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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
——————————————————————
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                           to                           

Commission File Number: 001-35897______________________________________

Voya Financial, Inc.
(Exact name of registrant as specified in its charter)
Delaware52-1222820
(State or other jurisdiction of incorporation or organization)(IRS Employer Identification No.)
230 Park Avenue
New YorkNew York10169
(Address of principal executive offices)(Zip Code)
(212) 309-8200
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.01 par valueVOYANew York Stock Exchange
Depositary Shares, each representing a 1/40th
VOYAPrBNew York Stock Exchange
interest in a share of 5.35% Fixed-Rate Reset Non-Cumulative Preferred Stock, Series B, $0.01 par value
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.           Yes    No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  
Yes    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer    
Non-accelerated filer     Smaller reporting company     
 Emerging growth company     
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).             Yes    No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.             Yes    No

APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of July 29, 2022, 97,918,656 shares of Common Stock, 0.01 par value, were outstanding.
1


Voya Financial, Inc.
Form 10-Q for the period ended June 30, 2022

INDEX
PAGE
PART I.FINANCIAL INFORMATION (UNAUDITED)
Item 1.Financial Statements:
Item 2.
Item 3.
Item 4.
PART II.OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 6.
2

Table of Contents
For the purposes of the discussion in this Quarterly Report on Form 10-Q, the term Voya Financial, Inc. refers to Voya Financial, Inc. and the terms "Company," "we," "our," and "us" refer to Voya Financial, Inc. and its subsidiaries.

NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, including "Risk Factors," and "Management’s Discussion and Analysis of Financial Condition and Results of Operations," contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements relating to future developments in our business or expectations for our future financial performance and any statement not involving a historical fact. Forward-looking statements use words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. Actual results, performance or events may differ materially from those projected in any forward-looking statement due to, among other things, (i) general economic conditions, particularly economic conditions in our core markets, (ii) performance of financial markets, including emerging markets, (iii) the frequency and severity of insured loss events, (iv) the effects of natural or man-made disasters, including pandemic events and specifically the current COVID-19 pandemic event, (v) mortality and morbidity levels, (vi) persistency and lapse levels, (vii) interest rates, (viii) currency exchange rates, (ix) general competitive factors, (x) changes in laws and regulations, (xi) changes in the policies of governments and/or regulatory authorities, (xii) our ability to successfully manage the separation of the Individual Life business that we sold to Resolution Life US on January 4, 2021, including the transition services on the expected timeline and economic terms, and (xiii) our ability to realize the expected benefits from the transaction with AllianzGI. Factors that may cause actual results to differ from those in any forward-looking statement also include those described under "Risk Factors," "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Trends and Uncertainties" in the Annual Report on Form 10-K for the year ended December 31, 2021 (File No. 001-35897) (the "Annual Report on Form 10-K") and in this Quarterly Report on Form 10-Q.
The risks included here are not exhaustive. Current reports on Form 8-K and other documents filed with the Securities and Exchange Commission ("SEC") include additional factors that could affect our businesses and financial performance. Moreover, we operate in a rapidly changing and competitive environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors.
3

Table of Contents
PART I.        FINANCIAL INFORMATION

Item 1.        Financial Statements
Voya Financial, Inc.
Condensed Consolidated Balance Sheets
June 30, 2022 (Unaudited) and December 31, 2021
(In millions, except share and per share data)
June 30,
2022
December 31,
2021
Assets:
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost of $31,205 as of 2022 and $30,656 as of 2021; allowance for credit losses of $47 as of 2022 and $58 as of 2021)
$29,324 $33,699 
Fixed maturities, at fair value using the fair value option
2,159 2,354 
Equity securities, at fair value (cost of $234 as of 2022 and $240 as of 2021)
234 240 
Short-term investments36 97 
Mortgage loans on real estate5,415 5,627 
 Less: Allowance for credit losses12 15 
 Mortgage loans on real estate, net5,403 5,612 
Policy loans373 392 
Limited partnerships/corporations1,848 1,739 
Derivatives277 171 
Other investments
76 79 
Securities pledged (amortized cost of $1,265 as of 2022 and $1,091 as of 2021)
1,183 1,198 
Total investments40,913 45,581 
Cash and cash equivalents954 1,402 
Short-term investments under securities loan agreements, including collateral delivered
1,123 1,108 
Accrued investment income413 428 
Premium receivable and reinsurance recoverable13,117 13,663 
Less: Allowance for credit losses on reinsurance recoverable38 28 
Premium receivable and reinsurance recoverable, net13,079 13,635 
Deferred policy acquisition costs and Value of business acquired2,480 1,378 
Deferred income taxes1,795 986 
Other assets (net of allowance for credit losses of $4 as of 2022 and $0 as of 2021)
2,581 2,532 
Assets related to consolidated investment entities ("CIEs"):
Limited partnerships/corporations, at fair value2,943 2,469 
Cash and cash equivalents85 171 
Corporate loans, at fair value using the fair value option1,122 1,111 
Other assets15 28 
Assets held in separate accounts80,017 100,433 
Total assets$147,520 $171,262 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
4

Table of Content
Voya Financial, Inc.
Condensed Consolidated Balance Sheets
June 30, 2022 (Unaudited) and December 31, 2021
(In millions, except share and per share data)
June 30,
2022
December 31,
2021
Liabilities and Shareholders' Equity:
Future policy benefits$9,970 $9,952 
Contract owner account balances43,181 42,806 
Payables under securities loan and repurchase agreements, including collateral held1,220 1,183 
Short-term debt1 1 
Long-term debt2,385 2,595 
Derivatives307 231 
Pension and other postretirement provisions205 226 
Current income taxes19 23 
Other liabilities1,848 2,098 
Liabilities related to CIEs:
Collateralized loan obligations notes, at fair value using the fair value option1,019 880 
Other liabilities1,135 1,013 
Liabilities related to separate accounts80,017 100,433 
Total liabilities$141,307 $161,441 
Commitments and Contingencies (Note 14)
Shareholders' equity:
Preferred stock ($0.01 par value per share; $625 aggregate liquidation preference as of 2022 and 2021 respectively)
  
Common stock ($0.01 par value per share; 900,000,000 shares authorized; 110,634,763 and 108,987,650 shares issued as of 2022 and 2021, respectively; 97,912,907 and 107,758,376 shares outstanding as of 2022 and 2021, respectively)
1 1 
Treasury stock (at cost; 12,721,856 and 1,229,274 shares as of 2022 and 2021, respectively)
(821)(80)
Additional paid-in capital7,500 7,542 
Accumulated other comprehensive income (loss)
(963)2,100 
Retained earnings (deficit):
Unappropriated(1,201)(1,310)
Total Voya Financial, Inc. shareholders' equity4,516 8,253 
Noncontrolling interest
1,697 1,568 
Total shareholders' equity6,213 9,821 
Total liabilities and shareholders' equity$147,520 $171,262 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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Voya Financial, Inc.
Condensed Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)
(In millions, except per share data)

Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Revenues:
Net investment income$581 $656 $1,211 $1,370 
Fee income411 436 844 894 
Premiums595 516 1,208 (4,471)
Net gains (losses):
Total impairments(2) (9) 
Other net gains (losses)(225)(37)(503)1,705 
Total net gains (losses)(227)(37)(512)1,705 
Other revenue44 374 84 484 
Income (loss) related to consolidated investment entities:
Net investment income115 558 198 564 
Total revenues1,519 2,503 3,033 546 
Benefits and expenses:
Policyholder benefits406 457 837 (3,977)
Interest credited to contract owner account balances237 229 471 473 
Operating expenses605 706 1,237 1,308 
Net amortization of Deferred policy acquisition costs and Value of business acquired67 26 147 565 
Interest expense33 39 73 88 
Operating expenses related to consolidated investment entities:
Interest expense13 12 19 17 
Other expense5 6 5 6 
Total benefits and expenses1,366 1,475 2,789 (1,520)
Income (loss) from continuing operations before income taxes153 1,028 244 2,066 
Income tax expense (benefit)10 112 17 64 
Income (loss) from continuing operations143 916 227 2,002 
Income (loss) from discontinued operations, net of tax (6) 8 
Net income (loss)143 910 227 2,010 
Less: Net income (loss) attributable to noncontrolling interest75 447 118 447 
Net income (loss) available to Voya Financial, Inc.68 463 109 1,563 
Less: Preferred stock dividends4 4 18 18 
Net income (loss) available to Voya Financial, Inc.'s common shareholders$64 $459 $91 $1,545 
Net income (loss) per common share:
Basic
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders$0.62 $3.86 $0.88 $12.64 
Income (loss) available to Voya Financial, Inc.'s common shareholders$0.62 $3.81 $0.88 $12.71 
Diluted
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders$0.57 $3.58 $0.80 $11.78 
Income (loss) available to Voya Financial, Inc.'s common shareholders$0.57 $3.53 $0.80 $11.84 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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Voya Financial, Inc.
Condensed Consolidated Statements of Comprehensive Income
For the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)
(In millions)

Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Net income (loss)$143 $910 $227 $2,010 
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities(1,886)661 (3,877)(2,829)
Pension and other postretirement benefits liability (1) (1)
Other comprehensive income (loss), before tax(1,886)660 (3,877)(2,830)
Income tax expense (benefit) related to items of other comprehensive income (loss)(396)139 (814)(363)
Other comprehensive income (loss), after tax(1,490)521 (3,063)(2,467)
Comprehensive income (loss)(1,347)1,431 (2,836)(457)
Less: Comprehensive income (loss) attributable to noncontrolling interest75 447 118 447 
Comprehensive income (loss) attributable to Voya Financial, Inc.$(1,422)$984 $(2,954)$(904)
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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Voya Financial, Inc.
Condensed Consolidated Statements of Changes in Shareholders' Equity
For the Three Months Ended June 30, 2022 (Unaudited)
(In millions)
Preferred StockCommon
Stock
Treasury
Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained Earnings (Deficit)Total
Voya
Financial, Inc.
Shareholders'
Equity
Noncontrolling
Interest
Total
Shareholders'
Equity
Unappropriated
Balance as of April 1, 2022$ $1 $(565)$7,504 $527 $(1,269)$6,198 $1,506 $7,704 
Comprehensive income (loss):
Net income (loss)     68 68 75 143 
Other comprehensive income (loss), after tax    (1,490) (1,490) (1,490)
Total comprehensive income (loss)(1,422)75 (1,347)
Common stock acquired - Share repurchase  (255)5   (250) (250)
Dividends on preferred stock   (4)  (4) (4)
Dividends on common stock   (20)  (20) (20)
Share-based compensation  (1)15   14  14 
Contributions from (Distributions to) noncontrolling interest, net       116 116 
Balance as of June 30, 2022$ $1 $(821)$7,500 $(963)$(1,201)$4,516 $1,697 $6,213 















The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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Voya Financial, Inc.
Condensed Consolidated Statements of Changes in Shareholders' Equity
For the Six Months Ended June 30, 2022 (Unaudited)
(In millions)
Preferred StockCommon
Stock
Treasury
Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained Earnings (Deficit)Total
Voya
Financial, Inc.
Shareholders'
Equity
Noncontrolling
Interest
Total
Shareholders'
Equity
Unappropriated
Balance as of January 1, 2022$ $1 $(80)$7,542 $2,100 $(1,310)$8,253 $1,568 $9,821 
Comprehensive income (loss):
Net income (loss)     109 109 118 227 
Other comprehensive income (loss), after tax    (3,063) (3,063) (3,063)
Total comprehensive income (loss)(2,954)118 (2,836)
Common stock issuance   2   2  2 
Common stock acquired - Share repurchase  (700)(50)  (750) (750)
Dividends on preferred stock   (18)  (18) (18)
Dividends on common stock   (41)  (41) (41)
Share-based compensation  (41)65   24  24 
Contributions from (Distributions to) noncontrolling interest, net       11 11 
Balance as of June 30, 2022$ $1 $(821)$7,500 $(963)$(1,201)$4,516 $1,697 $6,213 













The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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Voya Financial, Inc.
Condensed Consolidated Statements of Changes in Shareholders' Equity
For the Three Months Ended June 30, 2021 (Unaudited)
(In millions)
Preferred StockCommon
Stock
Treasury
Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained Earnings (Deficit)Total
Voya
Financial, Inc.
Shareholders'
Equity
Noncontrolling
Interest
Total
Shareholders'
Equity
Unappropriated
Balance as of April 1, 2021$ $2 $(1,301)$11,177 $1,910 $(3,857)$7,931 $1,068 $8,999 
Comprehensive income (loss):
Net income (loss)     463 463 447 910 
Other comprehensive income (loss), after tax    521  521  521 
Total comprehensive income (loss)984 447 1,431 
Net consolidations (deconsolidations) of consolidated investment entities       8 8 
Common stock acquired - Share repurchase  (518)(30)  (548) (548)
Dividends on preferred stock   (4)  (4) (4)
Dividends on common stock   (20)  (20) (20)
Share-based compensation  (1)20   19  19 
Contributions from (Distributions to) noncontrolling interest, net       (110)(110)
Balance as of June 30, 2021$ $2 $(1,820)$11,143 $2,431 $(3,394)$8,362 $1,413 $9,775 













The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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Voya Financial, Inc.
Condensed Consolidated Statements of Changes in Shareholders' Equity
For the Six Months Ended June 30, 2021 (Unaudited)
(In millions)
Preferred StockCommon
Stock
Treasury
Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained Earnings (Deficit)Total
Voya
Financial, Inc.
Shareholders'
Equity
Noncontrolling
Interest
Total
Shareholders'
Equity
Unappropriated
Balance as of January 1, 2021$ $2 $(1,016)$11,183 $4,898 $(4,957)$10,110 $1,068 $11,178 
Comprehensive income (loss):
Net income (loss)     1,563 1,563 447 2,010 
Reversal of Other Comprehensive Income (Loss) due to Individual Life Transaction— — — — (913)— (913)— (913)
Other comprehensive income (loss), after tax    (1,554) (1,554) (1,554)
Total comprehensive income (loss)(904)447 (457)
Net consolidations (deconsolidations) of consolidated investment entities— — — — — — — 8 8 
Common stock issuance   2   2  2 
Common stock acquired - Share repurchase  (753)(50)  (803) (803)
Dividends on preferred stock   (18)  (18) (18)
Dividends on common stock   (40)  (40) (40)
Share-based compensation  (51)66   15  15 
Contributions from (Distributions to) noncontrolling interest, net       (110)(110)
Balance as of June 30, 2021$ $2 $(1,820)$11,143 $2,431 $(3,394)$8,362 $1,413 $9,775 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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Voya Financial, Inc.
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2022 and 2021 (Unaudited)
(In millions)
Six Months Ended June 30,
20222021
Cash Flows from Operating Activities:
Net cash provided by (used in) operating activities - continuing operations$715 $(75)
Net cash (used in) operating activities - discontinued operations (250)
Net cash provided by (used in) operating activities715 (325)
Cash Flows from Investing Activities:
Proceeds from the sale, maturity, disposal or redemption of:
Fixed maturities3,454 2,996 
Equity securities 193 
Mortgage loans on real estate545 356 
Limited partnerships/corporations127 549 
Acquisition of:
Fixed maturities(4,613)(3,589)
Fixed maturities, trading (45)
Equity securities (271)
Mortgage loans on real estate(330)(334)
Limited partnerships/corporations(177)(231)
Short-term investments, net61 82 
Derivatives, net116 12 
Sales from consolidated investment entities578 508 
Purchases within consolidated investment entities(1,426)(771)
Proceeds from sale of business 250 
Collateral (delivered) received, net23 16 
Receipts on deposit asset contracts60 28 
Other, net8 508 
Net cash provided by investing activities - discontinued operations 376 
Net cash (used in) provided by investing activities(1,574)633 
Cash Flows from Financing Activities:
Deposits received for investment contracts3,548 3,132 
Maturities and withdrawals from investment contracts(3,112)(3,300)
Settlements on deposit liability contracts(3)(4)
Repayment of debt with maturities of more than three months(215)(85)
Borrowings of consolidated investment entities959 398 
Repayments of borrowings of consolidated investment entities(309)(97)
Contributions from (distributions to) participants in consolidated investment entities, net322 (143)
Proceeds from issuance of common stock, net2 2 
Share-based compensation(40)(41)
Common stock acquired - Share repurchase(750)(392)
Dividends paid on preferred stock(18)(18)
Dividends paid on common stock(41)(40)
Principal payments for financing leases(13)(13)
Other(5) 
Net cash provided by (used in) financing activities325 (601)
Net decrease in cash and cash equivalents, including cash in CIEs(534)(293)
Cash and cash equivalents, including cash in CIEs, beginning of period1,573 2,143 
Cash and cash equivalents, including cash in CIEs, end of period$1,039 $1,850 
June 30,
2022
December 31,
2021
Reconciliation of cash and cash equivalents, including cash in CIEs:
Cash and cash equivalents$954 $1,402 
Cash and cash equivalents in CIEs85 171 
Total cash and cash equivalents, including cash in CIEs$1,039 $1,573 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)

1.    Business, Basis of Presentation and Significant Accounting Policies

Business    

Voya Financial, Inc. and its subsidiaries (collectively the "Company") is a financial services organization in the United States that offers a broad range of retirement services, investment management services, mutual funds, group insurance and supplemental health products. Products and services are provided by the Company through three segments: Wealth Solutions, Health Solutions and Investment Management. Activities not directly related to the Company's segments and certain run-off activities that are not meaningful to the Company's business strategy are included within Corporate. See the Segments Note to these Condensed Consolidated Financial Statements.

On January 4, 2021, the Company completed a series of transactions pursuant to a Master Transaction Agreement (the “Resolution MTA”) entered into on December 18, 2019 with Resolution Life U.S. Holdings Inc., a Delaware corporation (“Resolution Life US”), pursuant to which Resolution Life US acquired all of the shares of the capital stock of Security Life of Denver Company ("SLD") and Security Life of Denver International Limited ("SLDI"), including the capital stock of several subsidiaries of SLD and SLDI. The Company will continue to hold an insignificant number of Individual Life, and non-Wealth Solutions annuity policies which together with the businesses sold through divestment or reinsurance will be referred to as "divested businesses".

Concurrently with the sale, SLD entered into reinsurance agreements with insurance subsidiaries of the Company. Pursuant to these agreements, the Company's subsidiaries reinsured to SLD certain individual life insurance and annuity businesses. The sale of SLD, SLDI and several of their subsidiaries along with the aforementioned reinsurance transactions are referred to herein as the "Individual Life Transaction". The Individual Life Transaction resulted in the disposition of substantially all of the Company's life insurance and legacy non-Wealth Solutions annuity businesses and related assets.

On June 9, 2021, the Company completed the sale of the independent financial planning channel of Voya Financial Advisors (“VFA”) to Cetera Financial Group, Inc. (“Cetera”), one of the nation's largest networks of independently managed broker-dealers. In connection with this transaction, the Company transferred more than 800 independent financial professionals serving retail customers with approximately $38 billion in assets under advisement to Cetera, while retaining approximately 500 field and phone-based financial professionals who support our Wealth Solutions business.

On July 25, 2022, the Company completed a series of transactions pursuant to a Combination Agreement dated June 13, 2022 (the “Agreement”) with Voya Investment Management LLC, a Delaware limited liability company and an indirect subsidiary of the Company (“Voya IM”), Allianz SE, a stock corporation organized and existing under the laws of the European Union and the Federal Republic of Germany (“Allianz”), Allianz Global Investors U.S. LLC, a Delaware limited liability company and an indirect subsidiary of Allianz (“AGI U.S.”), and VIM Holdings LLC, a newly formed Delaware limited liability company (“Newco”), pursuant to which the parties have combined Voya IM with assets and teams comprising specified transferred strategies managed by AGI U.S.

Under the terms of the Agreement, AGI U.S. transferred to Newco the rights to certain assets and liabilities related to specified investment teams and strategies and the associated assets under management (the “AGI Transferred Business”). The Company transferred all of the limited liability company interests in Voya IM to Newco and in exchange, received a 76% economic stake in Newco's class A shares. Pursuant to the Amended and Restated Limited Liability Company Agreement of Newco entered into at the closing date (“A&R Newco Operating Agreement”), the Company now holds, indirectly, a 76% economic stake in Newco's class A shares and Allianz holds, indirectly, a 24% economic stake in Newco's class A shares. Furthermore, Newco holds all of the limited liability company interests in Voya IM and certain assets and liabilities transferred from AGI U.S. related to specified investment teams and strategies and the associated assets under management.. In accordance with the A&R Newco Operating Agreement, the Company has full operational control of Newco, Voya IM and the transferred assets and investment teams.

The Company is in the process of determining the fair value of the identifiable assets and liabilities assumed as well as the impact of the transaction to Total shareholders’ equity. As such, an estimate of the financial impact of the acquisition cannot be currently made.

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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
On August 1, 2022, Voya Investment Management Alternative Assets, LLC (“VIMAA”), one of the Company’s indirect subsidiaries, entered into a Sale and Purchase Agreement (“SPA”) with Czech Management GP, LLC and Czech Holdings, LLC, both Delaware limited liability companies whereby VIMAA will acquire all of the issued and outstanding equity interests of Czech Asset Management, L.P., a Delaware limited partnership ("CAM"). CAM is a private credit asset manager dedicated to the U.S. middle market. The acquisition, which is expected to close for cash consideration in the fourth quarter of 2022, will expand Voya IM's private and leveraged credit business and is subject to conditions as defined in the SPA.

Impairment of Long-lived Assets

The carrying value of long-lived assets is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. An impairment loss is recognized whenever the carrying amount of an asset exceeds its estimated fair value. The amount of the impairment loss is calculated as the excess of the asset’s carrying value over its fair value. During the second quarter of 2022, the Company had a triggering event related to a decrease in the market price of one of its office buildings. Consequently, the Company determined its fair value, based on an appraisal, to be lower than its carrying value. As a result, the Company recognized an impairment loss of $32, which is included in Operating expenses in the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2022.

Revision of Prior Period Financial Statements

During the second quarter of 2022, the Company identified a presentation error related to a misclassification in the change in cash held by consolidated investment entities within the Condensed Consolidated Statement of Cash Flows. This error resulted in the total end of period cash and cash equivalents in the Condensed Consolidated Statement of Cash Flows not to reconcile to all cash and cash equivalents line items presented in the Condensed Consolidated Balance Sheet. The Company assessed the materiality of the error on prior period financial statements in accordance with the Accounting Changes and Error Corrections guidance. The Company has corrected the presentation error in the comparative period for the six months ended June 30, 2021 and evaluated the materiality of such error based on relevant quantitative and qualitative factors in relation to the Condensed Consolidated Financial Statements. The Company’s evaluation of the qualitative factors included, but was not limited to, consideration of the users of the Condensed Consolidated Financial Statements; there was no impact to net income, comprehensive income, total stockholders' equity or amounts on the Condensed Consolidated Balance Sheet; there was no impact on regulatory capital, cash balances or any liquidity measures; and there was no impact on any contractual or regulatory requirements. Based on this evaluation, the Company concluded that the error in the Condensed Consolidated Statement of Cash Flows did not result in a material misstatement of previously issued financial statements. The following table presents the impact of the error on the specific line items in the Condensed Consolidated Statement of Cash Flows:
Six Months Ended June 30, 2021
As ReportedAdjustmentsAs Adjusted
Net cash provided by (used in) operating activities$(189)$(136)$(325)
Net decrease in cash and cash equivalents, including cash in CIEs(157)(136)(293)
Cash and cash equivalents, including cash in CIEs, beginning of period1,922 221 2,143 
Cash and cash equivalents, including cash in CIEs, end of period1,765 85 1,850 

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and are unaudited. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. The inputs into the Company's estimates and assumptions consider the economic implications of COVID-19 on the Company's critical and significant accounting estimates. Those estimates are inherently subject to change and actual results could differ from those estimates, and the differences may be material to the Condensed Consolidated Financial Statements.

The Condensed Consolidated Financial Statements include the accounts of Voya Financial, Inc. and its subsidiaries, as well as other voting interest entities ("VOEs") and variable interest entities ("VIEs") in which the Company has a controlling financial
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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
interest. See the Consolidated and Nonconsolidated Investment Entities Note to these Condensed Consolidated Financial Statements. Intercompany transactions and balances have been eliminated.

The accompanying Condensed Consolidated Financial Statements reflect adjustments (including normal, recurring adjustments) necessary to present fairly the financial position of the Company as of June 30, 2022, its results of operations, comprehensive income and changes in shareholders' equity for the three and six months ended June 30, 2022 and 2021, and its statements of cash flows for the six months ended June 30, 2022 and 2021, in conformity with U.S. GAAP. Interim results are not necessarily indicative of full year performance.

Certain reclassifications have been made to prior-period amounts to conform to current-period reporting classifications. These reclassifications had no impact on Net income (loss) or Total shareholders’ equity.
The December 31, 2021 Consolidated Balance Sheet is from the audited Consolidated Financial Statements included in the Company's Annual Report on Form 10-K, filed with the SEC. Therefore, these unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Company's Annual Report on Form 10-K.

Future Adoption of Accounting Pronouncements

The following table provides a description of future adoptions of new accounting standards that may have an impact on the Company's financial statements when adopted:

StandardDescription of RequirementsEffective Date and Transition ProvisionsEffect on the Financial Statements or Other Significant Matters
Accounting Standards Update (“ASU”) 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions
This standard, issued in June 2022, clarifies that contractual restrictions on equity security sales are not considered part of the security unit of account and, therefore, are not considered in measuring fair value. In addition, the restrictions cannot be recognized and measured as separate units of account. Disclosures on such restrictions are also required.
The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and are required to be applied prospectively, with any adjustments from the adoption recognized in earnings and disclosed.
The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2022-03.
ASU 2022-02, Troubled Debt Restructurings ("TDRs") and Vintage DisclosuresThis standard, issued in March 2022, eliminates the accounting guidance on troubled debt restructurings for creditors, requires enhanced disclosures for creditors about loan modifications when a borrower is experiencing financial difficulty, and requires public business entities to include current-period gross write-offs in the vintage disclosure tables.The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Entities have the option to apply the amendments involving the recognition and measurement of TDRs using a modified retrospective transition method; the other amendments are required to be applied prospectively.The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2022-02.
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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
StandardDescription of RequirementsEffective Date and Transition ProvisionsEffect on the Financial Statements or Other Significant Matters
ASU 2020-04, Reference Rate ReformThis standard, issued in March 2020, provides temporary optional expedients and exceptions for applying U.S. GAAP principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

In January, 2021, the Financial Accounting Standards Board ("FASB") issued ASU 2021-01, which clarified the scope of relief related to ASU 2020-04.
The amendments are effective as of March 12, 2020, the issuance date of the ASU. An entity may elect to apply the amendments prospectively through December 31, 2022.
The Company expects that it may elect to apply some of the expedients and exceptions provided in ASU 2020-04; however, the Company is still evaluating its options under this guidance as the reference rate reform adoption process continues. To date, adoption of the ASU has not had an impact on the Company’s financial condition and results of operations. The Company will continue to evaluate the impacts of reference rate reform on contract modifications and hedging relationships as transition progresses.
ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts
This standard, issued in August 2018, changes the measurement and disclosures of insurance liabilities and deferred acquisition costs ("DAC") for long-duration contracts issued by insurers. In addition to expanded disclosures, the standard’s requirements include:
Annual review and, if necessary, update of cash flow assumptions used to measure the liability for future policy benefits for nonparticipating traditional and limited payment insurance contracts. The effect of updating cash flow assumptions will be measured on a retrospective catch-up basis and presented in the Statement of Operations in the period in which the update is made. The rate used to discount these liabilities will be required to be updated quarterly, with related changes in the liability recorded in Accumulated other comprehensive income ("AOCI").
The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Initial adoption for the liability for future policy benefits and DAC is required to be reported using either a full retrospective or modified retrospective approach. For market risk benefits, full retrospective application is required.
Evaluation of the implications of these requirements and related potential financial statement impacts is continuing, in accordance with an established governance framework and implementation plan, which includes design and testing of internal controls related to new processes. The Company does not plan to early adopt the ASU and expects to apply a modified retrospective transition method for the liability of future policy benefits and DAC.

The Company expects the January 1, 2021 transition impact will increase Total shareholders’ equity by $0.1 billion to $0.3 billion, primarily driven by a positive impact to AOCI resulting from the reversal of DAC, value of business acquired ("VOBA"), and other adjustment balances of approximately $1.3 billion after tax, offset by an unfavorable impact to AOCI of between $1.0 billion and $1.2 billion after tax resulting from the remeasurement of Future policy benefits and Reinsurance recoverables using January 1, 2021 discount rates. The expected transition effect on Total shareholders’ equity will also include an unfavorable impact on Retained earnings (deficit) of approximately $0.1 billion after tax associated with the establishment of MRB liabilities related to guaranteed minimum benefits on certain deferred
annuity contracts.
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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
StandardDescription of RequirementsEffective Date and Transition ProvisionsEffect on the Financial Statements or Other Significant Matters
ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts (cont.)
Fair value measurement of contract guarantee features qualifying as Market Risk Benefits (“MRB”), with changes in fair value recognized in the Statement of Operations, except for changes in the instrument-specific credit risk, which will be recorded in AOCI.
Amortization of DAC on a constant level basis over the expected term of the contracts, without reference to revenue or profitability. Elimination of adjustments in AOCI related to DAC and balances amortized on a basis consistent with DAC. DAC will no longer be subjected to loss recognition testing.
The majority of the ASU 2018-12 transition impact of between $1.0 billion and $1.2 billion associated with Future policy benefits and Reinsurance recoverables and approximately 50% of the $0.1 billion transition impact associated with the establishment of MRB liabilities are related to business that was reinsured to Resolution Life US in January 2021.

The ultimate effects the standard will have on the financial statements are highly dependent on policyholder behavior, actuarial assumptions and macroeconomic conditions, particularly interest rates and spreads, which may materially change ASU 2018-12-related equity impacts in periods subsequent to transition. The Company estimates the impact of ASU 2018-12 will shift to a reduction of Total shareholders’ equity as of June 30, 2022, primarily related to a negative impact in AOCI resulting from the reversal of DAC, VOBA, and other adjustment balances, which have declined significantly since January 2021 due to increases in interest rates and spreads. While rising interest rates since January 1, 2021 will result in a less unfavorable impact on AOCI due to remeasurement of liability for Future policy benefits, this will be materially offset by the impact from remeasurement of Reinsurance recoverables.

2.    Discontinued Operations

As noted in the Business, Basis of Presentation and Significant Accounting Policies Note, on January 4, 2021, the Company sold several of its subsidiaries and the related Individual Life and fixed and variable annuities businesses within these subsidiaries to Resolution Life US pursuant to the Resolution MTA entered into on December 18, 2019. The Company determined that the entities disposed of met the criteria to be classified as discontinued operations and that the sale represented a strategic shift that had a major effect on the Company’s operations. Income (loss) from discontinued operations, net of tax, for the six months ended June 30, 2021 included a reduction to loss on sale, net of tax of $8 associated with the transaction. For more information related to this transaction, refer to the Discontinued Operations Note to the Consolidated Financial Statements included in Part II, Item 8 of the Annual Report on form 10-K.

Subsequent to the close of the transaction, the Company incurred loss recognition of $523, which is inclusive of $302 of DAC/VOBA write down and $221 of premium deficiency reserve. The DAC/VOBA write down and the premium deficiency reserve were recorded in Net amortization of DAC/VOBA and Policyholder benefits, respectively in the Condensed Consolidated Financial Statements for the six months ended June 30, 2021.

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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
3.    Investments (excluding Consolidated Investment Entities)

Fixed Maturities

Available-for-sale and fair value option ("FVO") fixed maturities were as follows as of June 30, 2022:
Amortized CostGross Unrealized Capital GainsGross Unrealized Capital Losses
Embedded Derivatives(2)
Fair ValueAllowance for credit losses
Fixed maturities:
U.S. Treasuries
$800 $93 $9 $ $884 $ 
U.S. Government agencies and authorities
58 6 1  63  
State, municipalities and political subdivisions993 4 69  928  
U.S. corporate public securities
10,211 265 933  9,541 2 
U.S. corporate private securities4,993 38 289  4,742  
Foreign corporate public securities and foreign governments(1)
3,356 42 317  3,057 24 
Foreign corporate private securities(1)
3,391 15 166  3,222 18 
Residential mortgage-backed securities4,330 53 205 6 4,183 1 
Commercial mortgage-backed securities4,351 9 317  4,042 1 
Other asset-backed securities2,146 3 144  2,004 1 
Total fixed maturities, including securities pledged34,629 528 2,450 6 32,666 47 
Less: Securities pledged1,265 22 104  1,183  
Total fixed maturities$33,364 $506 $2,346 $6 $31,483 $47 
(1) Primarily U.S. dollar denominated.
(2) Embedded derivatives within fixed maturity securities are reported with the host investment. The changes in fair value of embedded derivatives are reported in Other net gains (losses) in the Condensed Consolidated Statements of Operations.



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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Available-for-sale and FVO fixed maturities were as follows as of December 31, 2021:
Amortized CostGross Unrealized Capital GainsGross Unrealized Capital Losses
Embedded Derivatives(2)
Fair ValueAllowance for credit losses
Fixed maturities:
U.S. Treasuries$764 $239 $ $ $1,003 $ 
U.S. Government agencies and authorities69 12   81  
State, municipalities and political subdivisions1,000 112 1  1,111  
U.S. corporate public securities10,402 1,580 41  11,941  
U.S. corporate private securities4,889 459 23  5,325  
Foreign corporate public securities and foreign governments(1)
3,373 368 18  3,723  
Foreign corporate private securities(1)
3,320 238 1  3,501 56 
Residential mortgage-backed securities4,183 139 31 12 4,302 1 
Commercial mortgage-backed securities4,032 173 22  4,183  
Other asset-backed securities2,069 25 12  2,081 1 
Total fixed maturities, including securities pledged34,101 3,345 149 12 37,251 58 
Less: Securities pledged1,091 107   1,198  
Total fixed maturities$33,010 $3,238 $149 $12 $36,053 $58 
(1) Primarily U.S. dollar denominated.
(2) Embedded derivatives within fixed maturity securities are reported with the host investment. The changes in fair value of embedded derivatives are reported in Other net gains (losses) in the Condensed Consolidated Statements of Operations.

The amortized cost and fair value of fixed maturities, including securities pledged, as of June 30, 2022, are shown below by contractual maturity. Actual maturities may differ from contractual maturities as securities may be restructured, called or prepaid. Mortgage-backed securities ("MBS") and Other asset-backed securities ("ABS") are shown separately because they are not due at a single maturity date.
Amortized
Cost
Fair
Value
Due to mature:
One year or less$766 $742 
After one year through five years4,212 4,102 
After five years through ten years5,129 4,886 
After ten years13,695 12,707 
Mortgage-backed securities8,681 8,225 
Other asset-backed securities2,146 2,004 
Fixed maturities, including securities pledged$34,629 $32,666 

As of June 30, 2022 and December 31, 2021, the Company did not have any investments in a single issuer, other than obligations of the U.S. Government and government agencies, with a carrying value in excess of 10% of the Company’s Total shareholders' equity.

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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
The following tables present the composition of the U.S. and foreign corporate securities within the fixed maturity portfolio by industry category as of the dates indicated:
Amortized
Cost
Gross
Unrealized
Capital
Gains
Gross
Unrealized
Capital
Losses
Fair
Value
June 30, 2022
Communications$1,313 $46 $90 $1,269 
Financial4,056 60 364 3,752 
Industrial and other companies9,187 114 754 8,547 
Energy 1,879 66 113 1,832 
Utilities3,757 63 235 3,585 
Transportation1,150 7 94 1,063 
Total$21,342 $356 $1,650 $20,048 
December 31, 2021
Communications$1,261 $238 $3 $1,496 
Financial3,752 394 13 4,133 
Industrial and other companies9,600 1,058 32 10,626 
Energy1,907 314 18 2,203 
Utilities3,782 499 11 4,270 
Transportation1,130 93 1 1,222 
Total$21,432 $2,596 $78 $23,950 

The Company invests in various categories of collateralized mortgage obligations (CMOs), including CMOs that are not agency-backed, that are subject to different degrees of risk from changes in interest rates and defaults. The principal risks inherent in holding CMOs are prepayment and extension risks related to significant decreases and increases in interest rates resulting in the prepayment of principal from the underlying mortgages, either earlier or later than originally anticipated. As of June 30, 2022 and December 31, 2021, approximately 38.9% and 40.6%, respectively, of the Company's CMO holdings, were invested in the above mentioned types of CMOs such as interest-only or principal-only strips, that are subject to more prepayment and extension risk than traditional CMOs.

Public corporate fixed maturity securities are distinguished from private corporate fixed maturity securities based upon the manner in which they are transacted. Public corporate fixed maturity securities are issued initially through market intermediaries on a registered basis or pursuant to Rule 144A under the Securities Act of 1933 (the "Securities Act") and are traded on the secondary market through brokers acting as principal. Private corporate fixed maturity securities are originally issued by borrowers directly to investors pursuant to Section 4(a)(2) of the Securities Act, and are traded in the secondary market directly with counterparties, either without the participation of a broker or in agency transactions.

Repurchase Agreements

As of June 30, 2022 and December 31, 2021, the Company did not have any securities pledged in dollar rolls or reverse repurchase agreements. As of June 30, 2022, the carrying value of securities pledged and obligation to repay loans related to repurchase agreement transactions were $108 and included in Securities pledged and Payables under securities loan and repurchase agreements, including collateral held on the Condensed Consolidated Balance Sheets. As of December 31, 2021, the carrying value of securities pledged and obligation to repay loans related to repurchase agreement transactions were $105. Securities pledged related to repurchase agreements are comprised of other asset-backed securities.




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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Securities Pledged

The Company engages in securities lending whereby the initial collateral is required at a rate of 102% of the market value of the loaned securities. The lending agent retains the collateral and invests it in high quality liquid assets on behalf of the Company. The market value of the loaned securities is monitored on a daily basis with additional collateral obtained or refunded as the market value of the loaned securities fluctuates. The lending agent indemnifies the Company against losses resulting from the failure of a counterparty to return securities pledged where collateral is insufficient to cover the loss. As of June 30, 2022 and December 31, 2021, the fair value of loaned securities was $913 and $969, respectively, and is included in Securities pledged on the Condensed Consolidated Balance Sheets.

If cash is received as collateral, the lending agent retains the cash collateral and invests it in short-term liquid assets on behalf of the Company. As of June 30, 2022 and December 31, 2021, cash collateral retained by the lending agent and invested in short-term liquid assets on the Company's behalf was $819 and $884, respectively, and is recorded in Short-term investments under securities loan agreements, including collateral delivered on the Condensed Consolidated Balance Sheets. As of June 30, 2022 and December 31, 2021, liabilities to return collateral of $819 and $884, respectively, are included in Payables under securities loan and repurchase agreements, including collateral held on the Condensed Consolidated Balance Sheets.

The Company accepts non-cash collateral in the form of securities. The securities retained as collateral by the lending agent may not be sold or re-pledged, except in the event of default, and are not reflected on the Company’s Condensed Consolidated Balance Sheets. This collateral generally consists of U.S. Treasury, U.S. Government agency securities and MBS pools. As of June 30, 2022 and December 31, 2021, the fair value of securities retained as collateral by the lending agent on the Company’s behalf was $132 and $117, respectively.

The following table presents borrowings under securities lending transactions by asset class pledged as of the dates indicated:
June 30, 2022December 31, 2021
U.S. Treasuries$41 $42 
U.S. Government agencies and authorities3 3 
U.S. corporate public securities605 599 
Foreign corporate public securities and foreign governments302 357 
Payables under securities loan agreements$951 $1,001 

The Company's securities lending activities are conducted on an overnight basis, and all securities loaned can be recalled at any time. The Company does not offset assets and liabilities associated with its securities lending program.
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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Allowance for credit losses

The following table presents a rollforward of the allowance for credit losses on available-for-sale fixed maturity securities for the periods presented:
Six Months Ended June 30, 2022
U.S. corporate private securitiesResidential mortgage-backed securitiesCommercial mortgage-backed securitiesForeign corporate public securities and foreign governmentsForeign corporate private securitiesOther asset-backed securitiesTotal
Balance as of January 1$ $1 $ $ $56 $1 $58 
Credit losses on securities for which credit losses were not previously recorded2 1 1 24  1 29 
Initial allowance for credit losses recognized on financial assets accounted for as PCD       
Reductions for securities sold during the period    (41) (41)
Reductions for intent to sell or more likely than not will be required to sell securities prior to recovery of amortized cost       
Change in allowance due to transfer of loans from Voya Reinsurance portfolios to Resolution       
   Increase (decrease) on securities with allowance recorded in previous period (1)  3 (1)1 
Write-offs       
Recoveries of amounts previously written-off       
Balance as of June 30$2 $1 $1 $24 $18 $1 $47 
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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Year Ended December 31, 2021
Residential mortgage-backed securitiesCommercial mortgage-backed securitiesForeign corporate private securitiesOther asset-backed securitiesTotal
Balance as of January 1$2 $1 $15 $8 $26 
Credit losses on securities for which credit losses were not previously recorded1  40  41 
Initial allowance for credit losses recognized on financial assets accounted for as PCD     
Reductions for securities sold during the period (1)  (1)
Reductions for intent to sell or more likely than not will be required to sell securities prior to recovery of amortized cost     
Change in allowance due to transfer of loans from Voya Reinsurance portfolios to Resolution     
Increase (decrease) on securities with allowance recorded in previous period(2) 1 (7)(8)
Write-offs     
Recoveries of amounts previously written-off     
Balance as of December 31$1 $ $56 $1 $58 

























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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Unrealized Capital Losses

The following table presents available-for-sale fixed maturities, including securities pledged, for which an allowance for credit losses has not been recorded by market sector and duration as of June 30, 2022:
Twelve Months or Less
Below Amortized Cost
More Than Twelve
Months Below
Amortized Cost
Total
Fair ValueUnrealized Capital LossesNumber of securitiesFair ValueUnrealized Capital LossesNumber of securitiesFair ValueUnrealized Capital LossesNumber of securities
U.S. Treasuries$59 $8 19 $14 $1 4 $73 $9 23 
U.S. Government agencies and authorities8 1 1    8 1 1 
State, municipalities and political subdivisions739 69 255 1  *1 740 69 256 
U.S. corporate public securities5,725 812 1,111 358 121 175 6,083 933 1,286 
U.S. corporate private securities3,337 253 356 230 36 9 3,567 289 365 
Foreign corporate public securities and foreign governments2,071 261 392 175 56 46 2,246 317 438 
Foreign corporate private securities2,455 165 199 13 1 3 2,468 166 202 
Residential mortgage-backed1,808 172 530 353 33 163 2,161 205 693 
Commercial mortgage-backed 3,468 282 561 261 35 47 3,729 317 608 
Other asset-backed1,751 127 422 144 17 74 1,895 144 496 
Total$21,421 $2,150 3,846 $1,549 $300 522 $22,970 $2,450 4,368 
*Less than $1

The Company concluded that an allowance for credit losses was unnecessary for these securities because the unrealized losses are interest rate related.

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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
The following table presents available-for-sale fixed maturities, including securities pledged, for which an allowance for credit losses has not been recorded by market sector and duration as of December 31, 2021:
Twelve Months or Less
Below Amortized Cost
More Than Twelve
Months Below
Amortized Cost
Total
Fair ValueUnrealized Capital LossesNumber of securitiesFair ValueUnrealized Capital LossesNumber of securitiesFair ValueUnrealized Capital LossesNumber of securities
U.S. Treasuries$16 $ *8 $12 $ *2 $28 $ *10
State, municipalities and political subdivisions58 1 22    58 1 22
U.S. corporate public securities1,425 35 292 115 6 119 1,540 41 411
U.S. corporate private securities447 5 34 122 18 9 569 23 43
Foreign corporate public securities and foreign governments534 16 97 28 2 14 562 18 111
Foreign corporate private securities70 1 7 11  *1 81 1 8
Residential mortgage-backed704 18 244 294 13 116 998 31 360
Commercial mortgage-backed1,137 12 191 228 10 32 1,365 22 223
Other asset-backed922 8 221 98 4 56 1,020 12 277
Total$5,313 $96 1,116 $908 $53 349 $6,221 $149 1,465
*Less than $1

Based on the Company's quarterly evaluation of its securities in an unrealized loss position, described below, the Company concluded that these securities were not impaired as of June 30, 2022. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases.
Gross unrealized capital losses on fixed maturities, including securities pledged, increased $2,301 from $149 to $2,450 for the six months ended June 30, 2022. The increase in unrealized losses was driven by materially higher interest rates across the yield curve and moderately wider credit spreads.

As of June 30, 2022, $5 of the total $2,450 of gross unrealized losses were from 5 available-for-sale fixed maturity securities with an unrealized loss position of 20% or more of amortized cost for 12 months or greater.

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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Evaluating Securities for Impairments

The Company performs a regular evaluation, on a security-by-security basis, of its available-for-sale securities holdings, including fixed maturity securities, in accordance with its impairment policy in order to evaluate whether such investments are impaired.

The following table identifies the Company's intent impairments included in the Condensed Consolidated Statements of Operations, excluding impairments included in Other comprehensive income (loss) by type for the periods indicated:
Three Months Ended June 30,
20222021
ImpairmentNo. of
Securities
ImpairmentNo. of
Securities
Residential mortgage-backed$2 17 $ *4 
Commercial mortgage-backed *1   
Total$2 18 $ *4 
(1) Primarily U.S. dollar denominated.
*Less than $1
Six Months Ended June 30,
20222021
ImpairmentNo. of
Securities
ImpairmentNo. of
Securities
Residential mortgage-backed$9 27 $ *10 
Commercial mortgage-backed *1  *1 
Total$9 28 $ *11 
(1) Primarily U.S. dollar denominated.
*Less than $1

The Company may sell securities during the period in which fair value has declined below amortized cost for fixed maturities. In certain situations, new factors, including changes in the business environment, can change the Company’s previous intent to continue holding a security. Accordingly, these factors may lead the Company to record additional intent related capital losses.

Troubled Debt Restructuring

The Company invests in high quality, well performing portfolios of commercial mortgage loans and private placements. Under certain circumstances, modifications are granted to these contracts. Each modification is evaluated as to whether a troubled debt restructuring has occurred. A modification is a troubled debt restructuring when the borrower is in financial difficulty and the creditor makes concessions. Generally, the types of concessions may include reducing the face amount or maturity amount of the debt as originally stated, reducing the contractual interest rate, extending the maturity date at an interest rate lower than current market interest rates and/or reducing accrued interest. The Company considers the amount, timing and extent of the concession granted in determining any impairment or changes in the specific valuation allowance recorded in connection with the troubled debt restructuring. A valuation allowance may have been recorded prior to the quarter when the loan is modified in a troubled debt restructuring. Accordingly, the carrying value (net of the valuation allowance) before and after modification through a troubled debt restructuring may not change significantly or may increase if the expected recovery is higher than the pre-modification recovery assessment. For the three months and six months ended June 30, 2022, the Company had no new commercial mortgage loan troubled debt restructurings. For the three months ended June 30, 2022, the Company had three new private placement troubled debt restructurings with a pre and post modification carrying value of $74 and $65, respectively. For the six months ended June 30, 2022, the Company had six new private placement troubled debt restructurings with a pre and post modification carrying value of $102 and $75, respectively. For the three months ended June 30, 2021, the Company did not have any commercial mortgage loan troubled debt restructurings. For the six months ended June 30, 2021, the Company had one commercial mortgage loan trouble debt restructuring with a pre and post modification carrying value of $5. For the three and six months ended June 30, 2021, the Company did not have any private placement troubled debt restructurings.
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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
For the three and six months ended June 30, 2022 and June 30, 2021, the Company did not have any commercial mortgage loans or private placements modified in a troubled debt restructuring with a subsequent payment default.

Mortgage Loans on Real Estate
 
The Company diversifies its commercial mortgage loan portfolio by geographic region and property type to reduce concentration risk. The Company manages risk when originating commercial mortgage loans by generally lending only up to 75% of the estimated fair value of the underlying real estate. Subsequently, the Company continuously evaluates mortgage loans based on relevant current information including a review of loan-specific performance, property characteristics and market trends. Loan performance is monitored on a loan specific basis through the review of submitted appraisals, operating statements, rent revenues and annual inspection reports, among other items. This review ensures properties are performing at a consistent and acceptable level to secure the debt. The components to evaluate debt service coverage are received and reviewed at least annually to determine the level of risk.

Loan-to-value ("LTV") and debt service coverage ("DSC") ratios are measures commonly used to assess the risk and quality of mortgage loans. The LTV ratio, calculated at time of origination, is expressed as a percentage of the amount of the loan relative to the value of the underlying property. A LTV ratio in excess of 100% indicates the unpaid loan amount exceeds the underlying collateral. The DSC ratio, based upon the most recently received financial statements, is expressed as a percentage of the amount of a property’s net income to its debt service payments. A DSC ratio of less than 1.0 indicates that a property’s operations do not generate sufficient income to cover debt payments. These ratios are utilized as part of the review process described above.

The following tables present commercial mortgage loans by year of origination and LTV ratio as of the dates indicated. The information is updated as of June 30, 2022 and December 31, 2021, respectively.

As of June 30, 2022
Loan-to-Value Ratios
Year of Origination
0% - 50%
>50% - 60%
>60% - 70%
>70% - 80%
>80% and above
Total
2022$151 $101 $59 $ $ $311 
2021247 314 206 10  777 
2020115 244 34 10  403 
2019194 173 65   432 
2018161 46 3   210 
2017648 203 4   855 
2016 and prior2,014 390 23   2,427 
Total$3,530 $1,471 $394 $20 $ $5,415 

As of December 31, 2021
Loan-to-Value Ratios
Year of Origination
0% - 50%
>50% - 60%
>60% - 70%
>70% - 80%
>80% and above
Total
2021$269 $315 $201 $ $ $785 
2020140 240 77   457 
2019201 192 69   462 
2018169 50 2   221 
2017656 214 4   874 
2016 and prior2,220 584 24   2,828 
Total$3,655 $1,595 $377 $ $ $5,627 
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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
The following tables present commercial mortgage loans by year of origination and DSC ratio as of the dates indicated. The information is updated as of June 30, 2022 and December 31, 2021, respectively.

As of June 30, 2022
Debt Service Coverage Ratios
Year of Origination
>1.5x
>1.25x - 1.5x
>1.0x - 1.25x
<1.0x
Commercial mortgage loans secured by land or construction loansTotal
2022$311 $ $ $ $ $311 
2021650 26 36 65  777 
2020310 36 33 24  403 
2019254 13 106 59  432 
2018127 7 53 23  210 
2017495 61 114 185  855 
2016 and prior1,829 311 193 94  2,427 
Total$3,976 $454 $535 $450 $ $5,415 

As of December 31, 2021
Debt Service Coverage Ratios
Year of Origination
>1.5x
>1.25x - 1.5x
>1.0x - 1.25x
<1.0x
Commercial mortgage loans secured by land or construction loansTotal
2021$652 $27 $38 $68 $ $785 
2020396 21 34 6  457 
2019278 49 108 27  462 
2018131 5 54 31  221 
2017414 156 111 193  874 
2016 and prior2,237 242 242 107  2,828 
Total$4,108 $500 $587 $432 $ $5,627 


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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
The following tables present the commercial mortgage loans by year of origination and U.S. region as of the dates indicated. The information is updated as of June 30, 2022 and December 31, 2021, respectively.

As of June 30, 2022
U.S. Region
Year of OriginationPacificSouth AtlanticMiddle AtlanticWest South CentralMountainEast North CentralNew EnglandWest North CentralEast South CentralTotal
2022$38 $49 $18 $60 $85 $38 $4 $1 $18 $311 
202198 72 138 139 110 142 9 47 22 777 
202074 176 22 24 32 40 2 8 25 403 
201959 143 14 109 47 10 15 13 22 432 
201850 63 57 10 14 10  6  210 
2017126 92 349 137 54 55 5 37  855 
2016 and prior683 550 477 118 183 207 51 123 35 2,427 
Total$1,128 $1,145 $1,075 $597 $525 $502 $86 $235 $122 $5,415 

As of December 31, 2021
U.S. Region
Year of OriginationPacificSouth AtlanticMiddle AtlanticWest South CentralMountainEast North CentralNew EnglandWest North CentralEast South CentralTotal
2021$98 $79 $143 $137 $110 $140 $9 $47 $22 $785 
202084 187 31 35 39 39 3 14 25 457 
201959 145 14 130 47 17 15 13 22 462 
201854 68 59 10 14 10  6  221 
2017128 94 360 139 56 56 5 36  874 
2016 and prior718 617 590 159 256 239 71 142 36 2,828 
Total$1,141 $1,190 $1,197 $610 $522 $501 $103 $258 $105 $5,627 

The following tables present the commercial mortgage loans by year of origination and property type as of the dates indicated. The information is updated as of June 30, 2022 and December 31, 2021, respectively.

As of June 30, 2022
Property Type
Year of OriginationRetailIndustrialApartmentsOfficeHotel/MotelOtherMixed UseTotal
2022$24 $118 $155 $14 $ $ $ $311 
202138 172 412 128  18 9 777 
202058 74 111 160    403 
201946 94 200 66 26   432 
201837 86 56 13  18  210 
2017108 403 193 147 4   855 
2016 and prior819 401 529 390 76 159 53 2,427 
Total$1,130 $1,348 $1,656 $918 $106 $195 $62 $5,415 
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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
As of December 31, 2021
Property Type
Year of OriginationRetailIndustrialApartmentsOfficeHotel/MotelOtherMixed UseTotal
2021$39 $185 $405 $129 $ $18 $9 $785 
202058 90 140 169    457 
201946 96 211 82 27   462 
201838 88 57 16 4 18  221 
2017110 417 195 149 3   874 
2016 and prior936 566 576 398 93 205 54 2,828 
Total$1,227 $1,442 $1,584 $943 $127 $241 $63 $5,627 

The following table summarizes the activity in the allowance for losses for commercial mortgage loans for the periods indicated:
June 30, 2022December 31, 2021
Allowance for credit losses, beginning of period$15 $89 
Credit losses on mortgage loans for which credit losses were not previously recorded 1 
Change in allowance due to transfer of loans from Voya Reinsurance portfolios to Resolution (14)
Increase (decrease) on mortgage loans with allowance recorded in previous period(3)(61)
Provision for expected credit losses12 15 
Write-offs  
Recoveries of amounts previously written-off  
Allowance for credit losses, end of period$12 $15 

The following table presents past due commercial mortgage loans as of the dates indicated:
June 30, 2022December 31, 2021
Delinquency:
Current$5,415 $5,627 
30-59 days past due  
60-89 days past due  
Greater than 90 days past due  
Total$5,415 $5,627 

Commercial mortgage loans are placed on non-accrual status when 90 days in arrears if the Company has concerns regarding the collectability of future payments, or if a loan has matured without being paid off or extended. As of June 30, 2022 and December 31, 2021, the Company had no commercial mortgage loan in non-accrual status. There was no interest income recognized on loans in non-accrual status for the six months ended June 30, 2022 and year ended December 31, 2021.
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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Net Investment Income

The following table summarizes Net investment income for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Fixed maturities$495 $497 $974 $1,012 
Equity securities5 6 9 11 
Mortgage loans on real estate60 64 119 125 
Policy loans5 5 11 11 
Short-term investments and cash equivalents2 4 3 5 
Limited partnerships and other29 97 125 240 
Gross investment income596 673 1,241 1,404 
Less: Investment expenses15 17 30 34 
Net investment income$581 $656 $1,211 $1,370 

As of June 30, 2022, the Company had $32 of investments in fixed maturities that did not produce net investment income. As of December 31, 2021, the Company had no investments in fixed maturities that did not produce net investment income. Fixed maturities are moved to a non-accrual status when the investment defaults.

Interest income on fixed maturities is recorded when earned using an effective yield method, giving effect to amortization of premiums and accretion of discounts. Such interest income is recorded in Net investment income in the Condensed Consolidated Statements of Operations.

Net Gains (Losses)

Net gains (losses) comprise the difference between the amortized cost of investments and proceeds from sale and redemption, as well as losses incurred due to the credit-related and intent-related impairment of investments. Realized investment gains and losses are also primarily generated from changes in fair value of embedded derivatives within products and fixed maturities, changes in fair value of fixed maturities recorded at FVO and changes in fair value including accruals on derivative instruments, except for effective cash flow hedges. Net gains (losses) also include changes in fair value of trading debt securities and changes in fair value of equity securities. The cost of the investments on disposal is generally determined based on first-in-first-out ("FIFO") methodology.

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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Net gains (losses) were as follows for the periods indicated:
Three Months Ended June 30,
20222021
Fixed maturities, available-for-sale, including securities pledged$(6)$15 
Fixed maturities, at fair value option(245)(129)
Equity securities, at fair value(24)5 
Derivatives32 (39)
Embedded derivatives - fixed maturities(2) 
Guaranteed benefit derivatives12 (9)
Mortgage loans1 25 
Other investments5 95 
Net gains (losses)$(227)$(37)
Six Months Ended June 30,
20222021
Fixed maturities, available-for-sale, including securities pledged$(79)$1,783 
Fixed maturities, at fair value option(550)(377)
Equity securities, at fair value(32)11 
Derivatives126 (16)
Embedded derivatives - fixed maturities(6)(5)
Guaranteed benefit derivatives18 48 
Mortgage Loans5 163 
Other investments6 98 
Net gains (losses)$(512)$1,705 

On June 1, 2021, the Company fully disposed of a 9.99% equity interest in VA Capital which was originally acquired as part of a Master Transaction Agreement dated December 20, 2017, related to the sale of substantially all of our Closed Block Variable Annuity (CBVA) and Annuity business. The disposition resulted in a net realized gain of $95 reported as Other net gains (losses) in the Condensed Consolidated Statements.

Proceeds from the sale of fixed maturities, available-for-sale and trading, and equity securities and the related gross realized gains and losses, before tax, were as follows for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
202220212022
(1)
2021
Proceeds on sales$971 $608 $2,220 $10,213 
Gross gains15 14 30 1,711 
Gross losses12  44 2 
(1) Decrease from prior year is the result of the transfer of assets to support the life reinsurance transaction with Resolution.

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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
4.    Derivative Financial Instruments

The Company primarily enters into the following types of derivatives:

Interest rate swaps: Interest rate swaps are used by the Company primarily to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and/or liabilities. Interest rate swaps are also used to hedge the interest rate risk associated with the value of assets it owns or in an anticipation of acquiring them. Using interest rate swaps, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest payments, calculated by reference to an agreed upon notional principal amount. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made to/from the counterparty at each due date. The Company utilizes these contracts in qualifying hedging relationships as well as non-qualifying hedging relationships.

Foreign exchange swaps: The Company uses foreign exchange or currency swaps to reduce the risk of change in the value, yield or cash flows associated with certain foreign denominated invested assets. Foreign exchange swaps represent contracts that require the exchange of foreign currency cash flows against U.S. dollar cash flows at regular periods, typically quarterly or semi-annually. The Company utilizes these contracts in qualifying hedging relationships as well as non-qualifying hedging relationships.

Total return swaps: The Company uses total return swaps as a hedge of interest related risks within various Legacy Annuity and Retirement products. Total return swaps are also used as a hedge of other corporate liabilities. Using total return swaps, the Company agrees with another party to exchange, at specified intervals, the difference between the economic performance of assets or a market index and a fixed or variable funding multiplied by reference to an agreed upon notional amount. No cash is exchanged at the onset of the contracts. Cash is paid and received over the life of the contract based upon the terms of the swaps. The Company utilized these contracts in non-qualifying hedging relationships.

Futures: Futures contracts are used to hedge against a decrease in certain equity indices. Such decreases may correlate to a decrease in variable annuity account values which would increase the possibility of the Company incurring an expense for guaranteed benefits in excess of account values. The Company also uses interest rate futures contracts to hedge its exposure to market risks due to changes in interest rates. The Company enters into exchange traded futures with regulated futures commissions that are members of the exchange. The Company also posts initial and variation margins, with the exchange, on a daily basis. The Company utilizes exchange-traded futures in non-qualifying hedging relationships. The Company may also use futures contracts as a hedge against an increase in certain equity indices.

Embedded derivatives: The Company also invests in certain fixed maturity instruments and has issued certain products that contain embedded derivatives for which market value is at least partially determined by, among other things, levels of or changes in domestic and/or foreign interest rates (short-term or long-term), exchange rates, prepayment rates, equity rates or credit ratings/spreads. In addition, the Company has entered into coinsurance with funds withheld arrangements, which contain embedded derivatives.

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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
The notional amounts and fair values of derivatives were as follows as of the dates indicated:
June 30, 2022December 31, 2021
Notional
Amount
Asset
Fair
Value
Liability
Fair
Value
Notional
Amount
Asset
Fair
Value
Liability
Fair
Value
Derivatives: Qualifying for hedge accounting(1)
Fair value hedges:
Foreign exchange contracts$88 $3 $ $94 $2 $ 
Cash flow hedges:
Interest rate contracts
22   22   
Foreign exchange contracts
699 62  683 16 16 
Derivatives: Non-qualifying for hedge accounting(1)
Interest rate contracts
17,585 207 301 13,382 147 209 
Foreign exchange contracts183 4 3 146 1 3 
Equity contracts248 1  299 4 2 
Credit contracts179  3 135 1 1 
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments(2)
N/A6  N/A12  
Within products(3)
N/A 25 N/A 47 
Within reinsurance agreements(4)
N/A21 41 N/A 196 
Managed custody guarantees(3)
N/A 4 N/A 1 
Total$304 $377 $183 $475 
(1) Open derivative contracts are reported as Derivatives assets or liabilities on the Condensed Consolidated Balance Sheets at fair value.
(2) Included in Fixed maturities, available-for-sale, at fair value on the Condensed Consolidated Balance Sheets.
(3) Included in Future policy benefits on the Condensed Consolidated Balance Sheets.
(4) Included in Other liabilities and Premium receivable and reinsurance recoverable on the Condensed Consolidated Balance Sheets.
N/A - Not applicable

Based on the notional amounts, a substantial portion of the Company’s derivative positions was not designated or did not qualify for hedge accounting as part of a hedging relationship as of June 30, 2022 and December 31, 2021. The Company utilizes derivative contracts mainly to hedge exposure to variability in cash flows, interest rate risk, credit risk, foreign exchange risk and equity market risk. The majority of derivatives used by the Company are designated as product hedges, which hedge the exposure arising from insurance liabilities or guarantees embedded in the contracts the Company offers through various product lines. These derivatives do not qualify for hedge accounting as they do not meet the criteria of being "highly effective" as outlined in ASC Topic 815, but do provide an economic hedge, which is in line with the Company’s risk management objectives. The Company also uses derivatives contracts to hedge its exposure to various risks associated with the investment portfolio. The Company does not seek hedge accounting treatment for certain of these derivatives as they generally do not qualify for hedge accounting due to the criteria required under the portfolio hedging rules outlined in ASC Topic 815. The Company also uses credit default swaps coupled with other investments in order to produce the investment characteristics of otherwise permissible investments that do not qualify as effective accounting hedges under ASC Topic 815.

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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Although the Company has not elected to net its derivative exposures, the notional amounts and fair values of Over-The-Counter ("OTC") and cleared derivatives excluding exchange traded contracts are presented in the tables below as of the dates indicated:
June 30, 2022
Notional AmountAsset Fair ValueLiability Fair Value
Credit contracts$179 $ $3 
Equity contracts201 1  
Foreign exchange contracts970 69 3 
Interest rate contracts10,838 207 288 
277 294 
Counterparty netting(1)
(208)(208)
Cash collateral netting(1)
(59)(81)
Securities collateral netting(1)
(6)(1)
Net receivables/payables$4 $4 
(1) Represents the netting of receivable balances with payable balances, net of collateral, for the same counterparty under eligible netting agreements.
December 31, 2021
Notional AmountAsset Fair ValueLiability Fair Value
Credit contracts$135 $1 $1 
Equity contracts239 4 2 
Foreign exchange contracts923 19 19 
Interest rate contracts12,003 147 209 
171 231 
Counterparty netting(1)
(156)(156)
Cash collateral netting(1)
(12)(70)
Securities collateral netting(1)
(2)(2)
Net receivables/payables$1 $3 
(1) Represents the netting of receivable balances with payable balances, net of collateral, for the same counterparty under eligible netting agreements.

Collateral

Under the terms of the OTC Derivative International Swaps and Derivatives Association, Inc. ("ISDA") agreements, the Company may receive from, or deliver to, counterparties collateral to assure that terms of the ISDA agreements will be met with regard to the Credit Support Annex ("CSA"). The terms of the CSA call for the Company to pay interest on any cash received equal to the Federal Funds rate. To the extent cash collateral is received and delivered, it is included in Payables under securities loan and repurchase agreements, including collateral held and Short-term investments under securities loan agreements, including collateral delivered, respectively, on the Condensed Consolidated Balance Sheets and is reinvested in short-term investments. Collateral held is used in accordance with the CSA to satisfy any obligations. Investment grade bonds owned by the Company are the source of noncash collateral posted, which is reported in Securities pledged on the Condensed Consolidated Balance Sheets.

As of June 30, 2022, the Company held $59 and pledged $82 of net cash collateral related to OTC derivative contracts and cleared derivative contracts, respectively. As of December 31, 2021, the Company held $17 and pledged $71 of net cash collateral related to OTC derivative contracts and cleared derivative contracts, respectively. In addition, as of June 30, 2022, the Company delivered $162 of securities and held $6 of securities as collateral. As of December 31, 2021, the Company delivered $124 of securities and held $2 of securities as collateral.

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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
The location and effect of derivatives qualifying for hedge accounting on the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Comprehensive Income are as follows for the periods indicated:
Three Months Ended June 30,
20222021
Interest Rate ContractsForeign Exchange ContractsInterest Rate ContractsForeign Exchange Contracts
Derivatives: Qualifying for hedge accounting
Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into IncomeNet investment incomeNet investment income and Other net gains/(losses)Net investment incomeNet investment income and Other net gains/(losses)
Amount of Gain or (Loss) Recognized in Other Comprehensive Income$(1)$55 $ $6 
Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income 2  2 
Six Months Ended June 30,
20222021
Interest Rate ContractsForeign Exchange ContractsInterest Rate ContractsForeign Exchange Contracts
Derivatives: Qualifying for hedge accounting
Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into IncomeNet investment incomeNet investment income and Other net gains/(losses)Net investment incomeNet investment income and Other net gains/(losses)
Amount of Gain or (Loss) Recognized in Other Comprehensive Income$(2)$62 $(1)$12 
Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income 5  (1)

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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
The location and amount of gain (loss) recognized in the Condensed Consolidated Statements of Operations for derivatives qualifying for hedge accounting are as follows for the period indicated:
Three Months Ended June 30,
20222021
Net investment incomeOther net gains/(losses)Net investment incomeOther net gains/(losses)
Total amounts of line items presented in the statement of operations in which the effects of fair value or cash flow hedges are recorded$581 $(225)$656 $(37)
Derivatives: Qualifying for hedge accounting
Fair value hedges:
Foreign exchange contracts:
Hedged items (5) (1)
Derivatives designated as hedging instruments(1)
 6  1 
Cash flow hedges:
Foreign exchange contracts:
Gain (loss) reclassified from accumulated other comprehensive income into income2  2  
Six Months Ended June 30,
20222021
Net investment incomeOther net gains/(losses)Net investment incomeOther net gains/(losses)
Total amounts of line items presented in the statement of operations in which the effects of fair value or cash flow hedges are recorded$1,211 $(503)$1,370 $1,705 
Derivatives: Qualifying for hedge accounting
Fair value hedges:
Foreign exchange contracts:
Hedged items (7) (1)
Derivatives designated as hedging instruments(1)
 8  1 
Cash flow hedges:
Foreign exchange contracts:
Gain (loss) reclassified from accumulated other comprehensive income into income
5  4 (5)
(1) For the three and six months ended June 30, 2022, $1 of the change in derivative instruments designated and qualifying as fair value hedges was excluded from the assessment of hedge effectiveness and recognized currently in earning. For the three and six months ended June 30, 2022 and June 30, 2021, an immaterial portion of the change in derivative instruments designated and qualifying as fair value hedges was excluded from the assessment of hedge effectiveness and recognized currently in earning.
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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
The location and effect of derivatives not designated as hedging instruments on the Condensed Consolidated Statements of Operations are as follows for the periods indicated:
Location of Gain or (Loss) Recognized in Income on DerivativeThree Months Ended June 30,
20222021
Derivatives: Non-qualifying for hedge accounting
Interest rate contractsOther net gains (losses)$52 $(48)
Foreign exchange contractsOther net gains (losses)(1)(2)
Equity contractsOther net gains (losses)(20)9 
Credit contractsOther net gains (losses)(4)1 
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investmentsOther net gains (losses)(2) 
Within productsOther net gains (losses)12 (4)
Within reinsurance agreements(1)
Policyholder benefits84 (29)
Managed custody guaranteesOther net gains (losses)1  
Total$122 $(73)
Location of Gain or (Loss) Recognized in Income on DerivativeSix Months Ended June 30,
20222021
Derivatives: Non-qualifying for hedge accounting
Interest rate contractsOther net gains (losses)$152 $(23)
Foreign exchange contractsOther net gains (losses)(2)(2)
Equity contractsOther net gains (losses)(28)12 
Credit contractsOther net gains (losses)(4)1 
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investmentsOther net gains (losses)(6)(5)
Within productsOther net gains (losses)22 31 
Within reinsurance agreements(1)
Policyholder benefits176 23 
Managed custody guaranteesOther net gains (losses)(2)4 
Total$308 $41 
(1) For the three months ended June 30, 2022, no gains (losses) from standalone derivatives were recognized. For the six months ended June 30, 2022, the amount excluded gains (losses) of $1 from standalone derivatives recognized in Other net gains (losses). For the three and six months ended June 30, 2021, the amount excluded gains (losses) of $3 and $4, respectively, from standalone derivatives recognized in Other net gains (losses).
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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
5.    Fair Value Measurements (excluding Consolidated Investment Entities)

Fair Value Measurement

The following table presents the Company's hierarchy for its assets and liabilities measured at fair value on a recurring basis as of June 30, 2022:
Level 1Level 2Level 3Total
Assets:
Fixed maturities, including securities pledged:
U.S. Treasuries
$653 $231 $ $884 
U.S. Government agencies and authorities
 63  63 
State, municipalities and political subdivisions
 928  928 
U.S. corporate public securities 9,522 19 9,541 
U.S. corporate private securities 2,962 1,780 4,742 
Foreign corporate public securities and foreign governments(1)
 3,053 4 3,057 
Foreign corporate private securities(1)
 2,819 403 3,222 
Residential mortgage-backed securities 4,152 31 4,183 
Commercial mortgage-backed securities 4,042  4,042 
Other asset-backed securities 1,941 63 2,004 
Total fixed maturities, including securities pledged
653 29,713 2,300 32,666 
Equity securities
23 8 203 234 
Derivatives:
Interest rate contracts 207  207 
Foreign exchange contracts 69  69 
Equity contracts 1  1 
Embedded derivative on reinsurance 21  21 
Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements2,106 7  2,113 
Assets held in separate accounts74,144 5,524 349 80,017 
Total assets$76,926 $35,550 $2,852 $115,328 
Percentage of Level to total67 %31 %2 %100 %
Liabilities:
Derivatives:
Guaranteed benefit derivatives(2)
  29 29 
Other derivatives:
Interest rate contracts13 288  301 
Foreign exchange contracts 3  3 
Credit contracts 3  3 
Embedded derivative on reinsurance (45)
(3)
86 41 
Total liabilities$13 $249 $115 $377 
(1) Primarily U.S. dollar denominated.
(2) Includes GMWBL, GMWB, FIA, Stabilizer and MCGs.
(3) The Company classifies these embedded derivatives within liabilities given the underlying nature of the balances and the right-of-offset.

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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
The following table presents the Company's hierarchy for its assets and liabilities measured at fair value on a recurring basis as of December 31, 2021:
Level 1Level 2Level 3Total
Assets:
Fixed maturities, including securities pledged:
U.S. Treasuries$745 $258 $ $1,003 
U.S. Government agencies and authorities 81  81 
State, municipalities and political subdivisions 1,111  1,111 
U.S. corporate public securities 11,925 16 11,941 
U.S. corporate private securities 3,415 1,910 5,325 
Foreign corporate public securities and foreign governments(1)
 3,723  3,723 
Foreign corporate private securities(1)
 3,148 353 3,501 
Residential mortgage-backed securities 4,259 43 4,302 
Commercial mortgage-backed securities 4,183  4,183 
Other asset-backed securities 2,037 44 2,081 
Total fixed maturities, including securities pledged745 34,140 2,366 37,251 
Equity securities
37  203 240 
Derivatives:
Interest rate contracts 147  147 
Foreign exchange contracts 19  19 
Equity contracts 4  4 
Credit contracts 1  1 
Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements
2,525 82  2,607 
Assets held in separate accounts94,943 5,174 316 100,433 
Total assets$98,250 $39,567 $2,885 $140,702 
Percentage of Level to total70 %28 %2 %100 %
Liabilities:
Derivatives:
Guaranteed benefit derivatives(2)
  48 48 
Other derivatives:
Interest rate contracts 209  209 
Foreign exchange contracts 19  19 
Equity contracts 2  2 
Credit contracts 1  1 
Embedded derivative on reinsurance 109 87 196 
Total liabilities$ $340 $135 $475 
(1) Primarily U.S. dollar denominated.
(2) Includes GMWBL, GMWB, FIA, Stabilizer and MCGs.
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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Valuation of Financial Assets and Liabilities at Fair Value

Certain assets and liabilities are measured at estimated fair value on the Company’s Consolidated Balance Sheets. The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The exit price and the transaction (or entry) price will be the same at initial recognition in many circumstances. However, in certain cases, the transaction price may not represent fair value. The fair value of a liability is based on the amount that would be paid to transfer a liability to a third-party with an equal credit standing. Fair value is required to be a market-based measurement that is determined based on a hypothetical transaction at the measurement date, from a market participant’s perspective. The Company considers three broad valuation approaches when a quoted price is unavailable: (i) the market approach, (ii) the income approach and (iii) the cost approach. The Company determines the most appropriate valuation technique to use, given the instrument being measured and the availability of sufficient inputs. The Company prioritizes the inputs to fair valuation approaches and allows for the use of unobservable inputs to the extent that observable inputs are not available.

The Company utilizes a number of valuation methodologies to determine the fair values of its financial assets and liabilities in conformity with the concepts of exit price and the fair value hierarchy as prescribed in ASC Topic 820. Valuations are obtained from third-party commercial pricing services, brokers and industry-standard, vendor-provided software that models the value based on market observable inputs. The valuations obtained from third-party commercial pricing services are non-binding. The Company reviews the assumptions and inputs used by third-party commercial pricing services for each reporting period in order to determine an appropriate fair value hierarchy level. The documentation and analysis obtained from third-party commercial pricing services are reviewed by the Company, including in-depth validation procedures confirming the observability of inputs. The valuations are reviewed and validated monthly through the internal valuation committee price variance review, comparisons to internal pricing models, back testing to recent trades or monitoring of trading volumes.

The valuation approaches and key inputs for each category of assets or liabilities that are classified within Level 2 and Level 3 of the fair value hierarchy are presented below.

For fixed maturities classified as Level 2 assets, fair values are determined using a matrix-based market approach, based on prices obtained from third-party commercial pricing services and the Company’s matrix and analytics-based pricing models, which in each case incorporate a variety of market observable information as valuation inputs. The market observable inputs used for these fair value measurements, by fixed maturity asset class, are as follows:

U.S. Treasuries: Fair value is determined using third-party commercial pricing services, with the primary inputs being stripped interest and principal U.S. Treasury yield curves that represent a U.S. Treasury zero-coupon curve.

U.S. government agencies and authorities, State, municipalities and political subdivisions: Fair value is determined using third-party commercial pricing services, with the primary inputs being U.S. Treasury yield curves, trades of comparable securities, credit spreads off benchmark yields and issuer ratings.

U.S. corporate public securities, Foreign corporate public securities and foreign governments: Fair value is determined using third-party commercial pricing services, with the primary inputs being benchmark yields, trades of comparable securities, issuer ratings, bids and credit spreads off benchmark yields.

U.S. corporate private securities and Foreign corporate private securities: Fair values are determined using a matrix and analytics-based pricing model. The model incorporates the current level of risk-free interest rates, current corporate credit spreads, credit quality of the issuer and cash flow characteristics of the security. The model also considers a liquidity spread, the value of any collateral, the capital structure of the issuer, the presence of guarantees, and prices and quotes for comparably rated publicly traded securities.

RMBS, CMBS and ABS: Fair value is determined using third-party commercial pricing services, with the primary inputs being credit spreads off benchmark yields, prepayment speed assumptions, current and forecasted loss severity, debt service coverage ratios, collateral type, payment priority within tranche and the vintage of the loans underlying the security.
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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Generally, the Company does not obtain more than one vendor price from pricing services per instrument. The Company uses a hierarchy process in which prices are obtained from a primary vendor and, if that vendor is unable to provide the price, the next vendor in the hierarchy is contacted until a price is obtained or it is determined that a price cannot be obtained from a commercial pricing service. When a price cannot be obtained from a commercial pricing service, independent broker quotes are solicited. Securities priced using independent broker quotes are classified as Level 3.

Fair values of privately placed bonds are determined primarily using a matrix-based pricing model and are generally classified as Level 2 assets. The model considers the current level of risk-free interest rates, current corporate spreads, the credit quality of the issuer and cash flow characteristics of the security. Also considered are factors such as the net worth of the borrower, the value of collateral, the capital structure of the borrower, the presence of guarantees and the Company’s evaluation of the borrower’s ability to compete in its relevant market. Using this data, the model generates estimated market values, which the Company considers reflective of the fair value of each privately placed bond.

Equity securities: Level 2 and Level 3 equity securities, typically private equities or equity securities not traded on an exchange, are valued by other sources such as analytics or brokers.

Derivatives: Derivatives are carried at fair value, which is determined using the Company’s derivative accounting system in conjunction with observable key financial data from third-party sources, such as yield curves, exchange rates, S&P 500 Index prices, London Interbank Offered Rates ("LIBOR"), Overnight Index Swap ("OIS") rates, and Secured Overnight Financing Rate ("SOFR"). The Company uses SOFR discounting for valuations of interest rate derivatives; however, certain legacy positions may continue to be discounted on OIS. The Company uses OIS for valuations of collateralized interest rate derivatives, which are obtained from third-party sources. For those derivatives that are unable to be valued by the accounting system, the Company typically utilizes values established by third-party brokers. Counterparty credit risk is considered and incorporated in the Company’s valuation process through counterparty credit rating requirements and monitoring of overall exposure. It is the Company’s policy to transact only with investment grade counterparties with a credit rating of A- or better. The Company’s nonperformance risk is also considered and incorporated in the Company’s valuation process. The Company also has certain credit default swaps and options that are priced by third party vendors or by using models that primarily use market observable inputs, but contain inputs that are not observable to market participants, which have been classified as Level 3. The remaining derivative instruments are valued based on market observable inputs and are classified as Level 2.

Guaranteed benefit derivatives: The Company records reserves for annuity contracts containing GMWBL and GMWB riders. The guarantee is an embedded derivative and is required to be accounted for separately from the host variable annuity contract. The fair value of the obligation is calculated based on actuarial and capital market assumptions related to the projected cash flows, including benefits and related contract charges, over the anticipated life of the related contracts. The cash flow estimates are produced by using stochastic techniques under a variety of market return scenarios and other market implied assumptions. These derivatives are classified as Level 3 liabilities in the fair value hierarchy.

The index-crediting feature in the Company's FIA contracts is an embedded derivative that is required to be accounted for separately from the host contract. The fair value of the obligation is calculated based on actuarial and capital market assumptions related to the projected cash flows, including benefits and related contract charges, over the anticipated life of the related contracts for FIAs. The cash flow estimates are produced by market implied assumptions. These derivatives are classified as Level 3 liabilities in the fair value hierarchy.

The Company records reserves for Stabilizer and MCG contracts containing guaranteed credited rates. The guarantee is treated as an embedded derivative or a stand-alone derivative (depending on the underlying product) and is required to be reported at fair value. The estimated fair value is determined based on the present value of projected future claims, minus the present value of future guaranteed premiums. At inception of the contract, the Company projects a guaranteed premium to be equal to the present value of the projected future claims. The income associated with the contracts is projected using relevant actuarial and capital market assumptions, including benefits and related contract charges, over the anticipated life of the related contracts. The cash flow estimates are produced by using stochastic techniques under a variety of risk neutral scenarios and other market implied assumptions. These derivatives are classified as Level 3 liabilities.

The discount rate used to determine the fair value of the Company's GMWBL, GMWB, FIA, and Stabilizer embedded derivative liabilities and the stand-alone derivative for MCG includes an adjustment to reflect the risk that these obligations will not be fulfilled ("nonperformance risk"). The nonperformance risk adjustment incorporates a blend of observable, similarly
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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
rated peer holding company credit spreads, adjusted to reflect the credit quality of the individual insurance subsidiary that issued the guarantee, as well as an adjustment to reflect the non-default spreads and the priority and recovery rates of policyholder claims.

Embedded derivatives on reinsurance: The carrying value of embedded derivatives is estimated based upon the change in the fair value of the assets supporting the funds withheld payable under reinsurance agreements. The fair value of the embedded derivative is based on market observable inputs and is classified as Level 2. The remaining derivative instruments are classified as Level 3 and are estimated using the income approach. The fair value is calculated by estimating future cash flows for a certain discrete projection period, estimating the terminal value, if appropriate, and discounting these amounts to present value at a rate of return that considers the relative risk of the cash flows and the time value of money.

Level 3 Financial Instruments

The fair values of certain assets and liabilities are determined using prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement (i.e., Level 3 as defined by ASC Topic 820), including but not limited to liquidity spreads for investments within markets deemed not currently active. These valuations, whether derived internally or obtained from a third-party, use critical assumptions that are not widely available to estimate market participant expectations in valuing the asset or liability. In addition, the Company has determined, for certain financial instruments, an active market is such a significant input to determine fair value that the presence of an inactive market may lead to classification in Level 3. In light of the methodologies employed to obtain the fair values of financial assets and liabilities classified as Level 3, additional information is presented below.

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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
The following tables summarize the change in fair value of the Company's Level 3 assets and liabilities and transfers in and out of Level 3 for the periods indicated:
Three Months Ended June 30, 2022
Fair Value as of April 1Total
Realized/Unrealized
Gains (Losses)
Included in:
PurchasesIssuancesSales
Settlements
Transfers
into
Level 3
Transfers
out of
Level 3
Fair Value as of June 30
Change In
Unrealized
Gains
(Losses)
Included in
Earnings(3)
Change In
Unrealized
Gains
(Losses)
Included in
OCI
(3)
Net
Income
OCI
Fixed maturities, including securities pledged:
U.S. corporate public securities$71 $ $(1)$1 $ $ $ $ $(52)$19 $ $(1)
U.S. corporate private securities1,925 (1)(134)89   (58) (41)1,780 (1)(133)
Foreign corporate public securities and foreign governments(1)
11   4     (11)4   
Foreign corporate private securities(1)
496 (3)(7)51   (15) (119)403 (4)(7)
Residential mortgage-backed securities45 (6) 2   (9)1 (2)31 (6) 
Other asset-backed securities49  (2)35   (5) (14)63  (2)
Total fixed maturities, including securities pledged2,597 (10)(144)182   (87)1 (239)2,300 (11)(143)
Equity securities, at fair value
203 (17) 26     (9)203 (17) 
Derivatives:
Guaranteed benefit derivatives(2)(5)
(42)13        (29)  
Embedded derivatives on reinsurance(86)        (86)  
Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements8      (8)     
Assets held in separate accounts(4)
334 (12) 67  (3)  (37)349   
(1) Primarily U.S. dollar denominated.
(2) All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract by contract basis. These amounts are included in Other net (losses) in the Condensed Consolidated Statements of Operations.
(3) For financial instruments still held as of June 30 amounts are included in Net investment income and Total net gains (losses) in the Condensed Consolidated Statements of Operations or Unrealized gains (losses) on securities in the Condensed Consolidated Statements of Comprehensive Income.
(4) The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company.
(5) Includes GMWBL, GMWB, FIA, Stabilizer and MCGs.
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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Six Months Ended June 30, 2022
Fair Value as of January 1 Realized/Unrealized
Gains (Losses)
Included in:
PurchasesIssuancesSales

Settlements
Transfers
into
Level 3
Transfers
out of
Level 3
Fair Value as of June 30
Change In
Unrealized
Gains
(Losses)
Included in
Earnings
(3)
Change In
Unrealized
Gains
(Losses)
Included in
OCI(3)
Net
Income
OCI
Fixed maturities, including securities pledged:
U.S. corporate public securities$16 $ $(1)$5 $ $ $ $ $(1)$19 $ $(1)
U.S. corporate private securities1,910 (2)(277)158   (120)121 (10)1,780 (2)(276)
Foreign corporate public securities and foreign governments(1)
   4      4   
Foreign corporate private securities(1)
353 (22)(31)97   (28)148 (114)403 (4)(31)
Residential mortgage-backed securities43 (15) 4    1 (2)31 (15) 
Other asset-backed securities44  (4)39  (10)(6)  63  (4)
Total fixed maturities, including securities pledged2,366 (39)(313)307  (10)(154)270 (127)2,300 (21)(312)
Equity securities, at fair value
203 (26) 26      203 (26) 
Derivatives:
Guaranteed benefit derivatives (2)(5)
(48)20   (1)    (29)  
Embedded derivatives on reinsurance(87)1        (86)  
Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements   8   (8)     
Assets held in separate accounts(4)
316 (26) 132  (4) 6 (75)349   
(1) Primarily U.S. dollar denominated.
(2) All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract by contract basis. These amounts are included in Other net (losses) in the Condensed Consolidated Statements of Operations.
(3) For financial instruments still held as of June 30 amounts are included in Net investment income and Total net gains (losses) in the Condensed Consolidated Statements of Operations or Unrealized gains (losses) on securities in the Condensed Consolidated Statements of Comprehensive Income.
(4) The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company.
(5) Includes GMWBL, GMWB, FIA, Stabilizer and MCGs.

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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Three Months Ended June 30, 2021
Fair Value as of April 1Total
 Realized/Unrealized
Gains (Losses)
Included in:
PurchasesIssuancesSales

Settlements
Transfers
into
Level 3
Transfers
out of
Level 3
Fair Value as of June 30
Change In
Unrealized
Gains
(Losses)
Included in
Earnings
(3)
Change In
Unrealized
Gains
(Losses)
Included in
OCI(3)
Net
Income
OCI
Fixed maturities, including securities pledged:
U.S. corporate public securities$60 $ $1 $ $ $ $(1)$ $(37)$23 $ $5 
U.S. corporate private securities1,584 1 40 23   (93)504 (48)2,011  (2)
Foreign corporate public securities and foreign governments(1)
7   10     (7)10   
Foreign corporate private securities(1)
380 1 8 1  (34)(4)  352 1 5 
Residential mortgage-backed securities47 (4) 12    3 (12)46 (4) 
Commercial mortgage-backed securities   2      2   
Other asset-backed securities69   15   (7)1  78   
Total fixed maturities, including securities pledged2,147 (2)49 63  (34)(105)508 (104)2,522 (3)8 
Fixed maturities, trading, at fair value   45      45   
Equity securities, at fair value
257 3    (11)   249 3  
Derivatives:
Guaranteed benefit derivatives (2)(5)
(26)(19)    1   (44)  
Embedded derivatives on reinsurance(88)3        (85)  
Assets held in separate accounts(4)
237 2  71     (17)293   
(1) Primarily U.S. dollar denominated.
(2) All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract by contract basis. These amounts are included in Other net (losses) in the Condensed Consolidated Statements of Operations.
(3) For financial instruments still held as of June 30, amounts are included in Net investment income and Total net gains (losses) in the Condensed Consolidated Statements of Operations or Unrealized gains (losses) on securities in the Condensed Consolidated Statements of Comprehensive Income.
(4) The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company.
(5)Includes GMWBL, GMWB, FIA, Stabilizer and MCGs.
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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Six Months Ended June 30, 2021
Fair Value as of January 1
 Realized/Unrealized
Gains (Losses)
Included in:
PurchasesIssuancesSales

Settlements
Transfers
into
Level 3
Transfers
out of
Level 3
Fair Value as of June 30
Change In
Unrealized
Gains
(Losses)
Included in
Earnings
(3)
Change In
Unrealized
Gains
(Losses)
Included in
OCI(3)
Net
Income
OCI
Fixed maturities, including securities pledged:
U.S. corporate public securities$93 $1 $ $ $ $(25)$(1)$ $(45)$23 $ $ 
U.S. corporate private securities1,900 51 (96)77  (328)(137)621 (77)2,011 (1)(96)
Foreign corporate public securities and foreign governments(1)
   10      10   
Foreign corporate private securities(1)
457 9 (2)1  (81)(32)  352 2 (5)
Residential mortgage-backed securities43 (7) 15  (7) 2  46 (7) 
Commercial mortgage-backed securities   1  (1)(4)6  2   
Other asset-backed securities61  (2)22  (4)(22)23  78  (2)
Total fixed maturities, including securities pledged2,554 54 (100)126  (446)(196)652 (122)2,522 (6)(103)
Fixed maturities, trading, at fair value   45      45   
Equity securities, at fair value
172 13  225  (152)(9)  249 (2) 
Derivatives:
Guaranteed benefit derivatives (2)(5)
(84)38     2   (44)  
Other derivatives, net1      (1)   (1) 
Embedded derivatives on reinsurance 4   (89)    (85)  
Assets held in separate accounts(4)
222 3  104  (1)  (35)293   
(1) Primarily U.S. dollar denominated.
(2) All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract by contract basis. These amounts are included in Other net (losses) in the Condensed Consolidated Statements of Operations.
(3) For financial instruments still held as of June 30, amounts are included in Net investment income and Total net gains (losses) in the Condensed Consolidated Statements of Operations or Unrealized gains (losses) on securities in the Condensed Consolidated Statements of Comprehensive Income.
(4) The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company.
(5) Includes GMWBL, GMWB, FIA, Stabilizer and MCGs.
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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
For the three and six months ended June 30, 2022 and 2021, the transfers in and out of Level 3 for fixed maturities were due to the variation in inputs relied upon for valuation each quarter. Securities that are primarily valued using independent broker quotes when prices are not available from one of the commercial pricing services are reflected as transfers into Level 3. When securities are valued using more widely available information, the securities are transferred out of Level 3 and into Level 1 or 2, as appropriate.
Significant Unobservable Inputs

The Company's Level 3 fair value measurements of its fixed maturities, equity securities and equity and credit derivative contracts are primarily based on broker quotes for which the quantitative detail of the unobservable inputs is neither provided nor reasonably corroborated, thus negating the ability to perform a sensitivity analysis. The Company performs a review of broker quotes by performing a monthly price variance comparison and back tests broker quotes to recent trade prices.

