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CONTRIBUTION AGREEMENT
by and among
CONNING ASSET MANAGEMENT COMPANY,
GENERAL AMERICAN LIFE INSURANCE COMPANY,
GENERAL AMERICAN HOLDING COMPANY,
GENERAL AMERICAN INVESTMENT MANAGEMENT COMPANY,
CONNING & COMPANY,
CONNING CORPORATION
and
THE SHAREHOLDERS AND OPTION HOLDERS OF CONNING CORPORATION
Dated July 24, 1995
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TABLE OF CONTENTS
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Page
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RECITALS
ARTICLE I
CONTRIBUTIONS TO CAM; CLOSING............................................. 1
1.1 Contributions of the Parties...................................... 1
1.2 Option Holder Exchange............................................ 2
1.3 General American Loans............................................ 3
1.4 The Closing....................................................... 3
1.5 Deliveries of GAHC at the Closing................................. 3
1.6 Deliveries of the Shareholders at the Closing..................... 3
1.7 Deliveries of the Option Holders at Closing....................... 4
1.8 Deliveries of CAM at the Closing.................................. 4
1.9 Legended Certificates............................................. 5
1.10 Escrow............................................................ 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE EQUITY HOLDERS, CONNING CORP. AND CONNING........................ 6
2.1 Enforceable Agreement; Existence and Qualification................ 7
2.2 Capitalization and Related Matters................................ 8
2.3 Subsidiaries...................................................... 9
2.4 Property.......................................................... 9
2.5 Financial Statements.............................................. 9
2.6 Books and Records................................................. 10
2.7 No Undisclosed Liabilities........................................ 10
2.8 Taxes............................................................. 10
2.9 Accounts Receivable............................................... 13
2.10 Regulatory Matters; Permits and Licenses.......................... 14
2.11 Real Property..................................................... 14
2.12 Assets............................................................ 15
2.13 Absence of Certain Changes........................................ 15
2.14 No Breach of Law or Governing Document............................ 16
2.15 Litigation........................................................ 17
2.16 Environmental Matters............................................. 17
2.17 Contracts......................................................... 18
2.18 Intellectual Property............................................. 18
2.19 Insurance......................................................... 19
2.20 Officers, Directors, Employees, and Consultants................... 20
2.21 Bank Accounts of Conning Corp. ................................... 20
2.22 Transactions with Related Persons................................. 20
2.23 Labor Matters..................................................... 20
2.24 Employee Benefit Matters.......................................... 21
2.25 Discrimination and Occupational Safety and Health................. 23
2.26 Alien Employment Eligibility...................................... 23
2.27 Governmental Approvals and Filings................................ 23
2.28 Brokers, Finders.................................................. 23
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2.29 Outside Financial Interests....................................... 24
2.30 Guarantees........................................................ 24
2,31 Foreign Operations and Export Control............................. 24
2.32 Disclosure........................................................ 25
2.33 Qualified Investors............................................... 25
2.34 Purchase for Investment........................................... 25
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
GENERAL AMERICAN, GAHC, GAIMCO AND CAM.................................. 26
3.1 Enforceable Agreement; Existence and Qualification................ 26
3.2 Capitalization and Related Matters................................ 27
3.3 The CAM Preferred Stock and CAM Options........................... 28
3.4 Subsidiaries...................................................... 28
3.5 Property.......................................................... 28
3.6 Financial Statements.............................................. 29
3.7 Books and Records................................................. 29
3.8 No Undisclosed Liabilities........................................ 29
3.9 Taxes............................................................. 29
3.10 Accounts Receivable............................................... 32
3.11 Regulatory Matters; Permits and Licenses.......................... 32
3.12 Real Property..................................................... 33
3.13 Assets............................................................ 33
3.14 Absence of Certain Changes........................................ 34
3.15 No Breach of Law or Governing Document............................ 35
3.16 Litigation........................................................ 35
3.17 Environmental Matters............................................. 35
3.18 Contracts......................................................... 36
3.19 Intellectual Property............................................. 36
3.20 Insurance......................................................... 37
3.21 Officers, Directors, Employees, and Consultants................... 38
3.22 Bank Accounts of GAIMCO and CAM................................... 38
3.23 Transactions with Related Persons................................. 38
3.24 Labor Matters..................................................... 38
3.25 Employee Benefit Matters.......................................... 39
3.26 Discrimination and Occupational Safety and Health................. 41
3.27 Alien Employment Eligibility...................................... 41
3.28 Governmental Approvals and Filings................................ 41
3.29 Brokers, Finders.................................................. 41
3.30 Outside Financial Interests....................................... 42
3.31 Guarantees........................................................ 42
3.32 Foreign Operations and Export Control............................. 42
3.33 Disclosure........................................................ 43
ARTICLE IV
ADDITIONAL COVENANTS OF THE PARTIES....................................... 43
4.1 Conduct of Business............................................... 43
4.2 Access to Records................................................. 44
4.3 Preservation of Business.......................................... 44
4.4 Insurance and Maintenance of Property............................. 45
4.5 Books, Records and Financial Statements........................... 45
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4.6 Other Governmental Filings........................................ 45
4.7 Notification of Certain Matters................................... 45
4.8 No Solicitation................................................... 45
4.9 Offering Memorandum............................................... 46
4.10 Approval of Parachute Payments.................................... 47
4.11 Notice to Customers............................................... 47
4.12 Filing of Certificate of Designation.............................. 47
ARTICLE V
CONDITIONS TO THE OBLIGATIONS
GENERAL AMERICAN, GAHC, GAIMCO AND CAM.................................. 47
5.1 Representations and Warranties.................................... 47
5.2 Performance of Agreement.......................................... 47
5.3 Certificate....................................................... 47
5.4 Approvals......................................................... 48
5.5 No Adverse Proceeding............................................. 48
5.6 Opinions of Counsel............................................... 48
5.7 Employment Agreements............................................. 48
5.8 Adverse Change.................................................... 48
5.9 Shareholders' Agreement........................................... 48
5.10 Investor Questionnaires........................................... 48
5.11 Approval of Parachute Payments.................................... 48
5.12 Redemption of Preferred Stock..................................... 48
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE
EQUITY HOLDERS, CONNING CORP. AND CONNING............................... 49
6.1 Representations and Warranties.................................... 49
6.2 Performance of Agreement.......................................... 49
6.3 Certificate....................................................... 49
6.4 Approvals......................................................... 49
6.5 No Adverse Proceeding............................................. 49
6.6 Adverse Change.................................................... 49
6.7 Opinions of Counsel............................................... 50
6.8 Investor Questionnaire............................................ 50
6.9 Employment Agreements............................................. 50
6.10 Shareholders' Agreement........................................... 50
6.11 Option Agreements................................................. 50
ARTICLE VII
INDEMNIFICATION........................................................... 50
7.1 Survival of Representations and Warranties........................ 50
7.2 Indemnification of General American, GAHC, GAIMCO and CAM......... 51
7.3 Indemnification of Equity Holders................................. 52
7.4 Limitations on Indemnity.......................................... 53
7.5 Notice of Claim................................................... 54
7.6 Right to Contest Claims of Third Persons.......................... 55
7.7 Return or Cancellation of Legended Shares; Escrow Withdrawals..... 56
7.8 Exclusive Remedy.................................................. 57
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ARTICLE VIII
MISCELLANEOUS PROVISIONS.................................................. 57
8.1 Notice............................................................ 57
8.2 Appointment of Representative..................................... 59
8.3 Termination of Shareholder Agreement.............................. 60
8.4 Entire Agreement.................................................. 60
8.5 Assignment; Binding Agreement..................................... 60
8.6 Counterparts...................................................... 61
8.7 Headings; Interpretation.......................................... 61
8.8 Expenses.......................................................... 61
8.9 Termination of the Agreement...................................... 61
8.10 Governing Law..................................................... 61
8.11 Confidentiality................................................... 62
8.12 Further Assurances................................................ 62
TABLE OF DEFINITIONS
TABLE OF EXHIBITS
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CONTRIBUTION AGREEMENT
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THIS CONTRIBUTION AGREEMENT (the "Agreement") is made and
entered into as of July 24, 1995, by and among Conning Asset Management
Company, a Missouri corporation ("CAM"), General American Life Insurance
Company, a Missouri mutual life insurance company ("General American"),
General American Holding Company, a Missouri corporation ("GAHC"), General
American Investment Management Company, a Missouri corporation ("GAIMCO"),
Conning & Company, a Connecticut corporation ("Conning"), Conning
Corporation, a Delaware corporation ("Conning Corp."), and the shareholders
(the "Shareholders") and option holders (the "Option Holders") of Conning
Corp.
RECITALS
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A. General American is the owner of all of the issued and
outstanding capital stock of GAHC, which in turn is the owner of all the
issued and outstanding capital stock of GAIMCO.
A. GAHC has incorporated CAM for purposes of the transactions
contemplated hereby.
B. The Shareholders are the owners of all of the issued and
outstanding capital stock of Conning Corp., which in turn is the owner of
all of the issued and outstanding capital stock of Conning.
C. GAHC and the Shareholders desire to make contributions to
CAM in exchange for equity interests therein and/or cash on the terms and
conditions set forth herein.
D. Following the closing of the transactions effected
pursuant to this Agreement, the Option Holders desire to cancel their
options to purchase voting common stock, par value $.01 per share (the
"Conning Common Stock"), of Conning Corp. (the "Conning Options") for equity
interests in CAM and cash.
NOW, THEREFORE, in consideration of the recitals and the mutual
covenants, representations, warranties, conditions and agreements
hereinafter expressed, the parties agree as follows:
ARTICLE I
CONTRIBUTIONS TO CAM; CLOSING
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1.1 Contributions of the Parties. At the Closing (as
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hereinafter defined), subject to the terms and conditions set forth herein,
GAHC and the Shareholders shall make the following contributions to and
receive the following consideration from CAM:
(a) GAHC shall contribute all of the issued and
outstanding common stock, no par value per share (the "GAIMCO
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Common Stock"), of GAIMCO in exchange for 6,710,000 shares of the voting
common stock of CAM, par value $.01 per share (the "CAM Common Stock"),
which will constitute all of the issued and outstanding CAM Common Stock.
(b) Each Shareholder (excluding the Specified
Shareholders (as hereinafter defined) shall contribute all of the Conning
Common Stock and all of the non-voting common stock of Conning Corp., par
value $.01 per share (the "Conning Non-Voting Common Stock"), owned by such
Shareholder in exchange for the portion set forth on such Shareholder's
signature page hereof under the headings "Cash Received for Stock" and "CAM
Preferred Stock Received for Stock" of the following aggregate
consideration: (i) $3,039,829 in cash and (ii) 2,152,509 shares of the
Series A Convertible Preferred Stock, par value $.01 per share (the "CAM
Preferred Stock"), of CAM. The terms of the CAM Preferred Stock are set
forth in the Certificate of Designation attached hereto as Exhibit A (the
"Certificate of Designation"). ---------
(c) Xxxxxx Xxxxxxx, Xxxxxx Xxxxx, Xxxxx Xxxxx,
Pennsylvania Life Insurance Company, a Pennsylvania corporation, and
Occidental Life Insurance Company of North Carolina, a North Carolina
corporation (the "Specified Shareholders"), shall each contribute all of the
Conning Common Stock and all of the Conning Non-Voting Common Stock owned by
such Specified Shareholder in exchange for $222.3918 in cash and no shares
of CAM Preferred Stock per share of Conning Common Stock or Conning
Non-Voting Common Stock contributed by each such Specified Shareholder.
1.2 Option Holder Exchange.
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(a) At the Closing, immediately following the
contributions of GAHC and the Shareholders described above and after CAM has
acquired control of Conning Corp., each Option Holder (excluding the
Specified Shareholders) shall cancel all of the Conning Options held by such
Option Holder in exchange for the portion set forth on such Option Holder's
signature page hereof under the headings "Cash Received for Options" and
"CAM Preferred Stock Received for Options" of the following aggregate
consideration: (i) $1,465,173 in cash and (ii) 1,037,491 shares of CAM
Preferred Stock.
(b) At the Closing, immediately following the
contributions of GAHC and the Shareholders described above and after CAM has
acquired control of Conning Corp., each Specified Shareholder shall cancel
all of the Conning Options held by such Specified Shareholder in exchange
for $222.3918 in cash per share of Conning Common Stock covered by a
canceled Conning Option held by each such Specified Shareholder, less the
exercise price for such share under such Conning Option.
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1.3 General American Loans. At the Closing, in order to fund
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the payment of cash to the Shareholders and the Option Holders as described
above in Sections 1.1 and 1.2 and to fund certain capital needs of Conning
Corp., General American will lend CAM up to $13,000,000 and will lend
Conning Corp. $2,500,000. Such loans shall be evidenced by promissory notes
in the forms attached hereto as Exhibit B (the "CAM Note" and the "Conning
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Corp. Note," respectively). At the Closing, General American shall deliver
to CAM $13,000,000 and to Conning Corp. $2,500,000 by wire transfer of
immediately available funds, and, in consideration thereof, CAM and Conning
Corp. shall deliver to General American the CAM Note and the Conning Corp.
Note, duly executed by CAM and Conning Corp., respectively.
1.4 The Closing. The consummation of the transactions
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contemplated hereby (the "Closing") shall take place at the offices of Xxxxx
Xxxx LLP, One Metropolitan Square, 000 Xxxxx Xxxxxxxx, Xxxxx 0000, Xx.
Xxxxx, Xxxxxxxx at 10:00 a.m. on August 15, 1995 (the "Closing Date").
1.5 Deliveries of GAHC at the Closing. Subject to the
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conditions to GAHC's obligations set forth in Article V hereof, at the
Closing, GAHC shall deliver:
(a) to CAM, certificates evidencing all of the issued and
outstanding GAIMCO Common Stock, free and clear of all security interests,
claims and restrictions, duly endorsed to CAM; and
(b) to CAM and each of the Shareholders and Option
Holders (collectively, the "Equity Holders"), excluding the Specified
Shareholders, the Shareholders's Agreement in the form attached hereto as
Exhibit C (the "Shareholders' Agreement"), duly executed by GAHC.
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1.6 Deliveries of the Shareholders at the Closing. Subject to
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the conditions to the Equity Holders' obligations set forth in Article VI
hereof, at the Closing, each Shareholder shall deliver:
(a) to CAM, certificates evidencing the shares of Conning
Common Stock owned by such Shareholder, free and clear of all security
interests, claims and restrictions, duly endorsed to CAM;
(b) to CAM, GAHC and each of the other Equity Holders
(excluding the Specified Shareholders), the Shareholders' Agreement, duly
executed by such Shareholder (excluding the Specified Shareholders); and
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(c) to CAM and the Escrow Agent (as hereinafter
defined), the Escrow Agreement (as hereinafter defined), duly executed by
each Specified Shareholder (excluding Pennsylvania Life Insurance Company, a
Pennsylvania corporation, and Occidental Life Insurance Company of North
Carolina, a North Carolina corporation (collectively, "Penn. Corp.")).
1.7 Deliveries of the Option Holders at Closing. Subject to
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the conditions to the Equity Holders' obligations set forth in Article VI
hereof, at the Closing, each Option Holder shall deliver:
(a) to Conning Corp., an Option Cancellation Agreement in
the form of Exhibit D (the "Option Cancellation Agreements"), duly executed
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by such Option Holder; and
(b) to CAM, GAHC and each of the other Equity Holders
(excluding the Specified Shareholders), the Shareholders' Agreement, duly
executed by such Option Holder (excluding the Specified Shareholders that
hold Conning Options).
1.8 Deliveries of CAM at the Closing. Subject to the
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conditions to CAM's obligations set forth in Article V hereof, at the
Closing, CAM shall deliver:
(a) to GAHC, a certificate evidencing 6,710,000 shares of
CAM Common Stock, free and clear of all security interests, claims and
restrictions;
(b) to each Shareholder by CAM check or wire transfer,
the amount of cash set forth opposite such Shareholder's name under the
heading "Closing Cash" on each such respective Equity Holder's signature
page hereof;
(c) upon CAM's acquisition of control of Conning Corp.,
to each Option Holder by CAM check, the amount of cash set forth opposite
such Option Holder's name under the heading "Closing Cash" on each such
respective Equity Holder's signature page hereof;
(d) to each Shareholder (excluding the Specified
Shareholders), a certificate evidencing the number of shares of CAM
Preferred Stock set forth opposite such Shareholder's name under the heading
"Total Shares" on each such respective Equity Holder's signature page
hereof, free and clear of all security interests, claims and restrictions
other than those contemplated hereby;
(e) upon CAM's acquisition of control of Conning Corp.,
to each Option Holder (excluding the Specified Shareholders), a certificate
evidencing the number of shares of
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CAM Preferred Stock set forth opposite such Option Holder's name under the
heading "Total Shares" on each such respective Equity Holder's signature
page hereof, free and clear of all security interests, claims and
restrictions other than those contemplated hereby;
(f) to each Option Holder, an Option Cancellation
Agreement, duly executed by Conning Corp.;
(g) to GAHC and each of the Equity Holders (excluding the
Specified Shareholders), the Shareholders' Agreement, duly executed by CAM;
(h) to each of the optionees listed on Exhibit E (the
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"CAM Optionees"), an Option Agreement in the form of Exhibit F (the "Option
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Agreements") granting each such CAM Optionee the option to purchase, at a
per share exercise price of $5.33 (subject to adjustment as provided in such
Option Agreements), the number of shares of the non-voting common stock, par
value $.01 per share (the "CAM Non-Voting Common Stock"), set forth on each
such respective Option Holder's signature page hereof under the heading
"Option Shares," duly executed by CAM;
(i) to each of the key employees listed on Exhibit G
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(the "Key Employees"), an Employment Agreement in the form of Exhibit H (the
"Employment Agreements"), duly executed by CAM; ---------
(j) to GAHC, the CAM Note, duly executed by CAM; and
(k) to each of the Specified Shareholders (excluding
Penn. Corp.) and the Escrow Agent, the Escrow Agreement duly executed by
CAM.
1.9 Legended Certificates. Certificates evidencing in the
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aggregate 375,294 of the aggregate shares of CAM Preferred Stock issuable to
the Option Holders and certificates evidencing in the aggregate 702,813 of
the aggregate shares of CAM Preferred Stock issuable to the Shareholders and
Option Holders will be legended with the legend set forth on Exhibit I (the
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"Legend"). The number of shares of CAM Preferred Stock issuable to each
Option Holder and Shareholder to which the Legend shall apply is set forth
on each such Equity Holder's signature page hereof under the headings
"Prorata Share of Section 7.2(a) Indemnity" and "Prorata Share of Section
7.2(b) Indemnity." Upon tender of such legended certificates to CAM at the
following times, such certificates shall be exchanged for certificates not
bearing the Legend: (a) in the case of the Option Holders, with respect to
shares received in exchange for Conning Options, 375,294 legended shares in
the aggregate will be delegended on or after the third
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anniversary of the Closing or, if earlier, the date on which the 1995
Conning tax year is closed, and (b) in the case of the Option Holders and
the Shareholders, 702,813 legended shares in the aggregate issued to the
Option Holders and all legended shares issued to Shareholders will be
delegended on the later to occur of (i) the end of the eighteenth month
after the Closing, or (ii) the final, non-appealable resolution by agreement
or by a court of competent jurisdiction of the Pending Litigation (as
hereinafter defined). The certificates evidencing the CAM Preferred Stock
shall also bear such legends as are prescribed by Section 2.34, the
Shareholders' Agreement, and as are otherwise customary under the
circumstances or required by law.
