Exhibit 10.23
 
 
 
 

 
 
 
 
ASSET AND STOCK PURCHASE AGREEMENT
 
 
by and among
 
 
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY,
 
 
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY,
 
 
THE CANADA LIFE ASSURANCE COMPANY
 
 
and
 
 
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
 
 
Dated as of November 26, 2007
 

 
 

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TABLE OF CONTENTS
Page
ARTICLE I

DEFINITIONS

Section 1.01
Definitions
2

ARTICLE II

TRANSFER AND ACQUISITION OF ASSETS

     
Section 2.01
Consideration
25
Section 2.02
Acquisition of Transferred Assets and Shares; Assumption of Assumed Liabilities
25
Section 2.03
Payments at and After Closing.
26
Section 2.04
Additional Adjustment of Purchase Price
29
Section 2.05
Place and Date of Closing.
31
Section 2.06
Transactions to be Effected at the Closing
31
Section 2.07
Nonassignability of Assets
32
Section 2.08
Delayed Approvals
32

ARTICLE III

RENEWAL RIGHTS

Section 3.01
Cessation of Renewals
33
Section 3.02
Renewal Rights
33
     

ARTICLE III A

UNRELATED ADMINISTERED CONTRACTS

Section 3A.01
Cessation of Renewals.
36
Section 3A.02
Renewal Rights
36

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER, FGWLA AND CLAC

Section 4.01
Organization, Standing and Authority
36
Section 4.02
Capitalization.
37
Section 4.03
Authorization.
38
Section 4.04
Non-Contravention
38

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Section 4.05
Consents and Approvals
39
Section 4.06
Statement of Assets and Liabilities
39
Section 4.07
Insurance Company Subsidiary Financial Statements
40
Section 4.08
Absence of Certain Changes
40
Section 4.09
Business Contracts
42
Section 4.10
Business Reinsurance Agreements
42
Section 4.11
Transferred Assets
43
Section 4.12
Litigation; Orders
43
Section 4.13
Compliance with Law
43
Section 4.14
Permits
46
Section 4.15
Brokers
46
Section 4.16
Employees
46
Section 4.17
Employee Plans
48
Section 4.18
Real Property
50
Section 4.19
Computer Software
51
Section 4.20
Intellectual Property Rights…
53
Section 4.21
Tax Matters
54
Section 4.22
Security Deposits
57
Section 4.23
Bank Accounts
57
Section 4.24
Sufficiency of Assets…
57
Section 4.25
Actuarial Reports
57
Section 4.26
Disclosure
57
Section 4.27
Producer Appointments and Contracts
58
Section 4.28
Certain Insurance Contracts
58
Section 4.29
Books and Records
58
Section 4.30
Officer and Director Claims
58
Section 4.31
Noncompetition Agreements
58
Section 4.32
Insurance Coverage
58
Section 4.33
Stop Loss Insurance Contracts
58

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Section 5.01
Organization, Standing and Authority
59
Section 5.02
Authorization
59
Section 5.03
Non-Contravention
59
Section 5.04
Compliance with Law
60
Section 5.05
Consents and Approvals
60
Section 5.06
Brokers
61
Section 5.07
Ratings
61
Section 5.08
Licenses and Franchises
61
Section 5.09
Purchaser Financial Statements
61
Section 5.10
Absence of Certain Changes
61
Section 5.11
Sufficient Funds.
62
Section 5.12
Investment Intent
62

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ARTICLE VI

COVENANTS

Section 6.01
Conduct of Business
62
Section 6.02
Exclusivity
66
Section 6.03
Access to Information; Confidentiality
67
Section 6.04
Reasonable Best Efforts
67
Section 6.05
Consents, Approvals, Filings and Costs
67
Section 6.06
Representations and Warranties
69
Section 6.07
Notification
70
Section 6.08
Further Assurances
70
Section 6.09
Expenses
70
Section 6.10
Resources
70
Section 6.11
Employees and Employee Benefits.
70
Section 6.12
Form and Rate Filing
76
Section 6.13
Intercompany Relationships
76
Section 6.14
Non-Compete
77
Section 6.15
Cooperation/Integration
79
Section 6.16
Core Administration System
79
Section 6.17
Seller Confidentiality Agreements
79
Section 6.18
Books and Records
80
Section 6.19
Confidentiality
80
Section 6.20
Insurance Coverage
82
Section 6.21
Great-West Healthcare Holdings, Inc
82
Section 6.22
Seller Subsidiaries Acquisition Agreements.
83
Section 6.23
Supplements to Schedules
83
Section 6.24
Electronic Delivery of Computer Software
83
Section 6.25
Resolution of Certain Issues.
83
Section 6.26
Termination of Certain Contracts
83
Section 6.27
Preparation for Closing.
84
Section 6.28
Optional Business
84
Section 6.29
Tax Returns
85

ARTICLE VII

CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER

Section 7.01
Representations and Covenants
85
Section 7.02
Secretary’s Certificate
86
Section 7.03
Other Agreements
86
Section 7.04
Governmental and Regulatory Consents and Approvals
86
Section 7.05
Third Party Consents
87
Section 7.06
No Injunctions or Restraints
87
Section 7.07
Resignation of Officers and Directors
87

 
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ARTICLE VIII

CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF SELLER, FGWLA AND CLAC

Section 8.01
Representations and Covenants
87
Section 8.02
Secretary’s Certificate
88
Section 8.03
Other Agreements.
88
Section 8.04
Governmental and Regulatory Consents and Approvals
88
Section 8.05
Third Party Consents
88
Section 8.06
No Injunctions or Restraints
88
     

ARTICLE IX

FURTHER AGREEMENTS

Section 9.01
Access to Books and Records
89
Section 9.02
Cooperation
90
Section 9.03
Actuarial Appraisal
90
Section 9.04
Use of Names
90
Section 9.05
Reserves.
91
Section 9.06
Control of Litigation
91
Section 9.07
License to Owned Generally Used Software
93

ARTICLE X

SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 10.01
Survival of Representations, Warranties and Covenants.
94

 
ARTICLE XI

INDEMNIFICATION

Section 11.01
Obligation to Indemnify
94
Section 11.02
Indemnification Procedures
96

ARTICLE XII

TAXES

Section 12.01
Tax Indemnity
97
Section 12.02
Returns and Payments.
99
Section 12.03
Refunds
100
Section 12.04
Contests
101
Section 12.05
Time of Payment
102
Section 12.06
Cooperation and Exchange of Information
102
Section 12.07
Miscellaneous.
103

 
 
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Section 12.08
Exclusivity
105
     

 
 
ARTICLE XIII

TERMINATION PRIOR TO CLOSING

Section 13.01
Termination of Agreement.
105
Section 13.02
Survival
106
     

ARTICLE XIV

GENERAL PROVISIONS

Section 14.01
Publicity
106
Section 14.02
Dollar References
107
Section 14.03
Notices
107
Section 14.04
Entire Agreement
108
Section 14.05
Waivers and Amendments; Non-Contractual Remedies;
 
 
Preservation of Remedies
108
Section 14.06
Governing Law.
108
Section 14.07
Jurisdiction
108
Section 14.08
Binding Effect; Assignment
109
Section 14.09
Interpretation
109
Section 14.10
No Third Party Beneficiaries
110
Section 14.11
Counterparts
110
Section 14.12
Exhibits and Schedules
110
Section 14.13
Headings
110

 
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EXHIBITS
 
Exhibit A
Form of Assumption Agreement
Exhibit B
Form of Bill of Sale and General Assignment
Exhibit C
December 31 Net Worth Statement
Exhibit D
December 31 Statement of Assets and Liabilities
Exhibit E
Form of FGWLA Administrative Services Agreement
Exhibit F
Form of FGWLA Indemnity Reinsurance Agreement
Exhibit G
Form of Network Licensing Agreement
Exhibit H
Form of Seller Administrative Services Agreement
Exhibit I
Form of Seller Indemnity Reinsurance Agreement
Exhibit J
Form of CLAC Administrative Services Agreement
Exhibit K
Form of CLAC Indemnity Reinsurance Agreement
Exhibit L
Form of Subsidiary Assumption Agreement
Exhibit M
Form of Transition Services Agreement
Exhibit N
Form of Headquarters Leases
Exhibit O
Form of Employee Lease Agreement
Exhibit P
Examples of Adjustment to Purchase Price
Exhibit Q
CSRP Business Plan
       

 

 
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SCHEDULES
 
Schedule 1.01(a)
ADA Contracts
Schedule 1.01(b)
Administered Contracts
Schedule 1.01(c)
ASO Agreements
Schedule 1.01(d)
Assigned and Assumed Acquisition-Related Contracts
Schedule 1.01(e)
Assumed Liabilities Services Agreement
Schedule 1.01(f)
Assumed Reinsurance Agreements
Schedule 1.01(g)
CLAC Insurance Contracts
Schedule 1.01(h)
Continued Practices
Schedule 1.01(i)
Excluded Assets
Schedule 1.01(j)
FGWLA Insurance Contracts
Schedule 1.01(k)
Inactive HMOs
Schedule 1.01(l)
Insurance Company Subsidiaries
Schedule 1.01(m)
Composite Marks
Schedule 1.01(n)
Seller’s Knowledge
Schedule 1.01(o)
FGWLA’s Knowledge
Schedule 1.01(p)
CLAC’s Knowledge
Schedule 1.01(q)
Purchaser’s Knowledge
Schedule 1.01(r)
Methodologies
Schedule 1.01(s)
Non-Insurance Company Subsidiaries
Schedule 1.01(t)
Purchased Subsidiaries
Schedule 1.01(u)
Seller Insurance Contracts
Schedule 1.01(v)
Special Incentive and Severance Agreements
Schedule 1.01(w)
Subsidiary Insurance Contracts
Schedule 1.01(x)
Tangible Assets
Schedule 1.01(y)
Business Bank Accounts
Schedule 2.01
Allocation of Purchase Price
Schedule 4.01(b)
Seller Subsidiary Organization
Schedule 4.02
Seller Subsidiary Capitalization
Schedule 4.04
Non-Contravention
Schedule 4.05(a)(i)
Seller Regulatory Closing Consents
Schedule 4.05(a)(ii)
Other Seller Regulatory Consents
Schedule 4.05(b)
Other Seller Governmental Consents
Schedule 4.05(c)
Seller Third Party Consents
Schedule 4.06(b)
Unaudited Financial Statements
Schedule 4.08
Absence of Certain Changes
Schedule 4.09
Material Business Contracts
Schedule 4.10
Business Reinsurance Agreements
Schedule 4.12(a)
Litigation
Schedule 4.12(b)
Orders
Schedule 4.13(a)
Compliance with Law
Schedule 4.13(c)
Filings Compliance
Schedule 4.13(d)(i)
Policy Forms
Schedule 4.13(d)(ii)
Policy Form Compliance

 
 
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Schedule 4.13(e)
Premium Rate, Plan and Policy Filings
Schedule 4.13(f)
Privacy Compliance
Schedule 4.14
Permits
Schedule 4.16(b)
Unions
Schedule 4.16(h)
Certain Notices
Schedule 4.17(a)
Employee Plans
Schedule 4.17(c)
Seller Subsidiary Plans
Schedule 4.18(a)(i)
Transferred Leases
Schedule 4.18(a)(ii)
Subleased Leases
Schedule 4.19(a)
Principally Used Software
Schedule 4.19(b)
Generally Used Software
Schedule 4.19(c)
Excluded Software
Schedule 4.19(e)
Software Fees
Schedule 4.20(a)
Intellectual Property Violations
Schedule 4.20(b)
Intellectual Property
Schedule 4.20(d)
Intellectual Property Licenses and Fees
Schedule 4.21
Tax Matters
Schedule 4.22
Security Deposits
Schedule 4.23
Bank Accounts
Schedule 4.24(a)
Sufficiency of Assets
Schedule 4.24(b)
Assets
Schedule 4.25
Actuarial Reports
Schedule 4.27
Material Producer Contracts
Schedule 4.28
Certain Insurance Contracts
Schedule 4.30
Officer and Director Claims
Schedule 4.31
Noncompetition Agreements
Schedule 4.32
Insurance Coverage
Schedule 5.03
Non-Contravention
Schedule 5.04(a)
Compliance with Law
Schedule 5.04(b)
Threatened Investigations
Schedule 5.05(a)
Purchaser Regulatory Consents
Schedule 5.05(b)
Other Purchaser Governmental Consents
Schedule 5.05(c)
Purchaser Third Party Consents
Schedule 5.08
Licenses
Schedule 6.01(a)
Conduct of Business:  Seller, FGWLA and CLAC
Schedule 6.01(b)
Conduct of Business:  Seller Subsidiaries
Schedule 6.05(f)
Replacement of Certain Arrangements
Schedule 6.11(a)(1)
Business Employees
Schedule 6.11(a)(2)
Corporate Employees
Schedule 6.11(m)
Severance Benefits
Schedule 6.13
Intercompany Obligations
Schedule 6.21
Subsidiaries of Great-West Healthcare Holdings, Inc.
Schedule 6.25
Resolution of Certain Issues
Schedule 7.05
Purchaser Required Third Party Consents
Schedule 8.05
Seller Required Third Party Consents
Schedule 9.04(a)
Use of Names

 
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Schedule 9.04(b)
Subsidiary Corporate Names

 
ix

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ASSET AND STOCK PURCHASE AGREEMENT
 
This ASSET AND STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of November
26, 2007, is entered into by and among Great-West Life & Annuity Insurance
Company, a Colorado domiciled insurance company (“Seller”), First Great-West
Life & Annuity Insurance Company, a New York domiciled insurance company
(“FGWLA”), The Canada Life Assurance Company, a Canadian insurance company
entered into the United States under the laws of the State of Michigan (“CLAC”),
and Connecticut General Life Insurance Company, a Connecticut domiciled
insurance company (“Purchaser”).
 
W I T N E S S E T H:
 
WHEREAS, upon the terms and subject to the conditions of this Agreement, Seller,
FGWLA and CLAC desire to sell, and Purchaser desires to acquire, the Acquired
Operations of Seller, FGWLA and CLAC as described herein (all capitalized terms
used in these recitals and not otherwise defined having the respective meanings
assigned to them in Section 1.01 hereto); and
 
WHEREAS, in order to effectuate the foregoing, it is contemplated that, upon the
terms and subject to the conditions of this Agreement:  (i) Seller and
Purchaser, FGWLA and Purchaser and CLAC and Purchaser will enter into the Seller
Indemnity Reinsurance Agreement, the FGWLA Indemnity Reinsurance Agreement and
the CLAC Indemnity Reinsurance Agreement, respectively, providing, among other
things, for the indemnity reinsurance as of the Effective Date of the Insurance
Liabilities; (ii) Seller and Purchaser, FGWLA and Purchaser and CLAC and
Purchaser will enter into the Seller Administrative Services Agreement, the
FGWLA Administrative Services Agreement and the CLAC Administrative Services
Agreement, respectively, providing for Purchaser’s provision of certain
administrative services on behalf of Seller, FGWLA and CLAC with respect to the
Insurance Contracts, the Reinsured Contracts and the Administered Contracts;
(iii) Seller will transfer the Shares to Purchaser; (iv) Seller, Purchaser and
FGWLA will enter into the Transition Services Agreement, providing, among other
things, for Seller’s and FGWLA’s provision to Purchaser of certain transition
services for transition periods following the Closing Date; (v) Seller, FGWLA
and CLAC will execute and deliver to Purchaser the Transfer Documents providing
for the transfer to Purchaser of the Transferred Assets; (vi) Seller, FGWLA,
CLAC and Purchaser will enter into the Assumption Agreement, providing for the
assumption by Purchaser of the Other Assumed Liabilities; and (vii) Seller,
FGWLA, CLAC and Purchaser will execute and deliver such other agreements,
instruments and documents as are described herein.
 
NOW, THEREFORE, in consideration of the representations, warranties, covenants
and agreements set forth herein, the parties hereto agree as follows:
 
 

--------------------------------------------------------------------------------

 
ARTICLE I
 
 
DEFINITIONS
 
  Section 1.01     Definitions
 
   The following terms shall have the respective meanings set forth below
throughout this Agreement:
 
“Acquisition Date” means, for any Seller Subsidiary, the later of (a) the date
on which such Seller Subsidiary became an Affiliate of Seller and (b) January 1,
2002.
 
“Acquired Operations” means the Transferred Assets, the Insurance Liabilities,
the Other Assumed Liabilities and the Purchased Subsidiaries.
 
“Acquisition Proposal” shall have the meaning set forth in Section 6.02.
 
“Actual Results” shall have the meaning set forth in Section 2.04(a)(ii).
 
“Action” shall have the meaning set forth in Section 4.12.
 
“ADA Contracts” means all administrative services agreements by and between
Seller and the American Dental Association, including those listed on Schedule
1.01(a), the reinsurance agreements listed on Schedule 1.01(a) pursuant to which
Seller reinsures certain group policies issued to the American Dental
Association, and the staff plans listed on Schedule 1.01(a).
 
“Adjustment Amount” means, with respect to a Net Worth Statement, (a) the net
worth of the Insurance Company Subsidiaries shown in such Net Worth Statement
minus the Target Insurance Company Subsidiaries Statutory Net Worth, plus (b)
the GAAP tangible book equity of the Non-Insurance Company Subsidiaries shown in
such Net Worth Statement minus the Target Non-Insurance Company Subsidiaries
GAAP Equity.
 
“Administered Contracts” means (a) the ASO Agreements entered into by Seller,
FGWLA or CLAC, (b) those specialty market contracts entered into by Seller,
FGWLA or CLAC in connection with the Business and listed on Schedule 1.01(b),
(c) the Assumed Liabilities Services Agreements, (d) other contracts and
agreements entered into by Seller, FGWLA or CLAC in connection with the Business
between the date hereof and the Closing Date in the ordinary course of business
of the types set forth on such schedule, to the extent that such contracts
remain in effect on the Closing Date and (e) all contracts of the types set
forth on such schedule that are entered into after the Closing Date in
accordance with the terms of the Administrative Services Agreements, all of
which contracts will be administered by Purchaser pursuant to the terms of the
Administrative Services Agreements; for the avoidance of doubt, Administered
Contracts shall not include any ADA Contracts.
 
“Administration Adjustment Factor” means 1/6 of the sum of the Monthly
Administration Adjustment Factors for the applicable Relevant Period.
 
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“Administration Margin” means (a) the Administration Adjustment Factor times (i)
gross administration fees collected or accrued in connection with the Group
Health Business during the applicable Relevant Period, plus (ii) Pharmacy
Benefits Management Revenue collected or accrued during the applicable Relevant
Period, minus (iii) commissions paid in connection with the Group Health
Business during the applicable Relevant Period, minus (iv) premium taxes
incurred in connection with the Group Health Business during the applicable
Relevant Period, minus (b) the greater of (i) (A) actual operating expenses
incurred in connection with the Group Health Business during the applicable
Relevant Period times (B) the Administration Adjustment Factor and (ii)
$240,000,000.  In determining each of the components of Administration Margin,
accounting methodologies applied by Seller and its Affiliates in the preparation
of the Unaudited Financial Statements shall be used on a consistent basis, and
the effects of Extraordinary Items shall be excluded.
 
“Administrative Services Agreements” means the Seller Administrative Services
Agreement, the FGWLA Administrative Services Agreement and the CLAC
Administrative Services Agreement.
 
“Admitted Receivables” means claim and premium receivables of the Acquired
Operations which are included in the Transferred Assets and accorded positive
value in accordance with the Methodologies.
 
“Affiliate” means, with respect to any Person, at the time in question, any
other Person controlling, controlled by or under common control with such
Person.  For purposes of the foregoing, “control”, including the terms
“controlling”, “controlled by” and “under common control with”, means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of an institution, whether through the ownership of
voting securities, by contract or otherwise.
 
“Agreement” shall have the meaning set forth in the introductory paragraph
hereof.
 
“Allocable Amount” shall have the meaning set forth in Section 12.07(d).
 
“Alternate Bidder” shall have the meaning set forth in Section 6.02.
 
“Ancillary Agreements” means the Seller Indemnity Reinsurance Agreement, the
FGWLA Indemnity Reinsurance Agreement, the CLAC Indemnity Reinsurance Agreement,
the Seller Administrative Services Agreement, the FGWLA Administrative Services
Agreement, the CLAC Administrative Services Agreement, the Transition Services
Agreement, the Headquarters Leases, the Network Licensing Agreement, the
Employee Lease Agreement, the Assumption Agreement, the Subsidiary Assumption
Agreement, the Transfer Documents and the Subleases.
 
“Antitrust Division” shall have the meaning set forth in Section 6.05(b).
 
“Annualized Difference” shall have the meaning set forth in Section 2.04(a)(ii).
 
 
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“Applicable SAP” means with respect to Seller, FGWLA, CLAC, the Insurance
Company Subsidiaries and Purchaser, statutory accounting practices prescribed or
permitted by the Commissioner (or equivalent title) of the state of domicile of
such insurer, but disregarding any permitted practices applicable specifically
to any such Person.
 
“ASO Agreements” means those agreements under which Seller, FGWLA, CLAC or any
Seller Subsidiary agrees to perform specific administrative duties for the
maintenance of a self-funded health insurance plan (a) reflected on Schedule
1.01(c), or (b) that are entered into between September 30, 2007 and the Closing
Date in substantially the same form as the agreements listed on Schedule
1.01(c), allowing for variation of terms arising from negotiations between the
parties to such an agreement in the ordinary course of business.
 
“Assigned and Assumed Contracts” means those contracts and agreements entered
into by Seller, FGWLA, CLAC or the Inactive HMOs in connection with the Business
and relating exclusively to the Healthcare Division, to the extent that such
contracts remain in effect on the Closing Date, but excluding (a) the
Administered Contracts, (b) the Producer Contracts, (c) Contracts entered into
in connection with any transaction by which the stock or other equity interests
in any Person, including any Seller Subsidiary, were acquired, other than the
Contracts listed in Schedule 1.01(d) and (d) the Contracts to be replaced as
described in Schedule 6.05(f).
 
“Assumed Liabilities” means (a) the Insurance Liabilities and (b) the Other
Assumed Liabilities.
 
“Assumed Liabilities Services Agreements” means those contracts listed on
Schedule 1.01(e) pursuant to which Seller administers the Reinsured Contracts.
 
“Assumed Reinsurance Agreements” means those Contracts of assumed reinsurance
set forth on Schedule 1.01(f); for the avoidance of doubt, Assumed Reinsurance
Agreements shall not include any ADA Contracts.
 
“Assumption Agreement” means an Assumption Agreement in the form of Exhibit A.
 
“Benchmark” means $70,373,000, if the Closing occurs prior to August 1, 2008,
and $78,225,000, if the Closing occurs on or after August 1, 2008.
 
“Bill of Sale and General Assignment” means a Bill of Sale and General
Assignment in the form of Exhibit B.
 
“Books and Records” means the Business Books and Records and the Corporate Books
and Records.
 
“Business” means the (a) business of Seller, FGWLA, and CLAC of issuing,
reinsuring and administering as applicable, the Insurance Contracts, the
Reinsured Contracts and the Administered Contracts in the United States and (b)
the
 
4

--------------------------------------------------------------------------------

 
businesses operated by the Seller Subsidiaries in the United States, in each
case as conducted as of the date hereof.  For the avoidance of doubt, the
Business shall not include any ADA Contracts.
 
                                “Business Books and Records” means (a) the
originals or copies of all records of Seller, FGWLA and CLAC (including computer
generated, recorded or stored records) which relate to the Business or which are
otherwise necessary to operate the Business, including customer lists, policy
information, personnel records (to the extent that the personnel records may be
transferred by Seller, FGWLA and CLAC, as applicable, under applicable Law),
Insurance Contract forms and rating plans, claim records, sales records,
underwriting records, financial records and compliance records and records
relating to the Assumed Reinsurance Agreements, in each case, in the possession
or control of Seller, FGWLA, CLAC, the Seller Subsidiaries or any of their
Affiliates, but excluding any such records that relate to Seller Legal
Proceedings and are subject to the attorney client privilege, and (b) Tax
Returns and workpapers of or relating solely to the Seller Subsidiaries, the
Business or the Transferred Assets, in each case, in the possession or control
of Seller, FGWLA, CLAC, the Seller Subsidiaries or any of their Affiliates.
 
“Business Contracts” means, collectively, the Assigned and Assumed Contracts,
the Administered Contracts and the Subsidiary Contracts.
 
“Business Day” means any day other than a Saturday, Sunday, a day on which
banking institutions in either of the States of Colorado or New York are
permitted or obligated by Law to be closed or a day on which the New York Stock
Exchange is closed for trading.
 
“Business Employees” shall have the meaning set forth in Section 6.11(a).
 
“Business Reinsurance Agreements” means, collectively, the Ceded Reinsurance
Agreements and the Subsidiary Reinsurance Agreements.
 
“Cap” shall have the meaning set forth in Section 2.04(a)(i).
 
“Ceded Reinsurance Agreements” means, to the extent that such treaties or
agreements relate to the Insurance Liabilities, Sellers Extra Contractual
Obligations or Purchaser Extra Contractual Obligations, (a) the reinsurance and
retrocession treaties and agreements to which Seller, FGWLA, CLAC or any of
their Affiliates is a ceding party that are in force on the date hereof or
entered into by Seller, FGWLA or CLAC, other than in violation of Section 6.01,
between the date hereof and the Closing Date and (b) any such treaty or
agreement that is terminated or expired but under which Seller, FGWLA or CLAC
may continue to receive reinsurance coverage.
 
“CLAC” shall have the meaning set forth in the introductory paragraph hereof.
 
“CLAC Administrative Services Agreement” means an Administrative Services
Agreement in the form of Exhibit J.
 
 
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“CLAC Indemnity Reinsurance Agreement” means an Indemnity Reinsurance Agreement
in the form of Exhibit K.
 
“CLAC Insurance Contracts” means (a) all of the Stop Loss Insurance Agreements
written by CLAC in the United States reflected on Schedule 1.01(g), (b)
contracts on the same forms as those Stop Loss Insurance Agreements reflected on
Schedule 1.01(g) written by CLAC between September 30, 2007 and the Closing
Date, and (c) any such contracts that are issued by CLAC on or after the Closing
Date in accordance with the terms of the CLAC Administrative Services Agreement
(including, in each case of (a), (b) and (c), renewals thereof and all
supplements, endorsements, enhancement letters, riders and ancillary agreements
in connection therewith).
 
“Closing” means the closing of the transactions contemplated by this Agreement.
 
“Closing Date” means (a) if the last of the conditions to Closing set forth in
this Agreement (other than those conditions that by their nature are to be
satisfied at the Closing) is satisfied or waived in writing on or prior to the
20th day of a given month, the last day of such month, or (b) if such
satisfaction or waiver in writing occurs or is granted after the 20th day of any
given month, the last day of the month following the month in which the last of
such conditions was so satisfied or waived in writing; provided, however, that
if such date is not a Business Day, the Closing Date shall be the immediately
succeeding Business Day; provided, further, that the Closing may occur on such
other day as the parties may agree to in writing.
 
“Closing Net Worth Statement” means a Net Worth Statement as of the date of the
Closing Statement of Assets and Liabilities as estimated by Seller in good faith
in accordance with the Methodologies.
 
“Closing Statement of Assets and Liabilities” means the Statement of Assets and
Liabilities of the Business (excluding the Seller Subsidiaries) as of the last
day of the month immediately preceding the month in which the Effective Date
falls, as estimated by Seller in good faith in accordance with the
Methodologies.
 
“COBRA Coverage” shall have the meaning set forth in Section 6.11(j)(i)(2).
 
“Code” means the Internal Revenue Code of 1986, as amended.
 
“Consent Period” shall have the meaning set forth in Section 2.07.
 
“Commissions” means all commissions, expense allowances, and other fees and
compensation payable to Producers.
 
“Confidentiality Agreement” shall have the meaning set forth in Section 6.03.
 
“Consolidated Group” shall have the meaning set forth in Section 4.21(f).
 
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“Consolidated Tax Return” shall have the meaning set forth in Section 12.02(a).
 
“Continued Policies” shall have the meaning set forth in Section 6.20(a).
 
“Continued Practice” means (a) any policy or other regular practice of Seller,
FGWLA, CLAC or a Seller Subsidiary, existing prior to the Closing, which (i) are
not disclosed hereunder (ii) violates applicable Law, (iii) is not the policy or
regular practice of Purchaser, and (iv) is carried out by or under the
supervision of Business Employees, Corporate Employees or Subsidiary Employees
on behalf of Purchaser or its Affiliates, at any time between the Closing Date
and the day which is one hundred and twenty (120) days after the Closing Date,
or (b) any policy or other practice of Seller, FGWLA, CLAC or a Seller
Subsidiary listed on Schedule 1.01(h).
 
“Contract” means any written or oral agreement, contract, lease, sublease,
license, sublicense, undertaking, indenture, evidence of indebtedness, guaranty,
loan, or mortgage.
 
“Contractholder” means the holder of an Insurance Contract or the counterparty
under an Administered Contract, as applicable.
 
“Corporate Books and Records” means the originals or copies of all of the books,
records, data and information relating to the assets, properties, business,
conduct and operations of the Seller Subsidiaries, including all licenses held
by the Insurance Company Subsidiaries, and all such items relating to each
Seller Subsidiary’s legal existence, stock ownership, corporate management or
other such corporate records, in each case, in the possession or control of
Seller, FGWLA, a Seller Subsidiary or any of their respective Affiliates.
 
“Corporate Employees” shall have the meaning set forth in Section 6.11(a).
 
“December 31 Net Worth Statement” means the pro forma Net Worth Statement
prepared in accordance with the Methodologies as of December 31, 2006, attached
hereto as Exhibit C.
 
“December 31 Statement of Assets and Liabilities” means the pro forma Statement
of Assets and Liabilities of the Business (excluding the Seller Subsidiaries)
prepared in accordance with the Methodologies as of December 31, 2006, attached
hereto as Exhibit D.
 
“Delayed Approvals” has the meaning set forth in Section 2.08.
 
“Due and Uncollected Premiums” means premiums due but uncollected with respect
to an Insurance Contract as of any given time.
 
“Effective Date” means the Closing Date if such date is the last day of a month
and, if not (i) due to the Closing Date being the next succeeding Business Day,
then the last day of the month immediately preceding the month in which the
Closing
 
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Date falls or (ii) due to the Closing Date being another day agreed to in
writing by the parties, such date as may be agreed to in writing by the parties.
 
“Election” shall have the meaning set forth in Section 12.07(e).
 
“Employee Lease Agreement” means an Employee Lease Agreement in the form of
Exhibit O.
 
“Employee Plans” means all “employee benefit plans” within the meaning ascribed
to such term by Section 3(3) of ERISA and all other employee benefit
arrangements or payroll practices, including, but not limited to each employment
agreement, termination or severance agreement or plan, deferred compensation
plan, incentive compensation plan, equity compensation plan, severance pay, sick
leave, vacation pay, salary continuation for disability, hospitalization,
medical insurance, life insurance, scholarship program, stock option or
restricted stock plan sponsored or maintained by Seller, FGWLA or any ERISA
Affiliate that provide benefits or compensation to or on behalf of Business
Employees and Corporate Employees (whether formal or informal, whether for the
benefit of a single individual or for more than one individual and whether for
the benefit of current or former employees or their beneficiaries), and the
Seller Subsidiary Plans.
 
“Employment Commencement Date” means, with respect to each Transferred Employee,
the date following the last day such Transferred Employee is employed by Seller
or FGWLA, and with respect to Subsidiary Employees, the Closing Date.
 
“Environmental Laws” shall mean any Law relating to the protection of the
environment, or to the manufacture, use, transport, treatment, storage,
disposal, release or threatened release of any substance listed, classified or
regulated as “hazardous” or “toxic” or any similar term under such Environmental
Law.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations promulgated thereunder.
 
“ERISA Affiliate” means any trade or business (whether or not incorporated)
which is or has ever been under common control, or which is or has ever been
treated as a single employer, with Seller, FGWLA, the Seller Subsidiaries or any
of their Affiliates under section 414(b), (c), (m) or (o) of the Code.
 
“Excluded Assets” means those assets utilized in the Business and listed or
described on Schedule 1.01(i).
 
“Excluded Liabilities” means (a) premium Taxes due in respect of premiums
collected prior to the Effective Date; (b) any assessment or similar charges in
connection with guaranty fund or risk pool participation other than those set
forth in clause (e) to the definition of “Insurance Liabilities”; (c) premiums,
payments for or other consideration due prior to the Effective Date with respect
to Ceded Reinsurance Agreements; (d) returns or refunds of premiums payable
prior to the Effective Date; (e)
 
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any Sellers Extra Contractual Obligations; (f) contributions due or benefits
payable under any Employee Plans, other than with respect to contributions due
or benefits payable with respect to Subsidiary Employees for the period prior to
the Effective Date; (g) judgments, settlements, defense costs or other fees,
costs and expenses arising out of, under or relating to Existing Litigation; and
(h) any other liabilities that are not Assumed Liabilities.
 
“Excluded Software” shall have the meaning set forth in Section 4.19(c).
 
“Existing Litigation” means (a) any dispute relating to an Insurance Contract,
an Assigned and Assumed Contract, an Administered Contract or an Assumed
Reinsurance Agreement and as to which (i) a complaint, or notice of a complaint,
has been served or filed in a court on behalf of or against Seller, FGWLA or
CLAC or any of their respective officers or directors prior to the Closing Date,
(ii) a demand for arbitration has been served or filed on behalf of or against
Seller, FGWLA or CLAC or any of their respective officers or directors prior to
the Closing Date or (iii) a written notice has been delivered to Seller, FGWLA
or CLAC or any of their respective officers or directors prior to the Closing
Date by an attorney threatening a course of action reasonably likely to result
in either of the foregoing or, (b) any dispute as to which (i) a complaint, or
notice of a complaint, has been served or filed in a court on behalf of or
against a Seller Subsidiary or any of its officers or directors prior to the
Closing Date, or (ii) a demand for arbitration has been served or filed on
behalf of or against a Seller Subsidiary or any of its officers or directors
prior to the Closing Date or (iii) a written notice has been delivered to a
Seller Subsidiary or any of its respective officers or directors prior to the
Closing Date by an attorney threatening a course of action reasonably likely to
result in either of the foregoing; in each case of (a) and (b), excluding (A)
claims that are administered by Seller, FGWLA, CLAC or a Seller Subsidiary
pursuant to an ASO Agreement but as to which none of Seller, FGWLA, CLAC or any
Seller Subsidiary is a named party, (B) Purchaser Legal Proceedings and (C)
Shared Actions (including Actions which initially constitute Existing Litigation
but which become Purchaser Legal Proceedings or Shared Actions after the
Closing).
 
“Extraordinary Item” means (a) a special, nonrecurring item of income or
expense, including the effects of the Closing and severance and special employee
compensation paid in connection with the Closing, but excluding fees due under
the Transition Services Agreement and rents under the Headquarters Leases, and
(b) for the portion of the Relevant Period after the Closing, the effect of any
material difference between the manner in which the Group Health Business was
conducted prior to the Closing and the manner in which it is conducted by
Purchaser after the Closing.
 
“FGWLA” shall have the meaning set forth in the introductory paragraph hereof.
 
“FGWLA Administrative Services Agreement” means an Administrative Services
Agreement in the form of Exhibit E.
 
 
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“FGWLA Indemnity Reinsurance Agreement” means an Indemnity Reinsurance Agreement
in the form of Exhibit F.
 
“FGWLA Insurance Contracts” means (a) all of the Stop Loss Insurance Agreements
written by FGWLA in the United States reflected on Schedule 1.01(j), (b) all
other insurance contracts written by FGWLA in the United States reflected on
Schedule 1.01(j), (c) contracts on the same forms as those insurance contracts
reflected on Schedule 1.01(j) written by FGWLA between September 30, 2007 and
the Closing Date, and (d) any such contracts that are issued by FGWLA on or
after the Closing Date in accordance with the terms of the FGWLA Administrative
Services Agreement (including, in each case of (a), (b), (c) and (d), renewals
thereof and individual certificates issued thereunder and all supplements,
endorsements, enhancement letters, riders and ancillary agreements in connection
therewith, and including any individual policies issued by FGWLA upon the
exercise of conversion rights with respect to health coverages under any such
contracts).
 
“Filing Party” shall have the meaning set forth in Section 12.02(b).
 
“Final Calculation of PP Reduction Amount” shall have the meaning set forth in
Section 2.04(b)(ii).
 
“Final Net Worth Statement” shall have the meaning set forth in Section 2.03(c).
 
“Final Statement of Assets and Liabilities” shall have the meaning set forth in
Section 2.03(c).
 
“FTC” shall have the meaning set forth in Section 6.05(b).
 
“GAAP” means United States generally accepted accounting principles.
 
“Governmental Entity” means any federal, state, local, foreign, international or
multinational agency, commission, court, entity or authority exercising
executive, legislative, judicial, regulatory, administrative or taxing functions
of or pertaining to government or any non-governmental United States or foreign
self-regulatory agency, commission or authority or any arbitral tribunal.
 
“Group Health Business” means the Business, excluding that segment of the
Healthcare Division that is included in the “Specialty” segment in the financial
reporting of Seller and its Affiliates.
 
“Guaranteed Renewal Contracts” means those Insurance Contracts which by their
terms provide multi-year rate guarantees or are guaranteed renewable such that
they cannot, by their terms or under applicable law, be terminated at any given
time by notice from, or by other unilateral action initiated or taken by,
Seller, FGWLA or CLAC.
 
“Headquarters” means the corporate headquarters property located in Greenwood
Village, Colorado.
 
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“Headquarters Leases” means leases with respect to the Headquarters between
Seller and Purchaser in the forms included in Exhibit N.
 
“Healthcare Division” means the division of Seller which is engaged in the
operation of the Business.
 
“HIPAA” shall have the meaning set forth in Section 4.13(g).
 
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder.
 
