Exhibit 2.1
INVESTMENT AND FUNDING AGREEMENT
This Investment and Funding Agreement ("Agreement"), is made and entered
into as of March 31, 1999, by and among INDIANAPOLIS LIFE GROUP OF COMPANIES,
INC., a corporation organized under the laws of the State of Indiana, whose
office and principal place of business is located at 0000 Xxxxx Xxxxxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxx 00000 ("the Company"), INDIANAPOLIS LIFE INSURANCE
COMPANY, a mutual life insurance company organized under the laws of the State
of Indiana, whose office and principal place of business is located at 0000
Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000 ("Indianapolis Life"),
AMERICAN UNITED LIFE INSURANCE COMPANY, a mutual life insurance company
organized under the laws of the State of Indiana, whose office and principal
place of business is located at Xxx Xxxxxxxx Xxxxxx, X.X. Xxx 000, Xxxxxxxxxxxx,
Xxxxxxx 00000-0000 ("AUL"), and LEGACY MARKETING GROUP, a corporation organized
under the laws of the State of California, whose office and principal place of
business is located at 0000 X. XxXxxxxx Xxxx., Xxxxxxxx, Xxxxxxxxxx 00000
("Legacy") (Indianapolis Life, AUL and Legacy are sometimes collectively
referred to herein as the "Investors" and individually referred to herein as an
"Investor").
RECITALS
1. The Company is a holding company for IL Annuity and Insurance Company, a
Massachusetts-domiciled stock insurance company ("IL Annuity"), IL Securities,
Inc., an Indiana corporation, Western Security Life Insurance Company, an
Arizona-domiciled stock insurance company and Bankers Life Insurance Company of
New York, a New York-domiciled stock insurance company, each of which is a
wholly-owned subsidiary of the Company. The Company was originally established
by Indianapolis Life as a wholly-owned subsidiary.
2. Indianapolis Life and AUL have signed an Agreement to Affiliate
expressing their mutual desire to integrate the companies under a mutual
insurance holding company structure as soon as practicable (the "Agreement to
Affiliate"). As part of the Agreement to Affiliate, AUL agreed to invest in the
Company by purchasing common stock, with the proceeds being used by the Company
to support the capital and surplus needs of the Company's insurance company
subsidiaries. As of the date of this Agreement and prior to the transactions
contemplated by this Agreement, Indianapolis Life owned 127.86 shares, or
66.79%, of the 191.44 outstanding shares of the Company's common stock, and AUL
owned 63.58 shares, or 33.21%, of the 191.44 outstanding shares of the Company's
common stock. IL Annuity now needs additional capital, and accordingly
Indianapolis Life and AUL now each wish to purchase additional common stock of
the Company.
3. An important part of Legacy's business is marketing and distributing
insurance and annuity products of IL Annuity. Legacy understands that sales of
such products create a substantial "surplus strain" on IL Annuity, and Legacy
wishes to facilitate IL Annuity's ability to continue to write such business.
Accordingly, Legacy now wishes to purchase common stock of the Company, with the
proceeds being used by the Company to support the capital and surplus needs of
the Company's insurance company subsidiaries.
4. IL Annuity's capital and surplus needs will be significantly reduced
when certain proposed changes to the National Association of Insurance
Commissioners' life risk-based capital instructions regarding the transfer of
the default risk and interest rate risk (e.g., C1 and C3 risks) in modified
coinsurance transactions (the "NAIC Mod-co Changes") become effective.
Accordingly, the Investors intend that their investments under this Agreement
will provide temporary funding, to be retired if and when the NAIC Mod-co
Changes are made.
5. The parties intend in this Agreement to provide for their purchase from
the Company of shares of the Company's common stock, for the repurchase of that
common stock by the Company, and for other related matters. As used in this
Agreement, the term "Shares" shall refer only to the authorized but unissued
shares of the Company's common stock issued and purchased under this Agreement.
