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STOCK PURCHASE AGREEMENT
Dated as of January 21, 1997
Between
FARMERS GROUP, INC.
and
GREAT SOUTHERN LIFE INSURANCE COMPANY
With Respect to all of the
Outstanding Capital Stock of
THE OHIO STATE LIFE INSURANCE COMPANY
and
INVESTORS GUARANTY LIFE INSURANCE COMPANY
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TABLE OF CONTENTS
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Definitions.............................................. 1
ARTICLE II
SALE OF SHARES AND CLOSING
2.1 Purchase and Sale ........................................ 10
2.2 Consideration ............................................ 10
2.3 Closing .................................................. 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
3.1 Organization of Seller ................................. 13
3.2 Authority of Seller .................................... 13
3.3 Organization of the Companies .......................... 14
3.4 Capital Stock .......................................... 14
3.5 Subsidiaries ........................................... 14
3.6 Conflicts or Violations ................................ 14
3.7 SAP Statements ......................................... 15
3.8 GAAP Statements ........................................ 16
3.9 Reserves ............................................... 16
3.10 Absence of Changes ..................................... 17
3.11 Taxes .................................................. 18
3.12 Litigation.............................................. 18
3.13 Compliance With Laws ................................... 18
3.14 Benefit Plans and Employee Matters...................... 18
3.15 Properties.............................................. 19
3.16 Contracts............................................... 19
3.17 Licenses and Permits ................................... 21
3.18 Operations Insurance ................................... 21
3.19 Intercompany Liabilities ............................... 21
3.20 Bank Accounts .......................................... 22
3.21 Brokers ................................................ 22
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3.22 Environmental............................................... 22
3.23 Insurance and Annuity Business ............................. 23
3.24 Agents...................................................... 24
3.25 Actuarial Information ...................................... 25
3.26 Conduct of Business......................................... 25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.1 Organization of the Purchaser ....................... 25
4.2 Authority of Purchaser .............................. 26
4.3 Conflicts or Violations ............................. 26
4.4 Litigation. 27
4.5 Purchase for Investment ............................. 27
4.6 Brokers ............................................. 27
4.7 Financial Capacity .................................. 27
ARTICLE V
COVENANTS OF THE SELLER
5.1 Regulatory and Other Approvals.......................... 27
5.2 HSR Filings............................................. 28
5.3 Investigation by the Purchaser ......................... 28
5.4 Conduct of Business .................................... 28
5.5 Financial Statements ................................... 30
5.6 Intercompany Liabilities ............................... 30
5.7 Resignations of Directors .............................. 31
5.8 Books and Records ...................................... 31
5.9 Notice and Cure ........................................ 31
5.10 Employee Matters ....................................... 31
5.11 Trademark Agreements ................................... 32
5.12 Intercompany Lease ..................................... 32
5.13 Intentionally Omitted................................... 32
5.14 Pension Reserve......................................... 32
5.15 No Churning............................................. 33
5.16 Transition Services..................................... 33
5.17 Purchase of Certain Assets.............................. 33
5.18 Assumption of Certain Litigation Matters................ 33
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ARTICLE VI
COVENANTS OF THE PURCHASER
6.1 Regulatory Approvals ............................ 34
6.2 HSR Filings...................................... 34
6.3 Non-Solicitation ................................ 34
6.4 Notice and Cure ................................. 35
6.5 Intercompany Liabilities ........................ 35
6.6 Employees........................................ 35
6.7 Confidentiality ................................. 37
6.8 Cooperation...................................... 37
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
7.1 Representations and Warranties ...................... 38
7.2 Performance.......................................... 38
7.3 Officer's Certificates .............................. 38
7.4 HSR Act Approval .................................... 38
7.5 No Injunction ....................................... 38
7.6 No Proceeding or Litigation ......................... 38
7.7 Consents, Authorizations, etc ....................... 39
7.8 No Adverse Change ................................... 39
7.9 Opinions of Counsel ................................. 39
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE SELLER
8.1 Representations and Warranties ...................... 40
8.2 Performance.......................................... 40
8.3 Officer's Certificates .............................. 40
8.4 HSR Act Approval .................................... 40
8.5 No Injunction ....................................... 40
8.6 No Proceeding or Litigation ......................... 40
8.7 Consents, Authorizations, etc ....................... 41
8.8 Opinion of Counsel .................................. 41
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ARTICLE IX
SURVIVAL OF PROVISIONS; REMEDIES
9.1 Survival ............................................... 41
9.2 Available Remedies ..................................... 42
ARTICLE X
INDEMNIFICATION
10.1 Tax Indemnification and Other Tax Matters .............. 42
10.2 Other Indemnification .................................. 46
10.3 Method of Asserting Claims ............................. 47
10.4 After-Tax Damages; Refunds ............................. 49
10.5 Claims Limitation ...................................... 49
ARTICLE XI
TERMINATION
11.1 Termination ............................................ 50
11.2 Effect of Termination .................................. 51
ARTICLE XII
NOTICES
12.1 Notices ................................................ 51
ARTICLE XIII
MISCELLANEOUS
13.1 Entire Agreement .................................. 53
13.2 Expenses .......................................... 53
13.3 Public Announcements .............................. 53
13.4 Confidentiality ................................... 53
13.5 Further Assurances ................................ 53
13.6 Waiver ............................................ 54
13.7 Amendment.......................................... 54
13.8 Counterparts ...................................... 54
13.9 No Third Party Beneficiaries ...................... 54
13.10 Governing Law ..................................... 55
13.11 Binding Effect .................................... 55
13.12 Assignment Limited ................................ 55
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13.13 Headings, Gender, etc ......................... 55
13.14 Severability .................................. 55
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EXHIBIT LIST
Exhibit A -- Form of Trademark Assignment Agreement
Exhibit B -- Form of Intercompany Lease
Exhibit C -- Intentionally Omitted
Exhibit D -- Transition Services Agreement
Exhibit E -- Opinion of Seller's Counsel
Exhibit F -- Opinion of Purchaser's Counsel
Exhibit G -- Description of OSL Building
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and
entered into as of January 21, 1997, by and between Farmers Group, Inc., a
Nevada corporation (the "Seller"), and Great Southern Life Insurance Company, a
Texas corporation (the "Purchaser").
RECITALS
WHEREAS, the Seller owns all of the issued and outstanding
capital stock of each of The Ohio State Life Insurance Company, an Ohio
corporation ("OSL"), and Investors Guaranty Life Insurance Company, a California
corporation ("IGL" and, together with OSL, the "Companies"); and
WHEREAS, the Seller desires to sell, and the Purchaser desires
to purchase, all of the issued and outstanding shares of capital stock of the
Companies upon the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable consider
ation, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The capitalized terms used in this Agreement and
not otherwise defined herein shall have the following meanings:
"Actual Net Income" shall mean, with respect to either or both of the
Companies, an amount equal to (i) the net gain from operations, calculated
in the same manner as line 31, page 4 of each Company's 1995 Annual
Statement, for the period from and including October 1, 1996 to and
including the Closing Date, based on a closing of the books of the Company or
the Companies, as the case may be, as of the close of business on the Closing
Date and calculated in accordance with SAP on an after-tax basis, which, for
this purpose, shall include any gain or loss on the transactions specified
in Section 5.14, minus (ii) any payments made or required to be made by the
Company or the Companies, as the case may be, in connection with
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Taxes attributable to the period from and including October 1, 1996 to and
including the Closing Date, but only to the extent the Taxes to which such
payments relate have not already been taken into account as a deduction in
computing the amount described in clause (i) above, plus (or minus) (iii) that
portion of net realized capital gains (or losses) calculated in the same manner
as line 32, page 4 of each Company's 1995 Annual Statement that is attributable
to the increase (or decrease) in market value of the Transferred Assets from
October 1, 1996 to the Closing Date; provided, however, that the computation of
Actual Net Income shall not take into account the excluded Taxes referred to in
the second sentence of Section 10.1(c).
"Affiliate" shall mean, with respect to any Person, any other
Person that directly, or indirectly through one or more intermediaries,
Controls, is Controlled by, or is under common Control with such Person.
"Agent" shall mean any current or former insurance agent,
general agent, managing general agent, broker, or other similarly situated
person with respect to either Company or of any organization with which either
Company has or had a marketing relationship.
"Annual Statement" shall mean any annual statement of a Company
filed with or submitted to the insurance regulatory authorities of the
state in which such Company is domiciled on a form or forms prescribed
or permitted by such authorities.
"Assigned Trademarks" shall mean the Seller's Assigned Trademarks and
the Companies' Assigned Trademarks.
"Assumed Litigation Matters" shall have the meaning ascribed thereto
in Section 5.18.
"Audit" shall mean any audit, assessment of Taxes, or other
examination by any Tax Authority, or any judicial or administrative
proceeding or appeal of such proceeding relating to Taxes.
"Benefit Plans" shall mean all Employee Pension Benefit Plans, all
Employee Welfare Benefit Plans, all stock bonus, stock ownership, stock
option, stock purchase, stock appreciation rights, phantom stock, and
other stock plans (whether qualified or non-qualified), and all other pension,
welfare, severance, retirement, bonus, deferred compensation, incentive
compensation, insurance (whether life, accident and health, or other and
whether key man, group, workers compensation,
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or other), profit sharing, disability, thrift, day care, legal services,
leave of absence, vacation, sick leave, layoff, and supplemental or excess
benefit plans, and all other written or unwritten benefit contracts, group or
individual arrangements, or procedures having the effect of a plan, whether
or not more than one person is covered, in each case, existing on or
before the Closing Date, under which the Seller or either of the Companies is
or may hereafter become obligated in any manner as an employer or obligated
to any current or former Agent (including without limitation obligations to
make contributions or other payments).
"Business" shall have the meaning ascribed to it in Section 3.23. .
"Business Day" shall mean a day other than Saturday, Sunday, or any day on
which the principal commercial banks located in California are authorized or
obligated to close under the laws of California.
"Claim Notice" shall mean written notification of a Third Party
Claim by an Indemnified Party to an Indemnifying Party pursuant to Section
10.3(a) hereof, enclosing a copy of all papers served, if any.
"Closing" shall mean the closing of the sale and purchase of the
Shares, as provided in Section 2.3 hereof.
"Closing Date" shall mean the second Business Day after the
satisfaction or waiver of all of the conditions to the obligations of the
parties set forth in Articles VII, and VIII hereof, or such other date as
the Purchaser and the Seller may mutually agree upon in writing.
"Closing Date Unrealized Gain" shall mean (i) the market value of the
Portfolio Stocks as of the Closing Date (which shall be equal to the price
paid for the Portfolio Stocks pursuant to Section 5.17), minus (ii) the
Companies' original cost of the Portfolio Stocks.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"commercially reasonable efforts" or "commercially reasonable steps,"
when used with respect to any party, shall mean the reasonable efforts of
such party without the requirement that such party incur any unanticipated (as
of the date hereof) out-of-pocket expenses, including the making of any
capital contribution, or
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incur any other unanticipated (as of the date hereof) burden or commence or
pursue litigation in any action, suit or proceeding, whether
administrative, civil or criminal.
"Companies" shall mean OSL and IGL.
"Companies' Assigned Trademarks" shall have the meaning ascribed to it
in Section 5.11.
"Company" shall mean any one of the Companies.
"Company Benefit Plans" shall mean all Benefit Plans other than Seller
Benefit Plans.
"Company Liabilities" shall have the meaning ascribed to it in Section
5.6(a).
"Confidentiality Agreement" shall mean the letter agreement, dated
October 2, 1996, by and between the Seller and the Purchaser.
"Consideration" shall have the meaning ascribed to it in Section
2.2(a).
"Consideration Adjustment" shall have the meaning ascribed to it in
Section 2.2(b).
"Consideration Adjustment Payment Date" shall have the meaning ascribed
to it in Section 2.2(d).
"Consideration Adjustment Statement" shall have the meaning ascribed to
it in Section 2.2(b).
"Control" (and its derivative terms "Controlled," "Controls," etc.)
shall mean the power and right to direct the management and policies of
another Person, whether by ownership of voting securities, the ability to
elect a majority of the board of directors or other managing board or
committee, management contract, or otherwise.
"Damages" shall mean any and all costs, damages, liabilities, fines,
fees, penalties, interest obligations, deficiencies, losses, and expenses
(including without limitation punitive, treble, or other exemplary or
extra-contractual damages, amounts paid in settlement, interest, court
costs, costs of investigation, reasonable fees and
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expenses of attorneys, accountants, actuaries, and other experts, and other
reasonable expenses of litigation or of any claim, default, or assessment).
"Disclosure Schedule" shall mean the Disclosure Schedule attached
hereto.
"Employee Pension Benefit Plan" shall mean each employee pension
benefit plan (whether or not insured), as defined in Section 3(2) of ERISA,
which is or was in existence on or before the Closing Date, and to which the
Seller or either of the Companies is or would hereafter become obligated
in any manner as an employer, including any similar plan covering any current
or former Agent.
"Employee Welfare Benefit Plan" shall mean each employee welfare
benefit plan (whether or not insured), as defined in Section 3(1) of ERISA,
which is or was in existence on or before the Closing Date, and to which the
Seller or either of the Companies is or would hereafter become obligated
in any manner as an employer, including any similar plan covering any current
or former Agent.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended (including without limitation any successor act), and
the rules and regulations promulgated thereunder.
"ERISA Affiliate" shall mean any Person under common control or a
member of a controlled group of corporations (as defined in Sections 414(b)
and (c) of the Code) with the Seller, the Companies or any of their
subsidiaries.
"Estimated Net Income" shall mean an amount equal to the Seller's
good faith estimate, as certified by the Seller's Chief Financial Officer on
the Closing Date, of the Companies' Actual Net Income.
"Existing Product" shall have the meaning ascribed thereto in Section
3.23.
"Existing Product Holders" shall have the meaning ascribed thereto
in Section 3.23.
"Existing Product Item" shall mean any failure of an Existing
Product to be accorded treatment under the Code that is no less favorable
than the tax treatment under the Code for which such Existing Product was
intended to qualify at the time of its issuance, other than as a result of
(i) changes to the Code which are effective after the Closing Date or (ii) a
ctions undertaken by, or omissions of, an Existing Product Holder that
are contrary to the provisions of an Existing Product.
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"Filing Date" shall have the meaning ascribed to it in Section 2.2(b).
"Financial Statements" shall mean the SAP Statements and the GAAP
Statements.
"Form 8023 Package" shall have the meaning ascribed to it in Section
10.1(g).
"GAAP" shall mean generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
"GAAP Statements" shall mean the financial statements of the Companies
delivered to the Purchaser pursuant to Section 3.8.
"Governmental Authority" shall mean any government or any agency,
bureau, board, commission, court, department,official, political subdivision,
tribunal or other instrumentality of any government, whether federal, state or
local, domestic or foreign.
"Hazardous Materials" shall mean any hazardous or toxic substances,
material or waste that is regulated by any federal authority or by any
state or local governmen tal authority where the substance, material or waste
is located.
"HSR Act" shall mean Section 7A of the ▇▇▇▇▇▇▇ Act (Title II of
the ▇▇▇▇- ▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976), as amended
(including without limitation any successor act), and the rules and
regulations promulgated thereunder.
"IGL" shall mean Investors Guaranty Life Insurance Company, a
California corporation.
"IGL Shares" shall have the meaning ascribed to it in Section 3.4.
"Indemnified Party" shall mean a Person claiming indemnification under
Article X hereof.
"Indemnifying Party" shall mean a Person against whom claims of indem
nification are being asserted under Article X hereof.
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"Indemnity Notice" shall have the meaning ascribed to it in Section
10.3(c) hereof.
"Intercompany Lease" shall have the meaning ascribed to it in Section
5.12.
"Intercompany Liability Statement" shall have the meaning ascribed
to it in Section 5.6 hereof.
"Inter-Party Claim" shall have the meaning ascribed to it in Section
10.3(c).
"IRS" shall mean the United States Internal Revenue Service or any
successor agency.
"Lien" shall mean any mortgage, pledge, assessment, security
interest, lease, sublease, lien, adverse claim, levy, charge, option,
rights of others or restrictions (whether on voting, sale, transfer,
disposition or otherwise) or other encumbrance of any kind, whether imposed by
agreement, understanding, law or equity, or any conditional sale contract,
title retention contract, or other contract to give or to refrain from giving
any of the foregoing, in each case, other than Permitted Encumbrances.
"Material Adverse Effect" shall mean a material adverse effect on the
validity or enforceability of this Agreement, on the ability of the
Seller or the Purchaser to perform its obligations under this Agreement, or on
the business or condition of the Companies, taken together.
"Mediator" shall have the meaning ascribed to it in Section 2.2(c)
hereof.
"NAIC" shall mean the National Association of Insurance Commissioners.
"Order" shall mean any decree, injunction, judgment, order, ruling,
assessment or writ.
"OSL" shall mean The Ohio State Life Insurance Company, an Ohio
corporation.
"OSL Building" shall mean the property described on Exhibit G.
"OSL Shares" shall have the meaning ascribed to it in Section 3.4.
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"Permitted Encumbrances" shall mean the following: (i) Liens for
Taxes or assessments or other governmental charges or levies (a) that
are not yet delinquent, or (b) that are being contested in good faith
and have been adequately reserved for; (ii) pledges or deposits of the type
reflected in the Companies' 1995 Annual Statements on the Schedule of Special
Deposits; (iii) workers', mechanics', suppliers', carriers',
warehousemen's or other similar liens arising in the ordinary course of
business and securing obligations aggregating not in excess of $200,000 at
any time outstanding, not yet due and payable; and (iv) zoning
restrictions, easements, licenses, or other restrictions on the use of
real property or other minor irregularities in title (including leasehold
title) thereto, so long as the same do not materially impair the use,
value, or marketability of such real property, leases or leasehold
estates.
"Person" shall mean any natural person, corporation, general
partnership, limited partnership, proprietorship, trust, union, association,
court, tribunal, agency, government, department, commission,
self-regulatory organization, arbitrator, board, bureau, instrumentality,
or other entity, enterprise, authority, or business organiza tion.
"Portfolio Stocks" shall mean the Companies' common and preferred
stocks.
"Pre-Closing Straddle Period" shall mean with respect to any taxable
period that commences prior to the Closing Date, but ends on or after the
Closing Date, the portion of the taxable period that commences on the first
day of such taxable period and continues up to and including the Closing Date.
"Purchaser" shall mean Great Southern Life Insurance Company, a Texas
corporation.
"Quarterly Statement" shall mean any quarterly statement of a Company
filed with or submitted to the insurance regulatory authorities of the state
in which such Company is domiciled on a form or forms prescribed or
permitted by such authorities.
"Representative" shall mean, with respect to any Person, any director,
officer, employee, agent, advisor, counsel, accountant, actuary, lender
or other representative of such Person or of any Affiliate of such
Person or any Representative of any of the foregoing.
"Reserve Liabilities" shall have the meaning ascribed to it in Section
3.9.
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"Resolution Accountant" shall have the meaning ascribed to it in
Section 10.1(g) hereof.
"SAP" shall mean, with respect to any Company (or its SAP
Statements), the accounting practices required or permitted by the
National Association of Insurance Commissioners and the insurance regulatory
authorities of the state in which such Company is domiciled, consistently
applied throughout the specified period and in the immediately prior comparable
period.
"SAP Statements" shall mean the Annual Statements, the Quarterly
Statements, and other financial statements and presentations of the Companies
delivered to the Purchaser pursuant to Section 3.7 or Section 5.5 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Seller" shall mean Farmers Group, Inc., a Nevada corporation.
"Seller Benefit Plans" shall mean the Benefit Plans set forth in
Section 3.14 of the Disclosure Schedule under the heading "Seller Benefit
Plans."
"Seller Liabilities" shall have the meaning ascribed to it in Section
5.6(a).
"Seller's Assigned Trademarks" shall have the meaning ascribed to it in
Section 5.11.
"Seller's Notice of Objection" shall have the meaning ascribed to it in
Section 2.2(c).
"Services Agreement" shall have the meaning ascribed to it in Section
5.16.
"Shares" shall have the meaning ascribed to it in Section 3.4.
"subsidiary" shall mean, with respect to any Person, any
corporation with respect to which such Person, directly or indirectly
through one or more subsidiaries, owns more than 50% of the outstanding
shares of capital stock having generally the right to vote in the election of
directors.
"Tax" or "Taxes" shall mean all Federal, state, local and
foreign taxes, assessments, and governmental charges (whether imposed
directly or through
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withholdings), including any interest, penalties and additions to Tax applicable
thereto.
"Tax Authority" shall mean the Internal Revenue Service and any other
domestic or foreign governmental authority responsible for the
administration of any Taxes.
"Tax Claim" shall have the meaning ascribed to it in Section 10.1(h)
hereof.
"Tax Returns" shall mean returns, declarations, statements, reports,
schedules, forms and information returns and any amended Tax Return required to
be supplied to a taxing authority in respect of or relating to Taxes.
"Tax Sharing Agreement" shall mean the Tax Sharing Agreement among
the Seller and its subsidiaries provided to the Purchaser under cover of a
letter, dated the date hereof from the Seller to the Purchaser.
"Third Party Claim" shall have the meaning ascribed to it in Section
10.3(a).
"Trademark Agreement" shall have the meaning ascribed to it in Section
5.11.
"Transferred Assets" shall have the meaning ascribed to it in Section
5.17.
"WARN Act" shall have the meaning ascribed to it in Section 6.6.
ARTICLE II
SALE OF SHARES AND CLOSING
2.1 Purchase and Sale. The Seller agrees to sell to the Purchaser,
and the Purchaser agrees to purchase from the Seller, the Shares at the Closing
upon the terms and subject to the conditions set forth in this Agreement.
2.2 Consideration.
(a) The consideration for the OSL Shares and the IGL Shares
(the "Consideration") shall be the sum of (i) $330,085,815, plus (ii) an amount
equal to the Companies' Actual Net Income. The Consideration (calculated for
such purpose by assuming that the Companies' Actual Net Income is equal to the
Estimated Net
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Income), less the amount of any payments made by the Purchaser in respect
thereof concurrently with the execution of this Agreement (and any accrued
interest thereon), shall be payable by the Purchaser at the Closing by
wire transfer in immediately avail able federal funds to such bank and
account as the Seller may specify at least one Business Day prior to the
Closing Date.
(b) The Consideration shall be adjusted after the Closing Date
as follows: (i) if the Companies' Actual Net Income exceeds the Estimated Net
Income, the Purchaser shall pay the Seller an amount equal to such excess; (ii)
if the Estimated Net Income exceeds the Companies' Actual Net Income, the Seller
shall pay the Purchaser an amount equal to such excess; (iii) if the Closing
Date Unrealized Gain is greater than $13,133,646, then the Purchaser shall pay
the Seller an amount equal to the difference; and (iv) if the Closing Date
Unrealized Gain is less than $13,133,646, then the Seller shall pay the
Purchaser an amount equal to the difference; in each case, together with
interest thereon at an annual rate of 8%, accruing from the Closing Date to and
including the date of payment (collectively, the "Consideration Adjustment").
The Purchaser shall calculate the Companies' Actual Net Income and, as soon as
reasonably practicable, but in any event no later than the date (the "Filing
Date") on which both of the Companies have first filed with the insurance
regulatory authorities of the State of Ohio (in the case of OSL) and the State
of California (in the case of IGL) an Annual Statement or Quarterly Statement
that includes financial statements for a period that includes the Closing Date,
the Purchaser shall deliver to the Seller a statement (the "Consideration
Adjustment Statement") setting forth the Companies' Actual Net Income and the
difference between the Companies' Actual Net Income and the Estimated Net
Income, if any. After delivery of the Consideration Adjustment Statement, the
Purchaser shall, and shall cause the Companies to, provide the Seller with
reasonable access to the Companies' books and records sufficient to permit the
Seller to verify the Companies' Actual Net Income.
(c) In the event that the Seller believes that the Purchaser's
calculation of the Companies' Actual Net Income is incorrect, the Seller shall
have the right to challenge such determination in good faith by giving notice of
its objection in writing to the Purchaser within ten Business Days following
delivery of the Consideration Adjustment Statement, setting forth in
reasonable detail the basis for such objection and the Seller's calculation
of the Companies' Actual Net Income (the "Seller's Notice of Objection"). In
the event that the Seller and the Purchaser are unable to agree on the
resolution of such disagreement within ten Business Days following delivery
of the Seller's Notice of Objection to the Purchaser, the Seller and the
Purchaser shall resolve such disagreement in accordance with the following
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procedures. The Purchaser and the Seller shall each select an independent
certified public accountant within ten Business Days after delivery of the
Seller's Notice of Objection for the purpose of selecting a third
independent certified public accountant with a regional or national
accounting practice in the life insurance industry (the "Mediator"). Such
accountants shall mutually select the Mediator and give a written notice to
the Purchaser and the Seller identifying the Mediator, including a
written acceptance of such appointment from the Mediator, within twenty
Business Days after delivery of the Seller's Notice of Objection. The Mediator
shall not have performed services for either the Purchaser or the Seller
within the preceding three years and shall not have testified in any dispute
in which either the Purchaser or the Seller was involved as a party;
provided that the Purchaser and the Seller may waive such restriction in
writing if they mutually agree to such waiver. The Purchaser shall promptly
deliver to the Mediator the Consideration Adjustment Statement, and the
Seller shall promptly deliver to the Mediator the Seller's Notice of
Objection. The Mediator shall review the Consideration Adjustment Statement
and the Seller's Notice of Objection, and each party shall submit to the
Mediator all information reasonably requested by the Mediator to enable the
Mediator to independently resolve the issue which is the subject of the
objection by the Seller. The Mediator shall make its own determination of
the Companies' Actual Net Income, which may not be greater than the
Purchaser's calculation thereof and may not be less than the Seller's
calculation thereof. The Mediator shall issue a written report of its
determination in reasonable detail and shall deliver a copy of such report
to the Seller and the Purchaser within twenty Business Days following
the Mediator's receipt of the Seller's Notice of Objection. The
determination made by the Mediator shall be final and binding and may be
enforced by any court having jurisdiction. The costs of the Mediator's
determination shall be borne by the parties as determined by the Mediator to
be fair, just and equitable. Each party shall bear all costs associated with
its own appointed independent certified public accountant.
(d) The Consideration Adjustment, if any, shall be payable by
the Purchaser or the Seller, as the case may be, within 10 Business Days after
the final determination of the Consideration Adjustment as provided above (the
"Consideration Adjustment Payment Date"). Such payment shall be made by wire
transfer in
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immediately available federal funds to such bank and account as the party
entitled to receive such Consideration Adjustment payment may specify by written
notice received by the party obligated to make such Consideration Adjustment
payment at least one Business Day prior to the Consideration Adjustment Payment
Date.
