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Exhibit 10.1
INVESTMENT AGREEMENT
Dated as of December 30, 1997
among
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK,
MONY FINANCIAL SERVICES CORPORATION
and
THE INVESTORS NAMED HEREIN
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TABLE OF CONTENTS
ARTICLE I
Purchase and Sale of Notes,
Warrants and Convertible Preferred Stock;
Exchange, Registration and Resale
SECTION 1.1. Purchase and Sale of Notes........................................... 1
SECTION 1.2. Purchase and Sale of the Warrants.................................... 2
SECTION 1.3. Convertible Preferred Stock.......................................... 2
SECTION 1.4. Holding Company Notes................................................ 3
SECTION 1.5. [Intentionally omitted.]............................................. 4
SECTION 1.6. Registration and Resale.............................................. 4
ARTICLE II
Closings; Conditions
SECTION 2.1. First Closing........................................................ 5
SECTION 2.2. Conditions to Obligations of the Investors at First Closing.......... 5
(a) Representations and Warranties............................................... 5
(b) Compliance with Agreements and Conditions.................................... 5
(c) Litigation................................................................... 5
(d) Certain Events............................................................... 6
(e) Certificate.................................................................. 6
(f) Opinions .................................................................... 6
(g) Consents and Approvals....................................................... 6
(h) Ratings...................................................................... 6
(i) Agreements in Full Force and Effect ......................................... 7
(j) Closing Fee ................................................................. 7
SECTION 2.3. Conditions to Obligations of the Company at First Closing............ 7
(a) Representations and Warranties............................................... 7
(b) Litigation................................................................... 7
(c) Certificate.................................................................. 7
(d) Opinions..................................................................... 7
SECTION 2.4. Second Closing....................................................... 7
SECTION 2.5. Conditions to Obligations of the Investors at Second Closing......... 8
(a) Representations and Warranties............................................... 8
(b) Compliance with Agreements and Conditions.................................... 8
(c) Litigation................................................................... 8
(d) Certain Events............................................................... 8
(e) Certificate.................................................................. 8
(f) Opinions .................................................................... 9
(g) Consents and Approvals....................................................... 9
(h) Agreements in Full Force and Effect.......................................... 9
(i) Closing Fee ................................................................. 9
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SECTION 2.6. Conditions to Obligations of Holding Company at Second Closing....... 9
(a) Representations and Warranties............................................... 9
(b) Litigation................................................................... 9
(c) Certificate.................................................................. 10
(d) Opinion...................................................................... 10
SECTION 2.7. Subsequent Closings.................................................. 10
ARTICLE III
Representations and Warranties
SECTION 3.1. Representations and Warranties of Company and Holding Company........ 10
(a) Corporate Existence.......................................................... 10
(b) Authorization; Enforcement................................................... 11
(c) Subject Securities........................................................... 11
(d) Consents and Approvals....................................................... 12
(e) No Conflicts................................................................. 12
(f) Capital Structure ........................................................... 13
(g) Company Documents............................................................ 14
(h) Financial Statements and Information......................................... 14
(i) Exchange Act Reports ........................................................ 15
(j) Absence of Certain Changes or Events ........................................ 15
(k) Assets....................................................................... 16
(l) Liabilities and Reserves .................................................... 18
(m) Contracts.................................................................... 19
(n) Litigation................................................................... 19
(o) Compliance with Laws, etc.................................................... 20
(p) Operations Insurance......................................................... 20
(q) Brokers and Finders, etc..................................................... 21
(r) Taxes ....................................................................... 21
(s) Employee Benefit Plans....................................................... 21
(t) Insurance Business .......................................................... 23
(u) Reinsurance.................................................................. 23
(v) Service Marks, Trademarks, etc............................................... 24
(w) Variable Products Securities Law Matters; Investment Companies; Investment
Advisors.................................................................. 24
SECTION 3.2. Representations and Warranties of Investors.......................... 25
(a) Authorization; Enforcement................................................... 25
(b) Status and Investment Intent................................................. 26
(c) Brokers and Finders, etc..................................................... 26
(d) Investor not a Plan.......................................................... 26
(e) No Conflicts................................................................. 26
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ARTICLE IV
Agreements by the Company
SECTION 4.1. [Intentionally omitted]............................................... 27
SECTION 4.2. [Intentionally omitted]............................................... 27
SECTION 4.3. [Intentionally omitted]............................................... 27
SECTION 4.4. [Intentionally omitted]............................................... 27
SECTION 4.5. Investment Proposals.................................................. 27
SECTION 4.6. [Intentionally omitted]............................................... 27
SECTION 4.7. [Intentionally omitted]............................................... 27
SECTION 4.8. [Intentionally omitted]............................................... 27
SECTION 4.9. Board Representation.................................................. 27
SECTION 4.10. Registration and Resale............................................... 29
SECTION 4.11. [Intentionally omitted]............................................... 29
ARTICLE V
Further Agreements
SECTION 5.1. Public Announcements.................................................. 29
SECTION 5.2. Fees and Expenses..................................................... 30
SECTION 5.3. Regulatory and Other Consents......................................... 30
SECTION 5.4. Best Efforts.......................................................... 31
ARTICLE VI
Miscellaneous
SECTION 6.1. Termination........................................................... 31
SECTION 6.2. Standstill Agreement.................................................. 33
SECTION 6.3. Voting of Holding Company Common Stock................................ 35
SECTION 6.4. Limitation on Sales of Holding Company Common Stock,
Warrants and Convertible Preferred Stock.............................. 37
SECTION 6.5. Survival of Representations and Warranties and Agreements............. 38
SECTION 6.6. Severability.......................................................... 38
SECTION 6.7. Indemnification....................................................... 38
SECTION 6.8. Charter and By-laws................................................... 39
SECTION 6.9. Information........................................................... 39
SECTION 6.10. Plan of Demutualization............................................... 40
SECTION 6.11. Regulatory Filings.................................................... 42
SECTION 6.12. Entire Agreement; No Third-Party Beneficiaries........................ 44
SECTION 6.13. Notices............................................................... 44
SECTION 6.14. Amendments and Waivers................................................ 46
SECTION 6.15. Counterparts.......................................................... 46
SECTION 6.16. Successors and Assigns................................................ 46
SECTION 6.17. Reproduction of Documents............................................. 46
SECTION 6.18. Construction.......................................................... 46
SECTION 6.19. Incorporation......................................................... 47
SECTION 6.20. Waiver of Jury Trial.................................................. 47
SECTION 6.21. Designation of Principal Investor..................................... 47
SECTION 6.22. Interpretation........................................................ 47
SECTION 6.23. GOVERNING LAW......................................................... 47
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Annex Defined Terms
Exhibit 1 Fundamental Terms of the Plan
Exhibit 2-A Form of Fiscal Agency Agreement
Exhibit 2-B Form of Warrant
Exhibit 2-C Terms of Holding Company Notes
Exhibit 2-D Terms of Convertible Preferred Stock
Exhibit 3 Form of Registration Rights Agreement
Exhibit 4 Private Resale Terms
Exhibit 5-A Form of Opinion of Senior Vice President
and General Counsel of the Company
Exhibit 5-B Form of Opinion of Xxxxx Xxxxxxxxxx
Exhibit 6 Form of Opinion of Xxxxxxxx & Xxxxxxxx
Exhibit 7-A Form of Opinion of Senior Vice President
and General Counsel of the Company
Exhibit 7-B Form of Opinion of Xxxxx Xxxxxxxxxx
Exhibit 8 Form of Opinion of Xxxxxxxx & Xxxxxxxx
Exhibit 9-A Form of Opinion of Senior Vice President
and General Counsel of the Company
Exhibit 9-B Form of Opinion of Xxxxx Xxxxxxxxxx
Schedule 1.1 Initial Note Investors
Schedule 1.2 Warrant Investors
Schedule 1.3 Convertible Preferred Stock Investors
Schedule 3.1(d) Consents
Schedule 3.1(e) Conflicts
Schedule 3.1(f) Subsidiaries
Schedule 3.1(h) Financial Statements and Information
Schedule 3.1(i) SEC Documents
Schedule 3.1(j) Certain Changes/Events
Schedule 3.1(k) Assets
Schedule 3.1(l) Liabilities and Reserves
Schedule 3.1(n) Litigation
Schedule 3.1(o) Compliance with Laws
Schedule 3.1(q) Brokers and Finders
Schedule 3.1(r) Taxes
Schedule 3.1(t) Insurance Business
Schedule 3.1(u) Reinsurance
Schedule 3.1(v) Intellectual Property
Schedule 3.1(w) Variable Products Matters
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INVESTMENT AGREEMENT, dated as of December 30, 1997, among THE
MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, a New York mutual life insurance
company (the "Company"), MONY FINANCIAL SERVICES CORPORATION, a Delaware
corporation (the "Holding Company"), and GS MEZZANINE PARTNERS, L.P., a Delaware
limited partnership, GS MEZZANINE PARTNERS OFFSHORE, L.P., a Cayman Islands
exempted limited partnership, STONE STREET FUND 1997, L.P., a Delaware limited
partnership and BRIDGE STREET FUND 1997, L.P., a Delaware limited partnership
(each, an "Investor" and collectively, the "Investors").
WHEREAS the Company is currently considering the possibility of
adopting a plan of reorganization under Section 7312 of the New York Insurance
Law ("Section 7312"), which plan of reorganization would, if adopted, provide
for (a) the conversion of the Company from a mutual life insurance company into
a stock life insurance company which would become a wholly owned subsidiary of
the Holding Company, (b) the issuance of Common Stock of the Holding Company
("Holding Company Common Stock") or other consideration to eligible
policyholders of the Company in exchange for their policyholder membership
interests in the Company and (c) the possible issuance to the Investors or one
or more Subsidiaries or Affiliates of the Investors, at or following the
Demutualization Date, of Holding Company Common Stock pursuant to the Warrants
or the Convertible Preferred Stock; and
WHEREAS in anticipation of the possible consummation of such plan
of reorganization and in order to enhance the competitive position and increase
the surplus of the Company during the period prior to consummation thereof, the
Investors are willing to purchase surplus notes of the Company and provide a
commitment to purchase additional surplus notes in certain circumstances, and
the Company wishes to sell such surplus notes to the Investors and obtain such
commitment, all on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
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ARTICLE I
PURCHASE AND SALE OF NOTES,
WARRANTS AND CONVERTIBLE PREFERRED STOCK;
EXCHANGE, REGISTRATION AND RESALE
SECTION 1.1. Purchase and Sale of Notes. (a) On the terms and
subject to the conditions set forth herein, the Company agrees to issue and sell
to the Investors in the respective amounts set forth in Schedule 1.1 hereto (or
to one or more Subsidiaries or Affiliates of any such Investor that is listed on
Schedule 1.1 and that is designated by such Investor by notice to the Company
not less than five Business Days prior to the First Closing Date that agrees to
be bound by the Agreement (whereupon any such other Person shall become an
Investor under this Agreement)) and the Investors agree to purchase or to cause
such Subsidiaries or Affiliates to purchase from the Company at the First
Closing $115,000,000 aggregate principal amount of the Company's Surplus
Notes(the "Notes") for a total purchase price of $115,000,000 (the "Note
Purchase Price"). The Notes shall be issued pursuant to a Fiscal Agency
Agreement in the form of Exhibit 2-A hereto (the "Fiscal Agency Agreement") and
shall be in substantially the form set forth in Exhibit A to the Fiscal Agency
Agreement.
(b) Notwithstanding the provisions of Section 1.1(a) or Section
1.2, the Investors shall not be required to purchase the Notes or the Warrants
if at any time within the 60 days prior to the First Closing Date the Company or
any investment banker, attorney or other advisor or representative of the
Company or any of its Subsidiaries is or has been in discussions or negotiations
with any Person concerning, or is otherwise contemplating, an Investment
Proposal, other than any discussions or negotiations which may have occurred but
which have been definitively terminated prior to the First Closing Date.
SECTION 1.2. Purchase and Sale of the Warrants. In
consideration of the Investors' agreements and covenants hereunder, and subject
to the terms and conditions stated herein, the Holding Company agrees to issue
and deliver to the Investors in the respective amounts set forth in Schedule 1.2
hereto (or to one or more Subsidiaries or Affiliates of any such Investor that
is listed on Schedule 1.2 and that is designated by such Investor by notice to
the Company not less than five Business Days prior to the First Closing Date) at
the First Closing, for an aggregate purchase price of $10,000,000, one or more
Common Stock Purchase Warrants, substantially in the form set forth in Exhibit
2-B hereto (collectively, the "Warrants"), to
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purchase an aggregate of such number of shares of Holding Company Common Stock
as shall equal the Warrant Shares Number (as defined in the Warrant), at a
purchase price per share equal to the Exercise Price, subject to adjustment
under certain circumstances as provided therein.
SECTION 1.3. Convertible Preferred Stock. In the event that the
Demutualization Date has occurred on or prior to June 30, 1999, the Holding
Company may at any time after the Demutualization Date require the Investors to
purchase in the respective amounts set forth in Schedule 1.3 hereto (or one or
more Subsidiaries or Affiliates of any such Investors that is listed on Schedule
1.3 and that is designated by such Investor by notice to the Company not less
than five Business Days prior to the Second Closing Date that agrees to be bound
by this Agreement (whereupon any such Person shall become an Investor under this
Agreement)) and the Investors agree to purchase or to cause such Subsidiaries or
Affiliates to purchase from the Holding Company at the Second Closing an
aggregate of 1,000,000 shares of convertible preferred stock of the Holding
Company having the terms and conditions set forth in Exhibit 2-D hereto and that
have been registered under the Securities Act (the "Convertible Preferred
Stock") for a total purchase price of $100,000,000 (the "Convertible Preferred
Stock Purchase Price") provided that not later than the 90th day after the
Demutualization Date the Company has first provided such Investors with written
notice of its election to issue the Convertible Preferred Stock and require such
purchase pursuant to this Section 1.3. The Company shall file a registration
statement under the Securities Act with respect to the Convertible Preferred
Stock to be issued and sold to the Investors not later than the 10th Business
Day following its notice to the Investors of its election to issue the
Convertible Preferred Stock and shall use its best efforts to have such
registration statement declared effective as promptly as practicable. On the
effective date of such registration statement the Company shall notify the
Investors of the effectiveness of the registration statement and specify the
date (the "Convertible Preferred Stock Issuance Date") on which it intends to
issue such Convertible Preferred Stock, which date shall be not less than 3
Business Days and not more than 15 Business Days after the giving of such
notice.
SECTION 1.4. Holding Company Notes. At any time from and after
the Demutualization Date, the Investors, together with such of their
Subsidiaries or Affiliates as may then hold Notes may elect to exchange Notes
for Holding Company notes having the terms and conditions set forth in Exhibit
2-C hereto ("Holding Company Notes"). Any such
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election and exchange shall be made in whole or in part with respect to the
entire aggregate principal amount of Notes held by the Investors and their
Subsidiaries and Affiliates, provided that no such election and exchange shall
be made for less than (x) $50 million in aggregate principal amount of such
Notes or (y) the balance of such Notes then held by the Investors and their
Subsidiaries and Affiliates, if less than $50 million. In order to make any such
election, the Principal Investor on behalf of such holders shall provide the
Company and the Holding Company with 15 Business Days' prior written notice (an
"Exchange Notice") of its intent to make such exchange, which Exchange Notice
shall specify whether the Holding Company Notes (i) shall be publicly registered
under the Securities Act upon issuance or (ii) shall not be so registered upon
issuance, but shall be subject to the provisions regarding registration rights
set forth in Exhibit 2-C. If such Exchange Notice specifies that such Holding
Company Notes are to be registered as set forth in clause (i) immediately above,
the Holding Company shall, as soon as practicable following receipt of such
notice, file with the SEC a registration statement relating to such Holding
Company Notes and their resale by the Investors, and shall use its best efforts
to cause such registration statement to become effective within 90 days of the
date of the related Exchange Notice. In the event such registration statement
has not been declared effective within such 90-day period, the Principal
Investor on behalf of such holders may (i) provide the Company and the Holding
Company with a revised Exchange Notice requesting the Holding Company to
withdraw such registration statement and issue non-registered Holding Company
Notes (which shall continue to have the registration rights set forth in Exhibit
2-C or (ii) withdraw such Exchange Notice and continue to hold Notes, provided
that any such withdrawal pursuant to this clause (ii) shall not prohibit the
Principal Investor on behalf of such holders from submitting another Exchange
Notice at any time after 60 days from such withdrawal. In the case of an
exchange for registered Holding Company Notes, such exchange shall occur no
later than five Business Days after the effective date of the registration
statement relating to such Holding Company Notes and, in the case of an exchange
for non-registered Holding Company Notes, such exchange shall occur no later
than 20 Business Days after the provision by the electing party of the Exchange
Notice or five Business Days of a revised Exchange Notice, as the case may be,
requesting such exchange, in any such case unless otherwise agreed to in writing
by the Principal Investor, the Company and the Holding Company.
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Upon any exchange pursuant to this Section 1.4, the Investors or
other party holding the Notes being exchanged shall transfer and assign such
Notes to the Holding Company and the Holding Company shall issue to the
Investors or such other party a like amount of Holding Company Notes.
SECTION 1.5. [Intentionally omitted.]
SECTION 1.6. Registration and Resale. (a) In addition to the
registration of the Holding Company Notes and Convertible Preferred Stock
contemplated by Sections 1.3 and 1.4 hereof, the Investors, together with their
Subsidiaries or Affiliates, shall have rights to registration under the
Securities Act of the Warrants and all shares of Holding Company Common Stock
issuable thereunder and the shares of Holding Company Common Stock issuable
pursuant to the Convertible Preferred Stock, in each case on the terms and
subject to the conditions set forth in the Registration Rights Agreement, which
shall be in substantially the form set forth in Exhibit 3 hereto.
(b) (i) At any time prior to the earlier of (x) the
Demutualization Date and (y) June 30, 1999, the Investors and such of their
Subsidiaries or Affiliates as may then hold Notes shall have the right to
privately resell up to $90 million aggregate principal amount of Notes in one or
more transactions exempt from registration under the Securities Act pursuant to
Rule 144, Rule 144A or any other exemption then available thereunder, provided
that the Company shall not be required to prepare a disclosure document for any
resale of Notes in an amount of less than $50 million in the aggregate. Any such
resale shall be made on the terms and subject to the conditions set forth in
Exhibit 4 hereto, including, from and after the date falling six months after
the First Closing Date, the preparation by the Company of a disclosure document
to be used in connection therewith which shall be acceptable to the Principal
Investor and which shall include narrative and financial disclosure concerning
the Company and its operations substantially consistent in scope with that used
in connection with the sale of the Company's 11-1/4% Surplus Notes due 2024.
(ii) In the event the Demutualization Date has not occurred by
June 30, 1999, the resale rights described in the preceding clause (i) shall
apply to the entire aggregate principal amount of Notes then held by the
Investors or their Subsidiaries or Affiliates.
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(c) Holding Company Notes and Convertible Preferred Stock may be
freely resold at any time by the Investors and their Subsidiaries or Affiliates,
as the case may be, pursuant to registration under the Securities Act or any
applicable exemption from registration thereunder.
(d) Notwithstanding anything herein to the contrary, Subject
Securities may be sold or otherwise transferred between and among the Investors
and their Subsidiaries and Affiliates without restriction hereunder, and any
Subject Securities that have been registered under the Securities Act may be
sold to any Person without restriction hereunder, subject to compliance with
applicable law and to the restrictions contained in Section 6.4.
ARTICLE II
CLOSINGS; CONDITIONS
SECTION 2.1. First Closing. The closing of the purchase and
sale of the Notes and the Warrants shall take place at 10:00 a.m., New York City
time, on December 30, 1997, at the offices of Xxxxxxxx & Xxxxxxxx, 125 Broad
Street, New York, New York, or at such other time and place as the parties may
mutually determine in writing (the "First Closing"). The actual date on which
the First Closing shall occur is referred to herein as the "First Closing Date".
Subject to the satisfaction of the conditions thereto set forth in Sections 2.2
and 2.3 hereof, the First Closing Date shall occur no later than the date 15
Business Days following the date that the Company provides a notice to the
Investors advising them of the proposed First Closing Date. At the First
Closing, (i) the Company shall issue and deliver to the Investors set forth in
Schedule 1.1 or their Subsidiaries or Affiliates designated pursuant to Section
1.1 the Notes, all duly executed by the Company and dated the First Closing
Date, in such denominations (of $10,000,000 or integral multiples of $1,000,000
in excess thereof) as shall be designated in writing by the Investors not less
than one Business Day prior to the First Closing and registered in the name of
the Investors or the applicable Subsidiary or Affiliate (or the name of its or
their respective nominees), (ii) the Holding Company shall issue and deliver to
the Investors set forth in Schedule 1.2 or their Subsidiaries or Affiliates
designated pursuant to Section 1.2 the Warrants and (iii) the Investors shall
pay the Company, in United States dollars and in immediately available funds by
wire transfer to the Company's account at The Chase Manhattan Bank, N.A. (ABA
No. 000000000, account
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No. 008-000018), an amount equal to the sum of the Note Purchase Price and the
Warrant Purchase Price and shall provide the commitment to purchase the
Convertible Preferred Stock as set forth in Section 1.3 hereof.
SECTION 2.2. Conditions to Obligations of the Investors at First
Closing. The obligations of the Investors to consummate the First Closing are
subject to the satisfaction in full prior to or at the First Closing of each of
the following conditions precedent:
(a) Representations and Warranties. The representations and
warranties made by the Company and the Holding Company in this Agreement
shall have been true and correct when made and shall be true and correct
as of the First Closing, as though such representations and warranties
were made on and as of the First Closing Date.
(b) Compliance with Agreements and Conditions. The Company and
the Holding Company shall have performed and complied in all material
respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by the
Company or the Holding Company at or before the First Closing.
(c) Litigation. On the First Closing Date, there shall not be
(i) in effect any injunction, decree or order enjoining or restraining
any of the Transactions, (ii) pending any action or proceeding seeking
an injunction, decree or order enjoining or restraining any of the
Transactions or, alternatively, seeking substantial damages if any of
the Transactions are consummated or (iii) instituted or, to the best
knowledge of the Company, threatened any action or proceeding by any
Governmental Authority with respect to the issuance or acquisition of
any of the Subject Securities, the execution, delivery or performance of
this Agreement or the consummation of any of the Transactions.
(d) Certain Events. There shall not exist any condition or
state of facts that would, at or immediately after the First Closing,
constitute an event of insolvency, rehabilitation, liquidation,
conservation or dissolution of the Company or MLOA.
(e) Certificate. The Investors shall have received a
certificate executed on behalf of the Company by two senior executive
officers of the Company
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(of the rank of at least Senior Vice President) and dated the First
Closing Date to the effect that to their knowledge (i) the conditions
set forth in clauses (a), (b), (d) and (h) of this Section 2.2 have been
satisfied and (ii) no condition has occurred or exists that would permit
the Investors to decline to purchase the Notes and Warrants pursuant to
Section 1.1(b).
(f) Opinions. The Investors shall have received the opinions,
dated the First Closing Date, of the Senior Vice President and General
Counsel of the Company and of Xxxxx Xxxxxxxxxx, special counsel to the
Company and the Holding Company, substantially to the effect set forth
in Exhibits 5-A and 5-B, respectively.
(g) Consents and Approvals. (i) All Approvals required in
connection with the validity of the Notes and the Warrants, the
acquisition by the Investors or their Subsidiaries or Affiliates
designated pursuant to Sections 1.1 and 1.2 of Holding Company Common
Stock pursuant to the Warrants and the consummation of the Transactions
contemplated by this Agreement to occur at the First Closing shall have
been duly obtained, made or given and shall be in full force and effect
at the First Closing, without the imposition in such Approvals upon the
Investors or any of their Subsidiaries or Affiliates of any restriction
on the ability of any of them to acquire shares of Holding Company
Common Stock pursuant to exercise of the Warrants or conversion of the
Convertible Preferred Stock or any other material adverse condition.
(ii) The Investors shall have received an indication
satisfactory to them (A) from the NYID, the Arizona Insurance Department
and any other applicable Governmental Authority under Applicable
Insurance Laws to the effect that individually or collectively none of
(x) the acquisition of the Notes, the Warrants or the other Subject
Securities, (y) the acquisition of Holding Company Common Stock pursuant
to the Warrants and the Convertible Preferred Stock or (z) the
appointment of the Investor Director shall result in the Investors, or
any of them, or any of their Subsidiaries or Affiliates, acquiring
"control" of the Company or any Insurance Company within the meaning of
any Applicable Insurance Laws, and (B) from the NYID to the effect that
the Investors or their Subsidiaries or Affiliates may acquire the
Warrants, the Convertible Preferred Stock and Holding Company Common
Stock pursuant to the Warrants or the Convertible Preferred
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Stock notwithstanding the provisions of Section 7312(v).
(h) Ratings. There shall not have occurred any reduction in the
rating of the Company or MLOA by A.M. Best & Co. or in the claims-paying
ability rating of the Company or MLOA by Standard & Poor's Ratings Group
or in the financial strength rating of the Company or MLOA by Xxxxx'x
Investors Service, Inc. to "B++" or below, "BBB" or below or "Baa3" or
below, respectively, or any reduction in the Company's surplus notes
debt rating from Standard & Poor's Ratings Group or Xxxxx'x Investors
Service, Inc. to "BB+" or below or "Ba1" or below, respectively, and no
such organization shall have informed the Company or otherwise announced
that it will make a reduction in any such ratings if any of the
Transactions are consummated.
(i) Agreements in Full Force and Effect. Each of the
Transaction Agreements shall be in full force and effect.
(j) Closing Fee. At the First Closing, the Company shall pay to
the Investors a closing fee (the "First Closing Fee") in an amount equal
to the sum of $1,250,000 plus 1% of the aggregate principal amount of
Notes to be purchased. The First Closing Fee shall be allocated among
the Investors pro rata according to the aggregate principal amount of
Notes to be purchased by them at the First Closing.
SECTION 2.3. Conditions to Obligations of the Company at First
Closing. The obligations of the Company to consummate the First Closing are
subject to the satisfaction in full prior to or at the First Closing of each of
the following conditions precedent:
(a) Representations and Warranties. The representations and
warranties made by the Investors in this Agreement shall have been true
and correct when made and shall be true and correct as of the First
Closing, as though such representations and warranties were made on and
as of the First Closing Date.
(b) Litigation. On the First Closing Date, there shall not be
(i) in effect any injunction, decree or order enjoining or restraining
any of the Transactions, (ii) pending any action or proceeding seeking
an injunction, decree or order enjoining or restraining any of the
Transactions or, alternatively, seeking substantial damages if any of
the Transactions are
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consummated or (iii) instituted or, to the best knowledge of the
Company, threatened any action or proceeding by any Governmental
Authority with respect to the acquisition of any of the Subject
Securities, the execution, delivery or performance of this Agreement or
the consummation of any of the Transactions.
(c) Certificate. The Company shall have received certificates
executed on behalf of each Investor by two senior executive officers (of
the rank of at least Vice President) of the general partner or managing
general partner of such Investor and dated the First Closing Date to the
effect that the conditions set forth in clause (a) of this Section 2.3
have been satisfied.
(d) Opinions. The Company shall have received (i) the opinion,
dated the First Closing Date, of Xxxxxxxx & Xxxxxxxx, special counsel to
the Investors, substantially to the effect set forth in Exhibit 6 and
(ii) an opinion from UBS Securities LLC concerning the terms of the
Transactions to be consummated at the First Closing.
SECTION 2.4. Second Closing. The closing of the purchase and
sale of the Convertible Preferred Stock shall take place at 10:00 a.m., New York
City time, on the Convertible Preferred Issuance Date at the offices of Xxxxxxxx
& Xxxxxxxx, 125 Broad Street, New York, New York, or on such other day or at
such other time and place as the parties may mutually determine in writing (the
"Second Closing"). The actual date on which the Second Closing shall occur is
referred to herein as the "Second Closing Date". At the Second Closing, the
Holding Company shall issue and deliver to the Investors set forth on Schedule
1.3 or their Subsidiaries or Affiliates designated pursuant to Section 1.3 the
Convertible Preferred Stock, all duly executed by the Company and dated the
Second Closing Date, in such denominations as shall be designated in writing by
the Investors not less than one Business Day prior to the Second Closing and
registered in the name of the Investors or the applicable Subsidiary or
Affiliate (or the name of its or their respective nominees) against delivery of
the Convertible Preferred Stock Purchase Price in United States dollars and in
immediately available funds by wire transfer to the account of the Holding
Company designated in writing by the Holding Company to the Principal Investor
not less than one Business Day prior to the Second Closing.
SECTION 2.5. Conditions to Obligations of the Investors at
Second Closing. The obligations of the Investors to consummate the Second
Closing are subject to
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the satisfaction in full prior to or at the Second Closing of each of
the following conditions precedent:
(a) Representations and Warranties. The representations and
warranties made by the Company and the Holding Company in Section
3.1(a),(b),(c),(d),(e),(f) and (j)(b) shall have been true and
correct when made and shall be true and correct as of the Second
Closing, as though such representations and warranties were made on
and as of the Second Closing Date.
(b) Compliance with Agreements and Conditions. The Company and
the Holding Company shall have performed and complied in all
material respects with all agreements, covenants, obligations and
conditions required by this Agreement to be performed or complied
with by the Company or the Holding Company at or before the Second
Closing.
(c) Litigation. On the Second Closing Date, there shall not be
(i) in effect any injunction, decree or order enjoining or
restraining any of the Transactions, (ii) pending any action or
proceeding seeking an injunction, decree or order specifically
enjoining or restraining any of the issuance to the Investors, or
the acquisition by the Investors, of any of the Subject Securities
or, alternatively, seeking substantial damages if any of Subject
Securities are issued to, or acquired by, the Investors or (iii)
instituted or, to the best knowledge of the Company, threatened any
action or proceeding by any Governmental Authority with respect to
the issuance or acquisition of any of the Subject Securities, the
execution, delivery or performance of this Agreement or the
consummation of any of the Transactions.
