AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON August 27, 2002
REGISTRATION STATEMENT NO. 333-88794
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
PRE-EFFECTIVE AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------------
AMERUS GROUP CO.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
IOWA 42-1458424
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
699 WALNUT STREET
DES MOINES, IOWA 50309-3948
(515) 362-3600
(Address and telephone number of Registrant's principal executive offices)
----------------------
JOSEPH K. HAGGERTY, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
AMERUS GROUP CO.
699 WALNUT STREET
DES MOINES, IOWA 50309-3948
(515) 362-3600
(Name, address and telephone number of agent for service)
---------------------
Copies to
ANDREW R. SCHLEIDER, ESQ.
SHEARMAN & STERLING
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022-6069
(212) 848-4000
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
======================================================================================================================
TITLE OF AMOUNT PROPOSED PROPOSED MAXIMUM AMOUNT OF
EACH CLASS OF TO BE MAXIMUM OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED (1) PER SECURITY (2) PRICE(2) FEE
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Optionally Convertible $185,000,000 100% $185,000,000 $17,020
Equity-Linked Accreting Notes
(OCEANs(SM))
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Common Stock, no par value (3) (3) (3) (4)
======================================================================================================================
(1) The Optionally Convertible Equity-Linked Accreting Notes (OCEANs(SM)) were
issued at an original price of $1,000 per OCEAN, which represents an
aggregate initial offering price of $185,000,000 and an aggregate principal
amount at maturity of $234,950,000.
(2) This estimate is made solely for the purpose of determining the registration
fee pursuant to Rule 457(c) under the Securities Act.
(3) Includes the shares of common stock issuable upon conversion or deliverable
upon exchange of the OCEANs at their accreted principal amount based upon
the conversion price of the OCEANs. Pursuant to Rule 416 under the
Securities Act, this registration statement shall also be deemed to cover
the issuance, sales and resales of an indeterminate number of shares of
common stock that may become issuable upon conversion or deliverable upon
exchange of the OCEANs as a result of stock splits, stock dividends and
other similar transactions.
(4) Under Rule 457(i), there is no additional filing fee with respect to the
shares of common stock that may be issued and sold upon conversion or
deliverable upon exchange of the OCEANs because no additional consideration
will be received in connection with the exercise of the conversion
privilege.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
PROSPECTUS SUBJECT TO COMPLETION, DATED AUGUST 27, 2002
$185,000,000
AMERUS GROUP CO.
OPTIONALLY CONVERTIBLE EQUITY-LINKED ACCRETING NOTES
(OCEANS(SM)) DUE MARCH 6, 2032
AND COMMON STOCK ISSUABLE UPON CONVERSION OR DELIVERABLE UPON
EXCHANGE OF THE OCEANS
We issued the OCEANs in a private placement in March 2002 at an issue
price of $1,000.00 per OCEAN. The selling securityholders named on page 46 of
this prospectus may use this prospectus to resell their OCEANs and the shares of
our common stock issuable upon conversion or deliverable upon exchange of their
OCEANs.
We have summarized below the principal terms of the OCEANs. For more
detail, you should read "Description of the OCEANs" beginning on page 22 of
this prospectus.
- The yield on the OCEANs (without taking into account any contingent
interest) will be approximately 3.83% per annum through March 6,
2007, and approximately 2.28% per annum thereafter through
maturity. We will pay a portion of the yield semiannually on March
6 and September 6 in cash at a rate of $20.00 per annum per OCEAN.
Since only a portion of the OCEANs' yield is paid in cash, the
principal amount of the OCEANs will accrete and each OCEAN will
have a principal amount at maturity of $1,270.00. In addition, we
will also pay contingent interest on the OCEANs as described in
this prospectus.
- We may defer payment of cash interest on the OCEANs from time to
time.
- We may redeem the OCEANs at the redemption prices described in this
prospectus if at least one of the conditions specified for
redemption has occurred.
- You may surrender your OCEANs for conversion only:
- if the sale price of our common stock for a specified number
of trading days exceeds $47.85, subject to adjustment;
- during any period in which an event of default on the OCEANs
has occurred and is continuing;
- if we have called the OCEANs for redemption;
- during any period in which payment of cash interest is
deferred;
- during any period in which our senior long-term unsecured
credit rating falls below specified levels or is suspended or
withdrawn; and
- during specified periods upon the occurrence of specified
corporate transactions.
