\nSEC ………………………………………………………….. 9
\nSection 6.21 Subsidiaries ………………………………………. 57
\nSecurities Act ………………………………………………… 16
\nShare ………………………………………………………… 4
\nShareholders Meeting …………………………………………… 48
\nShares ……………………………………………………….. 4
\nshares ……………………………………………………….. 36
\nSpin-Off ……………………………………………………… 1
\nSpinco ……………………………………………………….. 1
\nStock Plans …………………………………………………… 12
\nSubsidiary ……………………………………………………. 10
\nSuperior Proposal ……………………………………………… 46
\nSurviving Corporation ………………………………………….. 2
\nTakeover Statute ………………………………………………. 26
\nTax ………………………………………………………….. 27
\nTax Allocation Agreement ……………………………………….. 28
\nTax Authority …………………………………………………. 28
\nTax Return ……………………………………………………. 28
\nTax Sharing Agreement ………………………………………….. 43
\nTaxable ………………………………………………………. 27
\nTaxes ………………………………………………………… 27
\nTermination Date ………………………………………………. 64
\nTermination Fee ……………………………………………….. 66
\nthe Company has no knowledge ……………………………………. 21
\nTotal assets under management …………………………………… 62
\nTransaction …………………………………………………… 1
\nTransaction Agreements …………………………………………. 2
\nTransaction Expenses …………………………………………… 53
\nU.S. Retained Insurance Companies ……………………………….. 10
\nVoting Debt …………………………………………………… 13
\n<\/c><\/s><\/table>\n -vii-
\n 9
\n AGREEMENT AND PLAN OF RESTRUCTURING AND MERGER<\/p>\n
AGREEMENT AND PLAN OF RESTRUCTURING AND MERGER
\n(hereinafter called this “Agreement”), dated as of July 19, 2000, among AETNA
\nINC., a Connecticut corporation (the “Company”), ING AMERICA INSURANCE HOLDINGS,
\nINC., a Delaware corporation (“Parent”), and ANB ACQUISITION CORP., a
\nConnecticut corporation and a newly formed, wholly owned subsidiary of Parent
\n(“Merger Sub”, the Company and Merger Sub sometimes being hereinafter
\ncollectively referred to as the “Constituent Corporations”) and, for the sole
\npurpose of Sections 4.2, 4.3, 5.2, 6.3, 6.5, 6.8, 6.12, 6.18, 6.19, 6.20 and
\nArticle IX, ING GROEP N.V., a corporation organized under the laws of the
\nNetherlands (“ING”).<\/p>\n
RECITALS<\/p>\n
WHEREAS, provided that all conditions precedent to the
\nDistribution (as defined below) have been satisfied, immediately prior to the
\nEffective Time (as defined below), the Company and Aetna U.S. Healthcare Inc., a
\nPennsylvania corporation and a wholly owned subsidiary of the Company
\n(“Spinco”), intend to enter into a distribution agreement in the form of Annex A
\nhereto, with such changes as may be approved by Parent in accordance with
\nSection 9.2(b) of this Agreement (the “Distribution Agreement”), and to effect
\nthe various transactions contemplated thereby and, with the exception of this
\nAgreement, by the other Transaction Agreements (as defined below) (all such
\ntransactions being referred to collectively as the “Spin-Off”);<\/p>\n
WHEREAS, the respective boards of directors of each of Parent,
\nMerger Sub and the Company have determined that it is in the best interests of
\ntheir respective entities and shareholders to enter into this Agreement and have
\napproved and adopted this Agreement and the merger of Merger Sub with and into
\nthe Company (the “Merger”, the Spin-Off, the Merger and the other transactions
\ncontemplated by the Transaction Agreements sometimes being hereinafter
\ncollectively referred to as the “Transaction”) upon the terms and subject to the
\nconditions set forth in this Agreement;<\/p>\n
WHEREAS, in making the foregoing determinations, the board of
\ndirectors of the Company considered, among other things, the interests of the
\nCompany’s employees, customers, creditors and suppliers, as well as community
\nand societal considerations;<\/p>\n
WHEREAS, the Company, ING, Parent and Merger Sub desire to
\nmake certain representations, warranties, covenants and agreements in connection
\nwith this Agreement and the Distribution Agreement (this Agreement, the
\nDistribution Agreement
\n 10
\nand the other agreements and term sheets attached hereto or thereto sometimes
\nbeing hereinafter collectively referred to as the “Transaction Agreements”); and<\/p>\n
WHEREAS, for federal income Tax (as defined below) purposes,
\nit is intended that the Transaction will be treated at the shareholder level as
\nan integrated transaction in redemption and disposition of the Company’s
\noutstanding capital stock.<\/p>\n
NOW, THEREFORE, in consideration of the premises, and of the
\nrepresentations, warranties, covenants and agreements contained herein, the
\nparties hereto agree as follows:<\/p>\n
ARTICLE I<\/p>\n
The Transaction; Closing; Effective Time<\/p>\n
1.1 The Spin-Off. Provided that all conditions precedent to
\nthe Spin-Off have been satisfied, prior to the Effective Time, the Company shall
\nenter into the Distribution Agreement with Spinco, each other Person that will
\nbe a party to any Transaction Agreement (other than the Merger Agreement) shall
\nenter into each such Transaction Agreement, and, on the terms and subject to the
\nconditions of the Transaction Agreements, immediately prior to the Effective
\nTime, the Company shall effect, and cause Spinco to effect, the Spin-Off.<\/p>\n
1.2 The Merger. Upon the terms and subject to the conditions
\nset forth in this Agreement, at the Effective Time Merger Sub shall be merged
\nwith and into the Company and the separate corporate existence of Merger Sub
\nshall thereupon cease. The Company shall be the surviving corporation in the
\nMerger (sometimes hereinafter referred to as the “Surviving Corporation”), and
\nthe separate corporate existence of the Company with all its rights, privileges,
\npowers and franchises shall continue unaffected by the Merger, except as set
\nforth in Article II of this Agreement. The Merger shall have the effects
\nspecified in the Connecticut Business Corporation Act, as amended (the “CBCA”).<\/p>\n
1.3 Closing. The closing of the Merger (the “Closing”) shall
\ntake place (i) at the offices of Sullivan & Cromwell, 125 Broad Street, New
\nYork, New York at 9:00 A.M. on the second business day on which the last to be
\nfulfilled or waived of the conditions set forth in Article VII (other than those
\nconditions that by their nature are to be fulfilled at the Closing, but subject
\nto the fulfillment or waiver of those conditions and subject to compliance with
\nthe provisions of Section 4.2(b) of this Agreement) shall be fulfilled or waived
\nin accordance with this Agreement or (ii) at such other place and time and\/or on
\nsuch other date as the Company and Parent may agree in writing (the “Closing
\nDate”).<\/p>\n
-2-
\n 11
\n 1.4 Effective Time. As soon as practicable following the
\nClosing, the Company, Parent and Merger Sub will cause a Certificate of Merger
\n(the “Certificate of Merger”) to be executed, acknowledged and delivered for
\nfiling to the Secretary of State of Connecticut as provided in Section 33-819 of
\nthe CBCA. The Merger shall become effective at the time when the Certificate of
\nMerger has been accepted for filing by the Secretary of State of Connecticut or
\nsuch other time as the parties hereto may agree to specify in the Certificate of
\nMerger (the “Effective Time”).<\/p>\n
ARTICLE II<\/p>\n
Certificate of Incorporation and By-Laws
\n of the Surviving Corporation<\/p>\n
2.1 The Certificate of Incorporation. The certificate of
\nincorporation of Merger Sub as in effect immediately prior to the Effective Time
\nshall be the certificate of incorporation of the Surviving Corporation (the
\n“Charter”); provided, however, that the Charter shall be amended to change the
\nname of the Surviving Corporation to the name of: “Lion Connecticut Holdings
\nInc.”, and as so amended, shall be the certificate of incorporation of the
\nSurviving Corporation until duly amended as provided therein or by applicable
\nlaw.<\/p>\n
2.2 The By-Laws. The by-laws of Merger Sub as in effect at the
\nEffective Time shall be the by-laws of the Surviving Corporation (the
\n“By-Laws”); provided, however, that the By-Laws shall be amended to change the
\nname of the Surviving Corporation to the name of: “Lion Connecticut Holdings
\nInc.”, and as so amended, shall be the by-laws of the Surviving Corporation
\nuntil thereafter amended as provided therein or by applicable law.<\/p>\n
ARTICLE III<\/p>\n
Officers and Directors
\n of the Surviving Corporation<\/p>\n
3.1 Directors. The directors of Merger Sub at the Effective
\nTime shall, from and after the Effective Time, be the directors of the Surviving
\nCorporation until their successors have been duly elected or appointed and
\nqualified or until their earlier death, resignation or removal in accordance
\nwith the Charter and the By-Laws.<\/p>\n
3.2 Officers. The officers of the Company at the Effective
\nTime shall, from and after the Effective Time, be the officers of the Surviving
\nCorporation until their<\/p>\n
-3-
\n 12
\nsuccessors have been duly elected or appointed and qualified or until their
\nearlier death, resignation or removal in accordance with the Charter and the
\nBy-Laws. Prior to the Effective Time, the Company shall cause, by transfer or
\notherwise, all officers of the Company and its Subsidiaries (as defined below)
\nand Affiliates (as defined below) who will be employees of Spinco or any of its
\nSubsidiaries after the Spin-Off (as contemplated by the Transaction Agreements)
\nto cease their employment with the Company and each of its Subsidiaries and
\nAffiliates, as the case may be, and no replacements shall be elected, appointed
\nor hired for such employees without the approval of Parent.<\/p>\n
ARTICLE IV<\/p>\n
Effect of the Merger on Capital Stock;
\n Exchange of Certificates<\/p>\n
4.1 Effect on Capital Stock. At the Effective Time, as a
\nresult of the Merger and without any action on the part of the holder of any
\ncapital stock of the Company:<\/p>\n
(a) Merger Consideration. Each share of Common Stock, par
\nvalue $0.01 per share, of the Company (“Common Stock”), including the associated
\nright to purchase one one-hundredth of a share of Class B Voting Preferred
\nStock, par value $0.01 per share (“Class B Voting Preferred Stock”), of the
\nCompany (each a “Right” and, together with Common Stock, a “Share” or,
\ncollectively, the “Shares”) issued pursuant to the Rights Agreement, dated as of
\nSeptember 24, 1999, between the Company and First Chicago Trust Company of New
\nYork, as Rights Agent (the “Rights Agreement”), issued and outstanding
\nimmediately prior to the Effective Time (other than (i) Shares owned by or on
\nbehalf of ING, Parent, Merger Sub or any other Subsidiary of ING (collectively,
\nthe “ING Companies”) or Shares that are owned by or on behalf of the Company or
\nany Subsidiary of the Company and in each case not held on behalf of third
\nparties or (ii) Shares (“Dissenting Shares”) that are owned by shareholders
\n(“Dissenting Shareholders”) exercising dissenter’s rights pursuant to Sections
\n33-855 through 33-872 of the CBCA (each such Share owned by or on behalf of the
\nING Companies, the Company and any Subsidiary of the Company and each Dissenting
\nShare, an “Excluded Share” and collectively, the “Excluded Shares”)) shall be
\nconverted into the right to receive an amount in cash per Share equal to (x)
\n$7.70 billion (i) minus the greater of (A) $2.678 billion (which amount shall be
\nreduced by $300 million if the $300 million outstanding principal amount of the
\n6.75% Notes of Aetna Services, Inc. due 2001 due and payable on August 15, 2001
\nis repaid in full on such maturity date) and (B) the aggregate principal amount
\nof all Long-Term Debt (as defined below) outstanding as of the Effective Time to
\nany Person (other than obligations for indebtedness set forth in Section
\n4.1(a)(i) of the Company Disclosure Letter) (such amount being the “Assumed
\nLong-Term Debt<\/p>\n
-4-
\n 13
\nObligations”), (ii) plus the Net Capital Contribution Amount (positive or
\nnegative), (iii) plus the Net Interest Accrual Amount (positive or negative) and
\n(iv) minus the CityPlace Accrual Amount divided by (y) the aggregate number of
\noutstanding Shares as of the Effective Time (the “Merger Consideration”). At the
\nEffective Time, all Shares issued and outstanding immediately prior to the
\nEffective Time shall no longer be outstanding and shall be canceled and retired
\nand shall cease to exist, and each certificate or other similar evidence of
\nownership of uncertificated Shares (such certificate or similar evidence of
\nownership of uncertificated Shares being referred to herein as a “Certificate”)
\nformerly representing any of such Shares (other than Excluded Shares) shall
\nthereafter represent only the right to the Merger Consideration. “Net Capital
\nContribution Amount” means an amount determined as of the Effective Time for the
\nperiod after March 31, 2000 until the Effective Time that is equal to the
\naggregate cash capital contributions (other than Excluded Capital Contributions
\n(as defined below)) made (without duplication) after March 31, 2000 by the
\nCompany or Aetna Services, Inc. to Aetna Retirement Services, Inc., Aetna
\nInternational, Inc. or any of their respective Subsidiaries from among the
\npermitted capital contributions included in Section 4.1(a) of the Company
\nDisclosure Letter minus the amount of any dividends or distributions (other than
\nExcluded Dividends) paid (without duplication) after March 31, 2000 from Aetna
\nRetirement Services, Inc., or Aetna International, Inc. or any of their
\nrespective Subsidiaries (other than Subsidiaries that are not Subsidiaries of
\nthe Company) to Aetna Services, Inc. (other than any such dividends and
\ndistributions paid in respect of the proceeds (after Taxes and transaction
\nexpenses incurred in connection therewith) (the “Permitted Sales Proceeds”)
\nreceived from the sale or disposition of (i) Inversiones Mercantile-Aetna C.A.
\nand (ii) the Company’s direct or indirect interest in Kwang Hua Securities
\nInvestment & Trust Co. and Kwang Hua Securities Investment Consultant Co. Ltd.
\n(the items referred to in clauses (i) and (ii) collectively, the “Permitted
\nSales”)). The term “Long-Term Debt” means indebtedness for borrowed money, the
\nterm of which, when incurred, had a maturity date of one year or more, of the
\nCompany or any of its Subsidiaries. The term “Excluded Capital Contribution”
\nmeans any portion of any capital contribution made, directly or indirectly, to
\nSpinco or any of its Subsidiaries. The term “Excluded Dividends” means cash
\ndividends or other cash distributions, funds for which were originally provided
\nby Subsidiaries of Aetna Retirement Services, Inc. or Aetna International, Inc.
\nthat are also Subsidiaries of Spinco, net of any Tax cost to any of the Company
\nor its Subsidiaries. The term “Net Interest Accrual Amount” means the amount
\n(positive or negative) equal to the Parent Interest Portion minus the Closing
\nDate Interest Accrual. The term “CityPlace Accrual Amount” means an amount equal
\nto the next aggregate semi-annual lease payment of the Company and its
\nSubsidiaries payable in respect of the the CityPlace building to be made after
\nthe Effective Time multiplied by a fraction the numerator of which is the total
\nnumber of days elapsed since the immediately preceding October 31 or March 30
\nuntil the Effective Time and the denominator of which is 180. “Parent Interest
\nPortion” shall mean an amount equal to the amount of interest that would accrue
\n(in a manner consistent with accruals on the Assumed Long-Term Debt Obligations)
\non $1 billion (one <\/p>\n
-5-
\n 14
\nbillion dollars) principal amount of indebtedness bearing an annual interest
\nrate of 7.1% from and including April 1, 2000 to the Effective Time. “Closing
\nDate Interest Accrual” shall mean the amount of interest accrued as of the
\nEffective Time in respect of the Assumed Long-Term Debt Obligations.<\/p>\n
(b) The Merger and the Spin-Off shall be effected such that
\nthe shares of Spinco to be distributed in the Spin-Off and the Merger
\nConsideration are distributed or paid, as the case may be, only to the same
\nholder of a share of Common Stock.<\/p>\n
(c) Cancellation of Shares. Each Share issued and outstanding
\nimmediately prior to the Effective Time and owned by or on behalf of any of the
\nING Companies or owned by the Company or any Subsidiary of the Company (in each
\ncase other than Shares that are held on behalf of third parties) shall, by
\nvirtue of the Merger and without any action on the part of the holder thereof,
\nno longer be outstanding and shall be canceled and retired without payment of
\nany consideration therefor and shall cease to exist.<\/p>\n
(d) Merger Sub. At the Effective Time, each share of common
\nstock, par value $0.01 per share, of Merger Sub issued and outstanding
\nimmediately prior to the Effective Time shall be converted into one share of
\ncommon stock of the Surviving Corporation.<\/p>\n
4.2 Exchange of Cash for Shares.<\/p>\n
(a) Paying Agent. At or prior to the Effective Time, ING shall
\ncause Parent or an Affiliate of Parent to deposit with First Chicago Trust
\nCompany of New York (the “Paying Agent”), for the benefit of the holders of
\nShares, cash sufficient to pay the aggregate Merger Consideration in exchange
\nfor Shares outstanding immediately prior to the Effective Time (other than
\nExcluded Shares) upon due surrender of the Certificates (or affidavits of loss
\nin lieu thereof) pursuant to the provisions of this Article IV (such cash being
\nhereinafter referred to as the “Payment Fund”).<\/p>\n
The funds deposited with the Paying Agent shall be invested by
\nthe Paying Agent as Parent shall reasonably direct, and any net profit resulting
\nfrom, or interest or income produced by, such investments will be payable to the
\nSurviving Corporation or Parent, as Parent directs.<\/p>\n
(b) Payment Procedures. Promptly after the Effective Time, the
\nSurviving Corporation shall cause the Paying Agent to mail to each holder of
\nrecord of Shares (other than holders of Excluded Shares) (i) a letter of
\ntransmittal specifying that delivery shall be effected, and risk of loss and
\ntitle to the Certificates shall pass, only upon delivery of the Certificates (or
\naffidavits of loss in lieu thereof) to the Paying Agent, such <\/p>\n
-6-
\n 15
\nletter of transmittal to be in such form and have such other provisions as
\nParent and the Company may reasonably agree, and (ii) instructions for use in
\neffecting the surrender of the Certificates (and affidavits of loss in lieu
\nthereof) in exchange for the Merger Consideration. Upon surrender of a
\nCertificate for cancellation (or due submission of an affidavit of loss in lieu
\nthereof) to the Paying Agent together with such letter of transmittal, duly
\nexecuted, the holder of such Certificate (or submitter of such affidavit, as the
\ncase may be) shall be entitled to receive in exchange therefor, a check in the
\namount (after giving effect to any required Tax withholdings) of the number of
\nShares represented by such Certificate (or affidavit of loss in lieu thereof)
\nmultiplied by the Merger Consideration, and the Certificate so surrendered shall
\nforthwith be canceled. No interest will be paid or accrued on any amount payable
\nupon due surrender (after giving effect to any required Tax withholding) of the
\nCertificates. In the event of a transfer of ownership of Shares that is not
\nregistered in the transfer records of the Company, a check for any cash to be
\npaid upon due surrender of the Certificate may be paid to such a transferee if
\nthe Certificate formerly representing such Shares is presented to the Paying
\nAgent, accompanied by all documents required to evidence and effect such
\ntransfer and to evidence that any applicable stock transfer Taxes have been paid
\nor are not applicable.<\/p>\n
For the purposes of this Agreement, the term “Person” shall
\nmean any individual, corporation (including not-for-profit corporations),
\ngeneral or limited partnership, limited liability company, joint venture,
\nestate, trust, association, organization, Governmental Entity (as defined below)
\nor other entity of any kind or nature.<\/p>\n
(c) Transfers. After the Effective Time, there shall be no
\ntransfers on the stock transfer books of the Company of the Shares that were
\noutstanding immediately prior to the Effective Time.<\/p>\n
If, after the Effective Time, Certificates are presented to
\nthe Surviving Corporation or Parent for transfer, they shall be canceled and,
\nprovided the Merger Consideration provided thereon has not escheated to the
\nrelevant Governmental Entity (as defined below), exchanged for a check (after
\ngiving effect to any required Tax withholding) in the proper amount pursuant to
\nthis Article IV.<\/p>\n
(d) Termination of Payment Fund. Any portion of the Payment
\nFund (including the profit, interest or income from any investments thereof)
\nthat remains unclaimed by the holders of Shares (other than Excluded Shares) for
\none year after the Effective Time shall be returned to Parent or as directed by
\nParent. Any holders of Shares (other than Excluded Shares) who have not
\ntheretofore complied with this Article IV shall thereafter look only to Parent
\nfor payment of (after giving effect to any required Tax withholdings) the Merger
\nConsideration upon due surrender of their Certificates (or affidavits of loss in
\nlieu thereof), without any interest thereon. Notwithstanding the foregoing, none
\nof Parent, the Surviving Corporation, the Paying Agent or any other<\/p>\n
-7-
\n 16
\nPerson shall be liable to any former holder of Shares for any amount properly
\ndelivered to a public official pursuant to applicable abandoned property,
\nescheat or similar laws.<\/p>\n
(e) Lost, Stolen or Destroyed Certificates. In the event any
\nCertificate shall have been lost, stolen or destroyed, upon the making of an
\naffidavit of that fact by the Person claiming such Certificate to be lost,
\nstolen or destroyed and, if required by Parent, the posting by such Person of a
\nbond in customary amount as indemnity against any claim that may be made against
\nit with respect to such Certificate, the Paying Agent will issue in exchange for
\nsuch lost, stolen or destroyed Certificate a check in the amount (after giving
\neffect to any required Tax withholdings) of the number of Shares represented by
\nsuch lost, stolen or destroyed Certificate multiplied by the Merger
\nConsideration upon due surrender of, and deliverable in respect of the Shares
\nrepresented by, such Certificate pursuant to this Agreement.<\/p>\n
(f) Withholding of Tax. Parent shall be entitled to deduct and
\nwithhold from the consideration otherwise payable pursuant to this Agreement to
\nany former holder of Shares such amounts as Parent (or any affiliate thereof) is
\nrequired to deduct and withhold with respect to the making of such payment under
\nthe U.S. Internal Revenue Code of 1986, as amended, and the rules and
\nregulations promulgated thereunder (the “Code”) or any provision of state, local
\nor foreign Tax Law (as defined below). Such withheld amounts shall be treated
\nfor all purposes of this Agreement as having been paid to the former holders of
\nShares in respect of which such deduction and withholding was made.<\/p>\n
4.3 Dissenters’ Rights. Any Person who otherwise would be
\ndeemed a Dissenting Shareholder shall not be entitled to receive the Merger
\nConsideration with respect to the Shares owned by such Person unless and until
\nsuch Person shall have failed to perfect or shall have effectively withdrawn or
\nlost such holder’s right to dissent from the Merger under the CBCA. Each
\nDissenting Shareholder shall be entitled to receive only the payment determined
\npursuant to Sections 33-855 through 33-872 of the CBCA with respect to Shares
\nowned by such Dissenting Shareholder. The Company shall give Parent (i) prompt
\nnotice of any written dissenters’ demands, attempted withdrawals of such
\ndemands, and any other instruments served pursuant to applicable Law received by
\nthe Company relating to dissenters’ rights and (ii) the opportunity to direct
\nall negotiations and proceedings with respect to dissenters’ demands under the
\nCBCA. The Company shall not, except with the prior written consent of Parent,
\nvoluntarily make any payment with respect to any dissenters’ demands for payment
\nfor Shares, offer to settle or settle any such demands or approve any withdrawal
\nof any such demands. If, after the Effective Time, such Dissenting Shareholder
\nfails to perfect, withdraws or loses its right to demand the payment of fair
\nvalue for its Shares under the CBCA, such Shares shall be treated as if they had
\nbeen converted as of the Effective Time into a right to receive the Merger
\nConsideration and ING shall cause Parent to promptly thereafter deposit, or
\ncause to be<\/p>\n
-8-
\n 17
\ndeposited, with the Paying Agent, for the benefit of such Dissenting
\nStockholder, cash sufficient to pay the aggregate Merger Consideration in
\nexchange for all such Shares.<\/p>\n
ARTICLE V<\/p>\n
Representations and Warranties<\/p>\n
5.1 Representations and Warranties of the Company. Except as
\ndisclosed in the Company’s Annual Report on Form 10-K for the year ended
\nDecember 31, 1999, filed with the Securities and Exchange Commission (the “SEC”)
\non February 29, 2000 (the “1999 10-K”), the Company’s Quarterly Report on Form
\n10-Q for the quarter ended March 31, 2000, filed with the SEC on April 27, 2000
\n(the “First 2000 10-Q”), the Company’s Annual Proxy Statement on Schedule 14A,
\nfiled with the SEC on March 22, 2000, or as set forth in the corresponding
\nsections or subsections of the disclosure letter, dated the date hereof,
\ndelivered to Parent by the Company on or prior to entering into this Agreement
\n(the “Company Disclosure Letter”), the Company hereby represents and warrants to
\nParent and Merger Sub as set forth in this Section 5.1. All representations and
\nwarranties contained in this Agreement which are made as to Joint Ventures (as
\ndefined below) or any other joint ventures shall be made only as to the actual
\nknowledge of those people set forth on Section 5.1 of the Company Disclosure
\nLetter.<\/p>\n
(a) Organization, Good Standing and Qualification. (i) Each of
\nthe Company and its Subsidiaries (as defined below) and Joint Ventures and
\nSpinco is an entity duly organized, validly existing and in good standing (or
\nrelevant state or foreign law equivalent) under the Laws of its respective
\njurisdiction of organization and has all requisite corporate or similar power
\nand authority to own and operate its properties and assets and to carry on its
\nbusiness as presently conducted and is qualified to do business and is in good
\nstanding in each jurisdiction where the ownership or operation of its assets or
\nproperties or conduct of its business requires such qualification, except (A) to
\nthe extent such qualifications to do business include the possession of
\ninsurance, reinsurance or healthcare licenses, which are addressed in Section
\n5.1(a)(ii) below and (B) where the failure to be so organized, qualified or in
\ngood standing (or relevant state or foreign law equivalent), or to have such
\npower or authority is not, individually or in the aggregate, reasonably likely
\nto have a Company Material Adverse Effect (as defined below). The Company has
\nmade available to Parent complete and correct copies of the certificate of
\nincorporation and by-laws or other comparable governing instruments of the
\nCompany and each of the Subsidiaries and Joint Ventures of the Company set forth
\nin Section 5.1(a)(i)(A) of the Company Disclosure Letter. Such certificates of
\nincorporation and by-laws or other comparable governing instruments of the
\nCompany, Spinco, each of the Joint Ventures and each of the Subsidiaries listed
\nin Section 5.1(a)(i)(A) of the Company Disclosure Letter so delivered are in
\nfull force and effect. Section 5.1(a)(i)(B) of the<\/p>\n
-9-
\n 18
\nCompany Disclosure Letter contains, as of the date of this Agreement, a correct
\nand complete list of (x) each Subsidiary and Joint Venture of the Company and
\n(y) each jurisdiction where the Company and each of such Subsidiaries and Joint
\nVentures is organized.<\/p>\n
As used in this Agreement, the term (x) “Subsidiary” means,
\nwith respect to any Person, any entity, whether incorporated or unincorporated,
\nof which at least a majority of the securities or ownership interests having by
\ntheir terms ordinary voting power to elect a majority of the board of directors
\nor other persons performing similar functions is directly or indirectly owned or
\ncontrolled by such Person or by one or more of its respective Subsidiaries or by
\nsuch Person and any one or more of its respective Subsidiaries; provided,
\nhowever, that except in the context of references in Section 5.1(e)(iii) to
\nconsolidated financial statements of the Company and its Subsidiaries, (A) no
\nmember of the Spinco Group (as defined in the Distribution Agreement) shall be
\ndeemed to be a Subsidiary, Joint Venture or “Affiliate” (as defined in Rule
\n12b-2 under the Exchange Act) of the Company, (B) each member of the Spinco
\nGroup (other than Spinco) shall be deemed to be a Subsidiary only of Spinco and
\nnot a member of the Aetna Group (as defined in the Distribution Agreement), (C)
\nno member of the Aetna Group shall be deemed to be a Subsidiary, Joint Venture
\nor Affiliate of Spinco or member of the Spinco Group and (D) each member of the
\nAetna Group (other than the Company) shall be deemed to be a Subsidiary only of
\nthe Company and not a member of the Spinco Group, and (y) “Company Material
\nAdverse Effect” means a material adverse effect on the financial condition,
\nproperties, business or annual results of operations of the Company and its
\nSubsidiaries and Joint Ventures taken as a whole, except to the extent that such
\nadverse effect results from (A) general economic conditions or changes therein
\nin any one or more countries, (B) financial market fluctuations or conditions in
\nany one or more countries, (C) adverse economic, currency or regulatory changes
\nor effects in or affecting the financial services industry, insurance industry
\nor asset management industry in any one or more countries or (D) the
\nannouncement of the transactions contemplated herein. Notwithstanding the
\nforegoing, the parties hereto acknowledge and agree that in no event shall any
\nmatter that is or would be a Spinco Group Liability (as such term is defined in
\nthe Distribution Agreement) constitute or give rise to, in whole or in part, a
\nCompany Material Adverse Effect.<\/p>\n
(ii) The Company and its Subsidiaries (i) conducts its
\ndomestic insurance and reinsurance operations exclusively through Aetna Life
\nInsurance and Annuity Company and Aetna Insurance Company of America (the “U.S.
\nRetained Insurance Companies”) and (ii) conducts its international insurance,
\nreinsurance and health care operations through those Subsidiaries, Joint
\nVentures and joint ventures set forth in Section 5.1(a)(ii)(A) of the Company
\nDisclosure Letter (the “International Retained Insurance Companies” and,
\ntogether with the U.S. Retained Insurance Companies, the “Retained Insurance
\nCompanies”). Section 5.1(a)(ii)(B) of the Company <\/p>\n
-10-
\n 19
\nDisclosure Letter sets forth the jurisdictions where the Retained Insurance
\nCompanies are domiciled or “commercially domiciled” and licensed to do an
\ninsurance or reinsurance or healthcare business for insurance regulatory
\npurposes. Each of the Retained Insurance Companies is (A) duly licensed or
\nauthorized to engage in the business conducted by it (including, without
\nlimitation, as a healthcare company, an insurance company or, where applicable,
\na reinsurer) in its jurisdiction of organization, (B) duly licensed or
\nauthorized as a healthcare company, an insurance company or, where applicable, a
\nreinsurer in each other jurisdiction where it is required to be so licensed or
\nauthorized, and (C) duly authorized in its jurisdiction of organization and each
\nother applicable jurisdiction to engage in or write each line of business
\nreported as being written in the Company SAP Statements (as defined below) (in
\nthe case of U.S. Retained Insurance Companies) or (in the case of International
\nRetained Insurance Companies) comparable report, except, in the case of each of
\nclauses (A) through (C), where the failure to be so licensed or authorized is
\nnot reasonably likely to have a Company Material Adverse Effect. The Company and
\neach of the Retained Insurance Companies have made all required filings under
\napplicable Insurance Laws (as defined below) except where the failure to file is
\nnot, individually or in the aggregate, reasonably likely to have a Company
\nMaterial Adverse Effect.<\/p>\n
(iii) Joint Ventures. Section 5.1(a)(iii)(A) of the Company
\nDisclosure Letter sets forth a list of each of the Company’s and its
\nSubsidiaries’ Joint Ventures. With respect to each of those Joint Ventures so
\nindicated in Section 5.1(a)(iii) of the Company Disclosure Letter, the Company
\nhas made available to Parent correct and complete copies of all agreements among
\nJoint Venture parties with respect to the Joint Venture and all governing
\ninstruments and amendments thereto with respect to each Joint Venture. With
\nrespect to each of the Joint Ventures, the Company has made available to Parent
\ncorrect and complete copies of all agreements to which the Company or any of its
\nSubsidiaries or Joint Ventures is a party which (i) have affected or are
\nreasonably likely to affect the ability, if any, of Parent to direct and control
\nsuch entity’s business operations after consummation of the Merger and the other
\ntransactions contemplated in the Transaction Agreements or (ii) evidence any
\ncommitment (whether or not contingent) for future investment of capital or
\notherwise to be directly or indirectly made by ING, the Company or any of their
\nrespective Subsidiaries therein, or any other future material liabilities or
\nobligations in respect thereof of ING, the Company or any of their respective
\nSubsidiaries. With respect to the joint ventures of the Company and its
\nSubsidiaries that are not Joint Ventures: (A) neither the Company nor any of its
\nSubsidiaries or Joint Ventures is liable for any material obligations or
\nmaterial liabilities of any such joint ventures, (B) neither the Company nor any
\nof its Subsidiaries or Joint Ventures is obligated to make any loans or capital
\ncontributions to, or to undertake any guarantees or obligations with respect to,
\nsuch joint ventures, (C) none of such joint ventures own any assets that are
\nmaterial to the continued conduct of the business of the Company and its
\nSubsidiaries and Joint Ventures, taken as a whole, substantially as it is
\npresently conducted, (D) neither the Company nor any of its Subsidiaries or
\nJoint Ventures is subject to any limitation on its right to compete<\/p>\n
-11-
\n 20
\nor any material limitation on its right to otherwise conduct its business by
\nreason of any agreement relating to such joint venture and (E) each joint
\nventure is in material compliance with all Laws of all Governmental Entities. As
\nused herein, “Joint Venture” shall mean those direct or indirect joint ventures
\nof the Company or any of its Subsidiaries (i) that are not otherwise direct or
\nindirect Subsidiaries of the Company and (ii) in which the Company or any of its
\nSubsidiaries as of the date of this Agreement have invested, or made commitments
\nto invest, $25 million or more, but “Joint Venture” and “joint venture” shall
\nnot include any entities whose securities are held solely for passive investment
\npurposes by the Company or any of its Subsidiaries. Section 5.1(a)(iii)(B) of
\nthe Company Disclosure Letter contains, as of the date of this Agreement, a
\ncorrect and complete list of each joint venture of the Company and its
\nSubsidiaries that is not a Joint Venture.<\/p>\n
(b) Capital Structure. The authorized capital stock of the
\nCompany consists of 500,000,000 shares of Common Stock, of which 141,149,275
\nshares of Common Stock were outstanding as of the close of business on June 30,
\n2000, 15,000,000 shares of Class A Voting Preferred Stock, par value $0.01 per
\nshare, of which no shares are outstanding, 15,000,000 shares of Class B Voting
\nPreferred Stock, of which no shares are outstanding, 15,000,000 shares of Class
\nC Voting Preferred Stock, par value $0.01 per share, of which no shares are
\noutstanding, and 15,000,000 shares of Class D Non-Voting Preferred Stock, par
\nvalue $0.01 per share, of which no shares are outstanding (the Class A Voting
\nPreferred Stock, the Class B Voting Preferred Stock, the Class C Voting
\nPreferred Stock and the Class D Non-Voting Preferred Stock sometimes being
\nreferred to herein as the “Preferred Stock”). Since June 30, 2000 to the date
\nhereof, no Shares have been issued except in the ordinary course of business,
\nincluding, without limitation, pursuant to stock option exercises. All of the
\noutstanding shares of Common Stock have been duly authorized and are validly
\nissued, fully paid and nonassessable. The Company has no shares of Common Stock
\nor Preferred Shares reserved for or otherwise subject to issuance, except that,
\nas of the date hereof, there were (i) 22,179,682 shares of Common Stock reserved
\nfor issuance pursuant to those plans identified as Stock Plans in Section 5.1(b)
\nof the Company Disclosure Letter (collectively, the “Stock Plans”), (ii)
\n1,673,145 shares of Class B Voting Preferred Stock reserved for issuance
\npursuant to the Rights Agreement, (iii) 3,200,000 shares of Common Stock
\nreserved for issuance pursuant to the Share Exchange and Registration Rights
\nAgreement dated as of December 17, 1999, between the Company and Citibank, N.A.
\nand (iv) 1,000,000 shares of Common Stock reserved for issuance pursuant to the
\nCertificate dated August 6, 1999 representing Stock Appreciation Rights to
\npurchase shares of Common Stock of the Company, issued to The Prudential
\nInsurance Company of America. The Company has provided to Parent a correct and
\ncomplete list of the aggregate outstanding options, as of the date of this
\nAgreement, to purchase Shares under the Stock Plans (each a “Company Option”),
\nincluding the date of grant, exercise price and number of Shares subject
\nthereto. Each of the outstanding shares of capital stock or other securities of
\neach of the Company’s Subsidiaries is duly <\/p>\n
-12-
\n 21<\/p>\n
authorized, validly issued, fully paid and nonassessable and owned by the
\nCompany or a direct or indirect wholly owned subsidiary of the Company, free and
\nclear of any lien, pledge, security interest, claim or other encumbrance. Except
\nas set forth above, there are no preemptive or other outstanding rights,
\noptions, warrants, conversion rights, stock appreciation rights, redemption
\nrights, repurchase rights, agreements, arrangements, calls, commitments or
\nrights of any kind that obligate the Company or any of its Subsidiaries to issue
\nor sell any shares of capital stock or other securities of the Company or any of
\nits Subsidiaries or any securities or obligations convertible or exchangeable
\ninto or exercisable for, or giving any Person a right to subscribe for or
\nacquire, any securities of the Company or any of its Subsidiaries, and no
\nsecurities or obligations evidencing such rights are authorized, issued or
\noutstanding. The Company does not have outstanding any bonds, debentures, notes
\nor other obligations the holders of which have the right to vote (or convertible
\ninto or exercisable for securities having the right to vote) with the
\nshareholders of the Company on any matter (“Voting Debt”).<\/p>\n
(c) Corporate Authority; Approval and Fairness. (i) The
\nCompany has, and Spinco will have prior to the Effective Time, all requisite
\ncorporate power and authority and the Company has, and Spinco will have prior to
\nthe Effective Time, taken all corporate action necessary in order to execute,
\ndeliver and perform its obligations under the Transaction Agreements to which it
\nis or will be a party and to consummate, on the terms and subject to the
\nconditions of the Transaction Agreements, the transactions contemplated hereby
\nand thereby, subject only to approval of this Agreement and the transactions
\ncontemplated hereby by the holders of at least two-thirds of the outstanding
\nshares of Common Stock (the “Company Requisite Vote”). Each Transaction
\nAgreement to which the Company or Spinco is or will be a party, when executed by
\nsuch party, will be a valid and binding agreement of such party enforceable
\nagainst such party in accordance with its terms, subject to bankruptcy,
\ninsolvency, fraudulent transfer, reorganization, moratorium and similar laws of
\ngeneral applicability relating to or affecting creditors’ rights and to the
\nrights of creditors of insurance companies generally and to general equity
\nprinciples (the “Bankruptcy and Equity Exception”).<\/p>\n
(ii) The board of directors of the Company (A) has, and, in
\nthe case of Spinco, the Board of Directors of Spinco will have prior to the
\nEffective Time, unanimously approved the Transaction Agreements and the
\ntransactions contemplated hereby and (B) has declared that this Agreement and
\nthe transactions contemplated hereby, taken as a whole, are fair to, advisable
\nand in the best interests of the holders of shares of Common Stock. In taking
\nsuch action, the Board of Directors of the Company considered, among other
\nthings, the interests of the Company’s employees, customers, creditors and
\nsuppliers as well as community and societal considerations. The board of
\ndirectors of the Company has also has received the opinions of its financial
\nadvisors, Donaldson Lufkin & Jenrette Securities Corporation and Goldman, Sachs
\n& Co., to the effect that the <\/p>\n
-13-
\n 22
\nconsideration to be received by the holders of shares of Common Stock in the
\nMerger is fair from a financial point of view to the holders of shares of Common
\nStock.<\/p>\n
(d) Governmental Filings; No Violations. (i) Other than the
\nreports, filings, registrations, consents, approvals, permits, authorizations,
\napplications, expiry of waiting periods and\/or notices (A) pursuant to Section
\n1.4, (B) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
\namended (the “HSR Act”), (C) under any foreign competition laws, (D) under the
\nExchange Act, the Securities Act (in each case as defined below) and other
\nsecurities laws, (E) under the Investment Company Act of 1940, as amended (the
\n“1940 Act”), (F) under the Investment Advisers Act of 1940, as amended (the
\n“Advisers Act”), (G) with the NYSE (as defined below), (H) with the National
\nAssociation of Securities Dealers, Inc. (the “NASD”), (I) with applicable
\nforeign, federal and state regulatory authorities governing insurance and
\nhealthcare (including, but not limited to, the Commissioners or Superintendents,
\nas the case may be, of Insurance of Connecticut and Florida) (the “Insurance and
\nHealthcare Authorities”), (J) in respect of certain undertakings made by the
\nCompany to the Insurance and Healthcare Authorities of the States of Florida and
\nCalifornia, (K) with federal and state regulatory authorities governing banking
\n(including, but not limited to, the Office of Thrift Supervision, the Federal
\nDeposit Insurance Corporation, the Connecticut Banking Department, and the
\nOffice of the Comptroller of the Currency), insurance premium finance,
\ncommercial collections, leasing, consumer finance, financial services,
\ninvestment services, commercial finance and mortgage lending or servicing (the
\n“Banking Authorities”), (L) with the Department of Labor, (M) with applicable
\nforeign and federal regulatory authorities governing foreign investments, (N)
\nwith applicable foreign regulatory authorities governing the management of
\npension plans, (O) with applicable state regulatory authorities governing
\ninvestments advisors, (P) with the Pension Benefit Guaranty Corporation (the
\n“PBGC”) (Q) required to be obtained from any Governmental Entity (as defined
\nbelow) in its capacity as a customer of the Company, Spinco or any of their
\nSubsidiaries or any Joint Ventures and (R) with the IRS in connection with
\ncertain transfers contemplated by the Employee Benefits Agreement (as defined
\nbelow), no notices, reports or other filings are required to be made by the
\nCompany, Spinco or any of their Subsidiaries or any Joint Ventures with, nor are
\nany consents, registrations, approvals, permits, applications, expiry of waiting
\nperiods or authorizations required to be obtained by the Company, Spinco or any
\nof their Subsidiaries or any Joint Ventures from, any U.S. or non-U.S.
