1
STOCK PURCHASE AND SALE AGREEMENT
By and Between
XXXX XXXXX LIFE INSURANCE COMPANY
and
SUNAMERICA LIFE INSURANCE COMPANY
Dated November 29, 1996
TABLE OF CONTENTS
PAGE
ARTICLE 1 - PURCHASE AND SALE OF STOCK; CLOSING 2
1.1. Closing 2
1.2. Purchase and Sale of JANY Stock 2
1.3. Closing Deliveries 3
1.4. Additional Closing Deliveries 4
1.5. Settlement of Intercompany Obligations 4
1.6. Disputes 6
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF SELLER 6
2.1. Organization, Standing and Authority of Seller 6
2.2. Authorization 7
2.3. Actions and Proceedings 7
2.4. No Conflict or Violation 8
2.5. Consents and Approvals 8
2.6. Brokerage and Financial Advisers 9
2.7. Compliance With Laws 9
2.8. Insurance Contracts 9
2.9. Permits, Licenses and Franchises 12
2.10. Regulatory Filings 13
2.11. Reinsurance 14
2.12. Absence of Certain Changes or Events 14
2.13. Computer Software and Other Intellectual
Property 17
2.14. Contracts 18
2.15. Statutory Financial Statements 20
2.16. JANY Capital Stock 22
2.17. Tax Matters 22
2.18. Real Property 24
2.19. Owned Properties 25
2.20. Pension and Other Employee Plans 26
2.21. Labor Matters 29
2.22. Banks 29
2.23. Reserves 30
2.24. Books and Records 31
2.25. Threats of Cancellation 31
2.26. Operations Insurance 31
2.27. Intercompany Liabilities 32
2.28. Employee Loans 32
2.29. Credited Rates 32
2.30. Related Agreements. 32
2.31. Third Party Administration Agreements 33
2.32. Mortgage Loans 33
2.33. No Waiver of Defenses 39
2.34. GAAP Financial Statements 39
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF PURCHASER 40
3.1. Organization and Standing 41
3.2. Authorization 41
3.3. Actions and Proceedings 41
3.4. No Conflict or Violation 42
3.5. Consents and Approvals 42
3.6. Brokerage and Financial Advisers 43
3.7. GAAP Financial Statements 43
3.8. Statutory Financial Statements 44
3.9. Rating 45
3.10. Investment Intent and Acknowledgement 45
ARTICLE 4 - PRE-CLOSING COVENANTS 46
4.1. Conduct of Business 46
4.2. Certain Transactions 50
4.3. Investigations 51
4.4. HSR Act Filings 51
4.5. Consents and Reasonable Efforts 52
4.6. Representations and Warranties 52
4.7. Financial Statements and Reports 53
4.8. Transfer Real Estate Owned 54
4.9. Stay-on Bonus. 54
ARTICLE 6 - CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER
TO CLOSE 56
ARTICLE 7 - POST-CLOSING COVENANTS 59
7.1. Continued Access and Cooperation 59
7.2. Further Assurances 60
7.3. Expenses 61
7.4. Tax Indemnification and Other Tax Matters 61
7.5. Employee Plans 70
7.6. Non-Discriminatory Treatment of Policyholders 71
7.7. Change of Name 71
ARTICLE 8 - TERMINATION; SURVIVAL 72
8.1. Termination of Agreement 72
8.2. Effect of Termination 73
ARTICLE 9 - SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION 74
9.1. Survival of Representations 74
9.2. Indemnification by Purchaser and JANY 75
9.3. Indemnification by Seller 77
9.4. Indemnification Procedure 79
ARTICLE 10 - PUBLICITY AND CONFIDENTIALITY 82
10.1. Publicity 82
10.2. Confidentiality 83
ARTICLE 11 - MISCELLANEOUS 85
11.1. Notices 85
11.2. Entire Agreement 87
11.3. Amendments 88
11.4. Waivers 88
11.5. Governing Law 88
11.6. Binding Effect; Assignment; Third Party
Beneficiaries 89
11.7. Severability 89
11.8. Headings 90
11.9. Counterparts 90
11.10. Arbitration 90
SIGNATURES 92
ANNEX A - Definitions
EXHIBITS
A - Transition Services Agreement
B - Opinion of Seller's Counsel
C - Opinion of Purchaser's Counsel
D - Loan Documentation
SCHEDULES
2.3 - Actions and Proceedings
2.4 - Certain Matters - Conflicts
2.5 - Consents and Approvals
2.7 - Compliance
2.8(a) - Insurance Contract Forms
2.8(b) - In Force Insurance Contracts
2.8(c) - Certain Commissions Contracts
2.8(e) - Contested Benefits
2.8(f) - Distributions and Other Benefits
2.8(h) - Known Agent Violations
2.8(f) - Distributions and Other Benefits
2.9 - Permit Exceptions
2.10 - Regulatory Filings
2.11 - Reinsurance Agreements
2.12 - Certain Changes or Events
2.13 - Intellectual Propterty
2.14 - Contracts
2.17 - Tax Matters
2.18 - Real Property
2.20 - Pension and Other Employee Plans
2.22 - Bank Accounts
2.23(a) - Reserve Liabilities
2.23(b) - Reserve Exceptions
2.25 - Threats of Cancellation
2.26 - Operations Insurance
2.27 - Intercompany Liabilities
2.28 - Employee Loans
2.30 - Related Agreements
2.31 - Third Party Administration Agreements
2.32(a) - Mortgage Loans
2.32(b) - Participation
2.32(d) - Waivers, Amendments and Releases Mortgage
Loans
2.32(f) - Missing Original Notes
2.32(l) - Tax Delinquencies
3.3 - Purchaser's Actions and Proceedings
3.4 - Purchaser's Conflicts or Violations
3.5 - Purchaser's Consents and Approvals
STOCK PURCHASE AND SALE AGREEMENT
STOCK PURCHASE AND SALE AGREEMENT (the "Agreement") dated
November 29, 1996 by and between Xxxx Xxxxx Life Insurance Company,
a Minnesota corporation ("Seller"), and SunAmerica Life Insurance
Company, an Arizona corporation ("Purchaser").
W I T N E S S E T H:
WHEREAS, Xxxx Xxxxx Life Insurance Company of New York, a New
York corporation (along with any business or predecessor company
acquired by it, "JANY"), is engaged in the business of selling and
administering annuity, life and health related insurance policies
and related activities solely in the State of New York (the
"Insurance Business");
WHEREAS, Seller owns all of the outstanding capital stock of
JANY (the "JANY Stock"); and
WHEREAS, Seller wishes to sell to Purchaser, and Purchaser
wishes to acquire from Seller, all of the JANY Stock pursuant to
the terms and conditions set forth in this Agreement and certain
other assets of Seller pursuant to the terms and conditions set
forth in the Asset Purchase and Sale Agreement dated concurrently
herewith between Seller and Purchaser (the "Asset Purchase
Agreement").
NOW, THEREFORE, in consideration of the premises,
representations and warranties and the mutual covenants and
agreements contained herein and other good, valuable and sufficient
consideration, the receipt of which is hereby acknowledged, Seller
and Purchaser
(collectively, the "Parties" and, sometimes individually, a "Party"),
intending to be legally bound, hereby agree as follows.
The capitalized terms used in this Agreement and not
defined herein shall have the meanings specified in Annex A
attached hereto. Unless the context otherwise requires, such
capitalized terms shall include the singular and plural and the
conjunctive and disjunctive forms of the terms defined.
ARTICLE 1
PURCHASE AND SALE OF STOCK; CLOSING
Section 1.1. Closing. The closing of the transactions
contemplated hereby (the "Closing") shall take place at 10:00 a.m.
local time, at the offices of Xxxxxx Xxxx & Xxxxxx LLP, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, or such other time and place as
Purchaser and Seller may mutually agree in writing, on the last
business day of the month in which the satisfaction of all
conditions set forth in Articles 5 and 6 hereof concerning the
Parties' respective obligations to consummate the transactions
contemplated herein occurs or such other date as Seller and
Purchaser may mutually agree in writing (the "Closing Date") and,
subject to completion, shall be deemed to have been consummated and
become effective for all purposes as of 11:59 p.m. on the Closing
Date.
Section 1.2. Purchase and Sale of JANY Stock.
Subject to the terms and conditions set forth herein, at
the Closing, Seller shall sell, assign and deliver to Purchaser,
and Purchaser shall purchase and accept from Seller, all of
Seller's right, title and interest in and to the JANY Stock. In
consideration for the sale, assignment and delivery of the JANY
Stock, at the Closing Purchaser shall pay to Seller a
purchase price of One Hundred Thirty Two Million Dollars ($132,000,000)
(the "Purchase Price"). Purchaser shall pay the Purchase Price to
Seller on the Closing Date by wire transfer of immediately
available funds to such bank account as Seller shall designate to
Purchaser at least three business days prior to the Closing Date.
The amount of the cash payment wired to Seller shall be reduced by
an amount equal to one day's interest at an interest rate equal to
the three month LIBOR rate in effect on the day preceding the
Closing Date plus 25 basis points.
Section 1.3. Closing Deliveries.
(a) At the Closing, Seller shall or shall cause JANY to
deliver to Purchaser the following:
(i) the certificates representing the JANY Stock
duly endorsed in blank or accompanied by stock transfer powers
in proper form duly endorsed in blank, together with all
necessary stock transfer stamps affixed thereto and such other
instruments as shall reasonably be required by Purchaser to
transfer to Purchaser all rights, title and interest in the
JANY stock;
(ii) all minutes and minute books of JANY;
(iii) all stock transfer books and stock ledgers
of JANY;
(iv) all blank certificates for shares of capital
stock of JANY;
(v) resignations of all directors and officers of
JANY serving in office immediately prior to the Closing;
(vi) the opinion of counsel to Seller and JANY,
substantially in the form of Exhibit B attached hereto
("Seller's Opinion"); and
(vii) a certificate of an executive officer of
Seller, dated the Closing Date, representing and warranting to
the effect that (A) the officer signing such
certificate is familiar with the provisions of this Agreement
and (B) the conditions specified in Article 4 of this Agreement
have been satisfied.
(b) At the Closing, Purchaser shall deliver to Seller
the following:
(i) the opinions of counsel to Purchaser,
substantially in the form of Exhibit C attached hereto
("Purchaser's Opinion");
(ii) a certificate of an executive officer of
Purchaser, dated the Closing Date, representing and warranting
to the effect that (A) the Person signing such certificate is
familiar with the provisions of this Agreement and (B) the
conditions specified in Article 5 of this Agreement have been
satisfied;
(iii) written consents to assignments, where
necessary from all applicable parties relating to the Third
Party Administration Agreements; and
(iv) the Purchase Price.
Section 1.4. Additional Closing Deliveries. In addition to
the transactions and deliveries contemplated above, the following
acts or transactions will occur at the Closing:
(a) Seller and Purchaser will enter into a Transition
Services Agreement substantially in the form of Exhibit A attached
hereto (the "Transition Services Agreement"); and
(b) all of the agreements between or among (i) JANY and
Seller or (ii) JANY and any Affiliates of Seller will be
terminated.
Section 1.5. Settlement of Intercompany Obligations.
(a) At least five days prior to the Closing, Seller will
estimate and cause to be paid by or to Seller or its Affiliates and
JANY, as the case may be, in cash, all obligations accrued through
the Closing on JANY's books and records payable by or to JANY from or to
Seller and its Affiliates, which payments shall have been incurred in
the ordinary course of business on a basis consistent with past practice,
except that Seller shall not allocate to JANY any portion of any
bonuses for any Person who is not an employee of JANY. Seller shall
deliver to Purchaser a reasonably detailed description of all such
payments at least five days prior to the Closing.
(b) Seller shall prepare and deliver to Purchaser on or
before the 60th day after the Closing Date a reconciliation
statement of the estimated obligations paid by or to Seller and its
Affiliates by or to JANY pursuant to Section 1.5(a) hereof and the
actual amount of the amount of such obligations (other than as
provided in Section 7.4(d) hereof) (the "Reconciliation
Statement"). If the total actual amount of such obligations is
less than the estimated amount paid to Seller or its Affiliates by
JANY pursuant to Section 1.5(a) hereof, Seller shall pay to JANY in
cash an amount equal to such difference, together with interest
from the Closing Date through the date of payment at the rate per
annum equal to the three month LIBOR rate in effect on the date of
payment plus 25 basis points. Such payment shall accompany the
reconciliation statement. If the actual total amount and revised
estimate of such obligations exceeds the estimated amount paid to
Seller or its Affiliates by JANY pursuant to Section 1.5(a) hereof,
Purchaser shall pay, or cause JANY to pay, to Seller or its
Affiliates, as the case may be, within 10 days after delivery of
such statement cash in an amount equal to such excess, together
with interest from the Closing Date through the date of such
payment at the rate per annum equal to the three month LIBOR rate
in effect on the date of payment plus 25 basis points. After the
date hereof, JANY will not enter into any contract or, except as
required by this Agreement or any contract listed on Schedule 2.27
attached hereto, engage in any transaction with Seller or any
Affiliate of Seller.
Section 1.6. Disputes. If Purchaser and Seller are unable
to resolve any disagreement with respect to the Reconciliation
Statement within 30 days after Seller receives a timely notice of
disagreement, the items of disagreement alone shall be referred for
final determination to the U.S. national office of Price Waterhouse
or, if such firm is unable or unwilling to make such final
determination, to such other independent accounting firm as the
Parties shall mutually designate. The firm making such
determination is referred to herein as the "Independent Party." The
Reconciliation Statement shall be deemed to be binding on Purchaser
and Seller upon the earlier to occur of (i) Purchaser's failure to
deliver to Seller a notice of disagreement within 30 days after its
receipt of the Reconciliation Statement prepared by Seller, (ii)
resolution of any disagreement by mutual agreement of the Parties
after a timely notice of disagreement has been delivered to Seller
or (iii) notification by the Independent Party of its final
determination of the items of disagreement submitted to it. The
fees and disbursements of the Independent Party shall be borne
equally, one-half by Purchaser and one-half by Seller.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
Section 2.1. Organization, Standing and Authority of Seller.
Seller is a corporation duly organized as a capital stock life and
health insurance company, validly existing and in good standing
under the Laws of the State of Minnesota. JANY is a corporation
duly organized, validly existing and in good standing in the State
of New York. JANY has all corporate power and authority necessary
or required by Law to engage in the conduct of the Insurance Business
as currently conducted by it. Seller has furnished Purchaser with
true and correct copies of the Articles of Incorporation and By-laws
of JANY, along with all amendments thereto.
Section 2.2. Authorization. Seller has all corporate power
and authority necessary to execute, deliver and perform its
obligations under this Agreement and the Transition Services
Agreement. The execution and delivery by Seller of this Agreement
and the Transition Services Agreement, and the performance by
Seller and JANY of its obligations hereunder and thereunder, have
been duly authorized by all necessary corporate and shareholder
actions on the part of Seller and JANY. This Agreement and the
Transition Services Agreement, when executed by all of the parties
thereto, will each constitute a valid and binding obligation of
Seller enforceable against Seller in accordance with its terms,
except insofar as enforceability may be limited by bankruptcy,
insolvency, moratorium or other Laws which may affect creditors'
rights and remedies generally and by principles of equity
(regardless of whether enforceability is considered in a proceeding
in equity or at law).
Section 2.3. Actions and Proceedings.
(a) Except as disclosed on Schedule 2.3 attached hereto,
there are no outstanding Orders by or with any court, arbitrator or
Governmental Entity before which Seller or any of its material
Affiliates or JANY is or was a party.
(b) Except as set forth on Schedule 2.3 attached hereto,
there are no Actions pending or, to the knowledge of Seller,
threatened either by or against JANY, Seller with respect to JANY
or any of JANY's properties or assets which (i) seeks monetary
damages exceeding $50,000 individually or $500,000 in the aggregate
or an unspecified amount of damages, (ii) seeks any injunction or
similar relief or (iii) would, individually or in the aggregate,
have a Material Adverse Effect.
(c) There are no Actions presently pending or, to the
knowledge of Seller, threatened, and there are no final Orders
presently outstanding which pertain to any of the JANY Stock.
Section 2.4. No Conflict or Violation. Except as disclosed
on Schedule 2.4 attached hereto, the execution, delivery and
performance by Seller of this Agreement and the Transition Services
Agreement in accordance with the respective terms and conditions
hereof and thereof do not and will not (a) violate or constitute a
default under any provision of the charter or by-laws of Seller or
JANY, in each case, as amended to date, (b) violate or result in
the breach, cancellation or termination of, accelerate the
performance required under, or result in the creation of any lien,
claim, restriction, charge or encumbrance or other defect of title
("Liens") upon the JANY Stock or any of the material properties or
assets of JANY pursuant to, any mortgage, deed of trust, guaranty,
note, indenture, bond, lease, agreement or other instrument to
which either of Seller or JANY is a party or by or to which it or
any of the assets of JANY may be bound, (c) violate any Order of
any court, arbitrator or Governmental Entity against, or binding
upon, or any agreement with, or condition imposed by, any
Governmental Entity binding upon Seller or JANY or any of such
properties or assets of JANY, (d) violate any Law or (e) result in
the breach or violation of any of the terms or conditions of,
constitute a default under, or otherwise cause an impairment or
revocation of, any license, permit, order, approval, registration,
authorization, qualification or filing with or under any Law or
Governmental Entity (collectively, "Permits") related to the
Insurance Business.
Section 2.5. Consents and Approvals. Except as required
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and rules and regulations thereunder (the "HSR Act") or as
set forth on Schedule 2.5 attached hereto, no consent, approval, exemption
or authorization is required to be obtained from, no notice is required
to be given to and no filing is required to be made with any third party
(including, without limitation, Governmental Entities of competent
jurisdiction) by Seller or JANY in order (a) for this Agreement and the
Transition Services Agreement to constitute a valid and binding obligation
of Seller, (b) to authorize or permit the consummation of the transactions
contemplated hereby by Seller and JANY or (c) to prevent the
termination of any material right, privilege, franchise, license,
permit or agreement of JANY or to prevent any material loss to
JANY.
Section 2.6. Brokerage and Financial Advisers. No broker,
finder or financial adviser has acted directly or indirectly as
such for, or is entitled to any compensation from, Seller or JANY
in connection with this Agreement or the transactions contemplated
hereby, except CS First Boston, whose fees for services rendered in
connection with such transactions will be paid by Seller.
Section 2.7. Compliance With Laws. Except as disclosed in
Schedule 2.7 attached hereto, neither Seller nor JANY is in
material violation of any Law or any Order of any court, arbitrator
or Governmental Entity pertaining to JANY or any of its assets.
Section 2.8. Insurance Contracts. The forms of all policies
and endorsements utilized for the In Force Insurance Contracts of
JANY are described on Schedule 2.8(a) attached hereto. All In Force
Insurance Contracts in effect on October 21, 1996 or September 21,
1996, (as indicated in such Schedule) are listed in Schedule 2.8(b)
attached hereto. All In Force Insurance Contracts in effect on
Closing Ledger Date will be set forth in an updated Schedule 2.8(b)
delivered to Purchaser at the Closing. Schedule 2.8(b) includes
(and the updated Schedule 2.8(b) will include) with respect to each In
Force Insurance Contract the policy number, policyholder name, form, plan
code and account balance. All In Force Insurance Contracts are in all
respects, to the extent required under applicable Law, on forms approved
by applicable insurance regulatory authorities or which have been filed
and not objected to by such authorities within the period provided for
objection, and such forms comply in all material respects and have been
administered in all material respects in accordance with applicable
Law. Without limiting the foregoing:
(a) JANY has offered and sold each Insurance Contract in
compliance with all applicable Laws (it being acknowledged that no
representation is made with respect to compliance by independent
agents of JANY except as provided in Section 2.8(h) hereof) and all
of Seller's registrations, filings or submissions made by it with
respect to the Insurance Contracts with any Governmental Entity
were in material compliance with applicable Laws when filed.