AGREEMENT
In consideration of the premises and the mutual covenants set forth in this
Agreement, and intending to be legally bound hereby, the Company, Indianapolis
Life, AUL and Legacy agree as follows:
ARTICLE 5
Purchase and Sale of Shares
Section 1.1. Purchase by and Sale of Shares to Investors. On the date
hereof, the Company is issuing and selling to the Investors, and the Investors
are purchasing from the Company, the number of Shares set forth below opposite
each Investor's name, at a price per share of $779,182.34 (the "Initial Price"):
Name of Investor Number of Shares Total Purchase Price
Indianapolis Life 1.93 $ 1,500,000
AUL 5.78 $ 4,500,000
Legacy 15.40 $12,000,000
The Company hereby acknowledges receipt of payment in full for the Shares, and
the Investors hereby acknowledge receipt of certificates representing their
respective Shares. The Company shall contribute the amounts received from the
Investors as consideration for the issuance of the Shares to IL Annuity as a
contribution to its capital and surplus.
Section 1.2. Per Share Price and Adjustment to Number of Shares.
(a) The Investors acknowledge and confirm to the Company and to each other
that the Initial Price is based on an out-dated historical valuation (the "Old
Valuation") of the Company of $149,166,667 (before giving effect to the
additional cash proceeds of the Company's sale of the Shares), divided by the
total number of outstanding shares of common stock, and that a current valuation
of the Company is being prepared for the purpose of adjusting the number of
Shares, as provided in Section 1.2(b).
(b) The Investors desire and intend to purchase Shares based on the current
value of the Company. For the purposes of this Agreement, the current value of
the Company as of December 31, 1998 shall equal its book value as shown on the
Company's audited consolidated financial statement as of the year ended December
31, 1998 prepared in accordance with generally accepted accounting principles
(the "New Valuation). Accordingly, the Company shall present to the Investors
not later than April 30, 1999, the audited consolidated financial statement as
of the year ended December 31, 1998.
(b) The New Valuation shall provide the basis for the "Adjusted Initial
Price," which shall be equal to the New Valuation, divided by the total number
of outstanding shares of common stock of the Company as of December 31, 1998
(191.44 shares).
(c) Upon determination of the Adjusted Initial Price as provided for in
this Agreement, the number of Shares purchased by each Investor shall be
adjusted to a number that equals (i) that Investor's total purchase price, as
set forth in Section 1.1 of this Agreement, divided by (ii) the Adjusted Initial
Price; such number of Shares to be rounded to the nearest 100th of a Share. On
the date hereof each Investor has deposited with the Company its certificate
representing the Shares purchased by it under Section 1.1 of this Agreement, and
while such Shares are deposited with the Company each Investor shall be entitled
to vote its Shares and to receive any dividends paid. Each Investor hereby
authorizes the Company to substitute for that initial stock certificate, a new
stock certificate reflecting the corrected number of Shares, based on the
Adjusted Initial Price. After determination of the Adjusted Initial Price, the
Company shall promptly deliver to each Investor the corrected stock certificate
called for by this Section 1.2(c).
(d) Legacy understands and acknowledges that the Adjusted Initial Price is
likely to be greater than the per share price paid by AUL and Indianapolis Life
for the shares of the common stock of the Company held by them before giving
effect to the transactions contemplated by this Agreement, and all the Investors
understand and acknowledge that the Adjusted Initial Price is likely to be
greater than the Initial Price.
ARTICLE 5
Repurchase of the Shares
Section 2.1. Repurchase at Option of the Company. The Company may, at any
time at its election, repurchase all or part of the then outstanding Shares from
the Investors, by giving notice as provided in Section 2.5 and upon payment to
each Investor of the Repurchase Price for its Shares being repurchased,
calculated as described in Section 2.6. In the event that the Company elects to
repurchase part but not all of the then outstanding Shares, the Company shall
repurchase Shares in the order provided in Section 2.4.
Section 2.2. Mandatory Repurchase.