1.10 Escrow. In connection with the Closing, the Specified
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Shareholders (excluding Penn. Corp.), CAM and Boatmen's Trust Company, as
escrow agent (the "Escrow Agent"), shall enter into an Escrow Agreement in
the form of Exhibit J (the "Escrow Agreement") pursuant to which each of the
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Specified Shareholders (excluding Penn. Corp.) shall deposit 16.739% of the
cash consideration to be received by such Specified Shareholder hereunder
($348,131 in the aggregate) (the "Escrow Funds") to be held by the Escrow
Agent pursuant to the terms of the Escrow Agreement. Subject to the terms
of the Escrow Agreement and this Agreement, the Escrow Funds shall be
available to satisfy any claims a CAM Indemnified Person (as hereinafter
defined) may have for indemnification from such Specified Shareholders
pursuant to Article VII of this Agreement. Upon termination of the Escrow
Agreement, the Escrow Agent shall distribute any remaining balance of the
Escrow Funds as provided in the Escrow Agreement. As an alternative to the
Escrow Agreement, any of the Specified Shareholders (excluding Penn. Corp.)
may at the Closing deliver an irrevocable letter of credit to secure his
obligations hereunder, provided that the terms and form of such letter of
credit and any related documentation is satisfactory to GAHC.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
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OF THE EQUITY HOLDERS, CONNING CORP. AND CONNING
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The Equity Holders, Conning Corp. and Conning hereby severally
and not jointly make the following representations and warranties to General
American, GAHC, GAIMCO and CAM, each of which is true and correct on the
date hereof and will be true and correct on the Closing Date and each of
which shall survive the Closing as specified in Section 7.1 hereof. Unless
otherwise specifically provided herein, each reference to Conning Corp. or
Conning in this Agreement shall be deemed a reference to such entity and to
each of Conning Corp., Conning & Company and Conning International, Inc.,
such that each representation, warranty or covenant with respect to Conning
Corp. or Conning,
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whether contained in this Article II or elsewhere in this Agreement, shall
also be a representation, warranty, or covenant with respect to each of
Conning Corp., Conning & Company and Conning International, Inc.
Notwithstanding the foregoing, Penn. Corp. shall only make the
representations and warranties set forth in Section 2.1(a) and the last
sentence of Section 2.2(a) and only as to itself and shall have no
liability for any other representation or warranty in this Article II.
2.1 Enforceable Agreement; Existence and Qualification.
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(a) The Equity Holders have the power, authority and
capacity to execute and deliver this Agreement, to perform their obligations
hereunder, and to consummate the transactions contemplated hereby. This
Agreement constitutes the valid and binding obligation of the Equity
Holders, enforceable against each of them in accordance with its terms.
(b) Conning Corp. (excluding Conning and Conning
International, Inc.) and Conning (excluding Conning Corp. and Conning
International, Inc.) each have full power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by Conning Corp.
(excluding Conning and Conning International, Inc.) and Conning (excluding
Conning Corp. and Conning International, Inc.) have been duly authorized by
all requisite corporate action. This Agreement constitutes the valid and
binding obligation of Conning Corp. (excluding Conning and Conning
International, Inc.) and Conning (excluding Conning Corp. and Conning
International, Inc.), enforceable in accordance with its terms.
(c) Conning Corp. (excluding Conning and Conning
International, Inc.) is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and each of
Conning and Conning International, Inc. is a corporation duly organized,
validly existing and in good standing under the laws of its state, country
or other jurisdiction of incorporation, as listed on Schedule 2.3. Conning
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Corp. has all requisite corporate power and authority to own, lease, and use
its assets and properties and to conduct the business in which it is
engaged. Conning Corp. is duly licensed or qualified to do business as a
foreign corporation and is in good standing in the state(s), countries or
other jurisdictions listed on Schedule 2.1(c) (or Schedule 2.3 with respect
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to the entities listed on such Schedule) and is not required to be
registered, licensed or qualified to do business in any other jurisdiction
in which the failure to so qualify would result in losses to Conning Corp.
in excess of $25,000. Conning Corp. has delivered to General American true,
complete and correct copies
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of the constituent documents, as currently in effect, of Conning Corp.
(d) Except as set forth on Schedule 2.1(d), Conning
Corp. is not a party to, subject to or bound by any note, bond, mortgage,
indenture, deed of trust, agreement, lien, contract or other instrument or
obligation or any statute, law, rule, regulation, judgment, order, writ,
injunction, or decree of any court, administrative or regulatory body,
governmental agency, arbitrator, mediator or similar body, franchise or
license, which is material to its business and which would (i) conflict with
or be breached or violated or the obligations thereunder accelerated or
increased (whether or not with notice or lapse of time or both) by the
execution, delivery or performance by Conning Corp. of this Agreement or
(ii) prevent the carrying out of the transactions contemplated hereby.
Except as set forth on Schedule 2.1(d) and except for compliance with the
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provisions of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "H-S-R Act"), none of Conning Corp. or the Equity Holders is
required to obtain any waiver or consent of any third person or governmental
authority for the execution of this Agreement or the consummation of the
transactions contemplated hereby. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
creation of any material lien, claim, encumbrance, security interest,
charge, pledge, or other material restriction or material adverse claim of
whatever nature against Conning Corp. or any of its properties or assets.
2.2 Capitalization and Related Matters.
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(a) Capital Stock. The entire authorized capital
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stock of Conning Corp. (excluding Conning and Conning International, Inc.)
consists solely of (i) 1,000,000 shares of Conning Common Stock, of which
60,571 shares are issued and outstanding, (ii) 100,000 shares of Conning
Non-Voting Common Stock, of which 24,350 shares are issued and outstanding,
and (iii) 1,000,000 shares of Conning Preferred Stock, of which no shares
are issued and outstanding (after giving effect to the redemption of all
Conning Preferred Stock held by the Specified Shareholders). No other
capital stock of Conning Corp. (excluding Conning and Conning International,
Inc.) is authorized or issued. Schedule 2.2(a) sets forth the names,
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addresses and holdings of the record holders of all of the capital stock of
Conning Corp. (excluding Conning and Conning International, Inc.). Except
as set forth on Schedule 2.2(a), all of the issued and outstanding shares of
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the capital stock of Conning Corp. are duly authorized, validly issued,
fully paid, non-assessable and free of preemptive rights, without
restriction on the transfer thereof other than pursuant to applicable
federal and state securities laws, and all of such shares have been so
issued in
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full compliance with all applicable federal and state securities laws.
Except as set forth on Schedule 2.2(a), the Shareholders own the Conning
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Common Stock free and clear of any lien, claim, encumbrance, security
interest, charge, pledge, or other material restriction or material adverse
claim of whatever nature (collectively, "Liens").
(b) Options and Other Securities. Schedule 2.2(b) sets
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forth the names and addresses of all holders of Conning Options. Prior to
Closing, Conning Corp. will have delivered to General American true,
complete and correct copies of all agreements and plans relating to the
Conning Options. Except as set forth on Schedule 2.2(b), there are no
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outstanding subscriptions, rights, options, warrants, conversion privileges
or agreements of any kind entitling any person or entity to acquire from
Conning Corp. any shares of the capital stock of Conning Corp. or any other
type of security of Conning Corp. All of the Conning Options have been
issued in full compliance with all applicable federal and state securities
laws.
2.3 Subsidiaries. Except as listed on Schedule 2.3, Conning
------------ ------------
Corp. does not own or have the right to acquire 10% or more of the voting
securities or other equity interest in, or directly or indirectly control,
any other corporation, partnership, joint venture or other entity (excluding
all securities and equity interests held by any of Conning Insurance Capital
Limited Partnership, Conning Insurance Capital International Partners,
Conning Insurance Capital Limited Partnership II, Conning Insurance Capital
International Partners II, Conning Insurance Capital Limited Partnership III
and Conning Insurance Capital International Partners III (collectively, the
"Conning Funds")). Conning Corp. owns all right, title and interest in and
to all capital stock or other equity interests described on Schedule 2.3 and
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all rights with respect thereto. The capitalization and the state, country
or other jurisdiction of incorporation of each entity listed on Schedule 2.3
is accurately described and identified on Schedule 2.3. ------------
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2.4 Property. Except as set forth on Schedule 2.4, Conning
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Corp. is the sole owner of all right, title, and interest in and to all
material assets reflected on the Conning Balance Sheet (defined below) and
owns or has the valid right to lease all property, real and personal,
tangible and intangible, used by it in, or necessary for it to transact, the
business in which it is engaged, and there exists no material restriction on
the use or transfer of such assets or property. The assets owned or leased
by Conning Corp. constitute all of the property and property rights used or
necessary for the conduct of the business of Conning Corp. in the manner and
to the extent presently conducted by Conning Corp. No such assets or
property are in the
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possession of others and Conning Corp. holds no property on consignment.
2.5 Financial Statements.
--------------------
(a) Set forth on Schedule 2.5 are (i) the audited
------------
consolidated balance sheets of Conning Corp. as of December 31, 1992, 1993,
and 1994, and the related statements of earnings, shareholders' equity and
changes in financial position or cash flow for the fiscal years then ended,
and all notes and schedules thereto, and (ii) the unaudited consolidated
balance sheet of Conning Corp. as of June 30, 1995 (the "Conning Balance
Sheet") and the related statements of earnings and changes in financial
position for the period then ended, together with any notes or schedules
thereto ((i) and (ii) together, the "Conning Financial Statements").
(b) The Conning Financial Statements (i) are true,
complete, and correct, (ii) present fairly the financial position, results
of operations, and cash flows of Conning Corp. at the dates and for the
periods indicated, and (iii) have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis
(except that unaudited financial statements do not contain footnotes and are
subject to year-end audit adjustments, which will not be material in the
aggregate).
2.6 Books and Records. The books of account, corporate record
-----------------
books, minute books, bank accounts, and other records of Conning Corp. are
true, correct, and complete in all material respects, have been maintained
in accordance with good business practices, and the matters contained
therein are accurately reflected in the Conning Financial Statements to the
extent appropriate.
2.7 No Undisclosed Liabilities. Conning Corp. does not have
--------------------------
any liabilities or obligations whatsoever, known or unknown, accrued,
absolute, contingent, or other, except (a) as set forth on the Conning
Balance Sheet or Schedule 2.7, or (b) those incurred in the ordinary course
------------
of the business of Conning Corp., consistent with past practice, since the
date of the Conning Balance Sheet, none of which will, or could, have an
adverse effect upon the business or condition (financial or otherwise) or
operations of Conning Corp.
2.8 Taxes.
-----
(a) Conning Corp. and each of its Tax Affiliates (as
hereinafter defined) has timely filed or caused to be filed with the
appropriate Government (as hereinafter defined) entity all Tax Returns (as
hereinafter defined) ("Conning Tax Returns"),
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and, except as specified in a letter to General American's counsel dated the
date hereof (the "Article II Tax Disclosure Letter"), no Conning Tax Returns
for any open tax years have been amended. All Conning Tax Returns are true,
correct, and complete. There are no grounds for assertion of any
understatement penalty under Section 6661 of the Code (prior to repeal) or
Section 6662 of the Internal Revenue Code of 1986, as amended (the "Code").
(b) Except as set forth in the Article II Tax Disclosure
Letter, all Taxes (as hereinafter defined) due and payable by Conning Corp.
or any of its Tax Affiliates with respect to all periods ending on or prior
to the date hereof have been timely and fully paid, and there are no grounds
for the assertion or assessment of any additional Taxes against Conning
Corp. or any of its Tax Affiliates or their respective assets with respect
to such periods. There are no audits of any Returns of Conning Corp. or any
of its Tax Affiliates pending or threatened. There is no waiver of any
statute of limitations in effect with respect to any Conning Tax Returns.
(c) All unpaid Taxes for all periods up to and including
the Closing Date are properly accrued on the books of Conning Corp. and its
Tax Affiliates. All unpaid Taxes for all periods up to the date of the
Conning Balance Sheet are properly accrued on the Conning Financial
Statements. The Article II Tax Disclosure Letter lists all Conning Tax
Returns for periods up to and including the Closing Date (whether the period
ends on such date) which have not been filed on or before the Closing Date.
(d) There are no Liens for Taxes upon any assets of
Conning Corp. or its Tax Affiliates, except Liens for Taxes not yet due and
payable.
(e) Except as set forth on the Article II Tax Disclosure
Letter, true, correct and complete copies of all Conning income Tax Returns,
tax examination reports and statements of deficiencies assessed against, or
agreed to with respect to Conning Corp. or any of its Tax Affiliates with
respect to the last four (4) years with the Internal Revenue Service or any
taxing authority have been delivered to General American.
(f) Except as set forth on the Article II Tax Disclosure
Letter, neither Conning Corp. nor any of its Tax Affiliates is or ever has
been a member of an "affiliated group" within the meaning of Section 1504 of
the Code, except for the affiliated group of which Conning Corp. is the
common parent.
(g) Conning Corp. and each of its Tax Affiliates has
complied with all Law (as hereinafter defined) relating to
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the withholding of Taxes and the payment thereof (including, without
limitation, withholding of Taxes under Section 1441 and 1442 of the Code, or
any similar provision under foreign Law), and has timely and properly
withheld from employee wages and paid over to the proper Government all
amounts required to be withheld and paid over under applicable Law.
(h) Neither Conning Corp. nor any of its Tax Affiliates
is a party to any safe harbor lease within the meaning of section 168(f)(8)
of the Code, as in effect prior to amendment by the Tax Equity and Fiscal
Responsibility Act of 1982. None of Conning Corp.'s or its Tax Affiliates'
property or assets has been financed with or directly or indirectly secures
any industrial revenue bonds or debt the interest on which is tax-exempt
under Section 103(a) of the Code. Neither Conning Corp. nor any of its Tax
Affiliates is a borrower or guarantor of any outstanding industrial revenue
bonds, and none of such parties is a tenant, principal user or related
person to any principal user (within the meaning of section 144(a) of the
Code) of any property which has been financed or improved with the proceeds
of any industrial revenue bonds.
(i) Conning Corp. is not and has not been a real
property holding company within the meaning of Section 897(c) of the Code,
and Conning Corp. shall so certify upon General American's request.
(j) Conning Corp. is not required to include in income
any adjustment under Section 481(a) of the Code by reason of a change in
accounting method initiated by Conning Corp. and the Internal Revenue
Service has not proposed any such adjustment or change in accounting method.
Conning Corp. has no pending private letter ruling request with the Internal
Revenue Service.
(k) None of the property owned by Conning Corp. or any
of its Tax Affiliates is tax-exempt use property within the meaning of
section 168(h) of the Code.
(l) No consent has been filed relating to Conning Corp.
pursuant to section 341(f) of the Code.
(m) Except as set forth on the Article II Tax Disclosure
Letter, neither Conning Corp. nor any of its Tax Affiliates is a partner in
any joint venture, partnership or other arrangement or contract that could
be treated as a partnership for federal income tax purposes.
(n) Neither Conning Corp. nor any of its Tax Affiliates
is a party to or bound by any affiliated group consolidated return tax
allocation agreement, tax sharing agreement or tax indemnification
agreement.
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(o) Except as set forth on the Article II Tax Disclosure
Letter, Conning Corp. is not liable for Taxes to any foreign taxing
authority and does not have and has not had a permanent establishment in any
foreign country, as defined in any applicable tax treaty or convention
between the United States and such foreign country.
(p) All material elections with respect to Taxes
affecting Conning Corp. or any of its Tax Affiliates as of the date hereof
are set forth in the Article II Tax Disclosure Letter. No new elections
with respect to Taxes, or any changes in current elections with respect to
Taxes of Conning Corp. or any of its Tax Affiliates or affecting any of such
parties shall be made after the date of this Agreement without the prior
written consent of General American.
(q) Except for this Agreement and the transactions
contemplated hereby, Conning Corp. and each of its Tax Affiliates are not a
party to any agreement, contract, arrangement or plan that has resulted or
would result, separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of section 280G of the Code.
(r) Conning Corp. and each of its Tax Affiliates have
not participated in an international boycott within the meaning of section
999 of the Code.
(s) As used in this Agreement, "Taxes" means all taxes,
charges, fees, levies, or other like assessments, including without
limitation income, gross receipts, ad valorem, value added, premium, excise,
real property, personal property, windfall profit, sales, use, transfer,
license, withholding, employment, payroll, and franchise taxes imposed by:
the United States or any other nation, state, or bilateral or multilateral
governmental authority, any local governmental unit or subdivision thereof,
or any branch, agency, or judicial body thereof ("Government"); and shall
include any interest, fines, penalties, assessments, or additions to tax
resulting from, attributable to, or incurred in connection with any such
Taxes or any contest or dispute thereof. As used in this Agreement,
"Return" means, with respect to Conning Corp., the federal income tax return
of Conning Corp., Conning and Conning Corp.'s Tax Affiliates, and, with
respect to GAIMCO, the federal income tax return of GAIMCO prepared as if it
were an unaffiliated corporation, and, in each case, any state and local
income tax return, excise tax return, franchise tax return, information
return, or report, and any and all other filings required by any taxing
authority, including all amendments thereto with respect to any Tax. As
used in this Agreement, "Tax Affiliate" shall mean, with respect to a
company, any member of an affiliated
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group as defined in section 1504 of the Code or any member of a combined or
unitary group of which such company is or was a member (other than such
company).
2.9 Accounts Receivable. Set forth on Schedule 2.9 is a list
------------------- ------------
of all the accounts receivable of Conning Corp. as of June 30, 1995. Such
accounts receivable and any accounts receivable arising between such date
and the Closing Date (the "Conning Accounts Receivable") arose or will have
arisen in the ordinary and usual course of the business of Conning Corp.
Except as set forth on Schedule 2.9, the Conning Accounts Receivable are not
------------
and will not be on the Closing Date subject to any counterclaim, set-off,
defense, security interest, claim, or other encumbrance. Except to the
extent of any reserve therefor on the Conning Balance Sheet or paid in full
prior to Closing, the Conning Accounts Receivable are and will be current
and collectible and will be paid in full, net of reserves, on or before 90
days after the Closing Date.
2.10 Regulatory Matters; Permits and Licenses.
----------------------------------------
(a) Conning is registered with the Securities and
Exchange Commission as a broker-dealer under the Securities Exchange Act of
1934 and as an investment adviser under the Investment Advisers Act of 1940.
Conning is licensed as a broker-dealer in securities under the laws relating
to the conduct of a securities business in the jurisdictions set forth on
Schedule 2.10. Conning is a member in good standing of the National
-------------
Association of Securities Dealers, Inc. ("NASD"), the Securities Investor
Protection Corporation ("SIPC") and an associate member of the American
Stock Exchange, Inc. ("ASE"). No litigation, proceeding or investigation is
pending or, to the knowledge of Conning, threatened, which might result in
the termination or the suspension of the registration or licensing of
Conning or any of its approved persons, principals or registered
representatives, or in any other disciplinary action against it or any of
them under any applicable statute, rule or regulation or in the termination
or suspension or other disciplinary action affecting Conning's rights as a
member of the NASD, SIPC or ASE.