(b) The transactions contemplated by this Agreement will
not materially affect the validity and binding character of any
Insurance Contract entered into or issued by JANY or render any
admitted assets of JANY non-admitted under the applicable Laws up
to and including the Closing Date.
(c) Except as set forth in Schedule 2.8(c) attached
hereto, and except in accordance with customary insurance industry
practice, (i) JANY is not liable to pay commissions upon the
renewal of any insurance policy nor (ii) is it a party to any
agreement providing for the third-party collection of annuity or
insurance premiums payable to JANY by any other Person, which
commissions or premiums exceed $100,000 in the aggregate.
(d) All In Force Insurance Contracts are in full force
and effect and are legal, valid and binding obligations of JANY,
and to the knowledge of Seller each other party thereto, and are
enforceable against JANY, and to the knowledge of Seller each other
party thereto, in accordance with their respective terms, except to
the extent that enforcement thereof may be
limited by or subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
application relating to or affecting creditors' rights and to general
equity principles (other than equitable rescission rights).
(e) All Insurance Contract benefits payable by JANY and,
to the knowledge of Seller, by any other Person that is a party to
or bound by any reinsurance, coinsurance or other similar contract
with JANY have been paid in accordance with the terms of the
Insurance Contracts under which they arose, except for such
benefits for which there is, in the reasonable opinion of Seller or
JANY, a reasonable basis to contest and all such contested benefits
have been disclosed in Schedule 2.8(e) attached hereto.
(f) Except as set forth on Schedule 2.8(f) attached
hereto, no In Force Insurance Contract issued, reinsured or
underwritten by JANY entitles the holder thereof or any other
Person to receive dividends, distributions or other benefits based
on the revenues or earnings of JANY or any other Person.
(g) The underwriting standards utilized and ratings
applied by JANY and, to the knowledge of Seller, by any other
Person that is a party to or bound by any reinsurance, coinsurance
or other similar contract with JANY conform in all respects to
industry accepted practices and to the standards and ratings
required pursuant to the terms of the respective reinsurance,
coinsurance or other similar contracts.
(h) To the knowledge of Seller, each producer who wrote,
sold or produced business for JANY was duly licensed as an
insurance agent (for the type of business written, sold or produced
by such producer) in the particular jurisdiction in which such
producer wrote, sold or produced such business. Except as otherwise
provided in Schedule 2.8(h) attached hereto, to the knowledge of Seller,
no insurance agent who wrote, produced or sold any portion
of the business of JANY for Seller violated in any material respect any
terms or provisions of any Law, except such violations as have been
(i) cured, (ii) resolved through agreements with applicable Governmental
Entities or (iii) are barred by an applicable statute of limitations.
(i) The treatment under the Internal Revenue Code of
1986, as amended, and any successor thereto (the "Code") of all
Insurance Contracts is no less favorable to the Policyholder
thereof than the treatment under the Code for which such Insurance
Contracts were intended to qualify at the time of their issuance,
except for any failure to qualify for such treatment that results
from (i) changes to the Code, regulations, pronouncements,
announcements or guidance issued in connection with the treatment
of the contracts under the Code which were enacted (or have an
effective date) after the Closing Date, (ii) amendments,
modifications, supplements, riders, endorsements or revisions to
the Insurance Contracts after the Closing Date or (iii) changes in
the manner in which the Insurance Contracts are administered after
the Closing Date.
Section 2.9. Permits, Licenses and Franchises. JANY is
licensed to issue life and health related insurance policies only
in the State of New York. JANY has been duly authorized by the New
York Department of Insurance to issue the Insurance Contracts that
it is currently writing, and was duly authorized to issue the
Insurance Contracts that it is not currently writing at the time
such Insurance Contracts were issued. Except as set forth on
Schedule 2.9 attached hereto, JANY has all Permits necessary to
conduct the Insurance Business as currently conducted by JANY.
Neither the ownership of its property or assets nor the business
conducted by JANY requires the qualification, registration, license
or admission in any jurisdiction outside the State of New York,
except where the failure to be so qualified, registered, licensed
or admitted, individually or in the aggregate, would not have a
Material Adverse Effect. All of the Permits
are in full force and effect and JANY has not received notice from
any Governmental Entity of its intention to revoke or not renew any
Permit, except for such failures to have Permits in full force and effect,
revocations, non-renewals and other events which do not and will
not, individually or in the aggregate, have a Material Adverse
Effect.
Section 2.10. Regulatory Filings. Seller has made available
for inspection by Purchaser all material registrations, filings and
submissions made by JANY with any Governmental Entity and final
financial and market conduct reports of examinations with respect
to JANY issued by any such Governmental Entity along with copies of
JANY's or Seller's responses thereto made or issued on or
subsequent to January 1, 1993. Except as listed on Schedule 2.10
attached hereto, JANY has filed all material reports, statements,
documents, registrations, filings or submissions (including without
limitation any marketing, advertising or sales material) required
to be filed by it with any Governmental Entity. Except as listed
on Schedule 2.10 attached hereto, (a) no material deficiencies have
been asserted by any such Governmental Entity with respect to such
registrations, filings or submissions that have not been satisfied;
(b) such registrations, filings or submissions were in material
compliance with applicable Law when filed; (c) since December 31,
1994, neither Seller nor JANY has submitted any written response
with respect to material comments from any Governmental Entity
concerning such filings, registrations, submissions or reports of
examination; (d) since December 31, 1992, no fine or penalty has
been imposed on JANY (or on Seller with respect to JANY) by any
Governmental Entity; and (e) no deposits have been made by JANY (or
by Seller with respect to JANY) with, or at the direction of, any
Governmental Entity which were not shown in the most recent Annual
Statement of JANY.
Section 2.11. Reinsurance. Schedule 2.11 sets forth all
reinsurance or co-insurance agreements (together with all other
agreements related thereto) to which JANY is a party related to the
Insurance Contracts, and all such contracts, arrangements,
treaties, understandings and agreements under which JANY has any
obligation to cede or assume insurance. All such agreements are
valid and binding against JANY and, to the knowledge of Seller the
other parties thereto, and are in full force and effect in
accordance with their terms and conform in all material respects to
all applicable Laws and neither JANY nor, to Seller's knowledge,
any other party thereto is in material default under any such
agreement. Except as otherwise provided on Schedule 2.11 attached
hereto, no party to any such agreement has audited Seller with
respect thereto.
Section 2.12. Absence of Certain Changes or Events. Except
as disclosed on Schedule 2.12 attached hereto or except as
expressly contemplated or required by this Agreement, since
December 31, 1995, (a) JANY has not, except in the ordinary course
of business, consistent with past practice, (i) engaged in any
material transaction, (ii) entered into any material agreement,
(iii) waived or released any material right or obligation or (iv)
incurred any indebtedness for borrowed money and (b) except as
disclosed on Schedule 2.12 attached hereto, there has not been,
occurred or arisen:
(i) any declaration, setting aside, or payment of
any dividend or other distribution in respect of the capital
stock of JANY, or any direct or indirect redemption, purchase
or other acquisition by JANY of any such stock or of any
interest in or right to acquire any such stock;
(ii) any issuance, sale or disposition by JANY of
any debenture, note, stock or other security issued by JANY,
or any material modification or amendment of
any right of the holder of any outstanding debenture, note,
capital stock or other security issued by JANY.
(iii) any Lien created on any of the assets of
JANY or assumed by JANY with respect to any of such assets
which Lien relates to liabilities individually or in the
aggregate exceeding $100,000 (but excluding Liens arising
through securities lending in the ordinary course of JANY's
business);
(iv) any prepayment of any liabilities (other than
pursuant to any Insurance Contract) individually or in the
aggregate exceeding $100,000;
(v) any liability involving the borrowing of money
by JANY individually or in the aggregate exceeding $100,000;
(vi) any damage, destruction or loss (whether or not
covered by insurance) affecting any of the assets of JANY
which damage, destruction or loss individually or in the
aggregate exceeds $100,000;
(vii) any work stoppage, strike, labor difficulty or
union organizational campaign (in process or threatened) at or
affecting JANY;
(viii) any payment, discharge or satisfaction by
JANY of any material Lien or liability other than material
Liens or liabilities that were paid, discharged or satisfied
in the ordinary course of business and consistent with past
practice;
(ix) any sale, transfer or conveyance of any
investments or other assets of JANY with an individual Book
Value in excess of $100,000, except in the ordinary course of
business and consistent with past practice;
(x) any amendment, termination, waiver, disposal or
lapse of, or other failure to preserve, any material license,
Permit or other form of authorization of JANY;
(xi) any amendment of, or any failure by JANY to
perform all of its obligations under, or any default under, or
any waiver of any right under, or any termination (other than
on the stated expiration date) of, any contract that involves
or reasonably would involve the annual expenditure or receipt
by JANY of more than $100,000 except for actions taken with
respect to Insurance Contracts (including, without limitation,
reinsurance thereon) in the ordinary course of business and
consistent with past practice;
(xii) any amendment of the articles or
certificate of incorporation or by-laws of JANY;
(xiii) any termination, amendment or entering
into by JANY as ceding or assuming insurer of any reinsurance,
coinsurance or other similar contract or any trust agreement
or security agreement related thereto, except as contemplated
hereby;
(xiv) any transaction or arrangement under which
JANY paid, loaned or advanced any amount to or in respect of,
or sold, transferred, or leased any of its assets or any
services to (i) any officer or director of Seller, JANY or any
Affiliate of Seller, (ii) any Affiliate of Seller or JANY, or
(iii) any business or other Person in which Seller, JANY, any
such officer or director, or any Affiliate of Seller or JANY
has any material interest, except transactions or arrangements
not exceeding $100,000 in the aggregate which are consistent
with past practice;
(xv) any material change in any underwriting,
actuarial, investment, financial reporting, marketing or
accounting practice or policy followed by JANY, or in any
assumption underlying such a practice or policy, or in any
method of calculating any bad debt, contingency or other
reserve for financial reporting or any other accounting
purposes other than as required by GAAP, SAP or applicable Law
and consistent with past practice;
(xvi) any expenditure or commitment for
additions to property, plant, equipment or other tangible or
intangible capital assets of JANY which exceed $100,000 in the
aggregate;
(xvii) any accruals or payments by Seller or JANY
or employer contributions under any employee benefit plan in
respect of employees of JANY, other than those in accordance
with the terms of such plans and consistent with past
practice;
(xviii) any increase in compensation outside the
ordinary course; or
(xix) any contract or agreement, written or
oral, to take any of the actions set forth in the preceding
clauses (i) through (xviii) of this Section 2.12.
Section 2.13. Computer Software and Other Intellectual
Property. Schedule 2.13 attached hereto sets forth a list of all
computer software programs and other intellectual property used by
JANY that Seller reasonably believes to be necessary to conduct the
Insurance Business as currently being conducted. Schedule 2.13
attached hereto also sets forth whether each such computer software
program is (i) owned by JANY or licensed by JANY and (ii) the title
of each licensing agreement pursuant to which JANY has the right to
use such licensed software. Schedule 2.13 attached hereto sets
forth each licensing agreement pursuant to which Seller has the
right to use such licensed software. To the knowledge of Seller,
JANY is not in conflict with or in violation or infringement of any
rights, asserted or otherwise, of any other Person with respect to
any owned software or licensed software or other intellectual
property, nor has Seller received any notice of any such conflict,
violation or infringement. JANY has the non-exclusive right to use
all such licensed software and other intellectual property.
Section 2.14. Contracts.
(a) Schedule 2.14 lists and briefly describes (including
the parties to and the date and subject matter of) each and every
contract, agreement, lease, license, commitment or arrangement to
which JANY is a party or which is binding upon JANY, except only
for those specifically listed in Schedules 2.8(b), 2.8(c), 2.8(f),
2.11, 2.12, 2.13, 2.18, 2.26, 2.27, 2.30, 2.31, 2.32(a) or 2.32(d)
attached hereto, attached hereto or those which may be terminated
by JANY without penalty or having a value to or imposing an
obligation upon JANY not in excess of $100,000 in the aggregate
annually.
(b) Schedule 2.14 hereto also identifies each contract
in force entered into by JANY in connection with or related to
JANY's business and operations within the following categories:
(i) all agency or consultation contracts other than
contracts terminable without penalty or other liability (other
than liabilities previously accrued thereunder) upon 90 days'
or less notice;
(ii) all contracts with any Person containing any
provision limiting the ability of JANY to engage in any
business or to compete with or to obtain products or services
from any Person or, to the knowledge of Seller, limiting the
ability of any Person to compete with or to provide products
or services to JANY;
(iii) all direct or indirect guarantees of any
obligation of JANY, or contracts for the provision for credit
support to JANY with respect to obligations to third parties,
by Seller or any of its Affiliates;
(iv) all contracts relating to the future
disposition or acquisition by JANY of any assets or of any
interest in any business enterprise (other than contracts
entered into in the ordinary course of business and consistent
with past practice);
(v) all outstanding proxies, powers of attorney or
similar delegations of authority (other than delegations of
authority for the service of process pursuant to applicable
insurance or corporate laws and other than such proxies,
powers of attorney or similar delegations of authority entered
into or made in the ordinary course of business and consistent
with past practice);
(vi) all contracts for the provision of
administrative, managerial or other services by or for JANY to
or from any other Person;
(vii) all partnerships, joint ventures, profit-
sharing or similar contracts;
(viii) all contracts relating to the borrowing of
money by JANY or to the direct or indirect guarantee by JANY
of any obligation for borrowed money in excess, individually
or in the aggregate, of $100,000 in respect of indebtedness of
any other Person, including without limitation any contract
relating to (i) the maintenance of compensating balances that
are not terminable by JANY without penalty or other liability
upon not more than 60 calendar days' notice, (ii) any line of
credit or similar facility, (iii) the payment for property,
products, or services of any other Person even if such
property, products or services have not yet been conveyed,
delivered or rendered or (iv) the obligation to take-or-pay,
keep-well, make-whole or maintain surplus or earnings levels
or perform other financial ratios or requirements; and
(ix) all leases or subleases of real property used
in the business, operations or affairs of JANY, and all other
leases, subleases, or rental or use contracts for which JANY
is liable.
(c) Except as set forth on Schedule 2.14 attached
hereto, each of the contracts listed on Schedule 2.14 is in full
force and effect and is legal, valid and binding on JANY and to
Seller's knowledge the other parties thereto, and is enforceable
against JANY and to Seller's knowledge the other parties thereto in
accordance with its terms, except to the extent that enforcement
thereof may be limited by or subject to applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general application relating to or affecting
creditors' rights and to general equity principles (other than
equitable rescission rights). Neither JANY nor, to Seller's
knowledge, any other party to such contract is in material
violation, breach or default of any such contract. There have been
delivered or made available to Purchaser true and complete copies
of all of the contracts set forth in Schedule 2.14 attached hereto.
Section 2.15. Statutory Financial Statements. Seller has
previously delivered to Purchaser true, complete and correct copies
of the audited statements of admitted assets, liabilities and
capital and surplus (statutory basis) of Seller as of December 31,
1993, 1994, and 1995, and the related summaries of operations,
statements of capital and surplus and cash flow (statutory basis)
for the years then ended, together with the notes related thereto.
Seller has previously delivered to Purchaser true, complete and
correct copies of the Annual Statements of JANY as filed with the
New York Department of Insurance, for the years ended December 31,
1993, 1994 and 1995, together with all attachments, exhibits and
schedules thereto and all affirmations and certifications filed
therewith and the actuarial opinions for such years. Seller
has previously made available to Purchaser for review (without the
right to remove or make copies) all auditors' work papers related
to the foregoing audited financial information. Seller has
previously delivered to Purchaser true, complete and correct copies
of the Quarterly Statements of JANY as filed with the New York
Department of Insurance, for the quarters ended March 31, 1996,
June 30, 1996 and September 30, 1996, together with all exhibits
and schedules thereto. Each such Annual Statement and Quarterly
Statement complied in all material respects with all applicable
Laws when so filed and was timely filed with all required
Governmental Entities. No material deficiencies have been
asserted or are otherwise known by Seller with respect thereto.
Each such financial statement (and the exhibits and schedules
relating thereto), including without limitation each statement of
assets, liabilities, surplus and other funds (statutory basis) of
Seller and each of the summaries of operations, statements of
capital and surplus and cash flow (statutory basis) contained in
the respective financial statement was prepared in accordance with
SAP applied on a consistent basis (except for changes, if any,
disclosed therein) and each such Annual Statement and Quarterly
Statement fairly presents (in accordance with SAP) the financial
condition of JANY as of the respective dates thereof, and its
results of operations or cash flows, as the case may be, for and
during the respective periods covered thereby (provided the
Quarterly Statements are subject to normal year end adjustments and
lack footnotes and other presentation items). There were no
material liabilities affecting JANY as of December 31, 1995
required in accordance with SAP to be reflected or disclosed in the
Annual Statement for the period then ended, or as of March 31,
1996, June 30, 1996 or September 30, 1996 required in accordance
with SAP to be reflected or disclosed in the Quarterly Statement
for the period then ended, which are not so reflected or disclosed
therein. JANY has not prepared any GAAP financial statements.
Section 2.16. JANY Capital Stock.
(a) The authorized capital stock of JANY consists of
360,000 shares of common stock, $20 par value per share, all of
which shares have been validly issued and are fully paid and are
outstanding and, subject to any liability imposed by Section 630 of
the New York Business Corporation Law, non-assessable. All such
shares were issued in compliance with applicable Laws. Such shares
are all of the shares of JANY Stock. Except for this Agreement,
there are no outstanding subscriptions, options, warrants, rights,
convertible or exchangeable securities, agreements or commitments
which obligate or require Seller or JANY to issue or sell any
shares of capital stock of JANY. JANY has no subsidiaries and does
not control, directly or indirectly, any other Person. JANY is not
a party to any joint venture or partnership arrangement and does
not own or control any interest in any other Person except in
connection with JANY's portfolio investments.
(b) The JANY Stock is owned beneficially and of record
by Seller free and clear of all Liens. Upon consummation of the
transactions contemplated hereby, good and valid title and interest
in and to the JANY Stock shall have been sold, assigned and
delivered to Purchaser free and clear of all Liens.
Section 2.17. Tax Matters.
(a) Except as set forth on Schedule 2.17 attached
hereto, all Tax Returns, required to be filed with respect to JANY
have been timely filed for all years and periods for which such Tax
Returns were due (taking into account all filing date extensions),
all Taxes due and payable for the periods covered by such Tax
Returns have been duly and timely paid, there are no outstanding
waivers or extensions of statutes of limitation with respect to any
Taxes required to be shown on any such Tax Return, and all required
estimated payments of Taxes
sufficient to avoid any penalties for underpayment have been made,
and, to the knowledge of Seller, there are no material misstatements
contained in any such Tax Return. To the knowledge of Seller, since
December 31, 1995, JANY has not incurred any liability with respect
to any Taxes, except in the ordinary course of the Insurance Business.
Except as set forth in Schedule 2.17 attached hereto, there are no
presently pending or, to the knowledge of Seller, threatened audits
or assessments by any federal, state or local taxing authority involving
material issues which pertain to JANY or any of the material properties
owned by JANY. There are no Liens with respect to Taxes (except for Liens
with respect to real property Taxes not yet delinquent) upon any of
the assets and properties of JANY. All federal income Taxes owed
by the affiliated group referred to in Section 2.17(g) hereof have
been paid for each taxable period during which JANY was a member of
such group, other than any unpaid Taxes that, if required to be
paid, would not have a Material Adverse Effect.
(b) With respect to any period through September 30,
1996 for which Tax Returns have not yet been filed, or for which
Taxes are not yet due or owing, JANY has made due and sufficient
current accruals for such Taxes in accordance with SAP and GAAP,
and such current accruals through such date are duly and fully
provided for in the financial statements of JANY for the period
then ended.
