Exhibit 10.37
AMENDMENT NO. 1
TO
JOINT VENTURE AGREEMENT
THIS AMENDMENT NO. 1 (the "Amendment") is made and entered as of this
1st day of April, 2002 (the "Effective Date"), by and between Ameritas Life
Insurance Corp., a Nebraska stock life insurance company ("ALIC"), and AmerUs
Life Insurance Company (formerly American Mutual Life Insurance Company), an
Iowa stock life insurance company ("AML").
R-E-C-I-T-A-L-S
A. ALIC and AML are parties to an Amended and Restated Joint Venture
Agreement dated as of June 30, 1996 (the "Joint Venture Agreement").
B. With the passage of time and changes in the business of the Joint
Venture, certain provisions of the Joint Venture Agreement, which have governed
the parties' relationship for several years, no longer reflect the parties'
current relationship and intentions.
C. Since the date of the Joint Venture Agreement, both of the parties
and/or their respective holding company affiliates have entered into Corporate
Transactions with other insurance companies and affiliated companies, and the
parties now desire to expand the Joint Venture to incorporate and encompass
certain variable business of these additional companies.
D. ALIC and AML have now determined that it is in their mutual best
interests to enter into this Amendment.
A-G-R-E-E-M-E-N-T-S
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises set forth in this Amendment and other good and valuable
consideration, the parties hereto agree as follows:
1. The modifications and changes to the Joint Venture Agreement that
are set forth in this Amendment shall become effective as of the Effective Date
except where expressly stated otherwise, and shall not be read to abrogate or
affect in any way the parties' rights or obligations under the terms of the
Joint Venture Agreement at any time prior to the Effective Date except where
expressly stated otherwise. Any capitalized term used in this Amendment that is
not otherwise defined herein shall have the meaning assigned to it in the Joint
Venture Agreement.
ARTICLE I--DEFINITIONS
2. A new Section 1.2A is inserted directly after existing Section 1.2,
which new section shall provide as follows:
-1-
Exhibit 10.37
"Additional Appraisal" shall have the meaning assigned to such
term in Section 2.3(e)(7) hereof.
3. A new Section 1.2B is inserted directly after new Section 1.2A,
which new section shall provide as follows:
"Additional Appraised Value" shall have the meaning assigned
to such term in Section 2.3(e)(7) hereof.
4. A new Section 1.2C is inserted directly after new Section 1.2B,
which new section shall provide as follows:
"Additional Appraiser" shall have the meaning assigned to such
term in Section 2.3(e)(7) hereof.
5. A new Section 1.11A is inserted directly after existing Section
1.11, which new section shall provide as follows:
"AML Distribution Appraised Value" shall have the meaning
assigned to such term in Section 2.3(e)(6) hereof.
6. A new Section 1.11B is inserted directly after new Section 1.11A,
which new section shall provide as follows:
"AML Earn-Out" shall have the meaning assigned to such term in
Section 2.3(e)(9) hereof.
7. A new Section 1.14A is inserted directly after existing Section
1.14, which new section shall provide as follows:
"AML's Portion" shall have the meaning assigned to such term
in Section 2.3(e)(9) hereof.
8. A new Section 1.14B is inserted directly after new Section 1.14A,
which new section shall provide as follows:
"Annual Appraisal" shall have the meaning assigned to such
term in Section 2.3(e)(6) hereof.
9. A new Section 1.14C is inserted directly after new Section 1.14B,
which new section shall provide as follows:
"Annual Appraised Value" shall have the meaning assigned to
such term in Section 2.3(e)(6) hereof.
-2-
Exhibit 10.37
10. A new Section 1.15A is inserted directly after existing Section
1.15, which new section shall provide as follows:
"Appraiser" shall have the meaning assigned to such term in
Section 2.3(e)(6) hereof.
11. A new Section 1.22A is inserted directly after existing Section
1.22, which new section shall provide as follows:
"Balanced Board Provisions" shall have the meaning assigned to
such term in Section 2.3(e)(1) hereof.
12. A new Section 1.22B is inserted directly after new Section 1.22A,
which new section shall provide as follows:
"Balanced Governance Revocation Notice" shall mean a written
communication given by ALIC to AML as provided in Section
2.3(e) hereof.
