EXHIBIT 9
AMENDED AND RESTATED ALLIED GROUP
INTERCOMPANY OPERATING AGREEMENT
TABLE OF CONTENTS
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I. TRANSFER OF EMPLOYEE GROUP.......................................... 2
Section 1.1 Mutual Employees...................................... 2
Section 1.2 Western Heritage Employees............................ 2
Section 1.3 Employment Agreements................................. 3
Section 1.4 Option Agreements..................................... 4
II. LEASE OF EMPLOYEES.................................................. 4
Section 2.1 Lease of Employees.................................... 4
Section 2.2 Allocation of Personnel Cost.......................... 6
Section 2.3 Employment Relationships.............................. 6
Section 2.4 Officers.............................................. 7
Section 2.5 Joint Compensation Committee Membership............... 7
Section 2.6 Joint Compensation Committee Authority................ 7
Section 2.7 Notification of Plan Charges.......................... 8
III. OFFICE FACILITIES................................................... 8
Section 3.1 Currently Occupied Office Facilities.................. 8
Section 3.2 New Office Space...................................... 9
Section 3.3 Disputes.............................................. 9
IV. COMPUTER EQUIPMENT AND SERVICES..................................... 9
Section 4.1 Management Information Services Agreement............. 9
V. AIRCRAFT AND FLIGHT SERVICES........................................ 9
Section 5.1 Availability.......................................... 9
Section 5.2 Cost and Allocations.................................. 10
VI. EQUIPMENT, VEHICLES, AND OTHER PROPERTY............................. 10
Section 6.1 ALLIED Leasing Property............................... 10
Section 6.2 Cost Allocation....................................... 10
VII. AGENCY FORCE........................................................ 10
Section 7.1 Independent Agents.................................... 10
Section 7.2 Exclusive Agency Listings............................. 11
VIII. POOLING AGREEMENT................................................... 11
Section 8.1 Pooled Elements....................................... 11
IX. REPRESENTATIONS AND WARRANTIES...................................... 11
Section 9.1 General............................................... 11
Section 9.2 Representations and Warranties by AGI and AGI
Subsidiaries......................................... 11
Section 9.3 Representations and Warranties by Mutual and the Mutual
Subsidiaries......................................... 13
Section 9.4 Representations and Warranties by ALFC and the ALFC
Subsidiaries......................................... 15
X. TERMINATION, AMENDMENT, AND CHANGE OF CONTROL....................... 16
Section 10.1 Term and Termination.................................. 16
Section 10.2 Amendment............................................. 17
Section 10.3 Charge of Control of ALFC............................. 17
Section 10.4 Charge of Control of AGI.............................. 18
XI. ARBITRATION......................................................... 18
Section 11.1 Consent to Arbitration................................ 18
Section 11.2 Authority of Arbitrators.............................. 19
Section 11.3 Expenses; Location.................................... 19
Section 11.4 Restriction........................................... 19
XII. INDEMNIFICATION..................................................... 20
Section 12.1 Indemnification by Mutual............................. 20
Section 12.2 Indemnification by AGI................................ 20
Section 12.3 Indemnification by ALFC............................... 20
Section 12.4 Limitations........................................... 20
Section 12.5 Participation in Defense.............................. 20
XIII. AFFIRMATIVE COVENANTS............................................... 21
Section 13.1 Cooperation........................................... 21
Section 13.2 Marketing............................................. 21
Section 13.3 Life Insurance Products............................... 21
Section 13.4 Agency................................................ 22
Section 13.5 Current Information................................... 22
Section 13.6 Confidences and Trade Secrets......................... 22
Section 13.7 Covenant Not To Compete............................... 23
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XIV. REGULATORY AND OTHER APPROVALS...................................... 23
Section 14.1 Regulatory Filings.................................... 23
Section 14.2 Other Approvals....................................... 23
XV. ALFC, ALLIED LIFE, AND ALBA EMPLOYEES............................... 24
Section 15.1 ALFC, ALLIED Life, and ALBA Employees................. 24
XVI. MISCELLANEOUS....................................................... 24
Section 16.1 Assignment............................................ 24
Section 16.2 Waiver; Remedies...................................... 25
Section 16.3 Permissive Release of Confidential Information........ 25
Section 16.4 Notices............................................... 25
Section 16.5 Governing Law......................................... 25
Section 16.6 Enforceability........................................ 26
Section 16.7 Survival of Representations and Warranties............ 26
Section 16.8 Counterparts.......................................... 26
Section 16.9 Headings.............................................. 26
Section 16.10 Entire Agreement...................................... 26
XVII. DEFINITIONS......................................................... 26
Section 17.1 ACA................................................... 26
Section 17.2 AGA................................................... 26
Section 17.3 AGI................................................... 27
Section 17.4 AGI Subsidiaries...................................... 27
Section 17.5 ALBA.................................................. 27
Section 17.6 ALFC.................................................. 27
Section 17.7 ALFC Subsidiaries..................................... 27
Section 17.8 ALLIED Group.......................................... 27
Section 17.9 ALLIED Leasing........................................ 27
Section 17.10 ALLIED Life........................................... 27
Section 17.11 AMCO.................................................. 27
Section 17.12 AMCO Subsidiaries..................................... 27
Section 17.13 Annual Rental Cost.................................... 27
Section 17.14 APC................................................... 27
Section 17.15 Coordinating Committee................................ 27
Section 17.16 Current Restructuring................................. 28
Section 17.17 Depositors............................................ 28
Section 17.18 Direct Employee Allocation............................ 28
Section 17.19 Direct Employees...................................... 28
Section 17.20 ▇▇▇▇▇▇▇▇▇ Daukins, Inc................................ 28
Section 17.21 ▇▇▇▇▇▇▇▇▇ Daukins Subsidiaries........................ 28
Section 17.22 Employee Group........................................ 28
Section 17.23 Employee Utilization Percentage....................... 28
Section 17.24 ESOP.................................................. 28
Section 17.25 Human Resources Department............................ 28
Section 17.26 Insurance Approvals................................... 28
Section 17.27 Joint Compensation Committee.......................... 29
Section 17.28 Joint Marketing Agreement............................. 29
Section 17.29 MIS Agreement......................................... 29
Section 17.30 Mutual................................................ 29
Section 17.31 Mutual Subsidiaries................................... 29
Section 17.32 Pool.................................................. 29
Section 17.33 Pooling Agreement..................................... 29
Section 17.34 Restructuring Plan.................................... 29
Section 17.35 Staff Employees....................................... 29
Section 17.36 Surplus Office Space.................................. 29
Section 17.37 Total Personnel Costs................................. 30
XVIII.RESTATEMENT OF ALLIED GROUP INTERCOMPANY OPERATING AGREEMENT........ 30
Section 18.1 Restatement........................................... 30
SIGNATURES.............................................................. 30-31
SUBSIDIARY SIGNATURE ADDENDA............................................ 32-37
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AMENDED AND RESTATED ALLIED GROUP
INTERCOMPANY OPERATING AGREEMENT
This Amended and Restated ALLIED Group Intercompany Operating Agreement
("Agreement"), made effective as of January 1, 1990, is amended and restated on
August 25, 1993, by and among ALLIED Mutual Insurance Company, an Iowa mutual
insurance corporation, ("Mutual") including the Mutual Subsidiaries listed in
Section 17.31 of this Agreement which are or will become parties by executing
an addendum to this Agreement, ALLIED Group, Inc., an Iowa corporation, ("AGI")
including the AGI Subsidiaries listed in Section 17.4 of this Agreement which
are or will become parties by executing an addendum to this Agreement, and
ALLIED Life Financial Corporation, and Iowa corporation ("ALFC") including the
ALFC subsidiaries listed in Section 17.7 of this Agreement which are or will
become parties by executing an addendum to this Agreement. Mutual, the Mutual
Subsidiaries, AGI, the AGI Subsidiaries, ALFC, and the ALFC Subsidiaries
together constitute the "ALLIED Group." All other capitalized terms used in
this Agreement and not otherwise defined shall have the meanings set forth below
under Article XVII.
RECITALS
WHEREAS, the companies in the ALLIED Group are engaged in various
businesses including property-casualty insurance, life insurance, data
processing, and various financial services using common employees, office
facilities, agency contacts, aircraft, vehicles, and equipment; and
WHEREAS, prior to the original adoption of this Agreement on January 1,
1990, Mutual owned a majority voting interest in all companies in the ALLIED
Group, either directly or indirectly, and allocation of employees and other
business resources had been accomplished without, for the most part, formal
written agreements, and that Mutual had employed persons, owned or leased office
facilities, together with AMCO had maintained agency relationships, together
with ALLIED Leasing had owned or leased property, equipment, or vehicles that
have been required to conduct the business of the ALLIED Group, and had made
such resources available to the companies in the ALLIED Group; and
WHEREAS, as of January 1, 1990, responsibility for the employment of
persons for the ALLIED Group, except persons employed by ALLIED Life, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, Inc., and the ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Subsidiaries, was transferred to AGI
from Mutual to implement a portion of a Restructuring Plan for the ALLIED Group;
and
WHEREAS, ALFC was formed July 20, 1993 and is entering into this Agreement
as part of the Current Restructuring of the ALLIED Group; and
WHEREAS, unless otherwise indicated, capitalized terms shall have such
meaning as set forth in Article XVII of this Agreement;
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NOW THEREFORE, in consideration of the foregoing, and of the mutual
covenants set forth below and other valuable consideration, the receipt of which
is hereby acknowledged, the parties agree as follows:
I. TRANSFER OF EMPLOYEE GROUP
Section 1.1 Mutual Employees.
(a) Under the Restructuring Plan, Mutual terminated its employment of
all persons shown on the ALLIED Mutual Insurance Company Payroll Register (the
"Mutual Payroll Register") as of the close of business on December 31, 1989.