2.3 Closing. Subject to the provisions of this Agreement, the
Closing shall take place at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at 10:00 a.m., local
time, on the Closing Date. At the Closing, the Seller shall assign and
transfer to the Purchaser good and valid title, and all other rights and
interests, in and to the Shares, free and clear of all Liens. To effect such
assignment and transfer, the Seller shall deliver or cause to be delivered to
the Purchaser certificates representing all of the Shares, accompanied by
duly executed blank stock powers or (at the request of the Purchaser) endorsed
in blank for transfer. The Seller shall execute and deliver to the Purchaser
the Shares and such documents and instruments as are required of the Seller
under the terms and provisions of this Agreement. All such certificates, stock
powers, documents, and instruments shall be in form and content reasonably
satisfactory to the Purchaser. The Purchaser shall pay the Consideration and
deliver such documents and instruments as are required of the Purchaser under
the terms and provisions of this Agreement. All such documents and
instruments shall be in form and content reasonably satisfactory to the
Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser as follows:
3.1 Organization of Seller. The Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Nevada and has the requisite corporate power and corporate authority to
enter into this Agreement and to perform its obligations under this
Agreement. The Seller is duly licensed, qualified or admitted to do business
and is in good standing in all jurisdictions in which it is required to be
so licensed, qualified or admitted to do business by the laws thereof,
except such as would not have a Material Adverse Effect.
3.2 Authority of Seller. The execution and delivery of this
Agreement, the Trademark Agreement, the Intercompany Lease and the Services
Agreement by the Seller and the performance by the Seller of its obligations
under such agreements are within Seller's corporate powers and have been duly
and validly authorized by all necessary corporate action on the part of the
Seller. Each such agreement constitutes a valid and binding obligation of
the Seller and is enforceable against the Seller in accordance with its
terms, except to the extent that enforcement hereof may be limited by or
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect affecting creditors' rights
generally and by general principles of equity (regardless of whether
enforcement is sought in equity or at law).
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3.3 Organization of the Companies. Each of the Companies is
(i) a corporation duly organized as a life insurance corporation, validly
existing, and in good standing under the laws of the State of Ohio (in the case
of OSL) or the State of California (in the case of IGL) and (ii) has all
corporate powers required to carry on its business as now conducted. Each of
the Companies is duly licensed, qualified or admitted to do business as an
insurer and is in good standing in all jurisdictions in which it is
required to be so licensed, qualified or admitted to do business by the laws
thereof, except such as would not have a Material Adverse Effect.
3.4 Capital Stock. The authorized capital stock of OSL consists
solely of 3,000,000 shares of common stock, par value $1.00 per share,
of which 1,997,990 shares are issued and outstanding (the "OSL Shares"). The
authorized capital stock of IGL consists solely of 8,500,000 shares of common
stock, par value $2.00 per share, of which 750,000 shares are issued and
outstanding (the "IGL Shares" and, together with the OSL Shares, the
"Shares"). The Shares have been duly authorized and validly issued, are
fully paid and nonassessable and free of preemptive rights and are owned
beneficially and of record by the Seller, free and clear of all Liens,
except as disclosed in the Disclosure Schedule, which Liens shall be
released at or prior to the Closing. Except as provided by this Agreement or
as disclosed in the Disclosure Schedule, there are no outstanding obligations,
securities, options, contracts or other rights that give any Person the right
to purchase or acquire any shares of capital stock of the Companies (or any
other interest therein).
3.5 Subsidiaries. Neither of the Companies has any subsidiaries.
3.6 Conflicts or Violations. Except as set forth in the
Disclosure Schedule, neither the execution and delivery of this Agreement by
the Seller, the consummation by the Seller of the transactions contemplated
hereby, nor the perfor ▇▇▇▇▇ by the Seller of its obligations hereunder will:
(a) subject to obtaining the approvals, authorizations
and clearances, and making the filings, contemplated by Sections 5.1, 5.2, 6.1
and 6.2 hereof prior to the Closing Date, violate any term or provision of
any law or any writ, judgment, decree, injunction, or similar order
applicable to the Seller or either of the Companies or require any action by
or in respect of, or filing with any governmental body, agency or official on
the part of the Seller;
(b) conflict with or result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default under,
any of the terms,
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conditions or provisions of the Articles of Incorporation or Bylaws of the
Seller or either of the Companies; or
(c) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default under, or give rise to any
right of termination, cancellation or acceleration, or result in the creation of
any Lien under, any contract to which either of the Companies or the Seller is a
party or by which any of their assets or properties may be bound;
except, in each case, such as would not have a Material Adverse Effect;
provided, however, that to the extent that the accuracy of the representations
contained in paragraphs (a) and (c) of this Section 3.6 is affected by the
decision of the United States Supreme Court in ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life
Insurance Co. ▇. ▇▇▇▇▇▇ Trust and Savings Bank, ▇▇▇ ▇. ▇▇. ▇▇▇ (1993), such
representations are made to the knowledge of the Seller.
3.7 SAP Statements. The Seller has previously delivered to the
Purchaser true and complete copies of the following SAP Statements:
(a) an Annual Statement of each of the Companies for each of
the years ended December 31, 1993, 1994 and 1995 (and the notes, exhibits and
schedules relating thereto and any affirmations and certifications filed
therewith);
(b) audited statements of admitted assets, liabilities, and
capital and surplus (statutory basis) of each of the Companies as of December
31, 1993, 1994 and 1995, and the related summaries of operations, statements of
capital and surplus and cash flow (statutory basis) for the years then ended,
together with the notes related thereto; and
(c) a Quarterly Statement of each of the Companies for the
nine- month period ended September 30, 1996 (and the exhibits and schedules
relating thereto).
Each such Annual Statement and Quarterly Statement complied in all material
respects with all applicable laws when so filed and was timely filed with all
required insurance regulatory authorities. No deficiencies, other than as set
forth in the Disclosure Schedule, have been asserted or are otherwise known by
the Seller with respect thereto. Each of the SAP Statements (and the exhibits
and schedules relating thereto), including, without limitation, each statement
of assets, liabilities, surplus and other funds (statutory basis) and each of
the summaries of operations, statements
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of capital and surplus and cash flow (statutory basis) contained in the SAP
Statements, was prepared in accordance with SAP applied on a consistent basis
(except for changes, if any, disclosed therein) and is complete in all
material respects, and each such Annual Statement and Quarterly Statement
fairly presents (in accordance with SAP) the financial condition of the
Company to which it relates as of the date thereof, or its results of
operations or cash flows, as the case may be, for and during the period
covered thereby.
3.8 GAAP Statements. The Seller has previously delivered to the
Purchaser the following GAAP Statements:
(a) an audited balance sheet of each of the Companies as of
Decem ber 31, 1993, 1994 and 1995, and the related audited statements of
operations, shareholders' equity, and cash flow for the years then ended,
together with the notes related thereto; and
(b) an unaudited balance sheet of each of the Companies as of
September 30, 1996, and the related unaudited statement of income and
shareholders' equity for the period then ended.
Each such GAAP Statement (and, in the case of the audited GAAP Statements, the
notes relating thereto) was prepared in accordance with GAAP applied on a
consistent basis (except for changes, if any, disclosed therein), and fairly
presents (in accordance with GAAP) the financial position of the Company to
which it relates as of the date thereof or the related results of operations,
shareholder's equity or cash flow (if included in such GAAP Statements) of the
Company to which it relates for and during the period covered thereby.
3.9 Reserves. Except as disclosed in the Disclosure Schedule,
all reserves and other liabilities with respect to insurance and annuities
and for claims and benefits incurred but not reported ("Reserve
Liabilities"), as established or reflected in the SAP Statements of each of
the Companies, have been determined in accordance with generally accepted
actuarial standards (as adopted by the Actuarial Standards Board and the NAIC,
including but not limited to Actuarial Guidelines as found in the Financial
Condition Examiners Handbook) consistently applied, are fairly stated in
accordance with sound actuarial principles, are based on actuarial
assumptions that are in accordance with those called for by the provisions of
the related insurance and annuity contracts and in the related reinsurance,
coinsurance and other similar contracts, meet the requirements of the
insurance laws and regulations of the State of Ohio (in the case of OSL) or the
State of California (in
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the case of IGL), and are at least as great as the minimum aggregate amounts
required for the conduct of business in any other states in which it is
licensed, and adequate provision for all such Reserve Liabilities has been
made (in accordance with SAP). Each of the Companies owns assets that
qualify as admitted assets under applicable laws in an amount at least equal
to such Company's Reserve Liabilities.
3.10 Absence of Changes. Except as disclosed in the Disclosure
Schedule or in the Financial Statements, or as contemplated in this
Agreement, since December 31, 1995, (a) there has not been, occurred, or
arisen any change in, or any event (including without limitation any
damage, destruction, or loss, whether or not covered by insurance),
condition, or state of facts of any character that, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect, (b) the Companies have operated only in the ordinary course of
business consistent with past practice, and (c) without limiting the
generality of the foregoing, neither of the Companies has:
(i) declared, set aside or paid any dividend
or other distribution in respect of its capital stock, or redeemed,
purchased or otherwise acquired any of its capital stock;
(ii) created any Lien on or in any of its assets or
properties or assumed any Lien with respect to any of its assets or properties,
which Lien relates to liabilities that, individually or in the aggregate,
exceed $200,000;
(iii) incurred any liability for borrowed money that,
individu ally or in the aggregate, exceeds $200,000;
(iv) suffered any damage, destruction or loss
(whether or not covered by insurance) affecting any of its assets or
properties, which damage, destruction or loss, individually or in the
aggregate, exceeds $200,000;
(v) suffered the termination or lapse of, or
otherwise failed to preserve, any material license or permit;
(vi) amended its Articles of Incorporation or Bylaws;
(vii) entered into, amended or terminated any
reinsurance, coinsurance or other similar contract; or
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(viii) entered into any contract or agreement to take
any of the actions set forth in paragraphs (i) through (vii) of this Section
3.10.
3.11 Taxes. Except as disclosed in the Disclosure Schedule:
(a) all Federal and state income Tax Returns and
other material income Tax Returns required to be filed by or on behalf of OSL
and IGL have been filed, and all such returns are true, complete and
correct in all material respects;
(b) there are no Liens in respect of Taxes upon the
properties of OSL and IGL, except for Liens in respect of property
Taxes not yet delinquent; and
(c) neither OSL nor IGL is a party to, is bound by, or has
any obligation under any tax sharing contract, other than the Tax Sharing
Agreement.
3.12 Litigation. Except as disclosed in the Disclosure Schedule, there
are no actions, suits, investigations or proceedings pending or, to the
knowledge of the Seller, threatened, against the Seller or the Companies that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
3.13 Compliance With Laws. Except as disclosed in the Disclosure
Schedule, neither of the Companies is in violation of any law or any writ,
judgment, decree, injunction or similar order applicable to it, except such as
would not reasonably be expected to have a Material Adverse Effect.
3.14 Benefit Plans and Employee Matters. The Disclosure Schedule sets
forth under the headings "Seller Benefit Plans" and "Company Benefit Plans" a
complete and correct list of all Seller Benefit Plans and Company Benefit
Plans, respectively, copies of which, including all amendments, summary plan
descriptions and any other written summaries or communications relating
thereto, have been made available to the Purchaser. Each of the Benefit Plans
has been administered in accordance with its terms and with all applicable
material provisions of ERISA, the Code and other applicable Federal and state
laws. Except as disclosed in the Disclosure Schedule, neither of the Companies
(a) has any liability under or in connection with any past or present Benefit
Plan maintained by, or contributed to by or on behalf of, the Seller or the
Companies that has not been, and will not have been as of the Closing, paid or
assumed by the Seller or an ERISA Affiliate of the Seller (other than the
Companies) which exceeds $100,000 in the aggregate, or (b) has any liability
direct or indirect to any employees or Agents of the Seller or any employees or
Agents of any Affiliate of the Seller (other than the Companies).
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Neither of the Companies is a party to or bound by any collective bargaining or
similar labor contract.
3.15 Properties. Except for the Transferred Assets, and as
disclosed in the Disclosure Schedule:
(a) each of the Companies has good, valid and marketable
title in fee simple to, or has a valid leasehold interest in, free and clear
of all Liens, all real property currently used in the conduct of its
business and operations;
(b) each of the Companies has good and marketable title
to, or has legally enforceable rights to use, all tangible personal property
that is (i) used in the conduct of its business and operations, other than
tangible personal property owned by the Seller or one of its Affiliates
(other than the Companies) which is set forth on the Disclosure Schedule, or
(ii) carried for value on its books and records, in each case, free and clear
of all Liens, and all such tangible personal property is, except for
reasonable wear and tear, in good operating condition and repair and is
suitable for its current uses; and
(c) each of the Companies has the right to use, free and
clear of any royalty or other payment obligations, claims of infringement or
alleged infringement, or other Liens, all marks, names, trademarks,
service marks, patents, patent rights, copyrights, trade names and service
marks and, to the Seller's knowledge, assumed names, unregistered logos and
trade secrets, that are used in the conduct of its business and operations
other than the Assigned Trademarks.
3.16 Contracts. The Disclosure Schedule sets forth a true and
complete list of each of the following contracts that are currently in
effect and to which either of the Companies is a party, or by which any of
the assets or properties of either of the Companies is bound:
(a) each agency or consultation contract that is
not terminable without penalty or other liability (other than liabilities
previously accrued thereunder) upon 90 days' or less notice;
(b) each contract containing any provision or
covenant limiting the ability of either of the Companies to engage in
any line of business or to compete with or to obtain products or services
from any Person or, to the knowledge of the Seller, limiting the ability
of any Person to compete with or to provide products or services to either of
the Companies;
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(c) each partnership, joint venture, profit-sharing, or
similar contract with any Person;
(d) each contract relating to (i) the borrowing of
money by either of the Companies or (ii) the direct or indirect guarantee by
either of the Companies of any obligation of any other Person for borrowed
money that, in either case, exceeds $200,000;
(e) each lease or sublease of real property used
in the business and operations of either of the Companies, and each lease,
sublease or rental or use contract for which either of the Companies is
liable, in each case, that (i) is not terminable by either of the Companies
without penalty or other liability (other than liabilities previously accrued
thereunder) upon 90 days' or less notice and (ii) requires annual payments by
the Companies of more than $200,000;
(f) each contract relating to the future
disposition or acquisition by either of the Companies of any assets or
properties of any Person or of any interest in any business enterprise (other
than the disposition or acquisition of investments in the ordinary course
of business and consistent with past practice) that involves consideration in
excess of $200,000;
(g) each contract to which the Seller or any Affiliate
of the Seller (other than the Companies) is a party (including, without
limitation, those relating to allocations of expenses, personnel, services, or
facilities);
(h) each assumption reinsurance (as the ceding or
assuming company), reinsurance, coinsurance or other similar contract
providing for the transfer or sharing of liabilities with respect to in-force
insurance business, and each trust agreement or other security agreement
related thereto, indicating, with respect to each such contract (by
reinsurer or coinsurer) or security agreement, the information required to be
disclosed in Schedule S of an Annual Statement;
(i) each contract or arrangement pursuant to which any
Person guaran tees an obligation of either of the Companies in excess of
$200,000, or pursuant to which either of the Companies guarantees any
obligation of another Person in excess of $200,000; and
(j) each contract not disclosed pursuant to the
foregoing clauses (a) through (i) that involves the payment or potential
payment, pursuant to the terms of such contract, by or to the Companies of
more than $200,000, or that is otherwise
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material to the business or condition of the Companies, other than an
insurance policy, annuity or other contract entered into in the ordinary
course of business.
Neither of the Companies nor, to the knowledge of the Seller, any other party to
any contract set forth on the Disclosure Schedule pursuant to this Section 3.16,
is currently in violation, breach or default under any such contract or, with or
without notice or lapse of time or both, would be in violation or breach of or
default under any such contract, except such as would not have a Material
Adverse Effect.
3.17 Licenses and Permits. Except as disclosed in the
Disclosure Schedule, each of the Companies owns or holds all licenses,
franchises, permits, approvals, authorizations, exemptions,
classifications, certificates, registrations and similar documents or
instruments that are required for its business and operations.
3.18 Operations Insurance. The Disclosure Schedule sets forth a
true and complete list and description (including, without limitation, the
names of the insurers and coverage thereof) of all self insurance
programs (formal programs for the payment or absorption of losses) and all
casualty, liability, property, workers compensation, directors and
officers liability and other insurance contracts that insure the business
and operations of either of the Companies or affect or relate to the
ownership, use or operation of any of the Companies' assets or properties
and (a) that have been issued to the Companies or (b) that are held by the
Seller or by any Affiliate of the Seller (other than the Companies) for the
benefit of the Companies. All such insurance is in full force and effect. All
premiums due with respect to such insurance for all periods up to and
including the Closing Date will have been paid as of such date and no notice
of cancellation or termination has been received with respect to any such
policy. All such policies of insurance will remain in full force and effect
through the Closing Date; provided, however, that the policies referred to
in the foregoing clause (b) may be terminated, or otherwise cease to be in
full force and effect, as of the close of business on the Closing Date
3.19 Intercompany Liabilities. Except as reflected in the
Financial Statements or as disclosed in the Disclosure Schedule, or as
provided under Sec tion 10.1 of this Agreement, there are no liabilities,
contracts or commitments between either of the Companies, on the one
hand, and the Seller or any Affiliate of the Seller (other than the
Companies), on the other, except for liabilities arising under the Tax
Sharing Agreement and liabilities that have been incurred on a basis
consistent with past practice. Except as disclosed in the Disclosure
Schedule, since September 30, 1996, no such intercompany liabilities
have been paid, and no
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settlements of such intercompany liabilities have been made except
intercompany liabilities that have been paid or settled on a basis consistent
with past practice.
3.20 Bank Accounts. The Disclosure Schedule sets forth (a) a
true and complete list of the names and locations of all banks, trust
companies, securities brokers and other financial institutions at which
either of the Companies has an account or safe deposit box or maintains a
banking, custodial, trading or other similar relationship, and (b) a true
and complete list and description of each such account, box and
relationship, indicating, in each case, the account number and the names of
the employees authorized to transact business with respect thereto.
3.21 Brokers. Except as disclosed in the Disclosure Schedule,
all negotiations with respect to this Agreement and the transactions
contemplated hereby have been carried out by the Seller directly with the
Purchaser, without the intervention of any Person on behalf of the
Seller (other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated) in such manner as to
give rise to any valid claim by any Person against the Purchaser or the
Companies for a finder's fee, brokerage commission, or similar payment. Any
claims or obligations with respect to the items required to be set forth in
the Disclosure Schedule pursuant to this Section 3.21 (including the
fees and expenses of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated) are the
responsibility of and shall be paid by the Seller.
3.22 Environmental. To the knowledge of the Companies, except as
disclosed in the Disclosure Schedule, or such as would not have a Material
Adverse Effect:
(a) there are no underground storage tanks located on the
real property currently owned by the Companies (as used in this Section, the
"real property"), in which any Hazardous Material is being stored, whether or
not any such tank is itself regulated, nor has there been any spill, disposal,
discharge or release of any Hazardous Material into, on, from or over that
real property or into surface or ground water on or under that real
property that would reasonably be expected to result in liability for the
Companies;
(b) there are no asbestos-containing materials or
lead-based paints incorporated into the buildings or interior improvements on
any of that real property, nor is there any electrical transformer owned by
either of the Companies that contains regulated levels of PCBs;
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(c) none of that real property has been or is used as a
treatment, storage or disposal ("TSD") facility, as defined and regulated under
the Resource Conservation and Recovery Act, 42 U.S.C. ▇▇.▇▇. 6901 et seq.;
(d) there has not been on any of that real property any
prior use that would make applicable the notice or prior approval requirements
of any environmental statute or regulation as a result of this transaction,
of any action contemplated by this Agreement, or in the event of any
"change of control" resulting from this transaction; and
(e) neither of the Companies has disposed of, or
arranged for the transportation or disposal of "hazardous substances" as
defined by the Comprehensive Response Compensation and Liability Act of 1980,
as amended.
3.23 Insurance and Annuity Business.
(a) Except as disclosed in the Disclosure Schedule
or otherwise described in this Agreement, since the Seller acquired the
Companies, the Companies have not been involved in any type of business
activities other than the life insurance and annuity business (collectively,
the "Business").
(b) Except as disclosed in the Disclosure Schedule:
(i) no outstanding insurance or annuity
contract issued, reinsured or underwritten by either of the Companies
that is part of such Company's Business entitles the holder thereof or any
other person or entity to receive dividends, distributions or other benefits
based on the revenues or earnings of such Company or any other entity;
(ii) except for Existing Product Items (with
respect to which the Seller shall indemnify the Purchaser pursuant to
Section 10.1(k)), all currently outstanding insurance, annuity or
investment policies, plans or contracts, financial products,
employee benefit plans, individual retirement accounts, or any similar or
related policy, contract, plan or product, whether individual, group or
otherwise, included in the Business of OSL or IGL and issued, prior to the
Closing Date, by either Company as products having tax attributes under the
Code favorable to the purchaser, policyholder, or intended beneficiary
thereof (an "Existing Product") are eligible for tax treatment that is no less
favorable to such purchaser, policyholder, or beneficiary ("Existing Product
Holders") than the tax treatment under the Code for which such Existing Product
was intended to qualify at the time of its issuance,
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except for any failure to qualify for such treatment that results from (x)
changes to the Code which are effective after the Closing Date or (y)
actions undertaken by, or omissions of, an Existing Product Holder that are
contrary to the provisions of an Existing Prod uct;
(iii) all insurance policies or contracts,
including annuities, that are included in the Companies' respective
businesses and all certificates, forms, applications, advertising materials
and rates or rules are in compliance with all applicable laws and regulations
(other than compliance with tax laws and regulations which is covered by
(ii) immediately above), except where non-compliance would not have a
Material Adverse Effect on such Company; and
(iv) the insurance and annuity business of
each Company has been issued in conformity with such Company's
underwriting standards and, with respect to such business reinsured in
whole or in part, conforms to the standards agreed to with the reinsurer in
the related reinsurance, coinsurance or other similar contracts.
3.24 Agents. Except as disclosed in the Disclosure Schedule, with
respect to each Company:
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(a) each Agent of such Company, at the time such Agent
wrote, sold or produced the business of such Company, was duly licensed as an
insurance agent (for the type of business written, sold or produced by such
Agent) in the particular jurisdiction in which such Agent wrote, sold or
produced such business, except in isolated instances where the failure to
have such license would not have a Material Adverse Effect on such business;
(b) no Agent has, to the knowledge of the Seller or either
of the Companies, violated (or with or without notice or lapse of time or
both, would have violated) any term or provision of any law, regulation or
any writ, judgment, decree, injunction or similar order applicable to the
writing, sale or production of the business of such Company, except where such
violation would not have a Material Adverse Effect on such business; and
(c) all payments due to Agents with respect to each
Company's insurance or annuity business are described in the Agent
contracts, forms of each variant of such contracts have been provided to
the Purchaser by the Seller.
3.25 Actuarial Information. The Seller has previously delivered
to the Purchaser the report of the actuarial firm of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
Inc. dated September 25, 1996, as amended, regarding the Companies'
businesses. The following information provided to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
Inc. upon which such report was based was prepared in accordance with normal
practices in the life insurance industry and the Companies' past practices and
is consistent with the Companies' respective SAP statements: (i) information
about such policies in force, including amount of insurance, gross premiums,
cash values, statutory and tax reserve factors, policy benefits, and commission
rates; and (ii) information with respect to each Company's historical mortality
and persistency experience. The information provided to Milliman & ▇▇▇▇▇▇▇▇▇,
Inc. with respect to inventory of each Company's life insurance and annuity
policies in force as of June 30, 1996 is accurate except for any inaccuracy
that would not result in a material adverse change in the matters presented in
such report.
3.26 Conduct of Business. Since September 30, 1996, except as
disclosed in the Disclosure Schedule, the Companies have conducted their
respective businesses in the ordinary course and consistent with past practice,
and without limiting the generality of the foregoing, have not, during such
period, engaged in any activity of the kind which is prohibited by Section
5.4, and have taken all affirmative actions of the kind that are required by
Section 5.4, except for any actions or activities prior to January 17, 1997
that would be prohibited by Section 5.4(j).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller as follows:
4.1 Organization of the Purchaser. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Texas and has the requisite corporate power and corporate
authority to enter into this Agreement and to perform its obligations under
this Agreement. The Purchaser is duly licensed, qualified or admitted to
do business and is in good standing in all jurisdictions in which it is
required to be so licensed, qualified or admitted to do business by the laws
thereof, except such as would not have a Material Adverse Effect.
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4.2 Authority of Purchaser. The execution and delivery of
this Agreement by the Purchaser and the performance by the Purchaser
of its obligations under this Agreement have been duly and validly
authorized by all necessary corporate action on the part of the
Purchaser. This Agreement constitutes a valid and binding obligation of the
Purchaser and is enforceable against the Purchaser in accordance with its
terms, except to the extent that enforcement hereof may be limited by or
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect affecting creditors' rights
generally and by general principles of equity (regardless of whether
enforcement is sought in equity or at law).
4.3 Conflicts or Violations. Neither the execution and delivery of
this Agreement by the Purchaser, the consummation by the Purchaser
of the transactions contemplated hereby, nor the performance by the
Purchaser of its obligations hereunder will:
(a) subject to obtaining the approvals, authorizations
and clearances, and making the filings, contemplated by Sections 5.1 and
5.2 and Sections 6.1 and 6.2 hereof prior to the Closing Date, violate
any term or provision of any law or any writ, judgment, decree, injunction, or
similar order applicable to the Purchaser;
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(b) conflict with or result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default under,
any of the terms, conditions, or provisions of the Articles or Certificate of
Incorporation, Bylaws or other organizational documents of the Purchaser; or
(c) result in a violation or breach of, or constitute (with
or without notice or lapse of time or both) a default under, or give rise to
any right of termination, cancellation, or acceleration, or result in the
creation of any Lien under, any contract to which the Purchaser is a party
or by which any of its assets or properties may be bound;
except, in each case, such as would not have a Material Adverse Effect;
provided, however, that to the extent that the accuracy of the representations
contained in paragraphs (a) and (c) of this Section 4.3 is affected by the
decision of the United States Supreme Court in ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life
Insurance Co. ▇. ▇▇▇▇▇▇ Trust and Savings Bank, ▇▇▇ ▇. ▇▇. ▇▇▇ (1993), such
representations are made to the knowledge of the Purchaser.
4.4 Litigation. There are no actions, suits,
investigations or proceedings pending or, to the knowledge of the Purchaser,
threatened against the Purchaser that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.