Other Financial Instruments

The following disclosures are made in accordance with the requirements of ASC Topic 825 which requires disclosure of fair value information about financial instruments, whether or not recognized at fair value on the Condensed Consolidated Balance Sheets.

ASC Topic 825 excludes certain financial instruments, including insurance contracts and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.
The carrying values and estimated fair values of the Company's financial instruments as of the dates indicated:
June 30, 2022December 31, 2021
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
Assets:
Fixed maturities, including securities pledged$32,666 $32,666 $37,251 $37,251 
Equity securities234 234 240 240 
Mortgage loans on real estate5,415 5,239 5,627 5,982 
Policy loans373 373 392 392 
Cash, cash equivalents, short-term investments and short-term investments under securities loan agreements2,113 2,113 2,607 2,607 
Derivatives277 277 171 171 
Embedded derivative on reinsurance21 21   
Other investments76 76 79 79 
Assets held in separate accounts80,017 80,017 100,433 100,433 
Liabilities:
Investment contract liabilities:
Funding agreements without fixed maturities and deferred annuities(1)
$36,125 $37,982 $35,334 $43,407 
Funding agreements with fixed maturities1,462 1,457 1,460 1,461 
Supplementary contracts, immediate annuities and other791 653 829 775 
Derivatives:
Guaranteed benefit derivatives(2)
29 29 48 48 
Other derivatives307 307 231 231 
Embedded derivative on reinsurance41 41 196 196 
Short-term debt1 1 1 1 
Long-term debt2,385 2,316 2,595 2,991 
(1) Certain amounts included in Funding agreements without fixed maturities and deferred annuities are also reflected within the Guaranteed benefit derivatives section of the table above.
(2) Includes GMWBL, GMWB, FIA, Stabilizer and MCGs.

The following table presents the classifications of financial instruments which are not carried at fair value on the Condensed Consolidated Balance Sheets:
Financial InstrumentClassification
Mortgage loans on real estateLevel 3
Policy loansLevel 2
Other investmentsLevel 2
Funding agreements without fixed maturities and deferred annuitiesLevel 3
Funding agreements with fixed maturitiesLevel 2
Supplementary contracts and immediate annuitiesLevel 3
Short-term debt and Long-term debtLevel 2

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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
6.    Deferred Policy Acquisition Costs and Value of Business Acquired

The following tables present a rollforward of DAC and VOBA for the periods indicated:
2022
DACVOBATotal
Balance as of January 1, 2022$1,217 $161 $1,378 
Deferrals of commissions and expenses56 3 59 
Amortization:
Amortization, excluding unlocking(116)(10)(126)
Unlocking(1)
(41)(45)(86)
Interest accrued49 16 
(3)
65 
Net amortization included in Condensed Consolidated Statements of Operations(108)(39)(147)
Change due to unrealized capital gains/(losses) on available-for-sale securities700 490 1,190 
Balance as of June 30, 2022$1,865 $615 $2,480 
2021
DACVOBATotal
Balance as of January 1, 2021$1,440 $70 $1,510 
Deferrals of commissions and expenses50 3 53 
Amortization:
Amortization, excluding unlocking(2)
(479)(158)(637)
Unlocking(1)
(9)7 (2)
Interest accrued56 18 
(3)
74 
Net amortization included in Condensed Consolidated Statements of Operations(432)(133)(565)
Change due to unrealized capital gains/(losses) on available-for-sale securities181 267 448 
Balance as of June 30, 2021$1,239 $207 $1,446 
(1) Includes the impacts of annual review of assumptions which typically occurs in the third quarter; and retrospective and prospective unlocking.
(2) There was no loss recognition during 2022. During 2021, the Company recorded loss recognition of $301 and $1 for DAC and VOBA, respectively.
(3) Interest accrued at the following rates for VOBA: 3.5% to 7.2% during 2022 and 2021.

7.    Reinsurance

The Company reinsures its business through a diversified group of reinsurers. However, the Company remains liable to the extent its reinsurers do not meet their obligations under the reinsurance agreements. The Company monitors trends in arbitration and any litigation outcomes with its reinsurers. Collectability of reinsurance balances are evaluated by monitoring ratings and evaluating the financial strength of its reinsurers. Large reinsurance recoverable balances with offshore or other non-accredited reinsurers are secured through various forms of collateral, including secured trusts, funds withheld accounts and irrevocable letters of credit ("LOC").

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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Information regarding the effect of reinsurance on the Condensed Consolidated Balance Sheets is as follows as of the periods indicated:
June 30, 2022
DirectAssumedCededTotal,
Net of
Reinsurance
Assets
Premiums receivable$195 $10 $(205)$ 
Reinsurance recoverable, net of allowance for credit losses— — 13,079 13,079 
Total$195 $10 $12,874 $13,079 
Liabilities
Future policy benefits and contract owner account balances$52,076 $1,075 $— $53,151 
Liability for funds withheld under reinsurance agreements71 — — 71 
Total$52,147 $1,075 $— $53,222 
December 31, 2021
DirectAssumedCededTotal,
Net of
Reinsurance
Assets
Premiums receivable$169 $8 $(213)$(36)
Reinsurance recoverable— — 13,671 13,671 
Total$169 $8 $13,458 $13,635 
Liabilities
Future policy benefits and contract owner account balances$51,648 $1,110 $— $52,758 
Liability for funds withheld under reinsurance agreements203 — — 203 
Total$51,851 $1,110 $— $52,961 
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Table of Contents
Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Information regarding the effect of reinsurance on the Condensed Consolidated Statement of Operations is as follows for the periods indicated:
Three Months Ended June 30,

20222021
Premiums:
Direct premiums$814 $760 
Reinsurance assumed4 5 
Reinsurance ceded(223)(249)
Net premiums$595 $516 
Fee income:
Gross fee income$510 $537 
Reinsurance assumed4 4 
Reinsurance ceded(103)(105)
Net fee income$411 $436 
Interest credited and other benefits to contract owners / policyholders:
Direct interest credited and other benefits to contract owners / policyholders
$1,076 $1,037 
Reinsurance assumed14 20 
Reinsurance ceded(1)
(447)(371)
Net interest credited and other benefits to contract owners / policyholders
$643 $686 
(1) Includes $72 and $56 for amounts paid and accrued to reinsurers in connection with the Company's UL contracts for the Life segment for the three months ended June 30, 2022 and 2021, respectively.

Six Months Ended June 30,

20222021
Premiums:
Direct premiums$1,628 $1,532 
Reinsurance assumed13 14 
Reinsurance ceded(433)(6,017)
Net premiums$1,208 $(4,471)
Fee income:
Gross fee income$1,043 $1,097 
Reinsurance assumed9 9 
Reinsurance ceded(208)(212)
Net fee income$844 $894 
Interest credited and other benefits to contract owners / policyholders:
Direct interest credited and other benefits to contract owners / policyholders
$1,954 $3,004 
Reinsurance assumed22 41 
Reinsurance ceded(1)
(668)(6,549)
Net interest credited and other benefits to contract owners / policyholders
$1,308 $(3,504)
(1) Includes $150 and $5,845 for amounts paid and accrued to reinsurers in connection with the Company's UL contracts for the Life segment for the six months ended June 30, 2022 and 2021, respectively.

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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
If the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the agreement using the deposit method of accounting. As of June 30, 2022 and December 31, 2021, the Company has a deposit asset of $1.6 billion, which is reported in "Other assets" on the accompanying Condensed Consolidated Balance Sheets.

8.     Share-based Incentive Compensation Plans

The Company has provided equity-based compensation awards to its employees under the ING U.S., Inc. 2013 Omnibus Employee Incentive Plan (the "2013 Omnibus Plan"), the Voya Financial, Inc. 2014 Omnibus Employee Incentive Plan (the "2014 Omnibus Plan") and the Voya Financial, Inc. 2019 Omnibus Employee Incentive Plan (the "2019 Omnibus Plan") (together, the "Omnibus Plans"). As of June 30, 2022, common stock reserved and available for issuance under the 2013 Omnibus Plan, the 2014 Omnibus Plan and the 2019 Omnibus Plan was 347,663, 3,027,864 and 8,028,432 shares, respectively.

The Company offers equity-based awards to Voya Financial, Inc. non-employee directors under the Voya Financial, Inc. 2013 Omnibus Non-Employee Director Incentive Plan ("Director Plan").

Compensation Cost

The following table summarizes share-based compensation expense, which includes expenses related to awards granted under the Omnibus Plans and Director Plan for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Restricted Stock Unit (RSU) awards$8 $8 $30 $26 
Performance Stock Unit (PSU) awards7 11 31 30 
Stock options 1  1 
Total share-based compensation expense15 20 61 57 
Income tax benefit3 4 18 15 
After-tax share-based compensation expense$12 $16 $43 $42 

Awards Outstanding

The following table summarizes RSU and PSU awards activity under the Omnibus Plans and the Director Plan for the periods indicated:
RSU AwardsPSU Awards
(awards in millions)
Number of AwardsWeighted Average Grant Date Fair ValueNumber of AwardsWeighted Average Grant Date Fair Value
Outstanding as of January 1, 20221.4 $57.53 2.0 $54.05 
Adjustment for PSU performance factor  0.2 59.13 
Granted0.7 66.03 0.6 66.32 
Vested(0.7)56.62 (0.9)51.34 
Forfeited *60.87  *58.14 
Outstanding as of June 30, 20221.4 $62.18 1.9 $58.85 
*Less than 0.1
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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
The following table summarizes the number of options under the Omnibus Plans for the periods indicated:
Stock Options
(awards in millions)
Number of AwardsWeighted Average Exercise Price
Outstanding as of January 1, 20221.8 $42.91 
Granted  
Exercised(0.1)39.91 
Forfeited  
Outstanding as of June 30, 20221.7 $43.15 
Vested, exercisable, as of June 30, 20221.7 $43.15 

9.     Shareholders' Equity

Noncontrolling Interest

Noncontrolling interest in limited partnerships increased as a result of favorable market appreciation in limited partnership investments, net of contributions and distributions. See the Consolidated and Nonconsolidated Investment Entities Note to these Condensed Consolidated Financial Statements for additional details over changes in noncontrolling interest during the year and impacting Shareholders' Equity.

Common Shares

The following table presents the rollforward of common shares used in calculating the weighted average shares utilized in the basic earnings per common share calculation for the periods indicated:
Common Shares
(shares in millions)
IssuedHeld in TreasuryOutstanding
Balance, January 1, 2021143.3 19.1 124.2 
Common shares issued0.1  0.1 
Common shares acquired - share repurchase 17.9 (17.9)
Share-based compensation2.4 1.0 1.4 
Treasury Stock retirement(36.8)(36.8) 
Balance, December 31, 2021109.01.2107.8 
Common shares issued   
Common shares acquired - share repurchase 10.9 (10.9)
Share-based compensation1.6 0.6 1.0 
Balance, June 30, 2022110.612.797.9

Dividends declared per share of Common Stock were as follows for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Dividends declared per share of Common Stock$0.20 $0.165 $0.40 $0.33 

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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Share Repurchase Program

From time to time, the Company's Board of Directors authorizes the Company to repurchase shares of its common stock. These authorizations permit stock repurchases up to a prescribed dollar amount and generally may be accomplished through various means, including, without limitation, open market transactions, privately negotiated transactions, forward, derivative, or accelerated repurchase, or automatic repurchase transactions, including 10b5-1 plans, or tender offers. Share repurchase authorizations typically expire if unused by a prescribed date.

On April 28, 2022, the Board of Directors provided its most recent share repurchase authorization, increasing the aggregate amount of the Company's common stock authorized for repurchase by $500. The share repurchase authorization expires on June 30, 2023 (unless extended), and does not obligate the Company to purchase any shares. The authorization for the share repurchase program may be terminated, increased or decreased by the Board of Directors at any time.

The following table presents repurchases of the Company's common stock through share repurchase agreements with third-party financial institutions during the six months ended June 30, 2022.

2022
Execution DatePaymentInitial Shares DeliveredClosing DateAdditional Shares DeliveredTotal Shares Repurchased
June 21, 2022$250 3,382,950 (1)(1)(1)
March 17, 2022$275 3,305,786 May 11, 2022890,112 4,195,898 
(1) This arrangement is scheduled to terminate no later than the end of the third quarter 2022, at which time the Company will settle any positive or negative share balances based on the daily volume-weighted average price of the Company's common stock.


Warrants

On May 7, 2013, the Company issued to ING Group warrants to purchase up to 26,050,846 shares of the Company's common stock equal in the aggregate to 9.99% of the issued and outstanding shares of common stock at that date. The exercise price of the warrants at the time of issuance was $48.75 per share of common stock, subject to adjustments, including for stock dividends, cash dividends in excess of $0.01 per share a quarter, subdivisions, combinations, reclassifications and non-cash distributions. The warrants also provide for, upon the occurrence of certain change of control events affecting the Company, an increase in the number of shares to which a warrant holder will be entitled upon payment of the aggregate exercise price of the warrant. The warrants became exercisable to ING Group and its affiliates on January 1, 2017 and to all other holders starting on the first anniversary of the completion of the IPO (May 7, 2014). The warrants expire on the tenth anniversary of the completion of the IPO (May 7, 2023). The warrants are net share settled, which means that no cash will be payable by a warrant holder in respect of the exercise price of a warrant upon exercise, and are classified as permanent equity. They have been recorded at their fair value determined on the issuance date of May 7, 2013 in the amount of $94 as an addition and reduction to Additional-paid-in-capital. Warrant holders are not entitled to receive dividends. On March 12, 2018, ING Group sold its remaining interests in the warrants and no longer owns any warrants. On June 29, 2022, the Company paid a quarterly dividend of $0.20 per share on its common stock. As a consequence, the exercise price of the warrants to purchase shares of common stock was adjusted to $47.21 per share of common stock and the number of shares of common stock for which each warrant is exercisable has been adjusted to 1.032523411. As of June 30, 2022, no warrants have been exercised.

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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Preferred Stock

As of June 30, 2022 and December 31, 2021, there were 100,000,000 shares of preferred stock authorized. Preferred stock issued and outstanding are as follows:
June 30, 2022December 31, 2021
SeriesIssuedOutstandingIssuedOutstanding
6.125% Non-cumulative Preferred Stock, Series A
325,000 325,000 325,000 325,000 
5.35% Non-cumulative Preferred Stock, Series B
300,000 300,000 300,000 300,000 
Total625,000 625,000 625,000 625,000 

The declaration of dividends on preferred stock per share and in the aggregate were as follows for the periods indicated:
Series ASeries B
Three Months Ended June 30,Per ShareAggregatePer ShareAggregate
2022$ $ $13.375 $4 
2021  13.375 4 
Six Months Ended June 30,
2022$30.625 $10 $26.750 $8 
202130.625 1026.750 8 
As of June 30, 2022, there were no preferred stock dividends in arrears.

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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
10.     Earnings per Common Share
The following table presents a reconciliation of Net income (loss) and shares used in calculating basic and diluted net income (loss) per common share for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
(in millions, except for per share data)2022202120222021
Earnings
Net income (loss) available to common shareholders:
Income (loss) from continuing operations$143 $916 $227 $2,002 
Less: Preferred stock dividends4 4 18 18 
Less: Net income (loss) attributable to noncontrolling interest75 447 118 447 
Income (loss) from continuing operations available to common shareholders64 465 91 1,537 
Income (loss) from discontinued operations, net of tax (6) 8 
Net income (loss) available to common shareholders$64 $459 $91 $1,545 
Weighted average common shares outstanding
Basic101.7 120.6 103.9 121.6 
Dilutive Effects(1):
Warrants7.1 7.3 7.7 6.3 
RSU awards0.8 0.9 0.9 1.0 
PSU awards0.6 0.7 0.8 0.9 
Stock Options0.6 0.7 0.6 0.7 
Diluted110.8 130.2 113.9 130.5 
Basic(2)
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders$0.62 $3.86 $0.88 $12.64 
Income (loss) from discontinued operations, net of taxes available to Voya Financial, Inc.'s common shareholders$ $(0.05)$ $0.06 
Income (loss) available to Voya Financial, Inc.'s common shareholders$0.62 $3.81 $0.88 $12.71 
Diluted(2)
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders$0.57 $3.58 $0.80 $11.78 
Income (loss) from discontinued operations, net of taxes available to Voya Financial, Inc.'s common shareholders$ $(0.04)$ $0.06 
Income (loss) available to Voya Financial, Inc.'s common shareholders$0.57 $3.53 $0.80 $11.84 
(1) For the six months ended June 30, 2022 and June 30, 2021, weighted average shares used for calculating earnings per share excludes the impact of forward contracts related to the share repurchase agreement entered into on June 21, 2022 and June 30, 2021, respectively, as the inclusion of these instruments would be antidilutive to the earnings per share calculation. For more information on the share repurchase agreement, see the Shareholders' Equity Note to these Condensed Consolidated Financial Statements.
(2) Basic and diluted earnings per share are calculated using unrounded, actual amounts. Therefore, the components of earnings per share may not sum to its corresponding total.

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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
11.    Accumulated Other Comprehensive Income (Loss)

Shareholders' equity included the following components of AOCI as of the dates indicated:
June 30,
20222021
Fixed maturities, net of impairment
$(1,926)$3,739 
Derivatives(1)
129 63 
DAC/VOBA adjustment on available-for-sale securities(2)
422 (877)(3)
Premium deficiency reserve adjustment(2)
 (15)
Other intangibles adjustment on available-for-sale securities(2)
(4)5 
Other— 2 
Unrealized capital gains (losses), before tax(1,379)2,917 
Deferred income tax asset (liability)413 (490)
Net unrealized capital gains (losses)(966)2,427 
Pension and other postretirement benefits liability, net of tax3 4 
AOCI$(963)$2,431 
(1) Gains and losses reported in Accumulated Other Comprehensive Income (AOCI) from hedge transactions that resulted in the acquisition of an identified asset are reclassified into earnings in the same period or periods during which the asset acquired affects earnings. As of June 30, 2022, the portion of the AOCI that is expected to be reclassified into earnings within the next 12 months is $20.
(2) Upon adoption of ASU 2018-12 on January 1, 2023, the DAC/VOBA adjustments on available-for-sale securities, Premium deficiency reserve adjustment and Other intangibles adjustment on available-for-sale securities will be reversed as of the January 1, 2021 transition date and in subsequent periods.
(3) In connection with the closing of the Individual Life Transaction on January 4, 2021, the Company released stranded AOCI and reversed unrealized capital gains (losses) on available-for-sale securities associated with DAC for the disposed entities. In addition, the Company released the unrealized gains for the investments transferred associated with the reinsurance transactions entered into at closing.




























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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Changes in AOCI, including the reclassification adjustments recognized in the Condensed Consolidated Statements of Operations were as follows for the periods indicated:
Three Months Ended June 30, 2022
Before-Tax AmountIncome Tax (Benefit)After-Tax Amount
Available-for-sale securities:
Fixed maturities$(2,548)$535 $(2,013)
Adjustments for amounts recognized in Net gains (losses) in the Condensed Consolidated Statements of Operations20 (4)16 
DAC/VOBA593 (125)468 
Premium deficiency reserve adjustment5 (1)4 
Other intangibles(5)1 (4)
Change in unrealized gains (losses) on available-for-sale securities(1,935)406 (1,529)
Derivatives:
Derivatives54 
(1)
(11)43 
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations
(5)1 (4)
Change in unrealized gains (losses) on derivatives49 (10)39 
Change in Accumulated other comprehensive income (loss)$(1,886)$396 $(1,490)
(1) See the Derivative Financial Instruments Note to these Condensed Consolidated Financial Statements for additional information.
Six Months Ended June 30, 2022
Before-Tax AmountIncome Tax (Benefit)After-Tax Amount
Available-for-sale securities:
Fixed maturities$(5,211)$1,094 $(4,117)
Adjustments for amounts recognized in Net gains (losses) in the Condensed Consolidated Statements of Operations90 (19)71 
DAC/VOBA1,190 
(1)
(250)940 
Premium deficiency reserve adjustment14 (3)11 
Other intangibles(9)2 (7)
Change in unrealized gains (losses) on available-for-sale securities(3,926)824 (3,102)
Derivatives:
Derivatives59 
(2)
(12)47 
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations
(10)2 (8)
Change in unrealized gains (losses) on derivatives49 (10)39 
Change in Accumulated other comprehensive income (loss)$(3,877)$814 $(3,063)
(1) See the Deferred Policy Acquisition Costs and Value of Business Acquired Note to these Condensed Consolidated Financial Statements for additional information.
(2) See the Derivative Financial Instruments Note to these Condensed Consolidated Financial Statements for additional information
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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Three Months Ended June 30, 2021
Before-Tax AmountIncome Tax (Benefit)After-Tax Amount
Available-for-sale securities:
Fixed maturities$826 $(173)$653 
Other (2) (2)
Adjustments for amounts recognized in Net gains (losses) in the Condensed Consolidated Statements of Operations(15)3 (12)
DAC/VOBA(149)31 (118)
Premium deficiency reserve adjustment(1)1  
Change in unrealized gains (losses) on available-for-sale securities659 (138)521 
Derivatives:
Derivatives7 
(1)
(2)5 
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations(5)1 (4)
Change in unrealized gains (losses) on derivatives2 (1)1 
Pension and other postretirement benefits liability:
Amortization of prior service cost recognized in Operating expenses in the Condensed Consolidated Statements of Operations(1) (1)
Change in pension and other postretirement benefits liability(1) (1)
Change in Accumulated other comprehensive income (loss)$660 $(139)$521 
(1) See the Derivative Financial Instruments Note to these Condensed Consolidated Financial Statements for additional information    .

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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Six Months Ended June 30, 2021
Before-Tax AmountIncome Tax (Benefit)After-Tax Amount
Available-for-sale securities:
Fixed maturities$(3,099)$420 $(2,679)
Adjustments for amounts recognized in Net gains (losses) in the Condensed Consolidated Statements of Operations(1,775)373 (1,402)
DAC/VOBA1,194 
(1)
(251)943 
Premium deficiency reserve adjustment445 (93)352 
Other intangibles419 (88)331 
Change in unrealized gains (losses) on available-for-sale securities(2,816)361 (2,455)
Derivatives:
Derivatives(2)
(2)
 (2)
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations
(11)2 (9)
Change in unrealized gains (losses) on derivatives(13)2 (11)
Pension and other postretirement benefits liability:
Amortization of prior service cost recognized in Operating expenses in the Condensed Consolidated Statements of Operations
(1) (1)
Change in pension and other postretirement benefits liability(1) (1)
Change in Accumulated other comprehensive income (loss)$(2,830)$363 $(2,467)
(1) See the Deferred Policy Acquisition Costs and Value of Business Acquired Note to these Condensed Consolidated Financial Statements for additional information.
(2) See the Derivative Financial Instruments Note to these Condensed Consolidated Financial Statements for additional information.

12.    Income Taxes

The Company uses the estimated annual effective tax rate method in computing its interim tax provision. Certain items, including changes in the realizability of deferred tax assets and changes in liabilities for uncertain tax positions, are excluded from the estimated annual effective tax rate and the actual tax expense or benefit is reported in the period the related item is incurred.

The Company's effective tax rate for the three and six months ended June 30, 2022 was 6.5% and 7.0%. The effective tax rate differed from the statutory rate of 21% primarily due to noncontrolling interest, the effect of the dividends received deduction ("DRD") and tax credits.

The Company's effective tax rate for the three months ended June 30, 2021 was 10.9%. The effective tax rate differed from the statutory rate of 21% primarily due to noncontrolling interest and the effect of the DRD. The Company's effective tax rate for the six months ended June 30, 2021 was 3.1%. The effective tax rate differed from the statutory rate of 21% primarily due to the effect of the release of a stranded tax benefit in Other Comprehensive Income due to the Individual Life Transaction, noncontrolling interest and the effect of the DRD.

Valuation allowances are provided when it is considered more likely than not that some portion or all of the deferred tax assets ("DTAs") will not be realized. The Company reviews all available positive and negative evidence to determine if a valuation allowance is recorded, including historical and projected pre-tax book income, tax planning strategies and reversals of temporary differences. As of June 30, 2022, the Company had year-to-date losses on securities of $3,877 in Other comprehensive income primarily driven by increases in interest rates. The Company determined that the increase in unrealized
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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
losses on fixed income investments will be offset in future years by the ordinary income produced from these investments as they reach maturity. Additionally, operating income remained positive for the period and was largely consistent with the 2021 year-end valuation allowance analysis. After evaluating the positive and negative evidence, the Company did not change its judgement regarding the realization of DTAs. For more information related to the valuation allowance, refer to the Income Taxes Note to the Consolidated Financial Statements included in Part II, Item 8 of the Annual Report on form 10-K.

Tax Regulatory Matters

For the tax years 2020 through 2022, the Company participated in the Internal Revenue Service ("IRS") Compliance Assurance Process ("CAP"), which is a continuous audit program provided by the IRS. For the 2020 tax year, the Company was in the Compliance Maintenance Bridge ("Bridge") phase of CAP. In the Bridge phase, the IRS did not conduct any review or provide any letters of assurance for that tax year.

13.    Financing Agreements

Short-term and Long-term Debt

The following table summarizes the carrying value of the Company’s debt securities issued and outstanding as of June 30, 2022 and December 31, 2021:
IssuerMaturityJune 30, 2022December 31, 2021
3.65% Senior Notes, due 2026 (2)(3)
Voya Financial, Inc.06/15/2026$445 $445 
5.7% Senior Notes, due 2043 (2)(3)
Voya Financial, Inc.07/15/2043395 395 
4.8% Senior Notes, due 2046 (2)(3)
Voya Financial, Inc.06/15/2046297 297 
4.7% Fixed-to-Floating Rate Junior Subordinated Notes, due 2048
Voya Financial, Inc.01/23/2048345 345 
5.65% Fixed-to-Floating Rate Junior Subordinated Notes, due 2053(4)
Voya Financial, Inc.05/15/2053530 740 
7.25% Voya Holdings Inc. debentures, due 2023(1)
Voya Holdings, Inc.08/15/2023140 140 
7.63% Voya Holdings Inc. debentures, due 2026(1)
Voya Holdings, Inc.08/15/2026139 139 
6.97% Voya Holdings Inc. debentures, due 2036(1)
Voya Holdings, Inc.08/15/203679 79 
8.42% Equitable of Iowa Companies Capital Trust II Notes, due 2027
Equitable of Iowa Capital Trust II04/01/202713 13 
1.00% Windsor Property Loan
Voya Retirement Insurance and Annuity Company06/14/20273 3 
Subtotal2,386 2,596 
Less: Current portion of long-term debt1 1 
Total$2,385 $2,595 
(1) Guaranteed by ING Group.
(2) Interest is paid semi-annually in arrears.
(3) Guaranteed by Voya Holdings.
(4) See the Junior Subordinated Notes section below.

As of June 30, 2022, the Company was in compliance with its debt covenants.

Aetna Notes

As of June 30, 2022, the outstanding principal amount of the Aetna Notes was $358, which is guaranteed by ING Group. As of June 30, 2022, the Company provided $363 of collateral benefiting ING Group, comprised of a deposit of $200 to a control account with a third-party collateral agent and $163 of letter of credit. The collateral may be exchanged at any time upon the posting of any other form of acceptable collateral to the account.
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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Junior Subordinated Notes

During the six months ended June 30, 2022, the Company repurchased $214 par value of its 5.65% Fixed-to-Floating Rate Junior Subordinated Note, due 2053, on the open market, resulting in loss on debt extinguishment of $4, which is included in Interest expense on the Condensed Consolidated Statements of Operations.

Senior Unsecured Credit Facility Agreement

As of June 30, 2022, the Company had a $500 senior unsecured credit facility with a syndicate of banks which expires November 1, 2024. The facility provides $500 of committed capacity for issuing letters of credit and the full $500 may be utilized for direct borrowings. As of June 30, 2022, there were no amounts outstanding as revolving credit borrowings and no amounts of LOCs outstanding under the senior unsecured credit facility. Under the terms of the facility, the Company is required to maintain a minimum net worth of $6,150, which may increase upon any future equity issuances by the Company.
14.    Commitments and Contingencies

Leases

During the six months ended June 30, 2022, the Company recorded an impairment of $3 on its right-of-use asset associated with leased office space, which is included in Operating expenses in the Condensed Consolidated Statements of Operations. There was no impairment on the Company's right-of-use asset associated with leased office space during the three months ended June 30, 2022.

During the three and six months ended June 30, 2021, the Company recorded an impairment of $13 on its right-of-use asset associated with leased office space, which is included in Operating expenses in the Condensed Consolidated Statements of
Operations.

Commitments

Through the normal course of investment operations, the Company commits to either purchase or sell securities, mortgage loans, or money market instruments, at a specified future date and at a specified price or yield. The inability of counterparties to honor these commitments may result in either a higher or lower replacement cost. Also, there is likely to be a change in the value of the securities underlying the commitments.

As of June 30, 2022, the Company had off-balance sheet commitments to acquire mortgage loans of $200 and purchase limited partnerships and private placement investments of $1,094, of which $393 related to consolidated investment entities.

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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Restricted Assets

The Company is required to maintain assets on deposit with various regulatory authorities to support its insurance operations. The Company may also post collateral in connection with certain securities lending, repurchase agreements, funding agreements, credit facilities and derivative transactions. The components of the fair value of the restricted assets were as follows as of the dates indicated:
June 30, 2022December 31, 2021
Fixed maturity collateral pledged to FHLB (1)
$1,990 $1,881 
FHLB restricted stock(2)
75 78 
Other fixed maturities-state deposits43 46 
Cash and cash equivalents35 31 
Securities pledged(3)
1,183 1,198 
Total restricted assets$3,326 $3,234 
(1) Included in Fixed maturities, available for sale, at fair value on the Condensed Consolidated Balance Sheets.
(2) Included in Other investments on the Condensed Consolidated Balance Sheets.
(3) Includes the fair value of loaned securities of $913 and $969 as of June 30, 2022 and December 31, 2021, respectively. In addition, as of June 30, 2022 and December 31, 2021, the Company delivered securities as collateral of $162 and $124 and repurchase agreements of $108 and $105, respectively. Loaned securities and securities delivered as collateral are included in Securities pledged on the Condensed Consolidated Balance Sheets.

Federal Home Loan Bank Funding Agreements

The Company is a member of the FHLB of Des Moines and the FHLB of Boston and is required to pledge collateral to back funding agreements issued to the FHLB. As of June 30, 2022 and December 31, 2021, the Company had $1,462 and $1,461 respectively, in non-putable funding agreements, which are included in Contract owner account balances on the Condensed Consolidated Balance Sheets. As of June 30, 2022 and December 31, 2021, assets with a market value of approximately $1,990 and $1,881, respectively, collateralized the FHLB funding agreements. Assets pledged to the FHLB are included in Fixed maturities, available-for-sale, at fair value on the Condensed Consolidated Balance Sheets.

Litigation, Regulatory Matters and Contingencies

Litigation, regulatory and other loss contingencies arise in connection with the Company's activities as a diversified financial services firm. The Company is a defendant in a number of litigation matters arising from the conduct of its business, both in the ordinary course and otherwise. In some of these matters, claimants seek to recover very large or indeterminate amounts, including compensatory, punitive, treble and exemplary damages. Modern pleading practice in the U.S. permits considerable variation in the assertion of monetary damages and other relief. Claimants are not always required to specify the monetary damages they seek or they may be required only to state an amount sufficient to meet a court's jurisdictional requirements. Moreover, some jurisdictions allow claimants to allege monetary damages that far exceed any reasonably possible verdict. The variability in pleading requirements and past experience demonstrates that the monetary and other relief that may be requested in a lawsuit or claim often bears little relevance to the merits or potential value of a claim. Litigation against the Company includes a variety of claims including negligence, breach of contract, fraud, violation of regulation or statute, breach of fiduciary duty, negligent misrepresentation, failure to supervise, elder abuse and other torts.

As with other financial services companies, the Company periodically receives informal and formal requests for information from various state and federal governmental agencies and self-regulatory organizations in connection with inquiries and investigations of the products and practices of the Company or the financial services industry. It is the practice of the Company to cooperate fully in these matters.

While it is possible that an adverse outcome in certain cases could have a material adverse effect upon the Company's financial position, based on information currently known, management believes that neither the outcome of pending litigation and regulatory matters nor potential liabilities associated with other loss contingencies, are likely to have such an effect. However, given the large and indeterminate amounts sought in certain litigation and the inherent unpredictability of all such matters, it is possible that an adverse outcome in certain of the Company's litigation or regulatory matters, or liabilities arising from other loss contingencies, could, from time to time, have a material adverse effect upon the Company's results of operations or cash flows in a particular quarterly or annual period.
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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
For some matters, the Company is able to estimate a possible range of loss. For such matters in which a loss is probable, an accrual has been made. For matters where the Company, however, believes a loss is reasonably possible, but not probable, no accrual is required. For matters for which an accrual has been made, but there remains a reasonably possible range of loss in excess of the amounts accrued or for matters where no accrual is required, the Company develops an estimate of the unaccrued amounts of the reasonably possible range of losses. As of June 30, 2022, the Company estimates the aggregate range of reasonably possible losses, in excess of any amounts accrued for these matters as of such date, to be up to approximately $25.

For other matters, the Company is currently not able to estimate the reasonably possible loss or range of loss. The Company is often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from plaintiffs and other parties, investigation of factual allegations, rulings by a court on motions or appeals, analysis by experts and the progress of settlement discussions. On a quarterly and annual basis, the Company reviews relevant information with respect to litigation and regulatory contingencies and updates the Company's accruals, disclosures and reasonably possible losses or ranges of loss based on such reviews.

Litigation includes Henkel of America v. ReliaStar Life Insurance Company, et al. (USDC District of Connecticut, No. 1:18-cv-00965)(filed June 8, 2018). Plaintiff alleges that ReliaStar breached the terms of a stop loss policy it issued to Plaintiff by refusing to reimburse Plaintiff for more than $47 in claims incurred by participants in prior years and submitted for coverage under the stop loss policy. Plaintiff alleges a breach of contract claim or, in the alternative, that the stop loss policy be declared to cover the submitted claims, and also asserts that ReliaStar engaged in unfair trade practices and unfair insurance practices in violation of state statutes, and did so willfully and intentionally to warrant an award of punitive damages under state law. The Company denies the allegations, which it believes are without merit, and intends to defend the case vigorously.

Litigation also includes Ravarino, et al. v. Voya Financial, Inc., et al. (USDC District of Connecticut, No. 3:21-cv-01658) (filed December 14, 2021). In this putative class action, the plaintiffs allege that the named defendants breached their fiduciary duties of prudence and loyalty in the administration of the Voya 401(k) Savings Plan. The plaintiffs claim that the named defendants did not exercise proper prudence in their management of allegedly poorly performing investment options, including proprietary funds, and passed excessive investment-management and other administrative fees for proprietary and non-proprietary funds onto plan participants. The plaintiffs also allege that the defendants engaged in self-dealing through the inclusion of the Voya Stable Value Option into the plan offerings and by setting the “crediting rate” for participants’ investment in the Stable Value Fund artificially low in relation to Voya’s general account investment returns in order to maximize the spread and Voya’s profits at the participants’ expense. The complaint seeks disgorgement of unjust profits as well as costs incurred. The Company denies the allegations, which it believes are without merit, and intends to defend the case vigorously.

Finally, industry wide, life insurers continue to be exposed to class action litigation related to the cost of insurance rates and periodic deductions from cash value. Common allegations include that insurance companies have breached the terms of their universal life insurance policies by establishing or increasing the cost of insurance rates using cost factors not permitted by the contract, thereby unjustly enriching themselves. This litigation is generally known as cost of insurance litigation.
Cost of insurance litigation for the Company includes Advance Trust & Life Escrow Services, LTA v. ReliaStar Life Insurance Company (USDC District of Minnesota, No. 1:18-cv-02863) (filed October 5, 2018), a putative class action in which Plaintiff alleges that the Company’s universal life insurance policies only permitted the Company to rely upon the policyholders’ expected future mortality experience to establish the cost of insurance, and that as projected mortality experience improved, the policy language required the Company to decrease the cost of insurance. Plaintiff alleges that the Company did not decrease the cost of insurance as required, thereby breaching its contract with the policyholders, and seeks class certification. On March 29, 2022, the district court granted the Plaintiff’s motion for class certification and denied the Company’s motion for summary judgment. The Company denies the allegations in the complaint, believes the complaint to be without merit, and will defend the lawsuit vigorously.

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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Contingencies related to Performance-based Capital Allocations on Private Equity Funds

Certain performance-based capital allocations related to sponsored private equity funds ("carried interest") are not final until the conclusion of an investment term specified in the relevant asset management contract. As a result, such carried interest, if accrued or paid to the Company during such term, is subject to later adjustment based on subsequent fund performance. If the fund’s cumulative investment return falls below specified investment return hurdles, some or all of the previously accrued carried interest is reversed to the extent that the Company is no longer entitled to the performance-based capital allocation. Should the fund’s cumulative investment return subsequently increase above specified investment return hurdles in future periods, previous reversals could be fully or partially recovered.

As of June 30, 2022, approximately $136 of previously accrued carried interest would be subject to full or partial reversal in future periods if cumulative fund performance hurdles are not maintained throughout the remaining life of the affected funds.

15.     Consolidated and Nonconsolidated Investment Entities

The Company holds variable interests in certain investment entities in the form of debt or equity investments, as well as the right to receive management fees, performance fees, and carried interest. The Company consolidates certain entities under the VIE guidance when it is determined that the Company is the primary beneficiary. Alternatively, certain entities are consolidated under the VOE guidance when control is obtained through voting rights. Refer to the Condensed Consolidated Balance Sheets for the assets and liabilities of the Company's consolidated investment entities.

The Company has no right to the benefits from, nor does it bear the risks associated with consolidated investment entities beyond the Company’s direct equity and debt investments in and management fees generated from these entities. Such direct investments amounted to approximately $314 and $317 as of June 30, 2022 and December 31, 2021, respectively. If the Company were to liquidate, the assets held by consolidated investment entities would not be available to the general creditors of the Company as a result of the liquidation.

Consolidated VIEs and VOEs

Collateral Loan Obligations Entities ("CLOs")

The Company is involved in the design, creation, and the ongoing management of CLOs. These entities are created for the purpose of acquiring diversified portfolios of senior secured floating rate leveraged loans, and securitizing these assets by issuing multiple tranches of collateralized debt; thereby providing investors with a broad array of risk and return profiles. Also known as collateralized financing entities under Topic 810, CLOs are variable interest entities by definition.

In return for providing collateral management services, the Company earns investment management fees and contingent performance fees. In addition to earning fee income, the Company often invests in the subordinated debt of entities formed to be the issuers of CLO offerings during their warehouse periods. The Company’s investments in these CLOs are repaid when the CLOs’ warehouse periods are closed and the CLO offerings are issued. The Company performs ongoing monitoring of the consolidation assessment for CLOs during and after their warehouse periods to determine if Voya remains the primary beneficiary of the CLOs. The fee income earned and investments held are included in the Company's ongoing consolidation assessment for each CLO. The Company was the primary beneficiary of 8 and 7 CLOs as of June 30, 2022 and December 31, 2021, respectively. The one additional CLO was consolidated during the first half of 2022 with impacts reflected within the Cash and cash equivalents and CLO notes, at fair value using the fair value option within the CIE sections of the Company's Condensed Consolidated Balance Sheet. There was no impact to the Company's Condensed Consolidated Statement of Operations during the three and six months ended June 30, 2022.

Limited Partnerships ("LPs")

The Company invests in and manages various limited partnerships, including private equity funds and hedge funds. The LPs generally have a ten-year life and have specified period during which investors can subscribe for limited partnership interests. Once the investors are admitted as limited partners, the investors are required to contribute capital when called by the general partners. The purpose of the LPs is to obtain subscriptions from limited partners and maximize the return to their partners by
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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
assembling a diversified portfolio of investments in private equity funds and other securities or assets with similar risk and return characteristics primarily through secondary market purchases. The majority of the investors in the LPs are unrelated parties to the Company. In return for subscriptions, each partner receives an equity interest in the LPs in proportion to its respective investment. These entities have been evaluated by the Company and are determined to be VIEs due to the equity holders, as a group, lacking the characteristics of a controlling financial interest.

In return for serving as the general partner of and providing investment management services to these entities, the Company earns management fees and carried interest in the normal course of business. Additionally, the Company often holds an investment in each limited partnership it manages, generally in the form of general partner and limited partner interests. The fee income, carried interest, and investments held are included in the Company’s ongoing consolidation analysis for each limited partnership. The Company consolidated 11 funds, which were structured as partnerships, as of June 30, 2022 and December 31, 2021.

The noncontrolling interest related to these partnerships increased from $1,568 at December 31, 2021 to $1,697 at June 30, 2022. Changes in market value, contributions and distributions related to these investments in partnerships directly impact the noncontrolling interest component of Shareholders' Equity on the Company's Condensed Consolidated Balance Sheets. The change in noncontrolling interest was primarily driven by favorable market appreciation in limited partnership investments, adjusted for contributions and distributions. The Company records the noncontrolling interest using a lag methodology relying on the most recent financial information available.

The following table summarizes the components of the consolidated investment entities as of the dates indicated:

June 30, 2022December 31, 2021
Assets of Consolidated Investment Entities
VIEs
Cash and cash equivalents$85 $171 
Corporate loans, at fair value using the fair value option1,122 1,111 
Limited partnerships/corporations, at fair value2,943 2,469 
Other assets15 28 
Total VIE assets4,165 3,779 
Total assets of consolidated investment entities$4,165 $3,779 
Liabilities and Shareholders' Equity of Consolidated Investment Entities
VIEs
CLO notes, at fair value using the fair value option$1,019 $880 
Other liabilities1,135 1,013 
Total VIE liabilities2,154 1,893 
Total liabilities of consolidated investment entities2,154 1,893 
Noncontrolling interest1,697 1,568 
Total VIE shareholders' equity1,697 1,568 
Total liabilities and shareholders' equity of consolidated investment entities$3,851 $3,461 

Fair Value Measurement

Upon consolidation, the Company elected to apply the FVO for financial assets and financial liabilities held by CLOs and continued to measure these assets (primarily corporate loans) and liabilities (debt obligations issued by CLOs) at fair value in subsequent periods. The Company has elected the FVO to more closely align its accounting with the economics of its transactions and allows the Company to more effectively align changes in the fair value of CLO assets with a commensurate change in the fair value of CLO liabilities.

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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Investments held by consolidated private equity funds are measured and reported at fair value in the Company's Condensed Consolidated Financial Statements. Changes in the fair value of consolidated investment entities are recorded as a separate line item within Income (loss) related to consolidated investment entities in the Company's Condensed Consolidated Statements of Operations.

The methodology for measuring the fair value of financial assets and liabilities of consolidated investment entities, and the classification of these measurements in the fair value hierarchy is consistent with the methodology and classification applied by the Company to its investment portfolio, as discussed within the Fair Value Measurements (excluding Consolidated Investment Entities) Note to these Condensed Consolidated Financial Statements.

As discussed in more detail below, the Company utilizes valuations obtained from third-party commercial pricing services, brokers and investment sponsors or third-party administrators that supply NAV (or its equivalent) per share used as a practical expedient. The valuations obtained from brokers and third-party commercial pricing services are non-binding. These valuations are reviewed on a monthly or quarterly basis depending on the entity and its underlying investments. Procedures include, but are not limited to, a review of underlying fund investor reports, review of top and worst performing funds requiring further scrutiny, review of variance from prior periods and review of variance from benchmarks, where applicable. In addition, the Company considers both macro and fund specific events that may impact the latest NAV supplied and determines if further adjustments of value should be made. Such changes, if any, are subject to senior management review.

When a price cannot be obtained from a commercial pricing service, independent broker quotes are solicited. Securities priced using independent broker quotes are classified as Level 3. Broker quotes and prices obtained from pricing services are reviewed and validated through an internal valuation committee price variance review, comparisons to internal pricing models, back testing to recent trades or monitoring of trading volumes.

Cash and Cash Equivalents

The carrying amounts for cash reflect the assets’ fair values. The fair value for cash equivalents is determined based on quoted market prices. These assets are classified as Level 1.

CLOs

Corporate loans: Corporate loan investments, which comprise the majority of consolidated CLO portfolio collateral, are senior secured corporate loans maturing at various dates between 2023 and 2030, paying interest at LIBOR, SOFR, EURIBOR or PRIME plus a spread of up to 10.0%. As of June 30, 2022 and December 31, 2021, the unpaid principal balance exceeded the fair value of the corporate loans by approximately $55 and $8, respectively. Less than 1.0% of the collateral assets were in default as of June 30, 2022 and December 31, 2021.

The fair values for corporate loans are determined using independent commercial pricing services. Fair value measurement based on pricing services may be classified in Level 2 or Level 3 depending on the type, complexity, observability and liquidity of the asset being measured. The inputs used by independent commercial pricing services, such as benchmark yields and credit risk adjustments, are those that are derived principally from or corroborated by observable market data. Hence, the fair value measurement of corporate loans priced by independent pricing service providers is classified within Level 2 of the fair value hierarchy. In addition, there are assets held with CLO portfolios that represent senior level debt of other third party CLOs. These CLO investments are classified within Level 3 of the fair value hierarchy. See description of fair value process for CLO notes below.

CLO notes: The CLO notes are backed by diversified loan portfolios consisting primarily of senior secured floating rate leveraged loans. Repayment risk is segmented into tranches with credit ratings of these tranches reflecting both the credit quality of underlying collateral as well as how much protection a given tranche is afforded by tranches that are subordinate to it. The most subordinated tranche bears the first loss and receives the residual payments, if any. The interest rates are generally variable rates based on LIBOR or EURIBOR plus a pre-defined spread, which varies from 1.0% for the more senior tranches to 8.8% for the more subordinated tranches. CLO notes mature in 2026 and 2034, and have a weighted average maturity of 12 years as of June 30, 2022. The investors in this debt are not affiliated with the Company and have no recourse to the general credit of the Company for this debt.
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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
The fair values of the CLO notes are measured based on the fair value of the CLO's corporate loans, as the Company uses the measurement alternative available under ASU 2014-13 and determined that the inputs for measuring financial assets are more observable. The CLO notes are classified within Level 2 of the fair value hierarchy, consistent with the classification of the majority of the CLO financial assets.

The Company reviews the detailed prices including comparisons to prior periods for reasonableness. The Company utilizes a formal pricing challenge process to request a review of any price during which time the vendor examines its assumptions and relevant market inputs to determine if a price change is warranted.

The following narrative indicates the sensitivity of inputs:
Default Rate: An increase (decrease) in the expected default rate would likely increase (decrease) the discount margin (increase risk premium) used to value the CLO investments and CLO notes and, as a result, would potentially decrease the value of the CLO investments and CLO notes.
Recovery Rate: A decrease (increase) in the expected recovery of defaulted assets would potentially decrease (increase) the valuation of CLO investments and CLO notes.
Prepayment Rate: A decrease (increase) in the expected rate of collateral prepayments would potentially decrease (increase) the valuation of CLO investments and CLO notes as the expected weighted average life ("WAL") would increase (decrease).
Discount Margin (spread over LIBOR): An increase (decrease) in the discount margin used to value the CLO investments and CLO notes would decrease (increase) the value of the CLO investments and CLO notes.

Private Equity Funds

As prescribed in ASC Topic 820, the unit of account for these investments is the interest in the investee fund. The Company owns an undivided interest in the fund portfolio and does not have the ability to dispose of individual assets and liabilities in the fund portfolio. Rather, the Company would be required to redeem or dispose of its entire interest in the investee fund. There is no current active market for interests in underlying private equity funds.

Valuation is generally based on the valuations provided by the fund's general partner or investment manager. The valuations typically reflect the fair value of the Company's capital account balance of each fund investment, including unrealized capital gains (losses), as reported in the financial statements of the respective investee fund as of the respective year end or the latest available date. In circumstances where fair values are not provided, the Company seeks to determine the fair value of fund investments based upon other information provided by the fund's general partner or investment manager or from other sources.

The fair value of securities received in-kind from fund investments is determined based on the restrictions around the securities.
Unrestricted, publicly traded securities are valued at the closing public market price on the reporting date;
Restricted, publicly traded securities may be valued at a discount from the closing public market price on the reporting date, depending on the circumstances; and
Privately held securities are valued by the directors/general partner of the investee fund, based on a variety of factors, including the price of recent transactions in the company's securities and the company's earnings, revenue and book value.

In the case of direct investments or co-investments in private equity companies, the Company initially recognizes investments at cost and subsequently adjusts investments to fair value. On a quarterly basis, the Company reviews the general partner or lead investor's valuation of the investee company, taking into account other available information, such as indications of a market value through subsequent issues of capital or transactions between third parties, performance of the investee company during the period and public, comparable companies' analysis, where appropriate.

Investments in these funds typically may not be fully redeemed at net asset value ("NAV") within 90 days because of inherent restriction on near term redemptions.

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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
As of June 30, 2022 and December 31, 2021, certain private equity funds maintained term loans and revolving lines of credit of $1,204 and $1,214, respectively. The term loans mature in three to five years, and the revolving lines of credit are eligible for renewal every three years; all loans bear interest at LIBOR/EURIBOR plus 150 - 215 bps. The lines of credit are used for funding transactions before capital is called from investors, as well as for the financing of certain purchases. As of June 30, 2022 and December 31, 2021, outstanding borrowings amount to $1,048 and $697, respectively. The borrowings are reflected in Liabilities related to consolidated investment entities - other liabilities on the Company's Condensed Consolidated Balance Sheets. The borrowings are carried at an amount equal to the unpaid principal balance.

The following table summarizes the fair value hierarchy levels of consolidated investment entities as of June 30, 2022:
Level 1Level 2Level 3NAVTotal
Assets
Cash and cash equivalents
$85 $ $ $ $85 
Corporate loans, at fair value using the fair value option 1,122   1,122 
Limited partnerships/corporations, at fair value   2,943 2,943 
Total assets, at fair value$85 $1,122 $ $2,943 $4,150 
Liabilities
CLO notes, at fair value using the fair value option
$ $1,019 $ $ $1,019 
Total liabilities, at fair value$ $1,019 $ $ $1,019 

The following table summarizes the fair value hierarchy levels of consolidated investment entities as of December 31, 2021:
Level 1Level 2Level 3NAVTotal
Assets
Cash and cash equivalents$171 $ $ $ $171 
Corporate loans, at fair value using the fair value option 1,111   1,111 
Limited partnerships/corporations, at fair value   2,469 2,469 
Total assets, at fair value$171 $1,111 $ $2,469 $3,751 
Liabilities
CLO notes, at fair value using the fair value option$ $880 $ $ $880 
Total liabilities, at fair value$ $880 $ $ $880 

Transfers of investments out of Level 3 and into Level 2 or Level 1, if any, are recorded as of the beginning of the period in which the transfer occurred. For the three and six months ended June 30, 2022 and 2021, there were no transfers in or out of Level 3 or transfers between Level 1 and Level 2.

Deconsolidation of Certain Investment Entities

Certain investment entities that have historically been consolidated in the financial statements may require deconsolidation as of the reporting period because: (a) such funds have been liquidated or dissolved; or (b) the Company is no longer deemed to be the primary beneficiary of the VIEs as it no longer has a controlling financial interest.

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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
The change in CLO’s consolidation status due to the close of the warehouse and the launch of the CLO do not meet the criteria described above as this transaction represents normal business operations of the entity. Refer to the CLO life cycle described above.

During the three and six months ended June 30, 2022 and 2021, the Company had no deconsolidations.

Nonconsolidated VIEs

The Company also holds variable interest in certain CLOs and LPs that are not consolidated as it has been determined that the Company is not the primary beneficiary.

CLOs

As of June 30, 2022 and December 31, 2021, the Company held $358 and $415 ownership interests, respectively, in unconsolidated CLOs, which also represents the Company's maximum exposure to loss.

LPs

As of June 30, 2022 and December 31, 2021, the Company held $1,848 and $1,739 ownership interests, respectively, in unconsolidated limited partnerships, which also represents the Company's maximum exposure to loss.

Securitizations

The Company invests in various tranches of securitization entities, including RMBS, CMBS and ABS. Through its investments, the Company is not obligated to provide any financial or other support to these entities. Each of the RMBS, CMBS and ABS entities are thinly capitalized by design and considered VIEs. The Company's involvement with these entities is limited to that of a passive investor. The Company has no unilateral right to appoint or remove the servicer, special servicer or investment manager, which are generally viewed to have the power to direct the activities that most significantly impact the securitization entities' economic performance, in any of these entities, nor does the Company function in any of these roles. The Company, through its investments or other arrangements, does not have the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the entity. Therefore, the Company is not the primary beneficiary and does not consolidate any of the RMBS, CMBS and ABS entities in which it holds investments. These investments are accounted for as investments available-for-sale as described in the Fair Value Measurements (excluding Consolidated Investment Entities) Note to these Condensed Consolidated Financial Statements and unrealized capital gains (losses) on these securities are recorded directly in AOCI, except for certain RMBS which are accounted for under the FVO whose change in fair value is reflected in Other net gains (losses) in the Condensed Consolidated Statements of Operations. The Company’s maximum exposure to loss on these structured investments is limited to the amount of its investment. Refer to the Investments (excluding Consolidated Investment Entities) Note to these Condensed Consolidated Financial Statements for details regarding the carrying amounts and classifications of these assets.

16.     Restructuring

Organizational Restructuring

Pursuant to the Company executing the Resolution MTA and the Individual Life Transaction, the Company sold five of its legal subsidiaries, SLD, SLDI, RRII, MUL and VAE to Resolution Life US, which is an insurance holding company newly formed by RLGH, a Bermuda-based limited partnership. The Company also executed an agreement with Cetera on June 9, 2021, where Cetera acquired the independent financial planning channel of VFA. Additionally, the Company transferred or ceased usage of a substantial number of administrative systems and is undertaking restructuring efforts to reduce stranded expenses associated with its Individual Life business and independent financial planning channel as well as its corporate and shared services functions. The Company anticipates incurring additional restructuring expenses directly and indirectly related to these dispositions beyond the second quarter of 2022, of $20 to $40 in addition to the $91 incurred during 2021 and $19 incurred for the six months ended June 30, 2022.

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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
The restructuring activities related to the Individual Life Transaction and the sale of the independent financial planning channel have resulted in recognition of severance and organizational transition costs that are reflected in both continuing operations and discontinued operations. Amounts reflected in continuing operations are reported in Operating expenses in the Condensed Consolidated Statements of Operations, but excluded from Adjusted operating earnings before income taxes. These expenses are classified as a component of Other adjustments to Income (loss) from continuing operations before income taxes and consequently are not included in the adjusted operating results of the Company's segments.

The summary below presents Organizational Restructuring expenses, pre-tax, by type of costs incurred, for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
Cumulative Amounts Incurred to Date(1)
2022202120222021
Severance benefits $2 $9 $2 $13 $86 
Organizational transition costs6 32 17 39 409 
Total restructuring expenses$8 $41 $19 $52 $495 
Continuing operations$8 $41 $19 $52 $430 
Discontinued operations$ $ $ $ $65 
(1) Includes expenses incurred during 2017-2022.

The following table presents the accrued liability associated with Organizational Restructuring expenses as of June 30, 2022:
Severance BenefitsOrganizational Transition CostsTotal
Accrued liability as of January 1, 2022$30 $22 $52 
Provision2 17 19 
Payments(6)(30)(36)
Accrued liability as of June 30, 2022$26 $9 $35 

17.    Segments

On January 4, 2021, the Company completed a series of transactions pursuant to the Resolution MTA entered into on December
18, 2019 with Resolution Life US to sell several of its subsidiaries and the related Individual Life and fixed and variable annuities businesses within these subsidiaries. See the Business Held for Sale and Discontinued Operations Note to these Condensed Consolidated Financial Statements.

On March 15, 2021, the Company announced several updates to our operating model and leadership team. In conjunction with those updates, the Retirement and Employee Benefits segments were renamed to Wealth Solutions and Health Solutions, respectively. The Company will continue to provide its principal products and services through three segments: Wealth Solutions, Health Solutions and Investment Management.

Measurement

Adjusted operating earnings before income taxes is a measure used by management to evaluate segment performance. The Company believes that Adjusted operating earnings before income taxes provides a meaningful measure of its business and segment performances and enhances the understanding of the Company’s financial results by focusing on the operating performance and trends of the underlying business segments and excluding items that tend to be highly variable from period to period based on capital market conditions and/or other factors. The Company uses the same accounting policies and procedures to measure segment Adjusted operating earnings before income taxes as it does for the directly comparable U.S. GAAP measure Income (loss) from continuing operations before income taxes. Adjusted operating earnings before income taxes does not replace Income (loss) from continuing operations before income taxes as the U.S. GAAP measure of the Company’s consolidated results of operations. Therefore, the Company believes that it is useful to evaluate both Income (loss) from
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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
continuing operations before income taxes and Adjusted operating earnings before income taxes when reviewing the Company’s financial and operating performance. Each segment’s Adjusted operating earnings before income taxes is calculated by adjusting Income (loss) from continuing operations before income taxes for the following items:
Net investment gains (losses), net of related amortization of DAC, VOBA, sales inducements and unearned revenue, which are significantly influenced by economic and market conditions, including interest rates and credit spreads, and are not indicative of normal operations. Net investment gains (losses) include gains (losses) on the sale of securities, impairments, changes in the fair value of investments using the FVO unrelated to the implied loan-backed security income recognition for certain mortgage-backed obligations and changes in the fair value of derivative instruments, excluding realized gains (losses) associated with swap settlements and accrued interest;
Net guaranteed benefit gains (losses), which are significantly influenced by economic and market conditions and are not indicative of normal operations, include changes in the fair value of derivatives related to guaranteed benefits, net of related reserve increases (decreases) and net of related amortization of DAC, VOBA and sales inducements, less the estimated cost of these benefits. The estimated cost, which is reflected in Adjusted operating results, reflects the expected cost of these benefits if markets perform in line with the Company's long-term expectations and includes the cost of hedging. Other derivative and reserve changes related to guaranteed benefits are excluded from adjusted operating earnings, including the impacts related to changes in the Company's nonperformance spread;
Income (loss) related to businesses exited or to be exited through reinsurance or divestment, which includes gains and (losses) associated with transactions to exit blocks of business within continuing operations (including net investment gains (losses) on securities sold and expenses directly related to these transactions) and residual run-off activity (including an insignificant number of Individual Life, and non-Wealth Solution annuities policies that were not part of the divested businesses). Excluding this activity, which also includes amortization of intangible assets related to businesses exited or to be exited, better reveals trends in the Company's core business and more closely aligns Adjusted operating earnings before income taxes with how the Company manages its segments;
Income (loss) attributable to noncontrolling interest, which represents the interest of shareholders, other than those of the Company, in consolidated entities. Income (loss) attributable to noncontrolling interest represents such shareholders' interests in the gains and (losses) of those entities, or the attribution of results from consolidated VIEs or VOEs to which the Company is not economically entitled;
Dividend payments made to preferred shareholders are included as reductions to reflect the Adjusted operating earnings that is available to common shareholders;
Income (loss) related to early extinguishment of debt, which includes losses incurred as a result of transactions where the Company repurchases outstanding principal amounts of debt; these losses are excluded from Adjusted operating earnings before income taxes since the outcome of decisions to restructure debt are not indicative of normal operations;
Impairment of goodwill, value of management contract rights and value of customer relationships acquired, which includes losses as a result of impairment analysis; these represent losses related to infrequent events and do not reflect normal, cash-settled expenses;
Immediate recognition of net actuarial gains (losses) related to the Company's pension and other postretirement benefit obligations and gains (losses) from plan amendments and curtailments, which includes actuarial gains and losses as a result of differences between actual and expected experience on pension plan assets or projected benefit obligation during a given period. The Company immediately recognizes actuarial gains and (losses) related to pension and other postretirement benefit obligations and gains and losses from plan adjustments and curtailments. These amounts do not reflect normal, cash-settled expenses and are not indicative of current Operating expense fundamentals; and
Other items not indicative of normal operations or performance of the Company's segments or related to events such as
capital or organizational restructurings undertaken to achieve long-term economic benefits, including certain costs related to debt and equity offerings, acquisition / merger integration expenses, severance and other expenses associated with such activities, and expenses attributable to vacant real estate. These items vary widely in timing, scope and frequency between periods as well as between companies to which the Company is compared. Accordingly, the Company adjusts for these items as management believes that these items distort the ability to make a meaningful evaluation of the current and future performance of the Company's segments.

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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
The summary below reconciles Adjusted operating earnings before income taxes for the segments to Income (loss) from continuing operations before income taxes for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Income (loss) from continuing operations before income taxes
$153 $1,028 $244 $2,066 
Less Adjustments:
Net investment gains (losses) and related charges and adjustments
(52)29 (139)67 
Net guaranteed benefit gains (losses) and related charges and adjustments3 (5)(19)5 
Income (loss) related to businesses exited or to be exited through reinsurance or divestment(50)247 (97)971 
Income (loss) attributable to noncontrolling interest
75 447 118 447 
Income (loss) related to early extinguishment of debt1  (4)(10)
Immediate recognition of net actuarial gains (losses) related to pension and other post-employment benefit obligations and gains (losses) from plan amendments and curtailments
  4  
Dividend payments made to preferred shareholders4 4 18 18 
Other adjustments(51)(46)(68)(57)
Total adjustments to income (loss) from continuing operations
(70)675 (188)1,441 
Adjusted operating earnings before income taxes by segment:
Wealth Solutions$186 $295 $391 $550 
Health Solutions47 63 68 100 
Investment Management40 66 79 118 
Corporate(49)(71)(107)(142)
Total$223 $353 $431 $626 

Adjusted operating revenues is a measure of the Company's segment revenues. Each segment's Operating revenues are calculated by adjusting Total revenues to exclude the following items:
Net investment gains (losses) and related charges and adjustments, which are significantly influenced by economic and market conditions, including interest rates and credit spreads and are not indicative of normal operations. Net investment gains (losses) include gains (losses) on the sale of securities, impairments, changes in the fair value of investments using the FVO unrelated to the implied loan-backed security income recognition for certain mortgage-backed obligations and changes in the fair value of derivative instruments, excluding realized gains (losses) associated with swap settlements and accrued interest. These are net of related amortization of unearned revenue;
Gains (losses) on changes in fair value of derivatives related to guaranteed benefits, which is significantly influenced by economic and market conditions and not indicative of normal operations, includes changes in the fair value of derivatives related to guaranteed benefits, less the estimated cost of these benefits. The estimated cost, which is reflected in Adjusted operating revenues, reflects the expected cost of these benefits if markets perform in line with the Company's long-term expectations and includes the cost of hedging. Other derivative and reserve changes related to guaranteed benefits are excluded from Adjusted operating revenues, including the impacts related to changes in the Company's nonperformance spread;
Revenues related to businesses exited or to be exited through reinsurance or divestment, which includes revenues associated with transactions to exit blocks of business within continuing operations (including net investment gains (losses) on securities sold related to these transactions) and residual run-off activity (including an insignificant number of Individual Life, and non-Wealth Solution annuities policies that were not part of the divested businesses). Excluding
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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
this activity better reveals trends in the Company's core business and more closely aligns Adjusted operating revenues with how the Company manages its segments;
Revenues attributable to noncontrolling interest, which represents the interests of shareholders, other than the Company, in consolidated entities. Revenues attributable to noncontrolling interest represents such shareholders' interests in the gains and losses of those entities, or the attribution of results from consolidated VIEs or VOEs to which the Company is not economically entitled; and
Other adjustments to Total revenues primarily reflect fee income earned by the Company's broker-dealers for sales of non-proprietary products, which are reflected net of commission expense in the Company's segments’ operating revenues, other items where the income is passed on to third parties and the elimination of intercompany investment expenses included in Adjusted operating revenues.

The summary below reconciles Adjusted operating revenues for the segments to Total revenues for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Total revenues$1,519 $2,503 $3,033 $546 
Adjustments:
Net investment gains (losses) and related charges and adjustments(60)(71)(157)(39)
Gains (losses) on change in fair value of derivatives related to guaranteed benefits
3 (5)(19)5 
Revenues related to businesses exited or to be exited through reinsurance or divestment(58)296 (104)(3,413)
Revenues attributable to noncontrolling interest93 464 142 470 
Other adjustments8 205 36 315 
Total adjustments to revenues$(14)$889 $(102)$(2,663)
Adjusted operating revenues by segment:
Wealth Solutions$706 $807 $1,460 $1,589 
Health Solutions640 591 1,287 1,190 
Investment Management171 193 349 382 
Corporate17 24 39 48 
Total $1,534 $1,614 $3,135 $3,209 

Other Segment Information

The Investment Management segment revenues include the following intersegment revenues, primarily consisting of asset-based management and administration fees for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Investment Management intersegment revenues$23 $22 $45 $45 

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Voya Financial, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
The summary below presents Total assets for the Company’s segments as of the dates indicated:
June 30, 2022December 31, 2021
Wealth Solutions$115,202 $137,544 
Health Solutions2,901 3,002 
Investment Management970 1,226 
Corporate24,595 26,025 
Total assets, before consolidation(1)
143,668 167,797 
Consolidation of investment entities3,852 3,465 
Total assets
$147,520 $171,262 
(1) Total assets, before consolidation includes the Company's direct investments in CIEs prior to consolidation, which are accounted for using the equity method or fair value option.
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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Dollar amounts in millions, unless otherwise stated)

For the purposes of the discussion in this Quarterly Report on Form 10-Q, the term Voya Financial, Inc. refers to Voya Financial, Inc. and the terms “Company,” “we,” “our,” and “us” refer to Voya Financial, Inc. and its subsidiaries.

The following discussion and analysis presents a review of our consolidated results of operations for the three and six months ended June 30, 2022 and 2021 and financial condition as of June 30, 2022 and December 31, 2021. This item should be read in its entirety and in conjunction with the Condensed Consolidated Financial Statements and related notes contained in Part I, Item 1. of this Quarterly Report on Form 10-Q, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section contained in our Annual Report on Form 10-K for the year ended December 31, 2021 ("Annual Report on Form 10-K").

In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Actual results may differ materially from those discussed in the forward-looking statements as a result of various factors. See the Note Concerning Forward-Looking Statements.

Overview

We provide our principal products and services through three segments: Wealth Solutions, Health Solutions and Investment Management. Corporate includes activities not directly related to our segments and certain run-off activities that are not meaningful to our business strategy.

On June 9, 2021, we completed the sale of the independent financial planning channel of Voya Financial Advisors (“VFA”) to Cetera Financial Group, Inc. (“Cetera”), one of the nation's largest networks of independently managed broker-dealers. In connection with this transaction, we transferred more than 800 independent financial professionals serving retail customers with approximately $38 billion in assets under advisement to Cetera, while retaining approximately 500 field and phone-based financial professionals who support our Wealth Solutions business.

On July 25, 2022, the Company completed a series of transactions pursuant to a Combination Agreement dated June 13, 2022 (the “Agreement”) with Voya Investment Management LLC, a Delaware limited liability company and our indirect subsidiary (“Voya IM”), Allianz SE, a stock corporation organized and existing under the laws of the European Union and the Federal Republic of Germany (“Allianz”), Allianz Global Investors U.S. LLC, a Delaware limited liability company and an indirect subsidiary of Allianz (“AGI U.S.”), and VIM Holdings LLC, a newly formed Delaware limited liability company (“Newco”), pursuant to which the parties combined Voya IM with assets and teams comprising specified transferred strategies managed by AGI U.S. For further details, refer to the Business, Basis of Presentation and Significant Accounting Policies Note to the Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

On August 1, 2022, Voya Investment Management Alternative Assets, LLC (“VIMAA”), one of our indirect subsidiaries, entered into a sales and purchase agreement (“SPA”) with Czech Management GP, LLC, a Delaware limited liability company, Czech Holdings, LLC, a Delaware limited liability company whereby VIMAA will acquire all of the issued and outstanding equity interests of Czech Asset Management, L.P., a Delaware limited partnership, a private credit asset manager dedicated to the U.S. middle market. The acquisition, which is expected to close for cash consideration in the fourth quarter of 2022, will expand VIMAA’s private and leveraged credit business and is subject to conditions as defined in the SPA.

Discontinued Operations

The Individual Life Transaction

On January 4, 2021, we completed a series of transactions pursuant to a Master Transaction Agreement (the “Resolution MTA”) entered into on December 18, 2019, with Resolution Life U.S. Holdings Inc., a Delaware corporation (“Resolution Life US”), pursuant to which Resolution Life US acquired Security Life of Denver Company ("SLD"), Security Life of Denver International Limited ("SLDI") and Roaring River II, Inc. ("RRII") including several subsidiaries of SLD. We determined that the entities disposed of met the criteria to be classified as discontinued operations and that the sale represented a strategic shift that had a major effect on the Company’s operations. Income (loss) from discontinued operations, net of tax, for the six months ended June 30, 2021 included a reduction to loss on sale, net of tax of $8 associated with the transaction. For more information
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related to this transaction, refer to the Discontinued Operations Note to the Consolidated Financial Statements included in Part II, Item 8 of the Annual Report on form 10-K.

Trends and Uncertainties

We describe known material trends and uncertainties that might affect our business in our Annual Report on Form 10-K for the year ended December 31, 2021, under the caption "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Trends and Uncertainties", and in other sections of that document, including "Risk Factors". In addition, we describe below in this Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") more recently developing known trends and uncertainties that we believe may materially affect our future liquidity, financial condition or results of operations. All statements in this section, other than statements of historical fact, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. For a discussion of factors that could cause actual results, performance, or events to differ from those discussed in any forward-looking statement, including in a material manner, see “Note Concerning Forward-Looking Statements” in this Quarterly Report on Form 10-Q.

COVID-19 and its Effect on the Global Economy

COVID-19, the disease caused by the novel coronavirus, has had a significant adverse effect on the global economy since March of 2020. Even though the pace of vaccinations has increased in many countries, including the United States, the disease continues to spread throughout the world. The persistence of new infections, including the introduction of new variants, has slowed the re-opening of the U.S. economy and, even in regions where restrictions have largely been lifted, economic activity has been slow to recover. In addition, while the ability to impose federal vaccine mandates have been curtailed by the U.S. Supreme Court, we continue to be subject to various state and local vaccine mandates that would require at least a portion of our U.S. employees to be vaccinated, which could potentially impact our work force. Longer-term, the economic outlook is uncertain, but may depend in significant part on progress with respect to effective therapies to treat COVID-19 or the approval of additional vaccines and the pace at which they are administered globally.

Effect on Voya Financial - Financial Condition, Capital and Liquidity

Because both public health and economic circumstances are changing so rapidly at present, it is impossible to predict how COVID-19 will affect Voya Financial’s future financial condition. Absent a further significant and prolonged market shock, however, we do not anticipate a material effect on our balance sheet, statutory capital, or liquidity. Our capital levels remain strong and significantly above our targets. As of June 30, 2022, our estimated combined RBC ratio, with adjustments for certain intercompany transactions, was 426%, above our 375% target.

During the six months ended June 30, 2022, we completed repurchases of approximately $700 million of our common shares, including initial delivery of shares on a share repurchase agreement entered into with a third-party financial institution that will settle no later than the end of the third quarter 2022. We do not anticipate any reduction in our common shareholder dividend and continue to monitor the dividends-paying capacity of our insurance subsidiaries. We have distributed $1.2 billion in 2022 from our insurance subsidiaries.

Effect on Voya Financial - Results of Operations

Predicting with accuracy the consequences of COVID-19 on our results of operations is impossible. To date, the most significant effects of adverse economic conditions have been on our fee-based income, with net investment income experiencing milder effects. Underwriting income, principally affected by increases to mortality and morbidity due to the disease, has also been negatively affected.

Wealth Solutions

In Wealth Solutions, the effects of COVID-19 have become less distinguishable as other geopolitical developments have driven uncertainty in the macroeconomic environment. Ongoing equity market volatility and declines drive variability in AUM levels and associated fee-based margin. Higher interest rate levels have provided and may continue to provide some offsetting revenue lift on our general account fixed products. On a prospective basis, general economic uncertainty due to COVID-19, combined with other factors and events, could serve to negatively impact sales and flows into Wealth Solutions products.

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Health Solutions

In Health Solutions, the effects from COVID-19 have been seen primarily in increased mortality claims on group life policies. We have not seen a significant increase in medical stop loss claims.

We expect mortality claims in group life to be elevated in 2022 due to COVID-19 related deaths, with the magnitude of such claims dependent on mortality rates from the disease. We currently estimate that, for every 10,000 incremental deaths in the United States due to COVID-19, we would see between $2 to $3 million of additional claims. Experience to date is consistent with this expectation.

Investment Management

The lingering effects of COVID-19 combined with geopolitical uncertainty are driving higher inflation resulting in equity market volatility and higher interest rates. In Investment Management, this has resulted in lower AUM levels in both equity and fixed income assets with a corresponding reduction of fee-based margin. While investment capital has been revaluated higher over the last year, lingering economic uncertainty could result in investment capital results declining materially. The higher outflows seen with our retail business at the outset of the pandemic subsided in the prior year however retail outflows have increased in recent quarters due to market impacts. The pandemic has made generating new business leads more challenging, resulting in a reduction in sales meetings and activities that could drive a lower level of sales activity during the year. If the pandemic persists and the economy fails to grow, or declines from current levels, asset values could be negatively impacted resulting in lower management fee revenue and/or investment capital returns.

Interest Rate Environment

We believe the interest rate environment will continue to influence our business and financial performance in the future for several reasons, including the following:

Our general account investment portfolio, which was approximately $40.5 billion as of June 30, 2022, consists predominantly of fixed income investments. In prior years during the prolonged low interest rate environment, the yield we earned on new investments has been lower than the yields earned on maturing investments, which were generally purchased in environments where interest rates were higher than current levels. We currently anticipate that proceeds that are reinvested in fixed income investments during 2022 will earn an average yield near the prevailing portfolio yield. However, heightened market volatility implies greater uncertainly around the path of interest rates and the outlook for new money investments going forward. New purchase yields at current market levels would be near the yield of maturing assets. If interest rates were to continue to rise, we expect the yield on our new money investments would also rise and exceed the yield of maturing assets. In addition, movements in prevailing interest rates also influence the prices of fixed income investments that we sell on the secondary market rather than holding until maturity or repayment, with rising interest rates generally leading to lower prices in the secondary market, and falling interest rates generally leading to higher prices.
We actively manage our investment portfolio and offer competitive product rates in the market. Several of our products pay guaranteed minimum rates such as fixed accounts and a portion of the stable value accounts included within defined contribution retirement plans. We are required to pay these guaranteed minimum rates even if earnings on our investment portfolio decline, with the resulting investment margin compression negatively impacting earnings. In addition, we expect more policyholders to hold policies (lower lapses) with comparatively high guaranteed rates longer in a low interest rate environment. Conversely, a rise in average yield on our investment portfolio will positively impact earnings if the average interest rate we pay on our products does not rise correspondingly. Similarly, we expect policyholders may be less likely to hold policies (higher lapses) with existing guarantees as interest rates rise.

For additional information on the impact of the continued low interest rate environment, see Risk Factors - The level of interest rates may adversely affect our profitability, particularly in the event of a continuation of the current low interest rate environment or a period of rapidly increasing interest rates in Part I, Item 1A. of our Annual Report on Form 10-K. Also, for additional information on our sensitivity to interest rates, see Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A. of our Annual Report on Form 10-K.

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Stranded Costs

As a result of the Individual Life Transaction, the historical revenues and certain expenses of the divested businesses have been classified as discontinued operations. Historical revenues and certain expenses of the businesses that have been divested via reinsurance at closing of the Individual Life Transaction (including an insignificant amount of Individual Life and non-Wealth Solutions annuities that are not part of the transaction) are reported within continuing operations, but are excluded from adjusted operating earnings as businesses exited or to be exited through reinsurance or divestment. Expenses classified within discontinued operations and businesses exited or to be exited through reinsurance include only direct operating expenses incurred by these businesses and then only to the extent that the nature of such expenses was such that we ceased to incur such expenses upon the close of the Individual Life Transaction. Certain other direct costs of these businesses, including those which relate to activities for which we provide transitional services and for which we are reimbursed under transition services agreements (“TSAs”) are reported within continuing operations along with the associated revenues from the TSAs. Additionally, indirect costs, such as those related to corporate and shared service functions that were previously allocated to the businesses sold or divested via reinsurance, are reported within continuing operations. These costs ("Stranded Costs") and the associated revenues from the TSAs are reported within continuing operations in Corporate, since we do not believe they are representative of the future run-rate of revenues and expenses of the continuing operations of our business segments. We have implemented a cost reduction strategy to address Stranded Costs. Refer to Restructuring in the section below for more information on this program.

Restructuring

Organizational Restructuring

Pursuant to the Company executing the Resolution MTA and the Individual Life Transaction, the Company sold five of its legal subsidiaries, SLD, SLDI, RRII, MUL and VAE to Resolution Life US, which is an insurance holding company newly formed by RLGH, a Bermuda-based limited partnership. The Company also executed an agreement with Cetera on June 9, 2021, where Cetera acquired the independent financial planning channel of VFA. Additionally, the Company transferred or ceased usage of a substantial number of administrative systems and is undertaking restructuring efforts to reduce stranded expenses associated with its Individual Life business and independent financial planning channel as well as its corporate and shared services functions. The Company anticipates incurring additional restructuring expenses directly and indirectly related to these dispositions beyond the second quarter of 2022, of $20 to $40 in addition to the $91 incurred during 2021 and $19 incurred for the six months ended June 30, 2022.

See the Restructuring Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for information on the restructuring activities related to the Individual Life Transaction.

Environmental, Social and Governance (“ESG”)

We have a multi-faceted ESG strategy which encompasses corporate issuance and governance, product and solution development, and ESG advocacy. We report periodically on our ESG activities in accordance with Global Reporting Initiative (GRI) Standards.

Environmental
We work to minimize our environmental impact while engaging our various stakeholders on climate-related topics. In particular, through the reduction of waste consumption and greenhouse gas emissions, the reduction of energy use, and the purchase of renewable energy certificates and offsets to compensate for energy consumption.

Social
We focus on workplace diversity, talent development and retention, including through fostering a safe and supportive workplace. We have prioritized increasing our diverse representation across all employee levels, as well as continuing to sustain the gender and racial parity of our workforce.

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Governance
Our Board of directors consists of our Chairman and CEO and our CEO-Elect, together with 9 independent directors, including a lead independent director, each of whom is elected annually. Our Board also represents a diverse array of tenures, experiences and backgrounds, including gender parity.

Our management team aligns its priorities with the long-term interests of our shareholders through a requirement to own meaningful amounts of VOYA stock.

Operating Measures

In this MD&A, we discuss Adjusted operating earnings before income taxes and Adjusted operating revenues, each of which is a measure used by management to evaluate segment performance. For additional information on each measure, see Segments Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

AUM and AUA

The following table presents AUM and AUA as of the dates indicated:
As of June 30,
($ in millions)20222021
AUM and AUA:
Wealth Solutions$466,139 $527,835 
Health Solutions1,996 1,905 
Investment Management289,710 315,331 
Eliminations/Other(113,475)(123,906)
Total AUM and AUA(1)
$644,370 $721,165 
AUM350,242 386,696 
AUA294,129 334,469 
Total AUM and AUA(1)
$644,370 $721,165 
(1) Includes AUM and AUA related to the divested businesses, for which a substantial portion of the assets continue to be managed by our Investment Management segment.

Terminology Definitions

Net gains (losses), net investment gains (losses) and related charges and adjustments, and Net guaranteed benefit gains (losses) and related charges and adjustments include changes in the fair value of derivatives. Increases in the fair value of derivative assets or decreases in the fair value of derivative liabilities result in "gains." Decreases in the fair value of derivative assets or increases in the fair value of derivative liabilities result in "losses."

In addition, we have certain products that contain guarantees that are embedded derivatives related to guaranteed benefits and index-crediting features, while other products contain such guarantees that are considered derivatives (collectively "guaranteed benefit derivatives").

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Results of Operations - Company Condensed Consolidated

The following table presents summary condensed consolidated financial information for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
($ in millions)20222021Change20222021Change
Revenues:
Net investment income$581 $656 $(75)$1,211 $1,370 $(159)
Fee income411 436 (25)844 894 (50)
Premiums595 516 79 1,208 (4,471)5,679 
Net gains (losses)(227)(37)(190)(512)1,705 (2,217)
Other revenue44 374 (330)84 484 (400)
Income (loss) related to consolidated investment entities115 558 (443)198 564 (366)
Total revenues1,519 2,503 (984)3,033 546 2,487 
Benefits and expenses:
Interest credited and other benefits to contract owners/policyholders643 686 (43)1,308 (3,504)4,812 
Operating expenses605 706 (101)1,237 1,308 (71)
Net amortization of Deferred policy acquisition costs and Value of business acquired (1)
67 26 41 147 565 (418)
Interest expense33 39 (6)73 88 (15)
Operating expenses related to consolidated investment entities18 18 — 24 23 
Total benefits and expenses1,366 1,475 (109)2,789 (1,520)4,309 
Income (loss) from continuing operations before income taxes153 1,028 (875)244 2,066 (1,822)
Income tax expense (benefit)10 112 (102)17 64 (47)
Income (loss) from continuing operations143 916 (773)227 2,002 (1,775)
Income (loss) from discontinued operations, net of tax— (6)— (8)
Net Income (loss)143 910 (767)227 2,010 (1,783)
Less: Net income (loss) attributable to noncontrolling interest75 447 (372)118 447 (329)
Less: Preferred stock dividends— 18 18 — 
Net income (loss) available to our common shareholders$64 $459 $(395)$91 $1,545 $(1,454)
(1) Refer to DAC/VOBA and Other Intangibles Unlocking in Part I, Item 2. of this Quarterly Report on Form 10-Q for further detail.

For additional information on reconciliations of Income (loss) from continuing operations to Adjusted operating earnings before income taxes and Total revenues to Adjusted operating revenues, and their relative contributions of each segment, see Segments Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.











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Consolidated - Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Total Revenues

Total revenues decreased $984 million from $2,503 million to $1,519 million. The following items contributed to the overall decrease.

Net investment income decreased $75 million from $656 million to $581 million primarily due to:

lower alternative investment and prepayment fee income in the current period primarily driven by the impact of equity market performance.

Fee income decreased $25 million from $436 million to $411 million primarily due to:

lower fee income in Wealth Solutions driven by a lower earned rate.

Premiums increased $79 million from $516 million to $595 million primarily due to:

higher premiums driven by growth across all blocks of business in Health Solutions.

Net gains (losses) increased $190 million from a loss of $37 million to a loss of $227 million primarily due to:

a gain driven by the sale of our stake in a limited partnership interest in the prior period;
losses from market value changes associated with our reinsured businesses, which are fully offset by a corresponding amount in Interest credited and other benefits to contract owners/policyholders;
a favorable change in the allowance for losses on commercial mortgage loans in the prior period; and
higher unfavorable mark-to-market adjustments on securities subject to fair value option accounting due to interest rate movements.

The increase was partially offset by:

a favorable change in the fair value of guaranteed benefit derivatives excluding nonperformance risk as a result of interest rate movements.

Other revenue decreased $330 million from $374 million to $44 million primarily due to:

a net gain in the prior period related to the sale of the independent financial planning channel of VFA;
lower revenues driven by the sale of the independent financial planning channel of VFA during the prior period; and
lower revenue resulting from transition services agreements.

Income (loss) related to consolidated investment entities decreased $443 million from $558 million to $115 million primarily due to:

equity market impacts to limited partnership valuations and updating the methodology used in calculating non-controlling interest accruals in the first quarter.

The decrease was partially offset by:

increase in investments in limited partnerships.


Total Benefits and Expenses

Total benefits and expenses decreased $109 million from $1,475 million to $1,366 million. The following items contributed to the overall decrease.

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Interest credited and other benefits to contract owners/policyholders decreased $43 million from $686 million to $643 million primarily due to:

market value impacts and changes in the reinsurance deposit assets associated with our reinsured businesses, which are fully offset by a corresponding amount in Net gains (losses).

The decrease was partially offset by:

higher claims in Group Life, primarily related to non-COVID-19 claims, and growth in Stop Loss and Voluntary blocks of business, partially offset by other reserve adjustments in Health Solutions; and
a litigation reserve within our Businesses exited in the current period.

Operating expenses decreased $101 million from $706 million to $605 million primarily due to:

lower expenses driven by the sale of the independent financial planning channel of VFA;
lower restructuring and other non-operating charges in the current period;
lower incentive compensation in Corporate due to stronger performance in the prior period;
lower stranded costs in the current period related to the Individual Life Transaction due to increased benefits from cost savings; and
lower compensation related expenses in our Investment Management segment primarily due to higher earnings in the prior period.

The decrease was partially offset by:

an impairment to the fair value of a wholly owned office building. See the Business, Basis of Presentation and Significant Accounting Policies Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further description;
an increase in growth-based expenses across the business; and
an unfavorable change in quarterly pension costs.

Net amortization of DAC/VOBA increased $41 million from $26 million to $67 million primarily due to:

unfavorable unlocking in business exited driven by interest rate movements; and
an unfavorable change in unlocking in Wealth Solutions primarily driven by separate account market performance in the current period.

The increase was partially offset by:

lower amortization related to our businesses exited..

Interest expense decreased $6 million from $39 million to $33 million primarily due to:

lower interest expense as a result of cumulative debt extinguishment; and
income related to debt extinguished at a discount during the current period.

Income Tax Expense

Income tax expense decreased $102 million from $112 million to $10 million primarily due to:

a decrease in income before income taxes.

The decrease was partially offset by:

a decrease in noncontrolling interest; and
a decrease in the dividends received deduction ("DRD").

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Loss from Discontinued Operations, net of Tax

Income (loss) from discontinued operations, net of tax decreased $6 million from $6 million to $0 million primarily due to:

a favorable adjustment to the Individual Life Transaction loss on sale, net of tax excluding costs to sell made in the prior period that did not recur in the current period.

Adjustments from Income (Loss) from Continuing Operations before Income Taxes to Adjusted Operating Earnings (Loss) before Income Taxes

For additional information on the reconciliation adjustments listed below, see the Segments Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

Net investment gains (losses) and related charges and adjustments changed $81 million from a gain of $29 million to a loss of $52 million primarily due to:
a gain driven by the sale of our stake in a limited partnership interest in the prior period;
a favorable change in the allowance for losses on commercial mortgage loans in the prior period; and
higher unfavorable mark-to-market adjustments on securities subject to fair value option accounting due to interest rate movements.

The change was partially offset by:

favorable changes in derivative valuations due to interest rate movements.

Net guaranteed benefit gains (losses) and related charges and adjustments changed $8 million from a loss of $5 million to a gain of $3 million primarily due to:

favorable changes in derivative valuations due to interest rate movements.

Income (loss) related to businesses exited or to be exited through reinsurance or divestment changed $297 million from a gain of $247 million to a loss of $50 million primarily due to:

A gain in the prior period related to the sale of the independent financial planning channel of VFA net of transaction-related costs to sell;
unfavorable unlocking in business exited driven by interest rate movements; and
a litigation reserve in the current period.

