation proceeding
involving GALIC; (d) any alleged breaches of contracts relating to the Stable
Value Business and the direct consequences thereof; (e) any alleged default in
connection with 8.525% Capital Securities issued by a wholly owned trust of the
Company or the 7.625% Surplus Notes issued by GALIC and the direct consequences
thereof; or (f) any downgrade of the financial strength or claims paying rating
of the Company, any Subsidiary, RGA, any RGA Subsidiary, Conning or any Conning
Subsidiary.
"MEC" has the meaning set forth in Section 4.26(iv).
"Missouri Insurance Code" means title XXIV of the Revised Statutes of
Missouri, section 374 et seq., as amended from time to time.
"Owned Real Property" means the real property owned by the Company or
any Subsidiary, together with all buildings and other structures, facilities or
improvements currently located thereon, and all fixtures, systems, equipment of
the Company or any Subsidiary attached or appurtenant thereto.
"Permits" has the meaning set forth in Section 4.10(a).
"Person" means any individual, corporation, company, partnership
(limited or general), joint venture, limited liability company, association,
trust or other entity.
"Proposal" has the meaning set forth in Section 6.13(b).
"Purchase Price" has the meaning set forth in Section 2.1.
"Records" means all records and other documents which are used by the
Company, any Subsidiary, Conning, any Conning Subsidiary, RGA or any RGA
Subsidiary, to administer, reflect, monitor, evidence or record information
relating to such Person's business or conduct and all such records and other
documents, including all such records maintained on electronic or magnetic
media, or in any electronic database system of the Company, any Subsidiary,
Conning, any Conning Subsidiary, RGA or any RGA Subsidiary, or necessary to
comply with any Applicable Law with
8
<PAGE> 45
respect to the business of the Company, any Subsidiary, Conning, any Conning
Subsidiary, RGA or any RGA Subsidiary.
"Reorganization Plan" has the meaning set forth in the Recitals of this
Agreement.
"Reorganization Proceeding" has the meaning set forth in the Recitals
of this Agreement.
"Representative" has the meaning set forth in Section 6.13(a).
"RGA" means Reinsurance Group of America, Incorporated, a Missouri
corporation.
"RGA GAAP Financial Statements" has the meaning set forth in Section
4.6(b).
"RGA Interim Financial Statements" has the meaning set forth in Section
4.6(b).
"RGA Subsidiaries" means the Persons listed on Schedule 1.1(d).
"Rights" means the rights issued pursuant to the Rights Agreement.
"Rights Agreement" means the Rights Agreement, dated as of May 4, 1993,
between RGA and Chase Mellon Shareholder Services, L.L.C. (as successor to
Boatman's Trust Company), as amended.
"SAP Financial Statements" has the meaning set forth in Section 4.6(d).
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Section 4.24.
"Seller" has the meaning set forth in the first paragraph of this
Agreement.
"Seller Plans" has the meaning set forth in Section 4.13(a).
"Shares" has the meaning set forth in the Recitals of this Agreement.
"Stable Value Business" means funding agreements and guaranteed
investment contracts issued by GALIC.
9
<PAGE> 46
"Subsidiaries" means the Persons listed on Schedule 1.1(b).
"Supervision Order" means that order entered on August 10, 1999 placing
GALIC under the Department's supervision, as such order may from time to time be
modified, amended, supplemented or replaced.
"Supplemental Schedules" has the meaning set forth in Section 6.8(b).
"Tax" means all taxes, charges, fees and levies based upon gross or net
income, gross receipts, franchises, premiums, profits, sales, use, value added,
transfer, employment or payroll, including, without limitation, any ad valorem,
environmental, excise, license, occupation, property, severance, stamp,
withholding, or windfall profit tax, any custom duty or other tax, together with
any interest credit or charge, penalty, addition to tax or additional amount
imposed by or payable to any Taxing Authority.
"Tax Allocation Agreements" means the tax allocation agreements of
which the Company, the Subsidiaries, RGA, the RGA Subsidiaries, Conning or the
Conning Subsidiaries are parties, which are noted on Schedule 1.1(e), true and
correct copies of which were previously provided to Buyer.
"Tax Election Amount" has the meaning set forth in Section 8.6(c).
"Tax-Qualified Retirement Contract" means any insurance policy or
annuity that is held as part of or in connection with a tax-qualified retirement
plan described in section 401(a), section 403(a) or section 403(b) of the Code
or as part of or in connection with any individual retirement annuity described
in section 408(b) of the Code.
"Tax Return" means with respect to any corporation or group of
corporations, all reports, estimates, extension requests, information statements
and returns relating to, or required to be filed in connection with, any payment
of any Tax.
"Taxing Authority" means the Internal Revenue Service and any other
domestic or foreign Governmental Authority responsible for the administration of
any Tax.
"Undisputed Amount" has the meaning set forth in Section 8.6(d).
"Wire Transfer" means a payment in immediately available funds by wire
transfer in lawful money of the United States of America to such account or
accounts as shall have been designated by notice to the paying party.
10
<PAGE> 47
ARTICLE II
PURCHASE OF SHARES
Section 2.1 Purchase of Shares. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing Seller shall sell to
Buyer, and Buyer shall purchase from Seller, the Shares for a purchase price of
One Billion Two Hundred Million Dollars ($1,200,000,000), subject to adjustment
in accordance with Section 2.2 (as so adjusted, the "Purchase Price"). The
Purchase Price shall be deposited into the Escrow.
Section 2.2 Adjustment of Purchase Price. The Purchase Price shall be
adjusted as follows:
(a) In the event that all approvals required from Governmental
Authorities (other than the Department or the court before which the
Reorganization Proceeding is brought) have been obtained and in the event
that the Closing Date is a date 120 or more but less than 180 calendar days
after the date of this Agreement, the Purchase Price shall be reduced by
One Million Dollars ($1,000,000) for each calendar day in the period
commencing on the later of the date that the last approval from a
Governmental Authority (other than the Department or the court before which
the Reorganization Proceeding is brought) has been obtained or the 120th
day after the date of this Agreement and ending on the Closing Date
(inclusive).
(b) In the event that all approvals required from Governmental
Authorities (other than the Department or the court before which the
Reorganization Proceeding is brought) have been obtained, and in the event
that the Closing Date is a date 180 or more calendar days after the date of
this Agreement, the Purchase Price shall be reduced by One Million Dollars
($1,000,000) for each calendar day in the period commencing on the 120th
day and ending on the 179th day after the date of this Agreement
(inclusive), and Two Million Dollars ($2,000,000) for each calendar day in
the period commencing on the 180th day after the date of this Agreement and
ending on the Closing Date (inclusive); provided, however, that any
reductions in the Purchase Price pursuant to this Section 2.2(b) shall not
commence until the date that the last approval from a Governmental
Authority (other than the Department or the court before which the
Reorganization Proceeding is brought) has been obtained if so obtained
after the 120th day after the date of this Agreement.
11
<PAGE> 48
ARTICLE III
THE CLOSING
Section 3.1 Closing. Upon the terms and subject to the conditions of
this Agreement, the closing of the purchase and sale of the Shares (the
"Closing") shall be at 10:00 A.M. local time at the offices of LeBoeuf, Lamb,
Greene & MacRae, L.L.P., 125 West 55th Street, New York, New York 10019, on the
second Business Day following the date on which all of the conditions set forth
in Article IX (other than those conditions designating instruments, certificates
or other documents to be delivered at the Closing) shall have been satisfied or
waived, or such other location, date and time as Buyer and Seller shall agree
upon in writing.
Section 3.2 Closing Deliveries. At the Closing, the parties hereto
shall take the following actions:
(a) Seller shall deliver to Buyer one or more certificates
representing all of the Shares, duly executed in blank or accompanied by
stock powers duly executed in blank, in proper form for transfer, with all
appropriate stock transfer tax stamps affixed, such Shares being free and
clear of all Encumbrances;
(b) Except as set forth on Schedule 3.2(b), Seller shall deliver to
Buyer certificates as to the good standing of the Company and the
Subsidiaries in the respective jurisdictions of their incorporation,
together with a copy of the Certificate of Incorporation of the Company
certified by the Secretary of State of the State of Missouri;
(c) Seller shall deliver to Buyer a copy of any approvals required in
connection with the Reorganization Proceeding;
(d) Seller shall deliver to Buyer resolutions of the board of
directors of Seller, certified by the Secretary or Assistant Secretary of
Seller, approving and authorizing the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated
hereby;
(e) Seller shall deliver a certificate of the Secretary or Assistant
Secretary of Seller as to the incumbency of the officers executing this
Agreement and the Ancillary Agreements and the genuineness of their
signatures;
(f) Seller shall deliver the minute books, stock ledgers, corporate
seal and all other corporate books and records of the Company;
12
<PAGE> 49
(g) Buyer shall deliver to the Escrow Agent the Purchase Price by Wire
Transfer;
(h) Buyer shall deliver to Seller a receipt evidencing receipt by
Buyer of the Shares;
(i) Buyer shall deliver to Seller resolutions of the board of
directors of Buyer, certified by the Secretary or Assistant Secretary of
Buyer, approving and authorizing the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated
hereby;
(j) Seller shall deliver to Buyer resolutions of the board of
directors of RGA, certified by the Secretary or Assistant Secretary of RGA,
approving and authorizing the indirect acquisition by Buyer of RGA Common
Shares for purposes of Section 351.459 of the Missouri Revised Statutes,
making the Rights Agreement inapplicable to the transactions contemplated
hereby and by the Ancillary Agreements and taking such actions as are
necessary to provide that Section 351.407 of the Missouri Revised Statutes
does not apply to the transactions contemplated hereby and by the Ancillary
Agreements; and
(k) Seller shall deliver to Buyer resolutions of the board of
directors of Conning, certified by the Secretary or Assistant Secretary of
Conning, approving and authorizing the indirect acquisition by Buyer of
Conning common shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
Section 4.1 Organization and Related Matters. (a) The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Missouri and has the corporate power and authority to carry
on its business as it is now being conducted and to own, lease or operate all of
its properties and assets, and is duly licensed or qualified to do business and
is in good standing in each jurisdiction in which the nature of the business
conducted by it or the character of the assets owned by it makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed would not, individually or in the aggregate, have a
Material Adverse Effect.
(b) Seller is a mutual insurance holding company duly incorporated,
validly existing and in good standing under the laws of the State of
Missouri.
13
<PAGE> 50
Section 4.2 Subsidiaries. (a) Except as set forth on Schedule 4.2, all
of the outstanding shares of capital stock of the Subsidiaries, Conning, the
Conning Subsidiaries, RGA and the RGA Subsidiaries are owned beneficially and of
record, directly or indirectly, by the Company, free and clear of any
Encumbrances. Except as set forth on Schedule 4.2, each Subsidiary, Conning,
each Conning Subsidiary, RGA and each RGA Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has the corporate power and authority to
carry on its business as now being conducted and to own, lease and operate all
of its properties and assets. Each Subsidiary, Conning, each Conning Subsidiary,
RGA and each RGA Subsidiary is duly licensed or qualified to do business and is
in good standing and has all insurance licenses in each jurisdiction in which
the nature of the business conducted by it or the character of the assets owned
by it makes such qualification or licensing necessary, except where the failure
to be so qualified or licensed would not, individually or in the aggregate, have
a Material Adverse Effect. Each insurance license of the Subsidiaries, including
but not limited to each authorization to transact reinsurance, is in full force
and effect without amendment, limitation or restriction other than as described
in Schedule 4.2, and, except for the Supervision Order and the Reorganization
Proceeding (including any rehabilitation proceeding involving GALIC), Seller
does not have knowledge of any event, inquiry or proceeding which could
reasonably be expected to lead to the revocation, amendment, failure to renew,
limitation, suspension or restriction of any such insurance license, except, in
each case, such failures to be in full force and effect and such revocations,
amendments, failures to renew, limitations, suspensions and restrictions that
would not, individually or in the aggregate, have a Material Adverse Effect.
Other than Conning, the Conning Subsidiaries, RGA and the RGA Subsidiaries, the
Company has no direct or indirect subsidiaries except as set forth on Schedule
1.1(b). Conning has no direct or indirect subsidiaries except the Conning
Subsidiaries. RGA has no direct or indirect subsidiaries except the RGA
Subsidiaries.
(b) Except as set forth on Schedule 4.2, and except for the stock of
the Subsidiaries, Conning, each Conning Subsidiary, RGA and each RGA
Subsidiary and portfolio investments made in the ordinary course of
business (consistent with past practice), there are no corporations,
partnerships or other entities in which the Company owns, of record or
beneficially, any direct or indirect equity interest or any right
(contingent or otherwise) to acquire the same.
Section 4.3 Authority; No Violation. (a) Seller has full corporate
power and authority to execute and deliver this Agreement and, assuming the
approval of the Director required by the Supervision Order and the
Reorganization
14
<PAGE> 51
Proceeding (including any rehabilitation proceeding involving GALIC), to
consummate the transactions contemplated hereby, the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly approved by all requisite corporate action on the part of
Seller, and no other corporate proceedings on the part of Seller are necessary
to approve this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Seller and
(assuming (i) the approval of the Director required by the Supervision Order,
(ii) any approvals required in connection with the Reorganization Proceeding and
(iii) the due authorization, execution and delivery of this Agreement by Buyer)
constitute valid and binding obligations of Seller, enforceable against Seller
in accordance with their terms.
(b) Except as set forth on Schedule 4.3(b) and assuming that the
consents and approvals referred to in Section 4.4 are duly obtained,
neither the execution and delivery of this Agreement by Seller, nor the
consummation by Seller of the transactions contemplated hereby to be
performed by it, nor compliance by Seller with any of the terms or
provisions hereof, will (i) violate any provision of the Certificate of
Incorporation or Bylaws of Seller, the Company, any Subsidiary, Conning,
any Conning Subsidiary, RGA and any RGA Subsidiary, or (ii) (A) violate in
any respect any Applicable Law with respect to Seller, the Company, any
Subsidiary, Conning, any Conning Subsidiary, RGA and any RGA Subsidiary, or
any of their respective properties or assets, (B) result in the creation of
any Encumbrance upon any of the Shares or upon any of the assets or
properties of the Seller, the Company, any Subsidiary, Conning, any Conning
Subsidiary, RGA and any RGA Subsidiary, or (C) violate, conflict with,
result in a breach of any provision of, or constitute a default under, any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which Seller, the Company, any
Subsidiary, Conning, any Conning Subsidiary, RGA and any RGA Subsidiary, is
a party, or by which Seller, the Company, any Subsidiary, Conning, any
Conning Subsidiary, RGA and any RGA Subsidiary, or any of their respective
properties or assets, may be bound or affected, except for such violations,
Encumbrances, conflicts, breaches or defaults which would not, individually
or in the aggregate, have a Material Adverse Effect.
Section 4.4 Consents and Approvals. Except for (i) the approval of the
Director required by the Supervision Order, (ii) any approvals or orders
required in connection with the Reorganization Proceeding, (iii) approvals or
consents of Governmental Authorities under the insurance holding company laws of
Missouri, California, New York, Illinois, and Texas, (iv) consents or approvals
required under the Investment Company Act of 1940, as amended, the Investment
Advisers Act of 1940, as amended, or the Securities Exchange Act of 1934, as
amended,
15
<PAGE> 52
(v) the applicable filings under the HSR Act, (vi) the matters set forth on
Schedule 4.4, and (vii) such other filings, notifications, authorizations,
consents or approvals the failure to make or obtain which would not,
individually or in the aggregate, have a Material Adverse Effect, no consents or
approvals of or filings or registrations with any Governmental Authority or
third party are necessary in connection with the execution and delivery by
Seller of this Agreement, and the consummation by Seller of the transactions
contemplated hereby. Seller is not aware of any consents specified in the
preceding sentence that it believes it is not reasonably likely to obtain.
Seller has delivered to Buyer a true and correct copy of the Supervision Order.
Section 4.5 Stock Ownership. Seller owns beneficially and of record all
of the Shares, free and clear of all Encumbrances. Upon consummation of the
transactions contemplated hereby, Buyer will own all of the issued and
outstanding capital stock of the Company free and clear of all Encumbrances.
Upon approval of the Director required by the Supervision Order and any
approvals required in connection with the Reorganization Proceeding, Seller
shall have the full and unrestricted power to sell, assign, transfer and deliver
the Shares to Buyer upon the terms and subject to the conditions of this
Agreement free and clear of Encumbrances. There are no shares of capital stock
of the Company issued or outstanding other than the Shares. All of the Shares
are duly authorized, validly issued, fully paid, nonassessable and free of any
preemptive rights. There is no outstanding option, warrant, right, subscription,
call, unsatisfied preemptive right, convertible or exchangeable security, or
other agreement or right of any kind to purchase or otherwise acquire any
capital stock of the Company. Except as set forth on Schedule 4.5, all of the
issued and outstanding shares of capital stock of the Subsidiaries, RGA, the RGA
Subsidiaries, Conning and the Conning Subsidiaries are duly authorized, validly
issued, fully paid, nonassessable and free of any preemptive rights, and are
owned beneficially and of record by the Company or another of the Subsidiaries,
free and clear of all Encumbrances. Except as set forth on Schedule 4.5, there
is no outstanding option, warrant, right, subscription, call, unsatisfied
preemptive right, convertible or exchangeable security, or other agreement or
right of any kind to purchase or otherwise acquire, in each case from the
Company, any Subsidiary, Conning, any Conning Subsidiary, RGA or any RGA
Subsidiary, any capital stock of any Subsidiary, Conning, any Conning
Subsidiary, RGA or any RGA Subsidiary. Except as set forth on Schedule 4.5,
there is no outstanding security of any kind convertible into or exchangeable
for the capital stock of any Subsidiary, Conning, any Conning Subsidiary, RGA or
any RGA Subsidiary and there is no outstanding contract or other agreement of
Seller, the Company, any Subsidiary, Conning, any Conning Subsidiary, RGA or any
RGA Subsidiary to purchase, redeem or otherwise acquire any outstanding shares
of capital
16
<PAGE> 53
stock or any other equity security of the Company, any Subsidiary, Conning, any
Conning Subsidiary, RGA or any RGA Subsidiary.
