STOCK PURCHASE AGREEMENT
between
ST. PAUL FIRE AND MARINE INSURANCE COMPANY
and
OLD MUTUAL PLC
Dated as of April 26, 2001
SHARES OF FIDELITY AND GUARANTY LIFE INSURANCE COMPANY
AND
SHARES OF OLD MUTUAL PLC
STOCK PURCHASE AGREEMENT, dated as of April
26, 2001, between ST. PAUL FIRE AND MARINE INSURANCE
COMPANY, a Minnesota insurance corporation ("Seller"), and
OLD MUTUAL PLC, a public limited company incorporated in
England and Wales ("Parent").
WHEREAS, Seller owns all of the capital stock
of Fidelity and Guaranty Life Insurance Company, a Maryland
insurance company ("F&G Life"), which in turn directly or
indirectly owns all of the outstanding capital stock or
other equity interests of the F&G Subsidiaries (as
hereinafter defined);
WHEREAS, Seller desires to sell all of the
outstanding capital stock of F&G Life (the "Shares"), and
Parent desires that a direct or indirect wholly owned
subsidiary of Parent to be designated by Parent prior to the
Escrow Closing (as hereinafter defined) ("Purchaser")
purchase such capital stock from Seller, in each case on the
terms and subject to the conditions set forth in this
Agreement;
WHEREAS, Seller desires to sell the Surplus
Note (as hereinafter defined), and Parent desires that a
direct or indirect wholly owned subsidiary of Parent to be
designated by Parent prior to the Escrow Closing ("Note
Purchaser") purchase the Surplus Note from Seller, in each
case on the terms and subject to the conditions set forth in
this Agreement; and
WHEREAS, Parent agrees to fully and
unconditionally guarantee the obligations of Purchaser and
Note Purchaser under this Agreement.
NOW, THEREFORE, in consideration of the
mutual covenants and agreements set forth in this Agreement,
and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
ARTICLE ONE
Sale and Purchase
-----------------
Section 1.1. Sale and Purchase of the Shares and Surplus Note.
------------------------------------------------
Upon the terms and subject to the conditions
contained herein, at the Closing, Seller shall sell, assign,
transfer, convey and deliver free and clear of all Liens
(other than Liens expressly created or permitted by Parent
or Purchaser) (a) to Purchaser, and Purchaser shall purchase
from Seller, the Shares and (b) to Note Purchaser, and Note
Purchaser shall purchase from Seller, the Surplus Note.
Section 1.2. Consideration.
-------------
(a) The maximum consideration for the sale and purchase of
the Shares shall be the sum of:
(i) $285,000,000 plus accrued interest, as more fully set
forth in Section 1.3(a)(i); and
(ii) a number of Parent Shares equal to the sum of (A) the
quotient of (1) $300,000,000 divided by (2) the product of
the Escrow Closing Share Price multiplied by the Escrow
Closing Date Conversion Rate, and (B) the quotient of (1)
$40,000,000 divided by (2) the product of the Reference
Share Price multiplied by the Reference Date Conversion
Rate, in each case as more fully set forth in Sections
1.3(a)(ii) and 1.9(a)(ii), respectively (provided that
Parent shall have the option to cause Purchaser to deliver
cash in lieu of certain Parent Shares pursuant to Section
1.9(a)(i)).
(b) The consideration for the sale and purchase of the
Surplus Note shall be the sum of $50,000,000 plus accrued
interest as more fully set forth in Section 1.3(b).
Section 1.3. Consideration to be Paid at the Escrow Closing.
----------------------------------------------
(a) Subject to the terms and conditions
contained herein, in consideration for the sale and delivery
of the Shares, at the Escrow Closing, the following
(collectively, the "Initial Share Consideration") shall be
delivered to Seller:
(i) Purchaser shall deliver $285,000,000 plus accrued
interest at the LIBOR rate from June 30, 2001 through to the
next Business Day after the Escrow Closing Date (or, if a
Closing Date has been mutually agreed upon in writing by
Parent and Seller which is later than then next Business Day
after the Escrow Closing Date, through to such later Closing
Date) in immediately available funds to the client account
of the Seller's Lawyers (the "Escrow Account") the details
of which will be made available to Parent in writing by
Seller at least three Business Days prior to the Escrow
Closing (the "Cash Consideration"); and
(ii) Parent, on behalf of Purchaser, shall deliver a number
of fully paid (or credited as fully paid) Parent Shares (as
defined below), free and clear of all Liens (other than
Liens expressly created or permitted by Seller), equal to
the quotient of (i) $300,000,000 divided by (ii) the
average closing price (the "Escrow Closing Share Price") of
a Parent Share on the London Stock Exchange ("LSE")
(multiplied by the Escrow Closing Date Conversion Rate) as
reported in the European edition of The Wall Street Journal,
or, if not reported therein, The Financial Times, for the 10
consecutive trading days prior to (but not including) the
Escrow Closing Date (the "Initial Parent Shares"), each of
which shall have been duly allotted and issued by Parent
immediately prior to the Escrow Closing subject only to
their being admitted to the Official List of the UK Listing
Authority ("UKLA") and admitted to trading on the LSE market
for listed securities (both admissions taken together, the
"Listing"). For purposes of this Section 1.3, "Escrow
Closing Date Conversion Rate" means the U.S. dollar/British
Pound exchange rate as reported in the United States
(Eastern edition) of The Wall Street Journal for the
Business Day immediately preceding the Escrow Closing Date.
(b) Subject to the terms and conditions contained herein,
in consideration for the sale and delivery of the Surplus
Note, at the Escrow Closing, Note Purchaser shall deliver
$50,000,000 plus accrued interest on the Surplus Note
through to the next Business Day after the Escrow Closing
Date (or, if a Closing Date has been mutually agreed upon in
writing by Parent and Seller which is later than the next
Business Day after the Escrow Closing Date, through to such
later Closing Date), in immediately available funds to the
Escrow Account (the "Surplus Note Consideration").
Section 1.4. Escrow Closing.
--------------
Subject to the terms and conditions of this
Agreement, the escrow closing of the purchase and sale of
the Shares and of the Surplus Note (the "Escrow Closing")
shall occur at the offices of Sullivan & Cromwell, 125 Broad
Street, New York, New York at 10:00 A.M. New York City time,
on the earliest date reasonably practicable (but no later
than the third Business Day) following the satisfaction or
waiver of all conditions to the obligations of the parties
to consummate the transactions contemplated hereby (other
than conditions with respect to actions the parties will
take at the Escrow Closing itself), or such other location,
time or date as may be agreed to in writing by Seller and
Parent (the "Escrow Closing Date").
Section 1.5. Transactions on the Escrow Closing Date.
---------------------------------------
At the Escrow Closing:
(a) Seller will deliver to Parent's Lawyers (who shall hold
them in escrow and, in the case of documents to be dated the
Closing Date, undated, to the order of Seller pending
closing on the terms and subject to the conditions set forth
in the Lawyers' Escrow Instruction Letter) (i) the Surplus
Note duly endorsed or accompanied by a note power (in form
reasonably satisfactory to counsel for Parent) in favor of
Note Purchaser, (ii) certificates representing the Shares,
duly endorsed or accompanied by stock powers (in form
reasonably satisfactory to counsel for Parent) in favor of
Purchaser and accompanied by any requisite transfer tax
stamps, (iii) the certificate referred to in Section 8.4.7
of this Agreement, (iv) the License Agreement, duly executed
and delivered by Seller, (v) the Indemnification Agreement
duly executed and delivered by The St. Paul, Seller, United
States Fidelity and Guaranty Company and F&G Life, and (vi)
such other documents and instruments required to be
delivered by Seller under the terms of this Agreement; and
(b) Parent (on behalf of Purchaser and Note Purchaser),
Purchaser and Note Purchaser, as appropriate, will deliver
to Seller's Lawyers (who shall hold such cash sums and
documents in escrow and, in the case of documents to be
dated the Closing Date, undated, to the order of Purchaser
and Note Purchaser pending Closing on the terms and subject
to the conditions set forth in the Lawyers' Escrow
Instruction Letter) (i) the Cash Consideration and the
Surplus Note Consideration, (ii) a share certificate or
share certificates for the Initial Parent Shares in the name
of Seller or such affiliate or affiliates of Seller as
Seller may direct and accompanied by any requisite transfer
tax stamps, (iii) the certificate referred to in Section
8.3.7 of this Agreement, (iv) the Indemnification Agreement
duly executed and delivered by Parent, (v) the License
Agreement, duly executed and delivered by Parent, and (vi)
such other documents and instruments required to be
delivered by Parent under the terms of this Agreement.
(c) Parent (on behalf of Purchaser and Note Purchaser) and
Seller will issue to Parent's Lawyers and Seller's Lawyers
jointly a letter in a form to be mutually agreed upon in
good faith by Seller and Parent (the "Lawyers' Escrow
Instruction Letter") setting out the basis on which the
items referred to above in this Section 1.5 are to be held
in escrow by each of them respectively and Parent (on behalf
of Purchaser and Note Purchaser) will deliver to Seller a
copy of such letter counter-signed by Parent's Lawyers in
which Parent's Lawyers undertake to Seller and Parent to
comply with the terms of the said letter and, likewise,
Seller will deliver to Parent a copy of such letter counter-
signed by Seller's Lawyers in which Seller's Lawyers
undertake to Parent and Seller to comply with the terms of
the said letter.
Section 1.6. Closing.
-------
Subject to the terms and conditions of this
Agreement, the closing of the purchase and sale of the
Shares and the Surplus Note (the "Closing") shall occur
either automatically following the Escrow Closing once
Listing of the Initial Parent Shares has been confirmed by
both the UKLA and the LSE ("Listing Confirmation") or at
such other time or on such other date as may be agreed to in
writing by Seller and Parent (the "Closing Date"), provided
that each of Seller and Parent shall use its commercially
reasonable efforts to obtain such Listing of the Initial
Parent Shares as promptly as possible. Listing Confirmation
will be evidenced for these purposes by, in the case of the
UKLA, the dissemination of the appropriate notice pursuant
to Rule 7.1 of the Listing Rules of the UKLA, and by, in the
case of the LSE, an announcement in accordance with
paragraph 2.1 of the Admission and Disclosure Standards of
the LSE.
Section 1.7. Transactions on the Closing Date.
--------------------------------
Once Listing Confirmation has been duly issued
by both the UKLA and the LSE then, as stated above, the
Closing will automatically take place in the absence of a
delay agreed to in writing by Parent and Seller. On
Closing:
(a) Parent's Lawyers shall date and release to Purchaser
and Note Purchaser all of the documents and instruments
referred to in Section 1.5(a) above; and
(b) Seller's Lawyers shall:
(i) transfer the Cash Consideration and Surplus Note
Consideration to such bank account as Seller may direct; and
(ii) date and release to Seller all of the documents and
instruments referred to in Section 1.5(b) above.
Section 1.8. Impaired Security Purchase Price Adjustment.
-------------------------------------------
(a) Adjustment. The Initial Share Consideration shall be
reduced by an amount equal to the Impaired Security Purchase
Price Adjustment.
(b) Definitions. The following terms shall have the
meanings set forth below for purposes of this Section 1.8:
(i) "Aggregate Impaired Amount" means the sum of (A) the
Specified Investment Securities Losses and (B) the
Downgraded Investment Securities Losses.
(ii) "Book Value" means, with respect to any investment
security, the amortized cost thereof as determined in
accordance with GAAP, provided, however, that write-downs
and similar adjustments subsequent to March 31, 2001 shall
be disregarded for purposes of calculating "Book Value".
(iii) "Impaired Security Purchase Price Adjustment"
means an amount equal to the Aggregate Impaired Amount minus
the Upgraded Investment Securities Offset; provided,
however, that the Impaired Security Purchase Price
Adjustment shall in no event be less than zero (0).
(iv) "Non-Investment Grade Credit Rating" means a credit
rating of BB+ or lower from Standard & Poor's or Ba1 or
lower from Moody's.
(v) "Specified Investment Security" means those investment
securities listed on Exhibit A.
(vi) "March 31 Market Value" means fair value calculated in
accordance with GAAP of an investment security as of March
31, 2001 (or, in the case of investment securities acquired
after March 31, 2001, Book Value).
(vii) "Escrow Closing Date Market Value" means fair
value calculated in accordance with GAAP of an investment
security as of the Escrow Closing Date (or, where
applicable, the proceeds from disposition of any investment
security sold prior to the Escrow Closing Date).
(viii) "Downgraded Investment Security" means any
investment security that (A) has received a credit rating
downgrade from, or been placed on credit watch with negative
implications by, Moody's or Standard & Poor's after the
later of March 31, 2001 and the date of acquisition thereof
by F&G Life or Thomas Jefferson Life and before the earlier
of the Escrow Closing Date and the date which is three
Business Days after the date of disposition thereof, (B) has
a Non-Investment Grade Credit Rating on the Escrow Closing
Date, and (C) has an Escrow Closing Date Market Value which
is lower than its March 31 Market Value.
(ix) "Downgraded Investment Securities Losses" means an
amount equal to the difference of (A) the aggregate March 31
Market Values of all Downgraded Investment Securities minus
(B) the aggregate Escrow Closing Date Market Values of all
Downgraded Investment Securities.
(x) "Specified Investment Securities Losses" means an
amount equal to the difference of (A) the aggregate March 31
Market Values of all Specified Investment Securities minus
(B) the aggregate Escrow Closing Date Market Values of all
Specified Investment Securities.
(xi) "Upgraded Investment Security" means any investment
security that (A) has received a credit rating upgrade from,
or been placed on a credit watch with positive implications
by, Moody's or Standard & Poor's after the later of March
31, 2001 and the date of acquisition thereof by F&G Life or
Thomas Jefferson Life and before the earlier of the Escrow
Closing Date and the date of disposition thereof, (B) has a
March 31 Market Value which is greater than its Book Value,
and (C) has an Escrow Closing Date Market Value which is
greater than its March 31 Market Value.
(xii) "Upgraded Investment Securities Offset" means an
amount equal to the difference of (A) the aggregate Escrow
Closing Date Market Values of all Upgraded Investment
Securities minus (B) the aggregate March 31 Market Values of
all Upgraded Investment Securities.
(c) Valuation. As of the Closing Date, Parent and Seller
shall engage a valuation expert mutually agreed upon by
Parent and Seller, and if the parties cannot agree, an
alternative valuation expert designated by the American
Arbitration Association (the "Valuation Expert"). Each of
the parties hereto shall use its commercially reasonable
efforts to cause the Valuation Expert to prepare and deliver
as promptly as practicable (but in no event more than 60
days following the Escrow Closing Date) a report (the
"Impaired Security Purchase Price Adjustment Report"). All
valuations performed or used by the Valuation Expert shall
be conducted using methodologies consistent with the
historical methodologies used by F&G Life and Thomas
Jefferson Life to value investment securities (including the
use of commercial pricing services). The Impaired Security
Purchase Price Adjustment Report shall set forth:
(i) the March 31 Market Value and Escrow Closing Date
Market Value of each Specified Investment Security,
Downgraded Investment Security and Upgraded Investment
Security held by F&G Life or Thomas Jefferson Life at any
time between March 31, 2001 and the Escrow Closing Date;
(ii) a calculation of the Specified Investment Securities
Losses;
(iii) a calculation of the Downgraded Investment
Securities Losses;
(iv) a calculation of the Upgraded Investment Securities
Offset;
(v) a calculation of the Aggregate Impaired Amount; and
(vi) a calculation of the Impaired Security Purchase Price
Adjustment.
(d) Cooperation and Review. Parent and Seller shall take
such actions as are reasonably necessary to expedite the
Valuation Expert's preparation and delivery of the Impaired
Security Purchase Price Adjustment Report. During the
period from the Closing Date until the date of delivery of
the Impaired Security Purchase Price Adjustment Report,
Parent and Seller shall give the Valuation Expert and other
appropriate personnel such assistance and access to the
assets and books and records of F&G Life and Thomas
Jefferson Life as the Valuation Expert shall reasonably
request during normal business hours in order to enable the
Valuation Expert to prepare and deliver the Impaired
Security Purchase Price Adjustment Report. The parties
shall cause the Valuation Expert to deliver the Impaired
Security Purchase Price Adjustment Report to both parties
promptly following completion thereof. Parent and Seller
shall have the right to review all work papers and
procedures used to prepare the Impaired Security Purchase
Price Adjustment Report and shall have the right to perform
any other reasonable procedures necessary to verify the
accuracy thereof. Parent and Seller shall each be
responsible for, and shall promptly pay when due, one-half
of the fees and expenses of the Valuation Expert.
(e) Dispute Resolution. Unless Parent or Seller, within 20
Business Days following the delivery of the Impaired
Security Purchase Price Adjustment Report, notifies the
other party in writing (an "Objection Notice") that it
objects to the Impaired Security Purchase Price Adjustment
Report and specifies in reasonable detail (A) the basis for
such objection, (B) all information in such objecting
party's possession which forms the basis thereof, and (C)
the amount in dispute, such Impaired Security Purchase Price
Adjustment Report shall become final and binding upon the
parties. If an Objection Notice is given, the parties shall
consult with each other with respect to the objection. If
the parties are unable to reach agreement within 20 Business
Days after an Objection Notice has been given, any
unresolved disputed items shall be promptly referred to an
independent nationally recognized public accounting firm
selected by mutual agreement of Parent and Seller, or if
Parent and Seller are unable to agree within five Business
Days of such 20-day period, an independent nationally
recognized public accounting firm appointed by the American
Arbitration Association acting in accordance with the
Commercial Dispute Resolution Procedures in effect at the
time the arbitration is initiated (the "Unrelated Accounting
Firm"). The Unrelated Accounting Firm shall be directed to
render a written report on the unresolved disputed issues
with respect to the Impaired Security Purchase Price
Adjustment Report within 90 days of the submission of such
disputed issues to them and to resolve only those issues of
dispute set forth in the Objection Notice. The resolution
of the dispute by the Unrelated Accounting Firm shall be
final and binding on the parties. Parent and Seller agree
to cooperate with each other and with each other's
authorized representatives to resolve any and all matters in
dispute as soon as practicable. The fees and expenses of
the Unrelated Accounting Firm shall be borne equally by
Seller and Parent.
(f) Within two (2) Business Days after the final
determination of any adjustment pursuant to this Section
1.8, Seller shall pay to Purchaser the amount of any
adjustment required. Any payment pursuant to this Section
1.8 shall be made by wire transfer of immediately available
funds to an account designated by Purchaser and shall be
accompanied by immediately available funds in an amount
equal to interest accruing on such payment at the LIBOR rate
from the Closing Date to the date of payment.
Section 1.9. Consideration to be Provided on the Reference Date.
--------------------------------------------------
(a) On the Reference Date, if the product of
(i) the number of Initial Parent Shares, adjusted to reflect
any subdivision or consolidation of such shares or any bonus
shares issued in respect of such shares after the Escrow
Closing Date but on or prior to the Reference Date,
multiplied by (ii) the Reference Share Price multiplied by
the Reference Date Conversion Rate (such product of (i)
multiplied by (ii) being the "Reference Date Value") is less
than $300,000,000, at Parent's option, either:
(i) Purchaser shall deliver to Seller by wire transfer in
immediately available funds an amount equal to the
difference of (A) $300,000,000 minus (B) the Reference Date
Value (provided, however, that any payment by Purchaser
pursuant to this Section 1.9(a)(i) shall in no event be
greater than $40,000,000); or
(ii) Parent, on behalf of Purchaser, shall allot and issue
to Seller or an affiliate or affiliates of Seller as Seller
may direct fully paid (or credited as fully paid) and free
and clear of all Liens (other than Liens expressly created
or permitted by Seller) a number of duly allotted and issued
Parent Shares (the "Reference Date Shares") equal to the
quotient of (A) $300,000,000 minus the Reference Date Value
divided by (B) the Reference Share Price multiplied by the
Reference Date Conversion Rate (provided, however, that the
numerator referred to in Section 1.9(a)(ii)(A) shall in no
event be greater than $40,000,000);
provided, however, that if on the Reference Date, the
Reference Date Value is greater than $330,000,000, Purchaser
shall not be obligated to make any payment and Parent, on
behalf of Purchaser, shall not be obligated to deliver any
Parent Shares pursuant to this Section 1.9, and Seller
shall, at Seller's option, either:
(x) deliver to Purchaser by wire transfer in
immediately available funds an amount equal to the
difference of (A) the Reference Date Value minus (B)
$330,000,000; or
(y) deliver to Purchaser a sum equal to the
amount realized by Seller, net of any fee or discount,
upon the sale to third parties through a broker or
brokers designated by Parent, free and clear of all
Liens (other than Liens expressly created or permitted
by Parent or Purchaser), of a number of Parent Shares
equal to the quotient of (A) the Reference Date Value
minus $330,000,000 divided by (B) the Reference Share
Price multiplied by the Reference Date Conversion Rate.
(b) "Reference Share Price" shall mean the average closing
price of a Parent Share on the LSE as reported in the
European edition of The Wall Street Journal, or, if not
reported therein, The Financial Times, for the 10
consecutive trading days prior to (but not including) the
Reference Date.
(c) "Reference Date Conversion Rate" means the U.S.
Dollar/British Pound exchange rate as reported in the United
States (Eastern Edition) of The Wall Street Journal for the
Business Day immediately preceding the Reference Date.
Section 1.10. Transfer Restrictions on Initial Parent Shares.
----------------------------------------------
(a) (i) Prior to the Reference Date, Seller
shall not directly or indirectly Transfer or attempt to
Transfer any Initial Parent Shares. As used in this
Agreement, "Transfer" means the making of any sale,
exchange, assignment, hypothecation, gift, security
interest, pledge or other encumbrance, or any agreement
therefor, any voting trust or other agreement or arrangement
with respect to the transfer of voting rights or any other
transfer or disposition whatsoever, whether voluntary or
involuntary, affecting the right, title, interest or
possession in or to such Initial Parent Shares. Any
purported Transfer of Parent Shares in violation of this
Section 1.10 shall be of no force or effect. Seller agrees
not to sell, transfer, pledge, rehypothecate or enter into
any transaction based upon the value of the Parent Shares,
including, without limitation, any transaction involving
futures, options, derivatives or similar instruments or
strategies designed to hedge all or a portion of the risks
associated with ownership of the Parent Shares. For
purposes of greater clarity, nothing in this Section
1.10(a)(i) shall prevent Seller from hedging the currency
risk associated with its holdings of Parent Shares or making
use of derivatives on broad based indices of U.K. or South
African stocks (including futures on such indices, options
on such futures, and options and swaps on such indices).
(ii) Notwithstanding anything contained in Section
1.10(a)(i), Seller shall have the right at any time to
Transfer any or all of the Initial Parent Shares (in each
case provided that any and all Persons to whom or to which
any Initial Parent Shares are Transferred in accordance with
this Section 1.10 agree to be bound by this Section 1.10 and
execute and deliver to Parent an agreement in form and
substance reasonably acceptable to Parent to such effect) to
(A) The St. Paul or any direct or indirect wholly owned
subsidiary of The St. Paul or (B) as required by Law (as
defined in Section 3.2).
(b) Seller may Transfer Initial Parent Shares from and
after the Reference Date; provided, however, that any
Transfer shall comply with the requirements of Regulation S
under the Securities Act of 1933 or be exempt from the
registration requirements of such Act. Any such Transfers
shall be made, at Seller's option, either:
(i) Through any broker selected by Seller, provided that:
(A) the number of Parent Shares sold by Seller on any
trading day pursuant to this Section 1.10(b)(i) shall not
exceed 25% of the average trading volume of Parent Shares on
the LSE in the 10 trading days preceding such trading day
and (B) the number of Parent Shares sold by Seller in any
six month period shall not exceed 25% of the number of
Parent Shares acquired by Seller from Parent pursuant to
this Agreement; or
(ii) Without regard to any volume limitations, in one or
more placements through brokers managed consistent with
normal market practice in the United Kingdom; provided, that
Parent, at its option, may designate one of two joint
bookrunners for each such placement. If Parent designates a
joint bookrunner for a placement ("Parent's Bookrunner"),
Seller shall designate the other joint bookrunner ("Seller's
Bookrunner"). Seller may negotiate fee arrangements
(including placement commissions or market discounts) with
Seller's Bookrunner and Parent shall use commercially
reasonable efforts to cause Parent's Bookrunner to match the
fee arrangements of Seller's Bookrunner. To the extent that
Parent's Bookrunner is unwilling to agree to fee
arrangements that are at least as favorable to Seller as
those offered by Seller's Bookrunner, Seller shall not be
obliged to involve Parent's Bookrunner in the placement. If
Parent's Bookrunner for a placement is unable or unwilling
to proceed with the placement at a time that Seller and its
designated Bookrunner wish to commence the placement
(provided that Parent's Bookrunner shall have been given
reasonable advance notice thereof), Seller shall be free to
proceed with the placement without the participation of
Parent's designated Bookrunner. To the extent reasonably
requested by Seller, and to the extent Parent and Parent
officers, upon advice of counsel, may do so consistent with
applicable Law, Parent officers shall participate in road
show presentations to facilitate the sale of Parent Shares
in such placements. Seller agrees that in connection with
any placement it will instruct the bookrunners for the
placement: (A) to consult with (but not to take instructions
from) Parent regarding the placement and to keep Parent
reasonably informed concerning the status and terms of such
placement; and (B) that Seller wishes the bookrunners to use
reasonable efforts to place the Parent Shares being sold by
Seller with long term investors and to place such Parent
Shares in a manner consistent with the maintenance of an
orderly market; provided, in the case of each of (A) and
(B), that such considerations do not disadvantage the Seller
regarding the price it obtains for such Parent Shares.
(c) In addition, Seller may Transfer Initial Parent Shares
at any time and in any manner with the prior written consent
of Parent.
Section 1.11. Fractional Shares.
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No fraction of a Parent Share will be issued
pursuant to Section 1.3(a)(ii) or Section 1.9(a)(ii), but in
lieu thereof Seller shall receive from Purchaser an amount
in U.S. dollars in cash (rounded down to the nearest whole
cent), without interest thereon, equal to the product of (A)
such fraction and (B) the Escrow Closing Share Price or
Reference Share Price, as the case may be, and (C) the
Escrow Closing Date Conversion Rate (with respect to the
Escrow Closing Share Price) or the Reference Date Conversion
Rate (with respect to the Reference Share Price).
Section 1.12. Parent Guarantee.
----------------
Parent hereby unconditionally and irrevocably
guarantees the due and punctual performance of all the
obligations of Purchaser and Note Purchaser under this
Agreement. Prior to the Escrow Closing, Parent shall cause
each of Purchaser and Note Purchaser to authorize, execute
and deliver this Agreement and assume its respective
obligations as a party hereunder.
ARTICLE TWO
Definitions
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Section 2.1. Definitions.
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(a) The following terms shall have the
respective meanings set forth below throughout this
Agreement:
(i) "African Exchanges" means the Johannesburg Securities
Exchange and the Malawi, Namibian and Zimbabwe Stock
Exchanges.
(ii) "Agreement" means this Stock Purchase Agreement, dated
as of April 26, 2001, between Seller and Parent.
(iii) "Business Day" means a day which is not a
Saturday, a Sunday or a public holiday in New York or
London.