(b) Set forth on Schedule 2.10 is a list or description
-------------
of each material license or permit required for the conduct of the business
of Conning, together with the name of the governmental agency or entity
issuing each such license and permit. To the knowledge of Conning Corp.,
each of such licenses and permits is valid and in full force and effect.
Except as noted on Schedule 2.10, none of such licenses and permits will be
-------------
rescinded solely as a result of a change in control of Conning.
2.11 Real Property. Conning Corp. does not own any real
-------------
property. Schedule 2.11 lists and provides descriptions of
-------------
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all real property leased or subleased to Conning Corp. and all other real
property which is used by Conning Corp. and not owned by Conning Corp.
(the "Conning Leased Real Property"). Except as otherwise described on
Schedule 2.11: (a) there are no leases, subleases, licenses, concessions or
-------------
other agreements, written or oral, granting to any person or entity the
right to use or occupy any portion of the Conning Leased Real Property which
are not listed on Schedule 2.17; (b) no person or entity (other than Conning
-------------
Corp. or Conning) is in possession of any of the Conning Leased Real
Property; (c) neither the current use of the Conning Leased Real Property
nor the operation of Conning Corp.'s business violates any agreement
affecting the Conning Leased Real Property or any applicable legal
requirements; and (d) all certificates of occupancy, permits, licenses,
approvals and other authorizations required in connection with the past,
present and proposed operation of its business on the Conning Leased Real
Property have been lawfully issued to Conning Corp. and are, as of the date
hereof, and will be following the consummation of the transactions
contemplated hereby, in full force and effect.
2.12 Assets. Conning Corp. has good and marketable title to,
------
or a valid leasehold interest in, all material properties and assets used by
it, located on its premises or shown on the Conning Balance Sheet or
acquired after the date thereof, free and clear of all Liens, except for
Liens disclosed on the Conning Balance Sheet or Schedule 2.11 (as to real
-------------
property) or Schedule 2.12 (as to all other properties and assets) and
-------------
except for properties and assets disposed of for fair consideration in the
ordinary course of business since the date of the Conning Balance Sheet.
Conning Corp. owns or leases or has the valid and enforceable right to use
all material assets, tangible or intangible, necessary for the conduct of
its business as presently conducted and as proposed to be conducted, and,
upon the Closing, Conning Corp. will continue to have the same rights with
respect to such assets. All of the material tangible assets of Conning
Corp. are in good operating condition and repair as required for their use
as presently conducted or planned by Conning Corp. and conform to all
applicable Laws, and no notice of any violation of any Law relating to any
of such property or assets has been received by Conning Corp. except such as
have been fully complied with.
2.13 Absence of Certain Changes. Since March 31, 1995, except
--------------------------
as set forth in the Conning Financial Statements or Schedule 2.13 or as
-------------
explicitly provided for under this Agreement, there has not been:
(a) Any material adverse change in (i) the business or
condition (financial or otherwise) or operations of Conning Corp., or (ii)
the condition of the assets and property,
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real and personal, tangible and intangible, of Conning Corp. (the "Conning
Property");
(b) Any loss or notice of the expected loss of any of
Conning's customers or any material decrease in or change in the terms of
such customers' business relationships or dealings with Conning;
(c) Any declaration, setting aside, or payment of any
dividend or any distribution (in cash or in kind) to any shareholder of
Conning Corp. on account of or with respect to any securities of or
interests in Conning Corp., or any direct or indirect redemption, purchase,
repurchase or other acquisition by Conning Corp. of any securities of or
interests in Conning Corp.;
(d) Any increase in compensation or other remuneration
payable to or for the benefit of or committed to be paid to or for the
benefit of any partner, director, officer, agent, or employee of Conning
Corp., or in any benefits granted under any Plan (defined below) with or for
the benefit of any such partner, director, officer, agent, or employee,
except for regularly scheduled raises consistent with past practices in
timing and amount;
(e) Any transaction entered into or carried out by
Conning Corp. other than in the ordinary course of business;
(f) Any borrowing or incurrence of any other
indebtedness (including letter of credit and foreign exchange obligations),
contingent or otherwise, by or on behalf of Conning Corp.; or any
endorsement, assumption, or guarantee of payment or performance of any loan
or obligation of any other person or entity by Conning Corp.;
(g) Any change made by Conning Corp. in its methods of
doing business or of accounting;
(h) Any grant by Conning Corp. of any mortgage, security
interest, or other encumbrance with respect to the Conning Property;
(i) Any sale, lease, or disposition of, or any agreement
to sell, lease, or dispose of, any of the Conning Property other than
arm's-length sales in the ordinary course of business of Conning Corp.;
(j) Any modification or termination of any Conning
Contract (defined below) or any material term thereof other than in the
ordinary course of business;
(k) Any purchase by Conning Corp. of capital
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assets with a value individually or in the aggregate in excess of $50,000;
(l) Any loan or advance made by Conning Corp. to any
person or entity; or
(m) Any binding commitment or agreement by a Shareholder
or Conning Corp. to do any of the foregoing items (b) through (k).
2.14 No Breach of Law or Governing Document. Conning Corp. is
--------------------------------------
not in material default under or in material breach or material violation of
any applicable statute, law, ordinance, decree, order, injunction, rule,
directive, or regulation of any Government ("Law") or the provisions of any
Government permit, franchise, or license, or any provision of its
constituent documents. Neither the execution of this Agreement nor the
Closing do or will constitute or result in any such default or violation.
2.15 Litigation. Except as set forth on Schedule 2.15, (a)
---------- -------------
there is no suit, claim, litigation, proceeding (administrative, judicial,
or in arbitration, mediation or alternative dispute resolution), Government
or grand jury investigation, or other action (any of the foregoing,
"Action") pending or, to the knowledge of any Shareholder or Conning Corp.,
threatened against Conning Corp. or involving its business, any of the
Conning Property, or, in connection with its business, any of its partners,
directors, officers, agents, or other personnel, including, without
limitation, any Action challenging, enjoining, or preventing this Agreement
or the consummation of the transactions contemplated hereby; and (b) Conning
Corp. is not subject to any order, writ, injunction, or decree of any court
or other Government entity ("Order") other than Orders of general
applicability. There is no Action pending or, to the knowledge of Conning
Corp., threatened against Conning Corp. or any of the Shareholders or Option
Holders challenging, enjoining, or preventing this Agreement or the
consummation of the transactions contemplated hereby.
2.16 Environmental Matters.
---------------------
(a) Except as set forth on Schedule 2.16 Conning Corp.
-------------
complies, and has at all times complied with, and does not cause, has not
caused, and will not cause liability to be incurred by Conning Corp. under,
any and all current or prior Law relating to the protection of health or the
environment, including, without limitation: the Clean Air Act, the Federal
Water Pollution Control Act, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Toxic Substance Control Act,
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and the common law, including the law of nuisance and strict liability
(collectively, "Environmental Law"). Except as set forth on Schedule 2.16,
-------------
Conning Corp. is not in violation of and has not violated any Environmental
Law.
(b) Except as set forth on Schedule 2.16, Conning Corp.
-------------
possesses and is in compliance with all necessary permits, registrations,
approvals, and licenses, and has properly made all filings with and
submissions to any Government or other authority required by any
Environmental Law. No deficiencies have been asserted by any such
Government or authority with respect to such items.
(c) Except as set forth on Schedule 2.16, there has been
-------------
no spill, discharge, leak, leaching, emission, migration, injection,
disposal, escape, dumping, or release of any kind on, beneath, above, or
into any and all property which Conning Corp. currently or previously owned,
leased, occupied or used or into the environment surrounding such property
of any pollutants, contaminants, hazardous substances, hazardous chemicals,
toxic substances, hazardous wastes, infectious wastes, radioactive
materials, petroleum including crude oil or any fraction thereof, asbestos
fibers, or solid wastes (collectively, "Hazardous Materials"), including,
without limitation, those defined in any Environmental Law.
(d) Set forth on Schedule 2.16 is a list of all reports,
-------------
surveys and other written materials commissioned or developed by or on
behalf of Conning Corp. since 1985 with respect to environmental matters
relating to Conning Corp.
2.17 Contracts.
---------
(a) Set forth on Schedule 2.17 is a list of each written
-------------
or oral contract, agreement, lease, indenture, and evidence of indebtedness
(including letter of credit and foreign exchange obligations and purchase
orders for either the purchase of materials or the sale of a product) to
which Conning Corp. is a party or of which it is a beneficiary which
involves an outstanding, contingent, or continuing liability or obligation
of or to Conning Corp. (a "Conning Contract") and which (i) is material to
the business, financial condition or operations of Conning Corp., (ii)
involves (A) a guaranty, indemnity, or power of attorney, (B) a sharing of
payments or joint venture, (C) a sales agency, representation,
distributorship or franchise arrangement, (D) restrictions on competition or
confidentiality agreements, or (E) an obligation in excess of $50,000, (iii)
has resulted or will result in a loss to Conning Corp., or (iv) is not in
the ordinary course of business of Conning Corp. Conning Corp. does not
provide investment advisory services to any registered investment company.
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(b) Except as indicated on Schedule 2.17, neither
-------------
Conning Corp. nor, to the knowledge of Conning Corp., any other party to a
Conning Contract is in default under or in breach or violation of any
Conning Contract, and, to the knowledge of Conning Corp., no event has
occurred that, through the passage of time or the giving of notice, or both,
would constitute, and neither the execution of this Agreement nor the
Closing hereunder do or will constitute or result in, such a default, breach
or violation, cause the acceleration of any obligation of any party thereto
or the creation of a lien or encumbrance upon any Property or the Conning
Common Stock, or require any consent thereunder to the transactions
contemplated herein.
2.18 Intellectual Property.
---------------------
(a) Schedule 2.18 contains a true, complete and accurate list
-------------
of all patents, trademarks, service marks, copyrights, applications for
patents and for registration of trademarks, service marks and copyrights and
software licenses which are material to the business of Conning Corp.
Schedule 2.18 accurately identifies, where appropriate, one or more of the
-------------
following for each item of such intellectual property: filing date, issue
date, classification of invention or goods covered, country of origin,
licensor, license date and licensed subject matter. Schedule 2.18 contains
-------------
a complete and accurate list of all licenses and other rights granted by
Conning Corp. to any third party with respect to any item of the Conning
Intellectual Property (as hereinafter defined).
(b) Conning Corp. represents and warrants as follows: (i) the
Conning Intellectual Property is valid and enforceable and encompasses all
proprietary rights material to the operation of its business as presently
conducted or proposed to be conducted (in each case free and clear of all
Liens); (ii) to the knowledge of Conning Corp., it has taken all actions
necessary to maintain and protect the Conning Intellectual Property; (iii)
there has been no claim made against Conning Corp. asserting the invalidity,
misuse or unenforceability of any of the Conning Intellectual Property or
challenging Conning Corp.'s right to use or ownership of any of the Conning
Intellectual Property; (iv) Conning Corp. is not aware of any infringement
or misappropriation of any of the Conning Intellectual Property or of any
facts raising a likelihood of infringement or misappropriate; (v) to the
knowledge of Conning Corp., the conduct of its business has not infringed or
misappropriated, and does not infringe or misappropriate, any intellectual
property or proprietary right of any other entity; (vii) no loss of any of
the Conning Intellectual Property is known by Conning Corp. to be
threatened, pending or reasonably foreseeable; and (viii) the consummation
of the transactions contemplated by this Agreement
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will not materially alter, impair or extinguish any of the Conning
Intellectual Property.
(c) For purposes of this Agreement, "Conning Intellectual
Property" shall mean all of the following (in whatever form or medium) which
are owned by or licensed to Conning Corp.: (i) patents, trademarks, service
marks and copyrights, (ii) applications for patents and for registration of
trademarks, service marks and copyrights, (iii) trade secrets and trade
names, and (iv) all other items of proprietary know-how or intellectual
property.
2.19 Insurance. Conning Corp. has during the past five years
---------
maintained: (i) general comprehensive liability insurance against such
risks as are customarily insured against by businesses similar to Conning
Corp. and in at least such amounts as are usually carried by persons or
entities engaged in the same or a similar business, and (ii) insurance as
required by law or under any agreement to which Conning Corp. is or has been
a party, including, without limitation, unemployment and workers'
compensation coverage. A list of each such currently effective insurance
policy is set forth on Schedule 2.19.
-------------
2.20 Officers, Directors, Employees, and Consultants. Set
-----------------------------------------------
forth on Schedule 2.20 is a list of: (a) all current directors of Conning
-------------
Corp., (b) all current officers (with office held) of Conning Corp., (c) all
employees (active or other) of Conning Corp., (d) all current paid
consultants to Conning Corp., and (e) all retirees and terminated employees
of Conning Corp. for which Conning Corp. has any benefits responsibility or
other continuing or contingent obligation, together, in each case, with the
current rate of compensation (if any) payable to each. Conning Corp. is not
indebted to any partner, director, officer, employee or agent of Conning
Corp., except for amounts due as (x) normal salaries, wages and bonuses, (y)
as disclosed on Schedule 2.20, or (z) in reimbursement of ordinary expenses
-------------
on a current basis.
2.21 Bank Accounts of Conning Corp. Set forth on Schedule 2.21
------------------------------ -------------
hereto is a list of the locations and numbers of all bank accounts and safe
deposit boxes maintained by Conning Corp., together with the names of all
persons who are authorized signatories or have access thereto.
2.22 Transactions with Related Persons. Except as set forth on
---------------------------------
Schedule 2.22, Conning Corp. has no obligations, contractual or otherwise,
-------------
owed to or owing from, directly or indirectly, any officer, director or
Equity Holder or any affiliate of any of them or of Conning Corp.
2.23 Labor Matters. Set forth on Schedule 2.23 is each
------------- -------------
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collective bargaining, works council, union representation or similar
agreement or arrangement to which Conning Corp. is or has been a party or by
which it is or has been bound. Except as set forth on Schedule 2.23:
-------------
(a) Conning Corp. is not and has not engaged in any
unfair labor practice;
(b) There is no labor strike, dispute, slowdown, or
stoppage pending or, to the knowledge of any Shareholder or Conning Corp.,
threatened against Conning Corp.;
(c) No right of representation exists respecting Conning
Corp.'s employees;
(d) No collective bargaining agreement is currently
being negotiated and no organizing effort is currently being made with
respect to Conning Corp.'s employees; and
(e) No current or former employee of Conning Corp. has
any claim against Conning Corp. on account of or for (i) overtime pay, other
than overtime pay for the current payroll period, (ii) wages or salary
(excluding current bonus, accruals and amounts accruing under pension and
profit sharing and other employee benefit plans) for any period other than
the current payroll period, (iii) vacation, time off or pay in lieu of
vacation or time off, other than that earned in respect of the current
fiscal year, or (iv) any violation of any Law relating to minimum wages or
maximum hours of work.
2.24 Employee Benefit Matters.
------------------------
(a) Except as set forth on Schedule 2.24, Conning Corp.
-------------
does not have outstanding and is not a party to or subject to liability
under: (i) any agreement, arrangement, plan or policy, whether or not
considered legally binding, that involves (A) any pension, retirement,
profit sharing, deferred compensation, bonus, stock option, stock purchase,
health, welfare, or incentive plan; or (B) any welfare or "fringe" benefits,
including, without limitation, vacation, severance, disability, medical,
hospitalization, dental, life and other insurance, tuition, company car,
club dues, sick leave, maternity, paternity or family leave, or other
benefits; or (ii) any employment, consulting, engagement, or retainer
agreement or arrangement whereby Conning Corp. employs, retains or engages
any individual or other entity as an employee, consultant or independent
contractor to Conning Corp. ((i) and (ii) together, the "Conning Plans," and
each item thereunder, a "Conning Plan"). True, correct, and complete copies
of all documents creating or evidencing any Conning Plan listed on Schedule 2.24
have been delivered to General American. There are -------------
21
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no negotiations, demands or proposals which are pending or threatened or
which have been made since December 31, 1992 which concern matters now
covered, or that would be covered, by the foregoing types of agreement,
arrangement, plan, or policy.
(b) Each Conning Plan complies with and has been
administered, operated, and maintained in compliance with, and, except as
set forth on Schedule 2.24, Conning Corp. has no direct or indirect
-------------
liability under, the Code or the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), as the case may be, or any other Law applicable
to any Conning Plan, and no Conning Plan is subject to Title IV of ERISA.
(c) No "reportable event" (as defined in ERISA) or
"prohibited transaction" (as defined in the Code or ERISA) has occurred, and
Conning Corp. has no knowledge of a situation which would give rise to a
reportable event or prohibited transaction, with respect to any Conning
Plan.
(d) All contributions for all periods ending prior to
the Closing Date which are required to be made prior to the Closing Date
(including periods from the first day of the current plan year to the
Closing Date) will be made prior to the Closing Date by Conning and all
members of the controlled group in accordance with past practice. All
insurance premiums due have been paid in full, subject only to normal
retrospective adjustments in the ordinary course, with regard to the Conning
Plans for policy years or other applicable policy periods ending on or
before the Closing Date.
Corp. has not made any contribution to any multi-employer plan (as defined
in ERISA), Conning Corp. has never been a member of a controlled group which
contributed to any such plan, and Conning Corp. has never been under common
control with an employer which contributed to any such plans.
(e) The statements of assets and liabilities of the
Conning Plans as of the end of the fiscal year ending December 31, 1993, and
the statements of changes in fund balances, financial position and net
assets available for benefits under such Conning Plans for such fiscal year,
copies of which have been furnished to General American, fairly present the
financial condition of such Conning Plans as of such date and the results of
operations thereof for the year ended on such date, all in accordance with
GAAP applied on a consistent basis.
(f) All of the Conning Plans, to the extent applicable,
are in compliance with the continuation of health benefit provisions
contained in the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), and with Section 1862(b)(4)(A)(i) of the Social Security
Act, and Conning
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Corp. does not have any liability for any excise tax imposed by Code Section
5000. Except as set forth on Schedule 2.24, Conning Corp. has no liability
-------------
or obligation to provide life, medical or other welfare benefits to former
or retired employees, other than under COBRA.
(g) Also set forth on Schedule 2.24 are all employee
-------------
benefit plans which Conning Corp. has terminated or taken action to
terminate since January 1, 1991. Such terminations have been carried out in
accordance with all provisions of Law, including, without limitation, all
applicable reporting and other provisions of the Code and ERISA. Except as
described on Schedule 2.24 hereto, Conning Corp. has no liability to, and
-------------
has not received notice alleging such liability from, any person or entity,
including, without limitation, the PBGC, any other Government agency or any
participant in or beneficiary of any such plan, nor is Conning Corp. liable
for any excise, income or other tax or penalty as a result of or in
connection with such termination. Conning Corp. has obtained a favorable
determination letter from the Internal Revenue Service with respect to the
termination of each of such plans, true, complete and correct copies of
which have been delivered to General American. The favorable determination
letters were received after full and accurate disclosure by Conning Corp. of
all material facts to the appropriate Government agencies.