4.5 Purchase for Investment. The Shares to be acquired under the
terms of this Agreement will be acquired by the Purchaser for its own account
for the purpose of investment and not for the purpose of a "distribution,"
within the meaning of the Securities Act. The Purchaser will not transfer
or otherwise dispose of any of the Shares acquired by it, or any interest
therein, in any manner that would violate any provision of the Securities Act
or any applicable state securities law. The Purchaser agrees that the
certificates representing the Shares may bear legends to the effect
that the Shares have not been registered under the Securities Act or
state securities laws, and that no interest therein may be transferred or
otherwise disposed of in violation of the provisions thereof.
4.6 Brokers. All negotiations with respect to this Agreement
and the transactions contemplated hereby have been carried out by the Purchaser
directly with the Seller, without the intervention of any Person on
behalf of the Purchaser in such manner as to give rise to any valid claim
by any Person against the Seller, the
Companies or any of the Seller's subsidiaries for a finder's fee, brokerage
commis sion, or similar payment.
4.7 Financial Capacity. The Purchaser has the financial capacity to
consummate the transactions contemplated hereby, including, without limitation,
sufficient financing to pay the Consideration at the Closing, as well as all
other costs and expenses incurred by it in connection therewith. The Purchaser
has fully disclosed to the Seller its plan for financing the transactions
contemplated hereby.
ARTICLE V
COVENANTS OF THE SELLER
5.1 Regulatory and Other Approvals. The Seller shall, and shall cause
each of the Companies to, (a) take all commercially reasonable steps necessary
or desirable, and proceed diligently and in good faith and use all commercially
reasonable efforts to obtain, as promptly as practicable, all approvals required
by any applicable contract of the Seller or the Companies to consummate the
transactions contemplated hereby, (b) take all reasonable steps necessary or
desirable, and proceed diligently and in good faith and use best efforts to
obtain, as
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promptly as practicable, all approvals, authorizations and clearances of
governmental and regulatory authorities required of the Seller or the
Companies to permit the Seller to consummate the transactions contemplated
hereby, (c) provide such other information and communi cations to such
governmental and regulatory authorities as the Purchaser or such authorities
may reasonably request and (d) cooperate with the Purchaser in obtaining, as
promptly as practicable, all approvals, authorizations, and clearances of
govern mental or regulatory authorities and others required of the Purchaser
to consummate the transactions contemplated hereby, including, without
limitation, any required approvals of the insurance regulatory authorities of
the States of Ohio and California; provided, however, that in no case shall
the Seller be under any obligation pursuant to this Section 5.1 or Section 5.2
to incur costs or expenses or suffer conditions that, individually or in the
aggregate, are materially burdensome.
5.2 HSR Filings. The Seller shall (a) take promptly all actions
necessary to make the filings required of the Seller or its Affiliates under
the HSR Act, (b) comply at the earliest practicable date with any request
for additional information received by the Seller or its Affiliates from the
Federal Trade Commission or Antitrust Division of the Department of Justice
pursuant to the HSR Act, (c) cooperate with the Purchaser in connection with
the Purchaser's filings under the HSR Act and (d) request early termination of
the applicable waiting period.
5.3 Investigation by the Purchaser. Prior to the Closing, the Seller
shall provide, and shall cause the Companies to provide, to the Purchaser,
its lenders, and their respective counsel, accountants, actuaries and
other Representatives, access, upon reasonable notice and during normal
business hours, to employees of the Seller and the Companies, and to the
facilities, accountants, actuaries, assets, properties and books and
records of the Companies and shall furnish the Purchaser and such other
Persons during such period with all such information and data (including
without limitation copies of contracts and other books and records) concerning
the business and operations of the Companies as the Purchaser or any of such
other Persons may reasonably request, except to the extent that the
disclosure of any such information could result in the waiver of any
attorney-client privilege, in which event the Seller shall so advise the
Purchaser; provided, however, that all information disclosed to the Purchaser
and such other Persons pursuant hereto shall be subject to the terms of the
Confidentiality Agreement.
5.4 Conduct of Business. Except as otherwise provided in this Agreement
or as may be consented to in writing by the Purchaser, prior to the Closing,
the Seller shall cause each of the Companies to conduct its business only
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in the ordinary course and consistent with past practice, and, without
limiting the generality of the foregoing, the Seller shall cause each of the
Companies:
(a) to use all commercially reasonable efforts to (i)
preserve intact its present business organization, reputation and
policyholder or customer relations, (ii) keep available the services of
its key employees, agents, consultants and other similar representatives,
(iii) maintain all material licenses, qualifications and authorizations to
do business in each jurisdiction in which it is so licensed, qualified
or authorized, (iv) comply with all terms of all material contracts to which
it is a party or by which any of its assets or properties is or may be
bound, and (v) maintain all of its assets and properties in good working
order and condition, ordinary wear and tear excepted;
(b) to maintain its books and records in the usual manner and
consistent with past practice with no material changes in any underwriting,
investment, actuarial, financial reporting or accounting practice or policy;
(c) to prepare and file all Tax Returns required to be filed by
it prior to the Closing Date, and pay all Taxes indicated on such Tax
Returns or otherwise due and payable prior to the Closing Date, unless such
Taxes are being contested in good faith and adequate reserves have been
established on its books and records;
(d) to comply in all material respects with all laws applicable
to its business and operations;
(e) not to merge, consolidate or combine with any other Person,
or to liquidate, dissolve or reorganize;
(f) not to amend its Articles of Incorporation or Bylaws;
(g) not to issue any shares of its capital stock or other
equity securities or enter into any contract to issue any such shares or
other equity securities;
(h) not to pay any dividend or other distribution in
respect of its capital stock, or redeem, purchase or otherwise acquire any of
its capital stock (it being understood that payments made pursuant to the Tax
Sharing Agreement are not dividends or distributions);
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(i) not to incur any indebtedness for borrowed money
other than intercompany liabilities owed by the Companies to the Seller or an
Affiliate of the Seller that are incurred and paid in the ordinary course
of business and consistent with past practice; and
(j) to refrain from selling any investment assets, other than
cash and cash equivalents, except as consented to in writing by the Purchaser;
provided, however, that the receipt of principal payments on securities which
are made at the option of the issuer or are paid in accordance with their
terms shall not constitute a sale of assets.
5.5 Financial Statements. As promptly as practicable after an
Annual Statement or Quarterly Statement is filed by either of the Companies
after the date hereof and prior to the Closing Date, the Seller shall
deliver to the Purchaser a copy of such Annual Statement or Quarterly
Statement and a copy of the Companies' financial statements prepared in
accordance with GAAP for the same periods, which, in the case of the 1996
year-end statements, shall be audited.
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5.6 Intercompany Liabilities. (a) Prior to the Closing, the Seller shall
continue to provide services for, and enter into transactions with, the
Companies consistent with past practice. Except as otherwise specifically
provided herein or in the Trademark Agreements, the Intercompany Lease or the
Services Agreement, as of the Closing Date, the Seller shall terminate, and
shall cause its Affiliates to terminate, all contracts, arrangements and
transactions between either of the Companies, on one hand, and the Seller or any
Affiliate of the Seller (other than the Companies), on the other. At least ten
(10) days prior to the Closing Date, the Seller shall deliver to the Purchaser a
bona fide estimate of (i) all liabilities (the "Company Liabilities") owed by
the Companies to the Seller or any Affiliate of the Seller (other than the
Companies) as of the Closing Date, and (ii) all liabilities (the "Seller
Liabilities") owed by the Seller or any Affiliate of the Seller (other than the
Companies) to the Companies as of the Closing Date. Within 60 calendar days
after the Closing, the Seller shall deliver to the Purchaser a complete list and
description (the "Intercompany Liability Statement") in reasonable detail
(including dollar amounts) of the Company Liabilities and the Seller
Liabilities. If the Company Liabilities exceed the Seller Liabilities, within 30
calendar days of receipt of the Intercompany Liability Statement, the Purchaser
shall pay, or cause the Companies to pay, the amount of such excess, except as
otherwise provided under Section 10.1 of this Agreement. If the Seller
Liabilities exceed the Company Liabilities, within 30 calendar days of delivery
of the Intercompany Liability Statement, the Seller shall pay or cause its
Affiliates to pay, the amount of such excess.
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(b) In accordance with the provisions of the preceding paragraph, the
Seller shall cause the Tax Sharing Agreement to be terminated with respect to
the Companies as of the Closing Date. In addition, effective as of the Closing
Date: (i) Seller shall, and Seller shall cause each of its Affiliates other than
the Companies to, release each of the Companies from any and all further
liability and obligation to make any payments of any kind whatsoever to the
Seller or to any of such Affiliates under the Tax Sharing Agreement, other than
payments shown on the Intercompany Liability Statement; and (ii) each of the
Companies shall release the Seller and each of its Affiliates other than the
Companies from any and all further liability and obligation to make any payments
of any kind whatsoever to either of the Companies under the Tax Sharing
Agreement, other than any credits reflected on the Intercompany Liability
Statement. Each of the parties shall, and the Purchaser and the Seller shall
cause their Affiliates other than the Companies to, execute and deliver at the
Closing all documentation reasonably requested by the other to effectuate the
provisions of this paragraph. These provisions shall, notwithstanding any other
provisions in this Agreement, survive the Closing without limitation as to time.
5.7 Resignations of Directors. The Seller shall cause each member
of the Board of Directors of the Companies to tender, effective at the
Closing, his or her resignation from such Board of Directors.
5.8 Books and Records. After the Closing, the Seller shall deliver
to the Purchaser, or make available to the Purchaser copies of, all books and
records of the Companies in the possession of the Seller or any of its
Affiliates (other than the Companies).
5.9 Notice and Cure. Prior to the Closing, the Seller shall notify
the Purchaser promptly in writing of, and shall use all commercially
reasonable efforts to cure before the Closing, any event, transaction, or
circumstance occurring after the date of this Agreement that causes or
will cause any covenant or agreement of the Seller under this Agreement to be
breached, or that renders or will render untrue any representation or
warranty of the Seller contained in this Agreement as if the same were made
on or as of the Closing Date.
5.10 Employee Matters. From and after the Closing, each of the
Companies shall cease to be a participating employer under any of the
Seller Benefit Plans, in accordance with the terms of such plans, and the
Seller shall take all such action as is necessary, on its part, to
effect such cessation of participation and accrual. The Seller agrees that
such cessation shall not limit or adversely affect the
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future participation of retired or former employees or Agents of the
Companies (or of their "qualified beneficiaries") who have elected,
prior to, or as of, the Closing Date, (a) to participate in the Seller's
retiree health and life insurance plan(s), or (b) to continue group health
insurance coverage under the provisions of Section 4980B(f) of the Code
(commonly referred to as "COBRA"), and the Seller shall retain all, and
the Purchaser and the Companies shall have no, responsibility or
liability in connection therewith. Except as otherwise provided in Section
6.6, the Seller shall assume or retain, as the case may be, all liabilities
under the Seller Benefit Plans, including but not limited to benefits
accrued by employees, Agents and former employees and Agents of the Companies
prior to, or as of, the Closing Date. The Seller shall honor or cause its
insurance carriers to honor all claims for benefits by a current or
former employee or Agent of the Companies under any of the Seller Benefit
Plans that is an Employee Welfare Benefit Plan, with respect to claims
incurred prior to, or as of, the Closing Date.
5.11 Trademark Agreements. At or prior to the Closing, the Seller
shall enter into a Trademark Assignment Agreement, substantially in the form of
Exhibit A hereto (each, a "Trademark Agreement"), with each of the Companies,
providing for (a) the transfer to the Seller or its Affiliates of any and
all of such Company's rights in and to those names, marks, logos,
designs and other intellectual property associated with the Seller and its
Affiliates other than the Companies (in each case, the "Seller's Assigned
Trademarks"), and (b) the transfer to such Company of any and all of the
Seller's rights in and to those names, marks, logos, designs and other
intellectual property associated with such Company (in each case, the
"Companies' Assigned Trademarks").
5.12 Intercompany Lease. At or prior to the Closing, the Seller
shall cause F.I.G. Holding Company and OSL to enter into a lease relating to
office space in the OSL Building, substantially in the form of Exhibit B
hereto (the "Intercompany Lease").
5.13 Intentionally Omitted.
5.14 Pension Reserve. At or prior to the Closing, the Seller shall
cause each of the Companies to release the amount of its provision for
pension and other employee welfare obligations, as reflected on a
statement of admitted assets, liabilities and capital and surplus (statutory
basis) of each of the Companies as of the Closing Date prepared on the
same basis as the SAP Statements, to the extent that the liabilities and
obligations to which such provision relates have been or will be paid or
assumed by the Seller.
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5.15 No Churning. Neither the Seller nor any of its Affiliates shall
take any action after the date hereof intended to knowingly solicit or
induce exchanges or replacements of any policies of either of the Companies
which are in force or have been applied for prior to the close of business on
the Closing Date, or knowingly exchange or replace any of such policies.
5.16 Transition Services. At or prior to the Closing, the Seller
shall enter into a Transition Services Agreement, substantially in the form
of Exhibit D hereto (each, a "Services Agreement"), with each of the Companies.
5.17 Purchase of Certain Assets. Pursuant to agreements reasonably
acceptable to the Seller, the Seller shall purchase from the Companies the
following assets (collectively, the "Transferred Assets"): (i) immediately
after the Closing, all of the Portfolio Stocks for a price equal to their
respective fair market values as of the close of the markets as of the Closing
Date; (ii) immediately prior to the Closing, all of the Companies' real
property for a price equal to their respective statutory book values as of the
Closing Date; (iii) immediately prior to the Closing, all of the Companies'
mortgage loans on real estate at their amortized statutory book values at
the close of business as of the Closing Date; and (iv) immediately
prior to the Closing, all of the Companies' interests in the Northtowne
Apartments limited partnership and the Midwest Mezzanine Fund limited
partnership, in each case, at statutory book value as of the Closing Date.
5.18 Assumption of Certain Litigation Matters. After the Closing,
the Seller shall direct the defense and settlement of the Companies in the
following lawsuits: (i) Charton, Bermes, Rovenger v. OSL; (ii) ▇▇▇▇▇▇ v. OSL;
(iii) OSL ▇. ▇▇▇▇▇ Road Company; and (iv) OSL v. NDT Technology (collectively,
the "Assumed Litigation Matters"); and shall indemnify and hold harmless
the Companies from any costs or losses arising from such matters;
provided, however, that no compromise or settlement of the Assumed
Litigation Matters may be effected by the Seller without the Purchaser's
consent if such compromise or settlement involves relief other than monetary
damages paid by the Seller.
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ARTICLE VI
COVENANTS OF THE PURCHASER
6.1 Regulatory Approvals. The Purchaser shall (a) take all
commercially reasonable steps necessary or desirable, and proceed
diligently and in good faith and use all commercially reasonable efforts to
obtain, as promptly as practicable, all approvals required by any applicable
contract of the Purchaser or any of its Affiliates to consummate the
transactions contemplated hereby, (b) take all reasonable steps necessary or
desirable, and proceed diligently and in good faith and use best efforts to
obtain, as promptly as practicable, all approvals, authorizations and
clearances of governmental and regulatory authorities required of the
Purchaser to permit the Purchaser to consummate the transactions contemplated
hereby, including, without limitation, any required approvals of the
insurance regulatory authorities of the States of Ohio and California, (c)
provide such other information, communications and commitments to such
governmental and regulatory authorities as the Seller or such
authorities may reasonably request and (d) cooperate with the Seller and
the Companies (including, without limitation, providing the Seller and the
Companies with a reasonable opportunity to review any regulatory filings
and correspondence prior to their submission to the relevant regulatory
authorities, and the opportunity to participate in any meetings with regulatory
authorities) in obtaining, as promptly as practicable, all approvals,
authorizations and clearances of governmental or regulatory authorities
required of the Seller and the Companies to consummate the transactions
contemplated hereby.
6.2 HSR Filings. The Purchaser shall (a) take promptly all
actions necessary to make the filings required of the Purchaser or its
Affiliates under the HSR Act, (b) comply at the earliest practicable date
with any request for additional information received by the Purchaser or
any of its Affiliates from the Federal Trade Commission or Antitrust Division
of the Department of Justice pursuant to the HSR Act, (c) cooperate with the
Seller in connection with the Seller's filings under the HSR Act and (d)
request early termination of the applicable waiting period.
6.3 Non-Solicitation. Prior to the Closing Date and after any
termination of this Agreement prior to Closing, the Purchaser shall not, and
shall cause its present and future Affiliates not to, directly or indirectly,
utilize or attempt to utilize any information obtained from the Seller
or the Companies in connection with the transactions contemplated by
this Agreement, and not otherwise legally in the possession of the
Purchaser or the public, regarding the Companies or their policyholders
or customers (a) in any manner that might be competitive with the Companies
or (b) for the purpose of causing or attempting to cause (i) any
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policyhold er or customer to replace or terminate an insurance or annuity
contract or other investment or financial product issued, reinsured,
underwritten or sold by either of the Companies in whole or in part, with
products of any other Person at any time, (ii) any reinsurer to terminate any
reinsurance, coinsurance or other similar contract, or sever a relationship,
with either of the Companies at any time, or (iii) any agent (including
without limitation any insurance agent), consultant or other Representative of
either of the Companies to resign or sever a relationship with either of the
Companies at any time.
6.4 Notice and Cure. Prior to the Closing, the Purchaser shall
notify the Seller promptly in writing of, and shall use all commercially
reasonable efforts to cure before the Closing, any event, transaction or
circumstance occurring after the date of this Agreement that comes to the
attention of the Purchaser which causes or will cause any covenant or agreement
of the Purchaser under this Agreement to be breached, or that renders
or will render untrue any representation or warranty of the Purchaser
contained in this Agreement as if the same were made on or as of the Closing
Date.
6.5 Intercompany Liabilities. If the Company Liabilities exceed
the Seller Liabilities, within 30 calendar days of receipt of the Intercompany
Liability Statement, the Purchaser shall pay, or cause the Companies to
pay, the amount of such excess, except as otherwise provided under
Section 10.1 of this Agreement.
6.6 Employees.
(a) After the Closing Date, each of the Companies shall cease
to be a participating employer under the Seller Benefit Plans, in accordance
with the terms thereof, and the Purchaser shall, and shall cause the Companies
to, cooperate with the Seller and take all actions as are reasonably requested
by the Seller to effect such cessation of participation.
(b) As soon as practicable after the Closing Date, the
Purchaser shall take all steps as may be necessary to (i) cause the employee
welfare benefit plans (as such term is defined in ERISA ss. 3(1)) maintained by
the Purchaser to recognize the service rendered by employees and former
employees of the Companies prior to the Closing Date for purposes of determining
eligibility, vesting and benefit accrual to the extent such service would have
been recognized for such purposes under such plans had such service been
rendered directly to the Purchaser; (ii) waive any exclusions or limits for
preexisting conditions (except to the extent that any employee or former
employee of the Companies was subject to an exclusion or limit for a pre
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-existing condition under an Employee Welfare Benefit Plan); and (iii) cause
the employee pension benefit plans (as such term is defined in ERISA ss. 3(2))
maintained by the Purchaser to recognize the service rendered by
employees and former employees of the Companies through the Closing Date for
purposes of determining eligibility and vesting (but not benefit accrual) to
the extent such service would have been recognized for such purposes under
such plans had such service been rendered directly to the Purchaser.
(c) The Purchaser shall indemnify and hold harmless the Seller
with respect to all liabilities and obligations whatsoever in connection with
claims made by or on behalf of the employees and former employees of the
Companies (including, without limitation, liabilities with respect to severance
pay, salary continuation, group health care continuation coverage and similar
obligations) relating to any termination or alleged termination of employment or
coverage after the Closing, other than those relating to liabilities under the
Seller Benefit Plans that are specifically assumed by the Seller pursuant to
Section 5.10.
(d) The Purchaser hereby assumes all liability for any
alleged failure to give, or cause the Companies to give, all notices required
by the U.S. Worker Adjustment and Retraining Notification Act of 1988, as
amended (the "WARN Act"), and any similar state law or regulation by reason of
events occurring after the Closing Date. The Purchaser shall indemnify and
hold harmless the Seller and its Affiliates with respect to any and all claims
asserted under the WARN Act or any similar state law or regulation
because of a "plant closing" or "mass layoff" with respect to the Companies
occurring after the Closing Date. For purposes of this Agreement, the Closing
Date shall be the "effective date" for purposes of the WARN Act.
(e) After the Closing, the Purchaser shall, or shall cause one
of its affiliates to, use reasonable efforts to employ persons employed by the
Companies as of the Closing Date with benefits and terms of employment
equivalent to those offered employees of the Purchaser as of such date and with
base compensation competitive with that provided to such employees as of such
date; provided, however, that nothing herein shall (i) alter the
employment-at-will status of any employee, or (ii) prohibit the Purchaser or its
affiliate from terminating any employee for cause or reducing the number of
employees of the Companies as a result of improved efficiencies resulting from
the implementation of new technology. After the Closing, the Purchaser intends
to cause one of its affiliates to employ and retain, at a minimum, employees of
the Companies in Columbus, Ohio engaged in sales, new business, policyowner
service, claims, billing, agency compensations, underwriting,
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commission accounting, and general accounting. After the Closing, if a position
held by any person employed by the Companies as of the Closing Date is
eliminated and a similar position is available with the Purchaser or one of
its affiliates, the Purchaser will use reasonable efforts to make such
position available to the person whose position has been eliminated if such
person otherwise satisfies the Purchaser's standards and qualifications for
such employment. If the Purchaser or one of its affiliates offers any of the
Companies' employees a position at a location outside of Columbus, Ohio, the
Purchaser shall, or shall cause such affiliate to, pay such employee's
reasonable relocation costs. After the Closing, the Purchaser shall, or
shall cause its affiliate to, make severance payments to the persons employed
by the Companies as of the Closing, consistent with the Purchaser's policies
in effect prior to the Closing.
6.7 Confidentiality. The Purchaser agrees that all information and data
obtained by the Purchaser or the Purchaser's Representatives from the Seller,
its Affiliates, and their employees, agents and Representatives shall be kept
confidential in accordance with the terms of the Confidentiality Agreement.
6.8 Cooperation. The Purchaser agrees that the Seller will direct the
defense and/or settlement of the Assumed Litigation Matters; provided, however
that no compromise or settlement of the Assumed Litigation Matters may be
effected by the Seller without the Purchaser's consent if such compromise or
settlement involves relief other than monetary damages paid by the Seller. The
Purchaser shall, and shall cause the Companies and their employees to, fully
cooperate with the Seller with respect to the Seller's defense of the Companies
in the Assumed Litigation Matters, including, without limitation, providing the
Purchaser with access to the Company's employees and records relating thereto.
The Purchaser shall not, and shall cause the Companies and their employees not
to, interfere with the Seller's defense or settlement of the Companies in the
Assumed Litigation Matters.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
The obligation of the Purchaser to consummate the transactions
described in Article II of this Agreement are subject to the fulfillment, at or
before the Closing, of each of the following conditions (all or any of which may
be waived in whole or in part by the Purchaser):
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7.1 Representations and Warranties. The representations and warranties
of the Seller set forth in this Agreement shall be true and correct in all
material respects on and as of the Closing Date as though such
representations and warranties were made on and as of such date, except
for any breach of a representation or warranty resulting from any action
taken by the Seller or any of its Affiliates or any of their Representatives
that is required by, or contemplated under, this Agreement.
7.2 Performance. The Seller shall have performed or complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement to be so performed or complied with by the Seller at
or before the Closing.
7.3 Officer's Certificates. The Seller shall have delivered to the
Purchaser a certificate, dated the Closing Date, in form and substance
reasonably acceptable to the Purchaser and executed by the chief executive
officer, vice president of life insurance operations or senior vice president of
the Seller, certifying that the conditions set forth in Sections 7.1 and 7.2
have been satisfied and that, to the best of such officer's knowledge, the
conditions set forth in Sections 7.5, 7.6 and 7.8 have been satisfied, and
setting forth the amount of Estimated Net Income. In addition, the Seller
shall have delivered to the Purchaser a certificate, dated the Closing Date
and executed by the secretary or any assistant secretary of the Seller,
certifying that the Seller has duly and validly taken all corporate action
necessary to authorize its execution and delivery of this Agreement and its
performance of its obligations under this Agreement, and that the
resolutions (true and complete copies of which shall be attached to
the certificate) of the Board of Directors of the Seller with respect to
this Agreement and the transactions contemplated hereby have been duly and
validly adopted and are in full force and effect.
7.4 HSR Act Approval. All waiting periods applicable to this
Agreement and the transactions contemplated hereby under the HSR Act shall have
expired or been terminated.
7.5 No Injunction. There shall not be in effect on the Closing Date
any writ, judgment, injunction, decree or similar order of any court or
similar Person restraining, enjoining or otherwise preventing consummation of
any of the transac tions contemplated by this Agreement.
7.6 No Proceeding or Litigation. There shall not be instituted,
pending or, to the knowledge of the Seller and the Purchaser, threatened,
any action, suit, investigation, or other proceeding in, before or by
any court, governmental or
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regulatory authority or other Person to restrain, enjoin or otherwise
prevent consummation of any of the transactions contemplated by this
Agreement or to recover any Damages or obtain other relief as a result of
this Agreement or any of the transactions contemplated hereby or as a result
of any contract entered into in connection with or as a condition
precedent to the consummation hereof, which action, suit, investigation or
other proceeding would, in the reasonable opinion of the Purchaser, result in
a decision, ruling, or finding that, individually or in the aggregate, has or
would reasonably be expected to have a Material Adverse Effect. There shall
not be in effect on the Closing Date any voluntary or involuntary
bankruptcy, receivership, conservatorship or similar proceeding with
respect to the Seller or either of the Companies.
7.7 Consents, Authorizations, etc. All orders, consents, permits,
authorizations, approvals, and waivers of every Person necessary to permit the
Purchaser to perform its obligations under this Agreement and to consummate the
transactions contemplated hereby (including, without limitation, any requisite
action of the insurance regulatory authorities of the States of Ohio and
California, and any other insurance regulatory authorities which have
jurisdiction over thetransactions contemplated hereby) shall have been
obtained and shall be in full force and effect.
7.8 No Adverse Change. Since the date of the most recent Financial
State ments, except as disclosed in the Disclosure Schedule, there shall
not have been, occurred or arisen any change, event (including without
limitation any damage, destruction or loss, whether or not covered by
insurance), condition or state of facts that, individually or in the
aggregate, has or would reasonably be expected to have a Material Adverse
Effect.