\ngovernmental or regulatory authority, agency, commission, tribunal, body or
\nother governmental, quasi-governmental or self-regulatory entity (each, a
\n“Governmental Entity”), in connection with the execution and delivery of the
\nTransaction Agreements by the Company and Spinco and the consummation by the
\nCompany and Spinco of the Merger, the Spin-Off and the other transactions
\ncontemplated hereby and thereby, except those that the failure to make or obtain
\nare not, individually or in the aggregate, reasonably likely to have a Company
\nMaterial Adverse Effect or prevent, <\/p>\n
-14-
\n 23
\nmaterially delay or materially impair the ability of the Company or Spinco to
\nconsummate the Merger and the other transactions contemplated by the Transaction
\nAgreements.<\/p>\n
(ii) The execution, delivery and performance of each
\nTransaction Agreement by the Company (and in the case of the Distribution
\nAgreement, Spinco) does not, and the consummation by the Company (and in the
\ncase of the Distribution Agreement, Spinco) of the Merger and the other
\ntransactions contemplated hereby and thereby will not, constitute or result in
\n(A) a breach or violation of, or a default under, the certificate or by-laws of
\nSpinco or the Company or the comparable governing instruments of any of the
\nCompany’s or Spinco’s Subsidiaries or any Joint Ventures, (B) a breach or
\nviolation of, or a default under, the acceleration of any rights or obligations
\nor the creation of a lien, pledge, security interest, claim or other encumbrance
\non the assets of Spinco, the Company or any of the Company’s or Spinco’s
\nSubsidiaries or any Joint Ventures (with or without notice, lapse of time or
\nboth) pursuant to, any agreement, lease, non-governmental license, contract,
\ntreaty, note, mortgage, indenture, non-governmental franchise, non-governmental
\npermit, concession, arrangement or other non-governmental obligation
\n(“Contracts”) binding upon Spinco, the Company or any of the Company’s or
\nSpinco’s Subsidiaries or any Joint Ventures or, assuming compliance with the
\nmatters referred to in Section 5.1(d)(i), any Law (as defined below), or any
\ngovernmental or non-governmental permit, franchise or license to which Spinco,
\nthe Company or any of the Company’s or Spinco’s Subsidiaries or any Joint
\nVentures is subject or (C) any change in the rights or obligations of any party
\nunder any of the Contracts, except, in the case of clause (B) or (C) above, for
\nany breach, violation, default, acceleration, creation or change that is not,
\nindividually or in the aggregate, reasonably likely to have a Company Material
\nAdverse Effect or prevent, materially delay or materially impair the ability of
\nthe Company or Spinco to consummate the transactions contemplated by the
\nTransaction Agreements. The payment of the Merger Consideration in the Merger
\nand distribution of the shares of Spinco to be distributed in the Spin-Off only
\nto the same holder of a share of Common Stock (as described in Section 4.1(b) of
\nthis Agreement) is capable of being effected in accordance with Law.<\/p>\n
(e) Statutory Reports; Company Reports; Financial Statements.
\n(i) Since January 1, 1997, each of the Retained Insurance Companies has filed
\nall annual or quarterly statements, together with all exhibits, interrogatories,
\nnotes, actuarial opinions, affirmations, certifications, schedules or other
\nsupporting documents in connection therewith, required to be filed with or
\nsubmitted to the appropriate regulatory authorities of the jurisdiction in which
\nit is, or was for the period of time covered by the filing, domiciled or
\n“commercially domiciled” on forms prescribed or permitted by such authority (in
\nthe case of U.S. Retained Insurance Companies and Aetna Life Insurance Company
\nof America (“ALICA”), collectively, the “Company SAP Statements”, and in the
\ncase of International Retained Insurance Companies, other than immaterial
\nInternational Retained Insurance Companies, collectively the “Foreign Company<\/p>\n
-15-
\n 24
\nStatements”). The Company has delivered or made available to Parent all Company
\nSAP Statements and all Foreign Company Statements, in each case for the year
\nended December 31, 1999 each in the form (including exhibits, annexes and any
\namendments thereto) filed with the applicable insurance regulatory agency. Since
\nJanuary 1, 1997, the financial statements included in the Company SAP Statements
\nand Foreign Company Statements for the periods from and after January 1, 1997,
\nincluding the notes thereto, have been prepared in accordance with statutory or
\nother applicable accounting practices prescribed or permitted by applicable
\nregulatory authorities in effect as of the date of the respective statements,
\nand such accounting practices have been applied on a substantially consistent
\nbasis throughout the periods involved, except as expressly set forth in the
\nnotes or schedules thereto. Such financial statements present fairly in all
\nmaterial respects the respective statutory financial positions and results of
\noperations of each of the Retained Insurance Companies as of their respective
\ndates and for the respective periods presented therein. The Company SAP
\nStatements and Foreign Company Statements complied in all material respects with
\nall applicable Laws when filed, and no material deficiency has been asserted
\nwith respect to any Company SAP Statements or Foreign Company Statements by the
\napplicable insurance regulatory body or other Governmental Entity. Except as
\nindicated therein, all assets that are reflected as admitted assets on the
\nCompany SAP Statements and Foreign Company Statements , to the extent
\napplicable, comply in all material respects with all applicable Insurance Laws
\n(as defined below) with respect to admitted assets and are in an amount at least
\nequal to the minimum amounts required by applicable Insurance Laws. The
\nstatutory balance sheets and statements of income, changes in financial position
\nand cash flow included in the Company SAP Statements for 1999 have been audited
\nby KPMG LLP and the Company has delivered or made available to Parent true and
\ncomplete copies of all audit opinions related thereto. To the extent the balance
\nsheets and statements of income, changes in financial position and cash flow
\nincluded in the Foreign Company Statements for 1999 have been audited, the
\nCompany has delivered or made available to Parent true and complete copies of
\nall audit opinions related thereto. The Company has delivered to Parent true and
\ncomplete copies of all examinations and market conduct reports or other
\ncomparable examinations or reports of insurance departments and any insurance
\nregulatory agencies since January 1, 1998 relating to the Retained Insurance
\nCompanies.<\/p>\n
(ii) The Company has filed with the SEC each registration
\nstatement, report, proxy statement or information statement required to be filed
\nby it since January 1, 1997, including the 1999 10-K and the First 2000 10-Q,
\neach in the form, when filed (or if amended, as of the date of such amendment)
\n(including exhibits, annexes and any amendments thereto), promulgated by the SEC
\nunder the Securities Act of 1933, as amended (the “Securities Act”) or the
\nExchange Act (collectively, with any other filings made with the SEC since
\nJanuary 1, 1997, and including any such registration statements, reports, proxy
\nstatements and information statements filed subsequent to the date hereof and as
\namended, the “Company Reports”). As of their respective dates (or, if amended,
\nas <\/p>\n
-16-
\n 25
\nof the date of such amendment), the Company Reports did not, and any Company
\nReports filed with the SEC subsequent to the date hereof will not, contain any
\nuntrue statement of a material fact or omit to state a material fact required to
\nbe stated therein or necessary to make the statements made therein, in the light
\nof the circumstances in which they were made, not misleading.<\/p>\n
(iii) Each of the consolidated balance sheets included in the
\nCompany Reports (including the related notes and schedules) fairly presents in
\nall material respects, or will fairly present in all material respects, the
\nconsolidated financial position of the Company and its Subsidiaries as of its
\ndate and each of the consolidated statements of income, shareholders’ equity and
\ncash flows included in the Company Reports (including any related notes and
\nschedules) fairly presents in all material respects, or will fairly present in
\nall material respects, the results of operations, retained earnings and cash
\nflows, as the case may be, of the Company and its Subsidiaries for the periods
\nset forth therein (subject, in the case of unaudited statements, to notes and
\nnormal year-end audit adjustments that will not be material in amount or
\neffect), in each case in accordance with U.S. generally accepted accounting
\nprinciples (“GAAP”) consistently applied during the periods involved, except as
\nmay be noted therein.<\/p>\n
(iv) Section 5.1(e)(iv) of the Company Disclosure Letter
\ncontains the unaudited pro forma consolidated balance sheet of Spinco and its
\nSubsidiaries as of March 31, 2000, together with the related unaudited
\nconsolidated statement of income for the three-month period then ended, and the
\nunaudited pro forma consolidated statement of income of Spinco and its
\nSubsidiaries for the year ended December 31, 1999. Such statements present
\ninformation as if the Spin-Off had occurred (on the terms and subject to the
\nconditions set forth in the Transaction Agreements) as of the Balance Sheet Date
\nor, with respect to the income statements, as if the Spin-Off had occurred (on
\nthe terms and subject to the conditions set forth in the Transaction Agreements)
\nas of the beginning of the period presented. Such statements are based on, and
\nshould be read in conjunction with, the historical consolidated financial
\nstatements included in the Company Reports. Such balance sheet fairly presents
\nin all material respects the consolidated financial position of Spinco and its
\nSubsidiaries as of its date, as if the Spin-Off had occurred (on the terms and
\nsubject to the conditions set forth in the Transaction Agreements) on such date,
\nand each such consolidated statement of income, fairly presents in all material
\nrespects the results of operations of Spinco and its Subsidiaries for the
\nperiods set forth therein, as if the Spin-Off had occurred (on the terms and
\nsubject to the conditions set forth in the Transaction Agreements) as of the
\nbeginning of such period (subject to notes and normal year-end audit adjustments
\nthat will not be material in amount or effect). The accounts reflected in the
\nunaudited pro forma consolidated financial statements referred to in this
\nsubsection have been prepared in accordance with GAAP on a basis consistent with
\nthe historical audited consolidated financial statements of the Company and its<\/p>\n
-17-
\n 26
\nSubsidiaries (including Spinco and its Subsidiaries) and were prepared in
\naccordance with the requirements of SEC Regulation S-X as it relates to pro
\nforma financial statements.<\/p>\n
(v) Section 5.1(e)(v) of the Company Disclosure Letter
\ncontains the unaudited pro forma consolidated balance sheet of the Company and
\nits Subsidiaries as of March 31, 2000, together with the related unaudited
\nconsolidated statement of income, for the three-month period then ended, and the
\nunaudited pro forma consolidated statement of income of the Company and its
\nSubsidiaries for the year ended December 31, 1999. Such statements present
\ninformation as if the Spin-Off had occurred (on the terms and subject to the
\nconditions set forth in the Transaction Agreements) as of the Balance Sheet Date
\nor, with respect to the income statements, as if the Spin-Off had occurred (on
\nthe terms and subject to the conditions set forth in the Transaction Agreements)
\nas of the beginning of the period presented. Such statements are based on, and
\nshould be read in conjunction with, the historical consolidated financial
\nstatements included in the Company Reports. Such balance sheet fairly presents
\nin all material respects the consolidated financial position of the Company and
\nits Subsidiaries as of its date, as if the Spin-Off had occurred (on the terms
\nand subject to the conditions set forth in the Transaction Agreements) on such
\ndate, and each such consolidated statement of income fairly presents in all
\nmaterial respects the results of operations of the Company and its Subsidiaries
\nfor the periods set forth therein, as if the Spin-Off had occurred (on the terms
\nand subject to the conditions set forth in the Transaction Agreements) as of the
\nbeginning of such period (subject to notes and normal year-end audit adjustments
\nthat will not be material in amount or effect). The accounts reflected in the
\nunaudited pro forma financial statements referred to in this subsection have
\nbeen prepared in accordance with GAAP on a basis consistent with the historical
\naudited consolidated financial statements of the Company and its Subsidiaries
\n(including Spinco and its Subsidiaries) and were prepared in accordance with the
\nrequirements of SEC Regulation S-X as it relates to pro forma financial
\nstatements.<\/p>\n
(f) Absence of Certain Changes. Except as disclosed in the
\nCompany Reports filed prior to the date hereof or as expressly contemplated by
\nthe Transaction Agreements or Section 6.1 hereof, since March 31, 2000 (the
\n“Balance Sheet Date”), the Company and its Subsidiaries and Joint Ventures have
\nconducted their respective businesses only in, and have not engaged in any
\nmaterial transaction other than according to, the ordinary course of such
\nbusinesses consistent with prior practice and since the Balance Sheet Date there
\nhas not been (i) any Company Material Adverse Effect or any development or
\ncombination of developments of which the Company has knowledge (as such phrase
\nis defined below) that has had or is reasonably likely to have, individually or
\nin the aggregate, a Company Material Adverse Effect; (ii) any damage,
\ndestruction or other casualty loss with respect to any material asset or
\nproperty owned, leased or otherwise used by the Company or any of its
\nSubsidiaries or Joint Ventures, whether or not covered by insurance, which is
\nreasonably likely to have a Company Material Adverse Effect; (iii) any change by
\nthe Company or any of its Subsidiaries in accounting principles, <\/p>\n
-18-
\n 27
\npractices or methods, except as may be appropriate to conform to changes in
\nstatutory or regulatory accounting rules or generally accepted accounting
\nprinciples or regulatory requirements with respect thereto; (iv) any
\ndeclaration, setting aside or payment of any dividend or other distribution in
\nrespect of the capital stock of the Company or Aetna Retirement Services, Inc.
\nor Aetna International, Inc., except for dividends or other distributions on the
\ncapital stock of the Company publicly announced prior to the date hereof and
\nexcept for regularly scheduled quarterly cash dividends on the Company’s capital
\nstock; (v) any material addition, or any development involving a prospective
\nmaterial addition, to the Company and its Subsidiaries’ consolidated reserves
\nfor future insurance policy benefits or other insurance policy claims and
\nbenefits other than as a result of new business produced in the ordinary course
\nof business since the Balance Sheet Date and except to the extent relating
\nsolely to any member of the Spinco Group; (vi) any material change in the
\nactuarial, investment, reserving, underwriting or claims administration
\npolicies, practices or principles of any Retained Insurance Company, except as
\nmay be appropriate to conform to changes in statutory or regulatory accounting
\nor actuarial rules or generally accepted accounting or actuarial principles or
\nregulatory requirements with respect thereto; (vii) any amendment of any of the
\nCompensation and Benefit Plans (as defined below) other than amendments in the
\nordinary course of business consistent with prior practice; (viii) any granting
\nby the Company or any of its Subsidiaries to any of the 20 highest paid
\nemployees (by base salary) of the Company (each a “Designated Person” and
\ncollectively, the “Designated Persons”) of any increase in compensation, except
\n(A) for increases in the ordinary course of business consistent with prior
\npractice, (B) as was required under employment agreements in effect as of the
\nBalance Sheet Date or (C) in connection with a promotion; (ix) any granting by
\nthe Company or any of its Subsidiaries to any Designated Person of any increase
\nin severance or termination pay, except (A) for obligations which have been
\nsatisfied prior to the date hereof, (B) for increases in the ordinary course of
\nbusiness consistent with prior practice in any one case not in excess of
\n$100,000, (C) as was required under any employment, severance or termination
\nagreement in effect as of the Balance Sheet Date or (D) in connection with a
\npromotion; (x) any entry by the Company or any of its Subsidiaries into any new
\nseverance or termination agreement with any Designated Person, except (A) for
\nobligations which have been satisfied prior to the date hereof, (B) new
\nseverance or termination obligations in the ordinary course of business
\nconsistent with prior practice in any one case not in excess of $100,000, (C) in
\nconnection with a promotion or (D) any new severance or termination agreement
\nentered into at Parent’s request or with Parent’s consent; (xi) except in the
\nordinary course of business consistent with past practices, any material Tax
\nelection made by the Company or any of its Subsidiaries or any material changes
\nof the Company or any of its Subsidiaries’ methods of accounting for federal
\nincome Tax purposes or (xii) any transfer or transaction that would have been
\nprohibited by Section 6.1(l) had it been in effect since March 31, 2000;
\nprovided, however, that the limitations of clauses (vii) through (x) of this
\nSection 5.1(f) shall not apply to any actions taken in respect of any individual
\nwho, after giving effect to the Spin-Off, will be an <\/p>\n
-19-
\n 28
\nexecutive officer, director or employee of Spinco or any of its Subsidiaries (an
\n“Excluded Employee”) if such actions do not adversely affect the Company and its
\nSubsidiaries and such limitations shall not apply to any actions taken in
\nrespect of any other individual so long as any liabilities resulting from such
\nactions are the responsibility of Spinco or any of its Subsidiaries (after
\ngiving effect to the Transaction Agreements). For purposes of the proviso to
\nthis Section 5.1(f), an action will not be considered to adversely affect the
\nCompany and its Subsidiaries if (i) the action is taken with respect to an
\nExcluded Employee whose employment arrangements expressly provide that, upon
\nconsummation of the Spin-Off, any and all claims of such Excluded Employee with
\nrespect to employment shall be brought only against Spinco or any of its
\nSubsidiaries and shall not be brought against the Company or any of its
\nSubsidiaries or (ii) if the aggregate liability for the action (other than an
\naction described in the foregoing clause (i)), together with the aggregate
\nliability for all actions other than those described in the foregoing clause
\n(i), determined in each case without regard to the Transaction Agreements, is
\nless than $10 million.<\/p>\n
(g) Litigation and Liabilities. (i) Except as disclosed in the
\nCompany Reports filed prior to the date hereof, there are no civil, criminal or
\nadministrative actions, suits, claims, hearings, investigations or proceedings
\npending or, to the knowledge of the Company, threatened against Spinco, the
\nCompany, their respective Subsidiaries, any of the Joint Ventures or any of
\ntheir respective properties or assets except for those that are not,
\nindividually or in the aggregate, reasonably likely to have a Company Material
\nAdverse Effect or prevent, materially delay or materially impair the ability of
\nthe Company or Spinco to consummate the transactions contemplated by the
\nTransaction Agreements.<\/p>\n
(ii) Set forth in Section 5.1(g)(ii) of the Company Disclosure
\nLetter is a complete list, as of the date hereof, of all civil, criminal or
\nadministrative actions, suits, claims (other than individual customer complaints
\nwhich are received in the ordinary course of business, consistent with past
\npractices, and as to which no suit, action or arbitration has been commenced),
\nhearings, investigations or proceedings pending, or, to the actual knowledge of
\nthe people set forth in Section 5.1(g)(ii) of the Company Disclosure Letter,
\nthreatened, against the Company and its Subsidiaries (other than Aetna
\nInternational, Inc. and its Subsidiaries, the “International Entities”), any
\nJoint Ventures and any joint ventures of the Company or their properties or
\nassets.<\/p>\n
(iii) Set forth in Section 5.1(g)(iii) of the Company
\nDisclosure Letter is a complete list, as of the date hereof, of each civil,
\ncriminal or administrative actions, suits, claims (other than individual
\ncustomer complaints which are received in the ordinary course of business,
\nconsistent with past practices, and as to which no suit, action or arbitration
\nhas been commenced), hearings, investigations or proceedings pending, or, to the
\nactual knowledge of the people set forth in Section 5.1(g)(iii) of the Company<\/p>\n
-20-
\n 29
\nDisclosure Letter, threatened, against the International Entities and the Joint
\nVentures or their properties or assets, as to which, in each case, it is
\nreasonably likely to expect potential damages resulting therefrom to exceed
\n$500,000, net of applicable insurance and reserves.<\/p>\n
(iv) As of the date hereof, there is no litigation against any
\nmember of the Spinco Group which, net of applicable insurance and reserves with
\nrespect thereto, is reasonably likely to result in liability for amounts which
\nwould be material to the financial condition of Spinco.<\/p>\n
(v) Except for those obligations and liabilities that are
\nfully reflected or reserved against on the consolidated balance sheet of the
\nCompany included in the 1999 10-K or the First 2000 10-Q and for obligations and
\nliabilities incurred in the ordinary course of business consistent with prior
\npractice since March 31, 2000, neither the Company nor any of its Subsidiaries
\nhas incurred any obligations or liabilities of any nature whatsoever, whether
\nabsolute, accrued, contingent, known, unknown or otherwise and none of the Joint
\nVentures has incurred any obligation or liabilities of any nature whatsoever,
\nwhether absolute, accrued, contingent or otherwise and, in each case, whether or
\nnot required to be disclosed on a balance sheet prepared in accordance with GAAP
\nor statutory or other applicable accounting principles, including those relating
\nto matters involving any Environmental Law (as defined below), or any other
\nfacts or circumstances of which the Company has knowledge that could result in
\nany claims against, or obligations or liabilities of, the Company or any of its
\nAffiliates or Joint Ventures, except for those that are not, individually or in
\nthe aggregate, reasonably likely to have a Company Material Adverse Effect or
\nprevent, materially delay or materially impair the ability of the Company or
\nSpinco to consummate the transactions contemplated by the Transaction
\nAgreements. As used in the Agreement, each of the phrases (i) “of which the
\nCompany has knowledge”, (ii) “knowledge of the Company” and (iii) “the Company
\nhas no knowledge” means the actual knowledge of those people set forth on
\nSection 5.1(g)(v) of the Company Disclosure Letter.<\/p>\n
(h) Employee Benefits. (i) A true and complete copy of each
\nmaterial employment benefit and compensation plan, Contract, policy or
\narrangement, including each “employee benefit plan” within the meaning of
\nSection 3(3) of the Employee Retirement Income Security Act of 1974, as amended
\n(“ERISA”), bonus, incentive, deferred compensation, employee stock ownership,
\nstock bonus, stock purchase, restricted stock, stock option, stock appreciation
\nrights, stock based, termination and severance plan, Contract, policy or
\narrangement that covers employees, directors, agents, consultants, former
\nemployees or former directors of the Company and its Subsidiaries (the
\n“Compensation and Benefit Plans”) and any trust agreement or insurance contract
\nforming a part of such Compensation and Benefit Plans has been made available to
\nParent prior to the date hereof. The Compensation and Benefit Plans are listed
\nin Section 5.1(h) of the <\/p>\n
-21-
\n 30
\nCompany Disclosure Letter and any “change of control” or similar provisions
\ntherein are specifically identified in Section 5.1(h) of the Company Disclosure
\nLetter. Except as provided in the Transaction Agreements, neither the Company
\nnor any of its Subsidiaries has any commitment, oral or written, to create any
\nadditional material Compensation and Benefit Plan or to modify or change any
\nexisting Compensation and Benefit Plan in a material respect.<\/p>\n
(ii) All Compensation and Benefit Plans are in substantial
\ncompliance with all applicable Law, including the Code and ERISA, and all
\nrequired filings and disclosures with respect to any Compensation and Benefit
\nPlan have been timely made. More specifically, the Company and the Compensation
\nand Benefit Plans have at all times complied with Section 407 of ERISA with
\nrespect to the holding and acquiring of “employer securities” and “qualifying
\nemployer securities” as defined under ERISA. Each Compensation and Benefit Plan
\nthat is an “employee pension benefit plan” within the meaning of Section 3(2) of
\nERISA (a “Pension Plan”) and that is intended to be qualified under Section
\n401(a) of the Code (each, a “Qualified Plan”), has received a favorable
\ndetermination letter (including a determination that the related trust under
\nsuch Compensation and Benefit Plan is exempt from Tax under Section 501(a) of
\nthe Code) from the Internal Revenue Service (the “IRS”) with respect to “TRA”
\n(as defined in Section 1 of Revenue Procedure 93-39), and the Company is not
\naware of any circumstances reasonably likely to result in revocation of any such
\nfavorable determination letter. There is no material pending or, to the
\nknowledge of the Company, threatened legal action, suit, claim or governmental
\ninvestigation relating to any of the Compensation and Benefit Plans, other than
\nroutine claims for benefits. Neither the Company nor any of its Subsidiaries nor
\nSpinco nor any of its Subsidiaries has engaged in a transaction, or omitted to
\ntake any action, with respect to any Compensation and Benefit Plan that,
\nassuming the Taxable period of such transaction expired as of the date hereof,
\ncould subject the Company or any of its Subsidiaries to a material Tax or
\npenalty imposed by either Section 4975 of the Code or Section 502 of ERISA.<\/p>\n
(iii) There is no material liability under Subtitle C or D of
\nTitle IV of ERISA that has been incurred which has not been satisfied and no
\nsuch material liability is expected to be incurred by the Company or any
\nSubsidiary with respect to any ongoing, frozen or terminated “single-employer
\nplan”, within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
\nmaintained by any of them, or the single-employer plan of any entity which is
\nconsidered one employer with the Company under Section 4001 of ERISA or Section
\n414 of the Code (such entity an “ERISA Affiliate” and such plan an “ERISA
\nAffiliate Plan”). The Company and its Subsidiaries have not incurred any
\nmaterial withdrawal liability that has not been satisfied and the Company does
\nnot expect that they will incur any such material withdrawal liability with
\nrespect to any multiemployer plan under Subtitle E to Title IV of ERISA. Neither
\nthe Company, its Subsidiaries nor any ERISA Affiliate has contributed, or been
\nobligated to contribute, to a <\/p>\n
-22-
\n 31<\/p>\n
“multiemployer plan” within the meaning of Section 3(37) of ERISA within the
\nlast six calendar years. No notice of a “reportable event”, within the meaning
\nof Section 4043 of ERISA for which the 30-day reporting requirement has not
\nbeen waived, has been required to be filed for any Pension Plan or any ERISA
\nAffiliate Plan within the 12-month period ending on the date hereof or, except
\nin respect of the transactions contemplated by the Transactions Agreements,
\nwill be required to be filed in connection with the transactions contemplated
\nby the Transaction Agreements. The PBGC has not instituted proceedings to
\nterminate any Pension Plan or ERISA Affiliate Plan, and, to the knowledge of
\nthe Company, no condition exists that presents a material risk that such
\nproceedings will be instituted.<\/p>\n
(iv) All material contributions required to be made under the
\nterms of any Compensation and Benefit Plan or ERISA Affiliate Plan as of the
\ndate hereof have been timely made in accordance with such terms and applicable
\nLaw and\/or have been reflected on the most recent consolidated balance sheet
\nfiled or incorporated by reference in the Company Reports prior to the date
\nhereof. Neither any Pension Plan nor any ERISA Affiliate Plan has an
\n“accumulated funding deficiency” (whether or not waived) within the meaning of
\nSection 412 of the Code or Section 302 of ERISA, and no ERISA Affiliate has an
\noutstanding funding waiver. Neither the Company nor its Subsidiaries or ERISA
\nAffiliates nor Spinco nor its Subsidiaries or ERISA Affiliates (x) has provided,
\nor is required to provide, security to any Pension Plan or to any ERISA
\nAffiliate Plan pursuant to Section 401(a)(29) of the Code or (y) has taken any
\naction, or omitted to take any action, that has resulted, or is reasonably
\nlikely to result, in the imposition of a lien under Section 412(a) of the Code
\nor pursuant to ERISA.<\/p>\n
(v) Under each Pension Plan which is a single-employer plan
\nand ERISA Affiliate Plan, as of the last day of the most recent plan year ended
\nprior to the date hereof, the actuarially determined present value of all
\n“benefit liabilities”, within the meaning of Section 4001(a)(16) of ERISA (as
\ndetermined on the basis of the actuarial assumptions contained in the Pension
\nPlan’s most recent actuarial valuation), did not exceed the then current value
\nof the assets of such Plan, and as of the date hereof, there has been no
\nmaterial adverse change in the financial condition of such Plan nor any
\namendment or other change to such Plan that would materially increase the amount
\nof benefits thereunder which reasonably could be expected to change such result.<\/p>\n
(vi) Except as required by applicable Law, by the Transaction
\nAgreements or pursuant to individual agreements, neither the Company nor any of
\nits Subsidiaries or ERISA Affiliates have any obligations for retiree health and
\nlife benefits under any Compensation and Benefit Plan. No action taken by the
\nCompany or its Subsidiaries or Spinco or its Subsidiaries alters the Company’s
\nor its Subsidiaries’ ability to amend or terminate any retiree health or life
\nplan in accordance with the written terms of such plan.<\/p>\n
-23-
\n 32
\n (vii) The consummation of the Merger and the other
\ntransactions contemplated by the Transaction Agreements will not, without any
\nother action (w) entitle any employee, consultant or director of the Company or
\nany of its Subsidiaries to any payment (including severance pay or similar
\ncompensation) or any increase in compensation, (x) accelerate the time of
\npayment or vesting or trigger any payment of compensation or benefits or the
\nfunding of any trust under, increase the amount payable or trigger any other
\nmaterial obligation pursuant to, any of the Compensation and Benefit Plans or
\n(y) result in any breach or violation of, or a default under, any of the
\nCompensation and Benefit Plans.<\/p>\n
(viii) With respect to each Compensation and Benefit Plan, if
\napplicable, the Company has provided or made available to Parent true and
\ncomplete copies of (i) the most recent Form 5500 filed with the IRS; (ii) the
\nmost recent actuarial report and financial statement; (iii) the most recent
\nsummary plan description; (iv) the forms filed with the PBGC (other than for
\npremium payments) since January 1, 1998; (v) the most recent determination
\nletter issued by the IRS; (vi) any Form 5310 or Form 5330 filed with the IRS;
\nand (vii) the most recent nondiscrimination tests performed under ERISA and the
\nCode (including 401(k) and 401(m) tests).<\/p>\n
(ix) From March 31, 2000 through the date hereof, no (i)
\nDesignated Persons or (ii) other employees of Aetna Retirement Services, Inc. or
\nAetna International, Inc. or any of their Subsidiaries (that are also
\nSubsidiaries of the Company), Joint Ventures or joint ventures have been
\ntransferred to or from the Company, Spinco, any of their respective Subsidiaries
\nor joint ventures or Aetna Services, Inc., other than transfers of such other
\nemployees identified in clause (ii) in the ordinary course of business
\nconsistent with past practices.<\/p>\n
(i) Compliance with Laws; Permits. (i) The business and
\noperations of the Company and its Subsidiaries and Joint Ventures have been
\nconducted in compliance with all applicable foreign, federal, state and local
\nLaws regulating the business and products of insurance, reinsurance and
\nhealthcare and all applicable orders and directives of Insurance and Healthcare
\nAuthorities (including federal authorities with respect to health maintenance
\norganization and other health and workmen’s compensation products and variable
\ninsurance and annuity products) and market conduct recommendations resulting
\nfrom market conduct examinations conducted by or on behalf of Insurance and
\nHealthcare Authorities (including federal authorities with respect to health
\nmaintenance organization and other health and workmen’s compensation products
\nand variable insurance and annuity products) (collectively, “Insurance Laws”),
\nexcept where the failure to so conduct such business and operations is not,
\nindividually or in the aggregate, reasonably likely to have a Company Material
\nAdverse Effect. Without limiting the generality of the preceding sentence,
\nexcept where the failure to do so is not, individually or in the aggregate,
\nreasonably likely to have a Company Material Adverse <\/p>\n
-24-
\n 33<\/p>\n
Effect, each of the Company and its Subsidiaries and Joint Ventures and, to the
\nknowledge of the Company as of the date hereof, its Agents (as defined below),
\nhave marketed, administered, sold and issued insurance, reinsurance, healthcare
\nand annuity products and guaranteed investment contracts in compliance with all
\napplicable Insurance Laws, including (A) all applicable prohibitions against
\nwithdrawal of business lines and “redlining”, (B) all applicable requirements
\nrelating to the disclosure of the nature of insurance and\/or annuity products
\nas policies of insurance or annuities, as the case may be, (C) all applicable
\nrequirements relating to insurance and\/or annuity product projections and
\nillustrations and (D) all applicable requirements relating to the advertising,
\nsales and marketing of insurance and annuity products, healthcare products and
\nguaranteed investment contracts. In addition, (X) there is no pending or, to
\nthe knowledge of the Company, threatened charge by any Insurance and Healthcare
\nAuthority that the Company or any of its Subsidiaries or Joint Ventures has
\nviolated, nor any pending or, to the knowledge of the Company, threatened
\ninvestigation by any Insurance and Healthcare Authority with respect to
\npossible violations of any applicable Insurance Laws where such violations are,
\nindividually or in the aggregate, reasonably likely to have a Company Material
\nAdverse Effect; (Y) none of the Company or any of its Subsidiaries or Joint
\nVentures is subject to any order or decree of any Insurance and Healthcare
\nAuthority relating specifically to such Person (as opposed to insurance
\ncompanies generally) which is, individually or in the aggregate, reasonably
\nlikely to have a Company Material Adverse Effect; and (Z) the Company and its
\nSubsidiaries and Joint Ventures have filed all reports required to be filed
\nwith any Insurance and Healthcare Authority as to which the failure to file
\nsuch reports is, individually or in the aggregate, reasonably likely to have a
\nCompany Material Adverse Effect.<\/p>\n
(ii) In addition to Insurance Laws, except as set forth in the
\nCompany Reports filed prior to the date hereof, the businesses of each of
\nSpinco, the Company and the Company’s Subsidiaries and Joint Ventures have not
\nbeen, and are not being, conducted in violation of any applicable federal,
\nstate, local or foreign law, statute, ordinance, directive, rule, regulation,
\njudgment, order, injunction, decree, arbitration award, agency requirement,
\nlicense or permit of any Governmental Entity (collectively, “Laws”), except for
\nviolations or possible violations that are not, individually or in the
\naggregate, reasonably likely to have a Company Material Adverse Effect or
\nprevent, materially delay or materially impair the ability of the Company or
\nSpinco to consummate the Merger and the other transactions contemplated by the
\nTransaction Agreements. No investigation or review by any Governmental Entity
\nwith respect to the Company or any of its Subsidiaries or Joint Ventures which
\nwould be reasonably likely to have a Company Material Adverse Effect is pending
\nor, to the knowledge of the Company, threatened, nor has any Governmental Entity
\nindicated an intention to conduct the same. To the knowledge of the Company, no
\nchange is required in the Company’s or any of its Subsidiaries’ or Joint
\nVentures’ processes, properties or procedures in connection with any such Laws,
\nand the Company has not received any notice or communication of any<\/p>\n
-25-
\n 34<\/p>\n
noncompliance with any such Laws that has not been cured as of the date hereof
\nother than any such failure to make changes or non-compliance which is not,
\nindividually or in the aggregate, reasonably likely to have a Company Material
\nAdverse Effect. Spinco, the Company and the Company’s Subsidiaries and Joint
\nVentures each has all permits, licenses, franchises, variances, exemptions,
\norders and other governmental authorizations, consents and approvals necessary
\nto conduct its business as presently conducted except those the absence of
\nwhich are not, individually or in the aggregate, reasonably likely to have a
\nCompany Material Adverse Effect or prevent, materially delay or materially
\nimpair the ability of the Company or Spinco to consummate the Merger and the
\nother transactions contemplated by the Transaction Agreements. None of the
\nCompany’s Subsidiaries which is a registered broker-dealer has entered into or
\nis subject to a restrictions letter agreement or similar agreement or decree
\nwith the NASD as of the date hereof.<\/p>\n
(j) Takeover Statutes. No restrictive provision of any “fair
\nprice,” “moratorium”, “control share acquisition”, “interested shareholder” or
\nother similar anti-takeover statute or regulation (each a “Takeover Statute”) or
\nany restrictive provision of any anti-takeover provision in the Company’s
\ncertificate of incorporation and by-laws is, or at or following the Effective
\nTime will be, applicable to the Company, the Shares, the Merger or the other
\ntransactions contemplated by the Transaction Agreements.<\/p>\n
(k) Environmental Matters. Except as would not be reasonably
\nlikely to have, individually or in the aggregate, a Company Material Adverse
\nEffect:<\/p>\n
(i) the Company and its Subsidiaries and Joint Ventures have
\nat all times been in compliance with all Orders (as defined below) of any
\nGovernmental Entity and all Laws, in each case related to any Environmental Law
\n(as defined in the Distribution Agreement);<\/p>\n
(ii) there are not any past or present conditions or
\ncircumstances at, or arising out of, any current or former business, assets or
\nproperties of the Company or any of its Subsidiaries or Joint Ventures,
\nincluding but not limited to the on-site or off-site disposal, presence or
\nrelease of or exposure to any chemical substance, product or waste or any other
\ncondition or circumstance which has resulted in or could reasonably be expected
\nto give rise to: (a) liabilities, fines, penalties, costs, capital expenditures
\nor obligations for any violation, noncompliance, cleanup, remediation, disposal
\nor corrective action under any Environmental Law or (b) claims arising for
\npersonal injury, property damage, or damage to natural resources; and<\/p>\n
(iii) neither the Company nor any of its Subsidiaries or Joint
\nVentures has (a) received any notice of noncompliance with, violation of, or
\nliability or potential liability relating to any Environmental Law or (b)
\nentered into any consent decree, agreement or order or is subject to any order
\nof any court or governmental authority or <\/p>\n
-26-
\n 35<\/p>\n
tribunal or any indemnity with any third party relating to any Environmental
\nLaw or relating to the cleanup of any hazardous materials contamination.<\/p>\n
(l) Taxes. (i) Except as would not, individually or in the
\naggregate, be reasonably likely to have a Company Material Adverse Effect, the
\nCompany and each of its Subsidiaries (A) have duly and timely filed (taking into
\naccount any extension of time (to the extent validly received) within which to
\nfile) all Tax Returns (as defined below) required to be filed by any of them and
\nall such filed Tax Returns are complete and accurate; (B) all Taxes (as defined
\nbelow) owed (whether or not shown on any Tax Return) have been paid when due,
\nincluding any Taxes that the Company or any of its Subsidiaries are obligated to
\nwithhold from amounts owing to any employee, creditor or third party, except
\nwith respect to matters contested in good faith; and (C) have not waived any
\nstatute of limitations with respect to Taxes or agreed to any extension of time
\nwith respect to a Tax assessment or deficiency, which waiver or extension has
\ncovered a Tax period that has not yet expired. Except as are not reasonably
\nlikely to have a Company Material Adverse Effect, (A) there are not any pending
\nor threatened audits, examinations, investigations or other proceedings in
\nrespect of Taxes or Tax matters, (B) there are not any unresolved questions or
