Continuing Employees (a) Effective as of the Closing, each Subsidiary shall cease to be a participating employer in the Company Benefit Plans (other than Company Benefit Plans which are sponsored by the Subsidiaries solely for the benefit of employees of the Subsidiaries (the "Subsidiary Benefit Plans")) and, on or after the Closing Date, the Subsidiaries shall have no obligations or liabilities to, under or with respect to any Company Benefit Plan, other than the Subsidiary Benefit Plans.
(b) For periods after the Closing, the Purchaser will provide (or cause to be provided) to each employee of any of the Subsidiaries who continues his or her employment with the Subsidiaries or the Purchaser after the Closing (the "Business Employees") employee benefit plans, agreements, programs, policies and arrangements (the "Purchaser's Plans") that are substantially comparable in the aggregate to the employee benefits maintained from time to time by the Purchaser for its similarly situated employees. Notwithstanding the preceding sentence, (i) the Purchaser shall not be required to provide coverage under a defined benefit pension plan to any Business Employee who was not a member of a class of employees who, immediately prior to the Closing Date, was eligible for coverage under a Company Benefit Plan which was a defined benefit pension plan, (ii) the Purchaser shall not be required to provide any benefit to any Business Employee to the extent the provision of such benefit would result in the duplication of benefits and (iii) the Purchaser shall be permitted to provide to Business Employees benefits under employee welfare benefit plans which are substantially comparable to those provided to such Business Employees under Company Benefit Plans which are employee welfare benefit plans immediately prior to the Closing Date. For the purposes of any of the Purchaser's Plans for which eligibility and vesting of benefits depend on length of service and for all other benefits for which benefit levels depend on length of service (but not benefit accrual or eligibility purposes under any defined benefit pension plan), the Purchaser shall give (or cause to be given) to each continuing Business Employee full credit for past service with the Companies and the Subsidiaries and for any additional periods for which the Companies or a Subsidiary has previously granted the Business Employee with service credit for comparable benefit purposes under a corresponding Company Benefit Plan ("Prior Service"). In addition, and without limiting the generality of the foregoing: (i) each Business Employee shall be given credit for Prior Service for purposes of eligibility to participate, satisfaction of any waiting periods, evidence of insurability requirements, or the application of any pre-existing condition limitations and shall be given credit for amounts paid under a corresponding Company Benefit Plan during the same period for purposes of applying deductibles, co-payments and out-of-pocket maximums as though such amounts had been paid in accordance with the terms and conditions of the Purchaser's Plans. Nothing in this Section 5.10 shall prevent Purchaser or the Subsidiaries from terminating the employment of any of the Business Employees at any time after the Closing, so long as the Subsidiaries comply with the applicable terms of the Retention Plan.
(c) Effective as of the Closing Date, the Purchaser shall establish or designate a defined contribution plan maintained by the Purchaser or its affiliates in which, subject to the terms and conditions of such plan (taking into account the provisions of this Section 5.10), Business Employees shall be eligible to participate (the "Purchaser's Defined Contribution Plan"). The Companies maintain the Liberty Financial Companies, Inc. Savings and Investment Plan (the "Companies' Defined Contribution Plan") and have submitted a favorable determination letter request with the IRS with respect thereto, which determination letter request is pending as of the date hereof. The Companies agree to take all actions necessary to amend the Companies' Defined Contribution Plan as applied to any Business Employee to eliminate all annuity forms of distribution effective as of a date no later than the Closing Date. The amendment described in the preceding sentence shall be made in accordance with Treasury regulations issued pursuant to section 411(d)(6) of the Code, and the Companies shall provide, not later than the Closing Date, all Business Employees with a summary (the "Amendment Summary") that reflects such amendment and that satisfies the requirements of ERISA and applicable Department of Labor regulations relating to summaries of material modifications. Subject to the provisions of this Section 5.10(c), the Companies and the Purchaser shall take (or cause to be taken) all actions necessary to cause the assets and liabilities of the Companies' Defined Contribution Plan attributable to the accrued benefits of Business Employees to be transferred from the trustee of the Companies' Defined Contribution Plan to the trustee of the Purchaser's Defined Contribution Plan; provided, however, that no transfer of assets or liabilities shall occur with respect to any Business Employee whose annuity starting date occurs prior to the effective date of the transfer. The assets to be transferred pursuant to the preceding sentence shall consist of cash and promissory notes evidencing outstanding loans to Business Employees. The transfer of assets and liabilities from the Companies' Defined Contribution Plan to the Purchaser's Defined Contribution Plan shall conform in all respects with Sections 411(d)(6) and 414(l) of the Code. No transfer of assets and liabilities from the Companies' Defined Contribution Plan to the Purchaser's Defined Contribution Plan shall occur until the latest of (i) the Closing Date, (ii) the date on which the IRS issues a favorable determination letter with respect to the Companies' Defined Contribution Plan and the Companies have taken all actions required by the IRS as a condition of such favorable determination letter, or (iii) 90 days after the Companies have adopted the amendment to the Companies' Defined Contribution Plan which eliminates all annuity forms of distribution and have provided Business Employees with the Amendment Summary.