(h) To the extent applicable with respect to each
Conning Plan, true, correct and complete copies of the most recent (i)
determination letter and any outstanding request for a determination letter;
(ii) Form 5500 and attached Schedule B; (iii) Form 5310 and any related
filings with the PBGC; (iv) ruling letter and any outstanding request for a
ruling letter with respect to the tax-exempt status of any voluntary
employees' beneficiary association ("VEBA") which is implementing such
Conning Plan; and (v) general notification to employees of their rights
under Code Section 4980B and form of letter(s) distributed upon the
occurrence of a qualifying event described in Code Section 4980B, in the
case of a Conning Plan that is a "group health plan" as defined in Code
Section 162(i) have been delivered to General American.
2.25 Discrimination and Occupational Safety and Health.
-------------------------------------------------
Except as set forth on Schedule 2.25, no person has any claim or basis for
-------------
any Action against Conning Corp. arising out of any Law relating to
discrimination in employment or employment practices or occupational safety
and health standards. Since December 31, 1992, Conning Corp. has not
received any notice from any person alleging a violation of such law or
occupational safety or health standards.
23
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2.26 Alien Employment Eligibility. With respect to each person
----------------------------
employed by Conning Corp. on or after May 1, 1987, and who actually
commenced such employment on or after November 6, 1986: (a) Conning Corp.
hired such person in compliance with the Immigration Reform and Control Act
of 1986 and the rules and regulations thereunder ("IRCA"); and (b) Conning
Corp. has complied with all record-keeping and other regulatory requirements
under IRCA.
2.27 Governmental Approvals and Filings. Except for compliance
----------------------------------
with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "H-S-R Act") and except as set forth on Schedule 2.27, none of the
-------------
Shareholders or Conning Corp. is required to obtain any approval, consent,
or authorization of, or to make any declaration or filing with, any
Government for the valid execution and delivery of this Agreement or any
other agreement to be delivered hereunder or the performance or consummation
of the transactions contemplated hereby or thereby.
2.28 Brokers, Finders. Except as set forth on Schedule 2.28,
---------------- -------------
no finder, broker, agent, or other intermediary acting on behalf of any
Equity Holder or Conning Corp. is entitled to a commission, fee, or other
compensation or obligation in connection with the negotiation or
consummation of this Agreement or any of the transactions contemplated
hereby.
2.29 Outside Financial Interests. Except as identified on
---------------------------
Schedule 2.29, no director (excluding Xxxxx Xxxxx, Xxxxxxx Xxxxxx, Xxxxx
-------------
Xxxxx, Xxxxxx Xxxxx and Xxxxxx X. Xxxxxxx), officer, Equity Holder or any
affiliate of any of them or of Conning Corp. has any direct or indirect
financial interest in any competitor with or supplier or customer of, or any
other person or entity that has any transactions or other business
relationship with, Conning Corp.; provided, however, that for this purpose
ownership of corporate securities having no more than 5% of the outstanding
voting power of any competitor, supplier, customer or other person or
entity, which securities are listed on any national securities exchange or
authorized for quotation on the Automated Quotations System of the National
Association of Securities Dealers, Inc., shall not be deemed to be such a
financial interest, provided such person has no other connection or
relationship with such competitor, supplier, customer or other person or
entity.
2.30 Guarantees. Except as set forth on Schedule 2.30, Conning
---------- -------------
Corp. is not a guarantor, indemnitor, surety or accommodation party or
otherwise liable for any indebtedness of any other person or entity except
as endorser of checks received and deposited in the ordinary course of
business.
24
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2.31 Foreign Operations and Export Control. Conning Corp. has
-------------------------------------
at all times acted:
(a) pursuant to valid qualifications to do business in
all jurisdictions outside the United States where such qualification is
required by local law and the failure to do so would have a material adverse
effect on the business, operations or condition (financial or otherwise) of
Conning Corp.;
(b) in material compliance with all applicable foreign
laws, including without limitation laws relating to foreign investment,
foreign exchange control, immigration, employment and taxation;
(c) without notice of material violation of and in
material compliance with all relevant anti-boycott legislation, including
without limitation the Tax Reform Act of 1976, as amended, the Export
Administration Act of 1979, as amended, and regulations thereunder,
including all reporting requirements;
(d) without material violation of and pursuant to any
material, required export licenses granted under the Export Administration
Act of 1979, as amended, and regulations thereunder, which licenses are
described on Schedule 2.31; and
-------------
(e) without violation of the Foreign Corrupt Practices
Act of 1977, as amended.
2.32 Disclosure. Each Schedule and each document attached as a
----------
Schedule is true, correct, and complete in all material respects. No
representation or warranty by Conning Corp., Conning or the Equity Holders
in this Agreement or any Schedule referred to herein or in any agreement to
be delivered hereunder contains any untrue statement of a material fact or
any omission of a material fact necessary to make the statements contained
herein and therein, in light of the circumstances under which the statements
were made, not misleading.
2.33 Qualified Investors. The Equity Holders listed on
-------------------
Schedule 2.33 are each "accredited investors" within the meaning of Rule 501
-------------
of Regulation D ("Regulation D") promulgated under the Securities Act of
1933, as amended (the "1933 Act"). The remaining 20 Equity Holders either
alone or with their "purchaser representative" (as such term is defined for
purposes of Rule 501 of Regulation D), have such knowledge and experience in
financial and business matters that they are capable of evaluating the
merits and risks of the transactions provided for in this Agreement.
Conning has delivered to General American true, complete and correct copies
of investor questionnaires
25
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establishing the status of each Equity Holder, and his or her purchaser
representative, where applicable, duly executed by each such Equity Holder
and purchaser representative, where applicable. Conning Corp. has no reason
to believe that CAM should not rely on such investor questionnaires.
2.34 Purchase for Investment.
-----------------------
(a) Each Equity Holder is acquiring the shares of CAM
Preferred Stock issuable hereunder for his own account and not with a view
to, or for sale in connection with, any "distribution," as such term is used
in Section 2(11) of the 1933 Act, of any shares of CAM Preferred Stock in
violation of the 1933 Act.
(b) Each Equity Holder understands that (i) the shares
of CAM issued pursuant to this Agreement will be restricted securities
within the meaning of Rule 144 of the 1933 Act ("Rule 144"); (ii) such
securities are not registered; (iii) such securities must be held
indefinitely and that no transfer of such securities may be made by the
Equity Holder unless (A) the sale of such securities has been registered
under the 1933 Act and any applicable state securities laws, or (B) an
exemption from registration is available under applicable state securities
laws and the 1933 Act, including in accordance with the terms and conditions
of Rule 144; and (iv) in any event, the exemption from registration under
Rule 144 will not be available unless such securities have been beneficially
owned for at least two years.
(c) Each Equity Holder understands that the certificates
representing the shares of CAM Preferred Stock issued pursuant to this
Agreement shall bear a legend substantially as follows:
"The sale, transfer or encumbrance of this certificate is subject to
an Agreement between the Corporation and all of its Shareholders. A
copy of this Agreement is on file in the office of the Secretary of
the Corporation. The Agreement provides, among other things, for
certain obligations to sell and to purchase the Shares evidenced by
this certificate, for a designated purchase price. By accepting the
Shares evidenced by this certificate, the holder agrees to be bound by
said Agreement."
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 or any applicable state law. They
may not be offered for sale, sold, transferred or pledged without (1)
registration under the Securities Act of 1933 and any applicable state
law, or (2) at holder's expense, an opinion
26
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(satisfactory to the Company) that registration is not required."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
---------------------------------
GENERAL AMERICAN, GAHC, GAIMCO AND CAM
--------------------------------------
General American, GAHC, GAIMCO and CAM hereby make the following
representations and warranties to each of Conning Corp., Conning and the
Equity Holders, each of which is true and correct on the date hereof and
will be true and correct as of the Closing Date and each of which shall
survive the Closing as specified in Section 7.1 hereof.
3.1 Enforceable Agreement; Existence and Qualification.
--------------------------------------------------
(a) General American, GAHC, GAIMCO and CAM each have
full power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance
of this Agreement by General American, GAHC, GAIMCO and CAM have been duly
authorized by all requisite corporate action. This Agreement constitutes
the valid and binding obligation of General American, GAHC, GAIMCO and CAM,
enforceable in accordance with its terms.
(b) General American, GAIMCO and CAM are each
corporations duly organized, validly existing and in good standing under the
laws of the State of Missouri. Each of General American, GAIMCO and CAM has
all requisite corporate power and authority to own, lease and use its assets
and properties and to conduct the business in which it is engaged. Each of
GAIMCO and CAM is duly licensed or qualified to do business as a foreign
corporation and is in good standing in the state(s), countries or other
jurisdictions listed on Schedule 3.1(b), and is not required to be
---------------
registered, licensed or qualified to do business in any other jurisdiction
in which the failure to so qualify would result in losses to GAIMCO or CAM
in excess of $25,000. GAIMCO has delivered to Conning Corp. true, complete
and correct copies of the constituent documents, as currently in effect, of
GAIMCO and CAM.
(c) Neither GAIMCO nor CAM is a party to, subject to or
bound by any note, bond, mortgage, indenture, deed of trust, agreement,
lien, contract or other instrument or obligation or any statute, law, rule,
regulation, judgment, order, writ, injunction, or decree of any court,
administrative or regulatory body, governmental agency, arbitrator, mediator
or similar body, franchise or license, which is material to its business and
which would (i) conflict with or be breached or
27
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violated or the obligations thereunder accelerated or increased (whether or
not with notice or lapse of time or both) by the execution, delivery or
performance by GAIMCO and CAM of this Agreement or (ii) prevent the carrying
out of the transactions contemplated hereby. Except as set forth on
Schedule 3.1(c) and except for compliance with the provisions of the H-S-R
---------------
Act, none of General American, GAHC, GAIMCO or CAM is required to obtain any
waiver or consent of any third person or governmental authority for the
execution of this Agreement or the consummation of the transactions
contemplated hereby. The execution of this Agreement and the consummation
of the transactions contemplated hereby will not result in the creation of
any material Lien against GAIMCO or CAM or any of their respective
properties or assets.
3.2 Capitalization and Related Matters.
----------------------------------
(a) Capital Stock. The entire authorized capital
-------------
stock of GAIMCO consists solely of 100 shares of GAIMCO Common Stock, of
which 10 shares are issued and outstanding. No other capital stock of
GAIMCO is authorized or issued. The entire authorized capital stock of CAM
consists solely of (i) 20,000,000 shares of CAM Common Stock, of which 0
shares are issued and outstanding, and (ii) 20,000,000 shares of CAM
Non-Voting Common Stock, of which 0 shares are issued and outstanding, and
(iii) 20,000,000 shares of preferred stock (all of which will be designated
as CAM Preferred Stock upon filing of the Certificate of Designation with
the Secretary of State of Missouri), of which 0 shares are issued and
outstanding. No other capital stock of GAIMCO or CAM is authorized or
issued. GAHC is the record and beneficial owner of all of the outstanding
capital stock of GAIMCO and CAM. All of the issued and outstanding shares
of the capital stock of GAIMCO are duly authorized, validly issued, fully
paid, non-assessable and free of preemptive rights, without restriction on
the transfer thereof other than pursuant to applicable federal and state
securities laws, and all of such shares have been so issued in full
compliance with all applicable federal and state securities laws.
(b) Other Securities. There are no outstanding
----------------
subscriptions, rights, options, warrants, conversion privileges or
agreements of any kind entitling any person or entity to acquire from GAIMCO
or CAM any shares of the capital stock of GAIMCO or CAM or any other type of
security of GAIMCO or CAM.
3.3 The CAM Preferred Stock and CAM Options. The shares of
---------------------------------------
CAM Preferred Stock to be issued to the Equity Holders hereunder, when
delivered hereunder, will be duly authorized, validly issued, fully paid,
nonassessable, and free of preemptive rights, without restriction on the
transfer thereof other than pursuant to applicable federal and state
securities laws and as
28
34
contemplated by this Agreement and the Shareholders' Agreement. At and
after Closing, CAM will reserve for issuance under the CAM Options a
sufficient number of shares of CAM Non-Voting Common Stock, which will be,
when issued, duly authorized, validly issued, fully paid, nonassessable, and
free of preemptive rights, without restriction on the transfer thereof other
transfer thereof other than pursuant to applicable federal and state
securities laws and as contemplated by this Agreement.
3.4 Subsidiaries. Neither GAIMCO nor CAM, directly or
------------
indirectly, owns or has the right to acquire 10% or more of the voting
securities or other equity interest in, or directly or indirectly control,
any other corporation, partnership, joint venture or other entity.
3.5 Property. Except as set forth on Schedule 3.5, GAIMCO is
-------- ------------
the sole owner of all right, title, and interest in and to all material
assets reflected on the GAIMCO Balance Sheet (defined below) and owns or has
the valid right to lease all property, real and personal, tangible and
intangible, used by it in, or necessary for it to transact, the business in
which it is engaged, and there exists no material restriction on the use or
transfer of such assets or property. Except as noted on Schedule 3.5, the
------------
assets owned or leased by GAIMCO constitute all of the property and property
rights used or necessary for the conduct of the business of GAIMCO in the
manner and to the extent presently conducted by GAIMCO. No such assets or
property are in the possession of others and GAIMCO holds no property on
consignment.
3.6 Financial Statements.
--------------------
(a) Set forth on Schedule 3.6 are (i) the audited
------------
balance sheet of GAIMCO as of December 31, 1994, 1993 and 1992, and the
related statements of earnings, shareholders' equity and changes in
financial position or cash flow for the fiscal years then ended and all
notes and schedules thereto, and (ii) the unaudited balance sheet of GAIMCO
as of June 30, 1995 (the "GAIMCO Balance Sheet") and the related statements
of earnings and changes in financial position for the period then ended,
together with any notes or schedules thereto ((i) and (ii) together, the
"GAIMCO Financial Statements").
(b) Also set forth on Schedule 3.6 are the audited
------------
balance sheet of General American as of December 31, 1994, and the related
statements of earnings, shareholders' equity and changes in financial
position or cash flow for the fiscal year then ended and all notes and
schedules thereto (the "General American Financial Statements").
(c) The GAIMCO Financial Statements and the
29
35
General American Financial Statements (i) are true, complete, and correct,
(ii) present fairly the financial position, results of operations, and cash
flows of GAIMCO and General American, respectively, at the dates and for the
periods indicated, and (iii) have been prepared in accordance with GAAP
applied on a consistent basis (except that unaudited financial statements do
not contain footnotes and are subject to year-end audit adjustments, which
will not be material in the aggregate).
3.7 Books and Records. The books of account, corporate record
-----------------
books, minute books, bank accounts, and other records of GAIMCO and CAM are
true, correct, and complete in all material respects, have been maintained
in accordance with good business practices, and the matters contained
therein are accurately reflected in the GAIMCO Financial Statements to the
extent appropriate.
3.8 No Undisclosed Liabilities. Neither GAIMCO nor CAM has
--------------------------
any liabilities or obligations whatsoever, known or unknown, accrued,
absolute, contingent, or other, except (a) as set forth on the GAIMCO
Balance Sheet or Schedule 3.8, or (b) those incurred in the ordinary course
------------
of the business of GAIMCO and CAM, consistent with past practice, since the
date of the GAIMCO Balance Sheet, none of which will, or could, have an
adverse effect upon the business or condition (financial or otherwise) or
operations of GAIMCO or CAM.
3.9 Taxes.
-----
(a) GAIMCO and each of its Tax Affiliates has timely
filed or caused to be filed with the appropriate Government entity all Tax
Returns (the returns applicable to GAIMCO are hereinafter referred to as the
"GAIMCO Tax Returns"), and no GAIMCO Tax Returns for any open tax year have
been amended. All GAIMCO Tax Returns are true, correct, and complete. There
are no grounds for assertion of any understatement penalty under Section
6661 of the Code (prior to repeal) or Section 6662 of the Code.
(b) All Taxes due and payable by GAIMCO or any of its
Tax Affiliates with respect to all periods ending on or prior to the date
hereof have been timely and fully paid, and there are no grounds for the
assertion or assessment of any additional Taxes against GAIMCO or any of its
Tax Affiliates or their respective assets with respect to such periods.
Except as specified in a letter to Conning Corp.'s counsel dated the date
hereof (the "Article III Tax Disclosure Letter"), there are no audits of any
GAIMCO Tax Returns of GAIMCO or any of its Tax Affiliates pending or
threatened. Except as specified on the Article III Tax Disclosure Letter,
there is no waiver of any
30
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statute of limitations in effect with respect to any GAIMCO Tax Returns.
(c) All unpaid Taxes for all periods up to and including
the Closing Date are properly accrued on the books of GAIMCO and its Tax
Affiliates. All unpaid Taxes for all periods up to the date of the GAIMCO
Balance Sheet are properly accrued on the GAIMCO Financial Statements. The
Article III Tax Disclosure Letter lists all GAIMCO Tax Returns for periods
up to and including the Closing Date (whether the period ends on such date)
which have not been filed on or before the Closing Date.
(d) There are no Liens for Taxes upon any assets of
GAIMCO or its Tax Affiliates, except Liens for Taxes not yet due and
payable.
(e) Except as specified on the Article III Tax
Disclosure Letter, true, correct and complete copies of all GAIMCO income
Tax Returns, tax examination reports and statements of deficiencies assessed
against, or agreed to with respect to GAIMCO or any of its Tax Affiliates
with respect to the last four (4) years with the Internal Revenue Service or
any taxing authority have been delivered to Conning Corp.
(f) Except as set forth on the Article III Tax
Disclosure Letter, neither GAIMCO nor any of its Tax Affiliates is or ever
has been a member of an "affiliated group" within the meaning of Section
1504 of the Code, except for the affiliated group of which General American
is the common parent.
(g) GAIMCO and each of its Tax Affiliates has complied
with all Law relating to the withholding of Taxes and the payment thereof
(including, without limitation, withholding of Taxes under Section 1441 and
1442 of the Code, or any similar provision under foreign Law), and has
timely and properly withheld from employee wages and paid over to the proper
Government all amounts required to be withheld and paid over under
applicable Law.
(h) Neither GAIMCO nor any of its Tax Affiliates is a
party to any safe harbor lease within the meaning of section 168(f)(8) of
the Code, as in effect prior to amendment by the Tax Equity and Fiscal
Responsibility Act of 1982. None of GAIMCO's or its Tax Affiliates'
property or assets has been financed with or directly or indirectly secures
any industrial revenue bonds or debt the interest on which is tax-exempt
under Section 103(a) of the Code. Neither GAIMCO nor any of its Tax
Affiliates is a borrower or guarantor of any outstanding industrial revenue
bonds, and none of such parties is a tenant, principal user or related
person to any principal user (within the meaning of section 144(a) of the
Code) of any property which
31
37
has been financed or improved with the proceeds of any industrial revenue
bonds.
(i) GAIMCO is not and has not been a real property
holding company within the meaning of Section 897(c) of the Code, and GAIMCO
shall so certify upon Conning Corp.'s request.
(j) GAIMCO is not required to include in income any
adjustment under Section 481(a) of the Code by reason of a change in
accounting method initiated by GAIMCO and the Internal Revenue Service has
not proposed any such adjustment or change in accounting method. GAIMCO has
no pending private letter ruling request with the Internal Revenue Service.
(k) None of the property owned by GAIMCO or any of its
Tax Affiliates is tax-exempt use property within the meaning of section
168(h) of the Code.
(l) No consent has been filed relating to GAIMCO
pursuant to section 341(f) of the Code.
(m) GAIMCO is not a partner in any joint venture,
partnership or other arrangement or contract that could be treated as a
partnership for federal income tax purposes.