(d) Certain Events. There shall not exist any condition or state
of facts that would, at or immediately after the Second Closing,
constitute an event of insolvency, rehabilitation, liquidation,
conservation or dissolution of the Company or MLOA.
(e) Certificate. The Investors shall have received a certificate
executed on behalf of the Company by two senior executive officers
of the Company (of the rank of at least Senior Vice President) and
dated the Second Closing Date to the effect that to their knowledge
the conditions set forth in clauses (a), (b), (d) and (h) of this
Section 2.5 and have been satisfied.
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(f) Opinions. The Investors shall have received the opinions,
dated the Second Closing Date, of the Senior Vice President and
General Counsel of the Company and of Xxxxx Xxxxxxxxxx, special
counsel to the Company and the Holding Company, substantially to the
effect set forth in Exhibits 7-A and 7-B, respectively.
(g) Consents and Approvals. (i) All Approvals required in
connection with the validity of the Convertible Preferred Stock, the
acquisition by the Investors or their Subsidiaries or Affiliates
designated pursuant to Sections 1.2 and 1.3 of Holding Company
Common Stock pursuant to the Warrants and the Convertible Preferred
Stock, and the consummation of the Transactions contemplated by this
Agreement to occur at the Second Closing shall have been duly
obtained, made or given and shall be in full force and effect at the
Second Closing, without the imposition in such Approvals upon the
Investors or any of their Subsidiaries or Affiliates of any
restriction on the ability of any of them to acquire shares of
Holding Company Common Stock pursuant to exercise of the Warrants or
conversion of the Convertible Preferred Stock or any other material
adverse condition.
(ii) The indications to the effect referred to in Section
2.2(g)(ii) hereof shall be in full force and effect and shall not
have been rescinded or modified in any manner.
(h) Agreements in Full Force and Effect. Each of the Transaction
Agreements shall be in full force and effect.
(i) Closing Fee. At the Second Closing, the Company shall pay to
the Investors a closing fee (the "Second Closing Fee") in an amount
equal to $1,000,000. The Second Closing Fee shall be allocated among
the Investors pro rata according to the aggregate number of shares
of Convertible Preferred Stock to be purchased by them at the Second
Closing.
SECTION 2.6. Conditions to Obligations of Holding Company at
Second Closing. The obligations of the Holding Company to consummate the Second
Closing are subject to the satisfaction in full prior to or at the Second
Closing of each of the following conditions precedent:
(a) Representations and Warranties. The representations and
warranties made by the Investors in this Agreement shall have been true
and correct when made
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and shall be true and correct as of the Second Closing, as though such
representations and warranties were made on and as of the Second Closing
Date.
(b) Litigation. On the Second Closing Date, there shall not be
(i) in effect any injunction, decree or order enjoining or restraining
any of the Transactions, (ii) pending any action or proceeding seeking
an injunction, decree or order specifically enjoining or restraining any
of the issuance to the Investors, or the acquisition by the Investors,
of any of the Subject Securities or, alternatively, seeking substantial
damages if any of the Subject Securities are issued to, or acquired by,
the Investors or (iii) instituted or, to the best knowledge of the
Company, threatened any action or proceeding by any Governmental
Authority with respect to the issuance or acquisition of any of the
Subject Securities, the execution, delivery or performance of this
Agreement or the consummation of any of the Transactions.
(c) Certificate. The Company shall have received certificates
executed on behalf of each Investor by two senior executive officers (of
the rank of at least Vice President) of the general partner or managing
general partner of such Investor and dated the Second Closing Date to
the effect that the conditions set forth in clause (a) of this Section
2.6 have been satisfied.
(d) Opinion. The Company shall have received the opinion, dated
the Second Closing Date, of Xxxxxxxx & Xxxxxxxx, special counsel to the
Investors, substantially to the effect set forth in Exhibit 8.
SECTION 2.7. Subsequent Closings. At the time of any Subsequent
Closing, the Company shall provide to the Investors opinions, dated the date of
such Subsequent Closing, of the Senior Vice President and General Counsel of the
Company and of Xxxxx Xxxxxxxxxx, substantially to the effect set forth in
Exhibits 9-A and 9-B, respectively.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of Company and
Holding Company. The Company and the Holding Company hereby jointly and
severally make the following representations and warranties to the Investors:
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(a) Corporate Existence. The Company has been duly organized
and is validly existing as a mutual life insurance company in good
standing under the laws of the State of New York, with full corporate
power and authority to own its properties and conduct its business as
currently conducted or proposed to be conducted and to perform its
obligations under the Contracts to which it is a party; each of the
Significant Subsidiaries has been duly incorporated and is validly
existing as a corporation in good standing under the laws or its
respective jurisdiction of incorporation, with full corporate power and
authority to own its properties and conduct its business as currently
conducted or proposed to be conducted and to perform its obligations
under the Contracts to which it is a party; and all of the issued shares
of capital stock of each of the Company's Subsidiaries have been duly
and validly authorized and issued, are fully paid and nonassessable and
(except for directors' qualifying shares) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims. Each of the Company, the Holding Company and each
other Significant Subsidiary of the Company is duly qualified as a
foreign corporation or partnership to transact business and is in good
standing in each jurisdiction in which it owns or leases substantial
properties or in which the conduct of its business requires such
qualification, except where the failure to be so qualified and in good
standing would not, in any case or in the aggregate, have a material
adverse effect upon the business, operations, assets, liabilities,
stockholders' equity (or SAP Surplus in the case of the Insurance
Companies) or financial condition of the Holding Company, the Company
and their Subsidiaries, considered as a whole (a "Material Adverse
Effect").
(b) Authorization; Enforcement. (i) Each of the Company and the
Holding Company has full corporate power and authority to execute and
deliver the Transaction Agreements and such other instruments to be
executed by it pursuant hereto and to perform its obligations under the
Transaction Agreements and such other instruments in accordance with
their respective terms. The Company has full corporate power and
authority to issue and sell the Notes and the Holding Company has full
corporate power and authority to issue and sell the Warrants, to issue
the Holding Company Notes and the Convertible Preferred Stock and to
perform its obligations thereunder in accordance with its terms. Each of
the Company and the Holding Company
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has full corporate power and authority to consummate a Plan, subject to
approval thereof by the Superintendent and the policyholders of the
Company in accordance with Section 7312 and any changes in their
respective certificates of incorporation or by-laws provided for in a
Plan. At the time of any Subsequent Closing, the Holding Company will,
as the case may be, have full corporate power and authority to issue and
deliver the Holding Company Notes and the Convertible Preferred Stock
and the shares of Holding Company Common Stock to be issued and
delivered upon the exercise of Warrants or conversion of Convertible
Preferred Stock at any such Subsequent Closing.
(ii) The Company has formulated and endorsed certain proposed
summary terms of the Plan as set forth in Exhibit 1.
(iii) Each of the Company and the Holding Company has taken all
necessary corporate action to duly and validly authorize its execution
and delivery of the Transaction Agreements and the other instruments to
be executed by it pursuant hereto and the consummation of the
Transactions (except with respect to the adoption of a Plan by the Board
and the approval of the IPO). Each of the Transaction Agreements has
been duly executed and delivered by the Company and the Holding Company
and constitutes a valid and legally binding obligation of the Company
and the Holding Company, enforceable against the Company and the Holding
Company in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles. The provisions of Section 203 of the General
Corporation Law of the State of Delaware will not apply to the Investors
or their Subsidiaries or to this Agreement or the transactions
contemplated by this Agreement.
(c) Subject Securities. Upon issuance to the Investors or their
Subsidiaries or Affiliates as provided herein, the Notes will (A) have
been duly authorized, executed and delivered by the Company, (B) be
validly issued obligations of the Company, enforceable against the
Company in accordance with their respective terms, and (C) be free and
clear of all Liens. Upon issuance to the Investors or their Subsidiaries
or Affiliates as provided herein, the Warrants and Holding Company Notes
will (A) have been duly authorized, executed and delivered by the
Xxxxxxx
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Xxxxxxx, (X) be validly issued obligations of the Holding Company,
enforceable against the Holding Company in accordance with their
respective terms, and (C) be free and clear of all Liens. Upon issuance
to the Investors or their Subsidiaries or Affiliates as provided herein,
the Convertible Preferred Stock and the Holding Company Common Stock
will have been duly authorized and validly issued and will be fully paid
and nonassessable and, in the case of the Convertible Preferred Stock,
the terms thereof will be valid and binding on the Holding Company.
(d) Consents and Approvals. No Approval is required to be
obtained, made or given, and no Notice is required to be filed, by or
with respect to the Company, the Holding Company or any other Subsidiary
of the Company in connection with the execution and delivery by the
Company or the Holding Company, as the case may be, of the Transaction
Agreements, the issue and sale of the Notes and the Warrants, the issue
and delivery of the Holding Company Notes and the Convertible Preferred
Stock, the issue and delivery in exchange for the Warrants or the
Convertible Preferred Stock of the shares of Holding Company Common
Stock to be issued and so delivered by the Holding Company pursuant
thereto, the adoption and consummation of a Plan, the performance by the
Company, the Holding Company or any other Subsidiary of the Company of
their respective obligations under the Transaction Agreements, or the
consummation of the Transactions, other than (i) under the HSR Act with
respect to the acquisition of Holding Company Common Stock in exchange
for Warrants or Convertible Preferred Stock, (ii) under the insurance
laws of the States of New York and Arizona with respect to the issuance
and sale of the Notes, the effectuation of a Plan and the IPO and the
acquisition of Holding Company Common Stock in exchange for Warrants or
Convertible Preferred Stock, (iii) registration of the shares of Holding
Company Common Stock, the Holding Company Notes and the Convertible
Preferred Stock under the Securities Act and the Exchange Act (if
applicable) and any securities and insurance securities laws of any
State with respect to the issuance of the Holding Company Notes and
Convertible Preferred Stock and the effectuation of a Plan and the IPO,
(iv) filings, at any time, of tax returns, tax reports and tax
information statements and (v) as otherwise specified on Schedule
3.1(d); and other than the Superintendent, no Governmental Authority has
authority to disapprove any payment on the Notes under any Applicable
Insurance Laws.
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(e) No Conflicts. None of the execution and delivery of any of
the Transaction Agreements or the consummation of any of the
Transactions will:
(i) conflict with or result in a breach of any provision of the
Certificate of Incorporation or By-Laws (or other organizational
documents) of the Company, the Holding Company or any other Subsidiary
of the Company (assuming, with respect to the Transactions to be
consummated at or after the First Closing, the amendment of such
organizational documents of the Company and of the Holding Company as
contemplated by Exhibit 1 and by a Plan) or
(ii) except (A) with respect to the termination of the
investment advisory contracts entered into by the Company or any
Subsidiary of the Company as an investment adviser that are subject to
the Investment Advisers Act or the Investment Company Act upon
consummation of a Plan, (B) with respect to (1) any consent or approval
required under any of the real estate joint venture agreements, real
estate leases, mortgage loans and other real estate related agreements
set forth in Schedule 3.1(e) and (2) any Real Property Approvals, in
each case, upon consummation of a Plan and (C) as otherwise specified in
Schedule 3.1(e), result in any conflict with, breach of or default (with
or without notice or lapse of time or both) under, or give rise to any
right of termination, cancellation or acceleration of any obligation or
loss of any benefit under, or result in the imposition of any Liens on
any of their respective properties or assets under, or require any
consent or approval which has not been obtained with respect to:
(1) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement or instrument or permit,
concession, franchise or license to which the Company, the
Holding Company or any other Subsidiary of the Company is a
party or by which the Company, the Holding Company or any other
Subsidiary of the Company or any of their respective properties
or assets may be bound, except where such conflict, breach or
default, termination, cancellation or acceleration, imposition
or failure to obtain any consent or approval referred to in this
clause (1) would not in any case or in the aggregate have a
Material Adverse Effect or
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(2) any order, decree or injunction, or, assuming
that the Consents referred to in Section 3.1(d)(i), (ii), (iii)
or (iv) or specified on Schedule 3.1(d) have been obtained or
made, any law, rule or regulation applicable to the Company, the
Holding Company or any other Subsidiary of the Company or any of
their respective properties or assets, with such exceptions,
individually or in the aggregate, as would not be reasonably
likely to (x) have a Material Adverse Effect, (y) affect the
validity of any of the Subject Securities or (z) prevent the
consummation of any of the Transactions.
(f) Capital Structure. (i) The Company is a mutual life
insurance company organized under the NYIL and is not authorized to
issue any capital stock. The Holding Company is a wholly owned
Subsidiary of the Company. Except for this Agreement and the Warrants,
there are no warrants, options, agreements, convertible or exchangeable
Securities or other commitments pursuant to which the Company or the
Holding Company is or may become obligated to issue or sell any shares
of its capital stock or other equity Securities.
(ii) Schedule 3.1(f) lists the name of each Subsidiary of the
Company that is a subsidiary of the Company for purposes of Regulation
115 of the NYIL, its jurisdiction of incorporation or organization, and,
in the case of each Significant Subsidiary, the authorized, issued and
outstanding amounts of its capital stock or other ownership or
partnership interests and the Company's direct or indirect (through
another specified Subsidiary) percentage interest therein. Except as
disclosed in Schedule 3.1(f), all the issued and outstanding shares of
the capital stock or other ownership or partnership interests of the
Significant Subsidiaries are owned of record and beneficially, directly
or indirectly, by the Company, free and clear of any Liens. All shares
or other ownership or partnership interests of any Significant
Subsidiary are duly and validly issued and outstanding and all such
shares are fully paid and nonassessable. None of the outstanding capital
stock or other ownership or partnership interests of any Significant
Subsidiary has been issued in violation of, or is subject to, any
preemptive or subscription rights. Except as disclosed in Schedule
3.1(f), there are no warrants, options, agreements, convertible or
exchangeable Securities or other commitments pursuant to which any
Significant Subsidiary is or may become obligated
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to issue, sell, purchase, retire or redeem any shares of its capital
stock or other ownership or partnership interests or other Securities.
Except for this Agreement and the Registration Rights Agreement, there
are no standstill, voting or similar agreements or any rights of first
offer or first refusal to which the Company or the Holding Company is a
party that presently or in the future will limit any person's ability to
acquire, vote, sell or hold any Holding Company Common Stock.
(g) Company Documents. The Investors have been furnished prior
to the date of this Agreement true, complete and correct copies of the
Articles or Certificates of Incorporation and By-laws of the Company and
each Significant Subsidiary, each of which is in full force and effect
on the date hereof. The Company has made available for inspection by the
Investors true, complete and correct copies of the minutes of all
meetings since January 1, 1994 of the Board and of each committee of the
Board, and of the respective boards of directors and committees thereof
of each Significant Subsidiary.
(h) Financial Statements and Information. (i) The following
financial statements have been furnished to the Investors by the Company
prior to the date of this Agreement:
(A) The audited consolidated balance sheets of the
Company as of December 31, 1996 and 1995, and the related
consolidated summaries of operations and surplus and
consolidated statements of cash flows of the Company for the
years ended December 31, 1996, 1995 and 1994, including in each
case the opinion thereon of Coopers & Xxxxxxx;
(B) the unaudited balance sheet of the Company as of
September 30, 1997, and the related summaries of operations and
surplus of the Company for the three months then ended;
(C) the audited statements of financial condition of
MLOA as of December 31, 1996 and 1995, and the related
statements of earnings and cash flows for the years then ended,
in each case with the opinion thereon of Coopers & Xxxxxxx; and
(D) the unaudited statement of financial condition of
MLOA as of September 30, 1997, and
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the related unaudited statements of earnings and cash
flows for the three months then ended.
(ii) The financial statements described in paragraph (i)
above are the financial statements of the Company and its
Subsidiaries or of MLOA, and their respective Subsidiaries
(collectively, the "Audited Entities"), as the case may be, as
of the dates of such statements and for the periods then ended
and fairly present the respective financial condition of the
Audited Entities to which they relate as of the dates of such
statements and their respective results of operations and/or
cash flows, as the case may be, for the periods then ended
(subject to normal, recurring audit adjustments). All such
financial statements are in accordance with the respective books
and records of the Audited Entities, which books and records,
when considered together for each Audited Entity, are complete
and current and maintained in accordance with customary
accounting practices. The financial statements of the Company
and of MLOA referred to above have been prepared in conformity
with accounting practices prescribed or permitted by the
Insurance Department of the States of New York and Arizona,
respectively, applied on a consistent basis.
(iii) The Annual Statements and the Quarterly Statements
with respect to each Insurance Company, in each case as filed
with the applicable Governmental Authority of its jurisdiction
of domicile, were prepared in conformity with SAP, present
fairly, to the extent required by and in conformity with SAP,
the statutory financial condition of each such Insurance Company
at their respective dates and the results of operations, changes
in capital and surplus and cash flow of such Insurance Company
for each of the periods then ended, and were correct in all
material respects when filed and there were no material
omissions therefrom when filed. Complete and correct copies of
the Annual Statements and the Quarterly Statements for the
periods referred to in Section 3.1(h)(i) have been furnished by
the Company to the Investors prior to the date of this
Agreement. Except as set forth in Schedule 3.1(h) hereto, no
deficiencies or violations material to the financial condition
or operations of any Insurance Company have been asserted in
writing by any Governmental Authority which have not been cured
or otherwise resolved to the satisfaction of such Governmental
Authority.
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(i) Exchange Act Reports. Each of the Company and each of its
Significant Subsidiaries has filed all material reports, schedules,
forms, statements and other documents required to be filed by it with
the SEC since January l, 1995 (collectively, the "SEC Documents").
Except as set forth in Schedule 3.1(i), each of the SEC Documents has
been duly and timely filed, and when filed was in compliance with the
requirements (including accounting requirements) of any applicable
Federal securities law and the applicable rules and regulations of the
SEC thereunder, and no event has occurred requiring the filing of any
amendment of any of the SEC Documents which amendment has not been duly
and timely filed, except for failures to file or comply, or events,
which would not in the aggregate have a Material Adverse Effect.
(j) Absence of Certain Changes or Events. (a) (i) Except as set
forth in Schedule 3.1(j) or as otherwise disclosed in writing to the
Investors prior to the date of this Agreement, since December 31, 1996,
each of the Company and each of its Significant Subsidiaries has
conducted its business only in the ordinary course consistent with its
past practices in all material respects, and neither the Company nor any
of its Subsidiaries has (i) borrowed, or agreed to borrow, funds in an
amount in excess of $25,000,000, other than, in the case of any
Insurance Company, (A) short-term Indebtedness incurred in the ordinary
course of business consistent with past practice, (B) Section 1307
Indebtedness and (C) other Indebtedness that is nonrecourse to any
assets of the Company or any of its Subsidiaries other than the Separate
Accounts, and, in the case of any Subsidiary of the Company that is not
an Insurance Company, Indebtedness in the ordinary course of business
consistent with past practice not exceeding $50,000,000 in the aggregate
for all such Subsidiaries, (ii) experienced any damage, destruction or
loss that, to the extent not covered by insurance, has had or is likely
to have a Material Adverse Effect, (iii) except in the case of any
wholly owned Subsidiary, declared, set aside or paid any dividend or
other distribution (whether in cash, stock or property) in respect of
its capital stock, insurance policies or partnership units other than
customary dividends or distributions in the ordinary course of business
consistent with past practices,(iv) in the case of any Insurance
Company, made, or agreed to make, any change in its underwriting,
pricing, actuarial or investment practices or policies, and in the case
of any Significant Subsidiary, made, or agreed to make, any change in
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its financial, tax or accounting practices or policies, in either case
including without limitation any basis for establishing reserves and
depreciation or amortization policies or rates and which, in any case,
could have a Material Adverse Effect, or (v) in the case of any
Insurance Company, experienced any increase or decrease in the
percentage of its reinsured business, or any increase in its lapse
ratio, or any decrease in the amount of its in-force business which
could have a Material Adverse Effect.
(b) Except as set forth in Schedule 3.1(j) or as otherwise
disclosed in writing to the Investors prior to the date of this
Agreement, since December 31, 1996, there has not been any event,
condition, change, development involving a prospective change, or other
occurrence that individually or in the aggregate has resulted or is
reasonably likely to result in a Material Adverse Effect.
(c) Since the date of its incorporation, the Holding Company has
engaged in no activities and has incurred no liabilities (contingent or
otherwise) other than those incidental to its organization and the
execution and delivery of this Agreement and the consummation of the
Transactions. The Holding Company has issued no Securities other than
shares of Holding Company Common Stock issued to and purchased by the
Company prior to the date of this Agreement.
(k) Assets.
(i) Material Owned Property. (A) The Investors have been
furnished prior to the date of this Agreement a true and complete list
of all Material Owned Properties and have been provided the opportunity
to review title, mortgage, lease and all other relevant documentation
relating thereto.
(B) Either the Company or one of its Subsidiaries or the Company
and one or more of its Subsidiaries is the holder of good, marketable
and insurable fee simple title or good and valid title to the leasehold
estate to each Material Owned Property free and clear of all Liens,
except for Permitted Real Property Liens and except mortgages on such
Material Owned Property as of December 31, 1996 and refinancings of such
mortgages and other mortgages entered into since December 31, 1996 in
the ordinary course of business consistent with past practice.
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(C) To the knowledge of the Company, the use, occupancy and
condition of each Material Owned Property is in compliance with all
applicable laws, statutes, regulations, ordinances, judgments or orders
(other than with respect to environmental matters), except where the
failure to be so in compliance would not reasonably be expected to have
a material adverse effect on the use, occupancy, operation or market
value of the Material Owned Properties taken as a whole and except as
set forth in Schedule 3.1(k).
(D) All real property ad valorem and other similar taxes payable
by the Company or any of its Subsidiaries have been paid or are
adequately reserved for in the financial statements referred to in
Section 3.1(h)(i), and the amount of such reserves has been determined
in accordance with the standards applicable to such financial statements
as set forth in Sections 3.1(h)(ii) and (iii), except where the failure
to do so would not be reasonably likely to have a Material Adverse
Effect.
(ii) Mortgage Loans.
(A) Except as set forth in Schedule 3.1(k), each Mortgage Loan
was underwritten and originated or purchased or otherwise acquired by
the Company or one of its Subsidiaries in the course of its normal
commercial mortgage lending activities and in a manner deemed reasonable
and prudent by the Company or such Subsidiary and consistent with
industry practice, except as would not, in any case or in the aggregate,
have a material adverse effect on the aggregate market value of all the
Mortgage Loans considered as a whole.
(B) The origination and collection practices used by the Company
and its Subsidiaries with respect to each Mortgage Loan (other than such
Mortgage Loans specified in Schedule 3.1(k)) have complied in all
respects with all Federal, State, local or foreign laws, statutes,
regulations or ordinances except as would not in the aggregate have a
material adverse effect on the aggregate market value of all the
Mortgage Loans, considered as a whole.
(C) Except as disclosed in Schedule 3.1(k), to the knowledge of
the Company, the aggregate amount of those Mortgage Loans that are
classified as in the process of foreclosure for purposes of the 1996
financial statements referred to in Section 3.1(h)(i) has not increased
in the period from April 1, 1997 to
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the date prior to the date of this Agreement by more than $16 million.
As of December 31, 1996, and as of November 30, 1997, payments
were past due more than 90 days only in respect of the respective
aggregate principal amounts of Mortgage Loans set forth in Schedule
3.1(k) hereto. To the knowledge of the Company, the aggregate principal
amount of Mortgage Loans in respect of which payments were past due more
than 90 days did not increase in the period from December 1, 1997 to the
date prior to the date of this Agreement by more than $2 million.
(iii) Environmental Matters. Except as disclosed on Schedule
3.1(k) hereto, (A) the Company has not received within the shorter
period of (1) its period of ownership of any Real Property or (2) the
last three years, any written notice, demand, letter, claim or request
for information regarding the presence of Hazardous Substances or
liability under any Environmental Law with respect to such Real
Property; and (B) the Company has not received any written notice (the
subject of which has not been fully cured) that any of its Real Property
is currently subject to any orders, decrees, injunctions or any other
proceedings or requirements imposed by any governmental authority or
third party pursuant to any Environmental Law.
(l) Liabilities and Reserves. (i) The September 30, 1997,
consolidated balance sheets referred to in Section 3.1(h)(i)(B) and (D)
reflect adequate provision for all obligations and liabilities of the
respective Audited Entities at such date for which provision is required
under the accounting principles specified in Section 3.1(h)(ii) pursuant
to which such balance sheets were prepared, and except to the extent
specifically disclosed, reflected or reserved against in such balance
sheets and the notes thereto, none of the Audited Entities has any
material obligations or liabilities of any nature (whether accrued,
absolute, contingent or otherwise, and whether or not due, or arising
out of transactions entered into, or any state of facts existing, prior
to such date) required under such accounting principles to be set forth
on a consolidated balance sheet of any of the Audited Entities or in the
notes thereto, except (x) liabilities incurred since September 30, 1997,
in the ordinary course of business consistent with past practice and (y)
as disclosed in Schedule 3.1(l).
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(ii) Each reserve and other liability amount in respect of the
insurance business, including without limitation reserve and other
liability amounts in respect of insurance policies, annuity contracts or
guaranteed interest contracts, whether direct or assumed by reinsurance,
established or reflected in the respective Annual Statements for the
year ended December 31, 1996, of the Company and the Insurance Companies
was determined in accordance with generally accepted actuarial standards
consistently applied, was based on actuarial assumptions that were in
accordance with or stronger than those called for in relevant policy and
contract provisions, is fairly stated in accordance with sound actuarial
principles and is in compliance with the requirements of the Applicable
Insurance Laws. Each Insurance Company owns assets that qualify as
admitted assets under Applicable Insurance Laws in an amount at least
equal to the sum of all such reserves and liability amounts and its
minimum statutory capital and surplus as required by the insurance laws,
rules and regulations of its jurisdiction of domicile.
(iii) Except for regular periodic assessments in the ordinary
course of business and except as set forth in Schedule 3.1(l), no claim
or assessment is pending nor, to the knowledge of the Insurance
Companies, threatened against any of them by any State insurance
guaranty association in connection with such association's fund relating
to insolvent insurers.
(m) Contracts. (i) True and complete copies or, if none exist,
written descriptions, of all Contracts, as such Contracts may have been
amended, modified or supplemented, have been provided or made available
to the Investors prior to the date of this Agreement.
(ii) Each of the Contracts is valid and binding in all material
respects in accordance with its terms and is in full force and effect.
None of the Contracts contains terms which would reasonably be expected
to have a Material Adverse Effect. To the knowledge of the Company, no
party to any of the Contracts that are material to the Company or any
Significant Subsidiary is in or claimed to be in breach or default in
any respect under any term or provision of any of such material
Contracts, with such exceptions, individually or in the aggregate, as
would not have a Material Adverse Effect.
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(n) Litigation. (i) Except as set forth in Schedule 3.1(n) and
other than Litigation relating to taxes, there is no Litigation now
pending, or, to the knowledge of the Company, threatened, against or
relating to the Company or any of its Subsidiaries, or any director or
officer of the Company or any of its Significant Subsidiaries in his
capacity as such, or the assets, properties or business of the Company
or any of its Subsidiaries (whether or not covered by insurance) (A)
involving a claim made prior to the date of this Agreement of more than
$5,000,000, (B) which could adversely affect the ability of the Company
or the Holding Company to consummate any of the Transactions, (C) which
could reasonably be expected to have a Material Adverse Effect, (D)
involving any former officers or directors of the Company or any of its
Subsidiaries as a party adverse to the Company or any of its
Subsidiaries, (E) involving criminal proceedings or investigations
against or targeting the Company, any of its Subsidiaries or any of such
directors or officers in their capacity as such, (F) involving
extraordinary regulatory proceedings, (G) adverse to the Company or any
sponsoring Subsidiaries involving any claims, whether individual or
class action, relating to life insurance or annuity-related sales
practices, including "churning", "vanishing premium", "replacement",
"policy illustration" or similar claims or (H) involving any investment
advisory client of the Company or any of its Subsidiaries with assets
under management in excess of $50,000,000 and adverse to the Company or
any of its Subsidiaries.
(ii) Except as set forth in Schedule 3.1(n), neither the Company
nor any of its Subsidiaries nor any of their respective officers or
directors is subject to any permanent, preliminary or temporary
injunction or prohibitive order, judgment or decree of any Governmental
Authority which could adversely affect the ability of the Company or the
Holding Company to consummate the Transactions or which (x) restricts in
any material respect the ability of the Company or of any Significant
Subsidiary to conduct its business or to engage in any other business or
(y) enjoins or prohibits any officer or director of the Company or of
any Significant Subsidiary from taking, or requires any of such officers
or directors to take, in his capacity as such, any action of any kind or
enjoins or prohibits any such officer or director from violating any law
or regulation.