Section 4.6 Financial Statements. (a) Seller has previously furnished
Buyer with true and correct copies of audited consolidated financial statements
for the Company and the Subsidiaries as of and for the years ended December 31,
1998, 1997 and 1996 (collectively, the "Company GAAP Financial Statements") and
interim unaudited consolidated financial statements for the Company and the
Subsidiaries as of and for the quarterly periods ended March 31, 1999, and June
30, 1999 (collectively, the "Interim Financial Statements"). Seller has also
previously furnished Buyer with a summary of adjustments proposed to be made to
certain future financial statements. Subject to the adjustments referred to in
the second sentence of this Section 4.6, each of the balance sheets included in
the Company GAAP Financial Statements fairly presents in all material respects
the financial position of the Company and the Subsidiaries as of its date and
each of the statements of operations and cash flow statements included in the
Company GAAP Financial Statements fairly presents in all material respects the
results of operations and cash flows of the Company and the Subsidiaries for the
period therein set forth, in each case in accordance with GAAP applied on a
consistent basis (except as may be disclosed in the notes thereto). Subject to
the adjustments referred to in the second sentence of this Section 4.6, the
Interim Financial Statements were prepared in a manner consistent with that
employed in the Company GAAP Financial Statements. The Interim Financial
Statements do not contain footnote disclosures and are subject to normal
recurring year-end adjustments, but otherwise fairly present in all material
respects the financial position and results of operations of the Company and the
Subsidiaries for the periods and as of the dates therein set forth.
(b) Seller has previously furnished Buyer with true and correct copies
of audited consolidated financial statements for RGA and the RGA
Subsidiaries as of and for the years ended December 31, 1998, 1997 and 1996
(collectively, the "RGA GAAP Financial Statements") and interim unaudited
consolidated financial statements for RGA and the RGA Subsidiaries as of
and for the quarterly periods ended March 31, 1999, and June 30, 1999
(collectively, the "RGA Interim Financial Statements"). Each of the balance
sheets included in the RGA GAAP Financial Statements fairly presents in all
material respects the financial position of RGA and the RGA Subsidiaries as
of its date and each of the statements of operations and cash flow
statements included in the RGA GAAP Financial Statements fairly presents in
all material respects the results of operations and cash flows of RGA and
the RGA Subsidiaries for the period therein set forth, in each case in
accordance with GAAP applied on a consistent basis (except as may be
disclosed in the notes thereto). The RGA Interim
17
<PAGE> 54
Financial Statements were prepared in a manner consistent with that
employed in the RGA GAAP Financial Statements. The RGA Interim Financial
Statements do not contain footnote disclosures and are subject to normal
recurring year-end adjustments, but otherwise fairly present in all
material respects the financial position and results of operations of RGA
and the RGA Subsidiaries for the periods and as of the dates therein set
forth.
(c) Seller has previously furnished Buyer with true and correct copies
of audited consolidated financial statements for Conning and the Conning
Subsidiaries as of and for the years ended December 31, 1998, 1997 and 1996
(collectively, the "Conning GAAP Financial Statements") and interim
unaudited consolidated financial statements for Conning and the Conning
Subsidiaries as of and for the quarterly periods ended March 31, 1999, and
June 30, 1999 (collectively, the "Conning Interim Financial Statements").
Each of the balance sheets included in the Conning GAAP Financial
Statements fairly presents in all material respects the financial position
of Conning and the Conning Subsidiaries as of its date and each of the
statements of operations and cash flow statements included in the Conning
GAAP Financial Statements fairly presents in all material respects the
results of operations and cash flows of Conning and the Conning
Subsidiaries for the period therein set forth, in each case in accordance
with GAAP applied on a consistent basis (except as may be disclosed in the
notes thereto). The Conning Interim Financial Statements were prepared in a
manner consistent with that employed in the Conning GAAP Financial
Statements. The Conning Interim Financial Statements do not contain
footnote disclosures and are subject to normal recurring year-end
adjustments, but otherwise fairly present in all material respects the
financial position and results of operations of Conning and the Conning
Subsidiaries for the periods and as of the dates therein set forth.
(d) Seller has previously furnished Buyer with copies of audited
statutory financial statements of each Life Insurance Subsidiary and each
RGA Subsidiary as of and for the years ended December 31, 1998, 1997 and
1996, and unaudited statutory financial statements of each Life Insurance
Subsidiary and each RGA Subsidiary as of and for the period ended June 30,
1999, prepared in conformity with accounting practices prescribed or
permitted by their respective jurisdictions of domicile (collectively, the
"SAP Financial Statements"). Each of the balance sheets included in the SAP
Financial Statements fairly presents in all material respects the financial
position of the reporting Person as of its date and each of the statements
of operations and cash flows included in the SAP Financial Statements
fairly presents in all material respects the results of operations and cash
flows of the reporting Person for the period therein set forth, in each
case in accordance with statutory accounting practices prescribed or
permitted by the
18
<PAGE> 55
applicable jurisdiction on a consistent basis. No material deficiencies
have been asserted by any Governmental Authority with respect to the SAP
Financial Statements, and the SAP Financial Statements comply in all
material respects with all Applicable Law.
(e) The books of account and other financial records of the Company
and each material Subsidiary: (i) reflect all material items of income and
expense and all material assets and liabilities required to be reflected
therein in accordance with GAAP or statutory accounting principles, as
applicable, (ii) are in all material respects complete and correct, and
(iii) have been maintained in accordance with what the Company or such
Subsidiary believes to be good business, accounting and actuarial
practices, as applicable.
Section 4.7 No Other Broker. Other than Morgan Stanley & Co.
Incorporated and Goldman, Sachs & Co., the fees and expenses of which will be
paid by Seller, no broker, finder or similar intermediary has acted for or on
behalf of Seller or the Company or the Subsidiaries, or is entitled to any
broker's, finder's or similar fee or other commission from Seller, the Company
or the Subsidiaries in connection with this Agreement or the transactions
contemplated hereby.
Section 4.8 Legal Proceedings. Except (i) as set forth on Schedule 4.8,
(ii) for the Supervision Order, (iii) for the Reorganization Proceeding,
including any rehabilitation proceeding involving GALIC, and (iv) for Actions
arising in the ordinary course of business consistent with past practice from or
related to the obligations of any Life Insurance Subsidiary, RGA or any RGA
Subsidiary under any insurance policy or similar instrument written, assumed or
reinsured by such Life Insurance Subsidiary, RGA or RGA Subsidiary, neither the
Company, any Subsidiary, Conning, any Conning Subsidiary, RGA nor any RGA
Subsidiary is a party to any, and there are no pending or, to the knowledge of
Seller, threatened, Actions against or otherwise affecting the Company, any
Subsidiary, Conning, any Conning Subsidiary, RGA or any RGA Subsidiary, or any
of their respective properties or assets, or challenging the validity or
propriety of the transactions contemplated by this Agreement or the Ancillary
Agreements which, if adversely determined, would have, individually or in the
aggregate, a Material Adverse Effect, and there is no injunction, order,
judgment, decree or regulatory restriction imposed upon the Company, any
Subsidiary, Conning, any Conning Subsidiary, RGA or any RGA Subsidiary, or any
of their respective properties, or assets which has had or would have,
individually or in the aggregate, a Material Adverse Effect.
Section 4.9 Undisclosed Liabilities. Except for (i) those liabilities
or items set forth on Schedule 4.9 or any other Schedule to this Agreement, (ii)
those liabilities that may
19
<PAGE> 56
result from any alleged breaches of any contracts constituting Stable Value
Business, (iii) those liabilities that may result from any alleged default in
connection with the 8.525% Capital Securities issued by a wholly owned trust of
the Company or the 7.625% Surplus Notes issued by GALIC, (iv) those liabilities
that are reflected or reserved against on the Interim Financial Statements as of
June 30, 1999, and (vi) liabilities incurred in the ordinary course of business
consistent with past practice since June 30, 1999, no liabilities have been
incurred by the Company or the Subsidiaries other than those that would not,
individually or in the aggregate, have a Material Adverse Effect.
Section 4.10 Compliance with Applicable Law; Insurance Operations. (a)
Except as set forth on Schedule 4.10, each of the Company and the Subsidiaries
holds in full force and effect all licenses, franchises, permits and
authorizations, other than Environmental Permits (which are addressed solely in
Section 4.21) ("Permits"), necessary for the lawful ownership and use of their
respective properties and assets and the conduct of their respective businesses
under and pursuant to Applicable Laws relating to the Company and the
Subsidiaries, and there has been no violation of any Permit nor has the Seller,
the Company or any Subsidiary received written notice asserting any such
violation, except for such failures to be in full force and effect and for such
violations, if any, which would not, individually or in the aggregate, have a
Material Adverse Effect.
(b) Except as set forth on Schedule 4.10, each of the Company and the
Subsidiaries is in compliance with each Applicable Law relating to it or any of
its assets, properties or operations, except where noncompliance with any such
Applicable Law would not, individually or in the aggregate, have a Material
Adverse Effect.
(c) Each Subsidiary which is either a broker-dealer or an investment
advisor is duly registered as such with all applicable Governmental Authorities,
including without limitation the SEC and state securities or "blue sky"
authorities (with such registrations being in full force and effect), and is in
good standing, except for failures to be so registered or in good standing as
would not, individually or in the aggregate, have a Material Adverse Effect.
(d) ERISA Compliance. Except as set forth on Schedule 4.10 with respect
to any actions of the Company or any of its Subsidiaries or Affiliates, or
agents, directors, officers or employees of such entities, where such entities
or parties have acted or could be deemed to have acted as an ERISA fiduciary
(within the meaning of Section 3(21)(A) of ERISA) or have performed services as
a result of which any such person was a party in interest (within the meaning of
Section 3(14) of ERISA) or a disqualified person (within the meaning of Section
4975(e)(2) of the Code), such actions have been in compliance
20
<PAGE> 57
with ERISA's and the Code's fiduciary and prohibited transaction requirements
(to the extent applicable), except for such violations as would not,
individually or in the aggregate, have a Material Adverse Effect.
Section 4.11 Absence of Certain Changes. Except (i) as set forth on
Schedule 4.11, (ii) with respect only to clause (x) and subclauses (a), (k) and
(l) (insofar as (l) applies to (a) and (k)) of clause (y), as a result of the
Supervision Order and the Reorganization Proceeding, including any
rehabilitation proceeding involving GALIC, (iii) with respect only to clause (x)
and subclauses (a), (k) and (l)(insofar as (l) applies to (a) and (k)) of clause
(y) as a result of any alleged breaches of Stable Value Business, (iv) with
respect only to clauses (x) and subclauses (a), (k) and (l) (insofar as (l)
applies to (a) and (k)) of clause (y) as a result of any alleged default in
connection with the 8.525% Capital Securities issued by a wholly owned trust of
the Company or the 7.625% Surplus Notes issued by GALIC, (v) with respect only
to clauses (x) and subclauses (a), (k) and (l) (insofar as (l) applies to (a)
and (k)) of clause (y),as a result of any downgrade of the financial strength
and claims paying ability ratings of the Company, any Subsidiary, RGA, any RGA
Subsidiary, Conning or any Conning Subsidiary, (vi) as reflected on the Company
GAAP Financial Statements, the Interim Financial Statements, the RGA GAAP
Financial Statements, the RGA Interim Financial Statements, the Conning GAAP
Financial Statements or the Conning Interim Financial Statements, or (vii) as
otherwise contemplated or permitted by this Agreement or the Ancillary
Agreements, since December 31, 1998, the Company and its Subsidiaries, taken as
a whole, (x) have conducted their business in the ordinary course of business
consistent with past practice and (y) have not:
(a) made any change in its fiscal year, or, if a Life Insurance
Subsidiary, made any change in underwriting, reinsurance, marketing, claim
processing and payment, reserving, financial or accounting practices or
policies of any Life Insurance Subsidiary, except as required by law, GAAP
or statutory accounting practices of its state of domicile or as would not,
individually or in the aggregate, have a Material Adverse Effect;
(b) issued, sold, pledged, encumbered or disposed of, any of its
capital stock, notes, bonds or other securities, or any option, warrant or
other right to acquire the same;
(c) split, combined or reclassified any shares of capital stock, or
redeemed, repurchased or otherwise acquired any of its capital stock or
declared, made or paid any dividends or distributions (whether in cash,
securities or other property) to the holders of its capital stock;
21
<PAGE> 58
(d) merged with, entered into a consolidation with or acquired an
interest of 5% or more in any Person or acquired, in one transaction of a
series of transactions, a substantial portion of the assets or business of
any Person or any division or line of business thereof, or otherwise
acquired any assets or securities (other than fixed maturity securities,
cash and short-term investments) with an aggregate value in excess of
$10,000,000 other than in the ordinary course of the Company's business
consistent with past practice;
(e) made any capital expenditure or commitment for any capital
expenditure including, without limitation, capital lease obligations, in
excess of $5,000,000 in the aggregate;
(f) incurred indebtedness for money borrowed in excess of $10,000,000
in the aggregate;
(g) made any loan to, guaranteed any indebtedness for money borrowed
of, or otherwise incurred such indebtedness on behalf of, any Person in
excess of $5,000,000 in the aggregate other than investments made in the
ordinary course of business;
(h) except as required by law, rule or regulation or any collective
bargaining agreement or involving increases in the ordinary course of
business consistent with past practice, (i) granted any increase, or
announced any increase, in the wages, salaries, compensation, bonuses,
incentives, pension or other benefits payable to any of its senior officers
who in the preceding 12 months received compensation in excess of $200,000,
or any director including, without limitation, any increase or change
pursuant to any Seller Plan, or (ii) established or promised to establish
any plan or benefit program or increased or promised to increase any
benefits under any Seller Plan (including any severance arrangement or
employee retention arrangement);
(i) amended or restated its charter or Bylaws (or other organizational
documents);
(j) paid, discharged, settled or satisfied any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise) other than (i) for an amount of $5,000,000 or less, (ii) an
insurance claim arising in the ordinary course of business consistent with
past practice, (iii) ordinary course repayment of indebtedness or payment
of contractual obligations when due and (iv) payments made to holders of
contracts relating to the Stable Value Business;
22
<PAGE> 59
(k) renewed, amended, modified or terminated any of its contracts,
agreements or arrangements, or otherwise waived, released, cancelled or
assigned any of its rights, claims or benefits thereunder except renewals,
amendments, modifications and terminations as would not, individually or in
the aggregate, have a Material Adverse Effect; or
(l) agreed, whether in writing or otherwise, to take any of the
actions specified in this Section 4.11, except as expressly contemplated by
this Agreement.
Section 4.12 Technology and Intellectual Property. (a) Except
as set forth on Schedule 4.12, the Company or a Subsidiary owns or possesses, or
has rights or licenses to use, the patents, trademarks (including common law
trademarks), service marks, copyrights (including any registrations or
applications relating to any of the foregoing), trade names, technology, trade
secrets, inventions, know-how and computer programs which are reasonably
necessary to carry on its business as currently conducted (each, an
"Intellectual Property Right"), and neither the Company nor any Subsidiary has
engaged in any infringement of the intellectual property rights of others with
respect to any such Intellectual Property Right that, if such infringement is
determined to be unlawful, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect. Except as set forth on Schedule 4.12, the
execution and delivery of this Agreement and the Ancillary Agreements by Seller,
and the consummation of the transactions contemplated hereby and thereby, will
neither cause the Company or any Subsidiary to be in violation or default under
any licenses, sublicenses or other agreements to which the Company or any
Subsidiary is a party and pursuant to which the Company or any Subsidiary is
authorized to use any Intellectual Property Right, nor entitle any other party
to any such license, sublicense or agreement to terminate such license,
sublicense or agreement, except where any such violation, default, termination
or modification would not, individually or in the aggregate, have a Material
Adverse Effect. Schedule 4.12 sets forth a complete and correct list, as of the
date hereof, of the trademarks that are material to the business as currently
conducted by the Company or any Subsidiary and all registrations and
applications for registration of any Intellectual Property Rights. Except as set
forth on Schedule 4.12, Seller has no knowledge of any infringement by third
parties of the Intellectual Property Rights.
(b) Except as set forth on Exhibit 4.12, the use of any
Intellectual Property Right in the business as currently conducted by the
Company or any Subsidiary does not breach, violate or infringe any intellectual
property rights of any third party or (except for the payment of computer
software or other licensing fees) does not require any payment for the use of
any patent, trade name, service mark, trade secret, trademark,
23
<PAGE> 60
copyright or other intellectual property right or technology owned by any third
party except where any such breaches, violations, infringements, or payments,
would not, individually or in the aggregate, have a Material Adverse Effect.