\nclaims concerning the Company’s or any of its Subsidiaries’ Tax liability and
\n(C) there are no Tax liens against the Company or any of its Subsidiaries except
\nfor liens for Taxes not yet due or Taxes being contested in good faith. The
\nCompany has made available to Parent true and correct copies of the United
\nStates federal income Tax Returns filed by the Company and its Subsidiaries for
\neach of the fiscal years ended December 31, 1995, 1996, 1997 and 1998. Neither
\nthe Company nor any of its Subsidiaries is a party to any Tax Allocation
\nAgreement that is material to the determination of a Tax of the (i) Company and
\nits Subsidiaries, or (ii) Spinco and its Subsidiaries.<\/p>\n
As used in this Agreement, (y) “Tax” (including, with
\ncorrelative meaning, the terms “Taxes”, and “Taxable”) means (i) all federal,
\nstate, local and foreign income, profits, franchise, premium, gross receipts,
\nenvironmental, customs duty, capital stock, severances, stamp, payroll, sales,
\nemployment, unemployment, disability, use, property, withholding, excise,
\nproduction, value added, occupancy and other taxes, duties or assessments of any
\nnature whatsoever, together with all interest, penalties and additions imposed
\nwith respect to such amounts and any interest in respect of such penalties and
\nadditions, (ii) any liability for the payment of any amount of the type
\ndescribed in clause (i) as a result of being or having been before the Closing
\nDate a member of an affiliated, consolidated, combined or unitary group, or a
\nparty to any agreement or arrangement, as a result of which liability of the
\nCompany and each of its subsidiaries to a Tax Authority is determined or taken
\ninto account with reference to the liability of any other Person (including,
\ne.g., liability under Treasury Regulation 1.1502-6 or similar liability under
\nany other Law), and (iii) any liability for the payment of any amount as a
\nresult of being party to any Tax Allocation Agreement or with respect to the
\npayment of <\/p>\n
-27-
\n 36<\/p>\n
any amount of the type described in (i) or (ii) as a result of any existing
\nexpress or implied obligation (including, but not limited to, an
\nindemnification obligation). “Tax Return” means all returns and reports
\n(including elections, declarations, disclosures, schedules, estimates and
\ninformation returns) required to be supplied to a Tax Authority relating to
\nTaxes.<\/p>\n
“Tax Allocation Agreement” means all existing agreements or
\narrangements (whether or not written) binding the Company or any of its
\nSubsidiaries that provide for the allocation, apportionment, sharing or
\nassignment of any Tax liability or benefit, or the transfer or assignment of
\nincome, revenues, receipts, or gains for the principal purpose of determining
\nany Person’s Tax liability.<\/p>\n
“Tax Authority” means the Internal Revenue Service and any
\nother domestic or foreign Governmental Entity or Person responsible for the
\nadministration of any Tax Laws.<\/p>\n
(ii) Except for situations which would not, individually or in
\nthe aggregate, be reasonably likely to have a Company Material Adverse Effect,
\n(A) the Tax treatment under the Code of all Retained Insurance Contracts (as
\ndefined below) is and at all times has been in all material respects the same or
\nmore favorable to the purchaser, policyholder or intended beneficiaries thereof
\nas the Tax treatment under the Code for which such Retained Insurance Contracts
\nqualified or purported to qualify at the time of their issuance or purchase,
\nexcept for changes resulting from changes to the Code which do not affect such
\nRetained Insurance Contracts due to the effective date thereof, (B) each
\nhardware, software and firmware product used by the Retained Insurance Companies
\nto maintain such Retained Insurance Contracts’ qualification for the Tax
\ntreatment under the Code for which such Retained Insurance Contracts qualified
\nor purported to qualify at the time of their issuance or purchase is and at all
\nrelevant times has been properly designed and implemented to maintain such
\nqualification, (C) each annuity contract issued by the Retained Insurance
\nCompanies qualifies as an annuity contract under Section 72 of the Code, (D)
\neach life insurance policy which is a Retained Insurance Contract qualifies as a
\nlife insurance contract for federal income Tax purposes and any such policy
\nwhich is a modified endowment contract under Section 7702A of the Code (each, a
\n“MEC”) has been marketed as such at all relevant times or the policyholder
\notherwise has consented to such MEC status and (E) each of the Retained
\nInsurance Companies is and at all times has been the owner for federal income
\nTax purposes of the assets in any segregated asset account underlying or
\nsupporting each variable annuity contract and each variable insurance policy
\nissued by it; provided, however, that for purposes of this sentence and Section
\n5.1(l)(iv), (A) the term Retained Insurance Companies shall include only Aetna
\nLife Insurance & Annuity Company and Aetna Insurance Company of America and (B)
\nthe term Retained Insurance Contracts shall not include any contracts issued by
\nany Person other than the Retained Insurance Companies, as modified by clause
\n(A) of this proviso.<\/p>\n
-28-
\n 37<\/p>\n
(iii) Except for situations which would not, individually or
\nin the aggregate, be reasonably likely to have a Company Material Adverse
\nEffect, each Fund Client (as defined below) has elected to qualify and, for all
\nTaxable years that an Advisory Entity (as defined below) served as investment
\nadviser and with respect to which the applicable statute of limitations
\n(including any extensions) has not expired (“open Taxable years”), has
\ncontinuously qualified to be treated as a “regulated investment company” under
\nSubchapter M of Chapter 1 of Subtitle A of the Code and has continuously been
\neligible to compute, and has for each such Taxable year computed, its federal
\nincome Tax under Section 852 of the Code and has no earnings and profits
\naccumulated in any Taxable year. Except as would not be, individually or in the
\naggregate, reasonably likely to have a Company Material Adverse Effect, each
\nFund Client that is intended to be a Tax-exempt municipal bond fund has
\nsatisfied the requirements of Section 852(b)(5) of the Code and is qualified to
\npay exempt interest dividends as defined therein. At the Closing Date, all Tax
\nReturns with respect to any Taxable period for which the applicable statute of
\nlimitations (including any extensions) has not expired and during which an
\nAdvisory Entity has served as investment adviser that were or are required to
\nbe filed on or before such date by or on behalf of a Fund Client were or shall
\nhave been filed and were or shall be complete and correct and all federal and
\nother Taxes, shown or required to be shown as due on such returns, shall have
\nbeen paid or provided for. No such Tax Return or other filing is currently
\nunder audit, no assessment has been asserted with respect to such Tax Returns
\nor other filings, and no requests for waivers of the time to make any such
\nassessment are pending. None of the Fund Clients is delinquent in the payment
\nof any material Tax assessment or governmental charge.<\/p>\n
(iv) In providing recordkeeping and administrative services in
\nthe ordinary course of business consistent with prior practice with respect to
\ncustomers’ insurance products, whether individual or group retirement or
\ndeferred compensation plans or arrangements, and with respect to any Retained
\nInsurance Contracts issued, assumed, modified, exchanged or sold by a Retained
\nInsurance Company as of the Closing Date, each Retained Insurance Company is in
\ncompliance with the applicable administrative requirements of the Code and the
\nrules and regulations thereunder, and, to the extent applicable, the
\nrequirements of Parts 2, 3 and 4 of Title I of ERISA, except in each case for
\nthose failures to comply that are not, individually or in the aggregate,
\nreasonably likely to have a Company Material Adverse Effect.<\/p>\n
(m) Labor Matters. Neither the Company nor any of its
\nSubsidiaries or Joint Ventures is a party to or otherwise bound by any
\ncollective bargaining agreement, Contract or other agreement or understanding
\nwith a labor union or labor organization, nor is the Company or any of its
\nSubsidiaries or Joint Ventures the subject of any material proceeding asserting
\nthat the Company or any of its Subsidiaries or Joint Ventures has committed an
\nunfair labor practice or seeking to compel it to bargain with any labor union or
\nlabor organization nor is there pending or, to the knowledge of the Company,<\/p>\n
-29-
\n 38<\/p>\n
threatened, nor has there been for the past five years, any labor strike,
\ndispute, walk-out, work stoppage, slow-down or lockout involving the Company or
\nany of its Subsidiaries or Joint Ventures. The parties acknowledge and agree
\nthat this representation and warranty is made only with respect to employees of
\nthe Company and its Subsidiaries and Joint Ventures who are not Excluded
\nEmployees.<\/p>\n
(n) Insurance. All material fire and casualty, general
\nliability, directors’ and officers’, errors and omissions and product liability
\ninsurance policies maintained by or on behalf of the Company or any of its
\nSubsidiaries or Joint Ventures are with reputable insurance carriers and provide
\ninsurance coverage reasonably customary or adequate for the operation of their
\nrespective businesses, except for any such failures to maintain insurance
\npolicies that are not, individually or in the aggregate, reasonably likely to
\nhave a Company Material Adverse Effect. The Company and its Subsidiaries and
\nJoint Ventures have given notice to insurance carriers of all material claims
\nthat may be covered, and, with respect to claims in excess of $1,000,000, the
\nCompany and its Subsidiaries and Joint Ventures have not received any refusal of
\ncoverage or any notice that a defense will be afforded with reservation of
\nrights or any notice of cancellation or any other indication that any insurance
\npolicy is no longer in full force or effect or will not be renewed or that the
\nissuer of any policy is not willing or able to perform its obligations
\nthereunder.<\/p>\n
(o) Intellectual Property. (i) After giving effect to the
\nSpin-Off and the related transactions, the Company and each of its Subsidiaries
\nand Joint Ventures will own, or will be licensed or will otherwise possess
\nlegally enforceable rights to use, all material patents, trademarks, trade
\nnames, service marks, copyrights, and any applications therefor, technology,
\nknow-how, trade secrets, computer software programs or applications, and
\ntangible or intangible proprietary information or materials (“Intellectual
\nProperty”) that is used in the business of the Company and its Subsidiaries and
\nJoint Ventures as currently conducted (“Company Intellectual Property Rights”),
\nexcept for any such failures to own, be licensed or possess that are not,
\nindividually or in the aggregate, reasonably likely to have a Company Material
\nAdverse Effect, and to the knowledge of the Company all material patents,
\ntrademarks, trade names, service marks and copyrights held by the Company and
\nits Subsidiaries and Joint Ventures are valid and subsisting.<\/p>\n
(ii) Except as is not reasonably likely to have a Company
\nMaterial Adverse Effect:<\/p>\n
(A) neither the Company nor Spinco nor their respective
\nSubsidiaries is, nor will any of them be as a result of the execution and
\ndelivery of the Transaction Agreements or the performance of its obligations
\nhereunder and thereunder, in violation of any licenses, sublicenses and other
\nagreements as to which it is a party and pursuant to <\/p>\n
-30-
\n 39<\/p>\n
which the Company and its Subsidiaries and Joint Ventures is authorized to use
\nany third-party Intellectual Property;<\/p>\n
(B) the Company and its Subsidiaries have not received any
\nnotice of any bona fide claims (I) to the effect that the Company or any of its
\nSubsidiaries or Joint Ventures is infringing on any copyright, patent,
\ntrademark, trade name, service mark or trade secret, (II) against the use by the
\nCompany or any of its Subsidiaries or Joint Ventures of any Intellectual
\nProperty used in the business of the Company or any of its Subsidiaries or Joint
\nVentures as currently conducted or as proposed to be conducted or (III)
\nchallenging the ownership, validity or effectiveness of any of the Company
\nIntellectual Property Rights or other trade secret material to the Company; and<\/p>\n
(C) to the knowledge of the Company, the Company Intellectual
\nProperty does not infringe the intellectual property rights of any third party
\nand there is no infringement of any of the Company Intellectual Property Rights
\nby any third party, including any employee or former employee of the Company or
\nany of its Subsidiaries or Joint Ventures.<\/p>\n
(p) Rights Plan. (i) The board of directors of the Company and
\nthe Company have taken all necessary action to render the Rights Agreement
\ninapplicable to the Merger, the Spin-Off and the other transactions contemplated
\nby the Transaction Agreements.<\/p>\n
(ii) The Company has, or prior to the Effective Time will
\nhave, taken all necessary action with respect to all of the outstanding Rights
\nso that, as of immediately prior to the Effective Time, (A) neither the Company
\nnor Parent will have any obligations under the Rights or the Rights Agreement
\nand (B) the holders of the Rights will have no rights under the Rights or the
\nRights Agreement.<\/p>\n
(q) Brokers and Finders. Neither the Company, nor any of its
\nSubsidiaries, officers, directors or employees has employed any broker or finder
\nor incurred any liability for any brokerage fees, commissions or finders’ fees
\nin connection with the Merger, the Spin-Off or the other transactions
\ncontemplated by the Transaction Agreements, except that the Company has employed
\nDonaldson Lufkin & Jenrette Securities Corporation and Goldman, Sachs & Co. as
\nits financial advisors. The fees and expenses of Goldman, Sachs & Co. and
\nDonaldson Lufkin & Jenrette Securities Corporation shall be paid by Spinco and
\nafter the Spin-Off, the Company will have no liability or obligation to such
\nfirms arising out of their engagement with the Company.<\/p>\n
(r) Insurance Business. (i) Except as otherwise is not,
\nindividually or in the aggregate, reasonably likely to have a Company Material
\nAdverse Effect, all policies, binders, slips, certificates, guaranteed
\ninvestment contracts, annuity contracts and <\/p>\n
-31-
\n 40<\/p>\n
participation agreements and other agreements of insurance and reinsurance and
\nhealthcare products, whether individual or group, in effect as of the date
\nhereof (including all applications, supplements, endorsements, riders and
\nancillary agreements in connection therewith) that are issued by the Retained
\nInsurance Companies (the “Retained Insurance Contracts”) and any and all
\nmarketing materials, are, to the extent required under applicable Law, on forms
\napproved by applicable insurance regulatory authorities or which have been
\nfiled and not objected to by such authorities within the period provided for
\nobjection, and such forms comply in all material respects with the Insurance
\nLaws applicable thereto. Premium rates established by the Retained Insurance
\nCompanies that are required to be filed with or approved by insurance
\nregulatory authorities have been so filed or approved, the premiums charged
\nconform thereto in all material respects, and such premiums comply in all
\nmaterial respects with the Insurance Laws applicable thereto, except where the
\nfailure to be so filed or approved, or to so conform or comply, is not,
\nindividually or in the aggregate, reasonably likely to have a Company Material
\nAdverse Effect.<\/p>\n
(ii) To the knowledge of the Company as of the date hereof,
\neach insurance agent, third party administrator, manager, marketer, underwriter,
\nbroker, reinsurance intermediary and distributor (each an “Agent”), at the time
\nsuch Agent wrote, sold, produced or managed business for any Retained Insurance
\nCompany was duly licensed (for the type of business written, sold, produced or
\nmanaged) and no such Agent violated (or with or without notice or lapse of time
\nor both, would have violated) any term or provision of any Law applicable to the
\nwriting, sale, production or management of business for any Retained Insurance
\nCompany, except for such failures to be licensed or such violations which have
\nbeen cured, which have been resolved or settled through agreements with
\napplicable Governmental Entities or which are barred by an applicable statute of
\nlimitations, or that have not had or are not, individually or in the aggregate,
\nreasonably likely to have a Company Material Adverse Effect.<\/p>\n
(iii) Prior to the date hereof, the Company has made available
\nto Parent a true and correct copy of each material Contract between any Retained
\nInsurance Company and any reinsurance intermediary and of each material pooling
\nagreement to which a Retained Insurance Company is a party.<\/p>\n
(iv) Prior to the date hereof, the Company has made available
\nto Parent a true and complete copy of any actuarial reports prepared by
\nindependent actuaries with respect to reserve adequacy of any Retained Insurance
\nCompany or any of its Subsidiaries since December 31, 1997, and all attachments,
\naddenda, supplements and modifications thereto (the “Company Actuarial
\nAnalyses”). To the knowledge of the Company, the information and data furnished
\nby the Company or any Retained Insurance Company to its independent actuaries in
\nconnection with the preparation of the Company Actuarial Analyses were accurate
\nin all material respects.<\/p>\n
-32-
\n 41<\/p>\n
(v) To the knowledge of the Company as of the date hereof, all
\nmaterial amounts recoverable under reinsurance, coinsurance or other similar
\nContracts to which any Retained Insurance Company is a party (including, but
\nnot limited to, amounts based on paid and unpaid losses) are fully collectible.<\/p>\n
(s) Liabilities and Reserves. (i) The reserves carried on the
\nCompany SAP Statements or Foreign Company Statements, as the case may be, of
\neach Retained Insurance Company for the year ended December 31, 1999 for future
\nannuity contracts, insurance and healthcare policy benefits, losses, claims,
\nreinsurance and similar purposes are in compliance in all material respects with
\nthe applicable requirements for reserves, if any, established by the insurance
\ndepartments or applicable Governmental Entity of the jurisdiction of domicile of
\nsuch Retained Insurance Company, were determined in all material respects in
\naccordance with generally accepted actuarial standards consistently applied and
\nare fairly stated in all material respects in accordance with sound actuarial
\nprinciples utilizing actuarial assumptions in accordance with or more
\nconservative than called for in relevant policy and Contract provisions. The
\nCompany has delivered to Parent true, correct and complete copies of the
\nactuarial valuation reports delivered to the insurance department of the
\ndomiciliary jurisdiction of each U.S. Retained Insurance Company for the years
\nended December 31, 1999 and 1998.<\/p>\n
(ii) Except for regular periodic assessments in the ordinary
\ncourse of business consistent with prior practice or assessments based on
\ndevelopments which are publicly known within the insurance industry, to the
\nknowledge of the Company, no claim or assessment is pending or threatened
\nagainst any U.S. Retained Insurance Company which is peculiar or unique to such
\nRetained Insurance Company by any state insurance guaranty association in
\nconnection with such association’s fund relating to insolvent insurers which if
\ndetermined adversely, is, individually or in the aggregate, reasonably likely to
\nhave a Company Material Adverse Effect.<\/p>\n
(t) Separate Accounts. (i) Except as otherwise is not,
\nindividually or in the aggregate, reasonably likely to have a Company Material
\nAdverse Effect, each separate account maintained by a Retained Insurance Company
\n(collectively, the “Company Separate Accounts”) is duly and validly established
\nand maintained under the laws of its jurisdiction of formation and, to the
\nextent subject to the 1940 Act, is either excluded from the definition of an
\ninvestment company pursuant to Sections 3(c)(1), 3(c)(7) or 3(c)(11) of the 1940
\nAct or is duly registered as an investment company under the 1940 Act. Except as
\notherwise is not, individually or in the aggregate, reasonably likely to have a
\nCompany Material Adverse Effect, each such Company Separate Account, if
\nregistered under the 1940 Act, is operated in compliance with the 1940 Act, has
\nfiled all reports and amendments of its registration statement required to be
\nfiled, and has been granted all exemptive relief necessary for its operations as
\npresently conducted, and is in compliance with all conditions to any such
\nrelief. Except as otherwise is not, individually <\/p>\n
-33-
\n 42<\/p>\n
or in the aggregate, reasonably likely to have a Company Material Adverse
\nEffect, the Retained Insurance Contracts under which the Company Separate
\nAccounts assets are held are duly and validly issued and are binding
\nobligations of the issuing Retained Insurance Company and are either exempt
\nfrom registration under the Securities Act or were sold pursuant to an
\neffective registration statement under the Securities Act, and any such
\nregistration statement is currently in effect to the extent necessary to allow
\nthe appropriate Retained Insurance Company to receive contributions under such
\nRetained Insurance Contracts.<\/p>\n
(ii) The assets of each Company Separate Account that are
\nsubject to the Code are adequately diversified within the meaning of, and to the
\nextent required by, Section 817(h) of the Code.<\/p>\n
(iii) Each of the Retained Insurance Companies that is subject
\nto the Code is treated for federal Tax purposes as the owner of the assets
\nunderlying the respective life insurance policies and annuity contracts issued,
\nentered into or sold by it.<\/p>\n
(iv) Each account through which the Company or any of its
\nSubsidiaries provides services to any client (an “Account Client”) that is (A)
\nan employee benefit plan, as defined in Section 3(3) of ERISA, that is subject
\nto Title I of ERISA; (B) a person acting on behalf of such a plan; or (C) an
\nentity whose assets include the assets of such a plan, within the meaning of
\nERISA and applicable regulations (hereinafter referred to as an “ERISA Client”),
\nin each case have been managed by the Company and its Subsidiaries such that
\neach of the Company and its Subsidiaries in the exercise of such management is
\nin compliance in all respects with the applicable requirements of ERISA, except
\nto the extent the failure to comply is not, individually or in the aggregate,
\nreasonably likely to have a Company Material Adverse Effect.<\/p>\n
(u) Material Contracts. All of the material Contracts of the
\nCompany and its Subsidiaries and Joint Ventures that are required to be
\ndescribed in the Company Reports or listed or filed as Exhibits to the 1999
\n10-K, the First 2000 10-Q or any Company Reports filed subsequent to the date
\nhereof thereto are described in such Company Reports or listed or filed as
\nexhibits thereto, respectively, and are in full force and effect. True and
\ncomplete copies of all such material Contracts have been delivered or made
\navailable by the Company to Parent. Neither the Company nor any of its
\nSubsidiaries or Joint Ventures nor, to the knowledge of the Company, any other
\nparty is in breach of or in default under any such Contract except for such
\nbreaches and defaults as are not, individually or in the aggregate, reasonably
\nlikely to have a Company Material Adverse Effect. Neither the Company nor any of
\nits Subsidiaries or Joint Ventures is party to any Contract containing any
\nprovision or covenant limiting in any material respect the ability of the
\nCompany or any of its Subsidiaries or Joint Ventures or, assuming the
\nconsummation of the transactions contemplated by the Transaction Agreements, ING
\nor <\/p>\n
-34-
\n 43<\/p>\n
any of its subsidiaries or joint ventures, to (i) sell any products or services
\nof or to any other Person, (ii) engage in any line of business or (iii) compete
\nwith or to obtain products or services from any Person or limiting the ability
\nof any Person to provide products or services to the Company or any of its
\nAffiliates or Joint Ventures or, assuming the consummation of the transactions
\ncontemplated by the Transaction Agreements, ING or any of its subsidiaries or
\njoint ventures.<\/p>\n
(v) Investment Contracts, Fund Clients and Advisory Clients.
\n(i) Certain of the Company’s Subsidiaries provide investment advisory,
\nsub-advisory, administration, distribution or certain other services (each
\nContract for such services being referred to as an “Investment Contract”, each
\nother party thereto being referred to as a “Client”, and each Client which is
\nregistered as an investment company under the 1940 Act being referred to as a
\n“Fund Client”) to the Clients. A complete list of Fund Clients is set forth in
\nSection 5.1(v) of the Company Disclosure Letter. Each of the Fund Clients (or
\nthe company or trust of which it is a series) is duly organized, validly
\nexisting and in good standing under the Laws of its jurisdiction of
\norganization, except as would not, individually or in the aggregate, be
\nreasonably likely to have a Company Material Adverse Effect. The Boards of
\nTrustees or Directors of the Fund Clients operate in all material respects in
\nconformity with the applicable requirements and restrictions of Sections 9, 10
\nand 16 of the 1940 Act.<\/p>\n
(ii) Except as would not, individually or in the aggregate, be
\nreasonably likely to have a Company Material Adverse Effect, each of the Fund
\nClients is in compliance with all applicable Laws of the SEC, the NASD, the IRS
\nand any other governmental agency or self-regulatory body having jurisdiction
\nover such Fund Client or its distributor or investment adviser and of any
\njurisdiction in which such Fund Client is registered, qualified or sold and with
\nits prospectus and statement of additional information.<\/p>\n
(iii) Each of the Company’s Subsidiaries that provides
\ninvestment advisory or sub-advisory services (each an “Advisory Entity” and,
\ncollectively “Advisory Entities”), a complete list of which has previously been
\nmade available by the Company to Parent, to any Fund Client or any other Person
\n(each such other Person, an “Advisory Client”) is duly registered with the SEC
\nas an investment adviser or is not required to do so because it does not engage
\nin business in the United States and does not provide investment advisory or
\nsub-advisory services to an investment company registered under the 1940 Act. No
\nAdvisory Entity is required to register as an investment advisor with any state.
\nAny Advisory Entity doing business outside the United States is duly licensed to
\nprovide investment advisory services in the jurisdictions in which it does
\nbusiness. The Company is not an Advisory Entity. Each pooled Advisory Client is
\neither registered as an investment company under the 1940 Act or relies upon an
\nappropriate exemption from the definition of an investment company under the
\n1940 Act.<\/p>\n
-35-
\n 44
\n (iv) Each Fund Client and Advisory Entity has operated and is
\ncurrently operating in compliance with all Laws, and with the investment
\nobjectives, policies and restrictions, that are applicable to it or its business
\nexcept for such noncompliance as would not, individually or in the aggregate, be
\nreasonably likely to have a Company Material Adverse Effect. Each Advisory
\nEntity has been and is in compliance with each Investment Contract to which it
\nis a party, except as would not, individually or in the aggregate, be reasonably
\nlikely to have a Company Material Adverse Effect.<\/p>\n
(v) The accounts of each Advisory Client subject to ERISA have
\nbeen managed by the applicable Company Subsidiary in compliance in all material
\nrespects with the applicable requirements of ERISA.<\/p>\n
(vi) All issued and outstanding shares of common stock and
\nshares or units of beneficial interest of each Fund Client (collectively,
\n“shares”) are, and at the Effective Time will be, and all of the authorized but
\nunissued shares of each Fund Client when issued for the consideration described
\nin the current registration statement relating to that Fund Client will be duly
\nand legally issued and outstanding, fully paid, and non-assessable by the Fund
\nClient. No Fund Client has outstanding any options, warrants, or other rights to
\nsubscribe for or purchase any of its shares, nor is there outstanding any
\nsecurity convertible into shares of any Fund Client.<\/p>\n
(vii) The current prospectus and related registration
\nstatement, including the current statement of additional information, for each
\nof the Fund Clients (copies of which have been made available to Parent) conform
\nin all material respects to the applicable requirements of the Securities Act,
\nthe 1940 Act, and the rules and regulations of the SEC thereunder, as well as
\nthe applicable requirements of the various state securities Laws, and do not
\ncontain any untrue statement of a material fact or omit to state any material
\nfact required to be stated therein or necessary to make the statements therein,
\nin light of the circumstances under which they were made, not misleading.<\/p>\n
(viii) Each Fund Client has filed with the SEC all material
\nContracts, including all agreements and arrangements for the distribution of
\nshares, to which a Fund Client is a party or by which a Fund Client or its
\nproperty is bound, other than Contracts for the purchase or sale of portfolio
\nsecurities entered into in the ordinary course of business consistent with prior
\npractice, that are required to be filed with the SEC. Each Contract subject to
\nSection 12(b) or 15 of the 1940 Act has been duly approved at all times in
\ncompliance in all material respects with Section 12(b) or 15 of the 1940 Act and
\nall other applicable Laws. Each such Contract is currently in full force and
\neffect and has been performed by the relevant entity in accordance with the 1940
\nAct and all other applicable Laws. No material default or condition or event
\nthat, after notice or lapse of time or both, would constitute a material default
\non the part of the Company or any of its<\/p>\n
-36-
\n 45
\nSubsidiaries or, to the knowledge of the Company, on the part of the other
\nparties to such advisory and sub-advisory agreements, exists under any of those
\nmaterial Contracts.<\/p>\n
(ix) All proxy statements to be prepared for use by the Fund
\nClients in connection with the transactions contemplated by the Transaction
\nAgreements will, with respect to information provided by the Company, any of its
\nSubsidiaries, or a Fund Client, not contain any untrue statement of a material
\nfact, or omit to state any material fact required to make the statements
\ntherein, in light of the circumstances under which they were made, not
\nmisleading.<\/p>\n
(w) Company Broker\/Dealers. (i) The Company and its
\nSubsidiaries operate its broker\/dealer operations exclusively through Aetna Life
\nInsurance and Annuity Company, Aeltus Capital, Inc., Aetna Investment Services,
\nInc., Systematized Benefits Administrators, Inc., Financial Network Investment
\nCorporation and Aetna Financial Services, Inc. (collectively, the “Company
\nBroker\/Dealers”). Each Company Broker\/Dealer that is required to be registered
\nas a broker-dealer with the SEC or under applicable state Laws is so registered
\nand is registered with each other Governmental Entity with which it is required
\nto register in order to conduct its business as now conducted, and is and has
\nbeen since January 1, 1997 in full compliance with all applicable Laws
\nthereunder, except for any failures to register or comply which are not,
\nindividually or in the aggregate, reasonably likely to have a Company Material
\nAdverse Effect. Each Company Broker\/Dealer is a member organization in good
\nstanding of the NASD and such other organizations in which its membership is
\nrequired in order to conduct its business as now conducted, except such failures
\nto be in good standing or such memberships the failure to have or maintain which
\nare not, individually or in the aggregate, reasonably likely to have a Company
\nMaterial Adverse Effect.<\/p>\n
(ii) Except as are not, individually or in the aggregate,
\nreasonably likely to have a Company Material Adverse Effect, no Company
\nBroker\/Dealer is, nor is any “associated person” of it, subject to a “statutory
\ndisqualification” (as such terms are defined in the Exchange Act) or subject to
\na disqualification that would be a basis for censure, limitations on the
\nactivities, functions or operations of, or suspension or revocation of the
\nregistration of any of the Company Broker\/Dealers as broker-dealer, municipal
\nsecurities dealer, government securities broker or government securities dealer
\nunder Section 15, Section 15B or Section 15C of the Exchange Act and, to the
\nknowledge of the Company, there are no proceedings or investigations pending by
\nany Governmental Entity or self-regulatory organization that is reasonably
\nlikely to result in any such censure, limitations, suspension or revocation.<\/p>\n
(iii) Except as are not, individually or in the aggregate,
\nreasonably likely to have a Company Material Adverse Effect, since its
\ninception, each Company Broker\/Dealer has had net capital (as such term is
\ndefined in Rule 15c3-1 under the<\/p>\n
-37-
\n 46
\nExchange Act) that satisfies the minimum net capital requirements of the
\nExchange Act and of the laws of any jurisdiction in which such company conducts
\nbusiness.<\/p>\n
(x) Bank Regulatory Matters. (i) Neither the Company nor any
\nof its Subsidiaries or Joint Ventures or their respective properties is a party
\nto or is subject to any order, decree, agreement, memorandum of understanding or
\nsimilar agreement with, or extraordinary supervisory letter from, any Banking
\nAuthority.<\/p>\n
(ii) Neither the Company nor any of its Subsidiaries or Joint
\nVentures has been advised by any Banking Authority that such Banking Authority
\nis contemplating issuing or requesting (or is considering the appropriateness of
\nissuing or requesting) any such order, decree, agreement, memorandum of
\nunderstanding, supervisory letter or similar submission.<\/p>\n
(y) No Contracts, Etc. Except for assets or properties to be
\ntransferred to Spinco or its Subsidiaries pursuant to the Transaction
\nAgreements, none of Spinco or any of its Subsidiaries presently uses in the
\nconduct of its business any material assets or properties, whether tangible,
\nintangible or mixed, which are also utilized in the conduct of the business of
\nthe Company and its Subsidiaries and Joint Ventures, and, other than ordinary
\ncourse commercial arrangements on arms length terms, none of Spinco or any of
\nits Subsidiaries is presently directly or indirectly a party to any Contract,
\narrangement or understanding with the Company or any of its Subsidiaries or
\nJoint Ventures (other than the Transaction Agreements). After giving effect to
\nthe Spin-Off and to all supplies and services to be provided pursuant to the
\nTransaction Agreements, the Company and its Subsidiaries and Joint Ventures,
\nwill include all the Company’s direct or indirect right, title and interest
\n(including minority interests) in and to all of (i) the assets and services that
\nare necessary to permit the operation of the Company and its Subsidiaries and
\nJoint Ventures in substantially the same manner as such operations have been
\nconducted prior to the date hereof and (ii) all assets reflected on the
\nunaudited pro forma consolidated balance sheet of the Company and its
\nSubsidiaries as of March 31, 2000 referred to in Section 5.1(e)(iv) of this
\nAgreement, except those assets disposed of in the ordinary course of business
\nsince such date. The termination of all Contracts, arrangements and
\nunderstandings between the Company and its Subsidiaries and Joint Ventures on
\nthe one hand and Spinco and its Subsidiaries on the other hand, to the extent
\ncontemplated by the Distribution Agreement, is not, individually or in the
\naggregate, reasonably likely to have a Company Material Adverse Effect. The
\nunaudited pro forma consolidated balance sheet of the Company and its
\nSubsidiaries as of March 31, 2000 referred to in Section 5.1(e)(v) of this
\nAgreement reflects all assets of the Company and its Subsidiaries and Joint
\nVentures principally used in the business or operations of the Company and its
\nSubsidiaries and Joint Ventures as of March 31, 2000, other than assets or
\nproperties of the Company or Aetna Services, Inc. or any of their Subsidiaries
\nthat will be transferred to<\/p>\n
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\n 47
\nSpinco or its Subsidiaries and made available as necessary to provide services
\nto the Company and its Subsidiaries pursuant to the Transaction Agreements.<\/p>\n
5.2 Representations and Warranties of ING, Parent and Merger
\nSub. Except as set forth in the corresponding sections or subsections of the
\ndisclosure letter, dated the date hereof, delivered to the Company by Parent on
\nor prior to entering into this Agreement (the “Parent Disclosure Letter”), ING,
\nParent and Merger Sub each hereby represent and warrant to the Company that:<\/p>\n
(a) Capitalization of Merger Sub. The authorized capital stock
\nof Merger Sub consists of 1,000 shares of common stock, par value $0.01 per
\nshare, all of which are validly issued and outstanding. All of the issued and
\noutstanding capital stock of Merger Sub is, and at the Effective Time will be,
\nowned by Parent, and there are (i) no other shares of capital stock or voting
\nsecurities of Merger Sub, (ii) no securities of Merger Sub convertible into or
\nexchangeable for shares of capital stock or voting securities of Merger Sub and
\n(iii) no options or other rights to acquire from Merger Sub, and no obligations
\nof Merger Sub to issue, any capital stock, voting securities or securities
\nconvertible into or exchangeable for capital stock or voting securities of
\nMerger Sub. Merger Sub has not conducted any business prior to the date hereof
\nand has no, and prior to the Effective Time will have no, assets, liabilities or
\nobligations of any nature other than those incident to its formation and
\npursuant to the Transaction Agreements and the transactions contemplated
\nthereunder.<\/p>\n
(b) Organization, Good Standing and Qualification. Each of
\nING, Parent and Merger Sub is a corporation duly organized, validly existing and
\nin good standing under the Laws of its respective jurisdiction of organization
\nand has all requisite corporate or similar power and authority to own and
\noperate its properties and assets and to carry on its business as presently
\nconducted and is qualified to do business and is in good standing in each
\njurisdiction where the ownership or operation of its assets or properties or
\nconduct of its business requires such qualification, except where the failure to
\nbe so organized, qualified or in such good standing, or to have such power or
\nauthority, is not reasonably likely to have a Parent Material Adverse Effect. As
\nused herein, the term “Parent Material Adverse Effect” means a material adverse
\neffect on the financial condition, properties, business or annual results of
\noperations of Parent and its Subsidiaries and joint ventures taken as a whole,
\nexcept to the extent that such adverse effect results from (i) general economic
\nconditions or changes in any one or more countries, (ii) financial market
\nfluctuations or conditions in any one or more countries, (iii) adverse economic,
\ncurrency or regulatory changes or effects in or affecting the financial services
\nindustry, insurance industry, banking industry, or asset management industry
\ngenerally in any one or more countries, (iv) the announcement of the
\ntransactions contemplated herein, or any effect which would prevent, materially
\ndelay or materially impair the ability of Parent to consummate the transactions
\ncontemplated hereby.<\/p>\n
-39-
\n 48
\n (c) Corporate Authority. (i) Each of ING, Parent and Merger
\nSub has all requisite corporate power and authority and has taken all corporate
\naction necessary in order to execute, deliver and perform its obligations under
\nthis Agreement and to consummate the transactions contemplated hereby on the
\nterms and subject to the conditions of this Agreement. This Agreement is a valid
\nand binding agreement of ING, Parent and Merger Sub, enforceable against each of
\nING, Parent and Merger Sub in accordance with its terms, subject to the
\nBankruptcy and Equity Exception.<\/p>\n
(ii) No approval by the shareholders of either of ING or
\nParent is required in order for ING and Parent to execute, deliver and perform
\nits respective obligations under this Agreement and to consummate the
\ntransactions contemplated hereby on the terms and subject to the conditions of
\nthis Agreement.<\/p>\n
(d) Governmental Filings; No Violations. (i) Other than the
\nreports, filings, registrations, consents, approvals, permits, authorizations,
\napplications and\/or notices (A) pursuant to Section 1.4, (B) under the HSR Act,
\n(C) under any foreign competition laws, (D) under the Exchange Act, the
\nSecurities Act and other securities laws, (E) under the 1940 Act, (F) under the
\nAdvisers Act, (G) with the NYSE, (H) with the NASD, (I) with the applicable
\nInsurance and Healthcare Authorities, (J) with the Banking Authorities, (K) with
\nthe PBGC, (L) with the Department of Labor, (M) with applicable foreign and
\nfederal regulatory authorities governing foreign investments, (N) with
\napplicable foreign regulatory authorities governing the management of pension
\nplans, (O) with the IRS in connection with certain transfers contemplated by the
\nEmployee Benefits Agreement, and (P) with applicable Dutch regulatory
\nauthorities (notice filings), no notices, reports or other filings are required
\nto be made by ING, Parent or Merger Sub with, nor are any consents,
\nregistrations, approvals, permits or authorizations required to be obtained by
\nING, Parent or Merger Sub from, any Governmental Entity, in connection with the
\nexecution and delivery of this Agreement by ING, Parent and Merger Sub and the