(c) The federal and state income and state premium Tax
Returns of JANY have not been audited or examined by the relevant
Governmental Entity, and the statute of limitations for the federal
and state income and premium Tax Returns for all periods through
the respective years specified in Schedule 2.17 attached hereto has
expired. Seller has previously delivered to the Purchaser copies,
which are true and complete in all material respects, of each of
(i) the most recent audit reports relating to the federal and state
income and state premium
Taxes due from JANY for the last three taxable years and (ii) the
federal and state income and state premium Tax Returns filed by JANY
for each of the last three taxable years, and Seller has made
available to Purchaser for inspection true and correct copies of
such Tax Returns (insofar as such returns relate to JANY) filed by
any affiliated, combined or consolidated group of which JANY was then
a member.
(d) No audit or other proceeding by any Governmental
Entity is pending or, to the knowledge of Seller, threatened with
respect to any Taxes due from JANY or any Tax Return filed by or
relating to JANY. To the knowledge of Seller, no assessment of Tax
has been formally proposed by any Governmental Entity, orally or in
writing, against JANY.
(e) JANY is not a party to, is not bound by and has no
obligation under, any tax sharing contract and, to the knowledge of
Seller, JANY does not have any liability for indemnification of
third parties with respect to Taxes or liabilities for Taxes as a
transferee.
(f) The insurance reserves set forth in the federal
income Tax Returns filed by or on behalf of JANY have been
determined in all material respects in accordance with section 807
or 846 of the Code, as applicable, and will be so determined in the
federal income Tax Return to be filed on behalf of JANY for the
period ending on the Closing Date.
(g) JANY is (and will continue to be on the Closing
Date) a member of the affiliated group that files consolidated
federal income Tax Returns with Seller.
Section 2.18. Real Property.
(a) Schedule 2.18 attached hereto identifies all real
property which is owned by or leased to JANY other than interests
arising under any Mortgage (the "Real Property"). JANY owns good
and indefeasible title to, or has a valid leasehold interest in,
free and clear of all Liens, all such Real Property currently used
in the conduct of its business or of a type
required to be disclosed in Schedule A of an Annual Statement if
owned by JANY. No improvement on any such Real Property owned by JANY
encroaches upon any real property of any other Person and there are no
physical, mechanical or structural defects therein. JANY owns,
leases or has a valid right under contract or otherwise to use
adequate means of ingress and egress to, from and over all Real
Property. JANY has not granted any rights of occupancy with
respect to the Real Property leased by it.
(b) (i) Neither JANY nor, to the knowledge of Seller,
any other Person has used any of the Real Property for the storage,
treatment, generation, transportation, manufacture, processing,
handling, production, distribution, deposit, burial, use, or
disposal of any Hazardous Substance which has created or might
create any liability of owners or occupants of the Real Property
under, or which would require reporting to a Governmental Entity
pursuant to, Environmental Laws; (ii) JANY has no liability arising
out of or resulting from a release of any Hazardous Substance on or
from any Real Property; (iii) JANY has complied in all material
respects with all applicable Environmental Laws relating to the
Real Property and the business, activities and processing conducted
thereon; (iv) no asbestos or PCB's are contained in or stored on
the Real Property or the improvements thereon; (v) no radon gas is
contained in any of such improvements; and (vi) there are no
storage tanks located in, on or under the Real Property.
Section 2.19. Owned Properties. JANY is the sole and
exclusive owner of, and has good and marketable title to, all of
the properties and assets owned by it, free and clear of all Liens
other than:
(i) those reflected in the June 30, 1996 interim
statutory financial statements of JANY, including, without
limitation, obligations with respect to the Insurance
Contracts;
(ii) liens for taxes, charges and assessments
imposed by any taxing authority which are not yet due and
payable or which are being contested in good faith by
appropriate proceedings;
(iii) mechanics', suppliers', installment sales
and similar liens for services rendered or materials
furnished, the charges for which are not yet due and payable
or which are being contested in good faith by appropriate
proceedings, and purchase money security interests and similar
security interests for goods purchased by JANY;
(iv) in the case of the Real Property and equipment,
defects or imperfections in title, liens, claims, easements or
rights, restrictions and encumbrances which do not materially
interfere with the use of such properties as presently used by
JANY or the conduct of the Insurance Business as presently
conducted by JANY; and
(v) Liens arising through securities lending in the
ordinary course of JANY's business.
Section 2.20. Pension and Other Employee Plans. Schedule
2.20 attached hereto lists all benefit plans and, without
duplication, all employee benefit plans and collective bargaining,
employment or severance agreements or other similar arrangements to
which JANY is a party or by which it is bound, legally or
otherwise, including without limitation (i) any profit-sharing,
deferred compensation, bonus, stock option, stock purchase,
pension, retainer, consulting, retirement, severance, welfare or
incentive plan, agreement or arrangement, (ii) any plan, agreement
or arrangement providing for "fringe benefits" or perquisites to
employees, officers, directors or agents, including but not limited
to benefits relating to JANY's automobiles, clubs, vacation, child
care, parenting, sabbatical, sick leave, medical, dental,
hospitalization, life
insurance and other types of insurance, (iii) any employment agreement,
or (iv) any other "employee benefit plan" within the meaning of ERISA).
Seller has delivered to Purchaser true and complete copies of all current
governing documents and summary plan descriptions with respect to such
plans, agreements and arrangements, or summary descriptions of any such
plans, agreements or arrangements not otherwise in writing. JANY is in
compliance with the applicable provisions of ERISA (as amended
through the date of this Agreement), the regulations and other
published regulatory authorities thereunder, and all other laws
applicable with respect to all benefit plans. JANY has performed
all of its obligations under all benefit plans. To the knowledge
of Seller, there are no Actions (other than routine claims for
benefits) pending or threatened against such benefit plans of their
assets, or arising out of such benefit plans, and, to the knowledge
of Seller, no facts exist which could give rise to any such
Actions. Other than as indicated on Schedule 2.20 attached hereto:
(a) JANY neither maintains, sponsors nor contributes to
any program or arrangement covering employees of JANY that is an
"employee pension benefit plan," an "employee welfare benefit
plan," or a "multi-employer plan" as such terms are defined in
Sections 3(2), 3(1) and 3(37), respectively, of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")
("ERISA Plans"), or any other incentive or benefit arrangement
("Non-ERISA Plans");
(b) No ERISA Plan (or any trust created thereunder) has
engaged in a "prohibited transaction" within the meaning of Section
406 of ERISA or Section 4975 of the Internal Revenue Code of 1986,
as amended (the "Code"), which could subject the Purchaser or JANY
to any tax penalty on prohibited transactions and which has not
adequately been corrected;
(c) Each ERISA Plan is in compliance with all material
reporting, disclosure and other requirements of the Code and ERISA
as they relate to any such ERISA Plan;
(d) Determination letters have been received from the
Internal Revenue Service with respect to each ERISA Plan which is
intended to comply with Code Section 401(a), stating that such
ERISA Plan is qualified thereunder;
(e) No ERISA Plan subject to Title IV of ERISA has been
terminated;
(f) No ERISA Plan has incurred any "accumulated funding
deficiency" as such term is defined in Section 302 of ERISA and
Section 412 of the Code (whether or not waived);
(g) No liability to the Pension Benefit Guaranty
Corporation (the "PBGC"), other than for premiums, has been
incurred with respect to any ERISA Plan;
(h) No proceeding or other action has been initiated by
the PBGC to terminate any ERISA Plan, nor has written notice been
given by the PBGC of an intention to commence or seek the
commencement of any such proceeding or actions; and
(i) JANY has not, within the last six years before the
Closing, completely or partially withdrawn from a "multi-employer
plan" covering its employees.
(j) Each ERISA plan has been duly authorized by the
Board of Directors of JANY. Each such plan is qualified in form
and operation under Section 401(a) of the Code and each trust under
each such plan is exempt from tax under Section 501(a) of the Code.
No event has occurred that will or could give rise to
disqualification or loss of tax-exempt status of any such plan or
trust under such sections. No event has occurred that will or
could subject any such plans to tax under Section 511 of the Code.
No nonexempt prohibited transaction (within the meaning of Section
4975 of the Code) or party-in-interest transaction (within the
meaning of Section 406 of ERISA) has occurred with respect to any
of such plans.
(k) Seller has delivered to Purchaser for each such plan
copies of the following documents: (i) the Form 5500 filed in each
of the three most recent plan years, including but not limited to
all schedules thereto and financial statements with attached
opinions of independent accountants, (ii) the most recent
determination letter from the IRS, (iii) the consolidated statement
of assets and liabilities of such plan as of its most recent
valuation date, and (iv) the statement of changes in fund balance
and in financial position or the statement of changes in net assets
available for benefits under such plan for the most recently ended
plan year. The financial statements so delivered fairly present
the financial condition and the results of operations of each of
such plans as of such dates, or for such periods in accordance with
GAAP.
(l) All group health plans of JANY and any ERISA
affiliate have been operated in compliance with the group health
plan continuation coverage requirements of Section 4980B of the
Code to the extent such requirements are applicable.
(m) There has been no act or omission by JANY or any
ERISA affiliate that has given rise to or may give rise to fines,
penalties, taxes, or related charges under Section 502(c) or (l) or
Section 4071 or ERISA or Chapter 43 of the Code.
Section 2.21. Labor Matters. JANY is not a party to any
representation or collective bargaining agreement with any
employees of JANY. There is no strike, slowdown, picketing, work
stoppage, labor trouble or other similar event in which employees
of JANY are participating or, to the knowledge of Seller, have
threatened to participate.
Section 2.22. Banks. Schedule 2.22 attached hereto sets
forth (a) the name, location and account number of each bank, trust
company, securities broker and other financial institution at which
JANY maintains an account, safe deposit box, lock box or vault or
maintains a banking,
custodial, trading or other similar relationship and (b) the name of
each individual authorized by JANY to effect transactions with respect
to such account, safe deposit box, lock box or vault.
Section 2.23. Reserves. Except as set forth in Schedule 2.23
attached hereto, all reserves with respect to Insurance Contracts
as established or reflected, and all other provisions made for
policy and contract claims with respect to Insurance Contracts
(collectively, "JANY Reserve Liabilities"), in the respective
Annual and Quarterly Statements were determined in accordance with
SAP and generally recognized actuarial methods and standards,
consistently applied, were fairly stated in accordance with sound
actuarial principles, using prescribed morbidity and mortality
tables and interest rates that are in accordance with the nature of
the benefits specified in the related Insurance Contracts of JANY,
and such JANY Reserve Liabilities and other provisions met the
applicable requirements of the insurance laws and regulations of
the State of New York. The JANY Reserve Liabilities as of October
21, 1996 have been calculated in the manner set forth on Schedule
2.23 attached hereto. Without limitation of the foregoing
sentence, to Seller's knowledge, adequate provision for all JANY
Reserve Liabilities has been made to cover the total amount of all
reasonably anticipated matured and unmatured benefits, claims and
other liabilities under all Insurance Contracts. JANY owns assets
that qualify as legal reserve assets under applicable Laws in an
amount at least equal to all such JANY Reserve Liabilities. Except
as described in Schedule 2.23(b) attached hereto, all reserves and
accrued liabilities for estimated losses, settlements, costs and
expenses from pending suits, actions and proceedings included in
JANY's most recent Quarterly Financial Statements filed with the
New York Department of Insurance were determined in accordance with
Statement of Financial Accounting Standards No. 5 issued by the
Financial Accounting Standards Board.
Section 2.24. Books and Records. The minute books of JANY
contain a true and complete record in all material respects of all
corporate actions taken at all meetings and by all written consents
in lieu of meetings of JANY's stockholder and Board of Directors
and all committees thereof. The stock record books of JANY reflect
accurately all transactions in its capital stock. The books,
files, reports, documents, plans and operating records of, or
maintained by Seller or JANY, and all other data in the possession
or control of Seller and of JANY and primarily relating to or
otherwise reasonably required for the operation of JANY's business
have been maintained in all material respects in accordance with
all applicable Laws.
Section 2.25. Threats of Cancellation. Except as set forth
in Schedule 2.25 attached hereto, since December 31, 1995 through
the date of this Agreement, no Policyholder, group of Policyholder
Affiliates, or Persons writing, selling or producing, either
directly or through reinsurance assumed, insurance business that
individually or in the aggregate for each such Policyholder, group
or Person, respectively, accounted for (i) 5% or more of the annual
premium or annuity income (as determined in accordance with SAP) or
(ii) 1% of account values of Seller and JANY, taken as a whole, in
each case at or for the 12 month period then ended, has terminated
or, to the knowledge of Seller, threatened to terminate its
relationship with JANY.
Section 2.26. Operations Insurance. Schedule 2.26 attached
hereto lists all casualty, liability, property and other similar
insurance contracts that insure the business, operations or affairs
of JANY or affect or relate to the ownership, use or operations of
any of JANY's assets (including, without limitation, the names of
the insurers and the type of coverage thereof) and (a) that have
been issued to JANY or (b) that are held by Seller or by any
Affiliate of Seller
(other than JANY) for the benefit of JANY. All such insurance policies
shall terminate as of the Closing Date.
Section 2.27. Intercompany Liabilities. Except as reflected
in the Annual or Quarterly Financial Statements of JANY filed with
the New York Department of Insurance, or disclosed in Schedule 2.27
attached hereto, there are no liabilities, contracts or commitments
between JANY on the one hand, and Seller or any Affiliate of
Seller, on the other. Except as disclosed in Schedule 2.27
attached hereto, during the period from June 30, 1996 to the date
hereof, no such intercompany liabilities have been paid and no
settlements of such intercompany liabilities have been made except
intercompany liabilities that have been paid or settled on a basis
consistent with the JANY's past practice or as provided in Section
2.12(xiv).
Section 2.28. Employee Loans. All loans issued by JANY to
any officer, director or employee of Seller or JANY are set forth
on Schedule 2.28 attached hereto. Except as set forth on Schedule
2.28 attached hereto, all such loans were issued in accordance with
commercially reasonable underwriting standards and there is no
default on any such loan.
Section 2.29. Credited Rates. JANY has complied and is in
compliance with all applicable contract provisions and Laws
associated with credited interest rates related to the Insurance
Contracts.
Section 2.30. Related Agreements. Each of the Related
Agreements is similar in all material respects to one of the forms
set forth on Schedule 2.30 attached hereto. Neither Seller nor
JANY knows of any Related Agreements other than those that gave
rise to the commissions listed in Schedule 2.30 attached hereto
concerning commissions payable on the Insurance Contracts. JANY is
not in breach of any of the Related Agreements and, to the
knowledge of Seller, none of the other parties to the Related
Agreements is in breach thereof.
Section 2.31. Third Party Administration Agreements.
Schedule 2.31 attached hereto lists all third party administration
agreements to which JANY is a party (the "Third Party
Administration Agreements"). The Third Party Administration
Agreements are valid and binding obligations of JANY, enforceable
against JANY in accordance with their terms, and to JANY's
knowledge, are valid and binding obligations of the other parties
thereto, enforceable against such other parties in accordance with
their terms. JANY is not in breach of any of such Third Party
Administration Agreements and, to the knowledge of Seller, none of
the other parties to such Third Party Administration Agreements is
in breach thereof.
Section 2.32. Mortgage Loans.
(a) Except as set forth on Schedule 2.32(a) attached
hereto, Seller is the holder of a first lien position on the
Mortgage Loans free and clear of any other Liens, except for with
respect to the Mortgaged Property or the mortgage related thereto
(a) the lien of current real property taxes and assessments, ground
rents, personal property taxes, water rates, water frontage charges
and/or meter charges, sewer taxes or rents and other similar
charges or assessments, in each case not yet due and payable, (b)
covenants, conditions and restrictions, rights of way, easements
and other matters of public record of a type acceptable to lending
institutions generally or specifically referred to in the title
insurance policy or title opinion issued in connection with the
original loan made with respect to the Mortgaged Property, (c)
mechanics' or similar liens or claims for work, labor and
materials, (d) zoning and other land use restrictions and
ordinances, including, without limitation, landmark, historic and
wetland designations, (e) rights of tenants under leases or other
rights of tenants or rights of other occupants of the premises with
or without the legal right to do so, (f) any state of facts an
accurate survey would show with respect to the Mortgaged Property,
(g) the failure of the
premises to comply with applicable occupancy Law or municipal violations
of record, (h) in the case where the Mortgaged Property is a condominium
unit, the lien of a condominium association on such Mortgaged Property
for unpaid maintenance or common expense assessments not yet due and
payable, (i) littoral or riparian rights, if any, (j) any right, title
or interest in any minerals, mineral rights or related matters including
but not limited to oil, gas, coal and other hydrocarbon whether or not
shown by the public records and, (k) the lien of any secondary
financing in each case, which do not materially impair the Mortgage
Loan ("Permitted Mortgage Liens"). As of the date specified
therein, the (i) loan number, (ii) loan class, (iii) lien priority,
(iv) borrower's name, (v) property address, (vi) outstanding
principal amount, (vii) book value, (viii) delinquency status, (ix)
status code, (x) current interest rate (or the method of
calculating same), (xi) service fee rate, (xii) net interest rate,
(xiii) maturity date and (xiv) percentage owned by JANY for each
Mortgage Loan are materially as set forth in the Mortgage Loan
Schedule. Except as set forth on Schedule 2.32(a) attached hereto,
the proceeds of each Mortgage Loan have been fully disbursed and
there are no future or additional advances to be made with respect
to any Mortgage Loans. Except as set forth on Schedule 2.32(a)
attached hereto, no Mortgage Loan has been delinquent for a period
of more than 30 days within the last 12 months in the payment of
any principal or interest thereon. Each Mortgage Loan is a
permitted investment for Minnesota life insurers under applicable
Law.
(b) With respect to each Mortgage Loan and any and all
Loan Documents relating thereto, to Seller's knowledge (i) each of
such Mortgage Loans and Loan Documents are the legal, valid, and
binding obligation of the mortgagor, obligor or the guarantor, as
applicable, and each is enforceable in accordance with its terms,
except as enforcement thereof may be limited by applicable
bankruptcy or insolvency Laws, provided that in this case, Seller
may rely upon borrower's closing counsel's opinion letter if
originated by Seller, or upon representations and warranties given
to Seller by another financial institution or entity if purchased
by Seller, or in the absence of either, without due inquiry or
investigation by Seller so long as Purchaser is assigned the
benefits of such opinions, representations or warranties, (ii) none
of such Mortgage Loans or Loan Documents is the subject of any
agreement, contract or other arrangement (other than this
Agreement) pursuant to which any interest in any Mortgage Loan or
any payment due under any Mortgage Loan or with respect to any
Mortgage Property has been or is intended to be sold, used as
collateral, transferred to or otherwise disposed of to any Person
or Persons by the original lender, subject to the participatory
interests of other lenders or investors as are set forth on
Schedule 2.32(b) attached hereto.
(c) With respect to each Mortgage Loan and any and all
Loan Documents relating thereto, the mortgagor does not have a
valid defense to the payment in full of such Mortgage Loan that
arises from applicable Laws and such Mortgage Loan is not subject
to any right of rescission, set-off, abatement, diminution or
counterclaim, except in any case as such right or defense may be
provided by bankruptcy, insolvency, reorganization or other similar
Laws affecting the enforcement of creditors' rights generally and
by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
(d) None of the terms of any Loan Documents relating to
any Mortgage Loan have been waived, amended or modified in any
respect, except as set forth on the Mortgage Loan Schedule and
except for such waivers, amendments and modifications as do not
adversely affect (i) any mortgagor's, obligor's or guarantor's
obligation to pay principal, interest or other sums required
(including the timing of such payments) to be paid under such Loan
Documents, (ii) Seller's Liens against the Mortgage Property
securing the Mortgage Loan or (iii) the
enforceability in a timely manner of such Liens. Except as set forth
in the Mortgage Loan Schedule, no Mortgage Loan has been satisfied,
subordinated or rescinded, in whole or in part except (i) upon full
payment of the underlying loan or, in the case of a partial release,
in connection with the receipt of an independent third party MAI
self-contained appraisal evidencing that there is sufficient collateral
(which for this purposes shall mean no more than 80% loan to value)
remaining with respect to such Mortgage Loan or (ii) as a result of a final
judgment or its equivalent of a condemnation or eminent domain
proceeding which does not materially impair the Mortgaged Property
or Mortgage Loan. Except as set forth on Schedule 2.32(d) attached
hereto, no mortgagor, obligor nor any guarantor listed on the
Mortgage Loan Schedule in respect of any Mortgage Loan has been
released, in whole or in part except in accordance with the terms
of the Note and Mortgage except in the case of a partial release
either (i) as a result of a written loan modification or assumption
agreement or (ii) if, prior to the release of any mortgagor,
obligor or guarantor, a determination was made by Seller that (A)
such mortgagor, obligor or guarantor was insolvent or deemed to
have a lack of ability to make any material contribution with
respect to the outstanding Mortgage Loan debt and (B) that the
remaining mortgagor, obligor or guarantor was able to repay the
outstanding Mortgage Loan debt, in either case such that the
release of any mortgagor, obligor or guarantor would not have a
material adverse impact on the repayment of the Mortgage Loan.