(iv) "Contracts" shall mean agreements, contracts (other
than contracts implied in law) and commitments (other than
agreements, contracts or commitments relating to assets in
the investment portfolios of F&G Life or any of the F&G
Subsidiaries entered into in the ordinary course of business
consistent with past practice or mortgage loans or other
assets held in F&G Life's or any F&G Subsidiary's investment
portfolio) of the following types, to which F&G Life or any
of the F&G Subsidiaries is a party or by which F&G Life or
any of the F&G Subsidiaries or any of their respective
properties is bound as of the date hereof: (A) any
mortgage, indenture, loan or credit agreement, security
agreement or other agreement or instrument relating to the
borrowing of money or extension of credit in any case in
excess of $1,000,000 (other than intercompany loans), (B)
any collective bargaining agreement, (C) any agreement with
any Person containing any provision or covenant currently or
hereafter in effect (other than restrictions agreed to in
the ordinary course of business consistent with past
practice in confidentiality agreements or insurance agent,
broker, producer, marketing or distribution agreements to
which F&G Life or Thomas Jefferson Life is a party, in each
case other than those agreements that purport to bind any
affiliates of F&G Life other than the F&G Subsidiaries) (i)
limiting the ability of F&G Life or any F&G Subsidiary to
(1) sell any products or services of or to any other Person,
(2) engage in any line of business, or (3) compete with or
obtain products or services from any Person or (ii) limiting
the ability of any Person to compete with or to provide
products or services to F&G Life or any F&G Subsidiary, in
the case of clauses (i) and (ii), except for confidentiality
or marketing and distribution agreements providing that F&G
Life or any F&G Subsidiary will not use information provided
under such agreements to develop an insurance product
substantially similar to another Person's proprietary
product, (D) all contracts pursuant to which F&G Life or any
F&G Subsidiary has agreed to indemnify or hold harmless any
Person (other than hold harmless agreements entered into
with public school districts or other Government Entities in
the ordinary course of business consistent with past
practice in connection with distribution of F&G Life's tax
sheltered annuity products, indemnifications or hold
harmless covenants which have lapsed, customary
indemnifications and hold harmless covenants contained in
insurance policies, annuity contracts or reinsurance
contracts issued by F&G Life or any F&G Subsidiary in the
ordinary course of business consistent with past practice,
agreements entered into in the ordinary course of business
consistent with past practice pursuant to which F&G Life or
any F&G Subsidiary agrees to indemnify others for negligence
or wrongful acts of F&G Life or any F&G Subsidiary), (E) the
leases set forth in Section 3.9(a) of Seller's Disclosure
Schedule, (F) all reinsurance and retrocession contracts
providing for reinsurance or retrocession premiums in excess
of $1,000,000 annually, (G) all outstanding written proxies,
powers of attorney, or similar delegations of authority of
F&G Life or any F&G Subsidiary (other than those that are
immaterial or given in connection with insurance policies or
those given in the ordinary course of business in connection
with customary insurance agency or brokerage or other agency
or sales agreements), (H) all agreements with any present
individual officer, director, employee, agent (other than
insurance agent), consultant, or other similar
representative of F&G Life or any F&G Subsidiary or former
individual officer, director, employee, agent (other than
insurance agent), consultant or similar representative
thereof (other than change in control agreements, and
marketing and distribution agreements entered into in the
ordinary course of business consistent with past practice)
under which there exists any present or future liability
with respect to such contract requiring payments to any such
individual in excess of $200,000 annually or $1,000,000 in
the aggregate over any three-year period, (I) any other
agreement, contract or commitment (other than insurance
policies, annuity contracts, reinsurance agreements,
insurance agency or brokerage or other agency or sales
agreements entered into in the ordinary course of business)
which, in any case, requires payments or receipts by a party
thereto after the date of this Agreement of more than
$1,000,000 annually or $5,000,000 in the aggregate over any
three-year period, and (J) the current insurance agent,
broker or producer agreements between F&G Life and each of
(i) the 10 F&G Producers that accounted for the highest
sales in F&G Life's annuity brokerage sales channel during
the calendar year ended December 31, 2000, and (ii) the 10
F&G Producers that accounted for the highest sales in F&G
Life's life brokerage sales channel during the calendar year
ended December 31, 2000. Without limiting the generality of
the foregoing, the term "Contracts" shall include the
Agreement for Information Services and Third-Party
Administrative Services, dated November 13, 1995, between
F&G Life and Alliance-One Services, Inc. ("Alliance") (as
successor to Alliance One Services, L.P.), together with all
amendments thereto, the Agreement for Information Services,
dated April 12, 1996, between Thomas Jefferson Life and
Alliance, together with all amendments thereto, and the
Agreement for Third Party Administrative Services, dated
March 31, 1997, between Thomas Jefferson Life and Alliance,
together with all amendments thereto.
(v) "Environmental Law" means any applicable Law, license,
permit or other legal requirement enacted, promulgated or
otherwise mandated by any Government Entity (A) for the
protection of the environment (including air, water, soil
and natural resources), or (B) regulating the use, storage,
handling, emission, discharge, migration, transportation,
release or disposal of Hazardous Substances, in each case as
presently in effect in the relevant jurisdiction.
(vi) "F&G Life" means Fidelity and Guaranty Life Insurance
Company, a Maryland stock insurer.
(vii) "F&G Life's Business" means the businesses and
activities of F&G Life and the F&G Subsidiaries as presently
conducted, and the interests, properties, assets and
liabilities of F&G Life and the F&G Subsidiaries, taken as a
whole.
(viii) "F&G Subsidiaries" means Thomas Jefferson Life
together with F&G Securities, Inc., a Maryland corporation,
F&G Brokerage, Inc., a Maryland corporation, Fidelity &
Guaranty Assignment, LLC, a Maryland limited liability
company, and Mt. Washington Investment Group, LLC, a
Maryland limited liability company.
(ix) "GAAP" means generally accepted accounting principles
in the United States.
(x) "Government Entity" means any federal, state, local,
municipal, county, foreign or other governmental, quasi-
governmental, administrative or regulatory authority, body,
agency, court, tribunal, commission or other similar
governmental entity (including any branch, department,
agency or political subdivision thereof).
(xi) "Guaranty Agreements" means (i) the Guaranty dated
February 3, 1999 by Seller for the benefit of F&G Life, and
(ii) the letter agreement dated February 9, 1999 from Seller
to Duff and Phelps Credit Rating Company (Fitch).
(xii) "Hazardous Substance" means any material,
substance or waste presently listed, defined, designated or
classified as hazardous, toxic, radioactive, a pollutant, a
contaminant or words of similar meaning or regulatory effect
by any Government Entity, including petroleum, any
derivative or by-product thereof, asbestos, and
polychlorinated biphenyls.
(xiii) "Intellectual Property" means computer software,
patents and patentable materials, trademarks, trade names,
trade secrets, service marks, copyrights, inventions
(whether patentable or unpatentable), know-how and other
intellectual property rights and applications therefor,
registrations thereof and licenses or other rights in
respect thereof.
(xiv) "IRS" means the Internal Revenue Service.
(xv) "Knowledge of Parent" means the actual knowledge,
within the scope of his or her responsibility, after
reasonable inquiry of persons who directly report to him or
her and are known to him or her to have specialized
knowledge of the subject matter at issue, of the Chairman
and Chief Executive, the Chief Executive, Financial
Services, the Chief Executive, Life or the Group Finance
Director of Parent.
(xvi) "Knowledge of Seller" means the actual knowledge,
within the scope of his or her responsibility, after
reasonable inquiry of persons who directly report to him or
her and are known to him or her to have specialized
knowledge of the subject matter at issue, of (i) the Chief
Executive Officer and President, the Chief Financial
Officer, the Vice President-Corporate Controller or the
General Counsel of Seller or (ii) the President, any
Executive Vice President, the Chief Financial Officer or the
General Counsel of F&G Life, Thomas Jefferson Life.
(xvii) "LIBOR" means the 3 month London Interbank Offered
Rate, determined as the arithmetic mean of the offered rates
for deposits in United States dollars which appears on the
display designated as page "LIBO" on the Reuters Data
Terminal (or such other page as may replace the LIBO page on
that service for the purpose of displaying London interbank
offered rates of major banks) at approximately 11:00 A.M.
London time on the date on which LIBOR is to be determined.
(xviii) "Lien" means any mortgage, pledge, security
interest, lien, adverse claim, levy, charge or similar
encumbrance or any conditional sales agreement or title
retention agreement.
(xix) "Material Adverse Effect" means a material adverse
effect on (A) the assets, business, financial condition or
results of operations of F&G Life and the F&G Subsidiaries,
taken as a whole, but shall not include any changes or
effects (x) to the extent relating to or resulting from
general economic, political or market conditions, including
(i) changes after the date of this Agreement in any Law or
in the interpretation of any Law by any Government Entity
and (ii) changes in GAAP or SAP, (y) to the extent arising
from or associated with adverse developments in the life
insurance industry generally or (z) to the extent
attributable to the public announcement of this Agreement or
the transactions contemplated hereby or the identity or
business strategy of Parent, (B) the legality, validity or
enforceability of any material provision of this Agreement
and the material agreements and instruments to be entered
into in connection herewith or (C) the ability of Seller to
perform its material obligations under this Agreement or any
of the other Transaction Agreements.
(xx) "NASD" means the National Association of Securities
Dealers, Inc.
(xxi) "Parent" means Old Mutual plc.
(xxii) "Parent Material Adverse Effect" means a material
adverse effect on (A) the assets, business, financial
condition or results of operations of Parent and the Parent
Subsidiaries, taken as a whole, but shall not include any
changes or effects (x) to the extent relating to or
resulting from general economic, political or market
conditions, including (i) changes after the date of this
Agreement in any Law or in the interpretation of any Law by
any Government Entity and (ii) changes in applicable
accounting standards, including, without limitation, GAAP,
U.K. GAAP and generally accepted accounting principles in
South Africa, (y) to the extent arising from or associated
with adverse developments in the life insurance, casualty
insurance, asset management or brokerage industries
generally or (z) to the extent attributable to the public
announcement of this Agreement or the transactions
contemplated hereby, (B) the legality, validity or
enforceability of any material provision of this Agreement
and the material agreements and instruments to be entered
into in connection herewith or (C) the ability of Parent to
perform its material obligations under this Agreement or any
of the other Transaction Agreements.
(xxiii) "Parent Principal Subsidiary" means any of:
(A) Old Mutual (US) Holdings Inc. (formerly known as United
Asset Management Corporation); or
(B) any Subsidiary of Parent whose gross assets are equal
to five percent or more of the gross assets of Parent and
the Parent Subsidiaries; or
(C) any Subsidiary of Parent whose operating profits before
tax and extraordinary and exceptional items are equal to
five percent or more of the consolidated operating profits
before tax and extraordinary and exceptional items of Parent
and the Parent Subsidiaries; or
(D) any Subsidiary of Parent to which has been transferred
(whether by one or a series of transactions, related or not)
the whole or substantially the whole of the assets of a
Subsidiary of Parent which, immediately prior to such
transactions or any of such transactions, was a Parent
Principal Subsidiary by virtue of (B) or (C) above.
For the purpose of this definition:
1. the gross assets or operating profits before tax and
extraordinary and exceptional items of a company shall be
ascertained by reference to the latest audited (where
appropriate) accounts (consolidated in the case of a company
which itself has Subsidiaries and which, in the normal
course, prepares consolidated accounts) of that company
adjusted (where appropriate) to reflect any company
(determined on the same basis) subsequently acquired or
disposed of;
2. the gross assets or operating profits before tax and
extraordinary and exceptional items of Parent and the Parent
Subsidiaries shall be ascertained by reference to the latest
audited consolidated accounts of Parent and the Parent
Subsidiaries, adjusted (where appropriate) to reflect any
company (determined on the same basis) subsequently acquired
or disposed of;
3. a Parent Principal Subsidiary which has become a Parent
Principal Subsidiary under paragraph (D) above as a result
of a transfer from a Parent Principal Subsidiary which is a
Parent Principal Subsidiary by virtue of paragraph (B) or
(C) above shall cease to be a Parent Principal Subsidiary on
the date of publication of the first audited consolidated
accounts of Parent and the Parent Subsidiaries prepared as
of a date after that Parent Principal Subsidiary became a
Parent Principal Subsidiary, unless that Parent Principal
Subsidiary remains to be treated as a Parent Principal
Subsidiary by virtue of paragraph (B) or (C) above; and
4. if a Subsidiary of Parent becomes a Parent Principal
Subsidiary under paragraph (D) above, then the Parent
Principal Subsidiary from which the relevant transfer was
made shall, subject to paragraphs (B) and (C) above, cease
to be a Parent Principal Subsidiary.
(xxiv) "Parent Subsidiaries" means each of the
Subsidiaries of Parent.
(xxv) "Parent's Business" means the businesses and
activities of Parent and the Parent Subsidiaries as
presently conducted, and the interests, properties, assets
and liabilities of Parent and the Parent Subsidiaries, taken
as a whole.
(xxvi) "Parent's Disclosure Schedule" means the
Disclosure Schedule delivered by Parent to Seller, dated as
of the date hereof.
(xxvii) "Parent's Lawyers" means Weil, Gotshal & Manges
LLP, at 767 Fifth Avenue, New York, NY 10153-0119.
(xxviii) "Person" means any individual, corporation
(including any non-profit corporation), general or limited
partnership, limited liability company, limited liability
partnership, firm, joint venture, joint-stock company,
trust, estate, association, unincorporated organization,
governmental, judicial or regulatory body or other entity of
any kind or nature.
(xxix) "Prepaid Note" means the Promissory Note dated
December 22, 1999, payable by F&G Life to Seller in the
original principal amount of $40,000,000.00.
(xxx) "Reference Date" means the date that is one year
after the Closing Date.
(xxxi) "SEC" means the Securities and Exchange
Commission.
(xxxii) "Seller" means St. Paul Fire and Marine Insurance
Company, a Minnesota insurance corporation.
(xxxiii) "Seller's Disclosure Schedule" means the
Disclosure Schedule delivered by Seller to Parent, dated as
of the date hereof.
(xxxiv) "Seller's Lawyers" means Sullivan & Cromwell, at
125 Broad Street, New York, NY 10004.
(xxxv) "Specified Matters" shall have the meaning set
forth in Section 2.1(a)(xxxv) of Seller's Disclosure
Schedule.
(xxxvi) "Structured Settlements Program" means the
business relationships and arrangements in effect as of the
date of this Agreement between (i) Seller and certain
liability insurers that are subsidiaries of Seller
(collectively with Seller, the "Structured Settlement
Purchasers") and (ii) F&G Life, Fidelity & Guaranty
Assignment, LLC, a wholly owned subsidiary of F&G Life, and
Thomas Jefferson Life, under which F&G Life, in the case of
non-New York business, or Thomas Jefferson Life, in the case
of New York business, sells to the Structured Settlement
Purchasers or, as the case may be, Fidelity & Guaranty
Assignment, LLC, as assignee, in accordance with Section 130
of the Code, immediate annuity contracts or funding
agreements to fund the obligations of the Structured
Settlement Purchasers for periodic payment of damages for
personal injuries established by settlement or judgment in
resolution of a tort claim or for periodic payments in
settlement of a workers' compensation claim or any other
claim against any Structured Settlement Purchaser.
(xxxvii) "Subsidiary" means (i) a subsidiary within the
meaning of section 736 of the U.K. Companies Act 1985, as
amended by section 144 of the U.K. Companies Act 1989; and
(ii) unless the context otherwise requires, a subsidiary
undertaking within the meaning of section 21 of the U.K.
Companies Act 1989.
(xxxviii) "Surplus Note" means the Promissory Note dated
December 12, 2000, payable by F&G Life to Seller in the
original principal amount of $50,000,000.00.
(xxxix) "Tax" or "Taxes" means any federal, foreign, state
or local income, business, alternative or add-on minimum
taxes, gross income, gross receipts, sales, use, ad valorem,
value added, transfer, transfer gains, net worth, franchise,
profits, premium, license, withholding, payroll, employment,
custom, duty or other taxes, governmental fees or like
assessments or charges of any kind whatsoever, together with
any interest, penalty, addition to tax or additional amount
imposed by any governmental or taxing authority and shall
include any liability in respect of Taxes as a transferee or
as an indemnitor, guarantor, surety or in a similar capacity
under any contract, arrangement, agreement, understanding or
commitment (whether oral or written).
(xl) "Tax Return" means any return, declaration, report,
claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment
thereto.
(xli) "The St. Paul" means The St. Paul Companies, Inc.,
a Minnesota general business corporation.
(xlii) "Thomas Jefferson Life" means Thomas Jefferson
Life Insurance Company, a New York stock life insurance
company.
(xliii) "Transaction Agreements" means this Agreement, the
Indemnification Agreement and the License Agreement.
(xliv) "U.K. GAAP" means accounting principles generally
accepted in the United Kingdom.
(b) The following terms shall have the respective meanings
set forth in the relevant Section referred to below
throughout this Agreement:
Agency 4.5
Agreements and Instruments 4.6
Audited Statutory Financial Statements 3.6(b)
Authorization 4.5
Basket 9.2(c)
Business Employees 5.3.1(a)
Cash Consideration 1.3(a)(i)
Closing 1.6
Closing Date 1.6
COBRA 3.11
Code 3.11
Damages 9.2(l)
Dual Covered Claim 9.2(d)
Environmental Permits 3.25(a)(i)
ERISA 3.11
ERISA Affiliate 3.11
Escrow Account 1.3(a)(i)
Escrow Closing 1.4
Escrow Closing Date 1.4
Escrow Closing Date Conversion Rate 1.3(a)(ii)
Escrow Closing Share Price 1.3(a)(ii)
F&G Plans 3.11
F&G Producers 3.22(a)
GAAP Financial Information 3.6(a)
HSR 3.3
Impaired Security Purchase
Price Adjustment Report 1.8(c)
Indemnifiable ERISA Losses 9.2(h)
Indemnifiable Market Misconduct 9.2(k)
Indemnification Agreement 8.3.3
Indemnified Party 9.2(f)
Indemnifying Party 9.2(f)
Initial Parent Shares 1.3(a)(ii)
Initial Share Consideration 1.3(a)
Invalid Provision 10.17
Laws 3.2
Lawyers' Escrow Instruction Letter 1.5(c)
License Agreement 8.3.6
Listing 1.3(a)(ii)
Listing Confirmation 1.6
Litigation 3.16
LSE 1.3(a)(ii)
Negative Parent Changes 6.1(k)
Negative Seller Changes 6.1(k)
Note Purchaser Recitals
Objection Notice 1.8(e)
OM Life Insurance Subsidiary 5.3.1(a)
OM Life Insurance Subsidiary's DC Plan 5.3.1(b)
Parent Benefit 6.1(k)
Parent Changes 6.1(k)
Parent Detriment 6.1(k)
Parent Financial Statements 4.8
Parent Indemnitee 9.2(a)
Parent Interim Financial Statement 5.2.3
Parent Shares 4.1(c)
Parent's Bookrunner 1.10(b)(ii)
Pension Plan 3.11
Permits 3.21
Plans 3.11
Positive Parent Changes 6.1(k)
Positive Seller Changes 6.1(k)
Post-Closing Tax Period 6.1(c)
Preliminary Offering Circular 4.7(a)
Protocols 5.3.2(a)
Purchaser Recitals
Quarterly GAAP Financial Information 5.1.3
Quarterly Statutory Statement 5.1.3
Reference Date Conversion Rate 1.9(c)
Reference Date Shares 1.9(a)(ii)
Reference Date Value 1.9(a)
Reference Share Price 1.9(b)
Related Costs 6.1(a)
SAP 3.6(c)
Seller Benefit 6.1(k)
Seller Changes 6.1(k)
Seller Detriment 6.1(k)
Seller Indemnitee 9.2(b)
Seller's Bookrunner 1.10(b)(ii)
Shares Recitals
St. Paul DC Plans 5.3.1(b)
Statutory Statements 3.6(b)
Surplus Note Consideration 1.3(b)
Tax Benefit 6.1(d)
Transfer 1.10(a)(i)
UKLA 1.3(a)(ii)
Unrelated Accounting Firm 1.8(e)
Valuation Expert 1.8(c)
WARN 3.12
ARTICLE THREE
Representations and Warranties of Seller
----------------------------------------
Seller represents and warrants to Parent as
follows:
Section 3.1. Corporate Status and Authority.
------------------------------
Seller is an insurance corporation duly
incorporated, validly existing and in good standing under
the laws of the State of Minnesota, and Seller has full
right, power and authority and has taken all corporate
action necessary in order to execute and deliver this
Agreement and the other Transaction Agreements to which it
is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated
hereby and thereby. This Agreement has been, and the other
Transaction Agreements to which it is a party, when executed
and delivered will be, duly executed and delivered by Seller
and this Agreement is, and the other Transaction Agreements
to which it is a party, when executed and delivered will be,
the legal, valid and binding obligation of Seller
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 and to general
equity principles.
Section 3.2. Non-Contravention.
-----------------
Subject to the obtaining of certain consents or
approvals indicated in Section 3.3 of this Agreement or in
Section 3.2 of Seller's Disclosure Schedule, the execution,
delivery and performance of this Agreement and the other
Transaction Agreements to which it is a party by Seller and
the consummation by Seller of the transactions contemplated
hereby and thereby will not (x) contravene, conflict with,
or constitute or result in a breach or violation of (i) any
statute, regulation, rule, binding interpretation,
injunction, judgment, order, decree, ruling, charge,
arbitration award or ruling or other binding restriction of
any Government Entity ("Laws") to which Seller, F&G Life or
any of the F&G Subsidiaries (or any of their respective
assets) is subject, or (ii) any provision of the certificate
of incorporation or by-laws or other organizational
documents of Seller, F&G Life or any of the F&G Subsidiaries
or (y) violate, conflict with, result in a breach of,
constitute (or with notice or upon the expiration of
applicable grace or cure periods or both constitute) a
default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, cancel or
require any notice under any agreement, contract, lease,
license or instrument to which F&G Life or any of the F&G
Subsidiaries is a party or by which any of them are bound or
to which any of their properties or assets is subject, or
create any Liens on any properties or assets owned by F&G
Life or any of the F&G Subsidiaries, in the case of clauses
(x)(i) and (y), the effect of which, individually or in the
aggregate, has had or is reasonably likely to have a
Material Adverse Effect.
Section 3.3. Government Approvals, Consents and Filings.
------------------------------------------
No consent, approval, authorization, order,
filing, registration or notification is required to be
obtained by Seller, F&G Life or any of the F&G Subsidiaries
from, or made or given by Seller, F&G Life or any of the F&G
Subsidiaries to, any Government Entity in connection with
the execution, delivery and performance of this Agreement or
the other Transaction Agreements or the consummation of the
transactions specifically provided for hereby or thereby or
by any agreement entered into pursuant hereto, except (x)
filings with the Federal Trade Commission and the Department
of Justice that may be required with respect to the
acquisition of the Shares by Purchaser, pursuant to the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended
("HSR"), and the expiration or early termination of the
waiting period thereunder and (y) as otherwise indicated in
Section 3.3 of Seller's Disclosure Schedule.
Section 3.4. Corporate Status and Shares of F&G Life.
---------------------------------------
(a) F&G Life (x) is an insurance company duly
incorporated and validly existing under, and is in good
standing under, the laws of the State of Maryland, (y) with
full power and authority to conduct its business and to own
or lease and operate its properties as and in the places
where such business is now conducted and such properties are
now owned or leased and operated, with such exceptions as,
individually or in the aggregate, have not had and are not
reasonably likely to have a Material Adverse Effect. F&G
Life is qualified or otherwise authorized to do business as
a foreign corporation and is in good standing in each
jurisdiction in which the character of the properties owned
or held by it under lease or license or F&G Life's Business
requires such qualification or authorization, except where
the failure so to qualify or be authorized, individually or
in the aggregate, has not had and is not reasonably likely
to have a Material Adverse Effect. The foregoing
qualifications and authorizations, together with those
indicated in Section 3.21 of Seller's Disclosure Schedule,
are sufficient in all material respects for the conduct of
F&G Life's Business as presently conducted.
(b) The authorized capital stock of F&G Life consists of
50,000 shares of common stock, par value $100.00 per share,
of which 30,000 shares are issued and outstanding. The
Shares constitute all of the issued and outstanding capital
stock of F&G Life. All of the Shares are owned beneficially
and of record by Seller, free and clear of any Liens. All
of the Shares have been duly authorized and validly issued
and are fully paid and nonassessable. Except for rights
created pursuant to this Agreement, there are no outstanding
options, warrants, securities, rights (preemptive or other),
subscriptions, calls, or other agreements of any kind that
give any Person the right to purchase or otherwise receive
or be issued any shares of capital stock of F&G Life, or any
security convertible into or exchangeable for any shares of
capital stock of F&G Life and no authorization therefor has
been given. There are no voting arrangements with respect
to the Shares and, assuming receipt of the approvals and
consents indicated in Section 3.3 of this Agreement and
Section 3.3 of Seller's Disclosure Schedule and in Section
4.3 of this Agreement and Section 4.3 of Purchaser's
Disclosure Schedule, there are no restrictions on Seller's
ability to transfer the Shares to Purchaser at the Closing
free and clear of any Liens (other than Liens expressly
created or permitted by Parent or Purchaser). Upon delivery
of the Initial Share Consideration and the Surplus Note
Consideration, Purchaser will acquire good and marketable
title to the Shares, free and clear of any Lien (other than
Liens expressly created or permitted by Parent or
Purchaser).
(c) Other than as set forth in Section 3.4(c) of Seller's
Disclosure Schedule, there are no restrictions or
limitations on the payment of dividends by F&G Life other
than as provided by statute or regulation.
Section 3.5. F&G Subsidiaries.
----------------
(a) The F&G Subsidiaries are the only Persons
(other than low income housing limited partnerships and
similar tax credit investments held in F&G Life's or Thomas
Jefferson Life's investment portfolios) in which F&G Life
owns 50% or more of the capital stock or other equity
interests having ordinary voting power for the election of
directors, or the equivalent thereof. The F&G Subsidiaries
(x) are duly organized, validly existing, and in good
standing under the laws of their respective jurisdictions of
organization, (y) with full power and authority to conduct
their respective businesses as they are now being conducted
and to own or lease and operate their respective properties
as and in the places where such businesses are now conducted
and such properties are now owned or leased and operated,
with such exceptions as, individually or in the aggregate,
have not had and are not reasonably likely to have a
Material Adverse Effect. The F&G Subsidiaries are qualified
or otherwise authorized to do business and are in good
standing in each jurisdiction in which the character of the
properties owned or held under lease or license or the
character of any of the F&G Subsidiaries' businesses
requires such qualification or authorization, except where
the failure to so qualify or be so authorized, individually
or in the aggregate, has not had and is not reasonably
likely to have a Material Adverse Effect.
(b) The authorized capital stock of Thomas Jefferson Life
consists of 500,000 shares of common stock, par value $2.00
per share, of which 220,000 shares are issued and
outstanding. The authorized capital stock of F&G
Securities, Inc. consists of 10,000 shares of common stock,
par value $10.00 per share, all of which are issued and
outstanding. The authorized capital stock of F&G Brokerage,
Inc. consists of 100,000 shares of common stock, par value
$1.00 per share, of which 10,000 shares are issued and
outstanding. The membership interest in Fidelity & Guaranty
Assignment, LLC consists of $100.00.
(c) All the issued and outstanding shares of the capital
stock or other equity interests of each of the F&G
Subsidiaries are owned beneficially and of record by F&G
Life, free and clear of any Liens. All the issued and
outstanding shares or other equity interests of each of the
F&G Subsidiaries have been duly authorized and validly
issued and are fully paid and nonassessable. There are no
outstanding options, warrants, securities, rights
(preemptive or other), subscriptions, calls, or other
agreements of any kind that give any Person the right to
purchase or otherwise receive or be issued any of the shares
of capital stock or other equity interests of any of the F&G
Subsidiaries, or any security convertible into or
exchangeable for any shares of capital stock or other equity
interests of any of the F&G Subsidiaries and no
authorization therefor has been given. There are no voting
arrangements with respect to the shares of capital stock or
other equity interests of any of the F&G Subsidiaries.