(n) Except as set forth on the Article III Tax
Disclosure Letter, neither GAIMCO nor any of its Tax Affiliates is a party
to or bound by any affiliated group consolidated return tax allocation
agreement, tax sharing agreement or tax indemnification agreement.
(o) Except as set forth on the Article III Tax
Disclosure Letter, GAIMCO is not liable for Taxes to any foreign taxing
authority and does not have and has not had a permanent establishment in any
foreign country, as defined in any applicable tax treaty or convention
between the United States and such foreign country.
(p) All material elections with respect to Taxes
affecting GAIMCO as of the date hereof are set forth in the Article III Tax
Disclosure Letter. No new elections with respect to Taxes, or any changes
in current elections with respect to Taxes of GAIMCO or any of its Tax
Affiliates or affecting any of such parties shall be made after the date of
this Agreement without the prior written consent of Conning Corp.
(q) GAIMCO is not a party to any agreement, contract,
arrangement or plan that has resulted or would result, separately or in the
aggregate, in the payment of any "excess
32
38
parachute payments" within the meaning of section 280G of the Code.
(r) GAIMCO and each of its Tax Affiliates have not
participated in an international boycott within the meaning of section 999
of the Code.
3.10 Accounts Receivable. Set forth on Schedule 3.10 is a list
------------------- -------------
of all the accounts receivable of GAIMCO as of March 31, 1995. Such
accounts receivable and any accounts receivable arising between such date
and the Closing Date (the "GAIMCO Accounts Receivable") arose or will have
arisen in the ordinary and usual course of the business of GAIMCO. Except
as set forth on Schedule 3.10, the GAIMCO Accounts Receivable are not and
-------------
will not be on the Closing Date subject to any counterclaim, set-off,
defense, security interest, claim, or other encumbrance. Except to the
extent of any reserve therefor on the GAIMCO Balance Sheet or paid in full
prior to Closing, the GAIMCO Accounts Receivable are and will be current and
collectible and will be paid in full, net of reserves, on or before 90 days
after the Closing Date.
3.11 Regulatory Matters; Permits and Licenses.
----------------------------------------
(a) GAIMCO is registered with the Securities and
Exchange Commission as an investment adviser under the Investment Advisers
Act of 1940. GAIMCO is licensed under the laws relating to the conduct of a
securities business in the jurisdictions set forth on Schedule 3.11. No
-------------
litigation, proceeding or investigation is pending or, to the knowledge of
GAIMCO, threatened, which might result in the termination or the suspension
of the registration or licensing of GAIMCO or any of its approved persons,
principals or registered representatives, or in any other disciplinary
action against it or any of them under any applicable statute, rule or
regulation.
(b) Set forth on Schedule 3.11 is a list or description
-------------
of each material license or permit required for the conduct of the business
of GAIMCO, together with the name of the governmental agency or entity
issuing each such license and permit. To the knowledge of GAIMCO, each of
such licenses and permits is valid and in full force and effect. Except as
noted on Schedule 3.11, none of such licenses and permits will be rescinded
-------------
solely as a result of a change in control of GAIMCO.
3.12 Real Property. Neither GAIMCO nor CAM owns any real
-------------
property. Schedule 3.12 lists and provides descriptions of all real
-------------
property leased or subleased to GAIMCO or CAM and all other real property
which is used by GAIMCO or CAM and not owned by GAIMCO or CAM (the "GAIMCO
Leased Real Property"). Except as otherwise described on Schedule 3.12:
-------------
(a) there are no leases,
33
39
subleases, licenses, concessions or other agreements, written or oral,
granting to any person or entity the right to use or occupy any portion of
the GAIMCO Leased Real Property which are not listed on Schedule 3.18; (b)
-------------
no person or entity (other than GAIMCO) is in possession of any of the
GAIMCO Leased Real Property; (c) neither the current use of the GAIMCO
Leased Real Property nor the operation of GAIMCO's business violates any
agreement affecting the GAIMCO Leased Real Property or any applicable legal
requirements; and (d) all certificates of occupancy, permits, licenses,
approvals and other authorizations required in connection with the past,
present and proposed operation of its business on the GAIMCO Leased Real
Property have been lawfully issued to GAIMCO and are, as of the date hereof,
and will be following the consummation of the transactions
contemplated hereby, in full force and effect.
3.13 Assets. GAIMCO has good and marketable title to, or a
------
valid leasehold interest in, all material properties and assets used by it,
located on its premises or shown on the GAIMCO Balance Sheet or acquired
after the date thereof, free and clear of all Liens, except for Liens
disclosed on the GAIMCO Balance Sheet or Schedule 3.12 (as to real property)
-------------
or Schedule 3.13 (as to all other properties and assets) and except for
-------------
properties and assets disposed of for fair consideration in the ordinary
course of business since the date of the GAIMCO Balance Sheet. Except as
set forth on Schedule 3.12 or 3.13, GAIMCO owns or leases or has the valid
------------- ----
and enforceable right to use all material assets, tangible or intangible,
necessary for the conduct of its business as presently conducted and as
proposed to be conducted, and, upon the Closing, GAIMCO will continue to
have the same rights with respect to such assets. All of the material
tangible assets of GAIMCO are in good operating condition and repair as
required for their use as presently conducted or planned by GAIMCO and
conform to all applicable Laws, and no notice of any violation of any Law
relating to any of such property or assets has been received by GAIMCO
except such as have been fully complied with.
3.14 Absence of Certain Changes. Since March 31, 1995, except
--------------------------
as set forth in the GAIMCO Financial Statements or Schedule 3.14 hereto or
-------------
as explicitly provided for under this Agreement, there has not been:
(a) Any material adverse change in (i) the business or
condition (financial or otherwise) or operations of GAIMCO or CAM, or (ii)
the condition of the assets and property, real and personal, tangible and
intangible, of GAIMCO and CAM (the "GAIMCO Property");
(b) Any declaration, setting aside, or payment of any
dividend or any distribution (in cash or in kind) to any shareholder of
GAIMCO or CAM on account of or with respect to any
34
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securities of or interests in GAIMCO or CAM, or any direct or indirect
redemption, purchase, repurchase or other acquisition by GAIMCO or CAM of
any securities of or interests in GAIMCO or CAM;
(c) Any increase in compensation or other remuneration
payable to or for the benefit of or committed to be paid to or for the
benefit of any partner, director, officer, agent, or employee of GAIMCO or
CAM, or in any benefits granted under any GAIMCO Plan (defined below) with
or for the benefit of any such partner, director, officer, agent, or
employee, except for regularly scheduled raises consistent with past
practices in timing and amount;
(d) Any transaction entered into or carried out by
GAIMCO or CAM other than in the ordinary course of business;
(e) Any borrowing or incurrence of any other
indebtedness (including letter of credit and foreign exchange obligations),
contingent or otherwise, by or on behalf of GAIMCO or CAM; or any
endorsement, assumption, or guarantee of payment or performance of any loan
or obligation of any other person or entity by GAIMCO or CAM;
(f) Any change made by GAIMCO or CAM in its methods of
doing business or of accounting;
(g) Any grant by GAIMCO or CAM of any mortgage, security
interest, or other encumbrance with respect to the GAIMCO Property;
(h) Any sale, lease, or disposition of, or any agreement
to sell, lease, or dispose of, any of the GAIMCO Property other than
arm's-length sales in the ordinary course of business of GAIMCO and CAM;
(i) Any modification or termination of any GAIMCO
Contract (defined below) or any material term thereof other than in the
ordinary course of business;
(j) Any purchase by GAIMCO or CAM of capital assets with
a value individually or in the aggregate in excess of $50,000;
(k) Any loan or advance made by GAIMCO or CAM to any
person or entity;
(l) Any binding commitment or agreement by a GAIMCO or
CAM to do any of the foregoing items (b) through (k); or
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(m) Any material adverse change in the business or
financial condition of General American.
3.15 No Breach of Law or Governing Document. Neither GAIMCO
--------------------------------------
nor CAM is in material default under or in material breach or material
violation of any applicable Law or the provisions of any Government permit,
franchise, or license, or any provision of its constituent documents.
Neither the execution of this Agreement nor the Closing do or will
constitute or result in any such default or violation.
3.16 Litigation. Except as set forth on Schedule 3.16, (a)
---------- -------------
there is no Action pending or, to the knowledge of GAIMCO, threatened
against GAIMCO or CAM or involving their businesses, any of the GAIMCO
Property, or, in connection with their businesses, any of their partners,
directors, officers, agents, or other personnel, including, without
limitation, any Action challenging, enjoining, or preventing this Agreement
or the consummation of the transactions contemplated hereby; and (b) neither
GAIMCO nor CAM is subject to any Order other than Orders of general
applicability. There is no Action pending or, to the knowledge of GAIMCO,
threatened against GAIMCO or CAM challenging, enjoining, or preventing this
Agreement or the consummation of the transactions contemplated hereby.
3.17 Environmental Matters.
---------------------
(a) Except as set forth on Schedule 3.17, GAIMCO and CAM
-------------
comply, and have at all times complied with, and do not cause, have not
caused, and will not cause liability to be incurred by GAIMCO or CAM under,
any and all current or prior Environmental Law. Except as set forth on
Schedule 3.17, neither GAIMCO nor CAM is in violation of or has violated any
-------------
Environmental Law.
(b) Except as set forth on Schedule 3.17, GAIMCO and CAM
-------------
possess and are in compliance with all necessary permits, registrations,
approvals, and licenses, and has properly made all filings with and
submissions to any Government or other authority required by any
Environmental Law. No deficiencies have been asserted by any such
Government or authority with respect to such items.
(c) Except as set forth on Schedule 3.17, there has been
-------------
no spill, discharge, leak, leaching, emission, migration, injection,
disposal, escape, dumping, or release of any kind on, beneath, above, or
into any and all property which GAIMCO or CAM currently or previously owned,
leased, occupied or used or into the environment surrounding such property
of any Hazardous Materials, including, without limitation, those defined in
any Environmental Law.
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(d) Set forth on Schedule 3.17 is a list of all reports,
-------------
surveys and other written materials commissioned or developed by or on
behalf of GAIMCO or CAM since 1985 with respect to environmental matters
relating to GAIMCO or the GAIMCO Environmental Property.
3.18 Contracts.
---------
(a) Set forth on Schedule 3.18 is a list of each written
-------------
or oral contract, agreement, lease, indenture, and evidence of indebtedness
(including letter of credit and foreign exchange obligations and purchase
orders for either the purchase of materials or the sale of a product) to
which GAIMCO or CAM is a party or of which it is a beneficiary which
involves an outstanding, contingent, or continuing liability or obligation
of or to GAIMCO or CAM (a "GAIMCO Contract") and which (i) is material to
the business, financial condition or operations of GAIMCO and CAM, (ii)
involves (A) a guaranty, indemnity, or power of attorney, (B) a sharing of
payments or joint venture, (C) a sales agency, representation,
distributorship or franchise arrangement, (D) restrictions on competition or
confidentiality agreements, or (E) an obligation in excess of $50,000, (iii)
has resulted or will result in a loss to GAIMCO or CAM, or (iv) is not in
the ordinary course of business of GAIMCO or CAM.
(b) Except as indicated on Schedule 3.18, neither GAIMCO
-------------
nor CAM nor, to the knowledge of GAIMCO, any other party to a GAIMCO
Contract is in default under or in breach or violation of any GAIMCO
Contract, and, to the knowledge of GAIMCO, no event has occurred that,
through the passage of time or the giving of notice, or both, would
constitute, and neither the execution of this Agreement nor the Closing
hereunder do or will constitute or result in, such a default, breach or
violation, cause the acceleration of any obligation of any party thereto or
the creation of a lien or encumbrance upon any GAIMCO Property or the GAIMCO
Common Stock or the CAM capital stock, or require any consent thereunder to
the transactions contemplated herein.
3.19 Intellectual Property.
---------------------
(a) Schedule 3.19 contains a true, complete and accurate list
-------------
of all patents, trademarks, service marks, copyrights, applications for
patents and for registration of trademarks, service marks and copyrights and
software licenses which are material to the business of GAIMCO or CAM.
Schedule 3.19 accurately identifies, where appropriate, one or more of the
-------------
following for each item of such intellectual property: filing date, issue
date, classification of invention or goods covered, country of origin,
licensor, license date and licensed subject
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matter. Schedule 3.19 contains a complete and accurate list of all licenses
-------------
and other rights granted by GAIMCO or CAM to any third party with respect to
any item of the GAIMCO Intellectual Property (as hereinafter defined).
(b) (i) the GAIMCO Intellectual Property is valid and
enforceable and encompasses all proprietary rights material to the operation
of GAIMCO's and CAM's businesses as presently conducted or proposed to be
conducted (in each case free and clear of all Liens); (ii) to the knowledge
of GAIMCO, GAIMCO and CAM have taken all actions necessary to maintain and
protect the GAIMCO Intellectual Property; (iii) there has been no claim made
against GAIMCO or CAM asserting the invalidity, misuse or unenforceability
of any of the GAIMCO Intellectual Property or challenging GAIMCO's or CAM's
right to use or ownership of any of the GAIMCO Intellectual Property; (iv)
GAIMCO is not aware of any infringement or misappropriation of any of the
GAIMCO Intellectual Property or of any facts raising a likelihood of
infringement or misappropriate; (v) to the knowledge of GAIMCO, the conduct
of GAIMCO's and CAM's businesses has not infringed or misappropriated, and
does not infringe or misappropriate, any intellectual property or
proprietary right of any other entity; (vi) no loss of any of the GAIMCO
Intellectual Property is known to by GAIMCO to be threatened, pending or
reasonably foreseeable; and (vii) the consummation of the transactions
contemplated by this Agreement will not materially alter, impair or
extinguish any of the GAIMCO Intellectual Property.
(c) For purposes of this Agreement, "GAIMCO Intellectual
Property" shall mean all of the following (in whatever form or medium) which
are owned by or licensed to GAIMCO or CAM: (i) patents, trademarks, service
marks and copyrights, (ii) applications for patents and for registration of
trademarks, service marks and copyrights, (iii) trade secrets and trade
names, and (iv) all other items of proprietary know-how or intellectual
property.
3.20 Insurance. GAIMCO and CAM have during the past five years
---------
maintained: (i) general comprehensive liability insurance against such
risks as are customarily insured against by businesses similar to GAIMCO and
CAM and in at least such amounts as are usually carried by persons or
entities engaged in the same or a similar business, and (ii) insurance as
required by law or under any agreement to which GAIMCO or CAM is or has been
a party, including, without limitation, unemployment and workers'
compensation coverage. A list of each such currently effective insurance
policy is set forth on Schedule 3.20.
-------------
3.21 Officers, Directors, Employees, and Consultants. Set
-----------------------------------------------
forth on Schedule 3.21 is a list of: (a) all current directors of GAIMCO
-------------
and CAM, (b) all current officers (with
38
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office held) of GAIMCO and CAM, (c) all employees (active or other) of
GAIMCO and CAM, (d) all current paid consultants to GAIMCO and CAM, and (e)
all retirees and terminated employees of GAIMCO and CAM for which GAIMCO or
CAM has any benefits responsibility or other continuing or contingent
obligation, together, in each case, with the current rate of compensation
(if any) payable to each. Neither GAIMCO nor CAM is indebted to any
partner, director, officer, employee or agent of GAIMCO or CAM, except for
amounts due as (x) normal salaries, wages and bonuses, (y) as disclosed on
Schedule 3.21, or (z) in reimbursement of ordinary expenses on a current
-------------
basis.
3.22 Bank Accounts of GAIMCO and CAM. Set forth on Schedule 3.22
------------------------------- -------------
hereto is a list of the locations and numbers of all bank accounts and
safe deposit boxes maintained by GAIMCO and CAM, together with the names of
all persons who are authorized signatories or have access thereto.
3.23 Transactions with Related Persons. Except as set forth on
---------------------------------
Schedule 3.23 hereto, neither GAIMCO nor CAM has any obligations,
-------------
contractual or otherwise, owed to or owing from, directly or indirectly, any
officer or director or any affiliate thereof or of GAIMCO or CAM.
3.24 Labor Matters. Set forth on Schedule 3.24 is each
------------- -------------
collective bargaining, works council, union representation or similar
agreement or arrangement to which GAIMCO or CAM is or has been a party or by
which it is or has been bound. Except as set forth on Schedule 3.24:
-------------
(a) Neither GAIMCO nor CAM is or has been engaged in any
unfair labor practice;
(b) There is no labor strike, dispute, slowdown, or
stoppage pending or, to the knowledge of GAIMCO, threatened against GAIMCO
or CAM;
(c) No right of representation exists respecting
GAIMCO's or CAM's employees;
(d) No collective bargaining agreement is currently
being negotiated and no organizing effort is currently being made with
respect to GAIMCO's or CAM's employees; and
(e) No current or former employee of GAIMCO or CAM has
any claim against GAIMCO or CAM on account of or for (i) overtime pay, other
than overtime pay for the current payroll period, (ii) wages or salary
(excluding current bonus, accruals and amounts accruing under pension and
profit sharing and other employee benefit plans) for any period other than
the current payroll period, (iii) vacation, time off or pay in lieu of
39
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vacation or time off, other than that earned in respect of the current
fiscal year, or (iv) any violation of any Law relating to minimum wages or
maximum hours of work.
3.25 Employee Benefit Matters.
------------------------
(a) Except as set forth on Schedule 3.25, neither GAIMCO
-------------
nor CAM has outstanding or is a party to or subject to liability under: (i)
any agreement, arrangement, plan or policy, whether or not considered
legally binding, that involves (A) any pension, retirement, profit sharing,
deferred compensation, bonus, stock option, stock purchase, health, welfare,
or incentive plan; or (B) any welfare or "fringe" benefits, including,
without limitation, vacation, severance, disability, medical,
hospitalization, dental, life and other insurance, tuition, company car,
club dues, sick leave, maternity, paternity or family leave, or other
benefits; or (ii) any employment, consulting, engagement, or retainer
agreement or arrangement whereby GAIMCO or CAM employs, retains or engages
any individual or other entity as an employee, consultant or independent
contractor to GAIMCO or CAM ((i) and (ii) together, the "GAIMCO Plans," and
each item thereunder, a "GAIMCO Plan"). True, correct, and complete copies
of all documents creating or evidencing any GAIMCO Plan listed on Schedule 3.25
-------------
have been delivered to Conning Corp. Except as set forth on Schedule 3.25,
-------------
there are no negotiations, demands or proposals which are pending or
threatened or which have been made since December 31, 1992 which concern
matters now covered, or that would be covered, by the foregoing types of
agreement, arrangement, plan, or policy.
(b) Each GAIMCO Plan complies with and has been
administered, operated, and maintained in compliance with, and, except as
set forth on Schedule 3.25, neither GAIMCO nor CAM has any direct or
-------------
indirect liability under, the Code or ERISA, as the case may be, or any
other Law applicable to any GAIMCO Plan, and no GAIMCO Plan is subject to
Title IV of ERISA.
(c) No "reportable event" (as defined in ERISA) or
"prohibited transaction" (as defined in the Code or ERISA) has occurred, and
GAHC has no knowledge of a situation which would give rise to a reportable
event or prohibited transaction, with respect to any GAIMCO Plan.
