AMENDMENT NO. 1 TO
STOCK PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT (this "Amendment") is
made and entered into as of April 14, 1997, by and between Farmers Group, Inc.,
a Nevada corporation (the "Seller"), and Great Southern Life Insurance Company,
a Texas corporation (the "Purchaser").
RECITALS
WHEREAS, the Seller and the Purchaser desire to amend the Stock Purchase
Agreement, dated as of January 21, 1997 (the "Agreement"), by and between the
Seller and the Purchaser.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Amendment, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
1. Definitions. The capitalized terms used in this Amendment and
not otherwise defined herein shall have the meanings set forth in the Agreement.
ARTICLE II
AMENDMENT OF STOCK PURCHASE AGREEMENT
1. Closing Date. The definition of "Closing Date" set forth in
Section 1.1 of the Agreement is hereby amended and restated in its entirety to
read as follows:
"Closing Date" shall mean April 15, 1997."
2. Farmers Drive Property. Section 1.1 of the Agreement is
hereby amended by inserting, immediately after the definition of "Existing
Product Item," the following new defined term, to read in its entirety as
follows:
"Farmers Drive Property" shall mean all of that certain tangible
personal property, equipment and supplies owned by OSL and situated at
that portion of the Real Property commonly known as 0000 Xxxxxxx Xxxxx,
Xxxxxxxx, Ohio."
3. Closing Date Unrealized Gain. Section 1.1 of the Agreement is
hereby amended by restating the definition of "Closing Date Unrealized Gain" to
read in its entirety as follows:
"Closing Date Unrealized Gain" shall mean (i) the price paid for the
Portfolio Stocks transferred pursuant to Section 5.17, minus (ii) the
Companies' original cost of such Portfolio Stocks."
4. Intangible Property. Section 1.1 of the Agreement is hereby
amended by inserting, immediately after the definition of "Indemnity Notice,"
the following new defined term, to read in its entirety as follows:
"Intangible Property" shall mean all of that certain intangible property
owned by the Companies and used by the Companies in connection with the
Real Property and/or the Personal Property, including, without
limitation, (a) all contract rights, books, records, reports, test
results, environmental assessments, as-built plans, specifications and
other similar documents and materials relating to the use, operation,
maintenance, repair, construction or fabrication of the Real Property or
the Personal Property; (b) the Companies' right, if any, in and to all
trademarks and trade names relating to the Real Property; (c) all
transferable business licenses, architectural, site, landscaping or
other permits, applications, approvals, authorizations and other
entitlements affecting the Real Property; and (d) all transferable
guarantees, warranties and utility contracts.
5. 9/30 Unrealized Gain/Loss Subsequently Realized. Section 1.1
of the Agreement is hereby amended by inserting, immediately after the
definition of "NAIC," the following new defined term, to read in its entirety as
follows:
"9/30 Unrealized Gain/Loss Subsequently Realized" shall mean (i) the
aggregate market value, as of September 30, 1996, of the Portfolio
Stocks owned as of September 30, 1996 that were sold after such date
(other than pursuant to Section 5.17) but prior to or on the Closing
Date minus (ii) the Companies' aggregate original cost of such Portfolio
Stocks."
6. Personal Property. Section 1.1 of the Agreement is hereby
amended by inserting, immediately after the definition of "Person," the
following new defined term, to read in its entirety as follows:
"Personal Property" shall mean all of that certain tangible personal
property, equipment and supplies owned by the Companies and either
situated at the Real Property or used by the Companies in connection
with the use, operation, maintenance, construction or repair of the Real
Property; provided, however, that Personal Property shall not include
the Farmers Drive Property."
7. Real Property. Section 1.1 of the Agreement is hereby amended
by inserting,
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immediately after the definition of "Quarterly Statement," the following new
defined term, to read in its entirety as follows:
"Real Property" shall mean all of the Companies' real property."
8. Transferred Property. Section 1.1 of the Agreement is hereby
amended by inserting, immediately after the definition of "Transferred Assets,"
the following new defined term, to read in its entirety as follows:
"Transferred Property" shall mean all of the Real Property, Intangible
Property and Personal Property."
9. Consideration. Section 2.2(a) of the Agreement is hereby
amended by deleting "$330,085,815" and inserting, in lieu thereof
"$330,021,133."