(a) Provided that the NAIC Mod-co Changes have been adopted by the NAIC and
are applicable to IL Annuity, the Company shall repurchase all or part of the
then outstanding Shares from the Investors, subject to and in accordance with
the other provisions of this Section 2.2, in one or more repurchase transactions
as soon as is practicable after adoption of the NAIC Mod-co Changes.
(b) The number of Shares to be repurchased by the Company under this
Section 2.2 shall equal (i) the amount of funds then available to the Company
for such repurchase, including funds distributed to the Company by IL Annuity,
divided by (ii) the Repurchase Price for the Shares, calculated as described in
Section 2.6. In that regard, provided that the NAIC Mod-Co Changes have been
adopted by the NAIC and are applicable to IL Annuity, the Company shall use its
commercially reasonable efforts to cause IL Annuity to distribute funds to the
Company, but only to the extent that such distribution would not result in IL
Annuity's total adjusted capital falling below 175% of its "company action level
risk based capital" (or such higher risk based capital ratio as may be required
by the Massachusetts Department of Insurance), such that all of the Shares or,
if that is not feasible, the greatest number of Shares, may be repurchased.
(c) The Investors understand and acknowledge that the Company's repurchase
of the Shares will, to a large degree, be dependent upon approvals by the
Massachusetts Department of Insurance of distributions from IL Annuity to the
Company, and that such Department's approval of distributions is discretionary
and may depend, among other factors, upon the NAIC Mod-co Changes becoming
effective and applicable to IL Annuity.
(d) The Repurchase Price for Shares repurchased under this Section 2.2
shall be calculated as described in Section 2.6.
(e) In the event that fewer than all of the then outstanding Shares are
being repurchased under this Section 2.2, the Company shall repurchase Shares in
the order provided in Section 2.4.
(f) The Company shall give notice of any repurchase of Shares under this
Section 2.2 as provided in Section 2.5.
Section 2.3. Put Right of Legacy. In the event that either:
(a) AUL and Indianapolis Life consummate their affiliation under a mutual
insurance holding company structure or combine under some other structure before
all of Legacy's Shares are repurchased under Sections 2.1 or 2.2, or
(b) all of the Shares held by Legacy have not been repurchased by the
Company by March 31, 2007;
Legacy shall have the right, by written notice to the Company, to require the
Company promptly to repurchase all of the Shares owned by Legacy, at the
Repurchase Price calculated as described in Section 2.6.
Section 2.4. Order of Repurchase. The Company shall repurchase Shares from
Indianapolis Life, AUL and Legacy under this Article II ( whether optional or
mandatory), other than a repurchase under Section 2.3, based on the ratio of the
number of Shares purchased by each such Investor to the total number of Shares
purchased by the Investors under this Agreement.
Section 2.5. Notice and Closing. The Company shall give prompt written
notice to each of the Investors of each proposed repurchase of Shares under this
Article II. Each such notice shall include (i) the number of Shares to be
repurchased from each Investor, (ii) the Repurchase Price (calculated in the
manner described in Section 2.6), and (iii) the proposed date of the repurchase,
which shall be not earlier than five (5) business days following the date of the
notice and not later than thirty (30) business days following the date of the
notice.
(b) Each such repurchase of Shares shall take place at the offices of the
Company in Indianapolis, Indiana, upon delivery by each Investor whose Shares
are being repurchased of a certificate or certificates representing the Shares,
duly endorsed for transfer to the Company, free and clear of any liens,
restrictions or encumbrances other than those imposed by this Agreement, and by
wire transfer from the Company to a bank account designated by each Investor
whose Shares are being repurchased of immediately available funds equal to the
aggregate Repurchase Price of the Shares being repurchased. If fewer than all of
the Shares represented by an Investor's stock certificate are being repurchased,
the Company shall promptly return to such Investor a new certificate
representing the Shares that have not been repurchased.