“Inactive HMOs” means those health maintenance organizations or health care
service providers set forth in Schedule 1.01(k).
 
“Incentive Cash Compensation” shall have the meaning set forth in Section
6.11(g).
 
“Indemnified Party” shall have the meaning set forth in Section 11.02(a).
 
“Indemnifying Party” shall have the meaning set forth in Section 11.02(a).
 
“Indemnity Reinsurance Agreements” means the Seller Indemnity Reinsurance
Agreement, the FGWLA Indemnity Reinsurance Agreement and the CLAC Indemnity
Reinsurance Agreement.
 
“Independent Firm” shall have the meaning set forth in Section 12.05.
 
“Insurance Company Subsidiary SAP Statements” shall have the meaning set forth
in Section 4.07.
 
“Insurance Company Subsidiaries” means those Subsidiaries of Seller set forth on
Schedule 1.01(l) hereto.
 
“Insurance Contracts” means the Seller Insurance Contracts, the FGWLA Insurance
Contracts and the CLAC Insurance Contracts.
 
“Insurance Liabilities” means the following liabilities of Seller, FGWLA and
CLAC, in each case excluding the Excluded Liabilities, and net of all amounts
actually collected by Seller, FGWLA and CLAC on or after the Effective Date
under the Ceded Reinsurance Agreements to the extent that such collected amounts
relate to the Business and not to Sellers Extra Contractual Obligations: (a) the
liabilities under the Insurance Contracts, including all liabilities for unpaid
claims, incurred but not reported claims, benefits or other payments (including
dividends or other experience refunds payable on or after the Effective Date)
under the Insurance Contracts, whether incurred before, on or after the
Effective Date; (b) all loss adjustment expenses and expense reimbursement
amounts arising out of or relating to the Insurance Contracts; (c) all
liabilities under the Insurance Contracts arising out of any changes to the
terms and conditions of the Insurance Contracts mandated by applicable Law
whether incurred
 
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before, on or after the Effective Date; (d) premium Taxes due in respect of
premiums collected on or after the Effective Date with respect to the Insurance
Contracts; (e) assessments and similar charges with respect to the Insurance
Contracts in connection with the participation by Seller, FGWLA, CLAC or
Purchaser whether voluntary or involuntary, in any guaranty association or risk
pool established or governed by any state or other jurisdiction, arising on
account of premiums collected on or after the Effective Date; (f) Commissions
payable with respect to the Insurance Contracts in respect of premiums collected
on or after the Effective Date; (g) premiums, payments, fees or other
consideration or amounts due on or after the Effective Date under any Ceded
Reinsurance Agreements; (h) all liabilities for amounts payable on or after the
Effective Date for returns or refunds of premiums with respect to the Insurance
Contracts; (i) all liabilities arising out of Purchaser Extra Contractual
Obligations; (j) all liabilities with respect to Contractholder funds on deposit
(advance premiums, premium deposit funds or retired lives reserve funds) with
Seller, FGWLA or CLAC; (k) all unclaimed property liabilities arising under or
relating to the Insurance Contracts with respect to amounts paid or received on
or after the Effective Date or otherwise related to bank over-drafts as
reflected on the Final Statement of Assets and Liabilities and (l) all
liabilities arising under the Assumed Reinsurance Agreements.  For the avoidance
of doubt, Purchaser assumes the risk that reinsurance under the Ceded
Reinsurance Agreements is not collected.
 
            “Intangible Assets” means (i) all renewal rights and ownership of
expirations relating to the Insurance Contracts and (ii) the Intellectual
Property Rights owned by Seller, FGWLA or CLAC.
 
“Intellectual Property Rights” shall mean all intellectual property used or held
for use principally in the Business including, but not limited to, patents,
trademarks, service marks, trade names and associated goodwill in the foregoing,
copyrights, processes, trade secrets, inventions, know-how, confidential
information and domain names (in each case, including any common law rights,
registrations, applications, licenses or rights relating to any of the
foregoing), other than the composite marks set forth on Schedule 1.01(m).
 
“Intercompany Agreements” shall have the meaning set forth in Section 6.13.
 
“Intercompany Obligations” shall have the meaning set forth in Section 6.13.
 
“Knowledge” means, (a) as to Seller, the knowledge of any of the persons listed
on Schedule 1.01(n) after reasonable inquiry, (b) as to FGWLA, the knowledge of
any of the persons listed on Schedule 1.01(o) after reasonable inquiry, (c) as
to CLAC, the knowledge of any of the persons listed on Schedule 1.01(p) after
reasonable inquiry, and (d) as to Purchaser, the knowledge of any of the persons
listed on Schedule 1.01(q) after reasonable inquiry.
 
 
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“Law” means any constitution, law, ordinance, rule, principle of common law,
regulation, statute, treaty, order, judgment, decree, administrative
interpretation or other requirement of any Governmental Entity or any order,
writ, injunction, directive, judgment or decree of any Governmental Entity
applicable to a Person or such Person’s business, property or assets.
 
“Leased Property” means the regional or other offices of Seller, FGWLA or a
Seller Subsidiary that are leased or subleased by Seller, FGWLA or any Seller
Subsidiary, used in connection with the Business and leased pursuant to the
Leased Property Leases.
 
“Leased Property Leases” shall have the meaning set forth in Section 4.18(a).
 
“Licensed Generally Used Software” shall have the meaning set forth in Section
4.19(b).
 
“Licensed Principally Used Software” shall have the meaning set forth in Section
4.19(a).
 
“Lien” means any pledge, claim, lien, charge, mortgage, encumbrance or security
interest.
 
“Losses” shall have the meaning set forth in Section 11.01(a).
 
“Management Presentation” means the Great-West Healthcare Management
Presentation dated April 2007, as presented to Purchaser.
 
“Material Business Contracts” means those Business Contracts which constitute
vendor contracts (excluding Contracts with Providers) entered into in the
ordinary course of business (a) under which the total of the amounts reasonably
expected to be paid or received by Seller, FGWLA, CLAC and the Seller
Subsidiaries in any year exceeds $75,000 or (b) whose termination or
cancellation would reasonably be expected to result in a Sellers Material
Adverse Effect, after allowing for replacement with any substitute arrangement
readily available on market terms.
 
“Material Producer Contract” shall have the meaning set forth in Section 4.27.
 
“Methodologies” means (subject to Section 2.03(e) with respect to the Final
Statement of Assets and Liabilities and the Final Net Worth Statement) (a)
first, the accounting, actuarial, financial, valuation, estimation,
determination and other rules and principles specified in Schedule 1.01(r); (b)
second, to the extent not contemplated by the items referred to in (a), and
solely as applied to statements other than the December 31 Statement of Assets
and Liabilities, the methods used in the preparation of the December 31
Statement of Assets and Liabilities; (c) third, to the extent not contemplated
by the items referred to in (a) and (b), the most recent past practices of
Seller, FGWLA and CLAC with respect to the Business used in preparing statutory
financial statements, with
 
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respect to Seller, FGWLA, CLAC, and the Insurance Company Subsidiaries, and
Seller’s consolidated financial statements filed with the SEC, with respect to
the Non-Insurance Company Subsidiaries; and (d) fourth, to the extent not
contemplated by the items referred to in (a), (b) and (c), Applicable SAP, with
respect to Seller, FGWLA, CLAC, and the Insurance Company Subsidiaries, and
GAAP, with respect to the Non-Insurance Company Subsidiaries.
 
                               “Monthly Administration Adjustment Factor” means,
for January 2008, 1; and for each month from February 1, 2008 through and
including the last day of the applicable Relevant Period, 1 plus (a) the sum of
the average monthly gross administration fees collected by the Group Health
Business during the 12 month period ending on the last day of the last full
month in which such fees were collected (or, if such fees were not collected
during the entire 12 month period, such fees collected during the full month
period during which such fees were collected) from each group health plan which
both (i) as of January 31, 2008, was serviced by the Group Health Business and
(ii) as of the end of the month in question, is serviced by Purchaser or any of
its Affiliates divided by (b) the aggregate gross administration fees collected
by the Group Health Business during such month.
 
“Monthly Payments” shall have the meaning set forth in Section 2.03(h).
 
“Monthly Risk Adjustment Factor” means, for January 2008, 1; and for each month
from February 1, 2008 through and including the last day of the applicable
Relevant Period, 1 plus (a) the sum of the average monthly net premium written
by the Group Health Business during the 12 month period ending on the last day
of the last full month in which the applicable Insurance Contract(s) was in
force (or, if the applicable Insurance Contract(s) was not in force for the
entire 12 month period, for such shorter full month period that such contract(s)
was in force) for each group health plan which both (i) as of January 31, 2008,
held an Insurance Contract issued by the Group Health Business and (ii) as of
the end of the month in question, holds a group health insurance or stop loss
contract issued by Purchaser or any of its Affiliates divided by (b) the
aggregate net premium written by the Group Health Business during such month.
 
“Multiemployer Plan” shall have the meaning provided in Section 3(37) of ERISA.
 
“Negative Condition” shall have the meaning set forth in Section 6.05(e).
 
“Network Licensing Agreement” means a Network Licensing Agreement in the form of
Exhibit G.
 
“Net Reinsurance Premium” means, with respect to a Statement of Assets and
Liabilities, for any one of Seller, FGWLA or CLAC, the liabilities for such
company shown in such Statement of Assets and Liabilities minus the assets for
such company shown in such Statement of Assets and Liabilities.
 
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“Net Worth Statement” means a calculation of the pro forma net worth of the
Seller Subsidiaries, taking into account the Subsidiary Liabilities but not the
Subsidiary Indemnified Liabilities, in the form of the December 31 Net Worth
Statement and prepared in accordance with the Methodologies.
 
“Neutral Auditor” means a certified public accounting firm independent of all
parties, which shall be selected by the parties in good faith, or, if the
parties are unable to agree on such a firm, a senior partner in an independent
certified public accounting firm who shall be selected by the American
Arbitration Association.
 
“New Retention and Severance Agreements” shall have the meaning set forth in
Section 6.11(n).
 
“90-Day Treasury Rate” means the annual yield rate, on the date to which the
90-Day Treasury Rate relates, of actively traded U.S. Treasury securities having
a remaining duration to maturity of three months, as such rate is published
under “Treasury Constant Maturities” in Federal Reserve Statistical Release
H.15(519).
 
“Non-Acceptance Offer Employee” shall have the meaning set forth in Section
6.11(e).
 
“Non-Insurance Company Subsidiaries” means those Subsidiaries of Seller set
forth on Schedule 1.01(s).
 
“Non-Renewal Date” means (a) with respect to the Insurance Contracts and Related
Administered Contracts issued in a particular state of the United States or the
District of Columbia in which Purchaser is not fully authorized as of the
Closing Date to issue policies in substantially the form of the Insurance
Contracts, the last day of the sixth month following the date upon which
Purchaser becomes fully authorized to issue policies in substantially the form
of the Insurance Contracts, utilizing premium rates determined by Purchaser and
approved by applicable regulatory authorities, but no later than the date which
is 18 months following the Closing Date and (b) with respect to (i) Insurance
Contracts and Related Administered Contracts issued in a particular state of the
United States or the District of Columbia in which Purchaser is fully authorized
as of the Closing Date to issue policies in substantially the form of the
Insurance Contracts utilizing premium rates determined by Purchaser and approved
by applicable regulatory authorities and (ii) Unrelated Administered Contracts,
six months after the Closing Date.
 
“Optional Business” means the portion of the Business and the business of the
Seller Subsidiaries involving the issuance, underwriting, reinsurance, sales,
marketing or administration of any product or arrangement sold or marketed as
“life insurance” within the meaning of section 7702 of the Code, involving a
death benefit purportedly excluded from income from under section 101 of the
Code, constituting an annuity, endowment or life insurance contract the proceeds
from which are or purport to be subject to section 72 of the Code, or included
in the Supplemental Contracts (within the meaning of the Methodologies).
 
 
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“Order” shall have the meaning set forth in Section 4.12.
 
“Organizational Documents” shall have the meaning set forth in Section 4.01(c).
 
“Other Assumed Liabilities” means (a) all liabilities, obligations and
commitments of Seller, FGWLA and CLAC under the Assigned and Assumed Contracts
and the Administered Contracts other than the Excluded Liabilities, (i) relating
to periods prior to the Effective Date, up to the amounts specifically reflected
on the Final Statement of Assets and Liabilities, or (ii) relating to periods
after the Effective Date, (b) Seller, FGWLA and CLAC sales force incentive
compensation accrued through the Effective Date up to the amount specifically
reflected on the Final Statement of Assets and Liabilities, (c) amounts accrued
through the Effective Date under the broker incentive compensation plans of
Seller, FGWLA and CLAC up to the amounts specifically reflected on the Final
Statement of Assets and Liabilities and (d) all other liabilities and
obligations (other than Insurance Liabilities) reflected on the Final Statement
of Assets and Liabilities up to the respective amounts specifically so
reflected.
 
“Other Party” has the meaning set forth in Section 9.06(e).
 
“Owned Generally Used Software” shall have the meaning set forth in Section
4.19(b).
 
“Owned Principally Used Software” shall have the meaning set forth in Section
4.19(a).
 
“Paid Purchase Price” shall have the meaning set forth in Section 2.04(a)(i).
 
“Parent” means GWL&A Financial Inc.
 
“Payment Date” shall have the meaning set forth in Section 12.05.
 
“Permit” means all permits and insurance and other licenses, franchises,
approvals, authorizations, exemptions, classifications, certificates,
registrations and similar documents.
 
“Permitted Liens” means, as to any asset, (a) any Liens for Taxes by
Governmental Entities that (i) are not yet due or delinquent, (ii) are disclosed
in Schedule 4.21 and are being contested in good faith by appropriate
proceedings or (iii) have been accrued or otherwise reflected on the applicable
financial statements (in accordance with Applicable SAP or GAAP, as applicable),
(b) Liens arising by operation of law; (c) other Liens that do not in the
aggregate materially detract from the value or materially interfere with the
present or reasonably contemplated use of such asset in the Business; and (d) in
the case of the Material Business Contracts, the Liens set forth in such
contracts.
 
“Person” means any individual, corporation, partnership, firm, joint venture,
association, limited liability company, limited liability partnership,
joint-stock
 
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 company, trust, unincorporated organization, Governmental Entity, business
unit, division or other entity.
 
                                “Pharmacy Benefits Management Revenue” means the
revenue of Seller and its Affiliates from the pharmacy management benefits
operations of the Group Health Business, as historically reported by Seller and
its Affiliates in their financial statements.
 
“Post-Closing PP Adjustment” shall have the meaning set forth in Section
2.04(a)(i).
 
“PPR Review Period” shall have the meaning set forth in Section 2.04(b)(i).
 
“Primary Party” has the meaning set forth in Section 9.06(e).
 
“Producer” means any agent, broker, producer, managing general agent, general
agent or sales representative of Seller, FGWLA, CLAC or any Seller Subsidiary
involved in the placement or marketing of the Insurance Contracts (excluding
those individuals employed by either Seller, FGWLA, CLAC or any Seller
Subsidiary).
 
“Producer Contracts” means Contracts between Seller, FGWLA or CLAC and Producers
regarding the placement or marketing of Insurance Contracts.
 
“Proposed Allocation” shall have the meaning set forth in Section 12.07(e)(iv).
 
“Proposed Calculation of PP Reduction Amount” shall have the meaning set forth
in Section 2.04(b)(i).
 
“Proposed Net Worth Statement” shall have the meaning set forth in Section
2.03(c).
 
“Proposed Statement of Assets and Liabilities” shall have the meaning set forth
in Section 2.03(c).
 
“Provider” means a hospital, physician, clinical laboratory, ancillary provider,
health care practitioner, supplier, other Person, or combination of the
foregoing, that renders or provides health care services or supplies.
 
“Purchase Price” means One Billion Five Hundred Million dollars ($1,500,000,000)
(for the avoidance of doubt, without regard for any Adjustment Amount).
 
“Purchase Price Reduction Amount” shall have the meaning set forth in Section
2.04(a)(ii).
 
“Purchased Subsidiaries” means those Seller Subsidiaries set forth on Schedule
1.01(t).
 
 
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“Purchaser” shall have the meaning set forth in the introductory paragraph
hereof.
 
“Purchaser Extra Contractual Obligations” means all liabilities for
compensatory, consequential, exemplary, punitive or other special or similar
damages which relate to or arise in connection with, and any settlement, defense
or investigation costs incurred in connection with, any alleged or actual act,
error, omission or other event in connection with the handling of any claims by
Purchaser or any of its Affiliates on or after the Closing Date, whether acting
on behalf of Seller, FGWLA or CLAC or any of their Affiliates pursuant to the
Administrative Services Agreements or otherwise, under any of the Insurance
Contracts, Reinsured Contracts, Administered Contracts or Assigned and Assumed
Contracts in connection with the marketing, issuance, delivery, cancellation or
administration of any of any such Contracts on or after the Closing Date;
provided, however, that in no event shall Purchaser Extra Contractual
Obligations include Sellers Extra Contractual Obligations.  Acts or omissions of
the Business Employees under the supervision of Purchaser or any of its
Affiliates on or after the Closing Date shall be attributed to Purchaser for the
purposes of this definition.
 
“Purchaser Legal Proceedings” shall have the meaning set forth in Section
9.06(a).
 
“Purchaser Liabilities” has the meaning set forth in Section 9.06(e).
 
“Purchaser Material Adverse Effect” means (a) an adverse effect on the business,
properties, assets, liabilities, operation, results of operations or financial
condition of Purchaser such that the likelihood that Contractholders and holders
of Administered Contracts will agree to renew Insurance Contracts and
Administered Contracts with Purchaser, as contemplated in Article III, will be
materially reduced, or (b) a material adverse effect on the ability of Purchaser
to perform its obligations under this Agreement or any Ancillary Agreement or to
consummate any of the transactions contemplated hereby or thereby; provided,
however, to the extent such effect results from any of the following, such
effect shall not be considered a Purchaser Material Adverse Effect:  (i) unless
affecting Purchaser in a substantially disproportionate manner as compared to
similar companies, (A) general economic or business conditions, including
interest or currency rates, or changes therein or any act of terrorism, similar
calamity or war, (B) changes in Law including insurance laws or regulations, and
(C) conditions generally affecting the health insurance industry, and (ii)
conditions or effects resulting from the announcement of the transaction
contemplated hereby.
 
“Purchaser Requirements” shall have the meaning set forth in Section 6.11(e).
 
“Purchaser SAP Statements” shall have the meaning set forth in Section 5.09.
 
“Reinsured Contracts” means the policies administered by Seller or FGWLA
pursuant to the Assumed Liabilities Services Agreements.
 
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“Related Administered Contract” shall have the meaning set forth in Section
3.01.
 
“Relevant Period” shall have the meaning set forth in Section 2.04(a)(i).
 
“Replacement Retention Agreement” shall have the meaning set forth in Section
6.11(m)(i).
 
“Review Period” shall have the meaning set forth in Section 2.03(c).
 
“Risk Adjustment Factor” means 1/6 of the sum of the Monthly Risk Adjustment
Factors for the applicable Relevant Period.
 
“Risk Margin” means (a) (i) net premium written in connection with the Group
Health Business during the applicable Relevant Period minus (ii) net claims
incurred (including incurred but not reported claims, but excluding prior period
reserve adjustments) in connection with the Group Health Business during the
applicable Relevant Period times (b) the Risk Adjustment Factor.  In determining
the components of Risk Margin, accounting methodologies applied by Seller and
its Affiliates in the preparation of the Unaudited Financial Statements shall be
used on a consistent basis.
 
“SEC” means the United States Securities and Exchange Commission.
 
“Seller” shall have the meaning set forth in the introductory paragraph hereof.
 
“Seller Administrative Services Agreement” means an Administrative Services
Agreement in the form of Exhibit H.
 
“Seller Confidentiality Agreement” shall have the meaning set forth in Section
6.02.
 
“Seller Indemnity Reinsurance Agreement” means an Indemnity Reinsurance
Agreement in the form of Exhibit I.
 
“Seller Insurance Contracts” means (a) all of the Stop Loss Insurance Agreements
written by Seller in the United States reflected on Schedule 1.01(u), (b) all
other insurance contracts written by Seller in the United States reflected on
Schedule 1.01(u), (c) contracts on the same forms as those insurance contracts
or policy forms reflected on Schedule 1.01(u) written by Seller between
September 30, 2007 and the Closing Date, and (d) any such contracts that are
issued by Seller on or after the Closing Date in accordance with the terms of
the Seller Administrative Services Agreement (including, in each case of (a),
(b) and (c), renewals thereof and individual certificates issued thereunder and
all supplements, endorsements, enhancement letters, riders and ancillary
agreements in connection therewith, and including any individual policies issued
by Seller upon the exercise of conversion rights with respect to health
coverages under any such contracts).
 
 
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“Seller Legal Proceedings” shall have the meaning set forth in Section 9.06(a).
 
“Seller Liabilities” has the meaning set forth in Section 9.06(e).
 
“Seller Subsidiaries” means the Insurance Company Subsidiaries and the
Non-Insurance Company Subsidiaries.
 
“Seller Subsidiary Plans” means all “employee benefit plans” within the meaning
ascribed to such term by Section 3(3) of ERISA and all other employee benefit
arrangements or payroll practices, including, but not limited to each
employment, termination or severance agreement, deferred compensation plan,
incentive compensation plan, equity compensation plan, severance pay, sick
leave, vacation pay, salary continuation for disability, hospitalization,
medical insurance, life insurance, scholarship program, stock option or
restricted stock plan sponsored or maintained by Seller, FGWLA, the Seller
Subsidiaries or any ERISA Affiliate that provide benefits or compensation to or
on behalf of Subsidiary Employees (whether formal or informal, whether for the
benefit of a single individual or for more than one individual and whether for
the benefit of current or former employees or their beneficiaries).
 
“Seller Title IV Plan” means any Employee Plan that is subject to Title IV of
ERISA or section 412 of the Code, maintained by Seller, FGWLA, the Seller
Subsidiaries or any ERISA Affiliate or to which Seller, FGWLA, the Seller
Subsidiaries or any ERISA Affiliate contributed or is or may be obligated to
contribute thereunder on behalf of the Business Employees and/or Subsidiary
Employees.
 
“Sellers Extra Contractual Obligations” means all liabilities for compensatory,
consequential, exemplary, punitive or other special or similar damages which
relate to or arise in connection with, and any settlement, defense or
investigation costs incurred in connection with, any alleged or actual act,
error, omission or other event in connection with the issuance, marketing or
administration of any Insurance Contract, Reinsured Contract, Administered
Contract or Assigned and Assumed Contract or the handling of any claims under
any such Contract (a) prior to the Closing Date, by Seller or any of its
Affiliates, or (b) on or after the Closing Date (i) by Seller (and not by
Purchaser as Administrator under the Administrative Services Agreements), other
than as provided for in the prior written consent or direction of, or explicit
recommendation by, Purchaser as Administrator under the Administrative Services
Agreements or (ii) by Purchaser as Administrator under the Administrative
Services Agreement, if the act, error, omission or other event giving rise to
such liability was explicitly (1) directed by Seller pursuant to the terms of
the Administrative Services Agreements and (2) objected to in advance in writing
by Purchaser.
 
“Sellers Material Adverse Effect” means any material adverse effect (a) on the
business, financial condition or results of operations of the Acquired
Operations taken as a whole, or (b) on the ability of Seller, FGWLA, CLAC or any
of their Affiliates to perform its obligations under this Agreement or any
Ancillary Agreement or to consummate any of the transactions contemplated hereby
or thereby; provided, however,
 
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to the extent such effect results from any of the following, such effect shall
not be considered a Sellers Material Adverse Effect:  (i) unless affecting the
Acquired Operations in a substantially disproportionate manner as compared to
similar businesses, (A) general economic or business conditions, including
interest or currency rates, or changes therein or any act of terrorism, similar
calamity or war, (B) changes in Law including insurance laws or regulations, and
(C) conditions generally affecting the health insurance industry, or (ii)
conditions or effects resulting from the announcement of this Agreement or the
transaction contemplated hereby.
 
“Shared Action” has the meaning set forth in Section 9.06(e).
 
“Shares” means all of the issued and outstanding shares of capital stock or
other equity interests of the Purchased Subsidiaries, other than such shares or
interests indicated in Schedule 4.02 as being owned by a party other than
Seller.
 
“Special Incentive and Severance Agreements” means the Special Incentive and
Severance Agreements set forth on Schedule 1.01(v).
 
“Statement of Assets and Liabilities” means a statement of assets and
liabilities of the Business (excluding the Seller Subsidiaries) in the same
format as the December 31 Statement of Assets and Liabilities prepared in
accordance with the Methodologies.
 
“Statutory Reserves” means statutory reserves of Seller, FGWLA and CLAC (without
regard to the transactions contemplated by the Indemnity Reinsurance Agreements)
with respect to the Insurance Liabilities, calculated in accordance with
Applicable SAP.
 
“Stop Loss Insurance Agreements” means insurance or reinsurance contracts issued
by Seller, FGWLA or CLAC to the Business’s self-funded clients that either (or
both) (a) fully insure all claims in excess of a designated aggregate threshold
of total expected annual claims of a client’s self-funded plan, or (b) fully
insure claims of an individual participant in a client’s self-funded plan in
excess of a designated annual individual deductible amount.
 
“Sublease” shall have the meaning set forth in Section 6.27(a).
 
“Subleased Leases” means the Leased Property Leases set forth in Schedule
4.18(a)(ii).
 
“Subsidiary” means, with respect to any Person on a given date, any other Person
of which 50% or more of the voting power or value of the equity securities or
equity interests is owned directly or indirectly by such Person.
 
“Subsidiary Assumption Agreement” means a Subsidiary Assumption Agreement
between Seller and the Seller Subsidiaries in the form of Exhibit L.
 
 
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“Subsidiary Contracts” means all Contracts entered into by the Seller
Subsidiaries, to the extent such contracts remain in effect on the Closing Date,
other than the Subsidiary Insurance Contracts.
 
“Subsidiary Employees” means those individuals employed by the Seller
Subsidiaries immediately prior to the Closing Date.
 
“Subsidiary Extra Contractual Liabilities” means all liabilities for
compensatory, consequential, exemplary, punitive or other special or similar
damages which relate to or arise in connection with, and any settlement, defense
or investigation costs incurred in connection with, any alleged or actual act,
error, omission or other event in connection with the handling of any claims by
Seller, FGWLA, CLAC, the Seller Subsidiaries or any of their respective
Affiliates under any of the Subsidiary Insurance Contracts or in connection with
the marketing, issuance, delivery, cancellation or administration of any of the
Subsidiary Insurance Contracts by Seller, FGWLA, CLAC, the Seller Subsidiaries
or any of their respective Affiliates, in any case occurring prior to the
Closing Date.
 
“Subsidiary Indemnified Liabilities” means all liabilities and obligations of
any kind of the Seller Subsidiaries (i) existing as of the Closing Date or (ii)
arising out of or relating to acts, omissions, facts or conditions occurring or
existing prior to the Closing Date, in each case other than the Subsidiary
Liabilities.
 
“Subsidiary Insurance Contracts” means (a) all of the Stop Loss Insurance
Agreements written by Insurance Company Subsidiaries in the United States
reflected on Schedule 1.01(w), (b) all other insurance contracts written by
Insurance Company Subsidiaries in the United States reflected on Schedule
1.01(w), (c) contracts on the same forms as those insurance contracts reflected
on Schedule 1.01(w) written by Insurance Company Subsidiaries between September
30, 2007 and the Closing Date.
 
“Subsidiary Insurance Liabilities” means the liabilities and obligations of the
Seller Subsidiaries under the Subsidiary Insurance Contracts, other than
judgments, settlements, defense costs or other fees, costs and expenses arising
out of, under or relating to Existing Litigation and Subsidiary Extra
Contractual Liabilities, whether or not subject to reinsurance.
 
“Subsidiary Liabilities” means (a) the Subsidiary Insurance Liabilities, (b) the
liabilities of the Seller Subsidiaries arising under Subsidiary Contracts up to
the amounts specifically reflected on the Final Statement of Assets and
Liabilities, (c) the liabilities of the Seller Subsidiaries for judgments,
settlements, defense costs or other fees, costs and expenses arising out of,
under, or relating to any dispute relating to a Subsidiary Insurance Contract,
other than Subsidiary Extra Contractual Obligations or Existing Litigation, (d)
the Seller Subsidiaries’ sales force incentive compensation accrued through the
Effective Date up to the amounts specifically reflected on the Final Statement
of Assets and Liabilities, (e) amounts accrued through the Effective Date under
the broker incentive compensation plans of the Seller Subsidiaries up to the
amounts specifically reflected on the Final Statement of Assets and Liabilities
and (f) all other
 
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 liabilities and obligations reflected on the Final Statement of Assets and
Liabilities up to the respective amounts so reflected.
 
“Subsidiary Reinsurance Agreements” means (a) the reinsurance and retrocession
treaties and agreements to which any of the Seller Subsidiaries is a ceding
party that are in force on the date hereof or entered into by any Seller
Subsidiary other than in violation of Section 6.01, between the date hereof and
the Closing Date and (b) any such treaty or agreement that is terminated or
expired but under which the Seller Subsidiaries may continue to receive
reinsurance coverage.
 
“Tangible Assets” means all of the furniture, fixtures, equipment, supplies and
other tangible personal property owned by Seller or FGWLA listed on Schedule
1.01(x), to the extent that Seller or FGWLA continues to own such assets on the
Closing Date.
 
“Target Insurance Company Subsidiaries Statutory Net Worth” means $150,200,000
in statutory capital and surplus, determined in accordance with Applicable SAP.
 
“Target Non-Insurance Company Subsidiaries GAAP Equity” means $2,000,000 in GAAP
tangible book equity.
 
“Tax” or “Taxes” means all taxes, charges, fees, levies or other assessments,
including, without limitation, any income, net income, franchise tax or any tax
based on income, any alternative or add-on minimum taxes, any gross income,
gross receipts, estimated, retaliatory, commercial activity, margin, single
business, business, premium, sales, use, ad valorem, value added, transfer,
profits, license, payroll, employment, withholding, excise, severance, stamp,
occupation, property, environmental or windfall profit tax, assessments or
similar charges in connection with guaranty fund or risk pool participation,
custom duty or other tax, governmental fee or other like assessment including
all interest, penalties and additions imposed with respect thereto.
 
“Tax Authority” means the Internal Revenue Service and any other domestic or
foreign Governmental Entity responsible for the administration and/or collection
of any Tax.
 
“Tax Contest” shall have the meaning set forth in Section 4.21(e).
 
“Tax Indemnifying Party” shall have the meaning set forth in Section 12.02(b).
 
“Tax Returns” means all returns, reports, forms, estimates or information
statements relating to or required to be filed in connection with any Tax
including any schedule or attachment thereto and any amendment or supplement
thereof.
 
“Third Party Claim” shall have the meaning set forth in Section 11.02(a).
 
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“Transfer Documents” means the Bill of Sale and General Assignment and such
other documents and instruments as Purchaser may reasonably request in order to
transfer all of Seller’s, FGWLA’s, CLAC’s and the Inactive HMOs’ respective
right, title and interest in the Transferred Assets to Purchaser.
 
“Transfer Taxes” shall have the meaning set forth in Section 2.01(b).
 
“Transferred Assets” means (i) all rights of Seller and FGWLA with respect to
the Due and Uncollected Premiums (including outstanding and to be billed), (ii)
all receivables of the Business as of the close of business prior to the
Effective Date, (iii) all rights of Seller and FGWLA with respect to broker
commission advances and advance claims payments as of the close of business
prior to the Effective Date and reflected on the Final Statement of Assets and
Liabilities, (iv) such of the Business Books and Records as are reasonably
required by Purchaser to conduct the Business on or after the Closing Date, (v)
the Assigned and Assumed Contracts, (vi) the Transferred Leases, (vii) the
Tangible Assets, (viii) the Intangible Assets, (ix) the Owned Principally Used
Software, other than the Excluded Software, (x) all accounts maintained and all
fees received under the Administered Contracts for services rendered thereunder
on or after the Effective Date, (xi) the bank accounts of Seller, FGWLA and CLAC
utilized exclusively in connection with the Business and set forth on Schedule
1.01(y) and (xii) all other assets of Seller and FGWLA principally used in the
Business, in each case other than the Excluded Assets.
 
“Transferred Employee” shall have the meaning set forth in Section 6.11(e).
 
“Transferred Leases” means the Leased Property Leases set forth in Schedule
4.18(a)(i) under which Seller is indicated as tenant.
 
“Transition Services Agreement” means a Transition Services Agreement in the
form of Exhibit M.
 
“Treasury Regulations” means the Treasury Regulations (including temporary
regulations) promulgated by the United States Treasury Department with respect
to the Code or other federal tax statutes.
 
“Unaudited Financial Statements” shall have the meaning set forth in Section
4.06(b).
 
“United States” means the United States of America.
 
“Unrelated Administered Contracts” shall have the meaning set forth in Section
3A.01.
 
“WARN Act” means the Worker Adjustment and Retraining Notification Act of 1988
or any similar applicable state or local law requiring notice to employees in
the event of a closing or layoff.
 
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“Welfare Benefits” shall have the meaning set forth in Section 6.11(j)(i)(1).
 
ARTICLE II
 
TRANSFER AND ACQUISITION OF ASSETS
 
Section 2.01     Consideration
 
(a)         Upon the terms and subject to the conditions of this Agreement,
Purchaser shall pay to Seller, FGWLA and CLAC on the Closing Date an aggregate
amount equal to the Purchase Price, adjusted by the Adjustment Amount,
calculated in accordance with the provisions of Sections 2.02 and 2.03.  For the
avoidance of doubt, if the Adjustment Amount with respect to the Final Net Worth
Statement is positive, the Purchase Price will be increased by such Adjustment
Amount, but if the Adjustment Amount with respect to the Final Net Worth
Statement is negative, the Purchase Price will be reduced by such Adjustment
Amount.  The Purchase Price shall be allocated among Seller, FGWLA and CLAC in
accordance with Schedule 2.01.
 
(b)         All excise, sales, use, transaction, conveyance, stock transfer,
value added, transfer (including real property transfer or gains), stamp,
documentary, filing, recordation and other similar Taxes, levies or assessments
(“Transfer Taxes”) resulting from the transactions contemplated by this
Agreement shall be borne one half by Seller and one half by Purchaser.  For the
avoidance of doubt, any and all Transfer Taxes or any other Taxes resulting from
any restructuring or other transactions undertaken by Seller, FGWLA, CLAC of the
Seller Subsidiaries prior to the Closing shall be borne by Seller.
 
(c)         Each party shall be entitled to deduct and withhold income or
franchise Taxes imposed as a result of the sale of the Seller Subsidiaries or
the Transferred Assets from any payment otherwise payable or deliverable
pursuant to this Agreement with respect to such transactions as such party is
required by applicable Tax Law to deduct and withhold with respect to such
payment; provided, such withholding party shall first notify the other party of
such requirement no later than 15 days prior to the Closing Date and; provided,
further, however, that no amounts shall be so withheld pursuant to this Section
2.01(c) to the extent (i) the withholding party is notified in writing by the
other party to not withhold such amounts from such payment and (ii) such other
party agrees to indemnify the withholding party against claims made by a Tax
Authority with respect to the collection of such Taxes that were not
withheld.  To the extent that amounts are so deducted and withheld by any party
such deductions and withholdings shall be treated for all purposes of this
Agreement as having been paid by such party in respect of which such deduction
and withholding was made.
 
Section 2.02     Acquisition of Transferred Assets and Shares; Assumption of
Assumed Liabilities
 
.
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(a)         Upon the terms and subject to the conditions of this Agreement and
the payment of the Purchase Price, on the Closing Date, Seller, FGWLA and CLAC,
as applicable, shall sell, assign and transfer to Purchaser all of their right,
title and interest in the Transferred Assets.  All sales, assignments and
transfers of the Transferred Assets shall be effected by the Transfer
Documents.  Subject to the restrictions set forth in Section 6.19, Seller, FGWLA
and CLAC shall be entitled to keep and maintain copies of all Books and Records
and other items from and after the Closing, and to have access to the originals
of the Books and Records in accordance with Sections 9.01 and 12.06.
 
(b)         Upon the terms and subject to the conditions of this Agreement, on
the Closing Date, Seller, FGWLA and CLAC shall cede to Purchaser their
respective Insurance Liabilities, and Purchaser shall assume 100% of the
Insurance Liabilities pursuant to the Indemnity Reinsurance Agreements, as
applicable, in exchange for payment to Purchaser of the applicable Net
Reinsurance Premium by each of Seller, FGWLA and CLAC.
 
(c)         Upon the terms and subject to the conditions of this Agreement, on
the Closing Date, Seller, FGWLA and CLAC shall assign to Purchaser and Purchaser
shall assume the Other Assumed Liabilities, and the Seller shall assume the
Subsidiary Indemnified Liabilities pursuant to the Subsidiary Assumption
Agreement.
 
(d)         Upon the terms and subject to the conditions of this Agreement, on
the Closing Date, Seller shall sell, assign and transfer the Shares to
Purchaser.
 
(e)         Upon the terms and subject to the conditions of this Agreement, on
the Closing Date, Seller shall sublease the Leased Property subject to the
Subleased Leases to Purchaser pursuant to the Subleases.
 
Section 2.03     Payments at and After Closing.
 
(a)         Not later than the third Business Day prior to the Closing Date,
Seller shall deliver to Purchaser drafts of the Closing Statement of Assets and
Liabilities and of the Closing Net Worth Statement, together with a certificate
of the Chief Financial Officer of Seller certifying that such statements were
prepared in accordance with the terms of this Agreement.  Seller, FGWLA and CLAC
shall consult in good faith with Purchaser regarding the drafts so delivered,
and shall make any changes thereto agreed with Purchaser.
 
