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Exhibit 2
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).
"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
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"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.
"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.
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"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 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,
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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).
"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
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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.
"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.
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"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 Xxxx-Xxxxx-Xxxxxx 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).
"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).
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"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 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
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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 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.
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"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 Xxxxx Xxxxxx Shareholder Services, L.L.C. (as successor
to Xxxxxxx'x 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.
"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).
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"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.
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
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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.
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, Xxxxxx & XxxXxx, L.L.P., 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
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.
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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;
(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
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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.
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
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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 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
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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, (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
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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 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
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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 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
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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 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 Xxxxxx Xxxxxxx & Co.
Incorporated and Xxxxxxx, 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
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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 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,
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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
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
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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;
(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
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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;
(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
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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 xxxx, trade secret, trademark, 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
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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.
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
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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.
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,
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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, 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
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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.
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
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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
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
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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.
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
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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 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
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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 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
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provided Buyer with copies of all underwriting policies and procedures
for each Life Insurance Subsidiary.
(vi) 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.
(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.
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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.
(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
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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 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 (i)
preserve intact its present organization, business and franchise; (ii) maintain
in effect all material licenses, approvals, qualifications, registrations and
authorizations necessary to carry on its business as currently conducted; (iii)
preserve material existing
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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"); (iv)
continue its advertising and promotional activities, pricing and purchasing
policies, operations and business plan implementation consistent with past
practice; (v) 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; (vi) in the case only of the Company and
the Subsidiaries, not undertake any material new business initiatives; and (vii)
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, (i) 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; (ii) 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
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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 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, (ii) 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
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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.
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
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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 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
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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 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.
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(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 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
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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.
(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
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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
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.
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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 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.
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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 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) (i) 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
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such inception and one-hundred eighty days following such inception.
(ii) 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 Xxxxxxx Xxxxx, Bear Xxxxxxx, Xxxxxx
Brothers or Xxxxxxx Xxxxx 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
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in the taxable income of the Company or its Subsidiaries for any such period and
a correlative decrease in such taxable income in a later taxable period
beginning on or after the Closing Date, in which case the amount of the
indemnity shall be reduced by the discounted present value of the resulting
reasonably estimated future benefit), and, except as otherwise provided in
Section 8.9, against any loss, damage, liability or expense, including
reasonable fees for attorneys and other outside consultants, incurred in
contesting or otherwise in connection with any such Taxes: (i) Taxes imposed on
the Company or any Subsidiary with respect to taxable periods ending on or
before the Closing Date; (ii) Taxes imposed on any member of any consolidated,
combined or unitary group with which any of the Company and the Subsidiaries
file or have filed a Tax Return on a consolidated, combined or unitary basis for
a taxable period ending on or before the Closing date; and (iii) with respect to
taxable periods beginning before the Closing Date and ending after the Closing
Date, Taxes imposed on the Company or any Subsidiary which are allocable,
pursuant to Section 8.1(b), to the portion of such Tax period ending on the
Closing Date.
(b) In the case of Taxes that are payable with respect to a taxable
period that begins before the Closing Date and ends after the Closing Date the
portion of any such Tax that is allocable to the portion of the period ending on
the Closing Date shall be:
(i) in the case of Taxes that are either (A) based upon or related
to income or receipts, or (B) imposed in connection with any sale or other
transfer or assignment of property (real or personal, tangible or
intangible) (other than conveyances pursuant to this Agreement, as
provided under Section 8.9), deemed equal to the amount which would be
payable if the taxable period ended with the Closing Date;
(ii) in the case of Taxes imposed on a periodic basis with respect
to the assets of the Company or any Subsidiary, or otherwise measured by
the level of any item, deemed to be the amount of such Taxes for the
entire period (or, in the case of such Taxes determined on an arrears
basis, the amount of such Taxes for the immediately preceding period),
multiplied by a fraction the numerator of which is the number of calendar
days in the period ending on the Closing Date and the denominator of which
is the number of calendar days in the entire period; and
(iii) in the case of any premium tax, the amount which would be
payable with respect to the direct premiums written during the period that
ends on the Closing Date (taking into account the rates and credits
allocable to the pre-Closing period that would be available if such period
were treated as a separate year for premium tax purposes).
