-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NI8YxGOAsCjWgnEaB49k8txzsU6mBoipNppkLW2JP42zNnMhNqySkKfMUalyxoZ1 fISzFZAolPdeppeMcnGtzg== 0000950123-00-002453.txt : 20000321 0000950123-00-002453.hdr.sgml : 20000321 ACCESSION NUMBER: 0000950123-00-002453 CONFORMED SUBMISSION TYPE: SC TO-I PUBLIC DOCUMENT COUNT: 19 FILED AS OF DATE: 20000320 GROUP MEMBERS: CC MERGER SUB INC GROUP MEMBERS: METROPOLITAN LIFE INSURANCE CO/NY SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CONNING CORP CENTRAL INDEX KEY: 0000801051 STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282] IRS NUMBER: 431719355 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-I SEC ACT: SEC FILE NUMBER: 005-53167 FILM NUMBER: 573896 BUSINESS ADDRESS: STREET 1: 700 MARKET ST CITY: ST LOUIS STATE: MO ZIP: 63101 BUSINESS PHONE: 3144440498 MAIL ADDRESS: STREET 1: CONNING CORP STREET 2: 700 MARKET ST CITY: ST LOUIS STATE: MO ZIP: 63101 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: METROPOLITAN LIFE INSURANCE CO/NY CENTRAL INDEX KEY: 0000728618 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411] IRS NUMBER: 135581829 STATE OF INCORPORATION: NY FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC TO-I BUSINESS ADDRESS: STREET 1: ONE MADISON AVE CITY: NEW YORK STATE: NY ZIP: 10010 BUSINESS PHONE: 2125785914 MAIL ADDRESS: STREET 1: ONE MADISON AVENUE LAW DEPARTMENT CITY: NEW YORK STATE: NY ZIP: 10010-3690 SC TO-I 1 SCHEDULE TO 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE TO TENDER OFFER STATEMENT UNDER SECTION 14(D)(1) OR 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 CONNING CORPORATION - -------------------------------------------------------------------------------- (NAME OF SUBJECT COMPANY) CC MERGER SUB INC. METROPOLITAN LIFE INSURANCE COMPANY - -------------------------------------------------------------------------------- (NAME OF FILING PERSONS -- OFFEROR) COMMON STOCK, PAR VALUE $0.01 PER SHARE - -------------------------------------------------------------------------------- (TITLE OF CLASS OF SECURITIES) 208215 10 3 - -------------------------------------------------------------------------------- (CUSIP NUMBER OF CLASS OF SECURITIES) JANE WEINBERG, ESQ. METROPOLITAN LIFE INSURANCE COMPANY ONE MADISON AVENUE NEW YORK, NEW YORK 10010 TELEPHONE: (212) 578-2211 - -------------------------------------------------------------------------------- (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF FILING PERSONS) COPY TO: ADAM O. EMMERICH, ESQ. WACHTELL, LIPTON, ROSEN & KATZ 51 WEST 52ND STREET NEW YORK, NEW YORK 10019 TELEPHONE: (212) 403-1234 - -------------------------------------------------------------------------------- CALCULATION OF FILING FEE
- ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ TRANSACTION VALUATION* AMOUNT OF FILING FEE - ------------------------------------------------------------------------------------------------ $95,425,962.50 $19,026 - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------
* Estimated for purposes of calculating the amount of filing fee only. The amount assumes the purchase of 7,634,077 shares of common stock, par value $0.01 per share (the "Shares"), at a price per Share of $12.50 in cash. Such number of Shares represents the fully diluted number of Shares outstanding as of March 20, 2000, less the number of Shares already beneficially owned by Metropolitan Life Insurance Company. [ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: None. Form or Registration No.: Not applicable. Filing Party: Not applicable. Date Filed: Not applicable. [ ] Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. Check the appropriate boxes below to designate any transactions to which the statement relates: [X] third-party tender offer subject to Rule 14d-1. [X] issuer tender offer subject to Rule 13e-4. [X] going-private transaction subject to Rule 13e-3. [ ] amendment to Schedule 13D under Rule 13d-2. Check the following box if the filing is a final amendment reporting the results of the tender offer: [ ] PAGE 1 OF 6 PAGES EXHIBIT INDEX BEGINS ON PAGE 6 2 This Tender Offer Statement on Schedule TO is filed by Metropolitan Life Insurance Company, a New York life insurance company ("MetLife"), and CC Merger Sub Inc., a Missouri corporation and an indirect wholly owned subsidiary of MetLife ("Purchaser"). The Schedule TO relates to the offer by Purchaser to purchase all outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of Conning Corporation ("Conning") at $12.50 per Share, net to the seller in cash (less any required withholding taxes), upon the terms and subject to the conditions set forth in the offer to purchase (the "Offer to Purchase") and in the related letter of transmittal (the "Letter of Transmittal," which together with the Offer to Purchase, as amended or supplemented from time to time, collectively constitute the "Offer"), attached hereto as Exhibits (a)(1) and (a)(2), respectively. The information set forth in the Offer is incorporated herein by reference with respect to Items 1-9, 11 and 13 of Schedule TO. The Agreement and Plan of Merger, by and among MetLife, Purchaser and Conning, dated as of March 9, 2000 (the "Merger Agreement"), a copy of which is attached as Exhibit (d)(1) hereto, is incorporated herein by reference with respect to Items 5 and 11 of Schedule TO. ITEM 10. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. Not applicable. ITEM 12. EXHIBITS. (a)(1) Offer to Purchase dated March 20, 2000. (a)(2) Form of Letter of Transmittal. (a)(3) Form of Notice of Guaranteed Delivery. (a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Text of proposal letter sent by MetLife to Conning on January 14, 2000. (a)(7) Text of press release issued by MetLife dated January 18, 2000. (a)(8) Text of joint press release issued by MetLife and Conning dated March 9, 2000. (a)(9) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(10) Form of summary advertisement dated March 20, 2000. (c)(1) Opinion of Salomon Smith Barney Inc. (c)(2) Opinion of Credit Suisse First Boston Corporation. (c)(3) Report of Salomon Smith Barney Inc. (d)(1) Agreement and Plan of Merger by and among MetLife, Purchaser and Conning dated as of March 9, 2000. (d)(2) Investment Advisory Agreement by and between General American Life Insurance Company and General American Investment Management Company, dated as of May 1, 1995. (d)(3) Assignment and Assumption Agreement by and among Conning Asset Management Company, MetLife and General American Life Insurance Company, dated as of March 1, 2000. (d)(4) Limited Partnership Agreement of Conning Capital Partners VI, L.P., dated as of February 25, 2000. (d)(5) Side Letter to Limited Partnership Agreement regarding the participation of MetLife in Conning Capital Partners VI, L.P., dated as of March 7, 2000. (f) Statement describing appraisal rights and procedures for exercising appraisal rights (incorporated by reference from Offer to Purchase). (g) None. (h) None.
2 3 ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3. (a) Financial statements (1) Conning's Annual Report on Form 10-K for the year ended December 31, 1999 (pages 30-33) is incorporated herein by reference. (2) The book value per share of Conning common stock as of December 31, 1999 was $6.96 (basic) and $6.74 (diluted). (b) Not applicable The financial information incorporated by reference may be read and copied at the following locations at the SEC: Public Reference Room New York Regional Office Chicago Regional Office Room 1024, Judiciary Plaza Suite 1300 Citicorp Center 450 Fifth Street, N.W. 7 World Trade Center Suite 1400 Washington, D.C. 20549 New York, New York 10048 500 West Madison Street Chicago, Illinois 60661-2511
Please call the SEC at 1-800-732-0330 for further information on the public reference rooms. Conning's SEC filings should also be available to the public from commercial document retrieval services and at the Internet world wide web site that the SEC maintains at http://www.sec.gov. 3 4 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. CC MERGER SUB INC. By /s/ GARY A. BELLER ------------------------------------ Name: Gary A. Beller Title: President and Chairman of the Board METROPOLITAN LIFE INSURANCE COMPANY By /s/ GARY A. BELLER ------------------------------------ Name: Gary A. Beller Title: Senior Executive Vice-President and General Counsel Dated: March 20, 2000 4 5 EXHIBIT INDEX (a)(1) Offer to Purchase dated March 20, 2000. (a)(2) Form of Letter of Transmittal. (a)(3) Form of Notice of Guaranteed Delivery. (a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Text of proposal letter sent by MetLife to Conning on January 14, 2000. (a)(7) Text of press release issued by MetLife dated January 18, 2000. (a)(8) Text of joint press release issued by MetLife and Conning dated March 9, 2000. (a)(9) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(10) Form of summary advertisement dated March 20, 2000. (c)(1) Opinion of Salomon Smith Barney Inc. (c)(2) Opinion of Credit Suisse First Boston Corporation. (c)(3) Report of Salomon Smith Barney Inc. (d)(1) Agreement and Plan of Merger by and among MetLife, Purchaser and Conning dated as of March 9, 2000. (d)(2) Investment Advisory Agreement by and between General American Life Insurance Company and General American Investment Management Company, dated as of May 1, 1995. (d)(3) Assignment and Assumption Agreement by and among Conning Asset Management Company, MetLife and General American Life Insurance Company, dated as of March 1, 2000. (d)(4) Limited Partnership Agreement of Conning Capital Partners VI, L.P., dated as of February 25, 2000. (d)(5) Side Letter to Limited Partnership Agreement regarding the participation of MetLife in Conning Capital Partners VI, L.P, dated as of March 7, 2000. (f) Statement describing appraisal rights and procedures for exercising appraisal rights (incorporated by reference from Offer to Purchase). (g) None. (h) None.
5 EX-99.A.1 2 OFFER TO PURCHASE 1 Offer to Purchase for Cash All Outstanding Shares of Common Stock of CONNING CORPORATION at $12.50 NET PER SHARE by CC MERGER SUB INC. an indirect wholly owned subsidiary of METROPOLITAN LIFE INSURANCE COMPANY THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, APRIL 17, 2000, UNLESS THE OFFER IS EXTENDED. A SUMMARY OF THE PRINCIPAL TERMS OF THE OFFER APPEARS ON PAGES (II) THROUGH (IV). YOU SHOULD READ THIS ENTIRE DOCUMENT CAREFULLY BEFORE DECIDING WHETHER TO TENDER YOUR SHARES. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS: (a) APPROVED OR DISAPPROVED OF THE TRANSACTION; (b) PASSED UPON THE MERITS OR FAIRNESS OF THE TRANSACTION; OR (c) PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Dealer Manager for the Offer is: Credit Suisse/First Boston Logo March 20, 2000 2 TABLE OF CONTENTS
PAGE ---- Summary of the Offer................................................ ii Introduction........................................................ 1 Special Factors..................................................... 2 I. Background of the Tender Offer and the Merger Agreement..... 2 II. Purpose of, Alternative to, Reasons for and Effects of the Tender Offer and the Merger................................. 5 III. Fairness of the Tender Offer and the Merger................. 6 IV. Reports, Opinions and Appraisals............................ 7 V. Interests of Certain Persons................................ 16 The Tender Offer and the Merger..................................... 20 1. Terms of the Tender Offer................................... 20 2. Acceptance for Payment and Payment for Conning Shares....... 22 3. Procedures for Accepting the Offer and Tendering Shares..... 23 4. Withdrawal Rights........................................... 25 5. Price Range of the Shares; Dividends........................ 26 6. Possible Effects of the Tender Offer on the Market for the Conning Shares; Stock Quotation; Securities Exchange Act Registration; Margin Regulations............................ 26 7. Information Concerning Conning.............................. 28 8. Information Concerning MetLife and Purchaser................ 30 9. The Merger Agreement and the Merger......................... 32 10. Source and Amount of Funds.................................. 41 11. Dividends and Distributions................................. 41 12. Conditions of the Offer..................................... 41 13. Legal and Regulatory Matters................................ 43 14. Fees and Expenses........................................... 45 15. Miscellaneous............................................... 46 Schedule I Directors and Executive Officers of MetLife and I-1 Purchaser.........................................................
i 3 SUMMARY OF THE OFFER PRINCIPAL TERMS - MetLife, through an indirect wholly owned subsidiary, is offering to buy all outstanding shares of Conning common stock not already owned by MetLife and its affiliates. MetLife and its affiliates already own approximately 60.4% of the outstanding Conning shares. The tender price is $12.50 per share in cash, less any required withholding taxes. Tendering stockholders will not have to pay brokerage fees or commissions. - As provided in our merger agreement with Conning, the tender offer is the first step in our plan to acquire all of the outstanding Conning shares that we do not already own. We would like to acquire enough Conning shares in the tender offer so that, including the Conning shares we already own, we would control at least two-thirds of the outstanding Conning shares. If we reach this target in the tender offer, we will acquire any remaining Conning shares in a later merger for $12.50 per share in cash. With control over two-thirds of the outstanding Conning shares, we can ensure approval of the merger. Conning stockholders who comply with Missouri law will have appraisal rights in the merger. - The initial offering period of the offer will expire at 12:00 midnight, New York City time, on Monday, April 17, 2000, unless we extend the offer. - If we decide to extend the tender offer, we will issue a press release giving the new expiration date no later than 9:00 a.m., New York City time, on the first business day after the previously scheduled expiration of the tender offer. RECOMMENDATION OF THE CONNING SPECIAL COMMITTEE The Conning board of directors formed a special committee consisting of Conning's independent director to consider, evaluate and negotiate the terms of the merger agreement and to make a recommendation on the offer and the merger to the Conning board of directors. The Conning special committee has determined that the tender offer and the merger are fair to, advisable and in the best interests of Conning and its stockholders, and has recommended to the Conning board of directors that it recommend to the Conning stockholders acceptance of the tender offer and, if necessary, approval of the merger agreement. RECOMMENDATION OF THE CONNING BOARD OF DIRECTORS The Conning board of directors has determined that, based upon the recommendation of the Conning special committee and other considerations, the tender offer and the merger are fair to, advisable and in the best interests of Conning and its stockholders, and has voted to recommend to the Conning stockholders acceptance of the tender offer and, if necessary, approval of the merger agreement. The Conning board of directors recommends that Conning stockholders tender their shares in the tender offer and, if necessary, approve the merger agreement. CONDITIONS We are not required to complete the tender offer unless enough Conning shares are validly tendered and not withdrawn prior to the expiration of the tender offer so that, including the Conning shares we already own, we would control at least two-thirds of the outstanding Conning shares. Other conditions to the tender offer are described on pages 41 through 43. The tender offer is not conditioned on MetLife obtaining financing. ii 4 PROCEDURES FOR TENDERING If you wish to accept the tender offer, you must do the following: - If you are a record holder (i.e., a stock certificate has been issued to you), you must either complete and sign the enclosed letter of transmittal and send it with your stock certificate to the depositary for the tender offer, ChaseMellon Shareholder Services, L.L.C., or follow the procedures described in this document for book-entry transfer. These materials must reach the depositary before the tender offer expires. Detailed instructions are contained in the letter of transmittal and on pages 23 through 25 of this document. - If you are a record holder but your stock certificate is not available or you cannot deliver it to the depositary before the offer expires, you may be able to tender your Conning shares using the enclosed notice of guaranteed delivery. Please call our information agent, MacKenzie Partners, Inc., at 800-322-2885 for assistance. See page 24 for further details. - If you hold your Conning shares through a broker or bank, you should instruct your broker or bank to tender your Conning shares. WITHDRAWAL RIGHTS If, after tendering your Conning shares in the tender offer, you decide that you do NOT want to accept the tender offer, you can withdraw your Conning shares by so instructing the depositary before the tender offer expires. If you tendered by giving instructions to a broker or bank, you must instruct the broker or bank to arrange for the withdrawal of your Conning shares. See pages 25 and 26 for further details. SUBSEQUENT OFFERING PERIOD - We may give stockholders who do not tender in the tender offer another opportunity to tender at the same price in a subsequent offering period. However, if there are tendered and not withdrawn enough Conning shares so that, including the Conning shares we already own, we would control at least 90% of the outstanding Conning shares, there will not be a subsequent offering period. Instead, we will complete the merger as soon as possible after the tender offer expires and without a vote of Conning stockholders, as permitted under Missouri law. Conning stockholders who had not previously tendered their shares will receive the same price per share upon completion of the merger. - The subsequent offering period, if any, will begin on the day we announce that we have purchased Conning shares in the offer and last for three to 20 business days. We may extend the subsequent offering period, but it will not last more than 20 business days in total. - There will be no withdrawal rights in the subsequent offering period. RECENT CONNING TRADING PRICES; SUBSEQUENT TRADING - The average of the closing prices for Conning shares over the 20 trading days immediately before we publicly announced on January 18, 2000 the proposal to acquire Conning was $8.68 per share. - The closing price for Conning shares was: - $9.56 per share on January 14, 2000, the last trading day before we announced the proposal to acquire Conning, and - $12.31 per share on March 17, 2000, the last trading day before the printing of these materials. - Before deciding whether to tender, you should obtain a current market quotation for Conning shares. iii 5 FURTHER INFORMATION If you have questions about the offer, you can call: Our Information Agent: MacKenzie Partners, Inc. Banks and Brokers Call Collect: (212) 929-5500 All others Call Toll Free: (800) 322-2885 or our Dealer Manager: Credit Suisse First Boston Corporation Call Toll Free: (800) 646-4543
iv 6 To: All Holders of Shares of Common Stock of Conning Corporation INTRODUCTION CC Merger Sub Inc. ("Purchaser"), an indirect wholly owned subsidiary of Metropolitan Life Insurance Company, or MetLife, is offering to purchase all outstanding shares of common stock, par value $0.01 per share, of Conning Corporation at a purchase price of $12.50 per share, net to the seller in cash (less any required withholding taxes), without interest, upon the terms and subject to the conditions set forth in this offer to purchase and in the related letter of transmittal (which, together, constitute the tender offer). As used in this document, the term "tender offer" includes any subsequent offering period, as described in Section 1. Stockholders of record who hold Conning shares registered in their name and tender the Conning shares directly to ChaseMellon Shareholder Services, L.L.C. (the "Depositary") will not be required to pay brokerage fees or commissions or, except as described in Instruction 6 of the letter of transmittal, stock transfer taxes on the sale of Conning shares in the tender offer. Stockholders who hold their Conning shares through a bank or broker should check with such institution as to whether they will be charged any service fees. However, if you do not complete and sign the Substitute Form W-9 included in the letter of transmittal, you may be subject to a required backup United States federal income tax withholding of 31% of the gross proceeds payable to you. See Section 3. We will pay all charges and expenses of Credit Suisse First Boston Corporation, as Dealer Manager ("Credit Suisse First Boston" or the "Dealer Manager"), the Depositary, and MacKenzie Partners, Inc., as Information Agent (the "Information Agent"), incurred in connection with the tender offer. See Section 14. THE CONNING SPECIAL COMMITTEE, CONSISTING OF THE SOLE DIRECTOR ON THE CONNING BOARD OF DIRECTORS WHO WAS NEITHER AN OFFICER OF CONNING NOR AN OFFICER OF METLIFE, HAS DETERMINED THAT THE TENDER OFFER AND THE MERGER ARE FAIR TO, ADVISABLE AND IN THE BEST INTERESTS OF CONNING AND ITS STOCKHOLDERS, AND HAS RECOMMENDED TO THE CONNING BOARD OF DIRECTORS THAT IT RECOMMEND TO THE CONNING STOCKHOLDERS ACCEPTANCE OF THE TENDER OFFER AND, IF NECESSARY, APPROVAL OF THE MERGER AGREEMENT. THE CONNING BOARD OF DIRECTORS HAS DETERMINED, BASED UPON THE RECOMMENDATION OF THE CONNING SPECIAL COMMITTEE AND OTHER CONSIDERATIONS, THAT THE TENDER OFFER AND THE MERGER ARE FAIR TO, ADVISABLE AND IN THE BEST INTERESTS OF CONNING AND ITS STOCKHOLDERS, AND HAS VOTED TO RECOMMEND TO THE CONNING STOCKHOLDERS ACCEPTANCE OF THE TENDER OFFER AND, IF NECESSARY, APPROVAL OF THE MERGER AGREEMENT. THE CONNING BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS TENDER THEIR CONNING SHARES IN THE TENDER OFFER AND, IF NECESSARY, APPROVE THE MERGER AGREEMENT. We are not required to purchase any Conning shares unless enough Conning shares are validly tendered and not withdrawn prior to the expiration of the tender offer so that, including the Conning shares we already own, we would control at least two-thirds of the outstanding Conning shares (the "Minimum Condition"). We reserve the right (subject to the applicable rules and regulations of the Securities and Exchange Commission), which we presently have no intention of exercising, to waive the Minimum Condition and to elect to purchase a smaller number of Conning shares. The tender offer is also subject to certain other terms and conditions. See Sections 1, 9, and 12. We are making the tender offer under the Agreement and Plan of Merger, by and among MetLife, Purchaser and Conning, dated as of March 9, 2000. Following the completion of the tender offer and the satisfaction or waiver of certain conditions, Conning will merge with Purchaser. Conning will continue as the surviving corporation. In the merger, each outstanding Conning share that is not controlled by us (other than Conning shares held by stockholders who perfect and do not withdraw or otherwise lose their appraisal rights under Missouri law) will be converted into the right to receive the merger consideration, which will be $12.50 net in cash or any higher price paid per Conning share in the tender offer. Section 9 contains a description of the merger agreement. Salomon Smith Barney Inc. ("Salomon Smith Barney"), financial advisor to the Conning special committee, delivered to the Conning special committee a written opinion that, as of the date of the merger 7 agreement, the consideration of $12.50 per Conning share to be received by the stockholders of Conning, other than MetLife and its affiliates, in the tender offer was fair to the Conning stockholders from a financial point of view. A copy of the Salomon Smith Barney opinion is included with Conning's Solicitation/Recommendation Statement on Schedule 14D-9, which is being mailed with this offer to purchase; stockholders are urged to read the opinion in its entirety for a description of the assumptions made, matters considered and limitations of the review undertaken by Salomon Smith Barney. Salomon Smith Barney's advisory services and opinion were provided for the information of the Conning special committee in its evaluation of the tender offer and the merger and the opinion is not intended to be, nor does it constitute a recommendation to any Conning stockholder as to whether such holder should tender Conning shares in the tender offer or vote in favor of the merger, if applicable. Approval of the merger requires the affirmative vote of the holders of at least two-thirds of the outstanding Conning shares. As a result, if the Minimum Condition and the other conditions to the tender offer are satisfied and the tender offer is completed, we will own a sufficient number of Conning shares to ensure that the merger will be approved by Conning stockholders. See Sections 9 and 12. If, pursuant to the tender offer, we acquire enough Conning shares so that, including the Conning shares we already own, we control at least 90% of the outstanding Conning shares, it will not be necessary under Missouri law to hold a meeting of Conning stockholders to approve the merger. To MetLife's knowledge after making reasonable inquiry, all of the individuals listed on Schedule I to this offer to purchase and all of the executive officers, directors and affiliates of Conning who own or hold Conning shares currently intend to tender their Conning shares (other than Conning shares that they have the right to purchase by exercising stock options and Conning shares that, if tendered, would cause them to incur liability under the short-swing-profits provisions of the Securities Exchange Act of 1934, as amended) to MetLife in the tender offer. To MetLife's knowledge after making reasonable inquiry, none of the individuals listed on Schedule I to this offer to purchase and none of the executive officers and affiliates of Conning, except those officers who serve on the Conning board of directors, has made a recommendation either in support of or opposed to the transaction. Conning has informed us that, as of March 3, 2000, there were 13,753,359 Conning shares issued and outstanding and 2,185,713 Conning shares reserved for issuance upon the exercise of outstanding stock options. THE TENDER OFFER IS CONDITIONED UPON THE FULFILLMENT OF THE CONDITIONS DESCRIBED IN SECTION 12. THE INITIAL OFFERING PERIOD OF THE TENDER OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, APRIL 17, 2000, UNLESS WE EXTEND IT. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION. YOU SHOULD READ THEM CAREFULLY BEFORE YOU MAKE ANY DECISION WITH RESPECT TO THE TENDER OFFER. SPECIAL FACTORS I. BACKGROUND OF THE TENDER OFFER AND THE MERGER AGREEMENT On January 6, 2000, MetLife acquired indirect beneficial ownership of 8,304,995 Conning shares when it purchased from General American Mutual Holding Company, a Missouri mutual insurance holding company, all of the issued and outstanding shares of capital stock of GenAmerica Corporation. GenAmerica owns all of the issued and outstanding shares of capital stock of General American Life Insurance Company, which owns all of the issued and outstanding shares of capital stock of GenAm Holding Company, which is the record owner of the 8,304,995 Conning shares. These Conning shares represent approximately 60.4% of the outstanding Conning shares, based upon the number of outstanding Conning shares represented to us by Conning in the merger agreement. MetLife paid $1.2 billion for the capital stock of GenAmerica. The address of the principal office of each of GenAmerica, General American Life Insurance and GenAm Holding is 700 Market Street, St. Louis, Missouri 63101. 2 8 Subsequent to the acquisition of GenAmerica, MetLife decided that it would be in the best interests of MetLife and its policyholders if MetLife acquired the outstanding Conning shares that it did not already control through GenAmerica. On the afternoon of January 14, 2000, MetLife submitted a proposal letter to the Conning board of directors. This letter set forth MetLife's initial proposal to acquire all of the outstanding Conning shares not already controlled by MetLife for $10.50 per share in cash. MetLife also informed the Conning board of directors that it had retained Credit Suisse First Boston to act as its financial advisor in connection with the proposal. MetLife issued a press release the next business day, which was January 18, 2000, announcing that it had made the proposal. This press release also announced that MetLife would assume investment management responsibility over the general account assets of General American Life Insurance, which Conning was managing at the time. As of December 31, 1999, these general account assets had a market value of approximately $5.8 billion. In 1999, Conning received approximately $6.8 million in fees for providing investment management services with respect to these assets. MetLife's general policy is to manage its own general account assets and the general account assets of its insurance subsidiaries, rather than to retain the services of third-party asset managers such as Conning. See Section 8. Conning issued a press release announcing that it had received the proposal letter. A copy of MetLife's press release is attached as Exhibit (a)(7) to the Tender Offer Statement on Schedule TO (the "Schedule TO"), and a copy of the proposal letter is attached as Exhibit (a)(6) to the Schedule TO. On January 21, 2000, the Conning board of directors met to discuss the MetLife proposal letter. The Conning board of directors established the Conning special committee, consisting of John A. Fibiger, the sole director who was neither an officer of Conning nor an officer of MetLife, for the purpose of considering, evaluating and negotiating the proposed transaction with MetLife on behalf of the minority shareholders and making a recommendation to the Conning board of directors. The Conning board of directors also authorized the Conning special committee to retain, at the expense of Conning, independent financial and legal advisors. On January 24, 2000, the Conning special committee spoke with representatives of Salomon Smith Barney and the Conning special committee's independent legal counsel. Both Salomon Smith Barney and such legal counsel had been retained by a previous special committee of the Conning board of directors in connection with MetLife's acquisition of GenAmerica. Salomon Smith Barney advised the Conning special committee that Salomon Smith Barney and its predecessors and affiliates previously have provided and currently are providing investment banking services to MetLife and its affiliates unrelated to the offer and the merger. The Conning special committee nevertheless decided to continue to use Salomon Smith Barney as its financial advisor. The Conning special committee determined that other eligible firms were likely to have financial relationships with MetLife that are comparable to those of Salomon Smith Barney and that choosing a firm other than Salomon Smith Barney, one less familiar with Conning, would delay the process of considering, evaluating and negotiating the proposed transaction with MetLife. On January 27, 2000, the Conning special committee met with representatives of Salomon Smith Barney and the Conning special committee's legal counsel. The Conning special committee's legal counsel reviewed the responsibilities and legal duties of the Conning special committee. Salomon Smith Barney presented its preliminary valuation analysis of Conning. The special committee concluded that better terms, including a higher price per share, should be sought from MetLife. The special committee then directed legal counsel to pursue discussions on the status of a draft merger agreement and to facilitate the initiation of a dialogue between Salomon Smith Barney and Credit Suisse First Boston. On February 2, 2000, special legal counsel to MetLife delivered a draft merger agreement to counsel for the Conning special committee and Conning. On February 4, 2000, representatives of Credit Suisse First Boston and Salomon Smith Barney held a meeting at the offices of Salomon Smith Barney in New York to discuss possible valuation analyses of Conning. 3 9 On February 7 and February 9, 2000, representatives of Credit Suisse First Boston spoke by phone with Conning's management and representatives of Salomon Smith Barney to review Conning's financial projections, which took into account the assumption by MetLife of investment management responsibility over most of the general account assets of General American Life Insurance and its insurance subsidiaries (other than Reinsurance Group of America, Incorporated ("RGA")). Between February 9 and February 23, 2000, representatives of Salomon Smith Barney and Credit Suisse First Boston spoke on several occasions to discuss possible valuation analyses of Conning and Conning's financial projections. On February 23, 2000, the Conning special committee spoke by phone with representatives of Salomon Smith Barney and the Conning special committee's legal counsel. The special committee contemplated developments in the process to date, valuation considerations and next steps in the negotiating process with MetLife. The special committee instructed its legal counsel and Salomon Smith Barney to pursue negotiations with their respective MetLife counterparts. On February 24 and February 25, 2000, representatives of Salomon Smith Barney and Credit Suisse First Boston held conference calls to discuss Conning's financial projections and possible valuation analyses of Conning. On February 25, 2000, representatives of MetLife's financial and legal advisors spoke with the Conning special committee's financial and legal advisors to discuss MetLife's perspective on Conning's valuation in light of the Conning management projections and MetLife's own internal analysis of Conning's business. As part of these discussions, MetLife's financial and legal advisors and the Conning special committee's financial and legal advisors met to discuss various alternatives. During these discussions, Salomon Smith Barney, on behalf of the Conning special committee, attempted to negotiate a higher price in the tender offer and the merger. Additional information was sent to Credit Suisse First Boston. The negotiations eventually resulted in MetLife increasing its offer to $12.50 per share. Between February 26, 2000 and March 9, 2000, MetLife, Conning and the Conning special committee, and their respective counsel, negotiated the terms of the definitive merger agreement. On February 27, 2000, the Conning special committee spoke by telephone with representatives of Salomon Smith Barney and the Conning special committee's legal counsel to review the results of negotiations, the timing of completing the negotiation process and possible public announcements regarding related developments. On March 2, 2000, the Conning special committee met with representatives of Salomon Smith Barney and the Conning special committee's legal counsel. Salomon Smith Barney presented its financial analysis regarding MetLife's current proposal and gave its oral opinion that, as of March 2, 2000, a $12.50 offer price was fair, from a financial point of view, to Conning's stockholders other than MetLife and its affiliates. The Conning special committee's legal counsel reviewed the legal issues in connection with the draft merger agreement and the status of related stockholder litigation. On March 9, 2000, the Conning special committee met with representatives of Salomon Smith Barney and the Conning special committee's legal counsel to review remaining issues in the merger negotiations. Salomon Smith Barney confirmed that its fairness opinion regarding the terms of the proposed merger with MetLife had not changed since it presented to the Conning special committee on March 2, 2000. Subject to an acceptable outcome in the negotiation of final terms of the merger agreement, the special committee (a) determined that the tender offer and proposed merger are fair to, advisable and in the best interests of Conning and its stockholders, (b) approved the offer and the merger, (c) recommended that the Conning board accept the tender offer and approve the merger agreement, and (d) recommended that the Conning board recommend acceptance of the tender offer and approval of the merger agreement by Conning's stockholders. 4 10 Immediately following the meeting of the Conning special committee with its financial and legal advisors on March 9, 2000, the Conning board of directors met and received presentations from Conning's counsel and Salomon Smith Barney and received the recommendation of the Conning special committee. By unanimous vote, other than Richard A. Liddy who abstained because he is an officer of MetLife and of an affiliate of MetLife, the Conning board of directors then (a) determined that each of the tender offer and the merger was fair to, advisable and in the best interests of Conning and its stockholders (other than MetLife and its affiliates), (b) voted to recommend to the Conning stockholders acceptance of the tender offer and, if necessary, approval of the merger agreement, and (c) recommended that Conning stockholders tender their Conning shares in the tender offer and, if necessary, approve the merger agreement. Throughout the period between January 24, 2000 and March 9, 2000, the Conning special committee regularly consulted with and directed, as appropriate, the Conning special committee's legal counsel and Salomon Smith Barney on developments in the negotiations relating to the proposed tender offer and merger. On March 9, 2000, MetLife, Purchaser and Conning entered into the merger agreement. MetLife and Conning also issued a joint press release prior to the commencement of trading in Conning shares, which release announced the execution of the merger agreement and the impending tender offer. A copy of this press release is included as Exhibit (a)(8) to the Schedule TO and is incorporated herein by reference. II. PURPOSE OF, ALTERNATIVE TO, REASONS FOR AND EFFECTS OF THE TENDER OFFER AND THE MERGER PURPOSE, ALTERNATIVE AND REASONS. The purpose of the tender offer and the merger is to enable MetLife to acquire control of the entire equity interest in Conning. MetLife's current intention is to retain the Conning shares that it acquires in the tender offer and the merger. If the tender offer and the merger are completed, Conning will merge with Purchaser. Conning will continue as the surviving corporation. MetLife has no current plan or proposal to sell the Conning shares that it acquires in the tender offer. However, from time to time, as conditions warrant, MetLife may dispose of all or any portion of the Conning shares. The two-step tender-offer-and-merger structure has been used in lieu of the alternative one-step merger structure because MetLife believes that the two-step structure can be completed more quickly than a one-step merger transaction. MetLife believes that the acquisition of Conning is appropriate at this time because it will best position Conning to pursue future business and growth opportunities, maximize the value of Conning and best serve the interests of Conning and its stockholders. EFFECTS. When the merger is completed, Conning will be an indirect wholly owned subsidiary of MetLife. It is MetLife's intention that a majority of the Conning board of directors will consist of representatives of MetLife. Following completion of the tender offer and the merger, MetLife's and its subsidiaries' combined interest in Conning's net book value and net earnings will increase from approximately 60.4% to 100%. According to Conning's Form 10-K for the year ended December 31, 1999, 100% of Conning's net book value as of December 31, 1999 was approximately $95.7 million (which means that 60.4% was approximately $57.8 million), and 100% of Conning's net income for the year ended December 31, 1999 was approximately $13.3 million (which means that 60.4% was approximately $8.0 million). MetLife and its subsidiaries will be entitled to all of the benefits of owning 100% of Conning, including all income generated by Conning's operations, any future increase in Conning's value and the right to elect all members of the Conning board of directors. Similarly, MetLife will also bear the risk of losses resulting from Conning's operations and from any decline in the value of Conning after the merger. Following completion of the tender offer and the merger, MetLife will cause Conning's common stock to be delisted from the NASDAQ and Conning will be a privately held corporation. Accordingly, current Conning stockholders who are not affiliated with MetLife will not have the opportunity to participate in the earnings and growth of Conning and will not have any right to vote on corporate matters. Similarly, 5 11 after completion of the merger, former stockholders will not face the risk of losses resulting from Conning's operations or from any decline in the value of Conning. MATERIAL UNITED STATES FEDERAL INCOME TAX EFFECTS. Your receipt of cash for Conning shares in the tender offer or the merger will be a taxable transaction for United States federal income tax purposes and may also be a taxable transaction under applicable state, local, foreign and other tax laws. For United States federal income tax purposes, if you sell or exchange your Conning shares in the tender offer or the merger, you would generally recognize gain or loss equal to the difference between the amount of cash received and your tax basis for the Conning shares that you sold or exchanged. That gain or loss will be capital gain or loss (assuming you hold your Conning shares as a capital asset), and any such capital gain or loss will be long term if, as of the date of sale or exchange, you have held the Conning shares for more than one year or will be short term if, as of such date, you have held the Conning shares for one year or less. The discussion above may not be applicable to certain types of stockholders, including stockholders who acquired Conning shares through the exercise of employee stock options or otherwise as compensation, individuals who are not citizens or residents of the United States, foreign corporations, or entities that are otherwise subject to special tax treatment under the Internal Revenue Code of 1986, as amended (such as insurance companies, tax-exempt entities and regulated investment companies). THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO YOU OF THE TENDER OFFER AND MERGER, INCLUDING UNITED STATES FEDERAL, STATE AND LOCAL AND FOREIGN TAX CONSEQUENCES. III. FAIRNESS OF THE TENDER OFFER AND THE MERGER MetLife and Purchaser believe that the consideration to be received in the tender offer and the merger by the Conning stockholders that are unaffiliated with MetLife is fair to those stockholders. MetLife and Purchaser base their belief on the following: - after a thorough review with independent financial and legal advisors, the Conning special committee concluded that the tender offer and the merger are fair to, advisable and in the best interests of Conning and its stockholders, and approved the tender offer and the merger agreement; - based upon the recommendation of the Conning special committee and other considerations, the Conning board of directors, other than Richard A. Liddy who abstained because of his positions as an officer of MetLife and of a MetLife subsidiary, determined that the tender offer and the merger are fair to, advisable and in the best interests of Conning stockholders, and unanimously approved the tender offer and the merger agreement; - on March 9, 2000, the Conning special committee received a written fairness opinion from Salomon Smith Barney that, subject to the various assumptions and limitations set forth in that opinion, as of the date thereof, the $12.50 per Conning share in cash to be received by Conning stockholders in the tender offer and the merger was fair to Conning stockholders (other than MetLife or Conning and their respective wholly owned subsidiaries) from a financial point of view; - for over six weeks, the merger agreement was negotiated at arm's length with the Conning special committee, which acted independently, with the assistance of financial and legal advisors and on behalf of Conning stockholders unaffiliated with MetLife; - Conning's historical financial performance and MetLife's projections of Conning's future financial performance, which take into account MetLife's assumption of investment management responsibility over the general account assets of General American Life Insurance; - Conning's business and earnings prospects, near- and long-term business risks, the competitive business environment in which Conning operates and business and valuation trends in Conning's industry; 6 12 - the cash consideration of $12.50 per share to be paid in the tender offer and the merger represents (a) a premium of approximately 30.7% above the closing price of Conning shares on the last trading day before MetLife announced its initial proposal to acquire Conning, (b) a premium of approximately 44.0% above the average of the closing prices for Conning shares over the 20 trading days immediately before we publicly announced the proposal to acquire Conning, and (c) a premium of approximately 48.1% above the closing price for Conning shares on each of December 14, 15 and 16, 1999, approximately one month before MetLife announced its initial proposal to acquire Conning; - the structure of the transaction is designed to result in Conning stockholders, other than MetLife and its affiliates, receiving the consideration in the tender offer and the merger at the earliest possible time; and - MetLife's internally prepared financial analysis, which included a review of comparable current market prices and historical comparable transaction prices of Conning's peer group, as well as a discounted cash flow analysis, to determine the value of Conning shares. MetLife and Purchaser did not find it practicable to assign, nor did they assign, relative weights to the individual factors considered in reaching their conclusion as to fairness. In light of the nature of Conning's business, MetLife and Purchaser did not deem net book value or liquidation value to be relevant indicators of the value of Conning shares. The merger can be completed without the approval of a majority of the Conning stockholders that are unaffiliated with MetLife. IV. REPORTS, OPINIONS AND APPRAISALS OPINION OF SALOMON SMITH BARNEY. Salomon Smith Barney was retained to act as financial advisor to the Conning special committee in connection with, among other things, the proposed acquisition by MetLife of the outstanding Conning shares owned by stockholders not affiliated with MetLife. Pursuant to Salomon Smith Barney's engagement letter with the independent directors of Conning, dated August 16, 1999, Salomon Smith Barney rendered an oral opinion to the special committee on March 2, 2000, which opinion was confirmed in writing on March 9, 2000, to the effect that, based upon and subject to the considerations and limitations set forth in the opinion, its work described below and other factors it deemed relevant, as of that date, the tender offer price was fair, from a financial point of view, to the holders of Conning shares other than MetLife and its affiliates. The full text of Salomon Smith Barney's opinion, which sets forth the assumptions made, general procedures followed, matters considered and limits on the review undertaken, is included as Exhibit (c)(1) to the Schedule TO. A copy of the Salomon Smith Barney opinion is available for inspection and copying by any holder of Conning shares or any representative of such holder who has been so designated in writing, at the principal executive offices of Conning during normal business hours. The summary of Salomon Smith Barney's opinion set forth below is qualified in its entirety by reference to the full text of the opinion. STOCKHOLDERS ARE URGED TO READ SALOMON SMITH BARNEY'S OPINION CAREFULLY AND IN ITS ENTIRETY. In arriving at its opinion, Salomon Smith Barney reviewed a draft of the merger agreement, dated March 7, 2000, and held discussions with certain senior officers, directors and other representatives and advisors of Conning concerning the businesses, operations and prospects of Conning. Salomon Smith Barney examined publicly available business and financial information relating to Conning, as well as financial forecasts and other information and data for Conning that were provided to or otherwise discussed with Salomon Smith Barney by the management of Conning. Salomon Smith Barney reviewed the financial terms of the tender offer and the merger as set forth in the merger agreement in relation to, among other things: - current and historical market prices and trading volumes of Conning shares; - the historical and projected earnings and other operating data of Conning; and - the capitalization and financial condition of Conning. 7 13 Salomon Smith Barney also considered, to the extent publicly available, the financial terms of other similar transactions recently effected that Salomon Smith Barney considered relevant in evaluating the tender offer and the merger and analyzed financial, stock market and other publicly available information relating to the businesses of other companies whose operations Salomon Smith Barney considered relevant in evaluating those of Conning. In addition, Salomon Smith Barney conducted such other analyses and examinations and considered such other information and financial, economic and market criteria as it deemed appropriate in arriving at its opinion. In rendering its opinion, Salomon Smith Barney assumed and relied, without independent verification, upon the accuracy and completeness of all financial and other information and data publicly available or furnished to or otherwise reviewed by or discussed with Salomon Smith Barney. With respect to financial forecasts and other information and data provided to or otherwise reviewed by or discussed with it, Salomon Smith Barney was advised by the management of Conning that such forecasts and other information and data had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of Conning as to the future financial performance of Conning. Salomon Smith Barney did not make and was not provided with an independent evaluation or appraisal of Conning's assets or liabilities (contingent or otherwise) nor did Salomon Smith Barney make any physical inspection of Conning's properties or assets. Representatives of Conning advised Salomon Smith Barney, and Salomon Smith Barney assumed, that the final terms of the definitive merger agreement would not vary materially from those set forth in the draft reviewed by Salomon Smith Barney. Salomon Smith Barney noted that MetLife and its affiliates hold approximately 60.4% of the outstanding Conning shares, and that MetLife had indicated that it is not interested, under any circumstances, in selling its interest in Conning. Accordingly, Salomon Smith Barney was not requested to, and did not, solicit third-party indications of interest in the possible acquisition of all or part of Conning, nor was it requested to consider, and its opinion did not address, the relative merits of the tender offer and the merger as compared to any alternative business strategies that might exist for Conning or the effect of any other transaction in which Conning might engage. In addition, Salomon Smith Barney noted that MetLife had stated its intention to terminate certain business relationships that General American Life Insurance and its insurance subsidiaries have with Conning and had begun the process of doing so. In arriving at its opinion, Salomon Smith Barney took into account the prospective effect on Conning's revenues, cash flow and earnings of such termination of business and other potential loss of business derived from Conning's relationship with MetLife and its affiliates. Salomon Smith Barney's opinion necessarily was based on information available to it, and financial, stock market and other conditions and circumstances existing and disclosed to Salomon Smith Barney as of the date of the opinion. SALOMON SMITH BARNEY'S ADVISORY SERVICES AND OPINION WERE PROVIDED FOR THE INFORMATION OF THE CONNING SPECIAL COMMITTEE IN ITS EVALUATION OF THE TENDER OFFER AND THE MERGER AND THE OPINION IS NOT INTENDED TO BE, NOR DOES IT CONSTITUTE, A RECOMMENDATION TO ANY HOLDER OF CONNING SHARES AS TO WHETHER SUCH HOLDER SHOULD TENDER CONNING SHARES IN THE TENDER OFFER OR VOTE IN FAVOR OF THE MERGER, IF APPLICABLE. In connection with rendering its opinion, Salomon Smith Barney made a presentation to the Conning special committee on March 2, 2000 with respect to the material analyses performed by Salomon Smith Barney in evaluating the fairness of the offer price. The following is a summary of this presentation. In connection with confirming its opinion in writing on March 9, 2000, Salomon Smith Barney updated internally certain of the analyses performed in connection with its oral opinion delivered on March 2, 2000. The following summary of financial analyses includes information presented in tabular format. IN ORDER TO UNDERSTAND FULLY THE FINANCIAL ANALYSES USED BY SALOMON SMITH BARNEY, THESE TABLES MUST BE READ TOGETHER WITH THE TEXT OF EACH SUMMARY. THE TABLES ALONE DO NOT CONSTITUTE A COMPLETE DESCRIPTION OF THE FINANCIAL ANALYSES. The following quantitative information, to the extent it is based on market data, is, 8 14 except as otherwise indicated, based on market data as it existed at or prior to February 25, 2000, and is not necessarily indicative of current or future market conditions. In performing its financial analyses, Salomon Smith Barney relied on certain assumptions, financial forecasts and other information provided by management of Conning in order to evaluate Conning's expected future operating performance. Two sets of financial projections were used in Salomon Smith Barney's financial analyses: - Management Projections -- Reflects Conning's future operating performance as prepared by Conning's senior management after taking into account the announced termination of certain business relationships with General American Life Insurance and its insurance subsidiaries ("Management Projections"). - Sensitivity Analysis -- Reflects Conning's future operating performance as prepared by Conning's senior management and adjusted for other potential loss of business derived from Conning's relationship with General American Life Insurance and its insurance subsidiaries in addition to the loss taken into account under the definition of Management Projections ("Sensitivity Analysis"). * * * TRANSACTION SUMMARY. Salomon Smith Barney reviewed the terms of the tender offer and noted that the offer price of $12.50 per share resulted in an implied value of $171.9 million for 100% of the Conning shares issued and outstanding and an implied value of $68.1 million for the outstanding Conning shares not owned by MetLife and its affiliates. Salomon Smith Barney also noted that the offer price per share represented: - a multiple of 11.2x year 2000 estimated earnings per share for Conning published by I/B/E/S International, Inc. ("IBES") as of February 25, 2000; - a multiple of 13.4x year 2000 estimated earnings per share based on the Management Projections; - a multiple of 17.3x year 2000 estimated earnings per share based on the Sensitivity Analysis; - a discount of 33.3% to Conning's 52-week high price of $18.75 per share; - a premium of 85.2% to Conning's 52-week low price of $6.75 per share; - a premium of 30.7% to the $9.5625 price per Conning share one day prior to MetLife's initial offer of $10.50 per share on January 18, 2000; and - a premium of 48.1% to the $8.4375 price per Conning share on December 16, 1999, approximately one month prior to MetLife's initial offer. HISTORICAL TRADING AND RELATIVE PRICE PERFORMANCE ANALYSIS. Salomon Smith Barney reviewed the daily closing prices and trading volume for Conning shares during the period from December 17, 1997 (the date of Conning's initial public offering) through February 25, 2000, with particular emphasis on Conning's trading history for the period from July 29, 1999 through February 25, 2000. Salomon Smith Barney compared the daily closing price of Conning shares for the period from December 17, 1997 through February 25, 2000 with the trading performance of: - an index of six publicly traded asset managers comprised of Federated Investors, Inc., BlackRock, Inc., The John Nuveen Company, Affiliated Managers Group, Inc., United Asset Management Corp. and Gabelli Asset Management Inc. (the "Asset Managers"); - the Standard & Poor's 500 Stock Index; and - the Russell 2000 Index. RELATIVE PRICE TO FORWARD EARNINGS RATIO ANALYSIS. Salomon Smith Barney compared, for the period from December 17, 1997 through February 25, 2000, the multiples of closing prices of Conning 9 15 shares to IBES estimated 12 month forward earnings per share with the average multiples of closing prices of the Asset Managers to IBES estimated forward earnings per share over the same period. MORTGAGE BUSINESS RELATIVE PRICE PERFORMANCE. Salomon Smith Barney noted that Conning derives a sizable portion of its revenue from a mortgage-related business. Salomon Smith Barney compared, for the period from December 17, 1997 through February 25, 2000, the trading performance of the Asset Managers with the performance of: - an index of three publicly traded residential mortgage banks comprised of Countrywide Credit Industries, Inc., Irwin Financial Corporation and Resource Bancshares Mortgage Group, Inc.; - an index of six publicly traded mortgage Real Estate Investment Trusts comprised of Indymac Mortgage Holdings, Inc., Anthracite Capital, Inc., Redwood Trust, Inc., Amresco, Inc., Resource Asset Investment Trust and Laser Mortgage Management, Inc. (the "REIT Group"); and - the Standard & Poor's 500 Stock Index. ANALYSIS OF HISTORICAL OPERATING PERFORMANCE. Salomon Smith Barney analyzed Conning's historical operating performance, affiliated and unaffiliated assets under management and the associated revenue and pre-tax income for each year from 1996 through 1999. Salomon Smith Barney also reviewed the same information for each quarter in 1999 to assess the relative growth of affiliated and unaffiliated assets under management and the associated revenue and pre-tax income. Salomon Smith Barney also reviewed the ratios of pre-tax income to revenue and pre-tax income to average assets under management with respect to Conning's affiliated and unaffiliated assets under management. Salomon Smith Barney compared certain operating statistics for Conning with those of the Asset Managers. In addition, Salomon Smith Barney noted that the average ratio of stock price to IBES estimated forward net income for Conning declined from 19.4x in 1998 to 14.1x for the period January 1, 1999 to August 9, 1999 as compared to a decline of 19.2x in 1998 to 16.9x for the Asset Managers over the same period. Salomon Smith Barney also compared Conning's client base (institutional versus retail) and type of assets under management (equity versus fixed-income and domestic versus international) with the client base and type of assets under management for each of the Asset Managers. COMPONENT VALUATION ANALYSIS. Salomon Smith Barney derived implied valuation ranges per Conning share by applying ranges of multiples of share price to year 2000 estimated net income derived from Conning's different business lines using both the Management Projections and the Sensitivity Analysis as set forth in the following table:
ESTIMATED AS OF 2/25/00 YEAR 2000 NET PRICE/YEAR 2000 INCOME PER MULTIPLE MEDIAN IMPLIED BUSINESS LINE SHARE VALUATION (+/- 10%) VALUATION RANGE - ------------- ------------- ------------------- --------------- MANAGEMENT PROJECTIONS Unaffiliated Assets under Management... $0.56 11.6x - 14.2x $6.45 - $ 7.88 Affiliated Assets under Management..... 0.04 11.6 - 14.2 0.52 - 0.64 Mortgage............................... 0.33 4.7 - 5.8 1.59 - 1.94 ----- ------------ -------------- Total.................................. $0.93 9.1x - 11.2x $8.55 - $10.46 ===== ============ ============== SENSITIVITY ANALYSIS Unaffiliated Assets under Management... $0.45 11.6x - 14.2x $5.21 - $ 6.36 Mortgage............................... 0.28 4.7 - 5.8 1.30 - 1.59 ----- ------------ -------------- Total.................................. $0.72 9.0x - 11.0x $6.51 - $ 7.96 ===== ============ ==============
Salomon Smith Barney selected the range of multiples of price to year 2000 estimated net income per share for Conning's asset management business based on a range of multiples derived for the Asset 10 16 Managers and selected the range of multiples for Conning's mortgage business based on a range of multiples derived for the REIT Group. Salomon Smith Barney noted that the offer price of $12.50 per share was higher than the ranges of values suggested by this analysis. COMPARABLE COMPANY ANALYSIS. Salomon Smith Barney compared certain financial data for Conning using both the Management Projections and the Sensitivity Analysis with corresponding financial data for the Asset Managers based on IBES estimates. Salomon Smith Barney calculated the multiples of closing share prices as of February 25, 2000 to each of: (a) latest 12 months net income per share as of December 31, 1999; (b) year 2000 estimated net income per share; and (c) year 2001 estimated net income per share. The following table sets forth information concerning the range and median of multiples for the Asset Managers described above, as well as multiples for Conning using the Management Projections and the Sensitivity Analysis.
CONNING ASSET MANAGERS ------------------------- ---------------------- MANAGEMENT SENSITIVITY RANGE MEDIAN PROJECTIONS ANALYSIS ------------- ------ ----------- ----------- Price to Latest 12 Months Net Income per Share as of December 31, 1999............................ 10.8x - 20.2x 12.8x 12.9x 16.7x Price to Year 2000 Estimated Net Income per Share........................................... 10.0x - 15.1x 12.9x 11.4x 14.8x Price to Year 2001 Estimated Net Income per Share........................................... 8.4x - 12.7x 11.2x 9.6x 11.0x
Salomon Smith Barney then applied the low and median multiples of price to year 2000 estimated net income for the Asset Managers to derive ranges of implied prices per Conning share of approximately $9.25 to approximately $12.00 based on the Management Projections and of approximately $7.25 to $9.25 per share based on the Sensitivity Analysis. Salomon Smith Barney noted that the offer price of $12.50 per share is higher than the ranges of values suggested by this analysis. PREMIUM ANALYSIS. Salomon Smith Barney reviewed the premium to share price for 95 going-private transactions from January 1, 1995 to February 25, 2000 using both one-month and one-day premiums prior to each announcement. Using the premiums paid to stock price one-month and one-day prior to announcement for the 25th percentile and 75th percentile of the precedent going-private transactions, Salomon Smith Barney derived valuation ranges of approximately $9.75 to approximately $11.75 and approximately $10.75 to $12.50 per Conning share, respectively. DISCOUNTED CASH FLOW ANALYSIS. Salomon Smith Barney performed a three-year discounted cash flow analysis to establish a range of equity values for Conning shares. The discounted cash flow was calculated assuming a discount rate of 12% and net income growth rates ranging from 5.0% to 20.0% for the years 2000 to 2002 and was comprised of the sum of (a) the present value of Conning's estimated interim cash flows and (b) the fiscal year 2002 terminal value of Conning based on terminal value multiples ranging from 9.0x to 10.5x year 2002 estimated net income. Based upon the foregoing analysis, and using Management Projections, this analysis resulted in a valuation range per Conning share of $8.56 to $13.62. Salomon Smith Barney also performed a discounted cash flow analysis similar to the one described above using the Sensitivity Analysis. This analysis resulted in a valuation range per Conning share of $6.93 to $10.96. * * * The preceding discussion is a summary of the material financial analyses furnished by Salomon Smith Barney to the Conning special committee, but it does not purport to be a complete description of the analyses performed by Salomon Smith Barney or of its presentation to the Conning special committee. The preparation of financial analyses and fairness opinions is a complex process involving subjective judgments, and is not necessarily susceptible to partial analysis or summary description. Salomon Smith Barney made no attempt to assign specific weights to particular analyses or factors considered, but, rather, made qualitative judgments as to the significance and relevance of all the analyses and factors considered 11 17 and determined to give its fairness opinion as described above. Accordingly, Salomon Smith Barney believes that its analyses, and the summary set forth above, must be considered as a whole, and that selecting portions of the analyses and of the factors considered by Salomon Smith Barney, without considering all of the analyses and factors, could create a misleading or incomplete view of the processes underlying the analyses conducted by Salomon Smith Barney and its opinion. With regard to the comparable companies analyses summarized above Salomon Smith Barney selected comparable public companies on the basis of various factors, including the size and similarity of the line of business; however, no company utilized as a comparison in these analyses summarized above is identical to Conning. As a result, these analyses are not purely mathematical, but also take into account differences in financial and operating characteristics of the subject companies and other factors that could affect the public trading value of the subject companies to which Conning is being compared. In its analyses, Salomon Smith Barney made numerous assumptions with respect to Conning, industry performance, general business, economic, market and financial conditions, and other matters, many of which are beyond the control of Conning. Any estimates contained in Salomon Smith Barney's analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by these analyses. Estimates of values of companies do not purport to be appraisals or necessarily to reflect the prices at which companies may actually be sold. Because these estimates are inherently subject to uncertainty, none of Conning, the Conning special committee, the Conning board of directors, Salomon Smith Barney or any other person assumes responsibility if future results or actual values differ materially from the estimates. Salomon Smith Barney's analyses were prepared solely as part of Salomon Smith Barney's analysis of the fairness of the offer price and were provided to the Conning special committee in that connection. The opinion of Salomon Smith Barney was only one of the factors taken into consideration by the Conning special committee in making its determination to recommend that the Conning board of directors approve the tender offer and the merger. The opinion of Salomon Smith Barney was not intended to be and does not constitute a recommendation to any holder of Conning shares as to whether any such holder should tender Conning shares in the tender offer or, if applicable, vote in favor of the merger. Salomon Smith Barney is an internationally recognized investment banking firm engaged in, among other things, the valuation of businesses and their securities in connection with mergers and acquisitions, restructurings, leveraged buyouts, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. The Conning special committee selected Salomon Smith Barney to act as financial advisor to the Conning special committee on the basis of Salomon Smith Barney's international reputation and Salomon Smith Barney's familiarity with Conning. Salomon Smith Barney and its predecessors and affiliates previously have provided and currently are providing investment banking services to MetLife unrelated to the offer and the merger, for which Salomon Smith Barney will receive customary compensation. In particular, Salomon Smith Barney anticipates having a significant role in the upcoming initial public offering of MetLife, Inc. In the ordinary course of its business, Salomon Smith Barney and its affiliates may actively trade or hold the securities of both Conning and MetLife (or its affiliates) for its own account and for the account of its customers, and, accordingly, may at any time hold a long or short position in those securities. Salomon Smith Barney and its affiliates, including Citigroup Inc. and its affiliates, may maintain relationships with Conning, MetLife and their respective affiliates. Pursuant to Salomon Smith Barney's engagement letter, Conning agreed to pay Salomon Smith Barney approximately $1,000,000 for its services rendered in connection with the offer and the merger, of which $500,000 has already been paid by Conning to Salomon Smith Barney. Conning also has agreed to reimburse Salomon Smith Barney for its reasonable travel and other out-of-pocket expenses incurred in connection with its engagement, including the reasonable fees and expenses of its legal counsel up to $50,000, and to indemnify Salomon Smith Barney against specific liabilities and expenses relating to or arising out of its engagement, including liabilities under the United States federal securities laws. A copy of the Salomon Smith Barney opinion is included as Exhibit (c)(1) to the Schedule TO. The Salomon Smith Barney opinion is available for inspection and copying at the principal executive offices of 12 18 Conning during its regular business hours by any interested Conning stockholder or representative who has been so designated in writing. A copy of Salomon Smith Barney's presentation to the Conning special committee on March 2, 2000 is included as Exhibit (c)(3) to the Schedule TO. OPINION OF FINANCIAL ADVISOR TO METLIFE. MetLife engaged Credit Suisse First Boston to act as its financial advisor in connection with the proposed tender offer and merger. In connection with the engagement, MetLife requested that Credit Suisse First Boston evaluate the fairness to MetLife, from a financial point of view, of the aggregate consideration to be paid by MetLife in the tender offer and the merger. At a meeting of the MetLife board of directors on March 8, 2000, Credit Suisse First Boston rendered to the MetLife board of directors its oral opinion (which opinion was confirmed by delivery of a written opinion dated March 8, 2000) to the effect that, as of such date and based upon and subject to certain matters stated in the opinion, the aggregate consideration to be paid by MetLife in the tender offer and the merger was fair to MetLife from a financial point of view. CREDIT SUISSE FIRST BOSTON'S OPINION WAS PROVIDED TO THE METLIFE BOARD OF DIRECTORS. THE OPINION IS DIRECTED ONLY TO THE FAIRNESS OF THE CONSIDERATION FROM A FINANCIAL POINT OF VIEW TO METLIFE AND DOES NOT ADDRESS THE FAIRNESS OF THE CONSIDERATION TO CONNING OR THE CONNING STOCKHOLDERS THAT ARE NOT AFFILIATED WITH METLIFE. The full text of Credit Suisse First Boston's written opinion dated March 8, 2000 to the MetLife board of directors, which describes the procedures followed, assumptions made, matters considered and limitations of the review undertaken, has been filed as Exhibit (c)(2) to the Schedule TO. The summary of Credit Suisse First Boston's opinion set forth below is qualified in its entirety by reference to the full text of such opinion. In arriving at its opinion, Credit Suisse First Boston reviewed certain publicly available business and financial information relating to Conning, as well as a recent draft of the merger agreement. Credit Suisse First Boston also reviewed certain other information, including financial forecasts, provided to it by MetLife and Conning, and met with the respective managements of MetLife and Conning to discuss the business and prospects of Conning. Credit Suisse First Boston also considered certain financial and stock market data of Conning, and compared those data for Conning with similar data for other publicly held companies in businesses similar to Conning and considered, to the extent publicly available, the financial terms of certain other business combinations and other transactions that recently have been effected. Credit Suisse First Boston also considered other information, financial studies, analyses and investigations and financial, economic and market criteria which it deemed relevant. In connection with its review, Credit Suisse First Boston did not assume any responsibility for independent verification of any of the foregoing information and relied on such information being complete and accurate in all material respects. With respect to the financial forecasts, Credit Suisse First Boston was advised, and assumed, that they were reasonably prepared on bases reflecting the best currently available estimates and judgments of the respective managements of MetLife and Conning as to the future financial performance of Conning. Credit Suisse First Boston was not requested to make, and did not make, an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Conning, and was not furnished with any such evaluations or appraisals. Credit Suisse First Boston also assumed, with the consent of MetLife, that the executed merger agreement and all of the terms and conditions thereof would conform in all material respects with the draft of the merger agreement reviewed by Credit Suisse First Boston and that the tender offer and the merger would be completed on the terms described in such draft. Credit Suisse First Boston's opinion was necessarily based upon financial, economic, market and other conditions as they existed and could be evaluated on the date of its opinion. With respect to outstanding litigation involving Conning, including litigation relating to the tender offer and the merger, MetLife instructed Credit Suisse First Boston to rely solely upon the judgment of the management of Conning and its counsel that the outcome of the litigation will not have a material adverse effect on the financial condition or results of operations of Conning. 13 19 In preparing its opinion for the MetLife board of directors, Credit Suisse First Boston performed a variety of financial and comparative analyses, including those described below. The summary of Credit Suisse First Boston's analyses set forth below does not purport to be a complete description of the analyses underlying Credit Suisse First Boston's opinion. The preparation of a fairness opinion is a complex analytic process involving various determinations as to the most appropriate and relevant methods of financial analyses and the application of those methods to the particular circumstances and, therefore, a fairness opinion is not readily susceptible to summary description. In arriving at its opinion, Credit Suisse First Boston made qualitative judgments as to the significance and relevance of each analysis and factor considered by it. Accordingly, Credit Suisse First Boston believes that its analyses must be considered as a whole and that selecting portions of its analyses and factors, without considering all analyses and factors, could create a misleading or incomplete view of the analyses underlying its opinion. In its analyses, Credit Suisse First Boston considered and made numerous assumptions with respect to Conning, industry performance, regulatory, general business, economic, market and financial conditions and other matters. Many of these factors are beyond the control of MetLife and Conning. No company, transaction or business used in Credit Suisse First Boston's analyses as a comparison is identical to MetLife or Conning or the tender offer and the merger, nor is an evaluation of the results of such analyses entirely mathematical. Rather, the analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the acquisition value, public trading value or other values of the companies, their business segments or the transactions being analyzed. The estimates contained in Credit Suisse First Boston's analyses and the ranges of valuations resulting from any particular analysis are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by such analyses. In addition, analyses relating to the value of businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold. Accordingly, such analyses and estimates are inherently subject to substantial uncertainty. Credit Suisse First Boston's opinion and financial analyses were only one of many factors considered by the MetLife board of directors in its evaluation of the tender offer and the merger and should not be viewed as determinative of the views of the MetLife board of directors with respect to the tender offer and the merger or the consideration to be paid in the tender offer and the merger. The following is a summary of the material financial analyses performed by Credit Suisse First Boston in arriving at its oral opinion delivered on March 8, 2000 and its written opinion dated March 8, 2000, but does not purport to be a complete description of the analyses performed by Credit Suisse First Boston for such purposes. Each valuation analysis performed by Credit Suisse First Boston described below assumed that the investment management responsibility over the general account assets of General American Life Insurance and its insurance subsidiaries (except for certain assets) would be transferred from Conning's asset management subsidiary, Conning Asset Management Company, to MetLife, as well as the possible loss of investment management responsibility over additional assets, resulting in both a loss of service fee revenue and an expense saving to Conning. Specifically, each of the discounted cash flow analysis, the comparable companies analysis and the comparable acquisitions analysis performed by Credit Suisse First Boston assumed, based on information provided by MetLife and Conning management, that Conning would lose annual revenue of approximately $7.9 million and would achieve an annual expense savings of approximately $1.9 million as a result of the transfer of approximately $7.7 billion of assets under management, which would result in a $6.0 million decrease to Conning's pre-tax income. DISCOUNTED CASH FLOW ANALYSIS. Based upon assumptions and five-year projections provided by MetLife and, with respect to certain information, Conning, Credit Suisse First Boston performed a discounted free cash flow analysis employing discount rates ranging from 13% to 15% and terminal-value multiples of fifth-year projected earnings before interest, taxes, depreciation and amortization ("EBITDA"), ranging from 7.0x to 9.0x. In addition, Credit Suisse First Boston assumed 0% growth in 2000 revenue from Conning's annualized fourth-quarter 1999 revenue and applied an 8.5% annual growth rate thereafter. Credit Suisse First Boston also assumed that Conning Capital Partners VI, L.P., a private 14 20 equity fund described in Section 8 below, raises a total of $200 million. This analysis indicated an implied valuation range for the Conning shares of approximately $10.92 to $13.38 per share. COMPARABLE COMPANIES ANALYSIS. Credit Suisse First Boston compared financial and operating data of Conning with corresponding data of selected publicly traded companies in the asset management industry (the "Comparable Companies"), with particular emphasis on asset managers with a substantial fixed income asset management business, including BlackRock, Inc. and Federated Investors, Inc. Credit Suisse First Boston reviewed the enterprise values, calculated as equity market value, plus total debt, preferred stock and minority interests, less excess cash, and the equity values, of the Comparable Companies as multiples of 1999 net income, 1999 EBITDA and 2000 estimated net income. Estimated financial data for the Comparable Companies were based on publicly available research analysts' consensus estimates provided by First Call Corporation. All multiples were based on closing stock prices on March 7, 2000. Credit Suisse First Boston then applied a range of selected multiples derived from the Comparable Companies data to adjusted 1999 net income, 2000 estimated net income and adjusted 1999 EBITDA of Conning, as adjusted for the assumed loss to Conning of the investment management responsibility over the general account assets of General American Life Insurance and its insurance subsidiaries (except for certain assets) and certain other assets and cost savings, as discussed above. Based on the Comparable Companies data, Credit Suisse First Boston selected a relevant multiple range of 12.0x to 14.0x adjusted 1999 net income, 10.0 to 12.0x 2000 estimated net income and 8.0x to 8.7x adjusted 1999 EBITDA. This analysis indicated an implied valuation range for the Conning shares of approximately $8.45 to $9.86 per share. COMPARABLE ACQUISITIONS ANALYSIS. Using publicly available information, Credit Suisse First Boston analyzed recent acquisitions in the asset management industry (the "Comparable Acquisitions"), and calculated the implied multiples of selected financial data for such acquisitions. In its analysis, Credit Suisse First Boston reviewed information relating to acquisitions of U.S. asset managers since 1997 involving consideration of approximately $100 million to $300 million, giving particular emphasis to the following acquisitions:
ACQUIROR TARGET - -------- ------ Affiliated Managers Group, Inc. Frontier Capital Management Co., Inc. ReliaStar Financial Group Pilgrim Capital Corporation Affiliated Managers Group, Inc. Tweedy, Brown Company LLC
Credit Suisse First Boston's comparable acquisition analysis indicated a 1999 EBITDA multiple range of 9.5x to 11.0x. Credit Suisse First Boston then applied a range of this multiple to Conning's adjusted 1999 EBITDA as adjusted for the assumed loss to Conning of the investment management responsibility over the general account assets of General American Life Insurance and its insurance subsidiaries (except for certain assets) and certain other assets and cost savings, as discussed above. This analysis indicated an implied valuation range for the Conning shares of approximately $11.27 to $12.68 per share. MERGER CONSEQUENCE ANALYSIS. Credit Suisse First Boston performed a merger consequence analysis to assess the impact of the tender offer and the merger on MetLife's estimated earnings per share in the calendar years 2000, 2001 and 2002 after taking into account the impact of the transfer of the investment advisory responsibility for the general account assets of General American Life Insurance and its insurance subsidiaries from Conning to MetLife, as well as Conning's possible loss of investment advisory responsibility for additional assets. This analysis indicated that the merger would be approximately break-even to MetLife's earnings per share in 2000 and modestly accretive in 2001 and 2002. The actual results achieved by MetLife following the merger may vary from projected results and the variations may be material. OTHER FACTORS. In the course of preparing its opinion, Credit Suisse First Boston considered other information and data, including the premiums implied by the consideration payable in the tender offer and the merger relative to historical stock prices for the Conning shares, which indicated that the $12.50 per share to be paid in the tender offer and merger represented a 45% premium over the December 17, 1999 15 21 per share closing price (the closing price one month prior to the public announcement of MetLife's initial proposal) and a 31% premium over the January 14, 2000 per share closing price (the closing price on the last full trading day prior to the public announcement of MetLife's initial proposal). Credit Suisse First Boston was selected by MetLife as its financial advisor based on its experience and familiarity with MetLife and its business. Credit Suisse First Boston is an internationally recognized investment banking firm and is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. Pursuant to the terms of Credit Suisse First Boston's engagement, MetLife has agreed to pay Credit Suisse First Boston a customary transaction fee upon completion of the tender offer and the merger. MetLife has also agreed to reimburse Credit Suisse First Boston for all out-of-pocket expenses, including the fees and expenses of legal counsel and any other advisor retained by Credit Suisse First Boston, and to indemnify Credit Suisse First Boston and its affiliates and related persons against certain expenses and liabilities, including liabilities under the federal securities laws, arising in connection with its engagement. In the past, Credit Suisse First Boston and its affiliates have provided and are currently providing certain investment banking services to MetLife unrelated to the proposed tender offer and the merger, including acting as financial advisor in MetLife's proposed demutualization and joint-lead underwriter in the proposed related initial public offering of MetLife, Inc., and have received and expect to receive customary fees for such services. In connection with MetLife, Inc.'s proposed initial public offering, Credit Suisse Group, the ultimate parent of Credit Suisse First Boston, has agreed in principle that it or its affiliates will purchase, at the initial public offering price, in a private placement from MetLife, Inc., common stock which could represent approximately 4.9% of the total number of shares of MetLife, Inc. common stock outstanding upon consummation of the initial public offering and the private placements. In addition, the Vice Chairman of MetLife is a member of the board of directors of Credit Suisse Group, the ultimate parent of Credit Suisse First Boston, and an officer of MetLife is a member of the investment committee of Credit Suisse First Boston International Equity Partners, L.P., an affiliate of Credit Suisse First Boston. MetLife is also a limited partner of certain limited partnerships affiliated with Credit Suisse First Boston. In the ordinary course of its business, Credit Suisse First Boston and its affiliates may actively trade the debt and equity securities of MetLife (or its affiliates) and Conning for their own accounts and for the accounts of customers and, accordingly, may at any time hold long or short positions in such securities. The full text of Credit Suisse First Boston's written opinion dated March 8, 2000 to the MetLife board of directors has been filed as Exhibit (c)(2) to the Schedule TO filed with the SEC with respect to the tender offer and may be inspected and copied from the SEC in the manner specified in Section 7. V. INTERESTS OF CERTAIN PERSONS INITIAL PUBLIC OFFERING OF METLIFE, INC. COMMON STOCK. One of Conning's subsidiaries, Conning & Company, will act as a junior co-manager in the proposed initial public offering of MetLife, Inc. common stock. The extent of Conning & Company's participation in the offering has not yet been determined. OPTION HOLDERS AND REPLACEMENT AWARDS. Prior to the completion of the tender offer, the Conning board of directors (or, if appropriate, any committee thereof) will take all actions necessary to provide for the cancellation, at the Effective Time, of all outstanding stock options (the "Stock Options"), that have been granted under any stock option or similar plan or agreement of Conning (the "Stock Plans"). Conning will also take all actions necessary to provide, as of the Effective Time, (a) for the termination of all Stock Plans, and (b) the deletion of any provisions in any other plan, program or arrangement that provides for the issuance or grant of any other interest in the capital stock of Conning or any of its subsidiaries. In connection with the cancellation of the Stock Options, holders of Stock Options will receive replacement awards that will be substituted for the Stock Options. Under the replacement award program, 16 22 all employees that hold Stock Options as of the Effective Time will receive either (a) a cash payment equal to the product of (1) the total number of Conning shares subject to such Stock Option and (2) the excess of $12.50 over the per share exercise price of the Stock Option; or (b) a deferred payment. In the case of non-qualified options, the deferred payment will be equal to the present value of the Stock Options, calculated using a Black-Scholes formula. In the case of incentive stock options, the deferred payment will equal the greater of (a) the Black-Scholes value of the Stock Options and (b) the excess of $12.50 over the per share exercise price of the Stock Option, plus an additional payment representing the value of the loss of the favorable tax treatment of incentive stock options calculated based on such excess. All deferred awards will bear interest. The replacement award program is subject to change, provided that the program remains consistent with its current terms or with any amendment to which Conning, MetLife and Purchaser mutually agree. EMPLOYMENT AGREEMENT. Paul Kopsky was recently appointed Chief Financial Officer, effective March 16, 2000, replacing Fred M. Schpero, who resigned. In connection with Mr. Kopsky's appointment, Mr. Kopsky and Conning, with MetLife's consent (as is required by the merger agreement), reached an oral understanding that Mr. Kopsky and Conning would enter into an employment agreement providing, among other customary points, for a retention bonus. The aggregate value of the annual salary, incentive bonus and retention bonus proposed to be offered in the definitive agreement to Mr. Kopsky for each of two years will equal at least $475,000 per year. TRANSITIONAL RETENTION BONUS PROGRAM. Prior to the execution of the merger agreement, Conning adopted a transitional retention bonus program for certain selected employees at a cost of approximately $2.3 million. Recently, in consultation with MetLife, a proposal was made to expand the program to include other employees (including certain executive officers). This proposal is subject to the approval of the Conning board of directors and, under the terms of the merger agreement, the consent of MetLife. Conning estimates that the total cost for the entire program, including both the program adopted prior to the execution of the merger agreement and the expanded program, will be approximately $10 million to $13 million. SEVERANCE PLAN. In February 2000, Conning adopted a severance plan covering all Conning employees, including executive officers. The severance plan provides for compensation to any employee (a) whose job is eliminated or significantly altered (as described in the plan) or (b) who does not accept a requested transfer to a location more than a specified distance from the previous location if the position at the previous location becomes unavailable. The plan provides for payments to eligible employees equal to the greater of (a) one week of base salary per year of service with a minimum of 10 weeks or (b) a number of weeks of base salary according to the employee's job classification up to a maximum of 52 weeks. The severance plan is subject to amendment or termination by Conning at any time. 17 23 BENEFICIAL OWNERSHIP OF SHARES. The following table sets forth information, as of March 16, 2000, regarding the ownership of Conning shares by each person known by Conning to be the beneficial owner of more than 5% of the outstanding Conning shares, and any director or executive officer of MetLife, Purchaser, Conning or any of their affiliates who is the beneficial owner of Conning shares or options to purchase Conning shares. Except as indicated below, the directors and executive officers of MetLife, Purchaser, Conning and their affiliates do not own any Conning shares or options to purchase Conning shares:
AMOUNT AND NATURE OF PERCENT OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS ---------------- ----------------------- ---------- GREATER THAN 5% STOCKHOLDER: MetLife..................................................... 8,304,995(2) 60.4% DIRECTORS AND OFFICERS OF CONNING: Arthur C. Reeds, III, Chairman.................................................. 1,334(3) * James L. Lipscomb, President and Chief Executive Officer..................... -- -- John B. Clinton, Executive Vice President.................................. 138,070(4) 1.0% Michael D. McLellan, Executive Vice President.................................. 128,510(5) * Thomas D. Sargent, Executive Vice President.................................. 78,444(6) * Paul W. Kopsky, Jr., Chief Financial Officer................................... 4,106(7) * John A. Fibiger, Director.................................................. 3,001(8) * Richard A. Liddy, Director.................................................. 57,500(9) * All Conning directors and executive officers as a group (8 410,965(10) 2.9% persons)..................................................