The Mutual Payroll Register was a true, correct, and complete listing of all
persons employed by Mutual as of that date, and contained true and correct
information as to the positions, years of service, and salaries of all such
employees.
(b) Under the Restructuring Plan, AGI hired all persons who were listed
or properly should have been listed on the Mutual Payroll Register at the same
salaries and benefits, on the same terms and conditions, and subject to the same
defenses, rights, and obligations to which Mutual may be subject, or to which
Mutual may be entitled, commencing as of the start of business January 1, 1990.
AGI shall not be deemed to have employed any persons whose employment by Mutual
would otherwise terminate as of or prior to such date but for this Agreement.
Except as may be set forth in Section 1.3, nothing in this Agreement shall
obligate AGI to continue to retain or employ any employee hired by AGI pursuant
to this Agreement for any particular period of time or at any particular rate of
compensation after January 1, 1990.
(c) Mutual transferred to AGI all assets relating to the employee group
hired by AGI pursuant to this Agreement.
(d) AGI assumed and paid all liabilities including but not limited to
compensation, fringe benefits, taxes, withholdings, and reimbursements relating
to obligations of Mutual relating to employees hired by AGI pursuant to this
Agreement from and after January 1, 1990. AGI assumed all liabilities of Mutual
relating to employees hired by AGI which were unknown or contingent as of
January 1, 1990; provided, however, that any losses, expenses, or payments made
on any such unknown or contingent liabilities shall be allocated pursuant to
Section 2.2 below according to pooling percentages or time and cost study
percentages in effect on the date of payment.
Section 1.2. Western Heritage Employees.
(a) Under the Restructuring Plan, Western Heritage Insurance Company
("Western Heritage") terminated its employment of all
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persons listed on the Western Heritage Insurance Company Payroll Register (the
"Western Heritaqe Payroll Register") as of the close of business on December 31,
1989. The Western Heritage Payroll Register was a true, correct, and complete
list of all persons employed by Western Heritage and contained true, correct
information as to the positions, years of service, and salaries of all such
employees.
(b) Under the Restructurinq Plan, AGI hired all persons who were listed or
properly should be listed on the Western Heritage Payroll Register, at the same
salaries and benefits, on the same terms and conditions, and subject to the same
defenses, rights, and obligations to which Western Heritage may be subject, or
to which Western Heritage may be entitled, commencing as of the start of
business January 1, 1990. AGI shall not be deemed to have employed any persons
whose employment by Western Heritage would otherwise terminate as of or prior to
such date but for this Agreement. Except as may be set forth in Section 1.3,
nothing in this Agreement shall obligate AGI to continue to retain or employ any
employee hired by AGI pursuant to this Agreement for any particular period of
time or at any particular rate of compensation after January 1, 1990.
(c) Western Heritage transferred to AGI all assets relating to the employee
group hired by AGI pursuant to this Agreement.
(d) AGI assumed and paid all liabilities including but not limited to those
that may have arisen, or were accrued but unpaid as of January 1, 1990,
including but not limited to compensation, fringe benefits, taxes, withholdings,
and reimbursements relating to obligations of Western Heritage to employees
hired by AGI pursuant to this Agreement from and after January 1, 1990. AGI
assumed all liabilities of Western Heritage relating to employees hired by AGI
pursuant to this Agreement that were unknown or contingent as of January 1,
1990; provided, however, that any losses, expenses, or payments made on any such
unknown or contingent liabilities shall be allocated pursuant to Section 2.2
below according to pooling percentages or time and cost study percentages in
effect on the date of payment.
Section 1.3. Employment Agreements. Mutual delivered to AGI, and AGI
acknowledged receipt of, true, correct, and complete copies of each written
agreement, policy, plan, or obligation providing the sick leave, salaries,
wages, vacations, holidays, pensions, retirement benefits, profit sharing,
insurance, incentive, bonus, or other compensation for employees, whether or not
legally binding. AGI agreed to enter into written employment agreements with
such officers of Mutual, AGI, or Western Heritage who were parties to written
employment agreements with such companies as of January 1, 1990, upon the same
terms and conditions of employment as were set forth in the employment
agreements. AGI shall indemnify and hold harmless Mutual from liability for
employee claims arising under such agreement arising after January
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1, 1990; provided, however, that nothing herein shall prvent AGI from including
the cost of such indemnity in the calculation of the personnel costs allocated
to the parties pursuant to this Agreement.
Section 1.4 Option Agreements.
(a) Substitution of AGI. AGI has entered into new stock option agreements
or caused the amendment of existing option agreements with employees of AGI,
which substitute AGI in the position of Mutual as of January 1, 1990. Neither
amendment of the stock option agreements or plans, nor any terms of this
Agreement or the Restructurinq Plan shall change the terms on which any stock
options shall be measured, qranted, or exercised.
(b) AGI Tax Benefit Allocation. AGI is the issuer of all common stock to be
issued pursuant to the stock option agreements referred to in paragraph (a) of
this Section 1.4. The price which AGI will receive when the option is exercised
is equal to the fair market value of the stock on the date of grant of the
option. If there is a difference between the fair market value of the stock on
the date of grant and the price to be paid by the optionee, such difference will
be paid to AGI when the options are exercised by the company to which the
optionee's salary has been allocated. Any tax benefit associated with the
difference between the fair market value of the stock at the date of grant of
the option and the fair market value of the stock at the date of exercise shall
be an allocable cost to be included in the Total Personnel Costs assessed by AGI
to the companies in the ALLIED Group for which AGI provides employees and option
benefits.
(c) ALFC Tax Benefit Allocation. If in the future ALFC is tbe issuer of
ALFC common stock pursuant to stock option agreements, the price which ALFC will
receive when the option is exercised is equal to the fair market value of the
stock on the date of grant of the option. If there is a difference between the
fair market value of the stock on the date of grant and the price to be paid by
the optionee, such difference will be paid to ALFC when the options are
exercised by the company to which the optionee's salary has been allocated. Any
tax benefit associated with the difference between the fair market value of the
stock at the date of grant of the option and the fair market value of the stock
at the date of exercise shall be an allocable cost to be assessed by ALFC to the
companies in the ALLIED Group to which the optionee's salary has been allocated.
II. LEASE OF EMPLOYEES
Section 2.1. Lease of Employees.
(a) Obligation to Provide Employees. AGI shall provide the entire
requirement of employees of each other company in the ALLIED
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Group, except for ALFC, ALFC Subsidiaries, and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. and its
subsidiaries, for use in the company's business according to such job
descriptions, qualifications, experience, education, or skills as may be
specified by the company to AGI from time to time. Such specifications shall be
retained in the files of the Human Resources Department. Each company may notify
the Human Resources Department at any time of its intention to change such
specifications, and the Human Resources Department shall make the requested
changes to the specifications promptly upon the receipt thereof. AMCO will lease
employees from AGI for the operation of the Pool under the Pooling Agreement and
will determine the specifications of the leased employees.
(b) Provider. Except for ALFC, the ALFC Subsidiaries, and ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, Inc. and its subsidiaries, each company in the ALLIED Group shall lease
from AGI employee services required for the operation of their respective
businesses and shall, in partial consideration for such leased employees, pay
its proportionate share of AGI's Total Personnel Costs as provided in Section
2.2.
(c) Independent Hiring. Notwithstanding paragraph (b) above and Mutual's
present intent to continue leasing employees from AGI, Mutual and the Mutual
Subsidiaries shall have the unrestricted right to directly obtain and hire any
or all employees from any other sources and on any terms to perform such duties
as Mutual and the Mutual Subsidiaries may determine from time to time, rather
than leasing such employees from AGI. Should Mutual or the Mutual Subsidiaries
choose to exercise their right to hire employees from other sources, it will not
hire any individual who was an AGI employee leased to Mutual or the Mutual
Subsidiaries within three (3) months preceding such hiring, without the written
consent of AGI.
(d) Human Resources Department. The Human Resources Department shall be
responsible for the implementation, management, and operation of AGI's employee
leasing obligations under this Agreement. The AGI employees operating the Human
Resources Department shall not be leased to any other company, and the personnel
costs and related expenses of such employees shall be borne solely by AGI. The
Human Resources Department shall pay to Mutual an allocated Annual Rent Cost in
accordance with Section 3.1 and shall also be subject to Sections 3.2. and 3.3.
(e) Fees for Leasing and Other Services. Each company in the ALLIED Group
which leases employees from AGI shall pay a fee to AGI for such services, and
each company in the ALLIED Group which utilizes services from the Human
Resources Department but does not lease employees from AGI shall pay to AGI a
reasonable negotiated fee therefor. Such fees shall be set as follows: (i) Each
company in the ALLIED Group, except for the APC, Depositors, ALFC, ALFC
Subsidiaries, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. and its subsidiaries, and Western
Heritage, shall pay to AGI a fee equal to 5.07% of the gross payroll of those
employees leased to such company, such fee
5
to be calculated and paid every two (2) weeks; (ii) Since Western Heritage is
leasing employees from AGI but is not receiving compensation or payroll
processing services from AGI, Western Heritage shall pay a fee to AGI as set by
the Executive Committee of the AGI Board of Directors; (iii) ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Inc. and its subsidiaries are receiving certain services from the Human
Resources Department and shall thus pay a fee to AGI as set by the Executive
Committee of the AGI Board of Directors; and (iv) ALFC and the ALFC Subsidiaries
are receiving certain services from the Human Resources Department, which
include but are not limited to maintaining employment documents, salary
administration, employee benefit administration, payroll administration, related
recordkeeping functions, employee placement, termination counseling and
processing, and payroll data processing, and for such services ALFC and the ALFC
Subsidiaries shall pay to AGI a fee equal to 4.62% of each company's gross
payroll, such fee to be calculated and paid every two (2) weeks to AGI.