7.9 Opinions of Counsel. The Seller shall have delivered to the
Purchaser an opinion, in form and substance reasonably acceptable to the
Purchaser, dated the Closing Date, of ▇▇▇▇▇ ▇. ▇▇▇▇, Senior Vice President and
General Counsel of the Seller, or other counsel to the Seller reasonably
acceptable to the Purchaser, as to the matters set forth on Exhibit E hereto.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE SELLER
The obligations of the Seller to consummate the transactions described
in Article II of this Agreement are subject to the fulfillment, at or before the
Closing, of each of the following conditions (all or any of which may be waived
in whole or in part by the Seller):
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8.1 Representations and Warranties. The representations and warranties
of the Purchaser set forth in this Agreement shall be true and correct in
all material respects on and as of the Closing Date as though such
representations and warranties were made on and as of such date.
8.2 Performance. The Purchaser shall have performed or complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement to be so performed or complied with by the Purchaser
at or before the Closing.
8.3 Officer's Certificates. The Purchaser shall have delivered to
the Seller a certificate, dated the Closing Date, in form and substance
reasonably acceptable to the Seller and executed by the chief executive
officer or chief financial officer of the Purchaser, certifying that the
conditions set forth in Sections 8.1 and 8.2 have been satisfied and that, to
the best of such officer's knowledge, the conditions set forth in Sections
8.5, 8.6 and 8.7 have been satisfied. In addition, the Purchaser shall
have delivered to the Seller a certificate, dated the Closing Date and
executed by the secretary or any assistant secretary of the Purchaser,
certifying that the Purchaser has duly and validly taken all corporate
action necessary to authorize its execution and delivery of this Agreement
and its performance of its obligations under this Agreement, and that any
required resolutions (true and complete copies of which shall be
attached to the certificate) of the board of directors of the Purchaser
with respect to this Agreement and the transactions contemplated hereby have
been duly and validly adopted and are in full force and effect.
8.4 HSR Act Approval. All waiting periods applicable to this
Agreement and the transactions contemplated hereby under the HSR Act shall have
expired or been terminated.
8.5 No Injunction. There shall not be in effect on the Closing Date
any writ, judgment, injunction, decree or similar order of any court or
similar Person restraining, enjoining or otherwise preventing consummation of
any of the transactions contemplated by this Agreement.
8.6 No Proceeding or Litigation. There shall not be instituted,
pending or, to the knowledge of the Purchaser or the Seller, threatened, any
action, suit, investigation or other proceeding in, before or by any court,
governmental or
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regulatory authority or other Person to restrain, enjoin or otherwise prevent
consummation of any of the transactions contemplated by this Agreement, or
to recover any Damages or obtain other relief as a result of this Agreement or
any of the transactions contemplated hereby or as a result of any contract
entered into in connection with or as a condition precedent to the consummation
hereof, which action, suit, investigation or other proceeding may, in the
reasonable opinion of the Seller, result in a decision, ruling,
or finding that individually or in the aggregate has or would reasonably be
expected to have a Material Adverse Effect. There shall not be in effect on
the Closing Date any voluntary or involuntary bankruptcy, receiver ship,
conservatorship or similar proceeding with respect to the Purchaser.
8.7 Consents, Authorizations, etc. All orders, consents, permits,
authorizations, approvals and waivers of every Person necessary to permit the
Seller to perform its obligations under this Agreement and to consummate the
transactions contemplated hereby shall have been obtained and shall be in full
force and effect.
8.8 Opinion of Counsel. Texas, Ohio and California counsel to the
Purchaser that are reasonably acceptable to the Seller shall have delivered to
the Seller an opinion, in form and substance reasonably acceptable to the
Seller, dated the Closing Date, as to the matters set forth on Exhibit F hereto.
ARTICLE IX
SURVIVAL OF PROVISIONS; REMEDIES
9.1 Survival. The representations, warranties, covenants and
agreements made by the Seller and the Purchaser in this Agreement, or in any
certificate delivered by the Seller or the Purchaser pursuant to Section 7.3
or Section 8.3 hereof shall survive the Closing:
(a) until the earlier of the third anniversary of the Closing
Date or the expiration of all applicable statutes of limitations (including all
periods of extension, whether automatic or permissive) in the case of (i) the
representations and warranties of the Seller set forth in Sections 3.1, 3.2,
3.3, 3.21 and 3.24 hereof, or in any certificate delivered pursuant to Section
7.3 hereof (to the extent such certificate refers to such Sections), (ii) the
representations and warranties of the Purchaser set forth in Article IV hereof,
or in any certificate delivered pursuant to Section 8.3 hereof, and (iii) the
indemnification provisions set forth in Article X hereof, except insofar as they
are applicable to Sections 3.4, 3.11 and 3.14;
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(b) until the first anniversary of the Closing Date in the
case of all representations and warranties of the Seller not specified in
Section 9.1(a) above or Section 9.1(c) below; and
(c) until the expiration of all applicable statutes of
limitations (including all periods of extension, whether automatic or
permissive) in the case of (i) the representations and warranties of the Seller
set forth in Sections 3.4, 3.11 and 3.14 hereof, or in any certificate delivered
pursuant to Section 7.3 hereof (to the extent such certificate refers to such
sections), (ii) the indemnification provisions set forth in Article X applicable
to such Sections, and (iii) the covenants and agreements set forth in Article V
and Article VI hereof.
If a Claim Notice or an Indemnity Notice is given in accordance with
Section 10.3 hereof before expiration of the applicable time period
referenced above, then (notwithstanding such time period) the representation,
warranty, covenant or agreement applicable to such claim shall survive
until, but only for purposes of, resolution of such claim. This Article IX
shall survive the Closing or the termination of this Agreement.
9.2 Available Remedies. The rights and remedies provided for in this
Agreement are cumulative and are not exclusive of any rights or remedies that
any party may otherwise have at law or in equity. The rights and remedies of any
party based upon, arising out of or otherwise in respect of any breach of any
representation, warranty, covenant or agreement contained in this Agreement
shall in no way be limited by the fact that the act, omission, occurrence or
other state of facts upon which any claim of any such breach is based may also
be the subject matter of any other representation, warranty, covenant or
agreement contained in this Agreement (or in any other agreement between the
parties) as to which there is no breach.
ARTICLE X
INDEMNIFICATION
10.1 Tax Indemnification and Other Tax Matters. Subject to the
provisions of Article IX hereof:
(a) The Seller shall be liable for, shall pay to the
appropriate Tax Authorities, and shall hold OSL and IGL and the Purchaser
harmless against, all Taxes and obligations under the Tax Sharing Agreement that
relate to any taxable period ending on or before the Closing Date. In
particular, the Seller shall be liable
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for, shall pay to the appropriate Tax Authorities, and shall hold OSL and
IGL and the Purchaser harmless against, all Taxes resulting from the
election under section 338(h)(10) of the Code which is agreed to be made
pursuant to Section 10.1(g) of this Agreement in respect of items of income
or gain that are properly reportable on the Tax Return of the Seller, OSL,
or IGL for the taxable period ending on, and includ ing, the Closing Date;
provided, however, that Taxes arising from or related to any such items of
income or gain that are properly reportable on the Tax Return of the
Purchaser, OSL or IGL for the taxable period commencing with the day
following the Closing Date shall be the liability of the Purchaser, OSL or
IGL, as the case may be, for which no indemnification from the Seller may be
sought under this Agreement.
(b) The Purchaser and the Company shall be liable for, shall
pay to the appropriate Tax Authorities, and shall hold the Seller harmless
against, all Taxes that relate to any taxable period that ends after the
Closing Date (including any taxable period that begins prior to the Closing
Date and ends after the Closing Date).
(c) Prior to or on the Closing Date, OSL and IGL shall
continue to make payments of Taxes to the Seller for the Pre-Closing Straddle
Period in amounts determined in a manner consistent with the Tax Sharing
Agreement. Such Tax payments shall not include any Taxes resulting from the
section 338(h)(10) election to be made pursuant to Section 10.1(g) of this
Agreement.
(d) The Seller and the Purchaser shall maintain all records
necessary to support the Tax Returns as filed for all Tax years until closed.
(e) In the event that OSL or IGL is, becomes entitled to, or
receives any refund of Taxes in respect any taxable period ending on or prior to
the Closing Date, (i) the Purchaser, OSL, IGL and the Seller shall cooperate
with each other and take all reasonable actions necessary to obtain such refund
and (ii) the amount thereof, plus any interest related thereto shall be the
property of (and paid over to) the Seller.
(f) The Seller shall be responsible for, prepare, and have
ultimate discretion with respect to, all Tax Returns required or permitted by
applicable law to be filed by OSL or IGL (or by the Seller on its behalf) with
respect to taxable periods ending on or before the Closing Date. The Purchaser,
OSL and IGL shall (i) cooperate with the Seller for the purpose of making any
election under applicable law to permit each of OSL and IGL to end at the end of
the Closing Date all taxable periods that have begun prior to the Closing Date
that have not otherwise ended and
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(ii) provide access to all relevant books and records for purposes of preparing
any Tax Returns in respect thereof.
(g) The Purchaser will make, in a timely manner, the election
pursuant to section 338(g) of the Code and the Purchaser and Seller will jointly
make, in a timely manner, the election pursuant to section 338(h)(10) of the
Code and comparable state tax provisions with respect to the purchase and sale
of Shares con templated by this Agreement. For purposes of determining the
purchase price under this Section 10.1(g), the liabilities of OSL and IGL shall
be equal to the amount of such liabilities for Federal income tax purposes as of
the Closing Date. The Purchaser shall have the initial responsibility for the
timely preparation of IRS Form 8023, and all supporting statements, schedules,
and required information applicable thereto (including an allocation of the
purchase price to the properties of OSL and IGL), and such Form 8023,
statements, schedules, and information (the "Form 8023 Package") shall be
submitted to the Seller for its review no later than 60 Business Days
following the Closing Date. Within 30 Business Days after the receipt by the
Seller of the Form 8023 Package, the Seller shall notify the Purchaser of
any objections or proposed changes. If the Seller has no objections or proposed
changes or if the Purchaser and the Seller agree on the resolution of all
objections or proposed changes, the Purchaser and Seller shall promptly file
Form 8023 and the relevant attachments with the IRS via certified mail with
return receipt requested. As soon as practicable thereafter, the Purchaser and
Seller shall furnish to each other a photocopy of such certificate of mailing
and return receipt. If the Seller and the Purchaser shall fail to reach an
agreement with respect to any objection or proposed change within 120 Business
Days following the Closing Date, then any disputed objection(s) or pro posed
change(s) shall be submitted for resolution to an impartial certified public
accounting firm of national reputation reasonably acceptable to the Purchaser
and the Seller (the "Resolution Accountant"). The Purchaser and the Seller shall
use reason able efforts to cause a report of the Resolution Accountant to be
rendered within 20 Business Days of its appointment, and the Resolution
Accountant's determination as to the appropriateness and extent of changes (if
any) to the Form 8023 Tax Package shall be final and binding. Immediately after
such determination, the Purchaser and Seller shall promptly file Form 8023 and
the relevant attachments with the IRS in accordance with the procedure described
above. The Purchaser and the Seller agree to file their respective tax returns,
reports, and forms, including IRS Form 8023, in a manner consistent with the
Form 8023 Package.
(h) The Purchaser, OSL or IGL shall promptly (i) notify the
Seller of the commencement of any Audit by any Tax Authority concerning any Tax
for
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which the Seller may be responsible under Section 10.1(a) of this Agreement
(a "Tax Claim") and (ii) furnish the Seller with copies of any correspondence
received from any Tax Authority related thereto. The Seller shall promptly (i)
notify the Purchaser, OSL or IGL of the commencement of any Audit by any Tax
Authority concerning any Tax for which the Purchaser, OSL or IGL may be
responsible under Section 10.1(b) of this Agreement and (ii) furnish the
Purchaser, OSL or IGL with copies of any correspondence received from any Tax
Authority related thereto; provided, however, that the failure of a party to
give prompt notice pursuant to this Section 10.1(h) shall not relieve the other
party from any indemnification obligations hereunder unless the failure to give
such notice jeopardizes the other party's ability to defend any claim arising
from or related to such Audit.
(i) The Seller may control the conduct of any Audit covered by
Section 10.1(h) for which it is responsible by having its personnel rather than
personnel of the Purchaser, OSL or IGL deal directly with the applicable Tax
Authority. At its election, the Seller may contest or settle any Tax
Claim in any legally permissible manner at its sole cost and expense and,
upon the Seller's payment of such Taxes to the relevant Tax Authority, may
▇▇▇ for a refund thereof. The Seller shall control all correspondence,
responses, and proceedings related to any such contest or refund suit, and
may pursue or forego any administrative proceedings, appeals, or litigation in
respect of such Tax Claim. The Purchaser, OSL and IGL as appropriate, will
cooperate fully, provide access to all books and records, and will take all
lawful action in connection with such contest or refund suit as the Seller may
reasonably request. The Seller shall keep the Purchaser, OSL and IGL, as
appropriate, regularly apprised of the progress of any such contest or refund
suit. In the event that such contest or refund suit may reasonably be
expected to increase materially the liability of OSL or IGL for Taxes
described in Section 10.1(b) hereof, or increase the obligation of OSL or
IGL to make payments pursuant to Section 10.1(c) or (d) hereof, the Seller
shall consult with the Purchaser in good faith as to any considerations
that Purchaser may have regarding such contest or refund suit.
(j) In the event that the Seller does not elect to contest a
Tax Claim pursuant to Section 10.1(i) of this Agreement, the Purchaser, OSL or
IGL may (but shall not be required to) contest such claim for the account of the
Seller, in which case (i) the Seller shall have the right to review and approve
in advance any correspon dence or responses sent to any Tax Authority by or on
behalf of OSL or IGL with respect to any Tax Claim and to participate in any
subsequent administrative proceedings, appeals, and litigation, if any, and (ii)
the Purchaser, OSL and IGL, as appropriate, shall provide access to all relevant
books and records. The
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Purchaser, OSL and IGL, as appropriate, shall keep the Seller regularly
apprised of the of progress any such Audit. In the event that the Purchaser,
OSL or IGL elects to contest a Tax claim, the Purchaser, OSL and IGL shall
indemnify and hold harmless the Seller for any Tax liability in excess of the
amount of the Tax liability that would have arisen under the settlement that
the Seller was willing to accept.
(k) The Seller shall indemnify the Purchaser for, and hold the
Pur chaser and the Companies harmless against, any and all (A) payments made by
the Companies to Existing Product Holders in respect of costs or losses incurred
by such holders, and (B) increased Taxes of the Companies, but only to the
extent that such costs, losses, or increased Taxes result from an Existing
Product Item; provided, however, that the Seller shall have no obligation to
indemnify or hold harmless the Purchaser or the Companies unless the Seller is
permitted, during the period following the Closing Date, to (i) direct the
Purchaser and/or the Companies to amend or modify any Existing Product and
related computer programs, in the sole and absolute discretion of the Seller
in connection with any Existing Product Item or potential Existing
Product Item, (ii) review and approve any proposal made by the Purchaser or
the Companies to amend or modify any Existing Product and related computer
pro grams, which approval shall not be unreasonably withheld, (iii) represent
exclusively the interests of the Purchaser and the Companies in connection with
any Existing Product Item or potential Existing Product Item, and (iv)
respond, negotiate, litigate, settle, or otherwise manage any inquiry or
controversy, in the sole and absolute discretion of the Seller, in connection
with any Existing Product Item or potential Existing Product Item. The
Seller shall indemnify the Purchaser for, and hold the Purchaser and the
Companies harmless against, any costs or losses resulting from action
taken by the Purchaser or the Companies at the direction of the Seller
pursuant to this Section 10.1(k).
10.2 Other Indemnification.
(a) Subject to the provisions of Article IX and Sections 10.4
and 10.5 hereof, the Seller agrees to indemnify the Companies and the Purchaser
in respect of, and hold each of them harmless against:
(i) any and all Damages (other than Indemnification
for Taxes and Existing Product Items, which shall be governed solely by
Section 10.1 hereof) resulting from or relating to (A) any breach of any
representation or warranty in Article III or in any certificate delivered by
or for the Seller pursuant to Section 7.3 hereof, or (B) any failure of the
Seller to perform any covenant or agreement
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included in this Agreement and required to be performed by the Seller on or
prior to the Closing; and
(ii) any and all Damages resulting from a failure on
the part of the Seller to comply with the covenants or undertakings set forth
in Section 10.1 of this Agreement, provided that such failure does not
result from any act or omission on the part of the Purchaser or, after
the Closing Date, by the Companies:
(b) Subject to the provisions of Article IX and Sections 10.4
and 10.5 hereof, the Purchaser agrees to indemnify the Seller in respect of, and
hold the Seller harmless against:
(i) any and all Damages (other than Indemnification for
Taxes, which shall be governed solely by Section 10.1 hereof) resulting from
or relating to (A) any breach of any representation or warranty in
Article IV or in any certificate delivered by or for the Seller pursuant to
Section 8.3 hereof, or (B) any failure of the Purchaser to perform any
covenant or agreement included in this Agreement and required to be performed
by the Purchaser or, after the Closing Date, by the Companies; and
(ii) any and all Damages resulting from or relating to
liabilities or obligations of the Companies arising out of events or
circumstances occurring in their entirety after the Closing Date, other than
liabilities and obligations of the Companies to the Seller or any Affiliate
of the Seller (other than the Companies).
10.3 Method of Asserting Claims. All claims for indemnification by an
Indemnified Party under Section 10.2 hereof shall be asserted and resolved as
follows:
(a) Third Party Claims. If any claim or demand, or any
investigation or proceeding is commenced, for which an Indemnifying Party would
be liable for Damages to an Indemnified Party, is asserted against or sought to
be collected from such Indemnified Party by a Person other than a party hereto
or any Affiliate thereof (a "Third Party Claim"), the Indemnified Party shall
deliver a Claim Notice within 30 days of receipt by the Indemnified Party of a
written notice of claim or demand that constitutes a Third Party Claim and with
reasonable promptness with respect to any other Third Party Claim; provided,
however, no failure or delay in giving any such Claim Notice shall relieve the
Indemnifying Party of its obligations except, and only to the extent, that it is
prejudiced thereby. The Indemnifying Party shall give notice
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to the Indemnified Party within 30 days of receipt of a Claim Notice setting
forth whether the Indemnifying Party disputes its liability with respect to
matters covered by such Claim Notice and whether the Indemnifying
Party, at the sole cost and expense of the Indemnifying Party, desires to
assume the defense of the matters set forth in such Claim Notice. The
Indemnified Party may take any action it deems necessary to preserve its
rights prior to receipt of such response from the Indemnify ing Party but
shall not settle or proceed to final judgment with respect to such Third Party
Claim prior to the expiration of such 30 day period.
(b) Defense. The Indemnifying Party shall have the right to
direct, through counsel of its own choosing, the defense or settlement of any
action or proceeding brought against the Indemnified Party in respect of Third
Party Claims; provided, however, that the Indemnifying Party shall not settle
any matter without obtaining the Indemnified Party's prior consent thereto if
such settlement provides for any remedy other than the payment of money damages
or that does not provide for a full release of the Indemnified Party or,
regardless of the terms of such settlement, if the Indemnifying Party disputes
its liability with respect to the Third Party Claim. If the Indemnifying Party
elects to assume the defense of any such claim or proceed ing, the Indemnified
Party may participate in such defense at its own expense. If the Indemnifying
Party fails to defend or, after commencing or undertaking any such defense,
fails to prosecute or withdraws from such defense other than as a result of a
settlement, the Indemnified Party shall have the right to direct, at the
Indemnifying Party's sole cost and expense, through counsel of its own
choosing, the defense or settlement of any such action or proceeding;
provided, however, that if the Indemnified Party assumes the defense of any
such claim or proceeding pursuant to this Section 10.3 and proposes to
settle such claim or proceeding prior to a final judgment thereon or to
forego appeal with respect thereto, then the Indemnified Party shall
give the Indemnifying Party prompt written notice thereof and the
Indemnifying Party shall have the right to participate in and consent (which
consent shall not be unreasonably withheld) to the settlement or assume or
reassume the defense of such claim or proceeding. Notwithstanding the
foregoing provisions of this Section 10.3(b), if the Indemnifying Party
disputes its liability to the Indemnified Party and if such dispute is
resolved in favor of the Indemnifying Party by final, nonappealable order of
a court of competent jurisdiction, the Indemnifying Party shall not be
required to bear the costs and expenses of the Indemnified Party's defense
pursuant to this Section 10.3(b), and the Indemnified Party shall
reimburse the Indemnifying Party in full for all costs and expenses incurred
by the Indemnifying Party in con nection with such Third Party Claim. The
party directing the defense shall pursue such defense diligently and
promptly. The parties shall cooperate in the defense shall pursue such
defense diligently and promptly. The parties shall cooperate in
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the defense of all Third Party Claims. In connection with the defense of
any Third Party Claim, each party shall make available to the party
controlling such defense any books, records or other documents within its
control that are reasonably requested in the course of or necessary or
appropriate for such defense, provided appropriate arrangements are made to
safeguard the confidentiality of such materials.
(c) Claims Between the Parties and their Affiliates. If
the Indemnified Party has a claim against the Indemnifying Party that
does not involve a Third Party Claim (an "Inter-Party Claim"), the
Indemnified Party shall give written notice (the "Indemnity Notice") to the
Indemnifying Party with reasonable promptness of such claim, specifying
the nature, estimated amount and the specific basis for such claim. The
Indemnifying Party shall respond within 30 days of receipt of such notice of
an Inter-Party Claim. If the Indemnifying Party timely disputes such claim,
the Indemnified Party and the Indemnifying Party shall negotiate in good
faith to resolve such dispute. If not so resolved or if no timely response is
made, either party may pursue whatever remedies it may have.
10.4 After-Tax Damages; Refunds. With respect to the
indemnification agreements set forth in this Article X, the Seller and the
Purchaser agree that the amount of any payment shall be adjusted downward by
the tax benefit actually recognized in the year of payment or succeeding year
and upward by the tax cost actually incurred in the year of payment or
succeeding year by the party to be indemnified and such payment shall be
(i) promptly paid to the Indemnifying Party or offset against
indemnification payments then owed to the Indemnifying Party or (ii) in the
case of any payment due under Section 10.1, payable by either party 30
days after the "final determination" within the meaning of section 1313 of
the Code. Any payment (other than interest thereon) made under this
Agreement by the Seller to (or at the direction of) the Purchaser or the
Companies or by the Purchaser or the Compa ▇▇▇▇ to (or at the direction of)
the Seller shall be treated by all parties hereto for all purposes as an
adjustment to the purchase price set forth under Section 2.2 of this Agreement.
10.5 Claims Limitation.
(a) The Purchaser specifically agrees that the Seller shall
not have any liability or obligation for any Damages under this Agreement
unless: (i) the aggregate amount of all such Damages exceeds $2,000,000 and then
only for the amount of such Damages in excess of $1,000,000; and (ii) notice of
the claim for such Damages shall have been given to the Seller prior to the end
of the survival period for such claim.
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(b) The limitation contained in subsection (i) of Section
10.5(a) shall not apply to Damages arising under Sections 3.2, 3.4, 3.11, 3.14
or 10.1 of this Agreement.
(c) The Seller shall not be liable or obligated for any
Damages under this Agreement (other than in respect of Damages arising under
Section 3.4, 3.11, 3.14 or 10.1) that, together with all other Damages for which
the Seller is liable or obligated under this Agreement, exceed $60,000,000. The
Seller shall not be liable or obligated for any Damages under this Agreement as
a result of a breach of Section 3.4 or 3.14 that, together with all other
Damages for which the Seller is liable or obligated under this Agreement, exceed
the amount of the Consideration.
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned, upon notice by the terminating party to
the other party:
(a) at any time before the Closing, by mutual written agreement of the
Seller and the Purchaser; or
(b) at any time by the Seller in the event of any breach of any repre
sentation, warranty, covenant or agreement on the part of the Purchaser, or if
any representation of the Purchaser shall have become untrue, in either case,
such that the conditions set forth in Article VIII are incapable of being
satisfied by July 1, 1997;
(c) at any time by the Purchaser in the event of any breach of any
representation, warranty, covenant or agreement on the part of the Seller, or if
any representation of the Seller shall have become untrue, in either case, such
that the conditions set forth in Article VII are incapable of being satisfied by
July 1, 1997; and
(d) at any time after July 1, 1997, by the Seller or the Purchaser, if
the transactions contemplated by this Agreement have not been consummated on or
before such date and such failure to consummate is not caused by a breach of
this Agreement (or any representation, warranty, covenant or agreement included
herein) by the party electing to terminate pursuant to this clause (d).
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11.2 Effect of Termination. If this Agreement is validly terminated
pursuant to Section 11.1 hereof, this Agreement shall thereupon become null and
void, and there shall be no liability on the part of the Seller or the Purchaser
(or any of their respective employees, consultants, or other Representatives),
except that (a) the provisions of this Section and Sections 6.3, 6.7, and 13.4
hereof shall survive any such termination, and (b) any such termination shall be
without prejudice to any claim which either party may have against the other for
breach of any representation, warranty, covenant or agreement included in this
Agreement. All reasonable out-of-pocket expenses incurred in connection with
this Agreement and the transactions contemplated hereby by a non-breaching party
who terminates this Agreement pursuant to Section 11.1(b) or (c) shall be
reimbursed promptly by the breaching party. If this Agreement is terminated for
any reason, other than pursuant to Section 11.1(a) or 11.1(c), then, in addition
to, and without prejudice to, any claim that the Seller may have against
the Purchaser for breach of any representation, warranty, covenant or
agreement included in this Agreement, and without any offset or reduction
in respect of any claims by the Purchaser against the Seller, the Seller
shall be entitled to retain any funds paid by the Purchaser in respect of the
Consideration concurrently with the execution of this Agreement (and any
accrued interest thereon). If this Agreement is terminated pursuant to
Section 11.1(a) or 11.1(c), then the Seller shall promptly return to the
Purchaser any funds paid by the Purchaser in respect of the Consideration
concurrently with the execution of this Agreement (and any accrued
interest thereon).
ARTICLE XII
NOTICES
12.1 Notices. All notices and other communications under this Agreement
must be in writing and shall be deemed to have been duly given if delivered,
faxed or mailed, by certified mail, return receipt requested, first-class
postage prepaid, to the parties at the following addresses:
If to the Seller, to:
Farmers Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President Life Insurance
Operations, and ▇▇▇▇▇ ▇. ▇▇▇▇, Senior Vice
President and General Counsel
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Purchaser, to:
Great Southern Life Insurance Company
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇ ▇.▇.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
All notices and other communications required or permitted under this Agreement
that are addressed as provided in this Article XII shall, if delivered
personally, be deemed given upon delivery, shall, if delivered by facsimile, be
deemed delivered when confirmed and shall, if delivered by mail in the manner
described above, be deemed given on the third Business Day after the day it is
deposited in a regular depository of the United States mail. Any party from time
to time may change its address for the purpose of notices to that party by
giving a similar notice specifying a new address, but no such notice shall be
deemed to have been given until it is actually received by the party sought to
be charged with the contents thereof.