(e) None of the Mortgage Loans are cross-collateralized
with any other mortgage loan except for another Mortgage Loan other
than a cross-collateralization which does not have a material
adverse impact on the repayment of the Mortgage Loan.
(f) The Mortgage File with respect to each Mortgage Loan
contains all of the Loan Documents relating to each such Mortgage
Loan, including, but not limited to, all
documents described on Exhibit D and all such documents are true,
complete and correct copies of the documents they purport to be.
Except as set forth on Schedule 2.32(f) attached hereto, the Mortgage
Loan Files contain the original promissory notes and/or other evidence
of indebtedness (including all amendments thereto) and the originals of
all credit enhancements, if any, as applicable.
(g) With regard to the Mortgaged Property relating to
any Mortgage Loan, to the knowledge of Seller no material amount of
Hazardous Substances has been disposed of or identified on, under
or at such Mortgaged Property the presence of which is either in
violation of Law or would, under applicable Laws, require (or
permit any Governmental Entity to require) removal or remediation
of such Hazardous Substance, except to the extent that removal or
remediation has occurred or will occur prior to the Closing Date
and except as would not materially affect the Mortgaged Property or
the repayment of the Mortgaged Loan.
(h) To the knowledge of Seller, there is no pending or
threatened condemnation proceeding affecting any Mortgaged
Property, or any part thereof, which could have an adverse effect
upon the current use of such Mortgaged Property.
(i) To the knowledge of Seller, there is no pending or
threatened Action relating to such Mortgage Loan affecting the
Mortgaged Property relating to such Mortgage Loan which would have
a material and adverse effect upon such Mortgage Loan.
(j) Seller has received no written notice (i) of any
material violation of any Law which is a direct result of the
maintenance, operation, occupancy, or use of any of the Mortgaged
Property related to such Mortgage Loan, in its present manner such
that the violation would materially adversely affect the operation,
occupancy or other use of such Mortgaged Property and (ii) that any
material Permits and approvals required by Governmental Entities
having jurisdiction over the operation of such Mortgaged Property
in its present manner have not been performed, issued or paid for
or are not in full force and effect.
(k) With respect to each Mortgage Loan, (i) each
Mortgage is covered by a title insurance policy or where customary
an opinion of title from a law firm in such jurisdiction, insuring
or opining that the Mortgage creates the first priority Lien it
purports to create and that the Mortgage is not subject to any
defect or encumbrance except Permitted Mortgage Liens, (ii) no
claims have been made by Seller or, to Seller's knowledge, any
other Person under any title policy relating to any Mortgage Loan,
(iii) there has been no act or omission by Seller, or to Seller's
knowledge, any party holding an interest in any title policy
(including without limitation any failure to pay the premiums
therefor) that creates sufficient grounds for the defense by the
title insurer of any claims by the insured or that otherwise limits
the title insurer's liability under any title policy relating to
any Mortgage Loan and (iv) there has been no act or omission by
Seller, or to Seller's knowledge, any party holding an interest in
any title policy that has caused a subordination of the priority of
any Lien as insured under any title policy relating to any Mortgage
Loan. Seller is the insured under any title policy relating to any
Mortgage Loan, either by name, endorsement or by virtue of being
the successor to the original named insured lender. Seller is
either the sole insured or a participant insured in those Mortgage
Loans in which the Seller does not hold 100% of the first Lien.
(l) Except as set forth on Schedule 2.32(l) attached
hereto, there are no delinquent real estate taxes in respect of any
Mortgage Property except as set forth on the Mortgage Loan Schedule
or any deficiency in any obligor's obligations to pay amounts into
escrow (other than in the case of escrows where property taxes have
been increased in the past 12 months).
(m) If upon origination the Mortgaged Property relating
to such Mortgage Loan was in an area identified in the Federal
Register by the Federal Emergency Management Agency as having
special flood hazards (and the flood insurance described below is
available), a flood insurance policy meeting the requirements of
the current guidelines of the Federal Insurance Administrator, if
available, is in effect with a generally acceptable insurance
carrier, in an amount representing coverage not less than the
lesser of (i) the unpaid principal balance of such Mortgage Loan,
(ii) the full insurable value of such Mortgaged Property or (iii)
the maximum amount of insurance available under the Flood Disaster
Protection Act of 1973.
(n) A hazard insurance policy with a standard mortgagee
clause is in effect with respect to each Mortgage Loan (other than
a Mortgage Loan secured solely by unimproved land), in an amount
representing coverage not less than the lesser of (i) the unpaid
principal balance of such Mortgage Loan or (ii) the full insurable
value of the Mortgaged Property relating to such Mortgage Loan.
(o) All servicing contracts related to the Mortgage
Loans originated by JANY are terminable at the election of JANY at
termination fees that are no greater than customary termination
fees paid in accordance with industry practice.
Section 2.33. No Waiver of Defenses. JANY has not waived any
defenses, claims or Actions which would have been available to JANY
under the Insurance Contracts or the Related Agreements.
Section 2.34. GAAP Financial Statements. On or prior to the
date hereof, JANY has delivered to Purchaser true, correct and
complete copies of (a) the audited consolidated balance sheets of
Xxxx Xxxxx Financial Corporation ("Xxxx Xxxxx") and its
subsidiaries as of December 31, 1995 and 1994, prepared in
accordance with GAAP, together with the notes thereon and the
related report of Price Waterhouse the independent certified public
accountant of Xxxx Xxxxx, and (b) the audited consolidated
statements of income, stockholders' equity and cash flows of Xxxx
Xxxxx and its subsidiaries for the years ended December 31, 1995,
1994 and 1993 prepared in accordance with GAAP, together with the
notes thereon and the related report of Price Waterhouse
(collectively, the "Xxxx Xxxxx Financial Statements"). JANY has
delivered to Purchaser true, correct and complete copies of the
consolidated balance sheets, and the related consolidated
statements of income, stockholders' equity and cash flows of Xxxx
Xxxxx and its subsidiaries for the quarters ended March 31, 1996,
June 30, 1996 and September 30, 1996, prepared in accordance with
GAAP (the "Interim Xxxx Xxxxx Financial Statements"). The Xxxx
Xxxxx Financial Statements and the Interim Xxxx Xxxxx Financial
Statements are based on the books and records of Xxxx Xxxxx and its
subsidiaries and have been prepared in accordance with GAAP
consistently applied (except in the case of the Interim Xxxx Xxxxx
Financial Statements for normal year end adjustments). The Xxxx
Xxxxx Financial Statements have been audited by Price Waterhouse.
The Xxxx Xxxxx Financial Statements and the Interim Xxxx Xxxxx
Financial Statements fairly present in all material respects the
consolidated financial position and results of operations of Xxxx
Xxxxx and its subsidiaries as of the dates and for the periods
indicated therein.
For purposes of this Article 2, references to the knowledge of
Seller means, after reasonable inquiry, the actual knowledge of the
officers of Seller having the title of Senior Vice President or
higher.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
Section 3.1. Organization and Standing. Purchaser is a
corporation duly organized and validly existing under the Laws of
the State of Arizona. Purchaser has all corporate power and
authority necessary or required by Law to own, lease and operate
its assets, properties and business and to carry on the operations
of its business as currently conducted by it.
Section 3.2. Authorization. Purchaser has all corporate
power and authority necessary to execute, deliver and perform its
obligations under this Agreement. Purchaser is duly licensed,
qualified or admitted to do business and is in good standing in all
jurisdictions in which it is required to be so qualified, licensed
or admitted to do business by the Laws thereof, except where the
failure to so qualify, be admitted or licensed, individually or in
the aggregate is not reasonably likely to have a Material Adverse
Affect on Purchaser. The execution and delivery by Purchaser of
this Agreement, and the performance by Purchaser of its obligations
hereunder, have been duly authorized by all necessary corporate and
shareholder actions on the part of Purchaser. This Agreement, when
executed by the Parties, will constitute a valid and binding
obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, except insofar as enforceability may be
limited by bankruptcy, insolvency, moratorium or other Laws which
may affect creditors' rights and remedies generally and by
principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
Section 3.3. Actions and Proceedings. Except as disclosed
on Schedule 3.3 attached hereto, (a) there are no outstanding
Orders by or with any court, arbitrator or Governmental Entity
before which Purchaser or any of its material Affiliates is or was
a party that, individually or in the aggregate, have a Material
Adverse Effect on Purchaser, and (b) there are no Actions pending or, to
Purchaser's knowledge, threatened against Purchaser or any of its material
Affiliates which, if adversely determined, would, individually or in the
aggregate, have a Material Adverse Effect on Purchaser.
Section 3.4. No Conflict or Violation. Except as disclosed
on Schedule 3.4 attached hereto, the execution, delivery and
performance by Purchaser of this Agreement in accordance with the
terms and conditions hereof do not and will not (a) violate any
provision of the charter, by-laws or other organizational document
of Purchaser, in each case, as amended to date, (b) violate,
constitute a default under, or result in the breach, cancellation
or termination of, accelerate the performance required under, or
result in the creation of any Lien upon any of the assets of
Purchaser, pursuant to, any mortgage, deed of trust, guaranty,
note, indenture, bond, lease, agreement or other instrument to
which Purchaser is a party or by or to which it or any of its
assets may be bound, (c) violate any Order of any court, arbitrator
or Governmental Entity against, or binding upon, or any agreement
with, or condition imposed by, any court, arbitrator or
Governmental Entity binding upon Purchaser or any of such assets,
(d) violate any Law or (e) result in the breach of any of the terms
or conditions of, constitute a default under, or otherwise cause an
impairment or revocation of, any Permit related to Purchaser's
business.
Section 3.5. Consents and Approvals. Except as required
under the HSR Act or as set forth on Schedule 3.5 attached hereto,
no consent, approval, exemption or authorization is required to be
obtained from, no notice is required to be given to and no filing
is required to be made with any third party (including, without
limitation, Governmental Entities of competent jurisdiction) by
Purchaser in order (a) for this Agreement and the Transition
Services Agreement to constitute a valid and binding obligation of
Purchaser, (b) to authorize or permit the consummation of the
transactions contemplated hereby by Purchaser or (c) to authorize
or permit Purchaser to conduct the business of JANY after the
Closing.
Section 3.6. Brokerage and Financial Advisers. No broker,
finder or financial adviser has acted directly or indirectly as
such for, or is entitled to any compensation from, Purchaser in
connection with this Agreement or the transactions contemplated
hereby, except Xxxxxxx Xxxxx & Company, whose fees for services
rendered in connection with such transactions will be paid by
Purchaser.
Section 3.7. GAAP Financial Statements. On or prior to the
date hereof, Purchaser has delivered to Seller true, correct and
complete copies of (a) the audited consolidated balance sheets of
SunAmerica Inc. ("SunAmerica") and its subsidiaries as of December
31, 1995 and 1994, prepared in accordance with GAAP, together with
the notes thereon and the related report of Price Waterhouse, the
independent certified public accountant of SunAmerica, and (b) the
audited consolidated statements of income, stockholders' equity and
cash flows of SunAmerica and its subsidiaries for the years ended
December 31, 1995, 1994 and 1993, prepared in accordance with GAAP,
together with the notes thereon and the related report of Price
Waterhouse (collectively, the "SunAmerica Financial Statements").
Purchaser has delivered to Seller true, correct and complete copies
of the consolidated balance sheets, and the related consolidated
statements of income, stockholders' equity and cash flows of
SunAmerica and its subsidiaries for the quarters ended March 31,
1996 and June 30, 1996, prepared in accordance with GAAP (the
"Interim Purchaser Financial Statements"). The SunAmerica
Financial Statements and the Interim Purchaser Financial Statements
are based on the books and records of SunAmerica and its
subsidiaries, and the SunAmerica Financial Statements have been
prepared in accordance with GAAP consistently applied, audited by
Price Waterhouse and fairly present in all material respects the
consolidated financial position and results of operations of
SunAmerica and its subsidiaries as of the dates and for the periods
indicated therein.
Section 3.8. Statutory Financial Statements. Purchaser has
furnished to Seller true, complete and correct copies of the Annual
Statements of Purchaser as filed with the Arizona Department of
Insurance for the years ended December 31, 1995, 1994 and 1993,
together with all attachments, exhibits and schedules thereto and
all affirmations and certifications filed therewith and applicable
actuarial opinions for such years. Purchaser has furnished to
Seller true, complete and correct copies of the Quarterly
Statements of Purchaser as filed with the Arizona Department of
Insurance for the quarters ended March 31, 1996 and June 30, 1996,
together with all attachments, exhibits and schedules thereto and
all affirmations and certifications filed therewith and no further
amendments thereto are being considered. Each such Annual
Statement and Quarterly Statement complied in all material respects
with all applicable Laws when so filed and were timely filed with
all required Governmental Entities. No material deficiencies have
been asserted or are otherwise known by Purchaser with respect
thereto. Each such Annual Statement and Quarterly Statement was
prepared in accordance with SAP applied on a consistent basis
(except for changes, if any, disclosed therein) and fairly presents
(in accordance with SAP) the financial condition of Purchaser as of
the respective dates thereof or its results of operations or cash
flows, as the case may be, for and during the respective periods
covered thereby, (provided the Quarterly Statements are subject to
normal year end adjustments and lack footnotes and other
presentation items). There were no material liabilities affecting
Purchaser as of December 31, 1995 required in accordance with SAP
to be reflected or disclosed in the Annual Statement for the period
then ended, or as of March 31, 1996 or June 30, 1996 required in
accordance with SAP to be reflected or disclosed in the Quarterly
Statement for the period then ended, which are not so reflected or
disclosed therein.
Section 3.9. Rating. As of the date hereof, the Standard &
Poor's Corporation Claims - Paying Ability Rating of Purchaser is
AA- and the Xxxxx'x Investor Service, Inc. Financial Strength
rating of Purchaser is A2. Purchaser's A.M. Best & Co. rating is
A+ (superior) and its Duff & Xxxxxx rating is AA.
Section 3.10. Investment Intent and Acknowledgement.
Purchaser is purchasing the JANY Stock for its own account and not
with a view toward, or for resale in connection with, any
distribution thereof. Purchaser acknowledges that it and its
representatives and advisors have had the opportunity to ask
questions of and receive answers from Seller, JANY and their
representatives to the extent that Purchaser and its
representatives and advisors have deemed necessary and appropriate
and to review all written documentation and other information
requested by them, for the purpose of evaluating JANY, the purchase
of the JANY Stock and the transactions contemplated by this
Agreement, the Ancillary Agreements and the agreements contemplated
hereby and thereby. In entering into this Agreement and in
purchasing the JANY Stock, Purchaser has relied solely upon its own
due diligence, its knowledge of the industry in which the Insurance
Business is conducted and the representations and warranties of
Seller expressly set forth in this Agreement, and not upon any
other representations, warranties or statements of any kind;
provided, however, that such diligence and knowledge shall not be
deemed a waiver by Purchaser of any of its rights with respect to
the representations and warranties of Seller.
For purposes of this Article 3, references to the knowledge of
Purchaser means, after reasonable inquiry, the actual knowledge of
officers of Purchaser having the title of Senior Vice President or
higher.
ARTICLE 4
PRE-CLOSING COVENANTS
Section 4.1. Conduct of Business.
(a) Prior to the Closing, Seller shall, and shall cause
JANY to, unless Seller shall receive the prior written consent of
Purchaser:
(i) operate the business of JANY as presently
operated and only in the ordinary course and consistent with
past practice (including but not limited to past underwriting
standards and investment philosophies) subject however to such
changes as may be required by changes in applicable Laws or
contemplated by this Agreement; and
(ii) use commercially reasonable efforts to preserve
its relationship with and the goodwill of its brokers,
customers, suppliers, employees and other Persons having
business dealings with Seller and/or JANY in connection with
its business.
(b) Without limiting the generality of the foregoing,
Seller will or will cause JANY to:
(i) use commercially reasonable efforts to (A)
maintain all licenses, qualifications and authorizations
necessary for JANY to do business in the State of New York,
(B) maintain in full force and effect all material contracts,
documents and arrangements set forth in Schedule 2.14 hereof,
(C) maintain all of JANY's material assets and properties in
good working order and condition, ordinary wear and tear
excepted, (D) continue all current marketing and selling
programs relating to JANY's business in accordance with its
current marketing plan and (E) maintain each rating
classification assigned to JANY as of the date hereof by
insurance rating agencies.
(ii) cause the books and records of JANY to be
maintained in the usual manner and consistent with past
practice and not permit a material change in any underwriting,
investment, actuarial, financial reporting or accounting
practice or policy of JANY or in any assumption underlying
such a practice or policy, or in any method of calculating any
bad debt, contingency or other reserve for financial reporting
purposes (including without limitation any practice, policy,
assumption or method relating to or affecting the
determination of insurance or annuities in force, premium or
investment income, JANY Reserve Liabilities or operating
ratios with respect to expenses, losses or lapses) except as
may be required by a change in GAAP, SAP or Law.
(iii) (A) prepare and file all Tax Returns
required to be filed by JANY prior to or on the Closing Date
and (B) pay all Taxes indicated on such Tax Returns or
otherwise due and payable prior to or on the Closing Date,
unless such Taxes are being contested in good faith and
adequate reserves have been established on the books and
records of JANY.
(iv) (A) cause all JANY Reserve Liabilities with
respect to Insurance Contracts established or reflected in the
books and records of JANY to be (1) established or reflected
on a basis consistent with those JANY Reserve Liabilities and
reserving methods followed by JANY in the preparation of its
December 31, 1995 Annual Statement filed with the New York
Department of Insurance and (2) adequate to cover the total
amount of all reasonably anticipated matured and unmatured
benefits, dividends, losses, claims, expenses and other
liabilities of JANY under all Insurance Contracts pursuant to
which JANY has or will have any liability (including without
limitation any liability arising under or as a result of any
reinsurance, coinsurance or other similar
contract); and (B) cause JANY to continue to own assets that
qualify as legal reserve assets under all applicable Laws in an
amount at least equal to the JANY Reserve Liabilities.
(v) use commercially reasonable efforts to maintain
in full force and effect until the Closing substantially the
same levels of coverage for JANY as the insurance afforded
under the contracts listed in Schedule 2.26 attached hereto
and cooperate with Purchaser, at Purchaser's cost and expense,
to obtain additional or carry-on insurance with respect to
JANY after the Closing. Any and all benefits under the
contracts listed in Schedule 2.26 attached hereto paid or
payable prior to the Closing with respect to the business,
operations, affairs or assets and properties of JANY shall be
paid or payable to JANY.
(vi) cause JANY to continue to administer the
Insurance Contracts (including surrenders) in the ordinary
course, consistent with past practice.
(vii) cause JANY to continue to comply with all
Laws applicable to its business, operations or affairs, except
for such failures to comply as would not, individually or in
the aggregate, have a Material Adverse Effect.
(viii) cause JANY to invest current and future
cash assets in high grade public corporate bonds (NAIC 1 or 2)
designated by Purchaser on the first Business Day of each week
or, if Purchaser does not make such a designation, in
Qualified Investments and provide Purchaser with weekly
reports showing the above investments in the form prepared by
JANY in the ordinary course of its business.
