EXHIBIT 10.2
STOCK PURCHASE AGREEMENT AMENDMENT
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This Amendment, dated as of October 15, 1999 (the "Amendment"), to the
Stock Purchase Agreement (the "Stock Purchase Agreement") dated as of June 10,
1999 by and between Scottish Annuity & Life Insurance Company (Cayman) Ltd., a
corporation organized under the laws of the Cayman Islands ("Buyer"), and NRG
Acquisition Partners, L.P., a limited partnership organized under the laws of
the State of Delaware ("Seller"). Capitalized terms used herein but not
otherwise defined herein shall have the meanings ascribed to such terms in the
Stock Purchase Agreement.
WITNESSETH:
WHEREAS, in accordance with Section 5.17 of the Stock Purchase Agreement,
Buyer and Scottish Holdings, Inc., a corporation organized under the laws of the
State of Delaware ("Holdings"), have entered into an Assignment Agreement dated
as of October 15, 1999, whereby Buyer has assigned and Holdings has assumed all
of Buyer's rights and obligations under the Stock Purchase Agreement, subject to
Buyer remaining jointly and severally liable to Seller under the Stock Purchase
Agreement, and Holdings has become a party thereto;
WHEREAS, the parties wish to designate the "Computation Date" as used in
the Stock Purchase Agreement;
WHEREAS, as required by the Stock Purchase Agreement, the parties wish to
select a Closing Date;
WHEREAS, the parties desire Harbourton Reassurance, Inc. (the "Company") to
enter into and implement the terms of a letter of intent (the "RCH Letter of
Intent") providing for the termination of a certain mortality stop loss
agreement (and related trust agreement) by and between the NRG America Life
Reassurance Corporation and Reinsurance Company of Hannover ("RCH") with an
effective date of January 1, 1994 (the "Stop Loss Agreement"), effective as of
September 30, 1999;
WHEREAS, in accordance with the provisions of Section 5.15 of the Stock
Purchase Agreement, Seller wishes to amend certain Schedules to the Stock
Purchase Agreement; and
WHEREAS, in accordance with the provisions of Section 12.4 of the Stock
Purchase Agreement, Seller and Buyer wish to amend certain terms of the Stock
Purchase Agreement.
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NOW, THEREFORE, in consideration of the premises set forth above, and
subject to the terms and conditions stated herein, the parties hereto agree as
follows:
1 The parties agree that the Closing Date, as that term is defined
in the Stock Purchase Agreement, shall be October 15, 1999.
2 The parties agree that for all purposes under the Stock Purchase
Agreement, the Computation Date shall be September 30, 1999.
The Agreement is hereby amended to add a new Section 5.19 as follows:
3 Section 5.19. Termination of Stop Loss Agreement with
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Reassurance Company of Hannover.
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(a) Seller shall cause the Company to execute that certain letter
agreement by and between the Company and RCH, dated as of
September 30, 1999 (the "RCH Letter Agreement"), and that certain
agreement between the Seller and the Company relating thereto.
(b) Buyer and Holdings shall cause the Company to implement and
give full effect to the terms of the RCH Letter Agreement.
(c) The Closing Balance Sheet shall be prepared on the basis that
the Stop Loss Agreement with RCH has been terminated as of the
Computation Date and that the Company shall have no liability for
1999 and prior claim years, and the Closing Payment shall be
determined on that basis; for avoidance of doubt, the Closing
Payment will reflect the reduction of reserves of $3,170,522 and
the establishment of a payable of $3,750,000 resulting from the
termination of the Stop Loss Agreement.
(d) In the event that termination of the Stop Loss Agreement has
not been effected in accordance with the terms of the RCH Letter
Agreement by December 15, 1999, the Final Balance Sheet and the
Closing Statement shall be prepared on the basis that the Stop
Loss Agreement was in effect on the Computation Date, and the
Purchase Price shall be determined on that basis; for avoidance
of doubt, the Purchase Price shall reflect an adjustment relative
to the Closing Payment of the amount equal to the aggregate of
(i) $579,478 and (ii) any reduction or increase in Stop Loss
Agreement related reserves (including changes in reserves for any
claims incurred attributable to 1998) from $3,170,522, as
determined by a mutually agreeable third party actuary at the
expense of Seller ((i) and (ii) collectively, the "RCH
Adjustment").
(e) Any increase in the Purchase Price attributable to the
failure of the parties to implement the transactions contemplated
by the RCH Letter Agreement shall be paid as set forth in Section
2.3(f) of the Stock
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Purchase Agreement; provided, however, that Buyer and Holdings
shall not be obligated to make any payment that reflects the
increase in Purchase Price attributable to the matters set forth
herein until such time as Seller has delivered to Buyer or
Holdings a letter of credit in the amount of the RCH Adjustment,
if such RCH Adjustment results in a surplus, meeting the
requirements of Section 6.10 of the Stock Purchase Agreement.
