DEFINITIVE TRANSACTION FRAMEWORK AGREEMENT BY AND AMONG GENERAL MOTORS LLC, STATE STREET BANK AND TRUST COMPANY, THE PRUDENTIAL INSURANCE COMPANY OF AMERICA AND PRUDENTIAL FINANCIAL, INC. May 30, 2012
Exhibit 10.1
DEFINITIVE TRANSACTION FRAMEWORK AGREEMENT
BY AND AMONG
GENERAL MOTORS LLC,
STATE STREET BANK AND TRUST COMPANY,
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
AND
PRUDENTIAL FINANCIAL, INC.
May 30, 2012
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TABLE OF CONTENTS
ARTICLE I | ||||
DEFINITIONS AND INTERPRETATION | Page | |||
Section 1.1 | Definitions | |||
Section 1.2 | Interpretation | |||
ARTICLE II | ||||
PURCHASE OF SINGLE PREMIUM GROUP ANNUITY CONTRACT | ||||
Section 2.1 | Closing | |||
Section 2.2 | Deliveries at Closing | |||
Section 2.3 | Final Plan Portfolio and Contract 300 Portfolio P | |||
Section 2.4 | Calculation of Base Annuity Premium and Solicited Adjusted Annuity Premium | |||
Section 2.5 | Calculation of Revised Base Annuity Premium | |||
Section 2.6 | Determination and Valuation of Final Plan Portfolio | |||
Section 2.7 | Calculation of Dry-Run Closing Premiums | |||
Section 2.8 | Calculation of the Preliminary Closing Premium and Revised Preliminary Closing Premium | |||
Section 2.9 | Calculation of the Closing Final Premium | |||
Section 2.10 | Interim Post-Closing Final Premium | |||
Section 2.11 | Final Valuation of Final Plan Portfolio and Post-Closing Final Premium | |||
Section 2.12 | Post-Closing Final Premium and Closing Asset Valuation Disputes | |||
Section 2.13 | True-Up Payment Upon Resolution of Post-Closing Final Premium and Closing Asset Valuation Disputes | |||
Section 2.14 | TCF | |||
Section 2.15 | Access and Cooperation | |||
Section 2.16 | Data Updates | |||
Section 2.17 | Business Day Adjustments | |||
Section 2.18 | Adjustment to the Target Closing Date | |||
Section 2.19 | Amendments to the Group Annuity Contract | |||
Section 2.20 | Amendments to the Procedures Manual and Identified CD-ROM | |||
Section 2.21 | [ *** ] | |||
Section 2.22 | Return of Additional Premium Due To Late Discovery of Mortality | |||
Section 2.23 | Reimbursement of [ *** ] | |||
ARTICLE III | ||||
COMPANY'S REPRESENTATIONS AND WARRANTIES | ||||
Section 3.1 | Due Organization, Good Standing and Corporate Power |
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TABLE OF CONTENTS
Section 3.2 | Authorization of Agreement; Enforceability | |||
Section 3.3 | Consents And Approvals; No Violations | |||
Section 3.4 | Compliance with ERISA and Code | |||
Section 3.5 | No Brokers' Fee | |||
Section 3.6 | No Discretionary Authority | |||
Section 3.7 | Accuracy of Information | |||
Section 3.8 | Parent Liquidity Position | |||
Section 3.9 | Delivery of Plan | |||
Section 3.10 | Settlement Accounting | |||
Section 3.11 | No Other Representations or Warranties; Reliance | |||
ARTICLE IV | ||||
INDEPENDENT FIDUCIARY'S REPRESENTATIONS AND WARRANTIES | ||||
Section 4.1 | Due Organization, Good Standing and Corporate Power | |||
Section 4.2 | Authorization of Agreement; Enforceability | |||
Section 4.3 | Consents And Approvals; No Violations | |||
Section 4.4 | ERISA Related Determinations. | |||
Section 4.5 | No Brokers' Fee | |||
Section 4.6 | No Other Representations or Warranties; Reliance | |||
ARTICLE V | ||||
INSURER AND INSURER PARENT REPRESENTATIONS AND WARRANTIES | ||||
Section 5.1 | Due Organization, Good Standing and Corporate Power | |||
Section 5.2 | Authorization of Agreement; Enforceability | |||
Section 5.3 | Consents And Approvals; No Violations | |||
Section 5.4 | Enforceability of Group Annuity Contract | |||
Section 5.5 | RBC Ratio | |||
Section 5.6 | Compliance with Laws | |||
Section 5.7 | No Brokers' Fee | |||
Section 5.8 | Disclosed Information | |||
Section 5.9 | No Other Representations or Warranties; Reliance | |||
ARTICLE VI | ||||
PRE CLOSING COVENANTS | ||||
Section 6.1 | Plan Amendments; Company Certification | |||
Section 6.2 | Notice of Material Litigation |
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TABLE OF CONTENTS
Section 6.3 | Efforts to Close; Regulatory Clearances; Third-Party Consents | |||
Section 6.4 | Public Announcements; SEC Filings | |||
Section 6.5 | Notification of Certain Matters | |||
Section 6.6 | Calculation and Adjustment of Insurer RBC Ratio; Projected Parent Liquidity Position; Liquidity Requirement; Liquidity Cap | |||
Section 6.7 | Administrative Transition Process | |||
Section 6.8 | Compliance with Prohibited Transaction Class Exemption 84-24 | |||
Section 6.9 | Pre-Closing Meeting | |||
Section 6.10 | Non-Solicitation | |||
Section 6.11 | Information Provided To The Independent Fiduciary | |||
Section 6.12 | [ *** ] Diligence | |||
Section 6.13 | Newco | |||
Section 6.14 | Recoupment | |||
ARTICLE VII | ||||
OTHER COVENANTS | ||||
Section 7.1 | Company Actions | |||
Section 7.2 | Insurer Actions | |||
Section 7.3 | Cooperation with Independent Third Party | |||
Section 7.4 | Administrative Services | |||
Section 7.5 | Transferred Asset True-Ups | |||
Section 7.6 | Correspondence Center | |||
ARTICLE VIII | ||||
CONDITIONS TO OBLIGATION TO CLOSE | ||||
Section 8.1 | Conditions to the Independent Fiduciary's Obligations | |||
Section 8.2 | Conditions to the Company's Obligations | |||
Section 8.3 | Conditions to the Insurer's Obligations | |||
Section 8.4 | No Frustration of Closing Conditions | |||
ARTICLE IX | ||||
INDEMNIFICATION FOR THIRD PARTY CLAIMS | ||||
Section 9.1 | Indemnification by the Insurer | |||
Section 9.2 | Procedures For Indemnification Claims | |||
Section 9.3 | Claims and Payment; Treatment of Payments | |||
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TABLE OF CONTENTS
ARTICLE X | ||||
TERMINATION | ||||
Section 10.1 | Termination of Agreement | |||
Section 10.2 | Effect of Termination | |||
ARTICLE XI | ||||
MISCELLANEOUS | ||||
Section 11.1 | Expenses | |||
Section 11.2 | Entire Agreement | |||
Section 11.3 | Amendments and Waivers | |||
Section 11.4 | Succession and Assignment | |||
Section 11.5 | Notices | |||
Section 11.6 | Governing Law | |||
Section 11.7 | Submission to Jurisdiction; Service of Process | |||
Section 11.8 | Waivers of Jury Trial | |||
Section 11.9 | Specific Performance | |||
Section 11.10 | Severability | |||
Section 11.11 | No Third Party Beneficiaries | |||
Section 11.12 | Counterparts; Facsimile and Electronic Signatures | |||
Section 11.13 | Survival of Representations and Warranties | |||
Section 11.14 | Confidentiality; Intellectual Property | |||
Section 11.15 | Waiver of Punitive Damages | |||
APPENDICES | Title | |||
Appendix 1.1-A | Form of Group Annuity Contract | |||
Appendix 1.1-B | Form of GA 300 True-Up Amendment | |||
Appendix 1.2 | Priced Lives | |||
Appendix 1.3 | Forms of Annuity Certificates | |||
Appendix 2.1-A | Mechanics for Transfer of Final Plan Portfolio | |||
Appendix 2.1-B | Final Plan Portfolio Transfer Instrument | |||
Appendix 2.6 | Asset Valuation Formulas and Methods | |||
Appendix 2.6(d)(I) | List of [ *** ] that Plan Trustee Intends to Transfer at Closing | |||
Appendix 2.6(d)(II) | List of Additional [ *** ] that Plan Trustee May Include, in Ranking Order of Preference | |||
Appendix 2.7 | Form of Premium Calculation | |||
Appendix 2.12 | Dispute Resolution |
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TABLE OF CONTENTS
Appendix 6.6 | Projected RBC Ratio Calculation Method | |||
Appendix 6.7 | Administrative Transition Process | |||
Appendix 8.2(d) | Insurer Governmental Approvals | |||
Appendix 8.2(e) | Plan Governmental Approvals | |||
EXHIBITS | ||||
Exhibit A | Form of Transferred Assets Schedules | |||
Exhibit B | Form of Plan Trustee Agreement | |||
Exhibit C | Form of Final Asset Statement | |||
Exhibit D | Form of Instruction to [ *** ] | |||
DISCLOSURE LETTERS | ||||
Company Disclosure Letter | ||||
Prudential Disclosure Letter | ||||
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DEFINITIVE TRANSACTION FRAMEWORK AGREEMENT
This DEFINITIVE TRANSACTION FRAMEWORK AGREEMENT (this “Agreement”) is entered into as of May 30, 2012 (the “DTFA Execution Date”) by and among The Prudential Insurance Company of America, a New Jersey life insurance company (the “Insurer”), Prudential Financial, Inc., a New Jersey corporation (“Insurer Parent”), General Motors LLC, a Delaware limited liability company (acting in a non-fiduciary capacity as the sponsor of the Plan (the “Company”), and State Street Bank and Trust Company, a Massachusetts trust company, solely in its capacity as the independent fiduciary of the General Motors Retirement Program for Salaried Employees (the “Plan”) with authority and responsibility to represent the Plan and its Plan Participants and Plan Beneficiaries in regard to the transactions set forth herein (the “Independent Fiduciary”). The Insurer, Insurer Parent, the Company, and the Independent Fiduciary as the representative of the Plan are referred to collectively herein as the “Parties.”
WITNESSETH
WHEREAS, the Company wishes to spin off from the Plan various assets and liabilities attributable to active salaried employee participants, deferred vested participants and certain other participants and transfer them to a New Plan, such that the remaining Plan Participants and Plan Beneficiaries in the Plan consist of Covered Lives, Contingent Lives and Beneficiaries (the “Plan Spin-Off”);
WHEREAS, the Company has amended the Plan to provide certain Plan Participants and Plan Beneficiaries in pay status with the right to elect a Lump-Sum Payment;
WHEREAS, the Company wishes to amend the Plan to provide for a Standard Termination of the Plan covering the remaining Plan Participants and Plan Beneficiaries (the “Plan Termination”), and intends to transfer to the Plan sufficient funding to meet the requirements for a Standard Termination;
WHEREAS, the Independent Fiduciary has been appointed to represent the Plan and its Plan Participants and Plan Beneficiaries in connection with the purchase of one or more group annuity contracts and has been and will be responsible for the selection of the insurer to provide such annuity contract(s) for all Covered Lives, Contingent Lives and Beneficiaries in accordance with ERISA and applicable guidance, including Interpretive Bulletin 95-1;
WHEREAS, the Insurer wishes to issue to the Plan the Group Annuity Contract on the terms and subject to the conditions set forth herein and therein;
WHEREAS, Insurer Parent expects to derive substantial benefit from the consummation of the transactions contemplated by this Agreement and the Insurer's issuance of the Group Annuity Contract;
WHEREAS, the Company is desirous of proceeding with the Plan's purchase of the Group Annuity Contract from the Insurer in connection with the Plan Termination, and is providing the Plan a commitment to contribute the additional funding necessary to enable the Plan to satisfy Plan benefits in accordance with 29 U.S.C. §4041(b), on the terms and subject to the conditions set forth herein;
WHEREAS, the Independent Fiduciary has determined that the Insurer satisfies the requirements of Interpretive Bulletin 95-1 and will direct the Plan to proceed to purchase the Group Annuity Contract from the Insurer in connection with the termination of the Plan on the terms and subject to the conditions set forth herein; and
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WHEREAS, prior to the execution of this Agreement, the Insurer has entered into a letter of understanding with Fidelity, which acts as the recordkeeper and third party administrator for the Plan, setting forth the principal terms governing an Administration and Transition Services Agreement (“ATSA”).
NOW, THEREFORE, in consideration of the mutual promises herein made, and in consideration of the representations, warranties and covenants herein contained, the Parties agree as follows:
ARTICLE 1 | ||||
DEFINITIONS AND INTERPRETATION |
“10-Q” is defined in Section 6.4(f).
“Action” means any claim, action, suit, arbitration, complaint, charge, investigation, inquiry or proceeding by or before any Governmental Authority.
“Additional Classification Error Correction” means the amount of the adjustment to the Dry-Run Post-Solicitation Premiums, the Preliminary Post-Solicitation Premium, the Interim Post-Closing Post-Solicitation Premium or the Post-Closing Post-Solicitation Premium, as applicable, as determined by the Insurer and limited to the Additional Classification Errors in accordance with the methodologies that are applied by the Insurer in calculating the Non-Solicited Annuity Premium, the Solicited Annuity Premium and, if applicable, the Non-Electing Annuity Premium.
“Additional Classification Errors” means only those Classification Errors (other than Signing Classification Errors) that the Company or its Affiliates or Fidelity reports to the Insurer in writing; provided, that, in the case of any such report by Fidelity, the Company shall have the right to (a) review such report and (b) promptly correct any errors in such report.
“Adjusted Basis Amount” is defined in the Procedures Manual.
“Affiliate” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person. For the purposes of this definition, “controlling,” “controlled” and “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise; provided, however, that none of the United States, the U.S. Department of Treasury nor any Person controlled by the United States or the U.S. Department of Treasury shall be deemed to be an Affiliate of the Company solely because of the ownership, directly or indirectly, by the U.S. Department of Treasury of equity interests in the corporate parent of the Company.
[ *** ]
“Agreed Updates” is defined in Section K of the Procedures Manual.
“Agreement” is defined in the preamble.
“Alternative Arrangement” is defined in Section 6.7.
“Alternative Transaction Proposal” is defined in Section 6.10.
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“Ancillary Agreements” means the Group Annuity Contract (after giving effect to the restatement of Contract 300 Article P and all exhibits thereto), the Plan Trustee Agreement, the Escrow Agreement, the Independent Third Party Agreement, and all other written agreements, documents or certificates to be delivered by a Party, the Plan, the Plan Trustee or the Plan Investment Fiduciary at the Closing.
“Annuitant” means a person to whom the Insurer is required to issue an Annuity Certificate pursuant to the terms of the Group Annuity Contract and this Agreement.
“Annuity Certificate” means an annuity certificate substantially in the applicable form set forth in Appendix 1.3, with such modifications as may be made by the Insurer as required by, or permitted under, applicable Law.
“Annuity Commencement Date” means (a) January 1, 2013; if the Closing occurs on or prior to the Outside Date or (b) such other date, if applicable, as may be provided pursuant to Section 10.2(d).
“Annuity Committee” means the named fiduciary of the Plan which appointed and designated the Independent Fiduciary in connection with the transactions set forth in this Agreement.
“Annuity Exhibit” means Schedule 1 to the calculation of the Final Premium in the form of Schedule 1 to Appendix 2.7.
“Annuity Payment” means the monthly payments payable to Annuitants pursuant to the Group Annuity Contract.
[ *** ]
“Approved Firm” means any of the firms listed in the letter agreement between the Company and the Insurer dated as of the date hereof, unless such entity, or any of its Affiliates, is subject to an agreement with any Party to this Agreement to provide audit, tax or other similar services to such Party or any of its Affiliates; provided, that, if (a) all of such entities are ineligible pursuant to the foregoing limitations or (b) all of such entities are otherwise unavailable, such other nationally recognized independent accounting, actuarial or consulting firm as may be reasonably acceptable to the Company and the Insurer.
“Approved Firm-A” means any of the Approved Firms applicable to Section 6.6(a).
“Approved Firm-B” means any of the Approved Firms applicable to Section 6.6(b).
“Approved Firm-C” means any of the Approved Firms applicable to Section 2.12.
“Arbitration Disputes” is defined in Section 2.12(a).
“ASC 715” means Accounting Standards Codification Section 715: Compensation-Retirement Benefits.
“Asset Class” means each asset class identified in Section I of the Procedures Manual.
“ATSA” is defined in the recitals.
“Authorized Control Level RBC” means the denominator determined under the risk-based capital formula in accordance with the RBC instructions.
[ *** ]
3
“[ *** ] Transfer Documentation” means the assignment and assumption agreement(s) or similar transfer documents necessary to permit the transfer of a [ *** ] to the Insurer.
“Base Annuity Premium” means the sum of the Non-Solicited Annuity Premium and the Solicited Annuity Premium.
“Beneficiary” has the meaning ascribed to such term in the Group Annuity Contract.
“Benefit Amount Correction” means the adjustment to the Dry-Run Post-Solicitation Premiums, the Preliminary Post-Solicitation Premium, the Interim Post-Closing Post-Solicitation Premium or the Post-Closing Post-Solicitation Premium, as applicable, as calculated in accordance with the methodology and procedures set forth in Section B of the Procedures Manual, as a result of a Benefit Amount Increase.
“Benefit Amount Increase” means a data error that reflects an increase in the total monthly benefit under the Plan for any Priced Life, and only with respect to such Priced Life.
“Xxxx of Sale” is defined in Appendix 2.1-B.
“Broker-Quote [ *** ]” means each [ *** ] which, as of the close of business on the second Business Day preceding the Target Closing Date, neither Reuters/LPC nor Markit Group is available as of such date or no fair market value is indicated by any such source as of such date.
“Broker-Quote Public Bond” means each Public Bond for which, as of the close of business on the second Business Day preceding the Target Closing Date, none of the primary pricing source, secondary pricing source or tertiary pricing source (if any) set forth in Table 1 on Appendix 2.6 is available as of such date or no fair market value is indicated by any such source as of such date.
“Business Day” means any day other than a Saturday, a Sunday or a day on which banks located in New York, New York are authorized or required by Law to close.
“Calculating Party” is defined in Section 6.6(c).
“Cash” means (a) currency of the United States of America or wire transfers thereof that is legal tender for payment of all public and private debts and (b) marketable direct obligations issued or unconditionally guaranteed by the United States of America, or issued by any agency thereof, maturing within one year from the date of acquisition thereof.
“Cash Closing Payment” is defined in Section 2.1(a).
“Classification Error” means as to Signing Classification Errors, an incorrect classification of a Priced Life or a Priced Life's benefits as to be solicited or to be non-solicited, and as to Additional Classification Errors, sending a Lump-Sum Solicitation to a Priced Life, in respect of such Priced Life's benefits, referenced in Appendix 1.2 as a Non-Solicited Life, or not sending a Lump-Sum Solicitation to a Priced Life, in respect of such Priced Life's benefits, referenced in Appendix 1.2 as a Solicited Life.
“Closing Asset Transfers” is defined in Section 2.1(a).
“Closing Asset Valuation” is defined in Section 2.11(a).
“Closing Broker-Quote Valuations” is defined in Section 2.10(a).
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“Closing CMA Adjustment” means the adjustment applied to the Closing Final Premium, the Interim Post-Closing Final Premium and the Post-Closing Final Premium with respect to the period from the DTFA Pricing Date through the close of business on the last Business Day prior to the Closing Date, stated as a percentage and calculated in accordance with the methodology and procedures set forth in Section F of the Procedures Manual.
“Closing” is defined in Section 2.1(b).
“Closing Date” is defined in Section 2.1(b).
“Closing Date Adjustment” means the adjustment applied to the Closing Final Premium, the Interim Post-Closing Final Premium and the Post-Closing Final Premium, stated as a percentage and calculated in accordance with the methodology and procedures set forth in Section E of the Procedures Manual.
“Closing Final Premium” is defined in Section 2.9(c).
“Closing [ *** ] Adjustment” means the total dollar price adjustment to the Closing Final Premium, the Interim Post-Closing Final Premium and the Post-Closing Final Premium relating to [ *** ] as of the close of business on the last Business Day prior to the Closing Date, as calculated in accordance with the methodology and procedures set forth in Section I of the Procedures Manual.
“Closing PFS Adjustment” means the adjustment applied to the Closing Final Premium, the Interim Post-Closing Final Premium, and the Post-Closing Final Premium determined as of the close of business on the last Business Day prior to the Closing Date, stated as a percentage and calculated in accordance with the methodology and procedures set forth in Section H of the Procedures Manual.
“Closing SCA Adjustment” means the adjustment applied to the Closing Final Premium, the Interim Post-Closing Final Premium and the Post-Closing Final Premium with respect to the period from the DTFA Pricing Date through the close of business on the last Business Day prior to the Closing Date, stated as a percentage and calculated in accordance with the methodology and procedures set forth in Section G of the Procedures Manual.
“CMA Adjustment” means, as of the dates as provided in this Agreement, the adjustment that would be applied to the Closing Final Premium if the Closing were to occur on such date, with respect to the period from the DTFA Pricing Date through the close of business on the last Business Day prior to such date, stated as a percentage and calculated in accordance with the methodology and procedures set forth in Section F of the Procedures Manual.
“Code” means the Internal Revenue Code of 1986.
“Company” is defined in the preamble.
“Company Action Level Risk-Based Capital” means, with respect to any insurer, the product of 2.0 and its Authorized Control Level RBC.
“Company Controlled Group” means the Company and its Affiliates.
“Company Disclosure Letter” means the disclosure letter as delivered by the Company to the other Parties immediately prior to the execution of this Agreement.
5
“Company's Knowledge” means the actual knowledge of any officer of the Company responsible for the day to day administration or oversight of the Plan or directly involved in the negotiation of this Agreement or the transactions contemplated hereby, in each case, (a) after making appropriate inquiry of those people reporting directly to such officer who have substantial responsibility for the relevant subject matter, and (b) if none of such officers or people reporting directly to them have substantial responsibility for the subject matter that is the subject of the relevant representation, after making appropriate inquiry of an officer of the Company that has substantial responsibility for such subject matter.
“Company MAC” means the occurrence or existence of any fact, circumstance, change, development, condition or event subsequent to the DTFA Execution Date that individually or in the aggregate would, or would reasonably be expected to, [ *** ].
“Company Provided Life-by-Life Information” is defined in the Procedures Manual.
“Compelled Disclosing Party” is defined in Section 11.14(d).
“Confidential Information” means all business and technical information or processes, stored in any medium, to the extent the same is reasonably construed or generally accepted as containing a trade secret, proprietary or confidential information of or belonging to any Party, its Representatives, its Affiliates or its Affiliates' Representatives, including know-how and trade secrets, customer or client requirements and lists, Insurer Provided Life-by-Life Information, the Company Provided Life-by-Life Information, the Procedures Manual, the Identified CD-ROM, technology, software and data processing procedures, insurance, actuarial, accounting and financial data, management systems, records and any other information that is designated as confidential, and the portions of any reports or other documents prepared by the Independent Third Party, the Approved Firms or any arbitrator or staff thereof or any other professional engaged in connection with this Agreement and any report or other document prepared by a receiving Party that contains or incorporates Confidential Information of a disclosing Party. Confidential Information includes information communicated orally, in writing or in any other recorded or tangible form, includes information supplied by the disclosing Party and includes information delivered prior to the date hereof pursuant to the Confidentiality Agreements. Information received by the receiving Party containing trade secrets or proprietary or confidential information constitutes Confidential Information.
“Confidentiality Agreements” means, collectively, (i) the Confidentiality Agreement, dated September 9, 2011, between the Insurer and the Company, as amended, (ii) the confidentiality provisions set forth in the Independent Fiduciary's engagement agreement dated Xxxxx 00, 0000, (xxx) the Confidentiality Agreement, dated February 23, 2012, between the Company, the Independent Fiduciary and the Annuity Committee, and (iv) the Confidentiality Agreement, entered into in March, 2012, between the Insurer and the Independent Fiduciary.
“[ *** ] Asset” means any [ *** ] in the Final Plan Portfolio that is within the In-Kind Asset Tolerances set forth and described in Section I of the Procedures Manual.
“Consents” means any consent, approval (or deemed approval after the expiry of all appropriate waiting periods), authorization, notice, permission or waiver.
“Contingent Lives” has the meaning ascribed to such term in the Group Annuity Contract.
“Contract” means any legally enforceable agreement, contract, commitment, instrument, undertaking, lease, note, mortgage, indenture, license or arrangement, whether written or oral.
6
“Contract 300” means Group Annuity Contract No. 300, as amended, including Contract 300 Article A, Contract 300 Article M and Contract 300 Article P.
“Contract 300 Article A” means Article A of Group Annuity Contract No. 300, as amended, issued by Aetna Life Insurance Company.
“Contract 300 Article M” means Article M of Group Annuity Contract No. 300, as amended, issued by Metropolitan Life Insurance Company.
“Contract 300 Article P” means, prior to Closing, Article P of Group Annuity Contract No. 300, as amended, issued by Insurer.
“Contract 300 Portfolio P” means, as of any date of determination, the assets held in the Insurer's separate account VCA-GA-7436, as that separate account exists as of such date used by the Insurer to satisfy the Insurer's liabilities under Contract 300 Article P.
“Covered Lives” has the meaning ascribed to such term in the Group Annuity Contract.
“Covered Period” is defined in Appendix 6.6.
“Credit Rating Agencies” means each of Standard & Poor's Rating Services, a division of The XxXxxx-Xxxx Companies, Inc., Xxxxx'x Investors Service, Inc. and Fitch Ratings Ltd., and their respective successors and assigns.
“Data Error” is defined in the Procedures Manual.
“Determination Letter” means a favorable letter issued by the Internal Revenue Service regarding the tax-qualified status of the Plan under Code § 401(a).
“Disclosure Letters” means, collectively, the Company Disclosure Letter and the Prudential Disclosure Letter.
“Dispute” means any claim, counterclaim, demand, cause of action, controversy or dispute.
“DRO” means a Qualified Domestic Relations Order as set forth in ERISA § 206(d)(3) and Code § 401(a)(13)(B).
“Dry-Run Additional Classification Error” means, with respect to each calculation of a Dry-Run Post-Solicitation Premium, the Additional Classification Error Correction, as calculated by the Insurer as of the day that is seven (7) days prior to the date such Dry-Run Post-Solicitation Premium is required to be delivered by the Insurer to the Company.
“Dry-Run Benefit Amount Correction” means, with respect to each calculation of a Dry-Run Post-Solicitation Premium, the Benefit Amount Correction, as calculated by the Insurer as of the day that is seven (7) days prior to the date such Dry-Run Post-Solicitation Premium is required to be delivered by the Insurer to the Company.
“Dry-Run Closing Premium” is defined in Section 2.7(a).
“Dry-Run [ *** ]” means, with respect to each calculation of a Dry-Run Post-Solicitation Premium, the [ *** ], as calculated by the Insurer as of the day that is seven (7) days prior to the date such Dry-Run Post-Solicitation Premium is required to be delivered by the Insurer to the Company.
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“Dry-Run Post-Solicitation Premium” is defined in Section 2.5(e)(i).
“Dry-Run Single Life Mortality Correction” means, with respect to each calculation of a Dry-Run Post-Solicitation Premium, the Single Life Mortality Correction, as calculated by the Insurer as of the day that is seven (7) days prior to the date such Dry-Run Post-Solicitation Premium is required to be delivered by the Insurer to the Company.
“DTFA Execution Date” is defined in the preamble.
“DTFA Pricing Date” means April 30, 2012.
“Enforceability Exception” is defined in Section 3.2.
“ERISA” means the Employee Retirement Income Security Act of 1974.
“Escrow Account” means the account established pursuant to the Escrow Agreement.
“Escrow Agent” means U.S. Bank, National Association.
“Escrow Agreement” means the escrow agreement, dated as of May 30, 2012, between the Company, the Insurer and the Escrow Agent and effective as of the DTFA Execution Date.
“Estimated Lump-Sum Data” is defined in Section 2.5(d).
[ *** ] Newco, [ *** ] Newco [ *** ] Newco [ *** ] Newco [ *** ] Newco, [ *** ] Newco [ *** ] Newco.
“Expected Data Finalization Date” is defined in the Group Annuity Contract.
“Extension Period” is defined in Section 10.2(d)(i).
“Fidelity” means Fidelity Workplace Services, LLC.
“Final Asset Statement” is defined in Section 2.6(a).
“Final Additional Classification Errors Correction” means the Additional Classification Errors Correction, as calculated by the Insurer as of the Annuity Commencement Date (or if no Interim Post-Closing Post-Solicitation Premium was delivered, the date that is 30 days prior to the Target Closing Date) and taking into account Additional Classification Errors that are reported to the Insurer on or after the Interim Corrections Calculation Date and prior to the date that is 7 days prior to the date that the calculation of the Post-Closing Final Premium is delivered pursuant to Section 2.11(c)(ii).
“Final Benefit Amount Correction” means the Benefit Amount Correction, as calculated by the Insurer as of the Annuity Commencement Date and taking into account Benefit Amount Increases that are discovered by the Insurer on or after the Interim Corrections Calculation Date (or if no Interim Post-Closing Post-Solicitation Premium was delivered, the date that is 30 days prior to the Target Closing Date) and prior to the date that is 7 days prior to the date that the calculation of the Post-Closing Final Premium is delivered pursuant to Section 2.11(c)(ii).
