A definitive agreement was announced yesterday to merge Equitable General Corp. of McLean into Gulf Life Insurance Co., a subsidiary of Gulf United Corp of Houston.

Gulf United will pay the equivalent of $142.8 million in cash and stock for Equitable General and will keep the headquarters of Equitable General Life Insurance Co. in McLean with its present management.

Executives of the two companies yesterday signed an agreement detailing terms of the merger plan announced in principal June 26, after Equitable General rejected offers from several other suitors.

To take over Equitable General, Gulf United will pay $51 cash for up to 1.3 million of Equitable General's 2.8 million outstanding shares.

Each of the remaining shares will be exchanged for one share of a new issue of convertible preferred stock of Gulf United, paying an annual dividend of $3.78 per share, carrying a liquidating value of $50 and convertible at any time into two shares of Gulf United common.

Gulf United will set up a sinking fund to retire the new issue and after 10 years will be required to offer to retire one third of the shares each year and to actually retire at least 20 percent each year at the $50 price.

The limit on the cash portion of the offer is intended to qualify the stock exchange as a tax-free transaction under Internal Revenue Service rules.

If the whole 1.3 million shares are offered for cash, it will cost Gulf United $66.3 million. At the same $51 per share price the exchange of stock would add another $76.5 million to the cost price.

The $51 buyout is $11 a share more than Equitable General shareholders would have received under the first merger offer the company received, from Great Southern Corp., another Houston insurance holding company.

Following that $40 bid in mid-April Equitable General got a $45 offer from Liberty National Life Insurance Company of Birmingham, Ala. Gulf United entered the bidding war at the beginning of May with a $45 offer that was raised to $47 a day later. A $50 counteroffer from Liberty Producer the $51 Gulf United bid that was finally accepted.

It will take two or three months to complete the paperwork needed for a special Equitable General stockholders meeting to vote on the merger, estimated Frank Eslinger, executive vice president.

Approval of the company's approximately 900 shareholders is considered certain because of the large blocks of shares controlled by insiders and investors close to the company. Equitable General Chairman Charels Charles Phillips controls about 450,000 shares and two other shareholders have blocks of 200,000 and 266,000 shares.

The tax-free exchange of shares was engineered to minimize the impact of capital gains taxes on the company's long-time in shareholders, many of whom bought the stock for $1 a share or less many years ago.