The change was partially offset by:

lower amortization related to our businesses exited.

Income (loss) related to early extinguishment of debt increased $1 million from $0 million to income of $1 million primarily due to:

debt extinguished at a discount during the current period.

Other adjustments to operating earnings increased $5 million from a loss of $46 million to a loss of $51 million primarily due to:
an impairment to the fair value of a wholly owned office building.

The increase was partially offset by:

higher costs recorded in the prior period related to restructuring. See the Restructuring Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further description.

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Consolidated - Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Total Revenues

Total revenues increased $2,487 million from $546 million to $3,033 million. The following items contributed to the overall increase.

Total Revenues

Net investment income decreased $159 million from $1,370 million to $1,211 million primarily due to:

lower alternative investment and prepayment fee income in the current period primarily driven by the impact of equity market performance; and
lower investment income on fixed maturity securities as yields on new investments are lower than the yields earned on the involuntary asset turnover.

Fee income decreased $50 million from $894 million to $844 million primarily due to:

lower fee income in Wealth Solutions driven by a lower earned rate; and
amortization of unearned revenue in the prior period driven by the realized gains on the transfer of assets to a comfort trust pursuant to reinsurance agreements entered into concurrent with the close of the Individual Life Transaction.

The decrease was partially offset by:

an increase in average separate account, institutional/mutual fund and external client AUM in Wealth Solutions and Investment Management driven by higher average equity markets and positive net flows.

Premiums increased $5,679 million from $(4,471) million to $1,208 million primarily due to:

the close of the Individual Life Transaction in the prior period, at which point RLI, VRIAC, and RLNY ceded substantially all of their Individual Life and Non-Wealth Solution Annuities businesses to SLD, which are fully offset by a corresponding amount in Interest credited and other benefits to contract owners/policyholders; and
higher premiums driven by growth across all blocks of business in our Health Solutions segment.

Net gains (losses) changed $2,217 million from a gain of $1,705 million to a loss of $512 million primarily due to:

higher realized gains in the prior period due to the transfer of assets to a comfort trust pursuant to reinsurance agreements entered into concurrent with the close of the Individual Life Transaction;
a gain driven by the sale of our stake in a limited partnership interest in the prior period;
losses from market value changes associated with our reinsured businesses, which are fully offset by a corresponding amount in Interest credited and other benefits to contract owners/policyholders;
higher impairments primarily related to CECL in the current period and a favorable change in the allowance for losses on commercial mortgage loans in the prior period;
higher unfavorable mark-to-market adjustments on securities subject to fair value option accounting due to interest rate movements; and
an unfavorable change in the fair value of guaranteed benefit derivatives excluding nonperformance risk as a result of interest rate movements.

Other revenue decreased $400 million from $484 million to $84 million primarily due to:

a net gain in the prior period related to the sale of the independent financial planning channel of VFA;
lower revenues driven by the sale of the independent financial planning channel of VFA during the prior period; and
lower revenue resulting from transition services agreements.

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Income (loss) related to consolidated investment entities decreased $366 million from $564 million to $198 million primarily due to:

equity market impacts to limited partnership valuations.

The decrease was partially offset by:

increase in investments in limited partnerships.

Total Benefits and Expenses

Total benefits and expenses increased $4,309 million from $(1,520) million to $2,789 million. The following items contributed to the overall increase.

Interest credited and other benefits to contract owners/policyholders increased $4,812 million from $(3,504) million to $1,308 million primarily due to:

the close of the Individual Life Transaction in the prior period, at which point, RLI, VRIAC, and RLNY ceded substantially all of their Individual Life and Non-Wealth Solutions Annuities businesses to SLD, which are fully offset by a corresponding amount in Premiums;
higher claims in Group Life, primarily related to non-COVID-19 claims, and growth in Stop Loss and Voluntary blocks of business, partially offset by a lower Voluntary loss ratio and other reserve adjustments in Health Solutions; and
a litigation reserve in the current period

The increase was partially offset by:

amortization and loss recognition in the prior period driven by the realized gains on the transfer of assets to a comfort trust pursuant to reinsurance agreements entered into concurrent with the close of the Individual Life Transaction as well as other activities associated with the close which did not repeat; and
market value impacts and changes in the reinsurance deposit asset associated with business reinsured, which are fully offset by a corresponding amount in Net realized capital gains (losses).

Operating expenses decreased $71 million from $1,308 million to $1,237 million primarily due to:

lower expenses driven by the sale of the independent financial planning channel of VFA;
lower incentive compensation in Corporate due to stronger performance in the prior period;
lower restructuring and other non-operating charges in the current period;
lower stranded costs in the current period related to the Individual Life Transaction due to increased benefits from cost savings;
lower compensation related expenses in our Investment Management segment primarily due to higher earnings in the prior period; and
a favorable true-up to the fourth quarter 2021 pension actuarial gain in the current period.

The decrease was partially offset by:

a ceding commission paid in the prior period as part of the close of the Individual Life Transaction at which point RLI, VRIAC and RLNY ceded substantially all of the Individual Life and Non-Wealth Solution Annuities businesses to SLD;
an impairment to the fair value of a wholly owned office building. See the Business, Basis of Presentation and Significant Accounting Policies Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further description;
an increase in growth-based expenses across the business; and
an unfavorable change in quarterly pension costs.

Net amortization of DAC/VOBA decreased $418 million from $565 million to $147 million primarily due to:

amortization and loss recognition in the prior period driven by the realized gains on the transfer of assets to a comfort trust pursuant to reinsurance agreements entered into concurrent with the close of the close of the Individual Life Transaction; and
lower amortization related to our businesses exited.
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The decrease was partially offset by:

unfavorable unlocking in business exited driven by interest rate movements; and
an unfavorable change in unlocking in Wealth Solutions primarily driven by separate account market performance in the current period.

Interest expense decreased $15 million from $88 million to $73 million primarily due to:

lower interest expense as a result of cumulative debt extinguishment; and
lower loss related to early extinguishment of debt in the current period compared to the prior period.

Income Tax Expense

Income tax expense decreased $47 million from $64 million to $17 million primarily due to:

a decrease in income before income taxes.

The decrease was partially offset by:

the release of a stranded tax benefit in Other Comprehensive Income in 2021 that did not reoccur in 2022;
a decrease in noncontrolling interest; and
a decrease in the DRD.

Loss from Discontinued Operations, net of Tax

Income (loss) from discontinued operations, net of tax decreased $8 million from $8 million to $0 million primarily due to:

unfavorable adjustments to the Individual Life Transaction loss on sale, net of tax excluding costs to sell made in the prior period that did not recur in the current period.

Adjustments from Income (Loss) from Continuing Operations before Income Taxes to Adjusted Operating Earnings (Loss) before Income Taxes

For additional information on the reconciliation adjustments listed below, see the Segments Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

Net investment gains (losses) and related charges and adjustments changed $206 million from a gain of $67 million to a loss of $139 million primarily due to:

a gain driven by the sale of our stake in a limited partnership interest in the prior period;
higher impairments primarily related to CECL in the current period and a favorable change in the allowance for losses on commercial mortgage loans in the prior year; and
higher unfavorable mark-to-market adjustments on securities subject to fair value option accounting due to interest rate movements.

The change was partially offset by:

favorable changes in derivative valuations due to interest rate movements.

Net guaranteed benefit gains (losses) and related charges and adjustments changed $24 million from a gain of $5 million to a loss of $19 million primarily due to:

unfavorable changes in derivatives valuations due to interest rate movements.

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Income (loss) related to businesses exited or to be exited through reinsurance or divestment changed $1,068 million from a gain of $971 million to a loss of $97 million primarily due to:

the close of the Individual Life Transaction in the prior period at which point the transfer of assets to a comfort trust pursuant to the reinsurance agreements resulted in realized gains which were partially offset by intangibles amortization, loss recognition and other activities which did not repeat;
a gain in the prior period related to the sale of the independent financial planning channel of VFA net of transaction-related costs to sell;
unfavorable unlocking in business exited driven by interest rate movements; and
a litigation reserve in the current period.

The change was partially offset by:

lower amortization related to our businesses exited.

Immediate recognition of net actuarial gains related to pension and other postretirement benefit obligations and gains from plan adjustments and curtailments increased $4 million from $0 million to $4 million primarily due to:

an adjustment to the gain recorded in the fourth quarter of 2021. For further details on the gain recorded in the fourth quarter of 2021, see Critical Accounting Judgments and Estimates - Employee Benefits Plans in Part II, Item 7. of our Annual Report on Form 10-K.

Income (loss) related to early extinguishment of debt decreased $6 million from a loss of $10 million to a loss of $4 million primarily due to :

lower premium paid to extinguish debt in the current period compared to the prior period.

Other adjustments to operating earnings increased $11 million from a loss of $57 million to a loss of $68 million primarily due to:

an impairment to the fair value of a wholly owned office building.

The increase was partially offset by:

higher costs recorded in the prior period related to restructuring. See the Restructuring Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further description.

Results of Operations - Segment by Segment

Adjusted operating earnings is the measure of segment profit or loss management uses to evaluate segment performance. Adjusted operating earnings should not be viewed as a substitute for GAAP pre-tax income. We believe the presentation of segment adjusted operating earnings as we measure it for management purposes enhances the understanding of our business by reflecting the underlying performance of our core operations and facilitating a more meaningful trend analysis. Refer to the Segments Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on the presentation of segment results and our definition of adjusted operating earnings.

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Wealth Solutions

The following table presents Adjusted operating earnings before income taxes of our Wealth Solutions segment for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
($ in millions)2022202120222021
Adjusted operating revenues:
Net investment income and net gains (losses)$446 $525 $931 $1,034 
Fee income239 262 495 514 
Other revenue21 20 34 41 
Total adjusted operating revenues706 807 1,460 1,589 
Operating benefits and expenses:
Interest credited and other benefits to contract owners/policyholders222 223 441 440 
Operating expenses265 277 551 560 
Net amortization of DAC/VOBA33 12 77 41 
Total operating benefits and expenses520 512 1,069 1,040 
Adjusted operating earnings before income taxes (1)
$186 $295 $391 $550 
(1) See DAC/VOBA and Other Intangibles Unlocking in Part I, Item 2. of this Quarterly Report on Form 10-Q for further information.

The following tables present Total Client Assets, which comprise total AUM and AUA, for our Wealth Solutions segment as of the dates indicated:
As of June 30,
($ in millions)20222021
Full Service$158,956 $180,515 
Recordkeeping244,499 276,829 
Total Defined Contribution403,454 457,343 
Investment-only Stable Value39,622 41,901 
Retail Client and Other Assets23,063 28,591 
Total Client Assets$466,139 $527,835 

As of June 30,
($ in millions)20222021
Fee-based$369,705 $424,664 
Spread-based34,220 33,212 
Investment-only Stable Value39,622 41,901 
Retail Client Assets22,592 28,058 
Total Client Assets$466,139 $527,835 
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The following table presents Full Service, Recordkeeping, and Stable Value net flows for our Wealth Solutions segment for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
($ in millions)2022202120222021
Full Service - Corporate markets:
Deposits$3,473 $3,157 $7,707 $7,299 
Surrenders, benefits and product charges(2,798)(2,969)(6,421)(6,427)
Net flows674 188 1,286 871 
Full Service - Tax-exempt markets:
Deposits1,540 1,457 2,961 3,490 
Surrenders, benefits and product charges(1,215)(1,407)(2,800)(3,255)
Net flows326 50 160 235 
Total Full Service Net Flows$1,000 $238 $1,446 $1,106 
Recordkeeping and Stable Value:
Recordkeeping Net Flows$224 $(755)$(669)$2,770 
Investment-only Stable Value Net Flows$549 $(502)$1,694 $(658)

Wealth Solutions - Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Adjusted operating earnings before income taxes decreased $109 million from $295 million to $186 million primarily due to:

lower alternative asset income;
lower fee and other revenue primarily resulting from the sale of the Financial Planning Channel and a lower earned rate; and
an unfavorable change in DAC unlocking primarily due to equity market performance in the current year.

The decrease was partially offset by:

higher investment margin; and
lower expenses primarily driven by the impact of the Financial Planning Channel sale, partially offset by business growth.

Wealth Solutions - Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Adjusted operating earnings before income taxes decreased $159 million from $550 million to $391 million primarily due to:

lower alternative asset income;
lower fee and other revenue resulting from the sale of the Financial Planning Channel and a lower earned rate, partially offset by higher average equity markets; and
an unfavorable change in DAC unlocking primarily due to equity market performance in the current year.

The decrease was partially offset by:

higher investment margin; and
lower expenses primarily driven by the impact of the Financial Planning Channel sale, partially offset by business growth.

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Health Solutions

The following table presents Adjusted operating earnings before income taxes of the Health Solutions segment for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
($ in millions)2022202120222021
Adjusted operating revenues:
Net investment income and net gains (losses)$35 $42 $74 $77 
Fee income19 15 38 31 
Premiums588 535 1,178 1,085 
Other revenue(2)(2)(3)(3)
Total adjusted operating revenues640 591 1,287 1,190 
Operating benefits and expenses:
Interest credited and other benefits to contract owners/policyholders445 403 921 841 
Operating expenses141 117 282 236 
Net amortization of DAC/VOBA16 13 
Total operating benefits and expenses594 527 1,219 1,090 
Adjusted operating earnings before income taxes$47 $63 $68 $100 

The following table presents sales, gross premiums and in-force for our Health Solutions segment for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
($ in millions)2022202120222021
Sales by Product Line:
Group life and Disability$14 $21 $100 $81 
Stop loss24 20 347 317 
Total group products38 41 447 398 
Voluntary (1)
20 29 124 110 
Total sales by product line$58 $70 $570 $508 
Total gross premiums and deposits$671 $602 $1,330 $1,209 
Group life and Disability$811 $749 $811 $749 
Stop loss1,231 1,191 1,231 1,191 
Voluntary (1)
681 550 681 550 
Total annualized in-force premiums$2,722 $2,490 $2,722 $2,490 
Loss Ratios:
Group life (interest adjusted)89.9 %88.2 %102.9 %94.5 %
Stop loss78.9 %78.2 %77.7 %76.9 %
Total Loss Ratio (2)
73.1 %71.6 %73.1 %71.6 %
(1) Includes Health Account Solutions products.
(2) Total Loss Ratio is presented on a trailing twelve month basis.

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Health Solutions - Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Adjusted Operating earnings before income taxes decreased $16 million from $63 million to $47 million primarily due to:

higher benefits incurred due to growth in business and non-COVID-19 Group Life impacts, partially offset by lower COVID-19 impacts and other reserve adjustments;
higher distribution expenses, commissions and amortization of intangibles driven by business growth; and
lower investment income primarily driven by lower alternative asset income.

The decrease was partially offset by:

higher premiums and fees driven by growth across all three lines of business.

Health Solutions - Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Adjusted Operating earnings before income taxes decreased $32 million from $100 million to $68 million primarily due to:

higher benefits incurred due to growth in business and non-COVID-19 Group Life impacts, partially offset by a lower Voluntary loss ratio and other reserve adjustments;
higher distribution expenses, commissions and amortization of intangibles driven by business growth; and
lower investment income primarily driven by alternative asset income.

The decrease was partially offset by:

higher premiums and fees driven by growth across all three lines of business.


Investment Management

The following table presents Adjusted operating earnings before income taxes of our Investment Management segment for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
($ in millions)2022202120222021
Adjusted operating revenues:
Net investment income and net gains (losses)$$27 $16 $55 
Fee income160 163 325 321 
Other revenue
Total adjusted operating revenues171 193 349 382 
Operating benefits and expenses:
Operating expenses131 127 271 264 
Total operating benefits and expenses131 127 271 264 
Adjusted operating earnings before income taxes
$40 $66 $79 $118 

Our Investment Management segment operating revenues include the following intersegment revenues, primarily consisting of asset-based management and administration fees.
Three Months Ended June 30,Six Months Ended June 30,
($ in millions)2022202120222021
Investment Management intersegment revenues$23 $22 $45 $45 
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The following table presents AUM and AUA for our Investment Management segment as of the dates indicated:
As of June 30,
($ in millions)20222021
External clients:
Institutional(1)
$136,596 $138,005 
Retail(1)
61,070 77,007 
Total external clients197,666 215,013 
General account38,686 38,425 
Total AUM(1)
236,352 253,438 
AUA(2)
53,359 61,893 
Total AUM and AUA(1)(2)
$289,710 $315,331 
(1) Includes assets associated with the divested businesses.
(2) Includes assets sourced by other segments and also reported as AUA or AUM by such other segments. Assets Under Advisement, presented in AUA, includes advisory assets, mutual fund, general account and stable value assets.

The following table presents net flows for our Investment Management segment for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Net flows:
Institutional$1,998 $440 $4,219 $312 
Retail(1,439)(191)(2,332)(443)
Divested businesses
(525)(710)(1,193)(1,505)
Total net flows$34 $(461)$694 $(1,636)

Investment Management - Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Adjusted operating earnings before income taxes decreased $26 million from $66 million to $40 million primarily due to:

lower investment capital returns primarily driven by higher overall market performance in the prior year; and
higher operating expenses primarily driven by growth, partially offset by lower variable compensation.

Investment Management - Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Adjusted operating earnings before income taxes decreased $39 million from $118 million to $79 million primarily due to:

lower investment capital returns primarily driven by higher overall market performance in the prior year; and
higher operating expenses primarily driven by growth, partially offset by lower variable compensation due to lower earnings.

The decrease was partially offset by:

higher fee and other revenue primarily driven by higher average equity markets and positive net flows.

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Corporate

The following table presents Adjusted operating earnings before income taxes of Corporate for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
($ in millions)2022202120222021
Adjusted operating revenues:
Net investment income and net gains (losses)$— $$$
Other revenue17 22 38 45 
Total adjusted operating revenues17 24 39 48 
Operating benefits and expenses:
Operating expenses(1)
26 49 54 89 
Interest expense(2)
40 45 92 101 
Total operating benefits and expenses66 95 146 190 
Adjusted operating earnings before income taxes$(49)$(71)$(107)$(142)
(1) Primarily includes stranded costs related to the divested businesses, expenses from corporate activities, and expenses not allocated to our segments.
(2) Includes dividend payments made to preferred shareholders.
Corporate - Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Adjusted operating earnings before income taxes improved $22 million from a loss of $71 million to a loss of $49 million primarily due to:

lower incentive compensation expense in the current period driven by lower adjusted operating earnings before taxes;
lower stranded costs related to the Individual Life transaction due to increased benefits from cost saving initiatives; and
lower interest expense driven by cumulative debt extinguishments.

The improvement was partially offset by:

lower pension benefit driven by pension plan asset de-risking; and
lower revenue resulting from transition services agreements associated with the Individual Life Transaction due to exited agreements since the prior period.

Corporate - Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Adjusted operating earnings before income taxes improved $35 million from a loss of $142 million to a loss of $107 million primarily due to:

lower incentive compensation expense in the current period driven by lower adjusted operating earnings before taxes;
lower stranded costs related to the Individual Life transaction due to increased benefits from cost saving initiatives; and
lower interest expense driven by cumulative debt extinguishments.

The improvement was partially offset by:

lower pension benefit driven by pension plan asset de-risking; and
lower revenue resulting from transition services agreements associated with the Individual Life Transaction due to exited agreements since the prior period.

Alternative Investment Income

Investment income on certain alternative investments can be volatile due to changes in market conditions. The following table presents the amount of investment income (loss) on certain alternative investments that is included in segment Adjusted operating earnings before income taxes and the average level of assets in each segment. These alternative investments are carried at fair value, which is estimated based on the net asset value ("NAV") of these funds.

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While investment income on these assets can be volatile, based on current plans, we expect to earn 9.0% on these assets over the long term.

The following table presents alternative investment income and average assets of alternative investments for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
($ in millions)2022202120222021
Wealth Solutions:
Alternative investment income$33 $122 $122 $229 
Average alternative investment1,634 1,366 1,584 1,246 
Health Solutions:
Alternative investment income14 12 22 
Average alternative investment162 152 166 119 
Investment Management:
Alternative investment income27 16 55 
Average alternative investment347 307 349 285 

DAC/VOBA and Other Intangibles Unlocking

Changes in Adjusted operating earnings before income taxes and Net income (loss) are influenced by increases and decreases in amortization of DAC, VOBA, deferred sales inducements ("DSI"), and unearned revenue ("URR"), collectively, "DAC/VOBA and other intangibles". Unlocking, described below, related to DAC, VOBA, DSI and URR, as well as amortization of net cost of reinsurance, are referred to as "DAC/VOBA and other intangibles unlocking"."

We amortize DAC/VOBA and other intangibles related to fixed and variable deferred annuity contracts over the estimated lives of the contracts in relation to the emergence of estimated gross profits. Assumptions as to mortality, persistency, interest crediting rates, returns associated with separate account performance, impact of hedge performance, expenses to administer the business and certain economic variables, such as inflation, are based on our experience and our overall short-term and long-term future expectations for returns available in the capital markets. At each valuation date, estimated gross profits are updated with actual gross profits and the assumptions underlying future estimated gross profits are evaluated for continued reasonableness. Adjustments to estimated gross profits require that amortization rates be revised retroactively to the date of the contract issuance, which is referred to as unlocking. As a result of this process, the cumulative balances of DAC/VOBA and other intangibles are adjusted with an offsetting benefit or charge to income to reflect changes in the period of the revision. An unlocking event that results in a benefit to income ("favorable unlocking") generally occurs as a result of actual experience or future expectations being favorable compared to previous estimates. Changes in DAC/VOBA and other intangibles due to contract changes or contract terminations higher than estimated are also included in "unlocking." At each valuation date, we evaluate these assumptions and, if actual experience or other evidence suggests that earlier assumptions should be revised, we adjust the reserve balance, with a related charge or credit to Policyholder benefits. These reserve adjustments are included in unlocking associated with all our segments. An unlocking event that results in a charge to income ("unfavorable unlocking") generally occurs as a result of actual experience or future expectations being unfavorable compared to previous estimates. As a result of unlocking, the amortization schedules for future periods are also adjusted.

The following table presents the amount of DAC/VOBA and other intangibles unlocking included in segment Adjusted operating earnings before income taxes for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
($ in millions)2022202120222021
Wealth Solutions$(4)$18 $(20)$21 
Total DAC/VOBA and other intangibles unlocking$(4)$18 $(20)$21 

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Liquidity and Capital Resources
Liquidity refers to our ability to access sufficient sources of cash to meet the requirements of our operating, investing and financing activities. Capital refers to our long-term financial resources available to support business operations and future growth. Our ability to generate and maintain sufficient liquidity and capital depends on the profitability of the businesses, timing of cash flows on investments and products, general economic conditions and access to the capital markets and the other sources of liquidity and capital described herein.

Consolidated Sources and Uses of Liquidity and Capital

Our principal available sources of liquidity are product charges, investment income, proceeds from the maturity and sale of investments, proceeds from debt issuance and borrowing facilities, equity securities issuance, repurchase agreements, contract deposits and securities lending. Primary uses of these funds are payments of policyholder benefits, commissions and operating expenses, interest credits, share repurchases, investment purchases and contract maturities, withdrawals and surrenders.

Parent Company Sources and Uses of Liquidity

Voya Financial, Inc. is largely dependent on cash flows from its operating subsidiaries to meet its obligations. The principal sources of funds available to Voya Financial, Inc. include dividends and returns of capital from its operating subsidiaries, as well as cash and short-term investments, and proceeds from debt issuances, borrowing facilities and equity securities issuances.

These sources of funds include the $500 million revolving credit sublimit of our Third Amended and Restated Credit Agreement and reciprocal borrowing facilities maintained with Voya Financial, Inc.'s subsidiaries as well as alternate sources of liquidity described below.

We estimate that our excess capital (which we define as the amount of capital and surplus in our insurance subsidiaries above our 375% RBC target, plus the amount of holding company liquidity above our $200 million target) as of June 30, 2022, was approximately $0.7 billion.

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Voya Financial, Inc.'s primary sources and uses of cash for the periods indicated are presented in the following table:
Six Months Ended June 30,
($ in millions)20222021
Beginning cash and cash equivalents balance$202 $212 
Sources:
Dividends and returns of capital from subsidiaries1,176 1,435 
Proceeds from Resolution sale— 572 
Amounts received from subsidiaries under tax sharing agreements, net33 — 
Sale of interest in wholly owned subsidiary— 80 
Settlement of amounts due from (to) subsidiaries and affiliates, net36 — 
Collateral received, net— 11 
Asset maturities and investment income, net25 32 
Derivatives, net— 20 
Other, net21 33 
Total sources1,291 2,183 
Uses:
Repurchase of Senior Notes— 76 
Premium paid and other fees related to debt extinguishment
Payment of interest expense58 64 
Capital provided to subsidiaries— 40 
Repayments of loans from subsidiaries, net of repayments (1)
60 671 
Debt repurchase214 — 
New issuances of loans to subsidiaries, net of repayments48 49 
Amounts paid to subsidiaries under tax sharing agreements, net— 275 
Payment of income taxes, net13 — 
Common stock acquired - Share repurchase750 392 
Share-based compensation39 41 
Dividends paid on preferred stock18 18 
Dividends paid on common stock41 40 
Collateral delivered, net— 
Derivatives, net39 — 
Total uses1,287 1,675 
Net increase in cash and cash equivalents508 
Ending cash and cash equivalents balance$206 $720 
(1) Reflects netting of Intercompany receivable from subsidiaries of $18 million in Q2 of 2021
Share Repurchase Program and Dividends to Common Shareholders

See the Shareholders' Equity Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for information relating to authorizations by the Board of Directors to repurchase our shares and amounts of common stock repurchased pursuant to such authorizations during the six months ended June 30, 2022. As of June 30, 2022, we were authorized to repurchase shares up to an aggregate purchase price of $271 million.

On April 28, 2022, the Board of Directors provided its most recent share repurchase authorization, increasing the aggregate amount of our common stock authorized for repurchase by $500 million. The share repurchase authorization expires on June 30, 2023 (unless extended), and does not obligate us to purchase any shares. The authorization for the share repurchase program may be terminated, increased or decreased by the Board of Directors at any time.


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The following table provides a summary of common dividends and repurchases of common shares for the periods indicated:
Six Months Ended June 30,
($ in millions)20222021
Dividends paid on common shares$41 $40 
Repurchases of common shares (at cost)700 753 
Total$741 $793 

Liquidity

We manage liquidity through access to substantial investment portfolios as well as a variety of other sources of liquidity including committed credit facilities, securities lending and repurchase agreements. Our asset-liability management ("ALM") process takes into account the expected maturity of investments and expected benefit payments as well as the specific nature and risk profile of the liabilities. As part of our liquidity management process, we model different scenarios to determine whether existing assets are adequate to meet projected cash flows.

Capitalization

The primary components of our capital structure consist of debt and equity securities. Our capital position is supported by cash flows within our operating subsidiaries, the availability of borrowed funds under liquidity facilities, and any additional capital we raise to invest in the growth of the business and for general corporate purposes. We manage our capital position based on a variety of factors including, but not limited to, our financial strength, the credit rating of Voya Financial, Inc. and of its insurance company subsidiaries and general macroeconomic conditions.

Noncontrolling interest in limited partnerships, a component of Shareholders' Equity on our Condensed Consolidated Balance Sheets, increased as a result of favorable market appreciation in limited partnership investments, net of contributions and distributions. See the Consolidated and Nonconsolidated Investment Entities Note to our Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for additional details over changes in noncontrolling interest during the year and impacting capitalization.

As of June 30, 2022, we had $1 million of short-term debt borrowings outstanding consisting entirely of the current portion of long-term debt.

The following table summarizes our borrowing activities for the six months ended June 30, 2022:
($ in millions)Beginning BalanceIssuanceMaturities and RepaymentOther ChangesEnding Balance
Total long-term debt$2,595 $— $(214)$$2,385 

See the Financing Agreements and Shareholders’ Equity Notes to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for additional details on changes in debt and equity during the year.


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Leverage Ratios

Our Leverage Ratios are a measure that we use to monitor the level of our debt relative to our capitalization. The following table presents our leverage ratios for the periods indicated:
June 30,December 31,
($ in millions)20222021
Financial Debt
Total financial debt$2,386 $2,596 
Other financial obligations(1)
282 300 
Total financial obligations2,668 2,896 
Equity
Preferred equity(2)
612 612 
Common equity, excluding AOCI4,867 5,541 
Total shareholders' equity, excluding AOCI5,479 6,153 
AOCI(963)2,100 
Total Voya Financial, Inc. shareholders' equity4,516 8,253 
Noncontrolling interest1,697 1,568 
Total shareholders' equity$6,213 $9,821 
Capital
Capitalization(3)
$6,902 $10,849 
Adjusted capitalization(4)
$8,881 $12,717 
Leverage Ratios
Debt-to-Capital(5)
34.6 %23.9 %
Financial Leverage(6)
36.9 %27.6 %
(1) Includes operating leases, capital leases, and unfunded pension plan after-tax.
(2) Includes preferred stock par value and additional paid-in-capital.
(3) Includes Total financial debt and Total Voya Financial, Inc. shareholders' equity.
(4) This measure is a Non-GAAP financial measure. Includes Total financial obligations and Total shareholders' equity.
(5) Total financial debt divided by Capitalization.
(6) This measure is a Non-GAAP financial measure. Total financial obligations and Preferred equity divided by Adjusted capitalization.

Our Financial Leverage Ratio increased 930 basis points from 27.6% at December 31, 2021 to 36.9% at June 30, 2022. This increase was primarily driven by a decrease in Adjusted capitalization, partially offset by debt extinguishment. The decrease in Adjusted capitalization was primarily due to a reduction in Accumulated other comprehensive income from the increase in interest rates and credit spreads and repurchases of common stock, partially offset by increases in Net income available to common shareholders and in Noncontrolling interest. For further details about the change in Noncontrolling interest, refer to the Consolidated and Nonconsolidated Investment Entities Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

Senior Unsecured Credit Facility

See the Financing Agreements Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for information on the senior unsecured credit facility.

Other Credit Facilities

We have historically used credit facilities to provide collateral for affiliated reinsurance transactions with captive insurance subsidiaries. These arrangements, which facilitated the financing of statutory reserve requirements, primarily related to our divested businesses.


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The following table summarizes our credit facilities as of June 30, 2022:
($ in millions)
Obligor / ApplicantBusiness SupportedSecured / UnsecuredCommitted / UncommittedExpirationCapacityUtilizationUnused Commitment
Voya Financial, Inc.OtherUnsecuredCommitted11/01/2024$500 $— $500 
Voya Financial, Inc.OtherUnsecuredCommitted04/07/2025200 163 37 
Total
$700 $163 $537 

Total fees associated with the credit facilities were immaterial for the six months ended June 30, 2022 and 2021.

Voya Financial, Inc. Credit Support of Subsidiaries

Voya Financial, Inc. provide guarantees to certain of our subsidiaries to support various business requirements:
Voya Financial, Inc. guarantees the obligations of Voya Holdings under the $13 million principal amount Equitable Notes maturing in 2027, and provides a back-to-back guarantee to ING Group in respect of its guarantee of $358 million combined principal amount of Aetna Notes.
Voya Financial, Inc. and Voya Holdings provide a guarantee of payment of obligations to certain subsidiaries under certain surplus notes held by those subsidiaries.

We did not recognize any asset or liability as of June 30, 2022 in relation to intercompany indemnifications, guarantees or support agreements. As of June 30, 2022, no guarantees existed in which we were required to currently perform under these arrangements.

Borrowings from Subsidiaries

We maintain revolving reciprocal loan agreements with a number of our life and non-life insurance subsidiaries that are used to fund short-term cash requirements that arise in the ordinary course of business. Under these agreements, either party may borrow up to the maximum allowable under the agreement for a term not more than 270 days. For life insurance subsidiaries, the amounts that either party may borrow under the agreement vary and are between 2% and 5% of the insurance subsidiary's statutory net admitted assets (excluding separate accounts) as of the previous year end depending on the state of domicile. As of June 30, 2022, the aggregate amount that may be borrowed or lent under agreements with life insurance subsidiaries was $1.3 billion. For non-life insurance subsidiaries, the maximum allowable under the agreement is based on the assets of the subsidiaries and their particular cash requirements. As of June 30, 2022, Voya Financial, Inc. had $71 million outstanding borrowings from subsidiaries and had loaned $171 million to its subsidiaries.

Ratings

Our access to funding and our related cost of borrowing, collateral requirements for derivative instruments and the attractiveness of certain of our products to customers are affected by our credit ratings and insurance financial strength ratings, which are periodically reviewed by the rating agencies. Financial strength ratings and credit ratings are important factors affecting public confidence in an insurer and its competitive position in marketing products. Credit ratings are also important to our ability to raise capital through the issuance of debt and for the cost of such financing.

A downgrade in our credit ratings or the credit or financial strength ratings of our rated subsidiaries could have a material adverse effect on our results of operations and financial condition. See Risk Factors- A downgrade or a potential downgrade in our financial strength or credit ratings could result in a loss of business and adversely affect our results of operations and financial condition in Part I, Item 1A. of our Annual Report on Form 10-K.

Financial strength ratings represent the opinions of rating agencies regarding the financial ability of an insurance company to meet its obligations under an insurance policy. Credit ratings represent the opinions of rating agencies regarding an entity's ability to repay its indebtedness. These ratings are not a recommendation to buy or hold any of our securities and they may be revised or revoked at any time at the sole discretion of the rating organization.

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The financial strength and credit ratings of Voya Financial, Inc. and its principal subsidiaries as of the date of this Quarterly Report on Form 10-Q are summarized in the following table.
Rating Agency
A.M. BestFitch, Inc.Moody's Investors Service, Inc.Standard & Poor's
("A.M. Best")(1)
("Fitch")(2)
("Moody's")(3)
("S&P")(4)
Long-term Issuer Credit Rating/Outlook:
Voya Financial, Inc.
(5)
BBB+/stableBaa2/stableBBB+/Stable
Financial Strength Rating/Outlook:
Voya Retirement Insurance and Annuity Company
(5)
A/stableA2/stableA+/Stable
ReliaStar Life Insurance Company
A/stableA/stableA2/stableA+/Stable
ReliaStar Life Insurance Company of New YorkA/stableA/stableA2/stableA+/Stable
(1) A.M. Best's financial strength ratings for insurance companies range from "A++ (superior)" to "s (suspended)." Long-term credit ratings range from "aaa (exceptional)" to "s (suspended)."   
(2) Fitch's financial strength ratings for insurance companies range from "AAA (exceptionally strong)" to "C (distressed)." Long-term credit ratings range from "AAA (highest credit quality)," which denotes exceptionally strong capacity for timely payment of financial commitments, to "D (default)."
(3) Moody’s financial strength ratings for insurance companies range from "Aaa (exceptional)" to "C (lowest)." Numeric modifiers are used to refer to the ranking within the group, with 1 being the highest and 3 being the lowest. These modifiers are used to indicate relative strength within a category. Long-term credit ratings range from "Aaa (highest)" to "C (default)."
(4) S&P's financial strength ratings for insurance companies range from "AAA (extremely strong)" to "D (default)." Long-term credit ratings range from "AAA (extremely strong)" to "D (default)."
(5) Effective April 11, 2019, A.M. Best withdrew, at the Company’s request, its financial strength ratings with respect to Voya Financial, Inc. and Voya Retirement Insurance and Annuity Company.

Rating agencies use an "outlook" statement for both industry sectors and individual companies. For an industry sector, a stable outlook generally implies that over the next 12 to 18 months the rating agency expects ratings to remain unchanged among companies in the sector. For a particular company, an outlook generally indicates a medium or long-term trend in credit fundamentals, which if continued, may lead to a rating change. In June of 2021, Moody’s revised its outlook for the U.S. life insurance sector from negative to stable. In December of 2021, A.M. Best revised its outlook on the U.S. life insurance sector from negative to stable. Also in December 2021, Fitch revised its outlook for the U.S. life insurance sector from negative to neutral.

Restrictions on Dividends and Returns of Capital from Subsidiaries

Our business is conducted through operating subsidiaries. U.S. insurance laws and regulations regulate the payment of dividends and other distributions by our U.S. insurance subsidiaries to their respective parents. These restrictions are based in part on the prior year's statutory income and surplus. In general, dividends up to specified levels are considered ordinary and may be paid without prior approval. Dividends in larger amounts, or "extraordinary" dividends, are subject to approval by the insurance commissioner of the state of domicile of the insurance subsidiary proposing to pay the dividend. In addition, under the insurance laws of our principal insurance subsidiaries domiciled in Connecticut and Minnesota (these insurance subsidiaries are referred to collectively as our "Principal Insurance Subsidiaries"), no dividend or other distribution exceeding an amount equal to an insurance company's earned surplus may be paid without the domiciliary insurance regulator's prior approval.

Our Principal Insurance Subsidiary domiciled in Connecticut has ordinary dividend capacity for 2022. However, as a result of the extraordinary dividends it paid in 2015, 2016 and 2017, together with deferred gains on reinsurance in connection with historical recaptures and cessions of term life insurance business including the recent Individual Life Transaction, our Principal Insurance Subsidiary domiciled in Minnesota currently has negative earned surplus and cannot make ordinary dividend payments. Any extraordinary dividend payment would be subject to domiciliary insurance regulatory approval, which can be granted or withheld at the discretion of the regulator.

We may receive dividends from or contribute capital to our wholly owned non-life insurance subsidiaries such as broker-dealers, investment management entities and intermediate holding companies.

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Insurance Subsidiaries - Dividends, Returns of Capital, and Capital Contributions

The following table summarizes dividends by each of the Company's Principal Insurance Subsidiaries to its parent for the periods indicated:
Dividends PaidExtraordinary Distributions Paid
Six Months Ended June 30,Six Months Ended June 30,
($ in millions)2022202120222021
Subsidiary Name (State of domicile):
Voya Retirement Insurance and Annuity Company ("VRIAC") (CT)$48 $78 $809 $474 
ReliaStar Life Insurance Company ("RLI") (MN)— — 329 358 

Impact of New Accounting Pronouncements

For information regarding the impact of new accounting pronouncements, see the Business, Basis of Presentation and Significant Accounting Policies Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

We have obligations for the return of non-cash collateral under an amendment to our securities lending program. Non-cash collateral received in connection with the securities lending program may not be sold or re-pledged by our lending agent, except in the event of default, and is not reflected on our Condensed Consolidated Balance Sheets. For information regarding obligations under this program, see the Investments (excluding Consolidated Investment Entities) Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

For changes in commitments related to the acquisition of mortgage loans and the purchase of limited partnerships and private placement investments related to consolidated investment entities, see the Commitments and Contingencies Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

Critical Accounting Judgments and Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical estimates and assumptions are evaluated on an on-going basis based on historical developments, market conditions, industry trends and other information that is reasonable under the circumstances. There can be no assurance that actual results will conform to estimates and assumptions and that reported results of operations will not be materially affected by the need to make future accounting adjustments to reflect changes in these estimates and assumptions from time to time. The inputs into our estimates and assumptions consider the economic implications of COVID-19 on our critical and significant accounting estimates. Those estimates are inherently subject to change and actual results could differ from those estimates, and the differences may be material to the accompanying Condensed Consolidated Financial Statements.

We have identified the following accounting judgments and estimates as critical in that they involve a higher degree of judgment and are subject to a significant degree of variability:
Reserves for future policy benefits;
DAC, VOBA and other intangibles (collectively, "DAC/VOBA and other intangibles");
Valuation of investments and derivatives;
Impairments;
Income taxes;
Contingencies; and
Employee benefit plans.

In developing these accounting estimates, we make subjective and complex judgments that are inherently uncertain and subject to material changes as facts and circumstances develop. Although variability is inherent in these estimates, we believe the
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amounts provided are appropriate based on the facts available upon preparation of the Condensed Consolidated Financial Statements.

The above critical accounting estimates are described in the Business, Basis of Presentation and Significant Accounting Policies Note and the Discontinued Operations Note in our Consolidated Financial Statements in Part II, Item 8. of our Annual Report on Form 10-K.

Assumptions and Periodic Review

Changes in assumptions can have a significant impact on DAC/VOBA and other intangibles balances, amortization rates, reserve levels and results of operations. Assumptions are management's best estimates of future outcome. We periodically review these assumptions against actual experience and, based on additional information that becomes available, update our assumptions. Deviation of emerging experience from our assumptions could have a significant effect on our DAC/VOBA and other intangibles, reserves and the related results of operations.

During the first quarter of 2021 and as a result of the close of the Individual Life transaction, we reviewed our blocks of business to determine recoverability of DAC, VOBA and other intangibles. This review resulted in the write down of DAC/VOBA and recording loss recognition of $302 million associated with DAC/VOBA and the establishment of premium deficiency reserves of $221 million in our divested businesses. The loss recognition and establishment of premium deficiency reserves were recorded in the Condensed Consolidated Statements of Operations and excluded from Adjusted operating earnings for the six months ended June 30, 2021.

Sensitivity

As of June 30, 2022 there have been no material changes to the sensitivities disclosed in Critical Accounting Judgements and Estimates in Part II. Item 7 of our Annual Report on Form 10-K.

Income Taxes

We use the estimated annual effective tax rate method in computing our interim tax provision. Certain items, including changes in the realizability of deferred tax assets and changes in liabilities for uncertain tax positions, are excluded from the estimated annual effective tax rate and the actual tax expense or benefit is reported in the period the related item is incurred.

See the Income Taxes Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for more information.

Investments (excluding Consolidated Investment Entities)

Investments for our general account are managed by our wholly owned asset manager, Voya Investment Management LLC, pursuant to investment advisory agreements with affiliates. In addition, our internal treasury group manages our holding company liquidity investments, primarily money market funds.

See Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7. of our Annual Report on Form 10-K for information on our investment strategy.

See the Investments (excluding Consolidated Investment Entities) Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for more information on investments.

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Portfolio Composition

The following table presents the investment portfolio as of the dates indicated:
June 30, 2022December 31, 2021
($ in millions)Carrying
Value
% of TotalCarrying
Value
% of Total
Fixed maturities, available-for-sale, excluding securities pledged
$29,324 71.6 %$33,699 73.9 %
Fixed maturities, at fair value option2,159 5.3 %2,354 5.2 %
Equity securities, at fair value234 0.6 %240 0.5 %
Short-term investments(1)
36 0.1 %97 0.2 %
Mortgage loans on real estate5,403 13.2 %5,612 12.3 %
Policy loans373 0.9 %392 0.9 %
Limited partnerships/corporations
1,848 4.5 %1,739 3.8 %
Derivatives277 0.7 %171 0.4 %
Other investments76 0.2 %79 0.2 %
Securities pledged
1,183 2.9 %1,198 2.6 %
Total investments$40,913 100.0 %$45,581 100.0 %
(1) Short-term investments include investments with remaining maturities of one year or less, but greater than three months, at the time of purchase.

Fixed Maturities

The following tables present total fixed maturities, including securities pledged, by market sector as of the dates indicated:
June 30, 2022
($ in millions)Amortized Cost% of TotalFair Value% of Total
Fixed maturities:
U.S. Treasuries
$800 2.3 %$884 2.7 %
U.S. Government agencies and authorities
58 0.2 %63 0.2 %
State, municipalities and political subdivisions993 2.9 %928 2.8 %
U.S. corporate public securities
10,211 29.4 %9,541 29.2 %
U.S. corporate private securities4,993 14.4 %4,742 14.5 %
Foreign corporate public securities and foreign governments(1)
3,356 9.7 %3,057 9.4 %
Foreign corporate private securities(1)
3,391 9.8 %3,222 9.9 %
Residential mortgage-backed securities
4,330 12.5 %4,183 12.8 %
Commercial mortgage-backed securities4,351 12.6 %4,042 12.4 %
Other asset-backed securities2,146 6.2 %2,004 6.1 %
Total fixed maturities, including securities pledged$34,629 100.0 %$32,666 100.0 %
(1) Primarily U.S. dollar denominated.
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December 31, 2021
($ in millions)Amortized Cost% of TotalFair Value% of Total
Fixed maturities:
U.S. Treasuries$764 2.2 %$1,003 2.7 %
U.S. Government agencies and authorities69 0.2 %81 0.2 %
State, municipalities and political subdivisions1,000 2.9 %1,111 3.0 %
U.S. corporate public securities10,402 30.5 %11,941 32.1 %
U.S. corporate private securities4,889 14.3 %5,325 14.3 %
Foreign corporate public securities and foreign governments(1)
3,373 9.9 %3,723 10.0 %
Foreign corporate private securities(1)
3,320 9.7 %3,501 9.4 %
Residential mortgage-backed securities4,183 12.3 %4,302 11.5 %
Commercial mortgage-backed securities4,032 11.8 %4,183 11.2 %
Other asset-backed securities2,069 6.2 %2,081 5.6 %
Total fixed maturities, including securities pledged$34,101 100.0 %$37,251 100.0 %
(1)Primarily U.S. dollar denominated.

As of June 30, 2022, the average duration of our fixed maturities portfolio, including securities pledged, is between 7.0 and 7.5 years.

Fixed Maturities Credit Quality - Ratings

For information regarding our fixed maturities credit quality ratings, see the Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Consolidated Financial Statements in Part II, Item 7. of our Annual Report on Form 10-K.



























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The following tables present credit quality of fixed maturities, including securities pledged, using NAIC designations as of the dates indicated:
($ in millions)June 30, 2022
NAIC Quality Designation123456Total Fair Value
U.S. Treasuries$884 $— $— $— $— $— $884 
U.S. Government agencies and authorities63 — — — — — 63 
State, municipalities and political subdivisions839 89 — — — — 928 
U.S. corporate public securities3,215 5,960 322 22 13 9,541 
U.S. corporate private securities1,656 2,746 245 93 — 4,742 
Foreign corporate public securities and foreign governments(1)
958 1,906 122 59 — 12 3,057 
Foreign corporate private securities(1)
419 2,597 155 41 10 — 3,222 
Residential mortgage-backed securities3,980 128 29 23 11 12 4,183 
Commercial mortgage-backed securities3,357 544 102 38 — 4,042 
Other asset-backed securities1,636 323 10 20 2,004 
Total fixed maturities$17,007 $14,293 $982 $286 $41 $57 $32,666 
% of Fair Value
52.0%43.8%3.0%0.9%0.1%0.2%100.0%
(1) Primarily U.S. dollar denominated.
($ in millions)December 31, 2021
NAIC Quality Designation123456Total Fair Value
U.S. Treasuries$1,003 $— $— $— $— $— $1,003 
U.S. Government agencies and authorities81 — — — — — 81 
State, municipalities and political subdivisions1,003 105 — — — 1,111 
U.S. corporate public securities4,112 7,341 406 63 19 — 11,941 
U.S. corporate private securities1,787 3,111 319 105 — 5,325 
Foreign corporate public securities and foreign governments(1)
1,151 2,389 160 23 — — 3,723 
Foreign corporate private securities(1)
310 2,850 185 82 — 74 3,501 
Residential mortgage-backed securities4,227 37 17 18 4,302 
Commercial mortgage-backed securities3,553 487 114 29 — — 4,183 
Other asset-backed securities1,685 330 10 13 30 13 2,081 
Total fixed maturities$18,912 $16,650 $1,198 $317 $69 $105 $37,251 
% of Fair Value50.8%44.7%3.2%0.9%0.2%0.2%100.0%
(1)Primarily U.S. dollar denominated.
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The following tables present credit quality of fixed maturities, including securities pledged, using NAIC acceptable rating organizations ("ARO") ratings as of the dates indicated:
($ in millions)June 30, 2022
ARO Quality RatingsAAAAAABBBBB and BelowTotal Fair Value
U.S. Treasuries$884 $— $— $— $— $884 
U.S. Government agencies and authorities54 — — — 63 
State, municipalities and political subdivisions55 534 250 89 — 928 
U.S. corporate public securities33 549 2,909 5,629 421 9,541 
U.S. corporate private securities61 143 1,375 2,864 299 4,742 
Foreign corporate public securities and foreign governments(1)
172 860 1,803 214 3,057 
Foreign corporate private securities(1)
— 47 316 2,690 169 3,222 
Residential mortgage-backed securities2,873 462 305 215 328 4,183 
Commercial mortgage-backed securities1,464 414 909 1,121 134 4,042 
Other asset-backed securities197 420 1,006 318 63 2,004 
Total fixed maturities$5,629 $2,750 $7,930 $14,729 $1,628 $32,666 
% of Fair Value17.2%8.4%24.3%45.1%5.0%100.0%
(1)Primarily U.S. dollar denominated.
($ in millions)December 31, 2021
ARO Quality RatingsAAAAAABBBBB and BelowTotal Fair Value
U.S. Treasuries$1,003 $— $— $— $— $1,003 
U.S. Government agencies and authorities70 — 11 — — 81 
State, municipalities and political subdivisions55 623 326 104 1,111 
U.S. corporate public securities66 728 3,727 6,954 466 11,941 
U.S. corporate private securities68 91 1,520 3,314 332 5,325 
Foreign corporate public securities and foreign governments(1)
229 1,045 2,233 208 3,723 
Foreign corporate private securities(1)
— 48 259 2,938 256 3,501 
Residential mortgage-backed securities2,927 258 216 298 603 4,302 
Commercial mortgage-backed securities1,600 424 869 1,166 124 4,183 
Other asset-backed securities257 445 968 324 87 2,081 
Total fixed maturities$6,054 $2,846 $8,941 $17,331 $2,079 $37,251 
% of Fair Value16.3 %7.6 %24.0 %46.5 %5.6 %100.0 %
(1)Primarily U.S. dollar denominated.

Fixed maturities rated BB and below may have speculative characteristics and changes in economic conditions or other circumstances that are more likely to lead to a weakened capacity of the issuer to make principal and interest payments than is the case with higher rated fixed maturities.









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Potential Credit Related COVID-19 Exposures

The following table presents our fixed maturities portfolio exposure to sectors that we believe may be particularly affected by the economic consequences of COVID-19:
($ in millions)June 30, 2022
NAIC Rating (%)
Fair ValueFair Value %Unrealized Capital Gains/(Losses)%
Public
%
Private
1234-6
Energy $1,832 5.7 %$(47)69 %31 %20.0 %67.5 %7.4 %5.1 %
Midstream
808 2.5 %(30)67 %33 %12.8 %82.6 %3.0 %1.6 %
Independent Energy346 1.1 %(4)68 %32 %22.0 %40.0 %16.9 %21.1 %
Integrated Energy355 1.1 %(5)74 %26 %47.0 %42.5 %9.5 %1.0 %
Refining162 0.5 %(1)90 %10 %— %94.0 %6.0 %— %
Oil Field Services161 0.5 %(7)44 %56 %12.0 %80.7 %5.6 %1.7 %
Metals487 1.5 %(19)65 %35 %9.0 %87.5 %3.3 %0.2 %
Airlines/Aircraft Leasing229 0.7 %(13)73 %27 %26.4 %43.5 %13.0 %17.1 %
Restaurants274 0.8 %(27)90 %10 %— %94.3 %5.7 %— %
Airports117 0.4 %(14)38 %62 %26.1 %47.0 %26.9 %— %
Lodging177 0.5 %(13)93 %%83.2 %8.8 %8.0 %— %
Automotive251 0.8 %(8)37 %63 %20.9 %72.2 %5.6 %1.3 %
Retailers635 1.9 %(51)89 %11 %48.0 %45.5 %3.9 %2.6 %
COVID-19 Subtotal4,002 12.3 %(192)74 %26 %29.4 %61.0 %6.8 %2.8 %
Remaining Portfolio28,664 87.7 %(1,730)76 %24 %55.8 %40.9 %2.4 %0.9 %
Grand Total
$32,666100.0%$(1,922)75%25%51.9%43.8%3.0%1.3%

To the extent that issuers of these securities suffer economic distress, impairments among our portfolio assets may increase, perhaps significantly, which would reduce the carrying value of these assets for statutory purposes and decrease our admitted statutory capital. Such distress, or a further general deterioration in credit markets, could also result in ratings downgrades across our portfolio, which would require our insurance subsidiaries to hold additional amounts of risk-based capital. In both cases, the amount of our excess capital above our targets would decline, and if the reductions were significant enough, we might be required to use available sources of liquidity to fund additional statutory capital requirements.

Unrealized Capital Losses

Gross unrealized capital losses on fixed maturities, including securities pledged, increased $2,301 million from $149 million to $2,450 million for the six months ended June 30, 2022. The large increase in unrealized losses was driven by materially higher interest rates across the yield curve and moderately wider credit spreads. See section "Overview - Trends and Uncertainties" in this Management’s Discussion and Analysis.

As of June 30, 2022 and December 31, 2021, we held three fixed maturities and one fixed maturity with unrealized capital loss in excess of $10 million, respectively. As of June 30, 2022 and December 31, 2021, the unrealized capital losses on these fixed maturities equaled $34 million or 1.4% and $12 million or 7.9% of the total unrealized losses, respectively.

As of June 30, 2022, we held $1.8 billion of energy sector fixed maturity securities, constituting 5.6% of the total fixed maturities portfolio, with gross unrealized capital losses of $113 million, including one energy sector fixed maturity security with unrealized capital losses in excess of $10 million. The unrealized capital losses on these fixed maturity securities equaled $11 million. As of June 30, 2022, our fixed maturity exposure to the energy sector is comprised of 87.6% investment grade securities.

As of December 31, 2021, we held $2.2 billion of energy sector fixed maturity securities, constituting 5.9% of the total fixed maturities portfolio, with gross unrealized capital losses of $18 million, including one energy sector fixed maturity security with
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unrealized capital losses in excess of $10 million. The unrealized capital loss on this fixed maturity security equaled $12 million. As of December 31, 2021, our fixed maturity exposure to the energy sector is comprised of 86.2% investment grade securities.
See the Investments (excluding Consolidated Investment Entities) Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on unrealized capital losses.

CMO-B Portfolio

The following table presents fixed maturities balances held in the CMO-B portfolio by NAIC quality rating as of the dates indicated:
($ in millions)June 30, 2022December 31, 2021
NAIC Quality DesignationAmortized CostFair Value% Fair ValueAmortized CostFair Value% Fair Value
1$2,503 $2,517 92.8 %$2,621 $2,700 97.4 %
2129 123 4.5 %34 35 1.3 %
330 29 1.1 %— — — %
422 21 0.8 %— — — %
511 0.4 %16 0.6 %
610 12 0.4 %15 18 0.7 %
Total$2,700 $2,713 100.0 %$2,679 $2,769 100.0 %

For CMO securities where we elected the FVO, amortized cost represents the market values. For details on the NAIC designation methodology, see "Fixed Maturities Credit Quality-Ratings" in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7. of our Annual Report on Form 10-K.

The following table presents the notional amounts and fair values of interest rate derivatives used in our CMO-B portfolio as of the dates indicated:
June 30, 2022December 31, 2021
($ in millions)Notional
Amount  
Asset
Fair
Value  
Liability
Fair
Value  
Notional
Amount  
Asset
Fair
Value
Liability
Fair
Value  
Derivatives non-qualifying for hedge accounting:
Interest Rate Contracts$14,169 $157 $299 $9,770 $80 $146 

The Company utilizes interest rate futures and interest rate swaps as a part of the CMO-B portfolio to hedge interest rate risk.

The following table presents our CMO-B fixed maturity securities balances and tranche type as of the dates indicated:
($ in millions)June 30, 2022December 31, 2021
Tranche TypeAmortized CostFair Value% Fair ValueAmortized CostFair Value% Fair Value
Inverse Floater$73 $95 3.5 %$85 $127 4.6 %
Interest Only (IO)697 697 25.7 %459 460 16.6 %
Inverse IO768 777 28.6 %1,072 1,107 40.0 %
Principal Only (PO)88 91 3.4 %110 116 4.2 %
Floater0.2 %0.3 %
Agency Credit Risk Transfer1,009 990 36.5 %910 915 33.0 %
Other59 57 2.1 %36 37 1.3 %
Total$2,700 $2,713 100.0 %$2,679 $2,769 100.0 %

During the six months ended June 30, 2022, the market value of our CMO-B securities portfolio was modestly lower on a combination of transactional activity and offsetting valuation movements among tranche types.
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The following table presents returns for our CMO-B portfolio for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
($ in millions)2022202120222021
Net investment income (loss)$136 $151 $271 $314 
Net gains (losses)(1)
(140)(189)(267)(339)
Income (loss) from continuing operations before income taxes$(4)$(38)$$(25)
(1) Net gains (losses) also include derivatives interest settlements, mark to market adjustments and realized gains (losses) on standalone derivatives contracts that are in the CMO-B portfolio.

In defining the Adjusted operating earnings before income taxes for our CMO-B portfolio (including CMO-B portfolio income (loss) related to businesses to be exited through reinsurance or divestment) certain recharacterizations are recognized. The net coupon settlement on interest rate swaps hedging CMO-B securities that is included in Net gains (losses) is reflected. In addition, the premium amortization and change in fair value for securities designated under the FVO are included in Net gains (losses), whereas the coupon for these securities is included in Net investment income. In order to present the economics of these fair value securities in a similar manner to those of an available for sale security, the premium amortization is reclassified from Net gains (losses).

After adjusting for the two items referenced immediately above, the following table presents a reconciliation of Income (loss) from operations before income taxes from our CMO-B portfolio to Adjusted operating earnings before income taxes from our CMO-B portfolio for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
($ in millions)2022202120222021
Income (loss) from operations before income taxes$(4)$(38)$$(25)
Realized gains (losses) including impairment— (27)
Fair value adjustments57 81 89 136 
Total adjustments to income (loss) from operations58 81 95 109 
Adjusted operating earnings before income taxes$54 $43 $99 $84 

See Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7. of our Annual Report on Form 10-K for information on our CMO-B portfolio.



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Structured Securities

Residential Mortgage-backed Securities

The following tables present our residential mortgage-backed securities as of the dates indicated:
June 30, 2022
($ in millions)Amortized CostGross Unrealized Capital GainsGross Unrealized Capital LossesEmbedded DerivativesFair Value
Prime Agency$1,806 $32 $26 $$1,814 
Prime Non-Agency2,438 14 178 2,275 
Alt-A72 80 
Sub-Prime(1)
34 — 35 
Total RMBS$4,350 $54 $206 $$4,204 
(1) Includes subprime other asset backed securities.
December 31, 2021
($ in millions)Amortized CostGross Unrealized Capital GainsGross Unrealized Capital LossesEmbedded DerivativesFair Value
Prime Agency$1,937 $88 $$$2,022 
Prime Non-Agency2,146 42 22 2,167 
Alt-A84 97 
Sub-Prime(1)
38 — — 42 
Total RMBS$4,205 $142 $31 $12 $4,328 
(1) Includes subprime other asset backed securities.

Commercial Mortgage-backed Securities

The following tables present our commercial mortgage-backed securities as of the dates indicated:
June 30, 2022
($ in millions)AAAAAABBBBB and BelowTotal
Amortized CostFair ValueAmortized CostFair ValueAmortized CostFair ValueAmortized CostFair ValueAmortized CostFair ValueAmortized CostFair Value
2015 and prior$734 $707 $190 $185 $234 $226 $198 $188 $82 $77 $1,438 $1,383 
201650 45 20 19 32 30 49 44 — — 151 138 
201784 75 20 19 71 65 72 64 34 33 281 256 
2018109 103 20 19 90 84 40 37 18 17 277 260 
2019170 165 36 35 130 120 299 262 643 589 
202090 86 32 29 75 66 152 133 — — 349 314 
2021239 202 86 81 212 195 318 291 — — 855 769 
202290 81 29 27 129 123 109 102 — — 357 333 
Total CMBS$1,566 $1,464 $433 $414 $973 $909 $1,237 $1,121 $142 $134 $4,351 $4,042 
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December 31, 2021
($ in millions)AAAAAABBBBB and BelowTotal
Amortized CostFair ValueAmortized CostFair ValueAmortized CostFair ValueAmortized CostFair ValueAmortized CostFair ValueAmortized CostFair Value
2015 and prior$729 $809 $194 $200 $233 $241 $212 $213 $80 $79 $1,448 $1,542 
201650 55 20 21 28 30 49 49 — — 147 155 
201785 91 23 23 66 67 69 71 33 34 276 286 
201899 108 20 21 94 97 58 59 274 288 
2019184 203 36 36 139 141 296 297 663 685 
202092 93 31 32 73 74 164 166 — — 360 365 
2021240 241 92 91 220 219 312 311 — — 864 862 
Total CMBS$1,479 $1,600 $416 $424 $853 $869 $1,160 $1,166 $124 $124 $4,032 $4,183 
As of June 30, 2022, 83.1% and 13.5% of CMBS investments were designated as NAIC-1 and NAIC-2, respectively. As of December 31, 2021, 84.9% and 11.6% of CMBS investments were designated as NAIC-1 and NAIC-2, respectively.

Other Asset-backed Securities

The following tables present our other asset-backed securities as of the dates indicated:
June 30, 2022
($ in millions)AAAAAABBBBB and BelowTotal
Amortized CostFair ValueAmortized CostFair ValueAmortized CostFair ValueAmortized CostFair ValueAmortized CostFair ValueAmortized CostFair Value
Collateralized Obligation$135 $131 $343 $326 $952 $891 $121 $112 $59 $45 $1,610 $1,505 
Auto-Loans— — — — 16 14 
Student Loans16 15 86 83 — — — — 103 99 
Credit Card loans— — — — — — — — 
Other Loans54 49 115 104 221 205 — — 393 361 
Total Other ABS(1)
$206 $196 $439 $418 $1,079 $1,005 $343 $318 $59 $45 $2,126 $1,982 
(1) Excludes subprime other asset backed securities.
December 31, 2021
($ in millions)AAAAAABBBBB and BelowTotal
Amortized CostFair ValueAmortized CostFair ValueAmortized CostFair ValueAmortized CostFair ValueAmortized CostFair ValueAmortized CostFair Value
Collateralized Obligation$185 $186 $328 $328 $850 $848 $121 $120 $68 $64 $1,552 $1,546 
Auto-Loans— — — — — 10 11 
Student Loans17 17 108 110 — — 135 137 
Credit Card loans— — — — — — — — 
Other Loans48 52 96 99 198 203 — — 346 357 
Total Other ABS(1)
$252 $257 $440 $442 $967 $968 $320 $324 $68 $64 $2,047 $2,055 
(1) Excludes subprime other asset backed securities.

As of June 30, 2022, 81.4% and 16.4% of Other ABS investments were designated as NAIC-1 and NAIC-2, respectively. As of December 31, 2021, 80.7% and 16.1% of Other ABS investments were designated as NAIC-1 and NAIC-2, respectively.
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Mortgage Loans on Real Estate

As of June 30, 2022, our mortgage loans on real estate portfolio had a weighted average DSC of 2.04 times and a weighted average LTV ratio of 45.6%. As of December 31, 2021, our mortgage loans on real estate portfolio had a weighted average DSC of 2.13 times, and a weighted average LTV ratio of 45.5%. See the Investments (excluding Consolidated Investment Entities) Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on mortgage loans on real estate.

Impairments

We evaluate available-for-sale fixed maturities for impairment on a regular basis. The assessment of whether impairments have occurred is based on a case-by-case evaluation of the underlying reasons for the decline in estimated fair value. See the Business, Basis of Presentation and Significant Accounting Policies Note in our Consolidated Financial Statements in Part II, Item 8. of our Annual Report on Form 10-K for the policy used to evaluate whether the investments are impaired.

See the Investments (excluding Consolidated Investment Entities) Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on impairment.

Derivatives
We use derivatives for a variety of hedging purposes. We also have embedded derivatives within fixed maturities instruments and certain product features. See the Business, Basis of Presentation and Significant Accounting Policies Note in our Consolidated Financial Statements in Part II, Item 8. of our Annual Report on Form 10-K for further information.

See the Derivative Financial Instruments Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on derivatives.

European Exposures

We quantify and allocate our exposure to the region by attempting to identify aspects of the region or country risk to which we are exposed. Among the factors we consider are the nationality of the issuer, the nationality of the issuer's ultimate parent, the corporate and economic relationship between the issuer and its parent, as well as the political, legal and economic environment in which each functions. By undertaking this assessment, we believe that we develop a more accurate assessment of the actual geographic risk, with a more integrated understanding of contributing factors to the full risk profile of the issuer.

In the normal course of our ongoing risk and portfolio management process, we closely monitor compliance with a credit limit hierarchy designed to minimize overly concentrated risk exposures by geography, sector and issuer. This framework takes into account various factors such as internal and external ratings, capital efficiency and liquidity and is overseen by a combination of Investment and Corporate Risk Management, as well as insurance portfolio managers focused specifically on managing the investment risk embedded in our portfolio.

While economic conditions in Europe have broadly improved, geopolitical tensions emanating from the Russia-Ukraine conflict remain a notable tail risk. Despite signs of economic improvement in the region, we continue to closely monitor our exposure to the region.

As of June 30, 2022, our total European exposure had an amortized cost and fair value of $3,140 million and $2,882 million, respectively. Some of the major country level exposures were in the United Kingdom of $1,323 million, in France of $236 million, in The Netherlands of $239 million, in Switzerland of $208 million, in Germany of $195 million, and in Belgium of $114 million. Our direct exposure in Eastern Europe is comparatively small, with only $12 million of exposure in Russia and none in Ukraine or Belarus.

Consolidated and Nonconsolidated Investment Entities

We use many forms of entities to achieve our business objectives and we have participated in varying degrees in the design and formation of these entities. These entities are considered to be VIEs or VOEs (collectively, "Consolidated Investment Entities"), or nonconsolidated VIEs, and we evaluate our involvement with each entity to determine whether consolidation is required.

We perform a quarterly consolidation analysis to assess if the consolidation of a fund is required. The consolidation process brings on the assets, liabilities, noncontrolling interest and operations of the VIE and/or VOE into our financial statements.
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If the fund no longer meets the criteria for consolidation, the assets, liabilities, noncontrolling interest and operations of the fund is removed from our financial statements. This process of consolidation/deconsolidation could have a material impact on Total shareholders’ equity.

See Consolidation and Noncontrolling Interests and Fair Value Measurements in the Business, Basis of Presentation and Significant Accounting Policies Note to our Consolidated Financial Statements in Part II, Item 8. of our Annual Report on Form 10-K. Additionally, see the Consolidated and Nonconsolidated Investment Entities Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for more information.

Securitizations

We invest in various tranches of securitization entities, including RMBS, CMBS and ABS. Refer to the Consolidated and Nonconsolidated Investment Entities Note and Fair Value Measurements (excluding Consolidated Investment Entities) Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for an understanding over the Company's Securitizations. Refer to the Investments (excluding Consolidated Investment Entities) Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for details regarding the carrying amounts and classifications of these assets.

Guarantors and Issuers of Guaranteed Securities 

Voya Financial, Inc. (the “Parent Issuer”) has issued certain notes pursuant to transactions registered under the Securities Act of 1933. Such securities consist of (i) the 5.7% senior notes due 2043, the 3.65% senior notes due 2026, the 4.8% senior notes due 2046, with an aggregate principal amount of $1.1 billion as of June 30, 2022 and December 31, 2021 (collectively, the “Senior Notes”) and (ii) the 5.65% fixed-to-floating rate junior subordinated notes due 2053 and the 4.7% fixed-to-floating junior subordinated notes due 2048, with an aggregate principal amount of $875 million as of June 30, 2022 and $1.1 billion as of December 31, 2021 (collectively, the “Junior Subordinated Notes” and, together with the Senior Notes, the “Registered Notes”).

Voya Holdings (the “Subsidiary Guarantor”), a wholly owned subsidiary of the Parent Issuer, has guaranteed each of the Registered Notes on a full and unconditional basis. No other subsidiary of the Parent Issuer has guaranteed any of the Registered Notes. The Parent Issuer and the Subsidiary Guarantor are hereby referred to below as the “Obligor Group.”

The full and unconditional guarantees require the Subsidiary Guarantor to satisfy the obligations of the guaranteed security immediately, if and when the Parent Issuer has failed to make a scheduled payment thereunder. If the Subsidiary Guarantor does not make such payment, any holder of the guaranteed security may immediately bring suit directly against the Subsidiary Guarantor for payment of amounts due and payable.

Set forth below is summarized financial information of the Obligor Group, as presented on a combined basis. Inter-combination transactions and balances within the Obligor Group have been eliminated. In addition, financial information of any non-issuer or non-guarantor subsidiaries, which would normally be consolidated by either the Parent Issuer or the Subsidiary Guarantor under U.S. generally accepted accounting principles, has been excluded from such presentation.

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Refer to the Summarized Financial Information of the Obligor Group as of and for the six months ended June 30, 2022 and as of and for the year ended December 31, 2021 below:
As of and for the
($ in millions)
Six Months Ended June 30, 2022Year Ended December 31, 2021
Summarized Statement of Operations Information:
Total revenues$(36)$34 
Total benefits and expenses82 192 
Income (loss) from continuing operations, net of tax(68)718 
Net income (loss) before equity in earnings (losses) of unconsolidated affiliates(68)718 
Net income (loss) available to Obligor Group(68)718 
Summarized Balance Sheet Information
Total investments21 44 
Cash and cash equivalents207 205 
Deferred income tax assets935 908 
Loans to non-obligated subsidiaries171 123 
Due from non-obligated subsidiaries61 
Total assets1,357 1,356 
Short-term debt with non-obligated subsidiaries21 130 
Long-term debt2,384 2,594 
Total liabilities$2,555 $2,836 

Item 3.        Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk that our consolidated financial position and results of operations will be affected by fluctuations in the value of financial instruments. We have significant holdings in financial instruments and are naturally exposed to a variety of market risks. The main market risks we are exposed to include interest rate risk, equity market price risk and credit risk. We do not have material market risk exposure to "trading" activities in our Condensed Consolidated Financial Statements. For further details on these market risks, see Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A. in our Annual Report on Form 10-K.

Market Risk Related to Interest Rates

We assess interest rate exposures for financial assets, liabilities and derivatives using hypothetical test scenarios that assume either increasing or decreasing 100 basis point parallel shifts in the yield curve. In calculating these amounts, we exclude gains and losses on separate account fixed income securities related to products for which the investment risk is borne primarily by the separate account contract holder rather than by us. While the test scenarios are for illustrative purposes only and do not reflect our expectations regarding future interest rates or the performance of fixed-income markets, they are a near-term, reasonably possible hypothetical change that illustrates the potential impact of such events. These tests do not measure the change in value that could result from non-parallel shifts in the yield curve. As a result, the actual change in fair value from a 100 basis point change in interest rates could be different from that indicated by these calculations.

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The following table summarizes the net estimated potential change in fair value from hypothetical 100 basis point upward and downward shifts in interest rates as of June 30, 2022:
As of June 30, 2022
Hypothetical Change in
Fair Value(2)
($ in millions)Notional
Fair Value(1)
+ 100 Basis Points Yield Curve Shift- 100 Basis Points Yield Curve Shift
Financial assets with interest rate risk:
Fixed maturity securities, including securities pledged$— $32,666 $(2,153)$2,459 
Mortgage loans on real estate— 5,239 (194)209 
Financial liabilities with interest rate risk:
Investment contracts:
Funding agreements without fixed maturities and deferred annuities(4)
— 37,982 (2,558)3,316 
Funding agreements with fixed maturities— 1,457 (55)58 
Supplementary contracts and immediate annuities— 653 (50)
Derivatives:
Interest rate contracts17,607 94 182 (193)
Long-term debt— 2,316 (129)148 
Embedded derivatives on reinsurance— 20 49 (57)
Guaranteed benefit derivatives(3):
Other(4)
— 29 16 
(1) Separate account assets and liabilities which are interest sensitive are not included herein as any interest rate risk is borne by the holder of separate account.
(2)    (Decreases) in assets or (decreases) in liabilities are presented in parentheses. Increases in assets or increases in liabilities are presented without parentheses.
(3)    Certain amounts included in Funding agreements without fixed maturities and deferred annuities section are also reflected within the Guaranteed benefit derivatives section of the tables above.
(4)    Includes GMWBL, GMWB, FIA, Stabilizer and MCG.

Market Risk Related to Equity Market Prices

We assess equity risk exposures for financial assets, liabilities and derivatives using hypothetical test scenarios that assume either an increase or decrease of 10% in all equity market benchmark levels. The following table summarizes the net estimated potential change in fair value from an instantaneous increase and decrease in all equity market benchmark levels of 10% as of June 30, 2022. In calculating these amounts, we exclude gains and losses on separate account equity securities related to products for which the investment risk is borne primarily by the separate account contract holder rather than by us. While the test scenarios are for illustrative purposes only and do not reflect our expectations regarding the future performance of equity markets, they are near-term, reasonably possible hypothetical changes that illustrate the potential impact of such events. These scenarios consider only the direct effect on fair value of declines in equity benchmark market levels and not changes in asset-based fees recognized as revenue, changes in our estimates of total gross profits used as a basis for amortizing DAC/VOBA, other intangibles and other costs, or changes in any other assumptions such as market volatility or mortality, utilization or persistency rates in variable contracts that could also impact the fair value of our living benefits features. In addition, these scenarios do not reflect the effect of basis risk, such as potential differences in the performance of the investment funds underlying the variable annuity products relative to the equity market benchmark we use as a basis for developing our hedging strategy. The impact of basis risk could result in larger differences between the change in fair value of the equity-based derivatives and the related living benefit features, in comparison to the hypothetical test scenarios.
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As of June 30, 2022
Hypothetical Change in
Fair Value(1)
($ in millions)NotionalFair Value+ 10%
Equity Shock
-10%
Equity Shock
Financial assets with equity market risk:
Equity securities, at fair value$— $234 $23 $(23)
Limited liability partnerships/corporations— 1,848 113 (113)
Derivatives:
Equity futures and total return swaps209 — 11 (11)
Equity options40 — — — 
Financial liabilities with equity market risk:
Guaranteed benefit derivatives:
Other(2)
— 29 — — 
(1) (Decreases) in assets or (decreases) in liabilities are presented in parentheses. Increases in assets or increases in liabilities are presented without parentheses.
(2)    Includes GMWBL, GMWB, FIA, Stabilizer and MCG.

Market Risk Related to Credit Risk

In connection with the Individual Life Transaction in 2021, we entered into large reinsurance agreements with SLD, our former insurance subsidiary, with respect to the portion of the Individual Life and other legacy businesses that have been written by our insurance subsidiaries domiciled in Minnesota, Connecticut, and New York. As a result, SLD became our largest reinsurer during the first quarter of 2021. While SLD's reinsurance obligations to us are collateralized through assets held in trust, in the event of any default by SLD of its reinsurance obligations to us, or any loss of credit for such reinsurance, there can be no assurance that such assets will be sufficient to support the reserves that we would be required to establish or pay claims. There were no other material changes in our credit risk.

See the Discontinued Operations Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

Item 4.        Controls and Procedures

Disclosure Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended ("Exchange Act")) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company's current disclosure controls and procedures are effective in ensuring that material information relating to the Company required to be disclosed in the Company's periodic SEC filings is made known to them in a timely manner.

Changes in Internal Control Over Financial Reporting

There were no changes to the Company's internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II.     OTHER INFORMATION

Item 1.        Legal Proceedings

See the Commitments and Contingencies Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

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Item 1A.    Risk Factors

For a discussion of the Company’s potential risks and uncertainties, see Risk Factors in Part I, Item IA. of our Annual Report on Form 10-K for the year ended December 31, 2021 (the "Annual Report on Form 10-K") (File No. 001-35897) filed with the SEC and Management’s Discussion and Analysis of Financial Condition and Results of Operations-Trends and Uncertainties in Part I, Item 2. of this Quarterly Report on Form 10-Q.

The AGI Transaction could have negative impacts on us.

As further described under Business, Basis of Presentation and Significant Accounting Policies Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q , on July 25, 2022, we completed the AGI Transaction, pursuant to which we acquired certain assets of AGI U.S.

In order to fully integrate the former AGI U.S. assets, we are actively pursuing strategic, structural and process realignment and restructuring actions within our Investment Management business. These actions could lead to disruptions of our operations, loss of, or inability to recruit, key personnel needed to operate our businesses, weakening of our internal standards, controls or procedures, and impairment of our relationship with key customers and counterparties. We have and will continue to incur significant expenses in connection with the AGI Transaction.

In addition, we may face difficulties attracting or retaining relationships through which we manage or reinsure our Investment Management products. Vendors or reinsurers may elect to suspend, alter, reduce or terminate their relationships with us for various reasons, including uncertainty related to the AGI Transaction, changes in our strategy, potential adverse developments in our business, potential adverse rating agency actions or concerns about market-related risks.

We may also not achieve certain of the benefits that we expect in connection with the AGI Transaction, including expected revenues, and the achievement of projected targets at our various businesses. In addition, integration of the former AGI assets will require significant amounts of our management's time and effort which may divert management's attention from operating and growing our remaining businesses and could adversely affect our results of operations and financial condition.

Item 2.        Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities by the Issuer

The following table summarizes Voya Financial, Inc.’s repurchases of its common stock for the three months ended June 30, 2022:
Period
Total Number of Shares Purchased(1)
Average Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(4)
(in millions)
April 1, 2022 - April 30, 202217,131 $63.11 — $521 
May 1, 2022- May 31, 2022903,959 65.53 (2)890,112 521 
June 1, 2022 - June 30, 20223,384,020 59.12 (3)3,382,950 271 
Total4,305,110 $60.48 4,273,062 N/A
(1) In connection with the exercise or vesting of equity-based compensation awards, employees may remit to Voya Financial, Inc., or Voya Financial, Inc. may withhold into treasury stock, shares of common stock in respect to tax withholding obligations and option exercise cost associated with such exercise or vesting. For the three months ended June 30, 2022, there was an increase of 32,048 Treasury shares in connection with such withholding activities.
(2) On March 17, 2022, we entered into a share repurchase agreement with a third-party financial institution to repurchase $275 million of the Company's common stock. Pursuant to the agreement, we received initial delivery of 3,305,786 shares based on the closing market price of the Company's stock on March 18, 2022 of $66.55. This arrangement closed on May 11, 2022 and an additional 890,112 shares were delivered based on the daily volume-weighted average of the Company's common stock.
(3) On June 21, 2022, we entered into a share repurchase agreement with a third-party financial institution to repurchase $250 million of the Company's common stock. Pursuant to the agreement, we received initial delivery of 3,382,950 shares based closing market price of the Company's stock on June 21, 2022 of $59.12. This arrangement is scheduled to terminate no later than the end of the third quarter of 2022, at which time we will settle any positive or negative share balances based on the daily volume-weighted average of the Company's common stock.
(4) On April 28, 2022, the Board of Directors provided its most recent share repurchase authorization, increasing the aggregate amount of the Company's common stock authorized for repurchase by $500 million. The share repurchase authorization expires on June 30, 2023 (unless extended), and does not obligate the Company to purchase any shares. The authorization for the share repurchase program may be terminated, increased or decreased by the Board of Directors at any time.

Item 6.        Exhibits
See Exhibit Index on the following page.
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Voya Financial, Inc.
Exhibit Index
Exhibit No. Description of Exhibit
2.1+
10.1+
31.1+
31.2+
32.1+
32.2+
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH+Inline XBRL Taxonomy Extension Schema
101.CAL+Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF+Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB+Inline XBRL Taxonomy Extension Label Linkbase
101.PRE+Inline XBRL Taxonomy Extension Presentation Linkbase
104+Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101).
+ Filed herewith.
† Exhibits and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K and will be supplementally provided to the U.S. Securities and Exchange Commission upon request


A list of the omitted exhibits and schedules to the Combination Agreement (Exhibit 2.1) follows:

Exhibits

Exhibit A    Form of Core Distribution Agreement
Exhibit B    Form of Cross Distribution Agreement
Exhibit C    Form of Transition Services Agreement
Exhibit D    Form of A&R Newco Operating Agreement
Exhibit E    Form of AP/EU Sub-Advisory Agreements
Exhibit E-1    Form of Master Agreement for Advisory Services for Investment Funds (EU Sub-Advisory Agreement)
Exhibit F    Forms of AP/EU Sub-Management Agreements
Exhibit F-1    Form of Master Agreement for the Outsourcing of Portfolio Management Services for Investment Funds (German UCITS and AIF)
Exhibit F-2    Form of Master Agreement for the Outsourcing of Portfolio Management Services for Investment Funds (IMAs)
Exhibit F-3    Annex E.2 to Form of Master Agreement for the Outsourcing of Portfolio Management Services for Investment Funds
Exhibit G    Other Approvals and Consents
Exhibit H    Transferred Intellectual Property
Exhibit I        Form of Trademark Assignment Agreement

Schedules

Company Disclosure Schedule
Contributor Disclosure Schedule
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Schedule A    Covered Clients
Schedule A-1    Non-Registered Funds
Schedule A-2    Non-U.S. Public Funds
Schedule A-3    U.S. Registered Funds
Schedule A-4    Other Clients
Schedule A-5    AP/EU Portfolios
Schedule B    RRR/AUM Statement
Schedule C    Business Employees
Schedule D    Additional Covered Clients
Schedule E    Certain Compensation Matters

A list of the omitted exhibits and schedules to the Amended And Restated Limited Liability Company Agreement of VIM Holdings LLC (Exhibit 10.1) follows:

Schedule A    Members
Schedule B    Capital Contributions, Class A Units and Class B Units
Schedule C    Class B Underlying Assets
Schedule D    Fair Market Value Determination and Dispute Resolution Procedure
Schedule E    Inter-Affiliate Allocations
Schedule F    Restricted Competitors
Schedule G    Officers
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SIGNATURE

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.


August 4, 2022Voya Financial, Inc.
(Date)(Registrant)
By:/s/Michael S. Smith
Michael S. Smith
Vice Chairman and
Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
121

Document
Exhibit 2.1


COMBINATION AGREEMENT
by and among
VOYA FINANCIAL, INC.,
VOYA INVESTMENT MANAGEMENT LLC,
ALLIANZ SE,
ALLIANZ GLOBAL INVESTORS U.S. LLC
and
VIM HOLDINGS LLC
Dated as of June 13, 2022

CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED PURSUANT TO ITEM 601(A)(6) OF REGULATION S-K AND, WHERE APPLICABLE, HAVE BEEN MARKED WITH [***] TO INDICATE WHERE REDACTIONS HAVE BEEN MADE. THE MARKED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT CONTAINS INFORMATION THAT IF DISCLOSED WOULD CONSTITUTE A CLEARLY UNWARRANTED INVASION OF PERSONAL PRIVACY.