“Final [ *** ]” means the [ *** ], as calculated by the Insurer as of the Annuity Commencement Date and taking into account Data Errors that are discovered by the Insurer on or after the Interim Corrections Calculation Date (or if no Interim Post-Closing Post-Solicitation Premium was delivered,
8
the date that is 30 days prior to the Target Closing Date) and prior to the date that is 7 days prior to the date that the calculation of the Post-Closing Final Premium is delivered pursuant to Section 2.11(c)(ii).
“[ *** ]” is defined in Section 2.5(e)(ii).
“Final Plan Portfolio” means the portfolio of [ *** ] set forth on the Transferred Assets Schedule. For the avoidance of doubt, the assets in Contract 300 Portfolio P at Closing are part of the Final Plan Portfolio.
“Final Pre-Closing Asset Valuation” is defined in Section 2.6(e).
“Final Single Life Mortality Correction” means the Single Life Mortality Correction, as calculated by the Insurer as of the Annuity Commencement Date, and taking into account the death of any Covered Life prior to the Annuity Commencement Date who elected a Single Life Annuity that is discovered by the Insurer on or after the Interim Corrections Calculation Date (or if no Interim Post-Closing Post-Solicitation Premium was delivered, the date that is 30 days prior to the Target Closing Date) and prior to the date that is 7 days prior to the date that the calculation of the Post-Closing Final Premium is delivered pursuant to Section 2.11(c)(ii).
“Firm Limit” is defined in Section I of the Procedures Manual.
“[ *** ] Assets” means a total amount of [ *** ] up to the lesser of (a) [ *** ] of the Closing Final Premium or (b) [ *** ], but in no event to be less than [ *** ], as discussed in Section I of the Procedures Manual.
“FOA” is defined in Section A of the Procedures Manual.
“Form 500” means PBGC Form 500 filed in connection with the Plan's termination, and described in 29 C.F.R. § 4041.25.
“Form 501” means PBGC From 501 filed to certify the distribution of all Plan benefits, and described in 29 C.F.R. § 4041.29.
“GAAP” means United States generally accepted accounting principles and practices in effect from time to time applied consistently throughout the periods involved.
“[ *** ]” means the adjustment to the Dry-Run Post-Solicitation Premiums, the Preliminary Post-Solicitation Premium, the Interim Post-Closing Post-Solicitation Premium or the Post-Closing Post-Solicitation Premium, as applicable, as calculated in accordance with the methodology and procedures set forth in Section B of the Procedures Manual, as a result of a Data Error.
“General Account” means the Insurer's general account.
“Governmental Approval” means any Consent of a Governmental Authority.
“Governmental Authority” means any federal, state, municipal, foreign or local government or quasi-governmental authority or any regulatory or administrative body, department, agency, insurance commission or commissioner, subdivision, court or other tribunal, arbitrator or arbitral body of any of the foregoing.
“Group Annuity Contract” means a single premium, non-participating group annuity contract, and all exhibits thereto, that amends and restates Contract 300 Article P and is issued by the Insurer in the form of Appendix 1.1A.
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“Group Annuity Contract Issuance” is defined in Section 2.1(a).
“Guaranteed Separate Account” means the Insurer's dedicated, non-commingled separate account identified as [ *** ] that will be used to pay all or a portion of the Annuity Payments due under the Group Annuity Contract.
“[ *** ]” is defined in Section 6.5(c) and determined in accordance with Appendix 6.6.
“Identified CD-ROM” means the version of each Microsoft Excel spreadsheet that was uploaded to the RR Xxxxxxxx Venue Virtual Data Room, Project Name Vita Commercial Diligence, between 5:48 pm New York City time on May 29, 2012 and noon New York City time on May 30, 2012 by the Insurer, as the same may be updated in accordance with Section 2.4(c) or Section 2.20, and such Microsoft Excel spreadsheets to which the Company has been provided access will be downloaded by RR Xxxxxxxx onto a tangible CD-ROM on the DTFA Execution Date, or as promptly as practical thereafter, and will be initialed by the Company and the Insurer.
“IF Engagement Letter” has the meaning set forth in Section 3.4.
“Incremental Interim [ *** ] Adjustment” is the adjustment to the Interim Post-Closing Final Premium and the Post-Closing Final Premium defined in Section I of the Procedures Manual.
“Incremental Final [ *** ] Adjustment” is the adjustment to the Post-Closing Final Premium defined in Section I of the Procedures Manual.
“Indemnified Party” is defined in Section 9.1.
“Independent Fiduciary” is defined in the preamble.
“Independent Fiduciary Controlled Group” means the Independent Fiduciary and its Affiliates.
“Independent Fiduciary MAC” means the occurrence, in the sole discretion of the Independent Fiduciary, of a material adverse change in the Insurer subsequent to the DTFA Execution Date that would cause the selection of the Insurer to fail to satisfy ERISA and applicable guidance, including Interpretive Bulletin 95-1.
“Independent Third Party” means KPMG, LLP, or such other independent firm selected jointly by the Company and the Insurer.
“Independent Third Party Agreement” means the agreement between the Independent Third Party, the Company, and the Insurer in connection with premium verification and dispute resolution services outlined in this Agreement.
“Initial Certification” is defined in Section 2.4(a).
“Initial [ *** ]” means [ *** ], as updated into [ *** ] pursuant to the terms hereof.
“In-Kind Asset Information” is defined in Section H of the Procedures Manual.
“In-Kind Asset Tolerances” means the percentage limits for assets set forth and described in Section I of the Procedures Manual.
“Insurer” is defined in the preamble.
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“Insurer MAC” means the occurrence of any fact, circumstance, change, development, condition or event subsequent to the DTFA Execution Date that individually or in the aggregate would, or would be reasonably expected to, cause the [ *** ], at any point subsequent to the DTFA Execution Date, to be less than [ *** ].
“Insurer Parent” is defined in the preamble.
“Insurer Provided Life-by-Life Information” is defined in Section 2.4(a).
“Interim Closing Asset Valuation” is defined in Section 2.10(a).
“Interim Corrections Calculation Date” means December 13, 2012.
“Interim Post-Closing Additional Classification Errors Correction” means the Additional Data Errors Correction, as calculated by the Insurer as of the Interim Corrections Calculation Date and taking into account Classification Errors that are reported to the Insurer on or after the date that is 30 days prior to the Target Closing Date and prior to the Interim Corrections Calculation Date.
“Interim Post-Closing Benefit Amount Correction” means the Benefit Amount Correction, as calculated by the Insurer as of the Interim Corrections Calculation Date and taking into account Benefit Amount Increases that are discovered by the Insurer on or after the date that is 30 days prior to the Target Closing Date and prior to the Interim Corrections Calculation Date.
“Interim Post-Closing Final Premium” is defined in Section 2.10(b)(ii).
“Interim Post-Closing [ *** ]” means the [ *** ], as calculated by the Insurer as of the Interim Corrections Calculation Date and taking into account Data Errors that are discovered by the Insurer on or after the date that is 30 days prior to the Target Closing Date and prior to the Interim Corrections Calculation Date.
“Interim Post-Closing Insurer Payment” is defined in Section 2.10(c)(i).
“Interim Post-Closing Plan Payment” is defined in Section 2.10(c)(ii).
“Interim Post-Closing Post-Solicitation Premium” is defined in Section 2.10(b)(i).
“Interim Post-Closing Single Life Mortality Correction” means the Single Life Mortality Correction, as calculated by the Insurer as of the Interim Corrections Calculation Date and taking into account the death of any Covered Life prior to the Annuity Commencement Date who elected a Single Life Annuity that is discovered by the Insurer on or after the date that is 30 days prior to the Target Closing Date and prior to the Interim Corrections Calculation Date.
“Interpretive Bulletin 95-1” means the U.S. Department of Labor's interpretive bulletin codified at 29 C.F.R. § 2509.95-1.
“Joint Written Direction” is defined in the Escrow Agreement.
“Law” means any federal, state, foreign or local law, statute, ordinance, regulation, rule or Order of any Governmental Authority.
“Liability” means any direct or indirect liability, debt, obligation, commitment, guaranty, claim, loss, damage, deficiency, penalty, fine, cost or expense of any kind, whether relating to payment, performance or
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otherwise, known or unknown, fixed, absolute or contingent, accrued or unaccrued, matured or unmatured, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, whenever and however arising (including whether or not required to be reflected or reserved against on the financial statements of the obligor under GAAP).
“Liability [ *** ]” is defined in Section C of the Procedures Manual.
“Liens” means any lien, mortgage, security interest, pledge, deposit, encumbrance, restrictive covenant or other similar restriction.
“Liquidity Actions” means the taking of any of the following actions during the Covered Period: (i) [ *** ] during the Covered Period, or (ii) [ *** ] during the Covered Period, [ *** ]: (a) [ *** ] (i) [ *** ] in the aggregate; or (ii) [ *** ] and (b) [ *** ].
“Liquidity Cap” means an amount equal to [ *** ].
“Liquidity Requirement” means an amount in cash, as determined [ *** ] prior to the Target Closing Date, equal to (A) minus (B), where (A) equals [ *** ] as calculated pursuant to Appendix 2.6 (which, for the avoidance of doubt, does not include [ *** ] and (B) equals (i) [ *** ] plus (ii) the [ *** ], or if such [ *** ] at such time, then the [ *** ], in connection with [ *** ] (currently expected to be in the range of [ *** ], plus (iii) [ *** ], plus (iv) with respect to the [ *** ] necessary to (a) [ *** ] and (b) [ *** ], where determinations for both (a) and (b) shall be made by [ *** ].
“Losses” means any and all liabilities, losses, damages, expenses (including reasonable expenses of investigation, enforcement and collection and reasonable attorneys' and accountants' fees and expenses, in each case, in connection with any Action), costs, fines, fees, penalties and obligations.
“Lump-Sum Data” is defined in Section 2.5(a).
“Lump-Sum Election” means the timely and legally binding election by a Solicited Electing Life to receive a Lump-Sum Payment in accordance with the Lump-Sum Solicitation and the applicable Plan provisions.
“Lump-Sum Election Period” means the period from June 1, 2012 to the earlier to occur of (i) September 30, 2012 and (ii) the last date on which a Lump-Sum Payment is made.
“Lump-Sum Payment” means the single, lump-sum payment to a Solicited Electing Life.
“Lump-Sum Payment Period” means the period during which Lump-Sum Payments are made pursuant to the Lump-Sum Elections, but in no event may such Lump-Sum Payment Period extend beyond September 30, 2012.
“Lump-Sum Solicitation” means the offering by the Plan to the Solicited Lives of a right to elect a Lump-Sum Payment during the Lump-Sum Election Period.
“Material Litigation” means any Action that (a) has been initiated by the U.S. Department of Labor or other Governmental Authority against the Company, the Plan, the Insurer or any fiduciary of the Plan (including the Independent Fiduciary) that challenges the consummation of the transactions contemplated hereby (including the Lump-Sum Solicitation) or that otherwise asserts that such transactions violate
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applicable Law, or (b) has been initiated by a Person other than a Governmental Authority against the Company, the Plan, the Insurer or the Independent Fiduciary that challenges the consummation of the transactions contemplated hereby (including the Lump-Sum Solicitation) or that otherwise asserts that such transactions violate applicable Law and that, in the case of this clause (b), would reasonably be expected to have a material adverse effect on the transactions contemplated hereby.
“[ *** ] Adjustment” means, as of the applicable dates as provided in this Agreement, the total dollar price adjustment to the premium to be paid in exchange for the Group Annuity Contract if the Closing were to occur on such date, as calculated in accordance with the methodology and procedures set forth in Section I of the Procedures Manual.1
“Newco” is defined in Section 6.13.
“New Plan” means the employee benefit plan to which Plan Assets and Liabilities are or may be transferred in connection with the spin-off of Plan Assets and Plan Liabilities of the Plan as set forth in this Agreement.
“[ *** ]” means any asset in the Final Plan Portfolio that is not a [ *** ].
“Non-Electing Base Annuity Premium” is defined in Section A of the Procedures Manual.
“Non-Electing Annuity Premium” is the premium calculated in accordance with the methodology and procedures set forth in Section A of the Procedures Manual.
“Non-Exempt Prohibited Transaction” means a transaction prohibited by ERISA § 406 or Code § 4975 for which no statutory or regulatory exemption applies.
“Non-Separate Account Amount” is defined in Section 2.3(c).
“Non-Solicited Annuity Premium” is equal to $11,493,303,518, as such amount may be revised in accordance with Section 2.4.
“Non-Solicited Lives” means those Priced Lives who will not be offered the Lump-Sum Election in connection with the Lump-Sum Solicitation, it being understood that, as the context may require, a Priced Life shall be considered a Non-Solicited Life with respect to the portion of his or her benefit that is not eligible for a Lump-Sum Solicitation.
“Notice of Intent to Terminate” means the notice described in 29 C.F.R. § 4041.23.
“Notice of Plan Benefits” means the notice described in 29 C.F.R. § 4041.24.
“Order” means any order, award, decision, injunction, judgment, ruling, decree, writ, subpoena or verdict entered, issued, made or rendered by any Governmental Authority or arbitrator.
“Original Pricing Methodologies” is defined in Section 10.2(d)(i).
“Outside Date” is defined in Section 10.1(d).
“Parent Liquidity Position” means the total cash, cash equivalents and marketable securities of General Motors Company and its consolidated Subsidiaries other than General Motors Financial Company, Inc., as reported in General Motors Company's Annual Report on Form 10-K or Quarterly Report on Form 10-Q.
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“Participant Premium Calculation Tab” is defined in the Procedures Manual.
“Parties” is defined in the preamble.
“PBGC” means the Pension Benefit Guaranty Corporation.
“PBGC Review Period” means the period for PBGC review of the Form 500 as described in 29 C.F.R. § 4041.26.
“[ *** ]” means a [ *** ] that is identified on Exhibit C.
“[ *** ] Transfer Documentation” means the assignment and assumption agreement(s) or consents or similar transfer documents necessary to transfer [ *** ] to the Insurer, whether [ *** ] Newco.
“Permitted Liens” means:
(a) any Liens created by operation of Law in respect of restrictions on transfer of securities (other than restrictions relating to the transfer of assets at Closing, unless such transfer complies with such applicable Law);
(b) with respect to any [ *** ], (i) any Lien created under any subscription document, partnership agreement, side letter, offering document or other similar organizational document or credit, security or similar agreement to which such [ *** ] is subject, including any restriction on sale, assignment, disposition or transfer thereunder (other than restrictions relating to [ *** ], unless all required consents and conditions have been obtained prior to Closing as contemplated by this Agreement);
(c) with respect to any Public Bond, any transfer restrictions or other limitations on assignment, transfer or the alienability of rights under any indenture, debenture or other similar governing agreement to which such Public Bonds are subject (other than restrictions relating to the transfer of a Public Bond at Closing, unless such transfer does not violate any such restriction).
“Person” means any individual, corporation, limited liability company, partnership, sole proprietorship, joint venture, trust, estate, association, organization, labor union, Governmental Authority or other entity.
“PFS Adjustment” means, as of the applicable dates as provided in this Agreement, the adjustment that would be applied to the Closing Premium if the Closing were to occur on such date, stated as a percentage and calculated in accordance with the methodology and procedures set forth in Section H of the Procedures Manual.
“Plan” is defined in the preamble.
“Plan Asset” means an asset of the Plan within the meaning of ERISA.
“Plan Beneficiary” means a person designated by a current or former Plan Participant, by a DRO, or by the terms of the Plan to become entitled to receive a pension benefit from the Plan.
“Plan Investment Fiduciary” means General Motors Investment Management Corporation.
“Plan Liabilities” means a benefit obligation of the Plan.
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“Plan of Operations” means (a) with respect to the New York State Department of Financial Services, The Prudential Insurance Company of America Plan of Operations for VCA-GA-7436, and (b) with respect to the State of New Jersey Department of Banking and Insurance, The Prudential Insurance Company of America Restated Essentials of Method of Operations for VCA-GA-7436.
“Plan Participant” means a person who is eligible to receive a pension benefit from the Plan.
“Plan Spin-Off” is defined in the recitals.
“Plan Termination” is defined in the recitals.
“Plan Trustee” means, [ *** ], and for all other purposes, State Street Bank and Trust Company, each in their capacity as trustee for one or more trusts that hold Plan Assets and, in each case, any successor thereto.
“Plan Trustee Agreement” means the agreement, substantially in the form of Exhibit B hereto, between the Plan Trustee, the Independent Fiduciary and the Insurer.
“POINT” is defined in Section F of the Procedures Manual.
“POINT Access Event” is defined in Section 2.9(c).
“Post-Closing Final Premium” is defined in Section 2.11(c)(ii).
“Post-Closing Post-Solicitation Premium” is defined in Section 2.11(c)(i).
“Post-Solicitation Premium Tab” is defined in the Procedures Manual.
“Preliminary Additional Classification Errors Correction” means the Additional Classification Errors Correction, as calculated by the Insurer as of the day that is thirty (30) days prior to the Target Closing Date and taking into account Additional Classification Errors reported to the Insurer prior to the date that is 30 days prior to the Target Closing Date.
“Preliminary Benefit Amount Correction” means the Benefit Amount Correction, as calculated by the Insurer as of the day that is thirty (30) days prior to the Target Closing Date and taking into account Benefit Amount Increases discovered by the Insurer prior to the date that is 30 days prior to the Target Closing Date.
“Preliminary Broker-Quote Valuations” is defined in Section 2.6(e).
“Preliminary Closing Premium” is defined in Section 2.8(a).
“Preliminary CMA Adjustment” means the adjustment applied to the Preliminary Closing Premium, with respect to the period from the DTFA Pricing Date to the date that is seven (7) days prior to the Target Closing Date, stated as a percentage and calculated in accordance with the methodology and procedures set forth in Section F of the Procedures Manual.
“Preliminary [ *** ]” means the [ *** ], as calculated by the Insurer as of the day that is thirty (30) days prior to the Target Closing Date and taking into account Data Errors discovered by the Insurer prior to the date that is 30 days prior to the Target Closing Date.
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“Preliminary [ *** ] Adjustment” means the total dollar price adjustment to the Preliminary Closing Premium, as calculated in accordance with the methodology and procedures set forth in Section I of the Procedures Manual.
“Preliminary PFS Adjustment” means the adjustment to the Preliminary Closing Premium stated as a percentage and calculated in accordance with the methodology and procedures set forth in Section H of the Procedures Manual.
“Preliminary Plan Portfolio” means the projected Final Plan Portfolio expected to be delivered to the Insurer under Section 2.6(b)(i) as of 8 days before the Target Closing Date.
“Preliminary Post-Solicitation Premium” is defined in Section 2.5(e)(ii).
“Preliminary SCA Adjustment” means the adjustment applied to the Preliminary Closing Premium, with respect to the period from the DTFA Pricing Date to the date that is seven (7) days prior to the Target Closing Date, stated as a percentage and calculated in accordance with the methodology and procedures set forth in Section G of the Procedures Manual.
“Preliminary Single Life Mortality Correction” means the Single Life Mortality Correction, as calculated by the Insurer as of the day that is thirty (30) days prior to the Target Closing Date and taking into account the death of any Covered Life prior to the Annuity Commencement Date who elected a Single Life Annuity that is discovered by the Insurer prior to the date that is 30 days prior to the Target Closing Date.
“Priced Lives” means all Plan Participants and Plan Beneficiaries who are referenced by Appendix 1.2 and, as of November 30, 2011, are in pay status as to all of their Plan benefits (provided that the “Part B” benefits attributable to Priced Lives will in all cases be considered non-solicited). The Priced Lives referenced by Appendix 1.2 are identified as Non-Solicited Lives or Solicited Lives.
“Procedures Manual” means that certain Procedures Manual, as contained on the Identified CD-ROM delivered from the Insurer to the Company on the date hereof, as the same may be updated in accordance with Section 2.20.
“Projected Parent Liquidity Position” means, as of a date of determination, the projection of the Parent Liquidity Position as of the end of the 2012 calendar year.
“Projected RBC Ratio” means, as of a day of determination, the projection of the RBC Ratio as of the end of the 2012 calendar year, as calculated under the method set forth in Appendix 6.6.
“Prudential Disclosure Letter” means the disclosure letter as delivered by Insurer Parent and the Insurer to the other Parties immediately prior to the execution of this Agreement.
“Prudential's Knowledge” means the actual knowledge of any officer of the Insurer or Insurer Parent that will be responsible for the day to day administration of the Group Annuity Contract or was directly involved in the negotiation of this Agreement or the transactions contemplated hereby, in each case, (a) after making appropriate inquiry of those people reporting directly to such officer who have substantial responsibility for the relevant subject matter, and (b) if none of such officers or people reporting directly to them have substantial responsibility for the subject matter that is the subject of the relevant representation, after making appropriate inquiry of an officer of the Insurer or Insurer Parent that has substantial responsibility for such subject matter.
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“PTCE” means a prohibited transaction class exemption issued by the U.S. Department of Labor pursuant to ERISA § 408(a).
“Public Bonds” means those asset classes listed under heading “Asset Class” in Table I of the “Public Bonds” section of Appendix 2.6 that are (a) registered under the Securities Act of 1933 or (b) (i) traded pursuant to the Rule 144A exemption from the Securities Act of 1933 and the regulations issued thereunder and (ii) containing registration rights in favor of the holder of such note or obligation that are effective within one year of the date of transfer, it being understood that Public Bonds may be of any maturity, but do not include preferred stocks, hybrids, convertibles or tax-exempt municipal bonds.
“QPAM” means a Qualified Professional Asset Manager within the meaning of the U.S. Department of Labor Prohibited Transaction Class Exemption 84-14.
“RBC [ *** ]” means the “[ *** ]” described in Appendix 6.6.
“RBC Ratio” means the risk-based capital ratio of the Insurer, which shall be calculated in a manner consistent with the requirements and methodologies prescribed under New Jersey Law, as applied by the Insurer in the ordinary course of its business, consistent with its historic practice.
“[ *** ]” is defined in Section F of the Procedures Manual.
“Representatives” means, in respect of any Person that is an entity, such Person's officers, directors, employees, advisors and agents.
“Re-Pricing Offer” is defined in Section 10.2(d)(i).
“Re-Pricing Request” is defined in Section 10.2(d)(i).
“Requesting Party” is defined in Section 6.6(c).
“Revised Base Annuity Premium” means an amount equal to the Non-Solicited Annuity Premium plus the Non-Electing Base Annuity Premium.
“Revised Certification” is defined in Section 2.4(c).
“Revised Preliminary CMA Adjustment” means the adjustment applied to the Revised Preliminary Closing Premium, with respect to the period from the DTFA Pricing Date through the close of business on the day that is two (2) Business Days prior to the Target Closing Date, stated as a percentage and calculated in accordance with the methodology and procedures set forth in Section F of the Procedures Manual.
“Revised Preliminary Closing Premium” is defined in Section 2.8(c).
“Revised Preliminary [ *** ] Adjustment” means the total dollar price adjustment to the Revised Preliminary Closing Premium, as calculated in accordance with the methodology and procedures set forth in Section I of the Procedures Manual.
“Revised Preliminary PFS Adjustment” means the adjustment to the Revised Preliminary Closing Premium stated as a percentage and calculated in accordance with the methodology and procedures set forth in Section H of the Procedures Manual.
“Revised Preliminary SCA Adjustment” means the adjustment applied to the Revised Preliminary Closing Premium, with respect to the period from the DTFA Pricing Date through the close of business on
17
the day that is two (2) Business Days prior to the Target Closing Date, stated as a percentage and calculated in accordance with the methodology and procedures set forth in Section G of the Procedures Manual.
“[ *** ]” is defined in Section F of the Procedures Manual.
“[ *** ]” is defined in Section F of the Procedures Manual.
“SCA Adjustment” means, as of the dates as provided in this Agreement, the adjustment that would be applied to the Closing Final Premium if the Closing were to occur on such date, with respect to the period from the DTFA Pricing Date through the close of business on the last Business Day prior to such date, stated as a percentage and calculated in accordance with the methodology and procedures set forth in Section G of the Procedures Manual
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933.
“[ *** ]” is defined in the introduction section of the Procedures Manual.
“Signing Classification Errors” is defined in Section 2.4(c).
“Single Life Mortality Correction” means the adjustment to the Dry-Run Post-Solicitation Premiums, the Preliminary Post-Solicitation Premium, the Interim Post-Closing Post-Solicitation Premium or the Post-Closing Post-Solicitation Premium, as applicable, as calculated in accordance with the methodologies and procedures set forth in Section B of the Procedures Manual, as a result of a data correction respecting the death of a Covered Life who elected a Single Life Annuity that occurred on or before the Annuity Commencement Date.
“Solicited Adjusted Annuity Premium” means [ *** ], as the same may be revised in accordance with Section 2.4.
“Solicited Annuity Premium” means [ *** ], as the same may be revised in accordance with Section 2.4.
“Solicited Electing Lives” means the Solicited Lives who make a Lump-Sum Election.
“Solicited Lives” means those Priced Lives who will be offered the Lump-Sum Election in connection with the Lump-Sum Solicitation, it being understood that, as the context may require, a Priced Life shall be considered a Solicited Life with respect to the portion of his or her benefit that is eligible for a Lump-Sum Solicitation.
“Solicited Non-Electing Lives” means those Solicited Lives who do not make a Lump-Sum Election.
“Standard Termination” means a termination described in ERISA § 4041(b).
“Statutory Basis” is defined in Section 10.2(d)(i)(A).
“Statutory Reserves” is defined in Section 2.3(c).
“Subsidiary” means, with respect to any Person, any Person with respect to which the subject Person owns, directly or indirectly, at least 50% of the outstanding equity interests, voting rights or profits interests
18
or otherwise has the right to control or direct the business affairs of such Person (whether by board representation or otherwise).
“Target Closing Date” means (i) if the Form 500 has been filed with the PBGC on or prior to August 31, 2012: November 1, 2012; (ii) if the Form 500 has been filed with the PBGC after August 31, 2012 and prior to October 1, 2012: December 3, 2012; or (iii) otherwise such other date on or prior to the Outside Date, that the Insurer, the Company and the Independent Fiduciary may mutually agree.
“Target Closing Date Adjustment” means the adjustment to the Dry-Run Closing Premiums, the Preliminary Closing Premium and the Revised Preliminary Closing Premium, stated as a percentage and calculated in accordance with the methodology and procedures set forth in Section E of the Procedures Manual.
“Tax Qualified” means qualified by the Code for preferential tax treatment under Code §§ 401(a) and 501(a).
“Tax Position” is defined in Section 10.2(d)(i)(A).
“TCF” is an amount that is payable in accordance with Section 2.14 and is defined in Section J of the Procedures Manual.
“Third Party Claim” is defined in Section 9.1.
“Transaction” means the transaction contemplated to close on the Closing Date by this Agreement.
“Transaction Announcements” is defined in Section 6.4(a).
“Transaction MAC” means the occurrence of any fact, circumstance, change, development, condition or event subsequent to the DTFA Execution Date that, individually or in the aggregate, would or would reasonably be expected to result in the Liquidity Requirement of the Transaction exceeding the Liquidity Cap.
“Transferred Assets” means the assets included in the Final Plan Portfolio, and any Transferred Liabilities associated with those assets.
“Transferred Assets Schedule” means the statement of Transferred Assets in the form of the Schedule of Transferred Assets attached hereto as Exhibit A, as produced in accordance with Section 2.9(a) and updated in accordance with Section 2.10(b)(iii) and Section 2.11(c)(iii).
“Transferred Liabilities” means any and all expenses, obligations and other Liabilities relating to the ownership of any Transferred Asset, including [ *** ]. [ *** ] are set forth on Exhibit C.
“Uncovered Claim” is defined in Section 9.2(c).
Section 1.2 Interpretation.
(a)Whenever the words “include,” “includes” or “including” are used in this Agreement they shall be deemed to be followed by the words “without limitation.” The use of “or” is not intended to be exclusive unless expressly indicated otherwise.
19
(b)Words denoting any gender shall include all genders. The meanings given to terms defined herein shall be equally applicable to both singular and plural forms of such terms. Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning.
(c)The Appendices, Exhibits and Disclosure Letters to this Agreement, the Procedures Manual and the Identified CD-ROM are incorporated by reference and made a part of this Agreement as if set forth fully in this Agreement.
(d)A reference to any party to this Agreement or any other agreement or document shall include such party's successors and permitted assigns.
(e)A reference to any Law or to any provision of any Law shall include any amendment thereto, any modification or re-enactment thereof, any Law substituted therefor and all regulations and statutory instruments issued thereunder or pursuant thereto.
(f)All references to “$” and dollars shall refer to United States currency. All references to the word “days” shall refer to calendar days unless otherwise specified in a particular case.
(g)All references to any financial or accounting terms shall be defined in accordance with GAAP; provided, however, that as to Insurer's accounting, the accounting terms shall be in accordance with relevant state insurance statutory accounting principles (including applicable permitted practices).
(h)Reference to any agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof.
(i)The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Appendix, Exhibit, Schedule and Letter references are to this Agreement unless otherwise specified.
