<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) March 1, 2000
---------------------
GE Financial Assurance Holdings, Inc.
-------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-23375 54-1829180
- ---------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6604 West Broad Street, Richmond, Virginia 23230
- ---------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (804) 281-6000
- ---------------------------------------------------------------------------
Not Applicable
--------------
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On March 1, 2000, the insurance policies and related assets of Toho Mutual Life
Insurance Company (Toho) were transferred to GE Edison Life Insurance Company
(GE Edison), a subsidiary of GE Financial Assurance Holdings, Inc. (the
Company), a Delaware corporation and wholly-owned, indirect subsidiary of
General Electric Company.
In June 1999, Japan's Financial Supervisory Agency (FSA) issued a partial
business suspension order to Toho, a Japenese insurer which was deemed
insolvent, in accordance with the Japanese Insurance Business Law (IBL). In
connection with such suspension order, the FSA appointed two independent
individuals from the Japanese insurance industry and the Life Insurance
Association of Japan as administrators of Toho (collectively, the
Administrator). In accordance with the IBL, the Administrator determined that a
comprehensive transfer of Toho's insurance contracts to a rescuing company was
in the best interests of the Toho policyholders. In conjunction with the
comprehensive transfer, the Administrator restructured Toho's in-force insurance
contacts and investment portfolio. The restructured insurance contracts have
surrender charges, reduced benefits and lower policy guarantees. Restructured
assets, including a pre-determined statutory goodwill amount (representing the
anticipated statutory profits within the restructured insurance policies), equal
to the restructured policy reserves are also to be transferred to the rescuing
company. After a period of negotiation, GE Edison was selected as the rescuing
company and it entered into an agreement with Toho on December 22, 1999 (the
Agreement), pursuant to which Toho transferred its restructured insurance
contracts and assets to GE Edison when the transaction closed on March 1, 2000.
Under the terms of the Agreement, Japan's Policyholder Protection Corporation
contributed approximately $3.6 billion to GE Edison as part of the transfer of
the restructured policies. Total cash and invested assets acquired by GE Edison
pursuant to the comprehensive transfer approximated $20.5 billion, and
restructured insurance contracts and other liabilities assumed approximated
$22.7 billion. The Company expects to infuse approximately $600 million of
capital into GE Edison to support strong solvency margins and claims paying
ratings. The Company anticipates funding the capital infusion through the
issuance of commercial paper.
As previously disclosed in the Company's 1998 Annual Report on Form 10-K, the
Company and Toho jointly capitalized GE Edison in March 1998. At the time, GE
Edison acquired the operating infrastructure and certain tangible assets of
Toho. With the former Toho infrastructure, GE Edison commenced origination and
underwriting of all new business activity. The then-existing Toho business
remained with Toho with the exception of certain term life insurance business
ceded to GE Edison. GE Edison also entered into an agreement with Toho to cede a
portion of the new life insurance business issued by GE Edison to Toho under a
modified coinsurance arrangement. As a result of the March 1, 2000 comprehensive
transfer, the Company now indirectly owns 100% of GE Edison.
1
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial statements of business acquired.
The Regisrant has concluded that the assumption of policy liabilities
and the acquisition of assets is not an acquisition of a business that
has continuity both before and after the comprehensive transfer and
therefore Toho historical financial statements would not be relevant
to security holders of the Registrant and their understanding of
future operations. The Registrant will file a statement of liabilities
assumed and assets acquired by amendment to this Current Report on
Form 8-K.
(b) Pro forma financial information.
The liabilities assumed and assets acquired as part of the
comprehensive transfer will be reflected in the Registrant's March 31,
2000 consolidated balance sheet in its Quarterly Report on Form 10-Q
for the quarter ending March 31, 2000.
(c) Exhibits.
2.1 AGREEMENT ON THE TRANSFER OF INSURANCE CONTRACTS, ETC.
(English translation of the agreement executed on December 22,
1999 by and between Toho Mutual Life Insurance Company and GE
Edison Life Insurance Company).
The Registrant agrees to furnish supplementally to the Securities and
Exchange Commission, upon request, copies of any schedules and
exhibits to the foregoing exhibit that are not filed herewith in
accordance with Item 601(b)(2) of Regulation S-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GE Financial Assurance Holdings, Inc.
-------------------------------------
(Registrant)
Date: March 16, 2000 By: /s/ Thomas W. Casey
----------------------
Thomas W. Casey
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: March 16, 2000 By: /s/ Richard G. Fucci
-----------------------
Richard G. Fucci
Vice President and Controller
(Principal Accounting Officer)
2
<PAGE>
Exhibit 2.1
[English Translation]
AGREEMENT ON THE TRANSFER OF INSURANCE CONTRACTS, ETC.
This Agreement (the "Agreement") is made and entered into as of December 22,
1999, by and between Toho Mutual Life Insurance Company (the "Transferring
Company"), a corporation organized under the laws of Japan and having its
principal office at 2-15-1, Shibuya, Shibuya-ku, Tokyo, and GE Edison Life
Insurance Company (the "Rescuing Company"), a corporation organized under the
laws of Japan and having its principal office at 2-15-1, Shibuya, Shibuya-ku,
Tokyo.
W I T N E S S E T H :
WHEREAS, the Transferring Company is a mutual company conducting an insurance
business; on June 4, 1999, its Board of Directors adopted a resolution to cease
the continuation of its business, and, as the result of such resolution, the
chief officer of the Financial Supervisory Agency ("FSA") issued the partial
business suspension order in accordance with Article 241 of the Insurance
Business Law (the "IB Law"); and on June 5, 1999, the chief officer of FSA
appointed Mr. Mohachi Sugiyama, Mr. Akira Kosugi and the Life Insurance
Association of Japan ("LIAJ") as the administrators (the "Administrator") to
manage the business and assets of the Transferring Company in accordance with
Article 241 of the IB Law;
WHEREAS, the Administrator has the exclusive right to conduct the business of
the Transferring Company and to manage and dispose of the assets of the
Transferring Company; and in accordance with Article 247 of the IB Law and
pursuant to the order of the chief officer of FSA, the Administrator is
preparing the plan regarding the transfer of the Transferring Company's
insurance contracts in order to protect the interests of the Transferring
Company's policyholders, etc. by maintaining the insurance contracts;
WHEREAS, in accordance with Article 265-28 of the IB Law, the PPC is authorized
to provide financial assistance to a rescuing company in the form of a cash
payment in an amount equal to the difference between the Transferring Company's
assets and liabilities for the purpose of inducing the Rescuing Company to
acquire all such assets and liabilities and, in the event that a transfer to a
rescuing company is not arranged, the PPC is required to assume the insurance
contracts and related assets of the Transferring Company;
WHEREAS, the Administrator solicited an offer for the acceptance of the transfer
of such insurance contracts from candidates for a rescuing company who were
interested in accepting the transfer of the insurance contracts;
WHEREAS, the Rescuing Company made an offer to the Administrator for the
acceptance of the transfer of the insurance contracts on December 17, 1999,
which relies on and is conditioned upon, the receipt of the PPC Financial
Assistance, and the Administrator has determined that the transfer of the
insurance contracts to the Rescuing Company is in the best interest of the
Transferring Company's policyholders; and
1
<PAGE>
WHEREAS, in accordance with the terms and conditions of this Agreement and the
PPC's agreement to provide financial assistance as inducement to the Rescuing
Company to acquire the assets and liabilities of the Transferring Company in the
form of a cash payment to the Rescuing Company, the Transferring Company desires
to transfer such insurance contracts as defined below to the Rescuing Company,
and the Rescuing Company desires to accept the transfer of such insurance
contracts from the Transferring Company;
NOW, THEREFORE, the parties, intending to be legally bound, hereby agree as
follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Definitions. For the purpose of this Agreement, unless the context
-----------
requires otherwise, capitalized terms used herein without definition shall have
the respective meanings ascribed to them in this Section 1.1:
"Administrative Services Agreement" shall mean the Administrative Services
Agreement and the Cost Allocation Agreement collectively, both dated as of March
20, 1998 and between the Transferring Company and the Rescuing Company.
"Affiliate" of an entity (the "Entity") shall mean any judicial person directly
or indirectly controlling or controlled by the Entity through the direct or
indirect ownership of more than 50% of voting securities or equity interests.
With respect to the Rescuing Company, its Affiliates shall include GE and its
Affiliates.
"Asset Transfer Agreement" shall mean the Asset Transfer and Shareholders
Agreement dated as of February 27, 1998 among the Transferring Company, the
Rescuing Company and GEFA.
"Business Documents" shall mean all books, records, files, business records and
plans, reports, correspondence, documentation in respect of agreements, and
other financial and customer data, whether any such item is in paper, electronic
or other format, used or held by the Transferring Company in connection with the
Transferred Business.
"Business Day" shall mean a day on which commercial banks are open for regular
banking business in Tokyo.
"Closing" shall have the meaning set forth in Section 3.1.
"Closing Accounts" shall mean the balance sheet reflecting the Transferred
Assets Value and the Transferred Liabilities Amount as of the end of the day
immediately prior to the Closing Date as described in Section 2.4.
"Closing Date" shall mean the day on which the Closing takes place.
"Default Interest Rate" shall mean, with respect to the relevant day, a rate per
annum equal to 2.4% per annum plus the coupon rate of interest per annum at
which The Industrial Bank of Japan, Ltd. (or any successor entity) offers 5-year
debentures (ritsuki-kinyusai) (or any successor product) to the public on the
----------------
first Business Day on which that product is offered in the calendar month in
which the relevant day falls.
2
<PAGE>
"Defective Properties" shall mean the Real Properties which, in the reasonable
judgment of the Rescuing Company, have any environmental defect, title defect,
occupancy by persons associated with organized crime or any other material
defect similar thereto, affecting or potentially affecting the value of, or the
realization of the value of, or the Rescuing Company's willingness to acquire
title to, such Real Properties.
"Disclosure Schedule" shall mean the two binders identified as Disclosure
Schedule, which were delivered to the Rescuing Company on December 16, 1999.
"Edison Stock Transfer Agreement" shall mean an agreement for transfer of the
Edison stock between the Transferring Company and GEFA signed and delivered
concurrently with this Agreement.