(c) Unless otherwise provided in this Agreement, Seller
will prevent JANY, without the approval of Purchaser, which
approval shall not be unreasonably withheld, from and after the
date hereof until the Closing, from:
(i) selling, assigning, transferring, mortgaging,
pledging, leasing, granting or permitting to exist any Lien on
or otherwise disposing of any assets which are material to
JANY's business, taken as a whole, as presently conducted,
other than with respect to investment and portfolio assets in
the ordinary course of business, consistent with past
practice;
(ii) increasing the rates of compensation (including
bonuses) payable or to become payable to any officer,
employee, agent, independent contractor or consultant of JANY;
(iii) except in the ordinary course of business
consistent with past practice, incurring any obligation,
liability or indebtedness, incurring any extraordinary losses,
or disposing of, canceling, waiving or permitting to lapse any
rights of material value;
(iv) changing in any material respect its accounting
principles or practices (including, without limitation, any
changes in depreciation or amortization policies or rates or
any changes in any assumptions underlying any method of
calculating reserves) other than as required by a change in
GAAP, SAP or Law;
(v) except as disclosed herein, entering into or
amending or terminating any transaction or contract that could
reasonably be expected to have a Material Adverse Effect;
(vi) splitting, combining, redeeming, repurchasing
or reclassifying the capital stock of JANY or declaring,
setting aside, making or paying any dividend or other
distribution in respect of the capital stock of JANY;
(vii) issuing or selling (or agreeing to issue
or sell) any note, debenture, stock, or other security or any
options, warrants, conversion or other rights to purchase any
such securities or any securities convertible into or
exchangeable for such securities or granting, or agreeing to
grant, any such options;
(viii) amending the articles of incorporation or
bylaws or other charter or organizational documents of JANY;
(ix) except in the ordinary course of business
consistent with past practice, terminating, amending or
executing any material reinsurance, coinsurance or other
similar contract, as ceding or assuming insurer related to the
Insurance Contracts;
(x) settling any intercompany account or
obligations between Seller (or any of its Affiliates) and
JANY; or
(xi) entering into any contract or agreement to do
any of the foregoing;
Section 4.2. Certain Transactions. From the date of this
Agreement through the Closing, neither Seller, JANY nor any of
their respective directors or officers will (nor will Seller permit
its investment bankers or legal counsel to) solicit, encourage,
engage in or initiate any negotiations or discussions with, or
provide any information to, or otherwise cooperate in any other
manner with, any Person or group (other than Purchaser and its
Affiliates) concerning any sale, coinsurance, reinsurance,
replacement or other disposition, directly or indirectly of the
business of JANY or JANY's capital stock (except in the case of
coinsurance or reinsurance, for performance of obligations under
the reinsurance agreements listed on Schedule 2.11).
Section 4.3. Investigations. From the date hereof through
the Closing Date, Purchaser shall be entitled, through its counsel,
actuaries and other employees and Representatives, to make such
investigation of the assets, liabilities, business and operations
of JANY, and such examination of the books and records of JANY, as
Purchaser may reasonably request, including, without limitation,
for the purpose of investigating the financial condition, service
quality and operations of JANY. Any investigation, examination or
interview by Purchaser of employees of Seller and JANY shall be
conducted at reasonable times upon reasonable prior notice; and
each of the Parties and its officers, employees and
representatives, including, without limitation, counsel, investment
bankers and independent public accountants, shall cooperate with
the other's employees and representatives, as the case may be, in
connection with such review and examination; provided, however,
that such examination shall not be deemed a waiver by Purchaser of
any of its rights with respect to the representations and
warranties of Seller.
Section 4.4. HSR Act Filings. Seller and Purchaser shall,
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
the other agreements contemplated hereby, and will use their
respective reasonable 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 government or regulatory agency, including, without limitation,
any filings necessary under the provisions of the HSR Act.
Section 4.5. Consents and Reasonable Efforts. Seller and
Purchaser shall, and Seller will cause JANY to, cooperate and use
their commercially reasonable efforts to obtain all consents,
approvals and agreements of, and to give and make all notices and
filings with, any Governmental Entities, necessary to authorize,
approve or permit the consummation of the transactions contemplated
by this Agreement and the other agreements contemplated hereby.
Seller shall, and Seller will cause JANY to, use its commercially
reasonable efforts to obtain all approvals and consents to the
transactions contemplated by this Agreement as set forth on
Schedule 2.5 attached hereto. Purchaser will use its commercially
reasonable efforts to obtain all approvals and consents to the
transactions contemplated by this Agreement as set forth on
Schedule 3.5 attached hereto, if any. In addition, if required by
the New York Department of Insurance as a condition to consummation
of the transactions contemplated hereby, Purchaser shall cause JANY
to be merged at or after the Closing with another insurance company
Affiliate of Purchaser.
Section 4.6. Representations and Warranties. From the date
hereof through the Closing Date, (a) Seller shall use its
reasonable efforts to conduct its affairs, and to cause JANY 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 2 shall continue to be true,
complete and correct in all material respects on and as of the
Closing Date as if made on and as of the Closing Date, (b)
Purchaser shall use its reasonable efforts to conduct its affairs
in such a manner so that, except as otherwise contemplated or
permitted by this Agreement, the representations and warranties as
to Purchaser contained in Article 3 shall continue to be true
and correct in all material respects on and as of the Closing Date as
if made on and as of the Closing Date, (c) Seller shall notify
Purchaser promptly of any event, condition or circumstance known to
Seller occurring from the date hereof through the Closing Date that
would constitute a violation or breach of this Agreement by Seller
and (d) Purchaser shall notify Seller promptly of any event,
condition or circumstance known to Purchaser occurring from the
date hereof through the Closing Date that would constitute a
violation or breach of this Agreement by Purchaser.
Section 4.7. Financial Statements and Reports.
(a) At the time of filing with the New York Department
of Insurance, Seller will deliver to the Purchaser true and
complete copies of each Annual Statement and Quarterly Statement
filed by JANY after the date hereof and on or prior to the Closing.
(b) From and after the date hereof and through the
Closing Date, Seller shall continue to prepare in the ordinary
course of business consistent with past practice and shall deliver,
as soon as available, to Purchaser, true and complete copies of
customarily prepared internal management information reports
(including financial statements, reports, and analyses prepared by
or for Seller or JANY) prepared by or for Seller and as relate to
any of the business, operations, or affairs of JANY, including
without limitation normal internal reports which Seller or JANY
prepares (such as those reflecting weekly net production,
surrenders, head count and claims and monthly cash flow and
operations expense) but excluding any statements, reports or
analyses prepared in connection with any analyses of the
transaction contemplated in this Agreement. Without limiting the
foregoing, Seller will provide to Purchaser weekly a list of the
portfolio securities held by Seller, which reflects the market
value and book value thereof
(monthly) and any changes from the immediately preceding week (weekly),
including without limitation, weekly maturities, prepayments, sales,
redemptions or similar events.
Section 4.8. Transfer Real Estate Owned. On or prior to the
Closing Date, Seller shall cause JANY to transfer to Seller or its
Affiliates all real estate owned (excluding leasehold interests) by
JANY (on an as is-where is basis, with no representations or
warranties) in exchange for a cash payment by Seller to JANY equal
to the book value of such real estate owned on the date of
exchange.
Section 4.9. Stay-on Bonus. Seller, and not JANY, will pay
any stay-on bonus to JANY employees announced on or before the
Closing Date.
ARTICLE 5
CONDITIONS PRECEDENT TO THE OBLIGATION OF PURCHASER TO CLOSE
The obligations of Purchaser to consummate the
transactions contemplated hereby are, unless waived by Purchaser in
accordance with Section 11.4 hereof, subject to the fulfillment, at
or before the Closing, of each of the following conditions:
(i) No Law or Order of a court, arbitrator or
Governmental Entity of competent jurisdiction shall be in
effect which prohibits, restricts or enjoins, and no Action
shall be pending or threatened which seeks to prohibit,
restrict, enjoin, nullify, seek material damages with respect
to or otherwise materially adversely affect, the consummation
of the transactions contemplated by this Agreement.
(ii) The applicable waiting period under the HSR
Act, including all extensions thereof, shall have expired or
been terminated and Purchaser shall have been
furnished with appropriate evidence, reasonably satisfactory to
it, of such expiration or termination.
(iii) All Permits, consents and waivers required
from all Governmental Entities legally required to consummate
the Closing and to perform this Agreement and the Transition
Services Agreement and to consummate the transactions
contemplated herein and thereby shall have been obtained and
shall be in full force and effect and Purchaser shall have
been furnished with appropriate evidence, reasonably
satisfactory to it, of the granting of such Permits, consents
and waivers.
(iv) All necessary consents to the transactions
contemplated by this Agreement and the Transition Services
Agreement shall have been obtained including, without
limitation, those listed on Schedule 2.5 attached hereto, if
any.
(v) Except for such changes as may be permitted or
required pursuant to the terms hereof, the representations and
warranties of Seller set forth in Article 2 hereof shall be
true and correct in all material respects on and as of the
Closing with the same effect as though such representations
and warranties had been made on and as of the Closing, except
that any such representations and warranties that are given as
of a specified date and relate solely to a specified date or
period shall be true and correct only as of such date or
period.
(vi) Seller shall have performed and complied with
all covenants and agreements required to be performed or
complied with by Seller under this Agreement prior to or
concurrently with the Closing in all material respects.
(vii) Purchaser shall have received all
certificates and other documents required to be delivered to
Purchaser at or before the Closing pursuant to this Agreement
duly executed by all necessary Persons (other than Purchaser).
(viii) Purchaser shall have received the Closing
deliveries described in Section 1.3 hereof.
(ix) The transactions contemplated by this Agreement
shall have been approved by the New York Insurance Department.
(x) Purchaser and Seller shall have previously or
concurrently closed the transactions contemplated by the Asset
Purchase Agreement.
(xi) Since December 31, 1995, there shall not have
occurred any event or events or state of facts that
individually or in the aggregate has or could reasonably be
expected to have a Material Adverse Effect; provided, however,
that for purposes of this subclause (xi), events or facts
which affect the insurance or annuity industry generally
(e.g., a change in general economic or market conditions, a
change in tax Law or a change in insurance Law), shall not be
included in determining whether a Material Adverse Effect has
occurred.
ARTICLE 6
CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER TO CLOSE
The obligations of Seller to consummate the transactions
contemplated hereby are, unless waived by Seller in accordance with
Section 11.4 hereof, subject to the fulfillment, at or before the
Closing, of each of the following conditions:
(i) No Law or Order of a court, arbitrator or
Governmental Entity of competent jurisdiction shall be in
effect which prohibits, restricts or enjoins, and no Action
shall be pending or threatened which seeks to prohibit,
restrict, enjoin, nullify, seek material damages with respect
to or otherwise materially adversely affect, the consummation
of the transactions contemplated by this Agreement.
(ii) The applicable waiting period under the HSR
Act, including all extensions thereof, shall have expired or
been terminated and Seller shall have been furnished with
appropriate evidence, reasonably satisfactory to it, of such
expiration or termination.
(iii) All Permits, consents and waivers required
from all Governmental Entities legally required to consummate
the Closing and to perform this Agreement and the Transition
Services Agreement and to consummate the transactions
contemplated hereby and thereby shall have been obtained and
shall be in full force and effect and Seller shall have been
furnished with appropriate evidence, reasonably satisfactory
to it, of the granting of such Permits, consents and waivers.
(iv) All necessary consents to the transactions
contemplated by this Agreement and the Transition Services
Agreement shall have been obtained, including, without
limitation, those listed on Schedule 3.5 attached hereto.
(v) Except for changes as may be permitted or
required pursuant to the terms hereof, the representations and
warranties of Purchaser set forth in Article 3 hereof shall be
true and correct in all material respects on and as of the
Closing with the same effect as though such representations
and warranties had been made on and as of the Closing, except
that any such representations and warranties that are given as of a
specified date and relate solely to a specified date or period
shall be true and correct only as of such date or period.
(vi) Purchaser shall have performed and complied
with all covenants and agreements required to be performed or
complied with by Purchaser under this Agreement prior to or
concurrently with the Closing in all material respects.
(vii) Seller shall have received all certificates
and other documents required to be delivered to Seller at or
before the Closing pursuant to this Agreement duly executed by
all necessary Persons (other than Seller and JANY).
(viii) Seller shall have received the Closing
deliveries described in Sections 1.3 and 1.4 hereof.
(ix) The transaction contemplated by this Agreement
shall have been approved by the New York Insurance Department.
(x) Purchaser and Seller shall have previously or
concurrently closed the transactions contemplated by the Asset
Purchase Agreement.
(xi) Since December 31, 1995 there shall not have
occurred any event or events or state of facts that
individually or in the aggregate has or could reasonably be
expected to have a Material Adverse Effect on Purchaser;
provided, however, that for purposes of this subclause (xi),
events or facts which affect the insurance or annuity industry
generally (e.g., a change in general economic or market
conditions, a change in tax Law or a change in insurance Law),
shall not be included in determining whether a Material
Adverse Effect on Purchaser has occurred.
ARTICLE 7
POST-CLOSING COVENANTS
Section 7.1. Continued Access and Cooperation.
(a) Following the Closing Date, Seller shall (i) allow
Purchaser, upon reasonable prior notice and during regular business
hours, through its employees and other Representatives, at
Purchaser's expense, to examine and make copies of any books and
records retained by Seller within its possession or control
("control" for the purpose of this Section 8.1(a) being defined as
the ability to cause delivery to Seller or access by Purchaser), to
the extent they relate to JANY or the Insurance Business, for any
reasonable business purpose, including, without limitation, the
preparation or examination of Tax Returns, regulatory filings and
financial statements and the conduct of any Action, whether pending
or threatened, concerning the conduct of JANY or the Insurance
Business prior to the Closing Date at Seller's offices or other
facilities or properties and (ii) maintain such books and records
for Purchaser's examination and copying. Access to such books and
records shall be at Purchaser's expense and may not unreasonably
interfere with Seller's or any successor company's business
operations and Purchaser shall reimburse Seller for all reasonable
out-of-pocket expenses incurred by Seller in copying such records.
Seller shall retain such books and records for a period of at least
seven years (extended by a period equal to any extension of the
statute of limitations with respect to tax matters with respect to
which such books and records are necessary and of which Purchaser
shall notify Seller), after which time such books and records shall
be delivered to Purchaser.
(b) Following the Closing Date, Purchaser shall (i)
allow Seller, upon reasonable prior notice and during regular business
hours, through its employees and other Representatives, at Seller's
expense, to examine and make copies of the books and records of
JANY for any reasonable business purpose relating to Seller's prior
ownership of JANY, including, without limitation, the preparation or
examination of Tax Returns, regulatory filings and financial statements
and the conduct of any Action or the conduct of any regulatory, contract
holder, participant or other dispute resolution whether pending or
threatened at Purchaser's offices or other facilities or properties,
and (ii) maintain such books and records for Seller's examination and
copying. Access to such books and records shall be at Seller's expense
and may not unreasonably interfere with Purchaser's or any successor
company's business operations and Seller shall reimburse Purchaser for all
reasonable out-of-pocket expenses incurred by Purchaser in copying
such books and records. Purchaser shall retain such books and
records for a period of at least seven years (extended by a period
equal to any extension of the statute of limitations with respect
to tax matters with respect to which such books and records are
necessary and of which Seller shall notify Purchaser).
Section 7.2. Further Assurances.
(a) Upon the terms and subject to the conditions herein
provided, each of Seller and Purchaser shall use all commercially
reasonable efforts to take or cause to be taken, all actions or do,
or cause to be done, all things or execute or cause to be executed
any documents necessary, proper or advisable under applicable Laws
to consummate and make effective the transactions contemplated by
this Agreement, the Transition Services Agreements and the other
agreements contemplated hereby and thereby.
(b) On and after the Closing Date, Seller and Purchaser
shall take all commercially reasonable action and execute any additional
documents, instruments or conveyances of any kind (not containing
additional representations and warranties) and give all notices and obtain
all consents, approvals and Orders of Governmental Entities and other third
parties which may be necessary to carry out any of the provisions hereof,
including, without limitation, putting Purchaser in full possession and
operating control of JANY.
Section 7.3. Expenses. Except as otherwise specifically
provided in this Agreement and the Transition Services Agreement,
the Parties shall bear their respective expenses incurred in
connection with the preparation, execution and performance of this
Agreement, the Transition Services Agreement and the transactions
contemplated hereby and thereby, including, without limitation, all
fees and expenses of their respective Representatives; provided,
however, that Purchaser shall bear (a) the cost of the filing fees
in connection with the filings with the FTC and the Antitrust
Division under the HSR Act with respect to the transactions
contemplated hereby (which expense shall be borne equally by Seller
and Purchaser if separate filings are required with respect to the
transactions contemplated by this Agreement and the transactions
contemplated by the JALIC Asset Purchase Agreement), and (b) the
cost of obtaining required insurance regulatory approvals (other
than any approvals that relate solely to Seller), from regulatory
authorities.
Section 7.4. Tax Indemnification and Other Tax Matters.
(a) Seller shall be liable for, shall pay to the
relevant Tax Authorities, and shall indemnify and hold JANY and
Purchaser harmless against, (i) all Taxes that relate to (A) with
respect to any taxable period that commences prior to the Closing
Date, but ends on or after the Closing Date, the portion of the
taxable period that commences on the first day of such taxable
period and continues up to and including the Closing Date (the
"Pre-Closing Straddle Period"), and (B) any other taxable period
ending on or before the Closing Date, (ii) any Tax liability
arising under Treasury Regulation section 1.1502-6 or equivalent
state law provision as a result of JANY being included in a
consolidated, combined or unitary federal or state income
or franchise Tax Return prior to the Closing Date, (iii) federal
income and state Taxes required to be paid by or on behalf of JANY
as a result of the Section 338(h)(10) Election (and any equivalent
state law election) (as herein defined), if made pursuant to
Section 7.4(g) hereof, (iv) any Tax liability arising as a result
of JANY ceasing to be a member of the affiliated group of Seller
for purposes of Section 1504 of the Code and (v) Taxes incurred by
Purchaser or JANY as a result of a breach of a representation by
Seller set forth in Section 2.17 hereof or a failure on the part of
Seller to comply with the covenants and undertakings set forth in
this Section 7.4, including Seller's covenant to join in making the
Section 338(h)(10) Election, if so directed by Purchaser pursuant
to Section 7.4(g) hereof, provided that such failure does not
result from any act or omission on the part of Purchaser or, after
the Closing Date, JANY. The federal income Taxes described in
Section 7.4(a)(iii) above shall be calculated by comparing (x)
JANY's actual liability for federal income Taxes for the taxable
period in which the "deemed asset sale" resulting from the Section
338(h)(10) Election is reported to (y) the liability for federal
income Taxes that JANY would have had for such period had the
Section 338(h)(10) Election not been made. The state Taxes
described in Section 7.4(a)(iii) above shall mean JANY's actual
liability for state income or other Taxes payable to the State of
New York or any other state or local Tax jurisdiction arising from
the "deemed asset sale" or other consequences resulting from the
Section 338(h)(10) Election (and any state law equivalent or any
election that is deemed to result from the filing of the Section
338 (h)(10) Election).
(b) Except as provided in Section 7.4(a) or Section 9.4
hereof, Purchaser and JANY shall be liable for, shall pay to the
appropriate Tax Authorities, and shall hold Seller harmless against
all Taxes that relate to (i) with respect to any taxable period
that commences prior to the Closing Date but ends after the Closing
Date, the portion of the taxable period that
commences on the first day after the Closing Date and continues up to
and including the last day of such taxable period (the "Post-Closing
Straddle Period") and (ii) any taxable period that begins after the Closing
Date.
(c) Whenever it is necessary for purposes of this
Section 7.4 to determine the liability for Taxes of JANY for a
taxable period that begins before and ends after the Closing Date,
the determination shall be made by assuming that JANY had a taxable
year which ended at the close of business on the Closing Date,
except that exemptions, allowances or deductions that are
calculated on an annual basis (such as the deduction for
depreciation) shall be apportioned on a time basis.