Section 2.2. Allocation of Personnel Costs. The Employee Group is generally
divided into two types of employees, "Direct Employees" and "Staff Employees".
"Direct Employees" constitute the majority of the members of the Employee Group
and each employee of this type is assigned to perform substantially all of such
employee's services for a particular company in the ALLIED Group or for the
Pool. "Staff Employees" are employees who are assigned to perform services for
more than one of the companies in the ALLIED Group. The Total Personnel Costs,
as defined in Section 17.37, associated with a Direct Employee shall be
allocated to the company in the ALLIED Group for which such employee performs
services (the "Direct Employee Allocation"). The utilization of Staff Employees
by each company in the ALLIED Group shall be determined annually for the next
succeeding fiscal year on the basis of time and cost studies performed by AGI
management. Such utilization shall be reduced to an allocation amount for each
company in the ALLIED Group (the "Employee Utilization Percentage"). Each
company in the ALLIED Group shall pay to AGI an amount on each pay day equal to
its most recent Employee Utilization Percentage multiplied by AGI's Total
Personnel Costs applicable to Staff Employees for such pay period resulting in
each company's allocable share of the Total Personnel Costs for Staff Employees,
plus its Direct Employee Allocation for such pay period.
Section 2.3. Employment Relationships. AGI shall establish performance
criteria or standards, which reflect specifications supplied by each company in
the ALLIED Group to AGI, for leased Direct Employees assigned to the company and
for leased Staff Employees while performing services for the company. Each such
company shall have the right to advise AGI on the performance of employees
performing service for the company, and to request investigation, disciplinary
action, reassignment, and removal of such employees. AGI shall have the
exclusive right, however, to direct all AGI employees as to the manner in which
services are to be rendered and performance goals are to be achieved. AGI shall
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be, and shall have all the privileges, rights, and responsibilities of, common
law employer of all AGI employees, including but not limited to, establishing
work and disciplinary rules, setting compensation levels, and directing each AGI
employee as to the manner in which daily duties are completed, whether or not
the employee actually performs services for AGI or another company in the ALLIED
Group.
Section 2.4. Officers. Employment, termination, and terms of employment, of
all officers shall be reserved to the full Board of Directors of AGI, provided,
however, that while any such individual is leased to Mutual to perform services
as an officer (or provides the same or similar function as an officer), Mutual
will be consulted prior to all determinations regarding the employment, or terms
thereof, of such individuals; provided, however, that Mutual's input shall be of
an advisory nature and will not be binding on AGI which is the common law
employer of all such individuals.
Section 2.5. Joint Compensation Committee Membership. AGI and Mutual shall
have a Joint Compensation Committee of the Boards of Directors of AGI and
Mutual. The Joint Compensation Committee shall not have fewer than three
members, and Mutual shall have the right to appoint not less than one-half of
all members of the Joint Compensation Committee. Subject to the foregoing right
of Mutual to appoint at least one-half of the members of the Joint Compensation
Committee, the ratio of Mutual directors to AGI directors on the Joint
Compensation Committee may be adjusted no more often than once each year for the
next succeeding fiscal year as may be agreed by both AGI and Mutual. A quorum
for action at any meeting of the Joint Compensation Committee shall be a
majority but not less than three members. In general, actions of the Joint
Compensation Committee shall be by majority vote of its members, provided a
quorum is present.
Section 2.6. Joint Compensation Committee Authority. The role of the Joint
Compensation Committee shall be advisory only in all respects. The Joint
Compensation Committee shall be authorized to:
(a) Propose assignment and grant of stock options under all stock option
plans;
(b) Propose development, modification, or termination of benefit plans,
employee stock ownership plans, stock option plans, supplemental compensation
programs, or other incentive plans and propose such plans to the respective
Boards of Directors of AGI and Mutual for approval;
(c) Propose amendments or modifications of the ESOP, changes of the ESOP
Trustee, direction or modification in the voting of allocated and unallocated
shares, or increases or decreases in the amount of assets held or debt incurred
by the ESOP.
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Section 2.7. Notification of Plan Changes. With respect to Section 2.6, if
AGI adopts or implements any employee benefit plan or program, or any amendment
to any employment benefit plan or program, different from (i) those in existence
as of the date of this Agreement and (ii) those hereafter recommended in writing
by the Joint Compensation Committee, which new plan, program, or amendment would
cause the Total Personnel Costs to be higher than it would be without such plan,
program, or amendment, AGI shall provide Mutual with written notice of at least
three (3) months (unless such changes are required by law in which case Mutual
will be notified as soon as possible) before such plan, program, or amendment is
to be effective, describing such new benefit and the projected increase in the
Total Personnel Costs and in the payments from Mutual to AGI for leased
employees pursuant to Section 2.1(b) as a result of such plan, program, or
amendment. Mutual shall have the right to elect not to pay its share of the
increased (or total, as the case may be) cost of such plan, program or
amendment. In the event Mutual elects not to pay its share of such costs, AGI
shall provide all such increased benefits to all AGI employees who qualify for
such plans, programs, or amendments, including those employees leased to Mutual
and any Mutual Subsidiary, at AGI's cost and shall not charge such amounts
directly or indirectly to Mutual. Mutual shall give AGI notice if it elects not
to share in the cost of any such plan, program, or amendment within forty-five
(45) days after written notice from AGI of AGI's intent to adopt or implement
such plan, program, or amendment.
III. OFFICE FACILITIES
Section 3.1. Currently Occupied Office Facilities. Mutual currently is the
owner or lessee of certain office facilities now provided to the ALLIED Group. A
list of such office facilities shall be available upon request to Mutual. All
office facilities currently provided by Mutual are fully furnished. Other
property owned or leased by companies in the ALLIED Group for their specific use
shall be listed by such companies and provided upon request. Mutual, or the
other owners or lessees, shall continue to own or lease, in accordance with the
terms of the leases now in effect, the office facilities listed therein from and
after the date of this Agreement and shall continue to provide appropriate
office space to each company in the ALLIED Group, to the extent such facilities
are available except as may be mutually agreed upon by AGI and Mutual or ALFC
and Mutual. The utilization of office facilities by each company in the ALLIED
Group shall be determined annually on the basis of cost and time studies
performed by Mutual. An Annual Rental Cost per location occupied by a company
shall be developed by Mutual. Each company in the ALLIED Group shall pay to
Mutual (or at the request of Mutual, pay to such other owner or lessee, if
applicable) an amount equal to its allocated Annual Rental Cost per location on
a monthly basis. The percentage contribution of each of the parties to the
Pooling Agreement to Mutual for the Pool's
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Annual Rental Cost shall be determined in accordance with the terms of the
Pooling Agreement. With respect to Surplus Office Space, the Annual Rental Cost
of such space shall be allocated to each party in the same ratio as the party's
percentage allocation of the total Annual Rental Cost per location of the entire
ALLIED Group.
Section 3.2 New Office Space. Mutual shall have a right of first refusal to
provide appropriate additional office space needed by any company in the ALLIED
Group from and after the date of this Agreement, if Mutual at that time
possesses appropriate Surplus Office Space. Prior to any company in the ALLIED
Group obtaining office space or any other interests in real estate (for its own
use and not for investment), such company shall present its requirements to
Mutual who shall within 60 days provide the necessary facilities, indicate the
manner in which such facilities will be provided, or decline in writing to
provide such facilities, in which case the company shall be entitled to seek to
obtain appropriate facilities to satisfy such requirements from whatever source
available. Disputes over whether any office space is appropriate shall be
resolved by the Coordinating Committee.
Section 3.3. Disputes. Any conflicts or disputes regarding use or occupancy
of facilities for the conduct of business of the companies in the ALLIED Group,
or the terms upon which property is leased to the companies in the ALLIED Group
or upon which property is obtained, developed, or utilized, whether separately
or in combination with other companies in the ALLIED Group, shall be resolved by
the Coordinating Committee, provided such matter materially affects AGI, the AGI
Subsidiaries, ALFC, or the ALFC Subsidiaries.
IV. COMPUTER EQUIPMENT SERVICES
Section 4.1. Management Information Services Agreement. Mutual, AGI, ALFC,
and certain of their subsidiaries are parties to an Amended and Restated
Management Information Services Agreement with ALLIED Group Information Systems,
Inc. ("AGIS"), a subsidiary of AGI. Such agreement sets forth certain terms
relating to the use and provision of computers and data processing services to
the companies in the ALLIED Group, and shall govern the utilization and expense
of those services.
V. AIRCRAFT AND FLIGHT SERVICES
Section 5.1. Availability. Mutual or a Mutual Subsidiary from time to time
owns or leases private aircraft, hangar facilities, and other equipment,
property, or rights necessary to operate such private aircraft and to have
flight services available to itself and the other companies in the ALLIED Group.
Such
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services shall be made available to companies in the ALLIED Group on a
by-appointment basis, subject to availability. There can be no assurance that
(a) Mutual will continue to make flight services available, (b) such flight
services will be available when requested by any company in the ALLIED Group, or
(c) costs allocated to users will be less than the expenses associated with
commercial flight services. No company in the ALLIED Group shall be obligated to
use any flight services made available by Mutual.
Section 5.2. Cost and Allocations. Companies which elect to utilize such
flight services shall pay Mutual for such services on the basis of the cost per
hour established by Mutual. All participants in the Pool shall pay their
respective allocable share of the remaining costs of making flight services
available according to the percentages set forth in the Pooling Agreement on an
annual basis. Any dispute regarding availability, determination, or allocation
of costs, or other matters regarding flight services shall be resolved by the
Coordinating Committee.