TABLE OF CONTENTS
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Annexes
Annex A – Core Distribution Adjustment
Exhibits
Exhibit A – Form of Core Distribution Agreement
Exhibit B – Form of Cross Distribution Agreement
Exhibit C – Form of Transition Services Agreement
Exhibit D – Form of A&R Newco Operating Agreement
Exhibit E – Form of AP/EU Sub-Advisory Agreements
Exhibit E-1 – Form of Master Agreement for Advisory Services for Investment Funds (EU Sub-Advisory Agreement)
Exhibit F – Forms of AP/EU Sub-Management Agreements
Exhibit F-1 – Form of Master Agreement for the Outsourcing of Portfolio Management Services for Investment Funds (German UCITS and AIF)
Exhibit F-2 – Form of Master Agreement for the Outsourcing of Portfolio Management Services for Investment Funds (IMAs)
Exhibit F-3 – Annex E.2 to Form of Master Agreement for the Outsourcing of Portfolio Management Services for Investment Funds
Exhibit G – Other Approvals and Consents
Exhibit H – Transferred Intellectual Property
Exhibit I – Form of Trademark Assignment Agreement

Schedules

Company Disclosure Schedule
Contributor Disclosure Schedule
Schedule A – Covered Clients
Schedule A-1 – Non-Registered Funds
Schedule A-2 – Non-U.S. Public Funds
Schedule A-3 – U.S. Registered Funds
Schedule A-4 – Other Clients
Schedule A-5 – AP/EU Portfolios
Schedule B – RRR/AUM Statement
Schedule C – Business Employees
Schedule D – Additional Covered Clients
Schedule E – Certain Compensation Matters



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COMBINATION AGREEMENT
THIS COMBINATION AGREEMENT, dated as of June 13, 2022 (this “Agreement”), is made and entered into by and among Voya Financial, Inc., a Delaware corporation (“Company Parent”), Voya Investment Management LLC, a Delaware limited liability company (the “Company”), Allianz SE, a stock corporation organized and existing under the laws of the European Union and the Federal Republic of Germany (“Contributor Parent”), Allianz Global Investors U.S. LLC, a Delaware limited liability company (“Contributor”), and VIM Holdings LLC, a Delaware limited liability company (“Newco”). Company Parent, the Company, Contributor Parent, Contributor and Newco are referred to herein as the “Parties”.
RECITALS
WHEREAS, Contributor is engaged in the business of providing investment management and investment advisory services for Covered Clients;
WHEREAS, as of the Closing, Company Parent desires to transfer, convey, assign and deliver to Newco 100% of the Company’s limited liability company interests in consideration for the receipt of the Voya Newco Units and its rights in connection with the global strategic partnership to be entered into by the Parties;
WHEREAS, as of the Closing and at the direction of Newco, Contributor desires to contribute to the Company, and Newco desires to cause the Company to receive from Contributor, on the terms, and subject to the conditions, set forth in this Agreement, the Transferred Assets (such contribution, contributed subject to the Assumed Liabilities being assumed by the Company, the “Contribution”);
WHEREAS, at the Closing, the Voya Newco Units shall be issued to the Voya Member and thereafter held subject to the terms and conditions of the A&R Newco Operating Agreement;
WHEREAS, at the Closing, the Parties shall enter into a global strategic partnership pursuant to which:
(i)the Company (or a Company Advisor) shall be appointed as sub-adviser or sub-manager with respect to each of the AP/EU Portfolios, subject to the terms and conditions set forth in this Agreement and the applicable AP/EU Sub-Advisory Agreement or AP/EU Sub-Management Agreement;
(ii)AGI GmbH (or an Affiliate thereof) shall have exclusive distribution rights with respect to any current and future AP/EU Portfolios and shall be entitled to the Core Distribution Percentage of fee revenues derived from such AP/EU Portfolios, subject to the terms and conditions of this Agreement and the Core Distribution Agreement; and
(iii)(A) AGI GmbH (or an Affiliate thereof) shall have exclusive distribution rights within the AGI Distribution Territories with respect to any investment strategies managed by the Company or its Affiliates other than the Transferred Strategies, and (B) the Company (or an Affiliate thereof) shall have exclusive distribution rights within the United States and Canada with respect to any investment strategies managed by AGI GmbH or its Subsidiaries; subject in the case of clause (A) and (B) to the exclusivity exceptions and other terms and conditions of this Agreement and the Cross Distribution Agreement.
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NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and intending to be legally bound hereby, the Parties hereby agree as follows:
Article I
DEFINITIONS
Section 1.1Certain Definitions. For all purposes of this Agreement, the following terms shall have the respective meanings specified in this Section 1.1 (such definitions to be equally applicable to both the singular and plural forms of the terms herein defined):
A&R Newco Operating Agreement” means the Amended and Restated Limited Liability Company Agreement of Newco, to be entered into at the Closing in substantially the form set forth on Exhibit D.
Accounting Firm” has the meaning set forth in Section 2.8(e).
Acquisition Proposal” has the meaning set forth in Section 5.8(a).
Additional Separation Costs” means the costs and expenses (including any out- of-pocket and third-party costs) incurred in connection with the Company’s request for additional services or the incremental costs and expenses (including any out-of-pocket and third-party costs) when a separation activity is changed at Company’s request, but excluding the internal costs and expenses incurred by Contributor and its Affiliates for the time spent by their employees on the matters contemplated by this definition.
Adjusted Assets Under Management” has the meaning set forth in Annex A.
Adjusted Core Distribution Percentage” has the meaning set forth in Annex A.
Adjusted Newco Percentage” has the meaning set forth in Annex A.
Advisory Agreement” means any Investment Company Advisory Agreement and any Non-Investment Company Advisory Agreement of the Contributor; provided that “Advisory Agreement,” includes, following Closing, the AP/EU Sub-Management Agreements and AP/EU Sub-Advisory Agreements or novations of existing Advisory Agreements (notwithstanding that Contributor is not a party thereto).
Advisory Fee Rate” has the meaning set forth in Annex A.
Affiliate” means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such first Person; provided, however, that, for the purposes of this Agreement, no Covered Client (other than Contributor and any of its direct or indirect shareholders or Subsidiaries) shall be considered an Affiliate of Contributor and no advisory client of the Company (other than the Company and any of its direct or indirect shareholders or Subsidiaries) shall be considered an Affiliate of the Company solely by virtue of such advisory relationship; provided, further, that, notwithstanding anything contained herein to the contrary, neither the Company nor any of its Subsidiaries shall be considered an Affiliate of Contributor or Contributor Parent; provided, further, that prior to the Closing, Newco shall not be considered an Affiliate of the Company or Company Parent and from and after the Closing, Newco shall not be considered an Affiliate of Contributor or Contributor Parent.
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AGI Distribution Territories” means any country, region, territory or subdivision of the foregoing that is not within the United States of America or Canada.
AGI GmbH” means Allianz Global Investors GmbH, a Gesellschaft mit beschränkter Haftung organized under the laws of Germany.
Agreement” has the meaning set forth in the preamble hereto.
Allianz Global Investors Business” means, collectively, Contributor, AGI GmbH, Allianz Global Investors Holdings GmbH and their respective direct and indirect Subsidiaries.
Allianz Member” means PFP Holdings, Inc., a Delaware corporation.
Ancillary Agreements” means (a) the Bill of Sale, (b)  the Transition Services Agreement, (c) the Core Distribution Agreement, (d) the Cross Distribution Agreement, (e) the A&R Newco Operating Agreement, (f) any AP/EU Sub-Management Agreement(s), (g) any AP/EU Sub-Advisory Agreement(s), (h) the Trademark Assignment Agreement, (i) Intellectual Property Assignment Agreement, (j) the GRASSROOTS Trademark License Agreement, and (k) any other certificates, instruments, or agreements being executed and delivered in connection with this Agreement and the Transactions, including any exhibits or attachments to any of the foregoing or this Agreement.
Annex A” means Annex A to this Agreement, which is incorporated for all purposes into this Agreement and the A&R Newco Operating Agreement.
AP/EU Portfolios” means the Covered Clients that are set forth on Schedule A-5 and any other fund, vehicle, investment scheme or account established for the purpose of offering the Transferred Strategies within the AGI Distribution Territories.
AP/EU Sub-Advisory Agreement” means an agreement pursuant to which AGI GmbH (or an Affiliate thereof) engages the Company (and/or one or more Company Advisors) as a nondiscretionary sub-adviser with respect to one or more AP/EU Portfolios, which agreement shall have commercial terms substantially in the form set forth on Exhibit E, subject to such variations in the form of such agreement as may be reasonably necessary or appropriate in order to comply with Applicable Law, regulatory expectations and market practice within the relevant jurisdiction but which shall minimize to the extent commercially reasonable any substantive variation in terms (including non-commercial terms) from those in the form set forth on Exhibit E.
AP/EU Sub-Management Agreement” means an agreement delegating to the Company (or a Company Advisor) portfolio management authority with respect to one or more AP/EU Portfolios, which agreement shall have commercial terms substantially in the forms set forth on Exhibit F, subject to such variations in the form of such agreement as may be reasonably necessary or appropriate in order to comply with Applicable Law, regulatory expectations and market practice within the relevant jurisdiction but which shall minimize to the extent commercially reasonable any substantive variation in terms (including non-commercial terms) from those in the forms set forth on Exhibit F.
Applicable Law” means, with respect to any Person, property, asset, transaction, event or other matter, any Law applicable or relating to, and legally binding on, such Person, property, asset, transaction, event or other matter, as the case may be.
Assumed Liabilities” has the meaning given to it in Section 2.4.
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Benefit Plan” means each (a) “employee benefit plan” within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA, (b) benefit or compensation plan, policy, program, practice, arrangement or agreement, including any equity, equity-based, retirement, profit sharing, bonus, variable compensation, incentive, severance, separation, change in control, transaction, retention, deferred compensation, fringe benefit, vacation, paid time off, insurance, medical, dental, vision, prescription, fringe benefit, life, disability, sick leave, relocation, expatriate, perquisites, supplemental unemployment benefits or post-employment or retirement benefits (including compensation, pension, health, medical or insurance benefits) or similar plan, program, policy or arrangement, in each case whether or not written, and (c) employment, consulting or other similar individual agreement, plan, policy, arrangement or program, in each case, other than any portion of such plan or arrangement required to be maintained or contributed to by applicable law or otherwise mandated by any Governmental Authority.
Bill of Sale” has the meaning set forth in Section 2.6(a)(i).
Branding Transition Period” has the meaning set forth in Section 5.11(b).
Business Day” means any day that is not a Saturday, a Sunday or a day on which banks in the City of New York are authorized or required to close for regular banking business.
Business Employee” means, as of any particular date, each individual employed by Contributor or any of its Affiliates who provides portfolio management services in accordance with the Transferred Strategies, or whose employment primarily consists of providing services that support such provision of portfolio management services, but only to the extent that such individual is listed on Schedule C, as it may be updated from time to time (as contemplated by Section 3.15(f)).
CARES Act” means the Coronavirus Aid, Relief and Economic Security Act (Pub. L. 116-136); any other similar U.S. state, local or non-U.S. Law intended to address the consequences of COVID-19; and any administrative or other guidance published with respect thereto by any Governmental Authority.
Claim Notice” has the meaning set forth in Section 9.5(a).
Class A Unit” has the meaning set forth in the A&R Newco Operating Agreement.
Client Notice” has the meaning set forth in Section 5.3(d).
Closing” has the meaning set forth in Section 2.5.
Closing Core Distribution Percentage” has the meaning set forth in Annex A.
Closing Date” has the meaning set forth in Section 2.5.
Closing International Revenue Run-Rate” has the meaning set forth in Annex A.
Closing U.S. Revenue Run-Rate” has the meaning set forth in Annex A.
Code” means the U.S. Internal Revenue Code of 1986, as amended.
Company” has the meaning set forth in the preamble hereto.
Company Advisor” means the Subsidiaries of the Company that provide investment advisory or sub-advisory services to non-Affiliates of the Company.
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Company Advisory Agreement” means any advisory agreement, or other arrangements or understandings relating to the Company’s rendering of management, investment advisory or sub-advisory services to any Company Client.
Company Benefit Plan” means each Benefit Plan that is sponsored or maintained by, or required to be contributed to, or with respect to which any potential liability is borne by the Company or any of its Affiliates (including Company Parent).
Company Client” means any investment fund, vehicle or account (including any separately managed account or pooled investment vehicle) with respect to which the Company provides investment management, investment advisory or sub-advisory services or other similar services.
Company Disclosure Schedule” has the meaning set forth in the introductory paragraph of Article IV.
Company Financial Information” has the meaning set forth in Section 4.5.
Company Indemnitees” has the meaning set forth in Section 9.2(a).
Company Intellectual Property” means all Intellectual Property owned or purported to be owned by the Company or any of its Affiliates.
Company Material Adverse Effect” means any change, effect, event, circumstance, occurrence or development that, individually or in the aggregate, has a material adverse effect on the ability of the Company to timely perform its obligations under this Agreement or to consummate the Transactions prior to the Termination Date.
Company Parent” has the meaning set forth in the preamble hereto.
Company Savings Plan” has the meaning set forth in Section 5.10(f).
Company Tax Indemnified Parties” has the meaning set forth in Section 8.1(a).
Company Trust Bank” means Voya Investment Trust Co.
Competition Laws” means the HSR Act (and any similar Law enforced by any Governmental Authority regarding preacquisition notifications for the purpose of competition reviews), the Sherman Act of 1890, as amended, the Clayton Antitrust Act of 1914, as amended, the Federal Trade Commission Act of 1914, as amended, and all other Laws that are designed or intended to prohibit, restrict or regulate actions or transactions having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition or effectuating foreign investment.
Confidentiality Agreement” means the Mutual Confidentiality Agreement, dated as of September 28, 2020, by and between AGI GmbH and Company Parent.
Contract” means any written contract, agreement, indenture, note, bond, loan, instrument, lease, conditional sale contract, purchase or sales order, mortgage, license, franchise, insurance policy, undertaking, commitment or other enforceable arrangement, understanding, obligation or agreement to which the applicable Person is a party or by which the applicable Person or any of its properties or assets is bound.
Contribution” has the meaning set forth in the Recitals.
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Contributor” has the meaning set forth in the preamble hereto.
Contributor 401(k) Plan” has the meaning set forth in Section 5.10(f).
Contributor Benefit Plan” shall mean each Benefit Plan that is sponsored or maintained by, or required to be contributed to, or with respect to which any potential liability is borne by, Contributor or any of its Affiliates (including Contributor Parent), in each case, solely to the extent related to any Business Employee.
Contributor Disclosure Schedule” has the meaning set forth in the introductory paragraph of Article III.
Contributor Financial Information” has the meaning set forth in Section 3.5.
Contributor Indemnitees” has the meaning set forth in Section 9.3(a).
Contributor Marks” has the meaning set forth in Section 5.11(a).
Contributor Material Adverse Effect” means any change, effect, event, circumstance, occurrence or development that, individually or in the aggregate, has or would reasonably be expected to have (a) a material adverse effect on the Transferred Business or the assets, liabilities, financial condition or results of operations of the Transferred Business, taken as a whole or (b) a material adverse effect on the ability of Contributor Parent or Contributor to timely perform its obligations under this Agreement or any Ancillary Agreement or to consummate the Transactions prior to the Termination Date; provided that in the case of clause (a), any such change, effect, event, development, circumstance or occurrence to the extent resulting from, or arising in connection with, any of the following shall not be considered when determining whether a “Contributor Material Adverse Effect” has occurred: (i) changes after the date hereof in conditions in, or affecting, the economy or banking, credit, capital, securities or financial markets in the United States or elsewhere in the world, including changes in interest or exchange rates, disruption thereof and any decline in the price of any security or any market index; (ii) any change after the date hereof generally impacting the industries in which the Transferred Business operates, whether international, national, regional, state, provincial or local; (iii) any change after the date hereof in Laws or the International Financial Reporting Standards, or the enforcement or interpretation thereof; (iv) changes after the date hereof in political or general regulatory conditions, including hostilities, acts of war (whether declared or undeclared), sabotage, terrorism or military actions, or any escalation or worsening of any of the foregoing; (v) any change resulting from or arising out of the execution, announcement or consummation of the Transactions, including any such change relating to the identity of, or facts and circumstances relating to, the Company (provided that this clause (v) shall not apply to any representation or warranty the subject matter of which expressly relates to the foregoing); (vi) any action taken by the Company or Company Parent in breach of its obligations under this Agreement; (vii) any hurricane, flood, tornado, earthquake or other natural disaster, or any epidemic or pandemic (including the SARS-CoV-2 virus and or any mutation or variation thereof and the COVID-19 pandemic) or any other force majeure event after the date hereof, any escalation or worsening of any of the foregoing; (viii) any actions expressly required to be taken or omitted pursuant to this Agreement or taken with the Company’s express written consent (it being understood that actions taken by Contributor or any of its Affiliates in compliance with Section 5.1 shall not be excluded); (ix) the failure of the Transferred Business to achieve any financial projections or forecasts or revenue or earnings predictions, in and of itself; (x) any change in net assets under management or Revenue Run-Rate, in and of itself (it being understood that for purposes of clauses (ix) and (x), the changes, effects, events, circumstances, occurrences or developments giving rise to such failure or changes that are not otherwise excluded from the definition of “Contributor Material Adverse Effect” may be taken into account in determining whether there
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has been a “Contributor Material Adverse Effect”); (xi) the loss of any Business Employee or a Business Employee’s refusal to sign a Transfer Offer (provided, that this clause (xi) shall apply solely to the extent such loss or refusal results from a material breach by the Company or Company Parent of Section 5.10 under this Agreement); and (xii) the fact that the Contributor and its Affiliates have settled with the SEC, the Department of Justice, and certain private parties certain claims, or may settle or otherwise incur liabilities in connection with certain claims under the litigation matters disclosed in Section 3.9 of the Contributor Disclosure Schedule, in respect of the Transferred Business existing on the date of this Agreement relating to the facts, events and circumstances set forth in the DOJ Plea Agreement, the SEC Settlement Agreement and the other Structured Products Documents (such agreements together with the Structured Products Matter, the “Structured Products Resolution”) and the monetary damages and penalties to be paid by Contributor and its Affiliates pursuant to such settlements or litigation (it being understood that for purposes of clause (xii), any other claims or Liabilities related to the facts, events and circumstances set forth in the Structured Products Resolution that are not otherwise excluded from the definition of “Contributor Material Adverse Effect” may be taken into account in determining whether there has been a “Contributor Material Adverse Effect”); except, in the cases of clauses (i)-(iv) and (vii), to the extent such change, effect, event, circumstance, occurrence or development has a disproportionate effect on the Transferred Business or its assets, liabilities, financial condition or results of operations, taken as a whole, compared with other Persons operating in the industries in which the Transferred Business operates.
Contributor Material Contracts” has the meaning set forth in Section 3.8(a).
Contributor Nonqualified DC Plan” has the meaning set forth in Section 5.10(j).
Contributor Parent” has the meaning set forth in the preamble hereto.
Contributor Tax Indemnified Parties” has the meaning set forth in Section 8.1(b).
Control” means possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).
Control Determination” has the meaning set forth in Section 5.15.
Core Distribution Agreement” means the Distribution and Partnership Agreement by and between the Company (and/or one or more Company Advisors) and AGI GmbH (and/or one or more of its Affiliates) with respect to the provision of distribution services for the AP/EU Portfolios within the AGI Distribution Territories, in substantially the form set forth on Exhibit A.
Core Distribution Percentage” means the Closing Core Distribution Percentage as of the Closing through the True-Up Period, and then the Adjusted Core Distribution Percentage following the True-Up Period.
Covered Client” means the Persons set forth on Schedule A, together with (i) any Person identified on Schedule D, to the extent the Parties, acting reasonably and in good faith, agree that such Person should be treated as a Covered Client for purposes hereof, (ii) any other Person that, after the date of this Agreement, enters into an Advisory Agreement with Contributor pursuant to which Contributor provides investment advisory or sub-advisory services to such client in accordance with one or more Transferred Strategies and (iii) any Person who is party to an Advisory Agreement with Contributor pursuant to which Contributor provides investment advisory or sub-advisory services to such client in accordance with one or more Transferred Strategies but was inadvertently omitted from Schedule A; provided, however, that any Person
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that has terminated its Advisory Agreement(s) with Contributor with respect to the Transferred Strategies shall cease to be treated as a Covered Client effective upon such termination, and Schedule A (including each subsection thereof) shall accordingly be deemed to be automatically amended upon the effectiveness of any such termination; provided, further, that “Covered Client” includes, following Closing, clients in respect of the AP/EU Sub-Management Agreements and AP/EU Sub-Advisory Agreements or novations of existing Advisory Agreements (notwithstanding that Contributor is not a party thereto); provided, further, that the Persons identified on Schedule D shall be deemed not to be “Covered Clients” for purposes of the RRR/AUM Statement and the representations and warranties contained in Section 3.5.
Cross Distribution Agreement” means the Distribution and Partnership Agreement by and between the Company (and/or one or more Company Advisors) and AGI GmbH (and/or one or more of its Affiliates) with respect to the provision of distribution services for certain investment advisory clients of the Company and AGI GmbH, in substantially the form set forth on Exhibit B.
De Minimis Amount” has the meaning set forth in Section 9.2(b).
Deferral Plans” has the meaning set forth in Section 5.10(p).
Deferred CARES Act Taxes” means any amount payable by any Person after the Closing Date which would have been payable on or prior to the Closing Date but for the deferral of such Taxes pursuant to the CARES Act.
Delayed Transfer Subsidiary” has the meaning set forth in Section 2.9.
DIF Plan” has the meaning set forth in Section 5.10(p).
Dispute Notice” has the meaning set forth in Section 2.8(d).
DOJ Plea Agreement” means the Plea Agreement, including the Statement of Facts attached thereto, entered into by Contributor on May 17, 2022 with the United States of America, by and through the Department of Justice, Criminal Division, and the United States Attorney’s Office for the Southern District of New York.
Effective Time” means 12:01AM on the Closing Date.
Embodiment” means with respect to any Intellectual Property all documentation, drafts, papers, designs, schematics, diagrams, models, prototypes, software source and object code, computer-stored data, diskettes, manuscripts and other items describing all or any part of any such Intellectual Property or in which all or any part of such Intellectual Property is set forth, embodied, recorded or stored.
Employee Transfer Date” has the meaning set forth in Section 5.10(a).
Encumbrance” means any lien (statutory or otherwise), option, right of first offer or right of first refusal or similar right, lease or sublease, license or sublicense, restrictive covenant, encumbrance, hypothecation, pledge, mortgage, security interest, claim, charge, easement, encroachment, restriction (other than any restriction on transferability imposed by federal or state securities laws) or other adverse claim or encumbrance of any kind.
Environmental Laws” means all Laws relating to (a) the protection or restoration of the environment, including wetlands or indoor air, (b) the handling, use, presence, disposal, release or threatened release of, or exposure to, any hazardous substance or (c) noise control, odor
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control, pollution, contamination or any injury to persons or property from exposure to any hazardous substance.
ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules, regulations and class exemptions of the Department of Labor thereunder.
Estimated Closing Adjustment Statement” has the meaning set forth in Section 2.7(a).
Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder.
Excluded Assets” has the meaning set forth in Section 2.3(b).
Excluded Liabilities” has the meaning set forth in Section 2.4(b).
FINRA” means the Financial Industry Regulatory Authority, Inc. and its Subsidiaries.
Fraud” means, with respect to a Party, an actual and intentional fraud with respect to the making of representations and warranties contained in this Agreement or any other Ancillary Document or any certificate delivered in connection with this Agreement or any Ancillary Agreement and not with respect to other matters; provided, that such actual and intentional fraud of such Party specifically excludes any statement, representation, warranty or omission made negligently or recklessly and shall only be deemed to exist if (i) such Party had actual knowledge that any statements, representations, warranties or omissions made by it were inaccurate when made, (ii) that such statements, representations, warranties or omissions were made with the express intent to induce another Party to this Agreement to rely thereon (or with the expectation that such other Party would rely thereon) or that such other Party would take action or inaction to such other Party’s detriment, (iii) such other Party reasonably relied thereon or took a subsequent action or inaction and (iv) such action or inaction resulted in damages, losses or liabilities to such other Party.
Full Separation and Migration Plans” has the meaning set forth in Section 5.14(a)(iv).
Fund Documentsmeans, with respect to any Registered Fund or Non-Registered Fund, the then-current limited partnership agreement, limited liability company agreement, operating agreement, shareholders’ agreement, memorandum and articles of association, declaration of trust, or similar governing document governing the operations of such Registered Fund or Non-Registered Fund (and entities comprising the same), the then-current Advisory Agreements, managed account agreements, or other similar agreement, sponsorship, subscription and/or other agreements in respect of the management thereof, as amended from to time to time, as well as the then-current offering memorandum (if any) of such Registered Fund or Non-Registered Fund.
Fundamental Representations” means Section 3.1 (Organization and Related Matters), Section 3.2(a) (Authority), Section 3.11(f) (Regulatory Control); Section 3.21 (No Broker), Section 4.1 (Organization and Related Matters), Section 4.2 (Authority; No Violations), Section 4.4(a) (Capital Structure; Subsidiaries) and Section 4.15 (No Broker).
GAAP” means United States generally accepted accounting principles.
GRASSROOTS Trademark License Agreement” means a trademark license agreement pursuant to which Contributor will grant to the Company a worldwide, nonexclusive, perpetual, irrevocable, royalty-free license under the “GRASSROOTS” Trademarks for use in connection with the Transferred Business and its natural evolutions thereof, in a form that is reasonably acceptable to Contributor and the Company.
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Governmental Authority” means any United States or foreign government, any state or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including the SEC or any other authority, agency, department, board, commission or instrumentality of the United States, any State of the United States or any political subdivision thereof or any foreign jurisdiction, and any court, tribunal or arbitrator(s) of competent jurisdiction, and any United States or foreign governmental or non-governmental Self-Regulatory Organization, agency or authority.
Gross Asset Value Statement” has the meaning set forth in Section 8.8.
HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
Indebtedness” of a Person means all obligations and other liabilities (including all obligations in respect of principal, accrued interest, penalties, fees and premiums and all prepayment premiums or penalties and other amounts that may become due as a result of the Transactions) of such Person (a) for borrowed money, (b) evidenced by bonds, debentures, notes and similar instruments, (c) all leases of such Person capitalized (or that should be capitalized) in accordance with GAAP, (d) created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even if the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) secured by a purchase money mortgage or other Encumbrance to secure all or part of the purchase price of the property subject to such Encumbrance, (f) for the deferred purchase price of assets, property, goods or services (other than trade account payables), including all seller notes and “earn-out” payments and purchase price adjustment payments, (g) in respect of letters of credit, bankers’ acceptances, surety bonds and similar instruments (to the extent drawn), (h) for Contracts relating to interest rate protection, swap agreements, collar agreements and other hedging agreements, (i) all deferred revenue, deferred rent, accrued compensation, asset retirement obligations and payables related thereto, (j) in respect of forward sale and purchase agreements, and (k) (i) all obligations for guarantees of another person in respect of the obligations set forth in any of the foregoing clauses and (ii) the obligations set forth in any of the foregoing clauses of any other Person secured by any Encumbrance on any property or asset of such first Person (whether or not such obligation is assumed by such Person).
Indemnification Deductible” has the meaning set forth in Section 9.2(b).
Indemnified Party” has the meaning set forth in Section 9.5(a).
Indemnifying Party” has the meaning set forth in Section 9.5(a).
Indemnity Cap” has the meaning set forth in Section 9.2(b).
Infringe” has the meaning set forth in Section 3.17(c).
Initial Separation and Migration Plan” has the meaning set forth in Section 5.14(a)(iv).
Integration Costs” means all costs and expenses (including any out-of-pocket and third-party costs) incurred in connection with (a) the conversion of the Transferred Assets into a format different from the format as of the Closing Date or (b) the integration of the Transferred Assets into the systems and infrastructure of the Company or its designee, but excluding the internal costs and expenses incurred by Contributor and its Affiliates for the time spent by their employees on the matters contemplated by this definition.
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Intellectual Property” means any and all intellectual property and similar proprietary rights in any jurisdiction throughout the world, including to all (a) patents, patent applications, and statutory invention registrations, and all improvements to the inventions disclosed in each such patent, patent application and registration, (b) trademarks, service marks, certification marks, logos, trade dress, trade names, symbols, corporate names, brand names, domain names, social media identifiers and accounts and other indicators of source or origin (in each case, whether or not registered), including all goodwill associated therewith (collectively, “Trademarks”), (c) copyrights and works of authorship and mask work rights (in each case, whether or not registered) now or hereafter provided by Applicable Law, regardless of the medium of fixation or means of expression, (d) trade secrets, confidential information and confidential know-how (collectively, “Trade Secrets”), (e) software (including source code, object code, firmware, operating systems and specifications), (f) data, databases and data collections and (g) to the extent applicable, applications, registrations, renewals, extensions, redivisionals, continuations, continuations-in-part, revisions, divisionals, provisionals, reissues, reexaminations, reversions, derivative works, moral rights and foreign counterparts of or in connection with any of the foregoing.
Intellectual Property Assignment Agreement” has the meaning set forth in Section 5.13(a).
Interim Period” means the period from and after the date of this Agreement through the earlier of (a) the Closing and (b) the termination of this Agreement pursuant to Section 7.1.
Investment Advisers Act” means the Investment Advisers Act of 1940, as amended, and the rules and regulations of the SEC thereunder.
Investment Company Act” means the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder.
Investment Company Advisory Agreement” means an investment advisory agreement entered into by a Company Advisor or Contributor, as applicable, for the purpose of providing investment advisory or sub-advisory services to a U.S. Registered Fund (including, for the avoidance of doubt, any sub-advisory agreement entered into by a Company Advisor or Contributor, as applicable, with another adviser or sub-adviser).
IP Creator” has the meaning set forth in Section 3.17(e).
IRS” means the U.S. Internal Revenue Service.
IT Assets” means computers, software, firmware, middleware, servers, workstations, routers, hubs, switches, data communications lines and all other information technology equipment, whether physical, virtual or in the cloud, including all documentation related to the foregoing.
Knowledge of the Company” means the actual knowledge, as of the date of this Agreement, and the knowledge such individuals would have acquired in the exercise of due inquiry, of Micheline Faver, Huey Falgout and Trevor Ogle.
Knowledge of Contributor” means the actual knowledge, as of the date of this Agreement, and the knowledge such individuals would have acquired in the exercise of due inquiry, of Paul Koo, Tobias Pross, Thomas Schindler and John Viggiano; provided, that such due inquiry shall not require such individuals to conduct (or have conducted) any searches, analyses or opinions (including freedom-to-operate opinions) with respect to Intellectual Property.
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Law” means any United States or foreign federal, state or local statute, law (whether statutory or common law), ordinance, rule, administrative interpretation, regulation, Order, writ, directive, policy, guideline or other requirement (including those of any Self-Regulatory Organization).
Leased Real Property” means the real property leased or subleased pursuant to a Lease or otherwise used or occupied by Contributor or the Company, as applicable.
Leases” means any real estate leases and subleases to which Contributor (with respect to the Transferred Business) or the Company, as applicable, is a party.
Liabilities” means any and all indebtedness, liabilities, commitments or obligations, whether accrued or fixed, known or unknown, absolute or contingent, matured or unmatured, liquidated or unliquidated, determined or determinable, on or off-balance sheet, and whether arising in the past, present or future, and including those arising under any Contract, Proceeding or Order.
Licensed Intellectual Property” means the Intellectual Property licensed to the Company pursuant to Section 5.11 and Section 5.12 of this Agreement taken together.
Losses” means any and all damages, liabilities, losses, obligations, claims of any kind, interest, fines, penalties, assessments, costs, fees, deficiencies, settlements, awards, judgments, offsets, diminutions in value, expenses or charges of any kind (including reasonable fees, expenses of attorneys and investigation and costs of enforcing any rights to indemnification hereunder or pursuing any insurance recovery).
LTIPA” has the meaning set forth in Section 5.10(p).
made available” means included in the Intralinks virtual data room, as applicable, (i) created by Contributor and accessible by the Company or (ii) created by the Company and made accessible by the Contributor, in each case at least two (2) Business Days prior to the date hereof.
Material Permits” means Permits that are material and necessary for the performance by Contributor or its Affiliates, as applicable of its obligations under the Investment Company Advisory Agreements, as it is now being conducted by Contributor or its Affiliates.
Maximum Contributable Net Revenue Run-Rate” has the meaning set forth in Annex A.
Multiemployer Plan” means any “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA or Section 3(37) of ERISA.
Negative Consent Notice” has the meaning set forth in Section 5.3(b).
Newco” has the meaning set forth in the preamble hereto.
Non-Investment Company Advisory Agreement” means with respect to Contributor, any investment advisory, investment management or AP/EU Sub-Advisory Agreement entered into between Contributor and any Covered Client that is not a U.S. Registered Fund.
Non-Registered Fund” means with respect to Contributor, the pooled investment vehicles listed on Schedule A-1.
Non-U.S. Public Fund” means with respect to Contributor, the pooled investment vehicles listed on Schedule A-2.
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Order” means any order, judgment, injunction, award, decree or writ adopted or imposed by, including any consent decree, settlement agreement or similar written agreement with, any Governmental Authority.
Ordinary Course of Business” means an action taken or not taken by a Person that in the usual course of the normal day to day operations of such Person consistent with past practices of such person.
Organizational Documents” means: (a) with respect to any Person that is a corporation or trust bank, its articles or certificate of incorporation or memorandum and articles of association, as the case may be, and bylaws; (b) with respect to any Person that is a partnership, its certificate of partnership and partnership agreement; (c) with respect to any Person that is a limited liability company, its certificate of formation and limited liability company or operating agreement; (d) with respect to any Person that is a trust or other entity, its declaration or agreement of trust or constituent document; and (e) with respect to any other Person, its comparable organizational documents; in each case, as has been amended or restated and as in effect on the date hereof.
Parties” has the meaning set forth in the preamble hereto.
Performance Record” means the non-exclusive right to refer to the historical performance record and financial history of the Covered Clients, to the extent related to the operation of the Transferred Strategies; provided, for clarity, that “Performance Record” does not include any right to use the Contributor Marks (except as permitted under Section 5.11).
Permits” means all permits, licenses, registrations, agreements, waivers, approvals and authorizations of a Governmental Authority held, used or required by the applicable Person in connection with its business and operations.
Permitted Encumbrances” means (a) Encumbrances for Taxes, assessments or other governmental charges not yet due and payable the amount or validity of which are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, (b) mechanics’, materialmen’s, carriers’, workers’, repairers’ and Encumbrances arising or incurred in the Ordinary Course of Business or in connection with construction contracts for amounts that are not yet delinquent or are being contested in good faith and for which adequate reserves have been established in accordance with GAAP, (c) zoning, entitlement, building codes and other land use regulations, ordinances or legal requirements imposed by any Governmental Authorities having jurisdiction over the Leased Real Property, (d) all rights relating to the construction and maintenance in connection with any public utility of wires, poles, pipes, conduits and appurtenances thereto, on, under or above the Leased Real Property, (e)  statutory Encumbrances in favor of lessors arising in connection with any property leased to the Transferred Business, (f) other liens, defects, irregularities or imperfections of title, encroachments, easements, servitudes, permits, rights of way, flowage rights, restrictions, leases, licenses, covenants, sidetrack agreements and oil, gas, mineral and mining reservations, rights, licenses and leases, which, in each case and in the aggregate, do not materially impair the present use or occupancy of the Leased Real Property, and (g) non-exclusive licenses and other similar rights granted with respect to Intellectual Property in the Ordinary Course of Business.
Person” means any individual, corporation, company, partnership (limited or general), limited liability company, joint venture, association, trust or other business entity.
    “Personal Information” means all information irrespective of the form or medium in which it exists (including paper, electronic and other forms) that (i) identifies, relates to,
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describes, is reasonably capable of being associated with or could reasonably be linked, directly or indirectly, with a particular individual, device or household or (ii) otherwise constitutes personal data or personal information (or any other similar term) under any applicable Law, including as defined under any applicable Privacy Laws, including name, physical address, telephone number, email address, financial account number or government-issued identifier (including Social Security number or equivalent identifier and driver’s license number), passport number, medical, health or insurance information, gender, date of birth, educational or employment information, religious or political views or affiliations, marital or other status, any other data used or intended to be used to identify, contact or precisely locate an individual (e.g., geolocation data).

Post-Closing Tax Period” means any taxable year or period that begins after the Closing Date and, with respect to any Straddle Period, the portion of such taxable year or period beginning after the Closing Date.
Pre-Closing Communications” has the meaning set forth in Section 10.12(b).
Pre-Closing Confidentiality Agreement” shall mean those Contracts by and between Contributor Parent or any of its Subsidiaries (including Contributor) and Persons expressing an interest in acquiring a material ownership interest (whether by merger, sale or purchase of capital stock, sale or purchase of assets or otherwise) in the equity securities of the assets of the Transferred Business, taken as a whole, in connection with any process leading to the Transactions, or governing the confidentiality of information about the Transferred Business.
Pre-Closing Tax Period” means any taxable year or period that ends on or before the Closing Date and, with respect to any Straddle Period, the portion of such taxable year or period ending on and including the Closing Date.
Prior Contributor Counsel” has the meaning set forth in Section 10.12(a).
Privacy Laws” means all Laws worldwide relating to the collection, destruction, storage, use, privacy, security, protection, transfer or other Processing of data (including all Laws governing breach notification, whether or not such breach impacted Personal Information), including but not limited to the EU General Data Protection Regulation 2016/679, the UK General Data Protection Regulation and the Data Protection Act of 2018, the CAN-SPAM Act, the Gramm-Leach-Bliley Act and the California Consumer Privacy Act of 2018, any U.S. state data protection, data breach notification or data security Laws, PRC Civil Code, the PRC Personal Information Protection Law, the PRC Data Security Law, the PRC Cybersecurity Law, Taiwan’s Personal Data Protection Act 2015, Hong Kong’s Personal Data (Privacy) Ordinance (Cap. 486), Japan’s Act on the Protection of Personal Information, Singapore’s Personal Data Protection Act, any successor legislation to any of the foregoing and any Law concerning requirements for any outbound communications (including e-mail marketing, telephone or and text messaging contact) and other similar laws in applicable jurisdictions.
Privileged Materials” has the meaning set forth in Section 10.12(b).
Proceedings” has the meaning set forth in Section 3.9.
Process,” “Processing” or “Processed” means any operation or set of operations which is performed upon Personal Information, by any means, such as collection, recording, organization, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, blocking, erasure or destruction.
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Reference Date” has the meaning set forth in Annex A.
Reference Date Assets Under Management” has the meaning set forth in Annex A.
Reference Net Revenue Run-Rate” has the meaning set forth in Annex A.
Registered Fund” means a U.S. Registered Fund or Non-U.S. Public Fund.
Registered Fund Boards” means the boards of directors or trustees of the Registered Funds, as applicable.
Regulatory Documents” means, with respect to a Person, all forms, reports, registration statements, schedules and other documents filed or furnished, or required to be filed or furnished, by such Person pursuant to the securities Laws or banking Laws or the rules and regulations of any Governmental Authority (including FINRA).
Revenue Run-Rate” has the meaning set forth on Annex A.
Routine Inspection” has the meaning set forth in Section 3.11(c).
RRR/AUM Statement” means the statement of historical revenue run-rate and assets under management set forth on Schedule B.
SEC” means the U.S. Securities and Exchange Commission.
SEC Settlement Agreement” means that certain order instituting administrative and cease-and-desist proceedings, pursuant to Sections 15(b) and 21C of the Exchange Act and Sections 203(e) and 203(k) of the Investment Advisers Act, making findings, and imposing remedial sanctions and cease-and-desist order, instituted against Contributor by the SEC, dated May 17, 2022.
Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC thereunder.
Self-Regulatory Organization” means a self-regulatory organization, including any “self-regulatory organization” as such term is defined in Section 3(a)(26) of the Exchange Act and any other U.S. or non-U.S. securities exchange, futures exchange, futures association, commodities exchange, clearinghouse or clearing organization.
Separation and Migration Plans” has the meaning set forth in Section 5.14(a)(iv).
Separation Costs” means the costs and expenses (including any out-of-pocket and third-party costs) incurred in connection with the (a) separation of the Transferred Assets and Embodiments of Licensed Intellectual Property from the assets, infrastructure and data of Contributor and its Affiliates, (b) preparation of such Transferred Assets for delivery to Company or to the systems of Company and its Affiliates and (c) transmission of such Transferred Assets outside of the information technology systems or facilities of Contributor or its Affiliates, in order to allow Company to take possession of such Transferred Assets and Embodiments of the Licensed Intellectual Property.
Specified Representation” means Section 3.5 (Financial Information).
Sponsored Fund” means (a) with respect to the Contributor (or any Affiliate thereof), (i) any Sponsored U.S. Registered Fund, (ii) any Sponsored Non-U.S. Public Fund and (iii) any
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Sponsored Non-Registered Fund and (b) with respect to the Company, (x) a pooled investment vehicle (including a commingled pension fund or common trust fund), (y) an investment company (or series thereof) registered under the Investment Company Act for which the Company provides advisory or sub-advisory services pursuant to an Investment Company Advisory Agreement and (z) a collective investment scheme governed by the regulations on Undertakings for the Collective Investment of Transferable Securities or any other publically offered fund other than in clause (y) above for which the Company provides advisory or sub-advisory services pursuant to a Company Advisory Agreement, in each case of (x), (y) and (z), for which the Company or any of its Subsidiaries acts as the investment adviser, investment manager, sponsor or in a similar capacity (other than for which the Company or its Subsidiaries act solely as a sub-adviser or portfolio consultant or in a similar capacity).
Sponsored Non-Registered Fund” means any Non-Registered Fund that is a Covered Client for which Contributor (or any Affiliate thereof) acts as the primary investment adviser, investment manager, sponsor or in a similar capacity (other than a Non-Registered Fund for which Contributor (including its Affiliates) acts solely as a sub-adviser, sub-manager or portfolio consultant or in a similar capacity).
Sponsored Non-U.S. Public Fund” means any Non-U.S. Public Fund that is a Covered Client for which Contributor (or any Affiliate thereof) acts as the primary investment adviser, investment manager, sponsor or in a similar capacity (other than a Non-U.S. Public Fund for which Contributor (including its Affiliates) acts solely as a sub-adviser, sub-manager or portfolio consultant or in a similar capacity).
Sponsored U.S. Registered Fund” means any U.S. Registered Fund that is a Covered Client for which Contributor (or any Affiliate thereof) acts as the primary investment adviser, investment manager, sponsor or in a similar capacity (other than (i) a U.S. Registered Fund for which Contributor (including its Affiliates) acts solely as a sub-adviser, sub-manager or portfolio consultant or in a similar capacity, (ii) Sound Harbor Fund I and (iii) Sound Harbor Fund II).
Straddle Period” has the meaning set forth in Section 8.2(b).
Structured Products Documents” has the meaning set forth in Section 3.9 of the Contributor Disclosure Schedule.
Structured Products Matter” has the meaning set forth in Section 3.9 of the Contributor Disclosure Schedule.
Structured Products Resolution” has the meaning set forth in definition of “Contributor Material Adverse Effect”.
Sub-Advised AP/EU Portfolio” has the meaning set forth in Section 5.7(a).
Subsidiary” means, when used with reference to a Person, any other Person of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other governing body or persons performing similar functions, or more than fifty percent (50%) of the outstanding voting securities of which are owned, directly or indirectly, by such Person; provided, however, that none of the following shall be considered to be Subsidiaries of the Company or Contributor or any Affiliate of any such Party: (a) any entity registered as an investment company under the Investment Company Act; (b) any entity that would, but for Section 3(c)(1) or 3(c)(7) of the Investment Company Act, be required to be so registered; and (c) any other entity intended to serve as an investment pool of any kind; provided, further, that, notwithstanding anything contained herein to the contrary, neither the Company nor any of its Subsidiaries shall be considered a Subsidiary of Contributor or Contributor Parent and
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neither the Contributor nor any of its Subsidiaries shall be considered a Subsidiary of the Company or Company Parent; provided, further, that prior to the Closing, Newco shall not be considered a Subsidiary of the Company or Company Parent and from and after the Closing, Newco shall not be considered a Subsidiary of Contributor or Contributor Parent.
Tangible Class A Shareholders’ Equity” means an amount equal to the shareholders’ equity (prepared in accordance with GAAP) of the Class A Units (i) after excluding minorities for Class A Units, (ii) before the contribution of Transferred Assets and (iii) after excluding intangible assets, historical deferred tax assets and deferred compensation adjustments, which shall be calculated in a manner consistent with the line items and adjustments included in the illustrative calculation provided in Section 4.5(i) of the Company Disclosure Schedule.
Target VC Amount” means (i) for any applicable Transferred Employee party to a retention letter with the Company or its Affiliate, the variable compensation floor for the applicable year communicated to such Transferred Employee in such retention letter or (ii) for any other applicable Transferred Employee, the Transferred Employee’s 2021 variable compensation, subject to application of a factor of minus twenty-five percent (-25%).
Tax Return” means any return, report, declaration, information return, election, disclosure, claim for refund or other forms (including any attachment thereto and any amendment thereof) filed or required to be filed in connection with the assessment or collection of any Taxes or the administration of any Laws relating to any Tax.
Tax Sharing Agreement” means any Tax sharing, allocation, grouping or indemnification Contract, agreement, provision or arrangement (other than pursuant to any Contract entered into in the Ordinary Course of Business and the primary purpose of which does not relate to Taxes), including any agreement or arrangement, as a result of which liability of any Person to a Taxing Authority is determined or taken into account with reference to the activities of any other Person, other than any such Contract agreement, provision or arrangement that is solely between two or more Subsidiaries of the Company.
Taxes” means any U.S. federal, state, local or non-U.S. income, franchise, gains, capital, real property, goods and services, transfer, value added, alternative minimum, add-on minimum, profits, gross receipts, windfall profits, severance, ad valorem, personal property, production, sales, use, excise, license, premium, business and occupation, disability, employment, payroll, unemployment, severance, customs, social security, environmental, escheat, stamp, documentary stamp, estimated or withholding taxes, or any tax, duty, fee, assessment or charge of any kind whatsoever imposed by any Taxing Authority, together with any interest, additions or penalties imposed in respect of the foregoing.
Taxing Authority” means any Governmental Authority having jurisdiction over the assessment, determination, collection or other imposition of any Tax.
Tax Withholding Rules” shall mean (i) Sections 1471 to 1474 of the Code and any other similar legislation, regulations or guidance enacted in any other jurisdiction which seeks to implement similar financial account information reporting and/or withholding tax regimes; (ii) the OECD Standard for Automatic Exchange of Financial Account Information in Tax Matters – the Common Reporting Standard and any associated guidance; (iii) any intergovernmental agreement, treaty, regulation, guidance, standard or other agreement entered into in order to comply with, facilitate, supplement or implement the legislation, regulations, guidance or standards described in sub-paragraphs (i) and (ii), (iv) Section 1446(f) of the Code and (v) any legislation, regulations or guidance that give effect to the foregoing.
Termination Date” has the meaning set forth in Section 7.1(a)(v).
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Third Party Claim” has the meaning set forth in Section 9.5(b).
Third Party Primary Advisor” means any primary investment advisor of an Advisory Agreement that is not an Affiliate of Contributor.
Trade Secrets” has the meaning set forth in the definition of “Intellectual Property.”
Trademark Assignment Agreement” means the Trademark Assignment Agreement, substantially in the form of Exhibit I, by and between the Company (and/or its Affiliates) and Contributor (and/or its Affiliates).
Trademarks” has the meaning set forth in the definition of “Intellectual Property.”
Transactions” means the transactions contemplated by this Agreement and the Ancillary Agreements.
Transfer Offer” has the meaning set forth in Section 5.10(a).
Transfer Taxes” has the meaning set forth in Section 8.4.
Transferred Assets” has the meaning set forth in Section 2.3(a).
Transferred Books and Records” means all books and records, including financial and accounting records, supplier and customer lists, research data and resources (other than research purchased with “soft dollars”), compliance records, regulator correspondence, marketing and promotional materials, in each case related to the Transferred Business or the Transferred Employees in existence at the Closing Date, and in each case except as otherwise expressly provided in the mutually agreed Initial Separation and Migration Plan in effect as of the Closing; provided, however, that “Transferred Books and Records” shall not include (A) any original documents that Contributor or any of its Affiliates is required to retain under Applicable Law or Order; (B) Contributor’s minute books, stock records and other corporate or organizational records relating to corporate organization, formation or capitalization of internal corporate proceedings or corporate policies (except to the extent required in connection with the operation of the Transferred Business); (C) any books, records, files, papers, documents that are subject to the attorney-client privilege, provided, that the Parties shall discuss in good faith and implement measures to provide such information to the Company in a manner that preserves attorney-client privilege; (D) any Tax Returns and other documents, materials and information related to Taxes of Contributor or any of its Affiliates (except to the extent such Tax Returns or other documents, materials and information (or portions thereof) relate to the Transferred Assets or Transferred Business); (E) any books, records, files, papers, documents and information to the extent they primarily relate to the Excluded Assets or Excluded Liabilities; (F) any other books and records which Contributor is prohibited from disclosing or transferring to the Company under Applicable Law.
Transferred Business” means the portion of Contributor’s asset management business relating to the Business Employees’ provision of the Transferred Strategies to the Covered Clients.
Transferred Contracts and Equipment” means, other than IT Assets that do not constitute personal computers, monitors and other similar equipment allocated for use for the Transferred Employees pursuant to the Initial Separation and Migration Plan, any contracts, Leases, equipment or other personal property that primarily relate to, or are used or held primarily for use in connection with, or necessary for the operation of, the Transferred Business, in each case
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except as otherwise expressly provided in the mutually agreed Initial Separation and Migration Plan in effect as of the Closing.
Transferred Customer Information” means a copy of all information (including Personal Information) that (a) are owned or controlled by Contributor or its Affiliates, (b) relate to the Transferred Business (other than the Transferred Employee Information) and (c) Contributor is permitted under applicable Law to transfer to the Company (which, for clarity, excludes research paid for by “soft dollars”), in each case except as otherwise expressly provided in the mutually agreed Initial Separation and Migration Plan in effect as of the Closing; provided, however, that “Transferred Customer Information” shall not include (i) any information that is subject to the attorney-client privilege, provided, that the Parties shall discuss in good faith and implement measures to provide such information to the Company in a manner that preserves attorney-client privilege; (ii) any Tax Returns and other documents, materials and information related to Taxes of Contributor or any of its Affiliates (except to the extent, such Tax Returns or other documents, materials and information (or portions thereof) relate to the Transferred Assets or Transferred Business); (iii) information related to research purchased with “soft dollars”; or (iv) any information regarding a customer from whom consent is contractually required in connection with the Transaction and who has not provided such consent.
Transferred Employee” means each Business Employee (regardless of whether such individual is listed on Schedule C as of the date hereof or other particular date) who is offered and accepts an offer to transfer his or her employment to the Company on or after the Closing Date pursuant to Section 5.10 or the Transition Services Agreement and who actually commences such employment.
Transferred Employee Information” means all information (including Personal Information) that (a) are owned or controlled by Contributor, (b) relate to any Transferred Employee, and (c) Contributor is permitted under applicable Law and Contracts to transfer to the Company.
Transferred Intellectual Property” means all Intellectual Property owned by Contributor or its Affiliates and that primarily relates to, or is used or held for use in connection with, or necessary for the operation of, the Transferred Business, except as otherwise expressly provided in the mutually agreed Initial Separation and Migration Plan in effect as of the Closing but including the Intellectual Property described on Exhibit H.
Transferred Personal Information” means the Transferred Customer Information and the Transferred Employee Information.
Transferred Registered Intellectual Property” has the meaning set forth in Section 3.17(a).
Transferred Strategies” means the following strategies: (i) Income & Growth (Equity, Convertibles and High Yield), (ii) US Private Credit (Investment Grade US Private Placements, US High Yield Private Placements, Sound Harbor Fund I and Sound Harbor Fund II), (iii) Fundamental Equity (Artificial Intelligence, Global Technology, US Healthcare, Large Cap, Small Mid Cap, Grassroots and Disciplined Equity) and (iv) any strategies that are successors to or substantially incorporate the foregoing, or are otherwise managed by the Business Employees (or, after the Closing, managed by the Transferred Employees).
Transition Committee” has the meaning set forth in Section 5.14(a).
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Transition Services Agreement” means the Transition Services Agreement, substantially in the form of Exhibit C, by and between the Company (and/or one or more of its Affiliates) and Contributor (and/or one or more of its Affiliates).
True-Up Date” has the meaning set forth in Annex A.
True-Up International Revenue Run-Rate” has the meaning set forth in Annex A.
True-Up Period” has the meaning set forth in Annex A.
True-Up U.S. Revenue Run-Rate” has the meaning set forth in Annex A.
True-Up Statement” has the meaning set forth in Section 2.8(c).
U.S. Registered Fund” means with respect to Contributor, the investment companies (or series thereof) listed on Schedule A-3.
Voya Member” means Voya Holdings Inc.
Voya Newco Units” means the limited liability company member interests in Newco to be issued in accordance with the A&R Newco Operating Agreement.
Willful Breach” means, with respect to any breaches of any of the covenants or other agreements contained in this Agreement, a material breach that is a consequence of an intentional act or intentional failure to act undertaken by the breaching party with actual knowledge that such Party’s act or failure to act would, or would reasonably be expected to, result in or constitute a breach of this Agreement.
Article II
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
Section 1.2Transfer of Rights. On the terms and subject to the conditions set forth in this Agreement, at the Closing, Contributor shall transfer, convey, assign and deliver to Newco the right to acquire the Transferred Assets and to assume the Assumed Liabilities at such time and in such manner as directed by Newco.
Section 1.3Contribution of Company Equity to Newco. On the terms and subject to the conditions set forth in this Agreement, at the Closing following the transfer of rights described in Section 2.1 to Newco, Company Parent shall cause the Voya Member to transfer, convey, assign and deliver to Newco 100% of the limited liability company interests of the Company free and clear of all liens (other than restrictions on transfer under applicable securities laws).
Section 1.4Transfer of Transferred Assets. On the terms and subject to the conditions set forth in this Agreement, at the Closing, following the transfer of the limited liability company interests of Company described in Section 2.2 to Newco, as directed by Newco:
(a)Contributor shall (and, as applicable, shall cause its relevant Affiliates to) contribute, transfer, convey, assign and deliver to the Company, and Newco shall cause the Company to acquire and accept from Contributor (and, if applicable, its Affiliates), free and clear of all Encumbrances other than the Permitted Encumbrances, all of the Contributor’s (and, if applicable, its Affiliates’) right, title and interest in, to and under the following assets, property
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and rights of the Contributor for the purpose of conducting the portfolio management activities of the Business Employees and as necessary for the operation of the Transferred Business (but in all cases excluding the Excluded Assets) (collectively, the “Transferred Assets”):
(i)Advisory Agreements between Contributor and the Covered Clients, to the extent permitted under the terms of such Advisory Agreements and Applicable Law subject in each case to the receipt of requisite consents and approvals;
(ii)the Transferred Intellectual Property, and all rights to sue or recover and retain damages and costs and attorneys’ fees for past, present and future infringement, misappropriation or other violation of any of the Transferred Intellectual Property, and with respect to all of the Trademarks constituting Transferred Intellectual Property, all goodwill associated therewith;
(iii)copies of, access to or rights to use, all research resources of Contributor or Contributor Parent that primarily relate to, or are primarily used or held for use in connection with, or necessary for the operation of the Transferred Business or the Business Employees, or the management of, the Transferred Strategies as conducted as of the Closing;
(iv)the Transferred Books and Records;
(v)the Transferred Personal Information;
(vi)the Transferred Contracts and Equipment; and
(vii)all rights, causes of action, claims and credits to the extent relating to, arising out of or in respect of any other Transferred Asset or any Assumed Liability.
(b)Contributor and its Affiliates shall not contribute, transfer, convey, assign or deliver to the Company and the Company shall not receive any of Contributor’s (any of its Affiliates’) right, title and interest in and to any assets of Contributor and its Affiliates other than the Transferred Assets (the “Excluded Assets”). Without limiting the generality of the foregoing and notwithstanding anything to the contrary, the Excluded Assets shall include the following items:
(i)accounts receivable, fees or other amounts, including all fees or other amounts due to Contributor or any of its Affiliates from Covered Clients in respect of periods ending prior to the Closing;
(ii)all cash, cash equivalents, bank deposits, securities and investments;
(iii)all current and prior insurance policies of Contributor or any of its Affiliates and all rights of any nature with respect thereto, including all benefits, proceeds, premium refunds or other insurance recoveries payable or paid thereunder and rights to assert claims with respect to any such benefits, proceeds, premium refunds or other insurance recoveries;
(iv)all (A) real property of Contributor or its Affiliates and any buildings and improvements thereon and (B) all leasehold interests of Contributor or its Affiliates in real property, including any prepaid rent, security deposits and options to renew or purchase in connection therewith and, in each case, except as included in the Transferred Contracts and Equipment;
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(v)all furniture, fixtures, equipment (including all IT Assets), machinery, and other tangible personal property owned, leased or used by Contributor or any of its Affiliates except as included in the Transferred Contracts and Equipment;
(vi)all Intellectual Property owned by Contributor or any of its Affiliates except the Transferred Intellectual Property;
(vii)all Personal Information owned or controlled by Contributor or any of its Affiliates except the Transferred Personal Information;
(viii)all Contributor Benefit Plans and all assets set aside to fund the payment of benefits or liabilities related thereto;
(ix)all Tax assets (including Tax refunds, prepayments and other Tax benefits, whether in the form of a Tax receivable, Tax credit or otherwise) of Contributor or any of its Affiliates for any period or relating to the Transferred Business, the Transferred Assets or the Excluded Liabilities for any taxable period (or portion thereof) ending on or prior to the Closing Date;
(x)all prepaid expenses, credits, deposits and advance payments of Contributor or its Affiliates;
(xi)all Advisory Agreements with respect to AP/EU Portfolios; and
(xii)subject to Section 5.4 and other than the Transferred Books and Records, all books and records of Contributor or its Affiliates.
Section 1.1Assumption of Liabilities.
(a)On the terms and subject to the conditions set forth in this Agreement, at the Closing, following the transfer of the limited liability company interests of Company described in Section 2.2 to Newco, as directed by Newco, the Company shall assume and be solely responsible for, and duly and properly perform, discharge and pay, when due, any and all Liabilities (i) arising under Advisory Agreements and other Transferred Assets or (ii) with respect to any Transferred Employee, but only, in the case of the foregoing clauses (i) and (ii), to the extent such Liabilities are required to be performed or paid after the Closing or, if later, the date of transfer of such Transferred Asset or Transferred Employee to the Company and which do not relate to the failure to perform or other breach, default or other violation by Contributor or any of its Affiliates prior to the Closing or applicable transfer date (the “Assumed Liabilities”), but excluding, in each case, any Excluded Liabilities.
(b)Notwithstanding the foregoing or anything in this Agreement to the contrary, neither Newco nor the Company shall assume or be obligated to pay, perform or otherwise discharge any Liabilities of the Contributor or any of its Affiliates of any kind or nature whatsoever other than the Assumed Liabilities (collectively, the “Excluded Liabilities”). The Contributor shall, and shall cause each of its Affiliates to, pay, perform, satisfy and discharge when due all Excluded Liabilities. Without limiting the generality of the foregoing, the Excluded Liabilities shall include the following:
(i)Liabilities relating to, arising out of or resulting from the conduct, ownership or operation of the Transferred Business prior to the Closing;
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(ii)Liabilities relating to, arising out of or resulting from the conduct, ownership or operation of any Excluded Asset or any business of Contributor or any of its Affiliates other than the Transferred Business;
(iii)Liabilities for which Contributor or its Affiliates are made responsible pursuant to the express terms of this Agreement; 
(iv)Liabilities relating to each Excluded Asset, including any Liability arising at any time pursuant to an agreement entered into in connection with the disposition of an Excluded Asset;
(v)Liabilities arising out of a claim or demand by a third party or any Governmental Authority relating to any investment decision made by Contributor or any of its Affiliates relating to a Sub-Advised AP/EU Portfolio to the extent such investment decision is not consistent with recommendations made by the Company or any of its Affiliates (A) in its capacity as sub-advisor under the applicable AP/EU Sub-Advisory Agreement and (B) in material compliance with the sub-advisor’s obligations set forth in the applicable AP/EU Sub-Advisory Agreement;
(vi)Liabilities for any future claims or losses arising out of Contributor’s or any Affiliate’s failure to appropriately remove or permit access to any data or IT Assets;
(vii)Liabilities arising out of, resulting from or otherwise relating to the facts, events and circumstances set forth in the Structured Products Resolution, including any existing or future claims arising out of, resulting from or otherwise relating to alleged facts, events and circumstances similar to those underlying the Structured Products Resolution;
(viii)Liabilities of Contributor or any Affiliate of Contributor arising out of or relating to Transactions contemplated by this Agreement;
(ix)All accounts payable, fees or other amounts, including all fees or other amounts payable by of Contributor or any Affiliate of Contributor (a) in respect of periods ending on or prior to the Closing and (b) that constitute intercompany payables owing to Contributor or any Affiliate of Contributor;
(x)Liabilities in respect of broker’s, finder’s, investment banker’s, financial advisor’s and other fees or commissions in connection with the Transactions contemplated hereby based upon arrangements made by or on behalf of Contributor, including in respect of Ardea Partners LP;
(xi)Liabilities relating to or arising from Contributor Benefit Plans;
(xii)Liabilities of Contributor and its Affiliates relating to or arising out of the employment, or termination of employment, of any employee prior to the Closing; and
(xiii)Liabilities with respect to Taxes in any form (including any liability for the payment of any amounts with respect to Taxes as a result of (a) being or ceasing to be a member of an affiliated, consolidated, combined or unitary group (including any arrangement for group or consortium relief or similar arrangement) for any period, (b) any express or implied obligation to indemnify or otherwise assume or succeed to the liability of any other Person, whether imposed by Applicable Law, Contract or otherwise or (c) any Tax Sharing Agreement of Contributor or any of its Affiliates for any period or
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relating to the Transferred Business or the Transferred Assets for any taxable period (or portion thereof) ending on or prior to the Closing Date.
Section 1.5Closing. The consummation of the transactions contemplated by this Agreement (the “Closing”) shall be held remotely through electronic exchange of documents on July 25, 2022, assuming the conditions set forth in Article VI have been satisfied or waived by the Parties entitled to the benefits thereto (other than conditions which relate to actions to be taken at the Closing, but subject to the satisfaction or applicable waiver of such conditions at the Closing), or at such other date, time and place as the Company and Contributor shall mutually agree to in writing (the date on which the Closing actually takes place being referred to herein as the “Closing Date”). The Closing will be deemed effective as of the Effective Time for tax and accounting purposes.
Section 1.6Closing Deliverables. At the Closing:
(a)Contributor shall deliver, or cause to be delivered, to the Company or Newco, as the case may be:
(i)a bill of sale, duly executed by Contributor, covering the Transferred Business (the “Bill of Sale”) and such other instruments of transfer as may be reasonably requested by the Company in connection with the transfer of the Transferred Assets and the Transferred Business;
(ii)the Transition Services Agreement, duly executed by Allianz Global Investors U.S. Holdings LLC;
(iii)the Core Distribution Agreement, duly executed by AGI GmbH (and/or its applicable Affiliates);
(iv)the Cross Distribution Agreement, duly executed by AGI GmbH (and/or its applicable Affiliates);
(v)the A&R Newco Operating Agreement, duly executed by the Allianz Member;
(vi)the Trademark Assignment Agreement, duly executed by the Company (and/or its applicable Affiliates) and Contributor (and/or its applicable Affiliates);
(vii)the Intellectual Property Assignment Agreement, duly executed by the Company (and/or its applicable Affiliates) and Contributor (and/or its applicable Affiliates); and
(viii)each other Ancillary Agreement to which Contributor or an Affiliate of Contributor is a party, duly executed by Contributor or such Affiliate, as applicable, and such other agreements, documents and instruments as are required to be executed and delivered by Contributor or an Affiliate of Contributor at or prior to the Closing pursuant to Section 6.2 or as are otherwise reasonably required in connection with this Agreement.
(b)The Company or Newco, as the case may be, shall:
(i)deliver, or cause to be delivered, to Contributor:
(A)the Transition Services Agreement, duly executed by the Company;
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(B)the Core Distribution Agreement, duly executed by the Company (and/or its applicable Affiliates);
(C)the Cross Distribution Agreement, duly executed by the Company (and/or its applicable Affiliates);
(D)the A&R Newco Operating Agreement, duly executed by the Voya Member;
(E)the Trademark Assignment Agreement, duly executed by the Company (and/or its applicable Affiliates) and Contributor (and/or its applicable Affiliates);
(F)the Intellectual Property Assignment Agreement, duly executed by the Company (and/or its applicable Affiliates) and Contributor (and/or its applicable Affiliates); and
(G)each other Ancillary Agreement to which the Company is a party, duly executed by the Company, and such other agreements, documents and instruments as are required to be executed and delivered by the Company at or prior to the Closing pursuant to Section 6.3 or as are otherwise reasonably required in connection with this Agreement.
(c)Newco shall deliver, or cause to be delivered:
(i)to the Voya Member, free and clear of all liens (other than restrictions on transfer under applicable securities laws) the Voya Newco Units; and
(ii)a duly executed assignment instrument effecting the transfer of the Voya Newco Units to Company Parent in a form reasonably acceptable to Contributor.
(iii)to the Voya Member and the Allianz Member, the A&R Newco Operating Agreement, duly executed by Newco.
Section 1.7Closing Adjustment.
(c)No later than five (5) Business Days prior to the Closing Date, the Contributor shall provide to the Company a written statement (the “Estimated Closing Adjustment Statement”) setting forth a good-faith estimate of the (i) Closing U.S. Revenue Run-Rate, (ii) Closing International Revenue Run-Rate and (iii) Closing Core Distribution Percentage, in each case, delivered with (A) reasonable supporting detail with respect to the calculation of such amounts and (B) determined in a manner consistent with the methodology set forth in Annex A. The Company shall be entitled to comment on and request reasonable changes to the Estimated Closing Adjustment Statement, and the Contributor shall consider in good faith any such changes proposed by the Company. The Contributor and Contributor Parent shall, and shall cause their relevant independent accountants and Affiliates to, cooperate and assist the Company and its representatives in their review of the Estimated Closing Adjustment Statement, including making available books, records, work papers and relevant personnel.
(d)The Closing Core Distribution Percentage, as estimated on the Estimated Closing Adjustment Statement (after taking into account in good faith any comments from the Company pursuant to Section 2.7(a)) shall be the Core Distribution Percentage as of the Closing through the True-Up Date.
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Section 1.1Post-Closing Adjustment and Consent True-Up.
(e)As soon as practicable, but no later than thirty (30) days after the Closing Date, Company shall provide to the Contributor a written statement (the “Closing Statement”) setting forth the Company’s calculation of Tangible Class A Shareholders’ Equity as of the Closing Date. The Company’s calculations of such amounts set forth in the Closing Statement shall be delivered with reasonable supporting detail (including explanations and calculations for any adjustments made) with respect to the calculation of such amount, as determined in a manner consistent with the methodology set forth on Section 4.5(i) of the Company Disclosure Schedule.
(f)Upon the expiration of the period beginning on the Closing Date and ending on the True-Up Date (such period, the “True-Up Period”), the Company shall calculate the (i) True-Up U.S. Revenue Run-Rate, (ii) True-Up International Revenue Run-Rate, (iii) Adjusted Core Distribution Percentage, (iv) Maximum Contributable Net Revenue Run-Rate, and (v) the Adjusted Newco Percentage (if applicable); in each case, as determined in a manner consistent with the methodology set forth on Annex A.
(g)As soon as practicable, but no later than sixty (60) days after the True-Up Date, the Company shall prepare and deliver to Contributor a statement (the “True-Up Statement”) setting forth the Company’s calculation of the (i) True-Up U.S. Revenue Run-Rate, (ii) True-Up International Revenue Run-Rate, (iii) Adjusted Core Distribution Percentage and (iv) Maximum Contributable Net Revenue Run-Rate. The Company’s calculations of such amounts set forth in the True-Up Statement shall be delivered with reasonable supporting detail with respect to the calculation of such amounts.
(i)If the Company does not deliver the Closing Statement to Contributor within sixty (60) days after the Closing Date or does not deliver the True-Up Statement to Contributor within sixty (60) days after the True-Up Date, then Contributor, in Contributor’s sole discretion, shall have the right to prepare and present the Closing Statement or the True-Up Statement, respectively, within an additional sixty (60) days thereafter, and the Company shall provide reasonable assistance and access to information in connection with such preparation.
(ii)If Contributor elects to prepare the Closing Statement or the True-Up Statement in accordance with the immediately preceding sentence, then all subsequent references in this Section 2.8(c) to Contributor, on the one hand, and the Company, on the other hand, will be deemed to be references to the Company, on the one hand, and Contributor, on the other hand, respectively.
(h)Within sixty (60) days of receipt of the Closing Statement or True-Up Statement (as applicable), Contributor may provide written notice to the Company disputing all or a part of the amounts set forth in the Closing Statement or True-Up Statement (as applicable) (such notice, a “Dispute Notice”). If Contributor fails to deliver a Dispute Notice to the Company within such sixty (60)-day period, or if Contributor accepts in writing the amounts set forth in the Closing Statement or True-Up Statement before such sixty (60)-day period, then the Company and Contributor shall be deemed to have agreed that the amounts set forth in the applicable Closing Statement or True-Up Statement shall be finally determined and binding on the Parties for all purposes hereunder. If a Dispute Notice is provided to the Company, then the Company and Contributor shall use commercially reasonable efforts to resolve the disputed items during the thirty (30)-day period commencing on the date of the Company’s receipt of the Dispute Notice. Any determination set forth in the Closing Statement or True-Up Statement (as applicable) that is not objected to in the Dispute Notice shall be deemed acceptable and shall be final, binding and conclusive on the Parties upon delivery of the Dispute Notice.
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(i)If Contributor and the Company do not agree in writing upon a final resolution with respect to all disputed items within such thirty (30)-day period, then the remaining items in dispute shall be submitted immediately to Ernst & Young LLP, or, if such firm declines to be retained to resolve the dispute, another nationally recognized, independent accounting firm reasonably acceptable to the Company and Contributor (in either case, the “Accounting Firm”). The Accounting Firm will render a determination of the applicable dispute within thirty (30) days after referral of the matter to such Accounting Firm, which determination must be in writing and must set forth, in reasonable detail, the basis therefor. The terms of appointment and engagement of the Accounting Firm shall be on customary terms and conditions, and any associated engagement fees shall be initially borne fifty percent (50%) by Contributor and fifty percent (50%) by the Company; provided that all such fees shall ultimately be borne by Contributor and the Company in inverse proportion as such Party ultimately prevails on the matters resolved by the Accounting Firm, which proportionate allocations shall also be determined by the Accounting Firm at the time the determination of the Accounting Firm is rendered on the merits of the disputed items. Except as provided in the preceding sentence, all other costs and expenses incurred by the Parties hereto in connection with resolving any dispute hereunder before the Accounting Firm shall be borne by the Party incurring such cost and expense. In resolving the disputed items, the Accounting Firm shall (A) be bound by the provisions of this Section 2.8(e), (B) not assign a value to any item greater than the greatest value claimed for such item or less than the smallest value for such item claimed by either the Company or Contributor, (C) rely solely on the written submissions of the Parties and shall not conduct an independent investigation and (D) limit its decision to only such items as are in dispute and to only those adjustments as are necessary for the amounts set forth in the Closing Statement or True-Up Statement (as applicable) to comply with the provisions of this Agreement. Absent Fraud or manifest error, such determination of the Accounting Firm shall be conclusive and binding upon the Parties for all purposes hereunder upon which a judgment may be rendered by a court having proper jurisdiction over the Party against which such determination is sought to be enforced.
(j)The Adjusted Core Distribution Percentage, as finally determined in accordance with this Section 2.8 shall be the Core Distribution Percentage following the True-Up Period. In addition, the Parties shall make such additional adjustments as required in accordance with Annex A, including the Adjusted Newco Percentage.
(k)The Parties shall, and shall cause their respective independent accountants and their respective Affiliates, as applicable, to, reasonably cooperate and assist in the calculation of the items on the Closing Statement and True-Up Statement and the components thereof, and in the conduct of the review by the Accounting Firm of any proposed calculations of the items on the Closing Statement and True-Up Statement or the components thereof, including making available (to the extent reasonably necessary to resolve the items in dispute and subject to customary confidentiality and indemnity agreements) books, records, work papers and relevant personnel.
(l)During the True-Up Period, the Company shall periodically (and no less frequently than once every fourteen (14) days) provide Contributor with written updates regarding consents or other correspondence received by the Company or its Affiliates from any Covered Clients that bear on the calculations to be performed pursuant to this Section 2.8(h), together with reasonable supporting documentation.
(m)The True-Up Statement and the calculations of the items contained therein shall be determined in manner consistent with the principles used to derive the Revenue Run-Rate and Adjusted Assets Under Management as of March 31, 2022, as set forth on Annex A and the RRR/AUM Statement.
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(n)The Closing Statement shall become final and binding upon the Company and the Contributor on the earliest of (i) the expiration of Contributor’s sixty (60) day review period following the Closing Date without objection in accordance with the terms of Section 2.8(d), (ii) the date the Company and Contributor resolve in writing any differences they have with respect to the matters specified in the Dispute Notice and (iii) the date any disputed matters are finally resolved in writing in accordance with the procedures specified in Section 2.8(e) of this Agreement.
(o)If the amount of Tangible Class A Shareholders’ Equity as of the Closing Date is less than $15 million, within five (5) Business Days following determination of the Closing Statement, Voya Member shall pay to Company an amount in cash equal to the shortfall by wire transfer of U.S. Dollars in immediately available funds to the bank account(s) designated by Company at least two (2) Business Days prior to the expiration of such five (5) Business Day period. If the amount of Tangible Class A Shareholders’ Equity as of the Closing Date is greater than $15 million, within five (5) Business Days following determination of the Closing Statement, Company shall pay to Voya Member an amount in cash equal to such excess by wire transfer of U.S. Dollars in immediately available funds to the bank account(s) designated by Voya Member at least two (2) Business Days prior to the expiration of such five (5) Business Day period.
Section 1.1Delayed Company Subsidiary Transfers. In the event that (a) the transfer of any Subsidiary of the Company contemplated by this Agreement (including any indirect transfer effected by virtue of the transfer of the limited liability company interests of the Company) requires the consent of any Governmental Authority or the expiration of any waiting period following notice to such Governmental Authority (such Subsidiary, a “Delayed Transfer Subsidiary”), and (b) such consent has not been received, or such waiting period has not expired, as applicable, on or prior to the Closing Date, then (i) the Company and Company Parent shall, and shall cause their respective Subsidiaries to, use reasonable best efforts to retain any such Delayed Transfer Subsidiary until such time as the relevant consent has been received or waiting period has expired, as applicable, (ii) as promptly as practicable following the receipt of such consent or expiration of such waiting period, as applicable, Company Parent shall, and shall cause its respective Subsidiaries to, transfer such Delayed Transfer Subsidiary to Newco (or, at Newco’s direction, to the Company) for no additional consideration and (iii) the Parties shall use their respective reasonable best efforts to take such actions and to enter into such agreements (including service agreements) as are required to effect the economic and operational equivalent of the transfer of such Delayed Transfer Subsidiary as of the Closing, and to preserve the value of such Delayed Transfer Subsidiary such that upon its transfer to the Company, such Delayed Transfer Subsidiary’s economic value is substantially equivalent to its economic value as of the Closing Date. For the avoidance of doubt, neither the Company nor Company Parent shall have any liability to Contributor, Contributor Parent or Newco under this Agreement for the failure to transfer any Delayed Transfer Subsidiary as of the Closing Date (other than liability in respect of a failure to comply with the provisions of this Section 2.9).
Section 1.2[Intentionally Omitted].
Section 1.3Withholding. Each Party and its Affiliates (or any designee thereof) shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement such amounts as are required to be deducted or withheld with respect to the making of such payment under the Code, or any other applicable state, local or non-U.S. Law; provided that, other than in respect of backup withholding or amounts treated as compensation, each Party and its Affiliates (or any designee thereof), if applicable, shall use commercially reasonable efforts to provide advance notice in writing to the other Party of any such withholding or deduction and shall work with the other Party in good faith to reduce or eliminate any such deduction or withholding. To the extent that amounts are so deducted or withheld, such deducted
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or withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made.
Section 1.4Payment for Pre-Closing and Post-Closing Periods
(p)To the extent that, from and after the Closing, the Company or any Affiliate thereof receives payment of any management or other fees, or amounts in respect of expense reimbursement in respect of the Covered Clients that are attributable to any period prior the Closing, the Company will promptly, but in no event later than ten (10) Business Days after the Company or any Affiliate thereof receives such payment, remit any such amounts to Contributor or such other Affiliate designated by it.
(q)To the extent that, from and after the Closing, Contributor or any Affiliate thereof receives payment of any management or other fees, or amounts in respect of expense reimbursement in respect of the Transferred Assets that are attributable to the Closing Date or any period following the Closing, Contributor will promptly, but in no event later than ten (10) Business Days after the Company or any Affiliate thereof receives such payment, remit any such amounts to the Company or such other Affiliate designated by it.
Article III