- Prior to March 6, 2007, each OCEAN may be converted into a number
of shares of our common stock equal to the accreted principal
amount of the OCEANs at the time of conversion divided by the
conversion price of $37.598 per share, subject to adjustment. On
and after March 6, 2007, each OCEAN may be converted into a number
of shares of our common stock equal to $1,100.00 divided by the
then effective conversion price. The conversion price will be
adjusted under some circumstances.
- Additionally, if a firm quote cannot be obtained for the OCEANs
during a three-day period equal to at least 90% of the closing
stock price of our common stock on any such day multiplied by the
quotient of $1,100.00 divided by the conversion price in effect on
such day, holders may convert their OCEANs into a number of shares
of our common stock per OCEAN equal to 90% of the quotient of
$1,100.00 divided by the conversion price then in effect.
- The OCEANs are subordinated to all of our existing and future
senior debt, pari passu with all of our future senior subordinated
debt and senior to all of our existing and future junior
subordinated debt. In addition, the OCEANs are effectively
subordinated to all existing and future liabilities of our
subsidiaries.
Our common stock is listed on The New York Stock Exchange under the
symbol "AMH." On August 26, 2002, the last reported sale price on the New York
Stock Exchange of our common stock was $32.34 per share.
INVESTING IN THE OCEANS INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 11 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is August 27, 2002.
TABLE OF CONTENTS
PAGE
----
SUMMARY ............................................................................. 2
RISK FACTORS........................................................................ 9
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS....................................18
USE OF PROCEEDS..................................................................... 19
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERENCE SECURITY DIVIDENDS....... 19
DESCRIPTION OF THE OCEANS........................................................... 20
DESCRIPTION OF CAPITAL STOCK........................................................ 36
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS............................. 38
SELLING SECURITYHOLDERS............................................................. 44
PLAN OF DISTRIBUTION................................................................ 46
LEGAL MATTERS....................................................................... 47
EXPERTS ............................................................................ 47
WHERE YOU CAN FIND MORE INFORMATION..................................................48
1
SUMMARY
The following information should be read together with the information
contained or incorporated by reference in this prospectus. When used in this
document, the terms "AmerUs," "we," "our" and "us" refer to AmerUs Group Co.
(including American Mutual Holding Company and AmerUs Life Holdings, Inc. as
predecessor entities of AmerUs Group Co.) and our consolidated subsidiaries,
unless otherwise specified or indicated by the context. This summary highlights
selected information from this prospectus to help you understand AmerUs and the
OCEANs. You should carefully read this prospectus to understand fully the terms
of the OCEANs, as well as the tax and other considerations that may be important
to you in making a decision about whether to invest in the OCEANs.
AMERUS GROUP CO.
We are a holding company whose subsidiaries are engaged in the business
of marketing, underwriting and distributing a broad range of protection products
and accumulation products to individuals and businesses in 50 states, the
District of Columbia and the U.S. Virgin Islands. Our primary protection product
offerings consist of whole life, interest-sensitive whole life, equity-indexed
life, universal life and term life insurance policies. Our primary accumulation
product offerings consist of individual fixed annuities and insurance contracts
issued through separate account funding agreements.
We were founded in 1896 as the mutual insurer Central Life Assurance
Company. In 1996, we became the first mutual insurance holding company, a
structure that allows mutuals to access the public equity markets, which AmerUs
did in 1997 with its initial public offering. In 2000, AmerUs reorganized its
mutual holding company structure through a full demutualization and became a
100% public stock company.
We have had positive organic growth in our businesses. We have also
successfully executed a series of strategic acquisitions that have helped
generate sales growth, as well as balance our product and geographic
distribution. The following is a summary of these acquisitions and the benefits
created:
- In 1994, Central Life Assurance Company and American Mutual Life
Insurance Co. merged providing us with significant scale in their
life insurance operations. The merger resulted in our becoming one
of the 25 largest mutual insurers in America at that time.
- In October 1997, the acquisition of Delta Life Corporation
launched our annuity business. At the time of the acquisition,
Delta Life had about $2.0 billion in assets and specialized in
single-premium deferred annuity and equity-indexed annuity
products.
- In December 1997, we acquired AmVestors which specialized in the
sale of annuity products. The acquisition further strengthened our
presence in asset accumulation and retirement and savings markets.