(d) Except to the extent provided in this Section
7.4(d), JANY's participation under the tax allocation agreement
among the Houston National Life Insurance Company consolidated
group ("Tax Allocation Agreement") shall be terminated as of the
Closing Date. After the date hereof, JANY shall continue to make
Tax payments to Seller pursuant to the Tax Allocation Agreement
("Tax Allocation Payments") and appropriate estimated tax payments
to the State of New York in respect of taxable periods described in
Section 7.4(a)(i) above; provided, however, the computation of such
payments shall not take into account (and Seller shall indemnify
JANY against) any Taxes described in Section 7.4(a) (ii), (iii),
(iv) and (v) above. At the time a consolidated federal income Tax
Return that includes JANY for a taxable period described in Section
7.4(a)(i) hereof is filed, (i) Purchaser shall pay (or cause JANY
to pay) to Seller the amount by which (x) the amount of Tax to be
reported on such Tax Return that pertains to JANY, exclusive of any
Taxes described in Section 7.4(a) (ii), (iii), (iv) and (v) above
("JANY's Adjusted Tax Return Liability") exceeds (y) the total Tax
Allocation Payments previously made by JANY in respect of the
taxable period covered by such Tax Return
("JANY's Total Tax Allocation Payments"), and (ii) Seller shall pay
to Purchaser or JANY the amount by which JANY's Total Tax Allocation
Payments exceeds JANY's Adjusted Tax Return Liability, as well as any other
amounts required to be paid to JANY pursuant to the Tax Allocation
Agreement with respect to the taxable period covered by the Tax
Return. At the time any state or local Tax Return of JANY is filed
that pertains to a taxable period described in Section 7.4(a)(i)
hereof or that covers Taxes described in Section 7.4(a)(iii)
hereof, Seller shall pay to Purchaser or JANY so much of the Tax
liability of JANY to be reported on such Tax Return that relates to
Taxes described in Section 7.4(a)(ii), (iii) and (v) hereof. Any
payments required to be made by Seller or Purchaser pursuant to the
preceding two sentences shall also include interest, if any,
commencing on the due date (without extensions) of the Tax Return
in question at an annual rate equal to the one year LIBOR rate in
effect on such due date plus 25 basis points. Any disputes
regarding the calculation of any payments required to be made
pursuant to this Section 7.4(d) shall be resolved pursuant to the
procedure set forth in Section 1.6 above. Except for the payments
permitted or required to be made by Purchaser or JANY pursuant to
this Section 7.4(d), nothing contained herein shall in any way
affect Seller's indemnification obligations pursuant to Section
7.4(a) hereof, including with respect to any subsequently
determined deficiencies in Tax arising in respect of any Tax Return
covering a period described in Section 7.4(a)(i) hereof.
(e) In the event that Seller or JANY is or becomes
entitled to or receives any refund of Taxes attributable to JANY in
respect of the Pre-Closing Straddle Period or any other taxable
period ending on or prior to the Closing Date, (i) Purchaser, JANY
and Seller shall cooperate with each other and take all reasonable
actions necessary to obtain such refund and (ii) the amount thereof
plus any interest related thereto, shall be (A) the property of
(and paid over to) Seller (but net of any Taxes imposed on JANY
with respect thereto) if it relates to a Tax period or portion
thereof ending on or before June 30, 1996 and was not reflected as
an asset or used to reduce the accrual for Taxes, on the Financial
Statement for the period ended June 30, 1996, and (B) JANY in all
other cases.
(f) (i) Seller shall prepare and timely file (or
provide to Purchaser for filing, if applicable) all Tax Returns
required or permitted by applicable Law to be filed by JANY (or by
Seller on its behalf) with respect to periods ending on or before
the Closing Date. Seller shall cause JANY to close its books as of
the Closing Date in compliance with the requirements of Treasury
Regulation 1.1502-76(b) and any similar state or local Law. If the
Closing Date shall not occur at the end of a calendar month,
Seller, with Purchaser's written consent, which will not be
unreasonably withheld, shall be permitted to ratably allocate the
calendar month's items of income and expense in accordance with
Regulation Section 1.1502-76(b)(2)(iii). Purchaser and JANY shall
(A) cooperate with Seller for the purpose of making any election
under applicable Law to permit JANY to file any short period Tax
Return for the taxable period ending on the Closing Date and (B)
provide access to all relevant books and records for purposes of
preparing such Tax Returns. Unless otherwise required by
applicable Law and disclosed in writing to Purchaser by Seller in
advance of the filing of the relevant Tax Return, any Tax Return to
be prepared by Seller pursuant to this Section 7.4(f) shall be
prepared on a basis consistent with past practice and shall not be
prepared in a manner calculated to accelerate or defer any income
or deductions into any taxable period in order to achieve a result
favorable to Seller and detrimental to Purchaser as a result of the
transactions contemplated by this Agreement. Purchaser shall be
given the opportunity to review any such Tax Return not less than
30 days prior to the due date for the filing of such return with
the relevant Governmental
Entity, and Seller shall consult with Purchaser in good faith with
respect to any issues that Purchaser may have regarding such Tax
Return. Purchaser shall have the right to approve (which approval
will not be unreasonably withheld) any position taken in such Tax Return
that affects Purchaser's or JANY's liability for Tax Allocation Payments
or estimated Tax payments pursuant to Section 7.4(d) hereof or Taxes
described in Section 7.4(b) hereof. Unless required by applicable Law,
Seller shall not file an amended Tax Return for JANY without Purchaser's
consent if such amendment would cause or increase JANY's liability
for any Taxes described in Section 7.4(b) hereof.
(ii) Purchaser shall file or cause to be filed when
due all Tax Returns with respect to Taxes that are required to be
filed by or with respect to JANY for taxable years or periods
ending after the Closing Date. With respect to any such Tax Return
that covers a Pre-Closing Straddle Period, a copy of such Tax
Return shall, to the extent permitted by applicable law, be
prepared on a basis consistent with past practices of JANY and
shall be provided to Seller within 30 days prior to the due date
(including extensions) for the filing thereof. Seller shall have
the right to approve (which approval shall not be unreasonably
withheld) such Tax Return to the extent it would require an
indemnification payment by Seller pursuant to Section 7.4(a)
hereof. Unless required by applicable law, Purchaser shall not
file an amended Tax Return for JANY without Seller's written
consent if such amendment would cause or increase Seller's
indemnification obligations pursuant to Section 7.4(a) hereof.
(g) At Purchaser's request, Seller will join with
Purchaser in making a timely election pursuant to Section
338(h)(10) of the Code (the "338(h)(10) Election"), and any
equivalent election in any state or states that Purchaser may
designate, with respect to the purchase and sale of JANY Stock
contemplated by this Agreement. For purposes of determining
the "deemed sales price", as defined in Regulation Section
1.338(h)(10)-(f) for purposes of this Section 7.4(g), the
liabilities of JANY shall be equal to the amount of such
liabilities for Federal income tax purposes as of the Closing Date.
Purchaser shall have the initial responsibility for the timely
preparation of IRS Form 8023-A, and all supporting statements,
schedules, and required information applicable thereto (including
an allocation of the purchase price to the assets of JANY), and
such Form 8023-A, statements, schedules, and information (the "Form
8023-A Package") shall be submitted to Seller for its review no
later than 120 days after the Closing Date. Within 30 days after
the receipt by Seller of the Form 8023-A Package, Seller shall
notify Purchaser of any objections or proposed changes. If Seller
has no objections or proposed changes or if Purchaser and Seller
agree on the resolution of all objections or proposed changes,
Purchaser and Seller shall promptly file Form 8023-A and the
relevant attachments with the IRS via certified mail with return
receipt requested. As soon as practicable thereafter, Purchaser
and Seller shall furnish to each other a photocopy of such
certificate of mailing and return receipt. If Seller and Purchaser
shall fail to reach an agreement with respect to any objection or
proposed change within 180 days following the Closing Date, then
any disputed objection(s) or proposed change(s) shall be submitted
for resolution to the national offices of Price Waterhouse LLP or,
if such firm refuses or is unable to undertake such matter, such
other public accounting firm as Purchaser and Seller shall mutually
agree (the "Resolution Accountant"). Purchaser and Seller shall
use reasonable efforts to cause a report of the Resolution
Accountant to be rendered within 10 Business Days of its
appointment, and the Resolution Accountant's determination as to
the appropriateness and extent of changes (if any) to the Form
8023-A Package shall be final and binding. The fees and
disbursements of the Resolution Accountant's with respect to making
such determination shall be borne one-half by
Seller and one-half by Purchaser. Promptly after such determination,
Purchaser and Seller shall file Form 8023-A and the relevant attachments
with the IRS in accordance with the procedure described above. Purchaser
and Seller agree to file their respective tax returns, reports and
forms, including IRS Form 8023-A, in a manner consistent with the
finalized Form 8023-A Package.
(h) Purchaser or JANY shall promptly (i) notify Seller
of the commencement of any claim, audit, examination or other
proposed change or adjustment by any Governmental Entity concerning
any Taxes for which Seller may be responsible under Section 7.4(a)
hereof (a "Tax Claim") and (ii) furnish Seller with copies of any
correspondence received from any Governmental Entity in connection
with such Tax Claim. Seller shall promptly (i) notify Purchaser or
JANY of the commencement of any claim, audit, examination or other
proposed change or adjustment by any Governmental Entity concerning
any Tax for which Purchaser or JANY may be responsible under
Section 7.4(b) hereof and (ii) furnish Purchaser or the JANY with
copies of any correspondence received from any Governmental Entity
in connection with such claim. Notwithstanding the foregoing, no
failure or delay in giving any notice described above shall relieve
Seller of its obligations under this Section 7.4 except, and only
to the extent, that it is prejudiced thereby.
(i) At its election, Seller may contest or settle any
Tax Claim in any legally permissible manner at its sole cost and
expense and, upon Seller's payment of such Taxes to the relevant
Governmental Entity, may xxx for a refund thereof. Seller shall
control all correspondence, responses and proceedings related to
any such contest or refund suit, and may pursue or forego any
administrative proceedings, appeals or litigation in respect of
such Tax Claim. Purchaser and JANY, as appropriate, will cooperate
fully, provide access to all books
and records, and will take all lawful action in connection with such
contest or refund suit as Seller may reasonably request. Seller shall
keep Purchaser and JANY, as appropriate, regularly apprised of the
progress of any such contest or refund suit. In the event that such
contest or refund suit may reasonably be expected to increase materially
the liability of JANY for Taxes described in Section 7.4(b) hereof, or
increase JANY's obligation to make payments pursuant to Section
7.4(d) hereof dealing with tax sharing agreements, if any hereof,
Seller shall consult with Purchaser in good faith as to any
considerations that Purchaser may have regarding such contest or
refund suit. If, during the course of an audit, the IRS proposes
an adjustment to the purchase price allocation reflected in the
Form 8023-A Package as ultimately approved by Seller or determined
by the Resolution Accountant pursuant to Section 7.4(g) hereof,
Seller shall (i) use its reasonable best efforts to defend in good
faith such purchase price allocation in the course of the audit,
(ii) keep Purchaser apprised of the progress of the audit, (iii)
give Purchaser and JANY an opportunity to participate, at their own
expense, in contesting the proposed adjustment to the purchase
price allocation and (iv) obtain Purchaser's approval of any
proposed settlement of the issues, which approval shall not be
unreasonably withheld.
(j) In the event that Seller does not elect to contest
a Tax Claim pursuant to Section 7.4(i) hereof, Purchaser or JANY
may (but shall not be required to) contest such claim for the
account of Seller, in which case (i) Seller shall have the right to
review and approve in advance any correspondence or responses sent
to any Governmental Entity by or on behalf of the JANY with respect
to any Tax Claim and to participate in any subsequent
administrative proceedings, appeals and litigation, if any, and
(ii) Purchaser and JANY, as appropriate, shall provide access to
all relevant books and records. Purchaser and JANY, as
appropriate, shall keep Seller regularly apprised of the progress
of any such contest, proceedings, appeals or
litigation. In the event that Purchaser or JANY elects to contest
such claim, Purchaser and JANY shall indemnify and hold harmless Seller
for any Tax liability in excess of the amount of the Tax liability that
would have arisen under the settlement that Seller was willing to
accept and which Seller has disclosed to Purchaser and JANY in
writing in advance of such election.
(k) In the event that, for any tax period ending after
the Closing Date, JANY recognizes a loss or becomes entitled to a
credit that may be carried back to a taxable period of JANY during
which it was included in Seller's consolidated federal income Tax
Return or any combined or unitary Tax Return that includes Seller
or its Affiliates, such carryback shall be made only with Seller's
written consent; provided that Seller shall consent to such
carryback, shall cooperate in the filing of any required returns or
claims for refund and shall pay Purchaser any Tax refund received
or the amount of reduction in Taxes so obtained (net of any tax or
other cost incurred by Seller in connection therewith) if Seller,
in its reasonable discretion, determines that permitting such
carryback or filing such returns or claims will not materially
adversely affect Seller or its Affiliates.
Section 7.5. Employee Plans. With respect to the Xxxx Xxxxx
Retirement Plan of Seller (the "Pension Plan") and the Xxxx Xxxxx
Employee Savings Incentive Plan of Seller (the "401(k) Plan"),
Purchaser and Seller agree as follows:
(a) Pension Plan. Effective as of the Closing, JANY
employees with accrued benefits under the Seller's Pension Plan
will be offered, subject to any required spousal consent rules, the
right to receive the value of such accrued benefits in a lump sum.
(b) 401(k) Plan. Assets held by Seller in Seller's
401(k) Plan on behalf of all Employees, at each such Employee's
option, will be transferred as soon as practicable after the
Closing to the trustees of a qualified plan maintained by Purchaser
or its Affiliates (if permitted)
or retained in Seller's 401(k) Plan (subject to rights of Employees
with respect thereto). Any assets transferred will be transferred in
accordance with the provisions of Seller's and Purchaser's 401(k) Plans.
Section 7.6. Non-Discriminatory Treatment of Policyholders.
Except as otherwise provided in the Indemnity Reinsurance Agreement
between Seller and Purchaser dated concurrently herewith, from and
after the Closing Date Purchaser shall use all commercially
reasonable efforts to cause JANY to provide, at all times and from
time to time, to the Policyholders under the Insurance Contracts
crediting rates and renewal rates and standards of policyholder
service and administration which are no less than those provided to
other policyholders of insurance or annuity contracts issued,
coinsured or reinsured by Purchaser or its Affiliates of a similar
type and nature (including without limitation factors such as issue
date, actual and anticipated lapse rates and surrender charge
periods and other relevant features and market conditions) as the
Insurance Contracts. Purchaser will use commercially reasonable
efforts to include a provision substantially similar to this
Section 7.6 in any agreement for the sale, transfer or bulk
reinsurance of all or substantially all of the Insurance Contracts.
Section 7.7. Change of Name. Purchaser will use
commercially reasonable efforts to cause the name of JANY to be
changed prior to December 31, 1997 to a name that does not include
the phrase "Xxxx" or "Xxxxx" or any variant thereof or any name
substantially similar to Xxxx Xxxxx. As soon as practicable after
obtaining the approval of the New York Department of Insurance to
a change of name, the policies sold under the "Xxxx Xxxxx" name
shall be endorsed with the new name of JANY. Seller hereby grants
to Purchaser a license to use the "Xxxx Xxxxx" name: (i) until such
time as the name change has been approved; and (ii)
thereafter, but only for the limited purpose of referring to JANY as
being formerly known under its prior name.
ARTICLE 8
TERMINATION; SURVIVAL
Section 8.1. Termination of Agreement. Notwithstanding
anything contained herein to the contrary, this Agreement may be
terminated:
(a) or at any time prior to the Closing, by mutual
written consent of Seller and Purchaser;
(b) by written notice by Purchaser to Seller if there
has been a material breach by Seller of any of the representations,
warranties, agreements or covenants of Seller set forth herein
which is not subject to cure prior to the Closing, or a failure of
any other condition not subject to cure prior to the Closing to
which the obligations of Purchaser are subject;
(c) by written notice by Seller to Purchaser if there
has been a material breach by Purchaser of any of the
representations, warranties, agreements or covenants of Purchaser
set forth herein which is not subject to cure prior to the Closing,
or a failure of any other condition not subject to cure prior to
the Closing to which the obligations of Seller are subject;
(d) at any time after April 30, 1997 (the "Termination
Date") and prior to the Closing, by Purchaser by written notice to
Seller, if (A) the Closing shall not have been consummated on or
before the Termination Date and (B) the failure to consummate the
Closing on or before the Termination Date did not result from the
failure by Purchaser to perform or comply with any covenant or
agreement contained in this Agreement required to be performed or
complied with prior to the Closing by Purchaser;
(e) at any time after the Termination Date and prior to
the Closing, by Seller by written notice to Purchaser, if (i) the
Closing shall not have been consummated on or before the
Termination Date and (ii) the failure to consummate the Closing on
or before the Termination Date did not result from the failure by
Seller to perform or comply with any covenant or agreement
contained in this Agreement required to be performed or complied
with prior to the Closing by Seller; or
(f) subject to Section 7.2 hereof, by written notice to
Purchaser or Seller to the other, at any time after a Governmental
Entity having jurisdiction over Purchaser or Seller has notified
such Party that it will not provide an approval, consent or Order
necessary for the terminating Party to consummate the transactions
contemplated by this Agreement or the Ancillary Agreements and the
Parties cannot subsequently procure such approval, consent or Order
using their respective commercially reasonable efforts.
Section 8.2. Effect of Termination. In the event that this
Agreement shall be terminated pursuant to Section 8.1, all further
obligations of the parties under this Agreement shall terminate
without further liability of either Party to the other; provided
that the obligations of the parties contained in Section 7.3
(Expenses), Article 10 (Confidentiality) and Article 11
(Miscellaneous) shall survive any such termination. A termination
under Section 8.1 shall not relieve any Party of any liability for
a breach of, or for any misrepresentation under, this Agreement, or
be deemed to constitute a waiver of any available remedy (including
specific performance if available) for any such breach or
misrepresentation.
ARTICLE 9
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
Section 9.1. Survival of Representations.
(a) The representations and warranties of Purchaser set
forth in Article 3 hereof shall survive the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby for a period of 21 months
following the Closing Date; provided, however, that the
representations contained in Section 3.1 (Organization, Standing
and Authority of Purchaser), and 3.2 (Authorization) shall survive
until the expiration of all applicable statutes of limitations
(including all periods of extension, whether automatic or
permissive).
(b) The representations and warranties of Seller set
forth in Article 2 hereof shall survive the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby for a period of 21 months
following the Closing Date; provided, however, that the
representations contained in Sections 2.1 (Organization, Standing
and Authority of JANY and Seller), 2.2 (Authorization), 2.16 (JANY
Capital Stock), 2.17 (Tax Matters) and 2.21 (Pension and Other
Employee Plans) shall survive until the expiration of all
applicable statutes of limitations (including all periods of
extension, whether automatic or permissive), and Sections 2.18
(Real Property) (paragraph (b) only) and 2.32 (Mortgages)
(paragraph (g) only) will survive until the fifth anniversary of
the Closing Date.
(c) No Action may be commenced by any Person with
respect to any claim arising out of or relating to such warranties
or representations after the expiration of the period for which
such representations and warranties shall survive pursuant to this
Section 9.1 (the "Applicable Survival Period"); provided, however,
that, subject to this Article 9, any Person
shall have the right to commence a suit, action or proceeding after
the expiration of the Applicable Survival Period with respect to
claims arising out of or relating to such representations and
warranties which shall have been asserted by such Person under Section
9.4 hereof before the expiration of the Applicable Survival Period.
Section 9.2. Indemnification by Purchaser and JANY.