REPRESENTATIONS AND WARRANTIES OF CONTRIBUTOR PARENT AND
CONTRIBUTOR
Except as set forth in a correspondingly labeled section of the written disclosure schedule delivered to the Company by Contributor concurrently with the execution and delivery of this Agreement (the “Contributor Disclosure Schedule”) (it being agreed that any matter disclosed in any section or subsection of the Contributor Disclosure Schedule shall be deemed disclosed with respect to any representation or warranty corresponding to any other section of this Agreement and the Contributor Disclosure Schedule to the extent its relevance to such section, representation or warranty is reasonably apparent from the face of the Contributor Disclosure Schedule), each of Contributor Parent and Contributor hereby represents and warrants to each of Company Parent and the Company as follows:
Section 1.2Organization and Related Matters. Each of Contributor Parent, Contributor and Newco (a) is a limited liability company or corporation, as applicable, duly organized and validly existing under the Laws of the jurisdiction of its formation, (b) has the requisite organizational power and authority necessary to carry on its respective business (including the Transferred Business) substantially in the manner as it is now being conducted and to own, lease and operate all of its properties and assets and (c) is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned, leased or operated by it makes such qualification or licensing necessary, except where the failure to be so licensed or qualified would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date.
Section 1.3Authority; No Violations.
(a)Each of Contributor Parent, Contributor and Newco has all requisite organizational power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is or will be a party and to consummate the Transactions. The execution and delivery of this Agreement and the Ancillary Agreements to which Contributor Parent, Contributor and Newco, as applicable, are or will be a party and the consummation of the
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Transactions by Contributor Parent, Contributor and Newco have been duly authorized by all requisite action of such Party. This Agreement has been (and the execution and delivery of each of the Ancillary Agreements to which Contributor Parent, Contributor and Newco, as applicable, will be a party will be) duly executed and delivered by Contributor Parent, Contributor and Newco, as applicable, and constitutes (and each such Ancillary Agreement when so executed and delivered by Contributor Parent, Contributor and Newco, as applicable, will constitute) a valid, legal and binding agreement of Contributor Parent, Contributor and Newco, as applicable (assuming that this Agreement has been, and the Ancillary Agreements to which such Party is a party will be, duly and validly authorized, executed and delivered by the other Persons party thereto), enforceable against Contributor Parent, Contributor and Newco, as applicable, in accordance with their terms, except (i) to the extent that enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other Laws affecting the enforcement of creditors’ rights generally and (ii) that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding thereof may be brought.
(b)Assuming the accuracy of the representations and warranties of Company Parent and the Company set forth in Section 4.2(b), no notices to, filings with or authorizations, consents or approvals of any Governmental Authority are necessary to be made by or received by Contributor Parent, Contributor or Newco for the execution, delivery or performance by Contributor Parent and Contributor of this Agreement or the Ancillary Agreements to which Contributor Parent, Contributor and Newco, as applicable, are or will be a party or the consummation by Contributor Parent and Contributor of the Transactions, except for (i) compliance with and filings under the HSR Act and any other applicable Competition Laws, (ii) filings listed on Section 3.2(b) of the Contributor Disclosure Schedule and (iii) those the failure of which to obtain or make would not, individually or in the aggregate, reasonably be expected to have a Contributor Material Adverse Effect.
(c)No vote of the holders of any class or series of capital stock of Contributor Parent, Contributor or Newco is necessary to approve this Agreement or to consummate the Transaction.
Section 1.4Non-Contravention. The execution and delivery by each of Contributor Parent, Contributor and Newco of this Agreement and the Ancillary Agreements to which such Party is or will be a party and the performance of its obligations hereunder and thereunder (including the consummation of the Transactions) do not (a) violate any provision of the Organizational Documents of such Party, (b) assuming compliance with the matters referred to in Section 3.2(b), violate any Applicable Law, (c) require any consent of or notice to any Person under, or result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default or give rise to any right of termination, cancellation or acceleration under, in the case of Contributor, any Contributor Material Contract, or (d) except as contemplated by this Agreement, result in the creation or imposition of any Encumbrance other than Permitted Encumbrances on any asset of the Transferred Business, except, in the case of clauses (b), (c) and (d), as would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date.
Section 1.5[Intentionally Omitted].
Section 1.6Financial Information. Set forth in Section 3.5 of the Contributor Disclosure Schedule are true and correct values of (i) the Revenue Run-Rate as of the Reference Date, (ii) the Adjusted Assets Under Management as of the Reference Date, (iii) the revenue and the related statements of net flows of the Transferred Strategies, as of the Reference Date and for the calendar years ending on December 31, 2021, December 31, 2020 and December 31, 2019 and (iv) the direct expenses with respect to the Transferred Strategies, as of the Reference Date
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and for the calendar year ending on December 31, 2021 (subclauses (i) through (iv)) collectively, the “Contributor Financial Information”).
Section 1.7Absence of Liabilities. Except for liabilities and obligations (a) incurred in the Ordinary Course of Business since December 31, 2021, (b) incurred under or in accordance with this Agreement or in connection with the Transactions, (c) Excluded Liabilities or (d) obligations for future performance under existing Contracts, Contributor and its Affiliates have not incurred liabilities or obligations of any kind (whether matured or unmatured fixed or contingent) with respect to the operation of the Transferred Business that would, individually or in the aggregate, reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date.
Section 1.8Absence of Certain Changes. Since December 31, 2021 , (a) there has not occurred any Contributor Material Adverse Effect and (b) Contributor has operated the Transferred Business in the Ordinary Course of Business.
Section 1.9Contracts.
(a)Section 3.8(a) of the Contributor Disclosure Schedule sets forth each of the following Contracts to which Contributor is bound as of the date hereof with respect to the conduct of the Transferred Business, but excluding any Contributor Benefit Plan and any Contract that would not be binding upon the Company or its Affiliates from and after the Closing, (collectively, including all amendments and waivers thereto, the “Contributor Material Contracts”):
(i)any Contract (A) prohibiting or restricting in any material respect the ability of the Transferred Business (or, following the Closing, the Company, Company Parent or any of their Affiliates) to engage in any business, to operate in any geographical area, or to compete with any Person, or (B) that requires the Transferred Business (or, following the Closing, the Company and its Affiliates) to deal exclusively with any Person;
(ii)any Advisory Agreement of Contributor related to the Transferred Business (including any side letters or side agreements modifying or supplementing the terms of any Advisory Agreement);
(iii)any joint venture, partnership or similar agreement related to the Transferred Business;
(iv)any Contract requiring the Transferred Business (or, following the Closing, the Company, Company Parent or any of their Affiliates) to make referrals of business or make available business opportunities or products or services to any person on a priority or exclusive basis;
(v)any Contract relating to the acquisition or disposition of any business, capital stock or assets of any Person (whether by merger, sale of stock, sale of assets or otherwise) for consideration greater than $1,000,000 or that has any remaining material obligations, including under any “earn-out” or other contingent consideration provisions;
(vi)any Contract involving a remaining commitment by the Transferred Business to pay capital expenditures in excess of $1,000,000;
(vii)any Contract providing for (A) annual payments by or to the Transferred Business in excess of $500,000 or (B) in aggregate in excess of $1,000,000;
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(viii)any Contract providing for the placement, distribution or sale of shares, units or other ownership interests of a fund of Contributor that required, or is reasonably expected to require, the provision of payments to, or the provision of payments from, the Transferred Business in excess of $1,000,000 in 2021 or 2022;
(ix)any administration agreement or any other Contract providing for administrative services to a U.S. Registered Fund of Contributor that is required, or is reasonably expected to require, the provision of payments to, or for the provision of payments from, the Transferred Business in 2021 or 2022 in excess of $1,000,000;
(x)any Contract containing (A) a “clawback” or similar undertaking by the Transferred Business requiring the reimbursement or refund of any fees, (B) a “most favored nation” or similar provision, (C) caps or waivers of a material amount on fees or expenses, (D) “key person” provisions (including any giving rise to rights of termination of other parties), (E) performance-based fee or allocation provisions or (F) exclusive dealing covenants;
(xi)any material option, license, franchise or similar Contract;
(xii)any material agency, dealer, sales representative, marketing or other similar Contract;
(xiii)any Lease except as otherwise provided in the Initial Separation and Migration Plan in effect as of the Closing;
(xiv)any Contract pursuant to which (A) a third Person licenses Intellectual Property to Contributor or its Affiliates that is material to the Transferred Business as currently conducted (except for (i) any licenses for generally commercially available non-customized off-the-shelf IT Assets (including software) for a one-time annual fee of less than $250,000 and (ii) employee and consultant invention assignment agreements entered into with on the Contributor’s standard for in the Ordinary Course of Business) or (B) Contributor or any of its Affiliates licenses material Transferred Intellectual Property to a third Person, other than non-exclusive licenses to a customer of the Transferred Business in the Ordinary Course of Business;
(xv)any Contract providing for the development by, for or with a third party of any Intellectual Property that is material to the Transferred Business; and
(xvi)any Contract that involves any resolution or settlement of any actual or threatened Action with a value in excess of $1,000,000 or that provides for any material injunctive or other non-monetary relief or any material restriction on the use, licensing or registration of any Intellectual Property, including any co-existence agreements.
(a)Contributor has delivered or made available to the Company correct and complete copies of each Contributor Material Contract, in each case, in effect on the date hereof. Each Contributor Material Contract is a legal, valid and binding agreement of the Contributor and is in full force and effect. Contributor has not received written notice since January 1, 2019 of (i) a material breach or default under such Contributor Material Contract or (ii) cancellation or termination of, or intent to cancel or terminate, such Contributor Material Contract. Contributor is not, and, to the Knowledge of Contributor, no other party is, in material breach or default of any Contributor Material Contract and no event has occurred that (with the giving of notice or the lapse of time or both) would constitute such a material breach or default by Contributor or, to the Knowledge of Contributor, any other party thereto.
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Section 1.10Legal Proceedings. (a) To the extent related to the Transferred Business, there are no legal, administrative, arbitral or other proceedings (including disciplinary proceedings), claims, suits, actions or governmental or regulatory investigations or inquiries of any nature (collectively, “Proceedings”) that are pending or, to the Knowledge of Contributor, threatened in writing against or relating to Contributor Parent, Contributor or any of their respective Affiliates or any of their properties, assets or businesses and (b) there is no Order imposed upon the Transferred Business, or any of its properties, assets or businesses or Contributor Parent, Contributor or their respective Affiliates, in each case, that would, individually or in the aggregate, reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date.
Section 1.11Compliance with Applicable Law.
(b)Since January 1, 2019, with respect to the Transferred Business, Contributor Parent, Contributor and their respective Affiliates within the Allianz Global Investors Business have complied with all Applicable Laws and none of Contributor Parent, Contributor or their respective Affiliates within the Allianz Global Investors Business has received any written notice (nor has any Proceeding been filed, or to the Knowledge of Contributor, threatened against Contributor Parent, Contributor or their respective Affiliates within the Allianz Global Investors Business related to the Transferred Business) asserting any violation by such Party of any Applicable Law, except for violations that would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date.
(c)With respect to the Transferred Business, Contributor Parent, Contributor and their respective Affiliates within the Allianz Global Investors Business hold, and at all times since January 1, 2019 have held, all Permits necessary for the conduct of the Transferred Business under and pursuant to Applicable Law, except, in each case, where any such failure would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date. The operation of the Transferred Business by the Contributor Parent, Contributor and their respective Affiliates within the Allianz Global Investors Business as currently operated is not in material violation of, nor is such Party or the Transferred Business in material default or material violation under, any such Material Permit. All Material Permits of the Transferred Business are in full force and effect and are not subject to any suspension, cancellation, modification or revocation or any Proceedings related thereto, and, to the Knowledge of Contributor, no such suspension, cancellation, modification or revocation or Proceeding is threatened, except for any failure to be in full force and effect or suspension, cancellation, modification or revocation or Proceedings that would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date. With respect to the Transferred Business, none of Contributor Parent, Contributor and their respective Affiliates within the Allianz Global Investors Business has received written notice of, and there is no pending, or threatened in writing, Proceeding concerning any failure to obtain any Material Permit.
Section 1.12Other Compliance Matters.
(a)Since January 1, 2019, with respect to the Transferred Business, Contributor Parent, Contributor and their respective Affiliates within the Allianz Global Investors Business have timely filed or furnished all Regulatory Documents that were required to be filed or furnished with any Governmental Authority and have timely paid in full all fees and assessments due and payable in connection therewith other than such failures to timely file or pay that would
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not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date. Since January 1, 2019, Contributor has been duly registered as an investment adviser under the Investment Advisers Act and under all other Applicable Laws (if required to be so registered under the Investment Advisers Act or other Applicable Laws), except, in each case, as would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date. Section 3.11(a) of the Contributor Disclosure Schedule lists the jurisdictions in which Contributor (1) is registered as an investment adviser or (2) is required to give notice that it is acting as an investment adviser or broker-dealer. Each such registration or license is in full force and effect.
(b)To the extent related to the Transferred Business, neither Contributor nor any of its Subsidiaries, any of their respective control persons, directors, officers, or employees (other than employees whose functions are solely clerical or ministerial), nor, to the Knowledge of Contributor, any other “affiliated person” (as defined in the Investment Company Act) thereof is ineligible pursuant to Section 9(a) or Section 9(b) of the Investment Company Act to serve as an investment adviser, depositor or principal underwriter to a registered investment company nor is there any Proceeding pending or, to the Knowledge of Contributor, threatened by any Governmental Authority, that would result in the ineligibility of Contributor, any of its Subsidiaries or any of their respective directors, officers or employees to serve in any such capacities. To the extent related to the Transferred Business, neither Contributor nor any of its Subsidiaries, any of their respective control persons, directors, officers, or employees (other than employees whose functions are solely clerical or ministerial), nor, to the Knowledge of Contributor, any other “affiliated person” (as defined in the Investment Company Act) thereof is ineligible pursuant to Section 203 of the Investment Advisers Act to serve as a registered investment adviser or as a “person associated with an investment adviser” (as defined in the Investment Advisers Act) of a registered investment adviser, nor is there any Proceeding pending or, to the Knowledge of Contributor, threatened in writing by any Governmental Authority that would reasonably be expected to result in the ineligibility of Contributor, any of its Subsidiaries or any of their directors, officers or employees to serve in such capacities or, to the Knowledge of Contributor, that would provide a basis for such ineligibility. To the extent related to the Transferred Business, except as has not had and would not reasonably be expected to be, individually or in the aggregate, material to the Transferred Business or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date, each employee of the Contributor or any of its Affiliates within the Allianz Global Investors Business who is required to be registered or licensed as a registered representative, principal, investment adviser representative, salesperson or equivalent with any Governmental Authority is duly registered or licensed as such and such registration or license is in full force and effect.
(c)Except for routine examinations, inquiries or inspections conducted by any Governmental Authority in the Ordinary Course of Business or of any fund of Contributor (including, for the avoidance of doubt, industry wide “sweeps” and similar inquiries not involving any specific allegation of wrongdoing on the part of any member of Contributor or any of its Subsidiaries or any fund) (a “Routine Inspection”), no investigation by any Governmental Authority into, with respect to the Transferred Business, Contributor Parent, Contributor or their respective Affiliates within the Allianz Global Investors Business regarding a potential violation of any Applicable Law by Contributor Parent, Contributor or their respective Affiliates within the Allianz Global Investors Business in connection with the Transferred Business is pending or has been threatened in writing. Except to the extent restricted from doing so by Applicable Law, Contributor has made available to the Company complete and correct copies of all investigation, examination, audit or inspection reports (other than Routine Inspection reports) received by Contributor in respect of the Transferred Business from any Governmental Authority and all written responses thereto made by Contributor, in each case since January 1, 2019 through the
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date hereof. Contributor has resolved all material deficiencies asserted by any Governmental Authority in connection with any such audit, examination, inspection or investigation.
(d)Contributor has adopted, and maintained in effect at all times required by Applicable Law since January 1, 2019, one or more codes of ethics, insider trading policies, personal trading policies, anti-money laundering programs, customer identification programs, cyber security, incident response, data security and privacy policies, disaster recovery and business continuity policies, written supervisory procedures and other policies with respect to the conduct of the Transferred Business required by Applicable Law, except as would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date.
(e)The Transferred Business currently maintains the investment management performance composites listed in Section 3.11(e) of the Contributor Disclosure Schedule. The performance history of the composites is accurate and complete in all material respects and the Transferred Business is in compliance with the Global Investment Performance Standards of the CFA Institute, in all material respects.
(f)The consummation of the Transactions will not result in Contributor Parent having “control” of the Company for purposes of Section 2(a)(9) of the Investment Company Act.
Section 1.13Covered Clients.
(d)Section 3.12(a) of the Contributor Disclosure Schedule sets forth, with respect to the Transferred Business: (i) a complete and correct list, as of the Reference Date, of each Advisory Agreement of Contributor, and the name of each Covered Client for which Contributor or any of its Subsidiaries is the investment adviser, investment manager, trustee (or other similar fiduciary) or sub-adviser thereunder; (ii) the total net assets under management by the Transferred Business for each Covered Client as of the Reference Date (collectively, the “Reference Date Assets Under Management”) calculated in the same manner as provided for in the calculation of base investment management fees payable in respect of each such Covered Client account pursuant to the terms of the Advisory Agreement applicable to such account; (iii) the Reference Date Revenue Run-Rate with respect to each such Covered Client; (iv) the investment advisory, investment management, trustee, sub-advisory or other similar recurring fees payable to Contributor or any of its Subsidiaries by each such Covered Client under the applicable Advisory Agreement; (v) the terms for each Fund of Contributor of the fee rebates, fee waivers, fee caps, expense reimbursement (or assumption) arrangements or discounts, sub-advisory fees paid by Contributor and any unreimbursable payments made by Contributor to brokers, dealers or other Persons with respect to the distribution of interests in the funds of Contributor; and (vi) whether the Covered Client is a U.S. Registered Fund, Non-U.S. Public Fund, Sponsored U.S. Registered Fund, Sponsored Non-U.S. Public Fund, Non-Registered Fund, or none of the foregoing.
(e)Since January 1, 2019, Contributor and its applicable Affiliates have provided their respective investment advisory services to each Covered Client in compliance with the Investment Advisers Act and the Investment Company Act, to the extent applicable, except for such failures to comply as, individually or in the aggregate, would not reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date.
(f)Except as would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the
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consummation of the Transactions prior to the Termination Date, (i) each Advisory Agreement of Contributor with respect to a U.S. Registered Fund of Contributor includes all provisions required by and complies in all respects with the Investment Advisers Act and (ii) each Investment Company Advisory Agreement of Contributor has been duly approved and continued in compliance with the Investment Company Act and complies in all respects with the Investment Company Act.
Section 1.14Registered Funds; Non-Registered Funds.
(b)Section 3.13(a)(i) of the Contributor Disclosure Schedule lists each Registered Fund of Contributor and Section 3.13(a)(ii) of the Contributor Disclosure Schedule lists each Non-Registered Fund of Contributor. Each such U.S. Registered Fund is, and at all times required under Applicable Law has been, duly registered with the SEC as an investment company under the Investment Company Act (to the Knowledge of Contributor insofar as the foregoing relates to a time on or after February 1, 2021). Each such Non-U.S. Public Fund is organized and operated in compliance with Applicable Law. No such Non-Registered Fund is required to register with the SEC as an investment company under the Investment Company Act.
(c)Since January 1, 2019 (or its inception, if later), each Sponsored U.S. Registered Fund’s (A) summary prospectuses, prospectus and statement of additional information (including supplements thereto) forming the part of any registration statement filed with the SEC under the Securities Act and/or the Investment Company Act, (B) annual and semi-annual shareholder reports filed with the SEC pursuant to Section 30 of the Investment Company Act and (C) supplemental advertising and marketing materials prepared by or on behalf of Contributor or an Affiliate of Contributor within the Allianz Global Investors Business did not at the time they were filed (if required to be filed), and did not during the period of their authorized use, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were or are made, not misleading. Since January 1, 2019 (or the inception of such Sponsored U.S. Registered Fund if later), no more than 25% of the members of the board of directors or trustees of any Sponsored U.S. Registered Fund have been “interested persons” (as defined in the Investment Company Act) of the Contributor, any Affiliate within the Allianz Global Investors Business or any other investment adviser for such Sponsored U.S. Registered Fund.
(d)Each Investment Company Advisory Agreement of Contributor has been duly approved, continued and at all times has been in compliance in all material respects with Section 15 of the Investment Company Act (to the Knowledge of Contributor insofar as the foregoing relates to a time on or after February 1, 2021). Neither Contributor nor any of its Subsidiaries is in default under any such Investment Company Advisory Agreement, except where such default would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business, taken as a whole, or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date.
(e)Each Sponsored Fund that is a juridical entity is duly organized, validly existing and, with respect to juridical entities in jurisdictions that recognize the concept of “good standing,” in good standing under the Laws of the jurisdiction of its organization and has (or in the case of a non-juridical entity, its trustees or other similar fiduciaries have) the requisite corporate, trust, fiduciary, company or partnership power and authority to own its properties and to carry on its business as currently conducted, and is qualified to do business in each jurisdiction where the nature of the business conducted by it or the character or location of the properties and assets owned, leased or operated by it makes such qualification or licensing necessary, except where any failure to be so duly organized, validly existing, in good standing, licensed or qualified or to have such power would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the
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consummation of the Transactions prior to the Termination Date. No such Sponsored Fund is in violation of any provision of its Fund Documents, except for violations that would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date.
(f)Each Sponsored Fund is, and has since the later of January 1, 2019 and its inception date, operated in compliance (i) with Applicable Law and (ii) with its respective investment policies and restrictions, as set forth in the applicable Fund Documents, except where any failure to be in compliance would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date. Since the later of January 1, 2019 and its inception date, each such Sponsored Fund has filed or furnished all Regulatory Documents in compliance with Applicable Law, except where such failure would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date.
(g)The shares, units or other ownership interests of each Sponsored Fund (i) have been issued and sold in compliance with Applicable Law and (ii) except with respect to such Non-Registered Funds, are qualified for public offering and sale in each jurisdiction where offers are made to the extent required under Applicable Law, in each case except where any failure to be in compliance or qualified would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date. Since January 1, 2019, none of the offering or private placement memoranda used in connection with an offering of shares, units or interests of any Sponsored Non-Registered Fund of Contributor, including any supplemental advertising and marketing materials prepared by or on behalf of Contributor or any Affiliate within the Allianz Global Investors Business thereof, contained an untrue statement of material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Since January 1, 2019, the offering memoranda used in connection with an offering of shares, units of interests of any Sponsored Non-Registered Fund of Contributor, including any supplemental advertising and marketing materials prepared by or on behalf of Contributor or any Affiliate within the Allianz Global Investors Business thereof, contains all required disclosures and information to comply with Applicable Law.
(h)The audited balance sheet of each Sponsored Fund as of each such Sponsored Fund’s two (2) most recently completed fiscal years and the related other audited financial statements for such two (2) most recently completed fiscal years have been prepared in accordance with GAAP (or in the case of a Non-U.S. Public Fund, prepared in accordance with the Applicable Law of each Non-U.S. Public Fund), and to the Knowledge of Contributor present fairly in all material respects the financial position and other financial results of such Sponsored Fund at the dates and for the periods stated therein. There are no liabilities or obligations of any Sponsored U.S. Registered Fund of Contributor or Sponsored Non-Registered Fund of Contributor of any kind whatsoever, whether known or unknown, accrued, contingent, absolute, determined, determinable or otherwise other than (A) (i) for each Sponsored U.S. Registered Fund of Contributor, liabilities or obligations disclosed and provided for in the balance sheet of such Sponsored U.S. Registered Fund or referred to in the notes thereto contained in the most recent annual or semi-annual report filed by such Sponsored U.S. Registered Fund prior to the date hereof with the SEC or (ii) for each Sponsored Non-Registered Fund of Contributor, liabilities or obligations disclosed and provided for in the balance sheet of such Sponsored Non-Registered Fund or referred to in the notes thereto contained in the most recent report (1) distributed by such Sponsored Non-Registered Fund to its shareholders or other interest holders
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or (2) as applicable, filed with a non-U.S. Governmental Authority or self-regulatory organization, in each case prior to the date hereof and provided or made available to the Company, or (B) for each Sponsored U.S. Registered Fund of Contributor or Sponsored Non-Registered Fund of Contributor, liabilities or obligations incurred in the Ordinary Course of Business since the date of such Sponsored U.S. Registered Fund’s or such Sponsored Non-Registered Fund’s applicable report referenced in clause (A)(i) or (ii) above.
(i)There is no Proceeding pending or, to the Knowledge of Contributor, threatened against any Sponsored Fund that would, individually or in the aggregate, reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date.
(j)Each U.S. Registered Fund of Contributor that is a Sponsored Fund has adopted one or more codes of ethics, insider trading policies, personal trading policies, anti-money laundering programs, customer identification programs, written supervisory procedures and other policies with respect to the conduct of the Transferred Business required by Applicable Law, except where the failure to do so would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date.
(k)Other than the exemptive orders and no-action letters listed in Section 3.13(j) of the Contributor Disclosure Schedule, neither Contributor, any of its Subsidiaries, nor any Sponsored Fund has been the recipient of any exemptive order or no-action letter upon which any such Sponsored Fund currently relies for the operation of its business.
(l)For all taxable years since its inception, (i) each Sponsored Fund has elected to be treated as (where such election is required for such treatment), and has qualified for its intended Tax classification or treatment, as reported on its most recent applicable Tax Return (including, in the case of each Sponsored U.S. Registered Fund of Contributor, as a regulated investment company taxable under Subchapter M of Chapter 1 of the Code, in the case of each Sponsored Non-Registered Fund of Contributor that is a common trust fund, as a common trust fund under Section 584 of the Code and in the case of each commingled pension fund, as a group trust arrangement within the meaning of Revenue Ruling 2011-1, 2011-2 Internal Revenue Bulletin 251, as modified by Revenue Ruling 201.4-24, 201.4-37 Internal Revenue Bulletin 529) and has been organized and operated in conformity with the requirements related to such intended Tax classification or treatment, and its proposed method of operation will enable it to continue to qualify for such intended Tax classification or treatment, (ii) each Sponsored U.S. Registered Fund and each Sponsored Non-Registered Fund of Contributor has timely filed (or caused to be timely filed) all Tax Returns required to be filed by it (taking into account any applicable extensions or waivers) with any Taxing Authority, such Tax Returns are true, correct, and complete in all material respects and has timely paid (or caused to be paid) all Taxes required to be paid under Applicable Law (whether or not reflected on such Tax Returns), (iii) no claim has ever been made by a Taxing Authority in any jurisdiction where any Sponsored U.S. Registered Fund or Non-Registered Fund of Contributor does not file Tax Returns that such Sponsored U.S. Registered Fund or Sponsored Non-Registered Fund (as applicable) is required to file Tax Returns in such jurisdiction, (iv) there is currently no audit or other examination by any Taxing Authority of any Tax Return of any Sponsored U.S. Registered Fund and Sponsored Non-Registered Fund of Contributor pending or threatened in writing, (v) each Sponsored U.S. Registered Fund and each Sponsored Non-Registered Fund of Contributor has complied with all applicable Tax withholding and information reporting requirements, including with respect to the Tax Withholding Rules (including maintenance of required records with respect thereto), (vi) there are no outstanding waivers or comparable consents given by any Sponsored U.S. Registered Fund or Sponsored Non-Registered Fund of Contributor (and no request for any such waiver or consent is pending) regarding the application of the statute of limitations with respect
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to Taxes and (vii) no Sponsored U.S. Registered Fund or Sponsored Non-Registered Fund of Contributor has any actual or potential liability for any Tax of any other Person, including any liability for the payment of any amounts with respect to Taxes as a result of (a) being or ceasing to be a member of an affiliated, consolidated, combined or unitary group (including any arrangement for group or consortium relief or similar arrangement) for any period, (b) any express or implied obligation to indemnify or otherwise assume or succeed to the liability of any other Person, whether imposed by Applicable Law, Contract or otherwise or (c) any Tax Sharing Agreement).
(m)None of the assets of any of the Sponsored Funds of Contributor constitute “plan assets” within the meaning of Department of Labor Regulation Section 2510.3-101, as modified by Section 3(42) of ERISA.
Section 1.15Insurance. Each insurance policy and bond covering the Transferred Business, any of its assets, properties or employees is in full force and effect, all premiums due and payable thereon have been paid and, in the past twelve (12) months from the date hereof, none of Contributor Parent, Contributor or their respective Affiliates within the Allianz Global Investors Business has received written notice from any insurer or agent of any intent to cancel any such insurance policy or bond. A complete and correct list of such insurance policies and bonds is set forth in Section 3.14 of the Contributor Disclosure Schedule. There are no claims related to the Transferred Business, any of its assets, properties or employees pending under any such insurance policies and bonds as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights, and none of the Transferred Business, Contributor Parent or Contributor nor any of their respective Affiliates within the Allianz Global Investors Business are in material breach of, or material default under, such insurance policies and bonds.
Section 1.16Employees; Employee Benefit Plans; ERISA.
(g)Section 3.15(a) of the Contributor Disclosure Schedule lists each material Contributor Benefit Plan. Prior to the date hereof, Contributor has provided to the Company correct and complete copies of each Contributor Benefit Plan reasonably necessary to facilitate the Company’s compliance with Section 5.10(a) of this Agreement.
(h)Each Contributor Benefit Plan (and any related trust or other funding vehicle) has been maintained and administered in all material respects in compliance with its terms, the applicable requirements of ERISA, the Code and any other Applicable Law. No Contributor Benefit Plan is a Multiemployer Plan or a defined benefit plan or a plan that is subject to Title IV of ERISA or subject to 412 of the Code or Section 302 of ERISA and no Contributor Benefit Plan provides or promises, any post-employment or post-retirement health or other welfare benefits to current or former employees other than health continuation coverage pursuant Section 4980B of the Code. Each Contributor Benefit Plan intended to be qualified under Section 401(a) of the Code, and the trust (if any) forming a part thereof, has received a favorable determination letter from the IRS and, to the Knowledge of Contributor, there are no existing circumstances or events that would reasonably be expected to result in any revocation of, or a change to, such determination letter. Each Contributor Benefit Plan providing for nonqualified deferred compensation has been established and operated in all material respects in a manner that meets, or is exempt from, the requirements of Section 409A(a) of the Code.
(i)None of the execution, delivery and performance of this Agreement, or the consummation of the Transactions, will (alone or in combination with any other event) result in or entitle any Business Employee identified on Schedule C as of the date hereof to (i) any material payment or benefits, including any severance pay or benefits, any bonus, variable compensation, retention, retirement or job security payment or benefit, any increase in the
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amount of compensation or benefits or the acceleration of the vesting or timing of payment of any compensation or benefits payable or (ii) any amount being nondeductible by the Company or any of its Affiliates under Section 280G of the Code or subject to an excise tax under Section 4999 of the Code. No Contributor Benefit Plan provides any Business Employee with a gross-up or reimbursement of Taxes imposed under Section 4999 or 409A of the Code (or any corresponding provisions of state or local Law relating to Tax).
(j)None of the Contributor or its Affiliates within the Allianz Global Investors Business is a party to or is otherwise bound by any collective bargaining agreement, or any other agreement or arrangement with any labor organization or other authorized employee representative representing any Business Employee. As of the date hereof, there are no labor unions, work council or other organizations or groups representing any Business Employees, and to the Knowledge of Contributor, since January 1, 2019, there has not been any organizational campaign, petition or other unionization activity seeking recognition of a collective bargaining unit relating to any Business Employees. As of the date hereof there is no pending or, to the Knowledge of Contributor, threatened, material strike, slowdown, picketing or work stoppage by, or lockout of, or other similar labor activity or organizing campaign with respect to any Business Employees.
(k)The Contributor and its Affiliates within the Allianz Global Investors Business are, and since January 1, 2019 have been, in compliance in all material respects with all Applicable Laws respecting employment and employment practices, terms and conditions of employment, classification of workers, wages, hours of work, child labor, immigration, employment discrimination, harassment, disability rights or benefits, equal opportunity, plant closures and layoffs, affirmative action, workers’ compensation, labor relations, employee leave issues, unemployment insurance and occupational safety and health, in each case with respect to Business Employees.
(l)Section 3.15(f) of the Contributor Disclosure Schedule sets forth, to the extent permitted by Applicable Law, for each Business Employee identified on Schedule C as of the date hereof, such employee’s name, employer, title, hire date, location, whether full- or part-time, whether active or on leave (and, if on leave, the nature of the leave and the expected return date), whether exempt from the Fair Labor Standards Act, annual salary or wage rate and most recent variable compensation award. Contributor shall update Section 3.15(f) of the Contributor Disclosure Schedule periodically prior to the Closing Date to reflect any new hires, resignations and terminations of Business Employees, and any other changes to the information as set forth therein (in each case, subject to Section 5.1(a)(vii)) and five (5) Business Days prior to the Closing Date shall deliver to the Company a final version of Section 3.15(f) of the Contributor Disclosure Schedule as of the most recent practicable date and based upon individuals identified as additional Business Employees in writing from the Company to Contributor in accordance with Section 10.6 at least two Business Days prior to the date of such updated Contributor Disclosure Schedule.
(m)Section 3.15(g) of the Contributor Disclosure Schedule sets forth a summary of the severance payments and benefits to which the Business Employees identified on Schedule C as of the date hereof would be entitled upon any termination of employment, and the circumstances under which such Business Employees would be entitled to such severance or benefits, including the formula by which cash severance benefits are calculated pursuant to any Contributor Benefit Plan.
Section 1.17Contributor Tax Representations.
(d)Except as would not, individually or in the aggregate, reasonably be expected to have a Contributor Material Adverse Effect, (i) all Tax Returns with respect to the Transferred
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Assets that are required to be filed on or before the Closing Date have been duly filed, (ii) such Tax Returns are true, correct, and complete in all material respects and (iii) all amounts required to be paid under Applicable Law (whether or not reflected on such Tax Returns) have been duly and timely paid or are being contested in good faith with adequate reserves established with respect to such unpaid Taxes in accordance with GAAP.
(e)No claim has ever been made by (i) a Taxing Authority in any jurisdiction where Tax Returns with respect to the Transferred Assets are not filed that Tax Returns with respect to the Transferred Assets are required to be filed in such jurisdiction or (ii) a Taxing Authority outside the United States that any Taxes are required to be paid with respect to the Transferred Assets in such jurisdiction.
(f)Except as would not, individually or in the aggregate, reasonably be expected to have a Contributor Material Adverse Effect, the Contributor has complied with all applicable Tax withholding and information reporting requirements, including with respect to the Tax Withholding Rules (including the maintenance of required records with respect thereto) and all material amounts required to be withheld with respect to the Transferred Assets in connection with any amounts paid or owing to any employee, independent contractor, creditor, equity holder or other third party for Taxes have been duly and timely withheld, and such withheld Taxes have been either duly and timely paid to the proper Taxing Authority in compliance with all Applicable Law or, where payment is not yet required, set aside in accounts for such purpose, or accrued, reserved against, and entered on the books and records of Contributor.
(g)Other than any Permitted Encumbrances, there is no Encumbrance for Taxes on any of the Transferred Assets.
(h)Except as would not, individually or in the aggregate, reasonably be expected to have a Contributor Material Adverse Effect, no issues have been raised by any Taxing Authority in connection with any examination of the Tax Returns referred to in clause (a) hereof are currently pending, and no Taxing Authority has asserted any deficiency, adjustment or claim with respect to Taxes with respect to the Transferred Assets that has not been resolved with respect to any taxable period for which the period of assessment or collection remains open.
(i)There are no outstanding waivers or comparable consents given (and no request for any such waiver or consent is pending) regarding the application of the statute of limitations with respect to Taxes with respect to the Transferred Assets.
(j)Any Transferred Asset acquired in a taxable transaction (i) was acquired from a third-party in an arm's length transaction, (ii) was accounted for correctly pursuant to Section 1060 of the Code, and (iii) is not subject to any Tax indemnities.
(k)No Section 197 intangibles, as defined in Section 197(d)(1) of the Code, contributed by Contributor, was held or used on or before August 10, 1993 by the Contributor, its Affiliates, or a “related person” (within the meaning of Section 197(f)(9)(C) of the Code).
(l)Allianz Member has been classified as a corporation for U.S. federal income tax purposes at all times since its formation.
(m)Notwithstanding anything to the contrary contained in this Agreement, the representations and warranties made in this Section 3.16 are the sole and exclusive representations and warranties of the Contributor with respect to Taxes with respect to the Transferred Assets and no other representation or warranty of the Contributor contained herein shall be construed to relate to Taxes with respect to the Transferred Assets (including their compliance with Applicable Law). For the avoidance of doubt, no representation is made
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concerning the existence or amount of any net operating loss, Tax basis or other Tax asset or liability with respect to the Transferred Assets.
Section 1.18Intellectual Property.
(n)Section 3.17(a) of the Contributor Disclosure Schedule sets forth a true and complete list, as of the date hereof, of all Intellectual Property included in the Transferred Intellectual Property that is registered with, issued by, renewed by, or the subject of a pending application before, any Governmental Authority or domain name registrar (the “Transferred Registered Intellectual Property”) specifying as to each such item, as applicable (A) the owner(s) of the item, (B) the jurisdictions in which the item is issued or registered or in which any application for issuance or registration has been filed, (C) the respective issuance, registration, and application number of the item, and (D) the date of application and issuance or registration of the item.
(o)Assuming that the Company has complied in all material respects with its obligations pursuant to Section 5.14(a), as of the Closing Date, the Transferred Intellectual Property, the Licensed Intellectual Property and the rights and services to be licensed or provided to the Company pursuant to the Ancillary Agreements (including the Transition Services Agreement), except as otherwise agreed in writing pursuant to the Initial Separation and Migration Plan in effect as of the Closing Date, include all Intellectual Property necessary and sufficient for the conduct of the Transferred Business after Closing in substantially the same manner and as it was conducted during the twelve (12) months prior to the Closing.
(p)Except as would not, individually or in the aggregate, reasonably be expected to be material to the conduct of the Transferred Business, (i) all Transferred Intellectual Property is solely and exclusively owned by Contributor or its Affiliates, free and clear of all Encumbrances other than Permitted Encumbrances, (ii) all Transferred Registered Intellectual Property is subsisting, and, to the Knowledge of Contributor, valid and enforceable, (iii) the Transferred Business and the operation thereof as currently conducted is not infringing, violating or misappropriating (“Infringe” or “Infringing”) any Intellectual Property of third Persons, (iv) to the Knowledge of Contributor, no Person is Infringing any Transferred Intellectual Property, (v) no Proceedings are pending before any Governmental Authority (or to the Knowledge of Contributor, threatened in writing, including by means of an invitation to license or request for indemnification) against Contributor or its Affiliates alleging that the operation of the Transferred Business Infringes the Intellectual Property of third Persons or challenging the ownership, validity, patentability, enforceability, registrability or use of any Transferred Intellectual Property and (vi) no Proceedings have been asserted in writing (including by means of an invitation to license or request for indemnification) on behalf of the Transferred Business alleging that any third Person Infringes any Transferred Intellectual Property or challenging the ownership, validity, patentability, enforceability, registrability or use of any Intellectual Property.
(q)Contributor and its Affiliates have taken commercially reasonable measures to maintain and protect the confidentiality of all material Trade Secrets included in the Transferred Intellectual Property and any other material confidential or proprietary information relating to the Transferred Business and, since January 1, 2019, no such Trade Secrets or information have been disclosed to any third Person, except (i) pursuant to commercially reasonable written confidentiality agreements protecting the confidentiality thereof or (ii) in a manner that would not individually or in the aggregate, reasonably be expected to be material to the Transferred Business.
(r)All Persons (including current and former officers (or equivalents), employees, and independent contractors) who are or have been involved in the creation of material Intellectual Property for or on behalf of the Transferred Business, or in the course of their
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engagement by the Contributor or its Affiliates in connection with the Transferred Business (each such person, an “IP Creator”) have executed and delivered to the Contributor an agreement (containing no applicable exceptions or exclusions from the scope of its coverage) regarding the protection of proprietary information and providing for the present-tense assignment to the Contributor of all such Intellectual Property which is not owned by the Contributor or one of its Affiliates by operation of law, the current forms of which will be made available to the Company (along with any such agreements deviating from such current forms in any material respects) before Closing. Contributor is not, and to the Contributor’s Knowledge no IP Creator is, in violation of any term of any such agreement.
(s)In connection with the Transferred Business, Contributor and its Affiliates use commercially reasonable efforts to protect the security and privacy of Transferred Personal Information. Since January 1, 2019, all Processing of Personal Information that constitutes Transferred Personal Information and the operation of the Transferred Business has been in compliance with all applicable Privacy Laws and the Contributor’s applicable public-facing privacy policies except as would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business. Since January 1, 2019, no person has claimed any compensation from, and no Governmental Authority has made any allegation against, Contributor, and Contributor has not received any written notice from any Person or Governmental Authority, in each case, related to the loss of or unauthorized access to or disclosure or transfer of any Transferred Personal Information.
(t)In connection with the Transferred Business, Contributor and its Affiliates have implemented and maintained commercially reasonable business continuity and disaster recovery plans, procedures and facilities for the Transferred Business and have taken reasonable steps to safeguard the integrity and security of the IT Assets used in the operation of the Transferred Business and the information (including Trade Secrets and Personal Information that constitutes Transferred Personal Information) stored thereon, including from unauthorized use or access by third parties. Except as would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business, all such IT Assets: (i) are in good working order; (ii) function in accordance with all specifications and any other descriptions under which they were supplied; (iii) are substantially free of any defects, bugs and errors; and (iv) are commercially reasonably sufficient for the existing needs of the Transferred Business.
(u)Since January 1, 2019, except as would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business, there have been no unauthorized intrusions, misuse or breaches of the security of any IT Assets used in the operation of the Transferred Business (including ransomware attacks), nor any breach, theft, misuse or unauthorized access, use or disclosure of any Personal Information that constitutes Transferred Personal Information which is or has been Processed by or on behalf of the Transferred Business. Since January 1, 2019, except as would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business, neither Contributor nor any of its Affiliates (i) has received any written notice or claim alleging that the operation of the Transferred Business violates any Privacy Law or contractual or fiduciary obligations relating to privacy or security of Transferred Personal Information, or (ii) has made, or was required to make, any disclosure of any data breach or IT Asset or network security breach in connection with the Transferred Business under any applicable Privacy Law or to any Governmental Authority.
(v)This Section 3.17(i) contains the sole and exclusive representations and warranties of Contributor with respect to the Infringement of Intellectual Property of any third Person.
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Section 1.19Real Estate.
(n)There is no real property owned by Contributor or its Affiliates that is used to operate the Transferred Business. Section 3.18(a) of the Contributor Disclosure Schedule lists all Leases used to operate the Transferred Business to which Contributor is a party and all Leased Real Property of Contributor. Correct and complete copies of such Leases have been delivered or made available to the Company. Contributor is not, and, to the Knowledge of Contributor, no other party is, in material breach or default of any material Lease and, to the Knowledge of Contributor, no event has occurred that (with the giving of notice or the lapse of time or both) would constitute such a material breach or default by Contributor or, to the Knowledge of Contributor, any other party thereto.
(o)With respect to the Transferred Business, since January 1, 2019, Contributor has complied with all Environmental Laws that pertain to any of the properties of the Transferred Business and the use and ownership thereof and the operation of the Transferred Business, except as would not, individually or in the aggregate, reasonably be expected to have a Contributor Material Adverse Effect. As of the date hereof, there are no Proceedings pending or, to the Knowledge of Contributor, threatened against Contributor under any Environmental Law, except for any Proceedings that would not, individually or in the aggregate, reasonably be expected to be material to the Transferred Business or prevent or materially impair or delay the consummation of the Transactions prior to the Termination Date. Contributor has made available to the Company copies of all reports of any environmental audits, site assessments, investigations, impact reviews, or other similar documents, containing material information regarding the Transferred Business or the real property owned by Contributor, that are in Contributor’s possession.
Section 1.20AP/EU Sub-Advisory Agreement Matters.
(w)Regulatory Approvals. Approval from any Governmental Authority is not required in order to establish the AP/EU Sub-Advisory Agreements, or otherwise Contributor has obtained each such requisite approval.
(x)Client Consent. Consent or approval from limited partners, members, shareholders, trustees, investors, or boards of any fund within the AP/EU Portfolios, or such consent or approval from any other person, is not required in order to establish the AP/EU Sub-Advisory Agreements.
Section 1.21Title, Condition and Sufficiency of Assets. The Contributor, or any of its Affiliates, as applicable, has good and valid title to, or a valid leasehold interest in, all of the assets and properties of the Transferred Business, including the Transferred Assets, free and clear of all Encumbrances other than Permitted Encumbrances. The Transferred Assets are in good operating condition and are adequate for the uses to which they are being put, and none of such property is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost. Assuming that the Company has complied in all material respects with its obligations pursuant to Section 5.14(a) as of the Closing Date, the Transferred Assets delivered as of the Closing Date, together with the rights and services to be provided under the Ancillary Agreements (including the Transition Services Agreement), and except as otherwise agreed in writing pursuant to the Initial Separation and Migration Plan in effect as of the Closing Date, include all properties, assets and rights (other than Intellectual Property) necessary and sufficient for the conduct of the Transferred Business after the Closing in substantially the same manner and as it was conducted during the twelve (12) months prior to the Closing.
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Section 1.22No Broker. Except for Ardea Partners LP, whose fee will be borne by Contributor, no broker, finder or similar intermediary has acted for or on behalf of, or is entitled to any broker’s, finder’s or similar fee or other commission from, Contributor Parent, Contributor or any of its Affiliates in connection with this Agreement or the Transactions.
Section 1.23Investigation; No Additional Representations. In entering into this Agreement, each of Contributor Parent and Contributor acknowledges and agrees, without limiting its right to rely on the representations, warranties, covenants and agreements contained herein, that it (a) has conducted its own independent investigation, review and analysis of, and, based thereon, has formed an independent judgment concerning, the business, assets, condition, operations and prospects of the Company, (b) has had adequate access to the books, records, facilities and personnel of the Company, and has been furnished with or given adequate access to such information about the Company and its Subsidiaries, businesses and operations as it has reasonably requested, (c) has relied solely upon its own independent investigation, review and analysis, and (d) has such knowledge and experience as to be aware of the risks and uncertainties inherent in the purchase of interests of the type contemplated by this Agreement, as well as the knowledge of the Company and its operations in particular, and has independently made its own analysis and decision to enter into this Agreement. Each of Contributor Parent and Contributor acknowledges and agrees that, except for the representations and warranties expressly set forth in Article IV, none of the Company, Company Parent, any of their respective Affiliates, officers, directors, employees, agents, lenders or representatives nor any other Person on behalf of any of them, makes or shall be deemed to make any representation or warranty to Contributor Parent, Contributor or any other Person with respect to the Company, Company Parent or the Transactions, express or implied, at law or in equity (including as to the accuracy of completeness of any of the information provided or made available to Contributor Parent, Contributor, any of their respective Affiliates, officers, directors, employees, agents, lenders or representatives or any other Person prior to the execution of this Agreement) and Contributor Parent and Contributor by this Agreement disclaim any such other representation or warranty, whether by the Company, Company Parent, any of their respective Affiliates, officers, directors, employees, agents, lenders or representatives or any other Person, notwithstanding the delivery or disclosure to Contributor Parent, Contributor or any of their respective Affiliates, officers, directors, employees, agents, lenders or representatives or any other Person, of any documentation or other information by the Company, Company Parent, their respective Affiliates, officers, directors, employees, agents, lenders or representatives or any other Person with respect to any one or more of the foregoing.
Section 1.24Newco Operations. Newco was formed solely for purposes of effecting the Transactions. Newco has no Liabilities except for Liabilities under this Agreement or the Ancillary Agreements. Immediately prior to the consummation of the Transactions, Allianz Member is the sole record and beneficial owner of, and has good, valid and marketable title to, all of equity interests of Newco, free and clear of all Encumbrances other than transfer restrictions imposed on equity securities by applicable securities Laws and the provisions of its organizational documents.
Article IV
REPRESENTATIONS AND WARRANTIES OF COMPANY PARENT AND THE COMPANY