- ------------------------ * Represents less than one percent. (1) Unless otherwise noted, each person has sole voting and investment power with respect to all Conning shares listed opposite such person's name. Conning shares issuable upon exercise of a person's exercisable Stock Options are deemed to be outstanding for purposes of calculating such person's percentage ownership. (2) Conning shares directly owned by GenAm Holding. (3) Includes 1,000 Conning shares held in a joint account with Mr. Reeds' wife, an account over which he has shared voting and investment power, and 334 Conning shares subject to Stock Options that are exercisable within 60 days. On March 9, Mr. Reeds resigned from his positions as President and Chief Executive Officer. He remained on the Conning board of directors. (4) Includes 25,840 Conning shares subject to Stock Options that are exercisable within 60 days and 1,953 restricted Conning shares that are subject to forfeiture in accordance with the terms of the specific grant (as to which Mr. Clinton has no investment power). (5) Includes 105,068 Conning shares subject to Stock Options that are exercisable within 60 days and 3,242 restricted Conning shares that are subject to forfeiture in accordance with the terms of the specific grant (as to which Mr. McLellan has no investment power). (6) Includes 25,840 Conning shares subject to Stock Options that are exercisable within 60 days and 2,188 restricted Conning shares that are subject to forfeiture in accordance with the terms of the specific grant (as to which Mr. Sargent has no investment power). (7) Includes 1,000 Conning shares subject to Stock Options that are exercisable within 60 days and 2,031 restricted Conning shares that are subject to forfeiture in accordance with the terms of the 18 24 specific grant (as to which Mr. Kopsky has no investment power) and 100 shares owned by Mr. Kopsky's children. (8) Includes 1,001 Conning shares subject to Stock Options that are exercisable within 60 days. (9) Includes 15,000 Conning shares subject to Stock Options that are exercisable within 60 days and 42,500 Conning shares held in a joint account with Mr. Liddy's wife, an account over which he has shared voting and investment power. Mr. Liddy is a member of the Executive Committee of MetLife and disclaims beneficial ownership of the Conning shares beneficially owned by MetLife. (10) Includes 173,749 Conning shares subject to Stock Options that are exercisable within 60 days and 9,414 restricted Conning shares that are subject to forfeiture in accordance with the terms of the specific grants (as to which the individuals have no investment power), but does not include the Conning shares held by Donald L. McDonald, who resigned from his position as Executive Vice President effective March 14, 2000, or the Conning shares held by Fred M. Schpero, who resigned from his position as Chief Financial Officer effective March 15, 2000. 19 25 THE TENDER OFFER AND THE MERGER 1. TERMS OF THE TENDER OFFER Upon the terms and subject to the conditions of the tender offer (including, if the tender offer is extended or amended, the terms and conditions of any extension or amendment), we will purchase all Conning shares validly tendered and not withdrawn in accordance with the procedures set forth in Section 4 on or prior to the Expiration Date. The term "Expiration Date" means 12:00 midnight, New York City time, on Monday, April 17, 2000, unless we extend the period of time for which the initial offering period of the tender offer is open, in which case the term "Expiration Date" will mean the time and date at which the initial offering period of the tender offer, as so extended, will expire. Upon the terms and subject to the conditions of the tender offer, including the Minimum Condition, we will purchase, as soon as permitted under the terms of the tender offer, all Conning shares validly tendered and not withdrawn prior to the Expiration Date, including such Conning shares held by officers and directors of Conning. If, at the Expiration Date the conditions to the tender offer described in Section 12 have not been satisfied or earlier waived, then we may, in our sole discretion, extend the Expiration Date for an additional period or periods of time by giving oral or written notice of the extension to the Depositary and by publicly announcing the new Expiration Date. During any extension of the initial offering period (as opposed to the subsequent offering period), all Conning shares previously tendered and not withdrawn will remain subject to the tender offer and subject to your right to withdraw. See Section 4. Subject to the applicable regulations of the Securities and Exchange Commission and the terms of the merger agreement, we also reserve the right, in our sole discretion, at any time or from time to time, to (a) terminate the tender offer (whether or not any Conning shares have previously been purchased pursuant to the tender offer) if any condition referred to in Section 12 has not been satisfied or earlier waived or upon the occurrence of any event specified in Section 12; and (b) waive any condition or (except as set forth in the merger agreement as summarized below) otherwise amend the tender offer in any respect, in each case, by giving oral or written notice of the termination, waiver or amendment to the Depositary and, other than, in the case of any waiver, by making a public announcement thereof. We acknowledge that (a) Rule 14e-1(c) under the Securities Exchange Act requires us to pay the consideration offered or return the Conning shares tendered promptly after the termination of the tender offer and (b) we may not delay purchase of, or payment for, any Conning shares upon the occurrence of any event specified in Section 12 without extending the period of time during which the tender offer is open. The rights we reserve in the preceding paragraph are in addition to our rights pursuant to Section 12. Any extension, termination or amendment of the tender offer will be followed as promptly as practicable by a public announcement. An announcement in the case of an extension will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which we may choose to make any public announcement, subject to applicable law (including those rules under the Securities Exchange Act that require that material changes be promptly disseminated to holders of Conning shares), we will have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a release to the Dow Jones News Service. Under the merger agreement, without the prior written consent of the Conning special committee and the Conning board of directors, we will not (a) impose additional conditions to the tender offer, (b) amend the existing conditions to the tender offer or any other term of the tender offer in a manner adverse to Conning stockholders, (c) decrease the number of Conning shares subject to the tender offer, (d) reduce the price per Conning share, (e) change the form of consideration payable in the tender offer, or (f) extend the Expiration Date, except as permitted in the merger agreement. If we make a material change in the terms of the tender offer, or if we waive a material condition to the tender offer, we will extend the tender offer and disseminate additional tender offer materials to the extent required by Rules 14d-4(d), 14d-6(c) and 14e-1 under the Securities Exchange Act. The minimum 20 26 period during which a tender offer must remain open following material changes in the terms of the offer, other than a change in price or a change in percentage of securities sought, depends upon the facts and circumstances, including the materiality of the changes. In the SEC's view, a tender offer should remain open for a minimum of five business days from the date the material change is first published, sent or given to stockholders, and, if material changes are made with respect to information that approaches the significance of price and the percentage of securities sought, a minimum of ten business days may be required to allow for adequate dissemination and investor response. With respect to a change in price, a minimum ten-business-day period from the date of the change is generally required to allow for adequate dissemination to stockholders. Accordingly, if, prior to the Expiration Date, we decrease the number of Conning shares being sought, or increase or decrease the consideration offered pursuant to the tender offer, and if the tender offer is scheduled to expire at any time earlier than the period ending on the tenth business day from the date that notice of the increase or decrease is first published, sent or given to holders of Conning shares, we will extend the tender offer at least until the expiration of such period of ten business days. For purposes of the tender offer, a "business day" means any day other than a Saturday, Sunday or a United States federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time. THE TENDER OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OF THE MINIMUM CONDITION. Consummation of the tender offer is subject to the conditions set forth in Section 12. We reserve the right, in accordance with applicable rules and regulations of the SEC, to waive any or all of those conditions. If, by the Expiration Date, any or all of those conditions have not been satisfied, we may, in the exercise of our good faith judgment, elect to (a) extend the tender offer, and, subject to applicable withdrawal rights, retain all tendered Conning shares until the expiration of the tender offer, as extended, subject to the terms of the tender offer and the merger agreement; (b) waive all of the unsatisfied conditions, and, subject to complying with applicable rules and regulations of the SEC, accept for payment all Conning shares so tendered; or (c) terminate the tender offer and not accept for payment any Conning shares and return all tendered Conning shares to tendering Conning stockholders. In the event that we waive any condition set forth in Section 12, the SEC may, if the waiver is deemed to constitute a material change to the information previously provided to the Conning stockholders, require that the tender offer remain open for an additional period of time or that we disseminate information concerning such waiver. Conning has provided us with its stockholder lists and security position listings for the purpose of disseminating the tender offer to holders of Conning shares. We will mail this offer to purchase, the related letter of transmittal and other relevant materials to record holders of Conning shares, and we will furnish the materials to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the securityholder lists or, if applicable, that are listed as participants in a clearing agency's security position listing, for forwarding to beneficial owners of Conning shares. SUBSEQUENT OFFERING PERIOD. We reserve the right, in accordance with the merger agreement and the rules and regulations of the SEC, to provide a subsequent offering period of three business days to 20 business days after the expiration of the initial offering period and our purchase of Conning shares tendered. A subsequent offering period would give Conning stockholders who do not tender in the initial offering period another opportunity to tender their Conning shares and receive the same tender offer price. If we elect to provide a subsequent offering period, we will disseminate additional tender offer materials, if necessary. During the subsequent offering period, Conning stockholders will not have the right to withdraw Conning shares previously tendered or tendered during the subsequent offering period. We expect to make the subsequent offering period available to Conning stockholders unless there are validly tendered and not properly withdrawn enough Conning shares so that, including the Conning shares we already own, we would have control over 90% of the outstanding Conning shares, in which case the merger will be completed as soon as possible and without a vote of Conning stockholders. Conning stockholders who had not previously tendered their shares will receive the same price per share upon completion of the merger. 21 27 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR CONNING SHARES Upon the terms and subject to the conditions of the tender offer (including, if we extend or amend the tender offer, the terms and conditions of the tender offer as so extended or amended), we will purchase, by accepting for payment, and will pay for, all Conning shares validly tendered and not withdrawn (as permitted by Section 4) prior to the Expiration Date promptly after the later of (a) the Expiration Date and (b) the satisfaction or waiver of the conditions to the tender offer set forth in Section 12. In addition, subject to applicable rules of the SEC, we reserve the right to delay acceptance for payment of, or payment for, Conning shares pending receipt of any governmental approvals set forth in Section 13. For information with respect to approvals that we are required to obtain prior to the completion of the tender offer, see Section 13. In all cases, we will pay for Conning shares purchased in the tender offer, including during the subsequent offering period, only after timely receipt by the Depositary of (a) certificates representing the Conning shares ("Conning Certificates") or timely confirmation (a "Book-Entry Confirmation") of the book-entry transfer of the Conning shares into the Depositary's account at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in Section 3; (b) the appropriate letter of transmittal (or a facsimile), properly completed and duly executed, with any required signature guarantees or an Agent's Message (as defined below) in connection with a book-entry transfer; and (c) any other documents that the letter of transmittal requires. The term "Agent's Message" means a message transmitted by the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Conning shares that are the subject of the Book-Entry Confirmation that the participant has received and agrees to be bound by the terms of the letter of transmittal and that we may enforce that agreement against the participant. For purposes of the tender offer, we will be deemed to have accepted for payment, and purchased, Conning shares validly tendered and not withdrawn as, if and when we give oral or written notice to the Depositary of our acceptance of the Conning shares for payment pursuant to the tender offer. In all cases, upon the terms and subject to the conditions of the tender offer, payment for Conning shares purchased pursuant to the tender offer, including during any subsequent offering period, will be made by deposit of the purchase price for the Conning shares with the Depositary, which will act as agent for tendering Conning stockholders for the purpose of receiving payment from us and transmitting payment to validly tendering Conning stockholders. UNDER NO CIRCUMSTANCES WILL WE PAY INTEREST ON THE PURCHASE PRICE FOR CONNING SHARES, EXCEPT AS MAY BE REQUIRED BY APPLICABLE LAW. If we do not purchase any tendered Conning shares pursuant to the tender offer for any reason, or if you submit Conning Certificates representing more Conning shares than you wish to tender, we will return Conning Certificates representing unpurchased or untendered Conning shares, without expense to you (or, in the case of Conning shares delivered by book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility pursuant to the procedures set forth in Section 3, the Conning shares will be credited to an account maintained within the Book-Entry Transfer Facility), as promptly as practicable following the expiration, termination or withdrawal of the tender offer. IF, PRIOR TO THE EXPIRATION DATE, WE INCREASE THE PRICE OFFERED TO HOLDERS OF CONNING SHARES IN THE TENDER OFFER, WE WILL PAY THE INCREASED PRICE TO ALL HOLDERS OF CONNING SHARES THAT WE PURCHASE IN THE TENDER OFFER, WHETHER OR NOT THE CONNING SHARES WERE TENDERED BEFORE THE INCREASE IN PRICE. We reserve the right, subject to the provisions of the merger agreement, to transfer or assign, in whole or from time to time in part, to one or more of our subsidiaries or affiliates the right to purchase all or any portion of the Conning shares tendered in the tender offer, but any such transfer or assignment will not 22 28 relieve us of our obligations under the tender offer or prejudice your rights to receive payment for Conning shares validly tendered and accepted for payment in the tender offer. 3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES VALID TENDER OF CONNING SHARES. Except as set forth below, in order for you to tender Conning shares in the tender offer, the Depositary must receive the letter of transmittal (or a facsimile thereof), properly completed and signed, together with any required signature guarantees or an Agent's Message in connection with a book-entry delivery of Conning shares and any other documents that the letter of transmittal requires at one of its addresses set forth on the back cover of this tender offer to Purchase on or prior to the Expiration Date, and either (a) you must deliver Conning Certificates representing tendered Conning shares to the Depositary or you must cause your Conning shares to be tendered pursuant to the procedure for book-entry transfer set forth below and the Depositary must receive Book-Entry Confirmation, in each case, on or prior to the Expiration Date, or (b) you must comply with the guaranteed delivery procedures set forth below. THE METHOD OF DELIVERY OF CONNING CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT YOUR OPTION AND SOLE RISK, AND DELIVERY WILL BE CONSIDERED MADE ONLY WHEN THE DEPOSITARY ACTUALLY RECEIVES THE CONNING CERTIFICATES. IF DELIVERY IS BY MAIL, WE RECOMMEND USING REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ENSURE TIMELY DELIVERY. BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect to the Conning shares at the Book-Entry Transfer Facility for purposes of the tender offer within two business days after the date of this offer to purchase. Any financial institution that is a participant in the system of the Book-Entry Transfer Facility may make book-entry delivery of Conning shares by causing the Book-Entry Transfer Facility to transfer the Conning shares into the Depositary's account at the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility's procedures. However, although Conning shares may be delivered through book-entry transfer into the Depositary's account at a Book-Entry Transfer Facility, the Depositary must receive the letter of transmittal (or facsimile thereof), properly completed and signed, with any required signature guarantees, or an Agent's Message in connection with a book-entry transfer, and any other required documents, at one of its addresses set forth on the back cover of this offer to purchase on or before the Expiration Date, or you must comply with the guaranteed delivery procedure set forth below. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. SIGNATURE GUARANTEES. A bank, broker, dealer, credit union, savings association or other entity that is a member in good standing of the Securities Transfer Agents Medallion Program (an "Eligible Institution") must guarantee signatures on all letters of transmittal, unless the Conning shares tendered are tendered (a) by a registered holder of Conning shares that has not completed either the box labeled "Special Payment Instructions" or the box labeled "Special Delivery Instructions" on the letter of transmittal or (b) for the account of an Eligible Institution. See Instruction 1 of the letter of transmittal. If the Conning Certificates are registered in the name of a person other than the signer of the letter of transmittal, or if payment is to be made to, or Conning Certificates for unpurchased Conning shares are to be issued or returned to, a person other than the registered holder, then the tendered Conning Certificates must be endorsed or accompanied by appropriate stock powers, signed exactly as the name or names of the registered holder or holders appear on the Conning Certificates, with the signatures on the Conning Certificates or stock powers guaranteed by an Eligible Institution as provided in the letter of transmittal. See Instructions 1 and 5 of the letter of transmittal. If the Conning Certificates are forwarded separately to the Depositary, a properly completed and duly executed letter of transmittal (or manually signed facsimile) must accompany each delivery of Conning Certificates. 23 29 GUARANTEED DELIVERY. If you want to tender Conning shares in the tender offer and your Conning Certificates are not immediately available or time will not permit all required documents to reach the Depositary on or before the Expiration Date or the procedures for book-entry transfer cannot be completed on time, your Conning shares may nevertheless be tendered if you comply with all of the following guaranteed delivery procedures: - your tender is made by or through an Eligible Institution; - the Depositary receives, as described below, a properly completed and signed Notice of Guaranteed Delivery, substantially in the form made available by us, on or before the Expiration Date; and - the Depositary receives the Conning Certificates (or a Book-Entry Confirmation) representing all tendered Conning shares, in proper form for transfer together with a properly completed and duly executed letter of transmittal (or manually signed facsimile), with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message) and any other documents required by the letter of transmittal within three trading days after the date of execution of the Notice of Guaranteed Delivery. You may deliver the Notice of Guaranteed Delivery by hand or mail or transmitted by facsimile transmission to the Depositary. The Notice of Guaranteed Delivery must include a guarantee by an Eligible Institution in the form set forth in the Notice of Guaranteed Delivery and a representation that you own the Conning shares being tendered within the meaning of Rule 14e-4 under the Securities Exchange Act. Guaranteed delivery procedures are not available in the subsequent offering period. Notwithstanding any other provision of the tender offer, we will pay for Conning shares only after timely receipt by the Depositary of Conning Certificates for, or, of Book-Entry Confirmation with respect to, the Conning shares, a properly completed and duly executed letter of transmittal (or facsimile thereof), together with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message) and any other documents required by the appropriate letter of transmittal. Accordingly, payment might not be made to all tendering stockholders at the same time and will depend upon when the Depositary receives Conning Certificates or Book-Entry Confirmation that the Conning shares have been transferred into the Depositary's account at a Book-Entry Transfer Facility. BACKUP UNITED STATES FEDERAL INCOME TAX WITHHOLDING. Under the backup United States federal income tax withholding laws applicable to certain stockholders (other than certain exempt stockholders, including, among others, all corporations and certain foreign individuals), the Depositary may be required to withhold 31% of the amount of any payments made to those stockholders pursuant to the tender offer or the merger. To prevent backup United States federal income tax withholding, you must provide the Depositary with your correct taxpayer identification number and certify that you are not subject to backup United States federal income tax withholding by completing the Substitute Form W-9 included in the letter of transmittal. Non-United States holders must submit a completed Form W-8 or Form W-8 BEN to qualify as an exempt recipient. These forms may be obtained from the Depositary. See Instruction 9 of the letter of transmittal. APPOINTMENT AS PROXY. By executing the letter of transmittal, you irrevocably appoint our designees, and each of them, as your agents, attorneys-in-fact and proxies, with full power of substitution, in the manner set forth in the letter of transmittal, to the full extent of your rights with respect to the Conning shares that you tender and that we accept for payment and with respect to any and all other Conning shares and other securities or rights issued or issuable in respect of those Conning shares on or after the date of this offer to purchase. All such powers of attorney and proxies will be considered irrevocable and coupled with an interest in the tendered Conning shares. This appointment will be effective when we accept your Conning shares for payment in accordance with the terms of the tender offer. Upon such acceptance for payment, all other powers of attorney and proxies given by you with respect to your Conning shares and such other securities or rights prior to such payment will be revoked, without further action, and no subsequent powers of attorney and proxies may be given by you (and, if given, will not be deemed effective). Our designees will, with respect to the Conning shares and such other securities and 24 30 rights for which the appointment is effective, be empowered to exercise all your voting and other rights as they, in their sole discretion, may deem proper at any annual or special meeting of Conning stockholders, or any adjournment or postponement thereof, or by consent in lieu of any such meeting or otherwise. In order for Conning shares to be deemed validly tendered, immediately upon the acceptance for payment of such Conning shares, we or our designee must be able to exercise full voting rights with respect to such Conning shares and other securities, including voting at any meeting of Conning stockholders. DETERMINATION OF VALIDITY. All questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of Conning shares will be determined by us, in our sole discretion, which determination will be final and binding on all parties. We reserve the absolute right to reject any or all tenders determined by us not to be in proper form or the acceptance of or payment for which may, in the opinion of our counsel, be unlawful. We also reserve the absolute right to waive any of the conditions of the tender offer or any defect or irregularity in any tender of Conning shares of any particular Conning stockholder, whether or not similar defects or irregularities are waived in the case of other Conning stockholders. No tender of Conning shares will be deemed to have been validly made until all defects and irregularities with respect to the tender have been cured or waived by us. None of MetLife, Purchaser or any of their respective affiliates or assigns, the Dealer Manager, the Depositary, the Information Agent or any other individual or entity will be under any duty to give any notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Our acceptance for payment of Conning shares tendered pursuant to any of the procedures described above will constitute a binding agreement between us and you upon the terms and subject to the conditions of the tender offer. 4. WITHDRAWAL RIGHTS Except as described in this Section 4, tenders of Conning shares made in the tender offer are irrevocable. You may withdraw Conning shares that you have previously tendered in the tender offer at any time on or before the Expiration Date, and, unless theretofore accepted for payment as provided herein, you may also withdraw Conning shares at any time after May 19, 2000; provided, however, you may not withdraw Conning shares during any subsequent offering period. If, for any reason, acceptance for payment of any Conning shares tendered in the tender offer is delayed, or we are unable to accept for payment or pay for Conning shares tendered in the tender offer, then, without prejudice to our rights set forth in this document, the Depositary may, nevertheless, on our behalf, retain Conning shares that you have tendered, and you may not withdraw your Conning shares, except to the extent that you are entitled to and duly exercise withdrawal rights as described in this Section 4. Any such delay will be by an extension of the tender offer to the extent required by law. In order for your withdrawal to be effective, you must timely deliver a written or facsimile transmission notice of withdrawal to the Depositary at one of its addresses set forth on the back cover of this offer to purchase. Any such notice of withdrawal must specify your name, the number of Conning shares that you want to withdraw, and (if Conning Certificates have been tendered) the name of the registered holder of the Conning shares as shown on the Conning share Certificate if different from your name. If Conning Certificates have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such Conning Certificates, you must submit the serial numbers shown on the particular Conning Certificates evidencing the Conning shares to be withdrawn and an Eligible Institution must guarantee the signature on the notice of withdrawal, except in the case of Conning shares tendered for the account of an Eligible Institution. If Conning shares have been tendered pursuant to the procedures for book-entry transfer set forth in Section 3, the notice of withdrawal must specify the name and number of the account at the appropriate Book-Entry Transfer Facility to be credited with the withdrawn Conning shares, in which case a notice of withdrawal will be effective if delivered to the Depositary by any method of delivery described in the first sentence of this paragraph. You may not rescind a withdrawal of Conning shares. Any Conning shares that you withdraw will be considered not validly tendered for purposes of the 25 31 tender offer, but you may tender your Conning shares again at any time before the Expiration Date by following any of the procedures described in Section 3. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by us, in our sole discretion, which determination will be final and binding. None of MetLife, Purchaser, Conning or any of their respective affiliates or assigns, the Dealer Manager, the Depositary, the Information Agent or any other individual or entity will be under any duty to give any notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. 5. PRICE RANGE OF THE SHARES; DIVIDENDS According to Conning's Form 10-K for the fiscal year ending December 31, 1999, Conning shares are traded on the Nasdaq National Market (the "NASDAQ") under the symbol "CNNG." The following table sets forth, for the periods indicated, the reported high and low sale prices for the Conning shares on the NASDAQ and dividends paid, as reported by published financial sources. CONNING CORPORATION
HIGH LOW DIVIDENDS ----- ----- --------- FISCAL 1998 First Quarter........................................... 21.75 16.00 .04 Second Quarter.......................................... 22.50 18.25 .04 Third Quarter........................................... 20.88 12.13 .04 Fourth Quarter.......................................... 20.75 10.63 .04 FISCAL 1999 First Quarter........................................... 21.00 13.50 .05 Second Quarter.......................................... 21.00 13.50 .05 Third Quarter........................................... 18.75 9.25 .05 Fourth Quarter.......................................... 11.75 6.75 .05 FISCAL 2000 First Quarter (through March 17, 2000).................. 13.25 7.88 .05
Under the terms of the merger agreement, Conning is not permitted to declare or pay dividends (other than regularly scheduled dividends) with respect to the Conning shares without the prior written consent of MetLife. The average of the closing prices on the NASDAQ for the Conning shares over the 20 last full days of trading before MetLife publicly announced the proposal on January 18, 2000 to acquire Conning was $8.68 per share. On January 14, 2000, the last full day of trading before MetLife announced the proposal to acquire Conning, the reported closing price on the NASDAQ for the Conning shares was $9.56 per share. On March 17, 2000, the last full day of trading prior to the commencement of the tender offer, the reported closing price on the NASDAQ for the Conning shares was $12.31 per share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE CONNING SHARES. 6. POSSIBLE EFFECTS OF THE TENDER OFFER ON THE MARKET FOR THE CONNING SHARES; STOCK QUOTATION; SECURITIES EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS If there are validly tendered and not properly withdrawn enough Conning shares so that, including the Conning shares we already own, we would have control over 90% of the outstanding Conning shares, we will complete the merger as soon as possible after the expiration of the tender offer (including any subsequent offering period) and without a vote of the stockholders of Conning. Conning stockholders who had not previously tendered their shares will receive the same price per share upon completion of the 26 32 merger. If, however, we acquire less than the number of Conning shares necessary to give us control over 90% of the outstanding Conning shares, Conning would have to hold a meeting of Conning stockholders to vote on the approval of the merger agreement before we could complete the merger. Until we complete the merger, our purchase of Conning shares pursuant to the tender offer could have the following effects. THE MARKET FOR CONNING SHARES. The purchase of Conning shares pursuant to the tender offer will reduce the number of Conning shares that might otherwise trade publicly and could adversely affect the liquidity and market value of the remaining Conning shares held by the public. The purchase of Conning shares pursuant to the tender offer can also be expected to reduce the number of holders of Conning shares. We cannot predict whether the reduction in the number of Conning shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for or marketability of the Conning shares or whether it would cause future market prices to be greater or less than the tender offer price. STOCK QUOTATION. Depending upon the number of Conning shares purchased pursuant to the tender offer, the Conning shares may no longer meet the requirements of The Nasdaq Stock Market, Inc. for continued inclusion in the NASDAQ, which require that an issuer have at least 200,000 publicly held shares, held by at least 400 stockholders or 300 stockholders of round lots, with a market value of at least $1,000,000, and have net tangible assets of at least $1,000,000, $2,000,000 or $4,000,000, depending on profitability levels during the issuer's four most recent fiscal years. If these standards are not met, the Conning shares might nevertheless continue to be included in the Nasdaq Stock Market with quotations published in its "additional list" or in one of the "local lists," but if the number of holders of the Conning shares were to fall below 300, or if the number of publicly held Conning shares were to fall below 100,000, or there were not at least two registered and active market makers for the Conning shares, the rules of The Nasdaq Stock Market, Inc. provide that the Conning shares would no longer be "qualified" for Nasdaq Stock Market reporting and the Nasdaq Stock Market would cease to provide any quotations. Conning shares held directly or indirectly by directors, officers or beneficial owners of more than 10% of the Conning shares are not considered as being publicly held for this purpose. According to Conning's representation in the merger agreement, as of March 3, 2000, there were 13,753,359 Conning shares outstanding. If, as a result of the purchase of Conning shares pursuant to the tender offer or otherwise, the Conning shares no longer meet the requirements for continued inclusion in any tier of the Nasdaq Stock Market and the Conning shares are no longer included in any tier of the Nasdaq Stock Market, the market for Conning shares could be adversely affected. In the event that the Conning shares no longer meet the requirements for continued inclusion in any tier of the Nasdaq Stock Market, it is possible that the Conning shares would continue to trade in the over-the-counter market and that price quotations would be reported by other sources. The extent of the public market for the Conning shares and the availability of such quotations would, however, depend upon the number of holders of Conning shares remaining at such time, the interest in maintaining a market in Conning shares on the part of securities firms, the possible termination of registration of the Conning shares under the Securities Exchange Act, as described below, and other factors. SECURITIES EXCHANGE ACT REGISTRATION. The Conning shares are currently registered under the Securities Exchange Act. The purchase of the Conning shares pursuant to the tender offer may result in the Conning shares becoming eligible for deregistration under the Securities Exchange Act. Registration of the Conning shares may be terminated upon application by Conning to the SEC if the Conning shares are not listed on a "national securities exchange" or the Nasdaq Stock Market and there are fewer than 300 record holders of Conning shares. Termination of registration of the Conning shares under the Securities Exchange Act would substantially reduce the information that Conning is required to furnish to its stockholders and the SEC and would make certain provisions of the Securities Exchange Act, such as the short-swing profit recovery provisions of Section 16(b) and the requirements of furnishing a proxy statement in connection with stockholders' meetings pursuant to Sections 14(a) or 14(c) and the related requirement of an annual report, no longer applicable to Conning. If the Conning shares are no longer registered under the Securities Exchange Act, the requirements of Rule 13e-3 under the Securities Exchange Act with respect to "going-private" transactions would no longer be applicable to Conning. In 27 33 addition, the ability of "affiliates" of Conning and persons holding "restricted securities" of Conning to dispose of such securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended, may be impaired or, with respect to certain persons, eliminated. If registration of the Conning shares under the Securities Exchange Act were terminated, the Conning shares would no longer be "margin securities" or eligible for stock exchange listing or reporting on the Nasdaq Stock Market. We believe that the purchase of the Conning shares pursuant to the tender offer may result in the Conning shares becoming eligible for deregistration under the Securities Exchange Act, and it would be our intention to cause Conning to make an application for termination of registration of the Conning shares as soon as possible after successful completion of the tender offer if the Conning shares are then eligible for such termination. If registration of the Conning shares is not terminated prior to the merger, then the registration of the Conning shares under the Securities Exchange Act and the quotation of the Conning shares on the NASDAQ will be terminated following the completion of the merger. MARGIN REGULATIONS. The Conning shares are currently "margin securities" under the regulations of the Board of Governors of the Federal Reserve System, which regulations have the effect, among other things, of allowing brokers to extend credit on the collateral of the Conning shares for the purpose of buying, carrying or trading in securities ("Purpose Loans"). Depending upon factors, such as the number of record holders of the Conning shares and the number and market value of publicly held Conning shares, following the purchase of Conning shares pursuant to the tender offer, the Conning shares might no longer constitute "margin securities" for purposes of the Federal Reserve Board's margin regulations and, therefore, could no longer be used as collateral for Purpose Loans made by brokers. In addition, if registration of the Conning shares under the Securities Exchange Act were terminated, the Conning shares would no longer constitute "margin securities." 7. INFORMATION CONCERNING CONNING According to Conning's Form 10-K for the fiscal year ending December 31, 1999, Conning's principal executive offices are located at 700 Market Street, St. Louis, Missouri 63101, and Conning's telephone number is (314) 444-0498. The following description of Conning and its business has been taken from Conning's Form 10-K for the fiscal year ended December 31, 1999, and is qualified in its entirety by reference to such report: Conning provides asset management services primarily to insurance companies and institutional investors, manages private equity funds investing in insurance and insurance-related companies, and conducts in-depth research on the insurance industry. The selected financial information of Conning and its consolidated subsidiaries set forth below has been excerpted and derived from Conning's Form 10-K for the fiscal year ending December 31, 1999 and from Conning's Form 10-Q for the period ending September 30, 1999. More comprehensive financial and other information is included in those reports (including management's discussion and analysis of financial condition and results of operations) and in other reports and documents filed by Conning with the SEC. The financial information set forth below is qualified in its entirety by reference to the reports and documents filed by Conning with the SEC and the financial statements and related notes that they contain. You can examine these reports and other documents and obtain copies of them in the manner set forth below. 28 34 BALANCE SHEET DATA
AS AT AS AT DECEMBER 31, 1999 DECEMBER 31, 1998 ----------------- ----------------- Current assets............................. $102,015,046 $71,556,346 Noncurrent assets.......................... 64,165,909 50,921,777 Current liabilities........................ 67,465,244 38,765,638 Noncurrent liabilities..................... 3,052,500 3,535,897 Book value per share -- basic.............. 6.96 6.05 Book value per share -- diluted............ 6.74 5.48
INCOME STATEMENT DATA
YEAR ENDED YEAR ENDED DECEMBER 31, 1999 DECEMBER 31, 1998 ----------------- ----------------- Income per common share from continuing operations -- basic...................... $1.66 $1.75 Income per common share from continuing operations -- diluted.................... 1.61 1.64 Net income per common share -- basic....... 0.99 1.00 Net income per common share -- diluted..... 0.95 0.93
Conning files annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information filed at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549, or at the SEC's public reference rooms in New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Conning's SEC filings should also be available to the public from commercial document retrieval services and at the Internet world wide web site maintained by the SEC at http://www.sec.gov. Although we have no knowledge that any such information is untrue, we take no responsibility for the accuracy or completeness of information contained in this offer to purchase with respect to Conning or any of its subsidiaries or affiliates or for any failure by Conning to disclose events that may have occurred or may affect the significance or accuracy of any such information. In the course of the discussions between us and Conning, we prepared our projections of Conning's future operating performance (the "MetLife Projections"). The MetLife Projections contain several assumptions that Conning did not make in preparing its October 1999 projections, including Conning's transfer to us of investment management responsibility over most of the assets contained in the general account of General American Life Insurance and its insurance subsidiaries; excluding RGA. See Section 8. The MetLife Projections were not prepared with a view to public disclosure or compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants regarding projections, do not reflect the impact, if any, of the recent resignations of certain senior executives (as described in notes 3 and 10 on pages 18 and 19), and are included in this offer to purchase only because we prepared them. Neither we nor Conning, nor either of our respective financial advisors nor the Dealer Manager assumes any responsibility for the accuracy of the MetLife Projections. Although presented with numerical specificity, the MetLife Projections are based upon a variety of assumptions relating to the businesses of Conning that may not be realized and are subject to significant uncertainties and contingencies, many of which are beyond the control of us and Conning. There can be no assurance that the MetLife Projections will be realized, and actual results may vary materially from those shown. Set forth below is a summary of the MetLife Projections, adjusted to take into account the loss of revenues attributable to Conning's assignment to MetLife, at the request of General American Life Insurance, of investment management responsibility over most of the general account assets of General 29 35 American Life Insurance and its insurance subsidiaries (excluding RGA). The MetLife Projections should be read together with the financial statements of Conning referred to herein. CONNING CORPORATION THE METLIFE PROJECTIONS (IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
FISCAL YEAR ENDED ----------------------------------------------- DEC. 31, 2000 DEC. 31, 2001 DEC. 31, 2002 ------------- ------------- ------------- Total Revenue.............................. $82.00 $91.10 $99.00 Net income................................. 9.30 11.90 12.90 Earnings per share......................... 0.68 0.87 0.94
In October 1999, Conning management also prepared projections of Conning's operating performance as part of its annual budgeting and planning process. Conning management provided us with a copy of these projections during the course of our discussions with Conning. These projections, which were prepared in October 1999, estimated total revenue for 2000, 2001 and 2002 to be $102 million, $112 million and $124 million, respectively; net income for 2000, 2001 and 2002 to be $15 million, $18 million and $21 million, respectively; and earnings per share for 2000, 2001 and 2002 to be $1.06, $1.24 and $1.45, respectively. During the course of our negotiations, we also received the Management Projections (as defined on page 9). Conning's October 1999 projections differ from the MetLife Projections primarily because Conning's projections do not, and the MetLife Projections do, take into account (a) Conning's recent assignment to MetLife, at the request of General American Life Insurance, of investment management responsibility over most of the general account assets of General American Life Insurance and (b) Conning's assignment to MetLife, to be made in the near-term, of investment management responsibility over most of the general account assets of General American Life Insurance's insurance subsidiaries, excluding RGA. The MetLife Projections differ from the Management Projections because different values were placed on the decreases in revenues and expenses in connection with Conning's loss of investment management responsibility over such assets. See Section 8. Conning did not prepare these projections with a view to public disclosure or compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants regarding projections. The projections are included in this offer to purchase only because Conning provided them to us. Neither we nor Conning, nor either of our respective financial advisors nor the Dealer Manager assumes any responsibility for the accuracy of Conning's projections. Although presented with numerical specificity, Conning's projections are based upon a variety of assumptions relating to the businesses of Conning which may not be realized and are subject to significant uncertainties and contingencies, many of which are beyond the control of us and Conning. There can be no assurance that Conning's projections will be realized, and actual results may vary materially from those shown. 8. INFORMATION CONCERNING METLIFE AND PURCHASER MetLife is a New York life insurance company whose principal executive offices are located at One Madison Avenue, New York, New York 10010, and whose telephone number is (212) 578-2211. Headquartered in New York City since 1868, MetLife is a leading provider of insurance and financial services to a broad spectrum of individual and group customers. MetLife, with approximately $420 billion of assets under management (as of December 31, 1999, on a pro forma basis, including the acquisition of GenAmerica), provides individual insurance and investment products to approximately 9 million households in the United States. In addition, the corporations and institutions that MetLife provides with group insurance and investment products have approximately 33 million employees and members. MetLife also has international insurance operations in ten countries, with a focus on the Asia/Pacific region, Latin America and selected European countries. 30 36 MetLife beneficially owns 8,304,995 Conning shares, which are approximately 60.4% of the outstanding Conning shares. This percentage amount is based upon the number of Conning shares outstanding as of March 3, 2000, as represented to us by Conning in the merger agreement. In addition, Richard A. Liddy, Senior Executive Vice-President of MetLife, beneficially owns 57,500 Conning shares. Purchaser's principal executive offices are located at One Madison Avenue, New York, New York 10010, and its telephone number is (212) 578-2211. Purchaser is a newly formed Missouri corporation and an indirect wholly owned subsidiary of MetLife. Purchaser has not conducted any business other than in connection with the tender offer and the merger. The name, business address, citizenship, present principal occupation and employment history for the past five years of each of the directors and executive officers of MetLife and Purchaser are set forth in Schedule I to this offer to purchase. None of MetLife, Purchaser or, to the best knowledge of MetLife and Purchaser, any of the persons listed in Schedule I to this offer to purchase, has during the last five years (a) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, United States federal or state securities laws or finding any violation of such laws. Except as set forth elsewhere in this offer to purchase or Schedule I to this offer to purchase: (a) neither we nor, to our knowledge, any of the persons listed in Schedule I or any associate or majority-owned subsidiary of ours or of any of the persons so listed, beneficially owns or has a right to acquire any Conning shares or any other equity securities of Conning; (b) neither we nor, to our knowledge, any of the individuals or entities referred to in clause (a) above or any of their executive officers, directors or subsidiaries has effected any transaction in the Conning shares or any other equity securities of Conning during the past 60 days; (c) neither we nor, to our knowledge, any of the persons listed in Schedule I to this offer to purchase, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of Conning (including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies, consents or authorizations); (d) in the past two years, there have been no transactions that would require reporting under the rules and regulations of the SEC between us or any of our subsidiaries or, to our knowledge, any of the persons listed in Schedule I, on the one hand, and Conning or any of its executive officers, directors or affiliates, on the other hand; and (e) in the past two years, there have been no contacts, negotiations or transactions between us or any of our subsidiaries or, to our knowledge, any of the persons listed in Schedule I, on the one hand, and Conning or any of its subsidiaries or affiliates, on the other hand, concerning a merger, consolidation or acquisition, a tender offer or other acquisition of securities, an election of directors or a sale or other transfer of a material amount of assets. CONNING CAPITAL PARTNERS VI, L.P. On March 9, 2000, MetLife became a limited partner of Conning Capital Partners VI, L.P. ("Fund VI"), which is a private equity fund whose general partner is partially owned by two subsidiaries of Conning and certain employees of Conning's private equity group. Conning and its subsidiaries' capital commitment to Fund VI is $20 million. MetLife's capital commitment to Fund VI is 5.5% of the total capital commitments of all partners of Fund VI (without regard to the amount of MetLife's capital commitment). However, MetLife's total capital commitment to Fund VI is subject to a cap of $27.5 million, and the total capital commitments of MetLife and Conning to Fund VI are subject to an aggregate cap of $47.5 million. As of March 9, 2000, the total capital commitments of Fund VI were approximately $163.5 million (including MetLife's capital commitment of approximately $9 million). INVESTMENT MANAGEMENT SERVICES. For a number of years, pursuant to various investment advisory agreements, Conning (through its subsidiary Conning Asset Management Company) has provided 31 37 investment management services, including investment advisory services, portfolio management services and back-office services (such as accounting services) in respect of the general account assets of General American Life Insurance and its insurance subsidiaries (including RGA). As of December 31, 1999, these general account assets had a market value of approximately $10.6 billion. In 1999, Conning received approximately $12.4 million in fees for providing these services relating to these general account assets. MetLife acquired indirect ownership of these general account assets (except for a 57.9% interest in the general account assets of RGA and its subsidiaries) when it completed its acquisition of GenAmerica Corporation, General American Life Insurance's parent, on January 6, 2000. MetLife's general policy is to manage its own general account assets and the general account assets of its insurance subsidiaries, rather than retain the services of third-party asset managers such as Conning. Because of this policy, beginning in March 2000, following receipt of approval from the Missouri Department of Insurance, Conning Asset Management Company began to transfer to MetLife, at the request of General American Life Insurance, investment management responsibility over the general account assets of General American Life Insurance (except for approximately $1.6 billion of real estate mortgage assets). In a series of two additional phases (beginning no later than June 30, 2000 and ending no later than September 30, 2000), Conning Asset Management Company will transfer to MetLife its portfolio management and back-office responsibilities in respect of these general account assets (except for the real estate mortgage assets). MetLife and Conning Asset Management Company are also in the process of effectuating similar transfers of investment advisory, portfolio management and back-office responsibility in respect of the general account assets of General American Life Insurance's insurance subsidiaries (other than RGA). These transfers will be subject to the approval of various state insurance departments. In general, the fees that MetLife will be charging General American Life Insurance and such subsidiaries (other than RGA) for its services will be lower than the fees that Conning Asset Management Company charged for the same services. As a result of these transfers, Conning Asset Management Company will no longer provide investment management services with respect to the general account assets of General American Life Insurance and its subsidiaries (other than in respect of the real estate mortgage assets and the general account assets of RGA and its insurance subsidiaries). Therefore, Conning Asset Management Company will receive significantly lower asset management fees from General American Life Insurance and its insurance subsidiaries (other than RGA). 9. THE MERGER AGREEMENT AND THE MERGER THE MERGER AGREEMENT. The following summary description of the merger agreement is qualified in its entirety by reference to the agreement itself, which we have filed as Exhibit (d)(l) to the Schedule TO that we have filed with the SEC. You may examine and copy the Schedule TO as set forth in Section 7, except that it will not be available at the regional offices of the SEC. THE TENDER OFFER. The merger agreement provides for the tender offer by Purchaser under the terms described in Section 1. THE MERGER. As soon as practicable after the satisfaction or waiver of the conditions to the merger, Conning and Purchaser will take such actions to make the merger effective. As a result of the merger, the separate corporate existence of Purchaser will cease and Conning will continue as the surviving corporation. At the effective time of the merger (the "Effective Time"), each Conning share issued and outstanding immediately prior to the Effective Time (other than any Conning shares held by MetLife or any wholly owned subsidiary of MetLife, in the treasury of Conning or by any wholly owned subsidiary of Conning, which Conning shares will remain outstanding or in the treasury of Conning, as the case may be, and any Conning shares held by stockholders who shall have properly demanded and perfected appraisal rights under Missouri law) will be canceled and retired and will be converted into the right to receive the tender offer price, without interest thereon. At the Effective Time, shares of common stock of Purchaser outstanding immediately prior to the Effective Time will be converted into Conning shares. The directors of Conning immediately prior to the Effective Time and three directors to be determined by MetLife will be the initial directors of Conning and the officers of Conning immediately before the Effective Time will remain as officers of Conning after the Effective Time. At the Effective 32 38 Time, the articles of incorporation of Purchaser will be the articles of incorporation of Conning, except that it will provide that the company will be named "Conning Corporation." The merger agreement also provides that the bylaws of Purchaser will become the bylaws of Conning, subject to a requirement in the merger agreement that certain indemnification provisions be preserved. See "-- Indemnification; Directors' and Officers' Insurance." If required by law in order to consummate the merger, Conning will (a) prepare and file with the SEC a preliminary proxy statement relating to the merger agreement, (b) use reasonable best efforts to have it cleared by the SEC and to cause a definitive proxy statement to be mailed to Conning stockholders, and (c) convene a special meeting of Conning stockholders for the purpose of considering and taking action upon the merger agreement. Notwithstanding the foregoing, if Purchaser acquires pursuant to the tender offer such number of Conning shares that, when aggregated with the Conning shares MetLife already beneficially owns, represents at least 90% of the outstanding Conning shares, the parties to the merger agreement will take all necessary and appropriate actions to cause the merger to become effective as soon as practicable after the acceptance for payment of and payment for the Conning shares by Purchaser pursuant to the tender offer without a meeting of Conning stockholders, in accordance with, and to the extent permitted by the Missouri General and Business Corporation Law (the "MGBCL"). STOCK OPTIONS AND REPLACEMENT AWARDS. Prior to the completion of the tender offer, the Conning board of directors (or, if appropriate, any committee thereof) will take all actions necessary to provide for the cancellation, at the Effective Time, of all outstanding Stock Options that have been granted under any Stock Plans. Conning will also take all actions necessary to provide for, as of the Effective Time, (a) the termination of all Stock Plans, and (b) the deletion of any provisions in any other plan, program or arrangement that provides for the issuance or grant of any other interest in the capital stock of Conning or any of its subsidiaries. In connection with the cancellation of the Stock Options, holders of Stock Options will receive replacement awards that will be substituted for the Stock Options. Under the replacement award program, all employees that hold Stock Options as of the Effective Time will receive either (a) a cash payment equal to the product of (1) the total number of Conning shares subject to such Stock Option and (2) the excess of $12.50 over the per share exercise price of the Stock Option; or (b) a deferred payment. In the case of non-qualified options, the deferred payment will be equal to the present value of the Stock Options, calculated using a Black-Scholes formula. In the case of incentive stock options, the deferred payment will equal the greater of (a) the Black-Scholes value of the Stock Options and (b) the excess of $12.50 over the per share exercise price of the Stock Option, plus an additional payment representing the value of the loss of the favorable tax treatment of incentive stock options calculated based on such excess. All deferred awards will bear interest. The replacement award program is subject to change, provided that the program remains consistent with its current terms or with any amendment to which Conning, MetLife and Purchaser mutually agree. 33 39 REPRESENTATIONS AND WARRANTIES. Conning has made customary representations and warranties to MetLife and Purchaser in the merger agreement with respect to: - - organization, qualification and - brokers subsidiaries - - capitalization - absence of certain changes - - authority - taxes - - SEC reports and financial statements - intellectual property - - information to be included in the - opinion of the financial advisor to proxy statement and other documents the Conning special committee - - consents and approvals - material contracts - - absence of defaults - insurance - - absence of undisclosed liabilities - affiliated transactions - - litigation - investment contracts, funds and clients - - permits - Conning Broker/Dealers - - employee benefit matters - takeover statutes
MetLife and Purchaser made customary representations and warranties to Conning with respect: - - organization and qualification - financing - - authority - ownership of Conning shares - - consents and approvals - conduct of business of Purchaser - - information to be included in the proxy statement and other documents
COVENANTS. The merger agreement obligates Conning and its subsidiaries, from the date of the merger agreement until the Effective Time, to conduct their businesses in the ordinary course consistent with past practice. The merger agreement also obligates Conning and its subsidiaries to use their reasonable best efforts to preserve intact their business organizations, to keep available the services of their present officers and key employees and to preserve their business relationships. In addition, the merger agreement contains specific restrictive covenants as to certain impermissible activities prior to the earlier of the Effective Time without the prior written consent of MetLife relating to, among other things: - - amendments to Conning's articles of - issuances or sales of its securities incorporation or by-laws - dividends in excess of $.05 per - - changes in capital structure quarter - - repurchases or redemptions of - assumption of debt securities - material acquisitions or dispositions - - adoption of another plan of merger - changes in accounting methods - - increases in compensation or adoption of new benefit plans - additional obligations to indemnify officers and directors - - tax elections - - settlement of litigation and certain other material events or transactions.
In the event Conning seeks MetLife's consent to take any of the aforementioned actions, MetLife must respond within seven days. ACQUISITION PROPOSALS. Under the merger agreement, Conning must promptly advise MetLife of the receipt of any inquiries, discussions, negotiations or proposals relating to an acquisition proposal, such as (a) a merger, consolidation or other business combination involving Conning or its subsidiaries, or (b) the acquisition of any capital stock or any material portion of the assets of Conning or its subsidiaries. Conning must identify for MetLife the offeror and the terms of any acquisition proposal and must promptly advise 34 40 MetLife of any material development relating to such proposal, including the results of any discussions or negotiations. Neither Conning nor any of its subsidiaries may provide any non-public information to any third party (other than MetLife, Purchaser or any of their respective affiliates or advisors) without having entered into a customary confidentiality agreement with respect to such information. EFFORTS. Upon the terms and conditions contained in the merger agreement, MetLife, Purchaser and Conning have agreed to use their reasonable best efforts (a) to do all things necessary, proper or advisable under any applicable law to consummate as promptly as practicable the transactions contemplated by the merger agreement, and (b) to cause the Effective Time to occur as soon as practicable after the stockholder vote, if any. Moreover, if, after the Effective Time any further action is necessary to carry out the purposes of the merger agreement, the proper officers and directors of MetLife, Purchaser and Conning will use reasonable best efforts to take such necessary action. In addition, none of MetLife, Purchaser or Conning may take any action that would reasonably be expected to delay materially the obtaining of, or result in not obtaining, any permission, approval or consent from any governmental entity that must be obtained prior to the completion of the tender offer or the merger. The parties to the merger must promptly consult with one another and provide any necessary information with respect to all filings with any governmental entity, and must otherwise cooperate in responding to governmental entities. However, MetLife is not required to (a) enter into any agreement with any governmental entity or to consent to any order, decree or judgment requiring MetLife to hold separate or divest, or to restrict the dominion or control of Purchaser or any of its affiliates over, any of the assets, properties or businesses of Purchaser, its affiliates or Conning, in each case, as in existence on the date of the merger agreement, or (b) defend against any litigation brought by any governmental entity seeking to prevent the completion of the transactions contemplated by the merger agreement. CONSENTS. MetLife, Purchaser and Conning will use all reasonable efforts to obtain consents of all third parties and governmental entities necessary, proper or advisable for the completion of the transactions contemplated by the merger agreement. PUBLIC ANNOUNCEMENTS. MetLife, Purchaser and Conning have agreed to consult one another before issuing any press release or other public statements with respect to the tender offer or the merger, and each has agreed not to issue any such press release or make any such public statement prior to consultation, except as may be required by law or in accordance with any listing agreement that they may have with any securities exchange or NASDAQ. EMPLOYEE BENEFIT PLANS. Subject to the following paragraph, Purchaser, Conning and its subsidiaries will honor, without modification, all contracts, agreements and other commitments of the parties prior to the date of the merger agreement that apply to any current or former employee or current or former director of Conning or its subsidiaries. However, this undertaking will not prevent MetLife, Purchaser or Conning or its subsidiaries from enforcing or complying with any of these commitments in accordance with its terms, including, exercising any right permitted thereunder or under applicable law to amend, modify, suspend, revoke or terminate any such commitment in whole or in part. Any workforce reductions carried out following the Effective Time by MetLife, Conning or any of its subsidiaries with respect to employees of Conning and its subsidiaries shall be carried out in accordance with all laws and regulations governing the employment relationship and termination thereof, including the Worker Adjustment and Retraining Notification Act and regulations promulgated thereunder and any analogous state or local law. Each of the company employee benefit plans (other than the Stock Plans) (as defined in the merger agreement) in effect as of the date of the merger agreement will be maintained with respect to the employees or former employees of Conning and its subsidiaries who are covered by any such company employee benefit plan immediately prior to the Effective Time (the "Affiliated Employees") until MetLife, Purchaser or Conning or its subsidiaries otherwise determines after the Effective Time. However, the merger agreement does not limit any right contained in any such company employee benefit plan or under applicable law to amend, modify, suspend, revoke or terminate any such company employee benefit plan. Nonetheless, MetLife, Purchaser, Conning or their respective subsidiaries will cause the Affiliated Employees to be provided with employee benefits for a period of not less than one year following the 35 41 Effective Time that are no less favorable in the aggregate than those provided to similarly situated employees of MetLife and its affiliates. Without limiting the foregoing, with respect to any benefit plan established to replace any company employee benefit plan (other than the Stock Plans) (each such plan, a "New Plan"), each participant in any such company employee benefit plan shall receive credit for purposes of eligibility to participate and vesting under such New Plan for service credited for the corresponding purpose under such company employee benefit plan; however, such crediting of service will not operate to duplicate any benefit to any such participant or the funding for any such benefit or cause any such company employee benefit plan or New Plan to fail to comply with the applicable provisions of the Internal Revenue Code or the Employee Retirement Income Security Act of 1974, as amended. With respect to any New Plan that is a welfare benefit plan, other than limitations, exclusions or waiting periods that are already in effect with respect to Affiliated Employees and that have not been satisfied as of the Effective Time, such New Plan shall waive all limitations to pre-existing conditions, exclusions and waiting periods with respect to participation and coverage requirements and provide each Affiliated Employee with full credit for co-payments and deductibles paid prior to the Effective Time in satisfying any applicable deductible or out-of-pocket requirements applicable to the same calendar year under such New Plan. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. The parties agreed that all rights to indemnification or exculpation now existing in favor of the directors, officers, employees and agents of Conning and its subsidiaries in effect as of the date of the merger agreement with respect to matters occurring prior to the Effective Time shall survive the Effective Time and shall continue in full force and effect. To the maximum extent permitted by law, this indemnification will be mandatory rather than permissive, and Conning will advance expenses to those persons who are indemnified. In addition, after the Effective Time, MetLife and Conning will jointly and severally, to the fullest extent permitted by law, defend and hold harmless everyone who serves as a director of Conning between the date of the merger agreement and the Effective Time against all expenses, claims, damages, liabilities and amounts paid in settlement that relate to the transactions contemplated by the merger agreement. However, neither MetLife nor Conning will be liable for any settlement effected without its written consent, which consent may not be unreasonably withheld. Under this indemnification, MetLife and Conning also will pay the reasonable fees and expenses of counsel representing directors seeking indemnification, as long as this counsel is reasonably satisfactory to MetLife and Conning. MetLife and Conning will promptly reimburse these directors for any documented expenses they reasonably incur. After the Effective Time, Conning will maintain, for six years, the policies of the directors' and officers' liability and fiduciary insurance that are currently in effect. Nonetheless, Conning may substitute policies of at least the same coverage containing terms and conditions that are no less advantageous to the beneficiaries so long as this substitution does not result in gaps or lapses in coverage. If Conning consolidates with or merges into any other entity and is not the surviving corporation or if Conning transfers or conveys all or any substantial portion of its properties and assets to any person, then proper provision will be made so that, the successors and assigns of Conning assume the obligations of indemnification described above. NOTIFICATION OF CERTAIN MATTERS. The parties to the merger agreement agreed to notify one another promptly of any of the following: - any fact that would be reasonably likely to cause (a) any representation or warranty to be untrue or inaccurate in any material respect, or (b) any covenant, condition or agreement not to be complied with or satisfied in any material respect; - any failure to comply with or satisfy any covenant, condition or agreement; and - any notice or other communication from any third party alleging that its consent may be required to complete any of the transactions contemplated by the merger agreement. 36 42 STATE TAKEOVER LAWS. Upon MetLife's request, Conning will take all reasonable steps to assist in any challenge by Purchaser to the validity or applicability of any state takeover law to any transaction contemplated by the merger agreement. STOCKHOLDER LITIGATION. Conning will give MetLife reasonable opportunity to participate in the defense of any stockholder litigation against Conning or its officers and directors relating to the transactions contemplated by the merger agreement. CONDITIONS TO CONSUMMATION OF THE MERGER. Pursuant to the merger agreement, the obligations of MetLife, Purchaser and Conning to complete the merger are subject to the satisfaction of each of the following conditions: - Conning will have obtained the approval of the merger agreement by the holders of at least two-thirds of the outstanding Conning shares, unless, after the tender offer, MetLife beneficially owns at least 90% of the Conning shares, in which case no vote is necessary; - Purchaser will have accepted for payment Conning shares pursuant to the tender offer in accordance with the terms of the tender offer; and - no law or ruling of any court of competent jurisdiction or any governmental entity will have restrained, enjoined or prohibited the completion of the merger, and there will not have been any statute, rule or regulation that prevents the completion of the merger or has the effect of making the purchase of Conning shares illegal. In addition, the obligations of MetLife and Purchaser are conditioned on the following: - Conning's representations and warranties in the merger agreement must be true and correct on the date of the merger agreement and at the Effective Time (except to the extent any such representation or warranty expressly speaks as of an earlier or different date), unless any inaccuracy of the representations and warranties would not, in the aggregate, be reasonably expected to have a material adverse effect on Conning; - Conning must have performed all obligations required by the merger agreement, unless non-performance would not, in the aggregate, reasonably be expected to have a material adverse effect on Conning or prevent completion of the merger; - an executive officer of Conning must have signed and delivered to MetLife a certificate regarding satisfaction of the two preceding conditions; and - no holder of Stock Options or other options, warrants, rights or agreements will have any right to receive any Conning shares upon exercise of his Stock Option or other options, warrants, rights or agreements. In addition, the obligations of Conning are conditioned on the following: - MetLife's and Purchaser's representations and warranties in the merger agreement must be true and correct on the date of the merger agreement and at the Effective Time (except to the extent any such representation or warranty expressly speaks as of an earlier or different date), unless any inaccuracy of the representations and warranties would not, in the aggregate, be reasonably expected to have a material adverse effect on MetLife; - MetLife and Purchaser must have performed all obligations required by the merger agreement, unless non-performance would not, in the aggregate, reasonably be expected to have a material adverse effect on the Company or prevent completion of the merger; and - an executive officer of MetLife must have signed and delivered to Conning a certificate regarding satisfaction of the two preceding conditions. 37 43 TERMINATION. The merger agreement may be terminated and the tender offer and the merger may be abandoned at any time prior to the Effective Time, even after any approval by Conning stockholders: - by the mutual written consent of MetLife and Conning; - by MetLife or Conning if any law or any ruling of a court of competent jurisdiction or governmental entity has restrained, enjoined or prohibited the completion of the merger, or there exists any statute, rule or regulation that prevents the completion of the merger or has the effect of making the purchase of Conning shares illegal; - by MetLife or Conning if the Effective Time has not occurred by September 9, 2000; - by MetLife if, due to an occurrence or circumstance that would result in a failure to satisfy any of the Tender Offer Conditions, Purchaser shall have (a) failed to commence the tender offer within the time prescribed by the merger agreement, (b) terminated the tender offer without having accepted any Conning shares for payment thereunder, or (c) failed to pay for Conning shares pursuant to the tender offer by July 9, 2000, unless the failure to satisfy any of the Tender Offer Conditions has been caused by a material breach of any of MetLife's or Purchaser's representations, warranties or covenants; - by Conning if, due to an occurrence or circumstance that would result in a failure to satisfy any of the Tender Offer Conditions, Purchaser shall have (a) failed to commence the tender offer within the time period prescribed by the merger agreement, (b) terminated the tender offer without having accepted any Conning shares for payment or (c) failed to pay for Conning shares pursuant to the tender offer by July 9, 2000, unless, the failure to satisfy any of the Tender Offer Conditions has been caused by a material breach of any of Conning's representations, warranties or covenants; - by Conning if, before Purchaser acquires any Conning shares in the tender offer, the Conning special committee approves or recommends another offer or an agreement with a third party to effect an acquisition transaction with terms that the Conning special committee has determined in good faith (a) to be more favorable to Conning and Conning stockholders (other than MetLife and Purchaser) than the tender offer and the merger, and (b) require approval or else the Conning special committee would be breaching its fiduciary duties; - by MetLife if the Conning special committee (a) shall have withdrawn or modified in a manner adverse to Purchaser its approval or recommendation of the tender offer, the merger agreement or the merger, (b) shall have approved or recommended another offer or an agreement to effect a proposal made by a third party to effect an acquisition transaction, or (c) shall have resolved to effect any of the foregoing; - by MetLife if the Minimum Condition shall not have been satisfied by the initially scheduled Expiration Date of the tender offer and on or prior to this Expiration Date any person shall have made a proposal or public announcement or communication to Conning with respect to an acquisition transaction; or - by MetLife or Conning in the event of any of (a) a material breach by the other party of any representation or warranty contained in the merger agreement if this breach cannot be or has not been cured within 20 business days after the giving of written notice, (b) a material breach by the other party of any of the obligations or agreements contained herein if this breach cannot be or has not been cured within 20 business days after the giving of written notice to the breaching party of such breach, or (c) Conning has incurred a material adverse effect (in which case MetLife may terminate the merger agreement) or MetLife has incurred a material adverse effect (in which case Conning may terminate the merger agreement). EFFECT OF TERMINATION. If MetLife, Purchaser or Conning terminates the merger agreement, it will become void and have no effect, except that each party will bear its own expenses. No party, and none of its directors, officers or shareholders, will have any liability, except as may arise from the breach of the merger agreement. 38 44 AMENDMENT. MetLife, Purchaser and Conning may amend the merger agreement by mutual written consent at any time before the Effective Time. However, if Conning stockholders approve the merger agreement, then, after this approval, no amendment that requires their approval can be made without their approval. WAIVER. At any time before the Effective Time, any party to the merger agreement may (a) extend the time for the performance of any of the obligations or other acts of the other party, (b) waive any inaccuracies in the representations and warranties of the other party, or (c) waive compliance by the other party with any of the agreements or conditions. Any agreement to any extension or waiver will be valid only if set forth in a signed, written instrument. The failure of any party to assert any of its rights under the merger agreement will not constitute a waiver of its rights. STATUTORY REQUIREMENTS. In general, under the MGBCL, a merger of two Missouri corporations requires (a) the board of directors of each of the corporations desiring to merge to approve a plan of merger containing provisions with respect to certain statutorily specified matters and (b) the stockholders of each corporation to approve the plan of merger. The stockholders of a corporation can approve a plan of merger with the affirmative vote of the holders of two-thirds of the outstanding shares of stock entitled to vote on such merger. According to Conning's articles of incorporation, the Conning shares are the only securities of Conning that entitle the holders thereof to voting rights. The MGBCL also provides that, if a parent company owns at least 90% of each class of stock of a subsidiary, the parent company can effect a short-form merger with that subsidiary without the action of the other stockholders of the subsidiary. Accordingly, if, as a result of the tender offer or otherwise, Purchaser acquires or controls the voting power of at least 90% of the Conning shares, Purchaser could, and intends to, effect the merger without prior notice to, or any action by, any other Conning stockholder. EFFECTS OF INABILITY TO CONSUMMATE THE MERGER. Pursuant to the merger agreement, following the completion of the tender offer and subject to certain other conditions, Purchaser will be merged with Conning. If, following the tender offer, Missouri law requires the approval of Conning stockholders in order to complete the merger, Conning will submit the merger to Conning stockholders for approval. Unless the Minimum Condition is satisfied, there can be no assurance that the required vote of the Conning stockholders will be obtained. Moreover, there can be no assurance that all other conditions to the merger (as described in Sections 9 and 12) will be satisfied. Therefore, it is possible that the merger will not be completed. If the merger is completed, Conning stockholders that elected not to tender their Conning shares in the tender offer will receive the same amount of consideration in exchange for each Conning share as they would have received in the tender offer. MetLife already controls more than 50% of the outstanding Conning shares. If the merger is not completed, Conning stockholders, other than those affiliated with MetLife, will lack sufficient voting power to elect directors or to cause other actions to be taken that require majority approval. If, for any reason, the merger is not completed, MetLife reserves the right (a) to acquire additional Conning shares through private purchases, market transactions, tender or exchange offers or otherwise on terms and at prices that may be more or less favorable than those of the tender offer, or (b) subject to any applicable legal restrictions, to dispose of any or all Conning shares controlled by MetLife. APPRAISAL RIGHTS. No appraisal rights are available in connection with the tender offer. However, if the merger is completed, Conning stockholders will have certain rights under Sections 351.447 and 351.455 of the MGBCL to dissent and demand appraisal of, and payment of the fair value of, their Conning shares. Such rights, if the statutory procedures (as outlined below) were complied with, could lead to a judicial determination of the fair value required to be paid to such dissenting holders for their Conning shares. Any such judicial determination of the fair value of Conning shares could be based upon considerations other than, or in addition to, the price paid in the tender offer and the market value of the Conning shares, including asset values and the investment value of the Conning shares. The value so determined could be more or less than the purchase price per the applicable Conning share pursuant to 39 45 the tender offer or the consideration per the applicable Conning share to be paid in the merger. The judicial determination of fair value is made as of (a) the day prior to the date on which such vote is taken if completion of the merger requires a stockholder vote; and (b) immediately prior to the merger, exclusive of any element of value arising from the expectation or accomplishment of the merger, if completion of the merger does not require a stockholder vote. In either case, the stockholder is entitled to interest on the fair value to the date of judgment. STATUTORY PROCEDURES FOR EXERCISING APPRAISAL RIGHTS. If completion of the merger requires a stockholder vote, a stockholder who wishes to exercise appraisal rights must (a) file with Conning, prior to or at the meeting at which Conning stockholders will vote on the merger, a written objection to the merger; (b) not vote in favor of the merger; and (c) within 20 days after the merger is effected, make written demand on Conning for payment of the fair value of his Conning shares as of the day prior to the date on which the vote was taken. The written demand must state the number and class of the Conning shares that the dissenting stockholder owns. Any stockholder who fails to make demand within the requisite 20-day period will be conclusively presumed to have consented to the merger and will be bound by its terms. If, within 30 days after the date on which the merger is effected, the dissenting stockholder and Conning agree upon the value of the dissenting stockholder's Conning shares, payment will be made, within 90 days after the date on which the merger is effected, upon the dissenting stockholder's surrender of his Conning Certificates. Payment of the agreed value will terminate the stockholder's interest in Conning shares and in Conning. If the dissenting stockholder and Conning cannot agree upon the value of the dissenting stockholder's Conning shares, the dissenting stockholder may, within 60 days after the expiration of the 30-day period, file a petition in any court of competent jurisdiction within the County of Cole in the State of Missouri asking for a judicial determination of the fair value of his Conning shares as of the day prior to the date on which the vote was taken. If the dissenting stockholder fails to file the petition within such time, he and all persons claiming under him will be conclusively presumed to have approved and ratified the merger, and will be bound by its terms. The judgment will be payable only upon and simultaneously with the dissenting stockholder's surrender of his Conning Certificates. Upon payment of the judgment, the dissenting stockholder will cease to have any interest in his Conning shares and in Conning. A dissenting stockholder's right to be paid the fair value of his Conning shares will cease if and when Conning abandons the merger. If completion of the merger does not require a stockholder vote, Conning will notify each stockholder that the merger has become effective within ten days after the Effective Date. Within 20 days after the mailing of this notice, a stockholder who wishes to exercise appraisal rights must make a written demand to Conning for payment of the value of his Conning shares immediately prior to the merger exclusive of any element of value arising from the expectation or accomplishment of the merger. After this 20-day period expires, the dissenting stockholder and Conning will have 30 days to agree upon the value of the dissenting stockholder's Conning shares. If the dissenting stockholder and Conning cannot agree, the dissenting stockholder may, within 60 days after the expiration of the 30-day period, file a petition in any court of competent jurisdiction within the County of Cole in the State of Missouri asking for a judicial determination of the fair value of his Conning shares immediately prior to the merger exclusive of any element of value arising from the expectation or accomplishment of the merger. If the dissenting stockholder fails to file such a petition within such time, he and all persons claiming under him will be conclusively presumed to have approved and ratified the merger, and will be bound by its terms. The judgment will be payable only upon and simultaneously with the dissenting stockholder's surrender to Conning of his Certificates. Upon payment of the judgment, the dissenting stockholder will cease to have any interest in his Conning shares and in Conning. THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE SUBSTANTIVE RIGHTS OF, OR THE PROCEDURES TO BE FOLLOWED BY, STOCKHOLDERS DESIRING TO EXERCISE ANY AVAILABLE APPRAISAL RIGHTS, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SECTIONS 351.447 AND 351.455 OF THE MGBCL. THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE MGBCL. 40 46 PLANS FOR CONNING. If MetLife acquires 100% control of Conning, it is MetLife's present intent to operate Conning as a subsidiary under Conning's current name. In addition, MetLife may make nominations to the Conning board of directors to appoint individuals to fill current vacancies on the Conning board of directors. MetLife also reserves the right to replace current Conning board members. In addition, MetLife reserves the right to make recommendations to the Conning board of directors to appoint individuals to fill vacant senior management positions that may exist at Conning from time to time. Conning announced, on March 9, 2000, that the Conning board of directors named James L. Lipscomb as President and Chief Executive Officer, succeeding Arthur C. Reeds, III, who announced his resignation effective immediately. Mr. Reeds will remain on the Conning board of directors. Mr. Lipscomb, a Senior Vice President at MetLife, has had a wide range of experience at MetLife, including investments, and, most recently, was in charge of corporate planning. MetLife will conduct a further review of Conning and its subsidiaries and their respective assets, businesses, corporate structure, capitalization, operations, properties, policies, management and personnel. After such review, MetLife will determine what actions or further changes, if any, would be desirable in light of the circumstances that then exist, and reserves the right to effect such actions or changes. MetLife's decisions could be affected by information hereafter obtained, changes in general economic or market conditions or in the business of Conning or its subsidiaries, actions by Conning or its subsidiaries, and other factors. Except as described in this offer to purchase, MetLife and its affiliates have no present plans or proposals that would require disclosure under United States federal securities laws. PROVISIONS FOR UNAFFILIATED STOCKHOLDERS. MetLife will not grant Conning stockholders that are unaffiliated with MetLife access to the corporate files of MetLife. MetLife will not provide unaffiliated Conning stockholders with counsel or appraisal services at the expense of MetLife. 10. SOURCE AND AMOUNT OF FUNDS Purchaser estimates that the total amount of funds required to purchase all outstanding Conning shares pursuant to the tender offer, to pay the replacement awards that will be substituted for the Stock Options and to pay related fees and expenses will be approximately $88 million. The funds necessary to purchase Conning shares pursuant to the tender offer, to pay the replacement awards and to pay related fees and expenses will be derived from MetLife's working capital. 11. DIVIDENDS AND DISTRIBUTIONS Conning may not, without the prior written consent of MetLife, split, combine, or reclassify any shares of its capital stock, declare, set aside or pay any dividend or other distribution in respect of its capital stock, other than regularly scheduled quarterly dividends not to exceed $0.05 per share per quarter, or redeem or otherwise acquire any of its securities. 12. CONDITIONS OF THE OFFER Notwithstanding any other provision of the tender offer, Purchaser is not required to accept for payment or (subject to any applicable rules and regulations of the SEC) pay for, and may delay the acceptance for payment of, any tendered Conning shares and may terminate or, subject to the terms of the merger agreement, amend the tender offer, unless (a) the Minimum Condition shall have been satisfied, and (b) at any time on or after execution of the merger agreement and before the acceptance for payment for Conning shares, none of the following conditions exists or has occurred and remains in effect: (1) there is pending any action by any governmental entity, or any law proposed, sought, promulgated, enacted, entered, enforced or deemed applicable to the tender offer: - seeking to or that does prohibit or impose any material limitations on MetLife's or Purchaser's ownership or operation (or that of any of their respective subsidiaries or affiliates) of all or a material portion of their or Conning's or any of its subsidiaries' businesses or assets, or to 41 47 compel MetLife or Purchaser or their respective subsidiaries and affiliates to dispose of or hold separate any material portion of the business or assets of Conning or MetLife or Purchaser and their respective subsidiaries, in each case, taken as a whole, - seeking to or that does make the acceptance for payment of, or the payment for, some or all of the Conning shares illegal or otherwise prohibiting, restricting or significantly delaying consummation of the tender offer or the merger or the performance of any of the other transactions contemplated by the merger agreement, or seeking to obtain from Conning or Purchaser any damages that are material in MetLife's view in relation to Conning and its subsidiaries as taken as a whole, - seeking to or that does impose material limitations on the ability of Purchaser, or render Purchaser unable, to acquire or hold or to exercise effectively all rights of ownership of the Conning shares, including, the right to vote any Conning shares purchased by Purchaser on all matters properly presented to Conning stockholders, or effectively to control in any material respect in MetLife's view the business, assets or operations of Conning, its subsidiaries or Purchaser or any of their respective affiliates, - seeking to or that does impose circumstances under which the purchase or payment for some or all of the Conning shares pursuant to the tender offer and merger could reasonably be expected to have a material adverse effect on Purchaser, or - that otherwise would reasonably be expected to have a material adverse effect on Conning; or (2) there has occurred any change that could reasonably be expected to constitute a material adverse effect on Conning; or (3) there has occurred (A) any general suspension of trading in, or limitation on prices for, securities on the New York Stock Exchange, Inc. or the NASDAQ for a period in excess of 24 hours (excluding suspensions or limitations resulting solely from physical damage or interference with such exchanges not related to market conditions), (B) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States (whether or not mandatory), (C) the commencement of a war or other international or national calamity, directly or indirectly, involving the United States, (D) any mandatory limitation by any United States governmental authority or agency that would reasonably be expected to have a material adverse effect on the extension of credit by banks or other financial institutions, or (E) in the case of any of the foregoing, existing at the date of the execution of the merger agreement, a material acceleration or worsening thereof; or (4) the merger agreement has been terminated in accordance with its terms; or (5) (A) the Conning special committee has withdrawn, changed or modified (including by amendment of Conning's Solicitation/Recommendation Statement on Schedule 14D-9) in a manner adverse to Purchaser or MetLife its approval or recommendation of the tender offer, the merger agreement or the merger or has recommended an acquisition proposal, or has adopted any resolution to effect any of the foregoing, (B) the Conning special committee has recommended any proposal other than this agreement in respect of an acquisition proposal, (C) the Conning special committee has continued discussions with any third party concerning an acquisition proposal for more than ten business days after the date of receipt of such acquisition proposal, or (D) an acquisition proposal that is publicly disclosed and that contains a proposal as to price (without regard to whether such proposal specifies a specific price or a range of potential prices) has been commenced, publicly proposed or communicated to Conning and the Conning special committee has not rejected such proposal within ten business days of the earlier to occur of (i) Conning's receipt of such acquisition proposal and (ii) the date such acquisition proposal first becomes publicly disclosed; or 42 48 (6) not all consents, permits and approvals of governmental entities and other persons have been obtained without material adverse conditions attached and material expenses imposed on Conning or any of its subsidiaries; or (7) the representations and warranties of Conning set forth in the merger agreement are not true and correct as of the date of the merger agreement or on and as of the Expiration Date as though made on and as of the Expiration Date (except to the extent any such representation or warranty expressly speaks as of an earlier or different date, and except for changes contemplated or permitted by the terms hereof), except, in either case, where the failure of such representations and warranties to be so true and correct would not, in the aggregate, be reasonably likely to have a material adverse effect on Conning; or (8) Conning has not performed in all material respects all obligations required to be performed by it under the merger agreement at or prior to the Expiration Date. The foregoing conditions are for the sole benefit of MetLife and Purchaser. MetLife or Purchaser may assert the failure of any of the conditions regardless of the circumstances (other than any circumstance arising solely by any action or inaction by MetLife or Purchaser) giving rise to any such failure. The conditions may be waived by MetLife or Purchaser in whole or in part at any time. The failure by MetLife or Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, and each such right shall be deemed an ongoing right that may be asserted at any time. A public announcement may be made of a material change in, or waiver of, such conditions. The tender offer may, in certain circumstances, be extended in connection with any such change or waiver. Purchaser acknowledges that the SEC believes that (a) if Purchaser is delayed in accepting the Conning shares it must either extend the tender offer or terminate the tender offer and promptly return the Conning shares, and (b) the circumstances in which a delay in payment is permitted are limited and do not include unsatisfied conditions of the tender offer, except with respect to most required regulatory approvals. 13. LEGAL AND REGULATORY MATTERS Except as set forth in this offer to purchase, based on our review of publicly available filings by Conning with the SEC and other information regarding Conning, we are not aware of any licenses or regulatory permits that appear to be material to the business of Conning and its subsidiaries, taken as a whole, that might be adversely affected by our acquisition of Conning shares in the tender offer. In addition, we are not aware of any filings, approvals or other actions by or with any governmental entity or administrative or regulatory agency that would be required for our acquisition or ownership of the Conning shares. Should any such approval or other action be required, we expect to seek such approval or action, except as described under "-- Takeover Laws." Should any such approval or other action be required, we cannot be certain that we would be able to obtain any such approval or action without substantial conditions, or that adverse consequences might not result to Conning's or its subsidiaries' businesses, or that certain parts of Conning's, MetLife's or any of their respective subsidiaries' businesses might not have to be disposed of or held separate in order to obtain such approval or action. In that event, we may not be required to purchase any Conning shares in the tender offer. See "Introduction" and Section 12 for a description of the conditions to the tender offer. STATE TAKEOVER LAWS. A number of states (including Missouri, where Conning is incorporated) have adopted takeover laws and regulations that purport to be applicable to attempts to acquire securities of corporations that are incorporated in those states or that have substantial assets, stockholders, principal executive offices or principal places of business in those states. To the extent that these state takeover statutes purport to apply to the tender offer or the merger, we believe that those laws conflict with United States federal law and are an unconstitutional burden on interstate commerce. In 1982, the United States Supreme Court, in Edgar v. Mite Corp., invalidated, on constitutional grounds, the Illinois Business Takeovers Statute, which, as a matter of state securities law, made takeovers of corporations meeting 43 49 certain requirements more difficult. The reasoning in that decision is likely to apply to certain other state takeover statutes. In 1987, however, in CTS Corp. v. Dynamics Corp. of America, the United States Supreme Court held that the State of Indiana could, as a matter of corporate law, and, in particular, those aspects of corporate law concerning corporate governance, constitutionally disqualify a potential acquiror from voting on the affairs of a target corporation without the prior approval of the remaining stockholders, as long as those laws were applicable only under certain conditions. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a federal district court in Oklahoma ruled that the Oklahoma statutes were unconstitutional insofar as they apply to corporations incorporated outside Oklahoma because they would subject those corporations to inconsistent regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a federal district court in Tennessee ruled that four Tennessee takeover statutes were unconstitutional as applied to corporations incorporated outside Tennessee. This decision was affirmed by the United States Court of Appeals for the Sixth Circuit. In December 1988, a federal district court in Florida held, in Grand Metropolitan PLC v. Butterworth, that the provisions of the Florida Affiliated Transactions Act and Florida Control Conning Share Acquisition Act were unconstitutional as applied to corporations incorporated outside of Florida. We have not attempted to comply with any state takeover statutes in connection with the tender offer or the merger. We reserve the right to challenge the validity or applicability of any state law allegedly applicable to the tender offer or the merger, and nothing in this tender offer to purchase nor any action that we take in connection with the tender offer is intended as a waiver of that right. In the event that it is asserted that one or more takeover statutes apply to the tender offer or the merger, and it is not determined by an appropriate court that the statutes in question do not apply or are invalid as applied to the tender offer or the merger, as applicable, we may be required to file certain documents with, or receive approvals from, the relevant state authorities, and we might be unable to accept for payment or purchase Conning shares tendered in the tender offer or be delayed in continuing or consummating the tender offer. In that case, we may not be obligated to accept for purchase, or pay for, any Conning shares tendered. See Section 12. ANTITRUST. Under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, and the rules that have been promulgated thereunder by the Federal Trade Commission, certain transactions may not be consummated unless certain information has been furnished to the Antitrust Division of the Department of Justice and the FTC and certain waiting period requirements have been satisfied. However, the acquisition of Conning shares by Purchaser pursuant to the tender offer is not subject to these requirements because MetLife and its affiliates currently own in excess of 50% of the outstanding Conning shares. The FTC and the Antitrust Division frequently scrutinize the legality under the antitrust laws of transactions such as the proposed acquisition of Conning shares by Purchaser pursuant to the tender offer. At any time before or after the purchase of Conning shares pursuant to the tender offer by Purchaser, the FTC or the Antitrust Division could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the purchase of Conning shares pursuant to the tender offer or seeking the divestiture of Conning shares purchased by Purchaser or the divestiture of substantial assets of MetLife or its subsidiaries. Private parties and the state attorneys general may also bring legal action under federal or state antitrust laws under certain circumstances. Based upon an examination of information available to MetLife relating to the businesses in which MetLife, Conning and their respective affiliates are engaged, MetLife believes that the tender offer will not violate the antitrust laws. Nevertheless, there can be no assurance that a challenge to the tender offer on antitrust grounds will not be made or, if such a challenge is made, what the result would be. STOCKHOLDER LITIGATION. Conning, MetLife and certain of Conning's directors have been named as defendants in three purported stockholder class actions. Two of these actions have been filed in the Supreme Court of the State of New York, County of New York, and are captioned Shive v. Metropolitan Life Ins. Co. and Hamann v. Metropolitan Life Ins. Co. The third action was filed in the Circuit Court of the City of Saint Louis, 22d Circuit, State of Missouri, and is captioned Moritz v. Reeds. The allegations in all three cases (the "Actions") are substantially similar, and each complaint in the Actions alleges that 44 50 (a) the MetLife proposal of $10.50 was unfair, (b) MetLife and the Conning directors were breaching their fiduciary duties to the stockholders of Conning not affiliated with MetLife in connection with the MetLife proposal, and (c) appropriate steps were not being taken to insure that the stockholders of Conning not affiliated with MetLife would receive fair value for their Conning shares in any transaction that might occur. As relief, the complaints in the Actions sought, among other things, an injunction against completion of the original MetLife proposal. On March 8, 2000, as the result of negotiations between counsel for parties in the Actions, an agreement in principle was reached providing for the settlement of the Actions, subject to Court approval and the completion of the merger, among other things. As part of the proposed settlement, the defendants have acknowledged that the pendency of the Actions and the efforts of plaintiffs' counsel were significant factors that led to the increase in the MetLife offer from $10.50 per share to $12.50 per share. 14. FEES AND EXPENSES Credit Suisse First Boston is acting as the Dealer Manager in connection with the tender offer and has provided certain financial advisory services to MetLife in connection with the tender offer and the merger. We will pay Credit Suisse First Boston a customary transaction fee for its services and will reimburse Credit Suisse First Boston for reasonable out-of-pocket expenses. We have agreed to indemnify Credit Suisse First Boston and its affiliates and certain other persons against certain liabilities and expenses in connection with their services as the Dealer Manager and financial advisor, including liabilities under the United States federal securities laws. At any time, Credit Suisse First Boston and its affiliates may actively trade Conning shares for their own account or for the accounts of customers, and, accordingly, may at any time hold a long or short position in Conning shares. We have retained MacKenzie Partners as Information Agent in connection with the tender offer. The Information Agent may contact holders of Conning shares by mail, telephone, telex, telegraph and personal interview and may request brokers, dealers and other nominee stockholders to forward material relating to the tender offer to beneficial owners of Conning shares. We will pay the Information Agent reasonable and customary compensation for these services in addition to reimbursing the Information Agent for its reasonable out-of-pocket expenses. We have agreed to indemnify the Information Agent against certain liabilities and expenses in connection with the tender offer, including certain liabilities under the United States federal securities laws. In addition, we have retained ChaseMellon Shareholder Services as the Depositary. We will pay the Depositary reasonable and customary compensation for its services in connection with the tender offer, will reimburse the Depositary for its reasonable out-of-pocket expenses and will indemnify the Depositary against certain liabilities and expenses, including certain liabilities under the federal securities laws. MetLife has paid or will be responsible for paying certain out-of-pocket expenses and the following expenses incurred or estimated to be incurred in connection with the tender offer and the merger:
IN THOUSANDS ------------ Dealer Manager and Financial Advisor.................... $ 750 Legal................................................... 500 Filing.................................................. 19 Information Agent....................................... 5 Depositary.............................................. 15 Printing................................................ 50
45 51 Conning has paid or will be responsible for paying the following expenses incurred or estimated to be incurred in connection with the tender offer and the merger:
IN THOUSANDS ------------ Financial Advisor....................................... $1,100 Legal................................................... 505
Except as set forth above, we will not pay any fees or commissions to any broker, dealer or other person for soliciting tenders of Conning shares pursuant to the tender offer. We will reimburse brokers, dealers, commercial banks and trust companies and other nominees, upon request, for customary clerical and mailing expenses incurred by them in forwarding offering materials to their customers. 15. MISCELLANEOUS We are not aware of any jurisdiction in which the making of the tender offer is prohibited by any administrative or judicial action pursuant to any valid state statute. If we become aware of any valid state statute prohibiting the making of the tender offer or the acceptance of Conning shares, we will make a good faith effort to comply with that state statute. If, after a good faith effort, we cannot comply with the state statute, we will not make the tender offer to, nor will we accept tenders from or on behalf of, the holders of Conning shares in that state. We have filed with the SEC a Schedule TO, together with exhibits, furnishing certain additional information with respect to the tender offer, and may file amendments to the Schedule TO. The Schedule TO and any exhibits or amendments may be examined and copies may be obtained from the SEC in the same manner as described in Section 7 with respect to information concerning Conning, except that copies will not be available at the regional offices of the SEC. WE HAVE NOT AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION ON OUR BEHALF THAT IS NOT CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, YOU SHOULD NOT RELY ON ANY SUCH INFORMATION OR REPRESENTATION. Neither the delivery of the offer to purchase nor any purchase pursuant to the tender offer will, under any circumstances, create any implication that there has been no change in the affairs of MetLife, Purchaser, Conning or any of their respective subsidiaries since the date as of which information is furnished or the date of this offer to purchase. THE MATTERS DISCUSSED UNDER THE HEADING "SPECIAL FACTORS" AND IN SECTION 7 CONTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. STOCKHOLDERS ARE CAUTIONED THAT, IN ADDITION TO THE OTHER FACTORS SET FORTH UNDER THE HEADING "SPECIAL FACTORS," THE FOLLOWING FACTORS MAY CAUSE CONNING'S ACTUAL FINANCIAL PERFORMANCE TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN SUCH FORWARD-LOOKING STATEMENTS: (a) SUPPLY AND DEMAND FOR CONNING'S PRODUCTS AND SERVICES; (b) COMPETITIVE PRICING PRESSURES; AND (c) CHANGES IN INDUSTRY LAWS AND REGULATION. CC MERGER SUB INC. March 20, 2000 46 52 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF METLIFE AND PURCHASER DIRECTORS AND EXECUTIVE OFFICERS OF METLIFE. The following table sets forth the name and present principal occupation or employment, and material occupations, positions, offices or employments for the past five years of each director and executive officer of MetLife. Unless otherwise indicated below, each occupation set forth opposite each individual refers to employment with MetLife. The business address of each such individual is c/o MetLife, One Madison Avenue, New York, New York 10010, and each such individual is a citizen of the United States of America, except for Mr. Tweedie who is a citizen of the United Kingdom and Canada.