(b)         On the Closing Date, the Purchase Price will be adjusted by the
Adjustment Amount, and the Net Reinsurance Premiums will be calculated, as
reflected in the Closing Statement of Assets and Liabilities and the Closing Net
Worth Statement, in the manner described in Section 2.01(a).  Such amounts shall
be transferred between Purchaser and Seller, FGWLA and CLAC, as appropriate, by
wire transfer of immediately available funds in U.S. Dollars.
 
 
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(c)         Within 90 days after the Closing Date, Seller shall prepare and
deliver to Purchaser a Statement of Assets and Liabilities as of the close of
business on the day preceding the Effective Date (the “Proposed Statement of
Assets and Liabilities”) and a Net Worth Statement as of the close of business
on the Business Day preceding the Effective Date (the “Proposed Net Worth
Statement”).  Seller shall deliver or make available to Purchaser and its
Affiliates upon request copies of all work papers used as the basis for
determining the Proposed Statement of Assets and Liabilities and Proposed Net
Worth Statement.  Purchaser shall have reasonable rights to monitor and
participate with Seller in Seller’s preparation of the Proposed Statement of
Assets and Liabilities, it nevertheless being understood that Seller shall have
the final authority in such preparation.  Purchaser and its representatives
shall have until the date that is 90 days after the delivery of the Proposed
Statement of Assets and Liabilities and the Proposed Net Worth Statement (the
“Review Period”) to review the Proposed Statement of Assets and Liabilities and
Proposed Net Worth Statement and all supporting determining papers and
documentation and to suggest changes, if any, therein.
 
If Seller and Purchaser are able to agree in writing on the manner in which all
items on the Proposed Statement of Assets and Liabilities and Proposed Net Worth
Statement should be treated then the resulting statements shall be binding on
the parties and the Proposed Statement of Assets and Liabilities shall be
referred to as the “Final Statement of Assets and Liabilities,” and the Proposed
Net Worth Statement shall be referred to as the “Final Net Worth Statement.”  If
Seller and Purchaser are unable, within 30 days from the last day of the Review
Period, to agree on the manner in which any item or items should be treated in
the preparation of the Final Statement of Assets and Liabilities and Final Net
Worth Statement, then all items remaining in dispute shall be submitted to the
Neutral Auditor; provided, however, that Purchaser shall have the right to
dispute the determination of any such item or items only on the basis of, and to
the extent it claims that, in determining such item (i) was not determined in
accordance with the Methodologies or (ii) there were mathematical errors in the
calculation of such item.  The Neutral Auditor shall determine the resolution,
based on the criteria referred to in the immediately preceding sentence, of
those issues (and only those issues) still in dispute and shall have no
jurisdiction to award any other relief. The parties shall notify the Neutral
Auditor (if previously designated) of any items remaining in dispute within 45
days from the last day of the Review Period, or if the Neutral Auditor was not
previously designated or is unable to serve, promptly request the American
Arbitration Association to appoint a Neutral Auditor.  The parties shall provide
to the Neutral Auditor written summaries of all items in dispute prepared by
Purchaser, on the one hand, and Seller, on the other hand within the later of
(i) 60 days from the last day of the Review Period or (ii) five days from the
appointment of the Neutral Auditor.  The Neutral Auditor’s determination shall
be made as soon as possible, if practicable within 30 days after receipt of the
written summaries and shall be set forth in a written statement delivered to
Seller and Purchaser and shall be final, binding and conclusive; provided,
however, that the dollar amount of each item in dispute shall be determined
between the range of dollar amounts proposed by Seller and Purchaser.  The
Proposed Statement of Assets and Liabilities and Proposed Net Worth Statement,
adjusted to give effect to such determination and any other agreement of the
parties, shall in that case be referred to as the Final Statement of Assets and
Liabilities and Final Net Worth Statement.  Each party
 
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agrees to execute, if requested by the Neutral Auditor, a reasonable engagement
letter.  One-half of the fees and expenses relating to the work, if any, to be
performed by the Neutral Auditor shall be borne by Seller and one-half of such
fees and expenses shall be borne by Purchaser.  The decision of the Neutral
Auditor may be entered and enforced in any court having jurisdiction.
 
(d)         Within five Business Days after the Final Statement of Assets and
Liabilities and the Final Net Worth Statement have been determined:
 
(i)                 if the Adjustment Amount, minus the sum of the Net
Reinsurance Premiums, with respect to the Final Statement of Assets and
Liabilities and the Final Net Worth Statement as determined in the manner
described in Section 2.01(a) exceeds the Adjustment Amount, minus the sum of the
Net Reinsurance Premiums, with respect to the Closing Statement of Assets and
Liabilities and the Closing Net Worth Statement, Purchaser shall pay to Seller,
FGWLA and CLAC cash in an aggregate amount equal to such excess, together with
interest thereon from and including the Closing Date to but not including the
date of such transfer computed at an annual rate equal to the 90-Day Treasury
Rate in effect on the Closing Date; or
 
(ii)                 if the Adjustment Amount, minus the sum of the Net
Reinsurance Premiums, with respect to the Closing Statement of Assets and
Liabilities and the Closing Net Worth Statement exceeds the Adjustment Amount,
minus the sum of the Net Reinsurance Premiums, with respect to the Final
Statement of Assets and Liabilities and the Final Net Worth Statement as
determined in the manner described in Section 2.01(a), Seller, FGWLA and CLAC
shall pay to Purchaser cash in an aggregate amount equal to such excess,
together with interest thereon from and including the Closing Date to but not
including the date of such transfer computed at the annual rate specified above.
 
(e)         Purchaser and the Seller Subsidiaries shall use commercially
reasonable efforts to collect in the ordinary course of business the Admitted
Receivables for the first 18 months after the Closing Date.  On the first
Business Day that is 18 months after the Closing Date, Purchaser and the Seller
Subsidiaries shall assign all Admitted Receivables not then collected in full to
Seller.  Seller shall pay to Purchaser the aggregate amount reflected in the
Final Statement of Assets and Liabilities and the Final Net Worth Statement in
respect of the Admitted Receivables minus the amount collected with respect
thereto on or prior to such date.
 
(f)         If, following the determination of the Final Net Worth Statement but
prior to 9 months following the Closing Date, Purchaser shall determine that one
or more Insurance Contracts that were ceded to Purchaser pursuant to the
Indemnity Reinsurance Agreements, or one or more Subsidiary Insurance Contracts,
were erroneously not considered by Seller, Purchaser and, if applicable, the
Neutral Auditor in the determination of the Final Statement of Assets and
Liabilities or the Final Net Worth Statement, Purchaser may deliver to Seller a
written notice explaining Purchaser’s determination of such error and
Purchaser’s proposal for an adjustment that should be
 
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made to the Purchase Price, the Net Reinsurance Premium and/or the Adjustment
Amount on account of such determination.  Purchaser shall make available to
Seller the Books and Records and workpapers used in Purchaser’s calculation and
such other information as Seller shall reasonably request in considering such
notice.  Seller and Purchaser shall cooperate in good faith in determining the
appropriate adjustment that should be made.  If Seller and Purchaser are unable,
within 90 days following the date of Purchaser’s notice, to resolve any dispute
as to the appropriate adjustment, such dispute shall be referred to the Neutral
Auditor (or to the American Arbitration Association for the appointment of a
Neutral Auditor if necessary), and the Neutral Auditor which shall determine the
appropriate resolution of such dispute in accordance with the criteria of this
Section 2.03(f) within 30 days from the date of the retention of the Neutral
Auditor for this purpose.  The procedures for the retention of the Neutral
Auditor, its decision and the enforcement thereof set forth in Section 2.03(d)
shall apply under this Section 2.03(f) to the extent applicable.
 
(g)         Cash transferred pursuant to clause (i) or (ii) of Section 2.03(d),
Section 2.03(e) and Section 2.03(f) shall be by wire transfer of immediately
available funds to one or more accounts specified in writing by the party
receiving such funds.
 
(h)         As additional consideration for the Transferred Assets and the
Shares, at the time of each of Purchaser’s first 4 monthly payments of fees to
Seller under the Transition Services Agreement (the “Monthly Payments”),
Purchaser shall pay to Seller $4,000,000 minus the portion of such Monthly
Payment due on account of “Corporate Services” as defined in the Transition
Services Agreement (unless such portion exceeds $4,000,000).  Such payment shall
be made in the manner specified in the Transition Services Agreement for the
Monthly Payments.
 
Section 2.04     Additional Adjustment of Purchase Price
 
                                                (a)         Post-Closing PP
Adjustment.
 
(i)                 As set forth in this Section 2.04, the Purchase Price as
finally determined in accordance with Section 2.03 (the “Paid Purchase Price”)
shall be subject to reduction following the Closing (the “Post-Closing PP
Adjustment”) based on certain results of the Business, as described below, (A)
for the six month period of January 1, 2008 through June 30, 2008, if the
Closing occurs prior to August 1, 2008 and (B) for the six month period of April
1, 2008 through September 30, 2008, if the Closing occurs on or after August 1,
2008 (in each case of (A) or (B), the “Relevant Period”); provided, however,
that in no event shall the Paid Purchase Price be reduced by more than
$200,000,000 (the “Cap”) as a result of the Post-Closing PP Adjustment.
 
(ii)                 The Post-Closing PP Adjustment will be determined by
comparing the sum of the Risk Margin and the Administration Margin, in each case
for the Relevant Period (such sum, the “Actual Results”), to the
Benchmark.  “Annualized Difference” means (A) the greater of (1) zero and (2)
(I) 92.5% of
 
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the Benchmark minus (II) the Actual Results divided by (B) (1) 0.4453, if the
Closing occurs prior to August 1, 2008, and (2) 0.4946, if the Closing occurs on
or after August 1, 2008.  “Purchase Price Reduction Amount” means the lesser of
(A) the Cap and (B) 7 times the Annualized Difference.  Examples of this
calculation are set forth in Exhibit P.
 
(b)         Calculation of Purchase Price Reduction Amount.
 
(i)                 Within 90 days after the end of the Relevant Period,
Purchaser shall prepare and deliver to Seller a calculation of the Purchase
Price Reduction Amount (the “Proposed Calculation of PP Reduction
Amount”).  Purchaser shall deliver or make available to Seller and its
Affiliates upon request copies of all material work papers used as the basis for
calculating the Proposed Calculation of PP Reduction Amount.  Seller shall have
reasonable rights to monitor the preparation of the Proposed Calculation of PP
Reduction Amount by Purchaser.  Seller and its representatives shall have until
the date that is 45 days after the delivery of the Proposed Calculation of PP
Reduction Amount (the “PPR Review Period”) to review the Proposed Calculation of
PP Reduction Amount and all supporting determining papers and documentation and
to suggest changes, if any, therein.
 
(ii)                 If Seller and Purchaser are able to agree in writing on the
manner in which all items on the Proposed Calculation of PP Reduction Amount
should be treated then the resulting statements shall be binding on the parties
and the Proposed Calculation of PP Reduction Amount shall be referred to as the
“Final Calculation of PP Reduction Amount.”  If Seller and Purchaser are unable,
within 30 days from the last day of the PPR Review Period, to agree on the
manner in which any item or items should be treated in the calculation of the
Final Calculation of PP Reduction Amount, then all items remaining in dispute
shall be submitted to the Neutral Auditor; provided, however, that Seller shall
have the right to dispute the determination of any such item or items only on
the basis of, and to the extent it claims that, in determining such item (A) was
not determined in accordance with the methodologies set forth in this Section
2.04 or (B) there were mathematical errors in the calculation of such item.  The
Neutral Auditor shall determine the resolution, based on the criteria referred
to in the immediately preceding sentence, of those issues (and only those
issues) still in dispute and shall have no jurisdiction to award any other
relief. The parties shall notify the Neutral Auditor (if previously designated)
of any items remaining in dispute within 45 days from the last day of the PPR
Review Period, or if the Neutral Auditor was not previously designated or is
unable to serve, promptly request the American Arbitration Association to
appoint a Neutral Auditor.  The parties shall provide to the Neutral Auditor
written summaries of all items in dispute prepared by Purchaser, on the one
hand, and Seller, on the other hand within the later of (A) 60 days from the
last day of the PPR Review Period and (B) five days from the appointment of the
Neutral Auditor.  The Neutral Auditor’s determination shall be made as soon as
possible, if practicable within 30 days after receipt of the written summaries
and shall be set forth in a written statement
 
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delivered to Seller and Purchaser and shall be final, binding and conclusive;
provided, however, that the dollar amount of each item in dispute shall be
determined between the range of dollar amounts proposed by Seller and
Purchaser.  The Proposed Calculation of PP Reduction Amount, adjusted to give
effect to such determination and any other agreement of the parties, shall in
that case be referred to as the Final Calculation of PP Reduction Amount.  Each
party agrees to execute, if requested by the Neutral Auditor, a reasonable
engagement letter.  One-half of the fees and expenses relating to the work, if
any, to be performed by the Neutral Auditor shall be borne by Seller and
one-half of such fees and expenses shall be borne by Purchaser.  The decision of
the Neutral Auditor may be entered and enforced in any court having
jurisdiction.
 
(iii)                 Within five Business Days after the Final Calculation of
PP Reduction Amount has been determined, Seller shall pay to Purchaser cash in
an amount equal to the Purchase Price Reduction Amount as reflected in the Final
Calculation of PP Reduction Amount.  Cash transferred pursuant to this clause
(iii) shall be by wire transfer of immediately available funds to an account
specified in writing by Purchaser.
 
Section 2.05     Place and Date of Closing.  The Closing shall take place at the
offices of Dewey & LeBoeuf LLP, 125 West 55th Street, New York, New York, at
10:00 a.m. New York time on the Closing Date or at such other time or place as
the parties may mutually agree.
 
Section 2.06     Transactions to be Effected at the Closing
 
.                                              (a)         At the Closing,
Seller, FGWLA and CLAC, as applicable, shall execute and deliver to Purchaser,
and shall cause their Affiliates (including the Inactive HMOs) to execute and
deliver to Purchaser, as applicable: (i) the Seller Indemnity Reinsurance
Agreement; (ii) the FGWLA Indemnity Reinsurance Agreement; (iii) the CLAC
Indemnity Reinsurance Agreement; (iv) the Seller Administrative Services
Agreement; (v) the FGWLA Administrative Services Agreement; (vi) the CLAC
Administrative Services Agreement; (vii) the Transition Services Agreement;
(viii) the Assumption Agreement; (ix) the Network Licensing Agreement; (x) the
Transfer Documents; (xi) the Headquarters Leases; (xii) the Subleases, (xiii)
certificates representing the Shares, duly endorsed in blank or accompanied by
duly executed instruments of transfer reasonably acceptable to Purchaser; (xiv)
the Subsidiary Assumption Agreement and (xv) such other agreements, instruments
and documents as are required by this Agreement to be delivered by Seller,
FGWLA, CLAC or their Affiliates at the Closing.
 
(b)         At the Closing, Purchaser shall execute and deliver to Seller, FGWLA
and CLAC, as applicable:  (i) the Seller Indemnity Reinsurance Agreement; (ii)
the FGWLA Indemnity Reinsurance Agreement; (iii) the CLAC Indemnity Reinsurance
Agreement; (iv) the Seller Administrative Services Agreement; (v) the FGWLA
Administrative Services Agreement; (vi) the CLAC Administrative Services
Agreement; (vii) the Transition Services Agreement; (viii) the Assumption
Agreement; (ix) the
 
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Network Licensing Agreement; (x) the Transfer Documents; (xi) the Headquarters
Leases; (xii) the Subleases; and (xiii) such other agreements, instruments and
documents as are required by this Agreement to be delivered by Purchaser at the
Closing.
 
Section 2.07     Nonassignability of Assets.  Notwithstanding anything to the
contrary contained in this Agreement, to the extent that the assignment or
transfer or attempted assignment or transfer to Purchaser of any Transferred
Asset or any benefit arising thereunder or resulting therefrom would require any
third party consents or waivers and such consents or waivers shall not have been
obtained prior to the Closing, neither this Agreement nor any Ancillary
Agreement shall constitute an assignment or transfer, or any attempted
assignment or transfer thereof.  Following the Closing, for a period of 18
months (the “Consent Period”), the parties shall continue to use their
reasonable best efforts, and shall cooperate fully with each other, to obtain
promptly such consents or waivers.  Pending receipt of such consent or waiver,
the parties shall cooperate with each other to effect mutually agreeable,
reasonable and lawful arrangements pursuant to the Transition Services Agreement
or otherwise designed to provide to Purchaser the benefits of any such
Transferred Asset.  Once consent or waiver for the assignment or transfer of any
such Transferred Asset not assigned or transferred at the Closing is obtained,
Seller, FGWLA or CLAC, as applicable, shall assign or transfer such Transferred
Asset to Purchaser at no additional cost.  In the event that Seller or its
Affiliate are unable to provide as a transition service the benefits of such
Transferred Asset, or any such Transferred Asset is still not transferred by the
end of the Consent Period, Seller shall reimburse Purchaser for an amount equal
to Purchaser’s incremental costs of replacing such Transferred Asset with a
substantially equivalent asset for the same remaining contractual time as such
Transferred Asset; such incremental costs are equal to the difference between
the cost of the Transferred Asset and the cost of its
replacement.  Notwithstanding the foregoing sentence, to the extent that Seller
is unable to obtain any such required consent with respect to one or more of the
Leased Properties prior to the end of the Consent Period, pursuant to the
Transition Services Agreement, Seller shall continue to lease the affected
Leased Properties for the benefit of Purchaser until such consent is obtained
and delivered to Purchaser, or the expiration or termination of the affected
Leased Property Lease, whichever is earlier.  In the event that, after the
Closing, the attempted assignment of any agreement listed in Schedule 1.1(d)
proves to be ineffective but the closing contemplated herein for the sale of
Shares to which such agreement relates has occurred, Seller shall take such
actions in connection with such agreement for the benefit of Purchaser as
Purchaser shall direct, to the extent it is reasonable to do so, and Purchaser
shall reimburse Seller and its Affiliates for any Losses in connection with such
agreement or such actions.  For the avoidance of doubt, this Section 2.07 shall
not limit the rights of Purchaser under Section 7.05 or of Seller, FGWLA or CLAC
under Section 8.05.
 
Section 2.08     Delayed Approvals.  In the event that the Closing has not
occurred by December 31, 2008 due to the lack of the receipt of one or more of
(i) required approvals from the California Department of Managed Care for the
acquisition of control of Great-West Healthcare of California, Inc. by
Purchaser, (ii) required approvals from the New York Insurance Department to
close the transactions contemplated by this Agreement with regards to the
Business of FGWLA, and (iii)
 
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required approvals from the Canadian Office of the Superintendent of Financial
Institutions to close the transactions contemplated by this Agreement with
regards to the Business of CLAC (such approvals which have not been obtained,
the “Delayed Approvals”), the parties shall negotiate in good faith the
possibility of consummating some of the transactions contemplated hereby
without, or prior to, closing the transactions subject to the Delayed Approvals.
 
ARTICLE III
 
RENEWAL RIGHTS
 
Section 3.01     Cessation of Renewals.  From and after the Non-Renewal Date
with respect to each Insurance Contract and Administered Contract written in
conjunction with an Insurance Contract (each, a “Related Administered Contract”)
or such earlier date as requested in writing by Purchaser, Seller, FGWLA and
CLAC shall cease renewing the Insurance Contracts and Related Administered
Contracts, except (i) with respect to Guaranteed Renewal Contracts that are not
terminated by or with the consent of the Contractholders or otherwise terminated
in accordance with their terms, (ii) to the extent required by applicable Law or
(iii) to honor binding quotes outstanding on such date.
 
Section 3.02     Renewal Rights.
 
(a)         Seller, FGWLA and CLAC shall provide to Purchaser on the Closing
Date a true, complete and correct list of clients which have Insurance Contracts
and Related Administered Contracts that are either in-force on the Closing Date
or lapsed as of the Closing Date but subject to reinstatement.
 
(b)         In connection with the first policy anniversary or other renewal
date of each Insurance Contract and the applicable Related Administered Contract
on or after the Non-Renewal Date applicable to such Insurance Contract and
Related Administered Contract with respect to which no renewal rate quote is
outstanding on such date (or, with respect to such Insurance Contracts and
Related Administered Contracts as remain in effect with Seller, FGWLA and CLAC
subsequent to such Non-Renewal Date based on renewal rate quotes so outstanding,
in connection with the next such policy anniversary or other renewal date),
Purchaser shall send, on behalf of Seller, FGWLA and CLAC, as appropriate, (i)
to each applicable Contractholder who does not have a Guaranteed Renewal
Contract a written notice in a form reasonably acceptable to Seller, notifying
such Contractholder of the termination of such Insurance Contract and Related
Administered Contract by Seller, FGWLA or CLAC, as applicable, and encouraging
such Contractholder to obtain replacement insurance and services with Purchaser
and (ii) to each applicable Contractholder who has a Guaranteed Renewal Contract
a written notice substantially in a form reasonably acceptable to Seller,
encouraging such Contractholder to replace its Guaranteed Renewal Contract and
Related Administered Contract with a new insurance policy and services agreement
issued by Purchaser.
 
 
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(c)         Purchaser shall, in connection with the first policy anniversary
date or other renewal date on or after the Non-Renewal Date applicable to each
Insurance Contract and the applicable Related Administered Contract with respect
to which no renewal rate quote is outstanding on such date (or, with respect to
such Insurance Contracts and Related Administered Contracts continued to be
written by Seller, FGWLA and CLAC subsequent to such Non-Renewal Date for the
reasons set forth in Section 3.01, in connection with the next such policy
anniversary), offer to issue a replacement policy and a new services agreement
on Purchaser’s forms and at Purchaser’s rates and subject to Purchaser’s
underwriting criteria, and Purchaser shall make a good faith effort to place the
same in effect.  In connection with such replacements, Purchaser shall honor
outstanding rate guarantees that are binding on Seller, FGWLA and CLAC.
 
(d)         From and after the applicable Non-Renewal Date, in connection with
any Insurance Contract and applicable Related Administered Contract with respect
to which renewal rate quotes or quotes for new business are outstanding on the
applicable Non-Renewal Date, Purchaser and Seller, Purchaser and FGWLA or
Purchaser and CLAC, as applicable, shall each use its commercially reasonable
efforts to actively encourage Contractholders and prospective Contractholders to
accept Purchaser in substitution for Seller, FGWLA and CLAC as the issuing
carrier and service provider.  In the event that a Contractholder or prospective
Contractholder should decline to so accept Purchaser and accepts a continuation
of its policy and service agreement issued by Seller, FGWLA or CLAC or a new
policy and service agreement issued by Seller, FGWLA or CLAC, such policy and
service agreement shall nevertheless be subject to the provisions of Section
3.02(b); for the avoidance of doubt, the provisions of Section 3.02(b) shall be
applicable to such policy and service agreement on the first anniversary after
the date of issuance of such policy and service agreement by Seller, FGWLA or
CLAC.
 
(e)         From and after the Closing, upon the exercise of conversion rights
with respect to health coverages under any Insurance Contract, Purchaser and
Seller, Purchaser and FGWLA or Purchaser and CLAC, as applicable, shall each use
its commercially reasonable efforts to actively encourage individuals exercising
such rights to accept Purchaser in substitution for Seller, FGWLA and CLAC as
the issuing carrier.  For the avoidance of doubt, in the event that an
individual should decline to so accept Purchaser the individual conversion
policy issued by Seller, FGWLA or CLAC, as applicable, shall constitute an
Insurance Contract hereunder and the provisions of Section 3.02(b) shall be
applicable to such individual conversion policy on the first anniversary date of
issuance of the individual conversion policy.
 
(f)         For Guaranteed Renewal Contracts or when otherwise required by law,
the policy issued by Purchaser that replaces such Insurance Contract shall not,
unless otherwise agreed by the applicable Contractholder, exclude from coverage
any pre-existing condition occurring after the effective date of the Insurance
Contract it replaced; provided, that such pre-existing condition did not
preclude coverage under any such existing Insurance Contract.
 
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(g)         Notwithstanding anything in this Agreement to the contrary, in no
event shall Seller, FGWLA or CLAC be obligated under this Agreement to renew any
Insurance Contract and applicable Related Administered Contract subsequent to
the policy anniversary date of such Insurance Contract or Related Administered
Contract following the applicable Non-Renewal Date or to send any notices to
Contractholders or otherwise attempt to encourage Contractholders to obtain
coverage or services with Purchaser after the second policy anniversary date
after the applicable Non-Renewal Date.  Notwithstanding the foregoing, Seller,
FGWLA and CLAC shall continue to renew the Guaranteed Renewal Contracts for as
long as is required pursuant to the terms of such contracts or applicable Law.
 
(h)         From and after the Closing Date, in connection with the renewal of
the Insurance Contracts and Related Administered Contracts by Purchaser, Seller,
FGWLA and CLAC shall:
 
(i)                 not object to the cancellation, on a pro rata basis, subject
to the consent of the insured, the Contractholder and/or agent thereof, of any
existing Insurance Contract which Purchaser desires to write;
 
(ii)                 subject to the Administrative Services Agreements, for two
years after the applicable Non-Renewal Date, refrain from filing any withdrawal
plans or notices with any insurance regulatory authorities in any state relating
to withdrawal from any lines, kinds or classes of insurance business relating to
the Insurance Contracts, except as set forth in Schedule 4.05(a)(ii), as
required by a change in applicable Law following the date hereof or as requested
by a Governmental Entity;
 
(iii)                 subject to the Administrative Services Agreements, for two
years after the applicable Non-Renewal Date, refrain from sending out notices of
any kind, including notices under HIPAA, to the Contractholders or holders of
Administered Contracts relating to withdrawal from any lines, kinds or classes
of insurance business, except as set forth in Schedule 4.05(a)(ii), as required
by a change in applicable Law following the date hereof or as requested by a
Governmental Entity;
 
(iv)                 (1) consult with Purchaser regarding any withdrawal plan or
similar filing with a Governmental Entity that Seller, FGWLA or CLAC may wish to
file as permitted by the foregoing clauses, and (2) make any such filing in a
form reasonably satisfactory to Purchaser, and at a time and in a manner
designed to minimize, to the extent practicable, any disruption to the conduct
of the Business by Purchaser, including the renewal of the Insurance Contracts
and Related Administered Contracts; and
 
(v)                 cooperate with Purchaser in identifying and making available
to Purchaser the form filing files and related regulatory approvals of Seller,
FGWLA and CLAC with respect to the Business and assist Purchaser in all
 
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reasonable respects in making “me-too” or similar filings of policy forms of the
types included in the Business.
 
(i)         Seller, FGWLA and CLAC agree that the intent of this Article III is
to convey to Purchaser on an exclusive basis all of Seller’s, FGWLA’s and CLAC’s
rights, title and interest in the rights to renew the Insurance Contracts and
the Related Administered Contracts.  Seller, FGWLA and CLAC shall not retain any
such renewal rights and shall not sell, assign, transfer or facilitate the
transfer of such rights to any third party other than Purchaser.
 
ARTICLE IIIA

UNRELATED ADMINISTERED CONTRACTS
 
Section 3A.01     Cessation of Renewals.  From and after the Non-Renewal Date,
Seller shall cease renewing the Administered Contracts that were issued by
Seller not in conjunction with an Insurance Contract (the “Unrelated
Administered Contracts”), except to honor renewal fee quotes outstanding on such
date, if applicable.
 
                               Section 3A.02      Renewal Rights.  Purchaser
shall, in connection with the first contract anniversary date of each Unrelated
Administered Contract selected by Purchaser in its discretion on or after the
Non-Renewal Date with respect to which no renewal fee quote is outstanding on
such date, if applicable (or, with respect to such Unrelated Administered
Contracts renewed by Seller subsequent to the Non-Renewal Date based on renewal
fee quotes outstanding on such date, in connection with the next such contract
anniversary), offer to issue a replacement contract under terms determined by
Purchaser and make a good faith effort to place the same in effect.  In
connection with such replacements, at Purchaser’s request, Seller shall
reasonably cooperate with Purchaser in Purchaser’s efforts to replace such
contracts.
 
ARTICLE IV
 
REPRESENTATIONS AND WARRANTIES OF SELLER, FGWLA AND CLAC
 
Seller, FGWLA and CLAC hereby represent and warrant to Purchaser as follows (it
being understood that each of FGWLA and CLAC hereby makes only those
representations and warranties that specifically relate to it).
 
Section 4.01     Organization, Standing and Authority
 
(a)         Seller is duly organized, validly existing and in good standing
under the Law of Colorado and has the requisite power and authority to carry on
the operations of the Business as it is now being conducted by Seller.  FGWLA is
duly organized, validly existing and in good standing under the Law of New York
and has the requisite power and authority to carry on the operations of the
Business as it is now being conducted by FGWLA.  CLAC is duly organized, validly
existing and in good standing
 
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under the Law of Canada and has the requisite power and authority to carry on
the operations of the Business as it is now being conducted by CLAC.
 
(b)         Each Seller Subsidiary is validly existing and is a corporation or
other legal entity duly organized under the Law of the jurisdiction indicated in
Schedule 4.01(b) and has the requisite corporate power and authority to carry on
its business as now being conducted.  Each Seller Subsidiary is duly qualified
to do business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties make such
qualification necessary.
 
(c)         Seller has delivered or made available to Purchaser complete and
correct copies of the certificate of incorporation and bylaws (or comparable
organizational documents) (as amended to date, the “Organizational Documents”)
for each of the Seller Subsidiaries.  No Seller Subsidiary is in material
default under or in material violation of any provision of its Organizational
Documents and such Organizational Documents as made available to Purchaser are
in full force and effect.  The minute books (containing the records of meetings
of the stockholders, the board of directors, and any committees of the board of
directors) of each Seller Subsidiary are true and complete in all material
respects.  The stock certificate books and the stock record books of each Seller
Subsidiary are correct and complete in all material respects.
 
Section 4.02     Capitalization.  Schedule 4.02 accurately sets forth, with
respect to each Seller Subsidiary, (i) the number of and designation of all
authorized shares of capital stock and (ii) the number of issued and outstanding
shares of capital stock by class, the names of the holders thereof and the
number of shares held by each such holder.  Such shares have been duly
authorized, validly issued and are fully paid and, to the extent applicable,
non-assessable and have been issued in compliance with all foreign, federal and
state securities laws.  Seller and/or one or more Seller Subsidiaries are and
shall be on the Closing Date the sole record and beneficial owners and holders
of good and valid title to such shares, except as set forth on Schedule 4.02,
free and clear of all Liens.  Except as listed on Schedule 4.02, no legend or
other reference to any purported encumbrance appears on any certificate
representing any of such shares.  Upon delivery of payment for the Shares as
herein provided, Purchaser will acquire good and valid title to the Shares, free
and clear of all Liens, other than any Liens arising from acts of
Purchaser.  Except as set forth in Schedule 4.02, there are no outstanding
options, warrants, calls, preemptive or similar rights, commitments or
agreements of any kind to which Seller or any of its Subsidiaries is a party, or
by which Seller or any of its Subsidiaries is bound, relating to the sale,
issuance or voting of, or the granting of rights to acquire, all or any portion
of the outstanding shares of capital stock of any Seller Subsidiary, or any
securities convertible or exchangeable into or evidencing the right to purchase
all or a portion of such shares.  There are no outstanding stock appreciation,
phantom stock, profit participation, or similar rights with respect to any
Seller Subsidiary.  There are no voting trusts or other agreements or
understandings to which Seller or any of the Seller Subsidiaries is a party with
respect to the voting of the outstanding shares of capital stock of the Seller
Subsidiaries.  There are no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or convertible into
 
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or exercisable for securities having the right to vote) with the holders of such
shares on any matter.
 
Section 4.03     Authorization.   Each of Seller, FGWLA, CLAC and, if
applicable, their Affiliates has the requisite power and authority to execute,
deliver and perform its obligations under this Agreement, each of the Ancillary
Agreements to be executed by it and the other agreements, documents and
instruments to be executed and delivered in connection with this Agreement or
the Ancillary Agreements.  The execution and delivery by Seller, FGWLA, CLAC
and, if applicable, their Affiliates of this Agreement, the Ancillary Agreements
and the other agreements, documents and instruments to be executed and delivered
in connection with this Agreement or the Ancillary Agreements by Seller, FGWLA,
CLAC and, if applicable, their Affiliates, and the performance by Seller, FGWLA,
CLAC and, if applicable, their Affiliates of their respective obligations
hereunder and thereunder, have been duly authorized by all necessary corporate
action on the part of Seller, FGWLA, CLAC and, if applicable, their
Affiliates.  This Agreement has been duly executed and delivered by Seller,
FGWLA and CLAC and, subject to the due execution and delivery hereof by
Purchaser, this Agreement is a valid and binding obligation of Seller, FGWLA and
CLAC, respectively, enforceable against Seller, FGWLA and CLAC, as appropriate,
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors’ rights generally and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).  Each Ancillary Agreement and each other
agreement, document and instrument to be executed and delivered in connection
with this Agreement or the Ancillary Agreements, when executed and delivered by
Seller, FGWLA, CLAC and, if applicable, their Affiliates, will be duly executed
and delivered by Seller, FGWLA, CLAC and their Affiliates, as applicable, and,
subject to the due execution and delivery of such agreements, documents and
instruments by the other parties thereto, each Ancillary Agreement and each
other agreement, document and instrument to be delivered in connection with this
Agreement or the Ancillary Agreements executed by Seller, FGWLA, CLAC or their
Affiliates will be a valid and binding obligation of Seller, FGWLA, CLAC or
their Affiliates, as applicable, enforceable against Seller, FGWLA, CLAC or
their Affiliates, as appropriate, in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors’ rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
 
Section 4.04     Non-Contravention.  Except as disclosed in Schedule 4.04, the
execution and delivery by each of Seller, FGWLA, CLAC and their Affiliates, as
applicable, of this Agreement and of the Ancillary Agreements to which it is a
party do not, and the consummation by Seller, FGWLA, CLAC and their Affiliates,
as applicable, of the transactions contemplated by this Agreement and by such
Ancillary Agreements and compliance with the provisions hereof and thereof will
not, (i) conflict with any of the provisions of the Organizational Documents of
Seller, FGWLA, CLAC, any Seller Subsidiary or any of their Affiliates, as
applicable, (ii) conflict with, result in a breach of or default (with or
without notice or lapse of, time, or both) under, give rise to a right of
 
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termination, cancellation or acceleration of any obligation or loss of a benefit
under or result in the creation of any Lien (other than Permitted Liens) on any
property or asset of Seller, FGWLA, CLAC, any Seller Subsidiary or any of their
Affiliates, as applicable, under, any indenture or other agreement, permit,
franchise, license or other instrument or undertaking to which Seller, FGWLA,
CLAC, any Seller Subsidiary or any of their Affiliates, as applicable, is a
party or by which Seller, FGWLA, CLAC, any Seller Subsidiary or any of their
Affiliates, as applicable, or any of their respective properties or assets is
bound or affected, or (iii) contravene any statute, law, ordinance, rule,
regulation, order, judgment, injunction, decree, determination or award
applicable to Seller, FGWLA, CLAC, any Seller Subsidiary or any of their
Affiliates, as applicable, or any of their respective properties or assets
except, with respect to (ii), as would not, individually or in the aggregate,
have a Sellers Material Adverse Effect.
 
Section 4.05     Consents and Approvals
 
                                                (a)         There is no
requirement applicable to Seller, FGWLA, CLAC, any Seller Subsidiary or any of
their Affiliates to make any filing with, or to obtain any Permit,
authorization, consent or approval from, any Governmental Entity that is either
a health or insurance regulatory authority (i) in order to permit the Closing,
except for the filings, permits, authorizations, consents or approvals set forth
in Schedule 4.05(a)(i), or (ii) otherwise in connection with the implementation
of the transactions contemplated by this Agreement and the Ancillary Agreements,
except for the filings, permits, authorizations, consents or approvals set forth
in Schedule 4.05(a)(ii).
 
(b)         There is no requirement applicable to Seller, FGWLA, CLAC or any
Seller Subsidiary to make any filing with, or to obtain any Permit,
authorization, consent or approval from, any Governmental Entity that is neither
a health nor insurance regulatory authority in connection with the consummation
of the transactions contemplated by this Agreement and the Ancillary Agreements,
except for the filings, permits, authorizations, consents or approvals as set
forth in Schedule 4.05(b).
 
(c)         There is no requirement applicable to Seller, FGWLA, CLAC or any
Seller Subsidiary to obtain any consent or approval from any third party
(excluding any Governmental Entity) in connection with the execution or
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, except for the consents, approvals or notices set forth in
Schedule 4.05(c), Schedule 4.09, Schedule 4.19(a), and Schedule 4.19(b) and such
other consents, approvals, or notices as may be required under the terms of the
Business Contracts which are not Material Business Contracts.
 
Section 4.06     Statement of Assets and Liabilities.
 
(a)         The December 31 Statement of Assets and Liabilities and December 31
Net Worth Statement were prepared from the Business Books and Records in
accordance with the Methodologies.  The Statutory Reserves set forth on the
December 31 Statement of Assets and Liabilities and the December 31 Net Worth
Statement were computed in accordance with the Methodologies and in accordance
with commonly
 
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accepted actuarial standards consistently applied and are fairly stated in
accordance with sound actuarial principles and were based, in all material
respects, on actuarial assumptions which were in accordance with those called
for in the provisions of the related Insurance Contracts and Reinsured
Contracts.
 
                                                (b)         Attached hereto as
Schedule 4.06(b) are copies of the unaudited pro-forma GAAP balance sheets and
income statements of the Business as of and for the twelve months ended December
31, 2006 and the six months ended June 30, 2007 (such financial statements,
together with the notes thereto, the “Unaudited Financial Statements”).  Except
as set forth in the notes to the Unaudited Financial Statements, the Unaudited
Financial Statements (i) were prepared in accordance with GAAP applied on a
consistent basis with the audited GAAP financial statements of Seller for the
year ended as of December 31, 2006, and the unaudited consolidated financial
statements of Seller for the six months ended June 30, 2007, as applicable, (ii)
were prepared using the same data with respect to the Business as was used in
preparing the audited GAAP financial statements of Seller for the year ended as
of December 31, 2006 and the unaudited financial statements of Seller for the
six months ended June 30, 2007, as applicable, and (iii) fairly present in all
material respects the combined financial position and the results of operations
of the Business for the periods indicated.
 