(j)The Parties each hereby acknowledge that (i) the Parties jointly and equally participated in the drafting of this Agreement and all other agreements contemplated hereby, (ii) the Parties have each been adequately represented and advised by legal counsel with respect to this Agreement and the transactions contemplated hereby, and (iii) no presumption shall be made that any provision of this Agreement shall be construed against any Party by reason of such role in the drafting of this Agreement and any other agreement contemplated hereby.
(k)The Table of Contents and the headings of the Articles and Sections herein are inserted for convenience of reference only and are not intended to be a part of, or to affect the meaning or interpretation of, this Agreement; provided, that this Section 1.2(k) shall not apply to the Table of Contents and the headings in Procedures Manual.
(l)If there is any conflict between this Agreement (excluding the Procedures Manual and the Identified CD-ROM) and the Procedures Manual or the Identified CD-Rom, this Agreement (excluding the Procedures Manual and the Identified CD-ROM) shall control and govern in all respects.
(m)All capitalized terms not defined in the Procedures Manual, any Disclosure Letter or any Appendix will have the meanings ascribed to them in this Agreement. The representations and warranties
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of the Company, the Independent Fiduciary, the Insurer and the Insurer Parent in this Agreement are made and given, and the covenants are agreed to, subject to the disclosures and exceptions set forth in their respective Disclosure Letters. The disclosure of any matter in any section of a Disclosure Letter shall be a disclosure for all purposes of this Agreement and all other sections of such Disclosure Letter to which such matter relates to the extent that the applicability of such matter to such other section of the Disclosure Letter is reasonably apparent on its face. The Disclosure Letters have been arranged in sections corresponding to the sections and paragraphs of this Agreement for the convenience of the Parties. The listing of any matter by the Company, the Independent Fiduciary or the Insurer in its Disclosure Letter shall expressly not constitute an admission by such Party, or to otherwise imply, that any such matter is material, is required to be disclosed under this Agreement or falls within relevant minimum thresholds or materiality standards set forth in this Agreement. No disclosure in a Disclosure Letter relating to any possible breach or violation of any contract or Law will be construed as an admission or indication that any such breach or violation exists or has actually occurred. In no event will the listing by the Company, the Independent Fiduciary or the Insurer of any matter in its Disclosure Letter expand the scope of such Party's representations, warranties or covenants set forth in this Agreement. All attachments to the Disclosure Letter are incorporated by reference into the Disclosure Letter in which they are directly or indirectly referenced. The information contained in the Disclosure Letter is in all events provided subject to the applicable Confidentiality Agreement.
ARTICLE II
PURCHASE OF SINGLE PREMIUM GROUP ANNUITY CONTRACT
A. Group Annuity Contract Issuance and Final Plan Portfolio Transfer
Section 2.1 Closing.
(a)At the Closing (i) the Insurer shall issue to the Plan and deliver to the Plan Trustee the Group Annuity Contract (the “Group Annuity Contract Issuance”); (ii) the Independent Fiduciary shall irrevocably direct the Plan Trustee to (A) assign, transfer and deliver to the Insurer the Transferred Assets as set forth on the Final Asset Statement (other than the assets of Contract 300 Portfolio P listed on the Final Asset Statement) in accordance with the procedures set forth in Appendix 2.1-A, in an amount up to the Closing Final Premium and (B) pay to the Insurer an amount of Cash (the “Cash Closing Payment”) equal to the excess, if any, of the Closing Final Premium over the aggregate Final Pre-Closing Asset Valuation of the assets in the Final Plan Portfolio (collectively, the “Closing Asset Transfers”); and (iii) Insurer Parent, together with the Company, shall issue a Joint Written Direction to the Escrow Agent directing the Escrow Agent to transfer all cash and other assets held in the Escrow Account to an account designated by the Company. As of the Closing Date, the Insurer shall, pursuant to the terms of the Group Annuity Contract, unconditionally and irrevocably guarantee the full payment of all Annuity Payments as set forth in the Group Annuity Contract in respect of each Covered Life, Contingent Life and any applicable Beneficiary, and will assume all investment risk associated with the Final Plan Portfolio.
(b)On the terms and subject to the conditions set forth in this Agreement, the consummation of the Group Annuity Contract Issuance, issuance of the Joint Written Direction referenced in Section 2.1(a)(iii), and the Closing Asset Transfers (the “Closing”) shall take place at the offices of Xxxxx Day located at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000-0000 (or such other location as will be mutually agreed upon by the Company and the Insurer) on (i) November 1, 2012, if at least three Business Days prior to November 1, 2012, all of the conditions set forth in Article VIII have been satisfied or waived (other than (a) conditions that by their nature or pursuant to this Agreement are to be satisfied at or immediately prior to the Closing, but subject to the satisfaction or, where permitted, waiver of those conditions, or (b) conditions with respect
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to the conclusion of the PBGC Review Period, which must conclude at or any time prior to Closing), (ii) December 3, 2012, if at least one Business Day prior to December 3, 2012, all of the conditions set forth in Article VIII have been satisfied or waived (other than (a) conditions that by their nature or pursuant to this Agreement are to be satisfied at or immediately prior to the Closing, but subject to the satisfaction or, where permitted, waiver of those conditions, or (b) conditions with respect to the conclusion of the PBGC Review Period, which must conclude at or any time prior to Closing) or (iii) if the Closing has not occurred on or prior to December 3, 2012, three (3) Business Days following the first date that all of the conditions set forth in Article VIII have been satisfied or waived (other than (a) conditions that by their nature or pursuant to this Agreement are to be satisfied at or immediately prior to the Closing, but subject to the satisfaction or, where permitted, waiver of those conditions, or (b) conditions with respect to the conclusion of the PBGC Review Period, which must conclude at or any time prior to Closing). The date on which the Closing occurs is referred to in this Agreement as the “Closing Date.”
Section 2.2 Deliveries at Closing.
(a) At the Closing, (i) with respect to the items set forth in clauses (i), (ii), (iii), (iv), (v) and (vii) below, the Independent Fiduciary shall or shall direct the Plan Trustee, as applicable, to deliver to the Insurer, with a copy to the Company and (ii) with respect to the items set forth in clauses (vi) and (viii) below, the Company shall deliver to the Insurer:
(i)a certificate, dated as of the Closing Date, signed by an officer of the Independent Fiduciary certifying as to the satisfaction of the conditions specified in Section 8.3(a) and Section 8.3(b) each as to the Independent Fiduciary;
(ii)the Xxxx of Sale (including all schedules thereto), duly executed by the Plan Trustee;
(iii)[ *** ] Transfer Documentation and [ *** ] Transfer Documentation, duly executed by the Plan Trustee;
(iv)a written acknowledgement of the receipt of the Group Annuity Contract signed by the Plan Trustee;
(v)the Group Annuity Contract (including all exhibits and attachments thereto), duly executed by the Plan Trustee;
(vi)a certificate, dated as of the Closing Date, signed by a duly authorized officer of the Company certifying as to the satisfaction of the conditions specified in Section 8.3(a) and Section 8.3(b), in each case, as to the Company, and Section 8.3(c);
(vii)the Plan Trustee Agreement, duly executed by the Independent Fiduciary and the Plan Trustee (or evidence of any alternative arrangements as shall have been agreed by the Insurer and the Company pursuant to the last sentence of Section 6.3(b)); and
(viii)an instruction to [ *** ], duly executed by the Plan Investment Fiduciary, in the form attached hereto as Exhibit D.
(b) At the Closing, the Insurer will deliver to the Plan Trustee, with a copy to the Independent Fiduciary and the Company, the following duly executed documents and other items:
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(i) the Group Annuity Contract (including all exhibits and attachments thereto), duly executed by the Insurer;
(ii) the Xxxx of Sale, duly executed by the Insurer;
(iii) [ *** ] Transfer Documentation and [ *** ] Transfer Documentation, duly executed by the Insurer;
(iv) a certificate, dated as of the Closing Date, signed by a duly authorized officer of the Insurer certifying that Contract 300 Portfolio P remains in the Guaranteed Separate Account and that the assets in Contract 300 Portfolio P are part of the consideration for the Group Annuity Contract;
(v) evidence of Governmental Approvals set forth in Appendix 8.2(d);
(vi) a certificate, dated as of the Closing Date, signed by a duly authorized officer of the Insurer certifying as to the satisfaction of the conditions specified in Section 8.2(a) and Section 8.2(c), in each case, as to the Insurer; and
(vii) the Plan Trustee Agreement, duly executed by the Insurer (or evidence of any alternative arrangements as shall have been agreed by the Insurer and the Company pursuant to the last sentence of Section 6.3(b)).
Section 2.3 Final Plan Portfolio and Contract 300 Portfolio P.
(a) Prior to the Closing, the Insurer will cause Contract 300 Portfolio P to remain in the Guaranteed Separate Account.
(b) Upon the Group Annuity Contract Issuance, the Insurer may allocate to the General Account an amount of the Final Plan Portfolio not greater than the lesser of (i) [ *** ], and the Insurer will allocate the balance of the Final Plan Portfolio to the Guaranteed Separate Account.
(c) For purposes of this Section 2.3, the following definitions shall apply:
“Non-Separate Account Amount” equals the [ *** ] as of the Closing Date minus the greater of (a) or (b), where (a) equals the Closing Final [ *** ], and (b) equals zero; provided, however, in no event may the Non-Separate Account Amount be less than zero
“Statutory Reserve” means the amount of statutory reserves established by the Insurer as of the Closing Date, with respect to the liabilities covered by the Group Annuity Contract, in accordance with statutory accounting principles prescribed or permitted by New Jersey Law.
(d) The allocation of assets (including Contract 300 Portfolio P) between the General Account and the Guaranteed Separate Account following the Closing Date shall be governed by the terms of the Group Annuity Contract.
B. Calculation of Closing Final Premium
Section 2.4 Calculation of Base Annuity Premium and Solicited Adjusted Annuity Premium.
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(a) Base Annuity Premium. The Solicited Annuity Premium, the Non-Solicited Annuity Premium, and the resulting Base Annuity Premium as of the DTFA Pricing Date, as calculated by the Insurer, initially do not give effect to any correction of Classification Errors. The definitive life-by-life list provided by the Insurer or any of its Affiliates containing information (excluding any information regarding monthly benefit amounts) with respect to each Non-Solicited Life and each Solicited Life (together with any other life-by-life information which may subsequently be provided by the Insurer or any of its Affiliates to the Independent Third Party to complete the calculations required by this Agreement, the “Insurer Provided Life-by-Life Information”) was provided to the Independent Third Party on May 29, 2012. The Independent Third Party has been directed to certify to the Company that (i) the Priced Lives referenced in Appendix 1.2 are the same as the lives (by numeric identifier, excluding any letter identifiers) set forth on the Participant Premium Calculations Tab, which shall be completed in accordance with the [ *** ] process, (ii) the Solicited Annuity Premium is equal to [ *** ] the Non-Solicited Annuity Premium is equal to [ *** ] (such certification, including the matters described in Section 2.4(b), below, the “Initial Certification”). The Independent Third Party will be directed to deliver this Initial Certification as soon as practicable following the DTFA Execution Date, and in no event later than 5 Business Days following the DTFA Execution Date. If the Independent Third Party does not, within such five (5) Business Day time period, certify the Non-Solicited Annuity Premium or the Solicited Annuity Premium calculated by the Insurer, then the Insurer shall so notify the Company and advise the Company of the reasons thereof, if known, and for a period of five (5) Business Days, seek to reasonably cooperate with the Independent Third Party to identify the reasons for the failure to certify and seek to resolve all items causing such failure to certify, and following the resolution of any such items the Insurer shall inform the Company within five (5) Business Days thereafter and the Insurer and the Company shall jointly direct the Independent Third Party to provide the certification contemplated by this Section 2.4(a).
(b) Solicited Adjusted Annuity Premium. The Solicited Adjusted Annuity Premium as of the DTFA Pricing Date as calculated by the Insurer, initially does not give effect to any correction of the Signing Classification Errors. The Independent Third Party has been directed to certify to the Company that, in accordance with Section A of the Procedures Manual, the Solicited Adjusted Annuity Premium is equal to the sum of the aggregate solicited annuity premium after applying [ *** ], as set forth on the Participant Premium Calculation Tab, which shall be completed in accordance with [ *** ]. The Independent Third Party will be directed to deliver this certification as soon as practicable following the DTFA Execution Date, and in no event later than five (5) Business Days following DTFA Execution Date. If the Independent Third Party does not, within such five (5) Business Day time period, certify the Solicited Adjusted Annuity Premium calculated by the Insurer, then the Insurer shall so notify the Company and advise the Company of the reasons thereof, if known, and for a period of five (5) Business Days, seek to reasonably cooperate with the Independent Third Party to identify the reasons for the failure to certify and seek to resolve all items causing such failure to certify, and following the resolution of any such items the Insurer shall inform the Company within five (5) Business Days thereafter and the Insurer and the Company shall jointly direct the Independent Third Party to provide the certification contemplated by this Section 2.4(b).
(c) Signing Classification Errors. On or prior to the date that is the later of (x) thirty (30) days following the DTFA Execution Date or (y) 14 days after the delivery by the Company to the Insurer of a revised list of Priced Lives, indicating whether each such Priced Life is a Solicited Life or a Non-Solicited Life correcting for the Classification Errors indentified prior to the DTFA Execution Date (the “Signing Classification Errors”), the Insurer shall deliver to the Company and to the Independent Third Party an updated Identified CD-ROM and a revised calculation of the Solicited Annuity Premium, the Non-Solicited Annuity Premium (and the resulting Base Annuity Premium), and the Solicited Adjusted Annuity Premium, in each case as of the DTFA Pricing Date. The Insurer shall calculate the Solicited Annuity Premium, the Non-Solicited Annuity Premium (and the resulting Base Annuity Premium), and the Solicited Adjusted
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Annuity Premium in accordance with the methodologies, [ *** ] (including methodologies relating to [ *** ]), that were applied by the Insurer in calculating the original Non-Solicited Annuity Premium, the Solicited Annuity Premium, and the Solicited Adjusted Annuity Premium, as applicable. Such revised calculations shall be made solely to give effect to the correction of the Signing Classification Errors (which for the avoidance of doubt shall be only as to the lives set forth in Section 2.4(a) of the Company Disclosure Letter). The Company and the Insurer shall jointly direct the Independent Third Party to, within five (5) Business Days of delivery of such revised calculations, certify to the Company and the Insurer (such certification, the “Revised Certification”), that (i) such revised calculations were limited to the Signing Classification Errors, and the Solicited Annuity Premium, Non-Solicited Annuity Premium and Solicited Adjusted Annuity Premium are the same for all other [ *** ] calculations with respect to Solicited Lives and Non-Solicited Lives not affected by the Signing Classification Errors, (ii) (A) the revised Solicited Annuity Premium and the Non-Solicited Annuity Premium, respectively, on the Summary Version-Vita Premium Build-Up Tool, is equal to the sum of the aggregate [ *** ], respectively, set forth on the revised Participant Premium Calculation Tab, which shall be completed in accordance with the [ *** ] and (B) the revised Solicited Adjusted Annuity Premium on the Summary Version-Vita Premium Build-Up Tool is equal to the sum of the aggregate solicited annuity premium after applying the [ *** ], as set forth on the revised Participant Premium Calculation Tab for each Solicited Life which shall be completed in accordance with [ *** ], and (iii) the average [ *** ] for lives who are affected by a Signing Classification Error and have become Solicited Lives as a result of such Signing Classification Error will [ *** ]. If the Independent Third Party does not, within such 5 Business Day time period, make such certifications, then the Insurer shall so notify the Company and advise the Company of the reasons thereof, if known, and for a period of five (5) Business Days, seek to reasonably cooperate with the Independent Third Party to identify the reasons for the failure to certify and seek to resolve all items causing such failure to certify, and following the resolution of any such items the Insurer shall inform the Company within five (5) Business Days thereafter and the Insurer and the Company shall jointly direct the Independent Third Party to provide the certification contemplated by this Section 2.4(c). Following the calculations in this Sections 2.4(c), the revised Solicited Annuity Premium, the Non-Solicited Annuity Premium (and the resulting Base Annuity Premium), and the Solicited Adjusted Annuity Premium shall replace the previous calculations of the Solicited Annuity Premium, the Non-Solicited Annuity Premium, the Solicited Adjusted Annuity Premium, as applicable.
(d) Additional Classification Errors. If any Additional Classification Errors are reported to the Insurer, the Insurer shall, in connection with the calculation of whichever of the Dry-Run Post-Solicitation Premium, Preliminary Post-Solicitation Premium, Interim Post-Closing Post-Solicitation Premium or Post-Closing Post-Solicitation Premium is to be next calculated by the Insurer pursuant to this Agreement, deliver to the Company and to the Independent Third Party a calculation of the resulting Additional Classification Error Correction. The Insurer shall calculate such Additional Classification Error Correction in accordance with the methodologies, [ *** ] (including methodologies relating to [ *** ]), that were applied by the Insurer in calculating the original Non-Solicited Annuity Premium, the Solicited Annuity Premium, and the Solicited Adjusted Annuity Premium, as applicable. In connection with the calculations described in the preceding sentence, the Insurer shall also deliver to the Independent Third Party the data inputs in respect of such Additional Classification Errors that are required to populate the “Average Incremental [ *** ] Charge for lives with increases in Solicited Base and Adjusted Annuity Premiums due to Classification changes or benefit increases” table set forth in the Post-Solicitation Premium Tab. The Company and the Insurer shall jointly direct the Independent Third Party to, within five (5) Business Days of delivery of such revised calculations, certify to the Company and the Insurer that the average [ *** ] within each [ *** ] for lives who are affected by a Signing Classification Error, an Additional Classification Error and have become Solicited Lives as a result of such Signing Classification Error or
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Additional Classification Error, or who were affected by a Benefit Amount Correction, will not be greater than [ *** ] multiplied by the average [ *** ] for all Solicited Lives in [ *** ].
(e) Benefit Amount Corrections. If any Benefit Amount Increases are reported to the Insurer, the Insurer shall, in connection with the calculation of whichever of the Dry-Run Post-Solicitation Premium, Preliminary Post-Solicitation Premium, Interim Post-Closing Post-Solicitation Premium or Post-Closing Post-Solicitation Premium is to be next calculated by the Insurer pursuant to this Agreement, deliver to the Company and to the Independent Third Party a calculation of the resulting Benefit Amount Correction. The Insurer shall calculate such Benefit Amount Correction in accordance with the methodologies, [ *** ] (including methodologies relating to [ *** ]), that were applied by the Insurer in calculating the original Non-Solicited Annuity Premium, the Solicited Annuity Premium, and the Solicited Adjusted Annuity Premium, as applicable. In connection with the calculations described in the preceding sentence, the Insurer shall also deliver to the Independent Third Party the data inputs in respect of such Benefit Amount Increases that are required to populate the “Average Incremental [ *** ] for lives with increases in Solicited Base and Adjusted Annuity Premiums due to Classification changes or benefit increases” table set forth in the Post-Solicitation Premium Spreadsheet. The Company and the Insurer shall jointly direct the Independent Third Party to, within five (5) Business Days of delivery of such revised calculations, certify to the Company and the Insurer that the average [ *** ] within each [ *** ] for lives who are affected by a Signing Classification Error, an Additional Classification Error and have become Solicited Lives as a result of such Signing Classification Error or Additional Classification Error, or who were affected by a Benefit Amount Correction, will not be greater than [ *** ]% multiplied by the average [ *** ] for all Solicited Lives [ *** ].
Section 2.5 Calculation of Revised Base Annuity Premium.
(a) Lump-Sum Election Data. On or prior to the date that is three (3) Business Days following the end of the Lump-Sum Election Period, the Company shall deliver to the Insurer and the Independent Third Party a statement setting forth a life-by-life list of each Solicited Life who made a Lump-Sum Election and each Solicited Life who did not make a Lump-Sum Election and any Solicited Life who [ *** ], together with reasonable supporting documentation (the “Lump-Sum Data”).
(b) Revised Base Annuity Premium. Within three (3) Business Days following the receipt of the Lump-Sum Data, the Insurer shall deliver to the Company and to the Independent Third Party a calculation of the Non-Electing Solicited Adjusted Annuity Premium and the Non-Electing Annuity Premium, and the calculation of the Revised Base Annuity Premium, in each case calculated in accordance with Section A of the Procedures Manual. The Insurer shall also deliver to the Company a calculation of the estimated [ *** ], and the estimated [ *** ] as of such date. The Insurer and the Company shall jointly direct the Independent Third Party to, within 5 Business Days following receipt of such calculations, certify to the Company that (i) the Solicited Lives set forth on the Participant Premium Calculations Tab who did not make a Lump-Sum Election were also designated by the Lump Sum Data as not having made a Lump-Sum Election, and the Solicited Lives set forth on the Participant Premium Calculations Tab who did make a Lump-Sum Election were also designated by the Lump Sum Data as having made a Lump-Sum Election and (ii) the Non-Electing Annuity Premium, as calculated by the Insurer, is equal to the aggregate solicited adjusted annuity premium for each [ *** ] who did not make a Lump-Sum Election, then multiplied by [ *** ] (as defined in the Procedures Manual) for each [ *** ]. The Independent Third Party shall use its calculation of the Non-Electing Annuity Premium as may be revised pursuant to Section 2.5(c), in connection with any future calculations it makes pursuant to Section 2.7, 2.8, 2.9, 2.10, and 2.11.
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(c) If the calculations by the Independent Third Party differ from the amounts calculated by the Insurer, the Insurer shall, for a period of five (5) Business Days, seek to reasonably cooperate with the Company and the Independent Third Party to identify the reasons for the difference and seek to resolve all such differences, and shall deliver the revised calculations, if any, to the Company within five (5) Business Days thereafter. In the event the Insurer, the Company and the Independent Third Party do not identify or resolve all such differences, the Company and the Insurer shall jointly direct the Independent Third Party to, within two (2) Business Days, make any revisions to the Non-Electing Solicited Adjusted Annuity Premium, Non-Electing Annuity Premium, and Revised Base Annuity Premium that were agreed upon by the Company and the Insurer and restate the Non-Electing Solicited Adjusted Annuity Premium, Non-Electing Annuity Premium, and Revised Base Annuity Premium, and provide the Company and the Insurer with such revised calculations.
(d) As soon as practicable after July 20, 2012, the Company will provide to the Insurer a statement setting forth the Company's good faith estimate of a life-by-life list of each Solicited Life who made a Lump-Sum Election and each Solicited Life who did not make a Lump-Sum Election and any Solicited Life [ *** ](the “Estimated Lump-Sum Data”). As soon as practicable after the receipt of the Estimated Lump-Sum Data, the Insurer will provide to the Company its good faith estimate of the [ *** ] as of date of delivery of the Estimated Lump-Sum Data.
(e) Dry-Run Post-Solicitation Premium; Preliminary Post-Solicitation Premium.
(i)In connection with the calculation of each Dry-Run Closing Premium, the Insurer shall deliver to the Company a calculation of such Dry-Run Post-Solicitation Premium. The “Dry-Run Post-Solicitation Premium” shall be an amount, calculated by the Insurer, equal to (i) the Non-Solicited Annuity Premium, plus (ii) the Non-Electing Annuity Premium, minus (iii) the Dry-Run Single Life Mortality Correction plus (iv) the Dry-Run [ *** ], plus (v) the Dry-Run Additional Classification Error Correction, plus (vi) the Dry-Run Benefit Amount Correction. For the avoidance of doubt, the Dry-Run GAAP Liability Correction, the Dry-Run Additional Classification Error Correction and the Dry-Run Benefit Amount Correction could be negative numbers.
(ii)On the date that is twenty-three (23) days prior to the Target Closing Date, the Insurer shall deliver to the Company a calculation of the Preliminary Post-Solicitation Premium. The “Preliminary Post-Solicitation Premium” shall be an amount, calculated by the Insurer, equal to (i) the Non-Solicited Annuity Premium, plus (ii) the Non-Electing Annuity Premium, minus (iii) the Preliminary Single Life Mortality Correction plus (iv) the Preliminary [ *** ], plus (v) the Preliminary Additional Classification Error Correction, plus or (vi) the Preliminary Benefit Amount Correction. In connection with the delivery of the Preliminary Post-Solicitation Premium, the Insurer shall calculate and deliver to the Company a calculation of the [ *** ], calculated as of the date that is thirty (30) days prior to the Target Closing Date (the [ *** ]); provided that, [ *** ], for purposes of calculating the Closing PFS Adjustment only, shall not exceed the calculation of the estimated [ *** ] for the most recently delivered calculation of the Dry-Run Closing Premium, plus [ *** ], and shall not be less than the calculation of the estimated [ *** ] for the most recently delivered calculation of the Dry-Run Closing Premium minus [ *** ].
(f) Each Dry-Run Post Solicitation Premium and the Preliminary Post-Solicitation Premium, as well as the [ *** ], shall be reviewed by the Independent Third Party as part of its independent calculation of each Dry-Run Closing Premium, the Preliminary Closing Premium, the Revised Preliminary Closing Premium and the Closing Final Premium, as applicable, it being understood that the Independent Third Party's review of the Preliminary Single Life Mortality Correction, the Preliminary [ *** ], the Preliminary
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Additional Classification Error Correction and the Preliminary Benefit Amount Correction will be limited to applying the [ *** ] process set forth in the Procedures Manual.
Section 2.6 Determination and Valuation of Final Plan Portfolio.
(a) On [ *** ] (or if the Lump-Sum Data has not been delivered on or prior to the date that is [ *** ], as soon as practicable after [ *** ] and the [ *** ] each calendar month thereafter until the earlier to occur of the Closing Date and the termination of this Agreement, and again on dates that are [ *** ] to the Target Closing Date, the Plan Investment Fiduciary shall deliver to the Insurer a statement of each [ *** ], and, if applicable, one or more Newcos and the assets held therein, that the Plan Trustee intends to transfer to the Insurer at Closing or that are part of Contract 300 Portfolio P that will remain in the Guaranteed Separate Account at the Closing. During the [ *** ] period following the delivery of such statement on the [ *** ] prior to the Target Closing Date, the Insurer and the Company shall cooperate in good faith to agree, in writing, upon a final statement in the form of Exhibit C (the “Final Asset Statement”) to be delivered [ *** ] prior to the Target Closing Date, listing each [ *** ], Newco and the assets held therein, that the Plan Trustee intends to transfer to the Insurer at the Closing or that are part of Contract 300 Portfolio P that will remain in the Guaranteed Separate Account at the Closing; provided, that the Insurer may only [ *** ] that constitute an [ *** ] under clauses (i)-(iv), (viii) or (ix)-(xi) of the definition of [ *** ].
(b) On each date identified in Section 2.6(a) above,
(i) the Plan Investment Fiduciary shall deliver to the Insurer a calculation of the value of each asset in the projected Final Plan Portfolio, calculated in accordance with the methodology set forth in Appendix 2.6. The valuation date shall be [ *** ], except for the delivery dates which are [ *** ] to the Target Closing Date (such value of the projected Final Plan Portfolio delivered [ *** ] to the Target Closing Date to be the “Preliminary Plan Portfolio”), in which case the valuation date shall be the [ *** ] prior to such delivery date (or in the case of Broker-Quote Public Bonds or [ *** ], as of the close of business on the second Business Day prior to such delivery date);
(ii) the Plan Investment Fiduciary shall deliver to the Insurer the In-Kind Asset Information; and
(iii) the Plan Investment Fiduciary will deliver to the Independent Third Party the outputs required from POINT to complete the premium calculations contemplated on such date.
(c) Within three (3) Business Days from each delivery of the list of assets in Section 2.6(a) (other than any such delivery that is required on the date that is 2 days prior to the Target Closing Date), the Insurer shall deliver notice to the Plan Investment Fiduciary, with a copy to the Company, of [ *** ].
(d) (i) Appendix 2.6(d)(I) sets forth a list of [ *** ] to the Insurer at Closing. Appendix 2.6(d)(II) sets forth, in ranking order of preference, additional [ *** ] and transferred at Closing, either in substitution for or in addition to the [ *** ] identified in Appendix 2.6(d)(I).
(ii) Insurer may give notice to the Plan Investment Fiduciary anytime before September 1, 2012 that [ *** ] any [ *** ] identified on Appendix 2.6(d)(I) or Appendix 2.6(d)(II) [ *** ]:
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(A)there is [ *** ],
(B)such [ *** ] (as such values are set forth on Appendix 2.6(d)(I) or Appendix 2.6(d)(II) as applicable), or
(C)Insurer is [ *** ] such [ *** ].
(iii) The portfolio of [ *** ] set forth on the Final Asset Statement and Transferred Asset Schedule at Closing will consist of:
(D)[ *** ] listed on Appendix 2.6(d)(I) other than (x) the [ *** ] or (y) for which all [ *** ]; and
(E)[ *** ] listed on Appendix 2.6(d)(II), if a [ *** ] (x) is [ *** ] pursuant to Section 2.6(d)(ii) and (y) all [ *** ] in satisfaction of the requirements of Appendix 2.1-A, beginning with the first such [ *** ] on Appendix 2.6(d)(II) and each immediately following [ *** ], and so on, provided, however, that if with respect to any [ *** ] in satisfaction of the requirements of Appendix 2.1-A for transfer have not been obtained, then the [ *** ] on Appendix 2.6(d)(II) would be selected instead; and provided, further, that if [ *** ] pursuant to this subparagraph would cause [ *** ] ([ *** ] prior to the Closing Date) [ *** ], then, unless the Plan Investment Fiduciary in its discretion, has determined that it shall transfer such [ *** ] notwithstanding whether such transfer would cause the aggregate value of transferred [ *** ] at Closing to [ *** ], then the [ *** ] on Appendix 2.6(d)(II) will be transferred in accordance with the procedures in this Section 2.6(d)(iii)(B), [ *** ] until either Appendix 2.6(d)(II) has been exhausted, or the Plan Investment Fiduciary, [ *** ]. For avoidance of doubt, it is not intended that [ *** ] Adjustment in accordance with the Procedures Manual.