NAME POSITION - ---- -------- Robert H. Benmosche...................... Chairman, President, Chief Executive Officer and Director Curtis H. Barnette....................... Director Gerald Clark............................. Vice-Chairman, Chief Investment Officer and Director Joan Ganz Cooney......................... Director Burton A. Dole, Jr....................... Director James R. Houghton........................ Director Harry P. Kamen........................... Director Helene L. Kaplan......................... Director Charles M. Leighton...................... Director Allen E. Murray.......................... Director Stewart G. Nagler........................ Vice-Chairman, Chief Financial Officer and Director John J. Phelan, Jr....................... Director Hugh B. Price............................ Director Robert G. Schwartz....................... Director Ruth J. Simmons.......................... Director William C. Steere, Jr.................... Director Gary A. Beller........................... Senior Executive Vice-President and General Counsel James M. Benson.......................... President, Individual Business; Chairman, Chief Executive Officer and President, New England Life Insurance Company C. Robert Henrikson...................... President, Institutional Business Richard A. Liddy......................... Senior Executive Vice-President Catherine A. Rein........................ Senior Executive Vice-President; President and Chief Executive Officer of Metropolitan Property and Casualty Insurance Company William J. Toppeta....................... President, Client Services and Chief Administrative Officer John H. Tweedie.......................... Senior Executive Vice-President Lisa M. Weber............................ Executive Vice-President, Human Resources Judy E. Weiss............................ Executive Vice-President and Chief Actuary
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The following table sets forth the name and present principal occupation or employment, and material occupations, positions, offices or employments for the past five years of each director and executive officer of Purchaser. Unless otherwise indicated below, each occupation set forth opposite each individual refers to employment with Purchaser. The business address of I-1 53 each such individual is c/o MetLife, One Madison Avenue, New York, New York 10010, and each such individual is a citizen of the United States of America.
NAME POSITION - ---- -------- Gary A. Beller........................... President and Chairman of the Board Terence Lennon........................... Vice-President and Treasurer Jane Weinberg............................ Vice-President and Secretary
Robert H. Benmosche has been a director of MetLife since 1997. Mr. Benmosche has been Chairman of the Board, President and Chief Executive Officer of MetLife since July 1998, was President and Chief Operating Officer of MetLife from November 1997 to June 1998, and was Executive Vice-President of MetLife from September 1995 to October 1997. Previously, he was Executive Vice-President of PaineWebber Group Incorporated from 1989 to 1995. Curtis H. Barnette has been a director of MetLife since 1994. Mr. Barnette has been Chairman of the Board and Chief Executive Officer of Bethlehem Steel Corporation since November 1992. He is a director of Owens Corning Incorporated. Gerald Clark has been a director of MetLife since 1997. Mr. Clark has been Vice-Chairman of the Board and Chief Investment Officer of MetLife since July 1998, was Senior Executive Vice-President and Chief Investment Officer of MetLife from December 1995 to July 1998 and was Executive Vice-President and Chief Investment Officer of MetLife from September 1992 to December 1995. Mr. Clark is a director of Credit Suisse Group. Joan Ganz Cooney has been a director of MetLife since 1980. Ms. Cooney has been Chairman of the Executive Committee of Children's Television Workshop since 1990. Ms. Cooney is a director of Johnson & Johnson Inc. Burton A. Dole, Jr. has been a director of MetLife since 1996. Mr. Dole was Chairman of the Board of Nellcor Puritan Bennett, Incorporated from 1995 until his retirement in 1997. He had been the Chairman of the Board, President and Chief Executive Officer of Puritan Bennett from 1986 to 1995 and the President and Chief Executive Officer of Puritan Bennett from 1980 to 1986. James R. Houghton has been a director of MetLife since 1975. Mr. Houghton has been Chairman of the Board Emeritus of Corning Incorporated since 1996. He was the Chairman of the Board of Corning from 1983 until his retirement in 1996. Mr. Houghton is a director of Corning, Exxon Corporation and J.P. Morgan & Co. Incorporated. Harry P. Kamen has been a director of MetLife since 1992. He was the Chairman of the Board and Chief Executive Officer of MetLife from April 1993 until his retirement in July 1998 and, in addition, was President of MetLife from December 1995 to November 1997. Mr. Kamen is a director of Banco Santander Central Hispano SA (Spain), Bethlehem Steel Corporation, National Association of Securities Dealers, Inc., Nvest Corporation, a subsidiary of MetLife, and Pfizer, Inc. Helene L. Kaplan has been a director of MetLife since 1987. Ms. Kaplan is of counsel to the law firm of Skadden, Arps, Slate, Meagher & Flom LLP. Ms. Kaplan is a director of Bell Atlantic Corporation, The Chase Manhattan Corporation, The May Department Stores Company and Exxon Mobil Corporation. Charles M. Leighton has been a director of MetLife since 1996. Mr. Leighton was the Chairman and Chief Executive Officer of the CML Group, Inc. from 1969 until his retirement in March 1998. CML Group filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in December 1998. Mr. Leighton is a director of Nvest. Allen E. Murray has been a director of MetLife since 1983. Mr. Murray was Chairman of the Board, President and Chief Executive Officer of Mobil Corporation from February 1986 until March 1993, and was Chairman of the Board and Chief Executive Officer of Mobil from March 1993 until his retirement in I-2 54 March 1994. Mr. Murray is a director of Morgan Stanley Dean Witter & Co. and Minnesota Mining & Manufacturing Company. Stewart G. Nagler has been a director of MetLife since 1997. Mr. Nagler has been Vice-Chairman of the Board and Chief Financial Officer of MetLife since July 1998, and was Senior Executive Vice-President and Chief Financial Officer of MetLife from April 1993 to July 1998. John J. Phelan, Jr. has been a director of MetLife since 1985. Mr. Phelan has been a senior advisor to the Boston Consulting Group since 1992. Prior to that time, Mr. Phelan was Chairman and Chief Executive Officer of the New York Stock Exchange. Mr. Phelan is a director of Eastman Kodak Company and Merrill Lynch & Co., Inc. Hugh B. Price has been a director of MetLife since 1994. Mr. Price has been President and Chief Executive Officer of the National Urban League, Inc. since 1994. Mr. Price is a director of Sears, Roebuck and Co. and Bell Atlantic Corporation. Robert G. Schwartz has been a director of MetLife since 1980. Mr. Schwartz was Chairman of the Board, President and Chief Executive Officer of MetLife from September 1989 until his retirement in March 1993. Mr. Schwartz is a director of COMSAT Corporation, Consolidated Edison Company of New York, Inc., Lowe's Companies, Inc. and Potlatch Corporation. Mr. Schwartz will be retiring from the MetLife board of directors effective on March 31, 2000, after his 72nd birthday. Ruth J. Simmons has been a director of MetLife since 1995. Dr. Simmons has been President of Smith College since 1995. Prior to that time, she was Vice-Provost of Princeton University from 1992 to 1995. Dr. Simmons is a director of Goldman, Sachs & Co., Pfizer Inc. and Texas Instruments, Inc. William G. Steere, Jr. has been a director of MetLife since 1997. Mr. Steere has been Chairman of the Board and Chief Executive Officer of Pfizer since 1992. Mr. Steere is a director of Dow Jones & Company, Inc., Minerals Technologies, Inc. and Texaco Inc. Gary A. Beller has been Senior Executive Vice-President and General Counsel of MetLife since February 1998. He was Executive Vice-President and General Counsel of MetLife from August 1996 to January 1998. Mr. Beller served as Executive Vice-President and Chief Legal Officer of MetLife from November 1994 to July 1996. James M. Benson has been President of Individual Business of MetLife since May 1999. He has been Chairman of the Board of New England Life Insurance Company since May 1998, Chief Executive Officer of New England Life since January 1998, and President of New England Life since June 1997. He was Chief Operating Officer of New England Life from June 1997 to December 1997. Mr. Benson was the President and Chief Operating Officer of The Equitable Companies Incorporated from February 1996 to May 1997, and was President of The Equitable Life Assurance Society of the United States from February 1994 to May 1997, and Chief Executive Officer from February 1996 to May 1997, and Chief Operating Officer of the Equitable Life Assurance Society from February 1994 to February 1996. C. Robert Henrikson has been President of Institutional Business of MetLife since May 1999. He was Senior Executive Vice-President, Institutional Business of MetLife, from December 1997 to May 1999, Executive Vice-President, Institutional Business of MetLife, from January 1996 to December 1997, Executive Vice-President, Pensions of MetLife, from January 1995 to January 1996, and Senior Vice-President, Pensions of MetLife, from January 1991 to January 1995. Terence Lennon has been Executive Vice-President of Government Relations, Compliance and Public Relations (previously called Corporate Special Services) since January 1998. He was Executive Vice-President of Planning and Mergers & Acquisitions from January 1997 to January 1998. He was Senior Vice-President of Mergers & Acquisitions from March 1994 to December 1996. Richard A. Liddy has been Senior Executive Vice-President of MetLife since February 2000. He has been Chairman of GenAmerica since January 1997. Prior to that time he served in various executive I-3 55 capacities at General American Life Insurance. Mr. Liddy is a director of RGA, Conning, Brown Shoe Company, Ralston Purina Company, Energizer Holdings, Inc. and Ameren Corporation. Catherine A. Rein has been President and Chief Executive Officer of Metropolitan Property and Casualty Insurance Company since March 1999. She has been Senior Executive Vice-President of MetLife since February 1998 and was Executive Vice-President of MetLife from October 1989 to February 1998. Ms. Rein is a director of Corning Incorporated, The Bank of New York Company, Inc. and GPU, Inc. William J. Toppeta has been President of Client Services and Chief Administrative Officer of MetLife since May 1999. He was Senior Executive Vice-President, Head of Client Services, of MetLife from March 1999 to May 1999, Senior Executive Vice-President, Individual Business, of MetLife from February 1998 to March 1999, Executive Vice-President, Individual Business, of MetLife from July 1996 to February 1998, Senior Vice-President, of MetLife from October 1995 to July 1996 and President and Chief Executive Officer, Canadian Operations, of MetLife from January 1994 to October 1995. John H. Tweedie has been Senior Executive Vice-President, Finance and International, of MetLife since March 1999. He was Senior Executive Vice-President of MetLife from May 1998 to March 1999 and Executive Vice-President from January 1994 to April 1998. Lisa M. Weber has been Executive Vice-President of MetLife since December 1999 and head of Human Resources of MetLife since March 1998. She was Senior Vice-President of MetLife from March 1998 to November 1999. Previously, she was Senior Vice-President of Human Resources of PaineWebber Group Incorporated, where she was employed for ten years. Judy E. Weiss has been Executive Vice-President and Chief Actuary of MetLife since February 1998. She was Senior Vice-President and Chief Actuary of MetLife from June 1996 to February 1998 and Senior Vice President from May 1991 to June 1996. Jane Weinberg has been Vice-President and Investment Counsel of MetLife since June 1999. Previously, she served as Associate General Counsel of MetLife. I-4 56 Facsimile copies of letters of transmittal, properly completed and duly executed, will be accepted. Letters of transmittal, Conning Certificates and any other required documents should be sent or delivered by each Conning stockholder or broker, dealer, commercial bank, trust company or other nominee to the Depositary at one of its addresses set forth below: The Depositary for the tender offer is: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. By Mail: By Hand: By Overnight Courier: Reorganization Department Reorganization Department Reorganization Department P.O. Box 3301 120 Broadway 85 Challenger Road South Hackensack, NJ 07606 13th Floor Mail Stop - Reorg New York, NY 10271 Ridgefield Park, NJ 07660 By Facsimile Transmission: Telephone to Confirm Fax: (201) 296-4293 (201) 296-4860
You may direct questions and requests for assistance to the Information Agent or the Dealer Manager at the addresses and telephone numbers set forth below. You may obtain additional copies of this offer to purchase, the letter of transmittal and other tender offer materials from the Information Agent or the Dealer Manager as set forth below, and they will be furnished promptly at our expense. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the tender offer. The Information Agent for the tender offer is: [MacKenzie Logo] 156 Fifth Avenue New York, New York 10010 Call Collect (212) 929-5500 Call Toll Free (800) 322-2885 The Dealer Manager for the tender offer is: Credit Suisse First Boston Corporation Eleven Madison Avenue New York, New York 10010-3629 Call Toll Free (800) 646-4543 EX-99.A.2 3 FORM OF LETTER OF TRANSMITTAL 1 LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK OF CONNING CORPORATION PURSUANT TO THE OFFER TO PURCHASE DATED MARCH 20, 2000 BY CC MERGER SUB INC. AN INDIRECT WHOLLY OWNED SUBSIDIARY OF METROPOLITAN LIFE INSURANCE COMPANY THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, APRIL 17, 2000, UNLESS THE OFFER IS EXTENDED. THE DEPOSITARY FOR THE OFFER IS CHASEMELLON SHAREHOLDER SERVICES, L.L.C. By Mail: By Hand: By Overnight Courier: Reorganization Department Reorganization Department Reorganization Department PO Box 3301 120 Broadway 85 Challenger Road South Hackensack, NJ 07606 13th Floor Mail Stop -- Reorg New York, NY 10271 Ridgefield Park, NJ 07660 By Facsimile Transmission: Telephone to Confirm Fax: (201) 296-4293 (201) 296-4860
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS LISTED ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 PROVIDED BELOW. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. - -------------------------------------------------------------------------------------------------------------------------------- DESCRIPTION OF SHARES TENDERED - -------------------------------------------------------------------------------------------------------------------------------- NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR ON CERTIFICATE(S)) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED (ATTACH ADDITIONAL SIGNED LIST, IF NECESSARY) - -------------------------------------------------------------------------------------------------------------------------------- SHARE TOTAL NUMBER OF NUMBER CERTIFICATE SHARES REPRESENTED BY OF SHARES NUMBER(S) SHARE CERTIFICATE(S)* TENDERED** --------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- TOTAL CERTS. SHARES TENDERED ------------------------------------------- TOTAL BOOK SHARES TENDERED ------------------------------------------- TOTAL SHARES TENDERED - -------------------------------------------------------------------------------------------------------------------------------- * Certificate numbers are not required if tender is made by book-entry transfer. ** If you desire to tender fewer than all Shares represented by a certificate listed above, please indicate in this column the number of Shares you wish to tender. Otherwise, all Shares represented by such certificate will be deemed to have been tendered. See Instruction 4. [ ] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE BEEN LOST OR DESTROYED AND SEE INSTRUCTION 9. Number of Shares represented by the lost or destroyed certificates: - --------------------------------------------------------------------------------------------------------------------------------
2 This Letter of Transmittal is to be completed by stockholders of Conning Corporation, a Missouri corporation, either if certificates ("Share Certificates") representing shares of Common Stock, par value $0.01 per share (the "Shares"), are to be forwarded herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is utilized, if delivery of Shares is to be made by book-entry transfer to an account maintained by ChaseMellon Shareholder Services, L.L.C. (the "Depositary") at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in Section 3, "Procedures for Accepting the Offer and Tendering Shares," of the Offer to Purchase dated March 20, 2000 (the "Offer to Purchase"). DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. Stockholders whose Share Certificates are not immediately available or who cannot deliver their Share Certificates and all other required documents to the Depositary on or prior to the expiration date of the Offer or who are unable to complete the procedure for book-entry transfer prior to the expiration date of the Offer may nevertheless tender their Shares pursuant to the guaranteed delivery procedures set forth in Section 3, "Procedures for Accepting the Offer and Tendering Shares," in the Offer to Purchase. See Instruction 2 below. NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW. PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY. [ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution: ---------------------------------------------------------------------------- Provide Account Number and Transaction Code Number: Account Number: ---------------------------------------------------------------------------- Transaction Code Number: ---------------------------------------------------------------------------- [ ] CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY. Name(s) of Registered Holder(s): ---------------------------------------------------------------------------- Window Ticket Number (if any): ---------------------------------------------------------------------------- Date of Execution of Notice of Guaranteed Delivery: --------------------------------------------------------------- Name of Institution which Guaranteed Delivery: -------------------------------------------------------------------- IF DELIVERED BY BOOK ENTRY TRANSFER TO THE BOOK-ENTRY TRANSFER FACILITY, CHECK BOX: [ ] Account Number: ---------------------------------------------------------------------------- Transaction Code Number: ---------------------------------------------------------------------------- 2 3 Ladies and Gentlemen: The undersigned hereby tenders to CC Merger Sub Inc., a Missouri corporation ("Purchaser") and an indirect wholly owned subsidiary of Metropolitan Life Insurance Company, a New York life insurance company ("Parent"), the above-described shares of Common Stock, par value $0.01 per share (the "Shares"), of Conning Corporation, a Missouri corporation (the "Company"), pursuant to Purchaser's offer to purchase all outstanding Shares at $12.50 per Share, net to the seller in cash (less any required withholding taxes), without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated March 20, 2000 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this letter of transmittal (the "Letter of Transmittal," which together with the Offer to Purchase, as amended or supplemented from time to time, collectively constitute the "Offer"). The Offer is being made pursuant to the Agreement and Plan of Merger, dated as of March 9, 2000, by and among Parent, Purchaser and the Company. Subject to, and effective upon, acceptance for payment of the Shares tendered herewith, in accordance with the terms of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, Purchaser all right, title and interest in and to all the Shares that are being tendered hereby and all dividends, distributions (including, without limitation, distributions of additional Shares) and rights declared, paid or distributed in respect of such Shares on or after March 20, 2000 (collectively, "Distributions") and irrevocably appoints ChaseMellon Shareholder Services, L.L.C. (the "Depositary") the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares and all Distributions, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (i) deliver certificates representing Shares ("Share Certificates") and all Distributions, or transfer ownership of such Shares and all Distributions on the account books maintained by the Book-Entry Transfer Facility, together, in either case, with all accompanying evidences of transfer and authenticity, to or upon the order of Purchaser; (ii) present such Shares and all Distributions for transfer on the books of the Company; and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares and all Distributions, all in accordance with the terms of the Offer. The undersigned hereby irrevocably appoints each of Gary A. Beller, Terence Lennon and Jane C. Weinberg as agent, attorney-in-fact and proxy of the undersigned, each with full power of substitution, to vote in such manner as such attorney and proxy or his or her substitute shall, in his or her sole discretion, deem proper and otherwise act (by written consent or otherwise) with respect to all the Shares tendered herewith and which have been accepted for payment by Purchaser prior to the time of such vote or other action and all Shares and other securities issued in Distributions in respect of such Shares which the undersigned is entitled to vote at any meeting of stockholders of the Company (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise. This proxy and power of attorney is coupled with an interest in the Shares tendered herewith, is irrevocable and is granted in consideration of, and is effective upon, the acceptance for payment of such Shares by Purchaser in accordance with the terms of the Offer. Such acceptance for payment shall revoke all other proxies and powers of attorney granted by the undersigned at any time with respect to such Shares (and all Shares and other securities issued in Distributions in respect of such Shares), and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the undersigned with respect thereto. The undersigned understands that, in order for Shares to be deemed validly tendered, immediately upon Purchaser's acceptance of such Shares for payment, Purchaser or its designee must be able to exercise full voting, consent and other rights with respect to such Shares and other securities, including, without limitation, voting at any meeting of the Company's stockholders. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered herewith and all Distributions, and that when such Shares are accepted for payment by Purchaser, Purchaser will acquire good, marketable and unencumbered title thereto and to all Distributions, free and clear of all liens, restrictions, charges and encumbrances, and that none of such Shares or Distributions will be subject to any adverse claim. The undersigned, upon request, shall execute and deliver all additional documents deemed by the Depositary or Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered herewith and all Distributions. In addition, the undersigned shall remit and transfer promptly to the Depositary for the account of Purchaser all Distributions in respect of the Shares tendered hereby and accepted for payment, accompanied by appropriate documentation of transfer, and pending such remittance and transfer or appropriate assurance thereof, Purchaser shall be entitled to all rights and privileges as owner of each such Distribution and may withhold the entire purchase price of the Shares tendered hereby and accepted for payment, or deduct from such purchase price, the amount or value of such Distribution as determined by Purchaser in its sole discretion. 3 4 No authority herein conferred or agreed to be conferred shall be affected by, and all such authority shall survive, the death or incapacity of the undersigned. All obligations of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable. See Section 4 in the Offer to Purchase. The undersigned understands that tenders of Shares pursuant to any one of the procedures described in Section 3, "Procedures for Accepting the Offer and Tendering Shares," of the Offer to Purchase and in the instructions hereto will constitute the undersigned's acceptance of the terms and conditions of the Offer. Purchaser's acceptance of such Shares for payment will constitute a binding agreement between the undersigned and Purchaser upon the terms and subject to the conditions of the Offer. Without limiting the foregoing, if the price to be paid in the Offer is amended in accordance with the Offer, the price to be paid to the undersigned will be the amended price notwithstanding the fact that a different price is stated in this Letter of Transmittal. The undersigned recognizes that under certain circumstances set forth in the Offer to Purchase, Purchaser may not be required to accept for payment any of the Shares tendered hereby. Unless otherwise indicated herein in the box entitled "Special Payment Instructions," please issue the check for the purchase price of all Shares purchased, and return all Share Certificates not purchased or not tendered in the name(s) of the registered holder(s) appearing above in the box entitled "Description of Shares Tendered." Similarly, unless otherwise indicated in the box entitled "Special Delivery Instructions," please mail the check for the purchase price of all Shares purchased and all Share Certificates not tendered or not purchased (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing above in the box entitled "Description of Shares Tendered." In the event that the boxes entitled "Special Payment Instructions" and "Special Delivery Instructions" are both completed, please issue the check for the purchase price of all Shares purchased and return all Share Certificates not purchased or not tendered in the name(s) of, and mail such check and Share Certificates to, the person(s) so indicated. Unless otherwise indicated herein in the box entitled "Special Payment Instructions," please credit any Shares tendered hereby and delivered by book-entry transfer, but which are not purchased, by crediting the account at the Book-Entry Transfer Facility. The undersigned recognizes that Purchaser has no obligation, pursuant to the Special Payment Instructions, to transfer any Shares from the name of the registered holder(s) thereof if Purchaser does not purchase any of the Shares tendered herewith. The undersigned understands that Purchaser reserves the right to transfer or assign, in whole at any time, or in part from time to time, to one or more of its affiliates, the right to purchase all or any portion of the Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 4 5 - ------------------------------------------------------------ SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) - ------------------------------------------------------------ To be completed ONLY if Share Certificates not tendered or not purchased and/or the check for the purchase price of the Shares purchased are to be issued in the name of and sent to someone other than the undersigned, or if Shares tendered by book-entry transfer which are not purchased are to be returned by credit to an account maintained at the Book-Entry Transfer Facility other than the account indicated above. Issue [ ] check and/or [ ] certificates to: Name: --------------------------------------------------- (PLEASE PRINT) Address: ------------------------------------------------- ----------------------------------------------------------- ----------------------------------------------------------- ----------------------------------------------------------- (INCLUDE ZIP CODE) ----------------------------------------------------------- (TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.) (ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW) [ ] Credit unpurchased Shares tendered by book-entry transfer to the Book-Entry Transfer Facility account set forth below: ----------------------------------------------------------- (ACCOUNT NUMBER) - ------------------------------------------------------------ - ------------------------------------------------------------ SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) - ------------------------------------------------------------ To be completed ONLY if Share Certificates not tendered or not purchased and/or the check for the purchase price of the Shares purchased are to be sent to someone other than the undersigned, or to the undersigned at an address other than that shown above. Mail [ ] check and/or [ ] certificates to: Name: --------------------------------------------------- (PLEASE PRINT) Address: ------------------------------------------- ----------------------------------------------------------- ----------------------------------------------------------- ----------------------------------------------------------- (INCLUDE ZIP CODE) ----------------------------------------------------------- (TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.) - ------------------------------------------------------------ 5 6 SIGN HERE (AND PLEASE COMPLETE SUBSTITUTE FORM W-9) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SIGNATURE(S) OF HOLDER(S) Dated: - ------------------------, 2000 (Must be signed by registered holder(s) exactly as name(s) appear(s) on Share Certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by Share Certificate(s) and documents transmitted herewith. If a signature is by an officer on behalf of a corporation or by an executor, administrator, trustee, guardian, attorney-in-fact, agent or other person acting in a fiduciary or representative capacity, please provide the following information. See Instructions 1 and 5.) Name(s): - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (PLEASE PRINT) Capacity (full title): - -------------------------------------------------------------------------------- Address: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (INCLUDE ZIP CODE) (Area Code) Telephone Number: - -------------------------------------------------------------------------------- Taxpayer Identification or Social Security No.: - --------------------------------------------------------------------- (SEE SUBSTITUTE FORM W-9) GUARANTEE OF SIGNATURE(S) (IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5) FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE BELOW. AUTHORIZED SIGNATURE - -------------------------------------------------------------------------------- NAME (PLEASE PRINT) - -------------------------------------------------------------------------------- NAME OF FIRM - -------------------------------------------------------------------------------- ADDRESS - -------------------------------------------------------------------------------- ZIP CODE - -------------------------------------------------------------------------------- (AREA CODE) TELEPHONE NO. DATED: - ------------------------, 2000 6 7 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER To complete the Letter of Transmittal, you must do the following: - Fill in the box entitled "Description of Shares Being Tendered." - Sign and date the Letter of Transmittal in the box entitled "Sign Here." - Fill in and sign in the box entitled "Substitute Form W-9." In completing the Letter of Transmittal, you may (but are not required to) also do the following: - If you want the payment for any Shares purchased issued in the name of another person, complete the box entitled "Special Payment Instructions." - If you want any certificate for Shares not tendered or Shares not purchased issued in the name of another person, complete the box entitled "Special Payment Instructions." - If you want any payment for Shares or certificate for Shares not tendered or purchased delivered to an address other than that appearing under your signature, complete the box entitled "Special Delivery Instructions." If you complete the box entitled "Special Payment Instructions" or "Special Delivery Instructions," you must have your signature guaranteed by an Eligible Institution (as defined in Instruction 1 below) unless the Letter of Transmittal is signed by an Eligible Institution. 1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of Transmittal is required (i) if this Letter of Transmittal is signed by the registered holder(s) of the Shares (which term, for purposes of this document, shall include any participant in the Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Shares) tendered herewith, unless such holder has completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" on this Letter of Transmittal, or (ii) if such Shares are tendered for the account of a firm that is a member in good standing of the Security Transfer Agent's Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchange Medallion Program (each being hereinafter referred to as an "Eligible Institution"). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter of Transmittal is to be used either if Share Certificates are to be forwarded herewith or, unless an Agent's Message (as defined below) is used, if Shares are to be delivered by book-entry transfer pursuant to the procedure set forth in Section 3, "Procedures for Accepting the Offer and Tendering Shares," of the Offer to Purchase. Share Certificates representing all physically tendered Shares, or confirmation of a book-entry transfer, if such procedure is available, into the Depositary's account at the Book-Entry Transfer Facility ("Book-Entry Confirmation") of all Shares delivered by book-entry transfer together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), or an Agent's Message in the case of book-entry transfer, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth herein prior to the expiration date of the Offer. If Share Certificates are forwarded to the Depositary in multiple deliveries, a properly completed and duly executed Letter of Transmittal must accompany each such delivery. Stockholders whose Share Certificates are not immediately available, who cannot deliver their Share Certificates and all other required documents to the Depositary on or before the expiration date of the Offer or who cannot complete the procedure for delivery by book-entry transfer on a timely basis may tender their Shares pursuant to the guaranteed delivery procedure described in Section 3, "Procedures for Accepting the Offer and Tendering Shares," of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by Purchaser, must be received by the Depositary on or before the expiration date of the Offer; and (iii) the Share Certificates representing all physically delivered Shares in proper form for transfer by delivery, or Book-Entry Confirmation of all Shares delivered by book-entry transfer, in each case together with a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message), and any other documents required by this Letter of Transmittal, must be received by the Depositary within three trading days after the date of execution of such Notice of Guaranteed Delivery, all as described in Section 3, "Procedures for Accepting the Offer and Tendering Shares," of the Offer to Purchase. 7 8 The term "Agent's Message" means a message, transmitted by the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of the Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares that such participant has received this Letter of Transmittal and agrees to be bound by the terms of this Letter of Transmittal and that Purchaser may enforce such agreement against such participant. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. By execution of this Letter of Transmittal (or facsimile hereof), all tendering stockholders waive any right to receive any notice of the acceptance of their Shares for payment. 3. INADEQUATE SPACE. If the space provided herein under "Description of Shares Tendered" is inadequate, the certificate numbers, the number of Shares represented by such Share Certificates and the number of Shares tendered should be listed on a separate schedule and attached hereto. 4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY TRANSFER). If fewer than all the Shares represented by any Share Certificate delivered to the Depositary herewith are to be tendered hereby, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered." In such cases, a new certificate representing the remainder of the Shares that were represented by the Share Certificates delivered to the Depositary herewith will be sent to each person signing this Letter of Transmittal, unless otherwise provided in the box entitled "Special Delivery Instructions" herein, as soon as practicable after the expiration or termination of the Offer. All Shares represented by Share Certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the Share Certificates evidencing such Shares without alteration, enlargement or any other change whatsoever. If any Share tendered hereby is owned of record by two or more persons, all such persons must sign this Letter of Transmittal. If any of the Shares tendered hereby are registered in the names of different holders, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of such Shares. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, no endorsements of Share Certificates or separate stock powers are required, unless payment is to be made to, or Share Certificates not tendered or not purchased are to be issued in the name of, a person other than the registered holder(s), in which case, the Share Certificate(s) representing the Shares tendered hereby must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear on such Share Certificate(s). Signatures on such Share Certificate(s) and stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares tendered hereby, the Share Certificate(s) representing the Shares tendered hereby must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on such Share Certificate(s). Signatures on such Share Certificate(s) and stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal or any certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to Purchaser of such person's authority to so act must be submitted. 6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction 6, Purchaser will pay all stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price of any Shares purchased is to be made to, or Share Certificate(s) representing Shares not tendered or accepted for payment are to be issued in the name of, a person other than the registered holder(s), the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person or otherwise) payable on account of 8 9 the transfer to such other person will be deducted from the purchase price of such Shares purchased, unless evidence satisfactory to Purchaser of the payment of such taxes, or exemption therefrom, is submitted. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE CERTIFICATES REPRESENTING THE SHARES TENDERED HEREBY. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase price of any Shares tendered herewith is to be issued, or Share Certificate(s) representing Shares not tendered or not purchased are to be issued, in the name of a person other than the person(s) signing this Letter of Transmittal or if such check or any such Share Certificate is to be sent to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal but at an address other than that shown in the box entitled "Description of Shares Tendered" herein, the appropriate boxes in this Letter of Transmittal must be completed. Stockholders delivering Shares tendered herewith by book-entry transfer may request that Shares not purchased be credited to the account maintained at the Book-Entry Transfer Facility as such stockholder may designate in the box entitled "Special Payment Instructions" herein. If no such instructions are given, all such Shares not purchased will be returned by crediting the same account at the Book-Entry Transfer Facility as the account from which such Shares were delivered. 8. WAIVER OF CONDITIONS. The conditions of the Offer may be waived, in whole or in part, by Purchaser, in its sole discretion, at any time and from time to time, in the case of any Shares tendered. See Section 12 of the Offer to Purchase. 9. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s) representing Shares has been lost, destroyed or stolen, the stockholder should promptly contact ChaseMellon Shareholder Services, L.L.C., which is the Company's transfer agent and the Depositary, by calling (800) 522-6645. The stockholder will then be instructed as to the steps that must be taken in order to replace the certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, destroyed or stolen certificates have been followed. 10. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses or telephone numbers set forth below. Additional copies of the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery and the Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 may be obtained from the Information Agent or the Dealer Manager or from brokers, dealers, commercial banks or trust companies. 11. SUBSTITUTE FORM W-9. Each tendering stockholder is required to provide the Depositary with a correct Taxpayer Identification Number ("TIN") on the Substitute Form W-9 which is provided under "Important Tax Information" below, and to certify, under penalties of perjury, that such number is correct and that such stockholder is not subject to backup withholding of Federal income tax. If a tendering stockholder has been notified by the Internal Revenue Service that such stockholder is subject to backup withholding, such stockholder must cross out item (2) of the Certification box of the Substitute Form W-9, unless such stockholder has since been notified by the Internal Revenue Service that such stockholder is no longer subject to backup withholding. Failure to provide the information on the Substitute Form W-9 may subject the tendering stockholder to a $50 penalty imposed by the Internal Revenue Service and to 31% Federal income tax withholding on the payment of the purchase price of all Shares purchased from such stockholder. If the tendering stockholder has not been issued a TIN and has applied for one or intends to apply for one in the near future, such stockholder should write "Applied For" in the space provided for the TIN in Part I of the Substitute Form W-9, and sign and date the Substitute Form W-9 and the Certificate of Awaiting Taxpayer Identification Number. If "Applied For" is written in Part I and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold 31% on all payments of the purchase price to such stockholder until a TIN is provided to the Depositary. Each foreign stockholder must complete and submit Form W-8 in order to be exempt from the 31% Federal income tax backup withholding due on payments with respect to the Shares. 12. NON-UNITED STATES HOLDERS. Non-United States holders must submit a completed IRS Form W-8 or Form W-8BEN in order to qualify as an exempt recipient. IRS Form W-8 or Form W-8BEN may be obtained by contacting the Depositary at one of the addresses on the face of this Letter of Transmittal. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR MANUALLY SIGNED FACSIMILE THEREOF), TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, AND EITHER SHARE CERTIFICATES FOR TENDERED SHARES OR CONFIRMATION OF BOOK-ENTRY TRANSFER MUST BE RECEIVED BY THE DEPOSITARY, IN EACH CASE PRIOR TO THE EXPIRATION DATE OF THE OFFER, WHICH IS 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, APRIL 17, 2000 (UNLESS OTHERWISE EXTENDED), OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES FOR GUARANTEED DELIVERY. 9 10 IMPORTANT TAX INFORMATION Under the Federal income tax law, a stockholder whose tendered Shares are accepted for payment is required by law to provide the Depositary (as payer) with such stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is an individual, the TIN is such stockholder's social security number. If the Depositary is not provided with the correct TIN, the stockholder may be subject to a $50 penalty imposed by the Internal Revenue Service and payments that are made to such stockholder with respect to Shares purchased pursuant to the Offer may be subject to backup withholding of 31%. Certain stockholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, such individual must submit a Form W-8, signed under penalties of perjury, attesting to such individual's exempt status. A Form W-8 can be obtained from the Depositary. Exempt stockholders should furnish their TIN, check the box and write "Exempt" in Part II of the Substitute Form W-9, and sign, date and return the Substitute Form W-9 to the Depositary. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. A stockholder should consult his or her tax advisor as to such stockholder's qualification for an exemption from backup withholding and the procedure for obtaining such exemption. If backup withholding applies, the Depositary is required to withhold 31% of any payments made to the stockholder. Backup withholding is not an additional tax. Rather, the Federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments that are made to a stockholder with respect to Shares purchased pursuant to the Offer, the stockholder is required to notify the Depositary of such stockholder's correct TIN by completing the form below certifying that (a) the TIN provided on Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN) and (b) that (i) such stockholder has not been notified by the Internal Revenue Service that such stockholder is subject to backup withholding as a result of a failure to report all interest or dividends or (ii) the Internal Revenue Service has notified such stockholder that such stockholder is no longer subject to backup withholding. WHAT NUMBER TO GIVE THE DEPOSITARY The stockholder is required to give the Depositary the social security number or employer identification number of the record holder of the Shares tendered hereby. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. If the tendering stockholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, the stockholder should write "Applied For" in the space provided for the TIN in Part I, and sign and date the Substitute Form W-9 and the Certificate of Awaiting Taxpayer Identification Number. If "Applied For" is written in Part I and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold 31% of all payments of the purchase price to such stockholder until a TIN is provided to the Depositary. 10 11 TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS (SEE INSTRUCTION 11) PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES L.L.C., AS DEPOSITARY - -------------------------------------------------------------------------------------------------------------------- SUBSTITUTE FORM W-9 PART 1--Taxpayer Identification ------------------------------- Number -- Please provide your TIN in the Social Security Number box at right and certify by signing and dating below. If awaiting TIN, write OR "Applied For." ------------------------------- Employer Identification Number --------------------------------------------------------------------------------------- Department of the PART 2--For Payees exempt from Backup Withholding--Check the box if you are NOT Treasury, Internal subject to backup witholding. [ ] Revenue Service -------------------------------------------------------------------------------- PAYOR'S REQUEST FOR PART 3--CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT: TAXPAYER IDENTIFICATION NUMBER ("TIN") AND (1) The number shown on this form is my correct taxpayer identification number CERTIFICATION (or I am waiting for a number to be issued to me), and (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. CERTIFICATION INSTRUCTIONS--You must cross out item 2 above if you have been notified by IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return. However, if, after being notified by the IRS that you were subject to backup withholding, you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item 2. - -------------------------------------------------------------------------------------------------------------------- SIGNATURE DATE - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. IN ADDITION, FAILURE TO PROVIDE SUCH INFORMATION MAY RESULT IN A PENALTY IMPOSED BY THE INTERNAL REVENUE SERVICE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" INSTEAD OF A TIN IN THE SUBSTITUTE FORM W-9 CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 31% of all reportable payments made to me will be withheld until I provide a number. Signature Date - ------------------------------------------------------------------------------- 11 12 MANUALLY SIGNED FACSIMILE COPIES OF THE LETTER OF TRANSMITTAL WILL BE ACCEPTED. THE LETTER OF TRANSMITTAL, CERTIFICATES FOR SHARES AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT OR DELIVERED BY EACH STOCKHOLDER OF THE COMPANY OR SUCH STOCKHOLDER'S BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO THE DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH ON THE FIRST PAGE. Questions and requests for assistance or additional copies of the Offer to Purchase, Letter of Transmittal and other tender offer materials may be directed to the Information Agent or the Dealer Manager at their respective telephone numbers and locations listed below, and will be furnished at Purchaser's expense. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. The Information Agent for the Offer is: [MacKenzie Logo] 156 Fifth Avenue New York, New York 10010 Call Collect (212) 929-5500 Call Toll Free (800) 322-2885 The Dealer Manager for the Offer is: Credit Suisse First Boston Corporation Eleven Madison Avenue New York, New York 10010-3629 Call Toll Free: (800) 646-4543 12 EX-99.A.3 4 FORM OF NOTICE OF GUARANTEED DELIVERY 1 NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON STOCK OF CONNING CORPORATION BY CC MERGER SUB INC. AN INDIRECT WHOLLY OWNED SUBSIDIARY OF METROPOLITAN LIFE INSURANCE COMPANY (NOT TO BE USED FOR SIGNATURE GUARANTEES) This Notice of Guaranteed Delivery (or one substantially in the form hereof) must be used to accept the Offer (as defined herein) if (a) certificates representing shares of common stock, par value $0.01 per share (the "Shares"), of Conning Corporation, a Missouri corporation ("Share Certificates"), are not immediately available; (b) time will not permit all required documents to reach ChaseMellon Shareholder Services, L.L.C. (the "Depositary"), on or prior to the Expiration Date (as defined in the Offer to Purchase) of the Offer; or (c) the procedure for book-entry transfer, as set forth in the Offer to Purchase, cannot be completed on a timely basis. This Notice of Guaranteed Delivery may be delivered by hand or mail or transmitted by facsimile transmission to the Depositary. See Section 3, "Procedures for Accepting the Offer and Tendering Shares," of the Offer to Purchase. The Depositary for the Offer is CHASEMELLON SHAREHOLDER SERVICES, L.L.C. By Mail: By Hand: By Overnight Courier: Reorganization Department Reorganization Department Reorganization Department PO Box 3301 120 Broadway 85 Challenger Road South Hackensack, NJ 07606 13th Floor Mail Stop -- Reorg New York, NY 10271 Ridgefield Park, NJ 07660 By Facsimile Transmission: Telephone to Confirm Fax: (201) 296-4293 (201) 296-4860
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS LISTED ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX IN THE LETTER OF TRANSMITTAL. THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED. 2 Ladies and Gentlemen: The undersigned hereby tenders to CC Merger Sub Inc., a Missouri corporation and an indirect wholly owned subsidiary of Metropolitan Life Insurance Company, a New York life insurance company, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated March 20, 2000 (the "Offer to Purchase"), and the related letter of transmittal (the "Letter of Transmittal," which together with the Offer to Purchase, as amended or supplemented from time to time, collectively constitute the "Offer"), receipt of each of which is hereby acknowledged, the number of Shares indicated below pursuant to the guaranteed delivery procedures set forth in Section 3, "Procedures for Accepting the Offer and Tendering Shares," of the Offer to Purchase:
- ------------------------------------------------------------ ----------------------------------------------------------- -------------------------------------------------------- -------------------------------------------------------- NUMBER OF SHARES -------------------------------------------------------- -------------------------------------------------------- NAMES(S) OF RECORD HOLDER(S) CERTIFICATE NOS. (IF AVAILABLE) -------------------------------------------------------- ADDRESS(ES) Indicate account number at Book-Entry Transfer Facility if Shares will be tendered by book-entry transfer: -------------------------------------------------------- ZIP CODE -------------------------------------------------------- -------------------------------------------------------- (AREA CODE) TELEPHONE NO. ACCOUNT NUMBER X ------------------------------------------------------ DATED: -------------------------------------------, 2000 X ------------------------------------------------------ SIGNATURE(S) OF RECORD HOLDER(S) - ------------------------------------------------------------ -----------------------------------------------------------
GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a bank, broker, dealer, credit union, savings association or other entity that is a member in good standing of the Securities Transfer Agents Medallion Program (an "Eligible Institution"), hereby guarantees delivery to the Depositary, at one of its addresses set forth above, of Share Certificates tendered hereby in proper form for transfer, or confirmation of the book-entry transfer of Shares into the Depositary's account at The Depository Trust Company, in either case together with delivery of a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantee, or an Agent's Message (as defined in the Offer to Purchase), and any other documents required by the Letter of Transmittal, within three trading days after the date of execution of this Notice of Guaranteed Delivery. The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal and Share Certificates to the Depositary within the time period indicated herein. Failure to do so may result in financial loss to such Eligible Institution. ---------------------------------------------------- X ---------------------------------------------------- NAME OF FIRM AUTHORIZED SIGNATURE ---------------------------------------------------- ------------------------------------------------------ ADDRESS NAME (PLEASE PRINT) ---------------------------------------------------- ------------------------------------------------------ ZIP CODE TITLE ---------------------------------------------------- DATED:---------------------------------------------, 2000 (AREA CODE) TELEPHONE NO.
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL EX-99.A.4 5 FORM OF LETTER TO BROKERS 1 [CREDIT SUISSE/FIRST BOSTON LOGO] CREDIT SUISSE FIRST BOSTON CORPORATION Eleven Madison Avenue Telephone 212 325 2000 New York, NY 10010-3629 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF CONNING CORPORATION AT $12.50 NET PER SHARE BY CC MERGER SUB INC. AN INDIRECT WHOLLY OWNED SUBSIDIARY OF METROPOLITAN LIFE INSURANCE COMPANY THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT NEW YORK CITY TIME, ON MONDAY, APRIL 17, 2000, UNLESS THE OFFER IS EXTENDED. March 20, 2000 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by CC Merger Sub Inc., a Missouri corporation ("Purchaser") and an indirect wholly owned subsidiary of Metropolitan Life Insurance Company, a New York life insurance company ("Parent"), to act as Dealer Manager in connection with the Purchaser's offer to purchase all outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of Conning Corporation, a Missouri corporation (the "Company"), at a purchase price of $12.50 per Share, net to the seller in cash (less any required withholding taxes), without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated March 20, 2000 (the "Offer to Purchase") and in the related letter of transmittal (the "Letter of Transmittal," which, together with the Offer to Purchase, as amended or supplemented from time to time, collectively constitute the "Offer") enclosed herewith. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares registered in your name or in the name of your nominee. The Offer is conditioned upon, among other things, there being validly tendered and not properly withdrawn prior to the expiration of the Offer enough Shares so that, including the Shares Parent already beneficially owns, Parent would control at least two-thirds of the outstanding Shares. The Offer is also subject to the other conditions contained in the Offer to Purchase. See Section 12, "Conditions of the Offer," of the Offer to Purchase. THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE OFFER AND THE MERGER (AS DEFINED BELOW) ARE FAIR TO, ADVISABLE AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS, AND HAS VOTED TO RECOMMEND TO THE BOARD OF DIRECTORS OF THE COMPANY THAT IT RECOMMEND TO THE CONNING STOCKHOLDERS ACCEPTANCE OF THE OFFER AND, IF NECESSARY, APPROVAL OF THE MERGER AGREEMENT (AS DEFINED BELOW). THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT, BASED UPON THE RECOMMENDATION OF THE SPECIAL COMMITTEE AND OTHER CONSIDERATIONS, THE OFFER AND 2 THE MERGER ARE FAIR TO, ADVISABLE AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS, AND HAS VOTED TO RECOMMEND TO THE CONNING STOCKHOLDERS ACCEPTANCE OF THE OFFER AND, IF NECESSARY, APPROVAL OF THE MERGER AGREEMENT. THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS TENDER THEIR SHARES PURSUANT TO THE OFFER AND, IF NECESSARY, APPROVE THE MERGER AGREEMENT. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of March 9, 2000 (the "Merger Agreement") among Parent, Purchaser and the Company pursuant to which, following the consummation of the Offer and in accordance with the Missouri General and Business Corporation Law, and subject to the satisfaction or waiver of certain conditions, Purchaser will be merged with and into the Company (the "Merger"), with the Company continuing as the surviving corporation and as an indirect, wholly owned subsidiary of Parent. Enclosed herewith for your information and forwarding to your clients are copies of the following documents: 1. The Offer to Purchase, dated March 20, 2000. 2. The Letter of Transmittal for your use to tender Shares and for the information of your clients. Facsimile copies of the Letter of Transmittal may be used to tender Shares. 3. A printed form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer. 4. The Notice of Guaranteed Delivery for Shares to be used to accept the Offer if certificates for Shares ("Share Certificates") and all other required documents are not immediately available or cannot be delivered to ChaseMellon Shareholder Services, L.L.C. (the "Depositary") by the Expiration Date (as defined in the Offer to Purchase) or if the procedure for book-entry transfer cannot be completed by the Expiration Date. 5. A letter to stockholders from James L. Lipscomb, President and Chief Executive Officer of the Company accompanied by the Company's Solicitation/Recommendation Statement on Schedule 14D-9. 6. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9. YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, APRIL 17, 2000, UNLESS THE OFFER IS EXTENDED. In order to accept the Offer, a duly executed and properly completed Letter of Transmittal and any required signature guarantees, or an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry delivery of Shares, and any other required documents should be sent to the Depositary and either Share Certificates representing the tendered Shares should be delivered to the Depositary, or Shares should be tendered by book-entry transfer into the Depositary's account maintained at the Book Entry Transfer Facility (as described in the Offer to Purchase), all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. If holders of Shares wish to tender, but it is impracticable for them to forward their Share Certificates or other required documents on or prior to the Expiration Date or to comply with the book-entry transfer procedures on a timely basis, a tender may be effected by following the guaranteed delivery procedures specified in Section 3, "Procedures for Accepting the Offer and Tendering Shares," of the Offer to Purchase. Purchaser will not pay any commissions or fees to any broker, dealer or other person (other than the Depositary, the Dealer Manager and the Information Agent) for soliciting tenders of Shares pursuant to the Offer. Purchaser will, however, upon request, reimburse you for customary clerical and mailing expenses incurred by you in forwarding any of the enclosed materials to your clients. Purchaser will pay or cause to be paid any stock transfer taxes payable on the transfer of Shares to it, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Any inquiries you may have with respect to the Offer should be addressed to, and additional copies of the enclosed material may be obtained from, the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth on the back cover of the Offer to Purchase. Very truly yours, Credit Suisse First Boston Corporation NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE DEALER MANAGER, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. EX-99.A.5 6 FORM OF LETTER TO CLIENTS 1 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF CONNING CORPORATION AT $12.50 NET PER SHARE BY CC MERGER SUB INC. AN INDIRECT WHOLLY OWNED SUBSIDIARY OF METROPOLITAN LIFE INSURANCE COMPANY THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON MONDAY, APRIL 17, 2000, UNLESS THE OFFER IS EXTENDED. March 20, 2000 To Our Clients: Enclosed for your consideration are the Offer to Purchase, dated March 20, 2000 (the "Offer to Purchase"), and the related letter of transmittal (the "Letter of Transmittal," which together with the Offer to Purchase, as amended or supplemented from time to time, collectively constitute the "Offer") relating to the offer by CC Merger Sub Inc., a Missouri corporation ("Purchaser") and an indirect wholly owned subsidiary of Metropolitan Life Insurance Company, a New York life insurance company ("Parent"), to purchase all outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of Conning Corporation, a Missouri corporation (the "Company"), at a purchase price of $12.50 per Share, net to the seller in cash (less any required withholding taxes), without interest thereon, upon the terms and subject to the conditions set forth in the Offer. Holders of Shares whose certificates for such Shares (the "Share Certificates") are not immediately available, or who cannot deliver their Share Certificates and all other required documents to ChaseMellon Shareholder Services L.L.C. (the "Depositary") on or prior to the Expiration Date (as defined in the Offer to Purchase), or who cannot complete the procedures for book-entry transfer on a timely basis, must tender their Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. Accordingly, we request instructions as to whether you wish to have us tender on your behalf any or all Shares held by us for your account pursuant to the terms and conditions set forth in the Offer. Please note the following: 1. The tender price is $12.50 per Share, net to you in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer. 2 2. The Offer is being made for all outstanding Shares. 3. The special committee of the Board of Directors of the Company has determined that the Offer and the Merger are fair to, advisable and in the best interests of the Company and its stockholders, and has recommended to the Board of Directors of the Company that it recommend to the Conning stockholders acceptance of the Offer and, if necessary, approval of the Merger Agreement (as defined below). The Board of Directors of the Company has determined that, based upon the recommendation of the special committee and other considerations, the Offer and the Merger are fair to, advisable and in the best interests of the Company and its stockholders and has voted to recommend to the Conning stockholders acceptance of the Offer and, if necessary, approval of the Merger Agreement. The Board of Directors of the Company recommends that the Company's stockholders tender their Shares pursuant to the Offer and, if necessary, approve the Merger Agreement. 4. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of March 9, 2000 (the "Merger Agreement"), among Parent, Purchaser and the Company pursuant to which, following the consummation of the Offer and in accordance with the Missouri General and Business Corporation Law, and subject to the satisfaction or waiver of certain conditions, the Purchaser will be merged with and into the Company (the "Merger"), with the Company continuing as the surviving corporation and as a wholly owned subsidiary of Parent. 5. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER ENOUGH SHARES SO THAT, INCLUDING THE SHARES PARENT ALREADY BENEFICIALLY OWNS, PARENT WOULD CONTROL AT LEAST TWO-THIRDS OF THE OUTSTANDING SHARES. THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THE OFFER TO PURCHASE. SEE SECTION 12, "CONDITIONS OF THE OFFER," OF THE OFFER TO PURCHASE. 6. Any stock transfer taxes applicable to the sale of Shares to the Purchaser pursuant to the Offer will be paid by the Purchaser, except as otherwise provided in Instruction 6 of the Letter of Transmittal. 7. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on Monday, April 17, 2000, unless the Offer is extended. 8. Payment for Shares purchased pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (a) Share Certificates or timely confirmation of the book-entry transfer of such Shares into the account maintained by the Depositary at The Depository Trust Company, pursuant to the procedures set forth in Section 3, "Acceptance for Payment and Payment for Common Shares," of the Offer to Purchase, (b) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase), in connection with a book-entry delivery, and (c) any other documents required by the Letter of Transmittal. Accordingly, payment may not be made to all tendering stockholders at the same time, depending upon when Share Certificates or confirmations of book-entry transfer of such Shares into the Depositary's account at a Book-Entry Transfer Facility are actually received by the Depositary. If you wish to have us tender any or all of the Shares held by us for your account, please so instruct us by completing, executing, detaching and returning to us the instruction form set forth on the back page of this letter. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified on the back page of this letter. An envelope to return your instructions to us is enclosed. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER. Purchaser is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of the Shares pursuant thereto, Purchaser will make a good faith effort to comply with such statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, Purchaser cannot comply with such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer is being made on behalf of Purchaser by Credit Suisse First Boston Corporation (the Dealer Manager), or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. 3 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF CONNING CORPORATION BY CC MERGER SUB INC. AN INDIRECT WHOLLY OWNED SUBSIDIARY OF METROPOLITAN LIFE INSURANCE COMPANY The undersigned acknowledge(s) receipt of your letter, the enclosed Offer to Purchase, dated March 20, 2000 (the "Offer to Purchase"), and the related Letter of Transmittal (which together with the Offer to Purchase constitute the "Offer") in connection with the offer by CC Merger Sub Inc., a Missouri corporation ("Purchaser") and an indirect wholly owned subsidiary of Metropolitan Life Insurance Company, a New York life insurance company, to purchase all outstanding shares of Common Stock, par value $.01 per share (the "Shares"), of Conning Corporation, a Missouri corporation, at a purchase price of $12.50 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase. This will instruct you to tender to Purchaser the number of Shares indicated below (or if no number is indicated below, all Shares) which are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. Number of Shares to Be Tendered: Shares* - -------------------------------------------------------------------------------- Sign Below Account Number: Signature(s) - --------------------------------------- --------------------------------------- Dated: - ---------------, 2000 --------------------------------------- - -------------------------------------------------------------------------------- PLEASE TYPE OR PRINT NAME(S) - -------------------------------------------------------------------------------- PLEASE TYPE OR PRINT ADDRESS(ES) HERE - -------------------------------------------------------------------------------- AREA CODE AND TELEPHONE NUMBER - -------------------------------------------------------------------------------- TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER(S) - --------------- * Unless otherwise indicated, it will be assumed that you instruct us to tender all Shares held by us for your account. EX-99.A.6 7 TEXT OF PROPOSAL LETTER 1 Exhibit (a)(6) [METROPOLITAN LIFE INSURANCE COMPANY LETTERHEAD] January 14, 2000 By Hand Board of Directors Conning Corporation 700 Market Street St. Louis, Missouri 63101 Gentlemen: This letter will serve to set forth in writing the general outline of the transaction we are proposing (the "Proposed Transaction") between Metropolitan Life Insurance Company ("MetLife") and Conning Corporation ("Conning"). In conjunction with our acquisition of GenAmerica Corporation ("GenAmerica"), and therefore indirectly a controlling interest in Conning, we have been considering the most effective way to partner with Conning going forward, as well as how best to arrange for the management of the general account assets of General American Life Insurance Company ("GALIC") currently managed by Conning. With regard to the former, MetLife recognizes Conning's premier position in the marketplace, and believes the addition of Conning will further enhance MetLife's asset management capabilities. In connection with the latter, we have determined that while MetLife has the highest regard for the asset management expertise of Conning, MetLife will assume the management of the general account assets of GALIC, as is its right under the investment management agreement between GALIC and Conning. This action is consistent with MetLife's general policy of managing the general account assets of its insurance affiliates, which we consider to be a highly efficient approach. As to the remainder of Conning's business, we have determined that it would be desirable if Conning becomes a wholly owned subsidiary of MetLife, and accordingly are proposing to acquire all of the publicly held shares of common stock of Conning Corporation not currently held by GALIC. Form of Transaction. The Proposed Transaction would include as its first step a tender offer by a newly formed subsidiary of MetLife for up to all of the outstanding shares of Conning common stock, other than those held through GenAmerica, at a cash 2 Board of Directors January 13, 2000 Page 2 price per share of $10.50. This price represents a premium of 21% to the average of the closing prices of Conning's stock over the past 20 days. The offer would be conditioned on the valid tender and non-withdrawal of sufficient shares of Conning common stock to increase MetLife's ownership (including through GenAmerica) to in excess of two-thirds of the fully diluted shares of Conning common stock. Promptly following consummation of the tender offer, the remaining shares of Conning common stock would be acquired at the same cash price per share as a result of a merger between Conning and a subsidiary of MetLife. The Proposed Transaction would be effected pursuant to a merger agreement in form and substance customary for transactions of this sort, which would be entered into only following approval and recommendation by the unaffiliated members of the Conning Board of Directors, who we would expect to serve as a Special Committee of the Board in connection with the consideration of the Proposed Transaction, and only upon the receipt by Conning of an opinion from your independent financial advisor as to the fairness from a financial point of view of the Proposed Transaction to the shareholders of Conning unaffiliated with MetLife or GenAmerica. Approval by MetLife's Board of Directors would also be a condition to entering into the merger agreement. Please understand also that MetLife is not interested, under any circumstances, in selling its interest in Conning. Management. We are keenly aware of the paramount importance of management in the success of Conning to date, and we would necessarily be counting on the existing management team to be firmly committed to Conning's continuing prosperity. As a part of the Proposed Transaction, we would expect to put in place arrangements with existing senior management of Conning to incentivize them on a going-forward basis. Financing. The Proposed Transaction is not subject to any financing contingency. MetLife has sufficient funds immediately available to complete the offer and the merger. As you know, we and our financial and legal advisors (Credit Suisse First Boston and Wachtell, Lipton, Rosen & Katz) are prepared to meet with the Special Committee and its legal and financial advisors at your convenience to review the Proposed Transaction and anything else that may be of interest or assistance. I look forward to continuing to work with you on the Proposed Transaction. Sincerely, /s/ Gary Beller Gary Beller EX-99.A.7 8 TEXT OF PRESS RELEASE 1 EXHIBIT (a)(7) Contact: Kevin Foley 212 578-4132 Kfoley@metlife.com METLIFE PROPOSES TO ACQUIRE PUBLIC SHARES OF CONNING FOR $10.50 PER SHARE IN CASH New York, January 18, 2000 -- MetLife today announced that MetLife has proposed to acquire all of the outstanding shares of Conning Corporation (NASDAQ: CNNG) common stock not already controlled by MetLife for $10.50 per share in cash, which would represent a premium of approximately 21% above the average of the closing prices of the Conning stock over the past 20 trading days. MetLife acquired its 61% interest in Conning as a result of its January 6 acquisition of GenAmerica Corporation, Conning's indirect majority owner. The transaction would be subject to customary terms and conditions, including regulatory approvals, and approval by the MetLife Board of Directors. MetLife reserves the right to amend or withdraw the proposal at any time in its sole discretion. MetLife stated in its proposal that it is not interested, under any circumstances, in selling its interest in Conning. "MetLife recognizes Conning's premier position in the marketplace and believes it will make an important addition to the MetLife asset management family," said Gary Beller, MetLife General Counsel and Senior Executive Vice President. "We look forward to working with its highly skilled staff and continuing to grow Conning's customer base while finding the right synergies with our existing asset management operations," Mr. Beller added. MetLife plans, pursuant to the investment management agreement with Conning, to assume the management of the general account assets of General American Life Insurance Company that are currently managed by Conning. "This is consistent with MetLife's general policy of managing the general account assets of its insurance affiliates which we consider to be a highly efficient approach," added Mr. Beller. Conning provides asset management services primarily to insurance companies and institutional investors, manages private equity funds investing in insurance and insurance-related companies, and conducts in-depth research on the insurance industry. Headquartered in New York City since 1868, MetLife is a leading provider of insurance and financial products and services to a broad spectrum of individual and group customers. The company, with $404.2 billion of assets under management as of September 30, 1999 on a pro-forma basis, including the acquisition of GenAmerica Corp., provides individual insurance and investment products to approximately 9 million households in the U.S. In addition, the corporations and institutions that MetLife provides with group insurance and investment products have approximately 33 million employees and members. MetLife also has international insurance operations in ten countries, with a focus on the Asia/Pacific region, Latin America and selected European countries. For more information about MetLife, please visit the company's Web site at www.metlife.com. * * * This press release is not an offer or the solicitation of an offer to buy any securities of Conning, and no such offer or solicitation will be made except in compliance with applicable securities laws. Certain of the above statements are forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and the Securities Litigation Reform Act of 1995. Factors that could have a material effect include the following: business conditions in Conning's industry and in the general economy; actual and expected results of operations of Conning and the other parties to any possible transaction; changes in the financial or capital markets; and the risk factors listed from time to time in Conning's reports filed with the Securities and Exchange Commission. Readers are cautioned that such forward-looking statements are not guarantees of future performance. EX-99.A.8 9 TEXT OF JOINT PRESS RELEASE 1 Contact: METLIFE CONNING Kevin Foley Investor Contact: Paul Kopsky, Jr. 212 578-4132 (314) 444-0715 Kfoley@metlife.com Media Contact: David Garino (314) 982-1700 METLIFE AND CONNING ANNOUNCE MERGER AGREEMENT New York, March 9, 2000 -- Metropolitan Life Insurance Company (MetLife) and Conning Corporation (NASDAQ:CNNG) today announced that they have entered into a definitive merger agreement providing for the acquisition by MetLife of all of the outstanding shares of Conning not already controlled by MetLife for $12.50 per share in cash. This is an increase from the $10.50 per share price contained in MetLife's initial proposal announced January 18, 2000. MetLife acquired its 61 percent interest in Conning as a result of its January 6, 2000 acquisition of GenAmerica Corporation, Conning's indirect majority owner. The board of directors of each company has approved the merger agreement. MetLife is expected to commence the tender offer for Conning's outstanding shares by March 20, 2000. The tender offer will remain open for 20 business days, unless extended pursuant to the merger agreement, and is conditioned upon the tender of a sufficient number of shares to give MetLife and its affiliates ownership of at least two-thirds of Conning's outstanding shares. Shares not tendered will be converted into the right to receive the same $12.50 per share in cash. The merger agreement contains customary closing conditions. Conning provides asset management services primarily to insurance companies and institutional investors, manages private equity funds investing in insurance and insurance-related companies, and conducts in-depth research on the insurance industry. Headquartered in New York City since 1868, MetLife is a leading provider of insurance and financial products and services to a broad spectrum of individual and group customers. The company, with $404.2 billion of assets under management as of September 30, 1999 on a pro-forma basis, including the acquisition of GenAmerica Corp., provides individual insurance and investment products to approximately 9 million households in the U.S. In addition, the corporations and institutions that MetLife provides with group insurance and investment products have approximately 33 million employees and members. MetLife also has international insurance operations in ten countries, with a focus on the Asia/Pacific region, Latin America and selected European countries. For more information about MetLife, please visit the company's Web site at www.metlife.com. # # # All stockholders should read the tender offer statement concerning the tender offer that will be filed by MetLife with the Securities and Exchange Commission (SEC) and mailed to stockholders. The tender offer statement will contain important information that stockholders should consider before making any decision regarding tendering their shares. You will be able to obtain the tender offer statement, as well as other filings containing information about MetLife and Conning, without charge, at the SEC's Internet site (www.sec.gov). Copies of the tender offer statement and other SEC filings can also be obtained, without charge, from the MetLife Secretary. EX-99.A.9 10 GUIDELINES FOR CERTIFICATION OF TAXPAYER ID 1 EXHIBIT (a)(9) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE (YOU) TO GIVE THE PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer. All "Section" references are to the Internal Revenue Code of 1986, as amended. "IRS" is the Internal Revenue Service.