(d) Other than as set forth in Section 3.5(d) of Seller's
Disclosure Schedule, there are no restrictions or
limitations on the payment of dividends or other
distributions by any of the F&G Subsidiaries other than as
provided by statute or regulation.
Section 3.6. Financial Statements and Statutory Reports.
------------------------------------------
(a) Seller has previously furnished to Parent
unaudited consolidated (i) balance sheets of F&G Life as of
December 31, 1998, 1999 and 2000, and (ii) income statements
of F&G Life for the years ended December 31, 1998, 1999 and
2000, each of which has been prepared on a basis consistent
with GAAP, it being acknowledged, however, that F&G Life's
status as a wholly owned indirect subsidiary of The St. Paul
results in GAAP not requiring F&G Life's financial
statements to include, among other things, footnotes and
statements of changes in stockholders' equity and cash flows
(collectively, the "GAAP Financial Information").
(b) Seller has previously furnished to Parent the following
statutory statements, in each case together with the
exhibits, schedules and notes thereto and any affirmations
and certifications filed therewith (collectively, the
"Statutory Statements"): (i) the annual statements of F&G
Life and Thomas Jefferson Life as at December 31, 1998, 1999
and 2000, in each case as filed with the insurance
regulatory authority of its jurisdiction of domicile,
including the statutory basis financial statements of F&G
Life and Thomas Jefferson Life, as audited by KPMG LLP (the
"Audited Statutory Financial Statements"), as at December
31, 1998 and 1999, and (ii) the annual statements of each of
F&G Life and Thomas Jefferson Life that were filed with
respect to the years covered by the annual statements
identified in (i) above in any jurisdiction (other than the
jurisdiction of domicile of F&G Life and Thomas Jefferson
Life) that differ materially from the corresponding annual
statements that were filed during such periods in the
jurisdiction of domicile of F&G Life and Thomas Jefferson
Life.
(c) Except as set forth in Section 3.6 of Seller's
Disclosure Schedule, the GAAP Financial Information and
Statutory Statements, respectively, present fairly, in all
material respects, the GAAP and statutory financial
condition and results of operations of F&G Life and Thomas
Jefferson Life, as the case may be, for the periods therein
specified, and were prepared, in all material respects, in
conformity with GAAP (with respect to the GAAP Financial
Information) and statutory accounting principles prescribed
or permitted by the applicable insurance regulatory
authority ("SAP") as in effect as of the date thereof (with
respect to the Statutory Statements), in each case applied
on a consistent basis during the periods presented, except
as expressly set forth within the subject financial
statements, and it being acknowledged that F&G Life's status
as a wholly owned indirect subsidiary of The St. Paul
results in GAAP not requiring F&G Life's financial
statements to include, among other things, footnotes and
statements of changes in stockholders' equity and cash
flows. To the Knowledge of Seller, no material deficiency
has been asserted in writing by any governmental authority
with respect to any of the GAAP Financial Information or
Statutory Statements.
Section 3.7. Undisclosed Liabilities.
-----------------------
Except as set forth in Section 3.7 of the
Seller's Disclosure Schedule, there were no liabilities of
F&G Life or any of the F&G Subsidiaries as of December 31,
2000 that are of a type required to be disclosed on a
consolidated balance sheet prepared in accordance with GAAP
or SAP, as applicable, as in effect on the date thereof (it
being acknowledged that F&G Life's status as a wholly owned
indirect subsidiary of The St. Paul results in GAAP not
requiring F&G Life's financial statements to include, among
other things, footnotes and statements of changes in
stockholders' equity and cash flows) except (a) policyholder
benefits payable or other liabilities incurred in the
ordinary course of business and consistent with past
practice, or (b) as reflected in the GAAP Financial
Information or Statutory Statements including the notes
thereto. Since December 31, 2000, neither F&G Life nor any
of the F&G Subsidiaries has incurred or become subject to
any liabilities that are of a type required to be disclosed
on a consolidated balance sheet (or, in the case of the
Statutory Statements, in the notes related thereto) prepared
in accordance with GAAP or SAP, as applicable, as in effect
on December 31, 2000 (it being acknowledged that F&G Life's
status as a wholly owned indirect subsidiary of The St. Paul
results in GAAP not requiring F&G Life's financial
statements to include, among other things, footnotes and
statements of changes in stockholders' equity and cash
flows), except (a) policyholder benefits payable or other
liabilities incurred in the ordinary course of business and
consistent with past practice, or (b) liabilities that,
individually or in the aggregate, have not had and are not
reasonably likely to have a Material Adverse Effect.
Section 3.8. Reserves
--------
Except as set forth in Section 3.8 of the
Seller's Disclosure Schedule, the reserves of each of F&G
Life and Thomas Jefferson Life reflected in the Statutory
Statements (a) were determined in accordance with generally
recognized actuarial methods and standards, consistently
applied, and were fairly stated in accordance with sound
actuarial principles using prescribed morbidity and
mortality tables and interest rates that are in accordance
with the nature of the benefits specified, and (b) met the
applicable requirements of the insurance laws and
regulations of the State of Maryland and the State of New
York, as applicable.
Section 3.9. Title to Real Properties.
------------------------
(a) Neither F&G Life nor any of the F&G
Subsidiaries owns any real property (other than leasehold
improvements relating to F&G Life's headquarters
facilities). Section 3.9(a) of Seller's Disclosure Schedule
sets forth a list of all real properties leased by F&G Life
and each of the F&G Subsidiaries. Except as, individually
or in the aggregate, has not had and is not reasonably
likely to have a Material Adverse Effect, F&G Life or an F&G
Subsidiary has good and valid leasehold estates in the real
properties leased by F&G Life or any of the F&G Subsidiaries
that are necessary for the conduct of F&G Life's Business as
currently conducted, free and clear of all Liens that would
adversely affect F&G Life's or any F&G Subsidiary's use of
such real property.
(b) Each of the leases relating to such real properties is
in full force and effect, there is no default by F&G Life or
any of the F&G Subsidiaries, as the case may be (or to the
Knowledge of Seller, by the lessor) under any such lease,
and each such lease will remain in full force and effect
following the Closing without any modification in the rights
or obligations of the parties under any such lease or
sublease, in each case, with such exceptions as,
individually or in the aggregate, have not had and are not
reasonably likely to have a Material Adverse Effect.
(c) To the Knowledge of Seller, no work has been performed
on or with respect to or in connection with any such real
property that has or would cause any such real property to
become subject to any mechanic's, materialmen's, workmen's,
repairmen's, carrier's or similar encumbrance currently
aggregating or reasonably expected to aggregate in excess of
$600,000.
Section 3.10. Material Contracts.
------------------
Except as indicated in Section 3.10(i) of
Seller's Disclosure Schedule, Seller has made available to
Parent for review copies of all written Contracts and
written descriptions of all oral Contracts other than
Contracts that by their terms cannot be disclosed. Section
3.10(i) of Seller's Disclosure Schedule contains a complete
list of all Contracts in effect as of the date hereof.
There are no defaults under any Contract by F&G Life or any
of the F&G Subsidiaries or, to the Knowledge of Seller, by
any other party thereto the effect of which, individually or
in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect. Except as, individually or in the
aggregate, has not had and is not reasonably likely to have
a Material Adverse Effect, each such Contract is in full
force and effect and constitutes a legal, valid, and binding
obligation of F&G Life or the relevant F&G Subsidiary, as
the case may be (and to the Knowledge of Seller, each other
party thereto), subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting
creditors' rights and to general equity principles. Except
as, individually or in the aggregate, has not had and is not
reasonably likely to have a Material Adverse Effect, none of
Seller, F&G Life nor any F&G Subsidiary has received any
notice, whether written or oral, of termination or intention
to terminate from any other party to any such Contract.
Section 3.11. Employee Benefits.
-----------------
Section 3.11 of Seller's Disclosure Schedule
contains a true and complete list of each employee benefit
plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), and all other employee benefits plans, contracts,
agreements or policies, whether or not subject to ERISA,
including, without limitation, bonus plans, employment,
consulting or other compensation agreements, incentive,
equity or equity-based compensation, deferred compensation
plans or arrangements, sale, disposition, change in control,
termination or severance plans or arrangements, stock
purchase plans and scholarship plans and programs, which
cover the employees of F&G Life and the employees of the F&G
Subsidiaries other than agreements by Seller or its
affiliates with members of senior management of F&G Life
that do not, and are not reasonably likely to, impose any
obligations on F&G Life, any F&G Subsidiaries or Parent or
any of its affiliates, and provided that Seller makes no
representation regarding any arrangements or discussions
that Parent or its affiliates may have had with executives
or employees of F&G Life or any F&G Subsidiaries (the
"Plans"). None of the Plans which are "pension plans"
subject to Section 3(2) of ERISA are sponsored by F&G Life
or the F&G Subsidiaries, and Section 3.11 of Seller's
Disclosure Schedule separately identifies any Plans which
are sponsored by F&G Life or any of the F&G Subsidiaries or
any employment agreements to which F&G Life or any of the
F&G Subsidiaries is a party (the "F&G Plans"). Seller has
made available or delivered to Parent an accurate and
complete copy of each such Plan and any amendments thereto,
and to the extent applicable, of any related trust agreement
or other funding instrument and the most recent Internal
Revenue Service determination letter, if applicable. Each
Plan has been maintained in all material respects in
accordance with its terms and in compliance with the
applicable requirements of the Internal Revenue Code of
1986, as amended (the "Code"), ERISA and other applicable
law. Each Plan which is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA ("Pension Plan")
and which is intended to be qualified under Section 401(a)
of the Code has received a favorable determination letter
from the Internal Revenue Service, and to the Knowledge of
Seller, no circumstances exist that are likely to result in
the revocation of any such favorable determination letter.
F&G Life and the F&G Subsidiaries have not incurred, and do
not expect to incur, any liability under Subtitle C or D of
Title IV of ERISA (other than for PBGC premiums which have
been paid in the ordinary course), or for failure to meet
the requirements of Section 412 of the Code, with respect to
any Pension Plan which is covered by Title IV of ERISA or
with respect to any single-employer plan of any entity which
is considered one employer with F&G Life under Section 4001
of ERISA or Section 414(b), (c), (m) or (o) of the Code
("ERISA Affiliate"). F&G Life and the F&G Subsidiaries have
no obligation to contribute to, and have not incurred any
withdrawal liability under, a multiemployer plan under
Subtitle E of Title IV of ERISA (whether or not based on the
contribution of an ERISA Affiliate). F&G Life has not been
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. Within the 12-month period
prior to the date hereof, no reportable event (within the
meaning of Section 4043 of ERISA) for which the 30-day
reporting requirement has not been waived has been required
to be filed with respect to any Pension Plan which would
result in a material liability to F&G Life or any F&G
Subsidiary. There are no material actions, suits or
proceedings pending against Seller, F&G Life or any F&G
Subsidiary brought by or on behalf of any employee of F&G
Life or any F&G Subsidiary relating to any Plan as of the
date of this Agreement. Neither Seller nor F&G Life has
engaged in a transaction with respect to any Plan that,
assuming the taxable period of such transaction expired as
of the date hereof, could subject F&G Life or any F&G
Subsidiary to a tax or penalty imposed by Section 4975 of
the Code or Section 502(i) of ERISA in an amount which would
be material. Except as indicated in Section 3.11 of
Seller's Disclosure Schedule, none of the Plans, including
the F&G Plans, provide for post-employment life or health
insurance, benefits or coverage for any participant or any
beneficiary of a participant, except as may be required
under the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA"). Except as indicated in Section
3.11 of Seller's Disclosure Schedule, neither the execution
and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any
payment becoming due to any employee (current, former or
retired) of F&G Life or any F&G Subsidiary, (ii) increase
any benefits otherwise payable under any Plan or (iii)
result in the acceleration of the time of payment or vesting
of any such benefits under any such plan. There is no
contract, plan or arrangement involving F&G Life or any F&G
Subsidiary and covering any employee thereof that,
individually or in the aggregate, could give rise to the
payment of any amount that would not be deductible by
Parent, F&G Life or any F&G Subsidiary by reason of Section
280G of the Code.
Section 3.12. Employee Relations.
------------------
Neither F&G Life nor any of the F&G
Subsidiaries is or has within the past three years been a
party to or bound by any collective bargaining agreement.
Within the past three years, to the Knowledge of Seller,
there have been no union organizing efforts in respect of
F&G Life or any of the F&G Subsidiaries. There is no
ongoing or, to the Knowledge of Seller, threatened strike,
picket, work stoppage or work slowdown against F&G Life or
any of the F&G Subsidiaries. There are no material
complaints, charges or claims against F&G Life or any of the
F&G Subsidiaries pending or, to the Knowledge of Seller,
threatened to be brought or filed, with any public or
governmental authority, arbitrator or court based on,
arising out of, in connection with, or otherwise relating to
the employment or termination of employment or failure to
employ by F&G Life or any of the F&G Subsidiaries, of any
individual. Except as set forth in Section 3.12 of Seller's
Disclosure Schedule, F&G Life and the F&G Subsidiaries are
in compliance with all laws, regulations and orders relating
to the employment of labor, including all such laws,
regulations and orders relating to wages, hours, the Worker
Adjustment and Retraining Notification Act and any similar
state or local "mass layoff" or "plant closing" law
("WARN"), collective bargaining, discrimination, civil
rights, safety and health, workers' compensation and the
collection and payment of withholding and/or social security
taxes and any similar tax, with such exceptions as,
individually or in the aggregate, have not had and are not
reasonably likely to have a Material Adverse Effect. There
has been no "mass layoff" or "plant closing" as defined by
WARN with respect to F&G Life or any of the F&G Subsidiaries
within the past three years.
Section 3.13. Insurance.
---------
Seller has made available to Parent for review,
summaries of all material written insurance policies
insuring the business of F&G Life and the F&G Subsidiaries.
All such insurance is in full force and effect and all
premiums required to be paid thereunder have been paid.
Section 3.14. Intellectual Property.
---------------------
Section 3.14 of Seller's Disclosure Schedule
contains a complete and accurate list of each (i) patent and
patent application owned by F&G Life or any F&G Subsidiary,
(ii) registered trademark and service mark and applications
therefor owned by F&G Life or any F&G Subsidiary, (iii)
material unregistered trademark and service mark owned by
F&G Life or any F&G Subsidiary, (iv) registered copyright
owned by F&G Life or any F&G Subsidiary and (v) material
license for any Intellectual Property of any other Person
that is used in the conduct of F&G Life's Business or
otherwise used in the conduct of the business, operations or
affairs of F&G Life and the F&G Subsidiaries (excluding
licenses for the use of non-customized commercially
available third party software). Except for licenses for
use of non-customized commercially available third party
software and as indicated in Section 3.14 of Seller's
Disclosure Schedule, to the Knowledge of Seller: (i) F&G
Life or one of the F&G Subsidiaries is the owner, free and
clear of any Lien, or has a valid license to use, all of the
material Intellectual Property currently used for the
conduct of F&G Life's Business and no such material licenses
will be terminated or materially adversely affected by the
consummation of the transactions contemplated by this
Agreement; (ii) the rights of F&G Life or the F&G
Subsidiaries in such Intellectual Property are valid and
enforceable in all material respects; (iii) no written
demand, claim, notice or action from any Person in respect
of such material Intellectual Property which challenges or
threatens to challenge the validity of, or the rights of F&G
Life or any of the F&G Subsidiaries in, such material
Intellectual Property has been made or threatened since
January 1, 1998 or is currently outstanding; (iv) neither
F&G Life nor any of the F&G Subsidiaries is in material
violation or infringement of, or has materially violated or
infringed, any Intellectual Property of any other Person in
connection with the conduct of F&G Life's Business since
January 1, 1998; (v) no written demand, claim or notice by
any Person contesting the validity, enforceability, use or
ownership of any of such material Intellectual Property has
been made since January 1, 1998 or is currently outstanding;
and (vi) no Person is infringing the rights of F&G Life or
any F&G Subsidiary in any material Intellectual Property
owned by any of them and currently used in the conduct of
F&G Life's Business. Neither F&G Life nor any F&G
Subsidiary has licensed any Intellectual Property owned,
licensed or used by F&G Life or any F&G Subsidiary to any
other Person other than to insurance producers of F&G Life
and Thomas Jefferson Life in the ordinary course of
business.
Section 3.15. Compliance with Laws; Governmental Authorizations.
-------------------------------------------------
Except as indicated in Section 3.15(i) of
Seller's Disclosure Schedule, neither F&G Life nor any of
the F&G Subsidiaries is in violation of any statute, rule,
regulation, judgment, order, decree, permit, concession,
franchise, or other governmental authorization or approval
currently in effect applicable to F&G Life's Business
(including, without limitation, insurance regulatory,
environmental, occupational safety and health and employment
discrimination laws and regulations currently in effect),
the effect of which, individually or in the aggregate, has
had or is reasonably likely to have a Material Adverse
Effect. Except as set forth in Section 3.15(ii) of Seller's
Disclosure Schedule, neither F&G Life nor any of the F&G
Subsidiaries is a party to, bound by, or in default under,
any stipulation, consent, decree, order or arbitration award
(or agreement entered into in any administrative, judicial,
or arbitration proceeding with any Government Entity)
currently in effect with any Government Entity requiring F&G
Life or any of the F&G Life Subsidiaries to take or refrain
from taking any action, with such exceptions as,
individually or in the aggregate, have not had or are not
reasonably likely to have a Material Adverse Effect. Except
as indicated in Section 3.15 of Seller's Disclosure
Schedule, since April 24, 1998, F&G Life and the F&G
Subsidiaries have conducted their business in compliance
with all applicable Laws, with such exceptions as,
individually or in the aggregate, have not had and are not
reasonably likely to have a Material Adverse Effect.
Section 3.16. Litigation.
----------
Except as indicated in Section 3.16 of Seller's
Disclosure Schedule, there is no Litigation (as defined
below), or putative class action seeking certification as a
class, pending or, to the Knowledge of Seller, threatened,
against F&G Life or any of the F&G Subsidiaries, or against
Seller, which has had or is reasonably likely to have a
Material Adverse Effect or which questions the validity, or
the due performance by Seller, of this Agreement. Except as
indicated in Section 3.16 of Seller's Disclosure Schedule,
there is no series of Litigation relating to the same
conduct of Seller, F&G Life or any of the F&G Subsidiaries
and arising out of a common set of operative facts pending
or, to the Knowledge of Seller, threatened against Seller,
F&G Life or any of the F&G Subsidiaries, which, individually
or in the aggregate, has had or is reasonably likely to have
a Material Adverse Effect. As used in this Agreement,
"Litigation" means any and all judicial, regulatory or
administrative actions, suits, arbitrations, proceedings, or
investigations (including, without limitation, any actions,
proceedings or investigations under environmental,
occupational safety and health and employment discrimination
laws and regulations but excluding defenses of actions based
on insurance or reinsurance claims in the ordinary course of
business). There is no pending or, to the Knowledge of
Seller, threatened (other than in customer complaints
received in the ordinary course of business) Litigation or
class actions alleging damages as a result of F&G Life or
any of the F&G Subsidiaries (x) not registering or seeking
to register with the Securities and Exchange Commission any
index-linked deferred annuity contract or agreement, or (y)
not treating personnel employed by Computer Science
Corporation or any of its affiliates as employees of F&G
Life or any F&G Subsidiaries.
Section 3.17. Taxes.
-----
(a) Except as indicated in Section 3.17 of
Seller's Disclosure Schedule: (i) all material Tax Returns
that are required to be filed by F&G Life or any of the F&G
Subsidiaries on or before the Closing Date have been or will
be duly and timely (taking into account all applicable
extensions) filed on or before the Closing Date, and all
such Tax Returns are or will be true and complete in all
material respects; (ii) all material Taxes shown to be due
on the Tax Returns referred to in clause (i) have been or
will be paid in full on or before the Closing Date or
accrued and reflected on the GAAP Financial Information in
accordance with GAAP and SAP; (iii) there is no claim,
audit, action, suit, proceeding or investigation now
pending, or to the Knowledge of Seller threatened against
F&G Life or any of the F&G Subsidiaries with respect to any
Tax for which F&G Life or any of the F&G Subsidiaries could
be liable; (iv) no waivers of applicable statutes of
limitation have been given with respect to any Tax Return
filed by F&G Life or any of the F&G Subsidiaries and no
power of attorney with respect to any Tax matter is
currently in force; (v) there are no consolidated, combined,
unitary or similar tax returns or reports that Seller or The
St. Paul has filed or was required to file on behalf of F&G
Life and the F&G Subsidiaries; (vi) with respect to all
periods through the most recent fiscal quarter of F&G Life
and the F&G Subsidiaries for which Tax Returns have not yet
been filed or for which Taxes are not yet due or owing, F&G
Life and the F&G Subsidiaries have made due and sufficient
current accruals for such Taxes in accordance with GAAP; and
(vii) as of the Closing Date, neither F&G Life, nor any of
the F&G Subsidiaries, will be a party to, will be bound by,
or will have any obligation under, any tax sharing agreement
or similar agreement or arrangement except for any tax
sharing agreement between F&G Life and Thomas Jefferson Life
and any obligations arising from a tax sharing agreement
between F&G Life and USF&G Corporation.
(b) Except as disclosed in Section 3.17 of the Seller's
Disclosure Schedule, F&G Life and each of the F&G
Subsidiaries have duly and timely withheld from employee
salaries, wages and other compensation and have paid over to
the appropriate taxing authorities all amounts required to
be so withheld and paid over for all periods under any
applicable Tax laws.
(c) Except as indicated in Section 3.17 of Seller's
Disclosure Schedule, neither F&G Life nor any of the F&G
Subsidiaries, nor Seller on behalf of F&G Life or any of the
F&G Subsidiaries has (A) filed a consent pursuant to Section
341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code)
owned by F&G Life or any of the F&G Subsidiaries, (B) agreed
with any taxing authority in writing or is required to make
any adjustments in taxable income for any Tax period
beginning on or after the Closing Date pursuant to Section
481(a) or Section 807(f) of the Code or any similar
provision of state, local or foreign law by reason of a
change in accounting method initiated by F&G Life or any of
the F&G Subsidiaries or has any knowledge that the IRS has
proposed in writing any such adjustment or change in
accounting method, or has any application pending with any
taxing authority requesting permission for any such changes
in accounting methods, (C) executed or entered into a
closing agreement pursuant to Section 7121 of the Code or
any predecessor provision thereof or any similar provision
of state, local or foreign law to include any item of income
in or exclude any item of deduction from any Tax period
beginning on or after the Closing Date with respect to F&G
Life or any of the F&G Subsidiaries, or (D) requested any
extension of time within which to file any Tax Return, which
Tax Return has since not been filed.
(d) Seller is not a foreign person within the meaning of
Section 1445 of the Code.
(e) Neither F&G Life nor any of the F&G Subsidiaries is
subject to any private letter ruling of the IRS or
comparable rulings of other taxing authorities.
(f) There are no liens as a result of any unpaid Taxes upon
any of the assets of F&G Life or any of the F&G
Subsidiaries.
(g) No claim has been made by a taxing authority in a
jurisdiction where F&G Life or any of the F&G Subsidiaries
does not file Tax Returns such that it is or may be subject
to taxation by that jurisdiction.
(h) As of December 31, 2000, neither F&G Life nor Thomas
Jefferson Life has any balance in its "policyholders'
surplus account," as that term is defined in section 815 of
the Code.
(i) As of December 31, 1999, F&G Life had a remaining
deferred ordinary tax loss of $29,766,915 from the previous
sale of the Founder's Building to an affiliate. No asset
has been established by F&G Life for the tax benefit that
may be realized by F&G Life from the restoration of such
loss in taxable years after 2000. The sale of F&G Life
pursuant to this agreement will result in the full
restoration of any remaining deferred ordinary tax loss to
F&G Life arising from the sale of the Founder's Building.
(j) The exclusive remedy for breaches of any
representations and warranties contained in this Section
3.17 shall be pursuant to the indemnification provisions of
Section 6.1 hereof.
Section 3.18. Conduct of Business Since December 31, 2000.