"Employee Transfer and Secondment Agreement" shall mean the Employee Transfer
and Secondment Agreement dated as of February 27, 1998 between the Transferring
Company and the Rescuing Company.
"Estimated Transferred Assets Value" shall mean the estimated value of the
Transferred Assets as calculated by the Rescuing Company, with a reasonable
amount of assistance of the Transferring Company, in accordance with the
principles described in Schedule 1.1(c), based upon the information available as
of the end of the Business Day immediately prior to the Pre-Closing Date.
"Estimated Transferred Liabilities Amount" shall mean the estimated amount of
the Transferred Liabilities as of the Closing as calculated by the Rescuing
Company, with a reasonable amount of assistance of the Transferring Company, in
accordance with the principles described in Schedule 1.1(d), based upon the
information available as of the end of the Business Day immediately prior to the
Pre-Closing Date.
"Excluded Assets" shall mean any assets owned, held or used by the Transferring
Company other than the Transferred Assets, and which Excluded Assets shall
include the assets set forth in Schedule 1.1(e).
"Excluded Liabilities" shall mean all liabilities of the Transferring Company
other than the Transferred Liabilities, including the Excluded Liabilities set
forth in Schedule 1.1(f).
"Financial Assistance Agreement" shall mean an agreement between PPC and the
Rescuing Company in substantially the form attached hereto as Exhibit 1.1-A.
"GE" shall mean General Electric Company, a New York corporation with its
principal office at Fairfield, Connecticut, U.S.A.
"GE Capital" shall mean General Electric Capital Corporation, a New York
corporation with its principal office at 260 Long Ridge Road, Stamford,
Connecticut, U.S.A.
"GEFA" shall mean GE Financial Assurance Holdings, Inc., a Delaware corporation
with its principal office at 6604 W. Broad Street, Richmond, Virginia, U.S.A.
"Goldman Sachs" shall mean The Goldman Sachs Group, Inc., a Delaware corporation
with its principal office at 85 Broad Street, New York, New York, U. S. A.
3
<PAGE>
"Goodwill" shall mean the present value of the future profits expected by the
Rescuing Company with respect to the Insurance Contracts and a part of the
Transferring Company's business which will give the Rescuing Company certain
excess earning power upon the transfer of the Insurance Contracts to the
Rescuing Company, and which shall include (a) customer relationships and
information on customers, (b) business network, (c) business reputation, (d)
business know-how, (e) business organization, (f) infra-structure, (g)
development capability of products and (h) the expenses paid by the Transferring
Company required to obtain the rights to the registrations, licenses,
permissions, allotments, etc. in accordance with the provisions of the laws and
regulations, the guidance of the administrative authorities, etc.
"Hedge Transactions" shall have the meaning set forth in Section 5.14.
"Hold Assets" shall mean the Defective Properties designated in writing by the
Rescuing Company on or prior to February 15, 2000 to be sold in accordance with
Section 8.8.
"Indemnification Notice" shall have the meaning set forth in Section 8.5.
"Insurance Contracts" shall mean all insurance contracts underwritten by the
Transferring Company including the Transferred Specific Contracts but excluding
all other specific contracts (tokutei keiyaku) defined under Article 250.3 of
---------------
the IB Law.
"Intangible Assets" shall mean the Marks, patents, copyrights, other industrial
and intellectual property rights, and all applications and registrations for any
of the foregoing, all rights related to the Business Documents, all rights
related to telephone lines, all information and know-how (including know-how
used for insurance products and internal management and planning operations),
customer lists (including those showing the names and addresses of existing,
"passive" and former customers), databases regarding existing insurance
contracts and all other information relating to customers, software, permits,
grants and licenses (including licenses pertaining to, or other rights to use,
the Marks or software), or other rights pertaining to any of the foregoing, all
as existing at and as used or held by the Transferring Company or any of the
Transferred Affiliates, other than the Excluded Assets.
"Japanese GAAP" shall mean generally accepted accounting principles practiced by
certified accountants in Japan as defined by the Japan Commercial Code and
related financial statement ordinances and Japanese Corporate Income Tax Laws,
IB Law and related ordinances and the Japanese Institute of Certified Public
Accountants.
"Joho-Roren" shall mean Japan Federation of Telecommunications, Electronic
Information and Allied Workers.
"Joho-Roren Contract" shall mean the group pension insurance contract
(kyoshutsugata-kigyonenkin-hoken-kyoteisho) dated as of January 1, 1998 and
-----------------------------------------
among Joho-Roren, the Transferring Company and other insurance companies (as
amended as of December 1, 1999), and other agreements related to or made in
connection with such insurance contracts and involving the Transferring Company
(including the group pension insurance contract dated January 1, 1983 among
Joho-Roren, the Transferring Company and other insurance companies).
"Joho-Roren Letter" shall mean a November 30, 1999 letter sent by Joho-Roren's
lawyers to the Rescuing Company, a copy of which was delivered to the
Transferring Company prior to the signing of this Agreement.
4
<PAGE>
"Lien" shall mean any ownership or similar interest, lien, mortgage, pledge,
security by way of assignment (joto-tampo), security interest, lease right
(other than a Tenant Lease), easement, other use right, claim or encumbrance of
any kind.
"Loan Receivables" shall mean the loan receivables of the Transferred Company or
any of the Transferred Affiliates listed in Schedule 1.1(g); provided, however,
that any such asset that is a Sold Asset shall be deemed to be deleted from
Schedule 1.1(g) Unless specifically excluded, the Loan Receivables shall include
the Security Interests for the Loan Receivables.
"Losses" shall have the meaning set forth in Section 8.1.
"Marks" shall mean any registered or unregistered service marks and trademarks
used in connection with the Transferred Business.
"Master Lease Agreement" shall mean the Master Lease Agreement dated as of March
25, 1998 between the Transferring Company and the Rescuing Company.
"Material Contract" shall mean any contract falling into one or more of the
categories set forth on, or any contract specifically listed on, Schedule
1.1(h), except any such contract designated in writing by the Rescuing Company
on or before the Pre-Closing Date as excluded from the Transferred Assets
"Other Transferred Assets" shall mean such specific assets set forth on Schedule
1.1(i).
"Other Transferred Liabilities" shall mean such specific liabilities set forth
on Schedule 1.1(j); provided, however, that any such liabilities that are
related to a Sold Asset shall be deemed to be deleted from Schedule 1.1(j).
"Permitted Direct Transferees" shall mean one or more (but not more than five)
entities directly or indirectly or jointly controlled by (i) GE Capital and/or
(ii) Goldman Sachs and/or (iii) one or more funds managed or administered by
Goldman Sachs or its Affiliates. It is currently planned that Permitted Direct
Transferees will include Yugen-Kaisha or Tokumei-Kumiai.
"PPC" shall mean the Life Insurance Policyholder Protection Corporation, an
organization formed under the IB Law.
"PPC Financial Assistance" shall mean the financial assistance provided by PPC
on the Closing Date in accordance with the Financial Assistance Agreement.
"PPC Financial Assistance Receivable" shall have the meaning set forth in
Section 5.12.
"Pre-Closing Accounts" shall mean the balance sheet reflecting the Estimated
Transferred Assets Value and the Estimated Transferred Liabilities Amount.
"Pre-Closing Date" shall mean a Business Day which shall be 5 Business Days
prior to the Closing Date. The Pre-Closing Date shall be February 23, 2000 if
the Closing Date is March 1, 2000.
"Real Properties" shall mean the real properties listed in Schedule 1.1(k),
which shall in each case include the Tenant Leases unless specifically excluded;
provided, however, that any such asset that is a Sold Asset shall be deemed to
be deleted from Schedule 1.1(k).
5
<PAGE>
"Recorded Insurance Contracts" shall mean (a) the in-force insurance contracts
recorded as insurance contracts on the master files of the Transferring Company
administered by the Rescuing Company in accordance with the Administrative
Services Agreement, both as of September 30, 1999 and as of December 29, 1999,
and (b) the insurance contracts recorded in the floppy disk identified as
"Insurance Contracts" and delivered by the Transferring Company to the Rescuing
Company prior to the signing of this Agreement.
"Reinsurance-A Agreement" shall mean the Reinsurance-A Agreement dated as of
March 30, 1998 between the Transferring Company and the Rescuing Company
(including the letter agreements regarding such Reinsurance-A Agreement).
"Reinsurance-B Agreement" shall mean the Reinsurance-B Agreement dated as of
March 30, 1998 between the Transferring Company and the Rescuing Company.
"Reinsurance-C Agreement" shall mean the Reinsurance-C Agreement between the
Transferring Company and the Rescuing Company (as referred to in the February
26, 1999 letter agreement regarding such Reinsurance Agreement)
"Rescuing Company Closing Documents" shall have the meaning set forth in Section
10.4.
"Securities" shall mean such stock, equity certificates, bonds, convertible
bonds, bonds with warrants, public bonds, debentures, commercial papers and
other securities of the Transferring Company or any of the Transferred
Affiliates set forth in Schedule 1.1(l); provided, however, that any such asset
that is a Sold Asset shall be deemed to be deleted from Schedule 1.1(l). Unless
specifically excluded, the Securities shall include the Security Interests for
the Securities.
"Security Agreement" shall mean the Security Agreement dated as of February 27,
1998 between the Transferring Company and the Rescuing Company.
"Security Interests" shall include guarantees, promissory notes for payment or
security, mortgages, pledges, security by way of assignment (joto-tampo) and
---- ------
other security interests granted or created in favor of the Transferring Company
or any of the Transferred Affiliates in order to secure the Loan Receivables or
the Securities.
"Sold Assets" shall mean any of the Loan Receivables, Real Properties,
Securities or Other Transferred Assets that were sold after September 30, 1999
and prior to the date hereof or scheduled to be sold on and after the date
hereof as set forth on Schedule 1.1(m) or to be sold on and after the date
hereof with the Rescuing Company's prior written consent.
"Special Structure Assets" shall mean the assets listed in Schedule 1.1(n).
"Tangible Assets" shall mean such assets as may be agreed upon between the
Transferring Company and the Rescuing Company on or prior to the Pre-Closing
Date (other than the Business Documents, the Goodwill, the Material Contracts,
the Intangible Assets, the Loan Receivables, the PPC Financial Assistance
Receivable, the Real Properties, the Securities, the Other Transferred Assets
and cash and cash equivalents), all as used or held by the Transferring Company
or any of the Transferred Affiliates.