Section 4.13 Employee Benefit Plans; ERISA. (a) Each "employee benefit
plan" (as such term is defined in Section 3(3) of ERISA) or other employment or
compensation plan, agreement or arrangement (whether or not subject to ERISA)
under which any Company Employees, or any current or former director or
independent contractor of the Company, any Subsidiary, Conning, any Conning
Subsidiary, RGA or any RGA Subsidiary, in their capacity as such, shall have any
benefit entitlements as of the Closing Date or in which any of such Persons
otherwise participates (collectively, the "Seller Plans") for which Seller will
have no liability or responsibility after the Closing Date is listed on Schedule
4.13, other than any Seller Plan which does not have an aggregate lifetime
present value liability in excess of $500,000.
(b) Except as set forth on Schedule 4.13 each Seller Plan has been
maintained and administered at all times in compliance with its terms and
Applicable Law including, in the case of any Seller Plan intended to be
qualified under Code Section 401(a), the provisions of Code Section 401(a),
there is no audit, investigation or proceeding pending or threatened involving
any Seller Plan before the IRS, Department of Labor or any other Governmental
Authority, there has not occurred with respect to any Seller Plan (and no person
or entity is contractually bound to enter into) any transaction constituting a
non-exempt "prohibited transaction" within the meaning of Section 4975 of the
Code or Section 406 of ERISA, and a determination letter has been received from
the IRS as to each Seller Plan that is intended to be qualified under Code
Section 401(a), and neither Seller nor Company is aware of any circumstances
likely to result in the revocation of any such determination letter except where
any such non-compliance, prohibited transaction or failure to have a
determination letter would not, individually or in the aggregate, have a
Material Adverse Effect.
(c) None of Seller, RGA or Conning nor any ERISA Affiliate thereof has
incurred or expects to incur any liability under Title IV of ERISA (other than
for payment of Pension Guaranty Corporation insurance premiums) or Section 412
of the Code which would have, individually or in the aggregate, a Material
Adverse Effect. None of such entities has any obligation to contribute to, or
any liability under, any multiemployer plan (as defined in ERISA Section
4001(a)(3)). Based on the most recent actuarial valuations, the accrued
liabilities of the Seller Plans subject to Title IV of ERISA do not exceed such
Seller Plans' assets.
24
<PAGE> 61
Section 4.14 Taxes. Except as set forth on Schedule 4.14:
(a) Each of Seller, the Company (and any affiliated group of
which the Company is a member) and the Subsidiaries has timely filed
with the appropriate taxing authorities all Tax Returns required to be
filed (taking into account all valid extensions) and all such Tax
Returns are complete and accurate;
(b) All Taxes shown in the Tax Returns referred to in Section
4.14(a) that are due and payable by the Company and the Subsidiaries
before the date hereof have been timely paid;
(c) There are no Encumbrances on any of the assets of the
Company or any Subsidiary that arose in connection with any failure (or
alleged failure) to pay any Taxes (other than Taxes that are not due as
of the date hereof);
(d) The Company and the Subsidiaries have withheld and paid all
Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party;
(e) No federal, state, local or foreign audit or other
administrative proceeding or court proceeding (each an "Audit") exists
or has been initiated with regard to Taxes or Tax Returns of the
Company or any Subsidiary, and neither the Company nor any Subsidiary
has received any notice that any such Audit is pending or threatened
with respect to any Taxes due from or with respect to the Company or
any Subsidiary or any Tax Return filed by or with respect to the
Company or any Subsidiary;
(f) Neither the Company nor any Subsidiary has requested an
extension of time within which to file any Tax Return in respect of any
taxable year which has subsequently not been filed and no outstanding
waivers or comparable consents regarding the application of the statute
of limitations with respect to any Taxes or Tax Returns has been given
by or on behalf of the Company or any Subsidiary;
(g) No power of attorney has been granted by or with respect to
the Company or any Subsidiary with respect to any matter relating to
Taxes; and
(h) Any representation or warranty with respect to Taxes
contained in this Section 4.14 shall be deemed to be accurate unless an
inaccuracy contained therein would have, individually or in the
aggregate, a Material Adverse Effect.
25
<PAGE> 62
Section 4.15 Contracts. (a) Schedule 4.15 sets forth a complete and
accurate list, as of the date hereof, of (i) all contracts to which the Company
or any Subsidiary is a party (excluding policies of insurance or reinsurance in
the ordinary course of business) or by which any of their respective assets are
bound which contain obligations of the Company or any Subsidiary in excess of
$5,000,000, and (ii) all contracts and agreements that limit or purport to limit
the Company, GALIC, Conning or RGA to compete in any line of business or with
any Person or in any geographic area (collectively, the "Contracts"). Neither
Seller, the Company, nor any Subsidiary has received written notice of a
cancellation of or an intent to cancel any Contract whose cancellation would
have, individually or in the aggregate, a Material Adverse Effect.
(b) Except as set forth on Schedule 4.15, assuming the due
authorization, execution and delivery by the other parties thereto, each
Contract is legal, valid, binding, enforceable against the other parties thereto
and in full force and effect, and will not cease to be in full force and effect
on terms identical to those currently in effect as a result of the consummation
of the transactions contemplated by this Agreement or the Ancillary Agreements,
nor will the consummation of the transactions contemplated by this Agreement
constitute a breach or default under such Contract, except such failures to be
enforceable or to be in full force and effect or such breaches or defaults as
would not have, individually or in the aggregate, a Material Adverse Effect.
(c) Except as set forth on Schedule 4.15, assuming the due
authorization, execution and delivery by the other parties thereto, neither the
Company nor any Subsidiary is in breach of, or default under, any Contract and,
to the knowledge of Seller, no other party to any Contract is in beach thereof
or default thereunder, except for such breaches or defaults as would not have,
individually or in the aggregate, a Material Adverse Effect.
Section 4.16 Portfolio Investments. Seller has previously delivered to
Buyer true and complete lists of all assets held in the investment portfolios of
the Life Insurance Subsidiaries as of August 11, 1999.
Section 4.17 Liabilities and Reserves. (a) The consolidated balance
sheets as of December 31, 1998 and June 30, 1999 included as part of the Company
GAAP Financial Statements and the Interim Financial Statements, respectively,
reflect adequate provision for all obligations and liabilities of the Company
and the Subsidiaries, Conning and the Conning Subsidiaries and RGA and the RGA
Subsidiaries, at such date for which provision is required under the accounting
principles specified in Section 4.6 pursuant to which such balance sheets were
prepared, and except to the extent specifically disclosed,
26
<PAGE> 63
reflected or reserved against in such balance sheets and the notes thereto, none
of the Company and the Subsidiaries, Conning and the Conning Subsidiaries and
RGA and the RGA Subsidiaries, has any material obligations or liabilities of any
nature (whether accrued, absolute, contingent or otherwise, and whether or not
due, or arising out of transactions entered into, or any state of facts
existing, prior to such date) required under such accounting principles to be
set forth on a consolidated balance sheet of any of the Company and the
Subsidiaries or in the notes thereto, except (x) liabilities incurred since
December 31, 1998, in the ordinary course of business consistent with past
practice and (y) as disclosed in Schedule 4.17(a).
(b) Each reserve and other liability amount in respect of the insurance
business, including without limitation reserve and other liability amounts in
respect of insurance policies, annuity contracts or guaranteed investment or
reinsurance, coinsurance or other similar insurance contracts, whether direct or
assumed by reinsurance, established or reflected in the respective Annual
Statements for the year ended December 31, 1998, and the Quarterly Statements
for the period ended June 30, 1999 of each of the Life Insurance Subsidiaries
was determined in accordance with generally accepted actuarial standards
consistently applied, was based on actuarial assumptions that were in accordance
with or stronger than those called for in relevant policy and contract
provisions, is fairly stated in accordance with sound actuarial principles and
is in compliance with the requirements of the insurance laws, rules and
regulations of their respective jurisdictions of domicile as well as those of
any other applicable jurisdictions (collectively, "Applicable Insurance Laws").
Except as set forth on Schedule 4.17(b), such reserves and liability amounts
with respect to each Life Insurance Subsidiary were adequate to cover the total
amount of all matured and unmatured liabilities and obligations of such Life
Insurance Subsidiary under all its outstanding insurance policies, funding
agreements and annuity, guaranteed interest, reinsurance, coinsurance and other
similar contracts as of December 31, 1998 or June 30, 1999, as appropriate. Such
investment assumptions were reasonable as of December 31, 1998 or June 30, 1999,
as appropriate. Each Life Insurance Subsidiary owns assets that qualify as
admitted assets under Applicable Insurance Laws in an amount at least equal to
the sum of all such reserves and liability amounts and its minimum statutory
capital and surplus as required by Applicable Insurance Laws.
(c) Except for regular periodic assessments in the ordinary course of
business and except as set forth in Schedule 4.8, no claim or assessment is
pending nor, to the knowledge of the Seller, threatened against any Life
Insurance Subsidiary by any State insurance guaranty association in connection
with such association's fund relating to insolvent insurers.
27
<PAGE> 64
Section 4.18 Title to Assets. Except as set forth in Schedule 4.18, and
subject to the Supervision Order and the approval of the Reorganization Plan,
the Company and the Subsidiaries have good and marketable title to, or valid and
subsisting leasehold interests in, all real and personal property and other
assets on their books and reflected on the Company's balance sheet at December
31, 1998 and June 30, 1999 included as part of the Company GAAP Financial
Statements and the Interim Financial Statements, respectively, or acquired in
the ordinary course of business consistent with past practice since December 31,
1998 or June 30, 1999, as appropriate, which would have been required to be
reflected on such balance sheet if acquired on or prior to such date, other than
assets which have been disposed of in the ordinary course of business and those
assets the failure of which to have good title to, or valid and subsisting
leasehold interests in, would not, individually or in the aggregate, have a
Material Adverse Effect. None of such property and other assets is subject to
any Encumbrance, except for Encumbrances set forth on Schedule 4.18 or reflected
in the financial statements of the Company as of December 31, 1998. Except as
set forth on Schedule 4.18 and as would not, individually or in the aggregate,
have a Material Adverse Effect, the Company and the Subsidiaries have the right
to quiet enjoyment of all property leased by any of them for the full term of
each such lease or sublease or similar agreement (or any renewal option)
relating thereto and such leased property is not subject to any failure to have
the right to quiet enjoyment.
Section 4.19 Transactions with Certain Persons. Except as set forth on
Schedule 4.19, neither any officer, director or employee of Seller, the Company
or any Subsidiary, nor any member of any such Person's immediate family, is now
a party to any material transaction with the Company or any Subsidiary,
including any contract or other binding arrangement (i) providing for the
furnishing of material services by such Person (except in such Person's capacity
as an officer, director, employee or consultant), (ii) providing for the rental
of material real or personal property from such Person, or (iii) otherwise
requiring material payments (whether pursuant to indebtedness or otherwise) to
such Person (other than for services as an officer, director, employee or
consultant of Seller, the Company or any Subsidiary).
Section 4.20 Reinsurance and Retrocessions. Schedule 4.20 sets forth a
true and complete list of all reinsurance and retrocession treaties and
agreements in force as of the date of this Agreement to which any Life Insurance
Subsidiary is a ceding party, any terminated or expired treaty or agreement
under which there remains any outstanding liability from one reinsurer in excess
of $15,000,000 and any treaty or agreement with any Affiliate of the Company or
any Life Insurance Subsidiary, the effective date of each such treaty or
agreement, and the termination date of any treaty or agreement which has a
28
<PAGE> 65
definite termination date. Except as set forth on Schedule 4.20, (i) no Life
Insurance Subsidiary is in default in any respect as to any provision of any
reinsurance or retrocession treaty or agreement or has failed to meet the
underwriting standards required for any business reinsurance thereunder and (ii)
no reinsurer or retrocessionaire is in default to any Life Insurance Subsidiary
pursuant to any reinsurance or retrocession treaty or agreement, except for
defaults which would not, individually or in the aggregate, have a Material
Adverse Effect.
Section 4.21 Environmental Laws. (a) To the knowledge of Seller, except
as set forth on Schedule 4.21 and as would not, individually or in the
aggregate, have a Material Adverse Effect: (i) the Company and each Subsidiary
have been and are in compliance with all applicable Environmental Laws, and have
possessed, possess, have been, and are in compliance with all Environmental
Permits required under such laws for the conduct of its business operations and
ownership of its Owned Real Property, (ii) there are no past, present or future
events (including, without limitation, the sale of any Owned Real Property),
conditions or legal requirements that would prevent, or substantially increase
the cost to the Company or any Subsidiary of complying with Environmental Laws
or of their obtaining, renewing or complying with all Environmental Permits
required under such laws for the conduct of its business and operations and
ownership of its Owned Real Property or that would give rise to any liability
arising under any Environmental Law, and (iii) there are no liabilities or
obligations of the Company or any of its Subsidiaries of any kind whatsoever,
whether accrued, contingent, absolute, direct or indirect, determined,
determinable or otherwise, arising under or relating to any Environmental Law,
(iv) there are and have been no conditions relating to the release or threatened
release of Hazardous Materials at any property owned, operated or otherwise used
by the Company or any Subsidiary now or in the past that would give rise to
liability of the Company or any Subsidiary under any Environmental Law and (v)
no written notice, notification, demand, request for information, citation,
summons, complaint, order, or notice of investigation has been received by the
Company or any of its Subsidiaries from, and no action, claim, suit, proceeding
or review is pending or threatened by, any Governmental Authority or Person
against, the Company or any of its Subsidiaries, with respect to any
Environmental Law.
(b) Notwithstanding anything herein to the contrary, the
representations and warranties contained in this Section 4.21 do not address any
liability or obligation of the Company or any Subsidiary arising specifically
from any obligation the Company or any Subsidiary may have to defend or
indemnify an insured, pursuant to a contract of insurance or reinsurance, with
respect to any claim relating to Hazardous Materials or under any Environmental
Law.
29
<PAGE> 66
Section 4.22 Insurance Coverage. The Company has furnished to Buyer a
true and correct list, as of the date hereof, of all policies of insurance
maintained by the Company or any Subsidiary relating to the assets, properties,
business, operations, employees, officers or directors of the Company or any
Subsidiary. The Company maintains insurance relating to such assets, properties,
business, operations, employees, officers and directors which is reasonable for
a company of its size engaged in the life and health insurance business.
Section 4.23 Year 2000. Except as set forth on Schedule 4.23 and except
as would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, each hardware, software and firmware product (including
embedded microcontrollers in computer equipment which are owned or licensed and
used by the Company or any Subsidiary and which are involved in electronic data
interchange and integration with third parties) owned or licensed and used by
the Company or any of its Subsidiaries (including without limitation all
software sold or licensed by NaviSys Incorporated and its subsidiaries) will,
when required to do so, correctly differentiate between the years in different
centuries and will accurately process date/time data (including, but not limited
to, calculating, comparing, and sequencing) from, into, and between the
twentieth and twenty-first centuries, including leap year calculations.
Section 4.24 RGA and Conning. Each of RGA and Conning has filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC since January 1, 1996 (collectively, the "SEC Documents").
Except as set forth on Schedule 4.24, each of the SEC Documents has been duly
and timely filed, and when filed was in material compliance with the
requirements (including accounting requirements) of any applicable federal
securities law and the applicable rules and regulations of the SEC thereunder,
and no event has occurred requiring the filing of any amendment of any of the
SEC Documents which amendment has not been duly and timely filed. Each of such
SEC Documents was complete and correct in all material respects as of its date
and, as of its date, did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading. Complete and correct copies of such SEC Documents have
been made available by the Company to the Buyer prior to the date of this
Agreement or, in the case of those not yet due and filed, will be so made
available promptly after filing.
Section 4.25 State Takeover Statutes and Shareholder Rights Plans.
Except for the provisions of Article III of RGA's Articles of Incorporation,
Seller has caused to be taken all actions necessary such that no "fair price,"
"moratorium," "control share acquisition," "business combination" or other form
30
<PAGE> 67
of antitakeover statute, regulation or provision of the Articles of
Incorporation of RGA or Conning is applicable to any of the transactions
contemplated hereby or by the Ancillary Agreements, including without limitation
Sections 351.407 and 351.459 of the Missouri Revised Statutes. Seller has caused
to be taken all actions necessary such that, for all purposes under the Rights
Agreement, neither Buyer nor any of its Affiliates shall be deemed an Acquiring
Person (as defined in the Rights Agreement), the Distribution Date (as defined
in the Rights Agreement) shall not be deemed to occur, and the Rights will not
separate from the common stock of RGA, in each case as a result of Buyer's
entering into this Agreement and the Ancillary Agreements or consummating the
transactions contemplated hereby or thereby, and the Rights Agreement and the
Rights are inapplicable to such transactions. There is no rights agreement,
rights plan or other similar agreement, plan or arrangement with respect to
Conning applicable to the transactions contemplated hereby or by the Ancillary
Agreements.
Section 4.26 Insurance Issued. Except as set forth on Schedule 4.26 or
as disclosed to Buyer in a letter from Seller to Buyer dated August 26, 1999 and
except as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, with respect to all insurance issued by any Life
Insurance Subsidiary:
(i) All insurance policy and annuity contract benefits payable by any
Life Insurance Subsidiary and, to the knowledge of the Seller, by any other
Person that is a party to or bound by any reinsurance, coinsurance or other
similar agreement with any Life Insurance Subsidiary, have been paid in
accordance with the terms of the insurance policies, annuity contracts and
other contracts under which they arose, except for such benefits for which
there is a reasonable basis to contest payment.
(ii) Except as set forth on Schedule 4.26, all advertising,
promotional and sales materials and other marketing practices used by any
Life Insurance Subsidiary or any agent of any Life Insurance Subsidiary
have complied and are currently in compliance with Applicable Laws.