(d) All contributions for all periods ending prior to
the Closing Date which are required to be made prior to the Closing Date
will be made prior to the Closing Date by GAIMCO or CAM and all members of
the controlled group in accordance with past practice. All insurance
premiums due have been paid in full, subject only to normal retrospective
adjustments in the ordinary course, with regard to the GAIMCO Plans for
policy years or other applicable policy periods ending on or before the
40
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Closing Date.
(e) Neither GAIMCO nor CAM has made any contributions to
any multi-employer plan (as defined in ERISA), neither GAIMCO nor CAM has
ever been a member of a controlled group which contributed to any such plan,
and neither GAIMCO nor CAM has ever been under common control with an
employer which contributed to any such plans.
(f) The statements of assets and liabilities of the
GAIMCO Plans as of the end of the fiscal year ending December 31, 1993, and
the statements of changes in fund balances, financial position and net
assets available for benefits under such GAIMCO Plans for such fiscal year,
copies of which have been furnished to Conning Corp., fairly present the
financial condition of such GAIMCO Plans as of such date and the results of
operations thereof for the year ended on such date, all in accordance with
GAAP applied on a consistent basis, and the actuarial assumptions used for
funding purposes have not been changed since the last written report of
actuaries on such GAIMCO Plans, which written reports have been furnished to
Conning Corp.
(g) All of the GAIMCO Plans, to the extent applicable,
are in compliance with the continuation of health benefit provisions
contained in COBRA, and with Section 1862(b)(4)(A)(i) of the Social Security
Act, and GAIMCO does not have any liability for any excise tax imposed by
Code Section 5000. Neither GAIMCO nor CAM has any liability or obligation
to provide life, medical or other welfare benefits to former or retired
employees, other than under COBRA.
(h) Also set forth on Schedule 3.25 are all employee
-------------
benefit plans which GAIMCO or CAM has terminated or taken action to
terminate since January 1, 1991. Such terminations have been carried out in
accordance with all provisions of Law, including, without limitation, all
applicable reporting and other provisions of the Code and ERISA and with
respect to the PBGC. Except as described on Schedule 3.25 hereto, neither
-------------
GAIMCO nor CAM has any liability to, and has not received notice alleging
such liability from, any person or entity, including, without limitation,
the PBGC, any other Government agency or any participant in or beneficiary
of any such plan, nor is GAIMCO or CAM liable for any excise, income or
other tax or penalty as a result of or in connection with such termination.
GAIMCO or CAM, as the case may be, has obtained a favorable determination
letter from the Internal Revenue Service with respect to the termination of
each of such plans, true, complete and correct copies of which have been
delivered to Conning Corp. The favorable determination letters were
received after full and accurate disclosure by GAIMCO and CAM of all
material facts to the appropriate Government agencies.
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(i) To the extent applicable with respect to each GAIMCO
Plan, true, correct and complete copies of the most recent (i) determination
letter and any outstanding request for a determination letter; (ii) Form
5500 and attached Schedule B; (iii) Form 5310 and any related filings with
the PBGC; (iv) ruling letter and any outstanding request for a ruling letter
with respect to the tax-exempt status of any voluntary employees'
beneficiary association ("VEBA") which is implementing such GAIMCO Plan; and
(v) general notification to employees of their rights under Code Section
4980B and form of letter(s) distributed upon the occurrence of a qualifying
event described in Code Section 4980B, in the case of a GAIMCO Plan that is
a "group health plan" as defined in Code Section 162(i) have been delivered
to General American.
3.26 Discrimination and Occupational Safety and Health.
-------------------------------------------------
Except as set forth on Schedule 3.26, no person has any claim or basis for
-------------
any Action against GAIMCO or CAM arising out of any Law relating to
discrimination in employment or employment practices or occupational safety
and health standards. Since December 31, 1992, neither GAIMCO nor CAM has
received any notice from any person alleging a violation of such law or
occupational safety or health standards.
3.27 Alien Employment Eligibility. With respect to each person
----------------------------
employed by GAIMCO or CAM on or after May 1, 1987, and who actually
commenced such employment on or after November 6, 1986: (a) GAIMCO or CAM
hired such person in compliance with the IRCA; and (b) GAIMCO or CAM has
complied with all record-keeping and other regulatory requirements under
IRCA.
3.28 Governmental Approvals and Filings. Except for compliance
----------------------------------
with the H-S-R Act and except as set forth on Schedule 3.28, none of General
-------------
American, GAHC, GAIMCO and CAM is required to obtain any approval, consent,
or authorization of, or to make any declaration or filing with, any
Government for the valid execution and delivery of this Agreement or any
other agreement to be delivered hereunder or the performance or consummation
of the transactions contemplated hereby or thereby.
3.29 Brokers, Finders. Except as set forth on Schedule 3.29,
---------------- -------------
no finder, broker, agent, or other intermediary acting on behalf of General
American, GAHC, GAIMCO or CAM is entitled to a commission, fee, or other
compensation or obligation in connection with the negotiation or
consummation of this Agreement or any of the transactions contemplated
hereby.
3.30 Outside Financial Interests. Except as identified on
---------------------------
Schedule 3.30, no director, officer or shareholder of GAIMCO has any direct
-------------
or indirect financial interest in any competitor
42
48
with or supplier or customer of, or any other person or entity that has any
transactions or other business relationship with, GAIMCO or CAM; provided,
however, that for this purpose ownership of corporate securities having no
more than 5% of the outstanding voting power of any competitor, supplier,
customer or other person or entity, which securities are listed on any
national securities exchange or authorized for quotation on the Automated
Quotations System of the National Association of Securities Dealers, Inc.,
shall not be deemed to be such a financial interest, provided such person
has no other connection or relationship with such competitor, supplier,
customer or other person or entity.
3.31 Guarantees. Except as set forth on Schedule 3.31, neither
---------- -------------
GAIMCO nor CAM is a guarantor, indemnitor, surety or accommodation party or
otherwise liable for any indebtedness of any other person or entity except
as endorser of checks received and deposited in the ordinary course of
business.
3.32 Foreign Operations and Export Control. GAIMCO and CAM
-------------------------------------
have at all times acted:
(a) pursuant to valid qualifications to do business in
all jurisdictions outside the United States where such qualification is
required by local law and the failure to do so would have a material adverse
effect on the business, operations, or condition (financial or otherwise) of
GAIMCO or CAM;
(b) in material compliance with all applicable foreign
laws, including without limitation laws relating to foreign investment,
foreign exchange control, immigration, employment and taxation;
(c) without notice of material violation of and in
material compliance with all relevant anti-boycott legislation, including
without limitation the Tax Reform Act of 1976, as amended, the Export
Administration Act of 1979, as amended, and regulations thereunder,
including all reporting requirements;
(d) without material violation of and pursuant to any
material, required export licenses granted under the Export Administration
Act of 1979, as amended, and regulations thereunder, which licenses are
described on Schedule 3.32; and
-------------
(e) without violation of the Foreign Corrupt Practices
Act of 1977, as amended.
3.33 Disclosure. Each Schedule and each document attached as a
----------
Schedule is true, correct, and complete in all
43
49
material respects. No representation or warranty by General American, GAHC,
GAIMCO or CAM in this Agreement or any Schedule referred to herein or in any
agreement to be delivered hereunder contains any untrue statement of a
material fact or any omission of a material fact necessary to make the
statements contained herein and therein, in light of the circumstances under
which the statements were made, not misleading.
ARTICLE IV
ADDITIONAL COVENANTS OF THE PARTIES
-----------------------------------
4.1 Conduct of Business. Prior to Closing, without the prior
-------------------
written consent of General American, neither Conning Corp. nor Conning will
or will agree to, and, without the prior written consent of Conning Corp.,
GAIMCO will not and will not agree to:
(a) Grant any increase in the rate of pay of any of its
employees, grant any increase in the salaries of any officer, employee or
agent, enter into or increase the benefits provided under any bonus,
profit-sharing, incentive compensation, pension, retirement, medical,
hospitalization, life insurance or other insurance plan or plans, or other
contracts or commitments, or in any other way increase in any amount the
benefits or compensation of any such officer, employee or agent, except,
however, ordinary increases in compensation not unusual in character or
amount made in the ordinary course of business to employees who are not
directors or officers; provided, however, that Conning Corp. may pay bonuses
to its employees prior to Closing in an aggregate amount not to exceed
$3,300,000 (which amount is independent from Conning's standard employee
bonus plan which remains in effect);
(b) Enter into (i) any employment contract or (ii) any
collective bargaining agreement;
(c) Enter into any contract or commitment or engage in
any transaction which is not in the usual and ordinary course of business or
which is inconsistent with past practices;
(d) Sell or dispose of or encumber any material amount
of assets (except pursuant to existing Contracts disclosed herein);
(e) Make, or enter into any contract for, any material
capital expenditure or enter into any material lease of equipment or real
estate (except pursuant to existing Contracts disclosed herein);
(f) Enter into any contract or commitment, whether for
the purchase or sale of inventory, supplies, other
44
50
products or services or otherwise, whether in the ordinary course of
business or otherwise, involving more than $50,000, or enter into any series
of such contracts with one party or affiliated group of parties involving
more than $100,000 in the aggregate;
(g) Create, assume, incur or guarantee any indebtedness
other than (i) in the usual and ordinary course of business and with a
maturity date of less than one year or (ii) that incurred pursuant to
existing Contracts disclosed herein;
(h) Declare or pay any dividend on, issue or make any
sale of, or distribution in respect of, its capital stock or directly or
indirectly redeem, purchase or otherwise acquire any of its capital stock
except as may be required under the Conning Corporation Shareholders'
Agreement dated February 25, 1993;
(i) Conduct or transact business other than in a manner
consistent with its past practices or change any accounting procedures or
practices or its financial structure;
(j) Make any amendments to or changes in its Articles or
Certificate of Incorporation or By-Laws, or, with respect to the
Subsidiaries, any of their respective constituent documents; or
(k) Perform any act, or attempt to do any act, or permit
any act or omission to act, which will or may reasonably be expected to
cause a breach by such party of any Contract to which it is a party,
including this Agreement.
4.2 Access to Records. Until the Closing, GAIMCO shall afford
-----------------
to authorized representatives of Conning Corp. reasonable access during
normal business hours to all premises, properties, books, records, personnel
and data of GAIMCO. Until the Closing, Conning Corp. and Conning shall
afford to authorized representatives of General American, reasonable access
during normal business hours to all premises, properties, books, records,
personnel and data of Conning Corp. and Conning. No such access, and no
other investigation or discovery of facts shall affect the discovering
party's right to recover for any breach of any representation or warranty
hereunder.
4.3 Preservation of Business. Each of Conning Corp., Conning
------------------------
and GAIMCO shall conduct their respective activities substantially in the
same manner as heretofore conducted and shall use its best efforts to keep
its business organization intact, including its present employees and
present relationships with customers and others having business relations
with it.
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4.4 Insurance and Maintenance of Property. Each of Conning
-------------------------------------
Corp., Conning and GAIMCO will maintain their respective existing insurance
policies on property owned or leased by it in full force and effect and will
operate, maintain and repair all of such property in a manner consistent
with past practice.
4.5 Books, Records and Financial Statements. From the date
---------------------------------------
hereof until Closing, each of Conning Corp., Conning and GAIMCO will
maintain their respective books and financial records in accordance with
GAAP consistently applied. Said books and financial records shall fairly
and accurately reflect the operations, results and condition, financial and
otherwise, of each such party. Each such party shall furnish to the others
promptly, as available, financial statements and operating reports
applicable to it since March 31, 1995, all of which shall be prepared in
accordance with GAAP consistently applied and shall present fairly the
consolidated financial position and results of operations of such party at
the dates and for the periods indicated.
4.6 Other Governmental Filings. The Equity Holders, Conning
--------------------------
Corp., Conning, General American, GAHC, GAIMCO and CAM will cooperate with
each other in making, as soon as practicable following the execution hereof,
all filings required by any governmental agency in connection with the
transactions contemplated by this Agreement, including, without limitation,
all filings required pursuant to the H-S-R Act and all appropriate federal
and state securities or "blue sky" filings with respect to the shares of CAM
Preferred Stock to be issued pursuant to this Agreement. All information
provided by the Equity Holders, Conning Corp., Conning, General American,
GAHC, GAIMCO and CAM in connection with such filings will be true, accurate
and complete in all material respects and will comply in all material
respects with all applicable laws and regulations.
4.7 Notification of Certain Matters. Between the date of this
-------------------------------
Agreement and the Closing, each of the parties hereto shall give prompt
notice to the others of (i) the occurrence, or failure to occur, of any
event which occurrence or failure would be likely to cause any
representation or warranty of such party contained in this Agreement to be
untrue or inaccurate in any respect any time from the date hereof to the
Closing Date and (ii) any failure of such party to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that such disclosure shall not be deemed to
-------- -------
cure any breach of a representation, warranty, covenant or agreement or to
satisfy any condition.
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4.8 No Solicitation.
---------------
(a) From the date hereof until the termination hereof,
Conning Corp., Conning and the Equity Holders agree not to, and will not
authorize any of Conning Corp.'s or Conning's officers, directors, employees
or other agents to, directly or indirectly, (i) take any action to seek,
initiate or encourage any offer from any person, entity or group (other than
General American or its subsidiaries) to acquire any shares of capital
stock, options or other securities of Conning Corp. or Conning, to merge or
consolidate with Conning Corp. or Conning, or to otherwise acquire any
significant portion of Conning Corp.'s or Conning's assets (a "Third Party
Offer"), or (ii) engage in negotiations concerning or disclose non-public
financial information relating to Conning Corp. or Conning, or any
confidential or proprietary trade or business information relating to the
businesses of Conning Corp. or Conning, or afford access to the properties,
books or records of Conning Corp. or Conning (except as required by Law), to
any third party that may be considering a Third Party Offer. Since June 14,
1995, none of the Equity Holders and none of Conning Corp. or Conning or
their respective officers, directors, employees or other agents has engaged
in any activities, discussions or negotiations with any parties with respect
to any of the foregoing.
(b) Conning Corp., Conning or the Equity Holders, as the
case may be, will orally notify General American immediately, followed by
prompt written notice (identifying the offeror and describing, in reasonable
detail, the terms of the offer or the request for information), of any Third
Party Offer from any person, entity or group (other than from General
American or its subsidiaries) or of any request for information with respect
to a Third Party Offer or any indication from any person, entity or group
that it or another person, entity or group is considering making a Third
Party Offer.
4.9 Offering Memorandum. In connection with the execution of
-------------------
this Agreement, General American, GAHC, GAIMCO, CAM, Conning Corp. and
Conning have cooperated to prepare and distribute to the Equity Holders an
offering memorandum of CAM (the "Offering Memorandum") relating to the
transactions contemplated hereby. General American, GAHC, GAIMCO and CAM
agree to indemnify and hold harmless Conning Corp. and Conning and their
respective directors, officers, control persons, employees, agents,
attorneys, accountants and other representatives from and against any
liability (including attorneys' fees) relating to or arising out of
information provided by them or on their behalf in writing for inclusion in
the Offering Memorandum or any state filing. Conning Corp. and Conning agree
to indemnify and hold harmless General American, GAHC, GAIMCO and CAM and
their respective directors, officers,
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control persons, employees, agents, attorneys, accountants and other
representatives from and against any liability (including attorneys' fees)
relating to or arising out of information provided by them or on their
behalf in writing for inclusion in the Offering Memorandum or any state
filing. The covenants contained in this Section shall survive the Closing
without limitation and are intended to benefit the indemnified parties and
shall be enforceable by such persons.
4.10 Approval of Parachute Payments. With respect to potential
------------------------------
"parachute payments" that may arise other than under the Employment
Agreements, prior to the Closing, Conning Corp. will take such action as is
necessary to cause such items to fall within an exemption under Section
280G(b)(5) of the Code.
4.11 Notice to Customers. Prior to Closing, Conning will send
-------------------
a notice and request for consent to the transactions contemplated hereby, in
a form reasonably acceptable to GAHC, to each of its customers.
4.12 Filing of Certificate of Designation. Prior to Closing,
------------------------------------
CAM shall file the Certificate of Designation with the Secretary of State of
Missouri.
ARTICLE V
CONDITIONS TO THE OBLIGATIONS
-----------------------------
GENERAL AMERICAN, GAHC, GAIMCO AND CAM
--------------------------------------
The obligations of General American, GAHC, GAIMCO and CAM at
Closing shall be subject to the satisfaction at Closing of each of the
following conditions, subject to the right of such parties to waive any one
or more of such conditions:
5.1 Representations and Warranties. The Equity Holders',
------------------------------
Conning Corp.'s and Conning's representations and warranties set forth in
Article II shall have been true and correct in all material respects when
made and shall be true and correct in all material respects on the Closing
Date, as though such representations and warranties were made at and as of
such date.
5.2 Performance of Agreement. The Equity Holders, Conning
------------------------
Corp. and Conning shall have performed and complied in all material respects
with all covenants, conditions, and other obligations under this Agreement
to be performed or complied with by them at or prior to Closing.
5.3 Certificate. Conning Corp., Conning and the Shareholders
-----------
shall have delivered to GAHC at Closing a certificate executed by each of
them, dated the Closing Date, to
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the effect that the conditions set forth in Sections 5.1 and 5.2 have been
satisfied, which, in the case of Penn. Corp. shall only certify as to the
representations and warranties made by it in Article II hereof. Such
certificate shall be deemed an additional representation and warranty of
Conning Corp., Conning and the Shareholders hereunder.
5.4 Approvals. All required consents and approvals from
---------
Governments and from JMB/Urban CityPlace Limited Partnership shall have been
obtained and all waiting periods required by Law, including, without
limitation, those required under the H-S-R Act, shall have expired.
5.5 No Adverse Proceeding. No Action shall have been overtly
---------------------
threatened or pending (a) for the purpose of enjoining or preventing the
consummation of this Agreement or any of the transactions contemplated
hereby or (b) which claims that this Agreement, such transactions, or their
consummation, is illegal or in violation of any agreement applicable to
Conning Corp., Conning or any Equity Holder.
5.6 Opinions of Counsel. Conning Corp. shall have delivered
-------------------
to GAHC at Closing opinions of Conning Corp.'s, Conning's and the Equity
Holders' counsel, in the forms attached hereto as Exhibit K.
---------
5.7 Employment Agreements. The Employment Agreements shall
---------------------
have been executed and delivered to CAM by the Key Employees at Closing.
5.8 Adverse Change. There shall have been no material adverse
--------------
change, actual or overtly threatened, in the business or condition,
financial or otherwise, assets, liabilities or prospects of Conning and
Conning Corp.
5.9 Shareholders' Agreement. The Shareholders' Agreement
-----------------------
shall have been executed and delivered by the Equity Holders (excluding the
Specified Shareholders) to CAM and GAHC at Closing.
5.10 Investor Questionnaires. An investor questionnaire and
-----------------------
such other documentation reasonably acceptable to General American shall
have been executed and delivered to General American and CAM by each
Shareholder and Option Holder receiving Preferred Stock hereunder. Such
documentation shall be sufficient in the sole discretion of General American
and its counsel to ensure compliance with the requirements of the Securities
Act of 1933, as amended, and any other Laws applicable to the issuance of
the CAM Preferred Stock hereunder and the conversion thereof.