6
<PAGE>
"Taxes" shall mean all taxes, charges, fees, levies or other assessments,
including income, property, consumption, stamp, registration taxes, whether by
assessment or withholding, and any secondary tax liability, imposed by Japan or
any other country or international organizations or any taxing authority thereof
or therein, and such term shall include any interest, penalties or additions
attributable to such taxes, charges, fees, levies or other assessments.
"Tenant Lease" shall mean tenant leases (including parking-lot leases) regarding
the Real Properties.
"Transferred Affiliates" shall have the meaning set forth in (a) of Schedule
4.1.
"Transferred Assets" shall mean the Business Documents, the Goodwill, the
Material Contracts, the Intangible Assets, the Loan Receivables, the PPC
Financial Assistance Receivable, the Real Properties, the Securities, the
Tangible Assets, the Other Transferred Assets and the Transferred Cash.
"Transferred Assets Value" shall mean the value of the Transferred Assets
calculated in accordance with the valuation principles described in Schedule
1.1(o).
"Transferred Business" shall mean the Transferred Assets and the Transferred
Liabilities, including the Insurance Contracts.
"Transferred Cash" shall mean the cash in Japanese currency held by the
Transferring Company as of the Closing Date other than (a) an amount of cash to
be retained by the Transferring Company to fund the payment of the consumption
tax imposed in connection with the transfer of the Transferred Assets under this
Agreement and (b) such additional amount of cash to be retained by the
Transferring Company to fund its obligations remaining after the Closing. The
specific amount of the Transferred Cash shall be reasonably determined by the
Transferring Company and notified to the Rescuing Company in writing no later
than the Pre-Closing Date.
"Transferred Liabilities" shall mean the Other Transferred Liabilities and the
unperformed liabilities under the Insurance Contracts (modified as set forth in
Schedule 5.6).
"Transferred Liabilities Amount" shall mean the amount of the Transferred
Liabilities as calculated in accordance with the principles described in
Schedule 1.1(p).
"Transferred Specific Contracts" shall mean Toho's insurance contracts which are
defined in Article 250.3 of the IB Law and are transferred to the Rescuing
Company; provided, however, that, regardless of the provisions of the IB Law,
(a) the insurance contracts which were surrendered or lapsed before June 4, 1999
without completion of payment by the Transferring Company of surrender value
before the issuance of the suspension order on June 4, 1999, (b) the group
pension insurance contracts the Transferring Company's share in which was agreed
to be changed without the procedures therefor being completed before the
issuance of the suspension order on June 4, 1999 and (c) the insurance
contracts, the term of which have expired by the surrender or lapse of the
relevant insurance contracts after June 4, 1999, shall not be included in the
Transferred Specific Contacts.
"Transferring Company Closing Documents" shall have the meaning set forth in
Section 9.11.
1.2. Interpretation. The word "include" or "including" shall be deemed to be
--------------
followed by the words "without limitation." A facsimile copy shall, unless
otherwise specifically set forth, be deemed to satisfy the requirement of "in
writing", "written" and so on.
7
<PAGE>
ARTICLE II
TRANSFER AND CONSIDERATION
--------------------------
2.1 Pre-Closing Adjustments.
-----------------------
On the Pre-Closing Date, the Rescuing Company, with a reasonable amount of
assistance of the Transferring Company, shall prepare and deliver to the
Transferring Company the Pre-Closing Accounts in the form set forth in Exhibit
2.1 which reflects a complete calculation of the Estimated Transferred Asset
Value and the Estimated Transferred Liabilities Amount and determine the amount
of the PPC Financial Assistance Receivable so that the Estimated Transferred
Asset Value becomes equal to the Estimated Transferred Liabilities Amount.
2.2. Consideration. In accordance with the provisions of this Agreement and
-------------
subject to the satisfaction of the conditions set forth in this Agreement
(including the provision of the PPC Financial Assistance to the Rescuing Company
under Section 3.2 (a)), the Rescuing Company shall recognize that the value of
the Goodwill is 233,691,000,000 yen (it being agreed that the Transferring
Company shall bear and pay the consumption tax imposed in connection with the
transfer of the Goodwill hereunder) and, without either party's making any
payment of cash consideration to the other party (other than the Transferred
Cash), the Transferring Company shall transfer the Transferred Assets to the
Rescuing Company and the Rescuing Company shall assume the Insurance Contracts
and the Transferred Other Liabilities under Sections 2.3 and 2.5.
2.3. Transfer of Insurance Contracts, etc. In accordance with the provisions
-------------------------------------
of this Agreement and subject to the satisfaction of the conditions set forth in
this Agreement, at the Closing, (a) the Transferring Company shall transfer the
Transferred Assets to the Rescuing Company free and clear of any Lien and the
Rescuing Company shall receive the Transferred Assets from the Transferring
Company and (b) the Transferring Company shall transfer the Other Transferred
Liabilities to the Rescuing Company and the Rescuing Company shall assume the
Other Transferred Liabilities from the Transferring Company and (c) the
Transferring Company shall transfer the Insurance Contracts (with respect to the
Insurance Contracts other than the Transferred Specific Contracts, with such
term changes as set forth in Schedule 5.6) and the Rescuing Company shall
receive such Insurance Contracts.
2.4. Closing Accounts.
----------------
(a) In any event no later than May 1, 2000, the Rescuing Company, with a
reasonable amount of assistance of the Transferring Company, shall prepare
and deliver to the Transferring Company a draft of the Closing Accounts in
the form set forth in Exhibit 2.4 which reflects a complete computation of
the Transferred Liabilities Amount and the Transferred Assets Value, both
calculated as of the end of the day immediately prior to the Closing Date;
provided, however, that the Rescuing Company may postpone the above
deadline up to 14 days, upon consent of the Transferring Company which
shall not be unreasonably withheld.
(b) The Rescuing Company shall permit the Transferring Company to have such
access to the offices and the books and records of the Rescuing Company
related to the Transferred Business as the Transferring Company may
reasonably require, cause the officers, employees and advisors of the
Rescuing Company to cooperate in good faith with the Transferring Company
and furnish to the Transferring Company all financial and other data and
information related to the Transferred Business as the Transferring Company
may reasonably request, in connection with its review of the Closing
Accounts.
8
<PAGE>
(c) In the event that the Transferring Company has any disagreement with the
Rescuing Company's draft of the Closing Accounts on the ground that such
draft of the Closing Accounts has not been prepared in accordance with the
principles described in Schedules 1.1(o) and 1.1(p) or that the
Transferring Company has not received from the Rescuing Company reasonable
materials or explanations to verify the accuracy of such draft, the
Transferring Company shall give written notice of all such disagreements
(the "Notice of Disagreement") within 30 days after the draft of the
Closing Accounts is delivered to the Transferring Company under (a) above.
The Notice of Disagreement shall set forth each item in disagreement, shall
provide reasonable specificity as to the ground and basis for each
disagreement and shall reasonably specify the total adjustment to the
Transferred Assets Value or Transferred Liabilities Amount, as the case may
be.
(d) In the event that the Transferring Company agrees with the Closing
Accounts, the Closing Accounts shall be final on the day which is 30 days
after the date on which the draft of the Closing Accounts is delivered to
the Transferring Company. If the Transferring Company does not deliver a
Notice of Disagreement under (c) above within such 30-day period, the
Closing Accounts shall be final and binding upon the parties.
(e) If, on the other hand, the Transferring Company delivers a Notice of
Disagreement to the Rescuing Company within such 30-day period, the two
parties shall negotiate in good faith to resolve all disagreements as
promptly as practicable. If the parties are unable to resolve all
disagreements within 30 days of receipt by the Rescuing Company of the
Notice of Disagreement, then all unresolved disagreements will be submitted
to an independent certified public accounting firm of national standing and
reputation as the Transferring Company and Rescuing Company shall jointly
select and retain (the "Settlement Auditor") for resolution in accordance
herewith. The parties shall cooperate in good faith with the Settlement
Auditor and shall give the Settlement Auditor access to all books, records
and other documents and information requested by the Settlement Auditor for
purposes of such resolution. In preparing such resolution, the Settlement
Auditor shall be instructed, and agree, to follow the principles described
in Schedules 1.1(o) and 1.1(p). The Settlement Auditor shall, within 60
days after its engagement, deliver to the Transferring Company and the
Rescuing Company a conclusive written resolution of all disagreements
submitted to it, which shall be final and binding upon the parties. The
amount of the Transferred Assets Value and Transferred Liabilities Amount,
as the case may be, will be adjusted accordingly to reflect any such
resolution and, as adjusted, shall be deemed final, and the Closing
Accounts shall accordingly be final. The Rescuing Company and the
Transferring Company shall each pay one-half of the fees and expenses of
the Settlement Auditor. The parties agree that the Settlement Auditor shall
be Chuo Audit Corporation (or such other audit firm as the parties may
agree).
2.5. Post-Closing Adjustment.
-----------------------
(a) If the Transferred Liabilities Amount exceeds the Transferred Assets Value,
the amount of such excess (together with the interest thereon accrued from
the Closing Date to be calculated at the rate of 1.5% per annum) shall be
paid in cash by PPC to the Rescuing Company within 15 Business Days after
the Closing Accounts are finalized in accordance with Section 2.4.
(b) If the Transferred Assets Value exceeds the Transferred Liabilities Amount,
the amount of such excess (together with the interest thereon accrued from
the Closing Date to be calculated at the rate of 1.5% per annum) shall be
paid in cash by the Rescuing Company to PPC within 15 Business Days after
the Closing Accounts are finalized in accordance with Section 2.4.
9
<PAGE>
2.6 Payment Method. Unless otherwise provided herein, all payments under this
---------------
Agreement shall be made by wire-transfer (denshin-sokin) of the relevant amount
-------------
in Japanese yen to the receiving party's bank account in Japan; provided that
the receiving party shall designate such bank account and notify the paying
party of it in writing no later than 5 Business Days prior to the date of the
relevant transfer.
ARTICLE III
-----------
CLOSING
-------
3.1. Time and Place of the Closing. The completion of the transfer of the
-----------------------------
Transferred Business under this Agreement (the "Closing") shall take place at
10:00 a.m. on March 1, 2000 (or such other day as may be agreed upon between the
parties), at the principal office of the Rescuing Company.