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ARTICLE XIII
MISCELLANEOUS
13.1 Entire Agreement. This Agreement supersedes all prior discussions and
agreements between the parties with respect to the subject matter hereof, and
this Agreement (including the exhibits hereto and the Disclosure Schedule)
contains the sole and entire agreement between the parties hereto with respect
to the subject matter hereof.
13.2 Expenses. Except as otherwise expressly provided in this
Agreement (including without limitation as provided in Article X and Section
11.2 hereof), each of the Seller and the Purchaser shall pay its own costs
and expenses in connection with this Agreement and the transactions
contemplated hereby.
13.3 Public Announcements. At all times at or before the Closing, the
Seller and the Purchaser shall each consult with the other before issuing or
making any reports, statements or releases to the public with respect to this
Agreement or the transactions contemplated hereby, and shall use good faith
efforts to agree on the text of a joint public report, statement or release or
shall use good faith efforts to obtain the other party's approval of the text of
any public report, statement or release to be made solely on behalf of a party.
If the Seller and the Purchaser are unable to agree on or approve any such
public report, statement or release and such report, statement or release is, in
the opinion of legal counsel to a party, required by law or may be appropriate
in order to discharge such party's disclosure obligations, then such party may
make or issue the legally required report, statement or release. Any such
report, statement or release approved or permitted to be made pursuant to this
Section 13.3 may be disclosed or otherwise provided by the Seller or the
Purchaser to any Person, including, without limitation, to any employee or
customer of either party hereto and to any governmental or regulatory authority.
13.4 Confidentiality. The Seller and the Purchaser hereby acknowledge
and agree that the Confidentiality Agreement remains in full force and
effect, and all information and data provided by the Seller or any of its
Representatives to the Purchaser or any of its Representatives shall be subject
to the terms of the Confidentiality Agreement.
13.5 Further Assurances. The Seller and the Purchaser agree that,
from time to time after the Closing, upon the reasonable request of the
other, they shall cooperate, and shall cause their respective Affiliates to
cooperate, with each other to effect the orderly transition of the transfer
of the business and operations of the
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Companies to the Purchaser. Without limiting the generality of the foregoing,
(a) the Seller shall give, and shall cause its Affiliates to give,
representatives of the Purchaser reasonable access to all books and
records of the Seller and its Affiliates reasonably requested by the
Purchaser in the preparation of any post-Closing financial statements,
reports, or Tax Returns of the Companies or necessary for the Purchaser to
make any required filings or to respond to any audit or inquiry of any
governmental or regulatory body; and (b) the Purchaser shall give, and shall
cause its Affiliates to give, representatives of the Seller reasonable access
to all pre-Closing books and records of the Companies reasonably requested by
the Seller in the preparation of any post-Closing financial statements,
reports, or Tax Returns of the Seller or necessary for the Seller to make any
required filings or to respond to any audit or inquiry of any governmental or
regulatory body. After the Closing, the Seller and the Purchaser shall use
commercially reasonable efforts to cooperate with the other in connection
with any proceeding, investigation, examination, audit, action or other
similar matter relating to the Companies or their business or operations;
provided that the party requesting such cooperation shall reimburse the
other for any reasonable out-of-pocket expenses incurred in connection
therewith.
13.6 Waiver. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof; such waiver
must be in writing and must be executed by the chief executive officer,
president, executive vice president or other senior officer of such party. A
waiver on one occasion shall not be deemed to be a waiver of the same or any
other breach on a future occasion. All remedies, either under this
Agreement, or by law or otherwise afforded, shall be cumulative and not
alternative.
13.7 Amendment. This Agreement may be modified or amended only by a
writing duly executed by or on behalf of all parties hereto.
13.8 Counterparts. This Agreement may be executed simultaneously in
any number of counterparts, each of which shall be deemed an original, but
all of which shall constitute one and the same instrument.
13.9 No Third Party Beneficiaries. Except as specifically
provided in Article X, the terms and provisions of this Agreement are
intended solely for the benefit of the parties hereto and their respective
successors and assigns, and it is not the intention of the parties to confer
third-party beneficiary rights upon any other Person, including, without
limitation, any employee of the Seller or either of the Companies.
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13.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable
to contracts executed and performed within the State of California,
without regard to principles of conflicts of laws.
13.11 Binding Effect. This Agreement is binding upon and shall inure
to the benefit of the parties and their respective successors and assignees.
13.12 Assignment Limited. Neither this Agreement nor any right
hereunder or part hereof may not be assigned by any party hereto without the
prior written consent of the other party hereto, which consent will not
be unreasonably withheld.
13.13 Headings, Gender, etc. The headings used in this Agreement have
been inserted for convenience and do not constitute matter to be
construed or interpreted in connection with this Agreement. Unless the
context of this Agreement otherwise requires, (a) words of any gender are
deemed to include each other gender; (b) words using the singular or plural
number also include the plural or singular number, respectively; (c) the
terms "hereof," "herein," "hereby," "hereto," and derivative or similar
words refer to this entire Agreement; (d) the terms "Article" or "Section"
refer to the specified Article or Section of this Agreement; and (e) all
references to "dollars" or "$" refer to currency of the United States of
America.
13.14 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of the Seller or the Purchaser under this Agreement shall
not be materially and adversely affected thereby, (a) such provision shall be
fully severable; (b) this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof;
(c) the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom; and (d) in lieu of such illegal, invalid
or unenforceable provision, there shall be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of each of the Seller and the Purchaser,
effective as of the date first written above.
FARMERS GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President Life Insurance
Operations
GREAT SOUTHERN LIFE INSURANCE
COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
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EXHIBIT A
ASSIGNMENT OF TRADE NAMES AND SERVICE MARKS
THIS ASSIGNMENT OF TRADE NAMES AND SERVICE MARKS (this
"Assignment"), is made and entered into as of _________, 1997, by and between
_______________________________, a _________ corporation (the "Company"), and
Farmers Group, Inc., a Nevada corporation (the "Seller"). Capitalized terms used
but not otherwise defined herein shall have the meanings set forth in the
Purchase Agreement (as defined below).
WHEREAS, pursuant to that certain Stock Pur chase Agreement,
dated as of January 21, 1997 (the "Pur chase Agreement"), by and between the
Seller and Great Southern Life Insurance Company (the "Purchaser"), the
Purchaser will acquire all of the outstanding capital stock of the Company (the
"Acquisition"); and
WHEREAS, in connection with the Acquisition, the Company and
the Seller desire to transfer certain rights and interests with respect to
certain trade names and service marks and related names, marks, logos and de
signs.
NOW, THEREFORE, for the sum of ten dollars ($10.00), and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged:
1. The Company hereby assigns and transfers to the Seller, its
successors, assigns or other legal representatives, without any representations
or warran ties whatsoever, whether express or implied by law or otherwise, all
of its right, title and interest in and to all trade names and service marks,
including, without limitation, those set forth on Schedule I hereto, but
excluding those set forth on Schedule II hereto, and all related names, marks,
logos and designs (collectively, the "Seller's Marks"), worldwide, together
with the good will of the business symbolized by the Seller's Marks, and all
income, royalties, damages and payments now or hereafter due or payable in
respect thereof, and in and to all causes of action (either in law or in
equity) and the right to ▇▇▇, counterclaim and recover for past, present or
future infringement of the rights assigned to the Seller under this Assignment.
2. The Seller hereby assigns and transfers to the Company, its
successors, assigns or other legal representatives, without any representations
or
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warranties whatsoever, whether express or implied by law or otherwise, all
its right, title and interest in and to the trade names and service marks set
forth on Sched ule II hereto, and all related names, marks, logos and designs
(collectively, the "Company's Marks"), worldwide, together with the goodwill of
the business symbolized by the Company's Marks, and all income, royalties,
damages, and payments now or hereafter due or payable in respect thereto, and in
and to all causes of action (either in law or in equity) and the right to ▇▇▇,
counterclaim, and recover for past, present, or future infringement of the
rights assigned to the Company under this Assignment.
3. Each of the Seller and the Company shall execute any papers
and perform such other proper acts as such party or its successors or assigns
may deem reason ably necessary to secure to the other party, or its successors
or assigns, the rights hereby assigned.
By: FARMERS GROUP, INC.
_______________________________
Name:
Title:
By: _______________________________
_______________________________
Name:
Title:
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SCHEDULE I
Farmers(R)
U.S. Serial No. 74/507/347
Reg. No. 1,899,192
Registered: 06/13/95
Expires: 06/13/2005
Farmers Credo(TM)
Farmers Insurance Group(R)
U.S. Serial No. 74/384,122
Reg. No. 1,821,673
Registered: 02/15/94
Expires: 02/14/2004
Farmers Insurance Group of Companies(R)
U.S. Serial No. 74-384,116
Reg. No. 1,821,672
Registered: 02/15/94
Expires: 02/15/04
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SCHEDULE II
If the Company is OSL:
OHIO STATE LIFE INSURANCE COMPANY(R)
U.S. Serial No. 74/536,232
Reg. No. 1,954,094
Registered: 01/02/96
Expires: 01/02/2006
OSL 2000(R)
U.S. Serial No. 74/553,786
Reg. No. 1,984,618
Registered: 07/02/96
Expires: 07/2/2006
OHIO STATE LIFE'S FLEX UL(TM)
U.S. Serial No. 74/552,355
Reg. No. Pending
Filed: 07/22/94
OHIO STATE LIFE'S FLEX UL 10(TM)
U.S. Serial No. 74/532,356
Reg. No. Pending
Filed: 07/22/94
OHIO STATE LIFE'S SECURITERM(TM)
U.S. Serial No. 75/166612
Reg. No. Pending
Filed: 09/16/96
OHIO STATE LIFE SEGMENTED CIRCLE DESIGN
U.S. Serial No. 73/517205
Reg. No. 1,355,788
Filed/Issued: 01/11/85 / 08/20/85
Expires: 08/20/95
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If the Company is IGL:
INVESTORS GUARANTY LIFE INSURANCE COMPANY(R)
U.S. Serial No. 74/536,231
Reg. No. 1,905,939
Registered: 07/18/95
Expires: 07/18/2005
INVESTORS GUARANTY LIFE INSURANCE COMPANY(R) & DESIGN
U.S. Serial No. 73/480,488
Reg. No. 1,335,890
Registered: 05/14/85
Expires: 05/14/95
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State of _________________
County of _______________
On ____________ before me, ___________________________________________________
personally appeared __________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
___ personally known to me -OR- ______ proved to me on the basis of
satisfactory evidence to be the
person(s) whose name(s) is/are
subscribed to the within instrument
and acknowledged to me that
he/she/they executed the same in
his/her/their authorized
capacity(ies), and that by
his/her/their signature(s) on the
instrument the per son(s) or the
entity upon behalf of which the
person(s) acted, executed the
instrument.
Witness my hand and official seal.
(SEAL) _______________________________________
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EXHIBIT B
LEASE AGREEMENT
Dated as of _____________, 1997
Between
F.I.G. HOLDING COMPANY,
A CALIFORNIA CORPORATION,
as Landlord,
and
THE OHIO STATE LIFE INSURANCE COMPANY,
AN OHIO CORPORATION,
as Tenant
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TABLE OF CONTENTS
Page
ARTICLE I
PREMISES, COMMON AREAS AND EQUIPMENT
1.1 Premises.....................................................
1.2 Common Areas; Access.........................................
1.3 Equipment........
1.4 Signage..........
ARTICLE II
TERM AND OPTIONS
2.1 Term........................................................
2.2 Options.....................................................
ARTICLE III
RENT
3.1 Payment of Base Rent........................................
3.2 Definition of Rent..........................................
3.3 Late Charges................................................
3.4 Termination-Advance Payments................................
ARTICLE IV
OPERATING EXPENSES
4.1 Payment of Operating Expenses...............................
4.2 Definition of Operating Expenses............................
4.3 Definition of Property Taxes................................
4.4 Definition of Tenant's Proportionate Share..................
ARTICLE V
SERVICES AND UTILITIES
5.1 Landlord's Obligations......................................
5.2 Tenant's Obligations........................................
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ARTICLE VI
USE; COMPLIANCE WITH LAWS
6.1 Use.......................................................
6.2 Compliance with Laws......................................
ARTICLE VII
MAINTENANCE, REPAIRS AND ALTERATIONS
7.1 Landlord's obligations....................................
7.2 Tenants' Obligations......................................
7.3 Alterations...............................................
7.4 Code Compliance...........................................
7.5 Tenant's FF&E.............................................
ARTICLE VIII
INSURANCE
8.1 Tenant's Required Coverage................................
8.2 Landlord's Required Coverage..............................
8.3 Insurers..................................................
8.4 Additional Insured........................................
8.5 Mutual Waiver of Subrogation Rights.......................
8.6 Indemnity.................................................
ARTICLE IX
DAMAGE OR DESTRUCTION
9.1 Damage or Destruction.....................................
9.2 Abatement of Rent; Compliance with Laws...................
ARTICLE X
CONDEMNATION
10.1 Takings...................................................
10.2 Partial Taking............................................
10.3 Rental Adjustment.........................................
10.4 Tenant's Claims...........................................
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ARTICLE XI
LIENS
11.1 Liens....................................................
ARTICLE XII
RIGHT TO CONTEST
12.1 Right to Contest.........................................
ARTICLE XIII
ASSIGNMENT AND SUBLETTING
13.1 Transfer.................................................
13.2 Permitted Transfers......................................
13.3 Assumption by Transferee.................................
ARTICLE XIV
DEFAULT
14.1 Events of Default........................................
14.2 Landlord's Remedies......................................
14.3 Landlord's Default.......................................
ARTICLE XV
INSPECTION
15.1 Inspection...............................................
ARTICLE XVI
SUBORDINATION; NONDISTURBANCE
16.1 Subordination............................................
16.2 Nondisturbance...........................................
ARTICLE XVII
HOLDOVER
17.1 Holdover.................................................
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ARTICLE XVIII
ESTOPPEL CERTIFICATES
18.1 Estoppel Certificates....................................
ARTICLE XIX
NOTICE OF CHANGE IN OWNERSHIP
19.1 Notice of Change in Ownership............................
ARTICLE XX
MISCELLANEOUS PROVISIONS
20.1 Notice...................................................
20.2 Entire Agreement.........................................
20.3 Cumulative Remedies......................................
20.4 No Waiver................................................
20.5 Amendments...............................................
20.6 Quiet Enjoyment..........................................
20.7 No Third Party Beneficiary...............................
20.8 Successors and Assigns...................................
20.9 Governing Law............................................
20.10 Captions.................................................
20.11 Gender; Number...........................................
20.12 No Brokers...............................................
20.13 Counterparts.............................................
20.14 No Recording.............................................
20.15 Severability.............................................
20.16 Attorneys' Fees..........................................
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EXHIBIT LIST
Exhibit "A" -- The Legal Description of The Land
Exhibit "B" -- The Premises on The Base ment of The Building
Exhibit "C" -- The Premises on The First Floor of The Building
Exhibit "D" -- The Premises on The Third Floor of The Building
Exhibit "E" -- The Premises on The Fifth Floor of The Building
Exhibit "F" -- The Equipment on the Roof of the Building
Exhibit "G" -- The Equipment on the Top Floor of the Building
Exhibit "H" -- The Equipment on the Basement of the Building
Exhibit "I" -- Signage
Exhibit "J" -- Janitorial Services
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LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") is made and entered into as of
_________, 1997, by and between F.I.G. HOLDING COMPANY, a California corporation
("Landlord"), and THE OHIO STATE LIFE INSURANCE COMPANY, an Ohio corporation
("Tenant").
RECITALS
WHEREAS, Landlord is the owner of a fee simple interest in:
(i) that certain real property located in the City of Columbus, County of
Franklin, State of Ohio, as more particularly described on Exhibit "A" attached
hereto (the "Land"); and (ii) those certain improvements and fixtures located on
or in the Land, including, without limitation, that certain office building
commonly known as ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Building" and, together with the
Land, the "Project"); and
WHEREAS, Landlord desires to lease to Tenant, and Tenant
desires to lease from Landlord, among other things, a portion of the Building
upon and subject to the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the Rent (as hereinafter
defined), the mutual covenants and agreements set forth in this Lease and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Landlord and Tenant hereby agree as follows:
ARTICLE I
PREMISES, COMMON AREAS AND EQUIPMENT
1.1 Premises. Landlord hereby leases to Tenant, and Tenant hereby
takes and hires from Landlord, upon and subject to the terms, covenants and
conditions set forth herein, the following property (collectively, the
"Premises"):
(a) that portion of the basement of the Build ing, as more
particularly set forth on Exhibit "B" attached hereto (the rentable square
footage of which shall, following the date hereof, (i) be determined by a
licensed architect in
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accordance with BOMA standards and (ii) be confirmed in writing by the parties
hereto);
(b) that portion of the first (1st) floor of the Building, as
more particularly set forth on Exhibit "C" attached hereto (the rentable square
footage of which shall, following the date hereof, (i) be determined by a
licensed architect in accordance with BOMA standards and (ii) be confirmed in
writing by the parties hereto);
(c) that portion of the third (3rd) floor of the Building, as
more particularly set forth on Exhibit "D" attached hereto (the rentable square
footage of which shall, following the date hereof, (i) be determined by a
licensed architect in accordance with BOMA standards and (ii) be confirmed in
writing by the parties hereto); and
(d) that portion of the fifth (5th) floor of the Building, as
more particularly set forth on Exhibit "E" attached hereto (the rentable square
footage of which shall, following the date hereof, (i) be determined by a
licensed architect in accordance with BOMA standards and (ii) be confirmed in
writing by the parties hereto).
1.2 COMMON AREAS; ACCESS. During the Term, Landlord grants to Tenant
the non-exclusive right to use, in common with other tenants in the Building,
the following areas appurte nant to the Premises (collectively, the "Common
Areas"): (i) the common entrances, lobbies, rest rooms, kitchens, cafeterias,
elevators, fire escapes and other emergency exits, stairways and access ways,
loading docks, ramps, drives and platforms, and any passage ways and
serviceways thereto, and the common pipes, conduits, wires and equip ment
serving the Premises; (ii) common walkways and sidewalks necessary for access
to the Building; and (iii) three hundred twenty five (325) parking spaces.
Landlord reserves the right from time to time, without
unreasonable interference with Tenant's use of the Premises and/or unreasonable
diminution or interference with the Common Areas within or outside the Building,
to alter or relocate any common facilities, to expand the Building, and to
install, relocate, use, maintain, repair and replace pipes, ducts, conduits,
wires and appurtenant meters and equipment for service to portions of the Build
ing above the ceiling surfaces, below the floor surfaces, within the walls and
in the central core areas.
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1.3 EQUIPMENT. Tenant acknowledges that in order for Landlord to use
and enjoy that portion of the first (1st) floor of the Building that is not
part of the Premises (the "Data Center") as a computer center, Landlord must
retain access to certain environmental equipment for the operation of
Landlord's computers. Accordingly (and notwithstanding anything to the contrary
contained herein), during the Term, the parties hereby acknowledge and agree
that Landlord shall have the right to use (and have access to) the following
equipment (collectively, the "Equipment"):
(a) the water cooling systems and related equip ment located on that
portion of the roof of the Building as set forth on Exhibit "F" attached hereto;
(b) the condensers, pumps and related equipment located on that
portion of the top floor of the Building as set forth on Exhibit "G" attached
hereto;
(c) the pumps and related equipment located on that portion of the
basement of the Building as set forth on Exhibit "H" attached hereto; and
(d) the electrical wires, conduits, conduit switches and cables
located in any and all risers, vertical shafts and horizontal raceways of the
Building, that are used to connect any of the Equipment described in para
graphs (a), (b) and (c) above to the Data Center or to the uninterrupted power
supply system located at ▇▇▇▇ ▇▇▇▇▇▇'▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇.
1.4 SIGNAGE. Landlord shall permit Tenant to post signs as set forth
on Exhibit "I" attached hereto.
ARTICLE II
TERM AND OPTIONS
2.1 TERM. The term of this Lease shall be for a period of three (3)
years (the "Term"), commencing on the date hereof (the "Commencement Date")
and, unless sooner terminated or extended as hereinafter provided, expiring on
the last day of the calendar month in which the third (3rd) year anniversary of
the Commencement Date occurs (the "Expira tion Date"); provided, however, that
Tenant shall have the option to terminate, effective as of the last day of the
calendar month in which the second (2nd) year anniversary of the Commencement
Date occurs (i.e., approximately two (2) years after the date hereof), that
portion of this Lease that relates to the Premises located on any one (1) floor
of the Building
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(which floor shall be selected by Tenant), by delivering written notice of such
termination (including an identification of the floor to be terminated) to
Landlord not later than one hundred twenty (120) days prior to the expiration
of the last day of the calendar month in which the second (2nd) year
anniversary of the Commencement Date occurs, and in the event that Tenant
elects to terminate such portion, all Rent to be paid by Tenant to Landlord and
all parking spaces to be provided by Landlord to Tenant under the terms of this
Lease shall be proportionately reduced to reflect the reduction in the rentable
square footage of the Premises as a result of such termination.
2.2 OPTIONS. Tenant shall have six (6) consecutive options (each, an
"Option") to extend the Term for a two-year period (each an "Option Term") upon
and subject to all of the same terms and conditions hereof (and subject to the
Rent increase as set forth in Section 3.1 hereof). Tenant may elect to exercise
each Option and to extend the Term by delivering written notice of such
election to Landlord not later than one hundred twenty (120) days prior to the
Expiration Date then in effect, in which event the Term (and the Expiration
Date) shall be extended for two (2) years from and after the Expiration Date
then in effect. If Tenant fails to exercise an Option in accordance with the
terms hereof (thereby opting not to extend the Term of this Lease), then all
subsequent Options shall be cancelled and extinguished. Landlord and Tenant
hereby agree that as consideration for Tenant's exercising the first of the six
(6) Options, Landlord shall (i) replace the carpet in the Premises, at
Landlord's sole cost and expense, with new carpet of the same type and quality
as the carpet that exists in the Premises on the Commencement Date, (ii)
repaint all painted areas throughout the Premises, at Landlord's sole cost and
expense, using the same type and quality of paint as the paint that exists in
the Premises on the Commencement Date, and (iii) perform the above-mentioned
work within the first sixty (60) days of such Option Term.
ARTICLE III
RENT
3.1 Payment of Base Rent. Subject to the provisions of Article IX and
Article X hereof, Tenant shall pay to Land lord the sum of Fourteen Dollars
($14.00) per rentable square foot of the Premises per year ("Base Rent"),
one-twelfth (1/12) of which shall be payable, in advance, on or before the
first (1st) day of each calendar month during the Term. If the Term shall
commence on a day other than the first day of a calendar month or shall end on
a day other than the last day of a calendar month, then the Base Rent for the
first and/or last partial calendar
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month of the Term, as the case may be, shall be prorated based on the actual
number of days elapsed in a 360 day year.
In the event that Tenant exercises its second (2nd) Option in
accordance with the terms hereof, the Base Rent during such second (2nd) Option
Term (and during the Option Term of any subsequently exercised Option) shall be
equal to the Market Rent (as hereinafter defined); pro vided, however, that in
no event shall the Base Rent for such Option Terms be less than Fourteen Dollars
($14.00) per rentable square foot of the Premises per year. As used herein, the
term "Market Rent" shall mean the fair market value per rentable square foot of
the Premises, taking into account all relevant factors, as determined by mutual
agreement of Landlord and Tenant. In the event that Landlord and Tenant are
unable to agree upon the Market Rent on or before the thirtieth (30th) day
following Landlord's receipt of Tenant's notice exercising the second (2nd)
Option, the matter shall be submitted to arbitration (in accordance with the
terms of the following paragraph) with each Arbitrator (as hereinafter defined)
being a member of the American Institute of Real Estate Appraisers (or any
successor association or body of comparable standing) and having been engaged in
the appraisal of commercial real estate situated in Franklin County, Ohio for a
period of not less than five (5) years immediately preceding his appointment.
In the event that arbitration is required pursuant to the
terms of the preceding paragraph, such arbitration shall be conducted by a
single arbitrator (an "Arbitrator") agreed upon by Landlord and Tenant within
ten (10) days of the commencement of the dispute. In the event that Landlord
and Tenant are unable to agree upon an Arbitrator within such period, each
party shall, within the next five (5) days, appoint an Arbitrator. The
appointed Arbitrators shall determine the Market Rent. In the event that the
Arbitrators are unable to agree upon the Market Rent within twenty (20)
days of their appointment, the Arbitrators shall appoint, within such twenty
(20) day period, a third Arbitrator, and the Market Rent shall be the average
of the determination prepared by said third Arbitrator and the determination
(prepared by either of the first two Arbitrators) which is closest in value to
(whether greater than or less than) the determination prepared by the third
Arbitrator. In the event that either party fails to appoint an Arbitrator in
accordance with the terms hereof, the decision of the other Arbitrator shall be
binding. In the event that the two Arbitrators ap pointed are unable to agree
upon the appointment of a third Arbitrator in accordance with the terms hereof,
then either party, acting on behalf of both, may request such appoint ment by
the [Presiding Judge of the Superior Court of the State of Ohio in and for the
County of Franklin]. In the event of the failure, refusal or inability of any
Arbitra tor to act, a new Arbitrator shall be appointed in his stead, which
appointment shall be made in the same manner as hereinbefore provided for the
appointment of such Arbitrator so failing, refusing, or unable to act. The fees
and expenses of the Arbitrators shall be borne as follows: (i) the fees and
expenses of a single Arbitrator shall be borne equally by Landlord and Tenant;
(ii) each party shall bear the fees and expenses of the Arbitrator appointed by
it; and (iii) the fees and expenses of the third Arbitrator (if any) shall be
borne equally by Landlord and Tenant (provided, however, that the Arbitra tors
may, in their discretion, award reasonable costs and fees to the prevailing
party). Any Arbitrator appointed pursuant to the terms of this paragraph shall
be a disin terested party and any arbitration proceedings shall be
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held in Franklin County, Ohio, in accordance with the rules then in effect of
the American Arbitration Association (or any successor association or body of
comparable standing) and this agreement to arbitrate shall be specifically
enforceable. Any award rendered by such arbitration shall be final and binding
on each of the parties and any judgment may be entered thereon in [the Superior
Court of Franklin County, Ohio] or any other court of competent jurisdiction.