Except as set forth in a correspondingly labeled section of the written disclosure schedule delivered to Contributor by the Company concurrently with the execution and delivery of this Agreement (the “Company Disclosure Schedule”) (it being agreed that any matter disclosed in any section or subsection of the Company Disclosure Schedule shall be deemed disclosed with respect to any representation or warranty corresponding to any other section of this Agreement and the Company Disclosure Schedule to the extent its relevance to such section, representation
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or warranty is reasonably apparent from the face of the Company Disclosure Schedule), each of Company Parent and the Company hereby represents and warrants to each of Contributor Parent and Newco as follows:
Section 1.25Organization and Related Matters. Each of Company Parent and the Company (a) is a limited liability company or corporation, as applicable, duly organized and validly existing under the Laws of the jurisdiction of its formation, (b) has the requisite organizational power and authority necessary to carry on its respective business substantially in the manner as it is now being conducted and to own, lease and operate all of its properties and assets and (c) is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned, leased or operated by it makes such qualification or licensing necessary, except where the failure to be so licensed or qualified would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 1.26Authority; No Violations.
(y)Each of Company Parent and the Company has all requisite organizational power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is or will be a party and to consummate the Transactions. The execution and delivery of this Agreement and the Ancillary Agreements to which Company Parent or the Company, as applicable, are or will be a party and the consummation of the Transactions by Company Parent and the Company have been duly authorized by all requisite action of such Party. This Agreement has been (and the execution and delivery of each of the Ancillary Agreements to which Company Parent and the Company, as applicable, will be a party will be) duly executed and delivered by Company Parent and the Company, as applicable, and constitutes (and each such Ancillary Agreement when so executed and delivered by Company Parent and the Company, as applicable, will constitute) a valid, legal and binding agreement of Company Parent and the Company, as applicable (assuming that this Agreement has been, and the Ancillary Agreements to which such Party is a party will be, duly and validly authorized, executed and delivered by the other Persons party thereto), enforceable against Company Parent and the Company, as applicable, in accordance with their terms, except (i) to the extent that enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other Laws affecting the enforcement of creditors’ rights generally and (ii) that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding thereof may be brought.
(a)Assuming the accuracy of the representations and warranties of Contributor Parent and Contributor set forth in Section 3.2(b), no notices to, filings with or authorizations, consents or approvals of any Governmental Authority are necessary to be made by or received by Company Parent or the Company for the execution, delivery or performance by Company Parent and the Company, as applicable, of this Agreement or the Ancillary Agreements to which Company Parent and the Company, as applicable, are or will be a party or the consummation by Company Parent and the Company of the Transactions, except for (i) compliance with and filings under the HSR Act and any other applicable Competition Laws, (ii) filings listed on Section 4.2(b) of the Company Disclosure Schedule and (iii) those the failure of which to obtain or make would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(b)No vote of the holders of any class or series of capital stock of Company Parent or the Company is necessary to approve this Agreement or to consummate the Transaction.
Section 1.5Non-Contravention. The execution and delivery by each of Company Parent and the Company of this Agreement and the Ancillary Agreements to which such Party is
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or will be a party and the performance of its obligations hereunder and thereunder (including the consummation of the Transactions) do not (a) violate any provision of the Organizational Documents of such Party), (b) assuming compliance with the matters referred to in Section 4.2(b) violate any Applicable Law, (c) require any consent of or notice to any Person under, or result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default or give rise to any right of termination, cancellation or acceleration under, any material Contract applicable to the Company or (d) except as contemplated by this Agreement, result in the creation or imposition of any Encumbrance other than Permitted Encumbrances on any material asset of the Company, except, in the case of clauses (b), (c) and (d), as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 1.6Capital Structure; Subsidiaries.
(c)As of the date hereof, all of the issued and outstanding limited liability company membership interests of the Company are owned by the Voya Member. All of the issued and outstanding equity interests are duly authorized, validly issued, fully paid and non-assessable and free of preemptive rights. Neither the Company nor any of its Subsidiaries directly or indirectly owns beneficially or of record any equity interest in any Person, other than the Subsidiaries of the Company.
(d)Section 4.4(b) of the Company Disclosure Schedule sets forth a correct and complete list of each Subsidiary of the Company, indicating the (i) type of entity, (ii) jurisdiction of organization, (iii) the number and type of issued equity interest and (iv) the holders of such equity interest. The Company owns, directly or indirectly, all of the issued and outstanding equity interests in, and other securities of, each Subsidiary of the Company, free and clear of any Encumbrances other than Permitted Encumbrances. All of the issued and outstanding equity interests of each Subsidiary of the Company have been duly authorized and are validly issued, fully paid and non-assessable and are free of preemptive rights, rights of refusal or similar rights. Each Subsidiary of the Company is (i) duly organized and validly existing under the Laws of the jurisdiction of its formation, and is in good standing in such jurisdiction, (ii) has the requisite power and authority necessary to carry on its respective business substantially in the manner as it is now being conducted and to own, lease and operate all of its properties and assets and (iii) is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned, leased or operated by it makes such qualification or licensing necessary, except where the failure to be so licensed or qualified would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 1.1Financial Information. The information provided in Section 4.5 of the Company Disclosure Schedule is true and correct, and fairly presents in all material respects (i) the assets and liabilities of the Company on a consolidated basis for the calendar quarter ended March 31, 2022, disregarding the assets and liabilities that comprise the Class B Underlying Assets (as defined in the A&R Newco Operating Agreement) and disregarding any changes in shareholders’ equity or profit or losses arising from the Class B Underlying Assets; and (ii) the assets and liabilities of the Company on a consolidated basis, the consolidated results of operation of the Company’s business, the consolidated profits and losses, and overall financial performance of the Company for the fiscal year ended December 31, 2021, disregarding the financial performance of the assets and liabilities that comprise the Class B Underlying Assets and disregarding any changes in shareholders’ equity or profit or losses arising from the Class B Underlying Assets (collectively, the “Company Financial Information”). The Company Financial Information has been (1) derived from the financial and management reporting systems of the Company and its Affiliates and (2) prepared in accordance with GAAP (subject to adjustments to reflect the legal entity basis and segment basis), applied on a consistent basis.
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Section 1.2Inter-Affiliate Agreements and Allocations. Section 4.6 of the Company Disclosure Schedule sets forth all Contracts, expense allocations, revenue share arrangements, fee arrangements or other similar arrangements between the Company or its Subsidiaries, on the one hand, and any other Affiliate of the Company, on the other hand (collectively, the “Company Inter-Affiliate Arrangements”), to the extent such Contracts, allocation or arrangements are material, individually or in the aggregate, to the Company’s business and operations as conducted on the date hereof.
Section 1.3Absence of Liabilities. Except for liabilities and obligations (a) incurred in the Ordinary Course of Business since December 31, 2021, (b) incurred under or in accordance with this Agreement or in connection with the Transactions, (c) of a partner (or Person serving in a comparable capacity) of a Non-Registered Fund arising in the Ordinary Course of Business under Applicable Law, and (d) that are obligations for future performance under existing Contracts, the Company and its Affiliates have not incurred liabilities or obligations that would, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 1.4Absence of Certain Changes. Since December 31, 2021, (a) there has not occurred any Company Material Adverse Effect and (b) the Company has operated its Business in the Ordinary Course of Business.
Section 1.1Legal Proceedings. (a) There are no Proceedings that are pending or, to the Knowledge of the Company, threatened in writing against or relating to the Company or any of its properties, assets or businesses and (b) there is no Order imposed upon the Company or any of its properties, assets or business, in each case of (a) and (b), that would, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 1.2Compliance with Applicable Law.
(e)Since January 1, 2019, Company Parent, the Company and their respective Affiliates have complied with all Applicable Laws and as of the date hereof, and have not received any written notice asserting any material violation by the Company of any Applicable Law, except for violations that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(f)Company Parent, the Company and their respective Affiliates hold, and at all times since January 1, 2019 have held, all Permits necessary for the conduct of their business under and pursuant to Applicable Law, except, in each case, where any such failure would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. All material Permits of the Company are in full force and effect and are not subject to any suspension, cancellation, modification or revocation or any Proceedings related thereto, and, to the Knowledge of the Company, no such suspension, cancellation, modification or revocation or Proceeding is threatened in writing, except for any failure to be in full force and effect or suspension, cancellation, modification or revocation or Proceedings that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 1.5Other Compliance Matters.
(g)Since January 1, 2019, the advisors set forth in Section 4.11(a) of the Company Disclosure Schedule (each, a “Company Advisor”), which comprise the only entities of the Company that provide investment advisory or sub-advisory services to non-Affiliates of the Company, have been duly registered as investment advisers under the Investment Advisers Act and under all other Applicable Laws (if required to be so registered), except, in each case, as
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would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(h)Neither the Company nor any of its Subsidiaries, nor, to the Knowledge of the Company and except where the ineligibility would not be material to the business of the Company, any of their directors, officers or employees is ineligible pursuant to Section 9(a) or Section 9(b) of the Investment Company Act to serve as an investment adviser, depositor or principal underwriter to a registered investment company nor is there any Proceeding pending or, to the Knowledge of the Company, threatened in writing by any Governmental Authority, that would result in the ineligibility of the Company, any of its Subsidiaries or any of their respective directors, officers or employees to serve in any such capacities. Neither the Company nor any of its Subsidiaries, nor, to the Knowledge of the Company, any of their directors, officers, or employees is ineligible pursuant to Section 203 of the Investment Advisers Act to serve as a registered investment adviser or as a “person associated with an investment adviser” (as defined in the Investment Advisers Act), nor is there any Proceeding pending or, to the Knowledge of the Company, threatened in writing by any Governmental Authority that would reasonably be expected to result in such ineligibility.
(i)Except Routine Inspections, to the Knowledge of the Company, no material investigation by any Governmental Authority into the Company regarding a potential violation of any Applicable Law by the Company is pending or has been threatened in writing. Except to the extent restricted from doing so by Applicable Law, the Company has made available to Contributor complete and correct copies of all material investigation, examination, audit or inspection reports (other than Routine Inspection reports) received by the Company from any Governmental Authority and all written responses thereto made by the Company, in each case since January 1, 2019 through the date hereof. The Company has resolved all material deficiencies asserted by any Governmental Authority in connection with any such audit, examination, inspection or investigation.
(j)The Company Trust Bank is a “trust bank,” as that term is defined under Section 36a-2(73) of the Connecticut General Statutes and its activities are limited to those that are permissible for a trust bank under Applicable Law.
(k)The Company Trust Bank is not subject to any cease-and-desist or other order or enforcement action issued by, is not a party to any written agreement, consent agreement or memorandum of understanding with, is not a party to any commitment letter or similar undertaking to, is not subject to any order or directive by, has not been ordered to pay any civil money penalty by, has not been since January 1, 2019, a recipient of any supervisory letter from, and has not since January 1, 2019, adopted any policies, procedures or board resolutions at the request or suggestion of, any Governmental Authority that currently restrict in any material respect or would reasonably be expected to restrict in any material respect the conduct of its business, except, in each case, as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 1.7Company Clients.
(l)Section 4.12(a) of the Company Disclosure Schedule sets forth the aggregate net assets under management by the Company for the Company Clients as of the Reference Date calculated in the same manner as provided for in the calculation of base investment management fees payable in respect of each such Company Client account pursuant to the terms of the Company Advisory Agreement applicable to such account.
(m)Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, (i) each Company Advisory Agreement is legal, valid,
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binding, enforceable upon the parties thereto and is in full force and effect; and (ii) the Company is not in breach or default, and to the Knowledge of the Company, no other party is in breach or default, of any Company Advisory Agreement.
(n)Each Sponsored Fund of the Company that is a juridical entity is duly organized, validly existing and, with respect to juridical entities in jurisdictions that recognize the concept of “good standing,” in good standing under the Laws of the jurisdiction of its organization and has the requisite corporate, trust, fiduciary, company or partnership power and authority to own its properties and to carry on its business as currently conducted, and is qualified to do business in each jurisdiction where the nature of the business conducted by it or the character or location of the properties and assets owned, leased or operated by it makes such qualification or licensing necessary, except where any failure to be so duly organized, validly existing, in good standing, licensed or qualified or to have such power would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(o)There is no Proceeding pending or, to the Knowledge of the Company, threatened in writing against any Sponsored Fund of the Company that would, individually or in the aggregate, reasonably be expected to have a material adverse effect on the business of the Company and its Subsidiaries, taken as a whole.
(p)For all taxable years since its inception, to the Knowledge of the Company, (i) each Sponsored Fund of the Company has elected to be treated as (where such election is required for such treatment), and has qualified for its intended Tax classification or treatment, as reported on its most recent applicable Tax Return (including, in the case of each Sponsored U.S. Registered Fund of the Company, a regulated investment company taxable under Subchapter M of Chapter 1 of the Code, in the case of each Sponsored Non-Registered Fund of the Company that is a common trust fund, as a common trust fund under Section 584 of the Code and in the case of each commingled pension fund, as a group trust arrangement within the meaning of Revenue Ruling 2011-1, 2011-2 Internal Revenue Bulletin 251, as modified by Revenue Ruling 201.4-24, 201.4-37 Internal Revenue Bulletin 529) and has been organized and operated in conformity with the requirements related to such intended Tax classification or treatment, and its proposed method of operation will enable it to continue to qualify for such intended Tax classification or treatment, (ii) each Sponsored U.S. Registered Fund and each Sponsored Non-Registered Fund of the Company has timely filed (or caused to be timely filed) all Tax Returns required to be filed by it (taking into account any applicable extensions or waivers) with any Taxing Authority, such Tax Returns are true, correct, and complete in all material respects and has timely paid (or caused to be paid) all Taxes required to be paid under Applicable Law (whether or not reflected on such Tax Returns).
Section 1.6Company Tax Representations.
(q)Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, (i) all Tax Returns required to be filed by the Company and any of its Subsidiaries on or before the Closing Date have been duly and timely filed, (ii) all such Tax Returns are true, correct and complete in all material respects, and (iii) all Taxes required to be paid by the Company and any of its Subsidiaries (whether or not shown as due on such Tax Returns) have been duly and timely paid or are being contested in good faith with adequate reserves established with respect to such unpaid Taxes in accordance with GAAP.
(a)No written claim has been made by any Taxing Authority in a jurisdiction where the Company or its Subsidiaries does not file Tax Returns that the Company or such Subsidiary, as applicable, is required to file Tax Returns in such jurisdiction.
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(r)Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, the Company and its Subsidiaries have complied with all applicable Tax withholding and information reporting requirements, including with respect to the Tax Withholding Rules (including the maintenance of required records with respect thereto) and all material amounts required to be withheld by the Company and any of its Subsidiaries in connection with any amounts paid or owing to any employee, independent contractor, creditor, equity holder or other third party for Taxes have been duly and timely withheld, and such withheld Taxes have been either duly and timely paid to the proper Taxing Authority in compliance with all Applicable Law or, where payment is not yet required, set aside in accounts for such purpose, or accrued, reserved against, and entered on the books and records of the Company or any of its Subsidiaries.
(a)Other than any Permitted Encumbrances, there is no Encumbrance for Taxes on the Company or its Subsidiaries.
(b)There are no outstanding waivers or comparable consents given (and no request for any such waiver or consent is pending) regarding the application of the statute of limitations with respect to material Taxes with respect to the Company or its Subsidiaries.
(c)Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, taken as a whole, (i) no Tax Returns of any of the Company and its Subsidiaries are under audit, examination or investigation by any Taxing Authority, and no such audit, examination or investigation has, to the Knowledge of the Company, been threatened, (ii) no issues have been raised by any Taxing Authority in connection with any examination of the Tax Returns referred to in clause (a) hereof are currently pending, and (iii) no Taxing Authority has asserted any deficiency, adjustment or claim with respect to Taxes with respect to the Company or its Subsidiaries that has not been resolved with respect to any taxable period for which the period of assessment or collection remains open.
(d)None of the Company or any of its Subsidiaries will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any Post-Closing Tax Period as a result of: (i) any change in, or use of an improper, method of accounting for a taxable period ending on or prior to the Closing Date; (ii) any “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of U.S. state, local or non-U.S. Law) executed on or prior to the Closing Date; (iii) any installment sale or open transaction made on or prior to the Closing Date; (iv) any prepaid amount or advance payments or deferred revenue received or accrued on or prior to the Closing Date; or (v) any election under Section 108(i) of the Code.
(e)Section 4.13(h) of the Company Disclosure Schedule lists the entity classification of the Company and each of its Subsidiaries for U.S. federal income tax purposes, as of the date hereof and as of the Closing Date, and there is no election pending to change such classification.
(f)Notwithstanding anything to the contrary contained in this Agreement, the representations and warranties made in this Section 4.13 are the sole and exclusive representations and warranties of the Company and its Subsidiaries with respect to Taxes and no other representation or warranty of the Company or its Subsidiaries contained herein shall be construed to relate to Taxes (including their compliance with Applicable Law). For the avoidance of doubt, no representation is made concerning the existence or amount of any net operating loss, Tax basis or other Tax asset or liability.
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Section 1.27Intellectual Property.
(a)Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, (i) all Intellectual Property owned or purported to be owned by the Company or its Affiliates is solely and exclusively owned by the Company or its applicable Affiliate, (ii) to the Knowledge of the Company, the operation of the businesses of the Company and its Affiliates is not Infringing any Intellectual Property of third Persons, (iii) to the Knowledge of the Company, no Person is Infringing any Company Intellectual Property, (iv) no Proceedings are pending before any Governmental Authority (or to the Knowledge of the Company, threatened in writing) against the Company or its Affiliates alleging that the operation of the Company’s business Infringes the Intellectual Property of third Persons and (v) no pending Proceedings have been asserted in writing by or on behalf of the Company or its Affiliates alleging that any third Person Infringes any Company Intellectual Property.
(b)The Company and its Affiliates have taken commercially reasonable measures to maintain and protect the confidentiality of all material Trade Secrets included in the Company Intellectual Property and, to the Knowledge of the Company, no such Trade Secrets have been disclosed to any third Person, except (i) pursuant to commercially reasonable written confidentiality agreements protecting the confidentiality thereof or (ii) in a manner that would not individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(c)Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, the Company and its Affiliates use commercially reasonable efforts to protect the security and privacy of all Personal Information owned, controlled or otherwise Processed by it or they own or control or is Processed by or on its or their behalf, and the operation of the businesses of the Company and its Affiliates has been in compliance in all material respects with all applicable Privacy Laws and their applicable public-facing privacy policies.
(d)This Section 4.14 contains the sole and exclusive representations and warranties of the Company with respect to Intellectual Property.
Section 1.28No Broker. Except for Goldman Sachs & Co. LLC, whose fee will be borne by the Company, no broker, finder or similar intermediary has acted for or on behalf of, or is entitled to any broker’s, finder’s or similar fee or other commission from Company Parent, the Company or any of its Affiliates in connection with this Agreement or the Transactions.
Section 1.29Investigation; No Additional Representations. In entering into this Agreement, each of Company Parent and the Company acknowledges and agrees, without limiting its right to rely on the representations, warranties, covenants and agreements contained herein, that it (a) has conducted its own independent investigation, review and analysis of, and, based thereon, has formed an independent judgment concerning, the business, assets, condition, operations and prospects of the Transferred Business, (b) has had adequate access to the books, records, facilities and personnel of the Transferred Business, and has been furnished with or given adequate access to such information about the Transferred Business and its businesses and operations as it has reasonably requested, (c) has relied solely upon its own independent investigation, review and analysis and (d) has such knowledge and experience as to be aware of the risks and uncertainties inherent in the purchase of interests of the type contemplated by this Agreement, as well as the knowledge of the Transferred Business and its operations in particular, and has independently made its own analysis and decision to enter into this Agreement. Each of the Company and Company Parent acknowledges and agrees that, except for the representations and warranties expressly set forth in Article III, none of Contributor Parent, Contributor, any of their respective Affiliates, officers, directors, employees, agents, lenders or representatives or
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any other Person on behalf of any of them, makes or shall be deemed to make any representation or warranty to the Company, Company Parent or any other Person with respect to Contributor, the Transferred Business or the Transactions, express or implied, at law or in equity (including as to the accuracy or completeness of any of the information provided or made available to the Company, Company Parent, or any of their respective Affiliates, officers, directors, employees, agents, lenders or representatives or any other Person prior to the execution of this Agreement) and Contributor Parent and Contributor by this Agreement disclaim any such representation or warranty, whether by Contributor Parent, Contributor, or any of their respective Affiliates, officers, directors, employees, agents, lenders or representatives or any other Person, notwithstanding the delivery or disclosure to the Company, Company Parent, or any of their respective Affiliates, officers, directors, employees, agents, lenders or representatives or any other Person, of any documentation or other information by Contributor Parent, Contributor, their respective Affiliates, officers, directors, employees, agents, lenders or representatives or any other Person with respect to any one or more of the foregoing.
Article V
COVENANTS
Section 1.30Conduct of Business by Contributor.
(n)During the Interim Period, except (1) as required or permitted by this Agreement, (2) as set forth in Section 5.1 of the Contributor Disclosure Schedule, (3) as required by any Law or Order applicable to the Transferred Business (including any measures in response to the COVID-19 pandemic and any future resurgence, evolution or mutation of COVID-19) or by any Contributor Material Contract, or (4) with the prior written consent of the Company (which consent shall not be unreasonably withheld, conditioned or delayed), Contributor and Contributor Parent shall and shall cause their respective Subsidiaries to (x) carry on the Transferred Business in the Ordinary Course of Business, (y) use commercially reasonable efforts to preserve the present business organization and material business relationships of the Transferred Business, including its customers and suppliers, and keep available the services of the Business Employees and (z) continue in all material respects consistent with past practices the management of the current assets and current liabilities of the Transferred Business, including the collection of accounts receivable, recoupment of advances, payment of accounts payable and payment of expenses, and the operation of the Transferred Business. Without limiting the generality of the foregoing, during the Interim Period, except as required or expressly permitted by this Agreement (including the exceptions provided for in the first sentence of this Section 5.1), Contributor covenants and agrees that Contributor shall not (and shall cause its Affiliates, as applicable, not to) with respect to the Transferred Business:
(i)mortgage, pledge or subject to any Encumbrance, the performance by Contributor of its obligations under the Contributor Material Contracts or any of the Transferred Assets, except for Permitted Encumbrances;
(ii)sell, assign, license, transfer, convey, abandon, let lapse or grant any rights under, or grant or suffer to exist any Encumbrance on, or otherwise dispose of, (A) Transferred Assets, except in the Ordinary Course of Business consistent with past practice, or (B) any Transferred Intellectual Property, except for non-exclusive licenses granted in the Ordinary Course of Business, or fail to continue to prosecute or defend, abandon, cancel, fail to renew or maintain or otherwise allow to lapse any material Transferred Registered Intellectual Property;
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(iii)(A) enter into any new Contract or renew any existing Contract requiring payments by, following the applicable Closing Date, the Company; (B) cancel, terminate, amend, modify, supplement, rescind, accelerate, renew, grant a waiver under or abandon any rights under any Advisory Agreement (unless as otherwise requested or instructed by the applicable client), Contributor Material Contract or Fund Document or any terms of any Advisory Agreement, Contributor Material Contract or Fund Document, except for the purpose of effecting any changes in applicable Law or implementing regulatory requirements or pursuant to any Order or in response to a breach or default by the other party thereto; or (C) take any action or omit to take any action for the purpose of accelerating or deferring payments under, or reducing or otherwise adversely affecting the amounts payable to Contributor or, following the applicable Closing Date, the Company, pursuant to any Advisory Agreement, Fund Document or Contributor Material Contract;
(iv)settle, pay, discharge or satisfy any Proceeding that would constitute a Transferred Asset or Assumed Liability, including where such settlement, payment, discharge or satisfaction would impose any restrictions or limitations upon the operations of the Business, whether before or after the Closing;
(v)incur, create, assume or guarantee any Indebtedness or liability of any other Person that would constitute an Assumed Liability;
(vi)(A) knowingly take any action that is reasonably expected to jeopardize the validity of or results in the revocation, surrender or forfeiture of, any of the Material Permits; and (B) fail to use commercially reasonable efforts to (I) prosecute in the Ordinary Course of Business any material pending applications with respect to the Material Permits, including any renewals thereof or (II) make all filings and reports and pay all fees necessary or reasonably appropriate for the continued performance by Contributor of its obligations under the Advisory Agreements, as and when such approvals, consents, Permits, licenses, filings, or reports or other authorizations are necessary or appropriate in the Ordinary Course;
(vii)(A) increase (or commit to increase) the base salary (or wages), annual target incentive opportunity or other compensation or benefits paid or payable to any Business Employee (or individual who, prior to such increase, was identified as an individual expected to become a Transferred Employee in writing from the Company to Contributor in accordance with Section 10.6), except (i) for increases of base salary (or wages) in the Ordinary Course of Business not in excess of 5.0 % with respect to any individual Business Employee or 2.0% with respect to all Business Employees in the aggregate and (ii) for increases in benefits under a Contributor Benefit Plan that are generally applicable to the employees of Contributor and its Affiliates and that are not specific to (and do not disproportionally impact) the Business Employees or any plan, program, arrangement, practice or agreement that would be a Contributor Benefit Plan if it were in existence on the date hereof, (B) grant any new entitlement to severance or termination pay or retention or change in control bonus to any Business Employee, (C) hire any natural person who if employed as of the date hereof would be a “Business Employee”, except (i) for new hires with base salary under $150,000 replacing Business Employees employed as of the date hereof whose employment is terminated in the Ordinary Course of Business prior to Closing or (ii) as mutually agreed by the Company and the Contributor, (D) terminate the employment of any Business Employee, other than terminations for “cause” or (E) establish any plan, program, arrangement, practice or agreement that would be a Contributor Benefit Plan that would be assumed if it were in existence on the date hereof;
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(viii)(A) amalgamate, merge with or into or consolidate with other Person, or (B) adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, recapitalization or other reorganization of the Contributor or any of its Subsidiaries; provided that the foregoing shall not restrict Contributor from taking such actions to the extent necessary for preparation of the winding down of its operations in the United States of America after the Closing;
(ix)purchase, lease or otherwise acquire any property or assets that would constitute Transferred Assets for an amount in excess of $500,000 individually or $1,000,000 in the aggregate, except in the Ordinary Course of Business consistent with past practice; or
(x)enter into any Contract to do any of the foregoing.
(a)Nothing contained in Section 5.1(a) is intended to give the Company the right to control or direct the operations of the Transferred Business prior to the Closing. Prior to the Closing, Contributor shall exercise complete control and supervision over the operations of the Transferred Business.
(b)Until the earlier of (x) the date on which all Sub-Advised AP/EU Portfolios have been terminated and become subject to an AP/EU Sub-Management Agreement and (y) the date that is twelve (12) months following the Closing, Contributor Parent shall and shall cause its Subsidiaries to take the following actions with respect to such Sub-Advised AP/EU Portfolios: (x) carry out the business of such Sub-Advised AP/EU Portfolios in the Ordinary Course of Business, (y) use commercially reasonable efforts to preserve the present business organization and material business relationships of such Sub-Advised AP/EU Portfolios, including its customers and suppliers, and keep available the services provided to the relevant Sub-Advised AP/EU Portfolio and (z) continue in all material respects consistent with past practices the management of the current assets and current liabilities of such Sub-Advised AP/EU Portfolios, including the collection of accounts receivable, recoupment of advances, payment of accounts payable and payment of expenses, and the operation of such Sub-Advised AP/EU Portfolios.
Section 1.31Conduct of Business by the Company.
(e)During the Interim Period, except (1) as required or permitted by this Agreement, (2) as set forth in Section 5.2 of the Company Disclosure Schedule, (3) as required by any Law or Order applicable to the Company (including any measures in response to the COVID-19 pandemic and any future resurgence, evolution or mutation of COVID-19) or by any material Contract to which the Company or any of its Subsidiaries is a party or pursuant to which any of their property or assets is bound, or (4) with the prior written consent of Contributor (which consent shall not be unreasonably withheld, conditioned or delayed), the Company shall (x) carry on its business in the Ordinary Course of Business and (y) use commercially reasonable efforts to preserve its present business organization and material business relationships. Without limiting the generality of the foregoing, during the Interim Period, except as required or expressly permitted by this Agreement (including the exceptions provided for in the first sentence of this Section 5.2), the Company covenants and agrees that the Company shall not (and shall cause its Subsidiaries, as applicable, not to), directly or indirectly:
(i)amend its Organizational Documents in any material respect;
(ii)amalgamate, merge with or into or consolidate with other Person;
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(iii)adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, recapitalization or other reorganization of the Company or any of its Subsidiaries;
(iv)authorize, issue, split, combine, subdivide or reclassify any capital stock, or securities exercisable for, exchangeable for or convertible into capital stock, or other equity or voting interests of the Company;
(v) except as required by Applicable Law or GAAP, make any material change in its accounting methods or practices;
(vi)sell, transfer, lease, offer to sell, abandon or make any other disposition, including by way of sub-advisory agreements, participations, or other similar arrangements, of any of its assets, other than (a) in the Ordinary Course of Business or (b) with a fair value not in excess of $2,000,000 individually or $4,000,000 in the aggregate;
(vii)take any action that would reasonably be expected to impact the tax character or treatment of the Transferred Assets that would disproportionately and adversely affect the Allianz Member in any material respect after the Closing (unless no alternative action exists that would not disproportionately and adversely affect the Voya Member in any material respect or that would be materially more tax-efficient taking into account the impact on the Allianz Member and the Voya Member) and that may not be taken after the Closing Date without the consent of the Allianz Member pursuant to Section 5.04(a)(vi) of the A&R Newco Operating Agreement;
(viii)agree or commit to do any of the foregoing; or
(ix)take any action in contravention of Schedule E of the A&R Newco Operating Agreement.
(c)Nothing contained in Section 5.2(a) is intended to give Contributor the right to control or direct the operations of the Company or any of its Subsidiaries. The Company and its Subsidiaries shall exercise complete control and supervision over their respective operations, as applicable.
Section 1.32Advisory Agreement Consents. For purposes of this Section 5.3, (i) all references to undertakings of Contributor Parent to take any particular action shall be construed to mean an undertaking to cause any applicable Subsidiaries of Contributor Parent to take such action and (ii) with respect to any Covered Clients having a Third Party Primary Advisor, the Contributor’s and Contributor Parent’s undertakings to take any particular action or cause any particular outcome set forth in this Section 5.3 shall be construed taking into account the limitations on the Contributor’s ability, in its role as subadvisor or submanager, to take such action or cause such outcome (it being understood, however, that Contributor shall use its commercially reasonable efforts to assist the Third Party Primary Advisor in achieving the objectives referred to in this Section 5.3):
(b)U.S. Registered Fund Approvals.
(i)Each of the Contributor and Contributor Parent shall use its commercially reasonable efforts, as soon as reasonably practicable following the date hereof, to cause the applicable Third Party Primary Advisor for closed-end U.S. Registered Funds to obtain either (A) the required consents and approvals (including by each applicable Registered Fund Board and, if applicable, the shareholders of each closed-end U.S.
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Registered Fund of Contributor) necessary to obtain approval of a new Investment Company Advisory Agreement (with such new Investment Company Advisory Agreement to be effective on the Closing Date with the same advisory and non-advisory fee (including net fee) terms and on other terms substantially the same as those in effect on the date hereof, with the exception of its effective and termination dates) pursuant to Section 15(c) of the Investment Company Act for such closed-end U.S. Registered Fund with a Company Advisor; or (B) in each case where a vote of shareholders is required, all required approvals by the Registered Fund Board of such closed-end U.S. Registered Fund of an “interim” new advisory contract between such closed-end U.S. Registered Fund and a Company Advisor, each pursuant to Rule 15a-4 of the Investment Company Act.
(ii)Each of the Contributor and Contributor Parent shall use its commercially reasonable efforts to cause the applicable Third Party Primary Advisor for closed-end U.S. Registered Funds to cause each such closed-end U.S. Registered Fund of Contributor to call a special meeting of the shareholders of such closed-end U.S. Registered Fund to be held as soon as reasonably practicable after the date of this Agreement for purposes of obtaining the requisite approval of such shareholders for such new Investment Company Advisory Agreement. In connection therewith, each of the Contributor and Contributor Parent shall use its commercially reasonable efforts to cause the applicable Third Party Primary Advisor for closed-end U.S. Registered Funds to assist in the preparation of all proxy solicitation materials required to be distributed to the shareholders of such closed-end U.S. Registered Fund with respect to the actions recommended for shareholder approval by such Registered Fund Board. Each of the Contributor and Contributor Parent shall use its commercially reasonable efforts to cause the applicable Third Party Primary Advisor for closed-end U.S. Registered Funds to cause each such closed-end U.S. Registered Fund (1) promptly clear all SEC comments to the proxy solicitation materials, (2) to mail such proxy solicitation materials to the shareholders of such closed-end U.S. Registered Fund as promptly as practicable after review by the SEC and (3) as soon as practicable following the mailing of such proxy solicitation materials, submit, or cause to be submitted, to the shareholders of such closed-end U.S. Registered Fund, for a vote at such shareholders meeting, the proposal described in the first sentence of this clause (ii). In connection with the preparation of such proxy solicitation materials, the Company shall prepare (or cause to be prepared) materially accurate descriptions of the Company and the anticipated structure of the Transferred Business following the Closing. Each of the Contributor and Contributor Parent shall use commercially reasonable efforts to cause the applicable Third Party Primary Advisor for closed-end U.S. Registered Funds to (i) provide the Company with drafts of the proxy materials (and any SEC comments thereto) on a timely basis and (ii) provide the Company an opportunity to provide reasonable comments on such proxy materials, which Contributor (in coordination with the applicable closed-end U.S. Registered Fund and under the general direction of the applicable Registered Fund Board) will use commercially reasonable efforts to include therein.
(iii)As soon as reasonably practicable following the date of this Agreement, each of the Contributor and Contributor Parent shall use its commercially reasonable efforts to cause the applicable Third Party Primary Advisor for U.S. Registered Funds to cause each U.S. Registered Fund of Contributor then engaged in a public offering of its shares to (A) file supplements or amendments to its prospectus forming a part of its registration statement then currently in use, which supplements or amendments shall disclose the Transactions contemplated hereby to the extent required by Applicable Law, and (B) make any other filing necessary under any Applicable Law to satisfy in all material respects disclosure requirements in connection with the public distribution of the shares of that U.S. Registered Fund.
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(iv)Contributor agrees that the information in the proxy materials to be furnished to the shareholders of any closed-end U.S. Registered Fund (other than information that is or will be provided by or on behalf of the Company or any other third party specifically for inclusion in such proxy materials) will not contain, as of the date of such proxy materials, any untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided that in the case of a closed-end U.S. Registered Fund that is not sponsored by Contributor or its Subsidiaries, the foregoing agreement of Contributor shall apply only to information provided by it or its Subsidiaries in writing specifically for inclusion in such proxy materials. The Company agrees that the information provided by it (or on its behalf) in writing specifically for inclusion in the proxy materials to be furnished to the shareholders of any closed-end U.S. Registered Fund will not contain, as of the date of such proxy materials, any untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(d)Non-Registered Fund Approvals. With respect to each Non-Registered Fund of Contributor, each of the Contributor and Contributor Parent shall, as soon as reasonably practicable following the date hereof, if and to the extent required by Applicable Law, such Non-Registered Fund’s Advisory Agreement or the applicable Fund Documents, use its commercially reasonable efforts to (i) obtain the consent of each Non-Registered Fund to the assignment or deemed assignment resulting from the Transactions of such Advisory Agreement, (ii) solicit (if reasonably necessary to obtain such Non-Registered Fund’s consent under the Non-Registered Fund’s Fund Documents or Advisory Agreement or Applicable Law) the requisite consent or approval of the limited partners, members, shareholders, trustees or other investors of such Non-Registered Fund and (iii) if any such Non-Registered Fund has a board of directors, advisory committee or other governing body, solicit the consent of a majority of the members of which are not employed by any member of Contributor (or such greater number of members as may be required under the Non-Registered Fund’s Fund Documents, Advisory Agreement or Applicable Law). The Parties agree that, if the consent or approval of any such Non-Registered Fund is required for the assignment or deemed assignment of such Non-Registered Fund’s Advisory Agreement resulting from the Transactions, then such consent and approval shall be deemed given for all purposes hereunder if (1) where the consent of limited partners, members, shareholders, trustees or other investors of such Non-Registered Fund is required under the Non-Registered Fund’s Advisory Agreement, its Fund Documents or Applicable Law, either (A) such consent representing the required percentage for limited partners, members, shareholders, trustees or other investors to provide consents under the applicable Fund Documents, Advisory Agreements and Applicable Law for such Non-Registered Fund has been obtained (and has not been withdrawn or superseded) to the assignment or deemed assignment of the applicable Advisory Agreement or (B) if consent other than written consent is not prohibited by Applicable Law, the applicable Fund Documents and Advisory Agreement, if no such written consent is obtained, (I) if written notice (“Negative Consent Notice”) has been sent to the limited partners, members, shareholders, trustees or other investors of such Non-Registered Fund (which Negative Consent Notice may be included in the notice required by this Section 5.3(b)) describing the Transactions, informing them of the intention to consummate the Transactions, which will result in an assignment or deemed assignment of such Non-Registered Fund’s Advisory Agreement (or other consequences triggering a consent requirement under Applicable Law, Fund Documents or Advisory Agreement) requesting such consent and explaining that each limited partner, member, shareholder, trustee or other investor that does not object to the assignment of the applicable Advisory Agreement within forty-five (45) days following delivery of such Negative Consent Notice will be deemed to have consented to such assignment, and (II) the requisite percentage of the limited partners, members, shareholders, trustees or other investors of such Non-Registered Fund necessary to approve the assignment or deemed assignment of the applicable Advisory Agreement have consented in writing or have been deemed in accordance with the immediately
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preceding clause (I) to have so consented (and such consents have not been withdrawn or superseded); (2) in all cases where any such Non-Registered Fund has a board of directors, advisory committee or other governing body, if the majority of the members of which are not employed by any member of Contributor (or such greater number of members as may be required under the Non-Registered Fund’s Fund Documents, Advisory Agreement or Applicable Law) have consented (and such consent has not been withdrawn); and (3) in each case, the Company or its relevant Affiliate has obtained the requisite consents so as to permit the applicable Company Advisor to provide its investment advisory services to such Non-Registered Fund following the Closing Date on substantially the same economic terms in effect on the date hereof; provided, however, that the consent of such Non-Registered Fund shall not be deemed to have been given for any purpose under this Agreement if at any time prior to the Closing such Non-Registered Fund (x) shall have affirmatively notified Contributor in writing that it does not so consent or (y) shall have terminated its Advisory Agreement or provided notice of such termination.
(e)Non-U.S. Public Funds.
(v)With respect to each Sponsored Non-U.S. Public Fund of Contributor, each of the Contributor and Contributor Parent shall, as soon as reasonably practicable following the date hereof, if required by Applicable Law or such Advisory Agreement, use its commercially reasonable efforts to obtain (or cooperate with the applicable third party in obtaining, in the case of a fund having a third party as the sponsor or primary investment adviser or manager) any approvals required for the assignment or novation to a Company Advisor of the Advisory Agreement in connection with the Transactions, or entry into a new Advisory Agreement with the Company, on its current terms. The Parties agree that a Sponsored Non-U.S. Public Fund shall be deemed to have consented for all purposes under this Agreement to the Transactions and the continued management of such Sponsored Non-U.S. Public Fund by the Company following the Closing if continued management of such Sponsored Non-U.S. Public Fund by a Company Advisor following the Closing has been approved in accordance with the immediately preceding sentence.
(vi)With respect to each Non-U.S. Public Fund of Contributor, each of the Contributor and Contributor Parent shall, as soon as reasonably practicable following the date hereof, if required by Applicable Law or such Advisory Agreement, use its commercially reasonable efforts to cooperate with the Person that acts as the investment adviser, investment manager, sponsor or in a similar capacity to obtain any approvals required for the assignment or novation to a Company Advisor of the Advisory Agreement in connection with the Transactions, or entry into a new Advisory Agreement with the Company, on its current terms. The Parties agree that a Non-U.S. Public Fund shall be deemed to have consented for all purposes under this Agreement to the Transactions and the continued management of such Non-U.S. Public Fund by the Company following the Closing if continued management of such Non-U.S. Public Fund by a Company Advisor following the Closing has been approved in accordance with the immediately preceding sentence.
(f)Other Client Approvals. Each of the Contributor and Contributor Parent shall, as soon as reasonably practicable following the date hereof, if required by Applicable Law or such Covered Client’s Advisory Agreement, send notices complying with Applicable Law and such Covered Client’s Advisory Agreement (each a “Client Notice”), to each Covered Client (other than the U.S. Registered Funds of Contributor, which are governed by Section 5.3(a), the Non-Registered Funds of Contributor, which are governed by Section 5.3(b), or the Sponsored Non-U.S. Public Funds of Contributor, which are governed by Section 5.3(c)) (i) informing such Covered Client of the Transactions and (ii) if required, requesting such Covered Client’s written
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consent or approval of the assignment or deemed assignment of its applicable Advisory Agreement. The Parties agree that, if the consent or approval of any such Covered Client is required for the assignment or deemed assignment of such Covered Client’s Advisory Agreement resulting from the Transactions, then such consent and approval shall be deemed given for all purposes hereunder (A) upon receipt of such Covered Client’s written consent or approval requested in the Client Notice, as of immediately prior to the Closing Date or (B) if consent other than written consent is not prohibited by Applicable Law or the Covered Client’s Advisory Agreement, (I) forty-five (45) days shall have elapsed since the date Contributor shall have sent to such Covered Client a Negative Consent Notice requesting such Covered Client’s written consent or approval as aforesaid and informing such Covered Client: (1) of the intention to consummate the Transactions, which will result in an assignment or deemed assignment of such Covered Client’s Advisory Agreement; (2) of Contributor’s intention to assign such Covered Client’s Advisory Agreement to a Company Advisor (or enter into a AP/EU Sub-Advisory Agreement with a Company Advisor), pursuant to which the Company Advisor shall provide the advisory services contemplated pursuant to the existing Advisory Agreement with such Covered Client after the Closing if such Covered Client does not terminate such agreement prior to the Closing; and (3) that the requested consent and approval of such Covered Client will be deemed to have been granted for all purposes with respect to the Transactions if such Covered Client continues to accept such advisory services for a period of at least forty-five (45) days after the date of the Negative Consent Notice without termination and (II) such Covered Client shall not have affirmatively notified the Contributor in writing that it does not so consent, or have terminated, or provided notice of termination of, its respective Advisory Agreement prior to the Closing.
(g)Cooperation; Third Party Advised Funds. The Parties shall provide all reasonable cooperation in connection with obtaining the approvals and consents sought pursuant to this Section 5.3 and shall promptly correct such information if and to the extent that such information becomes false or misleading in any material respect. Without limiting the foregoing, each of Contributor and the Company agrees to provide promptly in writing all information concerning itself and its Affiliates required to be included in the proxy solicitation, or other consent solicitation, materials or government filings contemplated by this Section 5.3, including to any Third Party Primary Advisors. Each of Contributor and the Company agrees that such information supplied by it or on its behalf shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. From and after the date hereof and until the end of the True-Up Period, Contributor and the Company shall communicate on a regular basis to stay apprised of such efforts to satisfy the requirements required to obtain the requisite Covered Client consent under this Section 5.3, and, upon reasonable request, Contributor shall make available to the Company copies of all executed client consents and other documents evidencing satisfaction of the foregoing.
(h)Post-Closing Efforts. In the event that the requirements for obtaining the consent of any Covered Client hereunder are not satisfied on or prior to the Closing Date then, following the Closing Date, the Company and each of the Contributor and Contributor Parent shall use (and shall cause their respective Affiliates to use) their respective commercially reasonable efforts to satisfy such consent requirements as soon as practicable and in any event within one (1) year after the Closing Date, and, to cause such Covered Client not to withdraw funds or terminate the applicable Advisory Agreement prior to the end of the True-Up Period.
(i)Expenses. The Company and Contributor Parent shall each bear and pay fifty percent (50%) of all of the costs, fees and expenses incurred in connection with each Covered Client consent or approval sought pursuant to this Section 5.3, excluding fees and expenses of their third party solicitation agents and expenses related to the preparation of any documents, instruments or materials related to seeking or obtaining such consents or approvals and excluding
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fees and expenses of attorneys, accountants and other representatives, which will be borne by the party incurring such fees and expenses; provided, that to the extent that the aggregate costs, fees and expenses borne and paid by the Company and Contributor Parent pursuant to this Section 5.3(g) exceed $3,000,000, the Contributor Parent shall bear and pay one hundred percent (100%) of such excess costs, fees and expenses.
Section 1.33Access to Information; Confidentiality; Books and Records.
(f)During the Interim Period, upon reasonable advance notice, Contributor Parent and Contributor shall, and shall cause their Subsidiaries to, provide to the Company and its authorized representatives during normal business hours (and subject to compliance with appropriate health and safety measures in response to the COVID-19 pandemic and any applicable Laws, including any “stay at home,” “shelter in place,” or similar Law or orders, made in response to the COVID-19 pandemic and any future resurgence, evolution or mutation of COVID-19), reasonable access to all books and records of Contributor pertaining to the Transferred Business and make available the Business Employees (in a manner so as to not interfere with the normal business operations of the Transferred Business). Except as otherwise expressly permitted pursuant to this Agreement, during the Interim Period, the Company shall not contact any of Contributor’s or its Subsidiaries’ employees, vendors, Covered Clients or Contract counterparties, in each case, without receiving prior written authorization from Contributor (which may be by e-mail) and, if such authorization is given, subject to the scope of such authorization; provided, that, the foregoing shall not apply with respect to contacts in the Ordinary Course of Business unrelated to this Agreement or the Transactions.
(g)Notwithstanding anything to the contrary in Section 5.4(a), Contributor may withhold any document (or any portion thereof) or information (i) that is subject to the terms of a non-disclosure or confidentiality agreement with a third Person (provided, that, in such a case, Contributor shall use commercially reasonable efforts to obtain a consent or waiver from such third Person to permit disclosure to the Company), (ii) that may constitute privileged attorney-client communications or attorney work product and the transfer of which, or the provision of access to which, as reasonably determined by Contributor’s counsel, may constitute a waiver of any such privilege, (iii) if the provision of access to such document (or applicable portion thereof) or information, as determined by Contributor’s counsel, could reasonably be expected to conflict with Applicable Laws, or (iv) pertaining to Taxes of Contributor or its Affiliates (other than documents and information relating to the Transferred Assets); provided, that Contributor Parent and Contributor shall use commercially reasonable efforts to allow for such access and disclosure in a manner that does not result in the events set out in the preceding clauses (ii), (iii) and (iv).
(h)All information provided to the Company pursuant to this Section 5.4 shall be held by the Company as confidential and as Confidential Information (as defined in the Confidentiality Agreement) under the terms of the Confidentiality Agreement and shall be subject to the Confidentiality Agreement in all respects, the terms of which are incorporated herein by reference. Effective upon, and only upon, the occurrence of the Closing, the Confidentiality Agreement shall terminate with respect to information and other Confidential Information (as defined in the Confidentiality Agreement) to the extent relating to the Transferred Business.
(i)The Company acknowledges and agrees that Contributor and its Affiliates shall have the right to retain copies of all books, data, files, information, materials and records in any form or media of the Transferred Business and/or the Transferred Assets relating to periods ending on or prior to the Closing Date (i) as may be required by any Governmental Authority, including pursuant to any Applicable Law or regulatory request or for purposes of preparing or filing any Tax Return or participating in an audit or other proceeding with respect to Taxes or
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(ii) as may be necessary to perform their respective obligations pursuant to this Agreement or any of the Ancillary Agreements, in each case, subject to compliance with all applicable Privacy Laws.
(j)After the Closing, the Company shall, until at least the seventh (7th) anniversary of the Closing Date, (i) retain all books, records and other documents pertaining to the Transferred Business in existence on the Closing Date and make the same available for inspection and copying by Contributor and its Affiliates and their respective representatives (in each case, at Contributor’s expense) as the Contributor may from time to time reasonably request and upon reasonable advance notice and (ii) cause the employees, counsel and financial advisors of the Company and its Affiliates to reasonably cooperate with Contributor and its Affiliates and their respective representatives in connection with the Contributor and its Affiliates’ ongoing financial reporting, accounting or other purpose related to their ownership or operation of the Transferred Business (including the provision of relevant parts of the books and records of the Transferred Business), during normal business hours, upon reasonable request and upon reasonable advance notice; provided that the Company shall not be required to provide access to information (x) that may constitute privileged attorney-client communications or attorney work product and the transfer of which, or the provision of access to which, as reasonably determined by the Company’s counsel, may constitute a waiver of any such privilege or (y) if the provision of access to such document (or applicable portion thereof) or information, as determined by the Company’s counsel, could reasonably be expected to conflict with Applicable Laws; provided, further, that the Company shall use commercially reasonable efforts to allow for such access and disclosure in a manner that does not result in the events set out in the preceding clauses (x) and (y). In the event that disclosing information would violate any obligation of the Company or any of its Affiliates with respect to confidentiality, the parties shall reasonably cooperate so the information might be made available in a redacted format, or, if such redaction would result in pertinent information being omitted, the Company shall make such information available if Contributor delivers confidentiality, and if reasonably required, indemnity undertaking reasonably satisfactory to the Company. Notwithstanding anything to the contrary herein, the auditors and independent accountants of Company or any of its Affiliates shall not be obligated to make any work papers available to any Person unless and until such Person has entered customary third-party access and confidentiality agreements in form and substance acceptable to such auditors or accountants.
(k)After the Closing, Contributor and Contributor Parent shall, and shall cause each of its applicable Affiliates to, until at least the seventh (7th) anniversary of the Closing Date, (i) retain all books, records and other documents or systems pertaining to the Transferred Business in existence on the Closing Date and make the same available for inspection and copying by Company Parent, the Company, their respective Affiliates and their respective representatives (in each case, at the Company’s expense) as the Company may from time to time reasonably request and upon reasonable advance notice and (ii) cause the employees, counsel and financial advisors of Contributor Parent, Contributor and their respective Affiliates to reasonably cooperate with Company Parent, the Company, their respective Affiliates and their respective representatives in connection with the Company Parent, the Company and their respective Affiliates’ ongoing financial reporting, accounting or other purpose related to Contributor Parent and Contributor’s ownership or operation of the Transferred Business (including the provision of relevant parts of the books and records of the Transferred Business), during normal business hours, upon reasonable request and upon reasonable advance notice; provided, that neither Contributor Parent nor Contributor shall be required to provide access to information (x) that may constitute privileged attorney-client communications or attorney work product and the transfer of which, or the provision of access to which, as reasonably determined by Contributor’s counsel, may constitute a waiver of any such privilege, or (y) if the provision of access to such document (or applicable portion thereof) or information, as determined by such Contributor’s counsel, could reasonably be expected to conflict with Applicable Laws; provided,
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further, that Contributor Parent and Contributor shall use commercially reasonable efforts to allow for such access and disclosure in a manner that does not result in the events set out in the preceding clauses (x) and (y). In the event that disclosing information would violate any obligation of the Contributor or any of its Affiliates with respect to confidentiality, the parties shall reasonably cooperate so the information might be made available in a redacted format, or, if such redaction would result in pertinent information being omitted, the Contributor shall make such information available if Company delivers confidentiality, and if reasonably required, indemnity undertaking reasonably satisfactory to the Contributor. Notwithstanding anything to the contrary herein, the auditors and independent accountants of Contributor or any of its Affiliates shall not be obligated to make any work papers available to any Person unless and until such Person has entered customary third-party access and confidentiality agreements in form and substance acceptable to such auditors or accountants.
(l)The Company shall promptly advise Contributor, and Contributor shall promptly advise the Company, of any change or event (i) that has had or is reasonably likely to have a Company Material Adverse Effect or Contributor Material Adverse Effect, respectively, or (ii) which it believes would or would be reasonably likely to cause or constitute a material breach of any of its representations, warranties or covenants contained herein that reasonably could be expected to give rise, individually or in the aggregate, to the failure of a condition in Article VI; provided, that any failure to give notice in accordance with the foregoing with respect to any breach shall not (in and of itself) be deemed to result in the failure of any condition set forth in Section 6.2 or 6.3 to be satisfied, or give rise to any indemnification rights under Article VIII or Article IX in respect thereof. The Company shall promptly advise Contributor upon receipt of inquiries or other communications from any Covered Client or Governmental Authority related to investigations in connection with the Structured Products Resolution and provide Contributor with a copy of such inquiry or communication unless otherwise prohibited by Applicable Law.
Section 1.34Public Announcements.
(a)None of the Company, Company Parent, Contributor Parent or Contributor shall make, nor permit any of their respective Affiliates or representatives to make, any public announcement or issue any public communication in respect of this Agreement, the Ancillary Agreements or the Transactions without the prior written consent of the Company (which consent shall not be unreasonably withheld, conditioned or delayed), in the case of an announcement or communication by Contributor Parent, Contributor or any of their respective Affiliates or representatives, or of Contributor (which consent shall not be unreasonably withheld, conditioned or delayed), in the case of an announcement or communication by Company Parent, the Company or any of its Affiliates, except, in each case, if such announcement or communication is required (i) to obtain consents and approvals, and to provide such notices and make such filings, necessary to consummate the Transactions, (ii) by Law, rule or regulation applicable to the Company, Company Parent, Contributor, Contributor Parent or any of their respective Affiliates (and only to the extent so required) or (iii) in the case of Contributor, pursuant to internal announcements to employees; provided, that, in the case of an announcement or communication described in clauses (i), (ii) or (iii), the Parties shall use commercially reasonable efforts to discuss and coordinate such announcement or communication with the other Parties, as applicable, prior to such announcement or issuance.
(b)Prior to making any public communications to the media, or responding to inquiries from members of the media, in each case regarding the Structured Products Matter, the Company and Company Parent will, to the extent consistent with Applicable Law and Company Parent’s or the Company’s communications with Governmental Authorities, obtain the consent of Contributor Parent (not to be unreasonably withheld, conditioned or delayed); provided, that no such consent shall be required in the case of information or statements that are substantially consistent with those previously provided to the public. The Parties will consult in good faith in
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connection with other public communications regarding the Structured Products Matter. The foregoing will in no event restrict the Company or Company Parent from communicating with Governmental Authorities or from making any communications the Company deems necessary or appropriate to comply with Applicable Law or the terms of any communications between Company Parent or the Company with any Governmental Authorities.
Section 1.35Regulatory Matters; Third Party Consents.
(m)During the Interim Period (or, in the case of AP/EU Portfolios where the necessary approvals have not been obtained at Closing, after the Interim Period until such approvals have been obtained), subject to the terms and conditions herein provided, each of Company Parent, the Company, Contributor Parent and Contributor shall use its commercially reasonable efforts, and shall cause their Subsidiaries, to use commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective as promptly as practicable the Transactions (including the satisfaction of the conditions precedent set forth in Article VI), including preparing and filing as promptly as practicable all documentation to effect all necessary or advisable notices, reports and other filings and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any Governmental Authority or third party to consummate the Transactions and to comply with the terms and conditions of all such consents, registrations, approvals, permits and authorizations; provided that pursuing consents or approvals with respect to Advisory Agreements shall be governed by Section 5.3. Without limiting the generality of the foregoing, Company Parent, the Company and, if applicable, Contributor Parent, Contributor and the Company, shall within ten (10) Business Days after the date hereof file an appropriate notification and report form under the HSR Act (requesting early termination of the waiting period with respect to the Transactions, if available) and, shall, within fifteen (15) Business Days after the date hereof, make all other filings pursuant to any other Applicable Law.
(n)None of Company Parent, the Company or its Subsidiaries may withdraw any filings without the prior written consent of Contributor, and none of Company Parent, the Company or its Subsidiaries shall extend any waiting period or comparable period under the HSR Act or other Applicable Laws or enter into any agreement with any Governmental Authority not to consummate the Transactions, except with the prior written consent of Contributor. None of Contributor Parent, Contributor or their respective Subsidiaries may withdraw any filings needed to consummate the Transactions without the prior written consent of the Company, and none of Contributor Parent, Contributor or their respective Subsidiaries shall extend any waiting period or comparable period under Applicable Laws or enter into any agreement with any Governmental Authority not to consummate the Transactions, except with the prior written consent of the Company. In the event any filings made in connection herewith are rejected for any reason whatsoever by the relevant Governmental Authority, each Party shall cure the reason for such rejection and resubmit any filings as soon as is reasonably practicable. Company Parent, the Company, Contributor Parent and Contributor shall deliver as promptly as practicable to the appropriate Governmental Authorities any additional information and documentary material that may be requested pursuant to the HSR Act or other Applicable Law. The Parties shall provide all information and reasonable cooperation in connection with obtaining the necessary approvals and consents and shall promptly correct such information if and to the extent that such information becomes false or misleading in any material respect. Notwithstanding anything herein to the contrary, but without limiting Contributor Parent and the Contributor’s obligations pursuant to this Section 5.6, Contributor Parent and Contributor shall control, and shall consult in good faith with and consider the views of the Company Parent and the Company concerning the strategy for obtaining all consents, registrations, approvals, permits and authorizations of any Governmental Authority pursuant to this Section 5.6, the overall development of the positions to be taken and the regulatory actions to be requested in any filing
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or submission with a Governmental Authority in connection with the Transactions and in connection with any investigation or other inquiry by or before, or any negotiations with, a Governmental Authority with respect thereto.
(o)In addition to the foregoing, each of Company Parent, the Company, Contributor Parent, and Contributor, shall use reasonable best efforts to take, and cause its Subsidiaries to use reasonable best efforts to take, any and all actions necessary to (A) make any filings or obtain any consents, clearances or approvals required under or in connection with any Applicable Law, and to enable all waiting periods under any Applicable Law to expire, (B) avoid or eliminate each and every impediment under any Applicable Law that may be asserted by any Governmental Authority, and (C) avoid the entry of, effect the dissolution of, and have vacated, lifted, reversed or overturned, any decree, Order or judgment that would prevent, prohibit, restrict or delay the consummation of the Transactions, in each case, to allow the Parties to consummate the Transactions as expeditiously as possible prior to the Termination Date; provided, however, that nothing in this Agreement shall require Company Parent or the Company or any of their respective Affiliates to (and neither Contributor nor Contributor Parent shall, without the prior written consent of Company Parent): (i) propose, offer, negotiate, commit to or effect, by consent decree, a hold separate Order or otherwise, the sale, divestiture, license or other disposition of any or all of the capital stock, assets, properties, rights, products, leases, businesses, services or other operations or interests therein of the Transferred Business or the Company or its Affiliates, or (ii) otherwise take or commit to take actions that after the Closing Date would limit the freedom of action of the Company, any of its Affiliates or the Transferred Business with respect to, or its or their ability to retain, one or more of the assets, properties, rights, products, leases, businesses, services or other operations of the Transferred Business or the Company or its Affiliates or any interest or interests therein. Nothing in this Agreement shall require Company Parent, Company or any of their Affiliates or permit the Contributor or Contributor Parent (without the prior consent of Company Parent) to litigate with any Governmental Authority in connection with the Transactions contemplated by this Agreement or any of the Ancillary Agreements. For the avoidance of doubt, the foregoing is not intended to excuse a failure to fulfill reasonable information requests from Governmental Authorities in connection with obtaining licenses or approvals in order to enter into the AP/EU Sub-Management Agreements. as contemplated in this Agreement.
(p)Each of Company Parent, the Company, Contributor Parent and Contributor shall (i) promptly notify the other Parties of any written communication made to or received by Company Parent, the Company, Contributor Parent or Contributor, as the case may be, from any Governmental Authority regarding this Agreement or any of the Transactions, and, if permitted by Applicable Law and reasonably practicable, permit the other Parties hereto to review in advance any proposed communication to any such Governmental Authority and consider in good faith such other Parties’ (and any of their outside counsel’s) reasonable comments to such proposed communication, (ii)  not agree to participate in any substantive meeting or discussion with any Governmental Authority in respect of any filing, investigation or inquiry regarding this Agreement or any of the Transactions unless, to the extent reasonably practicable, it consults with such other Parties in advance and, to the extent permitted by such Governmental Authority, gives such other Parties the opportunity to attend, and (iii) to the extent permitted by Applicable Law, furnish the other Parties with copies of all correspondence, filings and written communications between it and its Affiliates and representatives, on the one hand, and such Governmental Authority or its respective staff, on the other hand, with respect to this Agreement and the Transactions (provided, however, that such materials (or any other information or materials provided to or received by any party under this Section 5.6) may be redacted as necessary to address reasonable attorney-client or other privilege or confidentiality concerns, to the extent that such attorney-client or other privilege or confidentiality concerns are not governed by a common interest privilege or doctrine and provided, further, that no Party shall have any obligation to provide to any other Party the HSR Act filing or Item 4(c) and Item 4(d) documents
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in connection with the HSR Act filing, and that the Parties may, as each deems advisable, reasonably designate any material or information provided to or received by any Party under this Section 5.6 as “outside counsel only material”).
(q)During the Interim Period, the Company shall not, and shall cause its Subsidiaries to not, directly or indirectly, enter or agree to enter into any agreement to acquire, whether by merger, consolidation, business combination, the purchase of assets or equity or otherwise, any business or Person, if such transaction would reasonably be expected to cause the failure of Closing to occur by the Termination Date, except as set forth on Schedule 5.6(e) of the Company Disclosure Schedules.
(r)Notwithstanding anything to the contrary in this Agreement, nothing herein shall obligate or be construed to obligate Contributor, the Company or any of their respective Affiliates to make, or to cause to be made, any payment to any third Person in order to obtain the consent or approval of such third Person under any Contract.
(s)All filing fees incurred in connection with the HSR Act or paid to any Governmental Authority in connection with the Transactions shall be borne fifty percent (50%) by the Company, and fifty percent (50%) by Contributor.
Section 1.36AP/EU Portfolios; Core Distribution.
(j)With respect to each AP/EU Portfolio, if as of the Business Day immediately prior to the Closing Date, all applicable approvals or consents required for such AP/EU Portfolio to become subject to an AP/EU Sub-Management Agreement have been obtained and the entry into the AP/EU Sub-Management Agreement is otherwise consistent with applicable Law and the applicable Advisory Agreement, then the Parties shall cause an AP/EU Sub-Management Agreement to be entered into at the Closing with respect to such AP/EU Portfolio. With respect to each AP/EU Portfolio that does not so become subject to an AP/EU Sub-Management Agreement at the Closing, then the Parties shall cause an AP/EU Sub-Advisory Agreement to be entered into at the Closing with respect to such AP/EU Portfolio (each, a “Sub-Advised AP/EU Portfolio”), subject to receipt of the consents and approvals set forth on Section 3.19(b) and (c) of the Contributor Disclosure Schedule.
(k)Following the Closing and for a period of at least twelve (12) months thereafter, the Parties shall take, or cause to be taken, all action and to do, or cause to be done, all things reasonably necessary, proper or advisable (i) to obtain the consents and approvals necessary for each Sub-Advised AP/EU Portfolio to become subject to an AP/EU Sub-Management Agreement and (ii) upon receipt of all such necessary consents and approvals with respect to a Sub-Advised AP/EU Portfolio, cause the prompt termination of the AP/EU Sub-Advisory Agreement with respect to such Sub-Advised AP/EU Portfolio and prompt entry into an AP/EU Sub-Management Agreement with respect to such AP/EU Portfolio.
(l)During the term of the Core Distribution Agreement, to the extent that a new fund or vehicle is launched for the purpose of offering the Transferred Strategies within the Territories (as defined in the Core Distribution Agreement), the Parties shall cause an AP/EU Sub-Management Agreement to be entered into with respect to such fund or vehicle, to the extent consistent with applicable Law and the applicable Advisory Agreement, and if an AP/EU Sub-Management Agreement is not so entered into, the Parties shall cause an AP/EU Sub-Advisory Agreement to be entered into with respect to such fund or vehicle. Any such fund or vehicle shall otherwise be treated as an AP/EU Portfolio for purposes of this Section 5.7.
Section 1.37Non-Solicitation of Alternative Transactions.
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(t)Unless and until this Agreement will have been terminated in accordance with its terms, Contributor Parent and Contributor shall not, and shall cause their respective Affiliates not to, and shall direct their and their Affiliates’ officers, directors, employees, investment bankers, attorneys, accountants, consultants or other agents or advisors not to, directly or indirectly, (i) solicit, initiate or take any action to facilitate or knowingly encourage the submission of any proposal to acquire or purchase any capital stock of, or for the merger, consolidation, combination, sale of all or substantially all assets, reorganization or similar transaction involving the Transferred Business or the Business Employees (an “Acquisition Proposal”), (ii) (A) enter into or participate in any discussions or negotiations with, (B) furnish any non-public information relating to the Transferred Business (other than as to the existence of these provisions) to, or (C) otherwise knowingly cooperate in any way with, or knowingly assist, participate in, facilitate or encourage any effort by, in each case of this clause (ii), any Person other than the Company and its Affiliates in connection with making an Acquisition Proposal, (iii) enter into any agreement with any party other than the Company and its Affiliates with respect to such an Acquisition Proposal, or (iv) authorize any of the foregoing actions.
(u)Contributor Parent and Contributor shall, and shall cause their respective Affiliates to, immediately terminate and cause to be terminated any and all existing discussions or negotiations with any Persons (other than the Company and its Affiliates) conducted heretofore with respect to any of the foregoing actions described in Section 5.8(a). Contributor Parent and Contributor shall not, and shall cause their respective Affiliates not to, release any third party from any confidentiality or use restrictions to the extent relating to non-public information concerning the Transferred Business to which Contributor or any of its Affiliates is a party and relating to any Acquisition Proposal and promptly request (any in any event, within five (5) Business Days after the date hereof) the return or destruction of all information provided to any other Person relating to an Acquisition Proposal.
(v)Effective as of the Closing, Contributor Parent (or, if applicable, Contributor) hereby assigns to the Company its rights under each applicable Pre-Closing Confidentiality Agreement to the extent permissible under such Contract solely with respect to the confidential information of Contributor and the Transferred Business and with respect to any non-solicitation obligations thereunder applicable to Business Employees; provided, that, to the extent a Subsidiary of Contributor Parent or Contributor is a party to any applicable Pre-Closing Confidentiality Agreement, Contributor Parent (or, if applicable, Contributor) shall cause such Party to assign such rights to the Company effective as of the Closing.
Section 1.38Section 15(f) of the Investment Company Act.
(c)The Company acknowledges that Contributor is entering into this Agreement and the Ancillary Agreements in reliance upon the benefits and protections provided by Section 15(f) of the Investment Company Act. The Company shall use commercially reasonable efforts not to take, and shall use commercially reasonable efforts to cause its Affiliates not to take, any action that would have the effect of causing the requirements of any of the provisions of Section 15(f) of the Investment Company Act not to be met in respect of the Transactions, and shall use commercially reasonable efforts not to fail to take, and, after the Closing, shall use commercially reasonable efforts to cause its Affiliates not to fail to take, any action if the failure to take such action would have the effect of causing the requirements of any of the provisions of Section 15(f) of the Investment Company Act not to be met in respect of the Transactions. In that regard, the Company shall conduct its business and shall cause each of its Affiliates to, use commercially reasonable efforts to conduct its business so as to assure that:
(i)for a consecutive period of not less than three (3) years immediately after the Closing, at least seventy-five percent (75%) of the members of the boards of directors or trustees of each Sponsored U.S. Registered Fund of the Company are not
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(A) “interested persons” (within the meaning of Section 2(a)(19) of the Investment Company Act) of the investment adviser of such Sponsored U.S. Registered Fund after the Closing or (B) “interested persons” (within the meaning of Section 2(a)(19) of the Investment Company Act) of the investment adviser of such Sponsored U.S. Registered Fund immediately prior to the Closing; and
(ii)there shall not be imposed on any U.S. Registered Fund an “unfair burden” (as set forth and described in Section 15(f) of the Investment Company Act) as a result of the Transactions, or any express or implied terms, conditions or understandings applicable thereto including, for the avoidance of doubt, any costs associated with obtaining consents as described in Section 5.3.
(w)For a consecutive period of three (3) years immediately after the Closing, the Company shall not engage, and shall cause its Controlled Affiliates not to engage, in any transaction or series of related transactions that would constitute an “assignment” (as defined in the Investment Company Act) to any third party of any Investment Company Advisory Agreement between (i) either (A) the Company or any of its Controlled Affiliates and (ii) any investment company registered under the Investment Company Act for which Contributor serves as an investment adviser or sub-adviser as of the Closing without first obtaining a covenant, for the benefit of Contributor, in all material respects the same as that contained in this Section 5.9; provided, however, that if the Company or any of its Affiliates obtains an exemptive order from the SEC as contemplated by Section 15(f)(3) of the Investment Company Act, then this covenant shall be deemed to be modified to the extent necessary to permit the Company and its Affiliates to act in a manner consistent with such SEC exemptive order.
Section 1.39Employees and Employee Benefits.
(m)The Company, in its sole discretion, may select individuals not currently listed on Schedule C who are employed by Contributor or its Affiliates and who provide the services described in the definition of “Business Employee”, which individuals the Company shall identify to Contributor (i) no later than five (5) Business Days prior to Closing or (ii) pursuant to the Transition Services Agreement and which such additional individuals shall be deemed to be Business Employees for purposes of this Section 5.10 regardless of whether such individuals are included on Schedule C. The Company or one of its Affiliates shall extend offers of employment to each Business Employee, subject to and effective upon the consummation of the Closing except as provided in the Transition Services Agreement (each such offer, a “Transfer Offer”), pursuant to which the Company shall provide, or shall cause an Affiliate of the Company to provide to such individual compensation and benefits in accordance with the requirements of this Section 5.10(a). In the case of Transfer Offers extended to Business Employees identified on Schedule C as of the date hereof, such offers shall be extended as soon as practicable after the date hereof and, in any event prior to the Closing Date. The Company or one of its Affiliates shall provide, for as long as each Transferred Employee remains employed by the Company or one of its Affiliates during the period from the Closing Date (or, if later, the date on which the employment of the applicable Transferred Employee transfers to the Company or one of its Affiliates (the “Employee Transfer Date”)) to the first anniversary of the Closing Date: (i) a base salary (or hourly base wage rate) that is at least equal to the base salary (or hourly base wage rate) provided to such Transferred Employee immediately prior to the Employee Transfer Date, (ii) where applicable, incentive opportunities that are the same as those set forth in the retention letter entered into between the Company (or an Affiliate of the Company) and the applicable Transferred Employee prior to or concurrent with the date hereof, or, in the case of a Business Employee not a party to a retention letter, incentive opportunities that are mutually agreed between the Parties and (iii) employee health, welfare and retirement benefits that are reasonably similar in the aggregate to the employee health, welfare and retirement benefits provided to such Transferred Employee immediately prior to the Employee Transfer Date. With respect to any
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Business Employee who is not actively at work on the Closing Date as a result of an approved leave of absence (including maternity or paternity leave, leave under the Family Medical Leave Act of 1993, approved personal leave or short term-disability or medical leave) but whose employment otherwise would transfer as of the Closing Date, the Transfer Offer made pursuant to this Section 5.10(a) shall be contingent on such individual’s return to active status within six (6) months following the Closing Date or such longer period as required by Applicable Law.
(n)During the period beginning on the Employee Transfer Date through the first anniversary of the Employee Transfer Date, in the event of a termination of any Transferred Employee’s employment by the Company other than for cause, the Company shall provide the severance pay and benefits such Transferred Employee would be entitled to as set forth on Section 3.15(g) of the Contributor Disclosure Schedule.
(o)The Company shall, or shall cause an applicable Affiliate of the Company to, give each Transferred Employee full credit for all purposes under any Company Benefit Plan and under any other employee benefit plan, policy or arrangement, in either case maintained or made available for the benefit of Transferred Employees as of and after the Employee Transfer Date by the Company or an applicable Affiliate of the Company, for such Transferred Employee’s service prior to the Employee Transfer Date with Contributor and its applicable Affiliates and their respective predecessors. In no event shall credit under this Section 5.10(c) be given to the extent that it would result in a duplication of benefits for the same period of service or for purposes of benefit accruals with respect to any defined benefit pension, non-tax qualified deferred compensation benefits, post-employment health and welfare benefit plans or programs or early retirement subsidies.
(p)Notwithstanding anything in this Agreement to the contrary, the Company shall indemnify and hold harmless Contributor and its Affiliates for any severance payments in the amounts calculated in accordance with Section 3.15(g) of the Contributor Disclosure Schedule arising from, related to or based upon the termination of any Business Employee identified on Schedule C as of the date hereof who is terminated by the Contributor or its respective Affiliates on or after the Closing Date in the event such Business Employee is not offered employment with the Company in accordance with the provisions of Section 5.10(a); provided that such obligation to indemnify and hold harmless will not apply if the reasons that the offer of employment are not in accordance with the provisions of Section 5.10(a) were (i) mutually agreed by the Parties in writing prior to the delivery of the offer or (ii) due to a situation that would constitute “cause” to terminate employment of such Business Employee as reasonably determined by the Company in good faith. The Company shall, in accordance with this Section 5.10(d), reimburse Contributor for such Liabilities within thirty (30) Business Days after receipt of a written reimbursement request from Contributor. Except as expressly provided in this Section 5.10(d), Contributor and its Affiliates shall remain solely responsible for any and all Liabilities arising under the Contributor Benefit Plans, and the Company and its Affiliates shall not assume or otherwise acquire any of the Contributor Benefit Plans.
(q)The Company shall, or shall cause an applicable Affiliate of the Company to, use commercially reasonable efforts to: (i) waive any limitation on health and welfare coverage of such Transferred Employees due to pre-existing conditions, waiting periods, active employment requirements, and requirements to show evidence of good health under any Company Benefit Plan that is a health and welfare plan to the extent such Transferred Employees were covered under a similar Contributor Benefit Plan and (ii) cause each such Transferred Employee to receive credit for all deductible payments, co-payments and co-insurance paid by such employee under any Contributor Benefit Plan that is a medical plan prior to the Employee Transfer Date during the year in which the Employee Transfer Date occurs for the purpose of determining the extent to which any such employee has satisfied any applicable deductible and whether such
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employee has reached the out-of-pocket maximum under any Company Benefit Plan for such year.
(r)Contributor 401(k) Plan. Effective as of the Employee Transfer Date, the Transferred Employees shall no longer actively participate in any tax-qualified defined contribution plan sponsored by Contributor or any of its Affiliates (the “Contributor 401(k) Plan”). Prior to the Effective Time and thereafter (as applicable), Contributor and the Company shall take any and all actions as may be required, including amendments to the Contributor 401(k) Plan and/or the tax-qualified defined contribution plan of the Company or an applicable Affiliate of the Company (such plan, the “Company Savings Plan”) to permit each Transferred Employee to elect to make rollover contributions of “eligible rollover distributions” (within the meaning of Section 401(a)(31) of the Code, including of loans) in the form of cash, notes (in the case of loans) or a combination thereof, in an amount equal to the full account balance distributed or distributable to such Transferred Employee from the Contributor 401(k) Plan to the Company Savings Plan. Each Transferred Employee shall become a participant in the Company Saving Plan on the Employee Transfer Date (giving effect to the service crediting provisions of Section 5.10(c)); it being agreed that there shall be no gap in participation in a tax-qualified defined contribution plan.
(s)[Intentionally Omitted].
(t)Benefit Plan Participation; M&A Qualified Beneficiaries. Effective as of the Employee Transfer Date, except as provided in this Agreement, the Transferred Employees shall no longer actively participate in any Contributor Benefit Plan and Contributor and its Affiliates shall retain all liabilities with respect to claims incurred by each Transferred Employee prior to the Employee Transfer Date under any Contributor Benefit Plans. For purposes of this Section 5.10(h), the following claims shall be deemed to be incurred as follows: (a) with respect to short-term disability, long-term disability, life and accidental death and dismemberment benefits, upon the event giving rise to such benefits and (b) with respect to medical, dental, vision care, prescription and health-related benefits, upon provision of medical, dental, vision, prescription and health-related services, materials or supplies. From and after the Employee Transfer Date, the Company shall or shall cause an applicable Affiliate of the Company to be solely responsible for any and all obligations arising under the Consolidated Omnibus Budget Reconciliation Act of 1985 (or state law equivalents) with respect to each Transferred Employee (and qualifying dependents thereof) who is an “M&A qualified beneficiary” (as defined in Treasury Regulations Section 54.4980B-9) in connection with the Transactions.
(u)[Intentionally Omitted].
(v)Contributor Nonqualified Deferred Compensation Plans and Defined Benefit Plans. As of the Employee Transfer Date, the Transferred Employees shall continue as participants in any Contributor Benefit Plan that is a voluntary non-qualified deferred compensation plan (each, a “Contributor Nonqualified DC Plan”), in which Transferred Employees participate as of immediately prior to the Employee Transfer Date, and Contributor or an applicable Affiliate of Contributor shall retain all liabilities and obligations under such Contributor Nonqualified DC Plans relating to Transferred Employees.
(w)Vacation and Paid Time Off. The Company shall, or shall cause an Affiliate of the Company to, recognize and honor on an unpaid basis, any vacation or paid time off that is accrued but unused by each Transferred Employee immediately prior to the Employee Transfer Date. Contributor or its Affiliates shall pay each Transferred Employee for all vacation or paid time off that is accrued but unused by such Transferred Employee immediately prior to the Employee Transfer Date in accordance with the policies of Contributor or its Affiliates as applicable.
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(x)Communications. Prior to the Closing Date, neither Contributor or the Company shall without the advance approval of the other make any broad-based written (or prepared oral) communications pertaining to the transfer of Business Employees or other service providers of Contributor or its Affiliates or compensation or benefits matters that are affected by the Transactions.
(y)SLA Employees. Contributor or its Affiliates will continue to employ the individuals identified on Section 5.10(m) of the Contributor Disclosure Schedule following the Closing. Prior to Closing, the Parties shall cooperate to enter into a Service Level Agreement pursuant to which such individuals will perform services for the Company and its Affiliates and the Company and its Affiliates will reimburse, indemnify and hold harmless Contributor and its Affiliates for the services performed by such individuals so that the Parties are in such position as they would have been if the employment of such individuals had transferred to the Company and its Affiliates at Closing. For the avoidance of doubt, nothing herein limits the right of Contributor or its Affiliates to terminate the employment of such individuals at any time in accordance with Applicable Law.
(z)Severance. Within thirty (30) days following the end of March 2023, the Company shall provide Contributor a schedule outlining all components of severance pay (including the prorated variable compensation payable to such Business Employee for the year of termination as a result of such redundancy as stated in the Business Employee’s retention letter with the Company or its Affiliates if applicable) payable by the Company or its Affiliates to any Business Employee identified on Schedule C as of the date hereof as a result of a decision by the Company or its Affiliates to make such Business Employees redundant; provided, that (A) the decision to make each such Business Employee redundant was communicated by the Company or its Affiliate to the Business Employee before April 1, 2023 and the Business Employee’s last day of employment is scheduled to occur before January 1, 2024 and (B) such redundancy was required in order to reduce the budgeted direct compensation and benefits expense line items for 2023 by the amount set forth on Schedule E.
(aa)Variable Compensation. Within thirty (30) days following the award of the variable compensation by the Company or its Affiliates for each of 2022 and 2023, the Company shall provide Contributor a schedule identifying the Transferred Employees who earned variable compensation for such period and whose employment transferred to the Company and its Affiliates in such period, and the applicable Employment Transfer Date. Within thirty (30) days following the delivery of such schedule, Contributor shall pay the Company a pro rata portion of the Target VC Amount for each such Transferred Employee, where the prorated portion equals the number of calendar days from January 1 of the applicable year to (but not including) the applicable employment transfer date divided by the number of calendar days in the year.
(ab)Deferred Awards. With respect to each Transferred Employee who holds awards under the Allianz Deferred Into Funds Plan (“DIF Plan”) or the Allianz Long Term Cash Bonus Plan (LTIPA) (“LTIPA” and, together with the DIF Plan, the “Deferral Plans”), the Company will replace such Transferred Employee’s awards under the Deferral Plans with awards with the same value as of the date on which the Transferred Employee’s employment transfers to the Company or its Affiliate (as set forth in more detail in an agreement between Contributor and the Transferred Employee, to be entered into in connection with the offer letters contemplated in Section 5.10(a)) and the same vesting schedule as under the Deferral Plans, subject to compliance with Applicable Law. As soon as reasonably practicable after the date on which the Transferred Employee’s employment so transfers (subject to administrative processing requirements as applicable), Contributor shall pay to the Company an amount equal to (A) the value of the assets held in the DIF Plan investment account as reflected in the closing value of the DIF Plan administrator account as of the date of such employment transfer as determined by Contributor plus (B) for each Transferred Employee whose employment transfers to the
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Company on the Closing Date, the unvested projected value per the LTIPA administrator account, and for each Transferred Employee whose employment transfers to the Company after the Closing Date, the notional value of each such Transferred Employee’s LTIPA award, in each case measured prior to the transfer of such employment to the Company or its Affiliate.
(ac)No Third-Party Beneficiaries. Without limiting the generality of Section 10.8, nothing contained in this Section 5.10, express or implied, is intended to confer upon any Person not a party hereto (including any Business Employee or other individual offered employment by the Company or its Affiliates in accordance with this Section 5.10, or any beneficiary thereof) any right, benefit or remedy of any nature whatsoever, including any right to employment or continued employment for any period of time by reason of this Agreement, any right to a particular term or condition of employment or any right to any specific compensation or benefits. Notwithstanding anything to the contrary contained in this Agreement, no provision of this Agreement is intended to, or does, constitute the establishment of, or an amendment to, any Benefit Plan or similar arrangement.
Section 1.40Trademarks.
(x)The Company agrees, on behalf of itself and its Affiliates, that, after the Closing Date, none of them shall have any right, title and interest in, or (except as set forth in this Section 5.11) any right to use, any Trademark that is then owned by Contributor or any of its Affiliates that contains or consists of the word “ALLIANZ” or “GRASSROOTS” or the Allianz Eagle symbol, and any that are confusingly similar to any of the foregoing (such Trademarks, the “Contributor Marks”) except, with respect to the GRASSROOTS Trademark, the Company may use and display the GRASSROOTS Trademark pursuant to the GRASSROOTS Trademark License.
(y)Subject to the terms and conditions of this Agreement, effective as of the Closing Date, Contributor hereby grants to the Company a non-exclusive, royalty-free, fully paid-up, non-sublicensable, non-transferable license to use only those Contributor Marks that are used in the Transferred Business as of the Closing Date, for a period of three (3) months thereafter (the “Branding Transition Period”), solely for the Company to continue to service existing customers of the Transferred Business as of the Closing Date in the United States and solely in substantially the same manner as such Contributor Marks were used in the Transferred Business as of the Closing Date. The Company shall not (i) use the Contributor Marks in any advertising or marketing activities except as part of the Performance Record, (ii) use the Contributor Marks in connection with any new customers after the Closing Date, (iii) create or otherwise develop any new materials (signage, printed materials, electronic materials or otherwise) bearing any Contributor Marks after the Closing Date, or (iv) alter the appearance of any Contributor Marks as they are used in the Transferred Business as of the Closing Date or as described in the Transition Services Agreement. The Company shall ensure that all uses of Contributor Marks are only with respect to goods and services of a level of quality equal to or greater than the quality of goods and services with respect to which such Contributor Marks were used immediately prior to the Closing.
(z)Except as permitted during the Branding Transition Period by Section 5.11(b), the Company shall, and shall cause its Affiliates to, (i) refrain from using or displaying any Contributor Mark, alone or in combination with other words, symbols or elements, (ii) remove any public facing reproductions of or references to the Contributor Marks that are printed or affixed to the Transferred Assets, including printed materials, advertising materials, websites, domain names, and social media channels, and (iii) refrain from registering any Contributor Marks, alone or in combination with other words, symbols or elements, with any Governmental Authority. All goodwill associated with the Company’s use of any Contributor Marks will inure to the benefit of Contributor. Nothing in this Agreement shall prevent or restrict the Company or
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its Affiliates from (A) describing the historical relationship between the Transferred Business and the Contributor or otherwise using the Contributor Marks in a descriptive, factually accurate manner, or (B) making any use of the Contributor Marks that would constitute “fair use” or otherwise not be prohibited under Applicable Law if such use were made by a third party, in each case, provided, that the Company shall obtain Contributor Parent’s written consent, not to be unreasonably withheld or delayed, prior to making use of the Contributor Marks that constitutes trademark use which would be infringing upon such Contributor Marks under applicable trademark law if such use were made by a third party, but solely if such use by the Company is in connection with any statement regarding the Structured Products Matter or the Structured Products Resolution or the subject matter of the foregoing.
(aa)Within three (3) months after the Closing Date, the Company, with the reasonable cooperation of Contributor, shall change the name of any Covered Client (and any applicable general partners, special limited partners or similar compensation-related vehicles relating to such Covered Clients) that includes any Contributor Marks to a name that does not include any Contributor Marks.
Section 1.41Intellectual Property License.
(o)Subject to the terms and conditions of this Agreement, effective as of the Closing Date, Contributor hereby grants, on behalf of itself and its Affiliates, to the Company and its Affiliates a non-exclusive, irrevocable, perpetual, royalty-free, fully paid-up, non-sublicensable, non-transferable (except as set forth in Section 5.12(e)) license, under any Intellectual Property (other than Trademarks) that is owned by Contributor or its Affiliates as of the Closing Date and is or has been used in connection with the Transferred Business, to use such Intellectual Property in the conduct of the Transferred Business and natural evolutions thereof.
(p)Subject to the terms and conditions of this Agreement, effective as of the Closing Date, Company hereby grants, on behalf of itself and its Affiliates, to the Contributor and its Affiliates a non-exclusive, irrevocable, perpetual, royalty-free, fully paid-up, non-sublicensable, non-transferable (except as set forth in Section 5.12(e)) license, under any Transferred Intellectual Property (other than Trademarks) that is or has been used in connection with the Excluded Assets, to use such Intellectual Property in the conduct of the businesses of Contributor and its Affiliates (other than the Transferred Business) and natural evolutions thereof.
(q)With respect to any Trade Secrets included within the Intellectual Property that is licensed pursuant to Section 5.12(a) or Section 5.12(b), each Party, as licensee, shall, and shall cause its Affiliates to, treat such Trade Secrets as confidential and use commercially reasonable efforts to prevent the disclosure and unauthorized use thereof by third parties.
(r)Except for the licenses set forth in Section 5.11(b) and Section 5.12(a), this Agreement does not provide the Company or any of its Affiliates with any right to use or otherwise exploit any Intellectual Property owned by Contributor or any of its Affiliates after the Closing Date (and, for the avoidance of doubt, not constituting Transferred Intellectual Property). Except for the license set forth in Section 5.12(b), this Agreement does not provide Contributor or any of its Affiliates with any right to use or otherwise exploit any Transferred Intellectual Property.
(s)The Company may, without Contributor’s consent, assign the license granted pursuant to Section 5.12(a) to any Person that acquires all or substantially all of the Transferred Business from the Company; provided, that the Company enters into a written agreement with the such Person pursuant to which such Person agrees to be bound by this Section 5.12 as if such Person was in place of the Company. Contributor may, without the Company’s consent, assign the license granted pursuant to Section 5.12(b) to any Person that acquires all or substantially all
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of the businesses of Contributor and its Affiliates to which such license relates; provided, that Contributor enters into a written agreement with the such Person pursuant to which such Person agrees to be bound by this Section 5.12 as if such Person was in place of Contributor.
Section 1.42Other Intellectual Property Matters.
(ab)At Closing, Contributor shall, and shall cause its Affiliates to, transfer to the Company pursuant to an assignment agreement in a form reasonably acceptable to the Company and Contributor, free and clear of all Encumbrances other than Permitted Encumbrances, all of its and their right, title and interest in and to the Transferred Intellectual Property (such agreement, the “Intellectual Property Assignment Agreement”), together with (i) the right to sue and recover damages for past, present and future infringement, dilution, misappropriation or other violation or conflict associated therewith, (ii) the right to all past and future income, royalties, damages, and payments due with respect to the foregoing, including rights to damages and payments for past, present, or future infringements, misappropriations, or other violations thereof and (iii) the right to claim priority based on the filing date of any Transferred Intellectual Property.
(ac)As soon as reasonably practicable after the Closing, the Contributor shall deliver to the Company correct and complete copies of original registration certificates, and trademark prosecution files and dockets for each item of Transferred Registered Intellectual Property, to the extent reasonably in the possession of Contributor or its Affiliates, or their respective representatives.
(ad)As soon as reasonably practicable after the Closing, Contributor shall deliver (or cause to be delivered) to the Company all Embodiments of the Transferred Intellectual Property that are in the possession or control of Contributor or any Affiliate of Contributor, in the form, format and manner available to Contributor or such Affiliate, provided that any inadvertent failure by Contributor or its Affiliates to do so will not constitute a breach of this Agreement if remedied as soon as reasonably practicable upon Contributor or any of its Affiliates becoming aware of such failure (including following notification thereof by Company or its Affiliates).
(ae)As of and following the Closing, none of Contributor or any of its Affiliates shall (i) use, disclose (to the extent a Trade Secret), or otherwise exploit the Transferred Intellectual Property, or (ii) interfere with the Company’s efforts to apply for, register, defend or enforce registrations for, and rights in, the Transferred Intellectual Property worldwide. Following the Closing, upon receiving the Company’s prior written request, Contributor shall, and shall cause its Affiliates to, destroy any Embodiments of the Transferred Intellectual Property (including any software source code or object code) in their possession or control.
(af)As of the Closing, except for licenses granted under this Agreement, all licenses and other grants of rights under any Transferred Intellectual Property in favor of Contributor and its Affiliates will be terminated and Contributor shall, and shall cause its applicable Affiliates to, cause such licenses or grants to be terminated.
Section 1.43Separation, Migration and Transition.
(ad)Promptly and in any event no later than seven (7) days after the date of this Agreement, each of Contributor, on the one hand, and the Company, on the other hand, shall appoint an equal number of representatives and designate a lead executive (collectively, the “Transition Committee”) who will be responsible for designating individuals with appropriate
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functional knowledge and responsibilities to (and each of Contributor and Company shall cause such individuals to):
(i)develop a decision-making process and dispute resolution mechanism for the Transition Committee acceptable to the parties;
(ii)identify roles and functions that will be provided via the Transition Services Agreement;
(iii)cooperate in good faith to negotiate, develop and implement, subject to Applicable Law, a written “Day 1 Operating Model” within ten (10) days following the date hereof;
(iv)cooperate in good faith to negotiate, develop, mutually agree on and implement, subject to Applicable Law, a written separation and migration plan (which shall be consistent with the “Day 1 Operating Model” to the extent commercially reasonable) within thirty (30) days following the date hereof (the “Initial Separation and Migration Plan”), which shall be revised by mutual agreement after Closing such that within thirty (30) days following the Closing, Contributor and Company shall have developed a full separation and migration plan (the “Full Separation and Migration Plan”, and together with the “Initial Separation and Migration Plan”, the “Separation and Migration Plans”), which shall, in each case, set forth procedures for (A) the orderly separation of the Transferred Business from the other businesses of Contributor and its Affiliates and (B) migration and transition of the Transferred Business following the Closing or the end of the Transition Services Agreement, as applicable, in order to (y) integrate the Transferred Business into the business and operations of Company and/or (z) fully transition to the performance of services by a third-party servicer contracted by the Company;
(v)pursue any third party consents or authorizations necessary to provide the services set forth in the Transition Services Agreement;
(vi)agree to a set of service and pricing schedules to be attached to the Transition Services Agreement at Closing;
(vii)address any additional Company-requested services prior to Closing in connection with separation or migration, for which Contributor will consider such request and the provision of such services in good faith, and will provide to Company the terms and cost under which such services would be provided by Contributor, and the Parties shall discuss and mutually agree on the amount of such cost to be reimbursed;
(viii)address any loss-mitigating measures including, but not limited to, technical scanning and applicable insurance to identify and address transition and interim operating risk during the applicable Transition Services Agreement;
(ix)after the Closing, review the schedules to the Transition Services Agreement at regular intervals including at the end of the first year and at the beginning of any extension period (if applicable) and amend the schedules, as appropriate, in accordance with the terms of the Transition Services Agreement; and
(x)perform the Transition Committee’s obligations under the Transition Services Agreement in accordance with the terms thereof.
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(ag)Each of Contributor and Company may appoint a replacement of any of its own respective Transition Committee representatives upon written notice to the other party. The Transition Committee shall meet (or communicate via other technology) as frequently as reasonably required to develop the Separation and Migration Plans (in any event no less frequently than monthly) and upon reasonable request by any Transition Committee member.
(ah)The Parties shall bear the costs and expenses associated with actions contemplated by the Separation and Migration Plans in accordance with the following principles:
(xi)prior to and after Closing, each Party shall bear all of its own internal Separation Costs and Integration Costs;
(xii)prior to and after Closing, Contributor shall be responsible for all out-of-pocket Separation Costs;
(xiii)prior to and after Closing, Company shall be responsible for all out-of-pocket Integration Costs; and
(xiv)following the Closing, Company shall bear, and shall reimburse Contributor and its Affiliates for, all Additional Separation Costs.
Section 1.1Restructuring Efforts and SEC Matters. If, prior to, on or following the Closing Date, the Parties are informed by the staff of the SEC that the staff would recommend that the SEC determine that consummation of the Transactions would result or has resulted in Contributor Parent or any of its Subsidiaries having “control” of the Company for purposes of Section 2(a)(9) of the Investment Company Act (any such informing by the staff, a “Control Determination”) such that the Company would be disqualified under Section 9 of the Investment Company Act from the activities enumerated therein, then the Parties shall promptly take all necessary or appropriate actions to adjust the terms of the Allianz Member’s investment in the Company (including by converting an additional portion or all of the Class A Units owned by Allianz Member into non-voting equity and, if such conversion does not cure the Control Determination, as mutually determined in good faith by the Parties based on consultation with outside counsel, reducing or removing any governance rights or other rights of the Allianz Member under the A&R Newco Operating Agreement or otherwise adjusting the terms of this Agreement or any other Ancillary Agreement), to the extent necessary to avoid a Control Determination and in a manner designed to preserve to the greatest extent possible the terms set forth in this Agreement and the forms of Ancillary Agreements; provided, however, that the foregoing shall not require Contributor to accept any adjustments that would reduce Allianz Member’s equity stake or reduce the Core Distribution Percentage if the “control” issue would reasonably be expected to be cured through a reduction of the Allianz Member’s voting percentage/governance or other rights, as mutually determined by the parties in good faith based on advice of counsel.
Section 1.2Wrong Pockets. In the event that at any time, or from time to time, following the Closing, Contributor Parent, Contributor or any of their respective Affiliates, shall receive or otherwise possess (a) any asset (other than Intellectual Property) primarily used or primarily held for use in, or otherwise primarily related to or primarily arising, in the Transferred Business as of the date hereof, or (b) any Intellectual Property or data that primarily relates to, or is used or held for use in connection with, or necessary for operation of, the Transferred Business, and such asset or Intellectual Property has not been made available to the Company pursuant to the Separation and Migration Plans at the time of such receipt or possession, then such Person, promptly following its actual awareness of such fact, shall, or shall cause its applicable Affiliate to (i) promptly notify Newco of such asset or Intellectual Property to be transferred to Newco or its designated Affiliate, and (ii) to promptly transfer, or cause to be
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transferred (including, upon the prior written consent of Newco, pursuant to the Transition Services Agreement or the Separation and Migration Plans), such asset or Intellectual Property to Newco or its designated Affiliate and the Company or such designated Affiliate shall accept such asset or Intellectual Property (for no additional consideration); provided that such Intellectual Property will be subject to the license granted pursuant to Section 5.12(b). Prior to any such transfer in accordance with this Section 5.16, such Person shall hold such asset or Intellectual Property in trust for the use and benefit of Newco. This Section 5.16 shall, for the avoidance of doubt, not supersede the express terms agreed between the Parties in, and shall be subject to, the Transition Services Agreement and the Separation and Migration Plans.
Section 1.3Tangible Class A Shareholders’ Equity.
(a)The Company will target an amount of $15,000,000 of Tangible Class A Shareholders’ Equity at the Closing, which amount is intended to be sufficient for the combined business, including the Transferred Strategies, to be operated in the Ordinary Course of Business and to cover the Company’s regulatory capital requirements and its net working capital requirements, without any use of retained earnings or any recourse to financial liabilities other than short-term financial liabilities with maturity below sixty (60) days (including intercompany liquidity arrangements with payment terms less than sixty (60) days).
(b)Following the Closing, the Parties shall comply with the provisions set forth in Section 5.17(b) of the Company Disclosure Schedule with respect to Tangible Class A Shareholders’ Equity.
Article VI
CONDITIONS TO THE CONSUMMATION OF THE TRANSACTION
Section 1.44Mutual Conditions. The obligations of each Party to consummate the Transactions shall be subject to the satisfaction (or written waiver by each Party) of each of the following conditions:
(ae)Regulatory Approvals. (i) Any applicable waiting period under the HSR Act relating to the Transactions shall have expired or been terminated and (ii) the other approvals and consents, as applicable, set forth in Exhibit G shall have been received and in full force and effect.
(af)No Injunction, etc. (i) No statute, rule, regulation, executive order, decree, temporary restraining order, preliminary or permanent injunction or other Order issued by any court of competent jurisdiction or other Governmental Authority or other legal restraint or prohibition, in each case, preventing the consummation of the Transactions shall be in effect, and (ii) the SEC has not made a Control Determination and neither party has been informed by the staff of the SEC that the staff would recommend that the SEC make a Control Determination; provided that if any such Control Determination or staff recommendation has been rescinded prior to the Closing or the issues underlying such Control Determination or staff recommendation have been resolved, as mutually determined by the Parties in good faith based on advice of counsel, then this Section 6.1(b)(ii) shall be disregarded for purposes of determining whether the conditions to Closing are satisfied.
Section 1.45Conditions to the Obligations of the Company and Company Parent. The obligation of the Company and Company Parent to consummate the Transactions shall be subject
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to the satisfaction of each of the following conditions, any of which may be waived in writing by the Company and Company Parent:
(a)Representations and Warranties.
(i)The Fundamental Representations of Contributor Parent and Contributor contained in Article III of this Agreement (without giving effect to any limitations as to “materiality” or “Contributor Material Adverse Effect” set forth therein) shall have been true and correct as of the date hereof and shall be true and correct at and as of the Closing with the same effect as though made at and as of the Closing (except to the extent such Fundamental Representations relate to an earlier date, in which case such Fundamental Representations shall be true and correct as of such earlier date) in all but de minimis respects;
(ii)The representation and warranty of Contributor Parent and Contributor set forth in Section 3.7(a) shall have been true and correct as of the date hereof and shall be true and correct at and as of the Closing with the same effect as though made at and as of the Closing; and
(iii)The other representations and warranties of Contributor Parent and Contributor contained in Article III of this Agreement (without giving effect to any limitations as to “materiality” or “Contributor Material Adverse Effect” set forth therein) shall have been true and correct as of the date hereof and shall be true and correct at and as of the Closing with the same effect as though made at and as of the Closing (except to the extent such representations and warranties relate to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date), except where the failure of such representations and warranties to be so true and correct would not, individually or in the aggregate, reasonably be expected to have a Contributor Material Adverse Effect.
(a)Covenants and Agreements. Contributor Parent and Contributor shall have performed and complied in all material respects with all covenants required by this Agreement to be performed or complied with by them at or prior to the Closing.
(b)No Contributor Material Adverse Effect. Since the date of this Agreement, there shall not have occurred any Contributor Material Adverse Effect.
(c)Officer’s Certificate. The Contributor and Contributor Parent shall have delivered to Company Parent or the Company a certificate, dated as of the Closing Date, signed by a duly authorized officer of Contributor, certifying as to the satisfaction of the conditions contained in Section 6.2(a), Section 6.2(b) and Section 6.2(c).
Section 1.46Conditions to the Obligations of Contributor and Contributor Parent. The obligations of Contributor and Contributor Parent to consummate the Transactions shall be subject to satisfaction of each of the following conditions, any of which may be waived in writing by Contributor and Contributor Parent:
(b)Representations and Warranties.
(i)The Fundamental Representations of Company Parent and the Company contained in Article IV of this Agreement (without giving effect to any limitations as to “materiality” or “Company Material Adverse Effect” set forth therein) shall have been true and correct as of the date hereof and shall be true and correct at and as of the Closing with the same effect as though made at and as of the Closing (except to the extent such
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Fundamental Representations relate to an earlier date, in which case such Fundamental Representations shall be true and correct as of such earlier date) in all but de minimis respects.
(ii)The other representations and warranties of Company Parent and the Company contained in Article IV of this Agreement (without giving effect to any limitations as to “materiality” or “Company Material Adverse Effect” set forth therein) shall have been true and correct as of the date hereof and shall be true and correct at and as of the Closing with the same effect as though made at and as of the Closing (except to the extent such representations and warranties relate to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date), except where the failure of such representations and warranties to be so true and correct would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(ag)Covenants and Agreements. Company Parent and the Company shall have performed and complied in all material respects with all covenants required by this Agreement to be performed or complied with by Company Parent and the Company at or prior to the Closing.
(ah)Officer’s Certificate. Company Parent and the Company shall have delivered to Contributor or Contributor Parent a certificate, dated as of the Closing Date, signed by a duly authorized officer of the Company, certifying as to the satisfaction of the conditions contained in Section 6.3(a) and Section 6.3(b).
Article VII
TERMINATION
Section 1.1Termination.
(a)This Agreement may be terminated and the Transactions may be abandoned at any time prior to the Closing:
(i)by the mutual written agreement of the Company and Contributor;
(ii)by either the Company or the Contributor, if (A) there shall be any Law that makes consummation of the Transactions illegal or otherwise prohibited or (B) any injunction, decree or other Order of any Governmental Authority having competent jurisdiction permanently enjoining the Company, Company Parent, Contributor or Contributor Parent from consummating the Closing is entered and such injunction, decree or Order shall have become final and nonappealable; provided that (A) Contributor shall not have the right to terminate this Agreement pursuant to this Section 7.1(a)(ii) if its or Contributor Parent’s failure to fulfill any obligation or covenant under this Agreement (or material breach of any representation, warranty or other agreement herein) shall have been the primary cause of, or resulted in, such injunction, decree or Order and (B) the Company shall not have the right to terminate this Agreement pursuant to this Section 7.1(a)(ii) if its or Company Parent’s failure to fulfill any obligation or covenant under this Agreement (or material breach of any representation, warranty or other agreement herein) shall have been the primary cause of, or resulted in, such injunction, decree or Order;
(iii)by the Contributor, if there shall be a breach by the Company or Company Parent of any of its representations, warranties, covenants or agreements contained herein that would result in a failure to satisfy one or more of the conditions set forth in Section
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6.3(a) or Section 6.3(b), and such breach is either (A) not capable of being cured prior to the Termination Date or (B) is capable of being cured and has not been cured within the earlier of (1) thirty (30) days after the receipt by the Company or Company Parent of a written notice of such breach from Contributor and (2) five (5) Business Days prior to the Termination Date; provided, that Contributor shall not have the right to terminate this Agreement pursuant to this Section 7.1(a)(iii) if Contributor or Contributor Parent is then in breach of any of its respective representations, warranties, covenants or agreements contained herein and such breach would result in a failure to satisfy one or more of the conditions set forth in Section 6.2(a) or Section 6.2(b);
(iv)by the Company, if there shall be a breach by Contributor or Contributor Parent of any of its representations, warranties, covenants or agreements contained herein that would result in a failure to satisfy one or more of the conditions set forth in Section 6.2(a) or Section 6.2(b), and such breach is either (A) not capable of being cured prior to the Termination Date or (B) is capable of being cured and has not been cured within the earlier of (1) thirty (30) days after the receipt by Contributor or Contributor Parent of a written notice of such breach from the Company and (2) five (5) Business Days prior to the Termination Date; provided, that the Company shall not have the right to terminate this Agreement pursuant to this Section 7.1(a)(iv) if the Company or Company Parent is then in breach of any of its respective representations, warranties, covenants or agreements contained herein and such breach would result in a failure to satisfy one or more of the conditions set forth in Section 6.3(a) or Section 6.3(b); or
(v)by Contributor, on the one hand, or the Company, on the other hand, if the Closing shall not have occurred by 5:00 P.M. (New York City time) on July 26, 2022, (the “Termination Date”), which may be extended upon written notice of either party, if prior to such date the SEC extends the temporary waiver from disqualification granted to the Contributor, in each case, to the date that such temporary waiver is extended to; provided, that (A) Contributor shall not have the right to terminate this Agreement pursuant to this Section 7.1(a)(v) if its or Contributor Parent’s failure to fulfill any obligation or covenant under this Agreement (or material breach of any representation, warranty or other agreement herein) shall have been the primary cause of or resulted in the failure of the Closing to occur on or before such date and (B) the Company shall not have the right to terminate this agreement pursuant to this Section 7.1(a)(v) if its or Company Parent’s failure to fulfill any obligation or covenant under this Agreement (or material breach of any representation, warranty or other agreement herein) shall have been the primary cause of, or resulted in, the failure of the Closing to occur on or before such date.
(b)The termination of this Agreement shall be effectuated by the delivery by the Party seeking to terminate this Agreement to the other Party of a written notice of such termination and the basis under this Agreement for such termination. If this Agreement so terminates, it shall become null and void and have no further force or effect, except as provided in Section 7.2.
Section 1.2Survival. If this Agreement is terminated in accordance with Section 7.1 hereof and the Transactions are not consummated, this Agreement shall become null and void and of no further force and effect, without any liability on the part of any Party hereto; provided that the provisions of Section 5.4(c), Section 5.5, this Section 7.2, Article X, and the Confidentiality Agreement shall survive any termination hereof and shall remain in full force and effect (in the case of the Confidentiality Agreement, pursuant to its terms). Notwithstanding the foregoing, nothing in this Section 7.2 shall relieve any Party of liability for any Fraud or any Willful Breach of this Agreement occurring prior to such termination.
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Article VIII
TAX MATTERS
Section 1.8Tax Indemnification.
(a)From and after the Closing, Contributor or Contributor Parent shall pay or cause to be paid, and shall indemnify Newco and each of its Affiliates (collectively, the “Company Tax Indemnified Parties”) and hold the Company Tax Indemnified Parties harmless from and against, without duplication, (i) any Taxes imposed on or in respect of the Transferred Assets for any Pre-Closing Tax Period (including with respect to any Deferred CARES Act Taxes with respect to the Transferred Assets), (ii) any Transfer Taxes for which Contributor is responsible pursuant to Section 8.4, (iii) any Taxes imposed on Newco or its Affiliates as a result of the Company being deemed to be a transferee or successor to the Contributor or its Affiliates and (iv) any reasonable costs, attorneys’ fees and expenses attributable to any of the foregoing items; provided that Contributor shall not be required to pay or cause to be paid, or to indemnify or hold harmless the Company Tax Indemnified Parties from and against any Tax to the extent such Tax (A) arises as a result of the violation of Section 8.2(b) or (B) was incurred by reason of a transaction outside of the Ordinary Course of Business occurring on the Closing Date after the Closing.
(b)From and after the Closing, Company Parent shall pay or cause to be paid, and shall indemnify Contributor and each of its Affiliates after the Closing Date (collectively, the “Contributor Tax Indemnified Parties”) and hold the Contributor Tax Indemnified Parties harmless from and against, without duplication, (i) any Taxes imposed on or in respect of the Company or its Subsidiaries for any Pre-Closing Tax Period (including with respect to any Deferred CARES Act Taxes with respect to the Company or its Subsidiaries), (ii) any Taxes of any Person for which Newco, the Company or any of its Subsidiaries is liable solely because the Company or any such Subsidiary (A) was prior to Closing a member of an affiliated, consolidated, combined, unitary or similar Tax group, (B) was prior to Closing a party to any Tax Sharing Agreement or (C) is otherwise liable for the Taxes of any other Person by reason of any transaction or event occurring prior to Closing, (iii) any Transfer Taxes for which Company Parent is responsible pursuant to Section 8.4, and (iii) any reasonable costs, attorneys’ fees and expenses attributable to any of the foregoing items; provided that the Company Parent shall not be required to pay or cause to be paid, or to indemnify or hold harmless the Contributor Tax Indemnified Parties from and against any Tax to the extent such Tax (A) arises as a result of the violation of Section 8.2(b) or (B) was incurred by reason of a transaction outside of the Ordinary Course of Business occurring on the Closing Date after the Closing.
Section 1.3Tax Returns.
(c)Newco shall prepare and timely file (or cause to be prepared and timely filed), at Newco’s sole cost and expense, all Tax Returns of Newco and any of its Subsidiaries that are required to be filed with respect to a Pre-Closing Tax Period, and Company Parent shall pay or cause to be paid all Taxes shown as due on any such Tax Returns. The Contributor shall prepare and timely file (or cause to be prepared and timely filed), at the Contributor’s sole cost and expense, all Tax Returns with respect to the Transferred Assets that are required to be filed with respect to a Pre-Closing Tax Period, and Contributor shall pay or cause to be paid all Taxes shown as due on any such Tax Returns.
(d)Except for any Tax Return subject to Section 8.2(a), Newco shall prepare and timely file (or cause to be prepared and timely filed) all other Tax Returns required to be filed by or with respect to Newco and any of its Subsidiaries. In the case of any Tax Return of Newco for a Tax period that includes (but does not end on) the Closing Date (a “Straddle Period”) and
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which may result in material Tax liability of the Contributor, (i) Newco shall deliver (or cause to be delivered) such Tax Returns to Contributor for its review and comment at least thirty (30) days prior to the due date therefor (taking into account any extensions), (ii) Newco shall consider in good faith any reasonable comments received from Contributor not later than fifteen (15) days prior to the due date therefor (taking into account any extensions) and (iii) to the extent such Tax Returns treat the Contribution of the Transferred Assets in a manner inconsistent with Section 8.7, Newco shall not file such Tax Returns without the prior written consent of Contributor with respect to the treatment on such Tax Returns of the Contribution of the Transferred Assets, such consent not to be unreasonably withheld, conditioned or delayed.
Section 1.1Amendment of Tax Returns; Similar Items. Without the prior consent of the other Party, no Party shall, nor permit its Affiliates to, voluntarily approach any Taxing Authority on or after the Closing Date with respect to any Pre-Closing Tax Period if such action could reasonably be expected to materially affect the Tax liability of the other Party.
Section 1.4Transfer Taxes. All real property, transfer, documentary, sales, use, stamp, registration, recording, value added and similar Taxes incurred in connection with the Transactions (“Transfer Taxes”) shall be borne fifty percent (50%) by Company Parent, on the one hand, and fifty percent (50%) by Contributor, on the other hand. The Party required by Applicable Law to file any Tax Returns and other documentation with respect to such Transfer Taxes shall timely prepare, with the other Party’s cooperation, and file such Tax Return and shall pay or cause to be paid such Transfer Taxes, and the other Party shall promptly reimburse the first Party for its share of such Transfer Taxes upon written demand therefor. Newco and Contributor agree to timely sign and deliver (or cause to be timely signed and delivered) such certificates or forms as may be necessary or appropriate in connection with such filing.
Section 1.5Allocation of Straddle Period Taxes. For purposes of this Agreement, in the case of any Straddle Period, all Taxes shall be apportioned between the Pre-Closing Tax Period, on the one hand, and the Post-Closing Tax Period, on the other hand, as though such taxable period terminated as of the close of business on the Closing Date; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the Pre-Closing Tax Period, on the one hand, and the Post-Closing Tax Period, on the other hand, in proportion to the number of days in such Straddle Period included in the Pre-Closing Tax Period and the number of days in such Straddle Period included in the Post-Closing Tax Period.
Section 1.6Cooperation. Company Parent, Newco, the Company and Contributor shall, and shall cause their respective Affiliates to, cooperate fully, as and to the extent reasonably requested by the other Party, in connection with the filing of any Tax Returns pursuant to this Article VIII and the conduct of any matter related to Taxes. Such cooperation shall include the retention and (upon another Party’s request) the provision of reasonably relevant records and information, making employees and personnel available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, and the provision of any reasonably requested power of attorney. Notwithstanding anything to the contrary in this Agreement, from and after the date hereof, Contributor shall (with respect to the Transferred Assets), and Company Parent shall cause the Company to, and, after the Closing, Newco shall, retain all books and records with respect to Tax matters relating to all taxable periods beginning before the Closing Date until the expiration of the statute of limitations of the respective taxable periods, and to abide by all record retention agreements entered into with any Taxing Authority.
Section 1.7Tax Treatment. The parties hereto agree (i) to treat the contribution of the Transferred Assets as a tax-free contribution to a partnership (i.e., Newco) governed by Section 721 of the Code, and (ii) not to take any contrary position on any Tax Return or in any Tax
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proceeding except to the extent required pursuant to a “determination” within the meaning of Section 1313(a) of the Code. Following the Closing, the parties agree to treat the Company as an entity disregarded as separate from Newco for all applicable Tax purposes.
Section 1.8Gross Asset Value Determination. The fair market value of each of the Transferred Assets for Tax purposes as of the time of the Contribution shall be determined in accordance with the procedures set forth in this Section 8.8, and such fair market values as so determined shall be treated as the initial Gross Asset Value of each of the Transferred Assets for purposes of the A&R Newco Operating Agreement. Newco shall prepare a draft statement of such fair market values to be provided to the Allianz Member within ninety (90) days following the Closing Date (such statement, the “Gross Asset Value Statement”). If within forty-five (45) days of receipt of such draft Gross Asset Value Statement, the Allianz Member notifies Newco of any disagreement with respect thereto, the Allianz Member and Newco shall negotiate in good faith to resolve such dispute. If the Allianz Member does not so notify Newco of a disagreement, the Gross Asset Value Statement shall be final and binding on all parties. If the Allianz Member and Newco cannot resolve any dispute within thirty (30) days, the dispute shall be referred for resolution to an internationally recognized accounting or valuation firm mutually acceptable to the Allianz Member and Newco, whose determination of the fair market value of each of the Transferred Assets as of the time of the Contribution shall be final and binding on all parties.
Section 1.9Coordination; Survival. Notwithstanding anything to the contrary in this Agreement, claims for indemnification with respect to Taxes shall be governed exclusively by this Article VIII, and the indemnification provisions of this Article VIII represent the sole and exclusive remedy of a Party for any such claims (subject to the limitations expressly applied to this Article VIII as are set forth in Article IX). The representations and warranties set forth in Section 3.13(k) and Section 3.16 and the covenants, including the indemnification provisions, set forth in this Article VIII shall survive until sixty (60) days after the expiration of the relevant Tax statutes of limitations.
Article IX
INDEMNIFICATION
Section 1.9Survival. Except as otherwise set forth in Section 8.9, all representations and warranties made in this Agreement, or in any certificate delivered pursuant to Section 6.2(d) or Section 6.3(c), and all covenants and agreements of the Parties contained in this Agreement which by their terms are to be performed at or prior to the Closing, shall survive the Closing for a period of eighteen (18) months after the Closing Date; provided that the Fundamental Representations shall survive the Closing until the expiration of the applicable statute of limitations and claims for Fraud and claims in respect of Excluded Liabilities or Assumed Liabilities, respectively, shall survive indefinitely. Subject to Section 8.9, all other covenants and agreements of the Parties contained in this Agreement shall survive the Closing Date in accordance with their respective terms and until fully performed, but not to exceed the applicable statute of limitations, in the event of a breach of any such covenant. Notwithstanding the preceding sentences, any breach of representation, warranty, covenant or agreement in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate pursuant to the preceding sentences until the final resolution of such claim, if, prior to such time, a Claim Notice with respect to such inaccuracy or breach shall have been given pursuant to Section 9.5 to the Party against whom such indemnity is sought and such claim is pursued hereunder within a reasonable time period thereafter.
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Section 1.10Indemnification of Company Indemnitees.
(a)From and after the Closing, and subject to this Article IX, Contributor Parent shall indemnify and hold harmless Company Parent and each of its Subsidiaries (including, from and after the Closing, Newco) and Affiliates and each of their respective officers, directors, employees and agents (each, a “Company Indemnitee” and collectively, the “Company Indemnitees”) from and against, and pay or reimburse the Company Indemnitees for, any and all Losses to the extent resulting from or arising out of:
(i)any breach of any representation or warranty made by Contributor or Contributor Parent in this Agreement or any in any certificate furnished by such party in connection with this Agreement, read for purposes of this Article IX (including for purposes of determining breach and calculating the amount of Losses) without reference to Contributor Material Adverse Effect, materiality, or similar qualifications;
(ii)any breach by Contributor, Contributor Parent or, prior to the Closing, Newco of any of its covenants or agreements contained herein; and
(iii)the Excluded Liabilities.
(b)Notwithstanding anything to the contrary contained in this Section 9.2, the Company Indemnitees shall not be entitled to indemnification, or to otherwise make a claim for indemnity, under Section 9.2(a)(i) (i) unless and until the aggregate amount of Losses that would otherwise be payable exceeds, on a cumulative basis, an amount equal to $7,500,000 (the “Indemnification Deductible”), and then only to the extent such Losses exceed the Indemnification Deductible; (ii) where the amount of Losses with respect to such claim (or related series of claims arising from the same facts and circumstances) does not exceed $150,000 (the “De Minimis Amount”) (and the amount of such Losses with respect to such claims that do not exceed the De Minimis Amount shall not be aggregated for purposes of the Indemnification Deductible in the preceding clause); or (iii) for Losses, taken in the aggregate, in excess of $75,000,000 (the “Indemnity Cap”); provided, however, that the Indemnification Deductible, the De Minimis Amount and the Indemnity Cap shall not apply with respect to any claim by a Company Indemnitee for indemnification for (i) any breach of the Fundamental Representations of Contributor and (ii) any case of Willful Breach or Fraud; provided, further, that no claim by a Company Indemnitee for indemnification for any breach of the Specified Representation may be brought until after taking into account the completion of the adjustment procedures contemplated in Section 2.8 and Annex A, and that the Indemnification Deductible and the Indemnity Cap shall not apply with respect to any claim by a Company Indemnitee for indemnification for any breach of the Specified Representation. Notwithstanding any provision of this Agreement to the contrary, (i) in no event shall any of the limitations on indemnification set forth in this Section 9.2(b) apply to any indemnification obligation pursuant to Section 9.2(a)(iii) (and, for the avoidance of doubt, such indemnification obligations in Section 9.2(a)(iii) for Losses will accrue from the first dollar and be unlimited in amount) and (ii) in no event shall the Contributor Parent be liable in respect of any indemnification obligation pursuant to Section 9.2(a)(i) or Section 9.2(a)(ii) for Losses in excess of $750,000,000.
Section 1.4Indemnification by the Company.
(c)From and after the Closing, and subject to this Article IX, Newco shall indemnify and hold harmless Contributor, Contributor Parent and each of its respective Subsidiaries and Affiliates and each of their respective officers, directors, employees and agents (collectively, the “Contributor Indemnitees”) from and against, and pay or reimburse any of the Contributor Indemnitees for, any and all Losses to the extent resulting from or arising out of (i) any breach of any representation or warranty made by the Company or Company Parent in this Agreement or
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any in any certificate furnished by such party in connection with this Agreement, read for purposes of this Article IX (including for purposes of determining breach and calculating the amount of Losses) without reference to the Company Material Adverse Effect, materiality, or similar qualifications, or (ii) any breach by the Company or Company Parent of any of its covenants or agreements contained herein which are to be performed at or prior to the Closing or (iii) any Assumed Liability.
(d)Notwithstanding anything to the contrary contained in this Section 9.3, Contributor Indemnitees shall not be entitled to indemnification, or to otherwise make a claim for indemnity, under Section 9.3(a)(i), (i) unless and until the aggregate amount of Losses that would otherwise be payable hereunder exceeds, on a cumulative basis, an amount equal to the Indemnification Deductible, and then only to the extent such Losses exceed the Indemnification Deductible; (ii) where the amount of Losses with respect to such claim (or related series of claims arising from the same facts and circumstances) does not exceed the De Minimis Amount (and the amount of such Losses with respect to such claims that do not exceed the De Minimis Amount shall not be aggregated for purposes of the Indemnification Deductible in the preceding clause (b)(i)); or (iii) for Losses, taken in the aggregate, in excess of the Indemnity Cap; provided, however, that the Indemnification Deductible, the De Minimis Amount, and the Indemnity Cap shall not apply with respect to any claim by a Contributor Indemnitee for indemnification for any breach of any Fundamental Representation of the Company and any case of Willful Breach or Fraud. Notwithstanding any provision of this Agreement to the contrary, (i) in no event shall any of the limitations on indemnification set forth in this Section 9.3(b) apply to any indemnification obligation pursuant to Section 9.3(a)(iii) (and, for the avoidance of doubt, such indemnification obligations in Section 9.3(a)(iii) for Losses will accrue from the first dollar and be unlimited in amount) and (ii) in no event shall the Company be liable in respect of any indemnification obligation pursuant to Article VIII or Section 9.3(a)(i) or Section 9.3(a)(ii) for Losses in excess of $750,000,000.
Section 1.10Indemnification Generally; Certain Limitation. Notwithstanding anything in this Agreement to the contrary, the Company and Contributor agree, for themselves and on behalf of the Company Indemnitees and Contributor Indemnitees:
(e)The amount of any and all Losses indemnifiable pursuant to Section 8.1, Section 9.2 or Section 9.3 shall be determined net of (i) any amounts actually recovered by the applicable Indemnified Party under insurance policies or other contractual indemnities of any Person which are contained outside of this Agreement and the Ancillary Agreements with respect to such Losses (net of any deductible or any out-of-pocket expenses actually incurred in securing such recovery) and (ii) any cash Tax benefit actually realized by the applicable Indemnified Party with respect to such Losses. The Indemnified Party shall be deemed to have “actually realized” such a Tax benefit, to the extent that, as determined in the reasonable discretion of the Indemnified Party exercised in good faith, the amount of Taxes paid by the Indemnified Party or any of its Affiliates is reduced below the amount of Taxes that such Persons would have been required to pay but for any such Tax benefit with respect to income or gain related to the Transferred Assets or Class A Units in the year of the Loss (or, if later, any tax year up to the taxable year of the indemnification payment). If such a Tax benefit is actually realized by an Indemnified Party with respect to any Losses for which it has previously been indemnified (directly or indirectly) by an Indemnifying Party, the Indemnified Party shall promptly pay to the Indemnifying Party an amount equal to such actually realized Tax benefit or, if it is a lesser amount, the amount of such previously indemnified Losses. If such a Tax benefit is reasonably available to an Indemnified Party in connection with any such Losses, the Indemnified Party shall use commercially reasonable efforts to cause such Tax benefit to be actually realized. In any case where an Indemnified Party recovers, under insurance policies or from any contractual indemnity outside this Agreement and the Ancillary Agreements, any amount in respect of a matter for which such Indemnified Party was indemnified pursuant to Section 8.1, Section 9.2 or Section 9.3, as
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applicable, in each case to the extent not already taken into account in determining the indemnified Losses pursuant to this Section 9.4(a), such Indemnified Party shall promptly pay over to the applicable Indemnifying Party the amount so recovered or realized, but not in excess, in the aggregate, of an amount equal to the aggregate amount previously so paid to, or otherwise recovered by, the Indemnified Party in respect of such matter pursuant to Section 8.1, Section 9.2 or Section 9.3, as applicable, net of any deductible or any out-of-pocket expenses actually incurred by such Indemnified Party in securing such recovery. For the avoidance of doubt, an Indemnified Party shall not be entitled to indemnification pursuant to Section 9.2 or Section 9.3, as applicable, for any Loss to the extent that the Company was compensated for such Loss through the Adjusted Core Distribution Percentage.
(f)Each Indemnified Party shall, and shall cause its respective Affiliates to, use commercially reasonable efforts to mitigate any Losses for which such Indemnified Party seeks indemnification under this Agreement; provided that neither the Indemnified Party nor any of its respective Affiliates or Subsidiaries shall be required to incur any out-of-pocket expenses to third parties, commence any Proceeding or offer or grant any accommodation (financial or otherwise) to any third party to mitigate. Each Indemnified Party shall use commercially reasonable efforts to collect any amounts available under insurance coverage, or from any other Person alleged to be responsible, for any Damages payable under this Article IX.
(g)An indemnity payment made pursuant to this Agreement shall be treated as an adjustment to the transaction consideration for Tax purposes, unless otherwise required by Applicable Law.
(h)No Party shall be liable for (i) special, punitive, exemplary or incidental damages, or (ii) any consequential or indirect damages or diminution in value, in each case of clauses (i) and (ii), except (x) in the case of (ii), to the extent such damages were a reasonably foreseeable consequence of the matter for which indemnification is sought, whether based on Contract, tort, strict liability, other Law or otherwise and whether or not arising from any other Party’s sole, joint or concurrent negligence, strict liability or other fault or liability or (y) in the case of (i) and (ii) are awarded against an Indemnified Party pursuant to a Third Party Claim.
(i)All indemnifiable Losses under Article VIII or this Article IX shall be determined without duplication of recovery under other provisions of this Agreement, any certificate delivered in connection with this Agreement or any Ancillary Agreement (which for the avoidance of doubt, shall include any recovery for a Loss to the extent the Indemnified Party has recovered for such Loss in accordance with the adjustments made pursuant to Section 2.7 and Section 2.8). Without limiting the generality of the immediately preceding sentence, if a set of facts, conditions, events or occurrences constitutes a breach of more than one representation, warranty, covenant or agreement that is subject to an indemnification obligation under Article VIII or this Article IX, then only one recovery of indemnifiable Losses shall be permitted in respect thereof, and in no event shall there be any indemnification or duplication of payments under different provisions of this Agreement arising out of the same facts, conditions, events or occurrences; provided that such Indemnified Party (in its sole discretion) shall be permitted to choose under which provision of Article VIII or this Article IX to bring any such indemnification claim.
Section 1.11Notification of Claims; Third Party Claims.
(j)A Person that may be entitled to be indemnified under this Agreement (the “Indemnified Party”) shall promptly notify the party or parties from which indemnification is sought (the “Indemnifying Party”) in writing of any such claim in respect of which indemnity may be sought under this Article IX describing in reasonable detail (to the extent then known) the material facts and circumstances with respect to the subject matter of such claim and, if
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applicable, including copies of all material written evidence thereof and indicating the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party in connection therewith (a “Claim Notice”); provided, however, that the failure to promptly provide such Claim Notice shall not release the Indemnifying Party from any of its obligations under this Article IX except to the extent the Indemnifying Party is prejudiced by such failure. The Parties agree that (i) in this Article IX they intend to shorten (in the case of the limited survival periods specified in Section 9.1) the applicable statute of limitations period with respect to certain claims hereunder, (ii) Claim Notices for claims in respect of a breach of a representation, warranty, covenant or agreement must be delivered prior to the expiration of any applicable survival period specified in Section 9.1 for such representation, warranty, covenant or agreement and (iii) any claims for indemnification for which a Claim Notice is not timely delivered in accordance with the terms and conditions of this Section 9.5 shall be expressly barred and are hereby irrevocably and unconditionally waived; provided that if, prior to such applicable date, an Indemnified Party shall have timely notified in writing any Indemnifying Party in accordance with the requirements of this Section 9.5 of a claim for indemnification under this Article IX (whether or not formal legal action shall have been commenced based upon such claim), such claim shall continue to be subject to indemnification in accordance with this Article IX notwithstanding the passing of such applicable date.
(k)Upon an Indemnifying Party’s receipt of a Claim Notice from an Indemnified Party pursuant to (and in accordance with the requirements of) this Section 9.5 in respect of a pending or threatened claim or demand by a third party that the Indemnified Party has determined has given or will reasonably give rise to a right of indemnification under this Agreement (such claim or demand being a “Third Party Claim” and including any such pending or threatened claim or demand asserted by a third party against the Indemnified Party), the Indemnifying Party may, by written notice delivered to the Indemnified Party within thirty (30) days after the date of receipt of the Claim Notice in respect of such Third Party Claim, assume the defense and control of such Third Party Claim (including the right to negotiate a settlement or compromise of such Third Party Claim), with its own counsel (that is reasonably acceptable to the Indemnified Party) and at its own expense and the Indemnified Party shall cooperate with the Indemnifying Party in connection therewith; provided that the Indemnifying Party shall permit the Indemnified Party a reasonable opportunity to participate in the defense of such Third Party Claim with its own counsel and at its own expense; provided, further, that if the Indemnifying Party assumes the defense and control of such Third Party Claim, such Indemnifying Party may not, except with the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed), settle or compromise such Third Party Claim unless such settlement or compromise (w) includes as a term thereof a full and unconditional release by the third party asserting such Third Party Claim of all applicable Indemnified Parties, (x) does not subject the Indemnified Party to any injunctive relief or other equitable remedy, (y) does not involve a finding or admission of any violation of Law and (z) does not require any payment or contribution by the Indemnified Parties or their Affiliates. Notwithstanding the foregoing, (i) no Indemnifying Party shall have the right to assume or control the defense of any Third Party Claim that (A) seeks an injunction or other equitable relief against the Indemnified Party or any of its Affiliates, (B) seeks to impose any obligation on the Indemnified Party or any of its Affiliates other than solely the payment of money damages for which the Indemnified Party will be fully indemnified hereunder or (C) in which the third party is a Governmental Authority, and (ii) the Indemnifying Party shall be responsible for the fees and expenses of the Indemnified Party’s counsel if (A) the named parties to any such action (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party and such Indemnified Party shall have been advised in writing by counsel that there may be one or more legal defenses available to the Indemnified Party which are not available to the Indemnifying Party or (B) the Indemnified Party shall have been advised in writing by counsel that the assumption of such defense by the Indemnifying Party would be inappropriate due to an actual or potential conflict of interest absent representation by the Indemnified Party by its own counsel (provided that the
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Indemnifying Party shall not be liable for the fees and expenses of more than one firm of counsel for all Indemnified Parties, other than a single local counsel in each relevant jurisdiction).
(l)If the Indemnifying Party (i) does not notify the Indemnified Party within thirty (30) days after the receipt of the Indemnified Party’s Claim Notice in respect of such Third Party Claim that such Indemnifying Party elects to undertake the defense and control thereof or (ii) notifies such Indemnified Party that it does not elect to undertake the defense and control thereof, then, in each case, such Indemnified Party shall have the right to contest, defend, settle or compromise such Third Party Claim (the costs of which shall be taken into account as a Loss), and shall not thereby waive any right to indemnity therefor pursuant to this Agreement; provided, however, that, notwithstanding anything in this Agreement to the contrary, no Indemnified Party may, in any circumstance, settle or compromise (or agree to settle or compromise) a Third Party Claim for which it intends to seek indemnification hereunder absent the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed).
(m)The Indemnifying Party and the Indemnified Party shall cooperate in the defense or prosecution of any Third Party Claim in respect of which indemnity may be sought hereunder and each of the Company and Contributor (or a duly authorized representative of such Party) shall (and shall cause the relevant Indemnifying Party or Indemnified Party, as the case may be, to) furnish such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials and appeals, as may be reasonably requested in connection therewith to ensure the adequate defense of any such Third Party Claim.
(n)In the event any Indemnifying Party receives a Claim Notice for indemnity from an Indemnified Party pursuant to this Section 9.5 that does not involve a Third Party Claim, the Indemnifying Party shall notify the Indemnified Party within thirty (30) days following its receipt of such Claim Notice whether the Indemnifying Party disputes all or a portion of its liability to the Indemnified Party under Section 8.1 or this Article IX.
Section 1.11Payments of Claims. The amount of Losses to which an Indemnified Party will be entitled under this Article IX will be determined: (a) by written agreement between the Indemnified Party and the Indemnifying Party; or (b) by a final judgment or decree of any court of competent jurisdiction (for which purpose, a judgment or decree of a court will be deemed final when the time for appeal, if any, will have expired and no appeal will have been taken or when all appeals taken will have been finally determined). Any indemnification payments pursuant to this Article IX shall be effected by wire transfer of immediately available funds from the Company or Contributor Parent, as the case may be, to an account or accounts designated in writing by Contributor or the Company, as applicable, within three (3) Business Days after the determination thereof.
Section 1.12Exclusive Remedy. Notwithstanding anything to the contrary in this Agreement and except (i) with respect to the matters covered by Article II, (ii) with respect to willful misconduct or Fraud in connection with entering into this Agreement or consummating the Transactions or (iii) in the case where a Party seeks to obtain specific performance pursuant to Section 10.7, the Parties hereby agree that, from and after the Closing, the sole and exclusive remedy of a Party for any breach or inaccuracy of any representation or warranty contained in this Agreement, or for any breach of any covenant or agreement contained in this Agreement required to be performed at or prior to the Closing, shall be the applicable indemnification rights set forth in Article VIII and this Article IX; provided, however, that nothing in this Section 9.7 shall limit the rights or remedies of, or constitute a waiver of any rights or remedies by, any
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Person pursuant to (or shall otherwise operate to interfere with the operation of) any Ancillary Agreement.
Article X
MISCELLANEOUS
Section 1.3Amendments; Waiver. This Agreement may not be amended, altered or modified except by written instrument executed by the Parties, which may be entered into at any time. Any agreement on the part of the Parties to waive any term or provision of this Agreement shall be valid only if set forth in an instrument in writing signed on behalf of the Party or Parties against whom the waiver is to be effective. No such waiver shall constitute a waiver of, or estoppel with respect to, any subsequent or other inaccuracy, breach or failure to strictly comply with the provisions of this Agreement. No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof.
Section 1.4Entire Agreement. This Agreement (including the Contributor Disclosure Schedule, the Company Disclosure Schedule, the Ancillary Agreements, the Confidentiality Agreement and any other schedules, certificates, lists and documents referred to herein, and any documents executed by any of the Parties simultaneously herewith or pursuant thereto), constitutes the entire agreement of the Parties and supersedes all prior agreements and understandings, discussions, negotiations and communications, written and oral, among the Parties with respect to the subject matter hereof.
Section 1.5Expenses. Except as otherwise set forth in this Agreement, whether or not the Transactions are consummated, all fees and expenses incurred in connection with this Agreement and the Transactions, including the fees and disbursements of counsel, financial advisors and accountants, shall be paid by the Party incurring such fees or expenses; provided, that notwithstanding the foregoing in this Section 10.3, but except as otherwise set forth in this Agreement, Contributor shall be solely responsible for any fees, costs or expenses incurred by the Transferred Business prior to the Closing arising from or incurred in connection with this Agreement and the Transactions.
Section 1.6Interpretation.
(a)Unless the context otherwise requires, when a reference is made in this Agreement to (i) Annexes, Articles, Sections, Schedules or Exhibits, such reference shall be to an Annex of, Article of, Section of, Schedule to or Exhibit to this Agreement; (ii) “paragraphs” or “clauses,” such reference shall be deemed references to separate paragraphs or clauses of the section or subsection in which the reference occurs; (iii) any Contract (including this Agreement) or Law shall be deemed references to such Contract or Law as amended, supplemented or modified from time to time in accordance with its terms and the terms hereof, as applicable, and in effect at any given time (and, in the case of any Law, to any successor provisions thereof) so long as, in the case of any Contract, such amendment, supplement and modification has been made available to the Company or Contributor, as applicable; (iv) any Person, such reference shall be deemed references to such Person’s successors and permitted assigns, and in the case of any Governmental Authority, to any Person(s) succeeding to its functions and capacities; and (v) any Law shall be deemed references to all rules and regulations promulgated thereunder.
(b)The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
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(c)Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” “Writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. “Or” shall be deemed to be used in the inclusive sense of “and/or.”
(d)If a term is defined as one part of speech (such as a noun), it shall have a corresponding meaning when used as another part of speech (such as a verb). Terms defined in the singular have the corresponding meanings in the plural, and vice versa. Unless the context of this Agreement clearly requires otherwise, words importing the masculine gender shall include the feminine and neutral genders and vice versa. The words “hereof,” “hereto,” “hereby,” “herein,” “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular section or article in which such words appear. The word “or” shall not be exclusive.
(e)Any reference to “days” means calendar days unless Business Days are expressly specified. If any action under this Agreement is required to be done or taken on a day that is not a Business Day, then such action shall be required to be done or taken not on such day but on the first succeeding Business Day thereafter. The phrases “the date of this Agreement,” “the date hereof” and terms of similar import, unless the context otherwise requires, shall be deemed to refer to the date set forth in the first paragraph of this Agreement.
(f)The Parties acknowledge that each Party and its attorney has reviewed this Agreement and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting Party, or any similar rule operating against the drafter of an agreement, shall not be applicable to the construction or interpretation of this Agreement.
(g)All monetary figures shall be in U.S. dollars unless otherwise specified. Any accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP.
Section 1.13Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.
Section 1.14Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a .pdf document (with confirmation of transmission) if sent prior to 8:00 p.m. in the place of receipt on a Business Day, and on the next Business Day if sent after 8:00 p.m. in the place of receipt on a Business Day or at any time on a date that is not a Business Day; or (d) on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.6):
if to Company Parent, the Company, or, following Closing, Newco, to:

Voya Financial, Inc.
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    [*** - personal information]

with a copy (which shall not constitute notice) to:

Cleary Gottlieb Steen & Hamilton LLP
    [*** - personal information]

if to Contributor Parent, Contributor, or, prior to the Closing, Newco, to:

Allianz SE
    [*** - personal information]

    Allianz Global Investors U.S. LLC
    [*** - personal information]

with a copy (which shall not constitute notice) to:

Sullivan & Cromwell LLP
    [*** - personal information]

Section 1.15Specific Performance.
(h)The Parties agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the provisions of this Agreement were not performed in accordance with its specific terms and that any remedy at law for any breach of any provision of this Agreement would be inadequate. Accordingly, the Parties acknowledge and agree that each Party shall be entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of this Agreement and/or to enforce specifically the terms and provisions hereof in any court specified in Section 10.10, in addition to any other remedy to which they are entitled at law or in equity, and the Parties hereby agree not to assert, and hereby waive, in any action seeking any such relief, the defense of adequacy of a remedy at law and the posting of any bond or other security in connection therewith.
(i)Each Party further agrees that (i) by seeking the remedies provided for in this Section 10.7, a Party shall not in any respect waive its right to seek any other form of relief that may be available to such Party under this Agreement or in the event that the remedies provided for in this Section 10.7 are not available or otherwise are not granted, and (ii) nothing set forth in this Section 10.7 shall require any Party to institute any action for (or limit any Party’s right to institute any action for) specific performance under this Section 10.7 prior or as a condition to exercising any termination right under Article VII, nor shall the commencement of any action pursuant to this Section 10.7 or anything set forth in this Section 10.7 restrict or limit any such Party’s right to terminate this Agreement in accordance with Article VII or pursue any other remedies under this Agreement that may be available then or thereafter.
Section 1.12Binding Effect; Persons Benefiting; No Assignment. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns and any transferee of all or substantially all of the assets of such Party and its Subsidiaries taken as a whole. Except for Section 5.9, Section 10.12 and Article IX (each of which shall be for the benefit of the Persons set forth therein, and each such Person shall be an intended third party beneficiary thereof and shall have the rights, benefits and remedies provided for therein), no provision of this Agreement is intended or shall be construed to confer upon any entity or Person other than the Parties and their respective successors and permitted assigns any right, remedy or claim under or by reason of this Agreement or any part hereof. This Agreement may not be assigned without the prior written consent of the Company, in the case of any
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assignment by Contributor Parent or Contributor, or Contributor, in the case of any assignment by the Company or Company Parent; provided that (i) the Company may assign its rights (but not its obligations) hereunder to any Subsidiaries and (ii) Contributor may assign its rights (but not its obligations) hereunder to any of its Affiliates, in each case without the prior written consent of any other Party so long as such assignment does not, and would not reasonably be expected to, delay the consummation of the Closing.
Section 1.13Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same agreement, it being understood that all of the Parties need not sign the same counterpart. Delivery of an executed signature page of this Agreement by electronic image scan transmission shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 1.14Governing Law; Consent to Jurisdiction.
(j)This Agreement shall be governed in all respects, including as to validity, interpretation and effect, by the Laws of the State of New York, without giving effect to its principles or rules of conflict of laws, to the extent such principles or rules are not mandatorily applicable by statute and would permit or require the application of the Laws of another jurisdiction.
(k)Each of the Parties hereto submits to the exclusive jurisdiction of any state or federal court sitting in the Borough of Manhattan in the City of New York, in any suit, claim, demand, action, proceeding or cause of action arising out of or relating to this Agreement, agrees that all claims under any theory of liability in respect of such suit, claim, demand, action, proceeding or cause of action may and shall be heard and determined in any such court and agrees not to bring any suit, claim, demand, action, proceeding or cause of action arising out of or relating to this Agreement in any other court. Each Party irrevocably and unconditionally waives any defense of inconvenient forum or any other objection to the maintenance of any suit, claim, demand, action, proceeding or cause of action so brought and waives any bond, surety or other security that might be required of any other Party with respect thereto. Each Party agrees that service of summons and complaint or any other process that might be served in any suit, claim, demand, action, proceeding or cause of action may be made on such Party, and shall be effective service of process for any such suit, claim, demand, action, proceeding or cause of action, by sending or delivering a copy of any such process to the Party to be served at the address of the Party and in the manner provided for the giving of notices in Section 10.6. Nothing in this Section 10.10, however, shall affect the right of any Party to serve legal process in any other manner permitted by Law. Each Party agrees that a final, non-appealable judgment in any suit, claim, demand, action, proceeding or cause of action so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by Law.
(l)Contributor Parent irrevocably appoints Contributor as its agent for the service of process in the State of New York in relation to any matter arising out of this Agreement, and in the event that Contributor liquidates, is wound up or otherwise ceases to be able to serve as agent for service of process in the State of New York, Contributor Parent shall promptly appoint another Affiliate of Contributor Parent to serve in such capacity.
Section 1.16Waiver of Jury Trial. Each Party hereby waives, to the fullest extent permitted by Law, any right to trial by jury of any suit, claim, demand, action, proceeding or cause of action (i) arising under this Agreement or (ii) in any way connected with or related or incidental to the dealings of the Parties in respect of this Agreement or any of the Transactions, in each case whether now existing or hereafter arising, and whether in contract, tort, equity, or otherwise. The Parties each hereby agree and consent that any such suit, claim, demand, action,
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proceeding or cause of action shall be decided by court trial without a jury and that the Parties to this Agreement may file an original counterpart of a copy of this Agreement with any court as written evidence of the consent of the Parties hereto to the waiver of their right to trial by jury.
Section 1.17Waiver of Conflicts.
(m)The Company (on behalf of itself and its Affiliates) covenants and agrees that, following the Closing, Sullivan & Cromwell LLP (“Prior Contributor Counsel”) may serve as counsel to Contributor and its Affiliates in connection with any matters arising under or related to this Agreement or the Transactions, including with respect to any litigation, claim or obligation arising out of or related to this Agreement or the Transactions, notwithstanding any representation by the Prior Contributor Counsel prior to the Closing Date of Contributor and its Affiliates. The Company (on behalf of itself and its Affiliates) hereby irrevocably (i) waives any claim it has or may have that a Prior Contributor Counsel has a conflict of interest or is otherwise prohibited from engaging in such representation and (ii) covenants and agrees that, in the event that a dispute arises after the Closing between the Company or any of its Affiliates, on the one hand, and Contributor or any of its Affiliates, on the other hand, Prior Contributor Counsel may represent Contributor or any of its Affiliates in such dispute even though the interests of such Person(s) may be directly adverse to the Company or any of its Affiliates and even though Prior Contributor Counsel may have represented Contributor in a matter substantially related to such dispute.
(n)All communications between Contributor and its respective Affiliates, on the one hand, and Prior Contributor Counsel or other internal or external legal counsel currently representing Contributor or its Affiliates, on the other hand, related to the Transactions shall be deemed to be attorney-client confidences that belong solely to Contributor and its Affiliates (the “Pre-Closing Communications”). Accordingly, the Company and its Affiliates shall not have access to any such Pre-Closing Communications or to the files of Prior Contributor Counsel relating to the Transactions from and after the Closing, and all books, records and other materials of Contributor in any medium (including electronic copies) containing or reflecting any of the Pre-Closing Communications or the work product of legal counsel with respect thereto, including any related summaries, drafts or analyses, and all rights with respect to any of the foregoing, are hereby assigned and transferred to Contributor effective as of the Closing (collectively, the “Privileged Materials”). The Privileged Materials shall be excluded from the transfer contemplated by this Agreement and shall be retained by Contributor as of Closing with no copies thereof distributed to the Company or its Affiliates or their respective representatives. From and after the Closing, the Company, its Affiliates and their respective representatives shall maintain the confidentiality of the Privileged Materials. From and after the Closing, none of the Company, its Affiliates and their respective representatives shall access or in any way, directly or indirectly, use or rely upon any Privileged Materials. To the extent that any Privileged Materials are delivered to the Company, the Company (on behalf of itself and its Affiliates) agrees not to assert a waiver of any applicable privilege or protection, and will deliver all such Privileged Materials to Contributor promptly upon discovery thereof, without retaining copies thereof. Without limiting the generality of the foregoing, from and after the Closing, (i) Contributor and its Affiliates shall be the sole holders of the attorney-client privilege with respect to the Privileged Materials, and the Company shall not be a holder thereof, (ii) to the extent that files of Prior Contributor Counsel in respect of Privileged Materials constitute property of the client, only Contributor and its Affiliates shall hold such property rights and (iii) Prior Contributor Counsel shall have no duty whatsoever to reveal or disclose any Privileged Materials to the Company by reason of any attorney-client relationship between Prior Contributor Counsel and the Company, or otherwise. For avoidance of doubt, nothing in the foregoing shall prevent the Company from complying with any court order, subpoena or any type of compulsory process. The Company hereby acknowledges and confirms that it has had the opportunity to review and obtain adequate information regarding the significance and risks of the waivers and other terms
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and conditions of this Section 10.12, including the opportunity to discuss with counsel such matters and reasonable alternatives to such terms. The covenants and obligations set forth in this Section 10.12 shall survive for ten (10) years following the Closing Date.
(o)The provisions of this Section 10.12 are intended to be for the benefit of, and shall be enforceable by, Contributor and each Prior Contributor Counsel, who are express third party beneficiaries of this Section 10.12.
Section 1.5Exhibits and Schedules. The Contributor Disclosure Schedule, the Company Disclosure Schedule, and all exhibits, schedules, annexes or other documents expressly incorporated into this Agreement, are hereby incorporated into this Agreement and are hereby made a part hereof as if set out in full in this Agreement. The mere inclusion of any item in any section or subsection of the Contributor Disclosure Schedule or the Company Disclosure Schedule as an exception to any representation or warranty or otherwise shall not be deemed to constitute an admission or suggestion by the applicable Party, or to otherwise imply, that any such item is or would reasonably be expected to be material or has had or would reasonably be expected to have a Contributor Material Adverse Effect or a Company Material Adverse Effect, is required to be disclosed, or otherwise represents a violation of, breach of or default under any Contract or Law or otherwise or an exception or material fact, event or circumstance for the purposes of this Agreement, or that such item meets or exceeds a monetary or other threshold specified for disclosure in this Agreement or otherwise. Such disclosure shall not be used as a basis for interpreting the terms “material,” “materially,” “materiality,” “Contributor Material Adverse Effect,” “Company Material Adverse Effect” or any similar qualification. Unless the context would otherwise require, the term “material” and the concept of the “material nature” of an effect upon Contributor shall be measured relative to the Transferred Business, taken as a whole as the Transferred Business is currently being conducted. Matters disclosed in any section or subsection of the Contributor Disclosure Schedule or the Company Disclosure Schedule are not necessarily limited to matters that are required by this Agreement to be disclosed therein. Such additional matters are set forth for informational purposes only and do not necessarily include other matters of a similar nature or impose any duty or obligation to disclose any information beyond what is required by this Agreement, and disclosure of such additional matters shall not affect, directly or indirectly, the interpretation of this Agreement or the scope of the disclosure obligations hereunder. Headings inserted in the sections or subsections of the Contributor Disclosure Schedule or the Company Disclosure Schedule are for convenience of reference only and shall not have the effect of amending or changing the express terms of the sections or subsections as set forth in this Agreement. The Contributor Disclosure Schedule, the Company Disclosure Schedule and the information and statements contained therein are not intended to constitute, and shall not be construed as constituting, representations or warranties of a Party except as, or to the extent, provided in this Agreement.
Section 1.6Guarantees.
(p)Contributor Parent shall cause Contributor and any other Subsidiary of Contributor Parent that is a party to this Agreement or any of the Ancillary Agreements to perform all of its or their respective agreements, covenants and obligations under, and in accordance with, this Agreement and the Ancillary Agreements. Contributor Parent unconditionally guarantees to the Company the full and complete performance by Contributor and any other Subsidiary of Company Parent that is a party to this Agreement or any of the Ancillary Agreements of its respective obligations under this Agreement and the Ancillary Agreements, as applicable, including the payment of any amounts payable by Contributor or such other Subsidiary of Contributor Parent pursuant to this Agreement or the Ancillary Agreements. Contributor Parent hereby waives diligence, presentment, demand of performance, filing of any claim, any right to require any proceeding first against Contributor or such other Subsidiary of Contributor Parent, protest, notice and all demands whatsoever in connection with
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the performance of its obligations set forth in this Section 10.14(a) or elsewhere in this Agreement and the Ancillary Agreements, as applicable. The foregoing guarantee shall, to the fullest extent permitted under applicable law, be absolute and unconditional irrespective of any change in the existence (corporate, limited liability or otherwise), structure or ownership of Contributor or any Subsidiary of Contributor Parent that is a party to this Agreement or any of the Ancillary Agreements, or any insolvency, bankruptcy, reorganization or other similar proceeding of Contributor or any Subsidiary of Contributor Parent that is a party to this Agreement or any of the Ancillary Agreements or any of their respective assets, or the incapacity, lack of authority or limitation of status or power of Contributor or any Subsidiary of Contributor Parent that is a party to this Agreement or any of the Ancillary Agreements.
(q)Company Parent shall cause the Company and any other Subsidiary of Company Parent that is a party to this Agreement or any of the Ancillary Agreements to perform all of its or their respective agreements, covenants and obligations under, and in accordance with, this Agreement and the Ancillary Agreements. Company Parent unconditionally guarantees to Contributor Parent and Contributor the full and complete performance by Company and any other Subsidiary of Company Parent that is a party to this Agreement or any of the Ancillary Agreements of its respective obligations under this Agreement and the Ancillary Agreements, as applicable, including the payment of any amounts payable by the Company or such other Subsidiary of Company Parent pursuant to this Agreement or the Ancillary Agreements; provided, that Company Parent’s aggregate liability shall not exceed $750,000,000. Company Parent hereby waives diligence, presentment, demand of performance, filing of any claim, any right to require any proceeding first against the Company or such other Subsidiary of Company Parent, protest, notice and all demands whatsoever in connection with the performance of its obligations set forth in this Section 10.14(b) or elsewhere in this Agreement and the Ancillary Agreements, as applicable. The foregoing guarantee shall, to the fullest extent permitted under applicable law, be absolute and unconditional irrespective of any change in the existence (corporate, limited liability or otherwise), structure or ownership of the Company or any Subsidiary of Company Parent that is a party to this Agreement or any of the Ancillary Agreements, or any insolvency, bankruptcy, reorganization or other similar proceeding of the Company or any Subsidiary of Company Parent that is a party to this Agreement or any of the Ancillary Agreements or any of their respective assets, or the incapacity, lack of authority or limitation of status or power of the Company or any Subsidiary of Company Parent that is a party to this Agreement or any of the Ancillary Agreements.
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    IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first written above.
VOYA FINANCIAL, INC.
By:/s/ Trevor Ogle
Name:Trevor Ogle
Title:Senior Vice President
VOYA INVESTMENT MANAGEMENT LLC
By:/s/ Christine Hurtsellers
Name:Christine Hurtsellers
Title:Chief Executive Officer

[Signature Page to the Combination Agreement]


ALLIANZ SE
By:/s/ Renate Wagner
Name:Renate Wagner
Title:Member of the Board of
Management
By:/s/ Andreas Wimmer
Name:Andreas Wimmer
Title:
Member of the Board of
Management

[Signature Page to the Combination Agreement]


ALLIANZ GLOBAL INVESTORS U.S. LLC
By:/s/ John Viggiano
Name:John Viggiano
Title:General Counsel

[Signature Page to the Combination Agreement]


VIM HOLDINGS LLC
By:/s/ Claudia Knox
Name:Claudia Knox
Title:President
By:/s/ William Kenny
Name:William Kenny
Title:Chief Financial Officer

[Signature Page to the Combination Agreement]

Document
Exhibit 10.1

AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT

of

VIM HOLDINGS LLC

Dated as of July 25, 2022
THE LIMITED LIABILITY COMPANY INTERESTS REPRESENTED BY THIS SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS. SUCH INTERESTS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS OR EXEMPTION THEREFROM AND COMPLIANCE WITH THE OTHER SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN.