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5.11 Approval of Parachute Payments. With respect to potential
------------------------------
"parachute payments" that may arise under the Employment Agreements, prior
to the Closing, Conning Corp. shall have taken such action as is necessary
to cause such items to fall within an exemption under Section 280G(b)(5) of
the Code.
5.12 Redemption of Preferred Stock. Conning Corp. shall have
-----------------------------
redeemed all shares of its Preferred Stock for an aggregate purchase price
of no more than $3.85 million, plus accrued and unpaid dividends.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE
------------------------------------
EQUITY HOLDERS, CONNING CORP. AND CONNING
-----------------------------------------
The obligations of Conning Corp., Conning and the Equity Holders
at Closing shall be subject to the satisfaction at the Closing of the
following conditions, subject to the right of such parties to waive any one
or more of such conditions:
6.1 Representations and Warranties. The representations and
------------------------------
warranties of General American, GAHC, GAIMCO and CAM set forth in Article
III shall have been true and correct in all material respects when made and
shall be true and correct in all material respects on the Closing Date as
though such representations and warranties were made at and as of such date
and time.
6.2 Performance of Agreement. General American, GAHC, GAIMCO
------------------------
and CAM shall have performed and complied in all material respects with all
covenants, conditions, and other obligations under this Agreement to be
performed or complied with by them at or prior to the Closing.
6.3 Certificate. General American, GAHC, GAIMCO and CAM shall
-----------
have delivered to the Equity Holders, Conning Corp. and Conning at the
Closing a certificate of General American, GAHC, GAIMCO and CAM executed by
each of them, dated the Closing Date, to the effect that the conditions set
forth in Sections 6.1 and 6.2 have been satisfied. Such certificate shall
be deemed an additional representation and warranty of General American,
GAHC, GAIMCO and CAM hereunder.
6.4 Approvals. All required consents and approvals from
---------
Governments and from third parties under Contracts shall have been obtained
and all waiting periods required by Law, including, without limitation,
those required under the H-S-R Act, shall have expired.
6.5 No Adverse Proceeding. No Action shall have been
---------------------
threatened or pending (a) for the purpose of enjoining or
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preventing the consummation of this Agreement or any of the transactions
contemplated hereby or (b) which claims that this Agreement, such
transactions, or their consummation, is illegal or in violation of any
agreement applicable to General American, GAHC, GAIMCO or CAM.
6.6 Adverse Change. There shall have been no material adverse
--------------
change, actual or overtly threatened, in the business or condition,
financial or otherwise, assets, liabilities or prospects of GAIMCO or CAM.
6.7 Opinions of Counsel. GAHC shall have delivered to Conning
-------------------
Corp. at Closing opinions of General American's, GAHC's, GAIMCO's and CAM's
counsel, in the forms attached hereto as Exhibit L.
---------
6.8 Investor Questionnaire. GAHC shall have executed and
----------------------
delivered to CAM an investor questionnaire and such other documentation
reasonably acceptable to Conning Corp. to ensure compliance with the
requirements of the Securities Act of 1933, as amended, and any other Laws
applicable to the issuance of the CAM Common Stock hereunder.
6.9 Employment Agreements. The Employment Agreement shall
---------------------
have been executed and delivered to the Key Employees by CAM at Closing.
6.10 Shareholders' Agreement. The Shareholders' Agreement
-----------------------
shall have been executed and delivered to the Equity Holders (excluding the
Specified Shareholders) by CAM and GAHC at Closing.
6.11 Option Agreements. The Option Agreements shall have been
-----------------
executed and delivered to each of the New Optionees by CAM at Closing.
ARTICLE VII
INDEMNIFICATION
---------------
7.1 Survival of Representations and Warranties. All
------------------------------------------
representations and warranties of the parties made in this Agreement or in
any exhibit, Schedule, certificate, instrument or any document delivered
pursuant hereto (excluding the Offering Memorandum, which is provided for in
Section 4.9) shall survive the Closing and shall remain in effect for a
period of eighteen months after the Closing Date but thereafter shall expire
and no party shall be entitled to make a claim for indemnification with
respect to such representations and warranties unless a claim with respect
thereto shall have been made in writing against the party responsible for
indemnification hereunder prior to the expiration of such eighteen month
period; provided, that the
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foregoing limitation shall not apply to the representations and warranties
made in Sections 2.8 and 3.9, which shall survive until the expiration of
all applicable statutes of limitation. All representations and warranties
hereunder shall be deemed to be material and relied upon by the parties with
or to whom the same were made, notwithstanding any investigation or
inspection made by or on behalf of such party or parties.
7.2 Indemnification of General American, GAHC, GAIMCO and CAM.
---------------------------------------------------------
(a) The Shareholders and the Option Holders (except
Penn. Corp., which shall be liable hereunder only pursuant to paragraph (i)
hereof in the case of a breach of a representation and warranty made by
Penn. Corp. with resect to itself and pursuant to paragraph (iv) hereof for
its pro rata share of all liability thereunder, in accordance with the
percentages set forth on Penn. Corp.'s signature page hereof), severally and
not jointly, shall hold General American, GAHC, GAIMCO, CAM, Conning Corp.
and Conning and their respective affiliates and the shareholders, directors,
officers, partners, successors, assigns, and agents of each of them (the
"CAM Indemnified Persons"), harmless and indemnify each of them from and
against, and waives any claim for contribution or indemnity from any CAM
Indemnified Person with respect to, any and all claims, losses, damages,
liabilities, penalties, fines, expenses or costs ("Losses"), plus reasonable
attorneys' fees and expenses incurred in connection with Losses and/or
enforcement of this Agreement, plus interest from the date incurred through
the date of payment at the prime lending rate of Boatmen's Bank of St.
Louis, N.A. from time to time prevailing (in all, "Indemnified Losses")
incurred or to be incurred by any CAM Indemnified Person resulting from or
arising out of:
(i) Any inaccuracy in or incompleteness or
incorrectness of Conning's, Conning Corp.'s and the Equity Holders'
representations or warranties set forth in this Agreement or any
certificate, instrument or other document delivered hereunder;
(ii) Any breach or violation of Conning's, Conning
Corp.'s and the Equity Holders' covenants or agreements contained in
this Agreement, including the provisions of this Article VII;
(iii) Any liability of Conning Corp. or any of its
Tax Affiliates for Taxes for any taxable period ending on or before the
Closing Date, except to the extent provided for as a tax liability in
the Conning Balance Sheet or unless such liability arises from matters
disclosed in the Article II Tax Disclosure Letter; or
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(iv) the pending litigation (the "Pending
Litigation") styled (i) Lionheart Group, Inc., et al. v. Conning &
Company, (the "Lionheart Litigation") and (ii) Xxxxxxx Xxxxxxx,
----------------
Insurance Commissioner of the Commonwealth of Pennsylvania, in her
------------------------------------------------------------------
capacity as Liquidator of Rockwood Insurance Company(In Liquidation)
--------------------------------------------------------------------
and as assignee of Rockwood Casualty Insurance Company vs. Conning &
--------------------------------------------------------------------
Company, et al., to the extent Indemnified Losses arising out of such
---------------
litigation exceed applicable insurance deductibles, the costs not
reimbursed by insurance incurred by Conning after the Closing Date in
defending such litigation and applicable insurance proceeds, if any,
received by Conning on account of such litigation.
(b) In addition, the Option Holders, severally and not
jointly, shall hold the CAM Indemnified Persons harmless and indemnify each
of them from and against any and all Taxes for pre-Closing periods on any
recognized gain (without regard to offsetting deductions) to Conning Corp.
or Conning resulting from the transfer of CAM Preferred Stock in
consideration for the cancellation of the Conning Options pursuant to the
terms of this Agreement and the Option Cancellation Agreements; provided,
however, that neither CAM nor Conning Corp. nor Conning shall be permitted
to settle or compromise any claim for which the Option Holders are obligated
to indemnify CAM Indemnified Persons under this Section 7.2(b) without the
consent of the Representative (as hereinafter defined), which consent shall
not be unreasonably withheld.
7.3 Indemnification of Equity Holders.
---------------------------------
(a) General American and CAM shall hold the Equity
Holders and their permitted assigns and agents (the "Shareholder Indemnified
Persons") harmless and indemnify each of them from and against, and waives
any claim for contribution or indemnity from any Shareholder Indemnified
Person, any and all Indemnified Losses incurred or to be incurred by any of
them resulting from or arising out of:
(i) Any inaccuracy in or incompleteness or
incorrectness of General American's, GAHC's, GAIMCO's and CAM's
representations or warranties set forth in this Agreement or any
certificate, instrument or other document delivered hereunder;
(ii) Any breach or violation of General American's,
GAHC's, GAIMCO's and CAM's covenants or agreements contained in this
Agreement, including the provisions of this Article VII; or
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(iii) Any liability of GAIMCO or any of its Tax
Affiliates for Taxes for any taxable period ending on or before the
Closing Date, except to the extent provided for as a tax liability in
the GAIMCO Balance Sheet or unless such liability arises from matters
disclosed in the Article III Tax Disclosure Letter.
(b) In addition, subject to the limitations contained in
Section 7.4(g) of this Agreement, subsequent to the closing of the
transactions contemplated by this Agreement, General American and CAM shall
cause Conning to hold the Equity Holders and their permitted assigns
harmless and indemnify them from and against any liability for federal and
state income taxes (including any interest or penalties attributable
thereto) resulting directly from (i) a determination by the Internal Revenue
Service ("IRS") or state taxing authority that any portion of the fair
market value of the CAM Preferred Stock and/or cash received by the Equity
Holders under the terms of this Agreement constitutes compensation for
services, and (ii) the receipt of any indemnity payment pursuant to this
Section 7.3(b); provided, however, that at the request of General American,
-------- -------
CAM, or Conning, as the case may be, such indemnifying party shall have the
right, with respect to this issue, to participate in the audit,
investigation or other proceeding (including being timely provided with
relevant correspondence) leading to such a determination by the IRS or state
taxing authority and approve any settlement, which approval shall not be
unreasonably withheld.
7.4 Limitations on Indemnity.
------------------------
(a) The Shareholders' and Option Holders' obligation to
indemnify CAM Indemnified Persons pursuant to Section 7.2(a)(iii) and the
Option Holders' obligation to indemnify CAM Indemnified Persons pursuant to
Section 7.2(b) shall terminate upon the expiration of the applicable
statutes of limitation unless a claim with respect thereto shall have been
made in writing against the Shareholders and/or the Option Holders, as the
case may be, prior to the expiration of such statutes of limitation.
(b) The Shareholders' and Option Holders' obligation to
indemnify CAM Indemnified Persons pursuant to Section 7.2(a)(iv) shall
terminate upon the final, non-appealable resolution by agreement or by a
court of competent jurisdiction of the Pending Litigation unless a claim
with respect thereto shall have been made in writing against the
Shareholders and the Option Holders prior to such resolution.
(c) The Shareholders and the Option Holders shall have
no obligation to indemnify the CAM Indemnified Persons pursuant to Section
7.2(a) unless Indemnified Losses under such
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Section exceed $200,000 in the aggregate, but if so to the full extent of
Indemnified Losses in excess of $200,000 in the aggregate.
(d) The Shareholders and the Option Holders shall have
no obligation to indemnify the CAM Indemnified Persons pursuant to Section
7.2(a) in excess of $4,000,000 in the aggregate; provided, however, that to
the extent Indemnified Losses include any payments on account of the
Lionheart Litigation and Indemnified Losses exceed in the aggregate
$4,000,000, the Shareholders' and Option Holders' indemnification shall
continue for up to an additional $1,000,000, provided that such additional
$1,000,000 indemnification obligation shall not exceed the aggregate amount
of Indemnified Losses arising out of or resulting from the Lionheart
Litigation.
(e) General American and CAM shall have no obligation to
indemnify the Shareholder Indemnified Persons pursuant to Section 7.3 unless
Indemnified Losses under such Section exceed $200,000 in the aggregate, but
if so to the full extent of Indemnified Losses in excess of $200,000 in the
aggregate. General American and CAM shall have no obligation to indemnify
the Shareholder Indemnified Persons pursuant to Section 7.3 in excess of
$4,000,000 in the aggregate.
(f) The obligations of the Shareholders and the Option
Holders pursuant to Section 7.2 are several and each Shareholder and Option
Holder shall be liable only for his, her or its pro rata amount of the
indemnification obligation in accordance with the percentages set forth on
each such Equity Holder's signature page hereof.
(g) The obligation of General American and CAM to cause
Conning to indemnify the Equity Holders for income tax liabilities under
Section 7.3(b) of this Agreement shall be limited to the amount of the
corresponding tax benefits received by Conning, CAM, or General American, as
the case may be, which result from deductions, losses, or other tax benefits
actually realized with respect to its income tax returns corresponding to
that portion of the fair market value of the CAM Preferred Stock and/or cash
which is treated as compensation for services pursuant to such a
determination; provided, that in the event of such an adverse determination
--------
by the IRS or state taxing authority affecting an Equity Holder, then
Conning, CAM, or General American, as the case may be, shall use reasonable
good faith efforts and take all reasonably appropriate actions to maximize
such corresponding tax benefits consistent with achieving a final overall
settlement with the applicable taxing authority on all tax issues which is
optimal from Conning's or CAM's (as the case may be) perspective as a
taxpayer; provided further, the indemnifying party shall not be obligated to
-------- -------
make
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any indemnity payments until the tax liability of Conning or CAM, as
the case may be, for the year or years in question is finally agreed with
the taxing authority or otherwise finally determined; and provided further,
-------- -------
that an Equity Holder claiming hereunder shall give prompt notice to the
indemnifying party of a proposed tax adjustment within the meaning of
Section 7.3(b), provided that the failure to give such notice shall not
affect such Equity Holder's entitlement to indemnity except to the extent
the indemnifying party is in fact prejudiced thereby.
7.5 Notice of Claim. In the event that any party hereto seeks
---------------
indemnification hereunder on behalf of itself or himself or another
indemnified person, such party (the "Indemnified Party") shall give written
notice to the party or parties obligated to indemnify such party (the
"Indemnifying Party") specifying the facts constituting the basis for such
claim and the amount, if known, of the claim asserted. The failure of the
Indemnifying Party, within a period of thirty (30) days after the giving of
such notice by the Indemnified Party, to give written notice to the
Indemnified Party of the intention to contest such claim shall be deemed an
agreement that the claim is a valid claim and at such time as it is known,
the amount thereof shall be paid promptly by the Indemnifying Party.
7.6 Right to Contest Claims of Third Persons. If an
----------------------------------------
Indemnified Party asserts a claim for indemnification hereunder because of a
claim made by any claimant not a party, the Indemnified Party shall give the
Indemnifying Party reasonably prompt notice thereof, but in no event more
than ten (10) business days after said assertion is actually known to the
Indemnified Party; provided, however, that the right of a person to be
indemnified hereunder in respect of claims made by a third party shall not
be adversely affected by a failure to give such notice unless, and then only
to the extent that, an Indemnifying Party is prejudiced thereby. The
Indemnifying Party shall have the right, upon written notice to the
Indemnified Party, and using counsel reasonably satisfactory to the
Indemnified Party, to investigate, secure, contest or settle the claim
alleged by such third person (hereinafter called a "Third-Person Claim"),
provided that the Indemnified Party may participate voluntarily, at its own
expense, in any such Third-Person Claim through representatives and counsel
of its own choice, and, provided further, that the Indemnifying Party
unconditionally acknowledges to the Indemnified Party in writing his or its
obligation to indemnify the persons to be indemnified hereunder with respect
to all elements of such Third-Person Claim. Unless and until the
Indemnifying Party elects to defend the Third-Person Claim, the Indemnified
Party shall have the full right, at its option, to do so and to look to the
Indemnifying Party under the provisions of this Agreement for the amount of
the costs, if any, of defense. The failure of the Indemnifying Party to
respond in writing to
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the aforesaid notice of the Indemnified Party with respect to such
Third-Person Claim within twenty (20) days after receipt thereof shall be
deemed an election not to defend the same. Notwithstanding the foregoing,
an Indemnifying Party shall only be responsible for the fees and expenses of
one counsel for all Indemnified Parties with respect to any Third-Person
Claim. If the Indemnifying Party does not assume the defense of
any such Third-Person Claim, including any litigation resulting
therefrom, (a) the Indemnified Party may defend against such claim or
litigation, in such manner as it may deem appropriate, including, but not
limited to, settling such claim or litigation, after giving notice of the
same to the Indemnifying Party, on such terms as the Indemnified Party may
deem appropriate, and (b) the Indemnifying Party shall be entitled to
participate in (but not to control) the defense of such action, with its own
counsel at its own expense. If the Indemnifying Party thereafter seeks to
question the manner in which the Indemnified Party defended such
Third-Person Claim or the amount or nature of any such settlement, the
Indemnifying Party shall have the burden to prove by clear and convincing
evidence that the Indemnified Party did not defend or settle such
Third-Person Claim in a reasonably prudent manner. The Parties shall make
available to each other all relevant information in their possession
relating to any such Third-Person Claim and shall cooperate in the defense
thereof. Notwithstanding the provisions of this Section, CAM shall control
the defense and settlement or resolution of the Pending Litigation, provided
that the consent of the Representative, which may not be unreasonably
withheld, must be obtained prior to the settlement of such litigation in
excess of applicable insurance proceeds.
7.7 Return or Cancellation of Legended Shares; Escrow
-------------------------------------------------
Withdrawals.
-----------
(a) In order to secure the Equity Holders'
indemnification obligations hereunder, certain of the certificates
evidencing the shares of CAM Preferred Stock issuable to the Equity Holders
(the "Certificates") have been legended as provided in Section 1.9. If
payment is not made in accordance with Section 7.7(b), satisfaction of the
Shareholders' and the Option Holders' indemnification obligations pursuant
to Section 7.2(a) shall be effected through (a) the cancellation of
Certificates evidencing shares of CAM Preferred Stock registered in the
names of such holders with an aggregate value equal to the unsatisfied
indemnification obligations, based on a per share value calculated in
accordance with Section 11.3(a) of the Shareholders' Agreement, and
allocated among the Shareholders and Option Holders in accordance with their
relative percentages set forth on their respective signature pages, and (b)
the withdrawal from the Escrow Funds of a portion of the Escrow Funds with
an aggregate value equal to the unsatisfied indemnification obligations,
allocated among the Specified Shareholders
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(excluding Penn. Corp.) in accordance with the percentages set forth on
their respective signature pages. If payment is not made in accordance with
Section 7.7(b), satisfaction of the Option Holders' indemnification
obligations pursuant to Section 7.2(b) shall be effected through the
cancellation of Certificates evidencing shares of CAM Preferred Stock with
an aggregate value equal to the Indemnified Losses, based on a per share
value calculated in accordance with Section 11.3(a) of the Shareholders'
Agreement and allocated among the Option Holders in accordance with the
percentages set forth on their respective signature pages. The portion of
Indemnified Losses for which an Option Holder or Shareholder is responsible,
as set forth on their respective signature pages, is referred to herein as
that Equity Holder's "Adjusted Ratable Share."