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(o) Compliance with Laws, etc. (i) Each of the Company and MLOA
is duly licensed as an insurance company in its respective jurisdiction
of incorporation and is duly licensed or authorized as an insurer in
each other jurisdiction where it is required to be so licensed or
authorized to conduct its business as currently conducted or proposed to
be conducted, in each case with such exceptions, individually or in the
aggregate, as would not have a Material Adverse Effect; each of the
Company and MLOA is in compliance with the requirements of its
Applicable Insurance Laws, and has filed all Notices required to be
filed thereunder, in each case, with such exceptions, individually or in
the aggregate, as would not have a Material Adverse Effect; and, except
as set forth on Schedule 3.1(o), neither the Company nor MLOA has
received any notification from any insurance regulatory authority to the
effect that any additional Approval from such insurance regulatory
authority is needed to be obtained by the Company or MLOA in any case
where it could be reasonably expected that obtaining such Approvals or
the failure to obtain such Approvals would have a Material Adverse
Effect;
(ii) Each Broker-Dealer Subsidiary and each Investment Adviser
Subsidiary is duly licensed or registered as a broker-dealer or
investment adviser, as the case may be, in each jurisdiction (including
the United States) where it is required to be so licensed or registered
to conduct its business as currently conducted or as proposed to be
conducted, in each case, with such exceptions, individually or in the
aggregate, as would not have a Material Adverse Effect; each
Broker-Dealer Subsidiary and Investment Adviser Subsidiary has all other
necessary Approvals of and from all applicable regulatory authorities to
conduct their respective businesses as currently conducted or as
proposed to be conducted, in each case with such exceptions,
individually or in the aggregate, as would not have a Material Adverse
Effect; except as set forth on Schedule 3.1(o), none of the
Broker-Dealer Subsidiaries or Investment Adviser Subsidiaries has
received any notification from any applicable regulatory authority to
the effect that any additional Approvals from such regulatory authority
are needed to be obtained by such subsidiary in any case where it could
be reasonably expected that (x) any of the Broker-Dealer Subsidiaries or
Investment Adviser Subsidiaries would in fact be required either to
obtain any such additional Approvals or cease or otherwise limit
engaging in certain business and (y) the process of obtaining such
Approvals or limiting such business
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would have a Material Adverse Effect; and each Broker-Dealer Subsidiary
and Investment Adviser Subsidiary is in compliance with the requirements
of the applicable broker-dealer and investment adviser laws and
regulations of each jurisdiction which is applicable to such subsidiary,
and has filed all Notices required to be filed thereunder, in each case
with such exceptions, individually or in the aggregate, as would not
have a Material Adverse Effect.
(p) Operations Insurance. All liability, property and casualty,
workers compensation, directors and officers liability, surety bonds,
key man life insurance and other similar insurance contracts that insure
the business, properties, operations or affairs of the Company or any of
its Significant Subsidiaries or affect or relate to the ownership, use
or operations of the Company's or any of its Significant Subsidiaries'
assets or properties are, to the knowledge of the Company, in full force
and effect and are with financially sound and reputable insurers in
accordance with normal industry practice (including self insurance) and,
in the light of the respective businesses, properties, operations and
affairs of the Company and its Subsidiaries, are in amounts and provide
coverage that is reasonable and customary for persons in similar
businesses or for similar property.
(q) Brokers and Finders, etc. None of the Company or any of its
Subsidiaries nor any of their officers, directors or employees has
employed any broker, agent or finder other than as disclosed in Schedule
3.1(q) or incurred any liability for any brokerage fees, commissions or
finders' fees in connection with the Transactions or otherwise in
connection with the sale of the Subject Securities, other than fees to
the advisers set forth in Schedule 3.1(q), which fees are obligations
solely of the Company and will be duly paid by the Company.
(r) Taxes. (i) Each of the Company and each of its Subsidiaries
has (A) timely filed all material tax returns and reports required to be
filed by it and (B) timely paid (or the Company has paid on its behalf)
all taxes shown to be due on such returns or reports. All claims for
assessment or collection of material taxes that have been asserted
against the Company or any of its Subsidiaries are being contested in
good faith in appropriate proceedings or the taxes to which such claims
relate have been paid by the Company (or its Subsidiaries). The most
recent financial statements
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referred to in Section 3.1(h)(i) reflect an adequate accrual (determined
in accordance with the standards applicable to such financial statements
as set forth in Sections 3.1(h)(ii) and (iii)) for all taxes payable or
asserted to be payable by the Company and its Subsidiaries for all
taxable periods and portions thereof through the date of such financial
statements. Except as set forth in Schedule 3.1(r), with respect to the
Company or any of its Subsidiaries, no deficiencies for any taxes in
excess of $1,000,000 have been proposed, asserted or assessed against
the Company or any of its Subsidiaries, and no waivers or requests for
waivers of the time to assess any such taxes are pending. Schedule
3.1(r) sets forth the status of the examination by the Internal Revenue
Service of, or any other proceedings relating to, the tax returns of the
Company and each of its Subsidiaries (including, without limitation,
whether a waiver of any statute of limitations has been requested or
granted in connection with such examination or other proceedings).
(ii) Except as previously disclosed to the Investors in writing,
(A) all Policies issued by any Insurance Company comply with all
relevant definitional provisions of the Code, (B) the Insurance
Companies' Separate Accounts have been maintained in compliance with the
diversification requirements of Section 817 of the Code since its
enactment and (C) each Fund operating in the United States has elected
to be treated as a RIC and has, since the end of the most recent taxable
year of such Fund that has been closed and for which the statute of
limitations for assessments has expired, qualified as a RIC.
(s) Employee Benefit Plans. (i) True and complete copies of
all Benefit Plans, including, but not limited to, any trust instruments
and insurance contracts forming a part of any Benefit Plans and a
description of any obligations for any retiree health and life benefits
thereunder, and all amendments thereto, have been provided or made
available to the Investors prior to the date of this Agreement.
(ii) All Plans, to the extent subject to ERISA, are in
substantial compliance with ERISA. Each Pension Plan which is intended
to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service with
respect to "TRA" (as defined in Section 1 of Rev. Proc. 93-39), and the
Company is not aware of any circumstances likely to result in revocation
of any
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such favorable determination letter. There is no material pending or, to
the best knowledge of the Company, threatened litigation relating to the
Plans. Neither the Company nor any of its Subsidiaries has engaged in a
transaction with respect to any of the Plans that, assuming the taxable
period of such transaction expired as of the date hereof, could subject
the Company or any Subsidiary to a tax or penalty imposed by either
Section 4975 of the Code or Section 502(i) of ERISA in an amount which
would be material.
(iii) No liability under Subtitle C or D of Title IV of
ERISA has been or is expected to be incurred by the Company or any of
its Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any of them, or the
single-employer plan of any ERISA Affiliate. The Company and its
Subsidiaries have not incurred and do not expect to incur any withdrawal
liability with respect to a multiemployer plan under Subtitle E of Title
IV of ERISA (regardless of whether based on contributions of an ERISA
affiliate). No "reportable event", within the meaning of Section 4043 of
ERISA for which the 30-day reporting requirement has not been waived and
which could result in material liabilities to the Company or any
Subsidiary of the Company, has occurred as to any Pension Plan within
the 12-month period ending on the date hereof.
(iv) All contributions required to be made under the
terms of any Benefit Plan have been timely made or have been reflected
on the Annual Statements or the Quarterly Statements. Neither any
Pension Plan nor any single-employer plan of an ERISA Affiliate has an
"accumulated funding deficiency" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA and no ERISA
Affiliate has an outstanding funding waiver. Neither the Company nor any
of its Subsidiaries has provided, or is required to provide, security to
any Pension Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Code.
(v) Under each Pension Plan which is a single employer
plan, as of the last day of the most recent plan year ended prior to the
date hereof, the actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial
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assumptions contained in such Pension Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such
Pension Plan, and there has been no material change in the financial
condition of such Pension Plan since the last day of the most recent
plan year. The withdrawal liability of the Company and its Subsidiaries
under each Benefit Plan which is a multiemployer plan to which the
Company, any of its Subsidiaries or an ERISA Affiliate has contributed
during the preceding 12 months, determined as if a "complete
withdrawal", within the meaning of Section 4203 of ERISA, had occurred
as of the date hereof, does not exceed $100,000.
(vi) Except as previously disclosed to the Investors,
neither the Company nor any of its Subsidiaries has any obligations for
retiree health and life benefits under any Benefit Plan. The Company or
its Subsidiaries may amend or terminate any such Benefit Plan at any
time without incurring any liability thereunder.
(t) Insurance Business. (i) Each Insurance Company possesses an
Insurance License in each State or other jurisdiction in which such
Insurance Company is required to possess an Insurance License, except
where the failure to possess Insurance Licenses would not, individually
or in the aggregate, have a Material Adverse Effect. All such Insurance
Licenses are in full force and effect and neither the Company nor any
Subsidiary of the Company has received any notice of any event, inquiry,
investigation or proceeding that would reasonably be expected to result
in the suspension, revocation or limitation of any such Insurance
License, except where the failure to possess Insurance Licenses would
not, individually or in the aggregate, have a Material Adverse Effect,
and to the knowledge of the Insurance Companies, there is no sustainable
basis for any such suspension, revocation or limitation.
(ii) Except as set forth in Schedule 3.1(t), to the knowledge of
the Company, all forms of Policies currently issued (or filed pending
current review by applicable Governmental Authorities) by any Insurance
Company are, to the extent required under Applicable Insurance Laws, on
forms approved by applicable Governmental Authorities of the
jurisdiction where issued or have been filed with and not objected to by
such Governmental Authorities within the period provided for objection,
except where the failure to be on such forms
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would not, individually or in the aggregate, have a Material Adverse
Effect. All Policy applications in respect of Policy forms currently
issued and material to the operation of any Insurance Company as of the
date of this Agreement and required to be filed with or approved by
applicable Governmental Authorities under Applicable Insurance Laws have
been so filed or approved except where the failure to be so filed or be
approved would not, individually or in the aggregate, have a Material
Adverse Effect. Any premium rates with respect to Policies currently
issued required to be filed with or approved by applicable Governmental
Authorities under Applicable Insurance Laws have been so filed or
approved and premiums charged conform thereto, except where the failure
to so file or receive approval or conform will not, individually or in
the aggregate, have a Material Adverse Effect.
(u) Reinsurance. True and complete copies of all Reinsurance
Agreements have been provided or made available to the Investors prior
to the date of this Agreement. Each of the Reinsurance Agreements is
valid and binding in all material respects in accordance with its terms
on the Insurance Company party thereto. The Company has no reason to
believe that any material amount recoverable by any Insurance Company
pursuant to any Reinsurance Agreement is not fully collectible in due
course. No Insurance Company or, to the knowledge of the Company, any
other party thereto, is in default in any material respect as to any
Reinsurance Agreement and, to the knowledge of the Company, there is no
reason to believe that the financial condition of any such other party
is impaired to the extent that a default thereunder may reasonably be
anticipated. Except as disclosed in Schedule 3.1(u), none of the
Reinsurance Agreements contains any provision providing that the other
party thereto may terminate such Reinsurance Agreement by reason of the
transactions contemplated by this Agreement, and any Insurance Company
that has ceded reinsurance, coinsurance or excess insurance pursuant to
any such Reinsurance Agreement is entitled to take full credit in its
statutory financial statements for such reinsurance, coinsurance or
excess insurance ceded pursuant to Applicable Insurance Laws.
(v) Service Marks, Trademarks, etc. Except as set forth in
Schedule 3.1(v) and except for software license payments paid or payable
in the ordinary course of business, each of the Company and each of its
Significant Subsidiaries has the right to use, free and
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clear of any royalty or other payment obligations, claims of
infringement or Liens, all Trademarks that are material to the conduct
of its business.
(w) Variable Products Securities Law Matters; Investment
Companies; Investment Advisors.
(i) The Insurance Companies are in compliance in all material
respects with the Securities Act, the Exchange Act, the Investment
Company Act and the Investment Advisers Act to the extent that such Acts
apply to their insurance operations.
(ii) The Company and its Subsidiaries are in compliance in all
material respects with the Securities Act, the Exchange Act, the
Investment Company Act, the Investment Advisers Act and State securities
laws to the extent that such Acts and State securities laws apply to
their sponsorship of, underwriting of or advisory relationships with
investment companies required to be registered under the Investment
Company Act.
(iii) No prospectus, amendment or supplement thereto, on their
respective dates, and no registration statement, or post-effective
amendment thereto, at the time it became effective, relating to the
Separate Accounts, the trusts in which the Separate Accounts invest or,
to the knowledge of the Company, the investment companies registered
under the Investment Company Act or under any comparable State law to
which the Company or any of its Subsidiaries provides investment
advisory services, included an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which
they were made, not misleading, and none of such prospectuses, as
amended or supplemented and pursuant to which Securities are currently
being offered, includes an untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made,
not misleading.
(iv) Except as set forth in Schedule 3.1(w), since January 1,
1996, none of the Company, any of its Subsidiaries, any employee,
director or officer thereof or any affiliated person of any of the
foregoing has been enjoined, indicted, convicted or made the subject of
disciplinary proceedings, consent decrees or administrative orders on
account of any violation of the Securities Act, the Exchange Act, the
Investment
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Company Act or the Investment Advisers Act or State securities laws in
connection with its insurance operations, nor has any of the foregoing
persons been convicted of any felony or misdemeanor involving the
purchase or sale of any security or arising out of such person's conduct
as an underwriter, broker, dealer, investment adviser, municipal
securities dealer, governmental securities, broker, government
securities dealer, transfer agent, or entity or person required to be
registered under the Commodity Exchange Act, or as an affiliated person,
salesman, or employee of any investment company, bank, insurance
company, or entity or person required to be registered under the
Commodity Exchange Act, or been permanently or temporarily enjoined by
reason of any misconduct by order, judgment, or decree of any court of
competent jurisdiction from acting as an underwriter, broker, dealer,
investment adviser, municipal securities dealer, government securities
broker, government securities dealer, transfer agent, or entity or
person required to be registered under the Commodity Exchange Act, or as
an affiliated person, salesman, or employee of any investment company,
bank, insurance company, or entity or person required to be registered
under the Commodity Exchange Act, or from engaging in or continuing any
conduct or practice in connection with any such activity or in
connection with the purchase or sale of any security.
(v) Schedule 3.1(w) sets forth, as of September 30, 1997, a list
of (a) the name of each registered investment company advised by the
Company or an "affiliated person" of the Company (as defined in the
Investment Company Act) and each registered investment company of which
the Company or an "affiliated person" is the principal underwriter, and
(b) for each such company, a detailed description of the relationships
between such company and its adviser and any subadvisers and the Company
and any other bases for such affiliation. Schedule 3.1(w) sets forth
each such company which is "controlled" by the Company within the
meaning of Section 2(a)(9) of the Investment Company Act and the factual
basis for such control.
SECTION 3.2. Representations and Warranties of Investors. The
Investors, jointly and severally, hereby make the following representations and
warranties to the Company and to the Holding Company:
(a) Authorization; Enforcement . The Investors have full
partnership power and authority to execute
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and deliver the Transaction Agreements to which the Investors are a
party and the other instruments to be executed by them pursuant hereto
and to perform their obligations under the Transaction Agreements to
which the Investors are a party and such other instruments in accordance
with their respective terms. The Investors have taken all necessary
partnership action to duly and validly authorize the execution and
delivery of the Transaction Agreements to which the Investors are a
party and such other instruments to be delivered pursuant hereto and the
consummation of the Transactions. Each of the Transaction Agreements to
which the Investors are a party has been duly executed and delivered by
the Investors and constitutes, or will constitute, a valid and legally
binding obligation of each Investor, enforceable in accordance with its
terms.
(b) Status and Investment Intent. Subject to (i) the right of
resale with respect to the Notes and (ii) the exchange of the Notes for
the Holding Company Notes and the right of resale with respect to such
Holding Company Notes, the Investors purchasing Notes hereunder will be
purchasing such Notes for their own respective accounts, and each
Investor understands that the Notes have not been registered under the
Securities Act and may not be offered or sold unless the Notes are
registered under the Securities Act or a valid exemption from such
registration is available.
(c) Brokers and Finders, etc. None of the Investors nor any of
their Subsidiaries, officers, directors or employees has employed any
broker, agent or finder, or incurred any liability for any brokerage
fees, commissions or finders' fees in connection with the transactions
contemplated by this Agreement or otherwise in connection with the
purchase of the Notes or the Warrants.
(d) Investor not a Plan. Each Investor represents either (a) it
is not (i) an employee benefit plan (as defined in section 3(3) of
ERISA) which is subject to the provisions of Title I of ERISA, (ii) a
plan described in section 4975(e)(1) of the Code, or (iii) an entity
whose underlying assets are deemed to be assets of a plan described in
(i) or (ii) above by reason of such plan's investment in the entity, or
(b) the Investor's purchase and holding of Notes will be exempt under a
prohibited transaction class exemption issued by the U.S. Department of
Labor.
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(e) No Conflicts. None of the execution and delivery by any
Investor of this Agreement or the Registration Rights Agreement or the
consummation of the Transactions will constitute or result in (i) a
breach or violation of such Investor's partnership agreement, (ii) a
breach or violation of, or default under, any material agreement or
instrument to which such Investor is a party or by which it is bound or
to which any of its assets or properties is subject or (iii) a breach or
violation of any order, decree or injunction or, assuming that the
Approvals referred to in Section 3.1(d) are obtained, any law, rule or
regulation applicable to such Investor or any of its properties or
assets, with such exceptions, individually or in the aggregate, as would
not be reasonably likely to prevent the consummation of any of the
Transactions.
ARTICLE IV
AGREEMENTS BY THE COMPANY
The Company and the Investors recognize and agree that nothing
in this Article IV shall constitute a part of or be deemed included in the terms
of the Notes, which terms are set forth in Exhibit 2-A hereto. The Company and
the Investors further recognize and agree that nothing in this Article IV shall
constitute a limitation on or otherwise affect the Superintendent's
discretionary authority pursuant to Section 1307 of the NYIL with respect to the
approval of payments on the Notes.
SECTION 4.1. [Intentionally omitted]
SECTION 4.2. [Intentionally omitted].
SECTION 4.3. [Intentionally omitted].
SECTION 4.4. [Intentionally omitted].
SECTION 4.5. Investment Proposals. (a) The Company promptly
shall advise the Principal Investor orally and in writing of any Investment
Proposal or any inquiry with respect to or which could lead to any Investment
Proposal and the identity of the Person making any such Investment Proposal or
inquiry and will keep the Principal Investor fully informed of the status and
details of any such Investment Proposal or inquiry. In addition, in the
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event that the Company consummates an Investment Proposal prior to the
Demutalization Date, if requested in writing by the Principal Investor within
180 days after the consummation of such Investment Proposal the Company or the
successor to the Company shall purchase all of the outstanding Warrants for a
price of $10,000,000 in the aggregate within 60 days of the date of such
request.
(b) In the event that an Investment Proposal is consummated all
outstanding Notes shall remain outstanding as obligations of the Company or the
successor to the Company, as the case may be, in accordance with their terms.
SECTION 4.6. [Intentionally omitted]
SECTION 4.7. [Intentionally omitted]
SECTION 4.8. [Intentionally omitted]
SECTION 4.9. Board Representation. (a) The Company agrees that,
not later than the first meeting of the Board that occurs after the First
Closing, it will cause one vacancy to be created on its Board (by increasing the
number of the members of such Board or otherwise) and it will cause one person
proposed by the Principal Investor and selected by the Company as provided in
Section 4.9(b) to be elected or appointed to such Board. The Company and the
Holding Company further agree that thereafter the Company, or following the
Demutualization Date, the Holding Company, shall nominate for election to the
Board of the Company or the Holding Company, as applicable, by the policyholders
or stockholders of the Company or the Holding Company, as applicable, at any
meeting of such policyholders or stockholders held for the purpose of electing
Trustees or Directors, the Trustee or Director appointed pursuant to the
previous sentence or another nominee of the Investors that has been selected by
the Company or the Holding Company as provided in Section 4.9(b).
(b) In connection with any appointment or nomination of the
Investors' nominee to the Company's or Holding Company's Board, as applicable,
pursuant to this Section 4.9, the Principal Investor shall propose to the
Company or Holding Company, as applicable, three candidates, one of which may be
selected by the Company or Holding Company, as applicable, subject to the prior
approval of the Superintendent. If none of the three persons proposed by the
Principal Investor is selected by the Company or the Holding Company, as
applicable, the Principal Investor shall propose two additional persons, one of
whom shall be selected for appointment or nomination by the Company or
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43
Holding Company, as applicable, subject to the prior approval of the
Superintendent. The Principal Investor shall not propose any person who (i) at
the time of such proposal is either a member of the board of directors or board
of trustees or a senior officer of a Person engaged in the Life Insurance
Business or (ii) is not qualified to serve as a Trustee or Director pursuant to
the by-laws of the Company or the Holding Company, as the case may be.
(c) The Company and the Holding Company shall use their
respective best efforts to cause all of the Investors' nominees that have been
selected by the Company or the Holding Company for nomination pursuant to the
provisions of this Agreement to be elected at any meeting of policyholders or
stockholders, as applicable, held for the purpose of electing Trustees or
Directors. Without limiting the foregoing, such persons shall be included in the
list of candidates nominated by the Company's or Holding Company's Board, as
applicable, for such election, and the Company or the Holding Company, as
applicable, shall solicit votes in favor of such persons in the solicitation
materials sent to policyholders or stockholders and shall vote or cause to be
voted all shares or mutual voting interests held by them or which they otherwise
have power to vote or direct the voting of in favor of such persons.
(d) (i) Each nominee of the Investors referred to in this
Section 4.9 shall serve on the Board of Trustees or Board of Directors, as the
case may be, to which such nominee is elected or appointed, until his successor
is duly elected or appointed and qualified, or until his earlier death or
resignation. In the event that any such nominee shall cease to serve as a
Trustee of the Company or as a Director of the Holding Company, as applicable,
for any reason other than as a result of his resignation due to the termination
of the rights provided in this Section 4.9, the Company or the Holding Company,
as applicable, shall cause the vacancy resulting thereby promptly to be filled
by another nominee of the Investors selected by the Company or the Holding
Company as provided in Section 4.9(b).
(e) With respect to any legal requirements concerning the
residency or citizenship of Trustees or Directors, the Company and the Holding
Company will use their best efforts to cause the members of the applicable Board
other than Investors' nominee to be persons with residency and citizenship such
that the selected Investors' nominee will not be ineligible to serve. Such best
efforts will not include causing any necessary resignations in order to
accommodate such nominee. The Principal Investor will include at least one
resident of New York in its list of
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nominees. To the extent that any nominee is required to be a "member" of the
Company, the Company will make reasonable and customary arrangements to cause
such person to become a member (with the Investors, if necessary under law, to
pay any costs of acquiring any necessary insurance policy).
(f) The Investors' Board representation rights granted by this
Section 4.9 shall terminate at such time when the Investors and their
Subsidiaries and Affiliates in the aggregate no longer own an aggregate amount
of Warrants and Convertible Preferred Stock representing the right to acquire
Holding Company Common Stock and/or Holding Company Common Stock equal to at
least 5% of the voting power of the Holding Company Common Stock on an as
exercised or as converted basis.
(g) Each of the Company and the Holding Company agrees that any
Trustee or Director appointed or elected pursuant to this Section 4.9 who is
serving on the Company's or Holding Company's Board, as applicable, shall be
furnished with all information generally provided to the Trustees or Directors,
as applicable (including to the members of any Committee of which such Trustee
or Director is a member), shall have full access to information regarding the
Company or the Holding Company, as applicable, and shall be entitled to the same
perquisites as the Company's and the Holding Company's other outside Trustees or
Directors, as applicable.
(h) The Principal Investor, on behalf of the Investors, shall
have the right to consult with the senior management of the Company or,
following the Demutualization Date, the Holding Company with respect to the
business of the Company and its Subsidiaries or the Holding Company and its
Subsidiaries, as applicable, and to make proposals with respect to such
business. The parties agree that the Company and the Holding Company shall be
under no obligation to take any action with respect to the proposals and other
advice given by the Principal Investor pursuant to the foregoing, provided,
however, that the Company and the Holding Company shall be obligated to take any
such proposals and advice seriously and give due consideration thereto.
SECTION 4.10. Registration and Resale. The Company and the
Holding Company shall comply with the respective provisions regarding
registration and resale rights as are set forth in Exhibit 2-C.
SECTION 4.11. [Intentionally omitted]
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ARTICLE V
FURTHER AGREEMENTS
SECTION 5.1. Public Announcements. The Investors, the Company
and the Holding Company will consult with each other before issuing any press
release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, and shall not issue any such press
release or make any such public statement prior to such consultation or, after
such consultation, if any party is not reasonably satisfied with the text of
such release or statement, except as may otherwise be required by applicable
law. For purposes of this Section 5.1, a public statement shall include any
announcement by the Company to its employees and/or agency force; provided,
however, that such an announcement may be made at any time after prior
consultation but notwithstanding the absence of reasonable satisfaction with the
text thereof by the Investors so long as the Investors are not named therein.
SECTION 5.2. Fees and Expenses. (a) Upon the earliest of (x)
the First Closing Date and (y) December 31, 1997, if written approval from the
Superintendent for the issuance of the Notes and Warrants has been obtained at
or prior to such date but the First Closing Date has not occurred, the Company
shall pay the Principal Investor, on behalf of the Investors, a commitment fee
of $1,250,000 in immediately available funds.
(b) The Company shall promptly reimburse the Investors in
same-day funds, upon request therefor by the Principal Investor, for their
reasonable Expenses and for any costs and expenses (including, without
limitation, reasonable legal fees and expenses) incurred to enforce this
provision, unless the First Closing does not occur for any reason other than
that the conditions to the obligations of the Investors set forth in Section 2.2
have not been satisfied, provided, however, that the Company shall not in any
event be required to reimburse the Investors for any such Expenses (other than
any enforcement costs and expenses referred to in this sentence) in an amount in
excess of $600,000. Other than the reimbursement contemplated by the foregoing
sentence or in Section 5.2(a), whether or not the transactions contemplated
hereby are consummated or the Investment Agreement is terminated pursuant to
Section 6.1, all fees and Expenses incurred in connection with the Transaction
Agreements and the transactions contemplated thereby (including without
limitation the Plan and the IPO) shall be paid by the party incurring such fees
or expenses.
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SECTION 5.3. Regulatory and Other Consents. (a) The Investors
shall prepare and file with the appropriate Governmental Authorities all
documentation and information required by law or requested by any such
Governmental Authority to be filed by the Investors to permit the consummation
of the transactions contemplated hereby, including without limitation, (i) any
notifications and filings required to be made by the HSR Act, (ii) applications,
notifications and filings required to be made under any of the Applicable
Insurance Laws and (iii) any necessary applications, reports or other documents
required to be filed by the Investors with the SEC, the NYSE, the NASD and the
securities commissions of States in which any of the Company's Subsidiaries acts
as a broker-dealer or an investment adviser.
(b) The Investors shall not deliver to any Governmental
Authority any application, notification, filing or other document that describes
or refers to the Company, any of its Subsidiaries or the transactions
contemplated hereby without affording the Company a reasonable opportunity to
review and comment on such application, notification, filing or other document
(other than any confidential portions thereof) and without the prior approval by
the Company of such description or reference (which approval shall not be
unreasonably withheld).
(c) The Investors shall promptly deliver to the Company copies
of all documents filed with any Governmental Authorities by the Investors with
respect to the transactions contemplated hereby and copies of all correspondence
to and from such Governmental Authorities in connection therewith, other than,
in each case, confidential portions thereof.
SECTION 5.4. Best Efforts. Subject to the terms and conditions
of this Agreement, including the next sentence, and except as otherwise
specifically provided in Section 6.10, each party will use its best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective in the most expeditious
manner practicable, the First Closing and the Second Closing and the other
transactions contemplated by the Transaction Agreements including (i) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Authorities and the making of all necessary
registrations and filings (including filings with Governmental Authorities, if
any) and the taking of all reasonable steps as may be necessary to obtain an
approval
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or waiver from, or to avoid an action or proceeding by, any Governmental
Authority, (ii) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, brought against such party challenging any
Transaction Agreement or the consummation of the transactions contemplated
thereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Authority vacated or reversed and
(iii) the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by the Transaction Agreements. The
parties will use all reasonable efforts to obtain, or cause to be obtained, all
necessary consents, approvals or waivers from third parties to the First
Closing, the Second Closing, any Subsequent Closing and the other transactions
contemplated by the Transaction Agreements.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Termination. This Agreement may be terminated at
any time:
(a) by mutual agreement in writing of the Company and the
Investors;
(b) by either the Company or the Investors upon written notice
to the other parties (i) if the First Closing shall not have occurred by
December 31, 1997, provided, however, that the right to terminate this
Agreement pursuant to this clause (i) shall not be available to any
party whose failure to fulfill any of its obligations under this
Agreement resulted in the First Closing not occurring by such date; or
(ii) if any Governmental Authority shall have issued an injunction,
decree or order or taken any other action permanently enjoining,
restraining or otherwise prohibiting the First Closing, the Second
Closing, the consummation of the Plan or any of the other Transactions
and such injunction, decree or order, or other action, shall have become
final and nonappealable; and
(c) by the Investors if:
(i) the Company or the Board withdraws or abandons a
Plan or ceases to use its commercially reasonable efforts to
effectuate the Plan or there shall have been a material breach
of any covenant or agreement set forth in Section 6.10 or the
Plan
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shall have been amended in a manner that results in the Plan not
containing the terms set forth in Exhibit 1 or containing terms
inconsistent with those set forth in Exhibit 1 or in any of the
Transaction Agreements;
(ii) the Plan is disapproved (or is approved in a manner
that results in the Plan not containing the terms set forth in
Exhibit 1 or containing terms inconsistent with those set forth
in Exhibit 1 or in any of the Transaction Agreements) by the
Superintendent pursuant to Section 7312(j) (regardless of
whether such disapproval is subject to appeal or review), or is
not approved by the Superintendent by June 30, 1999;
(iii) the Plan is disapproved by the policyholders of
the Company, or is not approved by such policyholders within 90
days after the approval of the Plan by the Superintendent; or
(iv) (1) a Governmental Authority shall (A) commence, or
apply for an order directing it to commence, delinquency,
rehabilitation, liquidation, conservation, reorganization,
dissolution or similar proceedings, including, without
limitation, summary proceedings, against the Company or MLOA
under any Applicable Insurance Laws as in effect from time to
time, or (B) appoint, or seek to appoint, a receiver,
rehabilitator, trustee, custodian, sequestrator, liquidator,
conservator or similar official for either of them or for all or
any substantial part of their respective properties or assets;
(2) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (A) relief in respect of the Company or any
Significant Subsidiary, or of a substantial part of the property
or assets of the Company or any Significant Subsidiary, under
Title 11 of the United States Code, as now constituted or
hereafter amended, or any successor to or replacement of such
statute, or any other Federal or State bankruptcy, insolvency,
receivership or similar law, (B) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar
official for the Company or any Significant Subsidiary or for a
substantial part of the property or assets of the Company or any
Significant Subsidiary or (C) the winding-up or liquidation of
the Company or any Significant Subsidiary and such
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proceeding or petition shall continue undismissed for 30 days or
an order or decree approving or ordering any of the foregoing
shall be entered; or (3) (A) the Company or MLOA shall consent
to, or fail to contest in a timely and appropriate manner, the
commencement against it of delinquency, rehabilitation,
liquidation, conservation, reorganization, dissolution or
similar proceedings, including, without limitation, summary
proceedings, under any Applicable Insurance Laws as in effect
from time to time; or (B) the Company or any Significant
Subsidiary shall (i) voluntarily commence any proceeding or file
any petition seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any successor
to or replacement of such statute, or any other Federal or State
bankruptcy, insolvency, receivership or similar law, (ii)
consent to, or fail to contest in a timely and appropriate
manner, the commencement against it of any proceeding or the
filing of any petition described in clause (1) or (2) above,
(iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar
official for the Company or any Significant Subsidiary or for a
substantial part of the property or assets of the Company or any
Significant Subsidiary, (iv) file an answer admitting the
material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or
fail generally to pay its debts (including, without limitation,
claims of policyholders under insurance policies, annuity
contracts and funding agreements) as they become due or (vii)
take any action for the purpose of effecting any of the
foregoing; and
(d) By the Investors or, subject to compliance with Section 4.5,
the Company if an Investment Proposal is accepted by the Company's Board
at any time.