(f) In the event that the Stop Loss Agreement is not terminated
in accordance with the terms of the RCH Letter Agreement, all
provisions of the Stock Purchase Agreement relating to the
Reassurance Company of Hanover block, including, without
limitation, Sections 6.10 and 9.1, shall apply in full as if this
Section 5.19 had never been effective.
(g) The Seller agrees to bear the reasonable incidental expenses
incurred by Buyer, Holdings and the Company in connection with
the preparation, negotiation and execution of the definitive
agreements pursuant to the RCH Letter Agreement.
4. Section 6.10 of the Stock Purchase Agreement is hereby amended as
follows: (a) the amount of the letter of credit required under this section
shall be reduced from $5,830,000 to $5,250,000, and (b) the term Specified
Claims shall not include claims relating to the "Reinsurance Company of Hanover"
reinsurance.
5. Section 6.11 of the Stock Purchase Agreement is hereby amended by
adding a sentence, as follows:
Notwithstanding any provision in the Stock Purchase Agreement to
the contrary, the Associated A & H Rein 908F receivable set forth
on Schedule 6.11 shall not be so assigned to Seller (and shall
not result in a decrease in the Capital and Surplus), and Buyer
and Holdings shall cause the Company to remit to Seller amounts
received by the Company in connection with such receivable
retained by the Company within ten (10) Business Days after
receipt by the Company.
6. Section 9.1(d)(ii) of the Stock Purchase Agreement is hereby
amended, as follows: the phrase "claims relating to a reserve deficiency under
that certain stop-loss reinsurance treaty with Reinsurance Company of Hanover"
shall be replaced with "liabilities and obligations arising in connection with
the transactions contemplated by the RCH Letter of Intent, including any
liabilities relating to the Stop Loss Agreement following its termination,
and..."
7. Section 9.1 is hereby further amended by adding a new subsection
(f), as follows;
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(f) claims and liabilities relating to the refusal of American
Continental Insurance Company to allow the Company to recapture
treaties numbers 652A and 652B prior to the contractual recapture
date of December 31, 1999.
8. Section 9.4 of the Stock Purchase Agreement is hereby amended by
adding a sentence, as follows:
Notwithstanding any provision in the Stock Purchase Agreement to
the contrary, in the event that the Stop Loss Agreement is
terminated, and the Seller becomes obligated to provide
indemnification pursuant to Section 9.1(d)(ii) of this Agreement,
the Retained Amount shall be available to pay indemnification
claims arising thereunder.
9. In accordance with Section 5.15 of the Stock Purchase Agreement,
Schedules 2.2, 3.14, 3.19 and 6.11, respectively, to the Stock Purchase
Agreement are each hereby deleted in their entirety as of the date hereof and
they are hereby replaced by Schedules A, B, C and D, respectively, attached
hereto. These amendments of Schedules 2.2, 3.14, 3.19 and 6.11, respectively,
shall constitute an amendment of such Schedules for purposes of Section 5.15 of
the Stock Purchase Agreement.
10. The parties hereby agree that the book value and market value of
investment assets as of September 30, 1999 for purposes of preparing the Closing
Balance Sheet and Final Balance Sheet, and for purposes of determining the
Purchase Price shall be based on the statutory balance sheet and the Estimated
Purchase Price as of September 30, 1999 prepared and submitted in connection
with the Certificate of the Assistant Treasurer of NRG Acquisition Corporation,
General Partner of Seller, dated October 15, 1999.
11. All of the other provisions of the Stock Purchase Agreement shall
be interpreted consistently with and in furtherance of the amendments set forth
in this Amendment. Except as amended hereby, all of the terms and conditions of
the Stock Purchase Agreement are hereby ratified and confirmed.
12. Except as amended hereby, the Stock Purchase Agreement shall
remain unaltered and in full force and effect.
13. This Amendment may be executed in counterparts, each of which
taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Amendment by signing any such counterpart.
14. This Amendment shall be governed by and construed in accordance
with the laws of the State of Delaware.
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IN WITNESS WHEREOF, the parties have executed this Amendment on the
date first above written.
SCOTTISH ANNUITY & LIFE INSURANCE
COMPANY (CAYMAN) LTD.
By: /S/ Henryk Sulikowski
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Name: Henryk Sulikowski
Title: Senior Vice President and Chief Insurance
Officer
SCOTTISH HOLDINGS, INC.
By: /S/ Peter W. Presperin
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Name: Peter W. Presperin
Title: Senior Vice President and Chief Financial
Officer
NRG ACQUISITION PARTNERS, L.P.
By: /S/ Steven B. Smotrich
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Name: Steven B. Smotrich
Title: Vice President
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