3.2 DEFINITION OF RENT. All costs and expenses which Tenant assumes
or agrees to pay to Landlord under this Lease shall be deemed additional rent
(which, together with the Base Rent is sometimes referred to herein as the
"Rent"). The Rent shall be paid to Landlord at Landlord's address set forth in
Section 20.1 hereof, or to such other person or address as Landlord shall
designate to Tenant in writing from time to time, without any setoff,
deduction, ▇▇▇▇▇ ment, prior notice or demand except as otherwise spe cifically
provided in this Lease, in lawful money of the United States of America.
3.3 LATE CHARGES. Any Rent not paid by Tenant on or before the tenth
(10th) business day following the day that such Rent is due hereunder shall
bear interest from the date due to the date of payment at the rate of twelve
percent (12%) per annum (but in no event in excess of the maximum rate
permitted by law).
3.4 TERMINATION-ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to Article IX or Article X hereof, an equitable adjustment shall be
made concerning advance Rent and any advance payments made by Tenant to
Landlord.
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ARTICLE IV
OPERATING EXPENSES
4.1 PAYMENT OF OPERATING EXPENSES. In the event that the Operating
Expenses (as hereinafter defined) for any calendar year during the Term exceed
the Operating Expenses for the 1997 calendar year (the "Base Year"), Tenant
shall pay to Landlord, in addition to the Base Rent and all other payments due
under this Lease, an amount equal to Tenant's Proportionate Share (as
hereinafter defined) of the Excess Expenses (as hereinafter defined) in
accordance with the provisions of this Article IV.
4.2 DEFINITION OF OPERATING EXPENSES. (a) The term "Operat ing
Expenses" shall mean the reasonable costs and expenses incurred by Landlord in
connection with the operation, maintenance, repair and ownership of the
Building that are properly allocable to the Premises, as determined in accor
dance with generally accepted accounting principles, consistently applied,
including, without limitation, the following costs and expenses: (1) salaries,
wages, bonuses and other compensation of all persons at or below the level of
Building manager employed full time in the performance of duties directly
connected with the operation, repair, or maintenance of the Building
("Landlord's Employees") (including, without limitation, engineers, janitors,
painters, floor waxers, window washers, security, and gardeners), but
excluding persons performing services not uniformly available to or performed
for substantially all of the tenants of the Project; (2) payroll, social securi
ty, workers' compensation, unemployment and similar taxes with respect to
Landlord's Employees, and the cost of providing disability or other benefits
imposed by law or otherwise, with respect to Landlord's Employees; (3) uniforms
(including the cleaning, replacement and pressing thereof) provided to
Landlord's Employees; (4) premiums and other charges incurred by Landlord with
respect to fire, other casualty, rent and liability insur ance, any other
insurance as is deemed necessary or advisable in the reasonable judgment of
Landlord and, after the Base Year, costs of repairing an insured casualty to
the extent of the deductible amount under the applicable insurance policy
(provided that such deductible amount shall not exceed $25,000 for the Building
each year); (5) water charges and sewer rents or fees; (6) license, permit and
inspection fees; (7) sales, use and excise taxes on goods and services
purchased by Landlord in connection with the operation, maintenance or repair
of the Building and Building systems and equipment; (8) the actual cost of
management of the Project, whether managed by Landlord or an independent
contractor, in an amount not to exceed 3% of Landlord's gross rental revenues
from the Building; (9) non-capital repairs to and physical maintenance of the
Building, including Building systems and appurtenances thereto and normal
repairs;
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(10) janitorial, window cleaning, guard, extermination, water treatment,
rubbish removal, plumbing and other services and inspection or service
contracts for elevator, electrical, mechanical and other Building equipment and
systems or as may otherwise be necessary or proper for the operation or
maintenance of the Building; (11) supplies, tools, materials, and equip ment
used in connection with the operation, maintenance or repair of the Building;
(12) reasonable accounting, legal and other professional fees and
expenses; (13) painting the exterior or the public or Common Areas of the
Building and the cost of maintaining the sidewalks, landscaping and other
Common Areas of the Building; (14) all costs and expenses for electricity,
chilled water, air conditioning, water for heating, gas, fuel, steam, heat,
lights, power and other energy related utilities required in connection with
the operation, maintenance and repair of the Building; (15) the cost of
furniture, draperies, carpeting, landscap ing and other customary and ordinary
items of personal property (excluding paintings, sculptures and other works of
art) provided by Landlord for use in the Common Areas of the Building, such
costs to be amortized over the useful life thereof; and (16) subject to the
limitation set forth in Section 4.3(b) hereof, Property Taxes (as hereinafter
defined). No particular item of expense shall be included in the calculation of
Operating Expenses more than once.
(b) Notwithstanding anything to the contrary contained herein,
Operating Expenses shall not include the following: (i) depreciation on the
Building or equipment or systems therein; (ii) debt service (including, without
limitation, interest, principal, points, amortization, commissions or fees);
(iii) rental under any ground or underlying lease; (iv) attorneys' fees, charges
and disbursements and other costs and expenses incurred in connection with lease
negotiations with prospective Building tenants or any disputes with Building
tenants; (v) the cost of any repairs, improvements, alterations or equipment
which would be properly classified as capital expenditures according to
generally accepted accounting principles and practices; (vi) the cost (including
permits, licenses and inspection fees) of decorating, improving for tenant
occupancy, renovating, painting or redecorating portions of the Building to be
demised to tenants; (vii) wages, salaries or other compensation paid to any
executive employees of Landlord or of Landlord's agents above the function of
Building manager; (viii) advertising and promotional expenditures; (ix) real
estate broker's or other leasing commissions or costs; (x) penalties or other
costs incurred due to a violation by Landlord, as deter mined by written
admission, stipulation, final judgment or arbitration award, of any of the terms
and conditions of this Lease or any other lease relating to the Building, except
to the extent that such costs reflect costs that would have been incurred by
Landlord absent such violation; (xi) repairs and other work occasioned by any
uninsured casualty and, subject to the provisions of item (4) in Section 4.2(a)
above, any insured casualty, to the extent that Landlord
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is reimbursed by insurance proceeds, and other work paid from insurance or
condemnation proceeds; (xii) costs, penalties or fines arising from Landlord's
violation of any applicable governmental rule or authority except to the extent
that such costs reflect costs that would have been incurred by Landlord absent
such violation; (xiii) all direct costs of refinancing, selling or exchang ing
the Building or any interest therein, including broker's commissions,
attorneys' fees, charges and dis bursements and closing costs; (xiv) Landlord's
general corporate office overhead and administrative expenses (which shall not
be deemed to include the management fee provided for in item (8) of Section
4.2(a) above); (xv) all costs associated with the presence, abatement,
removal and monitoring of any asbestos, chlorofluorocarbons or hazard ous
materials and any abatement or removal activities in connection therewith;
(xvi) any expense for which Landlord is actually directly reimbursed by a
tenant or other party; (xvii) amounts paid to affiliates of Landlord for
materials or services to the extent that the cost of such materials or services
is in excess of the normal range of costs for similar materials or services
under normal circumstances (taking into account the market factors in effect on
the date any relevant contracts were negotiated) in comparable buildings;
(xviii) all costs of services or other benefits made available without separate
charge to other tenants of the Building, which services or benefits are not
made available without separate charge to Tenant; (xix) the excess cost portion
of all services or other benefits provided to other tenants of the Building in
substantially greater quantities (on a per square foot basis) or at a
substantially greater cost (on a per square foot basis) than provided to
Tenant; (xx) all costs of correcting defects in the initial construction of the
Building; (xxi) costs for utilities for which any tenant of the Building
directly contracts with a utility company; (xxii) all costs to the extent
arising from the gross negligence or willful misconduct of Landlord or its
employees or agents; (xxiii) all costs arising from Landlord's charitable or
political contributions; (xxiv) all costs of purchasing or leasing sculpture,
paint ings or other objects of art; and (xxv) all costs to construct, operate
and maintain any additions to the Building made subsequent to the date of this
Lease.
(c) Landlord hereby agrees that the Operating Expenses shall
not be a profit center for Landlord. Operating Expenses are intended to be "net"
only and, therefore, should be reduced by the amount of any insurance or
warranty reimbursement or recovery, other reimbursement, recoupment, payment,
discount, credit, reduction, allowance or the like received by Landlord or its
agent in respect of such Operating Expenses. Landlord shall promptly, diligently
and actively pursue any and all insurance, warranty or other claims relating to
costs that are included in Operating Expenses. In no event shall Landlord be
entitled to a reimbursement (under this Section 4.2 and comparable paragraphs of
other tenants' leases) (i) from
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tenants of the Building for Operating Expenses in excess of one hundred percent
(100%) of the cost actually incurred therefor in any applicable calendar year,
or (ii) from Tenant for an amount in excess of the Tenant's Proportion ate
Share of the cost actually incurred for any Operating Expense in any applicable
calendar year. Notwithstanding anything to the contrary contained in this
Section 4.2, to the extent that a portion of any item of Operating
Expense is attributable to any building or business other than the Building,
only that portion of the cost of such item allocable to the Building shall be
included as an Operating Expense, provided that such includable portion when
added to all other portions of such item shall not exceed 100% of the cost of
such item.
4.3 DEFINITION OF PROPERTY TAXES. As used herein, the term "Property
Taxes" shall include: all taxes, assessments, water and sewer charges and other
similar governmental charges levied on or attributable to the Project or its
operation, including, without limitation, (a) real property taxes or
assessments levied or assessed against the Project, (b) assessments or charges
levied or assessed against the Project by any redevelopment agency, and
(c) any tax measured by gross rentals received from the leasing of the Premises
or the Project (other than excess profits taxes, franchise taxes, gift taxes,
transfer taxes, capital stock taxes, inheritance and succession taxes, estate
taxes, federal and state income taxes, and other taxes applied or measured by
Landlord's general net income, as opposed to rents, receipts or income
attributable to opera tions at the Premises). Property Taxes shall not include
interest and/or penalties assessed as a result of any late payment.
4.4 DEFINITION OF TENANT'S PROPORTIONATE SHARE. As used herein, the
term "Tenant's Proportionate Share" shall mean a frac tion, the numerator of
which is equal to the rentable square feet of the Premises (which number shall,
following the date hereof, (i) be determined by a licensed architect in accor
dance with BOMA standards and (ii) be confirmed in writing by the parties
hereto) and the denominator of which is equal to the rentable square feet of
the Project (which number shall, following the date hereof, (a) be determined
by a licensed architect in accordance with BOMA standards and (b) be confirmed
in writing by the parties hereto). Tenant's Proportionate Share of Operating
Expenses shall be payable by Tenant to Landlord as follows:
(a) Beginning with the calendar year following the Base Year
and for each calendar year thereafter (each, a "Comparison Year"), Tenant shall
pay to Landlord, in the manner and at the times provided in subparagraphs (b)
and (c) below, an amount equal to Tenant's Proportionate Share multiplied by the
amount by which Operating Expenses in curred by Landlord in the Comparison Year
exceed
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Operating Expenses incurred by Landlord in the Base Year. This excess is
referred to herein as the "Excess Expenses."
(b) On or before the fifth (5th) business day prior to the
expiration of the Base Year and each Compar ▇▇▇▇ Year during the Term, Landlord
shall deliver to Tenant a notice setting forth Landlord's reasonable estimate
of the amount of Tenant's Proportionate Share of Excess Ex penses payable
during such Comparison Year (such amount being referred to herein as the
"Estimated Excess Expense Amount"). On the first day of each calendar month
during the Term, Tenant shall pay to Landlord an amount equal to one-twelfth
(1/12) of the Estimated Excess Expense Amount then in effect. It is the
intention hereunder to estimate on annual basis the amount of Tenant's
Proportionate Share of Excess Expenses for each Comparison Year, and then to
make an adjustment in the following year, as provided in subparagraph (c)
below, based on the actual Operating Expenses incurred for such Comparison Year.
(c) On or before March 15 of each Comparison Year after the
first Comparison Year, Landlord shall deliver to Tenant a statement (the "Annual
Statement") setting forth actual Operating Expenses for the immediately
preceding Comparison Year, together with a reasonably detailed breakdown of
Operating Expenses incurred in such Comparison Year. If Tenant's Proportionate
Share of the actual Excess Expenses for the immediately preceding Com parison
Year exceeds the aggregate amount of monthly pay ments of the Estimated Excess
Expense Amount made by Tenant for such Comparison Year, then Tenant shall pay
Landlord the amount of such deficiency within thirty (30) days of the receipt of
the Annual Statement. If the aggregate amount of the monthly payments of the
Estimated Excess Expense Amount made by Tenant for such Comparison Year exceeds
Tenant's Proportionate Share of the actual Excess Expenses for such Comparison
Year, then Landlord shall (i) credit against Tenant's ensuing monthly
installments of additional rent for the remainder of such Comparison Year an
amount equal to such deficiency until the credit is ex hausted and (ii) not
later than five (5) business days prior to each calendar month in which such
credit is due, deliver to Tenant a credit statement setting forth the amount of
the credit to be applied to additional rent in such calendar month and the
amount of additional rent, if any, payable in such month. If a credit is due
from Land lord to Tenant on the Expiration Date, then Landlord shall pay Tenant
the amount of the credit within thirty (30) days following the Expiration Date.
The obligations of Tenant and Landlord to make payments required under this
Section 4.4 shall survive the Expiration Date.
▇-▇▇
▇▇
(▇) Tenant's Proportionate Share of Excess Expenses in any
Comparison Year having less than 360 days shall be appropriately prorated.
(e) Tenant (or Tenant's designee or consultant) shall have the
right after reasonable notice and at reason able times to inspect and audit
Landlord's accounting records at Landlord's accounting office and if, after such
inspection, Tenant still disputes the amount of Tenant's Proportionate Share of
Excess Expenses, a certification as to the proper amount shall be made by an
independent Big 6 certified public accountant. Tenant agrees to pay the cost of
such certification unless it is determined that Land lord's original statement
overstated Tenant's Proportionate Share of Excess Expenses by more than five
percent (5%), in which event Landlord shall pay the cost of such certifica tion
and the costs of Tenant's inspection or audit.
ARTICLE V
SERVICES AND UTILITIES
5.1 LANDLORD'S OBLIGATIONS. (a) Subject to the provisions of this
Lease, including, without limitation, subparagraph (b) below and the
limitations and restrictions imposed by applicable laws and government and
utility company regula tions, Landlord shall, at its sole cost and expense: (i)
furnish or cause to be furnished to the Building twenty-four (24) hours a day,
during each day of the Term, electricity suitable for the intended use of the
Premises, hot and cold running water, scavenger and recycling service, and
elevator service; (ii) provide to the Premises window washing service for
exterior windows and those janitorial services set forth on Exhibit "J"
attached hereto and made a part hereof; (iii) maintain and keep
lighted the Common Areas in the Building; and (iv) provide heating, ventilation
and air conditioning ("HVAC") to the Premises on all business days starting no
later than 7:00 a.m. and ending no earlier than 6:00 p.m. Any HVAC required by
Tenant for any days and hours other than those in the preceding sentence shall
be provided to the Pre mises, upon reasonable notice by Tenant to Landlord, and
Tenant shall pay the actual costs to Landlord of providing such HVAC as such
costs are established from time to time, within five (5) business days of
receipt of an invoice from Landlord therefor. Landlord represents, warrants,
cove nants and agrees that throughout the Term and any extension thereof, said
electrical capacity shall not be reduced, and may be increased, as reasonably
requested by Tenant, in order to sustain Tenant's intended use of the Premises;
provided, however, that any costs relating to such increase shall be incurred
and paid by Tenant. Notwithstanding anything to the contrary contained herein,
Landlord shall (if reasonably possible) deliver to Tenant written notice of any
intended interruption (including, without
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limitation any cessation or diminution) in the electricity or water supply
affecting the Premises, within a reasonable period prior to such interruption.
(b) As used herein, "Essential Services" shall mean (i)
ingress and egress to the Building (including, without limitation, emergency
exits), the Premises, the rest rooms in the Building and the Building's parking
area; (ii) HVAC; (iii) life safety systems; (iv) mechanical systems; (v)
plumbing and waste disposal systems; and (vi) electrical systems.
Notwithstanding the provisions of subparagraph (a) above, if any of the
Building equipment or machinery should cease to function properly, or should
any other event occur which results in the cessation or diminu tion of
Essential Services (hereinafter "Service Interrup tion"), Landlord shall
use its reasonable efforts to repair or remedy the Service Interruption as soon
as possible. In the event that Landlord has been notified of such Service
Interruption and Landlord has not repaired or remedied, or taken reasonable
action to repair or remedy, a Service Interruption within twenty-four (24)
hours after the date of occurrence and such Service Interruption is not caused
by an "Event of Force Majeure" (as hereinafter defined), Tenant shall (a) be
entitled to an abatement of Rent from the date of the commencement of such
Service Interruption to the later of (1) the date on which Landlord takes
reasonable action to repair or remedy such Service Inter ruption or (2) the
date on which this Lease is terminated by Tenant, if Tenant elects to terminate
this Lease as hereinafter provided, and (b) have the right, but not the
obligation, to cure said Service Interruption and deduct Tenant's cost thereof
from the next installment or install ments of Rent becoming due. In the event
that (x) Landlord has been notified of such Service Interruption, (y) such
Service Interruption has not been repaired or remedied on or before the tenth
(10th) day after the date on which Landlord receives such notice (for any
reason other than an Event of Force Majeure) and (z) such Service Interruption
can be reasonably repaired or remedied within such period, Tenant shall have
the right, but not the obligation, to terminate this Lease effective as of such
tenth (10th) day, provided that in the event that Tenant does elect to
terminate this Lease, Tenant shall have up to ninety (90) days following such
termination to relocate its personal property, equipment, computers and FF&E
located within the Premises. Tenant shall be responsible for the payment of
Rent for the period of time that its personal property, equipment, computers
and FF&E remain located within the Premises. Commencing on the date on which
Tenant is entitled to an abatement of Rent as set forth in this Section 5.1,
Tenant may, in addition, maintain an action in equity for specific performance.
Nothing herein shall prevent Tenant from defending against a suit filed by
Landlord for non-payment of Rent on the grounds of con structive eviction. As
used herein, the term "Event of Force Majeure" shall mean any event beyond
Landlord's control,
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including, without limitation, an act of God, governmental, regulatory or
judicial authority, war, blockade, insurrection, riot, labor dispute, or
casualty.
(c) Landlord shall, at Landlord's expense, install a separate
electric meter or sub-meter (subject to utility company requirements) in order
to measure electric ity consumed by Tenant on the Premises.
5.2 TENANT'S OBLIGATIONS. (a) Tenant shall pay for, prior to
delinquency, all telephone and other materials and services not expressly the
obligation of Landlord that are furnished to or used on or about the Premises
during the Term or any Option Term.
(b) In addition to Base Rent, Tenant shall pay for all
electricity utilized by Tenant at the Premises, as measured by a separate meter
respecting the Premises.
ARTICLE VI
USE; COMPLIANCE WITH LAWS
6.1 Use. Tenant shall be entitled to use the Premises for general
office operations. Landlord shall cooperate with Tenant in securing from any
public authority any permits or licenses that may be required by Tenant for the
conduct and operation of Tenant's business or for the proper use of the
Premises. Tenant shall not use or occupy, or permit the use or occupancy of,
all or any portion of the Premises for any unlawful purpose.
6.2 Compliance with Laws. Subject to Tenant's Right to Contest (as
hereinafter defined), Tenant shall comply with, and if necessary make all such
alterations so that the Premises is in compliance with, all laws, ordinances,
rules and regulations of all governmental authorities applicable thereto and to
the use thereof ("Legal Requirements"), other than (a) structural changes to
the Building and (b) compliance for which Landlord is expressly responsible
under this Lease.
ARTICLE VII
MAINTENANCE, REPAIRS AND ALTERATIONS
7.1 Landlord's Obligations. Landlord shall maintain in good order,
condition and repair the Building, all mechanical and utility systems, Common
Areas and all other portions of the Premises, except to the extent that Tenant
is obligated
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to maintain the Premises pursuant to the terms of this Lease, including, without
limitation, Section 7.2 hereof. Except as otherwise expressly provided herein,
Landlord shall complete all repairs within thirty (30) days of the date on which
Landlord is notified or becomes aware of the need to make such repairs;
provided, however, that if the nature of a repair is such that it cannot
reasonably be completed within such thirty (30) day period, then Landlord shall
not be in default of its obligations under this Section 7.1 if Landlord
commences the repair in question within such thirty (30) day period and
thereafter dili gently pursues the repair to completion.
7.2 TENANT'S OBLIGATIONS. Except for services furnished by Landlord
pursuant to this Article VII, Tenant, at Tenant's sole cost and expense, shall
maintain the Premises in good order, condition and repair, including, without
limitation, the interior surfaces of the ceilings, walls and floors, all doors,
interior windows, fixtures and special items in excess of Building standard
furnishings and equipment installed by or for the benefit of or at the expense
of Tenant.
7.3 ALTERATIONS. Tenant, at its sole cost and expense, may make any
non-structural changes and alterations to the Premises as Tenant shall
reasonably deem necessary or desirable without the approval of Landlord. Tenant
shall not make structural changes or alterations to the Premises without the
prior written consent of Landlord. As used herein, "Alterations" shall mean any
change or alterations to be made to the Premises by Tenant. Landlord agrees to
join in the application for, and execute all instruments necessary to obtain,
any permits, licenses or authoriza tions in connection with Alterations which
are permitted herein or to which Landlord has consented. Upon the termination
of this Lease and Tenant's relocation of its personal property, equipment,
computers and FF&E within ninety (90) days following such termination in
accordance with the terms hereof (including, without limitation, Tenant's
payment of Rent for the period of time that its personal property, equipment,
computers and FF&E remain located within the Premises), Tenant shall surrender
the Premises to Landlord in the condition that existed on the Commencement Date
(ordinary wear and tear, repairs and replacements required to be made pursuant
to this Lease, loss by fire, casualty, condemnation, and alterations, additions
and improvements herein permitted, all excepted).
7.4 Code Compliance. All work done in connection with any
maintenance, repair, Restoration (as hereinafter defined) and/or Alterations
shall be done in a good and workmanlike manner and in compliance with any and
all Legal Require ments, including, without limitation, applicable building
codes, ordinances, rules and regulations.
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7.5 Tenant's FF&E. All furniture, fixtures, equipment and property of
any nature that may be installed or placed in or upon the Premises by Tenant
(collectively, "FF&E") shall remain the property of Tenant. FF&E may be
relocated within the Premises by the Tenant with Landlord's consent, which
shall not be unreasonably withheld. Landlord hereby waives any right it may now
or hereafter have in the FF&E. Tenant may assign, lien, encumber, mortgage or
create a security interest in or upon the FF&E without the consent of Landlord
and may remove the FF&E at any time during the Term. Upon the request of
Tenant, Landlord agrees to provide Tenant, within ten (10) days of such
request, a written waiver, in form reasonably satisfactory to Tenant,
evidencing Landlord's waiver of any rights it may have in the FF&E.
ARTICLE VIII
INSURANCE
6.1 Tenant's Required Coverage. At all times during the Term, Tenant
shall, at its expense, maintain or cause to be main tained insurance as set
forth in this Article VIII:
(a) all-risk property insurance (including fire, smoke, explosion,
vandalism and malicious mischief) cover ing loss or damage to the FF&E and
other property located at the Premises, in the amount of full replacement value
thereof; provided that Tenant shall be required to maintain insurance for
tornado, collapse and flood only to the extent that such insurance is
customarily carried for comparable Premises in the area and is available at
commer cially reasonable rates and terms;
(b) commercial general liability insurance against claims for
personal injury or death and property damage occurring upon, in or about the
Premises, in the sum of $5,000,000 combined single limit per occurrence and
$10,000,000 all-inclusive umbrella coverage; and
(c) workers' compensation insurance as required by state law with
respect to Tenant's employees.
8.2 Landlord's Required Coverage. At all times during the Term,
Landlord shall, at its expense, maintain or cause to be maintained insurance as
set forth in this Article VIII:
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(a) all-risk property insurance (including fire, smoke,
explosion, vandalism and malicious mischief) cover ing loss or damage to the
Building, in the amount of full replacement value thereof, with a deductible
provision, if any, that does not materially exceed that which prudent,
efficient operators of comparable first-class high-rise office buildings in the
area surrounding the Project would carry from time-to-time in the exercise of
reasonable busi ness judgment; and
(b) commercial general liability insurance with amounts of
coverage Landlord deems appropriate in its good faith business judgment, but in
no event less than $10,000,000 in coverage.
8.3 INSURERS. All insurance provided for under this Lease shall be
effected under valid and enforceable policies issued by insurers of recognized
responsibility who are licensed to do business in the State of Ohio. Such insur
ance may be carried by either party as part of a blanket coverage for all real
property owned or leased by such party.
8.4 ADDITIONAL INSURED. All policies of insurance required to be
obtained by either party pursuant to Sections 8.1 (a), 8.1 (b), 8.2 (a) and 8.2
(b) hereof shall (a) name such party as the insured thereunder, (b) provide
that all insurance proceeds thereunder shall be payable to such party, (c) name
the other party as an additional insured (provided, however, that Landlord's
all risk policy described in Section 8.2 hereof shall not name Tenant as an
additional insured), and (d) contain an endorsement requiring thirty (30) days'
prior written notice from the insurer to the other party before cancellation or
modifica tion thereof. The loss, if any, under the insurance policies required
to be obtained by either party pursuant to Sections 8.1 (a), 8.1 (b), 8.2 (a)
and 8.2 (b) hereof, shall be adjusted with the insurers, or their
authorized representatives, by such insured party.
8.5 Mutual Waiver of Subrogation Rights. Notwithstanding anything to
the contrary contained in this Lease, each party hereto hereby releases the
other respective party and the respective partners, shareholders, agents,
employees, officers, directors and authorized representatives of such released
party, from any claims such releasing party may have for damage to the
Building, the Premises or any of such releasing party's fixtures, personal
property, improvements and alterations in or about the Premises, the Building
or the Land that is caused by or results from risks insured against under any
fire and extended coverage insurance policies actually carried by such
releasing party or deemed to be carried by such releasing party. For purposes
of this Section 8.5, Tenant and Landlord shall be deemed to be carrying any of
the insurance policies required pursuant to Sections 8.1
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and 8.2 hereof but not actually carried by Tenant or Landlord. Each party
hereto shall cause each such fire and extended coverage insurance policy
obtained by it to provide that the insurance company waives all rights of
recovery by way of subrogation against the other respective party and the
other aforesaid released parties in connection with any matter covered by such
policy.
8.6 Indemnity. Tenant shall indemnify, defend and hold Land lord
harmless from and against any and all liabilities, fines, claims, demands,
actions, costs and expenses (including, without limitation, reasonable
attorneys' fees, charges and disbursements), which may be imposed upon or
incurred by or asserted against Landlord by the occurrence of any accident or
injury, including death or damage to person and property, in or about the
Premises during the Term, unless arising as a result of the gross negligence or
willful acts or omissions of Landlord or any agent of Landlord.