(iv) The [ *** ] in the Transferred Asset Schedule on the Closing Date will be determined in accordance with Appendix 2.6.
(v) Notwithstanding anything to the contrary in this Agreement[ *** ] to the Insurer through [ *** ] Newcos that meet the requirements of Section 6.13, in the Plan Investment Fiduciary's sole discretion.
(e) On (i) the Business Day immediately prior to the Closing Date, the Plan Investment Fiduciary shall deliver to the Insurer a calculation of the value of each Broker-Quote Public Bond and [ *** ] in the Final Plan Portfolio in accordance with the methodology set forth in Appendix 2.6 as of the close of business on the second Business Day prior to the Closing Date [ *** ] and (ii) the Closing Date, the Plan Investment Fiduciary shall deliver to the Insurer a calculation of the value of each asset in the Final Plan Portfolio other than Broker-Quote Public Bonds and [ *** ], calculated in accordance with the methodology set forth in Appendix 2.6, as of the close of business on the immediately preceding Business Day (together with the [ *** ], the “Final Pre-Closing Asset Valuation”).
Section 2.7 Calculation of Dry-Run Closing Premiums.
(a)On September 6, 2012, and on the third Business Day of each calendar month thereafter until the earlier to occur of the Closing Date and the termination of this Agreement, the Insurer shall deliver to the Company and the Independent Third Party, and the Company and the Insurer shall jointly direct the
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Independent Third Party to deliver to the Insurer and the Company, a calculation of the Dry-Run Closing Premium generally consistent with the form of Appendix 2.7. Each “Dry-Run Closing Premium” shall be equal to (i) the Dry-Run Post-Solicitation Premium multiplied by (ii) 100% plus the Target Closing Date Adjustment, multiplied by (iii) the sum of (A) the CMA Adjustment and (B) the SCA Adjustment, multiplied by (iv) 100% plus the PFS Adjustment, plus (v) the [ *** ] Adjustment. For purposes of calculating each Dry-Run Closing Premium, the Insurer shall, and the Insurer and the Company shall jointly direct the Independent Third Party to, use the data provided in accordance with Section 2.6(b) delivered on the second Business Day of that calendar month, and calculate the Target Closing Date Adjustment, the CMA Adjustment, SCA Adjustment, [ *** ] Adjustment and PFS Adjustment as of the last day of the immediately preceding calendar month.
(b)If a Dry-Run Closing Premium as calculated by the Independent Third Party differs by more than [ *** ] from such Dry-Run Closing Premium calculated by the Insurer, then the Insurer shall, for a period of five (5) Business Days, seek to reasonably cooperate with the Company and the Independent Third Party to identify the reasons for the difference and seek to resolve all such differences, and shall deliver the revised calculations, if any, to the Company within five (5) Business Days thereafter. In the event the Insurer, the Company and the Independent Third Party do not identify or resolve all such differences, the Company and the Insurer shall jointly direct the Independent Third Party to, within two (2) Business Days, make any revisions to the applicable Dry-Run Closing Premium that were agreed upon by the Company and the Insurer, recalculate such Dry-Run Closing Premium and provide the Company and the Insurer with such revised calculations.
(c)The PFS Adjustment and CMA Adjustment included in each Dry-Run Closing Premium shall incorporate a calculation of the estimated [ *** ]; provided that, (i) except with respect to the initial calculation of the Dry-Run Closing Premium, in connection with the calculation of the PFS Adjustment only, the estimated [ *** ] incorporated into the calculation of the PFS Adjustment included in each such calculation performed pursuant to this Section 2.7 shall not exceed the calculation of the estimated [ *** ] incorporated into the PFS Adjustment for the most recently delivered calculation of the Dry-Run Closing Premium, [ *** ], and shall not be less than the calculation of the estimated [ *** ] incorporated in the PFS Adjustment for the most recently delivered calculation of the Dry-Run Closing Premium [ *** ] and (ii) with respect to the initial calculation of the Dry-Run Closing Premium, in connection with the calculation of the PFS Adjustment only, the estimated [ *** ] incorporated into the calculation of the PFS Adjustment performed pursuant to this Section 2.7 shall not exceed the calculation of the estimated Final [ *** ] delivered by the Insurer pursuant to Section 2.5(b), [ *** ], and shall not be less than the calculation of the estimated [ *** ] delivered by the Insurer pursuant to Section 2.5(b), [ *** ]
(d)The Insurer and the Company shall calculate the CMA Adjustment, SCA Adjustment, PFS Adjustment, and [ *** ] Adjustment in any succeeding calculations of Dry-Run Closing Premium (and Preliminary Closing Premium, Closing Final Premium, Interim Post-Closing Final Premium and Final Post-Closing Premium) in accordance with the agreed upon methodologies as notified by the Independent Third Party in calculating any prior Dry-Run Closing Premiums.
Section 2.8 Calculation of the Preliminary Closing Premium and Revised Preliminary Closing Premium.
(a) On the day that is seven (7) days prior to the Target Closing Date, the Insurer shall deliver to the Company and the Independent Third Party, and the Company and the Insurer shall jointly direct the Independent Third Party to deliver to the Insurer and the Company, a calculation of the Preliminary Closing
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Premium generally consistent with the form of Appendix 2.7. The “Preliminary Closing Premium” shall be equal to (i) the Preliminary Post-Solicitation Premium multiplied by (ii) 100% plus the Target Closing Date Adjustment, multiplied by (iii) the sum of (A) the Preliminary CMA Adjustment and (B) the Preliminary SCA Adjustment, multiplied by (iv) 100% plus the Preliminary PFS Adjustment, plus (v) the Preliminary [ *** ] Adjustment. For purposes of calculating the Preliminary Closing Premium, the Insurer shall, and the Insurer and the Company shall jointly direct the Independent Third Party to, use the data provided in accordance with Section 2.6(b) delivered on the immediately prior day. The Preliminary PFS Adjustment and Preliminary CMA Adjustment shall incorporate the calculation of the [ *** ], where the [ *** ] for calculating the PFS Adjustment is subject to the terms of Section 2.7(c).
(b) If the Preliminary Closing Premium as calculated by the Independent Third Party differs by more than [ *** ] from the Preliminary Closing Premium as calculated by the Insurer, then the Insurer shall, for a period of two (2) Business Days, seek to reasonably cooperate with the Company and the Independent Third Party to identify the reasons for the difference and seek to resolve all such differences, and shall deliver the revised calculations, if any, to the Company within one (1) Business Day thereafter. In the event the Insurer, the Company and the Independent Third Party do not identify or resolve all such differences, the Company and the Insurer shall jointly direct the Independent Third Party to, within one (1) Business Day, make any revisions to the Preliminary Closing Premium that were agreed upon by the Insurer and the Company, recalculate the Preliminary Closing Premium and provide the Company and the Insurer with such revised calculations.
(c) On the day that is one (1) day prior to the Target Closing Date, the Insurer shall deliver to the Company and the Independent Third Party, and the Company and the Insurer shall jointly direct the Independent Third Party to deliver to the Insurer and the Company, a calculation of the Revised Preliminary Closing Premium generally consistent with the form of Appendix 2.7. The “Revised Preliminary Closing Premium” shall be equal to (i) the Preliminary Post-Solicitation Premium multiplied by (ii) 100% plus the Target Closing Date Adjustment, multiplied by (iii) the sum of (A) the Revised Preliminary CMA Adjustment and (B) the Revised Preliminary SCA Adjustment, multiplied by (iv) 100% plus the Revised Preliminary PFS Adjustment, plus (v) the Revised Preliminary [ *** ] Adjustment. For purposes of calculating the Revised Preliminary Closing Premium, the Insurer shall, and the Insurer and the Company shall jointly direct the Independent Third Party to, use the data provided in accordance with Section 2.6(b) delivered on the immediately prior day. The Revised Preliminary PFS Adjustment and Revised Preliminary CMA Adjustment shall incorporate the calculation of the [ *** ], where the [ *** ] for calculating the PFS Adjustment is subject to the terms of Section 2.7(c).
(d) It is understood between the parties that the Company may choose to calculate Dry-Run Closing Premiums, a Preliminary Closing Premium, a Revised Preliminary Closing Premium or a Closing Final Premium, or other premium described in this Article II, and the Insurer shall reasonably cooperate with those efforts consistent with the provisions of Section 2.15.
Section 2.9 Calculation of the Closing Final Premium.
(a) As early as practicable on the Closing Date, the Insurer shall produce and deliver to the Company, the Transferred Assets Schedule, which shall incorporate the Final Asset Statement and the Final Pre-Closing Asset Valuation. Such Transferred Asset Schedule shall be attached as the Transferred Assets Schedule to the Group Annuity Contract.
(b) On the Closing Date (but prior to the Closing), the Plan Investment Fiduciary shall deliver to the Insurer the In-Kind Asset Information.
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(c) On the Closing Date (but prior to the Closing), the Insurer shall deliver to the Company and the Independent Third Party, and the Company and the Insurer shall jointly direct the Independent Third Party to deliver to the Insurer and the Company, a calculation of the Closing Final Premium in the form of Appendix 2.7 (including a proposed Annuity Exhibit). The “Closing Final Premium” shall be equal to (i) the Preliminary Post-Solicitation Premium multiplied by (ii) 100% plus the Closing Date Adjustment, multiplied by (iii) the sum of (A) the Closing CMA Adjustment and (B) the Closing SCA Adjustment, multiplied by (iv) 100% plus the Closing PFS Adjustment, plus (v) the Closing [ *** ] Adjustment; provided that if the unavailability or inaccessibility of POINT (a “POINT Access Event”) prevents the calculation on the Closing Date of the Closing Final Premium, the Closing Final Premium shall be equal to the Revised Preliminary Closing Premium. The Closing PFS Adjustment and Closing CMA Adjustment shall incorporate the calculation of the [ *** ], where the [ *** ] for calculating the PFS Adjustment is subject to the terms of Section 2.5(e)(ii).
(d) If (x) the Independent Third Party has calculated the Closing Final Premium and (y) the Closing Final Premium calculated by the Independent Third Party differs by an amount equal to or less than [ *** ] from the Closing Final Premium calculated by the Insurer, the Closing Final Premium will be the amount so calculated by [ *** ]. In the event of a POINT Access Event, the foregoing calculations of the Closing Final Premium will be deemed to refer to the Revised Preliminary Closing Premium, and in such event, if the difference between the Revised Preliminary Closing Premium calculated by the Independent Third Party differs by an amount equal to or less than [ *** ] from the Revised Preliminary Closing Premium calculated by the Insurer, the Revised Preliminary Closing Premium will be the amount so calculated by [ *** ].
(e) If (x) the Independent Third Party has calculated the Closing Final Premium and (y) the Closing Final Premium calculated by the Independent Third Party is more than [ *** ] less than the Closing Final Premium calculated by the Insurer, the Company may elect to either (1) waive the condition to its obligations to close set forth in Section 8.2(i) and use the Closing Final Premium [ *** ], and have such Closing Final Premium and the calculation with respect thereto (including adjustments and corrections to the Closing Final Premium) be subject to correction and adjustment post-Closing in connection with the development of the Post-Closing Final Premium prepared in accordance with Section2.12, or (2) elect not to waive the condition to its obligations to close set forth in Section 8.2(i) and proceed to work with the Insurer to the next Target Closing Date, if any, or (3) elect not to waive the condition to its obligations to close set forth in Section 8.2(i) and terminate this Agreement pursuant to Section 10.1(h); provided, that in the event that the Company elects to terminate this Agreement as provided in this clause (3), the Insurer may, by the delivery of notice to the Company within three (3) Business Days following the delivery to the Insurer of the Company's notice to terminate, elect to use the Closing Final Premium calculated by the Independent Third Party solely for purposes of Closing, and have such Closing Final Premium and the calculation with respect thereto (including adjustments and corrections to the Closing Final Premium) be subject to correction and adjustment post-Closing in connection with the development of the Post-Closing Final Premium prepared in accordance with Section 2.12 (and in that case this Agreement will not be terminable pursuant to Section 10.1(h)). In the event of a POINT Access Event, the forgoing calculations of the Closing Final Premium will be deemed to refer to the Revised Preliminary Closing Premium.
(f) If the Independent Third Party has not calculated the Closing Final Premium, the Closing Final Premium shall equal the Closing Final Premium as calculated by the Insurer (but, unless the Preliminary Post-Solicitation Premium calculated by the Insurer and the Preliminary Post-Solicitation Premium calculated by the Independent Third Party differ by more than [ *** ], applying the Preliminary Post-Solicitation Premium calculated by the Independent Third Party); provided that if (x) the Company has calculated the
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Closing Final Premium and (y) the Closing Final Premium calculated by the Company is more than [ *** ] less than the Closing Final Premium calculated by the Insurer, the Company may elect to either (1) waive the condition to its obligations to close set forth in Section 8.2(i) and use the Closing Final Premium calculated by [ *** ] solely for purposes of Closing, and have such Closing Final Premium and the calculation with respect thereto (including adjustments and corrections to the Closing Final Premium) be subject to correction and adjustment post-Closing in connection with the development of the Post-Closing Final Premium prepared in accordance with Section 2.12, or (2) elect not to waive the condition to its obligations to close set forth in Section 8.2(i) and proceed to work with the Insurer to the next Target Closing Date, if any, or (3) elect not to waive the condition to its obligations to close set forth in Section 8.2(i) and terminate this Agreement pursuant to Section 10.1(h); provided, that in the event that the Company elects to terminate this Agreement as provided in this clause (3), the Insurer may, by the delivery of notice to the Company within three (3) Business Days following the delivery to the Insurer of the Company's notice to terminate, elect to use the Closing Final Premium calculated by [ *** ] solely for purposes of Closing, and have such Closing Final Premium and the calculation with respect thereto (including adjustments and corrections to the Closing Final Premium) be subject to correction and adjustment post-Closing in connection with the development of the Post-Closing Final Premium prepared in accordance with Section 2.12 (and in that case this Agreement will not be terminable pursuant to Section 10.1(h)). In the event of a POINT Access Event, the forgoing calculations of the Closing Final Premium will be deemed to refer to the Revised Preliminary Closing Premium.
C. Calculation of Post-Closing Premiums
Section 2.10 Interim Post-Closing Final Premium.
(a)If the Closing Date has occurred on or prior to December 10, 2012, then on or prior to [ *** ], the Plan Investment Fiduciary shall deliver to the Insurer a calculation of the value of each asset in the Final Plan Portfolio, (A) with respect to the Public Bonds and [ *** ] (other than Broker-Quote Public Bonds and [ *** ]) included in the Final Plan Portfolio, valued in an amount equal to the value assigned to [ *** ] in connection with calculation of the Final Pre-Closing Asset Valuation, (B) with respect to each Broker-Quote Public Bond [ *** ] a calculation of the value of each Broker-Quote Public Bond [ *** ] in the Final Plan Portfolio in accordance with the methodology set forth in Appendix 2.6 as of the close of business on the Business Day immediately prior to the Closing Date (the “[ *** ]”) and (C) with respect to [ *** ] in the Final Plan Portfolio, as valued as of the close of business on the day immediately preceding the Closing Date in accordance with the methodology set forth in Appendix 2.6, it being understood that with respect to any [ *** ], the value of such [ *** ] shall be unchanged from the value of such [ *** ] calculated in connection with the Final Pre-Closing Asset Valuation (collectively, the “Interim Closing Asset Valuation”); provided that if the Plan Investment Fiduciary fails to deliver an Interim Closing Asset Valuation pursuant to this Section 2.10(a), the Insurer shall deliver to the Company an Interim Closing Asset Valuation with respect to Broker Quote Public Bonds, [ *** ] in connection with its calculation of the Interim Post-Closing Final Premium in accordance with the methodologies set forth in Appendix 2.6.
(b)If the Closing Date has occurred on or prior to December 10, 2012, then on or prior to December 20, 2012:
(i)the Insurer shall deliver to the Company a calculation of the Interim Post-Closing Post-Solicitation Premium. The “Interim Post-Closing Post-Solicitation Premium” which shall be an amount, calculated by the Insurer, equal to (A) the Preliminary Post-Solicitation Premium, minus (B) the Interim Post-Closing Single Life Mortality Correction, plus (C) the Interim Post-Closing [
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*** ], plus (D) the Interim Post-Closing Additional Classification Error Correction, plus (E) the Interim Post-Closing Benefit Amount Correction (for the avoidance of doubt, the Interim Post-Closing [ *** ], the Interim Post-Closing Additional Classification Error Correction and the Interim Post-Closing Benefit Amount Correction could be negative numbers);
(ii)the Insurer shall calculate and deliver to the Company, and the Company and the Insurer shall jointly direct the Independent Third Party to deliver to the Company and the Insurer, a calculation of the Interim Post-Closing Final Premium in the form of Appendix 2.7 (including a proposed Annuity Exhibit). The “Interim Post-Closing Final Premium” shall be equal to (A) the Interim Post-Closing Post-Solicitation Premium multiplied by (B) 100% plus the Closing Date Adjustment, multiplied by (C) the sum of (I) the Closing CMA Adjustment and (II) the Closing SCA Adjustment, multiplied by (D) 100% plus the Closing PFS Adjustment, plus (E) the Closing [ *** ] Adjustment, plus (F) the Incremental Interim [ *** ] Adjustment; and
(iii)the Insurer shall produce and deliver to the Company and the Independent Third Party an updated Transferred Assets Schedule.
(c)Within 5 Business Days of the delivery by the Insurer of the calculation of the Interim Post-Closing Final Premium:
(i)if the sum of (A) the aggregate value of the assets in the Final Plan Portfolio specified in the Interim Closing Asset Valuation and (B) the amount of the Cash Closing Payment exceeds the amount of the Interim Post-Closing Final Premium, then, subject to the execution by the Plan Trustee of an amendment of the Group Annuity Contract in connection with Section 2.19, either Insurer Parent or the Insurer shall pay to the Plan Trustee an amount, in Cash, equal to such excess (the “Interim Post-Closing Insurer Payment”); and
(ii)if the amount of the Interim Post-Closing Final Premium exceeds the sum of (A) the aggregate value of the assets in the Final Plan Portfolio specified in the Interim Closing Asset Valuation and (B) the amount of the Cash Closing Payment, then, subject to the execution by the Insurer of an amendment of the Group Annuity Contract in connection with Section 2.19, the Independent Fiduciary shall irrevocably direct the Plan Trustee to pay to the Insurer an amount, in Cash, equal to such excess (the “Interim Post-Closing Plan Payment”).
(d)The Company shall make available to the Plan, Cash in the amount necessary to enable the Plan Trustee to pay all amounts that it is directed to pay to the Insurer by the Independent Fiduciary pursuant to this Section 2.10. The Plan Trustee shall unconditionally pay all such amounts to the Insurer pursuant to the Plan Trustee Agreement.
(e)Three (3) Business Days prior to the date of the Insurer's delivery of the Interim Post-Closing Premium, the Company and the Insurer shall jointly direct the Independent Third Party to prepare an Interim Post-Closing Final Premium, which it shall deliver to the Company and the Insurer on the same date that the Insurer delivers its calculation of the Interim Post-Closing Final Premium.
Section 2.11 Final Valuation of Final Plan Portfolio and Post-Closing Final Premium.
(a) On or prior to the day that is 80 days following the Closing Date, the Plan Investment Fiduciary shall deliver to the Insurer a calculation of the value of each asset in the Final Plan Portfolio, (A) with respect
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to the [ *** ] included in the Final Plan Portfolio, valued in an amount equal to the [ *** ] in connection with calculation of the Final Pre-Closing Asset Valuation (B) with respect to each [ *** ] in the Final Plan Portfolio, valued in an amount equal [ *** ] in connection with calculation of the Interim Closing Asset Valuation or, if there has not been an Interim Closing Valuation, the [ *** ] and (C) with respect to [ *** ] in the Final Plan Portfolio as valued as of the close of business on the day immediately preceding the Closing Date in accordance with the methodology set forth in Appendix 2.6 (the “Closing Asset Valuation”); provided that if the Plan Investment Fiduciary fails to deliver a Closing Asset Valuation pursuant to this Section 2.11(a), the Insurer shall deliver to the Company a Closing Asset Valuation in connection with its calculation of the Post-Closing Final Premium, with respect to [ *** ], in accordance with the methodologies set forth in Appendix 2.6.
(b) From and after the Closing until the determination of the Post-Closing Final Premium, the Insurer will, in accordance with the Insurer's standard verification practices and procedures, review the Social Security Master Death file and the Lexis Nexis Accurint tool to attempt to determine if any Covered Lives or Contingent Lives are deceased. If either such data source indicates that a Covered Life or Contingent Life is deceased, the life will be deemed deceased, subject to the Insurer's standard verification practices and procedures. The Insurer will provide monthly updates of such mortality review.
(c) On or prior to the date that is 90 days following the Closing Date, but in no event earlier than March 1, 2013 (such date shall be the agreed upon Expected Data Finalization Date under the Group Annuity Contract):
(i)the Insurer shall deliver to the Company a calculation of the Post-Closing Post-Solicitation Premium. The “Post-Closing Post-Solicitation Premium” shall be an amount, calculated by the Insurer, equal to (A) the Interim Post-Closing Post-Solicitation Premium, or if no Interim Post-Closing Post-Solicitation Premium was delivered, the Preliminary Post-Solicitation Premium, minus (B) the Final Single Life Mortality Correction, plus (C) the Final [ *** ], plus (D) the Final Additional Classification Error Correction, plus (E) the Final Benefit Amount Correction (for the avoidance of doubt, the Final [ *** ], the Final Additional Classification Error Correction and the Final Benefit Amount Correction could be negative numbers);
(ii)the Insurer shall calculate and deliver to the Company a calculation of the Post-Closing Final Premium in the form of Appendix 2.7 (including a proposed Annuity Exhibit). The “Post-Closing Final Premium” shall be equal to (A) the Post-Closing Post-Solicitation Premium multiplied by (B) 100% plus the Closing Date Adjustment, multiplied by (C) the sum of (I) the Closing CMA Adjustment and (II) the Closing SCA Adjustment, multiplied by (D) 100% plus the Closing PFS Adjustment, plus (E) the Closing [ *** ] Adjustment, plus (F) the sum of the Incremental Interim [ *** ] Adjustment and the Incremental Final [ *** ] Adjustment, and
(iii)the Insurer shall produce and deliver to the Company and the Independent Third Party an updated Transferred Assets Schedule.
(d) Three (3) Business Days prior to the date of the Insurer's delivery of the Post-Closing Final Premium, the Company and the Insurer shall jointly direct the Independent Third Party to prepare a Post-Closing Final Premium, which it shall deliver to the Company and the Insurer on the same date that the Insurer delivers its calculation of the Post-Closing Final Premium.
Section 2.12 Post-Closing Final Premium and Closing Asset Valuation Disputes.
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(a) Within ten (10) days following the delivery by the Insurer of the calculation of the Post-Closing Final Premium in accordance with Section 2.11(c)(ii), subject to Section 2.12(b), (i) the Company or the Insurer may dispute any component of the calculation of the Post-Closing Post-Solicitation Premium, the Post-Closing Final Premium, or any other item set forth in the calculation of the Post-Closing Final Premium (or any component of a prior calculation of the premium), including whether [ *** ] and any Single Life Mortality Corrections, [ *** ], Benefit Amount Corrections, and Signing and Additional Classification Errors; and (ii) the Insurer may dispute the Closing Asset Valuation. Any such dispute (an “Arbitration Dispute”) shall be resolved in accordance with the procedures set forth in Appendix 2.12.
(b) Notwithstanding anything to the contrary in Section 2.12(a), (i) if the Company shall have made the election set forth in clause (1) of Section 2.9(e) or clause (1) of Section 2.9(f) the Insurer shall not have the right to dispute any component of the calculation of the Post-Closing Post-Solicitation Premium, the Post-Closing Final Premium, or any other item set forth in the calculation of the Post-Closing Final Premium (other than (A) whether an [ *** ], (B) the In-Kind Asset Information or (C) the Closing Asset Valuation) and (ii) the Company shall not have the right to dispute the Closing Asset Valuation.
(c) Any component of the calculation of (i) the Post-Closing Post-Solicitation Premium or (ii) the Post-Closing Final Premium, or any other item set forth in the calculation of the Post-Closing Final Premium, including the Closing Asset Valuation, or whether an [ *** ] which is not disputed pursuant to Section 2.12(a) shall be final and binding on the Parties.
Section 2.13 True-Up Payment Upon Resolution of Post-Closing Final Premium and Closing Asset Valuation Disputes.
(a) By the earlier of (x) the date that is five (5) Business Days following the final resolution of all disputes in accordance with Section 2.12 and (y) the later of the date that is (1) 175 days following the end of the PBGC Review Period and (2) 145 days following the Closing Date:
(i) if (A) the sum of (x) the aggregate Closing Asset Valuation of the assets in the Final Plan Portfolio (as may be adjusted following the resolution of disputes in accordance with Section 2.12(a)) and (y) the amount of the Cash Closing Payment minus (B) the [ *** ], if any, plus (C) the Interim Post-Closing Plan Payment, exceeds the amount of the Post-Closing Final Premium (as may be adjusted following the resolution of any disputes in accordance with Section 2.12(a)), if any, then, subject to the execution by the Plan Trustee of an amendment of the Group Annuity Contract in connection with Section 2.19, either Insurer Parent or the Insurer shall pay to the Plan Trustee an amount, in Cash, equal to such excess; and
(ii) if (A) the amount of the Post-Closing Final Premium (as adjusted following the resolution of disputes in accordance with Section 2.12(a)) plus (B) the Interim Post-Closing Insurer Payment, if any, minus (C) the Interim Post-Closing Plan Payment, exceeds the sum of (x) the aggregate Closing Asset Valuation of the assets in the Final Plan Portfolio (as may be adjusted following the resolution of any disputes in accordance with Section 2.12(a)) and (y) the amount of the Cash Closing Payment, then, subject to the execution by the Insurer of an amendment of the Group Annuity Contract in connection with Section 2.19, the Independent Fiduciary shall irrevocably direct the Plan Trustee to pay to the Insurer, an amount, in Cash, equal to such.
(b) The Company shall make available to the Plan, Cash in the amount necessary to enable the Plan Trustee to pay all amounts that it is directed to pay to the Insurer by the Independent Fiduciary pursuant
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to this Section 2.13. The Plan Trustee shall unconditionally pay all such amounts to the Insurer pursuant to the Plan Trustee Agreement.
D. TCF
Section 2.14 TCF.
(a)The Company shall deposit into the Escrow Account, by wire transfer of immediately available funds, the TCF on the Business Day following the DTFA Execution Date and the 5th Business Day of each calendar month thereafter (starting in July of 2012), until the earlier to occur of the Closing Date and the termination of this Agreement in accordance with Article X.
(b)The Company shall pay any and all fees and other amounts that may become due and payable to the Escrow Agent pursuant to the Escrow Agreement.
E. General
Section 2.15 Access and Cooperation. The Company, the Insurer and their respective Representatives will be entitled to reasonable access during normal business hours to examine and be provided copies of (a) the work papers and files related to the preparation of, or support for, the calculations and valuations contemplated by this Article II, including any such work papers or files related to POINT and (b) the relevant books and records of the Insurer or the Company, as applicable, and to discuss with the Insurer's or the Company's, as applicable, employees and Representatives involved with respect thereto; provided, however, that notwithstanding anything to the contrary set forth herein, other than as set forth in Section 11.7, the Company and its Representatives shall not have access to the Insurer Provided Life-by-Life Information or any work papers or other information that discloses or reveals Insurer Provided Life-by-Life Information, nor shall the Company or any of its Representatives attempt to derive, directly or indirectly, Insurer Provided Life-by-Life Information from any other information provided to the Company, the Company's Affiliates or Representatives or the Company's Affiliates' Representatives. Should, notwithstanding the foregoing, the Company or any of its Representatives obtain Insurer Provided Life-by-Life Information, whether directly or indirectly, or through a process of derivation, they hereby agree to transfer any rights in such information to the Insurer.
Section 2.16 Data Updates. The Insurer shall have reasonable access to all updates to data, including benefit amounts, benefit forms, dates of birth, dates of death, gender, and lives missing from the original data provided by Towers Xxxxxx that relate to the premium payable to the Insurer, in each case limited to data in connection with Priced Lives who are Covered Lives, Contingent Lives and Beneficiaries.
Section 2.17 Business Day Adjustments. If any calculation set forth in this Article II is to be performed as of a day that is not a Business Day, such calculation shall be performed as of the immediately preceding Business Day.
Section 2.18 Adjustment to the Target Closing Date. If subsequent to the calculation or delivery of a calculation or other deliverable that was required to be performed or delivered as of, on or prior to a day that is some number of days prior to the Target Closing Date, the Target Closing Date is adjusted so that it is a later date, the applicable Party shall re-calculate or deliver such calculation or other deliverable as of, on or prior, as applicable, to such number of days prior to the Target Closing Date as so adjusted.