Section 2.6. Repurchase Price. The per share purchase price for Shares
repurchased under this Article II (the "Repurchase Price") shall be calculated
as follows:
(a) for a repurchase of Shares from Legacy, the Repurchase Price shall be
the Adjusted Initial Price, plus an amount calculated at the average rate of
return to IL Annuity on the amount of funds contributed to IL Annuity under this
Agreement from the date of this Agreement through the date of payment of the
Repurchase Price (on the basis of a year of 365 days);
(b) for a repurchase of Shares from AUL or Indianapolis Life, the
Repurchase Price shall be equal to either: (1) if the Company's common stock is
not registered under the Securities Exchange Act of 1934, as amended, or
otherwise publicly traded, the Adjusted Initial Price multiplied by a fraction,
(A) the numerator of which is the per share book value of the Company's common
stock as of the end of the most recent quarter ended prior to the date of the
notice required by Section 2.5, and determined based upon the Company's
financial statements prepared in accordance with generally accepted accounting
principles (and with a pro forma adjustment for any NAIC Mod-co Change that is
not already reflected in such financial statements), and (B) the denominator of
which is the Adjusted Initial Price; or (2) if the Company's common stock is
registered under the Securities Act of 1934, as amended, or otherwise publicly
traded, the average closing price of the stock during the five business days
preceding the closing of the repurchase.
Section 2.7. Regulatory Approval. The Company shall use its commercially
reasonable efforts to seek approval from the Massachusetts Division of Insurance
for the payment of dividends or other distributions by IL Annuity in connection
with the repurchase of the Shares under this Article II. Notwithstanding
anything to the contrary in this Agreement, the Company's obligation to
repurchase any of the Shares under Section 2.2 at any time shall be subject to
receipt by the Company and IL Annuity of any and all required regulatory
approvals, including approvals required for any dividend or other distribution
to the Company from its insurance company subsidiaries.
Section 2.8. Reporting Requirement. Until all of the Shares are repurchased
under this Article II, the Company shall provide, to each of the Investors
holding Shares at the applicable time, a copy of (a) the Company's year-end
audited consolidated financial statement prepared in accordance with generally
accepted accounting principles within ten (10) days of the completion of the
audit and (b) quarterly financial statements prepared in accordance with
generally accepted accounting principles within forty-five (45) days after the
end of the applicable quarter.
ARTICLE 5
Transfer Restrictions on Legacy's Shares
Section 3.1. Acknowledgment of Restrictions. This Article III restricts
Legacy's rights to sell or otherwise transfer any of the Shares issued to or
held by Legacy, and the parties believe that the stability, the integrity and
the interests of the Company and its subsidiaries, including the continued
successful and harmonious management of the Company and its subsidiaries, will
be best served and promoted by restricting Legacy's rights to transfer any of
its Shares. Legacy acknowledges that such restrictions are reasonable and in the
best interests of the Company and its subsidiaries. Legacy further acknowledges
that neither the Shares nor any other shares of the Company's stock issued to or
held by Indianapolis Life and AUL are subject to similar transfer restrictions
due to the close relationship between Indianapolis Life and AUL and to the
proposed affiliation of the two companies under the Agreement to Affiliate.
Section 3.2. Transfer Restrictions. Legacy may make a transfer of any or
all of its Shares only as provided in Section 3.3 of this Agreement or in
Article II of this Agreement. For purposes of this Agreement, the term
"transfer" shall mean any sale, exchange, assignment, gift, pledge, grant of a
security interest, grant of a power of attorney, grant of an option to purchase
or any other alienation, disposition or encumbrance of any Shares or of any
interest in Shares by contract, operation of law or otherwise.
Section 3.3. The Company's Right of First Refusal.
(a) Legacy shall not sell any of the Shares until after June 30, 2000. If
Legacy desires to sell any or all of its Shares after June 30, 2000, Legacy must
first offer to sell such Shares to the Company as follows:
(1) Legacy shall give written notice to the Company that Legacy desires to
sell some or all of its Shares, stating the number of Shares offered for sale
and the requested price per share of such Shares and any other requested payment
terms (the "Requested Terms"). In the event that Legacy has received or
anticipates receipt of an offer to purchase some or all of its Shares from a
third party other than the Company, Legacy shall request that such outside offer
be put into writing, including a statement of the number of Shares subject to
such offer and the Requested Terms. A copy of any such written outside offer
shall be provided to the Company as part of the notice required under this
Section 3.3(a)(1).
