GUARANTEE AGREEMENT
General American Life Insurance Company ("General American") by resolution of
its Board of Directors, has guaranteed that Paragon Life Insurance Company
("Paragon") will have sufficient funds to meet all of its contractual
obligations. In order to give full effect to this guarantee the parties hereto
agree as follows:
1) The General American guarantee is a guarantee of payment. In the event a
Paragon policyholder presents a legitimate claim for payment under a Paragon
insurance policy General American promises to pay such a claim directly to
the policyholder if Paragon is unable to make such payment.
2) General American guarantees payment of Paragon's contractual obligations
even if the reason Paragon is not liable to pay them is insolvency,
bankruptcy, assignment for the benefit of creditors, appointment of
receiver, or any court order or legal process affecting Paragon's ability to
honor its obligations to policyholders.
3) The General American guarantee is explicitly for the benefit of Paragon
policyholders and shall be directly enforceable by them without a
requirement, if Paragon is unable to pay claims on its policies, that the
party seeking to enforce the guarantee first file a claim with Paragon or in
an insolvency proceeding. If any payment of Paragon under an insurance
policy must be returned by a policyholder as a preference in bankruptcy or
for any other reason, General American's guarantee will take effect with
respect to that policyholder. Paragon shall be entitled to bring this
guarantee to the attention of all of its customers and potential customers.
4) General American shall be entitled to adequate notice of any claim before
the obligation to make good on the guarantee shall take effect, but any
delay in presenting notice of a claim shall not affect General American's
obligations hereunder. General American does not waive, by giving this
guarantee, its right to investigate claims made against Paragon in the same
manner and to the same extent that it investigates claims made in the
ordinary course of its own business. General American reserves the right to
assert conventional defenses to the payment of any insurance claim.
5) The General American guarantee shall not be affected by amendments or
additions made by Paragon to its insurance policies, or by waivers or
extensions granted by Paragon except that General American's guarantee shall
not give Paragon's policyholders rights to a greater recovery than they
would obtain under the terms of the policy of insurance they have with
Paragon. General American waives its right to assert defenses against
payment of a claim arising from illegality, unenforceability, and failure to
give notices or take other formal steps which might at law otherwise be
required of one seeding to enforce the guarantee.
6) Any change in this Agreement shall have prospective effect only so that
contracts issued prior to the effective date of any change shall not be
affected by any
subsequent modification of the guarantee unless the modification is an
enhancement of the guarantee or the policyholder consents in writing to the
new terms of the guarantee.
7) General American's guarantee of Paragon's contractual obligations is
given in consideration of General American's desire to see Paragon, its
wholly-owned subsidiary, grown and prosper, without constraints caused by
customer concerns about Paragon's financial strength. Paragon's obligations
as the recipient of the guarantee are to operate as a successful insurance
company in its chosen areas of endeavor and to keep General American
informed of its financial situation and of any instance in which General
American might be called upon to honor its guarantee.
8) Upon payment of any claim General American shall be subrogated to the
rights of Paragon for that amount, and Paragon agrees to cooperate with
General American to effect such subrogation rights against third parties.
General American and Paragon agree to hold any sums they collect from third
parties in trust for Paragon policyholders and to pay claims from such sums
as they become due. Paragon further agrees to repay General American any
amounts due under this Agreement to policyholders and not reimbursed by
other parties.
9) This Agreement shall be governed by the law of Missouri. If any part of
this Agreement shall be held invalid, illegal, or unenforceable the
remaining parts of the Agreement shall not be affected and shall continue in
effect. This Agreement shall be binding upon any successor or assign of
General American or Paragon, provided however that General American's
obligations hereunder shall cease and determine only if this Agreement is
assigned to an entity having a rating from Standard & Poor's, attesting to
financial strength, credit-worthiness, or claims-paying ability equal to or
better than General American's rating.
In witness whereof the parties have signed this Guarantee Agreement this 13th
day of June 1991.
GENERAL AMERICAN LIFE INSURANCE PARAGON LIFE INSURANCE COMPANY
COMPANY
By: /s/ H. Xxxxx Xxxxxxxx By: /s/ Xxxx X. Xxxxxxxx
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H. Xxxxx Xxxxxxxx, Xxxx X. Xxxxxxxx,
Chairman Of the Board, Chief President
Executive Officer