\nconsummation by ING, Parent and Merger Sub of the Merger and the other
\ntransactions contemplated hereby, except those that the failure to make or
\nobtain are not, individually or in the aggregate, reasonably likely to have a
\nParent Material Adverse Effect.<\/p>\n
(ii) The execution, delivery and performance of this Agreement
\nby ING, Parent and Merger Sub do not, and the consummation by ING, Parent and
\nMerger Sub of the Merger and the other transactions contemplated hereby will
\nnot, constitute or result in (A) a breach or violation of, or a default under,
\nthe governing instruments of ING, Parent and Merger Sub, (B) a breach or
\nviolation of, or a default under, the acceleration of any rights or obligations
\nor the creation of a lien, pledge, security interest, claim or other encumbrance
\non the assets of ING or any of its Subsidiaries (with or without notice, lapse
\nof time or both) pursuant to, any Contracts binding upon ING or any of its
\nSubsidiaries or any Law or governmental or non-governmental franchise, permit,
\nlicense or obligation to which ING or any of its Subsidiaries is subject or (C)
\nany change in the rights or<\/p>\n
-40-
\n 49
\nobligations of any party under any of the Contracts, except, in the case of
\nclause (B) or (C) above, for breach, violation, default, acceleration, creation
\nor change that, individually or in the aggregate, is not reasonably likely to
\nhave a Parent Material Adverse Effect.<\/p>\n
(iii) Neither the Company nor any of its Subsidiaries is a
\nparty to any Contracts requiring consents or approvals, the failure to obtain
\nwhich, individually or in the aggregate, would cause a failure of the condition
\nset forth in Section 7.2(c) to be satisfied. The representation set forth in the
\nimmediately preceding sentence shall be limited to the actual knowledge as of
\nthe date hereof of any of the people set forth on Section 5.2(d)(iii) of the
\nParent Disclosure Letter.<\/p>\n
(e) Adequate Funds. Parent has and will have at the Effective
\nTime sufficient funds for the payment of the aggregate Merger Consideration and
\nto perform its obligations under this Agreement.<\/p>\n
(f) Brokers and Finders. Neither ING, nor Parent, Merger Sub
\nor any of their respective Subsidiaries, officers, directors or employees has
\nemployed any broker or finder or incurred any liability for any brokerage fees,
\ncommissions or finders’ fees in connection with the Merger or the other
\ntransactions contemplated hereby, except that the Parent has employed Merrill,
\nLynch & Co. as its financial advisors. The fees and expenses of Merrill, Lynch & Co. shall be paid by Parent and the Company will have no liability or obligation
\nwith respect thereto.<\/p>\n
ARTICLE VI<\/p>\n
Covenants<\/p>\n
6.1 Interim Operations; Operation of Businesses. The Company
\ncovenants and agrees as to itself and its Subsidiaries and, subject to the
\nprovisions of Section 9.9, its Joint Ventures, that after the date hereof and
\nprior to the Effective Time (unless Parent shall otherwise approve in writing,
\nwhich approval shall not be unreasonably withheld or delayed, and except as set
\nforth in Section 6.1 of the Company Disclosure Letter or as otherwise expressly
\ncontemplated to occur prior to the Effective Time by any of the Transaction
\nAgreements and except as would otherwise be permitted by Section 5.1(f) of this
\nAgreement):<\/p>\n
(a) its and its Subsidiaries’ and Joint Ventures’ businesses
\nshall be conducted in the ordinary course of business consistent with prior
\npractice and, to the extent consistent therewith, each shall use all reasonable
\nefforts to (i) preserve its business organization intact and maintain its
\nexisting relations and goodwill with customers, suppliers, distributors, agents,
\nregulators, creditors, lessors, employees and business<\/p>\n
-41-
\n 50
\nassociates, (ii) maintain and keep material properties and assets in good repair
\nand condition, ordinary wear and tear excepted and (iii) maintain in effect all
\nexisting governmental permits that are required for the continued operation of
\nthe business of the Company and its Subsidiaries and Joint Ventures in all
\nmaterial respects as they are currently conducted;<\/p>\n
(b) it and its Subsidiaries and Joint Ventures shall not (i)
\nissue, sell, pledge, dispose of or encumber any capital stock owned by it in any
\nof its Subsidiaries or Joint Ventures; (ii) amend its certificate of
\nincorporation or by-laws or comparable governing instruments; (iii) split,
\ncombine or reclassify its outstanding shares of capital stock; (iv) declare, set
\naside or pay any dividend, other than dividends of the Permitted Sales Proceeds,
\npayable in cash, stock or property in respect of any capital stock other than
\ndividends from direct or indirect wholly-owned Subsidiaries of Aetna Retirement
\nServices, Inc. and Aetna International, Inc. that are also Subsidiaries of the
\nCompany and other than regular quarterly cash dividends by the Company not in
\nexcess of $0.20 per share of Common Stock; or (v) repurchase, redeem or
\notherwise acquire, except in connection with the Stock Plans, or permit any of
\nits Subsidiaries or Joint Ventures to purchase or otherwise acquire, any shares
\nof any of its or its Subsidiaries or Joint Ventures’ capital stock or any
\nsecurities convertible into or exchangeable or exercisable for any such shares
\nof capital stock;<\/p>\n
(c) neither it nor its Subsidiaries or Joint Ventures shall
\n(i) issue, sell, pledge, dispose of or encumber any shares of, or securities
\nconvertible into or exchangeable or exercisable for, or options, warrants,
\ncalls, commitments, rights or any agreements of any kind to acquire, any shares
\nof its capital stock of any class or any Voting Debt (other than (A) options or
\n(B) shares of Common Stock issuable pursuant to options, in either case under
\nthe Stock Plans); (ii) other than in the ordinary course of business consistent
\nwith prior practice or pursuant to existing Contracts described in Section
\n6.1(c) of the Company Disclosure Letter or as would otherwise be permitted by
\nSection 6.21 of this Agreement and other than the Permitted Sales, transfer,
\nlease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any
\nother property or assets (including capital stock of or ownership interests in
\nany of its Subsidiaries or Joint Ventures) or modify any material indebtedness;
\n(iii) incur any indebtedness with a maturity of one year or more; (iv) make or
\nauthorize or commit for any capital expenditures (x) in the case of Subsidiaries
\nof the Company and Joint Ventures, taken together, in excess of five million
\ndollars ($5,000,000) in the aggregate in excess of those set forth in or
\nexpressly contemplated by the applicable financial plans furnished to Parent
\nprior to the date hereof and (y) in the case of the Company and Aetna Services,
\nInc., taken together, in excess of twenty-five million dollars ($25,000,000) in
\nthe aggregate; or (v) by any means, make any acquisition of, or investment in,
\nassets or stock of or other interest in, any other Person or entity other than
\nportfolio investments made in the ordinary course of business consistent with
\npast practice;<\/p>\n
-42-
\n 51
\n (d) neither it nor its Subsidiaries or Joint Ventures shall
\nterminate, establish, adopt, enter into, make any new, or accelerate the vesting
\nor payment of any existing, grants or awards under, amend or otherwise modify,
\nany Compensation and Benefit Plans, except as may be required by law or
\ncontractual obligations in effect as of the date of this Agreement, or increase
\nthe salary, wage, bonus or other compensation of any employees except increases
\noccurring in the ordinary course of business consistent with prior practice
\n(which shall include normal periodic performance reviews and related
\ncompensation and benefit increases); provided, however, that up to $3,000,000
\nmay be allocated to retention payments to be made to employees conditioned on
\ntheir remaining with the Company or any of its Subsidiaries after the Merger and
\nsuch additional amounts as may be agreed to by Parent;<\/p>\n
(e) except for any Tax Claims as to which Spinco and its
\nSubsidiaries would be required, under the Tax Sharing Agreement that is appended
\nas Exhibit C to the Distribution Agreement (the “Tax Sharing Agreement”)
\n(assuming its effectiveness), to indemnify the Company and its Subsidiaries and
\nJoint Ventures, neither it nor its Subsidiaries or Joint Ventures shall (i) (x)
\nsettle or compromise the litigation specified in Section 6.1(e) of the Company
\nDisclosure Letter or (y) settle or compromise any other claims or litigation for
\nan amount in excess of two million dollars ($2,000,000) individually with
\nrespect to each such other claim or litigation, (ii) pay, discharge, settle or
\nsatisfy any material liabilities or obligations (absolute, accrued, asserted or
\nunasserted, contingent or otherwise), other than the payment, discharge or
\nsatisfaction of liabilities and obligations in the ordinary course of business
\nconsistent with prior practice and within the amounts reflected or reserved on
\nthe most recent consolidated financial statements contained in the Company
\nReports prior to the date hereof or (iii) except in the ordinary course of
\nbusiness consistent with prior practice, enter into, modify, amend or terminate
\nany of its material Contracts (other than any Contracts providing for any
\nPermitted Sale) or waive, release or assign any material rights or claims (it
\nbeing agreed that the provisions of clause (iii) shall not apply to any matter
\nreferred to therein to the extent relating to Spinco or any of its
\nSubsidiaries);<\/p>\n
(f) neither it nor any of its Subsidiaries or Joint Ventures
\nshall make any material Tax election or permit any insurance policy naming it as
\na beneficiary or loss-payable payee to be cancelled or terminated, except in
\neach case in the ordinary course of business consistent with prior practice and
\nexcept for elections under Section 338 of the Code;<\/p>\n
(g) neither it nor any of its Subsidiaries or Joint Ventures
\nshall enter into any agreement containing any provision or covenant limiting in
\nany material respect the ability of the Company or any Affiliate or Joint
\nVenture or, assuming the consummation of the transactions contemplated by the
\nTransaction Agreements, ING or any of its subsidiaries or joint ventures, to (i)
\nsell any products or services of or to any<\/p>\n
-43-
\n 52<\/p>\n
other Person, (ii) engage in any line of business or (iii) compete with or to
\nobtain products or services from any Person or limiting the ability of any
\nPerson to provide products or services to the Company or any of its Affiliates
\nor Joint Ventures or, assuming the consummation of the transactions contemplated
\nby the Transaction Agreements, ING or any of its Subsidiaries or Joint Ventures;<\/p>\n
(h) neither it nor its Subsidiaries or Joint Ventures shall
\nmake any significant change in any accounting methods or systems of internal
\naccounting controls, except as may be appropriate to conform to changes in
\nstatutory or regulatory accounting rules or generally accepted accounting
\nprinciples or regulatory requirements with respect thereto;<\/p>\n
(i) neither it nor its Subsidiaries or Joint Ventures shall,
\nother than as would not be inconsistent with the Company’s or its Subsidiaries’
\nor Joint Ventures’ respective investment guidelines as in effect in the first
\nquarter of 2000 (or, following consultation with Parent, consistent with
\nindustry standards), intentionally and materially alter the mix of investment
\nassets of the Company, Subsidiary or Joint Venture or the duration or credit
\nquality of such assets;<\/p>\n
(j) neither it nor its Subsidiaries or Joint Ventures shall,
\nother than consistent with past practices (or following consultation with
\nParent, consistent with industry standards), intentionally and materially alter
\nthe profile of the insurance liabilities of the Retained Insurance Companies or
\nmaterially alter the pricing practices or policies of the Retained Insurance
\nCompanies;<\/p>\n
(k) neither it nor any of its Subsidiaries or Joint Ventures
\nshall take any action that would cause or omit to take any action for the
\npurpose of causing any of the Company’s representations and warranties herein to
\nbecome untrue in any material respect;<\/p>\n
(l) neither it nor any of its Subsidiaries and Joint Ventures
\nwill engage in or allow any transfer of assets or liabilities or other
\ntransactions between (A) the Company and its Subsidiaries and Joint Ventures or
\njoint ventures, on the one hand, and Spinco and any of its Subsidiaries and
\njoint ventures, on the other hand, or (B) the Company or Aetna Services, Inc.,
\non the one hand, and any Subsidiary of Aetna Services, Inc. that is also a
\nSubsidiary of the Company, on the other hand, except, in either case, (i)
\npayments in return for services rendered in the ordinary course of its business
\nconsistent with past practice, (ii) as expressly contemplated by the Transaction
\nAgreements to occur prior to the Effective Time or (iii) transfers of Permitted
\nSales Proceeds; and<\/p>\n
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\n 53<\/p>\n
(m) neither it nor any of its Subsidiaries nor Joint Ventures
\nshall authorize or enter into an agreement to do any of the foregoing.<\/p>\n
The parties agree that the provisions of Section 6.1, other
\nthan Section 6.1(l) and as contemplated by Section 6.1(e), shall be inapplicable
\nto Spinco and its Subsidiaries and the Company may permit Spinco and its
\nSubsidiaries to conduct their businesses in their discretion; provided, however,
\nthat the Company agrees that no action will be taken or permitted in furtherance
\nof the interests of Spinco and its Subsidiaries, or the Transaction, by the
\nCompany or any of its Subsidiaries or Joint Ventures or Spinco or its
\nSubsidiaries that would (i) reasonably be expected to interfere with the timely
\nconsummation of the Merger or (ii) have any of the effects set forth in Section
\n6.1(l). Notwithstanding the limitations in this Section 6.1, other than Section
\n6.1(l), which shall apply, the Company and Aetna Services, Inc. shall be free to
\ntake any of the actions set forth in Section 6.1 of the Company Disclosure
\nLetter. No such actions shall result in any loss or liability to any Subsidiary
\nof Aetna Services, Inc. that is also a Subsidiary of the Company except to the
\nextent expressly contemplated by the Transaction Agreements to occur prior to
\nthe Effective Time or expressly contemplated by Section 6.1 of the Company
\nDisclosure Letter. Except as expressly permitted by this Agreement, the Company
\nagrees to use its best efforts to operate the business of Spinco and its
\nSubsidiaries independently of the Company and Aetna Services, Inc. in a manner
\nthat minimizes the liabilities incurred within the Company and Aetna Services,
\nInc.<\/p>\n
6.2 Acquisition Proposals. (a) The Company agrees that neither
\nit nor any of its Subsidiaries, nor Spinco nor any of its Subsidiaries nor any
\nof the officers and directors of any of them shall, and that it shall direct and
\nuse its best efforts to cause Spinco’s, its and their Subsidiaries’ employees,
\nagents and representatives (including any investment banker, attorney or
\naccountant retained by them or any of their Subsidiaries) not to, directly or
\nindirectly, initiate, solicit or encourage any inquiries or the making of any
\nproposal or offer with respect to a merger, reorganization, share exchange,
\nconsolidation or similar transaction, or any purchase of all or 10% or more of
\nthe assets or any equity securities of the Company or any of its Subsidiaries or
\nSpinco or any of its Subsidiaries (any such proposal or offer being hereinafter
\nreferred to as an “Acquisition Proposal”), it being understood that any such
\nactivities engaged in prior to the date of this Agreement do not violate this
\nSection 6.2. The Company further agrees that from and after the date hereof
\nneither it nor any of its Subsidiaries nor Spinco nor any of its Subsidiaries
\nnor any of the officers and directors of any of them shall, and that it shall
\ndirect and use its best efforts to cause Spinco’s, its and their Subsidiaries’
\nemployees, agents and representatives (including any investment banker, attorney
\nor accountant retained by them or any of their Subsidiaries) not to, directly or
\nindirectly, engage in any negotiations concerning, or provide any confidential
\ninformation or data to, or have any discussions with, any Person relating to an
\nAcquisition Proposal, or otherwise facilitate any effort or attempt to make or
\nimplement an Acquisition Proposal; provided, however,<\/p>\n
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\n 54<\/p>\n
that nothing contained in this Agreement shall prevent the Company or its board
\nof directors from (A) complying with Rules 14d-9 and 14e-2 promulgated under
\nthe Exchange Act with regard to an Acquisition Proposal; (B) providing
\ninformation in response to a request therefor by a Person who has made a bona
\nfide written Acquisition Proposal that was not solicited in violation of this
\nSection 6.2(a) if the board of directors receives from the Person so requesting
\nsuch information an executed confidentiality agreement on terms substantially
\nsimilar to those contained in the Confidentiality Agreement (as defined below);
\n(C) engaging in any negotiations or discussions with any Person who has made an
\nunsolicited bona fide written Acquisition Proposal that was not solicited in
\nviolation of this Section 6.2(a); or (D) recommending such an Acquisition
\nProposal to the shareholders of the Company, if and only to the extent that,
\n(i) in each such case referred to in clause (B), (C) or (D) above, the board of
\ndirectors of the Company determines in good faith after consultation with
\noutside legal counsel that such action is necessary in order for its directors
\nto comply with their respective fiduciary duties under applicable law and (ii)
\nin each case referred to in clause (C) or (D) above, the board of directors of
\nthe Company determines in good faith (after consultation with its financial
\nadvisor) that such Acquisition Proposal, if accepted, is reasonably likely to
\nbe consummated, taking into account all legal, financial and regulatory aspects
\nof the proposal and the Person making the proposal and would, if consummated,
\nresult in a transaction or a combination of transactions more favorable to the
\nCompany’s shareholders from a financial point of view than the transactions
\ncontemplated by this Agreement (any such more favorable Acquisition Proposal
\nbeing referred to in this Agreement as a “Superior Proposal”). The Company
\nagrees that it will immediately cease and cause to be terminated any existing
\nactivities, discussions or negotiations with any parties conducted heretofore
\nwith respect to any Acquisition Proposal. The Company agrees that it will take
\nthe necessary steps to promptly inform the individuals or entities referred to
\nin the first sentence hereof of the obligations undertaken in this Section 6.2.
\nThe Company agrees that it will notify Parent immediately if any such
\ninquiries, proposals or offers relating to an Acquisition Proposal are received
\nby, any such information is requested from, or any such discussions or
\nnegotiations are sought to be initiated or continued with, any of its
\nrepresentatives indicating, in connection with such notice, the name of such
\nPerson and the material terms and conditions of any proposals or offers and
\nthereafter shall keep Parent informed, on a current basis, on the status and
\nterms of any such proposals or offers and the status of any such discussions or
\nnegotiations. The Company also agrees that it will promptly request each Person
\nthat has heretofore executed a confidentiality agreement in connection with its
\nconsideration of acquiring it or any of its Subsidiaries or Spinco or any of
\nits Subsidiaries to return or destroy all confidential information heretofore
\nfurnished to such Person by or on behalf of it or any of its Subsidiaries or
\nSpinco or any of its Subsidiaries. Notwithstanding the foregoing, the parties
\nhereto acknowledge and agree that the provisions of this Section 6.2(a) shall
\nnot restrict in any respect the right of the Company, Spinco, Spinco’s
\nSubsidiaries or any of the officers, directors, employees, agents and
\nrepresentatives of any of them to, directly or<\/p>\n
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\n 55<\/p>\n
indirectly, initiate, solicit, encourage or take any other action with respect
\nto (including without limitation entering into an agreement for) any
\ntransaction relating to any assets or equity securities of Spinco or any of its
\nSubsidiaries, so long as such transaction would not reasonably be expected to
\ninterfere with the timely consummation of the Merger, the Spin-Off or the other
\ntransactions contemplated by the Transaction Agreements.<\/p>\n
(b) Notwithstanding anything in this Section 6.2 to the
\ncontrary, if, at any time prior to obtaining the Company Requisite Vote, the
\nCompany’s board of directors determines in good faith, on the basis of the
\nadvice of its financial advisors and outside counsel, in response to an
\nAcquisition Proposal that did not result from a breach of Section 6.2(a), that
\nsuch proposal is a Superior Proposal, the Company or its board of directors may
\nterminate this Agreement if, and only if, the Company shall substantially
\nconcurrently with such termination enter into a definitive agreement containing
\nthe terms of a Superior Proposal; provided, however, that the Company shall not
\nterminate this Agreement pursuant to this sentence, and any purported
\ntermination pursuant to this sentence shall be void and of no force or effect,
\nunless the Company shall have complied with (i) all the provisions of this
\nSection 6.2, including the notification provisions in this Section 6.2, (ii) the
\nfollowing proviso, and (iii) all applicable requirements of Section 8.3,
\nincluding the payment of the termination fee described in Section 8.5(b) prior
\nto or concurrently with such termination; and provided further, however, that
\nthe Company shall not exercise its right to terminate this Agreement pursuant to
\nthis Section 6.2 until after five business days following Parent’s receipt of
\nwritten notice (a “Notice of Superior Proposal”) advising Parent that the
\nCompany’s board of directors has received such a Superior Proposal and that such
\nboard of directors will, subject to any action taken by Parent pursuant to this
\nsentence, cause the Company to accept such Superior Proposal, specifying the
\nmaterial terms and conditions of such Superior Proposal and identifying the
\nPerson making such Superior Proposal (it being understood and agreed that any
\namendment to the price or any other material term of such a Superior Proposal
\nshall require an additional Notice of Superior Proposal and a new five business
\nday period).<\/p>\n
6.3 Accuracy of Proxy Statement and Form 10. Each of the
\nCompany, ING and Parent agrees that none of the information supplied or to be
\nsupplied by it or its Affiliates, Subsidiaries or Joint Ventures (and in the
\ncase of the Company, including Spinco and its Affiliates) for inclusion or
\nincorporation by reference in the proxy statement of the Company seeking
\napproval of the Merger (the “Proxy Statement”) and the registration statement on
\nForm 10 relating to the Spin-Off (the “Form 10”) and any amendment or supplement
\nthereto will, in the case of the Proxy Statement, at the date of mailing to
\nholders of Shares and at the time of the meeting of holders of Shares of the
\nCompany to be held in connection with the Transaction and, in the case of the
\nForm 10, at the effective date of the Form 10 and at the date of mailing of the
\nForm 10 to holders of record of the Shares, in any such case, contain any untrue
\nstatement of a material fact or omit to state any material fact required to be
\nstated therein or necessary in order to make<\/p>\n
-47-
\n 56<\/p>\n
the statements therein, in light of the circumstances under which they were
\nmade, not misleading. The Company agrees that the Proxy Statement and the Form
\n10 and any amendment or supplement thereto will comply in all material respects
\nwith the applicable provisions of the Exchange Act and the rules and
\nregulations thereunder.<\/p>\n
6.4 Shareholders Meeting. The Company will take, in accordance
\nwith applicable law and its certificate of incorporation and by-laws, all action
\nnecessary to convene a meeting of holders of shares of Common Stock (the
\n“Shareholders Meeting”) as promptly as reasonably practicable after the
\nexecution of this Agreement to consider and vote upon the approval of this
\nAgreement and the transactions contemplated hereby. Subject to fiduciary
\nobligations and the requirements of applicable Law, the Company’s board of
\ndirectors shall recommend such approval and shall take all lawful action to
\nsolicit such approval.<\/p>\n
6.5 Filings; Other Actions; Notification. (a) ING, Parent and
\nthe Company shall use their respective best efforts to prepare and file with the
\nSEC the Proxy Statement and the Form 10 as promptly as is practicable after the
\ndate hereof. The Company shall use its reasonable best efforts to (i) have the
\nProxy Statement and the Form 10 approved by the SEC as promptly as practicable
\nafter each such filing and (ii) promptly after each such approval thereafter
\nmail the Proxy Statement and the Form 10 to the holders of Shares of the
\nCompany. The Company shall promptly notify Parent and ING of any request by the
\nSEC for any amendment or supplement to the Proxy Statement or the Form 10 and
\nshall provide Parent and ING copies of all correspondence between the Company
\nand\/or any of its representatives and the SEC with respect to the Proxy
\nStatement.<\/p>\n
(b) The Company, ING and Parent shall cooperate with each
\nother and use (and shall cause their respective Subsidiaries, Joint Ventures and
\njoint ventures, including Spinco and its Subsidiaries, to use) their respective
\nbest reasonable efforts to take or cause to be taken all actions, and do or
\ncause to be done all things necessary, proper or advisable on its part under the
\nTransaction Agreements and applicable Laws to consummate and make effective the
\nMerger, the Spin-Off and the other transactions contemplated by the Transaction
\nAgreements as soon as practicable, including preparing and filing as promptly as
\npracticable all documentation to effect all necessary notices, applications,
\npetitions, reports and other filings and to obtain as promptly as practicable
\nall consents, registrations, approvals, waivers, licenses, permits,
\nqualifications, orders, ratings and authorizations necessary or advisable to be
\nobtained from any Governmental Entity (“Governmental Approvals”) and\/or any
\nthird party and make all transfers or assignments contemplated by the
\nTransaction Agreements, in each case in order to consummate the Merger, the
\nSpin-Off or any of the other transactions contemplated by the Transaction
\nAgreements, in each case on the terms and subject to the conditions set forth in
\nthe Transaction Agreements; provided, however, that nothing in this Section 6.5
\nshall require,<\/p>\n
-48-
\n 57<\/p>\n
or be construed to require, ING or Parent, in connection with the receipt of
\nany regulatory approval, to proffer to, or agree to (i) sell or hold separate
\nand agree to sell, divest or to discontinue to or limit, before or after the
\nEffective Time, any assets, businesses, or interest in any assets or businesses
\nof ING, Parent, the Company or any of their respective Affiliates or Joint
\nVentures (or to consent to any sale, or agreement to sell, or discontinuance or
\nlimitation by ING or Parent or the Company, as the case may be, of any of its
\nassets or businesses) or (ii) agree to any conditions relating to, or changes
\nor restriction in, the operations of any such asset or businesses which, in the
\ncase of clause (i) or clause (ii), is reasonably likely, individually or in the
\naggregate, to have a material adverse effect on the financial condition,
\nproperties, business or annual results of operations of the Company and its
\nSubsidiaries, taken as a whole, or a material adverse effect on the financial
\ncondition, properties, business or annual results of operations of ING and its
\nSubsidiaries, taken as a whole. Subject to applicable Laws relating to the
\nexchange of information (including any obligations pursuant to any listing
\nagreement with or rules of any securities exchange), each of ING, Parent and
\nthe Company shall have the right to review and approve (such approval not to be
\nunreasonably withheld or delayed) in advance, and to the extent practicable
\neach will consult the other on, all the information relating to it, and any of
\nits Affiliates and Joint Ventures, that appear in any filing made with, or
\nwritten materials submitted to, any third party and\/or any Governmental Entity
\n(including any securities exchange) in connection with the Merger and the other
\ntransactions contemplated by the Transaction Agreements.<\/p>\n
(c) The Company, ING and Parent each shall, upon request by
\nthe other, furnish the other with all true and accurate information concerning
\nitself, its Subsidiaries, Joint Ventures and joint ventures (including in the
\ncase of the Company, Spinco and its Subsidiaries), directors, officers and
\nshareholders and such other matters as may be reasonably necessary or advisable
\nin connection with the Proxy Statement or the Form 10 or any other statement,
\nfiling, notice or application made by or on behalf of ING, Parent or the Company
\nor any of their respective Subsidiaries, Joint Ventures or joint ventures to any
\nthird party and\/or any Governmental Entity in connection with the Merger and the
\ntransactions contemplated by the Transaction Agreements.<\/p>\n
(d) The Company, ING and Parent each shall promptly provide
\nthe other party with copies of all filings made by either the Company, Spinco,
\nING or Parent with any Governmental Entity in connection with the Transaction
\nAgreements and the transactions contemplated hereby and thereby. The Company,
\nING and Parent each shall keep the other apprised of the status of matters
\nrelating to completion of the transactions contemplated hereby and thereby,
\nincluding promptly furnishing the other with copies of any notices or other
\ncommunications received by Spinco, ING, Parent or the Company, as the case may
\nbe, or any of its Subsidiaries, Joint Ventures or joint ventures, from any third
\nparty and\/or any Governmental Entity with respect to the Merger and the other
\ntransactions contemplated by the Transaction Agreements. Notwithstanding<\/p>\n
-49-
\n 58<\/p>\n
the foregoing, Spinco shall only be required with respect to the Spin-Off to
\nprovide ING and Parent copies of material filings, notices and communications
\nrelating to the Spin-Off. The Company shall keep Parent informed on a prompt
\nbasis concerning the status of rating agency communications regarding Spinco
\nand provide Parent with copies of all presentations to and correspondence with
\nrating agencies relating to the Spinco rating. The Company shall give prompt
\nnotice to Parent of any change that is reasonably likely to result in a Company
\nMaterial Adverse Effect.<\/p>\n
(e) In the event any claim, action, suit, investigation or
\nother proceeding by any Governmental Entity or other Person or other legal or
\nadministrative proceeding is commenced that questions the validity or legality
\nof any of the Transaction Agreements, the Merger, the Spin-Off or the other
\ntransactions contemplated by the Transaction Agreements or claims damages in
\nconnection therewith, the Company, ING and Parent each agree to cooperate and
\nuse their best reasonable efforts to defend against and respond thereto.<\/p>\n
(f) The Company shall use its reasonable efforts to assist
\nParent in obtaining all required consents, including the consent of the People’s
\nRepublic of China, prior to the Effective Time, to either (i) the transfer of
\nthe joint venture interest held by Aetna Life Insurance Company in Pacific-Aetna
\nLife Insurance Company Limited to a Subsidiary of the Company or (ii) if consent
\nto such transfer cannot be obtained on terms and conditions reasonably
\nacceptable to Parent on an alternative structure agreed upon with Parent whereby
\nthe benefits (as well as the liabilities) associated with the joint venture
\ninterest held by Aetna Life Insurance Company in Pacific-Aetna Life Insurance
\nCompany Limited are transferred to a Subsidiary of the Company; provided,
\nhowever, that the foregoing shall not require the Company, its Subsidiaries,
\nJoint Ventures or joint ventures to (x) take or fail to take any action that
\ncould reasonably be expected to adversely affect in any respect any of Spinco or
\nany of its Subsidiaries or prevent or materially delay or impair the
\nconsummation of the transactions contemplated hereby or (y) pay any money, other
\nthan reasonable advisors’ fees and expenses, to any third party in connection
\nwith carrying out its obligations under this sentence. Notwithstanding the
\nreferences to Governmental Consents of the Peoples Republic of China and Hong
\nKong in Section 7.1(b) of this Agreement, the parties hereto acknowledge and
\nagree that the transfer of the joint venture interest held by Aetna Life
\nInsurance Company in Pacific-Aetna Life Insurance Company Limited or the
\nlicense held by Pacific-Aetna Life Insurance Company Limited are not to be a
\ncondition to either party’s obligation to effect the Merger.<\/p>\n
(g) The Company shall use its best efforts to satisfy the
\nconditions to the Spin-Off set forth in Section 3.02 of the Distribution
\nAgreement and shall effect the Spin-Off if such conditions have been satisfied.
\nNotwithstanding anything in this Section 6.5 to the contrary, the parties
\nacknowledge and agree that this Section 6.5 shall not<\/p>\n
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\n 59<\/p>\n
require the Company or Spinco, in connection with the receipt of any
\nGovernmental Approval in connection with the consummation of the Spin-Off, to
\nproffer or agree to conditions relating to, or changes or restrictions in, the
\noperations or assets of Spinco and its Subsidiaries that are reasonably likely,
\nindividually or in the aggregate, to have a material adverse effect on the
\nfinancial condition, properties, business or annual results of operations of
\nSpinco and its Subsidiaries, taken as a whole, or waive any condition to the
\nSpin-Off set forth in Section 3.02 of the Distribution Agreement. At or prior
\nto the Spin-Off, the Company shall take those actions required by Section 7.01
\nof the Distribution Agreement to be taken at or prior to the Spin-Off.<\/p>\n
(h) The Company and its Subsidiaries shall use their
\nreasonable best efforts to keep Parent informed concerning material
\ndevelopments, including with respect to matters addressed in Section 6.1 of this
\nAgreement, in the businesses of the Company and its Subsidiaries and to consult
\nperiodically with representatives of Parent concerning such developments.<\/p>\n
6.6 Access. Upon reasonable notice, and subject to applicable
\nlaw, the Company shall (and shall cause its Subsidiaries and Joint Ventures to
\nand use reasonable efforts to cause its Fund Clients to) afford Parent’s
\nofficers, employees, counsel, accountants and other authorized representatives
\n(“Representatives”) reasonable access, during normal business hours throughout
\nthe period prior to the Effective Time, to its officers, employees, properties,
\nbooks, Contracts and records and, during such period, shall (and shall cause its
\nSubsidiaries and Joint Ventures and Spinco and its Subsidiaries to) furnish
\npromptly to the other all information concerning its business, properties and
\npersonnel as may reasonably be requested; provided, however, that no
\ninvestigation pursuant to this Section shall affect or be deemed to modify any
\nrepresentation or warranty made by the Company; and provided further, however,
\nthat the foregoing shall not require the Company to permit any inspection, or to
\ndisclose any information, that in the reasonable judgment of the Company would
\nresult in the disclosure of any trade secrets of third parties or violate any of
\nits obligations with respect to confidentiality if the Company shall have used
\nbest reasonable efforts to obtain the consent of such third party to such
\ninspection or disclosure. All requests for information made pursuant to this
\nSection shall be directed to an executive officer of the Company or such Person
\nas may be designated by its officers, as the case may be.<\/p>\n
6.7 Stock Exchange. The Surviving Corporation shall use its
\nbest efforts to cause the Shares to be de-listed from the New York Stock
\nExchange (the “NYSE”) and de-registered under the Exchange Act as soon as
\npracticable following the Effective Time.<\/p>\n
6.8 Publicity. The initial press release with respect to the
\nMerger and the other transactions contemplated by this Agreement shall be a
\njoint press release.<\/p>\n
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\n 60<\/p>\n
Thereafter, neither the Company, Spinco, ING nor Parent shall (i) issue any
\npress release or otherwise make any public announcements with respect to the
\nMerger and the other transactions contemplated by this Agreement (other than
\nthe Spin-Off) or (ii) make any material filings with any third party and\/or any
\nGovernmental Entity (including any securities exchange) for the purpose of
\nfurthering consummation of the Transactions, in each case without consulting
\nwith, and obtaining the prior consent of, the other party (which consent shall
\nnot be unreasonably withheld or delayed). The Company shall use its best
\nreasonable efforts to consult in advance with Parent concerning any public
\nannouncement concerning the Spin-Off. Notwithstanding the foregoing two
\nsentences, a party may, without consulting with or obtaining the consent of the
\nother party, issue a press release or otherwise make a public announcement as
\nmay be required by Law or under the applicable rules of any securities exchange
\nif it has used its best reasonable efforts to consult with the other party and
\nto obtain such party’s consent but has been unable to do so in a timely manner.<\/p>\n
6.9 Benefits; Company Options; Company Employees.<\/p>\n
(a) Exhibit A (the “Employee Benefits Agreement”) to the
\nDistribution Agreement, which sets forth the covenants of the Company relating
\nto employee benefits matters, shall have the same force and effect, and shall be
\nsubject to the provisions hereof until the Effective Time, as if set forth
\nherein.<\/p>\n
(b) The Company and Spinco agree to, and to cause each of
\ntheir Subsidiaries to, (x) consult with Parent in advance of (and in a manner
\nwhich provides Parent reasonable time to comment) issuing or making any
\ncommunications to the employees of the Company and its Subsidiaries regarding
\nthe Transaction or any other employee benefit matter and (y) develop with Parent
\na communications program relating to the post Spin-Off period, which shall be
\nimplemented prior to the Spin-Off (it being understood such implementation will
\nbe made in a timely manner so as to effectuate enrollment in the new benefit
\nplans the Company will offer after the Spin-Off).<\/p>\n
(c) Except as expressly contemplated by the Employee Benefits
\nAgreement, the Company agrees not to and to cause its Subsidiaries not to (x)
\ntransfer employees from any of Aetna Retirement Services, Inc. or Aetna
\nInternational, Inc. or any of their Subsidiaries (that are also Subsidiaries of
\nthe Company) or Joint Ventures to the Company, Aetna Services, Inc., Spinco or
\nany of its Subsidiaries or Joint Ventures without Parent’s consent (which
\nconsent shall not be unreasonably withheld) or (y) transfer employees to Aetna
\nRetirement Services, Inc. or Aetna International, Inc. or any of their
\nSubsidiaries (that are also Subsidiaries of the Company) or Joint Ventures from
\nthe Company, Aetna Services, Inc., Spinco or any of its Subsidiaries without
\nParent’s consent (which consent shall not be unreasonably withheld).<\/p>\n
-52-
\n 61<\/p>\n
(d) The Company, Spinco and Parent agree to cooperate in the
\npreparation of, and mutually agree with Parent on the final versions of the
\nschedules to the Employee Benefits Agreement. Without limiting the generality
\nof the foregoing, in this regard the Company and Spinco agree to provide to
\nParent all relevant information available to them in respect of the Company and
\nits Subsidiaries’ employees and the Compensation and Benefit Plans for the
\npurposes of creating such schedules.<\/p>\n
6.10 ERISA Client Lists. Within 30 days following the date
\nhereof, Parent shall deliver to the Company a written list of the entities that
\nare affiliated with or related to Parent (the “Parent ERISA List”). As soon as
\npracticable after the date the Parent ERISA List is delivered to the Company,
\nbut in no event later than 30 days before the Closing Date, the Company shall
\ndeliver to Parent a written statement which identifies each Account Client that
\nis an ERISA Client and lists each contract or agreement, if any, and all
\namendments thereto, in effect on the date hereof, entered into by the Company or
\nany of its Subsidiaries with respect to or on behalf of any such ERISA Client,
\npursuant to which any of the entities identified in the Parent ERISA List has
\nagreed to (i) execute securities transactions, (ii) provide any other goods or
\nservices or (iii) purchase, sell, exchange or swap securities or any other
\neconomic interests therein or derivative thereof, including but not limited to
\nrights to receive or obligations to pay interest or principal denominated in a
\nparticular currency.<\/p>\n
6.11 Expenses. Except as otherwise provided in Section 8.5(b),
\nSection 9.10 or any Transaction Agreement, whether or not the Merger is
\nconsummated, all costs and expenses incurred in connection with the Transaction
\nAgreements and the Merger and the other transactions contemplated by the
\nTransaction Agreements shall be paid by the party incurring such expense, except
\nthat (a) expenses incurred in connection with the filing fee and printing and
\nmailing the Proxy Statement shall be shared equally by Parent and the Company
\nand (b) all Transaction Expenses (as defined below), unless otherwise
\nspecifically provided for in any Transaction Agreement, shall be paid by Spinco.