In the event of the termination of this Agreement pursuant to
this Section 6.1, this Agreement shall thereafter become void and have no
effect, and no party shall have any liability to any other party hereto or their
shareholders, partners or policyholders in respect thereof, except (x) for the
provisions of Sections 6.10(d) and 5.2 and this Article VI, and (y) nothing
herein will relieve any party from liability for any breach of any of its
represen-
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tations, warranties, covenants or agreements contained in the Transaction
Agreements or the Subject Securities prior to such termination. No party shall
in any event be liable to the other party for loss of anticipated profits from
the transactions contemplated by this Agreement or for any other consequential
damages arising out of the termination of this Agreement.
SECTION 6.2. Standstill Agreement. (a) Subject to Section 6.2(b)
and (c), the Investors covenant and agree that for a period from the
Demutualization Date until the earlier of the fifth anniversary of the
Demutualization Date or June 30, 2004 (such period, the "Standstill Period"),
the Investors will not, and will cause their Subsidiaries and any Affiliates
that own Warrants, Convertible Preferred Stock or Holding Company Common Stock
that was acquired upon exercise of Warrants or conversion of Convertible
Preferred Stock not to, directly or indirectly, acquire, offer to acquire or
agree to acquire any outstanding Holding Company Common Stock other than
pursuant to the Warrants and the Convertible Preferred Stock or from an Investor
or from a Subsidiary or Affiliate of an Investor which acquired such Holding
Company Common Stock upon exercise of Warrants or conversion of Convertible
Preferred Stock without the prior written approval of the Company.
(b) Notwithstanding the foregoing, the Investors and their Subsidiaries and
Affiliates shall have the right to directly or indirectly acquire, offer to
acquire or agree to acquire Holding Company Common Stock:
(i) directly from the Holding Company (pursuant to any stock dividend,
stock split or other distribution, by purchase or otherwise);
(ii) in the case of an Affiliate of an Investor that is a broker-dealer,
investment manager or investment adviser, for third parties or its own
account in the ordinary course of such Affiliate's business;
(iii) in a transaction involving the acquisition of, or merger or
consolidation with, a previously unaffiliated Person, or the acquisition
of substantially all of the assets of a previously unaffiliated Person,
that owns Holding Company Common Stock at the time of such transaction,
other than any such transaction entered into primarily for the purpose
of acquiring Holding Company Common Stock;
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(iv) if the Company or the Holding Company breaches or violates any of
Section 4.9, 4.10 or 6.2(d) of this Agreement or the Registration Rights
Agreement;
(v) if an event specified in Section 6.1(c)(iv) occurs;
(vi) if any Person not affiliated with the Investors makes a formal
proposal or offer (a) for a merger, consolidation or other business
combination directly or indirectly involving the Holding Company, the
Company or any Significant Subsidiary or (b) to acquire directly or
indirectly all or substantially all the assets of the Holding Company,
the Company or any Significant Subsidiary, which proposal or offer is
either supported or not opposed by the Board of the Holding Company; and
(vii) by way of any reorganization, recapitalization, merger,
consolidation, rights offering or similar event.
(c) (i) Notwithstanding the foregoing, this Section 6.2 shall
terminate when the Investors and their Subsidiaries and Affiliates that acquire
Warrants, Convertible Preferred Stock or Holding Company Common Stock upon
exercise of Warrants or conversion of Convertible Preferred Stock own an
aggregate number of shares of Holding Company Common Stock acquired upon
exercise of Warrants or conversion of Convertible Preferred Stock plus the
number of shares of Holding Company Common Stock issuable upon exercise of
Warrants and conversion of Convertible Preferred Stock that is held by the
Investors and their Subsidiaries and Affiliates that is less than 5% of the
fully diluted Holding Company Common Stock.
(ii) In the event an Investor makes a distribution of Warrants,
Convertible Preferred Stock or Holding Company Common Stock to its partners in
the ordinary course, the provisions of Section 6.2(a) shall not apply to any
limited partner of such Investor but shall apply to the general partner or
managing general partner of such Investor and its Subsidiaries and Affiliates
if, and for so long as, the aggregate number of shares of Holding Company Common
Stock acquired upon exercise of Warrants or conversion of Convertible Preferred
Stock plus the number of shares of Holding Company Common Stock issuable upon
exercise of Warrants and conversion of Convertible Preferred Stock that is held
by the Investors and their Subsidiaries and Affiliates is equal to 5% or more of
the fully diluted Holding Company Common Stock.
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(d) The Holding Company agrees that, so long as the Investors,
their Subsidiaries and Affiliates are subject to Section 6.2(a), it will not
take any action (including, without limitation, adoption of a shareholder rights
plan) that would have the effect of imposing more stringent requirements on the
Investors, their Subsidiaries and Affiliates than those contained in this
Section 6.2.
SECTION 6.3. Voting of Holding Company Common Stock. (a) Subject
to Sections 6.3(b), (c) and (d) during the Standstill Period the Investors will
not, and will cause their Subsidiaries and Affiliates that acquire Holding
Company Common Stock upon exercise of Warrants or conversion of Convertible
Preferred Stock not to, (i) solicit proxies or become a participant (other than
by voting) in a "solicitation" (as such term is defined in Regulation 14A under
the Exchange Act) in opposition to the Board (provided that (A) any such person
(1) may vote against any nominee for director of the Holding Company as to whom
proxies are not being solicited by the Board and (2) may vote Holding Company
Common Stock or other Holding Company voting securities so long as it does not
have voting discretion over such securities and (B) none of such persons shall
be deemed a participant for purposes of this Section 6.3(a) solely by reason of
the membership of the Investor Director on the Board), (ii) call or seek to call
any special meeting of the Company's stockholders for any reason whatsoever,
(iii) deposit any such Holding Company Common Stock in a voting trust or subject
any Holding Company Common Stock to any arrangement or agreement with respect to
the voting of such, other than an arrangement or agreement among the Investors
and their Subsidiaries and Affiliates that acquire Warrants, Convertible
Preferred Stock of Holding Company Common Stock or (iv) form or join a group for
the purpose of acquiring, holding, voting or disposing of Holding Company Common
Stock, other than a group consisting only of the Investors and their
Subsidiaries and Affiliates that acquire Warrants, Convertible Preferred Stock
or Holding Company Common Stock.
During the Standstill Period the Investors will, and will cause
their Subsidiaries and Affiliates that acquire Holding Company Common Stock upon
exercise of Warrants or conversion of Convertible Preferred Stock to, vote all
shares of Holding Company Common Stock (i) acquired upon exercise of Warrants or
conversion of Convertible Preferred Stock owned by them or (ii) acquired from
their Subsidiaries or Affiliates either, at the option of the Board upon
reasonable prior notice to the Principal Investor, in accordance with the
recommendation of the Board or in the same proportion as the holders of Holding
Company
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Common Stock who are not affiliated with either the Holding Company or the
Investors with respect to all matters properly presented for a vote of the
holders of the Holding Company Common Stock.
(b) The provisions of Section 6.3(a) shall not apply: (i) if the Investors and
their Subsidiaries and Affiliates may acquire Holding Company Common Stock
without regard to Section 6.2(a) pursuant to Section 6.2(b)(iv), (v) or (vi);
(ii) with respect to matters that relate to: (A)(1) any merger, consolidation or
other business combination involving the Holding Company, the Company or any
Significant Subsidiary, (2) any sale, lease, transfer or other disposition in
one transaction or a series of transactions of all or substantially all the
assets of the Holding Company, the Company or any Significant Subsidiary, (3)
any recapitalization or similar transaction or series of transactions involving
the Holding Company, the Company or any Significant Subsidiary or (4) any
dissolution or complete or partial liquidation of the Holding Company, the
Company or any Significant Subsidiary; (B) the approval of any amendment to the
Holding Company's Certificate of Incorporation or by-laws; (C) any matter that
could result in any decrease in the percentage of the voting power represented
by the aggregate voting power of all Holding Company Common Stock and Holding
Company Common Stock issuable upon exercise of Warrants or conversion of
Convertible Preferred Stock then owned by the Investors and their Subsidiaries
and Affiliates; and (D) any other matter (other than the election of directors)
that in the good faith judgment of the Investors could adversely affect their
interests as significant stockholders of the Holding Company; or (iii) with
respect to the matters specified in the first paragraph of Section 6.3(a), to
the voting and other activities of any Affiliate of an Investor that is a
broker-dealer, investment manager or investment adviser with respect to Holding
Company Common Stock held for the account of third parties or its own account in
the ordinary course of such Affiliate's business. In addition, in the event an
Investor makes a distribution of Warrants, Convertible Preferred Stock or
Holding Company Common Stock to its partners in the ordinary course, the
provisions of Section 6.3(a) shall not apply to any limited partner of such
Investor but shall apply to the general partner or managing general partner of
such Investor and its Subsidiaries and Affiliates if, and for so long as, the
aggregate number of shares of Holding Company Common Stock acquired upon
exercise of Warrants or conversion of Convertible Preferred Stock plus the
number of shares of Holding Company Common Stock issuable upon exercise of
Warrants and conversion of Convertible Preferred Stock that is held by the
Investors and their Subsidiaries
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and Affiliates is equal to 5% or more of the fully diluted Holding Company
Common Stock.
(c) Notwithstanding the foregoing, this Section 6.3 shall terminate when the
Investors and their Subsidiaries and Affiliates that acquire Warrants,
Convertible Preferred Stock or Holding Company Common Stock upon exercise of
Warrants or conversion of Convertible Preferred Stock own an aggregate number of
shares of Holding Company Common Stock acquired upon exercise of Warrants or
conversion of Convertible Preferred Stock plus the number of shares of Holding
Company Common Stock issuable upon exercise of Warrants and conversion of
Convertible Preferred Stock that is held by the Investors and their Subsidiaries
and Affiliates that is less than 5% of the fully diluted Holding Company Common
Stock.
(d) Notwithstanding anything herein to the contrary, the provisions of Section
6.3(a) shall not limit or restrict in any way any action that is or may be taken
in connection with the voting rights carried by the Convertible Preferred Stock.
(e) For purposes of this Section 6.3, all references to Holding Company Common
Stock acquired upon exercise of Warrants or conversion of Convertible Preferred
Stock shall be deemed to include all shares of Holding Common Stock that are
distributed or acquired in respect of such Holding Company Common Stock pursuant
to any stock dividend, stock split, reorganization, recapitalization, merger,
consolidation, rights offering or other similar distribution by the Holding
Company.
SECTION 6.4. Limitation on Sales of Holding Company Common
Stock, Warrants and Convertible Preferred Stock. (a) Subject to Section 6.4(b)
and (c), until the termination of the Standstill Period the Investors will not,
and will cause their Subsidiaries and Affiliates that own Warrants, Convertible
Preferred Stock or Holding Company Common Stock that was acquired upon exercise
of Warrants or conversion of Convertible Preferred Stock not to, sell, transfer
or otherwise dispose of any Warrants, Convertible Preferred Stock or Holding
Company Common Stock that was acquired (including from their Subsidiaries and
Affiliates) upon exercise of Warrants or conversion of Convertible Preferred
Stock in a negotiated transaction (which for these purposes does not include an
open market sale other than as a result of an offer to sell securities having
aggregate voting rights of more than 3% of the voting rights on an as converted
basis at any one time): (i) to any Person that is engaged in the Life Insurance
Business if, to the knowledge
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of the transferor, after giving effect to such transaction such Person would own
an aggregate number of shares of Holding Company Common Stock plus the number of
shares of Holding Company Common Stock issuable upon exercise of Warrants and
conversion of Convertible Preferred Stock that is held by such Person that is
equal to 3% or more of the fully diluted Holding Company Common Stock at the
time of such transaction without the prior written consent of the Holding
Company or (ii) to any Person if, to the knowledge of the transferor, after
giving effect to such transaction such Person would own an aggregate number of
shares of Holding Company Common Stock plus the number of shares of Holding
Company Common Stock issuable upon exercise of Warrants and conversion of
Convertible Preferred Stock that is held by such Person that is equal to 5% or
more of the fully diluted Holding Company Common Stock at the time of such
transaction without the prior written consent of the Company.
(b) Notwithstanding the foregoing, the provisions of Section
6.4(a) shall not apply to (i) any transfers between or among the Investors,
their Subsidiaries and Affiliates or (ii) any widely distributed public
underwritten offering.
(c) Notwithstanding the foregoing, this Section 6.4 shall
terminate when the Investors and their Subsidiaries and Affiliates that acquire
Warrants, Convertible Preferred Stock or Holding Company Common Stock upon
exercise of Warrants or conversion of Convertible Preferred Stock own an
aggregate number of shares of Holding Company Common Stock acquired upon
exercise of Warrants or conversion of Convertible Preferred Stock plus the
number of shares of Holding Company Common Stock issuable upon exercise of
Warrants and conversion of Convertible Preferred Stock that is held by Investors
and their Subsidiaries and Affiliates that is less than 5% of the fully diluted
Holding Company Common Stock. In addition, in the event an Investor makes a
distribution of Warrants, Convertible Preferred Stock or Holding Company Common
Stock to its partners in the ordinary course, the provisions of Section 6.4(a)
shall not apply to any limited partner of such Investor but shall apply to the
general partner or managing general partner of such Investor and its
Subsidiaries and Affiliates if, and for so long as, the aggregate number of
shares of Holding Company Common Stock acquired upon exercise of Warrants or
conversion of Convertible Preferred Stock plus the number of shares of Holding
Company Common Stock issuable upon exercise of Warrants and conversion of
Convertible Preferred Stock that is held by the Investors and their Subsidiaries
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and Affiliates is equal to 5% or more of the fully diluted Holding Company
Common Stock.
(d) For purposes of this Section 6.4, all references to Holding
Company Common Stock acquired upon exercise of Warrants or conversion of
Convertible Preferred Stock shall be deemed to include all shares of Holding
Common Stock that are distributed or acquired in respect of such Holding Company
Common Stock pursuant to any stock dividend, stock split, reorganization,
recapitalization, merger, consolidation, rights offering or other similar
distribution by the Holding Company.
SECTION 6.5. Survival of Representations and Warranties and
Agreements. (a) (a) The representations, warranties and agreements of the
Company and the Holding Company contained in this Agreement shall survive until
the Expiration Date.
(b) The agreements of the Company and the Holding Company
contained in Sections 4.9, 4.10, 6.9, 6.10 and 6.11 of this Agreement shall
survive for so long as the Investors or their respective Subsidiaries or
Affiliates continue to own an aggregate amount of Warrants and Convertible
Preferred Stock representing the right to acquire Holding Company Common Stock
and/or Holding Company Common Stock equal to at least 5% of the voting power of
the Holding Company Common Stock on an as exercised or as converted basis.
SECTION 6.6. Severability. If any provision of this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the provisions of this Agreement shall remain in full force and
effect. The parties shall endeavor in good faith negotiations to replace any
invalid, illegal or unenforceable provision with a valid, legal and enforceable
provision, the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provision.
SECTION 6.7. Indemnification. The Company and the Holding
Company jointly and severally agree to indemnify each Investor, and each of
their Subsidiaries and Affiliates and each of their respective partners,
officers, directors, trustees, employees, representatives and agents from and
hold each of them harmless against, and promptly upon demand pay or reimburse
each of them for, any and all actions, suits, proceedings (including any
investigations, litigation or inquiries), claims, costs, losses, liabilities,
damages or expenses of any kind or nature whatsoever which may be incurred by or
asserted against or involve any of them
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(whether or not any of them is designated a party thereto) as a result of,
arising out of or in any way related to (a) any actual or proposed use by the
Company or the Holding Company of the proceeds of any of the Subject Securities;
(b) any breach by the Company or the Holding Company of any representation,
warranty or covenant contained herein; or (c) any other aspect of this
Agreement, the Subject Securities or the Transactions, including, without
limitation, the reasonable fees and disbursements of counsel (including
allocated costs of internal counsel) and all other expenses incurred in
connection with investigating, defending or preparing to defend any such action,
suit, proceeding (including any investigations, litigation or inquiries) or
claim, and including all actions, suits, proceedings (including any
investigations, litigation or inquiries), claims, costs, losses, liabilities,
damages or expenses arising by reason of ordinary negligence of each Investor,
and each of their Subsidiaries and Affiliates and each of their respective
partners, officers, directors, trustees, employees, representatives, agents and
affiliates, provided, however, that the provisions of this Section 6.7 shall not
apply to any action, suit, proceeding, claim, cost, loss, liability, damage or
expense to the extent, but only to the extent, caused by the gross negligence or
willful misconduct of the party seeking indemnification.
The obligations of the Company and the Holding Company under
this Section 6.7 will survive the payment or transfer of any Note or other
Subject Security, the enforcement, amendment or waiver of any provision of this
Agreement, the Transaction Agreements or the Subject Securities, and the
termination of this Agreement.
SECTION 6.8. Charter and By-laws. Except as otherwise
specifically contemplated by this Agreement, the Company and the Holding Company
shall not, except as provided in the Plan, amend its Certificate or Articles of
Incorporation or By-laws and in the case of any Subsidiary of the Company (other
than the Holding Company), amend its Certificate or Articles of Incorporation or
By-laws or partnership agreement, if such amendment would materially adversely
affect the rights of or expected benefits to the Investors or any of its
Subsidiaries under any Transaction Agreement.
SECTION 6.9. Information. (a) The Company shall, and shall cause
each of its Subsidiaries to, afford to the Investors, and to the Investors'
accountants, counsel, financial advisers, actuaries and other representatives,
reasonable access during normal business hours during the period prior to the
Demutualization Date
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(except with respect to the information specified in clauses (a), (c) and (f)
hereunder, which obligations shall continue until the Investors and their
Subsidiaries and Affiliates shall have exercised Warrants representing the right
to acquire at least five percent of the outstanding shares of Holding Company
Common Stock) to all their respective properties, books, contracts, commitments,
records and officers and employees and, during such period, the Company shall,
and shall cause each of its Subsidiaries to, furnish promptly to the Investors
(a) a copy of each Annual Statement, Quarterly Statement and registration
statement filed by it during such period pursuant to the requirements of any
Federal, State or foreign insurance law or regulation, (b) after the end of each
fiscal quarter and fiscal year of the Company and the other Audited Entities,
updated financial statements comparable to those described in Section 3.1(h)(i),
in the case of each quarterly financial statement, certified by the Chief
Financial Officer of the Company or of the relevant other Audited Entity and, in
the case of each annual financial statement, audited by independent public
accountants, (c) in the case of the Company and any Significant Subsidiary,
after the end of each month, its management financial reports (together with all
accompanying documents) prepared with respect to such month, (d) all notices to
any Insurance Company with respect to any alleged deficiency or violation
material to the financial condition or operations of such Insurance Company from
any Governmental Authority, (e) each written report on examination of financial
condition or market conduct (whether in draft or final form) of any Insurance
Company issued by any applicable Governmental Authority and (f) all other
information and documents concerning its business, properties and personnel as
the Investors may reasonably request; provided, however, that all notices,
reports, information and documents that are designated in writing by the
Company, in good faith, as confidential shall be kept confidential, with the
exception that any such items may be provided to the Investors' accountants,
counsel, financial advisers, actuaries and other agents, unless such disclosure
is made in connection with a court or regulatory proceeding or required by law
or such notices, reports, information or documents become available to the
public generally or through a third party.
(b) The Company shall, through the Demutualization Date, cause
its senior management to inform on a regular basis and in good faith the
Investors concerning the management of the Company's and its Subsidiaries'
businesses.
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SECTION 6.10. Plan of Demutualization. (a)(i) The Company shall
continue its efforts to prepare and complete a Plan with the goal of the
Demutualization Date occurring in the latter part of 1998. For purposes of the
preceding sentence, the inclusion of terms in the Plan relating to matters not
specifically addressed in Exhibit 1 shall not be deemed to be inconsistent with
such Exhibit so long as such matters are not incompatible with the matters
specifically addressed in Exhibit 1. The Company shall use its commercially
reasonable efforts to implement a Plan on the timetable provided in Exhibit 1,
and shall permit the Investors to review all documents (including the plan of
operation and actuarial projections required by Section 7312(e)(i)(H)) to be
filed or delivered to any Governmental Authority or otherwise in connection with
the Plan). Without limitation of the foregoing, the Company will, as promptly as
practicable after the date hereof, and in any event no later than June 30, 1998,
recommend to the Board that a Plan based upon the proposed summary terms of the
Plan set forth in Exhibit 1 be adopted by the Board. If such Plan is approved
and adopted by the Board, the Company shall use its commercially reasonable
efforts promptly to obtain all regulatory approvals of and consents to the Plan
required to be obtained by the Company or any of its Subsidiaries under any
Applicable Insurance Law (including without limitation the approval of the Plan
by the Superintendent), and the Company shall submit the Plan to its
policyholders and use its commercially reasonable efforts to obtain the approval
of the Plan by such policyholders. The Company shall use its commercially
reasonable efforts to cause the Plan to become effective in accordance with its
terms and the provisions of Section 7312.
(ii) Prior to the Demutualization Date, the Holding Company
shall take all necessary corporate action to duly and validly authorize the
issue and delivery of (i) the shares of Holding Company Common Stock to be
issued upon exercise of the Warrants and (ii) the shares of Convertible
Preferred Stock and shares of Holding Company Common Stock issuable upon
conversion of the Convertible Preferred Stock. The Company and the Holding
Company shall cause all such shares of Holding Company Common Stock and
Convertible Preferred Stock, if any, to be duly authorized and, upon such
issuance, to be (A) validly issued, fully paid and nonassessable, and (B) free
and clear of all Liens.
(iii) Nothing in this Section 6.10(a) shall prevent the Company
from accepting an Investment Proposal, nor shall failure to comply with this
Section 6.10(a) after acceptance of an Investment Proposal be a breach of this
Agreement.
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(b) The Company and the Holding Company will prepare and file
with the SEC the S-1 as soon as practicable after the filing of a Plan with the
Superintendent, and will use its best efforts to cause the S-1 to become
effective in a timely fashion consistent with a goal of the Demutualization Date
occurring in the latter part of 1998 and the effectiveness of the S-1 to occur
on or prior to the Demutualization Date. The Company will prepare the Proxy
Statement and will cause the Proxy Statement to be mailed to the Company's
policyholders prior to approval of the Plan by the Superintendent in a timely
fashion consistent with the prior sentence. If at any time prior to the IPO or
the approval of the Plan by the Company's policyholders, there shall occur any
event that should be set forth in an amendment or supplement to the S-1 or the
Proxy Statement, as the case may be, the Company and the Holding Company will
promptly prepare and (to the extent required by applicable law or regulation)
distribute or mail to its policyholders, an appropriate amendment or supplement
thereto.
(c) The Company and the Holding Company shall keep the Investors
informed of their progress and of any material developments in connection with
the preparation and approval of the Plan, the preparation and mailing of the
Proxy Statement and the preparation, filing and effectiveness of the S-1. The
Company and the Holding Company will not mail or use the Proxy Statement, or any
amendment or supplement thereto, and will not use any Prospectus, or any
amendment or supplement thereto, without the prior approval of the Investors of
any material therein relating to the Investors or any of their Subsidiaries or
Affiliates.
(d) (i) In connection with the use of the Proxy Statement and
the S-1, the Company and the Holding Company will, jointly and severally,
indemnify, defend and hold harmless, to the extent permitted by law, each
Investor and its Subsidiaries and Affiliates, and each of their respective
partners, officers, directors and agents and each person (as defined in Section
2(2) of the Securities Act), if any, who controls each Investor within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act or
any similar Federal statute then in force, against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation
and reasonable attorneys' fees) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in the Proxy
Statement, the S-1 or the Prospectus, or any amendment or supplement thereto, or
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be
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stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any such untrue statement or alleged untrue statement
or such omission or alleged omission contained in information furnished in
writing by such Investor expressly for use in the Proxy Statement, the S-1 or
the Prospectus, or any amendment or supplement thereto. If, in connection with
the Proxy Statement, the S-1 or the Prospectus, or any amendment or supplement
thereto, an Investor shall furnish written information to the Company or the
Holding Company expressly for use therein, such Investor will indemnify, defend
and hold harmless, to the extent permitted by law, the Company and the Holding
Company and their respective directors, officers and agents against any and all
losses, claims, damages, liabilities and expenses (including reasonable costs of
investigation and reasonable attorneys' fees) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact or any omission
or alleged omission of a material fact required to be stated in the Proxy
Statement, the S-1 or the Prospectus or any amendment or supplement thereto
necessary to make the statements therein not misleading, but only insofar as
such untrue statement or alleged untrue statement or such omission or alleged
omission is contained in information so furnished in writing by such Investor
expressly for use therein. Any person entitled to indemnification under the
provisions of this Section 6.10(d) shall (x) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification,
provided that the failure of any indemnified party to give notice as provided in
this Agreement shall not relieve the indemnifying party of its obligations under
this Section 6.10(d), except to the extent that the indemnifying party is
actually prejudiced by the failure to give such notice, and (y) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, permit
such indemnifying party to assume the defense of such claim, with counsel
reasonably satisfactory to the indemnified party; and in any event, such
indemnifying party shall not be subject to any liability for any settlement made
without its consent (which shall not be unreasonably withheld). In the event an
indemnifying party shall not be entitled, or elects not, to assume the defense
of a claim, such indemnifying party shall not be obligated to pay the fees and
expenses of more than one counsel (plus one local counsel in each relevant
jurisdiction) for all parties indemnified by such indemnifying party under this
Section 6.10(d) in respect of such claim, unless in the reasonable judgment of
any such indemnified party a conflict of interest may exist between such
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indemnified party and any other of such indemnified parties in respect of such
claim. The indemnification provided in this Section 6.10(d) shall remain in full
force and effect, regardless of any investigation made by or on behalf of any
indemnified party.
(ii) If the indemnification provided for in the first sentence
of Section 6.10(d) is due in accordance with its terms but is for any reason
held by a court or an arbitrator to be unavailable from the Company or the
Holding Company, on grounds of policy or otherwise, then the Company, the
Holding Company and the Investors shall contribute to the aggregate losses,
claims, damages, liabilities and expenses to which the Company or the Holding
Company, on the one hand, and the Investors, on the other, may be subject in
such proportion as is appropriate to reflect the relative fault of the Company
and the Holding Company, on the one hand, and of the Investors, on the other, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the Company, the Holding Company
and the Investors shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission of a material fact relates to information supplied
by the Company or the Holding Company, on the one hand, or by the Investors, on
the other, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Investors agree that it would not be just and equitable if contribution
pursuant to this Section 4.7(d)(ii) were determined by pro rata allocation or by
any other method of allocation which does not take account of the equitable
considerations referred to in the two immediately preceding sentences.
SECTION 6.11. Regulatory Filings. (a) The Company and the
Holding Company will furnish the Investors, their Subsidiaries and Affiliates
with such information as they may reasonably request in connection with any
application, notification or filing the Investors and/or their Subsidiaries and
Affiliates may make to applicable Governmental Authorities in connection with or
as a result of the Transactions, any Approval obtained in connection with the
Transactions or otherwise in connection with the acquisition or ownership of the
Subject Securities by the Investors and/or their Subsidiaries and Affiliates,
including without limitation those under any Applicable Insurance Laws. The
Company and the Holding Company will cause each of its Subsidiaries to cooperate
with the
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Investors, their Subsidiaries and Affiliates, to the extent they may reasonably
request, to enable them to make such applications, notifications or filings as
promptly as practicable.
(b) At such times as contemplated by the time schedule contained
in Exhibit 1, the Company and its Subsidiaries shall prepare and file with the
appropriate Governmental Authorities all documentation and information required
by law or requested by any such Governmental Authority to be filed by the
Company and its Subsidiaries to permit the consummation of the Transactions,
including, without limitation, (i) any notifications and filings required to be
made by the HSR Act, (ii) notifications and filings required to be made under
any Applicable Insurance Laws, (iii) any necessary applications, reports or
other documents to be filed by the Company or any of its Subsidiaries with the
SEC, the NYSE, the NASD, any other regulatory or self-regulatory organization
and the securities commissions of States in which any of the Company's
Subsidiaries acts as a broker-dealer or investment adviser and (iv) other
notifications and filings referred to in Schedule 3.1(d). The Company shall, or
shall cause each of its Subsidiaries to, perform all such other actions
reasonably necessary to obtain favorable action from any such Governmental
Authority consistent with the time schedule contained in Exhibit 1.