3.2. Actions at the Closing. At the Closing, PPC and the parties will take the
----------------------
following actions simultaneously:
(a) For the purpose of the transfer of the Insurance Contracts from the
Transferring Company to the Rescuing Company as of the Closing Date, PPC
shall pay the PPC Financial Assistance to the Rescuing Company to satisfy
the PPC Financial Assistance Receivable, by remitting it to a bank account
designated by the Rescuing Company;
(b) the Rescuing Company shall deliver a receipt for the PPC Financial
Assistance to PPC;
(c) the Transferring Company shall transfer the Transferred Assets in such
manner as set forth in Schedule 3.2;
(d) the Rescuing Company shall deliver a receipt for the Transferred Assets to
the Transferring Company;
(e) the Rescuing Company shall assume the Transferred Liabilities;
(f) the Transferring Company shall deliver the Transferring Company Closing
Documents to the Rescuing Company;
(g) the Rescuing Company shall deliver the Rescuing Company Closing Documents
to the Transferring Company; and
(h) such other actions as each party may reasonably request in order to
consummate the transfer of the Transferred Business to the Rescuing Company
and the transactions contemplated under Section 7.1.
3.3. Pre-Closing. The parties agree to hold one or more pre-closing meetings
-----------
(including a meeting on the Pre-Closing Date) before the Closing on such dates
as agreed upon between the parties for the purpose of (a) ascertaining the
status of satisfaction of various conditions precedent to the Closing and (b)
discussing how the conditions precedent which remain unsatisfied at that time
are to be complied with.
3.4 Post Closing Actions. At any time after the Closing, the Transferring
--------------------
Company shall use its reasonable best efforts to take such further actions (and
execute such documents) as requested by the Rescuing Company as are reasonably
necessary to consummate, perfect and make effective the transfer of the
Transferred Assets as contemplated by this Agreement.
10
<PAGE>
3.5. Human Resource Limitation after Closing. The Rescuing Company
----------------------------------------
acknowledges that Transferring Company represented to the Rescuing Company that
it will have extremely limited human resources after the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
4.1. Representations and Warranties of the Transferring Company.
----------------------------------------------------------
Except as specifically set forth in the Disclosure Schedule, the Transferring
Company represents and warrants to the Rescuing Company as set forth in Schedule
4.1; provided, however, that the exceptions contain in the Disclosure Schedule
shall apply only to the extent that the Rescuing Company can reasonably assess
the economic impact of such matters based upon such disclosure. For the purpose
of Schedule 4.1, "to the knowledge of the Transferring Company" shall mean the
knowledge of the Administrator or any staff member of the Administrator seconded
from the LIAJ whose names are identified in the letter delivered by the
Transferring Company to the Rescuing Company immediately prior to the signing
hereof.
4.2. Representations and Warranties of the Rescuing Company. The Rescuing
-------------------------------------------------------
Company represents and warrants to the Transferring Company as set forth in
Schedule 4.2.
4.3 Effect of Due Diligence Review. Except as provided in the proviso of the
------------------------------
first sentence of Section 4.1, neither (a) any due diligence review conducted in
connection with the transaction contemplated hereunder nor (b) any knowledge of
either party or any of its Affiliates shall affect in any manner whatsoever the
validity or effect of the representations and warranties contained herein or
made pursuant hereto or the indemnification or remedies related thereto.
4.4. Survival of Representations and Warranties. Each party shall have the
------------------------------------------
right to rely fully upon the representations and warranties of the other party
contained in or made pursuant to this Agreement. (Without prejudice to the
generality of the foregoing, the Rescuing Company may, by relying upon the
representations and warranties of the Transferring Company contained in or made
pursuant to this Agreement, provide any third party with the Rescuing Company's
own representations and warranties in selling, leasing or otherwise disposing of
any of the Transferred Assets to such third party; provided, however, that, such
third party shall not be entitled to make a claim directly against the
Transferring Company in connection with the Transferring Company's
representations and warranties under this Agreement.) All such representations
and warranties (other than those set forth in (a) and (b) of each of Schedules
4.1 and 4.2 or any representations and warranties intentionally inaccurate or
false which shall survive the Closing indefinitely or the maximum period
permitted under applicable laws) shall terminate as of the completion of the
Closing.
4.5. Construction. The parties agree that, for the purpose of Section 8.1 or
------------
8.2 (but not for the purpose of Section 9.1 or 10.1), the representations and
warranties contained in (g) through (o) and (v) through (z) of Schedule 4.1 and
(d) of Schedule 4.2 shall be deemed to have been made with the knowledge
qualification. Each representation and warranty is to be construed independently
of the others and is not limited by reference to any other representation and
warranty.
11
<PAGE>
ARTICLE V
COVENANTS OF TRANSFERRING COMPANY
---------------------------------
5.1. Operation of Business of the Transferring Company. During the period from
-------------------------------------------------
the date hereof until the Closing, except as contemplated in this Agreement or
as separately agreed upon between the parties in writing, the Transferring
Company shall, subject to the limitations under the IB Law, conduct its
operation of the Transferred Business in substantially the same manner as it was
conducted immediately prior to the signing of this Agreement.
5.2. Specific Undertaking for Operation. Without prejudice to the generality
----------------------------------
of the Transferring Company's obligations set forth in Section 5.1, during the
period from the date hereof to the Closing, except as otherwise approved by the
Rescuing Company in writing (such approval shall not be unreasonably withheld,
the Transferring Company shall, in connection with the Transferred Business:
(a) except as set forth in Schedule 5.2(a), not enter into, amend, terminate,
modify or fail to pay any amount owing under any material contract or
agreement including any Material Contract;
(b) not borrow any additional funds or provide any guarantee;
(c) except as specified in Schedule 5.2(c), (i) not waive any claims or rights
and (ii) not receive any amount payable under the Loan Receivables (other
than the Loan Receivables which are loans to individuals), the Securities
or the Tenant Leases on an accelerated basis;
(d) except for the investment activities regarding assets in the special
accounts (tokubetsukanjo), not sell, transfer, modify, dispose of or create
any Lien over, any Transferred Asset other than the Sold Assets;
(e) manage the Real Properties and the Loan Receivables in accordance with the
Management Manual, a copy of which is attached hereto as Exhibit 5.2;
(f) not increase the rates of compensation (including bonuses) payable or to
become payable to any officer or employee (except as increased in
accordance with terms established prior to the date hereof and specifically
disclosed in the Disclosure Schedule), or accelerate the date at which any
such compensation is paid, or modify any other employment terms and
conditions, or enter into or modify any collective bargaining agreement or
any agreement with any labor union (except for (x) the matters agreed with
any labor union and existing on the date hereof and specifically disclosed
in the Disclosure Schedule and (y) upon prior consultation with the
Rescuing Company, any collective bargaining agreement or any agreement with
any labor union to be made) (it being agreed that (i) nothing in this
Section 5.2(f) shall prohibit the Transferring Company from taking such
actions with respect to its officers or employees who will not be seconded
or transferred to the Rescuing Company and who will remain with, and work
for, the Transferring Company after the Closing Date and (ii) the
Transferring Company shall be solely responsible for any costs or
liabilities arising from such agreements described in Section 5.2(f)(y));
(g) use its reasonable efforts to keep available to the Transferring Company
the services of its respective present officers and employees (except as
any cessation of such services by an officer or employee as is caused by
the voluntary resignation of such officer or employee);
12
<PAGE>
(h) not change its internal rules, credit and collection policies, or account
categorization practices, including "reaging" criteria or practices and the
interest rate and default interest rate charged to the customers, or its
reserve or write-off policies (or any application of any such rules or
policies to the operation thereof);
(i) give the Rescuing Company prompt notice of any default by any party under a
Loan Receivable, a Tenant Lease, an item of the Securities or a Material
Contract and any event which might have a material adverse effect on the
value of any of the Transferred Assets; and
(j) amend, with a reasonable amount of assistance of the Rescuing Company, its
Business Methods Manual, as necessary, so that the Insurance Contracts are
in compliance with such Manual.
5.3. [Intentionally Left Blank.]
5.4. Access to Information. With a prior written or oral notice given to the
---------------------
Transferring Company reasonably in advance, the Transferring Company shall allow
the Rescuing Company and its authorized representatives to have full access to
all officers and employees (including the Administrator and their staff members)
and all Material Contracts, books, records, offices and other facilities and
properties prepared in connection with the Transferred Business and owned or
controlled by the Transferring Company (including the Administrator and their
staff members) during the ordinary business hours of the Transferring Company.
5.5. Public Announcement. Except as required by applicable laws and
-------------------
regulations or by any government authority, the Transferring Company (whether or
not it is made under the name of one of the Administrators or otherwise) shall
not issue any press release or otherwise make any public statement with respect
to this Agreement or the transactions contemplated hereby without prior
consultation with the Rescuing Company. The Transferring Company shall ensure
that such press release and public statement accurately represent in all
material respects, the Agreement and the transaction contemplated hereby.
5.6. Covenants on the Transfer of Insurance Contracts.
------------------------------------------------
(a) By the Closing, in accordance with Article 250 of the IB Law, the
Transferring Company shall provide the change of the insurance terms of the
Insurance Contracts as set forth in Schedule 5.6, to which the Rescuing
Company has agreed.
(b) By the Closing, in accordance with Article 268 of the IB Law, the
Transferring Company shall, jointly with the Rescuing Company, submit to
the chief officer of FSA an application for the confirmation of the
qualifications of the transfer of the Insurance Contracts.
(c) By the Closing, in accordance with Article 266 of the IB Law, the
Transferring Company shall, jointly with the Rescuing Company, submit to
PPC an application for the financial assistance.
5.7. Approvals and Satisfaction of Other Regulatory Requirements. In addition
-----------------------------------------------------------
to the matters set forth in Section 5.6, the Transferring Company shall use its
reasonable efforts to obtain all required approvals with reasonable terms, make
all required filings, registrations and reports and satisfy all other
requirements under applicable laws and regulations in order to consummate the
transaction contemplated hereby.