(c)         Except for liabilities accrued or reserved against in the Unaudited
Financial Statements or incurred in the ordinary course of business since
December 31, 2006, the Seller Subsidiaries have not incurred any liabilities,
whether absolute, accrued or contingent, of a nature which would, individually
or in the aggregate, be required to be reflected on a balance sheet prepared in
accordance with GAAP (or disclosed in the notes thereto), except as would not
result in a material increase in the aggregate liabilities shown in the
Unaudited Financial Statements.
 
Section 4.07     Insurance Company Subsidiary Financial Statements.  Seller has
previously delivered or made available to Purchaser true, complete and correct
copies of the statutory financial statements of each Insurance Company
Subsidiary, as filed with the applicable domestic regulators for the years ended
December 31, 2006 and 2005 and for each subsequent quarterly or annual period
previously filed (or, in the case of such statements filed after the date
hereof, will promptly provide such statements to Purchaser after the filing
thereof), together with all exhibits and schedules thereto (the “Insurance
Company Subsidiary SAP Statements”).  The Insurance Company Subsidiary SAP
Statements present (or, when filed, will present) fairly, in all material
respects, the respective statutory financial conditions of the Insurance Company
Subsidiaries at the respective dates thereof, and the statutory results of
operations for the periods then ended in accordance with Applicable SAP applied
on a consistent basis throughout the periods indicated and consistent with each
other, except as otherwise specifically noted therein.
 
Section 4.08     Absence of Certain Changes.  Except as disclosed in Schedule
4.08, since December 31, 2006, and with respect to Section 4.08(l) since
December 31, 2005, Seller, FGWLA and CLAC have conducted the Business, and the
Seller Subsidiaries have conducted their businesses, only in the ordinary course
consistent with past practice, and since such date, there has not been:
 
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(a)         any occurrence, development or event that has had or would,
individually or in the aggregate, reasonably be expected to have a Sellers
Material Adverse Effect;
 
(b)         any material change in the statutory accounting methods, principles
or practices used by Seller, FGWLA or CLAC in connection with the Business or by
the Insurance Company Subsidiaries, including but not limited to any material
change with respect to establishment of reserves for losses and loss adjustment
expenses, except insofar as may be required by a change in Applicable SAP or a
change in Law, or, after the date hereof, by any Governmental Entity;
 
(c)         any increase, other than in the ordinary course of business
consistent with past practice or as permitted or required under an existing
agreement or as required by applicable Law, in the compensation of, or the value
of any pension, retirement allowance, severance or other employee benefit plan,
agreement or arrangement applicable to any Business Employee, or, except as
provided by Section 6.11(m) or 6.11(n), any establishment of any new Employee
Plan applicable to any Business Employee;
 
(d)         any change in underwriting standards, pricing bases, retention
limits, administrative practices or claims practices and standards of Seller,
FGWLA, CLAC or the Insurance Company Subsidiaries, other than in the ordinary
course of business consistent with past practice;
 
(e)         any entry into, or material amendment of, a Business Contract or
Leased Property Lease, except for any such change (i) as a result of a renewal
or expiration or (ii) in the ordinary course of business consistent with past
practices;
 
(f)         any transaction or commitment made, or any material contract or
agreement entered into by Seller, FGWLA or CLAC related to the Business or by
any Seller Subsidiary (including the acquisition or disposition of any assets)
or any relinquishment by Seller, FGWLA or CLAC of any material contract or other
right related to the Business or by any Seller Subsidiary of any material
contract or other right, other than transactions and commitments in the ordinary
course of business consistent with past practices;
 
(g)         other than in the ordinary course of business consistent with past
practice, with respect to the Business, any material forgiveness, cancellation,
compromise, waiver or release of any debts, claims or rights;
 
(h)         other than investment portfolio activities in the ordinary course of
business consistent with past practice, any material acquisition or disposition
of (i) any asset that otherwise would have been a Transferred Asset upon
consummation of the Closing or (ii) any asset of a Seller Subsidiary;
 
(i)         any entering into or commutation of any reinsurance contract (i)
with respect to the Insurance Contracts or Reinsured Contracts by Seller, FGWLA
or
 
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CLAC or (ii) with respect to the Subsidiary Insurance Contracts by any Insurance
Company Subsidiary, other than in the ordinary course of business consistent
with past practice;
 
(j)         declared, set aside, made or paid any dividend or other distribution
in respect of any shares of capital stock of any Seller Subsidiary or otherwise
purchased or redeemed, directly or indirectly, any such shares;
 
(k)         issued, sold, granted, conferred, awarded, pledged, or otherwise
encumbered any shares of capital stock of any Seller Subsidiary;
 
(l)         any material change in Tax accounting methods, policies or
practices, except as required by a change in GAAP or SEC rules, regulations or
guidelines or applicable Law, any material Tax election or settlement or
compromise of any material Tax liability, any amended material Tax Return or
claim for refund filed, any consent to extension of the period of limitations
for the payment or assessment of any material Tax, or any closing agreement
affecting any material Tax liability or refund entered into, in each case, by
any Seller Subsidiary or solely with respect to the Business or the Transferred
Assets; or
 
(m)           any agreement or commitment (contingent or otherwise) to do any of
the foregoing.
 
Section 4.09     Business Contracts.  Schedule 4.09 sets forth (i) a list of the
Material Business Contracts in effect on the date hereof and (ii) whether
consent from a third-party is required to assign each such Material Business
Contract to Purchaser.  True and complete copies of all Material Business
Contracts have been made available to Purchaser for its review.  Each Business
Contract is in full force and effect and is the valid and binding obligation of
each of Seller, FGWLA, CLAC, or each Seller Subsidiary party thereto, as
applicable, and, to the Knowledge of Seller, FGWLA and CLAC, each other party
thereto, except as the enforceability of any thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors’ rights generally and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).  Except as set forth in Schedule 4.09, none of
Seller, FGWLA, CLAC, any Seller Subsidiary or any of their Affiliates or, to the
Knowledge of Seller, FGWLA and CLAC, any other Person is (or, with the giving of
notice or the lapse of time or both, will be) in violation or breach of or
default under any of the Business Contracts in any material respect.
 
Section 4.10     Business Reinsurance Agreements.  Schedule 4.10 sets forth a
list of the Business Reinsurance Agreements as of the date hereof.  Each of the
Business Reinsurance Agreements is in full force and effect and is the valid and
binding obligation of Seller, FGWLA, CLAC or each Seller Subsidiary and, to the
Knowledge of Seller, FGWLA and CLAC, each other party thereto, except as the
enforceability of any thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors’ rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in
 
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equity or at law).  Except as set forth in Schedule 4.10, none of Seller, FGWLA,
CLAC, any Seller Subsidiary or any of their Affiliates, or, to the Knowledge of
Seller, FGWLA and CLAC, any other Person is (or, with the giving of notice or
the lapse of time or both, will be) in violation or breach of or default under
any of the Business Reinsurance Agreements in any material respects.  To the
Knowledge of Seller, FGWLA and CLAC, there is no event that has occurred which,
with the passage of time or the giving of notice, or both, would create a
default or breach by Seller, FGWLA, CLAC or any Seller Subsidiary under any
Business Reinsurance Agreement.  None of the transactions contemplated hereby or
by an Ancillary Agreement would, directly or indirectly, cause a default or
breach under any Business Reinsurance Agreement.  Neither Seller, FGWLA, CLAC,
any Seller Subsidiary nor any other party under any Business Reinsurance
Agreement has given any notice of termination with respect to any such
arrangement or treaty, and, to the Knowledge of Seller, FGWLA and CLAC, there is
no dispute under any such arrangement or treaty.
 
Section 4.11     Transferred Assets.  Seller, FGWLA and CLAC, as applicable,
have good title to all of the Transferred Assets, free and clear of all Liens,
except for Permitted Liens.  At the Closing, subject to Section 2.07, Purchaser
will acquire the Transferred Assets, free and clear of all Liens, except for
Permitted Liens and except for any Liens arising from acts of Purchaser or any
of its Affiliates.  Each of the Seller Subsidiaries has good title to all of its
respective assets, free and clear of all Liens, except for Permitted Liens.
 
Section 4.12     Litigation; Orders.  Except as set forth in Schedule 4.12(a),
and except for claims litigation arising under the Insurance Contracts, the
Reinsured Contracts, or the ASO Contracts and litigation with Providers, in each
case in the ordinary course of business, there is no action, suit, proceeding or
arbitration (each, an “Action”) pending or threatened in writing against Seller,
FGWLA or CLAC (in each case, to the extent relating to the Business) or against
any Seller Subsidiary.  Except as set forth in Schedule 4.12(b), there are no
judgments, decrees, injunctions, or orders of any Governmental Entity or
arbitrator or any consent agreements, commitment agreements or similar written
agreements entered into between any Governmental Entity and (i) any Seller
Subsidiary, but disregarding any such agreement issued prior to the date of
acquisition of the Seller Subsidiary and not within the Knowledge of Seller, or
(ii) Seller, FGWLA or CLAC, with respect to the Business (each an “Order”), in
each case issued after January 1, 2004 or under which Seller, FGWLA, CLAC or any
Seller Subsidiary has any continuing obligations.  Seller, FGWLA, CLAC and the
Seller Subsidiaries have not been advised by any Governmental Entity that it is
currently considering issuing or requesting any such Order in the future.
 
Section 4.13     Compliance with Law
 
.                                              (a)         Except as disclosed
in Schedule 4.13(a), since January 1, 2005 Seller, FGWLA and CLAC have been in
compliance with all applicable Law as regards the Business in all material
respects, and the Seller Subsidiaries have been in compliance with all
applicable Law in all material respects.
 
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(b)         Since January 1, 2005, neither Seller, FGWLA, CLAC (in each case, to
the extent relating to the Business) nor any Seller Subsidiary nor, to the
respective Knowledges of Seller, FGWLA or CLAC, any third party service provider
acting on behalf of Seller, FGWLA, CLAC (in each case, to the extent relating to
the Business) or any Seller Subsidiaries, has received, nor otherwise has any
knowledge of, any written notice from any Governmental Entity that (i) alleges
any material noncompliance (or that Seller, FGWLA, CLAC or any Seller Subsidiary
or any such third party service provider is under investigation or the subject
of an inquiry by any such Governmental Entity for such alleged material
noncompliance) with any applicable Law, or (ii) asserts any risk-based capital
deficiency.  Since January 1, 2005, no Governmental Entity has threatened in
writing any investigation or inquiry related to any material noncompliance with
any applicable Law by Seller, FGWLA, CLAC (in each case, to the extent relating
to the Business) or any Seller Subsidiary.
 
(c)         Except as set forth on Schedule 4.13(c), Seller, FGWLA, CLAC (in
each case, to the extent relating to the Business) and the Seller Subsidiaries
have filed with the appropriate Governmental Entities, including state health
and insurance regulatory authorities and any applicable federal
regulatory authorities, all material reports, statements, documents,
registrations, filings or submissions required to be filed by them.  Except as
set forth in Schedule 4.13(c), all such registrations, filings and submissions
filed by Seller, FGWLA, CLAC or the Seller Subsidiaries were in compliance in
all material respects with applicable Law when filed or as amended or
supplemented, and no material deficiencies have been asserted by any
Governmental Entity with respect to such registrations, filings or
submissions that have not been cured.
 
(d)         Schedule 4.13(d)(i) sets forth a list of standard contract forms
(subject to state variations) utilized by Seller, FGWLA, CLAC and the Insurance
Company Subsidiaries in issuing the Insurance Contracts and the Subsidiary
Insurance Contracts.  Except as set forth on Schedule 4.13(d)(ii), (i) all
policy forms, and certificates used in the Business, the forms of all policies
and certificates on which Insurance Contracts and Subsidiary Insurance Contracts
were written and all amendments, endorsements and riders thereto and (ii) all
applications, brochures and marketing materials pertaining thereto have been, in
all material respects, approved by all applicable Governmental Entities or filed
with and not objected to by such Governmental Entities within the period
provided by applicable Law for objection, to the extent required by Law, and
comply in all material respects with all requirements of Law.  Seller, FGWLA and
CLAC in each case, to the extent relating to the Business and the Seller
Subsidiaries have, in the aggregate, performed their obligations with respect to
the Insurance Contracts and Subsidiary Insurance Contracts, as applicable, in
accordance with the terms of the Insurance Contracts and Subsidiary Insurance
Contracts, as applicable, in all material respects.
 
(e)         Except as set forth in Schedule 4.13(e), all premium rates, rating
plans and policy terms established or used by Seller, FGWLA, CLAC (in each case,
to the extent relating to the Business) or any Insurance Company Subsidiary that
are required to be filed with and/or approved by Governmental Entities have been
so filed and/or approved in all material
 
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respects, the premiums charged conform in all material respects to the premiums
so filed and/or approved and comply with the insurance Law applicable thereto.
 
(f)         Seller, FGWLA, CLAC (in each case, to the extent relating to the
Business) and the Seller Subsidiaries have implemented policies, procedures
and/or programs designed to assure that their agents nd employees are in
compliance in all material respects with applicable Law
 
(g)         Except as set forth on Schedule 4.13(f), Seller, FGWLA, CLAC and the
Seller Subsidiaries have at all times complied in all material respects with all
applicable Law relating to privacy, data protection and the collection and use
of personal information and user information gathered, accessed, collected or
used in the course of the operations of Seller, FGWLA, CLAC and the Seller
Subsidiaries, as applicable, including the applicable provisions of the Health
Insurance Portability and Accountability Act of 1996 (“HIPAA”) and the Privacy
Rule and the Security Rule adopted thereunder.  To the respective Knowledges of
Seller, FGWLA and CLAC, each of Seller, FGWLA, CLAC and the Seller Subsidiaries
have complied in all material respects with the requirements of HIPAA to have
agreements with all of its “business associates” (as such term is defined by and
as such agreements are required by the Privacy Rule adopted under HIPAA).  No
Action is pending or threatened in writing against Seller, FGWLA, CLAC or any
Seller Subsidiary alleging a violation of any Person’s privacy, personal
information or data rights.  Each of Seller, FGWLA, CLAC and the Seller
Subsidiaries have at all times complied in all material respects with all rules,
policies and procedures established by Seller, FGWLA, CLAC and the Seller
Subsidiaries, as applicable, from time to time and as applicable with respect to
privacy, data protection or collection and use of personal information and user
information gathered or accessed in the course of the operations of Seller,
FGWLA, CLAC and the Seller Subsidiaries.  No Action is pending or threatened in
writing against Seller, FGWLA, CLAC or any Seller Subsidiary by any Person
alleging a violation of such Person’s or privacy, personal or confidentiality
rights under any such rules, policies or procedures.  The consummation of the
transactions contemplated herein will not breach or otherwise cause any
violation of any Law related to privacy, data protection or the collection and
use of personal information and user information gathered or accessed from then
current users (at the time of consummation of the transactions contemplated
hereunder) in the course of the operations of Seller, FGWLA, CLAC and the Seller
Subsidiaries, in each case in any material respect.
 
(h)         With respect to all personal and user information described in
clause (g) above, each of Seller, FGWLA, CLAC and the Seller Subsidiaries has at
all times taken all steps reasonably necessary (including implementing and
monitoring compliance with adequate measures with respect to technical and
physical security) to ensure that such information is protected against loss and
against unauthorized access, use, modification, disclosure or other
misuse.  There has been no unauthorized access to or other misuse of that
information that has had or would, individually or in the aggregate, reasonably
be expected to have a Seller Material Adverse Effect.  Seller, FGWLA, CLAC and
the Sellers Subsidiaries, as applicable, maintain systems and procedures
reasonably designed to respond to complaints received alleging violation of
third party content rights.
 
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(i)         All forms of Business Contracts with third parties that currently
are in use by each of Seller, FGWLA, CLAC and the Seller Subsidiaries conform in
all material respects to the requirements of applicable Law.
 
Section 4.14     Permits.  Schedule 4.14 hereto lists (i) all jurisdictions in
which each of Seller, FGWLA, CLAC (in each case, to the extent relating to the
Business) and the Seller Subsidiaries, as applicable, is licensed, (ii) the
authority granted under each such license in each jurisdiction and (iii) all
third-party accreditations held by each of Seller, FGWLA, CLAC (in each case, to
the extent relating to the Business) and the Seller Subsidiaries.  Each of
Seller, FGWLA, CLAC (in each case, to the extent relating to the Business) and
the Seller Subsidiaries has all Permits (whether or not related to the business
of insurance) and third-party accreditations necessary for the conduct of its
business as it is currently conducted in each jurisdiction in which Seller,
FGWLA, CLAC and the Seller Subsidiaries require such Permits or
accreditations.  The Business has been and is being conducted in compliance with
all such Permits and accreditations in all material respects.  Except as set
forth in Schedule 4.14, all such Permits and accreditations are in full force
and effect, and neither Seller, FGWLA, CLAC nor any Seller Subsidiary has
received any written notice of any proceeding or investigation pending or
threatened in writing, which would reasonably be expected to lead to the
revocation, amendment, failure to renew, limitation, modification, suspension or
restriction of any such Permit or accreditation.
 
Section 4.15     Brokers.  No broker, investment banker, financial advisor or
other Person, other than Goldman, Sachs & Co., the fees and expenses of which
will be paid by Seller, is entitled to any broker’s, finder’s, financial
advisor’s or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Seller, FGWLA, CLAC or any of their Affiliates.
 
Section 4.16     Employees
 
                                                (a)         Seller and FGWLA
have made available to Purchaser a true and complete listing of the Business
Employees and Subsidiary Employees as of the date hereof (which listing shall be
updated by Seller from time to time, as appropriate), including each such
Business Employee’s and Subsidiary Employee’s job title, classification and hire
date.
 
(b)         Except as set forth in Schedule 4.16(b), no union or other labor
organization represents or claims to represent the Business Employees or
Subsidiary Employees and, to the respective Knowledges of Seller and FGWLA,
since January 1, 2005, there have been no union organizing activities among such
Business Employees or Subsidiary Employees.  Neither Seller nor FGWLA nor any
Seller Subsidiary is now bound, nor has at any time during the last five years
been bound, by any collective bargaining or similar agreement with any labor
organization applicable to the Business Employees or Subsidiary Employees.
 
 
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(c)         Seller and FGWLA have made available to Purchaser true and complete
copies of all employee manuals or handbooks containing personnel or employee
relations policies applicable to Business Employees and/or Subsidiary Employees.
 
(d)         All persons classified by Seller or its Affiliates as independent
contractors satisfy and have at all times satisfied the requirements of
applicable Law in all material respects to be so classified.  Seller and its
Affiliates have in all material respects fully and accurately reported their
compensation on IRS Form 1099 when required to do so and have no material
obligations to provide benefits with respect to such persons under any Employee
Plans or otherwise.  Except pursuant to intercompany servicing or third party
temporary staffing arrangements, no individuals are currently providing services
to any Seller Subsidiary pursuant to a leasing agreement or similar type of
arrangements, nor has any Seller Subsidiary entered into any arrangements
whereby services will be provided by such individuals.  There is no proceeding
pending or threatened in writing against Seller, FGWLA or any Seller Subsidiary
challenging the classification of any person as an employee or an independent
contractor, including any claim for unpaid benefits, for or on behalf of, any
such person.
 
(e)         Seller, FGWLA and the Seller Subsidiaries are in compliance in all
material respects with all applicable laws respecting employment and employment
practices, including, without limitation, all laws respecting terms and
conditions of employment, health and safety, wages and hours, child labor,
immigration, employment discrimination, disability rights or benefits, equal
opportunity, plant closures and layoffs, affirmative action, workers’
compensation, labor relations, employee leave issues and unemployment insurance.
 
(f)         Seller, FGWLA and the Seller Subsidiaries are not and have not been:
(i) a “contractor” or “subcontractor” (as defined by Executive Order 11246),
(ii) required to comply with Executive Order 11246 or (iii) required to maintain
an affirmative action plan; it being nevertheless understood that Seller
voluntarily complies with Executive Order 11246.
 
(g)         Seller, FGWLA and the Seller Subsidiaries are not delinquent in any
material respects in payments to any present or former Business Employees or
Subsidiary Employees for any services or amounts required to be reimbursed or
otherwise paid.
 
(h)         Except as set forth on Schedule 4.16(h), to the respective
Knowledges of Seller and FGWLA, neither Seller nor FGWLA nor any of the Seller
Subsidiaries has received (i) notice of any unfair labor practice charge or
complaint with respect to it which is still pending before the National Labor
Relations Board or any other Governmental Entity against it, (ii) notice of any
complaints, grievances or arbitrations with respect to it arising out of any
collective bargaining agreement which is still pending, (iii) notice of any
charge or complaint with respect to it before the Equal Employment Opportunity
Commission or any other Governmental Entity responsible for the prevention of
unlawful employment practices which is still pending, (iv) notice of the
 
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intent of any Governmental Entity responsible for the enforcement of labor,
employment, wages and hours of work, child labor, immigration, or occupational
safety and health laws to conduct an investigation with respect to it or notice
that such investigation is in progress in either case which is still pending, or
(v) notice of any lawsuit or other proceeding pending in any forum by or on
behalf of any present or former Business Employee or Subsidiary Employee of such
entities, any applicant for employment or classes of the foregoing alleging
breach of any express or implied contract of employment, any applicable law
governing employment or the termination thereof or other discriminatory,
wrongful or tortuous conduct in connection with the employment relationship.
 
(i)         Seller, FGWLA and each Seller Subsidiary are and have been in
compliance in all material respects with all notice and other requirements under
the WARN Act and any similar foreign, state or local law relating to plant
closings and layoffs.
 
(j)         To the respective Knowledges of Seller and FGWLA, no Business
Employee or Subsidiary Employee is in any material respect in violation of any
term of any employment agreement, nondisclosure agreement, common law
nondisclosure obligation, fiduciary duty, noncompetition agreement, restrictive
covenant or other obligation to a former employer of any such Business Employee
or Subsidiary Employee relating (i) to the right of any such Business Employee
or Subsidiary Employee to be employed by Seller, FGWLA or any Seller Subsidiary
or (ii) to the knowledge or use of trade secrets or proprietary information.
 
(k)         The execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in any breach, or
obligation to pay any amounts under, any collective bargaining agreement,
employment agreement, consulting agreement or any other labor-related agreement
to which Seller, FGWLA or any Seller Subsidiary is a party.
 
Section 4.17     Employee Plans
 
                                               (a)         Schedule 4.17(a)
contains a list of each Employee Plan.  Seller or FGWLA has made available, or
has caused the Seller Subsidiaries to make available, to Purchaser the plan
documents or other writing constituting each such Employee Plan and the summary
plan description for each such Employee Plan (if applicable).
 
(b)         No Employee Plan is a Multiemployer Plan and since January 1, 2002,
neither Seller, FGWLA, the Seller Subsidiaries nor any ERISA Affiliate has had
any obligation to contribute to, or has incurred any withdrawal liability with
respect to a Multiemployer Plan.  No Employee Plan is a “multiple employer plan”
described in Section 4063 of ERISA.  There is no amount or payment arising from
or in connection with any Employee Plan, including any Seller Title IV Plan but
excluding any Seller Subsidiary Plan, with respect to which Purchaser is or will
be liable to any Person, including any Governmental Entity or any employee of
any of Seller, FGWLA or any of
 
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their ERISA Affiliates.  No funding waiver has been requested under section 412
of the Code with respect to any Seller Title IV Plan.  There has occurred no
non-exempt “prohibited transaction” (within the meaning of section 4975 of the
Code or section 406 of ERISA) or breach of any fiduciary duty described in
Section 404 of ERISA that would reasonably be expected to result in any material
liability, direct or indirect, for Purchaser or any of its Affiliates (including
without limitation the Seller Subsidiaries as of and following the Closing) or
any officer, director or employee of Purchaser or any of its Affiliates
(including without limitation the Seller Subsidiaries as of and following the
Closing).
 
(c)         Except as set forth in Schedule 4.17(c), with respect to Seller
Subsidiary Plans:  (i) Seller has provided or has caused the Seller Subsidiaries
to provide to Purchaser (in addition those documents contemplated by Section
4.17(a)) (A) if any Seller Subsidiary Plan is funded through a trust or any
third party funding vehicle, a copy of the trust or other funding agreement and
the latest financial statements thereof, (B) where applicable, Forms 5500 with
respect to the two most recently completed plan years, including all related
schedules, (C) with respect to each Seller Subsidiary Plan intended to be
qualified under section 401(a) of the Code, the most recent determination letter
from the Internal Revenue Service, and (D) since the Acquisition Date of the
sponsor of any Seller Subsidiary Plan or to the Knowledge of Seller, any
correspondence between Seller or any of its Affiliates and any Governmental
Entity concerning any issue that could reasonably be expected to result in a
material liability to such sponsor; (ii) no Seller Subsidiary Plan provides for
post-employment surgical, medical, hospitalization, death or similar benefits
(whether or not insured) other than as required under applicable Law; (iii) no
Seller Subsidiary Plan is subject to Section 302 or Title IV of ERISA; (iv) each
Seller Subsidiary Plan intended to be qualified under section 401(a) of the Code
is so qualified, the trusts maintained thereunder are exempt from taxation under
section 501(a) of the Code, and no condition exists that would reasonably be
expected to adversely affect such qualifications; (v) the execution and the
delivery of this Agreement or the consummation of the transactions contemplated
hereby will not, alone or with any other event, cause there to be paid any
bonuses other compensation or cause the accelerated vesting of benefits or
payments under any Seller Subsidiary Plan; (vi) each Seller Subsidiary Plan has
been established and maintained in compliance in all material respects with its
terms and applicable Law; (vii) each Seller Subsidiary Plan that constitutes a
“non-qualified deferred compensation plan” within the meaning of section
409A(d)(1) of the Code has been operated in good faith compliance with section
409A of the Code and the guidance issued thereunder; (viii) neither Seller nor
any Seller Subsidiary has incurred any liability for any excise, income or other
taxes or penalties with respect to any Seller Subsidiary Plan that would
reasonably be expected to result in any liability, direct or indirect, for
Purchaser or any of its Affiliates (including without limitation the Seller
Subsidiaries as of and following the Closing); and (ix) there are no pending or,
to the respective Knowledges of Seller and FGWLA, threatened claims by or on
behalf of any Seller Subsidiary Plan, or by or on behalf of any participants or
beneficiaries of any Seller Subsidiary Plan or other persons, other than claims
for benefits made in the ordinary operation of Seller Subsidiary Plans, and no
condition exists which would reasonably be expected to result in the assertion
of any such claim.
 
 
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Section 4.18     Real Property
 
(a)         Schedules 4.18(a)(i) and 4.18(a)(ii) hereto, taken together, set
forth a true and complete list and summary description of all Leased
Property.  All of the leases or subleases of Leased Property including all
amendments thereto (the “Leased Property Leases”) are valid and in full force
and effect in all material respects and all rents and additional rents due to
date on each Leased Property Lease have been paid or will be timely paid in
accordance with the customary practice permitted by such Leased Property Lease.
 
(b)         No notice of default which is extant (i.e., not cured within the
applicable grace period) has been given by the lessor to the lessee, or by the
lessee to the lessor, under any of the Leased Property Leases.  None of Seller,
FGWLA or any Seller Subsidiary is in material default under any Leased Property
Lease and, to the respective Knowledges of Seller and FGWLA, no lessor is in
material default under any Leased Property Lease.  No event has occurred which,
with the passage of time or the giving of notice, or both, would constitute a
material default thereunder by Seller or FGWLA or which would entitle any party
to any of the Leased Property Leases to exercise any default remedy thereunder
or which could result in the termination thereof.
 
(c)         Seller has delivered to Purchaser or otherwise made available to
Purchaser true, correct and complete copies of the Leased Property Leases,
together with all amendments, modifications or supplements, if any, thereto.
 
(d)         Seller, FGWLA or a Seller Subsidiary, as applicable, enjoys peaceful
and undisturbed possession in all material respects under all Leased Property
Leases.
 
(e)         To the respective  Knowledges of Seller and FGWLA, no notice of
violation of any material law, ordinance or administrative regulation (including
any zoning or building law) has been received by Seller, FGWLA or any Seller
Subsidiary with respect to any Leased Property or the Headquarters.  Each Leased
Property and the Headquarters is in a state of reasonable maintenance and
repair.  To the respective Knowledges of Seller and FGWLA, neither the whole nor
any portion of any Leased Property or the Headquarters is being condemned or
otherwise taken by any public authority, nor has any notice been received of any
such condemnation or taking.
 
(f)         Seller, FGWLA and the Seller Subsidiaries have obtained all material
permits required pursuant to any applicable Environmental Laws in connection
with the occupancy of the Leased Property pursuant to the Leased Property Leases
and the Headquarters, and each of them has operated in compliance in all
material respects with applicable Environmental Laws regarding the Leased
Property and the Headquarters.  Neither Seller, FGWLA or a Seller Subsidiary has
received from any Governmental Entity or any Person (i) any written notice of a
(nor to the Knowledge of Seller has there been any) violation, alleged
violation, non compliance, inquiry, investigation, liability or potential
liability regarding compliance with applicable Environmental Laws by any of
Seller, FGWLA or a Seller Subsidiary relating to the Leased Property or the
Headquarters,
 
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or (ii) any written demand or claim (A) seeking (nor to the Knowledge of Seller
has there been any) payment, contribution, indemnification, remedial action or
removal action or (B) alleging (nor to the Knowledge of Seller has there been)
any environmental damage or injury to person, property or natural resources,
concerning (in the case of (A) or (B)) any of the Leased Real Property, the
Headquarters, or any real property formerly owned, leased or operated (in part
or in whole) by a Seller Subsidiary.
 
                                                (g)         None of the Leased
Property has been pledged or assigned by Seller, FGWLA or a Seller Subsidiary.
 
(h)         Neither Seller, FGWLA nor a Seller Subsidiary has given any notice
to any landlord under any of the Leased Property Leases indicating that it will
not be exercising any extension or renewal options under the Leased Property
Leases.  All security deposits required under the Leased Property Leases have
been paid to and have not been applied in respect of a breach or a default under
such Leased Property Lease unless all amounts so applied have been redeposited
in full.
 
(i)         There are currently in effect such insurance policies for each
Leased Property and Headquarters as are customarily maintained or required by a
tenant or owner, as applicable, with respect to similar properties.  All
premiums due on such insurance policies have been paid by Seller, FGWLA or a
Seller Subsidiary and Seller, FGWLA or a Seller Subsidiary will maintain such
insurance policies (or substantially similar substitute coverage) from the date
hereof through the Closing Date or earlier termination of this
Agreement.  Seller, FGWLA or a Seller Subsidiary has not received and has no
knowledge of any notice from any insurance company requesting the performance of
any work or alteration with respect to any Leased Property or the Headquarters
or any portion thereof.  Seller, FGWLA or a Seller Subsidiary has received no
notice from any insurance company concerning, nor is Seller, FGWLA nor a Seller
Subsidiary aware of, any defects or inadequacies in any Leased Property or the
Headquarters, which, if not corrected, would result in the termination of
insurance coverage or materially increase its cost.
 
Section 4.19     Computer Software
 
                                                (a)         Set forth on
Schedule 4.19(a) hereto is a true and complete listing of all material computer
software programs and databases used or held for use principally in the conduct
of the Business.  Schedule 4.19(a) hereto also sets forth whether each such
computer software program or database is (i) owned by Seller, FGWLA, CLAC or any
Seller Subsidiary (together with any other computer software programs and
databases owned by Seller, FGWLA, or CLAC and used or held for use principally
in the conduct of the Business, the “Owned Principally Used Software”) or (ii)
licensed by Seller, FGWLA, CLAC or any Affiliate of Seller from a third party
(together with any other computer software programs and databases licensed by
Seller, FGWLA, or CLAC and used or held for use principally in the conduct of
the Business, the “Licensed Principally Used Software”), and whether consent
from a third party to assign the license in the Licensed Principally Used
Software to Purchaser is required.
 
 
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(b)         Set forth on Schedule 4.19(b) hereto a true and complete listing of
all material computer software programs and databases used or held for use both
(i) in the conduct of the Business and also (ii) in the conduct of any of the
other businesses of Seller, FGWLA, CLAC or any Affiliate of Seller and not used
principally in the conduct of the Business.  Schedule 4.19(b) hereto also sets
forth whether each such computer software program or database is (i) owned by
Seller, FGWLA, CLAC or any Affiliate of Seller (together with any other computer
software programs and databases owned by Seller, FGWLA, CLAC or any of their
Affiliates and used or held for use both (x) in the conduct of the Business and
also (y) in the conduct of any other business of Seller, FGWLA, CLAC or any of
their Affiliates and not used principally in the conduct of the Business, the
“Owned Generally Used Software”) or (ii) licensed by Seller, FGWLA, CLAC or any
Affiliate of Seller from a third party (together with any other computer
software programs and databases licensed by Seller, FGWLA, CLAC or any of their
Affiliates and used or held for use both (x) in the conduct of the Business and
also (y) in the conduct of any other business of Seller, FGWLA, CLAC or any of
their Affiliates and not used principally in the conduct of the Business, the
“Licensed Generally Used Software”).  Schedule 4.19(b) hereto also sets forth
whether consent from a third party is required to provide Purchaser with the
right to use each such Licensed Generally Used Software.
 
(c)         Set forth on Schedule 4.19(c) are all items of Owned Principally
Used Software and Licensed Principally Used Software that are not to be
licensed, sublicensed, assigned or otherwise transferred to Purchaser (“Excluded
Software”).  On the Closing Date, except with respect to the Excluded Software
and subject to the receipt of all required third party consents or waivers
therefor as contemplated by Section 6.05, Purchaser or the Seller Subsidiaries
will have (A) exclusive ownership of all rights whatsoever in the Owned
Principally Used Software, including all copyright and other rights in its
source code, object code, utilities required to compile code, executables,
documentation and all copies thereof, free and clear of any royalty or other
payment obligations or Liens, (B) pursuant to an assignment of all of Seller’s,
FGWLA’s, CLAC’s or any Affiliate of Seller’s (other than the Seller
Subsidiaries’) right to the Licensed Principally Used Software, the right to
use, in the same manner in connection with the Business as used by Seller,
FGWLA, CLAC or the Seller Subsidiaries prior to the Closing Date the Licensed
Principally Used Software licensed by Seller, FGWLA, CLAC or any Affiliate of
Seller (other than the Seller Subsidiaries), and (C) pursuant to the Transition
Services Agreement, the benefit of the Owned Generally Used Software and the
Licensed Generally Used Software as it was used in connection with the Business
as used by Seller, FGWLA, CLAC or the Seller Subsidiaries prior to the Closing
Date.  For the avoidance of doubt, the parties hereto agree that all costs and
expenses associated with the matters set forth in clauses (B) and (C) above
shall be borne by Seller and Purchaser in accordance with Section 6.05(d).
 
(d)         With respect to the Owned Principally Used Software, the Owned
Generally Used Software, the Licensed Principally Used Software, the Licensed
Generally Used Software (other than the Excluded Software), and the Intellectual
Property Rights to be transferred, licensed, sublicensed or assigned to
Purchaser under this Agreement or any Ancillary Agreement:  to the respective
Knowledges of Seller,
 
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FGWLA and CLAC, nothing in such software or Intellectual Property Rights, in
whole or in part, infringes the intellectual property rights of any other
Person, including rights of copyright, trademark, patent, trade secret or any
other proprietary right except for infringements which would not, individually
or in the aggregate, have a Sellers Material Adverse Effect; none of Seller,
FGWLA or CLAC has received any written notice of any claim that any of such
property infringes the intellectual property rights of any third party; such
property does not, to the respective Knowledges of Seller, FGWLA and CLAC,
contain any disabling devices, Trojan horses, or other embedded mechanisms by
which use thereof may be impeded; and except for the fees set forth on Schedules
4.19(e) and 4.20(d) or in the Transition Services Agreement, no such property to
be transferred, licensed or assigned hereunder requires any payment for the use
of any patent, trade name, service mark, trade secret, trademark, copyright or
other intellectual property right or technology owned by any third party.
 
(e)         Set forth on Schedule 4.19(e) is a true and correct list of all
maintenance fees, third party licensing fees and similar charges required to be
paid for the use of the material Licensed Principally Used Software and the
material Owned Principally Used Software, other than the Excluded Software.
 
 
(f)         Seller, FGWLA, CLAC and the Seller Subsidiaries have established and
maintain commercially reasonable security programs and are in material
compliance with such programs.  Seller, FGWLA, CLAC and the Seller Subsidiaries
have not had a security breach, with respect to the Business that resulted in or
required the notification of customers of the Business of such security breach.
 
Section 4.20     Intellectual Property Rights
 
.                                               (a)         Except as set forth
in Schedule 4.20(a) and subject to the receipt of all required third party
consents or waivers therefor as contemplated by Section 6.05, the execution and
delivery of this Agreement by Seller, FGWLA and CLAC, and the consummation of
the transactions contemplated hereby, will neither cause Seller, FGWLA, CLAC or
any Seller Subsidiary to be in violation or default under any licenses,
sub-licenses or other agreements to which Seller, FGWLA, CLAC or any Seller
Subsidiary is a party and pursuant to which Seller, FGWLA, CLAC or any Seller
Subsidiary is authorized, or has granted rights, to use any Intellectual
Property Rights, nor entitle any other party to any such license, sub-license or
agreement to terminate or modify such license, sub-license or agreement, except
for such violations, defaults, terminations or modifications as would not,
individually or in the aggregate, have a Sellers Material Adverse Effect.
 
(b)         Set forth on Schedule 4.20(b) is a complete and correct list and a
brief description (including whether such is licensed or owned and the licensee
and owner thereof) of, all Intellectual Property Rights (other than as set forth
in Schedules 4.19(a) and 4.19(b)) that are material to the conduct of the
Business and, whether material or not, all registrations and applications for
registration of any Intellectual Property Rights owned by Seller or its
Affiliates.
 
