Exhibit 10.29
AMENDMENT #1
TO ENGAGEMENT AGREEMENT
This AMENDMENT #1 TO THE ENGAGEMENT AGREEMENT is made and entered into as
of August 14, 1995 by and between General American Life Insurance Company
("Client") and ARM Financial Group, Inc. ("ARM") for the purpose of amending
that certain Engagement Agreement made and entered into by Client and Analytical
Risk Management, Ltd. as of the 12th day of March, 1993, and subsequently
assigned by Analytical Risk Management, Ltd. to ARM, effective November 26,
1993, such assignment properly consented to by Client on September 8, 1993 (the
"Engagement Agreement").
Whereas Client and ARM entered into the Engagement Agreement under which
ARM provides various services to Client in connection with a floating rate
guaranteed interest contract product (the "GIC Product"); and
Whereas Client and ARM wish to enter into a joint venture to develop and
market guaranteed interest contracts and funding agreements as agreed upon by
the parties, and to share in the profits generated by the sales of such
products; and
Whereas Client and ARM intend to share in such profits on business placed
after the date of this Amendment #1 by means of reinsuring a 50% portion of the
business written by Client to Integrity Life Insurance Company, a subsidiary of
ARM ("Integrity"), and Client and ARM intend to share in such profits on
business placed prior to the date of this Amendment #1 and on business which is
not, for whatever reason, reinsured, by the payment of fees to ARM as outlined
in the Engagement Agreement; and
Whereas Client and ARM wish to amend the Engagement Agreement to include
certain services in connection with an indexed interest rate funding agreement
(the "Funding Agreement"); and
Whereas Client and ARM wish to agree that certain actions will be taken by
each of the parties in connection with the GIC Product and the Funding
Agreement;
Now, therefore, in consideration of the premises and the mutual covenants
and obligations hereinafter set forth, the parties agree to amend the Engagement
Agreement as follows:
Section 2, Design, Development, and Implementation of GIC Product, is
amended by the addition of subsection (d) as follows:
(d) Funding Agreement. ARM shall work with Client to design and
develop the Funding Agreement in accordance with specifications agreed upon by
the parties. All services to be performed by ARM and all actions to be taken by
either Client or ARM as described in subsection (b) above shall be applicable to
both the GIC Product and the Funding Agreement.
Subsection (a) of Section 3, Marketing and Distribution Authority, is
amended by the addition of the following new paragraph:
ARM shall provide to Client a written marketing plan for the Funding
Agreement. During the Term, each of ARM and Client may sell, market, and
distribute the Funding Agreement through its respective employees, agents, and
representatives. ARM will assist Client with the design and development of
material for use by Client with respect to the Funding Agreement for
presentation to rating agencies.
Subsection (c) of Section 3, Deposits, is deleted and replaced with the
following:
(c) Deposits. All deposits from contractholders with respect to the GIC
Product and the Funding Agreement issued on behalf of Client shall be deposited
by wire transfer from the contractholders directly to such bank accounts in the
name of Client as Client may direct.
Section 4, Contractholder Administration Services, is amended by the
addition of the following new paragraph:
The responsibilities of each party as described in this Section 4 shall be
applicable to both the GIC Product and the Funding Agreement.
Section 5, Portfolio and Asset-Liability Advisory Services, is amended by
the addition of the following new paragraph:
Each party will share with the other party on a monthly basis the asset
strategies and portfolio construction of the portfolios held in connection with
the GIC Product and the Funding Agreement.
Section 28, Additional Covenants, is added to the Engagement Agreement as
follows:
Section 28, Additional Covenants.
(a) Rating. Client will obtain short term contract or debt ratings
from two of the three following rating agencies: Standard & Poors; Moody's
Investor Service; and Duff & Phelps.
(b) Licenses. ARM shall cause Integrity to apply for accredited
reinsurer status in the State of New York.
(c) Expenses. The parties shall mutually agree upon the procurement of
any services which may enhance the sales of, or otherwise improve the
profitability of, the Funding Agreement and which may result in expenses which
the parties desire to share. The parties shall mutually agree upon the terms on
which such expenses will be shared. Neither party will be responsible for any
expense or portion thereof unless the parties mutually agreed to the expenditure
and the specific allocation of expenses prior thereto.
(d) Placement of Reinsurance. Client, ARM and National Integrity Life
Insurance Company, a New York domiciled subsidiary of ARM ("National Integrity")
agree that, from the effective date of this Amendment #1 until such time as
Integrity obtains accredited reinsurer status in the State of New York, but no
later than April 1, 1996, 50% of new contributions under the GIC Product and the
Funding Agreement shall be placed under a reinsurance agreement between Client
and National Integrity. Client and ARM further agree that, upon Integrity's
licensing as an accredited
2
reinsurer in the State of New York, 50% of new contributions under the GIC
Product and the Funding Agreement shall be placed under a reinsurance agreement
between Client and Integrity.
(e) National Integrity Reinsurance. ARM and National Integrity agree
that, upon Integrity's licensing as an accredited reinsurer in the State of New
York, ARM and National Integrity will cooperate with Client, if Client so
desires, to transfer any business then reinsured with National Integrity to
Integrity, including pursuit of any necessary regulatory approvals for such
transfer.
(f) Recapture. In the event that the business reinsured with National
Integrity is not transferred to Integrity pursuant to item (e) above by July 1,
1996, for whatever reason, Client may recapture such business if Client so
desires. If Client recaptures such business reinsured with National Integrity,
Client shall "replace" such recaptured amount by placing 100% of new
contributions under the GIC Product and the Funding Agreement under the
reinsurance agreement between Client and Integrity until such time as the
reinsured percentage of the business written after the date of this amendment
again equals 50%. Any amount recaptured pursuant to this subsection (f) will not
be subject to the payment of fees to ARM under the Engagement Agreement, except
to the extent that such recaptured amount has not been "replaced" by the
reinsurance of new contributions. However, in the event that such recaptured
amount can not be "replaced" because Integrity is not licensed as an accredited
reinsurer in the State of New York by July 1, 1996, the recaptured amount will
be subject to the payment of fees to ARM under the Engagement Agreement.
3
IN WITNESS WHEREOF the undersigned have executed this Amendment as of the
day and year first written above.
CLIENT
General American Life Insurance Company
By: /s/ Leonard M. Rubenstein
-----------------------------------------
Leonard M. Rubenstein
Title: Executive Vice President - Investments
ARM
ARM Financial Group, Inc.
By: /s/ John R. Lindholm
-----------------------------------------
John R. Lindholm
Title: Executive Vice President - Chief Marketing
Officer
NATIONAL INTEGRITY
National Integrity Life Insurance Company
By: /s/ John R. Lindholm
-----------------------------------------
John R. Lindholm
Title: Vice President - Chief Marketing Officer
4