13. A new Section 1.27A is inserted directly after existing Section
1.27, which new section shall provide as follows:
"Change of Control" with respect to a specified Person shall
mean:
(a) a majority of the board of directors of such Person's
ultimate parent shall consist of individuals who were not
directors of such parent immediately prior to such
transaction and who were not nominated for board
membership by such directors; or
(b) the acquisition by any Person which was not previously an
Affiliate of such specified Person of the beneficial
ownership (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of more than 25% of the shares of
stock of such Person which are entitled to elect the
board of directors of such Person.
14. A new Section 1.27B is inserted directly after new Section 1.27A,
which new section 1.27B shall provide as follows:
"Change of Control Transaction" shall mean an acquisition,
divestiture, merger, consolidation, reorganization or other
similar transaction affecting a Person's corporate structure
that, upon or incident to consummation, will constitute a
Change of Control with respect to such Person.
15. A new Section 1.85A is inserted directly after Section 1.85, which
new section shall provide as follows:
-3-
Exhibit 10.37
"Put Notice" shall mean a written communication given by AML
to ALIC as provided in Section 2.3(e) hereof.
16. A new Section 1.96A is inserted directly after Section 1.96, which
new section shall provide as follows:
"Third Appraiser" shall have the meaning assigned to such term
in Section 2.3(e)(8) hereof.
SECTION 2.2--CAPITALIZATION OF HOLDING COMPANY
17. The third sentence of Section 2.2(c) is deleted and replaced with
the following:
In accordance with the foregoing, following any transaction in
which either ALIC (together with any Affiliates thereof other
than Holding Company and its Subsidiaries) or AML (together
with any Affiliates thereof other than Holding Company and its
Subsidiaries) becomes the owner of all of the Shares, such
owner shall indemnify the other party for the full amount of
any payment made under such other party's Guaranty for
liability incurred following the closing of such purchase.
18. A new Section 2.2(e) is added, and shall provide as follows:
In the event any Affiliate of ALIC or AML (other than Holding
Company and its Subsidiaries) becomes a holder of any Shares,
then references in this Agreement to such party (ALIC and/or
AML, as the case may be) shall be deemed to refer to such
party collectively with its Affiliate(s) that has(have) become
owner(s) of such Shares. Each such Affiliate shall execute a
Joint Venture Acknowledgment in form and substance acceptable
to each of ALIC and AML to confirm such Affiliate's
understanding and acceptance of the foregoing and in
particular, but without limitation, to acknowledge that:
(1) Any governance rights such Affiliate might otherwise have
by virtue of its ownership of Shares shall be subject to
all the terms of this Agreement, as amended from time to
time, including without limitation Section 2.4 hereof.
The right to select directors that is reserved for ALIC
or AML, as the case may be, may be shared by ALIC or AML
with such Affiliate in its discretion. Such Affiliate
shall not have any independent right under the Nebraska
Business Corporation Act to select any such director or
effect any corporate action as a shareholder of Holding
Company, except to the extent ALIC or AML, as the case
may be, shares its rights hereunder with such Affiliate.
(2) Prior to the date on which any such Affiliate will cease
to be an Affiliate of ALIC or AML, as the case may be,
the Shares held by such Affiliate shall be transferred to
ALIC or AML, as the case may be, or to another
-4-
Exhibit 10.37
Affiliate thereof which is permitted to hold such Shares
as described in Section 2.8(a)(1) hereof.
(3) Any references hereunder to one "party" or the "other
party" shall refer to (A) ALIC collectively with its
Affiliates (other than Holding Company and its
Subsidiaries) that hold Shares, or (B) AML collectively
with its Affiliates (other than Holding Company and its
Subsidiaries) that hold Shares. No such references to one
"party" shall be read to refer to such Affiliate
independently of ALIC or AML, as the case may be, and
Affiliates thereof (other than Holding Company and its
Subsidiaries) which also hold Shares.
(4) Any transfer of Shares of ALIC or AML under Section
2.8(a)(2) hereof and any transfer pursuant to an Auction,
a Unilateral Auction Notice or a Put Notice shall include
all of the Shares owned by such party collectively with
its Affiliates (other than Holding Company and its
Subsidiaries) that hold Shares.
(5) Any action permitted of a "party" hereunder may be taken
only by ALIC, on the one hand, or AML, on the other. Any
action required of a "party" hereunder shall be binding
on ALIC and AML together with their respective Affiliates
(other than Holding Company and its Subsidiaries) that
hold Shares; provided, however, that if it is clear that
a particular covenant or agreement can be satisfied by
the action of a single Person (as, by way of example,
would be the case if the covenant involved the payment of
money) then such action may (except to the extent
otherwise expressly provided and except where context
otherwise requires) be fulfilled by ALIC, on the one
hand, or AML, on the other, or an Affiliate thereof
(other than Holding Company and its Subsidiaries) that
holds Shares.