 
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(c)         All registrations for trademarks, service marks, copyrights, issued
patents and domain names included in the Intellectual Property Rights and owned
by Seller or its Affiliates are valid and subsisting and in full force and
effect, unless otherwise noted on Schedule 4.20(b).
 
(d)         Schedule 4.20(d) sets forth a list of all licenses and other
agreements in which Seller, FGWLA, CLAC or the Seller Subsidiaries has granted
another Person (other than an Affiliate of Seller) the right to use any of the
Intellectual Property Rights.
 
(e)         On the Closing Date, Purchaser or the Seller Subsidiaries will have
(i) exclusive ownership of all rights whatsoever in the Intellectual Property
Rights owned by Seller, FGWLA, CLAC or the Seller Subsidiaries, free and clear
of any royalty or other payment obligations or Liens, (ii) pursuant to an
assignment of all of Seller’s, FGWLA’s, CLAC’s or any Affiliate of Seller’s
(other than the Seller Subsidiaries’) right to the Intellectual Property Rights
owned by any third party, the right to use such intellectual property, in the
same manner in connection with the Business as used by Seller, FGWLA, CLAC or
the Seller Subsidiaries prior to the Closing Date, and (iii) pursuant to the
Transition Services Agreement, the benefit of the use in the same manner in
connection with the Business as used by Seller, FGWLA, CLAC or the Seller
Subsidiaries prior to the Closing Date, all intellectual property owned by a
third party and used or held for use in both the conduct of the Business and
also in the conduct of any of the other business of Seller FGWLA, CLAC or any
Affiliate of Seller and not used principally in the conduct of the
Business.  For the avoidance of doubt, the parties hereto agree that all costs
and expenses associated with the matters set forth in clauses (ii) and (iii)
above shall be borne in accordance with Section 6.05(d).
 
(f)         To the Knowledge of Seller, FGWLA and CLAC, the conduct of the
Business as currently conducted does not infringe or otherwise violate the
intellectual property rights of any third party, except for infringements which
would not, individually or in the aggregate, have a Sellers Material Adverse
Effect.
 
Section 4.21     Tax Matters.  Except as disclosed in Schedule 4.21:
 
(a)         All material Tax Returns of or relating to the Seller Subsidiaries,
the Business or the Transferred Assets required to be filed on or prior to the
Closing Date have been timely filed (or will have been timely filed prior to the
Closing Date).
 
(b)         All Tax Returns referred to in paragraph (a) above were true,
correct and complete in all material respects when filed.
 
(c)         All material amounts of Taxes of or relating to the Seller
Subsidiaries, the Business or the Transferred Assets required to be paid or
withheld under applicable Law have (or by the Closing Date will have) been
timely paid or remitted, as appropriate, to the proper Tax Authority except for
Taxes  that are disclosed in Schedule 4.21 and are being contested in good faith
through appropriate proceedings.
 
 
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(d)         There is (i) currently not in effect any written agreement that
extends the period of assessment or collection of any Taxes of or relating to
the Seller Subsidiaries, the Business or the Transferred Assets that has been
executed or filed with any Tax Authority and (ii) no power of attorney that is
currently in force has been granted with respect to any matter relating to Taxes
that could affect any of the Seller Subsidiaries, the Business or the
Transferred Assets after the Closing Date.
 
(e)         No federal, state, local or foreign audit, examination, refund
litigation, adjustment, controversy or other administrative proceeding or court
proceeding (each a “Tax Contest”) exists, is pending, is proposed, or has been
initiated or threatened in writing with regard to any material amount of Taxes
of or relating to the Seller Subsidiaries, the Business or the Transferred
Assets.
 
(f)         Each of the Seller Subsidiaries is a member of the affiliated group
(within the meaning of section 1504(a)(1) of the Code) for which Parent files a
federal consolidated income tax return as the common parent (the “Consolidated
Group”), and has not been includible in any other federal consolidated income
tax return for any taxable period for which the statute of limitations has not
expired.
 
(g)         None of the Seller Subsidiaries has any liability for a material
amount of Taxes of any Person (other than any of the Seller Subsidiaries) under
Treasury Regulations section 1.1502-6 (or similar provision of state, local, or
foreign Law), as a transferee or successor, or (other than as specifically set
forth in (A) this Agreement or (B) the Ancillary Agreements) by contract.
 
(h)         No election has been made by or with respect to any of the Seller
Subsidiaries under section 846(e) of the Code.
 
(i)         Seller has delivered to Purchaser a true and complete copy of all
Tax sharing agreements involving any of the Seller Subsidiaries.
 
(j)         The Seller Subsidiaries have established (and until the Closing Date
will maintain) on their books and records reserves adequate to satisfy all
liabilities for Taxes that are not yet due and payable and are required to be
accrued in accordance with GAAP of each of the Seller Subsidiaries through the
Closing Date.
 
(k)         There are no Tax liens on any of the assets of any of the Seller
Subsidiaries or the Business or any of the Transferred Assets other than any
Liens for Taxes by Governmental Entities that (i) are not yet due or delinquent,
(ii) are disclosed in Schedule 4.21 and are being contested in good faith by
appropriate proceedings or (iii) have been accrued or otherwise reflected on the
applicable financial statements (in accordance with Applicable SAP or GAAP, as
applicable).
 
(l)          Seller has delivered to Purchaser correct and complete copies of
all (i) income and  franchise Tax Returns filed by or with respect to the Seller
Subsidiaries for the 2004, 2005 and 2006 tax years; and (ii) premium Tax Returns
for the 2004, 2005 and 2006 tax years, in each case to the extent that such Tax
Returns are in its
 
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 possession.  With respect to Tax Returns described in the previous sentence
that are not currently in the possession of Seller, Seller shall cooperate with
Purchaser in order to deliver such Tax Returns to Purchaser prior to the Closing
Date.
 
                                               (m)           None of the Seller
Subsidiaries has any material amount of income reportable for a period ending
after the Closing Date but attributable to a transaction not in the ordinary
course of business (e.g., resulting from an installment sale) occurring in, or a
change in accounting method made for, a period ending on or prior to the Closing
Date which resulted in a deferred reporting of a material amount of income from
such transaction or from such change in accounting method.
 
(n)         None of the Seller Subsidiaries has constituted a “distributing
corporation” or a “controlled corporation” (within the meaning of section
355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free
treatment under section 355 of the Code in the two years prior to the date of
this Agreement.
 
(o)         None of the Seller Subsidiaries has a “policyholders surplus
account” within the meaning of section 815 of the Code.
 
(p)         None of the Seller Subsidiaries maintains a “special loss discount
account” or makes “special estimated tax payments” within the meaning of section
847 of the Code.
 
(q)         As required by applicable Tax law, (A) Seller, FGWLA or CLAC (with
respect to the Business or the Transferred Assets) and (B) the Seller
Subsidiaries have reported to the Internal Revenue Service all “reportable
transactions” (as such term is defined in Treasury Regulations section
1.6011-4).  Seller has delivered to Purchaser correct and complete copies of all
disclosures described in the preceding sentence.
 
(r)         Since December 31, 2006, none of (i) Seller, FGWLA or CLAC (with
respect to the Business or the Transferred Assets) or (ii) the Seller
Subsidiaries, has participated in any “listed transactions” (as such term is
defined in Treasury Regulations section 1.6011-4).
 
(s)         No Seller Subsidiary Plan provides for the payment of any amount
which would not be deductible by reason of section 280G of the Code (or any
corresponding provision of state, local or foreign Law).
 
(t)         Written notice has not been received by (A) Seller, FGWLA or CLAC
(with respect to the Business or the Transferred Assets) or (B) any Seller
Subsidiary from any Tax Authority in a jurisdiction where it does not file a Tax
Return asserting that it is subject to Tax by or required to file a Tax Return
in that jurisdiction.
 
(u)         Other than Alta Health & Life Insurance Company, none of the Seller
Subsidiaries is a “life insurance company” as defined in section 816 of the
Code.
 
 
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This Section 4.21 and Section 4.08(l) contain the sole and exclusive
representations and warranties provided by Seller, FGWLA and CLAC to Purchaser
and its Affiliates with respect to all matters relating to Taxes of Seller,
FGWLA, CLAC, the Seller Subsidiaries, the Business and the Transferred Assets.
 
Section 4.22     Security Deposits.  Schedule 4.22 sets forth a true and correct
list of all securities deposited by each of the Seller Subsidiaries with
Governmental Entities.
 
Section 4.23     Bank Accounts.  Schedule 4.23 sets forth a true and correct
list of bank accounts and investment accounts of the Seller Subsidiaries,
including the name of each bank or other institution, account numbers, a list of
the signatories to such accounts and the names of all persons holding a power of
attorney with respect to such accounts.
 
Section 4.24     Sufficiency of Assets.  Except as set forth in Schedule
4.24(a), after giving effect to the transactions provided for under this
Agreement, including the rights granted to Purchaser under the Ancillary
Agreements, Purchaser will, as respects the Acquired Operations, own, possess,
license, lease or, through an enforceable written obligation, have access to, or
the benefit of, all assets and contractual rights necessary for the conduct of
the Business and the affairs of the Seller Subsidiaries immediately following
the Closing in all material respects as conducted on the date of this
Agreement.  Schedule 4.24(b) lists all Contracts, Intellectual Property Rights
and other assets of Seller, FGWLA and CLAC which are used in the Business as
presently conducted, are material to the conduct of the Business and not
included in the Transferred Assets, the Assigned and Assumed Contracts, the
Insurance Contracts, the Assumed Reinsurance Agreements or the Administered
Contracts, other than the Excluded Assets, the Owned Generally Used Software,
the Licensed Generally Used Software and the Producer Contracts.
 
Section 4.25     Actuarial Reports.  Schedule 4.25 lists all of the actuarial
reports which were prepared internally or externally in connection with
Seller’s, FGWLA’s, CLAC’s and the Insurance Company Subsidiaries’ statutory
annual filings since January 1, 2006, and prior to the date of this Agreement,
and all attachments, addenda, supplements thereto and Seller, FGWLA and CLAC
have delivered or made available to Purchaser complete and accurate copies of
all such actuarial reports; provided, however, that with respect to any such
actuarial reports with respect to Seller, FGWLA and CLAC, only the portions
thereof with respect to the Business of such company have been delivered or made
available to Purchaser.
 
Section 4.26     Disclosure.  Each of Seller, FGWLA, CLAC and the Seller
Subsidiaries have made all disclosures to Contractholders with respect to
compensation paid to Producers to the extent that such disclosures are required
to be made by applicable Law, and all such disclosures complied in all material
respects with applicable Law when made.
 
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Section 4.27     Producer Appointments and Contracts.  Schedule 4.27 lists each
contract that Seller, FGWLA, CLAC (in each case, to the extent relating to the
Business) or any Seller Subsidiary has with a Producer in effect as of the date
hereof which resulted, in calendar year 2006, in more than $20,000,000 in direct
written premium and premium equivalents (each a “Material Producer
Contract”).  None of Seller, FGWLA, CLAC or the Seller Subsidiary that is a
party to a Material Producer Contract or, to the Knowledge of Seller, FGWLA and
CLAC, any other party to such Material Producer Contract is in breach thereof in
any material respect.
 
Section 4.28     Certain Insurance Contracts.   Schedule 4.28 lists all
Insurance Contracts and Subsidiary Insurance Contracts in force as of the date
hereof that (a) are Guaranteed Renewal Contracts, (b) provide for the payment of
policy dividends or (c) provide for experience rating.
 
Section 4.29     Books and Records.   The Books and Records are complete and
accurate in all material respects.
 
Section 4.30     Officer and Director Claims.  As of the date of this Agreement,
except as set forth in Schedule 4.30, no Person is pursuing or, to the Knowledge
of Seller, FGWLA and CLAC, is threatening in writing to pursue any Action
against any current or former officer or director of the Seller Subsidiaries in
his or her capacity as an officer or director of the Seller Subsidiaries, and
none of Seller, FGWLA nor CLAC is pursuing or threatening to pursue any Action
against any current or former officer or director of the Seller Subsidiaries in
his or her capacity as an officer or director of the Seller Subsidiaries.
 
Section 4.31     Noncompetition Agreements.   Except as set forth in Schedule
4.31, none of Seller or any of its Affiliates, including the Seller
Subsidiaries, is a party to any Contract, including any Assigned and Assumed
Contract, which, by its terms, will restrict Purchaser’s or any Seller
Subsidiary’s rights to compete with other entities, engage in any line of
business, or solicit, employ or contract with employees, customers or Providers.
 
Section 4.32     Insurance Coverage.  Schedule 4.32 sets forth a true and
complete list of the insurance policies covering the Seller Subsidiaries as of
the date of this Agreement.  As of the date of this Agreement, none of the
Seller Subsidiaries has any claims under review, in dispute or unpaid by any
Person providing such insurance coverage to or on behalf of the Seller
Subsidiaries, other than workers compensation claims in the ordinary course of
business.
 
Section 4.33     Stop Loss Insurance Contracts.  Seller has implemented in all
material respects the business plans set forth in the Management Presentation as
regards (i) the renewal of Stop Loss Insurance Agreements and (ii) the increase
of manual rates applicable to the issuance of new Stop Loss Insurance
Agreements.
 
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ARTICLE V
 
REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
Purchaser hereby represents and warrants to Seller, FGWLA and CLAC as follows.
 
Section 5.01     Organization, Standing and Authority.   Purchaser is duly
organized, validly existing and in good standing under the Law of Connecticut
and has the requisite power and authority to carry on the operations of its
businesses as they are now being conducted by Purchaser.
 
Section 5.02     Authorization.  Purchaser has the requisite power and authority
to execute, deliver and perform its obligations under this Agreement, each of
the Ancillary Agreements to be executed by it and the other agreements,
documents and instruments to be executed and delivered in connection with this
Agreement or the Ancillary Agreements.  The execution and delivery by Purchaser
of this Agreement, the Ancillary Agreements to be executed by it and the other
agreements, documents and instruments to be executed and delivered in connection
with this Agreement or the Ancillary Agreements, and the performance by
Purchaser of its obligations hereunder and thereunder, have been duly authorized
by all necessary corporate action on the part of Purchaser.  This Agreement has
been duly executed and delivered by Purchaser and, subject to the due execution
and delivery hereof by Seller, FGWLA and CLAC, this Agreement is a valid and
binding obligation of Purchaser enforceable against Purchaser in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors’ rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).  Each Ancillary Agreement and each other agreement, document and
instrument to be executed and delivered in connection with this Agreement or the
Ancillary Agreements, when executed and delivered by Purchaser will be duly
executed and delivered by Purchaser and, subject to the due execution and
delivery of such agreements, documents and instruments by the other parties
thereto, each Ancillary Agreement and each other agreement, document and
instrument to be delivered in connection with this Agreement or the Ancillary
Agreements executed by Purchaser will be a valid and binding obligation of
Purchaser enforceable against Purchaser in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors’ rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
 
Section 5.03     Non-Contravention.   Except as disclosed on Schedule 5.03, the
execution and delivery by Purchaser of this Agreement and the Ancillary
Agreements to which it is a party do not, and the consummation by Purchaser of
the transactions contemplated by this Agreement and by such Ancillary Agreements
and compliance with the provisions hereof and thereof will not, (i) conflict
with any of the provisions of the Organizational Documents of Purchaser, (ii)
conflict with, result in a breach of or default
 
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(with or without notice or lapse of time, or both) under, give rise to a right
of termination, cancellation or acceleration of any obligation or loss of a
benefit under, or result in the creation of any Lien (other than Permitted
Liens) on any property or asset of Purchaser under, any indenture or other
agreement, permit, franchise, license or other instrument or undertaking to
which Purchaser is a party or by which Purchaser or any of its properties or
assets is bound or affected, or (iii) contravene any statute, law, ordinance,
rule, regulation, order, judgment, injunction, decree, determination or award
applicable to Purchaser or any of its subsidiaries or any of its properties or
assets, except, with respect to (ii), as would not, individually or in the
aggregate, have a Purchaser Material Adverse Effect.
 
Section 5.04     Compliance with Law
 
.                                               (a)         Except as disclosed
in Schedule 5.04(a), since January 1, 2005 Purchaser has been in compliance with
all Law, except where the failure to be in compliance would not, individually or
in the aggregate, have a Purchaser Material Adverse Effect.
 
(b)         Except as disclosed in Schedule 5.04(b) or as would not have a
Purchaser Material Adverse Effect, since January 1, 2005, Purchaser has not
received, nor otherwise has any Knowledge of, any written notice from any
Governmental Entity that (i) alleges any material noncompliance (or that
Purchaser is under investigation or the subject of an inquiry by any such
Governmental Entity for such alleged material noncompliance) with any applicable
Law, or (ii) asserts any risk-based capital deficiency.
 
Section 5.05     Consents and Approvals.
 
(a)         There is no requirement applicable to Purchaser or any of its
Affiliates to make any filing with, or to obtain any Permit, authorization,
consent or approval from, any Governmental Entity that is either a health or
insurance regulatory authority in connection with the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements, except
for the filings, permits, authorizations, consents or approvals set forth in
Schedule 5.05(a).
 
(b)         There is no requirement applicable to Purchaser to make any filing
with, or to obtain any Permit, authorization, consent or approval from, any
Governmental Entity that is neither a health nor insurance regulatory authority
in connection with the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements, except for the filings, permits,
authorizations, consents or approvals as set forth in Schedule 5.05(b).
 
(c)         There is no requirement applicable to Purchaser to obtain any
consent or approval from any third party (excluding any Governmental Entity) in
connection with the execution or consummation of the transactions contemplated
by this Agreement, except for the consents, approvals or notices set forth in
Schedule 5.05(c) and such other consents, approvals, authorizations,
declarations, filings or notices the failure
 
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 to obtain or make which, in the aggregate, would not have a Purchaser Material
Adverse Effect.
 
Section 5.06     Brokers.  No broker, investment banker, financial advisor or
other Person, other than Banc of America Securities LLC, the fees and expenses
of which will be paid by Purchaser, is entitled to any broker’s, finder’s,
financial advisor’s or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Purchaser or any of its Affiliates.
 
Section 5.07     Ratings.   Purchaser has an A.M. Best claims paying rating of
at least A- and a Standard & Poor’s Corporation rating of at least BBB+, and
Purchaser has received no notification that its A.M. Best claims paying rating
will be downgraded below A- or that its Standard & Poor’s Corporation rating
will be downgraded below BBB+ as  a result of the consummation of the
transaction contemplated hereby.
 
Section 5.08     Licenses and Franchises.    Except as listed on Schedule 5.08
and for policy form, rate and similar approvals and small group market
approvals, after acquiring the Seller Subsidiaries, Purchaser will have all
Permits necessary to (a) conduct the Business in the manner and in the
jurisdictions in which the Business is presently being conducted; and (b)
perform its obligations under this Agreement and each Ancillary Agreement.  All
such Permits are valid and in full force and effect, and Purchaser is not
operating under any formal or informal agreement or understanding with any
Governmental Entity which restricts its authority in a manner that would
materially limit its ability to so conduct the Business or to perform its
obligations under this Agreement or any Ancillary Agreement.  Except as listed
on Schedule 5.08, no material violations exist in respect of any such license or
authorization and no investigation or proceeding is pending or, to the Knowledge
of Purchaser, threatened, that would be reasonably likely to result in the
suspension, revocation or material limitation or restriction of any such license
or authorization and, to the Knowledge of Purchaser, there is no reasonable
basis for the assertion of any such violation or the institution of any such
proceeding or investigation.
 
Section 5.09     Purchaser Financial Statements.  Purchaser has previously
delivered to Seller, FGWLA and CLAC true, complete and correct copies of the
statutory financial statements of Purchaser as filed with the Insurance
Department of the State of Connecticut, for the years ended December 31, 2006
and 2005 and for the calendar quarter ended March 31, 2007, together with all
exhibits and schedules thereto (the “Purchaser SAP Statements”).  The Purchaser
SAP Statements present fairly, in all material respects, the statutory financial
condition of Purchaser at the respective dates thereof, and the statutory
results of operations for the periods then ended in accordance with Applicable
SAP applied on a consistent basis throughout the periods indicated and
consistent with each other, except as otherwise specifically noted therein.
 
Section 5.10      Absence of Certain Changes.  Since December 31, 2006, there
has not been any change, event, occurrence, circumstance, fact or other matter
that
 
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 has had or would, individually or in the aggregate, reasonably be expected to
have a Purchaser Material Adverse Effect.
 
Section 5.11     Sufficient Funds.   Purchaser has or will have at Closing
sufficient surplus and funds available (through existing credit arrangements or
otherwise) to pay the amounts required by Article II, to assume the Assumed
Liabilities and to pay all fees and expenses related to the transactions
contemplated by this Agreement that are the obligation of Purchaser.
 
Section 5.12     Investment Intent.  The Shares will be acquired by Purchaser
for its own account and not with a view to, or for sale in connection with, any
distribution thereof.  Purchaser will refrain from transferring or otherwise
disposing of any of the Shares, or any interest therein, in such manner as to
violate any registration provision of any applicable federal or state securities
law regulating the disposition thereof.
 
ARTICLE VI
 
COVENANTS
 
Section 6.01     Conduct of Business
 
                                                                      (a)         Except
as set forth on Schedule 6.01(a) or as otherwise contemplated by this Agreement,
during the period from the date of this Agreement to the Closing Date, Seller,
FGWLA and CLAC (1) shall carry on the Business only in the ordinary course of
business consistent with past practice, (2) shall use their reasonable best
efforts to preserve intact the present business organization and operations of
the Business, to keep available the services of the Business Employees and to
preserve their relationships with Governmental Entities, licensors, producers,
Providers, customers and others having business relationships with the Business
and (3) shall not without the prior consent of Purchaser:
 
(i)                 make any change in the Tax or statutory accounting methods,
principles or practices used by Seller, FGWLA or CLAC in connection with the
Business, including but not limited to any change with respect to establishment
of reserves for losses and loss adjustment expenses, except insofar as may be
required by a change in Applicable SAP or as may be required by Law or any
Governmental Entity;
 
(ii)                 pay, discharge, compromise or satisfy any material claims,
liabilities or obligations associated with the Business other than the payment,
discharge, compromise or satisfaction of claims, liabilities or obligations in
the ordinary course of the business consistent with past practice;
 
(iii)                 make, with respect to the Business, any loans or advances
to, or investments in any Person other than in the ordinary course of business
consistent with past practice;
 
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(iv)                 amend in any material respect, assign or terminate any
Ceded Reinsurance Agreement or enter into any new reinsurance or retrocession
agreements with respect to the Business, except in the ordinary course of
business consistent with past practice;
 
(v)                 amend in any material respect, assign or terminate any
Assigned and Assumed Contract or Administered Contract, except in the ordinary
course of business consistent with past practice;
 
(vi)                 sell, dispose of, transfer, guarantee, mortgage or encumber
any asset that would otherwise be a Transferred Asset, except in the ordinary
course of business consistent with past practice;
 
(vii)                 increase, other than in the ordinary course of business
consistent with past practice or as permitted or required by an existing
agreement or as required by applicable Law, the compensation of, or the value of
any pension, retirement allowance, severance or other employee benefit plan,
agreement or arrangement applicable to any Business Employee, or establish any
new Employee Plan applicable to any Business Employee;
 
(viii)                 (A) make any change in underwriting standards, pricing
bases, retention limits, administrative practices or claims practices and
standards used in connection with the Business, other than in the ordinary
course of business consistent with past practice, or (B) make any material
change that would relax the standards in pricing and underwriting procedures for
the issuance or renewal of Insurance Contracts and Reinsured Contracts or the
standards by which Insurance Contracts or Reinsured Contracts are administered
or monitored;
 
(ix)                 permit, allow, or suffer any assets which will be
Transferred Assets upon consummation of the Closing to be subjected to any Lien
other than Permitted Liens;
 
(x)                 incur any long-term indebtedness that would be required
hereunder to be assumed by Purchaser;
 
(xi)                 enter into any collective bargaining agreement with respect
to the Business or involving Business Employees or Corporate Employees except
insofar as may be required by applicable law;
 
(xii)                 cancel any debts or waive any material claims or rights
relating to any assets which will be Transferred Assets upon consummation of the
Closing, other than in the ordinary course of business consistent with past
practice;
 
(xiii)                 enter into any agreement containing any provision or
covenant that would on or after the Closing directly limit Purchaser’s or its
Affiliates’ ability to (i) sell any products or services of or to any other
Person, (ii) engage in the Business or (iii) compete with or to obtain products
or services from
 
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any Person or limiting the ability of any person to provide products or services
relating to the Business;
 
(xiv)                 enter into any Contract not entered into the ordinary
course of business consistent with past practice and which, if in effect on the
date hereof, would constitute a Material Business Contract;
 
(xv)                 make any filings with any Governmental Entities in any
state relating to the withdrawal from any lines, kinds or classes of insurance
business included in the Insurance Contracts, except as required by a change in
applicable Law following the date hereof or as requested by a Governmental
Entity;
 
(xvi)                 with respect to the Insurance Contracts and the Reinsured
Contracts, reduce rates, fail to implement actuarially based rate increases,
extend existing policy terms, accelerate renewals, or take any other actions
similar to the foregoing, in each case other than in the ordinary course of
business consistent with past practice;
 
(xvii)                 cease providing any services to the Business that are
provided to the Business as of the date hereof;
 
(xviii)                 take any action which would be contrary to the
representation set forth in Section 4.08(l) had such action occurred prior to
the date hereof; or
 
(xix)                 commit or agree to take any of the foregoing actions.
 
(b)         Except as set forth on Schedule 6.01(b) or as otherwise contemplated
by this Agreement, during the period from the date of this Agreement to the
Closing Date, Seller shall cause the Seller Subsidiaries (i) to carry on their
respective businesses only in the ordinary course of business consistent with
past practice and (ii) use their reasonable best efforts to preserve intact
their respective present business organizations and operations, to keep
available the services of the Subsidiary Employees and to preserve their
respective relationships with Governmental Entities, licensors, Providers,
customers and others having business relationships with the Seller Subsidiaries,
and Seller shall not permit any Seller Subsidiary to, without the prior consent
of Purchaser:
 
(i)                 make any change in the Tax or accounting methods, principles
or practices used by such Seller Subsidiary, including but not limited to any
change with respect to establishment of reserves for losses and loss adjustment
expenses maintained by the Insurance Company Subsidiaries, except insofar as may
be required by a change in Applicable SAP or generally accepted accounting
principles, or as may be required by Law or any Governmental Entity;
 
(ii)                 pay, discharge, compromise or satisfy any material claims,
liabilities or obligations other than the payment, discharge, compromise or
 
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satisfaction of claims, liabilities or obligations in the ordinary course of the
business consistent with past practice;
 
(iii)                 make any material capital expenditure, except (A)
expenditures in the ordinary course of business consistent with past practice
and (B) as would not reduce non-cash assets of the business of such Seller
Subsidiary;
 
(iv)                 amend in any material respect, assign or terminate any
reinsurance or retrocession agreement or enter into any new reinsurance or
retrocession agreements, except in the ordinary course of business consistent
with past practice;
 
(v)                 make any change in underwriting standards, pricing bases,
retention limits, administrative practices or claims practices and standards
other than in the ordinary course of business consistent with past practice;
 
(vi)                 (A) sell, dispose of, transfer, guarantee, mortgage or
encumber any assets, other than in the ordinary course of business consistent
with past practice or (B) terminate, modify or change in any material respect
any material contract, other than in the ordinary course of business consistent
with past practice;
 
(vii)                 (A) permit or allow any assets to become subject to any
Liens except Permitted Liens or, (B) waive any material claims or rights
relating to its business;
 
(viii)                 declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect of, any of
its outstanding capital stock;
 
(ix)                 issue, sell, grant, repurchase or redeem any shares of its
capital stock, any other voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities;
 
(x)                 amend its organizational documents;
 
(xi)                 (A) incur any indebtedness for borrowed money or guarantee
or otherwise become responsible for any such indebtedness of another person or
(B) make any loans, advances or capital contributions to, or investments in, any
other person, other than purchases of investment assets in the ordinary course
of business consistent with past practice;
 
(xii)                 enter into any collective bargaining agreement, except
insofar as may be required by applicable Law;
 
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(xiii)                 cancel any debts or waive any material claims or rights
relating to any assets of such Seller Subsidiary, other than in the ordinary
course of business consistent with past practice;
 
(xiv)                 enter into any agreement containing any provision or
covenant that would on or after the Closing directly limit Purchaser’s or its
Affiliates’ ability to (A) sell any products or services of or to any other
Person, (B) engage in the business of such Seller Subsidiary or (C) compete with
or to obtain products or services from any Person or limiting the ability of any
person to provide products or services relating to the business of such Seller
Subsidiary;
 
(xv)                 enter into any Contract not entered into in the ordinary
course of business consistent with past practices and which, if in effect on the
date hereof, would constitute a Material Business Contract;
 
(xvi)                 make any filings with any Governmental Entities in any
state relating to the withdrawal of any licenses held by such Seller Subsidiary,
except as required by a change in applicable Law following the date hereof or as
requested by a Governmental Entity;
 
(xvii)                 acquire (A) any business or any corporation, partnership,
joint venture, association or other business organization or division thereof or
(B) any assets that are material, individually or in the aggregate, to such
Seller Subsidiary, other than purchases of investment assets in the ordinary
course of business consistent with past practice;
 
(xviii)                 increase, other than in the ordinary course of business
consistent with past practice or as permitted or required by an existing
agreement or as required by applicable Law, the compensation of, or the value of
any pension, retirement allowance, severance or other employee benefit plan,
agreement or arrangement applicable to any Subsidiary Employee, or establish any
new Employee Plan applicable to any Subsidiary Employee;
 
(xix)                 not take any action which would be contrary to the
representation set forth in Section 4.08(l) had such action occurred prior to
the date hereof; or
 
(xx)                 commit or agree to take any of the foregoing actions.
 
Section 6.02     Exclusivity.  From and after the date of this Agreement,
Seller, FGWLA, CLAC and their Affiliate shall not, directly or indirectly,
through any director, officer, employee, shareholder, financial advisor,
representative or agent of such Person (i) solicit, initiate, aid or encourage
(including by way of furnishing information or advice) or take any other action
to facilitate any inquiries or proposals that constitute, or could reasonably be
expected to lead to, a proposal or offer for a merger, consolidation,
amalgamation, business combination, sale or transfer of assets or properties,
sale of shares of capital stock (including by way of a tender or exchange
offer), or similar
 
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transaction involving any part of the Acquired Operations (an “Acquisition
Proposal”), (ii) engage in negotiations or discussions with any Person (or group
of Persons) other than Purchaser or its advisors (an “Alternate Bidder”)
concerning, or provide any nonpublic information or advice to any Person
relating to, any Acquisition Proposal, (iii) continue any prior discussions or
negotiations with any Alternate Bidder concerning any Acquisition Proposal or
(iv) accept, or enter into any contract (whether or not contingent upon
consummation of the transactions contemplated by this Agreement) concerning, any
Acquisition Proposal with any Alternate Bidder or consummate any Acquisition
Proposal other than as contemplated by this Agreement.  In the event that any of
Seller, FGWLA, CLAC or their Affiliate receives an Acquisition Proposal, the
Person receiving such Acquisition Proposal shall promptly notify Purchaser of
such proposal and provide a copy thereof (if in written or electronic form) or,
if in oral form, a written summary of the terms and conditions thereof,
including the names of the interested parties.  Seller, FGWLA, CLAC and their
Affiliate shall request that all Alternate Bidders who executed a
confidentiality agreement in connection with the consideration of a possible
Acquisition Proposal (each a “Seller Confidentiality Agreement”) return, or
destroy, all confidential information heretofore furnished to such Alternate
Bidder by or on behalf of Seller, FGWLA, CLAC, the Seller Subsidiaries or their
Affiliates subject to the terms of such Seller Confidentiality Agreement.
 
Section 6.03     Access to Information; Confidentiality.  Seller, FGWLA and CLAC
shall, upon reasonable notice, afford to Purchaser and to the officers,
employees, counsel, financial advisors, accountants, actuaries and other
representatives of Purchaser reasonable access during normal business hours
during the period prior to the Closing Date to the Books and Records and the
other Transferred Assets and, during such period, shall furnish as promptly as
practicable to Purchaser such information concerning the Acquired Operations as
Purchaser may from time to time reasonably request.  Purchaser agrees that they
will hold, and will cause their Affiliates and each of their respective
directors, officers, employees, partners, counsel, financial advisors,
accountants, actuaries and other representatives and Affiliates to hold, any
information so obtained in confidence to the extent required by, and in
accordance with, the provisions of the Confidentiality Agreement, dated April
25, 2007 (the “Confidentiality Agreement”), between Seller and CIGNA
Corporation.
 
Section 6.04     Reasonable Best Efforts.  Upon the terms and subject to the
conditions and other agreements set forth in this Agreement, each of the parties
agrees to use its reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, as promptly as practicable (subject to Section 6.05(e)), the
transactions contemplated by this Agreement or any Ancillary Agreement.
 
Section 6.05     Consents, Approvals, Filings and Costs
 
                                               (a)         Seller, FGWLA, CLAC
and Purchaser will make and cause their respective Affiliates to make all
necessary filings as soon as practicable, including any filing required under
state insurance Law, in order to facilitate prompt consummation
 
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of the transactions contemplated by this Agreement or any Ancillary
Agreement.  In addition, Seller, FGWLA, CLAC and Purchaser will each use their
reasonable best efforts, and will cooperate fully with each other to obtain as
promptly as practicable all necessary consents, approvals, permits or
authorizations of Governmental Entities and consents or waivers of all third
parties necessary or advisable for the consummation of the transactions
contemplated by this Agreement or any Ancillary Agreement.  Each of Seller,
FGWLA, CLAC and Purchaser shall use their reasonable best efforts to provide
such information and communications to Governmental Entities as such
Governmental Entities may reasonably request.
 
(b)         Seller and Purchaser will, as promptly as practicable, file, or
cause to be filed, Notification and Report Forms under the HSR Act with the
Federal Trade Commission (the “FTC”) and the Antitrust Division of the United
States Department of Justice (the “Antitrust Division”) in connection with the
transactions contemplated by this Agreement, and will use their respective
reasonable best efforts to respond as promptly as practicable to all inquiries
received from the FTC or the Antitrust Division for additional information or
documentation and to cause the waiting periods under the HSR Act to terminate or
expire at the earliest possible date.  Seller and Purchaser will each furnish to
the other such necessary information and reasonable assistance as the other may
request in connection with its preparation of necessary filings or submissions
to any governmental or regulatory agency, including, without limitation, any
filings necessary under the provisions of the HSR Act.
 
(c)         Each of the parties shall notify the other party and keep it advised
as to the status of all applications to, communications with and proceedings
before, Governmental Entities in connection with the transactions contemplated
by this Agreement.
 
(d)         The parties agree that any costs and expenses payable to third
parties (other than the respective agents, representatives, counsel, financial
advisors, actuaries and accountants of the parties to this Agreement) in
connection with the procurement of any consents or waivers of third parties
(other than Governmental Entities) necessary or advisable for the consummation
of the transactions contemplated by this Agreement or any Ancillary Agreement
(whether such costs and expenses are incurred prior to the Closing or after the
Closing pursuant to Section 2.07), including any consents or waivers for the
assignment or transfer to Purchaser of any Transferred Asset, shall be borne one
half by Seller and one half by Purchaser.  Without limiting the foregoing, the
parties hereto agree that Seller and Purchaser shall bear equally (i) all costs
and expenses payable to third parties (other than the respective agents,
representatives, counsel, financial advisors, actuaries and accountants of the
parties to this Agreement) in connection with the assignment of the Licensed
Principally Used Software contemplated by clause (B) of Section 4.19(c), and
(ii) all costs and expenses payable to third parties (other than the respective
agents, representatives, counsel, financial advisors, actuaries and accountants
of the parties to this Agreement) (a) in connection with the procurement of any
consents or waivers of third parties necessary or advisable for Seller to
provide to Purchaser or a Seller Subsidiary use of the Licensed Generally Used
Software pursuant to the Transition Services Agreement, as contemplated by
clause (C) of Section 4.19(c), or
 
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(b) in providing to Purchaser or a Seller Subsidiary such use of the Licensed
Generally Used Software, including any increase in costs and expenses to Seller
or Seller’s Affiliates as a result of providing such use of the Licensed
Generally Used Software.  In lieu of procuring any consent or waiver described
in this Section 6.05(d), until (but not after) the end of the Consent Period,
Seller may, in cooperation with Purchaser, obtain for Purchaser or the
applicable Seller Subsidiary a substantially equivalent replacement for the
Transferred Asset, license, contract, lease or other right whose assignment
requires such consent or waiver, and the cost of such replacement shall be borne
one half by Seller and one half by Purchaser, but only if Seller has reasonably
determined that the cost of such replacement is less than the cost of procuring
such consent or waiver.  For the avoidance of doubt, any cost or expenses in
connection with the procurement of any consents or waivers of third parties to
be borne by any Seller Subsidiary on or following the Effective Date and not
taken into account in the Final Net Worth Statement shall be treated as having
been borne by Purchaser.
 
(e)         Notwithstanding anything herein to the contrary, no party shall be
obligated to take or refrain from taking or to agree to it, its Affiliates or
the Acquired Operations taking or refraining from any action or to suffer to
exist any restriction or requirement which would, individually or together with
all other such actions, restrictions or requirements, reasonably be expected to
result in a material negative effect on the benefits, taken as a whole, which
such party could otherwise reasonably expect to derive from the consummation of
the transactions contemplated hereby had such party not been obligated to take
or refrain from or to agree to the taking or refraining from such action or
suffer to exist such restriction or requirement, excluding the effects of any
such restriction or requirement that (i) is customary for the applicable
Governmental Entity to impose in transactions of the type of transaction
contemplated hereby, (ii) results from any business plans of Purchaser with
respect to any of the Acquired Operations that materially change the existing
business plan of such part of the Acquired Operations or (iii) results from any
prior activities of Purchaser or any of its Affiliates unrelated to the
transactions contemplated under this Agreement or the Business (“Negative
Condition”).
 