(iii) Each insurance agent, at the time such agent wrote, sold or
produced business for any Life Insurance Subsidiary since January 1, 1994,
was duly licensed as an insurance agent (for the type of business written,
sold or produced by such insurance agent) in the particular jurisdiction in
which such agent wrote, sold or produced such business.
(iv) The Tax treatment under the Code of all insurance or annuity
policies, plans or contracts; all financial products, employee benefit
plans, individual retirement
31
<PAGE> 68
accounts or annuities; or any similar or related policy, contract, plan, or
product, whether individual, group, or otherwise, if any, issued or sold by
any Life Insurance Subsidiary is and at all times has been the same or not
less favorable to the purchaser, policyholder or intended beneficiaries
thereof as the Tax treatment under the Code for which such contracts
qualified or purported to qualify at the time of their issuance or
purchase, except for changes resulting from changes to the Code which do
not apply to such issuance or purchase due to their effective date. For
purposes of this Section 4.26, the provisions of the Code relating to the
Tax treatment of such contracts shall include, but not be limited to,
Sections 72, 79, 101, 104, 105, 106, 125, 130, 401, 402, 403, 404, 408,
412, 415, 419, 419A, 457, 501, 505, 817, 818, 7702 and 7702A. In addition,
except as disclosed to Buyer in a letter from Seller to Buyer dated August
26, 1999, each annuity contract issued by any Life Insurance Subsidiary
qualified as an annuity contract under Section 72 of the Code. Each life
insurance policy issued by any Life Insurance Subsidiary qualified as a
life insurance contract for federal income tax purposes when issued and any
such policy which is a modified endowment contract under Section 7702A of
the Code, (each, a "MEC") has been marketed as such at all relevant times
or the policyholder otherwise has consented to such MEC status. Each of the
employee benefit plans issued or sold by the Company qualifies under
Section 401(a), 403(b) or 457, as applicable, of the Code.
(v) The underwriting standards utilized and ratings applied by each
Life Insurance Subsidiary with respect to insurance policies, annuity
contracts or guaranteed investment contracts outstanding as of the date
hereof have been provided to Buyer and, with respect to any such policy or
contract reinsured in whole or in part, conform in all material respects to
the standards and ratings required pursuant to the terms of the related
reinsurance, coinsurance or other similar contracts and Seller has provided
Buyer with copies of all underwriting policies and procedures for each Life
Insurance Subsidiary.
(iv) No insurance agent or broker at the time such agent or broker
wrote, sold or produced business for any Life Insurance Subsidiary,
violated (or with notice or lapse of time or both would have violated) any
term or provision of any law or order applicable to any aspect (including,
but not limited to, the writing, sale or production) of the business of any
Life Insurance Subsidiary.
Section 4.27 Real Property. (a) Schedule 4.27 lists all Owned Real
Property.
32
<PAGE> 69
(b) Schedule 4.27 lists all leases with respect to Leased Real Property
requiring the payment of more than $1,000,000 per annum.
(c) The Seller has, or has caused to be, delivered to the Buyer true
and complete copies of all leases listed on Schedule 4.27. Each such lease is
legal, valid, binding, enforceable and in full force and effect with respect to
the Company or the Subsidiary, as applicable, and, to the knowledge of Seller,
each such lease is legal, valid, binding, enforceable and in full force and
effect with respect to the lessor thereof, except when the failure to be legal,
valid, binding, enforceable and in full force and effect would not have a
Material Adverse Effect.
(d) To the knowledge of Seller, there are no condemnation proceedings
or eminent domain proceedings of any kind pending or threatened against the
Owned Real Property or Leased Real Property.
(e) Except as set forth on Schedule 4.27, the rental set forth in each
lease of the Leased Real Property is the actual rental being paid, and there are
no separate agreements or understandings with respect to the same, except as
would not, individually or in the aggregate, be a Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
Section 5.1 Organization and Related Matters. Buyer is a mutual life
insurance company duly organized, validly existing and in good standing under
the laws of the State of New York.
Section 5.2 Authority; No Violation. (a) Buyer has full power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by all requisite action on the part of Buyer, and no other
proceedings on the part of Buyer are necessary to approve this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Buyer and (assuming the due authorization,
execution and delivery of this Agreement by Seller) constitutes the valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms.
33
<PAGE> 70
(b) Neither the execution and delivery of this Agreement by Buyer, nor
the consummation by Buyer of the transactions contemplated hereby to be
performed by it, nor compliance by Buyer with any of the terms or provisions
hereof, will (i) violate any provision of the Charter or Bylaws of Buyer, or
(ii) assuming that the consents and approvals referred to in Section 5.3 are
duly obtained, (A) violate in any material respect any Applicable Law with
respect to Buyer, or any of its properties or assets or (B) violate, conflict
with, result in a breach of any provision of, or constitute a default under any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which Buyer is a party, or by which Buyer or
any of its properties or assets may be bound or affected, except for such
violations, conflicts, breaches or defaults which would not, individually or in
the aggregate, prevent or materially delay the performance by Buyer of any of
its obligations hereunder.
Section 5.3 Consents and Approvals. Except for (i) the approval of the
Director required by the Supervision Order, (ii) any approvals or orders
required in connection with the Reorganization Proceeding (iii) approvals or
consents of Governmental Authorities under the insurance holding company laws of
Missouri, California, New York, Illinois, and Texas, (iv) applicable filings
under the HSR Act, (v) the matters set forth on Schedule 5.3, and (vi) such
other filings, authorizations, consents or approvals the failure to make or
obtain which would not, individually or in the aggregate, prevent or materially
delay the performance by Buyer of any of its obligations pursuant to this
Agreement, no consents or approvals of or filings or registrations with any
Governmental Authority or any third party are necessary in connection with the
execution and delivery by Buyer of this Agreement and the consummation by Buyer
of the transactions contemplated hereby. Buyer is not aware of any consents
specified in the preceding sentence which it believes it is not reasonably
likely to obtain.
Section 5.4 Legal Proceedings. Buyer is not a party to any, and there
are no pending or, to Buyer's knowledge, threatened, Actions against or
otherwise affecting Buyer or its properties or assets or challenging the
validity or propriety of the transactions contemplated by this Agreement which,
if adversely determined, would, individually or in the aggregate, prevent or
materially delay the performance by Buyer of any of its obligations pursuant to
this Agreement, and there is no injunction, order, judgment, decree or
regulatory restriction imposed upon Buyer or its properties or assets which
would, individually or in the aggregate, prevent or materially delay the
performance by Buyer of any of its obligations pursuant to this Agreement.
Section 5.5 Investment Intent of Buyer. The Shares to be acquired under
this Agreement will be acquired by Buyer for
34
<PAGE> 71
its own account and not for the purpose of a distribution. Buyer will refrain
from transferring or otherwise disposing of any of the Shares acquired by it, or
any interest therein, in such manner as to violate any registration provision of
the Securities Act of 1933, as amended, or any applicable state securities law
regulating the disposition thereof. Buyer agrees that the certificates
representing the Shares may bear legends to the effect that the Shares have not
been registered under the Securities Act of 1933, as amended, or such other
state securities laws, and that no interest therein may be transferred or
otherwise disposed of in violation of the provisions thereof.
Section 5.6 No Other Broker. Other than Credit Suisse First
Boston Corporation, the fees and expenses of which will be paid by Buyer, no
broker, finder or similar intermediary has acted for or on behalf of Buyer or
any Affiliate of Buyer, or is entitled to any broker's, finder's or similar fee
or other commission from Buyer, or any Affiliate of Buyer, in connection with
this Agreement or the transactions contemplated hereby.
Section 5.7 Financing. Buyer has, and at the Closing will have,
sufficient cash to consummate the transactions contemplated hereby and to pay
all related fees and expenses.
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business. Prior to the Closing Date or the
termination of this Agreement pursuant to the terms hereof, (a) except the
events described in clauses (ii), (iii) and (iv) of Section 4.11, or any order
of the Director of the Department or from the Reorganization Proceeding, Seller
shall cause each of the Company, the Subsidiaries, RGA, the RGA Subsidiaries,
Conning and the Conning Subsidiaries to use commercially reasonable efforts to
(iii) preserve intact its present organization, business and franchise; (iv)
maintain in effect all material licenses, approvals, qualifications,
registrations and authorizations necessary to carry on its business as currently
conducted; (v) preserve material existing relationships with its employees and
agents, other distribution sources, customers, lenders, suppliers, regulators,
rating agencies and others having material business relationships with it
(referred to herein as "Contacts"); (vi) continue its advertising and
promotional activities, pricing and purchasing policies, operations and business
plan implementation consistent with past practice; (vii) continue in full force
and effect without material modification all existing policies or binders of
insurance currently maintained in respect of its assets, properties, business,
operations, employees, officers or directors except as required by applicable
law; (viii) in the case only of the Company and the Subsidiaries, not undertake
any
35
<PAGE> 72
material new business initiatives; and (ix) cooperate with Buyer to present the
change of ownership contemplated by this Agreement in a positive manner to its
Contacts, including without limitation furnishing such introductions and
facilitating such continuing access to such Contacts as Buyer may reasonably
request; and
(b) without the prior written consent of Buyer, which consent shall not
be unreasonably withheld, Seller will not, and will not permit the Company or
the Subsidiaries to, except as required pursuant to any order of the Director or
the Department or issued pursuant to the Reorganization Proceeding, (x) take or
omit to take any action that would be reasonably likely to cause any of the
representations and warranties made by Seller in this Agreement to become
untrue; (xi) take any action that would prevent or materially impair the ability
of Seller to consummate the transactions contemplated by this Agreement,
including without limitation actions that would be reasonably likely to prevent
or materially impair the receipt of any consent, registration, approval, permit
or authorization, that is necessary in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby; or (iii) sell or otherwise transfer or dispose of the shares of the
capital stock of RGA or Conning held by the Company.
Section 6.2 Public Announcements. Buyer and Seller shall consult with
each other and the Department before issuing, and provide each other the
opportunity to review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this Agreement, and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by the Department, by Applicable
Law or court process or by obligations pursuant to any listing agreement with
any national securities exchange.
Section 6.3 Expenses. Regardless of whether any or all of the
transactions contemplated by this Agreement are consummated, and except as
otherwise expressly provided herein, Buyer and Seller shall each bear their
respective direct and indirect expenses incurred in connection with the
negotiation and preparation of this Agreement, the Ancillary Agreements and the
consummation of the transactions contemplated hereby or thereby.
Section 6.4 Access; Certain Communications. Between the date of this
Agreement and the Closing Date, subject to Applicable Laws relating to the
exchange of information and to any order of the Director of the Department or
issued pursuant to the Reorganization Proceeding:
(a) Seller shall (and shall cause the Company and each
Subsidiary to) afford to Buyer and its authorized agents and
36
<PAGE> 73
representatives access, upon reasonable notice and during normal business hours,
to all contracts and other documents and other information (except immaterial
contracts, documents and information subject to confidentiality agreements) of
or relating to the assets, liabilities, business, operations and other aspects
of the business of the Company and the Subsidiaries and shall use commercially
reasonable efforts to cause RGA, the RGA Subsidiaries, Conning and the Conning
Subsidiaries to afford such access to Buyer and its authorized agents and
representatives. Seller shall cause the Company Employees and the employees of
any Subsidiary and each of the Company's and their respective attorneys,
financial advisors, auditors, actuarial advisors and other representatives to
provide reasonable assistance to Buyer in Buyer's investigation of matters
relating to the purchase of the Shares; provided, however, that Buyer's
investigation shall be conducted in a manner which does not materially interfere
with the normal operations, customers and employee relations of the Company, its
Subsidiaries, RGA, the RGA Subsidiaries, Conning or the Conning Subsidiaries.
Without limiting any of the terms thereof, the terms of the Confidentiality
Agreement shall govern Buyer's and its agents' and representatives' obligations
with respect to all confidential information with respect to the Company, the
Subsidiaries, RGA, the RGA Subsidiaries, Conning and the Conning Subsidiaries,
which has been provided or made available to them at any time, including during
the period between the date of this Agreement and the Closing Date;
(b) except as required pursuant to any order of the Director of the
Department or issued pursuant to the Reorganization Proceeding, Seller shall
give prompt notice to Buyer of (i) any material communication received from or
given to any Governmental Authority in connection with any of the transactions
contemplated hereby, (xii) any notice or other communication from or on behalf
of any Person alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement; and (iii) any
actions, suits, claims or investigations commenced or to Seller's knowledge
threatened against Seller, the Company and the Subsidiaries, and, if known, RGA,
the RGA Subsidiaries, Conning and the Conning Subsidiaries, that, if pending on
the date of this Agreement, would have been required to have been disclosed, or
relate to the consummation of the transactions contemplated by this Agreement;
provided, however, that the delivery of any notice pursuant to this Section
6.4(b) shall not limit or otherwise affect the remedies available hereunder to
Buyer; and
(c) Seller shall, and shall cause any other Person receiving access
thereto to, keep strictly confidential any and all non-public information it or
they may receive from or concerning Buyer and its Affiliates, including, without
limitation, any information received pursuant to Section 6.6.
37
<PAGE> 74
Section 6.5 Reorganization Plan. As soon as practicable after execution
of this Agreement, Seller shall make reasonable efforts to cause the Department
to commence a Reorganization Proceeding and to submit the Reorganization Plan
incorporating the material terms of this Agreement.
Section 6.6 Regulatory Matters; Third Party Consents. (a) Buyer and
Seller shall cooperate with each other and (i) shall use their commercially
reasonable efforts promptly to prepare and to file all necessary documentation,
and to effect all applications, notices, petitions and filings, with each
Governmental Authority which are necessary or advisable to consummate the
transactions contemplated by this Agreement, and (ii) shall use their
commercially reasonable efforts to obtain as promptly as practicable any permit,
consent, approval, waiver or authorization of such Governmental Authority which
is necessary or advisable to consummate the transactions contemplated by this
Agreement.
(b) Buyer and Seller shall cooperate with each other and (i) shall use
their commercially reasonable efforts promptly to prepare and to file all
necessary documentation, and to effect all applications, notices, petitions and
filings, with each third party (other than a Governmental Authority) which are
necessary or advisable to consummate the transactions contemplated by this
Agreement, and (ii) shall use their commercially reasonable efforts to obtain as
promptly as practicable any permit, consent, approval, waiver or authorization
of such third party which is necessary or advisable to consummate the
transactions contemplated by this Agreement.
(c) Buyer and Seller shall have the right to review in advance, and
shall consult with the other party on, in each case subject to Applicable Laws
relating to the exchange of information, all the information relating to Seller,
the Company and the Subsidiaries or Buyer, as the case may be, and any of their
respective Affiliates, which appear in any filing made with, or written
materials submitted to, any Governmental Authority or any other third party in
connection with the transactions contemplated by this Agreement. The parties
hereto agree that they will consult with each other with respect to the
obtaining of any permit, consent, approval or authorization of a Governmental
Authority or other third party necessary or advisable to consummate the
transactions contemplated by this Agreement and each party shall keep the other
apprised of the status of obtaining any such permit, consent, approval or
authorization. The party responsible for any such filing shall promptly deliver
to the other party evidence of the filing of all applications, filings,
registrations and notifications relating thereto, and any supplement, amendment
or item of additional information in connection therewith. The party responsible
for a filing shall also promptly deliver to the other party a copy of each
notice, order, opinion and other item of correspondence
38
<PAGE> 75
received from or sent to any Governmental Authority by such filing party in
respect of any such application. In exercising the foregoing rights and
obligations, Buyer and Seller shall act reasonably and promptly.
(d) Without limiting the generality of the foregoing, as promptly as
practical and, in any event within 21 calendar days after the date hereof, Buyer
shall make Form A filings, which shall include all required exhibits thereto,
with the insurance departments of the States of Missouri, California, New York,
Illinois and Texas with respect to the transactions contemplated hereby and, as
promptly as practical, Buyer shall make all required foreign filings with
respect to the transactions contemplated hereby. Buyer shall as promptly as
practicable make any and all other filings and submissions of information with
such insurance departments which are required or requested by such insurance
departments in order to obtain the approvals required by such insurance
departments to consummate the transactions contemplated hereby. If any such
insurance department, including without limitation the insurance department of
the States of Missouri, California, New York, Illinois and Texas, requires that
a hearing be held in connection with any such approval, Buyer shall use its
commercially reasonable efforts to arrange for such hearing to be held as
promptly as practicable after the notice that such hearing is required has been
received by Buyer. Seller agrees to furnish Buyer with such necessary
information and reasonable assistance as Buyer may reasonably request in
connection with its preparation of such Form A filings and other filings or
submissions. Buyer shall keep Seller fully apprised of its actions with respect
to all such filings, submissions and scheduled hearings and shall provide Seller
with copies of such Form A filings and other filings or submissions (except to
the extent that such information would be, or relates to information that would
be, filed under a claim of confidentiality).
(e) Buyer and Seller shall, upon request, furnish each other with all
information concerning themselves, their subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary in connection
with any statement, filing, notice or application made by or on behalf of Buyer,
the Company or any of their respective Affiliates to any Governmental Authority
in connection with the transactions contemplated by this Agreement or the
Ancillary Agreements (except to the extent that such information would be, or
relates to information that would be, filed under a claim of confidentiality).