(6) In the event of a capital call under Section 2.2(b)
hereof, each of ALIC and AML and their respective
Affiliates (other than Holding Company and its
Subsidiaries) that hold Shares shall be responsible for
its proportionate share, based on its percentage
ownership of all outstanding Shares of AMAL, of the
aggregate capital contribution to be made; provided,
however, that ALIC and AML, respectively, shall remain
responsible for any amount not paid by their respective
Affiliates as stated above.
SECTION 2.3--DISTRIBUTION EFFORTS AND COMPETITION
19. In Section 2.3(a), the words "and Fixed Annuities" are deleted, so
that this Section, as amended, shall read:
Except as otherwise provided in Subsection (c) below, ALIC and
AML shall use all reasonable efforts and take all reasonable
actions to encourage their respective
-5-
Exhibit 10.37
Distribution Forces, consistent with the requirements of law
and to the extent not prohibited by any other applicable
Contract executed prior to the date of this Agreement, to
accept appointment by AVLIC and to distribute the Variable
Products of AVLIC. More specifically, AML shall commit to take
the actions set forth in the marketing plan set forth as
Exhibit I to this Agreement.
20. In Section 2.3(b), the words "or Fixed Annuities" and "or Fixed
Annuity" are deleted each time they appear, so that this Section, as amended,
shall read:
Except as otherwise provided in Subsection (c) below, while
the Joint Venture is in effect, neither AML nor ALIC nor any
Affiliate of either (other than Holding Company and its
Subsidiaries) shall, directly or indirectly, or in combination
with any other Person, (i) sell, issue, sponsor or provide any
Variable Products except Variable Products of AVLIC; or (ii)
provide any incentive, value, inducement, recognition or other
reward for any member of its Distribution Force or any other
agent, employee or representative thereof for selling any
Variable Products which are not AVLIC products; provided,
however, that the foregoing limitation shall not limit either
party's right to distribute any Variable Product product of
any Person other than AVLIC, or to provide any incentive
described in clause (ii) above, in any state until and unless
AVLIC has obtained all licenses and approvals necessary or
appropriate to permit a comparable product of AVLIC to be
distributed in such state.
21. Section 2.3(c)(3) is deleted in its entirety.
22. In Sections 2.3(c)(4) and (5), the words "or Fixed Annuity" and "or
Fixed Annuities" are deleted each time they appear, so that these Sections, as
amended, shall read:
(4) the distribution, following any Corporate Transaction of
ALIC, of Variable Products through marketing channels which do
not include the Distribution Force of ALIC, or the
distribution, following any Corporate Transaction of AML, of
Variable Products through marketing channels which do not
include the Distribution Force of AML; or
(5) the acquisition and servicing by either party of any
existing Variable Products business originated by a Third
Party, and any associated renewals, replacements or other
continued or increased contributions by holders of such
Variable Products; or
23. Section 2.3(c)(6) is deleted in its entirety and replaced with the
following:
(6) the provision by ALIC or AML or an Affiliate thereof of
any incentive, value, inducement, recognition or other reward
for members of their respective Distribution Forces or any
other agent, employee or representative thereof for selling
Variable Products that are not AVLIC products, but only to the
extent sold
-6-
Exhibit 10.37
through AIC or another broker-dealer subsidiary of Holding
Company and only to the extent required by law.
24. Section 2.3(e) is deleted in its entirety and replaced with the
following:
ALIC or AML or any Affiliate of either (other than Holding
Company and its Subsidiaries) may make and/or enter into such
acquisitions, divestitures, mergers, consolidations,
reorganizations or other similar transactions affecting its
corporate structure as each may in its sole discretion
determine. Notwithstanding the foregoing, if any such
transaction involves or constitutes a Change of Control with
respect to AML, then AML shall, within ten Business Days of
the date on which a Contract providing for the Change of
Control Transaction is signed, give notice of such pending
Change of Control to ALIC, and ALIC shall have the right in
its sole discretion to give, within thirty days after the date
of such notice, a Balanced Governance Revocation Notice to
AML. If any such transaction involves or constitutes a Change
of Control with respect to ALIC, then ALIC shall, within ten
Business Days of the date on which a Contract providing for a
Change of Control Transaction is signed, give notice of such
pending Change of Control to AML, and AML shall have the right
to give, within thirty days after the date of such notice, a
Put Notice to ALIC. In the event that a Balanced Governance
Revocation Notice or a Put Notice is given in accordance with
this Section 2.3(e), then the remaining provisions of this
Section 2.3(e) shall govern. If the party having the right to
give the notices described above in this Section 2.3(e) does
not do so in accordance herewith, then the Joint Venture shall
continue and the remaining provisions of this Section 2.3(e)
shall have no effect.