(2) The Company shall have the option for sixty (60) days after its receipt
of the notice described in Section 3.3(a)(1) to purchase all, but not less than
all, of such Shares upon the Requested Terms, or at such other price per Share
and other terms as may be agreed upon by Legacy and the Company.
(3) The Company's purchase option under Section 3.3(a)(2) may be exercised
only by giving notice to Legacy in accordance with Section 6.4. Such notice
shall specify the date of closing, which must be within seventy-five (75) days
after the date of delivery of Legacy's notice to the Company under Section
3.3(a)(1).
(4) Any of the Company's rights under this Section 3.3 may be assigned to
Indianapolis Life or AUL. In the event that the Company elects not to exercise
its rights under this Section 3.3, the Company shall offer, within twenty (20)
days after its receipt of the notice described in Section 3.3(a)(1), its right
of first refusal to purchase 75% of the Shares offered by Legacy to AUL and its
right of first refusal to purchase 25% of the Shares offered by Legacy to
Indianapolis Life. The Company shall promptly give Legacy written notice of any
such assignment.
(b) In the event that the option of the Company (or its assignees) to
purchase all of the Shares offered by Legacy lapses, is waived or becomes void,
then Legacy may seek to make a sale (an "Outside Sale") of all, but not less
than all, of such Shares to any outside party at a price per share equal to or
greater than specified as part of the Requested Terms and on other terms no more
favorable (to the purchaser) than specified in the Requested Terms. Legacy shall
have a period not to exceed sixty (60) days
after the option of the Company lapses, is waived or becomes void, for the
closing of any such Outside Sale. The Shares transferred by any such Outside
Sale shall continue to be subject to the terms, conditions and benefits of this
Agreement, and the purchaser of such Shares shall execute an agreement, in form
and substance reasonably acceptable to the Company, agreeing to be bound by this
Agreement as if it were an original party hereto.
Section 3.4. Restrictive Legend. The certificate or certificates evidencing
the Shares issued to Legacy shall bear the following legend, or a substantially
similar legend:
"Encumbrance, pledge, assignment, transfer or other disposition of the
Shares represented by this certificate is subject to the restrictions
and rights of first refusal contained in an Investment and Funding
Agreement dated as of March 31, 1999, among the Corporation and certain
of its shareholders. A copy of such Agreement is on file at the
principal office of the Corporation."
ARTICLE 5
Representations and Warranties of Investors
Each Investor hereby severally, and not jointly, represents and warrants to
each of the other Investors and to the Company as follows:
Section 4.1. Authority.
(a) The Investor is duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated.
(b) The Investor is duly qualified to do business and is in good standing
in all of the states in which it is transacting business.
(c) The execution, delivery and performance of this Agreement by the
Investor has been approved by all necessary corporate action and does not
require the consent of any person or entity for such execution, delivery and
performance under any contract or agreement to which the Investor is a party.
Section 4.2. No Conflict; Required Filings and Consents. This Agreement is
a valid and binding obligation of the Investor, enforceable in accordance with
its terms, and does not:
(a) conflict with or result in a breach of any provision of the Investor's
Articles of Incorporation, bylaws or any contract to which the Investor is a
party or by which it may be bound;
(b) violate any judgment, order, writ, injunction or decree of any court,
administrative agency or governmental body applicable to the Investor;
(c) cause or give any person grounds to cause the maturity of any liability
of the Investor to be accelerated or increased; or
(d) violate any code, statute, rule or regulation of the United States of
America or any state, which is applicable to the Investor, subject to such
regulatory filings and approvals as contemplated by this Agreement.