(b) In the event a CAM Indemnified Person is entitled to
indemnification for an Indemnified Loss, each Shareholder or Option Holder,
as the case may be, shall deliver to the Representative either (i) a
Certificate or Certificates sufficient to satisfy such Shareholder's or
Option Holder's Adjusted Ratable Share of such Indemnified Losses, or (ii) a
cashier's or certified check equal to such Equity Holder's Adjusted Ratable
Share of such Indemnified Losses. The Representative shall, upon receipt of
such Certificates and/or checks, deliver such Certificates and/or checks to
CAM, which will cancel the surrendered Certificates and issue to the
Representative Certificates for each Equity Holder who has delivered
Certificates to the Representative evidencing the number of shares of CAM
Preferred Stock owned by such Equity Holder after deduction of such Equity
Holder's Adjusted Ratable Share of the Indemnified Losses. In the event a
Shareholder or Equity Holder does not deliver his or her Certificate or a
check as provided above, CAM shall be permitted to (i) cancel the
Certificate(s) held by such Equity Holder and shall issue to such Equity
Holder a new Certificate evidencing the number of shares of CAM Preferred
Stock owned by such Equity Holder after deduction of such Equity Holder's
Adjusted Ratable Share of the Indemnified Losses, or (ii) if such Equity
Holder does not hold any Certificates, pursue any and all of its legal or
equitable remedies against such Equity Holder in order to recover such
Equity Holder's Adjusted Ratable Share of the Indemnified Losses.
7.8 Exclusive Remedy. The provisions of this Article VII and
----------------
the documents and agreements to be entered into pursuant hereto shall
constitute the exclusive remedy of the parties with respect to any claims or
Indemnified Losses resulting from or arising out of the provisions of this
Agreement or the transactions contemplated hereby which may be asserted
after the Closing; provided, that the foregoing shall not preclude any claim
for injunctive or other non-monetary equitable
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relief or any claim based on fraud or intentional misrepresentation.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
------------------------
8.1 Notice. All notices, requests, demands, and other
------
communications required or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given and made upon being
delivered either by courier or fax delivery to the party for whom it is
intended, provided that a copy thereof is deposited, postage prepaid,
certified or registered mail, return receipt requested, in the United States
mail, bearing the address shown in this Section 8.1 for, or such other
address as may be designated in writing hereafter by, such party:
If to General American, GAHC, GAIMCO or CAM:
Xxxxxxx X. Xxxxxxxxxx
Executive Vice President--Investments
General American Life Insurance Company
000 Xxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
With a copy to:
Xxxxx X. Xxxxx, Xx., Esq.
Xxxxx Xxxx LLP
000 Xxxxx Xxxxxxxx, Xxxxx 0000
One Xxxxxxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
If to Conning Corp.:
Xxxxxxx X. Xxxxxxx
President and CEO
Conning & Company
CityPlace II
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxxxx, Esq.
LeBoeuf, Lamb, Xxxxxx & XxxXxx LLP
Xxxxxxx Square
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000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
If to the Shareholders and/or the Specified Shareholders and/or
the Option Holders, in care of the Representative:
Xxxxxxx X. Xxxxxxx
President and CEO
Conning & Company
CityPlace II
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
8.2 Appointment of Representative.
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(a) By execution hereof, the Shareholders, the Option
Holders and the Specified Shareholders hereby designate Xxxxxxx X. Xxxxxxx
as the "Representative." The Representative shall have full power to act on
behalf of the Shareholders, the Option Holders and the Specified
Shareholders in the manner specified herein and in connection with all
matters with respect to which action by the Representative is contemplated
by this Agreement, except that no amendment adversely affecting Penn.
Corp.'s rights hereunder or altering the amount, type or nature of
consideration payable to the Equity Holders hereunder shall be valid unless
approved in writing by Penn Corp.
(b) The Representative shall take all actions required
to be taken by the Representative under this Agreement and may take any
action contemplated by this Agreement on behalf of the Shareholders, the
Option Holders and the Specified Shareholders. By giving notice to the
Representative in the manner provided by Section 8.1, General American,
GAHC, GAIMCO or CAM, as the case may be, shall be deemed to have given
notice to all of the Shareholders and Option Holders and the Specified
Shareholder.
(c) In the event that a CAM Indemnified Person gives
notice to the Representative of a Third-Person Claim for which
indemnification may be sought, the Representative shall have the authority
to determine, in his sole judgment and in accordance with Section 7.6,
whether to retain counsel (and to select that counsel) to protect the
Shareholder's, the Option Holders', and the Specified Shareholders'
interests, whether to assume the defense of or otherwise to control the
handling of the Third-Person Claim, and to make all other decisions required
to be made by the Shareholders, the Option Holders or the Specified
Shareholders pursuant to Article VII of this Agreement, including, without
limitation, whether to consent or withhold his
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consent to any settlement or compromise of a Third-Person Claim. The
Representative is hereby also authorized (but not required) to seek approval
of any proposed action or decision affecting the interests of the
Shareholders, Option Holders or Specified Shareholders hereunder and in such
event shall be authorized to act in accordance with the approval of such
holders whose aggregate percentages as set forth on their respective
signature pages constitute 51% or more of the indemnification obligations of
such holders, provided that the Representative shall not have the authority
to consent to the settlement of the Pending Litigation without the approval
of Penn. Corp., which will not be unreasonably withheld.
(d) In the event that the Representative shall resign or
otherwise cease to act as the Representative, the Representative shall be
authorized to select a replacement Representative, subject to the written
approval of Shareholders, Option Holders and Specified Shareholders who hold
in the aggregate 51% or more of the total percentages set forth on the
Equity Holders' signature pages (a "Majority of Interested Shareholders"),
or, if the Representative shall not have selected a replacement who shall
have been approved by a Majority of Interested Shareholders as aforesaid by
the date the Representative ceases to act in such capacity, then a Majority
of Interested Shareholders shall be authorized to select a replacement
Representative by written consent.
(e) The Representative shall have no liability to the
Shareholders, the Option Holders or the Specified Shareholders with respect
to any action taken or not taken by him under this Agreement except for his
own gross negligence or willful misconduct. The Representative may act in
reliance upon the advice of counsel satisfactory to him in reference to any
matter in connection with this Agreement and shall not incur any liability
for any action taken in good faith in accordance with such advice.
(f) Any action taken by the Representative may be
considered by General American, GAHC, GAIMCO and CAM to be the action of
each Shareholder, Option Holder and/or the Specified Shareholder for whom
such action was taken for all purposes of this Agreement.
8.3 Termination of Shareholder Agreement. Conning Corp. and
------------------------------------
each Equity Holder agree that the Shareholders' Agreement dated February 25,
1993 and each and every other agreement restricting the transfer of Conning
Corp. capital stock or options for Conning Corp. capital stock shall
terminate on the Closing Date and all provisions thereof are hereby waived
with respect to the transactions contemplated hereby.
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8.4 Entire Agreement. This Agreement and the Schedules and
----------------
Exhibits hereto embody the entire agreement and understanding of the parties
hereto with respect to the subject matter hereof, and supersede all prior
and contemporaneous agreements and understandings relative to such subject
matter.
8.5 Assignment; Binding Agreement. This Agreement and various
-----------------------------
rights and obligations arising hereunder shall inure to the benefit of and
be binding upon the parties, their successors, and assigns and their legal
representatives, and permitted assigns. Neither this Agreement nor any of
the rights, interests, or obligations hereunder shall be transferred,
delegated, or assigned by Conning, Conning Corp., the Specified
Shareholders, any Shareholder or any Option Holder without the prior written
consent of General American, or by General American, GAHC, GAIMCO or CAM
without the prior written consent of Conning Corp.
8.6 Counterparts. This Agreement may be executed
------------
simultaneously in multiple counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
8.7 Headings; Interpretation. The article and section
------------------------
headings contained in this Agreement are inserted for convenience only and
shall not affect in any way the meaning or interpretation of the Agreement.
Each reference in this Agreement to an Article, Section, Schedule or
Exhibit, unless otherwise indicated, shall mean an Article or a Section of
this Agreement or a Schedule or Exhibit attached to this Agreement,
respectively. References herein to "days," unless otherwise indicated, are
to consecutive calendar days. The term "person" includes any Government.
Gender-specific references such as "its," "his," and "her" shall include all
other genders.
8.8 Expenses. Regardless of whether the transactions
--------
contemplated hereby are consummated, General American shall pay its own and
GAIMCO's, GAHC's and CAM's legal and accounting fees, costs and expenses in
connection with such transactions and the Shareholders and Option Holders
shall be permitted to cause Conning to pay their and Conning Corp.'s and
Conning's reasonable legal, investment banking and accounting fees, costs
and expenses in connection with such transactions.
8.9 Termination of the Agreement. This Agreement may be
----------------------------
terminated by a party hereto without further liability or obligation if (a)
such party is not in breach or violation hereof and (b) the conditions to
such party's obligations at Closing have not been satisfied on or before
August 31, 1995. In the event of such termination, nothing in this Section
or elsewhere in this Agreement shall impair or restrict the rights of the
terminating party to any and all remedies at law or in equity in the event
of a breach of or default under this Agreement by another party.
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8.10 Governing Law. This Agreement shall in all respects be
-------------
construed in accordance with and governed by the substantive laws of the
State of Missouri, without reference to its choice of law rules.
8.11 Confidentiality. No party to this Agreement shall make
---------------
any public disclosure of the terms hereof or the transactions contemplated
hereby without the prior written consent of the other parties, except as
required by law.
8.12 Further Assurances. From and after the Closing, the
------------------
parties shall do such acts and execute such documents and instruments as may
be reasonably required to make effective the transactions contemplated
hereby.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first above written.
GENERAL AMERICAN LIFE INSURANCE COMPANY
By /s/ Xxxxxxx X. Xxxxx
--------------------------------
Xxxxxxx X. Xxxxx
Chairman, President and
Chief Executive Officer
GENERAL AMERICAN HOLDING COMPANY
By /s/ Xxxxxxx X. Xxxxx
--------------------------------
Xxxxxxx X. Xxxxx
Chairman and President
GENERAL AMERICAN INVESTMENT MANAGEMENT
COMPANY
By /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxxxx
President
CONNING ASSET MANAGEMENT COMPANY
By /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------
Name:
Title:
CONNING & COMPANY
By /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx
Chairman of the Board, President
and Chief Executive Officer
CONNING CORPORATION
By /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx
Chairman of the Board, President
and Chief Executive Officer
EQUITY HOLDER
/s/ X. X. Xxxxxxx
-----------------------------------
/s/ Xxxx X. Xxxxxx
-----------------------------------
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
/s/ Xxxxxxx X. Xxxxxxxxxxxx
-----------------------------------
/s/ Xxxxxx X. Xxxxx
-----------------------------------
/s/ Xxxx Xxxxxxx
-----------------------------------
/s/ Xxxxxx X. XxXxxxxx
-----------------------------------
/s/ Xxxxxx X. Xxxxx
-----------------------------------
/s/ Xxxxx X. Xxxxxxx
-----------------------------------
/s/ Xxxx Xxxxxxxx
-----------------------------------
/s/ Xxxx X. Xxxxxxx, Xx.
-----------------------------------
/s/ Xxxxx X. Xxxx
-----------------------------------
/s/ Xxxx X. Xxxxxxx
-----------------------------------
/s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
/s/ Xxxx X. Xxxxxxx
-----------------------------------
/s/ Xxxx X. Xxxxxxx
-----------------------------------
/s/ Xxxxxx X. Xxxxxx
-----------------------------------
/s/ Xxxx X. Xxxxxx
-----------------------------------
/s/ Xxxxxx Xxxxxxx
-----------------------------------
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
/s/ X. Xxxxx, Xx.
-----------------------------------
/s/ Xxxxx X. Xxxxx
-----------------------------------
/s/ Xxxx Xxxxxx
-----------------------------------
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TABLE OF DEFINITIONS
--------------------
"Certificate of Designation".......................... 2
1933 Act.............................................. 25
Accounts Receivable................................... 13
Action................................................ 17
Adjusted Ratable Share................................ 56
Agreement............................................. 1
Article II Tax Disclosure Letter...................... 10
Article III Tax Disclosure Letter..................... 30
Buyer Indemnified Persons............................. 51
CAM................................................... 1
CAM Common Stock...................................... 2
CAM Indemnified Persons............................... 51
CAM Non-Voting Common Stock........................... 5
CAM Note.............................................. 3
CAM Optionees......................................... 5
CAM Preferred Stock................................... 2
Certificates.......................................... 56
Closing............................................... 3
Closing Date.......................................... 3
COBRA................................................. 22
Code.................................................. 10
Conning............................................... 1
Conning Accounts Receivable........................... 13
Conning Balance Sheet................................. 10
Conning Common Stock.................................. 1
Conning Contract...................................... 18
Conning Corp. ........................................ 1
Conning Corp. Note.................................... 3
Conning Financial Statements.......................... 10
Conning Funds......................................... 9
Conning Intellectual Property......................... 19
Conning Leased Real Property.......................... 14
Conning Non-Voting Common Stock....................... 2
Conning Options....................................... 1
Conning Plan.......................................... 21
Conning Plans......................................... 21
Conning Property...................................... 15
Conning Tax Returns................................... 10
Contract.............................................. 18
Days.................................................. 61
Employment Agreements................................. 5
Environmental Law..................................... 17
Equity Holders........................................ 3
ERISA................................................. 21
Escrow Agent.......................................... 6
Escrow Agreement...................................... 6
Escrow Deposit........................................ 6
Escrow Funds.......................................... 6
Financial Statements.................................. 10
GAAP.................................................. 10
GAHC.................................................. 1
71
GAIMCO................................................ 1
GAIMCO Accounts Receivable............................ 32
GAIMCO Balance Sheet.................................. 29
GAIMCO Common Stock................................... 1
GAIMCO Contract....................................... 36
GAIMCO Financial Statements........................... 29
GAIMCO Intellectual Property.......................... 37
GAIMCO Leased Real Property........................... 33
GAIMCO Plan........................................... 39
GAIMCO Plans.......................................... 39
GAIMCO Property....................................... 34
GAIMCO Tax Returns.................................... 30
General American...................................... 1
General American Financial Statements................. 29
Government............................................ 13
H-S-R Act............................................. 8
Hazardous Materials................................... 18
Indemnified Losses.................................... 51
Indemnified Party..................................... 55
Indemnifying Party.................................... 53
Intellectual Property................................. 19
IRCA.................................................. 23
Key Employees......................................... 5
Law................................................... 16
Leased Real Property.................................. 33
Legend................................................ 5
Liens................................................. 8
Lionheart Litigation.................................. 51
Losses................................................ 51
Offering Memorandum................................... 46
Option Agreements..................................... 5
Option Cancellation Agreements........................ 4
Option Holders........................................ 1
Option Shares......................................... 5
Order................................................. 17
Pending Litigation.................................... 51
Penn. Corp............................................ 4
Person................................................ 61
Plan.................................................. 21
Plans................................................. 21
Property.............................................. 15
Regulation D.......................................... 25
Representative........................................ 59
Return................................................ 13
Rule 144.............................................. 25
Shareholder Indemnified Persons....................... 52
Shareholders.......................................... 1
Shareholders' Agreement............................... 3
Specified Shareholders................................ 2
Tax Affiliate......................................... 13
Tax Returns........................................... 10
Taxes................................................. 13
Third Party Offer..................................... 46
72
Third-Person Claim.................................... 55
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LIST OF SCHEDULES
Schedule Number Description of Schedule
--------------- -----------------------
Schedule 2.1(c) Licenses
Schedule 2.1(d) Third Party Authority
Schedule 2.2(a) Ownership of Capital Stock of Conning Corporation, a Delaware
Corporation
Schedule 2.2(b) Options and Other Securities
Schedule 2.3 Conning Subsidiaries
Schedule 2.4 Property
Schedule 2.5 Financial Statements
Schedule 2.7 Undisclosed Liabilities
Schedule 2.8 Article II Disclosure Letter
Schedule 2.9 Accounts Receivable
Schedule 2.10 Regulatory Matters: Permits and Licenses
Schedule 2.11 Property (Leased)
Schedule 2.12 Assets
Schedule 2.13 Absence of Changes
Schedule 2.15 Litigation
Schedule 2.15 Supplement to Litigation
Schedule 2.16 Environmental Matters
Schedule 2.17 Contracts
Exhibit 2.17a Insurance Asset Management, Advisory and Accounting Contracts
Exhibit 2.17b Consulting / Financial Advisory Contracts
Schedule 2.18 Intellectual Property
Schedule 2.18a Registered Copyrights
Schedule 2.19 Insurance
Schedule 2.20 Officers, Directors Employees and Consultants
Schedule 2.20 Supplemental Disclosure: Officers, Directors Employees and
Consultants
Schedule 2.21 Bank Accounts
Schedule 2.22 Transaction with Related Parties
Schedule 2.23 Labor Matters
Schedule 2.24 Employee Benefits
Schedule 2.25 Discrimination and Occupational Safety and Health
Schedule 2.27 Governmental Approvals and Filings
Schedule 2.28 Broker & Finder Fees
Schedule 2.29 Outside Financial Interest
Schedule 2.30 Guarantees
Schedule 2.31 Foreign Operations and Export Control
Schedule 2.33 Qualified Investors
Schedule 3.1(b) Existence and Qualifications
Schedule 3.1(c) Existence and Qualifications
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Schedule 3.5 Property
Schedule 3.6 Financial Statements
Schedule 3.8 Undisclosed Liabilities
Schedule 3.10 Accounts Receivable
Schedule 3.11 Regulatory Matters
Schedule 3.12 Real Property
Schedule 3.13 Assets
Schedule 3.14 Absence of Changes
Schedule 3.16 Litigation
Schedule 3.17 Environmental
Schedule 3.18 Contracts
Schedule 3.19 Intellectual Property
Schedule 3.20 Insurance
Schedule 3.21 Officers, Directors, et al
Schedule 3.22 Bank Accounts
Schedule 3.23 Related Persons
Schedule 3.24 Labor
Schedule 3.25 ERISA
Schedule 3.26 OSHA
Schedule 3.28 Approvals
Schedule 3.29 Brokers
Schedule 3.30 Outside Interests
Schedule 3.31 Guarantees
Exhibit A Certificate of Designation
Exhibit B CAM and Conning Corp. Notes
Exhibit C Shareholders' Agreement
Exhibit D Option Cancellation Agreement
Exhibit E CAM Optionees
Exhibit F Option Agreement
Exhibit G Key Employees
Exhibit H Employment Agreements
Exhibit I Legend
Exhibit J Escrow Agreement
Exhibit K Opinions of Conning Corp.'s, Conning's and the Equity Holders'
Counsel
Exhibit L Opinions of General American's, GAHC's, GAIMCO's and
CAM's Counsel
Separate schedule for each individual equity holder, listing the name and
address of the equity holder, number of shares of Conning, Inc. (formerly
Conning Corporation) common stock contributed by the equity holder, number
of shares of the Company (formerly Conning Asset Management Company) preferred
stock received by the equity holder for such Conning, Inc. common stock, amount
of cash received for such Conning, Inc. common stock, number of options to
purchase Conning, Inc. common stock held by the equity holder canceled, number
of shares of Company preferred stock received by the equity holder for such
canceled options, amount of cash received by the equity holder for such
canceled options and the pro rata (by number and percentage) shares of
indemnity applicable to the equity holder pursuant to Sections 7.2(a),
7.2(a)(iv), 7.2(a) excluding 7.2(a)(iv) and 7.2(b) of the Contribution
Agreement.