-------------------------------------------
Since December 31, 2000, except as indicated in
Section 3.18 of Seller's Disclosure Schedule or indicated or
reflected in the GAAP Financial Information or Statutory
Statements, except for the repayment by F&G Life to Seller
of the Prepaid Note and except for matters arising out of or
relating to this Agreement and the transactions contemplated
hereby, through the date hereof (x) F&G Life and the F&G
Subsidiaries have conducted F&G Life's Business only in the
ordinary course of business and in substantially the same
manner in which it previously has been conducted, and (y)
there has not been any:
(a) Material Adverse Effect or any change in the financial
condition, business or results of operations of F&G Life or
any of the F&G Subsidiaries or, to the Knowledge of Seller,
any other event that has occurred since December 31, 2000,
in each case that, individually or in the aggregate, has had
or is reasonably likely to have a Material Adverse Effect;
(b) (i) change in the authorized or issued capital stock of
F&G Life or the authorized or issued capital stock or other
equity interests of any of the F&G Subsidiaries; (ii) grant
of any stock option, warrant, or other right to purchase
shares of capital stock of F&G Life or to purchase shares of
capital stock or other equity interests of any of the F&G
Subsidiaries; (iii) issuance of any security convertible
into the capital stock of F&G Life or the capital stock or
other equity interests of any of the F&G Subsidiaries; (iv)
grant of any registration rights in respect of the capital
stock of F&G Life or the capital stock or other equity
interests of any of the F&G Subsidiaries; (v)
reclassification, combination, split, subdivision, purchase,
redemption, retirement, issuance, sale, or any other
acquisition or disposition, directly or indirectly, by F&G
Life of any shares of the capital stock thereof or by any of
the F&G Subsidiaries of any shares of the capital stock or
other equity interests thereof; (vi) amendment of any term
of any outstanding security of F&G Life or any of the F&G
Subsidiaries; (vii) declaration, setting aside or payment of
any dividend (whether in cash, securities or other property)
or other distribution or payment in respect of the shares of
the capital stock of F&G Life or shares of the capital stock
or other equity interests of any of the F&G Subsidiaries; or
(viii) sale or pledge of any stock or other equity interests
owned by F&G Life or any of the F&G Subsidiaries except in
the ordinary course of administering F&G Life's and Thomas
Jefferson Life's investment portfolio;
(c) (i) amendment or other change in the certificate of
incorporation or by-laws or other organizational documents
of F&G Life or any of the F&G Subsidiaries; (ii) merger or
consolidation by F&G Life or any of the F&G Subsidiaries
with or into any other Person; (iii) subdivision or
reclassification of any shares of the capital stock of F&G
Life or shares of the capital stock or other equity
interests of any of the F&G Subsidiaries; or (iv) change or
agreement to change in any manner the rights of the
outstanding capital stock of F&G Life or the outstanding
capital stock or other equity interests of any of the F&G
Subsidiaries;
(d) material change in the policies, practices or
principles of F&G Life or any of the F&G Subsidiaries with
respect to accounting, reserving, hedging, taxes, financial
reporting, actuarial, investing or otherwise engaging in
derivatives transactions, underwriting or claims
administration, including any material change in any method
of calculating or estimating any bad debt, contingency
insurance or other reserve for financial reporting purposes
or for any other tax or accounting purpose (other than any
change required by GAAP, SAP, the American Academy of
Actuaries, or applicable Law);
(e) agreement entered into or amended by F&G Life or any of
the F&G Subsidiaries with any labor union or association
representing any employee, or regarding any wage or salary
increase or bonus or other compensation (other than in the
ordinary course of business consistent with past practice)
with respect to any officers, directors, employees, agents
or consultants of F&G Life or any of the F&G Subsidiaries,
or any adoption or amendment of any stock option, employment
agreement, executive compensation plan, severance pay,
401(k) plan, retirement plan, stay bonus, change of control
plan or agreement, employee stock ownership plan or any
other employee benefit plan of The St. Paul, F&G Life or any
of the F&G Subsidiaries, with respect to any officers,
directors, employees, agents or consultants of F&G Life or
any of the F&G Subsidiaries, other than agreements by Seller
or its affiliates with members of senior management of F&G
Life that do not impose any obligations on F&G Life, any F&G
Subsidiaries or Parent or any of its affiliates, an
amendment required by Law or as generally adopted or amended
with respect to employees of Seller, or any plan or
commitment to do any of the foregoing and provided that
Seller makes no representation regarding any arrangements or
discussions that Parent or its affiliates may have had with
executives or employees of F&G Life or any F&G Subsidiaries;
(f) other contract, agreement or transaction entered into
by F&G Life or any of the F&G Subsidiaries that both (i)
materially increases the liabilities of F&G Life and the F&G
Subsidiaries taken as a whole and (ii) is not in the
ordinary course of business;
(g) Lien created on any of the assets of F&G Life or any
F&G Subsidiary or any Lien assumed by F&G Life on any F&G
Subsidiary with respect to any of such assets which Lien
relates to liabilities individually or in the aggregate
exceeding (or reasonably likely to exceed) $2,000,000;
(h) cancellation without reasonable consideration of any
material liability that is of a type required to be
disclosed on a consolidated balance sheet (or in the notes
related thereto) prepared in accordance with GAAP or SAP, as
applicable, owed to F&G Life or any F&G Subsidiary by any
other Person except in the ordinary course of business;
(i) write-off or write-down of, or any determination to
write-off or write-down, any assets (other than any
statutory write-down of investment assets) of F&G Life or
any F&G Subsidiary or any portion thereof, except for write-
offs or write-downs that do not exceed $500,000 individually
or in the aggregate or for write-offs or write-downs in the
ordinary course of business and consistent with past
practice;
(j) sale, transfer, or conveyance of any investments, or
any other assets, of F&G Life or any F&G Subsidiary with a
book value, individually or in the aggregate, in excess of
$500,000, except in the ordinary course of business and
consistent with past practice;
(k) expenditure or commitment for additions to property,
plant, equipment, or other tangible or intangible capital
assets of F&G Life or any F&G Subsidiary which exceeds
$2,000,000 individually or in the aggregate;
(l) making or recission of any material election relating
to Taxes, settlement or compromise of any material claim,
action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes, or
except as may be required by applicable law, change to any
of F&G Life's or any F&G Subsidiary's material methods of
reporting income or deductions for federal income tax
purposes from those employed in the preparation of its most
recently filed federal income tax return;
(m) decrease in the amount, or any change in the nature, of
the insurance in force written by F&G Life or Thomas
Jefferson Life or any material change in the amount or
nature of the statutory reserves or other similar amounts of
F&G Life or Thomas Jefferson Life with respect to insurance
contracts, in each case which decrease or change,
individually or in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect;
(n) amendment or introduction (other than as contemplated
by this Agreement) by F&G Life or Thomas Jefferson Life of
any insurance contract issued by F&G Life or Thomas
Jefferson Life other than in the ordinary course of business
and consistent with past practice;
(o) change outside the ordinary course of business in any
marketing relationship between F&G Life or Thomas Jefferson
Life and any Person through which F&G Life or Thomas
Jefferson Life sells insurance contracts, which change,
individually or in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect; or
(p) agreement (whether written or oral and express or
implied) by F&G Life or any of the F&G Subsidiaries to do
any of the foregoing (b) through (o).
Section 3.19. Brokers.
-------
All negotiations relating to this Agreement and
the transactions contemplated hereby have been carried out
without the intervention of any Person acting on behalf of
Seller, The St. Paul or F&G Life in such manner as to give
rise to any claim for any brokerage or finder's commission,
fee or similar compensation, except for Goldman, Sachs &
Co., whose fees and expenses in respect thereof shall be
paid by Seller.
Section 3.20. Regulatory Filings.
------------------
Seller has heretofore made available for
inspection by Parent (i) with respect to F&G Life and the
F&G Subsidiaries, each material registration, filing or
submission of F&G Life and each of the F&G Subsidiaries with
any Government Entity, (ii) each annual statement filed with
or submitted to the Maryland or New York insurance
regulatory authorities by F&G Life or Thomas Jefferson Life,
and (iii) any reports of examination (including, without
limitation, financial, market conduct and similar
examinations) of F&G Life or, as applicable, any of the F&G
Subsidiaries, issued by any state insurance regulatory
authority, in any case, since December 31, 1997. To the
Knowledge of Seller, all material deficiencies or violations
noted in the examination reports described in clause (iii)
above have been resolved to the material satisfaction of the
insurance department that noted such deficiencies or
violations. Except as set forth in Section 3.20 of Seller's
Disclosure Schedule, F&G Life and the F&G Subsidiaries have
each filed all reports, statements, documents,
registrations, filings or submissions required to be filed
with any governmental or regulatory body since December 31,
1997, all such registrations, reports, statements,
documents, filings and submissions were in compliance with
applicable law when filed, and no deficiencies have been
asserted by any such governmental or regulatory body with
respect to such registrations, filings or submissions that
have not been satisfied, in each case, with such exceptions
as, individually or in the aggregate, have not had and are
not reasonably likely to have a Material Adverse Effect. As
of the date hereof, neither F&G Life nor Thomas Jefferson
Life is a "commercially domiciled insurer" under the laws of
any jurisdiction or is otherwise treated as domiciled in a
jurisdiction other than its jurisdiction of organization.
Section 3.21. Permits.
-------
F&G Life and Thomas Jefferson Life are licensed
to write life insurance policies and annuity contracts in
the jurisdictions indicated by their names in Section
3.21(i) of Seller's Disclosure Schedule. Except as
indicated in Section 3.21(ii)(B) of Seller's Disclosure
Schedule, all permits, licenses, approvals, franchises,
authorizations, exemptions, classifications, registrations,
and similar documents or instruments issued by any
Government Entity to F&G Life or any other F&G Subsidiary,
the loss, revocation, termination or expiration of which,
individually or in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect, are listed in
Section 3.21(ii) of Seller's Disclosure Schedule
(collectively, the "Permits"). All Permits are valid and in
full force and effect, with such exceptions as, individually
or in the aggregate, have not had and are not reasonably
likely to have a Material Adverse Effect. F&G Life and the
F&G Subsidiaries are in compliance in all material respects
with all terms required for the continued effectiveness of
each such Permit, and there is no pending or, to the
Knowledge of Seller, threatened, revocation or involuntary
non-renewal of any such Permit. Except as indicated in
Section 3.21 of Seller's Disclosure Schedule, no material
permit, license, approval, franchise, authorization,
exemption, classification, registration or similar document
or instrument, in addition to the Permits currently held by
F&G Life or any F&G Subsidiary, is required to be held by
F&G Life or any F&G Subsidiary to conduct F&G Life's
Business as it is now conducted in all material respects.
Assuming that the consents and approvals identified in
Section 3.3 of Seller's Disclosure Schedule are obtained,
none of such Permits are reasonably likely to be materially
adversely affected by consummation of the transactions
contemplated hereby.
Section 3.22. Insurance Producers.
-------------------
(a) Except as indicated in Section 3.22 of
Seller's Disclosure Schedule, to the Knowledge of Seller,
each insurance producer, managing general agent, broker,
solicitor, and customer representative, including without
limitation salaried employees of F&G Life or any F&G
Subsidiaries performing the duties of insurance producer,
managing general agent, broker, solicitor or customer
representative (collectively, "F&G Producers"), at the time
such F&G Producer wrote, sold, or produced business, or
performed such other act that may require a producer's,
solicitor's, broker's or other insurance license for F&G
Life or any F&G Subsidiary, was duly licensed and appointed,
where required, as an insurance producer (for the type of
business written, sold, or produced by such insurance
producer, managing general agent, broker, solicitor, or
customer representative) in the particular jurisdiction in
which such F&G Producer wrote, sold, produced, solicited, or
serviced such business, as may be required by the various
states, in each case, with such exceptions as, individually
or in the aggregate, have not had and are not reasonably
likely to have a Material Adverse Effect.
(b) Except as indicated in Section 3.22 of Seller's
Disclosure Schedule, to the Knowledge of Seller, no F&G
Producer is in violation (or with or without notice or lapse
of time or both, would be in violation) of any term or
provision of any Law or any writ, judgment, decree,
injunction, or similar order applicable to the writing,
sale, or production of business for F&G Life or any F&G
Subsidiary, in each case with such exceptions as,
individually or in the aggregate, have not had and are not
reasonably likely to have a Material Adverse Effect.
Section 3.23. Insurance Matters.
-----------------
(a) Except as indicated in Section 3.23 of
Seller's Disclosure Schedule, all policy forms issued by F&G
Life and the F&G Subsidiaries, and all amendments,
applications, brochures, illustrations and certificates
pertaining thereto have, where required by applicable Law,
been approved by all applicable Government Entities or filed
with and not objected to by such Government Entities within
the period provided by applicable Law for objection, subject
to such exceptions as, individually or in the aggregate,
have not had and are not reasonably likely to have a
Material Adverse Effect. Except as indicated in Section
3.23 of Seller's Disclosure Schedule, all such forms comply
in all material respects with, and have been administered in
all material respects in accordance with, applicable Law.
Any rates of F&G Life or any of the F&G Subsidiaries which
are required to be filed with or approved by any Government
Entity have been so filed or approved, and the rates used by
F&G Life or any of the F&G Subsidiaries conform in all
material respects thereto subject to such exceptions as,
individually or in the aggregate, have not had and are not
reasonably likely to have a Material Adverse Effect. Except
as indicated in Section 3.23 of Seller's Disclosure
Schedule, any contract or agreement to which F&G Life or any
of the F&G Subsidiaries is a party and which is required to
be filed with or approved by any Government Entity has been
so filed or approved subject to such exceptions as,
individually or in the aggregate, have not had and are not
reasonably likely to have a Material Adverse Effect.
(b) All insurance contract benefits payable by or on behalf
of F&G Life or any F&G Subsidiary have in all material
respects been paid in accordance with the terms of the
insurance contracts under which they arose, except for such
benefits for which F&G Life or the applicable F&G Subsidiary
believes there is a reasonable basis to contest payment.
Section 3.24. Cancellations.
-------------
Since December 31, 2000, no Person or group of
Persons acting in concert writing, selling or producing
insurance business which in the aggregate accounted for
$25,000,000 or more in annuity premium or $10,000,000 or
more in life insurance premium of F&G Life's Business for
the year ended December 31, 2000 has terminated or
substantially reduced its relationship with F&G Life or any
F&G Subsidiary. Since December 31, 2000, no policyholder or
group of policyholders acting in concert has withdrawn or
given notice of its intent to withdraw funds under any
insurance contract to which F&G Life or any F&G Subsidiary
is a party in excess of $100,000,000.
Section 3.25. Environmental Matters.
---------------------
(a) Except as, individually or in the
aggregate, has not had and is not reasonably likely to have
a Material Adverse Effect, to the Knowledge of Seller: (i)
F&G Life and the F&G Subsidiaries possess all permits,
licenses and other authorizations required by Environmental
Laws ("Environmental Permits") and all properties owned,
operated or leased by or for F&G Life or the F&G
Subsidiaries are in compliance with all applicable
Environmental Laws and Environmental Permits; (ii) neither
F&G Life nor any of the F&G Subsidiaries has received any
written notice, complaint or other written communication
from any Government Entity or other Person alleging the
violation of or potential liability under any applicable
Environmental Laws other than for matters that have been
resolved prior to the date hereof; (iii) neither F&G Life
nor any of the F&G Subsidiaries is subject to any pending or
threatened judicial or administrative proceeding or
governmental investigation or subject to any outstanding
court order, administrative order or decree arising under
any Environmental Law; (iv) neither F&G Life nor any of the
F&G Subsidiaries has incurred any liability in connection
with a release, spill, or leak of Hazardous Substances; and
(v) neither F&G Life nor any of the F&G Subsidiaries
generated, stored, used, transported or disposed of any
Hazardous Substance except as permitted under applicable
Environmental Laws.
(b) This Section 3.25 constitutes the sole representation
and warranty of Seller with respect to any Environmental Law
or Hazardous Substance notwithstanding any other
representation or warranty in this Article III.
Section 3.26. Intercompany Liabilities.
------------------------
All material intercompany agreements,
liabilities, loans, advances, payables and receivables
between Seller or any affiliate of Seller (other than F&G
Life and the F&G Subsidiaries), on the one hand, and F&G
Life or any F&G Subsidiary, on the other hand, in effect as
of March 31, 2001, other than receivables and payables
relating to the issuance of annuities and funding agreements
by F&G Life or Thomas Jefferson Life in connection with the
Structured Settlements Program and those in respect of the
F&G Life guaranteed investment contract held by the trustee
for the Section 401(k) plan established for employees of The
St. Paul and its affiliates are listed in Section 3.26 of
Seller's Disclosure Schedule. Since March 31, 2001, neither
F&G Life nor any of the F&G Subsidiaries has (x) entered
into any material intercompany agreement with, or (y)
incurred any material intercompany obligations owing to,
Seller or any affiliate of Seller (other than F&G Life and
the F&G Subsidiaries), in the case of clause (y) other than
in the ordinary course of business consistent with past
practice.
Section 3.27. Investments.
-----------
F&G Life and Thomas Jefferson Life have good
and valid title, in each case in all material respects, to
all debentures, notes, stocks, securities, and other assets
that are of a type required to be disclosed in Schedules B
through DB of its annual statement and that are owned by it.
F&G Life and each F&G Subsidiary have good and valid title
free and clear of all Liens, in each case in all material
respects, to all debentures, notes, stocks, securities, and
other similar assets that are owned by it.
Section 3.28. Minute Books.
------------
The minute books of F&G Life and each F&G
Subsidiary have previously been made available to Parent for
inspection, and, except as set forth in Section 3.28 of
Seller's Disclosure Schedule, such minute books are complete
in all material respects and reflect all material board and
stockholder actions since December 31, 1991.
Section 3.29. Insurance Products.
------------------
Except as set forth in Section 3.29 of Seller's
Disclosure Schedule: (i) F&G Life and each of the F&G
Subsidiaries have substantially complied with all applicable
reporting, withholding and disclosure requirements under the
Code, including, but not limited to, those regarding
distributions with respect to insurance contracts issued,
entered into or sold by it and have reported the
distributions under such contracts substantially in
accordance with Section 72, 7702, and 7702A of the Code;
(ii) each insurance contract issued, entered into, or sold
by F&G Life or any F&G Subsidiary (whether developed by,
administered by, or reinsured with any unrelated third
party) qualifies as a life insurance contract or an annuity
contract, as applicable, under the federal Tax laws,
including, without limitation, under Sections 72, 817(h),
and 7702 of the Code and their underlying regulations; (iii)
the insurance contracts are not modified endowment contracts
within the meaning of Section 7702A of the Code unless and
to the extent the holders of the policies have been notified
of their classification; (iv) F&G Life and Thomas Jefferson
Life are treated, for federal Tax purposes, as the owners of
the assets underlying the respective insurance contracts
that F&G Life and Thomas Jefferson Life have issued, entered
into or sold; (v) each insurance contract issued, entered
into or sold by F&G Life or any F&G Subsidiary (whether
developed by, administered by or reinsured with, any
unrelated third party) which is provided under or connected
with either a plan described in Section 401(a), 403(a),
403(b), 408 or 457 or any similar provision of the Code has
been endorsed, administered and otherwise is in substantial
compliance with the requirements of the Code applicable to
such contract, and there are no nonexempt prohibited
transactions within the meaning of Section 4975 of the Code
with respect to such contracts (other than such non-exempt
prohibited transactions or violations that arise to the
extent that, for these purposes, F&G Life or Thomas
Jefferson Life may be holding "plan assets" in or may be a
"fiduciary" with respect to its general account); (vi) there
are no "hold harmless", Tax sharing or indemnification
agreements respecting the Tax qualification or treatment of
any product or plan sold, issued, entered into or
administered by F&G Life or any F&G Subsidiary (whether
developed by, administered by, or reinsured with any
unrelated third party); and (vii) the insurance reserves set
forth in the federal income tax returns filed by F&G Life
have been determined in all material respects in accordance
with Section 807 or 846 of the Code, as applicable.
Section 3.30. No Other Representations or Warranties.
--------------------------------------
(a) Except for the representations and
warranties contained in this Article Three, none of Seller,
F&G Life or any of the F&G Subsidiaries, any advisor to any
Person referred to in this paragraph (a) or any other Person
makes any express or implied representation or warranty on
behalf of Seller, F&G Life or the F&G Subsidiaries, and
Seller hereby disclaims any such representation or warranty
whether by Seller, The St. Paul, F&G Life any of the F&G
Subsidiaries or any of the respective affiliates, officers,
directors, employees, agents or representatives of any
Person referred to in this subparagraph (a) or by any other
Person.
(b) In particular, without limiting the foregoing
disclaimer, none of the following shall be deemed to
constitute a representation or warranty of any Person
referred to in paragraph (a) of this Section 3.30: (i) any
information set forth in the Fidelity & Guaranty Life
Insurance Company 2000-2003 Business Plan (December 1, 2000)
distributed in connection with the proposed sale of F&G
Life, (ii) any financial projection or forecast relating to
the F&G Life's Business, (iii) any information set forth in
the Milliman and Robertson, Inc. actuarial appraisals of F&G
Life and Thomas Jefferson Life, dated as of December 31,
1999 and December 31, 2000, respectively, or (iv) any oral
or written information presented to Parent during any
management presentation, including any question and answer
session thereto. With respect to any projection or forecast
delivered by or on behalf of Seller to Parent, Parent
acknowledges that (A) there are uncertainties inherent in
attempting to make such projections and forecasts, (B) it is
familiar with such uncertainties, (C) it is taking full
responsibility for making its own evaluation of the adequacy
and accuracy of all such projections and forecasts so
furnished to it, and (D) it shall have no claim against any
Person with respect thereto other than a claim for fraud or
bad faith.
ARTICLE FOUR
Representations and Warranties of Parent
----------------------------------------
Parent represents and warrants to Seller as follows:
Section 4.1. Corporate Status and Authority;
Qualification; Parent Shares.
----------------------------
(a) (x) Parent is a corporation duly incorporated, validly
existing and in good standing under the laws of England and
Wales, and (y) Parent has full right, power and authority
and has taken all corporate action necessary in order to
execute and deliver this Agreement and the other Transaction
Agreements to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. Each of
Purchaser and Note Purchaser is, or will be as of the Escrow
Closing, a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of
incorporation, and each of Purchaser and Note Purchaser has,
or will have as of the Escrow Closing, full right, power and
authority and has taken, or will have taken as of the Escrow
Closing, all corporate action necessary in order to execute
and deliver this Agreement and the other Transaction
Agreements to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. No vote of
the holders of Parent Shares is necessary to approve this
Agreement, the other Transaction Agreements and the
transactions contemplated hereby or thereby. This Agreement
has been, and the other Transaction Agreements to which
Parent is a party when executed and delivered will be, duly
executed and delivered by Parent, and this Agreement is, and
each of the other Transaction Agreements to which it is a
party when executed and delivered will be, the legal, valid
and binding obligation of Parent 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 and to general equity principles. This
Agreement and the other Transaction Agreements to which it
is a party when executed and delivered will be duly executed
and delivered by each of Purchaser and Note Purchaser, and
this Agreement and each of the other Transaction Agreements
to which it is a party when executed and delivered will be
the legal, valid and binding obligation of each of Purchaser
and Note Purchaser 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 and
to general equity principles.
(b) Parent has full power and authority to conduct its
business and to own or lease and operate its properties as
and in the places where such business is now conducted and
such properties are now owned or leased and operated, with
such exceptions as, individually or in the aggregate, have
not had and are not reasonably likely to have a Parent
Material Adverse Effect. Parent has made available to
Seller a complete and correct copy of Parent's memorandum
and articles of association, as amended to date. Parent's
memorandum and articles of association so delivered are in
full force and effect.
(c) As of April 24, 2001, the authorized share capital of
Parent consists of 600,000,000, which is made up of
6,000,000,000 ordinary shares of 10 pence each ("Parent
Shares"), of which 3,552,192,468 Parent Shares are issued
and outstanding. All of the outstanding Parent Shares have
been duly authorized and validly allotted and issued and are
fully paid or credited as fully paid. Except for rights
created pursuant to this Agreement and except as set out in
the Preliminary Offering Circular or Section 4.1(c) of
Parent's Disclosure Schedule, Parent has not granted any
Person the right (whether exercisable now or in the future
and whether contingent or not) to call for the allotment,
conversion, issue, sale or transfer of any share or loan
capital or any other security giving rise to a right over
the capital of Parent or any Parent Subsidiary under any
option or other agreement (including conversion rights and
rights of preemption). None of the Initial Parent Shares or
Reference Date Shares, if any, will be issued in violation
of the preemptive rights of any holder of Parent Shares.
The Initial Parent Shares and Reference Date Shares, if any,
will rank pari passu with the outstanding Parent Shares and
the Parent Shares conform to the descriptions thereof
contained in the Preliminary Offering Circular. The Initial
Parent Shares and the Reference Date Shares, if any, will
not be subject to calls for further funds (and holders
thereof will not be subject to any personal liability in
respect of the debts and obligations of Parent by reason of
being a holder of Parent Shares). Except as set forth in
this Agreement or the Preliminary Offering Circular, there
are no restrictions upon the voting or transfer of any of
the Parent Shares pursuant to Parent's memorandum and
articles of association, English company law or any
agreement or other instrument to which Parent or any of its
subsidiaries is a party or by which any of them may be
bound.
(d) Prior to the Escrow Closing, Parent will have taken all
necessary action (save for obtaining Listing) to permit it
to issue the number of Initial Parent Shares required to be
issued pursuant to Article One. The Initial Parent Shares
and the Reference Date Shares, if any, when issued, will be
duly authorized, validly allotted and issued and fully paid
or credited as fully paid. The Initial Parent Shares will
(i) when issued be free and clear of any Liens (other than
Liens expressly created or permitted by Seller), (ii) on the
next Business Day following the Escrow Closing Date be
admitted to Listing and (iii) be approved for listing on all
other stock exchanges on which Parent Shares are then listed
(subject only to official notice of issuance). The
Reference Date Shares, if any, when issued, will be (i) free
and clear of any Liens (other than Liens expressly created
or permitted by Seller), (ii) admitted to Listing and
admitted to trading on the LSE and (iii) approved for
listing on all other stock exchanges on which Parent Shares
are then listed (subject only to official notice of
issuance).
Section 4.2. Non-Contravention.
-----------------
Subject to the obtaining of certain consents or
approvals indicated in Section 4.3 of this Agreement or
Section 4.2 of Parent's Disclosure Schedule, the execution,
delivery and performance of this Agreement and the other
Transaction Agreements to which it is a party by each of
Parent, Purchaser and Note Purchaser and the consummation by
Parent, Purchaser and Note Purchaser of the transactions
contemplated hereby and thereby will not (x) contravene,
conflict with, or constitute or result in a breach or
violation of (i) any Laws to which Parent, any of the Parent
Principal Subsidiaries, Purchaser or Note Purchaser (or any
of their respective assets) is subject, or (ii) any
provision of the memorandum, articles of association,
certificate of incorporation, by-laws or other
organizational documents of Parent, any of the Parent
Principal Subsidiaries, Purchaser or Note Purchaser or (y)
violate, conflict with, result in a breach of, constitute
(or with notice or upon the expiration of applicable grace
or cure periods or both constitute) a default under, result
in the acceleration of, create in any party the right to
accelerate, terminate, modify, cancel or require any notice
under any agreement, contract, lease, license or instrument
to which Parent, any of the Parent Principal Subsidiaries,
Purchaser or Note Purchaser is a party or by which any of
them are bound or to which any of their properties or assets
is subject, or create any Liens on any properties or assets
owned by Parent, any of the Parent Principal Subsidiaries,
Purchaser or Note Purchaser, in the case of clauses (x)(i)
and (y), the effect of which, individually or in the
aggregate, has had or is reasonably likely to have a Parent
Material Adverse Effect.
Section 4.3. Government Approvals, Consents and Filings.
------------------------------------------
No consent, approval, authorization, order,
filing, registration or notification is required to be
obtained by Parent, any of the Parent Principal
Subsidiaries, Purchaser or Note Purchaser from, or made or
given by Parent, any of the Parent Principal Subsidiaries,
Purchaser or Note Purchaser to, any Governmental Entity in
connection with the execution, delivery and performance of
this Agreement or the other Transaction Agreements or the
consummation of the transactions contemplated hereby or
thereby or by any agreement entered into pursuant hereto,
except (u) announcements required by Law, (v) filings with
the Federal Trade Commission and the Department of Justice
as may be required with respect to the acquisition of the
Shares by Purchaser, pursuant to HSR, and the expiration or
early termination of the waiting period thereunder, (w)
filings of preacquisition statements required by applicable
state insurance holding company systems laws, (x)
acquisition of control filings in all jurisdictions
indicated in Section 4.3 of Parent's Disclosure Schedule,
(y) any approval for Listing or listing on all other stock
exchanges on which Parent Shares are listed and (z) as
otherwise indicated in Section 4.3 of Parent's Disclosure
Schedule.
Section 4.4. Parent Subsidiaries.
-------------------
The Parent Principal Subsidiaries (x) are duly
organized, validly existing under, and in good standing
under, the laws of their respective jurisdictions of
organization, (y) with full power and authority to conduct
their respective businesses as they are now being conducted
and to own or lease and operate their respective properties
as and in the places where such businesses are now conducted
and such properties are now owned or leased and operated,
with such exceptions as, individually or in the aggregate,
have not had and are not reasonably likely to have a Parent
Material Adverse Effect. To the Knowledge of Parent, the
Parent Principal Subsidiaries are qualified or otherwise
authorized to do business in each jurisdiction in which the
character of the properties owned or held under lease or
license or the character of any of the Parent Principal
Subsidiaries' businesses requires such qualification or
authorization, except where the failure to so qualify or be
so authorized, individually or in the aggregate, has not had
and is not reasonably likely to have a Parent Material
Adverse Effect.
Section 4.5. Consents.
--------
Except as disclosed in the Preliminary Offering
Circular or as, individually or in the aggregate, has not
had and is not reasonably likely to have a Parent Material
Adverse Effect, (a) Parent and each of the Parent Principal
Subsidiaries has carried on and is carrying on its business
and operations so that there have been no breaches of
applicable laws, regulations and by-laws (including the
rules and regulations, whether statutory or otherwise, of
any regulatory authority by which any member is bound) in
each country in which its business and operations is carried
on and (b) all consents, approvals, authorizations, orders,
filings, registrations, notifications, permits,
certificates, licences and clearances (each an
"Authorization") of or with any court or governmental,
regulatory or supranational agency or body, any taxation
authority or any stock exchange authority, the Commission of
the European Union or any court, agency body or other
institution having jurisdiction over Parent or any of the
Parent Principal Subsidiaries (each an "Agency") required to
be procured in order to engage in the business currently
conducted by Parent or any of the Parent Principal
Subsidiaries or required to own or lease its properties and
operate the business currently conducted by Parent or any of
the Parent Principal Subsidiaries on and from the properties
and other assets and to conduct its businesses (w) have
been, or will have been prior to the Escrow Closing Date,
obtained or made and are or will, prior to the Escrow
Closing Date, be in full force and effect, (x) are not
limited in duration (unless it is normal for such
Authorizations to be limited in duration), (y) have been
fulfilled and performed and no event has occurred which
allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other
impairment of the rights of the holder of any such
Authorization and (z) to the Knowledge of Parent, there is
no reason to believe that any Agency is considering
limiting, suspending, revoking or refusing to renew any
Authorization.