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Section 2.19 Amendments to the Group Annuity Contract.
(a)Within five Business Days following the delivery by the Insurer of the calculation of the Interim Post-Closing Final Premium, the Insurer shall amend the Group Annuity Contract, and the Independent Fiduciary shall irrevocably direct the Plan Trustee to amend the Group Annuity Contract, in each case, to reflect any differences between (A) the amount of the Interim Post-Closing Final Premium and the amount of the Closing Final Premium, (B) the Annuity Exhibit delivered in connection with the calculation of the Interim Post-Closing Final Premium and the Annuity Exhibit delivered in connection with the delivery of calculation of the Closing Final Premium and (C) the Transferred Assets Schedule delivered in connection with the calculation of the Interim Post-Closing Final Premium and the Transferred Assets Schedule delivered pursuant to Section 2.9(a).
(b)By the earlier of (x) the date that is five (5) Business Days following the final resolution of all disputes in accordance with Section 2.12 and (y) the later of the date that is (1) 175 days following the end of the PBGC Review Period and (2) 145 days following the Closing Date, the Insurer shall amend the Group Annuity Contract, and the Independent Fiduciary shall irrevocably direct the Plan Trustee to amend the Group Annuity Contract, in each case, to reflect any differences between (A) the amount of the Post-Closing Final Premium (as adjusted following the resolution of any disputes in accordance with Section 2.12(a)) and the amount of the Interim Post-Closing Final Premium, or if no Interim Post-Closing Final Premium was delivered, the Closing Final Premium, (B) the Annuity Exhibit delivered in connection with the calculation of the Post-Closing Final Premium (as adjusted following the resolution of any disputes in accordance with Section 2.12(a)) and the Annuity Exhibit delivered in connection with the delivery of calculation of the Interim Post-Closing Final Premium, or if no Interim Post-Closing Final Premium was delivered, the Annuity Exhibit delivered in connection with the delivery of the calculation of the Closing Final Premium and (C) the Transferred Assets Schedule delivered in connection with the calculation of the Post-Closing Final Premium (as adjusted following the resolution of any disputes in accordance with Section 2.12(a)) and the Transferred Assets Schedule delivered pursuant to Section 2.10(b)(iii) or if no Transferred Assets Schedule was delivered pursuant to Section 2.10(b)(iii), the Transferred Assets Schedule delivered pursuant to Section 2.9(a).
Section 2.20 Amendments to the Procedures Manual and Identified CD-ROM.
(a) Within thirty (30) days following the DTFA Execution Date, the Insurer shall deliver an updated Identified CD-ROM and Procedures Manual, to reflect, in the Insurer's judgment, the Agreed Updates. Within ten (10) Business Days following the receipt of such updated Identified CD-ROM and Procedures Manual, the Company shall either (i) consent in writing to such updated Identified CD-ROM and Procedures Manual (such consent not to be unreasonably withheld, delayed or conditioned) or (ii) inform the Insurer in writing of any disagreements with such updated Identified CD-ROM or Procedures Manual. In the event that the Company informs the Insurer of any such disagreement, the Insurer and the Company shall cooperate in good faith to resolve any such disagreement as soon as practical. The Procedures Manual and the Identified CD-ROM updated pursuant to this Section 2.20(a) shall, following the consent of the Company or the resolution of any disagreements in connection with the preceding sentence, be binding on the Parties and such updated Identified CD-ROM (which shall be updated following the certification provided by the Independent Third Party in connection with Section 2.4(c)) shall be initialed by the Company and the Insurer and shall replace any previous versions of the Identified CD-ROM.
(b) If the Company or the Insurer identify any error or omission in the Procedures Manual or the Identified CD-ROM (other than an error or omission that would be resolved by an Agreed Update), the
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Company or the Insurer, as applicable, shall promptly inform the other and the Company and the Insurer shall cooperate in good faith to update the Procedures Manual or the Identified CD-ROM to resolve such error or omission, and such updated Identified CD-ROM shall be initialed by the Company and the Insurer. The Procedures Manual or the Identified CD-ROM, as updated pursuant to this Section 2.20(b), shall be binding on the Parties.
Section 2.21 [ *** ]
(a) If, prior to the later of the date that is (1) 175 days following the end of the PBGC Review Period and (2) 145 days following the Closing Date, [ *** ] to the Insurer at Closing is identified by either the Insurer or the Company as [ *** ], (x) the Insurer or the Company, as applicable, shall promptly inform the other, and, if such [ *** ], (y) the Insurer shall, within 5 days, [ *** ] and (z) the Independent Fiduciary shall [ *** ].
(b) The Company shall make available to the Plan, Cash in the amount necessary to enable the Plan Trustee to pay all amounts that it is directed to pay to the Insurer by the Independent Fiduciary pursuant to this Section 2.21. The Plan Trustee shall unconditionally pay all such amounts to the Insurer pursuant to the Plan Trustee Agreement.
Section 2.22 Return of Additional Premium Due To Late Discovery of Mortality. Notwithstanding Sections 2.10-2.13 (and any arbitration relating thereto), if after the date that is 7 days prior to the date that the Post-Closing Final Premium is delivered pursuant to Section 2.11(c)(ii) and prior to the date that is ninety (90) days after the Annuity Commencement Date, the Insurer discovers additional data corrections relating to deaths of Covered Lives and Contingent Lives that occurred prior to the Annuity Commencement Date, the Insurer shall return the portion of the Post-Closing Final Premium relating to such deaths to the Plan or, in the event that the Plan is no longer in existence, to the Company, within twenty (20) days thereafter. The Company shall have no rights to dispute such calculation.
Section 2.23 Reimbursement of [ *** ].
(a) If, during the period from and after the Closing Date through the [ *** ] of the Closing Date, the Insurer made a payment to, or had a [ *** ] at Closing, due to the following:
(i)an obligation pursuant to an [ *** ], in whole or in part, or otherwise reimburse or pay to the [ *** ], prior to the Closing Date, provided [ *** ],
(ii)any tax, fee or other governmental charge (including, without limitation, any deductions or offsets relating to withholding tax deductions or other payments of taxes) to the extent attributable to [ *** ] prior to the Closing Date, or
(iii)any Losses arising from breach [ *** ], of its representations, warranties or covenants made by it under the [ *** ] which arise, accrue or relate to the period prior to the Closing,
the Insurer shall deliver notice to the Company setting forth in reasonable detail the amount of the claim and indemnification reimbursement that the Insurer seeks. The Insurer shall also provide such supporting documentation as may be reasonably requested by the Company in connection therewith. The Company shall, within ninety (90) days following its receipt of such notice, remit such amount to the Insurer (or if such claim is disputed in good faith, promptly on resolution of such dispute). For the avoidance of doubt,
39
only those amounts that (i) result in an actual economic loss to the Insurer, and (ii) only with respect to Section 2.23(a)(i), are related to a prior economic gain to the Plan Trustee, on behalf of the Plan, are eligible for payment by the Company pursuant to this Section 2.23. The maximum aggregate obligation of the Company to make payments under this Section 2.23 [ *** ], and the Company shall have no other obligations in respect of Transferred Liabilities described in this Section 2.23 other than as provided in this Section 2.23.
(b) If, during the period from and after the Closing Date through the [ *** ] of the Closing Date, the Insurer receives a [ *** ] to it at Closing, then upon becoming aware that [ *** ], the Insurer shall deliver a notice to the Company setting forth in reasonable detail the amount of the [ *** ] to such entity as the Company may direct. [ *** ], to the Insurer prior to the second anniversary of the Closing Date with respect to any payment made on behalf of the Plan prior to the Closing Date that is determined under the [ *** ] to be in excess of the amount that was actually required to paid on behalf of the Plan, but only to the extent the [ *** ] was reduced by such payment made on behalf of the Plan. The maximum aggregate obligation of the Insurer to make payments under this Section 2.23 is [ *** ], and the Insurer shall have no other obligations with respect to any [ *** ] with respect to [ *** ] after the Closing.
ARTICLE III
COMPANY'S REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to Insurer Parent, the Insurer and the Independent Fiduciary as of the DTFA Execution Date and the Closing Date that, except as set forth in the Company Disclosure Letter:
Section 3.1 Due Organization, Good Standing and Corporate Power. The Company is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware. The Company has all requisite power and authority to enter into and carry out its obligations under this Agreement and the Ancillary Agreements to which it is, or will be at Closing, a party (if any) and to consummate the transactions contemplated to be undertaken by the Company herein or therein. The Company is duly qualified or licensed to do business and is in good standing in each jurisdiction in which its sponsorship of the Plan makes such qualification or licensing necessary, except in such jurisdictions where the failure to be in good standing, or so qualified or licensed is not material.
Section 3.2 Authorization of Agreement; Enforceability. The Company has received all appropriate corporate approvals and no other action on the part of the Company or its Affiliates is necessary to authorize the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated to be undertaken by the Company under this Agreement and the Ancillary Agreements (to the extent a party thereto, if any). This Agreement is, and the Ancillary Agreements (to the extent that the Company is a party thereto, if any), when executed will be, duly executed and delivered by the Company, and each is (or when executed will be) a valid and binding obligation of the Company and enforceable against the Company, in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Law affecting the enforcement of creditors' rights generally and by general equitable principles (such exception is the “Enforceability Exception”).
Section 3.3 Consents And Approvals; No Violations. Assuming the Consents from Governmental Authorities set forth on Section 3.3 of the Company Disclosure Letter have been obtained, the execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the
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transactions contemplated to be undertaken by the Company pursuant to this Agreement do not (a) violate or conflict with any provision of its certificate or articles of incorporation, bylaws or code of regulations (or the comparable governing documents); (b) violate or conflict with any Law or Order of any Governmental Authority applicable to the Company; (c) require any additional Governmental Approval; or (d) except for the Consents required in connection with [ *** ], require any Consent of or other action by any Person under, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, or cause or permit termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit under, any provision of any Contract to which the Company is a party, the absence or occurrence of any of the foregoing would have a material adverse impact on the Company's ability to consummate the Transaction.
Section 3.4 Compliance with ERISA and Code. The Plan is maintained under and is subject to ERISA and operated in compliance therewith and with its terms. The Plan is Tax Qualified and its trust is exempt from taxation. The Plan's most recent favorable Determination Letter is dated May 18, 2012 and reflects all changes to the plan through April 30, 2012. All Plan amendments necessary to effect the Lump-Sum Solicitation, and the other transactions contemplated by this Agreement, and the Ancillary Agreements, except for the Plan Termination and Plan Spin-Off, have been duly authorized and made by the Company. The Independent Fiduciary has been duly appointed as a fiduciary of the Plan with respect to the purchase of one or more group annuity contracts as set forth in an engagement letter with the Annuity Committee dated March 16, 2012, as amended (the “IF Engagement Letter”), and has the sole authority and responsibility to (i) determine whether the Transaction satisfies ERISA and applicable guidance, including Interpretative Bulletin 95-1, (ii) direct the Plan Trustee on behalf of the Plan in connection with the transfer of the Transferred Assets in connection with the consummation of the Transaction, (iii) direct the Plan Trustee on behalf of the Plan in connection with the execution or any amendment of the Group Annuity Contract, and (iv) perform the covenants and agreements and make the representations and warranties set forth in this Agreement, the Ancillary Agreements (to the extent a party thereto) and the IF Engagement Letter to be performed or made by the Independent Fiduciary.
Section 3.5 No Brokers' Fee. The Company has no Liability for any fee, commission or payment to any broker, finder or agent with respect to the Transactions for which any other Party, or its respective Affiliates or Representatives, could be liable.
Section 3.6 No Discretionary Authority. The Company has no discretionary asset management authority or responsibility regarding management of the Plan Assets.
Section 3.7 Accuracy of Information. To the Company's Knowledge, (a) the data in respect of mortality experience with respect to the Plan through November 30, 2011 that was furnished by or on behalf of the Company or the Plan or any of their respective Affiliates prior to the date hereof to the Insurer, its Affiliates or any of its actuarial, accounting or legal advisors in connection with the negotiation of this Agreement, the Group Annuity Contract, and the transactions contemplated by this Agreement did not contain any material misstatement or material omission; and (b) the data in respect of date of birth, date of death or gender of any Non-Solicited Lives or Solicited Lives that was furnished by or on behalf of the Company or the Plan or any of their respective Affiliates prior to the date hereof to the Insurer, its Affiliates or any of its actuarial, accounting or legal advisors in connection with the negotiation of this Agreement, the Group Annuity Contract, and the transactions contemplated by this Agreement, was not generated using any materially incorrect systematic assumptions or omissions.
Section 3.8 Parent Liquidity Position. The Parent Liquidity Position as of March 31, 2012 was $31.455 billion. As of the DTFA Execution Date, to the Company's Knowledge there are no circumstances existing or that would reasonably be expected to occur that would reasonably be expected to cause a Company
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MAC.
Section 3.9 Delivery of Plan. A true, correct and complete copy of the Plan has been delivered to the Independent Fiduciary and the Insurer on or prior to the DTFA Execution Date.
Section 3.10 Settlement Accounting. As of the DTFA Execution Date, to the Company's Knowledge there are no circumstances existing or that would reasonably be expected to occur that would be reasonably likely to cause the Company to conclude that the Company may not account for the transactions contemplated by this Agreement and the Ancillary Agreements as a settlement under ASC 715.
Section 3.11 No Other Representations or Warranties; Reliance. Except for the representations and warranties of the Company expressly set forth in this Article III, neither the Company, nor any of its Affiliates, nor any other Person makes any express or implied representation or warranty on behalf of the Company or any of its Affiliates with respect to the Company, its Affiliates, the Plan, the Transferred Assets or the transactions contemplated by this Agreement or the Standard Termination and the Lump-Sum Solicitation. The Company acknowledges and agrees that Insurer Parent, the Insurer and the Independent Fiduciary have relied on the representations set forth in this Article III.
ARTICLE IV
INDEPENDENT FIDUCIARY'S REPRESENTATIONS AND WARRANTIES
The Independent Fiduciary hereby represents and warrants to the Company, Insurer Parent and the Insurer as of the DTFA Execution Date and the Closing Date that:
Section 4.1 Due Organization, Good Standing and Corporate Power.
(a)Independent Fiduciary is a Massachusetts trust company duly organized, validly existing and in good standing under the Laws of the Commonwealth of Massachusetts. The Independent Fiduciary has all requisite power and authority to enter into and carry out its obligations under this Agreement and the Ancillary Agreements (to the extent a party thereto) to which it is, or will be at Closing, a party and to direct the Plan Trustee to consummate the transactions on behalf of the Plan trust. The Independent Fiduciary is duly qualified or licensed to do business and is in good standing in each jurisdiction in which its representation of the Plan makes such qualification or licensing necessary, except in such jurisdictions where the failure to be or in good standing or so qualified or licensed is not material.
(b)The Independent Fiduciary meets the requirements of, and in the transactions contemplated by this Agreement and the Ancillary Agreements (to the extent a party thereto) is acting as, an investment manager under ERISA § 3(38) and a QPAM under PTCE 84-14. The Independent Fiduciary is experienced in independent fiduciary work, and together with its reliance on its consultant Xxxxxx Xxxxx Inc. and its counsel, K&L Gates, LLP, the Independent Fiduciary is knowledgeable concerning the large scale group annuity marketplace and reasonably believes that it has the requisite expertise to select the Insurer of the Group Annuity Contract and perform its obligations under this Agreement, the Ancillary Agreements (to the extent a party thereto) and the IF Engagement Letter. The Independent Fiduciary was designated a fiduciary of the Plan by the Annuity Committee with respect to the purchase of one or more group annuity contracts in the IF Engagement Letter (a true and correct copy of which has been provided to the Insurer, other than the attachment thereto regarding the fees to be paid to the Independent Fiduciary), reaffirms its fiduciary status as set forth in such letter; and has provided the services described in Exhibit A of such letter prudently and solely in the interest of the Plan Participants and Plan Beneficiaries. The Independent Fiduciary has the authority and responsibility to (i) determine whether the Transaction satisfies ERISA and applicable guidance,
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including Interpretative Bulletin 95-1, (ii) direct the Plan Trustee on behalf of the Plan in connection with the transfer of the Transferred Assets in connection with the consummation of the Transaction, (iii) direct the Plan Trustee on behalf of the Plan in connection with the execution of the Group Annuity Contract and the amendments thereto contemplated by this Agreement, and (iv) perform the covenants and agreements and make the representations and warranties set forth in this Agreement, the Ancillary Agreements (to the extent a party thereto) and the IF Engagement Letter to be performed or made by the Independent Fiduciary.
Section 4.2 Authorization of Agreement; Enforceability. The Independent Fiduciary has received all appropriate corporate approvals and no other action on the part of the Independent Fiduciary is necessary to authorize the execution, delivery and performance of this Agreement and the Ancillary Agreements (to the extent a party thereto) and the consummation of the transactions contemplated to be undertaken by the Independent Fiduciary under this Agreement and the Ancillary Agreements (to the extent a party thereto). This Agreement is, and the Ancillary Agreements (to the extent a party thereto), when executed will be, duly executed and delivered by the Independent Fiduciary, and each is (or when executed will be) a valid and binding obligation of Independent Fiduciary and enforceable against Independent Fiduciary, in accordance with its terms, subject to the Enforceability Exception and the prudence requirements of ERISA; provided, that, except as set forth in Section 10.2, neither this Agreement nor the Ancillary Agreements (to the extent a party thereto) shall be enforceable against the Independent Fiduciary if this Agreement is terminated pursuant to Section 10.1(f) or the Closing condition set forth in Section 8.1 has not been satisfied. Notwithstanding any other provision in this Agreement or the Ancillary Agreements (to the extent a party thereto), the Confidentiality Agreements applicable to the Independent Fiduciary shall remain enforceable against the Independent Fiduciary if this Agreement is terminated pursuant to Section 10.1(f) or the Closing condition set forth in Section 8.1 has not been satisfied.
Section 4.3 Consents And Approvals; No Violations. The execution, delivery and performance of this Agreement and the Ancillary Agreements (to the extent a party thereto) by the Independent Fiduciary, or the consummation by the Independent Fiduciary of the transactions contemplated to be undertaken by the Independent Fiduciary, do not: (a) violate or conflict with any provision of its certificate or articles of incorporation, bylaws or code of regulations (or the comparable governing documents); (b) violate or conflict with any Law or Order of any Governmental Authority applicable to Independent Fiduciary; (c) require any Governmental Approval; (d) require any Consent of or other action by any Person; or (e) result in a Non-Exempt Prohibited Transaction.
Section 4.4 ERISA Related Determinations.
(a) The Independent Fiduciary is fully qualified to serve as an independent fiduciary in connection with the Transactions contemplated by this Agreement and it is independent of the Company. The annual revenues of the Independent Fiduciary Controlled Group from the Company Controlled Group in 2011 were less than five percent of the Independent Fiduciary Controlled Group's total annual revenues in that year and the annual revenues of the Independent Fiduciary Controlled Group projected to be received from the Company Controlled Group in 2012 are less than five percent of the Independent Fiduciary Controlled Group's total projected annual revenues for 2012. Commercially reasonable ethical walls have been erected between the personnel working on the Transaction and the personnel working on other matters involving the Company Controlled Group.
(b) The Independent Fiduciary has selected the Insurer to issue the Group Annuity Contract as set forth in this Agreement and such selection satisfies the requirements of ERISA and applicable guidance, including Interpretive Bulletin 95-1. The Independent Fiduciary has delivered a certification confirming the foregoing, executed by a duly authorized officer of the Independent Fiduciary, to the Annuity Committee.
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(c) If an Independent Fiduciary MAC has not occurred between the DTFA Execution Date and the Closing Date and is not continuing as of the Closing Date, the selection of the Insurer to provide the Group Annuity Contract will continue to satisfy the requirements of ERISA and applicable guidance, including Interpretive Bulletin 95-1, as of the Closing Date.
Section 4.5 No Brokers' Fee. The Independent Fiduciary has no Liability for any fee, commission or payment to any broker, finder or agent with respect to the Transactions for which any other Party, or their respective Affiliates or Representatives, could be liable.
Section 4.6 No Other Representations or Warranties; Reliance. Except for the representations and warranties of the Independent Fiduciary expressly set forth in this Article IV, neither the Independent Fiduciary, nor its Affiliates, nor any other Person makes any express or implied representation or warranty on behalf of the Independent Fiduciary or any of its Affiliates with respect to the Independent Fiduciary, the Plan, the Transferred Assets or the transactions contemplated by this Agreement and the Ancillary Agreements (to the extent a party thereto), including the Standard Termination and the Lump-Sum Solicitation. The Independent Fiduciary acknowledges and agrees that Insurer Parent, the Insurer and the Company have relied on the representations set forth in this Article IV.
ARTICLE V
INSURER AND INSURER PARENT REPRESENTATIONS AND WARRANTIES
Each of Insurer Parent and the Insurer hereby represents and warrants to the Company and the Independent Fiduciary as of the DTFA Execution Date and the Closing Date that, except as set forth in the Prudential Disclosure Letter:
Section 5.1 Due Organization, Good Standing and Corporate Power. Insurer Parent is a corporation duly organized, validly existing and in good standing under the Laws of the State of New Jersey. The Insurer is a life insurance company duly organized, validly existing and in good standing under the Laws of the State of New Jersey. Each of Insurer Parent and the Insurer have all requisite power and authority to enter into and carry out their respective obligations under this Agreement and the Ancillary Agreements to which each is, or will be at Closing, a party and to consummate the transactions contemplated to be undertaken by each of Insurer Parent or the Insurer herein or therein. The Insurer is duly qualified or licensed to do business and is in good standing in each jurisdiction in which its performance of its obligations set forth in the Group Annuity Contract and Contract 300 Article P makes such qualification or licensing necessary, except in such jurisdictions where the failure to be in good standing or so qualified or licensed is not material.
Section 5.2 Authorization of Agreement; Enforceability. Each of Insurer Parent and the Insurer have received all appropriate corporate approvals and no other action on the part of Insurer Parent, the Insurer or their respective Affiliates is necessary to authorize the execution, delivery and performance of this Agreement and the Ancillary Agreements (to the extent a party thereto) and the consummation of the transactions contemplated to be undertaken by Insurer Parent and the Insurer under this Agreement and the Ancillary Agreements (to the extent a party thereto). This Agreement is, and the Ancillary Agreements, other than the Group Annuity Contract, which is covered by Section 5.4 below, (to the extent the Insurer is a party thereto) when executed will be, duly executed and delivered by the Insurer, and each is (or when executed will be) a valid and binding obligation of the Insurer and enforceable against the Insurer in accordance with its terms, except to the extent that its enforceability may be subject to the Enforceability Exceptions. This Agreement has been, and the Ancillary Agreements (to the extent that the Insurer Parent is a party thereto) when executed will be, duly executed and delivered by Insurer Parent and each is a valid and binding obligation of Insurer Parent (to the extent the Insurer Parent is a party thereto) and enforceable against Insurer Parent,
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in accordance with its terms, except to the extent that its enforceability may be subject to the Enforceability Exceptions.
Section 5.3 Consents And Approvals; No Violations. Assuming the Consents from Governmental Authorities set forth on Section 5.3 of the Prudential Disclosure Letter have been obtained, the execution and delivery of this Agreement and the Ancillary Agreements (to the extent a party thereto) by Insurer Parent and the Insurer and the consummation by Insurer Parent and the Insurer of the transactions contemplated to be undertaken by the Insurer Parent and the Insurer do not (a) violate or conflict with any provision of their respective certificates or articles of incorporation, bylaws or code of regulations (or the comparable governing documents); (b) violate or conflict with any Law or Order of any Governmental Authority applicable to Insurer Parent or the Insurer or any Transferred Assets; (c) require any Governmental Approval; (d) require any Consent of or other action by any Person under, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, or cause or permit termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit under, any provision of any Contract to which the Insurer is a party, to the extent the absence or occurrence of any of the foregoing would have a material adverse impact on the Insurer's ability to consummate the Transaction; or (e) result in a Non-Exempt Prohibited Transaction. The form of Group Annuity Contract has been approved for issuance by the New York State Department of Financial Services. The Plan of Operations has been approved by the New York State Department of Financial Services and the New Jersey Department of Banking and Insurance. The Annuity Certificates have been filed with the New York State Department of Financial Services for use in accordance with the General Annuity Contract.
Section 5.4 Enforceability of Group Annuity Contract. The Group Annuity Contract when executed will be duly executed and delivered by the Insurer and will be a valid and binding obligation of the Insurer and enforceable against the Insurer by the Plan Trustee and each Covered Life, Contingent Life and Beneficiary, in accordance with its terms, except to the extent that its enforceability may be subject to the Enforceability Exceptions. After the Contract-Holder (as defined in the Group Annuity Contract) ceases to exist, the Group Annuity Contract when executed will be duly executed and delivered by the Insurer and will be a valid and binding obligation of the Insurer and enforceable against the Insurer by each Covered Life, Contingent Life and Beneficiary, in accordance with its terms, except to the extent that its enforceability may be subject to the Enforceability Exceptions.
Section 5.5 RBC Ratio. The RBC Ratio at December 31, 2011 was 491% [ *** ], and such Projected RBC Ratio was determined in accordance with [ *** ]. As of the DTFA Execution Date, to the Insurer's Knowledge there are no circumstances existing or that would reasonably be expected to occur that would reasonably be expected to cause an Insurer MAC.
Section 5.6 Compliance with Laws. The business of the Insurer Parent and the Insurer has been and is being conducted in material compliance with applicable Laws, and none of the licenses, permits or Governmental Approvals required for the continued conduct of the business of the Insurer Parent and the Insurer as such business is currently being conducted will lapse, terminate, expire or otherwise be impaired as a result of the consummation of the transactions contemplated to be undertaken by the Insurer Parent, the Insurer or their Affiliates hereunder or pursuant to the Ancillary Agreements, except as, in either case, would not reasonably be expected to be, individually or in the aggregate, materially adverse to the ability of the Insurer Parent and the Insurer to perform their obligations under this Agreement or the Ancillary Agreements.
Section 5.7 No Brokers' Fee. Neither Insurer Parent nor the Insurer has any Liability for any fee, commission or payment to any broker, finder or agent with respect to the Transaction for which any other Party, or their respective Affiliates or Representatives, could be liable.
Section 5.8 Disclosed Information.
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(a)Insurer Parent and the Insurer represent and warrant to the Company and the Independent Fiduciary in connection with the Independent Fiduciary's due diligence that, to Prudential's Knowledge, (i) all material information provided to the Independent Fiduciary in connection with the transactions contemplated by this Agreement, was, as of the date indicated on such information, true and correct in all material respects and (ii) no change has occurred since the date indicated on such information that the Insurer or Insurer Parent has not publicly disclosed or disclosed to the Independent Fiduciary that would cause such information, taken as a whole, to be materially false or misleading.
(b)Insurer Parent and the Insurer represent and warrant to the Company that, to Prudential's Knowledge, (i) the information on the Identified CD-ROM, (ii) the Insurer Provided Life-by-Life Information provided to the Independent Third Party, and (iii) all other information and data supplied to the Independent Third Party (other than, in each case, any such information that was supplied by the Company, the Plan Trustee, the Plan, the Independent Fiduciary, the Plan Investment Fiduciary or any of their respective Affiliates or Representatives, and has been exactly reproduced by the Insurer, with no modifications, errors or other changes) does not contain any material errors or omissions, other than any errors or omissions that are addressed by the Agreed Updates.
Section 5.9 No Other Representations or Warranties; Reliance. Except for the representations and warranties of Insurer and the Insurer Parent expressly set forth in this Article V, none of the Insurer Parent, the Insurer, any of their respective Affiliates or any other Person makes any express or implied representation or warranty on behalf of Insurer Parent or the Insurer or any of their respective Affiliates with respect to Insurer Parent, the Insurer, their respective Affiliates, or the transactions contemplated by this Agreement and the Ancillary Agreements (to the extent a party thereto). Insurer Parent and the Insurer acknowledge and agree that the Company and the Independent Fiduciary have relied on the representations set forth in this Article V.
ARTICLE VI
PRE CLOSING COVENANTS
The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing (except as otherwise expressly stated to apply to a different period):
Section 6.1 Plan Amendments; Company Certification. The Company shall amend the Plan in a timely manner after the DTFA Execution Date to the extent necessary to effectuate the Plan Spin-Off and Plan Termination as contemplated in this Agreement. In addition, the Company will deliver at or prior to the Closing a true and correct certificate confirming whether or not the following items have occurred:
(a)the Plan Spin-Off was effected;
(b)a Notice of Intent to Terminate has been distributed;
(c)a Notice of Plan Benefits has been distributed;
(d)the Form 500 has been filed; and
(e)all Lump-Sum Payments have been made prior to the end of the Lump-Sum Payment Period from Plan Assets in accordance with the Lump-Sum Elections.
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Section 6.2 Notice of Material Litigation. Between the DTFA Execution Date and the Closing Date, if (i) the Company, the Plan or any fiduciary of the Plan, or (ii) the Insurer or the Insurer Parent, becomes involved in any Material Litigation (except for PBGC review of the Plan's Standard Termination) then the Company (in the case of clause (i)) or the Insurer (in the case of clause (ii)) shall notify such other Party of such Material Litigation within ten (10) Business Days of the date on which it learns of such Material Litigation.