5.8. [Intentionally Left Blank]
13
<PAGE>
5.9. Preliminary Registration of the Transfer of Ownership. The Transferring
-----------------------------------------------------
Company shall reasonably cooperate with the Rescuing Company in its making the
preliminary registration of the transfer to the Rescuing Company of the
ownership of such Real Properties as designated by the Rescuing Company. The
Transferring Company shall reasonably cooperate with the Rescuing Company in its
conducting survey and confirming boundaries of such Real Properties designated
by the Rescuing Company. All registration tax therefor, fees to judicial
scriveners (shihoshoshi), etc. and costs for confirming boundaries shall be
-----------
borne by the Rescuing Company. In the event this Agreement terminates pursuant
to Article XI, all registration tax, fees to judicial scriveners, etc. for
cancellation of such preliminary registrations shall be borne by the Rescuing
Company.
5.10. Consent to Assignment of Loan Receivables, Securities, Real Properties
----------------------------------------------------------------------
and Material Contracts and Treatment of Premium Loans. The Transferring Company
- -----------------------------------------------------
shall use its reasonable efforts to obtain from such persons whose consents are
legally required to transfer the relevant Transferred Assets as contemplated
hereunder or to perfect such transfer, written consents to the assignment and
transfer to the Rescuing Company (or its Permitted Direct Transferee) of the
Loan Receivables, the Tenant Leases, the Real Properties, the Securities and the
Material Contracts in such manner reasonably acceptable to the Rescuing Company.
If the Rescuing Company wishes to obtain from any other person other than such
persons, such consents, the Transferring Company shall reasonably cooperate with
the Rescuing Company in obtaining such consents. The Transferring Company has
premium loan arrangements with banks and wrote policies collateralized by those
banks. The Transferring Company shall use its reasonable efforts to request
those banks to lower the interest rate of those premium loans.
5.11 Handling of Joho-Roren Matter.
-----------------------------
(a) The Transferring Company shall take such actions as set forth in Schedule
5.11.
(b) Notwithstanding Section 6.6(a), the Transferring Company and the Rescuing
Company agree that Rescuing Company will not assume the lead manager's role
of the Transferring Company for the Joho-Roren Contract.
5.12. PPC Financial Assistance. The Transferring Company shall record for tax
------------------------
and accounting purposes a receivable equal to the PPC Financial Assistance, by 3
days prior to the Closing, and such journal entry shall be reflected in the
final financial statements of the Transferring Company and the Transferring
Company's tax return and related documents filed for the fiscal year ending on
the Closing Date (the "PPC Financial Assistance Receivable").
5.13. Special Structure Assets. The Transferring Company shall unwind through
------------------------
dissolution, termination or other appropriate methods all Special Structure
Assets, in order to permit the transfer to the Rescuing Company of the assets
underlying the Special Structure Assets in the form as reflected in Schedules
1.1(g), 1.1(k) and 1.1(l). If a Special Structure Asset cannot be unwound prior
to the Pre-Closing Date, such Special Structure Asset shall be reclassified as
an Excluded Asset.
5.14. Hedging Transactions. As of the date hereof, the Transferring Company
--------------------
shall enter into, and shall maintain through the Closing Date, one or more
hedging transactions in the form and amount requested by the Rescuing Company to
protect certain assets against interest rate fluctuations (the "Hedge
Transactions"). GE Capital (on behalf of the Rescuing Company) will guarantee
the Transferring Company's performance on the Hedge Transactions. In addition,
the Rescuing Company will act as sole agent for the Hedge Transactions and, may
14
<PAGE>
transfer, terminate or modify the Hedge Transactions prior to the Closing. At
the Closing, the Transferring Company shall transfer the Hedge Transaction to
the Rescuing Company for no additional consideration other than that otherwise
provided for in this Agreement. The Rescuing Company shall reimburse the
Transferring Company for all costs of these hedging transactions, including
reasonable fees of a financial advisor on the Closing Date. In the event this
Agreement terminates pursuant to Article XI, the Hedge Transactions shall not
cash settle before March 1, 2000 and the Rescuing Company shall pay all costs
(other than the corporate tax and inhabitant tax imposed on the Transferring
Company in connection with these hedging transactions) of the Hedge Transactions
as a break-up fee.
5.15. Conditions to Transfer of Certain Loan Receivables. By the Pre-Closing
--------------------------------------------------
Date, the Transferring Company shall have completed the actions relating to the
Loan Receivables set forth in Schedule 5.15. If the Transferring Company does
not complete such actions with respect to a Loan Receivable by the Pre-Closing
Date, such Loan Receivable shall be deleted from Schedule 1.1(g) and
reclassified as an Excluded Asset.
5.16. Cooperation. The Transferring Company shall cooperate with the Rescuing
-----------
Company in a reasonable manner in satisfying the terms of the transactions
contemplated hereby and in making such transactions valid.
ARTICLE VI
COVENANTS OF RESCUING COMPANY
-----------------------------
6.1. Public Announcements. Except as required by applicable laws and
--------------------
regulations or by any government authority, the Rescuing Company shall not issue
any press release or otherwise make any public statement with respect to this
Agreement or the transactions contemplated hereby without prior consultation
with the Transferring Company. The Rescuing Company shall ensure that such press
release and public statement accurately represent in all material respects the
Agreement and the transaction contemplated hereby.
6.2. Covenants on the Transfer of Insurance Contracts.
-------------------------------------------------
(a) By the Closing Date, in accordance with Article 268 of the IB Law, the
Rescuing Company shall, jointly with the Transferring Company, submit to
the chief officer of FSA an application for the confirmation of the
qualifications of the transfer of the Insurance Contracts.
(b) By the Closing Date, in accordance with Article 266 of the IB Law, the
Rescuing Company shall, jointly with the Transferring Company, submit to
PPC an application for the financial assistance.
6.3. Approvals and Satisfaction of Other Regulatory Requirements. In addition
-----------------------------------------------------------
to the matters set forth in Section 6.2, the Rescuing Company shall use its
reasonable efforts to obtain all required approvals with reasonable terms, make
all required filings, registrations and reports and satisfy all other
requirements under applicable laws and regulations in order to consummate the
transactions contemplated hereby.
6.4. Cooperation. The Rescuing Company shall cooperate with the Transferring
-----------
Company in a reasonable manner in satisfying the terms of the transactions
contemplated hereby and in making such transactions valid.
6.5. Waiver of Right to Take Action Against Administrator, Etc. The Rescuing
----------------------------------------------------------
Company hereby waives any rights it may have to institute any actions for
15
<PAGE>
monetary claims against the Administrator (in their respective individual
capacity) or Administrator's staff members (including the persons seconded form
LIAJ to the Transferring Company) in connection with any act or omission of any
of such Administrator or Administrator's staff members during their tenure or
affiliation with the Transferring Company and prior to the Closing, unless such
act or omission constitutes willful misconduct or gross negligence in performing
his or her role as the Administrator or Administrator's staff member.
6.6. Obligations of Rescuing Company after Closing. The Rescuing Company
---------------------------------------------
covenants as follows:
(a) The Rescuing Company shall use its reasonable efforts after the Closing to
protect the existing policyholders of the Transferring Company, taking into
account the interests of the policyholders with respect to continuity of
services and with respect to maintenance of existing understandings or
relationships with LIAJ or other insurance companies in connection with
services to policyholders.
(b) The Rescuing Company shall use its reasonable efforts to employ at least
the majority of the existing employees (including those being seconded to
the Rescuing Company) of the Transferring Company as of the date hereof.
(c) The Rescuing Company shall use its reasonable efforts to apply to the
existing employees of the Transferring Company who will not be employed by
the Rescuing Company or any Affiliates of the Rescuing Company after the
Closing the same treatment as the Transferring Company applied before June
4, 1999 in connection with termination of employee housing relationship and
housing loans.
ARTICLE VII
EXISTING CONTRACTUAL RELATIONSHIPS AND LIQUIDATION OF TRANSFERRING COMPANY
--------------------------------------------------------------------------
7.1. Termination of the Asset Transfer Agreement. Subject to the occurrence of
-------------------------------------------
the Closing, the Transferring Company and the Rescuing Company agree to
terminate the Asset Transfer Agreement as of the Closing in accordance with the
terms set forth in Schedule 7.1.
7.2. Termination of the Administrative Services Agreement. Subject to the
-----------------------------------------------------
occurrence of the Closing, the Transferring Company and the Rescuing Company
agree to terminate the Administrative Services Agreement as of the Closing in
accordance with the terms set forth in Schedule 7.2.
7.3. Modification of the Employment Transfer and Secondment Agreement. Subject
----------------------------------------------------------------
to the occurrence of the Closing, the Transferring Company and the Rescuing
Company agree to modify the Employment Transfer and Secondment Agreement in
accordance with the terms set forth in Schedule 7.3.
7.4. Termination of the Master Lease Agreement etc. Subject to the occurrence
---------------------------------------------
of the Closing, the Transferring Company and the Rescuing Company agree to
terminate the Master Lease Agreement and lease agreements and parking lot use
agreements entered into based upon Article 2.1 of the Master Lease Agreement as
of the Closing in accordance with the terms set forth in Schedule 7.4.
7.5. Settlement of Accounts under the Reinsurance-A Agreement and the
----------------------------------------------------------------
Reinsurance-C Agreement. The Transferring Company and the Rescuing Company
- -----------------------
hereby acknowledge that the Reinsurance-A Agreement and the Reinsurance-C
16
<PAGE>
Agreement were terminated as of June 4, 1999 and the reinsurances ceded
thereunder were terminated and recaptured as of June 4, 1999. Subject to the
occurrence of the Closing, the Transferring Company and the Rescuing Company
agree to undertake the settlement of the accounts regarding the Reinsurance-A
Agreement and the Reinsurance-C Agreement in accordance with the terms set forth
in Schedule 7.5.
7.6. Termination of the Reinsurance-B Agreement. Subject to the occurrence of
-------------------------------------------
the Closing, the Transferring Company and the Rescuing Company agree to
terminate the Reinsurance-B Agreement in accordance with the terms set forth in
Schedule 7.6.
7.7. Termination of the Security Agreement. Subject to the occurrence of the
--------------------------------------
Closing, the Transferring Company and the Rescuing Company agree to terminate
the Security Agreement in accordance with terms set forth in Schedule 7.7.