Section 4.6. Absence of Defaults.
-------------------
No event has occurred and is subsisting or, to
the Knowledge of Parent, is about to occur, which
constitutes or would (with the expiry of any applicable
grace period or the fulfilment of any condition or the
giving of any notice or the compliance with any other
formality) constitute, a default under or result in the
acceleration by reason of default of, any obligations under
any agreement (including its articles of association),
undertaking or arrangement, bond, indenture, mortgage, deed
of trust, loan or credit agreement, licence, note, lease or
other agreement or instrument (including any note, debenture
or other evidence of indebtedness) to which Parent or any of
the Parent Principal Subsidiaries is a party or by which it
may be bound or and to which its assets are subject and
which is, in any case, material to Parent and the Parent
Principal Subsidiaries taken as a whole (collectively,
"Agreements and Instruments").
Section 4.7. Preliminary Offering Circular.
-----------------------------
(a) All statements of fact contained in the
Preliminary Offering Circular, which is attached to Section
4.7 of Parent's Disclosure Schedule, as of its date are true
and accurate in all material respects and not misleading and
all forecasts and estimates contained therein are as of its
date made on reasonable grounds, are based on reasonable
assumptions, are fair and honestly held and have been made
after due and careful inquiry and consideration. There is
no information which has not been disclosed in the
Preliminary Offering Circular the omission of which makes
any statement therein misleading as of its date or which in
the context of the offering of the Bonds (as defined in the
Preliminary Offering Circular), is material for disclosure
therein as of its date.
(b) The Preliminary Offering Circular, as of its date,
contains all information with respect to Parent and the
Parent Subsidiaries and the Parent Shares which is material
in the context of the offering of the Bonds (including all
information required by English law and Cayman Islands law
and the information which, according to the particular
nature of Parent and the Parent Shares, is necessary to
enable investors and their professional advisers to make an
informed assessment of the assets and liabilities, financial
position, profits and losses, and prospects of Parent and of
the rights attaching to the Parent Shares in accordance with
section 146 of the United Kingdom Financial Services Act
1986).
(c) Subject to paragraph (e) below, the opinions and
intentions expressed in the Preliminary Offering Circular,
as of its date, are honestly held, have been reached after
considering all relevant circumstances of which the Parent
is aware and are based on reasonable assumptions.
(d) All reasonable inquiries have been made by Parent to
ascertain the facts, information and statements in the
Preliminary Offering Circular, as of its date, and to verify
the accuracy of all such facts, information and statements
as of the date of such document.
(e) For the avoidance of any doubt, no representation or
warranty is made by Parent that the transactions described
in the Preliminary Offering Circular will be consummated.
Section 4.8. Parent Financial Statements.
---------------------------
The consolidated financial statements of Parent
and the Parent Subsidiaries appearing in the Preliminary
Offering Circular (the "Parent Financial Statements") were
prepared (except to the extent, if any, disclosed therein)
in accordance with generally accepted accounting principles
prevailing in, and pursuant to the relevant laws of, the
United Kingdom, consistently applied and present a true and
fair view of the financial position of Parent and the Parent
Subsidiaries as of the dates, and the results of operations
and cash flow information of Parent and the Parent
Subsidiaries for the periods, in respect of which they have
been prepared. Parent maintains a system of internal
financial and accounting controls which is, in its
reasonable opinion, sufficient to provide assurance that
transactions and assets are recorded as necessary to permit
preparation of complete and accurate returns and reports to
regulatory bodies as and when required by them, and
financial statements in conformity with generally accepted
accounting principles prevailing in the United Kingdom.
Section 4.9. Pro Forma Financial Information.
-------------------------------
The pro forma financial information set out in
the Preliminary Offering Circular has been prepared after
due careful inquiry by Parent on the basis set out in the
Preliminary Offering Circular.
Section 4.10. Undisclosed Liabilities.
-----------------------
To the Knowledge of Parent, except as set forth
in Section 4.10 of Parent's Disclosure Schedule, there were
no liabilities of Parent or any of the Parent Subsidiaries
as of December 31, 2000 that are of a type required to be
disclosed on a consolidated balance sheet (or in the notes
related thereto) prepared in accordance with U.K. GAAP, as
in effect on the date thereof except as reflected in the
consolidated financial statements of the Parent and the
Parent Subsidiaries appearing in the Preliminary Offering
Circular. To the Knowledge of Parent, since December 31,
2000, neither Parent nor any of the Parent Subsidiaries has
incurred or become subject to any liabilities that are of a
type required to be disclosed on a consolidated balance
sheet (or in the notes related thereto) prepared in
accordance with U.K. GAAP as in effect on December 31, 2000,
except liabilities that, individually or in the aggregate,
have not had and are not reasonably likely to have a Parent
Material Adverse Effect.
Section 4.11. No Parent Material Adverse Change.
---------------------------------
Except as indicated in the Preliminary Offering
Circular or as disclosed in Section 4.11 of Parent's
Disclosure Schedule, since December 31, 2000:
(a) there has been no material adverse change, or any
development or event which might reasonably be expected to
result in a material adverse change, to the condition
(financial or otherwise) or in the earnings, results of
operations, prospects or general business affairs of Parent
and the Parent Principal Subsidiaries taken as a whole,
whether or not arising in the ordinary course of business,
except for such changes that would not, individually or in
the aggregate, have a Parent Material Adverse Effect;
(b) there have been no transactions entered into which are
material with respect to Parent and the Parent Principal
Subsidiaries taken as a whole; and
(c) there has been no dividend or distribution of any kind
declared, paid or made by Parent on any class of its share
capital.
Section 4.12. Absence of Proceedings.
----------------------
Neither Parent nor any of the Parent Principal
Subsidiaries is engaged in any litigation, arbitration,
prosecution, investigation, inquiry or other legal
proceeding, nor, to the Knowledge of Parent, is any such
proceeding pending or threatened against Parent or any of
the Parent Principal Subsidiaries which in any such case may
have or has had during the 12 months preceding the date of
this Agreement a Parent Material Adverse Effect.
Section 4.13. Listing.
-------
The Parent Shares currently issued are duly
admitted to the Official List of the UKLA, are admitted to
trading by the LSE and the African Exchanges and are freely
tradeable on the LSE and the African Exchanges (subject to
the respective exchange control regulations of such African
countries) and Parent is in compliance with all the listing
and admission requirements of the UKLA, the LSE and the
African Exchanges.
Section 4.14. Regulatory Filings.
------------------
To the Knowledge of Parent, Parent and the
Parent Principal Subsidiaries have each filed all material
reports, statements, documents, registrations, filings or
submissions required to be filed with any governmental or
regulatory body since December 31, 1998, all such
registrations, reports, statements, documents, filings and
submissions were in material compliance with applicable law
when filed, and no material deficiencies have been asserted
by any such governmental or regulatory body with respect to
such registrations, filings or submissions that have not
been satisfied, in each case, with such exceptions as,
individually or in the aggregate, have not had and are not
reasonably likely to have a Parent Material Adverse Effect.
Section 4.15. Brokers.
-------
All negotiations relating to this Agreement and
the transactions contemplated hereby have been carried out
without the intervention of any Person acting on behalf of
Parent in such manner as to give rise to any claim for any
brokerage or finder's commission, fee or similar
compensation, except for Dresdner Kleinwort Wasserstein and
Fletcher Financial, Inc., whose fees in respect thereof
shall be paid by Parent.
Section 4.16. Investment Intent.
-----------------
Purchaser is acquiring the Shares for its own
account for investment purposes only and not with a view to,
or for sale or resale in connection with, any public
distribution thereof or with any present intention of
selling, distributing or otherwise disposing of the Shares,
except in compliance with applicable securities laws.
Section 4.17. Financing.
---------
Parent, Purchaser and Note Purchaser, as the
case may be, have and will have, as and when required,
adequate financial resources and/or undrawn committed
facilities and will have, as and when required, the funds
and authorized Parent Shares necessary to consummate the
transactions contemplated hereby in accordance with the
terms hereof. Parent's, Purchaser's and Note Purchaser's
obligations hereunder are not subject to any conditions
regarding Parent's, Purchaser's or Note Purchaser's ability
to obtain financing for the transactions contemplated
hereby.
Section 4.18. No Other Representations or Warranties.
--------------------------------------
(a) Except for the representations and
warranties contained in this Article Four or as may be set
forth in any closing certificate hereunder, neither Parent
nor any other Person makes any express or implied
representation or warranty on behalf of Parent, and Parent
hereby disclaims any such representation or warranty whether
by Parent or any of its affiliates, officers, directors,
employees, agents or representatives or any other Person.
(b) In particular, without limiting the foregoing
disclaimer, no oral or written information presented to
Seller during any management presentation, including any
question and answer session thereto, shall be deemed to
constitute a representation or warranty of any Person
referred to in paragraph (a) of this Section 4.18. With
respect to any projection or forecast delivered by or on
behalf of Parent to Seller, Seller acknowledges that (i)
there are uncertainties inherent in attempting to make such
projections and forecasts, (ii) it is familiar with such
uncertainties, (iii) it is taking full responsibility for
making its own evaluation of the adequacy and accuracy of
all such projections and forecasts so furnished to it, and
(iv) it shall have no claim against any Person with respect
thereto other than a claim for fraud or bad faith.
ARTICLE FIVE
Covenants and Certain Actions of the Parties
-------------------------------------------
Section 5.1. Obligations of Seller.
---------------------
Section 5.1.1. Conduct of Business, Etc.
------------------------
From the date of this Agreement until the
Closing, except: (i) as contemplated or permitted by this
Agreement; (ii) as indicated in Section 5.1.1 of the
Seller's Disclosure Schedule; (iii) as requested by Parent
or its affiliates; and (iv) as otherwise consented to by
Parent in writing, Seller shall cause F&G Life and the F&G
Subsidiaries to:
(a) carry on their business only in the ordinary course, in
substantially the same manner in which it previously has
been conducted and, to the extent consistent with such
business, use commercially reasonable efforts to preserve
intact their present business organization and maintain
their existing relationships and goodwill with customers,
clients, suppliers, distributors, regulators, creditors,
agents, brokers and others having business dealings with F&G
Life or any F&G Subsidiary (provided that none of Seller,
F&G Life or any of the F&G Subsidiaries shall be required to
incur any costs or expenses or otherwise expend any monies
out of the ordinary course of business, consistent with past
practice, in connection with such efforts);
(b) (i) maintain in all material respects all of their
material licenses, qualifications, and authorizations to do
business in each jurisdiction in which they are so licensed,
qualified or authorized (it being acknowledged and agreed
that state regulators have considerable discretion to
withdraw licenses, authorizations and permits and that, to
the extent such withdrawals occur despite the commercially
reasonable efforts of F&G Life and the F&G Subsidiaries,
Seller shall not be deemed to have violated this Section
5.1.1(b)(i)); and (ii) maintain in all material respects all
of their material fixed assets in good working order and
condition, ordinary wear and tear excepted;
(c) not make or rescind any material election relating to
Taxes, settle or compromise any material claim, action,
suit, litigation, proceeding, arbitration, investigation,
audit or controversy relating to Taxes, or except as may be
required by applicable law, change any of F&G Life's or any
of the F&G Subsidiaries' material methods of reporting
income or deductions for federal income tax purposes from
those employed in the preparation of its most recently filed
federal income tax return;
(d) maintain in all material respects the reserves of F&G
Life and Thomas Jefferson Life in accordance with the
generally recognized actuarial methods and standards
followed by F&G Life and Thomas Jefferson Life as of the
date of this Agreement and consistent with past practice,
except to the extent required by any change in applicable
Law;
(e) not enter into any reinsurance contract, whether as
reinsurer or reinsured, including without limitation any
surplus relief or financial reinsurance contract, except in
the ordinary course of business and consistent with past
practice;
(f) continue to comply, in all material respects, with all
Laws (including, without limitation, Environmental Laws)
applicable to their business, operations or affairs, except
for such failures that, individually or in the aggregate,
would not have and are not reasonably likely to have a
Material Adverse Effect;
(g) cause such officers and/or members of the boards of
directors of F&G Life and the F&G Subsidiaries as are
designated by Parent or are employees of The St. Paul or its
affiliates (other than F&G Life and the F&G Subsidiaries)
effective as of, and subject to, the Closing, to tender
their resignations from such officer positions and/or boards
of directors on or prior to the Closing Date;
(h) make available to Parent on or prior to the Closing
Date, all of the books and records of F&G Life and each of
the F&G Subsidiaries;
(i) not: (i) make any representation, commitment or
promise, oral or written, to any officer, director,
employee, agent or consultant of F&G Life or any of the F&G
Subsidiaries concerning any Plan that would materially
increase the benefits provided by F&G Life or any of the F&G
Subsidiaries under such Plan (other than as required by
applicable Law); (ii) make any change to, or amend in any
way, the contracts, salaries, wages, or other compensation
of any officer, director, employee, consultant, or other
similar representative of F&G Life or any of the F&G
Subsidiaries whose annual cash compensation exceeds
$150,000, other than changes or amendments that are made in
the ordinary course of business and consistent with past
practice; (iii) adopt, enter into, amend, alter, or
terminate, partially or completely, any employee benefit
plan relating to or affecting any employee of F&G Life or
any of the F&G Subsidiaries (other than an amendment
required by Law, as generally adopted with respect to
employees of Seller, The St. Paul and its subsidiaries or to
maintain the tax-qualified status of any Pension Plan); (iv)
enter into any contract with any officer, director, employee
or consultant of F&G Life or any of the F&G Subsidiaries
that is not terminable, without penalty or other liability,
upon not more than 60 calendar days' notice without any
reason; (v) assume, enter into, amend, alter, or terminate
any labor or collective bargaining agreement to which F&G
Life or any of the F&G Subsidiaries is a party or is
affected thereby; or (vi) hire any officer, director,
employee, consultant, or other similar Person whose annual
cash compensation exceeds $150,000, other than the hiring of
any such Person as a replacement for a Person whose
employment has ceased at a substantially similar
compensation level, in the case of clauses (i) through (vi),
other than pursuant to arrangements that are generally
adopted with respect to or directed at officers, directors,
employees or consultants of (x) F&G Life or any of the F&G
Subsidiaries, on the one hand, and of The St. Paul or any of
its other subsidiaries, on the other hand, at the sole
expense of Seller or its affiliates (other than F&G Life or
any of the F&G Subsidiaries), or (y) The St. Paul and its
subsidiaries.
(j) not materially violate, breach, or default under, or
not take or fail to take any action that (with or without
notice or lapse of time or both) would constitute a material
violation, breach, or default under, any Contract;
(k) not: (i) change the authorized or issued capital stock
of F&G Life or the authorized or issued capital stock or
other equity interests of any of the F&G Subsidiaries; (ii)
grant any stock option, warrant, or other right to purchase
shares of capital stock of F&G Life or to purchase shares of
capital stock or other equity interests of any of the F&G
Subsidiaries; (iii) directly or indirectly issue, sell,
pledge, dispose of or encumber any capital stock of F&G Life
or any capital stock or other equity interests of any of the
F&G Subsidiaries or any security directly or indirectly
convertible or exchangeable into the capital stock of F&G
Life or the capital stock or other equity interests of any
of the F&G Subsidiaries; (iv) grant any registration rights
in respect of the capital stock of F&G Life or the capital
stock or other equity interests of any of the F&G
Subsidiaries; (v) reclassify, combine, split, subdivide,
purchase, redeem, retire, issue, sell, or make any other
acquisition or disposition, directly or indirectly, by F&G
Life of any shares of the capital stock thereof or by any of
the F&G Subsidiaries of any shares of the capital stock or
other equity interests thereof; (vi) amend any material term
of any outstanding security of F&G Life or any of the F&G
Subsidiaries; (vii) declare, set aside or pay any dividend
(whether in cash, securities or other property) or make any
other distribution or payment in respect of the shares of
the capital stock of F&G Life or shares of capital stock or
other equity interests of any of the F&G Subsidiaries; or
(viii) sell or pledge any stock or other equity interest
owned by F&G Life or any of the F&G Subsidiaries except in
the ordinary course of administering F&G Life's and Thomas
Jefferson Life's investment portfolio;
(l) not: (i) amend or make any other change in the
certificate of incorporation or by-laws or other
organizational documents of F&G Life or any of the F&G
Subsidiaries; (ii) merge or consolidate F&G Life or any of
the F&G Subsidiaries with or into any other Person; (iii)
subdivide or reclassify any shares of the capital stock of
F&G Life or shares of the capital stock or other equity
interests of any of the F&G Subsidiaries; or (iv) change or
agree to change in any manner the rights of the outstanding
capital stock of F&G Life or the outstanding capital stock
or other equity interests of any of the F&G Subsidiaries;
(m) not: (i) acquire (including by way of bulk
reinsurance, merger, consolidation or acquisition of stock
or assets) any Person or any division thereof or material
portion of the assets thereof; (ii) liquidate, dissolve or
wind up, or dispose of all or substantially all of the
assets (including by way of bulk reinsurance, whether on an
indemnity or assumption basis) of F&G Life or any of the F&G
Subsidiaries; or (iii) organize any new subsidiary of F&G
Life or any of the F&G Subsidiaries;
(n) not make any material change in the policies, practices
or principles of F&G Life or any of the F&G Subsidiaries
with respect to accounting, reserving, hedging, tax,
financial reporting, actuarial investing or otherwise
engaging in derivatives transactions, underwriting or claims
administration, including any material change in any method
of calculating or estimating any bad debt, contingency
insurance or other reserve for financial reporting purposes
or for any other tax or accounting purpose (other than any
change required by GAAP, SAP, the American Academy of
Actuaries, or applicable Law), or, in respect of
underwriting or claims administration, in the ordinary
course;
(o) not transfer, lease, license, guarantee, sell,
mortgage, pledge, dispose of or encumber any property or
assets in any material respect or incur or modify any other
liability in any material respect, in each case in excess of
$1,500,000 per transaction or $5,000,000 in the aggregate
and other than in respect of the investment portfolios of
F&G Life and Thomas Jefferson Life;
(p) not incur or modify any indebtedness for borrowed money
in excess of $5,000,000;
(q) not make, authorize, or commit for any capital
expenditures to be paid by F&G Life or any F&G Subsidiary in
excess of $1,000,000 in the aggregate;
(r) other than in the ordinary course of business
consistent with past practice, not enter into any other
contract, agreement or transaction to which F&G Life or any
of the F&G Subsidiaries is a party that (i) requires or is
reasonably expected to require payment during the term
thereof by F&G Life and the F&G Subsidiaries of $500,000 or
more (excluding (x) insurance policies and annuities issued
by F&G Life or Thomas Jefferson Life in the ordinary course
of business consistent with past practice and (y)
commissions payable with respect to the sale of insurance or
annuity products of F&G Life or any F&G Subsidiary) or (ii)
otherwise materially increases or is reasonably expected to
materially increase the liabilities of F&G Life and the F&G
Subsidiaries taken as a whole other than insurance policies
and annuities issued by F&G Life or Thomas Jefferson Life in
the ordinary course of business consistent with past
practice;
(s) not: (i) settle or compromise any material litigation
in excess of $500,000 individually or (ii) pay, discharge,
settle or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge,
satisfaction or settlements of claims, liabilities or
obligations in the ordinary and usual course of business;
(t) not enter into any agreement containing any provision
or covenant (other than restrictions agreed to in the
ordinary course of business consistent with past practice in
confidentiality agreements or insurance agent, broker,
producer, marketing or distribution agreements to which F&G
Life or Thomas Jefferson Life is a party, in each case other
than those agreements that purport to bind any affiliates of
F&G Life other than the F&G Subsidiaries) limiting in any
material respect the ability of F&G Life or any F&G
Subsidiary to (i) sell any of its current products or
services of or to any other Person, (ii) engage in any line
of business in which it currently conducts business, or
(iii) compete with any Person with whom it currently
competes;
(u) not enter into any other contract, agreement or
transaction that both (i) materially increases the
liabilities of F&G Life and the F&G Subsidiaries taken as a
whole and (ii) is not in the ordinary course of business;
and
(v) not: (i) enter into any material intercompany
agreement or (ii) incur any material intercompany
obligations owing to Seller or any affiliate of Seller
(other than F&G Life and the F&G Subsidiaries), in the case
of clause (ii) other than in the ordinary course of
business; and
(w) not enter into any agreement (whether written or oral
and express or implied) by F&G Life or any of the F&G
Subsidiaries with respect to F&G Life's Business to do any
of the foregoing (b) through (v).
It is acknowledged and agreed that Seller shall
not be deemed to have violated this Section 5.1.1 by reason
of actions taken or not taken as directed by Parent or any
of its affiliates.
Section 5.1.2. Access and Information.
----------------------
Between the date hereof and the Closing Date,
Parent and its representatives (including, but not limited
to, counsel, accountants and environmental consultants)
shall have reasonable access to and may inspect the
properties, documents, books, records, Tax Returns and audit
reports of F&G Life and the F&G Subsidiaries and such
information concerning their respective businesses, affairs,
properties, operations and personnel as Parent or its
representatives may from time to time reasonably request and
may discuss the affairs and accounts of F&G Life and the F&G
Subsidiaries with officers and other employees of Seller,
F&G Life, the F&G Subsidiaries and their counsel, in each
case insofar as such access is reasonably requested by
Parent, and after the Closing, Seller will furnish all
information and documents in its possession relating to F&G
Life's Business as Parent may reasonably request. If at any
time after the Closing Seller discovers in its possession or
under its control any books and records of F&G Life or any
of the F&G Subsidiaries that have not been previously
delivered or made available to Parent on or prior to the
Closing Date, Seller shall deliver or make available such
books and records to Parent. The foregoing and Section 10.6
shall not require Seller, F&G Life or any of the F&G
Subsidiaries to permit any inspection, or to disclose any
information, that in the reasonable judgment of Seller could
reasonably be expected to result in (i) the disclosure of
any trade secrets of third parties or the violation of any
obligations of Seller, F&G Life or any of the F&G
Subsidiaries with respect to confidentiality if Seller shall
have used reasonable efforts to obtain the consent of such
third party to such inspection or disclosure, (ii) the
waiver of any applicable attorney-client privilege, or (iii)
the violation of any Law. Parent shall conduct any
inspection or discussion during normal business hours and in
a manner that does not materially interfere with normal
business or violate any applicable Law, or contravene any
Contract to which Seller, F&G Life, the F&G Subsidiaries or
any of their affiliates is a party. Parent shall schedule
all inspections and discussions to be held at times and
places approved in advance by the Chief Financial Officer of
the Seller (or, in his absence, any Executive Vice President
of the Seller), which approval shall not be unreasonably
withheld. Parent agrees and agrees to cause its directors,
officers, employees, representatives, agents and advisors to
hold confidential all information and documents obtained by
it from Seller, F&G Life, the F&G Subsidiaries or their
representatives pursuant to this Section 5.1.2 or Section
10.6 and to return to Seller all such information and
documents and any copies made thereof as soon as practicable
if the transactions contemplated by this Agreement are not
consummated for any reason.
Section 5.1.3. Additional Financial Statements.
-------------------------------
As soon as reasonably practicable after they
become available, Seller shall cause F&G Life and Thomas
Jefferson Life to make available to Parent as and to the
extent prepared, (a) the statutory basis financial
statements of F&G Life and Thomas Jefferson Life, as audited
by KPMG LLP, as at December 31, 2000, (b) the unaudited
consolidated GAAP Financial Information of F&G Life for all
quarterly fiscal periods subsequent to December 31, 2000 and
prior to the Closing Date (collectively, "Quarterly GAAP
Financial Information") and (c) quarterly Statutory
Statements of F&G Life and Thomas Jefferson Life for all
quarterly fiscal periods subsequent to December 31, 2000 and
prior to the Closing Date, together with the exhibits,
schedules and notes thereto, if any, and any affirmations
and certifications filed therewith, as filed with the
Maryland Insurance Department or the New York Insurance
Department, as applicable (each a "Quarterly Statutory
Statement").
Section 5.1.4. No Solicitation.
---------------
Other than as expressly contemplated by this
Agreement, Seller shall not, shall cause its subsidiaries
(including without limitation F&G Life, Thomas Jefferson
Life and the other F&G Subsidiaries) not to, and shall use
its commercially reasonable efforts to cause its affiliates
and Persons acting for or on behalf of Seller, Seller's
subsidiaries or other respective affiliates thereof not to
take, directly or indirectly, any action to seek or
encourage any offer or expression of interest or to
entertain any offer or expression of interest (including in
connection with any proposed public or private offering of
securities) or proposal from any Person: (i) to acquire any
assets (other than with respect to portfolio investments of
F&G Life and Thomas Jefferson Life in the ordinary course of
business) or shares of capital stock or other equity
interests of F&G Life or any of the F&G Subsidiaries (or any
interest in any of the foregoing); (ii) to merge,
consolidate, or combine, or to permit any other Person to
merge, consolidate, or combine with F&G Life or any of the
F&G Subsidiaries; (iii) to liquidate, dissolve, or
reorganize F&G Life or any of the F&G Subsidiaries in any
manner; (iv) to acquire or transfer any assets (other than
with respect to portfolio investments of F&G Life and Thomas
Jefferson Life in the ordinary course of business) of F&G
Life or any of the F&G Subsidiaries (or any interest in any
of the foregoing); (v) to reach any agreement or
understanding (whether or not such agreement or
understanding is absolute, revocable, contingent, or
conditional) for, or otherwise to attempt to consummate, any
such acquisition, transfer, merger, consolidation,
combination, or reorganization of F&G Life or any of the F&G
Subsidiaries; or (vi) to furnish or cause to be furnished
any information with respect to F&G Life or any of the F&G
Subsidiaries to any Person (other than Parent and its
affiliates, directors, officers, employees, and agents) that
(x) Seller, F&G Life or their respective affiliates (or any
Person acting for or on behalf of Seller, F&G Life or their
respective affiliates) knows or has reason to believe is in
the process of attempting or considering any such
acquisition, transfer, merger, consolidation, combination,
liquidation, dissolution, or reorganization of F&G Life or
any of the F&G Subsidiaries or any offer or expression of
interest thereof, and (y) is in connection with, relating to
or intended to facilitate any such offer, expression of
interest or proposal. If Seller, F&G Life or any of their
respective affiliates receives, directly or indirectly, from
any Person (other than Parent, Purchaser or Note Purchaser)
any offer, proposal or informational request that is subject
to this Section 5.1.4, Seller shall (or shall cause F&G Life
to, as appropriate): (x) promptly advise such Person, by
written notice, of the terms of this Section 5.1.4; (y)
promptly deliver a copy of such notice to Parent; and (z)
refrain from any further solicited contact with such Person
concerning such proposed transaction.
Section 5.1.5. Insurance.
---------
From the date hereof through the Closing Date,
Seller shall cause each of F&G Life and the F&G Subsidiaries
to maintain in force (including necessary renewals thereof)
the insurance covering F&G Life and the F&G Subsidiaries on
the date hereof, except to the extent that such insurance
may be replaced with substantially equivalent policies
appropriate to insure the assets, properties and business to
substantially the same extent as currently insured and
except for any changes in insurance policies of Seller or
The St. Paul that may affect their subsidiaries generally.
Section 5.1.6. Investments.