Section 4.3. Investment Representations. The Investor:
(a) is acquiring the Shares for its own account as an investment and
without an intent to distribute the Shares;
(b) acknowledges that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any state
securities laws, and may not be resold or transferred by an Investor without
appropriate registration or the availability of an exemption from such
requirements;
(c) is an "Accredited Investor," as such term is defined in Rule 501(a) of
Regulation D promulgated by the United States Securities and Exchange Commission
pursuant to the Securities Act;
(d) has had an opportunity to make inquiries concerning the Company and
each other Investor and all matters relevant to an investment in the Shares and
has been given the opportunity to ask questions of, and receive answers from,
Indianapolis Life and the Company concerning both companies, their businesses,
the Shares, the risks associated with an investment in the Shares, and such
additional information as it deems necessary to evaluate an investment in the
Shares;
(e) has such knowledge and experience in business and financial matters in
general as to be capable of evaluating Indianapolis Life and the Company, their
proposed activities, and the risks and merits of an investment in the Shares;
(f) understands that no federal or state agency has made any finding or
determination as to the fairness of the offering of the Shares, nor any
recommendation or endorsement of the Shares; and
(g) agrees that the certificates representing the Shares will bear a legend
substantially to the following effect:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED, THE INDIANA
SECURITIES LAW OR THE CALIFORNIA SECURITIES LAW. THESE SHARES MAY NOT
BE SOLD OR OFFERED FOR SALE UNLESS THEY HAVE FIRST BEEN SO REGISTERED
OR UNLESS THE CORPORATION'S COUNSEL HAS GIVEN AN OPINION THAT SUCH
REGISTRATIONS ARE NOT REQUIRED."
Section 4.4. Availability of Funds. The Investor has the funds available to
pay the total purchase price for its respective Shares on the date hereof.
ARTICLE 5
Representations and Warranties of the Company
The Company hereby represents and warrants to the Investors as follows:
Section 5.1. Organization and Authority.
(a) The Company is an Indiana corporation, duly organized and validly
existing.
(b) The execution, delivery and performance of this Agreement by the
Company has been approved by all necessary corporate action and does not require
the consent of any person or entity for such execution, delivery and performance
under any contract or agreement to which is a party.
Section 5.2. No Conflict; Required Filings and Consents. This Agreement is
a valid and binding obligation of the Company, enforceable against the Company
in accordance with its terms, and does not:
(a) conflict with or result in a breach of any provision of Articles of
Incorporation, bylaws or any contract to which the Company is a party or by
which it may be bound;
(b) violate any judgment, order, writ, injunction or decree of any court,
administrative agency or governmental body applicable to the Company;
(c) cause or give any person grounds to cause the maturity of any liability
of the Company to be accelerated or increased; or
(d) violate any code, statute, rule or regulation of the United States of
America or any state, which is applicable to the Company, subject to such
regulatory filings and approvals as contemplated by this Agreement.
Section 5.3. Financial Statements.
(a) The unaudited consolidated financial statements of the Company for and
as at the year ended December 31, 1998, have been prepared in accordance with
generally accepted accounting principles ("GAAP") and fairly present the
consolidated results of operations and financial condition of the Company on a
GAAP basis for such period (subject to normal audit adjustments and the absence
of notes).
(b) Except for liabilities and obligations incurred after December 31, 1998
in the ordinary course of the Company's business that are not material to its
business or financial condition, the Company has no liabilities or obligations
of any nature (matured or unmatured, fixed or contingent) that are not provided
for in the such financial statements to the extent required by GAAP.
Section 5.4. Capitalization; Valid Issuance.
(a) Prior to consummation of the transactions contemplated by this
Agreement, the Company has issued and outstanding 191.44 shares of its common
stock. Other than this Agreement or the Agreement to Affiliate, the Company has
no outstanding options, warrants, conversion rights, agreements or commitments
for the issuance, transfer or sale of any common stock of the Company.
(b) Upon the issuance of the Shares to the Investors upon the terms and
conditions of this Agreement, the Shares, along with all previously issued
shares of common stock, shall be validly issued, fully paid, non-assessable and
free from any further capital call. All such Shares have been or will have been,
as the case may be, issued in compliance with all applicable laws and
regulations, including but not limited to all federal, state, and other
securities laws and regulations.