(f) Buyer and Seller shall promptly advise each other upon receiving
any communication from any Governmental Authority whose consent or approval is
required for consummation of the transactions contemplated by this Agreement
which causes such party to believe that there is a reasonable likelihood that
any
39
<PAGE> 76
requisite regulatory approval will not be obtained or that the receipt of any
such approval will be materially delayed.
Section 6.7 Further Assurances. (a) Each of the parties hereto shall
execute such documents and other papers and perform such further acts as may be
reasonably required to carry out the provisions hereof and the transactions
contemplated hereby. Each such party shall, on or prior to the Closing Date, use
its commercially reasonable efforts to fulfill or obtain the fulfillment of the
conditions precedent to the consummation of the transactions contemplated
hereby, including the execution and delivery of any documents, certificates,
instruments or other papers that are reasonably required for the consummation of
the transactions contemplated hereby.
(b) Seller shall, and shall cause the Subsidiaries, and shall use
reasonable best efforts to cause RGA and the RGA Subsidiaries, Conning and the
Conning Subsidiaries, and their respective officers, directors, employees and
agents (including attorneys, auditors and financial advisors) to provide such
information (including, without limitation, financial information) and
assistance as Buyer shall reasonably request in connection with the preparation
of Buyer's Registration Statement on Form S-1 and policyholder information
booklet and with respect to the Buyer's planned demutualization and initial
public offering, including, without limitation, participating in due diligence
discussions and meetings during normal business hours with Buyer's underwriters
and providing such financial statements and audit reports thereon and consents
with respect thereto as are reasonably necessary.
Section 6.8 Notification of Certain Matters. (a) Each party shall give
prompt notice to the other party of (i) the occurrence, or failure to occur, of
any event or the existence of any condition that has caused or could reasonably
be expected to cause any of its representations or warranties contained in this
Agreement to be breached at any time after the date of this Agreement, up to and
including the Closing Date (except to the extent such representations and
warranties are given as of a particular date or period and relate solely to such
particular date or period) and (ii) any failure on its part to comply with or
satisfy, in any material respect, any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement.
(b) Within twenty-eight days following the date of the execution of
this Agreement and in any event no less than twenty-eight days prior to the
Closing, Seller may provide to Buyer schedules permitted to be delivered in
accordance with this Agreement on or prior to the date hereof which were not so
delivered (such schedules being the "Supplemental Schedules"). Each of such
Supplemental Schedules when delivered shall be certified to be a complete
schedule being delivered in
40
<PAGE> 77
satisfaction of this covenant. Within fourteen days following the delivery of
the last Supplemental Schedule to be delivered in accordance with this Section
6.8, Buyer may elect to terminate this Agreement by notice, as provided in
Section 11.1 hereof, if any items disclosed in one or more of the Supplemental
Schedules, either individually or in the aggregate, could reasonably be expected
to constitute a Material Adverse Effect. Regardless of whether any such items
individually or in the aggregate could reasonably be expected to constitute a
Material Adverse Effect, if the Closing occurs, Seller shall indemnify Purchaser
for any Losses arising from any item disclosed in such Supplemental Schedules in
accordance with Article X hereof, as if such items were not disclosed and, for
the purposes of such Article X hereof, such items do not constitute exceptions
to the representations, warranties and covenants contained in this Agreement.
Section 6.9 Maintenance of Records. Through the Closing Date, the
Company shall maintain the Records in all material respects in the same manner
and with the same care that the Records have been maintained prior to the
execution of this Agreement. From and after the Closing Date, each of the
parties shall permit the other party reasonable access to any applicable Records
in its possession, and the right to duplicate such Records, to the extent that
the requesting party has a reasonable business purpose for requesting such
access or duplication. Notwithstanding any other provision of this Section 6.9,
access to any Records may be denied to the requesting party if the other party
is required under Applicable Law to deny such access.
Section 6.10 Service Under Employee Plans. (a) Service by the Company
Employees with the Company, Seller or any of their Affiliates prior to the
Closing Date shall be recognized under each benefit plan, program or arrangement
established, maintained or contributed to by Buyer, the Company or any of their
Affiliates after the Closing Date for the benefit of any Company Employee to the
same extent recognized for comparable purposes under the Seller Plans providing
comparable benefits, except that in no event shall Buyer be required to take
such service prior to the Closing Date into account in determining the accrual
of benefits under any retirement benefit plan; provided, however, that this
provision shall have no effect on any service credit that existed under any
Seller Plan on the Closing Date. Neither Buyer nor any Affiliate shall amend, in
any manner adverse to any participant whose employment is terminated within 12
months after the Closing Date so that such person is no longer employed by Buyer
or any entity that is then an Affiliate thereof, the provisions of any of the
plans or programs listed in Schedule 6.10 hereto dealing specifically with
additional benefits or rights of participants in the event of termination of
employment on account of job elimination or divestiture.
41
<PAGE> 78
(b) Buyer shall, or shall cause the applicable entity to, (i) waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Company
Employees under any welfare benefit plan in which such Company Employees may be
eligible to participate after the Closing Date, other than limitations or
waiting periods that are already in effect with respect to such Company
Employees and that have not been satisfied as of the Closing Date under any
welfare plan maintained for the Company Employees immediately prior to the
Closing Date, and (ii) provide each Company Employee with credit for any
co-payments and deductibles paid prior to the Closing Date in satisfying any
applicable deductible or out-of-pocket requirements under any welfare plans that
such Company Employees are eligible to participate in after the Closing Date.
Section 6.11 Benefits Under Employee Plans. All benefits accrued and/or
incurred by Company Employees and their qualified beneficiaries prior to the
Closing Date under the Seller Plans shall be a liability of the Seller Plans to
the extent payable under the terms of the Seller Plans. After the Closing Date,
Buyer may amend the Seller Plans in accordance with their respective terms;
provided, however, that Buyer will not take any action to use the assets of the
trust under the General American Life Insurance Company and Affiliated Companies
Executive Deferred Compensation Plans (the "Rabbi Trust") for any purposes other
than those permitted under the Rabbi Trust agreement as in effect on the date
hereof.
Section 6.12 Company Confidentiality Agreements. Buyer and Seller
acknowledge and agree that on or prior to the Closing, Seller will assign to
Buyer its rights under the Company Confidentiality Agreements, except to the
extent that any such assignment is directly or indirectly prohibited or impaired
by the terms of any of such Company Confidentiality Agreements or applicable
law, in which case the parties hereto shall cooperate to provide Buyer, to the
fullest extent practicable, the benefits thereof.
Section 6.13 No Solicitations. (a) From and after the date hereof,
Seller shall not, and shall direct and use commercially reasonable efforts to
cause the Subsidiaries, Conning, the Conning Subsidiaries, RGA and the RGA
Subsidiaries, and each of their respective officers, directors, employees,
agents, advisors or other representatives (each, a "Representative") not to,
directly or indirectly, (i) solicit, initiate or knowingly encourage the
submission of any Proposal (as defined below), (ii) participate in any
discussions or negotiations regarding, or furnish to any Person any non-public
information with respect to, any Proposal or Alternative Transaction (as defined
below), other than with Buyer; provided, however, that to the extent required by
the fiduciary obligations of Seller's Board of Directors, as determined in good
faith by
42
<PAGE> 79
Seller's Board of Directors following consultation with outside counsel, or at
the direction of the Department or the Reorganization Proceeding, if Seller
receives an unsolicited proposal with respect to a Control Transaction (as
defined below), Seller may participate in such discussions or negotiations or
furnish (pursuant to a confidentiality agreement in customary form) such
information in response to such Proposal or, subject to Section 11.3, authorize,
engage in or enter into any agreement with respect to such Control Transaction.
Seller will advise Buyer of, and communicate to Buyer the terms of, any Proposal
that Seller, the Company, any of the Subsidiaries or any of their respective
Representatives, or, if known by the Company, RGA, any of the RGA Subsidiaries,
Conning or any of the Conning Subsidiaries, may receive unless the terms of such
Proposal prohibit such disclosure, or otherwise directed by the Director.
(b) For purposes of this Agreement: (i) "Proposal" means any written
proposal or offer from any Person relating to an Alternative Transaction; (ii)
"Alternative Transaction" means any (A) direct or indirect acquisition or
purchase of any equity securities of, or other equity interest in, the Company
or any of the Subsidiaries that if consummated would result in any Person
beneficially owning (or having the right to acquire) 10% or more of any class of
equity securities of, or the equity interest in the Company or any of the
Subsidiaries or which would require approval under any federal, state or local
law, rule, regulation or order governing or relating to the current or
contemplated operations of the Company or any of the Subsidiaries, (B) merger,
consolidation, business combination, sale of a material portion of the assets
(including, without limitation, by means of any reinsurance or renewal rights
transaction), liquidation, dissolution or similar transaction involving the
Company or any of the Subsidiaries or (C) other transaction the consummation of
which would reasonably be expected to impede, interfere with, prevent or
materially delay the transactions with Buyer contemplated by this Agreement or
which would reasonably be expected to dilute the benefits of such transactions
to Buyer; and (iii) "Control Transaction" means any transaction that involves a
(A) merger or consolidation or similar business combination involving the
Company or a significant Subsidiary of the Company, (B) sale of all or
substantially all of the assets of the Company or (C) sale or issuance of the
Shares or other equity securities of the Company to a Person which, following
the completion of such sale or issuance, will beneficially own the Shares or
other equity securities of the Company representing a majority of the voting
power with respect to the election of the directors of the Company.
Section 6.14 Policy Credits and Dividends in Respect of Tax-Qualified
Retirement Contracts. Subject to the applicable requirements of ERISA and the
Code, Buyer agrees to cause the Life Insurance Subsidiaries or their successors
to accept at any time after the Closing Date any distribution by Seller in
respect
43
<PAGE> 80
of any Tax-Qualified Retirement Contract and to post a policy credit or
dividend to such contract with respect to such distribution as soon as
practicable. Buyer and Seller shall cooperate in all matters with respect to any
such distribution to best assure the ongoing qualification of any related
tax-qualified retirement plan.
Section 6.15 Alternative Structure. In the event that the Closing fails
to occur because Buyer has not made the determination referred to in Section
9.1(f)(ii), the termination date referred to in Section 11.1(a)(v) shall be
October 26, 2000 and Buyer and Seller shall use their best efforts to negotiate
and implement an alternative structure that will permit the Closing to occur as
promptly as practicable; provided, however, that nothing contained in this
Section 6.15 will require Buyer or Seller to agree to alter the Purchase Price
or any of the other fundamental economic terms of the purchase of Shares
pursuant to this Agreement.
Section 6.16 Employment. For a period of one year after the Closing
Date, Buyer shall maintain the number of employees employed by the Company, its
Subsidiaries, RGA, the RGA Subsidiaries, Conning and the Conning Subsidiaries at
no less than 90% of the aggregate number of such employees employed by such
entities as of the Closing Date; provided, however, that when calculating such
percentage the number of employees employed as of the date hereof may be
adjusted to reflect businesses divested by the Company after the date hereof. No
provision contained in this Section 6.16 shall be deemed to constitute an
employment contract between Buyer and any individual, or a waiver of Buyer's
right to discharge any employee at any time, with or without cause.
Section 6.17 Headquarters; Local Activities. For the reasonably
foreseeable future after the Closing, the corporate headquarters and principal
executive offices of the Company, Conning and RGA shall be located in
metropolitan St. Louis, Missouri. For the reasonably foreseeable future after
the Closing, Buyer shall cause the Company, and the Company shall provide,
charitable contributions and community support within the St. Louis, Missouri
area substantially comparable to the historical levels of charitable
contributions and community support provided by the Company prior to the
Closing.
Section 6.18 Dividends. Holders of participating policies of the Life
Insurance Subsidiaries and GALIC in effect on the Closing Date shall continue to
have the right to receive dividends as provided in the participating policies,
if any.
Section 6.19 Investment Advisory Agreements. Seller agrees to use
commercially reasonable efforts to obtain all required shareholder, board and
customer consents as required in connection with any investment advisory
agreements as a result of
44
<PAGE> 81
the transactions contemplated by this Agreement so as to assure that such
agreements are not terminated.
Section 6.20 Capital Contribution. In the event that Buyer and Seller
implement the exchange program contemplated by Section 7.1(c)(i) hereof,
following the Closing upon termination of the exchange contracts, Buyer will
make a capital contribution of $120,000,000 to GALIC.
Section 6.21 Change of Control Agreements. Buyer and, prior to the
Closing Date, Seller shall use their respective commercially reasonable efforts
to prevent to the greatest extent possible the occurrence of a "change of
control" or similar triggering event under a Seller Plan or other contract or
arrangement for the benefit of any Company Employee (or any non-employee
director or independent contractor of Seller, the Company, any Subsidiary, RGA,
any RGA Subsidiary, Conning or any Conning Subsidiary).
ARTICLE VII
INTERIM ARRANGEMENT
Section 7.1 Interim Agreements. (a) Buyer will develop with Seller as
soon as practicable a program of coinsurance support for the period from the
date of this Agreement through the Closing Date for new and existing business to
be issued by GALIC, and similar arrangements as may be required by COVA and RGA.
(b) Buyer will develop with Seller as soon as practicable a program of
policy conversion to support GALIC's in force business for the period from the
date of this Agreement through the Closing Date.
(c) (xiii) To address the funding agreement business, Buyer and Seller
will as soon as practicable implement a stabilization program. Such program will
consist of an exchange or other program agreed to by Buyer and Seller and
approved by the Department. Under an exchange program Buyer will offer to each
holder of a funding agreement contract an exchange contract in consideration for
the transfer by GALIC to Buyer of assets as determined below with market value
(at the business day prior to the date of transfer) equal to the market value of
the liabilities under the funding agreement contracts at the business day prior
to the date of transfer (determined using Buyer's credit rating) plus a risk
premium of $120 million. The $120 million would be payable by Wire Transfer in
three $40 million installments; at inception of the exchange, ninety days
following such inception and one-hundred eighty days following such inception.
45
<PAGE> 82
(xiv) Under an exchange program, five business days prior to
the date of asset transfer, Buyer will submit to a mutually agreed upon
third party (to be selected from Merrill Lynch, Bear Stearns, Lehman
Brothers or Salomon Smith Barney (the "third party") a schedule of
fixed-income assets from the GALIC portfolio (the "105% Portfolio")
having (in Buyer's reasonable opinion) a market value of 105% of the
market value of the funding agreement contract liabilities being
exchanged. On the business day prior to the transfer, the third party
will determine the market value of each asset in the 105% Portfolio.
Assets having a market value equal to 100% of the market value of the
funding agreement contract liabilities will be selected by Buyer, in
its sole discretion, from such 105% Portfolio and transferred to, and
accepted by, Buyer as payment for its exchange of the funding agreement
contract liabilities. For purposes of this provision, the term "market
value of the funding agreement contract liabilities" shall mean the
amount mutually agreed to by Buyer and GALIC on the business day prior
to the date of transfer. In selecting the 105% Portfolio, Buyer's
primary concern is liquidity, but it will also take into account the
following:
(a) GALIC's capital and surplus;
(b) the tax effect on GALIC of the asset transfer;
(c) the effect of the asset transfer upon the investment
yield, asset quality and maturity structure of the
assets remaining at GALIC after such transfer; and
(d) the relationship between the book yield on the
transferred portfolio and the interest crediting rate
of the funding agreement contract liabilities.
ARTICLE VIII
TAX MATTERS
Section 8.1 Indemnity. (a) Subject to the terms of Section 8.1(c)
excluding payments to Seller pursuant to Section 8.2, Seller agrees to indemnify
and hold harmless Buyer, the Company and each Subsidiary against the following
Taxes (except to the extent of the reserve for Taxes (not including any deferred
Tax amounts) on the June 30, 1999 Interim Financial Statement and except to the
extent that any such Tax is attributable to an audit adjustment that results in
an increase in the taxable income of the Company or its Subsidiaries for any
such period and a correlative decrease in such taxable income in
46
<PAGE> 83
later taxable period beginning on or after the Closing Date, in which case the
a later taxable period beginning on or after the Closing Date, in which case the
amount of the indemnity shall be reduced by the discounted present value of the
resulting reasonably estimated future benefit), and, except as otherwise
provided in Section 8.9, against any loss, damage, liability or expense,
including reasonable fees for attorneys and other outside consultants, incurred
in contesting or otherwise in connection with any such Taxes: (i) Taxes imposed
on the Company or any Subsidiary with respect to taxable periods ending on or
before the Closing Date; (ii) Taxes imposed on any member of any consolidated,
combined or unitary group with which any of the Company and the Subsidiaries
file or have filed a Tax Return on a consolidated, combined or unitary basis for
a taxable period ending on or before the Closing date; and (iii) with respect to
taxable periods beginning before the Closing Date and ending after the Closing
Date, Taxes imposed on the Company or any Subsidiary which are allocable,
pursuant to Section 8.1(b), to the portion of such Tax period ending on the
Closing Date.
(b) In the case of Taxes that are payable with respect to a taxable
period that begins before the Closing Date and ends after the Closing Date the
portion of any such Tax that is allocable to the portion of the period ending on
the Closing Date shall be:
(i) in the case of Taxes that are either (A) based upon or related to
income or receipts, or (B) imposed in connection with any sale or other
transfer or assignment of property (real or personal, tangible or
intangible) (other than conveyances pursuant to this Agreement, as provided
under Section 8.9), deemed equal to the amount which would be payable if
the taxable period ended with the Closing Date;
(ii) in the case of Taxes imposed on a periodic basis with respect to
the assets of the Company or any Subsidiary, or otherwise measured by the
level of any item, deemed to be the amount of such Taxes for the entire
period (or, in the case of such Taxes determined on an arrears basis, the
amount of such Taxes for the immediately preceding period), multiplied by a
fraction the numerator of which is the number of calendar days in the
period ending on the Closing Date and the denominator of which is the
number of calendar days in the entire period; and
(iii) in the case of any premium tax, the amount which would be
payable with respect to the direct premiums written during the period that
ends on the Closing Date (taking into account the rates and credits
allocable to the pre-Closing period that would be available if such period
were treated as a separate year for premium tax purposes).