-----------
From the date hereof through the Closing Date,
Seller shall cause F&G Life and Thomas Jefferson Life to (a)
comply with their respective investment guidelines in effect
as of the date hereof and set forth in Section 5.1.6 of
Seller's Disclosure Schedule except that no investments with
an NAIC rating of less than 2 may be purchased and (b)
manage their investment portfolios, in all material
respects, in accordance with applicable Law.
Section 5.1.7. Change in Control Payments.
--------------------------
Seller shall be responsible for and shall
promptly pay when due all bonuses which become due and
payable under the F&G Life Disposition Incentive Plan at any
time (whether prior to, on, or following the Closing Date)
as a result of (i) the execution and delivery of this
Agreement by any party hereto or (ii) the Closing.
Section 5.1.8. Bank Accounts.
-------------
As promptly as reasonably practicable after the
date of this Agreement, Seller shall make available to
Parent (a) a true and complete list of the names and
locations of all banks, trust companies, securities brokers,
and other financial institutions at which F&G Life and each
of the F&G Subsidiaries has an account or safe deposit box
or maintains a banking, custodial, trading, trust, or other
similar relationship, (b) a true and complete list and
description of each such account, safe deposit box, and
relationship, and (c) with respect to each such account or
safe deposit box, the names of all persons authorized to
draw therefrom or have access thereto.
Section 5.1.9. Intercompany Obligations.
------------------------
No later than the sixtieth day after the
Closing, Seller and each of its subsidiaries (other than F&G
Life and the F&G Subsidiaries) shall pay and discharge all
loans, advances and payables that it owes to F&G Life or any
of the F&G Subsidiaries as of the Escrow Closing Date, other
than receivables and payables relating to the issuance of
annuities and funding agreements by F&G Life or Thomas
Jefferson Life in connection with the Structured Settlements
Program in the ordinary course of business and those in
respect of the F&G Life guaranteed investment contract held
by the trustee for the Section 401(k) plan established for
employees of The St. Paul and its affiliates.
Section 5.1.10. Minute Books.
------------
The minute books of F&G Life and each F&G
Subsidiary will promptly be made available to Parent for
inspection when and as available with regard to any material
board or stockholder actions occurring between the date
hereof and the Escrow Closing Date.
Section 5.2. Obligations of Parent.
---------------------
Section 5.2.1. Use of Names.
------------
Commencing as promptly as practicable after the
Closing, but in no event later than 180 days after the
Closing, neither Parent nor any of its subsidiaries or
affiliates (including F&G Life and the F&G Subsidiaries)
will use any marks, designs, logos, slogans, names, words or
letters which include the words "USF&G", "United States
Fidelity and Guaranty", "St. Paul" or "Fire & Marine" or
those that are suggestive or derivative thereof, except (i)
as may be required by Law, (ii) for the purposes of
historical identification in materials not designed as
advertising or solicitation and (iii) as provided under the
License Agreement.
Except as permitted by the preceding paragraph,
Parent shall cause F&G Life and the F&G Subsidiaries to
refrain from using any printed materials or other means of
communication which state, suggest or imply any affiliation
with The St. Paul, Seller or any of their respective
subsidiaries following the Closing; provided that so long as
Parent continues to use its commercially reasonable efforts
to discontinue the use of such materials and other means of
communication, F&G Life may continue to use materials
existing at the Closing, subject to applicable Law, for up
to 180 days after Closing. With respect to all materials
used after the Closing which state or suggest or imply any
affiliation with The St. Paul, Seller or any of their
respective subsidiaries, Parent shall indemnify and hold The
St. Paul, Seller and their respective subsidiaries harmless
against and in respect of any and all damages, losses,
liabilities and expenses, including, without limitation,
legal and other expenses which arise out of, relate to or
result from the inclusion of such statements, suggestions or
implications in such materials. Parent, effective as of the
Closing and except as expressly set forth in this Section
5.2.1, acting on behalf of itself and its subsidiaries and
affiliates, including F&G Life and the F&G Subsidiaries,
hereby assigns and relinquishes to Seller any right F&G Life
and the F&G Subsidiaries may heretofore have had to use the
marks, designs, logos, slogans or names of The St. Paul,
Seller or any of their respective subsidiaries, including,
without limitation, "USF&G", "United States Fidelity and
Guaranty", "St. Paul" and "Fire & Marine", or any marks,
designs, logos, slogans, words, names or letters suggestive
or derivative thereof in any trade or business or otherwise,
except to the extent permitted under the License Agreement.
Notwithstanding anything to the contrary in this
Agreement, Parent acknowledges and agrees that those
trademarks and service marks identified with an asterisk (*)
on Section 3.14(ii) and (iii) of Seller's Disclosure
Schedule, and any associated registrations and applications,
as well as all goodwill associated therewith and represented
thereby, shall be conveyed at or prior to the Escrow Closing
Date from F&G Life and the F&G Subsidiaries to The St. Paul
or a subsidiary of The St. Paul designated by The St. Paul.
The St. Paul or its designee shall, effective as of the
Closing Date, license such marks, registrations,
applications and associated goodwill to F&G Life and the F&G
Subsidiaries, as the case may be, pursuant to the License
Agreement (as hereinafter defined).
Section 5.2.2. Access and Information.
----------------------
(a) Between the date hereof and the Closing
Date, The St. Paul, Seller and their respective
representatives (including, but not limited to, counsel,
accountants and environmental consultants) shall have
reasonable access to and may discuss the affairs and
accounts of Parent and the Parent Subsidiaries with
directors and officers of Parent and its counsel insofar as
such access is reasonably requested by The St. Paul or
Seller in connection with its bring-down of its due
diligence investigation of Parent to the Closing.
(b) Sections 5.2.2(a) and 10.6 shall not require Parent,
F&G Life or any of the F&G Subsidiaries to permit any
inspection, or to disclose any information, that in the
reasonable judgment of Parent could reasonably be expected
to result in (i) the disclosure of any trade secrets of
third parties (other than F&G Life or the F&G Subsidiaries)
or violate any obligations of Parent, F&G Life or any of the
F&G Subsidiaries with respect to confidentiality if Parent
shall have used reasonable efforts to obtain the consent of
such third party to such inspection or disclosure, (ii) the
waiver of any applicable attorney-client privilege, or (iii)
a violation of any Law. The St. Paul or Seller shall
conduct any inspection or discussion during normal business
hours and in a manner that does not materially interfere
with normal business or violate any applicable Law. The St.
Paul or Seller shall schedule all inspections and
discussions to be held at times and places approved in
advance by the Group Finance Director of Parent (or, in his
absence, the Group Finance Controller of Parent), which
approval shall not be unreasonably withheld. Each of The
St. Paul and Seller agrees and agrees to cause its
directors, officers, employees, representatives, agents and
advisors to hold confidential all information and documents
obtained by it, him or her pursuant to Section 5.2.2(a)
prior to the Closing from Parent or its representatives or
pursuant to Section 10.6 after the Closing from Parent, F&G
Life, the F&G Subsidiaries or their representatives.
Section 5.2.3. Additional Financial Statements.
-------------------------------
As soon as reasonably practicable after they
become available, Parent shall make available to Seller as
and to the extent prepared and made publicly available,
unaudited U.K. GAAP financial statements of Parent for all
interim fiscal periods subsequent to December 31, 2000 and
prior to the Escrow Closing Date (each a "Parent Interim
Financial Statement"). Each Parent Interim Financial
Statement will conform to the requirements of Section 4.8 as
if set forth therein.
Section 5.2.4. Stock Exchange Listing.
----------------------
Parent shall use its commercially reasonable
efforts to cause the Initial Parent Shares to be issued to
Seller at the Closing pursuant to Article One of this
Agreement and the Reference Date Parent Shares, if any, to
be issued to Seller on the first anniversary of the Closing
Date pursuant to Article One, respectively, to be (a)
admitted to the Official List of the UKLA, (b) admitted to
trading on the LSE, and (c) approved for listing on all
other stock exchanges on which Parent Shares are then listed
(subject only to official notice of issuance), in the case
of clauses (a) through (c), prior to the Closing Date and on
or prior to the first Business Day following the first
anniversary of the Closing Date, respectively, provided that
if such Reference Date Parent Shares are not so admitted to
the Official List of the UKLA, admitted to trading on the
LSE and approved for listing as set forth in clauses (a)
through (c) on or prior to the first Business Day following
the first anniversary of the Closing Date, Parent shall
deliver to Seller in immediately available funds the amount
(if any) required by Section 1.9(a)(i) in lieu of the
Reference Date Shares.
Section 5.2.5. Intercompany Obligations.
------------------------
No later than the sixtieth day after the
Closing, Parent shall cause each of F&G Life and the F&G
Subsidiaries to pay and discharge all loans, advances and
payables that it owes to Seller or any of its affiliates
(other than F&G Life and the F&G Subsidiaries) as of the
Escrow Closing Date.
Section 5.2.6. Settlement of Tax Benefit.
-------------------------
Parent shall cause Seller to be paid the cash
value of the tax benefit realized by F&G Life in connection
with the sale of the Founders Building as and to the extent
such tax benefit is realized by F&G Life or any of its
affiliates. The cash value of the tax benefit realized by
F&G Life in connection with such sale shall equal the
excess, if any, of (i) the amount of Taxes that would have
been payable by F&G Life, any of the F&G Subsidiaries,
Parent or any affiliate of Parent with respect to any tax
period in the absence of such sale over (ii) the amount of
Taxes actually paid with respect to such period.
Section 5.2.7. Guaranty and Other Arrangements.
-------------------------------
Parent agrees and covenants not to, and to
cause each of F&G Life, Thomas Jefferson Life and Fidelity &
Guaranty Assignment, LLC not to, pursue any rights that F&G
Life, Thomas Jefferson Life or Fidelity & Guaranty
Assignment, LLC may have to any reimbursement, capital
contribution, indemnification or guaranty under any of the
Guaranty Agreements or the agreements and arrangements
indicated in Section 8.3.3 of Seller's Disclosure Schedule
or any other guaranty, capital support or similar
arrangement made by Seller or any of its current or former
affiliates.
Section 5.3. Obligations of Parties.
----------------------
Section 5.3.1. Employee Matters.
----------------
(a) For at least one year following the
Closing Date, Parent shall provide to current and former
employees of F&G Life and the F&G Subsidiaries (the
"Business Employees") employee benefits (including, without
limitation, medical, disability and life insurance and
retirement benefits) that are no less favorable than those
provided to similarly situated employees of Parent's life
insurance subsidiary situated in the United States ("OM Life
Insurance Subsidiary"). Notwithstanding the foregoing, for
no less than one year following the Closing Date, (i) OM
Life Insurance Subsidiary shall provide the Business
Employees with vacation and personal leave benefits which
are no less favorable than those provided to similarly
situated employees of OM Life Insurance Subsidiary, and OM
Life Insurance Subsidiary shall assume and be responsible
for all accrued but not taken vacation and personal leave
with respect to the Business Employees, as of the Closing
Date, and (ii) OM Life Insurance Subsidiary shall provide
the Business Employees with severance benefits which are
equal to the greater of (A) the benefits provided under the
severance plans listed in Section 5.3.1(a) of Seller's
Disclosure Schedule (including for this purpose, eligibility
for severance benefits such as constructive termination) or
(B) the severance plan maintained by Parent for its
similarly situated employees. Subject to the foregoing and
the requirements of Section 5.3.1(f), nothing in this
Agreement shall be construed as limiting in any way the
right of OM Life Insurance Subsidiary after the Closing Date
to terminate the employment of any Business Employee or to
modify, amend or terminate any employee benefit plan in
accordance with the terms of each employee benefit plan.
(b) As soon as practicable following the Closing Date,
Seller acknowledges that The St. Paul shall offer each of
the Business Employees the option of electing a distribution
from The St. Paul Companies, Inc. Stock Ownership Plan and
The St. Paul Companies, Inc. Savings Plus Plan
(collectively, "St. Paul DC Plans"), which distribution
shall be offered and made in compliance with Section
401(k)(l0) of the Code to the extent applicable. OM Life
Insurance Subsidiary agrees to cause its tax qualified
defined contribution plan (the "OM Life Insurance
Subsidiary's DC Plan") to permit each Business Employee who
is a participant in the St. Paul DC Plans to effect a direct
rollover of the taxable portion of such participant's
accrued benefits under St. Paul DC Plans to OM Life
Insurance Subsidiary's DC Plan. In connection with any such
rollover, OM Life Insurance Subsidiary shall cause OM Life
Insurance Subsidiary's DC Plan to allow any outstanding
participant loan and related promissory note under St. Paul
DC Plans to be directly rolled over into OM Life Insurance
Subsidiary's DC Plan. Seller and OM Life Insurance
Subsidiary agree to cooperate in order to effect the direct
rollover of accrued benefits with respect to those Business
Employees who elect a direct rollover of their distribution
from St. Paul DC Plans to OM Life Insurance Subsidiary's DC
Plan. OM Life Insurance Subsidiary agrees to take all
actions necessary to cause the OM Life Insurance Subsidiary
DC Plan to accept the direct rollovers in accordance with
the elections made by the Business Employees in accordance
with the terms of the OM Life Insurance Subsidiary DC Plan.
(c) Seller acknowledges that The St. Paul shall retain
liability to provide post-retirement welfare benefits for
each Business Employee (and his or her dependents) who is
eligible for such benefits as of the Closing Date and who
has in fact retired as of such date. Following the Closing
Date, OM Life Insurance Subsidiary shall provide post-
retirement welfare benefits to all Business Employees on the
same basis as it provides post-retirement welfare benefits
for its similarly situated employees. For purposes of the
first sentence of this paragraph, in order to be eligible
for post-retirement medical benefits, the Business Employee
must have elected by March 31, 2001 to be covered by the
"traditional retiree medical plan" (as opposed to the "cash
balance retiree health plan") and must meet all eligibility
requirements of such plan as of the Closing Date.
(d) With respect to each Business Employee, Seller and OM
Life Insurance Subsidiary agree that:
(i) OM Life Insurance Subsidiary shall waive pre-existing
condition exclusions, evidence of insurability provisions,
waiting period requirements or any similar provisions under
any welfare benefit plan maintained or sponsored by or
contributed to by, OM Life Insurance Subsidiary for such
Business Employee after the Closing Date; provided such
conditions, waiting periods, exclusions or similar
provisions did not preclude coverage for such Business
Employee as of the Closing Date under the comparable plans
of The St. Paul.
(ii) Seller acknowledges that The St. Paul's welfare benefit
plans shall be responsible for expenses covered by The St.
Paul's welfare benefit plans, provided that such expenses
were incurred prior to the Closing Date. OM Life Insurance
Subsidiary's plans shall assume responsibility for all other
welfare plan benefit claims relating to Business Employees
incurred on or after the Closing Date in accordance with the
terms of the OM Life Insurance Subsidiary's plans. For this
purpose, a claim is incurred when the medical or other
service giving rise to the claim is performed, except that
in the case of death, a claim is incurred on death.
(iii) OM Life Insurance Subsidiary shall recognize the
service of each Business Employee with F&G Life, the F&G
Subsidiaries, The St. Paul and The St. Paul's affiliates
prior to the Closing Date for all purposes (other than
benefit accrual under OM Life Insurance Subsidiary's defined
benefit pension plan) under each of OM Life Insurance
Subsidiary's employee benefit plans, programs and policies
(including but not limited to vacation and severance
entitlement and eligibility for post-retirement welfare and
pension benefits); provided, however, such recognition of
service shall not be taken into account to the extent it
would result in a duplication of any benefits thereunder.
(iv) Seller acknowledges that The St. Paul shall be
responsible for satisfying obligations under Section 601 et.
seq. of ERISA and Section 4980B of the Code ("COBRA"), to
provide continuation coverage to or with respect to any
Business Employee in accordance with law with respect to any
"qualifying event" occurring before the Closing Date. OM
Life Insurance Subsidiary shall be responsible for
satisfying obligations under COBRA to provide continuation
coverage to or with respect to any Business Employee in
accordance with law with respect to any "qualifying event"
which occurs on or following the Closing Date.
(e) Seller acknowledges that The St. Paul shall be
responsible for all deferred compensation due under The St.
Paul Companies, Inc. Management Deferred Incentive Plan with
respect to services rendered prior to the Closing Date by
any Business Employee.
(f) Parent specifically agrees to honor in accordance with
their terms all employment, severance and change in control
contracts, agreements or plans indicated in Section 5.3.1(f)
of Seller's Disclosure Schedule.
Section 5.3.2. Structured Settlements.
----------------------
(a) During the period of time from the Closing
Date through the fifth anniversary of the Closing Date,
subject to Section 5.3.2(b) of this Agreement, (i) Seller
shall use commercially reasonable efforts, and Parent shall
cause F&G Life and Thomas Jefferson Life to use commercially
reasonable efforts, to continue the Structured Settlements
Program with substantially similar procedures and protocols
as those in effect as of the date of this Agreement,
including those set forth in Section 5.3.2(a)(i) of Seller's
Disclosure Schedule (collectively, the "Protocols") and (ii)
Seller shall, and Parent shall cause each of F&G Life and
Thomas Jefferson Life to, use its commercially reasonable
efforts to follow the terms and conditions of the Protocols.
The Protocols shall include, but need not be limited to,
Seller (x) providing F&G Life, in the case of non-New York
business, and Thomas Jefferson Life, in the case of New York
business, the right (A) to submit quotes on each potential
structured settlement (except where placement of business
with F&G Life or Thomas Jefferson Life would not be allowed
under an applicable court order or Law or the Structured
Settlement Provider Standards, and (B) of last refusal on
matching the lowest quote of other bidders in respect
thereof, and (y) purchasing structured settlement annuities
from F&G Life or Thomas Jefferson Life, as the case may be,
in accordance with the Protocols. The term "Structured
Settlement Provider Standards" shall mean the selection
criteria and standards, as revised from time to time and
consistently applied by Seller, with respect to selection of
providers of structured settlement annuities and funding
agreements as to minimum acceptable credit rating, service
quality and other similar standards for providers of
structured settlement annuities and funding agreements,
which criteria and standards as of the date hereof are set
forth, in part, in Section 5.3.2(a)(ii) of Seller's
Disclosure Schedule.
(b) During the period of time from the Closing Date through
the fifth anniversary of the Closing Date, Seller shall
monitor the total premiums paid by the Structured Settlement
Purchasers or, as the case may be, Fidelity & Guaranty
Assignment, LLC, as assignee, in accordance with Section 130
of the Code, to F&G Life and Thomas Jefferson Life as a
percentage of total premiums paid to all life insurance
companies in respect of structured settlements and may
decline to purchase structured settlement annuities and
funding agreements from such Persons to the extent Seller
deems necessary to limit such percentage to 75% of the total
premiums payable with respect to structured settlement
annuities purchased by the Structured Settlement Purchasers
or, as the case may be, Fidelity & Guaranty Assignment, LLC,
as assignee, in accordance with Section 130 of the Code,
during any calendar year.
(c) During the period of time from the fifth anniversary of
the Closing Date through the tenth anniversary of the
Closing Date, Seller shall use commercially reasonable
efforts to provide F&G Life, in the case of non-New York
business, and Thomas Jefferson Life, in the case of New York
business, the right (i) to submit quotes on each potential
structured settlement (except where placement of business
with F&G Life or Thomas Jefferson Life would not be allowed
under an applicable court order or Law or the Structured
Settlement Provider Standards regarding acceptable credit
rating, service and other quality standards for providers of
structured settlement annuities and funding agreements), and
(ii) of last refusal on matching the lowest quote submitted
by other bidders in respect thereof; provided, however, that
the Structured Settlement Purchasers shall not under any
circumstances be obligated to purchase any structured
settlement annuities or funding agreements from F&G Life or
Thomas Jefferson Life during such period of time.
(d) Seller agrees that during the first five years after
the Closing Date the Structured Settlement Purchasers will
instruct their brokers to seek bids for structured
settlement business only from annuity providers that are
rated at least as highly as F&G Life and Thomas Jefferson
Life were immediately prior to the date of this Agreement.
(e) Seller's obligations under Sections 5.3.2(a), 5.3.2(b),
5.3.2(c) and 5.3.2(d) of this Agreement shall be terminable
by Seller if any of the conditions specified in (i) through
(iv) below are not satisfied; provided that Seller shall
provide written notice and a 30 Business Day cure period to
Parent prior to the effectiveness of any termination of
Seller's obligations under Sections 5.3.2(a), 5.3.2(b),
5.3.2(c) and 5.3.2(d) pursuant to this Section 5.3.2(e), and
such obligations shall not terminate in the event that the
basis for termination is cured within such 30 Business Day
period; provided further, that F&G Life and Thomas Jefferson
Life shall have the benefit of the foregoing proviso in
respect of clauses (i) through (iii) below no more than once
in any twelve month period and with respect to clause (iv)
below no more than once in any twelve month period:
(i) F&G Life and Thomas Jefferson Life shall continue to
offer products for the funding of structured settlements at
rates that are reasonably competitive, compared to rates
available from other insurance carriers and life insurance
companies not affiliated with Seller meeting the Structured
Settlement Provider Standards and offering comparable
structured settlement annuity products;
(ii) F&G Life and Thomas Jefferson Life shall continue to
provide services to Structured Settlement Purchasers, their
affiliates and claims adjusters and independent brokers of
the Structured Settlement Purchasers which are reasonably
competitive with those of other life insurance companies not
affiliated with Seller that are active participants in the
structured settlements market, including, but not limited
to, with respect to the timely and accurate issuance of
contracts, the timely and accurate commencement of periodic
payments to payees and the timely and accurate payment of
commissions to independent brokers;
(iii) there shall not be any injunction, judgment,
order, decree, ruling or Law that prevents Seller from
continuing to settle claims (A) through structured
settlements generally or (B) through structured settlements
with F&G Life and Thomas Jefferson Life specifically,
provided that if such injunction, judgment, order, decree,
ruling or Law does not preclude any of the Structured
Settlement Purchasers from settling claims through F&G Life
and Thomas Jefferson Life, Seller's obligations under
Sections 5.3.2(a) through 5.3.2(d) shall continue in respect
of such Structured Settlement Purchasers; and
(iv) F&G Life and Thomas Jefferson Life shall maintain
credit ratings for their respective claims paying abilities
that are at least as favorable as those in effect
immediately prior to the date of this Agreement.
(f) During the period of time from the Closing Date through
the fifth anniversary of the Closing Date, Seller shall use
reasonable efforts to assist F&G Life in building its
structured settlement business with persons other than the
Structured Settlement Purchasers so long as such efforts do
not (i) create any liabilities for, or impose any
liabilities upon, Seller or any of its affiliates, or (ii)
cause Seller or any of its affiliates to expend any material
financial resources. Notwithstanding anything to the
contrary in this Section 5.3.2, neither Seller nor any of
its affiliates shall be required to endorse or recommend any
structured settlement annuities issued by F&G Life or Thomas
Jefferson Life.
(g) This Section 5.3.2 shall be of no force and effect in
the event that, at any time after the Closing, Parent no
longer directly or indirectly owns at least 50% of the
outstanding voting securities of F&G Life.
Section 5.3.3. Confidentiality.
---------------
Parent and Seller have agreed that they and
their respective subsidiaries will perform certain acts for
and provide certain products, services and facilities to
each other as users pursuant hereto or to certain agreements
ancillary hereto for various periods following the Closing
in order to permit an orderly transition of ownership of F&G
Life and the F&G Subsidiaries from Seller to Parent, and to
allow the users of the products, services and facilities to
continue their normal operations. Of necessity, this will
involve a sharing of various data, documents and other
information concerning the business or operations of the
users with providers of products, services or facilities
which are no longer affiliates of the users. Parent and
Seller agree that they and each of their subsidiaries and
their accountants, lawyers, financial advisors and other
agents and representatives, providing or receiving such
products, services or facilities to non-affiliated users
will treat all data, documents and other information
obtained or created in the course of providing or receiving
such products, services or facilities as confidential and
use and permit the use of such information only for the
purposes intended, except as may otherwise be required by
Law.
Section 5.3.4. Notifications.
-------------
(a) Prior to the Escrow Closing, Seller shall
promptly notify Parent (i) after satisfaction of the last of
Seller's obligations that are conditions to the obligation
of Parent to effect the transactions contemplated by this
Agreement, whether pursuant to Section 8.2 or Section 8.4,
except for such conditions which by their nature are to be
fulfilled at the Escrow Closing or the Closing, and (ii) of
the occurrence of any event that may make the satisfaction
of the conditions in Sections 8.2 or 8.4 not reasonably
likely.
(b) Prior to the Escrow Closing, Parent shall promptly
notify Seller (i) after satisfaction of the last of Parent's
obligations that are conditions to the obligation of Seller
to effect the transactions contemplated by this Agreement,
whether pursuant to Section 8.2 or Section 8.3, except for
such conditions which by their nature are to be fulfilled at
the Escrow Closing or the Closing, and (ii) of the
occurrence of any event that may make the satisfaction of
the conditions in Section 8.2 or 8.3 not reasonably likely.
Section 5.3.5. Rating Agency Matters.
---------------------
From and after the date of this Agreement until
the Closing, Seller shall use its commercially reasonable
efforts (x) to assist Parent and F&G Life in their
preparation of submissions to, and to participate in
Parent's and F&G Life's meetings with, A.M. Best Company,
Fitch, Inc. and Standard & Poor's regarding the initial
ratings to be assigned to F&G Life, and (y) to assist Parent
and Thomas Jefferson Life in their preparation of
submissions to, and to participate in Parent's and Thomas
Jefferson Life's meetings with, A.M. Best Company and
Standard & Poor's regarding the initial ratings to be
assigned to Thomas Jefferson Life after the Closing, in the
case of clauses (x) and (y) to the extent requested by
Parent. For greater certainty, this Agreement shall not
require Seller or any affiliate of Seller to provide any
form of financial or credit support to F&G Life or Thomas
Jefferson Life and shall not impose upon Seller or any
affiliate of Seller any obligations or liabilities in
respect of the credit ratings of Parent, F&G Life or Thomas
Jefferson Life other than as expressly set forth in the
immediately preceding sentence.
ARTICLE SIX
Tax Matters
-----------
Section 6.1. Indemnification and Similar Items.
---------------------------------
(a) Seller shall indemnify and hold harmless
each of the Parent Indemnitees against any Taxes of F&G Life
or the F&G Subsidiaries for any taxable year or other
taxable period that ends on or before the Closing Date, with
respect to taxable periods beginning before the Closing Date
and ending after the Closing Date, any Taxes imposed or
assessed against F&G Life or any of the F&G Subsidiaries
that are allocable, pursuant to Section 6.1(c), to the
portion of such period ending on the Closing Date, any Taxes
of any member of a combined, consolidated or unitary group
of which F&G Life or any of the F&G Subsidiaries (or any
predecessor thereof) is or was a member on or prior to the
Closing Date, by reason of the liability of F&G Life or any
of the F&G Subsidiaries pursuant to Treasury Regulation
Section 1.1502-6 or any analogous or similar state, local or
foreign law or regulation and any Taxes imposed upon or
assessed against F&G Life or any of the F&G Subsidiaries
arising by reason of any breach by Seller, or inaccuracy, of
any of the representations contained in Section 3.17 hereof;
provided, however, that Seller shall have no obligation to
indemnify any of the Parent Indemnitees from any such Taxes
until the aggregate amount of such Taxes exceeds the
aggregate amount of such Taxes accrued and reflected as a
current liability on the statutory balance sheet of F&G Life
as of December 31, 2000 (as described in Section 3.6(b)
hereof) less any and all Tax payments made by Seller, an
affiliate of Seller, F&G Life or any of the F&G Subsidiaries
since December 31, 2000, with respect to such accrued Taxes,
in which case Parent will be entitled to indemnity for the
entire excess amount. Seller shall also pay and shall
indemnify and hold harmless each of the Parent Indemnitees
from and against any losses, damages, liabilities,
obligations, deficiencies, costs and expenses (including,
without limitation, reasonable expenses and fees for
attorneys and accountants) ("Related Costs") incurred in
connection with the Taxes for which Seller is responsible to
indemnify each of the Parent Indemnitees pursuant to this
Section 6.1(a) (or any asserted deficiency, claim, demand,
action, suit, proceeding, judgment or assessment, including
the defense or settlement thereof, relating to such Taxes)
or the enforcement of this Section 6.1(a).