(1) If ALIC gives a Balanced Governance Revocation Notice,
then immediately upon the date of the final vote of
shareholders of AML (or of such direct or indirect parent
company thereof that is a party to the Change of Control
Transaction) approving the Change of Control Transaction,
the provisions of Section 2.4 hereof which provide for
ALIC and AML to share governance of Holding Company and
its Subsidiaries on an equal basis (the "Balanced Board
Provisions") will, subject to Section 2.3(e)(10) hereof,
be suspended, and immediately two Inside Directors of
Holding Company who were selected by AML, and one Inside
Director of AVLIC and AIC (and of any other Subsidiary of
Holding Company as to which the parties have equal board
representation pursuant to Section 2.4(k) hereof) who
were selected by AML, shall automatically and without
further action become non-voting. Notwithstanding the
foregoing, following the suspension of the Balanced Board
Provisions, and subject to Section 2.3(e)(3) hereof, no
action other than in the ordinary course of business
shall be taken unless ALIC and AML have agreed to such
action, and in no event shall any agreement or
arrangement between Holding Company or any Subsidiary
thereof, on the one hand, and ALIC or any Affiliate
thereof (other than Holding Company and its Subsidiaries)
or AML or any Affiliate thereof (other than Holding
Company and its
-7-
Exhibit 10.37
Subsidiaries), on the other, be entered into, amended,
terminated or modified in any way without the prior
written consent of ALIC and AML.
(2) Within 30 days after its receipt of a Balanced Governance
Revocation Notice, AML shall have the right to give a Put
Notice to ALIC and shall be deemed to have given such
notice effective at such 30th day unless, prior to such
date, AML gives notice to ALIC that it is not giving a
Put Notice pursuant hereto.
(3) In the event that AML gives notice as permitted under
Section 2.3(e)(2) hereof that it is not giving a Put
Notice to ALIC, then the following provisions shall be in
effect from and after the date of closing of the Change
of Control Transaction (or, if later, the date of the
Balanced Governance Revocation Notice), and shall
supersede any contrary provisions of Section 2.3(e)(1):
(A) The non-voting board members referenced in Section
2.3(e)(1) shall no longer be non-voting, but the
composition of the boards of directors of Holding
Company and each of its Subsidiaries shall be
changed in order that the number of directors
selected by each of the parties for each such board
shall be based on the proportionate ownership of
Shares of the parties. The directors selected by AML
shall be Inside Directors.
(B) The limitations and rights set forth in the last
sentence of Section 2.3(e)(1) shall be of no further
force or effect, provided, however, that no
agreement or arrangement between Holding Company or
any Subsidiary thereof, on the one hand, and ALIC or
any Affiliate thereof (other than Holding Company
and its Subsidiaries), on the other, shall be
entered into, amended, terminated or modified in any
way without the review and approval of the board of
directors of Holding Company.
(C) AML shall have the right and option, during the
thirty-day period following the first March 31 that
is at least eighteen months after the date when the
Balanced Board Provisions were suspended pursuant to
Section 2.3(e)(1) hereof, and at every second
anniversary of that March 31 so long as this
Agreement remains in effect, to give a Put Notice to
ALIC.