(c) The Company shall use its best efforts, and shall cause its
Subsidiaries to use their best efforts, to obtain all approvals or consents
required in connection with the Transactions, including with respect to any
"assignment" resulting from the Transactions or any "assignment" of any contract
to which the Company or any of its Subsidiaries is a party under the Investment
Company Act or the Investment Advisers Act, including without limitation the
following:
(i) with respect to each Fund, approvals by (A) the board of
directors thereof or persons with similar responsibilities of a new
underwriting or distribution contract, (B) the board of directors
thereof or persons with similar responsibilities of a new investment
management contract and (C) the holders of the voting securities of such
U.S. Fund of a new investment management contract, in each case such
agreements to contain terms and conditions substantially equivalent to
present agreements for such U.S. Fund; and
(ii) with respect to each advisory agreement other than an
advisory agreement for a U.S. Fund, any consent or approval of the
client that may be required
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under any United States Federal or State statute or regulation.
(d) The Company shall use its best efforts to obtain a
"no-action" letter from the staff of the SEC with respect to the exemption,
pursuant to Section 3(a)(10) of the Securities Act, from the registration
requirements of the Securities Act of the Holding Company Common Stock to be
issued pursuant to the Plan (other than Holding Company Common Stock to be
issued in the IPO). In the event the Company, despite its best efforts, does not
obtain such letter, the Company will cause the S-1 to register under the
Securities Act all the Holding Company Common Stock to be issued pursuant to the
Plan.
(e) The Company shall not deliver to any Governmental Authority
any application, notification, filing or other document that describes or refers
to the Investors, any of Affiliates without affording the Investors a reasonable
opportunity to review and comment on such application, notification, filing or
other document and without the prior approval by the Investors of such
description or reference (which approval will not be unreasonably withheld). The
Company shall promptly deliver to the Principal Investor copies of all
applications, notifications, filings (other than those with respect to Policy
forms) or other documents filed with any Governmental Authority by the Company
or any of its Subsidiaries with respect to the transactions contemplated by the
Transaction Agreements, and copies of all correspondence to and from such
Governmental Authority in connection therewith.
(f) The Company shall, from and after the date hereof and for so
long as any Investors or their Subsidiaries or Affiliates shall Beneficially Own
5% or more of the Holding Company Common Stock or shall own Warrants or
Convertible Preferred Stock representing the right to Beneficially Own 5% or
more of the Holding Company Common Stock, provide the Investors with quarterly
updates of the information set forth in Schedule 3.1(w) and called for by
Section 3.1(w) hereof.
SECTION 6.12. Entire Agreement; No Third-Party Beneficiaries.
This Agreement (together with the Registration Rights Agreement and the other
documents and instruments referred to herein) (a) constitutes the entire
agreement and understanding and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (b) except as otherwise expressly specified herein, is
not
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intended to confer upon any person other than the parties and the Holders any
rights or remedies hereunder.
SECTION 6.13. Notices. Any notice, demand, election, request,
consent or other communication required or permitted to be given hereunder shall
be in writing and shall be effective (a) when personally delivered or delivered
by telecopy on a Business Day during normal business hours (at the place of
receipt) at the address or number designated below or (b) on the second Business
Day following the date of mailing by overnight courier, fully prepaid, addressed
to such address, whichever shall first occur. The addresses for such
communications shall be:
If to the Company:
The Mutual Life Insurance Company of New York
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to the Holding Company:
MONY Financial Services Corporation
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
in either case with a copy to:
Xxxxx Xxxxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
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If to the Investors to them care of the Principal Investor:
The Principal Investor
GS Mezzanine Partners, L.P.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Attention: Xxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
Any party hereto may from time to time change its address for communications
under this Section 6.13 by giving at least 5 days' notice of such changed
address to the other party hereto.
SECTION 6.14. Amendments and Waivers. This Agreement may not be
amended, supplemented or discharged, and none of its provisions may be modified,
except expressly by an instrument in writing signed by the party to be charged.
The parties hereto may amend this Agreement without notice to or the consent of
any third party. Any term or provision of this Agreement may be waived, but only
in writing by the party which is entitled to the benefit of that provision. No
waiver by any party of any default with respect to any provision, condition or
requirement hereof shall be deemed to be a continuing waiver in the future
thereof or a waiver of any other provision, condition or requirement hereof; nor
shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right accruing to it thereafter. The act
of the Principal Investor shall be the act of the Investors under this Section
6.14.
SECTION 6.15. Counterparts. This Agreement may be executed in
one or more counterparts, which together shall constitute but one instrument. It
shall not be necessary for each party to sign each counterpart so long as each
party has signed at least one counterpart.
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SECTION 6.16. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
legal representatives. This Agreement shall not be assigned, in whole or in
part, by any party hereto.
SECTION 6.17. Reproduction of Documents. This Agreement and all
documents relating thereto, including without limitation (i) consents, waivers,
amendments and modifications that may hereafter be executed; (ii) documents
received by the Investors and their Subsidiaries and Affiliates at any closing
(except the Subject Securities themselves); and (iii) financial statements,
certificates and other information previously or hereafter furnished in
connection herewith, may be reproduced by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process and any
original document so reproduced may be destroyed. The Company agrees and
stipulates that, to the extent permitted by applicable law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made in the regular course of
business) and any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence. This Section 6.17 shall
not prohibit any party hereto from contesting any such reproduction to the same
extent that it could contest the original, or from introducing evidence to
demonstrate the inaccuracy of any such reproduction.
SECTION 6.18. Construction. Each covenant contained herein shall
be construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provisions herein refers to action
to be taken by any person, or which such person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such person, whether or not expressly specified in such provision.
SECTION 6.19. Incorporation. The Annex of Defined Terms and all
Exhibits and Schedules attached hereto are incorporated as part of this
Agreement as if fully set forth herein.
SECTION 6.20. Waiver of Jury Trial. Each party hereby waives any
right it may have to a trial by jury in respect of any action, proceeding or
litigation directly or
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indirectly arising out of, under or in connection with, this Agreement or any of
the Transactions or Subject Securities.
SECTION 6.21. Designation of Principal Investor. The Investors
designate and appoint GS Mezzanine Partners, L.P. to be the "Principal Investor"
under this Agreement and acknowledge and agree that the Principal Investor shall
be acting on behalf of all of the Investors with respect to the actions
specified in this Agreement that shall or may be taken by the Principal
Investor.
SECTION 6.22. Interpretation. When a reference is made in this
Agreement to a Section, Article, Schedule or Exhibit, such reference shall be to
a Section, Article, Schedule or Exhibit of this Agreement unless otherwise
indicated or unless the context shall otherwise require. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
SECTION 6.23. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.
IN WITNESS WHEREOF, the Company, the Holding Company and the
Investors have caused this Agreement to be duly executed by their respective
authorized officers as of the date first above written.
THE MUTUAL LIFE INSURANCE
COMPANY OF NEW YORK
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
MONY FINANCIAL SERVICES CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
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GS MEZZANINE PARTNERS, L.P.
By: GS Mezzanine Advisors, L.P.,
its general partner
By: GS Mezzanine Advisors, Inc.,
its general partner
By: /s/ Xxx X. Xxxxxxxx
----------------------------------
Name: Xxx X. Xxxxxxxx
Title: Vice President
GS MEZZANINE PARTNERS OFFSHORE, L.P.
By: GS Mezzanine Advisors
(Cayman), L.P.,
its general partner
By: GS Mezzanine Advisors, Inc.,
its general partner
By: /s/ Xxx X. Xxxxxxxx
----------------------------------
Name: Xxx X. Xxxxxxxx
Title: Vice President
STONE STREET FUND 1997, L.P.
By: Stone Street Asset Corp.,
its general partner
By:/s/ Xxx X. Xxxxxxxx
----------------------------------
Name: Xxx X. Xxxxxxxx
Title: Vice President
-00-
00
XXXXXX XXXXXX XXXX 0000, L.P.
By: Stone Street Asset Corp.,
its managing general partner
By: /s/ Xxx X. Xxxxxxxx
----------------------------------
Name: Xxx X. Xxxxxxxx
Title: Vice President
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ANNEX
DEFINED TERMS
As used in this Agreement and the Exhibits and Schedules hereto,
the following terms have the respective meanings set forth below or set forth in
the Section hereof following such term. The words "hereof", "herein", and
"hereunder" and words of similar import, when used in this Agreement, shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. Except with respect to the term "Plan", the terms defined in the
singular shall have a comparable meaning when used in the plural, and vice
versa. Unless the context otherwise requires, any reference to a statute, rule
or regulation refers to the same (including any successor statute, rule or
regulation thereto) as it may be amended from time to time.
"AFFILIATE" has the meaning assigned to such term in Rule 12b-2
under the Exchange Act.
This "AGREEMENT" means this Investment Agreement, dated as of
December 30, 1997, among the Company, Holding Company and Investors.
"ALTERNATIVE TRANSACTION" has the meaning specified in Section
14 of the form of Warrant.
"ANNUAL STATEMENTS" means annual statutory statements filed
pursuant to Applicable Insurance Laws by any Insurance Company (including
without limitation the annual statements of any separate accounts), together
with all exhibits and schedules thereto, and financial statements relating
thereto, and any actuarial opinion, affirmation or certification filed in
connection therewith.
"APPLICABLE INSURANCE LAWS" means insurance laws, rules and
regulations of the jurisdiction of domicile of or otherwise applicable to an
Insurance Company.
"APPROVALS" means collectively, all authorizations, approvals,
orders, consents, licenses, certificates or permits of, or registrations,
notices, qualifications or filings with, any Governmental Authority.
"ASSOCIATE" has the meaning assigned to such term in Rule 12b-2
under the Exchange Act.
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72
"AUDITED ENTITY" means the Company, MLOA, and their respective
Subsidiaries.
"BENEFICIALLY OWN" has the meaning set forth in Rule 13d-3 under
the Exchange Act.
"BENEFIT PLANS" means all benefit plans, contracts or
arrangements covering Employees, including, but not limited to, "employee
benefit plans" within the meaning of Section 3(3) of ERISA, and plans of
deferred compensation.
"BOARD" means the Board of Trustees of the Company or the Board
of Directors of the Holding Company, as the context requires.
"BROKER-DEALER SUBSIDIARIES" means each Subsidiary of the
Company which is engaged in the business of acting as a broker-dealer.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are required or authorized
by law to be closed.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning set forth in the recitals to this
Agreement.
"CONSENTS" means, collectively, all consents, approvals,
authorizations, licenses or orders of, or registrations or filings with, or
notices to, any Governmental Authority.
"CONTRACTS" means the following contracts, agreements,
commitments or arrangements, written or, to the knowledge of the Company and
only to the extent that they represent future liabilities in excess of
$1,000,000, unwritten, to which the Company or any of its Subsidiaries is a
party or by which any of their respective assets or properties are or may be
bound:
(i) all Contracts out of the ordinary course of business
representing future liabilities in excess of $5,000,000 that are
non-terminable without penalty upon not more than 30 days' notice;
(ii) all Contracts (including, without limitation, Contracts
relating to loans or advances other than margin loans made in the
ordinary course of
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73
business, but excluding Policies issued in the ordinary course of
business and excluding obligations under any Benefit Plan) with any
current or former officer or director of the Company or of any
Significant Subsidiary, or any of the 30 highest compensated agency
managers and agents of the Company or any of its Subsidiaries and the
name and position of each such person and the expiration date of each
such Contract (and specifying whether such Contract contains any
change-in-control provisions);
(iii) all Contracts with any person containing any provision or
covenant limiting the ability of the Company or of any Significant
Subsidiary to engage in any line of business or compete with any person;
(iv) all partnership or joint venture Contracts as of March 31,
1997 (and all such Contracts after such date that are material) with any
person (other than participations in reinsurance arrangements and
underwriting agreements entered into in the ordinary course of business,
and agreements relating to partnerships (x) in which neither the Company
nor any of its Subsidiaries is a general partner or (y) in which no
person other than the Company or its wholly owned Subsidiaries is a
partner);
(v) Contracts relating to nonrecourse mortgage borrowing in the
ordinary course of business (other than guarantees thereof), and all
Contracts relating to Indebtedness of the Company or any of its
Subsidiaries in a principal amount of $25,000,000 or more;
(vi) all leases, subleases or rental or use Contracts to which
the Company or any of its Subsidiaries is a party with respect to real
or personal property used by the Company or such Subsidiary in the
conduct of its business operations or affairs and providing for annual
rental payments to be paid by or on behalf of the Company or such
Subsidiary in excess of $5,000,000;
(vii) in the case of the Company or any Significant Subsidiary,
all Contracts with any labor union or association, other than Contracts
entered into in the ordinary course of the business of managing and
operating real property;
(viii) all Contracts pursuant to which any business unit was
sold since January 1, 1994 (or with
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respect to any insurance business units, January 1, 1992);
(ix) the top ten investment advisory Contracts or Contracts for
investment management, measured by 1996 annual revenues of each of the
Company and MLOA;
(x) except with respect to real estate joint ventures which are
Subsidiaries, all Contracts between the Company or any Subsidiary of the
Company and any of their Affiliates or Associates, other than Contracts
(a) made in the ordinary course of business consistent with past
practice at prices and on terms and conditions not less favorable to the
Company or such Subsidiary than could be obtained on an arms'-length
basis from unrelated third parties or (b) between the Company or any
wholly owned Subsidiary of the Company, on the one hand, and any other
wholly owned Subsidiary of the Company, on the other; and
(xi) all other Contracts material to the business or operations
of the Company and its Subsidiaries taken as a whole and not otherwise
referred to in clauses (i) through (x) above.
"CONVERTIBLE PREFERRED STOCK" has the meaning set forth in
Section 1.3 hereof.
"CONVERTIBLE PREFERRED STOCK ISSUANCE DATE" has the meaning set
forth in Section 2.4 hereof.
"CONVERTIBLE PREFERRED STOCK PURCHASE PRICE" has the meaning set
forth in Section 1.2 hereof.
"DEMUTUALIZATION DATE" means the date the Plan becomes effective
pursuant to Section 7312 or, if later, the first date following such
effectiveness on which shares of Holding Company Common Stock are first
distributed to Company policyholders.
"EMPLOYEES" means current employees or former employees of the
Company and its Subsidiaries.
"ENTERPRISE" means Enterprise Capital Management, Inc.
"ENVIRONMENTAL LAW" means any law, regulation, order, decree,
permit, authorization, opinion, common law or requirement of any Governmental
Authority relating to the handling, use, presence, disposal, release or
threatened
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release of any hazardous or toxic substance, the protection of the environment
or human health and safety or noise, odor, wetlands, pollution, contamination or
any injury or threat of injury to persons or property.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" means any entity which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the
Code.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"EXCHANGE NOTICE" has the meaning set forth in Section 1.4
hereof.
"EXERCISE PRICE" has the meaning set forth in the Warrants.
"EXPENSES" means all out-of-pocket fees and expenses, incurred
or paid by or on behalf of the Investors or any of their Subsidiaries or
Affiliates directly or indirectly in connection with the Transactions (including
but not limited to the due diligence review and negotiations preceding this
Agreement) or the consummation of any of the transactions contemplated by this
Agreement (including without limitation the Plan and the IPO), including but not
limited to all fees and expenses of counsel, accountants, actuaries, experts and
consultants to the Investors.
"EXPIRATION DATE" means the date that is the later of (i)18
months after the First Closing Date and (ii) the Demutualization Date.
"FIRST CLOSING" has the meaning set forth in Section 2.1 hereof.
"FIRST CLOSING DATE" has the meaning set forth in Section 2.1
hereof.
"FIRST CLOSING FEE" has the meaning set forth in Section 2.2(j)
hereof.
"FUND" means, for purposes of Section 3.1(r)(ii), any investment
company registered under the Investment Company Act to which the Company or any
of its Subsidiaries provides
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investment advisory services, for which a prospectus or other offering material
has stated an intention to qualify as a RIC.
"GAAP" means, at any time, generally accepted accounting
principles in the United States as are consistently applied by the Holding
Company at such time.
"GAAP EQUITY" means the consolidated stockholders' equity of the
Holding Company as determined in accordance with GAAP.
"GOVERNMENTAL AUTHORITY" and, as the context may require,
"GOVERNMENTAL AUTHORITIES" means any Federal, State, local, foreign or other
court, administrative agency or commission, insurance or securities regulatory
authority or other governmental authority or instrumentality or regulatory or
self-regulatory body or securities or commodities exchange.
"GRADATION" means a gradation within a rating category of a
rating agency or a change from the lowest or highest gradation within a rating
category to the next lower or higher, respectively, rating category of such
rating agency, which shall include "+" and "-" in the case of Standard & Poor's
Ratings Group and A.M. Best and "1", "2" and "3" in the case of Xxxxx'x Investor
Service, Inc. (for example, a reduction from BB+ to BB or from BB- to B+ or from
Ba1 to Ba2 would constitute a reduction of one Gradation).
"HAZARDOUS SUBSTANCE" means any substance that is: listed,
classified or regulated as a hazardous substance or a hazardous waste pursuant
to any Environmental Law; any petroleum product or by-product,
asbestos-containing material, lead-containing paint, polychlorinated biphenyls,
source material, byproduct material or special nuclear material as defined by or
pursuant to the Atomic Energy Act; or any other substance which is the subject
of regulatory action by any Government Authority or otherwise subject to any
Environmental Law.
"HOLDING COMPANY" has the meaning set forth in the recitals.
"HOLDING COMPANY COMMON STOCK" has the meaning set forth in the
recitals.
"HOLDING COMPANY NOTES" has the meaning specified in Section 1.3
hereof.
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00
"XXX XXX" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976 and the regulations thereunder.
"INDEBTEDNESS" means (without duplication), with respect to any
person, whether recourse is to all or a portion of the assets of such person and
whether or not contingent, (i) every obligation of such person for money
borrowed, (ii) every obligation of such person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses, (iii) every
reimbursement obligation of such person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of such person
(other than such a facility utilized to secure obligations under reinsurance or
retrocession agreements), (iv) every obligation of such person issued or assumed
as the deferred purchase price of property or services (including securities
repurchase agreements but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business which are not overdue or
which are being contested in good faith), (v) every capital lease obligation of
such person, (vi) all preferred stock issued by such person and (vii) every
obligation of the type referred to in clauses (i) through (iv) of another person
and all dividends of another person the payment of which, in either case, such
person has guaranteed or is responsible or liable for, directly or indirectly,
as obligor, guarantor or otherwise. The "amount" or "principal amount" of
Indebtedness at any time of determination represented by (a) any contingent
Indebtedness, shall be the maximum principal amount hereof, (b) any Indebtedness
issued at a price that is less than the principal amount at maturity thereof,
shall be the amount of the liability in respect thereof determined in accordance
with generally accepted accounting principles, and (c) any preferred stock,
shall be the maximum voluntary or involuntary liquidation preference plus
accrued and unpaid dividends in respect thereof, in each case as of such time of
determination.
"INSURANCE COMPANY" means each of the Company, MLOA and any
other Company Subsidiary engaged in the business of insurance.
"INSURANCE LICENSE" means a license, certificate of authority,
permit or other authorization to transact insurance.
"INVESTMENT ADVISER SUBSIDIARY" means each subsidiary of the
Company which is engaged in the business of acting as an investment adviser.
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"INVESTMENT ADVISERS ACT" means the Investment Advisers Act of
1940, as amended.
"INVESTMENT COMPANY ACT" means the Investment Company Act of
1940, as amended.
"INVESTMENT PROPOSAL" means any proposal or offer (in connection
with the conversion of the Company to a stock life insurance company or
otherwise), other than a proposal or offer by the Investors or any of their
Subsidiaries or Affiliates, for a merger, consolidation or other business
combination involving the Company, the Holding Company or any Significant
Subsidiary or any proposal or offer, other than a proposal or offer by the
Investors or any of their Affiliates, to acquire in any manner, directly or
indirectly, an equity interest in or any voting securities of or a substantial
portion of the assets of the Company, the Holding Company or any Significant
Subsidiary (whether in a transaction comparable to the one contemplated hereby
or otherwise).
"INVESTOR DIRECTOR" means the Director nominated to the Board
pursuant to Section 4.9 hereof.
"INVESTORS" has the meaning set forth in the recitals to this
Agreement.
"IPO" means an initial public offering of Holding Company Common
Stock effected in connection with the Plan.
"LIENS" means liens, pledges, mortgages, security interests,
claims, leases, charges, options, rights of first refusal, easements, servitude,
encumbrances and any other restrictions or limitations whatsoever.
"LIFE INSURANCE BUSINESS" means the underwriting, marketing and
selling in all or any part of the States of life insurance Policies.
"LITIGATION" means, collectively, all claims, actions,
proceedings, arbitrations, investigations, inquiries, charges or complaints
before or by any Governmental Authority or any private arbitration tribunal.
"MATERIAL ADVERSE EFFECT" has the meaning set forth in Section
3.1(a).
"MATERIAL OWNED PROPERTY" means real property owned in fee or
leased (other than operating leases) by the Company or any of its Subsidiaries,
or the Company and any of its
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Subsidiaries, either directly or through any interest of the Company or any such
Subsidiary in any joint venture, in each case which real property as of December
31, 1996, had a market value of $40,000,000 or more or in which the Company
and/or any of its Subsidiaries had invested, as of such date, $30,000,000 or
more.
"MLOA" means MONY Life Insurance Company of America.
"MONY BROKERAGE" means MONY Brokerage, Inc.
"MONY FUNDING" means MONY Funding, Inc.
"MONY SECURITIES" means MONY Securities Corporation.
"MORTGAGE" means, with respect to each Mortgage Loan, the note
or notes or other evidences of indebtedness evidencing such loan and the
mortgage, deed of trust or similar document securing such loan.
"MORTGAGE LOAN" means each loan made, purchased or otherwise
acquired by the Company or any of its Subsidiaries that is secured by any
interest in real property, together with the Mortgage.
"NASD" means the National Association of Securities Dealers,
Inc.
"NOTES" has the meaning specified in Section 1.1.
"NOTICES" means all notices, reports, documents or other filed
information.
"NYID" means the Insurance Department of the State of New York.
"NYIL" means the Insurance Law of the State of New York.
"NYSE" means the New York Stock Exchange, Inc.
"PENSION PLAN" means any of the Plans which is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA.
"PERMITTED LIENS" means (i) Liens reflected in the Annual
Statements delivered to the Investors pursuant to Section 3.1(h)(iii) and other
mortgages entered into since
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December 31, 1996, and Liens on securities since June 30, 1997, in either case
in the ordinary course of business consistent with past practice, (ii) the
claims of materialmen, carriers, landlords and like persons, and Liens securing
taxes, assessments, governmental charges or levies not yet due, all of which are
not yet delinquent or are being contested in good faith, so long as such contest
does not involve any substantial danger of the sale, forfeiture or loss of any
material assets of the Company or such subsidiary; (iii) statutory liens on
special deposit funds held by state regulatory authorities; (iv) Permitted Real
Property Liens; and (v) other Liens (excluding Liens on Securities) that do not
have a Material Adverse Effect.
"PERMITTED REAL PROPERTY LIENS" means Liens that are (i) claims
of mechanics, carriers, workmen, repairmen or other similar Liens arising or
incurred in the ordinary course of business or which are being contested in good
faith, (ii) pending condemnations, (iii) for taxes, assessments or other
governmental charges not yet due and payable or which are being contested in
good faith, (iv) statutory Liens of landlords and mortgagees of landlords, (v)
leases or subleases granted to others, (vi) in the case of leasehold interests,
Liens, if any, on the fee estate in the property subject to the lease, (vii)
zoning, building or other similar governmental restrictions or (viii) easements,
covenants, rights of way or other similar restrictions or other imperfections of
title (provided that the items described in clauses (i) through (viii) are
insured over pursuant to a title insurance policy or do not in any case or in
the aggregate materially impair the market value of, such Material Owned
Properties taken as a whole).
"PERSON" means any individual, corporation, partnership, firm,
joint venture, association, joint stock company, limited liability company,
trust, unincorporated organization, governmental or regulatory authority or
other entity.
"PLAN" means a plan of reorganization, as the same may be
amended from time to time, for the conversion of the Company under Section 7312
from a mutual life insurance company to a stock life insurance company, which
plan shall implement the terms set forth in Exhibit 1, shall not contain any
terms materially inconsistent with those set forth in Exhibit 1 or in any of the
Transaction Agreements and shall include such other terms as shall be necessary
to obtain the approval of the Superintendent.
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"PLANS" means all employee benefit plans, other than
"multiemployer plans" within the meaning of Section 3(37) of ERISA, covering
Employees.
"POLICIES" means insurance policies, annuity contracts and
guaranteed interest contracts and riders thereto.
"PRINCIPAL INVESTOR" has the meaning specified in Section 6.21
hereof.
"PROSPECTUS" means the prospectus for use in connection with the
IPO, as it may be amended or supplemented from time to time.
"PROXY STATEMENT" means an information or proxy statement to be
used in connection with obtaining the required approval of the Plan by the
policyholders of the Company.
"QUARTERLY STATEMENTS" means quarterly statutory statements filed
pursuant to Applicable Insurance Laws by any Insurance Company, together with
all exhibits and schedules thereto.
"REAL PROPERTY" means each Material Owned Property and any other
property owned by the Company or any Subsidiary either directly or through any
interest of the Company or any Subsidiary in any joint venture.
"REAL PROPERTY APPROVALS" means, collectively, (1) any consent
or approval required under any of the real estate joint venture agreements, real
estate leases, mortgage loans and other real estate related agreements set forth
in Schedule 3.1(e) hereto and (2) any consent or approval required under any
other real estate joint venture agreement, any real estate lease, any other
mortgage in respect of which the Company or any of its Subsidiaries is mortgagor
or any other real estate related agreements, the failure to obtain which
consents or approvals specified in this clause (2) would not in any case or in
the aggregate have a Material Adverse Effect.
"REGISTRATION RIGHTS AGREEMENT" means the agreement executed in
substantially the form set forth in Exhibit 3 hereto.
"REINSURANCE AGREEMENTS" means contractual treaties and
agreements regarding reinsurance, coinsurance, excess insurance, ceding of
insurance, assumption of insurance or indemnification with respect to insurance
to which any Insurance Company is a party.
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"RIC" means a regulated investment company under the Code.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"RULE 144A" means Rule 144A promulgated under the Securities
Act.
"S-1" means a registration statement on Form S-1, including the
related Prospectus, covering the shares of Holding Company Common Stock to be
issued in the IPO or otherwise in connection with the Plan.
"SAP" means statutory accounting practices prescribed or
permitted by an applicable Governmental Authority and applied on a consistent
basis.
"SAP SURPLUS" means the sum of Surplus and Asset Valuation
Reserve calculated in accordance with SAP.
"SEC" means the Securities and Exchange Commission.
"SEC DOCUMENTS" has the meaning set forth in Section 3.1(i)
hereto.
"SECOND CLOSING" has the meaning set forth in Section 2.4
hereto.
"SECOND CLOSING DATE" has the meaning set forth in Section 2.4
hereto.
"SECOND CLOSING FEE" has the meaning set forth in Section
2.5(l).
"SECTION 1307 INDEBTEDNESS" means Indebtedness of an Insurance
Company evidenced by surplus notes issued by the Insurance Company pursuant to
Section 1307 of the New York Insurance Law, other than Indebtedness that is
convertible or exchangeable into equity of such Insurance Company or of any of
its Affiliates.
"SECTION 7312" means Section 7312 of the NYIL.
"SECURITIES ACT" means the Securities Act of 1933.
"SECURITY" means each security as such term is defined in
Section 2(1) of the Securities Act, but shall not
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include securities referred to in Section 3(a)(2) or (8) of the Securities Act
or interests registered under the Securities Act in any of the separate accounts
of the Company or MLOA.
"SEPARATE ACCOUNTS" means the separate accounts of the Insurance
Companies.
"SIGNIFICANT SUBSIDIARY" means any of the following: (A) MLOA
and Enterprise, (B) in the case of the Company prior to the conversion of the
Company from mutual to stock form pursuant to Section 7312, the Holding Company,
and in the case of the Holding Company at or after the conversion of the Company
from mutual to stock form pursuant to Section 7312, the Company, (C) any other
"significant subsidiary", as such term is defined in Rule 1-02 of Regulation S-X
under the Securities Act, of the Company or of the Holding Company, and (D) any
Subsidiary of the Company or of the Holding Company of which any Significant
Subsidiary is a Subsidiary.
"STATES" means, collectively, the states of the United States,
the District of Columbia, the Commonwealth of Puerto Rico or any possession or
territory of the United States.
"SUBJECT SECURITIES" means, collectively, the Notes, the Holding
Company Notes, the Warrants, the Convertible Preferred Stock and the Holding
Company Common Stock.
"SUBSEQUENT CLOSING" means any closing in connection with (i)
the exchange of the Notes for the Holding Company Notes or (ii) the issuance (a)
of Holding Company Common Stock pursuant to the Warrants or (b) of Holding
Company Common Stock pursuant to the conversion or redemption of Convertible
Preferred Stock.
"SUBSIDIARY" means, as to any Person, (A) in the case of the
Investors or any of their Affiliates, a second person of which securities or
other ownership interests representing more than 50% of the ordinary voting
power are, at the time any determination is being made, owned or controlled by
the first person or one or more Subsidiaries of such person or a combination
thereof and (B) in the case of the Company or the Holding Company, a second
person of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or a general
partnership interest are, at the time any determination is being made, owned,
controlled or held by the first person or one or more Subsidiaries of such
person or a combination thereof, provided that the term "Subsidiary" shall not
include (x) any limited partnership in which neither the Investors nor
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the Company nor any of their respective Subsidiaries has an interest as a
general partner, (y) any person where (A) the Investors, the Company or their
respective Subsidiaries own securities of or other ownership interests in such
person representing more than 50% of the equity and 50% or less of the ordinary
voting power, (B) such securities or other ownership interests are held in the
investment portfolio of the Investors, the Company or any of their respective
Subsidiaries or Affiliates and (C) neither the Company, the Investors nor any of
their respective Subsidiaries or Affiliates controls such person or (z) any
person as to which control by the Investors, the Company or any of their
respective Subsidiaries or Affiliates has been negated by the establishment of a
voting trust or voting agreement.