ARTICLE 5
Miscellaneous and General
Section 6.1. Non-Assignment. This Agreement and any rights pursuant hereto
shall not be assignable by any party hereto (except as expressly provided or
permitted in this Agreement). Except as and to the extent specifically provided
in this Agreement, nothing in this Agreement, expressed or implied, is intended
to confer on any person other than the parties hereto, or their respective legal
successors, any rights, remedies, obligations or liabilities, or to relieve any
person other than the parties hereto, or their respective legal successors, from
any obligations or liabilities that would otherwise be applicable. The covenants
and agreements contained in this Agreement shall be binding upon, extend to and
inure to the benefit of the parties hereto, and each of their successors
respectively.
Section 6.2. Governing Law. This Agreement is made pursuant to and shall be
governed by, interpreted under, and the rights of the parties determined in
accordance with, the laws of the State of Indiana (without regard to any Indiana
rules or principles of conflicts of law that might look to any jurisdiction
outside of Indiana).
Section 6.3. Mediation and Arbitration. Any controversy, dispute or claim
under, arising out of or relating to this Agreement or its breach, which is not
resolved by mutual agreement shall be resolved by mediation efforts first, and,
failing that, by arbitration. Any party may make a written request for
mediation. If the parties fail to agree on the identity of a mediator within
fourteen (14) days of a demand, the requesting party shall contact the Indiana
Insurance Commissioner to appoint a mediator. The mediation shall occur in
Indianapolis, Indiana within twenty-one (21) days after appointment of the
mediator. The parties shall share equally in the costs of the mediation. If
mediation does not resolve the controversy, then either party may demand
arbitration.
Any party may give the others notice of its decision to submit a matter to
arbitration under this provision. A single arbitrator shall be appointed by the
American Arbitration Association. The arbitrator must be an executive officer or
former executive officer of a life insurance company other than a person
affiliated with, or who has been affiliated with any party. Arbitration
hereunder shall be the exclusive remedy of the parties for the enforcement of
this Agreement and shall be pursuant to the arbitration laws of the State of
Indiana. The arbitrator so chosen shall consider this Agreement from the
standpoint of practical business and equity, and shall not be bound by judicial
formalities and strict rules of law. The arbitrator shall submit a written
decision. The parties agree that final judgment may be entered upon the
arbitrator's decision in any court of competent jurisdiction and that the
arbitrator's decision may not be appealed. The cost of arbitration, including
the fee of the arbitrator, shall be borne by any or all parties in such
proportions as the arbitrator, in his sole discretion, may determine to be
equitable. The arbitration shall take place in Indianapolis, Indiana. The
arbitrator shall be instructed that in no event shall an award include either
termination or rescission of this Agreement unless the parties agree in writing
prior to the arbitration that termination or rescission would be an appropriate
remedy to consider.
Section 6.4. Notice. All notices, statements or requests provided for
hereunder shall be deemed to have been duly given when delivered by hand to an
officer of the other party, or when deposited with the U.S. Postal Services, as
certified or registered mail, postage prepaid, addressed:
(a) If to Indianapolis Life to:
Indianapolis Life Insurance Company
Attn: General Counsel
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
(b) If to the Company to:
Indianapolis Life Group of Companies, Inc.
Attn: General Counsel
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
(c) If to AUL to:
American United Life Insurance Company
Attn: General Counsel
Xxx Xxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxxxx, XX 00000-0000
(d) If to Legacy to:
Legacy Marketing Group
Attn: General Counsel
0000 X. XxXxxxxx Xxxx.
Xxxxxxxx, XX 00000
with a copy to:
Xxxx Xxxxx, Esq.
Xxxxxx, Xxxxxxx & Xxxxxxxxxx, LLP
00 Xxxxxxxxx Xxxx Xxxxx, X.X.
Xxxxxxx, XX 00000-0000
or to such other person or place as each party may from time to time designate
by written notice sent as provided for herein.