(4) If AML gives or is deemed to have given a Put Notice
under the initial paragraph of Section 2.3(e) or under
Section 2.3(e)(2) or 2.3(e)(3) hereof, then ALIC shall be
deemed, automatically and without further action, to have
agreed to purchase all, but not less than all, of the
Shares held by AML and its Affiliates as provided in
Section 2.2(e)(4) hereof, for that portion of the Put
Value that is equal to AML's Portion, plus the AML
-8-
Exhibit 10.37
Earn-Out. Such agreement shall be conditioned on the
closing of the Change of Control Transaction with respect
to AML or ALIC, as the case may be, and the closing of
ALIC's Share purchase agreement shall occur, at the
earliest, concurrent with the closing of such Change of
Control Transaction. Except as otherwise expressly
provided in this Section 2.3(e)(4), the parties' rights
and obligations with respect to the sale and purchase of
the Shares shall be as specified in Section 2.6(e)(4)
hereof, except that the date of the Put Notice shall be
deemed the "Acceptance Date" as such term is used therein
(and the time period set forth therein to close the Share
purchase agreement may be extended for up to 30 days
after the closing of the Change of Control Transaction in
order to be consistent with the preceding sentence). At
the closing of such Share purchase agreement, ALIC shall
deliver its unconditional agreement to pay the AML
Earn-Out. In the event of a transfer of the Shares of AML
(and Affiliates thereof that hold Shares) to ALIC
pursuant to such Put Notice, ALIC shall cause AIC and
AVLIC not to offer or pay any incentive, value,
inducement, recognition or other reward to maintain their
relationships with members of the Distribution Force of
AML, other than in the ordinary course of business and
consistent with past practice in connection with the
Distribution Force of AML.
(5) The Put Value shall be the Annual Appraised Value unless,
within 15 days after the date of the Put Notice, either
ALIC or AML gives notice to the other party of its
intention to obtain an Additional Appraisal. If two
Additional Appraisals are obtained and delivered in
accordance with Section 2.3(e)(7) hereof, then the Put
Value shall be the Annual Appraised Value, if that value
is greater than or equal to one of the Additional
Appraised Values and is less than or equal to the other
Additional Appraised Value. If the Annual Appraised Value
is greater than both of the Additional Appraised Values
or less than both of the Additional Appraised Values,
then the Put Value shall be the average of the Annual
Appraised Value and the Additional Appraised Value
nearest thereto. If only one Additional Appraised Value
is obtained and delivered in accordance with Section
2.3(e)(7) hereof, then the Put Value shall be the average
of the Annual Appraised Value and that Additional
Appraised Value. If the Put Value equals the Annual
Appraisal Value as provided in the preceding provisions
of this Section 2.3(e)(5), then the final AML
Distribution Appraised Value to be used in the
calculations pursuant to Section 2.3(e)(9) hereof shall
be the amount stated for that component of value in the
Annual Appraisal. Otherwise, such final AML Distribution
Appraised Value will be the average of the amounts stated
for that component of value in the two appraisals
averaged (as provided in such preceding provisions) to
calculate the Put Value. Notwithstanding the foregoing,
the appraised values referenced in this Section 2.3(e)(5)
(including the AML Distribution Appraised Value) shall in
all cases be based on such values rolled forward to the
most recent calendar quarter
-9-
Exhibit 10.37
end date (March 31, June 30, September 30 or December 31)
that is at least 45 days before the date of the closing
of the Share purchase transaction, and such roll-forward
shall be completed before application of the calculations
set forth in this Section 2.3(e)(5).
(6) The Annual Appraised Value shall be determined as
follows. Within 90 days after June 30 of each year while
this Agreement is in effect, AMAL shall obtain an
appraisal from an independent actuarial consulting firm
selected by the parties (the "Appraiser"), which shall
set forth the fair market value, as of such preceding
June 30, of the Joint Venture using the valuation methods
and assumptions set forth in Exhibit 2.3(e) hereto. Such
appraisal shall specifically and separately value the
component of value relating to the future life insurance
and annuity sales of the Distribution Forces of AML (and
Affiliates thereof) (the "AML Distribution Appraised
Value"). Exhibit 2.3(e) shall be updated by the parties
on or before June 30 of each year. The appraisal prepared
and delivered in accordance with this Section 2.3(e)(6)
is referred to herein as an "Annual Appraisal" and the
fair market value of the Joint Venture set forth therein
is referred to as the "Annual Appraised Value."
(7) If a party gives notice of its intention to obtain an
Additional Appraisal, then each of the parties may
obtain, from an independent actuarial consulting firm or
one of the then top five national accounting firms by
revenue chosen by such party (each, an "Additional
Appraiser," provided that neither party may choose for
this purpose the Appraiser), an independent appraisal
setting forth the fair market value of the Joint Venture
as of the prior June 30 using the valuation methods and
agreed assumptions set forth in Exhibit 2.3(e) hereto
(and separately setting forth its valuation of the AML
Distribution Appraised Value); provided, however, that if
the date of the most recent update of Exhibit 2.3(e) is
more than 15 months prior to the date of a Put Notice,
then in determining the fair market value of the Joint
Venture the Additional Appraisers shall not be bound by
(though they shall take into consideration) the
assumptions set forth in the most recent Exhibit 2.3(e).