10. Consideration Adjustment. Sections 2.2(b) and (c) of the
Agreement is hereby amended and restated to read in its entirety as follows:
"(b) The Consideration shall be adjusted after the Closing Date as
follows: (i) if the Companies' Actual Net Income exceeds the Estimated
Net Income, the Purchaser shall pay the Seller an amount equal to such
excess; (ii) if the Estimated Net Income exceeds the Companies' Actual
Net Income, the Seller shall pay the Purchaser an amount equal to such
excess; (iii) if the Closing Date Unrealized Gain is greater than
$13,133,646, then the Purchaser shall pay the Seller an amount equal to
the difference; (iv) if the Closing Date Unrealized Gain is less than
$13,133,646, then the Seller shall pay the Purchaser an amount equal to
the difference; (v) if the 9/30 Unrealized Gain/Loss Subsequently
Realized is greater than $2,796,764, then the Seller shall pay the
Purchaser an amount equal to such difference multiplied by 35%; and (vi)
if the 9/30 Unrealized Gain/Loss Subsequently Realized is less than
$2,796,764, then the Purchaser shall pay the Seller an amount equal to
such difference multiplied by 35%; in each case, together with interest
thereon at an annual rate of 8%, accruing from the Closing Date to and
including the date of payment (collectively, the "Consideration
Adjustment"). The Purchaser shall calculate the Companies' Actual Net
Income and the 9/30 Unrealized Gain/Loss Subsequently Realized and, as
soon as reasonably practicable, but in any event no later than the date
(the "Filing Date") on which both of the Companies have first filed with
the insurance regulatory authorities of the State of Ohio (in the case
of OSL) and the State of California (in the case of IGL) an Annual
Statement or Quarterly Statement that includes financial statements for
a period that includes the Closing Date, the Purchaser shall deliver to
the Seller a statement (the "Consideration Adjustment Statement")
setting forth (x) the
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Companies' Actual Net Income, (y) the difference between the Companies'
Actual Net Income and the Estimated Net Income, if any, and (z) the
Purchaser's calculation of the 9/30 Unrealized Gain/Loss Subsequently
Realized. After delivery of the Consideration Adjustment Statement, the
Purchaser shall, and shall cause the Companies to, provide the Seller
with reasonable access to the Companies' books and records sufficient to
permit the Seller to verify the Companies' Actual Net Income and the
9/30 Unrealized Gain/Loss Subsequently Realized.
(c) In the event that the Seller believes that the Purchaser's
calculation of the Companies' Actual Net Income or the 9/30 Unrealized
Gain/Loss Subsequently Realized is incorrect, the Seller shall have the
right to chal lenge such determination in good faith by giving notice of
its objection in writing to the Purchaser within ten Business Days
following delivery of the Consideration Adjustment Statement, setting
forth in reasonable detail the basis for such objection and the Seller's
calculation of the Companies' Actual Net Income or the 9/30 Unrealized
Gain/Loss Subsequently Realized, as the case may be (the "Seller's
Notice of Objection"). In the event that the Seller and the Purchaser
are unable to agree on the resolution of such disagreement within ten
Business Days following delivery of the Seller's Notice of Objection to
the Purchaser, the Seller and the Purchaser shall resolve such
disagreement in accordance with the following proce dures. The Purchaser
and the Seller shall each select an independent certified public
accountant within ten Business Days after delivery of the Seller's
Notice of Objection for the purpose of selecting a third independent
certified public accountant with a regional or national accounting
practice in the life insurance industry (the "Mediator"). Such
accountants shall mutually select the Mediator and give a written notice
to the Purchaser and the Seller identifying the Mediator, including a
written acceptance of such appointment from the Mediator, within twenty
Business Days after delivery of the Seller's Notice of Objection. The
Mediator shall not have performed services for either the Purchaser or
the Seller within the preceding three years and shall not have testified
in any dispute in which either the Purchas er or the Seller was involved
as a party; provided that the Purchaser and the Seller may waive such
restriction in writing if they mutually agree to such waiver. The
Purchaser shall promptly deliver to the Mediator the Consideration
Adjustment Statement, and the Seller shall promptly deliver to the
Mediator the Seller's Notice of Objection. The Mediator shall review the
Consideration Adjustment Statement and the Seller's Notice of Objection,
and each party shall submit to the Mediator all information reasonably
requested by the Mediator to enable the Mediator to independently
resolve the issue which is the subject of the objection by the Seller.
If the Seller's Notice of Objection disputes the calculation of the
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Companies' Actual Net Income, the Mediator shall make its own determi
nation of the Companies' Actual Net Income, which may not be greater
than the Purchaser's calculation thereof and may not be less than the
Seller's calculation thereof. If the Seller's Notice of Objection
disputes the calculation of the 9/30 Unrealized Gain/Loss Subsequently
Realized, the Mediator shall make its own determination of the 9/30
Unrealized Gain/Loss Subsequently Realized, which may not be greater
than the Seller's calculation thereof and may not be less than the
Purchaser's calculation thereof. The Mediator shall issue a written
report of its determination in reasonable detail and shall deliver a
copy of such report to the Seller and the Purchaser within twenty
Business Days following the Mediator's receipt of the Seller's Notice of
Objection. The determination made by the Mediator shall be final and
binding and may be enforced by any court having jurisdiction. The costs
of the Mediator's determination shall be borne by the parties as
determined by the Mediator to be fair, just and equitable. Each party
shall bear all costs associated with its own appointed independent
certified public accountant."
11. Closing.Section 2.3 of the Agreement is hereby amended by
inserting, immediately after "reasonably satisfactory to the Seller.", the
following: "The Closing shall take effect as of 11:59 p.m., Pacific Time, on the
Closing Date."
12. Intercompany Lease. Section 5.12 of the Agreement is hereby
amended by deleting "F.I.G. Holding Company" and inserting, in lieu thereof,
"Farmers New World Life Insurance Company."