VI. EQUIPMENT, VEHICLES AND OTHER PROPERTY
Section 6.1. ALLIED Leasing Property. ALLIED Leasing presently owns certain
motor vehicles and other items of personal property and equipment listed in the
ALLIED Group Leasing Corporation Asset Inventory and Lessee List (the "ALLIED
Leasing Inventory") which are utilized by persons who serve the Pool or one or
more of the companies in the ALLIED Group.
Section 6.2. Cost Allocations. The cost of those vehicles and items of
personal property leased by ALLIED Leasing shall be allocated to the members in
the ALLIED Group based on actual usage, at rates that are set forth in the
leases in effect as of the date of this Agreement. Lease rates and terms for
property leased by ALLIED Leasing to companies in the ALLIED Group shall be as
negotiated and mutually agreed by the parties, or as determined by the
Coordinating Committee from time to time in the event of a dispute as to such
rates or terms. Nothing herein shall require ALLIED Leasing to lease property to
companies in the ALLIED Group or to require companies in the ALLIED Group to
lease any property from ALLIED Leasing except as they may mutually agree.
VII. AGENCY FORCE
Section 7.1. Independent Agents. Parties hereto acknowledge that the
independent agency listings utilized by the ALLIED Group are the joint property
of Mutual and AMCO. The current agency listings amount to more than 1,900
agencies that are under contract with Mutual and AMCO as set forth in the agents
master file. The parties to this Agreement shall use their best efforts to
maintain
10
working relationships with the independent agencies for their proper business
purposes in substantially the same manner as prior to the effective date of this
Agreement. Mutual, ALLIED Life, AMCO, APC, and Depositors are all parties to the
Joint Marketing Agreement to memorialize their relationship in connection with
the agency force.
Section 7.2 Exclusive Agency Listings. Depositors and APC maintain
exclusive agency listings. Depositors and APC shall maintain their individual
property rights to each of the exclusive agency listings and in any developments
or additions to such listings that may be made in the future. Any future
companies or future business of existing companies that may take the form of
exclusive agency listings shall, prior to becoming the exclusive property right
of any particular company within the ALLIED Group, be approved by the
Coordinating Committee.
VIII. POOLING AGREEMENT
Section 8.1 Pooled Elements. Mutual, AMCO, APC, and Depositors ("Pool
Participants") are all parties to a Second Amended and Restated Reinsurance
Pooling Agreement, as amended (the "Pooling Agreement"). The Pooling Agreement
sets forth the rights, duties and obligations of the Pool Participants among
themselves regarding their respective businesses. As to matters set forth herein
regarding the Pool or the Pool Participants, the Pooling Agreement shall control
the manner in which the Pool Participants perform the obligations of the Pool
with respect to this Agreement.
IX. REPRESENTATIONS AND WARRANTIES
Section 9.1. General. Each of AGI, Mutual, and ALFC have had knowledge of
all aspects of the financial condition, property, business, employees, agents,
material contracts, licenses, and qualifications of the other and its
subsidiaries. Therefore, Mutual, AGI, and ALFC each represent and warrant to the
other that it has no knowledge or information that any of the representations or
warranties of the other in this Agreement are untrue or incorrect in any
material respect.
Section 9.2. Representations and Warranties by AGI and AGI Subsidiaries.
AGI and the AGI Subsidiaries hereby represent and warrant to Mutual and ALFC as
follows:
(a) AGI and each AGI Subsidiary are duly organized, validly existing
insurance or business corporations, as the case may be, in good standing under
the laws of the State of Iowa, except for Western Heritage, which is an Arizona
insurance company, and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. and the ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Subsidiaries,
11
which are Minnesota corporations, and each has all requisite corporate power and
authority to conduct its business, to own its properties, and to execute,
deliver, and perform all of its obligations under this Agreement.
(b) The execution, delivery, and performance of this Agreement has been or
will be duly authorized by all requisite action, corporate or otherwise, by AGI
and each AGI Subsidiary. This Agreement constitutes the legal, valid, and
binding obligation of AGI and each AGI Subsidiary, enforceable against them in
accordance with its terms. Subject to the receipt of the Insurance Approvals and
any other approvals required pursuant to Article XIV hereof, compliance by AGI
and each AGI Subsidiary with the provisions of this Agreement will not violate
the provisions of any law, regulation, or order applicable to it, will not
conflict with, or result in the breach or default by it of any of the terms,
conditions, or provisions of its articles of incorporation or bylaws or any
material contract or agreement to which it is a party or by which it or its
property is bound. Neither AGI nor any of the AGI Subsidiaries is a party to,
subject to or bound by or a beneficiary of any material agreement or judgment,
order, writ, injunction, or decree of any court, governmental body, or
arbitrator which would be contravened or breached by, or under which any payment
or other obligation could be accelerated as a result of, the execution,
delivery, or performance by AGI or the AGI Subsidiaries of this Agreement, or
which could prevent the consummation of this Agreement and the transactions
contemplated hereby, or which, by operation of law, or pursuant to its terms,
would terminate upon consummation of this Agreement. To the best knowledge of
AGI and each AGI Subsidiary, other than the receipt of the Insurance Approvals
and any other approvals required pursuant to Article XIV hereof, no permit,
consent, approval, or authorization of, or declaration to or filing or
registration with any governmental or regulatory authority is or will be
required in connection with the valid execution, delivery, or performance by AGI
or the AGI Subsidiaries of this Agreement.
(c) To the best knowledge and belief of AGI and each AGI Subsidiary, it is
duly qualified, licensed, or registered to do business as a foreign insurer or
foreign corporation, as the case may be, and is in good standing in each
jurisdiction which requires such licensing, qualification, or registration
wherein any of them conduct any business or lease any property and wherein the
failure to so qualify or register would have a material adverse effect on the
business, condition, or properties of AGI and the AGI Subsidiaries, taken as a
whole; and AGI and each AGI Subsidiary has all requisite power and authority,
corporate or otherwise, to own its respective properties and to conduct its
respective business in the manner in which it is presently conducted.
(d) Mutual and ALFC have heretofore been provided an opportunity to review
complete copies of the most recent financial statements of AGI and the AGI
Subsidiaries (the "Financial
12
Statements"). To the best knowledge and belief of AGI and the AGI Subsidiaries,
the Financial Statements are true, complete, and correct in all material
respects. The Financial Statements present fairly the consolidated financial
condition and results of operations of AGI and the AGI Subsidiaries as of the
dates and for the periods indicated therein and have been prepared in accordance
with generally accepted accounting principles or statutory accounting
principles, as the case may be, applied on a consistent basis throughout the
periods indicated.
(e) No representation or warranty made by AGI or an AGI Subsidiary in this
Agreement or in any schedule, or other instrument furnished or to be furnished
to Mutual, ALFC, or their representatives pursuant hereto, or in connection with
the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained therein not misleading. To
the best knowledge of each of AGI and the AGI Subsidiaries, there is no
information of a confidential nature concerning its assets, operations,
customers, or employees which has not heretofore been disclosed to Mutual in
writing which information could have a material adverse effect on its operations
after consummation of the transactions contemplated herein.
Section 9.3. Representation and Warranties by Mutual and the Mutual
Subsidiaries. Mutual and the Mutual subsidiaries hereby represent and warrant to
AGI and ALFC as follows:
(a) Mutual and each Mutual Subsidiary are duly organized, validly existing
insurance or business corporations, as the case may be, in good standing under
the laws of the State of Iowa, and each has all requisite corporate power and
authority to conduct its business, to own its properties, and to execute,
deliver, and perform all of its obligations under this Agreement.
(b) The execution, delivery, and performance of this Agreement has been or
will be duly authorized by all requisite action, corporate or otherwise, by
Mutual and each of the Mutual Subsidiaries. This Agreement constitutes the
legal, valid and binding obligation of Mutual and each Mutual Subsidiary,
enforceable against it in accordance with its terms. Subject to the receipt of
the Insurance Approvals and any other approvals required pursuant to Article XIV
hereof, compliance by Mutual and each Mutual Subsidiary with the provisions of
this Agreement will not violate the provisions of any law, regulation, or order
applicable to it, will not conflict with, or result in the breach or default by
it of any of the terms, conditions, or provisions of its articles of
incorporation or bylaws or any material contract or agreement to which it is a
party or by which it or its property is bound. Neither Mutual nor any of the
Mutual Subsidiaries is a party to, subject to or bound by or a beneficiary of
any material agreement or judgment, order, writ, injunction, or decree of any
court, governmental body, or arbitrator which would be contravened
13
or breached by, or under which any payment or other obligation could be
accelerated as a result of, the execution, delivery, or performance by Mutual or
the Mutual Subsidiaries of this Agreement, or which could prevent the
consummation of this Agreement and the transactions contemplated hereby, or
which, by operation of law, or pursuant to its terms, would terminate upon
consummation of this Agreement. To the best knowledge and belief of Mutual and
each Mutual subsidiary, other than the receipt of the Insurance Approvals and
any other approvals required pursuant to Article XIV hereof, no permit, consent,
approval, or authorization of, or declaration to or filing or registration with
any governmental or regulatory authority is or will be required in connection
with the valid execution, delivery, or performance by Mutual or the Mutual
Subsidiaries of this Agreement.
(c) To the best knowledge and belief of Mutual and each Mutual Subsidiary
it is duly qualified, licensed, or registered to do business as a foreign
insurer or foreign corporation, as the case may be, and is in good standing in
each jurisdiction which requires such licensing, qualification, or registration
wherein any of them conduct any business or lease any property and wherein the
failure to so qualify or register would have a material adverse effect on the
business, condition, or properties of Mutual and the Mutual Subsidiaries, taken
as a whole; and Mutual and each Mutual Subsidiary has all requisite power and
authority, corporate or otherwise, to own its respective properties and to
conduct its respective business in the manner in which it is presently
conducted.