Each party shall deliver its appraisal to the other party
within 90 days of the date of the Put Notice. Each
appraisal prepared and delivered in accordance with this
Section 2.3(e)(7) is referred to herein as an "Additional
Appraisal" and the fair market value set forth therein is
referred to as the "Additional Appraised Value."
(8) If at any time when a Put Notice is given the most recent
Annual Appraisal states the Joint Venture's value as of a
date more than 15 months earlier, then this Section
2.3(e)(8) shall supplement Section 2.3(e)(5) in
determining the Put Value. In such event, the parties
will be deemed to have given notice to each other of
their intention to obtain an Additional Appraisal as
permitted under Section 2.3(e)(5) hereof, and each
-10-
Exhibit 10.37
party shall obtain an Additional Appraisal meeting the
requirements of Section 2.3(e)(7) hereof. If the lower of
the two Additional Appraisals is not more than 10% less
than the average of the two Additional Appraised Values
and the higher Additional Appraised Value is not more
than 10% greater than that average, then the average of
the two Additional Appraised Values shall be the Put
Value for purposes of Section 2.3(e)(4) hereof (subject
to any roll-forward as described in the last sentence of
Section 2.3(e)(5)). If the foregoing condition is not
met, then the parties will cooperate to obtain a third
appraisal from an independent actuarial consulting firm
chosen by the two Additional Appraisers (the "Third
Appraiser"). If the two Additional Appraisers cannot
agree on an independent firm within 20 days after
delivery of the Additional Appraisals, then the Third
Appraiser shall be selected by lot from a list of the
then top five national accounting firms by revenue
(excluding, if applicable, the Additional Appraisers).
The Third Appraiser shall deliver, within 75 days of its
engagement, an appraisal of the fair market value of the
Joint Venture in the same manner as described in Section
2.3(e)(7) for the two Additional Appraisals. The value
stated in the appraisal delivered by the Third Appraiser
shall be substituted for the "Annual Appraised Value" and
the terms of Section 2.3(e)(5) hereof shall, with that
substitution, be used to determine the Put Value.
(9) "AML's Portion" of the Put Value is equal to (A) minus
(B), where (A) is equal to (i) the Put Value minus the
AML Distribution Appraised Value (as determined pursuant
to Section 2.3(e)(5) hereof), multiplied by (ii) AML's
(and its Affiliates' (other than Holding Company and its
Subsidiaries)) ownership of the Shares (as a percentage
of all outstanding Shares), and (B) is equal to (i) the
AML Distribution Appraised Value, multiplied by (ii)
ALIC's (and its Affiliates' (other than Holding Company
and its Subsidiaries)) ownership of the Shares (as a
percentage of all outstanding Shares). The "AML Earn-Out"
refers to an additional annual payment by ALIC to AML
based on the value of actual sales of the Variable
Products of AVLIC during the five-year period commencing
at the closing of the purchase by ALIC of AML's Shares.
The amount of such payments shall be based on the
valuation methods and assumptions described in Exhibit
2.3(e) hereto, using the actual sales of Variable
Products of AVLIC by AML and its Affiliates (other than
Holding Company and its Subsidiaries).
(10) In the event that a Change of Control of AML anticipated
as a result of a Change of Control Transaction does not
occur, the suspension of the Balanced Board Provisions as
described in Section 2.3(e)(1) hereof will end, any Put
Notice shall be withdrawn, any deemed agreement by ALIC
to purchase AML's (and its Affiliates') Shares shall be
deemed terminated, and the Joint Venture shall continue
as if the provisions of this Section 2.3(e) had never
been triggered (and immediately thereupon the
-11-
Exhibit 10.37
Inside Directors described in Section 2.3(e)(1) above
shall automatically and without further action regain
their voting status). These consequences shall be
effective immediately upon the earliest of any of the
following:
(A) AML delivers to ALIC in good faith a notice that the
Contract providing for the Change of Control
Transaction has been terminated; or
(B) AML makes a public announcement that the Change of
Control is not expected to occur; or
(C) the closing of the Change of Control Transaction
does not occur within six months after the
shareholder vote described in Section 2.3(e)(1).