\n“Transaction Expenses” shall mean all fees, costs and expenses incurred by (i)
\nthe Company, its Subsidiaries and Joint Ventures, in each case at or prior to
\nthe Effective Time, and (ii) Spinco and its Subsidiaries, in the case of each of
\nclause (i) and (ii), in connection with the Merger, the Spin-Off or any of the
\nother transactions contemplated by the Transaction Agreements, including the
\nfees and expenses of the Company’s and Spinco’s legal and financial advisors and
\nthe other fees and expenses set forth on Section 6.11 of the Company Disclosure
\nLetter.<\/p>\n
6.12 Indemnification; Directors’ and Officers’ Insurance. (a)
\nFrom and after the Effective Time, ING agrees that it will cause the Company to
\nindemnify and hold harmless each present and former director, officer and
\nemployee of the Company (when acting in such capacity), determined as of
\nimmediately prior to the Effective Time (the “Indemnified Parties”), against any
\ncosts or expenses (including reasonable attorneys’ fees), <\/p>\n
-53-
\n 62<\/p>\n
judgments, fines, losses, claims, damages or liabilities (collectively, “Costs”)
\nincurred in connection with any claim, action, suit, proceeding or
\ninvestigation, whether civil, criminal, administrative or investigative, arising
\nout of matters existing or occurring at or prior to the Effective Time, whether
\nasserted or claimed prior to, at or after the Effective Time, to the fullest
\nextent that the Company would have been permitted or required under Connecticut
\nlaw and its certificate of incorporation or by-laws or pursuant to other
\nagreements in effect on the date hereof to indemnify such Person (and ING shall
\nalso cause the Company to advance expenses as incurred to the fullest extent
\npermitted under applicable law; provided, however, that the Person to whom
\nexpenses are advanced provides an undertaking to repay such advances if it is
\nultimately determined that such Person is not entitled to indemnification); and
\nprovided further, however, that any determination required to be made with
\nrespect to whether an officer’s or director’s conduct complies with the
\nstandards set forth under Connecticut law and the Company’s certificate of
\nincorporation and by-laws shall be made by independent counsel selected by the
\nSurviving Corporation.<\/p>\n
(b) Any Indemnified Party wishing to claim indemnification
\nunder paragraph (a) of this Section 6.12, upon learning of any such claim,
\naction, suit, proceeding or investigation, shall promptly notify the Surviving
\nCorporation and ING thereof. In the event of any such claim, action, suit,
\nproceeding or investigation (whether arising before or after the Effective
\nTime), (i) ING or the Surviving Corporation shall have the right to assume the
\ndefense thereof and ING or the Surviving Corporation shall not be liable to such
\nIndemnified Parties for any legal expenses of other counsel or any other
\nexpenses subsequently incurred by such Indemnified Parties in connection with
\nthe defense thereof, except that if ING or the Surviving Corporation elects not
\nto assume such defense or counsel for the Indemnified Parties advises that there
\nare issues which raise conflicts of interest between ING or the Surviving
\nCorporation and the Indemnified Parties, the Indemnified Parties may retain
\ncounsel satisfactory to them, and ING or the Surviving Corporation shall pay all
\nreasonable fees and expenses of such counsel for the Indemnified Parties
\npromptly as statements therefor are received; provided, however, that the
\nSurviving Corporation or ING shall be obligated pursuant to this paragraph (b)
\nto pay for only one firm of counsel for all Indemnified Parties in any
\njurisdiction, (ii) the Indemnified Parties will cooperate in the defense of any
\nsuch matter and (iii) ING or the Surviving Corporation shall not be liable for
\nany settlement effected without its prior written consent; and provided further
\nthat neither ING nor the Surviving Corporation shall have any obligation
\nhereunder to any Indemnified Party if and when a court of competent jurisdiction
\nshall ultimately determine, and such determination shall have become final, that
\nthe indemnification of such Indemnified Party in the manner contemplated hereby
\nis prohibited by applicable law.<\/p>\n
(c) ING shall cause the Surviving Corporation to either (i)
\nmaintain the Company’s existing officers’ and directors’ liability insurance for
\na period of six years<\/p>\n
-54-
\n 63<\/p>\n
after the Effective Time or (ii) maintain a run-off or tail policy or
\nendorsement with respect to covering claims asserted within six years after the
\nEffective Time arising from facts or events that occurred at or before the
\nEffective Time (either, “D&O Insurance”), in each case so long as the annual
\npremium therefor is not in excess of 175% of the last annual premium paid prior
\nto the date hereof (the “Current Premium”); provided, however, that if the
\nexisting D&O Insurance expires, is terminated or cancelled during such six-year
\nperiod, the Surviving Corporation will use its reasonable efforts to obtain as
\nmuch D&O Insurance as can be obtained for the remainder of such period for a
\npremium not in excess (on an annualized basis) of 175% of the Current Premium.<\/p>\n
(d) If the Surviving Corporation or any of its successors or
\nassigns (i) shall consolidate with or merge into any other corporation or entity
\nand shall not be the continuing or surviving corporation or entity of such
\nconsolidation or merger or (ii) shall transfer all or substantially all of its
\nproperties and assets to any individual, corporation or other entity, then, and
\nin each such case, proper provisions shall be made so that the successors and
\nassigns of the Surviving Corporation shall assume all of the obligations set
\nforth in this Section.<\/p>\n
(e) The provisions of this Section are intended to be for the
\nbenefit of, and shall be enforceable by, each of the Indemnified Parties, their
\nheirs and their representatives.<\/p>\n
(f) Notwithstanding any provision of this Section 6.12 to the
\ncontrary, to the extent a Cost is also a Spinco Group Liability (as defined in
\nthe Distribution Agreement) such matter shall be addressed as a Spinco Group
\nLiability pursuant to the Distribution Agreement rather than this Section 6.12.<\/p>\n
6.13 Compliance with 1940 Act Section 15. (a) Prior to the
\nClosing, the Company shall use reasonable best efforts to ensure compliance with
\nSection 15(f) of the 1940 Act, so that the transactions contemplated by the
\nTransaction Agreements will be in compliance immediately after the Closing with
\nSection 15(f) of the 1940 Act, including assuring that at the time of the
\nClosing at least 75% of the Board of Directors or Trustees of each Fund Client
\nare not “interested persons” (as such term is defined in the 1940 Act) of the
\nSurviving Corporation or the Company.<\/p>\n
(b) Parent will use reasonable best efforts to assure
\ncompliance with the conditions of Section 15(f) of the 1940 Act as it applies to
\nthe transactions contemplated by the Agreement. From and after the Closing,
\nParent shall conduct the business of the Surviving Corporation so as to assure
\nthat, insofar as within the control of Parent: (i) for a period of three (3)
\nyears after the Closing Date, at least 75% of the members of the Board of
\nDirectors or Trustees of each Fund Client which enters into a replacement
\nInvestment Contract with an Advisory Entity that constitutes an investment
\nadvisory<\/p>\n
-55-
\n 64<\/p>\n
agreement are not (A) “interested persons” of the Surviving Corporation or (B)
\n“interested persons” of the Company; and (ii) there is not imposed on any Fund
\nClient an “unfair burden” (within the meaning of Section 15(f) of the 1940 Act)
\nas a result of the transactions contemplated by the Transaction Agreements, or
\nany express or implied terms, conditions or understandings applicable thereto.<\/p>\n
(c) For a period of three years (3) after the Closing, none of
\nParent, Surviving Corporation, nor any of their respective Affiliates will
\nvoluntarily engage in any transaction which would constitute an assignment of
\nany investment advisory contract with any Fund Client that is registered under
\nthe 1940 Act and is currently managed by the Company or its Affiliates to which
\nParent, Surviving Corporation or any of their respective Affiliates or the
\nCompany or any of its Affiliates is a party without first obtaining a covenant
\nin all material respects the same as that contained in this Section 6.13.<\/p>\n
6.14 Fund Client Contracts, Distribution Plans and Boards. The
\nCompany shall use its reasonable best efforts to cause (a) the consideration and
\ndue approval by the Board of Directors of each Fund Client and (b) to the extent
\nrequired by the 1940 Act, the consideration and due approval by such Fund
\nClient’s securityholders, of (X) a new Investment Contract (or, where permitted,
\napproval of continuation of the existing Investment Contract) with the same
\nAdvisory Entity to become effective upon the Closing, in each case, on the same
\nmaterial terms as in effect on the date hereof under such Investment Contract
\nfor the performance by the relevant Advisory Entity of investment management,
\ninvestment advisory, investment subadvisory or distribution services and (Y) an
\namended Rule 12b-1 distribution plan, in each case, on the same material terms
\nas in effect on the date hereof. In addition, the Company shall use its
\nreasonable best efforts to encourage the Board of Directors of each Fund Client
\n(or, to the extent required by the 1940 Act, the independent Directors thereof)
\n(X) to select and nominate, so as to constitute a majority of the independent
\nDirectors of such Board, individuals who are currently serving as independent
\ndirectors of investment companies that are advised by an Affiliate of Parent and
\n(Y) to nominate one director (who shall not be an independent director) that is
\nselected by Parent in each case so long as the Company does not reasonably
\nconclude, after consultation with Parent, such encouragement would adversely
\naffect the ability of the Company to obtain any consent required pursuant to
\nSection 7.2(d).<\/p>\n
6.15 Non-Fund Advisory Contracts. The Company or relevant
\nAdvisory Entity shall notify each Advisory Client of the transactions
\ncontemplated by the Transaction Agreements and use its reasonable best efforts
\nto obtain, prior to the Closing, any necessary consent of each Advisory Client
\nto the “assignment” (as such term is used in the Advisers Act) of its Investment
\nContract involving investment advisory services as a result of the transactions
\ncontemplated by the Transaction Agreements in a form<\/p>\n
-56-<\/p>\n
65<\/p>\n
reasonably satisfactory to Parent. The Company and Advisory Entity shall
\nconsult with Parent regarding all written communications with Advisory Clients
\nconcerning the obtaining of such assignments.<\/p>\n
6.16 Qualification of the Fund Clients; Fund Client Boards.
\nSubject to applicable fiduciary duties to the Fund Clients, the Company will use
\nits reasonable best efforts to cause the Fund Clients to take no action (i) that
\nwould prevent any Fund Client from qualifying as a “regulated investment
\ncompany” under Subchapter M of Chapter 1 of Subtitle A of the Code, (ii) that
\nwould prevent any Fund Client that is intended to be a Tax-exempt municipal bond
\nfund from satisfying the requirements of Section 852(b)(5) of the Code or from
\nqualifying to pay exempt interest dividends as defined therein or (iii) that
\nwould be inconsistent with any Fund Client’s prospectus and other offering,
\nadvertising and marketing materials.<\/p>\n
6.17 Rights. Prior to the Effective Time, the board of
\ndirectors of the Company shall take all necessary action to amend the definition
\nof Final Expiration Date (as defined in the Rights Agreement) to be the
\nDistribution Time (as defined in the Distribution Agreement).<\/p>\n
6.18 Takeover Statute. If any Takeover Statute is or may
\nbecome applicable to the Merger or the other transactions contemplated by the
\nTransaction Agreements, ING, Parent and their respective boards of directors and
\nthe Company and its board of directors shall each grant such approvals and take
\nsuch actions as are necessary so that such transactions may be consummated as
\npromptly as practicable on the terms contemplated by the Transaction Agreements
\nand otherwise act to eliminate or minimize the effects of such statute or
\nregulation on such transactions.<\/p>\n
6.19 Company Debt. Effective as of the Closing and, in each
\ncase (to the extent necessary), pursuant to supplemental indentures (reasonably
\nsatisfactory in form and substance to the Company), ING shall guarantee the
\nperformance of the obligations of Aetna Services, Inc. and the Company with
\nrespect to the Long-Term Debt, each such guarantee to take substantially the
\nsame form as the Company’s current guarantees of the obligations of Aetna
\nServices, Inc. under the Long-Term Debt.<\/p>\n
6.20 Voting of Shares. Each of ING and Parent agrees to vote,
\nor cause to be voted, all Shares beneficially owned by it or any of its
\nAffiliates in favor of adoption of this Agreement and the transactions
\ncontemplated hereby at the Shareholders Meeting.<\/p>\n
6.21 Other Agreements. (a) The Company agrees that it shall
\nuse its reasonable best efforts promptly to enter into agreements for the sale
\nof those Persons set forth on Section 6.21 of the Company Disclosure Letter (the
\n“Section 6.21 Subsidiaries”) on terms and conditions as favorable to the Company
\nand its Subsidiaries as can be<\/p>\n
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\n 66
\nobtained and in accordance with the procedures agreed between the parties. The
\nCompany shall permit representatives of Parent to be fully involved in every
\naspect of such sales process and the Company shall retain such financial and
\nlegal advisors to effect such sales as Parent shall reasonably request. Except
\nas may otherwise be agreed, the terms and conditions of all agreements for sale
\nor other agreements in connection with the sales process shall be subject to
\nParent’s prior approval, which will not be unreasonably withheld or delayed.
\nThe Company and its Subsidiaries shall not be required in connection with
\neffecting these sales to take any action that would adversely affect Spinco and
\nits Subsidiaries. Transaction expenses incurred in connection with such sales
\nshall not be deemed to be “Transaction Expenses” for purposes of this Agreement
\nand shall not be required to be paid by Spinco pursuant to Section 7.03 of the
\nDistribution Agreement. Parent and the Company each agree that it shall use its
\nreasonable best efforts to obtain waivers of regulatory requirements in the
\njurisdictions of the Section 6.21 Subsidiaries that otherwise could delay or
\nprevent satisfaction of the conditions set forth in Section 7.1(b).<\/p>\n
(b) The Company agrees that in carrying out the transactions
\ncontemplated by the Distribution Agreement it shall use its reasonable best
\nefforts (consistent with and subject to the terms and conditions of the
\nTransaction Agreements) to minimize the creation of liabilities of the Company
\nand its Subsidiaries. The Company shall keep Parent informed on a regular basis
\nconcerning the developments in the transactions contemplated by the Transaction
\nAgreements and the means by which such transactions are effected and, subject to
\nany existing agreements as to the means of effecting the transactions that are
\nreflected in the Distribution Agreement, the Company shall give reasonable
\nconsideration to Parent’s views on the means by which such transactions are
\neffected.<\/p>\n
(c) In connection with the Spin-Off, the Company and Spinco
\nshall enter into a trademark licensing agreement (the “Chinese Mark Agreement”)
\npursuant to which the Company shall grant to Spinco a perpetual, exclusive, and
\nroyalty-free license to use the Chinese name and\/or characters associated with
\nthe name “Aetna” or related logo, identified on Schedules D or I of the
\nDistribution Agreement (including, to the extent held by the Company or any of
\nits Subsidiaries or Spinco or any of its Subsidiaries, all forms and
\ntransliterations thereof, the “Chinese Mark”) in connection with the Spinco
\nBusiness (as that term is defined in the Distribution Agreement) in the United
\nStates. The Company acknowledges that the rights, title to and interest in the
\nChinese Mark and the associated Intellectual Property Rights (as defined in the
\nDistribution Agreement) (the “Aetna China Name Rights”) shall be owned by a
\nmember of the Aetna Group following the Spin-Off. The Chinese Mark Agreement
\nshall contain such other terms and conditions as the parties may agree, which
\nterms and conditions shall be no less favorable to Spinco than the terms and
\nconditions of the Trademark Licensing Agreement are to the Company (taking into
\naccount those issues which may arise by virtue of the fact that the Chinese<\/p>\n
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\nMark is a translation of an Intellectual Property Right which will, following
\nthe Spin-Off, be owned by Spinco).<\/p>\n
(d) On or prior to the Effective Time, Parent or its
\nAffiliates shall use its reasonable best efforts to procure insurance coverage
\nhaving the terms and conditions set forth in Section 6.21 of the Parent
\nDisclosure Letter or insurance policies procured by Parent or its Affiliates to
\ncover similar risks (the “Coverage Policies”). The Company agrees that, in
\nconnection with any such Coverage Policies, the Company shall contribute or
\ncause to be contributed as a capital contribution to Aetna Retirement Services,
\nInc., cash in an amount equal to Parent’s actual cost of obtaining such
\nCoverage Policies, or a portion of such cost not to exceed $30 million, or in
\nthe event Parent notifies the Company that such Coverage Policies are
\nunavailable on commercially reasonable terms and conditions, $30 million, and
\nthe amount of any such contribution shall not increase the Net Capital
\nContribution Amount.<\/p>\n
(e) Prior to the Effective Time, the Company shall contribute,
\nor cause to be contributed, to the capital of Aetna Retirement Services, Inc. an
\namount equal to $3.97 million.<\/p>\n
6.22 Headquarters and Related Matters. Parent agrees to cause
\nthe Surviving Corporation to maintain the principal corporate offices of the
\nCompany’s qualified plan operations in the city of Hartford, in the State of
\nConnecticut for at least three (3) years following the Effective Time and Parent
\nintends to cause the Company and its Subsidiaries to maintain employment levels
\nin and around the city of Hartford at substantially current levels, less normal
\nattrition.<\/p>\n
6.23 Asia. Parent agrees that for one year from the Effective
\nTime, unless there is a material change in circumstances at ING and its
\nSubsidiaries, Parent shall not permit the Company and its Subsidiaries to sell
\nthe interests of Aetna International, Inc. in Taiwan, Hong Kong and Malaysia;
\nprovided that the foregoing shall not limit the right of Parent to sell minority
\ninterests in such Subsidiaries.
\n 6.24 Confidentiality. The parties hereby acknowledge and agree
\nthat the provisions of the Confidentiality Agreement (as defined below) shall
\napply with respect to all information provided hereunder to Parent or any of its
\nAffiliates or Representatives (as such term is defined in the Confidentiality
\nAgreement).<\/p>\n
ARTICLE VII<\/p>\n
Conditions<\/p>\n
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\n 68
\n 7.1 Conditions to Each Party’s Obligation to Effect the
\nMerger. The respective obligation of each party to effect the Merger is subject
\nto the satisfaction or waiver at or prior to the Effective Time of each of the
\nfollowing conditions:<\/p>\n
(a) Shareholder Approval. This Agreement and the transactions
\ncontemplated hereby shall have been duly approved by holders of shares of Common
\nStock constituting the Company Requisite Vote in accordance with applicable law
\nand the certificate and by-laws of the Company.<\/p>\n
(b) Regulatory Consents. (i) The waiting period applicable to
\nthe consummation of the Merger under the HSR Act and applicable Insurance Laws
\nshall have expired or been terminated and (ii) other than the filing provided
\nfor in Section 1.4 and filings, if any, required under the environmental
\ntransfer acts of the states of New Jersey and Connecticut, all notices, reports
\nand other filings required to be made prior to the Effective Time by Spinco, the
\nCompany or Parent or any of their respective Subsidiaries or Joint Ventures
\nwith, and all consents, registrations, approvals, permits and authorizations
\nrequired to be obtained prior to the Effective Time by Spinco, the Company or
\nParent or any of their respective Subsidiaries or Joint Ventures from, any
\nGovernmental Entity in connection with the execution and delivery of the
\nTransaction Agreements and the consummation of the Merger and the other
\ntransactions contemplated hereby and thereby by Spinco, the Company, Parent and
\nMerger Sub shall have been made or obtained (as the case may be), other than (in
\nthe case of jurisdictions other than the United States, the Netherlands, the
\nPeople’s Republic of China, Hong Kong, Mexico, Poland, Malaysia and Taiwan)
\nthose the failure of which to make or obtain are not, individually or in the
\naggregate, reasonably likely (as compared to the situation in which they are
\nmade or obtained and taking into account all possible consequences to Parent and
\nits Subsidiaries, Spinco and its Subsidiaries and the Company and its
\nSubsidiaries and Joint Ventures of consummating the transactions contemplated by
\nthe Transaction Agreements without making or obtaining them) (A) to be material
\nto the Company and its Subsidiaries and Joint Ventures, taken as a whole, (B) to
\nbe material to Parent and its Subsidiaries, taken as a whole, (C) to materially
\nand adversely impact the reasonably anticipated economic and business benefits
\nto Parent and its Subsidiaries of the transactions contemplated hereby, (D) to
\nresult in criminal liability or a more than de minimis civil fine or other
\npenalty against Parent or any of its Affiliates, joint ventures or employees or
\nagainst the Company or any of its Affiliates, Joint Ventures or employees or (E)
\nto result in Parent and its Subsidiaries and joint ventures being prohibited
\nfrom conducting, or materially limited in their ability to conduct, business in
\nany jurisdiction (collectively, “Governmental Consents”).<\/p>\n
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\n 69
\n (c) Litigation. (i) No court or Governmental Entity of
\ncompetent jurisdiction shall have enacted, issued, promulgated, enforced or
\nentered any Law (including any Insurance Law) (whether temporary, preliminary or
\npermanent) (collectively, an “Order”) that is in effect and restrains, enjoins
\nor otherwise prohibits consummation of the Spin-Off or the Merger.<\/p>\n
(ii) No Governmental Entity shall have instituted or
\nthreatened to institute any proceeding that seeks such an Order.<\/p>\n
(d) Spin-Off. The Spin-Off shall have been consummated in
\naccordance with the terms and subject to the conditions set forth in Section
\n3.02 of the Distribution Agreement.<\/p>\n
7.2 Conditions to Obligations of Parent and Merger Sub. The
\nobligations of Parent and Merger Sub to effect the Merger are also subject to
\nthe satisfaction or waiver by Parent at or prior to the Effective Time of the
\nfollowing conditions:<\/p>\n
(a) Representations and Warranties. (i) The representations
\nand warranties of the Company set forth in this Agreement which are qualified by
\n“Company Material Adverse Effect” shall each be true and correct as so qualified
\nas of the date of this Agreement and as of the Closing Date as though made on
\nand as of the Closing Date (except to the extent any such representation or
\nwarranty expressly speaks as of an earlier date), (ii) the representations and
\nwarranties of the Company set forth in Sections 5.1(a)(i) or (ii), 5.1(b),
\n5.1(c), 5.1(j), 5.1(p) and 5.1(q) of this Agreement which are not qualified by
\n“Company Material Adverse Effect” shall each be true and correct in all material
\nrespects as of the date of this Agreement and as of the Closing Date as though
\nmade on and as of the Closing Date (except to the extent any such representation
\nor warranty expressly speaks as of an earlier date) and (iii) the
\nrepresentations and warranties of the Company set forth in this Agreement other
\nthan those contemplated by clauses (i) and (ii) hereof (without giving effect to
\nany qualifications as to “materiality” or other similar qualifications) shall be
\ntrue and correct as of the date of this Agreement and as of the Closing Date as
\nthough made on and as of the Closing Date (except to the extent any such
\nrepresentation or warranty expressly speaks as of an earlier date), except where
\nthe failure of such representations and warranties to be true and correct
\n(without giving effect to any qualifications as to “materiality” or other
\nsimilar qualifications) would not be, individually or in the aggregate,
\nreasonably likely to have a Company Material Adverse Effect. Parent shall have
\nreceived a certificate signed on behalf of the Company by an executive officer
\nof the Company to the foregoing effect.<\/p>\n
(b) Performance of Obligations of the Company. Each of Spinco
\nand the Company shall have performed in all material respects all obligations
\nrequired to be<\/p>\n
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\n 70
\nperformed by it under the Transaction Agreements at or prior to the Closing
\nDate, and Parent shall have received a certificate signed on behalf of the
\nCompany by an executive officer of the Company to such effect.<\/p>\n
(c) Consents Under Agreements. The Company shall have
\nobtained the consent or approval of each Person whose consent or approval shall
\nbe required in order to consummate the transactions contemplated by the
\nTransaction Agreements under any Contract to which Spinco or any of its
\nSubsidiaries or the Company or any of its Subsidiaries, Joint Ventures or joint
\nventures is a party and conduct the businesses of the Company and its
\nSubsidiaries, Joint Ventures and joint ventures substantially as presently
\nconducted, except those for which the failure to obtain such consent or
\napproval is not, individually or in the aggregate, reasonably likely to have a
\nCompany Material Adverse Effect or is not reasonably likely to prevent,
\nmaterially delay or materially impair the ability of Spinco or the Company to
\nconsummate the transactions contemplated by the Transaction Agreements and no
\nsuch consent or approval, and, except as otherwise agreed in writing pursuant
\nto this Agreement, no Governmental Consent shall require ING to (i) sell or
\nhold separate and agree to sell, divest or to discontinue to or limit, before
\nor after the Effective Time, any assets, businesses, or interest in any assets
\nor businesses of Parent, the Company or any of their respective Affiliates,
\nJoint Ventures or joint ventures (or to consent to any sale, or agreement to
\nsell, or discontinuance or limitation by Parent or the Company, as the case may
\nbe, of any of its assets or businesses) or (ii) agree to any conditions
\nrelating to, or changes or restriction in, the operations of any such asset or
\nbusinesses which, in either the case of clause (i) or (ii), is reasonably
\nlikely to have a material adverse effect on the financial condition,
\nproperties, business or annual results of operations of the Company and its
\nSubsidiaries, Joint Ventures and joint ventures, taken as a whole, or a
\nmaterial adverse effect on the financial condition, properties, business or
\nannual results of operations of ING and its Subsidiaries, taken as a whole.
\nNotwithstanding the foregoing, Parent and Merger Sub agree that the failure to
\nobtain any required consents or approvals as to which the Parent has actual
\nknowledge (as determined at the time and as set forth in Section 5.2(d)(iii))
\nshall not give rise to a failure of the condition set forth in this Section
\n7.2(c) to be satisfied.<\/p>\n
(d) Client Approvals. The approvals contemplated in Section
\n6.14 shall have been obtained for Fund Clients representing at least 85% of the
\ntotal assets under management of Fund Clients as of the date hereof. “Total
\nassets under management” means the aggregate of the net assets of the open-end
\nand closed-end Fund Clients, as adjusted to eliminate increases or decreases
\nattributable exclusively to positive or negative changes in the market value of
\nportfolio assets as of the date hereof.<\/p>\n
(e) Legal Opinions. Parent shall have received an opinion or
\nopinions of counsel to the Company dated the Closing Date, addressing the legal
\nmatters set forth in Section 7.2(e) of the Company Disclosure Letter.<\/p>\n
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\n 71<\/p>\n
(f) Solvency Opinions. The Parent and the Company shall have
\nreceived, each as an addressee thereof, copies of the “solvency opinions”
\ndelivered in connection with the Spin-Off.<\/p>\n
(g) Spinco Debt Ratings. (i) At the Effective Time, Spinco
\nshall have a post-Spin-Off investment grade debt rating of at least BBB from
\nStandard & Poor’s Corporation or Baa2 from Moody’s Investors Services, Inc. as
\nto long-term senior unsecured debt (or the equivalent for issuers which do not
\nhave long-term senior unsecured debt outstanding) and (ii) the Company shall
\nhave delivered written evidence, dated as of the Closing Date, from such rating
\nagency evidencing such rating. For the avoidance of doubt, the parties hereto
\nacknowledge and agree that possession of one such rating shall satisfy this
\ncondition.<\/p>\n
7.3 Conditions to Obligation of the Company. The obligation of
\nthe Company to effect the Merger is also subject to the satisfaction or waiver
\nby the Company at or prior to the Effective Time of the following conditions:<\/p>\n
(a) Representations and Warranties. (i) The representations
\nand warranties of ING, Parent and Merger Sub set forth in this Agreement which
\nare qualified by “Parent Material Adverse Effect” shall each be true and correct
\nas so qualified as of the date of this Agreement and as of the Closing Date as
\nthough made on and as of the Closing Date (except to the extent any such
\nrepresentation or warranty expressly speaks as of an earlier date), (ii) the
\nrepresentations and warranties of ING, Parent and Merger Sub set forth in
\nSection 5.2(a), 5.2(b), 5.2(c) and 5.2(f) of this Agreement which are not
\nqualified by “Parent Material Adverse Effect” shall each be true and correct in
\nall material respects as of the date of this Agreement and as of the Closing
\nDate as though made on and as of the Closing Date (except to the extent any such
\nrepresentation or warranty expressly speaks as of an earlier date), and (iii)
\nthe representations and warranties of ING, Parent and Merger Sub set forth in
\nthis Agreement other than those contemplated by clauses (i) and (ii) hereof
\n(without giving effect to any qualifications as to “materiality” or other
\nsimilar qualifications) shall be true and correct as of the date of this
\nAgreement and as of the Closing Date as though made on and as of the Closing
\nDate (except to the extent any such representation or warranty expressly speaks
\nas of an earlier date), except where the failure of such representations and
\nwarranties to be true and correct (without giving effect to any qualifications
\nas to “materiality” or other similar qualifications) would not be, individually
\nor in the aggregate, reasonably likely to have a Parent Material Adverse Effect.<\/p>\n
(b) Performance of Obligations of ING, Parent and Merger Sub.
\nEach of ING, Parent and Merger Sub shall have performed in all material respects
\nall obligations required to be performed by it under this Agreement at or prior
\nto the Closing<\/p>\n
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\n 72
\nDate, and the Company shall have received a certificate signed on
\nbehalf of ING, Parent and Merger Sub by authorized officers of ING and Parent to
\nsuch effect.<\/p>\n
(c) Consents Under Agreements. ING shall have obtained the
\nconsent or approval of each Person whose consent or approval shall be required
\nin order to consummate the transactions contemplated by this Agreement under
\nany Contract to which ING or any of its Subsidiaries is a party, except those
\nfor which failure to obtain such consents and approvals, individually or in the
\naggregate, is not reasonably likely to have a Parent Material Adverse Effect
\nand no Governmental Approvals required to be obtained from any Governmental
\nEntity by the Company or Spinco or any of Spinco’s Subsidiaries in connection
\nwith the consummation of the Spin-Off shall be subject to terms or conditions
\nreasonably likely to have, individually or in the aggregate, a material adverse
\neffect on the financial condition, properties, business or annual results of
\noperations of Spinco and its Subsidiaries, taken as a whole.<\/p>\n
(d) Guarantee of Company Debt. ING shall have entered into the
\nsupplemental indentures required by Section 6.19 of this Agreement.<\/p>\n
ARTICLE VIII<\/p>\n
Termination<\/p>\n
8.1 Termination by Mutual Consent. This Agreement may be
\nterminated and the Merger may be abandoned at any time prior to the Effective
\nTime, whether before or after the approval by holders of shares of Common Stock
\nof the Company referred to in Section 7.1(a), by mutual written consent of the
\nCompany and Parent by action of their respective boards of directors.<\/p>\n
8.2 Termination by Either Parent or the Company. This
\nAgreement may be terminated and the Merger may be abandoned at any time prior to
\nthe Effective Time by action of the board of directors of either the Company or
\nParent (and written notice to the other party) if (a) the Merger shall not have
\nbeen consummated by August 31, 2001 whether such date is before or after the
\ndate of approval by the holders of Shares of the Company (the “Termination
\nDate”); provided, however, that the Termination Date shall be automatically
\nextended for two (2) months (the “Extended Date”), if, on August 31, 2001: (i)
\nany of the Governmental Consents described in 7.1(b) have not been obtained or
\nwaived, (ii) each of the other conditions to the consummation of the Merger set
\nforth in Article VII has been satisfied or waived or remains capable of
\nsatisfaction, and (iii) any Governmental Consent that has not yet been obtained
\nis being pursued diligently and in good faith; (b) the approval of the holders
\nof shares of Common Stock required by Section 7.1(a) shall not have been
\nobtained at a meeting duly convened therefor or at any<\/p>\n
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\n 73<\/p>\n
adjournment or postponement thereof; (c) any Order permanently restraining,
\nenjoining or otherwise prohibiting consummation of the Merger shall become
\nfinal and non-appealable (whether before or after the approval by the
\nshareholders of the Company); or (d) any Law is in effect or is adopted or
\nissued which has the effect of prohibiting the Spin-Off or the Merger; provided
\nfurther, however, that the right to terminate this Agreement pursuant to clause
\n(a) above shall not be available to any party that has breached in any material
\nrespect its obligations under this Agreement in any manner that shall have
\nproximately contributed to the occurrence of the failure of the Merger to be
\nconsummated.<\/p>\n
8.3 Termination by the Company. This Agreement may be
\nterminated and the Merger may be abandoned at any time prior to the Effective
\nTime if: (a) whether before or after the approval of the holders of shares of
\nCommon Stock referred to in Section 7.1(a), by action of the board of directors
\nof the Company and written notice to Parent, there has been a material breach by
\nParent or Merger Sub of any representation, warranty, covenant or agreement
\ncontained in this Agreement that is not curable and such breach would give rise
\nto a failure of the condition set forth in Section 7.3(a) or Section 7.3(b); or
\n(b) in accordance with, and subject to the terms and conditions of, Section
\n6.2(b).<\/p>\n
8.4 Termination by Parent. This Agreement may be terminated
\nand the Merger may be abandoned at any time prior to the Effective Time by
\naction of the board of directors of Parent and written notice to the Company if:
\n(a) the board of directors of the Company shall have withdrawn or adversely
\nmodified its adoption or recommendation of this Agreement or the transactions
\ncontemplated hereby or shall have approved or recommended an Acquisition
\nProposal; or (b) there has been a material breach by the Company of any
\nrepresentation, warranty, covenant or agreement contained in this Agreement that
\nis not curable and such breach would give rise to a failure of the condition set
\nforth in Section 7.2(a) or Section 7.2(b); or (c) Shares or other securities or
\nassets are issued or delivered pursuant to the terms of the Rights Agreement
\nupon or following the occurrence of a Section 13 Event (as defined in the Rights
\nAgreement) or an Acquiring Person (as defined in the Rights Agreement) becoming
\nsuch.<\/p>\n
8.5 Effect of Termination and Abandonment. (a) In the event of
\ntermination of this Agreement and the abandonment of the Merger pursuant to this
\nArticle VIII, this Agreement (other than as set forth in Section 9.1) shall
\nbecome void and of no effect with no liability on the part of any party hereto
\n(or of any of its directors, officers, employees, agents, legal and financial
\nadvisors or other representatives); provided, however, that no such termination
\nshall relieve any party hereto of any liability or damages resulting from any
\ndeliberate breach of this Agreement occurring prior to such termination. The
\nparties further agree that if the Company is or becomes obligated to pay a
\ntermination fee pursuant to Section 8.5(b), the right of Parent to receive such
\ntermination fee shall be the sole remedy for damages of Parent with respect to
\nthe facts<\/p>\n
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\n 74<\/p>\n
and circumstances giving rise to such payment obligation except for
\nany deliberate breach of this Agreement. No party may assert a claim for damages
\nfor any inaccuracy of any representation or warranty contained in this Agreement
\n(whether by direct claim or counterclaim) except in connection with the
\ntermination of this Agreement.<\/p>\n
(b) In the event that (i) this Agreement is terminated by
\nParent pursuant to Section 8.4(a), or (ii) this Agreement is terminated by the
\nCompany pursuant to Section 8.3(b), then the Company shall, promptly, but in no
\nevent later than one business day after the date of such termination, pay Parent
\na termination fee of one hundred sixty-five million dollars ($165,000,000) (the
\n“Termination Fee”) and shall promptly, but in no event later than one business
\nday after being notified of the amount of all documented out-of-pocket charges
\nand expenses incurred by Parent or Merger Sub in connection with this Agreement
\nand the transactions contemplated by this Agreement up to a maximum of ten
\nmillion dollars ($10,000,000) (“Out-of-Pocket Expenses”), pay to Parent an
\namount equal to the Out-of-Pocket Expenses, in each case payable by wire
\ntransfer of same day funds. In the event that (i) this Agreement is terminated
\nby Parent or the Company pursuant to Section 8.2(b) or (ii) this Agreement is
\nterminated by Parent pursuant to Section 8.4(b), then (A) the Company shall
\npromptly, but in no event later than one business day after being notified of
\nthe Out-of-Pocket Expenses by Parent, pay to Parent an amount equal to the
\nOut-of-Pocket Expenses, payable by wire transfer of same day funds and (B) if,
\nin the case of clause (i), a bona fide Acquisition Proposal shall have become
\npublic or any Person shall have publicly announced an intention (whether or not
\nconditional) to make a proposal or offer relating to an Acquisition Proposal
\nprior to the date of the Shareholders Meeting or if, in the case of clause (ii),
\nthis Agreement is terminated by Parent pursuant to Section 8.4(b) as a result of
\na deliberate breach by the Company and a bona fide Acquisition Proposal shall
\nhave been made to the Company or become public or any Person shall have
\nannounced to the Company or publicly announced an intention (whether or not
\nconditional) to make a proposal or offer relating to an Acquisition Proposal
\nprior to the date of termination, and in the case of each of clause (i) and
\nclause (ii), within fifteen (15) months from the date of termination, the
\nCompany executes and delivers a definitive agreement with respect to any
\nAcquisition Proposal or an Acquisition Proposal is consummated (it being
\nunderstood that in the event the board of directors of the Company recommends
\nthe acceptance by the shareholders of the Company of a third-party tender offer
\nor exchange offer for at least a majority of the outstanding Shares, such
\nrecommendation shall be treated as though an agreement with respect to an
\nAcquisition Proposal had been executed), the Company shall promptly, but in no
\nevent later than one business day after the date of such execution and delivery,
\nor consummation, as the case may be, pay Parent the Termination Fee. The Company
\nacknowledges that the agreements contained in this Section 8.5(b) are an
\nintegral part of the transactions contemplated by this Agreement, and that,
\nwithout these agreements, Parent and Merger Sub would not enter into this
\nAgreement; accordingly, if the Company fails to promptly pay the amount due
\npursuant to this Section 8.5(b), and, in order to<\/p>\n
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\n 75<\/p>\n
obtain such payment, Parent or Merger Sub commences a suit which results in a
\njudgment against the Company for the fee set forth in this paragraph (b), the
\nCompany shall pay to Parent or Merger Sub its costs and expenses (including
\nattorneys’ fees) in connection with such suit, together with interest on the
\namount of the fee at the prime rate of Citibank N.A. in effect on the date such
\npayment was required to be made.<\/p>\n
ARTICLE IX<\/p>\n
Miscellaneous and General<\/p>\n
9.1 Survival. This Article IX and the agreements of the
\nCompany, ING, Parent and Merger Sub contained in Article IV, Sections 6.7 (Stock
\nExchange), 6.11 (Expenses), 6.12 (Indemnification; Directors’ and Officers’
\nInsurance), 6.13(b) and (c) (Compliance with 1940 Act Section 15), 6.19 (Company
\nDebt), 6.22 (Headquarters and Related Matters), 6.23 (Asia) and 6.24
\n(Confidentiality) shall survive the consummation of the Merger. This Article IX,
\nthe agreements of the Company, Parent and Merger Sub contained in Section 6.11
\n(Expenses) and Section 8.5 (Effect of Termination and Abandonment) shall survive
\nthe termination of this Agreement. All other representations, warranties,
\ncovenants and agreements in this Agreement shall not survive the consummation of
\nthe Merger or the termination of this Agreement (it being understood that this
\nsentence shall not limit the rights of any party hereto under Section 8.5 of
\nthis Agreement).<\/p>\n
9.2 Modification or Amendment. (a) Subject to the provisions
\nof the applicable law, at any time prior to the Effective Time, the parties
\nhereto may modify or amend this Agreement, by written agreement executed and
\ndelivered by duly authorized officers of the respective parties.<\/p>\n
(b) Each of the parties hereto acknowledges and agrees that,
\nexcept as otherwise contemplated by the relevant agreement, the Company may
\namend or modify any Transaction Agreement (other than this Agreement) only with
\nthe written consent of Parent. Parent agrees that it will not withhold any such
\nconsent if such proposed amendment or modification would not reasonably be
\nexpected to adversely affect in any respect any of ING, Parent, the Company and
\nits Subsidiaries and their respective Affiliates, or prevent or materially delay
\nor impair the consummation of the transactions hereby.<\/p>\n
9.3 Waiver of Conditions. The conditions to each of the
\nparties’ obligations to consummate the Merger are for the sole benefit of such
\nparty and may be waived by such party in whole or in part to the extent
\npermitted by applicable law. No failure or delay by any party in exercising any
\nright, power or privilege hereunder shall<\/p>\n
-67-
\n 76<\/p>\n
operate as a waiver thereof nor shall any single or partial exercise thereof
\npreclude any other or further exercise thereof or the exercise of any other
\nright, power or privilege. The rights and remedies herein provided shall be
\ncumulative and not exclusive of any rights or remedies provided by law.<\/p>\n
9.4 Counterparts. This Agreement may be executed in any number
\nof counterparts, each such counterpart being deemed to be an original
\ninstrument, and all such counterparts shall together constitute the same
\nagreement.<\/p>\n
9.5 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (a) THIS
\nAGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
\nINTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
\nSTATE OF NEW YORK, EXCEPT WITH RESPECT TO PROVISIONS RELATING TO THE
\nIMPLEMENTATION OF THE MERGER THAT ARE REQUIRED BY CONNECTICUT LAW TO BE GOVERNED
\nBY THE LAW OF THE STATE OF CONNECTICUT, WHICH PROVISIONS SHALL BE GOVERNED BY
\nCONNECTICUT LAW, IN EACH CASE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
\nTHEREOF. The parties hereby irrevocably submit to the jurisdiction of the United
\nStates District Court for the Southern District of New York or any other New
\nYork State court sitting in New York City, Borough of Manhattan, solely in
\nrespect of the interpretation and enforcement of the provisions of the
\nTransaction Agreements and of any documents referred to in the Transaction
\nAgreements, and in respect of the transactions contemplated hereby and thereby,
\nand hereby waive, and agree not to assert, as a defense in any action, suit or
\nproceeding for the interpretation or enforcement hereof or of any such document,
\nthat it is not subject thereto or that such action, suit or proceeding may not
\nbe brought or is not maintainable in said courts or that the venue thereof may
\nnot be appropriate or that any Transaction Agreement or any such document may
\nnot be enforced in or by such courts, and the parties hereto irrevocably agree
\nthat all claims with respect to such action or proceeding shall be heard and
\ndetermined in such court. The parties hereby consent to and grant any such court
\njurisdiction over the person of such parties and over the subject matter of such
\ndispute and agree that mailing of process or other papers in connection with any
\nsuch action or proceeding in the manner provided in Section 9.6 or in such other
\nmanner as may be permitted by law shall be valid and sufficient service thereof.<\/p>\n
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
\nWHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
\nDIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
\nUNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
\nRESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING<\/p>\n
-68-
\n 77<\/p>\n
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH
\nPARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY
\nOF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
\nPARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
\nWAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS
\nWAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS
\nBEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
\nWAIVERS AND CERTIFICATIONS IN THIS SECTION 9.5.<\/p>\n
9.6 Notices. Any notice, request, instruction or other
\ndocument to be given hereunder by any party to the others shall be in writing
\nand delivered personally or sent by registered or certified mail, postage
\nprepaid, or by facsimile:<\/p>\n
if to ING, Parent or Merger Sub<\/p>\n
ING America Insurance Holdings, Inc.
\n in c\/o ING North America Insurance Corp.