47
<PAGE> 84
(c) Notwithstanding any provision in this Agreement to the contrary,
Seller shall only be obligated to Buyer pursuant to the provisions of Section
8.1(a) for Taxes for which (i) Buyer, the Company or any Subsidiary, as the case
may be, has received a notice of proposed adjustment in writing from a Taxing
Authority (e.g., receipt of Form 5701 "Notice of Proposed Adjustments" for U.S.
federal tax purposes), and (ii) Buyer has thereafter made a valid claim with
respect thereto against the Escrow Account pursuant to the terms of the Escrow
Agreement on or prior to the third anniversary of the Closing Date.
(d) Buyer hereby agrees to indemnify and hold harmless Seller for all
Taxes and associated expenses not allocated to Seller pursuant to the provisions
of this Section 8.1(a).
(e) Neither Buyer, the Company, nor any Subsidiaries shall take or
allow to be taken any action the effect of which would be to accelerate the
making of any claim, the commencement or completion of any audit or other
inquiry by a Taxing Authority or the payment of (or increase in the amount of)
any Tax liability for which Seller has an obligation to indemnify Buyer pursuant
to the terms of Section 8.1. If Buyer, the Company, any Subsidiary, or any
employee or agent of any of them takes or causes to be taken any such action,
the indemnity provided in Section 8.1 hereof shall be void to the extent of any
associated payment or increase in Tax liability. Seller shall not take or permit
to be taken any action the effect of which would be to delay the making of any
claim, the commencement or completion of any audit or other inquiry by a Taxing
Authority or the payment of (or increase in the amount of) the payment or
increase the amount of any Tax liability for which Seller has an obligation to
indemnify Buyer pursuant to the terms of Section 8.1.
(f) Seller's obligations pursuant to this Section 8.1 shall be
satisfied solely with payments made by the Escrow Agent from the Escrow Account,
and Buyer shall have no other recourse against Seller with respect to any such
obligations.
Section 8.2 Tax Allocation Agreement Payments. After the Closing Date,
in accordance with the Tax Allocation Agreements and past intercompany
accounting practices of the Company and the Subsidiaries, the Company and the
Subsidiaries shall make further payments of Tax to the Seller or an appropriate
Taxing Authority to the extent that their share of current Taxes attributable to
taxable periods or portions thereof ending on or before the Closing Date exceeds
their previously paid share of estimated Taxes; provided, however, that no
payment shall be due for any period covered on the June 30, 1999 Interim
Financial Statement, except to the extent that provision for such Tax has been
made therein; and, provided, further, that no such payment shall include any
amount of Tax attributable directly or indirectly to the sale of the Shares
pursuant to this Agreement except as set forth in Section 8.6. Any payment under
this
48
<PAGE> 85
Section 8.2 which is to be made to the Seller shall be due not earlier than
five (5) Business Days before the due date of the corresponding payment to the
appropriate Taxing Authority. Except as otherwise provided in this Section 8.2,
this Agreement terminates, as of the Closing Date, the Tax Allocation Agreements
and any and all other similar agreements with respect to Taxes between or among
Seller and Company and the Subsidiaries.
Section 8.3 Returns and Payments. (a) Seller shall prepare and file or
otherwise furnish in proper form to the appropriate Taxing Authority (or cause
to be prepared and filed or so furnished) in a timely manner all (i)
consolidated, combined and unitary Tax Returns (each a "Consolidated Return")
that include Seller and (ii) Tax Returns relating to the Company and the
Subsidiaries that are attributable to periods ending on or before the Closing
Date (and Buyer shall do the same with respect to any non-Consolidated Return
for the Company or the Subsidiaries attributable to periods ending after the
Closing Date). Tax Returns of the Company and the Subsidiaries not yet filed for
any taxable period that begins before the Closing Date shall be prepared in a
manner consistent with past practices employed with respect to the Company and
the Subsidiaries (except to the extent counsel for Seller or the Company renders
a legal opinion that it is less likely than not that such practices would be
sustained by the courts if challenged or determines that a Tax Return cannot be
so prepared and filed without being subject to penalties). With respect to any
non-Consolidated Return required to be filed by Buyer or Seller with respect to
the Company and the Subsidiaries and as to which an amount of Tax is allocable
to the other party under Section 8.1(b), the filing party shall provide the
other party and its authorized representatives with a copy of such completed Tax
Return and a statement certifying the amount of Tax shown on such Tax Return
that is allocable to such other party pursuant to Section 8.1(b), together with
appropriate supporting information and schedules at least forty-five (45) days
prior to the due date (including any extension thereof) for the filing of such
Tax Return, and such other party and its authorized representatives shall have
the right to review and comment on such Tax Return and statement prior to the
filing of such Tax Return.
(b) After the Closing Date, Seller shall pay when due and payable all
Taxes with respect to the Company and the Subsidiaries that are unpaid as of the
Closing Date and are allocable to Seller pursuant to Sections 8.1(a) and 8.1(b)
(either directly to the appropriate Taxing Authority or as appropriate to Buyer,
the Company or any Subsidiary as the case may be).
(c) Buyer shall or shall cause the Company or the Subsidiaries to pay
all Taxes that are allocable to Buyer pursuant to Section 8.1(d)(either directly
to the appropriate Taxing Authority or to Seller).
49
<PAGE> 86
Section 8.4 Refunds. Any Tax refund (including any interest with
respect thereto) relating to the Company or any Subsidiary for Taxes paid for
any taxable period or portion thereof ending on or prior to the Closing Date
shall be the property of Seller, and if received by Buyer or the Company or any
Subsidiary shall be paid over promptly to Seller.
Section 8.5 Contests. (a) After the Closing, Buyer shall promptly
notify Seller in writing of any written notice of a proposed assessment, audit
or claim with respect to any inquiry, assessment, contest, proceeding or
litigation (a "Contest") of Buyer or Seller or of any of the Company and the
Subsidiaries which, if determined adversely to the taxpayer, would be grounds
for indemnification under this Article VIII.
(b) For all Contests for which the Seller alone has an indemnification
obligation under Section 8.1, Seller shall control all such Contests in
connection therewith. Prior to the Closing Date, Seller shall control all
Contests relating to the Company and the Subsidiaries. After the Closing Date,
in the case of a Contest that relates to a non-Consolidated Return (or any item
relating thereto or reported thereon) for a taxable period ending on or before,
or that includes, the Closing Date, Seller shall have the right at its expense
to participate in and control the conduct of such Contest, and for all taxable
periods thereafter, Buyer shall control such Contests. If Seller does not assume
the defense of any such Contest for a taxable period ending on or before the
Closing Date, Buyer may defend the same in such manner as it may deem
appropriate, including, but not limited to, settling such Contest after giving
30 days' prior written notice to Seller setting forth the terms and conditions
of settlement. In the event of a Contest covered by the second sentence of this
paragraph, that involves issues relating to a potential adjustment for which
Seller has liability that are required to be dealt with in a proceeding that
also involves separate issues relating to a potential adjustment for which Buyer
would be liable, Buyer shall have the right, at its expense, to control the
Contest but only with respect to the latter issues.
(c) Buyer and Seller agree to cooperate, and Buyer agrees to cause the
Company and the Subsidiaries to cooperate, in the defense against or compromise
of any claim in any Contest.
Section 8.6 Section 338(h)(10) Election. (a) At Buyer's written
request, which shall be given to Seller not later than 60 days before the last
date an election under Section 338(h)(10) of the Code ("Election") with respect
to the purchase of the Shares hereunder would be permitted to be filed, Buyer
and Seller shall (i) cooperate in the preparation for the Election and (ii)
unless Buyer thereafter shall notify Seller in writing prior to the date that
the Election would be required to be filed
50
<PAGE> 87
that such Election shall not be made, jointly file such Election with the
appropriate Taxing Authority on a timely basis and comply with the rules and
regulations applicable to such Election. In the event an Election is made
hereunder, unless directed otherwise by Buyer, Seller and Buyer shall, when
possible, omit or elect out of any such Election under applicable state or local
law.
(b) For purposes of making such Election and determining the Tax
Election Amount under Section 8.6(c), Buyer shall determine the value of the
tangible and intangible assets of the affected entities and shall timely provide
Seller with an allocation of Buyer's "adjusted grossed-up basis" in the Shares
(within the meaning of the Treasury Regulations under Section 338 of the Code)
to such assets (the "Allocation"). The Allocation shall be binding upon Buyer
and Seller for purposes of allocating the "deemed selling price" (within the
meaning of the Treasury Regulations) among the assets of the affected entities;
provided, however, that if Seller believes that all or a portion of the
Allocation is materially incorrect, an independent accounting firm of national
reputation (the "Independent Accounting Firm") shall be selected by Seller's and
Buyer's accounting firms, subject to the approval of both the Seller and Buyer,
to determine whether the Allocation is materially incorrect and the
determination of such Independent Accounting Firm shall be final. If the
Independent Accounting Firm determines that the Allocation is not materially
incorrect, Seller and Buyer shall be bound by the Allocation. If the Independent
Accounting Firm determines that the Allocation (or any portion thereof) is
materially incorrect, Seller and Buyer shall be bound by the Allocation as
adjusted by such Independent Accounting Firm.
(c) If Buyer decides to make the Election, Buyer shall pay to Seller as
additional Purchase Price an amount (the "Tax Election Amount") net of tax at an
assumed rate of 40%, equal to the excess of (i) the amount of federal, state and
local income and franchise Taxes due as a result of the deemed sale of the
assets of the affected entities pursuant to the Election, taking into account
any available federal, state or local losses, credits and loss or credit
carryovers, and any available election out of, omission of an election under, or
unavailability of an election under Section 338(h)(10) (or any analogous
provision) for state or local tax purposes, and disregarding any additional
amount of Purchase Price that may be payable by Buyer under this subsection (the
"Actual Section 338(h)(10) Tax Liability"), over (ii) the amount of federal,
state and local income and franchise taxes that would have been incurred by
Seller solely as a result of a transaction in which all the Shares were sold
without making an election under Section 338(h)(10) of the Code (the
"Hypothetical Stock Sale Tax Liability"). Notwithstanding any other provision of
this Agreement, Buyer shall not be entitled to an indemnity for any Tax that is
imposed with respect to a Tax period ending on or before, or that includes, the
Closing Date
51
<PAGE> 88
and that relates to the adjustment by a Taxing Authority of any federal, state
or local losses, credits and loss or credit carryovers that have been taken into
account in computing the Actual Section 338(h)(10) Tax Liability.)
(d) The Tax Election Amount shall be determined by Seller and its
accounting firm with the full cooperation of Buyer and its accounting firm;
provided, however, that the Tax Election Amount shall be subject to the right of
review by Buyer and Buyer's accountants. Seller shall provide to Buyer the
calculation of the Tax Election Amount no later than the twenty-fifth day
following the effective date of Buyer's initial request. In the event Buyer or
Buyer's accountants disagree with such calculation, Buyer shall give Seller
written notice thereof within 15 days of the date Seller furnishes such
calculation. Buyer shall pay to Seller the portion of the Tax Election Amount
that Buyer does not dispute (the "Undisputed Amount") at least three Business
Days prior to the due date of Seller's Return for the Tax period that includes
the Closing Date. If Seller and Buyer are unable to settle or compromise such
dispute within 15 Business Days after Buyer's notice, the Independent Accounting
Firm shall determine the Tax Election Amount and such determination shall be
final. In the event it is determined that Buyer owes Seller any portion of the
disputed amount, Buyer shall bear the portion of the costs of the Independent
Accounting Firm determined by multiplying such costs by a fraction, the
numerator of which is the additional amount that the Independent Accounting Firm
determines Buyer owes Seller and the denominator of which is the disputed
amount, and Buyer shall pay to Seller such additional amount plus interest
thereon at the "overpayment rate" as defined in Section 6621(a) of the Code from
the due date of Seller's Return to the date of payment. Seller shall bear all
costs of the Independent Accounting Firm which are not paid by Buyer pursuant to
the immediately preceding sentence.
Section 8.7 Time of Payment. Except as provided in Section 8.2 hereof,
payment of any amounts due under this Article VIII in respect of Taxes shall be
made (i) at least three Business Days before the due date of the applicable Tax
Return required to be filed by either Buyer or Seller, as the case may be, that
shows Taxes due for which the other party is responsible under Sections 8.1(a)
and 8.1(b), or (ii) within three Business Days following an agreement between
Seller and Buyer that an indemnity amount is payable, an assessment of a Tax by
a Taxing Authority, or a "determination" having been made as such term is
defined in Section 1313(a) of the Code. If liability under this Article VIII is
in respect of costs or expenses other than Taxes, payment of any amounts due
under this Article VIII shall be made within five Business Days after the date
when the relevant entity has been notified that such entity has a liability for
a determinable amount under this Article VIII and is provided with calculations
or other materials supporting such liability.
52
<PAGE> 89
Section 8.8 Cooperation and Exchange of Information. Upon the terms set
forth in Section 6.4 of this Agreement, Seller and Buyer will provide each other
with such cooperation and information as either of them reasonably may request
of the other in filing any Tax Return, amended Tax Return or claim for refund,
determining a liability for Taxes or a right to a refund of Taxes, participating
in or conducting any Contest in respect of Taxes or making representations to or
furnishing information to parties subsequently desiring to purchase any of the
Company or the Subsidiaries or any part of the business from Buyer. Such
cooperation and information shall include providing copies of relevant Tax
Returns or portions thereof, together with accompanying schedules, related work
papers and documents relating to rulings or other determinations by Taxing
Authorities. Seller shall make its employees available on a basis mutually
convenient to both parties to provide explanations of any documents or
information provided hereunder as is reasonably practicable. Each of Seller and
Buyer shall retain all Tax Returns, schedules and work papers, records and other
documents in its possession relating to Tax matters of the Company and the
Subsidiaries for each taxable period first ending after the Closing Date and for
all prior taxable periods until the later of (i) the expiration of the statute
of limitations of the taxable periods to which such Tax Returns, schedules and
work papers, records and other documents relate, without regard to extensions
except to the extent notified in writing of such extensions for the respective
Tax periods, or (ii) three years following the due date (without extension) for
such Tax Returns, provided, however, that the Seller may satisfy its obligations
hereunder by delivering all such Tax Returns, schedules and work papers, records
and other documents to the Buyer. Any information obtained under this Section
8.8 shall be kept confidential in accordance with Section 6.4 except as may be
otherwise necessary in connection with the filing of Tax Returns or claims for
refund or in conducting a Contest.
Section 8.9 Conveyance Taxes. Buyer shall be liable for and shall hold
Seller harmless against any real property transfer or gains, sales, use,
transfer, value added, stock transfer, and stamp taxes, any transfer, recording,
registration, and other fees, and any similar Taxes which become payable in
connection with the transactions contemplated by this Agreement, and shall file
such applications and documents as shall permit any such Tax to be assessed and
paid on or prior to the Closing Date in accordance with any available pre-sale
filing procedure. Buyer or Seller, as appropriate, shall execute and deliver all
instruments and certificates necessary to enable the other to comply with any
filing requirements relating to any such Taxes.
Section 8.10 Miscellaneous. (a) Seller and Buyer agree to treat all
payments made by either of them to or for the benefit of the other (including
any payments to the Company or any Subsidiary) under this Article VIII, under
other indemnity
53
<PAGE> 90
provisions of this Agreement as adjustments to the Purchase Price.
(b) Notwithstanding any other provision in this Agreement to the
contrary, Seller's obligation to indemnify Buyer, the Company, and its
Subsidiaries with respect to Taxes shall not extend to any Taxes attributable to
the deduction for the risk premium payment made pursuant to Article VII hereof.
(c) Seller will use its best efforts before the Closing Date to pursue
the submission to the Internal Revenue Service as disclosed to Buyer in a letter
from Seller to Buyer dated August 26, 1999.
(d) The representations and warranties contained in Sections 4.14 and
4.26(a)(iv) shall terminate as of the Closing Date.