(d) Notwithstanding the foregoing provisions of this Section 5.10, the Purchaser and the Companies shall, prior to the Closing Date, cooperate and negotiate in good faith to achieve the objectives of this Section 5.10 and to facilitate a transition of coverage for Business Employees to the Purchaser's Plans. The primary objectives of the parties in cooperating and negotiating any such further agreements shall be to provide for uninterrupted coverage of employees under appropriate employee benefit plans from and after the Closing Date. In furtherance of that objective, the Purchaser and the Companies agree that, for the Extended Coverage Period (as defined below), the Business Employees shall be entitled to continue coverage under the Company Benefit Plans which are group health or dental plans, and the Purchaser agrees to reimburse the Companies for covered claims incurred under such plans during the Extended Coverage Period and reasonable administrative costs incurred by the Companies as a result of the coverage of the Business Employees under such plans during the Extended Coverage Period. For purposes of this Agreement, the "Extended Coverage Period" shall be the period commencing on the Closing Date and ending on the date that the Business Employees become eligible for coverage under the Purchaser's group medical and dental plans (which date shall be no later than the first day of the coverage period following the first normal open enrollment period with respect to the Purchaser's group medical and dental plans which begins on or after the Closing Date). Except for obligations and agreements specifically set forth in this Section 5.10, no agreement with respect to employee benefit plans shall be effective unless and until it has been set forth in a written agreement duly executed on behalf of the Companies and the Purchaser.
(e) Notwithstanding the foregoing provisions of this Section 5.10, as of the Closing each of the Purchaser and the Subsidiaries shall assume and shall perform or cause their affiliates to perform, all of the obligations with respect to the employees and former employees of the Subsidiaries (other than persons that LFC has transferred to LFC or to direct or indirect subsidiaries of LFC other than the Subsidiaries) under each of (i) the Retention Plan and (ii) the Deferred Compensation Obligations; provided, however, that the Companies shall pay and perform all obligations to such persons under Sections 4 and 5 of the Retention Plan (pertaining to stock options and restricted stock), and the Companies acknowledge and agree that none of the Purchaser or any of the Subsidiaries are assuming any obligations with respect to such provisions; provided, further, that the Purchaser and the Subsidiaries (and not the Companies) shall be responsible for the entire amount of any Gross-Up Payments (as such term is defined in the Retention Plan). The Companies and the Purchaser shall allocate the "base amount" of parachute payments made or to be made to (or for the benefit of) any "disqualified individual" (in each case, as defined in Section 280G of the Code) in accordance with prop. Treasury Regulation 1.280G-1 (Q&A 38). Except for the obligations with respect to the Retention Plan and the Deferred Compensation Obligations set forth in the immediately preceding sentence, nothing in this Section 5.10(e) shall in any way restrict the ability of the Purchaser or any Subsidiary to terminate any employee benefit plan, policy, program or arrangement after the Closing Date in accordance with the terms thereof.