Section 6.3 Efforts to Close; Regulatory Clearances; Third-Party Consents.
(a) In addition to the actions specifically provided for elsewhere in this Agreement or in any Ancillary Agreement, each of the Parties will cooperate with each other and use (and, except with respect to the Independent Fiduciary, will cause their respective Affiliates to use) their respective commercially reasonable efforts to take, or to cause to be taken, all actions, and to do, or to cause to be done, all things reasonably necessary on its part to consummate the Closing. Without limiting the generality of the foregoing, (i) the Company shall use its commercially reasonable efforts to obtain and to cause others to obtain, as soon as practicable, the Governmental Approvals (including the Governmental Approvals set forth on Appendix 8.2(e)) and any consents required in connection with [ *** ] at the Closing, that may be or become necessary for the performance of its obligations under this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated herein and therein, including cooperating with the Plan in carrying out the Standard Termination and the Lump-Sum Solicitation, and will cooperate fully with each other in promptly seeking to obtain such Governmental Approvals and (ii) the Insurer Parent and the Insurer shall use their commercially reasonable efforts to obtain and to cause others to obtain, as soon as practicable, the Governmental Approvals (including the Governmental Approvals set forth on Appendix 8.2(d)) that may be or become necessary for the performance of its obligations under this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated herein and therein. Without limiting the foregoing and subject to applicable legal limitations and the instructions of any Governmental Authority, each of the Parties agrees to (A) reasonably cooperate and consult with one another, (B) furnish to the other Parties such necessary information and assistance as such other Party may reasonably request in connection with its preparation of any notifications or filings, (C) keep each other apprised of the status of matters relating to the completion of the transactions contemplated thereby, including furnishing the other with copies of material notices or communications received by such Party from any third party or any Governmental Authority with respect to such transactions, within five (5) Business Days of receipt thereof, and (D) to the extent reasonably practicable, permit the other Parties to review and incorporate the other Party's reasonable comments in any material communication to be given by it to any Governmental Authority with respect to obtaining the necessary approvals for the transactions contemplated by this Agreement.
(b) Without limiting the generality of Section 6.3(a) where the cooperation of third parties that are not Governmental Authorities, such as a trustee or record keeper, would be necessary in order for a Party to completely fulfill its obligations under this Agreement or any Ancillary Agreement, such Party will use its commercially reasonable efforts to cause such third parties to provide such cooperation. Without limiting the generality of the foregoing, the Parties shall use commercially reasonable efforts to work with the Plan Trustee to sign the Plan Trustee Agreement or to seek mutually agreeable alternative arrangements.
(c) Without limiting the generality of Section 6.3(a), the Company shall periodically update the Insurer, upon Insurer's reasonable request, from and after the DTFA Execution Date through the Closing Date with respect to progress regarding (i) the filing of the Form 500, (ii) the completion of the Lump-Sum Solicitation, (iii) the completion of the Plan Spin-Off, and (iv) other discussions with Governmental Authorities regarding the Plan Termination.
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Section 6.4 Public Announcements; SEC Filings.
(a) Each of the Company and the Insurer shall issue a press release announcing the execution and delivery of this Agreement and the transactions contemplated hereby (collectively, the “Transaction Announcements”). Each of the Company and the Insurer shall provide a draft of such Transaction Announcement, and any related Form 8-K filing, to the other Party (and to the Independent Fiduciary, to the extent such Transaction Announcement references State Street Bank and Trust Company, or the role, duties or conclusions of the Independent Fiduciary) for review prior to the issuance thereof and shall consider any comments made by such other Party (or the Independent Fiduciary, as applicable) in good faith.
(b) From the DTFA Execution Date through the Closing, the Company, the Independent Fiduciary and the Insurer shall not, and each shall cause their respective Affiliates not to, publish any press releases, or publish any other public statements (including to securities analysts), that contradicts or is inconsistent with the Transaction Announcements, without the prior approval of the other Parties, such approval not to be unreasonably withheld, conditioned or delayed, except as such Party determines in good faith may be required by Law or in connection with obligations pursuant to any listing agreement with any national securities exchange.
(c) Subject to paragraph (b) above, the Company and the Insurer each may make such public written or oral statements, as it deems necessary or appropriate, in its sole discretion, provided that each such Party shall seek to give the other Party a reasonable opportunity to comment upon such statements in advance to the extent practicable, it being understood that neither the Company nor the Insurer shall have any right of approval over public statements by the other Party, except to the extent contemplated by paragraph (b) above. Subject to paragraph (b) above, the Independent Fiduciary may make such written or oral statements as it deems necessary or appropriate to respond to press inquiries.
(d) Regulatory filings and other public communications regarding Governmental Approvals made by the Company, and all statements to Plan Participants and Plan Beneficiaries related to the Transaction, may be made in the sole discretion of the Company following the DTFA Execution Date; provided that any such regulatory filings or public communications regarding Governmental Approvals or any statements to Plan Participants and Plan Beneficiaries that describe the Insurer or the Group Annuity Contract shall be consistent in all material respects with the description of the Insurer and the Group Annuity Contract contained in the Company's Lump-Sum Solicitation. The Company shall provide copies of all such regulatory filings and public communications to Plan Participants and Plan Beneficiaries, in each case, to the Insurer and the Independent Fiduciary within ten (10) Business Days prior to the publication thereof if the description of the Insurer or the Group Annuity Contract in such regulatory filing or public communication will not be consistent in a material respect with the description contained in the Company's Lump-Sum Solicitation (and, if such description is consistent in a material respect with the description contained in the Company's Lump-Sum Solicitation, then the Company shall provide the Insurer and the Independent Fiduciary a copy of such regulatory filing or public communication reasonably promptly after the date on which it is first used, it being understood that the Company will not be required to provide copies of materials that are substantially similar to materials that have previously been shared with Insurer and the Independent Fiduciary).
(e) The Insurer shall provide copies of all regulatory filings and other public communications regarding Government Approvals set forth on Appendix 8.2(d), and statements to Annuitants related to the Transaction prior to the Annuity Commencement Date, to the Company and the Independent Fiduciary (i) within five Business Days prior to the filing or making thereof if the contents of such filing will not be
48
consistent in any material respect with the information contained in materials previously shared with the Company, and (ii) in all instances as soon as practicable following such filing or making.
(f) The Company acknowledges that its ultimate parent entity may file the press release referred to in clause (a) above with the SEC on Form 8-K within four (4) Business Days following execution of this Agreement, but that this Agreement will not be filed as an exhibit thereto. The Company's ultimate parent intends to file this Agreement with its Form 10-Q for the period ending June 30, 2012 (the “10-Q”). Simultaneously with the filing of the 10-Q, the Company's ultimate parent will file a confidential treatment request with the SEC to seek confidential treatment for certain provisions of the Agreement, including information relating to the pricing of the Group Annuity Contract. The Company's ultimate parent will provide the Insurer Parent a copy of any written correspondence with the SEC regarding such application for confidential treatment. Notwithstanding the foregoing, each Party acknowledges that the other Parties will publicly disclose any information that they believe is required by the rules of the SEC to be so disclosed and the Parties will cooperate with each other in preparation of the confidential treatment request. The Parties also agree that the contents of the confidential treatment request will be determined in the sole discretion of the Company.
Section 6.5 Notification of Certain Matters.
(a) Each Party will give written notice to the other Parties within five (5) Business Days of (i) any notice or other communication from any Person alleging that the Consent of such Person is or may be required in connection with the transactions contemplated hereby, (ii) any Action commenced or threatened in writing against, relating to or involving or otherwise affecting it or any of its Affiliates that relate to the consummation of the transactions contemplated hereby, and (iii) any change or event that would reasonably be expected to cause, individually or in the aggregate, any condition to Closing set forth in Article VIII not to be satisfied.
(b) Prior to the Closing, any Party may deliver to both other Parties supplements or updates to the sections of the delivering Party's Disclosure Letter which this Agreement or the delivering Party's Disclosure Letter, as applicable, explicitly provides may be supplemented or updated; provided, however, that no such supplement or update will be considered or taken into account for purposes of determining whether the conditions to closing set forth in Sections 8.2(a) or 8.3(a) have been satisfied; provided that any such supplement or update shall be deemed to have cured any breach of any representation or warranty made in this Agreement except for purposes of determining whether or not the conditions set forth in Article VIII have been satisfied.
(c) [ *** ]
(d) The Insurer will notify the other Parties as promptly as reasonably practicable (and in any event within seventy-two (72) hours) if (i) the Projected RBC Ratio has dropped below [ *** ], [ *** ]. [ *** ]. For the avoidance of doubt, no failure or delay by the Insurer to provide any notice required under this Section 6.5(d) shall be deemed to constitute a waiver of, or otherwise impair, the Insurer's termination right in Section 10.1(b)(ii).
(e) The Company will notify the other Parties as promptly as reasonably practicable (and in any event within seventy-two (72) hours) if either (i) the Liquidity Requirement has exceeded the Liquidity Cap, or (ii) the Projected Parent Liquidity Position is less than [ *** ]. For the avoidance of doubt, no failure or delay by the Company to provide any notice required under this Section 6.5(e) shall be deemed to constitute
49
a waiver of, or otherwise impair, the closing condition set forth in Section 8.2(h) or the Company's termination right in Section 10.1(b)(i).
Section 6.6 Calculation and Adjustment of Insurer RBC Ratio; Projected Parent Liquidity Position; Liquidity Requirement; Liquidity Cap.
(a) If the Insurer either (1) provides notice to the Company and the Independent Fiduciary pursuant to Section 6.5(d)(i), or (2) provides a notice of termination to the Company and the Independent Fiduciary pursuant to Section 10.1(b)(ii), then, in either case, the Company may, not more than 10 Business Days after receipt of such notice (or as promptly as practicable thereafter), retain an Approved Firm-A to review the Insurer's Projected RBC Ratio calculation and ensure that such calculation was prepared in good faith, consistent in all material respects with past practices of the Insurer, and without giving effect to the RBC Ratio impact of any of the RBC Actions.
(b) If the Company either (1) provides notice to the Insurer and the Independent Fiduciary pursuant to Section 6.5(e), or (2) provides a notice of termination to the Insurer and the Independent Fiduciary pursuant to Section 10.1(b)(i) or asserts that the closing condition set forth in Section 8.2(h) has not been satisfied, then, in either case, the Insurer may, not more than ten (10) Business Days after receiving such notice (or as promptly as practicable thereafter), retain an Approved Firm-B to review and verify the Company's calculation of the Liquidity Requirement or the Projected Parent Liquidity Position (or, if applicable, both calculations) and ensure that each such calculation was prepared in good faith, consistent in all material respects with past practices of the Company, and without giving effect to the liquidity impact of any of the Liquidity Actions.
(c) The Party requesting a review of calculations under Section 6.6(a) or Section 6.6(b), as the case may be, (the “Requesting Party”) shall instruct the respective Approved Firm to deliver its report to all Parties within ten (10) Business Days after the date of its retention. The Party whose calculation is being reviewed pursuant to Section 6.6(a) or Section 6.6(b), as applicable (the “Calculating Party”), shall fully cooperate with the Approved Firm, including providing access to all information, data and personnel necessary for the Approved Firm to complete and deliver its analysis within the ten (10) Business Day period described in the preceding sentence. Any failure by the Calculating Party to provide such access or cooperation will extend the delivery period until such access or cooperation is provided. If the Parties do not agree, in writing, on the calculation of the (i) Projected RBC Ratio pursuant to Section 6.6(a) or (ii) Projected Parent Liquidity Position or Liquidity Requirement pursuant to Section 6.6(b), then the determination by the Approved Firm shall be final and binding on all Parties.
(d) If, pursuant to a review arising under Section 6.6(a), the Approved Firm-A determines that the Insurer's Projected RBC Ratio calculation was not prepared in good faith, consistent in all material respects with past practices of the Insurer, [ *** ], and the Insurer or the Insurer Parent delivers the notice of termination described in Section 10.1(b)(ii) based upon such Projected RBC Ratio, then upon termination of this Agreement and in addition to the payment to the Company from the Escrow Account contemplated by Section 10.2(b)(i) and the payment to the Company from the Insurer contemplated by Section [ *** ].
(e) If, pursuant to a review arising under Section 6.6(b), the Approved Firm-B determines that the Company's calculation of the Liquidity Requirement or the Projected Parent Liquidity Position (or, if applicable, both calculations) was not prepared in good faith, consistent in all material respects with past practices of the Company, and without giving effect to the liquidity impact of any of the Liquidity Actions, and the Company delivers the notice of termination described in Section 10.1(b)(i) or asserts that the closing condition set forth in Section 8.2(h) has not been satisfied based upon such Liquidity Requirement or Projected
50
Parent Liquidity Position, then upon termination of this Agreement and in addition to the payment to the Insurer Parent from the Escrow Account contemplated by Section 10.2(b), an additional payment from the Company of [ *** ] shall be immediately due and payable to the Insurer Parent, [ *** ].
Section 6.7 Administrative Transition Process. From the DTFA Execution Date until the Closing Date, each of the Company and the Insurer shall use their respective commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary to coordinate the transfer to the Insurer of the recordkeeping and administration responsibilities necessary to effectively provide the administration services regarding the Annuity Payments under the Group Annuity Contract. Without limiting the generality of the foregoing, the Company shall use its commercially reasonable efforts to (a) provide the Insurer with information as reasonably requested by the Insurer to facilitate the transition process and (b) assist the Insurer in reaching any necessary agreement or arrangement with Fidelity, including in connection with (i) the provision of services and information set forth in Appendix 6.7 and (ii) the negotiation of a definitive ATSA. The Insurer shall use its commercially reasonable efforts to enter into such a definitive ATSA with Fidelity in a manner consistent with the letter of understanding with Fidelity entered into prior to the execution of this Agreement. If either (x) the requirements of Appendix 6.7 have not been fulfilled or (y) the Closing has not taken place on or before December 3, 2012, and the Insurer is unable to enter into a definitive ATSA with Fidelity, then the Insurer and the Company will cooperate in good faith to find an alternative method to facilitate the first Annuity Payment to Annuitants through existing commercial arrangements with Fidelity or through any other commercially reasonable method (an “Alternative Arrangement”). In the event an Alternative Arrangement is implemented, prior to the relevant payment date, the Insurer will be responsible to deposit cash in an amount sufficient to cover all such Annuity Payments and any related administrative costs into an account designated by the Company for such purpose.
Section 6.8 Compliance with Prohibited Transaction Class Exemption 84-24. From the DTFA Execution Date until the Closing Date, the Insurer and its Affiliates will not enter into any agreements whereby it would be a fiduciary expressly authorized in writing to manage, acquire or dispose of the Plan Assets on a discretionary basis that are involved in the Transaction. As of the date hereof, Insurer and/or the applicable Affiliate(s) of the Insurer have ceased providing any discretionary asset management services with respect to any Plan Assets that are involved in the Transaction. If the Insurer discovers the existence of any such agreement, the Insurer will, and will cause its Affiliates to, cease providing any discretionary asset management services with respect to any Plan Asset before such Plan Asset becomes involved in the Transaction. The preceding sentence shall not prohibit an Affiliate of the Insurer from acting as a non-discretionary trustee. If the Closing Date does not occur or this Agreement otherwise terminates, the Insurer will no longer be restricted as provided above in this Section 6.8.
Section 6.9 Pre-Closing Meeting. No earlier than fifteen (15) Business Days prior to the Target Closing Date, and no later than five (5) Business Days prior to the Target Closing Date, the Independent Fiduciary, the Company and the Insurer shall meet to discuss any matters relating to the Closing or as otherwise may be reasonably requested by any Party.
Section 6.10 Non-Solicitation. From and after the DTFA Execution Date and through the earlier to occur of the Closing Date or the termination of this Agreement, the Company shall not and shall cause any Representatives of the Company not to (i) solicit, initiate or knowingly facilitate any Alternative Transaction Proposal or the making or consummation thereof, (ii) enter into any agreement, letter of intent, agreement in principle or other similar instrument with respect to any Alternative Transaction Proposal, (iii) continue or otherwise participate in any discussions (except, in response to an inquiry by any Person, to notify such Person of the existence of the provisions of this Section 6.10) or negotiations regarding, or furnish to any Person any information in connection with, any Alternative Transaction Proposal, or (iv) enter into
51
or amend any agreement or other arrangement to engage any Person (including the Independent Fiduciary) to solicit any Alternative Transaction Proposal. For purposes of this Agreement, an “Alternative Transaction Proposal” means any proposal or offer relating to the entry into an insurance, reinsurance or other similar transaction that would be reasonably likely to replace, frustrate or cause not to occur the transactions contemplated by this Agreement and the Group Annuity Contract, such as any transaction in which the responsibility to make all or any substantial portion of the payments in respect of the Covered Lives, Contingent Lives or Beneficiaries would be transferred, assigned or novated from the Plan to a non-Affiliated Person or in which a non-Affiliated Person would assume an obligation to indemnify or reimburse the Plan, the Company or any of their respective Affiliates for any such payment. Nothing in this Section 6.10 shall restrict (i) any alternative arrangements with respect to the treatment of Contract 300 Article A and Contract 300 Article M, or (ii) the Lump-Sum Solicitation process.
Section 6.11 Information Provided To The Independent Fiduciary. Between the DTFA Execution Date and the execution of the Group Annuity Contract, Insurer and the Insurer Parent shall provide to the Independent Fiduciary any information that (i) is consistent with the type and amount of information provided during the Independent Fiduciary's pre-signing due diligence process, (ii) is otherwise prepared in the ordinary course of business of the Insurer (including any information that is prepared for the purpose of providing information to credit rating agencies) and (iii) relates to the Insurer or Insurer Parent, in each case as may be reasonably requested by the Independent Fiduciary.
Section 6.12 [ *** ].
(a) Promptly following the DTFA Execution Date, [ *** ] set forth on Appendix 2.6(d)(I) and Appendix 2.6(d)(II) (it being understood that each item of such information shall only be provided if and after any consent that is needed to share such information is obtained [ *** ]):
(i)the latest [ *** ];
(ii)the latest [ *** ];
(iii)information most recently provided to [ *** ] regarding the [ *** ], including descriptions and [ *** ] that may be reasonably requested by the Insurer;
(iv)[ *** ] that relate to the [ *** ]; and
(v)all [ *** ] and similar governing documentation related [ *** ].
(b) The Insurer shall furnish a list of [ *** ] in connection with the [ *** ], and the Company shall use commercially reasonable efforts [ *** ].
(c) Subject to any applicable contractual confidentiality restrictions and related requirements to obtain consents, [ *** ], as may be reasonably requested by the Insurer, provided, however, that the [ *** ] shall not be required to provide [ *** ].
(d) If requested by the Insurer in connection [ *** ] or any time after Closing, with respect to [ *** ] to furnish a copy of, or assist the Insurer in obtaining [ *** ], the information that would be included on the [ *** ].
Section 6.13 Newco. [ *** ] may cause the formation of [ *** ] in accordance with the procedures set forth in Appendix 2.1-A ([ *** ] “Newco”), provided that (i) each such Newco shall
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be, as of the Closing Date, [ *** ], (ii) [ *** ] Newco, (iii) all of such Newco's [ *** ], (iv) such Newco [ *** ] it holds free and clear of any Lien, other than a Permitted Lien, and will have obtained [ *** ], (v) such Newco [ *** ] in good xxxxx xxxxx necessary, advisable, convenient or incidental to the foregoing and (vi) no asset held or owned by [ *** ] Newco [ *** ].
Section 6.14 Recoupment. On or prior to the twentieth (20th) Business Day prior to the Closing, the Company shall deliver to the Insurer a statement setting forth (i) each Covered Life, Contingent Life or Beneficiary who has been paid, prior to the Annuity Commencement Date, Plan benefits in excess of the amount owed under the Plan, (ii) the amount of each such excess payment and the length of overpayment and (iii) for each such Covered Life, Contingent Life or Beneficiary, either (A) a certification that the amount of each such excess payment made to such Covered Life, Contingent Life or Beneficiary is undisputed or (B) a reasonably detailed description of the nature of each dispute in respect of any such excess payment made to such Covered Life, Contingent Life or Beneficiary.
ARTICLE VII
OTHER COVENANTS
Section 7.1 Company Actions. Following the Closing Date, the Company shall use its commercially reasonable efforts to:
(a)cooperate in the proper preparation and filing of the Form 501;
(b)cooperate in the closing out of the Plan in a Standard Termination; and
(c)take, or cause to be taken, all actions, and to do, or cause to be done, all things reasonably necessary on its part to effectuate the transactions contemplated by this Agreement.
Section 7.2 Insurer Actions. Following the Closing Date, the Insurer shall:
(a) use its best efforts to obtain approval from all necessary state insurance Governmental Authorities for the Annuity Certificates; provided the Insurer shall not be required to amend or modify the form of any Annuity Certificate in a manner that would result in the assumption by the Insurer of any additional Liability not provided for under the Group Annuity Contract;
(b) provide each Annuitant with an Annuity Certificate within 30 days after the Closing Date; provided that (i) if the form of any Annuity Certificate issuable to such Annuitant has not become “available” (in a manner consistent with the use of such term in 29 C.F.R. § 4041.28(d)(1)) as of the Closing Date, then the Insurer will provide such Annuity Certificate to the relevant Annuitant as promptly as reasonably practicable and in any case within 30 days following the date on which such Annuity Certificate so becomes “available,” and (ii) if such Annuity Certificate has not become “available” within 20 days following the Closing Date, the Insurer shall provide notice to the Company of such fact;
(c) cause the first Annuity Payment to be made to all Annuitants by the Annuity Commencement Date;
(d) for each Annuitant entitled to payments under Contract 300 Article P, cause such payments to be combined with each Annuity Payment that is made to each such Annuitant;
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(e) at the request of the Company, include a notice, provided by the Plan and reasonably acceptable to the Insurer, regarding Annuity Certificates in the Insurer's “welcome” mailing to the Annuitants or other subsequent mailings made by the Insurer to the Annuitants; and
(f) use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things reasonably necessary on its part to effectuate the transactions contemplated by this Agreement.
Section 7.3 Cooperation with Independent Third Party. Each Party will cooperate in good faith with the Independent Third Party and will promptly provide the Independent Third Party access to and copies of all data, records, facilities and personnel of such Party and its Affiliates and Representatives as is reasonably necessary to perform its functions under this Agreement.
Section 7.4 Administrative Services. The Plan Administrator shall continue to administer the Plan from the Closing through the Annuity Commencement Date. Following the Closing, the Insurer shall provide, or shall cause to be provided, all administrative services in connection with the payment of benefits under the Group Annuity Contract.
Section 7.5 Transferred Asset True-Ups. The Independent Fiduciary shall include in its direction in Section 2.1(a), and if necessary the Independent Fiduciary shall direct the Plan Trustee, that any payment or distribution related to the Insurer's ownership of a Transferred Asset, but received by the Plan or the Plan Trustee after Closing, shall be transferred to the Insurer within two (2) Business Days of receiving such payment or distribution. If necessary, the Company shall make available to the Plan an amount, in Cash, equal to the amount of such payment or distribution.
Section 7.6 Correspondence Center. Beginning as of the Closing Date and continuing through the fifth anniversary thereof, the Company will fund a reasonable means for current or former Plan Participants and Plan Beneficiaries to correspond with the Company with respect to their Plan benefits, the Lump-Sum Election or the Plan Termination; provided however, that the Company will have no responsibility for (including providing any funding relating to) administering the Group Annuity Contract or for responding to inquiries regarding the Group Annuity Contract. One month prior to Closing, the Company will advise the Insurer of its proposed standard operating procedures for directing individuals to such correspondence center.
ARTICLE VIII
CONDITIONS TO OBLIGATION TO CLOSE
Section 8.1 Conditions to the Independent Fiduciary's Obligations. The Independent Fiduciary's obligation to, or to direct the Plan Trustee to, consummate the transactions contemplated hereby in connection with the Closing is subject to satisfaction or waiver (provided that the condition in Section 8.1(a) may not be waived) of the following conditions:
(a)the Independent Fiduciary shall have confirmed that the Transaction satisfies ERISA and applicable guidance, including Interpretive Bulletin 95-1, because, since the DTFA Execution Date, there has not occurred an Independent Fiduciary MAC that continues as of the Closing Date,
(b)no Order shall be in effect which prohibits the consummation of any of the transactions contemplated by this Agreement, and
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(c)(i) the representations and warranties set forth in Article III and Article V (A) that are qualified by materiality shall be true and correct in all respects or (B) that are not qualified by materiality shall be true and correct in all material respects, in each case, as of the Closing Date with the same force and effect as though made on the Closing Date, (ii) each of the Company and the Insurer shall have performed and complied with its covenants and agreements hereunder through the Closing in all material respects, and (iii) the Insurer shall have received all of the Governmental Approvals set forth in Appendix 8.2(d) and identified as “Required for Closing” and the Plan shall have received all of the Governmental Approvals set forth on Appendix 8.2(e) and identified as “Required for Closing”, except, in the case of each of clauses (i)-(iii), as would not reasonably be expected to have a material adverse effect on the Independent Fiduciary's ability to perform its obligations hereunder.
Section 8.2 Conditions to the Company's Obligations. The Company's obligation to consummate the transactions contemplated hereby in connection with the Closing is subject to satisfaction or waiver by the Company of the following conditions:
(a) the representations and warranties set forth in Article IV and Article V (i) that are qualified by materiality shall be true and correct in all respects or (ii) that are not qualified by materiality shall be true and correct in all material respects, in each case, as of the Closing Date with the same force and effect as though made on the Closing Date;
(b) the Independent Fiduciary shall have performed and complied with its covenants hereunder through the Closing in all material respects;
(c) the Insurer shall have performed and complied with its covenants and agreements hereunder through the Closing in all material respects;
(d) the Insurer shall have received all of the Governmental Approvals set forth in Appendix 8.2(d) and identified as “Required For Closing”;
(e) the Plan shall have received all material Governmental Approvals set forth in Appendix 8.2(e);
(f) (i) no Order shall be in effect which prohibits consummation of any of the transactions contemplated by this Agreement and (ii) no Material Litigation shall have been filed or commenced and then be pending (or shall continue to be threatened to be initiated by a Governmental Authority);
(g) the Company shall have confirmed that it may account for the transactions contemplated by this Agreement and the Ancillary Agreements as a settlement as contemplated under ASC 715;
(h) no Transaction MAC shall have occurred and be continuing as of the Closing Date;
(i) the Closing Final Premium calculated by the Independent Third Party (or, if applicable pursuant to Section 2.9, the Company) is less than the Closing Final Premium calculated by the Insurer [ *** ], in each case as the Closing Final Premium is calculated by such Person on the Closing Date in accordance with Section 2.9;
(j) each delivery contemplated by Section 2.2(b) shall have been delivered; and
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(k) the Independent Fiduciary shall have confirmed that the Transaction satisfies ERISA and applicable guidance, including Interpretive Bulletin 95-1, because, since the DTFA Execution Date, there has not occurred an Independent Fiduciary MAC that continues as of the Closing Date.
Section 8.3 Conditions to the Insurer's Obligations. The Insurer's obligation to consummate the transactions contemplated hereby in connection with the Closing are subject to satisfaction or waiver by the Insurer of the following conditions:
(a) the representations and warranties in Article III and Article IV (A) that are qualified by materiality shall be true and correct in all respects or (B) that are not qualified by materiality shall be true and correct in all material respects, in each case, as of the Closing Date with the same force and effect as though made on the Closing Date;
(b) the Company and the Independent Fiduciary shall have performed and complied with their respective covenants and agreements hereunder through the Closing in all material respects and all material actions that are to have been taken by any of the Plan, the Plan Trustee and the Plan Investment Fiduciary on or prior to the Closing Date in accordance with this Agreement shall have been taken;
(c) the Plan shall have received all Governmental Approvals set forth in Appendix 8.2(e);
(d) (i) no Order shall be in effect which prohibits consummation of any of the transactions contemplated by this Agreement and (ii) no Material Litigation shall have been filed or commenced and be currently pending (or shall continue to be threatened to be initiated by a Governmental Authority);
(e) if the Closing has not occurred on or prior to December 3, 2012, either (i) Fidelity shall have executed and delivered the ATSA in a form that is reasonably acceptable to the Insurer, or (ii) an Alternative Arrangement shall have been effected; provided, the Insurer may not rely on the failure of this condition to its obligation to consummate the transactions contemplated hereby to be satisfied if such failure was caused by the Insurer's breach of Section 6.7; and
(f) each delivery contemplated by Section 2.2(a) shall have been delivered.
Section 8.4 No Frustration of Closing Conditions. Neither the Independent Fiduciary, nor the Company, nor the Insurer may rely on the failure of any condition to its obligation to consummate the transactions contemplated hereby set forth in Section 8.1, 8.2 or 8.3, as the case may be, to be satisfied if such failure was caused by such Party's or its Affiliates' breach of its representations, warranties or covenants hereunder.
ARTICLE IX
INDEMNIFICATION FOR THIRD PARTY CLAIMS
Section 9.1 Indemnification by the Insurer. From and after the Closing, the Insurer will indemnify, defend and hold the Company, the Plan and their respective Affiliates, officers, directors, stockholders, employees, agents and other Representatives (each, an “Indemnified Party”) harmless from and against any and all Liabilities (in each case, including reasonable out-of-pocket expenses and reasonable fees and expenses of counsel) to the extent arising out of or relating to the portion of any action, lawsuit, proceeding, investigation, demand or other claim against the Indemnified Party by a third party (such portion being a “Third Party Claim”) that is threatened or brought against or that involves an Indemnified Party and that arises out of or relates to any failure by the Insurer to perform or comply with the terms of the Group Annuity
56
Contract (including the restatement of Contract 300 Article P), including making the payments in respect of the Covered Lives, Contingent Lives or Beneficiaries to be made pursuant to the Group Annuity Contract.