13. Telephone Transition Services Agreement. Section 5.13 of the
Agreement is hereby amended by deleting "Intentionally Omitted" and inserting,
in lieu thereof, the following:
"Telephone Transition Services Agreement. At or prior to the
Closing, the Seller shall, and the Seller shall cause Farmers
New World Life Insurance Company and OSL to, enter into a
Telephone Transition Services Agreement, substantially in the
form of Exhibit H hereto."
14. Purchase of Certain Assets. Section 5.17 of the Agreement is
hereby amended and restated to read in its entirety as follows:
"Section 5.17 Purchase of Certain Assets. Pursuant to agreements
reasonably acceptable to the Seller, the Seller shall purchase from the
Companies the following assets (collectively, the "Transferred Assets"):
(i) immediately after the Closing, all of the Portfolio Stocks for a
price equal to their respective fair market values as of the close of
the markets as of the Closing Date; (ii) immediately prior to the
Closing, all of the
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Transferred Property, at a price equal to the aggregate statutory book
value as of March 31, 1997 plus an adjustment as provided below; (iii)
immedi ately prior to the Closing, all of the Companies' mortgage loans
on real estate at their amortized statutory book values at the close of
business as of March 31, 1997 plus an adjustment as provided below; and
(iv) immedi ately prior to the Closing, all of the Companies' interests
in the Northtowne Apartments limited partnership and the Midwest
Mezzanine Fund limited partnership, in each case, at statutory book
value as of March 31, 1997 plus an adjustment as provided below. The
adjustments referred to in clauses (ii), (iii) and (iv) above shall each
be calculated by adding an amount equal to (x) 8% of the respective
statutory book value as of March 31, 1997, multiplied by (y) a fraction,
the numerator of which is the number of days from and including April 1,
1997 to and including the Closing Date, and the denominator of which is
365."
15. Change of Par Value. The Agreement is hereby amended by
adding, immediately after Section 5.18 of the Agreement, a new Section 5.19, to
read in its entirety as follows:
"5.19 Change of Par Value. Prior to the Closing, the Seller shall cause
the par value of the IGL common stock to be changed from $2.00 to $3.00
per share."
16. Exchange of Certain Property. The Agreement is hereby amended
by adding, immediately after Section 5.19 of the Agreement, a new Section 5.20,
to read in its entirety as follows:
"5.20 Exchange of Certain Property. Immediately prior to the Closing,
Seller shall cause FIG Leasing Co., Inc. and OSL to make the following
exchange: FIG Leasing Co., Inc. shall transfer to OSL the following
vehicles: (a) Vehicle #50019, a Plymouth Grand Voyager SE (Minivan),
VIN# GH44R8SX592695 and (b) Vehicle # 50729, a Chevrolet Lumina (4-
door sedan), VIN# 0X0XX00XXX0000000 in exchange for OSL's transfer of
the certain Farmers Drive Property described on Schedule 1.1(a)
attached hereto to Farmers New World Life Insurance Company."
17. Conduct of Business on the Closing Date. The Agreement is
hereby amended by adding, immediately after Section 6.8 of the Agreement, a new
Section 6.9, to read in its entirety as follows:
"6.9 Conduct of Business on the Closing Date. The Purchaser shall cause
each of the Companies to conduct their respective businesses on the
Closing Date only in the ordinary course and consistent with the past
practice. Without limiting the generality of the foregoing, the
Purchaser
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shall not cause or permit either of the Companies to enter into, or
consum mate, any reinsurance arrangement or similar transaction that
takes effect on or prior to the Closing Date. Prior to the Closing, the
Purchaser shall (a) cause the reinsurance arrangements contemplated by
that certain letter agreement, dated January 21, 1997, between Employers
Reassurance Corporation and the Purchaser, not to take effect until the
first day after the Closing Date, and (b) furnish the Seller with
written documentation to such effect."
18. Exhibit B. The Agreement is hereby amended by deleting
Exhibit B thereto in its entirety and replacing it with Exhibit B hereto.
19. Exhibit H. The Agreement is hereby amended by adding
Exhibit H hereto as a new Exhibit H to the Agreement.
20. Schedule 1.1(a). The Agreement is hereby amended by adding
Schedule 1.1(a) hereto as a new Schedule 1.1.(a) to the Disclosure Schedule.
ARTICLE III
MISCELLANEOUS
1. Effect of Amendment. Except as expressly modified by this
Amendment, the Agreement shall continue to be and remain in full force and
effect in accordance with its terms. Any future reference to the Agreement shall
be deemed to be a reference to the Agreement as modified by this Amendment.
2. Counterparts. This Amendment may be executed simultaneously
in any number of counterparts, each of which shall be deemed an original, but
all of which shall constitute one and the same instrument.
3. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts executed and performed within the State of California, without regard
to principles of conflicts of laws.
(the next page is the signature page)
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IN WITNESS WHEREOF, this Amendment has been duly executed and delivered
by duly authorized officers of each of the Seller and the Purchaser, effective
as of the date first written above.
FARMERS GROUP, INC.
By:
Name:
Title:
GREAT SOUTHERN LIFE INSURANCE
COMPANY
By:
Name:
Title:
[TEXT]