ARTICLE IX
DAMAGE OR DESTRUCTION
9.1 Damage or Destruction. If all or a portion of the Premises is
damaged by fire or other casualty, or if the Building is so damaged that access
to or use and occupancy of the Premises is materially impaired (any such fire
or other casualty to the Premises or Building is hereinafter referred to as
"Damage"), Landlord shall within ten (10) business days after the occurrence of
the Damage give Tenant notice of Landlord's reasonable estimate of the time
required to repair such Damage (the "Damage Estimate"). If the Damage Estimate
is ninety (90) days or less, then Landlord shall repair the Damage (such repair
being referred to herein as a "Restoration") and this Lease shall remain in
full force and effect. If the Damage Estimate is more than ninety (90) days,
Landlord, at its option exercised by written notice to Tenant (such a notice
being referred to herein as "Landlord's Notice") within thirty (30) days of the
date of the Damage, shall either (a) repair the Damage, in which event this
Lease shall continue in full force and effect, or (b) if the Premises is
damaged to such an extent that Tenant is prevented from operating its business
at the Premises substantially in the manner in which such business was
conducted prior to the occurrence of such Damage, terminate this Lease
effective as of the date specified by Landlord in Landlord's Notice, which date
shall be not less than thirty (30) days nor more than sixty (60) days after the
date such Landlord's Notice is given. If the Damage Estimate is more than
ninety (90) days, and Landlord elects to repair the Damage or fails to deliver
Landlord's Notice within the time period required hereunder, then Tenant may
(by delivering written notice to
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Landlord within thirty (30) days after Tenant receives the Damage Estimate)
choose, in Tenant's sole and absolute discretion, to terminate this Lease
effective as of the date of such Damage. In the event that neither party elects
to terminate this Lease pursuant to this Section 9.1, and Landlord fails to
substantially complete its repair of the Damage within thirty (30) days after
the expiration of the time period set forth in the Damage Estimate (which
period shall be extended to the extent of any delays caused by Tenant or Events
of Force Majeure), then Tenant may terminate this Lease by delivering written
notice thereof to Landlord. Notwithstanding anything to the contrary in this
Section 9.1, Landlord shall not termi nate this Lease as a result of a fire or
casualty, unless it also exercises any comparable rights to terminate the
leases of all tenants in the Building that are similarly affected by the fire
or casualty. In the event that this Lease is terminated pursuant to the
provisions of this Section 9.1, Tenant shall have up to ninety (90) days
following such termination to relocate its personal property, equipment,
computers and FF&E located within the Premises. Tenant shall be responsible for
the payment of Rent for the period of time that its personal property,
equipment, computers and FF&E remain located within the Premises.
Notwithstanding anything to the contrary contained herein, if the remaining
Term of this Lease following the restoration of any Damage shall be less than
(i) one (1) year, or (ii) three (3) times as long as the restoration period,
Landlord or Tenant may, at its option, elect to terminate this Lease by
delivering written notice of such election to the other party within twenty
(20) business days following the date of the casualty; provided, however, that
a termination by Landlord in connection with a casualty near the end of the
Term as set forth above shall not be effective in the event that (a) the Damage
affects less than 25% of the Building, (b) Tenant then has, or would with the
passage of time have, the right to extend the Term of this Lease pursuant to an
Option, and (c) Tenant notifies Landlord in writing, within twenty (20)
business days following Tenant's receipt of Landlord's termination notice, that
Tenant is exercising such Option, in which case Landlord shall be obligated to
repair and restore the Building in accordance with the terms of this Section
9.1.
9.2 Abatement of Rent; Compliance with Laws. During the period that
the Premises or any portion thereof is rendered unusable by Damage and/or
Restoration, (a) the Rent due hereunder shall be proportionately reduced based
upon the extent to which the Damage and/or Restoration prevents Tenant from
conducting its business at the Premises in the manner in which such business
was conducted prior to the occurrence of such Damage, and (b) notwithstanding
anything to the contrary in Section 6.2 hereof, Landlord shall be solely and
exclusively responsible for correcting any non-compliance with Legal
Requirements resulting from or arising in connection with such Damage and/or
Restoration.
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ARTICLE X
CONDEMNATION
10.1 Takings. If at any time during the Term, (a) all, or any
portion, of the Premises shall be taken or condemned (a "Taking") for a public
or quasi-public use or purpose by any competent authority by the exercise of
the right of condemnation or eminent domain, and (b) the Taking involves a
material part of the Premises such that the remainder of the Premises shall be
deemed unsuitable or insufficient for Tenant's use, either party shall have the
right at its option to terminate this Lease as of the date possession is taken
by the condemning authority, by written notice to the other party within thirty
(30) days after such Taking, and the parties shall be relieved of further
obligations under this Lease, provided that the conditions precedent to a
party's right to terminate this Lease are satisfied as provided in Section 10.2
below. In the event that this Lease is terminated pursuant to the provisions of
this Section 10.1, Tenant shall have up to ninety (90) days following such
termination to relocate its personal property, equipment, computers and FF&E
located within the Premises. Tenant shall be responsible for the payment of
Rent for the period of time that its personal property, equipment, computers
and FF&E remain located within the Premises. In the event that this Lease is
not so terminat ed, then Landlord agrees to the extent of applicable proceeds
to restore the Premises to a complete unit of like quality and character as
existed prior to the Taking, as soon as reasonably possible.
Landlord shall be entitled to and shall receive from the
condemning authority the portion of the award with respect to such Taking
relating to Landlord's estate in the Premises and Tenant shall be entitled to
and shall receive from the condemning authority the portion of the award with
respect to such Taking relating to Tenant's estate in the Premises; provided,
however, that Tenant's award shall be limited to:
(a) an amount for the cost of removal or relocation of Tenant's
property or business; and
(b) an amount for damages for cessation or interruption of Tenant's
business.
10.2 PARTIAL TAKING. In the event of a partial Taking of the Premises
or the Building, Landlord shall have the right to terminate this Lease only if
the part of the Premises or the Building taken is a material part of the
Premises or Building and Tenant shall have the election to terminate this Lease
only if (a) the
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part of the Premises taken is a material part of the Premises which renders the
remainder of the Premises reasonably unsuitable for the continued conduct of
Tenant's business at the Premises or (b) if the loss of use of the part of the
Building taken materially impairs Tenant's use of the Premises. A partial
Taking of the Premises includes a temporary Taking of six months or more.
Notwithstanding anything to the contrary in this Article X, Landlord shall not
terminate this Lease as a result of a Taking, unless it also exercises any
comparable rights to terminate the leases of all tenants in the Building that
are similarly affected by the taking.
10.3 RENTAL ADJUSTMENT. If this Lease is not terminated pursuant to
Section 10.1 hereof, the Rent payable by Tenant for the balance of the Term
shall be equitably and proportionately reduced from the date of such Taking.
Except to the extent that Tenant may be prevented from so doing pursuant to the
terms of the order of the condemning authority, Tenant otherwise shall perform
and observe all of the terms, covenants, conditions and obligations of this
Lease on the part of Tenant to be performed and observed.
10.4 Tenant's Claims. Nothing contained in this Lease shall be
construed to preclude Tenant from prosecuting any claim directly against,
and/or recovering directly from, the condemning authority in any condemnation
proceeding for loss of business, depreciation or damages to and/or cost of
removal or the value of, stock and/or trade fixtures, furniture and other
personal property belonging to Tenant, and for relocation and moving expenses.
ARTICLE XI
LIENS
Subject to Tenant's Right to Contest, Tenant shall not suffer
or permit any lien or encumbrance of any kind or nature whatsoever, including,
without limitation, any mechanics' and materialmen's liens or charges by reason
of any work, labor, services or materials supplied to Tenant or anyone holding
an interest in the Premises through Tenant, to be filed against the Project, the
Premises or Landlord's leasehold interest therein. If any such liens shall be
filed against the Premises in violation of this Article XI, Tenant shall, within
a reasonable period of time, but in no event more than ninety (90) days after
notice of the filing thereof, cause the same to be discharged of record by
payment, deposit, bond, order of a court of competent jurisdiction or otherwise.
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ARTICLE XII
RIGHT TO CONTEST
Tenant, at its sole expense, may contest ("Right to Contest"), by
appropriate legal proceedings conducted in good faith and with due diligence,
the amount or validity or application, in whole or in part, of any Legal
Require ment or liens, provided that: (a) the commencement of such proceedings
shall suspend the collection of any such con tested amounts from Landlord and
from the Premises; (b) neither the Premises nor any Rent therefrom nor any part
thereof or interest therein would be in any immediate danger of being sold,
foreclosed, forfeited, attached or lost; (c) in the case of a Legal
Requirement, Landlord would not be in any immediate danger of civil or criminal
liability for failure to comply therewith pending the outcome of such
proceedings; and (d) if such contest be finally resolved against Tenant, Tenant
shall promptly pay the amount required to be paid, together with all interest
and penalties accrued thereon, and/or comply with any applicable Legal
Requirement, as applicable. Landlord, at Tenant's expense, shall execute and
deliver to Tenant such authorizations and other documents as may reasonably be
required in any such contest.
ARTICLE XIII ASSIGNMENT AND SUBLETTING
13.1 Transfer. Except as otherwise expressly provided herein, Tenant
shall not assign, convey, sublease, or otherwise transfer ("Transfer") this
Lease or any interest therein, without the prior written consent of Landlord,
which consent shall not be unreasonably withheld or delayed. It shall not be
deemed unreasonable for Landlord to take into account the net worth of the
proposed transferee vis-a-vis the net worth of Tenant in Landlord's
consideration of such consent. It is understood and agreed that in the event
that Landlord fails to consent to or disapprove any Transfer in writing within
thirty (30) days of Tenant's written request for Landlord's consent to such
Transfer, then Landlord shall be deemed to have consented to such Transfer.
13.2 Permitted Transfers. Notwithstanding anything to the contrary
contained herein, Landlord's consent shall not be required for any of the
following Transfers provided that such transferee's or assignee's net worth and
financial capability is equal to or exceeds that of Tenant:
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(a) any Transfer to any person or entity controlling, controlled by,
or under common control with, Tenant;
(b) any Transfer as a result of a merger, consolidation or
reorganization of Tenant; or
(c) any Transfer to any person or entity acquiring all or
substantially all of the business, assets or voting stock of Tenant.
13.3 ASSUMPTION BY TRANSFEREE. Upon each Transfer, each and every
transferee, whether as transferee or as successor-in-interest of any
transferee, shall be liable for the payment of Rent and for the performance of
all of the covenants, agreements, terms and provisions of this Lease on
Tenant's part to be performed during the Term. Tenant shall deliver or cause to
be delivered to Landlord a duplicate original copy of the instrument of
Transfer, if applicable, which instrument shall contain an assumption by the
transferee of the obligations of Tenant hereunder. Provided that such
transferee or assignee assumes all of Tenant's obligations under this Lease,
any consent by Landlord to any Transfer of this Lease, and any other permitted
Transfer, shall constitute a release of Tenant from liability for the full
performance by it of the provisions of this Lease and all of Tenant's
obligations hereunder shall cease and terminate upon such Transfer.
ARTICLE XIV
DEFAULT
14.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an event of default by Tenant (each, an "Event of Default") under
this Lease:
(a) The failure by Tenant to make any payment of Rent or any
other payment required to be made by Tenant hereunder, as and when due, where
such failure shall continue for a period of ten (10) business days after writ
ten notice thereof from Landlord;
(b) The failure by Tenant to observe or perform any of the
other covenants or provisions of this Lease where such failure shall continue
for a period of thirty (30) days after written notice thereof from Landlord
(unless such failure cannot reasonably be cured within said thirty (30) day
period and Tenant shall have
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commenced to cure said failure within said thirty (30) day period and continues
to prosecute such cure with due diligence);
(c) If any execution or attachment shall be levied against all
or substantially all of Tenant's assets, and such execution or attachment shall
not be stayed, set aside, bonded or discharged within ninety (90) days after the
same shall have been levied;
(d) If an order, judgment or decree shall be entered by any
court of competent jurisdiction approving a petition seeking a reorganization of
Tenant or the appoint ment of a receiver of all or substantially all of Tenant's
assets, and such order, judgment or decree shall continue unstayed and in effect
for a period of ninety (90) days after the same shall have been entered; or
(e) If an involuntary case is commenced against Tenant by the
filing of a petition under any chapter of the Federal bankruptcy code or under
any law other state or Federal governing bankruptcy or insolvency and an order
for relief is entered therein or the petition is not dismissed within ninety
(90) days after the filing of such petition.
14.2 LANDLORD'S REMEDIES. Upon the occurrence of an Event of Default,
Landlord, in addition to any other rights it may have at law or in equity,
shall have the following rights:
(a) to serve a written notice upon Tenant that Landlord elects to
terminate this Lease upon a specified date not less than thirty (30) days from
the date after the serving of such notice and, unless such Event of Default
shall be remedied prior to the termination date set forth in such notice, this
Lease shall terminate on the date specified in such notice and Tenant shall
surrender possession of the Premises to Landlord. In the event that Landlord
terminates this Lease pursuant to this Section 14.2(a), Landlord shall be
entitled to recover from Tenant damages incurred by Landlord by reason of
Tenant's default, including, but not limited to:
(i) the worth, at the time of award, of the unpaid Rent
that has been earned at the time of the termination of this Lease;
(ii) the worth, at the time of award, of the amount by
which the unpaid Rent that would have been earned after the date of
termination of this Lease until the time of award exceeds
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the amount of the loss of Rent that Tenant proves could be reasonably
avoided;
(iii) the worth, at the time of award, of the amount by
which the unpaid Rent for the balance of the stated term hereof after the
time of award exceeds the amount of the loss of Rent that Tenant proves
could be reasonably avoided; and
(iv) any other amount necessary to compensate Landlord for
the detriment proximately caused by Tenant's default, including, but not
limited to, the cost of recovering the Premises, preparing and altering the
Premises for reletting and all other reasonable costs and expenses of
reletting; or
(b) to maintain Tenant's right to possession in which case
this Lease shall continue in effect whether or not Tenant shall have abandoned
the Premises. In such event Landlord shall be entitled to enforce all of Land
lord's rights and remedies under this Lease, including the right to recover the
Rent as it becomes due hereunder.
"The worth, at the time of award," as used in Sections 14.2(a)(i) and
(ii) hereof, is to be computed by allowing interest at the rate of ten percent
(10%) per annum. "The worth, at the time of award," as used in Section
14.2(a)(iii) hereof, is to be computed by discount ing the applicable amount at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
the award, plus one percent (1%). Nothing contained in this Section 14.2 shall
limit Landlord's right to exercise any remedy available to Landlord at law or
in equity in an Event of Default by Tenant under this Lease.
14.3 LANDLORD'S DEFAULT. Landlord shall not be in default in the
performance of any obligation required to be performed under this Lease unless
Landlord has failed to perform such obligation within thirty (30) days after
the date on which Landlord receives notice from Tenant specifying in detail
Landlord's failure to perform; provided, however, that if the nature of
Landlord's obligation is such that more than thirty (30) days are required for
its performance, Landlord shall not be deemed in default if it shall commence
such performance within thirty (30) days and thereafter dili gently pursue the
same to completion. If Landlord does not cure the default, Tenant may exercise
all rights and remedies available to Tenant at law or in equity.
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ARTICLE XV
INSPECTION
Landlord and its representatives shall have the right to enter
into and upon the Premises or any part thereof at reasonable hours, after seven
(7) business days' prior written notice to Tenant (provided that Landlord is
accompanied at all times by Tenant or Tenant's agent or representative), for the
purpose of (a) inspecting the Premises to confirm that Tenant is in compliance
with its obligations under this Lease, (b) showing the Premises to prospective
purchasers of the Project, and (c) at any time within one (1) month prior to
the Expiration Date, for the purpose of showing the Premises to prospective
tenants; provided, however, that if Tenant does not have any further Options,
then Landlord may show the Premises to prospective tenants at any time within
two (2) months prior to the Expiration Date.
ARTICLE XVI
SUBORDINATION; NONDISTURBANCE
16.1 SUBORDINATION. This Lease, at Landlord's option, shall be
subordinate to any ground lease, mortgage, deed of trust, or any other
hypothecation or security (collective ly, "Security Devices") now or hereafter
placed by Landlord upon the Project and to any and all advances made on the
security thereof and to all renewals, modifications, consolidations,
replacements and extensions thereof. Notwithstanding such subordination,
Tenant's right to quiet possession of the Premises shall not be disturbed if
Tenant is not in default and so long as Tenant shall pay Rent and observe and
perform all of the provisions of this Lease, unless this Lease is otherwise
terminated pursuant to its terms. If any mortgagee, trustee or ground lessor
shall elect to have this Lease prior to the lien of its mortgage, deed of trust
or ground lease, and shall give written notice thereof to Tenant, this Lease
shall be deemed prior to such mortgage, deed of trust, or ground lease, whether
this Lease is dated prior or subsequent to the date of said mortgage, deed of
trust or ground lease, or the date of recording thereof.
16.2 NONDISTURBANCE. Notwithstanding anything to the contrary
contained herein, with respect to Security Devices entered into by Landlord
after the execution of this Lease, Tenant's subordination of this Lease shall
be subject to and conditioned upon Tenant's receipt of written assurances from
the lenders under such Security Devices, in form and substance reasonably
satisfactory to Tenant, that Tenant's possession and this Lease will not be
disturbed so long as Tenant is not in breach hereof and attorns to the record
owner of the Premises.
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ARTICLE XVII
HOLDOVER
If Tenant remains in possession of the Premises or any part
thereof after the expiration of the Term of this Lease (as it may be extended),
such occupancy shall be a tenancy from month to month upon the same terms and
provisions as this Lease; provided, however, that Basic Rent shall be an amount
equal to 125% of the Basic Rent which was due immediately prior to the
expiration of the Term of this Lease.
ARTICLE XVIII
ESTOPPEL CERTIFICATES
Tenant agrees, at any time and from time to time upon not less
than twenty (20) days' prior written notice by Landlord, to execute, acknowledge
and deliver to Landlord a statement in writing certifying that this Lease is
unmodified and in full force and effect (or if there have been modifications,
that the Lease is in full force and effect as modified and stating the
modifications), the dates to which Rent has been paid, and stating whether
Landlord is in default in performing any term, covenant, agreement, condition or
limitation contained in this Lease, it being intended that any such statement
delivered pursuant to this Article XVIII may be relied upon by Land lord, any
prospective purchaser of fee title in and to the Premises, or any mortgagee or
prospective mortgagee, but reliance on such statement may not extend to any
default as to which Tenant shall have no actual knowledge.
ARTICLE XIX
NOTICE OF CHANGE IN OWNERSHIP
Landlord agrees to deliver to Tenant written notice of any change in
the ownership of the Building, on or before the thirtieth (30th) day prior to
such change in ownership.
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ARTICLE XX
MISCELLANEOUS PROVISIONS
1Notice. All notices and other communications under this Lease must be in
writing and shall be deemed to have been duly given if delivered, telecopied or
mailed, by certified mail, return receipt requested, first-class postage
prepaid, to the parties at the following addresses:
If to Landlord: F.I.G. Holding Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇, Senior Vice President and General
Counsel, ▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President,
Investments, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Real Estate
Investment Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a Copy To: F.I.G. Holding Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Vice President of Data Center
Operations
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Tenant: The Ohio State Life Insurance Company
c/o Great Southern Life Insurance Company
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
All notices and other communications required or permitted
under this Lease that are addressed as provided in this Article XX shall, if
delivered personally, be deemed given upon delivery, shall, if delivered by
telecopy, be deemed delivered when confirmed and shall, if delivered by mail in
the manner described above, be deemed given on the third business day after the
day it is deposited in a regular depository of the United States mail. Any party
from time to time may change its address for the purpose of notices to that
party by giving a
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similar notice specifying a new address, but no such notice shall be deemed to
have been given until it is actually received by the party sought to be charged
with the contents thereof.
20.2 ENTIRE AGREEMENT. This Lease supersedes all prior discus sions
and agreements between the parties with respect to the subject matter hereof,
and this Lease (including the exhibits attached hereto) contains the sole and
entire agreement between the parties hereto with respect to the subject matter
hereof.
20.3 CUMULATIVE REMEDIES. The specified remedies to which Landlord or
Tenant may resort under the terms of this Lease are cumulative and are not
intended to be exclusive of any other remedies or means of redress to which
Landlord or Tenant, as the case may be, may be lawfully entitled in case of any
breach, or threatened breach by Landlord or Tenant of any provisions of this
Lease.
20.4 NO WAIVER. Except as otherwise expressly provided here in, the
failure of Landlord or Tenant to insist in any one or more cases upon the
strict performance of any of the covenants of this Lease shall not be construed
as a waiver or relinquishment for the future of such covenant. A receipt by
Landlord of Rent with knowledge of the breach of any covenant hereof shall not
be deemed a waiver of such breach. No waiver by Landlord or Tenant of any
provision of this Lease shall be deemed to have been made unless ex pressed in
writing and signed by Landlord or Tenant, as the case may be.
20.5 AMENDMENTS. This Lease shall not be amended or modified except
by an agreement in writing executed by both Landlord and Tenant.
20.6 QUIET ENJOYMENT. Landlord covenants, agrees and warrants that
Tenant, upon paying the Rent and all other charges herein provided for and upon
observing and keeping all of the covenants, agreements and provisions of this
Lease on its part to be observed and kept, shall peaceably and quietly hold,
occupy and enjoy the Premises during the Term without hindrance or molestation
by or from anyone claiming by, through or under Landlord.
20.7 No Third Party Beneficiary. The terms and provisions of this
Lease are intended solely for the benefit of the parties hereto and their
respective successors or assigns, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other person.
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20.8 SUCCESSORS AND ASSIGNS. This Lease shall be binding upon and
inure to the benefit of Landlord and Tenant, their respective heirs,
executors, administrators, successors and assigns.
20.9 GOVERNING LAW. This Lease shall be governed by and construed in
accordance with the laws of the State of Ohio.
20.10 CAPTIONS. The captions of this Lease are for convenience and
reference only and in no way define or limit the scope or intent of this Lease,
nor in any way affect this Lease.
20.11 Gender; Number. Words of any gender in this Lease shall be held
to include any other gender, and words in the singular number shall be held to
include the plural when the sense so requires. The word "person" shall mean a
corporation, partnership, trust or other entity, as the case may be.
20.12 NO BROKERS. Tenant and Landlord each represent to the other that
they have not dealt with any broker in regard to the execution of this Lease
and agree to defend, indemnify and hold each other harmless for any claims
which arise as a result of the breach of the foregoing represen tation.
20.13 COUNTERPARTS. This Lease may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
20.14 NO RECORDING. Neither party may record this Lease or any short
form of this Lease without the prior written consent of the other party (which
consent may be withheld in such party's sole and absolute discretion).
20.15 SEVERABILITY. If any term or provision of this Lease or the
application thereof to any person or circumstance shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than those as to which
it is invalid or unenforceable, shall not be affected thereby, and each term
and provision of this Lease shall be valid and enforced to the fullest extent
permitted by law.
20.16 ATTORNEYS' FEES. In the event of any litigation between Landlord
and Tenant alleging a breach of this Lease by the other party, the losing party
shall pay to the prevailing party its costs of litigation including reasonable
attor neys' fees, charges and disbursements.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Lease as of the day and year first above written.
LANDLORD:
F.I.G. HOLDING COMPANY,
a California corporation
By: ________________________________
Name:
Its:
By: ________________________________
Name:
Its:
TENANT:
THE OHIO STATE LIFE INSURANCE
COMPANY, an Ohio corporation
By: ________________________________
Name:
Its:
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EXHIBIT A
THE LEGAL DESCRIPTION OF THE LAND
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EXHIBIT B
THE PREMISES ON THE BASEMENT OF THE BUILDING
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EXHIBIT C
THE PREMISES ON THE FIRST FLOOR OF THE BUILDING
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EXHIBIT D
THE PREMISES ON ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇-▇▇
112
EXHIBIT E
THE PREMISES ON ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇-▇▇
113
EXHIBIT F
THE EQUIPMENT ON THE ROOF OF THE BUILDING
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EXHIBIT G
THE EQUIPMENT ON THE TOP FLOOR OF THE BUILDING
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EXHIBIT H
THE EQUIPMENT ON THE BASEMENT OF THE BUILDING
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116
EXHIBIT I
SIGNAGE
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117
EXHIBIT J
JANITORIAL SERVICES
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EXHIBIT D
TRANSITION SERVICES AGREEMENT
Dated as of _______ ___, 1997
Between
FARMERS GROUP, INC.
and
_____________________________
119
TABLE OF CONTENTS
Page
ARTICLE I
ADMINISTRATIVE SERVICES
1.1 Transition Period Services............................ 1
1.2 Post-Transition Period................................ 2
1.3 Settlements........................................... 2
ARTICLE II
PERFORMANCE STANDARDS
2.1 Performance and Quality............................... 2
2.2 Reliance on Company Employees......................... 2
2.3 Modification of Service Level ........................ 3
ARTICLE III
TRANSITION ASSISTANCE
3.1 Transfer of Administration............................ 3
3.2 Systems Transfer...................................... 3
ARTICLE IV
COST OF SERVICES AND EXPENSES
4.1 Service Fees.......................................... 4
4.3 Taxes................................................. 4
ARTICLE V
RELATIONSHIP OF THE PARTIES
5.1 Relationship of the Parties........................... 4
5.2 Non-Solicitation of Employees ........................ 4
D-i
ARTICLE VI
RECORD RETENTION AND MAINTENANCE
6.1 Record Retention and Maintenance...................... 5
ARTICLE VII
ACCESS TO PREMISES, BOOKS AND RECORDS
7.1 Access to Premises, Books and Records................. 5
ARTICLE VIII
BANKING ARRANGEMENTS
8.1 Deposit and Disbursement Accounts..................... 5
8.2 Deposits and Disbursements............................ 5
8.3 Approved Disbursements................................ 5
8.4 Insufficient Funds.................................... 6
8.5 Account Ownership and Earnings........................ 6
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by the Company........................ 6
9.2 Indemnification by the Servicer....................... 6
9.3 Survival of Indemnification Provisions................ 7
ARTICLE X
MISCELLANEOUS
10.1 Confidentiality...................................... 7
10.2 Notices.............................................. 7
10.3 Entire Agreement..................................... 9
10.4 Waiver............................................... 9
10.5 Amendment............................................ 9
10.6 Counterparts......................................... 9
10.7 Third Party Beneficiary.............................. 9
10.8 Governing Law........................................ 9
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10.9 Binding Effect....................................... 9
10.10 Assignment Limited.................................. 9
10.11 Headings, Gender, etc............................... 9
10.12 Severability....................................... 10
SCHEDULES
Schedule A -- SERVICES
Schedule B -- COMPUTER SYSTEMS AND SOFTWARE
Schedule C -- FEE SCHEDULE
Schedule D -- AUTHORIZED EMPLOYEES
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TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT (this "Agree ment"), is made and
entered into as of _______ __, 1996, by and between
________________________, a _________ corpora tion (the "Company"), and Farmers
Group, Inc., a Nevada corporation (the "Servicer"). Capitalized terms used but
not otherwise defined herein shall have the meanings set forth in the Purchase
Agreement (as defined below).