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(c) Notwithstanding any provision in this Agreement to the contrary,
Seller shall only be obligated to Buyer pursuant to the provisions of Section
8.1(a) for Taxes for which (i) Buyer, the Company or any Subsidiary, as the case
may be, has received a notice of proposed adjustment in writing from a Taxing
Authority (e.g., receipt of Form 5701 "Notice of Proposed Adjustments" for U.S.
federal tax purposes), and (ii) Buyer has thereafter made a valid claim with
respect thereto against the Escrow Account pursuant to the terms of the Escrow
Agreement on or prior to the third anniversary of the Closing Date.
(d) Buyer hereby agrees to indemnify and hold harmless Seller for
all Taxes and associated expenses not allocated to Seller pursuant to the
provisions of this Section 8.1(a).
(e) Neither Buyer, the Company, nor any Subsidiaries shall take or
allow to be taken any action the effect of which would be to accelerate the
making of any claim, the commencement or completion of any audit or other
inquiry by a Taxing Authority or the payment of (or increase in the amount of)
any Tax liability for which Seller has an obligation to indemnify Buyer pursuant
to the terms of Section 8.1. If Buyer, the Company, any Subsidiary, or any
employee or agent of any of them takes or causes to be taken any such action,
the indemnity provided in Section 8.1 hereof shall be void to the extent of any
associated payment or increase in Tax liability. Seller shall not take or permit
to be taken any action the effect of which would be to delay the making of any
claim, the commencement or completion of any audit or other inquiry by a Taxing
Authority or the payment of (or increase in the amount of) the payment or
increase the amount of any Tax liability for which Seller has an obligation to
indemnify Buyer pursuant to the terms of Section 8.1.
(f) Seller's obligations pursuant to this Section 8.1 shall be
satisfied solely with payments made by the Escrow Agent from the Escrow Account,
and Buyer shall have no other recourse against Seller with respect to any such
obligations.
Section 8.2 Tax Allocation Agreement Payments. After the Closing
Date, in accordance with the Tax Allocation Agreements and past intercompany
accounting practices of the Company and the Subsidiaries, the Company and the
Subsidiaries shall make further payments of Tax to the Seller or an appropriate
Taxing Authority to the extent that their share of current Taxes attributable to
taxable periods or portions thereof ending on or before the Closing Date exceeds
their previously paid share of estimated Taxes; provided, however, that no
payment shall be due for any period covered on the June 30, 1999 Interim
Financial Statement, except to the extent that provision for such Tax has been
made therein; and, provided, further, that no such payment shall include any
amount of Tax attributable directly or indirectly to the sale of the Shares
pursuant to this Agreement except as set forth in Section 8.6. Any payment under
this Section 8.2 which is to be made to the Seller shall be due not
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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).
Section 8.4 Refunds. Any Tax refund (including any interest with
respect thereto) relating to the Company or any
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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 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
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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 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.)
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(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.
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
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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 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
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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;
(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;
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(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;
(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
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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.
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.
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(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 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.
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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 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
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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, 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.
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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, 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;
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(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.
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
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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 Xxxxxx
Xxxxxxx & Co. Incorporated or Xxxxxxx, Sachs & Co. in 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
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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):
To Seller: General American Mutual
Holding Company
000 Xxxxxx Xxxxxx
Xx. Xxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxxxxx
With a concurrent
copy to: LeBoeuf, Lamb, Xxxxxx & XxxXxx,
L.L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx X. Xxx
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To Buyer: Metropolitan Life Insurance Company
Xxx Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
With a concurrent
copy to: Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx
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 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
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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/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman, President
and Chief Executive Officer
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chairman and Chief
Executive Officer
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