ARTICLE IX
CONDITIONS TO CLOSING
Section 9.1 Conditions to Buyer's Obligations. In addition to the
conditions set forth in Section 9.3, the obligations of Buyer to effect the
Closing shall be subject to the following conditions, any one or more of which
may be waived in writing by Buyer:
(a) The representations and warranties of Seller set forth in this
Agreement shall be true and correct in all material respects as of the date
of this Agreement and as of the Closing Date as though made on and as of
the Closing Date (except that any such representation and warranty that is
given as of a particular date or period and relates solely to such
particular date or period shall be true and correct only as of such date or
period); provided, however, that with respect to any representation or
warranty or portion thereof that is qualified by Material Adverse Effect,
materiality or similar qualifier, such representation or warranty or
portion thereof shall be true and correct in all respects;
(b) Seller shall have performed and complied with in all material
respects all agreements, covenants, obligations and conditions required by
this Agreement to be performed or complied with by Seller on or prior to
the Closing Date;
(c) Seller shall have caused to be delivered to Buyer a certificate
executed by a duly authorized officer of Seller certifying that the
conditions set forth in this Section 9.1 have all been satisfied;
54
<PAGE> 91
(d) The Company shall not have commenced a voluntary case or
proceeding under any bankruptcy law and, if an involuntary case shall have
been commenced against the Company under any bankruptcy law, such case
shall have been dismissed within 60 days after its commencement;
(e) The transactions contemplated by the proxy statement of RGA dated
July 23, 1999 shall have been consummated in all material respects on the
terms set forth in such proxy statement, including, without limitation, the
reclassification of RGA's Non-Voting Common Stock into Common Stock at the
exchange rate set forth in such proxy statement;
(f) Any approvals or orders required in connection with the
Reorganization Proceeding in order to permit the consummation of the
transactions contemplated by this Agreement shall have been obtained, and
(i) such approvals or orders shall have become final and nonappealable, or
(ii) the period for appealing any such approvals or orders shall have
passed, one or more appeals of such approvals or orders shall have been
timely taken and not withdrawn, any such approvals or orders shall not have
been stayed or reversed prior to the Closing, and Buyer shall have
determined, in its sole discretion, exercised in good faith, that any such
appeals are unlikely to invalidate Buyer's title to the Shares; and
(g) GALIC shall not be subject to a then pending rehabilitation
proceeding under Section 375.1165 of the Missouri Insurance Code.
Section 9.2 Conditions to Seller's Obligations. In addition to the
conditions set forth in Section 9.3, the obligations of Seller to effect the
Closing shall be subject to the following conditions, any one or more of which
may be waived in writing by Seller:
(a) The representations and warranties of Buyer set forth in this
Agreement shall be true and correct in all material respects as of the date
of this Agreement and as of the Closing Date as though made on and as of
the Closing Date (except that any such representation and warranty that is
given as of a particular date or period and relates solely to such
particular date or period shall be true and correct only as of such date or
period); provided, however, that with respect to any representation or
warranty or portion thereof that is qualified by Material Adverse Effect,
materiality or similar qualifier, such representation or warranty or
portion thereof shall be true and correct in all respects;
55
<PAGE> 92
(b) Buyer shall have performed and complied with in all material
respects all agreements, covenants, obligations and conditions required by
this Agreement to be performed or complied with by Buyer on or prior to the
Closing Date;
(c) Buyer shall have caused to be delivered to Seller a certificate
executed by a duly authorized officer of Buyer certifying that the
conditions set forth in this Section 9.2 have all been satisfied; and
(d) Any approvals or orders required in connection with the
Reorganization Proceeding in order to permit the transactions contemplated
by this Agreement shall have been obtained, and such approvals or orders
shall not have been stayed or reversed prior to the Closing.
Section 9.3 Mutual Conditions. The obligations of each of Buyer and
Seller to effect the Closing shall be subject to the following conditions, any
one or more of which may be waived in writing, as to itself, by either party:
(a) No temporary restraining order, preliminary or permanent
injunction or other order issued by a court of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of the
transactions contemplated by this Agreement shall be in effect;
(b) All approvals of Governmental Authorities required to consummate
the transactions contemplated hereby shall have been obtained and shall
remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired;
(c) In respect of the notifications of Buyer and Seller pursuant to
the HSR Act, the applicable waiting period and any extensions thereof shall
have expired or been terminated;
(d) Buyer, Seller and Escrow Agent shall have duly executed and
delivered the Escrow Agreement;
(e) The Reorganization Plan as approved in the Reorganization
Proceeding shall contain substantially the terms specified in Exhibit A and
such other terms as are reasonably acceptable to Buyer and Seller.
56
<PAGE> 93
ARTICLE X
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS; INDEMNIFICATION
Section 10.1 Survival. (a) The representations and warranties of the
parties set forth in this Agreement shall terminate on the date that is two
years after the Closing Date. Notice with respect to any claim in respect of any
inaccuracy in or breach of any representation or warranty shall be in writing
and shall be given to the party against which such claim is asserted on or
before the date on which such representation or warranty terminates.
(b) All covenants and agreements made by the parties to this Agreement
which contemplate performance following the Closing Date shall survive the
Closing Date. All other covenants and agreements shall not survive the Closing
Date and shall terminate as of the Closing; provided, however, that if any such
covenant or agreement is breached on or prior to the Closing Date, the
non-breaching party shall retain all rights and remedies with respect to such
breach following the Closing Date.
Section 10.2 Obligation of Seller to Indemnify. Subject to the
limitations set forth in Sections 10.1, 10.5, 10.6 and 10.7, Seller shall
indemnify, reimburse, defend and hold harmless Buyer and its directors,
officers, employees, Affiliates, and their respective successors and assigns
from and against any Loss incurred by any of them based upon, arising out of or
otherwise in respect of (i) any inaccuracy in or any breach of any
representation or warranty of Seller without taking into account, in determining
whether any such inaccuracy or breach exists or has occurred, any qualifier in
any representation or warranty or portion thereof as to Material Adverse Effect,
materiality or similar qualifier;(ii) the nonfulfillment on the part of Seller
of any unwaived covenant or agreement set forth in this Agreement; (iii) any
direct or derivative Action brought or threatened within three years after the
Closing Date by any Person of any kind or nature whatsoever and based on any
legal theory whatsoever (a) (other than non-derivative claims of Seller) seeking
relief as a result of Buyer's acquisition of the Shares, (b) resulting from
alleged breaches occurring on or after July 15, 1999 of contracts relating to
the Stable Value Business or (c) arising out of the financial distress of GALIC
relating to the Stable Value Business (the "Indemnified Litigation"); (iv) any
and all indemnification claims by officers, directors or employees of Seller,
the Company, GALIC, any Subsidiary, RGA, any RGA Subsidiary, Conning or any
Conning Subsidiary or payments made by the Company, any Subsidiary, RGA, any RGA
Subsidiary, Conning or any Conning Subsidiary with respect to the items set
forth in clause (iii) above, including without limitation, any indemnification
of any employee, officer or director (other than a director of RGA or Conning
who is not, and has never been, an
57
<PAGE> 94
officer or employee of Seller, the Company, GALIC, any subsidiary, RGA, any RGA
Subsidiary, Conning or any Conning Subsidiary) of any such Persons; (v) all
liabilities relating to any Seller Plan not listed in Schedule 4.13 (other than
a Seller Plan that does not have an aggregate lifetime present value liability
in excess of $500,000); and (vi) all liabilities relating to any additional or
accelerated compensation, benefits or other rights under a Seller Plan or other
contract or arrangement for the benefit of any Company Employee (or any
non-employee director or independent contractor of the Company, any Subsidiary,
RGA, any RGA Subsidiary, Conning or any Conning Subsidiary) resulting from the
transactions contemplated by this Agreement being considered to constitute a
"change in control" or similar triggering event.
Section 10.3 Obligation of Buyer to Indemnify. Subject to the
limitations set forth in Sections 10.1, 10.5 and 10.7, Buyer shall indemnify,
defend and hold harmless Seller and its directors, officers, employees,
Affiliates, and their respective successors and assigns from and against any
Loss incurred by any of them based upon, arising out of or otherwise in respect
of (i) any inaccuracy in or breach of any representation or warranty of Buyer
(after taking into account the exceptions to such representations and warranties
which are set forth on the Schedules related to such representations and
warranties), and (ii) the nonfulfillment on the part of Buyer of any unwaived
covenant or agreement set forth in this Agreement which survives the Closing
Date in accordance with Section 10.1.
Section 10.4 Notice and Opportunity to Defend Against Third Party
Claims. (a) Promptly after receipt from any third party by either party hereto
(the "Indemnitee") of a notice of any demand, claim or circumstance that,
immediately or with the lapse of time, would give rise to a claim or the
commencement (or threatened commencement) of any action, proceeding or
investigation (an "Asserted Liability") that may result in a Loss for which
indemnification may be sought hereunder, the Indemnitee shall give written
notice thereof (the "Claims Notice") to the party obligated to provide
indemnification pursuant to Section 10.2 or 10.3 (the "Indemnifying Party");
provided, however, that a failure to give such notice shall not prejudice the
Indemnitee's right to indemnification hereunder except to the extent that the
Indemnifying Party is actually prejudiced thereby. The Claims Notice shall
describe the Asserted Liability in reasonable detail, and shall indicate the
amount (estimated, if necessary) of the Loss that has been or may be suffered by
the Indemnitee.
(b) The Indemnifying Party may elect to compromise or defend, at its
own expense and by its own counsel, any Asserted Liability. If the Indemnifying
Party elects to compromise or defend such Asserted Liability, it shall, within
20 Business Days following its receipt of the Claims Notice (or sooner, if the
58
<PAGE> 95
nature of the Asserted Liability so requires) notify the Indemnitee of its
intent to do so, and the Indemnitee shall cooperate, at the expense of the
Indemnifying Party, in the compromise of, or defense against, such Asserted
Liability. If the Indemnifying Party elects not to compromise or defend the
Asserted Liability, fails to notify the Indemnitee of its election as herein
provided or contests its obligation to provide indemnification under this
Agreement, the Indemnitee may pay, compromise or defend such Asserted Liability.
Notwithstanding the foregoing, neither the Indemnifying Party nor the Indemnitee
may settle or compromise any Asserted Liability without the consent of the other
party; provided, however, that such consent to settlement or compromise shall
not be unreasonably withheld. In any event, the Indemnitee and the Indemnifying
Party may participate, at their own expense, in the defense of such Asserted
Liability. If the Indemnifying Party chooses to defend any Asserted Liability,
the Indemnitee shall make available to the Indemnifying Party any books, records
or other documents within its control that are necessary or appropriate for such
defense.
Section 10.5 Net Indemnity. The amount of any Loss from and against
which either party is liable to indemnify, reimburse, defend and hold harmless
the other party or any other Person pursuant to Section 10.2 or Section 10.3
shall be reduced by any insurance or other recoveries or any Tax benefit that
such Indemnitee actually realizes as a result of or in connection with such Loss
and increased by any Taxes such Indemnitee actually realizes in respect of
indemnification for such Loss.
Section 10.6 Tax Indemnification. Notwithstanding any provision of this
Article X or any other provision of this Agreement, any issue or matter relating
to Taxes (including all representations and warranties contained in Section 4.14
and 4.26(iv)) shall be governed solely by Article VIII.
Section 10.7 Limits on Indemnification. (a) No party shall have any
right to seek indemnification under this Agreement (i) as to any individual item
or series of related items of Loss, to the extent such Loss is less than
$25,000, (ii) with respect to Losses contemplated by Section 10.2(i) which would
otherwise be indemnifiable hereunder incurred by such party (including Losses
incurred by all other Indemnitees affiliated with or related to such party)
until such Losses exceed $15 million in the aggregate, after insurance or other
recoveries and on an after-tax basis, as provided in Section 10.5, and such
party (including such affiliated or related Persons) shall only be entitled to
be indemnified for Losses in excess of such aggregate amount, (iii) for
punitive, special or consequential damages (other than in connection with
Indemnified Litigation or litigation not disclosed to Buyer in breach of Section
4.8), or (iv) in respect of Losses to the extent such Losses result from or
arise out of actions taken by such party or an Affiliate,
59
<PAGE> 96
employee, representative or agent thereof after the Closing not contemplated by
this Agreement and not required by Applicable Law. After the Closing, the
remedies provided by this Article X shall be the sole and exclusive remedy for
the parties to this Agreement with respect to any dispute arising from, or
related to, this Agreement, except in the case of fraud and except that specific
performance shall continue to be available.
(b) Notwithstanding any provision of this Article X, the liability of
Seller under this Article X shall be limited to the Purchase Price paid to the
Escrow Agent pursuant to the terms of this Agreement and Buyer agrees that its
sole recourse shall be limited to the funds paid by Seller to the Escrow Agent.
ARTICLE XI
TERMINATION
Section 11.1 Termination. (a) This Agreement may be terminated on or
prior to the Closing Date only as follows:
(i) by mutual written consent of Buyer and Seller;
(ii) by either Buyer or Seller if a condition to its obligation to
perform becomes incapable of fulfillment, provided, however, that the right
to terminate this Agreement pursuant to this Section 11.1(a)(ii) shall not
be available to any party if its condition to perform became incapable of
fulfillment due to its failure to fulfill any obligation under this
Agreement;
(iii) by Buyer if Seller (A) breaches or fails in any material respect
to perform or comply with any of its material covenants or agreements
contained herein, or (B) breaches any representation or warranty that is
qualified as to Material Adverse Effect, or breaches any other
representation or warranty which breach would have a Material Adverse
Effect, and such breach is not cured to the reasonable satisfaction of
Buyer within 30 Business Days after Buyer has provided written notice
thereof to Seller;
(iv) by Seller if Buyer (A) breaches or fails in any material respect
to perform or comply with any of its material covenants or agreements
contained herein, or (B) breaches any representation or warranty in any
material respect and such breach is not cured to the reasonable
satisfaction of Seller within 30 Business Days after Seller has provided
written notice thereof to Buyer;
(v) subject to Section 6.15, by either Buyer or Seller upon written
notice to the other if the Closing Date shall not have occurred by August
26, 2000; provided, however,
60
<PAGE> 97
that the right to terminate this Agreement pursuant to this clause (v)
shall not be available to any party whose failure to fulfill any of its
obligations under this Agreement resulted in the Closing not occurring by
such date;
(vi) Subject to Section 11.3, by Seller, upon five days' prior notice
to Buyer, if, as a result of a Proposal with respect to a Control
Transaction by a party other than Buyer or any of its affiliates, (A) the
Board of Directors of Seller determines in good faith following
consultation with outside counsel and financial advisors that acceptance of
such Proposal is necessary for the Board of Directors to act consistent
with its fiduciary duties under applicable law or (B) the Director of the
Department directs that Seller terminate this Agreement;
(vii) by Buyer if GALIC or any material Life Insurance Subsidiary is
placed in delinquency proceedings or reorganization proceedings unless
agreed to by Buyer; provided, however, that Buyer shall not have the right
to terminate this Agreement under this clause (vii) as a result of a
rehabilitation proceeding with respect to GALIC which is instituted in
order to effectuate the transactions contemplated by this Agreement and
such proceeding is completed within 21 days or such longer period
determined by Buyer in its sole discretion as will not result in a material
diminution of the value of GALIC;
(viii) by Buyer if an order approving the Reorganization Proceeding or
this Agreement shall have been appealed and stayed and such stay shall not
have been lifted within 15 days after it was issued; and
(ix) by Buyer if, after the date hereof, there shall have occurred a
change that fundamentally impairs in a manner that cannot be remedied
within a reasonable period of time the core business operations of the
Company and its Subsidiaries, taken as a whole and is not attributable to
(1) general conditions applicable to the economy of the United States or
elsewhere, including changes in interest rates and in the stock or other
financial markets, (2) conditions generally affecting the life insurance,
life reinsurance or securities industries or (3) conditions or effects
resulting from or relating to the announcement or the existence or terms of
this Agreement or the consummation of the transactions contemplated hereby.
(b) The termination of this Agreement shall be effectuated by the
delivery of a written notice of such termination from the party terminating this
Agreement to the other party.
61
<PAGE> 98
Section 11.2 Obligations upon Termination. In the event that this
Agreement shall be terminated pursuant to Section 11.1, all obligations of the
parties hereto under this Agreement shall terminate and there shall be no
liability of any party hereto to any other party except (i) as set forth in
Section 6.2, Section 6.3, Section 6.4(c), Section 7.1(c) and Section 11.3 and
(ii) that nothing herein will relieve any party from liability for any breach of
this Agreement.
Section 11.3 Termination Fee. Seller shall pay Buyer a fee of
$50,000,000, which amount shall be payable by Wire Transfer, within one business
day following any termination of this Agreement by Seller pursuant to Section
11.1(a)(vi). The Company acknowledges that the agreements contained in this
Section 11.3 are an integral part of the transactions contemplated in this
Agreement, and that, without these agreements, Buyer would not enter into this
Agreement; accordingly, if Seller fails to promptly pay the amount due pursuant
to this Section 11.3, and, in order to obtain such payment, Buyer commences a
suit which results in a judgment against Seller for the full amount of the fee
set forth in this Section 11.3, Seller shall pay to Buyer its costs and expenses
(including attorneys' fees) in connection with such suit, together with interest
on the amount of the fee at the rate of 12% per annum from the date such fee was
required to be paid. No termination of this Agreement by Seller pursuant to
Section 11.1(a)(vi) shall be effective until receipt by Buyer of the amounts
contemplated by the first sentence of this Section 11.3.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Amendments. This Agreement may not be amended, altered or
modified except by written instrument executed by Buyer and Seller and approved
by the Department.
Section 12.2 Entire Agreement. (a) This Agreement, the Ancillary
Agreements and the Confidentiality Agreement constitute the entire understanding
of the parties hereto with respect to the transactions contemplated hereby, and
supersede all prior agreements and understandings, written and oral, among the
parties with respect to the subject matter hereof.
(b) Buyer acknowledges that neither Seller or any of its Affiliates,
nor any representative or advisor of any of them, has made any representation or
warranty to Buyer except as specifically made in this Agreement. In particular,
no such Person has made any representation or warranty to Buyer with respect to:
(i) any information or materials distributed by Morgan Stanley & Co.