(d) AGI and ALFC have heretofore been provided opportunity to review
complete copies or the most recent financial statements of Mutual and the Mutual
Subsidiaries (the "Financial Statements"). To the best knowledge and belief of
Mutual and the Mutual Subsidiaries, the Financial Statements are true, complete,
and correct in all material respects. The Financial Statements present fairly
the consolidated financial condition and results of operations of Mutual and the
Mutual Subsidiaries as of the dates and for the periods indicated therein and
have been prepared in accordance with generally accepted accounting principles
or statutory accounting principles, as the case may be, applied on a consistent
basis throughout the period indicated.
(e) No representation or warranty made by Mutual or a Mutual Subsidiary in
this Agreement or in any schedule, or other instrument furnished or to be
furnished to AGI, ALFC, or their representatives pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements contained therein not
misleading. To the best knowledge of each of Mutual and the Mutual Subsidiaries
there is no information of a confidential nature concerning its assets,
operations, customers, or employees which has not heretofore been disclosed to
AGI and
14
ALFC in writing which information could have a material adverse effect on its
operations after consummation of the transactions contemplated herein.
Section 9.4. Representations and Warranties by ALFC and ALFC Subsidiaries.
ALFC and the ALFC Subsidiaries hereby represent and warrant to Mutual and AGI as
follows:
(a) ALFC and each AFLC Subsidiary are duly organized, validly existing
insurance or business corporations, as the case may be, in good standing under
the laws of the State of Iowa, and each has all requisite corporate power and
authority to conduct its business, to own its properties, and to execute,
deliver, and perform all of its obligations under this Agreement.
(b) The execution, delivery, and performance of this Agreement has been or
will be duly authorized by all requisite action, corporate or otherwise, by ALFC
and each ALFC Subsidiary. This Agreement constitutes the legal, valid, and
binding obligation of ALFC and each ALFC Subsidiary, enforceable against them in
accordance with its terms. Subject to the receipt of the Insurance Approvals and
any other approvals required pursuant to Article XIV hereof, compliance by ALFC
and each ALFC Subsidiary with the provisions of this Agreement will not violate
the provisions or any law, regulation, or order applicable to it, will not
conflict with, or result in the breach or default by it of any of the terms,
conditions, provisions of its articles of incorporation or bylaws, or any
material contract or agreement to which it is a party or by which it or its
property is bound. Neither ALFC nor any of the ALFC Subsidiaries is a party to,
subject to or bound by or a beneficiary of any material agreement or judgment,
order, writ, injunction, or decree of any court, governmental body, or
arbitrator which would be contravened or breached by, or under which any payment
or other obligation could be accelerated as a result of, the execution,
delivery, or performance by ALFC or the ALFC Subsidiaries of this Agreement, or
which could prevent the consummation of this Agreement and the transactions
contemplated hereby, or which, by operation of law, or pursuant to its terms,
would terminate upon consummation of this Agreement. To the best knowledge of
ALFC and each ALFC Subsidiary, other than the receipt of the Insurance Approvals
and any other approvals required pursuant to Article XIV hereof, no permit,
consent, approval, or authorization of, or declaration to or filing or
registration with any governmental or regulatory authority is or will be
required in connection with the valid execution, delivery, or performance by
ALFC or the ALFC Subsidiaries of this Agreement.
(c) To the best knowledge and belief of ALFC and each ALFC Subsidiary, it
is duly qualified, licensed, or registered to do business as a foreign insurer
or foreign corporation, as the case may be, and is in good standing in each
jurisdiction which requires such licensing, qualification, or registration
wherein any of them conduct any business or lease any property and wherein the
failure
15
to so qualify or register would have a material adverse effect on the business,
condition, or properties of ALFC and the ALFC Subsidiaries, taken as a whole;
and ALFC and each ALFC subsidiary has all requisite power and authority,
corporate or otherwise, to own its respective properties and to conduct is
respective business in the manner in which it is presently conducted.
(d) Mutual and AGI have heretofore been provided the opportunity to review
complete copies of the most recent financial statements of ALFC and the ALFC
Subsidiaries (the "Financial Statements"). To the best knowledge and belief of
ALFC and the ALFC Subsidiaries, the Financial Statements are true, complete, and
correct in all material respects. The Financial Statements present fairly the
consolidated financial condition and results of operations of ALFC and the ALFC
Subsidiaries as of the dates and for the periods indicated therein and have been
prepared in accordance with generally accepted accounting principles or
statutory accounting principles, as the case may be, applied on a consistent
basis throughout the periods indicated.
(e) No representation or warranty made by ALFC or an ALFC Subsidiary in
this Agreement or in any schedule, or other instrument furnished or to be
furnished to Mutual, AGI, or their representatives pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements contained therein not
misleading. To the best knowledge of each ALFC and the ALFC subsidiaries there
is no information of a confidential nature concerning its assets, operations,
customers, or employees which has not heretofore been disclosed to Mutual and
AGI in writing which information could have a material adverse effect on its
operations after consummation of the transactions contemplated herein.
X. TERMINATION, AMENDMENT, AND CHANGE OF CONTROL
Section 10.1. Term and Termination.
(a) Term. This Agreement shall continue from January 1, 1990 to December
31, 2004, and shall continue thereafter unless prior to December 31, 2002, a
party to this Agreement delivers to the other parties a written notice that such
party intends to cease participation and terminate the Agreement as to it on
December 31, 2004 or as of a specified date thereafter. This Agreement may be
terminated by any party effective after December 31, 2004 provided that such
party has given written notice of termination to the others at least two (2)
years prior to the proposed termination date. Termination of any party's
participation in this Agreement prior to December 31, 2004 shall require
Coordinating Committee approval.
16
(b) Allocation in the Event of Termination. At the time any notice of
termination is given under this Agreement, AGI and Mutual promptly, and no later
than 60 days thereafter, shall identify all key employees, whether Direct or
Staff, who have been providing services to AGI or any of the AGI Subsidiaries
and to Mutual or any of the Mutual Subsidiaries. AGI and Mutual shall cooperate
diligently and in good faith to allocate those employees to AGI and the AGI
Subsidiaries and to Mutual and the Mutual Subsidiaries with a view toward
insuring, to the greatest extent possible, the viability and continued
operations of all companies with those employees. It is the intent of this
provision that AGI and Mutual shall together allocate such employees in a way
which is equitable and fair to both companies and their subsidiaries. The
Coordinating Committee shall resolve any disputes arising under this paragraph.
AGI and Mutual shall use their best efforts in attempting to effect the
allocation of those employees by obtaining those employees' agreements to become
employed by the respective companies as allocated pursuant to this paragraph.
Anything in this Agreement to the contrary notwithstanding, if any disputes
under this paragraph must be resolved by arbitration, no termination of this
Agreement which otherwise would occur shall occur until after final resolution
by the arbitrator.
(c) Post-termination Relationship. The Coordinating Committee will address
the post-termination access to services provided to the terminating party or
parties. Any post-termination disputes concerning the termination of the
Agreement, including interpretation of the covenant not to compete in Section
13.7, will be addressed to the Coordinating Committee for resolution.
Section 10.2. Amendment. This Agreement may be amended, modified, or
altered only by a writing signed by Mutual, AGI, and ALFC and approved by the
Coordinating Committee. As a condition to participation in this Agreement, each
AGI subsidiary, Mutual Subsidiary, and ALFC Subsidiary hereby agrees to be bound
by any such amendment, modification, or alteration that is approved by AGI,
Mutual, ALFC, and the Coordinating Committee as if they had each individually
approved the amendment. Notwithstanding the foregoing, Mutual, AGI, and ALFC may
amend the Agreement without the approval of the Coordinating Committee in order
(1) that AGI Subsidiaries, Mutual Subsidiaries, or ALFC Subsidiaries may be
added or deleted as parties hereto or (2) to record any change in a name
thereof; provided, that such addition, deletion, or name change shall not have a
material effect upon the operation of the Agreement.
Section 10.3. Change of Control of ALFC. In the event of a Change of
Control (as hereinafter defined in this section) of ALFC, either Mutual or AGI
may, in its sole discretion, at any time after such Change of Control: (i)
terminate the MIS Agreement and this Agreement upon six (6) months notice to
ALFC; (ii) extend the term of the MIS Agreement and this Agreement for up to ten
(10) additional years beyond December 31, 2004 upon six (6) months
17
notice to ALFC; or (iii) allow such agreements to continue in effect. "Change of
Control" for purposes of this section shall mean an event whereby a person,
group, or entity that is not affiliated with ALFC or Mutual acquires the
ownership of 50% or more of the voting stock of ALFC. A person, group, or entity
"affiliated" with ALFC or Mutual shall mean a person, group, or entity that
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with ALFC or Mutual.
Section 10.4. Change of Control of AGI.
(a) In the event of a Change of Control (as hereinafter defined in this
section) of AGI, Mutual may, in its sole discretion, at any time after such
Change of Control: (i) terminate all three of the Pooling Agreement, MIS
Agreement, and this Agreement upon six (6) months notice to AGI; (ii) extend the
term of the Pooling Agreement, MIS Agreement, and this Agreement for up to ten
(10) additional years beyond December 31, 2004 upon six (6) months notice to
AGI; or (iii) allow such agreements to continue in effect. "Change of Control"
for purposes of this section shall mean an event whereby a person, group, or
entity that is not affiliated with AGI or Mutual acquires the ownership of 50%
or more of the voting stock of AGI. A person, group, or entity "affiliated" with
AGI or Mutual shall mean a person, group, or entity that directly or indirectly
through one or more intermediaries controls, is controlled by, or is under
common control with AGI or Mutual.