(b) Parent shall indemnify and hold harmless each of the
Seller Indemnitees against (i) any Taxes imposed upon or
assessed against F&G Life or any of the F&G Subsidiaries
with respect to taxable years or other taxable periods that
begin after the Closing Date; and (ii) with respect to
taxable periods beginning before the Closing Date and ending
after the Closing Date, any Taxes imposed upon or assessed
against F&G Life or any of the F&G Subsidiaries which are
allocable, pursuant to Section 6.1(c), to the Post-Closing
Tax Period.
(c) In the case of Taxes that are payable with respect to a
taxable period that begins before the Closing Date and ends
after the Closing Date, the portion of any such Tax that is
allocable to the portion of the period ending on the Closing
Date shall be:
(i) in the case of any premium tax, the amount which would
be payable with respect to the direct premiums written
during the period that ends on the Closing Date (taking into
account the rates and credits allocable to the pre-Closing
period that would be available if such period were treated
as a separate year for premium tax purposes); and
(ii) in the case of any other Taxes, the amounts which would
be payable if the taxable year ended or is treated as ending
as of the close of the Closing Date.
The balance of any Taxes that are payable with respect to a
taxable period that begins before the Closing Date and ends
after the Closing Date is allocable to the Post-Closing Tax
Period. Exemptions, allowances or deductions that are
calculated on an annual basis (including, but not limited
to, depreciation and amortization deductions) shall be
allocated between the period ending on the Closing Date and
the Post-Closing Tax Period in proportion to the number of
days in each such period. For purposes of this agreement,
"Post-Closing Tax Period" means any Tax period ending after
the Closing Date, except that for Tax periods beginning
before and ending after the Closing Date, the portion of
such period beginning after the Closing Date will be
considered a Post-Closing Tax Period.
(d) If Seller's indemnification obligation under this
Article Six arises in respect of an adjustment which makes
allowable to Parent, any of its affiliates or, effective
upon the Closing, F&G Life or any of the F&G Subsidiaries,
any deduction, amortization, exclusion from income or other
allowance (a "Tax Benefit") which would not, but for such
adjustment, be allowable, then within 30 days after the
filing of the applicable Tax Return in which such Tax
Benefit is claimed, Parent shall pay to Seller the excess,
if any, of (i) the amount of Taxes that would have been
payable by F&G Life, any of the F&G Subsidiaries, Parent or
any affiliate of Parent with respect to such Tax period in
the absence of such Tax Benefit over (ii) the amount of
Taxes actually paid; provided, however, that Parent shall be
required to make a payment to Seller under this paragraph
(d) only to the extent that Seller has made an actual
indemnity payment to Parent.
(e) Any payment by Seller or Parent, as the case may be,
pursuant to Section 6.1(a) or Section 6.1(b) hereof, to the
extent not previously made pursuant to Section 6.2 hereof,
shall be made not later than 30 days after receipt by Seller
or Parent, as the case may be, of written notice stating
that a Tax liability has been paid by Parent or Seller, as
the case may be, or their respective affiliates.
(f) All payments under this Article Six shall be treated by
the parties as an adjustment to the Initial Share
Consideration. However, if any indemnification payment
under this Article Six (including, without limitation, this
Section 6.1(f)) is determined to be taxable to the party
receiving such payment by any taxing authority, the paying
party shall also indemnify the party receiving such payment
for any Taxes incurred by reason of the receipt of such
payment and any Related Costs incurred by the party
receiving such payment in connection with such Taxes (or any
asserted deficiency, claim, demand, action, suit,
proceeding, judgment or assessment, including the defense or
settlement thereof, relating to such Taxes).
(g) Any dispute as to any matter covered by this Article
Six shall be resolved by an independent accounting firm
mutually acceptable to Seller and Parent. The fees and
expenses of such accounting firm shall be borne equally by
Seller and Parent.
(h) Any claim for indemnity under this Article Six may be
made at any time prior to 60 days after the expiration of
the applicable Tax statute of limitations with respect to
the relevant taxable period (including all periods of
extension, whether automatic or permissive).
(i) Subject to Sections 6.1(j) and 6.1(k) hereof, to the
extent any determination of Tax liability of F&G Life or any
F&G Subsidiary, whether as the result of an audit or
examination, a claim for refund, the filing of an amended
return or otherwise, results in any refund of Taxes paid
attributable to (i) any period which ends on or before the
Closing Date or (ii) any period which includes the Closing
Date but does not begin or end on that day, any such refund
shall belong to Seller, provided that in the case of any Tax
refund described in clause (ii) of this Section 6.1(i), the
portion of such Tax refund which shall belong to Seller
shall be that portion that is attributable to the portion of
that period which ends on the Closing Date (determined on
the basis of an interim closing of the books as of the
Closing Date), and Parent shall promptly pay any such
refund, and the interest actually received thereon, to
Seller upon receipt thereof by Parent. Any and all other
refunds shall belong to Parent; provided further, however,
that Parent shall only pay such refunds to Seller to the
extent such refunds exceed the aggregate amount of Taxes
reflected as assets on the statutory balance sheet of F&G
Life as of December 31, 2000 (as described in Section 3.6(b)
hereof). Any payments made under this Section 6.1(i) shall
be net of any Taxes payable with respect to such refund,
credit or interest thereon.
(j) Seller shall pay to Parent the amount of any Tax refund
(including interest thereon) realized by Seller or any
affiliate thereof as a result of the carryback of any Tax
loss, deduction or credit of F&G Life or any F&G Subsidiary
from any taxable period (or portion thereof) beginning after
the Closing Date to a taxable period ending on or before the
Closing Date. Seller shall pay such amount to Parent within
20 business days after such Tax benefit is realized by
Seller or any affiliate of it as a refund or otherwise.
(k) If any audit, examination of or judicial proceeding
involving any Tax Return of F&G Life or any of the F&G
Subsidiaries for taxable periods ending on or before the
Closing Date shall result (by settlement or otherwise) in
any adjustment, the effect of which is to increase any
deduction, amortization, exclusion from income or other
allowance on any of the Tax Returns of F&G Life or any of
the F&G Subsidiaries for any Post-Closing Taxable Period
(the "Positive Parent Changes") or to decrease any
deduction, amortization, exclusion from income or other
allowance on any of the Tax Returns of F&G Life or any of
the F&G Subsidiaries for any Post-Closing Taxable Period
(the "Negative Parent Changes" and, together with the
Positive Parent Changes, the "Parent Changes"), Seller will
notify Parent and provide it with all necessary information
so that it can reflect on the appropriate Tax Returns any
appropriate Parent Changes. If, as a result of a Positive
Parent Change, F&G Life or any of the F&G Subsidiaries
enjoys a net income Tax benefit ("Parent Benefit") in any
Post Closing Taxable Period, Parent shall promptly make
payments to Seller as and when such Parent Benefit is
recognized in an amount equal to such Parent Benefit. If, as
a result of a Negative Parent Change, F&G Life or any of the
F&G Subsidiaries suffers a net income Tax detriment ("Parent
Detriment") in any Post-Closing Taxable Period, Seller shall
promptly make payments to Parent as and when such Parent
Detriment is recognized in an amount equal to such Parent
Detriment.
If any audit, examination of or judicial
proceeding involving any Tax Return of F&G Life or any of
the F&G Subsidiaries for a Post-Closing Taxable Period shall
result (by settlement or otherwise) in any adjustment, the
effect of which is to increase any deduction, amortization,
exclusion from income or other allowance on any of the Tax
Returns of F&G Life or any of the F&G Subsidiaries for any
taxable period ending on or before the Closing Date (the
"Positive Seller Changes") or to decrease any deduction,
amortization, exclusion from income or other allowance on
any of the Tax Returns of F&G Life or any of the F&G
Subsidiaries for any taxable period ending on or before the
Closing Date (the "Negative Seller Changes" and, together
with the Positive Seller Changes, the "Seller Changes"),
Parent will notify Seller and provide it with all necessary
information so that it can reflect on the appropriate Tax
Returns any appropriate Seller Changes. If, as a result of a
Positive Seller Change, F&G Life or any of the F&G
Subsidiaries enjoys a net income Tax benefit ("Seller
Benefit") in any taxable period ending on or before the
Closing Date, Seller shall promptly make payments to Parent
as and when such Seller Benefit is recognized in an amount
equal to such Seller Benefit. If, as a result of a Negative
Seller Change, F&G Life or any of the F&G Subsidiaries
suffers a net income Tax detriment ("Seller Detriment") in
any taxable period ending on or before the Closing Date,
Parent shall promptly make payments to Seller as and when
such Seller Detriment is recognized in an amount equal to
such Seller Detriment.
Section 6.2. Responsibility for Filing Returns.
---------------------------------
Parent or an affiliate of Parent (including,
effective upon the Closing, F&G Life and the F&G
Subsidiaries) shall file or cause to be filed when due all
Tax Returns required to be filed by or with respect to F&G
Life and the F&G Subsidiaries and not yet filed or due on or
before the Closing Date. With respect to Tax Returns that
include periods (or, with respect to Tax Returns that
include periods beginning on or before the Closing Date and
ending after the Closing Date, portions thereof) ending on
or before the Closing Date and that are filed after the
Closing Date, Parent shall permit Seller to review and
comment on such Tax Returns prior to filing and shall make
such revisions to such Tax Returns as are reasonably
requested by Seller and Seller shall pay to Parent the Taxes
due with respect to such Tax Returns for which Seller is
liable pursuant to Section 6.1(a) hereof no later than five
days prior to the due date for the filing of such Tax
Returns.
Section 6.3. Right to Contest Tax Liability.
------------------------------
Seller shall have the right to contest or
defend itself and F&G Life and the F&G Subsidiaries against
the assertion of any liability (including interest and
penalties thereon) with respect to which Seller has agreed
pursuant to this Article Six to indemnify and hold Parent,
F&G Life and the F&G Subsidiaries harmless; provided, that
(i) such asserted liability is not part of an audit, contest
or other proceeding that also involves or could impact,
directly or indirectly, a Post-Closing Tax Period, and (ii)
such asserted liability can be contested solely in the name
of Seller. If the conditions set forth in the proviso of
the immediately preceding sentence are not satisfied or
waived in writing by Parent, Seller shall have the right to
participate in the negotiation and settlement of any such
asserted liability, the contest and defense of which shall
be controlled by Parent. Parent shall promptly inform
Seller of any such asserted liability. If Seller is
controlling the contest and defense of any such asserted
liability, Seller may not settle, reject, compromise or
otherwise resolve any such asserted liability without the
consent of Parent, which consent will not be unreasonably
withheld or delayed. If Parent is controlling the contest
and defense of any such asserted liability, Parent may not
settle, reject, compromise or otherwise resolve any such
asserted liability without the consent of Seller, which
consent shall not be unreasonably withheld or delayed. If
Seller is controlling the contest and defense of any such
asserted liability, Parent, at Seller's written request,
shall cause F&G Life and the F&G Subsidiaries to cooperate
fully with Seller and to assist in the preparation for any
audit, and in the prosecution or defense of any claim, suit
or proceeding relating to any such asserted liability.
Seller shall promptly inform Parent of material developments
in any such tax liability contest.
Section 6.4. Access to Records.
-----------------
After the Closing Date, Parent shall provide to
Seller and Seller shall provide to Parent, as the case may
be, timely access and reasonable assistance and cooperation
during normal business hours in making tax information and
copies thereof with respect to F&G Life and the F&G
Subsidiaries available to Seller and its agents or Parent
and its agents, as the case may be, including access for the
timely filing of Tax Returns. Additionally, each of Seller
and Parent shall cooperate fully in preparing for and
conducting any audits of, or disputes with taxing
authorities regarding, any Tax Returns of F&G Life or any of
the F&G Subsidiaries, will make available to the other party
and to any taxing authority, as reasonably requested, all
records, documents, accounting data and other information
relating to Taxes of F&G Life and the F&G Subsidiaries, and
will furnish the other party with copies of all
correspondence received from any taxing authority in
connection with any tax audit or information request with
respect to any such taxable period for which the other party
may have a liability. All pertinent existing books of
account, papers, and records shall be retained by Seller,
Parent, F&G Life and the F&G Subsidiaries until either the
statute of limitations to which they relate expires by lapse
of time or by the terms of an agreement for extension of
time or until advised by Seller or Parent, as the case may
be, that such books of account, papers, and records are no
longer required by that party or its agent, whichever date
is later. After the Closing Date, Parent shall cause F&G
Life and the F&G Subsidiaries to comply with this Section
6.4.
ARTICLE SEVEN
Approvals; Commercially Reasonable Efforts
-------------------------------------------
Except as otherwise required herein, the parties
shall apply for and diligently prosecute all applications
for, and shall use their commercially reasonable efforts
promptly to obtain, such approvals, consents or
forebearances from: (i) any Person from whom such approvals,
consents or forebearances are required under any Contract to
which Seller, F&G Life or any of the F&G Subsidiaries is a
party; (ii) any Person from whom such approvals, consents or
forebearances are required under any material contract to
which Parent or any Parent Subsidiary is a party; and (iii)
insurance regulatory authorities and such other Government
Entities as shall be necessary to permit the Closing, and
shall use their commercially reasonable efforts to bring
about the satisfaction as soon as practicable of all the
conditions contained in Article Eight and otherwise to
effect the consummation as soon as practicable of the
transactions contemplated by this Agreement. Without
limiting the foregoing, each of Parent and Seller shall,
within 10 Business Days of the date hereof, make any filings
with the Federal Trade Commission and the Department of
Justice as may be required with respect to the acquisition
of the Shares by Purchaser, pursuant to HSR and Parent shall
make filings of preacquisition statements required by
applicable state insurance holding company systems laws and
acquisition of control filings in all jurisdictions
indicated in Section 4.3 of Parent's Disclosure Schedule
within 20 Business Days of the date hereof. In addition,
each party shall provide such other information,
documentation and communications to such insurance
regulatory authorities and such other Government Entities as
such authorities and Government Entities may reasonably
request, and each party shall cooperate with the other in
obtaining, as promptly as practicable, all approvals,
authorizations, and clearances of Government Entities and
other Persons required to consummate the transactions
contemplated hereby. Each party hereto shall have the right
to review in advance, and to the extent practicable each
will consult the other on, in each case subject to
applicable Laws relating to the exchange of information or
other applicable confidentiality requirements, all the
information relating to Seller, Parent or any of their
respective affiliates, as the case may be, that appears in
any filing or other submission made with, or other written
materials submitted to, any third party or Government Entity
in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of
Seller and Parent shall act reasonably and as promptly as
practicable. Seller and Parent agree that they will keep
the other apprised of the status of matters relating to
completion of the transactions contemplated by this
Agreement, including promptly furnishing the other with
copies of any notice or other communications received by
Seller, Parent or any of their respective subsidiaries, as
the case may be, from any third party or Government Entity
with respect to the transactions contemplated hereby,
including, without limitation, all inquiries from insurance
regulators and all notices of claims, suits and actions for
which either party receives service of process. Each party
hereto hereby covenants to request early termination of the
waiting period required by the HSR and to cooperate with the
other party hereto to the extent reasonably necessary to
assist in making reasonable supplemental presentations to
the Federal Trade Commission or the Antitrust Division of
the Department of Justice, and if reasonably requested by
the Federal Trade Commission or the Antitrust Division of
the Department of Justice, to promptly amend or furnish
additional information thereunder.
ARTICLE EIGHT
Conditions Precedent
--------------------
Section 8.1. Preamble.
--------
The respective obligations set forth herein of
Seller and Parent to consummate this Agreement and the
transactions contemplated hereby shall be subject to the
fulfillment, on or before the Escrow Closing Date, in the
case of Seller, of the conditions indicated in Sections 8.2
and 8.3, and in the case of Parent, of the conditions
indicated in Sections 8.2 and 8.4, provided that a party
shall be precluded from asserting that a condition
hereinafter set forth in this Article Eight has not been
satisfied by reason of any matter, event, fact, failure or
circumstance that was caused by such party.
Section 8.2. Conditions to Obligations of the Parties.
----------------------------------------
(a) There shall not be any injunction,
judgment, order, decree, ruling, action or suit in effect,
pending or threatened, in writing, of or by any Government
Entity that (i) seeks to restrain, enjoin or otherwise
prevent, or restrains, enjoins or otherwise prevents,
consummation of, or modifies or seeks to modify in any
material respect the carrying out of, any of the
transactions contemplated by this Agreement, (ii) seeks or
imposes material damages in connection with any of the
transactions contemplated by this Agreement, or (iii)
questions the validity or legality of any of the
transactions contemplated by this Agreement.
(b) All approvals set forth in Section 3.3 of Seller's
Disclosure Schedule and Section 4.3 of Parent's Disclosure
Schedule shall have been obtained and any waiting periods
under applicable insurance laws shall have expired or been
terminated.
(c) The waiting period under HSR shall have expired or been
terminated.
Section 8.3. Conditions to Obligations of Seller.
-----------------------------------
Section 8.3.1. Representations and Warranties of Parent.
----------------------------------------
The representations and warranties of Parent in
Article Four hereof shall be true and correct when made and
at and as of the Closing Date with the same effect as though
such representations and warranties had been made at and as
of such date, except (i) that any such representations and
warranties that are given as of a specified date and relate
solely to a specified date or period shall be true and
correct only as of such date or period, (ii) for changes
permitted by, or necessitated by compliance with, this
Agreement and (iii) to the extent any breach thereof,
individually or when aggregated with all such breaches, has
not had and is not reasonably likely to have a Parent
Material Adverse Effect. For purposes of this Section
8.3.1, the truth or correctness of any representation or
warranty of Parent in Article Four hereof shall be
determined without regard to any materiality, "Parent
Material Adverse Effect" or "Knowledge of Parent"
qualification set forth in such representation or warranty.
Parent shall have delivered to Seller at the Closing a
certificate to the foregoing effect, dated the Closing Date
and signed by the Global Head of Life of Parent.
Section 8.3.2. Performance of Covenants.
------------------------
Each and all of the covenants and agreements
herein of Parent to be performed or complied with prior to
or on the Closing Date shall have been duly performed or
complied with by Parent in all material respects, and Parent
shall have delivered to Seller a certificate to the
foregoing effect, dated the Closing Date and signed by the
Global Head of Life of Parent.
Section 8.3.3. Guaranty.
--------
All consents and approvals from any Person
(other than The St. Paul and its affiliates), including,
without limitation, any rating agency, to terminate fully
the Guaranty Agreements and those agreements and
arrangements indicated in Section 8.3.3 of Seller's
Disclosure Schedule shall have been obtained, and Parent and
the other signatories to the Indemnification Agreement (as
defined below) shall have entered into an Indemnification
Agreement substantially in the form of Annex A hereto (the
"Indemnification Agreement") with respect to each of (i) the
Guaranty Agreements and (ii) those agreements and
arrangements indicated in Section 8.3.3 of Seller's
Disclosure Schedule.
Section 8.3.4. Stock Exchange Listing.
----------------------
The Initial Parent Shares to be issued to
Seller at the Closing shall have been (a) admitted to the
Official List of the UKLA (subject only to such admission
becoming effective), (b) admitted to trading on the LSE
(subject only to such admission becoming effective) and (c)
approved for listing on all other stock exchanges on which
Parent Shares are then listed (subject only to official
notice of issuance).
Section 8.3.5. Parent Material Adverse Effect.
------------------------------
There shall not have occurred since the date of
this Agreement any Parent Material Adverse Effect or any
event or change that, individually or in the aggregate, is
reasonably likely to have a Parent Material Adverse Effect.
Section 8.3.6. License Agreement.
-----------------
Parent shall have duly executed and delivered
to Seller the Trademark License Agreement, substantially in
the form attached hereto as Annex B (the "License
Agreement").
Section 8.3.7. Certificate Relating to Authority.
---------------------------------
Parent shall have delivered to Seller a
certificate of the secretary or assistant secretary of
Parent, dated as of the Closing Date, as to the resolutions
of the Board of Directors (or other similar governing body)
of Parent authorizing the execution, delivery and
performance of this Agreement and the other Transaction
Agreements to which it is a party, as to the status and
signature of each of their officers who executed and
delivered this Agreement and the other Transaction
Agreements to which it is a party and any other document
delivered by them in connection with the consummation of the
transactions contemplated by this Agreement or any of the
other Transaction Agreements, as to its memorandum and
articles of association, certificate of incorporation, by-
laws or other organizational documents, certified by the
applicable governmental authority, and as to its due
organization, existence and good standing.
Section 8.4. Conditions to Obligations of Parent.
-----------------------------------
Section 8.4.1. Representations and Warranties of Seller.
----------------------------------------
The representations and warranties of Seller in
Article Three hereof shall be true and correct when made and
at and as of the Closing Date with the same effect as though
such representations and warranties had been made at and as
of such date, except (i) that any such representations and
warranties that are given as of a specified date and relate
solely to a specified date or period shall be true and
correct only as of such date or period, (ii) for changes
permitted by, or necessitated by compliance with, this
Agreement and (iii) to the extent any breach thereof,
individually or when aggregated with all such breaches, has
not had and is not reasonably likely to have a Material
Adverse Effect. For purposes of this Section 8.4.1, the
truth or correctness of any representation or warranty of
Seller in Article Three hereof shall be determined without
regard to any materiality, "Material Adverse Effect" or
"Knowledge of Seller" qualification set forth in such
representation and warranty. Seller shall have delivered to
Parent at the Closing a certificate to the foregoing effect,
dated the Closing Date and signed by the Chairman, President
or any duly authorized Vice President of Seller.
Section 8.4.2. Performance of Covenants.
------------------------
Each and all of the covenants and agreements
herein of Seller to be performed or complied with prior to
or on the Closing Date shall have been duly performed or
complied with by Seller in all material respects, and Seller
shall have delivered to Parent a certificate to the
foregoing effect, dated the Closing Date and signed by the
Chairman, President or any duly authorized Vice President of
Seller.
Section 8.4.3. Approvals.
---------
All approvals that are required to be obtained
in connection with the consummation of the transactions
contemplated hereby and by the other Transaction Agreements
from any Person under any Contract to which Seller, F&G Life
or any F&G Subsidiary is a party shall have been obtained,
the failure of which to obtain, individually or in the
aggregate, would have or is reasonably likely to have a
Material Adverse Effect.
Section 8.4.4. Material Adverse Effect.
-----------------------
There shall not have occurred since the date of
this Agreement any Material Adverse Effect or any event or
change that, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect.
Section 8.4.5. Ratings.
-------
The claims-paying ability of (x) F&G Life shall
be rated at least "A" by A.M. Best, "AA" by Standard &
Poor's and "AA" by Fitch, Inc., and (y) Thomas Jefferson
Life shall be rated at least "A" by A.M. Best and "AA" by
Standard & Poor's, in the case of clauses (x) and (y)
immediately prior to the Escrow Closing; provided that, for
greater certainty, the placing of F&G Life or Thomas
Jefferson Life on credit watch by any such agency primarily
as a result of this transaction on or prior to the Escrow
Closing shall not be deemed a failure by Seller to satisfy
the condition to Closing set forth in this Section 8.4.5.
Section 8.4.6. License Agreement.
-----------------
Seller shall have duly executed and delivered
to Parent the License Agreement.
Section 8.4.7. Certificate Relating to Authority.
---------------------------------
Seller shall have delivered to Parent a
certificate of the secretary or assistant secretary of
Seller, dated as of the Closing Date, as to the resolutions
of the Board of Directors of Seller authorizing the
execution, delivery and performance of this Agreement and
the other Transaction Agreements to which it is a party, as
to the status and signature of each of its officers who
executed and delivered this Agreement and any other document
delivered by it in connection with the consummation of the
transactions contemplated by this Agreement or any of the
other Transaction Agreements to which it is a party, as to
its certificate of incorporation and by-laws, certified by
the applicable governmental authority, and as to its due
organization, existence and good standing.
ARTICLE NINE
Survival; Indemnification
-------------------------
Section 9.1. Survival.
--------
The representations and warranties of Seller
and Parent herein shall survive for 18 months from the
Closing Date except for (i) the representations and
warranties of Seller specified in Section 3.4(b), Section
3.5(b), Section 3.5(c), clause (x) in the first sentence of
Section 3.4(a), and the first sentence and clause (x) in the
second sentence of Section 3.5(a), Section 3.11, and Section
3.17, and the representations and warranties of Parent
specified in Section 4.1(c), Section 4.1(d), clause (x) in
the first sentence of Section 4.1(a) and clause (x) in the
first sentence of Section 4.4, which shall survive until 60
days after expiration of all applicable statutes of
limitation and (ii) the representations and warranties of
Seller specified in Section 3.25, which shall survive for
three years following the Closing Date. Prior to the
Closing, other than in the case of intentional fraud by
Seller or Parent or any of their respective affiliates or
representatives, the sole and exclusive remedy of Parent and
of Seller for any breach or inaccuracy of any representation
or warranty contained herein shall be refusal to close the
transactions contemplated by this Agreement. After the
Closing, other than in the case of intentional fraud by
Seller or Parent or any of their respective affiliates or
representatives, the sole and exclusive remedy of Parent and
of Seller for any breach or inaccuracy of any representation
or warranty contained herein shall be the indemnities
provided by Article Six hereof and by Section 9.2 hereof.
Section 9.2. Indemnification.
---------------
(a) Seller shall indemnify in accordance with
Section 9.2 of this Agreement, without duplication, Parent
and its affiliates (including, without limitation, F&G Life
and the F&G Subsidiaries) and their respective officers,
directors, employees and agents, and the legal
representatives, successors and assigns thereof (each a
"Parent Indemnitee" and, collectively, the "Parent
Indemnitees") from and against (i) any and all Damages (as
defined below) sustained or incurred by such Parent
Indemnitee as a result of or arising out of any inaccuracy
in or breach of any representation or warranty made by
Seller to Parent in this Agreement, and (ii) any and all
Damages sustained or incurred by any Parent Indemnitee as a
result of or arising out of any breach by Seller of, or
failure of Seller to comply with, any covenant or obligation
under this Agreement to be performed by Seller.
Notwithstanding the foregoing, claims for indemnification
for Indemnifiable ERISA Losses, Indemnifiable Litigation (as
defined in Section 9.2(i) of Seller's Disclosure Schedule),
Indemnifiable Market Misconduct and Taxes (for avoidance of
doubt, not including claims with respect to a breach of the
representation of Section 3.29, which claims may be made
pursuant to this Section 9.2(a)) shall be governed
exclusively by Sections 9.2(h), 9.2(i) and 9.2(k) and
Article Six of this Agreement, respectively. For greater
certainty, no claims for Damages that relate in any respect
to breaches of representations and warranties, covenants or
obligations of Seller relating to Indemnifiable ERISA
Losses, Indemnifiable Litigation, Indemnifiable Market
Misconduct and Taxes (for avoidance of doubt, not including
claims with respect to a breach of the representation of
Section 3.29, which claims may be made pursuant to this
Section 9.2(a)) may be made except pursuant to Sections
9.2(h), 9.2(i) and 9.2(k) and Article Six of this Agreement,
respectively. For purposes of this Section 9.2(a), the
truth or correctness of any representation or warranty of
Seller in Article Three hereof shall be determined without
regard to any materiality, "Material Adverse Effect", or
"Knowledge of Seller" qualification set forth in such
representation or warranty.