(a) Subject to Sections 7.4, 9.1, the following
provisions of this Section 9.2 and 9.4 hereof, Purchaser shall
indemnify Seller and its Affiliates (other than JANY after the
Closing) (collectively, the "Seller Group") for, and shall hold it
harmless from, any and all damages, claims, suits, actions, causes
of action, proceedings, investigations, losses, liabilities,
assessments, judgments, deficiencies and expenses (including,
without limitation, reasonable legal, accounting and other
professional expenses) ("Liabilities") asserted against or incurred
or sustained by the Seller Group relating to, associated with or
arising out of (i) any breach by Purchaser of any covenant or
agreement contained in this Agreement by Purchaser or (ii) any
breach by Purchaser of any of the warranties or representations of
Purchaser set forth in Article 3 of this Agreement.
(b) From and after the Closing, JANY shall indemnify
each member of the Seller Group for, and hold the Seller Group
harmless from, any and all Liabilities of any kind or nature
asserted against or incurred or sustained by any or all of the
members of the Seller Group arising out of, related to or
associated with the Insurance Business or JANY, regardless of
whether at the time of Closing such Liabilities were (A) foreseen
or unforeseen, (B) known or unknown, (C) existing or arose in the
future, (D) fixed or contingent, (E) matured or unmatured, (F)
reflected in any of the Schedules attached hereto or (G) relate to
or are associated with events occurring or circumstances existing
before or after the Closing; provided,
however, that notwithstanding anything contained in this Section 9.2(b)
to the contrary, JANY shall not be obligated hereunder to indemnify the
Seller Group for, or to hold the Seller Group harmless from, any
Liabilities under this Section 9.2(b) to the extent that Seller is
obligated to indemnify Purchaser in respect of the same Liabilities
pursuant to Section 9.3 hereof (or would be obligated to indemnify
Purchaser if (i) the limitation on representations or warranties
under Section 9.1, or (ii) the dollar limitations on
indemnification set forth in Section 9.2(c) hereof did not apply).
(c) The Seller Group shall be entitled to
indemnification under Section 9.2(a)(ii) and 9.2(b), only when the
aggregate amount of all Liabilities with respect to which the
Seller Group would otherwise be entitled to indemnification under
Sections 9.2(a)(ii) and 9.2(b) hereof and Section 10.2(a)(ii) of
the Asset Purchase Agreement exceed $1.5 million. In addition, as
soon as practicable after such Liabilities exceed $1.5 million,
Purchaser shall pay to Seller $750,000. In no event shall the
amount payable by Purchaser and its Affiliates (including JANY) to
the Seller Group pursuant to Section 9.2(a)(ii) and 9.2(b) hereof
and Section 10.2(a)(ii) of the Asset Purchase Agreement exceed
$240,000,000.
(d) If any event shall occur or circumstance shall exist
which would otherwise entitle the Seller Group to indemnification
hereunder, Liabilities shall be deemed reduced to the extent of any
proceeds (other than (i) proceeds from self-insurance and (ii)
proceeds under experience-rated insurance policies the premiums for
which would be increased by reason of the filing of a claim
thereunder with respect to such Liability or expense) actually
recovered, net of the cost of such recovery, by the Seller Group
from any third party (including, without limitation, any insurance
company) with respect thereto. In furtherance of the immediately
preceding sentence, Seller agrees to, and to cause its Affiliates
to, (i) in good faith, diligently
seek recovery, at its or their own expense, of all such proceeds from
all third parties with respect to all Liabilities with respect to
which it or they make or may make a claim for indemnification hereunder
and (ii) keep Purchaser fully and promptly informed of all material matters
related thereto.
(e) To the extent that the undertakings set forth in
Section 9.2(a) and (b) hereof may be unenforceable, Purchaser shall
contribute the maximum amount that it is permitted to contribute
under applicable Law to the payment and satisfaction of all
Liabilities incurred by the Seller Group.
Section 9.3. Indemnification by Seller.
(a) Subject to Sections 7.4, 9.1, the following
provisions of this Section 9.3, and 9.4 hereof, Seller shall
indemnify Purchaser and its Affiliates (including JANY after the
Closing) (collectively, the "Purchaser Group") for, and shall hold
them harmless from, any and all Liabilities asserted against or
incurred or sustained by Purchaser relating to, associated with or
arising out of: (i) any breach by Seller of any covenant or
agreement contained in this Agreement by Seller, (ii) any breach by
Seller of any of the warranties or representations set forth in
Article 2 of this Agreement (other than Sections 2.18(b) and
2.32(g) hereof), (iii) any Extra Contractual Obligations, (iv) any
Vanishing Premium Liabilities; provided, however, that Seller shall
not be required to provide the indemnification with respect to
Vanishing Premium Liabilities related to any In Force Insurance
Contract if Purchaser reduces the dividend scale applicable to such
Insurance Contract or (v) the Insurance Contracts issued by JANY
without Permits as identified on Schedule 2.9 attached hereto.
(b) Subject to Section 9.1, the following provisions of
this Section 9.3 and 9.4 hereof, Seller shall indemnify the
Purchaser Group for, and shall hold it harmless from, (i) one-
half of any and all Liabilities up to an aggregate of $3,000,000 (i.e.,
$1.5 million of the first $3.0 million of such Liabilities) and
(ii) any and all Liabilities in excess of $3,000,000 asserted
against or incurred or sustained by the Purchaser Group relating
to, associated with or arising out of any breach of the
representations and warranties of Seller set forth in Sections
2.18(b) and 2.32(g) hereof and Section 3.22(g) of the Asset
Purchase Agreement (without giving effect to the knowledge and
materiality qualifiers set forth therein).
(c) The Purchaser Group shall be entitled to
indemnification under Section 9.3(a)(ii), 9.3(a)(iii) and
9.3(a)(iv) hereof only when the aggregate amount of all Liabilities
with respect to which the Purchaser Group would otherwise be
entitled to indemnification under Sections 9.3(a)(ii), 9.3(a)(iii)
and 9.3(a)(v) hereof and Section 10.3(a)(ii) of the Asset Purchase
Agreement exceeds $1.5 million. In addition, as soon as
practicable after such Liabilities exceeds $1.5 million, Seller
shall pay to Purchaser $750,000. In no event shall the amount
payable by Seller and its Affiliates to the Purchaser Group
pursuant to Sections 9.3(a)(ii), 9.3(a)(iii) and 9.3(a)(v) hereof
and Section 10.3(a)(ii) of the Asset Purchase Agreement exceeds
$240,000,000.
(d) If any event shall occur or circumstance shall exist
which would otherwise entitle the Purchaser Group to
indemnification hereunder, Liabilities shall be deemed reduced to
the extent of any proceeds (other than (i) proceeds from
self-insurance and (ii) proceeds under experience-rated insurance
policies the premiums for which would be increased by reason of the
filing of a claim thereunder with respect to such Liability)
actually recovered, net of the cost of such recovery, by the
Purchaser Group from any third party (including, without
limitation, any insurance company) with respect thereto. In
furtherance of the immediately preceding sentence, Purchaser agrees
to, and to cause its Affiliates to, (i) in good faith, diligently
seek recovery, at
its or their own expense, of all such proceeds from all third parties
with respect to all Liabilities with respect to which it or they make
or may make a claim for indemnification hereunder and (ii) keep Seller
fully and promptly informed of all material matters related thereto.
(e) To the extent that the undertakings set forth in
Section 9.3(a) hereof may be unenforceable, Seller shall contribute
the maximum amount that it is permitted to contribute under
applicable Law to the payment and satisfaction of all Liabilities
incurred by the Purchaser Group.
Section 9.4. Indemnification Procedure.
(a) Within a reasonable time after obtaining knowledge
thereof, a Person who may be entitled to indemnification hereunder
(the "Indemnitee") shall promptly give the Party who may be
obligated to provide such indemnification (the "Indemnitor")
written notice of any Liability which the Indemnitee has determined
has given or could give rise to a claim for indemnification
hereunder (a "Notice of Claim"); provided, however, no failure or
delay in giving any such Notice of Claim shall relieve the
Indemnitor of its obligations except, and only to the extent, that
it is prejudiced thereby. A Notice of Claim shall specify in
reasonable detail the nature and all known particulars related to
a Liability. The Indemnitor shall perform its indemnification
obligations in respect of a Liability described in a Notice of
Claim under Sections 9.2 or 9.3 hereof, as the case may be, within
30 days after the Indemnitor shall have received such Notice of
Claim.
(b) The Indemnitor shall inform the Indemnitee promptly
after the Indemnitor has made a good faith determination, based on
the facts alleged in such Notice of Claim or which have otherwise
become known to the Indemnitor, either that the Indemnitor
acknowledges that it has an indemnification obligation hereunder in
respect of such Liability or that the Indemnitor has made a good
faith determination that it has no indemnification obligation
hereunder in respect of such Liability. If the Indemnitor fails to
perform its obligations under this Section 9.4 or if the Indemnitor
shall have informed the Indemnitee in writing in that the
Indemnitor does not have an indemnification obligation hereunder in
respect of such Liability, then the Indemnitee shall have the
right, but not the obligation, to take the actions which the
Indemnitor would have had the right to take in connection with the
performance of such obligations and, if the Indemnitee is entitled
to indemnification hereunder in respect of the event or
circumstance as to which the Indemnitee takes such actions, then
the Indemnitor shall, in addition to indemnifying Indemnitee for
the Liability, indemnify the Indemnitee for all of the legal,
accounting and other costs, fees and expenses reasonably and
actually incurred in connection therewith.
(c) The Indemnitor shall have the right and obligation,
in good faith and at its own cost and expense, to cure, remediate,
mitigate, remedy or otherwise handle any event or circumstance
which gives rise to a Liability in respect of which a Notice of
Claim has been given (including events and circumstances which can
be cured, remediated, mitigated or remedied through the expenditure
of money and events and circumstances which give rise to a
Liability which can be measured in terms of money), regardless of
the nature of such Liability. Such right and obligation shall
include, without limitation, (i) the right to investigate any such
event or circumstance, and (ii) the right to defend, contest or
otherwise oppose any third party claim, demand, suit, action or
proceeding related to such event or circumstance with legal counsel
selected by it. The exercise of such right and performance of
such obligation shall not constitute an admission or agreement by
Indemnitor that it has an indemnification obligation hereunder in
respect of such Liability. If the Indemnitor proposes to settle or
compromise any
such third party action, demand, claim, suit or proceeding, the
Indemnitor shall give written notice to that effect (together with
a statement in reasonable detail of the terms and conditions of
such settlement or compromise) to the Indemnitee a reasonable time
prior to effecting such settlement or compromise.
(d) The Indemnitee shall have the right, but not the
obligation, to participate, at its own cost and expense, in the
defense, contest or other opposition of any such third party claim,
demand, suit, action or proceeding through legal counsel selected
by it and shall have the right, but not the obligation, to assert
any and all cross-claims or counterclaims which it may have. So
long as the Indemnitor is in good faith performing its obligations
under this Section 9.4, the Indemnitee shall (i) at Indemnitor's
cost and expense, cooperate in all reasonable ways with, make its
and its Affiliates' relevant files and records available for
inspection and copying by, make its and its Affiliates' employees
reasonably available to and otherwise render reasonable assistance
to the Indemnitor upon request and (ii) not compromise or settle
any such claim, demand, suit, action or proceeding without the
prior written consent of the Indemnitor. The Indemnitee shall have
the right (i) to object to the settlement or compromise of any such
third party action, demand, claim, suit or proceeding whereupon if
such settlement is solely a cash settlement (A) the Indemnitee will
assume the defense, contest or other opposition of any such third
party action, demand, claim, suit or proceeding for its own account
and as if it were the Indemnitor and (B) the Indemnitor shall be
released from any and all liability with respect to any such third
party action, demand, claim, suit or proceeding to the extent that
such liability exceeds the liability which the Indemnitor would
have had in respect of such a settlement or compromise, or (ii) to
assume, at any time by giving written notice to that effect to the
Indemnitor, the cure, mitigation, remediation, remedy or other
handling of such event or
circumstance and the defense, contest or other opposition of any such
third party action, demand, claim, suit or proceeding for its own
account whereupon the Indemnitor shall be released from any and all
liability with respect to such event or circumstance and such third
party action, demand, claim, suit or proceeding.
(e) After the Closing, Purchaser shall and shall cause
JANY to take all commercially reasonable actions which may be
necessary to enable Seller to exercise its rights and perform its
obligations under this Section 9.4.
(f) Notwithstanding anything contained herein to the
contrary, each Party shall use, and shall cause its Affiliates to
use, commercially reasonable efforts to mitigate any and all
damages, losses, liabilities, costs and expenses in respect of
which it may be entitled to indemnification hereunder.
ARTICLE 10
PUBLICITY AND CONFIDENTIALITY
Section 10.1. Publicity. Neither Party shall or shall permit
its Affiliates to issue any publicity, release or announcement
concerning the execution and delivery of this Agreement, the
provisions hereof or the transactions contemplated hereby without
the prior written approval of the form and content of such
publicity, release or announcement by the other; provided, however,
that no such approval shall be required when such publicity,
release or announcement is required by (i) applicable Law, (ii)
applicable rules or regulations of, or any listing agreement with,
a national or foreign stock exchange or the Automated Quotation
System maintained by the National Association of Securities
Dealers, Inc. or (iii) any Order of any court, arbitrator or
Governmental Entity of competent jurisdiction; and, provided
further, that, prior to issuing
any publicity, release or announcement without such prior written
approval, the Party issuing or whose Affiliate is issuing such
publicity, release or announcement shall have given reasonable
prior notice to the other Party of such intended issuance and, if
requested by the other Party, shall have used reasonable efforts
at such other Party's own cost and expense to obtain a protective
order or similar protection for the benefit of the other Party.
In addition, with the prior written consent of the Parties, not to
be unreasonably withheld, CS First Boston and Xxxxxxx Xxxxx & Company
each may cause to be published such tombstone advertisements with
respect to the transactions contemplated by this Agreement as it shall
deem appropriate. Nothing contained herein shall prevent the
communication of information with any Governmental Entity or any
agency or other organization which rates the financial solvency or
claims-paying ability of Seller, Purchaser or JANY, including
without limitation, A.M. Best Company, Inc., Duff & Xxxxxx,
Standard & Poor's Corporation and Xxxxx'x Investors Services, Inc.
or state insurance departments or other regulatory bodies.
Section 10.2. Confidentiality.
(a) All data, reports, records and other information of
any kind received by a Party or its Affiliates or Representatives
(such Party being hereinafter referred to as the "Receiving Party")
from the other Party or its Affiliates or Representatives, (such
other Party being hereinafter referred to as the "Delivering
Party") under this Agreement or in connection with the transactions
contemplated hereby shall be treated as confidential (collectively,
"Confidential Information"). Except as otherwise provided herein,
the Receiving Party shall not use (and shall not permit its
Affiliates, or Representatives to use) Confidential Information for
its own (or their own) benefit and shall use commercially reasonable
efforts (and shall cause its Affiliates, directors, officers and
employees to use commercially reasonable efforts) to maintain
the confidentiality of Confidential Information. If the
Receiving Party or any of its Affiliates or Representatives is
required to disclose Confidential Information by or to any court,
arbitrator or Governmental Entity of competent jurisdiction, the
Receiving Party shall, prior to such disclosure, promptly notify
the Delivering Party of such requirement and all particulars
related to such requirement. The Delivering Party shall have the
right, at its own cost and expense, to object to such disclosure
and to seek confidential treatment of any Confidential Information
to be so disclosed on such terms as it shall determine.
(b) The restrictions set forth in Section 10.2(a) hereof
shall not apply to the use or disclosure of Confidential
Information to the extent, but only to the extent, (i) permitted or
required pursuant to any other agreement between or among the
Parties or their respective Affiliates or Representatives, (ii)
necessary by a Party or its Affiliates in connection with
exercising its or their rights or performing its or their duties or
obligations under this Agreement, the Transition Services Agreement
or the other agreements described in clause (i) of this sentence,
(iii) contemplated by the last two sentences of Section 10.2(a)
hereof or (iv) that the Receiving Party can demonstrate such
Confidential Information (A) is or becomes generally available to
the public through no fault or neglect of the Receiving Party, (B)
is received in good faith on a non-confidential basis from a third
party who discloses such Confidential Information without violating
any obligations of secrecy or confidentiality, (C) is independently
developed after the time of receipt as shown by dated written
records or (D) was already possessed at the time of receipt as
shown by prior dated written records.
(c) For the purposes of this Section 10.2,
(i) information which is specific shall not be deemed to be within
an exception set forth in Section 10.2(b) hereof merely because it
is embraced by general information which is within such an
exception and (ii) a combination
of information shall not be deemed to be within an exception set forth
in Section 10.2(b) hereof merely because individual aspects of such
combination are within such an exception unless the combination of
information itself, its principle of operation and its value or
advantages are within such an exception.
ARTICLE 11
MISCELLANEOUS
Section 11.1. Notices. Any notice or other communication
required or permitted hereunder shall be in writing and shall be
delivered personally (by courier or otherwise), sent by certified,
registered or express mail, postage prepaid and return receipt
requested or transmitted by facsimile (with a copy of such notice
or other communication and a confirmation of transmission sent by
certified, registered or express mail, postage prepaid and return
receipt requested no later than the close of business on the next
business day following such transmission), and shall be addressed
as follows:
when Purchaser is to be notified:
SunAmerica Life Insurance Company
0 XxxXxxxxxx Xxxxxx, Xxxxxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: General Counsel
Facsimile No.: (000) 000-0000
with a copy to:
SunAmerica Life Insurance Company
0 XxxXxxxxxx Xxxxxx, Xxxxxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Controller
Facsimile No.: (000) 000-0000
and
O'Melveny & Xxxxx
1999 Avenue of the Stars
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
when Seller is to be notified:
Xxxx Xxxxx Life Insurance Company
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000-0000
Attention: General Counsel
Facsimile No.: (000) 000-0000
with copies to:
Xxxx Xxxxx Financial Corporation
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000-0000
Attention: General Counsel
Facsimile No.: (000) 000-0000
Xxxxxx Xxxx & Xxxxxx LLP
Two Stamford Plaza
000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxx X. Xxxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
A Party may, by notice given in accordance with this Section 11.1
to the other Party, designate another address or Person to which
notices required or permitted to be given pursuant to this
Agreement shall thereafter be transmitted. Each notice transmitted
in the manner described in this Section 11.1 shall be deemed to
have been given, received and become effective for all purposes at
the time it shall have been (i) delivered to the addressee as
indicated by the return receipt (if transmitted by mail),
transmitted to the addressee (if transmitted by facsimile and
subject to delivery of the mailed copy thereof) or the affidavit of
the messenger (if transmitted
by personal delivery) or (ii) presented for delivery to the addressee
as so indicated during normal business hours, if such delivery shall
have been refused for any reason.
Section 11.2. Entire Agreement. This Agreement (including
the Transition Services Agreement, the Asset Purchase Agreement,
the other agreements contemplated hereby and thereby, the Annex,
the Exhibits and the Schedules attached hereto (the "Transaction
Agreements")) contains the entire agreement and understanding
between the Parties with respect to the subject matter hereof and
cancels and supersedes all of the previous or contemporaneous
agreements, representations, warranties and understandings, whether
written or oral, by or between the Parties with respect to the
subject matter hereof. Except for the representations and
warranties expressly set forth in the Transaction Agreements,
Purchaser disclaims reliance upon (i) any representations,
warranties or guarantees (whether express or implied and whether
oral or written) by Seller, JANY or any of their Affiliates or any
of their or their respective Affiliates' Representatives
(including, without limitation, any projections of future sales,
revenues, expenses or earnings and any statements regarding the
prospects of the Insurance Business as presently conducted by JANY)
or (ii) any other information with respect to the Insurance
Business, Seller, JANY, their respective assets and properties or
their industry provided by or on behalf of them. Nothing contained
in any document or instrument of conveyance, transfer, assignment
or delivery executed or delivered at the Closing pursuant to this
Agreement shall amend, extend, modify, renew or alter in any manner
any representation, warranty, covenant, agreement or indemnity
contained herein. Nothing contained in the Transaction Agreements
or in any of the Schedules attached hereto or thereto or in any
other agreement contemplated hereby or thereby shall constitute or
be interpreted or construed as an admission by any Party or any of
its Affiliates of liability to third parties, whether under any
Law or otherwise, or as an admission that any Party or any of its
Affiliates are in violation of or have ever violated any such Law.