(b) In the event of a Change of Control (as hereinafter defined in this
section) of AGI, ALFC may, in its sole discretion, at any time after such Change
of Control: (i) terminate both the MIS Agreement and this Agreement upon six (6)
months notice to AGI; (ii) extend the term of the MIS Agreement and this
Agreement for up to ten (10) additional years beyond December 31, 2004 upon six
(6) months notice to AGI; or (iii) allow such agreements to continue in effect.
"Change of Control" for purposes of this section shall mean an event whereby a
person, group, or entity that is not affiliated with AGI or Mutual acquires the
ownership of 50% or more of the voting stock of AGI. A person, group, or entity
"affiliated" with AGI or Mutual shall mean a person, group, or entity that
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with AGI or Mutual.
XI. ARBITRATION
Section 11.1. Consent to Arbitration. Each party to this Agreement hereby
consents and agrees that any dispute between the parties hereto with respect to
the interpretation, performance, or breach of any of the terms of this Agreement
or the transactions
18
contemplated by this Agreement which cannot be resolved by the Coordinating
Committee shall be referred to arbitration conducted in accordance with the
rules and procedures of the American Arbitration Association ("AAA"), upon
written request of AGI, Mutual, and/or ALFC given to the others. Within thirty
(30) days of the giving of such written notice, each party involved shall
nominate an AAA-licensed arbitrator (the "Party Arbitrators"). Within thirty
(30) days of their nomination, if there are two Party Arbitrators, the Party
Arbitrators shall select a third AAA-licensed arbitrator (the "Third
Arbitrator") and shall give the parties involved notice of such choice. If each
party selects a Party Arbitrator, the three Party Arbitrators selected shall
constitute the Arbitrators without further selection.
Section 11.2. Authority of Arbitrators. The arbitrators shall be empowered
to decide all issues submitted to arbitration using principles of law and equity
and, if required, by application of any customary practices in the insurance and
reinsurance industries. The arbitrators shall be relieved of all judicial
formalities and shall not be required to follow any rules of evidence except as
such rules may be imposed on arbitration proceedings conducted in accordance
with the laws of the State of Iowa, but the arbitrators shall attempt to enforce
the intents and purposes of this Agreement to the extent practicable and in
accordance with Iowa law. The decision of a majority of the arbitrators shall be
final and binding on AGI, Mutual, ALFC, and their subsidiaries.
Section 11.3. Expenses; Location. Each of AGI, Mutual, and ALFC shall bear
the expenses of its respective Party Arbitrator. If only two parties are
involved in the arbitration, the involved parties shall jointly share all other
expenses of the arbitration proceeding and the expenses of the Third Arbitrator.
The arbitration proceeding shall take place at Des Moines, Iowa unless another
location is mutually agreed upon by the parties. The arbitration proceeding
shall be governed by the laws of the State of Iowa. The parties hereto hereby
agree that any information respecting any matters submitted to arbitration in
accordance with the foregoing or any aspect of the arbitration proceeding itself
shall be treated as confidential and will not be disclosed to anyone not
employed or acting on behalf of AGI, Mutual, or ALFC in connection with such
arbitration or used at any time in any manner that is adverse to the interests
of any party hereto but, in any such case, such information may be disclosed if
such disclosure is made in connection with either party's prosecution or defense
of any legal proceedings or if such disclosure is required pursuant to a
subpoena or other legal order issued by any judicial or regulatory body or is
otherwise required by law.
Section 11.4. Restriction. Anything set forth herein to the contrary
notwithstanding, with respect to any issue to be determined by arbitration, AGI,
Mutual, and/or ALFC shall each submit in writing to the arbitrators their
proposed resolution of
19
such issue. The arbitrators shall be constrained in their decision relating to
such issue to select only between the proposed resolutions, and the arbitrators
shall have no discretion to fashion any compromise or other resolution of the
issue submitted for arbitration.
XII. INDEMNIFICATION
Section 12.1. Indemnification by Mutual. Mutual shall defend, indemnify,
and hold harmless AGI, ALFC, and their successors and assigns against and in
respect of any and all damages, claims, losses, liabilities, and expenses
(including, without limitation, legal and other expenses) which may arise out of
or be in respect of any breach or misrepresentation by Mutual or the Mutual
Subsidiaries under this Agreement.
Section 12.2. Indemnification by AGI. AGI shall defend, indemnify, and
hold harmless Mutual, ALFC, and their successors and assigns against and in
respect of any and all damages, claims, losses, liabilities, and expenses
(including, without limitation, legal and other expenses) which may arise out of
or be in respect of any breach or misrepresentation by AGI or the AGI
Subsidiaries under this Agreement.
Section 12.3. Indemnification by ALFC. ALFC shall defend, indemnify, and
hold harmless AGI, Mutual, and their successors and assigns against and in
respect of any and all damages, claims, losses, liabilities, and expenses
(including, without limitation, legal and other expenses) which may arise out of
or be in respect of any breach or misrepresentation by ALFC or the ALFC
Subsidiaries under this Agreement.
Section 12.4. Limitations. Notwithstanding the foregoing, no
indemnification shall be available hereunder unless (i) notice of any claim for
indemnification is given to the indemnifying party within one year of the date
on which the loss under Section 12.1, Section 12.2, or Section 12.3 above occurs
or becomes known to the party to be indemnified and (ii) the party seeking
indemnification has previously paid or incurred damages, claims, losses,
liabilities, or expenses otherwise subject to indemnification hereunder in
excess of $75,000 in the aggregate.
Section 12.5 Participation in Defense. Promptly after receipt of notice of
any claim or the commencement of any action in respect to which indemnity may be
sought on account of the indemnity agreements contained in this Section, the
indemnified party will notify the indemnifying party in writing thereof. In case
any claim shall be asserted against an indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, to assume
the defense, conduct, or
20
settlement thereof, with counsel satisfactory to the indemnified party, and
after notice from the indemnifying party to the indemnified party of its
election to so assume the defense, conduct, or settlement thereof, the
indemnifying party will not be liable to the indemnified party under this
Section for any legal or other expenses subsequently incurred by the indemnified
party in connection with the defense, conduct, or settlement thereof.
Notwithstanding an election by the indemnifying party to assume the defense,
conduct, or settlement of any claim subject to indemnification hereunder, if the
indemnified party reasonably determines that its interests may be adverse to, or
in conflict with, those of the indemnifying party, it may elect, at its own
expense, to retain or continue to retain its own counsel to participate in the
defense, conduct, or settlement of such claim. The indemnified party will
cooperate with the indemnifying party without charge in connection with any such
claim, make personnel books and records relevant to the claim available to the
indemnifying party, and grant such authorizations or powers of attorney to the
agents, representatives, and counsel of the indemnifying party as such
indemnifying party may reasonably consider desirable in connection with the
defense of any such claim.
XIII. AFFIRMATIVE COVENANTS
Section 13.1 Cooperation. Mutual, AGI, ALFC, and their subsidiaries will
fully cooperate with each other and their respective counsel, if any, and
accountants in connection with any action to be taken in the performance of
their obligations under this Agreement. They shall use their best efforts to
take or cause to be taken any and all actions necessary or required to obtain
each of the regulatory consents or approvals described herein and any
third-party consents described in Article XIV of this Agreement, unless the
receipt thereof has been waived in writing by the parties to this Agreement. In
the conduct of their affairs and the performance of this Agreement the parties
hereto shall, unless otherwise agreed by the Coordinating Committee, maintain
the working relationships of the parties on substantially the same terms as
before the effectiveness of this Agreement.
Section 13.2. Marketing. Parties hereto shall attempt to position
themselves in their respective target markets, whether separate or overlapping,
in all ways so as to preserve and strengthen their individual identities and
businesses, while making the best use of their association as described in this
Agreement and in the related agreements and relationships described in this
Agreement.
Section 13.3. Life Insurance Products. AGI has transferred ownership of
all of the issued and outstanding capital stock of ALLIED Life to Mutual
pursuant to a certain Stock Purchase
21
Agreement dated October 24, 1989. Upon the closing thereof, AGI shall not engage
in the business of providing life insurance, annuities, or related products
directly or indirectly, nor shall AGI acquire, directly or indirectly, any life
insurance company or an interest in any life insurance company during the term
of this Agreement and for a period of five years thereafter, except with or
through ALFC or the ALFC Subsidiaries. Except as may be required by the Joint
Marketing Agreement, nothing herein shall require AGI or the AGI Subsidiaries to
sell, offer, or provide any life insurance products. The terms and conditions,
if any, upon which AGI, the AGI Subsidiaries, ALFC, or the ALFC Subsidiaries may
jointly offer life insurance products or services shall be as determined from
time to time by the parties. Any dispute relating to the offering of life
insurance products hereunder shall be resolved by the Coordinating Committee.
Notwithstanding any other provision of this Agreement, this paragraph survives
early termination of the Agreement.
Section 13.4. Agency. No party to this Agreement shall be deemed to be a
partner of, or agent for, any other party, except and only to the extent
necessary to effect any transactions which the parties may in their discretion
determine to be advantageous to enter into jointly, for example, joint purchases
of property or joint obligations to third parties, and then only as may be set
forth in a writing evidencing the scope of the parties' involvement in such
transactions which writing shall be subject to the approval of the Coordinating
Committee.
Section 13.5. Current Information. Each party to this Agreement shall,
upon request, annually certify to the others that the representations and
warranties made in this Agreement by such party are true and correct as of the
anniversary date of this Agreement, or such certification shall indicate in what
manner or to what extent such representations and warranties are incorrect. Upon
request, each party to this Agreement shall provide all other parties with
financial statements and shall annually certify to the others that the
representations and warranties in Section 9.2(d), Section 9.3(d), or Section
9.4(d) of this Agreement apply to such financial statements.
Section 13.6. Confidences and Trade Secrets.