\n 5780 Powers Ferry Road, NW
\n Atlanta, Georgia 30327-4390
\n Attention: Michael W. Cunningham
\n Executive Vice President & Chief Financial Officer
\n Fax: 770-980-3303<\/p>\n
B. Scott Burton
\n Senior Vice President & Chief Counsel
\n Fax: 770-850-7660<\/p>\n
-69-
\n 78
\n with copies to:<\/p>\n
ING Groep N.V.
\n Strawinskylaan 2631, 1077 ZZ Amsterdam,
\n P.O. Box 810,
\n 1000 Av. Amsterdam, the Netherlands
\n Attention: Fred Hubbell
\n Executive Board Member
\n Fax: +31-20-541-5402<\/p>\n
Diederik van Wassenaer
\n General Counsel
\n Fax: +31-20-541-8723<\/p>\n
and<\/p>\n
Sullivan & Cromwell
\n 125 Broad Street
\n New York, New York 10004
\n Attention: Joseph B. Frumkin, Esq.,
\n William D. Torchiana, Esq.
\n Fax: 212-558-3588<\/p>\n
if to the Company<\/p>\n
Aetna Inc.
\n 151 Farmington Avenue
\n Hartford, CT 06156-7505
\n Attention: L. Edward Shaw, Jr.
\n General Counsel
\n William J. Casazza
\n Corporate Secretary
\n Fax: 860-273-8340<\/p>\n
-70-
\n 79
\n with a copy to:<\/p>\n
Davis Polk & Wardwell
\n 450 Lexington Avenue
\n New York, New York 10017
\n Attention: Lewis B. Kaden, Esq.
\n David L. Caplan, Esq.
\n Fax: 212-450-4800<\/p>\n
or to such other persons or addresses as may be designated in writing by the
\nparty to receive such notice as provided above.<\/p>\n
9.7 Entire Agreement; No Other Representations. This Agreement
\n(including, any annexes, exhibits or schedules hereto or thereto and other
\ndocuments executed in connection herewith), the Company Disclosure Letter and
\nthe Confidentiality Agreement, dated May 25, 2000 (the “Confidentiality
\nAgreement”), between Parent and the Company constitute the entire agreement, and
\nsupersede all other prior agreements, understandings, representations and
\nwarranties, both written and oral, among the parties, with respect to the
\nsubject matter hereof and thereof.<\/p>\n
9.8 No Third Party Beneficiaries. Except as provided in
\nSection 6.12 (Indemnification; Directors’ and Officers’ Insurance), this
\nAgreement is not intended to confer upon any Person other than the parties
\nhereto any rights or remedies hereunder.<\/p>\n
9.9 Obligations of Parent and of the Company. Whenever this
\nAgreement requires a Subsidiary of Parent to take any action, such requirement
\nshall be deemed to include an undertaking on the part of Parent to cause such
\nSubsidiary to take such action. Whenever this Agreement requires a Subsidiary of
\nthe Company or Spinco to take any action, such requirement shall be deemed to
\ninclude an undertaking on the part of the Company to cause Spinco or such
\nSubsidiary to take such action and, after the Effective Time, on the part of the
\nSurviving Corporation to cause such Subsidiary to take such action. Parent
\nacknowledges that neither the Company nor any of its Subsidiaries possesses the
\npower to control the Joint Ventures. Accordingly, whenever this Agreement
\nrequires, or limits or restricts the ability of, the Company or any of its
\nSubsidiaries to take any action with respect to a Joint Venture or joint
\nventure, the Company and its Subsidiaries shall be deemed to have fully
\nsatisfied all of such obligations under this Agreement with respect to such
\nJoint Venture or joint venture if it has used its reasonable best efforts to
\ncause the Joint Venture or joint venture, as the case may be, to comply with
\nsuch obligations under this Agreement; provided, however, that the foregoing
\nshall not require the Company, its Subsidiaries, Joint Ventures or joint
\nventures to (i) take or fail to take any action that would reasonably be
\nexpected to adversely affect in any respect any of Spinco or any of its
\nSubsidiaries or prevent or materially delay or impair the consummation of the
\nTransactions or (ii) pay any money to any third party in connection with
\ncarrying out its obligations under this sentence.<\/p>\n
9.10 Transfer Taxes. All transfer, documentary, sales, use,
\nstamp, registration and other such Taxes and fees (including penalties and
\ninterest) incurred in connection with the Merger and the Spin-Off shall be paid
\nin accordance with the Distribution Agreement.<\/p>\n
9.11 Severability. The provisions of this Agreement shall be
\ndeemed severable and the invalidity or unenforceability of any provision shall
\nnot affect the validity or enforceability or the other provisions hereof. If any
\nprovision of this Agreement, or the application thereof to any Person or any
\ncircumstance, is invalid or unenforceable, (a) a suitable and equitable
\nprovision shall be substituted therefor in order to carry out, so far as may be
\nvalid and enforceable, the intent and purpose of such invalid or unenforceable
\nprovision and (b) the remainder of this Agreement and the application of such
\nprovision to other Persons or circumstances shall not be affected by such
\ninvalidity or unenforceability, nor shall such invalidity or unenforceability
\naffect the validity or enforceability of such provision, or the application
\nthereof, in any other jurisdiction.<\/p>\n
-71-
\n 80
\n 9.12 Interpretation. The table of contents and headings herein
\nare for convenience of reference only, do not constitute part of this Agreement
\nand shall not be deemed to limit or otherwise affect any of the provisions
\nhereof. Where a reference in this Agreement is made to a Section or Annex, such
\nreference shall be to a Section of or Annex to this Agreement unless otherwise
\nindicated. Whenever the words “include”, “includes” or “including” are used in
\nthis Agreement, they shall be deemed to be followed by the words “without
\nlimitation”. Unless the context otherwise requires, the use of the singular
\nshall include the plural, the use of the masculine shall include the feminine,
\nand vice versa. As used in this Agreement, the antecedent of any personal
\npronoun shall be deemed to be only the next preceding proper noun or nouns, as
\nappropriate for such pronoun. As used in this Agreement, any reference to any
\nlaw, rule or regulation shall be deemed to include a reference to any
\namendments, revisions or successor provisions to such law, rule or regulation.
\nExcept as otherwise explicitly provided herein, all references in this
\nAgreement to (i) the “Company,” “ING” or “Parent” shall be deemed to be a
\nreference only to such company and not to any direct or indirect subsidiaries
\nof such company or (ii) to documents or other materials having been “made
\navailable” to Parent shall be deemed to be a reference to a document or other
\nmaterials made available to Parent in the Company’s data room in Hartford,
\nConnecticut before June 9, 2000 or was actually delivered to an employee or
\nRepresentative of Parent.<\/p>\n
9.13 Assignment. This Agreement shall not be assignable by
\noperation of law or otherwise; provided, however, that Parent may designate, by
\nwritten notice to the Company, another wholly owned direct or indirect
\nsubsidiary to be a Constituent<\/p>\n
-72-
\n 81
\nCorporation in lieu of Merger Sub, in which event all references herein to
\nMerger Sub shall be deemed references to such other subsidiary, except that all
\nrepresentations and warranties made herein with respect to Merger Sub as of the
\ndate of this Agreement shall be deemed representations and warranties made with
\nrespect to such other subsidiary as of the date of such designation.<\/p>\n
9.14 Specific Performance. The parties hereto agree that
\nirreparable damage would occur if any provision of this Agreement were not
\nperformed in accordance with the terms hereof and that the parties shall be
\nentitled to an injunction or injunctions to prevent breaches of this Agreement
\nor to enforce specifically the performance of the terms and provisions hereof in
\nany federal court located in the State of New York, in addition to any other
\nremedy to which they are entitled at law or in equity.<\/p>\n
IN WITNESS WHEREOF, this Agreement has been duly executed and
\ndelivered by the duly authorized officers of the parties hereto as of the date
\nfirst written above.<\/p>\n
AETNA INC.<\/p>\n
By: \/s\/ ALFRED P. QUIRK, JR.
\n ————————-
\n Name: Alfred P. Quirk, Jr.
\n Title: Vice President-Finance and Treasurer<\/p>\n
ING AMERICA INSURANCE HOLDINGS, INC.<\/p>\n
By: \/s\/ MICHAEL W. CUNNINGHAM
\n ————————-
\n Name: Michael W. Cunningham
\n Title: Executive Vice President and
\n Chief Financial Officer<\/p>\n
ANB ACQUISITION CORP.<\/p>\n
By: \/s\/ MICHAEL W. CUNNINGHAM
\n —————————
\n Name: Michael W. Cunningham
\n Title: President<\/p>\n
ING GROEP N.V.
\n (solely for the purpose of Sections 4.2,
\n 4.3, 5.2, 6.3, 6.5, 6.8, 6.12, 6.18,
\n 6.19, 6.20 and Article IX)<\/p>\n
By: \/s\/ MICHAEL W. CUNNINGHAM
\n —————————
\n Name: Michael W. Cunningham
\n Title: Attorney-in-Fact<\/p>\n
-73-<\/p>\n
82
\n ANNEX A<\/p>\n
FORM OF<\/p>\n
DISTRIBUTION AGREEMENT<\/p>\n
between<\/p>\n
Aetna Inc.<\/p>\n
and<\/p>\n
Aetna U.S. Healthcare Inc.<\/p>\n
———————<\/p>\n
DATED AS OF [ ], 2000<\/p>\n
83<\/p>\n
TABLE OF CONTENTS<\/p>\n
\n\n PAGE
\n —-
\n
\n ARTICLE 1
\n DEFINITIONS<\/p>\nSECTION 1.01. Definitions………………………………………………2 <\/p>\n
ARTICLE 2
\n CONTRIBUTIONS AND ASSUMPTION OF LIABILITIES <\/p>\n
SECTION 2.01. Contribution of Contributed Subsidiaries…………………….15
\nSECTION 2.02. Transfers of Certain Assets to Spinco Group………………….15
\nSECTION 2.03. Transfers of Certain Assets to Aetna Group…………………..15
\nSECTION 2.04. Assumption of Certain Liabilities…………………………..16
\nSECTION 2.05. Agreement Relating to Consents Necessary to Transfer Assets……16<\/p>\n
ARTICLE 3
\n THE DISTRIBUTION<\/p>\n
SECTION 3.01. Cooperation Prior to the Distribution……………………….17
\nSECTION 3.02. Aetna Board Action; Conditions Precedent to the Distribution…..18
\nSECTION 3.03. The Distribution………………………………………….19
\nSECTION 3.04. Stock Dividend……………………………………………19
\nSECTION 3.05. Fractional Shares…………………………………………19<\/p>\n
ARTICLE 4
\n INDEMNIFICATION AND OTHER MATTERS<\/p>\n
SECTION 4.01. Spinco Indemnification of Aetna Group……………………….20
\nSECTION 4.02. Aetna Indemnification of Spinco Group……………………….20
\nSECTION 4.03. Insurance and Third Party Obligations; Limitation on Liability…21
\nSECTION 4.04. Notice and Payment of Claims……………………………….22
\nSECTION 4.05. Notice and Defense of Third-Party Claims…………………….22
\nSECTION 4.06. Non-Exclusivity of Remedies………………………………..25
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n
84<\/p>\n
ARTICLE 5
\n EMPLOYEE MATTERS AND TRANSITION SERVICES<\/p>\n
\n Page
\n ——
\n
\nSECTION 5.01. Employee Matters Generally……………………………………25<\/p>\nSECTION 5.02. Transition Services Matters Generally………………………….25<\/p>\n
ARTICLE 6
\n ACCESS TO INFORMATION<\/p>\n
SECTION 6.01. Provision of Corporate Records………………………………..25
\nSECTION 6.02. Access to Information………………………………………..26
\nSECTION 6.03. Litigation Cooperation……………………………………….26
\nSECTION 6.04. Reimbursement……………………………………………….27
\nSECTION 6.05. Retention of Records…………………………………………27
\nSECTION 6.06. Confidentiality……………………………………………..27
\nSECTION 6.07. Preservation of Privilege…………………………………….28
\nSECTION 6.08. Inapplicability of Article 6 to Tax Matters…………………….29<\/p>\n
ARTICLE 7
\n CERTAIN OTHER AGREEMENTS<\/p>\n
SECTION 7.01. Intercompany Accounts………………………………………..29
\nSECTION 7.02. Trademarks; Trade Names………………………………………30
\nSECTION 7.03. Further Assurances and Consents……………………………….31
\nSECTION 7.04. Noncompetition and Non-Solicitation……………………………31
\nSECTION 7.05. Third Party Beneficiaries…………………………………….32
\nSECTION 7.06. Intellectual Property Rights and Licenses………………………32
\nSECTION 7.07. Insurance…………………………………………………..32
\nSECTION 7.08. Prohibition on Certain Sales………………………………….34
\nSECTION 7.09. Brazilian Certificate of Foreign Capital Registration……………34<\/p>\n
ARTICLE 8
\n MISCELLANEOUS<\/p>\n
SECTION 8.01. Notices…………………………………………………….34
\nSECTION 8.02. Amendments; No Waivers……………………………………….36
\nSECTION 8.03. Expenses……………………………………………………36
\nSECTION 8.04. Successors and Assigns……………………………………….37
\nSECTION 8.05. Governing Law……………………………………………….37
\nSECTION 8.06. Counterparts; Effectiveness…………………………………..37
\nSECTION 8.07. Entire Agreement…………………………………………….37
\n<\/c><\/s><\/table>\n
85<\/p>\n
\n Page
\n ——
\n <\/p>\nSECTION 8.08. Tax Sharing Agreement; Set-Off; Payment of After-Tax Amounts
\n Certain Transfer Taxes……………………………………….37
\nSECTION 8.09. Jurisdiction………………………………………………..38
\nSECTION 8.10. Pre-Litigation Dispute Resolution……………………………..39
\nSECTION 8.11. Severability………………………………………………..39
\nSECTION 8.12. Survival……………………………………………………39
\nSECTION 8.13. Captions……………………………………………………39
\nSECTION 8.14. Specific Performance…………………………………………39
\nSchedule A — Spinco Assets – Contracts
\nSchedule B — Spinco Assets – Other Assets, Properties and Business
\nSchedule C — Spinco Group Liabilities
\nSchedule D — Spinco Intellectual Property Rights
\nSchedule E — Spinco Litigation
\nSchedule F — Aetna Assets – Contracts
\nSchedule G — Aetna Assets – Other Assets, Properties and Business
\nSchedule H — Aetna Group Liabilities
\nSchedule I — Aetna Intellectual Property Rights
\nSchedule 2.01 — Contribution of Contributed Subsidiaries
\nSchedule 7.01 — Existing Arrangements
\nSchedule 7.04(a) — Noncompetition
\nSchedule 7.07 — Group Policies
\nExhibit A — Employee Benefits Agreement
\nExhibit B — Term Sheet for Software Licensing Agreement
\nExhibit C — Tax Sharing Agreement
\nExhibit D — Term Sheet for Trademark Assignment Agreement
\nExhibit E — Term Sheet for Trademark Licensing Agreement
\nExhibit F — Term Sheet for Transition Services Agreement
\nExhibit G — Term Sheet for Lease Agreement
\nExhibit H — Term Sheet for CityPlace Agreement
\n<\/c><\/s><\/table>\n
86<\/p>\n
\n\n PAGE
\n —-
\n
\nSchedule A — Spinco Assets – Contracts
\nSchedule B — Spinco Assets – Other Assets, Properties and Business
\nSchedule C — Spinco Group Liabilities
\nSchedule D — Spinco Intellectual Property Rights
\nSchedule E — Spinco Litigation
\nSchedule F — Aetna Assets – Contracts
\nSchedule G — Aetna Assets – Other Assets, Properties and Business
\nSchedule H — Aetna Group Liabilities
\nSchedule I — Aetna Intellectual Property Rights
\nSchedule 2.01 — Contribution of Contributed Subsidiaries
\nSchedule 7.01 — Existing Arrangements
\nSchedule 7.04(a) — Noncompetition
\nSchedule 7.07 — Group Policies
\nExhibit A — Employee Benefits Agreement
\nExhibit B — Term Sheet for Software Licensing Agreement
\nExhibit C — Tax Sharing Agreement
\nExhibit D — Term Sheet for Trademark Assignment Agreement
\nExhibit E — Term Sheet for Trademark Licensing Agreement
\nExhibit F — Term Sheet for Transition Services Agreement
\nExhibit G — Term Sheet for Lease Agreement
\nExhibit H — Term Sheet for CityPlace Agreement
\n<\/c><\/s><\/caption>\n<\/table>\n iv<\/p>\n
87<\/p>\n
FORM OF DISTRIBUTION AGREEMENT<\/p>\n
DISTRIBUTION AGREEMENT dated as of [ ], 2000 (this “AGREEMENT”)
\nbetween Aetna Inc., a Connecticut corporation (“AETNA”), and Aetna U.S.
\nHealthcare Inc., a Pennsylvania corporation (“SPINCO”).<\/p>\n
W I T N E S S E T H:
\n – – – – – – – – – –<\/p>\n
WHEREAS, Spinco is presently a wholly-owned subsidiary of Aetna;<\/p>\n
WHEREAS, the Board of Directors of Aetna has determined that it is in
\nthe best interests of Aetna, its shareholders and Spinco that all outstanding
\nshares of Spinco Common Stock (as defined below) be distributed pro rata to
\nAetna’s shareholders (provided that all conditions precedent to the
\nDistribution have been satisfied) and that, pursuant to an agreement and plan
\nof restructuring and merger dated as of July 19, 2000 (“MERGER AGREEMENT”)
\namong Aetna, ING Groep N.V., a corporation organized under the laws of the
\nNetherlands (“ACQUIROR”), ING America Insurance Holdings, Inc., a Delaware
\ncorporation and an indirect wholly-owned subsidiary of Acquiror (“PARENT”), and
\nANB Acquisition Corp., a Connecticut corporation and a wholly-owned subsidiary
\nof Parent (“MERGER SUBSIDIARY”), Merger Subsidiary be merged with and into
\nAetna, as a result of which Aetna will become a wholly-owned subsidiary of
\nParent (the “MERGER”);<\/p>\n
WHEREAS, for United States federal income Tax (as defined below)
\npurposes, it is intended that the holders of common stock of Aetna be treated
\nas having received cash consideration from Parent and the Spinco Common Stock
\nin redemption and disposition of the outstanding Aetna Common Stock (as defined
\nbelow);<\/p>\n
WHEREAS, Aetna is concurrently herewith entering into, or proposes to
\nenter into prior to or on the Distribution Date (as defined below), the
\nAncillary Agreements (as defined below); and<\/p>\n
WHEREAS, the parties hereto desire to set forth herein the principal
\ncorporate transactions to be effected in connection with the Distribution and
\ncertain other matters relating to the relationship and the respective rights
\nand obligations of the parties following the Distribution.<\/p>\n
NOW, THEREFORE, the parties hereto agree as follows:<\/p>\n
88<\/p>\n
ARTICLE 1<\/p>\n
DEFINITIONS<\/p>\n
SECTION 1.1. Definitions. The following terms, as used herein, have
\nthe following meanings:<\/p>\n
“ACQUIROR” has the meaning set forth in the recitals.<\/p>\n
“ACTION” means any claim, suit, action, arbitration, inquiry,
\ninvestigation or other proceeding of any nature (whether criminal, civil,
\nlegislative, administrative, regulatory, prosecutorial or otherwise) by or
\nbefore any arbitrator or Governmental Entity or similar Person or body.<\/p>\n
“AELTUS NAME RIGHTS” means all of Aetna’s right, title and interest in
\nand use of the “Aeltus” name and any derivative thereof including, without
\nlimitation, all trademarks, service marks, trade dress, logos, domain names,
\ntrade names and corporate names (whether or not registered) in the United
\nStates and all other nations throughout the world, including all variations,
\nderivations, combinations, registrations and applications for registration of
\nthe foregoing and all goodwill associated therewith.<\/p>\n
“AETNA” has the meaning set forth in the recitals.<\/p>\n
“AETNA ASSETS” means all assets as reflected in the unaudited pro
\nforma consolidated balance sheet as of March 31, 2000 of Aetna and its
\nSubsidiaries set forth in Section 5.1(e)(iv) of the Company Disclosure Schedule
\naccompanying the Merger Agreement (except for those assets disposed of in
\naccordance with or expressly permitted by the Merger Agreement) together with
\nall other assets, leases, properties and businesses, of every kind and
\ndescription, wherever located, real, personal or mixed, tangible or intangible,
\nowned, held or used by (i) Aetna, Aetna Services or any member of the Spinco
\nGroup that relate primarily to the Aetna Business or (ii) any Aetna Subsidiary.
\nWithout limitation and for the avoidance of doubt, the following items are, and
\nshall be, “AETNA ASSETS” (and are not, and shall not be, Spinco Assets):<\/p>\n
(a) all rights of the Aetna Group (but excluding any and all rights
\nof the Spinco Group) under the Merger Agreement, the Confidentiality Agreement
\nand the Distribution Documents;<\/p>\n
(b) all Aetna Intellectual Property Rights;<\/p>\n
(c) all rights under the Contracts listed on Schedule F hereto;<\/p>\n
2<\/p>\n
89<\/p>\n
(d) the other assets, properties and business listed on Schedule G
\nhereto; and<\/p>\n
(e) all goodwill associated with the Aetna Business or the Aetna
\nAssets, together with the right to represent to third parties that Aetna Group
\nis the successor to the Aetna Business.<\/p>\n
“AETNA BENEFITS LIABILITIES” means the AI Assumed Liabilities as
\ndefined in the Employee Benefits Agreement.<\/p>\n
“AETNA BUSINESS” means the businesses and operations of the Aetna
\nSubsidiaries as conducted as of the date hereof.<\/p>\n
“AETNA CHINA NAME RIGHTS” shall have the meaning assigned to such term
\nin the Merger Agreement.<\/p>\n
“AETNA COMMON STOCK” means the common stock, par value $.01 per share,
\nof Aetna.<\/p>\n
“AETNA ENVIRONMENTAL LIABILITIES” means any and all Liabilities of or
\nrelating to (i) Aetna, Aetna Services or any member of the Spinco Group to the
\nextent arising from the conduct of, in connection with or relating to, the
\nAetna Business (as currently or previously conducted), or the ownership or use
\nof assets or property in connection therewith (including, without limitation,
\noffsite disposal), or (ii) any Aetna Subsidiary; which, in either case, arise
\nunder or relate to Environmental Laws, but shall exclude any such Liabilities
\nto the extent arising from the conduct of, in connection with or relating to
\nthe Spinco Assets or the Spinco Business.<\/p>\n
“AETNA GROUP” means Aetna, Aetna Services, the Aetna Subsidiaries and
\nall successors to each of those Persons.<\/p>\n
“AETNA GROUP LIABILITIES” means, except as otherwise specifically
\nprovided in the Merger Agreement or any Distribution Document, all of the
\nfollowing Liabilities (including Liabilities arising out of any litigation),
\nwhether arising before, at or after the Distribution Time: (i) all Liabilities
\nof or relating to Aetna, Aetna Services or any member of the Spinco Group to
\nthe extent arising from the conduct of, in connection with or relating to, the
\nAetna Business, or the ownership or use of assets or property in connection
\ntherewith, (ii) all Liabilities of or relating to any Aetna Subsidiary except
\nto the extent arising from the conduct of, in connection with or relating to
\nthe Spinco Assets or the Spinco Business or ownership or use thereof, (iii) the
\nLiabilities set forth on Schedule H hereto, (iv) the Company Debt, and (v) the
\nAetna Benefits Liabilities. Without<\/p>\n
3<\/p>\n
90<\/p>\n
limiting the generality of the foregoing, and except as specified in the next
\nsentence, “AETNA GROUP LIABILITIES” shall include, without limitation, the
\nfollowing Liabilities whether arising before, at or after the Distribution
\nTime: (a) any Liabilities arising in connection with the Aetna Assets, (b) the
\nAetna Environmental Liabilities, (c) all Liabilities arising under Contracts
\nentered into by any of the Aetna Subsidiaries, including, without limitation,
\nany such Contract relating to the acquisition or disposition of assets,
\nsecurities or businesses (other than any such Contracts relating to the
\nDomestic P&C Business) and (d) all other Liabilities of the Aetna Group under
\nthe Merger Agreement or any Ancillary Agreement. However, notwithstanding the
\nforegoing, “AETNA GROUP LIABILITIES” shall exclude any and all: (1) Liabilities
\nfor Taxes (since such Liabilities shall be governed by the Tax Sharing
\nAgreement), and (2) other Liabilities to the extent specifically retained or
\nassumed by the Spinco Group.<\/p>\n
“AETNA INDEMNITEE” has the meaning set forth in Section 4.01(a).<\/p>\n
“AETNA INTELLECTUAL PROPERTY RIGHTS” means all Intellectual Property
\nRights (i) owned by a member of the Aetna Group or the Spinco Group or (ii)
\nowned by a third party and licensed or sublicensed to a member of the Aetna
\nGroup or the Spinco Group, in either case held for use or used primarily in the
\nconduct of the Aetna Business including, without limitation, the Aetna China
\nName Rights, the Aeltus Name Rights and the Intellectual Property Rights listed
\non Schedule I hereto, but excluding the Aetna Name Rights.<\/p>\n
“AETNA NAME RIGHTS” has the meaning set forth in this Section 1.01 in
\nthe definition of “SPINCO INTELLECTUAL PROPERTY RIGHTS”.<\/p>\n
“AETNA SERVICES” means Aetna Services, Inc., a Connecticut
\ncorporation.<\/p>\n
“AETNA SHAREHOLDERS” means the holders of the Aetna Common Stock.<\/p>\n
“AETNA SUBSIDIARIES” means (i) the direct and indirect Subsidiaries of
\nAetna Services other than the Contributed Subsidiaries (and, subject to
\nobtaining all required approvals, shall include Pacific Aetna Life Insurance
\nLtd., if and from such time as the joint venture interest in such company held
\nby Aetna Life Insurance Company is transferred to another Aetna Subsidiary),
\n(ii) the respective direct and indirect Subsidiaries of the Persons referred to
\nin clause (i) and (iii) the respective minority ownership interests of the
\nPersons referred to in clauses (i) and (ii).<\/p>\n
“AFFILIATE” shall have the meaning ascribed to such term in Rule 12b-2
\nof the Exchange Act (as defined herein) as of the date hereof, provided
\nhowever, that except when referred to as an “EXISTING AFFILIATE,” for purposes
\nof this<\/p>\n
4<\/p>\n
91<\/p>\n
Agreement, no member of one Group shall be treated as an Affiliate of any
\nmember of the other Group.<\/p>\n
“AGREEMENT” has the meaning set forth in the recitals.<\/p>\n
“ANCILLARY AGREEMENTS” means each of the Chinese Mark Agreement,
\nEmployee Benefits Agreement, the Lease Agreement, the CityPlace Agreement, the
\nSoftware Licensing Agreement, the Tax Sharing Agreement, the Trademark
\nAssignment Agreement, the Trademark Licensing Agreement and the Transition
\nServices Agreement.<\/p>\n
“BUSINESS DAY” means any day other than a Saturday, Sunday or one on
\nwhich banks are authorized or required by law to close in New York, New York or
\nHartford, Connecticut.<\/p>\n
“CHINESE MARK AGREEMENT” shall have the meaning assigned to such term
\nin the Merger Agreement.<\/p>\n
“CITYPLACE AGREEMENT” means the agreement to be entered into on or
\nbefore the Distribution Date between Aetna (or Aetna Services) and Spinco (or
\none of its Affiliates, in which case Spinco shall guarantee the obligations of
\nsuch Affiliate) in respect of the CityPlace property, reflecting the terms set
\nforth on Exhibit H hereto.<\/p>\n
“COMMISSION” means the Securities and Exchange Commission.<\/p>\n
“COMPANY DEBT” shall have the meaning assigned to the term “Long Term
\nDebt” in the Merger Agreement.<\/p>\n
“CONFIDENTIALITY AGREEMENT” means the Confidentiality Agreement dated
\nas of May 25, 2000 between Parent and Aetna.<\/p>\n
“CONTRACTS” means any agreements, lease, license, contract, treaty,
\nnote, mortgage, indenture, franchise, permit, concession, arrangement or other
\nobligation.<\/p>\n
“CONTRIBUTED SUBSIDIARIES” means (i) Aetna Life Insurance Company, a
\nConnecticut corporation, Aetna Health and Life Insurance Company, a Connecticut
\ncorporation, Aetna Risk Indemnity Company Limited, a Bermuda corporation, Aetna
\nRealty Investments I, Inc., a Connecticut corporation, AE Housing Corp, a
\nConnecticut corporation, Aetna Business Resources, Inc., a Connecticut
\ncorporation, AE Fifteen, Incorporated, a Connecticut corporation, Luettgens
\nLimited, a Connecticut corporation, AUSHC Holdings, Inc., a<\/p>\n
5<\/p>\n
92<\/p>\n
Connecticut corporation, ASI Wings, L.L.C., a Delaware limited liability
\ncompany, Aetna Life & Casualty Bermuda Limited, a Bermuda corporation, Aetna
\nFoundation, Inc., a Connecticut non-stock corporation, Aelan Inc., a
\nConnecticut corporation, (ii) any subsidiaries formed for the purpose of
\neffecting the Restructuring, (iii) the respective direct and indirect
\nSubsidiaries of the Persons referred to in clauses (i) and (ii) and (iv) the
\nrespective minority ownership interests of the Persons referred to in clauses
\n(i), (ii) and (iii).<\/p>\n
“CONTROL” means the possession, directly or indirectly, of the power
\nto direct or cause the direction of the management and policies of a Person,
\nwhether through the ownership of voting securities, by contract or otherwise;
\nand the terms “CONTROLLING” and “CONTROLLED” have meanings correlative to the
\nforegoing;<\/p>\n
“DAMAGES” means, with respect to any Person, any and all damages
\n(including punitive and consequential damages), losses, Liabilities and
\nexpenses incurred or suffered by such Person (including, but not limited to,
\nall expenses of investigation, all attorneys’ and expert witnesses’ fees and
\nall other out-of-pocket expenses incurred in connection with any Action or
\nthreatened Action).<\/p>\n
“DISTRIBUTION” means the distribution by Aetna, pursuant to the terms
\nand subject to the conditions hereof, of all of the outstanding shares of
\nSpinco Common Stock to the Aetna Shareholders of record as of the Record Date.<\/p>\n
“DISTRIBUTION AGENT” means First Chicago Trust Company of New York.<\/p>\n
“DISTRIBUTION DATE” means the Business Day on which the Distribution
\nis effected.<\/p>\n
“DISTRIBUTION DOCUMENTS” means this Agreement and the Ancillary
\nAgreements and any other agreements or documents entered into to effect the
\ntransactions contemplated hereby or by the Ancillary Agreements (but excluding
\nthe Confidentiality Agreement and the Merger Agreement).<\/p>\n
“DISTRIBUTION TIME” means the time immediately before the Merger
\nEffective Time (as defined below).<\/p>\n
“DOMESTIC P&C BUSINESS” means the property and casualty insurance
\nbusiness and operations formerly conducted by Aetna or any of its Former or
\nExisting Affiliates in the United States.<\/p>\n
“EMPLOYEE BENEFITS AGREEMENT” means the Employee Benefits Agreement
\nsubstantially in the form attached as Exhibit A hereto to be entered into on or
\nbefore the Distribution Date between Aetna and Spinco.<\/p>\n
6<\/p>\n
93<\/p>\n
“ENVIRONMENTAL LAW” means any federal, state, local or foreign law
\n(including, without limitation, common law), treaty, judicial decision,
\nregulation, rule, judgment, order, decree, injunction, permit or governmental
\nrestriction or requirement or any agreement with any Governmental Entity or
\nother third party, relating to human health and safety, the environment or to
\npollutants, contaminants, wastes or chemicals or any toxic, radioactive,
\nignitable, corrosive, reactive or otherwise hazardous substances, wastes or
\nmaterials.<\/p>\n
“EXCHANGE ACT” means the Securities Exchange Act of 1934, as amended,
\nand the rules and regulations promulgated thereunder.<\/p>\n
“EXISTING AFFILIATE” means any Affiliate of Aetna as of the date
\nhereof and not giving effect to this Agreement, the Restructuring or the
\nMerger.<\/p>\n
“FINALLY DETERMINED” means, with respect to any Action, threatened
\nAction or other matter, that the outcome or resolution of that Action,
\nthreatened Action or other matter either (i) has been decided through binding
\narbitration or by a Governmental Entity of competent jurisdiction by judgment,
\norder, award, or other ruling or (ii) has been settled or voluntarily dismissed
\nby the parties pursuant to the dispute resolution procedure set forth in
\nSection 8.10 or otherwise and, in the case of each of clauses (i) and (ii), the
\nclaimants’ rights to maintain that Action, threatened Action or other matter
\nhave been finally adjudicated, waived, discharged or extinguished, and that
\njudgment, order, ruling, award, settlement or dismissal (whether mandatory or
\nvoluntary, but if voluntary that dismissal must be final, binding and with
\nprejudice as to all claims specifically pleaded in that Action) is subject to
\nno further appeal, vacatur proceeding or discretionary review.<\/p>\n
“FORM 10” means the registration statement on Form 10 to be filed by
\nSpinco with the Commission to effect the registration of Spinco Common Stock
\n(as defined below) pursuant to the Exchange Act in connection with the
\nDistribution, as such registration statement may be amended from time to time.<\/p>\n
“FORMER AFFILIATE” means any Person (as defined below) that, at any
\ntime prior to the date hereof and without giving effect to this Agreement was,
\nbut has ceased to be, an Affiliate of Aetna and\/or Aetna Services.<\/p>\n
“GOVERNMENTAL ENTITY” means any U.S. or non-U.S. governmental or
\nregulatory authority, agency, commission, tribunal, body or other governmental,
\nquasi-governmental or self-regulatory entity.<\/p>\n
“GROUP” means, as the context requires, the Spinco Group (as defined
\nbelow) or the Aetna Group (as defined below).<\/p>\n
7<\/p>\n
94<\/p>\n
“GROUP POLICIES” means all Policies, current or past, which prior to
\nthe Distribution Time are or at any time were maintained by or on behalf of or
\nfor the benefit or protection of Aetna, any Existing Affiliate or any Former
\nAffiliate (or any of their predecessors) and\/or one or more of the current or
\npast directors, officers, employees or agents of any of the foregoing
\nincluding, without limitation, the Policies identified on Schedule 7.07 hereto
\nbut excluding any Policies under which any Aetna Subsidiary is the named
\ninsured.<\/p>\n
“INCENTIVE AMOUNT” shall have the meaning assigned to such term in
\nwriting by Parent and Aetna.<\/p>\n
“INDEMNIFIED PARTY” has the meaning set forth in Section 4.04.<\/p>\n
“INDEMNIFYING PARTY” has the meaning set forth in Section 4.04.<\/p>\n
“INFORMATION STATEMENT” means the information statement to be sent to
\neach Aetna Shareholder of record as of the Record Date in connection with the
\nDistribution.<\/p>\n
“INSURANCE PROCEEDS” shall mean those monies (i) received by an
\ninsured from an insurance carrier or (ii) paid by an insurance carrier on
\nbehalf of an insured, in either case net of any applicable premium adjustment,
\nretrospectively-rated premium, deductible, retention, or cost of reserve paid
\nor held by or for the benefit of such insured.<\/p>\n
“INSURED CLAIMS” shall mean those Liabilities that, individually or in
\nthe aggregate, are covered within the terms and conditions of any of the Group
\nPolicies, whether or not subject to premium adjustments, deductibles,
\nretentions, co-insurance, cost of reserve paid or held by or for the benefit of
\nthe applicable insured(s), uncollectability or retrospectively-rated premiums,
\nbut only to the extent that such Liabilities are within applicable Group Policy
\nlimits, including aggregates.<\/p>\n
“INTELLECTUAL PROPERTY RIGHTS” means (i) inventions, whether or not
\npatentable, reduced to practice or made the subject of one or more pending
\npatent applications, (ii) national and multinational statutory invention
\nregistrations, patents and patent applications (including all reissues,
\ndivisions, continuations, continuations-in-part, extensions and reexaminations
\nthereof) registered or applied for in the United States and all other nations
\nthroughout the world, and all improvements to the inventions disclosed in each
\nsuch registration, patent or patent application, (iii) trademarks, service
\nmarks, trade dress, logos, domain names, trade names and corporate names
\n(whether or not registered) in the United States and all other nations
\nthroughout the world, including all variations,<\/p>\n
8<\/p>\n
95<\/p>\n
derivations, combinations, registrations and applications for registration of
\nthe foregoing and all goodwill associated therewith, (iv) copyrights (whether
\nor not registered) and registrations and applications for registration thereof
\nin the United States and all other nations throughout the world, including all
\nderivative works, moral rights, renewals, extensions, reversions or
\nrestorations associated with such copyrights, now or hereafter provided by law,
\nregardless of the medium of fixation or means of expression, (v) computer
\nsoftware (including source code, object code, firmware, operating systems and
\nspecifications), (vi) trade secrets and, whether or not confidential, business
\ninformation (including pricing and cost information, business and marketing
\nplans and customer and supplier lists) and know-how (including manufacturing
\nand production processes and techniques and research and development
\ninformation), (vii) industrial designs (whether or not registered), (viii)
\ndatabases and data collections, (ix) copies and tangible embodiments of any of
\nthe foregoing, in whatever form or medium, (x) all rights to obtain and rights
\nto apply for patents, and to register trademarks and copyrights, (xi) all
\nrights in all of the foregoing provided by treaties, conventions and common law
\nand (xii) all rights to sue or recover and retain damages and costs and
\nattorneys’ fees for past, present and future infringement or misappropriation
\nof any of the foregoing.<\/p>\n
“LAW” means any applicable federal, state, local or foreign law,
\nstatute, ordinance, directive, rule, regulation, judgment, order, injunction,
\ndecree, arbitration award, agency requirement, license or permit of any
\nGovernmental Entity.<\/p>\n
“LEASE AGREEMENT” means the Lease Agreement to be entered into prior
\nto or as of the Distribution Date between Aetna (or an Affiliate of Aetna, in
\nwhich case the obligations of such Affiliate shall be guaranteed by Aetna) and
\nAetna Life Insurance Company in respect of the property (the “TOWER”) situated
\nat 151 Farmington Avenue, Hartford, Connecticut 06156 reflecting the terms set
\nforth on Exhibit G hereto.<\/p>\n
“LIABILITY” or “LIABILITIES” means any and all claims, debts,
\nliabilities, assessments, costs (including, with respect to matters under
\nEnvironmental Laws, removal costs, remediation costs, closure costs and
\nexpenses of investigation and ongoing monitoring), deficiencies, charges,
\ndemands, fines, penalties, damages, losses, disgorgements and obligations, of
\nany kind, character or description (whether absolute, contingent, matured, not
\nmatured, liquidated, unliquidated, accrued, known, unknown, direct, indirect,
\nderivative or otherwise) whenever arising, including, but not limited to, all
\ncosts, interest and expenses relating thereto (including, but not limited to,
\nall expenses of investigation, all attorneys’ and expert witnesses’ fees and
\nall other out-of-pocket expenses in connection with<\/p>\n
9<\/p>\n
96<\/p>\n
any Action or threatened Action) and expressly including those relating to an
\nIndemnified Party’s own negligence or other misconduct.<\/p>\n
“LICENSED MARKS AND NAMES” has the meaning set forth in Section 7.02.<\/p>\n
“MERGER” has the meaning set forth in the recitals.<\/p>\n
“MERGER AGREEMENT” has the meaning set forth in the recitals.<\/p>\n
“MERGER EFFECTIVE TIME” shall have the meaning assigned to the term
\nEffective Time in the Merger Agreement.<\/p>\n
“MERGER SUBSIDIARY” has the meaning set forth in the recitals.<\/p>\n
“NYSE” has the meaning set forth in Section 3.01(d).<\/p>\n
“PARENT” has the meaning set forth in the recitals.<\/p>\n
“PERMITTED TRADEMARK PERIOD” means the three year period commencing on
\nthe Distribution Date, subject to any limitations set forth in the Trademark
\nLicensing Agreement.<\/p>\n
“PERMITTED SALES PROCEEDS” and “PERMITTED SALES” shall have the
\nmeanings assigned to such terms in the Merger Agreement.<\/p>\n
“PERSON” means any individual, corporation (including not-for-profit
\ncorporations), general or limited partnership, limited liability company, joint
\nventure, estate, trust, association, organization, Governmental Entity or other
\nentity of any kind or nature.<\/p>\n
“POLICIES” means insurance policies and insurance contracts of any
\nkind, including, without limitation, primary, excess and umbrella policies,
\ndirectors and officers’, errors and omissions, commercial general liability
\npolicies, life and benefits policies and contracts, fiduciary liability,
\nautomobile, aircraft, property and casualty, workers’ compensation and employee
\ndishonesty insurance policies, bonds and self-insurance and captive insurance
\ncompany arrangements, together with the rights, benefits and privileges
\nthereunder.<\/p>\n
“PROXY STATEMENT” means the proxy statement of Aetna to be filed with
\nthe Commission pursuant to the Exchange Act in connection with the Merger.<\/p>\n
“RECORD DATE” means the date determined by Aetna’s Board of Directors
\n(or by a committee of that board or any other Person acting under authority<\/p>\n
10<\/p>\n
97<\/p>\n
duly delegated to that committee or Person by Aetna’s Board of Directors or a
\ncommittee of that Board) as the record date for determining the Aetna
\nShareholders of record entitled to receive the Distribution.<\/p>\n
“REPRESENTATIVES” has the meaning set forth in Section 6.06.<\/p>\n
“RESTATED SPINCO CHARTER” means the restated certificate of