(f)         Notwithstanding anything herein to the contrary, the cost and
expenses in connection with the arrangements listed in Schedule 6.05(f) shall be
allocated as described in such schedule.
 
Section 6.06     Representations and Warranties.  From the date hereof through
the Closing Date (a) Seller, FGWLA, CLAC and their Affiliates shall use their
reasonable best efforts to conduct their affairs in such a manner so that except
as otherwise contemplated or permitted by this Agreement, the representations
and warranties contained in Article IV shall continue to be true, complete and
correct on and as of the Closing Date as if made on and as of the Closing Date,
except for
 
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representations and warranties that are expressly stated to be made as of an
earlier date; (b) Purchaser shall use its reasonable best efforts to conduct its
affairs in such a manner so that, except as otherwise contemplated or permitted
by this Agreement, the representations and warranties contained in Article V
shall continue to be true and correct on and as of the Closing Date as if made
on and as of the Closing Date, except for representations and warranties that
are expressly stated to be made as of an earlier date; (c) Seller, FGWLA or CLAC
shall notify Purchaser promptly of any event, condition or circumstance, to the
respective Knowledges of Seller, FGWLA or CLAC, occurring from the date hereof
through the Closing Date that would constitute a violation or breach of this
Agreement by Seller, FGWLA or CLAC; and (d) Purchaser shall notify Seller, FGWLA
and CLAC promptly of any event, condition or circumstance, to the Knowledge of
Purchaser, occurring from the date hereof through the Closing Date that would
constitute a violation or breach of this Agreement by Purchaser.
 
Section 6.07     Notification.  From the date hereof through the Closing Date,
Seller, FGWLA, CLAC and Purchaser shall each promptly notify the others and keep
them advised as to (i) any litigation or administrative proceeding pending and
known to it or, to its Knowledge, threatened in writing which challenges or
seeks to restrain or enjoin the consummation of any of the transactions
contemplated hereby and (ii) the occurrence of any event that would,
individually or in the aggregate, reasonably be expected to have a Sellers
Material Adverse Effect or Purchaser Material Adverse Effect.
 
Section 6.08     Further Assurances.  On and after the Closing Date, each of
Seller, FGWLA, CLAC and Purchaser shall take all reasonably appropriate action
and execute any additional documents, instruments or conveyances of any kind
which may be reasonably necessary to carry out any of the provisions of this
Agreement or consummate any of the transactions contemplated by this Agreement.
 
Section 6.09     Expenses.  Except as otherwise specifically provided in this
Agreement, the parties to this Agreement shall bear their respective expenses
incurred in connection with the preparation, execution and performance of this
Agreement and consummation of the transactions contemplated hereby, including
all fees and expenses of agents, representatives, counsel, financial advisors,
actuaries and accountants.
 
Section 6.10     Resources.  Each party shall have and maintain, from the date
hereof and during the terms of the Transition Services Agreement, the Indemnity
Reinsurance Agreements and the Administrative Services Agreements, sufficient
expertise, trained personnel, resources, systems, controls and procedures
(financial, legal, accounting, administrative or otherwise) as may be necessary
or appropriate to discharge its obligations after Closing under the terms of
this Agreement, the Transition Services Agreement, the Indemnity Reinsurance
Agreements, the Administrative Services Agreements or any other Ancillary
Agreement.  Without limiting the foregoing, none of Seller, FGWLA, CLAC,
Purchaser or any of their respective Affiliates shall  fail to maintain in full
force and effect all Permits, including form and rate filings, necessary for the
performance of its obligations under this Agreement or any Ancillary Agreement.
 
Section 6.11     Employees and Employee Benefits
 
.                                               (a)         For purposes of this
Section 6.11, and except as otherwise agreed upon in writing by the parties or
as reflected in the final list described in the last sentence of this Section
6.11(a), “Business Employees” shall mean the individuals listed
 
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 in Schedule 6.11(a)(1) and “Corporate Employees” shall mean the individuals
described on Schedule 6.11(a)(2) and such other employees of the Seller’s
corporate division that the parties hereto agree to in writing.  Such list on
Schedule 6.11(a)(1) shall consist of all active employees in the Healthcare
Division (including all employees on approved leaves of absence or on short-term
disability but excluding those employees or former employees receiving long-term
disability benefits).  Schedule 6.11(a)(1) shall be updated by Seller at least
monthly between the date of this Agreement and the Closing Date, and no later
than five days prior to the Closing Date, to add new hires whose employment is
in the Healthcare Division and to remove individuals who have terminated
employment or service (it being understood that an individual absent due to
vacation, holiday or an approved leave of absence shall not be deemed to have
terminated employment or service) or whose employment or service is no longer in
the Healthcare Division.
 
(b)         As provided in Section 6.11(j), after the Employment Commencement
Date, Seller shall not be responsible for wages, salaries and other benefits for
Business Employees with respect to their services as employees of Purchaser for
periods as of and after the Employment Commencement Date, it being understood
that with respect to Business Employees whose Employment Commencement Date
occurs after the Closing Date, such Business Employees shall remain employed by
Seller or its Affiliates and shall be seconded to Purchaser on the terms and
conditions set forth in the Employee Lease Agreement until the Employment
Commencement Date for such Business Employees.  The Employment Commencement Date
may be different dates for different Business Employees.
 
(c)         Prior to the earliest anticipated Closing Date, Purchaser shall
deliver to each Business Employee (except for Business Employees who are offered
Replacement Retention Agreements and fail to enter into such agreements) an
offer of employment with Purchaser or one of its Affiliates to be effective upon
the Employment Commencement Date on terms (except as provided in this Section
6.11) that include eligibility to participate in Purchaser benefit programs as
of the Employment Commencement Date on the same basis as similarly-situated
Purchaser employees, at least the same rate of base pay as such individual’s
base pay rate in effect on the date of the Agreement, and employment, to the
extent reasonably practicable, at a worksite that is geographically proximate to
such employee’s primary work location in effect immediately prior to
Closing.  Seller acknowledges and agrees that, except as otherwise provided in
Section 6.11(m) and Section 6.11(n), an offer of employment made consistent with
this Section 6.11(c) will not give rise to an obligation to provide severance
benefits to any such Business Employee regardless of whether such Business
Employee accepts such offer of employment.
 
(d)         From and after the Closing Date, and continuing to the date that is
4 months following the Closing Date or such later date as mutually agreed to by
the parties hereto, Purchaser may elect to deliver to any Corporate Employee an
offer of employment with Purchaser or one of its Affiliates to be effective on
the date that is 4 months following the Closing Date or such later date as
mutually agreed to by the parties hereto, on terms (except as provided in this
Section 6.11) that include eligibility to participate in Purchaser benefit
programs as of the Employment Commencement Date on
 
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the same basis as similarly-situated Purchaser employees, at least the same rate
of base pay as such individual’s base pay rate in effect on the date of the
Agreement, and employment, to the extent reasonably practicable, at a worksite
that is geographically proximate to such employee’s primary work location in
effect immediately prior to Closing.  Seller acknowledges and agrees that an
offer of employment made consistent with this Section 6.11(d) will not give rise
to an obligation to provide severance benefits to any such Corporate Employee
regardless of whether such Corporate Employee accepts such offer of employment.
 
(e)         A Business Employee or Corporate Employee who chooses to accept the
offer described in Section 6.11(c) or (d) must respond in writing to Purchaser’s
offer within 14 Business Days after receipt of the offer.  For purposes of this
Agreement, “Transferred Employee” shall mean a Business Employee or Corporate
Employee who (1) accepts the employment offer in a timely fashion and (2) meets
Purchaser’s reasonable employment requirements with respect to satisfactory
results of background checks, drug tests, immigration verification and similar
requirements (the “Purchaser Requirements”).  Any Business Employee or Corporate
Employee who fails to accept the offer in a timely fashion, or who fails to meet
the Purchaser Requirements, shall be a “Non-Acceptance Offer
Employee.”  Transferred Employees shall become employees of Purchaser or one of
its Affiliates upon the applicable Employment Commencement Date.  A Business
Employee or Corporate Employee who meets conditions (1) and (2) above but is on
an approved leave of absence for any reason or on short-term disability on the
Employment Commencement Date shall become an employee of Purchaser or one of its
Affiliates upon his or her return from leave of absence or upon presenting as
able to return to work following such short-term disability, but only if such
return is within 90 days after the Employment Commencement Date.
 
(f)         Subsidiary Employees who remain employed by a Seller Subsidiary
until immediately before the Closing shall remain Subsidiary Employees upon the
Closing.  As to any such Subsidiary Employee, the Employment Commencement Date
as used in this Section 6.11 shall be the Closing Date applicable to that
Subsidiary.
 
(g)         Except as otherwise provided in this Section 6.11, as of the
Employment Commencement Date, Seller and its Affiliates shall cause each
Transferred Employee to become fully vested under all Employee Plans that are
tax-qualified pension or retirement plans and in which such Transferred Employee
is participating as of immediately prior to such Transferred Employee’s
Employment Commencement Date.  Prior to and effective as of the applicable
Employment Commencement Date, with respect to each Transferred Employee, Seller
and its Affiliates shall cause to be contributed to Seller’s Staff and Agents
Savings Plan all contributions (including matching and catch-up contributions,
if applicable) with respect to all periods prior to the Employment Commencement
Date.  Except as otherwise provided in Section 6.11(m) and excepting accrued
incentive cash compensation, as of the Employment Commencement Date under
Seller’s annual bonus program (“Incentive Cash Compensation”), Seller and its
Affiliates shall cause all accrued benefits to be distributed to each
Transferred Employee within 30 days after the applicable Employment Commencement
Date or otherwise in accordance with the terms of the applicable plan.  
 
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Seller and Affiliates shall transfer the aggregate accrued Incentive Cash
Compensation in respect of the Transferred Employees to Purchaser with
sufficient documentation to permit Purchaser to identify such Incentive Cash
Compensation accrued with respect to each Transferred Employee.  Where active
participation in an Employee Plan does not cease by operation of Law, Seller
shall (except to the extent otherwise specifically provided herein) terminate
the participation of each Transferred Employee in each Employee Plan as of the
applicable Employment Commencement Date.
 
(h)         As of the Employment Commencement Date, except as specifically
provided herein, Purchaser or one of its Subsidiaries shall (A) become solely
responsible for all severance, termination and other liabilities related to the
termination of employment of each Transferred Employee whose employment is
terminated by Purchaser on or subsequent to the Employment Commencement Date;
and (B) be responsible for all other liabilities relating to the Transferred
Employees, including workers compensation liabilities, that arise on or after
the Employment Commencement Date on account of occurrences or conditions that
commence after the Employment Commencement Date.  Purchaser shall not be
responsible for any severance, termination, workers compensation or other or
liabilities related to any Non-Acceptance Offer Employee.
 
(i)         Except as otherwise provided in this Section 6.11, all
employee-related liabilities, including any workers compensation liabilities, of
Seller and their respective Affiliates with respect to all Transferred
Employees, Subsidiary Employees or any other present or former employee of
Seller relating to events or circumstances existing or occurring prior to the
Employment Commencement Date under an Employee Plan (including all liabilities
with respect to Business Employees under Employee Plans that are long-term
incentive compensation, deferred compensation, retention, retirement, savings or
pension plans, but excluding any Incentive Cash Compensation transferred to
Purchaser under Section 6.11(g)) or under any workers compensation program,
shall be retained by Seller and their respective Affiliates and shall be
Excluded Liabilities.
 
(j)         Except as otherwise provided in this Agreement to the contrary:
 
(i)                 Seller and its Affiliates shall be solely responsible for
(1) claims for the type of benefits described in Section 3(1) of ERISA whether
or not covered by ERISA (other than any claims for severance benefits, which
shall be governed under other provisions of this Section 6.11) (“Welfare
Benefits”) that are incurred under any Employee Plans by or with respect to (A)
any Business Employee and his or her beneficiaries or dependents before the
Employment Commencement Date and (B) any Non-Acceptance Offer Employee whether
before or after the Closing Date and (2) claims relating to continuation
coverage under Section 4980B of the Internal Revenue Code (“COBRA Coverage”)
attributable to “qualifying events” with respect to any Business Employee and
his or her beneficiaries and dependents that occur before the Employment
Commencement Date.
 
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(ii)                 Purchaser and its Affiliates shall be solely responsible
for (1) claims for Welfare Benefits that are incurred by or with respect to any
Transferred Employee and his or her beneficiaries or dependents on or after the
Employment Commencement Date and (2) claims relating to COBRA Coverage
attributable to “qualifying events” with respect to any Transferred Employee and
his or her beneficiaries and dependents that occur on or following the
Employment Commencement Date.  Purchaser shall waive any pre-existing condition
exclusions otherwise applicable to the Transferred Employees under any benefit
plan of Purchaser providing medical, dental, disability, and vision benefits in
which such Transferred Employees become eligible to participate, except to the
extent such pre-existing condition excluded participation in Seller’s plan.
 
(iii)                 Welfare Benefits liabilities under Seller Subsidiary Plans
shall remain with such plans upon Closing when sponsorship of such plans is
transferred to Purchaser or its Affiliates.  Seller or its Affiliates shall
cause the applicable Seller Subsidiaries to meet all contribution and other
funding obligations with respect to Seller Subsidiary Plans up to the Closing
Date.
 
(iv)                 For purposes of this Section 6.11(j), a medical/dental
claim shall be considered incurred when the services are rendered, the supplies
are provided or medications are prescribed, and not when the condition arose.  A
disability claim shall be considered incurred when the injury or illness
resulting in such claim occurs.
 
(k)         Purchaser shall provide each Transferred Employee credit for such
employee’s service with Seller and its Affiliates and any of their respective
predecessors prior to the Employment Commencement Date for purposes of
participation, vesting and benefit accrual (except for purposes of benefit
accrual under any defined benefit pension plan sponsored by Purchaser or any of
its Affiliates), under any benefit plan or program of Purchaser and its
Affiliates, except to the extent that such credited service would result in a
duplication of benefits.  Within 30 days after the Employment Commencement Date,
Seller shall provide Purchaser with accurate information about each Transferred
Employee’s service with Seller and its Affiliates and any of their respective
predecessors.
 
(l)         With respect to Transferred Employees, except as specifically
provided in this Section 6.11, Purchaser shall not assume, accept assignment of
or otherwise be responsible in any manner for any employment contracts,
agreements or arrangements such employee may have with Seller or any of its
Affiliates and shall not have any liabilities or obligations under any such
contracts, agreements or arrangements.
 
(m)           Replacement Retention Agreements.
 
(i)                 Prior to the Closing, Purchaser shall offer to each
individual listed in Schedule 1.01(v) an agreement intended to be in lieu of the
provisions for transition bonus and severance benefits of the Special Incentive
and
 
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Severance Agreement with such individual and with the intention that such new
agreement shall be entered into prior to Closing and effective as of and subject
to the Closing (each such new agreement, a “Replacement Retention
Agreement”).  Each Replacement Retention Agreement shall provide for transition
bonus and severance benefits that are similar in all material respects to those
provided under the Special Incentive and Severance Agreements and a release in
favor of Seller with respect to the rights in respect of transition bonus and
severance benefits under the Special Incentive and Severance Agreements, along
with other terms to be agreed by Purchaser and Seller.  Seller acknowledges and
agrees that under no circumstances whatever shall Purchaser assume any of
Seller’s obligations under the Special Incentive and Severance Agreements.
 
(ii)                 Seller shall promptly reimburse Purchaser for transition
bonus amounts actually paid to Transferred Employees pursuant to the terms of
the Replacement Retention Agreements (without giving effect to any post-Closing
amendments thereto).  Seller shall also promptly reimburse Purchaser for
severance amounts actually paid to Transferred Employees pursuant to the terms
of the Replacement Retention Agreements (without giving effect to any
post-Closing amendments thereto) to the extent that such severance amounts
exceed the severance benefits available under the severance pay plans of
Purchaser and its Affiliates currently in effect with respect to employees of
Purchaser or its Affiliates of comparable levels.  The additional benefits
available over those under such plans of Purchaser and its Affiliates are set
forth on Schedule 6.11(m).
 
(iii)                 In addition to the reimbursement of transition bonus
amounts paid under the Replacement Retention Agreements as provided in Section
6.11(m)(ii), Seller shall promptly reimburse Purchaser for any transition bonus
amounts actually paid to any of the Transferred Employees (other than those
Transferred Employees who are party to a Special Incentive and Severance
Agreement) during the 14 month period commencing on the Closing Date pursuant to
any transition-bonus plans adopted by Purchaser.
 
(iv)                 In no event shall Seller’s obligation to reimburse
Purchaser for severance pursuant to Section 6.11(m)(ii) exceed an aggregate of
$10 million.  In no event shall Seller’s obligation to reimburse Purchaser for
transition bonuses pursuant to Section 6.11(m)(ii) and Section 6.11(m)(iii)
exceed an aggregate of $10 million.
 
(n)         Prior to the Closing, Seller shall offer to a set of individuals to
be agreed by Seller and Purchaser agreements which shall be effective as of and
subject to the Closing (the “New Retention and Severance Agreements”).  The New
Retention and Severance Agreements shall provide for retention and severance
benefits, the amount, timing and form of which shall be mutually agreed between
Purchaser and Seller and such other terms and conditions as Purchaser shall
determine, and shall provide that, upon the Closing, Seller’s obligations may be
assumed by Purchaser, with Seller released therefrom, without the consent of the
individual party thereto.  Seller shall
 
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use its reasonable best efforts to enter into the New Retention and Severance
Agreements no later than 10 business days prior to the Closing.  Upon the
Closing, Seller shall assign to Purchaser, and Purchaser shall assume from
Seller, Seller’s obligations under the New Retention and Severance Agreements so
as to cause the release of Seller under the New Retention and Severance
Agreements.
 
(o)         With respect to Transferred Employees, Purchaser shall assume all
liabilities and obligations for all unused vacation and other time-off earned or
accrued by such Transferred Employee through the Employment Commencement Date in
accordance with the policies of Seller and its Affiliates to the extent such
accrued time-off is reflected in the Final Statement of Assets and Liabilities.
 
(p)         Seller shall cause any Seller Subsidiary Plan that is a
“non-qualified deferred compensation plan” within the meaning of section
409A(d)(1) of the Code to be amended to the extent necessary to bring any
provisions of such plans relating to time and form of payment into documentary
compliance with such Code section and all guidance issued thereunder prior to
the Closing Date to the extent that such guidance is to be effective as of or
prior to the Closing Date or, if earlier, December 31, 2008.  Any such
amendments shall be in a form reasonably acceptable to Purchaser.
 
(q)         Purchaser and Seller shall, subject to applicable Law, each make its
appropriate employees and data regarding employee benefit coverage available to
the other at such reasonable times as may be reasonably necessary for the proper
administration by the other of any and all matters relating to employee benefits
and worker’s compensation claims affecting its employees.  Subject to applicable
Law, Seller shall provide Purchaser with copies of the personnel files for each
Transferred Employee no later than the applicable Employment Commencement Date.
 
Section 6.12     Form and Rate Filing
 
.  Purchaser, with Seller’s, FGWLA’s and CLAC’s reasonable cooperation, shall,
as soon as reasonably practicable after the execution of this Agreement,
diligently proceed with the necessary regulatory filings and applications so
that Purchaser may begin conducting the Business directly as soon as reasonably
practicable following the Closing Date.  Such filings and applications shall
include, but are not limited to, making form and rate filings in all
jurisdictions where such filings are required for the conduct of the
Business.  Purchaser shall use reasonable best efforts to obtain approval of
such forms and rates as promptly as reasonably practicable.
 
Section 6.13     Intercompany Relationships.  Except as set forth on Schedule
6.13 or as otherwise contemplated by this Agreement, Seller, FGWLA and CLAC
shall cause all intercompany accounts, loans, advances, payables and receivables
between the Seller Subsidiaries, on the one hand, and Seller, FGWLA, CLAC or any
other Affiliate of the Seller Subsidiaries (other than another Seller
Subsidiary), on the other hand (collectively, the “Intercompany Obligations”),
to be settled prior to the Closing Date to the extent that amounts are due
thereunder in the ordinary course.  Except as set forth on Schedule 6.13 or as
otherwise contemplated by this Agreement, all future commitments, if any, with
respect to any Intercompany Obligations shall be
 
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terminated prior to the Closing Date and, in each case, the Seller Subsidiaries
shall be fully released from all liability with respect thereto.  Seller, FGWLA
and CLAC shall cause the participation of the Seller Subsidiaries in all
agreements, arrangements and understandings, whether written or oral, between
any of the Seller Subsidiaries, on the one hand, and Seller, FGWLA, CLAC or any
other Affiliate of the Seller Subsidiaries (other than another Seller
Subsidiary), on the other hand (collectively, the “Intercompany Agreements”), to
be terminated and cancelled on or prior to the Closing Date and the Seller
Subsidiaries to be fully released from all liability with respect thereto, other
than with respect to the settlement of amounts accrued but not then due
thereunder through the Closing Date, which the parties agree to cause to be
settled in accordance with past practices, but in any event prior to the
delivery of the Proposed Statement of Assets and Liabilities and the Proposed
Net Worth Statement by Seller to Purchaser.  Prior to the Closing Date, Seller
and its Affiliates shall provide to Purchaser evidence reasonably satisfactory
to Purchaser of the completion of the actions contemplated by this Section
6.13.  For the avoidance of doubt, (A) the Intercompany Agreements include (i)
all reinsurance agreements between the Insurance Company Subsidiaries on the one
hand, and Seller, FGWLA, CLAC or any other Affiliate of the Insurance Company
Subsidiaries (other than another Seller Subsidiary), on the other hand, and (ii)
the participation of the Seller Subsidiaries in any Tax sharing agreements, (B)
the Intercompany Obligations include the statutory reserves ceded under such
agreements and (C) all settlements of Intercompany Agreements on or after the
Closing Date shall be taken into account in the Proposed Statement of Assets and
Liabilities, the Proposed Net Worth Statement, the Final Statement of Assets and
Liabilities and the Final Net Worth Statement.
 
Section 6.14     Non-Compete
 
.                                               (a)         From and after the
Closing Date up to and including December 31, 2009, neither Seller, FGWLA nor
any of their Affiliates shall market, underwrite or issue stop loss, group life,
group disability, group medical, group dental, group vision, group prescription
drug coverage or group accidental death and dismemberment insurance contracts
anywhere in the United States other than ADA Contracts and corporate or bank
owned life insurance products, which would be included in the
Business.  Notwithstanding the foregoing, Seller, FGWLA, CLAC or any of their
Affiliates shall be permitted to (i) acquire, by merger or otherwise, and
operate the business, assets or stock of any other Persons or (ii) be acquired
by any other Person, provided that, in the case of the preceding sub-clause (i),
if the business so acquired derived more than 20% of its U.S. revenue or
operating profits for either of the prior two calendar years from the issuance,
marketing or underwriting of group medical, group dental, group vision, and
group prescription drug coverages, Seller, FGWLA, CLAC or such Affiliate, as the
case may be, shall after any such acquisition, use its commercially reasonable
efforts to sell, spin off or otherwise divest itself of the division, unit or
other portion of the acquired business or entity that engages in the issuance,
marketing or underwriting of such coverages as soon as reasonably practical.
 
                                                (b)         Notwithstanding
anything to the contrary set forth in this Section 6.14 (except as provided in
Section 6.14(d)), for a period of 30 months after the Closing Date, neither
Seller, FGWLA, CLAC nor any of their Affiliates shall directly or
 
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indirectly establish a marketing plan designed (i) to specifically target the
Contractholders or (ii) to specifically target the Business.
 
(c)           Notwithstanding any other provision of this Section 6.14 to the
contrary, in the event of an acquisition described in Section 6.14(a)(ii), or if
any Person otherwise acquires control of Seller, FGWLA, CLAC or any of their
respective Affiliates, the provisions of Section 6.14(a) and (b) shall not apply
to such Person or any of its Affiliates (other than Seller, FGWLA, CLAC or any
of the respective Affiliates of Seller, FGWLA or CLAC so acquired).
 
(d)         For a period of two years after the Closing Date, neither Seller,
FGWLA, CLAC nor any of their Affiliates shall (i) without the prior written
consent of Purchaser hire any of the Transferred Employees who are either (A)
employees designated as exempt employees of Seller or (B) otherwise employed in
the accounting, actuarial, sales, underwriting or information services
departments of the Healthcare Division or (ii) in any manner, directly or
indirectly, (A) solicit any Transferred Employee to terminate his or her
employment with Purchaser or its Affiliates or (B) otherwise recruit or
encourage any Transferred Employee to become an employee of, or a consultant to,
Seller, FGWLA, CLAC or any of their Affiliates; provided, however, that the
restrictions set forth above in this clause (ii) shall not prohibit Seller,
FGWLA, CLAC or their Affiliates from offering employment to or employing any
Transferred Employee (1) whose employment has been terminated by Purchaser or
its Affiliates, (2) who responds to a general solicitation or advertisement that
is not specifically directed to Transferred Employees (and nothing shall
prohibit the making of such solicitation or advertisement) or (3) who is
referred to Seller, FGWLA, CLAC or any of their Affiliates by search firms,
employment agencies or other similar entities, provided that such entities have
not been specifically instructed by any of them to solicit the Transferred
Employees.
 
(e)         The parties to this Agreement acknowledge that the covenants set
forth in this Section 6.14 are an essential element of this Agreement and that,
but for these covenants, the parties would not have entered in to this
Agreement.
 
(f)         The parties to this Agreement acknowledge that the type and periods
of restriction imposed in the provisions of this Section 6.14 are fair and
reasonable and are reasonably required for the protection of the parties.  If
any of the restrictions or covenants in this Section 6.14 are hereafter
construed to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants, which shall be given full effect,
without regard to the invalid portions.  If any of the restrictions or covenants
contained in this Section 6.14, or any portion thereof, are deemed to be
unenforceable because such covenant or restriction is held to cover a geographic
area or to be of such duration as is not permitted under applicable Law, the
parties agree that the court making such determination shall have the power to
reduce the duration and/or areas of such provision and, in its reduced form,
said provision shall then be enforceable.  The parties hereto intend to and
hereby confer jurisdiction to enforce the covenants contained in this Section
6.14 upon the courts of any state or other jurisdiction within the geographical
scope of such covenants.  In the event that the courts of any one
 
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or more of such jurisdictions shall hold such covenants wholly unenforceable by
reason of the breadth of such scope or otherwise, it is the intention of the
parties hereto that such determination not bar or in any way affect the parties’
rights to the relief provided above in the courts of any states or jurisdictions
within the geographical scope of such covenants as to breaches of such covenants
in such other respective states or jurisdictions, the above covenants as they
relate to each such jurisdiction being, for this purpose, severable into diverse
and independent covenants.
 
(g)         If any party hereto or its Affiliate commits a breach, or is about
to commit a breach, of any of the provisions of this Section 6.14, the other
parties hereto shall have the right to have the provisions of this Section 6.14
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach or threatened breach may cause
irreparable injury to each of the non-breaching parties and that money damages
may not provide an adequate remedy to such parties.  In addition, in connection
with this Section 6.14, each of the parties hereto may take all such other
actions and remedies available to it under law or in equity and shall be
entitled to such damages as it can show it has sustained by reason of such
breach.
 
Section 6.15     Cooperation/Integration.
 
(a)         During the period from the date of this Agreement until the Closing
Date, Seller shall, in accordance with mutually acceptable guidelines and
procedures:  (i) designate certain Persons acceptable to Purchaser to serve as
members of one or more transition teams with representatives of Purchaser and
cause such Persons to devote reasonable time to transition matters, including
but not limited to, periodic meetings to discuss planning and implementation of
transition plans, and (ii) reasonably cooperate with Purchaser to assist in the
implementation of comprehensive transition plans on or prior to the Closing
Date, dealing with such matters as network systems integration, employee
retention, financial reporting and regulatory compliance processes.
 
(b)         During the period from the date of this Agreement until the Closing
Date, Purchaser shall, in accordance with mutually acceptable guidelines and
procedures:  (i) designate certain Persons acceptable to Seller to serve as
members of one or more transition teams with representatives of Seller and cause
such Persons to devote reasonable time to transition matters, including but not
limited to, periodic meetings to discuss planning and implementation of
transition plans, and (ii) reasonably cooperate with Seller to assist in the
implementation of comprehensive transition plans on or prior to the Closing
Date, dealing with such matters as network systems integration, employee
retention, financial reporting and regulatory compliance processes.
 
Section 6.16     Core Administration System.  From the date hereof through the
Closing Date, Seller and its Affiliates shall use commercially reasonable
efforts to cause the core administration system to be developed and implemented
in accordance with the business plan attached hereto as Exhibit Q in all
material respects.
 
Section 6.17     Seller Confidentiality Agreements.  Following the Closing,
Seller and its Affiliates shall notify Purchaser in the event they become aware
of a breach
 
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of the Seller Confidentiality Agreements, and, if so directed by Purchaser,
shall enforce such rights for Purchaser’s benefit, to the extent it is
reasonable to do so.  Purchaser shall promptly pay to Seller and its Affiliates
all reasonable expenses of Seller and its Affiliates, including their direct
costs for the time of their employees, as a result of such enforcement
efforts.  Prior to the Closing, Seller shall deliver to the Seller Subsidiaries
copies of all Seller Confidentiality Agreements.
 
Section 6.18     Books and Records.  From the date hereof through the Closing
Date, subject to compliance with applicable Law and applicable contractual
obligations, the parties shall work together in good faith and in a commercially
reasonable manner to develop and implement a plan that will result in the
delivery or transfer of the Books and Records (in the form as such Books and
Records currently exist or acceptable to the parties) to Purchaser (or a Person
designated by Purchaser) at the Closing in the manner (and in the case of
physical Books and Records at the location(s)) reasonably requested by
Purchaser.
 
Section 6.19     Confidentiality
 
                                               (a)         Each party
acknowledges that the success of the transactions contemplated hereby and under
the Ancillary Agreements and of the continuing business of each such party and
its Affiliates from and after the Closing depends upon the continued
preservation of the confidentiality of certain information possessed by the
other parties and their respective Affiliates and that the preservation of the
confidentiality of certain information by the other parties and their respective
Affiliates is an essential premise of the bargain among the parties.  Each of
the parties acknowledges that each of the other parties would be unwilling to
enter into this Agreement or any of the Ancillary Agreements in the absence of
this Section 6.19 and the protections established hereby.
 
(b)         Accordingly, Seller shall not, and Seller shall cause its Affiliates
(including the Seller Subsidiaries until the consummation of the Closing) and
their respective controlled agents (excluding the Producers) and representatives
not to, at any time from and after the date of this Agreement, directly or
indirectly, disclose or use any confidential or proprietary information
involving or relating to the Business; provided, however, that disclosure and
use of any such information shall be permitted (i) with the prior written
consent of Purchaser or any of its Affiliates, (ii) as, and to the extent,
expressly permitted by this Agreement or any of the Ancillary Agreements, (iii)
as, and solely to the extent, necessary or required for the performance by
Seller, FGWLA or CLAC or any of their Affiliates of any of their respective
obligations under this Agreement or any of the Ancillary Agreements, (iv) prior
to the Closing, as, and to the extent, necessary or required in the operation of
the Business in the ordinary course, (v) to the extent such information is
generally available to, or known by, the public or otherwise has entered the
public domain (other than as a result of disclosure in violation of this Section
6.19(b) by Seller, FGWLA, CLAC or any of their Affiliates), (vi) as, and to the
extent, necessary or required by any Order, applicable Law or Governmental
Entity, subject to Section 6.19(f), and (vii) as, and to the extent, necessary
or required or reasonably appropriate in connection with the enforcement of any
right or remedy relating to this Agreement or any of the Ancillary Agreements.
 
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(c)         Accordingly, Purchaser shall not, and Purchaser shall cause its
Affiliates (including the Seller Subsidiaries following the Closing) and their
respective controlled agents (excluding insurance producers) and representatives
not to, at any time from and after the date of this Agreement, directly or
indirectly, disclose or use any confidential or proprietary information
involving or relating to Seller, FGWLA, CLAC or any of their Affiliates
(excluding the Seller Subsidiaries obtained by Purchaser or any of its
Affiliates in connection with the transactions contemplated under this
Agreement); provided, however, that disclosure and use of any such information
shall be permitted (i) with the prior written consent of Seller, FGWLA, CLAC or
any of their Affiliates, as applicable, (ii) as, and to the extent, expressly
permitted by this Agreement or any of the Ancillary Agreements, (iii) as, and
solely to the extent, necessary or required for the performance by Purchaser or
any of its Affiliates of any of their respective obligations under this
Agreement or any of the Ancillary Agreements, (iv) to the extent such
information is generally available to, or known by, the public or otherwise has
entered the public domain (other than as a result of disclosure in violation of
this Section 6.19(c) by Purchaser or its Affiliates), (v) as, and to the extent,
necessary or required by any Order, applicable Law or Governmental Entity,
subject to Section 6.19(f), and (vi) as, and to the extent, necessary or
required or reasonably appropriate in connection with the enforcement of any
right or remedy relating to this Agreement or any of the Ancillary Agreements.
 
(d)         Each party shall produce and implement policies and procedures that
are reasonably designed to ensure compliance by each such party’s directors,
officers, employees, agents and representatives with the requirements of this
Section 6.19.
 
(e)         For the avoidance of doubt, confidential information includes
business plans, financial information, operational information, strategic
information, legal strategies or legal analysis, formulas, production processes,
lists, names, research, marketing, sales information and any other information
similar to any of the foregoing or serving a purpose similar to any of the
foregoing.  However, the parties are not required to mark or otherwise designate
information as “confidential or proprietary information,” “confidential” or
“proprietary” in order to receive the benefits of this Section 6.19.
 
(f)         In the event that a party is required by Order, applicable Law or
any Governmental Entity to disclose any confidential or proprietary information
of another party hereto that is subject to the restrictions under this Section
6.19, such party shall (i) notify such other party in writing as soon as
possible, unless it is otherwise affirmatively prohibited by such Order,
applicable Law or such Governmental Entity from notifying such other party, (ii)
cooperate with such other party to preserve the confidentiality of such
confidential or proprietary information consistent with the requirements of such
Order, applicable Law or such Governmental Entity and (iii) use its reasonable
best efforts to limit any such disclosure to the minimum disclosure necessary or
required to comply with such Order, applicable Law or such Governmental Entity,
in each case, at the cost and expense of such other party.
 
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(g)         Nothing in this Section 6.19 shall prohibit a party from keeping or
maintaining any copies of any records, documents or other information that may
contain information that is otherwise subject to the requirements of this
Section 6.19, subject to its compliance with this Section 6.19.
 
(h)         Prior to any disclosure or use by any party of any information that
is subject to the requirements of Sections 6.19(b) or (c), such party shall use
its reasonable best efforts to redact or otherwise conceal any information that
is not otherwise disclosable or useable in accordance with the requirements of
this Section 6.19.
 
(i)         Each party shall be responsible for any breach or violation of the
requirements of this Section 6.19, as it applies to such party, by any of its
controlled agents (to the extent specified herein) or representatives.
 
(j)         The parties agree that the Confidentiality Agreement shall survive
the execution of this Agreement to the extent not inconsistent with this
Agreement, and shall terminate upon the Closing Date.
 
Section 6.20     Insurance Coverage
 
.                                              (a)         Until the Closing
Date, Seller, FGWLA and CLAC shall cause each of the Seller Subsidiaries to
continue to participate in an insurance program which is not less favorable to
the Seller Subsidiaries, in the aggregate, than the insurance policies of the
Seller Subsidiaries that are in effect on the date hereof, and (iii) will permit
each of the Seller Subsidiaries to submit claims (on the same terms as the
insurance policies of the Seller Subsidiaries that are in effect on the date
hereof) arising from or relating to facts, circumstances, events or matters that
occurred at or prior to the Closing (such policies, the “Continued
Policies”).  Until the Closing Date, Seller, FGWLA and CLAC shall, and shall
cause their Affiliates to, prevent any prejudice to the Seller Subsidiaries’
rights under the Continued Policies, including by causing the (A) Seller
Subsidiaries to be charged premiums or cost allocations in a non-discriminatory
manner, (B) Seller Subsidiaries to pay or otherwise satisfy any unpaid premiums
when due with respect to any period or periods ending at or prior to the
Closing, (C) Seller Subsidiaries to provide any required notices (including any
renewal notices or if applicable, other documentation required to continue in
full force and effect the Continued Policies) to the issuers of the Continued
Policies, and (D) Seller Subsidiaries to submit and pursue claims on a timely
basis under the Continued Policies.
 
(b)         From and after the Closing, Seller, FGWLA and CLAC shall, and shall
cause their Affiliates to continue to pursue in the ordinary course any claims
submitted at or prior to the Closing under the Continued Policies.
 
Section 6.21     Great-West Healthcare Holdings, Inc
 
  . Seller shall cause Great-West Healthcare Holdings, Inc. to own as of the
Closing Date only those Subsidiaries set forth on Schedule 6.21.
 
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Section 6.22     Seller Subsidiaries Acquisition Agreements.  Following the
Closing, if so directed by Purchaser, Seller and its Affiliates shall at
Purchaser’s direction enforce for Purchaser’s benefit, the rights of Seller for
indemnification for breaches of representations, warranties and covenants under
the agreements relating to the acquisition of the Seller Subsidiaries to the
extent it is reasonable to do so, provided that Purchaser shall promptly pay to
Seller and its Affiliates all reasonable expenses of Seller and its Affiliates,
including their direct costs for the time of their employees, as a result of
such enforcement efforts.  For the avoidance of doubt, nothing contained herein
shall limit Seller’s ability to pursue on its own behalf indemnification claims
relating to Subsidiary Indemnified Liabilities.
 