- In 2001, we acquired Indianapolis Life Insurance Company, or
ILICO, which had $5.8 billion in consolidated assets at the time
of the acquisition. The acquisition of ILICO allowed us to
strengthen our life insurance business and ultimately provided us
with a better balance of annuities and life insurance products.
Today, we are well positioned in our focused segments: protection
products and accumulation products. As of March 31, 2002, we had approximately
815,000 life insurance policies and fixed annuity contracts outstanding and
individual life insurance in force, net of reinsurance, of approximately $73.7
billion. We also had life insurance reserves of $4.5 billion and fixed annuity
reserves of $10.8 billion as of that date. Our total assets and our total
shareholders' equity were $18.8 billion and $1.2 billion, respectively, as of
March 31, 2002. Our principal executive offices are located at 699 Walnut
Street, Des Moines, Iowa 50309-3948 and our telephone number is (515) 362-3600.
2
THE OCEANS
OCEANs............................. $185,000,000 aggregate original
principal amount of our Optionally
Convertible Equity-linked Accreting
Notes (OCEANs(SM)) due March 6, 2032.
Each OCEAN was issued at a price of
$1,000.00.
Maturity........................... March 6, 2032.
Yield and Principal Amount
at Maturity........................ The yield on the OCEANs, without taking
into account any Contingent Interest (as
defined below), will be approximately
3.83% per annum compounded semiannually
from March 6, 2002 through March 6,
2007, and approximately 2.28% per annum
compounded semiannually from March 6,
2007 through maturity. We will pay a
portion of the yield in cash, as Stated
Interest, on each Interest Payment Date.
Since only a portion of the yield on the
OCEANs will be paid as Stated Interest,
the principal amount of each OCEAN will
accrete over time such that the
principal amount of each OCEAN will be
$1,270.00 at maturity as described below
under "Accreted Principal Amount."
Stated Interest.................... We will pay Stated Interest equal to
2.00% per annum of the original
principal amount (or $20.00 per annum
per OCEAN) semiannually on each Interest
Payment Date to record holders on the
preceding February 20 and August 23 of
each year (each a "Record Date").
Interest Payment Dates............. March 6 and September 6, commencing
September 6, 2002. Interest on the
OCEANs will be calculated on the basis
of a 360-day year of twelve 30-day
months.
Accreted Principal Amount.......... On each Interest Payment Date, the
principal amount of each OCEAN will
increase by the applicable yield on the
OCEANs less the amount of Stated
Interest payable on such date. Between
Interest Payment Dates, the Accreted
Principal Amount will be the linear
interpolation of the Accreted Principal
Amounts as of the immediately preceding
and immediately succeeding Interest
Payment Dates as described under
"Description of the OCEANs--General."
Contingent Interest................ On and prior to March 6, 2004,
Contingent Interest will be payable in
cash on each Interest Payment Date in an
amount equal to $11.70 per annum per
OCEAN. After March 6, 2004, Contingent
Interest will accrue from the record
date for any regular cash dividends on
our common stock and will be payable in
cash on the next following March 6, June
6, September 6 or December 6 (each a
"Quarterly Contingent Interest Payment
Date"). The amount of contingent
interest payable per OCEAN will be equal
to the regular cash dividends, if any,
paid by us on a share of our common
stock since the immediately preceding
Quarterly Contingent Interest Payment
Date, multiplied by the amount obtained
by dividing $1,100.00 by the conversion
price in effect on the record date for
such regular cash dividends. See
"Description of the OCEANs--Contingent
Interest" for a more detailed discussion
on the timing of payment and the
calculation of the amount of Contingent
Interest.
Deferral of Interest Payments...... If no event of default is continuing, we
may defer payments of Stated Interest on
the OCEANs from time to time, but at no
time for more than ten consecutive
semiannual periods. Interest on deferred
Stated Interest payments will accrue at
5.00% per annum, compounded
semiannually, on each Interest Payment
Date. We refer to the aggregate amount
of such deferred payments of Stated
Interest outstanding at any time,
together with any accrued and unpaid
interest thereon, as "Deferred
Interest".
3
We will pay all unpaid Deferred Interest
on any OCEANs surrendered for
conversion, redemption or repurchase. We
have agreed that during any interest
deferral period, among other things, we
will not declare or pay dividends on our
capital stock or pay interest on our
junior debt securities.