(a) Each party to this Agreement shall keep confidential, except as the
other party or parties may otherwise consent in writing, and, except for the
other parties' benefit, not disclose or make any use of at any time and for any
purpose whatsoever, any trade secrets, confidential information, knowledge,
data, trademarks or trade names, or other information of any of the companies in
the ALLIED Group relating to their products, know-how, designs, customer lists,
business plans, marketing plans and strategies, pricing strategies, or other
subject matter pertaining to any business of the ALLIED Group or any of its
clients, customers, consultants, licensees, or affiliates, which it has
22
obtained or may obtain, or otherwise acquire during the course of contacts,
discussions, negotiation, or agreement with any of the Companies in the ALLIED
Group, except as herein provided (hereafter, collectively, "Confidential
Information"). No party shall deliver, reproduce or in any way allow any
Confidential Information of the other parties or any documentation relating
thereto, to be delivered to or used by any third parties without specific
written direction or consent of a duly authorized officer of AGI, Mutual, or
ALFC as the case may be.
(b) Upon termination of this Agreement for any reason whatsoever, each
party shall promptly surrender and deliver to each other party all records,
materials, equipment, drawings, documents, data, and all Confidential
Information of the other parties and shall not retain any description containing
or pertaining to any Confidential Information of the other parties, unless
otherwise consented to in writing by a duly authorized officer of AGI, Mutual,
or ALFC as the case may be.
13.7 Covenant Not To Compete. AGI, Mutual, and ALFC agree not to engage in
a business, enterprise, or market that directly competes with the products or
markets of one another or the AGI Subsidiaries, Mutual Subsidiaries, or ALFC
subsidiaries for the term of the Agreement and five (5) years following the
termination of the Agreement for any reason.
XIV. REGULATORY AND OTHER APPROVALS
Section 14.1. Regulatory Filings. AGI, Mutual, and ALFC shall promptly
undertake such actions as may be necessary to file, amend, or apply for any
documents, certificates, or reports now filed or to be filed with any federal or
state authorities having jurisdiction over the subject matter of this Agreement
or the parties to this Agreement.
Section 14.2. Other Approvals. On or before the date of this Agreement,
any and all regulatory consents or approvals required to effect the transactions
contemplated herein shall have been obtained (or the receipt shall have been
waived by both of the parties hereto) without the imposition of a material cost,
liability, or restriction upon any of the parties hereto which is not consented
to by the affected party, which regulatory consents or approvals shall include
but shall not be limited to, the following:
(a) The Commissioner of the Insurance Division of the Department of
Commerce of the State of Iowa (the "Commissioner") shall have issued one or more
orders or consents (the "Insurance Approvals") to approve the terms of this
Agreement to the extent that the Commissioner shall have the regulatory
authority to disapprove the terms of this Agreement.
23
(b) On or before the effective date of this Agreement, all material
consents or approvals by any third party which were required to be obtained by
Mutual, AGI, or ALFC in connection with the execution, delivery, or performance
of this Agreement or the consummation of any transactions contemplated herein
shall have been obtained, or the receipts thereof shall have been waived by AGI,
Mutual, and ALFC.
XV. ALFC, ALLIED LIFE, AND ALBA EMPLOYEES
Section 15.1. ALFC, ALLIED Life, and ALBA Employees.
(a) ALFC, ALLIED Life, and ALBA shall be listed together on an ALLIED Life
and ALBA Payroll Register (the "Life Payroll Register"). AGI shall have no
control, discretion, or authority over such employees. The Life Payroll Register
shall be a true, correct, and complete listing of all persons employed by ALFC,
ALLIED Life, and ALBA, and shall contain true and correct information as to the
positions, years of service, and salaries of all such employees.
(b) ALLIED Life and ALBA, respectively, hired all persons who were listed
on the Life Payroll Register and subject to the same defenses, rights, and
obligations to which AGI may be subject, or to which AGI may be entitled,
commencing as of the start of business July 1, 1990. ALLIED Life and ALBA shall
not be deemed to have employed any persons whose employment by AGI would
otherwise terminate as of or prior to January 1, 1990 but for this Agreement.
Nothing in this Agreement shall obligate ALLIED Life or ALBA to continue to
retain or employ any employee hired by ALLIED Life or ALBA pursuant to this
Agreement for any particular period of time or at any particular rate of
compensation after the effective date of this Agreement.
(c) ALLIED Life and ALBA assumed and paid all liabilities for the employee
group as of June 30, 1990 including but not limited to compensation, fringe
benefits, taxes, withholdings, and reimbursements relating to obligations of AGI
relating to employees hired by AGI pursuant to this Agreement from and after
July 1, 1990.
XVI. MISCELLANEOUS
Section 16.1. Assignment. Neither this Agreement nor any rights hereunder
may be assigned by any of the parties hereto.
Section 16.2. Waiver; Remedies. No delay or omission of any party to this
Agreement to exercise any right or power hereunder shall impair such right or
power or be a waiver of any default or an acquiescence therein; and any single
or partial exercise of any
24
such right or power shall not preclude other or further exercise thereof or the
exercise of any other right. In addition to any rights granted herein, the
parties hereto shall have and may exercise any and all rights and remedies now
or hereafter provided by law except as may be limited by Article XI of this
Agreement.
Section 16.3. Permissive Release of Confidential Information.
Notwithstanding the provisions of Section 13.6 of this Agreement, any
Confidential Information may be used in connection with any arbitration relating
to the transactions contemplated by this Agreement and such information may be
disclosed if such disclosure is made in connection with the parties' prosecution
or defense of any legal proceedings or if such disclosure is required pursuant
to a subpoena or other legal order issued by any judicial or regulatory body or
is otherwise required by law.
Section 16.4. Notices. All notices, requests, demands, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally or if mailed by certified or registered mail
(return receipt requested):
(a) If to Mutual:
ALLIED Mutual Insurance Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
(b) If to AGI:
ALLIED Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
(c) If to ALFC:
ALLIED Life Financial Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
Any notice given as provided in this section 16.4, if given personally, shall be
effective upon delivery and if given by certified or registered mail shall be
effective three days after deposit in the mail. Any party hereto may change the
address at which it is to be given notice by giving notice to the other party as
provided in this section 16.4.
Section 16.5. Governing Law. This Agreement shall be deemed to be a
contract made under the laws of the State of Iowa and shall be construed and
interpreted under the laws of such state
25
applicable to contracts made and to be performed entirely within such state.
Section 16.6. Enforceability. If any one or more of the covenants,
agreements, provisions, or other terms of this Agreement shall be for any reason
whatsoever determined to be invalid, then such terms shall be deemed severable
from the remaining terms of this Agreement and shall in no way affect the
validity or enforceability of the other terms of this Agreement and such invalid
terms shall be replaced by valid terms bearing the closest possible similarity
in substance so that the intentions and purposes being the basis of this
Agreement could be enforced to the greatest extent permitted by law.
Section 16.7. Survival of Representations and Warranties. All covenants,
agreements, representations, and warranties made in this Agreement by any of the
parties hereto, including but not limited to, the indemnification provisions set
forth herein shall be effective on the effective date hereof and thereafter.
Section 16.8. Counterparts. This Agreement may be executed simultaneously
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
Section 16.9. Headings. The headings in the sections and subsections of
this Agreement are inserted for convenience only and shall not constitute a part
hereof.
Section 16.10. Entire Agreement. This Agreement, including the schedules
and exhibits referred to herein and any documents executed by the parties
simultaneously herewith constitute the entire understanding and agreement of the
parties hereto and supersede all other prior agreements and understandings,
written or oral, between the parties with respect to the transactions
contemplated herein. Provided, however, the foregoing shall not operate or be
construed to prohibit proof of prior understandings and agreements between or
among the parties to the extent necessary to properly construe or interpret this
Agreement.
XVII. DEFINITIONS
Section 17.1. ACA. The term "ACA" shall mean ALLIED Crop Agency, Inc., an
Iowa corporation.
Section 17.2. AGA. The term "AGA" shall mean ALLIED General Agency
Company, an Iowa corporation.
Section 17.3. AGI. The term "AGI" shall mean ALLIED Group, Inc., an Iowa
corporation.
26
Section 17.4. AGI Subsidiaries. The term "AGI Subsidiaries" shall mean
AMCO, APC, Depositors, ALLIED Group Mortgage Corporation, ALLIED Leasing,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc., the ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Subsidiaries, the AMCO
Subsidiaries, and any subsidiary added as a party hereto pursuant to the
procedure set forth in Section 10.2; provided, that any subsidiary deleted as a
party pursuant to said procedure shall no longer be included in the definition
of such term.
Section 17.5. ALBA. The term "ALBA" shall mean ALLIED Life Brokerage
Agency, Inc., an Iowa corporation, and the wholly-owned subsidiary of ALFC.
Section 17.6. ALFC. The term "ALFC" shall mean ALLIED Life Financial
Corporation, an Iowa corporation.
Section 17.7 ALFC Subsidiaries. The term "ALFC Subsidiaries" shall mean
ALLIED Life and ALBA and any subsidiary added as a party hereto pursuant to the
procedure set forth in Section 10.2; provided, however, that any subsidiary
deleted as a party pursuant to said procedure shall no longer be included in the
definition of such term.
Section 17.8. ALLIED Group. The term "ALLIED Group" shall mean Mutual, the
Mutual Subsidiaries, AGI, the AGI Subsidiaries, ALFC, and the ALFC Subsidiaries.
Section 17.9. ALLIED Leasing. The term "ALLIED Leasing" shall mean the AGI
subsidiary, ALLIED Group Leasing Corporation, an Iowa corporation.
Section 17.10. ALLIED Life. The term "ALLIED Life" shall mean ALLIED Life
Insurance Company, an Iowa life insurance corporation and the wholly-owned
subsidiary of ALFC.
Section 17.11 AMCO. The term "AMCO" shall mean AMCO Insurance Company, an
Iowa stock insurance corporation.