Section 9.2 Procedures For Indemnification Claims.
(a)Any Indemnified Party making a claim for indemnification for Third Party Claims under Section 9.1 shall notify the Insurer of each Third Party Claim in writing promptly after receiving notice of such, describing the Third Party Claim, the amount thereof (if known and quantifiable) and the basis thereof in reasonable detail; provided that, the failure to so notify the Insurer shall not relieve the Insurer of its obligations hereunder except to the extent that (and only to the extent that) such failure shall have caused the indemnifiable Losses to be greater than such Losses would have been had the Indemnified Party given the Insurer prompt notice hereunder.
(b) The Insurer shall have the right at any time to assume the defense against any Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party and control the defense of such Third Party Claim, so long as the Insurer accepts without reservation (but without waiver of any rights under Section 9.2(c)) responsibility to indemnify the Indemnified Party for such Third Party Claim.
(c) From and after the date that the Insurer has assumed and is conducting the defense of a Third Party Claim in accordance with Section 9.2(b), (i) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in, but not control, the defense of such Third Party Claim; (ii) the Indemnified Party may retain counsel at its sole cost and expense to control the defense of any portion of the action, lawsuit, proceeding, investigation, demand or other claim against the Indemnified Party that is not a Third Party Claim (the “Uncovered Claim”); (iii) the Insurer and the Indemnified Party shall cooperate fully with each other and any of their respective counsel in connection with the defense, negotiation or settlement of any such Third Party Claim or (if the Indemnified Party retains counsel for the Uncovered Claim) the Uncovered Claim, including providing access to any relevant books and records, properties, employees and Representatives; provided that, for avoidance of doubt, the foregoing will not require any Person to waive, or take any action which has the affect of waiving, its attorney-client privilege, attorney work-product, or any other applicable privilege with respect thereto; (iv) the Insurer shall not consent to the entry of any judgment on or enter into any settlement with respect to such Third Party Claim without the prior written consent of the Indemnified Party (which will not be unreasonably withheld, conditioned or delayed) unless the judgment or proposed settlement involves only the payment of money damages by the Insurer and does not impose an injunction or other equitable relief upon the Indemnified Party or admit liability on the part of any Indemnified Party; (v) the Indemnified Party shall not consent to the entry of any judgment or enter into any settlement with respect to such Third Party Claim without the prior written consent of the Insurer (which will not be unreasonably withheld, conditioned or delayed); and (vi) the Indemnified Party may consent to the entry of any judgment or enter into any settlement with respect to the Uncovered Claim without the prior consent of Insurer.
(d) If the Insurer has not assumed the defense of a Third Party Claim after notice thereof, (i) the Indemnified Party may defend against the Third Party Claim in any manner it reasonably determines to be appropriate; (ii) the Insurer shall reimburse the Indemnified Party promptly and periodically for the costs of defending against the Third Party Claim (including reasonable attorneys' fees and expenses allocable to such Third Party Claim) to the extent such costs are Losses for which the Indemnified Party is entitled to indemnification hereunder; and (iii) the Insurer shall remain responsible for any costs the Indemnified Party may incur resulting from the Third Party Claim to the extent such costs are Losses for which the Indemnified Party is entitled to indemnification hereunder. If the Indemnified Party has not assumed the defense of an Uncovered Claim as contemplated by Section 9.2(c)(ii), the Insurer is not responsible in any way for any
57
Liabilities or Orders resulting from not responding to or defending such Uncovered Claim; provided that the Insurer's responsibility for Third Party Claims shall not be altered in any way.
Section 9.3 Claims and Payment; Treatment of Payments. On each occasion that any Indemnified Party shall be entitled to indemnification under this Article IX, the Insurer shall, at each such time, promptly pay the amount of such indemnification within ten (10) Business Days following receipt of an invoice for out-of-pocket expense, fees or other amounts for which it is liable under this Article IX. Any indemnification payments made pursuant to this Agreement shall be treated for tax purposes as an adjustment to the Final Premium, unless otherwise required by applicable Law.
ARTICLE X
TERMINATION
Section 10.1 Termination of Agreement. This Agreement may be terminated at any time prior to the Closing as provided below:
(a)by the mutual written consent of the Company and the Insurer;
(b)by (i) the Company at any time if a Company MAC exists by delivery by the Company to the other Parties of notice of termination, provided, that the Company may not exercise this termination right to the extent that a Company MAC is attributable to any of the Liquidity Actions or (ii) the Insurer at any time if an Insurer MAC exists by delivery by the Insurer to the other Parties of notice of termination, [ *** ];
(c)by the Company if the Lump-Sum Payments have not been made prior to September 30, 2012;
(d)by the Company if the Closing has not occurred by or on December 28, 2012 (the “Outside Date”) or any state of facts or circumstances exists as a result of which there is no reasonable probability that the Closing can occur by or on the Outside Date, provided that such right to terminate this Agreement shall not be available to the Company if any failure of the Company to perform any of its obligations under this Agreement required to be performed at or prior to the Closing has been the cause of, or resulted in, the failure of the Closing to occur on or before the Outside Date and such action or failure to perform constitutes a breach of this Agreement;
(e)by the Company if there shall have been a misrepresentation or breach of any representation, warranty, covenant or agreement on the part of the Independent Fiduciary or Insurer contained in this Agreement such that any of the conditions set forth in Section 8.2(a), 8.2(b) or 8.2(c) would not be satisfied, and which shall not have been cured prior to twenty (20) Business Days following notice of such misrepresentation or breach to the Insurer or the Independent Fiduciary, as applicable;
(f)by the Insurer if the Closing has not occurred by or on the Outside Date or any state of facts or circumstances exists as a result of which there is no reasonable probability that the Closing can occur by or on the Outside Date, provided, that such right to terminate this Agreement shall not be available to the Insurer if any action of the Insurer or the failure of the Insurer to perform any of its obligations under this Agreement required to be performed at or prior to the Closing has been the cause of, or resulted in, the failure of the Closing to occur on or before the Outside Date and such action or failure to perform constitutes a breach of this Agreement;
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(g)by the Insurer if there shall have been a misrepresentation or breach of any representation, warranty, covenant or agreement on the part of the Company or the Independent Fiduciary contained in this Agreement such that any of the conditions set forth in Section 8.3(a) or 8.3(b) would not be satisfied, and which shall not have been cured prior to twenty (20) Business Days following notice of such misrepresentation or breach to the Company and the Independent Fiduciary, as applicable;
(h)by the Company in the event the Closing Final Premium calculated by the Independent Third Party (or, if applicable pursuant to Section 2.9, the Company) is less than the Closing Final Premium calculated by the Insurer by more than [ *** ], in each case as the Closing Final Premium is calculated by such Person in accordance with Section 2.9, subject to the proviso in the penultimate sentence of Section 2.9(e) or, as applicable, the proviso in the penultimate sentence of Section 2.9(f); and
(i)by the Company in the event that the Independent Third Party has not issued (A) the Initial Certification on or before the fifteenth Business Day following the DTFA Execution Date or (B) the Revised Certification on or before the tenth Business Day following the date established for delivery of the information described in the first sentence of Section 2.4(c) (or, if earlier, the tenth Business Day following the actual date of delivery of such information to the Independent Third Party).
(j)by the Company or the Insurer in the event that the trustee of the Plan who is intended to hold the Group Annuity Contract has not affirmed, on or before the twenty-fifth (25th) Business Day following the DTFA Execution Date, in a manner reasonably acceptable to the Company and the Insurer, its willingness to execute the Plan Trustee Agreement and the Company and the Insurer have not agreed upon a mutually acceptable alternative.
Section 10.2 Effect of Termination.
(a) Survival. If this Agreement is terminated pursuant to Section 10.1, all rights and obligations of the Parties hereunder will terminate upon such termination and will become null and void, except that Section 1.1 (Definitions), Section 3.11 (No Other Representations and Warranties), Section 4.6 (No Other Representations and Warranties), Section 5.9 (No Other Representations and Warranties), Section 6.6 (Calculation [ *** ] of Insurer RBC Ratio; Projected Parent Liquidity Position; Liquidity Requirement; Liquidity Cap), Article XI (Miscellaneous) and this Section 10.2 (Effect of Termination) will survive any such termination and no Party will otherwise have any Liability to any other Party hereunder; provided, however that nothing in this Section 10.2 will relieve any Party from Liability for any willful and material breach hereof.
(b) TCF. If this Agreement is terminated pursuant to Section 10.1, it is the intent of the parties that all funds held in the Escrow Account shall be released from the Escrow Account and paid to the appropriate Party not later than two (2) Business Days following the effective date of termination. In furtherance of the foregoing, the Company shall, together with Insurer Parent, issue a Joint Written Direction to the Escrow Agent to release all Cash and other assets held in the Escrow Account to the Insurer within two (2) Business Days after delivery of notice of termination of this Agreement, unless (i) this Agreement is [ *** ], (ii) this Agreement is [ *** ], (iii) this Agreement is [ *** ], and as of the date of such termination, any of the conditions set forth in [ *** ], in which case [ *** ], issue a Joint Written Direction to the Escrow Agent to [ *** ] in the Escrow Account [ *** ] within two (2) Business Days after the termination of this Agreement.
(c) Termination Fee. If this Agreement is terminated pursuant to [ *** ] the Insurer shall also pay to the Company, by wire transfer of immediately available funds, the amount of [ *** ]
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(d) Extension.
(i)Re-Pricing Offer. The Outside Date shall be deemed to be extended to [ *** ] if, on or before December 28, 2012, the Company delivers a request to the Insurer in writing that the Insurer deliver a Re-Pricing Offer (the “Re-Pricing Request”). In such circumstance, on or prior to January 15, 2013, the Insurer shall deliver to the Company and the Independent Fiduciary a written [ *** ] offer (the “Re-Pricing Offer”), which shall be determined by the Insurer based on pricing methodologies that are the same as the pricing methodologies [ *** ] used to develop the Base Annuity Premium and the Revised Base Annuity Premium, including the pricing methodologies set forth in Article II and the Procedures Manual and on the Identified CD-ROM (the “Original Pricing Methodologies”), updated to reflect the agreed methodologies and changes determined pursuant to Section 2.7(b) and Section 2.8(b), [ *** ]:
(A)[ *** ]
(B)[ *** ]
(C)[ *** ]
(D)[ *** ]
(E)[ *** ]
(F)[ *** ]
(ii) Company Response. The Company and the Insurer will cooperate in good faith for a period of ten (10) Business Days to negotiate any amendments to this Agreement and the Ancillary Agreements necessary to implement the terms of the Re-Pricing Offer, and to agree upon any other open items that need to be resolved (including any administrative transition issues). The Company shall deliver a written response to the Insurer either accepting or rejecting the Re-Pricing Offer within 10 Business Days following the Insurer's delivery of the Re-Pricing Offer to the Company.
(iii)Rejection of Re-Pricing Offer. If the Company rejects the Re-Pricing Offer, then this Agreement shall immediately terminate, and such termination will be treated in the same manner as a termination by the mutual written consent of the Company and the Insurer (and, for the avoidance of doubt, the Company shall, together with the Insurer Parent, [ *** ] (2) Business Days after the delivery of such notice of termination of this Agreement and [ *** ]).
(iv)Acceptance of Re-Pricing Offer. If the Company accepts the Re-Pricing Offer, then the following provisions will apply:
(A)The Closing Date and the Annuity Commencement Date shall take place [ *** ] (other than conditions that by their nature or pursuant to the terms of this Agreement are to be satisfied at or immediately prior to the Closing, but subject to the satisfaction or, where permitted, waiver of such conditions), or such other date as mutually agreed to by the Company and the Insurer.
(B)The Re-Pricing Offer will be used for purposes of Article II as if the DTFA Execution Date were [ *** ] and all provisions of such Article II will apply thereafter (e.g., the
60
Company and the Insurer will continue the practice of calculating the Dry-Run Closing Premium on a monthly basis).
(C)During the Extension Period, [ *** ] on or prior to December 31, 2012. For the avoidance of doubt, the [ *** ] will (i) upon the Closing, [ *** ] in accordance with Section 2.1(a) and (ii) upon the termination of this Agreement, [ *** ] pursuant to this Section 10.2.
(D)For the purpose of any calculations made from and after [ *** ], the reference to “December 31, 2012” in the definition of “Company MAC” will be deemed to be “[ *** ]” and reference to “end of the 2012 calendar year” in the definition of “Projected RBC Ratio” will be deemed to be “[ *** ].”
(E)The Insurer shall provide to the Company and the Independent Fiduciary the Insurer's RBC Ratio as of December 31, 2012, promptly following the date by which the Insurer prepares such RBC Ratio in the normal course of its business, which is expected to be approximately March 1, 2013, and together with a reasonably detailed explanation of the material underlying assumptions used in connection therewith.
(F)The Parties will negotiate in good faith to implement any amendments to this Agreement necessary to give effect to the Re-Pricing Proposal and the provisions of this Section 10.2(d).
(G)The terms “RBC Actions” and “Liquidity Actions”, shall, following December 31, 2012, be eliminated from this Agreement and shall not be given effect for any purposes hereunder or under the Ancillary Documents and the Company and the Insurer shall, in connection with the negotiation of the amendments to this Agreement and the Ancillary Agreements contemplated by Section 10.2(d)(ii), negotiate in good faith revised definitions of “RBC Actions” and “Liquidity Actions” with such updates and revisions as the Company and the Insurer may mutually agree upon.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Expenses. Except as otherwise expressly set forth herein, each Party will bear its own costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby, including all fees of law firms, commercial banks, investment banks, accountants, public relations firms, experts and consultants.
Section 11.2 Entire Agreement. This Agreement and the Ancillary Agreements, constitute the entire agreement between the Parties and supersede any prior understandings, agreements or representations (whether written or oral) by or between the Parties, written or oral, to the extent they relate in any way to the subject matter hereof. Notwithstanding the foregoing, the IF Engagement Letter shall not be superseded by this Agreement or the Ancillary Agreements.
Section 11.3 Amendments and Waivers. No amendment of any provision of this Agreement or the Ancillary Agreements will be valid unless the same will be in writing and signed by each party thereto, except as expressly provided herein. No waiver of any breach of this Agreement will be construed as an implied amendment or agreement to amend or modify any provision of this Agreement. No waiver by any Party of
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any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, will be valid unless the same will be in writing and signed by the Party making such waiver, nor will such waiver be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent default, misrepresentation or breach of warranty or covenant. No conditions, course of dealing or performance, understanding or agreement purporting to modify, vary, explain or supplement the terms or conditions of this Agreement will be binding unless this Agreement is amended or modified in writing pursuant to the first sentence of this Section 11.3. Except where a specific period for action or inaction is provided herein, no delay on the part of any Party in exercising any right, power or privilege hereunder will operate as a waiver thereof.
Section 11.4 Succession and Assignment. This Agreement will be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written consent of the other Parties.
Section 11.5 Notices. All notices, requests, demands, claims, certifications and other communications hereunder will be in writing except as expressly provided herein. Any notice, request, demand, claim or other communication hereunder will be deemed duly given (i) when delivered personally to the recipient; (ii) one (1) Business Day after being sent to the recipient by reputable overnight courier service (charges prepaid), addressed as set forth below; or (iii) when transmitted, if transmitted by facsimile, with confirmation of successful transmission received by the sender, with copies provided by email, if any, to those indicated below (including the recipient):
If to the Company: | General Motors LLC | |
000 Xxxxxxxxxxx Xxxxxx | ||
Xxxxxxx, XX 00000 | ||
Attention: Director, Pensions Funding, | ||
Treasurer's Office | ||
Email: xxxxxx.xxxx@xx.xxx | ||
With a copy (which will not constitute | ||
notice to the Company) to: | ||
General Motors LLC | ||
000 Xxxxxxxxxxx Xxxxxx | ||
Xxxxxxx, XX 00000 | ||
Attention: Associate General Counsel -- | ||
Manufacturing and Labor Relations | ||
Email: xxxxxxx.x.xxxxxxxx@xx.xxx |
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If to Insurer Parent: | Prudential Financial, Inc. | |
000 Xxxxxxxx Xxxxxx | ||
Xxx Xxxxxxxxxx Xxxxx | ||
Xxxxxxxx, XX 00000 | ||
Attention: Xxxx Xxxxxxx | ||
Facsimile: (000) 000-0000 | ||
With a copy (which will not constitute | ||
notice to the Insurer Parent) to: | ||
Debevoise & Xxxxxxxx LLP | ||
000 Xxxxx Xxxxxx | ||
Xxx Xxxx, XX 00000 | ||
Attention: Xxxxxxxx Xxxxxx | ||
Xxxxx Xxxxx | ||
Email: xxxxxxxx@xxxxxxxxx.xxx | ||
xxxxxxxx@xxxxxxxxx.xxx |
If to the Insurer: | Prudential Insurance Company of America | |
000 Xxxx Xxxxxx Xxxxx | ||
Xxxxxx, XX 00000 | ||
Attention: Xxxxx Xxxxx | ||
Facsimile: (000) 000-0000 | ||
With a copy (which will not constitute | ||
notice to the Insurer) to: | ||
Debevoise & Xxxxxxxx LLP | ||
000 Xxxxx Xxxxxx | ||
Xxx Xxxx, XX 00000 | ||
Attention: Xxxxxxxx Xxxxxx | ||
Xxxxx Xxxxx | ||
Email: xxxxxxxx@xxxxxxxxx.xxx | ||
xxxxxxxx@xxxxxxxxx.xxx |
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If to Independent Fiduciary: | State Street Global Advisors | |
Xxx Xxxxxxx Xxxxxx | ||
Xxxxxx, XX 00000 | ||
Attention: Xxxxxx Xxxx, Managing Director | ||
Email: xxxxxx_xxxx@xxxx.xxx | ||
With a copy (which will not constitute | ||
notice to the Independent Fiduciary) to: | ||
K&L Gates LLP | ||
K&L Gates Center | ||
000 Xxxxx Xxxxxx | ||
Xxxxxxxxxx, XX 00000 | ||
Attention: Xxxxxxx X. Xxxxx | ||
Email: xxxxxxx.xxxxx@xxxxxxx.xxx |
Any Party may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other Parties notice in the manner set forth in this Section 11.5.
Section 11.6 Governing Law. Except to the extent preempted by applicable Federal Law, this Agreement will be governed by, and construed in accordance with, the Laws of the State of New York, without regard to any principles of conflicts of law thereof that are not mandatorily applicable by Law and would permit or require the application of the Laws of another jurisdiction.
Section 11.7 Submission to Jurisdiction; Service of Process.
(a)Subject to Sections 2.12 and 6.6, each of the Parties irrevocably and unconditionally submits to the jurisdiction of any state or federal court, and only federal court if diversity of Parties exists, sitting in New York County, New York in any Dispute arising out of or relating to this Agreement or any Ancillary Agreement and agrees that all claims in respect of such Action may be heard and determined in any such court. Each Party also agrees not to bring any Action arising out of or relating to this Agreement or any Ancillary Agreement in any other court. Each of the Parties irrevocably and unconditionally waives any objection to personal jurisdiction, venue, and any defense of inconvenient forum to the maintenance of, any Action so brought and waives any bond, surety or other security that might be required of any other Party with respect thereto. Any Party may make service on any other Party by sending or delivering a copy of the process to the Party to be served at the address and in the manner provided for the giving of notices in Section 11.5; provided, however, that nothing in this Section 11.7 will affect the right of any Party to serve legal process in any other manner permitted by Law or in equity.
(b)Notwithstanding anything to the contrary set forth herein, the Parties acknowledge and agree that in the course of any Action including any dispute resolution process pursuant to Section 2.12 or 6.6, if the Insurer or the Independent Third Party produces or otherwise disclose the Life-By-Life Information, or information from which Life-By-Life Information may be derived, to the Company, the Independent Fiduciary or their respective Affiliates or Representatives, the Company and the Independent Fiduciary shall consent to the filing of, and the Parties shall use their all reasonable efforts to move for and urge the court to adopt, a protective order implementing terms reasonably satisfactory to the Insurer to limit the disclosure of such Insurer Provided Life-by-Life Information and ensure the strictly confidential treatment thereof, including
64
requiring such Insurer Provided Life-by-Life Information to be submitted under seal and for the return and destruction of such Insurer Provided Life-by-Life Information or copies thereof following the conclusion of any such Action, provided, that in no case will the Company be required to take any steps that would compromise the ability of the Company to prosecute or defend the Action or otherwise prejudice the Company's position (including any restrictions on the ability of Company experts to review, access and analyze any materials that the Company determines are relevant to such prosecution or defense); provided, further, that the Company and the Independent Fiduciary agree that it will not be considered unreasonable for the Insurer to seek a protective order that prevents disclosure of such information in such a way that it would be reasonably likely to become available to competitors of the Insurer or other third parties not involved in any such Action.
Section 11.8 Waivers of Jury Trial. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE ANCILLARY AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, INCLUDING THE STANDARD TERMINATION AND THE LUMP-SUM SOLICITATION.
Section 11.9 Specific Performance. The Parties agree that irreparable damage would occur if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, each Party will be entitled to an injunction or injunctions to prevent breaches of this Agreement by the breaching Party and to enforce specifically the terms and provisions of this Agreement, in addition to any other remedy to which such Party is entitled at law or in equity. The Parties further agree that (a) by seeking the remedies provided for in this Section 11.9, a Party will not in any respect waive its right to seek any other form of relief that may be available to such Party under this Agreement (including monetary damages) if the remedies provided for in this Section 11.9 are not available or otherwise are not granted, and (b) nothing set forth in this Section 11.9 will require any Party hereto to institute any proceeding for (or limit any Party's right to institute any proceeding for) specific performance under this Section 11.9 prior or as a condition to exercising any termination right under Article X (or receipt of any amounts due pursuant to Section 10.2), nor will the commencement of any legal action or legal proceeding pursuant to this Section 11.9 or anything set forth in this Section 11.9 restrict or limit any Party's right to terminate this Agreement in accordance with the terms of Article X, or pursue any other remedies under this Agreement that may be available then or thereafter.
Section 11.10 Severability. The invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of any other provisions of this Agreement. If any of the provisions of this Agreement are be held by a court or other tribunal of competent jurisdiction to be illegal, invalid or unenforceable, such provisions will be limited or eliminated only to the minimum extent necessary so that this Agreement will otherwise remain in full force and effect. If any of the material provisions of this Agreement are held illegal, invalid or unenforceable, this entire Agreement shall be null and void; provided that the Parties shall seek to reform any such provisions to the greatest extent practicable to restore the original meaning, intent and application of such provisions and shall restore this Agreement to the extent they are able to replicate its terms and conditions in all material respects.
Section 11.11 No Third Party Beneficiaries. Except to the extent otherwise provided in Section 9.1 with respect to Indemnified Parties, this Agreement will not confer any rights or remedies upon any Person other than the Parties and the respective successors and permitted assigns of the foregoing.
Section 11.12 Counterparts; Facsimile and Electronic Signatures. This Agreement may be executed in one or more counterparts, each of which will be deemed an original but all of which together will constitute
65
one and the same instrument. This Agreement or any counterpart may be executed and delivered to the recipients in Section 11.5 by electronic communications by portable document format (.pdf), each of which will be deemed an original.
Section 11.13 Survival of Representations and Warranties.
(a) Survival. The representations and warranties of the Parties will survive the Closing until the expiry of the relevant statute of limitations for contractual claims under the Laws of the State of New York as contemplated by Section 11.6.
(b) Exclusive Remedy. The Parties acknowledge that, except in the case of fraud or deliberate and intentional misrepresentations, after the Closing the sole and exclusive remedy of the Parties to address any Arbitration Dispute, shall be as set forth in Sections 2.10, 2.12, 2.13, 2.19, 2.21 and 2.23.
Section 11.14 Confidentiality; Intellectual Property.
(a) It is understood that each Party has received and will receive Confidential Information from the other Parties in connection with the negotiation of this Agreement and the Ancillary Agreements as well as in previous discussions and interactions involving the matters addressed by this Agreement and the Ancillary Agreements. Except as set forth herein (including except as expressly permitted or contemplated by the other provisions of this Agreement), the Parties shall not use the Confidential Information of another disclosing Party except in connection with the performance of their respective obligations under this Agreement and shall not disclose (and shall cause their respective Representatives, Affiliates, and Affiliates' Representatives not to disclose) any Confidential Information received from another Party, the Independent Third Party or an Approved Firm, except to such receiving Party's Representatives, Affiliates, and Affiliates' Representatives, who have a need to know and have agreed to maintain the confidentiality of Confidential Information in accordance with this Section 11.14; the disclosing Party is and shall be an express third party beneficiary of such agreement by such receiving Party's Representatives, Affiliates, and Affiliates' Representatives.
(b) Section 11.14(a) shall not apply with respect to Confidential Information that the receiving Party can demonstrate is or was:
(i)already known to such Party or its Affiliates prior to the confidential disclosure by the disclosing Party, the Independent Third Party or an Approved Firm;
(ii)independently developed by the receiving Party or its Affiliates not in violation or breach of this Agreement or any other confidentiality obligation to the disclosing Party (such as the Confidentiality Agreements or any retention agreement with a firm or professional in connection with this Agreement);
(iii)already known to the public without breach of confidence by such Party or any of its Affiliates;
(iv)received by the receiving Party from a third party without restrictions on its use in favor of the disclosing Party, whether by law or contract; or
(v)subject to prior compliance with Section 11.14(c), required to be disclosed pursuant to any applicable Law, stock exchange regulation, regulatory provision, court order, subpoena or other legal process.
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(c) Section 11.14(a) shall not apply from and after the Closing to restrict the use or disclosure by the Insurer of any Confidential Information related to Priced Lives, Annuity Payments, or the pricing or underwriting of the Group Annuity Contract, received from another disclosing Party, provided, that the Insurer shall use such Confidential Information only in compliance with all applicable Laws relating to privacy of personally identifying information. For the avoidance of doubt, this Section 11.14(c) does not apply to Confidential Information regarding the Company or the Plan (other than to the extent required in connection with the Group Annuity Contract).
(d) Except as otherwise provided in this Agreement, if any Party, its Representatives, its Affiliates or its Affiliates' Representatives, receives a request, subpoena, demand, or order for disclosure or become required by Law or stock exchange rule or regulation to disclose any Confidential Information (a “Compelled Disclosing Party”), such Compelled Disclosing Party shall promptly, and in no case more than five (5) Business Days following receipt of such a request, subpoena, demand, or order (so long as it is legally permitted to provide such notification), notify the other Parties to afford them the opportunity to object or seek a protective order or other remedy, including a protective order requiring Confidential Information to be submitted under seal and for the return and destruction of Confidential Information or copies thereof following the conclusion of any Action, prior to the disclosure of any such Confidential Information. The Compelled Disclosing Party shall, to the extent permitted by Law, cooperate with the other Party's or Parties' efforts to obtain such protective order, at such other Party's or Parties' cost and expense. In the event that such protective order or other remedy is not sought or obtained, only that portion of Confidential Information which the Compelled Disclosing Party in good faith believes is legally required to be provided may be disclosed and such Compelled Disclosing Party shall request that appropriate confidential treatment will be accorded to such Confidential Information.
(e) Each engagement letter between any of the Parties on the one hand and the Independent Third Party, each Approved Firm or each other professional engaged in connection with this Agreement, on the other, shall include undertakings by such professional to maintain the confidentiality of Confidential Information in accordance with this Section 11.14 and to clearly xxxx any reports or other work product prepared in connection with such engagement as confidential and not subject to disclosure except as permitted by this Section 11.14.
(f) The Parties acknowledge and agree that this Section 11.14 shall supersede the Confidentiality Agreements.
(g) Insurer is, and the other Parties acknowledge that Insurer is, the sole owner of all spreadsheets and formulas, including the methodologies in the CMA Adjustment tab, [ *** ] Adjustment tab, PFS Adjustment tab and SCA Adjustment tab on the spreadsheets and manuals (including the Procedures Manual) on the Identified CD-ROM, and that all such materials constitute Insurer's valuable and proprietary know how. The foregoing remains true even with respect to any such materials or know how incorporated or reproduced in the work product of the Independent Third Party, the Approved Firms or any arbitrator or staff thereof or any other professional engaged in connection with this Agreement. Insurer grants the Independent Fiduciary, the Company and, pursuant to the applicable engagement letter and subject to this Section 11.14 only, the Independent Third Party, the Approved Firms or any arbitrator or staff thereof or any other professional engaged in connection with this Agreement, the limited right to use such materials solely in connection with the transactions and proceedings contemplated by this Agreement. No party having use thereof shall have any rights in connection therein except as specifically granted by the foregoing sentence.
Section 11.15 Waiver of Punitive Damages. To the fullest extent permitted by Law, and
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notwithstanding any other provision of this Agreement, none of the Parties shall be liable to any other Party for any punitive or exemplary damages of any nature in respect of matters arising out of this Agreement or the Ancillary Agreements, whether arising out of breach of contract, negligence, tort, strict liability or any other legal or equitable principle. The foregoing sentence will not preclude recovery of amounts claimed in Third Party Claim to the extent that claims for such amounts are subject to indemnification under this Agreement.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.