- ------------------------------------------------------------ GIVE THE NAME AND SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - ------------------------------------------------------------ 1. Individual The individual 2. Two or more individuals(joint The actual owner of account) the account or, if combined funds, the first individual on the account(1) 3. Custodian account of a minor The minor(2) (Uniform Gift to Minors Act) 4. a. The usual revocable savings The grantor- trust (grantor is also trustee) trustee(1) b. So-called trust account that is The actual owner(1) not a legal or valid trust under state law 5. Sole proprietorship The owner(3) - ------------------------------------------------------------
- ------------------------------------------------------------ GIVE THE NAME AND EMPLOYER IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - ------------------------------------------------------------ 6. Sole proprietorship The owner(3) 7. A valid trust, estate, or pension The legal entity(4) trust 8. Corporate The corporation 9. Association, club, religious, The organization charitable, educational, or other tax-exempt organization 10. Partnership The partnership 11. A broker or registered nominee The broker or nominee 12. Account with the Department of The public entity Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments - ------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If only one person on a joint account has a social security number, that person's number must be furnished. (2) Circle the minor's name and furnish the minor's social security number. (3) You must show your individual name, but you may also enter your business or "doing business as" name. You may use either your social security number or your employer identification number (if you have one). (4) List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the taxpayer identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title.) NOTE: If no name is circled when there is more than one name listed, the number will be considered to be that of the first name listed. 2 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you don't have a taxpayer identification number, obtain Form SS-5, Application for a Social Security Card at the local Social Security Administration office, or Form SS-4, Application for Employer Identification Number, by calling 1 (800) TAX-FORM, and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from withholding include: - An organization exempt from tax under Section 501(a), an individual retirement account (IRA), or a custodial account under Section 403(b)(7), if the account satisfies the requirements of Section 401(f)(2). - The United States or a state thereof, the District of Columbia, a possession of the United States, or a political subdivision or wholly-owned agency or instrumentality of any one or more of the foregoing. - An international organization or any agency or instrumentality thereof. - A foreign government and any political subdivision, agency or instrumentality thereof. Payees that may be exempt from backup withholding include: - A corporation. - A financial institution. - A dealer in securities or commodities required to register in the United States, the District of Columbia, or a possession of the United States. - A real estate investment trust. - A common trust fund operated by a bank under Section 584(a). - An entity registered at all times during the tax year under the Investment Company Act of 1940. - A middleman known in the investment community as a nominee or custodian. - A futures commission merchant registered with the Commodity Futures Trading Commission. - A foreign central bank of issue. - A trust exempt from tax under Section 664 or described in Section 4947. Payments of dividends and patronage dividends generally exempt from backup withholding include: - Payments to nonresident aliens subject to withholding under Section 1441. - Payments to partnerships not engaged in a trade or business in the United States and that have at least one nonresident alien partner. - Payments of patronage dividends not paid in money. - Payments made by certain foreign organizations. - Section 404(k) distributions made by an ESOP. Payments of interest generally exempt from backup withholding include: - Payments of tax-exempt interest (including exempt-interest dividends under Section 852). - Payments described in Section 6049(b)(5) to nonresident aliens. - Payments on tax-free covenant bonds under Section 1451. - Payments made by certain foreign organizations. Certain payments, other than payments of interest, dividends, and patronage dividends, that are exempt from information reporting are also exempt from backup withholding. For details, see Sections 6041, 6041A, 6042, 6044, 6045, 6049, 6050A and 6050N and the regulations thereunder. EXEMPT PAYEES SHOULD COMPLETE A SUBSTITUTE FORM W-9 TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. Furnish your taxpayer identification number, write "EXEMPT" on the form, sign and date the form and return it to the payer. PRIVACY ACT NOTICE.--Section 6109 requires you to provide your correct taxpayer identification number to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes and to help verify the accuracy of your return and may also provide this information to various government agencies for tax enforcement or litigation purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.A.10 11 FORM OF SUMMARY ADVERTISEMENT 1 This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares (as defined below). The Offer (as defined below) is made solely pursuant to the Offer to Purchase, dated March 20, 2000, and the related Letter of Transmittal (and any amendments or supplements thereto), and is being made to all holders of Shares. Purchaser (as defined below) is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of the Shares pursuant thereto, Purchaser shall make a good faith effort to comply with such statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, Purchaser cannot comply with such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) holders of Shares in such state. In any jurisdiction where the securities, "blue sky" or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by Credit Suisse First Boston Corporation ("Credit Suisse First Boston" or the "Dealer Manager") or one or more registered brokers or dealers licensed under the laws of such jurisdiction. Notice of Offer to Purchase for Cash All Outstanding Shares of Common Stock of CONNING CORPORATION at $12.50 NET PER SHARE by CC MERGER SUB INC. an indirect wholly owned subsidiary of METROPOLITAN LIFE INSURANCE COMPANY CC Merger Sub Inc., a Missouri corporation ("Purchaser") and an indirect wholly owned subsidiary of Metropolitan Life Insurance Company, a New York life insurance company ("Parent"), hereby offers to purchase all outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of Conning Corporation, a Missouri corporation (the "Company"), at a purchase price of $12.50 per Share, net to the seller in cash (less any required withholding taxes), without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated March 20, 2000 (the "Offer to Purchase"), and in the related letter of transmittal (the "Letter of Transmittal," which together with the Offer to Purchase, as amended or supplemented from time to time, collectively constitute the "Offer"). Stockholders of record who tender directly to the Depositary (as defined below) will not be obligated to pay brokerage fees or commissions or, subject to Instruction 6 of the Letter of Transmittal, stock transfer taxes, if any, on the purchase of Shares by Purchaser pursuant to the Offer. Stockholders who hold their Shares through a broker or bank should consult such institution as to whether it charges any service fees. Purchaser will pay all charges and expenses of the Dealer Manager, ChaseMellon Shareholder Services L.L.C., which is acting as depositary (the "Depositary"), and MacKenzie Partners, Inc., which is acting as the information agent (the "Information Agent"), incurred in 2 connection with the Offer. Following the consummation of the Offer, the Purchaser intends to effect the Merger (as defined below) described below. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME ON MONDAY, APRIL 17, 2000, UNLESS THE OFFER IS EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER ENOUGH SHARES SO THAT, INCLUDING THE SHARES PARENT ALREADY BENEFICIALLY OWNS, PARENT WOULD CONTROL TWO-THIRDS OF THE OUTSTANDING SHARES (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THE OFFER TO PURCHASE. SEE SECTION 12, "CONDITIONS OF THE OFFER," OF THE OFFER TO PURCHASE. The special committee of the Board of Directors of the Company has determined that the Offer and the Merger are fair to, advisable and in the best interests of the Company and its stockholders, and has recommended to the Board of Directors of the Company that it recommend to the Conning stockholders acceptance of the Offer and, if necessary, approval of the Merger Agreement (as defined below) and the Offer. THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT, BASED UPON THE RECOMMENDATION OF THE SPECIAL COMMITTEE AND OTHER CONSIDERATIONS, THE OFFER AND THE MERGER ARE FAIR TO, ADVISABLE AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS, AND HAS VOTED TO RECOMMEND TO THE CONNING STOCKHOLDERS ACCEPTANCE OF THE OFFER AND, IF NECESSARY, APPROVAL OF THE MERGER AGREEMENT. THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS TENDER THEIR SHARES PURSUANT TO THE OFFER AND APPROVE AND ADOPT THE MERGER AGREEMENT. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of March 9, 2000 (the "Merger Agreement"), among Parent, Purchaser and the Company pursuant to which, following the consummation of the Offer and in accordance with the Missouri General and Business Corporation Law, and subject to the satisfaction or waiver of certain conditions, Purchaser will be merged with and into the Company (the "Merger"), with the Company continuing as the surviving corporation and as an indirect wholly owned subsidiary of Parent. The purpose of the Offer and the Merger is to enable Parent to acquire control of the entire equity interest in Conning. At the effective time of the Merger (the "Effective Time"), each Share issued and outstanding immediately prior to the Effective Time (other than any Shares held by Parent, Purchaser, any direct or indirect wholly owned subsidiary of Parent or Purchaser, in the treasury of the Company or by any wholly owned subsidiary of the Company, and other than Shares, if any, held by stockholders who validly perfect their appraisal rights under Missouri law) will be converted into the right to receive $12.50 in cash, without interest, or any higher price that is paid in the Offer (less any withholding taxes required under applicable law). The Merger Agreement is more fully described in the Offer to Purchase. For purposes of the Offer, Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered to Purchaser and not properly withdrawn if, as and when Purchaser gives oral or written notice to the Depositary of Purchaser's acceptance of such Shares for payment pursuant to the Offer. In all cases, upon the terms and subject to the conditions of the Offer, payment for Shares purchased pursuant to the Offer, including during any subsequent offering period, will be made by deposit of the purchase price therefor with the 2 3 Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from Purchaser and transmitting payment to validly tendering stockholders. Under no circumstances will interest on the purchase price for Shares be paid by Purchaser, regardless of any extension of the Offer or any delay in making such payment. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates representing Shares (the "Share Certificates") or timely confirmation of the book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company ("DTC") pursuant to the procedures set forth in Section 3, "Procedures for Accepting the Offer and Tendering Shares," of the Offer to Purchase, (ii) the Letter of Transmittal (or a manually signed facsimile thereof), delivered with the Offer to Purchase, properly completed and duly executed, with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry transfer of Shares, and (iii) any other documents required by the Letter of Transmittal. If any of the conditions set forth in the Offer to Purchase that relate to the Purchaser's obligations to purchase the Shares are not satisfied by 12:00 Midnight, New York City time, on Monday, April 17, 2000 (or any other time then set as the Expiration Date), the Purchaser may, subject to the Merger Agreement, elect to, (i) extend the Offer and, subject to applicable withdrawal rights, retain all tendered Shares until the expiration of the Offer, as extended, (ii) subject to complying with applicable rules and regulations of the Securities and Exchange Commission, accept for payment all Shares so tendered and not extend the Offer, or (iii) terminate the Offer and not accept for payment any Shares and return all tendered Shares to tendering shareholders. The term "Expiration Date" means 12:00 Midnight, New York City time, on Monday, April 17, 2000, unless the Purchaser shall have extended the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser shall expire. Subject to the terms and conditions set forth in the Offer to Purchase and the provisions of the Merger Agreement and the applicable rules and regulations of the Securities and Exchange Commission (the "SEC"), Purchaser expressly reserves the right, in its sole discretion, at any time and from time to time, to extend the period of time during which the Offer is open and thereby to delay acceptance for payment of, and payment for, any Shares, if the conditions to the Offer described in Section 12, "Conditions of the Offer," of the Offer to Purchase have not been satisfied or earlier waived. During any such extension, all Shares previously tendered and not properly withdrawn will remain subject to the Offer, subject to the rights of a tendering stockholder to withdraw such stockholder's Shares. Subject to the provisions of the Merger Agreement and the applicable rules and regulations of the SEC, the Purchaser also reserves the right, in its sole discretion, at any time or from time to time, to: (1) terminate the Offer (whether or not any Shares have previously been purchased pursuant to the Offer) if the conditions referred to in Section 12, "Conditions of the Offer," of the Offer to Purchase has not been satisfied or earlier waived or upon the occurrence of any event specified in such section; and (2) waive any such unsatisfied condition; or (3) except as set forth in the Merger Agreement, otherwise amend the Offer in any respect, in each case, by giving oral or written notice of the termination, waiver or amendment to the Depositary and, other than, in the case of any waiver, by making a public announcement thereof. 3 4 Any extension, delay, termination or amendment of the Offer will be followed as promptly as practicable by a public announcement. An announcement in the case of an extension will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. In addition, following the Expiration Date (as it may be so extended) and the purchase of Shares in the Offer, there may be a subsequent offering period, lasting for at least three and not more than 20 business days; stockholders who tender Shares during a subsequent offering period will not have the right to withdraw their Shares during such subsequent offering period. THE PURCHASER EXPECTS TO MAKE A SUBSEQUENT OFFERING PERIOD AVAILABLE, UNLESS THERE ARE VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN ENOUGH SHARES SO THAT, INCLUDING THE SHARES PARENT ALREADY BENEFICIALLY OWNS, PARENT WOULD CONTROL 90% OF THE OUTSTANDING SHARES, IN WHICH CASE THE MERGER WILL BE CONSUMMATED AS SOON AS POSSIBLE AFTER THE EXPIRATION DATE AND WITHOUT A VOTE OF COMPANY STOCKHOLDERS. Conning stockholders who had not previously tendered their Shares will receive the same price per Share upon completion of the merger. Tenders of Shares made pursuant to the Offer are irrevocable, except that Shares tendered pursuant to the Offer (except during any subsequent offering period) may be withdrawn at any time on or prior to the Expiration Date and, unless theretofore accepted for payment as provided in the Offer to Purchase, may also be withdrawn at any time after May 19, 2000. In order for a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn, and (if Share Certificates have been tendered) the name of the registered holder of the Shares as set forth in the Share Certificate, if different from that of the person who tendered such Shares. If Share Certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then prior to the physical release of such certificates, unless the Shares have been tendered by an Eligible Institution (as defined in the Offer to Purchase), the tendering stockholder must submit the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn and the signature on the notice of withdrawal must be guaranteed by an Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry transfer as set forth in Section 3, "Procedures for Accepting the Offer and Tendering Shares," of the Offer to Purchase, any notice of withdrawal must also specify the name and number of the account at the appropriate Book-Entry Transfer Facility (as defined in the Offer to Purchase) to be credited with the withdrawn Shares, in which case a notice of withdrawal will be effective if delivered to the Depositary by any method of delivery described in this paragraph. Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn will thereafter be deemed not validly tendered for purposes of the Offer, but may be tendered at any subsequent time prior to the Expiration Date by following any of the procedures described in Section 3, "Procedures for Accepting the Offer and Tendering Shares," of the Offer to Purchase. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by Purchaser, in its sole discretion, whose determination shall be final and binding. The receipt of cash in exchange for Shares pursuant to the Offer (or the Merger) will be a taxable transaction for U.S. federal income tax purposes and may also be a taxable transaction under the applicable state, local or foreign tax laws. Generally, a stockholder who receives cash in exchange for Shares pursuant to the Offer (or the Merger) will recognize gain or loss for U.S. 4 5 federal income tax purposes equal to the difference between the amount of cash received and such stockholder's adjusted tax basis in the Shares exchanged therefor. Provided that such Shares constitute capital assets in the hands of the stockholder, such gain or loss will be capital gain or loss, and will be long-term capital gain or loss if the holder has held the Shares for more than one year at the time of sale. The maximum U.S. federal income tax rate applicable to individual taxpayers on long-term capital gain is 20%, and the deductibility of capital losses is subject to limitations. ALL STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS AND OF CHANGES IN SUCH TAX LAWS. For a more complete description of certain U.S. federal income tax consequences of the Offer and the Merger see Section II, "Purpose of, Alternative to, Reasons for and Effects of the Tender Offer and the Merger," of the Offer to Purchase. The information required to be disclosed pursuant to Rules 14d-6(d)(1) and 13e-4(d)(1) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase, and is incorporated herein by reference. The Company has provided Purchaser with the Company's stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and the related Letter of Transmittal and, if required, other relevant materials will be mailed to record holders of Shares whose names appear on the stockholder list, and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder list or who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Questions and requests for assistance or for additional copies of the Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other tender offer materials may be directed to the Dealer Manager or the Information Agent at their respective telephone numbers and addresses listed below, and copies will be furnished at Purchaser's expense. Neither Parent nor Purchaser will pay any fees or commissions to any broker, dealer or other person other than the Depositary, the Dealer Manager and the Information Agent in connection with soliciting tenders of Shares pursuant to the Offer. The Information Agent for the Offer is: [MACKENZIE PARTNERS, INC. LOGO] 156 Fifth Avenue New York, New York 10010 5 6 (212) 929-5500 (Call Collect) or CALL TOLL-FREE (800) 322-2885 The Dealer Manager for the Offer is: [CREDIT SUISSE/FIRST BOSTON LOGO] Eleven Madison Avenue New York, New York 10010-3629 Call Toll Free (800) 646-4543 March 20, 2000 6 EX-99.C.1 12 FAIRNESS OPINION OF SALOMON SMITH BARNEY, INC. 1 Salomon Smith Barney - -------------------- A member of Citigroup [logo] March 9, 2000 Special Committee of the Board of Directors Conning Corporation 700 Market Street St. Louis, Missouri 63101 Ladies and Gentlemen: You have requested our opinion as to the fairness, from a financial point of view, to the holders of the common stock, par value $0.01 per share (the "Common Stock"), of Conning Corporation (the "Company"), other than Metropolitan Life Insurance Company ("Parent" or "MetLife") and its affiliates, of the consideration to be received by such stockholders (the "Non-MetLife Stockholders") in the proposed acquisition by Parent of the outstanding shares of Common Stock owned by the Non-MetLife Stockholders (the "Proposed Transaction") pursuant to an Agreement and Plan of Merger (the "Merger Agreement") to be entered into by and among Parent, CC Merger Sub Inc. ("Purchaser") and the Company. As more fully described in the Merger Agreement, Purchaser will make a cash tender offer (the "Offer") to acquire all the issued and outstanding shares of Common Stock not owned by Parent or its subsidiaries for $12.50 per share (the "Offer Price"). We understand that consummation of the Offer will be conditioned upon the tender of a number of shares of Common Stock that, when aggregated with the number of shares of Common Stock currently owned by Parent and its affiliates, represents at least two-thirds of the total number of outstanding shares of Common Stock. We also understand that, following the Offer, Purchaser would be merged with and into the Company and each outstanding share of Common Stock not beneficially owned by Parent and its affiliates would be converted into the right to receive the Offer Price. In arriving at our opinion, we reviewed a draft of the Merger Agreement dated March 7, 2000 and held discussions with certain senior officers, directors and other representatives and advisors of the Company concerning the businesses, operations and prospects of the Company. We examined certain publicly available business and financial information relating to the Company as well as certain financial forecasts and other information and data for the Company which were provided to or otherwise discussed with us by the management of the Company. We reviewed the financial terms of the Proposed Transaction as set forth in the Merger Agreement in relation to, among other things: current and historical market prices and trading volumes of the Common Stock; the historical and projected earnings and other operating data of the Company; and the capitalization and financial condition of the Company. We considered, to the extent publicly available, the financial terms of certain other similar transactions recently effected which we considered relevant in evaluating the Proposed Transaction and analyzed certain financial, stock market and other publicly available information relating to the businesses of other companies whose operations we considered relevant in evaluating those of the Company. In addition to the foregoing, we conducted such other analyses and examinations and considered such other information and financial, economic and market criteria as we deemed appropriate in arriving at our opinion. 2 Special Committee of the Board of Directors Conning Corporation March 9, 2000 Page 2 In rendering our opinion, we have assumed and relied, without independent verification, upon the accuracy and completeness of all financial and other information and data publicly available or furnished to or otherwise reviewed by or discussed with us. With respect to financial forecasts and other information and data provided to or otherwise reviewed by or discussed with us, we have been advised by the management of the Company that such forecasts and other information and data were reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of the Company as to the future financial performance of the Company. We have not made or been provided with an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of the Company nor have we made any physical inspection of the properties or assets of the Company. Representatives of the Company have advised us, and we have assumed, that the final terms of the Merger Agreement will not vary materially from those set forth in the draft reviewed by us. We have further assumed that the Proposed Transaction will be consummated in accordance with the terms of the Merger Agreement without waiver of any of the conditions precedent to the Proposed Transaction contained in the Agreement. We note that Parent and its affiliates hold approximately 61% of the outstanding Common Stock, and Parent has indicated that it is not interested, under any circumstances, in selling its interest in the Company. Accordingly, we were not requested to, and we did not, solicit third party indications of interest in the possible acquisition of all or a part of the Company, nor were we requested to consider, and our opinion does not address, the relative merits of the Proposed Transaction as compared to any alternative business strategies that might exist for the Company or the effect of any other transaction in which the Company might engage. In addition, we understand that Parent has stated its intention to terminate certain business relationships it and its affiliates have with the Company, and has begun the process of doing so. In arriving at our opinion, we have taken into account the prospective effect on the Company's revenues, cash flow and earnings of such termination of business and other potential loss of business derived from the Company's relationship with Parent and its affiliates. Our opinion is necessarily based upon information available to us, and financial, stock market and other conditions and circumstances existing and disclosed to us, as of the date hereof. Salomon Smith Barney Inc. has acted as financial advisor to the Special Committee of the Board of Directors of the Company (the "Special Committee") reviewing the Proposed Transaction, and in connection with it doing so, will receive a fee for such services, a significant portion of which is contingent upon the consummation of the Proposed Transaction. We have in the past provided and are currently providing investment banking services to Parent unrelated to the Proposed Transaction, for which services we will receive compensation. In particular, we anticipate that Salomon Smith Barney Inc. will have a significant role in MetLife's upcoming initial public offering. In the ordinary course of our business, we and our affiliates may actively trade or hold the securities of the Company and Parent for our own account or for the account of our customers and, accordingly, may at any time hold a long or short position in such securities. In addition, we and our affiliates (including Citigroup Inc. and its affiliates) may maintain relationships with the Company, Parent and their respective affiliates. 3 Special Committee of the Board of Directors Conning Corporation March 9, 2000 Page 3 Our advisory services and the opinion expressed herein are provided for the information of the Special Committee in its evaluation of the Proposed Transaction, and our opinion is not intended to be and does not constitute a recommendation to any Non-MetLife Stockholder as to whether such holder should tender shares of Common Stock in the Offer. This letter may be attached in its entirety as an exhibit to the Company's Schedule 14D-9 relating to the Offer. Based upon and subject to the foregoing, our experience as investment bankers, our work as described above and other factors we deemed relevant, we are of the opinion that, as of the date hereof, the Offer Price is fair, from a financial point of view, to the Non-MetLife Stockholders. Very truly yours, /s/ Salomon Smith Barney EX-99.C.2 13 OPINION OF CREDIT SUISSE FIRST BOSTON CORPORATION 1 [CREDIT SUISSE/FIRST BOSTON LOGO] March 8, 2000 Board of Directors Metropolitan Life Insurance Company One Madison Avenue New York, New York 10010 Dear Sirs and Mesdames: You have asked us to advise you with respect to the fairness to the Metropolitan Life Insurance Company (the "Acquiror") from a financial point of view of the aggregate consideration to be paid by the Acquiror pursuant to the terms of the Agreement and Plan of Merger (the "Acquisition Agreement"), among Conning Corporation (the "Company"), the Acquiror and CC Merger Sub Inc., an indirect wholly owned subsidiary of the Acquiror (the "Sub"). Pursuant to the Acquisition Agreement, the Acquiror, through Sub, will make a cash tender offer (the "Offer") for all of the issued and outstanding shares of common stock, par value $0.01 per share of the Company, not already owned by the Acquiror or its affiliates, at a price of $12.50 per share (the "Share Consideration"). Upon the terms and subject to the conditions set forth in the Merger Agreement, following consummation of the Offer, the Company will be merged with the Sub (the "Merger"), the Company will become a wholly owned subsidiary of the Acquiror and each outstanding share of common stock of the Company not owned by the Acquiror will be converted into the right to receive the Share Consideration. In arriving at our opinion, we have reviewed certain publicly available business and financial information relating to the Company, as well as a recent draft of the Acquisition Agreement. We have also reviewed certain other information, including financial forecasts, provided to us by the Company and the Acquiror, and have met with the Company's and the Acquiror's management to discuss the business and prospects of the Company. We have also considered certain financial and stock market data of the Company, and we have compared those data with similar data for other publicly held companies in businesses similar to the Company and we have considered the financial terms of certain other business combinations and other transactions which have recently been effected. We also considered such other information, financial studies, analyses and investigations and financial, economic and market criteria which we deemed relevant. In connection with our review, we have not assumed any responsibility for independent verification of any of the foregoing information and have relied on its being complete and accurate in all material respects. With respect to the financial forecasts, we have been advised, and we have assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the Company's and the Acquiror's managements as to the future financial performance of the Company. In addition, we have not been requested to make, and have not made, an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of the Company, nor have we been furnished with any such evaluations or appraisals. We have also assumed with your consent, that the executed Acquisition Agreement and all of the terms and conditions thereof will conform in all material respects with the draft of the Acquisition Agreement reviewed by us and that the Offer and the Merger will be consummated on the terms described in such draft. Our opinion is necessarily based upon financial, economic, market and other conditions as they exist and can be evaluated on the date hereof. With respect to outstanding litigation involving the Company, including litigation relating to the Offer and the Merger, in which significant damages are alleged, you have instructed us to rely solely upon the judgment of the management of the Company and its counsel that the outcome of the litigation will not have a material adverse effect on the financial condition or results of operations of the Company. 2 We have acted as financial advisor to the Acquiror in connection with the Merger and will receive a fee for our services, a significant portion of which is contingent upon the consummation of the Merger. In the past, we have performed and are currently providing certain investment banking services for the Acquiror unrelated to the proposed Offer and Merger, including acting as financial advisor in connection with the Acquiror's proposed demutualization and joint-lead manager in the related initial public offering, for which services we have received and expect to receive customary fees. In connection with the proposed initial public offering of MetLife, Inc., Credit Suisse Group, the ultimate parent of Credit Suisse First Boston Corporation, has agreed in principle that it or its affiliates will purchase, at the initial public offering price, in a private placement from MetLife, Inc., common stock which could represent approximately 4.9% of the total number of shares of MetLife, Inc.'s common stock outstanding upon consummation of the initial public offering and the private placements. In addition, we note that the Vice Chairman of the Acquiror is a member of the Board of Directors of Credit Suisse Group and an officer of the Acquiror is a member of the investment committee of Credit Suisse First Boston International Equity Partners, L.P. The Acquiror is also a limited partner of certain limited partnerships affiliated with Credit Suisse First Boston Corporation. In the ordinary course of our business, we and our affiliates may actively trade the debt and equity securities of both the Company and the Acquiror for our and such affiliates' own accounts and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities. It is understood that this letter is for the information of the Board of Directors of the Acquiror in connection with its consideration of the Offer and the Merger and is not to be quoted or referred to, in whole or in part, in any registration statement, tender offer statement, prospectus or proxy statement, or in any other document used in connection with the offering or sale of securities, nor shall this letter be used for any other purposes, without our prior written consent. This opinion does not address the fairness of the consideration to the public minority stockholders. Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the aggregate consideration to be paid by the Acquiror in the Offer and the Merger is fair to the Acquiror from a financial point of view. Very truly yours, CREDIT SUISSE FIRST BOSTON CORPORATION EX-99.C.3 14 REPORT OF SALOMON SMITH BARNEY, INC. 1 Confidential Presentation regarding: Project Spirit PRESENTATION TO THE INDEPENDENT COMMITTEE OF THE BOARD OF DIRECTORS March 2, 2000 SALOMON SMITH BARNEY --------------------------- A member of citigroup[LOGO] 2 PROJECT SPIRIT Disclaimer These materials are based solely on information received from publicly available documents and certain other information provided by the management of C Co. ("C Co." or the "Company"). Salomon Smith Barney Inc. ("Salomon Smith Barney") has had discussions with certain senior officers of C Co., but has not attempted independently to investigate or verify such information, and Salomon Smith Barney does not assume responsibility for the accuracy or completeness of such information. The projections included in these materials have been prepared by the management of C Co. Salomon Smith Barney has relied solely on such projections and, in preparing these materials has assumed that such projections were reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of C Co. Projections involve elements of subjective judgment and analysis, and there can be no assurance that such projections will be attained. Salomon Smith Barney expresses no opinion with respect to such projections or the assumptions underlying them. These materials are being furnished and should be considered only in connection with the advice or opinion being provided by Salomon Smith Barney in connection herewith. SALOMON SMITH BARNEY --------------------------- A member of citigroup[LOGO] 3 PROJECT SPIRIT Table of Contents 1 TRANSACTION SUMMARY 2 EQUITY MARKET REACTION AND UPDATE 3 HISTORICAL OPERATING PERFORMANCE 4 C CO. VALUATION ANALYSIS A. Market Based Data B. Discounted Cash Flow APPENDIX A. Projected Financial Statements B. Public Comparable Mortgage Companies SALOMON SMITH BARNEY --------------------------- A member of citigroup[LOGO] 4 PROJECT SPIRIT 1 TRANSACTION SUMMARY SALOMON SMITH BARNEY --------------------------- A member of citigroup[LOGO] 5 PROJECT SPIRIT Transaction Summary
- ----------------------------------------------------- ---------------------------------------------- ITEM OFFER TERMS - ----------------------------------------------------- ---------------------------------------------- Transaction M Co. acquires the outstanding shares of C Co. Price per Share $12.50 Total Transaction Value $174.6 million Value of Minority Interest $68.1 million Form of Consideration 100% cash Price as a Multiple of: 2000 IBES EPS (as of 2/25/00) 11.2x 2000 Management Projections EPS 13.4 2000 Sensitivity Analysis EPS 17.3 Price Premium/(Discount) to: 52 Week High ($18.75) (33.3%) 52 Week Low ($6.75) 85.2 1-Day Prior to M Co. Initial Offer ($9.5625) 30.7 1-Month Prior to M Co. Initial Offer ($8.4375) 48.1
SALOMON SMITH BARNEY --------------------------- 1 A member of citigroup[LOGO] 6 PROJECT SPIRIT 2 EQUITY MARKET REACTION AND UPDATE SALOMON SMITH BARNEY --------------------------- A member of citigroup[LOGO] 7 PROJECT SPIRIT C Co. Trading History PRICE/VOLUME Daily Data: IPO Date (December 17, 1997) through February 25, 2000 [GRAPHIC OMITTED] (a) 07/29/99: A Co. announces a loss of $179 million. (b) 08/09/99: Parent is downgraded by Moody's from A3 to Ba1 and then to B1 on 8/12/99. (c) 08/26/99: M Co. acquires Parent for $1.2 billion in cash. (d) 10/07/99: C Co. warns that 3rd quarter earnings may be up to 43% below consensus estimates. (e) 01/18/00: M Co. offers to purchase outstanding C Co. shares for $10.50 per share. SALOMON SMITH BARNEY --------------------------- 2 A member of citigroup[LOGO] 8 PROJECT SPIRIT C Co. Relative Price Performance PRICE PERFORMANCE Daily Data: IPO Date (December 17, 1997) through February 25, 2000 [GRAPHIC OMITTED] (a) 07/29/99: A Co. announces a loss of $179 million. (b) 08/09/99: Parent is downgraded by Moody's from A3 to Ba1 and then to B1 on 8/12/99. (c) 08/26/99: M Co. acquires Parent for $1.2 billion in cash. (d) 10/07/99: C Co. warns that 3rd quarter earnings may be up to 43% below consensus estimates. (e) 01/18/00: M Co. offers to purchase outstanding C Co. shares for $10.50 per share. SALOMON SMITH BARNEY --------------------------- 3 A member of citigroup[LOGO] 9 PROJECT SPIRIT C Co. Relative Price/Forward Earnings Ratio RELATIVE PRICE/FORWARD EARNINGS Daily Data: IPO Date (December 17, 1997) through February 25, 2000 [GRAPHIC OMITTED] (a) 07/29/99: A Co. announces a loss of $179 million. (b) 08/09/99: Parent is downgraded by Moody's from A3 to Ba1 and then to B1 on 8/12/99. (c) 08/26/99: M Co. acquires Parent for $1.2 billion in cash. (d) 10/07/99: C Co. warns that 3rd quarter earnings may be up to 43% below consensus estimates. (e) 01/18/00: M Co. offers to purchase outstanding C Co. shares for $10.50 per share. SALOMON SMITH BARNEY --------------------------- 4 A member of citigroup[LOGO] 10 PROJECT SPIRIT Mortgage Business Relative Price Performance MORTGAGE RELATED PRICE PERFORMANCE Daily Data: IPO Date (December 17, 1997) through February 25, 2000 [GRAPHIC OMITTED] SALOMON SMITH BARNEY --------------------------- 5 A member of citigroup[LOGO] 11 PROJECT SPIRIT C Co. Recent Trading History PRICE/VOLUME Daily Data: July 29, 1999 through February 25, 2000 [GRAPHIC OMITTED] (a) 07/29/99: A Co. announces a loss of $179 million. (b) 08/09/99: Parent is downgraded by Moody's from A3 to Ba1 and then to B1 on 8/12/99. (c) 08/26/99: M Co. acquires Parent for $1.2 billion in cash. (d) 10/07/99: C Co. warns that 3rd quarter earnings may be up to 43% below consensus estimates. (e) 01/18/00: M Co. offers to purchase outstanding C Co. shares for $10.50 per share. SALOMON SMITH BARNEY --------------------------- 6 A member of citigroup[LOGO] 12 PROJECT SPIRIT 3 HISTORICAL OPERATING PERFORMANCE SALOMON SMITH BARNEY --------------------------- A member of citigroup[LOGO] 13 PROJECT SPIRIT Historical AUM and Revenue Breakdown by Year AFFILIATED VS. UNAFFILIATED BUSINESSES ($ in millions)
As of December 31, ---------------------------------------------------------- ------------ ------------ ------------ ------------ ------------ 1996 1997 1998 1999(a) CAGR(b) ------------ ------------ ------------ ------------ ------------ Affiliated Assets Under Management $10,600 $14,200 $17,200 $11,600 3.1% Unaffiliated Assets Under Management 10,100 11,800 12,400 21,700 29.0 - ------------------------------------------------------------------------------------------------------------------ Total Assets Under Management $20,700 $26,000 $29,600 $33,300 17.2% - ------------------------------------------------------------------------------------------------------------------ Affiliated Revenues $10.8 $12.1 $16.1 $16.3 14.7% Unaffiliated Revenues 41.8 52.9 63.5 73.1 20.4 Other Revenues 1.1 1.6 2.6 1.6 14.3 - ------------------------------------------------------------------------------------------------------------------ Total Revenues $53.7 $66.6 $82.2 $90.9 19.2% - ------------------------------------------------------------------------------------------------------------------ Affiliated Pre-Tax Income $2.4 $2.6 $4.1 $4.6 24.2% Unaffiliated Pre-Tax Income 8.7 12.5 18.6 17.6 26.5 - ------------------------------------------------------------------------------------------------------------------ Total Pre-Tax Income $11.1 $15.1 $22.7 $22.2 26.0% - ------------------------------------------------------------------------------------------------------------------ Affiliated Pre-Tax Income/Revenues 22.2% 21.6% 25.5% 28.2% Pre-Tax Income/Average AUM 0.6bp 0.5bp 0.7bp 0.8bp Unaffiliated Pre-Tax Income/Revenues 20.8% 23.7% 29.3% 24.1% Pre-Tax Income/Average AUM 2.3bp 2.9bp 3.9bp 2.6bp Mortgage Revenues as a % of Total 28.5% 24.8% 28.2% 28.2%
(a) The decrease in affiliated AUM in 1999 is due to the loss of assets related to stable value products and the increase in unaffiliated AUM in 1999 is due to the conversion of a large advisory client to a discretionary client and the acquisition of TCW's high-grade fixed income management unit serving insurance companies. (b) Represents a CAGR from 1996-1999. SALOMON SMITH BARNEY --------------------------- 7 A member of citigroup[LOGO] 14 PROJECT SPIRIT Historical AUM and Revenue Breakdown by Quarter AFFILIATED VS. UNAFFILIATED BUSINESSES ($ in millions)
1999 ---------------------------------------------------------- ------------ ------------ ------------ ------------ 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter ------------ ------------ ------------ ------------ Affiliated Assets Under Management $17,100 $17,300 $11,800 $11,600 Unaffiliated Assets Under Management 12,300 15,100 22,200 21,700 - -------------------------------------------------------------------------------------------------- Total Assets Under Management $29,400 $32,400 $34,000 $33,300 - -------------------------------------------------------------------------------------------------- Affiliated Revenues $4.0 $4.1 $4.3 $3.9 Unaffiliated Revenues 18.5 19.5 16.9 18.1 Other Revenues 0.5 0.4 0.3 0.4 - -------------------------------------------------------------------------------------------------- Total Revenues $23.0 $24.0 $21.5 $22.4 - -------------------------------------------------------------------------------------------------- Affiliated Pre-Tax Income $1.2 $1.2 $1.2 $1.0 Unaffiliated Pre-Tax Income 5.1 5.4 3.1 4.0 - -------------------------------------------------------------------------------------------------- Total Pre-Tax Income $6.3 $6.6 $4.3 $5.0 - -------------------------------------------------------------------------------------------------- Affiliated Pre-Tax Income/Revenues 30.0% 29.3% 27.9% 25.6% Pre-Tax Income/Average AUM (a) 0.7bp 0.7bp 0.8bp 0.9bp Unaffiliated Pre-Tax Income/Revenues 27.6% 27.7% 18.3% 22.1% Pre-Tax Income/Average AUM (a) 4.1bp 3.9bp 1.7bp 1.8bp
(a) Annualized SALOMON SMITH BARNEY --------------------------- 8 A member of citigroup[LOGO] 15 PROJECT SPIRIT Historical Operating Statistics vs. Peer Group
------ ------ ------ 1997 1998 1999 ------ ------ ------ Revenue Growth C CO. 24.1% 23.4% 10.5% Peer Group 22.7 25.2 11.8 Net Income Growth C CO. 43.5% 47.1% 1.6% Peer Group 12.5 14.6 18.1 AUM Growth C CO. 25.6% 13.8% 12.5% Peer Group 33.5 21.6 13.1 Advisory Revenue/Total Revenue C CO. 50.1% 49.0% 43.8% Peer Group 87.4 94.1 96.4 Mortgage Revenue/Total Revenue C CO. 24.8% 28.2% 28.2% Peer Group -- -- -- Comp. Expense/Total Revenue C CO. 50.0% 46.5% 47.3% Peer Group 40.6 39.9 36.1 Total Revenue/AUM C CO. 0.26% 0.28% 0.27% Peer Group 0.46 0.47 0.53 Advisory Revenue/AUM C CO. 0.13% 0.14% 0.12% Peer Group 0.41 0.46 0.48 EBITDA Margin C CO. 27.6% 31.1% 27.6% Peer Group 35.7 42.2 40.3 Price/Forward Net Income C CO. NA 19.4x 14.1x (a) Peer Group 18.8 19.2 16.9 (a)
Note: Data for the peer group is based on the median of the historical operating statistics. Peer group includes FII, BLK, JNC, AMG, UAM and GBL. (a) Through 8/9/99. SALOMON SMITH BARNEY --------------------------- 9 A member of citigroup[LOGO] 16 PROJECT SPIRIT Business Mix vs. Peer Group (As of September 30, 1999)
Assets Under Management ----------------------------------------------------------------------- Client Type Asset Type Region -------------------- -------------------- ------------------ Retail Inst'l Equity FI Dom. Int'l - ----------------------------------------------------------------------------------------------------------- C Co. - Management Projections -- 100.0% 12.0% 88.0% 100.0% -- C Co. - Sensitivity Analysis -- 100.0 13.5 86.5 100.0 -- PUBLIC ASSET MANAGERS Federated Investors, Inc. 88.0% 12.0% 15.0% 85.0% 98.0% 2.0% BlackRock Inc. 39.9 60.1 10.3 89.7 98.0 2.0 John Nuveen 66.7 33.3 25.1 74.9 100.0 -- Affiliated Managers Group 7.0 93.0 67.0 33.0 64.0 36.0 United Asset Management 4.0 96.0 87.0 13.0 86.0 14.0 Gabelli Asset Management Inc. 50.3 49.7 88.0 12.0 100.0 -- - ----------------------------------------------------------------------------------------------------------- High 88.0% 96.0% 88.0% 89.7% 100.0% 36.0% Median 45.1 54.9 46.0 54.0 98.0 2.0 Low 4.0 12.0 10.3 12.0 64.0 -- - -----------------------------------------------------------------------------------------------------------
SALOMON SMITH BARNEY --------------------------- 10 A member of citigroup[LOGO] 17 PROJECT SPIRIT 4 C CO. VALUATION ANALYSIS SALOMON SMITH BARNEY --------------------------- A member of citigroup[LOGO] 18 PROJECT SPIRIT A. Market Based Data SALOMON SMITH BARNEY --------------------------- A member of citigroup[LOGO] 19 PROJECT SPIRIT Valuation Summary - Market Based Data ------------- Current C Co. Market Price: $10.69 ------------- | V ------------- ------------- ------------- M Co. Initial M Co. First M Co. Second Offer Price: Revised Offer Revised Offer $10.50 Price: $11.50 Price: $12.50 ------------- ------------- ------------- | | | V V V Valuation Methodology $6.50 $7.50 $8.50 $9.50 $10.50 $11.50 $12.50 $13.50 - ------------------------------------------------------------------------------------------------------------------------------------ Management Projections --------------------------- Summary Component Valuation $8.50-10.50 --------------------------- ------------------------------ Public Asset Managers (a) $9.25-$12.00 ------------------------------ Sensitivity Analysis ---------------------- Summary Component Valuation $6.50-8.00 ---------------------- --------------------- Public Asset Managers (a) $7.25-9.25 --------------------- Squeeze Out Analysis --------------------- 1-Day Prior Premium to M Co.'s Initial Offer $10.75-12.50 --------------------- ------------------ 1-Month Prior Premium to M Co.'s Initial Offer $9.75-11.75 ------------------
Valuation Multiples $6.50 $7.50 $8.50 $9.50 $10.50 $11.50 $12.50 $13.50 - ------------------------------------------------------------------------------------------------------------------------------------ Premium/Market Price (February 25, 2000)(b) (39.2)% (29.8)% (20.5)% (11.1)% (1.8)% 7.6% 17.0% 26.3% Premium/Market Price (January 14, 2000)(c) (32.0) (21.6) (11.1) (0.7) 9.8 20.3 30.7 41.2 Premium/Market Price (December 14, 1999) (d) (23.0) (11.1) 0.7 12.6 24.4 36.3 48.1 60.0 Premium/Market Price (August 9, 1999) (e) (59.7) (53.5) (47.3) (41.1) (34.9) (28.7) (22.5) (16.3) Firm Value/Management Projections 1999 EBITDA 0.9x 1.5x 2.1x 2.7x 3.4x 4.0x 4.6x 5.3x Firm Value/Sensitivity Analysis 1999 EBITDA 1.1 1.9 2.8 3.6 4.4 5.2 6.1 6.9 Price/Management Projections 1999 Net Income 7.9 9.1 10.3 11.5 12.7 13.9 15.1 16.3 Price/Sensitivity Analysis 1999 Net Income 10.2 11.7 13.3 14.9 16.4 18.0 19.6 21.1 Price/Management Projections 2000E Net Income (f) 7.0 8.0 9.1 10.2 11.2 12.3 13.4 14.4 Price/Sensitivity Analysis 2000E Net Income (g) 9.0 10.4 11.8 13.1 14.5 15.9 17.3 18.7 - ------------------------------------------------------------------------------------------------------------------------------------
(a) Public asset managers consist of FII, BLK, JNC, AMG, UAM, GBL. (b) Price as of close of M Co.'s first and second revised offer (2/25/00): $10.6875 (c) Price 1-day prior to M Co.'s initial offer (1/14/00): $9.5625 (d) Price 1-month prior to M Co.'s initial offer (12/14/99): $8.4375 (e) Price prior to Parent ratings downgrade announcement (8/9/99): $16.125 (f) Based on management projections of $0.93 for 2000 and 13.97 million shares outstanding. (g) Based on a sensitivity analysis of $0.72 for 2000 and 13.97 million shares outstanding. SALOMON SMITH BARNEY --------------------------- 11 A member of citigroup[LOGO] 20 PROJECT SPIRIT Summary Component Valuation
- ---------------------------------------------------------------------------------------------------- 2000E Net Income Per P/2000E Multiple Implied Business Line Share Median Valuation Valuation Range - ---------------------------------------------------------------------------------------------------- Management Projections Unaffiliated AUM (a) $0.56 11.6x -- 14.2x $6.45 -- $ 7.88 Affiliated AUM (Retained) (a) 0.04 11.6 -- 14.2 0.52 -- 0.64 Mortgage (b) 0.33 4.7 -- 5.8 1.59 -- 1.94 -------- -------------------- ---------------- - ---------------------------------------------------------------------------------------------------- Total C Co. $0.93 9.1x -- 11.2x $8.55 -- $10.46 - ---------------------------------------------------------------------------------------------------- Sensitivity Analysis Unaffiliated AUM (a) $0.45 11.6x -- 14.2x $5.21 -- $ 6.36 Mortgage (b) 0.28 4.7 -- 5.8 1.30 -- 1.59 -------- -------------------- ---------------- - ---------------------------------------------------------------------------------------------------- Total C. Co. $0.72 9.0x -- 11.0x $6.51 -- $ 7.96 - ----------------------------------------------------------------------------------------------------
N.B. Management Projections. (a) Represents median of P/2000E estimates adjusted by +/- 10% for an index of public asset managers companies (FII, BLK, JNC, AMG, UAM and GBL). (b) Represents median of P/2000E estimates adjusted by +/- 10% for an index of residential and commercial mortgage REIT companies (NDE, AHR, RWT, AMMB, RAS and LMM). SALOMON SMITH BARNEY --------------------------- 12 A member of citigroup[LOGO] 21 PROJECT SPIRIT Public Asset Managers FINANCIAL INFORMATION AS OF OR FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1999. (Dollars in millions, except per share data)
Market Cap. as a Multiple of: ------------------------------------- 2/25/00 Calendar: Market LTM ------------------- Cap. AUM Net.Inc.(b) 00EE(c) 01EE(c) - ---------------------------------------------------------------------------------------------------------- C Co. - Management Projections $149 $24,400 12.9x 11.4x 9.6x C Co. - Sensitivity Analysis 149 21,700 16.7 14.8 11.0 PUBLIC ASSET MANAGERS Federated Investors, Inc. $1,910 $124,820 15.4x 13.4x 11.7x BlackRock Inc. 1,201 161,500 20.2 15.1 12.7 John Nuveen 1,053 59,784 10.8 10.7 9.7 Affiliated Managers Group 830 82,041 11.5 14.7 11.8 United Asset Management 828 202,600 13.5 12.4 10.7 Gabelli Asset Management Inc. (a) 495 18,629 12.0 10.0 8.4 ------------------------------------------------------------------ High $202,600 20.2x 15.1x 12.7x Median 103,431 12.8 12.9 11.2 Low 18,629 10.8 10.0 8.4 ------------------------------------------------------------------ ------------------------------------------------------------------ C Co. Management Projections Implied Price Per Share: Median $10.56 $12.06 $12.50 Low 8.95 9.31 9.37 ------------------------------------------------------------------ ------------------------------------------------------------------ C Co. Sensitivity Analysis Implied Price Per Share: Median $8.17 $ 9.33 $10.92 Low 6.92 7.20 8.18 ------------------------------------------------------------------
N.B. Financial data excludes certain non-recurring and extraordinary items. (a) LTM data is as of 9/30/99 (b) C Co. is restated based on management estimates. (c) Public asset managers' earnings estimates are from IBES as of 2/25/00. C Co. earnings based on management projections. SALOMON SMITH BARNEY --------------------------- 13 A member of citigroup[LOGO] 22 PROJECT SPIRIT Premium Analysis: Going Private Transactions - -------------------------------------------------------------------------------- Premiums Paid to Non-Control Public Interest in a Going Private Transaction, 1995 to February 25, 2000 - --------------------------------------------------------------------------------
1-Month Market Premium 1-Day Market Premium to Initial M Co. Offer to Initial M Co. Offer ------------------------- ----------------------- Number of Implied C Co. Implied C Co. Transactions Median Price(a) Median Price(b) - --------------------------------------------------------------------------------------------------- Cash Consideration 77 25.0% $10.55 19.7% $11.45 Stock Consideration 14 16.0 9.79 4.6 10.00 Mixed Consideration 4 18.0 9.95 17.2 11.20 - --------------------------------------------------------------------------------------------------- Median 24.2 10.48 18.9 11.37 - ---------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- All Going Private Transactions, 1995 to February 25, 2000 - --------------------------------------------------------------------------------
1-Month Market Premium 1-Day Market Premium to Initial M Co. Offer to Initial M Co. Offer ------------------------- ----------------------- Number of Median Implied C Co. Median Implied C Co. Transactions Premium Price(a) Premium Price(b) - ------------------------------------------------------------------------------------------------------------- Transaction Value > $500 million 10 20.7% $10.19 21.8% $11.64 Transaction Value $100-499 million 42 24.9 10.54 17.2 11.20 Transaction Value < $99 million 43 25.0 10.55 19.0 11.38 - ------------------------------------------------------------------------------------------------------------- Median 24.2 10.48 18.9 11.37 - ------------------------------------------------------------------------------------------------------------- 1-Month Market Premium 1-Day Market Premium to Initial M Co. Offer to Initial M Co. Offer ------------------------- ----------------------- Median Implied C Co. Median Implied C Co. Premium Price(a) Premium Price(b) - ----------------------------------------------------------------------------------------------- 25th Percentile 16.0% $9.79 11.1% $10.63 50th Percentile 24.2 10.48 18.9 11.37 75th Percentile 40.2 11.83 31.7 12.59 - -----------------------------------------------------------------------------------------------
Source: Securities Data Corp. (a) Based on closing price of $8.438 on 12/14/99. (b) Based on closing price of $9.563 on 1/14/00. SALOMON SMITH BARNEY --------------------------- 14 A member of citigroup[LOGO] 23 PROJECT SPIRIT B. Discounted Cash Flow SALOMON SMITH BARNEY --------------------------- A member of citigroup[LOGO] 24 PROJECT SPIRIT Discounted Cash Flow Analysis - Management Projections ($ in millions)
Management ---------------------------------- ----- ----- ----- ----- ----- CAGR 1999 2000 2001 2002 99-02 ----- ----- ----- ----- ----- Net Income $11.2 $13.1 $15.6 $18.5 18.1% Plus: Amortization 2.5 2.7 2.9 3.1 7.6 ----- ----- ----- ----- ---- Interim Cash Flows 13.7 15.8 18.5 21.6 16.3% Terminal Value (a) 0.0 0.0 0.0 184.6 NM ----- ----- ----- ----- ---- Total Cash Flows $13.7 $15.8 $18.5 $206.1 NM ----- ----- ----- ----- ---- Multiple of 2002 Net Income (b) -------------------------------------- 9.0x 9.5x 10.0x 10.5x -------------------------------------- 5.0% $8.56 $8.89 $9.22 $9.55 Net Income 10.0 9.65 10.03 10.41 10.79 Growth Rate (c) 15.0 10.85 11.28 11.71 12.15 20.0 12.14 12.63 13.12 13.62
N.B. Management projections and restated 1999 information based on management estimates. (a) Based on a 10.0 x multiple of 2002 net income. (b) Assumes 13.97 million diluted shares. (c) Discount rate of 12% was calculated by using a median beta comprised of public asset managers, an equity risk premium of 5.50% and the 30 year risk free rate. SALOMON SMITH BARNEY --------------------------- 15 A member of citigroup[LOGO] 25 PROJECT SPIRIT Discounted Cash Flow Analysis - Sensitivity Analysis ($ in millions)
Management ---------------------------------- ----- ----- ----- ----- ----- CAGR 1999 2000 2001 2002 99-02 ----- ----- ----- ----- ----- Net Income $8.9 $10.1 $13.6 $16.0 21.4% Plus: Amortization 1.7 2.7 2.9 3.1 21.9 ----- ----- ----- ----- ---- Interim Cash Flows 10.6 12.8 16.5 19.1 21.5% Terminal Value (a) 0.0 0.0 0.0 159.8 NM ----- ----- ----- ----- ---- Total Cash Flows $10.6 $12.8 $16.5 $178.9 NM ----- ----- ----- ----- ---- Multiple of 2002 Net Income (b) -------------------------------------- 9.0x 9.5x 10.0x 10.5x -------------------------------------- 5.0% $6.93 $7.19 $7.45 $7.72 Net Income 10.0 7.80 8.10 8.40 8.71 Growth Rate (c) 15.0 8.75 9.09 9.44 9.79 20.0 9.78 10.17 10.56 10.96
N.B. Based on management's projections and adjusted for other potential loss of business derived from C Co.'s relationship with Parent. (a) Based on a 10.0 x multiple of 2002 net income. (b) Assumes 13.97 million diluted shares. (c) Discount rate of 12% was calculated by using a median beta comprised of public asset managers, an equity risk premium of 5.50% and the 30 year risk free rate. SALOMON SMITH BARNEY --------------------------- 16 A member of citigroup[LOGO] 26 PROJECT SPIRIT APPENDIX SALOMON SMITH BARNEY --------------------------- A member of citigroup[LOGO] 27 PROJECT SPIRIT A. Projected Financial Statements SALOMON SMITH BARNEY --------------------------- A member of citigroup[LOGO] 28 PROJECT SPIRIT Projected Income Statement - Management Projections 1999 - 2002 PROJECTIONS ($ in millions, except per share amounts)
--------- --------- --------- --------- --------- 1999-2002 1999 2000 2001 2002 CAGR --------- --------- --------- --------- --------- Total Revenues $82.1 $94.8 $104.3 $114.8 11.8% Expenses Employee Compensation and Benefits 41.6 46.6 49.9 53.5 8.8 Amortization of Goodwill 2.6 2.7 2.9 3.1 5.6 Other Expenses (a) 18.3 23.2 24.9 26.7 13.4 --------- --------- --------- --------- --------- Total Expenses $62.6 $72.5 $77.7 $83.3 10.0% Operating Income $19.5 $22.3 $26.6 $31.4 17.2% Interest Expense 0.2 0.2 0.2 0.1 (15.4) --------- --------- --------- --------- --------- Pre-Tax Income $19.3 $22.1 $26.4 $31.3 17.5% Taxes 7.7 9.0 10.8 12.8 18.4 --------- --------- --------- --------- --------- Net Income $11.5 $13.1 $15.6 $18.5 16.9% ========= ========= ========= ========= ========= Diluted EPS (b) $0.83 $0.93 $1.12 $1.32 16.9% Operating Margin 23.8% 23.5% 25.5% 27.4% Assets Under Management $24,400 $29,135 $32,569 $36,385 14.2% Total Revenues as a % of Average AUM 0.39% 0.40% 0.38% 0.37% -- Net Income as a % of Average AUM 0.06 0.04 0.04 0.04 --
N.B. Management estimates for 1999 and projections for 2000 - 2002. Includes estimated cost savings, including eliminations of allocated overhead, resulting from M Co.'s retraction of the general account assets managed by C Co. (a) Includes occupancy and equipment costs, marketing and production costs and professional services. (b) Based on 13.97 million diluted shares outstanding. SALOMON SMITH BARNEY --------------------------- 17 A member of citigroup[LOGO] 29 PROJECT SPIRIT Projected Income Statement - Sensitivity Analysis 1999 - 2002 PROJECTIONS ($ in millions, except per share amounts)
--------- --------- --------- --------- --------- 1999-2002 1999 2000 2001 2002 CAGR --------- --------- --------- --------- --------- Total Revenues $60.9 $74.0 $83.6 $91.5 11.2% Expenses Employee Compensation and Benefits 29.4 36.5 38.3 40.2 3.3 Amortization of Goodwill 1.7 2.7 2.9 3.1 4.6 Other Expenses (a) 14.6 17.4 19.1 20.9 6.2 --------- --------- --------- --------- --------- Total Expenses $45.7 $56.7 $60.3 $64.2 6.5% Operating Income $15.2 $17.3 $23.3 $27.2 25.3% Interest Expense 0.1 0.2 0.2 0.1 (13.2) --------- --------- --------- --------- --------- Pre-Tax Income $15.1 $17.1 $23.1 $27.1 25.8% Taxes 6.2 7.0 9.5 11.1 16.5 --------- --------- --------- --------- --------- Net Income $8.9 $10.1 $13.6 $16.0 25.8% ========= ========= ========= ========= ========= Diluted EPS (b) $0.64 $0.72 $0.97 $1.14 25.8% Operating Margin 25.0% 23.4% 27.8% 29.8% Assets Under Management $21,700 $25,978 $29,157 $32,672 12.1% Total Revenues as a % of Average AUM 0.36% 0.26% 0.25% 0.24% -- Net Income as a % of Average AUM 0.05 0.03 0.03 0.04 --
N.B. Based on management's projections and adjusted for other potential loss of business derived from C Co.'s relationship with Parent. (a) Includes occupancy and equipment costs, marketing and production costs and professional services. (b) Based on 13.97 million diluted shares outstanding. SALOMON SMITH BARNEY --------------------------- 18 A member of citigroup[LOGO] 30 PROJECT SPIRIT Projected Operating Results by Segment - Management Projections 2000 PROJECTIONS ($ in millions, except per share amounts)
---------- ------------ -------- ------------ ---------- -------- Expense Affiliated Unaffiliated Mortgage Consolidated Reductions Total ---------- ------------ -------- ------------ ---------- -------- Total Revenues $15.1 $62.9 $23.7 $101.7 ($6.9) $94.8 Expenses Employee Compensation and Benefits 6.9 31.5 9.6 48.0 (1.4) 46.6 Amortization of Goodwill (a) 0.0 1.6 1.1 2.7 0.0 2.7 Other Expenses (b) 4.2 16.4 5.1 25.8 (2.6) 23.2 ---------- ------------ -------- ------------ ---------- -------- Total Expenses $11.1 $49.6 $15.8 $76.5 ($4.0) $72.5 Operating Income $4.0 $13.3 $7.9 $25.2 ($2.9) $22.3 Interest Expense (a) 0.0 0.2 0.0 0.2 0.0 0.2 ---------- ------------ -------- ------------ ---------- -------- Pre-Tax Income $4.0 $13.1 $7.9 $25.0 ($2.9) $22.1 Taxes 1.6 5.4 3.2 10.2 (1.2) 9.0 ---------- ------------ -------- ------------ ---------- -------- Net Income $2.3 $7.8 $4.7 $14.8 ($1.7) $13.1 ========== ============ ======== ============ ========== ======== Diluted EPS (c) $0.17 $0.56 $0.33 $1.06 ($0.12) $0.93 Operating Margin 26.2% 21.2% 33.4% 24.8% 42.0% 23.5% Assets Under Management $12,357 $25,978 NM $38,335 ($9,200) $29,135 Total Revenues as a % of Average AUM 0.13% 0.26% NM 0.20% 0.08% 0.40% Net Income as a % of Average AUM 0.02 0.03 NM 0.04 0.02 0.04 ------------ --------
N.B. Management projections for 2000. Includes estimated cost savings, including eliminations of allocated overhead, resulting from M Co.'s retraction of the general account assets managed by C Co. (a) Affiliated businesses assumed to have 0% of annual goodwill amortization and interest expense beginning in 2000. (b) Includes occupancy and equipment costs, marketing and production costs and professional services. (c) Based on 13.97 million shares outstanding. SALOMON SMITH BARNEY --------------------------- 19 A member of citigroup[LOGO] 31 PROJECT SPIRIT Projected Operating Results by Segment - Management Projections 2001 PROJECTIONS ($ in millions, except per share amounts)
---------- ------------ -------- ------------ ---------- -------- Expense Affiliated Unaffiliated Mortgage Consolidated Reductions Total ---------- ------------ -------- ------------ ---------- -------- Total Revenues $16.6 $68.6 $26.7 $111.9 ($7.6) $104.3 Expenses Employee Compensation and Benefits 7.7 33.0 10.8 51.4 (1.4) 49.9 Amortization of Goodwill (a) 0.0 1.8 1.1 2.9 0.0 2.9 Other Expenses (b) 4.3 18.0 5.3 27.6 (2.7) 24.9 ---------- ------------ -------- ------------ ---------- -------- Total Expenses $11.9 $52.8 $17.2 $81.8 ($4.1) $77.7 Operating Income $4.7 $15.8 $9.5 $30.1 ($3.5) $26.6 Interest Expense (a) 0.0 0.2 0.0 0.2 0.0 0.2 ---------- ------------ -------- ------------ ---------- -------- Pre-Tax Income $4.7 $15.6 $9.5 $29.9 ($3.5) $26.4 Taxes 1.9 6.4 3.9 12.3 (1.4) 10.8 ---------- ------------ -------- ------------ ---------- -------- Net Income $2.8 $9.2 $5.6 $17.6 ($2.0) $15.6 ========== ============ ======== ============ ========== ======== Diluted EPS (c) $0.20 $0.66 $0.40 $1.26 ($0.15) $1.12 Operating Margin 28.4% 23.1% 35.7% 26.9% 45.7% 25.5% Assets Under Management $13,011 $29,157 NM $42,169 ($9,600) $32,569 Total Revenues as a % of Average AUM 0.13% 0.25% NM 0.20% 0.08% 0.38% Net Income as a % of Average AUM 0.02 0.03 NM 0.04 0.02 0.04 ------------ --------
N.B. Management projections for 2001. Includes estimated cost savings, including eliminations of allocated overhead, resulting from M Co's retraction of the general account assets managed by C Co. (a) Affiliated businesses assumed to have 0% of annual goodwill amortization and interest expense beginning in 2000. (b) Includes occupancy and equipment costs, marketing and production costs and professional services. (c) Based on 13.97 million diluted shares outstanding. SALOMON SMITH BARNEY --------------------------- 20 A member of citigroup[LOGO] 32 PROJECT SPIRIT Projected Operating Results by Segment - Management Projections 2002 PROJECTIONS ($ in millions, except per share amounts)
---------- ------------ -------- ------------ ---------- -------- Expense Affiliated Unaffiliated Mortgage Consolidated Reductions Total ---------- ------------ -------- ------------ ---------- -------- Total Revenues $18.3 $75.0 $29.8 $123.1 ($8.3) $114.8 Expenses Employee Compensation and Benefits 8.4 34.5 12.0 55.0 (1.5) 53.5 Amortization of Goodwill (a) 0.0 2.0 1.1 3.1 0.0 3.1 Other Expenses (b) 4.3 19.7 5.4 29.5 (2.8) 26.7 ---------- ------------ -------- ------------ ---------- -------- Total Expenses $12.7 $56.3 $18.6 $87.6 ($4.2) $83.3 Operating Income $5.6 $18.7 $11.2 $35.5 ($4.1) $31.4 Interest Expense (a) 0.0 0.1 0.0 0.1 0.0 0.1 ---------- ------------ -------- ------------ ---------- -------- Pre-Tax Income $5.6 $18.6 $11.2 $35.4 ($4.1) $31.3 Taxes 2.3 7.6 4.6 14.5 (1.7) 12.8 ---------- ------------ -------- ------------ ---------- -------- Net Income $3.3 $11.0 $6.6 $20.9 ($2.4) $18.5 ========== ============ ======== ============ ========== ======== Diluted EPS (c) $0.23 $0.79 $0.47 $1.49 ($0.17) $1.32 Operating Margin 30.4% 25.0% 37.7% 28.9% 49.2% 27.4% Assets Under Management $13,714 $32,672 NM $46,385 $10,000 $36,385 Total Revenues as a % of Average AUM 0.14% 0.24% NM 0.20% 0.08% 0.37% Net Income as a % of Average AUM 0.02 0.04 NM 0.05 0.02 0.04 ------------ --------
N.B. Management projections for 2002. Includes estimated cost savings, including eliminations of allocated overhead, resulting from M Co's retraction of the general account assets managed by C Co. (a) Affiliated businesses assumed to have 0% of annual goodwill amortization and interest expense beginning in 2000. (b) Includes occupancy and equipment costs, marketing and production costs and professional services. (c) Based on 13.97 million diluted shares outstanding. SALOMON SMITH BARNEY --------------------------- 21 A member of citigroup[LOGO] 33 PROJECT SPIRIT B. Public Comparable Mortgage Companies SALOMON SMITH BARNEY --------------------------- A member of citigroup[LOGO] 34 PROJECT SPIRIT Mortgage Unit Valuation Analysis FINANCIAL INFORMATION AS OF DECEMBER 31, 1999. (Dollars in millions, except per share data)
Price as a Multiple of: Price 52-Week Range Current as ----------------------- Market as of ---------------- a % of 2000E Book Name Cap. 2/25/00 High Low 52-Wk High EPS (a) Value - ---------------------------------------------------------------------------------------------------------------------------- C Co. Management Projections $149 $10.69 $18.75 $6.75 57.0% 11.4x NA C Co. Sensitivity Analysis 149 10.69 18.75 6.75 57.0 14.8 NA RESIDENTIAL AND COMMERCIAL MORTGAGE REITS Indymac Mortgage Holdings, Inc. $872 $11.38 $17.44 $9.88 65.2% 8.8x 1.05x Anthracite Capital, Inc. 134 6.38 7.88 6.00 81.0 5.0 0.79 Redwood Trust, Inc. (b) 105 12.00 17.88 11.25 67.1 6.3 0.47 AMRESCO, Inc. (b) 66 1.34 10.56 1.00 12.7 3.4 0.11 Resource Asset Inv. Trust 63 10.13 13.44 9.94 75.3 4.3 0.73 LASER Mortgage Management, Inc. (b) 59 3.94 5.63 3.13 70.0 5.5 0.79 --------------------------------------------------------- High 81.0% 8.8x 1.05x Median 68.6 5.3 0.76 Low 12.7 3.4 0.11 --------------------------------------------------------- --------------------------------------------------------- C Co. Management Projections Implied Price Per Share (c): Median $1.76 NA Low 1.15 NA --------------------------------------------------------- --------------------------------------------------------- C Co. Sensitivity Analysis Implied Price Per Share (d): Median $1.45 NA Low 0.95 NA ---------------------------------------------------------
(a) Earnings estimates based on median IBES estimates as of 2/25/00. (b) Financial data as of 9/30/99. (c) Based on management's forecasts for the mortgage business management projections of $0.33 per share for 2000. (d) Based on management's forecasts for the mortgage business sensitivity analysis of $0.28 per share for 2000. SALOMON SMITH BARNEY --------------------------- 22 A member of citigroup[LOGO] 35 PROJECT SPIRIT AMRESCO Case Study CASE STUDY: LEND LEASE CORP. ACQUIRES FIVE OF AMRESCO'S BUSINESSES o Target Description - AMRESCO Inc. specializes in real estate lending, commercial finance and the acquisition, resolution and servicing of commercial loans. Based in Dallas, AMRESCO has offices nationwide as well as in Canada, the United Kingdom, Mexico and Asia. Businesses sold focused on commercial mortgage and banking services, real estate lending and asset management included: AMRESCO Capital Ltd., Holliday Fenoglio Fowler LP, Real Estate Structured Finance, AMRESCO Services Ltd., and Asset Management. AMRESCO TRANSACTION DETAILS Announcement date December 8, 1999 Price / LTM Income NM Transaction value $257.5 million Price / Servicing Portfolio 0.59% Form of consideration Cash plus Promissory note, and $10.0 Total Servicing Portfolio $44,000 million million retention pool
EQUIVALENT VALUE FOR C CO. Implied transaction value $25.2 million ($1.80 per C Co. share) Total Servicing Portfolio $4,300 million
SALOMON SMITH BARNEY --------------------------- 23 A member of citigroup[LOGO] 36 Confidential Presentation regarding: Project Spirit UPDATED VALUATION ANALYSIS January 27, 2000 SALOMON SMITH BARNEY --------------------------- A member of citigroup[LOGO] 37 Table of Contents PROJECT SPIRT 1 EQUITY MARKET REACTION AND UPDATE 2 C CO. VALUATION ANALYSIS 3 ADDITIONAL VALUATION CONSIDERATIONS APPENDIX A. Projected Financial Statements B. Public Comparable Asset Management Companies C. Public Comparable Mortgage Companies D. Weighted Average Cost of Capital and Trading History SALOMON SMITH BARNEY --------------------------- A member of citigroup[LOGO] 38 PROJECT SPIRIT 1 EQUITY MARKET REACTION AND UPDATE SALOMON SMITH BARNEY --------------------------- A member of citigroup[LOGO] 39 PROJECT SPIRIT C Co. Relative Price Performance PRICE PERFORMANCE Daily Data: January 1, 1999 through January 25, 2000 C Co.'s stock price under-performed its peers in 1999, in large part due to uncertainty around the Parent situation beginning in the third quarter. [GRAPHIC OMITTED] (a) 07/29/99: A Co. announces a loss of $179 million. (b) 08/09/99: Parent is downgraded by Moody's from A3 to Ba1 and then to B1 on 8/12/99. (c) 08/26/99: M Co. acquires Parent for $1.2 billion in cash. (d) 10/07/99: C Co. warns that 3rd quarter earnings may be up to 43% below consensus estimates. (e) 01/18/00: M Co. offers to purchase outstanding C Co. shares for $10.50 per share. SALOMON SMITH BARNEY --------------------------- 1 A member of citigroup[LOGO] 40 PROJECT SPIRIT C Co. Trading History PRICE PERFORMANCE Although the Parent's situation was successfully resolved in August, C Co.'s stock price has not yet recovered to pre-announcement levels. Daily Data: July 29, 1999 through January 25, 2000 [GRAPHIC OMITTED] (a) 07/29/99: A Co. announces a loss of $179 million. (b) 08/09/99: Parent is downgraded by Moody's from A3 to Ba1 and then to B1 on 8/12/99. (c) 08/26/99: M Co. acquires Parent for $1.2 billion in cash. (d) 10/07/99: C Co. warns that 3rd quarter earnings may be up to 43% below consensus estimates. (e) 01/18/00: M Co. offers to purchase outstanding C Co. shares for $10.50 per share. SALOMON SMITH BARNEY --------------------------- 2 A member of citigroup[LOGO] 41 PROJECT SPIRIT C Co. Trading History PRICE PERFORMANCE C Co.'s stock price was at $9.5625 per share when the $10.50 per share offer was announced. Daily Data: January 1, 2000 through January 25, 2000 [GRAPHIC OMITTED] (a) 01/18/00: M Co. offers to purchase outstanding C Co. shares for $10.50 per share. SALOMON SMITH BARNEY --------------------------- 3 A member of citigroup[LOGO] 42 PROJECT SPIRIT C Co. Relative Price/Earnings Performance PRICE/EARNINGS PERFORMANCE Although C Co.'s P/E closely tracked the Peer Index through August, C Co.'s P/E currently represents a 30% discount to the Peer Index. Daily Data: January 1, 1999 through January 25, 2000 [GRAPHIC OMITTED] (a) 07/29/99: A Co. announces a loss of $179 million. (b) 08/09/99: Parent is downgraded by Moody's from A3 to Ba1 and then to B1 on 8/12/99. (c) 08/26/99: M Co. acquires Parent for $1.2 billion in cash. (d) 10/07/99: C Co. warns that 3rd quarter earnings may be up to 43% below consensus estimates. (e) 01/18/00: M Co. offers to acquire outstanding C Co. shares for $10.50 per share. Source: IBES consensus estimates, C Co. Earnings Estimates, Salomon Smith Barney. SALOMON SMITH BARNEY --------------------------- 4 A member of citigroup[LOGO] 43 PROJECT SPIRIT C Co. Earnings Estimates FIRST CALL ESTIMATES FOR THE ROLLING 12 MONTHS FORWARD C Co.'s median 2000 earnings estimate of $1.10 has declined approximately 20% from its July high of $1.35. [GRAPHIC OMITTED] (a) 07/29/99: A Co. announces a loss of $179 million. (b) 08/09/99: Parent is downgraded by Moody's from A3 to Ba1 and then to B1 on 8/12/99. (c) 08/26/99: M Co. acquires Parent for $1.2 billion in cash. (d) 10/07/99: C Co. warns that 3rd quarter earnings may be up to 43% below consensus estimates. (e) 01/18/00: M Co. offers to acquire outstanding C Co. shares for $10.50 per share. Source: First Call consensus estimates. SALOMON SMITH BARNEY --------------------------- 5 A member of citigroup[LOGO] 44 PROJECT SPIRIT C Co. Research Coverage CURRENT IBES RESEARCH COVERAGE
- -------------------------- ----------------- ------------------- ------------- 2000E ------------------- Last Firm Opinion Current Previous Estimate Date - -------------------------- ----------------- ------------------- ------------- A.G. Edwards Maintain Position $1.10 $1.10 12/20/99 Donaldson Lufkin & Jenrette Market Perform 1.10 1.10 10/13/99 Putnam, Lovell, de Guardiola Hold 1.15 1.15 9/2/99 - ---------------------------------------------------------------------------------------- Median $1.10 $1.10 - ---------------------------------------------------------------------------------------- IBES Mean Estimates $1.12 $1.12 - ---------------------------------------------------------------------------------------- Management Estimates $1.06 $1.06 ========================================================================================
Source: Bloomberg. SALOMON SMITH BARNEY --------------------------- 6 A member of citigroup[LOGO] 45 PROJECT SPIRIT Investor Community Reaction to Recent Events PRICE/EARNINGS IMPACT Prior to the offer, the market had been applying very little value to C Co.'s affilated businesses.