Incorporated or Goldman, Sachs & Co. in
62
<PAGE> 99
connection with the proposed sale of the Company and the Subsidiaries, or (ii)
any financial projection or forecast relating to the Company or the
Subsidiaries. With respect to any such projection or forecast delivered by or on
behalf of Seller to Buyer, Buyer acknowledges that: (A) there are uncertainties
inherent in attempting to make such projections and forecasts, (B) it is
familiar with such uncertainties, (C) it is taking full responsibility for
making its own evaluation of the adequacy and accuracy of all such projections
and forecasts so furnished to it and (D) it shall have no claim against any such
Person with respect to any such projection or forecast.
Section 12.3 Interpretation. When reference is made in this Agreement
to any Section, Exhibit or Schedule, such reference is to a Section, Exhibit or
Schedule of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." The phrases
"the date of this Agreement," "the date hereof" and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to the date set
forth in the first paragraph of this Agreement. The words "hereof", "herein",
"hereby" and other words of similar import refer to this Agreement as a whole
unless otherwise indicated. The phrase "to the knowledge of Seller" or any
similar phrase shall be deemed to refer to the actual knowledge of any of the
executive officers of the Company, GALIC, RGA and Conning after due inquiry.
Whenever the singular is used herein, the same shall include the plural, and
whenever the plural is used herein, the same shall include the singular, where
appropriate.
Section 12.4 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, that
provision shall be interpreted to be only so broad as is enforceable.
Section 12.5 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given and delivered if they are: (a)
delivered in person, (b) transmitted by facsimile (with confirmation), (c)
delivered certified or registered mail (return receipt requested), or (d)
delivered by an express courier (with confirmation) to a party at its address
listed below (or at such other address as such party shall deliver to the other
party by like notice):
63
<PAGE> 100
To Seller: General American Mutual
Holding Company
700 Market Street
St. Louis, MO 63101-1887
Facsimile: (314) 444-0510
Attention: Robert Banstetter
With a concurrent
copy to: LeBoeuf, Lamb, Greene & MacRae,
L.L.P.
125 West 55th Street
New York, NY 10019-4513
Facsimile: (212) 424-8500
Attention: Alexander M. Dye
To Buyer: Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10011-3690
Facsimile: (212) 679-4523
Attention: General Counsel
With a concurrent
copy to: Dewey Ballantine LLP
1301 Avenue of the Americas
New York, NY 10019-6092
Facsimile: (212) 259-6333
Attention: Jonathan L. Freedman
Jeff S. Liebmann
Section 12.6 Binding Effect; Persons Benefitting; No Assignment. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and the respective successors and permitted assigns of the parties and such
Persons. Nothing in this Agreement is intended or shall be construed to confer
upon any entity or person other than the parties hereto and their respective
successors and permitted assigns any right, remedy or claim under or by reason
of this Agreement or any part hereof. This Agreement may not be assigned by
either party hereto without the prior written consent of the other party, except
that the Buyer may assign its rights hereunder to a wholly owned subsidiary with
the prior written consent of the Department, which consent shall not be
unreasonably withheld.
Section 12.7 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
taken together shall
64
<PAGE> 101
constitute one and the same agreement, it being understood that all of the
parties need not sign the same counterpart.
Section 12.8 No Prejudice. This Agreement has been jointly prepared by
the parties hereto and the terms hereof shall not be construed in favor of or
against any party on account of its participation in such preparation.
Section 12.9 Governing Law. THIS AGREEMENT, THE LEGAL RELATIONS BETWEEN
THE PARTIES AND THE ADJUDICATION AND THE ENFORCEMENT THEREOF SHALL BE GOVERNED
BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE
STATE OF MISSOURI.
Section 12.10 Specific Performance. Each party hereto acknowledges and
agrees that the other party hereto would be irreparably damaged in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, each party
hereto agrees that it shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement by the other party and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
subject matter jurisdiction, in addition to any other remedy to which either
party may be entitled, at law or in equity.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
GENERAL AMERICAN MUTUAL
HOLDING COMPANY
By: /s/ Richard A. Liddy
Name: Richard A. Liddy
Title: Chairman, President
and Chief Executive
Officer
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ Robert H. Benmosche
Name: Robert H. Benmosche
Title: Chairman and Chief
Executive Officer
65
<PAGE> 102
Exhibit A
Reorganization Plan Components
The Reorganization Plan shall include provisions which
1. Incorporate the Stock Purchase Agreement, as executed, and the
Escrow Agreement, in the form of Exhibit B to the Stock
Purchase Agreement, as integral parts of Reorganization Plan
binding upon (or to be binding upon) Seller in Rehabilitation.
2. Provide for approval of sale of the company with the
determination (i) that the stock of the Company is being
transferred free and clear of all claims, liens and
encumbrances, including but not limited to claims against or
relating to Seller, the assets of Seller, or the interests of
the members of Seller in Seller or the value thereof and (ii)
that such sale is for fair consideration. In connection with
such sale, no closed block shall be required to be established
for any policyholders of GALIC.
<PAGE> 103
Schedule 1.1(a)
Life Insurance Subsidiaries
General American Life Insurance Company, a Missouri company
General Life Insurance Company, a Texas company
General Life Insurance Company of America, an Illinois company
GenAm Benefits Insurance Company, a Missouri company*
Paragon Life Insurance Company, a Missouri company
RGA Reinsurance Company, a Missouri company
Security Equity Life Insurance Company, a New York company
Cova Financial Services Life Insurance Company, a Missouri company
Cova Financial Life Insurance Company, a California company
First Cova Life Insurance Company, a New York company
Foreign
Missouri Reinsurance (Barbados), Inc.
RGA Reinsurance Company (Barbados) Ltd.
RGA Reinsurance Company of Australia Limited
RGA Life Reinsurance Company of Canada
RGA Reinsurance Company Chile S.A.
Triad Re, Ltd.
*GenAm Benefits Insurance Company: This entity currently holds insurance
licenses but is a non-operational shell which does not qualify as an insurance
company for tax purposes.
Received Time Aug.27. 11:59 AM
<PAGE> 104
Schedule 1.1(b)
Subsidiaries
General American Life Insurance Company
GenAmerica Management Corporation
Walnut Street Securities, Inc
Walnut Street Advisers, Inc
WSS Insurance Agencies (Alabama, Massachusetts, Ohio, Texas), Inc.
Collaborative Strategies, Inc.
GenAmerica Capital I
Missouri Reinsurance (Barbados), Inc.
NaviSys Incorporated
NaviSys Enterprise Solutions, Inc.
NaviSys Illustration Solutions, Inc.
NaviSys Insurance Solutions, Inc.
GenAm Benefits Insurance Company
Cova Corporation
Cova Financial Services Life Insurance Company
First Cova Life Insurance Company
Cova Financial Life Insurance Company
Cova Life Management Company
Cova Investment Advisory Corporation
Cova Investment Allocation Corporation
Cova Life Sales Company
Cova Life Administration Services Company
General Life Insurance Company
General Life Insurance Company of America
Paragon Life Insurance Company
Equity Intermediary Company
Security Equity Life Insurance Company
NaviSys Asia Pacific Limited
NaviSys de Mexico, S.A. de C.V.
Genelco Software, S.A.
Cova Life Administration Services Company
Consultec, LLC
Red Oak Realty Company
GenMark Incorporated
Stan Mintz Associates, Inc.
GenMark Insurance Agencies (Alabama, Massachusetts, Ohio, and Texas)
VirtualFinances.Com, Inc.
White Oak Royalty Company
Received Time Aug.27. 11:59AM
<PAGE> 105
Schedule 1.1(c)
Conning Subsidiaries
Conning, Inc.
Conning & Company
Conning Asset Management Company
Received Time Aug.27 11:59AM
<PAGE> 106
Schedule 1.1(d)
RGA Subsidiaries
RGA Sudamerica S.A.
BHIF America Seguros de Vida S.A.
RGA Reinsurance Company Chile S.A.
General American Argentina Sequros de Vida S.A.
Reinsurance Company of Missouri, Incorporated
RGA Reinsurance Company
Fairfield Management Group, Inc.
Reinsurance Partners, Inc.
Great Rivers Reinsurance Management, Inc.
RGA (U.K.) Underwriting Agency Limited
RGA Reinsurance Company (Barbados) Ltd.
RGA/Swiss Financial Group, L.L.C.
Triad Re, Ltd.
RGA Americas Reinsurance Company, Ltd.
RGA International Ltd.
RGA Financial Products Limited
RGA Canada Management Company, Ltd.
RGA Life Reinsurance Company of Canada
RGA Holdings Limited
RGA Capital Limited
Benefit Resource Life Insurance Company (Bermuda) Ltd.
RGA Australian Holdings Pty Limited
RGA Reinsurance Company of Australia Limited
RGA South African Holdings (Pty) Ltd.
RGA Reinsurance Company of South Africa Limited
Received Time Aug.27. 11:59AM
<PAGE> 107
AMENDMENT TO STOCK
PURCHASE AGREEMENT
AMENDMENT TO STOCK PURCHASE AGREEMENT, dated as of September 16, 1999,
by and between GENERAL AMERICAN MUTUAL HOLDING COMPANY, a Missouri mutual
insurance holding company ("Seller"), and METROPOLITAN LIFE INSURANCE COMPANY, a
New York mutual life insurance company ("Buyer").
RECITALS
WHEREAS, Buyer and Seller have previously entered into a Stock Purchase
Agreement, dated as of August 26, 1999 (the "Stock Purchase Agreement")
(capitalized terms used but not defined herein shall have the meanings ascribed
thereto in the Stock Purchase Agreement); and
WHEREAS, Buyer and Seller wish to amend the Stock Purchase Agreement as
provided herein;
NOW, THEREFORE, in connection with and in consideration of the premises
and the mutual agreements and covenants hereinafter set forth, the Buyer and the
Seller hereby agree as follows:
1. Section 3.2(g) of the Stock Purchase Agreement is hereby amended to
read in its entirety as follows:
"(g) The Purchase Price proceeds shall be paid (i) to the Seller if the
Seller is not the subject of a rehabilitation proceeding, and (ii) into the
Account (as defined in Article 11 of the Reorganization Plan) if the Seller is
the subject of a rehabilitation proceeding."
2. Section 9.3(d) of the Stock Purchase Agreement is hereby deleted.
Insofar as the Stock Purchase Agreement refers to the Escrow Agreement, such
references shall be deemed to be references to the provisions of Article 11 of
the Reorganization Plan. Insofar as the Stock Purchase Agreement refers to the
Escrow or the Escrow Account, such references shall be deemed to be references
to the Account (as defined in Article 11 of the Reorganization Plan). Insofar as
the Stock Purchase Agreement refers to the Escrow Agent, such references shall
be deemed to be references to the Director of Insurance of the State of
Missouri, acting solely in his capacity as the statutory rehabilitator of
Seller, and further solely insofar as he holds any portion of the Account and is
authorized to act with respect thereto.
3. Buyer agrees and acknowledges that the overbid procedures set forth
in the "Order Approving Certain Matters as to the Acquisition of GenAmerica
Corporation by Metropolitan Life Insurance Company" proposed to be issued on
September 17, 1999 by the Missouri court supervising the Reorganization
Proceeding are in conformity with the covenants of Seller set forth in Section
6.13 of the Stock Purchase Agreement.
4. The number "21" in the first sentence of Section 6.6(d) of the Stock
Purchase Agreement is hereby replaced with the number "28".
<PAGE> 108
5. There are hereby added to the Stock Purchase Agreement two new
subsections (h) and (i) of Section 9.1 (Conditions to Buyer's Obligations) to
read in their entirety as follows:
"(h) Seller shall have granted to Buyer a first priority perfected
security interest in or first priority perfected lien upon the Account and the
Account Fund (as those terms are defined in the Reorganization Plan) and all
assets comprising such Account Fund, to be evidenced by:
(i) filed financing statement(s) under the Uniform Commercial
Code as enacted in the relevant jurisdiction(s) (the "UCC");
(ii) reports of lien and judgment searches of appropriate
records; and
(iii) the Final Plan Confirmation Judgment (as defined in the
Reorganization Plan);
provided, however, if there is a reasonable basis for Buyer concluding, under
applicable law, that all or any of the foregoing are legally insufficient to
grant to Buyer a first priority perfected security interest or first priority
perfected lien, the parties shall cooperate in good faith to find an alternative
mechanism which has a legal effect substantially identical to the first priority
perfected security interest or first priority perfected lien described above,
which mechanism does not adversely affect the rights of the respective parties;
and
(i) Seller shall have obtained a signed agreement from the financial
institution at which the Account is required to be established pursuant to the
Reorganization Plan indicating that such institution (i) has established the
Account in accordance with the Reorganization Plan and has acknowledged receipt
of a copy of the Final Plan Confirmation Judgment (as defined in the
Reorganization Plan), (ii) has acknowledged that it is a "securities
intermediary" and that the Account and the assets comprising the Account Fund
are "investment property" and "financial assets" within the meaning of the UCC,
and are not deposit accounts, (iii) has agreed that it will not enter into an
agreement with any person that would give such person "control" over the Account
or the Account Fund within the meaning of the UCC and (iv) has agreed that it
will disburse assets comprising the Account Fund only upon request of the
Rehabilitator (as defined in the Reorganization Plan) supported by either an
order of the Rehabilitation Court (as defined in the Reorganization Plan) or the
written consent of the Buyer."
2
<PAGE> 109
6. The word "and" following the semi-colon at the end of Section 9.1(f)
of the Stock -Purchase Agreement is hereby deleted, and the period at the end of
Section 9.1(g) of the Stock Purchase Agreement is hereby replaced with a
semi-colon.
7. A new Section 12.11 is hereby added to the Stock Purchase Agreement
to read in its entirety as follows:
"Section 12.11 Security Interest. To secure Buyer's right to indemnity
pursuant to Articles VIII and X of the Stock Purchase Agreement, Seller hereby
grants to Buyer a first priority perfected security interest in all of Seller's
right, title and interest in and to the proceeds of the Seller's right to
receive the Purchase Price described in the Stock Purchase Agreement, as amended
by this Amendment (including, without limitation, all investments and
reinvestments of, and substitutions for, such proceeds). Such security interest
shall not attach until the Closing Date and, upon the Closing, shall for all
purposes be deemed to be, and be treated as, part of the MetLife Lien (as
defined in the Reorganization Plan). Notwithstanding the foregoing, the first
priority perfected security interest created by this Section 12.11 shall not in
any way impair any of the rights, or restrict the exercise of any of the
remedies, of the Seller under the Stock Purchase Agreement prior to the Closing.
Seller shall promptly execute and deliver to Buyer such further instruments and
documents, and take such further action (including, without limitation,
execution and delivery to Buyer of UCC financing statements to be filed in such
jurisdictions as Buyer may determine) as Buyer may reasonably request for the
purpose of perfecting, and otherwise obtaining or preserving the full benefit to
Buyer of; such first priority perfected security interest."
8. Exhibit B to the Stock Purchase Agreement is hereby deleted.
9. A new Exhibit C to the Stock Purchase Agreement, in the form of
Appendix I attached hereto, is hereby added to the Stock Purchase Agreement.
10. There is hereby added to the Stock Purchase Agreement a new
subsection (j) of Section 9.1 (Conditions to Buyer's Obligations) to read in its
entirety as follows:
"(j) The Reorganization Plan as set forth in Exhibit C hereto shall be
approved by the Rehabilitation Court with only such modifications that will not
materially impair the rights or interests of Buyer under this Agreement."
11. There is hereby added to the Stock Purchase Agreement a new
subsection (e) of Section 9.2 (Conditions to Seller's Obligations) to read in
its entirety as follows:
"(e) The Reorganization Plan as set forth in Exhibit C hereto shall be
approved by the Rehabilitation Court with only such modifications that will not
materially impair the rights or interests of Seller under this Agreement."
12. There is hereby added to the Stock Purchase Agreement a new
subsection (k) of Section 9.1 (Conditions to Buyer's Obligations) to read in its
entirety as follows:
3
<PAGE> 110
"(k) GALIC shall not be in administrative supervision."
13. Section 6.20 of the Stock Purchase Agreement is hereby amended to
read in its entirety as follows:
"Section 6.20 Capital Contribution. In the event that Buyer and Seller
implement the exchange program contemplated by Section 7.1 (c)(i) hereof and the
Closing occurs, (x) Buyer will make a capital contribution to GALIC not later
than the fifteenth Business Day following the Closing Date in the amount of
one-half of the aggregate risk premium payments theretofore made by GALIC to
Buyer pursuant to Section 7.1 (c)(i) hereof, (y) Buyer will make a further
capital contribution to GALIC equal to the amount set forth in clause (x) above
not later than the earlier of (i) the 180th day following the Closing Date and
(ii) the day following the termination or cancellation of the last exchange
contracts issued by Buyer pursuant to Section 7.l(c)(i), and (z) Buyer will
release GALIC from all payment obligations required to be made after the Closing
Date pursuant to Section 7. l(c)(i)."
For purposes of this Amendment, "Reorganization Plan" shall mean the
Plan of Reorganization in the form of Appendix I hereto.
Except as provided herein, the Stock Purchase Agreement shall remain
unamended and in full force and effect.
4
<PAGE> 111
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
GENERAL AMERICAN MUTUAL HOLDING COMPANY
By:/s/ Robert J. Banstetter
Name: Robert J. Banstetter
Title: Vice President, General
Counsel & Secretary
METROPOLITAN LIFE INSURANCE COMPANY
By:________________________________
Name:
Title:
<PAGE> 112
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
GENERAL AMERICAN MUTUAL HOLDING COMPANY
By:________________________________
Name:
Title:
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/Terence I. Lennon
Name: Terence I. Lennon
Title: Executive Vice President