GENERAL MOTORS LLC | ||||
By: | /s/ Xxxxxx Xxxxxx | |||
Name: Xxxxxx Xxxxxx | ||||
Title: Senior Vice President and Chief Financial Officer | ||||
THE PRUDENTIAL INSURANCE COMPANY | ||||
OF AMERICA | ||||
By: | /s/ Xxxxx Xxxxx | |||
Name: Xxxxx Xxxxx | ||||
Title: Vice President, Payout Annuities | ||||
PRUDENTIAL FINANCIAL, INC. | ||||
By: | /s/ Xxxxxx X. Xxxxxxx, Xx. | |||
Name: Xxxxxx X. Xxxxxxx, Xx. | ||||
Title: Second Vice President | ||||
STATE STREET BANK AND TRUST COMPANY, | ||||
Solely In Its Capacity As Independent Fiduciary of | ||||
the General Motors Retirement Plan for Salaried | ||||
Employees | ||||
By: | /s/ Xxxxxx Xxxx | |||
Name: Xxxxxx Xxxx | ||||
Title: Managing Director | ||||
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APPENDICES
Appendices to that certain Definitive Transaction Framework Agreement, dated as of May 30, 2012 (the “Agreement”), by and among The Prudential Insurance Company of America, a New Jersey life insurance company (the “Insurer”), Prudential Financial, Inc., a New Jersey corporation (“Insurer Parent”), General Motors LLC, a Delaware limited liability company (the “Company”) acting in a non-fiduciary capacity as the sponsor of the General Motors Retirement Program for Salaried Employees (the “Plan”), and State Street Bank and Trust Company the independent fiduciary of the Plan (the “Independent Fiduciary”). Capitalized terms used herein and not herein defined shall derive their meaning from Section 1.1 of the Agreement.
1
Appendix 1.1-A
FORM OF GROUP ANNUITY CONTRACT
Appendix 1.1A - 1
[Prudential Logo]
The Prudential Insurance Company of America
Newark, New Jersey
Contract-Holder: [NAME OF TRUST BANK, as Directed Trustee of the Vita Salaried Retirement Trust, a New York trust]A | Plan: [Vita]A Salaried Retirement Plan |
[ *** ] | Jurisdiction: New York |
[Amendment]A Date: [MM DD, YYYY]E | Total Contribution Amount: [$XXX,XXX]A Adjusted Contribution Amount: [$XXX,XXX due to Prudential or Contract-Holder on an Amendment Date]A |
Pages Attached: [1-XX, Transferred Assets Exhibit(s) and Annuity Exhibit(s)]A |
[NAME OF TRUST BANK as Directed Trustee of the Vita Salaried Retirement Trust, a New York trust]A | THE PRUDENTIAL INSURANCE COMPANY OF AMERICA [200 Xxxx Xxxxxx Xxxxx Xxxxxx, Xxx Xxxxxx 00000]X |
[By:_______________________________ Title: Date:]A | [Chairman and Chief Executive Officer]B [Secretary]B Attest: _______________________________ Date: |
Single-Premium Group Annuity Contract [ *** ], as provided herein, and providing for an irrevocable commitment to make Annuity Payments, subject to the provisions of this Contract. The Annuity Payments hereunder do not vary based on any gains or losses of the assets held in the Separate Account or the General Account.
Appendix 1.1A - 1
[ Provision I | DEFINITIONS; SEPARATE ACCOUNT OPERATIONS; PAYMENT OPERATIONS | ||||
[ *** ] | |||||
1.1 | Definitions | ||||
1.2 | Adjusted Contribution Amount; [ *** ] | ||||
1.3 | Annuity Payments; Annuity Payment Support; Associated Withdrawals from Accounts; Termination | ||||
1.4 | The Separate Accounts that Support this Contract | ||||
1.5 | Investments Held in Separate Account; Insulation of Separate Account Assets | ||||
1.6 | Payment Obligation of Prudential | ||||
1.7 | Establishing Reserves; Withdrawal of Assets from the Separate Account | ||||
1.8 | Process for making Monthly Annuity Payments | ||||
1.9 | Persons Entitled to Enforce this Contract against Prudential | ||||
1.10 | Small Account Conversions | ||||
Provision II | PAYMENT TERMS AND CONDITIONS FOR FORMS OF ANNUITIES | ||||
2.1 | General | ||||
2.2 | Definitions | ||||
2.3 | Annuity Forms | ||||
2.4 | Limitation on Assignment | ||||
2.5 | Proof of Continued Existence; Escheatment of Unpaid Amounts | ||||
2.6 | Misstatements | ||||
2.7 | Concerning Beneficiaries and Contingent Annuitants | ||||
2.8 | Concerning Domestic Relations Orders | ||||
2.9 | Substitute Payee | ||||
2.10 | Certificates | ||||
2.11 | Reliance on Records; Correction of Errors | ||||
2.12 | [Deductions from Annuity Payments]D | ||||
Provision III | GENERAL TERMS | ||||
3.1 | Communications | ||||
3.2 | Currency; Payments | ||||
3.3 | Contract-Holder | ||||
3.4 | No Implied Waiver | ||||
3.5 | Changes | ||||
3.6 | Entire Contract - Construction | ||||
3.7 | Third Party Beneficiaries: | ||||
TRANSFERRED ASSETS EXHIBIT(S) | |||||
ANNUITY EXHIBIT(S) ]C |
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Provision I Definitions; Separate Account Operations; Payment Operations
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1.1 Definitions
In addition to other capitalized terms defined in this Contract, the following capitalized terms shall have the meanings indicated:
"Additional General Account Reserve" has the meaning assigned in Section 1.7.
“Adjusted Contribution Amount” means the net amount specified as such on the Cover Page of this Contract, payable on the Effective Date or on an Amendment Date specified on the related Cover Page.
“Aggregate Monthly Payment” means, for each month, the aggregate amount of Annuity Payments payable in respect of all Covered Lives (and, if applicable, Contingent Lives and Beneficiaries) for such month.
“Amendment Date” means the date shown on the Cover Page, and which is other than the Effective Date.
“Annuity Commencement Date” means the date the Annuity Payments commence, which shall be [MM DD, YYYY]E[specified on the Annuity Exhibits]E.
“Annuity Exhibits” means the Annuity Exhibits attached hereto setting forth the features of the Annuity Payments for each Covered Life and Contingent Life.
“Annuity Forms” means the types of annuities (and payment obligations arising thereunder) specified in Provision II.
“Annuity Payments” means, with respect to each Covered Life (and, if applicable to such Covered Life, each Contingent Life), the amount of periodic and single payments determined in accordance with Provision II of this Contract, and, with respect to any Beneficiary, the amount of any periodic and single payments owed after the death of a Covered Life or, if applicable, a Contingent Life, in each case as determined in accordance with Provision II of this Contract.
“Beneficiary” means,
(A) | during the lifetime of a Covered Life, the person shown in Prudential's records as having been designated by the Covered Life to receive (after the death of such Covered Life) any payment owing under Provision II of this Contract other than payments owed to the related Contingent Life (such related Contingent Life is not a “Beneficiary” as such term is used in this Contract); and |
(B) | during the period after the death of the Covered Life and before the death of the Contingent Life, the person shown in Prudential's records as having been designated by the Contingent Life (or, in the absence of such designation, the person previously designated by the Covered Life) to receive, after the death of such Contingent Life, any payment owing under Provision II of this Contract. A Beneficiary is owed payments under this Contract after the death of a Covered Life or Contingent Life only if so provided for under the Annuity Form applicable to the Covered Life. |
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Until the death of the Covered Life (and, if the Annuity Form specifies a Contingent Life, until the death of both the Covered Life and Contingent Life) a Beneficiary is not a third-party beneficiary of this Contract and has no rights hereunder, and after such death(s) a Beneficiary has the rights of a third-party beneficiary as set forth herein. A Representative of a Beneficiary shall have the rights of a Beneficiary hereunder.
"Business Day" means any weekday on which the banks in New York City, New York are open for business. If any payment under this Contract is due and payable on a day which is not a Business Day, or if any notice or report is required to be given on a day which is not a Business Day, such payment shall be due and payable or such notice or report shall be given on the next succeeding Business Day
“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute.
“Commingled Account” means the Portfolio Protected Buyout Separate Account, an insurance company separate account the assets of which are owned by Prudential. The assets of this separate account will be held by Prudential in one or more custody accounts at entities independent of Prudential that only hold assets allocated to this separate account. Following consummation of a small account conversion in accordance with Section 1.10 (“Small Account Conversion”), this commingled separate account shall hold assets supporting the payment obligations of Prudential under this Contract. Such separate account also supports Prudential's payment obligations under other group annuity contracts issued by Prudential. Each such contract obligates Prudential to make payments to the contract-holder and/or to individual covered lives, contingent covered lives and beneficiaries in amounts measured and adjusted by the life-span of such covered lives, by any lump sum amounts due and/or by the remaining portion of any period certain annuities.
“Contingent Life” means a person listed on the Annuity Exhibits as entitled to a periodic payment following the death of the Covered Life in accordance with the related Annuity Form, or such other person who a Covered Life designates after the Annuity Commencement Date as a Contingent Life, if such designation is permitted by the related Annuity Form. A Contingent Life is not a Beneficiary as such term is used in this Contract. A Contingent Life is a third-party beneficiary of this Contract and has the rights set forth herein. A Representative of a Contingent Life shall have the rights of a Contingent Life hereunder.
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“Contract-Holder” means the entity named as such on the Cover Page of this Contract, and any successors or assigns of such Contract-Holder as provided in Provision III.
“Covered Life” means each person listed on the Annuity Exhibits as entitled to a periodic payment specified in the Annuity Exhibits. A Covered Life is not a Contingent Life or a Beneficiary as such terms are used in this Contract. A Covered Life is a third-party beneficiary of this Contract and has the rights set forth herein. A Representative of a Covered Life shall have the rights of a Covered Life hereunder.
“Dedicated Account” means the [ *** ]F, an insurance company separate account the assets of which are owned by Prudential. This separate account may only hold assets supporting the payment obligations of Prudential under this Contract. The assets of this separate account will be held by Prudential in one or more custody accounts at entities independent of Prudential that only hold assets allocated to this separate account. After consummation of a small account conversion in accordance with Section 1.10 (“Small Account Conversion”), the assets of this separate account shall be transferred to the Commingled Account.
“Effective Date” means the date specified in Section 1.2.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute.
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“Existing Contract” has the meaning assigned in Section 1.0.
“Existing Separate Account” has the meaning assigned in Section 1.0.
“Expected Data Finalization Date” means the date determined by mutual consent of the Contract-Holder and Prudential.
“General Account” means the General Account of Prudential.
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“Market Value,” (A) in respect of assets of a Separate Account, means the fair market value of such assets, as such fair market value is determined by Prudential in accordance with its standard procedures for establishing the market value of its assets, and (B) in respect of any portion of the Total Contribution Amount retained in the Existing Separate Account as of the Effective Date or paid to Prudential by delivery of non-cash assets acceptable to Prudential pursuant to Section 1.2 [ *** ] means the fair market value of each such asset in an amount and as of a date agreed to by Prudential and Contract-holder, as such amounts and dates are shown on the Transferred Assets Exhibit attached hereto.
“Plan” means the plan specified on the Cover Page of this Contract.
“Prudential” means The Prudential Insurance Company of America.
“Prudential's Office” means the following office of Prudential, unless Prudential provides a notice specifying another address for certain or all communications:
The Prudential Insurance Company of America
000 Xxxx Xxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000-0000
Attention: Annuity Operations
“Representative” means, with respect to persons who are a Covered Life, Contingent Life or Beneficiary, an individual or entity demonstrating to the reasonable satisfaction of Prudential that such individual or entity is duly appointed (a) as a guardian of such person (b) as a holder of powers of attorney from such person, (c) as a trustee of such person, (d) as an testamentary executor of such person's estate,(e) as being entitled to statutory subrogation rights granted to any entity created by statute or sponsored by a governmental body providing guarantees in respect of such person's right's under this Contract arising from any insolvency of Prudential; provided, that, a “Representative” does not include an assignee of the rights of such person hereunder in contravention of Provision II.
“Separate Account” means the Dedicated Account, provided that if the Commingled Account is substituted for the Dedicated Account in accordance with Section 1.10 (“Small Account Conversion”), then thereafter Separate Account means the Commingled Account. This Contract does not participate in the investment or other experience of either Separate Account.
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“Total Contribution Amount” means the amount specified as such on the Cover Page of this Contract.
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1.2 Adjusted Contribution Xxxxxx
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1.3 Annuity Payments; Annuity Payment Support; Associated Withdrawals from Accounts; Termination
Upon receipt of the Adjusted Contribution Amount due on the Effective Date, Prudential agrees to pay the Annuity Payments due under this Contract and further agrees that such obligation shall be irrevocable. Prudential will confirm to the Contract-Holder its receipt of such Adjusted Contribution Amount.
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1.4 The Separate Accounts that Support this Contract
During the period starting on the Effective Date and ending on the earlier of (a) the consummation of a small account conversion in accordance with Section 1.10 (“Small Account Conversion”) and (b) the payment of the last Annuity Payment due under this Contract, the Dedicated Account shall be the “Separate Account” supporting Annuity Payments hereunder. After consummation of a small account conversion in accordance with Section 1.10 (“Small Account Conversion”), the Commingled Account shall be the “Separate Account” supporting Annuity Payments hereunder.
1.5 Investments Held in Separate Account; Insulation of Separate Account Assets
The Separate Account is intended to be invested primarily in investment-grade fixed income securities, but other investments are permitted, provided, however, that all investments of the Separate Account shall be invested in accordance with applicable law, regulations and regulatory approvals (for purposes of this Section, “applicable law”). Prudential will invest and reinvest the assets of the Separate Account at the time and in the amounts as Prudential determines in its discretion and in accordance with applicable law. To the extent permitted by applicable law, the investments of the Separate Account may be made without regard to any limitations otherwise imposed on the investment of assets held in the General Account or in its other separate accounts. Prudential may, with respect to any assets held in the Separate Account, delegate Prudential's investment management and/or voting rights to other entities, including institutions not affiliated with Prudential.
Prudential owns all the assets in the Separate Account. As authorized by Section 17B:28-9(c) of the New Jersey Insurance Statutes and Section 4240(a)(12) of the New York Insurance Law, (A) none of the assets held in the Dedicated Account, [ *** ] and (B) none of the assets held in the Commingled Account, [ *** ], will be chargeable with liabilities arising out of any other business of Prudential.
1.6 Payment Obligation of Prudential
Prudential will make the payments owed by it under this Contract when such payments are due. Prudential irrevocably guarantees payment of the Annuity Payments as of the Annuity Commencement Date.
1.7 Establishing Reserves; Withdrawal of Assets from the Separate Account
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From time to time in accordance with applicable law or regulation, Prudential will determine whether
(A) | the statutory liability that Prudential is required to hold in respect of the contractual benefits supported by such Separate Account, |
is equal to or less than
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(B) | the sum of (x) the statutory carrying value of the assets held in the Separate Account, plus (y) the reserves, if any, related to the [Separate Account Portion of the contractual benefits that have been established in the General Account and]H that are supported by assets held in the General Account. The reserves described in (y) of the preceding sentence shall herein be referred to as the “Additional General Account Reserve”. |
If, on the date of determination, the amount described in clause (A) is greater than the amount described in clause (B), Prudential will establish and fund additional reserves in the General Account.
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A withdrawal from the Separate Account will be made on a Business Day, and the assets withdrawn will no longer be allocated to the Separate Account.
1.8 Process for Making Monthly Annuity Payments
Prudential, or its agent, will make Annuity Payments directly to each Covered Life, Contingent Life and Beneficiary starting on the Annuity Commencement Date.
1.9 Persons Entitled to Enforce this Contract against Prudential
Notwithstanding any other provision of this Contract to the contrary,
(i) | Rights of Annuitants. (a) After the Effective Date, the right of each Covered Life, Contingent Life and Beneficiary to receive an Annuity Payment determined pursuant to Provision II is enforceable by such person against Prudential, (b) after the Expected Data Finalization Date, each Covered Life, Contingent Life and Beneficiary has the right to enforce any provision of this Contract (as does the Contract-Holder) against Prudential, and (c) the rights of each Covered Life, Contingent Life and Beneficiary under the preceding subclause (b) is not diminished if the Contract-Holder ceases to exist and no successor is appointed; |
(ii) | Annuitants hold Rights Exclusively. After the Expected Data Finalization Date, and except as provided in clause (iii) below, the only parties having the right to enforce any provision of this Contract against Prudential shall be each Covered Life, Contingent Life, or Beneficiary, in each case solely in the capacity of an intended third party beneficiary of the provisions specified in clause (i)(b) above; and |
(iii) Rights and Duties of Contract-Holder and Prudential. (a) After the Effective Date, Contract-Holder shall have no obligation to any Covered Life, Contingent Life or Beneficiary with respect to the annuities as determined in Provision II; (b) between the Effective Date and the Expected Data Finalization Date, the Contract-Holder and Prudential shall each have the rights against and obligations to the other specified in this Contract; and (c) after the Expected Data Finalization Date, the Contract-Holder shall have the right to enforce any provision of this Contract against Prudential until the Contract-Holder ceases to exist, and Prudential shall have the right to enforce any provision of this Contract against the Contract-Holder until the Contract-Holder ceases to exist.
1.10 Small Account Conversion
If at any time the Market Value of the assets held in the Dedicated Account does not equal at least [$100 million]G, Prudential reserves the right to discontinue the Dedicated Account (such discontinuance referred to in this Section as a “Threshold Transfer”). In the event of a Threshold Transfer, without the consent of Contract-Holder, any Covered Life, Contingent Life or Beneficiary, Prudential may transfer the assets held in the Dedicated Account to the Commingled Account, subject to the receipt of all necessary consents and
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approvals, including regulatory approvals (such as those relating to the transfer of assets in-kind from the Dedicated Account to the Commingled Account).
Provision I | Payment Terms and Conditions for Forms of Annuities |
2.1 General
The amount owed by Prudential under this Contract in respect of each Covered Life (and, if applicable, Contingent Life and Beneficiary) will be determined by Prudential in accordance with the terms of this Provision II.
Prudential will apply the terms of this Provision II using the information contained in the Annuity Exhibits with respect to such Covered Life, Contingent Life, and Beneficiary, as such information is updated or corrected pursuant to this Contract. Capitalized terms used but not defined in Section 1.1 have the meanings assigned in this Provision II.
[For any Covered Life, Contingent Life or Beneficiary who is shown on the attached Annuity Exhibit as having been paid, prior to the Annuity Commencement Date, Plan benefits in excess of the amount owed under the Plan, such overpayments shall be deducted from the Annuity Payments otherwise owed to such persons pursuant to this Provision II. Nothing in the preceding sentence shall relate to misstatements of data on the Annuity Exhibits. Such misstatements are governed by Section 2.6.]D
[For any Covered Life, Contingent Life or Beneficiary who is shown on the attached Annuity Exhibit as having been paid, prior to the Annuity Commencement Date, Plan benefits that were less than the amount owed under the Plan, such underpayments shall be added to the Annuity Payments otherwise owed to such persons pursuant to this Provision II. Nothing in the preceding sentence shall relate to misstatements of data on the Annuity Exhibits. Such misstatements are governed by Section 2.6.]D
2.2 Definitions
The following definitions apply to this Section.
“Annuity Forms” means one of the following types of annuities:
(i) “Contingent Joint and Survivor Life Annuity” means, in respect of a Covered Life, the Annuity Form having such payment terms as are specified in Section 2.3 for such Annuity Form, together with any of the following Riders in respect of such Covered Life as are specified in Annuity Exhibits:
Special Benefit Rider
Level Benefit Rider
Refund Death Benefit Rider
and
together with, in respect of such Covered Life, any of the following Option(s) in respect of such Covered Life as are specified in the Annuity Exhibits with respect to such Covered Life:
General Conversion Option
(ii)“Period Certain Annuity,” means, in respect of a Covered Life, the Annuity Form having such payment terms as are specified in Section 2.3 for such Annuity Form. No Riders or Options apply to this Annuity Form.
(iii)“Single Life and Period Certain Annuity,” means, in respect of a Covered Life, the Annuity Form having such payment terms as are specified in Section 2.3 for such Annuity Form. No Riders or Options apply to this Annuity Form.
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(iv)“ Single Life Annuity,” means, in respect of a Covered Life, the Annuity Form having such payment terms as are specified in Section 2.3 for such Annuity Form, together with any of the following Riders in respect of such Covered Life as are specified in Annuity Exhibits:
Special Benefit Rider
Level Benefit Rider
Refund Death Benefit Rider
and
together with, in respect of such Covered Life, any of the following Option(s) in respect of such Covered Life as are specified in the Annuity Exhibits with respect to such Covered Life:
Post-Retirement Marriage Conversion Option
Disabled Age 55 Conversion Option
(v)“Spousal Joint and Survivor Life Annuity,” means, in respect of a Covered Life, the Annuity Form having such payment terms as are specified in Section 2.3 for such Annuity Form, together with any of the following Riders in respect of such Covered Life as are specified in Annuity Exhibits:
Special Benefit Rider
Level Benefit Rider
Pop-Up Rider
Refund Death Benefit Rider
and
together with, in respect of such Covered Life, any of the following Option(s) in respect of such Covered Life as are specified in the Annuity Exhibits with respect to such Covered Life:
General Conversion Option
Disabled Age 55 Conversion Option
(vi)Window Spousal Contingent 50% or 75% Joint and Survivor Life Annuity” means, in respect of a Covered Life, the Annuity Form having such payment terms as are specified in Section 2.3 for such Annuity Form, together with any of the following Riders in respect of such Covered Life as are specified in Annuity Exhibits:
Refund Death Benefit Rider
(vii) Window Single Life Annuity” means, in respect of a Covered Life, the Annuity Form having such payment terms as are specified in Section 2.3 for such Annuity Form, together with any of the following Riders in respect of such Covered Life as are specified in Annuity Exhibits:
Refund Death Benefit Rider
“Conversion Conditions” means the following:
(i) With respect to Disabled Age 55 Conversion Option,
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(A) means that a Covered Life (such Covered Life being “you” or “your”) is shown on the Annuity Exhibits as having a “Disabled Age 55” Conversion Option, and
(B) you demonstrate that you are age 55
(ii) With respect to the General Conversion Option,
(A) means that a Covered Life (such Covered Life being “you” or “your”) is shown on the Annuity Exhibits as having a “General” Conversion Option, then you must demonstrate that you meet one of the following conditions before you can exercise the option:
(B) if your Annuity Form is the Spousal Joint and Survivor Life Annuity or the Contingent Joint and Survivor Life Annuity with your spouse as Contingent Life and if you became divorced after your Original Retirement Date (as specified on the Annuity Exhibits), then you can exercise the option if you comply with the following conditions. You must provide us with a qualified domestic relations order (QDRO) in a form acceptable to us. It must provide that such Contingent Life will not be entitled to any portion of the Contingent Life Amount when you die.
(C) if your Annuity Form is the Contingent Joint and Survivor Life Annuity, and if your Contingent Life is not your spouse, you can exercise this option only in the event of post retirement marriage or re-marriage. No waiver from your Contingent Life is required. If we request, you must provide us with satisfactory proof of the good health of the Contingent Life before the Contingent Life can be removed and a new spouse can be added (see Post-Retirement Marriage Conversion Option, below).
Note that this option is limited to the situations described above. The following are examples of situations where you cannot exercise this option.
(X) if your Annuity Form is the Spousal Joint and Survivor Life Annuity and if you have not been divorced since your Original Retirement Date, you cannot exercise this option.
(Y) if your Annuity Form is the Contingent Joint and Survivor Life Annuity, if your Contingent Life is your spouse, and if you have not been divorced since your Original Retirement Date, you cannot exercise this option.
(iii) With respect to the Post-Retirement Marriage Conversion Option,
(A) means that a Covered Life (such Covered Life being “you” or “your”) is shown on the Annuity Exhibits as having a “Post-Retirement Marriage” Conversion Option, and
(B) You became married for the first time, or became re-married, after [June 30, 2011]E, and
(C) You exercise this option within 18-months after such marriage or re-marriage, and
(D) You supply us with evidence of such marriage or re-marriage.
“Conversion Options” means, if the “Disabled Age 55 Conversion Option,” the “General Conversion Option,” and/or the “Post-Retirement Marriage Conversion Option” is specified in the Annuity Exhibits as applicable to a Covered Life, and if such option is attached to an Annuity Form eligible for such option, the following options may convert the benefit from one Annuity Form to another Annuity Form. A Conversion Option cannot be exercised by a Contingent Life or a Beneficiary.
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(i)“Disabled Age 55 Conversion Option” means, if a Covered Life is specified in the Annuity Exhibits as having a “Disabled Age 55” Conversion Option (because such person retired from the Plan under a disability retirement prior to age 55) and also as receiving a distribution of one of the following Annuity Forms:
Single Life Annuity
Spousal Joint and Survivor Life Annuity
then such option is available to such Covered Life (“you” or “your”).
When you reach age 55, you may exercise this option to convert your current Annuity Form. Before your option exercise can become effective, you must satisfy the applicable Conversion Conditions. You can select your new Annuity Form from the following list. However, if you are married at the time you exercise this option, we will automatically convert your Annuity Form into a Spousal Joint and Survivor Annuity absent a qualified election.
Single Life Annuity: If you elect this Annuity Form, the pre-62+1 Pension Amount payable to you will equal the sum of two numbers. The first number equals your Disability Age 55 Pre-62+1 Pension Amount (as specified in the Annuity Exhibits). The second number equals your Disability Temporary Annuity (if specified on the Annuity Exhibits) where there has been a denial of Social Security Disability benefits. Your post-62+1 Pension Amount will equal your Disability Age 55 Post 62+1 Pension Amount (as specified in the Annuity Exhibits).
Spousal Joint and Survivor Life Annuity: If at the time of your disability, you were married and elected a Contingent Joint and Survivor Life Annuity you are not eligible to make this election at age 55. If you elect this Annuity Form, your pre-62+1 Pension Amount will equal the product obtained by multiplying two numbers and then adding a third number. The first number is your Disability Age 55 Pre-62+1 Pension Amount (as specified in the Annuity Exhibits). The second number is your Spousal Joint and Survivor Life Annuity Pop-Up Decrease Factor. The third number is any Disability Temporary Annuity specified for you on the Annuity Exhibits where there has been a denial of Social Security Disability benefits. Your post-62+1 Pension Amount will equal the product obtained by multiplying two numbers. The first number is your Disability Age 55 Post 62+1 Pension Amount. The second number is your Spousal Joint and Survivor Life Annuity Pop-Up Decrease Factor.
The amount we will pay your spousal Contingent Life will equal the result of multiplying two numbers. The first number is the Covered Life Amount payable to you pursuant to the foregoing paragraph. The second number is a percentage. The applicable percentage is based on the corresponding Original Retirement Date specified for such Covered Life in the Annuity Exhibits or in our records.: (1) 65% for a Original Retirement Date on/after October 1, 1999, (2) 60 % for a Original Retirement Date on/after November 1, 1976 and prior to October 1, 1999 (3) 55% for a Original Retirement Date on/after September 1, 1964 and prior to November 1, 1976 and (4) 50 % for a Original Retirement Date prior to September 1, 1964.
(ii) “General Conversion Option” means, if a Covered Life is specified in the Annuity Exhibits as having a “General” Conversion Option and also as receiving a distribution of one of the following Annuity Forms:
Spousal Joint and Survivor Life Annuity
Contingent Joint and Survivor Life Annuity
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then such option is available to the Covered Life (“you” or “your”).
The option allows you to convert your Annuity Form into a Single Life Annuity Form. Before your option exercise can become effective, you must meet the applicable Conversion Conditions. You must also notify us using a form provided by us.
Once you exercise your option, we will not owe any money to your Contingent Life after you die.
Instead, we will increase the Covered Life Amount payable to you. If the Annuity Form is a Spousal Joint and Survivor Life Annuity form of payment, the amount of the increase will equal the Pop-Up Amount in the Annuity Exhibit. If the Annuity Form is a Contingent Joint and Survivor Life Annuity, the amount of the increase will equal the result of multiplying two numbers. The first number is the Part A Basic Amount specified for you in the Annuity Exhibit. The second number is the Contingent Joint and Survivor Life Annuity Pop-Up Increase Factor. We will start paying the increased amount on the first day of the month after the exercise of your option becomes effective.
(iii) “Post-Retirement Marriage Conversion Option” means, if a Covered Life is specified in the Annuity Exhibits as having a “Post-Retirement Marriage” Conversion Option and also as receiving a distribution of the following Annuity Form:
Single Life Annuity
then such option is available to the Covered Life (“you” or “your”).
The option allows you to convert a portion of your monthly payment under a Single Life Annuity into a Spousal Joint and Survivor Annuity Form. Before your option exercise can become effective, you must meet the applicable Conversion Conditions. Also, you must notify us using a form provided by us. The effective date of the conversion is the first day of the month after the conversion is effective, but not sooner than the one-year anniversary of your marriage or re-marriage, and in any event before the 18-month anniversary of the marriage or re-marriage.
Only Part A Basic Amount (as specified in the Annuity Exhibits) may be converted.