In the event that a closing of the Change of Control
Transaction subsequently becomes likely, AML shall give
ALIC notice of such fact, and the procedures set forth in
this Section 2.3(e) shall become newly
applicable, with the 30-day period described in the
opening paragraph of this Section 2.3(e) commencing upon
the date on which AML gives ALIC such notice.
(11) In the event that a Change of Control of ALIC anticipated
as a result of a Change of Control Transaction does not
occur, any Put Notice shall be withdrawn, any deemed
agreement by ALIC to purchase AML's (and its Affiliates')
Shares shall be deemed terminated, and the Joint Venture
shall continue as if the provisions of this Section
2.3(e) had never been triggered. These consequences shall
be effective immediately upon the earliest of any of the
following:
(A) ALIC delivers to AML in good faith a notice that the
Contract providing for the Change of Control
Transaction has been terminated; or
(B) ALIC makes a public announcement that the Change of
Control is not expected to occur; or
(C) the closing of the Change of Control Transaction
does not occur within six months after the final
vote of shareholders of ALIC (or of such direct or
indirect parent company that is a party to the
Change of Control Transaction) in favor of the
Change of Control Transaction;
In the event that a closing of the Change of Control
Transaction subsequently becomes likely, ALIC shall give
AML notice of such fact, and the procedures set forth in
this Section 2.3(e) shall become newly
-12-
Exhibit 10.37
applicable, with the 30-day period described in the
opening paragraph of this Section 2.3(e) commencing upon
the date on which ALIC gives AML such notice.
(12) Notwithstanding any other provision of this Agreement, no
Unilateral Auction Notice and no Auction Notice may be
given from the date of one party's notice to the other of
a pending Change of Control until the expiration of the
latest of the following periods, as applicable:
a) The 30-day period following the date of a party's
notice to the other party of a pending Change of
Control of such party;
b) The 30-day period following the delivery of a
Balanced Governance Revocation Notice;
c) If a Put Notice is given or deemed given, the period
thereafter ending at the earlier of (i) the date of
closing of the sale and purchase of a party's Shares
hereunder or (ii) the date upon which the
consequences described in Sections 2.3(e)(10) or
(11) are effective.
25. A new Section 2.3(g) is added, which shall provide as follows:
(g) Following termination of this Agreement for any reason,
ALIC and AML and their Affiliates (other than Holding Company
and its Subsidiaries) shall be free to solicit and recruit
members of their respective Distribution Forces to enter into
or modify, expand or change relationships with one or more
broker-dealers other than broker-dealers that are Subsidiaries
of Holding Company.
SECTION 2.4--GOVERNANCE AND CONTROL
26. Section 2.4(a) is amended by deleting the current text in its
entirety and replacing it with the following:
The board of directors of Holding Company shall be comprised
of ten members, five of whom shall be selected by ALIC and
five of whom shall be selected by AML. Of the five directors
selected by each party, three shall be Inside Directors and
two shall be Outside Directors. After a President of AVLIC is
selected as provided in Section 2.4(e) hereof, that individual
may be added as an additional member of the board of directors
of Holding Company; provided, however, that the vote of this
individual shall not be taken into account in determining
whether any majority vote as described in Section 2.4(g)
hereof has been obtained.
27. Section 2.4(c) is amended by deleting the current text in its
entirety and replacing it with the following:
ALIC and AML shall cause the boards of directors of AVLIC and
of AIC to be comprised of eight members, four of whom shall be
selected by ALIC and four of whom shall be selected by AML.
All such directors shall be Inside Directors.
-13-
Exhibit 10.37
After a President of AVLIC is selected as provided in Section
2.4(e) hereof, that individual may be added as an additional
member of the board of directors of AVLIC; provided, however,
that the vote of this individual shall not be taken into
account in determining whether any majority vote as described
in Section 2.4(g) hereof has been obtained.
28. Section 2.4(j) is amended by deleting the current text in its
entirety and replacing it with the following:
Any Contract between Holding Company or any Subsidiary
thereof, on the one hand, and ALIC or any Affiliate thereof
(other than Holding Company and its Subsidiaries) or AML or
any Affiliate thereof (other than Holding Company and its
Subsidiaries), on the other, shall be effective only upon
approval of the board of directors of Holding Company or the
executive committee thereof. Until and unless such approval is
obtained, any such Contract shall be void ab initio.