THE LIMITED LIABILITY COMPANY INTERESTS REPRESENTED BY THIS SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER SET FORTH IN THIS AGREEMENT.





TABLE OF CONTENTS


Article I

DEFINITIONS
Section 1.01.    Certain Definitions
Section 1.02.    Other Interpretive Provisions
Article II

ORGANIZATIONAL MATTERS
Section 2.01.    Formation
Section 2.02.    Agreement; Members
Section 2.03.    Name of the Company
Section 2.04.    Place of Business
Section 2.05.    Registered Office and Registered Agent
Section 2.06.    Liability of Members
Section 2.07.    Purpose of the Company
Article III

CAPITAL CONTRIBUTIONS, COMPANY UNITS AND CAPITAL ACCOUNTS
Section 3.01.    Initial Capital Contributions; Class A Units; and Class B Units
Section 3.02.    Company Unit Certificates
Section 3.03.    Preemptive Rights
Section 3.04.    Additional Classes of Company Units
Section 3.05.    Additional Members
Section 3.06.    Voting Rights
Section 3.07.    Capital Accounts; Additional Investment Capital
Section 3.08.    Return of Capital; Withdrawals
Article IV

DISTRIBUTIONS AND ALLOCATIONS
Section 4.01.    Distributions
Section 4.02.    Restricted Distributions
Section 4.03.    Distributions in Kind
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TABLE OF CONTENTS
(continued)


Section 4.04.    Withholding and Payments on Behalf of a Member
Section 4.05.    Tax Distributions
Section 4.06.    Offset
Section 4.07.    Calculation of Profits and Losses
Section 4.08.    Allocation of Profits and Losses
Section 4.09.    Special Allocations
Section 4.10.    Curative Allocations
Section 4.11.    Other Allocation Rules
Section 4.12.    Tax Allocations; Section 704(c)
Section 4.13.    Tax Treatment
Section 4.14.    Tax Elections
Section 4.15.    Survival
Article V

MANAGEMENT
Section 5.01.    Board of Managers
Section 5.02.    Additional Management Provisions; No Member or Manager Fiduciary Duties
Section 5.03.    Quorum; Notice; Written Consent
Section 5.04.    Reserved Matters
Article VI

OFFICERS
Section 6.01.    Designation; Term; Qualifications
Section 6.02.    Removal and Resignation
Section 6.03.    Vacancies
Article VII

TRANSFER OF COMPANY UNITS
Section 7.01.    Limitations on Transfer
Section 7.02.    Right of First Offer
Section 7.03.    Tag Along Rights
Section 7.04.    Drag-Along Rights
Section 7.05.    Call and Put Rights
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TABLE OF CONTENTS
(continued)


Section 7.06.    Rights and Obligations of Transferees
Section 7.07.    Mergers; Conversions
Section 7.08.    Appraisal Rights
Section 7.09.    Specific Performance
Article VIII

COMPANY EXPENSES, BOOKS AND RECORDS, TAX MATTERS
Section 8.01.    Fees and Expenses
Section 8.02.    Fiscal Year
Section 8.03.    Records
Section 8.04.    Financial Statements and Reports
Section 8.05.    Tax Matters
Article IX

EXCULPATION AND INDEMNIFICATION
Section 9.01.    Exculpation; Fiduciary Duties
Section 9.02.    Indemnification and Expense Advancement
Section 9.03.    Exclusivity
Article X

DISSOLUTION, LIQUIDATION AND TERMINATION
Section 10.01.    Events Causing Dissolution
Section 10.02.    Cancellation of Certificate
Section 10.03.    Distributions on Liquidation or a Sale of the Company
Section 10.04.    Accounting on Liquidation
Section 10.05.    Return of Members’ Capital Contribution
Section 10.06.    Termination
Article XI

REPRESENTATIONS, WARRANTIES AND COVENANTS
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TABLE OF CONTENTS
(continued)


Section 11.01.    Representations and Warranties of the Members
Section 11.02.    Representations and Warranties of the Company
Section 11.03.    Entitlement of the Company and the Members to Rely on Representations and Warranties
Section 11.04.    Covenants of the Company
Article XII

MISCELLANEOUS
Section 12.01.    Freedom to Pursue Opportunities
Section 12.02.    Notices
Section 12.03.    Publicity and Confidentiality
Section 12.04.    Amendments
Section 12.05.    Governing Law; Jurisdiction
Section 12.06.    Waiver of Jury Trial
Section 12.07.    Entire Agreement
Section 12.08.    Other Instruments and Acts
Section 12.09.    Waivers
Section 12.10.    Successors and Assigns
Section 12.11.    Severability
Section 12.12.    Further Assurances
Section 12.13.    Counterparts; Electronic Signatures
Section 12.14.    Third Party Beneficiaries
Section 12.15.    No Third Party Liability
Section 12.16.    Binding Effect
Section 12.17.    Specific Performance
Section 12.18.    Company Subsidiaries
Article XIII

INITIAL PUBLIC OFFERING
Section 13.01.    Unilateral Initial Public Offering
Section 13.02.    Registering Entity
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TABLE OF CONTENTS
(continued)


Section 13.03.    Registration Rights
Section 13.04.    Shareholders Agreement; Certificate of Incorporation
Section 13.05.    Company Units


Schedules

Schedule A
Members
Schedule B
Capital Contributions, Class A Units and Class B Units
Schedule C
Class B Underlying Assets
Schedule D
Fair Market Value Determination and Dispute Resolution Procedure
Schedule EInter-Affiliate Allocations
Schedule FRestricted Competitors
Schedule GOfficers

        
        

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AMENDED AND RESTATED
LIMITED LIABILTY COMPANY AGREEMENT

OF

VIM HOLDINGS LLC
This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of VIM Holdings LLC, a Delaware limited liability company (the “Company”), dated as of July 25, 2022, is entered into in accordance with the Delaware Limited Liability Company Act (the “Act”) by and among the Company and those Persons listed on Schedule A, as it may be amended from time to time in accordance with the terms and conditions set forth herein, admitted to the Company as Members in accordance with this Agreement (each, a “Member” and collectively the “Members”).
WITNESSETH:
WHEREAS, effective as of June 10, 2022, PFP Holdings, Inc., a Delaware corporation (the “Allianz Member”) entered into the Limited Liability Company Agreement (the “Existing Agreement”) of the Company;
WHEREAS, on June 13, 2022, Voya Financial, Inc., a Delaware corporation (“Voya”), the Company, Voya Investment Management LLC, a Delaware limited liability company (“Voya IM”), Allianz SE, a stock corporation organized and existing under the laws of the European Union and the Federal Republic of Germany, and Allianz Global Investors U.S. LLC, a Delaware limited liability company (“Allianz”), entered into that certain Combination Agreement (the “Combination Agreement”), pursuant to which, on the date hereof, among other things, (i) Voya contributed all of the issued and outstanding equity interests in Voya IM to the Company (including, indirectly, the Class B Underlying Assets held by Voya IM), as a result of which Voya IM became a wholly owned Subsidiary of the Company and (ii) Allianz contributed the Transferred Assets (as defined in the Combination Agreement) to Voya IM; and
WHEREAS, pursuant to the Combination Agreement, and substantially concurrently with and conditioned on the closing (the “Closing”) of the transactions contemplated by the Combination Agreement, the Company and the Members wish to amend and restate the Existing Agreement in its entirety in order to, among other things, (i) admit Voya Holdings Inc., a Connecticut corporation (the “Voya Member”), as a Member, (ii) provide for the management of the Company and (iii) set forth the respective rights and obligations of the Members generally.
NOW, THEREFORE, in consideration of the mutual promises of the parties hereto, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is mutually agreed by and between the parties hereto as follows:
Article I

DEFINITIONS
Section 1.01.Certain Definitions. As used in this Agreement, the following terms have the following meanings:
Accredited Investors” means an “accredited investor” within the meaning of Regulation D of the Securities Act.
    1    



Adjusted Deficit Capital Account” means, with respect to any Member, the deficit balance, if any, in such Member’s Capital Account as of the end of the relevant Fiscal Year or other period, after giving effect to the following adjustments:
(a) Credit to such Capital Account any amounts that such Member is deemed to be obligated to restore pursuant to the penultimate sentences in Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Deficit Capital Account is intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
Act” has the meaning set forth in the recitals.
Advance Amount” has the meaning set forth in Section 4.04.
Affiliate” means, with respect to any Person, any other Person that directly or indirectly Controls, is Controlled by, or is under common Control with, such Person.
Agreement” has the meaning set forth in the preamble.
Allianz” has the meaning set forth in the recitals.
Allianz Group” means, collectively, the Allianz Member and its Permitted Transferees who hold Company Units.
Allianz Member” has the meaning set forth in the recitals.
Arm’s-Length Basis” means a transaction between two Persons that is carried out on terms no less favorable than the terms on which the transaction would be carried out by parties that (i) are not Affiliates, (ii) are wholly independent of one another and (iii) bear no special duty or obligation to one another, with each acting independently as a willing buyer or a willing seller (or, if the contemplated transaction does not involve a purchase and sale, as willing counterparties), each acting in his, her or its own self-interest.
Assumed Tax Rate” means, with respect to any Member, for the year in which the relevant income is allocated to such Member, the highest marginal effective rate of U.S. federal, state and local income tax (calculated by using the highest marginal blended U.S. federal, state and local income tax rate applicable for such period to a corporation conducting the business of the Company, taking into account, for U.S. federal income tax purposes, the deductibility of state and local taxes and any applicable limitations thereon), taking into account the character of income as well as any relevant taxes imposed at the entity level.
Board” has the meaning set forth in Section 5.01(a).
Business Day” means any day of the year on which national banking institutions in New York, New York and Munich, Germany are open to the public for conducting business and are not required or authorized by law to close.
Call Closing” has the meaning set forth in Section 7.05(c)(i).
    2    

Call Closing Date” has the meaning set forth in Section 7.05(c)(i).
Call Exercise Notice” has the meaning set forth in Section 7.05(b).
Call Exercise Period” has the meaning set forth in Section 7.05(b).
Call Purchase Price” means the Fair Market Value of the Company Units held by the Allianz Member as of the date of the delivery of the Call Exercise Notice; provided, however, that the Call Purchase Price in connection with the exercise of the Call Right pursuant to clause (y) of Section 7.05(a) shall in no event be less, on a per-Class A Unit basis, than the highest per- Class A Unit purchase price offered in writing by the Allianz Member or its applicable Affiliate pursuant to a “Repurchase Proposal” in accordance with Annex A of the Combination Agreement.
Call Right” has the meaning set forth in Section 7.05(a).
Capital Contribution” means, with respect to any Company Unit, the amount of cash and the Fair Market Value of other property (net of liabilities secured by such property that the Company is considered to assume or take subject to under Section 752 of the Code) contributed or deemed contributed by a Member to the Company (or any predecessor thereof) in respect of such Company Unit.
Certificate” has the meaning set forth in Section 2.01.
Change of Control” means (i) a transaction or series of related transactions in which any “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act), other than any Permitted Transferee, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the outstanding voting securities of the Company having the right to vote for the election of the Managers, (ii) any reorganization, merger or consolidation of the Company, other than a transaction or series of related transactions in which the holders of the voting securities of the Company outstanding immediately prior to such transaction or series of related transactions, or such holders’ Permitted Transferees, retain, immediately after such transaction or series of related transactions, at least a majority of the total voting power represented by the outstanding voting securities of the Company or such other surviving or resulting entity or (iii) a sale, lease or other disposition of all or substantially all of the assets of the Company, other than to any Permitted Transferee.
Class A Member” means each Member who holds Class A Units, and any other Person admitted as an additional or substitute Member in accordance with the terms hereof and who holds Class A Units, in each case so long as such Person holds Class A Units. If a Class A Member also holds different classes of Company Units, then such Class A Member shall be treated as a Class A Member only with respect to its Class A Units.
Class A Units” means Company Units that are designated as Class A Units.
Class B Member” means each Member who holds Class B Units, and any other Person admitted as an additional or substitute Member in accordance with the terms hereof and who holds Class B Units, in each case so long as such Person holds Class B Units. If a Class B Member also holds different classes of Company Units, then such Class B Member shall be treated as a Class B Member only with respect to its Class B Units.
Class B Units” means Company Units that are designated as Class B Units.
    3    

Class B Underlying Assets” means the investment assets and property of Voya IM, including the liabilities relating thereto, set forth on Schedule C.
Closing” has the meaning set forth in the recitals.
Closing Date” means July 25, 2022.
Code” means the U.S. Internal Revenue Code of 1986, as amended, and any successor law.
Company” has the meaning set forth in the preamble.
Company Minimum Gain” means “partnership minimum gain” determined pursuant to Treasury Regulations Section 1.704-2(d).
Company Units” means a membership interest in the Company (including, without limitation, each of the Class A Units and Class B Units). Each Company Unit shall represent a membership interest with the rights, powers and preferences provided in this Agreement and in the Act.
Combination Agreement” has the meaning set for in the recitals.
Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and “Controlled” has a correlative meaning.
Core Distribution Agreement” has the meaning assigned to such term in the Combination Agreement.
Corporate Opportunity” has the meaning set forth in Section 12.01.
Cross Distribution Agreement” has the meaning assigned to such term in the Combination Agreement.
Depreciation” means, for each Fiscal Year or other period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such year or other period, except that (i) if the Gross Asset Value of an asset differs from its adjusted basis for U.S. federal income tax purposes at the beginning of such year or other period and which difference is being eliminated by use of the “remedial method” as defined by Treasury Regulations Section 1.704-3(d), Depreciation for such Fiscal Year shall be the amount of book basis recovered for such Fiscal Year under the rules prescribed by Treasury Regulations Section 1.704-3(d)(2), and (ii) with respect to other assets the Gross Asset Value of which differs from its adjusted tax basis for U.S. federal income tax purposes at the beginning of such Fiscal Year, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the U.S. federal income tax depreciation, amortization, or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization, or other cost recovery deduction for such year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Board.
Designated Individual” shall mean the Person appointed under Section 8.05(a) to serve as the “designated individual” (within the meaning of Treasury Regulations Section 301.6223-1(b)(3)) of the Company for purposes of the Partnership Audit Rules.
    4    

DGCL” has the meaning set forth in 1.01(g).
Distributable Cash” shall mean cash or cash equivalents received by the Company or any of its Subsidiaries from any source other than cash dividends or distributions from, the proceeds of any sale of, or any earnings respect to any Class B Underlying Assets, minus the amount of cash that the Board determines in its reasonable discretion should be retained by Voya IM to maintain a normal level of working capital sufficient for the payment of Voya IM’s ordinary course debt servicing, operating expenses and other reserves that are reasonably required and customary for a business similar to Voya IM’s; provided that the Members’ preference for receiving distributions to the greatest extent possible will be given due consideration by the Board and the Company in any such determination. “Drag-Along Buyer” has the meaning set forth in Section 7.04(f).
Drag-Along Transfer” has the meaning set forth in Section 7.04(a).
ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder.
Escrow Agent” has the meaning set forth in Section 7.04(f).
Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder.
Existing Agreement” has the meaning set forth in the preamble.
Fair Market Value” has the meaning set forth in Schedule D.
Fiscal Year” has the meaning set forth in Section 8.02.
Former Member” means a Member who transferred his, her or its Company Units to another Person or had his, her or its interest in the Company redeemed, and each Person who was a Member of the Company immediately prior to a liquidation of the Company. Each Person shall be a Former Member with respect to each partnership taxable year or years during which such Member owned a Company Unit.
GAAP” means United States generally accepted accounting principles.
Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for U.S. federal income tax purposes, except as follows:
(i) the initial Gross Asset Value of any asset contributed by a Member to the Company shall be its fair market value as determined pursuant to the Combination Agreement;
(ii) the Gross Asset Value of each Company asset shall be adjusted to equal its gross fair market value, as determined by the Board, reasonably and in good faith, as of the following times: (A) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution; (B) the distribution by the Company to a Member of more than a de minimis amount of property as consideration for an interest in the Company; (C) the liquidation of the Company within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g); and (D) the acquisition of a Company Unit as consideration for the provision of services to or for the benefit of the Company by a new or existing Member acting in the capacity of a current or anticipated Member; provided, however, that adjustments pursuant to clauses (A), (B) and (D) above shall be made
    5    

only if the Board reasonably and in good faith determines that such adjustments are necessary or appropriate to reflect the relative Company Units of the Members in the Company;
(iii) the Gross Asset Value of any asset distributed to any Member shall be adjusted to equal the gross fair market value of such asset on the date of distribution as determined by the Board, reasonably and in good faith; and
(iv) the Gross Asset Value of each Company asset shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such asset pursuant to Sections 734(b) or 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m), subparagraph (vi) of the definition of Profits and Losses hereof, and Section 8.02 hereof; provided, however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (iv) to the extent the Board, reasonably and in good faith determines that an adjustment pursuant to subparagraph (ii), hereof is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (iv).
If the Gross Asset Value of an asset has been determined or adjusted pursuant to subparagraph (i), (ii), or (iv) hereof, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits and Losses.
Indemnified Person” has the meaning set forth in Section 9.01(a).
Information Member” has the meaning set forth in Section 8.04(a).
Initial Capital Contribution” has the meaning set forth in Section 3.01(a).
Initial Public Offering” or “IPO” means the first underwritten Public Offering.
Investment Capital Assets” has the meaning set forth in Section 3.07(c).
Investment Capital Notice” has the meaning set forth in Section 3.07(c).
Investment Company Act” means the Investment Company Act of 1940, as amended from time to time, and the rules and regulations promulgated thereunder.
IPO Notice” has the meaning set forth in Section 13.01.
IPO Restructuring” has the meaning set forth in Section 13.02.
IRS” means the U.S. Internal Revenue Service.
Manager” has the meaning set forth in Section 5.01(a).
Marketable Securities” shall mean Securities that are (i) tradable on an established U.S. national or non-U.S. securities exchange, (ii) reported through NASDAQ or a comparable established non-U.S. over-the-counter trading system or (iii) otherwise traded over-the-counter or purchased and sold in transactions effected pursuant to Rule 144A under the Securities Act, in each case that are not subject to restrictions on transfer (taking into account only such Securities) under the Securities Act or other applicable securities laws or subject to contractual restrictions on transfer.
    6    

Material Default” means any proposed Transfer in violation of Article VII or any action relating to bankruptcy or reorganization with respect to the Company.
Member” has the meaning set forth in the preamble.
Member Nonrecourse Debt” has the meaning set forth in Treasury Regulations Section 1.704-2(b)(4).
Member Nonrecourse Debt Minimum Gain” means an amount, with respect to Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Treasury Regulations Section 1.704-2(i)(3).
Member Nonrecourse Deductions” has the meaning set forth in Treasury Regulations Sections 1.704-2(i)(1) and 1.704-2(i)(2).
New Issuance” has the meaning set forth in Section 3.03(a).
New Securities” has the meaning set forth in Section 3.04.
Nonrecourse Deductions” has the meaning set forth in Treasury Regulations Section 1.704-2(b)(1).
Nonrecourse Liability” has the meaning set forth in Treasury Regulations Section 1.704-2(b)(3).
Non-U.S. Person” has the meaning set forth in Section 11.01(e).
Partnership Audit Rules” shall mean Subchapter C of Chapter 63 of the Code and any subsequent amendment (and any Treasury Regulations or other guidance that may be promulgated in the future relating thereto) and, in each case, any provisions of state, local, and non-U.S. law governing the preparation and filing of tax returns, interactions with tax authorities, the conduct and resolution of examinations by tax authorities and payment of resulting tax liabilities.
Partnership Representative” shall mean the Person designated pursuant to Section 8.05(a) to serve as the “partnership representative” (within the meaning of Treasury Regulations Section 301.6223-1(b)(3)) of the Company for purposes of the Partnership Audit Rules.
Permitted Voya Transfer” means a Transfer, on no more than one occasion, by the Voya Member or its Permitted Transferees of a number of Company Units representing not more than ten percent (10%) of the aggregate number of Company Units outstanding as of the date of such Transfer.
Permitted Transferee” means, with respect to a Transfer or proposed Transfer of Company Units, a wholly owned Subsidiary of the ultimate parent entity of the transferring Member.
Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, governmental entity or any other entity.
Preemptive Rights Notice” has the meaning set forth in Section 3.03(a).
    7    

Preemptive Rights Election Notice” has the meaning set forth in Section 3.03(a).
Preemptive Rights Response Period” has the meaning set forth in Section 3.03(a).
Proceeding” has the meaning set forth in Section 9.02(a).
Profit” and “Loss” mean, for each Fiscal Year, an amount equal to the Company’s net taxable income or loss for such Fiscal Year, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss, deduction, credit or any other item required to be stated separately pursuant to the Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments:
(i) any income of the Company that is exempt from U.S. federal income tax and not otherwise taken into account in computing Profit or Loss pursuant to this definition of Profit and Loss shall be added to such taxable income or loss;
(ii) any expenditures of the Company described in the Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code expenditures pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profit or Loss pursuant to this definition of Profit and Loss shall be subtracted from such taxable income or loss;
(iii) in the event the Gross Asset Value of any Company asset is adjusted pursuant to Subparagraph (ii) or (iii) of the definition of Gross Asset Value hereof, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profit or Loss;
(iv) gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for U.S. federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;
(v) in lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year, computed in accordance with the definition of Depreciation hereof;
(vi) to the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Sections 734(b) or 743(b) of the Code is required pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in complete liquidation of a Member’s interest, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Profit or Loss; and
(vii) notwithstanding any other provision of this definition of Profit and Loss, any items that are specially allocated pursuant to Section 4.09 (other than Section 4.09(a)) or Section 4.10 hereof shall not be taken into account in computing Profit or Loss. The amounts of the items of the Profits, Losses and any such other items available to be specially allocated pursuant to Section 4.09 and Section 4.10 hereof shall be determined by applying rules analogous to those set forth in Subparagraphs (i) through (vi) above.
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Pro Rata Portion” means, for purposes of Section 3.03 (with respect to preemptive rights), a number of Company Units or other securities equal to (i) the number of Company Units or other securities that the Company or its Subsidiary, as applicable, proposes to issue on the relevant issuance date, multiplied by (ii) a fraction, the numerator of which is the number of Class A Units held by the relevant Member immediately prior to such issuance date, and the denominator of which is the aggregate number of Class A Units held by all Class A Members immediately prior to such issuance date, and for purposes of Section 3.07(c) (with respect to amounts of Capital Contributions), an amount equal to (x) the aggregate amount of cash set forth in the applicable Investment Capital Notice, multiplied by (y), a fraction, the numerator of which is the number of Class A Units held by the relevant Member as of the date of such Investment Capital Notice, and the denominator of which is the aggregate number of Class A Units held by all Class A Members as of such date.
Public Offering” means (i) any public offering and sale of equity securities of the Company, or any of its Subsidiaries, or their respective successors for cash pursuant to an effective registration statement (other than on Form S-4, S-8 or a comparable form other than in connection with a transaction described in clause (ii) of this definition) under the Securities Act or (ii) the consummation of a merger or other business combination of the Company, or any of its Subsidiaries, or their respective successors, with, or the acquisition of the Company or any of its Subsidiaries holding all or substantially all of the assets of the Company (or the capital stock of the Company or any parent or Subsidiary of the Company), by a publicly-traded special purpose acquisition company or its subsidiary following which the capital stock of the combined entity or its parent is listed on the Nasdaq Stock Market’s National Market, the New York Stock Exchange or an affiliated national securities exchange in the United States of America of either of such stock exchanges.
Public Sale” means any sale of equity securities of the Company (i) to the public pursuant to an offering registered under the Securities Act or (ii) to the public through a broker, dealer or market maker pursuant to the provisions of Rule 144 promulgated under the Securities Act (other than a sale by a non-Affiliate pursuant to Rule 144 prior to a Public Offering).
Put Closing” has the meaning set forth in Section 7.05(f)(i).
Put Closing Date” has the meaning set forth in Section 7.05(f)(i).
Put Exercise Notice” has the meaning set forth in Section 7.05(e).
Put Purchase Price” has the meaning set forth in Section 7.05(d).
Put Right” has the meaning set forth in Section 7.05(d).
Regulatory Allocations” has the meaning set forth in Section 4.10.
Registering Entity” has the meaning set forth in Section 13.02.
Regulatory Control” shall mean “control” of the Company or any of its registered investment advisor Subsidiaries for purposes of Section 2(a)(9) of the Investment Company Act of 1940, as amended, or the Investment Advisers Act of 1940, as amended.
Response Notice” has the meaning set forth in Section 7.03(b).
Response Period” has the meaning set forth in Section 7.03(b).
Restricted Competitor” means the persons set forth on Schedule F.
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Restrictive Covenants” has the meaning set forth in Section 7.04(c).
ROFO Initiator” has the meaning set forth in Section 7.02(a).
ROFO Initiator Notice” has the meaning set forth in Section 7.02(a).
ROFO Notice Period” has the meaning set forth in Section 7.02(b).
ROFO Offer” has the meaning set forth in Section 7.02(b).
ROFO Offer Review Period” has the meaning set forth in Section 7.02(b).
ROFO Receiving Member” has the meaning set forth in Section 7.02(a).
ROFO Termination Date” has the meaning set forth in Section 7.02(c).
ROFO Transfer” has the meaning set forth in Section 7.02.
ROFO Units” has the meaning set forth in Section 7.02(a).
Sale of the Company” means any transaction or series of transactions pursuant to which an unaffiliated third party acquires, directly or indirectly, (i) equity securities of the Company representing at least a majority of the outstanding equity securities of the Company or possessing the voting power (other than voting rights accruing only in the event of a default, breach or event of noncompliance) to elect at least a majority of the Board (whether by merger, consolidation, reorganization, combination, sale or transfer of the Company’s equity, security holder or voting agreement, proxy, power of attorney or otherwise) or (ii) all or substantially all of the assets of the Company and its Subsidiaries, determined on a consolidated basis; provided that neither an IPO nor a Change of Control of Voya shall constitute a Sale of the Company.
Securities” shall mean shares of capital stock, partnership interests, limited liability company interests, warrants, options, bonds, notes, debentures and other equity and debt securities of whatever kind of any Person, whether readily marketable or not.
Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder.
Subsidiary” means, with respect to any Person, any other Person of which a majority of the outstanding voting securities or other voting equity interests are owned, directly or indirectly, by such first Person.
Tag-Along Notice” has the meaning set forth in Section 7.03(b).
Tag-Along Transfer” has the meaning set forth in Section 7.03(a).
Tax Amount” has the meaning set forth in Section 4.05(b).
Tax Distribution” has the meaning set forth in Section 4.05(a).
Tax Withholding Rules” shall mean (i) Sections 1471 to 1474 of the Code and any other similar legislation, regulations or guidance enacted in any other jurisdiction which seeks to implement similar financial account information reporting and/or withholding tax regimes; (ii) the OECD Standard for Automatic Exchange of Financial Account Information in Tax Matters – the Common Reporting Standard and any associated guidance; (iii) any
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intergovernmental agreement, treaty, regulation, guidance, standard or other agreement entered into in order to comply with, facilitate, supplement or implement the legislation, regulations, guidance or standards described in sub-paragraphs (i) and (ii); (iv) Section 1446(f) of the Code and (v) any legislation, regulations or guidance that give effect to the foregoing.
Termination Date” has the meaning set forth in Section 10.06(a).
Transfer” means, with respect to any Company Unit, a direct or indirect transfer, sale, exchange, assignment, pledge, hypothecation or other encumbrance or other disposition of such Company Unit or any interest therein, including by way of a merger, consolidation, share exchange, business combination, the grant of an option or other right, or otherwise, whether directly or indirectly, whether voluntarily, involuntarily or by operation of law, in each case, other than a Sale of the Company.
Transferred”, “Transferring”, “Transferor” and “Transferee” shall each have a correlative meaning to the term “Transfer.”
Treasury Regulations” shall mean the regulations promulgated under the Code, as amended from time to time (including any successor regulations).
True-Up Date” has the meaning assigned to such term in the Combination Agreement.
Unfunded Amount” has the meaning set forth in Section 3.07(c).
Voya IM” has the meaning set forth in the recitals.
Voya Member” has the meaning set forth in the recitals.
Section 1.02.Other Interpretive Provisions.
(a)The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.
(b)(1) The words “hereof”, “herein”, “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and (2) subsection, Section and Schedule references are to this Agreement, in the case of each of clauses (i) and (ii) unless otherwise specified.
(c)The term “including” is not limiting and means “including without limitation.”
(d)The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.
(e)Any reference in this Agreement to Schedule A or Schedule B shall be deemed to be a reference to Schedule A or Schedule B, as applicable, of this Agreement as each such Schedule may be amended and is in effect from time to time.
(f)Whenever the context requires, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms.
(g)Notwithstanding certain corporate similarities created under this Agreement with respect to the management of the Company, except as expressly provided in this
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Agreement, (i) the Members and the Company, by using such corporate similarities, do not intend to incorporate any provisions of the General Corporation Law of the State of Delaware (the “DGCL”) or any other corporate law, rule or regulation into this Agreement, in each case, as amended or otherwise updated from time to time and intend that the management of the Company shall be governed by terms expressly set forth in this Agreement and (ii) the Company is subject to and governed by the provisions of the Act, and not any provisions of the DGCL or any other corporate law, rule or regulation
Article II

ORGANIZATIONAL MATTERS
Section 1.01.Formation. The Company was formed on June 10, 2022, by filing a certificate of formation (the “Certificate”) with the Delaware Secretary of State. The Members shall, when required, execute and file such amendments to or restatements of the Certificate, in such public offices in the State of Delaware or elsewhere, as the Members deem advisable to give effect to the provisions of this Agreement and the Certificate, and to preserve the status of the Company as a limited liability company.
Section 1.02.Agreement; Members.
(a)This Agreement is effective as of the date hereof.
(b)The Members hereby agree that during the term of the Company, the rights, duties and obligations of the Member with respect to the Company will be determined in accordance with the terms and conditions of this Agreement and the Act.
(c)The name and mailing address of each Member shall be listed on Schedule A. The Company shall, and the Board or any officer of the Company is authorized to, amend Schedule A from time to time as necessary to ensure the accuracy of the information required to be included therein in accordance with the terms hereof.
Section 1.01.Name of the Company. The name of the Company is “VIM Holdings LLC”. The business of the Company may be conducted under such name or any other name permitted by the Act as the Board may determine from time to time.
Section 1.02.Place of Business. The Company shall have its principal office at 5780 Powers Ferry Road, NW, Suite 300, Atlanta, Georgia 30327 or such other place or places as the Board may deem appropriate, and may establish such other offices or places of business for the Company as the Board may deem appropriate.
Section 1.03.Registered Office and Registered Agent. The registered office of the Company in the State of Delaware is c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The registered agent for service of process of the Company at such address is The Corporation Trust Company.
Section 1.04.Liability of Members. Except as otherwise provided in the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and the Members shall have no obligation whatsoever for any such debt, obligation or liability of the Company solely by reason of being a Member. The failure of the Company to observe any formalities or requirements relating to the exercise of its power or management of its business or affairs under the Act or this Agreement shall not be grounds for imposing personal liability on the Members for any debts, obligations or liabilities of the Company.
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Section 1.05.Purpose of the Company. The purpose of the Company shall be to conduct an investment management and advisory business and to conduct such other activities and to own such properties and assets as the Board shall approve from time to time, either directly or indirectly through one or more Subsidiaries or other entities in which the Company holds an equity interest.
Article III

CAPITAL CONTRIBUTIONS, COMPANY UNITS AND CAPITAL ACCOUNTS
Section 1.03.Initial Capital Contributions; Class A Units; and Class B Units.
(a)As of the date hereof, (i) each Class B Member made or was deemed to have made one or more Capital Contributions with respect to such Class B Member’s Class B Units, in an amount equal to the value of the Class B Underlying Assets in the amount set forth in Schedule B, and (ii) each Class A Member made or was deemed to have made, as applicable, a Capital Contribution with respect to such Class A Member’s Class A Units, in cash or other property, to the Company in the amount set forth in Schedule B (each Member’s “Initial Capital Contribution”). As promptly as practicable following the Closing and in any event within forty-five (45) days of the Closing, the Company shall propose and deliver to the Allianz Member such amendments as may be necessary to reflect (i) in the case of Schedule B, the value of the Initial Capital Contributions and the value of the Class B Underlying Assets as of the Closing Date using the same methodologies and basis for preparation that were used to prepare the Company Financial Information (as defined in the Combination Agreement), to the extent applicable, and for any information not included in the Company Financial Information (as defined in the Combination Agreement) or in line with Schedule D of this Agreement, using the same methodologies and basis for preparation that were used to prepare Schedule B attached herereto on the Closing Date and (ii) in the case of Schedule C, the information on Schedule C related to the Class B Underlying Assets as of the Closing, using the same methodologies and basis for preparation that was used to prepare Schedule C that were attached hereto on the Closing Date. In connection with the Allianz’ Member’s consideration of any such amendments, the Company shall, and shall cause its relevant independent accountants and Affiliates to, (A) provide the Allianz Member with reasonable supporting detail (including explanations and calculations) used to determine the amended figures proposed to be set forth on Schedule B and Schedule C and (B) cooperate and assist the Allianz Member and its representatives in their review of such proposed amendments. In the event that the Allianz Member disagrees that the amendments to be made to Schedule B and Schedule C have been prepared using the same methodologies and basis for preparation in accordance with the clause (i) and clause (ii) above, the Allianz Member shall deliver a written statement to the Company within thirty (30) days of the Company’s delivery of the proposed amendments describing each such disagreement thereto. If no such disagreements are raised by the Allianz Member within thirty (30) days of the Company’s delivery of the proposed amendments, the proposed amendments to Schedule B and Schedule C shall be effective. In the event that the Allianz Member notifies the Company of any such disagreement within such thirty (30) day period, the Allianz Member and the Company shall attempt to resolve in good faith any such disagreement within thirty (30) days after Company’s receipt of the Allianz Member’s notice of disagreement. If resolution of any such disagreement is not reached on or before the final day of such thirty (30) day period, then the Company and the Allianz Member shall promptly (and in any event no later than five (5) Business Days thereafter) submit the items in dispute to Ernst & Young LLP, or, if such firm declines to be retained to resolve the dispute, another nationally recognized, independent accounting firm reasonably acceptable to the Company and the Allianz Member (in either case, the “Accounting Firm”). The Accounting Firm will render a determination of the applicable dispute within thirty (30) days after referral of the matter to such Accounting Firm, which determination must be in writing and must set forth, in reasonable detail, the basis therefor. The terms of appointment and engagement of the
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Accounting Firm shall be on customary terms and conditions, and any associated engagement fees shall be initially borne fifty percent (50%) by the Allianz Member and fifty percent (50%) by the Company. In resolving the disputed items, the Accounting Firm shall (i) be bound by the provisions of this Section 3.01(a), including that Schedule B and Schedule C be prepared using the same methodologies and basis for preparation in accordance with the clause (i) and clause (ii) above; (ii) not assign a value to any item greater than the greatest value claimed for such item or less than the smallest value for such item claimed by either the Company or the Allianz Member; (iii) rely solely on the written submissions of the Company and the Allianz Member and shall not conduct an independent investigation and (iv) limit its decision to only such items as are in dispute and to only those adjustments in accordance with the clause (i) and clause (ii) above. Absent fraud or manifest error, such determination of the Accounting Firm shall be conclusive and binding upon the Company and the Members for all purposes hereunder upon which a judgment may be rendered by a court having proper jurisdiction against which such determination is sought to be enforced.
(b)No Class A Member shall be permitted to make any additional Capital Contributions to the Company except in accordance with this Agreement.
(c)The Company shall, and the Board and any officer of the Company is authorized to, amend Schedule A and Schedule B, from time to time, to reflect any additional Capital Contributions and issuances or transfers of Class A Units made in accordance with this Agreement.
Section 1.06.Company Unit Certificates. The Company Units shall be uncertificated; provided, however, that if the Board so determines, Company Units may be evidenced by certificates similar to customary stock certificates. If the Board determines to issue certificates, the Board shall prescribe the forms of certificates to be issued by the Company, including the forms of legends to be affixed thereto. Any such certificate shall be delivered by the Company to the applicable record owner of the Company Units represented by such certificate. Certificates need not bear a seal of the Company but shall be signed (by manual, facsimile, photographic, photostatic or similar reproduction of such signature in writing) by the chief executive officer, president, any vice president or any other Person authorized by the Board to sign such certificates on behalf of the Company who shall certify the Company Units represented by such certificate. Books and records reflecting the record ownership of the Company Units shall be kept by the Company. In the event any officer who shall have signed, or whose manual, facsimile, photographic, photostatic or similar reproduction of such signature or signatures shall have been placed upon, any such certificate or certificates shall have ceased to be such officer before such certificate is issued by the Company, such certificate may nevertheless be issued by the Company with the same effect as if such person were such officer at the date of issue. The Board may determine the conditions upon which a new certificate may be issued in place of a certificate which is alleged to have been lost, stolen or destroyed and may, in its discretion, require the Member requesting the issuance of a new certificate or its legal representative: (i) to indemnify the Company against any and all losses or claims that may arise by reason of the issuance of a new certificate in the place of the one so lost, stolen or destroyed; (ii) to give bond with sufficient surety to support such Member’s indemnification obligations under the immediately preceding clause (i); and (iii) to satisfy any other reasonable requirements imposed by the Board. Each certificate shall bear a legend on the reverse side thereof substantially in the following form in addition to any other legend determined by the Board or as required by law:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR SOLD, UNLESS IT HAS BEEN REGISTERED UNDER THE
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SECURITIES ACT OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE (AND, IN SUCH CASE, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY MAY BE REQUESTED BY THE COMPANY TO THE EFFECT THAT SUCH OFFER OR SALE IS NOT REQUIRED TO BE REGISTERED UNDER THE SECURITIES ACT).
THIS SECURITY MAY BE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OTHER TERMS AND CONDITIONS SET FORTH IN THE SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF THE COMPANY, DATED AS OF JULY 25, 2022 (AS MAY BE AMENDED OR RESTATED FROM TIME TO TIME), A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.
Section 1.07.Preemptive Rights.
(d)At any time following the date hereof until consummation of the IPO, if the Company or any of its Subsidiaries proposes to issue additional Company Units or other equity securities (a “New Issuance”, it being understood that, for purposes of this Section 3.03, references to “Company Units” shall include any such other equity securities), including any warrants, options or other rights to acquire Company Units or such equity securities, or other equity securities or debt securities that are convertible into Company Units or such equity securities (with the exception of any issuance (i) in connection with any merger, acquisition or similar transaction; (ii) as consideration in a joint venture or any other strategic transaction; (iii) in connection with any Public Offering; (iv) in connection with any stock or Company Unit split, subdivision, conversion, exercise or dividend; (v) any debt issued to third-party banks, equipment lessors or other financial institutions pursuant to a debt financing transaction made on an Arm’s-Length Basis; (vi) any such securities issued or issuable under a management equity or incentive plan adopted by the Board; or (vii) in the case of an issuance by a Subsidiary, to the Company or a wholly owned Subsidiary of the Company; provided that, in the event the Company issues additional Company Units in reliance on any of the foregoing exceptions, each Class A Member’s Class A Units will be diluted pro rata in accordance with the Class A Units then held by each such Class A Member in respect of any such issuance), the Company shall, or shall cause its Subsidiary to, as the case may be, provide written notice to each Class A Member who is an Accredited Investor of such anticipated issuance no later than fifteen (15) days prior to the anticipated issuance date (such notice, the “Preemptive Rights Notice”). The Preemptive Rights Notice shall set forth the anticipated issuance date and the material terms and conditions of the New Issuance, including the proposed purchase price for any new Company Units as determined by the Company (which, in the case of a New Issuance solely to any existing Member or Members shall be equal to the Fair Market Value of such new Company Units, and in all other cases, which purchase price shall be determined by the Board) and the aggregate amount of Company Units proposed to be issued. Each Class A Member who is an Accredited Investor shall have the right to purchase up to its Pro Rata Portion of such new Company Units (which in the case of a New Issuance by a Subsidiary of the Company will be determined by the Board on a “look-through” basis) at the price and on the terms and conditions specified in the Preemptive Rights Notice by delivering an irrevocable written notice (a “Preemptive Rights Election Notice”) to the Company no later than three (3) Business Days before the anticipated issuance date (the “Preemptive Rights Response Period”), setting forth the number of such new Company Units for which such right is exercised. Such notice shall also include the maximum number of new Company Units the Class A Member would be willing to purchase in the event
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any other Class A Member elects to purchase less than its Pro Rata Portion of such Company Units. If any Class A Member elects not to purchase its full Pro Rata Portion of such new Company Units, the Company or its Subsidiary, as the case may be, shall allocate any remaining amount among those Class A Members (pro rata in accordance with the Class A Units then held by each such Class A Member) who have indicated in their notice to the Company or its Subsidiary, as the case may be, a desire to purchase new Company Units in excess of their respective Pro Rata Portions (it being understood that if Class A Members elect to purchase more new Company Units than remain available for sale, such allocation shall be made pro rata in accordance with the Class A Units then held by each such Class A Member); provided that no Class A Member shall be required to purchase more Company Units than the maximum number set forth in such Class A Member’s irrevocable written notice. In the event a Class A Member fails to deliver a valid Preemptive Rights Election Notice to the Company prior to the expiration of the Preemptive Rights Response Period such Class A Member shall cease to have any rights under this Section 3.03 with respect to such New Issuance. The Company shall, and the Board and any officer of the Company is authorized to, amend Schedule A and Schedule B as necessary to reflect the purchase by any Class A Member of Company Units in accordance with the terms of this Section 3.03(a).
(e)In the event the Class A Members have preemptive rights with respect to a New Issuance and the Class A Members do not purchase all such new Company Units in accordance with the procedures set forth in Section 3.03(a), the Company shall have ninety (90) days (provided that, if the Company signs a definitive agreement to sell such Company Units or other securities that would constitute a New Issuance within such time period, such period shall be extended by the period of time reasonably necessary to obtain any necessary regulatory or other third party approval of such sale) after the anticipated issuance date specified in the Preemptive Rights Notice to sell to other Persons (including any Class A Member) the remaining new Company Units or other securities that would constitute a New Issuance at the price and on the terms and conditions specified in the Preemptive Rights Notice. If the Company, or such Subsidiary, as the case may be, fails to sell such Company Units or other securities that would constitute a New Issuance within ninety (90) days (provided that, if the Company signs a definitive agreement to sell such Company Units or other securities that would constitute a New Issuance within such time period, such period shall be extended by the period of time necessary to obtain any necessary regulatory or other third party approval of such sale) of the anticipated issuance date provided in the Preemptive Rights Notice, the Company shall not thereafter issue or sell any Company Units or other securities that would constitute a New Issuance without first offering such Company Units or other securities that would constitute a New Issuance to the Class A Members in the manner provided in Section 3.03(a). The Company shall, and the Board and any officer of the Company is authorized to, amend Schedule A and Schedule B as necessary to reflect the purchase by any Person of Company Units in accordance with the terms of this Section 3.03(b).
(f)Any election not to, or inability of a Class A Member to, exercise its preemptive rights under this Section 3.03 in any one instance shall not affect its right (other than in respect of any reduction in its percentage holdings) as to any future issuances under this Section 3.03.
(g)Notwithstanding anything herein to the contrary, if the Board determines that compliance with this Section 3.03 would not be in the best interest of the Company, its Subsidiaries or the Members, then, in lieu of offering any Company Units or other securities that would constitute a New Issuance to the Class A Members that are Accredited Investors at the time such Company Units or other securities that would constitute a New Issuance are otherwise being issued or sold, the Company or the Subsidiary, as applicable, may issue or sell such securities to any Person and, following such issuance or sale, the Company or such Subsidiary, as applicable, shall comply with the provisions of this Section 3.03 by commencing the
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procedures contemplated by this Section 3.03 promptly, and in any event no later than ten (10) days, after any such issuance or sale of securities; provided that in lieu of the Company or such Subsidiary issuing additional Company Units or other securities, one or more Members may sell, free and clear of liens (other than liens arising under securities laws), the applicable portion of the Company Units or other securities purchased by such Member or Members to any such Class A Member. In such event, (x) for all purposes of this Section 3.03, the Pro Rata Portion of each Class A Member that is an Accredited Investor shall be determined taking into consideration the actual number of Company Units or other securities that would constitute a New Issuance sold and (y) to the extent that any Class A Member elects to exercise its preemptive rights in connection with the procedure set forth in this Section 3.03(d), the Company and each other Member shall take such actions as may reasonably be required, in the case of each of clause (x) and (y), so as to achieve the same economic effect as if such offer had been made prior to such sale.
(h)Notwithstanding anything herein to the contrary, none of the Allianz Member nor any of its Affiliates or Permitted Transferees shall be entitled to exercise any preemptive rights pursuant to this Section 3.03 if the purchase of the applicable Company Units or other securities would (i) cause the Allianz Group, taken as a whole, to be deemed to have Regulatory Control of the Company or (ii) be prohibited by any other law or order applicable to the Allianz Member or its applicable Affiliates or Permitted Transferees.
Section 1.04.Additional Classes of Company Units. The Company, by decision of the Board, may issue one or more additional classes of voting or non-voting Company Units in the Company, notes or other evidence of indebtedness or securities exercisable, convertible or exchangeable for Company Units (“New Securities”). The Board shall determine the terms and conditions applicable to such New Securities and, subject to compliance with Section 3.03, if applicable, in connection with the issuance of such New Securities and this Section 3.04 and notwithstanding anything in Section 12.04 to the contrary, shall be permitted to amend this Agreement (including the allocation and distribution provisions) to reflect the issuance of such New Securities in accordance with the terms of this Agreement. The Company shall, and the Board and any officer of the Company is authorized to, amend Schedule A, and/or Schedule B, as applicable, or to add or amend one or more additional schedules hereto, to reflect the issuance of such New Securities.
Section 1.05.Additional Members. Subject to Section 3.03, Section 3.04 and Article VII, the Board may admit one or more additional Members to the Company on such terms and conditions as the Board may determine. An additional Member admitted to the Company pursuant to this Section 3.05 shall (a) execute a counterpart to this Agreement and deliver such documents as may be necessary, in the reasonable opinion of the Board, to make such Person a party hereto and evidence the admission of such Person as a Member of the Company; and (b) if so required by the Board, make a Capital Contribution to the Company in an amount determined by the Board. The Company shall, and the Board and any officer of the Company is authorized to, amend Schedule A and/or Schedule B, as applicable, or to add or amend one or more additional schedules hereto, to reflect the admission of any additional Members.
Section 1.06.Voting Rights.
(i)Subject to the terms of any other class of Company Units the Company may issue pursuant to Section 3.04, and subject to Section 3.06(h), all Class A Members shall be entitled to one vote for each Class A Unit held.
(j)Meetings of Members may only be called by the Board or by holders of at least a majority of the outstanding Class A Units held by all Class A Members. A quorum for a
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meeting of Members shall require the presence, in person or by proxy, of Class A Members holding Class A Units representing a majority of the outstanding Class A Units held by all Class A Members. Except as required by the Act or this Agreement, any matter submitted to the Members for approval shall require the approval of a majority of the Class A Units held by all Class A Members. Meetings of Members may be held at any time at any location specified in the notice thereof in such place within or without the State of Delaware. Reasonable and sufficient notice of each meeting shall be given to each Class A Members. It shall be reasonable and sufficient notice to a Class A Members to send notice by first-class mail at least seven (7) days, or by overnight delivery, electronic mail, facsimile or hand delivery at least forty-eight (48) hours before the meeting addressed to such Class A Member at such Class A Member’s address shown on Schedule A. Notice of a meeting need not be given to any Member if a written waiver of notice, executed by such Member before or after the meeting, is filed with the records of the meeting, to any Member who attends the meeting without protesting prior thereto or at its commencement the lack of notice to such Member, to any holder of Company Units that is not a Class A Member or to any Member that is not entitled to vote at such meeting. The record date for any meeting of the holders of Company Units shall be the date of the notice, unless a later date is specified in such notice.
(k)The chairman of any meeting of Members shall be (i) the chairman of the Board, (ii) his or her designee or (iii) in the event the chairman of the Board is not present at such meeting and does not specify a designee, any other director approved by the Board. The chairman shall determine the order of business and procedure at the meeting, including the manner of voting and conduct of discussion. The chairman of the meeting or Class A Members holding Class A Units representing a majority of the Class A Units held by all Class A Members shall have the power to adjourn such meeting from time to time, without any notice other than announcement at the meeting of the time and place of holding of the adjourned meeting.
(l)Any action required or permitted to be taken at any meeting of Members may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the Class A Members holding not less than the minimum number of Class A Units that would be necessary to take such action at a meeting at which all Class A Members entitled to vote on the action were present and voted. Every written consent may be signed in any number of counterparts and shall bear the date of signature of each Class A Member who signs the consent. No written consent shall be effective to take the action that is the subject of the consent unless, within sixty (60) days after the date of the earliest dated consent delivered to the Company in the manner required by this Section 3.06(d), a consent or consents signed by the Class A Members holding not less than the minimum number of Class A Units that would be necessary to take the action that is the subject of the consent are delivered to the Company. An e-mail or similar transmission by a Class A Member, or a photographic, photostatic, facsimile or similar reproduction of a writing signed by a Class A Member, shall be regarded as signed by the Class A Member for purposes of this Section 3.06(d). Prompt notice of the taking of any action by Class A Members without a meeting by less than unanimous written consent shall be given to those Class A Members who did not consent in writing to the action; provided that no delay in delivery of such notice shall affect the effectiveness of such written consent.
(m)Unless a record date is set by the Board, the record date for determining Class A Members entitled to consent to any action in writing without a meeting shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Company.
(n)If any action by Class A Members is taken by written consent, any certificate or documents filed with the Secretary of State of the State of Delaware as a result of the taking of the action shall state, in lieu of any statement required by the Act concerning any
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vote of Class A Members, that written consent has been given in accordance with the provisions of the Act and that any written notice required by the Act has been given.
(o)Class A Members may participate in and hold a meeting by means of conference telephone or similar communications equipment by means of which all Persons participating in the meeting can hear each other, and participation in such meeting shall constitute attendance and presence in person at such meeting, except where a Person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened
(p)Voting Cap.
(i)In no event will the Allianz Member, together with any of its Permitted Transferees who hold Class A Units, be entitled to greater than 4.9% of the aggregate voting rights with respect to all outstanding Class A Units; provided, further, that upon the Transfer of any Class A Units by the Allianz Member to a third party that is not an Affiliate of the Allianz Member, such transferee shall be entitled to one vote for each Transferred Class A Unit.
(ii)If at any time the Allianz Group holds or reasonably anticipates that absent the operation of this Section 3.06(h) it will hold Company Units representing (on an as converted basis) more than the lesser of (i) 4.9% of any class of voting securities of the Company and (ii) a number of voting securities of the Company that would result in the Allianz Group, taken as a whole, being deemed to have Regulatory Control of the Company, then any Company Units so held (on an as converted basis) in excess of 4.9% (or if lower, the maximum percentage that would not result in the Allianz Group, taken as a whole, being deemed to have Regulatory Control of the Company) shall have no voting power, to the extent necessary to avoid Regulatory Control and solely for so long as such reduction of voting power is necessary to avoid Regulatory Control. Each of the Allianz Member and the Company shall consult in good faith in advance of any actual or potential event that would result in the application of this Section 3.06(h). Such consultation shall include appropriate involvement of external counsel having relevant expertise and, if requested by the other party, consideration of reasonable proposals to avoid Regulatory Control through measures other than the application of this Section 3.06(h).
(iii)If the Allianz Member has ceased to be subject to the disqualification under Section 9 of the Investment Company Act that resulted from the Structured Products Resolution (as defined in the Combination Agreement), at the Allianz Member’s reasonable request, the Members and the Company shall discuss in good faith potential adjustments to the Allianz Member’s voting rights that would not reasonably be expected to have an adverse regulatory consequence for the Company or to result in the Allianz Group, taken as a whole, being deemed to have Regulatory Control of the Company (including the elimination of this Section 3.06(h)) and shall effect such adjustments to the extent mutually agreed.
Section 1.01.Capital Accounts; Additional Investment Capital.
(a)The Company shall maintain a separate capital account with respect to the Company Units owned by each Member, as applicable (each, a “Capital Account”), for each Member in accordance with the following provisions:
(i)Each Member’s Capital Account shall be increased by the amount of such Member’s Capital Contributions, any Profits allocated to such Member pursuant
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to Article IV, and the amount of any Company liabilities assumed by such Member or secured by any Company assets distributed to such Member.
(ii)Each Member’s Capital Account shall be decreased by the amount of cash and the gross fair market value of any other Company property distributed to such Member pursuant to any provision of this Agreement, any Losses allocated to such Member pursuant to Article IV (including the Member’s share of expenditures described in Treasury Regulations Section 1.704-1(b)(2)(iv)(i)) and the amount of any liabilities of such Member assumed by the Company or secured by any Member assets contributed by such Member.
(iii)Whenever the Company would be permitted to adjust any Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(f) to reflect revaluations of Company property, the Company may so adjust the Capital Accounts. In the event that the Capital Accounts are adjusted pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(f) to reflect revaluations of Company property, (i) the Capital Accounts shall be adjusted in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g) for allocations of depreciation, depletion, amortization and gain or loss, as computed for book purposes, with respect to such property.
(iv)The Members’ distributive shares of depreciation, depletion, amortization and gain or loss, as computed for tax purposes, with respect to such property shall be determined so as to take account of the variation between the adjusted tax basis and Gross Asset Value of such property in the same manner as under Section 704(c) of the Code.
(v)The amount of upward and/or downward adjustments to the Gross Asset Value of the Company property shall be treated as Profits or Losses for purposes of applying the allocation provisions of Article III. In the event that Section 704(c) of the Code applies to Company property, the Capital Accounts of the Members shall be adjusted in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g) for allocations of depreciation, depletion, amortization and gain and loss, as computed for book purposes, with respect to such property.
(vi)In the event all or any portion of a Member’s Company Units are Transferred in accordance with the terms of this Agreement, the Transferee shall succeed to the Capital Account of such Member to the extent such Capital Account relates to the Transferred Company Units.
(a)The provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations issued under Section 704(b) of the Code and shall be interpreted and applied in a manner consistent with such Treasury Regulations. Subject to the last sentence of Section 4.14, the Board shall be authorized to make appropriate amendments to the allocations of items pursuant to this Section 3.07 if necessary or desirable in order to comply with Section 704 of the Code or applicable Treasury Regulations thereunder or otherwise as appropriate to reflect the economic entitlements herein.
(b)Investment Capital Contribution Requirements.
(vii)At any time as determined by the Board, the Company may deliver a written notice to each Class A Member (an “Investment Capital Notice”) requiring Class A Members to make a Capital Contribution to the Company in an amount equal to each Class A Member’s Pro Rata Portion of the aggregate amount of cash set forth in such Investment Capital Notice, the proceeds of which shall be used by the Company or
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its Subsidiaries as additional capital for seed investments in funds managed by the Company or its Subsidiaries, which usage (including the proposed date of deployment of such capital) shall be described with reasonable specificity in the Investment Capital Notice (any such investments, the “Investment Capital Assets”). In the event the Class A Members are required to or agree to make such a Capital Contribution, as applicable, each Class A Member shall do so by wire payment of immediately available funds, within twenty (20) Business Days of receipt of any Investment Capital Notice, in an amount equal to such Class A Member’s Pro Rata Portion of the aggregate amount of cash set forth in such Investment Capital Notice; provided, that (x) the Company may not require the Class A Members to make Capital Contributions to the Company in respect of seed investments in excess of $100,000,000 in the aggregate in any single calendar year, and (y) the Allianz Member shall not be required to make any Capital Contributions to the Company in respect of seed investments if, after giving effect to such Capital Contribution, the aggregate amount of the Allianz Member’s Capital Contributions in respect of seed investments (calculated net of any capital returned to the Allianz Member in respect of Capital Contributions in respect of seed investments) would exceed $100,000,000 in the aggregate. The Company shall, and the Board and any officer of the Company is authorized to, amend Schedule B to reflect the Fair Market Value of the amount of Capital Contributions by each Member made in respect of any Investment Capital Notice.
(viii)In the event that any Class A Member fails to make a required Capital Contribution pursuant to this Section 3.07(c) (the amount by which such required Capital Contribution is unfunded, the “Unfunded Amount”), each distribution to which such Member shall be entitled to pursuant to Section 4.01(a) following the date of such failure to timely fund shall be reduced by (and the Company shall retain) the amount of such Unfunded Amount plus an amount of interest on such Unfunded Amount (for the period commencing as of the date such Capital Contribution was required to be funded through the date such Unfunded Amount is fully funded or fully offset against any distribution to which such Class A Member is entitled to pursuant to Section 4.01(a)) at a rate per annum equal to the “prime rate” (as published by the Wall Street Journal or any successor thereto) plus five percent (5%). All Unfunded Amounts that are retained by the Company pursuant to this Section 3.07(c)(ii) shall increase the applicable Member’s Capital Account. All interest payments made with respect to any Unfunded Amounts shall promptly be distributed pro rata in accordance with the Class A Units then held by each such Class A Member to each other Member (other than the Member failing to fund such Unfunded Amounts) who has timely made all required Capital Contributions with respect to all Investment Capital Notices (or has repaid all Unfunded Amounts with any required interest) as of the date of such distribution.
(ix)Notwithstanding anything to the contrary herein, any acquisition of Investment Capital Assets by the Company or any of its Subsidiaries shall be funded exclusively through the investment of proceeds raised through the procedure set forth in this Section 3.07(c).
(x)The Company shall distribute any unused proceeds raised pursuant to an Investment Capital Notice, to the extent such proceeds are not invested or committed for investment in accordance with the Investment Capital Notice, to the Members in proportion to the Capital Contributions made by the Members pursuant to such Investment Capital Notice. The distribution of any amount to any Member pursuant to this Section 3.07 will reduce such Member’s Capital Contributions as set forth on Schedule B.
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Section 1.07.Return of Capital; Withdrawals. Except as explicitly provided elsewhere herein, including in Article IV, Article VII and Article X, no Class A Member shall have any right (a) to withdraw as a Class A Member from the Company, (b) to withdraw from the Company all or any part of such Class A Member’s Capital Contributions, (c) to receive property other than cash in return for such Class A Member’s Capital Contributions or (d) to receive any distribution from the Company.
Article IV

DISTRIBUTIONS AND ALLOCATIONS
Section 1.01.Distributions.
(a)Except as otherwise set forth in this Agreement and subject to the rights of any Company Units issued pursuant to and in accordance with Section 3.04, distributions to Members shall be made at such times and in such amounts as the Board determines, in accordance with the following provisions:
(i)any Distributable Cash shall be distributed within 30 days of each calendar quarter-end pro rata to each Class A Member in proportion to the number of Class A Units held by such Class A Member (after taking into account any Unfunded Amounts and interest payable in respect of such Unfunded Amounts pursuant to Section 3.07(c)(ii)); and
(ii)any distributions in respect of the Class B Underlying Assets (including dividends or distributions from such investments, the proceeds of any sale of such investments or any earnings with respect to such investments (including any earnings with respect to any proceeds from such investments, and including any dividends or distributions from Voya IM to the Company in respect of any of the foregoing)) shall be allocated solely to the Class B Member.
(b)All distributions made under this Section 4.01 shall be made to the holders of record of the applicable Company Units entitled to receive such distributions on the record date established by the Board or, in the absence of any such record date, to the holders of the applicable Company Units entitled to receive such distributions on the date of the distribution.
(c)The Company shall cause Voya IM and its applicable Subsidiaries to make distributions such that all Distributable Cash held by Voya IM and its applicable Subsidiaries as of any calendar quarter-end is timely distributed to the Company in order to allow the Company to make distributions of Distributable Cash required by this Agreement.
Section 1.08.Restricted Distributions. Notwithstanding anything to the contrary contained herein, the Company, and the Board on behalf of the Company, shall not make a distribution to any Member on account of its Company Units or redeem any Company Units if such distribution or redemption would violate the Act or other applicable law or any financing agreement to which the Company or any of its Subsidiaries is a party.
Section 1.09.Distributions in Kind.
(d)Upon the dissolution and winding up of the Company, the Company may distribute Marketable Securities or any other Securities or other property as distributions in kind. In the event that a distribution of Marketable Securities or other Securities or property is made, such Securities or property shall be deemed to have been sold at their Fair Market Value and the proceeds of such sale shall be deemed to have been distributed pursuant to Section 4.01.
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Distributions of Marketable Securities and, upon dissolution, winding up and liquidation of the Company, distributions of any other Securities or other property shall be made in proportion to the aggregate amounts that would be distributed to each Member pursuant to Section 4.01, as determined by the Board. If a distribution consists of both cash and Securities or Securities of more than one class (with each lot of Securities with a separate basis or holding period being treated as a separate class of Securities), each Member receiving such distribution shall, to the extent practicable, receive the same proportion of cash and Securities of each class being distributed.
(e)If any Member would otherwise be distributed an amount of any Securities that would cause such Member to own or control in excess of the amount of such Securities that it may lawfully own or control, would subject such Member to any material regulatory filing or would raise material contractual or regulatory issues for such Member, the Company may (i) as agent for such Member, sell all or any portion of such Securities distributable to such Member on behalf of such Member or (ii) deposit such Securities in a trust established by the Company for the benefit and at the expense of such Member (with voting control and other terms that are satisfactory to such Member).
Section 1.08.Withholding and Payments on Behalf of a Member.
(f)Notwithstanding any provision in this Agreement to the contrary, the Company is authorized to take any and all actions that it determines to be necessary or appropriate to ensure that the Company satisfies its withholding and tax payment obligations, including under the Tax Withholding Rules and Partnership Audit Rules. The Company is hereby authorized to withhold from distributions, and to make payments on behalf of a Member or Former Member of all amounts that the Company is required by law to withhold or pay on behalf of such Member or Former Member (including for the purposes of federal, state and local income tax withholding, state and local personal property taxes and state and local unincorporated business taxes, or any similar taxes imposed by any non-U.S. tax authority with respect to amounts distributable to a Member) (as determined in the Board’s sole discretion), and to pay any such amounts to a tax authority (including pursuant to Tax Withholding Rules and Partnership Audit Rules) as the Board determines in its good faith judgment is attributable to a Member’s or Former Member’s interest in the Company for the relevant year. Upon request by a Member or Former Member and to the extent such does not result in adverse consequences to the Company, the Company shall provide commercially reasonable assistance with respect to (i) any claim for benefits by a Member or Former Member under an applicable tax treaty or any exemption from or reduction in, or refunds of, taxes with respect to its investment in the Company (including, but not limited to, (x) filing any forms or applications necessary to obtain any exemptions from or reductions in taxes to the extent the Company is required to make such filings under applicable law, and (y) providing the Member or Former Member with such other information or documentation as is available to the Company using commercially reasonable efforts and is relevant to the Member’s or Former Member’s application for a tax refund) and (ii) any tax returns, forms or other documents that are required to be prepared or filed by a Member or Former Member as a result of its investment in the Company; provided, that the requesting Member or Former Member shall reimburse the Company for any reasonable and documented third-party expenses associated with such assistance. All amounts withheld by the Company from distributions or paid by the Company on behalf of a Member pursuant to this Section 4.04 shall be deemed to have been distributed to the Member otherwise entitled to receive the amount so withheld. In the event that any amounts required to be withheld from distributions to a Member, or payments are required to be made with respect to a Member and such withholdings or payments exceed the amount available for distribution to such Member pursuant to Section 4.01(a), and in all cases where amounts are required to be withheld from or paid with respect to a Former Member (the amount of any such shortfall with respect to each Member, and all payments or withholding with respect to a Former Member, being hereinafter referred to as
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the “Advance Amount”), the Company may take any of the following actions upon obtaining approval of the Board thereto: (i) require that each such Member contribute an amount in cash (or otherwise reimburse such amount in cash) to the Company equal to such Member’s Advance Amount plus a commercially reasonable rate of interest on such Advance Amount and costs and expenses (such payment not to constitute a Capital Contribution hereunder), or (ii) solely in the case of a Member, reduce the amount of any subsequent distributions (or any proceeds such Member may receive under Section 7.03, Section 7.04, Section 7.05 or Section 7.06 which would otherwise have been made to such Member) by the Advance Amount plus a commercially reasonable rate of interest on such Advance Amount. This Section shall apply with respect to all Advance Amounts made on behalf of a Former Member in respect of taxable years during which the Former Member was a Member of the Company. For the avoidance of doubt, any taxes, penalties and interest payable by the Company (including any taxes, penalties or interest payable in relation to the Tax Withholding Rules and Partnership Audit Rules) shall be treated as specifically attributable to the Members and shall be allocated among the Members such that the burden of (or any diminution in distributable proceeds resulting from) any such taxes, penalties or interest is borne by those Members to whom such amounts are specifically attributable (whether as a result of their status, actions, inactions or otherwise), in each case as reasonably determined by the Board; it being understood and agreed that, for purposes of calculating any such tax liability, the Company shall use commercially reasonable efforts to take into account the tax status of each Member.
(g)Promptly upon reasonable request, each Member shall provide the Company with information related to such Member necessary (i) to allow the Company to comply with any tax compliance, tax reporting, tax withholding or tax payment obligations of the Company or (ii) to establish the Company’s legal entitlement to an exemption from, or reduction of, withholding or other taxes or similar payments, including in relation to the Tax Withholding Rules and Partnership Audit Rules. A Member who acquires a Company Unit shall promptly furnish to the Company such information as the Company reasonably requests to enable it to compute the adjustments required by Section 755 of the Code and the Treasury Regulations thereunder. Each Member shall otherwise cooperate with the Company to the extent reasonably requested in connection with any tax structuring, tax audit, tax settlement or similar agreement, tax filings, tax elections, or other interaction with any tax authority of or involving the Company or any of its existing or former investments.
Section 1.01.Tax Distributions with Respect to the Class A Units.
(h)Subject to applicable law or any financing agreement to which the Company or any of its Subsidiaries is a party, and to the extent the Company has cash legally available for such purposes and subject to the maintenance by the Company of appropriate reserves, in each case as determined by the Board, the Board shall cause the Company to make distributions with respect to the Class A Units to the Class A Members, on a timely basis taking into consideration the due dates for estimated tax payments, until each Class A Member has received an amount no greater than such Class A Member’s Tax Amount (as defined below), subject to the following sentence (such distributions, “Tax Distributions”). The Tax Distributions to be made to each Class A Member hereunder shall be reduced by any amounts to be distributed or previously distributed to such Class A Member pursuant to Section 4.01 or this Section 4.05 during such Fiscal Year, which distributions shall be taken into account in determining whether the Class A Member has received an amount no greater than its Tax Amount in the previous sentence. Notwithstanding anything to the contrary herein, no Tax Distributions under this Section 4.05 will be required to be made with respect to any taxable income of the Company attributable to the sale or exchange or other distribution of all or substantially all of the Company’s assets or to the liquidation of the Company. For the avoidance of doubt, calculations of Tax Distributions with respect to the Class A Units will disregard any
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distributions or allocations made with respect to the Class B Underlying Assets. Tax Distributions with respect to the Class B Units will be made at the discretion of the Board.
(i)For each Class A Member, subject to applicable law or any restrictions in any financing agreements to which the Company or any of its Subsidiaries is a party, and to the extent the Company has cash legally available for such purposes and subject to the maintenance by the Company and its Subsidiaries of appropriate reserves, such Class A Member’s “Tax Amount” for a Fiscal Year shall be equal to the product of (i) the Assumed Tax Rate multiplied by (ii) the excess of Profit over Loss allocable to such Member’s Class A Units, or the cumulative excess of Profit over Loss allocable to such Member’s Class A Units, as appropriate, for a Fiscal Year, in each case appropriately taking into account loss carryovers from prior periods (but not taking into account any basis adjustments under Section 743 of the Code) and for the avoidance of doubt, taking into account any adjustments made under Section 704(c) of the Code.
(j)Any distributions made pursuant to this Section 4.05 to a Class A Member shall be treated for purposes of this Agreement as an advance against any future distributions made with respect to such Class A Member’s Class A Units, and shall reduce the amount of any future distributions made with respect to such Class A Member’s Class A Units pursuant to Section 4.01 (and, if applicable, Section 10.03) and the amount of proceeds allocable to such Class A Member upon a Transfer pursuant to Section 7.04 or Section 7.05.
Section 1.09.Offset. Whenever the Company is to distribute or pay any sum to any Member pursuant to any provision of this Agreement, any amounts such Member owes the Company or any of its Subsidiaries or Affiliates (whether pursuant to this Agreement or otherwise), as determined by the Board, may be deducted from such sum before distribution or payment, to the extent permitted by applicable law. All amounts deducted by the Company from amounts distributed or paid by the Company to a Member pursuant to the foregoing sentence shall (i) be deemed to have been distributed or paid to such Member and (ii) reduce any amounts such Member owes the Company or its Subsidiaries or Affiliates (as applicable) under the applicable arrangement between such entity and such Member.
Section 1.010.Calculation of Profits and Losses. The Profits and Losses of the Company shall be determined for each Fiscal Year on a tax accounting basis.
Section 1.011.Allocation of Profits and Losses. Except as otherwise set forth in Section 4.09,
(k)Profits, Losses and any such other items for any taxable year shall be allocated among the Members in the following manner:
(i)all Profits, Losses and any such other items arising with respect to the Class B Underlying Assets shall be allocated solely to the Class B Member; and
(ii)all other Profits, Losses and any such other items shall be allocated pro rata to each Class A Member in proportion to the number of Class A Units held by such Class A Member.
(l)For the avoidance of doubt, allocations of Profits, Losses and any such other items pursuant to Section 4.08(a) are intended to be allocated in a manner such that the Capital Account(s) of each Member is, as nearly as possible, equal (proportionately) to (i) the distributions that would be made if the Company were liquidated under Article X, its affairs wound up and its assets sold for cash equal to such Member’s Gross Asset Value, all Company liabilities were satisfied (limited with respect to each non-recourse liability to the Gross Asset
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Value of the assets securing such liability) and the net assets of the Company were distributed to the Members immediately after making such allocation, minus (ii) such Member’s share of Company Minimum Gain and Member Nonrecourse Debt Minimum Gain, computed immediately prior to the hypothetical sale of assets.
(m)Each Member agrees that it shall not, without the prior written consent of the Board, (i) treat, on its own income tax returns, any item of Profits, Losses and any such other items relating to its interest in the Company in a manner inconsistent with the treatment of such items by the Company as reflected on the Schedule K-1 or other information statement furnished to such Member by the Company or (ii) file any claim for a refund relating to any such item based on, or which would result in, such inconsistent treatment.
Section 1.012.Special Allocations. The following special allocations shall apply:
(n)Limitation on Losses. The Losses allocated pursuant to Section 4.08 hereof shall not exceed the maximum amount of Losses that can be so allocated without causing any Member to have an Adjusted Deficit Capital Account at the end of any Fiscal Year. In the event some but not all of the Members would have deficit Capital Accounts as a consequence of an allocation of Losses pursuant to Section 4.08 hereof, the limitation set forth in this Section 4.09 shall be applied on a Member by Member basis so as to allocate the maximum permitted Losses to each Member under Treasury Regulations Section 1.704-1(b)(2)(ii)(d).
(o)Minimum Gain Chargeback. Except as otherwise provided in Treasury Regulations Section 1.704-2(f), notwithstanding any other provision of this Agreement, if there is a net decrease in Company Minimum Gain during any Fiscal Year, each Member shall be specially allocated items of Profit for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount equal to such Member’s share of the net decrease in Company Minimum Gain, determined in accordance with Treasury Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Treasury Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 4.09(b) is intended to comply with the minimum gain chargeback requirement in Treasury Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.
(p)Member Minimum Gain Chargeback. Except as otherwise provided in Treasury Regulations Section 1.704-2(i)(4), notwithstanding any other provision of this Agreement, if there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt during any Fiscal Year of the Company, each Member who has a share of the Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Treasury Regulations Section 1.704-2(i)(5), shall be specially allocated items of Profit for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount equal to such Member’s share of the net decrease in Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Treasury Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Treasury Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 4.09(c) is intended to comply with the minimum gain chargeback requirement in Treasury Regulations Section 1.704-2(i)(4) and shall be interpreted consistently therewith.
(q)Qualified Income Offset. In the event any Member unexpectedly receives any adjustments, allocations or distributions described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6), items of Profit shall be specially allocated to each such Member in an amount and manner sufficient to eliminate, to the
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extent required by the Treasury Regulations, the deficit Capital Account of such Member as quickly as possible, provided that an allocation pursuant to this Section 4.09(d) shall be made only if and to the extent that such Member would have a deficit Capital Account after all other allocations provided for in this Article IV have been tentatively made as if this Section 4.09(d) were not in this Agreement.
(r)Gross Income Allocation. In the event any Member has a deficit Capital Account at the end of any Fiscal Year, each such Member shall be specially allocated items of Profit in the amount of such deficit as quickly as possible, provided that an allocation pursuant to this Section 4.09(e) shall be made only if and to the extent that such Member would have a deficit Capital Account after all other allocations provided for in this Agreement have been made as if Section 4.09(d) and this Section 4.09(e) were not in this Agreement.
(s)Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the Members in accordance with the general allocation of Losses set forth in Section 4.08.
(t)Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Treasury Regulations Section 1.704-2(i)(1).
(u)Section 754 Adjustment. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to the Sections 734(b) or 743(b) of the Code is required, pursuant to Treasury Regulations Sections 1.704-1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4) , to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of his interest in the Company, the amount of such adjustment to the Capital Accounts shall be treated as an item of Profit (if the adjustment increases the basis of the asset) or Loss (if the adjustment decreases such basis) and such Profit or Loss shall be specially allocated to the Members in accordance with their interests in the Company in the event Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Members to whom such distribution was made in the event Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.
(v)In the event a Member is entitled to a non-pro rata distribution of cash (including upon redemption), items of Profit related to such cash distribution may be specially allocated to the Member receiving such cash.
(w)Organizational Costs. The Board shall make an election under Section 709(b) of the Code to amortize partnership organizational expenses reasonably incurred by the Members with respect to the formation of the Company, and the Members and the Company shall reasonably cooperate with respect to the determination of any such amounts. Such organizational expenses shall be specially allocated to the Member who bore the economic cost of such expense to the maximum extent permitted by applicable law.
Section 1.10.Curative Allocations. The allocations set forth in Section 4.09(b), Section 4.09(c), Section 4.09(d), Section 4.09(e), Section 4.09(f), Section 4.09(g) and Section 4.09(h) (“Regulatory Allocations”) are intended to comply with certain requirements of the Treasury Regulations. The Members intend that, to the extent possible, all Regulatory Allocations shall be offset with either other Regulatory Allocations or with special allocations of other items of Profits, Losses, and any such other items pursuant to Section 4.09.
Section 1.11.Other Allocation Rules. For purposes of determining the Profits, Losses, or any other items allocable to any period within a Fiscal Year, Profits, Losses, and any such other items shall be determined on a daily, monthly, or other basis, as determined by the
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Board, using any permitted method under the Section 706 and the Treasury Regulations thereunder, which takes into account the varying interests of the Members during each Fiscal Year.
(x)The Members are aware of the income tax consequences of the allocations made by this Agreement and hereby agree to be bound by the provisions hereof in reporting their shares of income and loss for income tax purposes.
(y)Excess Nonrecourse Liabilities” of the Company, within the meaning of Treasury Regulations Section 1.752-3(a)(3), shall be allocated among the Members pro rata in proportion to the Company Units held by each Member.
(z)To the extent permitted by Treasury Regulations Section 1.704-2(h)(3), the Board shall endeavor not to treat distributions as having been made from the proceeds of a Nonrecourse Liability or a Member Nonrecourse Debt, but only to the extent that such distributions would not cause or increase a deficit Capital Account for any Member.
(aa)In the event the Company has taxable income that is characterized as ordinary income under the recapture provisions of the Code and the Treasury Regulations thereunder, each Member’s distributive share of taxable gain or loss from the sale of depreciable assets (to the extent possible) shall include a proportionate share of the recapture income equal to the Member’s share of prior cumulative depreciation deductions with respect to the assets that gave rise to the recapture income.
Section 1.12.Tax Allocations; Section 704(c). Except as otherwise provided in this Section 4.12, each item of Profit, Loss, and any such other item of the Company for U.S. federal income tax purposes shall be allocated among the Members in the same manner as such items are allocated for book purposes under this Article IV. In accordance with Section 704(c) of the Code, and the Treasury Regulations thereunder, Profits, Losses, and any such other items with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for U.S. federal income tax purposes and its initial Gross Asset Value (computed in accordance with the definition of Gross Asset Value), using any permissive method allowed under the Code and the Treasury Regulations thereunder (except that, with respect to the Transferred Assets (as such term is defined in the Combination Agreement), the traditional method described in Treasury Regulations Section 1.704-3(b) shall be used) . In the event the Gross Asset Value of any asset is adjusted pursuant to subparagraph (ii) of the definition of Gross Asset Value, subsequent allocations of Profits, Losses, and any such other items with respect to such asset shall take account of any variation between the adjusted basis of such asset for U.S. federal income tax purposes and its Gross Asset Value in the same manner as under Section 704(c) of the Code and the Treasury Regulations thereunder. Any elections or other decisions relating to such allocations shall be made by the Board in any manner that reasonably reflects the purposes and intention of this Agreement provided that any item of Loss attributable to property contributed by a Member shall, to the extent of an amount equal to the excess of (a) the U.S. federal income tax basis of such property at the time of its contribution over (b) the Gross Asset Value of such property at such time, be allocated in its entirety to such contributing Member and the tax basis of such property for the purposes of computing the amounts of all items allocated to any other Members (including a transferee of the contributing Member) shall be equal to its Gross Asset Value upon its contribution to the Company. Allocations pursuant to this Section 4.12 are solely for the purposes of U.S. federal, state and local taxes and shall not effect, or in any way be taken into account in computing any Member’s Capital Account or share of Profits, Losses or any such other items or distributions pursuant to any provisions of this Agreement.
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Section 1.13.Tax Treatment. The Company is intended to be classified as a partnership for U.S. federal, state and local income tax purposes. Neither the Company nor any Member shall take any action or take any position or make any election, in a tax return or otherwise, inconsistent therewith.
Section 1.14.Tax Elections. All elections, decisions and other matters concerning the allocation of Profits, Losses, and any such other items among the Members, and accounting procedures and the calculation of its taxable income or tax loss or other tax items under the Code (or other applicable tax law) or any other matter encompassed by this Article IV, not specifically and expressly provided for by the terms of this Agreement, shall be determined by the Board in good faith and in its reasonable discretion. Such determination made by the Board shall, absent manifest error, be final and conclusive as to all Members. Notwithstanding the foregoing, to the extent that any such election, decision or other matter directly relating to the tax treatment of the Transferred Assets would reasonably be expected to materially, disproportionately and adversely affect the Allianz Member, determined solely with reference to the Allianz Member’s ownership of Class A Units, the Board shall not make any such determination without the consent of the Allianz Member (such consent not to be unreasonably withheld, conditioned or delayed) unless no alternative action exists that would not disproportionately and adversely affect the Voya Member in any material respect or that would be materially more tax-efficient taking into account the impact on the Allianz Member and the Voya Member.
Section 1.15.Survival. The obligations under this Article IV shall survive the Transfer or withdrawal of Company Units, as well as the dissolution, winding up and termination of the Company.
Article V

MANAGEMENT
Section 1.013.Board of Managers.
(a)The Company shall be managed by a Board of Managers (the “Board”). The Board is hereby vested with full authority to manage the Company and exercise all rights on behalf of the Company under, and in accordance with, this Agreement, including without limitation all rights and powers to manage and control the business and affairs of the Company in accordance with this Agreement (including, without limitation, Section 5.02). The Board is further expressly authorized to delegate any or all of its rights and/or powers under this Agreement, including without limitation executing agreements and other binding documents on behalf of the Company, subject to the express terms of this Agreement. No Member or Manager (acting individually) shall have the authority to manage the business and affairs of the Company or contract for or incur on behalf of the Company any debts, liabilities or other obligations or bind the Company, except as expressly permitted by this Agreement. The Board shall meet on at least a quarterly basis (in person or telephonically), unless the Board otherwise agrees, and all Managers shall be entitled to receive copies of all Board presentations (including quarterly presentations) and all other meeting materials made available to the Board in advance.
(b)As of the Closing Date, the Board shall consist of three (3) Persons (each, a “Manager”), each appointed by the Voya Member, and may be increased or decreased by the Board or the Voya Member. Each Manager shall serve from his or her appointment under this Agreement until his or her death, resignation or removal in accordance herewith. Each Manager shall be a “manager” as such term is defined in the Act.
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(c)Subject to Section 5.01(d), each Manager shall hold office until his or her death, disability, retirement, resignation or removal (with or without cause) or until his or her successor shall have been duly elected and qualified. In the event that a vacancy is created at any time by the death, disability, retirement, resignation or removal (with or without cause) of any Manager, such vacancy shall be filled by another individual designated by the Voya Member, as promptly as practicable, and the Company and the Members shall take, at any time and from time to time, any and all actions necessary to accomplish the foregoing. In the event that a vacancy is created at any time by an increase in the size of the Board (including for purposes of adding an independent director), such vacancy shall be filled by an individual designated by the Voya Member.
(d)The Voya Member may remove any Manager, with or without cause, and elect any replacement Manager designated as provided in Section 5.01(c), and the Members shall take, at any time and from time to time, any and all actions necessary to accomplish the foregoing.
(e)As of the date hereof, the Managers shall be Michael Bell, Jane English, and Christine Hurtsellers.
(f)Decisions and actions of the Board shall require approval by a simple majority of Manager votes present at a meeting at which a quorum is present. Each Manager shall be entitled to one vote.
(g)The Company or its Subsidiaries, as the case may be, shall reimburse the Managers for all reasonable out-of-pocket expenses incurred in connection with their respective duties, including attendance at meetings of the Board and any committees thereof, and including without limitation reasonable travel, lodging and meal expenses.
(h)The Company and its Subsidiaries shall obtain customary director and officer indemnity insurance on commercially reasonable terms, which insurance shall cover each officer and Manager.
Section 1.010.Additional Management Provisions; No Member or Manager Fiduciary Duties. Notwithstanding anything to the contrary in this Agreement, any other agreement or at law or in equity, the Members agree that, to the fullest extent permitted by law, the Members in their capacity as such and the Managers shall have no fiduciary or other duty to the Company or the Members, and when a Member in its capacity as such or a Manager takes any action, including voting or giving or withholding its consent under this Agreement, such Person shall not be obligated to consider the interests of the Company or any of its Subsidiaries or any Member and may act exclusively in his, her or its own interest and without regard to the interest of any other Person; provided, however, that this Section 5.02 shall not (a) limit any Person’s obligation to comply with the express terms of this Agreement or any other agreement to which such Person is a party or (b) eliminate the implied contractual covenant of good faith and fair dealing, to the extent such covenants are not waivable under applicable law.
Section 1.011.Quorum; Notice; Written Consent.
(i)The quorum for a meeting of the Board shall require the presence of a majority of the votes of all the Managers then in office. Meetings of the Board may be held at any time at any location specified in the notice thereof in such place within or without the State of Delaware. Reasonable and sufficient notice of each meeting shall be given to each Manager. Managers may participate in a meeting of the Board by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other or by any other means permitted by law. Subject to Section 5.04, the affirmative vote
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of a majority of the votes present at a meeting of the Board at which there is a quorum shall be an act of the Board.
(j)It shall be reasonable and sufficient notice to a Manager to send notice by first-class mail at least seven (7) days, or by overnight delivery, electronic mail, facsimile or hand delivery at least twenty-four (24) hours, before the meeting addressed to such Manager at such Manager’s usual business address. Notice of a meeting need not be given to any Manager if a written waiver of notice, executed by such Manager before or after the meeting, is filed with the records of the meeting, or to any Manager who attends the meeting without protesting prior thereto or at its commencement the lack of notice to such Manager.
(k)Any action required or permitted to be taken at any meeting of the Board may be taken without a meeting without prior notice and without a vote pursuant to a written consent signed by Managers having not less than the minimum number of votes that would be necessary to approve such action at a meeting of the Board at which all Managers then in office were present and voted. Such consent may be executed in any number of counterparts and an e-mail or similar transmission by a Manager or a photographic, photostatic, facsimile, .pdf or similar reproduction of a writing signed by a Manager, shall be regarded as signed by the Manager for purposes of this Section 5.03(c). Such written consent shall be filed with the records of the meetings of the Board and treated for all purposes as the act of the Board.
Section 1.014.Reserved Matters.
(l)For so long as the Allianz Member’s percentage ownership of the Class A Units remains at or above ten percent (10%), the Company and its Subsidiaries shall not, directly or indirectly, and the Board shall not agree to take any of the following actions, without the prior written approval of the Allianz Member:
(i)except for transactions expressly contemplated by this Agreement, enter into any contract or other transaction with the Voya Member or an Affiliate of the Voya Member that is both material to the Company and its Subsidiaries, taken as a whole, and not on an Arm’s-Length Basis (other than (A) arrangements with respect to the payment of salary, bonus or other guaranteed payments in cash or equity of Voya or its Affiliates to employees of the Company or its Subsidiaries, (B) any contract or other transaction providing for rights (including registration rights and anti-dilution rights), benefits or obligations on the part of the Voya Member in its capacity as a Member of the Company that are equivalent and on a proportionate basis to the rights granted to the Allianz Member based on relative ownership of Company Units or (C) pursuant to any existing arrangements between the Voya Member or its Affiliates and the Company or its Subsidiaries (but excluding material amendments or modifications thereto that are not solely renewals or extensions of existing terms); provided, for the avoidance of doubt, that the Company shall not be required to obtain any corporate services independent of those provided by the Voya Member and its Affiliate (including, if applicable, inter-affiliate financing from an Affiliate of the Company at a market interest rate); and
(ii)enter into new lines of business that both (x) materially alter the risk profile, capital requirements and cash flow attributes of the Company and its Subsidiaries, taken as a whole, and (y) are materially different from those that the Company and its Subsidiaries are engaged in as of the Closing Date (it being understood that the provision of investment advisory, broker-dealer and distribution services through new types of products or new distribution channels or in new geographies shall not constitute a “new line of business” for the purposes of this Section 5.04(a)(ii)).
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(m)For so long as the Allianz Member is a Class A Member, the Company and its Subsidiaries shall not, directly or indirectly, and the Board shall not agree to take any of the following actions, without the prior written approval of the Allianz Member:
(i)make any material changes in the accounting policies of the Company (taken together with its Subsidiaries) that would disproportionately and adversely affect the Allianz Member in any material respect, except as may be required under GAAP;
(ii)make any amendment to, or waiver or release under, the operating agreement of any Subsidiary of the Company that would disproportionately and adversely affect the Allianz Member in any material respect;
(iii)commence any liquidation, dissolution or winding-up of the Company or Voya IM or enter into any plan to liquidate, dissolve or wind-up of the Company or Voya IM, except as may be required by operation of law pursuant to Section 10.01(a)(ii);
(iv)repurchase or redeem any equity securities of the Company if such repurchase or redemption would result in the Allianz Member’s interest exceeding 4.9% of any class of voting securities or 24% of any class of equity securities of the Company;
(v)make any change in entity classification of the Company or Voya IM for U.S. federal income tax purposes that would disproportionately and adversely affect the Allianz Member in any material respect, except as may be required by applicable law; and
(vi)declare in respect of the Class A Units any non-pro rata dividends or other distributions by the Company or any of its Subsidiaries, other than distributions solely among Subsidiaries of the Company or any such Subsidiaries making any non-pro rata repurchases or redemptions of equity securities of the Company from any Member, except as expressly provided for in Article IV.
(n)For so long as the Allianz Member’s percentage ownership of the Class A Units remains at or above three percent (3%), the Company and its Subsidiaries shall not, directly or indirectly, and the Board shall not agree to, without the prior written approval of the Allianz Member, take any action in contravention of Schedule E.
(o)This Section 5.04 shall be subject to Section 4.05, Section 7.04, Section 13.01 and Section 13.02. In connection with an IPO, all of the provisions of this Section 5.04 shall automatically terminate and be of no further force or effect, effective as of immediately prior to the consummation of such IPO.
Article VI