------------ ------------ Day Prior to Day Prior to Parent M Co. Announcement Announcement (8/9/99) (1/14/00) ------------ ------------ Share Price $16.13 $9.56 2000E EPS(a) 1.41 1.06 Price / 2000E EPS for C Co. 11.5x 9.0x Price / 2000E EPS for Unaffiliated AUM(b) 11.5x 11.5x Unaffiliated EPS(c) $1.20 $0.89 ------------ ------------ Contribution $13.81 $10.18 Price / 2000E EPS for Affiliated AUM 11.5x (3.7)x Affiliated EPS(c) $0.20 $0.17 ------------ ------------ Contribution $2.32 ($0.62) Total $16.13 $9.56
Source: Company documents (a) Reflects IBES estimates as of August 9, 1999, and current management estimates. (b) Assumes that the market's valuation of the earnings from the unaffiliated AUM is unchanged at 11.5x. (c) Reflects annualized weighted-average profitability from the six months ended June 30, 1999, and current management estimates. SALOMON SMITH BARNEY --------------------------- 7 A member of citigroup[LOGO] 7 46 PROJECT SPIRT C Co. Public Ownership The weighted average basis of the positions of all current shareholders is $16.94. (Shares in thousands)
- ------------------------------------------------------------------------------------------------------ Top 13F Institutional Holders Shares Held % of Total % of Non Weighted Average (000's) Held Parent Shares Purchase Price(a) - ------------------------------------------------------------------------------------------------------ 1 David L. Babson & Co. Inc. 686 5.0% 12.9% $18.32 2 MFS Investment Management 516 3.8 9.7 17.33 3 Dimensional FD Advisors, Inc. 264 1.9 5.0 13.78 4 Sterling Capital Management Co. 216 1.6 4.1 16.08 5 Wellington Management Co. LLP 186 1.4 3.5 15.20 6 PaineWebber Group Inc. 180 1.3 3.4 19.07 7 AXA Financial, Inc. 175 1.3 3.3 16.52 8 Barclays Bank plc 68 0.5 1.3 17.99 9 John A. Levin & Company, Inc. 65 0.5 1.2 13.78 10 State Street Bank & Trust Co. Boston 60 0.4 1.1 19.77 11 Mellon Private Asset Management 56 0.4 1.0 19.11 12 Fleet Boston Corporation 55 0.4 1.0 17.50 13 College Retire Equities 52 0.4 1.0 18.26 14 Hartford Investment Mgmt Co. Inc. 45 0.3 0.8 14.08 15 Frank Russell Co. 31 0.2 0.6 15.60 16 Bankers Trust NY Corp. 31 0.2 0.6 13.33 17 First Source Bank 30 0.2 0.6 13.78 18 Wilmington Trust Company 24 0.2 0.4 16.55 19 Westcap Investors, LLC 21 0.2 0.4 16.43 20 Northern Trust Company 16 0.1 0.3 18.26 21 Citigroup Investments Inc. 15 0.1 0.3 18.65 22 Firstar Investment Research & Mgmt Co. 14 0.1 0.3 15.84 23 World Asset Management 4 0.0 0.1 17.85 -------------------------------------- ------ ----- ----- ------ Total Top 13F Institutional Holders 2,810 20.6% 52.9% $16.94 Insiders/Management 654 4.8 12.3 Parent 8,305 61.0 -- Implied Retail 1,844 13.5 34.7 -------------------------------------- ------ ----- ----- Total Shares Outstanding 13,613 100.0% 100.0% ====================================== ====== ===== =====
Source: CDA Spectrum. Holdings as of September 30, 1999. (a) Estimate of holders basis in c Co. shares; applies a FIFO inventory to shares sold. Note: The following institutions have sold their entire holdings in C Co. since the 6/30/99 report: American General Corporation, Bank One Corporation, Chase Manhattan Corp., Credit Suisse First Boston Corp., Morgan Stanley Dean Witter Advisors, and Prospector Partners, LLC. SALOMON SMITH BARNEY --------------------------- 8 A member of citigroup[LOGO] 47 PROJECT SPIRIT Shareholder Analysis (Shares in thousands)
- ------------------------------------------------------------------------------------------------------------------------------------ Holdings (O00s) as of: (a) Top 13F InstItutional Holders Change 12-31-97 Change 12-31-98 Change 3-31-99 Change 6-30-99 Change 9-30-99 - ------------------------------------------------------------------------------------------------------------------------------------ 1 Davd L. Babson & Co. Inc. -- -- 546 546 10 556 22 577 109 686 2 MFS Investment Management -- -- 313 313 7 319 8 327 189 516 3 Dimensional FD Advisors, Inc. -- -- -- -- -- -- -- -- 264 264 4 Sterling Capital Management Co. 54 54 86 141 64 204 4 208 7 216 5 Wellington Management Co. LLP -- -- 81 81 168 249 55 304 (118) 186 6 PaineWebber Group Inc. -- -- 225 225 -- 225 -- 225 (45) 180 7 AXA Financial, Inc. -- -- -- -- 14 14 310 323 (149) 175 8 Barclays Bank plc -- -- 49 49 10 59 1 60 9 68 9 John A. Levin & Company, Inc. -- -- -- -- -- -- -- -- 65 65 10 State Street Bank & Trust Co. Boston -- -- 52 52 1 53 (1) 53 8 60 11 Mellon Private Asset Management -- -- 50 50 (3) 47 1 48 8 56 12 Fleet Boston Corporations -- -- 35 35 -- 35 -- 35 20 55 13 College Retire Equities -- -- 53 53 -- 53 (4) 50 3 52 14 Hartford Investment Mgmt. Co. Inc. -- -- 32 32 -- 32 13 45 -- 45 15 Frank Russell Co. 17 17 6 26 20 43 -- 43 (12) 31 16 Bankers Trust NY Corp. -- -- 37 37 5 42 (3) 39 (8) 31 17 First Source Bank 19 19 (19) -- -- -- -- -- 30 30 18 Wilmington Trust Company -- -- -- -- -- -- 24 24 -- 24 19 Westcap Investors, LLC -- -- -- -- -- -- 21 21 -- 21 20 Northern Trust Company -- -- 12 12 -- 12 -- 12 5 16 21 Citigroup Investments Inc. -- -- 52 52 (4) 48 (33) 15 -- 15 22 Firstar Investment Research & Mgmt. Co. -- -- 90 90 9 98 -- 98 (84) 14 23 World Asset Management 1 1 2 3 -- 3 -- 3 1 4 ------------------------------------------------------------------------------------------------------------------------------- Total Top 13F Institutional Holders 91 91 1,700 1,792 300 2,091 417 2,509 301 2,810 Top 13F Institutional Holders as of a % of Total 0.7% 13.8% 15.6% 18.5% 100.0% Total 13F Institutional Holders 713 2,552 2,769 2,874 2,810 13F Institutional as a % of Total 5.5% 19.7% 20.7% 21.2% 20.6% Total Shares Outstanding 12,875 12,939 13,375 13,534 13,613 -------------------------------------------------------------------------------------------------------------------------------
Source: CDA Spectrum. Holdings as of September 30, 1999. (a) 13F Institutions excludes Parent's majority share in C Co. SALOMON SMITH BARNEY --------------------------- 9 A member of citigroup[LOGO] 48 PROJECT SPIRIT 2 C CO. VALUATION ANALYSIS SALOMON SMITH BARNEY --------------------------- A member of citigroup[LOGO] 49 PROJECT SPIRIT Valuation Summary (Base Case)
------------ ------------- -------------------- M Co. Current C Co. C Co Prices. Offer Price: Market Price: Cumulative Wtd. Avg. $10.50 $11.06 $14.17(g) ------------ ------------- -------------------- Valuation Methodology $6.00 $7.50 $9.00 $10.50 $12.00 $13.50 $15.00 $16.50 $18.00 $19.50 - ------------------------------------------------------------------------------------------------------------------------------- Whole Company ----------- Summary Component Valuation $9.00-11.00 ----------- ----------- Public Market Comparables(a) $8.75-11.25 ----------- ------------ Precedent Transaction Analysis $13.00-14.50 ------------ ------- Squeeze Out Analysis (1 Day Prior) $12.25- 13.00 ------- ------ Squeeze Out Analysis (1 Month Prior) $9.50- 10.25 ------ ------------ DCF Analysis $15.00-18.75 ------------ Unaffiliated Operations ---------- Summary Component valuation $7.50-9.25 ---------- ---------- Public Market Comparabiles(a) $7.25-9.25 ---------- ------- Precedent Transaction Analysis $10.75- 11.50 ------- ------------ DCF Analysis $12.75-16.25 ------------ Valuation Multiples $6.00 $7.50 $9.00 $10.50 $12.00 $13.50 $15.00 - --------------------------------------------------------------------------------------------------------------------------- Premium / Market Price (January 25, 2000)(b) (45.8)% (32.2)% (18.6)% (5.1)% 8.5% 22.0% 35.6% Premium / Market Price (January 19, 2000)(c) (44.8) (31.0) (17.2) (3.4) 10.3 24.1 37.9 Premium / Market Price (December 27, 1999)(d) (26.7) (8.4) 9.9 28.2 46.6 64.9 83.2 Premium / Market Price (August 9, 1999)(e) (62.8) (53.5) (44.2) (34.9) (25.6) (16.3) (7.0) Firm value / Total Assets Under Mgmt.(%) 0.04 0.10 0.16 0.22 0.29 0.35 0.41 Firm Value / Unaffiliated Assets Under Mgmt.(%) 0.06 0.15 0.25 0.34 0.44 0.54 0.63 Firm Value / LTM Revenues 0.1x 0.4x 0.0x 0.8x 1.1x 1.3x 1.5x Firm value / LTM EBITDA 0.5 1.3 2.1 3.0 3.8 4.6 5.5 Price / LTM Net Income 6.3 7.9 9.5 11.0 12.6 14.2 15.8 Price / 1999E Earnings(f) 6.3 7.9 9.5 11.0 12.6 14.2 15.8 Price / 2000E Earnings(f) 5.7 7.1 8.5 10.0 11.4 12.8 14.2 - --------------------------------------------------------------------------------------------------------------------------- Valuation Multiples $16.50 $18.00 $19.50 - ---------------------------------------------------------------------------- Premium / Market Price (January 25, 2000)(b) 49.2% 62.7% 76.3% Premium / Market Price (January 19, 2000)(c) 51.7 65.5 79.3 Premium / Market Price (December 27, 1999)(d) 101.5 119.8 138.2 Premium / Market Price (August 9, 1999)(e) 2.3 11.6 20.9 Firm value / Total Assets Under Mgmt.(%) 0.69 0.76 0.82 Firm Value / Unaffiliated Assets Under Mgmt.(%) 1.06 1.16 1.26 Firm Value / LTM Revenues 2.5x 2.8x 3.0x Firm value / LTM EBITDA 9.2 10.0 10.8 Price / LTM Net Income 17.3 18.9 20.5 Price / 1999E Earnings(f) 17.3 18.9 20.5 Price / 2000E Earnings(f) 15.6 17.1 18.5 - ----------------------------------------------------------------------------
(a) Public market comparables consist of Federated Investors, John Nuveen, Eaton Vance Corp., Black Rock Inc., Neuberger Berman and Gabelli Asset Mgmt. (b) Price as of close (1/25/00): $11.0625 (c) Price as of close (1/19/00): $10.875 (d) Price as of close (12/27/00): $8.1875 (e) Price price to Parent ratings downgrade announcement (8/9/99): $16.125 (f) Based on management forecasts of $0.95 and $1.06 for 1999 and 2000, respectively, and 13.97 million shares outstanding. (g) Cumulative weighted average price from 12/16/97 to 1/25/00. SALOMON SMITH BARNEY --------------------------- 10 A member of citigroup[LOGO] 50 PROJECT SPIRIT Valuation Summary (Optimal Case)
------------ ------------- -------------------- M Co. Current C Co. C Co Prices. Offer Price: Market Price: Cumulative Wtd. Avg. $10.50 $11.06 $14.17(g) ------------ ------------- -------------------- Valuation Methodology $9.00 $10.S0 $12.00 $13.50 $15.00 $16.50 $18.00 $19.50 $21.00 $22.50 - ------------------------------------------------------------------------------------------------------------------------------------ Whole Company ------------ Summary Component Valuation $12.75-15.75 ------------ ------------ Public Market Comparables(a) $11.25-16.75 ------------ ------------ Precedent Transaction Analysis $18.00-22.50 ------------ ------------- Squeeze Out Analysis (1 Day Prior) $13.00-14.50 ------------- ------------ Squeeze Out Analysis (1 Month Prior) $10.25-11.50 ------------ ------------ DCF Analysis $16.00-20.25 ------------ Unaffiliated Operations ------------- Summary Component valuation $10.50-13.00 ------------- ----------- Public Market Comparabiles(a) $9.25-13.75 ----------- ------------ Precedent Transaction Analysis $14.50-15.50 ------------ ------------ DCF Analysis $13.75-17.50 ------------
Valuation Multiples $9.00 $1040 $12.00 $13.50 $15.00 $16.50 $18.00 - -------------------------------------------------------------------------------------------------------------------------- Premium / Market Price (January 25, 2000)(b) (18.6)% (5.1)% 8.5% 22.0% 35.6% 49.2% 62.7% Premium / Market Price (January 19. 2000)(c) (17.2) (3.4) 10.3 24.1 37.9 51.7 65.5 Premium / Market Price (December 27,19991(d) 9.9 28.2 46.6 64.9 83.2 101.5 119.8 Premium / Market Price (August 9,1999)(e) (44.2) (34.9) (25.6) (16.3) (7.0) 2.3 11.6 Firm Value / Total Assets Under Mgmt.(%) 0.16 0.22 0.29 0.35 0.41 0.48 0.54 Firm Value / Unaffiliated Assets Under Mgmt.(%) 0.25 0.34 0.44 0.54 0.63 0.73 0.83 Firm Value / LTM Revenues 0.6x 0.8x 1.1x 1.3x 1.5x 1.7x 2.0x Firm Value / LTM EBITDA 2.1 3.0 3.8 4.0 5.5 6.3 7.2 Price / LTM Net Income 9.5 11.0 12.6 14.2 15.8 17.3 18.9 Price / 1999E Earnings(f) 9.5 11.0 12.6 14.2 15.8 17.3 18.9 Price / 2000E Earnings(f) 8.5 10.0 11.4 12.8 14.2 15.6 17.1 - -------------------------------------------------------------------------------------------------------------------------- Valuation Multiples $19.50 $21.00 $22.50 - ----------------------------------------------------------------------------- Premium / Market Price (January 25, 2000)(b) 76.3% 89.8% 103.4% Premium / Market Price (January 19. 2000)(c) 79.3 93.1 106.9 Premium / Market Price (December 27,19991(d) 138.2 156.5 174.8 Premium / Market Price (August 9,1999)(e) 20.9 30.2 39.5 Firm Value / Total Assets Under Mgmt.(%) 0.82 0.88 0.94 Firm Value / Unaffiliated Assets Under Mgmt.(%) 1.21 1.35 1.45 Firm Value / LTM Revenues 3.0x 3.2x 3.5x Firm Value / LTM EBITDA 10.8 11.7 12.5 Price / LTM Net Income 20.5 22.1 23.6 Price / 1999E Earnings(f) 20.5 22.1 23.1 Price / 2000E Earnings(f) 18.5 19.9 21.3 - -----------------------------------------------------------------------------
(a) Public market comparables consist of Federated Investors, John Nuveen, Eaton Vance Corp., Black Rock Inc., Neuberger Berman and Gabelli Asset Mgmt. (b) Price as of close (1/25/00): $11.0625 (c) Price as of close (1/19/00): $10.875 (d) Price as of close (12/27/00): $8.1875 (e) Price price to Parent ratings downgrade announcement (8/9/99): $16.125 (f) Based on management forecasts of $0.95 and $1.06 for 1999 and 2000, respectively, and 13.97 million shares outstanding. (g) Cumulative weighted average price from 12/16/97 to 1/25/00. SALOMON SMITH BARNEY --------------------------- 11 A member of citigroup[LOGO] EX-99.D.1 15 AGREEMENT AND PLAN OF MERGER 1 EXHIBIT (d)(1) AGREEMENT AND PLAN OF MERGER by and among METROPOLITAN LIFE INSURANCE COMPANY CC MERGER SUB INC. and CONNING CORPORATION dated as of March 9, 2000 2 TABLE OF CONTENTS
Page ---- ARTICLE I THE OFFER Section 1.1 The Offer.............................................................................. 2 Section 1.2 Company Actions........................................................................ 3 Section 1.3 Actions by Parent and Purchaser........................................................ 4 ARTICLE II THE MERGER Section 2.1 The Merger............................................................................. 5 Section 2.2 Effective Time......................................................................... 5 Section 2.3 Effects of the Merger.................................................................. 6 Section 2.4 Articles of Incorporation and By-Laws of the Surviving Corporation..................... 6 Section 2.5 Directors.............................................................................. 6 Section 2.6 Officers............................................................................... 6 Section 2.7 Conversion of Common Shares............................................................ 6 Section 2.8 Conversion of Purchaser Common Stock................................................... 7 Section 2.9 Options; Stock Plans................................................................... 7 Section 2.10 Stockholders' Meeting.................................................................. 7 Section 2.11 Merger without Meeting of Stockholders................................................. 8 ARTICLE III DISSENTING SHARES; PAYMENT FOR COMMON SHARES Section 3.1 Dissenting Shares...................................................................... 9 Section 3.2 Payment for Common Shares.............................................................. 9 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY Section 4.1 Organization and Qualification; Subsidiaries........................................... 11 Section 4.2 Capitalization of the Company and its Subsidiaries..................................... 12 Section 4.3 Authority Relative to This Agreement; Consents and Approvals........................... 12 Section 4.4 SEC Reports; Financial Statements...................................................... 13 Section 4.5 Proxy Statement; Offer Documents....................................................... 14 Section 4.6 Consents and Approvals; No Violations.................................................. 14 Section 4.7 No Default............................................................................. 15 Section 4.8 No Undisclosed Liabilities............................................................. 15 Section 4.9 Litigation............................................................................. 15 Section 4.10 Permits................................................................................ 15 Section 4.11 Employee Benefit Matters............................................................... 16 Section 4.12 Brokers................................................................................ 17
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Page ---- Section 4.13 Absence of Certain Changes............................................................. 17 Section 4.14 Taxes.................................................................................. 17 Section 4.15 Intellectual Property.................................................................. 18 Section 4.16 Opinion of Financial Advisor........................................................... 19 Section 4.17 Material Contracts..................................................................... 19 Section 4.18 Insurance.............................................................................. 19 Section 4.19 Affiliated Transactions................................................................ 19 Section 4.20 Investment Contracts, Funds and Clients................................................ 20 Section 4.21 Company Broker/Dealers................................................................. 20 Section 4.22 Takeover Statutes; Charter............................................................. 21 ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER Section 5.1 Organization and Qualification Subsidiaries............................................ 21 Section 5.2 Authority Relative to This Agreement................................................... 21 Section 5.3 Consents and Approvals; No Violations.................................................. 22 Section 5.4 Proxy Statement; Schedule 14D-9........................................................ 22 Section 5.5 Financing.............................................................................. 23 Section 5.6 Ownership of Company Capital Stock..................................................... 23 Section 5.7 Conduct of Business of Purchaser....................................................... 23 ARTICLE VI COVENANTS Section 6.1 Conduct of Business of the Company..................................................... 23 Section 6.2 Acquisition Proposals.................................................................. 26 Section 6.3 Access to Information.................................................................. 26 Section 6.4 Additional Agreements; Reasonable Efforts.............................................. 26 Section 6.5 Consents............................................................................... 27 Section 6.6 Public Announcements................................................................... 27 Section 6.7 Indemnification........................................................................ 27 Section 6.8 Employee Benefit Arrangements.......................................................... 28 Section 6.9 Notification of Certain Matters........................................................ 30 Section 6.10 State Takeover Laws.................................................................... 30 Section 6.11 Stockholder Litigation................................................................. 30 Section 6.12 Further Action......................................................................... 30 ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER Section 7.1 Conditions to Each Party's Obligation to Effect the Merger............................. 30 Section 7.2 Conditions to Obligations of Parent and Purchaser...................................... 31 Section 7.3 Conditions to Obligations of the Company............................................... 31 Section 7.4 Frustration of Closing Conditions...................................................... 32
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Page ---- ARTICLE VIII TERMINATION; AMENDMENTS; WAIVER Section 8.1 Termination............................................................................ 32 Section 8.2 Effect of Termination.................................................................. 34 Section 8.3 Amendment.............................................................................. 34 Section 8.4 Waiver................................................................................. 34 ARTICLE IX MISCELLANEOUS Section 9.1 Nonsurvival of Representations and Warranties.......................................... 34 Section 9.2 Entire Agreement; Assignment........................................................... 34 Section 9.3 Validity............................................................................... 34 Section 9.4 Notices................................................................................ 35 Section 9.4 Governing Law.......................................................................... 36 Section 9.6 Descriptive Headings................................................................... 36 Section 9.7 Parties in Interest.................................................................... 36 Section 9.8 Counterparts........................................................................... 36 Section 9.9 Fees and Expenses...................................................................... 36 Section 9.10 Specific Performance................................................................... 36 Section 9.11 Interpretation; Absence of Presumption................................................. 36 ANNEX I Conditions to the Offer
-iii- 5 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of March 9, 2000, by and among Metropolitan Life Insurance Company ("Parent"), a New York life insurance company, CC Merger Sub Inc., a Missouri corporation and an indirect wholly owned subsidiary of Parent ("Purchaser"), and Conning Corporation, a Missouri corporation (the "Company"). WHEREAS, Parent beneficially owns 8,304,995 shares of the common stock, par value $0.01 par share, of the Company (the "Common Shares"); WHEREAS, it is proposed that Purchaser acquire all of the issued and outstanding Common Shares not beneficially owned by Parent or Purchaser (references to the Parent shall, where the context so requires, be deemed to refer to Purchaser as well); WHEREAS, it is proposed that Purchaser will make a cash tender offer (the "Offer") in compliance with Section 14(d)(1) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules and regulations promulgated thereunder to acquire all the issued and outstanding shares of Common Stock for $12.50 per share (such amount, or any greater amount per share paid pursuant to the Offer, being hereinafter referred to as the "Offer Price"), net to the seller in cash, upon the terms and subject to the conditions of this Agreement and Annex I hereto; and that the Offer will be followed by the merger (the "Merger") of Purchaser with and into the Company, with the Company being the surviving corporation, in accordance with the Missouri General and Business Corporation Law ("MGBCL"), pursuant to which each issued and outstanding Common Share not beneficially owned by Parent will be converted into the right to receive the Offer Price upon the terms and subject to the conditions provided herein and in Annex I hereto; WHEREAS, a special committee (the "Special Committee") of the Board of Directors of the Company (the "Company Board") has received the written opinion of Salomon Smith Barney Inc. (the "Financial Advisor") to the effect that, based on, and subject to, the various assumptions and qualifications set forth in such opinion, as of the date of such opinion, the Offer Price to be received by the holders of the Common Shares (other than Parent and its affiliates) pursuant to the Offer and the Merger is fair to such holders from a financial point of view; WHEREAS, the Special Committee has determined that this Agreement, and the Offer and the other transactions contemplated hereby, taken as a whole, are in the best interests of the Company and its stockholders, and has voted to recommend to the Company Board that the Company Board approve this Agreement, and the Offer and the other transactions contemplated hereby; WHEREAS, the Company Board has determined that this Agreement, the Offer and the other transactions contemplated hereby, taken as a whole, are in the best interests of the Company and its stockholders and has voted to approve this Agreement, and the Offer and the other transactions contemplated hereby; and 6 WHEREAS, Parent, Purchaser and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Offer and the Merger and also to prescribe various conditions to the Offer and the Merger. NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, Parent, Purchaser and the Company agree as follows: ARTICLE I THE OFFER Section 1.1. The Offer. (a) Provided that this Agreement shall not have been terminated in accordance with Article VIII and none of the conditions set forth in Annex I hereto (the "Tender Offer Conditions") shall exist after the date hereof and prior to the commencement of the Offer, as promptly as practicable, but not later than March 20, 2000, Purchaser shall, and Parent shall cause Purchaser to, commence (within the meaning of Rule 14d-2 under the Exchange Act) an offer to purchase all outstanding Common Shares at the Offer Price and shall take the actions set forth in Section 1.3 below and shall take all other actions as required by any order, writ, injunction, judgment, arbitration award, agency requirement, decree, law, statute, ordinance, rule or regulation (each a "Law"). The obligation of Purchaser to accept for payment or pay for any Common Shares tendered pursuant thereto will be subject only to the satisfaction of the Tender Offer Conditions. (b) Without the prior written consent of the Special Committee and the Company Board, Purchaser shall not (i) impose conditions to the Offer in addition to the Tender Offer Conditions, (ii) modify or amend the Tender Offer Conditions or any other term of the Offer in a manner adverse to the holders of Common Shares, (iii) reduce the number of Common Shares subject to the Offer, (iv) reduce the Offer Price, (v) except as provided in the following sentence, extend the Offer if all of the Tender Offer Conditions are satisfied or waived, or (vi) change the form of consideration payable in the Offer. Notwithstanding the foregoing, Purchaser may, in accordance with applicable Law, and without the consent of the Special Committee, extend the Offer at any time, and from time to time, (i) if at the then-scheduled expiration date of the Offer, any of the conditions to Purchaser's obligation to accept for payment and pay for all Common Shares shall not have been satisfied or waived; (ii) for any period required by any rule, regulation, interpretation or position of the SEC or its staff applicable to the Offer; or (iii) if all Tender Offer Conditions are satisfied or waived but the number of Common Shares tendered, together with Common Shares already beneficially owned by Parent, is at least equal to 66 2/3%, but less than 90%, of the then-outstanding number of Common Shares, for an aggregate period of not more than 20 business days (for all such extensions) beyond the latest expiration date that would be permitted under clause (i) or (ii) of this sentence (such aggregate period, the "Subsequent Offering Period"). So long as this Agreement is in effect, the Offer has been commenced and the Tender Offer Conditions have not been satisfied or waived, Purchaser shall, and Parent shall cause Purchaser to, cause the Offer not to expire, subject, however, to Purchaser's and Parent's -2- 7 rights of termination under this Agreement. Parent and Purchaser shall comply with the obligations respecting prompt payment and announcement under the Exchange Act. There shall be no withdrawal rights during the Subsequent Offering Period. (c) Parent and Purchaser represent that the Offer Documents (as defined in Section 1.3(a)) will comply in all material respects with the provisions of applicable federal securities Laws and, on the date filed with the SEC and on the date first published, sent or given to the Company's stockholders, shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, except that no representation is made by Parent or Purchaser with respect to information supplied by the Company in writing for inclusion in the Offer Documents. Each of Parent and Purchaser, on the one hand, and the Company, on the other hand, agrees to correct promptly any information provided by it for use in the Offer Documents if and to the extent that it shall have become false or misleading in any material respect and Purchaser further agrees to take all steps necessary to cause the Offer Documents as so corrected to be filed with the SEC and to be disseminated to stockholders of the Company, in each case, as and to the extent required by applicable federal securities Laws. Section 1.2. Company Actions. (a) The Company shall file with the SEC and mail to the holders of Common Shares, on or as promptly as practical after the date of the filing by Parent and Purchaser of the Offer Documents, a Solicitation/Recommendation Statement on Schedule 14D-9 (together with any amendments or supplements thereto, the "Schedule 14D-9") reflecting the recommendations of the Company Board and the Special Committee that holders of Common Shares tender their Common Shares pursuant to the Offer, and shall disseminate the Schedule 14D-9 as required by Rule 14d-9 promulgated under the Exchange Act. The Schedule 14D-9 will set forth, and the Company hereby represents that the Company Board and the Special Committee, at meetings duly called and held, have (i) determined by unanimous vote of its directors, other than directors who abstained, that the Offer and the Merger are fair to, advisable and in the best interests of the Company and its stockholders, (ii) approved the Offer and this Agreement and the transactions contemplated hereby in accordance with the MGBCL, (iii) resolved to recommend acceptance of the Offer and approval of this Agreement by the Company's stockholders, and (iv) taken all action in their control necessary to render Sections 351.407, 351.459 and 409.500 to 409.566 of the MGBCL inapplicable to the Offer and the Merger; provided, however, that such recommendations and approvals may be withdrawn, modified or amended to the extent that the Company Board or the Special Committee determines in good faith and on a reasonable basis, after consultation with outside counsel, that such action is required in the exercise of the Company Board's fiduciary duties or the Special Committee's fiduciary duties, respectively, under applicable Law. The Company further represents that, prior to the execution hereof, the Financial Advisor has delivered to the Special Committee the Fairness Opinion (as defined below), to the effect that, based on, and subject to, the various assumptions and qualifications set forth in such opinion, as of the date of such opinion, the Offer Price to be received by the holders of Common Shares (other than Parent or any of its affiliates, including Conning and its wholly owned Subsidiaries (as defined in Section 4.1)) pursuant to the Offer and the Merger is fair to such holders from a financial point of view. The Company further represents and warrants that it has been -3- 8 authorized by the Financial Advisor to reproduce the Fairness Opinion in full, and may also include references to the Opinion and to the Financial Advisor and its relationship with the Special Committee and the Company (in each case in form and substance as the Financial Advisor shall reasonably approve), in any statement on Schedule 14D-9 or proxy statement relating to the transactions contemplated hereby that the Company is required to file or distribute to its shareholders under the Securities Exchange Act of 1934 or other applicable Law. The Company further represents that it will file such other documentation and take such other actions as required by Law to effect the purposes of this Agreement. The Company hereby consents to the inclusion in the Offer Documents of the recommendations of the Company Board and the Special Committee described in this Section 1.2(a). (b) The Schedule 14D-9 will comply in all material respects with the provisions of applicable federal securities Laws, and, on the date filed with the SEC and on the date first published, sent or given to the Company's stockholders, shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, except that no representation is made by the Company with respect to information supplied by Parent or Purchaser in writing for inclusion in the Schedule 14D-9. Each of the Company, on the one hand, and Parent and Purchaser, on the other hand, agrees promptly to correct any information provided by either of them for use in the Schedule 14D-9 if and to the extent that it shall have become false or misleading, and the Company further agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated to the holders of Common Shares, in each case, as and to the extent required by applicable federal securities Law. (c) In connection with the Offer, the Company will promptly, or shall cause its transfer agent to promptly, furnish Purchaser with mailing labels, security position listings, any non-objecting beneficial owner lists and any available listing containing the names and addresses of the record holders of Common Shares as of the most recent practicable date and shall furnish Purchaser with such additional information (including, but not limited to, updated lists of holders of Common Shares and their addresses, mailing labels and lists of security positions and non-objecting beneficial owner lists) and such other assistance as Purchaser or its agents may reasonably request in communicating the Offer to the Company's record and beneficial stockholders. Subject to the requirements of applicable Law, and except for such steps as are appropriate to disseminate the Offer Documents and any other documents necessary to consummate the Merger, Parent, Purchaser and their affiliates, associates, agents and advisors shall use the information contained in any such labels, listings and files only in connection with the Offer and the Merger, and, if this Agreement shall be terminated, will deliver to the Company all copies of such information then in their possession. Section 1.3. Actions by Parent and Purchaser. Provided that this Agreement shall not have been terminated in accordance with Article VIII and none of the Tender Offer Conditions exists after the date hereof and prior to the commencement of the Offer, as promptly as practicable, but no later than March 20, 2000: (a) Parent and Purchaser shall file with the SEC a Tender Offer Statement and a Rule 13e-3 Transaction Statement on Schedule TO, including all exhibits thereto (together with -4- 9 all amendments and supplements thereto, the "Schedule TO") with respect to the Offer, the Merger and the other transactions contemplated hereby. The Schedule TO shall contain or incorporate by reference an offer to purchase (the "Offer to Purchase") and forms of the related letter of transmittal and any related documents (the Schedule TO, the Offer to Purchase and such other documents, together with all supplements or amendments thereto, collectively, the "Offer Documents"). The Offer Documents shall comply in all material respects with the requirements of the Exchange Act. On the date filed with the SEC and on the date first published, sent or given to the Company's stockholders, the Offer Documents shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that no representation is made by Parent or Purchaser with respect to information supplied by the Company for inclusion in the Offer Documents. Each of Parent and Purchaser agrees to correct promptly, and the Company agrees to notify Parent promptly as to, any information provided by it for use in the Offer Documents, if and to the extent such information shall have become false or misleading in any material respect, and each of Parent and Purchaser further agrees to take all steps necessary to cause the Offer Documents as so corrected to be filed with the SEC and to be disseminated to all of the holders of Shares, in each case as and to the extent required by applicable federal securities laws. Parent and Purchaser agree to provide the Company and the Special Committee and their respective counsel in writing any comments Parent, Purchaser or their counsel may receive from the SEC or its staff with respect to the Offer Documents promptly after receipt of such comments. Parent and Purchaser shall use their respective reasonable best efforts to respond to such comments promptly and shall provide the Company copies of any written responses and telephonic notification of any verbal responses by Parent, Purchaser or their counsel. (b) Parent shall provide or cause to be provided to Purchaser all of the funds necessary to purchase any Shares that Purchaser becomes obligated to purchase pursuant to the Offer. ARTICLE II THE MERGER Section 2.1. The Merger. Upon the terms and subject to the satisfaction or waiver of the conditions hereof, and in accordance with the applicable provisions of this Agreement and the MGBCL, at the Effective Time (as defined below) Purchaser shall be merged with and into the Company. Following the Merger, the separate corporate existence of Purchaser shall cease, and the Company shall continue as the surviving corporation (the "Surviving Corporation"). Parent may, upon notice to the Company, modify the structure of the Merger if Parent determines it advisable to do so because of tax or other considerations, and the Company shall promptly enter into any amendment to this Agreement necessary or desirable to accomplish such structure modification; provided that no such amendment shall reduce the Offer Price, change the form of consideration payable in the Offer, or otherwise adversely affect the Company or its shareholders or delay or hinder the transactions contemplated hereby. Section 2.2. Effective Time. As soon as practicable after the satisfaction or waiver of the conditions set forth in Article VII, the Company and Purchaser shall cause articles -5- 10 of merger to be executed, verified and filed with, and deliver to, in the manner required by the MGBCL, the Secretary of State of the State of Missouri, and the parties shall take such other and further actions as may be required by Law to make the Merger effective. The time at which the Merger becomes effective in accordance with applicable Law is referred to as the "Effective Time." Prior to the filing referred to in this Section 2.2, the closing will be held at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York 10019 (or such other place as the parties may agree) for the purpose of confirming all of the foregoing. Section 2.3. Effects of the Merger. From and after the Effective Time, the Merger shall have the effects set forth in the MGBCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the properties, rights, privileges, powers and franchises of the Company and Purchaser shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Purchaser shall become the debts, liabilities and duties of the Surviving Corporation. Section 2.4. Articles of Incorporation and By-Laws of the Surviving Corporation. (a) The articles of incorporation of Purchaser as in effect immediately prior to the Effective Time shall be the articles of incorporation of the Surviving Corporation until thereafter amended in accordance with the provisions thereof and applicable Law, except that Article I of the articles of incorporation of the Surviving Corporation shall read until thereafter amended: "The name of the corporation (which is hereinafter referred to as the "Corporation") is `Conning Corporation.'" (b) Subject to the provisions of Section 6.7, the by-laws of Purchaser in effect at the Effective Time shall be the by-laws of the Surviving Corporation until amended in accordance with the provisions thereof, the articles of incorporation and applicable Law. Section 2.5. Directors. Subject to applicable Law, the directors of the Company immediately prior to the Effective Time and three directors to be determined by Parent in its sole discretion shall be the initial directors of the Surviving Corporation and shall hold office until their respective successors are duly elected or appointed and qualified, or their earlier death, resignation or removal in accordance with the articles of incorporation and the by-laws of the Surviving Corporation. Section 2.6. Officers. The officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation and shall hold office until their respective successors are duly elected or appointed and qualified, or their earlier death, resignation or removal in accordance with the articles of incorporation and the by-laws of the Surviving Corporation. Section 2.7. Conversion of Common Shares. At the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof, each Common Share issued and outstanding immediately prior to the Effective Time, including any shares of restricted stock issued pursuant to the Stock Plans (as defined below) (other than (i) any Common Shares held by Parent, Purchaser, any direct or indirect wholly owned Subsidiary of Parent or Purchaser -6- 11 (the "Parent Shares"), in the treasury of the Company or by any wholly owned Subsidiary of the Company, which Common Shares shall remain outstanding or in the treasury of the Company, as the case may be, and (ii) Dissenting Shares (as defined herein)), shall by virtue of the Merger be cancelled and retired and shall be converted into the right to receive pursuant to Section 3.2 the Offer Price, payable to the holder thereof, without interest thereon, upon surrender of the certificate formerly representing such Common Share or any replacement certificates representing such Common Shares as may be obtained from the transfer agent of the Company. Section 2.8. Conversion of Purchaser Common Stock. Purchaser has outstanding 100 shares of common stock, par value $0.01 per share, all of which shares are entitled to vote with respect to approval and adoption of this Agreement. At the Effective Time, each share of common stock, par value $0.01 per share, of Purchaser issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and become [54,483.64] validly issued, fully paid and non-assessable shares of common stock, par value $0.01 per share, of the Surviving Corporation. Section 2.9. Options; Stock Plans. (a) Prior to the consummation of the Offer, the Company Board (or, if appropriate, any committee thereof) shall adopt appropriate resolutions and take all other actions necessary to provide for the cancellation, effective at the Effective Time, of all the outstanding stock options, all of which are listed in Section 2.9 of the Company Disclosure Schedule (as defined below) (the "Stock Options"), heretofore granted under any stock option or similar plan or agreement of the Company (such stock option or similar plans or agreements being collectively referred to herein as the "Stock Plans"). Such cancellation shall occur without any payment therefor except as provided in Section 6.8 with respect to the substitution therefor of Replacement Awards (as defined below). (b) The Company shall take all actions necessary to provide that, effective as of the Effective Time, (i) each of the Stock Plans shall be terminated, and (ii) the provisions in any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any of its Subsidiaries shall be deleted. Section 2.10. Stockholders' Meeting. (a) If required by applicable Law in order to consummate the Merger, the Company, acting through the Company Board, shall, in accordance with applicable Law, and provided that this Agreement shall not have been terminated: (i) duly call, give notice of, convene and hold a special meeting of its stockholders (the "Special Meeting") to be held as soon as practicable following the acceptance for purchase of and payment for Common Shares by Purchaser pursuant to the Offer for the purpose of considering and taking action upon this Agreement; (ii) together with Parent, prepare and file with the SEC a preliminary proxy statement relating to this Agreement, and use reasonable best efforts (A) to obtain and furnish the information required to be included by the SEC in the Proxy Statement (as defined herein) and, after consultation with each other, to respond as soon as practicable to any comments made by -7- 12 the SEC with respect to the preliminary proxy statement and cause a definitive proxy statement (the "Proxy Statement"), which the parties agree shall comply as to form in all material respects with all applicable Law, to be mailed to its stockholders at the earliest practicable date following expiration or termination of the Offer, and (B) subject to the fiduciary duties of the Company Board and the Special Committee under applicable Law, to obtain the necessary approvals of the Merger and this Agreement by the Company stockholders; and (iii) subject to the fiduciary duties of the Company Board and the Special Committee under applicable Law, include in the Proxy Statement (x) the recommendations of the Company Board and the Special Committee that stockholders of the Company vote in favor of the approval of the Merger and of this Agreement (except as set forth in the proviso to Section 1.2(a)) and (y) the Fairness Opinion in accordance with the provisions of Section 1.2(a). (b) Parent agrees that it will vote, or cause to be voted, all Common Shares then owned by it, Purchaser or any of Parent's other Subsidiaries in favor of the approval of this Agreement. (c) Whenever any event occurs which is required to be set forth in an amendment or supplement to the Proxy Statement, Parent or the Company, as the case may be, shall promptly inform the other of each such occurrence and cooperate in the filing with the SEC and/or mailing to the Company stockholders of such amendment or supplement. Each of the parties agree that the information provided by it for inclusion in the Proxy Statement and each amendment or supplement thereto, at the time of mailing thereof and at the time of the Special Meeting, will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If, at any time prior to the Effective Time, any information pertaining to one of the parties or, to such party's knowledge, any of its affiliates or its officers or directors, contained in or omitted from the Proxy Statement makes statements contained therein materially false or misleading, such party shall promptly so advise the other parties and provide such other parties with the information necessary to make the statements contained therein not false or misleading. In the event of such advice being given pursuant to the preceding sentence, the Company and Parent shall cooperate to promptly file with the SEC (after reasonable opportunity to Parent and the Company to review and comment thereon) any required amendments or supplements to the Proxy Statement and, to the extent required by law, disseminate such amendments or supplements to the Company stockholders. Section 2.11. Merger without Meeting of Stockholders. Notwithstanding Section 2.10, in the event that Purchaser shall acquire pursuant to the Offer such number of Common Shares (the "Threshold Number of Common Shares") which, when aggregated with the number of Common Shares currently beneficially owned by Parent, represents 90% of the total number of outstanding Common Shares on and after giving effect to the date of purchase, the parties hereto agree to take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after the acceptance for payment of and payment for Common Shares by Purchaser pursuant to the Offer without a meeting of stockholders of the Company, in accordance with and to the extent permitted by Section 351.447 of the MGBCL. -8- 13 ARTICLE III DISSENTING SHARES; PAYMENT FOR COMMON SHARES Section 3.1. Dissenting Shares. Notwithstanding Section 2.7 or 3.2, Common Shares outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of the Merger or consented thereto in writing and who has timely demanded and perfected the right, if any, for appraisal for such Common Shares in accordance with Sections 351.447 and 351.455 of the MGBCL ("Dissenting Shares") shall not be converted into the right to receive the Offer Price, unless such holder fails to perfect or withdraws or otherwise loses such holder's right to appraisal. If, after the Effective Time, such holder fails to perfect or withdraws or loses such holder's right to appraisal, such Common Shares shall be treated as if they had been converted as of the Effective Time into a right to receive the Offer Price. The Company shall give Parent prompt notice of any demands received by the Company for appraisal of Common Shares, and Parent shall have the right to participate in all negotiations and proceedings with respect to such demands. The Company shall not, except with the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, or otherwise negotiate, any such demands. Section 3.2. Payment for Common Shares. (a) Prior to the Effective Time, Purchaser shall designate a bank or trust company reasonably acceptable to the Company to act as paying agent (the "Paying Agent") in effecting the payment of the Offer Price in respect of certificates that, immediately prior to the Effective Time, represent Common Shares (the "Certificates") entitled to payment of the Offer Price pursuant to Section 2.7. At the Effective Time, Parent or Purchaser shall deposit, or cause to be deposited, in trust with the Paying Agent the aggregate Offer Price to which holders of Common Shares shall be entitled at the Effective Time pursuant to Section 2.7. (b) Promptly after the Effective Time, the Paying Agent shall mail to each record holder of Certificates a form of letter of transmittal which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Paying Agent and instructions for use in surrendering such Certificates and receiving the Offer Price in respect thereof. Upon the surrender of each such Certificate, together with a duly executed letter of transmittal and any other required documents, the Paying Agent shall, as soon as practicable, pay the holder of such Certificate an amount equal to the product of (x) the Offer Price multiplied by (y) the number of Common Shares formerly represented by such Certificate, in consideration therefor, and such Certificate shall forthwith be cancelled. Until so surrendered, each such Certificate (other than Certificates representing Common Shares held by Parent or Purchaser, any wholly owned Subsidiary of Parent or Purchaser, in the treasury of the Company or by any wholly owned Subsidiary of the Company or Dissenting Shares) shall represent solely the right to receive the aggregate Offer Price relating thereto. No interest or dividends shall be paid or accrued on the Offer Price. If the Offer Price (or any portion thereof) is to be delivered to any individual, corporation, trust, association, unincorporated association, estate, partnership, joint venture, limited liability company, Governmental Entity (as defined in Section 4.6) or other legal entity (each, a "Person"), other than the Person in whose name the Certificate surrendered is registered, it shall be a condition to such right to receive such -9- 14 Offer Price that the Certificate so surrendered shall be properly endorsed or otherwise be in proper form for transfer, that the signatures on the Certificate shall be properly guaranteed, and that the Person surrendering such Common Shares shall pay to the Paying Agent any transfer or other taxes required by reason of the payment of the Offer Price to a Person other than the registered holder of the Certificate surrendered, or shall establish to the satisfaction of the Paying Agent that such taxes have been paid or are not applicable. In the event any Certificate shall have been lost, stolen or destroyed, the Paying Agent shall be required to pay the full Offer Price in respect of any Common Shares represented by such Certificate; however, Parent may require the owner of such lost, stolen or destroyed Certificate to execute and deliver to the Paying Agent a form of affidavit claiming such Certificate to be lost, stolen or destroyed in form and substance reasonably satisfactory to Parent, and the posting by such owner of a bond in such amount as Parent may determine is reasonably necessary as indemnity against any claim that may be made against Parent or the Paying Agent. (c) Promptly following the date which is 135 days after the Effective Time, the Paying Agent shall deliver to the Surviving Corporation all cash, Certificates and other documents in its possession relating to the transactions contemplated hereby, and the Paying Agent's duties shall terminate. Thereafter, each holder of a Certificate may surrender such Certificate to the Surviving Corporation and (subject to applicable abandoned property, escheat and similar Laws) receive in consideration therefor the aggregate Offer Price relating thereto, without any interest or dividends thereon, except as required under applicable Law. Notwithstanding the foregoing, none of Parent, Purchaser, the Company or the Paying Agent shall be liable to any Person in respect of any cash delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. If any Certificates shall not have been surrendered immediately prior to such date on which any payment pursuant to this Article III would otherwise escheat to or become the property of any Governmental Entity (as defined herein), the cash payment in respect of such Certificate shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interests of any Person previously entitled thereto. (d) Immediately prior to the Effective Time, the stock transfer books of the Company shall be closed, and, after the Effective Time, there shall be no transfers on the stock transfer books of the Surviving Corporation of any Common Shares which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation or the Paying Agent, they shall be surrendered and cancelled in return for the payment of the aggregate Offer Price relating thereto, as provided in this Article III. (e) From and after the Effective Time, the holders of Certificates evidencing ownership of Common Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Common Shares except as otherwise provided herein or by applicable Law. Such holders shall have no rights, after the Effective Time, with respect to such Common Shares except to surrender such Certificates in exchange for the Offer Price pursuant to this Agreement or to perfect any rights of appraisal as a holder of Dissenting Shares that such holders may have pursuant to Sections 351.447 and 351.455 of the MGBCL. -10- 15 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY Except as set forth in the schedule delivered to the Parent prior to the execution of this Agreement (the "Company Disclosure Schedule"), the Company hereby represents and warrants to Purchaser and Parent as follows: Section 4.1. Organization and Qualification; Subsidiaries. (a) Each of the Company and its Subsidiaries (as defined below) is a corporation or other legal entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its businesses as now being conducted and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership, leasing or operation of its properties or assets or conduct of its business requires such qualification, except where the failure to be so qualified or in good standing or to have such power or authority, would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect (as defined below). The Company has heretofore delivered or made available to Purchaser accurate and complete copies of the articles of incorporation and by-laws and other organizational documents, as currently in effect, of the Company and each of its Subsidiaries. As used in this Agreement, "Subsidiary" shall mean, with respect to any party, any corporation or other organization, whether incorporated or unincorporated or domestic or foreign to the United States of which (i) such party or any other Subsidiary of such party is a general partner or (ii) at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries, or by such party and one or more of its Subsidiaries, excluding all investment funds (whether organized as partnerships, corporations, limited liability companies or any other type of entity) for which the Company or any entity, directly or indirectly, controlled by the Company acts as general partner, investment advisor or investment manager (collectively, "Conning Investment Funds"). The term "Company Material Adverse Effect" means any event, change in or effect on the business of the Company or its Subsidiaries, taken as a whole, that is or would reasonably be expected to be materially adverse to (i) the business, results of operations, properties (including intangible properties), financial condition, assets, agreements or employee base of the Company and its Subsidiaries, taken as a whole, or (ii) the ability of the Company to consummate the transactions contemplated hereby or to perform its obligations under this Agreement, except in the case of either clause (i) or clause (ii) any change or effect arising out of (x) a decline or deterioration in the economy in general or the asset management or capital markets in which the Company and its Subsidiaries operate, (y) this Agreement or the transactions contemplated hereby or the announcement thereof, or (z) any event caused primarily by any actions of Parent or its affiliates. Section 4.1(a) of the Company Disclosure Schedule sets forth a complete list of the Company's Subsidiaries. (b) Except as set forth in Section 4.1(b) of the Company Disclosure Schedule, the Company does not own (i) any equity interest in any corporation or other entity, or (ii) market- -11- 16 able securities where the Company's equity interest in any entity exceeds 5% of the outstanding equity of such entity on the date hereof. Section 4.2. Capitalization of the Company and its Subsidiaries. (a) The authorized capital stock of the Company consists of: 50,000,000 Common Shares and 20,000,000 shares of preferred stock, par value $0.01 per share ("Preferred Shares"). As of March 3, 2000, 13,753,359 Common Shares were issued and outstanding and no Preferred Shares were outstanding. All Common Shares have been duly authorized, validly issued, and are fully paid, nonassessable and free of preemptive rights or other similar rights (except for vesting and transfer restrictions on restricted shares issued under the Stock Plans). The Company has no commitments to issue or deliver any Common Shares or Preferred Shares except that, as of the date hereof, a total of 2,185,713 Common Shares are reserved for issuance pursuant to outstanding Options under the Stock Plans. Since March 3, 2000, no shares of the Company's capital stock have been issued other than pursuant to Options already in existence on such date, and no Options have been granted. Section 4.2 of the Company Disclosure Schedule contains a correct and complete list of each outstanding Option, including the holder, date of grant, exercise price and number of Shares subject thereto. Each of the outstanding shares of capital stock or other securities of each of the Company's Subsidiaries is duly authorized, validly issued, fully paid and nonassessable and owned by the Company or by a direct or indirect wholly owned Subsidiary of the Company, free and clear of any Lien (as defined below). Except as set forth above or in Section 4.2 of the Company Disclosure Schedule, there are no Common Shares or Preferred Shares authorized, reserved, issued or outstanding and there are no preemptive or other outstanding rights, subscriptions, options, warrants, stock appreciation rights, redemption rights, repurchase rights, convertible, exercisable, or exchangeable securities or other agreements, arrangements or commitments of any character relating to the issued or unissued share capital or other ownership interest of the Company or any of its Subsidiaries or any other securities or obligations convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any securities of the Company or its Subsidiaries, and no securities evidencing such rights are authorized, issued or outstanding. The Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible or exchangeable into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter. For purposes of this Agreement, "Lien" means, with respect to any asset (including any security) any option, claim, mortgage, lien, pledge, charge, security interest or encumbrance or restrictions of any kind in respect of such asset. (b) There are no voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the voting of the capital stock of the Company or any of the Subsidiaries. Section 4.3. Authority Relative to This Agreement; Consents and Approvals. (a) The Company has all the necessary corporate power and authority, and has taken all corporate action necessary, to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby in accordance with the terms hereof, subject only to the matters set forth in Section 4.6 and to obtaining the necessary approval of this Agreement -12- 17 by the holders of at least two-thirds of the outstanding Common Shares entitled to vote on the matter (provided, however, that no vote of the Company stockholders shall be necessary if Parent shall acquire pursuant to the Offer, the Threshold Number of Common Shares). This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery hereof by each of Parent and Purchaser, constitutes a valid, legal and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as may be subject to applicable bankruptcy, insolvency or other similar Laws, now or hereafter in effect, affecting creditors' rights generally. (b) Each of the Special Committee and the Company Board have duly and validly approved this Agreement and the Special Committee has received the Fairness Opinion from the Financial Advisor. Section 4.4. SEC Reports; Financial Statements. (a) Since December 11, 1997, except as set forth in Section 4.4(a) of the Company Disclosure Schedule, the Company and its Subsidiaries have filed with the SEC all forms, reports, schedules, statements and other documents required to be filed by it with the SEC pursuant to the Securities Act of 1933, as amended (including the rules and regulations promulgated thereunder the "Securities Act") and the Exchange Act (any such documents filed prior to the date hereof being collectively, the "Company SEC Documents"). The Company SEC Documents, including any financial statements or schedules included therein, at the time filed, or in the case of registration statements on their respective effective dates, (i) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as the case may be, and (ii) did not at the time filed (or, in the case of registration statements, at the time of effectiveness), contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The financial statements included in the Company SEC Documents (the "Financial Statements"), (i) have been prepared from, and are in accordance with, the books and records of the Company and its Subsidiaries, (ii) complied in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, (iii) have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis ("GAAP") during the periods involved (except as may be indicated in the notes thereto), and (iv) fairly present the consolidated financial position and the consolidated results of operations and cash flows (and changes in financial position, if any) of the Company and its Subsidiaries as of the times and for the periods referred to therein, except that any such Financial Statements that are unaudited, interim financial statements are subject to normal and recurring year-end adjustments. (b) The Company has heretofore delivered or made available to Purchaser, in the form filed with the SEC (including any amendments thereto), (i) its Annual Reports on Form 10-K for each of the three fiscal years ended December 31, 1997 and 1998, (ii) all definitive proxy statements relating to the Company's meetings of stockholders (whether annual or special) held since January 1, 1998, and (iii) all other reports (other than Quarterly Reports on Form 10-Q) or registration statements filed by the Company with the SEC since December 11, 1997. -13- 18 (c) The Company has heretofore delivered or made available to Purchaser a complete and correct copy of any amendments or modifications, which have not yet been filed by the Company with the SEC, to all agreements, documents or other instruments which previously had been so filed by the Company and are currently in effect. Section 4.5. Proxy Statement; Offer Documents. The Proxy Statement will comply in all material respects with the Securities Act and the Exchange Act, except that no representation is made by the Company with respect to information supplied by Parent for inclusion in the Proxy Statement. None of the information supplied by the Company in writing for inclusion in the Offer Documents or provided by the Company in the Schedule 14D-9 will, at the respective times that the Offer Documents and the Schedule 14D-9 are filed with the SEC and are first published or sent or given to holders of Common Shares, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Section 4.6. Consents and Approvals; No Violations. No filing with or notice to, and no permit, authorization, registration, consent or approval of, any court or tribunal or administrative, governmental or regulatory body, agency, authority or other entity (a "Governmental Entity") is required on the part of the Company or any of its Subsidiaries for the execution, delivery and performance by the Company of this Agreement or the consummation by the Company of the transactions contemplated hereby, except (i) as set forth in Section 4.6 of the Company Disclosure Schedule, (ii) pursuant to the applicable requirements of the Securities Act, the Exchange Act and the Investment Advisors Act of 1940, as amended (the "Advisors Act"), (iii) the delivery of the articles of merger pursuant to the MGBCL, (iv) to comply with state securities or "blue-sky" Laws, or (v) where the failure to obtain such permits, authorizations, consents or approvals or to make such filings or give such notice would not reasonably be expected to have a Company Material Adverse Effect. Neither the execution, delivery and performance of this Agreement by the Company nor the consummation by the Company of the transactions contemplated hereby will (A) conflict with or result in any breach, violation or infringement of any provision of the respective articles of incorporation or by-laws (or similar governing documents) of the Company or of any its Subsidiaries, (B) except as set forth in Section 4.6 of the Company Disclosure Schedule, result in a breach, violation or infringement of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to the creation of any Lien or any right of termination, amendment, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation, whether written or oral (each a "Contract"), to which the Company or any of its Subsidiaries is a party or by which any of them or any of their respective properties or assets may be bound, (C) change the rights or obligations of any party under any Contract, or (D) violate or infringe any Law applicable to the Company or any of its Subsidiaries or any of their respective properties or assets, except in the case of (B), (C) or (D) for breaches, violations, infringements, defaults or changes which would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Section 4.6 of the Company Disclosure Schedule sets forth a list, correct and complete in all material respects, of material Contracts of the Company and its Subsidiaries pursuant to which consents or waivers are or may be required prior to consummation of the transactions contemplated by this Agreement (whether or not subject to the exception set forth with respect to clauses (B), (C) and (D) above). -14- 19 Section 4.7. No Default. None of the Company or any of its Subsidiaries is in default or violation (and no event has occurred which with notice or the lapse of time or both would constitute a default or violation) of any term, condition or provision of (i) its articles of incorporation or by-laws (or similar governing documents), (ii) any Contract to which the Company or any of its Subsidiaries is now a party or by which any of them or any of their respective properties or assets may be bound, or (iii) any Law applicable to the Company, any of its Subsidiaries or any of their respective properties or assets, except in the case of clause (ii) or (iii) of this sentence for violations, breaches or defaults that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Section 4.8. No Undisclosed Liabilities. Except as set forth in the Company SEC Documents, neither the Company nor any of its Subsidiaries has incurred any, or has knowledge of any facts or circumstances that could give rise to any, liabilities or obligations of any nature, whether or not accrued, contingent, fixed, matured or otherwise, and whether or not required to be disclosed, that have, or would reasonably be expected to have, a Company Material Adverse Effect. Section 4.9. Litigation. Except as set forth in Section 4.9 of the Company Disclosure Schedule, there is no civil, criminal or administrative suit, claim, hearing, inquiry, action, proceeding or investigation (each an "Action") pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries or any of their respective properties or assets, or which would make the Company or any of its Subsidiaries a party in such Action, except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Except as disclosed in Section 4.9 of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is subject to any outstanding order, writ, injunction or decree, except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Section 4.10. Permits. Except as set forth in Section 4.10 of the Company Disclosure Schedule, the Company and its Subsidiaries hold all permits, licenses, variances, exemptions, orders and other authorizations, consents and approvals of all Governmental Entities necessary for the conduct of their respective businesses as presently conducted (the "Company Permits"), except for failures to hold such Company Permits which would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Except as set forth in Section 4.10 of the Company Disclosure Schedule, the Company and its Subsidiaries are in compliance with the terms of the Company Permits, except where the failure so to comply would not reasonably be expected to have a Company Material Adverse Effect. Except as set forth in Section 4.10 of the Company Disclosure Schedule, the businesses of the Company and its Subsidiaries are not being, and have not been, conducted in violation of any Law except for violations which individually or in the aggregate would not reasonably be expected to have a Company Material Adverse Effect. Except as set forth in Section 4.10 of the Company Disclosure Schedule, no investigation or review by any Governmental Entity with respect to the Company or any of its Subsidiaries is pending or, to the knowledge of the Company, threatened nor, to the knowledge of the Company, has any Governmental Entity indicated an intention to conduct the same, except where such investigation or review would not reasonably be expected to have a Material Adverse Effect. -15- 20 Section 4.11. Employee Benefit Matters. (a) For purposes of this Agreement, "Company Employee Benefit Plans" means all "employee benefit plans," as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and all other material employee benefit or compensation arrangements, including, any such arrangements providing severance pay, sick leave, vacation pay, salary continuation for disability, retirement benefits, deferred compensation, bonus pay, incentive pay, stock options (including those held by directors, employees, and consultants), hospitalization insurance, medical insurance, life insurance, scholarships or tuition reimbursements, in each case that are maintained by the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries is obligated to contribute thereunder for current or former directors, employees, independent contractors, consultants and leased employees of the Company or any of its Subsidiaries. (b) Except as set forth in Section 4.11 of the Company Disclosure Schedule or as otherwise contemplated by this Agreement, (i) the execution of, and performance of the transactions contemplated in this Agreement will not, either alone or upon the occurrence of subsequent events, result in any material payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits or obligation to fund benefits with respect to any employee or Company Employee Benefit Plan, and (ii) there are no material employment or severance agreements or material severance policies applicable to the Company or any of its Subsidiaries. (c) The Company Employee Benefit Plans have been maintained in all material respects in accordance with their terms and with all provisions of ERISA and the Internal Revenue Code of 1986, as amended (including rules and regulations thereunder) (the "Code") and all other applicable federal and state laws and regulations, except for failures to so maintain which, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect. (d) Except for matters which, individually or in the aggregate, could not reasonably be expected to have a Company Material Adverse Effect, there is no (i) unfair labor practice, labor dispute (other than routine individual grievances) or labor arbitration proceeding pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries relating to any of their businesses, (ii) activity or proceeding by a labor union or representative thereof to organize any employees of the Company or any of its Subsidiaries, or (iii) lockouts, strikes, slowdowns, work stoppages or threats thereof by or with respect to such employees. The Company is in compliance with all Laws regarding employment, employment practices, terms and conditions of employment and wages, except for such noncompliance which, either individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect. (e) Each material Company Employee Benefit Plan is listed in Section 4.11 of the Company Disclosure Schedule and has been made available to Parent. (f) Except as set forth in Section 4.11 of the Company Disclosure Schedule, each material Company Benefit Plan is set forth in a written plan document. -16- 21 Section 4.12. Brokers. No broker, finder or investment banker (other than the Financial Advisor, a true and correct copy of whose engagement agreement has been provided to Purchaser) is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Company. Except as set forth in Section 4.12 of the Company Disclosure Schedule no material financial advisory, legal, accounting, consulting or other fees and expenses are payable by or on behalf of the Company or any of its Subsidiaries in connection with this Agreement. Section 4.13. Absence of Certain Changes. Except as set forth in Section 4.13 of the Company Disclosure Schedule, since September 30, 1999, the Company and each of its Subsidiaries have conducted their respective businesses only in, and have not engaged in any material transaction other than according to, the ordinary course of business and consistent with past practice, and (i) there has not been any change, development or combination of changes or developments that, individually or in the aggregate, has had or could reasonably be expected to have a Company Material Adverse Effect; (ii) there has not been any damage, destruction, theft or other casualty loss with respect to any material asset or property owned, leased or otherwise used by the Company or any of its Subsidiaries, whether or not covered by insurance, except for such damage, destruction, theft or other casualty loss which would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect; and (iii) the Company has not taken any of the actions set forth in paragraphs (a) through (p) of Section 6.1. Section 4.14. Taxes. (a) Except as set forth in Section 4.14 of the Company Disclosure Schedule each of the Company and its Subsidiaries have timely filed (or have had timely filed on their behalf) or will timely file or cause to be timely filed all Tax Returns required by applicable Law to be filed by any of them prior to or as of the Effective Time. All such Tax Returns and amendments thereto are or will be true, complete and correct in all material respects. (b) Each of the Company and its Subsidiaries have paid (or have had paid on their behalf), or, where payment is not yet due, have established an adequate accrual on the books and records of the Company and its Subsidiaries for the payment of, all Taxes due with respect to any period (or portion thereof) ending on or prior to the Effective Time. (c) To the Company's knowledge, except as set forth in Section 4.14(c) of the Company Disclosure Schedule, no audit by a Tax authority is pending or threatened with respect to any Tax Returns filed by, or Taxes due from, the Company or its Subsidiaries. No issue has been raised by a Tax authority in any audit of the Company or any of its Subsidiaries that if raised with respect to any other period not so audited could be expected to result in a proposed deficiency for any period not so audited. To the Company's knowledge, no claim has ever been made by an authority in a jurisdiction in which the Company or any of its Subsidiaries does not file Tax Returns that the Company or such Subsidiary is or may be subject to taxation by that jurisdiction. No deficiency or adjustment for any Taxes has been threatened, proposed, asserted or assessed against the Company or its Subsidiaries. There are no Liens for Taxes upon the assets of the Company or its Subsidiaries, except Liens for current Taxes not yet due for which adequate reserves have been established in accordance with GAAP. The federal income Tax Returns of the Company and each of its Subsidiaries consolidated in such returns have been ex- -17- 22 amined by and settled with the IRS for all years through 1994. The Company has made available to Parent true and complete copies of all federal, and all material state, local and foreign, income Tax Returns filed by the Company or any of its Subsidiaries for any of the taxable periods that remains open, as of the date hereof, for examination or assessment of Tax. (d) Neither the Company nor any of its Subsidiaries has given or been requested to give any waiver of statutes of limitations relating to the payment of any Taxes or have executed powers of attorney with respect to any Tax matters, which will be outstanding as of the Effective Time. (e) Neither the Company nor any of its Subsidiaries is a party to, or is bound by, any Tax sharing, Tax indemnity, cost sharing, or similar agreement or policy relating to Taxes. (f) None of the Company or any of its Subsidiaries has made an election under Section 341(f) of the Code. (g) Neither the Company nor any Subsidiary has any liability for Taxes of any Person (other than the Company and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any comparable provision of state, local or foreign Law) as a transferee or successor, by contract or otherwise. (h) For purposes of this Agreement, the term "Taxes" means all taxes, charges, fees, levies or other assessments, including income, gross receipts, excise, property, sales, use, transfer, license, payroll, withholding, export, import, customs, capital stock and franchise taxes or duties, imposed by the United States or any state, local or foreign government or subdivision or agency thereof, including any interest, penalties or additions thereto. For purposes of this Agreement, the term "Tax Return" means any report, return or other information or document required to be supplied to a Tax authority in connection with Taxes. Section 4.15. Intellectual Property. (a) Except as disclosed in Company Reports filed prior to the date hereof or as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect: To the Company's knowledge, there do not exist any grounds for any bona fide claims (A) to the effect that the use of any product as now used by the Company or any of its Subsidiaries, infringes on any copyright, patent, trademark, trade name, service mark or trade secret; (B) against the use by the Company or any of its Subsidiaries, of any copyrights, patents, trademarks, trade names, service marks, trade secrets, technology, know-how or computer software programs and applications used in the business of the Company or any of its Subsidiaries as currently conducted; (C) challenging the ownership, validity or effectiveness of any of the material Company Intellectual Property Rights or other trade secret material to the Company; or (D) challenging the license or legally enforceable right to use of the material Third-Party Intellectual Rights by the Company or any of its Subsidiaries. (b) As used in this Agreement, the term (x) "Intellectual Property" means all patents, trademarks, trade names, service marks, copyrights and any applications therefor, technology, know-how, trade secret, computer software programs or applications, and tangible or intangible proprietary information or materials; (y) "Third-Party Intellectual Property Rights" means -18- 23 any third-party patents, trademarks, trade names, service marks and copyrights; and (z) "Company Intellectual Property Rights" means the patents, registered and material unregistered trademarks, trade names and service marks, registered copyrights, and any applications therefor owned by or licensed to the Company or any of its Subsidiaries. Section 4.16. Opinion of Financial Advisor. The Financial Advisor has delivered its written opinion (the "Fairness Opinion") to the Special Committee to the effect that, based on, and subject to, the various assumptions and qualifications set forth in such opinion, as of the date of such opinion, the Offer Price to be received in the transactions contemplated hereby by the holders of Common Shares (other than Parent and its affiliates, including the Company and its wholly owned Subsidiaries) is fair from a financial point of view to such holders, and such opinion has not been withdrawn or modified prior to consummation of the Offer or prior to the Effective Time, a copy of which opinion has been delivered to Purchaser. Section 4.17. Material Contracts. Except as disclosed in Section 4.17 of the Company Disclosure Schedule, all of the Contracts of the Company and its Subsidiaries that are required to be described in the Company SEC Documents or to be filed as exhibits thereto are described in the Company SEC Documents or filed as exhibits thereto, respectively, and are in full force and effect and, upon consummation of the Offer and the Merger, shall continue in full force and effect without penalty, acceleration, termination, repurchase right or other adverse consequence, except where such failure to continue in full force and effect would not reasonably be expected to have a Material Adverse Effect. Promptly following the date of this Agreement, true and complete copies of all such Contracts will be delivered or made available by the Company to Parent. Neither the Company nor any of its Subsidiaries nor, to the knowledge of the Company, any other party is in breach of or in default under any such Contract except for such breaches and defaults as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Section 4.18. Insurance. Section 4.18 of the Company Disclosure Schedule lists the Company's and its Subsidiaries' material insurance policies or bonds in effect prior to January 6, 2000 (the "Prior Insurance Policies"). There is no material claim pending under any of the Company's or any of its Subsidiary's Prior Insurance Policies as to which coverage has been questioned, denied or disputed by the underwriters of such Prior Insurance Policies. All premiums due and payable under all such Prior Insurance Policies have been paid and the Company and its Subsidiaries are otherwise in compliance in all material respects with the terms of such Prior Insurance Policies. The Company has no knowledge of any threatened termination of, or material premium increase with respect to, any such Prior Insurance Policies. Section 4.19. Affiliated Transactions. Neither the Company nor any of its Subsidiaries nor any of their respective officers, directors, employees or affiliates (nor any individual related by blood, marriage or adoption to any such individual) is a party to any agreement, contract, commitment, transaction or understanding with or binding upon the Company or any of its Subsidiaries or any of their respective assets or has engaged in any transaction with any of the foregoing within the last 12 months, except (x) for such agreements, contracts, commitments, transactions or understandings with or binding upon Parent or any of its Subsidiaries, and (y) as set forth on Section 4.11 and Section 4.19 of the Company Disclosure Schedule and except for customary payments to employees, officers or directors in the ordinary course of business con- -19- 24 sistent with past practice for services rendered in their capacity as employees, officers or directors. Section 4.20. Investment Contracts, Funds and Clients. (a) None of the Company's Subsidiaries provides investment management, investment advisory, sub advisory, administration, distribution or certain other services to any Person which is registered as an investment company under the Investment Company Act of 1940 (the "1940 Act") and which has been sponsored by the Company or one of its Subsidiaries. (b) Each of the Company's domestic Subsidiaries (each an "Advisory Entity" and, collectively "Advisory Entities"), a complete list of which has previously been made available by the Company to the Parent, that provides investment management, investment advisory or sub-advisory services to any Person (each an "Advisory Client") is duly registered with the SEC or an appropriate state regulatory authority as an investment adviser and is in compliance with all applicable provisions of the Investment Advisers Act of 1940, as amended (the "Advisers Act"), except for such non-compliance or would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. The Company is not an Advisory Entity. (c) Each Advisory Entity has operated and is currently operating in compliance with all Laws applicable to it or its business except for such noncompliance as would not, individually or in the aggregate, be reasonably expected to have a Company Material Adverse Effect. Each Advisory Entity has been and is in compliance with each Investment Contract to which it is a party, except as would not, individually or in the aggregate, be reasonably expected to have a Company Material Adverse Effect. (d) Except as would not individually or in the aggregate, reasonably be expected to have a Company Material Adverser Effect, the accounts of each Advisory Client subject to ERISA have been managed by the applicable Company Subsidiary in compliance in all material respects with the applicable requirements of ERISA. Section 4.21. Company Broker/Dealers. (a) Certain of the Company's Subsidiaries operate broker/dealer operations (collectively, the "Company Broker/Dealers"). Each Company Broker/Dealer that is required to be registered as a broker-dealer with the SEC or under applicable state Laws, is so registered and is registered with each other Governmental Entity with which it is required to register in order to conduct its business as now conducted, and is and has been since January 1, 1997 in full compliance with all applicable Laws thereunder, except for any failures to register or comply which would not, individually or in the aggregate, be reasonably expected to have a Company Material Adverse Effect. Each Company Broker/Dealer is a member organization in good standing of the NASD and such other organizations in which its membership is required in order to conduct its business as now conducted except such failures to be in good standing or such memberships the failure to have or maintain which would not, individually or in the aggregate, be reasonably expected to have a Company Material Adverse Effect. -20- 25 (i) Except as would not, individually or in the aggregate, be reasonably expected to have a Company Material Adverse Effect, (x) no Company Broker/Dealer is, nor is any "associated person" of it, subject to a "statutory disqualification" (as such terms are defined in the Exchange Act) or subject to a disqualification that would be a basis for censure, limitations on the activities, functions or operations of, or suspension or revocation of the registration of the Company as broker-dealer, municipal securities dealer, government securities broker or government securities dealer under Section 15, Section 15B or Section 15C of the Exchange Act and, (y) to the Company's knowledge, there are no proceedings or investigations pending by any Governmental Entity or self-regulatory organization that is reasonably likely to result in any such censure, limitations, suspension or revocation. (ii)Except as would not, individually or in the aggregate, be reasonably expected to have a Company Material Adverse Effect, since its inception, each Company Broker/Dealer has had net capital (as such term is defined in Rule 15c3-1 under the Exchange Act) that satisfies the minimum net capital requirements of the Exchange Act and of the Laws of any jurisdiction in which such company conducts business. Section 4.22. Takeover Statutes; Charter. The Company has taken, all necessary action within its control to exempt the Merger, the Offer and the other transactions contemplated by this Agreement from any restrictive provision of any "fair price," "moratorium," "control share acquisition," "interested shareholder" or other anti-takeover statute or regulation (each a "Takeover Statute") or any restrictive provision of any applicable anti-takeover provision in the Company's charter and by-laws. ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER Parent and Purchaser represent and warrant to the Company as follows: Section 5.1. Organization and Qualification; Subsidiaries. Parent is a life insurance company duly organized, validly existing and in good standing under the Laws of the State of New York, and Purchaser is a corporation duly organized, validly existing and in good standing under the Laws of the State of Missouri, and each of Parent and Purchaser has all requisite power and authority to own, lease and operate its properties and assets, and to carry on its business as now being conducted, except where the failure to be so organized, existing and in good standing or to have such power and authority would not reasonably be expected to have in the aggregate a Purchaser Material Adverse Effect (as defined below) on Purchaser or Parent. When used in connection with Purchaser or Parent, the term "Purchaser Material Adverse Effect" means any change or effect that is materially adverse to the ability of each of Purchaser or Parent to consummate the transactions contemplated hereby or to perform its obligations under this Agreement. Section 5.2. Authority Relative to This Agreement. Each of Parent and Purchaser has all necessary power and authority, and has taken all action necessary, to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby in -21- 26 accordance with the terms hereof. This Agreement constitutes a valid, legal and binding agreement of each of Parent and Purchaser, enforceable against each of Parent and Purchaser in accordance with its terms, except as may be subject to applicable bankruptcy, insolvency or other similar Laws, now or hereafter in effect, affecting creditors' rights generally. Section 5.3. Consents and Approvals; No Violations. (a) No filing with or notice to, and no permit, authorization, registration, consent or approval of, any Governmental Entity is required on the part of Parent or Purchaser for the execution, delivery and performance by the Parent and Purchaser of this Agreement or the consummation by the Parent and Purchaser of the transactions contemplated hereby, except (i) pursuant to the applicable requirements of the Securities Act and the Exchange Act, (ii) the delivery of the articles of merger pursuant to the MGBCL, (iii) to comply with state securities or "blue-sky" Laws, (iv) required to be made with the NASD and other applicable self-regulatory organizations, or (v) where the failure to obtain such permits, authorizations, consents or approvals or to make such filings or give such notice would not reasonably be expected to have a Parent Material Adverse Effect. Neither the execution, delivery and performance of this Agreement by each of Parent and Purchaser nor the consummation by each of Parent and Purchaser of the transactions contemplated hereby will (A) conflict with or result in any breach, violation or infringement of any provision of the respective articles of incorporation or by-laws (or similar governing documents) of Parent, Purchaser or any of their respective Subsidiaries, (B) result in a breach, violation or infringement of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to the creation of any Lien or any right of termination, amendment, cancellation or acceleration) under, any of the terms, conditions or provisions of any Contract to which Parent, Purchaser or any of their respective Subsidiaries is a party or by which any of them or any of their respective properties or assets may be bound or (C) violate any Law applicable to Parent, Purchaser or any of their respective Subsidiaries or any of their respective properties or assets, except in the case of clauses (B) or (C) for breaches, violations, infringements or defaults which would not, individually or in the aggregate, reasonably be expected to have a Purchaser Material Adverse Effect. (b) Upon consummation of the transactions contemplated hereby, each of Parent and the Surviving Corporation (i) will not become insolvent, (ii) will not be left with unreasonably small capital, (iii) will not have incurred debts beyond its ability to pay all of its debts as they mature, and (iv) will not have its capital impaired. Section 5.4. Proxy Statement; Schedule 14D-9. None of the information supplied or to be supplied by Parent or Purchaser in writing for inclusion in the Proxy Statement, if any, the Schedule 14D-9 or other filings with the SEC required to effectuate the transactions contemplated by this Agreement will, at the respective times that the Proxy Statement, if any, the Schedule 14D-9 or such other filings are filed with the SEC and are first published or sent or given to holders of Common Shares, and in the case of the Proxy Statement, if any, at the time that it or any amendment or supplement thereto is mailed to the Company's stockholders, at the time of the Special Meeting or at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. All information to be supplied by Parent and Purchaser to the Company will be supplied promptly and without delay. -22- 27 Section 5.5. Financing. Parent has available, and will provide Purchaser with all funds necessary to consummate the Merger and the transactions contemplated by this Agreement. In no event shall the receipt or availability of any funds or financing by Parent or any affiliate or any other financing or other transactions be a condition to any of Parent's obligations hereunder or to the consummation of the Merger. Section 5.6. Ownership of Company Capital Stock. Except for the Parent's Common Shares and except as listed on Section 5.6 of the Parent Disclosure Schedule, neither Parent nor, to its knowledge, any of its subsidiaries or affiliates (other than the Company), (i) beneficially owns directly or indirectly, or (ii) is party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, in each case, shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company. Section 5.7. Conduct of Business of Purchaser. Purchaser was formed solely for the purpose of engaging in the transactions contemplated hereby, has engaged in no other business activities and has conducted its operations only as contemplated hereby. ARTICLE VI COVENANTS Section 6.1. Conduct of Business of the Company. Except (i) as set forth in Section 6.1 of the Disclosure Schedule, (ii) as expressly contemplated by this Agreement, (iii) as agreed in writing by Purchaser, during the period from the date hereof to the Effective Time, the Company will, and will cause each of its Subsidiaries to, conduct its and their respective operations only in the ordinary course of business consistent with past practice and will use its reasonable best efforts, and will cause each of its Subsidiaries to use its reasonable best efforts, to preserve intact its current business organization of the Company and each of its Subsidiaries, to keep available the services of its and their present officers and key employees, and to preserve its business relationships including customers. Without limiting the generality of the foregoing, and except as expressly provided otherwise in this Agreement or as set forth in Section 6.1 of the Company Disclosure Schedule, after the date hereof and prior to the earlier of the (i) Effective time or (ii) termination of this Agreement, the Company will not and will cause its subsidiaries not to, without the prior written consent of Parent (and Parent shall, in the event any such consent is requested by the Company, respond within seven days): (a) amend or propose to amend its articles of incorporation or by-laws or other organizational documents; (b) (i) issue, reissue or sell, or authorize the issuance, reissuance or sale of (A) additional shares of capital stock of any class, or securities convertible into or exercisable or exchangeable for any capital stock of any class, or any rights, warrants or options to acquire any convertible securities or capital stock, other than the issuance of Common Shares, in accordance with the terms of the instruments governing such issuance on the date hereof, pursuant to the ex- -23- 28 ercise or conversion of Options outstanding on the date hereof, or (B) any other securities in respect of, in lieu of, or in substitution for, Common Shares or any other capital stock of any class outstanding on the date hereof; (ii) make any other changes in its capital structure; (c) split, combine or reclassify any shares of its capital stock, declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock (other than regular quarterly dividends consistent in timing with past practice and not to exceed $0.05 per share per quarter), or redeem or otherwise acquire any of its securities or any securities of its Subsidiaries; (d) (i) incur or assume any long-term or short-term debt or issue any debt securities, except for borrowings under existing lines of credit in the ordinary course of business consistent with past practice ; (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person except in the ordinary course of business consistent with past practice , and except for obligations of wholly owned Subsidiaries of the Company to the Company or to other wholly owned Subsidiaries of the Company; (iii) except for a capital commitment of $20 million to Conning Capital Partners VI L.P. and capital contributions to other Conning Investment Funds that have been committed as of the date hereof or are made in the ordinary course of business as set forth in Section 6.1 of the Company Disclosure Schedule (in amounts not to exceed the amounts so scheduled), make any loans, advances or capital contributions to, or investments in, any other Person (other than to wholly owned Subsidiaries of the Company or customary loans or advances to employees in the ordinary course of business consistent with past practice) or make any change in its existing borrowing or lending arrangements for or on behalf of any such Person, whether pursuant to an employee benefit plan or otherwise; (iv) pledge or otherwise encumber shares of capital stock of the Company or any of its Subsidiaries; or (v) mortgage or pledge any of its material assets, tangible or intangible, or create or suffer to exist any material Lien thereupon; (e) adopt a plan providing for the complete or partial liquidation, dissolution, consolidation, merger, restructuring or recapitalization of the Company or any of its Subsidiaries, or any resolutions relating to any of the foregoing; (f) increase in any manner the compensation or fringe benefits payable or to become payable to any director, officer or, employee, except, in the case of employees, only for normal increases in the ordinary course of business consistent with past practice that, in the aggregate, do not result in a material increase in benefits or compensation expense to the Company, or pay or award any benefit not required by any existing plan or arrangement to any officer, director or employee (including the granting of stock options, stock appreciation rights, shares of restricted stock or performance units pursuant to the Stock Plans or otherwise), or grant any severance or termination pay to any officer, director or other employee of the Company or any of its Subsidiaries, or enter into any employment or severance agreement with any director, officer or other employee of the Company or any of its Subsidiaries or establish, adopt, enter into, amend, or waive any performance or vesting criteria under any plan for the benefit or welfare of any current or former directors, officers or employees of the Company or its Subsidiaries or their beneficiaries or dependents (any of the foregoing being an "Employee Benefit Arrangement"), except, in each case, to the extent required by applicable Law; -24- 29 (g) acquire, sell, transfer, lease, encumber or dispose of (i) any assets outside the ordinary course of business consistent with past practice or (ii) any assets which in the aggregate are material to the Company and its Subsidiaries taken as a whole, or enter into any commitment or transaction outside the ordinary course of business consistent with past practice which would be material to the Company and its Subsidiaries taken as a whole; (h) except as may be required as a result of a change in Law or in GAAP, change any of the accounting principles, practices or methods used by the Company or any of its Subsidiaries; (i) revalue in any material respect any of the Company's or any of its Subsidiaries' assets, including writing off notes or accounts receivable other than in the ordinary course of business consistent with past practice; (j) (i) acquire (by merger, consolidation, or acquisition of stock or assets) any corporation, partnership or other business organization or division thereof or any equity interest therein; (ii) enter into any contract or agreement other than in the ordinary course of business consistent with past practice which would be material to the Company and its Subsidiaries taken as a whole; (iii) authorize any new capital expenditure(s) which, individually, is in excess of $100,000 or, in the aggregate, are in excess of $300,000; or (iv) enter into or amend any Contract providing for the taking of any action that would be prohibited hereunder; (k) make any Tax election (unless required by Law), settle or compromise any Tax liability of the Company or any of its Subsidiaries or any pending or threatened suit, action or claim relating to any potential or actual Tax liability of the Company or any of its Subsidiaries, change any method of accounting for Tax purposes or file (other than in a manner consistent with past practice or as required by Law) any Tax Return; (l) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business of liabilities reflected or reserved against in, or contemplated by, the consolidated financial statements (or the notes thereto) of the Company and its Subsidiaries or incurred in the ordinary course of business consistent with past practice; (m) enter into any obligation to indemnify any officer or director of the Company or any Subsidiary not otherwise provided under a current charter, by-law or other similar governing instrument or indemnity agreement in existence on January 6, 2000; (n) settle or compromise any pending or threatened suit, action or claim (i) relating to the transactions contemplated hereby, or (ii) any other pending or threatened material suit, action or claim other than in the ordinary course of business; (o) enter into any agreement of a nature that would be required to be filed as an exhibit to Form 10-K or 10-Q under the Exchange Act; and (p) take, or agree in writing or otherwise to take, any of the actions described in Sections 6.1(a) through 6.1(o). -25- 30 Section 6.2. Acquisition Proposals. From and after the execution of this Agreement, the Company shall promptly advise Parent in reasonable detail of the receipt, directly or indirectly, of any inquiries, discussions, negotiations or proposals relating to a merger, liquidation, recapitalization, consolidation or other business combination involving the Company or its Subsidiaries or acquisition of any capital stock or any material portion of the assets of the Company or its Subsidiaries, or any combination of the foregoing (an "Acquisition Transaction"), including identifying the offeror and the terms of any proposal relating to an Acquisition Transaction. The Company shall promptly advise Parent of any material development relating to such proposal, including the results of any discussions or negotiations with respect thereto. Neither the Company nor any of its Subsidiaries shall provide any non-public information to any third party (other than Parent, Purchaser or any of their respective affiliates or advisors) without having entered into a customary confidentiality agreement with respect to such information. Section 6.3. Access to Information. Between the date hereof and the consummation of the Offer and/or Effective Time, as the case may be, the Company will give Parent and Purchaser and their authorized representatives reasonable access to all employees, plants, offices, warehouses and other facilities and properties and to all books and records of the Company and its Subsidiaries, will permit Purchaser to make such inspections as Purchaser reasonably request and will cause the Company's officers and those of its Subsidiaries to furnish Purchaser with such financial and operating data and other information with respect to the business and properties of the Company and any of its Subsidiaries as Purchaser may from time to time reasonably request. The Company shall furnish promptly to Parent and Purchaser a copy of each report, schedule, registration statement and other document filed by it or its Subsidiaries during such period pursuant to the requirements of federal or state or foreign securities Laws. Section 6.4. Additional Agreements; Reasonable Efforts. (a) Upon the terms and subject to the conditions of this Agreement, each of Parent, Purchaser and the Company agree to use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under any applicable Laws to consummate and make effective the transactions contemplated hereby as promptly as practicable including, but not limited to, (i) the preparation and filing of all forms, registrations and notices required to be filed to consummate the transactions contemplated hereby and the taking of such actions as are necessary to obtain any requisite approvals, consents, orders, exemptions or waivers by any third party or Governmental Entity, (ii) the satisfaction of the other parties' conditions to the consummation of the Offer or the Merger, and (iii) contesting any legal proceeding challenging the Merger, and (iv) the execution of any additional instruments, including the Articles of Merger, necessary to consummate the transactions contemplated hereby. Subject to the terms and conditions of this Agreement, each party hereto agrees to use reasonable best efforts to cause the Effective Time to occur as soon as practicable after the stockholder vote, if any, with respect to the Merger. In case at any time after the Effective Time any further action is necessary to carry out the purposes of this Agreement, the proper officers and directors of each party hereto shall use reasonable best efforts to take all such necessary action. In addition, no party hereto shall take any action after the date hereof that would reasonably be expected to delay materially the obtaining of, or result in not obtaining, any permission, approval or consent from any Governmental Entity necessary to be obtained prior to the consummation of the Offer or the Merger. -26- 31 (b) Each party shall promptly consult with the other parties hereto with respect to, provide any necessary information with respect to and provide the other (or its counsel) copies of, all filings made by such party with any Governmental Entity or any other information supplied by such party to a Governmental Entity in connection with this Agreement and the transactions contemplated hereby. Each party hereto shall promptly inform the other of any communication from any Governmental Entity regarding any of the transactions contemplated hereby. If any party hereto or affiliate thereof receives a request for additional information or documentary material from any such Governmental Entity with respect to the transactions contemplated hereby, then such party will endeavor in good faith to make, or cause to be made, as soon as reasonably practicable and after consultation with the other party, an appropriate response in compliance with such request. To the extent that transfers of Company Permits are required as a result of execution of this Agreement or consummation of the transactions contemplated hereby, the Company shall use its best efforts to effect such transfers. (c) Notwithstanding the foregoing, nothing in this Agreement shall be deemed to require Purchaser to (i) enter into any agreement with any Governmental Entity or to consent to any order, decree or judgment requiring Purchaser to hold separate or divest, or to restrict the dominion or control of Purchaser or any of its affiliates over, any of the assets, properties or businesses of Purchaser, its affiliates or the Company, in each case, as in existence on the date hereof, or (ii) defend against any litigation brought by any Governmental Entity seeking to prevent the consummation of the transactions contemplated hereby. (d) Each of the Company, on the one hand, and Parent and Purchaser, on the other hand, shall not, and shall use commercially reasonable efforts to cause their respective Subsidiaries not to, take any action that would result in (i) any representations and warranties of such party (without giving effect to any "knowledge" qualification) set forth in this Agreement becoming untrue, or (ii) any of the conditions to the Merger set forth in Article VII or Annex I not being satisfied. Section 6.5. Consents. Parent, Purchaser and the Company each will use all reasonable efforts to obtain consents of all third parties and Governmental Entities necessary, proper or advisable for the consummation of the transactions contemplated hereby. Section 6.6. Public Announcements. Parent, Purchaser and the Company, as the case may be, will consult with one another before issuing any press release or otherwise making any public statements with respect to the transactions contemplated hereby, including the Offer and the Merger, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable Law or by obligations pursuant to any listing agreement with any national securities exchange or The Nasdaq Stock Market, as determined in good faith by Purchaser or the Company, as the case may be. Section 6.7. Indemnification. (a) The Surviving Corporation agrees that all rights to indemnification or exculpation now existing in favor of the directors, officers, employees and agents of the Company and its Subsidiaries as provided in their respective certificates or articles of incorporation or by-laws or otherwise in effect as of the date hereof with respect to matters occurring prior to the Effective -27- 32 Time shall survive the Effective Time and shall continue in full force and effect. To the maximum extent permitted by Law, such indemnification shall be mandatory rather than permissive, and the Company or the Surviving Corporation, as the case may be, shall advance expenses in connection with such indemnification. (b) From and after the Effective Time, Parent and the Surviving Corporation shall jointly and severally, to the fullest extent permitted by applicable Law, indemnify, defend and hold harmless each Person who is now or who becomes prior to the Effective Time a director of the Company against all losses, expenses (including reasonable attorney's fees and expenses), claims, damages, liabilities and, subject to the proviso of the next succeeding sentence, amounts paid in settlement, to the extent they are based on or arise out of or pertain to the transactions contemplated by this Agreement. In the event of any such loss, expense, claim, damage, liability, or settlement (whether or not arising before the Effective Time), (i) Parent and the Surviving Corporation shall pay the reasonable fees and expenses of counsel selected by the director seeking indemnification pursuant to this Section 6.7(b), which counsel shall be reasonably satisfactory to Parent and the Surviving Corporation, promptly after statements therefor are received and otherwise advance to such directors upon request reimbursement of documented expenses reasonably incurred, (ii) any determination required to be made with respect to whether such directors' conduct complies with the standards set forth in the MGBCL and the Company's articles of incorporation and by-laws shall be made by independent counsel mutually acceptable to Parent, the Surviving Corporation and such directors; provided, however, that neither Parent nor the Surviving Corporation shall be liable for any settlement effected without its written consent (which consent shall not be unreasonably withheld). The directors seeking indemnification pursuant to this Section 6.7(b) as a group may retain only one law firm with respect to each related matter except to the extent there is, in the opinion of counsel to a director, under applicable standards of professional conduct, a conflict on any significant issue between positions of such director and any other director seeking indemnification pursuant to this Section 6.7(b). (c) The Surviving Corporation, shall maintain in effect for not less than six (6) years from the Effective Time, the policies of the directors' and officers' liability and fiduciary insurance most recently maintained by the Company (provided that the Surviving Corporation may substitute therefor policies of at least the same coverage containing terms and conditions which are no less advantageous to the beneficiaries thereof so long as such substitution does not result in gaps or lapses in coverage) with respect to matters occurring prior to the Effective Time to the extent available. (d) In the event the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or any substantial portion of its properties and assets to any Person, then, and in each such case, proper provision shall be made so that the successors and assigns of such party assume the obligations of such party as contemplated by this Section 6.7. Section 6.8. Employee Benefit Arrangements. (a) The Company will not take any action which could prevent or impede the termination of the Stock Plans and any other plans, programs or arrangements providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any Subsidiary of the Company in each case effective prior -28- 33 to the Effective Time. The Company, as instructed by Parent, shall take all steps necessary or appropriate so that as of the Effective Time, each person who holds a Stock Option that is cancelled pursuant to Section 2.9(a) shall receive in substitution therefor, in accordance with the provisions of the Stock Plans, an incentive compensation award to replace such Stock Option (a "Replacement Award"), on terms and conditions consistent with those set forth in Section 6.8 of the Company Disclosure Schedule, with such changes as the parties may mutually agree. (b) Subject to Section 6.8(c), Purchaser and the Company and its Subsidiaries shall honor, without modification, all contracts, agreements, collective bargaining agreements and other commitments of the parties prior to the date hereof which apply to any current or former employee or current or former director of the Company or its Subsidiaries; provided, however, that this undertaking shall not prevent Parent, Purchaser or the Company or its Subsidiaries from enforcing or complying with any such commitments in accordance with its terms, including, exercising any right permitted thereunder or under applicable law to amend, modify, suspend, revoke or terminate any such commitment in whole or in part. Any workforce reductions carried out following the Effective Time by Parent or the Company or any of its Subsidiaries with respect to employees of the Company and its Subsidiaries shall be carried out in accordance with all laws and regulations governing the employment relationship and termination thereof, including the Worker Adjustment and Retraining Notification Act and regulations promulgated thereunder and any analogous state or local law. (c) Each of the Company Employee Benefit Plans (other than the Stock Plans) in effect as of the date hereof shall be maintained in effect with respect to the employees or former employees of the Company and its Subsidiaries who are covered by any such Company Employee Benefit Plan immediately prior to the Effective Time (the "Affiliated Employees") until Parent, Purchaser or the Company or its Subsidiaries otherwise determines after the Effective Time; provided, however, that nothing herein contained shall limit any right contained in any such Company Employee Benefit Plan or under applicable law to amend, modify, suspend, revoke or terminate any such Company Employee Benefit Plan; and provided, further, however, that Parent, Purchaser or the Company or their Subsidiaries shall cause the Affiliated Employees to be provided with employee benefits for a period of not less than one year following the Effective Time which are no less favorable in the aggregate than those provided to similarly situated employees of Parent and its Affiliates. Without limiting the foregoing, with respect to any benefit plan established to replace any Company Employee Benefit Plan (other than the Stock Plans) (each such plan, a "New Plan"), each participant in any such Company Employee Benefit Plan shall receive credit for purposes of eligibility to participate and vesting under such New Plan for service credited for the corresponding purpose under such Company Employee Benefit Plan; provided, however, that such crediting of service shall not operate to duplicate any benefit to any such participant or the funding for any such benefit or cause any such Company Employee Benefit Plan or New Plan to fail to comply with the applicable provisions of the Code or ERISA. (d) With respect to any New Plan which is a welfare benefit plan, other than limitations, exclusions or waiting periods that are already in effect with respect to Affiliated Employees and that have not been satisfied as of the Effective Time, such New Plan shall waive all limitations to pre-existing conditions, exclusions and waiting periods with respect to participation and coverage requirements and provide each Affiliated Employee with full credit for co- -29- 34 payments and deductibles paid prior to the Effective Time in satisfying any applicable deductible or out-of-pocket requirements applicable to the same calendar year under such New Plan. Section 6.9. Notification of Certain Matters. Parent, Purchaser and the Company shall promptly notify each other of (i) the occurrence or non-occurrence of any fact or event which would be reasonably likely (A) to cause any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect at any time from the date hereof to the Effective Time or (B) to cause any covenant, condition or agreement under this Agreement not to be complied with or satisfied in any material respect and (ii) any failure of the Company, Parent or Purchaser, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder in any material respect; provided, however, that no such notification shall affect the representations or warranties of any party or the conditions to the obligations of any party hereunder. Each of the Company, Parent and Purchaser shall give prompt notice to the other parties hereof of any notice or other communication from any third party alleging that the consent of such third party is or may be required in connection with the transactions contemplated by this Agreement. Section 6.10. State Takeover Laws. Prior to the Effective Time, the Company shall, upon the request of Purchaser, take all reasonable steps to assist in any challenge by Purchaser to the validity or applicability of any state takeover Law to the transactions contemplated by this Agreement, including the Offer and the Merger. Section 6.11. Stockholder Litigation. The Company shall give Parent reasonable opportunity to participate in the defense of any stockholder litigation against the Company and/or its officers and directors relating to the transactions contemplated hereby. Section 6.12. Further Action. Each party hereto shall, subject to the fulfillment at or before the Effective Time of each of the conditions of performance set forth herein or the waiver thereof, perform such further acts and execute such documents as may be reasonably required to effect the transactions contemplated hereby, including the Merger. ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER Section 7.1. Conditions to Each Party's Obligation to Effect the Merger. The respective obligations of Parent, Purchaser and the Company to consummate the Merger and the transactions contemplated hereby are subject to the satisfaction or waiver, at or before the Effective Time, of each of the following conditions: (a) Stockholder Approval. The Company shall have obtained the necessary approval of this Agreement by the holders of at least two-thirds of the outstanding Common Shares entitled to vote on the matter; provided, however, that no vote of the Company stockholders shall be necessary if Parent shall acquire, pursuant to the Offer, the Threshold Number of Common Shares. -30- 35 (b) Purchase of Common Shares. Purchaser shall have accepted for payment Common Shares pursuant to the Offer in accordance with the terms hereof. (c) Injunctions; Illegality. The consummation of the Merger shall not be restrained, enjoined or prohibited by any Law or ruling of a court of competent jurisdiction or any Governmental Entity, and there shall not have been any statute, rule or regulation enacted, promulgated or deemed applicable to the Merger by any Governmental Entity which prevents the consummation of the Merger or has the effect of making the purchase of Common Shares illegal. Each party agrees that, in the event that any such Law shall have been enacted, entered, promulgated or enforced, such party shall use its reasonable best efforts to cause such Law to be complied with, lifted or vacated, subject to the limitations set forth in Section 6.4(c). Section 7.2. Conditions to Obligations of Parent and Purchaser. The obligations of Parent and Purchaser to effect the Merger are also subject to the satisfaction or waiver by Parent, at or prior to the Effective Time, of each of the following conditions: (a) Representations and Warranties. The representations and warranties of the Company set forth in this Agreement shall be true and correct (without giving effect to any qualifications as to "Company Material Adverse Effect," "material" or similar qualifications) as of the date of this Agreement and on and as of the Effective Time as though made on and as of the Effective Time (except to the extent any such representation or warranty expressly speaks as of an earlier or different date, and except for changes contemplated or permitted by the terms hereof) except, in either case, where the failure of such representations and warranties to be so true and correct (without giving effect to any qualifications as to "Company Material Adverse Effect," "material" or similar qualifications) would not, in the aggregate, be reasonably expected to have a Company Material Adverse Effect, and the Company shall have delivered to Parent a certificate signed on behalf of the Company by an executive officer of the Company to such effect. (b) Performance of Obligations of the Company. The Company shall have performed all obligations required to be performed by it under this Agreement at or prior to the Effective Time, except for such non-performance as would not, in the aggregate, reasonably be expected to have either a Company Material Adverse Effect or prevent or prohibit consummation of the Merger, and Parent shall have received a certificate signed on behalf of the Company by an executive officer of the Company to such effect. (c) Termination of Stock Options. No holder of Stock Options or other options, warrants, rights or agreements will have any right to receive any shares of capital stock of the Company or, if applicable, the Surviving Corporation, upon exercise of any such Stock Option or other option, warrant, right or agreement. Section 7.3. Conditions to Obligations of the Company. The obligation of the Company to effect the Merger is also subject to the satisfaction or waiver by the Company, at or prior to the Effective Time, of each of the following conditions: (a) Representations and Warranties. The representations and warranties of Parent set forth in this Agreement shall be true and correct (without giving effect to any qualifications as to "Parent Material Adverse Effect," "material" or similar qualifications) as of the date of this -31- 36 Agreement and on and as of the Effective Time as though made on and as of the Effective Time (except to the extent any such representation or warranty expressly speaks as of an earlier or different date, and except for changes contemplated or permitted by the terms hereof) except, in either case, where the failure of such representations and warranties to be so true and correct (without giving effect to any qualifications as to "Parent Material Adverse Effect," "material" or similar qualifications) would not, in the aggregate, be reasonably expected to have a Parent Material Adverse Effect, and Parent shall have delivered to the Company a certificate signed on behalf of Parent by an executive officer of Parent to such effect. (b) Performance of Obligations of Parent. Parent shall have performed all obligations required to be performed by it under this Agreement at or prior to the Closing Date, except for such non-performance as would not, in the aggregate, reasonably be expected to have either a Company Material Adverse Effect or prevent or prohibit consummation of the Merger, and the Company shall have received a certificate signed on behalf of Parent by an executive officer of Parent to such effect. Section 7.4. Frustration of Closing Conditions. Neither Parent, Purchaser nor the Company may rely on the failure of any condition set forth in Sections 7.1 through 7.3 to be satisfied if such failure was caused solely by such party's own failure to use reasonable best efforts to consummate the Merger and the transactions contemplated hereby, as required by and subject to Section 6.4. ARTICLE VIII TERMINATION; AMENDMENTS; WAIVER Section 8.1. Termination. This Agreement may be terminated and the Offer and the Merger may be abandoned at any time prior to the Effective Time notwithstanding any requisite approval of this Agreement by the stockholders of the Company (with any termination by Parent also being an effective termination by Purchaser): (a) by mutual written consent of Parent and the Company; (b) by Parent or the Company if (i) the consummation of the Merger shall have been restrained, enjoined or prohibited by any Law or ruling of a court of competent jurisdiction or any Governmental Entity, or there shall have been any statute, rule or regulation enacted, promulgated or deemed applicable to the Merger by any Governmental Entity which prevents the consummation of the Merger or has the effect of making the purchase of Common Shares illegal; or (ii) the Effective Time shall not have occurred on or before the date which is six months from the date hereof; provided, however, that the right to terminate this Agreement under this Section 8.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur on or before such date; (c) by Parent if, due to an occurrence or circumstance which would result in a failure to satisfy any of the Tender Offer Conditions, Purchaser shall have (i) failed to commence the Offer within the time period prescribed in Section 1.1(a), (ii) terminated the Offer without -32- 37 having accepted any Common Shares for payment thereunder, or (iii) failed to pay for Common Shares pursuant to the Offer by the date which is four months from the date hereof, unless, in each case, such failure to satisfy any of the Tender Offer Conditions shall have been caused by or resulted from a material breach of any of Parent's or Purchaser's representations, warranties or covenants; (d) by the Company if, due to an occurrence or circumstance which would result in a failure to satisfy any of the Tender Offer Conditions, Purchaser shall have (A) failed to commence the Offer within the time period prescribed in Section 1.1(a), (B) terminated the Offer without having accepted any Common Shares for payment or (C) failed to pay for Common Shares pursuant to the Offer by the date which is four months from the date hereof, unless, in each case, such failure to satisfy any of the Tender Offer Conditions shall have been caused by or resulted from a material breach of any of the Company's representations, warranties or covenants; (e) by the Company if, prior to the purchase of Common Shares pursuant to the Offer in accordance with the terms of this Agreement, the Special Committee approves or recommends another offer or an agreement to effect a proposal made by a third party (other than an affiliate of Parent) to effect an Acquisition Transaction having terms which the Special Committee has determined in good faith (i) based upon the advice of a nationally recognized investment banker, to be more favorable to the Company and its Stockholders (other than Parent and Purchaser) than the Offer and the Merger and (ii) based upon the advice from its outside counsel, that failure to approve such third party proposal and terminate this Agreement would constitute a breach of fiduciary duties of the Special Committee under applicable Law; (f) by Parent if the Special Committee (i) shall have withdrawn or modified (including by amendment of the Schedule 14D-9) in a manner adverse to Purchaser its approval or recommendation of the Offer, this Agreement or the Merger, (ii) shall have approved or recommended another offer or an agreement to effect a proposal made by a third party (other than an affiliate of Parent) to effect an Acquisition Transaction or (iii) shall have resolved to effect any of the foregoing; (g) by Parent if the Minimum Condition (as defined in Annex I) shall not have been satisfied by the initially scheduled expiration date of the Offer and on or prior to such date any Person (other than Parent or Purchaser or any affiliate thereof) shall have made a proposal or public announcement or communication to the Company with respect to an Acquisition Transaction; or (h) by Parent or by the Company (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained herein), as the case may be, in the event of any of (A) a breach by the other party of any representation or warranty contained herein (subject to the standard set forth in Section 7.2(a) or 7.3(a), as the case may be), which breach cannot be or has not been cured within 20 business days after the giving of written notice to the breaching party of such breach; (B) a material breach by the other party of any of the obligations or agreements contained herein, which breach cannot be or has not been cured within 20 business days after the giving of written notice to the breaching party of such breach; or (C) a Company Material Adverse Effect exists (in which case -33- 38 Parent may terminate this Agreement) or a Parent Material Adverse Effect exists (in which case the Company may terminate this Agreement). Section 8.2. Effect of Termination. In the event of the termination and abandonment of this Agreement pursuant to Section 8.1, this Agreement shall forthwith become void and have no effect, without any liability on the part of any party or its directors, officers or shareholders, other than the provisions of this Section 8.2 and Section 9.9, which shall survive any such termination. Nothing contained in this Section 8.2 shall relieve any party from any liability for any breach of this Agreement. Section 8.3. Amendment. Subject to applicable Law, this Agreement may be amended by action taken by the Company, Parent and Purchaser at any time before or after approval of this Agreement by the stockholders of the Company (if required by applicable Law) but, after any such approval, no amendment shall be made which requires the approval of such stockholders under applicable Law without such approval. This Agreement may not be amended except by an instrument in writing signed on behalf of the parties hereto. Section 8.4. Waiver. At any time prior to the Effective Time, any party hereto may (i) extend the time for the performance of any of the obligations or other acts of the other party, (ii) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document, certificate or writing delivered pursuant hereto, or (iii) waive compliance by the other party with any of the agreements or conditions contained herein. Any agreement on the part of any party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of either party hereto to assert any of its rights hereunder shall not constitute a waiver of such rights. ARTICLE IX MISCELLANEOUS Section 9.1. Nonsurvival of Representations and Warranties. The representations, warranties and covenants made herein shall not survive beyond the Effective Time. Notwithstanding the foregoing, the agreements set forth in Section 2.3, Section 2.9, Article III, Section 6.7 and Section 6.8 shall survive the Effective Time indefinitely (except to the extent a shorter period of time is explicitly specified therein). Section 9.2. Entire Agreement; Assignment. This Agreement (i) constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof, and (ii) shall not be assigned by operation of Law or otherwise; provided, however, that Purchaser may assign any or all of its rights and obligations under this Agreement to any Subsidiary or affiliate of Purchaser, but no such assignment shall relieve Purchaser or Parent of its obligations hereunder if such assignee does not perform such obligations. Section 9.3. Validity. If any provision of this Agreement, or the application thereof to any Person or circumstance, is held invalid or unenforceable, such provision shall be -34- 39 enforced to the maximum extent permissible in the circumstances, and the remainder of this Agreement, and the application of such provision to other Persons or circumstances, shall not be affected thereby, and to such end, shall be enforced to the greatest extent permitted by applicable Law. The provisions of this Agreement are thus agreed to be severable. Section 9.4. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing (including by facsimile with written confirmation thereof) and unless otherwise expressly provided herein, shall be delivered during normal business hours by hand, by Federal Express, United Parcel Service or other nationally recognized overnight commercial delivery service, or by facsimile notice, confirmation of receipt received, addressed as follows, or to such other address as may be hereafter notified by the respective parties hereto: (a) If to Metropolitan Life Insurance Company or CC Merger Sub Inc.: Metropolitan Life Insurance Company One Madison Avenue New York, New York 10010 Attention: Terence Lennon Facsimile Number: (212) 251-1664 With a copy, which will not constitute notice, to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Adam O. Emmerich, Esq. Facsimile Number: (212) 403-2234 (b) If to Conning Corporation: Conning Corporation 700 Market Street St. Louis, Missouri 63101 Attention: John A. Fibiger Facsimile Number: (314) 444-0726 With copies, which will not constitute notice, to: Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10004 Attention: Allen I. Isaacson, P.C. Facsimile Number: (212) 859-8587 and Paul, Hastings, Janofsky & Walker LLP 399 Park Avenue -35- 40 New York, New York 10022-4697 Attention: Thomas L. Fairfield, Esq. Facsimile Number: (212) 319-4090 Section 9.5. Governing Law. This Agreement shall be governed by and construed in accordance with the Laws of the State of New York, without regard to the principles of conflicts of Law thereof. The parties hereto hereby agree and consent to be subject to the exclusive jurisdiction of the federal and state courts in the State of New York in any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby. Each party hereto hereby irrevocably waives, to the fullest extent permitted by Law, (i) any objection that it may now or hereafter have to laying venue of any suit, action or proceeding brought in such courts, and (ii) any claim that any suit, action or proceeding brought in such courts has been brought in an inconvenient forum. Section 9.6. Descriptive Headings. The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. Section 9.7. Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and its successors and permitted assigns, and except as provided in Section 6.7, nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. Section 9.8. Counterparts. This Agreement may be executed in two or more counterparts (including by facsimile), each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. Section 9.9. Fees and Expenses. Whether or not the Merger is consummated, except as otherwise specifically provided herein, all costs and expenses incurred in connection with the Offer, this Agreement and the Merger shall be paid by the party incurring such expenses. Section 9.10. Specific Performance. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at Law or in equity, provided, that this Section 9.10 shall have no force and effect from and after the termination of this Agreement in accordance with Section 8.1. Section 9.11. Interpretation; Absence of Presumption. (a) For the purposes hereof, (1) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (2) the terms "hereof", "herein", and "herewith" and words of similar import shall, unless otherwise stated, be -36- 41 construed to refer to this Agreement as a whole (including all of the Exhibits hereto) and not to any particular provision of this Agreement, and Article, Section, paragraph and Exhibit references are to the Articles, Sections, paragraphs and Exhibits to this Agreement unless otherwise specified, (3) the word "including" and words of similar import when used in this Agreement shall mean "including without limitation" unless the context otherwise requires or unless otherwise specified, (4) the word "or" shall not be exclusive, (5) provisions shall apply, when appropriate, to successive events and transactions, and (6) all references to any period of days shall be deemed to be to the relevant number of calendar days unless otherwise specified. (b) This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted. -37- 42 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed on its behalf as of the day and year first above written. METROPOLITAN LIFE INSURANCE COMPANY By: /s/Gary A. Beller Name: Gary A. Beller Title: Senior Executive Vice President and General Counsel CC MERGER SUB INC. By: /s/Gary A. Beller Name: Gary A. Beller Title: President CONNING CORPORATION By: /s/Arthur C. Reeds, III Name: Arthur C. Reeds, III Title: Chairman, President & Chief Executive Officer -38- 43 ANNEX I CONDITIONS TO THE OFFER THE CAPITALIZED TERMS USED HEREIN HAVE THE MEANINGS SET FORTH IN THE AGREEMENT AND PLAN OF MERGER (THE "MERGER AGREEMENT") TO WHICH THIS ANNEX I IS ATTACHED. Notwithstanding any other provisions of the Offer, Purchaser shall not be required to accept for payment or (subject to any applicable rules and regulations of the SEC) pay for, and may delay the acceptance for payment of, any Common Shares and may terminate or, subject to the terms of the Merger Agreement, amend the Offer, unless (i) there shall be validly tendered and not properly withdrawn prior to the expiration date for the Offer, as it may be extended in accordance with the Offer (the "Expiration Date") that number of Common Shares which, when aggregated with the number of Common Shares currently beneficially owned by Parent, represents at least two-thirds of the total number of outstanding Common Shares on a fully diluted basis on the date of purchase (the "Minimum Condition"), and (ii) at any time on or after the date of the Merger Agreement and prior to the acceptance for payment for Common Shares, none of the following conditions exists or shall have occurred and remain in effect: (a) there shall be pending any Action by any Governmental Entity, or any Law proposed, sought, promulgated, enacted, entered, enforced or deemed applicable to the Offer, (i) seeking to or which does prohibit or impose any material limitations on Parent's or Purchaser's ownership or operation (or that of any of their respective Subsidiaries or affiliates) of all or a material portion of their or the Company's or any of its Subsidiaries' businesses or assets, or to compel Parent or Purchaser or their respective Subsidiaries and affiliates to dispose of or hold separate any material portion of the business or assets of the Company or Parent or Purchaser and their respective Subsidiaries, in each case taken as a whole, (ii) seeking to or which does make the acceptance for payment of, or the payment for, some or all of the Common Shares illegal or otherwise prohibiting, restricting or significantly delaying consummation of the Offer or the Merger or the performance of any of the other transactions contemplated by the Merger Agreement, or seeking to obtain from the Company or Purchaser any damages that are material in Parent's view in relation to the Company and its Subsidiaries as taken as a whole, (iii) seeking to or which does impose material limitations on the ability of Purchaser, or render Purchaser unable, to acquire or hold or to exercise effectively all rights of ownership of the Common Shares, including, the right to vote any Common Shares purchased by Purchaser on all matters properly presented to the stockholders of the Company, or effectively to control in any material respect in Parent's view the business, assets or operations of the Company, its Subsidiaries or Purchaser or any of their respective affiliates, (iv) seeking to or which does impose circumstances under which the purchase or payment for some or all of the Common Shares pursuant to the Offer and Merger could reasonably be expected to have a Purchaser Material Adverse Effect, or (v) which otherwise would reasonably be expected to have a Company Material Adverse Effect; or 44 (b) there shall have occurred any change that would reasonably be expected to constitute a Company Material Adverse Effect; or (c) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on the New York Stock Exchange, Inc. or The Nasdaq Stock Market for a period in excess of 24 hours (excluding suspensions or limitations resulting solely from physical damage or interference with such exchanges not related to market conditions), (ii) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States (whether or not mandatory), (iii) the commencement of a war or other international or national calamity directly or indirectly involving the United States, (iv) any mandatory limitation by any U.S. governmental authority or agency that would reasonably be expected to have a material adverse affect on the extension of credit by banks or other financial institutions, or (v) in the case of any of the foregoing, existing at the date of the execution of the Merger Agreement, a material acceleration or worsening thereof; or (d) the Merger Agreement shall have been terminated in accordance with its terms; or (e) (i) the Special Committee shall have withdrawn, changed or modified (including by amendment of the Schedule 14D-9) in a manner adverse to Purchaser or Parent his approval or recommendation of the Offer, the Merger Agreement or the Merger or shall have recommended an Acquisition Proposal, or shall have adopted any resolution to effect any of the foregoing, (ii) the Special Committee shall have recommended any proposal other than this Agreement in respect of an Acquisition Proposal, (iii) the Special Committee shall have continued discussions with any third party concerning an Acquisition Proposal for more than ten (10) business days after the date of receipt of such Acquisition Proposal, or (iv) an Acquisition Proposal that is publicly disclosed and that contains a proposal as to price (without regard to whether such proposal specifies a specific price or a range of potential prices) shall have been commenced, publicly proposed or communicated to the Company and the Special Committee shall not have rejected such proposal within ten (10) business days of the earlier to occur of (A) the Company's receipt of such Acquisition Proposal and (B) the date such Acquisition Proposal first becomes publicly disclosed; or (f) not all consents, permits and approvals of Governmental Entities and other Persons set forth in Section 4.6 of the Company Disclosure Schedule shall have been obtained without material adverse conditions attached and material expenses imposed on the Company or any of its Subsidiaries; or (g) the representations and warranties of the Company set forth in the Merger Agreement shall not be true and correct (without giving effect to any qualifications as to "Company Material Adverse Effect," "material" or similar qualifications) as of the date of the Merger Agreement or on and as of the Expiration Date as though made on and as of the Expiration Date (except to the extent any such representation or warranty expressly speaks as of an earlier or different date, and except for changes contemplated or permitted by the terms hereof) except, in either case, where the fail- I-2 45 ure of such representations and warranties to be so true and correct (without giving effect to any qualifications as to "Company Material Adverse Effect," "material" or similar qualifications) would not, in the aggregate, be reasonably likely to have a Company Material Adverse Effect; or (h) the Company shall not have performed in all material respects all obligations required to be performed by it under the Merger Agreement at or prior to the Expiration Date. The parties acknowledge that the Tender Offer Conditions set forth above in this Annex I are for the sole benefit of Parent and Purchaser, that Parent or Purchaser may assert the failure of any of the Tender Offer Conditions regardless of the circumstances (other than any circumstance arising solely by any action or inaction by Parent or Purchaser) giving rise to any such failure, that the Company shall not assert the failure of, or waive, any such condition without the prior written consent of Parent and Purchaser, and that if Parent or Purchaser elects to waive any such condition to the Offer (which Parent or Purchaser may do in whole or in part at any time and from time to time), the Company shall cooperate and comply with such election. The failure by Parent or Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. Should the Offer be terminated pursuant to any of the foregoing provisions, all tendered Common Shares not theretofore accepted for payment shall forthwith be returned to the tendering stockholders. I-3 EX-99.D.2 16 INVESTMENT ADVISORY AGREEMENT 1 1 INVESTMENT ADVISORY AGREEMENT THIS AGREEMENT, made and entered into as of 1 May 1995 by and between General American Life Insurance Company, a Missouri insurance company ("Client"), and General American Investment Management Company ("Advisor"); WITNESSETH THAT: WHEREAS, Client desires that Advisor serve as investment advisor with respect to the investment portfolio maintained by Client in connection with Client's business as an insurer; and WHEREAS, Advisor hereby represents and warrants that it is duly registered as an investment advisor under the Investment Advisers Act of 1940 and experienced in the management of insurance portfolios; NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the parties covenant and agree as follows. 1. Appointment of Investment Advisor. Client hereby appoints Advisor as investment advisor with respect to its general account (herein referred to as "the Account," as constituted on the date hereof and as it may be changed, accreted, or diminished pursuant hereto). The Account is to be invested so as to accommodate Client's mix of liabilities in accordance with the investment laws for insurance companies in Missouri, Client's state of domicile. 2. Investment Authority. Client shall retain fiduciary responsibility, authority, and control with respect to management and investment of the securities in the Account. Client shall supervise operations of Advisor with respect to the Account. Advisor shall be free to buy, sell, exchange, convert, or otherwise trade assets in the Account in the exercise of its sole discretion, provided Advisor acts in a manner consistent with general directions received from Client. 3. Assignment. Neither party to this Agreement may assign its rights or responsibilities under this Agreement without the prior written consent of the other party. 4. Client Obligations. Client agrees to give Advisor any information in its possession which Client deems relevant to the suitability of the investment strategy implemented by Advisor, including information on Client's liabilities, whether this information becomes known before or after the adoption of the strategy. Client agrees to pay or have paid all fees and charges within thirty days of receipt of a bill stating what such fees and charges. 2 5. Advisor Obligations. a) Advisor does not warrant any rate of return on all or any segment of the Account. Advisor will try to select the most favorable prices and timing of asset purchases and sales. Advisor will select brokers and dealers on a basis which is favorable to Client, taking into account research services provided, ability to execute orders promptly and correctly, fees charged, and any other factors which Advisor deems relevant. Advisor will pass along to Client the cost of any and all brokers' fees, commissions, taxes, and other custodial charges related to management of the Account. b) It is understood and agreed that Advisor does not provide its services exclusively for Client. Advisor shall remain free to provide services to other clients or for its own account, pursuant to objectives which may or may not be similar to the strategy adopted for Client. c) Advisor shall make reports to Client as requested, including, but not limited to: i) delivery on the sixth working day of each month of all investment accounting data for the previous month, in an electronic format suitable for use in updating Client's computerized accounting records; ii) delivery by January 30 of each year of all investment-related exhibits and schedules for Client's statutory annual statement, in a printed format suitable for inclusion in Client's statutory annual statement without modification: 6. Custodian. The Advisor shall not have custody of any of the assets in the Account. Custody of assets of the Account shall at all times be maintained by one or more custodians selected by the Client. All transactions authorized by this Agreement shall be carried out through such custodians. The Advisor shall not be responsible for any act or omission of such custodians. 7. Fees. a) Fees are payable quarterly in arrears and are based on the market value of the Account as determined by Advisor on the last day of the quarter. The fee schedule is attached as Appendix A. Payments for less than a full calendar quarter shall be pro-rated. Client agrees that Advisor may direct custodians of the Account to make direct payment of fees due hereunder. 2 3 3 b) Calculation of fees shall be in accordance with the requirements of regulation 275.205-3 issued under the Investment Advisor Act of 1940 by the Securities and Exchange Commission, which requires among other things that Client be notified that it is theoretically possible that a fee based in part on the growth of a Client's funds could create an incentive for an advisor to make investments that are riskier or more speculative than it would make without a performance-based fee. c) Client shall have the right to audit the Account during normal business hours with or without notice. d) The fee may be modified from time to time with the written assent of both parties. 8. Confidentiality. Advisor shall keep any information it obtains about Client's business or investment objectives and results in confidence. 9. Term. This Agreement shall remain in effect until 1 May 1998 unless Client, in its sole discretion, elects to end this Agreement at an earlier time by giving ninety (90) days written notice to Advisor. After the initial three-year term this Agreement shall renew automatically for successive one-year terms unless the Parties amend it in writing to provide otherwise. Ninety days written notice of termination shall be required of either party, but Advisor agrees not to terminate during the initial three-year term. 10. Governing Law. This agreement shall be governed by and construed and enforced in accordance with the laws of Missouri. 11. Notice. All notices provided for in this Agreement shall be deemed to have been duly given when delivered by hand to an office of the other party or when deposited with the U.S. Postal Service as first class certified or registered mail, postage prepaid, or when delivered to an overnight courier, a telex, or a telecopy machine addressed as follows: a) To Client: General American Life Insurance Company 700 Market Street St. Louis, Missouri 63101 Attn: John W. Barber b) To Advisor: General American Investment Management Company 700 Market Street St. Louis, MO 63101 Attn: J. Terri Tanaka 3 4 or to such other persons or places as each party may from time to time designate by written notice such as specified. GENERAL AMERICAN INVESTMENT GENERAL AMERICAN LIFE MANAGEMENT COMPANY INSURANCE COMPANY By: /s/ Leonard M. Rubenstein By: /s/ Richard A. Liddy ----------------------------- ----------------------------- Leonard M. Rubenstein Richard A. Liddy President President 4 5 Appendix A to Investment Advisory Agreement by and between General American Life Insurance Company and General American Investment Management Company and dated 1 May 1995 For Investment Advice: An annual fee based on the market value of the amount under management, payable quarterly as per the following schedule: Commercial Mortgages 0.22% Securities 0.10% Real Estate 0.78%
5 EX-99.D.3 17 ASSIGNMENT AND ASSUMPTION AGREEMENT 1 Exhibit (d)(3) ASSIGNMENT AND ASSUMPTION AGREEMENT This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement"), dated as of March 1, 2000, by and among CONNING ASSET MANAGEMENT COMPANY, a Missouri corporation ("Assignor"), METROPOLITAN LIFE INSURANCE COMPANY, a New York life insurance company ("Assignee") and GENERAL AMERICAN LIFE INSURANCE COMPANY, a Missouri life insurance company ("General American"). W I T N E S S E T H: WHEREAS, Assignor and General American are parties to that certain Investment Advisory Agreement, dated as of May 1, 1995 (the "Advisory Agreement"), pursuant to which Assignor (formerly known as General American Investment Management Company) provides General American with investment advisory services for its general account (the "General Account"), including, without limitation, services relating to the trading of securities and the advisability of investing in, purchasing or selling securities ("Investment Advisory Services"), asset/liability management services in respect of the General Account ("Portfolio Management Services"; together with Investment Advisory Services, "Front-Office Services") and services other than Front-Office Services needed to operate and report on the General Account, including, without limitation, accounting services (including tax accounting, statutory accounting and accounting under generally accepted accounting principles), record-keeping services, reconciliation of trade confirmations, reporting and other similar functions not pertaining to Front-Office Services ("Back-Office Services"); and WHEREAS, on the date this Agreement is deemed approved by the Missouri Department of Insurance, whether by specific, written approval or by the passage of thirty days from receipt of the Agreement by the Missouri Department of Insurance (the "Agreement Effective Date"), Assignor desires to assign and transfer to Assignee, and Assignee desires to accept and assume, all of Assignor's rights and obligations under the Advisory Agreement (other than in respect of Back-Office Services and the Portfolio Management Services) with respect to all assets other than any and all commercial mortgage loan assets (the "Real Estate Mortgage Assets") and real estate assets other than the Real Estate Mortgage Assets (the "Real Estate Equity and Joint Venture Assets") (the "Assigned Assets); and WHEREAS, Assignor desires to continue to perform Portfolio Management Services in respect of the Assigned Assets until such date as Assignee shall notify Assignor in writing, but in any event no later than June 30, 2000 (the "Portfolio Management Termination Date"), at which time Assignor desires to assign and transfer, and Assignee desires to accept and assume, all of Assignor's rights and obligations in respect of Portfolio Management Services under the Advisory Agreement with respect to the Assigned Assets (the "Portfolio Management Assignment") 2 WHEREAS, Assignor desires to continue to perform Back-Office Services in respect of the Assigned Assets until such date as Assignee shall notify Assignor in writing, but in any event no later than September 30, 2000 (the "Back-Office Termination Date"), at which time Assignor desires to assign and transfer, and Assignee desires to accept and assume, all of Assignor's rights and obligations in respect of Back-Office Services under the Advisory Agreement with respect to the Assigned Assets (the "Back-Office Assignment"); and WHEREAS, Assignor desires to continue to perform Front-Office Services and Back-Office Services in respect of the Real Estate Equity and Joint Venture Assets until such date as Assignee shall notify Assignor in writing, but in any event no later than the Back-Office Termination Date (the "Real Estate Equity and Joint Venture Assignment Date"), at which time Assignor desires to assign and transfer, and Assignee desires to accept and assume, all of Assignor's rights and obligations in respect of the Real Estate Equity and Joint Venture Assets under the Advisory Agreement (the "Real Estate Equity and Joint Venture Asset Assignment"); and WHEREAS, notwithstanding the assignments set forth herein, Assignor will continue to provide Front-Office Services and Back-Office Services with respect to the Real Estate Mortgage Assets; and WHEREAS, Assignee is a registered investment adviser under the Investment Advisers Act of 1940, as amended; and WHEREAS, General American desires to consent to the assignments described above and to the payment of fees in respect of services rendered by Assignee and Assignor that will be provided in respect of the Assigned Assets, the Real Estate Equity and Joint Venture Assets and the Real Estate Mortgage Assets. NOW, THEREFORE, in consideration for the covenants, agreements and assignments set forth herein, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto, intending to be legally bound, have agreed as follows: 1. Various Assignments. a. Assigned Assets. Effective on the Agreement Effective Date, Assignor hereby assigns and transfers, and Assignee hereby accepts and assumes, all of Assignor's rights and obligations under the Advisory Agreement (other than in respect of Back-Office Services and Portfolio Management Services) with respect to the Assigned Assets. b. Portfolio Management Services. Effective on the Portfolio Management Termination Date, Assignor hereby assigns and transfers, and Assignee hereby accepts and assumes, all of Assignee's rights and obligations under the Advisory Agreement relating to Portfolio Management Services in respect of the Assigned Assets. 2 3 c. Back-Office Services. Effective on the Back-Office Termination Date, Assignor hereby assigns and transfers, and Assignee hereby accepts and assumes, all of Assignee's rights and obligations under the Advisory Agreement relating to Back-Office Services in respect of the Assigned Assets. d. Real Estate Equity and Joint Venture Assets. Effective on the Real Estate Equity and Joint Venture Assignment Date, Assignor hereby assigns and transfers, and Assignee hereby accepts and assumes, all of Assignor's rights and obligations under the Advisory Agreement in respect of the Real Estate Equity and Joint Venture Assets. 2. Assignor's Continued Performance of Portfolio Management Services and Back-Office Services; Services Relating to Real Estate Equity and Joint Venture Assets and Real Estate Mortgage Assets. a. Portfolio Management Services. For a period beginning on the date hereof and ending on the Portfolio Management Termination Date, Assignor shall continue to perform Portfolio Management Services in respect of the Assigned Assets. b. Back-Office Services. For a period beginning on the date hereof and ending on the Back-Office Termination Date, Assignor shall continue to perform Back-Office Services in respect of the Assigned Assets. c. Real Estate Equity and Joint Venture Assets. For a period beginning on the date hereof and ending on the Real Estate Equity and Joint Venture Assignment Date, Assignor will continue to perform Front-Office Services and Back-Office Services with respect to the Real Estate Equity and Joint Venture Assets. d. Real Estate Mortgage Assets. Notwithstanding the various assignments described in Section 1 hereof, Assignor shall continue to perform Front-Office Services and Back-Office Services with respect to the Real Estate Mortgage Assets. 3. Fees. General American hereby agrees to pay quarterly fees in arrears (which shall be pro-rated for any partial quarter) within 30 days after the end of the quarter to which such fees relate, which fees shall be calculated and paid as follows: a. Assignor's Fees. (i) Portfolio Management Services for the Assigned Assets. In consideration for its performance of Portfolio Management Services in respect of the Assigned Assets from the date hereof through (and including) the Portfolio Management Termination 3 4 Date, General American shall pay to Assignor a quarterly fee equal to the product of (x) the market value of the Assigned Assets as determined by Assignor as at the last day of the quarter to which such payment relates and (y) the applicable percentage set forth on the fee schedule annexed hereto as Exhibit A (the "Fee Schedule"). (ii) Back-Office Services for the Assigned Assets. In consideration for its performance of Back-Office Services in respect of the Assigned Assets from the date hereof through (and including) the Back-Office Termination Date, General American shall pay to Assignor a quarterly fee equal to the product of (x) the market value of the Assigned Assets as determined by Assignor as at the last day of the quarter to which such payment relates and (y) the applicable percentage set forth on the Fee Schedule. (iii) Real Estate Equity and Joint Venture Assets. In consideration for all services rendered by Assignor with respect to the Real Estate Equity and Joint Venture Assets, from the Agreement Effective Date and through (and including) the Real Estate Equity and Joint Venture Assignment Date, General American shall pay to Assignor a quarterly fee equal to the product of (x) the gross market value of the Real Estate Equity and Joint Venture Assets determined by Assignor as at the last day of the quarter to which such payment relates and (y) the applicable percentage set forth on the Fee Schedule. (iv) Real Estate Mortgage Assets. After the Agreement Effective Date, in consideration for all services rendered thereafter by Assignor with respect to the Real Estate Mortgage Assets, General American shall pay to Assignor a quarterly fee equal to the product of (x) the aggregate unpaid principal balance of the mortgage loans comprising the Real Estate Mortgage Assets determined by Assignor as at the last day of the quarter to which such payment relates and (y) the applicable percentage set forth on the Fee Schedule. b. Assignee's Fees. (i) Investment Advisory Services. In consideration for Assignee's performance of Investment Advisory Services in respect of the Assigned Assets from the Agreement Effective Date through (and including) the Portfolio Management Termination Date, General American shall pay to Assignee a quarterly fee equal to the product of (x) the market value of the Assigned Assets as determined by Assignor as at the last day of the quarter to 4 5 which such payment relates and (y) the applicable percentage set forth on the Fee Schedule. (ii) Front-Office Services. In consideration for Assignee's performance of Front-Office Services in respect of the Assigned Assets from the Portfolio Management Termination Date through (but not including) the Back-Office Termination Date, General American shall pay to Assignee a quarterly fee equal to the product of (x) the market value of the Assigned Assets as determined by Assignor as at the last day of the quarter to which such payment relates and (y) the applicable percentage set forth on the Fee Schedule. (iii) Front-Office Services and Back-Office Services. In consideration for Assignee's performance of Front-Office Services and Back-Office Services in respect of the Assigned Assets from and after the Back-Office Termination Date, General American shall pay to Assignee a quarterly fee equal to the product of (x) the market value of the Assigned Assets as determined by Assignee as at the end of such quarter and (y) the applicable percentage set forth on the Fee Schedule. (iv) Real Estate Equity and Joint Venture Assets. In consideration for Assignee's performance of Front-Office Services and Back-Office Services in respect of the Real Estate Equity and Joint Venture Assets from and after the Real Estate Equity and Joint Venture Assignment Date, General American shall pay to Assignee a quarterly fee equal to the product of (x) the gross market value of the Real Estate Equity and Joint Venture Assets as determined by Assignee as at the last day of the quarter to which such payment relates and (y) the applicable percentage set forth on the Fee Schedule. 4. Consent of General American. General American hereby consents to the assignments set forth in Section 1 hereof, the Fee Schedule and the other transactions contemplated by this Agreement. 5. Undertakings of Assignee; Standard of Care. a. In consideration of the compensation described in Section 3(b) above, Assignee undertakes to perform the duties required of the "Advisor" in the Advisory Agreement. b. Assignee agrees to perform its services under the Advisory Agreement with the same care and attention that it applies to the services it provides to its own accounts and to the accounts of its other clients, making every reasonable effort to avoid conflicts of 5 6 interest between or among General American, its own accounts and the accounts of its other clients. c. Assignee undertakes to perform the Front-Office Services and the Back-Office Services in accordance with applicable law and regulations, including the law and regulations of Missouri relating to life insurance companies such as General American; provided that, General American shall provide Assignee with guidance and assistance in respect of any such laws and regulations of Missouri that relate to Assignee's performance of Front-Office Services and Back-Office Services hereunder. d. Assignee will cooperate with Assignor to ensure that the transition of Front-Office Services and Back-Office Services contemplated by this Agreement occurs smoothly and without harm to General American; provided that, nothing contained in this Agreement shall constitute a representation or warranty of Assignee, or otherwise obligate Assignee, in respect of the future investment performance of any of the Assigned Assets or Real Estate Equity and Joint Venture Assets. 6. Term and Termination. The terms of this Section 6 shall supercede in its entirety Paragraph 9 of the Advisory Agreement. The term of this Agreement shall be the period of time from March 1, 2000 until termination by either party at any time upon ninety (90) days written notice, subject to the satisfaction of all outstanding obligations hereunder. In the event of termination of this Agreement, all books and records (including magnetic records, files, and spreadsheets) maintained by Assignee in connection with the performance of any of the services described herein will be transferred to General American. 7. Miscellaneous. a. Entire Agreement; Assignment; Amendment. This Agreement (i) constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof, and (ii) shall not be assigned by operation of law or otherwise without the prior written consent of the other parties hereto (which consent shall not be unreasonably withheld). This Agreement shall not be amended except pursuant to a writing that is executed by all parties hereto. b. Severability. If any provision of this Agreement, or the application thereof to any person or circumstance, is held invalid or unenforceable, such provision shall be enforced to the maximum extent permissible in the circumstances, and the remainder of this Agreement, and the application of such provision to other persons or circumstances, shall 6 7 not be affected thereby, and to such end, shall be severable and enforced to the greatest extent permitted by applicable law. c. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Missouri, without regard to the principles of conflicts of law thereof. d. Descriptive Headings. The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. e. Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and its successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person, entity, or group any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. f. Notices. All notices, requests, claims, demands, and other communications hereunder shall be in writing (including by facsimile with written confirmation thereof) and unless otherwise expressly provided herein, shall be delivered during normal business hours by hand, by Federal Express, United Parcel Service or other nationally recognized overnight commercial delivery service, or by facsimile notice, confirmation of receipt received, addressed as follows, or to such other address as may be hereafter specified by the respective parties hereto: If to Assignor, to: Conning Asset Management Company 700 Market Street St. Louis, MO 63101 Attn: Douglas R. Koester Fax: (314) 444-0613 with a copy (which shall not constitute notice) to: Conning Asset Management Company 700 Market Street St. Louis, MO 63101 Attn: Matthew P. McCauley, Esq., General Counsel Fax: (314) 444-0510 If to Assignee, to: Metropolitan Life Insurance Company 334 Madison Avenue 7 8 Convent Station, NJ 07961 Attn: Anthony J. Williamson, Senior Vice-President Fax: (973) 254-3054 with a copy (which shall not constitute notice) to: Metropolitan Life Insurance Company One Madison Avenue New York, NY 10010 Attn: Jane Weinberg, Esq., Vice-President and Investment Counsel Fax: (212) 578-3916 If to General American, to: General American Life Insurance Company 700 Market Street St. Louis, MO 63101 Attn: Barry Cooper Fax: (314) 444-0588 with a copy (which shall not constitute notice) to: General American Life Insurance Company 700 Market Street St. Louis, MO 63101 Attn: Matthew P. McCauley, Esq., Vice-President and Associate General Counsel Fax: (314) 444-0510 g. Counterparts. This Agreement may be executed in two or more counterparts (including by facsimile), each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. h. Further Assurances. Assignor, Assignee and General American each acknowledge and agree that they shall execute and deliver such further amendments and/or modifications to the Advisory Agreement as shall be reasonably requested from time to time in order to carry out the intention and/or facilitate the performance of the terms of this Agreement, including, but not limited to, further specifying the scope of services to be provided to General American with respect to Investment Advisory Services, Portfolio Management Services, Front-Office Services and Back-Office Services. 8 9 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed on its behalf as of the day and year first above written. ASSIGNOR: CONNING ASSET MANAGEMENT COMPANY By: /s/ Douglas R. Koester ------------------------------------ Name: Douglas R. Koester Title: Senior Vice President ASSIGNEE: METROPOLITAN LIFE INSURANCE COMPANY By:/s/ Anthony J. Williamson ------------------------------------ Name: Anthony J. Williamson Title: Senior Vice-President GENERAL AMERICAN: GENERAL AMERICAN LIFE INSURANCE COMPANY By: /s/ Richard A. Liddy ------------------------------------ Name: Richard A. Liddy Title: Chairman, President and Chief Executive Officer 9 10 Exhibit A Fee Schedule The following annual fees will be charged on a quarterly basis:
Assignor's Fees: - ---------------- Portfolio Management Services: 0.03% per annum (0.0075% per [SECTION 3(a)(i)] quarter) Back-Office Services: 0.02% per annum (0.0050% per [SECTION 3(a)(ii)] quarter) Real Estate Equity 0.78% per annum (0.195% per and Joint Venture Assets: quarter) SECTION 3(a)(iii)] Real Estate Mortgage Assets: 0.22% per annum (0.055% per [SECTION 3(a)(iv)] quarter)
Assignee's Fees: - ---------------- Investment Advisory Services: 0.05% per annum (0.0125% per [SECTION 3(b)(i)] quarter) Front-Office Services: 0.08% per annum (0.02% per [SECTION 3(b)(ii)] quarter) Front-Office Services 0.10% per annum (0.025% per and Back-Office Services: quarter) [SECTION 3(b)(iii)] Real Estate Equity and Joint Venture Assets: 0.45% per annum (0.1125% per [SECTION 3(b)(iv)] quarter)
10 EX-99.D.4 18 LIMITED PARTNERSHIP AGREEMENT 1 CONNING CAPITAL PARTNERS VI, L.P. ----------------------------------- LIMITED PARTNERSHIP AGREEMENT ------------------------------------ Dated as of February 25, 2000 2 TABLE OF CONTENTS 1. ORGANIZATION............................................................ 1 1.1. Formation of Limited Partnership..................................... 1 1.2. Name................................................................. 1 1.3. Purpose and Powers................................................... 1 1.4. Principal Place of Business.......................................... 1 1.5. Fiscal Year.......................................................... 1 2. CAPITAL COMMITMENTS AND CONTRIBUTIONS................................... 2 2.1. Identity; Commitment................................................. 2 2.2. Capital Contributions................................................ 2 2.3. Additional Limited Partners and Additional Capital Contributions..... 3 3. PARTNERS' CAPITAL ACCOUNTS; ALLOCATIONS................................. 5 3.1. Capital Accounts..................................................... 5 3.2. Allocations.......................................................... 5 3.3. Extraordinary Allocations............................................ 6 3.4. Allocations for Income Tax Purposes.................................. 7 3.5. Interim Accounting Periods........................................... 8 3.6 Defaulting Limited Partner........................................... 8 4. DISTRIBUTIONS........................................................... 12 4.1. Limitations on Distributions......................................... 12 4.2. Timing of Distributions.............................................. 12 4.3. Distributions........................................................ 13 4.4. Final Distribution................................................... 13 4.5. Tax Distributions.................................................... 13 4.6. Distributions of Cash or Securities.................................. 14 4.7. Determination of Carrying Value...................................... 15 4.8. Withholding Taxes.................................................... 16 4.9. General Partner's Obligation to Return Excess Distributions.......... 17 5. MANAGEMENT.............................................................. 19 5.1. Investment Guidelines................................................ 19 5.2. Powers & Duties of General Partner................................... 21 5.3. Advisory Committee................................................... 23 5.4. Other Business Relationships......................................... 24 5.5. Custodian............................................................ 26 5.6. Key Person Trigger Event............................................. 26 6. MATTERS AMONG PARTNERS.................................................. 27 6.1. Liability of General Partner......................................... 27 6.2. Liability of Limited Partners........................................ 27 6.3. No Obligation to Restore Negative Capital Account.................... 28 6.4. Actions of Partners; Bank Limited Partners Voting Percentage......... 28 6.5 Bank Regulatory Matters.............................................. 28 6.6 Exclusions from Investments.......................................... 30] 7. INDEMNIFICATION......................................................... 31] 7.1. General.............................................................. 31] 7.2. Expenses............................................................. 32 7.3. No Waiver, etc....................................................... 32 7.4. Insurance............................................................ 32 8. EXPENSES; MANAGEMENT FEE................................................ 32 8.1. Administrative Expenses.............................................. 32 8.2. Other Expenses....................................................... 33 8.3. Management Fee....................................................... 33 9. BOOKS AND RECORDS; REPORTS TO PARTNERS.................................. 35 9.1. Books and Records.................................................... 35 9.2. Tax Information...................................................... 35 9.3. Reports to Partners.................................................. 35]
3 9.4. Meetings............................................................ 36 9.5. Compliance with Laws................................................ 36 10. TRANSFERS............................................................... 37 10.1. Transfer by General Partner......................................... 37 10.2. Removal of General Partner.......................................... 37 10.3. Transfer by Limited Partners........................................ 37 10.4. Certain Restrictions on Transfers................................... 38 10.5 Further Restrictions................................................ 39 10.6. Actions............................................................. 39 11. DURATION AND TERMINATION OF THE PARTNERSHIP............................. 40 11.1. Duration............................................................ 40 11.2. Winding Up.......................................................... 40 11.3. Final Distribution.................................................. 41 12. DEFINITIONS............................................................. 42 13. MISCELLANEOUS........................................................... 52 13.1. Waiver of Partition................................................. 52 13.2. Power of Attorney................................................... 52 13.3. Modifications....................................................... 53 13.4. Severability........................................................ 54 13.5. Notices............................................................. 54 13.6. Governing Law....................................................... 54 13.7. Successors and Assigns.............................................. 54 13.8. Counterparts........................................................ 54 13.9. Headings............................................................ 54 13.10. Further Actions..................................................... 54 13.11. Delivery of Certificate............................................. 55