Section 6.23     Supplements to Schedules.   From time to time up to the
Closing, Seller, FGWLA and CLAC shall promptly supplement or amend the Schedules
that they have delivered with respect to any matter that (a) if existing or
occurring at or prior to the date hereof, would have been required to be set
forth or described in the Schedules, or (b) is necessary to correct any
information in the Schedules that has been rendered inaccurate thereby.  No
supplement or amendment to any Schedule shall have any effect for the purpose of
determining satisfaction of the conditions set forth in Article VII or the
obligations of Seller, FGWLA and CLAC under Section 11.01 or Section 12.01.
 
Section 6.24     Electronic Delivery of Computer Software.  Seller, FGWLA, CLAC
and any Seller Subsidiary shall cause any delivery of Owned Principally Used
Software and any other software for which ownership or control is assigned in
whole or substantial part to Purchaser under this Agreement to be made
exclusively by electronic means to the extent practicable.
 
Section 6.25     Resolution of Certain Issues.  From the date hereof until the
Closing Date, Seller, FGWLA and CLAC shall use their respective reasonable best
efforts, and Seller shall cause the Seller Subsidiaries to use their respective
reasonable best efforts, as applicable, to bring in to compliance with
applicable Law each of the issues set forth on Schedule 6.25.  From and after
the Closing Date, Seller and Purchaser shall cooperate and use their reasonable
best efforts to bring into compliance with applicable Law and resolve any
Actions or investigations with respect to each of the issues set forth on
Schedule 6.25 that have not been brought in to compliance with applicable Law
prior to the Closing Date.  Purchaser shall use its reasonable best efforts to
bring into compliance with applicable Law each Continued Practice which it
becomes aware is in violation of applicable Law.
 
Section 6.26     Termination of Certain Contracts
 
                                               (a)         No later than January
31, 2008, Seller shall deliver to Purchaser schedules of (i) all Assigned and
Assumed Contracts as of the date thereof, (ii) all Subsidiary Contracts in
effect as of the date thereof, and (iii) all consents or approvals required from
any third party (excluding any Governmental Entity) in connection with the
execution or consummation of the transactions contemplated by this Agreement and
the Ancillary Agreements, including under such Assigned and Assumed Contracts
and
 
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Subsidiary Contracts, other than the consents and approvals listed in Schedule
4.05(c), Schedule 4.09, Schedule 4.19(a) and Schedule 4.19(b).  Seller shall,
upon request of Purchaser, provide copies of any such Contracts to
Purchaser.  Such copies shall be delivered, received and handled in accordance
with applicable Law.  Seller shall update the schedules delivered pursuant to
this Section 6.26(a) with reasonable frequency until the Closing Date.
 
(b)         Seller, FGWLA and CLAC shall, and Seller shall cause the Seller
Subsidiaries to, use their reasonable best efforts to cause the termination of
any Assigned and Assumed Contract or Subsidiary Contract requested by Purchaser
in accordance with the terms of such Contract as of or prior to the Closing if
such termination will not affect Seller and its Affiliates (excluding the Seller
Subsidiaries) after the Closing and is without cost or liability to Seller and
its Affiliates (including because Purchaser has agreed to reimburse Seller and
its Affiliates for any cost).  Any such termination may be conditioned on the
occurrence of the Closing.
 
Section 6.27     Preparation for Closing
 
.                                               (a)         Within 60 days after
the date hereof, Purchaser and Seller shall negotiate in good faith the form of
a sublease (each, a “Sublease”) with respect to the portion of the Leased
Property utilized by the Business, as of the date hereof, under each Subleased
Lease, as set forth in Schedule 4.18(a)(ii).  The Subleases shall provide for
rent and other terms so that the economic terms of the Subleased Leases are
shared in the same proportion as the Leased Property thereunder, and other
customary terms.
 
(b)           Prior to the Closing Date, the parties hereto shall cooperate (i)
to cause the transfer to Purchaser of the bank accounts listed in Schedule
1.01(y) at the Closing, and (ii) to determine and implement the appropriate
method to cause the transfer of the accounts referred to in clause (x) of the
definition of “Transferred Assets” in connection with the Closing.
 
(c)         As promptly as practicable following the date hereof, Purchaser and
Seller shall agree upon the form of the Replacement Retention Agreements.
 
(d)         At or immediately following the Closing, Seller shall cause each
individual employed by it to assign to a Person designated by Purchaser all
stock of Allegiance Life & Health Insurance Company owned by such individual.
 
Section 6.28     Optional Business.  Following the date hereof, Seller shall
continue to permit Purchaser to investigate any issues regarding the treatment
for Tax purposes of the Optional Business (including the treatment for Tax
purposes of the holders and beneficiaries of Insurance Contracts included
therein).  Purchaser shall use its reasonable best efforts to complete this
investigation within 90 days after the date hereof, it being understood that the
amount of time necessary for this investigation may depend on matters discovered
therein and other factors beyond Purchaser’s control.  Seller shall provide
reasonable assistance to Purchaser in such investigation.  If, prior to the
Closing, Purchaser determines that it is undesirable for Purchaser to own the
Optional Business,
 
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then (a) the Optional Business and the Insurance Contracts included therein
shall be excluded from the Business; (b) the forms of Ancillary Agreements to be
executed at the Closing shall be modified to exclude the Optional Business; (c)
Seller and the Insurance Company Subsidiaries, as applicable, shall enter into
new indemnity reinsurance agreements, pursuant to which any Insurance Company
Subsidiaries which have, prior to the Closing, issued any Subsidiary Insurance
Contracts included in the Optional Business, shall cede 100% of their Insurance
Liabilities in connection with the Optional Business to Seller, on terms
substantially similar to the terms of the Seller Indemnity Reinsurance
Agreement, including the administration of such Subsidiary Insurance Contracts
by Seller, and without the payment of a ceding commission, but necessary changes
being made as appropriate; (d) the Closing Statement of Assets and Liabilities,
Closing Net Worth Statement, Proposed Statement of Assets and Liabilities,
Proposed Net Worth Statement, Final Statement of Assets and Liabilities and
Final Net Worth Statement shall be determined accordingly, which would result in
a different Net Reinsurance Premium and Adjustment Amount than if the Optional
Business were included in the Business, but no other adjustment shall be made to
the Purchase Price; (e) the Optional Business shall be excluded from Seller’s
and its Affiliates’ obligations under Section 6.14; and (f) after the Closing,
Seller shall indemnify Purchaser and its Affiliates for any Losses sustained by
them in connection with the Optional Business, including any claims by holders
or beneficiaries of Insurance Contracts arising out of the failure of any
Insurance Contract or Subsidiary Insurance Contract included in the Optional
Business to qualify for any Tax treatment intended.  If there is insufficient
time before the Closing to complete the preparations for such transactions,
then, if reasonably practicable, the Closing may occur, and such transactions
shall continue after the Closing.
 
Section 6.29     Tax Returns.  After the Closing Date, Seller shall cooperate
with Purchaser to obtain from the Internal Revenue Service for Purchaser any Tax
Returns of or relating solely to the Seller Subsidiaries, the Business or the
Transferred Assets requested by Purchaser.
 
ARTICLE VII
 
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER
 
The obligations of Purchaser under this Agreement are subject to the
satisfaction on or prior to the Closing Date of the following conditions, any
one or more of which may be waived by Purchaser to the extent permitted by Law:
 
Section 7.01     Representations and Covenants
 
.                                                (a)         The representations
and warranties of Seller, FGWLA and CLAC set forth in Article IV, except those
set forth in Sections 4.01, 4.02, 4.03 and 4.15, shall be true and correct on
the date hereof and as of the Closing Date as though made on and as of the
Closing Date, without regard to any materiality or Sellers Material Adverse
Effect qualifications, except for such failures of such representations and
warranties to be true and correct as would not, individually or in the
aggregate, have a Sellers Material Adverse Effect; provided, however, that, with
respect to the foregoing, representations
 
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and warranties that are given as of a particular date shall be true and correct
(in the manner set forth above), only as of such date.  The representations and
warranties of Seller, FGWLA and CLAC set forth in Sections 4.01, 4.02, 4.03 and
4.15 shall be true and correct on the date hereof and as of the Closing Date as
though made on and as of the Closing Date.
 
(b)         Each of Seller, FGWLA and CLAC shall have performed or complied with
each obligation, covenant, agreement and condition required to be performed by
it under this Agreement at or prior to the Closing that is qualified as to
materiality and shall have performed or complied in all material respects with
each other obligation, covenant, agreement and condition required to be
performed by it under this Agreement at or prior to the Closing.
 
(c)         Since the date of this Agreement there shall not have been any
occurrence, development or event that has had or would, individually or in the
aggregate, reasonably be expected to have a Sellers Material Adverse Effect.
 
(d)         On the Closing Date, Seller, FGWLA and CLAC shall have delivered to
Purchaser a certificate of Seller, FGWLA and CLAC, dated as of the Closing Date
and signed by an executive officer of each of Seller, FGWLA and CLAC, as to the
matters set forth in this Section 7.01.
 
Section 7.02     Secretary’s Certificate.  Each of Seller, FGWLA and CLAC, as
well as any of their Affiliates that are parties to any Ancillary Agreements,
shall have delivered to Purchaser a certificate of its secretary or assistant
secretary, dated as of the Closing Date, as to the resolutions of its Board of
Directors authorizing the execution, delivery and performance of the agreements
to which it is a party and as to the status and signature of each of its
officers who executed and delivered the agreements to which it is a party and
any other document delivered by it in connection with the consummation of the
transactions contemplated by this Agreement.
 
Section 7.03     Other Agreements.   Each of the Ancillary Agreements to which
Seller, FGWLA, CLAC or any of their Affiliates is a party shall have been duly
executed and delivered by Seller, FGWLA, CLAC or such Affiliates, as applicable,
on the Closing Date and each of such agreements shall be in full force and
effect with respect to Seller, FGWLA or CLAC, as applicable, on the Closing
Date.
 
Section 7.04     Governmental and Regulatory Consents and Approvals
 
                                               (a)         All filings required
to be made prior to the Closing Date with, and all consents, approvals, Permits
and authorizations required to be obtained prior to the Closing Date from,
Governmental Entities, including those set forth on Schedules 4.05(a)(i),
4.05(b), 5.05(a) and 5.05(b) hereto, in connection with the execution and
delivery of this Agreement and the Ancillary Agreements and the consummation of
the transactions contemplated hereby and thereby shall have been made or
obtained without the imposition of a Negative Condition.
 
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(b)         The waiting period prescribed by the HSR Act shall have expired or
been terminated.
 
Section 7.05     Third Party Consents.  (a) The consents listed in Schedule 7.05
shall have been obtained, and (b) all other consents or waivers of third parties
to the consummation of the transactions contemplated by this Agreement, other
than those that, if not obtained, would not have a material adverse effect on
the Business taken as a whole or a Purchaser Material Adverse Effect, shall have
been obtained.
 
Section 7.06     No Injunctions or Restraints.  No temporary restraining order,
preliminary or permanent injunction or other order or decree shall be pending,
threatened or issued by any Governmental Entity nor shall any other legal
restraint or prohibition preventing, restricting or which is reasonably likely
to prevent or restrict the consummation of any of the transactions contemplated
hereby be in effect, pending or threatened in writing.
 
Section 7.07     Resignation of Officers and Directors.  Purchaser shall have
received the written resignation of each officer and director of each of the
Seller Subsidiaries, effective as of the Closing Date.
 
ARTICLE VIII
 
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF SELLER, FGWLA AND CLAC
 
The obligations of Seller, FGWLA and CLAC under this Agreement are subject to
the satisfaction on or prior to the Closing Date of the following conditions,
any one or more of which may be waived by Seller, FGWLA and CLAC to the extent
permitted by Law:
 
Section 8.01     Representations and Covenants
 
                                               (a)         The representations
and warranties of Purchaser set forth in Article V, except those set forth in
Sections 5.01, 5.02 and 5.06, shall be true and correct on the date hereof and
as of the Closing Date as though made on and as of the Closing Date, without
regard to any materiality or Purchaser Material Adverse Effect qualifications,
except for such failures of such representations and warranties to be true and
correct as would not, individually or in the aggregate, have a Purchaser
Material Adverse Effect; provided, however, that, with respect to the foregoing,
representations and warranties that are given as of a particular date shall be
true and correct (in the manner set forth above), only as of such date.  The
representations and warranties of Purchaser set forth in Sections 5.01, 5.02 and
5.06 shall be true and correct on the date hereof and as of the Closing Date as
though made on and as of the Closing Date.
 
(b)         Purchaser shall have performed or complied with each obligation,
covenant, agreement and condition required to be performed by it under this
Agreement at or prior to the Closing that is qualified as to materiality and
shall have
 
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performed or complied in all material respects with each other obligation,
covenant, agreement and condition required to be performed by it under this
Agreement at or prior to the Closing.
 
(c)         Since the date of this Agreement there shall not have been any
occurrence, development or event that has had or would, individually or in the
aggregate, reasonably be expected to have a Purchaser Material Adverse Effect.
 
(d)         On the Closing Date, Purchaser shall have delivered to Seller, FGWLA
and CLAC a certificate of Purchaser, dated as of the Closing Date and signed by
an executive officer of Purchaser, as to the matters set forth in this Section
8.01.
 
Section 8.02     Secretary’s Certificate.  Purchaser shall have delivered to
Seller, FGWLA and CLAC a certificate of its secretary or assistant secretary,
dated as of the Closing Date, as to the resolutions of its Board of Directors
authorizing the execution, delivery and performance of the agreements to which
it is a party and as to the status and signature of each of its officers who
executed and delivered the agreements to which it is a party and any other
document delivered by it in connection with the consummation of the transactions
contemplated by this Agreement.
 
Section 8.03     Other Agreements.   Each of the Ancillary Agreements to which
Purchaser is a party shall have been duly executed and delivered by Purchaser on
the Closing Date and each of such agreements shall be in full force and effect
with respect to Purchaser on the Closing Date.
 
Section 8.04     Governmental and Regulatory Consents and Approvals
 
                                               (a)         All filings required
to be made prior to the Closing Date with, and all consents, approvals, Permits
and authorizations required to be obtained prior to the Closing Date from,
Governmental Entities, including those set forth on Schedules 4.05(a)(i),
4.05(b), 5.05(a) and 5.05(b) hereto, in connection with the execution and
delivery of this Agreement and the Ancillary Agreements and the consummation of
the transactions contemplated hereby and thereby shall have been made or
obtained.
 
(b)         The waiting period prescribed by the HSR Act shall have expired or
been terminated.
 
Section 8.05     Third Party Consents.  (a) The consents listed in Schedule 8.05
shall have been obtained, and (b) all other consents or waivers of third parties
to the consummation of the transactions contemplated by this Agreement shall
have been obtained, other than with respect to (b) those that, if not obtained,
would not have a material adverse effect on the business, financial condition or
results of operations of Seller or any of its Affiliates (excluding the Seller
Subsidiaries), a material adverse effect on the ability of Seller, FGWLA or CLAC
to perform their obligations under this Agreement or any Ancillary Agreement, or
a Purchaser Material Adverse Effect.
 
Section 8.06     No Injunctions or Restraints.  No temporary restraining order,
preliminary or permanent injunction or other order or decree shall be pending,
 
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threatened or issued by any Governmental Entity nor shall any other legal
restraint or prohibition preventing, restricting or which is reasonably likely
to prevent or restrict the consummation of any of the transactions contemplated
hereby be in effect, pending or threatened in writing.
 
ARTICLE IX
 
FURTHER AGREEMENTS
 
         Section 9.01     Access to Books and Records
 
                                               (a)         Following the Closing
Date, Purchaser shall afford, and shall cause its Affiliates to afford, to
Seller, FGWLA, CLAC and any of their Affiliates, their counsel and their
accountants, during normal business hours, the right to examine and make copies
of the Books and Records to the extent that such access may be reasonably
required by Seller, FGWLA, CLAC or any of their Affiliates in connection with
(i) the preparation of financial statements, (ii) responding to regulatory
inquiries or other regulatory purposes, (iii) the preparation of tax returns or
in connection with any audit, amended return, claim for refund or any proceeding
with respect thereto, (iv) the investigation, arbitration, litigation and final
disposition of any claims which may have been or may be made against Seller,
FGWLA, CLAC or such Affiliates in connection with the Business or the
Transferred Assets (other than with respect to claims that are then the subject
of litigation) or which Seller, FGWLA, CLAC or such Affiliates may make with
respect to the Business or the Transferred Assets (other than with respect to
claims that are then the subject of litigation) or (v) any other similar,
reasonable business purpose.  Seller, FGWLA, CLAC and their Affiliates shall
have the right to duplicate all Books and Records relating to the Business or
the Transferred Assets.  Purchaser shall not, and shall cause its Affiliates to
not, dispose of, alter or destroy any such Books and Records and other materials
other than in accordance with Purchaser’s books and records retention policy as
may be in effect from time to time, but in no event will Purchaser dispose of,
alter or destroy any such Books and Records and other materials prior to the
seventh anniversary of the Closing (or such longer period as reasonably
requested by Seller with respect to open tax examinations).
 
(b)         Following the Closing Date, Seller, FGWLA and CLAC shall afford, and
shall cause their Affiliates to afford, to Purchaser and any of its Affiliates,
counsel and accountants, during normal business hours, the right (subject to
applicable Law and excluding records subject to attorney client privilege that
relate to Seller Legal Proceedings) to examine and make copies of any books and
records of Seller, FGWLA or CLAC retained by Seller, FGWLA and CLAC relating to
the Business or the Transferred Assets (other than the Books and Records) to the
extent that such access may be reasonably required by Purchaser or any of its
Affiliates in connection with (i) the preparation of financial statements, (ii)
responding to regulatory inquiries or other regulatory purposes, (iii) the
preparation of tax returns or in connection with any audit, amended return,
claim for refund or any proceedings with respect thereto, (iv) the
investigation, arbitration, litigation and final disposition of any claims which
may have been or may be made against Purchaser or its Affiliates in connection
with the Business
 
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or the Transferred Assets (other than with respect to claims that are then the
subject of litigation) or which Purchaser or such Affiliates may make with
respect to the Business or the Transferred Assets (other than with respect to
claims that are then the subject of litigation) or (v) any other similar
reasonable business purpose.  Purchaser and its Affiliates shall have the
right to duplicate any books and records retained by Seller, FGWLA and CLAC
relating to the Business or the Transferred Assets (other than the Books and
Records).  Seller, FGWLA, and CLAC shall not, and shall cause their Affiliates
to not, dispose of, alter or destroy any such books and records and other
materials other than in accordance with their respective books and records
retention policy as may be in effect from time to time, but in no event will
Seller, FGWLA or CLAC dispose of, alter or destroy any such books and records
and other materials prior to the seventh anniversary of the Closing (or such
longer period as reasonably requested by Purchaser with respect to open tax
examinations).
 
Section 9.02     Cooperation.  Following the Closing Date, Purchaser shall use
its reasonable best efforts to cause employees of Purchaser or any of its
Affiliates who immediately prior to employment therewith were employed by
Seller, FGWLA or any of their Affiliates in connection with the Business to
reasonably cooperate with Seller, FGWLA, CLAC and any of their Affiliates in (i)
the defense or commencement of any litigation or arbitration arising out of any
event that occurred on or prior to the Closing Date involving the Business, (ii)
connection with any tax matter relating to the Business, (iii) the defense or
prosecution, as the case may be, of any Third Party Claim in accordance with
Section 11.02(b), and (iv) such other reasonable requests as shall be made by
Seller, FGWLA or CLAC.  Seller, FGWLA or CLAC, as applicable, shall promptly pay
to Purchaser all reasonable expenses of Purchaser, including its direct cost for
the time of its employees, as a result of its obligations under this Section
9.02.
 
Section 9.03     Actuarial Appraisal.   Purchaser acknowledges that none of
Seller, FGWLA, any of their Affiliates, or any employee, officer, director,
representative or advisor of any of them makes or has made any representation or
warranty to Purchaser except as specifically made in this Agreement or any
Ancillary Agreement to which it is a party.  In particular, no such Person has
made any representation or warranty to Purchaser with respect to any financial
projection or forecast relating to the Business.
 
Section 9.04     Use of Names
 
.                                               (a)         Notwithstanding any
inference contained herein or prior course of conduct to the contrary, and
except as contemplated by Article II, the Administrative Services Agreements or
the Transition Services Agreement, in no event shall Purchaser or any of its
Affiliates have any right to use, nor shall Purchaser, or any of its Affiliates
use, any corporate name or acronym of Seller, FGWLA, CLAC or any of their
Affiliates (other than those Seller Subsidiaries listed on Schedule 9.04(a)) in
any jurisdiction, or any registered or unregistered trademark, trade name,
service mark, domain name or URL or any application or registration therefor,
owned by, licensed to or used by Seller, FGWLA or CLAC or any of their
Affiliates (other than those Seller Subsidiaries listed on Schedule 9.04(a)) or
any other name or mark that is otherwise confusing due to its similarity to any
of the foregoing.
 
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(b)         Notwithstanding anything contained in Section 9.04(a) to the
contrary, within 30 days following the Closing, Purchaser shall cause each of
the Seller Subsidiaries listed on Schedule 9.04(b) to make all filings necessary
to change the Seller Subsidiary’s name in its state of incorporation to a name
which does not include the words “Great West” or any derivation of the name of
Seller.  Promptly after receiving approval of such name change from the
appropriate Governmental Authority in its state of incorporation, Purchaser
shall cause each such Seller Subsidiary to make all filings necessary to change
the Seller Subsidiary’s name to the name approved in its state of incorporation
in all other jurisdictions in which the Seller Subsidiary is licensed to
transact business
 
(c)         Purchaser acknowledges that any damage caused to Seller, FGWLA, CLAC
or any of their respective Affiliates by reason of the breach by Purchaser, or
any of its respective Affiliates of this Section 9.04 would cause irreparable
harm that could not be adequately compensated for in monetary damages alone;
therefore, Purchaser agrees that, in addition to any other remedies, at law or
otherwise, Seller, FGWLA and CLAC, and any of their respective Affiliates shall
be entitled to an injunction issued by a court of competent jurisdiction
restraining and enjoining any violation of this Section 9.04.
 
Section 9.05     Reserves.  Notwithstanding any other provision of this
Agreement to the contrary, other than as set forth in Sections 4.06 and 4.07,
Seller, FGWLA and CLAC make no representation or warranty regarding their
statutory reserves with respect to the Insurance Contracts or Reinsured
Contracts or regarding uncollectible reinsurance with respect to the Ceded
Reinsurance Agreements.
 
Section 9.06     Control of Litigation
 
                                               (a)         Seller, FGWLA or
CLAC, as appropriate, shall supervise and control the investigation, contest,
defense and/or settlement of all Sellers Extra Contractual Obligations claims
which do not also involve Insurance Liabilities and all Existing Litigation at
its own cost and expense (the “Seller Legal Proceedings”).  Purchaser shall
supervise and control the investigation, contest, defense and/or settlement of
all litigation involving Insurance Liabilities (whether or not such litigation
also involves Sellers Extra Contractual Obligations) to the extent not subject
to the provisions of Section 11.01 (insofar as it relates to Sellers Extra
Contractual Obligations) and, to the extent they are not subject to the
provisions of Section 11.01, Other Assumed Liabilities at its own cost and
expense (the “Purchaser Legal Proceedings”).
 
 
(b)         At Seller’s, FGWLA’s or CLAC’s request, Purchaser shall provide a
report summarizing the nature of any Purchaser Legal Proceedings, the alleged
actions or omissions giving rise to such Purchaser Legal Proceedings and copies
of any files or other documents that Seller, FGWLA or CLAC may reasonably
request in connection with its review of these matters.  At Purchaser’s request,
Seller, FGWLA or CLAC shall provide a report summarizing the nature of any
Seller Legal Proceedings, the alleged actions or omissions giving rise to such
Seller Legal Proceedings and copies of
 
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any files or other documents that Purchaser may reasonably request in connection
with its review of such matters.
 
(c)         Notwithstanding anything in this Agreement to the contrary,
Purchaser shall have the right to engage in its own separate legal
representation, at its own expense, and to participate fully in the defense of
any Seller Legal Proceedings involving a Seller Subsidiary without waiving any
of its rights to indemnification under Article XI.  Seller, FGWLA, CLAC and
Purchaser shall, and Purchaser shall cause the Seller Subsidiaries to, cooperate
with each other with respect to the administration of any Seller Legal
Proceeding.  In connection therewith, Purchaser shall have the right to monitor
and receive periodic updates regarding any Seller Legal Proceedings not
involving a Seller Subsidiary.  Whether or not Purchaser shall have participated
in the defense of any Seller Legal Proceeding, none of Seller, FGWLA or CLAC
shall compromise or settle any such Seller Legal Proceeding without Purchaser’s
prior written consent (not to be unreasonably withheld or delayed), unless (i)
there is no finding or admission of any violation of law or any violation of the
rights of any Person and no effect on any other claims that may be made against
any Seller Subsidiary and (ii) the sole relief provided is monetary damages that
are paid in full by Seller, FGWLA or CLAC without any liability to Purchaser
under Article XI and a full and complete release is provided to any applicable
Seller Subsidiary.
 
(d)         Notwithstanding anything in this Agreement to the contrary, Seller,
FGWLA or CLAC shall have the right to engage in its own separate legal
representation, at its own expense, and to participate fully in the defense of
any Purchaser Legal Proceedings without waiving any of their rights to
indemnification under Article XI or under the Indemnity Reinsurance
Agreements.  Purchaser, Seller, FGWLA and CLAC shall cooperate with each other
with respect to the administration of any Purchaser Legal Proceeding.  Whether
or not Seller, FGWLA or CLAC shall have participated in the defense of any
Purchaser Legal Proceeding, Purchaser shall not compromise or settle any such
Purchaser Legal Proceeding without Seller’s, FGWLA’s or CLAC’s prior written
consent (not to be unreasonably withheld or delayed), unless (i) there is no
finding or admission of any violation of law or any violation of the rights of
any Person and no effect on any other claims that may be made against Seller,
FGWLA or CLAC and (ii) the sole relief provided is monetary damages that are
paid in full by Purchaser without any liability to Seller, FGWLA or CLAC under
Article XI and a full and complete release is provided to Seller, FGWLA and
CLAC.
 
(e)         Purchaser and Seller shall cooperate in the defense or prosecution
of any Action (a “Shared Action”) other than Seller Legal Proceedings and
Purchaser Legal Proceedings which involves both (i) Excluded Liabilities,
Subsidiary Indemnified Liabilities, and other liabilities which are the ultimate
responsibility of Seller and its Affiliates, giving effect to the Assignment and
Assumption Agreement, the Subsidiary Assumption Agreement and the
indemnities provided under this Article XI (without regard for the .75% of
Purchase Price limitation in Sections 11.01(a) and 11.01(b)) (“Seller
Liabilities”) and (ii) Assumed Liabilities, Subsidiary Liabilities, and other
liabilities which are the ultimate responsibility of Purchaser and its
Affiliates (including the Seller Subsidiaries), giving effect to the Assignment
and Assumption
 
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Agreement and the indemnities provided under this Article XI (without regard for
the .75% of Purchase Price limitation in Section 11.01(b)) (“Purchaser
Liabilities”), but not involving Taxes.  Seller, if Seller Liabilities
predominate in a Shared Action not involving a Governmental Entity, or
Purchaser, if Purchaser Liabilities predominate in a Shared Action not involving
a Governmental Entity (such party, the “Primary Party”) shall have the rights
and obligations of the Indemnifying Party under Section 11.02(b), and the other
such party (the “Other Party”) shall have the rights and obligations of the
Indemnified Party under Section 11.02(b), except that (1) the expenses of the
Other Party in cooperating with the Primary Party shall be borne by the Other
Party, and (2) the relative significance of the Seller Liabilities and the
Purchaser Liabilities shall be taken into account appropriately by the Other
Party in deciding whether to consent to a settlement, compromise or
discharge.  If neither Seller Liabilities nor Purchaser Liabilities predominate
in a Shared Action not involving a Governmental Entity, each party shall be
permitted to settle, compromise or discharge its portion of such litigation
reasonably without the consent of the other party, and the parties shall, to the
extent feasible, consider employing joint counsel for such Shared Action, or
taking steps necessary to sever such Shared Action so that each party may defend
or prosecute its portion separately.  If a Shared Action involves a Governmental
Entity, Purchaser shall have the rights and obligations of the Indemnifying
Party under Section 11.02(b) and Seller shall have the rights and obligations of
the Indemnified Party under Section 11.02(b), but the costs of the parties shall
be allocated equitably in light of the relative significance of Purchaser
Liabilities and Seller Liabilities.
 
Section 9.07     License to Owned Generally Used Software.  Seller hereby grants
Purchaser and its Affiliates as of the Closing Date a perpetual, non-exclusive,
fully paid-up, non-transferable, non-sublicensable (except as set forth herein),
limited license to use, reproduce, perform, display and create derivative works
of the Owned Generally Used Software.  Such a license shall be “as is” “where
is” without any representation or warranty of any kind by Seller or its
Affiliates, whether express or implied, including, without limitation, the
implied warranties of fitness for a particular purpose, completeness, title,
non-infringement or merchantability.  Notwithstanding the foregoing, nothing
herein shall be deemed to limit or expand the representations and warranties in
Article IV of this Agreement.  The Owned Generally Used Software shall be
considered confidential information under Section 6.19.  Seller shall deliver
via electronic means to the extent practicable the source code for the Owned
Generally Used Software (which source code shall be annotated to the extent
Seller possesses such annotated source code at the time of delivery) in
accordance with the migration plan set forth in Schedule 5.2 of the Transition
Services Agreement, together with a copy of all supporting documentation
therefor that is Seller's possession at the time of delivery; Seller shall be
obligated only to deliver the instance of such software then in production, with
no obligation to alter the format or content of such software so delivered or to
create any annotations to the source code or any supporting
documentation.  Purchaser and its Affiliates may not lease, loan, resell,
sublicense, give or otherwise distribute the Owned Generally Used Software to
any third party except (a) to Purchaser’s Affiliates in connection with an
internal reorganization of Purchaser; (b) in connection with the sale by
Purchaser or its Affiliates of all or substantially all of the assets pertaining
to the Business (provided such third party agrees to the conditions set forth in
this Section 9.07); or (c) to employees and/or
 
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contractors of Purchaser and its Affiliates, provided such employees and
contractors are bound by obligations of confidentiality that are no less
protective of Seller’s rights than as set forth in this Agreement.
 
ARTICLE X
 
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
 
Section 10.01     Survival of Representations, Warranties and Covenants.
 
.                                               (a)         All representations
and warranties contained in this Agreement shall survive the Closing and shall
terminate and expire at the close of business on the date 18 months following
the Closing Date, except that (i) the representations and warranties contained
in Sections 4.21 (other than Section 4.21(r)) shall terminate and expire (A)
with respect to United States federal income Tax matters, at the close of
business on the earlier of (I) September 15, 2009, and (II) the date on which
the applicable United States federal income tax return with respect to the first
taxable period beginning after the Closing Date is actually filed, and (B) with
respect to all other Tax matters, at the close of business on the earlier of (I)
October 15, 2009, and (II) the date on which the applicable Tax Return (other
than the United States federal income tax return) with respect to the first
taxable period beginning after the Closing Date is actually filed, (ii) the
representations and warranties contained in Section 4.21(r) shall terminate 60
days after expiration of the applicable statute of limitation (taking into
account any extensions or waivers thereof) and from such date shall have no
further force or effect and (iii) the representations and warranties contained
in Sections 4.01, 4.02, 4.03, 4.15, 5.01, 5.02 and 5.06 shall survive the
Closing and shall not terminate or expire.
 
 
(b)         All covenants and agreements made by the parties to this Agreement
that contemplate performance following the Closing Date shall survive the
Closing Date.  All other covenants and agreements shall not survive the Closing
Date and shall terminate as of the Closing.
 
ARTICLE XI
 
INDEMNIFICATION
 
Section 11.01     Obligation to Indemnify
 
.                                                (a)         From and after the
Closing, and subject to the limitations set forth in this Article XI, Seller,
FGWLA and CLAC (it being understood that FGWLA and CLAC shall each only be
liable under this Section 11.01(a) for matters relating specifically to it, but
that Seller shall be liable for all indemnification provided for by this Section
11.01(a)), agree to indemnify and hold harmless Purchaser and its directors,
officers, employees, agents, representatives, and Affiliates from and against
all losses, liabilities, claims, expenses (including reasonable attorneys’ fees
and expenses) and damages but excluding lost profits or any punitive, exemplary,
consequential or similar damages (other than lost profits or any punitive,
exemplary, consequential or similar
 
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damages actually paid to a third party in a Third Party Claim and lost profits
not paid to a third party in a Third Party Claim to the extent set forth in
Section 11.01(c)) (“Losses”) (to the extent exceeding reserves, if any, with
respect to
such particular Losses reflected in the Final Statement of Assets and
Liabilities and Final Net Worth Statement) to the extent arising from or related
to (i) any breach of the representations and warranties  of Seller, FGWLA and
CLAC contained in this Agreement (determined without regard to any
qualifications as to materiality (including Sellers Material Adverse Effect)
therein), (ii) any breach of any of the covenants and agreements of Seller,
FGWLA or CLAC contained in this Agreement which covenants and agreements survive
the Closing, (iii) the Excluded Liabilities, (iv) the Subsidiary Indemnified
Liabilities or (v) Continued Practices; provided, however, that none of Seller,
FGWLA or CLAC shall have any liability under clause (i) or clause (v) of this
Section 11.01(a) or Section 12.01(a)(v) unless the aggregate of all Losses under
clause (i) or clause (v) of this Section 11.01(a) or Section 12.01(a)(v) for
which Seller, FGWLA or CLAC (taken together) would, but for this proviso, be
liable exceeds an amount equal to .75% of the Purchase Price, and then only to
the extent of any such excess.  In any event, notwithstanding anything in this
Agreement to the contrary, the maximum amount for which Seller, FGWLA and CLAC
shall be liable with respect to breaches described in clause (i) or clause (v)
above under this Section 11.01(a) or Section 12.01(a)(v) shall not exceed in the
aggregate, an amount equal to 50% of the Purchase Price.  The obligations of
Seller, FGWLA and CLAC under this Section 11.01 are in addition to their
obligations under the Ancillary Agreements, except as provided therein.  The
obligation of Seller, FGWLA and CLAC under clause (i) of this Section 11.01(a)
with respect to any violation of Law after the Closing by Purchaser or any of
its Affiliates (including the Seller Subsidiaries) that is a continuation of any
policy or regular practice of Seller, FGWLA, CLAC or a Seller Subsidiary that
existed prior to the Closing and is carried out by or under the supervision of
Business Employees, Corporate Employees or Subsidiary Employees on behalf of
Purchaser or its Affiliates shall be limited to their liability under clause (v)
of this Section 11.01(a).
 
(b)         From and after the Closing, and subject to the limitations set forth
in this Article XI, Purchaser agrees to indemnify and hold harmless Seller,
FGWLA, CLAC and their respective directors, officers, employees, agents,
representatives, and Affiliates from and against all Losses to the extent
arising from or related to (i) any breach of the representations and warranties
of Purchaser contained in this Agreement (determined without regard to any
qualifications as to materiality (including Purchaser Material Adverse Effect)
therein), (ii) any breach of any of the covenants and agreements of Purchaser
contained in this Agreement which covenants and agreements survive the Closing
or (iii) the Assumed Liabilities; provided, however, that Purchaser shall not
have any liability under clause (i) of this Section 11.01(b) unless the
aggregate of all Losses under clause (i) of this Section 11.01(b) for which
Purchaser would, but for this proviso, be liable exceeds an amount equal to .75%
of the Purchase Price, and then only to the extent of any such excess.  In any
event, notwithstanding anything in this Agreement to the contrary, the maximum
amount for which Purchaser shall be liable with respect to breaches described in
clause (i) above under this Section 11.01(b) shall not exceed in the aggregate,
an amount equal to 50% of the Purchase Price.  Purchaser’s obligations under
this Section 11.01 are in addition to its obligations under the Ancillary
Agreements, except as provided therein.
 
 
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(c)         In calculating Losses hereunder, each party shall have the right to
seek to prove that amounts for which it is indemnified by the other party should
include lost profits for the period of time from the Closing Date to the fifth
anniversary of the Closing Date; provided that (i) with respect to
indemnification claims pursuant to clause (i) of Section 11.01(a) or clause (i)
of Section 11.01(b), such lost profits shall be limited to lost profits
attributable to the period starting on the Closing Date and ending on the date
of the cure of the breach giving rise to an indemnification claim, and (ii) with
respect to a Continued Practice giving rise to an indemnification claim
pursuant to clause (v) of Section 11.01(a), such lost profits shall be limited
to lost profits attributable to the period starting on the Closing Date and
ending on the date upon the earlier of (A) the date upon which the Continued
Practice is brought in to compliance with Law in accordance with Purchaser’s
obligations pursuant to Section 9.07 or (B) the 120th day following the Closing
Date; provided further that Seller, FGWLA and CLAC shall have the right to seek
to prove that any such amounts have been mitigated, to the extent applicable, by
the Post-Closing PP Adjustment.
 
Section 11.02     Indemnification Procedures
 
.                                               (a)         In order for a party
(the “Indemnified Party”) to be entitled to any indemnification provided for
under this Agreement in respect of, arising out of or involving a claim or
demand made by, or an action, proceeding or investigation instituted by, any
Person neither a party to this Agreement nor an Affiliate of such a party (a
“Third Party Claim”), such Indemnified Party must notify the party from which
indemnity is sought (the “Indemnifying Party”) in writing, and in reasonable
detail, of the Third Party Claim within ten (10) Business Days after such
Indemnified Party learns of the Third Party Claim; provided, however, that
failure to give such notification shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Party shall have been actually
prejudiced as a result of such failure.  Thereafter, the Indemnified Party shall
deliver to the Indemnifying Party, within five (5) Business Days after the
Indemnified Party’s receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnified Party relating to the Third
Party Claim.
 
 
(b)         If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party will be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof with counsel selected by the
Indemnifying Party.  If the Indemnifying Party assumes such defense, the
Indemnified Party shall have the right to participate in the defense thereof and
to employ counsel, at its own expense, separate from the counsel employed by the
Indemnifying Party; provided, however, that the Indemnifying Party shall bear
the reasonable fees, costs and expenses of such separate counsel if the (A)
Indemnified Party shall have determined in good faith and shall have received a
written opinion of counsel to the effect that an actual or potential conflict of
interest makes representation by the same counsel or the counsel selected by the
Indemnifying Party inappropriate or (B) Indemnifying Party shall have authorized
the Indemnified Party to employ separate counsel at the Indemnifying Party’s
expense.  If the Indemnifying Party chooses to defend or prosecute any Third
Party Claim, all of the parties hereto shall cooperate in the defense or
prosecution thereof.  Such cooperation shall include the retention and (upon the
Indemnifying Party’s request) the provision to
 
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 the Indemnifying Party of records and information which are reasonably relevant
to such Third Party Claim, and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder.  All reasonable costs and expenses incurred in
connection with the Indemnified Party’s cooperation shall be borne by the
Indemnifying Party.  Whether or not the Indemnifying Party shall have assumed
the defense of a Third Party Claim, the Indemnifying Party shall have no
liability with respect to any compromise or settlement of such claims effected
without its written consent (such consent not to be unreasonably withheld or
delayed); the Indemnifying Party shall not admit any liability with respect to,
or settle, compromise or discharge, such Third Party Claim without the
Indemnified Party’s prior written consent (which consent shall not be
unreasonably withheld or delayed) unless (A) there is no finding or admission of
any violation of Law or any violation of the rights of any Person and no effect
on any other claims that may be made against the Indemnified Party, and (B) the
sole relief provided is monetary damages that are paid in full by the
Indemnifying Party and a full and complete release is provided to the
Indemnified Party.
 
(c)         The indemnities provided in this Agreement shall survive the
Closing; provided, however, that the indemnities provided under Sections
11.01(a)(i) and 11.01(b)(i) shall terminate when the applicable representation
or warranty terminates pursuant to Article X, except as to any item as to which
the Person to be indemnified shall have, prior to the expiration date of the
relevant representation and warranty, made a claim by delivering a notice
(stating in reasonable detail the basis of such claim) to the Indemnifying
Party.  Except (i) as set forth in Sections 2.03, 9.04, 12.01 and 14.05, and
(ii) for claims based on fraud, the indemnity provided in Sections 11.01(a) and
11.01(b) shall be the sole and exclusive remedy of the Indemnified Party against
the Indemnifying Party at law or equity for any claim arising under this
Agreement.
 
ARTICLE XII
 
TAXES
 
Section 12.01     Tax Indemnity.
 
                                               (a)         Seller, FGWLA and
CLAC agree to indemnify and hold harmless Purchaser, its Affiliates and the
Seller Subsidiaries against the following (to the extent in excess of the
reserves and accruals established for such Loss on the Final Statement of Assets
and Liabilities):  (i) Taxes imposed on or with respect to the Seller
Subsidiaries, the Business or the Transferred Assets with respect to taxable
periods ending on or before the Closing Date; (ii) with respect to taxable
periods beginning on or before the Closing Date and ending after the Closing
Date, Taxes imposed on or with respect to the Seller Subsidiaries, the Business
or the Transferred Assets which are allocable, pursuant to Section 12.01(b), to
the portion of such period ending on and including the Closing Date; (iii) Taxes
of any Person (other than any of the Seller Subsidiaries) that are imposed on or
for which any of the Seller Subsidiaries is liable pursuant to Treasury
Regulations section 1.1502-6 (or similar provision of state, local or foreign
Law), as a transferee or successor, or (other than as specifically set forth in
(A) this Agreement or (B) the Ancillary Agreements) by contract; (iv) Taxes
attributable to,
 
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or resulting directly or indirectly from elections under section 338(h)(10) of
the Code (and any comparable provisions of state, local or foreign Law) with
respect to the actual or deemed sale of the shares of capital stock of any of
the Seller Subsidiaries, pursuant to Section 12.07(e) of this Agreement; and (v)
any Losses (for the avoidance of doubt, for purposes of this clause (v), Losses
shall not include any Taxes (other than interest, penalties and additions
imposed with respect thereto) with respect to taxable periods beginning after
the Closing Date resulting from the failure to file a Tax Return in a
jurisdiction in which the Seller, FGWLA or CLAC (with respect to the Business or
the Transferred Assets) or any Seller Subsidiary was required to file) resulting
from the breach of a covenant, representation or warranty set forth in Sections
2.01(b), 2.01(c), 4.08(l) and 4.21 and this Article XII.  Purchaser shall use
commercially reasonable efforts to take actions in order to minimize the amount
of any Losses for which Seller is required to indemnify Purchaser pursuant to
clause (v) of this Section 12.01(a).   Purchaser agrees to indemnify and hold
harmless Seller and its Affiliates against the following:  (i) Taxes imposed on
or with respect to the Seller Subsidiaries, the Business or the Transferred
Assets with respect to taxable periods beginning after the Closing Date; (ii)
with respect to taxable periods beginning on or before the Closing Date and
ending after the Closing Date, Taxes imposed on or with respect to the Seller
Subsidiaries, the Business or the Transferred Assets which are allocable,
pursuant to Section 12.01(b), to the portion of such period beginning the day
after the Closing Date; (iii) Taxes imposed on or with respect to the Seller
Subsidiaries, the Business or the Transferred Assets with respect to taxable
periods ending on or before the Closing Date to the extent of the reserves and
accruals established for such Taxes on the Final Statement of Assets and
Liabilities; and (iv) any Losses resulting from the breach of a covenant,
representation or warranty set forth Sections 2.01(b), 2.01(c), 4.08(l) and 4.21
and this Article XII.  Seller shall use commercially reasonable efforts to take
actions in order to minimize the amount of any Losses for which Purchaser is
required to indemnify Seller pursuant to clause (iv) of this Section 12.01(a).
 
(b)         In the case of Taxes that are payable with respect to a taxable
period that begins on or before the Closing Date and ends after the Closing
Date, the portion of any such Tax that is allocable to the portion of the period
ending on and including the Closing Date shall be:
 
(i)                 in the case of Taxes that are either (x) based upon or
related to income or receipts, or (y) imposed in connection with any sale or
other transfer or assignment of property (real or personal, tangible or
intangible) (other than conveyances pursuant to this Agreement, which are
governed by Section 2.01(b) of this Agreement), deemed equal to the amount which
would be payable if the taxable year ended on and included the Closing Date;
 
(ii)                 in the case of Taxes imposed on a periodic basis with
respect to the assets of the Seller Subsidiaries, the Business or the
Transferred Assets, or otherwise measured by the level of any item, deemed to be
the amount of such Taxes for the entire period (or, in the case of such Taxes
determined on an arrears basis, the amount of such Taxes for the immediately
preceding period), multiplied by a fraction the numerator of which is the number
of calendar days in
 
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the period ending on and including the Closing Date and the denominator of which
is the number of calendar days in the entire period; and
 
(iii)                 in the case of Taxes based upon gross premiums deemed
equal to the amount that would be payable with respect to the premiums collected
as of the Closing Date.
 
(c)         Notwithstanding any provision in this Agreement to the contrary, all
liabilities relating to or arising out of any Tax matters that are specifically
indemnified by Purchaser or the Seller Subsidiaries, on the one hand, or Seller,
CLAC or FGWLA on the other hand, under any of the Ancillary Agreements shall be
governed and controlled by the terms of such other agreement and shall not be
subject to the terms of this Article XII to the extent this Article XII
conflicts with such other agreement.
 
Section 12.02     Returns and Payments.
 
(a)         From the date of this Agreement through and after the Closing Date,
Seller shall prepare and file or otherwise furnish in proper form to the
appropriate Tax Authority (or cause to be prepared and filed or so furnished) in
a timely manner:  (i) all consolidated, unitary, combined or similar Tax Returns
(each a “Consolidated Tax Return”) that include Seller, CLAC, FGWLA and the
Seller Subsidiaries for any taxable period, (ii) all Tax Returns that include
Seller, FGWLA or CLAC and (iii) all other Tax Returns that relate to or include
the Seller Subsidiaries, the Business or the Transferred Assets for tax periods
ending on or before the Closing Date.  With respect to Tax Returns described in
clause (i) or (ii) of this Section 12.02(a), such Tax Returns shall be prepared
and filed in a manner consistent with past practice to the extent that doing so
solely affects the Seller Subsidiaries, the Business or the Transferred
Assets.  With respect to Tax Returns described in clause (iii) of this Section
12.02(a), such Tax Returns shall be prepared and filed in a manner consistent
with past practice.  With respect to any Tax Return prepared by Seller pursuant
to this Section 12.02(a) which includes the Seller Subsidiaries, Seller shall
provide to Purchaser a copy of any such Tax Return that is filed by the Seller
Subsidiaries (or in the event of a Consolidated Tax Return, a pro forma Tax
Return for each includible Seller Subsidiary) no later than 30 days prior to the
date such Tax Return is required to be filed.  Purchaser shall have the right to
comment with respect to any such Tax Return to the extent such comment relates
to a matter which is reasonably likely to result in a material adverse affect
for Purchaser or its Affiliates (determined as if Purchaser will file an
Election for each Seller Subsidiary); provided, that such comments does not
cause Seller or its Affiliates to take any positions that are either contrary
with law.  Purchaser shall prepare and file or otherwise furnish in proper form
to the appropriate Tax Authority (or cause to be prepared and filed or so
furnished) in a timely manner all other Tax Returns of or that include the
Seller Subsidiaries.  At least 15 days prior to the Closing Date, Seller shall
provide written notice to Purchaser of any Tax Return that Purchaser is required
to file (or cause to be filed) within 45 days of the Closing Date pursuant to
this Section 12.02(a).
 
(b)         With respect to any Tax Return required to be filed (or caused to be
filed) by Purchaser, or Seller pursuant to Section 12.02(a) (the party with the
 
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obligation to file a Tax Return shall hereinafter be referred to as the “Filing
Party”) and as to which an amount of Tax is allocable to the other party under
Section 12.01 (the “Tax Indemnifying Party”), the Filing Party shall provide the
Tax Indemnifying Party with a copy of such completed Tax Return or in the case
of a Consolidated Tax Return, a pro forma Tax Return for the Seller Subsidiaries
(prepared on a separate company basis) and a statement certifying and setting
forth the calculation of the amount of Tax shown on any such Tax Return that is
allocable to such Tax Indemnifying Party pursuant to Section 12.01, together
with appropriate supporting information and schedules at least 20 Business Days
prior to the due date (including any extension thereof) for the filing of such
Tax Return.  Such Tax Indemnifying Party shall have the right to review and
comment on any such Tax Return and statement prior to the filing of such Tax
Return.
 
(c)         Subject to Section 12.01 and except as otherwise specifically
provided in an Ancillary Agreement, Seller shall pay or cause to be paid when
due and payable all Taxes properly shown on a Tax Return that Seller is required
to file (or cause to be filed) pursuant to the terms of paragraph (a) above and
Purchaser shall do the same with respect to all Taxes properly shown on a Tax
Return that Purchaser is required to file (or cause to be filed) pursuant to the
terms of paragraph (a) above.
 
(d)         In any case where a Filing Party files a Tax Return on which there
is properly shown an amount of Tax that is allocable to a Tax Indemnifying
Party, the Tax Indemnifying Party shall pay the Filing Party the amount so
allocated to it pursuant to Section 12.01 in accordance with the provisions of
Section 12.05.
 
(e)         Except as required by Law, none of Purchaser, the Seller
Subsidiaries or any Affiliate thereof shall amend, refile or otherwise modify,
or cause or permit the Seller Subsidiaries to amend, refile or otherwise modify,
any Tax election or Tax Return with respect to any Tax period (or portion of any
Tax period), ending on or prior to the Closing Date, without the prior written
consent of Seller.  To the extent allowed by Law, Purchaser and the Seller
Subsidiaries shall elect not to carry back any losses, credits or deductions of
the Seller Subsidiaries to Tax periods or portions thereof ending on or before
the Closing Date.
 
Section 12.03     Refunds.  Except as provided in the Ancillary Agreements, any
Tax refund (including any interest actually received with respect thereto) that
is actually received by Purchaser, the Seller Subsidiaries or any Affiliate of
Purchaser, or any credit against Taxes that is actually claimed by Purchaser,
the Seller Subsidiaries or any Affiliate of Purchaser on a Tax Return, for (a)
Taxes of or relating to any of the Seller Subsidiaries, the Business or the
Transferred Assets for any taxable period ending on or prior to the Closing Date
or (b) any Taxes for which Seller is liable pursuant to this Agreement or the
Ancillary Agreements, and in each case that is actually received or claimed by
Purchaser, the Seller Subsidiaries or any Affiliate of Purchaser, shall be the
property of Seller and shall be paid over promptly to Seller; provided, however,
that any such refund or credit which is accrued as an asset on the Final
Statement of Assets and Liabilities shall be the property of
Purchaser.  Notwithstanding the foregoing sentence, subject to Section 12.02(e),
any Tax refund (or equivalent benefit to Seller or any Affiliates of Seller
through a reduction in Tax liability) for a taxable period ending on or
 
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before the Closing Date arising out of the carryback of a loss or credit of or
with respect to the Seller Subsidiaries, the Business or the Transferred Assets
arising in a taxable period ending after the Closing Date and that is actually
received by Seller or any Affiliates of Seller, shall be the property of
Purchaser and shall be paid over promptly to Purchaser; provided, however, that
to the extent the amount of any such refund is due to a carry back to a tax year
with respect to which the statute of limitations has, but for such carryback,
expired and such refund is reduced as a result of the assessment of any
additional Taxes for which Purchaser could bring a claim for indemnity pursuant
to Section 12.1(a) but for this sentence, none of Seller, FGWLA or CLAC shall be
liable or required to indemnify Purchaser, its Affiliates or the Seller
Subsidiaries for such additional Taxes or shall be liable or required to
indemnify Purchaser, its Affiliates or the Seller Subsidiaries for the amount of
any lost refund or for the loss of any carryback item of loss or credit.  For
purposes of determining whether any refund, credit or equivalent benefit is
actually received or claimed for purposes of this Section 12.03, all such items
shall be applied in the order prescribed by applicable Tax law.
 
Section 12.04     Contests.
 
(a)         After the Closing Date, Purchaser shall promptly notify Seller, or
Seller, CLAC, or FGWLA shall promptly notify Purchaser, in writing of any
written notice of a proposed assessment, audit, examination or claim in a Tax
Contest of or relating to Purchaser, Seller, the Seller Subsidiaries, the
Transferred Assets or the Business which, if determined adversely to the
taxpayer, would be grounds for indemnification under this Article XII; provided,
however, that a failure to give such notice will not affect the rights of a
party to indemnification under this Agreement except to the extent, (i) if any,
that, but for such failure, the Tax Indemnifying Party could have avoided all or
a portion of the Tax liability in question or (ii) such failure otherwise
actually materially prejudices the Tax Indemnifying Party.
 
(b)         In the case of a Tax Contest that (i) relates to taxable periods
ending on or before the Closing Date or (ii) relates to a liability for Taxes
for which Seller is reasonably likely to indemnify Purchaser or the Seller
Subsidiaries pursuant to this Agreement or the Ancillary Agreements, Seller
shall have the right at its expense to participate in, control the conduct of,
and, subject to Purchaser’s consent pursuant to Section 12.04(c), settle such
Tax Contest.  Purchaser shall control all other Tax Contests and have the right
to participate in all Tax Contests (including with respect to which Seller
possesses the right to control) which are reasonably likely to result in an
adverse material effect to Purchaser, any Affiliate of Purchaser or the Seller
Subsidiaries.
 
(c)         None of Purchaser, the Seller Subsidiaries or any Affiliate of
either, nor Seller or any Affiliate of Seller, shall enter into any compromise
or agree to settle any claim pursuant to any Tax Contest which would adversely
affect the other party for any year without the written consent of the other
party, which consent may not be unreasonably withheld, conditioned or
delayed.  Purchaser and Seller agree to reasonably cooperate, and Purchaser
agrees to cause the Seller Subsidiaries to reasonably cooperate, in the defense
against or compromise of any Tax Contest.
 
 
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Section 12.05     Time of Payment.  Payment by the Tax Indemnifying Party of any
amounts due under this Article XII in respect of Taxes shall be made (i) at
least three Business Days before the earlier of the due date of the payment of
such Tax or the due date of the applicable estimated or final Tax Return
required to be filed by the Filing Party on which is required to be reported
Taxes for which the Tax Indemnifying Party is responsible under Section 12.01
without regard to whether the Tax Return shows overall net income or loss for
such period, or (ii) or in the event of a redetermination of any Taxes as a
result of any settlement or compromise of any Tax Contest, within five (5) days
after delivery of written notice of payment owing together with a computation of
the amounts due; provided, however, that in the event that the parties disagree
as to the amount or calculation of any amount described in clause (i) of this
Section 12.05, the parties shall attempt in good faith to resolve such
dispute.  If such dispute is not resolved within 20 days following the
commencement of the dispute, the parties shall jointly retain a nationally
recognized law or accounting firm, which firm is independent of both parties
(the “Independent Firm”), to resolve the dispute.  The Independent Firm shall
act as an arbitrator to resolve all points of disagreement and its decision
shall be final and binding upon all parties involved, except to the extent of a
redetermination described in clause (ii) of this Section 12.05.  To the extent
of a disputed item, payments required to be made under this Agreement shall be
made within 8 days of the Independent Firm delivering its decision to the
parties.  The fees and expenses relating to the Independent Firm shall be borne
equally by the parties.  Payments pursuant to this Article XII that are not made
on or before the date prescribed herein or with respect to a dispute, are made
after the date such payments would have been made pursuant to this paragraph but
for such dispute (the “Payment Date”) shall bear interest for the period from
and including the date immediately following the Payment Date through and
including the date of payment computed at an annual rate equal to the 90-Day
Treasury Rate in effect on the Payment Date.
 
Section 12.06     Cooperation and Exchange of Information.
 
(a)         Seller, FGWLA, CLAC and Purchaser (and all Affiliates of such
entities) agree to provide each other with such cooperation and information as
either Seller or Purchaser reasonably may request in filing any Tax Return or
claim for refund, determining a liability for Taxes or a right to a refund of
Taxes, or participating in or conducting any audit or other proceeding in
respect of Taxes with respect to the Seller Subsidiaries, the Business or the
Transferred Assets.  Such cooperation and information shall include providing
copies of relevant Tax Returns (other than Tax Returns filed by the Consolidated
Group) or relevant portions thereof, together with accompanying schedules,
related work papers and documents relating to rulings or other determinations by
any Tax Authority.  Seller, FGWLA, CLAC, Purchaser and the Seller Subsidiaries
shall each make its employees available on a basis mutually convenient to both
parties to provide explanations of any documents or information provided
hereunder.  Each of Seller, FGWLA, CLAC, the Seller Subsidiaries and Purchaser
shall retain all Tax Returns, schedules and work papers, records and other
documents in its possession relating to Tax matters of the Seller Subsidiaries,
the Business and the Transferred Assets for each taxable period first ending
after the Closing Date and for all prior taxable periods for the time period set
forth in Section 9.01(b).  Any information obtained under this Section
 
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12.06 shall be kept confidential except as may be otherwise necessary in
connection with the filing of Tax Returns or claims for refund or in connection
with any Tax Contest.
 
(b)         Notwithstanding any provisions in this Agreement to the contrary
(other than Section 12.04), the parties agree that none of Purchaser or any
Affiliates thereof will have the right to participate in, control or consent to
any matter that involves an income Tax Return filed on a consolidated, combined,
unified or group basis that includes Seller, FGWLA, CLAC, Parent or any
Affiliate of such entities, and neither Seller nor its Affiliates will have the
right to participate in, control or consent to any matter that involves an
income Tax Return filed on a consolidated, combined, unified or group basis that
includes Purchaser or any of its Affiliates.
 
(c)         From the date hereof through the Closing Date Seller, FGWLA and CLAC
shall cooperate with Purchaser and provide Purchaser and its representatives
with access to all information necessary for purposes of allowing Purchaser to
continue and conclude its Tax due diligence review of the Seller Subsidiaries,
the Business and the Transferred Assets, including to the extent necessary to
allow Purchaser to determine whether it will be beneficial to file the Election.
 
Section 12.07     Miscellaneous.
 
(a)         Seller and Purchaser agree to treat all payments made by either of
them to or for the benefit of the other (including any payments to the Seller
Subsidiaries) under the indemnity provisions of this Agreement and for any
misrepresentations or breaches of warranties or covenants as adjustments to the
Purchase Price to the extent required by applicable Tax Law.
 
(b)         Notwithstanding any provision in this Agreement to the contrary
(other than Sections 10.01(a) and 11.01(a) with respect to Section 12.01(a)(v)),
the obligations of the parties set forth in this Article XII shall be
unconditional and absolute and shall not be subject to any restrictions or
limitations other than those expressly set forth in this Article XII, and shall
remain in effect until 60 days after the expiration of the applicable statute of
limitations (taking into account any extensions or waivers thereof).
 
(c)         Notwithstanding any other provision in this Agreement to the
contrary (other than Section 11.01(a) with respect to Section 12.01(a)(v)), all
matters relating to Taxes shall be governed exclusively by Sections 2.01(b),
2.01(c), 4.08(l) and 4.21 and this Article XII; provided, however; that all
matters relating to Taxes that are specifically identified and addressed by the
Ancillary Agreements shall be governed by the terms of such agreements to the
extent this Article XII conflicts with such other agreements.
 
(d)         Seller, FGWLA, CLAC and Purchaser will allocate the Purchase Price
and other applicable consideration (the “Allocable Amount”) in accordance with
the requirements of sections 1060 and 338 of the Code and the Treasury
Regulations promulgated thereunder among and between the Shares, the Transferred
 
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Assets and the Business.  As soon as practicable after the Closing Date,
Purchaser shall prepare a schedule reflecting the allocation of the Allocable
Amount and shall submit it to Seller.  Purchaser and Seller will use reasonable
efforts to agree on the amount and proper allocation of the Allocable Amount in
accordance with sections 1060 and 338 of the Code and the Treasury Regulations
promulgated thereunder.
 
(e)         If, and only if, requested by Purchaser, Parent and Purchaser shall
jointly complete and make elections under section 338(h)(10) of the Code and any
analogous provisions of state, local or foreign Law (the “Election”) with
respect to the actual or deemed purchase of the stock of any of the Seller
Subsidiaries.
 
(i)                 On or prior to the Closing Date, Purchaser shall notify
Seller in writing of any such Election.
 
(ii)                 If Purchaser elects to make an Election as provided in this
Section 12.07(e), each of Parent and Purchaser (and all Affiliates of such
entities) shall report the actual or deemed purchase of the stock of such Seller
Subsidiary consistent with such Election.  Each of Parent and Purchaser shall
cause any and all forms necessary to effectuate such Election to be duly
executed by an authorized person, and shall, on the Closing Date, exchange
completed and duly executed copies of Internal Revenue Service Form 8023 and any
similar state, local and foreign forms, and shall duly and timely file all such
forms in accordance with applicable Tax laws and the terms of this Agreement.
 
(iii)                 Within 60 days after the Closing Date, Seller shall
deliver to Purchaser a written statement setting forth in reasonable detail the
calculation of the tax reserves as of the Closing Date of or relating to each
Seller Subsidiary, the Business and the Transferred Assets.
 
(iv)                 If Purchaser chooses to make an Election as provided in
this Section 12.07(e), within 180 days after the Closing Date, Purchaser shall
provide (or shall cause its Affiliates to provide) to Seller: (A) a proposed
allocation of the “Modified Aggregate Deemed Sales Price” and the “Adjusted
Grossed Up Basis” (each, as defined under applicable Treasury Regulations) among
the assets of each applicable Seller Subsidiary, which allocations shall be made
in accordance with section 338(b) of the Code, and (B) a complete set of IRS
Forms 8883 (and any comparable forms required to be filed under state, local or
foreign Law) and any additional data or materials required to be attached to IRS
Form 8883 pursuant to the Treasury Regulations promulgated under section 338 of
the Code (collectively, the “Proposed Allocation”).  If Seller objects to the
Proposed Allocation, Seller will notify Purchaser of such dispute in writing
(providing sufficient detail for Purchaser to determine Seller’s objection with
respect to the disputed item) within 20 days of receipt of the Proposed
Allocation.  In the case of a dispute, Purchaser and Seller will use reasonable
efforts for a period of 60 days after receipt of the notice of such dispute to
settle such dispute.  If no objection is provided by Seller within the time set
forth above, Seller and Purchaser (and their respective Affiliates) shall (A) be
bound by the Proposed
 
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Allocation for all Tax purposes, (B) prepare and file all Tax Returns in a
manner consistent with such allocations and (C) take no position inconsistent
with such allocations in any Tax Return, any proceeding before any Tax Authority
or otherwise, except to the extent required by applicable Law.
 
(f)         Immediately prior to the Closing Date, each of Seller and FGWLA
shall deliver to Purchaser a certificate under section 1445(b)(2) of the Code
providing that it is not a foreign person, in form and substance reasonably
satisfactory to Purchaser.
 
(g)         On or prior to the Closing, Parent and Seller shall terminate all
Tax sharing agreements entered into by the Seller Subsidiaries with respect to
such entities and such agreements shall have no continuing force or effect
thereafter with respect to the Seller Subsidiaries.
 
(h)         Notwithstanding the definition of “Net Reinsurance Premium” set
forth in Section 1.01, the “reinsurance premium” for U.S. federal income tax
purposes shall be determined by reference to the appropriate tax reserves, as
required by sections 338 and 1060 of the Code and the applicable Treasury
Regulations thereunder.
 
Section 12.08     Exclusivity.   Notwithstanding anything to the contrary in
this Agreement, this Article XII shall govern the procedures for all contests,
defenses and indemnification obligations related or attributable to Taxes.
 
ARTICLE XIII
 
TERMINATION PRIOR TO CLOSING
 
Section 13.01     Termination of Agreement.  This Agreement may be terminated at
any time prior to the Closing:
 
(a)         by Seller, FGWLA, CLAC or Purchaser in writing, if there shall be
any order, injunction or decree of any Governmental Entity which prohibits or
restrains Seller, FGWLA, CLAC or Purchaser from consummating the transactions
contemplated hereby, and such order, injunction or decree shall have become
final and nonappealable;
 
(b)         by Seller, FGWLA, CLAC or Purchaser in writing, if the Closing has
not occurred on or prior to 12 months following the date hereof, unless due to
the failure of the party seeking to terminate this Agreement to perform in all
material respects each of its obligations under this Agreement required to be
performed by it on or prior to the Closing Date;
 
(c)         by Purchaser (i) if there has been a breach on the part of Seller,
FGWLA or CLAC of any representation or warranty of Seller, FGWLA or CLAC
contained herein or in any certificate or other instrument delivered or
furnished to Purchaser pursuant hereto (without regard to any materiality or
Sellers Material Adverse Effect qualifications) such that all such breaches
would, individually or in the aggregate,
 
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have a Sellers Material Adverse Effect; or (ii) if there has been any failure on
the part of Seller, FGWLA or CLAC to comply with or perform any of their
respective agreements, covenants or obligations hereunder in any material
respect, and such noncompliance or nonperformance shall not have been (x) cured
or eliminated by Seller, FGWLA or CLAC within ten (10) Business Days following
receipt by Seller, FGWLA or CLAC of written notice thereof from Purchaser; or
(y) waived by Purchaser on or before the Closing Date;
 
(d)         by Seller, FGWLA or CLAC (i) if there has been a breach on the part
of Purchaser of any representation or warranty of Purchaser contained herein or
in any certificate or other instrument delivered or furnished to Seller, FGWLA
or CLAC pursuant hereto (without regard to any materiality or Purchaser Material
Adverse Effect qualifications) such that all such breaches would, individually
or in the aggregate, have a Purchaser Material Adverse Effect; or (ii) if there
has been any failure on the part of Purchaser to comply with or perform any of
its agreements, covenants or obligations hereunder in any material respect and
such noncompliance or nonperformance shall not have been (x) cured or eliminated
by Purchaser within ten (10) Business Days following receipt by Purchaser of
written notice thereof from Seller, FGWLA or CLAC; or (y) waived by Seller,
FGWLA and CLAC on or before the Closing Date; and
 
(e)         at any time on or prior to the Closing Date, by mutual written
consent of Seller, FGWLA, CLAC and Purchaser.
 
Section 13.02     Survival.   If this Agreement is terminated and the
transactions contemplated hereby are not consummated as described above, this
Agreement shall become null and void and of no further force and effect, except
that (a) in the event of a termination of this Agreement because of any breach,
the breaching party shall be liable to the other party for all actual damages
resulting from such breach, including reasonable attorneys fees, and, if
Purchaser is the breaching Party, Seller’s actual, reasonable and verifiable
direct costs in connection with the “Landlord’s Work” as defined in the forms of
Headquarters Leases; (b) in the event of a termination of this Agreement not
because of any breach, Purchaser shall reimburse Seller for one-half of Seller’s
actual, reasonable and verifiable direct costs in connection with the
“Landlord’s Work” as defined in the forms of Headquarters Leases; (c) the
provisions of this Agreement relating to the obligations of the parties hereto
to keep confidential and not to use certain information and data obtained from
the other parties hereto shall remain in full force and effect; and (d) the
provisions of Section 6.09, this Section 13.02 and Article XIV shall remain in
full force and effect.
 
ARTICLE XIV
 
GENERAL PROVISIONS
 
Section 14.01     Publicity.  Except as may otherwise be required by Law or
stock exchange requirements, no press release, public announcement or general
employee communication concerning this Agreement or the transactions
contemplated hereby shall be made by any of the parties hereto without advance
approval thereof by Seller,
 
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 FGWLA, CLAC and Purchaser.  The parties hereto shall cooperate with each other
in making any press release, public announcement or general employee
communication.
 
Section 14.02     Dollar References.  All dollar references in this Agreement
are to the currency of the United States.
 
Section 14.03     Notices.  Any notice or other communication required or
permitted hereunder shall be in writing (including facsimile or similar writing)
and shall be deemed given if (i) delivered personally, (ii) sent by overnight
courier (providing proof of delivery) or (iii) sent by facsimile, to the parties
at the following address:
 
(i)
If to Purchaser:
     
Connecticut General Life Insurance Company
 
Two Liberty Place
 
1601 Chestnut Street
 
Philadelphia, PA  19192
 
Attention:
Thomas A. McCarthy
 
Facsimile:
(215) 761-2387
     
With a concurrent copy to:
     
Connecticut General Life Insurance Company
 
c/o CIGNA Corporation
 
Two Liberty Place
 
1601 Chestnut Street
 
Philadelphia, PA  19192
 
Attention:
D. Timothy Tammany, Esq.
 
Facsimile:
(215) 761-5900
     
and
     
Skadden, Arps, Slate, Meagher & Flom LLP
 
Four Times Square
 
New York, NY  10036
 
Attention:
Robert J. Sullivan, Esq.
 
Facsimile:
(917) 777-2930
   
(ii)
If to Seller, FGWLA or CLAC:
     
Great-West Life & Annuity Insurance Company
 
8515 East Orchard Road
 
Greenwood Village, CO 80111
 
Attention:
Richard G. Schultz, Chief Legal Officer,
 
 
Corporate and Secretary            
Facsimile:
     
With a concurrent copy to:

 
 
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Dewey & LeBoeuf LLP
 
125 West 55th Street
 
New York, New York  10019-5389
 
Attention:
Donald B. Henderson, Jr.
 
Facsimile:
(212) 649-9405

 
Any party may, by notice given in accordance with this Section 14.03 to the
other parties, designate another address or person for receipt of notices
hereunder; provided, that notice of such a change shall be effective upon
receipt.
 
Section 14.04     Entire Agreement.  This Agreement (including the Ancillary
Agreements, the other agreements contemplated hereby and thereby, the Exhibits
and the Schedules hereto) contains the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, written or oral, with respect thereto; provided, however, that
the Confidentiality Agreement shall remain in full force and effect in
accordance with its terms prior to the Closing.
 
Section 14.05     Waivers and Amendments; Non-Contractual Remedies; Preservation
of Remedies.  This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by each of the parties or, in the case of a waiver, by the party waiving
compliance.  No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any right, power or privilege, nor any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or
privilege.  The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have at law or
in equity.  The parties agree that irreparable damage would occur in the event
any provision hereof were not to be performed in accordance with its terms and
that each party shall be entitled to specific performance of the terms hereof in
addition to any other remedies at law or in equity.
 
Section 14.06     Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
 
Section 14.07     Jurisdiction.    Each party hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of any court of
the United States or any state court which in either case is located in the City
of New York for any actions, suits or proceedings arising out of or relating to
this Agreement and the transactions contemplated hereby (and each party agrees
not to commence any action, suit or proceeding relating thereto except in such
courts, and further agrees that service of any process, summons, notice or
document by U.S. registered mail to its address set forth above shall be
effective service of process for any action, suit or proceeding brought against
it in any such court).  Each party hereby irrevocably and unconditionally waives
 
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 any objection to the laying of venue of any action, suit or proceeding arising
out of this Agreement or the transactions contemplated hereby in any such court,
and hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.  EACH PARTY
HERETO HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY ANY OF THEM AGAINST ANOTHER ARISING OUT OF OR IN ANY WAY CONNECTED
WITH THIS AGREEMENT, OR ANY OTHER AGREEMENTS EXECUTED IN CONNECTION HEREWITH OR
THE ADMINISTRATION THEREOF OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR
THEREIN.
 
Section 14.08     Binding Effect; Assignment.  This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors,
permitted assigns and legal representatives.  Neither this Agreement, nor any of
the rights, interests or obligations hereunder, may be assigned, in whole or in
part, by any party without the prior written consent of the other parties hereto
and any such assignment that is not consented to shall be null and void;
provided, however, that Purchaser shall be permitted to assign any or all of its
rights to acquire particular Transferred Assets or Shares.  In the event of such
an assignment, Purchaser shall remain primarily liable for all of its
obligations hereunder and for all of the obligations of any Affiliate to which
it assigned the right to acquire any Transferred Assets or Shares.
 
Section 14.09     Interpretation
 
.                                               (a)         Notwithstanding
anything in this Agreement to the contrary, no term or condition of this
Agreement shall be construed to supersede, restrict or otherwise limit any term
or condition set forth in the Indemnity Reinsurance Agreements.
 
(b)         The parties acknowledge and agree that they may pursue judicial
remedies at law or equity in the event of a dispute with respect to the
interpretation or construction of this Agreement.  In the event that an
alternative dispute resolution procedure is provided for in any of the Ancillary
Agreements or any other agreement contemplated hereby or thereby, and there is a
dispute with respect to the construction or interpretation of such Ancillary
Agreement, the dispute resolution procedure provided for in such Ancillary
Agreement shall be the procedure that shall apply with respect to the resolution
of such dispute.
 
(c)         For purposes of this Agreement, the words “hereof”, “herein”,
“hereby” and other words of similar import refer to this Agreement as a whole
unless otherwise indicated.  Whenever the words “include”, “includes”, or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation”.  The terms “transactions contemplated by this
Agreement” and “transactions contemplated hereby” shall include the sale and
purchase of the Shares and the Transferred Assets, the reinsurance by Purchaser
of the Insurance Liabilities, the assumption by Purchaser of the Other Assumed
Liabilities, and the execution, delivery and performance by the parties thereto
of the Ancillary Agreements and any other agreements contemplated hereby or
thereby.  Whenever the singular is used herein, the
 
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same shall include the plural, and whenever the plural is used herein, the same
shall include the singular, where appropriate.
 
Section 14.10     No Third Party Beneficiaries.   Nothing in this Agreement is
intended or shall be construed to give any Person (including, but not limited
to, the employees of Seller, FGWLA, CLAC or the Seller Subsidiaries), other than
the parties hereto, their successors and permitted assigns, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.
 
Section 14.11     Counterparts.   This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument.
 
Section 14.12     Exhibits and Schedules.  The Exhibits and the Schedules to
this Agreement that are specifically referred to herein are a part of this
Agreement as if fully set forth herein.  All references herein to Articles,
Sections, subsections, paragraphs, subparagraphs, clauses, Exhibits and
Schedules shall be deemed references to such parts of this Agreement, unless the
context shall otherwise require.
 
Section 14.13     Headings.  The headings in this Agreement are for reference
only, and shall not affect the interpretation of this Agreement.
 
 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
 
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
     
By:
/s/ Raymond L. McFeetors
 
Name:
Raymond L. McFeetors
 
Title:
President and Chief
   
Executive Officer
       
By:
/s/ Richard F. Rivers
 
Name:
Richard F. Rivers
 
Title:
Executive Vice President,
   
Healthcare

 

FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
     
By:
/s/ Raymond L. McFeetors
 
Name:
Raymond L. McFeetors
 
Title:
President and Chief
   
Executive Officer
       
By:
/s/ Richard F. Rivers
 
Name:
Richard F. Rivers
 
Title:
Executive Vice President
   
Healthcare
     

 
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THE CANADA LIFE ASSURANCE COMPANY
 
         
By:
/s/ Raymond L. McFeetors
   
Name:
Raymond L. McFeetors
   
Title:
President and Chief
     
Executive Officer
       
By:
/s/ Richard F. Rivers
   
Name:
Richard F. Rivers
   
Title:
Executive Vice President,
     
Healthcare
 

 
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CONNECTICUT GENERAL LIFE INSURANCE COMPANY
     
By:
/s/ David M. Cordani
 
Name:
David M. Cordani
 
Title:
Chairman of Executive
   
Committee and President

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