"SUPERINTENDENT" means the Superintendent of Insurance of the
State of New York.
"TAXES" means all Federal, State, county, local, foreign and
other taxes, assessments, duties or similar charges of any kind whatsoever,
including, without limitation, corporate franchise, income, sales, premium, use,
ad valorem, gross receipts, value added, profits, license, withholding, payroll,
employment, excise, property (other than real property ad valorem or other
similar taxes), customs and occupation taxes, and including, without limitation,
any interest, penalties and additions imposed with respect to such amounts.
"THE INSURANCE SECURITIES LAWS OF THE STATE OF NEW YORK" means
insurance securities laws set forth in the New York Insurance Law or the
Regulations thereunder.
"TO THE KNOWLEDGE OF THE COMPANY" or any similar phrase means to
the knowledge of any of the senior officers of the Company or any of the
licensed professional personnel of the Company's legal department who, on or
prior to the date of this Agreement, were involved in the negotiation of this
Agreement or the preparation of any of the Schedules, with such officers and
licensed professional personnel being deemed to have made reasonable inquiry of
the appropriate personnel of the Company, each Significant Subsidiary and each
other relevant Subsidiary of the Company with respect to the matter in question.
"TRADEMARKS" means material domestic trademarks, service marks,
assured names with the owner or user thereof, logos, trade names and copyrights.
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"TRANSACTION AGREEMENTS" means, collectively, this Agreement,
the Subject Securities, the Registration Rights Agreement and the Fiscal Agency
Agreement.
"TRANSACTIONS" means the execution and delivery by the Company
or the Holding Company, as the case may be, of the Transaction Agreements, the
issue and sale of the Subject Securities by the Company or the Holding Company,
as the case may be, the issue and delivery of the shares of Holding Company
Common Stock upon the exercise of Warrants or conversion of Convertible
Preferred Stock, the adoption and consummation of a Plan, the performance by the
Company, the Holding Company or any other Subsidiary of the Company of their
respective obligations under the Transaction Agreements, or the consummation of
the transactions contemplated by the Transaction Agreements.
"TRANSACTIONS CONTEMPLATED" by this Agreement includes, but is
not restricted to, the consummation of a Plan and of the IPO.
"U.S. FUND" means an investment company registered under the
Investment Company Act.
"WARRANT PURCHASE PRICE" has the meaning set forth in Section
1.2 hereof.
"WARRANTS" has the meaning set forth in Section 1.3 hereof.
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Exhibit 1 to the
Investment Agreement
FUNDAMENTAL TERMS OF PLAN OF REORGANIZATION
Capitalized terms used herein but not defined herein shall
have the respective meanings specified for such terms in the Investment
Agreement.
1. PURPOSE OF REORGANIZATION.
The principal purpose of the reorganization of the Company
pursuant to the Plan (the "Reorganization") is to convert the Company from a
mutual life insurer to a stock life insurer thereby permitting it to obtain
equity capital for the Company from sources that are unavailable to it as a
mutual insurer. Such equity capital is expected to enhance the Company's
business and competitive position and to strengthen its capital base. The
Reorganization will provide Eligible Policyholders (defined herein) with shares
of Holding Company Common Stock or, under circumstances specified in the Plan,
cash or Policy Credits (defined herein) in exchange for their policyholders'
membership interest, as such term is defined in paragraph (a)(3) of Section 7312
("Policyholders' Membership Interest"), in the Company.
2. FORM OF REORGANIZATION.
The Company shall be converted from a mutual life insurer into
a stock life insurer, which shall be a wholly owned subsidiary of the Holding
Company, pursuant to a plan of reorganization under paragraph (d)(1) or
paragraph (d)(4) of Section 7312 that is fair and equitable to policyholders.
3. APPROVAL OF PLAN.
(a) Adoption by Board of Directors. Prior to
submission of the Plan to the policyholders, the Company's Board of Trustee's
shall adopt the Plan in compliance with paragraph (e)(1) of Section 7312.
(b) Mailing of Notices and Other Information. As soon
as practicable after the Plan is adopted by the Company's Board of Directors,
the Company shall mail to appropriate policyholders notices relating to the
public hearing with respect to the Plan and the policyholders vote on a proposal
to approve the Plan and such other explanatory information as the Superintendent
shall approve or require, which shall comply with the applicable provisions of
Section 7312, including paragraph (e)(3), subsection (i) and paragraph (k)(1).
In addition, the Company shall publish notice of the public hearing in
compliance with subsection (i) of Section 7312.
87
(c) Public Hearing. The Superintendent shall hold a
public hearing as provided in subsection (i) of Section 7312.
(d) Approval by Policyholders. At least thirty days
after notice of the policyholder vote is mailed to policyholders, but not later
than ninety days after the approval of the Plan by the Superintendent, a
proposal to approve the Plan shall be submitted to a vote of the policyholders
in compliance with subsection (k) of Section 7312. If the Plan is approved by
the policyholders and the Superintendent, the Company shall promptly submit the
appropriate documents and certifications to the Superintendent in compliance
with paragraph (k)(11) of Section 7312.
(e) Filing of Plan. If the Plan is approved by the
policyholders and the Superintendent, the Company shall, as soon as practicable
thereafter, file the Plan with the Superintendent and the Clerk of New York
County in compliance with subsection (1) of Section 7312.
4. EFFECTIVENESS OF PLAN.
(a) Determination of Plan Effective Date. The Plan
Effective Date shall be as indicated in the Plan as the earlier of (i) the
closing date of the IPO or (ii) a stated date which shall not be later than six
months after the date on which the Plan is approved by the Superintendent
pursuant to subsection (j) of Section 7312.
(b) Amendment of Holding Company Charter and By-Laws.
Prior to the Plan Effective Date, the charter and by-laws of the Holding Company
shall be amended and restated, in a manner mutually satisfactory to the Company
and the Investors, so as to permit the consummation of the Plan and the
Transactions contemplated by the Investment Agreement.
(c) The Reorganization. On the Plan Effective Date:
(i) the Company shall by operation of
Section 7312 become a stock insurer;
(ii) the Company's charter and by-laws shall
be amended and restated in accordance with the Plan;
(iii) the Policyholders' Membership Interest
shall be extinguished in accordance with Section 7312, and Eligible
Policyholders shall receive all the Holding Company Common Stock to be
issued as of the Plan Effective Date except for shares of the Holding
Company Common Stock to be issued as provided in clause (vii) below;
(iv) cash or Policy Credits (defined herein)
shall be paid or allocated to certain Eligible Policyholders as
provided in section 8 hereof;
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88
(v) the Company shall issue shares of its
common stock, par value $1.00 per share, representing all of its issued
and outstanding common stock to the Holding Company;
(vi) the Company shall surrender to the
Holding company and the Holding Company shall cancel all shares of
Holding Company Common Stock previously issued by the Holding Company
to the Company and held by the Company immediately prior to the Plan
Effective Date; and
(vii) if there is an IPO on the Plan
Effective Date, the Holding Company shall issue Holding Company Common
Stock in the IPO in exchange for cash.
The Company, as reorganized, shall be a
continuation of the corporate existence of the Company, and the
Company's name shall as indicated in the Plan. The Company and the
Holding Company shall use the proceeds of the sale of the Notes and
the Convertible Preferred Stock and the proceeds of the IPO (in excess
of an amount equal to the sum of the Transaction Expenses and the
aggregate value of cash and Policy credits paid or allocated by the
Company as provided in Section 8 hereof) for the support of the
Company's life insurance operations. The parties acknowledge that in
connection with the Superintendent's order approving the Plan, the
Superintendent may require the Holding Company to contribute the Notes
to the Company.
5. THE EXCHANGE OF NOTES FOR HOLDING COMPANY SECURITIES;
PURCHASE OF WARRANT SHARES.
After the Demutualization Date, at the option of the
Investors, the Notes shall be exchanged for Holding Company Notes, on the terms,
conditions and dates set forth in section 1.4 of the Investment Agreement. After
the Demutualization Date subject to the conditions contained therein, the
Holding Company shall sell shares of Convertible Preferred Stock to the
Investors, at the request of the Company, as provided in section 1.3 of the
Investment Agreement.
In addition, the Holders shall have the right to purchase the
Warrant Shares on the terms and conditions and on the date set forth in the
Warrants issued pursuant to Section 1.2 of the Investment Agreement.
6. ELIGIBLE POLICYHOLDERS.
The Plan shall specify a fair and equitable method for
determining the class of policyholders who shall be entitled to receive
consideration under the Plan ("Eligible Policyholders"). Each Eligible
Policyholder shall be allocated consideration on a fair and equitable basis.
7. PAYMENT OF CONSIDERATION OTHER THAN HOLDING COMPANY COMMON
STOCK.
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The Plan may contain a provision which provides that an
Eligible Policyholder shall receive cash or Policy Credits in lieu of Holding
Company Common Stock if such Eligible Policyholder is entitled to receive fewer
than a certain minimum number of shares of Holding Company Common Stock or meets
such other fair and equitable criteria that are specified in the Plan; provided,
however, that the aggregate amount of consideration payable to eligible
Policyholders in cash and Policy Credits in lieu of Holding Company Common Stock
pursuant to the Plan shall not exceed a specified dollar amount.
Whenever consideration is to be paid to an Eligible
Policyholder in cash or Policy Credits pursuant to the Plan in lieu of shares of
Holding Company Common Stock, the amount of such consideration shall be equal to
the number of shares otherwise payable to such Eligible Policyholder multiplied
by the IPO Price or in the absence of an IPO, a percentage of book value (not to
exceed 70%) as indicated in the Plan. "Policy Credits" shall mean additional
death benefits, premium credits, additional annuity benefits or increases in
policy account value.
8. IPO
The Holding Company shall issue shares of Holding Company
Common Stock in the IPO. The proceeds of the IPO shall be used to provide funds
for the cash payments to Eligible Policyholders, to cover the Transaction
Expenses and for additional equity capital.
9. METHOD OF OPERATION FOR PARTICIPATING BUSINESS.
(a) Establishment of Closed Block. The Company shall
establish a closed block of participating policies and contracts pursuant to
paragraph (d)(5) of Section 7312 (the "Closed Block") that shall consist of
those participating life and health insurance and annuity policies and contracts
in force on the Plan Effective Date and specified in the Plan.
(b) Allocation of Assets to Closed Block. The Company
shall allocate assets to the Closed Block in an amount which together with
anticipated revenue from the policies and contracts included in the Closed Block
is reasonably expected to be sufficient to support such business including, but
not limited to, provisions for payment of claims, expenses and taxes, and to
provide for continuation of dividend scales in effect on the date of adoption of
the Plan by the Company's Board of Trustees, if the experience underlying such
scales continues, Assets shall be allocated to the Closed Block as of December
31, 1997, with appropriate adjustments from such date to the Plan Effective
Date.
Invested assets shall be allocated to the Closed
Block on an appropriate basis stated in the Plan by transferring from the
general account of the Company invested assets in the amount required to be
allocated to the Closed Block. X.X. Xxxxxx loans on policies included in the
Closed Block, shall be included in their entirety in the Closed Block (and
policy loans on policies not in the Closed Block shall be excluded in their
entirety). Investments in operating subsidiaries of the Company shall be
excluded from the Closed Block.
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(c) Operation of the Closed Block. The Closed Block shall be
operated for the exclusive benefit of the policies and contracts included
therein for policyholder dividend purposes only, which dividends shall be
supported solely by assets allocated to the Closed Block, in accordance with the
following principles and others that may be specified in the Plan:
(i) All cash flow of the Closed Block business and
initial Closed Block assets and of the investment and reinvestment
thereof shall be allocated to the Closed Block and shall constitute the
Closed Block assets at all times following the Plan Effective Date.
(ii) Dividends, interest crediting rates and
nonguaranteed premiums on Closed Block business shall be adjusted to
reflect changes in experience after 1997, which adjustments may contain
provision for smoothing experience over a period of time. Negative cash
flow in the Closed Block shall be supported by internal loans from the
rest of the general account, which loans shall be subject to a
reasonable rate of interest.
(iii) The Closed Block shall not be charged for any
Federal tax liability accrued with respect to operations of the Company
prior to January 1, 1998.
10. COSTS AND EXPENSES.
The Company and the Holding Company shall deliver to the
Superintendent a written undertaking in compliance with subsection (p) of
Section 7312 specifying that the Holding Company (or the Company, if the Company
is not demutualized) shall bear all costs and expenses incurred by the Company,
the Holding Company and, other than normal operating expenses, the NYID in
connection with the Plan. The Investors shall not be liable for the payment or
reimbursement of any such costs and expenses.
11. LISTING OF HOLDING COMPANY COMMON STOCK.
The Holding Company shall list the Holding Company Common
Stock on a national securities exchange or on the NASDAQ National Market System,
effective as of the Plan Effective Date. Such listing shall be in satisfaction
of any duty the Company or the Holding Company may have to encourage and assist
in the establishment of a public market for shares of Holding Company Common
Stock.
12. OPERATION OF THE COMPANY AFTER REORGANIZATION.
A plan of operation for the Company including actuarial
projections for a ten-year period shall be filed with the Plan.
13. AMENDMENT OF WITHDRAWAL OF PLAN.
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The Company's Board of Directors shall be permitted to amend
or withdraw the Plan at any time prior to the Plan Effective Date only in
compliance with subsection (f) of Section 7312.
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Exhibit 2A
Form of Fiscal Agency Agreement
See Exhibit 10.3 to MONY S-1 Registration Statement
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Exhibit 2-B
Form of Warrant
See Exhibit 4.3 to MONY S-1 Registration Statement
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EXHIBIT 2-C
Terms of
Holding Company Notes
Amount: Up to $115 million. The Holding Company Notes shall
be exchanged on the basis of one dollar of principal
amount for each outstanding dollar of principal
amount of Notes exchanged.
Issuer: Holding Company.
Maturity: Fifteen years from date of issuance.
Coupon: 9-1/2% per annum, unless the Notes have a different
interest rate, in which case the interest rate shall
be identical to the Notes. The Holding Company Notes
shall bear interest from and including the last date
on which interest on the Initial Notes was paid.
Interest June 30 and December 31 of each year, commencing the
Payment Dates: first such date after issuance.
Form: Fully registered, in denominations of $1,000 and
integral multiples thereof.
Optional
Redemption: None.
Sinking Fund: None.
Ranking: Subordinated to Senior Debt of the Holding Company as follows: Upon any
payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Holding Company, the holders of Senior Debt will
first be entitled to receive payment in full of principal of (and premium, if
any) and interest, if any, on such Senior Debt before the holders of the Holding
Company Notes will be entitled to receive or retain any payment in respect of
the principal of or interest on the Holding Company Notes. In the event of the
acceleration of the maturity of any Holding Company Notes, the holders of all
Senior Debt outstanding at the time of such acceleration will first be entitled
to receive payment in full of all amounts due thereon before the holders of the
Holding Company Notes will be entitled to receive any payment upon the principal
of or interest on the Holding Company Notes.
No payments on account of principal or interest in
respect of the Holding Company Notes may be made if
there shall have occurred and be continuing a default
in any payment with respect to Senior Debt, or an
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event of default with respect to any Senior Debt
resulting in the acceleration of the maturity
thereof, or if any judicial proceeding shall be
pending with respect to any such default.
"Senior Debt" means the principal of (and premium, if
any) and interest, if any (including interest
accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the
Holding Company to the extent that such claim for
post-petition interest is allowed in such
proceeding), on Indebtedness of the Holding Company
(other than Indebtedness described in clause (vi) of
the definition of Indebtedness), whether incurred on
or prior to the date of issuance of the Holding
Company Notes or thereafter incurred, unless, in the
instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is
provided that such obligations are not superior in
right of payment to the Holding Company Notes or to
other Indebtedness which is pari passu with, or
subordinated to, the Holding Company Notes.
"Indebtedness" means (without duplication), with
respect to any person, whether recourse is to all or
a portion of the assets of such person and whether or
not contingent, (i) every obligation of such person
for money borrowed, (ii) every obligation of such
person evidenced by bonds, debentures, notes or other
similar instruments, including obligations incurred
in connection with the acquisition of property,
assets or businesses, (iii) every reimbursement
obligation of such person with respect to letters of
credit, bankers' acceptances or similar facilities
issued for the account of such person (other than in
respect of such facilities issued to secure
reinsurance or retrocession agreements), (iv) every
obligation of such person issued or assumed as the
deferred purchase price of property or services
(including securities repurchase agreements but
excluding trade accounts payable or accrued
liabilities arising in the ordinary course of
business which are not overdue or which are being
contested in good faith), (v) every capital lease
obligation of such person, (vi) all preferred stock
issued by such person and (vii) every obligation of
the type referred to in clauses (i) through (v) of
another person and all dividends of another person
the payment of which, in either case, such person has
guaranteed or is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise. The
"amount" or "principal amount" of Indebtedness at any
time of determination represented by (a) any
contingent Indebtedness, shall be the maximum
principal amount hereof, (b) any Indebtedness issued
at a price that is less than the principal amount at
maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance
with generally accepted accounting principles, and
(c) any preferred stock, shall be the maximum
voluntary or involuntary liquidation preference plus
accrued and unpaid dividends in respect thereof, in
each case as of such time of determination.
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Covenants: The Indenture governing the Holding Company Notes
shall contain customary covenants for comparable
public insurance holding company indebtedness
relating to the assumption of the Holding Company
Notes by a successor in a merger, consolidation or
sale of assets, and limitations on liens upon or
disposition of certain property of the Holding
Company, including covenants requiring the payment of
principal and interest, maintenance of existence and
properties and payment of taxes and other claims.
Events of Default: (i) Failure to pay principal when due;
(ii) Failure to pay interest when due, continued
for 30 days;
(iii) Failure to comply with any covenant
contained in the Indenture continued for 30
days after notice to the Holding Company by
the Trustee or the holders of at least 25%
in aggregate principal amount of Holding
Company Notes;
(iv) Failure to pay when due, or acceleration of
the payment of principal of, any other
indebtedness of the Holding Company or any
Significant Subsidiary having, individually
or in the aggregate, an outstanding
principal amount of at least $25 million;
(v) Bankruptcy, insolvency, etc. of the Holding
Company or any Significant Subsidiary; and
(vi) Other customary events of default.
Upon the occurrence and continuance of an Event of
Default, the Trustee or the holders of at least 25%
in aggregate principal amount of the Holding Company
Notes may declare the principal of all of the Holding
Company Notes to be immediately due and payable
(except in the case of the bankruptcy event of
default, in which case the Holding Company Notes
shall automatically become due and payable).
Modification Modifications and amendments of the Indenture may be
and Waiver: made with the consent of the holders of a majority in
aggregate principal amount of the Holding Company
Notes; provided, however, that no such modification
or amendment may, without the consent of the holder
of each Exchanged Initial Note affected thereby, (a)
change the stated maturity of the principal of, or
any installment of interest on, any Note, (b) reduce
the principal amount of, or interest on, any Note,
(c) change the place or currency of payment, (d)
impair the right to institute suit for the
enforcement of any payment or with respect to any
Note, (e) reduce the above-stated percentage of
Holding Company Notes necessary to modify or amend
the Indenture, (f) modify any provisions of the
Indenture relating to the modification and amendment
of the Indenture or the waiver of past defaults, or
(g) modify the Subordination provisions in a manner
adverse to the holder.
The holders of a majority in aggregate principal
amount of the Holding Company Notes may waive any
past default under the Indenture, except a default in
the payment of principal or interest.
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Registration Rights: In the event the Holding Company Notes have not been
registered under the Securities Act prior to
issuance, as soon as practicable after the issuance
of the Holding Company Notes the Holding Company will
file with the SEC a registration statement relating
to an exchange offer pursuant to which the Holding
Company will offer to exchange notes that are
substantially identical to the Holding Company Notes
for the outstanding Holding Company Notes and will
effect the exchange offer. In the event that (i)
applicable interpretations of the staff of the SEC do
not permit the Holding Company to effect the exchange
offer or (ii) if any Holding Company Notes held by
any holder would not be freely transferable under the
Securities Act upon consummation of the exchange
offer, as soon as practicable the Holding Company
will, in lieu of (or, in the case of clause (ii), in
addition to) effecting the exchange offer, file a
registration statement relating to a shelf
registration of the Holding Company Notes for resale
by the holders thereof and will cause such
registration statement to remain effective for a
period of up to three years after the date of
original issuance of the Holding Company Notes
(subject to blackouts not to exceed 60 days in any 12
month period). In the event that (i) the registration
statement relating to the exchange offer or the
resale registration, as applicable, has not become
effective within 120 days following the date of
original issuance of the Holding Company Notes, (ii)
the exchange offer has not been consummated within 35
days after the effective date of the exchange offer
registration statement or (iii) any registration
statement required by the foregoing provisions ceases
to be effective (except as permitted) without being
succeeded immediately by an additional effective
registration statement, then the per annum interest
rate on the Holding Company Notes will increase by
0.5% for the period from the occurrence of any such
event until such time as no such event is applicable.
Indenture: To be issued under an indenture governed by the Trust
Indenture Act of 1939, as amended.
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EXHIBIT 2-D
Terms of
Convertible Preferred Stock
Issuer: Holding Company.
Liquidation Preference: In the event of the liquidation, dissolution or
winding up of the Holding Company, the holders of the
Convertible Preferred Stock will be entitled to
receive a liquidation preference equal to $100 per
share plus accrued and unpaid dividends to the date
of distribution. In the event the assets available
for distribution to the holders of the Convertible
Preferred Stock and stock ranking on a parity with
the Convertible Preferred Stock are insufficient to
pay the respective preferential amounts in full, such
assets shall be distributed ratably in proportion to
the preferential amounts payable thereon.
Amount: 1,000,000 shares.
Dividends: Cumulative from the date of issuance payable
quarterly in cash at a rate equal to the ten-year
Treasury Rate (determined in accordance with standard
market practice as reported in the Federal Reserve
Bank of New York "Composite 3:30 P.M. Quotations for
U.S. Government Securities") in effect on the date of
issuance.
Mandatory Redemption: The Holding Company shall be required to redeem all
outstanding shares of the Convertible Preferred Stock
on the earlier of (i) the tenth anniversary of the
date of issuance of the Convertible Preferred Stock
or (ii) December 31, 2013, at a price equal to $100
per share plus accumulated and unpaid dividends to
the redemption date (the "Mandatory Redemption
Price"). The Mandatory Redemption Price is payable in
cash or, at the option of the Holding Company but
subject to the conditions described in the following
sentences, in newly issued fully paid and
non-assessable shares of Holding Company Common
Stock. The number of shares of Holding Company Common
Stock to be delivered in payment of the Mandatory
Redemption Price in lieu of cash shall be determined
by dividing a number that is equal to 110% of the
Mandatory Redemption Price by the value of the
Holding Company Common Stock, which for this purpose
shall be equal to the average of the Closing Price
(as defined in the Warrant) of the Holding Company
Common Stock on the 20 Trading Days (as defined in
the Warrant) immediately preceding the redemption
date. Payment of the Mandatory Redemption Price may
not be made in Holding Company
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Common Stock unless the shares of Holding Company
Common Stock to be delivered (i) either have been
registered under the Securities Act of 1933 prior to
delivery or will be freely transferable without being
subject to any transfer restrictions under the
Securities Act of 1933 upon issuance and delivery,
(ii) have been listed or approved for quotation upon
issuance on the principal stock exchange or
inter-dealer quotation system on which the Holding
Company Common Stock is then approved for listing or
quotation and (iii) either have been duly registered,
qualified or approved for issuance and delivery under
any applicable state blue sky, securities or
insurance laws prior to issuance and delivery or will
be freely transferable without being subject to any
transfer restrictions under any such laws without
such registration, qualification or approval, as
applicable.
Optional Redemption: The Holding Company may redeem the Convertible
Preferred Stock at its option, in whole or in part,
at any time after the third anniversary of the
issuance of the Convertible Preferred Stock, upon not
less than 30 or more than 60 days' notice, at a price
equal to $100 per share plus accumulated and unpaid
dividends to the redemption date, if the Closing
Price of the Holding Company Common Stock exceeds
200% of the then applicable conversion price of the
Convertible Preferred Stock for a period of at least
20 consecutive Trading Days ending within 10 days of
the date on which notice of such redemption is given.
Conversion Rights: The Convertible Preferred Stock will be convertible
at the option of the holder at any time after the
date of original issuance unless previously redeemed
at an initial conversion price equal to the initial
Exercise Price of the Warrant. The conversion price
will be subject to the same anti-dilution adjustments
as the Exercise Price of the Warrant as well as the
one-time adjustment described below under "Special
Adjustment to Conversion Price."
Special Adjustment to
Conversion Price: If on the third anniversary of the original issuance
of the Convertible Preferred Stock the conversion
price is greater than 70% of the then book value per
share of Holding Company Common Stock determined in
accordance with GAAP on such date, the conversion
price shall be reset at such time so that the
conversion price will be equal to 70% of such book
value per share. After the resetting of the
conversion price, if any, the conversion price will
continue to be
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subject to the same anti-dilution adjustments
described above under "Conversion Rights."
Voting Rights: Except as indicated below or otherwise required by
law, holders of Convertible Preferred Stock will have
no voting rights. If (i) at any time the equivalent
of six quarterly dividends payable on the Preferred
Stock are accrued and unpaid, or (ii) the Holding
Company fails to make any payment upon mandatory
redemption of the Convertible Preferred Stock (each
of (i) and (ii) being a "Triggering Event"), (a) the
number of directors of the Holding Company will be
increased by two and, subject to obtaining any
necessary regulatory approvals, which the Holding
Company agrees to use its best efforts to obtain as
soon as practicable after the occurrence of a
Triggering Event, the holders of all outstanding
shares of Convertible Preferred Stock, voting
separately as a class, will be entitled to elect the
additional two directors and (b) the dividend rate on
the Convertible Preferred Stock shall automatically
increase by 100 basis points for the period from and
including the date of the occurrence of such
Triggering Event. The two additional directors shall
serve and the increased dividend rate shall be
payable until all dividends accrued and unpaid have
been paid or declared and funds set aside to provide
for payment in full or the Holding Company fulfills
its mandatory redemption obligation, as the case may
be.
In addition, without the vote or consent of the holders of at least a majority
of the shares of Convertible Preferred Stock then outstanding, the Holding
Company may not (a) create or issue or increase the authorized number of shares
of any class or series of stock ranking prior to the Convertible Preferred Stock
either as to dividends or upon liquidation, dissolution or winding up, or any
security convertible into or exercisable or exchangeable for such stock or (b)
amend, alter or repeal any of the provisions of the Certificate of Incorporation
so as to affect adversely any right, preference, privilege or voting power of
the Convertible Preferred Stock or the holders thereof; provided however, that
any increase in the amount of authorized preferred stock or the creation and
issuance of any other class, of preferred stock, or any increase in the amount
of authorized shares of such class or of any other class of preferred stock, in
each case ranking on a parity with or junior to the Convertible Preferred Stock
with respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up, will not be deemed to affect adversely
such rights, preferences or voting powers.
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Exhibit 3
Form of Registration Right Agreement
See Exhibit 10.2 to MONY S-1 Registration Statement
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Private Resale Terms
Disclosure Document: From and after the date following six months after
the First Closing Date, the Company shall prepare a
disclosure document to be used in connection with
private resales of the Company Notes pursuant to
Section 1.6(b) which shall be acceptable to the
holders selling Company Notes and which shall include
narrative and financial disclosure concerning the
Company and its operations substantially consistent
in scope with that used in connection with the sale
of the Company's 11-1/4% Surplus Notes due 2024.
Management Assistance: The Company shall make its senior management
reasonably available to the selling holders and
prospective purchasers of the Company Notes and
provide reasonable assistance to the selling holders
in the marketing of the Company Notes consistent with
that provided in connection with the sale of the
Company's 11-1/4% Surplus Notes due 2024.
Underwritten Offerings: The selling holders shall have the right to sell in
unregistered underwritten offerings and to require
that the Company and the selling holders enter into a
purchase agreement. The terms and conditions of, and
the obligations of the Company with respect to, any
such underwritten offerings shall be consistent with
those contemplated by the Registration Rights
Agreement and the underwriting of the Company's
11-1/4% Surplus Notes due 2024..
Indemnification: Whether or not a purchase agreement is entered into,
the selling holders shall have the right to require
that the Company and the selling holders enter into
an agreement providing for reciprocal indemnification
and contribution with respect to any disclosure
document prepared and used in connection with any
private resale that is consistent with the
indemnification and contribution provisions contained
in Section 2.9 of the Registration Rights Agreement.
Opinions: The Company shall provide or cause to be provided to
the purchasers an opinion of counsel as to the
validity and enforceability of the Company Notes
being sold.
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EXHIBIT 5-A
Opinion of Senior Vice President
and General Counsel of the Company at First Closing
(i) The Company and each of its Subsidiaries has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of its respective jurisdiction of
incorporation, with full corporate power and authority to own its
properties and conduct its business as currently conducted and to
perform its obligations under the Contracts to which its is a party.
(ii) Each of the Company, the Holding Company and
each other Significant Subsidiary of the Company is duly qualified as a
foreign corporation or partnership to transact business and is in good
standing in each jurisdiction in which it owns or leases substantial
properties or in which the conduct of its business requires such
qualification, except where the failure to be so qualified and in good
standing would not, in any case or in the aggregate, have a Material
Adverse Effect.
(iii) All of the issued shares of capital stock of
each Subsidiary of the Company have been duly and validly authorized
and issued, are fully paid and non-assessable and (except for
directors' qualifying shares) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims.