29. A new Section 2.4(k) is added, which shall provide as follows:
In the event that the Joint Venture creates or acquires a new
Subsidiary, and unless otherwise agreed by the parties, ALIC
and AML shall cause the board of directors of such Subsidiary
to be comprised of an equal number of members, half of whom
shall be selected by ALIC and half of whom shall be selected
by AML.
SECTION 2.5--OPTION
30. Section 2.5 is amended by adding a new Section 2.5(f), which shall
provide as follows:
Notwithstanding anything to the contrary set forth herein,
from and after April 1, 2001, the provisions of Section 2.5
are no longer effective and AML shall no longer have any right
to exercise any unexercised portion of the Option.
SECTION 2.6--DISPUTE RESOLUTION AND AUCTION
31. In Sections 2.6(e)(4) and 2.6(e)(5)a), the words "within one year
after the Acceptance Date" are replaced with the words "within six months after
the Acceptance Date."
SECTION 2.8--OTHER
32. In Section 2.8(c), the following words are inserted in place of the
word "The" at the beginning of this section: "Except as otherwise expressly
agreed by the parties from to time, the", so that this section, as amended,
shall read:
Except as otherwise expressly agreed by the parties from to
time, the reinsurance business generated by AVLIC or any other
insurance company Subsidiary of Holding Company, in excess of
(in the case of AVLIC) the initial retention level
-14-
Exhibit 10.37
of $100,000, shall be offered 50% to ALIC and 50% to AML for
reinsurance by such party on a quota share basis and/or for
further offering to Third Parties as such party may reasonably
direct; provided, however, that reinsurance with respect to
policies issued by AVLIC resulting from the conversion of any
term policy issued by either AML or ALIC shall be offered in
full to the party (AML or ALIC) which issued the original
policy. Each such Third Party shall have a rating of at least
"Excellent" by A.M. Best, Inc. The parties shall negotiate a
reinsurance treaty among AVLIC, ALIC and AML which would be
effective at the Closing Date or as soon thereafter as may be
practicable, which treaty shall specify the parties'
agreements with respect to such reinsurance.
33. In Section 2.8(g), a reference to a Put Notice shall be added, so
that this section, as amended, shall read:
In the event one party gives the other an Auction Notice, a
Unilateral Auction Notice, a Put Notice or a Transfer Notice
pursuant to this Agreement, then both parties shall cause
Holding Company and its Subsidiaries to provide each other and
their respective counsel, accountants, actuaries and other
representatives (including such representatives of any lender,
potential venture partner or other similar Person) with
access, upon reasonable notice and during normal business
hours, to all facilities, officers, employees, agents,
accountants, actuaries, Assets and Properties, and Books and
Records of Holding Company and its Subsidiaries, and will
furnish such Persons during such period with all such
information and data (including without limitation copies of
Contracts and other Books and Records) concerning the
business, operations and affairs of Holding Company and its
Subsidiaries as such Persons shall reasonably request. Each
such Person which is not a party to this Agreement shall agree
to be subject to and bound by the confidentiality provisions
of Section 2.8(h) hereof.
34. The second sentence of Section 2.8(j) is hereby deleted in its
entirety.
MISCELLANEOUS
35. The changes set forth in Paragraphs 19, 20 and 22 of this Amendment
shall be deemed to have taken effect on July 1, 1999, in respect of Fixed
Annuities that are commonly referred to in the industry as equity indexed
annuities. With respect to all other Fixed Annuities, such changes are effective
at the Effective Date.
36. The headings used in this Amendment have been inserted for
convenience and do not constitute matter to be construed or interpreted in
connection with this Agreement. The parties have worked closely together in
drafting, negotiating and reviewing this Amendment, and therefore acknowledge
and agree that any rule of construction to the effect that any ambiguities are
to be resolved against the drafting party shall not be employed in the
interpretation of this Amendment.
-15-
Exhibit 10.37
IN WITNESS WHEREOF, this Amendment has been duly executed and delivered
by the duly authorized officers of ALIC and AML effective as of the date first
written above.
AMERITAS LIFE INSURANCE CORP.
By: /s/ Kenneth C. Louis
------------------------
Kenneth C. Louis,
Chairman of the Board & Chief
Executive Officer
AMERUS LIFE INSURANCE COMPANY
By: /s/ Gary R. McPhail
--------------------------
Gary R. McPhail, President &
Chief Executive Officer
-16-