\nincorporation of Spinco, which shall be in such form as the Board of Directors
\nof Spinco reasonably determines.<\/p>\n
“RESTRUCTURING” means the contributions pursuant to Section 2.01
\nhereof, the settlement of intercompany accounts and repayment of Short Term
\nDebt (as defined below) in accordance with Section 7.01 hereof, the
\nDistribution and the other transactions contemplated by this Agreement and the
\nAncillary Agreements.<\/p>\n
“SECURITIES ACT” means the Securities Act of 1933, as amended, and the
\nrules and regulations promulgated thereunder.<\/p>\n
“SHORT TERM DEBT” means any indebtedness for borrowed money with a
\nmaturity of less than one year at the time of issuance.<\/p>\n
“SOFTWARE LICENSING AGREEMENT” means the Software Licensing Agreement
\nto be entered into prior to or as of the Distribution Date between Aetna and
\nSpinco, reflecting the terms set forth on Exhibit B hereto.<\/p>\n
“SPINCO” has the meaning set forth in the recitals.<\/p>\n
“SPINCO ASSETS” means all assets, leases, properties and businesses,
\nof every kind and description, wherever located, real, personal or mixed,
\ntangible or intangible, owned, held or used by Aetna, Aetna Services or any
\nmember of the Spinco Group, excluding the Aetna Assets. Without limitation and
\nfor the avoidance of doubt, the following items are, and shall be, “SPINCO
\nASSETS” (and are not, and shall not be, Aetna Assets):<\/p>\n
(a) all right, title and interest in the real property situated
\n at 151 Farmington Avenue, Hartford, Connecticut 06156 (subject to the
\n rights of the Aetna Group under the Lease Agreement), together with
\n all buildings, fixtures, and improvements erected thereon;<\/p>\n
(b) all rights of the Spinco Group (but excluding any and all
\n rights of the Aetna Group) under the Distribution Documents;<\/p>\n
11<\/p>\n
98
\n (c) to the extent relating to the business, assets or employees
\n of any member of the Spinco Group, all rights of Aetna under the
\n Confidentiality Agreement and the confidentiality agreements entered
\n into by Aetna with potential purchasers of Aetna or certain of Aetna’s
\n businesses during June and July 2000;<\/p>\n
(d) all cash and cash equivalents, including all bank account
\n balances and petty cash, of Aetna and Aetna Services (provided,
\n however, that the cash positions of Aetna and Aetna Services cannot be
\n increased or decreased in a manner that violates the Merger
\n Agreement);<\/p>\n
(e) all Spinco Intellectual Property Rights;<\/p>\n
(f) all rights under the Contracts listed on Schedule A hereto;<\/p>\n
(g) the other assets, properties and business listed on Schedule
\n B hereto;<\/p>\n
(h) the Permitted Sales Proceeds from the Permitted Sales and the
\n Incentive Amount; and<\/p>\n
(i) all goodwill associated with the Spinco Group, the Aetna
\n Group or the Spinco Assets prior to the Distribution Time (excluding
\n goodwill associated with the Aetna Business or the Aetna Assets),
\n together with the right to represent to third parties that the Spinco
\n Group is the successor to all businesses and operations of the Spinco
\n Group or the Aetna Group other than the Aetna Business (it being
\n agreed and understood between the parties that this will preclude the
\n Spinco Group from representing to third parties that it is the
\n successor to Aetna Group’s financial services and international
\n businesses).<\/p>\n
“SPINCO BENEFITS LIABILITIES” means the AUSHC Retained Liabilities as
\ndefined in the Employee Benefits Agreement.<\/p>\n
“SPINCO BUSINESS” means the businesses and operations of Spinco, its
\nSubsidiaries and the Contributed Subsidiaries, as conducted on the date hereof,
\nbut taking into account the Restructuring.<\/p>\n
“SPINCO COMMON STOCK” means the common stock, par value $.005 per
\nshare, of Spinco.<\/p>\n
“SPINCO ENVIRONMENTAL LIABILITIES” means any and all Liabilities of or
\nrelating to (i) Aetna, Aetna Services or any member of the Spinco Group or (ii)<\/p>\n
12<\/p>\n
99
\nthe Spinco Business or the Spinco Assets (including, without limitation, offsite
\ndisposal), which, in either case, arise under or relate to Environmental Laws,
\nexcluding the Aetna Environmental Liabilities.<\/p>\n
“SPINCO GROUP” means Spinco, its direct and indirect Subsidiaries and
\nthe Contributed Subsidiaries (including all successors to each of those
\nPersons).<\/p>\n
“SPINCO GROUP LIABILITIES” means, except as otherwise specifically
\nprovided in the Merger Agreement or any Distribution Document, all Liabilities
\n(including Liabilities arising out of any litigation), whether arising before,
\nat or after the Distribution Time, of or relating to (a) Aetna, Aetna Services
\nor any member of the Spinco Group, (b) any member of Aetna Group to the extent
\narising from the conduct of, in connection with or relating to the Spinco
\nAssets or the Spinco Business or the ownership or use thereof, (c) or arising
\nout of the Domestic P&C Business or (d) the Contracts (x) filed as Exhibits
\n4.22 and 10.6 to the Aetna Annual Report on Form 10-K for the year ended
\nDecember 31, 1999 or (y) identified on Schedule F to which Aetna Life Insurance
\nand Annuity Company and one or more Affiliates of Lincoln National Corporation
\nare parties; in each case excluding the Aetna Group Liabilities. Without
\nlimiting the generality of the foregoing, and except as specified in the next
\nsentence, “SPINCO GROUP LIABILITIES” shall include, without limitation, the
\nfollowing Liabilities whether arising before, at or after the Distribution
\nTime: (i) any Liabilities arising in connection with the Spinco Assets or the
\nSpinco Business, (ii) the Spinco Environmental Liabilities, (iii) the
\nLiabilities set forth on Schedule C hereto, (iv) the Spinco Litigation
\nLiabilities, (v) the Spinco Benefits Liabilities, (vi) all other Liabilities of
\nthe Spinco Group under any Distribution Document, and (vii) except to the
\nextent otherwise provided in this Agreement, the Merger Agreement or in any of
\nthe Ancillary Agreements, all Liabilities of the Spinco Group or the Aetna
\nGroup arising (prior to the Merger Effective Time) out of the Distribution and
\nany of the other transactions contemplated by this Agreement or any of the
\nAncillary Agreements. Notwithstanding the foregoing, “SPINCO GROUP LIABILITIES”
\nshall exclude any and all: (1) Liabilities for Taxes (which Liabilities shall
\nbe governed by the Tax Sharing Agreement) and (2) other Liabilities to the
\nextent specifically retained or assumed by the Aetna Group.<\/p>\n
“SPINCO INDEMNITEE” has the meaning set forth in Section 4.02(a).<\/p>\n
“SPINCO INTELLECTUAL PROPERTY RIGHTS” means all Intellectual Property
\nRights (i) owned by a member of the Spinco Group or the Aetna Group or (ii)
\nowned by a third party and licensed or sublicensed to a member of the Spinco
\nGroup or the Aetna Group, in each case excluding the Aetna Intellectual
\nProperty Rights but including without limitation:<\/p>\n
13<\/p>\n
100
\n (a) all right, title and interest in and use of the “Aetna” name and
\nany derivative thereof including, without limitation, all trademarks, service
\nmarks, trade dress, logos, domain names, trade names and corporate names
\n(whether or not registered) in the United States and all other nations
\nthroughout the world, including all variations, derivations, combinations,
\nregistrations and applications for registration of the foregoing and all
\ngoodwill associated therewith, but excluding the Aetna China Name Rights and
\nthe Aeltus Name Rights (collectively, the “AETNA NAME Rights”); and<\/p>\n
(b) the Intellectual Property Rights listed on Schedule D hereto.<\/p>\n
“SPINCO LITIGATION” means (i) the litigation pending as of the date
\nhereof in which Aetna or Aetna Services or one or more of their respective
\nofficers, directors or employees is named a defendant (x) relating to,
\ninvolving or arising out of the Spinco Business and any new such cases which
\nmay be commenced after the date hereof, (y) alleging violations of federal or
\nstate securities laws by Aetna or (z) alleging breaches of fiduciary duties of
\nthe Aetna directors under state law (in the case of clauses (y) and (z), the
\ncases set forth on Schedule E) but excluding, in each case, any such litigation
\nwhich relates primarily to the Aetna Business; and (ii) any litigation in which
\nAetna or Aetna Services (or one or more of their respective officers, directors
\nor employees) is named a defendant on or after the date hereof alleging
\nviolations of federal or state securities laws or breaches of fiduciary duties
\nof the Aetna directors at the Merger Effective Time under state law, in each
\ncase (x) relating to or arising out of the Merger or the Restructuring and (y)
\narising out of matters occurring before the Merger Effective Time. For the
\navoidance of doubt, “SPINCO LITIGATION” shall not include any Actions relating
\nto or in connection with Taxes, as such litigation is governed by the Tax
\nSharing Agreement.<\/p>\n
“SPINCO LITIGATION LIABILITIES” means all Liabilities arising before,
\nat or after the Distribution Time, in connection with, relating to, or
\nresulting from the Spinco Litigation.<\/p>\n
“SUBSIDIARY” means, with respect to any Person, any corporation or
\nother entity of which at least a majority of the securities or other ownership
\ninterests having by their terms ordinary voting power to elect a majority of
\nthe board of directors or other Persons performing similar functions are at the
\ntime directly or indirectly owned or controlled by such Person or by one or
\nmore of its respective Subsidiaries or by such Person and any one or more of
\nits respective Subsidiaries.<\/p>\n
“TAX” means Tax as such term is defined in the Tax Sharing Agreement.<\/p>\n
14<\/p>\n
101
\n “TAX SHARING AGREEMENT” means the Tax Sharing Agreement substantially
\nin the form attached as Exhibit C hereto to be entered into as of the
\nDistribution Date among Aetna, Parent and Spinco.<\/p>\n
“THIRD-PARTY CLAIM” has the meaning set forth in Section 4.05.<\/p>\n
“TRADEMARK ASSIGNMENT AGREEMENT” means the Trademark Assignment
\nAgreement to be entered into as of the Distribution Date between Aetna and
\nSpinco, reflecting the terms set forth on Exhibit D hereto.<\/p>\n
“TRADEMARK LICENSING AGREEMENT” means the Trademark Licensing
\nAgreement to be entered into as of the Distribution Date between Aetna and
\nSpinco, reflecting the terms set forth on Exhibit E hereto.<\/p>\n
“TRANSFER” has the meaning set forth in Section 2.02.<\/p>\n
“TRANSITION SERVICES AGREEMENT” means the Transition Services
\nAgreement to be entered into as of the Distribution Date between Aetna and
\nSpinco, reflecting the terms set forth on Exhibit F hereto.<\/p>\n
ARTICLE 2<\/p>\n
CONTRIBUTIONS AND ASSUMPTION OF LIABILITIES<\/p>\n
SECTION 2.01. Contribution of Contributed Subsidiaries. Upon the terms
\nand subject to the conditions set forth in the Merger Agreement and the
\nDistribution Documents, effective prior to the Distribution Time, Aetna shall
\ncontribute to Spinco all of the outstanding shares of capital stock of, or
\nother ownership interests in, each of the Subsidiaries in clause (i) and clause
\n(ii) of the definition of Contributed Subsidiaries in the manner described on
\nSchedule 2.01, subject to receipt of any necessary consents or approvals of
\nthird parties or of Governmental Entities and subject to Section 7.03.<\/p>\n
SECTION 2.02. Transfers of Certain Assets to Spinco Group. Upon the
\nterms and subject to the conditions set forth in the Merger Agreement or any
\nDistribution Document, except as otherwise expressly set forth therein,
\neffective prior to or as of the Distribution Time or as soon as practicable
\nafter the Distribution Time, subject to receipt of any necessary consents or
\napprovals of third parties or of Governmental Entities and subject to Section
\n7.03, Aetna shall, or, if requested, shall cause the relevant member of Aetna
\nGroup to, assign, contribute, convey, transfer and deliver (“TRANSFER”) to
\nSpinco or to one or more of Spinco’s wholly-owned Subsidiaries all of the
\nright, title and interest of Aetna <\/p>\n
15<\/p>\n
102
\nor such member of the Aetna Group in and to all Spinco Assets that are not
\nowned, held or used by a Contributed Subsidiary, if any, as the same shall
\nexist on the Distribution Date or on such later date as a particular Transfer
\nmay occur.<\/p>\n
SECTION 2.03. Transfers of Certain Assets to Aetna Group. Upon the
\nterms and subject to the conditions set forth in the Merger Agreement or any
\nDistribution Document, except as otherwise expressly set forth therein,
\neffective prior to or as of the Distribution Time or as soon as practicable
\nafter the Distribution Time, subject to receipt of any necessary consents or
\napprovals of third parties or of Governmental Entities and subject to Section
\n7.03, prior to the Distribution Time Aetna, and following the Distribution Time
\nSpinco, shall, or if requested, shall cause the relevant member of the Spinco
\nGroup to, Transfer to Aetna or to one or more members of Aetna Group all of the
\nright, title and interest of Spinco or such member of the Spinco Group in and
\nto all Aetna Assets, if any, as the same shall exist on the Distribution Date
\nor on such later date as a particular Transfer may occur.<\/p>\n
SECTION 2.04. Assumption of Certain Liabilities. (a) Upon the terms and
\nsubject to the conditions set forth in the Merger Agreement or any Distribution
\nDocument, except as otherwise expressly set forth therein, effective as of the
\nDistribution Time (or of the time of Transfer, if earlier, of the assets to
\nwhich such Liabilities are attributable), in partial consideration for the
\nTransfers pursuant to Section 2.02, Spinco hereby unconditionally (i) assumes
\nall Spinco Group Liabilities (it being understood that the Spinco Benefits
\nLiabilities are allocated and assumed pursuant to the Employee Benefits
\nAgreement) to the extent not then an existing obligation of the Spinco Group
\nand (ii) undertakes to pay, satisfy and discharge when due in accordance with
\ntheir terms all Spinco Group Liabilities.<\/p>\n
(b) Upon the terms and subject to the conditions set forth in the
\nMerger Agreement or any Distribution Document, except as otherwise expressly
\nset forth therein, effective as of the Distribution Time (or of the time of
\nTransfer, if earlier, of the assets to which such Liabilities are
\nattributable), in partial consideration for the Transfers pursuant to Section
\n2.03, Aetna hereby unconditionally (i) assumes all Aetna Group Liabilities (it
\nbeing understood that the Aetna Benefits Liabilities are allocated and assumed
\npursuant to the Employee Benefits Agreement) to the extent not then an existing
\nobligation of the Aetna Group and (ii) undertakes to pay, satisfy and discharge
\nwhen due in accordance with their terms all Aetna Group Liabilities.<\/p>\n
SECTION 2.05. Agreement Relating to Consents Necessary to Transfer
\nAssets. Notwithstanding anything in this Agreement to the contrary, this
\nAgreement shall not constitute an agreement to transfer or assign any asset or
\nany claim or right or any benefit arising thereunder or resulting therefrom if
\nan
\n 16<\/p>\n
103
\nattempted assignment thereof, without the necessary consent of a third
\nparty, would constitute a breach or other contravention thereof or in any way
\nadversely affect the rights of Spinco, or any member of the Spinco Group, or
\nAetna, or any member of the Aetna Group, thereunder. Spinco and Aetna shall
\ncooperate with each other, keep each other informed and will, subject to
\nSection 7.03, use their reasonable best efforts to obtain the consent of any
\nthird party or any Governmental Entity, if any, required in connection with the
\ntransfer or assignment pursuant to Sections 2.02 or 2.03 of any such asset or
\nany claim or right or any benefit arising thereunder. Until such required
\nconsent is obtained, or if such consent cannot be obtained or an attempted
\nassignment thereof would be ineffective or would adversely affect the rights of
\nthe transferor thereunder so that the intended transferee would not in fact
\nreceive substantially all such rights, Spinco and Aetna will cooperate in a
\nmutually agreeable arrangement under which the intended transferee would obtain
\nthe benefits and assume the obligations thereunder in accordance with this
\nAgreement, including (but not limited to) sub-contracting, sub-licensing or
\nsub-leasing to such transferee, or under which the transferor would enforce for
\nthe benefit of the transferee and (except as otherwise provided herein or in
\nany Ancillary Agreement) at the transferee’s expense any and all rights of the
\ntransferor against, with the transferee assuming the transferor’s obligations
\nto, each third party thereto. In the case of any Transfer involving a third
\nparty consent, the transferor shall not agree to any terms of transfer (without
\nthe prior written consent of the transferee) which have the effect of
\nmaterially altering the rights or benefits arising under any of the particular
\nSpinco Assets or the Aetna Assets, as the case may be subject to the Transfer.<\/p>\n
ARTICLE 3<\/p>\n
THE DISTRIBUTION<\/p>\n
SECTION 3.01. Cooperation Prior to the Distribution. (a) As promptly as
\npracticable after the date of this Agreement, Aetna and Spinco shall prepare,
\nand Spinco shall file with the Commission, the Form 10, which shall include or
\nincorporate by reference the Information Statement. Aetna and Spinco shall use
\ntheir reasonable best efforts to cause the Form 10 to become effective under
\nthe Exchange Act as soon as practicable. After the Form 10 has become
\neffective, Aetna shall mail the Information Statement as promptly as
\npracticable to the Aetna Shareholders of record as of the Record Date.<\/p>\n
(b) Aetna and Spinco shall cooperate in preparing, filing with the
\nCommission and causing to become effective any registration statements or
\namendments thereto that are appropriate to reflect the establishment of or<\/p>\n
17<\/p>\n
104
\namendments to any employee benefit and other plans contemplated by the
\nAncillary Agreements.<\/p>\n
(c) Aetna and Spinco shall take all such action as may be necessary or
\nappropriate under the securities or blue sky laws of states or other political
\nsubdivisions of the United States and shall take reasonable best efforts to
\ncomply with all applicable foreign securities laws in connection with the
\ntransactions contemplated hereby or by the Ancillary Agreements.<\/p>\n
(d) Spinco shall prepare, file and pursue an application to permit the
\nlisting of the Spinco Common Stock on the New York Stock Exchange (“NYSE”).<\/p>\n
SECTION 3.02. Aetna Board Action; Conditions Precedent to the
\nDistribution. Aetna’s Board of Directors shall establish (or delegate authority
\nto establish) the Record Date and the Distribution Date and any appropriate
\nprocedures in connection with the Distribution. In no event shall the
\nDistribution occur unless the following conditions shall have been satisfied:<\/p>\n
(a the Form 10 shall have become effective under the Exchange Act;<\/p>\n
(b the Spinco Common Stock to be delivered in the Distribution shall
\nhave been approved for listing on the NYSE, subject to official notice of
\nissuance;<\/p>\n
(c the Restated Spinco Charter shall be in effect;<\/p>\n
(d each of the Aetna Board of Directors and the Spinco Board of
\nDirectors (i) shall have received an opinion, addressed and reasonably
\nsatisfactory to each of them from an independent solvency firm selected by
\nthose boards of directors, and (ii) shall otherwise be reasonably satisfied,
\n(A) that after giving effect to the Restructuring (x) neither Aetna nor Spinco
\nwill be insolvent or will have unreasonably small capital or assets with which
\nto engage in their respective businesses, (y) each of Aetna and Spinco will be
\nable to pay its respective debts as they become due in the usual course of
\nbusiness and (z) neither Aetna’s nor Spinco’s total assets will be less than
\nthe sum of its respective total liabilities and (B) that the Distribution, when
\neffected in accordance with the terms of this Agreement and the Ancillary
\nAgreements, shall have been effected in accordance with the provisions of the
\nConnecticut Business Corporation Act relating to distributions and applicable
\nfraudulent transfer and fraudulent conveyance laws;<\/p>\n
(e the contributions referred to in Section 2.01, the transfers
\nreferred to in Sections 2.02 and 2.03, and the assumptions of Liabilities
\nreferred to in Section 2.04 of this Agreement shall have been effected;<\/p>\n
18<\/p>\n
105
\n (f each of the Ancillary Agreements shall have been duly executed
\nand delivered by the parties thereto; and<\/p>\n
(g each condition to the Merger set forth in Sections 7.1(a), (b)
\nand (c), 7.2 and 7.3 of the Merger Agreement shall have been satisfied or
\nwaived.<\/p>\n
SECTION 3.03. The Distribution. Subject to the terms and conditions set
\nforth in this Agreement, (i) immediately prior to the Distribution Time, Aetna
\nshall deliver to the Distribution Agent, for the benefit of the Aetna
\nShareholders of record on the Record Date, a stock certificate or certificates,
\nendorsed by Aetna in blank, representing all of the then-outstanding shares of
\nSpinco Common Stock owned by Aetna, (ii) the Distribution shall be effective as
\nof the Distribution Time and (iii) Aetna shall instruct the Distribution Agent
\nto distribute, on or as soon as practicable after the Distribution Date, to
\neach Aetna Shareholder of record as of the Record Date one share of Spinco
\nCommon Stock (together with the associated preferred share purchase rights) for
\nevery one share of Aetna Common Stock so held. Spinco agrees to provide all
\ncertificates for shares of Spinco Common Stock that Aetna shall require (after
\ngiving effect to Sections 3.04 and 3.05) in order to effect the Distribution.
\nThe Merger and Distribution shall be effected such that the Merger
\nConsideration (as defined in the Merger Agreement) and the shares of Spinco
\nCommon Stock to be distributed in the Distribution are payable and
\ndistributable, as applicable, only to the same Aetna Shareholders.<\/p>\n
SECTION 3.04. Stock Dividend. On or before the Distribution Date,
\nSpinco shall issue to Aetna as a stock dividend the number of shares of Spinco
\nCommon Stock (together with the associated preferred share purchase rights)
\nthat are required to effect the Distribution, as certified by the Distribution
\nAgent. In connection with the Distribution, Aetna shall deliver to Spinco for
\ncancellation all of the share certificates currently held by it representing
\nSpinco Common Stock.<\/p>\n
SECTION 3.05. Fractional Shares. No certificates representing
\nfractional shares of Spinco Common Stock will be distributed in the
\nDistribution. The Distribution Agent will be directed to determine the number
\nof whole shares and fractional shares of Spinco Common Stock allocable to each
\nAetna Shareholder of record as of the Record Date. Upon the determination by
\nthe Distribution Agent of such number of fractional shares, as soon as
\npracticable after the Distribution Date, the Distribution Agent, acting on
\nbehalf of the holders thereof, shall sell such fractional shares for cash on
\nthe open market in each case at the then prevailing market prices and shall
\ndisburse to each holder entitled thereto, in lieu of any fractional share,
\nwithout interest, that holder’s ratable share of the proceeds of that sale,
\nafter making appropriate deductions of the amount required, if any, to be
\nwithheld for United States federal income Tax purposes.<\/p>\n
19<\/p>\n
106
\n ARTICLE 4 <\/p>\n
INDEMNIFICATION AND OTHER MATTERS<\/p>\n
SECTION 4.01. Spinco Indemnification of Aetna Group. (a Subject to
\nSection 4.03, from and after the Distribution Date, Spinco shall indemnify,
\ndefend and hold harmless each member of the Aetna Group, their Affiliates
\n(including, for the avoidance of doubt, Parent) and their respective officers,
\ndirectors and employees (each, a “AETNA INDEMNITEE”) from and against any and
\nall Damages incurred or suffered by any Aetna Indemnitee arising out of (i) any
\nand all Spinco Group Liabilities and (ii) the breach by any member of the
\nSpinco Group of any obligation under any Distribution Document (subject to any
\nlimitation set forth therein), other than the Tax Sharing Agreement (all
\nindemnities thereunder being governed by the specific terms of the Tax Sharing
\nAgreement).<\/p>\n
(b Subject to Section 4.03, from and after the Distribution Date,
\nSpinco shall indemnify, defend and hold harmless each Aetna Indemnitee and each
\nPerson, if any, who controls any Aetna Indemnitee within the meaning of either
\nSection 15 of the Securities Act or Section 20 of the Exchange Act from and
\nagainst any and all Damages caused by any untrue statement or alleged untrue
\nstatement of a material fact contained in the Form 10 or any amendment thereof
\nor the Information Statement or Proxy Statement (in each case as amended or
\nsupplemented if Spinco shall have furnished any amendments or supplements
\nthereto), or caused by any omission or alleged omission to state therein a
\nmaterial fact necessary to make the statements therein, in the light of the
\ncircumstances under which they were made, not misleading, except to the extent
\nthat those Damages are caused by any such untrue statement or omission or
\nalleged untrue statement or omission based upon information that is furnished
\nto Spinco by Parent or any of its Affiliates (other than any member of the
\nAetna Group) specifically for use therein.<\/p>\n
SECTION 4.02. Aetna Indemnification of Spinco Group. (a Subject to
\nSection 4.03, from and after the Distribution Date, Aetna shall indemnify,
\ndefend and hold harmless each member of the Spinco Group, their Affiliates and
\ntheir respective officers, directors and employees (each, a “SPINCO
\nINDEMNITEE”) from and against any and all Damages incurred or suffered by any
\nSpinco Indemnitee arising out of (i) any and all Aetna Group Liabilities and
\n(ii) the breach by any member of the Aetna Group of any obligation under any
\nDistribution Document (subject to any limitation set forth therein), other than
\nthe Tax Sharing Agreement (all indemnities thereunder being governed by the
\nspecific terms of the Tax Sharing Agreement).<\/p>\n
(b Subject to Section 4.03, from and after the Distribution Date,
\nAetna shall indemnify, defend and hold harmless each Spinco Indemnitee and each<\/p>\n
20<\/p>\n
107<\/p>\n
Person, if any, who controls any Spinco Indemnitee within the meaning of either
\nSection 15 of the Securities Act or Section 20 of the Exchange Act from and
\nagainst any and all Damages caused by any untrue statement or alleged untrue
\nstatement of a material fact contained in the Form 10 or any amendment thereof
\nor the Information Statement or Proxy Statement (in each case as amended or
\nsupplemented if Spinco shall have furnished any amendments or supplements
\nthereto), or caused by any omission or alleged omission to state therein a
\nmaterial fact necessary to make the statements therein, in the light of the
\ncircumstances under which they were made, not misleading, in each case to the
\nextent, but only to the extent, that those Damages are caused by any such
\nuntrue statement or omission or alleged untrue statement or omission based upon
\ninformation that is furnished to Spinco by Parent or any of its Affiliates
\n(other than any member of the Aetna Group) specifically for use therein.<\/p>\n
SECTION 4.03. Insurance and Third Party Obligations; Limitation on
\nLiability. (a Upon indemnification of the Indemnified Party (as defined below),
\nthe Indemnifying Party shall be subrogated to the rights of the Indemnified
\nParty against the insurer or other third party with respect to such indemnified
\namount. It is expressly agreed that no insurer or any other third party shall
\nbe (i) entitled to a benefit it would not be entitled to receive in the absence
\nof the foregoing indemnification provisions, (ii) relieved of the
\nresponsibility to pay any Insured Claims or any other claims to which it is
\nobligated or (iii) entitled to any subrogation rights with respect to any
\nobligation hereunder.<\/p>\n
(b Each party shall use its reasonable best efforts to mitigate its
\nDamages and not to cause or worsen any Liability which would be a Liability of
\nthe other party. If an Indemnified Party shall receive any amount of Insurance
\nProceeds or any other amount from a third party in connection with a specific
\nLiability giving rise to indemnification hereunder (i) at any time subsequent
\nto the actual receipt of a payment in full indemnification of such Liability
\nhereunder, then such Indemnified Party shall reimburse the Indemnifying Party
\nfor any such indemnification payment made up to the amount of such Insurance
\nProceeds or other amounts actually received or (ii) at any time prior to the
\nreceipt of any indemnification payment in respect of such Liability hereunder,
\nthen the indemnification to be paid under Section 4.01 or 4.02 shall be paid
\nnet of the amount of any such Insurance Proceeds or other amounts actually
\nreceived. Notwithstanding this Section 4.03, (x) in no event shall any
\nIndemnified Party be required (i) to take any action, or forebear from
\nexercising any right, under the Merger Agreement or any Distribution Document
\nor (ii) to take any action with respect to, make any demand under or claim any
\ncoverage in connection with, any Policy, and (y) nothing herein shall permit
\nany Indemnifying Party to delay or refrain from making any payment to any
\nIndemnified Party because of the availability or alleged availability of any
\nPolicy or Insurance Proceeds (provided<\/p>\n
21<\/p>\n
108<\/p>\n
that the foregoing shall not limit the subrogation rights of an Indemnifying
\nParty under Section 4.03(a)).<\/p>\n
SECTION 4.04. Notice and Payment of Claims. If any Aetna Indemnitee or
\nSpinco Indemnitee (the “INDEMNIFIED PARTY”) determines that it is or may be
\nentitled to indemnification by any party (the “INDEMNIFYING PARTY”) under this
\nArticle 4 (other than in connection with any Action subject to Section 4.05),
\nthe Indemnified Party shall deliver to the Indemnifying Party a written notice
\nspecifying, to the extent reasonably practicable, the basis for its claim for
\nindemnification and the amount for which the Indemnified Party reasonably
\nbelieves it is entitled to be indemnified. Within 30 calendar days after
\nreceipt of such notice, the Indemnifying Party shall pay the Indemnified Party
\nsuch amount in cash or other immediately available funds unless the
\nIndemnifying Party objects in writing to the claim for indemnification or the
\namount thereof. In the event of such an objection or failure to pay by the
\nIndemnifying Party, the amount, if any, that is Finally Determined to be
\nrequired to be paid by the Indemnifying Party in respect of such indemnity
\nclaim shall be paid by the Indemnifying Party to the Indemnified Party in cash
\nwithin 15 calendar days after such indemnity claim has been so Finally
\nDetermined, with interest thereon at the prime rate of Citibank N.A. in effect
\nfrom time to time for the period commencing on the 30th day following receipt
\nof the initial notice of the claim from the Indemnified Party until the date of
\nactual payment (inclusive).<\/p>\n
SECTION 4.05. Notice and Defense of Third-Party Claims. (a Promptly
\n(and in any event within 10 Business Days) following the earlier of (i) receipt
\nof notice, whether by service of process or otherwise, of the commencement by a
\nthird party of any Action against or otherwise involving any Indemnified Party
\nor (ii) receipt of information from a third party alleging the existence of a
\nclaim against an Indemnified Party, in either case, with respect to which
\nindemnification may be sought pursuant to this Agreement (a “THIRD-PARTY
\nCLAIM”), the Indemnified Party shall give the Indemnifying Party written notice
\nthereof. The failure of the Indemnified Party to give notice as provided in
\nthis Section 4.05 shall not relieve the Indemnifying Party of its obligations
\nunder this Agreement, except to the extent that the Indemnifying Party is
\nactually and materially prejudiced by such failure to give notice.<\/p>\n
(b Within 30 calendar days after receipt of notice from the
\nIndemnified Party pursuant to Section 4.05(a), the Indemnifying Party may (by
\ngiving written notice thereof to the Indemnified Party) elect at its option to,
\nand shall at the request of the Indemnified Party, assume the defense of such
\nThird-Party Claim at the Indemnifying Party’s sole cost and expense unless the
\nIndemnifying Party objects in writing to such indemnification claim (in which
\ncase the Indemnified Party may not require the Indemnifying Party to assume the
\ndefense and the<\/p>\n
22<\/p>\n
109<\/p>\n
Indemnifying Party shall only assume the defense with the consent of the
\nIndemnified Party). During such 30-calendar day period, unless and until the
\nIndemnifying Party assumes the defense of a Third-Party Claim or objects in
\nwriting, the Indemnified Party shall take such action as it deems appropriate,
\nacting in good faith, in connection with the Third-Party Claim; provided,
\nhowever, that the Indemnified Party shall not settle or compromise, or make any
\noffer to settle or compromise, the Third-Party Claim without the prior written
\nconsent of the Indemnifying Party (which shall not be unreasonably withheld).<\/p>\n
(c If the Indemnifying Party assumes the defense of a Third-Party
\nClaim, (w) it shall keep the Indemnified Party timely informed of all
\nsignificant developments in connection therewith, (x) the defense shall be
\nconducted by counsel retained by the Indemnifying Party, provided that the
\nIndemnified Party shall have the right to participate in such proceedings and
\nto be represented by counsel of its own choosing at the Indemnified Party’s
\nsole cost and expense; and (y) the Indemnifying Party may settle or compromise
\nthe Third-Party Claim without the prior written consent of the Indemnified
\nParty so long as such settlement or compromise includes an unconditional
\nrelease of the Indemnified Party from all claims that are the subject of such
\nThird-Party Claim, provided that the Indemnifying Party may not agree to any
\nsuch settlement or compromise pursuant to which there is any finding or
\nadmission of any violation of Law or pursuant to which any remedy or relief
\n(including but not limited to the imposition of a consent order, injunction or
\ndecree which would restrict the future activity or conduct of the Indemnified
\nParty or any Subsidiary or Affiliate thereof), other than monetary damages for
\nwhich the Indemnifying Party shall be responsible hereunder, shall be applied
\nto or against the Indemnified Party, without the prior written consent of the
\nIndemnified Party (which shall not be unreasonably withheld).<\/p>\n
(d If the Indemnifying Party has not objected in writing to such
\nindemnification claim, and, if at the end of the 30-calendar day period
\nreferred to in Section 4.05(b) the Indemnifying Party has not assumed the
\ndefense of such claim, or, if earlier, beginning at such time as the
\nIndemnifying Party has declined in writing to assume the defense of a
\nThird-Party Claim, (x) the Indemnified Party will take such steps as it deems
\nappropriate to defend that Third-Party Claim and the defense shall be conducted
\nby counsel retained by the Indemnified Party, provided that the Indemnifying
\nParty shall have the right to participate in such proceedings and to be
\nrepresented by counsel of its own choosing at the Indemnifying Party’s sole
\ncost and expense; and (y) the Indemnifying Party shall reimburse the
\nIndemnified Party on a current basis (and in any event within 30-calendar days
\nafter the submission of invoices and bills by an Indemnified Party) for its
\nexpenses of investigation, attorneys’ and expert witnesses’ fees and other
\nout-of-pocket expenses incurred in defending against such Third-Party Claim and<\/p>\n
23<\/p>\n
110<\/p>\n
the Indemnifying Party shall be bound by the result obtained with respect
\nthereto by the Indemnified Party; provided further, that the Indemnified Party
\nshall not settle or compromise, or make any offer to settle or compromise, the
\nThird-Party Claim without the prior written consent of the Indemnifying Party
\n(which shall not be unreasonably withheld).<\/p>\n
(e The Indemnifying Party shall pay to (or at the direction of) the
\nIndemnified Party in cash the amount, if any, for which the Indemnified Party
\nis entitled to be indemnified hereunder within 15 calendar days after such
\nThird Party Claim has been Finally Determined, in the case of an indemnity
\nclaim as to which the Indemnifying Party has acknowledged liability or, in the
\ncase of any indemnity claim as to which the Indemnifying Party has not
\nacknowledged liability, within 15 calendar days after such Indemnifying Party’s
\nliability, if any, hereunder has been Finally Determined.<\/p>\n
(f Notwithstanding any other provision of this Agreement, Aetna
\nacknowledges and agrees that Spinco shall (solely at its own cost and expense)
\nassume and continue the defense of all the Spinco Litigation and that, as long
\nas such settlement or compromise includes an unconditional release of all Aetna
\nIndemnitees, Spinco shall be permitted to settle or compromise such Actions
\nwithout the consent of Aetna or any of its Affiliates provided that Spinco may
\nnot agree to any such settlement or compromise pursuant to which there is any
\nfinding or admission of any violation of Law or pursuant to which any remedy or
\nrelief (including but not limited to the imposition of a consent order,
\ninjunction or decree which would restrict the future activity or conduct of the
\nAetna Indemnitees), other than monetary damages for which the Spinco shall be
\nresponsible hereunder, shall be applied to or against the such Aetna
\nIndemnitee, without the prior written consent of such Aetna Indemnitee (which
\nshall not be unreasonably withheld); provided, further, that Spinco shall use
\nits reasonable best efforts to defend any Aetna Indemnitee and to cause any
\nAetna Indemnitee to be dismissed with prejudice as a party to any pending or
\nfuture Spinco Litigation and, to the extent any Aetna Indemnitee believes, in
\nits reasonable judgment, that Spinco has failed to diligently pursue such
\ndefense or dismissal, the Aetna Indemnitee shall be entitled (at its own cost
\nand expense) to independently move for or otherwise pursue such defense or
\ndismissal and to take such related actions as it may deem necessary or
\nappropriate in connection therewith. Spinco shall keep Aetna timely informed of
\nall significant developments with respect to the Spinco Litigation to which any
\nAetna Indemnitee is a party.<\/p>\n
(g Subject to Article 6, each party shall cooperate, and cause their
\nrespective Representatives to cooperate, in the defense or prosecution of any
\nThird-Party Claim and shall furnish or cause to be furnished such records,
\ninformation and testimony, and attend such conferences, discovery proceedings,<\/p>\n
24<\/p>\n
111<\/p>\n
hearings, trials or appeals, as may be reasonably requested in connection
\ntherewith.<\/p>\n
SECTION 4.06. Non-Exclusivity of Remedies. The remedies provided for in
\nthis Article 4 are not exclusive and shall not limit any rights or remedies
\nwhich may otherwise be available to any Indemnified Party at law or in equity.