OFFICERS
Section 1.01.Designation; Term; Qualifications. The Board may, from time to time, appoint one or more Persons to be officers of the Company. Any officer so appointed shall have such authority and perform such duties as the Board may, from time to time, delegate to him or her. Unless the Board decides otherwise, if the title is one commonly used for officers of a business corporation formed under the DGCL, the assignment of such title shall constitute the delegation to such officer of the authority and duties that are normally associated with that office, subject to any restrictions on such authority imposed by the Board and this Agreement (including
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Article V). Any number of offices may be held by the same Person. Without regard to the general delegation to the officers as set forth above, each officer who holds the title of “President”, “Senior Vice President” or “Vice President”, acting alone, shall have the authority to make, enter into and perform all contracts, agreements, reports and undertakings of the Company that have been authorized by the Board. Subject to Article V, in each case, the execution and delivery of such contracts, agreements or other documents, or the taking of any actions in connection therewith, shall be conclusive evidence of the Company’s approval thereof, and no further approval by the Company shall be required. Each officer shall hold office for the term for which such officer is appointed and until his or her successor shall be duly appointed and shall qualify, or until his or her death, resignation or removal as provided in this Agreement. Notwithstanding anything to the contrary in this Agreement, any other agreement or at law or in equity, the Members agree that, to the fullest extent permitted by law, the Member-designated officers of the Company (if any) shall have no fiduciary or other duty to the Company or the Members; provided, however, that this Section 6.01 shall not (i) limit any Person’s obligation to comply with the express terms of this Agreement or any other agreement to which such Person is a party or (ii) eliminate the implied contractual covenant of good faith and fair dealing, to the extent such covenants are not waivable under applicable law. As of the date hereof, the individuals set forth on Schedule G shall be the officers of the Company.
Section 1.02.Removal and Resignation. The Board may remove any officer of the Company as such, with or without cause, at any time. Any officer of the Company may resign as such at any time upon written notice to the Company. Such resignation shall be made in writing and shall take effect at the time specified therein or, if no time is specified therein, at the time of its receipt by the Company. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation.
Section 1.03.Vacancies. Any vacancy occurring in any office of the Company may be filled by Board approval in accordance with Section 6.01.
Article VII

TRANSFER OF COMPANY UNITS
Section 1.04.Limitations on Transfer.
(a)No Member may Transfer any of its Company Units except (i) by the Voya Member in connection with a Change of Control of Voya, (ii) at any time, to a Permitted Transferee, (iii) at any time, in connection with an IPO, (iv) after the three (3) year anniversary of the date hereof, in a Transfer of Company Units held by such Member to any Person, subject to compliance with the terms of this Agreement, including Section 7.02, (v) pursuant to the exercise by the Voya Member of the Call Right pursuant to Section 7.05, (vi) pursuant to Section 7.04, (vii) in a Permitted Voya Transfer or (viii) following a Material Default by the other Member under this Agreement, which Material Default remains uncured after thirty (30) days. All Transfers shall be made in compliance with the Securities Act, applicable federal and state laws, including the securities laws and regulations of any applicable jurisdiction.
(b)Notwithstanding any provisions of this Article VII to the contrary, no Member shall be entitled to Transfer any Company Units or any other rights under this Agreement (including to a Permitted Transferee) at any time unless the Board is reasonably satisfied that such Transfer would not:
(i)violate the Securities Act or any state (or other jurisdiction) securities or “Blue Sky” laws applicable to the Company or the Company Units;
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(ii)be a non-exempt “prohibited transaction” under ERISA or the Code or cause all or any portion of the assets of the Company to constitute “plan assets” under ERISA or Section 4975 of the Code; or
(iii)cause the Company to become a “publicly traded partnership”, as such term is defined in Sections 469(k)(2) or 7704(b) of the Code.
(a)The limitations on Transfers of Company Units set forth in this Article VII are in addition to any restrictions imposed by applicable law. Any purported Transfer of Company Units other than in accordance with this Agreement shall be null and void, and the Company shall refuse to recognize any such Transfer for any purpose and shall not reflect in this Agreement or otherwise in its records any change in record ownership of Company Units pursuant to any such Transfer. For the avoidance of doubt, it shall be a condition precedent to any Transfer of any Company Units (including pursuant to Section 7.03) that the Transferee shall agree in writing with the Company prior to the Transfer to be bound by the terms of this Agreement as if it had been an original signatory hereto.
(b)Subject to Section 7.03(e) and Section 7.04(i) hereof, any Member that proposes to Transfer Company Units in accordance with the terms and conditions hereof shall be responsible for any expenses incurred by the Company in connection with such Transfer.
(c)The Company shall, and the Board and any officer of the Company is authorized to, amend Schedule A and/or Schedule B to reflect the Transfer of any Company Units and the admission of any additional Members in accordance with this Article VII.
(d)Any Member seeking to Transfer Company Units agrees that (i) it and its potential transferee will be jointly and severally liable for all reasonable expenses, including attorneys’ fees or taxes (including under the Tax Withholding Rules and Partnership Audit Rules), incurred by the Company in connection with such Transfer or potential Transfer (including any unconsummated transfer), prior to the consummation of such Transfer, and if such expenses are not reimbursed promptly upon the Board’s request they may be withheld from amounts otherwise distributable to such Member and/or its transferee.
(e)Notwithstanding anything to the contrary in this Agreement, each transferring Member and assignee shall provide such forms, documentation, proof of payment or other certifications as reasonably required by the Board to determine that the transferring Member and the assignee have complied with Tax Withholding Rules (ignoring for this purpose Section 1446(f)(4) of the Code), and any similar provisions of state, local or non-U.S. law. Each of the transferring Member and the assignee shall be jointly and severally liable and shall pay and/or reimburse and hold harmless the Company for any taxes imposed under the Tax Withholding Rules (or any similar provisions of state, local or non-U.S. law) as a result of any Transfer with respect to which such Member or assignee was a party, together with any related costs and expenses. The obligations under this provision shall survive the Transfer or withdrawal of Company Units, as well as the dissolution, winding up and termination of the Company.
(f)Except in connection with a Transfer of Company Units (i) to a Permitted Transferee, (ii) in connection with an IPO, (iii) in the case of the Voya Member, in a Permitted Voya Transfer or (iv) to the extent permitted under Section 7.03, no Member shall be permitted to Transfer less than all of its Class A Units in connection with any Transfer of Class A Units.
(g)The provisions of this Section 7.01 shall not apply to, and shall in no way limit, a Change of Control of Voya.
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Section 1.05.Right of First Offer. No Member shall Transfer any of its Company Units without first complying with the requirements of this Section 7.02 (any Transfer of Company Units subject to this Section 7.02, as limited by the immediately following proviso, a “ROFO Transfer”); provided that this Section 7.02 shall not apply to Transfers (v) that are Permitted Voya Transfers or are in connection with a Change of Control of Voya, (w) to a Permitted Transferee, (x) by the Allianz Member pursuant to Section 7.03 or Section 7.05, (y) by a Member pursuant to Section 7.04 or (z) in connection with an IPO.
(a)ROFO Initiator Notice. Prior to entering into any agreement with respect to any ROFO Transfer by a Member (the “ROFO Initiator”), if at such time the other Member (the “ROFO Receiving Member”) is (i) an Information Member and (ii) permitted to act as an Investment Adviser to a Registered Investment Company, as those terms are defined for purposes of Section 9(a) of the Investment Company Act (including through the receipt of an executed waiver by the U.S. Securities and Exchange Commission), the ROFO Initiator shall deliver to such ROFO Receiving Member written notice (the “ROFO Initiator Notice”) stating such ROFO Initiator’s intention to effect a ROFO Transfer, which shall be all of the ROFO Initiator’s Company Units (the “ROFO Units”). For the avoidance of doubt, nothing in this Section 7.02(a) shall prohibit the Company or the ROFO Initiator from preparing for a potential Transfer, including engaging advisors, preparing diligence and marketing materials, entering into confidentiality agreements, or entering into discussions with or providing confidential information to potential purchasers, prior to delivering a ROFO Initiator Notice.
(b)ROFO Procedures. Within forty five (45) days after the date on which it receives the ROFO Initiator Notice, the ROFO Receiving Member may deliver or cause to be delivered a written offer (a “ROFO Offer” and such forty five (45) day period, the “ROFO Notice Period”) to the ROFO Initiator stating its bona fide intention to purchase such ROFO Units and specifying the proposed material terms and conditions, including the proposed price (which price must be in cash), pursuant to which such ROFO Receiving Member proposes to purchase all, but not less than all, of the ROFO Units. The ROFO Offer shall constitute such ROFO Receiving Member’s offer to purchase the ROFO Units from the ROFO Initiator, which offer shall be irrevocable for a period of 30 days after the date on which the ROFO Initiator receives the ROFO Offer (as such period may be further extended by mutual agreement of the ROFO Initiator and the ROFO Receiving Member, the “ROFO Offer Review Period”).
(c)Upon the earlier to occur of (i) the expiration of the ROFO Offer Review Period (after taking into account any extensions thereof mutually agreed to between the ROFO Initiator and any ROFO Receiving Member) without the parties having entered into a mutually agreeable definitive agreement regarding the sale of the ROFO Units and (ii) the expiration of the ROFO Notice Period without the ROFO Receiving Member sending a ROFO Offer within such period (such earlier date, the “ROFO Termination Date”), the ROFO Initiator may Transfer the ROFO Units to a third party purchaser; provided that the terms and conditions of the Transfer shall not be, in the aggregate, materially more favorable to the proposed purchaser than the terms specified in such ROFO Offer, as determined in the reasonable judgment of the ROFO Initiator. For the avoidance of doubt, if at the time of such Transfer, a ROFO Receiving Member would not be permitted to act as an Investment Adviser to a Registered Investment Company, then the ROFO Initiator may Transfer Company Units without delivery of a ROFO Initiator Notice to such ROFO Receiving Member.
(d)Non-Consummation. If the ROFO Initiator has not entered into the definitive agreement or agreements with respect to a Transfer of the ROFO Units in accordance with Section 7.02(c) within one hundred eighty (180) days following the ROFO Termination Date, then the provisions of this Section 7.02 shall again apply, and such ROFO Initiator shall not Transfer or offer to Transfer such Company Units without again complying with this Section 7.02.
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(e)Termination of ROFO. The rights set forth in this Section 7.02 shall terminate upon the consummation of an IPO.
Section 1.06.Tag Along Rights.
(h)Subject to Section 7.03(f), in the event that (i) the Voya Member proposes to Transfer its Class A Units to a third party that is not Affiliated with the Voya Member (a “Tag-Along Transfer”), and (ii) the Voya Member does not exercise its drag-along rights in accordance with the terms, conditions and procedures set forth in Section 7.04, then the Allianz Member may exercise tag-along rights with respect to the Class A Units that the Voya Member proposes to transfer in accordance with the terms, conditions and procedures set forth in this Section 7.03.
(i)At least fifteen (15) days prior to the consummation of a Tag-Along Transfer, the Voya Member shall promptly give written notice (a “Tag-Along Notice”) of any Tag-Along Transfer to the Allianz Member pursuant to Section 7.03(a). The Tag-Along Notice shall state Voya Member’s intention to effect a Tag-Along Transfer, which shall be all of the Voya Member’s Class A Units, the name and address of the Transferee, the proposed date of the Tag-Along Transfer, the proposed amount and form of consideration for each such Class A Unit (provided, that if the consideration includes cash and non-cash consideration, each element of such consideration (e.g., cash, equity or deferred consideration) shall be provided pro rata to each Class A Member in proportion to the number of Class A Units held by such Class A Member; provided, further, that any registration rights or rights related to transferability granted to the Voya Member in connection with any such non-cash consideration will also be granted to the Allianz Member (on a proportionate basis taking into account the relative amounts of Class A Units being Transferred by the Voya Member and the Allianz Member)), including a description of any non-cash consideration sufficiently detailed to permit the determination of the Fair Market Value thereof, and any other material terms and conditions of the Tag-Along Transfer. The Allianz Member shall have a period of fifteen (15) days (the “Response Period”) from the date of the Tag-Along Notice within which to notify the Voya Member whether the Allianz Member will elect to sell its Class A Units in connection with such Tag-Along Transfer. In order to exercise the tag rights set forth in this Section 7.03, the Allianz Member must deliver an irrevocable written notice to the Voya Member prior to the expiration of the Response Period stating that Allianz Member desires to sell its Class A Units in the Tag-Along Transfer (a “Response Notice”). In the event the Allianz Member fails to deliver a valid Response Notice prior to the expiration of the Response Period, the Allianz Member shall cease to have any rights under this Section 7.03 with respect to such Tag-Along Transfer. If the Voya Member is unable to cause the Transferee to purchase all the Class A Units proposed to be Transferred by the Voya Member and the Allianz Member in accordance with this Agreement, then the number of Voya Member’s Class A Units, and Allianz Member’s Class A Units that each such Member is permitted to sell in such Tag-Along Transfer shall be reduced pro rata based on the number of Class A Units held by such Member relative to the number of Class A Units held by all Members participating in such Tag-Along Transfer. The Voya Member shall have a period of ninety (90) days following the expiration of the Response Period to sell all the Class A Units agreed to be purchased by the Transferee; provided, however, that such ninety (90) day period shall be extended by the time necessary to obtain any required approvals of any governmental authority under any applicable laws. The sale of all Class A Units being sold by the Allianz Member pursuant to a particular Tag-Along Transfer shall be consummated simultaneously with the Tag-Along Transfer.
(j)In the event the Allianz Member exercises its tag-along rights pursuant to this Section 7.03, the Allianz Member shall (i) make the same representations, warranties, covenants, indemnities and agreements to the Transferee as made by the Voya Member in connection with the Tag-Along Transfer and (ii) otherwise agree to the same terms and
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conditions to the Transfer as the Voya Member agrees with respect to its sale of its Class A Units, but subject to the limitation on any Restrictive Covenants that would apply in the case of a Drag-Along Transfer. Notwithstanding the foregoing, however, all such representations, warranties, covenants, indemnities and agreements shall be made by the Voya Member and the Allianz Member severally and not jointly, and any liability under any such indemnities or liability for breach of any such representations and warranties or agreement shall be borne by the Voya Member and the Allianz Member severally and not jointly. Liability under any indemnities related to the Company or its Subsidiaries shall be allocated among the Voya Member and the Allianz Member pro rata based on the relative number of Class A Units Transferred by each of the Voya Member and the Allianz Member, and the aggregate amount of liability for each of the Voya Member and the Allianz Member shall not exceed the U.S. dollar value of the total consideration to be paid by the Transferee to such Member, respectively. Any Transfer of Class A Units by the Allianz Member pursuant to the terms hereof shall be at the price of the Class A Units specified in the Tag-Along Notice.
(k)The Voya Member shall have the right in connection with any Tag-Along Transfer (or in connection with the investigation or consideration of any potential Tag-Along Transfer) to require the Board and the Company to cooperate fully with potential acquirors in such prospective Tag-Along Transfer by taking all customary and other actions reasonably requested by the Voya Member, as applicable, or such potential acquirors, including making the Company’s properties, books and records, and other assets reasonably available for inspection by such potential acquirors, establishing a physical or electronic data room including materials customarily made available to potential acquirors in connection with such processes and making its employees reasonably available for presentations, interviews and other diligence activities, in each case subject to reasonable and customary confidentiality provisions. The Board and the Company shall provide assistance with respect to the actions described in this Section 7.03(d) as reasonably requested.
(l)All costs and expenses of the Voya Member and the Allianz Member in connection with the Tag-Along Transfer shall be borne by the Voya Member and the Allianz Member pro rata based on the number of Class A Units Transferred by each such Member relative to the number of Class A Units Transferred by all Members participating in such Tag-Along Transfer.
(m)The provisions of this Section 7.03 shall not apply in the event of (i) Transfers of Class A Units by a the Voya Member or the Allianz Member in connection with the exercise of drag-along rights set forth in Section 7.04, (ii) Transfers of Class A Units pursuant to the IPO, (iii) Transfers to Permitted Transferees, (iv) Permitted Voya Transfers or (v) Transfers of the Class A Units of the Voya Member in connection with a Change of Control of Voya, and none of the Transfers described in the foregoing clauses (i) through (v) shall be deemed to be a Tag-Along Transfer.
(n)Upon consummation of the IPO, the provisions of this Section 7.03 shall automatically terminate and be of no further force or effect.
Section 1.07.Drag-Along Rights.
(a)Subject to compliance with Section 7.02, in connection with any Sale of the Company by the Voya Member, the Voya Member may (but shall not be required to) exercise drag-along rights in accordance with the terms, conditions and procedures set forth in this Section 7.04 (the “Drag-Along Transfer”).
(b)In the event the Voya Member elects to exercise its drag-along rights pursuant to this Section 7.04, the Voya Member shall give written notice to the Allianz Member
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not later than thirty (30) Days prior to the consummation of the Drag-Along Transfer of such election by the Voya Member, setting forth the name and address of the Transferee, the total number of Class A Units proposed to be Transferred by the Voya Member, the proposed amount and form of consideration for such Class A Units (provided, that if the consideration includes cash and non-cash consideration, each element of such consideration (e.g., cash, equity or deferred consideration) shall be provided pro rata in respect of each Class A Unit; provided, further, that any registration rights or rights related to transferability granted to the Voya Member in connection with any such non-cash consideration will also be granted to the Allianz Member (on a proportionate basis taking into account the relative amounts of Class A Units being Transferred by the Voya Member and the Allianz Member)), including a description of any non-cash consideration sufficiently detailed to permit the determination of the Fair Market Value thereof, and all other material terms and conditions of the Drag-Along Transfer, including the proposed definitive agreement for the proposed Sale of the Company. The Voya Member shall also deliver or cause to be delivered to the Allianz Member copies of all transaction document related to the proposed Sale promptly as the same become available. Upon the consummation of the Drag-Along Transfer, each holder of Class A Units participating in the Drag-Along Transfer will receive the same portion of the aggregate consideration as other holders of Class A Units of the same type or class participating in the Drag-Along Transfer, as determined in accordance with Section 10.03 (other than any holder of Class A Units who receives consideration in the form of equity securities in connection with such holder’s election to rollover all or any portion of such holder’s Class A Units).
(c)The Allianz Member shall agree to the same terms and conditions to the Transfer as the Voya Member. Notwithstanding the foregoing:
(i)The Allianz Member must make the same fundamental representations and warranties, and indemnities with respect thereto, as made by the Voya Member in connection with the Drag-Along Transfer;
(ii)The Allianz Member shall not be required to make any other representations, including with respect to the Company, other than any such representations which are subject to recourse (including in respect of indemnification) on terms that are pro rata with the Voya Member; provided that, if required to make any such representations, the Allianz Member shall be given a reasonable opportunity to review a copy of any diligence report (if any) available to the Company or its Affiliates and any disclosures or qualifications with respect to such representations, which disclosures or qualifications shall be included in the definitive documentation of such Transfer to the extent reasonably satisfactory to the Voya Member;
(iii)If requested by the Voya Member, the Allianz Member shall agree to employee non-solicitation covenants regarding solicitation of employees of the Company and its Subsidiaries (“Restrictive Covenants”), in each case on reasonable terms for the type of transaction contemplated by the proposed Transfer and solely if such Restrictive Covenant is also agreed to by the Voya Member and is not disproportionately burdensome to the Allianz Member, provided, however, in no event shall the Allianz Member be obligated to agree to any Restrictive Covenant having a duration of longer than two (2) years; and
(iv)All such representations, warranties, covenants, indemnities and agreements shall be made by the Voya Member and the Allianz Member severally and not jointly, and any liability under any such indemnities or liability for breach of any such representations, warranties, covenants or agreements shall be borne by the Voya Member and the Allianz Member severally and not jointly (except to the extent that funds may be paid out of an escrow (in an amount agreed by the Allianz Member in writing as not
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being considered Distributable Cash) established to cover breaches of representations, warranties, covenants or agreements of the Company and its Subsidiaries as well as breaches by any Member of any identical representations, warranties, covenants or agreements provided by all Members). Liability under any such indemnities or liability for breach of any such representations, warranties, covenants or agreements related to the Company or its Subsidiaries shall be allocated between the Voya Member and the Allianz Member pro rata based on the relative number of Class A Units to be Transferred by each of them, and the aggregate amount of liability of the Voya Member and the Allianz Member to the Transferee shall not exceed the U.S. dollar value of the total consideration actually paid by the Transferee to the Voya Member and the Allianz Member, respectively.
(o)In the event that any Transfer pursuant to this Section 7.04 is structured as a merger, consolidation, or similar business combination, the Allianz Member must further agree, to the extent required or requested, to vote in favor of the transaction. The Allianz Member hereby irrevocably waives any dissenters, appraisal or other similar rights the Allianz Member may have under applicable law in connection with a Drag-Along Transfer.
(p)Any consideration placed in escrow or held back shall be allocated among holders of Company Units such that if the applicable buyer in the Drag-Along Transfer ultimately is entitled to some or all of such escrowed or held-back amounts, then the net ultimate proceeds received by such holders shall still comply with the intent of Section 7.04(b) as if the ultimate resolution of such escrow or holdback had been known at the closing of the Drag-Along Transfer.
(q)For purposes of this Section 7.04 and in order to secure the performance of the Allianz Member’s obligations under this Section 7.04, the Allianz Member hereby irrevocably appoints the Voya Member as its attorney-in-fact and proxy of the Allianz Member (with full power of substitution) to vote, provide a written consent or take any other action with respect to its Company Units as described in this paragraph if, and only in the event that, the Allianz Member fails to transfer, vote or provide a written consent, or take any other actions with respect to its Company Units in accordance with the terms of this Section 7.04 within two (2) Business Days of a request for such action. Upon such failure, the Voya Member shall have and is hereby irrevocably granted a proxy to vote or provide a written consent with respect to the Allianz Member’s Company Units for the purposes of taking the actions required by this Section 7.04. The Allianz Member intends this proxy to be, and it shall be, irrevocable and coupled with an interest, and the Allianz Member shall take such further action and execute such other instruments as may be necessary to effectuate the intent of this proxy.
(r)If the Allianz Member fails to Transfer its Company Units to be sold pursuant to this Section 7.04 to the buyer in the Drag-Along Transfer (the “Drag-Along Buyer”), the Voya Member may, at its option, in addition to all other remedies available to it, deposit the purchase price (including any promissory note constituting all or any portion thereof) for such Company Units with any national bank or trust company (the “Escrow Agent”), and thereupon all of the Allianz Member’s rights in and to such Company Units shall terminate. Thereafter, upon delivery to the Voya Member by the Allianz Member of appropriate documentation evidencing the Transfer of such Company Units to the Drag-Along Buyer, the Voya Member shall instruct the Escrow Agent to deliver the purchase price (without any interest from the date of the closing to the date of such delivery, any such interest to accrue to the Company), but subject to any amount placed in escrow or held back or otherwise returned to the acquiror to the Allianz Member.
(s)The Allianz Member agrees to cooperate with the Voya Member, to take any and all actions reasonably required to be taken in connection with such Drag-Along Transfer,
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and to execute any and all agreements and instruments, including, without limitation, agreements conveying their respective Company Units to the Drag-Along Buyer, subject to Section 7.04(c).
(t)All reasonable costs and expenses incurred by the Voya Member and the Company in connection with any proposed Drag-Along Transfer (whether or not consummated), including all attorneys’ fees and charges, all accounting fees and charges and all finder, brokerage or investment banking fees, charges or commissions, shall be paid by the Company.
(u)The Voya Member shall have the right in connection with a prospective bona-fide transaction with a third party counterparty or counterparties (or in connection with a customary “auction” process or other due diligence investigation or consideration of such prospective transaction by one or more prospective counterparties) or in connection with a prospective Change of Control of Voya to require the Company to cooperate fully with potential acquirors in such prospective transaction by taking all customary and other actions reasonably requested by such holders or such potential acquirors, including making the Company’s properties, books and records, and other assets reasonably available for inspection by such potential acquirors, establishing a physical or electronic data room including materials customarily made available to potential acquirors in connection with such processes and making its officers and employees, reasonably available for presentations, interviews and other diligence activities, in each case subject to reasonable and customary confidentiality provisions. In addition, after reasonable consultation with the Allianz Member, the Voya Member shall be entitled to take all steps reasonably necessary to carry out an auction of the Company, including selecting an investment bank, providing confidential information (pursuant to confidentiality agreements), selecting the winning bidder and negotiating the requisite documentation. The Company shall provide assistance with respect to the actions described in this Section 7.04(j) as reasonably requested.
(v)Upon consummation of the IPO, the provisions of this Section 7.04 shall automatically terminate and be of no further force or effect.
Section 1.08.Call and Put Rights.
(f)Right to Purchase. In the event (x) of a Change of Control of Voya or Allianz or (y) that the Adjusted Company Consideration Percentage (as defined in Annex A to the Combination Agreement) is less than ten percent (10%) and the Allianz Member’s percentage ownership of the Class A Units remains below ten percent (10%) for twelve (12) months following the True-Up Date, the Voya Member shall have the option and right (the “Call Right”), but not the obligation, to cause the Allianz Member to sell all Company Units held by the Allianz Member to the Voya Member or its designee in accordance with this Section 7.05.
(g)Call Right Procedures; Purchase Price. If the Voya Member, acting in its sole discretion, desires to exercise the Call Right, it shall deliver to the Allianz Member a written notice of its election (the “Call Exercise Notice”) not later than thirty (30) days following (x) the consummation of such Change of Control or (y) the first (1st) anniversary of the True-Up Date, in the case of an exercise of the Call Right pursuant to clause (y) of Section 7.05(a) (such thirty (30)-day period, the “Call Exercise Period”), which Call Exercise Notice shall include the Voya Member’s calculation of the Call Purchase Price.
(h)Call Closing.
(i)The closing of the purchase pursuant to the Call Right (the “Call Closing”) shall take place no later than ninety (90) days after delivery of the Call Exercise Notice; provided, however, that such ninety (90) day period shall be extended by the time necessary to complete the process of calculating the Fair Market Value of the
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Company Units held by the Allianz Member and obtain any required approvals of any third parties or governmental authorities under any applicable laws using good faith efforts. The Voya Member shall give the Allianz Member at least five (5) days’ written notice of the date of closing (the “Call Closing Date”).
(ii)At the Call Closing, the Allianz Member shall represent and warrant to the Voya Member that (1) it has full right, title, and interest in and to all of the Company Units held by the Allianz Member, (2) it has all the necessary power and authority and has taken all necessary action to sell such Company Units as contemplated by this Section 7.05, and (3) such Company Units are free and clear of any and all liens, pledges, security interests, options, rights of first offer, encumbrances, or other restrictions or limitations of any nature whatsoever, subject to customary exceptions, other than those arising as a result of or under the terms of this Agreement, provided that the Allianz Member shall not be required to make any representations or warranties regarding the Company and shall not be subject to any indemnification obligations in respect of representations and warranties regarding the Company.
(iii)The Voya Member or its designee shall pay the Call Purchase Price to the Allianz Member either (1) by wire transfer of immediately available funds or (2) in the form of the consideration provided to the shareholders of Voya in connection with such Change of Control (if applicable).
(iv)The Allianz Member shall take all actions as may be reasonably necessary to consummate the sale contemplated by the Call Right, including, without limitation, entering into agreements and delivering certificates and instruments and consents as may be deemed necessary or appropriate to consummate the sale.
(w)Put Right. In the event that the Voya Member does not exercise the Call Right prior to the expiration of the Call Exercise Period with respect to a Change of Control of the Voya Member, and solely in the event that the proposed acquiror in such Change of Control of the Voya Member is a Restricted Competitor, the Allianz Member shall have the option and right (the “Put Right”), but not the obligation, to cause the Voya Member or its designee to purchase all Company Units held by the Allianz Member for Fair Market Value (the “Put Purchase Price”) in accordance with this Section 7.05.
(x)Put Right Procedures. If the Allianz Member is entitled to, and desires to, exercise the Put Right, it shall deliver to the Voya Member a written notice of its election (the “Put Exercise Notice”) not later than thirty (30) Days following the expiration of the Call Exercise Period.
(y)Put Closing.
(v)The closing of the purchase pursuant to the Put Right (the “Put Closing”) shall take place no later than ninety (90) days after delivery of the Put Exercise Notice; provided, however, that such ninety (90) day period shall be extended by the time necessary to complete the process of calculating the Fair Market Value of the Company Units held by the Allianz Member and to obtain any required approvals of any third parties or governmental authorities under any applicable laws (the “Put Closing Date”).
(vi)At the Put Closing, the Allianz Member shall represent and warrant to the Voya Member or its designee that (1) it has full right, title, and interest in and to all of the Company Units held by the Allianz Member, (2) it has all the necessary power and authority and has taken all necessary action to sell such Company Units as contemplated by this Section 7.05, and (3) such Company Units are free and clear of any
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and all liens, pledges, security interests, options, rights of first offer, encumbrances, or other restrictions or limitations of any nature whatsoever, subject to customary exceptions and, other than those arising as a result of or under the terms of this Agreement, provided that the Allianz Member shall not be required to make any representations or warranties regarding the Company and shall not be subject to any indemnification obligations in respect of representations and warranties regarding the Company.
(vii)The Voya Member or its designee shall pay the Put Purchase Price to the Allianz Member either (1) by wire transfer of immediately available funds or (2) in the form of the consideration provided to the shareholders of Voya in connection with such Change of Control.
(viii)The Allianz Member shall take all actions as may be reasonably necessary to consummate the sale contemplated by the Put Right, including, without limitation, entering into agreements and delivering certificates and instruments and consents as may be deemed necessary or appropriate to consummate the sale.
(a)For purposes of this Section 7.05 and in order to secure the performance of the Allianz Member’s obligations under this Section 7.05, the Allianz Member hereby irrevocably appoints the Voya Member as its attorney-in-fact and proxy of the Allianz Member (with full power of substitution) to vote, provide a written consent or take any other action with respect to its Company Units as described in this paragraph if, and only in the event that, the Allianz Member fails to transfer or take any other actions with respect to its Company Units in accordance with the terms of this Section 7.05 within two (2) Business Days of a request for such action. Upon such failure, the Voya Member shall have and is hereby irrevocably granted a proxy to vote or provide a written consent with respect to the Allianz Member’s Company Units for the purposes of taking the actions required by this Section 7.05. The Allianz Member intends this proxy to be, and it shall be, irrevocable and coupled with an interest, and the Allianz Member shall take such further action and execute such other instruments as may be necessary to effectuate the intent of this proxy.
(b)If the Allianz Member fails to Transfer its Company Units to be sold pursuant to a Call Right or Put Right as set forth in this Section 7.05, the Voya Member or its designee may, at its option, in addition to all other remedies available to it, deposit the purchase price (including any promissory note constituting all or any portion thereof) for such Company Units with the Escrow Agent, and thereupon all of the Allianz Member’s rights in and to such Company Units shall terminate. Thereafter, upon delivery to the Voya Member or its designee by the Allianz Member of appropriate documentation evidencing the Transfer of such Company Units pursuant to the Call Right or Put Right, as applicable, the Voya Member shall instruct the Escrow Agent to deliver the purchase price (without any interest from the date of the closing to the date of such delivery, any such interest to accrue to the Company).
(c)Distribution Agreements. For the avoidance of doubt, any determination as to whether (i) the Call Right has been exercised for purposes of Section 8.2(a) or Section 8.2(b) of either of the Core Distribution Agreement or the Cross Distribution Agreement, (ii) the acquiror in a Change of Control of Voya or a Tag-Along Transfer by the Voya Member or any of its Affiliates is a Restricted Competitor for purposes of Section 8.2(b) or Section 8.2(c) of the Core Distribution Agreement or Section 8.2(b) of the Cross Distribution Agreement, (iii) a Tag-Along Transfer shall have occurred where the Voya Member or any of its Affiliates is a selling party for purposes of Section 8.2(c) of the Cross Distribution Agreement or (iv) a Transfer (other than to any Permitted Transferee) shall have occurred where either of the Allianz Member or the Voya Member or any of their Affiliates is the selling party for purposes of Section 8.2(c) or Section 8.2(d) of the Cross Distribution Agreement, shall be determined solely in accordance with the terms of this Agreement, and, notwithstanding anything to the contrary in the Core
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Distribution Agreement or the Cross Distribution Agreement, each Member shall not, and shall not permit any of its Affiliates to, terminate the Core Distribution Agreement or the Cross Distribution Agreement pursuant to any of the foregoing sections of the Core Distribution Agreement or the Cross Distribution Agreement except to the extent the applicable determination has been validly made in accordance with the terms of this Agreement.
(d)Upon consummation of the IPO, the provisions of this Section 7.05 shall automatically terminate and be of no further force or effect.
Section 1.09.Rights and Obligations of Transferees. Any Transferee of Company Units (including Permitted Transferees of any Member) shall be required, at the time of and as a condition to such Transfer, to become a party to this Agreement by executing and delivering such documents as may be necessary, in the reasonable opinion of the Board, to make such Person a party hereto, whereupon such Transferee will be treated as a Member for all purposes of this Agreement; provided that, following the IPO or a Change of Control of Voya, no Transferee of Company Units or equity securities of the Registering Entity, as the case may be, shall be required to become a party to this Agreement or to any shareholders agreement entered into pursuant or Section 13.04 if such Transferee acquired such Company Units or equity securities in a Public Sale. Notwithstanding the preceding sentence, but subject to the last sentence of Section 7.01(d), unless approved by the Board, no Transferee (other than a Permitted Transferee) shall acquire any of the rights provided in Article V hereof by reason of any Transfer. A Transferee of Company Units that complies with the provisions of this Section 7.06 shall be admitted by the Company as a Member hereunder so long as such Transfer was effected in compliance with the terms of this Agreement, including this Article VII.
Section 1.010.Mergers; Conversions. Subject to the provisions of this Agreement, in the event that any transaction in compliance with Section 7.04 is structured as a merger with, or consolidation or conversion into, another limited liability company (organized under the laws of Delaware or any other state), a limited partnership (organized under the laws of Delaware or any other state), a corporation (organized under the laws of Delaware or any other state) or other business entity (as defined in 18-209(a) of the Act), regardless of whether the Company is the survivor of such merger, consolidation or conversion, such transaction shall not require any act, vote or approval of the holders of any other class of Company Units or class of equity securities, other than an approval of holders of a majority of the Class A Units held by Class A Members entitled to vote pursuant to Section 3.06. Notwithstanding anything herein to the contrary, the Board shall be permitted to amend this Agreement and to take any other action that is deems necessary, desirable or appropriate to give effect to such a merger, consolidation or conversion approved in accordance with this Section 7.07.
Section 1.011.Appraisal Rights. No Member or holder of Company Units shall have any appraisal, dissenter or other similar rights with respect to any Company Units in connection with any merger, consolidation or business combination transaction, and except as otherwise determined by the Board, no Member or holder of Company Units shall be entitled to any appraisal, dissenter or other similar rights whatsoever with respect to any Company Units.
Section 1.012.Specific Performance. Each Member acknowledges that it shall be inadequate or impossible, or both, to measure in money the damage to the Company or the Members, if any of them or any transferee or any legal representative of any party hereto fails to comply with any of the restrictions or obligations imposed by this Article VII, that every such restriction and obligation is material, and that in the event of any such failure, the Company or the Members may not have an adequate remedy at law or in damages. Therefore, each Member consents to the issuance of an injunction or the enforcement of other equitable remedies against such Member at the suit of an aggrieved party without the posting of any bond or other security, to compel specific performance of all of the terms of this Article VII and to prevent any Transfer
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of Company Units in contravention of any terms of this Article VII and waives any defenses thereto, including the defenses of: (a) failure of consideration; (b) breach of any other provision of this Agreement; and (c) availability of relief in monetary damages.
Article VIII

COMPANY EXPENSES, BOOKS AND RECORDS, TAX MATTERS
Section 1.013.Fees and Expenses. Notwithstanding anything herein to the contrary, the Company shall pay all of its current expenses, including administrative expenses and fees, before any distributions may be made to the Members.
Section 1.014.Fiscal Year. Unless otherwise determined by the Board, the “Fiscal Year” of the Company shall be the taxable year of the Company, which shall end as of December 31.
Section 1.015.Records. The books and records of the Company and Voya IM shall be available for inspection by the Members at the principal office and place of business of the Company.
Section 1.016.Financial Statements and Reports. Until the consummation of the IPO, the Company shall (x) provide to each Information Member such information as required to satisfy the reporting obligations of such Information Member under law or regulation applicable to such Member as an entity or as part of controlled group of entities or under the governing documents of such Information Member and such other information as may reasonably be requested by such Information Member or as is otherwise required by law and (y) comply with, and will cause any of its Subsidiaries to comply with, the following provisions:
(i)Annual Statements. The Company shall deliver to each Member holding at least ten percent (10%) of the outstanding units of a particular class (“Information Members”) and to the Allianz Member within one hundred and eighty (180) days after the close of each Fiscal Year, an audited consolidated balance sheet and audited consolidated statements of operations, shareholder’s equity and cash flows with respect to the Company and its Subsidiaries as of the end of and for such year prepared in accordance with GAAP.
(j)Quarterly Statements. Within seventy five (75) days after the close of each fiscal quarter of the Company, the Company shall deliver to each Information Member and to the Allianz Member unaudited consolidated balance sheet and unaudited consolidated statements of operations, shareholder’s equity and cash flows with respect to the Company and its Subsidiaries as of the end of and for such quarter.
(k)Planning. In line with the Company’s and Voya IM’s business planning cycle, but not later than the fifth (5th) Business Day of November of each year, the Company shall deliver, or cause Voya IM to deliver, to each Information Member that so requests copies of the three (3)-year financial forecasts for the Company and its Subsidiaries presented by management of the Company or Voya IM to the Board or such other financial forecasts, in each case to the extent actually prepared by the Company or Voya IM, for use in reporting and planning by the ultimate parent company of the Company, in order to allow the requesting Member to assess the fair market value of such Member’s Company Units and to accommodate such Member’s financial planning process. In the event that the Company ceases to have a parent company that is listed on a national securities exchange, then the Company shall, in line with the Company’s and Voya IM’s business planning cycle but not later than the fifth (5th) Business Day of November of each year, deliver to each Information Member that so requests copies of the three (3)-year financial forecasts for the Company and its Subsidiaries.
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(l)Other Information Rights. The Company shall deliver to each Information Member, but only to the extent that such information is otherwise prepared by the Company or its Subsidiaries in the ordinary course:
(i)reasonably requested information to enable each Information Member to assess the performance and regulatory compliance of the Company or Voya IM, including information and reports in relation to the business performance, business plan or regulatory compliance of the Company or Voya IM;
(ii)on a quarterly basis, a summary of any payments or allocations between the Company and its Subsidiaries, on the one hand, and any of its Affiliates, on the other hand;
(iii)copies of new offering documents, marketing materials and other similar materials provided to clients (and investors therein) of the Company or its Subsidiaries, to the extent reasonably requested by the Information Member and not unduly burdensome to the Company;
(iv)notice following the Company’s or any of its Subsidiaries’ entry into of any material joint venture or partnership agreement; and
(v)notice following the Company’s or any of its Subsidiaries’ entry into any material agreement pursuant to which the Company or its Subsidiaries engage a third party, other than an Affiliate of the Company, to provide investment management or investment advisory services to the funds managed by the Company or its Subsidiaries.
Section 1.01.Tax Matters.
(a)Partnership Representative. Subject to the provisions of this Section 8.05, the Board shall oversee the accounting, tax and record keeping matters of the Company. The Voya Member shall serve as the Partnership Representative and appoint, or revoke the appointment of, the Designated Individual. The Partnership Representative and the Designated Individual (as relevant) shall have and exercise any authority permitted the Partnership Representative or the Designated Individual, as applicable, under the relevant Partnership Audit Rules; take whatever steps the Partnership Representative, in its reasonable discretion, deems necessary or desirable to perfect such designation and exercise such authority, including filing any forms and documents with the IRS or any other tax authority; and take such other action as may from time to time be required or authorized under applicable law. Each Member agrees to reasonably cooperate with the Partnership Representative and the Designated Individual, as relevant, and to do or refrain from doing any or all things reasonably requested by the Partnership Representative or the Designated Individual, as relevant, with respect to the conduct of such proceedings. At the reasonable request of the Partnership Representative or the Designated Individual, as relevant, a Member shall provide such information, pay such amounts, and take into account such adjustments as are required to utilize the alternative “pull-in” procedure, in accordance with Section 6225(c)(2)(B) of the Code relating thereto to modify an imputed underpayment. The Partnership Representative and the Designated Individual, as relevant, will have sole discretion to determine whether the Company (either on its own behalf or on behalf of the Members) will contest or continue to contest any tax deficiencies assessed or proposed to be assessed by any tax authority. Upon becoming aware of an examination of the Company’s affairs by tax authorities, including resulting administrative and judicial proceedings, the Partnership Representative or the Designated Individual, as relevant, shall promptly inform the Members. The Partnership Representative or the Designated Individual, as relevant, shall keep the Members reasonably informed with respect to any such examination or proceeding. Notwithstanding any other provision of this Agreement, each Member shall indemnify the
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Company for any deficiency for taxes imposed on any such Member (including penalties, additions to tax or interest imposed with respect to such taxes), or imposed on the Company in respect of any such Member, and shall pay any such taxes (including penalties, additions to tax or interest imposed with respect to such taxes). The foregoing indemnification obligation shall survive any Transfer of any such Member’s Company Units or the dissolution, winding up or termination of the Company. The Company shall reimburse the Partnership Representative or the Designated Individual, as relevant, for any and all reasonable expenses (including legal and accounting fees) incurred by the Partnership Representative or the Designated Individual, as relevant, in connection with the fulfillment of its duties under this Section 8.05. Notwithstanding anything to the contrary in this Agreement, none of the Company, the Partnership Representative or the Designated Individual shall settle any tax audit or other proceeding to the extent directly related to the tax treatment of the Transferred Assets, if such action is not required by applicable law and would disproportionately and adversely affect the Allianz Member in any material respect solely with respect to Allianz Member’s Company Units, unless (i) the Allianz Member consents to such action in writing (such consent not to be unreasonably withheld, conditioned or delayed) or (ii) no alternative action exists that would not disproportionately and adversely affect the Voya Member in any material respect or that would be materially more tax-efficient taking into account the impact on the Allianz Member and the Voya Member. Notwithstanding anything to the contrary in this Section 8.05, subject to applicable law, the Allianz Member shall have the right to control any tax audit or other proceeding (or any portion thereof) that relates solely to the tax treatment of the Contribution of the Transferred Assets (as such terms are defined in the Combination Agreement), provided that (i) the Allianz Member shall keep the Voya Member reasonably informed of the status of such tax audit or other proceeding, (ii) the Voya Member shall be entitled to meaningfully participate in such tax audit or other proceeding and (iii) the Allianz Member shall not settle, compromise or abandon any such tax audit or other proceeding without obtaining prior written consent of the Voya Member (not to be unreasonably withheld).
(b)Designated Tax Representative. The notice party indicated for each Member in Section 12.02 shall be designated as a representative to make any decisions on behalf of such Member (and each Former Member with respect to partnership taxable years in which the Former Member was a Member of the Company), with respect to taxes, that the Member or Former Member is entitled to make pursuant to this Agreement, unless such Member or Former Member designates a different representative and promptly informs the Partnership Representative of such modification. Any decision communicated to the Company in writing by such designee shall be binding upon the relevant Member or Former Member.
(c)Tax Information. Each Member (and each Former Member to the extent applicable) agrees to cooperate and provide information to the Company, and the Company agrees to reasonably cooperate and provide information to each such Member, that is necessary or useful in connection with conducting or resolving any audit of the Company or such Member, as applicable, and satisfying any tax liabilities resulting therefrom; provided, for the avoidance of doubt, that no Member shall be required to provide the Company with the Member’s tax returns pursuant to this Agreement.
(d)Preparation of Tax Returns. The Board (or its designee) shall prepare and file or cause to be prepared and filed all tax returns and statements, if any, required to be filed by the Company with any governmental authority having jurisdiction over the assessment, determination, collection, administration or imposition of any tax. The Board (or its designee) shall use commercially reasonable efforts to prepare and deliver or cause to be prepared and delivered to each Member within one hundred and eighty (180) days after the end of the taxable year of the Company an IRS Schedule K-1 (or any successor schedule or form); provided, that, notwithstanding the foregoing, if requested by a Member, the Company shall use commercially reasonable efforts to provide its estimated K-1 information to such Member no later than ninety
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(90) days after the end of such taxable year, it being understood such estimated information is subject to change based on the final Schedule K-1 made available by the Company.
Article IX

EXCULPATION AND INDEMNIFICATION
Section 1.017.Exculpation; Fiduciary Duties. (a) Subject to applicable law, no Member (in its capacity as such) or any of its Affiliates, or any current or former partner, manager, member, shareholder, employee, director, officer, management company, incorporator, successor or agent of such Person or any Manager or officer of the Company (including for the avoidance of doubt, the Partnership Representative and Designated Individual) (each, an “Indemnified Person”) shall be liable, in damages or otherwise, to the Company, the Members or any of their Affiliates or successors or assigns for any act or omission performed or omitted by any of them in good faith that relates to the Company or any of its Subsidiaries (including any act or omission performed or omitted by any of them in reliance upon and in accordance with the opinion or advice of experts, including legal counsel as to matters of law, accountants as to matters of accounting, tax advisors as to tax matters, including tax returns, taking tax positions and handling tax controversies and other interaction with governmental entities or authorities with respect to taxes, or investment bankers or appraisers as to matters of valuation), other than (i) liability of a Member for breach of this Agreement by such Member, (ii) liability of a Member or its applicable Affiliates pursuant to and in accordance with the terms of the Combination Agreement or any Ancillary Agreement (as defined in the Combination Agreement) or (iii) by reason of acts or omissions related to the Company attributable to such Indemnified Person’s fraud, reckless disregard of duty, bad faith or criminal act. To the maximum extent permitted by law, the Person bringing a claim against any Indemnified Person shall bear the burden of establishing a prima facie case that an Indemnified Person is not entitled to the benefit of the exculpation provisions set forth in this Section 9.01.
(a)To the fullest extent permitted by law, and notwithstanding any other provision of this Agreement or in any agreement contemplated herein or applicable provisions of law or equity or otherwise, none of the Voya Member, the Allianz Member or any Manager, in each case, acting in such Person’s capacity as a Member or Manager (including in performing any duties or obligations assigned to such Member or Manager pursuant to this Agreement), as applicable, shall (i) have any fiduciary or other duties to the Company or any Member other than the duty to comply with the applicable terms and provisions of this Agreement or (ii) be obligated to do or perform any act or thing in connection with the Company and its Subsidiaries not expressly set forth in this Agreement or any other agreement to which such Person is a party. Without limiting the foregoing, the provisions of this Agreement, to the extent that they restrict the duties and liabilities of any Member, Indemnified Person or any Manager otherwise existing at law or in equity, are agreed by the parties hereto to replace such other duties and liabilities of such Persons, to the maximum extent permitted by applicable law.
(b)This Section 9.01 shall not (a) limit any Person’s obligation to comply with the express terms of this Agreement or any other agreement to which such Person is a party or (b) eliminate the implied contractual covenant of good faith and fair dealing.
Section 1.018.Indemnification and Expense Advancement.
(m)Subject to the limitations and conditions provided in this Agreement, each Indemnified Person who was or is made a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, investigative, arbitrative (hereinafter a “Proceeding”), or any appeal in such a Proceeding relating to or arising out of the investment or other activities of the Company,
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or activities undertaken in connection with the Company, or otherwise relating to or arising out of this Agreement., shall be indemnified by the Company to the fullest extent permitted by the Act, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than said law permitted the Company to provide prior to such amendment), against judgments, penalties (including excise and similar taxes and punitive damages), fines, settlements and reasonable expenses (including reasonable attorneys’ fees) actually incurred by such Person in connection with such Proceeding (all such amounts and expenses referred to in this Section 9.02(a) referred to collectively as “Damages”); provided, that the actions or omissions on which such Proceeding or threatened Proceeding are based were reasonably believed by such Indemnified Person to be within the scope of the authority conferred upon such Indemnified Person by the Board or this Agreement, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that such Person’s conduct was unlawful; and provided, further, that, no Person shall be indemnified for Damages actually incurred by such Person that are attributable to: (a) such Person’s fraud, reckless disregard of duty, bad faith or criminal act; or (b) such Person’s breach of this Agreement or any other agreement in favor of the Company to which such Person is a party. The rights granted pursuant to this Article IX shall be deemed contract rights and shall vest immediately upon commencement of such Person’s status as an Indemnified Person hereunder, and no amendment, modification or repeal of this Article IX shall have the effect of limiting or denying any such rights with respect to actions taken or Proceedings arising prior to any amendment, modification or repeal. It is expressly acknowledged that the indemnification provided in this Article IX could involve indemnification for negligence or under theories of strict liability. Notwithstanding the foregoing, a Person who is an Indemnified Person by reason of having been a partner, manager, member, shareholder, employee, director, officer, management company, incorporator, successor or agent of any Member or any of its Affiliates or any Manager or officer of the Company (excluding the Partnership Representative and Designated Individual) will be eligible for indemnification pursuant to this Section 9.02 only for Proceedings relating to or arising out of transactions that took place during the time such Indemnified Person was a partner, manager, member, shareholder, employee, director, officer, management company, incorporator, successor or agent of any Member or any of its Affiliates or any Manager or officer of the Company (excluding the Partnership Representative and Designated Individual).
(n)Reasonable expenses incurred by an Indemnified Person who was, is or is threatened to be made a named defendant or respondent in a Proceeding shall be paid by the Company in advance of the final disposition of the Proceeding upon receipt of an undertaking by or on behalf of such Person to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Company; provided that, except as otherwise determined by the Board, no expenses shall be paid by the Company pursuant to this Section 9.02(b) in advance of the final disposition of a Proceeding if the party initiating the Proceeding is the Company, any of its Subsidiaries or any of their respective security holders acting by or in the right of the Company or any of its Subsidiaries.
(o)The Company, by adoption of a resolution of the Board, may indemnify and advance expenses to an employee or agent of the Company who are not or were not Indemnified Persons hereunder but who are or were serving the Company or its Subsidiaries or another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise at the request of the Company as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary against any liability asserted against such Person and incurred by such Person in such a capacity or arising out of his status as such a Person to the same extent that it may indemnify and advance expenses to Indemnified Persons hereunder under this Article IX.
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(p)Notwithstanding any other provision of this Article IX, the Company shall pay or reimburse reasonable out-of-pocket expenses incurred by a Manager or officer in connection with his or her appearance as a witness or other participation in a Proceeding at a time when he is not a named defendant or respondent in the Proceeding.
(q)The Company and the Members agree that each of the Indemnified Persons are express third party beneficiaries of this Article IX, able to enforce this Article IX according to its terms as if such Person were a party hereto.
(r)Notwithstanding anything to the contrary, the Company shall have no obligation to indemnify or advance expenses to the Allianz Member or any of its Affiliates for any liabilities for which any such Person is obligated to indemnify any Company Indemnitees (as defined in the Combination Agreement) pursuant to the Combination Agreement.
Section 1.019.Exclusivity. The remedies provided for in this Article IX are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Indemnified Person.
Article X

DISSOLUTION, LIQUIDATION AND TERMINATION
Section 1.020.Events Causing Dissolution. (a) The Company shall be dissolved and its affairs shall be wound up upon the first of the following to occur:
(i)a determination by the Board, in accordance with, and subject to any limitations in, Section 4.08, to dissolve the Company; or
(ii)any dissolution required by operation of law.
(a)Dissolution of the Company shall be effective as of the day on which the event occurs giving rise to the dissolution, but the Company shall not terminate until there has been a winding up of the Company’s business and affairs, and all of the Company’s assets have been distributed as provided in Section 10.03 and in the Act.
(b)Notwithstanding any other provision of this Agreement, the bankruptcy of a Member shall not cause such Member to cease to be a Member of the Company and despite the occurrence of such an event, the business of the Company shall continue without dissolution.
(c)Notwithstanding any other provision of this Agreement, each Member waives any right it might have under the Act or otherwise to (i) agree in writing to dissolve the Company upon such Member’s bankruptcy, or upon the occurrence of an event that causes such Member to cease to be a Member of the Company, and (ii) apply for judicial dissolution of the Company.
Section 1.01.Cancellation of Certificate. Upon the dissolution and completion of the winding up of the Company and the termination of this Agreement, the Certificate of Formation shall be canceled in accordance with the provisions of Section 18-203 of the Act and the Members shall be promptly notified of such dissolution.
Section 1.02.Distributions on Liquidation or a Sale of the Company. Upon dissolution of the Company, as expeditiously as is reasonable, the liabilities of the Company shall be paid and distributions shall be made in the following manner and order:
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(d)to creditors, including the Members who are creditors and Members who have not yet received the distributions determined by the Board to be payable to such Members pursuant to Section 4.01, to the extent otherwise permitted by law, in satisfaction of liabilities of the Company (whether by payment or by establishment or reserves); and
(e)thereafter, to the Members, in accordance with Section 4.01.
Section 1.01.Accounting on Liquidation. Upon liquidation, a proper accounting shall be made by the Company’s accountants of the Company’s assets, liabilities and results of operations through the last day of the month in which the Company is terminated.
Section 1.02.Return of Members’ Capital Contribution. A Member shall look solely to the Company’s assets for the return of such Member’s Capital Contribution. If the assets remaining after payment or discharge of all debts and liabilities of the Company are insufficient to return such Member’s Capital Contribution, the Member shall have no recourse against any other Member except to the extent of any required Capital Contribution of any other Member which has not been paid when due.
Section 1.03.Termination. (a) At such time (the “Termination Date”) as all of the Company’s assets have been distributed as provided for in Section 10.03, the Company and this Agreement shall terminate.
(f)Upon the termination of this Agreement, no party shall have any liability or obligation to any other party hereunder; provided that (i) the termination of this Agreement shall not relieve a party from liability for any breach of this Agreement on or prior to the Termination Date, and (ii) Article IX, Article X, Section 12.01, Section 12.03, Sections 12.05 through 12.07 and Sections 12.12 through 12.17 shall survive termination of this Agreement in accordance with their terms.
Article XI

REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 1.021.Representations and Warranties of the Members. Each Member represented and warranted to each other Member and to the Company that as of the date such Member became a Member of the Company:
(a)To the extent such Member was not a natural person, such Member (i) had all necessary power and authority to enter into this Agreement, as applicable, and to carry out its obligations hereunder and (ii) was duly organized and validly existing under the laws of the jurisdiction of its formation or organization, and the execution of this Agreement, as applicable, and the consummation of the transactions contemplated herein or therein, had been authorized by all necessary corporate or other action, and no other act or proceeding, corporate or otherwise, on its part was necessary to authorize the execution of this Agreement, as applicable, or the consummation of any of the transactions contemplated hereby. To the extent such Member was a natural person, such Member is sui juris and had full legal capacity and authority to enter into this Agreement and carry out its obligations hereunder. This Agreement was duly and validly executed by such Member and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and any implied covenant of good faith and fair dealing.
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(b)To the extent such Member was not a natural person, the execution and delivery by such Member of this Agreement and the performance of its obligations hereunder did not, do not and will not conflict with, or result in the breach of any provision of the organizational documents of such Member. The execution and delivery by such Member of this Agreement and the performance of its obligations hereunder did not, do not and will not (i) result in any violation, breach, conflict, default or event of default (or an event which with notice, lapse of time, or both, would constitute a default or event of default), or give rise to any right of acceleration or termination, cancellation or modification or any additional payment obligation, under the terms of any material contract, agreement or permit to which such Member is a party or by which such Member’s assets or operations are bound or affected or (ii) violate, in any material respect, any law, principle of common law, rule, regulation, judgment, injunction, order, code, constitution, ordinance, statute, treaty or decree of any governmental entity or order, in each case, applicable to such Member, the Company or any of its Subsidiaries.
(c)Other than any consents or permits that have already been obtained, no consent, waiver, approval, filing, authorization, exemption, registration, license, notification, permit or declaration was or is required to be made or obtained by such Member in connection with the execution, delivery or performance of this Agreement, excluding, for the avoidance of doubt, any transactions contemplated herein solely as a result of one or more amendments to this Agreement following the date hereof.
(d)(i)     Such Member’s interest in the Company was intended to be and was acquired solely for such Member’s own account for the purpose of investment and not with a view to any sale or other disposition of all or any part thereof, (ii) such Member’s knowledge and experience in financial and business matters are such that the Member is capable of evaluating the risks of making a Capital Contribution, and (iii) such Member’s determination to acquire the Company Units and, if applicable, make Capital Contributions was, and in each case will be, made by such Member independent of and without reliance upon any other Member or Person other than such Member’s legal counsel and financial, accounting, regulatory and tax advisors, if any, and independent of any statements or opinions as to the advisability of such acquisition or Capital Contribution or as to the properties, business, prospects or condition (financial or otherwise) of any Person in which the Company may invest which may have been made or given by any such other Person.
(e)(i)     The Member understands that the offering and sale of the Company Units are intended to be exempt from registration under the Securities Act and applicable U.S. state securities laws (A) in the case of “U.S. persons” (as defined in Rule 902(k) of Regulation S of the Securities Act), in reliance on the private placement exemption from registration provided in Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder or any other applicable exemption from the Securities Act and exemptions under applicable U.S. state securities laws, and (B) in the case of persons that are not U.S. persons (each, a “Non-U.S. Person”), in reliance on Regulation S promulgated under the Securities Act and exemptions under the applicable laws of the non-U.S. jurisdiction in which the Company Units are being offered and sold. The Member is aware that the Company Units cannot be sold or otherwise disposed of unless they are registered under the Securities Act and applicable U.S. state securities laws or unless an exemption from such registration is available, and that the Company has no present intention of so registering such interests under the Securities Act, and that accordingly such Member was and is able and was and is prepared to bear the economic risk of making a Capital Contribution and to suffer a complete loss of investment. The Member further agrees that it shall not engage in any Transfer of the Company Units it acquires in any manner that would require the registration of the Company Units under the Securities Act or under the laws of any non-U.S. jurisdictions.
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(i)With respect to each Class A Member, either the Member or each beneficial owner of such Member was and is (A) an Accredited Investor; or (B) if the Member was not or is not an Accredited Investor, Member either (1) alone or with his purchaser representative(s) had and has such knowledge and experience in financial and business matters that he was and is capable of evaluating the merits and risks of such investment or (2) was and is a Non-U.S. Person.
(ii)If the Member is a Non-U.S. Person, the Member has not been solicited to purchase and has not and shall not acquire its Company, directly or indirectly, while present in the United States.
(iii)If the Member is a Non-U.S. Person, the Member shall notify the Board promptly after it ceases to be a Non-U.S. Person.
(iv)Each Member (A) directly or indirectly, acquired the Company Units in compliance with all applicable laws, rules, regulations and other legal requirements including, without limitation, the legal requirements of jurisdictions in which such Member was or is a resident and in which such acquisition was consummated, and (B) consulted with legal counsel and financial, accounting, regulatory and tax advisors, as necessary, to ensure it was eligible to, directly or indirectly, acquire all or any part of the Company Units.
(a)The Member (i) directly or indirectly, acquired the Company Units in compliance with all applicable laws, rules, regulations and other legal requirements including, without limitation, the legal requirements of jurisdictions in which the Member was resident and in which such acquisition was consummated, (ii) has and had such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of its investment in the Company Units; and (iii) consulted with legal counsel and financial, accounting, regulatory and tax advisors, as necessary, to ensure it was eligible to, directly or indirectly, acquire all or any part of the Company Units.
(b)The Member has no need for liquidity in this investment, has the ability to bear the economic risk of this investment, and at the present time and in the foreseeable future can afford a complete loss of this investment.
(c)The Member agrees to deliver to the Company such information as to certain matters under the Securities Act, the Exchange Act and the Investment Company Act as the Company may reasonably request in order to ensure compliance with such acts and the availability of any exemptions thereunder (which, for the avoidance of doubt, shall not entitle the Company to require that any such Member take any action or omit to take any action on the basis of such information or determination of compliance or exemption).
(d)The Member was given the opportunity to ask questions of, and receive answers from, the Company concerning the terms and conditions of, and other matters pertaining to, its investment in the Company and had access to all such financial and other information concerning the Company as it had considered necessary to make a decision to invest in the Company and availed itself of this opportunity to the full extent desired.
(e)The Member acknowledges that neither the Company nor any Affiliate thereof has rendered any investment advice or securities valuation advice to the Member, and that the Member neither subscribed for nor acquired any interest in the Company in reliance upon, or with the expectation of, any such advice.
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(f)No representations or warranties have been made to the Member with respect to the investment in the Company Units or the Company other than the representations set forth herein, and the Member has not relied upon any representation or warranty not provided herein in making its investment in the Company.
(g)None of the funds that the Member used or will use to fund its Capital Contributions are assets of an employee benefit plan as defined in Section 3(3) of ERISA, subject to Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code, or an entity whose underlying assets include “plan assets” under the ERISA or the Code.
(h)The Member understands that the Company intends to be classified as a partnership for U.S. federal tax purposes and not as a publicly traded partnership, and accordingly such Member agrees that it will not Transfer any interest in the Company if it would cause the Company to become a “publicly traded partnership” as such term is defined in Section 7704(b) of the Code and the Treasury Regulations thereunder.
(i)The Member agrees to cooperate with the Company, including providing the Company with all relevant information and execute and deliver such representations, warranties and other documents that may be reasonably requested to comply with applicable law and/or regulation (including the Partnership Audit Rules and Tax Withholding Rules), including any requirement that is a precondition to relief or exemption from any withholding taxes, assessments or other governmental charges, to which the Company may be subject, to verify the representations and warranties made herein or otherwise in connection with the Member’s investment in the Company (including as may be necessary or desirable in connection with the making, management or disposition of an investment (including to make all necessary filings or in connection with the informational submissions of the Company and/or its respective subsidiaries in order for such persons to obtain all necessary consents from governmental authorities as, and to the extent, reasonably necessary to consummate any investment) or otherwise in connection with the operation of the Company), and agrees to hold harmless and indemnify the Company against any loss arising as a result of a failure to process the subscription if such information that has been required by the Company has not been provided by the Member in a timely manner.
Section 1.022.Representations and Warranties of the Company. The Company hereby represents and warrants to each Member that on the date hereof:
(a)The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.
(b)The Company has all necessary power and authority under the Certificate, this Agreement and the Act to execute this Agreement and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated by this Agreement have been duly and validly authorized by all necessary action and no other proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated by this Agreement. This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by the Members and the other parties thereto, constitutes, the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with their respective terms, subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to the effect of general principles of equity.
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(c)The execution and delivery of this Agreement by the Company do not and the performance of this Agreement by the Company will not, (i) conflict with or violate the Certificate or any equivalent organizational documents of any of its Subsidiaries, (ii) result in any violation, breach, conflict, default or event of default (or an event which with notice, lapse of time, or both, would constitute a default or event of default), or give rise to any right of acceleration or termination, cancellation or modification or any additional payment obligation, under the terms of any material contract, agreement or permit to which such Member is a party or by which such Member’s assets or operations are bound or affected, or (iii) violate, in any material respect, any law, principle of common law, rule, regulation, judgment, injunction, order, code, constitution, ordinance, statute, treaty or decree of any governmental entity or order, in each case, applicable to the Company or by which any property or asset of the Company is bound or affected.
(d)The execution and delivery of this Agreement by the Company does not, and the performance of this Agreement by the Company will not, require any consent, approval, order, permit, or authorization from, or registration, notification or filing with, any domestic or foreign governmental, regulatory or administrative authority, agency or commission, any court, tribunal or arbitral body, or any quasi-governmental or private body exercising any regulatory, taxing, importing or other governmental authority, or any other third party.
(e)The capitalization of the Company is as set forth in this Agreement. Except as contemplated hereby, (i) there are no outstanding subscriptions, options, “phantom” equity or other equity equivalent instruments, warrants, agreements, arrangements or commitments of any kind for or relating to the issuance, or sale of, or outstanding securities convertible into or exchangeable or exercisable for, any Company Units or other partnership interests or other equity interests of the Company, (ii) all of the outstanding partnership interests of the Company will have been duly and validly authorized and issued and will have been offered, issued, sold and delivered in compliance with applicable federal and state securities laws and not subject to any preemptive rights, (iii) there are no preemptive rights, rights of first refusal, put or call rights or obligations, tag-along rights, drag-along rights, anti-dilution rights or other similar rights with respect to the issuance, sale, redemption or transfer of the Company’s partnership interests or other equity securities of the Company, (iv) there are no rights to have the Company’s partnership interests registered for sale to the public in connection with the laws of any jurisdiction; or (v) there are no agreements, documents or instruments relating to the voting of the Company’s voting securities or restrictions on the transfer of the Company’s partnership interests.
Section 1.023.Entitlement of the Company and the Members to Rely on Representations and Warranties. The representations and warranties contained in Section 11.01 may be relied upon by the Company, and by the Members, in connection with the entering into of this Agreement. Without limiting the foregoing, each Member agrees to give the Company prompt written notice in the event that any representation of such Member contained in Section 11.01 ceases to be true at any time following the date hereof, and the Company agrees to give each Member prompt written notice in the event that any representation of the Company contained in Section 11.02 ceases to be true at any time following the date hereof.
Section 1.024.Covenants of the Company. Subject to exceptions as may be determined by the Board in its sole discretion, and notwithstanding any provision of this Agreement to the contrary the Company shall not, and each Member acknowledges and agrees that the Company will not, disclose the information contained in Schedule A or Schedule B to any Member other than Voya and Allianz, provided that the Company may provide upon request (i) each Member’s name and address as set forth on Schedule A and (ii) information relating exclusively to the requesting Member.
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Article XII

MISCELLANEOUS
Section 1.025.Freedom to Pursue Opportunities. The Company and the Members expressly acknowledge and agree that (a) none of the Members nor any of their respective Affiliates or representatives shall have any duty to communicate or present an investment or business opportunity to the Company in which the Company may have an interest or expectancy (a “Corporate Opportunity”), and (b) none of the Members nor any of their respective Affiliates or representatives (even if such Person is also an officer or Manager of the Company) shall be deemed to have breached any fiduciary or other duty or obligation to the Company by reason of the fact that any such Person pursues or acquires a Corporate Opportunity for itself or directs, sells, assigns or transfers such Corporate Opportunity to another Person or does not communicate information regarding such Corporate Opportunity to the Company. The Company expressly renounces any interest in a Corporate Opportunity and any expectancy that a Corporate Opportunity will be offered to the Company.
Section 1.026.Notices. In the event a notice or other document is required to be sent hereunder to the Company, the Board or to any Member, such notice or other document shall be in writing and shall be considered given and received, in all respects when personally delivered, or when sent by express or courier service or United States registered or certified mail, return receipt requested and postage and other fees prepaid, or by electronic mail, on the day such notice or document is personally delivered or delivered by electronic mail or on the third (3rd) Business Day following the day on which such notice or other document is deposited in the mail or delivered to any such commercial delivery service as aforesaid. Any notice and document shall be addressed to the party entitled to receive such notice or other document at the addresses shown on Schedule A hereto or at such other address as any such party shall request in a written notice sent to the Company. The Company or any Member or their respective legal representatives may effect a change of address for purposes of this Agreement by giving written notice of such change to the Company, and the Company shall, upon the request of any party hereto, notify such party of such change in the manner provided herein. Until such notice of change of address is properly given, the addresses set forth herein shall be effective for all purposes.
Section 1.027.Publicity and Confidentiality.
(a)Each Member agrees that such Member shall keep confidential, and shall not disclose to any third Person or use for its own benefit, without prior approval of the Board, any non-public information with respect to the Company or its Subsidiaries (including any Person in which the Company holds, or contemplates acquiring, an investment) that has been disclosed to such Member by or on behalf of the Company or its Subsidiaries, provided, that such Member may disclose any such information (i) as has become generally available to the public, was or has come into such Person’s possession on a non-confidential basis, without a breach of any confidentiality obligations by the Person disclosing such information, or has been independently developed by such Person, without use of the non-public information, (ii) to its Affiliates and its and their respective directors, officers, representatives, agents and employees and professional advisers who need to know such information and agree to keep it confidential on terms consistent with this Section 12.03, (iii) to the extent necessary in order to comply with any law, order, regulation or ruling applicable to such Member or its Affiliates, or to a regulatory agency with applicable jurisdiction and (iv) as may be required in response to any summons or subpoena or in connection with any litigation or arbitration, it being agreed that, unless such information has been generally available to the public, if such information is being requested pursuant to a summons or subpoena or a discovery request in connection with a litigation, then (x) the Member shall give the Company notice of such request and shall cooperate with the
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Company at the Company’s request so that the Company may, in its discretion, seek a protective order or other appropriate remedy, if available, at the Company’s expense and (y) in the event that such protective order is not obtained (or sought by the Company after notice), such Member (A) shall furnish only that portion of the information which, in accordance with the advice of counsel, is legally required to be furnished and (B) will exercise its reasonable efforts to obtain assurances that confidential treatment will be accorded such information.
(b)The Company agrees that it shall keep confidential, and shall not disclose to any third Person or use for its own benefit any non-public information with respect to any Member or its Affiliates that has been disclosed to the Company by or on behalf of such Member or its Affiliates without prior approval of such Member, provided, that the Company may disclose any such information (i) as has become generally available to the public, was or has come into such Person’s possession on a non-confidential basis, without a breach of any confidentiality obligations by the Person disclosing such information, or has been independently developed by such Person, without use of the non-public information, (ii) to its Affiliates and its and their respective directors, officers, representatives, agents and employees and professional advisers who need to know such information and agree to keep it confidential on terms consistent with this Section 12.03, (iii) to the extent necessary in order to comply with any law, order, regulation or ruling applicable to the Company or its Affiliates, or to a regulatory agency with applicable jurisdiction and (iv) as may be required in response to any summons or subpoena or in connection with any litigation or arbitration, it being agreed that, unless such information has been generally available to the public, if such information is being requested pursuant to a summons or subpoena or a discovery request in connection with a litigation, then (x) the Company shall give such Member notice of such request and shall cooperate with such Member at the Member’s request so that the Member may, in its discretion, seek a protective order or other appropriate remedy, if available, at the Member’s expense and (y) in the event that such protective order is not obtained (or sought by the Member after notice), the Company (a) shall furnish only that portion of the information which, in accordance with the advice of counsel, is legally required to be furnished and (b) will exercise its reasonable efforts to obtain assurances that confidential treatment will be accorded such information.
Section 1.028.Amendments. Except as provided in Section 2.02(c), Section 3.01(c), Section 3.03(a), Section 3.03(b), Section 3.04, Section 3.05, Section 5.04 and Section 7.01(e), the terms and provisions of this Agreement may be modified or amended at any time and from time to time only by approval of the Board; provided that, in addition to such approval, (a) any amendment that would alter, or result in the alteration of, the limited liability of the Members shall not be effective without the consent of the Members whose limited liability would be altered; (b) any amendment that would have a disproportionate and materially adverse effect on the rights, privileges or preferences of (i) any Member with respect to the Class A Units held by such Member relative to other Members with respect to the Class A Units held by such other Members shall require the consent of the Members holding a majority of Class A Units so adversely affected or (ii) any class of Company Units relative to any other class of Company Units shall require the consent of the Members holding a majority of Company Units of the class or classes of Company Units so adversely affected (if multiple classes of Company Units would be so adversely affected, consent of the Members holding a majority of the Company Units of all such classes, voting together as a single class shall be required); and (c) any amendment to Section 7.01, Section 7.02, Section 7.03, Section 7.04, Section 7.05, Article IV, Section 5.04 and Section 12.18 that is material and adverse to the Allianz Member, shall require the consent of the Allianz Member. All Members shall receive notice of any amendment to this Agreement (other than amendments to the Schedules as permitted by this Agreement).
Section 1.029.Governing Law; Jurisdiction. This Agreement and any dispute arising out of, relating to or in connection with this Agreement, shall be construed (both as to validity and performance), interpreted and enforced in accordance with the laws of the State of
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Delaware, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction. This Agreement shall be construed in accordance with Section 18-1101 of the Act. Any action against any party relating to the foregoing shall be brought exclusively in the Court of Chancery of the State of Delaware located in Wilmington, Delaware (or, if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, any state court located in Wilmington, Delaware or the United States District Court for the District of Delaware) and appellate courts thereof. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection that they may now or hereafter have to the laying of venue of any such action brought in such court or any defense of inconvenient forum for the maintenance of such action. Each party agrees that service of summons and complaint or any other process that might be served in any action may be made on such party by sending or delivering a copy of the process to the party to be served by registered mail, return receipt requested, at the address of the party provided for the giving of notices in Section 12.02. Nothing in this Section 12.05, however, shall affect the right of any party to serve legal process in any other manner permitted by law.
Section 1.030.Waiver of Jury Trial. THE MEMBERS ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE THE MEMBERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT SUCH MEMBER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH MEMBER CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH MEMBER UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH MEMBER MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH MEMBER HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.06.
Section 1.031.Entire Agreement. This Agreement embodies the entire agreement and understanding of the Members and supersedes all prior agreements and understandings between the Members with respect to the subject matter hereof.
Section 1.032.Other Instruments and Acts. The Members agree to execute any other instruments and perform any other acts that are or may be necessary to effectuate this Agreement and carry on the Company contemplated by this Agreement, as determined in good faith by the Board.
Section 1.033.Waivers. No waiver of any breach of any of the terms of this Agreement shall be effective unless such waiver is made expressly in writing and executed and delivered by the party against whom such waiver is claimed. No waiver of any breach shall be deemed to be a further or continuing waiver of such breach or a waiver of any other or subsequent breach. Except as otherwise expressly provided herein, no failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder, or otherwise available in respect hereof at law or in equity, shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof, or the exercise of any other right, power or remedy.
Section 1.10.Successors and Assigns. All covenants and agreements contained in this Agreement shall bind and inure to the benefit of the parties hereto and their respective
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heirs, executors, administrators, successors, legal representatives, and permitted assigns, whether so expressed or not.
Section 1.11.Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal, or unenforceable such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability, without invalidating the remainder of such provision or the remaining provisions of this Agreement, unless the severance of such provision could be in opposition to the parties’ intent with respect to such provision or the economic or legal substance of the transactions contemplated hereby would be affected in any manner materially adverse to any party hereto, in which case the parties will negotiate revisions to this Agreement to preserve as nearly as possible or nearly as practicable the economic or legal substance of such invalid, illegal or unenforceable provision.
Section 1.12.Further Assurances. In connection with this Agreement and the transactions contemplated hereby, each Member shall execute and deliver any additional documents and instruments and perform any additional acts that the Company determines to be necessary or appropriate to effectuate and perform the provisions of this Agreement and those transactions.
Section 1.13.Counterparts; Electronic Signatures. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. Facsimile, .pdf and other electronic signatures to this Agreement shall have the same effect as original signatures.
Section 1.14.Third Party Beneficiaries. Except as contemplated by Section 8.05, Article X, Section 12.01, Section 12.04 and Section 12.15, this Agreement does not create any rights, claims or benefits inuring to any Person that is not a party hereto, and it does not create or establish any third party beneficiary hereto.
Section 1.15.No Third Party Liability. This Agreement may only be enforced against the parties hereto. All claims or causes of action (whether in contract or tort) that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement (including any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), may be made only against the entities that are expressly identified as parties hereto; and no past, present or future controlling persons, management companies, portfolio companies, director, manager, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney or representative of any party hereto (including any Person negotiating or executing this Agreement on behalf of a party hereto), unless party to this Agreement shall have any liability or obligation with respect to this Agreement or with respect any claim or cause of action (whether in contract, tort equity or other use) that may arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement (including a representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement).
Section 1.16.Binding Effect. Except as otherwise provided in this Agreement to the contrary, this Agreement shall be binding upon and inure to the benefit of the Members, their distributees, heirs, legal representatives, executors, administrators, successors and permitted assigns.
Section 1.17.Specific Performance. It is hereby agreed and acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties fail to comply with any of the obligations herein imposed on them and that, in the event of any such
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failure, an aggrieved Person will be irreparably damaged and will not have an adequate remedy at law. Any such party shall, therefore, be entitled (in addition to any other remedy to which such party may be entitled at law or in equity) to injunctive relief, including specific performance, to enforce such obligations, without the posting of any bond, and, if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law..
Section 1.18.Company Subsidiaries. The Company shall cause its Subsidiaries to comply with the terms of this Agreement, to the extent applicable to its Subsidiaries. The Company shall cause the ownership interests in Voya IM to be one hundred percent (100%) owned by the Company at all times. The Company shall not own Subsidiaries other than Voya IM and its Subsidiaries and shall not conduct business other than through Voya IM or its Subsidiaries. This Section 12.18 may be waived by mutual written consent of the Voya Member and the Allianz Member.
Article XIII

INITIAL PUBLIC OFFERING
Section 1.01.Unilateral Initial Public Offering. Notwithstanding anything to the contrary contained in this Agreement, the Voya Member may unilaterally cause the Company to undertake the IPO on or after the third (3rd) anniversary of the Closing Date. The Voya Member shall exercise its rights pursuant to this Section 13.01 by providing a written notice thereof (an “IPO Notice”) to the Company and each other Member. Each Class A Member shall have the option to participate proportionately to such Class A Member’s Class A Units with the Voya Member as a selling equityholder in such IPO. Each Class A Member shall also have the right to purchase, or designate an Affiliate to purchase, a portion of the shares of the Registering Entity at the final price per share set forth in the final prospectus with respect to such IPO, proportionately to such Class A Member’s share of Securities of the Company as determined immediately prior to the consummation of the IPO. In furtherance of the foregoing, the Voya Member shall have the right to provide written notice to the Company prior to the third (3rd) anniversary of the Closing Date of its intention to exercise its rights pursuant to this Section 13.01, in which case, the Company will use its reasonable best efforts to begin preparations such that the IPO can be completed as promptly as reasonably practicable after the third (3rd) anniversary of the Closing Date and receipt of the IPO Notice.
Section 1.02.Registering Entity. Notwithstanding anything to the contrary contained herein, in connection with the IPO and upon the request of the Board or upon the receipt of an IPO Notice pursuant to Section 13.01, each of the Members hereby agrees that it will, at the expense of the Company, (a) take all such actions and execute all such documents as may be required by law, regulations, or an underwriter to effect the IPO and (b) take all such actions and execute all such documents as may be reasonably necessary to cause the Company to convert the Company into a corporation or to contribute its respective Company Units to a newly formed corporation or other entity or cause a Subsidiary of the Company to effect the IPO, or otherwise restructure the ownership of the Company such that a corporation owning the Company or into which the Company is converted effects the IPO (with respect to which, the Company shall in good faith consider using the structure commonly referred to as an umbrella partnership C corporation structure that includes a customary tax receivable agreement) (such transaction, the “IPO Restructuring” and the resulting public company following the IPO, the “Registering Entity”), in each case substantially concurrently with the closing of the IPO; provided that (i) any IPO Restructuring shall, to the extent reasonably practicable, be on a tax-efficient basis for the Voya Member and the Allianz Member, (ii) until immediately prior to the consummation of the IPO, all of the rights of such Members under this Agreement are preserved (either by entering into a shareholders agreement with the Registering Entity, keeping this
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Agreement in effect, including corresponding provisions in the Registering Entity’s certificate of incorporation or other organizational documents or otherwise), and (iii) following the IPO, all of the rights of such Members under this Agreement that do not terminate by their terms prior to or concurrent with consummation of the IPO are preserved as nearly as practicable for a publicly traded company (by entering into a new shareholder agreement with the Registering Entity as contemplated by Section 13.04, including corresponding provisions in the Registering Entity’s certificate of incorporation or other organizational documents or otherwise). Any IPO Restructuring shall be structured, to the extent reasonably achievable without compromising competing objectives, to maximize the ability of the Members to aggregate (“tack”) the period during which they hold Company Units together with the period during which they hold shares of capital stock for purposes of the United States securities laws, including Rule 144 under the Securities Act.
Section 1.03.Registration Rights. In connection with an IPO, the Registering Entity shall enter into a customary registration rights agreement with each Member with respect to the registration of the Registering Entity’s securities held by such Member in form and substance reasonably satisfactory to such Member.
Section 1.04.Shareholders Agreement; Certificate of Incorporation. Immediately prior to the consummation of the IPO, each of the Members shall execute a shareholders’ agreement covering the Company Units or, if applicable, any equity securities issued pursuant to Section 13.05, with terms that are (to the extent practicable) substantially equivalent to, mutatis mutandis, the terms of Article I, Section 3.06, Article V, Article XII and other applicable provisions of this Agreement to the extent such provisions do not expire by their terms prior to or concurrently with consummation of the IPO; provided that any equity securities of the Registering Entity received in respect of Class A Units, if any, shall be subject to the same limitations on the transferability set forth in Article VII that apply to Class A Units as of immediately prior to the date of the IPO. The certificate of incorporation of the Registering Entity shall include provisions as substantially equivalent as practicable to Article IX and Section 12.01.
Section 1.05.Company Units. In connection with, and subject to the consummation of the IPO, at the option of the Board, all or any portion of the Company Units may be converted into or redeemed for preferred stock and/or common stock (or other equity securities and/or options at Fair Market Value) of the Registering Entity and other rights that represent a substantially similar economic interest in the Registering Entity, which stock or rights may be subject to certain “lockup” or underwriters’ cutback or similar right to curtail the number of shares to be sold consistent with this Agreement and any registration rights agreement that may be entered into by the Company and the Members. With respect to any converted or redeemed Company Units, such conversion or redemption shall include, as determined by the Board in good faith, distribution of shares of capital stock of the Registering Entity having a value equal to the total proceeds that the Member would have received in accordance with the provisions of Section 4.01 or Article X if the Company were sold for its implied equity value based on the actual offering price of the Registering Entity’s common stock and the number of fully diluted shares after giving effect to the consummation of such IPO. Upon a conversion or redemption of all Company Units pursuant to this Section 13.05, the Board may cause the dissolution of the Company pursuant to Article XI, and each Member hereby consents to such dissolution for all purposes, it being agreed that all Company Units that are so redeemed shall be cancelled upon the redemption thereof, including if any such Company Units do not have or receive any value (including shares of capital stock of the Registering Entity) in connection therewith.
[SIGNATURE PAGES TO FOLLOW]

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IN WITNESS HEREOF, the Members have duly executed this Agreement as of the date first above written.
                            
                        COMPANY
VIM HOLDINGS LLC

By:    /s/ Christine Hurtsellers_____________
Name: Christine Hurtsellers
Title: Senior Managing Director

[Signature Page to A&R LLCA of VIM Holdings LLC]



                            VOYA MEMBER
VOYA HOLDINGS INC.

By:    /s/ Michael Smith__________________
Name: Michael Smith
Title: Chief Financial Officer

[Signature Page to A&R LLCA of VIM Holdings LLC]


                            ALLIANZ MEMBER
PFP HOLDINGS, INC.

By:    /s/ Claudia Knox__________________
Name: Claudia Knox
Title: President

By:    /s/ William Kenny_________________
Name: William Kenny
Title: Chief Financial Officer
    

[Signature Page to A&R LLCA of VIM Holdings LLC]

Document

Exhibit 31.1
 
CERTIFICATION
 
I, Rodney O. Martin, Jr., certify that:
 
1.    I have reviewed this quarterly report on Form 10-Q of Voya Financial, Inc.;
 
2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date:August 4, 2022
By:/s/Rodney O. Martin, Jr.
 Rodney O. Martin, Jr.
Chairman and Chief Executive Officer
 (Duly Authorized Officer and Principal Executive Officer)


Document

Exhibit 31.2
 
CERTIFICATION
 
I, Michael S. Smith, certify that:
 
1.    I have reviewed this quarterly report on Form 10-Q of Voya Financial, Inc.;
 
2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date:August 4, 2022
By:/s/Michael S. Smith
Michael S. Smith
Vice Chairman and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)


Document

Exhibit 32.1
 
CERTIFICATION
 
Pursuant to 18 U.S.C. §1350, the undersigned officer of Voya Financial, Inc. (the "Company") hereby certifies that, to the officer's knowledge, the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 (the "Report") fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


  

August 4, 2022By:/s/Rodney O. Martin, Jr.
 Rodney O. Martin, Jr.
  Chairman and Chief Executive Officer
    



Document

Exhibit 32.2
 
CERTIFICATION
 
Pursuant to 18 U.S.C. §1350, the undersigned officer of Voya Financial, Inc. (the "Company") hereby certifies that, to the officer's knowledge, the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 (the "Report") fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



  
August 4, 2022By:/s/Michael S. Smith
 Michael S. Smith
  Vice Chairman and Chief Financial Officer


voya-20220630.xsd
Attachment: XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT


voya-20220630_cal.xml
Attachment: XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT


voya-20220630_def.xml
Attachment: XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT


voya-20220630_lab.xml
Attachment: XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT


voya-20220630_pre.xml
Attachment: XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT