BONUS COMPENSATION AGREEMENT
THIS BONUS COMPENSATION AGREEMENT ["Bonus Agreement"] is
made and entered into this 30th day of September, 1994, by and
between AMVESTORS FINANCIAL CORPORATION ["AmVestors"] and AMERICAN
INVESTORS LIFE INSURANCE COMPANY, INC. ["AILICO"], all Kansas
corporations, as parties of the first part, and MARK V. HEITZ
["Mr. Heitz"], an individual, party of the second part.
WITNESSETH:
WHEREAS, AmVestors has employed Mr. Heitz as its
President and General Counsel, and AILICO has employed Mr. Heitz
as its Chairman of the Board of Directors and General Counsel in
accordance with the terms and conditions of an Employment
Agreement dated December 17, 1992;
WHEREAS, in accordance with the Employment Agreement
dated December 17, 1992, the Board of Directors of AmVestors and
AILICO have established the amount of Mr. Heitz's annual base
salary, benefits and perquisites, but have not provided him with
any additional compensation based upon the financial performance
or profitability of AmVestors and its affiliates ["the
Companies"];
WHEREAS, AmVestors and AILICO believe that Mr. Heitz may
be in a position to influence the financial performance and
profitability of the Companies by virtue of his employment,
knowledge and experience;
WHEREAS, AmVestors and AILICO believe that the best
interests of the Companies, their shareholders, policyholders and/
or creditors will be promoted by providing Mr. Heitz with a
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personal financial incentive to maximize the profitability of the
Companies, and that this objective can be attained by affording
him the opportunity to earn additional or bonus compensation based
upon objective indicia of performance;
WHEREAS, AmVestors and AILICO desire to provide Mr.
Heitz with the opportunity to earn additional or bonus
compensation based upon the financial performance of the Companies
in accordance with the terms and conditions described below;
WHEREAS, Mr. Heitz desires the opportunity to earn
additional or bonus compensation, in addition to his annual base
salary, benefits and perquisites, based upon the financial
performance of the Companies in accordance with the terms and
conditions described below.
NOW THEREFORE, in consideration of the mutual covenants
and conditions contained herein, the parties expressly understand
and agree as follows:
1. Performance of Executive Employee. Mr. Heitz shall
fully discharge his duties and responsibilities in accordance with
the Employment Agreement dated December 17, 1992, and shall
utilize his best efforts to maximize the financial performance and
profitability of the Companies to the fullest extent permitted
under law.
2. Additional or Bonus Compensation. During each year
of his employment, Mr. Heitz shall be entitled to earn additional
or bonus compensation based upon the annual financial performance
of AmVestors and its affiliates, and shall be entitled to receive
such compensation if one or more specified performance objectives
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have been fulfilled and the conditions of this section are
otherwise satisfied.
(a) Peformance Objectives During each calendar
year of his employment, Mr. Heitz shall be entitled to additional
or bonus compensation if one or more of the following goals is met
for the calendar year as a whole: (i) AmVestors achieves a return
on equity equal to or greater than 13%; (ii) AmVestors achieves
asset growth equal to or greater than 15%; (iii) AmVestors
realizes a total return on its own common stock equal to or
greater than the total return reported in the Standard & Poor Life
Index for the life insurance industry that year; (iv) AmVestors'
core operating earnings are equal to or greater than the reported
expectations of market analysts as of April 1st of the calendar
year; (v) AILICO receives premiums and annuity consideration
before reinsurance equal to or greater than $300 million; (vi)
AmVestors realizes and/or maintains a gross margin equal to or
greater than 200 basis points ["BP"]; and (vi) AmVestors incurs
total expenses equal to or less than 100 basis points ["BP"].
(b) Definitions For purposes of this section:
(i) "return on equity" shall be stated as a percentage derived
from net income divided by average shareholder's equity for the
calendar year; (ii) "asset growth" shall be stated as a percentage
derived from total assets as of December 31st of the calendar year
minus total assets as of December 31st of the preceding calendar
year divided by total assets as of December 31st of the preceding
calendar year; (iii) "total return on its own common stock" shall
be calculated using the same factors and metholodology as the
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Standard & Poor Life Index, including stock appreciation and
dividends per share, if any, during the calendar year; (iv) "core
operating earnings" shall be derived from the corresponding entry
on Form 10K of AmVestors' annual report to the shareholders; (v)
"the reported expectations of market analysts" means any published
forecast(s) of future financial performance deemed to be reliable
by AmVestors' Board of Directors in its sole discretion; (vi)
"premiums and annuity consideration before reinsurance" shall be
derived from AILICO's annual statement filed with the Kansas
Insurance Department; (vii) "gross margin" shall be derived from
the corresponding entry in the margin analysis on Form 10K of
AmVestors' annual report to the shareholders; and (viii) "total
expenses" means general insurance expenses and amortization of
deferred acquisition cost ["DAC"] associated with core operating
earnings stated as a percentage of average invested assets for the
calendar year.
(c) Additional or Bonus Compensation Formula
Additional or bonus compensation shall be calculated by
multiplying Mr. Heitz's annual base salary for the calendar year
["base"] times the ratio of performance objective points earned
divided by total performance objective points possible. For
purposes of this formula, performance objectives are assigned the
following point values:
Objective Points
AmVestors Return on Equity > 13% . . . . . . 1
AmVestors Asset Growth > 15% . . . . . . . . 1
Total Return on AmVestors Stock
> Total Return on S&P Life Index . . . . . 1
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AmVestors Core Operating Earnings
> Analyst Expectations . . . . . . . . . . 1
AILICO Premiums & Annuity
Consideration > $300 Million . . . . . . . 1
AmVestors Gross Margin > 200 BP . . . . . . . 0.5
AmVestors Total Expenses
< 100 BP . . . . . . . . . . . . . . . . . 0.5
for a total of 6.0 performance objective points possible each year
in which such criteria are utilized. In determining the
multiplication ratio as a fractional amount, the total objective
points earned serves as the numerator and the total objective
points possible serves as the denominator. If no performance
objectives are achieved for the calendar year as a whole, however,
no points are earned and no additional or bonus compensation shall
be due.
(d) Modification of Performance Measures and Point
Values During the first ninety (90) days of calendar year 1995
and each calendar year thereafter as deemed appropriate, the Board
of Directors of AmVestors and AILICO, in consultation with the
Compensation Committee, is authorized in its sole discretion to
amend, modify and/or supplement the performance goals or
objectives set forth in subsections (a), (b) and (c) above, and to
assign relative point values to all such performance goals or
objectives, for the purpose of determining Mr. Heitz's eligibility
for additional or bonus compensation and calculating its amount,
and any such amendments or modifications shall be effective as of
January 1st of any calendar year in which the action is taken.
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(e) Allocation and Payment of Additional or Bonus
Compensation The total amount of any additional or bonus
compensation which may be otherwise due in accordance with this
section for any year of Mr. Heitz's employment shall be allocated
in equal amounts to a cash bonus and a salary bonus to be paid
during the next succeeding calendar year as follows: (i) Mr.
Heitz shall be paid the total amount of the cash bonus [i.e., 50%
of all additional or bonus compensation] in a lump sum as soon as
practicable following receipt of the certified audit report for
the year in which objective points were earned, but no later than
April 15th; and (ii) Mr. Heitz shall be paid the total amount of
the salary bonus in equal bi-monthly installments from April 15th
through December 31st except as otherwise provided herein.
(f) Entitlement to and Forfeiture of Additional or
Bonus Compensation Under Prescribed Circumstances The terms of
this subsection shall have the same meaning as terms utilized in a
comparable context of the Employment Agreement dated December 17,
1992.
(i) Expiration of Term of Employment In the
event that Mr. Heitz's employment is terminated for any reason
upon expiration of the period covered by his Employment Agreement
dated December 17, 1992, Mr. Heitz shall be entitled to receive a
lump sum payment equal to the full amount of any cash bonus and
salary bonus that would otherwise have been due or owing to him,
which shall be paid within ten (10) days following receipt of the
certified audit report for the last calendar year of his
employment.
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(ii) Death or Disability In the event that
Mr. Heitz's employment is terminated due to death or disability at
any time prior to December 31st of any calendar year, his personal
representative(s): shall be entitled to receive a lump sum payment
equal to the full amount of any cash bonus and salary bonus that
would otherwise have been due or owing to him for the remainder of
such calendar year, which shall be paid within thirty (30) days of
death or disability; and, if Mr. Heitz was employed at least nine
(9) months during the calendar year of death or diability, a lump
sum payment equal to the full amount of any cash bonus and salary
bonus that would otherwise have been due or owing to him during
the next succeeding calendar year, which shall be paid within ten
(10) days following receipt of the certified audit report for the
calendar year of his death or disability.
(iii) Termination For Good Reason In the
event that Mr. Heitz terminates his employment for good reason,
including a change in control, at any time prior to December 31st
of any calendar year, he shall be entitled to receive a lump sum
payment equal to the full amount of any cash bonus and salary
bonus that would otherwise have been due or owing to him for the
remainder of such calendar year, which shall be paid within thirty
(30) days of termination; and an additional lump sum payment equal
to the full amount of any cash bonus and salary bonus that would
otherwise have been due or owing to him during the next succeeding
calendar year, which shall be paid within ten (10) days following
receipt of the certified audit report for the year of termination.
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(iv) Termination Without Good Reason In the
event that Mr. Heitz terminates his employment without good reason
prior to December 31st of any calendar year, Mr. Heitz shall
forfeit his right to any unpaid salary bonus through the remainder
of the calendar year of termination, and Mr. Heitz shall not be
entitled to receive any cash bonus or salary bonus that would have
otherwise been due or owing to him hereunder at any time during
the calendar year following such termination.
(v) Termination Without Cause In the event
that Mr. Heitz's employment is terminated by AmVestors and/or
AILICO without cause prior to December 31st of any calendar year,
Mr. Heitz shall be entitled to receive the full amount of any cash
bonus and salary bonus otherwise due in that calendar year, which
shall be paid within ten (10) days of such termination; and, if
Mr. Heitz was employed for at least nine (9) months during the
year of termination, he shall be entitled to receive an additional
lump sum payment equal to the full amount of the cash bonus and
salary bonus that would have otherwise been due or owing to him
hereunder during the next succeeding calendar year, which shall be
paid within ten (10) days following receipt of the certified audit
report for the year of termination.
(vi) Termination for Cause In the event that
AmVestors and/or AILICO terminate Mr. Heitz's employment for cause
prior to December 31st of any calendar year, Mr. Heitz shall
forfeit his right to any unpaid salary bonus through the remainder
of the calendar year of termination, and Mr. Heitz shall not be
entitled to receive any cash bonus or salary bonus that would have
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otherwise been due or owing to him hereunder at any time during
the next succeeding calendar year.
3. Governing Law and Binding Effect This Bonus
Agreement shall be governed by the laws of the State of Kansas,
and shall be binding upon the parties hereto, their successors,
heirs, legatees and personal representatives.
IN WITNESS WHEREOF, parties hereto have signed this
Bonus Compensation Agreement the day and year first written above.
PARTY OF THE FIRST PART:
AMVESTORS FINANCIAL CORPORATION
By:/s/Ralph W. Laster, Jr.
Ralph W. Laster, Jr., its
Chairman of the Board and Chief
Executive Officer
ATTEST:
/s/Lynn F. Hammes
CORPORATE SECRETARY
AMERICAN INVESTORS LIFE INSURANCE
COMPANY, INC.
By:/s/Ralph W. Laster, Jr.
Ralph W. Laster, Jr., its
President and Chief Executive
Officer
ATTEST:
/s/Lynn F. Hammes
CORPORATE SECRETARY
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COMPENSATION COMMITTEE - AMVESTORS
FINANCIAL CORPORATION and AMERICAN
INVESTORS LIFE INSURANCE COMPANY,
INC.
By:/s/R. Rex Lee
R. Rex Lee, it Chairman
PARTY OF THE SECOND PART:
/s/MarK V. Heitz
MARK V. HEITZ
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