(b) Parent shall indemnify in accordance with Section 9.2
of this Agreement, without duplication, Seller and its
affiliates and their respective officers, directors,
employees and agents and the legal representatives,
successors and assigns thereof (each a "Seller Indemnitee"
and, collectively, the "Seller Indemnitees") from and
against (i) any and all Damages sustained or incurred by
such Seller Indemnitee as a result of or arising out of any
inaccuracy in or breach of any representation or warranty
made by Parent to Seller in this Agreement, and (ii) any and
all Damages sustained or incurred by any Seller Indemnitee
as a result of or arising out of any breach by Parent,
Purchaser or Note Purchaser of, or failure of Parent to
comply with, any covenant or obligation under this Agreement
to be performed by Parent, Purchaser or Note Purchaser.
Notwithstanding the foregoing, claims for indemnification
for Taxes shall be governed exclusively by Article Six of
this Agreement. For purposes of this Section 9.2(b), the
truth or correctness of any representation or warranty of
Parent in Article Four hereof shall be determined without
regard to any materiality, "Parent Material Adverse Effect",
or "Knowledge of Parent" qualification set forth in such
representation or warranty.
(c) Any claim for indemnification against a party hereto in
respect of any breach or violation of a representation or
warranty made herein must be asserted before the expiration
of the applicable period of survival specified in Section
9.1. The aggregate amount for which Seller shall be
obligated to indemnify the Parent Indemnitees hereunder (i)
for any breach of or inaccuracy in any of the
representations and warranties set forth in Article Three,
other than for any breach of or inaccuracy in the
representations and warranties contained in Section 3.4(b),
Section 3.5(b), Section 3.5(c), clause (x) in the first
sentence of Section 3.4(a), and the first sentence and
clause (x) in the second sentence of Section 3.5(a) hereof,
shall in no event exceed $175,000,000, and (ii) for any
breach of or inaccuracy in any of the representations and
warranties set forth in Section 3.4(b), Section 3.5(b),
Section 3.5(c), clause (x) in the first sentence of Section
3.4(a) or the first sentence or clause (x) in the second
sentence of Section 3.5(a) hereof, together with any amounts
subject to the $175,000,000 limit set forth above, shall in
no event exceed in the aggregate $585,000,000. The
aggregate amount for which Parent shall be obligated to
indemnify the Seller Indemnitees hereunder (i) for any
breach of or inaccuracy in any of the representations and
warranties set forth in Article Four, other than for any
breach of or inaccuracy in any of the representations and
warranties set forth in Section 4.1(c), Section 4.1(d),
clause (x) in the first sentence of Section 4.1(a), or
clause (x) in the first sentence of Section 4.4 hereof,
shall in no event exceed $175,000,000, and (ii) for any
breach of or inaccuracy in any of the representations and
warranties set forth in Section 4.1(c), Section 4.1(d),
clause (x) in the first sentence of Section 4.1(a), or
clause (x) in the first sentence of Section 4.4 hereof,
together with any amounts subject to the $175,000,000 limit
set forth above, shall in no event exceed in the aggregate
$300,000,000. Neither party shall be obligated to provide
indemnification under Sections 9.2(a) or 9.2(b) of this
Agreement for a breach or violation of a representation and
warranty made herein unless and until the aggregate amount
of claims against such party for indemnification hereunder
for breaches of representations and warranties exceeds an
amount equal to $20,000,000 (the "Basket"), and then such
party shall only be obligated to provide indemnification for
such claims in excess of the Basket; provided, however, that
this Section 9.2(c) shall not apply to matters covered by
Article Six or Sections 9.2(h), 9.2(i) or 9.2(k) of this
Agreement, and provided further that the Basket shall not
apply for any breach of the representations and warranties
contained in Section 3.4(b), Section 3.5(b), Section 3.5(c),
clause (x) in the first sentence of Section 3.4(a), the
first sentence or clause (x) in the second sentence of
Section 3.5(a), Section 4.1(c), Section 4.1(d), clause (x)
in the first sentence of Section 4.1(a), or clause (x) in
the first sentence of Section 4.4; and provided further that
no breach of any representation or warranty shall be deemed
to have occurred for purposes of this Section 9.2 unless the
actual Damages incurred as a result thereof are in excess of
$25,000 except in the case of a series of similar breaches
relating to the same or substantially similar conduct of an
Indemnifying Party and arising out of a common set of
operative facts that together aggregate more than $25,000.
(d) The amount of any loss to which either party shall be
entitled to indemnification under this Article Nine shall be
limited to the amount by which the losses exceed amounts
received by an Indemnified Party under insurance policies.
In the event of a claim covered by both insurance and the
indemnification provisions of this Article Nine (a "Dual
Covered Claim"), each party agrees to promptly file a claim
against such insurance coverage and to collect the proceeds
due under such insurance coverage prior to seeking
indemnification under this Article Nine. If a party is
unable to collect the proceeds due under such insurance
coverage within a reasonable time and such party's claim for
insurance is still pending, such party may seek
indemnification under this Article Nine provided that the
seeking of indemnification does not materially prejudice
such party's right to collect the proceeds due under such
insurance coverage. If a party seeks indemnification and is
indemnified pursuant to this Article Nine while its claim
for insurance is still pending in accordance with the
previous sentence, such party agrees, upon the other party's
request, to (i) continue to seek insurance coverage and
collect the proceeds due under such insurance coverage and
remit to the other party the proceeds received from the
insurer for the Dual Covered Claim or (ii) assign its rights
to insurance for a Dual Covered Claim to the other party.
The Seller and Parent intend that, as between the insurer
and an Indemnifying Party, the insurer shall ultimately bear
the risk of loss with respect to a Dual Covered Claim, and
the Seller and Parent agree to cooperate to take such
further action as may be required in order to ensure that
this occurs.
(e) The dollar amounts indicated in Section 9.2(c) have
been agreed upon solely in order to facilitate the
administration of this Agreement, and they are in no way
intended to, and do not, reflect or suggest a determination
by the Seller and Parent that any such damage, loss,
liability or expense is material under this Agreement.
(f) In the case of third party actions, promptly after
receipt by a party (the "Indemnified Party") of notice of
any claim or notice of the commencement of any action, suit
or proceeding, in respect of which the Indemnified Party may
seek indemnification from the other party hereto (the
"Indemnifying Party") pursuant to this Article Nine, the
Indemnified Party shall notify the Indemnifying Party of
such claim, action, suit or proceeding, and shall thereafter
promptly convey all further communications and information
in respect thereof to the Indemnifying Party, provided that
no delay on the part of the Indemnified Party in notifying
the Indemnifying Party shall relieve the Indemnifying Party
from any liability or obligation hereunder unless (and then
solely to the extent that) the Indemnifying Party
demonstrates that the defense of such third party action is
prejudiced by the Indemnified Party's delay in giving such
notice.
(g) The Indemnifying Party shall, if it so elects, have
sole control at its own expense over the contest,
settlement, adjustment or compromise of any third-party
claim, action, suit or proceeding in respect of which this
Article Nine requires it to indemnify the Indemnified Party
and the Indemnifying Party shall not, as long as it conducts
the defense of such third-party claim, action, suit or
proceeding in a reasonably diligent manner, be liable to the
Indemnified Party for any fees of other counsel or any other
expenses with respect to the defense of such third-party
claim, action, suit or proceeding incurred by the
Indemnified Party, and the Indemnified Party shall cooperate
with the reasonable requests of the Indemnifying Party in
connection with such contest, settlement, adjustment or
compromise; provided, however, that (i) the Indemnified
Party may, if it so elects, employ counsel at its own
expense to assist in the handling of such claim, action,
suit or proceeding and (ii) the Indemnifying Party shall
obtain the prior written approval of the Indemnified Party,
which approval shall not be unreasonably withheld, before
entering into any settlement, adjustment or compromise of
such claim, action, suit or proceeding, or ceasing to defend
against such claim, action, suit or proceeding, (A) brought
by an insurance regulatory authority, or (B) if pursuant
thereto or as a result thereof, (1) the Indemnified Party
would be required to pay any amount that would not be fully
covered by indemnification hereunder, subject to the de
minimis qualifiers set forth in the third proviso of the
last sentence of Section 9.2(c) and the Basket, if
applicable, or (2) injunctive or other relief would be
imposed upon the Indemnified Party, provided that if the
Indemnified Party withholds approval of any settlement,
adjustment or compromise of a claim that involves a matter
brought by an insurance regulatory authority pursuant to
Section 9.2(g)(ii)(A), and the ultimate cost of defending
and disposing of such matter is increased as a result, the
Indemnified Party shall, upon receipt of written demand of
the Indemnifying Party, promptly pay the Indemnifying Party
an amount equal to such increase. If the Indemnified Party
notifies the Indemnifying Party in writing that it believes
that the Indemnifying Party is failing to conduct the
defense of such third-party claim, action, suit or
proceeding in a reasonably diligent manner, such notice sets
forth in detail the reasons for its belief, such notice is
accompanied by a certification of an officer of the
Indemnified Party stating that the Indemnified Party
believes that the Indemnifying Party is failing to conduct
the defense of such third-party claim, action, suit or
proceeding in a reasonably diligent manner and stating that
it has determined in good faith that there is a reasonable
probability that such third-party claim, action, suit or
proceeding is reasonably likely to materially adversely
affect it other than as a result of monetary damage for
which it could be entitled to full indemnification under
this Agreement, and the Indemnifying Party fails to cure
such failure within 30 days of receiving such notice, the
Indemnifying Party shall co-manage the defense of any such
third-party claim, action, suit or proceeding with the
Indemnified Party. The Indemnifying Party shall not be
liable under this Section 9.2 for any settlement, adjustment
or compromise effected without its consent of any claim,
action, suit or proceeding in respect of which
indemnification may be sought hereunder, nor shall the
amount of any such matter count toward the aggregate amount
above for which the other party may seek indemnity.
(h) Notwithstanding anything in this Agreement to the
contrary, in addition to (and without duplication of) the
indemnification provided by Section 9.2(a) above, Seller
shall also indemnify the Parent Indemnitees from and against
any and all Damages sustained or incurred by any Parent
Indemnitee as a result of or arising out of F&G Life or any
F&G Subsidiary being included in a group under common
control with Seller and its Affiliates (other than F&G Life
or any F&G Subsidiary) through the Closing Date for purposes
of Section 412 of the Code or Title IV of ERISA
("Indemnifiable ERISA Losses"). Notwithstanding anything in
this Agreement to the contrary (including, without
limitation, Section 9.1), Seller's obligations under this
Section 9.2(h) shall survive the Closing until the sixth
anniversary thereof.
(i) Notwithstanding anything in this Agreement to the
contrary, in addition to (and without duplication of) the
indemnification provided by Section 9.2(a) above, Seller
shall also indemnify the Parent Indemnitees from and against
any and all Damages sustained or incurred by any Parent
Indemnitee as a direct result of or arising out of
Indemnifiable Litigation, as such term is defined in Section
9.2(i) of Seller's Disclosure Schedule. Notwithstanding
anything in this Agreement to the contrary (including
without limitation Section 9.1), the rights of an
Indemnified Party set forth in the second sentence and the
first proviso of the first sentence of Section 9.2(g) shall
not apply with regard to any indemnification claim brought
pursuant to this Section 9.2(i); provided, however, that
Seller shall obtain the prior written approval of the
applicable Parent Indemnitee, which approval shall not be
unreasonably withheld or delayed, before entering into any
settlement of any such regulatory or administrative action
or litigation that would impose injunctive or other relief,
including, without limitation, any admission of wrongdoing
or guilt or requirement to discontinue any business
practice, upon the Parent Indemnitee.
(j) Notwithstanding anything in this Agreement to the
contrary, Seller shall not have any obligation to indemnify
any Parent Indemnitee from or against any Damages sustained
or incurred by such Parent Indemnitee as a result of any of
the Specified Matters.
(k) Notwithstanding anything in this Agreement to the
contrary, in addition to (and without duplication of) the
indemnification provided by Section 9.2(a)(i) above, Seller
shall also indemnify the Parent Indemnitees from and against
any and all Damages in excess of $25,000,000 sustained or
incurred by any Parent Indemnitee arising from the
activities of agents and employees of F&G Life and Thomas
Jefferson Life in selling the F&G Life and Thomas Jefferson
Life products (including liabilities arising from the use of
misleading marketing materials or improper training of
agents) prior to the Closing to the extent that the
activities were prohibited as of the date of this Agreement
under applicable laws regulating insurance sales practices
("Indemnifiable Market Misconduct"); provided, however, the
aggregate amount for which Seller shall be obligated to
indemnify the Parent Indemnitees under this Section 9.2(k)
shall in no event exceed $100,000,000 (for greater
certainty, Parent shall be obligated to pay the first
$25,000,000 of any such Damages and all such Damages in
excess of $125,000,000). Notwithstanding anything in this
Agreement to the contrary (including, without limitation,
Section 9.1), Seller's obligations under this Section 9.2(k)
shall survive until the third anniversary of the Closing.
(l) As used in this Article Nine, the term "Damages" shall
mean the actual out-of-pocket cost to the Indemnified Party,
when and as paid by the Indemnified Party, of all direct
assessments, levies, losses, fines, penalties, interest,
obligations, payments, liabilities, damages, costs and
expenses, including, without limitation, reasonable
attorneys', accountants' and investigators' fees and
expenses; provided, however, that no Indemnified Party shall
be entitled to indemnification from any Indemnifying Party
under this Article Nine in respect of any consequential or
special or punitive damages except for indemnification for
consequential or special or punitive damages that are paid
by an Indemnified Party to a third party. For the purposes
of clarification, any assessment, levy, loss, fine, penalty,
obligation, payment, liability, damage, cost or expense
suffered by F&G Life or any F&G Subsidiary after the Closing
shall (without duplication) be deemed to have been suffered
by Parent. The parties hereto agree to treat, to the extent
possible, any indemnity payment under this Agreement as an
adjustment to the Initial Share Consideration.
ARTICLE TEN
Miscellaneous
-------------
Section 10.1. Modification; Waiver.
--------------------
This Agreement may be modified in any manner
and at any time only by a duly authorized written instrument
executed by each of the parties hereto. Any of the terms
and conditions of this Agreement may be waived at any time
before the Closing Date by or on behalf of Parent or Seller
by the duly authorized writing of the party entitled to the
benefit of any such term or condition. A waiver on one
occasion will not be deemed to be a waiver of the same or
any other breach or nonfullfillment on a future occasion.
Unless expressly provided otherwise herein, all remedies,
whether under this Agreement or by law or otherwise
afforded, shall be cumulative and not alternative or
duplicative.
Section 10.2. Integration.
-----------
This Agreement, the other Transaction
Agreements, the confidentiality agreement, dated January 22,
2001, executed by The St. Paul and the confidentiality
agreement, dated November 20, 2000, executed by Parent and
The St. Paul, including the Schedules and Annexes hereto and
thereto, constitute the entire agreement and understanding
of the parties relating to the subject matter hereof and
supersede all prior and contemporaneous agreements and
understandings, whether oral or written, between the parties
hereto in respect of the subject matter of this Agreement.
The terms of this Agreement cannot be changed, modified,
released or discharged orally.
Section 10.3. Termination.
-----------
(a) This Agreement and the transactions
contemplated hereby may be terminated and abandoned at any
time prior to the Closing as follows:
(i) by mutual written agreement of Parent and Seller;
(ii) at the election of Parent, if any one or more of the
conditions to the obligation of Parent to close contained in
Section 8.4 hereof has not been fulfilled as of the date
falling 180 days after the date of this Agreement;
(iii) at the election of Seller, if any one or more of
the conditions to the obligation of Seller to close
contained in Section 8.3 hereof has not been fulfilled as of
the date falling 180 days after the date of this Agreement;
or
(iv) at the election of Parent or Seller if one or more of
the conditions to their obligation to close contained in
Section 8.2 hereof has not been fulfilled as of the date
falling 270 days after the date of this Agreement, or at
such later date as the parties shall have agreed to in
writing.
(b) Upon the valid termination of this Agreement pursuant
to this Section 10.3, this Agreement (other than Sections
10.4, 10.12 and 10.13, the last sentence of Section 5.1.2
and the last sentence of Section 5.2.2(b), which shall
remain in full force and effect) shall forthwith become null
and void, and neither party shall have any liability to the
other arising out of this Agreement except for any liability
arising from a breach of a covenant or agreement set forth
in this Agreement prior to its termination. For purposes of
the preceding sentence, neither party shall have any
liability to the other party for the failure of any
representation or warranty to be true or correct, and the
sole remedy for any such failure shall be to terminate this
Agreement pursuant to this Section 10.3.
Section 10.4. Expenses.
--------
Whether or not the transactions contemplated
herein shall be consummated, each party shall (except as
otherwise specifically provided herein) pay its own expenses
incident to the preparation and performance of
this Agreement.
Section 10.5. Further Actions.
---------------
Each party shall execute and deliver such other
certificates, agreements and documents and take such other
actions as may reasonably be requested by the other party in
order to consummate or implement the transactions
contemplated by this Agreement.
Section 10.6. Post-Closing Access.
-------------------
In connection with any financial audit of
Seller or any of its affiliates or other governmental
investigation of Seller, any of its affiliates, F&G Life or
any of the F&G Subsidiaries for any matter relating to any
period prior to the Closing, and otherwise insofar as access
is reasonably required by The St. Paul or Seller, including,
without limitation, for audit, accounting, tax return
preparation and filing and litigation purposes (other than
for or in contemplation of litigation, arbitration or other
claims by Seller or any affiliate of Seller (other than F&G
Life and the F&G Subsidiaries) against Parent or any of its
affiliates, including without limitation F&G Life or any F&G
Subsidiary), as well as for purposes of fulfilling
disclosure and reporting obligations, Parent shall, upon the
written request of Seller, permit The St. Paul, Seller and
their respective representatives to have reasonable
access to and may inspect, during normal business hours, the
properties, documents, books and records and other data of
F&G Life and the F&G Subsidiaries and such information
concerning the respective businesses, affairs, properties,
operations and personnel of F&G Life and the F&G
Subsidiaries as The St. Paul, Sellers or their respective
representatives may from time to time reasonably request and
may discuss the affairs and accounts of F&G Life and the F&G
Subsidiaries with officers and other employees of Parent,
F&G Life, the F&G Subsidiaries and their counsel. Parent
shall not dispose of such books and records during the five-
year period beginning with the Closing Date or any longer
period as mandated by applicable Laws without Seller's
consent, which shall not be unreasonably withheld or
delayed. Following the expiration of such five-year period,
Parent may dispose of such books and records at any time
upon giving 60 days' prior written notice to Seller, unless
Seller agrees to take possession of such books and records
within such 60-day period at no expense to Parent. In
addition: Seller shall provide, and shall cause its
respective affiliates to provide, to the representatives of
Parent reasonable access during normal business hours to all
books and records of Seller and its subsidiaries reasonably
requested by Parent in the preparation of any post-Closing
financial statements, reports, Tax Returns, or Tax filings
of or including F&G Life or any F&G Subsidiary.
Section 10.7. Publicity.
---------
Neither Parent, Seller, nor any of their
respective subsidiaries or affiliates, shall issue any press
release or make any written public announcement relating to
the subject matter of this Agreement prior to the
Closing Date without the prior review and written approval
of the other party; provided, however, that any party may
make any public disclosure it believes in good faith, after
consultation with legal counsel, is required by applicable
Laws or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing
party will use its commercially reasonable efforts to
consult with the other party before making the disclosure
and to allow the other party to review the text of the
disclosure before it is made).
Section 10.8. Notices.
-------
All notices, requests, demands, and other
communications hereunder shall be in writing, executed on
behalf of the sender, and shall be deemed to have been duly
given on the date delivered by hand or by courier service
such as Federal Express, or by other messenger (or, if
delivery is refused, upon presentment) or upon electronic
confirmation of a facsimile transmission, or upon delivery
by registered or certified mail, first-class postage prepaid
(return receipt requested), to the parties at the following
addresses:
If to Seller:
------------
St. Paul Fire and Marine Insurance Company
385 Washington Street, MC 517A
St. Paul, Minnesota 55102
Attention: Thomas Bradley
Chief Financial Officer
Facsimile: (651) 310-3378
with a separate copy addressed
to its President, and
with copies to:
John MacColl, General Counsel
The St. Paul Companies, Inc.
385 Washington Street, MC 515A
St. Paul, Minnesota 55102
Facsimile: (651) 310-8204
and
Donald R. Crawshaw
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Facsimile: (212) 558-3588
if to Parent:
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Old Mutual plc
Lansdowne House
57 Berkeley Square
3rd Floor
London
W1J 6ER
United Kingdom
Attn: Martin C. Murray
Company Secretary
Facsimile: 011-44-207-569-0209
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Ellen J. Odoner
Joseph T. Verdesca
Facsimile: (212) 310-8007
or to such other address or to such other person as a party
hereto shall have last designated by written notice to the
other party.
Section 10.9. Assignment.
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This Agreement shall be binding upon and inure
to the benefit of the parties named herein and their
respective successors and permitted assigns. Neither party
may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior
written approval of the other party, except that Parent or
Seller may assign all or any part of its rights or
obligations hereunder to one or more of its wholly owned
subsidiaries without the consent of the other parties
hereto; provided, however, that upon such assignment,
neither Parent nor Seller shall be deemed to be released
from any, and shall remain liable for all, of its
obligations hereunder.
Section 10.10. Counterparts.
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This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to
be an original and all of which taken together shall
constitute one and the same agreement.
Section 10.11. Headings.
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The article and section headings in this
Agreement are for convenience of reference only and shall
not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
Section 10.12. Governing Law.
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THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
Section 10.13. Submission to Jurisdiction.
--------------------------
EACH PARTY CONSENTS TO THE EXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND IN THE COURTS HEARING
APPEALS THEREFROM FOR ANY LEGAL ACTION, SUIT, OR PROCEEDING
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT. EACH
PARTY FURTHER WAIVES ANY OBJECTION TO THE LAYING OF VENUE
FOR ANY SUCH SUIT, ACTION OR PROCEEDING IN SUCH COURTS.
EACH PARTY AGREES TO ACCEPT AND ACKNOWLEDGE SERVICE OF ANY
AND ALL PROCESS THAT MAY BE SERVED IN ANY SUIT, ACTION OR
PROCEEDING. EACH PARTY AGREES THAT ANY SERVICE OF PROCESS
UPON IT IN THE MANNER PROVIDED IN SECTION 10.8 HEREOF TO
SUCH PARTY AT THE ADDRESS PROVIDED IN SUCH SECTION 10.8
SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
PROCESS UPON SUCH PARTY IN ANY SUCH SUIT, ACTION OR
PROCEEDING. Each party hereto hereby acknowledges and
agrees that any controversy which may arise under this
Agreement is likely to involve complicated and difficult
issues, and therefore each such party hereby irrevocably and
unconditionally waives any right such party may have to a
trial by jury in respect of any litigation directly or
indirectly arising out of or relating to this Agreement or
the transactions contemplated hereby. Each party certifies
and acknowledges that (i) no representative, agent or
attorney of any other party has represented, expressly or
otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver, (ii) each
such party understands and has considered the implications
of this waiver, (iii) each such party makes this waiver
voluntarily, and (iv) each such party has been induced to
enter into this Agreement by, among other things, the mutual
waivers and certifications in this Section 10.13.
Section 10.14. Severability.
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In case any one or more of the provisions
contained herein shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such
provision or provisions shall be ineffective only to the
extent of such invalidity, illegality or unenforceability,
without invalidating the remainder of such provision or
provisions or the remaining provisions of this Agreement,
and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision or provisions had never
been contained herein, unless such a construction would be
unreasonable.
Section 10.15. Brokers.
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Seller shall indemnify and hold harmless Parent
(and its respective officers, directors, and affiliates) in
respect of any and all claims or demands for commission,
compensation, or other fees by any broker, finder, or other
agent (whether or not a present or former employee or agent
of either of Seller or any of its affiliates) claiming to
have been engaged by Seller or any of its affiliates in
connection with the transactions contemplated by this
Agreement, and Seller shall bear the cost of the reasonable
out-of-pocket expenses incurred by the Parent in
investigating, defending against, or appealing any such
claim or demand. Parent shall indemnify and hold harmless
Seller (and its respective officers, directors, and
affiliates) in respect of any and all claims or demands for
commission, compensation or other fees by any broker,
finder, or other agent (whether or not a present or former
employee or agent of either of Parent or any of its
affiliates) claiming to have been engaged by Parent or any
of its affiliates in connection with the transactions
contemplated by this Agreement, and Parent shall bear the
cost of the reasonable out-of-pocket expenses incurred by
the Seller in investigating, defending against, or appealing
any such claim or demand.
Section 10.16. No Third Party Beneficiary.
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The terms and provisions of this Agreement are
intended solely for the benefit of, and may be enforced only
by, Seller and Parent, and their respective successors and
permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any
other Person or to create any obligations of a party to any
such other Person, except that each Seller Indemnitee and
each Parent Indemnitee shall be a third party beneficiary
with respect to Section 9.2 and shall be entitled to the
rights and benefits of, and to enforce, the provisions
thereof.
Section 10.17. Invalid Provisions.
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In the event that any provision of this
Agreement is held to be illegal, invalid or unenforceable in
a final, non-appealable order or judgment (each such
provision, an "Invalid Provision"), then such provision
shall be severed from this Agreement and shall be
inoperative, and the parties promptly shall negotiate in
good faith a lawful, valid and enforceable provision that is
as similar to the invalid provision as may be possible and
that preserves the original intentions and economic
positions of the parties as set forth herein to the maximum
extent feasible, while the remaining provisions of this
Agreement shall remain binding on the parties hereto.
Without limiting the generality of the foregoing sentence,
in the event a change in any applicable Law makes it
unlawful for a party to comply with any of its obligations
hereunder, the parties shall negotiate in good faith a
modification to such obligation to the extent necessary to
comply with such Law that is as similar in terms to the
original obligation as may be possible while preserving the
original intentions and economic positions of the parties as
set forth herein to the maximum extent feasible.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
ST. PAUL FIRE AND MARINE INSURANCE
COMPANY
By: /s/ D.W. Leatherdale
----------------------
Name: D.W. Leatherdale
Title: Chairman and C.E.O.
OLD MUTUAL PLC
By: /s/ J. Sutcliffe
------------------
Name: J. Sutcliffe
Title: Global Head of Life
Accepted and Agreed as of:
______________ __, 2001
PURCHASER
By:___________________
Name:______________
Title:_____________
NOTE PURCHASER
By:___________________
Name:______________
Title:_____________
LIST OF OMITTED EXHIBIT, ANNEXES AND SCHEDULES*
Exhibit No. Description
- ----------- -----------
1. List of Specified Investment Securities (Exhibit A to the
Stock Purchase Agreement)
2. Form of Indemnification Agreement (Annex A to the Stock
Purchase Agreement)
3. Form of Trademark License Agreement (Annex B to the Stock
Purchase Agreement)
4. Seller's Disclosure Schedule to the Stock Purchase Agreement
5. Parent's Disclosure Schedule to the Stock Purchase Agreement
*The exhibit, annexes and schedules to the Stock Purchase Agreement are being
listed herein (but not filed as exhibits to this Form 10-Q) pursuant to
paragraph (b)(2) of Item 601 of Regulation S-K. The St. Paul will furnish
supplementally a copy of any omitted exhibit, annexes or schedules to the
Commission upon request.