SCHEDULES Schedule I -- Partners' Identification and Capital Commitments Schedule II -- Business Addresses of the Partners 4 CONNING CAPITAL PARTNERS VI, L.P. This LIMITED PARTNERSHIP AGREEMENT of CONNING CAPITAL PARTNERS VI, L.P., a Delaware limited partnership (the "Partnership"), is made as of this 25th day of February, 2000 by and among each and all of the undersigned persons. 1. ORGANIZATION. 1.1. Formation of Limited Partnership. Conning Investment Partners VI, L.L.C., a Delaware limited liability company acting as the general partner of the Partnership (the "General Partner") together with the undersigned persons designated as Limited Partners (collectively, the "Partners", which term shall include any party hereafter admitted to the Partnership and shall exclude any party that ceases to be a Partner) hereby agree to form the Partnership, pursuant to and in accordance with the provisions of the Revised Uniform Limited Partnership Act, as adopted by the State of Delaware, as amended and in effect (the "LP Act"). Certain capitalized terms used in this Agreement are defined separately in Section 12. 1.2. Name. The name of the Partnership is "Conning Capital Partners VI, L.P.". The General Partner, without the prior consent of the Limited Partners, may change the name of the Partnership from time to time. The General Partner shall provide the Limited Partners with notice of any new name of the Partnership and the effective date of such change. 1.3. Purpose and Powers. The Partnership is being formed to operate as an investment fund principally for the purpose of making investments primarily in equity, equity-related and other securities issued in expansion financings, start-ups, buy-outs and recapitalization transactions relating to companies in the areas of insurance, financial services, e-commerce, healthcare and related businesses, including, without limitation, service and technology enterprises supporting such businesses, in order to realize long-term capital returns, all as determined and managed by the General Partner for the benefit of the Partners. The Partnership will make investments in accordance with the Investment Guidelines set forth in Section 5.1, and will engage in such other activities as are permitted hereby or are incidental or ancillary thereto, all as the General Partner shall reasonably deem necessary or advisable, upon the terms and conditions set forth in this Agreement. The Partnership reserves the authority, and may engage in any lawful act or activity and shall have and exercise any of the powers available to a limited partnership under the LP Act, to the extent not contrary to the terms and intent of this Agreement. 1.4. Principal Place of Business. The Partnership shall have and maintain its principal place of business at CityPlace II, 185 Asylum Street, Hartford, Connecticut 06103-4105. The Partnership may have such other place or additional places of business as the General Partner may determine from time to time and as indicated by written notice to the Limited Partners; provided that in no event shall the Partnership's principal place or any other place of business be outside of the United States. 1.5. Fiscal Year. The fiscal year of the Partnership (the "Fiscal Year") shall be the period ending on the 31st day of December in each year or, in the case of the last Fiscal Year of the Partnership, the last day on which the Partnership conducts any activities and as designated 5 -2- by the General Partner for purposes of the dissolution and final liquidation of the Partnership. The Partnership shall have the same Fiscal Year for income tax purposes and for financial accounting purposes. 2. CAPITAL COMMITMENTS AND CONTRIBUTIONS. 2.1. Identity; Commitment. The name, address and other identity information describing each Partner are set forth on Schedule I and Schedule II hereto. Each Partner has agreed and is obligated to perform with respect to the full amount of its Capital Commitment set forth opposite each such Partner's name on Schedule I, subject to and in accordance with the terms and conditions of this Agreement. The Capital Commitment of the General Partner in respect of the General Partner Interest shall be equal to at least 1% of all Capital Commitments of the Partnership. Any additional Capital Commitment of the General Partner beyond such amount may be treated separately as an Interest by a Limited Partner, in the sole discretion of the General Partner. The General Partner, acting on its own, is authorized to amend and revise the information on Schedule I from time to time to reflect the admission of additional Partners together with any additional or increased Capital Commitments, the withdrawal of any Partner, the transfer of any part or all of an interest of any Partner, or such other change in the information describing any Partner, all as may be determined by the General Partner and consistent with the purpose and terms of this Agreement. 2.2. Capital Contributions. Each Partner, upon its execution and delivery of this Agreement, shall be obligated to make Capital Contributions to the Partnership in immediately available funds in such amount as shall be called from time to time by the General Partner hereunder, subject to Section 6.6(b), determined on a pro rata basis relative to the Capital Commitments of all Partners, up to a total aggregate amount equal to its Capital Commitment as shown on Schedule I hereto. The General Partner may determine individual Partner Capital Contribution call amounts on a pro rata basis relative to the outstanding or unused Capital Commitments of the Partners to account for Excused Partner Capital Contributions with respect to Excused Investments under Section 6.6. (a) Call Procedures, Timing and Contributions. Each Partner shall make its initial Capital Contribution, in an amount to be determined by the General Partner, upon at least five (5) business days' prior written notice from the General Partner. Thereafter, each Limited Partner will make additional Capital Contributions to the Partnership, each in an amount to be determined by the General Partner and as called from time to time by the General Partner, upon prior written notice from the General Partner of not less than ten (10) business days. Each call notice shall set forth the name of the Partnership and the following basic information: (i) the scheduled date of the Capital Contribution and the total amount of Capital Contributions to be made by all Partners on such date; (ii) the required Capital Contribution to be made by the Limited Partner to which the notice is directed; (iii) the Partnership account to which such capital contribution shall be paid, including wiring and routing information; and (iv) such information relating to the proposed use to be made of the funds obtained by the Partnership as the General Partner in its discretion determines to include in that call notice, including a general description of the proposed Portfolio Investment that contains the business and industry of the related Portfolio Entity. The General Partner will coordinate the timing of, and amounts requested pursuant to, the notice of additional Capital Contributions on an "as needed" basis relative to the Partnership's anticipated funding requirements. The General Partner shall provide prompt 6 -3- written notice to each Limited Partner of the occurrence of the Partnership's first investment. In the event that the General Partner reasonably determines that the amount of any Capital Contributions called under this Section 2.2 is not likely to be used to make a Portfolio Investment, pay expenses of the Partnership or satisfy obligations or liabilities of the Partnership within a reasonable period of time (not to exceed ninety (90) days) after the Partnership's receipt of such Capital Contribution amounts, then within such ninety-day period the General Partner shall return to the Partners their respective pro rata portions of such amount of the Capital Contributions as are not likely to be so used, applied or reserved. The full amount of such returned Capital Contributions amount shall remain subject to further call by the General Partner for Capital Contributions in accordance with the other terms of this Section 2.2. (b) Investment Period. The General Partner shall be authorized to call and each Partner is obligated to make additional Capital Contributions up to an aggregate amount equal to its Capital Commitment throughout the period ending on the later to occur of: (i) the fifth (5th) anniversary of the date of the Partnership's final closing (the "Investment Period"). After the Investment Period the General Partner is authorized to call and each Partner is obligated to make additional Capital Contributions, up to an aggregate amount equal to its Capital Commitment remaining to be called, for the purposes of: (i) paying or satisfying Partnership expenses, obligations or liabilities which may be outstanding and due or are reasonably anticipated to become due within ninety (90) days of the General Partner's call for Capital Contributions; (ii) making additional incremental or follow-on investments in companies in which the Partnership has established an investment; and (iii) funding the conversion or exercise price of any warrant, option, purchase right or other security, or making any installment payment or settlement to acquire any security by contract or other arrangement, to the extent any of the foregoing is outstanding and was issued in connection with or as a result of an investment made or committed to be made during the Investment Period. (c) General Partner Contributions. Concurrently with each Capital Contribution to the Partnership by a Limited Partner pursuant to this Section 2.2, Section 2.3 or Section 3.6, the General Partner will make a Capital Contribution to the Partnership, in respect of its minimum General Partner Interest, in an amount in cash which will cause the General Partner's Capital Contribution to be at least equal to 1% of the aggregate Capital Contributions of all Partners. (d) Reinvestment. The Partners acknowledge that the General Partner may retain certain distributable amounts under Section 4.2 for reinvestment in accordance with the Investment Guidelines under Section 5.1. No Partner shall be obligated to contribute additional amounts in excess of such Partner's Capital Commitment as a result of such reinvestment. 2.3. Additional Limited Partners and Additional Capital Contributions. After the expiration of two hundred seventy (270) days from the date of this Agreement, no additional Limited Partners (other than Substitute Limited Partners admitted pursuant to Section 10.3) shall be admitted to the Partnership. Until the expiration of such period, the General Partner may admit one or more persons as additional Limited Partners ("Additional Limited Partners") to the Partnership or permit any existing Limited Partner to increase its Capital Commitment. (a) Conditions of Acceptance. The admission of Additional Limited Partners and acceptance of additional Capital Commitments from existing Limited Partners shall not be permitted if, upon the determination of the General Partner, such admission or acceptance would: 7 -4- (i) result in the Partnership becoming subject to additional regulation which the General Partner determines would have a material effect upon the ability of the Partnership to pursue its stated purposes; (ii) jeopardize the Partnership's tax status as an entity taxable as a partnership; or (iii) require the Partnership to be registered as an investment company under the Investment Company Act of 1940. (b) Capital Adjustments among Partners. Any existing Limited Partner which increases its Capital Commitment shall be considered to have been admitted to the Partnership as an Additional Limited Partner to the extent of such additional Capital Commitment upon the contribution of the initial portion of such additional Capital Commitment to the capital of the Partnership. Each Additional Limited Partner shall make an initial Capital Contribution to the Partnership in a percentage of its Capital Commitment which is the same percentage of the Capital Commitments of the other Limited Partners previously paid in as Capital Contributions, as determined on the date of its admission to the Partnership. Each existing Limited Partner which increases its Capital Commitment pursuant to this Section 2.3 shall make a Capital Contribution to the Partnership in such an amount as is required in order that the total Capital Contributions made by such Limited Partner shall be in the same percentage relationship to its total Capital Commitment (including such additional Capital Commitment) as the Capital Contributions of all other Partners bear to their respective Capital Commitments, determined on the date of such Capital Contribution by the increasing Partner. The balance of such Capital Commitments of Additional Limited Partners and of additional Capital Commitments from existing Limited Partners shall be due and paid at the times provided for the payment of additional Capital Contributions in Section 2.2. (c) Additional Payments upon Admission. In addition, each Additional Limited Partner and each existing Limited Partner which increases its Capital Commitment pursuant to this Section 2.3 shall make additional payments to the Partnership ("Late Payment Fees") comprised of the following amounts: (i) interest on the amount of such Partner's Late Management Fee payable to the General Partner pursuant to Section 8.3(b); (ii) interest on the amount of such Partner's Late Expenses (other than Late Management Fee) allocated pursuant to Section 3.3(c); and (iii) interest on any amounts of Capital Contributions used to fund Portfolio Investments made by the Partnership prior to such Limited Partner's admission into the Partnership or increase in its Capital Commitment pursuant to this Section 2.3 which such Limited Partner would have been obligated to contribute to the Partnership ("Late Portfolio Investment Capital Contributions") if it had been admitted to the Partnership at the time of its formation with a Capital Commitment equal to that set forth in Schedule I after such schedule has been amended to reflect such Limited Partner's admission or the increase in its Capital Commitment. In the case of interest amounts referred to in clause (i) above, interest shall be calculated at the prime rate from the date of the formation of the Partnership to the date of such Limited Partner's admission into the Partnership or increase in its Capital Commitment pursuant to this Section 2.3, as the case may be. In the case of interest amounts referred to in clauses (ii) and (iii) above, interest shall be calculated at the prime rate plus 2.0% from the date of the allocation of the Expense to the other Partners which resulted in such Late Expense being allocated to the Limited Partner or the contribution date of the Capital Contributions to the Partnership which resulted in such Late Portfolio Investment Capital Contribution to the Partnership by the Limited Partner, as the case may be, to the date of such Limited Partner's admission into the Partnership or increase in its Capital Commitment, as the case may be. 8 -5- (d) General Partner Adjustments. Upon the admission of any Additional Limited Partner or the making of an additional Capital Commitment by any existing Limited Partner, the General Partner shall increase its Capital Commitment to an amount equal to at least 1% of the aggregate Capital Commitments of all Partners. (e) Update and Amendment of Records. The General Partner, acting without any Limited Partners, is authorized to cause Schedule I hereto to be amended to reflect the occurrence of any and all of the foregoing events referred to in this Section 2.3. The General Partner shall provide written notice to each Limited Partner of any amendment to Schedule I pursuant to this Section 2.3 or any other provision of this Agreement within ninety (90) days of such amendment to Schedule I. 3. PARTNERS' CAPITAL ACCOUNTS; ALLOCATIONS. 3.1. Capital Accounts. There shall be established for each Partner on the books of the Partnership a Capital Account. Each Partner's Capital Account shall be credited with the amount of such Partner's Capital Contributions and shall be: (i) increased by the amount of any Net Income allocated thereto; and (ii) decreased by the amount of any Net Losses, items defined in Section 705(a)(2)(B) of the Code allocated thereto and by the amount of any Distributions made to such Partner. Such items shall be credited or charged, as the case may be, to the Capital Accounts of the Partners at the end of each Fiscal Period of the Partnership. The General Partner shall maintain the Capital Accounts of the Partners in accordance with Treas. Reg. Section 1.704-1(b)(2)(iv) (as amended and revised), shall have the authority to make and shall make such adjustments to the Capital Accounts as are necessary to comply with such regulations. Any revaluation of the Partnership's assets pursuant to the previous sentence shall be made in accordance with the principles of Section 4.7 hereof. Other than as specifically provided in this Agreement, no Partner shall be entitled to any other interest or compensation by reason of its Capital Contribution. 3.2. Allocations. (a) Net Income. As of the end of each fiscal quarter of the Partnership, after giving effect to any allocations made pursuant to Section 3.3 hereof, the Net Income (if any) of the Partnership for such fiscal quarter shall be allocated to the Partners as follows: (i) First, to all Partners, in proportion to the respective amounts of Net Losses (if any) previously allocated to each such Partner pursuant to 3.2(b)(iii) and not offset by prior allocations of Net Income made pursuant to this 3.2(a)(i), an amount of Net Income equal to the aggregate amount of such Net Losses; (ii) Second, to all Partners, in proportion to their respective 7% Preferential Return Allocations, an amount of Net Income equal to the aggregate amount of all such 7% Preferential Return Allocations; and (iii) Third, to all Partners in the amounts and proportions necessary to ensure, as promptly as possible and to the extent feasible, that the Cumulative Net Income of the Partnership for all periods since its inception shall have been 9 -6- allocated 80% to all Partners in proportion to their respective Capital Contributions and 20% to the General Partner. (b) Net Losses. Net Losses, if any, for any Fiscal Period of the Partnership shall be allocated to the Partners as follows: (i) First, to all Partners, in proportion to the respective amounts of Net Income (if any) previously allocated to each such Partner pursuant to 3.2(a)(iii) and not offset by prior allocations of Net Losses made pursuant to this 3.2(b)(i), an amount of Net Losses equal to the aggregate amount of such Net Income (if any); (ii) Second, to all Partners, in proportion to the respective aggregate amounts of Net Income (if any) previously allocated to each such Partner pursuant to 3.2(a)(ii) and not offset by prior allocations of Net Losses made pursuant to this 3.2(b)(ii), an amount of Net Losses equal to the aggregate amount of such Net Income (if any); and (iii) Third, to all Partners in proportion to their respective Capital Contributions. 3.3. Extraordinary Allocations. (a) Negative Capital Account. Notwithstanding anything to the contrary in this Agreement, no Net Losses shall be allocated to a Limited Partner to the extent any such allocation, after taking into account all Distributions made or to be made to such Limited Partner with respect to a Fiscal Year, would cause a negative balance in such Limited Partner's Capital Account for such Fiscal Year. Any such Net Losses instead shall be allocated to and among those Partners with positive Capital Account balances until such Capital Account balances are reduced to zero, and any remaining Net Losses shall be allocated to the General Partner; and thereafter an equivalent amount of Net Income subsequently allocated shall be allocated to the Partners to reverse such reallocation of Net Losses as promptly as possible, subject, however, to the constraints of this Section 3.3(a). (b) Qualified Income Offset. If a Partner unexpectedly receives an adjustment, allocation or distribution described in Treas. Reg. Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), such Partner shall be allocated items of income and gain (consisting of a pro rata portion of each item of Partnership income, including gross income, and gain for the Fiscal Period in which such event occurs (and, to the extent necessary, each subsequent Fiscal Period) in an amount and manner sufficient to eliminate (to the extent required by Treas. Reg. Section 1.704(b)(2)(ii)(d)) any resulting excess negative balance in such Partner's Capital Account as quickly as possible. In any such event, appropriate adjustments shall be made to subsequent allocations pursuant to Section 3.2 to counteract the effect of extraordinary allocations pursuant to the first sentence of this Section 3.3(b) subject, however, to the constraints of Section 3.3(a). (c) Special Situations. If any person or entity is admitted to the Partnership (or the Capital Commitment of any existing Partner is increased) in accordance with the 10 -7- provisions of this Agreement after the formation of the Partnership, the General Partner shall adjust the allocations otherwise provided for in this Article 3 of Net Income and Net Loss (and items of Partnership income, gain, loss and expense), for the Fiscal Year in which such event occurs and for subsequent fiscal years if necessary, so that, after such adjustments have been made, each Partner (including any Partners admitted after the formation of the Partnership and all Partners whose Capital Commitments have been increased after such time) shall have been allocated specially an amount of Expenses equal to the aggregate amount of Expenses such Partner would have been allocated if it had been admitted to the Partnership at the time of its formation with a Capital Commitment equal to that set forth in Schedule I after such schedule has been amended to reflect such Partner's admission or the increase in its Capital Commitment ("Late Expenses"); provided, however, that: (i) no item of income, gain or deductible loss realized (or deemed to have been realized on a distribution in kind) before the admission of any new Partner shall be allocated to such Partner; (ii) allocations to any existing Partner of items of income, gain or deductible loss realized (or deemed to have been realized on a distribution in kind) prior to the increase in the Capital Commitment of such Partner shall be limited to those permitted by Section 706 of the Code; and (iii) no special allocations shall be made pursuant to this Section 3.3(c) as a result of any reductions in the Capital Account of a Defaulting Limited Partner occurring pursuant to Section 3.6(d) or the adjustments provided for under that section with respect to such reductions. In addition, the amount of such Partner's Late Payment Fees relating to interest on Late Expenses (other than Late Management Fees) (under clause (ii) of Section 2.3(c)) and Late Portfolio Investment Capital Contributions (under clause (iii) of Section 2.3(c)) shall be allocated 80% to all other Partners (including the General Partner) in proportion to their respective Capital Contributions and 20% to the General Partner. (d) Guidelines. In making allocations of Net Income or Net Losses pursuant to Sections 3.2(a) and 3.2(b), the General Partner, after consulting with the Partnership's tax advisors, is authorized to separate these aggregate amounts into their components and allocate the components separately in order to further the intent of such Sections. For example, if with respect to a particular fiscal period the Partnership realizes a gross loss of $100 on a sale of Portfolio Securities and a gross gain of $200 on a sale of other securities resulting in Net Income of $100 ($200 gross gain minus $100 gross loss = $100 Net Income), the General Partner may allocate the $100 gross loss as $100 in Net Losses in the manner required by Section 3.2(b), and then allocate the $200 gross gain as $200 in Net Income in the manner required by Section 3.2(a), if advised by the Partnership's tax advisors that such special allocations will cause the Capital Accounts of the Partners to reflect more closely the Partners' relative economic interests in the Partnership. (e) General Partner Minimum. Subject only to Section 3.3(b) hereof, the General Partner shall be allocated, in respect of its minimum General Partner Interest, at least 1% of each material item of Partnership income, gain, loss, deduction or credit at all times during the existence of the Partnership. To the extent that any extraordinary allocations to the General Partner are required pursuant to this Section 3.3(e), appropriate adjustments shall be made to subsequent allocations pursuant to Section 3.2 (subject to Section 3.3(b) hereof and to the preceding sentence) to counteract the effects of such extraordinary allocations. 3.4. Allocations for Income Tax Purposes. Items of Partnership income, gain, loss, deduction or credit for each Fiscal Year of the Partnership shall be allocated among the Partners for Federal income tax purposes in accordance with the allocation of such income, gain, loss or 11 -8- deduction (or, in the case of a credit, the allocation of any item to which the credit relates) pursuant to Section 3.2. All matters concerning allocations for Federal, state and local income tax purposes, including accounting procedures, not expressly provided for by the terms of this Agreement shall be equitably determined in good faith by the General Partner upon advice of the Partnership's tax advisors. As set forth in Section 5.2(g) hereof, the General Partner shall be the "tax matters partner", as that term is used in the Code, of the Partnership. 3.5. Interim Accounting Periods. If: (i) a Limited Partner becomes a Defaulting Limited Partner within the meaning of Section 3.6, (ii) a non-defaulting Partner elects to make an additional Capital Commitment pursuant to paragraph (c) of Section 3.6, (iii) a Distribution is made pursuant to Sections 4.2, 4.3, 4.4 or 4.5 hereof, (iv) any revaluation of the assets of the Partnership is made pursuant to Section 3.1 hereof, or (v) the General Partner is required, or determines in its discretion to make an interim allocation of Net Income or Net Losses, then, and in each such event, the Fiscal Year in which such event occurs shall be divided into interim accounting periods (each an "Interim Accounting Period") for purposes of allocations pursuant to Section 3.2. The first Interim Accounting Period in any such Fiscal Year shall commence on the first day of such Fiscal Year and shall terminate on the date immediately prior to the date of the first event giving rise to an Interim Accounting Period in such Fiscal Year. Each subsequent Interim Accounting Period shall commence on the date of the event giving rise to such Interim Accounting Period in such Fiscal Year and shall terminate on the earlier of the last day of such Fiscal Year or the date immediately prior to the date of the event giving rise to the next Interim Accounting Period in such Fiscal Year. 3.6. Defaulting Limited Partner. The Partners severally hereby agree and acknowledge their mutual obligation to make Capital Contributions to the Partnership in an aggregate amount equal to their total Capital Commitments. Accordingly, the Partners agree to the default and penalty provisions of this Section 3.6 for their mutual assurance and to promote the purposes of the Partnership. The Partners agree that the damages to the Partnership from any default by a Partner in respect of its Capital Commitment cannot be determined or estimated with reasonable accuracy, and, accordingly, agree that the penalty provisions of this Section 3.6 provide reasonable liquidated damages on default. (a) Default. In the event that any Limited Partner fails to make payment in full of any Capital Contribution to the Partnership in a timely manner as called for and due, the General Partner will send written notice to such Limited Partner of such failure, and if such Limited Partner does not make full payment of its Capital Contribution within five (5) days after such Limited Partner has been given written notice thereof from the General Partner, then, at the 12 -9- close of business on such fifth (5th) day, such Limited Partner shall be in default (a "Defaulting Limited Partner") and shall be subject to the penalty provisions of this Section 3.6; except that any Partner that is an Excused Partner under Section 6.6 will not be regarded as a Defaulting Partner in respect of the Capital Contribution subject to the Excluded Investment provisions of Section 6.6. (b) Loss of Voting. Whenever the vote, consent or decision of a Partner or of the Partners is required or permitted pursuant to this Agreement or under the LP Act, no Defaulting Limited Partner shall be entitled to participate in such vote or consent, or to make such decision, and such vote, consent or decision shall be tabulated or made as if no Defaulting Limited Partner were a Partner. (c) Penalty. A Defaulting Limited Partner shall not be entitled to make any further Capital Contributions to the Partnership. Upon any such default, there shall be deducted from the Capital Account of such Defaulting Limited Partner as liquidated damages for such default (which each Partner hereby agrees is reasonable) an amount equal to 30% of the portion of such Defaulting Limited Partner's Capital Commitment which remains unpaid, and the Capital Commitment of the Defaulting Limited Partner shall thereafter be the amount of the Capital Contribution of such Partner as of the date of default, less the amount deducted pursuant to this sentence. The amount deducted from the Capital Account of the Defaulting Limited Partner shall be allocated among the Capital Accounts of the non-defaulting Partners as of the date of such default, in proportion to the respective Capital Contributions of the non-defaulting Partners as of such date, and the amount so allocated to the Capital Account of each such Partner shall be deemed to be a Capital Contribution by, and an increase in the Capital Commitment of, such Partner as of such date. The General Partner shall cause Schedule I hereto to be amended to reflect the Capital Commitments of the Partners as adjusted pursuant to this Section 3.6(c), including the deemed Capital Contributions of the non-defaulting Partners under this Section 3.6(c). Notwithstanding the foregoing: (i) the amount by which a Defaulting Limited Partner's Capital Account is reduced shall in no case exceed the positive balance in such Defaulting Partner's Capital Account immediately before the reduction; (ii) if the Capital Account of the Defaulting Limited Partner otherwise would be reduced below zero by a reduction occurring pursuant to the first sentence of this Section 3.6(c), such account shall be reduced to zero and any excess of the full reduction required by the first sentence of this Section 3.6(c) over the positive balance in such Defaulting Limited Partner's Capital Account immediately before such reduction shall be carried over and applied to reduce the balance in such account at such subsequent time or times (if ever) as such account has a positive balance; (iii) any resulting increases in the Capital Accounts of non-defaulting Partners shall occur only at such time or times as the corresponding reductions in the Defaulting Limited Partner's Capital Account occurs; and (iv) all adjustments required by the first and second sentences of this Section 3.6(c) to the Capital Commitments and Capital Contributions of the Partners shall occur at the time of the initial reduction in the Capital Account of the Defaulting Limited Partner, notwithstanding that subsequent adjustments to the Partners' Capital Accounts may occur as a result of such default. (d) Treatment of Management Fee. As of the first day of each fiscal quarter of the Partnership commencing after any such default, there shall be deducted from the Capital Account of each Defaulting Limited Partner (but in no event from the Capital Accounts of the non-defaulting Limited Partners) an amount equal to the Management Fee that would have been 13 -10- due in accordance with Section 8.3 on the unpaid portion of the original Capital Commitment of such Defaulting Limited Partner and the amount so deducted shall be paid to the General Partner in lieu of the Management Fee which would otherwise be due on such unpaid Capital Commitment. The General Partner, in its discretion may defer payment of such amount. Any amounts so deferred shall accrue interest at the rate of twelve percent (12%) per annum and shall be charged solely to the Capital Account of the Defaulting Partner. No Distribution shall be made to a Defaulting Limited Partner until all amounts due the General Partner under this paragraph (e) shall have been paid in full unless payment thereof shall have been deferred by the General Partner, in its discretion. No special allocation of expenses to the Defaulting Partner shall be made, and no interest on deferred management fee amounts shall accrue, to the extent that these allocations (or accruals and related allocations) would cause the Defaulting Partner's Capital Account to be reduced below zero. (e) Option Repurchase Remedy. Further, the General Partner, in its sole discretion, may elect to exercise the provisions of this Section 3.6(e) in respect of any Defaulting Partner, such that the non-defaulting Limited Partners (the "Optionees") and the General Partner together shall have the right and the option, but not the obligation, to acquire the remaining Partnership Interest, as adjusted to reflect any penalty amounts under Section 3.6(c) above, of the Defaulting Limited Partner (for this purpose, the "Optionor"), as follows: (i) The General Partner shall give written notice to the Optionor stating that the General Partner elects to pursue the option repurchase remedy in this Section 3.6(e); and the General Partner shall notify the Optionees of the default, within twenty (20) days of the date of default by the Defaulting Limited Partner. Such notice shall advise each Optionee of the portion and the price of the Optionor's Interest available to it. The portion available to each Optionee shall be that portion of the Optionor's Interest that bears the same ratio to the Optionor's entire Interest as each Optionee's Capital Contributions bears to the aggregate Capital Contributions of all Optionees (before the default). The aggregate price for the Optionor's Interest shall be the lesser of (A) the amount of the Optionor's Capital Account calculated as of the due date of the additional contribution and adjusted to reflect (1) the allocation of the appropriate proportion of the Partnership's unrealized gains and losses as of the due date of such defaulted contribution and (2) the deduction of the penalty amount pursuant to Section 3.6(c), or (B) the aggregate amount of the Optionor's Capital Contributions actually made less any Distributions (valued at their Carrying Value on the date of Distribution) on or prior to such due date, as adjusted to reflect any penalty amounts under Section 3.6(c) above. The price for each Optionee shall be prorated according to the portion of the Optionor's Interest purchased by each such Optionee. The option granted hereunder shall be exercisable at any time within twenty (20) days of the date of the notice from the General Partner to the Optionees by delivery to the Optionor in care of the General Partner of a notice of exercise of option together with a non-recourse promissory note for the purchase price and a security agreement in accordance with subsection (v) below, which notice and documents the General Partner shall forward to the Optionor. (ii) Should any Optionee not exercise its option within said twenty (20) day period, the General Partner immediately shall notify the other Optionees 14 -11- who have elected to exercise their option, which Optionees shall have the right and option ratably among them to acquire the portion of the Optionor's Interest not so acquired (the "Remaining Portion") within ten (10) days of the date of the notice specified in this subsection (ii) on the same terms as provided in subsection (i). (iii) The amount of the Remaining Portion not acquired by the Optionees pursuant to subsection (ii) may be acquired by the General Partner within ten (10) days of the expiration of the ten (10) day period specified in subsection (ii) on the same terms as set forth in subsection (i); provided, however, that the General Partner shall not be obligated to make the additional contributions otherwise due from the Optionor with respect to the Remaining Portion so acquired. (iv) The amount of the Remaining Portion not acquired by the Optionees and the General Partner pursuant to subsections (ii) or (iii) may, if the General Partner deems it in the best interest of the Partnership, be acquired by the Partnership or sold by the General Partner to any other investor of quality, net worth and standing comparable to the other Limited Partners, on terms not more favorable to such parties than those applicable to the Optionees' option, and upon the consent of the General Partner, any such third party purchaser may become a Limited Partner to the extent of the interest purchased hereunder. (v) The price due from each of the General Partner and the Optionees shall be payable by a non-interest bearing, non-recourse promissory note (in such form as the General Partner shall designate) due upon final liquidation of the Partnership. Each such note shall be secured by the portion of the Optionor's Partnership interest so purchased by its maker pursuant to a security agreement in a form designated by the General Partner and shall be enforceable by the Optionor only against such security. (vi) Upon exercise of any option hereunder, each Optionee (and, if applicable, any third party purchaser shall be obligated (A) to contribute to the Partnership that portion of the additional capital then due from the Optionor equal to the percentage of the Optionor's Interest purchased by such person and (B) except as otherwise provided in subsection (iii), to pay the same percentage of any further contributions otherwise due from such Optionor on the date such contributions are otherwise due. Each person who purchases a portion of the Optionor's Partnership Interest shall be deemed to have acquired such portion as of the due date of the additional Capital Contribution with respect to which the Optionor defaulted, and any distributions made after the due date on account of the Optionor's Interest shall be distributed among such purchasers (and, unless the entire Interest was purchased, the Optionor) in accordance with their ultimate respective interests in the Optionor's Interest. Distributions otherwise allocable to the Optionor under the preceding sentence shall first be used to offset any defaulted Capital Contribution of the Optionor still due to the Partnership. 15 -12- (vii) Upon completion of any transaction hereunder, the General Partner shall cause Schedule I to be amended to reflect all necessary changes resulting therefrom including, without limitation, admission of a purchaser as a Limited Partner, and adjustment of Capital Account balances, Capital Commitment amounts and Capital Contributions as of the date of the Optionor's default to reflect the acquisition from Optionor of the appropriate pro rata portion of each such item (including, if applicable, the reduction of aggregate Capital Commitments and resulting adjustment of Capital Contributions in connection with any acquisition of any Remaining Portion by the General Partner pursuant to subsection (iii)). The purchase and transfer of the Partnership Interest of the Optionor shall occur automatically upon exercise by any Optionee or the General Partner of its option hereunder, without any action by Optionor. (f) Reservation of Rights and Remedies. No right, power or remedy conferred upon the General Partner in this Section 3.6 shall be exclusive, and each such right, power or remedy shall be cumulative and in addition to every other right, power or remedy, whether conferred in this Section 3.6 or now or hereafter available at law or in equity or by statute or otherwise for the benefit or on behalf of the Partnership relative to any Defaulting Limited Partner. The General Partner is authorized to exercise its discretion as to the appropriate remedy and course of action to be taken, and to enforce any and all such remedy or course of action by and on behalf of the Partnership. No course of dealing between the General Partner and any Defaulting Limited Partner and no delay in exercising any right, power or remedy conferred in this Section 3.6 or now or hereafter existing at law or in equity or by statute or otherwise shall operate as a waiver or otherwise prejudice any such right, power or remedy. 4. DISTRIBUTIONS. 4.1. Limitations on Distributions. No distribution will be made to any Partner if and to the extent that such distribution would not be permitted under Sections 17-607(a) of the LP Act or if, in the determination of the General Partner, after giving effect to such distribution the assets of the Partnership would be insufficient to satisfy the liabilities or obligations of the Partnership to persons other than the Partners. Except for the Distributions as otherwise expressly provided for in Sections 4.2 through 4.6, no Partner shall have the right to withdraw any amount from its Capital Account or otherwise to demand and receive any distributions from the Partnership. 4.2. Timing of Distributions. The General Partner generally will endeavor to cause the Partnership to make Distributions to each Partner in the respective amounts of Net Income distributable to such Partner during such year by April 30 of the year following the year of the date of any allocation of Net Income pursuant to paragraph (a) of Section 3.2; provided, however, that (i) the General Partner will use its reasonable efforts to distribute cash proceeds from the disposition of any Portfolio Investment within forty-five (45) days after the Partnership's receipt thereof, and (ii) until the third (3rd) anniversary of the date of this Agreement, the General Partner, in its discretion, in accordance with the Investment Guidelines may determine not to make any such Distributions in respect of Net Income and may elect to retain and reinvest some or all of such distributable amounts in accordance with the Investment Guidelines in Section 5.1(a)(iv) below. 16 -13- 4.3. Distributions. The General Partner, at any time in its discretion, may cause the Partnership to make Distributions to the Partners from their Capital Accounts, subject to Section 4.2. Each Distribution pursuant to Section 4.2 and this Section 4.3 shall be apportioned among the Partners as follows: (i) First, to all Partners in proportion to their respective Priority Return Amounts until each Partner (other than any Defaulting Limited Partner) has received aggregate Distributions equal to such Partner's Priority Return Amount; (ii) Second, to all Partners in proportion to their respective 7% Distribution Preferences until each Partner (other than any Defaulting Limited Partner) has received aggregate Distributions equal to such Partner's 7% Distribution Preference; (iii) Third, 100% to the General Partner until the General Partner has received Distributions made pursuant to this 4.3(iii) equal in the aggregate to 20% of all distributions made pursuant to 4.3(ii) and this 4.3(iii) since the inception of the Partnership; and (iv) Thereafter, 80% to all Partners in proportion to their respective Capital Contributions and 20% to the General Partner. 4.4. Final Distribution. The Final Distribution shall be made in accordance with the provisions of Section 11.3. 4.5. Tax Distributions. (a) General. The General Partner shall use reasonable efforts to cause the Partnership to distribute in cash to each Partner, either during such Fiscal Year or within ninety (90) days after the close of such Fiscal Year, an amount equal to the aggregate Federal and state income tax liability such Partner would have incurred as a result of the Net Income for such Fiscal Year allocated to such Partner and reflected in the Partnership Return filed or to be filed for such Fiscal Year, calculated as follows: as if (i) such Partner was a natural person resident in the state with the highest applicable state income tax rate; (ii) such Partner was taxable at the maximum rates provided under applicable Federal and state income tax laws; and (iii) as if allocations from the Partnership were the sole source of income and loss for such Partner for such year. Such tax distribution amount will be reduced by the amount of all Distributions made to such Partner since the commencement of such Fiscal Year (other than Distributions required under this Section 4.5 in respect of the preceding Fiscal Year) in order that the amount of any such tax distributions will not have the effect of increasing the overall amount of distributions to the Partners under Section 4.3 with respect to any Fiscal Year. (b) Special General Partner Tax Distributions. The Partnership may make Distributions to the General Partner during any Fiscal Year to enable the members of the General Partner to satisfy their liability to make estimated tax payments with respect to such Fiscal Year or the preceding Fiscal Year based on calculations of the General Partner's hypothetical estimated tax liability made pursuant to paragraph (a) of this Section 4.5 as of such dates as the 17 -14- General Partner in its sole discretion may determine; provided, however, that: (i) if the aggregate amount of Distributions under this Section 4.5 made to the General Partner with respect to any Fiscal Year exceeds the amount distributable to the General Partner with respect to such Fiscal Year, calculated as of the end of such Fiscal Year pursuant to paragraph (a), the Partnership shall treat such excess amount as an advance against the General Partner's distributive share of Partnership income and the General Partner shall return such excess to the Partnership without interest within ten (10) days following determination by the Partnership that such excess distributions have been made; and (ii) the Capital Account of the General Partner shall not be reduced by any amounts treated as advances made to the General Partner pursuant to this paragraph (b) during any Fiscal Year, but shall be reduced as of the end of such Fiscal Year by an amount equal to the aggregate of all such amounts treated as advances, reduced by any part of such advances returned to the Partnership by the General Partner pursuant to the preceding clause (i) of this paragraph (b). 4.6. Distributions of Cash or Securities. Distributions may be made in cash or Securities or other assets of the Partnership, at the discretion of the General Partner, subject to the other provisions of this Section 4.6. The General Partner will use its reasonable efforts to make all distributions to Partners in the form of cash or Marketable Securities until such time as the Partnership commences liquidation. (a) Guidelines. The General Partner shall give the Partners at least five (5) business days' prior written notice of any proposed Distribution in kind of Securities or other assets. In the case of a Distribution which in whole or in part consists of Securities or other assets: (i) the amount of such Distribution shall be the sum of the amount of any cash distributed plus the Carrying Value of the Securities and other assets distributed, as of the close of business on the valuation date, as determined by the General Partner in accordance with the provisions of Section 4.7; and (ii) such Securities or other assets shall be deemed to have been sold for such value at the close of business on such valuation date and the amount of any gain or loss which would have been realized upon a sale for such value shall be deemed to have been realized and recognized at such time for the purpose of determining Net Income or Net Losses for the Fiscal Period immediately preceding such valuation date. The General Partner shall distribute such Securities or other assets as soon as practical after such valuation date. Each Distribution of Securities shall be made to the Partners in proportion to the amount each is receiving in the Distribution pursuant to Section 4.3. (b) Restrictions. The General Partner may cause the certificates evidencing any Securities to be distributed to be imprinted with legends as to such restrictions on transfer as may be reasonably necessary or appropriate, including legends as to applicable Federal or state securities law or other legal or contractual restrictions, and may require each Limited Partner to agree in writing: (i) that such Securities will not be transferred except in compliance with such restrictions and (ii) to such other matters as the General Partner may deem necessary or appropriate. (c) Limitations on In Kind Distributions. Prior to the termination of the Investment Period or, if earlier, the date of the Final Distribution, or otherwise unless consented to by a Majority in Interest of the Limited Partners, the General Partner will not distribute Non-Marketable Securities unless: (i) the issuer of such Securities is a reporting company under the Securities Exchange Act of 1934, as amended, and such issuer has, or has agreed to make, 18 -15- adequate current public information with respect to the issuer to comply with Rule 144 of the Securities and Exchange Commission; (ii) in the case of an issuer which has publicly traded equity Securities, not more than 50% of the Limited Partners are entitled to cause such Securities to be registered on demand and sold pursuant to an effective registration statement filed by such issuer pursuant to the Securities Act of 1933, as amended; (iii) the holders of such Securities are the beneficiaries of rights pursuant to valid contracts, charter or otherwise entitling them to "put" such Securities for purchase or redemption by such issuer or other financially capable third party at market equivalent pricing; (iv) such Securities represent a debt claim or other self liquidating contract right; or (v) such Securities are otherwise readily salable to an identifiable purchaser or class of purchasers, in the reasonable judgment of the General Partner, at the Carrying Value by the holders thereof or convertible or exchangeable for a Marketable Security. (d) Bank Partner Provisions. If, at any time, any Bank Regulated Partner notifies the General Partner that: (i) its holdings of any Security from a distribution in kind by the Partnership, combined with the ownership of securities of the same Portfolio Entity by such Bank Regulated Partner and its Affiliates, results in aggregate ownership by such Bank Regulated Partner and its Affiliates of an amount of securities of such Portfolio Entity in excess of that permitted by the Bank Holding Company Act of 1956; and (ii) despite their best efforts, such Bank Regulated Partner and its Affiliates are unable to sell such securities of such Portfolio Entity owned by them other than through the Partnership, then the General Partner shall take such steps as it deems reasonable, which steps are equitable to all Limited Partners, so as to avoid such excessive ownership attributable to the Bank Regulated Partner. (e) Modification for Regulatory Matters. Notwithstanding any other provision of this Agreement, in the event of a distribution in kind of any Securities or other asset that would cause a Limited Partner to own or control an equity interest in a Portfolio Company that exceeds the amount that such Limited Partner may lawfully own or control, then, upon written notice to the General Partner by such Limited Partner prior to the date of such distribution, (i) the Partners not so affected shall receive their shares of such Securities or other asset in kind; (ii) the Capital Accounts of the Partners shall be adjusted in the same manner as if the entire distribution of such Securities or other asset had been made in kind; and (iii) to the extent practicable, the General Partner shall be authorized to sell the affected Limited Partner's share of such Securities or other asset on behalf of such Limited Partner and distribute the proceeds of such sale, net of all expenses attributable to such sale, to such Limited Partner in cash. 4.7. Determination of Carrying Value. (a) Guidelines. The Carrying Value of Marketable Securities shall be determined in accordance with the following guidelines which shall be interpreted and applied in the good faith determination of the General Partner: (i) for purposes other than valuation in connection with a Distribution, their last sales price on the last trading day on which such Securities were traded immediately preceding the date of determination on the largest national securities exchange (measured by dollar volume of transactions in all Securities traded thereon) on which such Securities shall have traded, or, if available, such sales price on the consolidated tape; (ii) for purposes of a valuation in connection with a Distribution, the average of their last sales price on the five (5) most recent trading days on which such Securities were traded immediately preceding the date of determination on the largest national securities exchange 19 -16- (measured by dollar volume of transactions on all Securities traded thereon) on which such Securities shall have been traded, or if available, such sales price on the consolidated tape; or (iii) if neither determination referred to in clauses (i) or (ii) can be made, for purposes other than valuation in connection with a Distribution, the last closing "bid" price on the last trading day on which such Securities were traded immediately preceding the date of determination, or for purposes of a valuation in connection with a Distribution, the average of the last closing "bid" price on the five (5) most recent trading days on which such securities were traded immediately preceding the date of determination; provided, however, that if such Marketable Securities are subject to a restriction on transfer, the General Partner, in good faith and with the consent of the Advisory Committee, shall discount such sales or "bid" prices 4% to 20% depending on the nature of such restriction. (b) General Partner Authority. Except in connection with a Distribution or any revaluation of the Partnership's assets, which shall be governed by paragraph (c) of this Section 4.7, the General Partner shall establish the Carrying Value of Non-Marketable Securities at cost; provided, however, that the General Partner may revalue such Non-Marketable Securities in accordance with said paragraph (c) if a good faith basis for such redetermination exists. (c) Advisory Committee Review. The Advisory Committee shall have the authority (but not the obligation) to review the methodology used for any valuation of Non-Marketable Securities made for the purpose of making any Distribution or any revaluation of the Partnership's assets. Any valuation issues of Non-Marketable Securities which are not addressed by or in accordance with such reviewed methodology shall be made by the General Partner with the consent of the Advisory Committee. If either: (i) the Advisory Committee shall object to any such methodology or other valuation or (ii) any such methodology or other valuation reviewed by the Advisory Committee shall be objected to in writing by a Majority in Interest of the Limited Partners, then the General Partner will obtain an appraisal of the value of such Non-Marketable Securities by an independent investment banking, accounting or financial consulting firm selected by the General Partner and approved by the Advisory Committee in its reasonable discretion. Any such appraisal shall be an expense of the Partnership under Section 8.2 and shall be binding on all Partners. 4.8. Withholding Taxes. (a) General. The Partnership at all times shall be entitled to make payments required to discharge any obligation of the Partnership to withhold or make payments to any governmental authority with respect to any United States Federal, state or local tax liability or any other tax liability of any Limited Partner liable for such taxes arising out of such Limited Partner's interest in the Partnership. Any amount withheld for the payment of any such tax liability from a Distribution to a Limited Partner shall be deemed to be a Distribution to that Limited Partner made as of the time the withheld amount would have actually been distributed and shall reduce the amounts actually distributed. Any amounts paid by the Partnership for any such tax liability, but not withheld from a Distribution, shall be deemed to be an interest-free advance made by the Partnership to such Limited Partner and shall not be deemed to be a Distribution to such Limited Partner under this Agreement. Amounts treated as advances to any Limited Partner under this Section 4.8 shall be repaid by such Limited Partner to the Partnership within thirty (30) business days after the Partnership delivers a written request to such Limited Partner for such payment, which notice will be delivered promptly by the General Partner; 20 -17- provided, however, that if any such repayment is not made, the Partnership may (without prejudice to any other rights of the Partnership) collect such unpaid amounts from any Distribution that otherwise would be made to such Limited Partner. Notwithstanding any other provisions of this Agreement, in the event the Partnership fails to withhold any taxes in respect of any Limited Partner when required to do so (including as a result of any change in law or interpretation thereof or otherwise), any liability incurred by the Partnership (including interest but excluding any penalties) as a result of such failure shall be borne solely by such Limited Partner (and charged to such Partner's Capital Account) or, in the event that: (i) the Partnership shall no longer exist or such Limited Partner's Capital Account shall not be adequate for such purpose and (ii) any such liability shall have been paid by the General Partner, then such Limited Partner shall, promptly upon notice thereof, reimburse the General Partner for any such payment. (b) Operational Rules. The General Partner, after consulting with the Partnership's accountants or other advisers, shall determine the amount (if any) of any tax liability attributable to any Partner taking into account any differences in the Partners' status, nationality or other characteristics. Any such determination regarding the amount of tax liability attributable to particular Partners shall be based on the manner in which the jurisdiction imposing the related tax would attribute that tax liability and, in making any such determination, the General Partner shall be entitled to treat any Partner as ineligible for an exemption from or reduction in rate of such foreign tax under a tax treaty or otherwise except to the extent that such Partner provides the General Partner with such written evidence (including but not limited to forms or certificates executed by its managers and/or beneficial owners) as the General Partner or the relevant tax authorities may require to establish such Partner's (or some or all of its beneficial owners') entitlement to such exemption or reduction. The intent of this Section 4.8(b) is to ensure, to the maximum extent feasible, that the burden of any taxes withheld at the source or paid by the Partnership is borne by those Partners to which such tax obligations are attributable, and this Section 4.8(b) shall be interpreted and applied accordingly. 4.9. General Partner's Obligation to Return Excess Distributions. (a) Amount; Timing of Determination. If, as of the determination date of the Partnership's Final Distribution, (i) the General Partner has received Distributions in an aggregate amount in excess of 20% of the Partnership's Cumulative Net Income or (ii) the General Partner has received any Distributions and there is a shortfall between the aggregate Distributions made to the Limited Partners from the inception of the Partnership through such time and the full amount distributable to Limited Partners as of such time pursuant to clauses (i) and (ii) of Section 4.3, then the General Partner shall be regarded as having received "Excess Distributions" equal to the greater of the excess amount referred to in clause (i) above and the shortfall referred to in clause (ii) above, but not more than the aggregate amount of Distributions actually received by the General Partner from the inception of the Partnership through and including such date. The General Partner may elect not to receive any part or all of any distribution to which the General Partner otherwise may be entitled under the provisions of Section 4.3 and instead may distribute such amounts to and among the Partners in accordance with the provisions of clauses (i) and (ii) of Section 4.3, and thereafter may receive in full distributable amounts to which it is then entitled under Section 4.3, from time to time and upon the reasonable determination of the General Partner, as may be deemed to be appropriate by the General Partner in light of its obligations under this Section 4.9. 21 -18- (b) Repayment on Liquidation. Within 100 days after the determination date of the Partnership's Final Distribution: (i) the Partnership shall make a final determination of the amount of Excess Distributions received by the General Partner and not previously returned to the Partnership; and (ii) the General Partner shall return all such remaining Excess Distributions to the Partnership, subject to the conditions and limitations set forth in the other provisions of this Section 4.9. (c) Form of Repayment; Other Rules. All returns made to the Partnership pursuant to this Section 4.9 shall be in the form of cash or of Securities previously distributed to the General Partner by the Partnership during the fiscal period for which such determination of Excess Distributions is being made, valued in accordance with Section 4.7 at the time of their return. (i) No amount returned to the Partnership by the General Partner pursuant to this Section 4.9 shall increase the General Partner's Capital Contribution or reduce the General Partner's Subscription or remaining Capital Commitment. (ii) In no event shall the General Partner be required to return to the Partnership any amount greater than the excess, if any, of the total amount of distributions made by the Partnership to the General Partner as of the determination date, reduced by the sum of: (A) the aggregate amount of distributions that the General Partner would have received from the Partnership if it had made all of its Contributions to the Partnership in exchange for an interest as a limited partner therein and had never owned any interest in the Partnership as a general partner, (B) the aggregate amount of tax Distributions previously received by the General Partner pursuant to Section 4.5 (net of any amounts properly taken into account in the preceding clause (A)), and (C) the aggregate amount (if any) previously returned to the Partnership by the General Partner pursuant to this Section 4.9. (d) Obligation. The General Partner hereby acknowledges and agrees that, in the event that the General Partner does not perform its obligation under this Section 4.9, each of its members shall be severally (not jointly) liable for the General Partner's obligations to return Excess Distributions pursuant to this Section 4.9, solely to the extent of their respective pro rata shares of Distributions actually received by them from the General Partner. The General Partner agrees to maintain and enforce such provisions in its Limited Liability Company Agreement for the benefit of the Limited Partners. (e) Limitations. Except as provided by the Delaware Act or other applicable law or Section 4.8 (dealing with Tax Withholding), and (with respect to the General Partner) this Section 4.9 and Section 11.3, and (with respect to the Limited Partners) Section 11.3, neither the General Partner nor any Limited Partner shall be obligated at any time to repay to the Partnership 22 -19- all or any part of any distributions made to such Partner by the Partnership, or to make any Contribution or payment to the Partnership with respect to any deficit in such Partner's Capital Account. Nothing in this Section 4.9(e) shall affect the obligation of any Partner to contribute capital to the Partnership pursuant to the additional Capital Contributions provided for herein or to make any other payments to the Partnership otherwise required by this Agreement. 5. MANAGEMENT. 5.1. Investment Guidelines. The General Partner will invest the assets of the Partnership principally in companies engaged in various segments of the insurance, financial services, e-commerce and healthcare industries, including without limitation, service and technology businesses supporting such industries. Investments may be made in Securities of all types, including Marketable and Non-Marketable Securities. Any of the foregoing investments is hereinafter sometimes referred to as a "Portfolio Investment" and the issuer of such Portfolio Investment in Securities is hereinafter referred to as a "Portfolio Entity." (a) Roster of Items. The General Partner shall manage the investment activities of the Partnership in accordance with the provisions of this Section 5.1 (the "Investment Guidelines"), which shall be implemented subject to the good faith interpretation of the General Partner. The Investment Guidelines can be waived upon the consent of the Advisory Committee. (i) At no time shall the aggregate Portfolio Investment in any Portfolio Entity exceed twenty percent (20%) of the aggregate Capital Commitments of all Partners. (ii) At such times as the funds of the Partnership are not used to make Portfolio Investments or to pay expenses or other obligations and commitments of the Partnership, the General Partner shall invest such funds in Short-Term Investments. (iii) The General Partner, on behalf of the Partnership, may enter into arrangements to borrow funds such that the total outstanding indebtedness of the Partnership at any time will not exceed $15 million. The Partnership will not use borrowed funds to make Portfolio Investments except that the Partnership may incur indebtedness to acquire Securities in a Portfolio Investment if such indebtedness arises solely with respect to and in the amount of pending Capital Contributions called by the General Partner and in any event is reasonably likely to be paid in full and retired within 90 days of incurrence by the Partnership. (iv) The General Partner, in its discretion, may determine to reinvest net proceeds from the sale or other disposition of Portfolio Investments, at any time during the period ending on the third (3rd) anniversary of the final closing date, in other Portfolio Investments under the Investment Guidelines; provided, however, that the amount available for reinvestment at any time shall not exceed an amount equal to the Cost of Disposed Investments. 23 -20- (v) The Partnership will not initiate any tender offer or proxy contest transaction for the purpose of changing management of a company in a "hostile" transaction formally opposed by the board of directors (or other appropriate management of such entity), except that the Partnership may acquire Securities of any issuer in the ordinary course of investment activity and may initiate, propose and participate in any plan for reorganization or change in management of a Portfolio Entity once a Portfolio Investment is made. (vi) The Partnership will not invest in any other pooled investment vehicle or managed investment fund, including any "fund of funds" or other vehicle as to which any person or entity is entitled to any separate fee, "carried interest" or other compensation from the Partnership. (vii) The Partnership will not be engaged in the short-term trading of Marketable Securities. Further, the Partnership will not make open-market purchases of a class of publicly traded Securities except in anticipation of or in direct connection with a Portfolio Investment or as a follow-on investment in a Portfolio Entity. The Partnership may make Portfolio Investments in Securities which are convertible or exchangeable into Securities of a class of Securities which are publicly traded and listed, if such transaction is negotiated directly with the issuer in a private placement transaction and as to which the Partnership acquires a meaningful position with respect to such Portfolio Entity. For this purpose a "meaningful position" means either (x) a holding of at least 5% of the issuer's outstanding capital stock or (y) the right to elect or nominate a director. (viii) The Partnership will not engage in market arbitrage transactions but may enter into put, call, options, derivative securities and other contractual arrangements on a selected basis solely for the purposes of hedging the Partnership's Portfolio Investments. (ix) The Partnership at any time will not have Portfolio Investments (valued at cost) exceeding 30% of the aggregate Capital Commitments in Portfolio Entities with main offices, domiciled or otherwise conducting their main lines of business in jurisdictions outside the United States (including its territories and protectorates), the United Kingdom, Canada or Bermuda. (x) The Partnership will not make any Portfolio Investment in any Portfolio Entity whose principal business consists of (A) tobacco or tobacco products, (B) alcohol products, (C) the production of firearms or (D) gambling operations. (b) FCC Restrictions. The Partnership will not make any Portfolio Investment in a Portfolio Entity which is a Media or Common Carrier Company (as defined herein) if and to the extent that any Limited Partner would be attributed with an ownership interest as a result of such Portfolio Investment in such Media or Common Carrier Company under the rules and written policies of the FCC ("Attribution Rules"). For purposes of this Agreement, "Media or Common Carrier Company" means any company that, directly or indirectly, has an interest which is deemed attributable under the Attribution Rules in a broadcast radio or television 24 -21- station, a cable televisions system, a "daily newspaper" (as such term is defined in 47 C.F.R. Section 73.3555 of the FCC's rules), a multipoint multichannel distribution system, a local multipoint distribution system, an open video system, a commercial mobile radio service or any other communications facility the operations of which are subject to regulation by the FCC under any of (i) the Communications Act of 1934, as amended; (ii) the Attribution Rules; and (iii) the rules and written polices of the FCC limiting or restricting ownership in such Media or Common Carrier Companies. (c) Confidentiality. Except as otherwise expressly provided herein, including without limitation, Sections 9.2 through 9.4, the General Partner shall not be required to disclose information known by the General Partner as to Portfolio Entities or proposed Portfolio Investments and the General Partner may, in its discretion, keep such information confidential, to the extent required or deemed necessary or advisable in the good faith judgment of the General Partner, consistent with the provisions of Section 17-305 of the LP Act. 5.2. Powers & Duties of General Partner. (a) Authority. The management, operation and policy of the Partnership shall be vested exclusively in the General Partner, which shall be authorized and empowered on behalf and in the name of the Partnership by itself to carry out any and all of the objects and purposes of the Partnership and to perform all acts and enter into and perform all contracts and other undertakings that it may, in its discretion, deem necessary or advisable or incidental thereto. The General Partner shall have all the rights and powers and be subject to all the restrictions and liabilities of a general partner in a partnership without limited partners. (b) Specific Actions. Without limiting the general powers and duties set forth in paragraph (a) of this Section 5.2, the General Partner is hereby authorized and empowered on behalf and in the name of the Partnership to: (i) direct the formulation of investment policies and strategies for the Partnership, and invest Partnership funds, in accordance with the Investment Guidelines; (ii) acquire, hold, sell, transfer, exchange and dispose of Securities, and exercise all rights, powers, privileges and other incidents of ownership or possession with respect to Securities, including, without limitation, the voting of Securities, the approval of a restructuring of an investment in Securities, participation in arrangements with creditors, the institution and settlement or compromise of suits and administrative proceedings and other like or similar matters; (iii) purchase Securities for investment and make such representations to the seller of such Securities, and to other persons, as the General Partner may deem proper in such circumstances, including the representation that such Securities are purchased by the Partnership for investment and not with a view to their sale or other disposition; 25 -22- (iv) obtain on behalf of the Partnership options to purchase blocks of shares in private transactions under the Program, and trade in puts, calls, futures, other derivative securities, or invest in listed options, or write options to the extent that such vehicles are used for the purpose of hedging portfolio Securities (including Securities held by the Partnership as consideration for, or upon exchange, conversion or otherwise in respect of Portfolio Investment Securities), as the General Partner deems as appropriate; provided, however, that the Partnership has a sufficient number of such type of Securities underlying the hedge in its portfolio and expected cash flows from the portfolio to cover such hedge; and provided, further, however, that no such hedge shall extend for a term greater than six months; (v) open, maintain and close bank accounts and draw checks or other orders for the payment of money and open, maintain and close brokerage, mutual fund and similar accounts; (vi) hire consultants, attorneys, accountants, actuaries and such other agents and employees for itself and for the Partnership as may be reasonably necessary or advisable, and authorize any such agent or employee to act for and on behalf of the Partnership; (vii) retain any of its Affiliates to provide services to the General Partner on terms that are no less favorable than terms for such services offered to or engaged in with a third party, except as otherwise approved by the Advisory Committee; (viii) make any and all elections and other decisions with respect to tax and accounting matters; (ix) act on its own behalf and in its own name, as the General Partner may determine to be reasonably necessary and appropriate to enforce or secure the powers or rights of the Partnership; and (x) make and perform such other agreements and undertakings as may be necessary or advisable for the carrying out of any of the foregoing powers, objects or purposes. (c) Notwithstanding the foregoing provisions of this Section 5.2, the General Partner, acting on behalf of the Partnership, may not: (i) buy or sell commodities; (ii) buy or sell real estate; or (iii) buy or sell currencies other than currencies of the countries of domicile of Portfolio Entities. 26 -23- (d) UBTI Matters. The General Partner agrees to use its reasonable efforts to avoid the realization of income of the Partnership in the form of "unrelated business taxable income" attributable to a Limited Partner that is exempt from taxation under Section 501(a) of the Code, and shall use its reasonable efforts to conduct the affairs of the Partnership so as to minimize the risk of incurring such income. (e) ERISA/VCOC Matters. The General Partner shall use its reasonable efforts to ensure that the assets of the Partnership shall not be "plan assets" subject to the Employee Retirement Income Security Act of 1974 and the regulations thereunder ("ERISA"), and accordingly the General Partner shall use its reasonable efforts to operate and manage the affairs of the Partnership so as to qualify the Partnership as a "venture capital operating company" exempt from regulation as plan assets under ERISA. The General Partner and the Partnership will not have any obligations or requirements under these provisions, however, if the participation of "benefit plan" investors in the Partnership is not "significant" within the meaning of the Plan Asset Regulations of ERISA, or if such requirements of the Plan Asset Regulations no longer apply to the Partnership. (f) Tax Partnership Status. The General Partner agrees that it: (i) will not cause or permit the Partnership to elect to be excluded from the provisions of Subchapter K of the Code or to be treated as a corporation for federal income tax purposes; (ii) will cause the Partnership to make any election reasonably determined to be necessary or appropriate in order to ensure the treatment of the Partnership as a partnership for federal income tax purposes; (iii) will cause the Partnership to file any required tax returns in a manner consistent with its treatment as a partnership for federal income tax purposes; and (iv) has not taken, and will not take, any action that would be inconsistent with the treatment of the Partnership as a partnership for such purposes. (g) Tax Matters Partner. The General Partner shall be the tax matters partner, as defined in Section 6231 of the Code, of the Partnership (the "Tax Matters Partner"). The General Partner shall receive no additional compensation from the Partnership for its services in that capacity, but all reasonable expenses incurred by the Tax Matters Partner (including professional fees for such accountants, attorneys and agents as the General Partner in its discretion determines are necessary to or useful in the performance of its duties in that capacity) shall be borne by the Partnership. The General Partner shall be entitled to exculpation and indemnification with respect to any action it takes or fails to take as Tax Matters Partner with respect to any administrative or judicial proceeding involving "partnership items" (as defined in Section 6231 of the Code) of the Partnership to the extent provided under Article 7. 5.3. Advisory Committee. (a) Designation and Composition. An advisory committee (the "Advisory Committee"), composed of representatives of certain Limited Partners and other persons selected by the General Partner, will meet periodically, but no less often than once each year, with the General Partner and may advise the General Partner regarding the valuation of the Partnership's assets, interested party transactions and other similar actions. The Advisory Committee shall have the authority (but shall not be required) to advise and consult with the General Partner regarding the valuation of the Partnership's assets, interested party transactions and other similar actions. The General Partner and its members will not be regarded as a member of the Advisory 27 -24- Committee. At all times a majority of the members of the Advisory Committee shall be representatives of Limited Partners. Initially, the members of the Advisory Committee will consist of individual representatives or designees of the Limited Partners, as indicated on Schedule I hereto. Any individual member may be removed by the action of the General Partner together with a majority of the members then serving (other than the member who is the subject of such removal). In the event of any vacancy, whether by removal, resignation or otherwise, the Limited Partner whose representative is the subject of such vacancy will be entitled to designate an alternative representative to serve as the member, with such individual to be subject to the approval of the General Partner (which shall not be withheld unreasonably or delayed unduly). (b) Actions. Votes, approvals, consents, assents and other actions of the Advisory Committee shall be effective upon the action of at least a majority in number of the members of the Advisory Committee. The Advisory Committee may adopt rules, procedures and policies for the conduct of its meetings consistent with the other terms of this Agreement. (c) Authority; Confidentiality. The General Partner will retain exclusive authority and responsibility for the selection of investments and the operation of the business of the Partnership, and no member of the Advisory Committee or other Limited Partner shall take part in the control of the Partnership business or have any authority or power to act for or bind the Partnership or have any liability therefor. Except as otherwise expressly provided herein, including without limitation, Sections 9.2 through 9.4, the General Partner shall not be required to disclose to the members of the Advisory Committee any information known by the General Partner as to Portfolio Entities, proposed Portfolio Investments or other aspects of the Partnership's business where the General Partner reasonably and in good faith believes that there is a contractual basis or other basis for which it is necessary to keep such information confidential, or otherwise as consistent with the provisions of Section 17-305 of the LP Act. 5.4. Other Business Relationships. (a) General Partner and Principals. The General Partner, and its members (including the Principals), employees and Affiliates are engaged and may in the future engage, individually or with others, in other business or investment activities or business ventures, including those which may be similar to or in competition with the investments or business of the Partnership. The Principals also may provide management assistance, financial consulting, investment and asset management services, reporting and accounting, and investment banking (including merchant banking or other activities in which the Principals may act as a principal) and similar services to clients, which may include Portfolio Entities or potential Portfolio Entities. No fees for such services need be shared with the Partnership. In the event of any potential conflict of interest due to any other investment or business relationship, the General Partner will act in the manner which it reasonably and in good faith believes to be in or not opposed to the best interests of the Partnership. Obligations of fair dealing, non-disclosure of inside information and the like also may limit the Principals in acting on behalf of the Partnership. (b) Other Investment Funds. Subject to the other provisions of this Agreement, the Principals may at any time organize, sponsor, invest in or otherwise enter into contracts with other limited partnerships or other entities with the same or similar investment objectives as the Partnership and in which any Principal has the same or similar kinds of 28 -25- responsibilities as in this Agreement; provided, however, that unless approved in advance by at least Two-Thirds in Interest of the Limited Partners, the Principals shall not form or serve as general partner or investment manager of another private U.S. investment fund that has as its investment purpose and agenda the making of private equity investments in companies substantially similar to the companies in which the Partnership invests until the earlier of (i) the fourth anniversary of the date of this Agreement or (ii) such time as an amount equal to at least 75% of the Capital Commitments of all Partners (A) has been invested in Portfolio Investments or reserved for potential Portfolio Investments which are identified and likely to close within ninety (90) days or (B) reserved for follow-on investments (in an amount consistent with the Partnership's historical reserves for follow-on investments) and/or (C) paid or reserved for payment of Partnership expenses and obligations, including any such investments, expenses or obligations reasonably expected by the General Partner to be funded or become due within ninety (90) days (such set of conditions being referred to as "fully invested"). (c) Principal Transactions. Upon the approval of the Advisory Committee: (i) the Principals may make an investment in any Portfolio Entity in which the Partnership has invested, and the Partnership may make an investment in any entity in which a Principal has invested; and (ii) any Principal may also invest in any Portfolio Entity in which the Partnership is investing, at the same time as the Partnership invests therein and on terms not more favorable to any such Principal than those applicable to the Partnership's investment in the Portfolio Entity, unless such Principal's investment would result in a reduction of the amount of the investment which the Partnership would otherwise make. (d) Related Fund Transactions. Notwithstanding anything to the contrary herein, (i) the Partnership may make an investment in any Portfolio Entity in which any Related Fund has invested, and any Related Fund may make an investment in any entity in which the Principal has invested; and (ii) any Related Fund may also invest in any Portfolio Entity in which the Partnership is investing at the same time as the Partnership invests therein. For purposes of this Section 5.4, the term "Related Fund" shall mean any limited partnership or investment fund currently managed, or to be managed in the future, directly or indirectly, by any of the Principals, Conning & Company or an Affiliate of Conning & Company. (e) Related Party Transactions. The Partnership may not engage in a purchase or sale transaction of a Non-Marketable Security with a limited partnership or an investment fund which is managed or controlled by a Related Party. With regard to a Related Party which is not a limited partnership or an investment fund, the Partnership may not engage in a purchase or sale transaction of a Non-Marketable Security with a Related Party: (i) unless the Non-Marketable Security is of the same class as, or has the same rights to earnings and distributions as, a Marketable Security of the same issuer and the price for the Non-Marketable Security is determined by the price of the Marketable Security, after adjustments for illiquidity; or (ii) if otherwise, without the prior written consent of a Majority in Interest of the Limited Partners. The Partnership may not purchase securities in a Public Offering through which a Related Party is selling its holdings, unless the Securities purchased by the Partnership constitute 20% or less of the total Public Offering. For purposes of this Section 5.4 only, the term "Related Party" shall mean the General Partner and its Affiliates, and each of their respective stockholders, employees, officers, directors, and agents or, in the case of any General Partner member who is an individual, any of such person's family members, and the term "Public Offering" shall mean an offering of securities under the Securities Act of 1933, as amended. 29 -26- (f) General Partner Disclosure. The General Partner shall devote such resources as it deems in good faith to be reasonably necessary to manage the affairs of the Partnership. Without the prior written consent of the Advisory Committee, and notwithstanding any other provision of this Section 5.4, the General Partner, the Principals and each Related Party shall not engage in any transaction with the Partnership except on terms that are no less favorable than the terms of any such transaction offered to or engaged in with a third party. The General Partner will disclose the nature and terms of any such Related Party transactions to the Advisory Committee. For purposes of this Section 5.4, a Limited Partner shall not be deemed to be a Principal, a Related Party or an Affiliate solely by virtue of its status as a Limited Partner in the Partnership. 5.5. Custodian. All cash and Securities of the Partnership shall be held by a custodian appointed by the General Partner, which shall be a bank or trust company with combined capital, surplus and undivided profits of not less than $100 million at the time of appointment (the "Custodian"). Any Custodian may be replaced at the discretion of the General Partner, by another Custodian meeting the requirements of this Section 5.5, and the General Partner shall promptly notify the Limited Partners of such replacement. 5.6. Key Person Trigger Event. (a) Event Occurrence. The failure of (i) any four of the Principals or (ii) John B. Clinton and any two other Principals to be active in the affairs of the Partnership in the capacity of investment managers of the General Partner during the Investment Period shall constitute a "Key Person Trigger Event." For purposes of this provision, "failure to be active in the affairs of the Partnership" with respect to any Principal shall mean the failure of such Principal to devote all or a substantial portion of such Principal's business time and efforts as a manager of the General Partner. The General Partner shall provide written notice to all Partners promptly after the occurrence of any Key Person Trigger Event. (b) Suspension Period. Immediately upon the occurrence of such Key Person Trigger Event, the General Partner: (i) shall cause the Partnership to cease making any new Portfolio Investments other than a proposed Portfolio Investment to which the Partnership made a commitment evidenced in writing setting forth the significant terms in definitive form prior to the date of such Key Person Trigger Event or any follow-on investment that the General Partner determines is advisable to make in order to preserve the Partnership's rights and economic benefits of an existing Portfolio Investment; (ii) shall cause the Partnership not to commit to any new proposed Portfolio Investment unless such commitment explicitly is made dependent upon the separate approval of a Majority in Interest of the Limited Partners; (iii) shall not make (and no Partner shall be obligated to pay) any Capital Contributions in respect of any new or proposed Portfolio Investments; (iv) shall use its reasonable best efforts to manage the ownership, conversion, disposition and distribution of the Partnership's assets so as to preserve the value of the Partnership's assets; and (v) shall be authorized to make (and each Partner shall be obligated to pay) Capital Contributions solely to the extent necessary to support the investment activities permitted in the preceding clause (i) and to satisfy current outstanding Other Expenses and liabilities or obligations of the Partnership to third parties (collectively, the "Suspension Period Restrictions"). 30 -27- (c) Restart Consent. Within sixty (60) days of the occurrence of the Key Person Trigger Event, the General Partner will deliver written notice to the other Partners or call a meeting of the Partners in order to disclose the steps that the General Partner has taken and/or intends to take in order to continue with management of the investment activities of the Partnership, which may include the replacement of one or more Principals or an alternative plan of management. The Suspension Period Restrictions shall terminate immediately only upon the consent of a Majority in Interest of the Limited Partners, to such effect, at which time the General Partner shall resume and continue to manage the full investment activities of the Partnership, including without limitation, the making of new Portfolio Investments and Capital Contributions for any and all Partnership purposes. (d) No Restart Consent. If the Limited Partners do not so consent to the termination of the Suspension Period Restrictions within sixty (60) days of the date of the aforementioned General Partner's notice or meeting, then the General Partner may either (i) continue to manage the activities of the Partnership as set forth in this Agreement subject to the Suspension Period Restrictions or (ii) elect to terminate the Partnership and manage the activities of the Partnership as set forth in Article 11. 6. MATTERS AMONG PARTNERS. 6.1. Liability of General Partner. (a) Basic Standard of Care. The General Partner, each of its employees, affiliates, officers, directors and agents from time to time and the Principals shall not be liable to the Partnership or any Partner for any action or omission taken or suffered by any Principal which does not constitute a breach of any fiduciary duty owed by such Principal and is taken or suffered in good faith and in the belief that such action or omission was in or was not opposed to the best interests of the Partnership; provided, however, that such action or omission was not a material violation of this Agreement and did not constitute gross negligence, willful misconduct, fraud or a material violation of law and that such acts or omissions do not constitute a knowing failure to comply with the LP Act such that the liability of any of the Limited Partners for the liabilities of the Partnership may exceed their Capital Contributions. None of the General Partner or the Principals shall be liable to the Partnership or any Partner for any act or omission of any other party other than a Principal, nor shall any Principal (in the absence of gross negligence, willful misconduct, fraud, a material violation of this Agreement or a material violation of law by such Principal) be liable to the Partnership or any Partner for any act or omission of any employee or agent of the Partnership where reasonable care was exercised in their appointment, supervision and retention. Except as otherwise provided in this paragraph (a), neither the General Partner nor any Principal shall be liable to the Partnership or any Partner for any mistake of fact or judgment in conducting the affairs of the Partnership or otherwise acting in respect of and within the scope of this Agreement. (b) Not Liable for Return. Except as otherwise expressly provided in paragraph (a) of this Section 6.1, neither the General Partner nor any Principal shall be liable for the return of all or any portion of any Limited Partner's Capital Contributions. 6.2. Liability of Limited Partners. Except as may be otherwise provided by law, the liability of each Limited Partner is limited to its Capital Commitment, and nothing in this 31 -28- Agreement shall remove, diminish or affect such limitation. If a Partner has received the return of any part of its Capital Contributions, the Partner may continue to be liable to the Partnership for the amount of the returned Capital Contribution, but only to the extent necessary to discharge the Partnership's liabilities to creditors who extended credit to the Partnership during the period the Capital Contribution was held by the Partnership, and as otherwise provided under the LP Act or Section 11.3. 6.3. No Obligation to Restore Negative Capital Account. Except as otherwise provided for by law or by Section 11.3, no Partner shall have any obligation at any time to contribute any funds to restore any negative balance in its Capital Account. 6.4. Actions of Partners; Bank Regulated Partner Voting Percentage. The Partners hereby agree and acknowledge that any vote, consent, approval or other action to be taken by or on behalf of the Limited Partners hereunder shall be valid and effective for all purposes hereunder upon the taking of such action at a meeting or as evidenced in writing by or on behalf of Limited Partners representing at least the requisite percentage in Interest of all Limited Partners eligible and entitled to act with regard to such matters, based upon their relative Limited Partner Percentages at the time such action is to be taken; provided, however, that for such purposes any Bank Regulated Partner shall be deemed at all times to have a Limited Partner Percentage equal to the lesser of (i) 4.9% or (ii) its actual Limited Partner Percentage. Further, with respect to any action by the Partners: (x) any Limited Partner who is the subject of such action or against whom such action is to be enforced separate or apart from other Limited Partners on behalf of the Partnership as a whole, shall be excluded from taking any such action; (y) any Affiliate of the General Partner, to the extent it holds a Limited Partner Interest, shall be excluded from such action; and (z) no Bank Regulated Partner shall take part in action regarding the admission, removal or approval of replacement of the General Partner under Section 10.2 and as otherwise referred to in this Agreement. 6.5. Bank Regulatory Matters. (a) No "Control" Presumption. No Bank Regulated Partner shall be required to make any Capital Contribution to the Partnership to the extent that such contribution would result in such Bank Regulated Partner contributing more than 24.99% of all capital contributed to the Partnership, if such Bank Regulated Partner shall obtain an opinion of counsel (which counsel and opinion shall be reasonably acceptable in form and substance to the General Partner) to the effect that such contribution would cause such Bank Regulated Partner to violate Regulation Y or otherwise causes a Bank Regulatory Problem. (b) Adjustment. Anything contained in this Agreement to the contrary notwithstanding, any Bank Regulated Partner may elect to withdraw partially from the Partnership but only to the extent necessary to provide that the Interest of such Bank Regulated Partner in the Partnership shall not exceed 24.99%, if such Bank Regulated Partner shall obtain an opinion of counsel (which counsel and opinion shall be reasonably acceptable in form and substance to the General Partner) to the effect that, as a result of Regulation Y, such partial withdrawal of the Interest such Bank Regulated Partner from the Partnership to the extent described above is required to enable such Limited Partner to comply with Regulation Y or otherwise to avoid a Bank Regulatory Problem is necessary. 32 -29- (c) Partial Withdrawal Remedy. Any such Bank Regulated Partner partial withdrawal of Interest shall be effective at the end of the fiscal quarter in which such election occurs. Upon the partial withdrawal of any Bank Regulated Partner, either the remaining Partners or the Partnership, within sixty (60) days after the effective date of such Bank Regulated Partner withdrawal, shall purchase from the Bank Regulated Partner that amount of such Bank Regulated Partner's Interest corresponding to such Limited Partner's partial withdrawal at the price determined below. The purchase price to be paid for such Bank Regulated Partner's withdrawal Interest shall be the fair market value thereof as reflected in its Capital Account, determined as if all assets of the Partnership had been sold for their Carrying Values, all Partnership liabilities satisfied (to the extent feasible) and the resulting income, gains and losses to the Partners' Capital Accounts in accordance with Section 3.1 of this Agreement. (d) Payments. All payments made to a withdrawing Bank Regulated Partner pursuant to this Section 6.5 may be made (i) in cash or (ii) in the form of other consideration mutually acceptable to such Bank Regulated Partner and the General Partner. If and to the extent that any of the consideration consists of Securities, the General Partner and the Bank Regulated Partner shall apply the provisions of Sections 4.6(d) and (e) to determine the acceptability of such Securities as in-kind consideration. (e) Election Out. Upon issuance of the regulations implementing the "merchant banking activities" provisions of amended Section 4(k)(4)(H) of the Bank Holding Company Act, any Bank Regulated Partner may irrevocably elect, by providing written notice to the General Partner, not to be governed by this Section 6.5 because such Limited Partner or an Affiliate has elected to be treated as a "financial holding company" under the Financial Services Act of 1999 (the Gramm-Leach-Bliley Act of 1999). (f) Modification; Definitions. This Section shall not be amended without the consent of each of the Bank Regulated Partners. For purposes of this Section 6.5 the following defined terms apply: "Bank Holding Company Act" means the Bank Holding Company Act of 1956, as amended (12 U.S.C. 1843(c)(8)), including the Financial Services Act of 1999. "Bank Regulated Partner" means each Limited Partner that is (or is an Affiliate of a bank holding company that is) subject to the provisions of Regulation Y. "Regulation Y" shall mean Regulation Y of the Board of Governors of the Federal Reserve System (C.F.R. Part 225) or any successor to such Regulation. "Bank Regulatory Problem" means (i) any set of facts or circumstances wherein it has been asserted by any governmental regulatory agency (or any Bank Regulatory Partner believes that there is a significant risk of such assertion) that such Bank Regulated Partner is not entitled to own, hold, or exercise any material right with respect to all or any portion of the interest in the Partnership which such Partner holds or (ii) when a Bank Regulated Partner and its affiliates would own, control or have power (including voting rights) over a greater quantity of securities of any kind than are permitted under any requirement of any governmental rule or regulation directly applicable to the investment activities of such Bank Regulated Partner in its capacity as a Limited Partner. 33 -30- 6.6 Exclusions from Investments. (a) Request for Exclusion. If participation by a Bank Regulated Partner in a Portfolio Investment would result in a Bank Regulatory Problem, and such Bank Regulated Partner provides the General Partner with a written opinion of counsel to that effect, such Bank Regulated Partner may request to be excused from making payment of its capital contributions in respect of such Portfolio Investment (an "Excused Partner") and shall be excluded from participating in Partnership profits, losses and distributions attributable to such investment (the "Excluded Investment"). Any such request shall be submitted to the General Partner in writing, accompanied by the opinion of counsel, within five (5) business days after the receipt by the Bank Regulated Partner of the Capital Contribution call notice with respect to such proposed Portfolio Investment. (b) Effect of Exclusion. If a Bank Regulated Partner is an Excused Partner with respect to any Portfolio Investment, then, notwithstanding any other provision of this Agreement, the following provisions shall be applied: (i) The Capital Commitment of the Excused Partner shall not be reduced by such Excused Partner's share of any Capital Contributions called for by the Partnership to make such Excluded Investment; (ii) Such Excused Partner shall receive no allocations of items of income, gain, loss, deduction or expense attributable to that Excluded Investment and no Distributions attributable to that Excluded Investment (i.e., it shall be entitled to no economic returns from, and to the maximum extent feasible shall suffer no economic detriment attributable to, the Partnership's participation in that Excluded Investment); (iii) For purposes of determining the General Partner's "carried interest" attributable to Portfolio Investments made (in part) with such Excused Partner's paid-in Capital Contributions, and the General Partner's obligation to return Excess Distributions to such Excused Partner: (A) such Excused Partner and the General Partner shall be treated as partners in a separate "sub-partnership" with aggregate Capital Commitment and Capital Contributions equal to the Excused Partner's revised Capital Commitment and Capital Contributions plus a proportionate share of the General Partner's actual Capital Commitment and Capital Contributions, and (B) all calculations of the General Partner's carried interest shall be made separately, in accordance with the relevant provisions of the Agreement, with respect to this sub-partnership; (iv) The amount of Expenses attributable to this sub-partnership shall be equal to the Expenses attributable to the Portfolio Investments held by that sub-partnership, determined as follows: (A) all Expenses incurred solely as a result of making, holding or disposing of a particular Portfolio Investment (e.g., indemnification expenses for claims arising out of that Portfolio Investment) shall be deemed to be attributable to that Portfolio Investment; (B) all other Expenses (excluding Expenses attributable to the Management Fee) shall be apportioned 34 -31- among (and shall be deemed to be attributable to) all Portfolio Investments in proportion to the Capital Contributions used to acquire such Portfolio Investments; and (C) the General Partner shall determine the amount of Capital Contributions used to acquire each Portfolio Investment, and shall recalculate periodically the amount of Expenses attributable to each Portfolio Investment as additional Expenses accrue, in each case in a reasonable and consistent manner; (v) The Management Fee payable by the Partnership shall not be reduced as a result of any reduction in Capital Commitments occurring pursuant to this Section 6.6, and each Limited Partner (including each Excused Partner) shall bear the economic impact of its proportionate share (based on its relative Capital Commitment and without regard to any reduction occurring pursuant to this Section 6.6) of the aggregate amount of the Management Fee expense allocated to all Limited Partners under this Agreement. The General Partner is authorized to allocate Expenses attributable to payments or accruals of the Management Fee to the sub-partnership referred to in Section 6.6(b)(iii) and (iv) and, within such sub-partnership, between the General Partner and any Excused Partners, in such manner as the General Partner reasonably determines is necessary or advisable to implement the Partners' economic agreement as set forth in the preceding sentence; (vi) No Bank Regulated Partner which has become an Excused Partner pursuant to Section 6.6 shall be required to make any additional Capital Contributions to the Partnership with respect to such Portfolio Investment, but the General Partner shall adjust Partnership allocations to and within such sub-partnership to ensure, to the extent feasible, that such Excused Partner bears the economic burden of any Management Fee expense attributable to such Excused Partner's Capital Commitment (determined without regard to any reduction thereof); (vii) To the maximum extent feasible, except as explicitly provided in Sections 6.6(b)(i) through (vi), the amounts of Net Income or Net Losses allocable to, and the Distributions made to, the Partners other than the Excused Partner shall not be affected by the special arrangements between the General Partner and the Excused Partner contemplated by this Section 6.6; and (viii) With respect to Capital Contribution calls after an Excused Investment, the General Partner may determine individual Partner Capital Contribution amounts on a pro rata basis relative to the outstanding or unused Capital Commitments of all Partners. 7. INDEMNIFICATION. 7.1. General. The General Partner, each Principal, each member of the Advisory Committee, and each of their respective partners, members, managers, employees, affiliates, officers, directors and agents from time to time (each an "Indemnitee") shall be and hereby are: (i) indemnified and held harmless by the Partnership and (ii) released by the Partners, from and against any and all claims, demands, liabilities, costs, expenses, damages, losses, suits, 35 -32- proceedings and actions, whether civil or criminal, actual or threatened (collectively, "Liabilities"), whether judicial, administrative, investigative or otherwise, of any nature whatsoever, known or unknown, liquidated or unliquidated which Liability or Liabilities arise out of the conduct of the business or affairs of the Partnership by the respective Indemnitee or otherwise relate to this Agreement, including, without limitation, any Liability of any nature whatsoever resulting from an Indemnitee serving as a member of the Board of Directors of any Portfolio Entity; provided, however, that the satisfaction of any indemnification and holding harmless shall be from and limited to assets of the Partnership and no Limited Partner shall have any personal liability on account thereof; and provided, further, that an Indemnitee shall not be entitled to indemnification and release hereunder only if it shall have been determined by a court of competent jurisdiction that: (x) such Indemnitee did not act in good faith and in the reasonable belief that the Indemnitee's action was in accordance with such Person's obligations to the Partnership or such Indemnitee acted with reckless disregard for the duties of his or its office or with willful malfeasance; (y) such Liability arose from a material violation of this Agreement or the gross negligence, willful misconduct, or fraud by such Indemnitee, or from actions of such Indemnitee outside the scope of and unauthorized by this Agreement, or from any violation of Federal or state securities laws or (z) with respect to any criminal action or proceeding, such Indemnitee did have cause to believe beyond any reasonable doubt that the Indemnitee's conduct was criminal. 7.2. Expenses. Reasonable expenses, including reasonable legal expenses, incurred by an Indemnitee in defense or settlement of any claim that may be subject to a right of indemnification hereunder shall be advanced by the Partnership prior to the final disposition thereof upon receipt of the Indemnitee's undertaking to repay such amount to the Partnership if it shall be ultimately determined that the Indemnitee was not entitled to be indemnified hereunder. The right of any Indemnitee to the indemnification provided herein shall be cumulative of, and in addition to, any and all rights to which such Indemnitee may otherwise be entitled by contract or as a matter of law or equity, and shall extend to such Indemnitee's successors, assigns and legal representatives. All judgments against the Partnership or any Principal, in respect of which any of them is entitled to indemnification, must first be satisfied from Partnership assets before any such party is responsible therefor. 7.3. No Waiver, etc. Nothing contained herein shall constitute a waiver by any Partner of any right which it may have against any party under Federal or state securities laws. 7.4. Insurance. The General Partner may cause the Partnership to purchase and secure insurance, to the extent available at reasonable cost (as determined by the General Partner), covering the Liabilities described in this Article 7. 8. EXPENSES; MANAGEMENT FEE. 8.1. Administrative Expenses. Subject to the provisions of Section 8.2, the General Partner will bear and be charged with all ordinary, necessary and recurring costs and expenses of administering the Partnership (other than the Management Fee), and providing such services to the Partnership as are required to be provided by it pursuant to this Agreement, including office expenses, travel expenses (other than as provided for in Section 8.2(iv)), salaries and employee benefits, and other overhead expenses of the Partnership and all out-of-pocket costs of evaluating and developing potential Portfolio Investments or Short-Term Investments (other than fees and 36 -33- expenses of third-party consultants and other advisors) and of making, holding or selling Portfolio Investments and Short-Term Investments (collectively, "Administrative Expenses"). The General Partner, at its expense, may contract with Conning & Company or its subsidiaries for the furnishing of all of such services. 8.2. Other Expenses. All reasonable costs and expenses of the Partnership and (to the extent fairly allocable to the Partnership) of the General Partner (other than Administrative Expenses) are "Other Expenses" and will be borne by and charged to the Partnership. Other Expenses will include, without limitation: (i) out-of-pocket expenses incurred by the Partnership or the General Partner in connection with the organization of the Partnership and the offering of the interests therein (but excluding any placement fees and expenses) ("Organizational Expenses") and fees and expenses of placement agents and syndication expenses in connection with the offering and formation of the Partnership ("Syndication Expenses") up to an aggregate of $750,000 with such expenses in excess of $750,000 to be offset against the Management Fee payable to the General Partner by the Partnership pursuant to Section 8.3(a); (ii) fees and expenses of consultants, appraisers, custodians, counsel, independent public accountants, actuaries and other agents; (iii) finders, placement, brokerage and other similar fees incurred making Portfolio Investments; (iv) out-of-pocket costs of meetings with (including travel), and reports to, the Limited Partners; (v) all expenses of the Advisory Committee; (vi) costs and expenses incurred for the preparation and distribution of financial reports, tax reports and other information for the benefit of the Limited Partners or as specifically requested by a Limited Partner; (vii) any taxes, fees or other governmental charges levied against the Partnership or its income or assets or in connection with its business or operations; (viii) costs of any agency or administrative actions or hearings, any governmental action or third-party litigation or other matters that are the subject of indemnification pursuant to Article 7 hereof; (ix) costs of winding-up and liquidating the Partnership; (x) fees and expenses incurred in connection with potential Portfolio Investments that are not consummated by the Partnership; and (xi) all other costs and expenses of the Partnership or the General Partner in connection with this Agreement other than Administrative Expenses. 8.3. Management Fee. (a) Amount. The Partnership shall pay to the General Partner an annual management fee (the "Management Fee") computed as follows: (i) during the term of the Investment Period, 2.0% of aggregate Capital Commitments of the Partnership and (ii) during the period following the end of the Investment Period until the date of the Final Distribution, 2.0% of aggregate amount of Capital Commitments of the Partnership invested in Portfolio Investments of the Partnership which are unrealized as of the beginning of such period for which the Management Fee is due and payable pursuant to Section 8.3(b) below. The Management Fee shall be payable for the period commencing on the date of formation of the Partnership and terminating on the date of the Final Distribution. The amount of the Management Fee shall be reduced by the amount of Syndication Expenses and Organization Expenses in excess of $750,000. Any amount of such excess Syndication Expenses and Organization Expenses to be offset against the Management Fee shall reduce the annual Management Fee due and payable to the General Partner pursuant to Section 8.3(b) below on a pro rata basis applied over the five years following the determination date of such amount. 37 -34- (b) Payment. The Management Fee, calculated as provided in this Section 8.3, shall be payable quarterly in advance, for the period commencing with the date of this Agreement until the Final Distribution. The initial payment shall be due as part of the Initial Capital Call and thereafter will be made on each, January 1, April 1, July 1 and October 1 thereafter. Quarterly installments for any period less than a full quarter shall be prorated on the basis of the actual number of days elapsed. Upon the admission of any Additional Limited Partner or the making of any additional Capital Commitment to the Partnership by any Limited Partner pursuant to Section 2.3, the Management Fee (the "Late Management Fee") attributable to the Capital Commitment of such Additional Limited Partner (or to the additional Capital Commitment of such existing Limited Partner) for the period commencing on the date of the inception of the Partnership and terminating on the last day in the fiscal quarter in which such Partner is admitted (or makes such additional Capital Commitment) and the amount of such Partner's Late Payment Fees relating to interest on the Late Management Fee pursuant to Section 2.3(c)(i) shall be payable on the date of admission (or the date of making such additional Capital Commitment). (c) Adjustments. The following adjustments shall be made to the Management Fee: (i) Director's fees, consulting fees, commitment fees, monitoring fees, break-up fees and success fees (excluding any options, warrants or other equity securities awarded or otherwise issued to directors of a Portfolio Entity) paid during such year to the General Partner, to any member of the General Partner by Portfolio Entities for services rendered by such persons ("Portfolio Entity Remuneration") shall be used first to offset any transaction expenses advanced by such service provider and not reimbursed by the Partnership. Any remaining Portfolio Entity Remuneration shall be used to reduce the Management Fee (but not below zero) by 50% of such remaining amount, in accordance with the terms of Sections 8.3(c)(ii) and (iii) below. (ii) The amount of any Portfolio Entity Remuneration to be so applied shall be applied first against the quarterly payment next following the date of the determination of such net remuneration and then against each successive quarterly payment until such net remuneration has been fully utilized, provided that no amount shall be carried over as a credit from any fiscal year to the next. (iii) For purposes of 8.3(c)(ii), a fee reduction shall be deemed to have occurred when Portfolio Entity Remuneration is actually received by the remunerated Person and the amount of the net remuneration (and related reduction) has been determined in good faith by the General Partner. In the case of any fees paid in consideration other than cash (excluding any options, warrants or other equity securities awarded or otherwise issued to directors of a Portfolio Entity), such fees shall be deemed to have been received by the remunerated Person when such consideration has been disposed of for cash and shall be deemed to be in an amount equal to the proceeds of such disposition net of acquisition and other transaction expenses (including taxes, if any). 38 -35- 9. BOOKS AND RECORDS; REPORTS TO PARTNERS. 9.1. Books and Records. (a) General. The General Partner shall keep or cause to be kept complete and accurate records and books of account in which shall be entered all such transactions and other matters relative to the Partnership's business as are usually entered into records and books of account maintained by persons engaged in businesses of like character or which are required by the Act. Such books and records shall, to the extent consistent with all other provisions of this Agreement, be maintained for all purposes in accordance with generally accepted accounting principles consistently applied. (b) Maintenance; Inspection. The books and records of the Partnership shall be maintained at the offices of the General Partner, and all such books and records shall be available for inspection and copying at the reasonable request, and at the expense, of any Partner during ordinary business hours. All Partners shall also have the right, at their expense and during ordinary business hours, to meet with the Partnership's accountants. 9.2. Tax Information. The General Partner shall use its reasonable efforts to send to each person who was a Partner at any time during a Fiscal Year such Partnership tax information as shall be necessary for the preparation by such person of its Federal tax returns (including information returns) within seventy-five (75) days (but in no event later than ninety (90) days after the end of each Fiscal Year); and, to this end, upon specific request by a Partner, the General Partner shall provide each such Partner with a copy of the Partnership's estimated and unaudited financial statements for each Fiscal Year within forty-five (45) days after the close of such Fiscal Year. Upon the request of any Limited Partner, the General Partner will undertake to furnish to such person such additional information as may be necessary to enable such person to file other required returns or reports with governmental agencies. 9.3. Reports to Partners. (a) Annual Period. Within ninety (90) days after the end of each Fiscal Year of the Partnership, the General Partner shall send to each Limited Partner the following audited financial statements, prepared in accordance with generally accepted accounting principles (the "Annual Financial Statements"): (i) a balance sheet of the Partnership as of the end of such year; (ii) a statement of income of the Partnership for such year; (iii) a statement of cash flows of the Partnership for such year; (iv) a statement of changes in Partner's Capital Account for such year; (v) schedules detailing each Portfolio Investment of the Partnership as of the end of such year and setting forth both the cost and the General Partner's good faith estimate of the Carrying Value of each Portfolio Investment as of the end of such year presented substantially in the format 39 -36- that such information has been presented to investors in the Prior Funds; and (vi) notes to the audited financial statements. The General Partner shall cause an audit of the Annual Financial Statements to be made by the Partnership's independent public accountants, which audit shall be conducted in accordance with generally accepted auditing standards. The General Partner will select a nationally recognized independent public accounting firm on behalf of the Partnership. Upon reasonable request of a Limited Partner, the General Partner will use its reasonable efforts to provide such other additional information relating directly to the requesting Limited Partner's interest in the Partnership, subject to Section 17-305 of the LP Act. (b) Quarterly Period. Within forty-five (45) days after the end of the first, second, third and fourth fiscal quarters of the Partnership, the General Partner shall send to each Limited Partner: (i) a report summarizing the status of the Partnership and each Portfolio Investment of the Partnership as of the end of such period and setting forth the General Partner's good faith estimate of the Carrying Value of each Portfolio Investment as of the end of such period presented substantially in the format that such information has been presented to investors in the Prior Funds; (ii) a balance sheet, statement of income and cash flows and statement of changes in Capital Account balances for the Partnership with respect to such period (prepared on a pro forma basis, unaudited); and (iii) notice of the commencement of any event during such period entitling the Limited Partners to vote to terminate the Partnership or to vote to remove the General Partner. (c) Notices. The General Partner shall send to each Limited Partner notice of the bringing of any action or proceeding against the General Partner by one or more Limited Partners within twenty (20) days of the commencement thereof. 9.4. Meetings. The General Partner shall hold an annual meeting of the Partners on such date as the General Partners may determine and give at least thirty (30) days' prior written notice to the Limited Partner, at which the General Partner shall report on the Portfolio Investments of the Partnership. 9.5. Compliance with Laws. The General Partner shall conduct its affairs and shall conduct the affairs of the Partnership in such a manner that no Limited Partner will have any personal liability with respect to any obligation of the Partnership except as expressly assumed by any Limited Partner or as otherwise provided by law and generally so as to comply with all material laws as applicable to it (including without limitation the Foreign Corrupt Practices Act). The General Partner shall use its best efforts to cause all registrations or notices required under the LP Act to be submitted or made in accordance with the provisions of the LP Act and shall indemnify and keep indemnified each of the Limited Partners from and against any and all costs, expenses, claims, damages and liabilities to which they may become subject which result from the failure by the General Partner to comply with the requirements of the LP Act; provided, however, that the General Partner shall not be under any obligation to indemnify and keep indemnified each of the Limited Partners where such costs, expenses, claim damages or liabilities arise or result from a breach by a Limited Partner of its representations and warranties contained in the Subscription Agreement between the General Partner and the Limited Partners. 40 -37- 10. TRANSFERS 10.1. Transfer by General Partner. The General Partner shall not assign or otherwise transfer (collectively, "Transfer") its interest, and shall not voluntarily withdraw as General Partner of the Partnership, except with the consent of Two-Thirds in Interest of the Limited Partners; provided, however, that the General Partner may Transfer its interest to any successor of the General Partner or Affiliate of Conning Corporation without the consent of the Limited Partners. 10.2. Removal of General Partner. (a) Actions and Conditions. The General Partner may be removed by the action, evidenced by a written notice delivered in accordance with the requirements of Section 13.5, and executed by a Majority in Interest of the Limited Partners if, but only if: (i) the General Partner shall be in material violation of this Agreement and such violation shall have continued for a period of thirty (30) days after receipt by the General Partner of written notice thereof in accordance with the requirements of Section 13.5, executed by a Majority in Interest of the Limited Partners; or (ii) the General Partner shall have been determined by a court of competent jurisdiction to be guilty of gross negligence, fraud or willful misconduct in the conduct of the business or affairs of the Partnership or of any felony (it being understood that the General Partner shall promptly send written notice of any such determination to the Limited Partners). The General Partner may be removed for any reason by the action of Eighty Percent (80%) in Interest of the Limited Partners, evidenced by a written notice delivered in accordance with the requirements of Section 13.5 and executed by Eighty Percent (80%) in Interest of the Limited Partners. Except as provided in Section 10.2(b), the General Partner shall cease to be the general partner of the Partnership upon its removal or upon the occurrence of any other Event of Withdrawal and the provisions of Section 5.4 hereof shall terminate at such time. (b) Effect. Upon the removal of the General Partner or upon the occurrence of any other Event of Withdrawal, the Partnership shall be dissolved and wound up in accordance with the provisions of Sections 11.2 and 11.3, unless within ninety (90) days thereafter Eighty Percent (80%) in Interest of the Limited Partners agree in writing to continue the business of the Partnership and to the appointment of one or more general partners to replace the General Partner. 10.3. Transfer by Limited Partners. Subject at all times to Sections 10.4 and 10.5 and unless approved in advance by the General Partner under this Section 10.3, a Limited Partner may not Transfer all or any part of its Interest in the Partnership to another person (an "Assignee"). Notwithstanding the foregoing, upon reasonable prior written notice to the General Partner, a Limited Partner may Transfer all or any part of its Interest in the Partnership to an Assignee without such consent of the General Partner (but still subject to Sections 10.4 and 10.5): (i) to any entity that controls, is controlled by or is under common control with such Limited Partner; (ii) to any successor in interest upon the sale of all or substantially all of the assets of the Limited Partner or in connection with a merger, consolidation or dissolution of any corporate Limited Partner; (iii) as may be required by any law or regulation; (iv) by testamentary disposition or intestate succession; or (v) to a trust, profit sharing plan or other entity controlled by, or for the benefit of, such Limited Partner or one or more family members. Further, any 41 -38- change in any trustee or fiduciary of a Limited Partner shall not be considered to be a Transfer; provided, however, that (i) any replacement trustee or fiduciary of an ERISA Partner is also a fiduciary under ERISA and (ii) written notice of such change is given to the General Partner within a reasonable period of time after the effective date thereof. For purposes of this Section 10.3, "control" shall mean beneficial ownership of at least sixty percent (60%) of the outstanding interests of the subject entity. No Assignee shall have the right to become a Limited Partner (a "Substitute Limited Partner") upon the Transfer of a Limited Partner's Interest in the Partnership, unless all of the following conditions are satisfied: (i) a duly executed and acknowledged written instrument of assignment shall have been filed with the Partnership; (ii) the Limited Partner and the Assignee shall have executed and acknowledged such other instruments and taken such other actions as the General Partner shall deem reasonably necessary or desirable to effect such substitution, including, without limitation, the execution by the Assignee of a counterpart of or an appropriate supplement to this Agreement pursuant to which such Assignee agrees to be bound by the terms and provisions hereof; (iii) the conditions set forth in Section 10.4 have been satisfied, and, if requested by the General Partner, the Limited Partner or the Assignee shall have obtained an opinion of counsel reasonably satisfactory to the General Partner (which may include in-house counsel for such Limited Partner) as to the legal matters set forth therein; (iv) the Limited Partner or the Assignee shall have paid to the Partnership such amount of money as is sufficient to cover all expenses incurred by or on behalf of the Partnership in connection with such substitution; and (v) unless the Assignee is an Affiliate of the Limited Partner, the General Partner shall have consented in writing to such substitution, which consent will not be withheld unreasonably. 10.4. Certain Restrictions on Transfers. Notwithstanding any other provision of this Agreement, no Partner may Transfer in any manner whatsoever all or any part of its Interest in the Partnership, and no attempted or purported Transfer of such Interest shall be effective, unless: (i) such Transfer would not result in a violation of applicable law including any Federal or state securities laws or any term or condition of this Agreement; (ii) such Transfer would not result in a requirement that the Partnership register as an investment company under the Investment Company Act of 1940, as amended; (iii) if such Transfer is to an employee benefit plan within the meaning of ERISA, the General Partner shall have consented thereto; (iv) such Transfer is to an entity which the General Partner deems to be a Qualified Investor; and (v) such Transfer would not result in the Partnership being characterized as a publicly-traded partnership for Federal income tax purposes under Section 7704 of the Code. To this end, the General Partner shall be permitted to require and rely on representations made by the transferor Partner and the transferee Partner in connection with any proposed Transfer of all or any portion of any Interest to the extent that the General Partner determines that such representations are necessary or appropriate to satisfy the provisions of this Section 10.4. 42 -39- 10.5 Further Restrictions. Any Transfer or withdrawal under this Article 10 shall be subject to the restrictions in this Section 10.5. The following provisions are included in this Agreement to prevent the Partnership from being classified as a "publicly traded partnership", as defined in Section 7704 of the Code, that is taxable at the entity level: (i) The General Partner shall not cause or permit (x) any offering of Partnership interests to be registered under the Securities Act, or (y) interests in the Partnership to become "traded on an established securities market," and shall withhold its consent to any Transfer that, to the General Partner's knowledge after reasonable inquiry, would otherwise be accomplished by a trade on a "secondary market or the substantial equivalent thereof," in each case within the meaning of Sections 7704 or 469(k) of the Code and/or any Treasury Regulations; (ii) No Transfer of any Partnership interest or portion thereof shall be permitted or recognized (within the meaning of Treasury Regulation Section 1.7704-1(d)) by the Partnership or the General Partner if and to the extent that such Transfer, if made, would (x) fail to qualify as a "transfer not involving trading" pursuant to Treasury Regulation Section 1.7704-1(e), and (y) cause the Partnership to fail to qualify for the safe harbor for "private placements" set forth in Section 1.7704-1(h), and (z) cause the Partnership to fail to qualify for the "lack of actual trading" safe harbor set forth in Treasury Regulation Section 1.7704-1(j), unless the General Partner together with the Partnership's tax advisors determines that such Transfer would not otherwise cause the Partnership to be treated as a publicly traded Partnership under Section 7704(b) of the Code; and (iii) The transferor and transferee shall provide the General Partner, in connection with any proposed Transfer, written representations to the effect that (x) the proposed Transfer will not be effected on or through (1) a United States national, regional or local securities exchange, (2) a foreign securities exchange or (3) an interdealer quotation system that regularly disseminates firm buy or sell quotations by identified brokers or dealers (including, without limitation, the Nasdaq Automated Quotation System) and (y) such Person is not, and its proposed Transfer or acquisition (as the case may be) will not be made by, through or on behalf of, (1) a Person, such as a broker or a dealer, making a market in interests in the Partnership, or (2) a Person who makes available to the public bid or offer quotes with respect to interests in the Partnership; and shall provide such additional written representations as the General Partner reasonably may request to enable it to comply with this clause (iii), and the General Partner and counsel to the Partnership shall be permitted to rely upon such representations and on written representations from other Partners made prior to or contemporaneously with such proposed Transfer. 10.6. Actions. In the event that a Limited Partner completes an approved Transfer of an Interest, the General Partner is authorized to cause Schedule I to be amended to reflect as appropriate the occurrence of any of the transactions referred to in this Article 10. 43 -40- 11. DURATION AND TERMINATION OF THE PARTNERSHIP. 11.1. Duration. The existence of the Partnership commenced on the date of the filing of the Certificate of Limited Partnership pursuant to the LP Act and its term shall continue until the first to occur of any of the following events (an "Event of Termination"): (i) the tenth (10th) anniversary of the date of this Agreement; provided, however, that the General Partner may extend the term of the Partnership for up to two (2) additional one year terms to provide for the orderly termination and liquidation of the Partnership's Portfolio Investments; (ii) the decision by the General Partner to terminate the Partnership, together with the consent of Two-Thirds in Interest of the Limited Partners; (iii) the failure by the Limited Partners to continue the business of the Partnership, in accordance with the provisions of paragraph (b) of Section 10.2, following an Event of Withdrawal; (iv) the vote to terminate the Partnership by a Majority in Interest of the Limited Partners, in the event the Internal Revenue Service makes a determination, which is final except for the right of judicial review, or a court of competent jurisdiction makes a determination, that the Partnership is or is taxable as an association taxable as a corporation for Federal income tax purposes; (v) the election of the General Partner to terminate the Partnership after the failure of the Limited Partners to terminate the Suspension Period Restrictions in accordance with the provisions of Section 5.6; or (vi) the vote to terminate the Partnership by Eighty Percent in Interest of the Limited Partners. Upon the occurrence of an Event of Termination, the General Partner shall promptly provide notice thereof to each Limited Partner. 11.2. Winding Up. Upon the occurrence of an Event of Termination, the Partnership shall be wound up, liquidated and dissolved as promptly as reasonably practicable. The General Partner or, if there is no General Partner, a liquidator appointed by a Majority in Interest of the Limited Partners, shall proceed with the Dissolution Sale. In the Dissolution Sale, the General Partner or such liquidator shall use its best efforts to reduce the Securities of the Partnership to cash, subject to obtaining Carrying Value for such Securities and any tax or legal considerations. In the event that the General Partner or such liquidator is unable to reduce the Non-Marketable Securities of the Partnership to cash, the General Partner or liquidator, in its sole discretion, may enter into arrangements or form a vehicle to manage such Non-Marketable Securities until they can be reduced to cash. Any such Limited Partner shall give notice of its desire to have the General Partner or liquidator form such a vehicle within ten (10) days after notice from the General Partner or liquidator which states that the General Partner or liquidator is unable to reduce the Securities of the Partnership to cash, consistent with obtaining Carrying Value, and which sets forth the proposed terms of such vehicle and may designate a trustee other than the 44 -41- General Partner. The General Partner or liquidator shall be entitled to reasonable compensation for managing such vehicle and shall not be obligated to manage such vehicle for more than three (3) years. 11.3. Final Distribution. (a) Carrying Value of Assets. The Net Income or Net Losses of the Partnership from the Dissolution Sale shall be allocated to the Partners' Capital Accounts in accordance with Article 3. All securities remaining in the Partnership upon completion of the Dissolution Sale shall be deemed to have been sold at their Carrying Value and the amount of any gain or loss which would have been realized upon a sale for such value shall be deemed to have been realized and recognized for the purposes of computing the final allocations to the Capital Accounts in accordance with Article 3. (b) General Partner Account. If after final allocations to the Capital Accounts of the Partners, the Capital Account of the General Partner is negative, the General Partner shall contribute to the Partnership sufficient cash or Securities previously distributed to the General Partner (valued as of the date of return under Section 4.7) so that the balance of the Capital Account of the General Partner is increased to zero. Notwithstanding the preceding sentence, in no event shall the General Partner be required to return to the Partnership an amount that is in excess of the amount described in Section 4.9 hereof. If any Securities are so returned, they shall be valued at their Carrying Value at the time they are returned by the General Partner. (c) Limited Partners' Accounts. The General Partner may require a Limited Partner (including any former Limited Partner) to return distributions made to such Limited Partner or former Limited Partner for the purpose of meeting such Limited Partner's pro rata share of the Partnership's indemnity obligations under Section 7 or any other liability of or claim against the Partnership for which the Partnership has insufficient funds to pay (after calling any unpaid Capital Commitments) in an amount up to, but in no event in excess of, the aggregate amount of Distributions actually received by such Limited Partner from the Partnership; provided, however, that for such purposes no Partner shall be required to return an aggregate amount of Distributions in excess of fifty percent (50%) of such Partner's Capital Commitment. Notwithstanding the terms of this Agreement, if it is determined under the LP Act or other applicable law that any Limited Partner has received a Distribution which it is required to return to or for the account of the Partnership or Partnership creditors, then such Partner shall be obligated to return such Distribution in the full amount required under the LP Act or other applicable law. The obligation of any Limited Partner to return all or any part of a Distribution made to such Limited Partner shall be the obligation of such Limited Partner only and not of any other Partner. Any amount returned by a Limited Partner pursuant to this Section 11.3(c) shall be treated as a contribution of capital to the Partnership. The General Partner shall be required to return (at the same time as the Limited Partners) its pro rata portion (as provided below) of any amounts required to be returned by Limited Partners under this Section 11.3(c). A Partner's share of the giveback obligation under this Section 11.3(c) will be based on the amount of distributions received by such Partner arising out of the Portfolio Investment giving rise to the Partnership's indemnity obligations under Section 7 or other liability or claim; provided, however, that if such indemnity obligations or other liability or claim are not related to a particular Portfolio Investment, then amounts required to be returned under this Section 11.3(c) will be funded out of distributions generally to those Partners or former Partners who were 45 -42- Partners at or after the time of the event giving rise to such indemnity obligations or other liability or claim. Notwithstanding the foregoing, no Limited Partner shall be required to return a distribution after the first anniversary of the Final Distribution; provided, however, that if at the end of such period, there are any proceedings under Section 7 then pending or any other liability (whether contingent or otherwise) or claim then outstanding, the General Partner shall so notify the Limited Partners at such time (which notice shall include a brief description of each such proceeding (and of the liabilities asserted in such proceeding) or of such liabilities and claims) and the obligation of the Limited Partners to return any distribution for the purpose of meeting their giveback obligations under the Section 11.3 shall survive with respect to each such proceeding, liability or claim set forth in such notice (or any related proceeding, liability or claim based upon the same or similar claim) until the date that such proceeding, liability or claim is ultimately resolved and satisfied. (d) Priority of Distributions. The cash and any other property remaining in the Partnership upon completion of the Dissolution Sale shall be applied or distributed as a final distribution (a "Final Distribution") in one or more installments in the following order of priority: (i) to creditors of the Partnership, including Partners who are creditors, in the order of priority as provided by law; and (ii) to the Partners, in proportion to the amounts in their Capital Accounts. 12. DEFINITIONS. As used herein, the following terms have the following meanings: 7% Distribution Preference means, with respect to any Partner and at any time, an amount which if distributed to such Partner at such time would cause the aggregate amount of distributions made to such Partner and such Partner's predecessors in interest by the Partnership (determined, with respect to distributions in kind, pursuant to Section 4.6) to equal but not exceed an amount equal to such Partner's (and any such predecessor's) Aggregate 7% Preferential Return as of such time. 7% Preferential Return means, with respect to any Partner and as of the end of any fiscal quarter, an amount (not less than zero) equal to such Partner's Return Base as of the last day of the preceding fiscal quarter multiplied by 0.017059% (the equivalent, with quarterly compounding, of 7% compounded annually). A Partner's 7% Preferential Return for any fiscal period consisting of less than a full fiscal quarter shall be determined through proration on a daily basis by (1) multiplying 0.017059% times a fraction, the numerator of which is the actual number of days in such fiscal period and the denominator of which is the actual number of days in the fiscal quarter that includes such fiscal period; and (2) multiplying the result by such Partner's Return Base as of the end of the preceding fiscal quarter. 7% Preferential Return Allocation means, with respect to any Partner and as of the end of any fiscal period: (a) such Partner's Aggregate 7% Preferential Return determined as of the end of such fiscal period; reduced, but not below zero, by (b) the excess (if any) of (1) the aggregate amount of Net Income previously allocated to such Partner and such Partner's predecessors in 46 -43- interest (if any) over (2) the aggregate amount of Net Loss previously allocated to such Partner and such predecessors, in each case since the inception of the Partnership. Additional Limited Partner: An additional Limited Partner admitted to the Partnership pursuant to Section 2.2. Administrative Expenses: As defined in Section 8.1. Advisory Committee: As defined in Section 5.3. Affiliate: As to any person, any other person directly or indirectly controlling, controlled by, or under common control with, such person. Aggregate 7% Preferential Return means, with respect to any Partner and fiscal period, the sum of such Partner's 7% Preferential Returns for each calendar quarter (and partial quarter) from the inception of the Partnership through the end of such fiscal period. Agreement: This Limited Partnership Agreement, as amended from time to time. Annual Financial Statements: As defined in Section 9.3(b). Assignee: As defined in Section 10.3. Bank Regulated Partner: A Limited Partner which is a bank holding company as defined in Section 2 (c) of the Bank Holding Company Act of 1956, or an Affiliate thereof. Capital Account: The capital account of each Partner on the books of the Partnership, as described in Section 3.1. Capital Commitment: As to any Limited Partner, the amount of capital committed to be contributed to the Partnership by such Limited Partner as shown on Schedule I hereto, as revised from time to time in accordance with this Agreement. Capital Contribution: As to any Partner at any time, the capital contributed to the Partnership by such Partner at or before such time, including any additional Capital Contribution of such Partner under Section 3.6(c) and any amount allocated to the Capital Account of such Partner under Section 3.6(d), less any deduction pursuant to such Section. Carrying Value: The value of Securities as determined in accordance with the procedures set forth in Section 4.7. Certificate of Limited Partnership: The Certificate of Limited Partnership of the Partnership, as amended from time to time. Code: The Internal Revenue Code of 1986, as amended from time to time; and Treas. Reg. means the Treasury Regulation and related rules promulgated under the Code. 47 -44- Cost: With respect to Partnership assets and unless the context otherwise requires, the Partnership's adjusted tax basis in such assets for federal income tax purposes, provided, however, that, if the Partnership has made an election under Section 754 of the Code, such tax basis shall be determined after giving effect to adjustments made under Section 734 of the Code but (except as provided in Treasury Regulations Section 1.734-2(b)(1)) without regard to adjustments made under Section 743 of the Code. Cumulative Net Income: As of the time of any determination, the excess (if any) of the cumulative Net Income of the Partnership from its inception through and including such time over the cumulative Net Losses of the Partnership over that period. Custodian: As defined in Section 5.5. Defaulting Limited Partner: As defined in Section 3.6(a). Disposed Investments: As of any time of determination, all Portfolio Investments that have been sold, distributed to the Partners, written off as worthless securities, or otherwise disposed of, in whole or in part, to the extent so distributed or disposed of at or prior to the date of determination; provided, however, that any exchange of any securities of a Portfolio Entity for other securities or property (other than cash or cash equivalents) shall not constitute a disposition of the original securities. For this purpose, the following events shall be treated as partial dispositions of securities: (a) Each principal payment (or portion thereof) on any security that constitutes a debt instrument for federal income tax purposes shall be treated as a disposition of a portion of such security that is equivalent on a percentage basis to the portion of the original principal amount of such debt instrument represented by such principal payment; (b) In the event that the Partnership agrees to capitalize any interest that is accrued but remains unpaid on any security that constitutes a debt instrument for federal income tax purposes and to add such interest to principal, the amount so capitalized shall be treated, solely for purposes of determining whether payments subsequently made to the Partnership with respect to such security will constitute Distributions, as a follow-on investment in the debt securities of the issuer, and any determination regarding the extent to which subsequent payments made to the Partnership with respect to the original or any such follow-on investment in debt securities is properly treated as a payment of principal shall be made in accordance with federal income tax principles; (c) Each payment (or portion thereof) made to the Partnership in redemption of any security constituting stock for federal income tax purposes that is treated for such purposes as a distribution in part or full payment in exchange for such stock (rather than, for example, a dividend paid on such security) shall be treated as a disposition of the portion of such security treated for such purposes as having been exchanged; (d) Any partial repurchase by the issuer and any lapse or other termination of part of any security constituting an option or warrant for federal income tax purposes shall be treated as a disposition of a portion of such security that is equivalent on a percentage basis to the portion of the Partnership's investment in such security (as reflected in the Partnership's 48 -45- financial records maintained in accordance with federal income tax principles) represented by the portion of such security that was repurchased, lapsed or terminated; and (e) With respect to any Portfolio Investment that is subject to a Net Write-Down, such Portfolio Investment shall be treated as a Disposed Investment to the extent of such Net Write-Down while such Net Write-Down is in effect. In the event that the General Partner determines, pursuant to 4.2, to cause a portion of the proceeds attributable to the disposition of any Portfolio Investment to be retained by the Partnership and invested in other Portfolio Investments, then, for purposes of determining the Partners' Priority Return Amounts, the following portion of the original Portfolio Investment shall not be treated as Disposed Investments: the entire amount of such original Portfolio Investment multiplied by a fraction, the numerator of which is the amount of such proceeds reinvested in new Portfolio Investments and the denominator of which is the total amount of proceeds attributable to the disposition of such original Portfolio Investment. Dissolution Sale: All sales and liquidations by or on behalf of the Partnership of all or substantially all of its assets in connection with or in contemplation of the winding up of the Partnership. Distribution: Any distribution made by the Partnership to any one or more Partners. ERISA Partner: Any Limited Partner which is (a) an "employee benefit plan" within the meaning of Section 3(3) of ERISA and subject to Part 4 of Title I of ERISA, (b) a "plan," as defined in Section 4975(e)(1) of the Code, to which the provisions of section 4975 of the Code are applicable, or (c) any other Person, any of the assets of which constitute "plan assets," within the meaning of the Plan Assets Regulation, of a plan described in (a) or (b) above. Event of Termination: As defined in Section 11.1. Event of Withdrawal: Any of the following events with respect to the General Partner: (a) the General Partner withdraws from the Partnership as provided in Section 17-602 of the LP Act; (b) the General Partner ceases to be a member of the Partnership as provided in Section 10.1; (c) the General Partner is removed as a General Partner in accordance with Section 10.2; (d) the General Partner: (i) makes an assignment for the benefit of creditors; (ii) files a voluntary petition in bankruptcy; (iii) is adjudicated a bankrupt or insolvent; (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation; (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding of this nature; or (vi) seeks, consents to, or acquiesces in the appointment of 49 -46- a trustee, receiver, or liquidator of the General Partner or of all or any substantial part of its properties; (e) if within one hundred twenty (120) days after the commencement of any proceeding against the General Partner seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, the proceeding has not been dismissed, or if within ninety (90) days after the appointment without its consent or acquiescence of a trustee, receiver or liquidator of the General Partner or of all or any substantial part of its properties, the appointment is not vacated or stayed, or if within ninety (90) days after the expiration of any such stay, the appointment is not vacated; or (f) the dissolution and commencement of winding up of the General Partner Excluded Investment: As defined in Section 6.6(a). Excused Partner: As defined in Section 6.6(a). Expenses: For any Fiscal Period, expenses or losses of the Partnership incurred during such Fiscal Period, as determined pursuant to accrual method Federal income tax accounting principles, including, without limitation, all amounts borne by and charged to the Partnership pursuant to Sections 8.2 and 8.3. Final Distribution: As defined in Section 11.3(c). Fiscal Period: Any Fiscal Year or Interim Accounting Period. Fiscal Year: As defined in Section 1.5. General Partner: Conning Investment Partners VI, L.L.C., a limited liability company organized and existing under the laws of the state of Delaware. Income: For any Fiscal Period, all income and gains of the Partnership recognized for Federal income tax purposes, plus all income earned by the Partnership which is exempt from Federal income tax. Indemnitee: As defined in Section 7.1. Interest: An interest as a Partner in the Partnership. Interim Accounting Period: As defined in Section 3.5. Investment Guidelines: As defined in Section 5.1. Investment Period: As defined in Section 2.2(b). Key Person Trigger Event: As defined in Section 5.6. Late Expense: As defined in Section 3.3(c). Late Management Fee: As defined in Section 8.3(b). 50 -47- Late Payment Fees: As defined in Section 2.3(c). Late Portfolio Investment Capital Contribution: As defined in Section 2.3(c). Liabilities: As defined in Section 7.1. Limited Partner Percentage: As to any Limited Partner for any Fiscal Period, the fraction, expressed as a percentage, having as its numerator the balance of the Capital Contributions of such Limited Partner immediately prior to the end of such Fiscal Period and having as its denominator the aggregate amount of the balances of all of the Capital Contributions of all of the Limited Partners immediately prior to the end of such Fiscal Period. Limited Partners: At any time, the limited partners of the Partnership. LP Act: The Uniform Limited Partnership Act, as adopted by the State of Delaware and as amended from time to time. Majority [or Two-Thirds or Eighty Percent or X%] in Interest of the Limited Partners: At any time, Limited Partners whose Limited Partner Percentages aggregate more than the requisite designated percentage (i.e., Majority, Two-Thirds, Eighty Percent, as the case may be) of the Limited Partner Percentages of all the Limited Partners in the Partnership. Management Fee: As defined in Section 8.3. Marketable Securities: Securities that are traded on a national securities exchange or reported through the automated quotation system of a registered securities association and which at the same time are not subject to restrictions on transfer of the sort referred to in Section 4.6(b). Net Asset Value: As of any date, the amount by which the value of the Partnership's assets, determined in accordance with Section 4.7, exceeds the amount of its liabilities. Net Income: For any Fiscal Period, the excess, if any, of the Income of the Partnership over Expenses for such Fiscal Period. Net Losses: For any Fiscal Period, the excess, if any, of the Expenses of the Partnership over the Income of the Partnership for such Fiscal Period. Net Write-Down: As of any time, the sum of the amounts by which any Portfolio Investment that is not a Disposed Investment in its entirety has been written down on the Partnership's books in accordance with the rules set forth below to less than its Cost, but only to the extent that such write-down has not previously been offset by a corresponding write-up. (a) In the case of any Portfolio Investment for which market quotations are readily available, then, solely for purposes of determining the apportionment of distributions among the Partners: 51 -48- (i) the General Partner shall adjust the value of such investment as shown in the Partnership's financial records to its Carrying Value (determined in accordance with Section 4.7) at the end of the fiscal period in question, and (ii) if the Carrying Value of any such Portfolio Investment that previously has been subject to a downward adjustment subsequently increases, the General Partner shall adjust the value of such investment as shown in the Partnership's financial records to its Carrying Value at the end of the period in question. (b) In the case of any Portfolio Investment for which market quotations are not readily available: (i) if the General Partner shall determine in the good faith exercise of its discretion that there has been a significant decline as of the end of any fiscal period in the Carrying Value of such Portfolio Investment, then, solely for purposes of determining the apportionment of distributions among the Partners, the General Partner shall write down the value of such investment in the Partnership's financial records by the amount of such decline not previously taken into account in making such a downward adjustment; and (ii) if the General Partner shall determine in the good faith exercise of its discretion (after consultation with the Partnership's independent accountants) that as of the end of any fiscal period there has been a significant reversal or mitigation of circumstances previously giving rise to a write-down in the value of such Portfolio Investment, then, solely for purposes of determining the apportionment of distributions among the Partners, the General Partner shall write up the value of such investment by any amount (as determined in its sole discretion) not previously taken into account in making such an upward adjustment; and (iii) In the case of any such Portfolio Investment that is a debt obligation, (A) the determination by the General Partner of the decline in such Carrying Value shall take into account only changes in the creditworthiness of the issuer of the obligation and not any changes which may have taken place in general interest rate levels, and (B) any such determination of creditworthiness may be made by reference to the rating of the issuer's outstanding debt by Standard & Poors Corporation, Moody's Investor Service, Inc. or any other nationally-recognized rating organization in the United States, the issuer's NAIC rating, and such other information as the General Partner may deem relevant. (c) In no event shall any Portfolio Investment be written up for these purposes to an amount exceeding the Cost of that security. 52 -49- Non-Marketable Securities: Any securities other than Marketable Securities. Optionees: As defined in Section 3.6(e). Optionor: As defined in Section 3.6(e). Organizational Expenses: As defined in Section 8.2. Other Expenses: As defined in Section 8.2. Partners: As defined in Section 1.1. Partnership: Conning Capital Partners VI, L.P., the Delaware limited partnership, referred to in the first paragraph of this Agreement. Partnership Return: The return of partnership income which the Partnership is required to file with respect to any taxable year pursuant to Section 6031 of the Code. Portfolio Entity: As defined in Section 5.1. Portfolio Investment: As defined in Section 5.1. Prime Rate: the variable rate of interest, per annum, most recently published in the Wall Street Journal as its "prime rate." Principals: John B. Clinton, Gregory L. Batton, Stephan L. Christiansen, Scot Galliher, Preston B. Kavanagh, Steven F. Piaker and Gerard Vecchio. Priority Return Amount: With respect to any Partner and at any time, an amount which, if distributed to such Partner at such time, would cause the aggregate amount of distributions made by the Partnership to such Partner and such Partner's predecessors in interest from the inception of the Partnership through such time (other than those distributions necessary to satisfy the requirements of Section 4.3(ii)) to equal but not exceed that portion of such Partner's Capital Contribution that, at or prior to the time of determination, is reflected in the Partnership's books as having been used by the Partnership: (a) To acquire any Portfolio Investments that, as of such time, are Disposed Investments (including, for avoidance of doubt, any investments that are subject to a Net Write-Down, to the extent provided for in clause (e) in the definition of "Disposed Investments"), or (b) To pay any expenses properly borne by the Partnership under this Agreement (including but not limited to the Management Fee, Organizational Expenses and Syndication Expenses not in excess of $750,000 in the aggregate, and indemnification expenses, if any), but only: (i) To the extent of such Partner's proportionate share (based on its relative Capital Contribution) of the amount of such expenses attributable to investments that, at such time, are Disposed Investments; and 53 -50- (ii) To the extent that the Partnership has not, subsequent to the payment of such expenses but prior to the time of determination, used proceeds to acquire additional Portfolio Investments, at least equal in cost to the expenses so paid (in which event the Partners' Capital Contributions that were actually used to pay such expenses shall be deemed, for purposes of determining their Priority Return Amounts, to have been used to acquire such additional Portfolio Investments). For purposes of this definition, (A) any expenses borne by the Partnership shall be deemed to have been paid with Partnership funds other than the Partners' Capital Contributions to the extent that the Partnership has such other funds available to pay such expenses; (B) the aggregate amount of the Partnership's expenses from inception through any date of determination that have been paid with the Partners' Capital Contributions shall be apportioned among all Portfolio Investments (and the amounts so apportioned shall be deemed to be attributable to such Portfolio Investment) that were acquired by the Partnership since inception with the Partners' Capital Contributions in proportion to the relative Cost of such investments except that, to the extent that a particular Portfolio Investment has become a Disposed Investment, no further Partnership expenses shall be deemed to be attributable to that investment; (C) for purposes of the preceding clause (B), the General Partner may use any reasonable method (including but not limited to a quarterly or monthly convention) to determine the amount of expenses incurred from the Partnership's inception through such date of determination; and (D) in no event shall the Limited Partners' aggregate Priority Return Amounts exceed, at any time, their aggregate Capital Contributions at such time reduced (but not below zero) by the aggregate amount of Distributions previously distributed to them, other than those distributed pursuant to Section 4.3(ii) as 7% Distribution Preference amounts. Prior Funds: Conning Insurance Capital Limited Partnership, Conning Insurance Capital International Partners, Conning Insurance Capital Limited Partnership II, Conning Insurance Capital International Partners II, Conning Insurance Capital Limited Partnership III and Conning Insurance Capital International Partners III, L.P., Conning Connecticut Insurance Fund, L.P., and Conning Capital Partners V, L.P. Qualified Investor: An institutional or other sophisticated investor to which, in the opinion of the General Partner, an interest in the Partnership may be offered in a private placement without any violation of the Federal securities laws or any other applicable laws or regulations. Related Party: As defined in Section 5.4(e). Remaining Portion: As defined in Section 3.6(e)(ii). Return Base: shall mean, with respect to any Partner and as of any determination date, an amount, not less than zero, equal to: (a) such Partner's Return Base as of the end of the calendar quarter preceding such determination date (the "Prior Quarter"); (b) increased by 54 -51- (i) all Capital Contributions made by such Partner to fund Portfolio Investments (or pay related expenses subject to capitalization as part of the Cost of such investments for federal income tax purposes) to the extent that such contributions are both (A) received by the Partnership from such Partner at any time during or prior to the fiscal period commencing at the end of the Prior Quarter and ending at such determination date and (B) actually used by the Partnership during such fiscal period to make such Portfolio Investments, or pay such expenses (provided that, for this purpose, any such contributions received by the Partnership during any fiscal period and held by the Partnership for 60 days after receipt without being so used shall be deemed to have been so used as of the first day following the expiration of such 60-day period); (ii) all Capital Contributions made by such Partner for any purpose other than to fund Portfolio Investments (or pay related expenses subject to capitalization as part of the Cost of such investments for federal income tax purposes) to the extent that such contributions are received by the Partnership from such Partner during the fiscal period commencing at the end of the Prior Quarter and ending at such determination date; and (iii) such Partner's full 7% Preferential Return for the fiscal period commencing at the end of the Prior Quarter and ending at such determination date; and (c) reduced by an amount equal to the sum of all distributions made to such Partner by the Partnership during the fiscal period commencing at the end of the Prior Quarter and ending at such determination date. For purposes of the preceding sentence: (1) in determining such Partner's Return Base as of the Partnership's first determination date, the day on which such Partner made its initial capital contribution pursuant to this Agreement shall be deemed to constitute the end of the Prior Quarter; (2) except as provided in the preceding clause (1), any capital contribution actually received by the Partnership from such Partner during any calendar quarter or within five business days thereafter shall be deemed to have been received on the last day of such quarter; (3) any distribution actually made to such Partner by the Partnership during any calendar quarter or within five (5) business days thereafter shall be deemed to have been made on the last day of such quarter; (4) all contributions made to the Partnership by such Partner's predecessors in interest (if any), all distributions made by the Partnership to any such predecessors, and all 7% Preferential Returns of any such predecessors shall be taken into account as if such contributions had been made by, such distributions had been made to, and such 7% Preferential Returns had been for the benefit of, such Partner; (5) in the event the General Partner retains distributable amounts for reinvestment in accordance with Sections 4.2 and 5.1(a)(iv), only the cost basis of Securities constituting the Disposed Investment shall be included in the Return Base; and (6) distributions received by the General Partner shall be taken into account to reduce the General Partner's Return Base pursuant to clause (c) of this definition only to the extent of that portion of such distributions that the General Partner would have received if it had made its Capital Contributions to the Partnership in exchange for an interest as a Limited Partner and held no interest as a general partner of the Partnership (and another person had served as the General Partner hereunder). 55 -52- For avoidance of doubt, in the event that any Partner receives distributions that exceed the sum of such Partner's Aggregate 7% Preferential Return and Return Base, and subsequently makes contributions to the Partnership that otherwise would increase such Partner's Return Base, the resulting increase in such Partner's Return Base shall be limited to the excess, if any, of the amount so contributed over the sum of all such excess distributions. Deemed capital contributions attributable to default penalties imposed by Section 3.6(d) shall be treated for purposes of this definition as provided in that Section. Securities: Shares of capital stock, limited partnership interests, warrants, options, bonds, notes, rights, debentures and other securities and equity interests of whatever kind of any person, partnership, corporation or government, whether readily marketable or not. Securities Act: The Securities Act of 1933, as amended. Short-Term Investments: Any investment by the Partnership in U.S. government securities, certificates of deposit, commercial paper, and any other banking or money market instruments or in pooled investment accounts which in turn invest in such securities, which will have a rating of "BBB" or higher by Moody's Investors Services, Inc. or "Baa" or higher by Standard & Poors Corporation. Subscription Agreement: As defined in Section 9.5. Substitute Limited Partner: As defined in Section 10.3. Suspension Period Restrictions: As defined in Section 5.6. Syndication Expenses: As defined in Section 8.2. Tax Matters Partner: As defined in Section 5.2(g). Transfer: As defined in Section 10.1. 13. MISCELLANEOUS. 13.1. Waiver of Partition. Each Partner hereby irrevocably waives any and all rights that it may have to maintain an action for partition of any of the Partnership's property. 13.2. Power of Attorney. (a) General. Each Limited Partner hereby makes, constitutes and appoints the General Partner, with full power of substitution and resubstitution, its true and lawful attorney for it and in its name, place and stead for its use and benefit, to sign, execute, certify, acknowledge, file and record all instruments amending, restating or canceling the Certificate of Limited Partnership, as the same may hereafter be amended or restated, that may be appropriate, and to sign, execute, certify, acknowledge, file and record such other agreements, instruments or documents as may be necessary or advisable: (i) to reflect the exercise by the General Partner of 56 -53- any and all of the powers granted to it under this Agreement; (ii) to reflect the admission to the Partnership of any Limited Partner or an increase in the Capital Contributions of any Limited Partner or withdrawal of any Limited Partner in the manner prescribed in this Agreement; and (iii) which may be required of the Partnership or of the Partners by the laws of Delaware or any other jurisdiction. Each Limited Partner hereby gives such attorney-in-fact full power and authority to do and perform each and every act required by the foregoing sentence as fully as such Limited Partner might or could do if personally present, and hereby ratifies and confirms all that such attorney-in-fact shall lawfully do or cause to be done by virtue thereof. (b) Scope. The power of attorney granted pursuant to paragraph (a) of this Section 13.2: (i) is a special power of attorney coupled with an interest and, except as provided in clause (iii) of this paragraph (b) of Section 13.2, is irrevocable; (ii) may be exercised by such attorney-in-fact by listing all of the Limited Partners executing any agreement, certificate, instrument or document with the single signature of such attorney-in-fact acting as attorney-in-fact for all of them; and (iii) with respect to any Limited Partner, shall terminate upon the effectiveness of the admission of a Substitute Limited Partner pursuant to Section 10.3 except that the power of attorney for such Limited Partner shall survive such substitution for the sole purpose of enabling such attorney-in-fact to execute, acknowledge and file any such agreement, certificate, instrument or document as is necessary to effect such substitution. 13.3. Modifications. (a) General. This Agreement may be modified or amended only with the written consent of the General Partner and Two-Thirds in Interest of the Limited Partners; provided, however, that no amendment shall be made to this Agreement which would: (i) add to, detract from or otherwise modify the purposes of this Partnership without the consent of all the Partners; (ii) increase the Capital Commitment of any Partner (other than pursuant to Section 2.1 or 3.6); convert a Limited Partner's Interest into a General Partner's Interest; modify the limited liability of a Limited Partner; or increase the liabilities or responsibilities of, or diminish the rights or protections of, any Partner under this Agreement; in each case, without the consent of each such affected Partner; (iii) alter the Interest of any Partner in income, gains and losses or amend or modify any portion of Section 2.2 or Article 3 or 4 without the consent of each Partner adversely affected by such amendment or modification; provided, however, that the admission of Additional Limited Partners in accordance with the terms of this Agreement shall not constitute such an alteration, amendment or modification; (iv) amend or modify any portion of Article 10 hereof in a manner that would further restrict the transferability of a Limited Partner's Interest without the consent of all of the Limited Partners; 57 -54- (v) amend any provision hereof which requires the consent, action or approval of a specified percentage in Interest of the Limited Partners without the consent of such specified percentage in Interest of the Limited Partners; or (vi) amend this Section 13.3 without the consent of all the Partners. (b) Special Notice. If the General Partner dismisses or replaces the Partnership's independent public accountants, it shall notify the Limited Partners of such action and, if so requested by a Majority in Interest of the Limited Partners, it shall rescind or amend such action as requested. 13.4. Severability. If any provision of this Agreement, or the application of such provision to any person or circumstance, shall be held invalid, the remainder of this Agreement or the application of such provision to other persons or circumstances shall not be affected thereby. No default hereunder by a Limited Partner shall excuse a default by any other Limited Partner. 13.5. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered or mailed, first class registered mail or certified mail, postage prepaid, if to the Partners and air mail if such Partner is outside of the United States, at the addresses set forth on Schedule II attached hereto, and if to the Partnership, at the address referred to in Section 1.4, or to such other address as the Partnership or any Partner shall have last designated by notice to the Partners or the Partnership and the other Partners, as the case may be. Notices mailed in accordance with the foregoing shall be deemed to have been given and made seven (7) days following the date so mailed. All Distributions made hereunder to any Limited Partner shall be made in accordance with such reasonable written instructions as may be furnished by such Limited Partner to the General Partner from time to time. 13.6. Governing Law. This Agreement shall be governed by the laws of the State of Delaware. 13.7. Successors and Assigns. Except as otherwise specifically provided, this Agreement shall be binding upon and inure to the benefit of the Partners and their legal representatives, successors and assigns. 13.8. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall constitute one and the same instrument. 13.9. Headings. The 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 provision hereof. 13.10. Further Actions. (a) Non-U.S. Partner Tax Matters. Each Limited Partner which is a non-U.S. Person under the Code agrees that it will provide the information and forms requested by the General Partner, including U.S. Tax Form Schedule W-8 (foreign status certificate) and 58 -55- Form 1001 (reduced withholding rate certificate), as may be applicable, and shall cooperate with the General Partner upon its request in order to maintain appropriate records and provide for withholding amounts, if any, relating to its Interest in the Partnership, and, further, in the event that such Limited Partner fails to provide such information regarding U.S. tax withholding, the General Partner, the Partnership and the other Partners shall have no obligation or liability to the non-U.S. Limited Partner with respect to any U.S. tax matters or obligations which may be assessed against the non-U.S. Limited Partner. (b) Further Assurances. Each Partner shall execute and deliver such other certificates, agreements and documents, and take such other actions, as may reasonably be requested by the General Partner in connection with the formation of the Partnership and the achievement of its purposes, including, without limitation, (i) any documents that the General Partner deems necessary or appropriate to form, qualify, or continue the Partnership as a limited partnership in all jurisdictions in which the Partnership conducts or plans to conduct business, and (ii) all such agreements, certificates, tax statements and other documents as may be required to be filed in respect of the Partnership. 13.11. Delivery of Certificate. The General Partner shall provide a copy of the Certificate of Limited Partnership to each Limited Partner that makes a request therefor, but shall not otherwise be required to provide such copies. [Remainder of Page Left Blank Intentionally.] [Signature Pages Follow Immediately.] 59 CONNING CAPITAL PARTNERS VI, L.P. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. GENERAL PARTNER: CONNING INVESTMENT PARTNERS VI, L.L.C. By: /s/ John B. Clinton ------------------------ John B. Clinton Principal Manager Member 60 CONNING CAPITAL PARTNERS VI, L.P. COUNTERPART LIMITED PARTNER SIGNATURE PAGE IN WITNESS WHEREOF, the undersigned has executed this Agreement for the purchase of a limited partnership interest (the "Interest") in Conning Capital Partners VI, L.P. (the "Partnership"). This page constitutes the signature page for each of (i) the Subscription Agreement for the purchase of the Interest in the amount set forth below, and (ii) the Limited Partnership Agreement of the Partnership. Upon acceptance by the General Partner, the undersigned shall be admitted as a Limited Partner of the Partnership and hereby authorizes this signature page to be attached to a counterpart of the such Subscription Agreement and such Limited Partnership Agreement, each as executed by the General Partner. Date: March 7, 2000 Metropolitan Life Insurance Company (Print or Type Name of Investor) Capital Commitment/Subscription Sign Here: AMOUNT OF INTEREST PURCHASED: By: /s/ Charles E. Symington $ (SEE NEXT Title (if applic.) Managing Director PAGE)*____________________ Full name and address of Investor: Preferred address for receiving communications (Do not complete if already listed in prior column): Metropolitan Life Insurance Company One Madison Avenue, New York, NY 10010 Metropolitan Life Insurance Company Attn: Vice-President & Investment Counsel 334 Madison Avenue (Law, Area 6H) Convent Station, NJ 07961 Attn: Director, Corporate Equities Telephone No.: (973) 254-3000 Social Security or Federal Tax Telecopy No.: (973) 254-3055 Identification No.: Email Address: 13-5581829
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Type of Entity: Wire Instructions: - --------------- ------------------ ____ Tax exempt under Section 501(c) of Bank: The Chase Manhattan Bank Tax Code Bank ABA No.: 021-000-021 ____ BANK LIMITED PARTNER Address: New York, NY _X__ Insurance Company Account Name: Metropolitan Life Insurance Company, ____ ERISA Plan Corporate Partnerships ____ Governmental Plan Account Number: 002-2-430060
*Amount of Interest Purchased. For purposes hereof, a "Closing" shall mean each date, pursuant to Section 2.1 or 2.3 of the Partnership Agreement, that a Partner (other than Metropolitan Life Insurance Company ("MetLife")) is admitted to the Partnership or any existing Partner (other than MetLife) increases its Capital Commitment. As a result of the initial Closing that occurred on February 25, 2000, as of the date hereof, the Interest hereby purchased, and the Capital Commitment of MetLife hereunder, is equal to $7,944,444.44. At each subsequent Closing, the Interest hereby purchased, and the Capital Commitment of MetLife hereunder, shall be increased by an amount equal to the product of (x) five and one-half percent (5.5%) and (y) the result of dividing (i) the aggregate Capital Commitments of the Partnership that are made at such Closing (without regard to the additional Capital Commitment of MetLife to be made at such Closing) by (ii) ninety four and one-half percent (94.5%); provided that, in no event shall the total Capital Commitment of MetLife be increased to exceed $27,500,000. EX-99.D.5 19 SIDE LETTER 1 Exhibit (d)(5) CONNING INVESTMENT PARTNERS VI, L.L.C. CITYPLACE II 185 ASYLUM STREET HARTFORD, CT 06103 March 7, 2000 Metropolitan Life Insurance Company One Madison Avenue New York, New York 10010 Ladies and Gentlemen: This letter agreement is executed and delivered to confirm certain agreements with respect to the participation of Metropolitan Life Insurance Company ("MetLife") in Conning Capital Partners VI, L.P., a Delaware limited partnership (the "Partnership"), and the execution, delivery and performance by MetLife of the Limited Partnership Agreement of the Partnership dated as of February 25, 2000 (as amended, restated or modified from time to time, the "Partnership Agreement"). Any capitalized term used herein but not otherwise defined herein shall have the meaning ascribed to such term in the Partnership Agreement. In order to induce MetLife to purchase a Limited Partnership Interest, the General Partner, on behalf of itself and the Partnership, hereby agrees as follows: 1. Advisory Committee. In accordance with the provisions of Section 5.3(a) of the Partnership Agreement, at such time as the sum of (x) the Capital Commitment of MetLife and (y) the Capital Commitment of any of its subsidiaries (including, without limitation, Conning Corporation and its subsidiaries) exceeds an aggregate of $40,000,000, at the request of MetLife, the General Partner shall select a designee of MetLife as a member of the Advisory Committee (the "MetLife Representative"). In the event of any removal, resignation or other replacement of the MetLife Representative to the Advisory Committee, the General Partner agrees to select an alternative designee of MetLife as a member of the Advisory Committee (it being agreed that any such alternative designee shall be considered the "MetLife Representative" for all purposes under this paragraph); provided that MetLife will use its reasonable efforts to provide prior notice to, and to consult with, the General Partner in respect of any resignation of the MetLife Representative and determination of an alternative designee of MetLife to serve as the MetLife Representative. 2. Side Letters. Neither the Partnership, the General Partner, nor any of the General Partner's officers shall have entered into any side letter or similar agreement with any Limited Partner, except as disclosed to MetLife in writing on or prior to the date hereof. If at any time and from time to time any Limited Partner receives 2 Metropolitan Life Insurance Company March 7, 2000 Page 2 any other side letter or similar agreement, MetLife will be given copies of such agreements. 3. Counsel. The General Partner agrees that, in connection with any opinion of Limited Partner's counsel, in-house counsel shall be deemed reasonably acceptable counsel for MetLife to the General Partner. This letter agreement supplements the Partnership Agreement as between MetLife and the General Partner, and the terms hereof shall control with respect to MetLife in the event any conflict exists between the Partnership Agreement and the contents hereof. Except as set forth in this letter agreement, all the terms of the Partnership Agreement shall remain and continue in full force and effect as between MetLife and the General Partner. This letter agreement may be signed in any number of counterparts (including by facsimile), each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Neither this letter agreement nor any provision hereof is intended to confer upon any person or entity other than the parties hereto any rights or remedies hereunder. 3 Metropolitan Life Insurance Company March 7, 2000 Page 3 This letter agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to any conflicts-of-law principles thereof. Very truly yours, CONNING INVESTMENT PARTNERS VI, L.L.C. By: /s/ Preston B. Kavanagh Name: Preston B. Kavanagh Title: Manager Member CONNING CAPITAL PARTNERS VI, L.P. By: Conning Investment Partners VI, L.L.C., its general partner By: /s/ Preston B. Kavanagh Name: Preston B. Kavanagh Title: Manager Member Acknowledged and agreed as of the date first set forth above: METROPOLITAN LIFE INSURANCE COMPANY By: /s/ Charles E. Symington Name: Charles E. Symington Title: Managing Director -----END PRIVACY-ENHANCED MESSAGE-----