7.8. Liquidation of the Transferring Company. After the Closing, the Rescuing
----------------------------------------
Company shall, at the Transferring Company's cost payable monthly in advance,
cooperate with the Transferring Company in a reasonable manner in the
Transferring Company's conducting its liquidation (including preservation and
administration of the Excluded Assets) in accordance with the IB Law and the
Commercial Code. Such liquidation shall be conducted in such manner as shall not
be prejudicial to the Rescuing Company's rights under this Agreement and other
agreements existing between the parties.
ARTICLE VIII
INDEMNIFICATION
---------------
8.1. Indemnity by the Transferring Company. Subject to Section 8.4 below, the
--------------------------------------
Transferring Company shall indemnify and hold harmless the Rescuing Company and
the Permitted Direct Transferees and their respective directors, officers,
employees and assigns (the "Rescuing Company's Indemnitees") from and against
all losses, liabilities, damages, claims, costs or expenses (including
reasonable attorneys' fees and disbursements including those for handling or
defending any claim)(collectively "Losses"), based upon or arising out of the
breach of any representations and warranties or non-performance of any covenant
or agreement of the Transferring Company contained in, or made pursuant to, this
Agreement.
8.2. Indemnity by the Rescuing Company. Subject to Section 8.4 below, the
----------------------------------
Rescuing Company shall indemnify and hold harmless the Transferring Company and
its Administrator, officers, employees and assigns (the "Transferring Company's
Indemnitees") from and against all Losses, based upon or arising out of the
breach of any representations and warranties or non-performance of any covenant
or agreement of the Rescuing Company contained in, or made pursuant to, this
Agreement.
8.3. No Assumption of Liability.
--------------------------
(a) The parties acknowledge that the Rescuing Company shall not assume or be
responsible for any obligations arising from any agreements which are not
included in the Transferred Assets or any monetary liabilities (including
liabilities for Taxes) of the Transferring Company, except for the Other
Transferred Liabilities and, with regard to the Other Transferred
Liabilities, only for the specific amount shown in the Closing Accounts.
The Transferring Company shall indemnify and hold harmless the Rescuing
Company's Indemnitees from such liabilities or any claim for such
liabilities made against the Rescuing Company's Indemnitees.
17
<PAGE>
(b) The Transferring Company shall indemnify and hold harmless the Rescuing
Company's Indemnitees from (i) any liabilities to Joho-Roren (other than
its 4% share of the liabilities under the Joho-Roren Contract based upon
the amount of the liability reserves calculated by the Administrator and
transferred to the Rescuing Company)or anyone else arising out of any act
or failure to act of the Transferring Company (including the comprehensive
transfer of the insurance contracts contemplated hereunder) in connection
with the Joho-Roren Contract, (ii) any claim for such liabilities against
the Rescuing Company's Indemnitees and (ii) all costs or expenses
(including reasonable attorney's fees and disbursements) incurred by the
Rescuing Company's Indemnitees in handling or defending any claim for the
liabilities.
(c) The Transferring Company shall indemnify and hold harmless the Rescuing
Company's Indemnitees from (i) any liabilities arising from any policy sold
by the Transferring Company or any of its predecessors in Taiwan in or
before 1945 (ii) any claim for such liabilities (the "Taiwan Claim")
against the Rescuing Company's Indemnitees and (iii) all costs or expenses
(including reasonable attorney's fees and disbursements) incurred by the
Rescuing Company's Indemnitees in handling or defending any claim for the
liabilities; provided, however, that if a Taiwan Claim is made against the
Rescuing Company, the Rescuing Company shall explain in good faith that the
Rescuing Company has not assumed such liability even if such liability
arose.
8.4. Limitation on Indemnification. Notwithstanding Section 8.1, 8.2 or
------------------------------
8.3(a), after the completion of the Closing, either party shall not be
responsible for any Losses incurred by the other party for any breach of the
representations and warranties terminated as of the completion of the Closing
(unless such Losses are specifically claimed by a party in writing before the
completion of the Closing) or any breach of this Agreement (unless such breach
is made intentionally or by gross negligence); provided, however, that nothing
in this Section 8.4 shall be prejudicial to either party's right to request the
specific performance of the other party's obligations (including payment
obligations in accordance with the provisions of this Agreement including
Section 2.5, 8.3 (b) and (c), 8.6, 8.8, 8.10 and 14.7 and Article VII).
8.5. [Intentionally Left Blank]
8.6. Special Indemnity.
-----------------
The Transferring Company hereby request that the Rescuing Company shall treat
all of the Recorded Insurance Contracts as the Insurance Contracts, and the
Rescuing Company agrees to accommodate such request subject to the terms set
forth below:
(a) The Rescuing Company shall treat all Recorded Insurance Contracts as the
Insurance Contracts and shall perform its obligations as such. The
Transferring Company shall indemnify and hold harmless the Rescuing
Company's Indemnitees from and against all Losses based upon or arising
from any discrepancy between the Recorded Insurance Contracts and the
Insurance Contracts. (For the avoidance of doubt, if the Losses claimed by
the Rescuing Company's Indemnitees include the Losses caused by the willful
misconduct or gross negligence of any officer or employee of the Rescuing
Company in performing the customer services after the Closing Date (such as
making statements which constitutes defamation of character), the Rescuing
Company shall be responsible for such Losses; provided, however, that in no
event shall the Rescuing Company be responsible for any Losses arising from
an Alleged Specific Contract (as defined below)). The parties acknowledge
that no specific contract under the IB Law (other than the Transferred
Specific Contacts) is intended to be transferred from the Transferring
Company to the Rescuing Company and agree that the Rescuing Company shall
not be responsible for any liabilities related to any specific contracts
(other than the Transferred Specific Contracts) and the Rescuing Company
shall have the right to inform the policyholder of such fact and refer the
policyholder to the Transferring Company for negotiation.
18
<PAGE>
(b) If a policyholder or any other interested party asserts against the
Transferring Company or the Rescuing Company that its insurance contract
which does not fall under the definition of the Transferred Specific
Contract is a specific contract under the IB Law (the "Alleged Specific
Contracts"), the Transferring Company or the Rescuing Company, as the case
may be, shall promptly notify the other and shall cooperate with each other
in reviewing the merit of such assertion. The Rescuing Company shall have
the option in its discretion to determine its own policy on whether it (A)
shall continue to treat the Alleged Specific Contract as an Insurance
Contract or (B) shall treat the Alleged Specific Contract as a specific
contract under the IB Law (other than the Transferred Specific Contracts)
and reject any claim under such Alleged Specific Contract, and, regardless
of the Rescuing Company's determination, the Transferring Company shall
continue to indemnify and hold harmless the Rescuing Company's Indemnitees
from and against all Losses based upon or arising from such claim.
(c) If (A) the Transferring Company and the Rescuing Company agree that the
Alleged Specific Contract is a specific contract under the IB Law other
than the Transferred Specific Contract and the Transferring Company has
made a payment against the alleged claim in a manner satisfactory to the
Rescuing Company or (B) a final and definitive judgement has been rendered
to the effect that the Alleged Specific Contract is a specific contract
under the IB Law other than the Transferred Specific Contract and the
Transferring Company is solely responsible for any claim thereunder, the
Rescuing Company shall pay the Transferring Company such amount as shall be
calculated in accordance with the principles and formula set forth in
Schedule 8.6. Upon payment to the Transferring Company of the foregoing
amount, the Rescuing Company shall have no further liability to any person
or entity in connection with such specific contracts.
(d) The Transferring Company shall indemnify and hold harmless the Rescuing
Company's Indemnitees from and against all costs and expenses (including
reasonable attorney's fees and disbursements) incurred by the Rescuing
Company's Indemnitees in handling or defending any claim that a policy is a
specific contract under the IB Law.
8.7. Exercise of Indemnity Right by Permitted Direct Transferees. The
------------------------------------------------------------
Permitted Direct Transferees may, in connection with its acquisition of any Loan
Receivables and any Real Properties as permitted under Section 14.1, relay and
enjoy the benefit of the Transferring Company's representations and warranties
and covenants and agreements contained in, or made pursuant to, this Agreement,
and shall be entitled to the indemnification given by the Transferring Company
hereunder (but only within the range of the Rescuing Company's right for
indemnification) as if the Permitted Direct Transferees were parties to this
Agreement; provided, however, that the Permitted Direct Transferees may exercise
their right for indemnification only through one or more claims made by the
Rescuing Company unless an insolvency proceeding is commenced with respect to
the Transferring Company after the Closing or a court procedure is involved. It
is also agreed that the Indemnification Notice, the Claim and other actions
taken under the name of the Rescuing Company for the Permitted Direct
Transferees shall be deemed to have been taken by the relevant Permitted Direct
Transferee for the purpose of Article VIII if and when the Permitted Direct
Transferees are allowed to exercise their right for indemnification directly
against the Transferring Company.
8.8. Hold Assets.
-----------
19
<PAGE>
(a) The Rescuing Company may, at its option, reclassify the Defective
Properties from the Transferred Assets to the Hold Assets by giving a
written notice to the Transferring Company by February 15, 2000. Such
reclassification shall not change any rights and obligation of the parties
under this Agreement, except as set forth in this Section 8.8. The Rescuing
Company shall use its reasonable efforts to market the Hold Assets within 1
year of the Closing Date. The Transferring Company shall transfer the title
to such Hold Asset to a purchaser designated by the Rescuing Company.
(b) Any income generated by or sales proceeds arising from a Hold Asset shall
be assigned and paid directly to the Rescuing Company or its designee and
any ordinary costs and expenses (including fixed property taxes) shall be
borne by the Rescuing Company or its designee. The Rescuing Company shall
obtain a written consent from the Transferring Company before it spends any
costs and expenses other than the ordinary costs and expenses, such as
clean-up cost of hazardous materials. The Transferring Company shall grant
such first priority security interest in the Hold Assets and proceeds
thereof or take such other actions with respect to the Hold Assets and
proceeds thereof, all as reasonably requested by the Rescuing Company to
secure the right of the Transferring Company or its designee to receive
such income or sales proceeds.
(c) The Transferring Company shall, at any time with a prior written or oral
notice to the Transferring Company reasonably in advance, allow the
Rescuing Company or its designee to conduct its on-site due diligence
review (including environmental due diligence work) of the Real Properties;
provided, however, that all costs and expenses of such on-site due
diligence review shall be borne by the Rescuing Company or its designee.