Section 6.5. Severability. If any term, condition or provision of this
Agreement shall be determined to be invalid, inoperative or unenforceable, this
Agreement shall be given effect and applied without reference to the invalid,
inoperative or unenforceable provision and the remainder of this Agreement shall
be given effect, applied, interpreted, construed, and enforced accordingly.
Section 6.6. Entire Agreement. This Agreement, together with such
Amendments as may from time to time be executed in writing by the parties, such
amendments specifically referring to this Agreement, constitutes the entire
Agreement between the parties with respect to the subject matter hereof. Nothing
in this Agreement shall modify or supersede (a) any of the provisions of the
Agreement to Affiliate, which shall remain in full force and effect in
accordance with its terms, although Indianapolis Life and AUL acknowledge that
the Shares are subject to mandatory repurchase subject to Section 2.2 of this
Agreement, or (b) any of the provisions of the Investment Agreement, dated as of
November 3, 1997, among the Company, AUL and Indianapolis Life, or any other
agreements among such parties relating to shares of common stock of or
investments in the Company other than the Shares, each of which agreements shall
remain in full force and effect in accordance with its terms.
Section 6.7. Confidentiality. The parties, their respective subsidiaries
and their respective directors, officers, employees, agents, consultants, legal
counsel, auditors and other representatives shall each keep confidential, except
as required by law, any written materials or other information which is not
readily ascertainable from public information or sources, obtained in whatever
form from the other and the terms, conditions and provisions of this Agreement,
except in each case for disclosures mutually approved in writing by the parties.
Section 6.8. Expenses. The parties' respective expenses involving or
relating to this Agreement or the consummation of the transactions contemplated
by or provided for in this Agreement shall be borne by the party incurring such
expenses.
Section 6.9. Other Instruments, Regulatory Requirements and Cooperation.
The parties will from time to time cooperate with each other, upon the request
of the other, and without further consideration execute, acknowledge, and
deliver in proper form any further instruments and take such other action as may
reasonably be required to carry out effectively the intent of this Agreement.
The parties further agree that they shall cooperate with each other in complying
with regulatory requirements and responding to regulatory inquiries associated
with this Agreement.
Section 6.10. Future Stock Purchases. The parties understand that IL
Annuity may need additional capital before the end of 1999 to support its
continued insurance writings until the NAIC Mod- co Changes become effective and
that the Investors may be requested to purchase additional common stock of the
Company to fund those needs.
Section 6.11. Headings. The headings in this Agreement are inserted for
convenience and identification purposes only and are not intended to describe,
interpret, define, or limit the scope, the extent or intent of this Agreement
nor any provision hereof.
Section 6.12. Waiver of Breach. Neither the failure nor any delay on the
part of any party to exercise any right, remedy, power, or privilege under this
Agreement shall operate as a waiver thereof. Nor shall any single or partial
exercise of any right, remedy, power or privilege preclude the further exercise
of that right, remedy, power or privilege or the exercise of any other right,
remedy, power or privilege. Nor shall any waiver of any right, remedy, power or
privilege with respect to any occurrence be construed as a waiver of that right,
remedy, power or privilege with respect to any other occurrence. Any waiver
shall not be effective unless it is in writing and signed by the party granting
the waiver.
Section 6.13. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to constitute an original but all of which
together shall constitute one and the same instrument.
4/14/99 3:01 pm
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers as of the date first written above.
INDIANAPOLIS LIFE GROUP
OF COMPANIES, INC.
/s/Xxxxx Xxxxxx
By Xxxxx Xxxxxx
Its
INDIANAPOLIS LIFE INSURANCE COMPANY
/s/Xxxxx Xxxxxx
By Xxxxx Xxxxxx
Its
AMERICAN UNITED LIFE
INSURANCE COMPANY
/s/Xxxxx Xxxxxx
By Xxxxx Xxxxxx
Its
LEGACY MARKETING GROUP
/s/Skup
By Xxxxx X. Xxxx
Its Chief Financial Officer