RECITALS
WHEREAS, pursuant to that certain Stock Purchase Agreement,
dated as of January 21, 1997 (the "Purchase Agreement"), by and between Farmers
Group, Inc., a Nevada corporation (the "Seller"), and Great Southern Life
Insurance Company (the "Purchaser"), the Purchaser will acquire all of the
outstanding capital stock of the Company (the "Acquisition");
WHEREAS, in connection with the Acquisition, the Purchaser has
requested that the Servicer provide the Company with certain services during a
transitional period following the Acquisition relating to the policies issued by
the Company prior to the Closing Date along with any new policies under contract
forms for such policies adopted prior to the Closing Date issued by the Company
after the execution of this Agreement (collectively, the "Insurance Policies");
and
WHEREAS, the Servicer and the Company wish to set forth in
this Agreement their respective obligations in connection with the
administration, data processing, servicing, claims payment, policy management
and support of the Insurance Policies.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
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ARTICLE I
ADMINISTRATIVE SERVICES
1.1 TRANSITION PERIOD SERVICES. Subject to obtaining the consents,
licenses and approvals referred to in Section 3.2, on the terms and conditions
set forth herein, during the Transition Period (as defined below), the Servicer
shall, either directly or by agreement with certain of its Affiliates, provide
to the Company the services summarized in Schedule A, and such modified or
additional services as may be agreed upon by the Company and the Servicer from
time to time and set forth in a written amendment to this Agreement
(collectively, the "Services"). The "Transition Period" shall begin on the
Closing Date and end on the earliest of (i) the last day of the ninth month
after the Closing Date, (ii) the last day of the month ending at least 30 days
after the date on which the Company provides written notice to the Servicer
notifying the Servicer of the Company's termination of this Agreement, or (iii)
a date specified by mutual written consent of the parties hereto. Upon at least
fourteen (14) days notice to the Servicer, the Company may direct the Servicer
to cease performing a specified function or functions or the Services performed
by identified person nel.
1.2 POST-TRANSITION PERIOD. After the Transition Period, the
Servicer shall forward to the Company, at the address specified in Section 10.2,
any premiums, correspon dence, claims, inquiries or other matters received by it
after the Transition Period which relate to the Insurance Policies, and shall
refer all telephone calls regarding the Insurance Policies to the Company at the
telephone number set forth in Section 10.2.
1.3 SETTLEMENTS. The Servicer shall not, without the Company's
prior written consent, enter into any settlement with respect to, or compromise,
on behalf of the Company, any claim or demand against, or any cost, liabil ity
or expense of, the Company arising out of or relating to any of the Insurance
Policies (other than on terms expressly provided for in any such Insurance
Policies), all such settlements being reserved to the Company's exclusive
jurisdiction.
ARTICLE II
PERFORMANCE STANDARDS
2.1 PERFORMANCE AND QUALITY. The Servicer shall perform the
Services in conformity with practices and procedures used by the Servicer, and
of the same quality as provided by the Servicer and its Affiliates, 30 days
prior to the date hereof. The Servicer shall, to the extent feasible, modify
such practices and
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procedures to the extent necessary (a) to comply with any consents, licenses or
approvals obtained pursuant to Section 3.2, (b) to avoid a breach or
violation of any proprietary licensing, confidentiality or similar agreement to
which the Systems (as defined below) are subject, and (c) to comply with
changes in such laws and regulations as are applicable to the Services which
become effective during the Transition Period, in each case, at the Company's
cost. In providing the Services, the Servicer may, but shall not be obligated
to, conclusively rely on advice of counsel provided by the Company.
2.2 RELIANCE ON COMPANY EMPLOYEES. The Company agrees that, to the
extent the Servicer's performance of the Services is dependent on the
performance of functions or services or the provision of accurate information
by the Company, the Servicer shall have no obligation to perform such Services
and shall not have any liability to the Company with respect thereto,
including, without limita tion, any liability under Section 9.2 hereof, unless
and until the Company performs such functions or services or provides such
information.
2.3 MODIFICATION OF SERVICE LEVEL. The Servicer shall increase or
decrease the output of Services or resources dedicated to providing the
Services above or below that specified in Section 2.1 above, upon mutual
consent of the Servicer and the Company at modified fees mutually agreed upon.
Further, the Company understands and agrees that the Servicer may provide
similar services to its Affiliates pursuant to a disaster recovery plan and
that, in the event of a disaster, services provided under this Agreement may be
curtailed or suspended for up to thirty (30) days, in accordance with policies
of the Servicer in effect prior to the Acquisition.
ARTICLE III
TRANSITION ASSISTANCE
3.1 TRANSFER OF ADMINISTRATION. During the Transition Period, the
Servicer shall cooperate with the Company and use commercially reasonable
efforts (as defined in the Purchase Agreement) to effect an orderly transfer of
administration as rapidly and smoothly as possible at the business locations
specified by the Company. The Company shall reimburse the Servicer for all
travel costs associ ated therewith which have been approved in writing in
advance by the Company.
3.2 SYSTEMS TRANSFER. The Company and the Servicer acknowledge that
the Services may require the Servicer to use computer systems and software that
are subject to proprietary licensing and confidentiality agreements. A list of
such
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computer systems and software is set forth on Schedule B (the "Systems"). Each
of the Servicer and the Company agrees to use commercially reasonable efforts
to obtain all consents, licenses and approvals with respect to its Systems that
are necessary or desirable for the Servicer to perform the Services or other
obligations hereunder; provided that the Company shall pay any expense,
including the Servicer's internal expenses, involved in obtaining or attempting
to obtain any such consents and licenses. The Company shall also pay any
expense, Taxes, fines, penalties or damages incurred by the Servicer as a
result of any inadvertent failure by the Company to obtain necessary consents
or licenses. In connection with the Services and the transfer or conversion of
the Insurance Policies data from any such Systems, the Company agrees to enter
into nondisclosure agreements with the Servicer's licensors listed on Schedule
B, if any, that are necessary to transfer data to the Company during or at the
end of the Transition Period. The Servicer makes no representation as to the
accuracy or adequacy of its Systems.
ARTICLE IV
COST OF SERVICES AND EXPENSES
4.1 SERVICE FEES. Upon receipt of an invoice from the Servicer
with respect to the Services, the Company shall, within 5 Business Days, pay to
the Servicer the fees set forth on Schedule C (the "Service Fees") for the
Services specified in such invoice as having been provided under this Agreement.
The Servicer shall not invoice the Company more frequently than once a month. At
the Com pany's request, the Servicer shall provide the Company with appropriate
documentation evidencing the provision of such invoiced Services.
4.2 TAXES. Except as otherwise provided in the Purchase Agreement,
the Company shall be liable for (i) any Taxes attributable or related to the
Insurance Policies or the operations of the Company in respect of the
Transition Period and (ii) any Taxes imposed upon the Servicer in the course of
rendering the Services (other than Taxes imposed on the basis of net income in
respect of the Service Fees received by the Servicer). The Company shall
promptly reimburse the Servicer for any such Taxes paid directly by the
Servicer.
ARTICLE V
RELATIONSHIP OF THE PARTIES
5.1 RELATIONSHIP OF THE PARTIES. Nothing con tained in this
Agreement shall be construed to create any relationship of partnership or joint
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venture between the Servicer and the Company, and neither the Company nor the
Servicer shall represent to any third party that any relationship other than as
described in this Agreement exists. The parties agree that in acting pursuant
to this Agreement, the Servicer is acting as the agent of the Company.
5.2 NON-SOLICITATION OF EMPLOYEES. The Company shall not, and shall
cause its Affiliates not to, directly or indirectly, solicit any Person who is
an employee of the Servicer or any of its Affiliates to become an employee of
the Company or any of its Affiliates without the prior written consent of the
Servicer.
ARTICLE VI
RECORD RETENTION AND MAINTENANCE
6.1 RECORD RETENTION AND MAINTENANCE. During the Transition Period,
the Servicer shall hold, maintain and safeguard the books, records and other
data and support materials of the Company, including, without limitation,
files, input materials, reports and forms, that are received, computed,
developed or used pursuant to this Agreement, with the same standard of care
that the Servicer holds, maintains and safeguards its own books, records, data
and support materials.
ARTICLE VII
ACCESS TO PREMISES, BOOKS AND RECORDS
7.1 ACCESS TO PREMISES, BOOKS AND RECORDS. At any time during regular
business hours, upon reasonable notice, the Servicer shall provide the Company
and its representa tives and Affiliates with access to the books and records of
the Company in the possession of the Servicer that are used in connection with
the Services; provided that such access does not unreasonably disrupt the
Servicer's operations.
ARTICLE VIII
BANKING ARRANGEMENTS
8.1 DEPOSIT AND DISBURSEMENT ACCOUNTS. During the Transition Period,
the Servicer shall utilize the deposit and disbursement accounts of the Company
in accordance with the written instructions of the Company.
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8.2 DEPOSITS AND DISBURSEMENTS. All funds col lected by the Servicer
on behalf of the Company in connec tion with the Insurance Policies during the
Transition Period shall be promptly deposited in the appropriate accounts as
the Servicer receives said funds.
8.3 APPROVED DISBURSEMENTS. DURING the Transition Period, the
Company shall authorize the employees of the Servicer set forth on Schedule D
and, from time to time, in the Company's sole discretion, additional designated
employees of the Servicer, to make the following disburse ments relating to the
Insurance Policies from the Company's accounts in a timely manner pursuant to
the terms and conditions of this Agreement: all benefits, claims, loans, cash
surrenders, premium refunds and any other contractual benefits, claims or
obligations and insurance agent compensation required to be paid by the Company
pursuant to the Insurance Policies and amounts approved by the Company as
payable for reinsurance, and such other expenses as may be mutually agreed by
the parties (collectively, the "Approved Disbursements").
8.4 INSUFFICIENT FUNDS. In the event that, at any time, the amounts
in the applicable Company accounts are insufficient to cover the Approved
Disbursements, the Company shall, promptly upon receipt of written notice from
the Servicer, by means of a wire transfer of immediately available funds, pay
into the appropriate disbursement accounts such amounts as may be necessary to
eliminate such insufficiency.
8.5 ACCOUNT OWNERSHIP AND EARNINGS. The Company and the Servicer
acknowledge and agree that the balances in all of the Company's accounts and
the income derived therefrom, shall be owned solely by the Company, and the
Company and the Servicer agree that interest earned on funds in such accounts
shall be credited to such accounts.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by the Company. The Company shall indemnify and
hold the Servicer, its Affiliates and their officers, directors, employees,
agents and subagents, harmless against any Damages (which, for purposes of this
Section 9.1, shall include any Taxes for which the Company is responsible
pursuant to Section 4.2 hereof) resulting from: (i) any action taken by the
Servicer, its Affiliates, or any of their officers, directors, employees,
agents or sub-agents in good faith and in compliance with the terms of this
Agreement; (ii) the
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negligence, miscon duct or bad faith of the Company, its Affiliates and their
officers, directors, employees, agents and sub-agents; and (iii) any act
done or suffered by the Servicer in connec tion with its performance under this
Agreement in reliance upon any instruction, order or other instrument given or
executed by the Company.
9.2 INDEMNIFICATION BY THE SERVICER. The Servicer shall indemnify
and hold the Company, its Affiliates and their officers, directors, employees,
agents and sub-agents harmless against any Damages resulting from the
Servicer's wilful refusal or wilful failure to comply with the terms of this
Agreement, or which arise out of the Servicer's gross negligence or wilful
misconduct, provided, however, that the Servicer shall be without liability to
the Company if such act, error, omission or conduct was in accordance, in whole
or part, with express instructions from the Company received by the Servicer or
as provided in Section 2.3 hereof. In no event shall the Servicer have any
liability to the Company or its Affiliates under this Agreement, including this
Section 9.2, for any Damages resulting from the inaccuracy or inadequacy of the
Servicer's Systems. The Servicer's obligations under this Article shall not, in
the aggregate, exceed the total fees paid to the Servicer under this Agreement.
9.3 SURVIVAL OF INDEMNIFICATION PROVISIONS. The obligations under
Section 9.1 and Section 9.2 of this Agreement shall survive for a period of
twelve (12) months from the date of termination or expiration of the Transi
tion Period; provided, however, that any obligation of the Company to provide
indemnification under this Agreement for Taxes shall continue until the
expiration of all applicable statutory periods of limitations.
ARTICLE X
MISCELLANEOUS
10.1 CONFIDENTIALITY. Each of the Servicer and the Company shall hold,
and shall cause its Affiliates and their respective employees, consultants and
other agents and representatives to hold, in strict confidence, unless
compelled to disclose by judicial or administrative process or other
requirements of law, all documents and confiden tial or proprietary information
concerning the other party furnished to it by the other party or such other
party's employees, consultants, agents or representatives in connection with
this Agreement or the transactions contem plated hereby, except to the extent
that such documents or information are (a) previously lawfully known by the
party receiving such documents or information, or (b) in the public domain
through no fault of such receiving party or any of its Affiliates or
representatives, or (c) acquired by or obtained from a source not bound
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by, or in breach of, the terms of this Agreement or any confidentiality agree
ment. Each party hereto shall not disclose or otherwise provide any such
documents or confidential or proprietary information to any other Person,
except to its auditors, actuaries, attorneys, financial advisors and other
consul tants and advisors who need such documents or information in connection
with this Agreement or the Purchase Agreement or the transactions contemplated
hereby or thereby, and the parties hereto agree to cause each of the foregoing
to be subject to and bound by the confidentiality provisions hereof.
2 Notices. All notices and other communications under this
Agreement must be in writing and shall be deemed to have been duly given if
delivered, telecopied or mailed by certified mail, return receipt requested,
first-class postage prepaid, to the parties at the following addresses:
If to the Company to:
______________________________
______________________________
______________________________
Attn:
Telephone: (614)
Telecopier: (614)
With a copy to:
______________________________
______________________________
______________________________
Attn:
Telephone: (614)
Telecopier: (614)
If to the Servicer to:
Farmers Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President Life Insurance Operations and
▇▇▇▇▇ ▇. ▇▇▇▇, Senior Vice President and General Counsel
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
All notices and other communications required or permitted under this Agreement
that are addressed as provided in this Section 10.2 shall, if delivered
personally, be deemed given upon delivery, shall, if delivered by telecopy, be
deemed delivered when confirmed and shall, if delivered by mail in the manner
described above, be deemed given on the third Business Day after the day it is
deposited in a regular depository of the United States mail. Any party from time
to time may change its address for the purposes of notices to that party by
giving a similar notice specifying a new address, but no such notice shall be
deemed to have been given until it is actually received by the party sought to
be charged with the contents thereof.
10.3 ENTIRE AGREEMENT. This Agreement supersedes all prior discussions
and agreements between the parties with respect to the subject matter hereof,
and this Agreement (including the Schedules hereto) contains the sole and
entire agreement between the parties hereto with respect to the subject matter
hereof.
10.4 WAIVER. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof. Such waiver must
be in writing and must be executed by a duly authorized officer of such party.
A waiver on one occasion shall not be deemed to be a waiver of the same or any
other breach on a future occasion. All remedies, either under this Agreement,
or by law or otherwise afforded, shall be cumulative and not alternative.
10.5 AMENDMENT. This Agreement may be modified or amended only by a
writing duly executed by or on behalf of each of the parties hereto.
10.6 COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
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10.7 THIRD PARTY BENEFICIARY. The terms and provi sions of this
Agreement are intended solely for the benefit of the parties hereto and their
respective successors and permitted assigns, and it is not the intention of the
parties to confer third party beneficiary rights upon any other Person, except
as expressly provided herein.
10.8 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California applicable to contracts
executed and performed within the State of California, without regard to
principles of conflicts of laws.
10.9 Binding Effect. This Agreement is binding upon and shall inure
to the benefit of the parties and their respective successors and assignees.
10.10 ASSIGNMENT LIMITED. This Agreement and the rights and duties
hereunder shall not be assignable by either party hereto except upon prior
written consent of the other party and any attempted assignment without such
consent shall be void.
10.11 HEADINGS, GENDER, ETC. The headings used in this Agreement have
been inserted for convenience and do not constitute matter to be construed or
interpreted in connection with this Agreement. Unless the context of this
Agreement otherwise requires, (a) words of any gender are deemed to include
each other gender, (b) words using the singular or plural number also include
the plural or singular number, respectively, (c) the terms "hereof", "herein",
"hereby", "hereto", and derivative or similar words refer to this entire
Agreement, (d) the term "Arti cle" or "Section" refers to the specified Article
or Section of this Agreement, (e) the term "Schedule" refers to the specified
Schedule attached to this Agreement, and (f) all references to "dollars" or "$"
refer to currency of the United States of America.
10.12 SEVERABILITY. If any provision of this Agreement is held to
be illegal, invalid, or unenforceable under any present or future law, and if
the rights or obligations of the Company or the Servicer under this Agreement
will not be materially and adversely affected thereby, (a) such provision shall
be fully severable, (b) this Agreement shall be construed and enforced as if
such illegal, invalid, or unenforceable provision had never comprised a part
hereof, and (c) the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid or unenforce
able provision or by its severance herefrom, and (d) in lieu of such illegal,
invalid or unenforceable provision, there shall be added automatically as a part
of this Agreement a legal, valid and
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enforceable provisions as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.
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IN WITNESS WHEREOF, this Agreement has been duly executed by
the duly authorized officers of each of the Company and the Servicer, effective
as of the date first written above.
________________________________
By: ____________________________
Name:_______________________
Title:______________________
FARMERS GROUP, INC.
By: ____________________________
Name:_______________________
Title:______________________
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SCHEDULE A
SERVICES
During the Transition Period, the Servicer shall perform the following
services performed by it for the Company as of a date 30 days prior to the
Closing Date and relating to the Insurance Policies:
1. Maintenance of agent and policyholder electronic data processing
records consistent with prior practices of the Servicer to support the
administration of the Insurance Policies, subject to obtaining necessary
consents and licenses from the Company's and the Servicer's licensors
identified on Schedule 3.2.
2. Maintenance of proper accounting systems and banking and
reinsurance activities consistent with prior practices of the Servicer to
support the policies being administered. During the Transition Period, the
Servicer shall not be responsible for any cash management, invest ment
management, trading and related accounting for the Company.
3. Provision of data for use in preparing statutory financial
reporting information for the Company, on a basis consistent with prior
practices of the Servicer with respect to the Company, no later than the 25th
day following the end of each calendar quarter.
4. Consistent with prior practices of the Servicer with respect to the
Company, the Servicer shall use commercially reasonable efforts to provide the
Company with (a) data to be used in preparing GAAP financial reporting
information for each calendar quarter, not later than the 15th calendar day
following the end of such calendar quarter, and (b) data to be used in
determining the Company's estimated earnings for each calendar month, not later
than the 10th calendar day following the end of such month.
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SCHEDULE B
COMPUTER SYSTEMS AND SOFTWARE
[To Come]
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SCHEDULE C
FEE SCHEDULE
A base fee of $100,000 per month, subject to adjust ment, on the
anniversary of the Closing Date, in proportion to any increase in the consumer
price index from the Closing Date through such anniversary.
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SCHEDULE D
AUTHORIZED EMPLOYEES
[To Come]
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EXHIBIT E
OPINION OF SELLER'S COUNSEL
▇▇▇▇▇ ▇. ▇▇▇▇, Senior Vice President and General Counsel of the Seller,
or other counsel for the Seller reasonably acceptable to the Purchaser, will
deliver an opinion, which shall be subject to customary assumptions, exceptions
and conditions, and in reliance on certificates or advice of governmental
authorities, representatives of the Companies, the Seller and others, covering
the matters set forth below:
1. Each of the Seller and the Companies (a) is a corporation validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power to own its properties and conduct its
business as conducted at the Closing Date, and (b) is duly qualified or
licensed to do business as a foreign corpora tion and, in the case of the
Companies, as a foreign life insurance company, and is in good standing under
the laws of the jurisdictions in which it conducts business or is required to
hold a license to transact insurance as of the Closing Date.
2. The Seller has the corporate power and corporate authority to
execute and deliver the Agreement, the Trademark Agreements, the Intercompany
Lease and the Services Agreements (collectively, the "Transaction Documents")
and perform its obligations thereunder. The execution and delivery of the
Transaction Documents by the Seller, and the consummation by the Seller of the
transac tions contemplated thereby, have been duly authorized by all necessary
corporate action by the Seller. The Transac tion Documents have been duly
executed and delivered by the Seller.
3. The Transaction Documents constitute the valid and binding
obligations of the Seller, enforceable against the Seller in accordance with
its terms (subject to typical bankruptcy exceptions).
4. Neither the execution and delivery of the Transaction Documents by
the Seller, nor the consummation of the transactions contemplated thereby, will
violate, conflict with or constitute a breach by the Seller or the Companies of
(a) their respective Articles of Incorporation or Bylaws, (b) material
agreements to which any of them is a party (subject to the obtaining of
necessary consents, as specified), (c) any law which in the experience of such
counsel, is normally applicable to transactions of the type contemplated by the
Transaction Documents, (d) any judg ment, decree or award known to such counsel
by which the Seller or the
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Companies or any of their respective assets, is bound, or (e) result in the
imposition of any Lien against any asset of the Companies.
5. The authorized capital stock of each of the Companies is as set
forth in Section 3.4 of the Agreement. The Shares have been duly authorized and
validly issued, are fully paid and nonassessable and are owned of record and,
to the knowledge of such counsel, beneficially by the Seller.
6. Upon payment for and delivery of the Shares with all necessary
endorsements in accordance with the terms of the Agreement, and assuming the
Purchaser is acquiring the Shares in good faith without notice of any adverse
claim, the Purchaser will be the owner of the Shares, free and clear of any
adverse claim.
7. No consents, approvals, authorizations, registra tions,
declarations or filings with any Governmental Authority (as defined) which, in
the experience of such counsel, have jurisdiction over transactions of the type
contemplated by the Agreement, are required in connection with the execution,
delivery and performance of the Transaction Documents by the Seller, other than
such as have been obtained, given or made.
8. There is no action, suit, investigation or proceeding pending or,
to the knowledge of such counsel, threatened against the Seller or either
Company or any property or rights of the Seller or either Company by or before
any court, arbitrator or administrative or govern mental body that has had or
would reasonably be expected to have a material adverse effect on the validity,
binding effect or enforceability of the Transaction Documents, or the ability
of the Seller or either Company to perform its obligations under the
Transaction Documents.
Such counsel's opinions shall be limited to the laws of the States of
California, Ohio and Nevada and the Federal laws of the United States of
America to the extent specifically referred to in such opinion.
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EXHIBIT F
OPINION OF PURCHASER'S COUNSEL
Texas, California and Ohio counsel to the Purchaser reasonably
acceptable to the Seller will deliver an opinion, subject to customary
assumptions, exceptions and conditions, and in reliance on certificates or
advice of governmental authorities, representatives of the Purchaser and
others, covering the matters set forth below:
1. The Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation.
The Purchaser has all requisite corporate power and corporate authority to
execute and deliver the Agreement, the Trademark Agree ments, the Intercompany
Lease and the Services Agreements (collectively, the "Transaction Documents"),
and to perform its obligations thereunder.
2. The execution and delivery by the Purchaser of the Transaction
Documents, and the consummation by the Purchaser of the transactions
contemplated by the Transac tion Documents have been duly authorized by all
necessary corporate action by the Purchaser. The Transaction Documents have
been duly executed and delivered by the Purchaser.
3. The Transaction Documents constitute the legally valid and binding
obligations of the Purchaser, enforceable against it in accordance with its
terms (subject to typical bankruptcy-type exceptions).
4. Neither the execution and delivery by the Purchaser of the
Transaction Documents, nor the consumma tion of the transactions contemplated
thereby, will violate, conflict with or constitute a breach by the Purchaser of
the charter, bylaws or other organizational document of the Purchaser, or any
judgment, award or decree by which the Purchaser is bound.
5. No consents, approvals, authorizations, registra tions,
declarations or filings with any Governmental Authority are required by the
Purchaser in connection with the due execution, delivery and performance by the
Pur chaser of the Agreement, except for such as have been obtained given or
made.
6. There is no action, suit, investigation or proceeding pending or,
to the knowledge of such counsel, threatened against the Purchaser or any
property or rights of the Purchaser by or before any court, arbitrator or
administrative or
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governmental body that has had or would reasonably be expected to have a
material adverse effect on the validity, binding effect or enforceability of
the Transaction Documents, or the ability of the Purchaser to perform its
obligations under the Transaction Documents.
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EXHIBIT G
DEFINITION OF OSL BUILDING
The term "OSL Building" shall mean, collec tively, the Land, the
Improvements, and the balance of the Real Property (each as hereinafter
defined).
As used herein, the following terms shall have the following meanings:
1. The term "Land" shall mean that certain real property located in
the City of Columbus, County of Franklin, State of Ohio, as more particularly
described on Schedule "1" attached thereto.
2. The term "Improvements" shall mean all buildings, improvements,
structures and fixtures now or hereafter located on or in the Land, including,
without limitation, those certain buildings and structures com monly known as
▇▇▇▇ ▇▇▇▇▇▇'▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇.▇
3. The term "Real Property" shall mean, collectively, (i) the Land,
(ii) the Improvements, (iii) all apparatus, equipment and appliances used in
connec tion with the operation or occupancy of the Land and the Improvements
(such as heating, air conditioning or me chanical systems and facilities used
to provide any utility services, refrigeration, ventilation, waste disposal or
other services) and now or hereafter located on or in the Land or the
Improvements, and (iv) all of the rights, privileges and easements appurtenant
to or used in connection with the Land and the Improvements, including, without
limitation, all minerals, oil, gas and other hydrocarbon substances, all
development rights, air rights, water, water rights, waste water capacity and
water stock relating to the Land, all strips and gores, all of Seller's right,
title and interest in and to any streets, alleys, easements, rights-of-way,
public ways, or other rights appurtenant, adjacent or connected to the Land.
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SCHEDULE 1
LEGAL DESCRIPTION OF LAND
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