(d) Notwithstanding (a) and (b) above, at any time after the date hereof, the
Rescuing Company may, by giving a written notice to the Transferring
Company, waive all rights to (and be released from all obligations relating
to) such Hold Assets. Thereafter, the Transferring Company shall have the
right to dispose (and shall solely be responsible for disposing) of, and
retain any proceeds relating to (and bear any cost for), such Hold Assets.
In this case, the Rescuing Company shall not object to such Hold Asset's
being transferred to a third party transferee designated by the
Transferring Company at the price as low as 0 yen.
8.9. No Prejudice to Indemnification. Neither the finalization of the Closing
Accounts under Section 2.4 nor the payment or receipt of the payment under
Section 2.5 shall prejudice the parties' rights and obligations regarding
indemnification under this Article VIII (except as set forth in Section 8.4).
8.10. Default Interest. Any amount payable under this Agreement, but not paid
when due, shall bear interest at the Default Interest Rate which shall accrue on
a daily basis until such amounts are paid.
8.11. Right of Set-Off. Subject to Sections 8.4, nothing contained in this
Agreement shall prohibit or restrict either party from setting off (a) its
claims against the other party and (b) its obligations owed to such other party
in accordance with applicable laws.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF RESCUING COMPANY
-------------------------------------------------------
20
<PAGE>
The obligations of the Rescuing Company under this Agreement to consummate the
Closing shall be subject to the fulfillment, at or prior to the Closing, of all
of the following conditions, any one or more of which may be waived by the
Rescuing Company:
9.1. Representations and Warranties. All representations and warranties of the
-------------------------------
Transferring Company contained in Article IV of this Agreement shall be true in
all material respects (and any such representations and warranties made subject
to any materiality qualifier or similar thereto shall be true in all respects)
at and as of the Closing as if such representations and warranties were made at
and as of the Closing; provided, however, that if the relevant representations
and warranties are made on the affairs or conditions of the subject matters as
of a specific date set forth in the such representations and warranties, such
representations and warranties shall be true in all material respects as of such
specific date. The parties agree that any inaccuracy of the representations and
warranties resulted from the sale of the Sold Assets or a party's performance of
its obligations in compliance with this Agreement shall be disregarded for the
purpose of Section 9.1 and shall not constitute a breach of the relevant
representations and warranties.
9.2. Performance by Transferring Company. The Transferring Company shall have
------------------------------------
performed and complied in all material respects with all agreements, covenants
and conditions required by this Agreement to be performed and complied with by
it prior to or on the Closing.
9.3. Consent to Transfer of Loan Receivables, Securities, Tenant
-----------------------------------------------------------
Leases and the Material Contracts. The consents to the transfer from the
- ----------------------------------
Transferring Company to the Rescuing Company and the Permitted Direct
Transferees of such Loan Receivables (not all but at least 95% of the aggregate
amount of the outstanding principal amounts of such Loan Receivables), the
Tenant Leases, the Securities and the Material Contracts as set forth in
Schedule 9.3 shall have been obtained in such manner reasonably acceptable to
the Rescuing Company from the relevant parties to such Loan Receivables, the
Security Interests, the Tenant Leases, the Securities and the Material
Contracts.
9.4. [Intentionally Left Blank]
9.5. Transfer of Insurance Contracts and PPC Financial Assistance.
------------------------------------------------------------
(a) In accordance with Article 268.1 of the IB Law, the chief officer of FSA
shall have confirmed the qualifications with respect to the transfer of the
Insurance Contracts in accordance with this Agreement.
(b) In accordance with Article 270-2.2 of the IB Law, PPC shall have confirmed
that the Transferring Company's valuation of its assets are appropriate and
shall have notified the Transferring Company to that effect.
(c) In accordance with Article 270-3 of the IB Law, the PPC shall have
determined that it will provide the financial assistance and entered into
the Financial Assistance Agreement set forth in the Financial Assistance
Agreement with the Rescuing Company.
(d) In accordance with Articles 136 and 250 of the IB Law, a general meeting of
the policyholder representatives of the Transferring Company and a general
meeting of the shareholders of the Rescuing Company shall have adopted
their respective resolutions to approve the transfer of the Insurance
Contracts in accordance with this Agreement.
21
<PAGE>
(e) In accordance with Articles 137 and 251 of the IB Law, the Transferring
Company shall have made a public notice regarding the transfer of the
Insurance Contracts and (i) the number of the policyholders to be
transferred who express objection to the transfer of the Insurance
Contracts shall not have been more than one-tenth of the total number of
the policyholders to be transferred or (ii) the aggregate of the amounts
claimable under the Insurance Contracts by the objecting policyholders
shall not have been more than one-tenth of the aggregate of the amounts
claimable under the Insurance Contracts to be transferred.
(f) In accordance with Article 139 of the IB law, the chief officer of FSA
shall have approved the transfer of the Insurance Contracts in accordance
with this Agreement.
(g) Such other actions as may be required for the Rescuing Company to receive
the financial assistance set forth in the Financial Assistance Agreement
shall have been completed by PPC and the relevant governmental authorities.
(h) In accordance with the Financial Assistance Agreement, PPC shall have paid
the PPC Financial Assistance to the Rescuing Company to induce the Rescuing
Company to acquire the assets and liabilities of the Transferring Company.
9.6. No Material Adverse Change. Since September 30, 1999, except for such
--------------------------
changes as disclosed to the Rescuing Company in the Disclosure Schedule, there
shall have been no material adverse change in the condition, financial or
otherwise, of the Transferred Business, or of the Transferring Company's ability
to perform its obligations under this Agreement; provided, however, that, for
the purpose of this Section 9.6, any occurrence of event insured under the
Insurance Contracts, surrender of the Insurance Contracts or the decrease of the
Insurance Contracts due to requests for reduction of amounts or share change or
extension, pay-off, cancellation, etc., or any voluntary resignations of the
employees, shall in no event constitute such material adverse change.
9.7. Tax Treatment on Financial Assistance. The Rescuing Company shall have
---------------------------------------
received such written assurance regarding the tax-free treatment of the
financial assistance set forth in the Financial Assistance Agreement as shall
reasonably be acceptable to the Rescuing Company.
9.8. Regulatory Approval Essential for Post-Closing Operation of Transferred
-----------------------------------------------------------------------
Business. The Rescuing Company shall have obtained in such manner reasonably
- ---------
acceptable to the Rescuing Company such regulatory approvals, licenses and
clearances as set forth in Schedule 9.8.
9.9. [Intentionally Left Blank]
9.10. Completion of Actions for Joho-Roren Matter.
-------------------------------------------
(a) All actions set forth in Schedule 5.11 shall have been completed.
(b) The Rescuing Company shall have received a copy of the minutes which
records that such disclosure as set forth in Schedule 5.11(2) was properly
made.
(c) The Rescuing Company shall have received such opinion as set forth in
Schedule 5.11(3).
(d) The joint application as set forth in Schedule 5.11(4) have been submitted
to and accepted by PPC.
22
<PAGE>
(e) The Financial Assistance Agreement shall have been entered into between the
Rescuing Company and PPC in substantially the form attached hereto as
Exhibit 1.1-A.
Satisfaction of the conditions set forth in this Section 9.10 no later than
January 5, 2000, shall be a condition precedent to the Rescuing Company's
obligations to perform the Closing. If the Transferring Company finds any
situation where any of the conditions set forth in Section 9.10 is likely to
remain unsatisfied as of January 5, 2000, the Transferring Company shall
promptly notify the Rescuing Company of such situation.
9.11. Closing Documents. The Rescuing Company shall have received the
-----------------
following documents (the "Transferring Company Closing Documents"):
(a) A written opinion of Nishimura & Partners, legal counsel to the
Transferring Company dated the Closing Date in substantially the form
attached hereto as Exhibit 9.11.
(b) The Transferring Company's certificate confirming the satisfaction of the
conditions set forth in Sections 9.1, 9.2, 9.3, 9.5 and 9.6.
(c) Such documents and evidence as the Rescuing Company may reasonably request
in order to ascertain that the Transferring Company shall have taken such
actions as set forth in Schedule 5.11.
(d) Such other documents and evidence as the Rescuing Company may reasonably
request in order to ascertain the fulfillment of the conditions set forth
in this Article IX.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF TRANSFERRING COMPANY
-----------------------------------------------------------
The obligations of the Transferring Company under this Agreement to consummate
the Closing shall be subject to the fulfillment, at or prior to the Closing, of
all of the following conditions, any one or more of which may be waived by the
Transferring Company:
10.1. Representations and Warranties. All representations and warranties of
------------------------------
the Rescuing Company contained in Article IV of this Agreement shall be true in
all material respects (and any such representations and warranties made subject
to any materiality qualifier shall be true in all respects) at and as of the
Closing as if such representations and warranties were made at and as of the
Closing. The parties agree that any inaccuracy of the representations and
warranties resulted from the sale of the Sold Assets or a party's performance of
its obligations in compliance with this Agreement shall be disregarded for the
purpose of Section 10.1 and shall not constitute a breach of the relevant
representations and warranties.
10.2. Performance by Rescuing Company. The Rescuing Company shall have
--------------------------------
performed and complied in all material respects with all agreements, covenants
and conditions required by this Agreement to be performed and complied with by
it prior to or on the Closing.
10.3. Transfer of Insurance Contracts and PPC Financial Assistance.
------------------------------------------------------------
23
<PAGE>
(a) In accordance with Article 268.1 of the IB Law, the chief officer of FSA
shall have confirmed the qualifications with respect to the transfer of the
Insurance Contracts in accordance with this Agreement.
(b) In accordance with Article 270-2.2 of the IB Law, PPC shall have confirmed
that the Transferring Company's valuation of its assets are appropriate and
shall have notified the Transferring Company to that effect.
(c) In accordance with Article 270-3 of the IB Law, PPC shall have determined
that it will provide the financial assistance set forth in the Financial
Assistance Agreement to the Rescuing Company.
(d) In accordance with Articles 136 and 250 of the IB Law, a general meeting of
the policyholder representatives of the Transferring Company and a general
meeting of the shareholders of the Rescuing Company shall have adopted
their respective resolutions to approve the transfer of the Insurance
Contracts in accordance with this Agreement.