Section 11.3. Amendments. No addition to, and no
cancellation, renewal, extension, modification or amendment of, or
approval under this Agreement shall be binding upon a Party unless
such addition, cancellation, renewal, extension, modification,
amendment or approval is set forth in a written instrument which
states that it adds to, amends, cancels, renews or extends this
Agreement or grants an approval hereunder and which is executed and
delivered on behalf of each Party by an officer of, or attorney-in-
fact for, such Party.
Section 11.4. Waivers. No waiver of any provision of this
Agreement shall be binding upon a Party unless such waiver is
expressly set forth in a written instrument which is executed and
delivered on behalf of such Party by an officer of, or attorney-in-
fact for such Party. Such waiver shall be effective only to the
extent specifically set forth in such written instrument. Neither
the exercise (from time to time or at any time) nor the delay or
failure (at any time or for any period of time) to exercise any
right, power or remedy shall operate as a waiver of, the right to
exercise, or impair, limit or restrict the exercise of part of any
Party of any such right, power or remedy any other right, power or
remedy at any time and from time to time thereafter. No waiver of
any right, power or remedy of a Party shall be deemed to be a
waiver of any other right, power or remedy of such Party or shall,
except to the extent so waived, impair, limit or restrict the
exercise of such right, power or remedy.
Section 11.5. 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. Each Party consents and submits to the
non-exclusive personal jurisdiction of any federal court in the
State of Delaware in respect of any proceeding for the sole purpose
of injunctive relief or to enforce an arbitration award under
Section 11.10 hereof. Each Party consents to service of process
upon it with respect to any such proceeding by registered mail,
return receipt requested, and by any other means permitted by
applicable Laws. Each Party waives any objection that it may now
or hereafter have to the laying of venue of any such proceeding in
federal court in the State of Delaware and any claim that it may
now or hereafter have that any such proceeding in any such court
has been brought in an inconvenient forum.
Section 11.6. Binding Effect; Assignment; Third Party
Beneficiaries. This Agreement shall be binding upon and inure to
the benefit of the Parties and their respective successors and
permitted assigns. Neither Seller nor Purchaser shall assign any
of its rights or delegate any of its duties hereunder (in whole or
in part and by operation of law or otherwise) without the prior
written consent of the other Party hereto except that Purchaser may
assign its rights and obligations under this Agreement to any of
its Affiliates provided Purchaser shall remain liable for all of
its obligations hereunder notwithstanding such assignment. Any
assignment of rights or delegation of duties under this Agreement
by a Party without the prior written consent of the other Party, if
such consent is required hereby, shall be void. No Person
(including, without limitation, any employee of a Party) shall be,
or be deemed to be, a third party beneficiary of this Agreement.
Section 11.7. Severability. If any provision of this
Agreement shall hereafter be held to be invalid, unenforceable or
illegal, in whole or in part, in any jurisdiction under any
circumstances for any reason, (i) such provision shall be reformed
to the minimum extent necessary to cause such provision to be
valid, enforceable and legal while preserving the intent of the
Parties as expressed in, and the benefits to the Parties provided
by, this Agreement or (ii) if such provision cannot be so reformed,
such provision shall be severed from this Agreement and an
equitable adjustment shall be made to this Agreement (including,
without limitation, addition of necessary further provisions to
this Agreement) so as to give effect to the intent as so expressed
and the benefits so provided. Such holding shall not affect or
impair the validity, enforceability or legality of such provision
in any other jurisdiction or under any other circumstances.
Neither such holding nor such reformation or severance shall affect
or impair the legality, validity or enforceability of any other
provision of this Agreement.
Section 11.8. Headings. The headings in this Agreement have
been inserted for convenience of reference only, and shall not be
considered a part of this Agreement and shall not limit, modify or
affect in any way the meaning or interpretation of this Agreement.
Section 11.9. Counterparts. This Agreement may be executed
by the parties in any number of counterparts, each of which when so
executed and delivered shall constitute an original instrument, but
all such counterparts shall together constitute one and the same
instrument. This Agreement shall become effective and be deemed to
have been executed and delivered by all of the Parties at such time
as counterparts shall have been executed and delivered by both of
the Parties, regardless of whether each of the Parties has executed
the same counterpart. It shall not be necessary when making proof
of this Agreement to account for any counterparts other than a
sufficient number of counterparts which, when taken together,
contain signatures of both of the Parties.
Section 11.10. Arbitration. The Parties acknowledge and
agree that the transactions contemplated herein substantially
affect and impact interstate commerce. Therefore, all disputes or
differences between Seller and Purchaser arising under or which are
related to this Agreement (other than proceedings for the sole
purpose of injunctive relief) upon which an amicable
understanding cannot be reached within 30 days shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association, except as hereinafter provided, and
judgment upon the award entered by the Arbitrators (as defined
below) may be entered in any court having jurisdiction thereof.
The Arbitrators provided for herein shall construe this Agreement
in light of the prevailing custom and practices for acquisition
transactions of a similar nature. The "Arbitrators" shall consist
of one neutral arbitrator (or as provided below, three neutral
arbitrators). The Parties agree that the arbitration, if
implemented under this Agreement, shall be held at a site selected
by the Arbitrators. The Parties agree to arbitrate within 90 days
following the transmittal of written demand of either Party to
arbitrate any dispute arbitrable under this Agreement. The Parties
will in good faith, within 15 days following notice of written
demand to arbitrate attempt to agree on a single Arbitrator. If
the Parties cannot within 15 days thereafter agree on a single
arbitrator, each of the Parties shall appoint an Arbitrator,
notifying the other Party of the name and address of such
Arbitrator. The Arbitrators appointed by each Party shall agree
upon and appoint a third neutral Arbitrator. If either Party shall
fail to appoint an Arbitrator as herein provided, or should the two
Arbitrators so named fail to select the third Arbitrator within 30
days after their appointment, then, in either event, the President
of the American Arbitration Association or its successor shall
appoint such second and/or third Arbitrator. A decision of a
majority of the Arbitrators shall be final and binding and there
shall be no appeal therefrom. The Arbitrators shall within 45 days
after the final hearing enter an award and the award shall be
supported by a written opinion. The fees of the Arbitrators and
the direct costs of the arbitration shall be shared equally by the
Parties; all other costs of the respective Parties, including
without limitation fees and expenses of the respective Party's
attorneys, witnesses, and discovery shall be paid by the respective
Party,
except to the extent that the Arbitrators otherwise direct based on
the equities of the situation. The arbitration shall be held in
New York, New York, unless otherwise agreed between the Parties.
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first written above.
SUNAMERICA LIFE INSURANCE COMPANY
By: /s/ XXX X. XXXXXXX
_____________________________________
Name: Xxx X. Xxxxxxx
Title: Executive Vice President
XXXX XXXXX LIFE INSURANCE COMPANY
By: /s/ XXXXXXX X. XXXXXXX
_____________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman, President & C.E.O.
ANNEX A
The following terms are defined in the following Sections.
DEFINED TERM SECTION
Agreement Introduction
Ancillary Agreements 3.10
Antitrust Division 4.4
Applicable Purchaser Survival Period 9.1
Arbitrators 11.10
Asset Purchase Agreement Introduction
Books and Records 1.5
Closing 1.1
Closing Date 1.1
Code 2.9
Confidential Information 10.2
Deemed Asset Sale 7.4
Delivering Party 10.2
ERISA 2.20
ERISA Plans 2.20
401K Plan 7.5
Form 8023-A Package 7.4
FTC 4.4
Houston 7.4
HSR Act 2.5
Indemnitee 9.4
Indemnitor 9.4
Insurance Business Introduction
Interim Xxxx Xxxxx Financial Statements 2.34
Interim Purchaser Financial Statements 3.7
JANY's Adjusted Tax Return Liability 7.4
JANY Employee 7.5
JANY Reserve Liabilities 2.23
JANY Stock Introduction
JANY Introduction
Xxxx Xxxxx 2.34
Xxxx Xxxxx Financial Statements 2.34
knowledge 2.3
Liabilities 9.2
Liens 2.4
Notice of Claim 9.4
Parties Introduction
Party Introduction
Pension Benefit Guaranty Corporation 2.20
Pension Plan 7.5
Permits 2.5
Pre-Closing Straddle Period 7.4
Post-Closing Straddle Period 7.4
Purchase Price 1.2
Purchaser Introduction
Purchaser Financial Statements 3.7
Purchaser Group 9.3
Purchaser's Opinion 1.3
Real Property 2.18
Receiving Party 10.2
Resolution Accountant 7.4
Seller Introduction
Seller Group 9.2
Seller's Opinion 1.3
Tax Allocation Agreement 7.4
Tax Allocation Payments 7.4
Tax Claim 7.4
Termination Date 8.1
Third Party Administration Agreements 2.31
Transition Services Agreement 1.4
Transaction Agreements 1.2
"Action" means any action, claim, complaint, cause of action,
arbitration, petition, investigation, suit or administrative or
other proceeding, whether civil or criminal, at law or in equity,
before any court, arbitrator or Governmental Entity.
"Affiliate" shall mean any Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by, or
is under common control with the Person specified. For purposes of
this definition, "control" (and its derivative terms "controlled,"
"controls," etc.) shall mean the power and right to direct the
management and policies of another Person, whether by ownership of
voting securities, the ability to elect a majority of the board of
directors or other managing board or committee, management
contract, or otherwise.
"Book Value" means book value computed in accordance with SAP,
without marking to market and without including Accrued and Unpaid
Investment Income.
"Business Day" means any day on which banks and other
financial institutions are not required to be closed pursuant to
applicable Laws in any of New York, New York, Los Angeles,
California and Miami, Florida.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act.
"Closing Ledger Date" means the 21st day of the month in which
the Closing occurs or, if such day is not a Business Day, the next
preceding Business Day.
"Combined Reserve Liabilities" means the Reserve Liabilities
for JALIC Annuity Contracts plus all reserves with respect to
JANY's insurance contracts, in the aggregate.
"Commercially reasonable efforts" when used with respect to
any Party, means the reasonable efforts of such Party without the
requirement that such Party incur any extraordinary out-of-pocket
expenses, incur any other unanticipated burden or commence or
pursue any action, suit or proceeding.
"Environmental Laws" means any Law pertaining to health,
industrial hygiene or the environmental condition on or under any
property including, without limitation, CERCLA and the Toxic
Substance Control Act, and the rules and regulations thereunder.
"Excluded Liabilities" means (i) all liability for premium
taxes arising on account of premiums paid on or prior to the
Closing Ledger Date with respect to the Insurance Contracts, (ii)
all liability for commission payments and other fees or
compensation payable with respect to the Insurance Contracts to or
for the benefit of brokers and agents and other distribution
sources, to the extent that such amounts are based on premiums paid
on or prior to the Closing Ledger Date, (iii) trailer commissions
(which are based upon account values) accruable on or prior to the
Closing Ledger Date, and (iv) all guaranty fund assessments (or any
other assessment from a state entity formed to protect
policyholders against failure of an insurer to perform its
contractual obligations) imposed as a result of a conservatorship
or other insolvency proceeding commenced on or prior to the Closing
Date with respect to the Insurance Contracts.
"Execution Date" means the date of this Agreement.
"Extra Contractual Obligations" means all liabilities (i) for
compensatory, consequential, exemplary, punitive or similar damages
which directly relate to any alleged or actual act, error,
omission, fraud or misrepresentation by Seller or any of its
Affiliates or any of its or its Affiliates' officers or employees,
whether intentional or otherwise, prior to the Closing Date, or
(ii) from any actual or alleged reckless conduct or bad faith by
Seller, or any of its Affiliates or any of its or its Affiliates'
officers or employees, in connection with Seller's handling of any
claim under any of the Insurance Contracts or in connection with
the issuance, offer, sale, delivery, cancellation or administration
by Seller or any of its Affiliates or any of its or its Affiliates'
officers or employees of any of the Insurance Contracts.
"GAAP" shall mean United States generally accepted accounting
principles as in effect from time to time, consistently applied
throughout the specified period and in the immediately prior
comparable period.
"Governmental Entity" means any agency, administrative
division or department (or administrative subdivision), commission,
regulatory authority (including without limitation any insurance
regulatory authority), taxing or administrative authority, court or
other judicial body,
legislature of the government of the United States or any state, city,
municipality, county, town, district or other political subdivision
thereof on any state, city, municipality, county, town, district or
other political subdivision thereof or any quasi-governmental entity,
including, without limitation, the employees or agents thereof.
"Hazardous Substance" means (i) any and all substances defined
as "hazardous substances," "extremely hazardous substances," "toxic
substances," "hazardous waste," "hazardous materials" or
"infectious waste" for purposes of CERCLA or any other
Environmental Law and (ii) any petroleum or petroleum-based
products.
"In Force Insurance Contracts" means the Insurance Contracts
in effect on the date hereof, and as of the Closing Date, as the
case may be.
"Insurance Contracts" means all annuity and other policies and
supplementary contracts, as well as any riders providing for other
supplemental benefits, and all supplements, endorsements, riders
and ancillary agreements in connection therewith, and specifically
includes without limitation (i) all lapsed Insurance Contracts
subject to reinstatement and (ii) any supplemental benefits arising
out of the Insurance Contracts.
"Laws" means any and all federal, state or local statutes,
laws, ordinances, rules and regulations.
"Loan Documents" means the Mortgage Note, the Mortgage and any
and all other agreements, certificates, documents or instruments in
Seller's possession or under its control relating to the
origination, closing and modification of a Mortgage Loan, including
without limitation any related assignment of rents, security
agreement, UCC financing statement, guaranty, letter of credit,
pledge agreement, loan agreement or other instrument creating a
security interest in, and Lien upon, real and/or personal property.
"Material Adverse Effect" means any change, effect, event or
occurrence that has, or is reasonably likely to have, individually
or in the aggregate, a material adverse impact on (i) the assets,
business, financial position or results of operations of JANY or
(ii) the ability of Seller or JANY to consummate the transactions
contemplated by this Agreement and the Transition Services
Agreement; provided that "Material Adverse Effect" shall be deemed
to exclude the impact of (i) changes in Laws or interpretations
thereof by any Governmental Entity relating to or affecting the
Insurance Business and (ii) changes in GAAP or SAP.
"Material Adverse Effect on Purchaser" means any change,
effect, event or occurrence that has, or is reasonably likely to
have, individually or in the aggregate, a material adverse impact
on (i) the business, financial position or results of operations of
Purchaser (and after giving effect to the Closing, together with
JANY) or (ii) the ability of Purchaser to consummate the
transactions contemplated by this Agreement and the Transition
Services Agreement; provided that "Material Adverse Effect on
Purchaser" shall be deemed to exclude the impact of (i) changes in
Laws or interpretations thereof by any Governmental entity relating
to or affecting the business of Purchaser and (ii) changes in GAAP
or SAP.
"Mortgage" means the mortgage, deed of trust or other
instrument (and all modifications thereto) creating a Lien on real
property described therein or on the tenant's interest under a
ground lease of real property described therein, in either case
securing a Mortgage Note.
"Mortgage Loan" means any individual mortgage loan that is
identified on the Mortgage Loan Schedule.
"Mortgage Loan Schedule" means the list of Mortgage Loans
subject to this Agreement and identified on Schedule 2.32(a)
attached hereto, which schedule sets forth the following
information with respect to each Mortgage Loan as of the date
specified therein.
(i) the Mortgage Loan numbers;
(ii) the name of the mortgagor and the name or address
of the Mortgaged Property;
(iii) the Mortgage Loan Principal Balance;
(iv) lien priority of the Mortgage;
(v) the maturity date; and
(vi) the current interest rate.
(vii) the Mortgage Loan Status (current, litigation,
bankruptcy, tax plans, etc.).
"Mortgage Note" means the note or other evidence of the
indebtedness under a Mortgage Loan.
"Mortgaged Property" means the land and improvements that
secure a Mortgage, which in the case of a leasehold mortgage shall
mean the tenant's interest in the real property underlying the
ground lease or, where the context so requires, the real property
underlying the ground lease.
"Order" means any decree, injunction, judgment, order, ruling,
assessment or writ.
"Person" shall mean any natural person, corporation, general
partnership, limited partnership, limited liability
company,proprietorship, trust, union, association, court, tribunal,
agency, government, department, commission, self-regulatory
organization, arbitrator, board, bureau, instrumentality, or other
entity, enterprise, authority, or business organization.
"Policyholders" means, as applicable, the beneficiaries under,
or policyholders with-respect to, or owners of, the Insurance
Contracts, or any other Person entitled to payment with respect to
the Insurance Contracts.
"Related Agreements" means the agreements providing for the
payment of commissions relating to the Insurance Contracts as
listed in Schedule 2.30.
"Representatives" means, with respect to any Person, such
person's Affiliates, subsidiaries, shareholders, directors,
partners, joint ventures, officers, employees, agents,
representatives, producers, independent contractors, consultants,
lenders, brokers, finders, investment bankers, financial advisors,
attorneys and accountants. Seller's Representatives include
without limitation CS First Boston. Purchaser's Representatives
include without limitation Xxxxxxx Xxxxx & Company.
"Qualified Investments" means (A) readily marketable direct
obligations of the Government of the United States or any agency or
instrumentality thereof or obligations unconditionally guaranteed
by the full faith and credit of the Government of the United
States; (B) demand deposits with (1) any commercial bank that is a
member of the Federal Reserve System, the parent of which issues
commercial paper rated at least "P-1" (or the then equivalent
grade) by Xxxxx'x and "A-1" (or the then equivalent grade) by S&P,
is organized under the Laws of the United States or any State
thereof and is rated "TBW-1" or the equivalent or better by Thomson
BankWatch or any other nationally recognized agency or, (2) a
United States branch or agency of any commercial bank organized
under the Laws of any Organization for Economic Cooperation and
Development member country (as of the Execution Date of this
Agreement) which is rated "TBW-1" or the equivalent or better by
Thomson BankWatch or other internationally recognized agency; (C)
commercial paper issued by any corporation rated at least P-1 or
the then equivalent grade by Xxxxx'x and A-1 or the then equivalent
grade by S&P; (D) money market mutual funds (i) whose portfolio is
comprised solely of (1) marketable direct obligations of the United
States government or its agencies, and/or (2) bank or corporate
obligations which individually meet the rating criteria stipulated
in (B) or (C) above, (ii) whose total net assets exceed $1 billion
and (iii) where the Seller's investment in such fund is limited to
an amount not exceeding 10% of such fund's assets; or (E) such
other assets as the Party receiving such Qualified Investments may
expressly approve in writing.
"SAP" means the statutory accounting principals and practices,
as in effect from time to time, required or permitted for life
insurance companies by applicable Laws of the National Association
of Insurance Commissioners and the insurance regulatory authority
in the state in which the company in question is domiciled, as the
case may be, consistently applied throughout the specified period
and in the immediately prior comparable period
"Taxes" shall mean all taxes, charges, fees, levies, or other
similar assessments, including, without limitation, income, gross
receipts, ad valorem, premium, excise, real property, personal
property, windfall profit, sales, use, transfer, licensing,
withholding, employment, payroll, and franchise taxes imposed by
any Governmental Entity; and such term shall include any interest
(through the date of payment), penalties, assessments, or additions
to tax resulting from, attributable to, or incurred in connection
with any such tax or any contest or dispute thereof.
"Tax Returns" shall mean returns, declarations, statements,
reports, schedules, forms and information returns and any amended
Tax Return required to be supplied to a taxing authority in respect
of or relating to Taxes.
"Vanishing Premium Liabilities" means any Liabilities arising
out of or connected with a claim that an Insurance Contract which
utilizes dividends, credited interest or other earnings to reduce
the premium was sold based on a premium and earnings illustration
or representation that was allegedly or actually fraudulent or
misleading.