(iv) Each of the Company and MLOA is duly licensed as
an insurance company in its respective jurisdiction of incorporation
and is duly licensed or authorized as an insurer in each other
jurisdiction where it is required to be so licensed or authorized to
conduct its business as currently conducted or proposed to be
conducted, in each case with such exceptions, individually or in the
aggregate, as would not have a Material Adverse Effect; each of the
Company and MLOA is in compliance with the requirements of its
Applicable Insurance Laws, and has filed all Notices required to be
filed thereunder, in each case, with such exceptions, individually or
in the aggregate, as would not have a Material Adverse Effect; and,
except as set forth on Schedule 3.1(o), neither the Company nor MLOA
has received any notification from any insurance regulatory authority
to the effect that any additional Approval from such insurance
regulatory authority is needed to be obtained by the Company or MLOA in
any case where it could be reasonably expected that obtaining such
Approvals or the failure to obtain such Approvals would have a Material
Adverse Effect.
(v) No Approval is required to be obtained, made or
given, and no Notice is required to be filed, by or with respect to the
Company, the Holding Company or any other Subsidiary of the Company in
connection with the execution and delivery by the Company or the
Holding Company, as the case may be, of the Transaction Agreements, the
issue and sale of the Notes and the Warrants, the issue and delivery of
the Holding Company Notes and the Convertible Preferred Stock, the
issue and delivery in exchange for Warrants or Convertible Preferred
Stock of the shares of Holding Company Common Stock to be issued and so
delivered by the Holding Company pursuant thereto, the
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adoption and consummation of a Plan, the performance by the Company,
the Holding Company or any other Subsidiary of the Company of their
respective obligations under the Transaction Agreements, or the
consummation of the Transactions, other than (a) under the HSR Act with
respect to the acquisition of Holding Company Common Stock in exchange
for Warrants or Convertible Preferred Stock, (b) under the insurance
laws of the States of New York and Arizona with respect to the
effectuation of a Plan and the IPO and the acquisition of Holding
Company Common Stock in exchange for Warrants or Convertible Preferred
Stock, (c) registration of the shares of Holding Company Common Stock,
the Holding Company Notes and the Convertible Preferred Stock under the
Securities Act and the Exchange Act (if applicable) and any securities
and insurance securities laws of any State with respect to the issuance
of the Holding Company Notes and Convertible Preferred Stock and the
effectuation of a Plan and the IPO, (d) filings, at any time, of tax
returns, tax reports and tax information statements and (e) as
otherwise specified on Schedule 3.1(d); and other than the
Superintendent, no Governmental Authority has authority to disapprove
any payment on the Notes under any Applicable Insurance Laws.
(vi) None of the execution and delivery of any of the
Investment Agreement, the compliance by the Company and the Holding
Company, as applicable, with all of the provisions of the Transaction
Agreements and the consummation of any of the Transactions will (i)
conflict with or result in a breach of any provision of the Certificate
of Incorporation or By-Laws (or other organizational documents) of the
Company, the Holding Company or any other Subsidiary of the Company
(assuming, with respect to the Transactions to be consummated after the
First Closing, the amendment of such organizational documents of the
Company and of the Holding Company as contemplated by Exhibit 1 and by
a Plan) or (ii) except (A) with respect to the termination of the
investment advisory contracts entered into by the Company or any
Subsidiary of the Company as an investment adviser that are subject to
the Investment Advisers Act or the Investment Company Act, (B) with
respect to (1) any consent or approval required under any of the real
estate joint venture agreements, real estate leases, mortgage loans and
other real estate related agreements set forth in Schedule 3.1(e) and
(2) any Real Property Approvals, and (C) as otherwise specified in
Schedule 3.1(e), result in any conflict with, breach of or default
(with or without notice or lapse of time or both) under, or give rise
to any right of termination, cancellation or acceleration of any
obligation or loss of any benefit under, or result in the imposition of
any Liens on any of their respective properties or assets under, or
require any consent or approval which has not been obtained with
respect to, (1) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement or instrument or permit,
concession, franchise or license to which the Company, the Holding
Company or any other Subsidiary of the Company is a party or by which
the Company, the Holding Company or any other Subsidiary of the Company
or any of their respective properties or assets may be bound, except
where such conflict, breach or default, termination, cancellation or
acceleration, imposition or failure to obtain any consent or approval
referred to in this clause (1) would not in any case or in the
aggregate have a Material Adverse Effect, or (2) any order, decree or
injunction or, assuming that the Approvals referred to in clauses (a)
through (e) of paragraph (v) above have been obtained or made, any law,
rule or regulation applicable to the Company, the Holding Company or
any other Subsidiary of the
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Company or any of their respective properties or assets, with such
exceptions, individually or in the aggregate, as would not be
reasonably likely to (x) have a Material Adverse Effect, (y) affect the
validity of any of the Subject Securities or (z) prevent the
consummation of any of the Transactions.
(vii) Each Broker-Dealer Subsidiary and each
Investment Adviser Subsidiary is duly licensed or registered as a
broker-dealer or investment adviser, as the case may be, in each
jurisdiction (including the United States) where it is required to be
so licensed or registered to conduct its business as currently
conducted or as proposed to be conducted, in each case, with such
exceptions, individually or in the aggregate, as would not have a
Material Adverse Effect; each Broker-Dealer Subsidiary and Investment
Adviser Subsidiary has all other necessary Approvals of and from all
applicable regulatory authorities to conduct their respective
businesses as currently conducted or as proposed to be conducted, in
each case with such exceptions, individually or in the aggregate, as
would not have a Material Adverse Effect; except as set forth on
Schedule 3.1(o), none of the Broker-Dealer Subsidiaries or Investment
Adviser Subsidiaries has received any notification from any applicable
regulatory authority to the effect that any additional Approvals from
such regulatory authority are needed to be obtained by such subsidiary
in any case where it could be reasonably expected that (x) any of the
Broker-Dealer Subsidiaries or Investment Adviser Subsidiaries would in
fact be required either to obtain any such additional Approvals or
cease or otherwise limit engaging in certain business and (y) the
process of obtaining such Approvals or limiting such business would
have a Material Adverse Effect; and each Broker-Dealer Subsidiary and
Investment Adviser Subsidiary is in compliance with the requirements of
the applicable broker-dealer and investment adviser laws and
regulations of each jurisdiction which is applicable to such
subsidiary, and has filed all Notices required to be filed thereunder,
in each case with such exceptions, individually or in the aggregate, as
would not have a Material Adverse Effect.
(viii) Each Insurance Company possesses an Insurance
License in each State or other jurisdiction in which such Insurance
Company is required to possess an Insurance License, except where the
failure to possess Insurance Licenses would not, individually or in the
aggregate, have a Material Adverse Effect. All such Insurance Licenses
are in full force and effect and neither the Company nor any Subsidiary
of the Company has received any notice of any event, inquiry,
investigation or proceeding that would reasonably be expected to result
in the suspension, revocation or limitation of any such Insurance
License, except where the failure to possess Insurance Licenses would
not, individually or in the aggregate, have a Material Adverse Effect,
and to the knowledge of the Insurance Companies, there is no
sustainable basis for any such suspension, revocation or limitation.
(ix) Except as set forth in Schedule 3.1(n) and other
than Litigation relating to taxes, there is no Litigation now pending,
or, to the knowledge of such counsel, threatened, against or relating
to the Company or any of its Subsidiaries, or any director or officer
of the Company or any of its Significant Subsidiaries in his capacity
as such, or the assets, properties or business of the Company or any of
its Subsidiaries (whether or not covered by insurance) (A) involving a
claim made prior to the date of the Investment
20
106
Agreement of more than $5,000,000, (B) which could adversely affect the
ability of the Company or the Holding Company to consummate any of the
Transactions, (C) which could reasonably be expected to have a Material
Adverse Effect, (D) involving any former officers or directors of the
Company or any of its Subsidiaries as a party adverse to the Company or
any of its Subsidiaries, (E) involving criminal proceedings or
investigations against or targeting the Company, any of its
Subsidiaries or any of such directors or officers in their capacity as
such, (F) involving extraordinary regulatory proceedings, (G) adverse
to the Company or any sponsoring Subsidiaries involving any claims,
whether individual or class action, relating to life insurance or
annuity-related sales practices, including "churning", "vanishing
premium", "replacement", "policy illustration" or similar claims or (H)
involving any investment advisory client of the Company or any of its
Subsidiaries with assets under management in excess of $50,000,000 and
adverse to the Company or any of its Subsidiaries.
(x) Except as set forth in Schedule 3.1(n), neither
the Company nor any of its Subsidiaries nor any of their respective
officers or directors is subject to any permanent, preliminary or
temporary injunction or prohibitive order, judgment or decree of any
Governmental Authority which could adversely affect the ability of the
Company or the Holding Company to consummate the Transactions or which
(x) restricts in any material respect the ability of the Company or of
any Significant Subsidiary to conduct its business or to engage in any
other business or (y) enjoins or prohibits any officer or director of
the Company or of any Significant Subsidiary from taking, or requires
any of such officers or directors to take, in his capacity as such, any
action of any kind or enjoins or prohibits any such officer or director
from violating any law or regulation.
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EXHIBIT 5-B
Opinion of Xxxxx Xxxxxxxxxx
at First Closing
(i) The Company has been duly organized and is
validly existing as a mutual life insurance company in good standing
under the laws of the State of New York, with corporate power and
authority to own its properties and conduct its business as currently
conducted.
(ii) The Holding Company has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of the State of Delaware.
(iii) Each of the Company and the Holding Company has
full corporate power and authority to execute and deliver the
Transaction Agreements and such other instruments to be executed by it
pursuant to the Investment Agreement and to perform its obligations
thereunder in accordance with their respective terms; the Company has
full corporate power and authority to issue and sell the Notes and the
Holding Company has full corporate power and authority to issue and
sell the Warrants, to issue the Holding Company Notes and the
Convertible Preferred Stock and to perform its obligations thereunder
in accordance with their respective terms; each of the Company and the
Holding Company has full corporate power and authority to consummate a
Plan, subject to approval thereof by the Superintendent and the
policyholders of the Company in accordance with Section 7312 and any
changes in their respective certificates of incorporation or by-laws
provided for in a Plan.
(iv) Each of the Company and the Holding Company has
taken all necessary corporate action to duly and validly authorize its
execution and delivery of the Transaction Agreements and the other
instruments to be executed by it pursuant to the Investment Agreement
and the consummation of the Transactions (except with respect to the
adoption of a Plan by the Board and the approval of the IPO); each of
the Investment Agreement and the Registration Rights Agreement has been
duly executed and delivered by the Company and the Holding Company and
constitutes a valid and legally binding obligation of each of the
Company and the Holding Company, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, rehabilitation, liquidation,
reorganization, moratorium and similar laws of general applicability
relating to creditors' rights and to general equity principles,
regardless of whether enforceability is considered in a proceeding at
law or in equity; provided, however, that such counsel expresses no
opinion on the enforceability of Section 2.9 of the Registration Rights
Agreement.
(v) The provisions of Section 203 of the General
Corporation Law of the State of Delaware will not apply to the
Investors or their Subsidiaries or to the transactions contemplated by
Investment Agreement.
108
(vi) The Notes have been duly authorized, executed,
issued and delivered and constitute valid and legally binding
obligations of the Company enforceable in accordance with their terms
and entitled to the benefits of the Fiscal Agency Agreement, subject to
bankruptcy, insolvency, rehabilitation, liquidation, reorganization,
moratorium and similar laws of general applicability relating to
creditors' rights or rights of creditors of insurance companies
generally and to general equity principles, regardless of whether
enforceability is considered in a proceeding at law or in equity,
including, without limitation, Section 1307 of the New York Insurance
Law, free and clear of all Liens, except for those arising out of any
action or inaction of the holders thereof.
(vii) The Fiscal Agency Agreement has been duly
authorized, executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Fiscal Agent, constitutes
a valid and legally binding instrument, subject to bankruptcy,
insolvency, rehabilitation, liquidation, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights or rights of creditors of insurance companies
generally and to general principles of equity, regardless of whether
enforceability is considered in a proceeding at law or in equity,
including, without limitation, Section 1307 of the New York Insurance
Law.
(viii) The Warrants have been duly authorized,
executed, issued and delivered by each of the Holding Company and the
Company and constitute valid and legally binding obligations of each of
the Holding Company and the Company, subject to bankruptcy, insolvency,
rehabilitation, liquidation, reorganization, moratorium and similar
laws of general applicability relating to creditors' rights or rights
of creditors of insurance companies generally and to general equity
principles, regardless of whether enforceability is considered in a
proceeding at law or in equity, free and clear of all Liens, except for
those arising out of any action or inaction of the holders thereof; and
the shares of Holding Company Common Stock issuable upon exercise of
the Warrants have been duly authorized and reserved for issuance upon
such exercise.
(ix) No Approval of or with any United States or New
York court or insurance regulatory agency or other governmental body
having jurisdiction over the Company or its Subsidiaries known to such
counsel is required to be obtained, made or given, and no Notice is
required to be filed with any such court or governmental body, by or
with respect to the Company, the Holding Company or any other
Subsidiary of the Company in connection with the execution and delivery
by the Company and the Holding Company of the Transaction Agreements,
the issue and sale of the Notes and the Warrants, the issue and
delivery of the Holding Company Notes and the Convertible Preferred
Stock, the issue and delivery in exchange for Warrants or Convertible
Preferred Stock of the shares of Holding Company Common Stock to be
issued and so delivered by the Holding Company pursuant thereto, the
adoption and consummation of a Plan, the performance by the Company,
the Holding Company or any other Subsidiary of the Company of their
respective obligations under the Transaction Agreements, or the
consummation of the Transactions, other than (a) under the HSR Act with
respect to the acquisition of Holding Company Common Stock in exchange
for Warrants or Convertible Preferred Stock, (b) under the insurance
laws of the States of New York and Arizona with respect to the
effectuation of a Plan and the IPO and the acquisition of
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109
Holding Company Common Stock in exchange for Warrants or Convertible
Preferred Stock, (c) registration of the shares of Holding Company
Common Stock, the Holding Company Notes and the Convertible Preferred
Stock under the Securities Act and the Exchange Act (if applicable) and
any securities and insurance securities laws of any State with respect
to the issuance of a Holding Company Notes and Convertible Preferred
Stock and the effectuation of a Plan and a IPO, (d) filings, at any
time, of tax returns, tax reports and tax information statements and
(e) as otherwise specified on Schedule 3.1(d); and other than the
Superintendent, no Governmental Authority has authority to disapprove
any payment on the Notes under any Applicable Insurance Laws.
(x) None of the execution and delivery of any of the
Investment Agreement, the compliance by the Company and the Holding
Company, as applicable, with all of the provisions of the Transaction
Agreements and the consummation of any of the Transactions will (i)
conflict with or result in a breach of any provision of the Certificate
of Incorporation or By-Laws (or other organizational documents) of the
Company or the Holding Company (assuming, with respect to the
Transactions to be consummated after the First Closing, the amendment
of such organizational documents of the Company and of the Holding
Company as contemplated by Exhibit 1 and by a Plan) or (ii) conflict
with or result in breach or violation of any order, decree or
injunction known to such counsel or, assuming that the Approvals
referred to in clauses (a) through (e) of paragraph (ix) above have
been obtained or made, any United States or New York statute or any
rule or regulation known to such counsel of any United States or New
York court or insurance regulatory authority or other governmental
agency or body having jurisdiction over the Company or any of its
Subsidiaries or properties, with such exceptions, individually or in
the aggregate, as would not be reasonably likely to (x) have a Material
Adverse Effect, (y) affect the validity of any of the Subject
Securities or (z) prevent the consummation of any of the Transactions.
(xi) Neither the registration of the Notes or the
Warrants under the Securities Act, nor the qualification of an
indenture under the Trust Indenture Act of 1939, as amended, with
respect to the Notes, is required for the offer and sale of the Notes
and the Warrants to the Investors pursuant to the Investment Agreement.
(xii) Neither the Company nor the Holding Company is
an open-end investment company, unit investment trust or face-amount
certificate company that is or is required to be registered under the
Investment Company Act, although certain separate accounts of the
Company are registered as investment companies under the Investment
Company Act.
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110
EXHIBIT 6
Opinion of Xxxxxxxx & Xxxxxxxx
at First Closing
(i) Each Investor has full partnership power and
authority to execute and deliver the Investment Agreement and the
Registration Rights Agreement and to perform its obligations thereunder
in accordance with their respective terms.
(ii) Each Investor has taken all necessary
partnership action to duly and validly authorize the execution and
delivery of the Investment Agreement and the Registration Rights
Agreement.
(iii) Each of the Investment Agreement and the
Registration Rights Agreement has been duly executed and delivered by
each Investor and constitutes a valid and legally binding obligation of
such Investor, enforceable in accordance with its terms subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights; provided, however, that such counsel expresses no
opinion with respect to the provisions set forth in Section 2.9 of the
Registration Rights Agreement.
(iv) The execution and delivery by each Investor of
the Investment Agreement and the Registration Rights Agreement, the
purchase by each Investor of the Notes and Warrants to be purchased by
such Investor and the performance by such Investor of its obligations
under the Investment Agreement and the Registration Rights Agreement
will not (a) violate such Investor's partnership agreement or (b)
violate any Federal law of the United States or law of the State of New
York applicable to such Investor; provided, however, that, for purposes
of this paragraph (iv), such counsel expresses no opinion with respect
to Federal or state securities laws, other antifraud laws, fraudulent
transfer laws and the Employee Retirement Income Security Act of 1974
and related laws; provided, further, that insofar as performance by
such Investor of its obligations under each of the Investment Agreement
and the Registration Rights Agreement is concerned, we express no
opinion as to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or affecting credits'
rights.
(v) No Approval of or with any United States or New
York court or insurance regulatory agency or other United States or New
York governmental body having jurisdiction over the Investors known to
such counsel is required to be obtained, made or given in connection
with the execution and delivery by the Investors of the Investment
Agreement and the Registration Rights Agreement, the purchase by the
Investors of the Notes and Warrants and the performance by the
Investors of their obligations under the Investment Agreement and the
Registration Rights Agreement.
111
EXHIBIT 7-A
Opinion of Senior Vice President
and General Counsel of the Company at Second Closing
(i) The Holding Company and each of its Subsidiaries
has been duly incorporated and is validly existing as a corporation in
good standing under the laws of its respective jurisdiction of
incorporation, with full corporate power and authority to own its
properties and conduct its business as currently conducted and to
perform its obligations under the Contracts to which its is a party.
(ii) Each of the Holding Company, the Company and
each other Significant Subsidiary of the Holding Company is duly
qualified as a foreign corporation or partnership to transact business
and is in good standing in each jurisdiction in which it owns or leases
substantial properties or in which the conduct of its business requires
such qualification, except where the failure to be so qualified and in
good standing would not, in any case or in the aggregate, have a
Material Adverse Effect.
(iii) All of the issued shares of capital stock of
each Subsidiary of the Holding Company have been duly and validly
authorized and issued, are fully paid and non-assessable and (except
for directors' qualifying shares) are owned directly or indirectly by
the Holding Company, free and clear of all liens, encumbrances,
equities or claims.
(iv) Each of the Company and MLOA is duly licensed as
an insurance company in its respective jurisdiction of incorporation
and is duly licensed or authorized as an insurer in each other
jurisdiction where it is required to be so licensed or authorized to
conduct its business as currently conducted or proposed to be
conducted, in each case with such exceptions, individually or in the
aggregate, as would not have a Material Adverse Effect; each of the
Company and MLOA is in compliance with the requirements of its
Applicable Insurance Laws, and has filed all Notices required to be
filed thereunder, in each case, with such exceptions, individually or
in the aggregate, as would not have a Material Adverse Effect; and,
except as set forth on Schedule 3.1(o), neither the Company nor MLOA
has received any notification from any insurance regulatory authority
to the effect that any additional Approval from such insurance
regulatory authority is needed to be obtained by the Company or MLOA in
any case where it could be reasonably expected that obtaining such
Approvals or the failure to obtain such Approvals would have a Material
Adverse Effect.
(v) No Approval is required to be obtained, made or
given, and no Notice is required to be filed, by or with respect to the
Holding Company, the Company or any other Subsidiary of the Holding
Company in connection with the issue and sale of the Convertible
Preferred Stock, the issue and delivery of the Holding Company Notes,
the issue and delivery in exchange for Warrants or Convertible
Preferred Stock of the shares of Holding Company Common Stock to be
issued and so delivered by the Holding
112
Company pursuant thereto, the performance by the Holding Company, the
Company or any other Subsidiary of the Holding Company of their
respective obligations under the Transaction Agreements, or the
consummation of the Transactions, other than (a) under the HSR Act with
respect to the acquisition of Holding Company Common Stock in exchange
for Warrants or Convertible Preferred Stock, (b) under the insurance
laws of the States of New York and Arizona with respect to the
effectuation of the IPO and the acquisition of Holding Company Common
Stock in exchange for Warrants or Convertible Preferred Stock, (c)
registration of the shares of Holding Company Common Stock, the Holding
Company Notes and the Convertible Preferred Stock under the Securities
Act and the Exchange Act (if applicable) and any securities and
insurance securities laws of any State with respect to the issuance of
the Holding Company Notes and Convertible Preferred Stock and the
effectuation of the IPO, (d) filings, at any time, of tax returns, tax
reports and tax information statements and (e) as otherwise specified
on Schedule 3.1(d); and other than the Superintendent, no Governmental
Authority has authority to disapprove any payment on the Convertible
Preferred Stock under any Applicable Insurance Laws.
(vi) None of the issue and sale of the Convertible
Preferred Stock, the compliance by the Holding Company and the Company,
as applicable, with all of the provisions of the Transaction Agreements
and the consummation of any of the Transactions will (i) conflict with
or result in a breach of any provision of the Certificate of
Incorporation or By-Laws (or other organizational documents) of the
Holding Company, the Company or any other Subsidiary of the Holding
Company or (ii) except (A) with respect to the termination of the
investment advisory contracts entered into by the Company or any
Subsidiary of the Holding Company as an investment adviser that are
subject to the Investment Advisers Act or the Investment Company Act,
(B) with respect to (1) any consent or approval required under any of
the real estate joint venture agreements, real estate leases, mortgage
loans and other real estate related agreements set forth in Schedule
3.1(e) and (2) any Real Property Approvals, and (C) as otherwise
specified in Schedule 3.1(e), result in any conflict with, breach of or
default (with or without notice or lapse of time or both) under, or
give rise to any right of termination, cancellation or acceleration of
any obligation or loss of any benefit under, or result in the
imposition of any Liens on any of their respective properties or assets
under, or require any consent or approval which has not been obtained
with respect to, (1) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement or instrument or permit,
concession, franchise or license to which the Holding Company, the
Company or any other Subsidiary of the Company is a party or by which
the Holding Company, the Company or any other Subsidiary of the Company
or any of their respective properties or assets may be bound, except
where such conflict, breach or default, termination, cancellation or
acceleration, imposition or failure to obtain any consent or approval
referred to in this clause (1) would not in any case or in the
aggregate have a Material Adverse Effect, or (2) any order, decree or
injunction or, assuming that the Approvals referred to in clauses (a)
through (e) of paragraph (v) above have been obtained or made, any law,
rule or regulation applicable to the Holding Company, the Company or
any other Subsidiary of the Company or any of their respective
properties or assets, with such exceptions, individually or in the
aggregate, as would not be reasonably likely to (x) have
2
113
a Material Adverse Effect, (y) affect the validity of any of the
Subject Securities or (z) prevent the consummation of any of the
Transactions.
(vii) Each Broker-Dealer Subsidiary and each
Investment Adviser Subsidiary is duly licensed or registered as a
broker-dealer or investment adviser, as the case may be, in each
jurisdiction (including the United States) where it is required to be
so licensed or registered to conduct its business as currently
conducted or as proposed to be conducted, in each case, with such
exceptions, individually or in the aggregate, as would not have a
Material Adverse Effect; each Broker-Dealer Subsidiary and Investment
Adviser Subsidiary has all other necessary Approvals of and from all
applicable regulatory authorities to conduct their respective
businesses as currently conducted or as proposed to be conducted, in
each case with such exceptions, individually or in the aggregate, as
would not have a Material Adverse Effect; except as set forth on
Schedule 3.1(o), none of the Broker-Dealer Subsidiaries or Investment
Adviser Subsidiaries has received any notification from any applicable
regulatory authority to the effect that any additional Approvals from
such regulatory authority are needed to be obtained by such subsidiary
in any case where it could be reasonably expected that (x) any of the
Broker-Dealer Subsidiaries or Investment Adviser Subsidiaries would in
fact be required either to obtain any such additional Approvals or
cease or otherwise limit engaging in certain business and (y) the
process of obtaining such Approvals or limiting such business would
have a Material Adverse Effect; and each Broker-Dealer Subsidiary and
Investment Adviser Subsidiary is in compliance with the requirements of
the applicable broker-dealer and investment adviser laws and
regulations of each jurisdiction which is applicable to such
subsidiary, and has filed all Notices required to be filed thereunder,
in each case with such exceptions, individually or in the aggregate, as
would not have a Material Adverse Effect.
(viii) Each Insurance Company possesses an Insurance
License in each State or other jurisdiction in which such Insurance
Company is required to possess an Insurance License, except where the
failure to possess Insurance Licenses would not, individually or in the
aggregate, have a Material Adverse Effect. All such Insurance Licenses
are in full force and effect and neither the Company nor any other
Subsidiary of the Holding Company has received any notice of any event,
inquiry, investigation or proceeding that would reasonably be expected
to result in the suspension, revocation or limitation of any such
Insurance License, except where the failure to possess Insurance
Licenses would not, individually or in the aggregate, have a Material
Adverse Effect, and to the knowledge of the Insurance Companies, there
is no sustainable basis for any such suspension, revocation or
limitation.
(ix) Except as set forth in Schedule 3.1(n) and other
than Litigation relating to taxes, there is no Litigation now pending,
or, to the knowledge of such counsel, threatened, against or relating
to the Holding Company or any of its Subsidiaries, or any director or
officer of the Holding Company or any of its Significant Subsidiaries
in his capacity as such, or the assets, properties or business of the
Holding Company or any of its Subsidiaries (whether or not covered by
insurance) (A) involving a claim made prior to the date of the
Investment Agreement of more than $5,000,000, (B) which could adversely
affect the ability of the Holding Company or the Company to consummate
any
3
114
of the Transactions, (C) which could reasonably be expected to have a
Material Adverse Effect, (D) involving any former officers or directors
of the Holding Company or any of its Subsidiaries as a party adverse to
the Holding Company or any of its Subsidiaries, (E) involving criminal
proceedings or investigations against or targeting the Holding Company,
any of its Subsidiaries or any of such directors or officers in their
capacity as such, (F) involving extraordinary regulatory proceedings,
(G) adverse to the Holding Company or any sponsoring Subsidiaries
involving any claims, whether individual or class action, relating to
life insurance or annuity-related sales practices, including
"churning", "vanishing premium", "replacement", "policy illustration"
or similar claims or (H) involving any investment advisory client of
the Holding Company or any of its Subsidiaries with assets under
management in excess of $50,000,000 and adverse to the Holding Company
or any of its Subsidiaries.
(x) Except as set forth in Schedule 3.1(n), neither
the Holding Company nor any of its Subsidiaries nor any of their
respective officers or directors is subject to any permanent,
preliminary or temporary injunction or prohibitive order, judgment or
decree of any Governmental Authority which could adversely affect the
ability of the Holding Company or the Company to consummate the
Transactions or which (x) restricts in any material respect the ability
of the Holding Company or of any Significant Subsidiary to conduct its
business or to engage in any other business or (y) enjoins or prohibits
any officer or director of the Holding Company or of any Significant
Subsidiary from taking, or requires any of such officers or directors
to take, in his capacity as such, any action of any kind or enjoins or
prohibits any such officer or director from violating any law or
regulation.
4
115
EXHIBIT 7-B
Opinion of Xxxxx Xxxxxxxxxx
at Second Closing
(i) The Holding Company has been duly organized and
is validly existing as a mutual life insurance company in good standing
under the laws of the State of New York, with corporate power and
authority to own its properties and conduct its business as currently
conducted.
(ii) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Delaware, with corporate power and authority to own its
properties and conduct its business as currently conducted.
(iii) The Holding Company has full corporate power
and authority to issue the Convertible Preferred Stock and the Holding
Company Notes and to perform its obligations thereunder in accordance
with their respective terms.
(iv) Each of the Holding Company and the Company has
taken all necessary corporate action to duly and validly authorize its
execution and delivery of the Convertible Preferred Stock and the other
instruments to be executed by it pursuant to the Investment Agreement
and the consummation of the Transactions; each of the Investment
Agreement and the Registration Rights Agreement constitutes a valid and
legally binding obligation of each of the Holding Company and the
Company, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, rehabilitation, liquidation, reorganization,
moratorium and similar laws of general applicability relating to
creditors' rights and to general equity principles, regardless of
whether enforceability is considered in a proceeding at law or in
equity; provided, however, that such counsel expresses no opinion on
the enforceabiltiy of Section 2.9 of the Registration Rights Agreement.
(v) The provisions of Section 203 of the General
Corporation Law of the State of Delaware will not apply to the
Investors or their Subsidiaries or to the transactions contemplated by
Investment Agreement.
(vi) The Convertible Preferred Stock been duly
authorized and validly issued and is fully paid and non-assessable,
free and clear of all Lien; no holder of Convertible Preferred Stock is
or will be subject to personal liability by reason of being such a
holder; and the shares of Holding Company Common Stock issuable upon
conversion of such Convertible Preferred Stock have been duly
authorized and reserved for issuance upon such conversion.
(vii) The Fiscal Agency Agreement constitutes a valid
and legally binding instrument, subject to bankruptcy, insolvency,
rehabilitation, liquidation, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors'
rights or rights of creditors of insurance companies generally and to
general principles of
116
equity, regardless of whether enforceability is considered in a
proceeding at law or in equity, including, without limitation, Section
1307 of the New York Insurance Law.
(viii) The Warrants constitute valid and legally
binding obligations of each of the Holding Company and the Company,
subject to bankruptcy, insolvency, rehabilitation, liquidation,
reorganization, moratorium and similar laws of general applicability
relating to creditors' rights or rights of creditors of insurance
companies generally and to general equity principles, regardless of
whether enforceability is considered in a proceeding at law or in
equity, free and clear of all Liens, except for those arising out of
any action or inaction of the holders thereof.