(e) In accordance with Articles 137 and 251 of the IB Law, the Transferring
Company shall have made a public notice regarding the transfer of the
Insurance Contracts and (i) the number of the policyholders to be
transferred who express objection to the transfer of the Insurance
Contracts shall not have been more than one-tenth of the total number of
the policyholders to be transferred or (ii) the aggregate of the amounts
claimable under the insurance contracts by the objecting policyholders
shall not have been exceeds more than one-tenth of the aggregate of the
amounts claimable under the insurance contracts to be transferred.
(f) In accordance with Article 139 of the IB law, the chief officer of FSA
shall have approved the transfer of the Insurance Contracts in accordance
with this Agreement.
(g) Such other actions as may be required for the Rescuing Company to receive
the financial assistance set forth in the Financial Assistance Agreement
shall have been completed by PPC and the relevant governmental authorities.
(h) In accordance with the Financial Assistance Agreement, PPC shall have paid
the PPC Financial Assistance to the Rescuing Company.
10.4. Closing Documents. The Transferring Company shall have received the
------------------
following documents (the "Rescuing Company Closing Documents"):
(a) A written opinion of Nagashima, Ohno & Tsunematsu, legal counsel to the
Rescuing Company dated the Closing Date in substantially the form attached
hereto as Exhibit 10.4.
(b) The Rescuing Company's Certificate confirming satisfaction of the
conditions set forth in Sections 10.1, 10.2 and 10.3.
(c) Such other documents and evidence as the Transferring Company may
reasonably request in order to ascertain the fulfillment of the conditions
set forth in this Article X.
24
<PAGE>
ARTICLE XI
TERMINATION
-----------
11.1. Termination by Agreement. Prior to the Closing Date, this Agreement may
-----------------------
be terminated by a written agreement duly signed on behalf of the Transferring
Company and the Rescuing Company.
11.2. Termination.
-----------
If the Closing does not take place on or prior to March 1, 2000, unless
otherwise agreed in writing between the Transferring Company and the Rescuing
Company, this Agreement shall automatically terminate as of March 1, 2000.
11.3. Effect of Termination. If this Agreement shall terminate pursuant to
---------------------
Section 11.2, such termination shall be without cost or liability to either
party other than the cost or liability for breach of any representation,
warranty, covenant or agreement contained in this Agreement.
11.4. Survival of Certain Provisions. Unless otherwise agreed in writing, all
-------------------------------
definitions of terms used herein, Section 7.3 and Article I, VI, XI, XII, XIII
and XIV shall survive the termination of this Agreement.
ARTICLE XII
DISPUTE RESOLUTION
------------------
Any dispute or claim arising out or relating to this Agreement or breach
thereof, including any claim that this Agreement, or any part hereof, is
invalid, illegal or voidable shall be finally resolved under the exclusive
jurisdiction of the Tokyo District Court.
ARTICLE XIII
GOVERNING LAW AND LANGUAGE
--------------------------
13.1. Governing Law. This Agreement shall be governed by and interpreted in
--------------
accordance with the laws of Japan.
13.2. Language. The Japanese version of this Agreement shall be the original
---------
of this Agreement. If there is any difference in meaning between the Japanese
version of this Agreement and any translation thereof, the Japanese version
shall control in determining the meaning of the Agreement.
ARTICLE XIV
MISCELLANEOUS
-------------
14.1. Binding Effect and Assignment. This Agreement shall be binding upon and
-----------------------------
shall inure to the benefit of the parties and their respective successors and
assigns. Neither party shall transfer any rights or obligations under this
Agreement to any third party without having a prior written consent of the other
party; provided, however, that such consent shall not be unreasonably withheld.
Neither the Transferring Company nor the Rescuing Company shall be released from
any obligations under this Agreement as the result of such transfer, and the
relevant transferee shall comply with the agreements and covenants of the
transferor under this Agreement. Notwithstanding the foregoing, the Rescuing
Company may, by giving the Transferring Company a written notice prior to
25
<PAGE>
January 31, 2000, designate the Permitted Direct Transferees as entities which
become the direct transferees of all or a part of the Loan Receivables and the
Real Properties; provided, however, that the Rescuing Company shall indemnify
and hold harmless the Transferring Company from and against any incremental
costs which would not have been incurred by the Transferring Company, had the
transfer of such assets been made to the Rescuing Company.
14.2. Notices. Unless otherwise agreed upon in writing by a party receiving a
--------
notice or other communication, any notice or other communication required or
permitted to be given hereunder shall be in writing in the Japanese language
shall be delivered personally, transmitted by facsimile or sent by certified (or
registered) and express mail (air mail, if applicable), postage prepaid, and
shall be deemed given when so delivered personally or, if sent by mail, received
by a receiving party or, if transmitted by facsimile, one day after the date of
such facsimile to the party at the following addresses:
(i) If to the Transferring Company to:
Toho Mutual Life Insurance Company
2-15-1, Shibuya, Shibuya-ku, Tokyo 150-0002
Attention: Office of Insurance Administrators
Facsimile Number: 03-5485-7397
With a copy (it being understood that the delivery of a copy of notice shall not
be deemed to be the delivery of notice) to:
The Life Insurance Association of Japan
4-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo 100-0005
Attention: Chairman
Facsimile Number: 03-3201-6713
With a copy (it being understood that the delivery of a copy of notice shall not
be deemed to be the delivery of notice) to:
Nishimura & Partners
1-12-32, Akasaka, Minato-ku, Tokyo 107-6029
Attention: Masakazu Iwakura, Esq.
Facsimile Number: 03-5561-9711/12/13/14
If to the Rescuing Company to:
GE Edison Life Insurance Company
2-15-1, Shibuya, Shibuya-ku, Tokyo 150-0002
Attention: President
Facsimile Number: 03-5485-7035
With a copy (it being understood that the delivery of a copy of notice shall not
be deemed to be the delivery of notice) to:
GE Financial Assurance Holding, Inc.
6604 W. Broad Street
Richmond, Virginia 23230, U.S.A.
Attention: General Counsel
Facsimile Number: 804-662-2414
26
<PAGE>
With a copy (it being understood that the delivery of a copy of notice shall not
be deemed to be the delivery of notice)to:
Nagashima Ohno & Tsunematsu
3-12, Kioicho, Chiyoda-ku, Tokyo 102-0094
Attention: Kenichi Fujinawa, Esq.
Facsimile Number: 03-5213-7800
14.3. Headings. The heading in this Agreement are for convenience of reference
---------
only and shall not be taken into account in contention with the interpretation
of this Agreement.
14.4. Counterparts. This Agreement may be executed in two or more
-------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
14.5. Severability. Even if any provision of this Agreement (or application
-------------
thereof) is made invalid, illegal or unenforceable on a certain point, it shall
not affect or damage the application of such provision to other points or the
validity, legality or enforceability of other provisions of this Agreement. If a
provision is made unenforceable before a court, such provision shall be
interpreted with limitations only to the extent necessary to make such provision
enforceable.
14.6. Exhibits. The Exhibits, Attachments and Schedules to this Agreement are
---------
hereby made a part of this Agreement as if set forth in full herein.
14.7. Expenses and Taxes Related to Transactions. Except as otherwise
-------------------------------------------
specified in this Agreement, the parties to this Agreement shall bear their
respective expenses incurred in connection with the preparation, execution, and
performance of this Agreement, the transactions contemplated by this Agreement
and the compliance with this Agreement, including all fees and expenses of
agents, representatives, counsels, accountants financial advisers, brokers and
finders. Each party shall bear (a) the stamp duty payable with respect to the
originals of this Agreement and other documents to be retained by such party and
(b) the consumption tax imposed on its purchase or receipt of goods or services
under this Agreement; provided, however, that, (i) the consumption tax imposed
in connection with the transfer of the Transferred Assets under this Agreement
shall be borne by the Transferring Company, (ii) any outstanding tax for
representative registration (hyoji-toki) and for conservancy registration
----------
(hozon-toki) shall be paid by the Transferring Company and (iii) the
----------
registration tax imposed and the judicial scriveners' fees and disbursements in
connection with the transfer of the Transferred Asset under this Agreement shall
be borne by the Rescuing Company. Property taxes (koteishisan-zei) shall be
---------------
borne by each party on a prorated basis in accordance with its respective period
of ownership of the Transferred Assets to which such property taxes apply (i.e.
as to the period from January 1, 2000 through the day before the Closing Date
and as to the period from the Closing Date through December 31, 2000). Except as
otherwise specifically set forth in this Agreement, each party shall bear any
other Taxes which such party is obligated to pay to the relevant tax authorities
under applicable laws.
14.8. Waivers. No delay on the part of either party in exercising any right,
--------
power or privilege hereunder shall operate as a waiver thereof, nor shall any
waiver on the part of either party of any right, power or privilege hereunder,
nor any single or partial exercise of any right, power or privilege hereunder,
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder.
27
<PAGE>
14.9. Confidentiality.
---------------
(a) Except for the disclosure which may be made only to that extent when such
disclosure is required by or desirable under laws or this Agreement or when
the parties otherwise agree, the parties shall keep the terms of this
Agreement in strict confidence and shall not disclose them to any third
party.
(b) The Transferring Company shall keep the non-public information of the
Insurance Contracts (including non-public information of the policyholders)
in confidence and shall not disclose such information to any third party
unless such disclosure is required by applicable laws.
(c) Notwithstanding any other provisions of this Agreement, after the Closing
Date, each party may, after consultation with the other party, issue a
press release or otherwise publicly disclose the existence of this
Agreement and the transactions contemplated hereby.
14.10. Entire Agreement. This Agreement (including its Schedules, Exhibits and
----------------
Attachments) constitutes the entire agreement and understanding among the
parties with respect to the subject matter expressed herein and shall have the
priority over all previous agreements and understandings or other arrangements
(including the Confidentiality Agreement on such subject, as of August 27, 1999,
between the parties).
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the day and year first above written.
Toho Mutual Life Insurance Company
--------------------------------
Administrator Mohachi Sugiyama
Administrator Akira Kosugi
Administrator LIAJ
Noboru Yamaguchi
GE Edison Life Insurance Company
-------------------------------
Name: K. Rone Baldwin
Title: President & CEO
28