\nIf the indemnification provided for in this Article 4 is unavailable to any
\nIndemnified Party (x) that is a member of the Aetna Group on the grounds that
\nsuch Indemnified Party was a former Affiliate of Spinco or (y) on other public
\npolicy grounds, then the Indemnifying Party shall pay to the Indemnified
\nParty’s parent such amount that represents the diminution in value to such
\nparent as a result of the Indemnifying Party’s inability to so indemnify such
\nIndemnified Party (provided that such amount shall not exceed the amount that
\nwould otherwise have been payable by the Indemnifying Party to such Indemnified
\nParty in respect of such claim pursuant to this Article 4).<\/p>\n
ARTICLE 5<\/p>\n
EMPLOYEE MATTERS AND TRANSITION SERVICES<\/p>\n
SECTION 5.01. Employee Matters Generally. With respect to employee
\nmatters and employee benefits arrangements, the parties hereto agree as set
\nforth herein and in the Employee Benefits Agreement and in the Tax Sharing
\nAgreement.<\/p>\n
SECTION 5.02. Transition Services Matters Generally. With respect to
\nthe provision of certain transition services by either Group to the other Group
\nafter the Distribution Time, the parties hereto agree as set forth herein and
\nin the Transition Services Agreement, the Lease Agreement and the Software
\nLicensing Agreement.<\/p>\n
ARTICLE 6<\/p>\n
ACCESS TO INFORMATION<\/p>\n
SECTION 6.01. Provision of Corporate Records. Except as otherwise
\nspecifically set forth in this Agreement or any Ancillary Agreement,
\nimmediately prior to or as soon as practicable following the Distribution Date,
\neach Group shall provide to the other Group all documents, Contracts, books,
\nrecords and data (including but not limited to minute books, stock registers,
\nstock certificates and documents of title) in its possession relating primarily
\nto the other Group or its<\/p>\n
25<\/p>\n
112
\nbusiness, assets and affairs (after giving effect to the transactions
\ncontemplated hereby); provided that if any such documents, Contracts, books,
\nrecords or data relate to both Groups or the business and operations of both
\nGroups, each such Group shall provide to the other Group true and complete
\ncopies of such documents, Contracts, books, records or data. Data stored in
\nelectronic form shall be provided in the format in which it existed at the
\nDistribution Date, except as otherwise specifically set forth in this Agreement
\nor any Ancillary Agreement.<\/p>\n
SECTION 6.02. Access to Information. From and after the Distribution
\nDate, each Group shall, for a reasonable period of time, afford promptly to the
\nother Group and its accountants, counsel and other designated Representatives
\nreasonable access during normal business hours to all documents, Contracts,
\nbooks, records, computer data and other data in such Group’s possession
\nrelating to such other Group or the business and affairs of such other Group
\n(after giving effect to the transactions contemplated hereby) (other than data
\nand information subject to (i) an attorney\/client or other privilege that is
\nnot specifically subject to the provisions of this Article 6 or (ii) in the
\ncase of access provisions in any joint defense arrangements between a member or
\nmembers of one Group and a member or members of the other Group, the terms of
\nthe relevant joint defense agreement), insofar as such access is reasonably
\nrequired by such other Group, including, without limitation, for audit,
\naccounting, litigation, regulatory compliance and disclosure and reporting
\npurposes.<\/p>\n
SECTION 6.03. Litigation Cooperation. From and after the Distribution
\nDate: (a) Each Group shall use all reasonable best efforts to make available to
\nthe other Group and its accountants, counsel, and other designated
\nrepresentatives, upon written request, its current and former directors,
\nofficers, employees and representatives as witnesses, and shall otherwise
\ncooperate with the other Group, to the extent reasonably required in connection
\nwith any Action or threatened Action arising out of either Group’s business and
\noperations in which the requesting party may from time to time be involved.<\/p>\n
(b Each party hereto shall promptly notify the other party hereto,
\nupon its receipt or the receipt by any of its Affiliates, of a request or
\nrequirement (by oral questions, interrogatories, requests for information or
\ndocuments, subpoenas, civil investigative demands or other similar processes)
\nwhich relates to the business and operations of the other party (a “REQUEST”)
\nreasonably regarded as calling for the inspection or production of any
\ndocuments or other information in its possession, custody or control, as
\nreceived from any Person that is a party in any Action, or in the event the
\nPerson delivering the Request is not a party to such Action, as received from
\nsuch Person. In addition to complying with the applicable provisions of Section
\n6.06, each party shall assert and maintain, or cause its Affiliates to assert
\nand maintain, any applicable claim to privilege,<\/p>\n
26<\/p>\n
113<\/p>\n
immunity, confidentiality or protection in order to protect such documents and
\nother information from disclosure, and shall seek to condition any disclosure
\nwhich may be required on such protective terms as may be appropriate. No party
\nmay waive, undermine or fail to take any action necessary to preserve an
\napplicable privilege without the prior written consent of the affected party
\nhereto (or any affected Affiliate or Affiliates of any such party) except, in
\nthe opinion of such party’s counsel, as required by law.<\/p>\n
(c Aetna, on its own behalf and on behalf of all of its Affiliates,
\nhereby waives any conflict which might preclude counsel currently representing
\nAetna, Spinco or any of their respective Affiliates from representing Spinco
\nand\/or any of its Affiliates following the Distribution Date in connection with
\nthe Spinco Litigation existing at the Merger Effective Time.<\/p>\n
(d Aetna and Spinco shall enter into such joint defense agreements,
\nin customary form, as Aetna and Spinco shall determine are advisable.<\/p>\n
SECTION 6.04. Reimbursement. Except to the extent that any member of
\none Group is obligated to indemnify any member of the other Group under Article
\n4 for that cost or expense, each Group providing information or witnesses to
\nthe other Group, or otherwise incurring any expense in connection with
\ncooperating, under Sections 6.01, 6.02 or 6.03 shall be entitled to receive
\nfrom the recipient thereof, upon the presentation of invoices therefor, payment
\nfor all out-of-pocket costs and expenses that may be incurred in providing such
\ninformation, witnesses or cooperation.<\/p>\n
SECTION 6.05. Retention of Records. From and after the Distribution
\nDate, except as otherwise required by law or agreed to in writing, each party
\nshall, and shall cause the members of its respective Group to, retain all
\ninformation relating to the other Group’s business and operations in accordance
\nwith the then general practice of such party with respect to information
\nrelating to its own business and operations. Notwithstanding the foregoing, any
\nparty may destroy or otherwise dispose of any such information at any time,
\nprovided that, prior to such destruction or disposal, (i) such party shall
\nprovide not less than 90 calendar days’ prior written notice to the other
\nparty, specifying the information proposed to be destroyed or disposed of and
\nthe scheduled date for such destruction or disposal, and (ii) if the recipient
\nof such notice shall request in writing prior to the scheduled date for such
\ndestruction or disposal that any of the information proposed to be destroyed or
\ndisposed of be delivered to such requesting party, the party proposing the
\ndestruction or disposal shall promptly arrange for the delivery of such of the
\ninformation as was requested at the expense of the requesting party.<\/p>\n
27<\/p>\n
114<\/p>\n
SECTION 6.06. Confidentiality. From and after the Distribution Date,
\neach party shall hold and shall cause its Affiliates and their respective
\ndirectors, officers, employees, counsel, accountants, agents, consultants,
\nadvisors and other authorized representatives (“REPRESENTATIVES”) to hold in
\nstrict confidence all documents and other information (other than any such
\ndocuments and other information relating solely to the business or affairs of
\nsuch party) concerning the other party and\/or its Affiliates (“CONFIDENTIAL
\nINFORMATION”) unless such party is compelled to disclose such documents and\/or
\nother information by judicial or administrative process or, in the opinion of
\nits counsel, by other requirements of law or the rules of any applicable stock
\nexchange. Confidential Information shall not include such documents and\/or
\nother information which can be shown to have been (A) in the public domain
\nthrough no fault of such party, (B) lawfully acquired after the Distribution
\nDate on a non-confidential basis from other sources or (C) acquired or
\ndeveloped independently by such party without violating this Section 6.06 or
\nthe Confidentiality Agreement. Notwithstanding the foregoing, such party may
\ndisclose such Confidential Information to its Representatives so long as such
\nPersons are informed by such party of the confidential nature of such
\nConfidential Information and are directed by such party to treat such documents
\nand\/or other information confidentially. In the event that such party or any of
\nits Representatives is requested or required (by oral questions,
\ninterrogatories, requests for information or documents, subpoenas, civil
\ninvestigative demands or other similar processes) to disclose any of the
\nConfidential Information, such party will promptly notify the other party so
\nthat the other party may seek a protective order or other remedy or waive such
\nparty’s compliance with this Section 6.06. Such party shall exercise reasonable
\nbest efforts to preserve the confidentiality of the Confidential Information,
\nincluding, but not limited to, by cooperating with the other party to obtain an
\nappropriate protective order or other reliable assurance that confidential
\ntreatment will be accorded the Confidential Information. If, in the absence of
\na protective order or other remedy or the absence of receipt of a waiver of the
\nother party, such party or any of its Representatives is nonetheless legally
\ncompelled to disclose any of the Confidential Information, such party or such
\nRepresentative may disclose only that portion of the Confidential Information
\nwhich is legally required to be disclosed. Such party agrees to be responsible
\nfor any breach of this Section 6.06 by it and\/or its Representatives.<\/p>\n
SECTION 6.07. Preservation of Privilege. The parties hereto recognize
\nthat as a consequence of the transactions contemplated by this Agreement or the
\nMerger Agreement or the Ancillary Agreements, the parties may have common
\ninterests in the defense of certain pending or threatened litigation which may
\nnecessitate the exchange between the parties or their counsel of documents or
\nother information that is subject to the attorney-client privilege, the work
\nproduct doctrine or other legally recognized privileges, protections or
\nimmunities from<\/p>\n
28<\/p>\n
115<\/p>\n
discovery. Each party agrees to take in addition to, and not in limitation of,
\nits obligations under Section 6.03(b) all reasonable best and necessary efforts
\nto protect and maintain, and to cause its Affiliates to protect and maintain,
\nany applicable claim to privilege, immunity, protection or confidentiality in
\norder to protect such documents and other information from improper disclosure
\nor use. In addition to, and not in limitation of, its obligations under Section
\n6.03(b) and without limiting the generality of the foregoing, and to the
\nmaximum extent permitted by law, none of the parties or their respective
\nAffiliates may waive or undermine, or fail to defend in a commercially
\nreasonable manner, any privilege or protection or take or fail to take any
\nother commercially reasonable action (a) that could result in the disclosure of
\nany common-interest or joint-defense materials to any Person that is neither a
\nparty to this Agreement nor an Affiliate of any such party or (b) that would
\nhave the effect of waiving or undermining such privilege or protection, in
\neither case, without the prior written consent of the affected party and any
\naffected Affiliate of such affected party.<\/p>\n
SECTION 6.08. Inapplicability of Article 6 to Tax Matters.
\nNotwithstanding anything to the contrary in this Article 6, this Article 6
\nshall not apply with respect to documents, other information and\/or other
\nmatters relating to Taxes, all of which shall be governed by the Tax Sharing
\nAgreement.<\/p>\n
ARTICLE 7<\/p>\n
CERTAIN OTHER AGREEMENTS<\/p>\n
SECTION 7.01. Intercompany Accounts. (a Except as otherwise
\nspecifically set forth herein or in any of the Ancillary Agreements or in the
\nMerger Agreement, (i) all intercompany loan balances in existence as of the
\nDistribution Time between any member of the Aetna Group and any member of the
\nSpinco Group will be settled or paid in cash or other immediately available
\nfunds prior to or as of the Distribution Time and (ii) all intercompany
\naccounts receivable and accounts payable between any member of one Group and
\nany member of another Group in existence at the Distribution Time shall be paid
\nin full, in cash or other immediately available funds, by the party or parties
\nowing such obligations as soon as practicable (but in no event more than 30
\ncalendar days after the Distribution Time). It is understood and agreed that
\nall or a portion of the intercompany loan balances owed by Spinco to Aetna
\nServices will be paid in cash by Spinco.<\/p>\n
(b At or prior to the Distribution Time, Aetna shall repay or cause
\nto be repaid all Short Term Debt of any member of the Aetna Group, other than
\n(i) not more than $17.4 million aggregate principal amount (together with
\naccrued and<\/p>\n
29<\/p>\n
116<\/p>\n
unpaid interest thereon) of Short Term Debt issued by Cruz Blanca S.A., AFP
\nSanta Maria S.A., Aetna Credito Hipotecario S.A., and Aetna Life Insurance
\nCompany of America, Taiwan Branch, and (ii) any Short Term Debt of any Person
\nthat is not a Subsidiary of Aetna.<\/p>\n
(c) Except as otherwise contemplated hereby or as set forth on
\nSchedule 7.01 or in any of the other Ancillary Agreements or in the Merger
\nAgreement, all prior agreements and arrangements, including those relating to
\ngoods, rights or services provided or licensed, between any member of the
\nSpinco Group and any member of the Aetna Group shall be terminated effective as
\nof the Distribution Time, if not previously terminated. No such agreements or
\narrangements shall be in effect after the Distribution Time unless embodied in
\nthis Agreement, the Ancillary Agreements or set forth on Schedule 7.01.<\/p>\n
SECTION 7.02. Trademarks; Trade Names. (a) Prior to the Distribution
\nTime, Aetna and Spinco will enter into the Trademark Assignment Agreement, the
\nChinese Mark Agreement and the Trademark Licensing Agreement.<\/p>\n
(b) From and after the Distribution Date, (i) Aetna will not, and will
\nnot permit any of its Affiliates to, use any of (A) the Licensed Marks and
\nNames, except as specifically permitted by the Trademark License Agreement, and
\n(B) the Spinco Group’s logos, marks or names (other than the Licensed Marks and
\nNames), and (ii) Spinco will not, and will not permit any of its Affiliates to,
\nuse the Aetna China Name Rights except as specifically permitted by the Chinese
\nMark Agreement.<\/p>\n
(c) From and after the Distribution Date, Spinco will not, and will
\nnot permit any of its Affiliates to, infringe upon the Aeltus Name Rights.<\/p>\n
(d) As promptly as practicable following the Distribution Time, Aetna
\nwill, and will cause Aetna Services to, file with the applicable Governmental
\nEntity amendments to their articles or certificate of incorporation or
\notherwise take all action necessary to delete from their names the word “Aetna”
\nor any marks and names derived therefrom and shall do or cause to be done all
\nother acts, including the payment of any fees required in connection therewith,
\nto cause such amendments or other actions to become effective. Aetna will cause
\nall other members of the Aetna Group to take the foregoing actions with respect
\nto the names of the Aetna Subsidiaries as promptly as practicable prior to the
\nend of the Permitted Trademark Period.<\/p>\n
(e) From and after the Distribution Date, each party agrees to
\ncooperate with the other party in connection with any regulatory matters
\nrelating to the<\/p>\n
30<\/p>\n
117<\/p>\n
Trademark Licensing Agreement, the Chinese Mark Agreement and the Trademark
\nAssignment Agreement.<\/p>\n
(f) Aetna acknowledges that from and after the Distribution Date,
\nnotwithstanding the use of the marks and names (the “LICENSED MARKS AND NAMES”)
\nlicensed by Spinco as licensor pursuant to the Trademark Licensing Agreement,
\nthe Aetna Name Rights will remain an asset of the Spinco Group and shall
\ninclude any goodwill associated with the use of the “Aetna” name, and any
\nderivative thereof, in combination with one or more of the Acquiror’s existing
\nnames or marks as permitted by the Trademark Licensing Agreement.<\/p>\n
SECTION 7.03. Further Assurances and Consents. In addition to the
\nactions specifically provided for elsewhere in this Agreement, each of the
\nparties hereto shall use its reasonable best efforts to take, or cause to be
\ntaken, all actions, and to do, or cause to be done, all things, reasonably
\nnecessary, proper or advisable under applicable laws, regulations and
\nagreements or otherwise to consummate and make effective the transactions
\ncontemplated by this Agreement, including, without limitation, using its
\nreasonable best efforts to obtain any consents and approvals and to make any
\nfilings and applications necessary or desirable in order to consummate the
\ntransactions contemplated by this Agreement; provided that no party hereto
\nshall be obligated to pay any consideration therefor (except for filing fees
\nand other similar charges) to any third party from whom such consents or
\napprovals are requested or to take any action or omit to take any action if the
\ntaking of or the omission to take such action would be unreasonably burdensome
\nto the party, its Group or its Group’s business. The parties agree to enter
\ninto and execute such additional Distribution Documents as may be reasonably
\nnecessary, proper or advisable to effect the transactions contemplated by this
\nAgreement or the Ancillary Agreements, provided, however that such additional
\nDistribution Documents shall not diminish any of the rights granted or increase
\nany of the Liabilities assumed under this Agreement or the Ancillary
\nAgreements.<\/p>\n
SECTION 7.04. Noncompetition and Non-Solicitation. (a)(i) For a period
\nof three (3) years following the Merger Effective Time, neither Spinco nor any
\nof its Affiliates (after giving effect to the Distribution), will engage in the
\nfollowing businesses conducted by the Aetna Group immediately prior to the
\nMerger Effective Time: (A) in the United States, underwriting and\/or issuance
\nof defined contribution group annuities for pension plans maintained by
\nemployer or similar groups pursuant to Section 401(k), 403(b) or 457 of the
\nU.S. Internal Revenue Code of 1986, as amended (or any successor law),
\nunderwriting and\/or issuance of individual annuities, providing investment
\nadvisory or broker-dealer services, or the management of mutual funds, and (B)
\nin those jurisdictions outside of the United States listed in Schedule
\n7.04(a)(I), those businesses specified with respect <\/p>\n
31<\/p>\n
118
\nto each such jurisdiction ((A) and (B) collectively, the “Prohibited
\nBusinesses”), and (ii) for an additional period of 12 months, to the extent
\nthat Spinco or any of its Affiliates (after giving effect to the Distribution)
\nengages directly or indirectly in any Prohibited Business, it will do so using
\na brand other than “Aetna” (except and only to such extent as may be required
\nby Law); provided that the foregoing shall not prohibit Spinco or any of its
\nAffiliates from (x) conducting any of the activities set forth in Schedule 7.04
\n(a)(II), (y) engaging in any Prohibited Business in any jurisdiction specified
\nin Schedule 7.04(a) if the Aetna Group ceases to engage in such business in such
\njurisdiction, or (z) owning, acquiring or investing in any Person, provided
\nthat if such Person derives in excess of 10% of its consolidated gross revenue
\nin the most recently completed four fiscal quarters from business activities
\nwhich would be restricted hereunder, Spinco will, or will cause such Affiliate
\nto, divest a portion of such business representing such excess within 12 months
\nof the acquisition date (unless, in the case of the restriction specified in
\n(i) above, such 12-month period would terminate subsequent to the termination
\nof the 3-year restriction period). It is understood that the restrictions set
\nforth in the immediately preceding sentence will not apply to any Person that
\nacquires (by acquisition, merger or otherwise) an interest in Spinco or any of
\nits Affiliates so long as such Person was not an Affiliate of Spinco that was
\nsubject to such restrictions prior to the aforementioned acquisition, merger or
\nother acquisitive transaction (it being further understood that, following the
\naforementioned acquisition, merger or other acquisitive transaction, such
\nrestrictions will continue to apply to Spinco and its Affiliates that were
\nsubject to such restrictions prior to such acquisition, merger or other
\ntransaction).<\/p>\n
(b) Except as otherwise permitted by any Ancillary Agreement, for a
\nperiod of two years from the Merger Effective Date, neither Group nor any of
\nits Affiliates shall, directly or indirectly, solicit or attempt to employ or
\nemploy any employee of the other Group. Notwithstanding the foregoing, the
\nrestriction set forth in the immediately preceding sentence shall not apply to
\n(i) with respect to all employees other than officers and other senior
\nmanagement of any member of a Group, any Person who contacts such Group or any
\nof its Affiliates in response to general advertisements or searches or other
\nbroad-based hiring methods or (ii) individuals who choose to leave for Good
\nReason the employment of, or are terminated by, a Group without the other Group
\nhaving taken any action otherwise prohibited by this Section 7.04(b) . “GOOD
\nREASON” for the purposes of this Section 7.04(b) shall mean a significant or
\nlong-term reduction in compensation, a relocation of more than 50 miles from
\nthe employee’s current place of employment or a material diminution of the
\nemployee’s duties and responsibilities.<\/p>\n
(c) If any provision contained in this Section 7.04 shall for any
\nreason be held invalid, illegal or unenforceable in any respect, such
\ninvalidity, illegality or <\/p>\n
32<\/p>\n
119
\nunenforceability shall not affect any other provisions of this Section, but this
\nSection shall be construed as if such invalid, illegal or unenforceable
\nprovision had never been contained herein. It is the intention of the parties
\nthat if any of the restrictions or covenants contained herein is held to cover
\na geographic area or to be for a length of time which is not permitted by
\napplicable law, or in any way construed to be too broad or to any extent
\ninvalid, such provision shall not be construed to be null, void and of no
\neffect, but to the extent such provision would be valid or enforceable under
\napplicable law, a court of competent jurisdiction shall construe and interpret
\nor reform this Section to provide for a covenant having the maximum enforceable
\ngeographic area, time period and other provisions (not greater than those
\ncontained herein) as shall be valid and enforceable under such applicable law.
\nIn addition to and not in limitation of the parties’ obligations under Section
\n8.14, each of the parties hereto acknowledges that the other party would be
\nirreparably harmed by any breach of this Section and that there would be no
\nadequate remedy at law or in damages to compensate such party for any such
\nbreach. Each of the parties hereto agrees that the other party shall be
\nentitled to injunctive relief requiring specific performance by such party of
\nthis Section, and consents to the entry thereof.<\/p>\n
SECTION 7.05. Third Party Beneficiaries. Acquiror and Parent shall be
\nthird party beneficiaries of this Agreement. Except as contemplated in the
\npreceding sentence, nothing contained in this Agreement is intended to confer
\nupon any Person or entity other than the parties hereto and their respective
\nsuccessors and permitted assigns and Acquiror and Parent, any benefit, right or
\nremedies under or by reason of this Agreement, except that the provisions of
\nArticle 4 shall inure to the benefit of the Spinco Indemnitees and the Aetna
\nIndemnitees.<\/p>\n
SECTION 7.06. Intellectual Property Rights and Licenses. Except as
\notherwise specifically set forth in this Agreement or in any of the other
\nAncillary Agreements, neither Group shall have any right or license in or to
\nany technology, software, Intellectual Property Right or other proprietary
\nright owned, licensed or held for use by the other Group.<\/p>\n
SECTION 7.07. Insurance. (a) The Spinco Assets shall include any and
\nall rights of an insured party under each of the Group Policies, subject to the
\nterms of such Group Policies and any limitations or obligations of Spinco
\ncontemplated by this Section 7.07 or Schedule 7.07, specifically including
\nrights of indemnity and the right to be defended by or at the expense of the
\ninsurer, with respect to all Actions and Liabilities incurred or claimed to
\nhave been incurred prior to the Distribution Date by any party in or in
\nconnection with the conduct of any of the Spinco Group or the Aetna Group or
\ntheir respective businesses and operations, and which Actions and Liabilities
\nmay arise out of an insured or insurable <\/p>\n
33<\/p>\n
120
\noccurrence under one or more of such Group Policies. With respect to all of the
\napplicable Group Policies, Spinco shall use its reasonable best efforts, at its
\noption, either (x) to cause Aetna and its Affiliates to be named or maintained
\nas additional insured parties thereunder to the extent of, or (y) to obtain a
\nrun-off or tail coverage policy with respect to, in each case, their respective
\ninsurable interests in respect of the Aetna Group Liabilities incurred or
\nclaimed to have been incurred prior to the Distribution Date and insured
\nthereunder, and the Aetna Assets shall include such rights, to the extent they
\nrelate to the Aetna Group Liabilities, of an additional insured party under
\neach such Group Policy or under such run-off or tail policy, as applicable,
\nsubject to the terms of such Policy.<\/p>\n
(b) Spinco shall administer all Group Policies. Where Aetna Group
\nLiabilities are covered under the Group Policies for periods prior to the
\nDistribution Date, or under any Group Policy covering claims made after the
\nDistribution Date with respect to an action, error, omission or occurrence
\nprior to the Distribution Date, then from and after the Distribution Date, upon
\nrequest from Aetna, Spinco shall claim coverage for Insured Claims under such
\nGroup Policy as and to the extent that such insurance is available (subject to
\nSection 7.07(c)) up to the full extent of the applicable limits of liability of
\nsuch Group Policy.<\/p>\n
(c) Spinco shall use its reasonable best efforts to cause Insurance
\nProceeds received with respect to claims, costs and expenses under the Group
\nPolicies (i) relating to Aetna Group Liabilities, to be paid directly to Aetna
\n(or the applicable member of the Aetna Group) and (ii) relating to the Spinco
\nGroup Liabilities to be paid directly to Spinco (or the applicable member of
\nthe Spinco Group). In the event Spinco has been unable to cause Insurance
\nProceeds to be paid directly to a Aetna Group member in accordance with the
\npreceding sentence, or to cause Aetna and its Affiliates to be named or
\nmaintained as additional insureds or to obtain run-off or tail policies in
\naccordance with the last sentence of Section 7.07(a), Spinco shall inform Aetna
\nof the reasons therefor and Aetna shall be entitled, at its own cost and
\nexpense, to take such actions as may be necessary to achieve such payment or
\nsuch additional insured status or to obtain such run-off or tail policy (so
\nlong as such actions are not materially adverse to Spinco). Payment of the
\nallocable portions of indemnity costs out of Insurance Proceeds resulting from
\nsuch Group Policies will be made by Spinco to the appropriate party upon
\nreceipt from the insurance carrier (to the extent not paid directly to a Aetna
\nGroup member pursuant to the first sentence of this Section 7.01(c)). In the
\nevent that the aggregate limits on any Group Policies are exceeded by the
\naggregate of outstanding Insured Claims by the parties hereto, the parties
\nshall agree on an equitable allocation of Insurance Proceeds based upon their
\nrespective bona fide claims. Each party agrees to use reasonable best efforts
\nto maximize available coverage under those Group Policies applicable to such<\/p>\n
34<\/p>\n
121
\nparty, and to take all reasonable steps to recover from all other responsible
\nparties in respect of an Insured Claim to the extent coverage limits under a
\nGroup Policy have been exceeded or would be exceeded as a result of such Insured
\nClaim. Notwithstanding any other provision of this Agreement, Spinco shall not
\nbe required to renew, extend or expand the coverage available under any of the
\nGroup Policies provided, that prior to any termination (or failure to
\nreinstate) such Group Policies with respect to coverage of any Aetna Group
\nLiabilities insured thereunder, Spinco shall afford Aetna the opportunity of
\ntaking such commercially reasonable steps as may be necessary to maintain such
\ncoverage in place.<\/p>\n
SECTION 7.08. Prohibition on Certain Sales. Aetna agrees that for one
\nyear from the Merger Effective Time, unless there is a material change at
\nAcquiror and its Subsidiaries, Aetna will not sell or permit to be sold the
\ninterests of Aetna International, Inc. in Taiwan, Hong Kong and Malaysia;
\nprovided, that the foregoing shall not limit the right of Aetna to sell
\nminority interests in such Subsidiaries.<\/p>\n
SECTION 7.09. Brazilian Certificate of Foreign Capital Registration .
\nPrior to the Distribution Date, Aetna shall use its reasonable best efforts to
\nprovide to Parent a copy of the Certificate of Foreign Capital Registration for
\nSul America Aetna Seguros e Previdencia S.A., and if not prior to the
\nDistribution Date, Spinco shall provide such certificate to Parent within one
\nyear from the Distribution Date.<\/p>\n
ARTICLE 8<\/p>\n
MISCELLANEOUS<\/p>\n
SECTION 8.01. Notices. All notices and other communications to any
\nparty hereunder shall be in writing (including telecopy or similar writing) and
\nshall be deemed given when received addressed as follows:<\/p>\n
If to Aetna to:<\/p>\n
Aetna Inc.
\n [ ]
\n [ ]
\n Telecopy: [ ]
\n Attention: [ ]<\/p>\n
With copies to:<\/p>\n
35<\/p>\n
122<\/p>\n
Parent
\n in c\/o IVY North American Insurance Corp.
\n 5780 Powers Ferry Road, NW
\n Atlanta, Georgia 30327-4390
\n Attention: Michael W. Cunningham,
\n Executive Vice President & Chief Financial Officer
\n Fax: 770-980-3303<\/p>\n
B. Scott Burton
\n Senior Vice President & Chief Counsel
\n Fax: 770-850-7660<\/p>\n
and<\/p>\n
Sullivan & Cromwell
\n 125 Broad Street
\n New York, New York 10004
\n Attention: Joseph B. Frumkin, Esq.
\n William D. Torchiana, Esq.
\n Fax: 212-558-3588<\/p>\n
If to Spinco, to:<\/p>\n
Spinco
\n [ ]
\n [ ]
\n Telecopy: [ ]
\n Attention: [ ]<\/p>\n
With a copy to:<\/p>\n
[counsel to come]
\n and
\n Davis Polk & Wardwell
\n 450 Lexington Avenue
\n New York, New York 10017
\n Telecopy: (212) 450-4800
\n Attention: Lewis B. Kaden<\/p>\n
Any party may, by written notice so delivered to the other parties,
\nchange the address to which delivery of any notice shall thereafter be made.<\/p>\n
36<\/p>\n
123<\/p>\n
SECTION 8.02. Amendments; No Waivers. (a) Any provision of this
\nAgreement may be amended or waived if, and only if, such amendment or waiver is
\nin writing and signed, in the case of an amendment, by Aetna and Spinco, or in
\nthe case of a waiver, by the party against whom the waiver is to be effective.
\nIn addition, unless the Merger Agreement shall have been terminated in
\naccordance with its terms, any such amendment or waiver that is adverse in
\ninterest to any member of the Aetna Group shall be subject to the written
\nconsent of Parent.<\/p>\n
(b) No failure or delay by any party in exercising any right, power or
\nprivilege hereunder shall operate as a waiver thereof nor shall any single or
\npartial exercise thereof preclude any other or further exercise thereof or the
\nexercise of any other right, power or privilege. The rights and remedies herein
\nprovided shall be cumulative and not exclusive of any rights or remedies
\nprovided by law.<\/p>\n
SECTION 8.03. Expenses. (a) All costs and expenses incurred by Aetna or
\nSpinco in connection with the preparation, execution and delivery of the
\nAncillary Agreements and the consummation of the Distribution and the other
\ntransactions contemplated hereby and therein (including the fees and expenses
\nof all counsel, accountants and financial and other advisors of both Groups in
\nconnection therewith, and all expenses in connection with preparation, filing
\nand printing of the Form 10, the Information Statement and the Proxy Statement)
\nshall be paid by Spinco; provided that the Parent and its Affiliates shall pay
\ntheir own expenses, if any, incurred in connection with the Distribution and
\nSpinco shall pay all Transaction Expenses (as defined in the Merger Agreement),
\nin each case except as specifically provided otherwise herein, in the Merger
\nAgreement or any Ancillary Agreement.<\/p>\n
(b) Each reference in this Agreement to expenses, fees and
\nout-of-pocket costs shall mean such expenses, fees and out-of-pocket costs as
\nthe party incurring such expenses, fees or out-of-pocket costs would reasonably
\nincur in connection with its own business under circumstances where such
\nexpenses, fees and out-of-pocket costs are not subject to reimbursement.<\/p>\n
SECTION 8.04. Successors and Assigns. The provisions of this Agreement
\nshall be binding upon and inure to the benefit of the parties hereto and their
\nrespective successors and assigns; provided that neither party may assign,
\ndelegate or otherwise transfer any of its rights or obligations under this
\nAgreement without the prior written consent of Parent and the other party
\nhereto. If any party or any of its successors or assigns (i) shall consolidate
\nwith or merge into any other Person and shall not be the continuing or
\nsurviving corporation or entity of such consolidation or merger or (ii) shall
\ntransfer all or substantially all of its properties and assets to any Person,
\nthen, and in each such case, proper provisions shall be<\/p>\n
37<\/p>\n
124<\/p>\n
made so that the successors and assigns of such party shall assume all of the
\nobligations of such party under the Distribution Documents.<\/p>\n
SECTION 8.05. Governing Law. This Agreement shall be construed in
\naccordance with and governed by the law of the State of Delaware, without
\nregard to the conflict of laws rules thereof.<\/p>\n
SECTION 8.06. Counterparts; Effectiveness. This Agreement may be signed
\nin any number of counterparts, each of which shall be an original, with the
\nsame effect as if the signatures thereto and hereto were upon the same
\ninstrument. This Agreement shall become effective when each party hereto shall
\nhave received a counterpart hereof signed by the other party hereto.<\/p>\n
SECTION 8.07. Entire Agreement. This Agreement, the Merger Agreement,
\nthe Confidentiality Agreement and the other Distribution Documents constitute
\nthe entire understanding of the parties with respect to the subject matter
\nhereof and thereof and supersede all prior agreements, understandings and
\nnegotiations, both written and oral, between the parties with respect to the
\nsubject matter hereof and thereof. No representation, inducement, promise,
\nunderstanding, condition or warranty not set forth herein or in the
\nConfidentiality Agreement, the Merger Agreement or the other Distribution
\nDocuments has been made or relied upon by any party hereto. To the extent that
\nthe provisions of this Agreement are inconsistent with the provisions of any
\nother Ancillary Agreement, the provisions of such other Ancillary Agreement
\nshall prevail.<\/p>\n
SECTION 8.08. Tax Sharing Agreement; Set-Off; Payment of After-Tax
\nAmounts; Certain Transfer Taxes. (a) Except as otherwise specifically provided
\nherein and not inconsistent with the Tax Sharing Agreement, this Agreement
\nshall not govern any Tax, and any and all claims, losses, damages, demands,
\ncosts, expenses or liabilities relating to Taxes shall be exclusively governed
\nby the Tax Sharing Agreement.<\/p>\n
(b) If, at the time Spinco is required to make any payment to Aetna or
\nany of its Affiliates under this Agreement, Aetna or any of its Affiliates owes
\nSpinco or any of its Affiliates any amount under this Agreement or any
\nAncillary Agreement, then such amounts shall be offset and the excess shall be
\npaid by the party liable for such excess. Similarly, if at the time Aetna is
\nrequired to make any payment to Spinco or any of its Affiliates under this
\nAgreement, and Spinco or any of its Affiliates owes Aetna or any of its
\nAffiliates any amount under this Agreement or any Ancillary Agreement, then
\nsuch amounts shall be offset and the excess shall be paid by the party liable
\nfor such excess.<\/p>\n
38<\/p>\n
125<\/p>\n
(c) If Aetna, Spinco or any of their respective post-Distribution
\nAffiliates makes a payment pursuant to Section 4.01 or 4.02 of this Agreement,
\nthen such Person shall also pay the recipient of such payment the related
\nAfter-Tax Amount (as defined in the Tax Sharing Agreement). This Section
\n8.08(c) shall be interpreted in accordance with the principles set forth in the
\nTax Sharing Agreement and shall be subject to the dispute resolution provisions
\ncontained in Section 10.09 of the Tax Sharing Agreement.<\/p>\n
(d) Except as otherwise provided in the Ancillary Agreements, all
\ntransfer, documentary, sales, use, stamp and registration taxes and fees
\n(including any penalties and interest) incurred in connection with any of the
\ntransactions described in Article 2 of this Agreement shall be borne and paid
\nequally by Spinco and Aetna. The party that is required by applicable law to
\nfile any Return (as defined in the Tax Sharing Agreement) or make any payment
\nwith respect to any of those taxes shall do so, and the other party shall
\ncooperate with respect to that filing or payment as necessary. The non-paying
\nparty shall reimburse the paying party in accordance with this Section 8.08, as
\nappropriate, within 5 Business Days after it receives notice of the payment of
\nthose taxes. This Section 8.08(d) shall be interpreted in accordance with the
\nprinciples set forth in the Tax Sharing Agreement and shall be subject to the
\ndispute resolution provisions contained in Section 10.09 of the Tax Sharing
\nAgreement.<\/p>\n
SECTION 8.09. Jurisdiction. Except as otherwise expressly provided in
\nthis Agreement, any Action seeking to enforce any provision of, or based on any
\nmatter arising out of or in connection with, this Agreement or the transactions
\ncontemplated hereby may be brought in the United States District Court for the
\nDistrict of Delaware, and each of the parties hereby consents to the
\njurisdiction of such court (and of the appropriate appellate courts therefrom)
\nin any such Action and irrevocably waives, to the fullest extent permitted by
\nlaw, any objection which it may now or hereafter have to the laying of the
\nvenue of any such Action in any such court or that any such Action which is
\nbrought in any such court has been brought in an inconvenient forum. Process in
\nany such Action may be served on any party anywhere in the world, whether
\nwithin or without the jurisdiction of any such court. Without limiting the
\nforegoing, each party agrees that service of process on such party as provided
\nin Section 8.01 shall be deemed effective service of process on such party.<\/p>\n
SECTION 8.10. Pre-Litigation Dispute Resolution. Prior to the bringing
\nof any Action against the other, senior officers of Aetna and Spinco shall
\nconfer, consult and in good faith attempt for a period of 30 calendar days to
\nresolve any dispute between such parties relating to this Agreement or any of
\nthe Ancillary Agreements (other than the Tax Sharing Agreement) without resort
\nto legal remedies.<\/p>\n
39<\/p>\n
126<\/p>\n
SECTION 8.11. Severability. If any one or more of the provisions
\ncontained in this Agreement should be declared invalid, illegal or
\nunenforceable in any respect, the validity, legality and enforceability of the
\nremaining provisions contained in this Agreement shall not in any way be
\naffected or impaired thereby so long as the economic or legal substance of the
\ntransactions contemplated hereby is not affected in any manner materially
\nadverse to any party. Upon such a declaration, the parties shall modify this
\nAgreement so as to effect the original intent of the parties as closely as
\npossible in an acceptable manner so that the transactions contemplated hereby
\nare consummated as originally contemplated to the fullest extent possible.<\/p>\n
SECTION 8.12. Survival. All covenants and agreements of the parties
\ncontained in this Agreement and the Confidentiality Agreement shall survive the
\nDistribution Date indefinitely, unless a specific survival or other applicable
\nperiod is expressly set forth therein.<\/p>\n
SECTION 8.13. Captions. The captions herein are included for
\nconvenience of reference only and shall be ignored in the construction or
\ninterpretation hereof.<\/p>\n
SECTION 8.14. Specific Performance. Each party to this Agreement
\nacknowledges and agrees that damages for a breach or threatened breach of any
\nof the provisions of this Agreement would be inadequate and irreparable harm
\nwould occur. In recognition of this fact, each party agrees that, if there is a
\nbreach or threatened breach, in addition to any damages, the other nonbreaching
\nparty to this Agreement, without posting any bond, shall be entitled to seek
\nand obtain equitable relief in the form of specific performance, temporary
\nrestraining order, temporary or permanent injunction, attachment, or any other
\nequitable remedy which may then be available to obligate the breaching party
\n(i) to perform its obligations under this Agreement or (ii) if the breaching
\nparty is unable, for whatever reason, to perform those obligations, to take any
\nother actions as are necessary, advisable or appropriate to give the other
\nparty to this Agreement the economic effect which comes as close as possible to
\nthe performance of those obligations (including, but not limited to,
\ntransferring, or granting liens on, the assets of the breaching party to secure
\nthe performance by the breaching party of those obligations).<\/p>\n
40<\/p>\n
127<\/p>\n
IN WITNESS WHEREOF the parties hereto have caused this Distribution
\nAgreement to be duly executed by their respective authorized officers as of the
\ndate first above written.<\/p>\n
AETNA INC.<\/p>\n
By:
\n ——————————
\n Name: [ ]
\n Title: [ ]<\/p>\n
AETNA U.S. HEALTHCARE INC.<\/p>\n
By:
\n ——————————
\n Name: [ ]
\n Title: [ ]<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6587],"corporate_contracts_industries":[9440],"corporate_contracts_types":[9622,9626],"class_list":["post-43221","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-aetna-inc","corporate_contracts_industries-health__plans","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43221","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43221"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43221"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43221"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43221"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}