(ix) No Approval of or with any United States or New
York court or insurance regulatory agency or other governmental body
having jurisdiction over the Holding Company or its Subsidiaries known
to such counsel is required to be obtained, made or given, and no
Notice is required to be filed with any such court or governmental
body, by or with respect to the Holding Company, the Company or any
other Subsidiary of the Holding Company in connection with the issue
and sale of the Convertible Preferred Stock, the issue and delivery of
the Holding Company Notes, the issue and delivery in exchange for
Warrants or Convertible Preferred Stock of the shares of Holding
Company Common Stock to be issued and so delivered by the Holding
Company pursuant thereto, the performance by the Holding Company, the
Company or any other Subsidiary of the Holding Company of their
respective obligations under the Transaction Agreements, or the
consummation of the Transactions, other than (a) under the HSR Act with
respect to the acquisition of Holding Company Common Stock in exchange
for Warrants or Convertible Preferred Stock, (b) under the insurance
laws of the States of New York and Arizona with respect to the
effectuation of the IPO and the acquisition of Holding Company Common
Stock in exchange for Warrants or Convertible Preferred Stock, (c)
registration of the shares of Holding Company Common Stock, the Holding
Company Notes and the Convertible Preferred Stock under the Securities
Act and the Exchange Act (if applicable) and any securities and
insurance securities laws of any State with respect to the issuance of
a Holding Company Notes and Convertible Preferred Stock and the
effectuation of a Plan and a IPO, (d) filings, at any time, of tax
returns, tax reports and tax information statements and (e) as
otherwise specified on Schedule 3.1(d); and other than the
Superintendent, no Governmental Authority has authority to disapprove
any payment on the Convertible Preferred Stock under any Applicable
Insurance Laws.
(x) None of the issue and sale of the Convertible
Preferred Stock, the compliance by the Holding Company and the Company,
as applicable, with all of the provisions of the Transaction Agreements
and the consummation of any of the Transactions will (i) conflict with
or result in a breach of any provision of the Certificate of
Incorporation or By-Laws (or other organizational documents) of the
Holding Company or the Company or (ii) conflict with or result in
breach or violation of any order, decree or injunction known to such
counsel or, assuming that the Approvals referred to in clauses (a)
through (e) of paragraph (ix) above have been obtained or made, any
United States or New York statute or any rule or regulation known to
such counsel of any United States or New York court or insurance
regulatory authority or other
2
117
governmental agency or body having jurisdiction over the Company or any
of its Subsidiaries or properties, with such exceptions, individually
or in the aggregate, as would not be reasonably likely to (x) have a
Material Adverse Effect, (y) affect the validity of any of the Subject
Securities or (z) prevent the consummation of any of the Transactions.
(xi) The registration of the Convertible Preferred
Stock under the Securities Act has been effected.
(xii) The Company is not an open-end investment
company, unit investment trust or face-amount certificate company that
is or is required to be registered under the Investment Company Act,
although certain separate accounts of the Company are registered as
investment companies under the Investment Company Act.
3
118
EXHIBIT 8
Opinion of Xxxxxxxx & Xxxxxxxx
at Second Closing
(i) Each of the Investment Agreement and the
Registration Rights Agreement constitutes a valid and legally binding
obligation of each Investor, enforceable in accordance with its terms
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights; provided, however, that such counsel
expresses no opinion with respect to the provisions set forth in
Section 2.9 of the Registration Rights Agreement.
(ii) The purchase by each Investor of the
Convertible Preferred Stock will not (a) violate such Investor's
partnership agreement or (b) violate any Federal law of the United
States or law of the State of New York applicable to such Investor;
provided, however, that, for purposes of this paragraph (iv), such
counsel expresses no opinion with respect to Federal or state
securities laws, other antifraud laws, fraudulent transfer laws and the
Employee Retirement Income Security Act of 1974 and related laws.
(iii) No Approval of or with any United States or
New York court or insurance regulatory agency or other United States or
New York governmental body having jurisdiction over the Investors known
to such counsel is required to be obtained, made or given in connection
with the purchase by the Investors of the Convertible Preferred Stock.
119
EXHIBIT 9-A
Opinion of Senior Vice President
and General Counsel of the Company at Subsequent Closing
(i) The Holding Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with full
corporate power and authority to own its properties and conduct its
business.
(ii) No Approval is required to be obtained, made
or given, and no Notice is required to be filed, by or with respect to
the Holding Company or any Subsidiary of the Holding Company in
connection with the issue and delivery by the Holding Company of the
Subject Securities being issued at such Subsequent Closing or the
compliance by the Holding Company with all of the provisions of such
Subject Securities.
Neither the issue and delivery of the Subject Securities being issued at
such Subsequent Closing nor the compliance by the Holding Company with all
of the provisions of such Subject Securities will (i) conflict with or
result in a breach of any provision of the Certificate of Incorporation or
By-Laws of the Holding Company or (ii) result in any conflict with, breach
of or default (with or without notice or lapse of time or both) under, or
give rise to any right of termination, cancellation or acceleration of any
obligation or loss of any benefit under, or result in the imposition of any
Liens on any of the respective properties or assets of the Holding Company
or any Subsidiary of the Holding Company under, or require any consent or
approval which has not been obtained with respect to, (1) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement
or instrument or permit, concession, franchise or license to which the
Holding Company or any Subsidiary of the Holding Company is a party or by
which the Holding Company or any Subsidiary of the Holding Company or any
of their respective properties or assets may be bound, except where such
conflict, breach or default, termination, cancellation or acceleration,
imposition or failure to obtain any consent or approval referred to in this
clause (1) would not in any case or in the aggregate have a Material
Adverse Effect, or (2) any order, decree, injunction, law, rule or
regulation applicable to the Holding Company or any Subsidiary of the
Holding Company or any of their respective properties or assets, with such
exceptions, individually or in the aggregate, as would not be reasonably
likely to (x) have a Material Adverse Effect or (y) affect the validity of
such Subject Securities.
120
EXHIBIT 9-B
Opinion of Xxxxx Xxxxxxxxxx
at Subsequent Closing
(i) The Holding Company has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of the State of Delaware.
[If Holding Company Notes are being issued:
(ii) The Subject Securities being issued at such
Subsequent Closing have been duly authorized, executed, issued and
delivered, free and clear of all Liens; the indenture pursuant to which
such Subject Securities are being issued has been duly authorized,
executed and delivered by the Holding Company; such Subsequent
Securities and indentures constitute valid and legally binding
obligations of the Holding Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency, rehabilitation, liquidation,
reorganization, moratorium and similar laws of general applicability
relating to creditors' rights or rights of creditors of insurance
companies generally and to general equity principles, regardless of
whether enforceability is considered in a proceeding at law or in
equity, including, without limitation, Section 1307 of the New York
Insurance Law; and such Subject Securities are entitled to the benefits
of such indenture.]
[If Holding Company Common Stock is being issued:
(iii) The Subject Securities being issued at such
Subsequent Closing have been duly authorized and validly issued and are
fully paid and non-assessable, free and clear of all Liens; and no
holder of such Subject Securities is or will be subject to personal
liability by reason of being such a holder.]
(iv) No Approval of or with any United States,
New York or Delaware court or insurance regulatory agency or other
governmental body having jurisdiction over the Holding Company or its
Subsidiaries known to such counsel is required to be obtained, made or
given, and no Notice is required to be filed with any such court or
governmental body, by or with respect to the Holding Company or any
Subsidiary of the Holding Company in connection with the issue and
delivery of the Subject Securities being issued at such Subsequent
Closing or the compliance by the Holding Company with all of the
provisions of such Subject Securities.
(v) Neither the issue and delivery of the Subject
Securities being issued at such Subsequent Closing or the compliance by
the Holding Company with all of the provisions of such Subject
Securities will (i) conflict with or result in a breach of any
provision of the Certificate of Incorporation or By-Laws of the Holding
Company or (ii)
-6-
121
conflict with or result in breach or violation of any order, decree, or
injunction known to such counsel or any United States, New York or
Delaware statute or any rule or regulation known to such counsel of any
United States, New York or Delaware court or insurance regulatory
authority or other governmental agency or body having jurisdiction over
the Holding Company or any of its Subsidiaries or properties, with such
exceptions, individually or in the aggregate, as would not be
reasonably likely to (x) have a Material Adverse Effect or (y) affect
the validity of such Subject Securities.
-7-
122
Schedule 1.1
Note Investors
INVESTORS:
The following is the initial list of the Investors and the proposed allocation
among such Investors with respect to the Notes. In the event that any other
potential Investor listed below becomes an Investor, the allocations will be
modified to reflect such new Investor.
GS Mezzanine Partners, L.P. $72,428,000
GS Mezzanine Partners Offshore, $38,892,000
Offshore, X.X.
Xxxxx Street Fund 1997, L.P. $ 2,477,000
Xxxxxx Xxxxxx Xxxx 0000, $ 1,203,000
L.P.
Total $115,000,000
OTHER POTENTIAL INVESTORS:
Any direct or indirect Subsidiary of GS Mezzanine Partners, L.P. Any direct or
indirect Subsidiary of GS Mezzanine Partners Offshore, L.P.
The Xxxxxxx Sachs Group, L.P.
123
Schedule 1.3
Convertible Preferred Stock Investors
INVESTORS:
The following is the initial list of the Investors and the proposed allocation
among such Investors with respect to the Convertible Preferred Stock. In the
event that any other potential Investor listed below becomes an Investor, the
allocations will be modified to reflect such new Investor.
GS Mezzanine Partners, L.P. 629,810 shares
GS Mezzanine Partners Offshore, L.P. 338,190 shares
Xxxxx Xxxxxx Xxxx 0000, X.X. 21,540 shares
Xxxxxx Xxxxxx Xxxx 0000, X.X. 10,460 shares
Total 1,000,000 shares
OTHER POTENTIAL INVESTORS:
Any direct or indirect Subsidiary of GS Mezzanine Partners, L.P. Any direct or
indirect Subsidiary of GS Mezzanine Partners Offshore, L.P.
The Xxxxxxx Xxxxx Group, L.P.
124
Schedule 1.2
Warrant Investors
INVESTORS:
The following is the initial list of the Investors and the proposed allocation
among such Investors with respect to the Warrants. In the event that any other
potential Investor listed below becomes an Investor, the allocations will be
modified to reflect such new Investor.
(percentage of fully
diluted Holding Company Common
Stock issuable
upon exercise of Warrants) Purchase Price
-------------------------- --------------
GS Mezzanine Partners, L.P. 4.40866087% $6,298,087
GS Mezzanine Partners 2.36733913% $3,381,913
Offshore, X.X.
Xxxxx Xxxxxx Xxxx 0000, X.X. 0.15077391% $215,391
Xxxxxx Xxxxxx Xxxx 0000, X.X. 0.07322609% $104,609
Total 7.00% $10,000,000
OTHER POTENTIAL INVESTORS:
Any direct or indirect Subsidiary of GS Mezzanine Partners, L.P. Any direct or
indirect Subsidiary of GS Mezzanine Partners Offshore, L.P.
The Xxxxxxx Xxxxx Group, L.P.
125
SCHEDULE 3.1(d)
CONSENTS
The issue and sale of the Subject Securities subsequent to the first closing may
require regulatory approval to be obtained, made or given, or notice required
if:
(1) any purchaser of an equity security is deemed under appropriate
statute to be a control person of any insurance subsidiary;
(2) there is any change in statute or regulation in an applicable
jurisdiction subsequent to the date thereof; and
(3) a company which becomes a subsidiary of the Company or the Holding
Company causes the Company or the Holding Company to become subject to
a statute or regulation which requires such an approval or notice.
126
SCHEDULE 3.1(e)
CONFLICTS
NO EXCEPTIONS
127
SCHEDULE 3.1(f)
SUBSIDIARIES
SUBSIDIARIES OF THE COMPANY
Name State of Incorporation
---- ----------------------
ARES Holdings, Inc. Delaware
ARES, Inc. Connecticut
Enterprise Capital Management, Inc. Georgia
Enterprise Fund Distributors, Inc. Delaware
1740 Advisers, Inc. New York
MONY Brokerage, Inc. Delaware
MBI Insurance Agency of Alabama, Inc. Alabama
MBI Insurance Agency of Massachusetts, Inc. Massachusetts
MBI Insurance Agency of New Mexico, Inc. New Mexico
MBI Insurance Agency of Ohio, Inc. Ohio*
MBI Insurance Agency of Texas, Inc. Texas
MONY CS, Inc. Georgia
MONY Credit Corporation New York
MONY Financial Services Corporation Delaware
MONY Funding, Inc. Delaware
MONY International Holdings, Inc. Delaware
MONY Life Insurance Company of the Americas, Ltd. Cayman Islands
MONY Bank & Trust Company of the Americas, Ltd. Cayman Islands
MONY International Life Insurance Company Seguros Argentina
de Vida S.A.
MONY Realty Partners, Inc. Delaware
MONY Securities Corp. New York
1740 Ventures, Inc. New York
*This subsidiary has been formed, however, no shares have been issued and no
officers or directors have been elected or appointed.
128
SIGNIFICANT SUBSIDIARIES
Shares Owned
Subsidiary Authorized Issued Outstanding
by Company Incorporated Stock Stock Stock
----------------- ------------ ----- ----- -----------
MONY Life Insurance Arizona 5,000,000 Shares 2,500,000 2,500,000
100%
Company of America Common Stock
$1.00 Par Value
Enterprise Capital Georgia 10,000 Shares 500 500
100% Management, Inc. Common Stock
$0.10 Par Value
129
SCHEDULE 3.1(h)
FINANCIAL STATEMENTS AND INFORMATION
NO EXCEPTIONS
130
SCHEDULE 3.1(i)
SEC DOCUMENTS
NO EXCEPTIONS
131
SCHEDULE 3.1(j)
CERTAIN CHANGES/EVENTS
NO EXCEPTIONS
132
SCHEDULE 3.1(k)
ASSETS
SECTION 3.1(k)(i) - MATERIAL OWNED PROPERTIES
NO EXCEPTIONS
SECTION 3.1(k)(ii)(c) - MORTGAGE LOANS CLASSIFIED AS IN THE PROCESS OF
FORECLOSURE
NO EXCEPTIONS
SECTION 3.1(k)(ii)(c) - MORTGAGE LOANS PAST DUE MORE THAN 90 DAYS
As of December 31, 1996, $2,273,629 in aggregate principal amount of mortgages
were past due more then 90 days.
As of November 30, 1997, $441,293 in aggregate principal amount of mortgages
were past due more then 90 days.
SECTION 3.1(k)(iii) - ENVIRONMENTAL MATTERS
The Company is aware of the presence of Hazardous Substances at the following
Real Properties, but has not been requested to take any remedial action.
Property Hazardous Substance
-------- -------------------
0000 Xxxxxxxx Xxxxxxxx
Xxx Xxxx, XX 00000
MONY Towers Asbestos
0 XXXX Xxxxx
Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
00 Xxx Xxxxxx Xxxxxxxxxx Xxxxxxxxxxxx
Xxxxxxxx, XX 00000
133
SCHEDULE 3.1(l)
LIABILITIES AND RESERVES
NO EXCEPTIONS
134
SCHEDULE 3.1(n)
LITIGATION
In late 1995 and during 1996 a number of purported class actions were
commenced in various state and federal courts against the Company alleging
Company officials engaged in deceptive sales practices in connection with the
sale of "vanishing premium" whole and universal life policies during the period
1980 to present. A list of the actions commenced follows. Although the claims
asserted in each case are not identical, they seek substantially the same relief
under essentially the same theories of recovery (i.e., breach of contract,
fraud, negligent misrepresentation, negligent supervision and training, breach
of fiduciary duty, unjust enrichment and violation of state insurance and/or
deceptive business practice laws.) The Company has answered the complaints in
each action (except for one that is being voluntarily held in abeyance), has
denied any liability or wrongdoing, and has asserted numerous affirmative
defenses.
The Goshen action being the first filed action, has progressed far
beyond any other action. On June 7, 1996, the New York State Supreme Court
certified a nationwide class in Goshen consisting of all persons or entities who
have, or at the time of the policy's termination had, an ownership interest in a
whole or universal life insurance policy issued by the Company and sold on an
alleged "vanishing premium" basis during the period January 1, 1982 to December
31, 1995. On March 27, 1997, following the conclusion of the opt-out period for
class members, the Company filed a motion to dismiss or alternatively, for
summary judgment on all counts of the complaint. On October 21, 1997, the Goshen
Court granted the Company's summary judgment motion and dismissed with prejudice
the entire certified nationwide class action. Plaintiffs have filed a notice of
appeal to the Appellate Division, First Department and the Company intends
vigorously to oppose the appeal.
None of the other putative class actions has been certified or
progressed beyond the pleading stage. All of them have been consolidated and
transferred by the Judicial Panel on Multidistrict Litigation to the United
States District Court for the District of Massachusetts in In re Mutual Life
Insurance Company of New York Premium Litigation, MDL No. 1143, or were being
voluntarily held in abeyance pending the outcome of Goshen . The Massachusetts
District Court in the Multidistrict Litigation has entered a Stipulated Case
Management Order and Coordination Plan recognizing the Goshen case as the lead
case and essentially holding all of the federal cases in abeyance pending the
outcome of the Goshen action. The Company intends to seek the dismissal of these
putative class actions in light of the Goshen outcome.
135
CLASS ACTIONS
Goshen v. The Mutual Life Insurance Company of New York and MONY Life
Insurance Company of America, Supreme Court, New York County, New York (1995)
(certified nationwide class) ("Goshen");
XxXxxx v. The Mutual Life Insurance Company of New York, United States
District Court for the District of Massachusetts (1996) (coordinated with other
actions in MDL No. 1143) (seeking certification of a nationwide class);
Xxxxxx v. The Mutual Life Insurance Company of New York, United States
District Court for the Northern District of Mississippi (1995) (transferred to
the United States District Court for the District of Massachusetts for
coordination with MDL No. 1143) (seeking certification of a nationwide class);
Woodson v. The Mutual Life Insurance Company of New York and MONY Life
Insurance Company of America, et al., District Court, Parish of St. Xxxxxx,
Louisiana (1996) (removed and transferred to the United States District Court of
the District of Massachusetts for coordination with MDL No. 1143) (seeking
certification of a nationwide class of opt-outs from the Goshen litigation);
Xxxxxxx v. The Mutual Life Insurance Company of New York, et al.,
Circuit Court, Xxxxx County, Alabama (1996) (removed and transferred to the
United States District Court of the District of Massachusetts for coordination
with MDL No. 1143) (seeking certification of a class of Alabama policyholders);
and
Henning v. The Mutual Life Insurance Company of New York and MONY Life
Insurance Company of America, Supreme Court, New York County (1996) (voluntarily
held in abeyance pending the outcome of the Goshen action) (seeking
certification of a nationwide class)
NO FURTHER EXCEPTIONS AS TO ANY OTHER MATTER SET FORTH IN SECTION 3.1(n)(i) OR
(ii)
136
SCHEDULE 3.1(o)
COMPLIANCE WITH LAWS
NO EXCEPTIONS
137
SCHEDULE 3.1(q)
BROKERS AND FINDERS
NO EXCEPTIONS
138
SCHEDULE 3.1(r)
TAXES
DEFICIENCIES - NO EXCEPTIONS
STATUS OF INTERNAL REVENUE SERVICE EXAMINATIONS OF, OR ANY OTHER PROCEEDINGS
RELATING TO, THE TAX RETURNS OF THE COMPANY AND EACH OF ITS SUBSIDIARIES.
Internal Revenue Service examinations have been completed through 1987.
Returns for the years 1988 and 1989 are on appeal at the Appellate level of the
Internal Revenue Service. All outstanding matters relating to these appeals have
been discussed and resolved. These years are closed subject to possible
adjustment of losses carried back from later years.
Returns for the years 1990 and 1991 are currently being audited. Currently there
have been no significant adjustments.
139
SCHEDULE 3.1(t)
INSURANCE BUSINESS
NO EXCEPTIONS
140
SCHEDULE 3.1(u)
REINSURANCE
NO EXCEPTIONS
141
SCHEDULE 3.1(v)
INTELLECTUAL PROPERTY
The use of the Company's Trademarks by Significant Subsidiaries have
been granted under revocable licenses which may be revoked by the Company at any
time without prior notice.
142
SCHEDULE 3.1(w)
VARIABLE PRODUCT MATTERS
As of September 30, 1997, the following is a list of:
A. EACH REGISTERED INVESTMENT COMPANY ADVISED BY THE COMPANY OR AN "AFFILIATED
PERSON" OF THE COMPANY (AS DEFINED IN THE INVESTMENT COMPANY ACT). (Note:
Investment adviser or subadviser which is the Company or an affiliated person of
the Company is identified in parenthesis)
ADVISED BY THE COMPANY OR A DIRECT OR INDIRECT SUBSIDIARY OF THE COMPANY: MONY
Series Fund, Inc. (MONY Life Insurance Company of America) Enterprise
Accumulation Trust (Enterprise Capital Management, Inc.) Enterprise Group of
Funds, Inc. (Enterprise Capital Management, Inc.) Diversified Investors
Portfolios -- Money Market, Intermediate Government Bond,
Government/Corporate Bond and Equity Income Series (1740 Advisors, Inc.
(subadviser))
ADVISER AND SUBADVISER OF THE INVESTMENT COMPANY AND NOT OTHERWISE AN AFFILIATE
OF THE COMPANY IS AN AFFILIATE OF THE COMPANY BY VIRTUE OF THE COMPANY'S
OWNERSHIP OF 5% OR MORE OF THE OUTSTANDING SHARES OF THE INVESTMENT COMPANY:
Diversified Investors Portfolios (through Keynote Series Account)
-- Equity Growth Series (Diversified Investment Advisers, Inc. --
investment adviser; Chancellor LGT Asset Management, Inc. --
subadviser; ownership as of 9/30/97 -- 2.13%)
Diversified Investors Portfolios (through MONY Pooled Account)
-- High Quality Bond Series (Diversified Investment Advisers, Inc. --
investment adviser; Merganser Capital Management Corporation
-- subadviser; ownership as of 9/30/97 -- 32.13%)
-- High-Yield Bond Series (Diversified Investment Advisers, Inc.
-- investment adviser; Delaware Investment Advisers --
subadviser; ownership as of 9/30/97 -- 22.31%)
-- Equity Value Series (Diversified Investment Advisers, Inc.
-- investment adviser; Ark Asset Management Co., Inc. --
subadviser; ownership as of 9/30/97 -- 4.08%)
-- Growth & Income Series (Diversified Investment Advisers, Inc.
-- investment adviser; Xxxxxx Advisory Company, Inc. --
subadviser; ownership as of 9/30/97 -- 8.03%)
-- Equity Growth Series (Diversified Investment Advisers, Inc.
-- investment adviser; Chancellor LGT Asset Management, Inc.
-- subadviser; ownership as of 9/30/97 -- 3.38%)
-- Special Equity Series (Diversified Investment Advisers, Inc.
-- investment adviser; Pilgrim Xxxxxx & Associates, Ltd., Ark
Asset Management Co.,
143
Inc., Liberty Investment Management and Westport Asset
Management, Inc. -- subadvisers; ownership as of 9/30/97 --
29.13%)
-- International Equity Series (Diversified Investment Advisers, Inc.
-- investment adviser; Capital Guardian Trust Company --
subadviser; ownership as of 9/30/97 -- 23.14%)
NOTE: The Company through Keynote Series Account and MONY Pooled Accounts owned
at 9/30/97 23.62% of Diversified Investors Portfolios if all series were
considered as one series.
OCC Accumulation Trust
-- Equity Portfolio (OpCap Advisors -- investment adviser; ownership as
of 9/30/97 -- 12.31%)
-- Small Cap Portfolio (OpCap Advisors -- investment adviser; ownership
as of 9/30/97 -- 5.75%)
-- Global Equity Portfolio (OpCap Advisors -- investment adviser;
ownership as of 9/30/97 -- 0.00%)
-- Managed Portfolio (OpCap Advisors -- investment adviser; ownership
as of 9/30/97 -- 17.98%)
-- U.S. Government Income Portfolio (OpCap Advisors -- investment
adviser; ownership as of 9/30/97 -- 31.78%)
-- Money Market Portfolio (OpCap Advisors -- investment adviser;
ownership as of 9/30/97 -- 61.76%)
NOTE: The Company and MONY Life Insurance Company of America owned at 9/30/97
23.58% of OCC Accumulation Trust if all portfolios were considered as one
portfolio.
ADVISER AND SUBADVISER OF THE INVESTMENT COMPANY NOT OTHERWISE AN AFFILIATE OF
THE COMPANY IS AN AFFILIATE OF THE COMPANY BY VIRTUE OF THE COMMON BOARD OF
TRUSTEES OF DIVERSIFIED INVESTORS PORTFOLIOS:
-- Balanced Series (Diversified Investment Advisers, Inc., --
investment adviser; Institutional Capital Corporation --
subadviser; ownership as of 9/30/97 -- 1.22% through Keynote
Series Account and 0.84% through MONY Pooled Accounts)
-- Aggressive Equity Series (Diversified Investment Advisers, Inc. --
investment adviser; XxXxxxxx Capital Management Inc. --
subadviser; ownership as of 9/30/97 -- 4.34%)
B. EACH REGISTERED INVESTMENT COMPANY OF WHICH THE COMPANY OR AN "AFFILIATED
PERSON" IS THE PRINCIPAL UNDERWRITER. (Note: Principal Underwriter identified in
parenthesis)
MONY Series Fund, Inc. (MONY Securities Corp.)
Enterprise Accumulation Trust (Enterprise Fund Distributors, Inc.)
Enterprise Group of Funds, Inc. (Enterprise Fund Distributors, Inc.)
144
MONY Variable Account A (MONY Securities Corp.)
MONY Variable Account L (MONY Securities Corp.)
MONY Variable Account S (MONY Securities Corp.)
MONY America Variable Account A (MONY Securities Corp.)
MONY America Variable Account L (MONY Securities Corp.)
MONY America Variable Account S (MONY Securities Corp.)
Keynote Series Account (MONY Securities Corp.)
C. FOR EACH REGISTERED INVESTMENT COMPANY LISTED ABOVE, A DETAILED DESCRIPTION
OF THE RELATIONSHIPS BETWEEN SUCH COMPANY AND ITS ADVISER AND ANY SUBADVISERS
AND ANY OTHER BASES FOR SUCH AFFILIATION. (Note: Investment adviser and
sub-adviser, if any, identified for each portfolio)
MONY Series Fund, Inc.
All portfolios - MONY Life Insurance Company of America is a wholly
owned, direct subsidiary of the Company and the Company and
MONY Life Insurance Company of America own all the outstanding
shares of each of the portfolios.
Enterprise Accumulation Trust
All portfolios -- Enterprise Capital Management, Inc. is a wholly
owned, indirect subsidiary of the Company and the Company and
MONY Life Insurance Company of America own all the outstanding
shares of each of the portfolios.
Subadvisers--
Managed Portfolio -- OpCap Advisors
Small Cap Portfolio --GAMCO Investors, Inc.
Equity Portfolio -- OpCap Advisors
International Growth Portfolio -- Xxxxxxx Partners, Inc.
High Yield Bond Portfolio
-- Xxxxxxx - Xxxxxx Capital Management, Inc.
Enterprise Group of Funds, Inc. (Note: does not accept separate account money)
All portfolios -- Enterprise Capital Management, Inc. is a wholly
owned, indirect subsidiary of the Company and the members of
the Board of Directors are all also members of the Board of
Trustees of the Enterprise Accumulation Trust.
Subadvisors--
Growth Portfolio -- Montag & Xxxxxxxx, Inc.
Capital Appreciation Portfolio -- Provident Investment
Counsel, Inc.
Small Company Value Portfolio -- GAMCO Investors, Inc.
International Growth Portfolio -- Xxxxxxx Partners, Inc.
Government Securities Portfolio -- TCW Funds Management, Inc.
High-Yield Bond Portfolio -- Xxxxxxx-Xxxxxx Capital
Management, Inc.
145
Tax-Exempt Income Portfolio -- Xxxxxx Xxxxxxx Asset
Management, Inc.
Managed Portfolio -- OpCap Advisors
Equity Income Portfolio -- 1740 Advisers, Inc.
Equity Portfolio -- OpCap Advisors
Available on or about July 1, 1997 --
Growth and Income Portfolio -- Retirement System
Investors, Inc.
OCC Accumulation Trust --
All portfolios -- the Company and MONY Life Insurance Company of
America own more than 5% of the outstanding shares of each of
the portfolios except for the Global Equity Portfolio.
The following registered investment companies are unit investment trusts and do
not have investment advisers:
MONY Variable Account A
MONY Variable Account L
MONY Variable Account S
MONY America Variable Account A
MONY America Variable Account L
MONY America Variable Account S
Keynote Series Account
D. FOR EACH COMPANY LISTED ABOVE WHICH IS "CONTROLLED" BY THE COMPANY WITHIN THE
MEANING OF SECTION 2(a)(9) OF THE INVESTMENT COMPANY ACT, THE FACTUAL BASIS FOR
SUCH CONTROL.
MONY Series Fund, Inc., Enterprise Accumulation Trust and OCC Accumulation Trust
may be deemed to be "controlled" by the Company and its wholly owned subsidiary,
MONY Life Insurance Company of America because, under the insurance laws of the
States of New York and Arizona the assets of the separate accounts established
by such insurance companies are held by the insurance company.
MONY Life Insurance Company of America, MONY Securities Corp., Enterprise
Capital Management, Inc., Enterprise Fund Distributors, Inc. and 1740 Advisers,
Inc. are direct or indirect wholly owned subsidiaries of the Company by virtue
of the direct or indirect ownership of 100% of the issued and outstanding voting
stock of each such company. No other investment adviser or subadviser is
directly or indirectly "controlled" by the Company. MONY Brokerage, Inc. does
not provide investment advisory services to investment companies.