Section 17.12. AMCO Subsidiaries. The term "AMCO Subsidiaries" shall mean
AGA, AGIS, The Freedom Group, Inc., Western Heritage Insurance Company, Midwest
Printing Services, Ltd. and Freedom Insurance Services, Inc.
Section 17.13 Annual Rental Cost. The term "Annual Rental Cost" shall mean
the annual total costs and expenses of providing furnished office space,
including depreciation and interest.
Section 17.14. APC. The term "APC" shall mean ALLIED Property and Casualty
Insurance Company, an Iowa stock insurance company.
Section 17.15. Coordinating Committee. The term "Coordinating Committee"
shall mean the joint meeting of the committees
27
established by the Bylaws of Mutual, AGI, and ALFC for the purpose, among
others, of resolving issues under this Agreement.
Section 17.16. Current Restructuring. The term "Current Restructuring"
shall refer to the incorporation of ALFC and its capitalization by Mutual
transferring the stock of ALLIED Life and ALBA in exchange for ALFC common and
preferred stock.
Section 17.17. Depositors. The term "Depositors" shall mean the AGI
subsidiary, Depositors Insurance Company, an Iowa stock insurance corporation.
Section 17.18. Direct Employee Allocation. The term "Direct Employee
Allocation" shall have the meaning set forth in Section 2.2 of this Agreement.
Section 17.19. Direct Employees. The term "Direct Employees" shall have
the meaning set forth in Section 2.2 of this Agreement.
Section 17.20. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. The term "▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc."
shall mean ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc., a Minnesota corporation.
Section 17.21. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Subsidiaries. The term "▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Subsidiaries" shall mean Voyageur Fund Distributors, Inc., Voyageur
Asset Management Group, Inc., Dougherty, Dawkins, Strand & ▇▇▇▇▇▇▇ Incorporated,
and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Portfolio Advisory Services, all of which are Minnesota
corporations.
Section 17.22. Employee Group. The term "Employee Group" shall mean those
persons listed on or who properly should be listed on the AGI Payroll Register.
Section 17.23. Employee Utilization Percentage. The term "Employee
Utilization Percentage" shall have the meaning set forth in Section 2.2 of this
Agreement.
Section 17.24. ESOP. The term "ESOP" shall mean that certain leveraged
employee stock ownership plan adopted by the Board of Directors of AGI on
December 8, 1989, including any amendments thereto.
Section 17.25. Human Resources Department. The term "Human Resources
Department" shall mean the personnel and payroll departments of AGI, exclusive
of training, personnel development, switchboard and receptionist functions, and
communications media. The Human Resources Department is an AGI department and is
staffed with AGI employees.
Section 17.26. Insurance Approvals. The term "Insurance Approvals" shall
have the meaning set forth in Section 14.2(a) of this Agreement.
28
Section 17.27. Joint Compensation Committee. The term "Joint Compensation
Committee" shall mean the committee formed in accordance with Article II of this
Agreement.
Section 17.28. Joint Marketing Agreement. The term "Joint Marketing
Agreement" shall mean the ALLIED Group Joint Marketing Agreement and any
amendments thereto.
Section 17.29. MIS Agreement. The term "MIS Agreement" shall mean that
certain Amended and Restated Management Information Services Agreement and any
amendments thereto or successor agreements.
Section 17.30. Mutual. The term "Mutual" shall mean ALLIED Mutual
Insurance Company, an Iowa mutual insurance corporation.
Section 17.31. Mutual Subsidiaries. The term "Mutual Subsidiaries" shall
mean AID Finance Services, Inc., ACA, ALLIED Jet Center, Inc., ALLIED Group
Merchant Banking Corporation, ARE, Inc., ALLIED Group Insurance Marketing
Company, and any subsidiary added as a party hereto pursuant to the procedure
set forth in Section 10.2; provided, that any subsidiary deleted as a party
pursuant to said procedure shall no longer be included in the definition of such
term.
Section 17.32. Pool. The term "Pool" shall mean the arrangement for
sharing insurance business revenues and expenses created by the Pooling
Agreement.
Section 17.33. Pooling Agreement. The term "Pooling Agreement" shall mean
that certain Second Amended and Restated Reinsurance Pooling Agreement, and any
amendments thereto or successor agreements.
Section 17.34. Restructuring Plan. The term "Restructuring Plan" shall
mean 1) the sale of 100% of the issued and outstanding capital stock of ALLIED
Life from AGI to Mutual in exchange for 2,700,000 shares of AGI common stock; 2)
the transfer of the Employee Group from Mutual to AGI; 3) the formation by AGI
of an employee stock ownership plan; 4) the termination of the ALLIED Mutual
Defined Benefit Plan; 5) the amendment of the Pooling Agreement; and 6) the
entering into of such other agreements as may be necessary to document such
transactions and to retain for the companies in the ALLIED Group the continued
benefits of their close business relationships, all as provided in the minutes
of the meetings of the Boards of Directors of AGI and Mutual held on October 23,
1989.
Section 17.35. Staff Employees. The term "Staff Employees" shall have the
meaning set forth in Section 2.2 of this Agreement.
Section 17.36. Surplus Office Space. The term "Surplus Office Space" shall
mean any vacant or unoccupied office space that is
29
owned or leased by Mutual or any of the Mutual Subsidiaries with the exception
of the Eden Prairie, Minnesota property.
Section 17.37. Total Personnel Costs. The term "Total Personnel Costs"
shall include all costs or expenses of whatever nature and from whatever origin
arising out of or related to the maintenance of an employee group. Such term
shall include but shall not be limited to the following costs, expenses, and
obligations:
(a) salaries, wages, reimbursements;
(b) benefit plans, including the ESOP;
(c) payroll taxes;
(d) employee insurance;
(e) litigation with employees;
(f) termination benefits;
(g) retiree medical benefits.
XVIII. RESTATEMENT OF ALLIED GROUP
INTERCOMPANY OPERATING AGREEMENT
Section 18.1. Restatement. The ALLIED Group Intercompany Operating
Agreement originally became effective January 1, 1990 and all previous
amendments and agreements are hereby superseded and replaced by this Agreement.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed as of the date and year above first written.
ALLIED MUTUAL INSURANCE COMPANY
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, President
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
30
ALLIED GROUP, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, Chairman of the
Board and President
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
ALLIED Life Financial Corporation
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
31
SUBSIDIARY SIGNATURE ADDENDUM
As of August 25, 1993, the undersigned companies hereby agree to become a
party and be subject to the Amended and Restated ALLIED Group Intercompany
Operating Agreement that became effective January 1, 1990 and is amended and
restated as of the date of this Addendum, and the undersigned companies consent
to ALLIED Group, Inc. as its agent with respect to those matters as specified in
the Amended and Restated ALLIED Group Intercompany Operating Agreement.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc.
By: /s/
--------------------------------------
Title: President
Dougherty, Dawkins, Strand & ▇▇▇▇▇▇▇
Incorporated
By: /s/
--------------------------------------
Title: Chairman
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Portfolio Advisory
Services
By: /s/
--------------------------------------
Title: Chairman
Voyager Asset Management Group, Inc.
By: /s/
--------------------------------------
Title: Chairman
Voyageur Fund Distributors, Inc.
By: /s/
--------------------------------------
Title: Chairman
32
ALLIED Group Mortgage Company
By: /s/
--------------------------------------
Title: President
AMCO Insurance Company
By: /s/
--------------------------------------
Title: Pres.
ALLIED General Agency Company
By: /s/
--------------------------------------
Title: Pres.
ALLIED Group Information Systems, Inc.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Title: President
The Freedom Group, Inc.
By: /s/
--------------------------------------
Title: Secretary
Freedom Insurance Services, Inc.
By: /s/
--------------------------------------
Title: Asst. Secretary
33
Midwest Printing Services, Ltd.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Title: Vice President & Treasurer
ALLIED Group Leasing Corporation
By: /s/
--------------------------------------
Title: President
ALLIED Property and Casualty Insurance
Company
By: /s/
--------------------------------------
Title: Pres.
Depositors Insurance Company
By: /s/
--------------------------------------
Title: Pres.
▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Insurance Company
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Title: President
35
SUBSIDIARY SIGNATURE ADDENDUM
As of August 25, 1993, the undersigned companies hereby agree to become a
party and be subject to the Amended and Restated ALLIED Group Intercompany
Operating Agreement that became effective January 1, 1990 and is amended and
restated as of the date of this Addendum, and the undersigned companies consent
to ALLIED Mutual Insurance Company as its agent with respect to those matters as
specified in the Amended and Restated ALLIED Group Intercompany Operating
Agreement.
AID Finance Services, Inc.
By: /s/
--------------------------------------
Title: President
ALLIED Crop Agency, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------
Title: President
ALLIED Jet Center, Inc.
By: /s/
--------------------------------------
Title: President
ALLIED Group Merchant Banking Corporation
By: /s/
--------------------------------------
Title: President
ARE, Inc.
By: /s/
--------------------------------------
Title: President
ALLIED Group Insurance Marketing Company
By: /s/
--------------------------------------
Title: President
36
SUBSIDIARY SIGNATURE ADDENDUM
As of August 25, 1993, the undersigned companies hereby agree to become a
party and be subject to the Amended and Restated ALLIED Group Intercompany
Operating Agreement that became effective January 1, 1990 and is amended and
restated as of the date of this Addendum, and the undersigned companies consent
to ALLIED Life Financial Corporation as its agent with respect to those matters
as specified in the Amended and Restated ALLIED Group Intercompany Operating
Agreement.
ALLIED Life Insurance Company
By: /s/
--------------------------------------
Title: President
ALLIED Life Brokerage Agency, Inc.
By: /s/
--------------------------------------
Title: President
37