Conversion Conditions.............. Holders may surrender OCEANs for
conversion only if one or more of the
following conversion conditions is
satisfied and only for the periods set
forth below and under "Description of
the OCEANs--Conversion Rights":
- if the sale price per share of our
common stock for at least 20
trading days in the 30 trading-day
period ending on the trading day
prior to the conversion date
exceeds 140% of our Initial Stock
Price ($34.18), subject to
adjustment;
- during any period in which an event
of default has occurred and is
continuing;
- if we have called the OCEANs for
redemption, during the period
ending two business days prior to
the redemption date;
- during the five trading days after
a notice that a Special Conversion
Event (as described below) has
occurred;
- during any period in which we defer
payment of Stated Interest;
- during any period in which our
senior long-term unsecured credit
rating is downgraded by Standard &
Poor's to BB+ or lower and by
Moody's to Ba2 or lower, or if our
senior long-term unsecured credit
rating is suspended or withdrawn by
both rating agencies, or if neither
rating agency continues to provide
ratings services or coverage to us;
or
- during specified periods upon the
occurrence of specified corporate
transactions, including a change of
control, described under
"Description of the OCEANs--
Conversion Rights--Conversion upon
Specified Corporate Transactions."
A Special Conversion Event will be
deemed to have occurred if a holder
requests that the bid solicitation agent
obtain bids for such holder's OCEANs
during a three trading-day Measurement
Period, and a firm bid for such OCEANs
cannot be obtained from specified
securities dealers on any day during
such period that is at least equal to
90% of the closing sale price of our
common stock on any such day multiplied
by the quotient of $1,100.00 divided by
the conversion price then in effect, as
more fully described under "Description
of the OCEANs--Conversion
Rights--Conversion upon a Special
Conversion Event."
We will, or will cause the trustee to,
notify holders of the OCEANs of the
occurrence of an event triggering the
convertibility of the OCEANs.
4
Consideration upon Conversion...... The conversion price will be $37.598 per
share, subject to adjustment under
certain circumstances as described under
"Description of the OCEANs--Conversion
Rights--Adjustment of the Conversion
Price."
If at least one of the conditions for
conversion is satisfied, holders may
convert their OCEANs and would be
entitled to receive:
- an amount of shares of our common
stock per OCEAN equal to:
(i) if the OCEANs are converted
prior to March 6, 2007, the
Accreted Principal Amount of
the OCEANs on the date of
conversion divided by the
conversion price then in
effect;
(ii) if the OCEANs are converted
on or after March 6, 2007,
$1,100.00 (the Accreted
Principal Amount of the
OCEANs on March 6, 2007)
divided by the conversion
price then in effect; or
(iii) notwithstanding the
foregoing, if the OCEANs are
convertible solely as a
result of a Special
Conversion Event, $990.00
divided by the conversion
price then in effect;
- cash in lieu of fractional shares;
- any accrued and unpaid Contingent
Interest which accrued on or after
March 6, 2004;
- if such OCEANs were converted upon
the exercise of conversion rights
arising by reason of a notice of
redemption or a change of control
or distribution described under
"Description of the
OCEANs--Conversion
Rights--Conversion upon Specified
Corporate Transactions," the sum of
(i) any accrued and unpaid Stated
Interest on such OCEANs up to but
not including the conversion date,
(ii) on or prior to March 6, 2004,
accrued and unpaid Contingent
Interest up to but not including
the conversion date, and (iii) if
such redemption or change of
control or distribution occurs
prior to March 6, 2007, an amount
equal to the Make-Whole Premium (as
defined under "Description of the
OCEANs--Maturity; Redemption of
OCEANs at Our Option--Optional
Redemption upon Satisfaction of
Market Price Condition") that would
have been payable if such OCEANs
had been redeemed on the conversion
date; and
- if such conversion is during an
Interest Deferral Period, all
deferred Stated Interest payments
on such OCEANs, including accrued
and unpaid interest thereon.
If a holder surrenders OCEANs for
conversion during the period after any
Record Date but prior to the
corresponding Interest Payment Date, the
holder must pay us at the time of
surrender (1) the Stated Interest
payable on such OCEANs on such Interest
Payment Date, and (2) if the OCEANs are
5
surrendered for conversion prior to
March 6, 2004, the Contingent Interest
payable on such OCEANs on such Interest
Payment Date, unless in either case such
OCEANs (x) have been called for
redemption, or (y) are surrendered for
conversion pursuant to the occurrence of
a specified transaction described under
"Description of the OCEANs--Conversion
Rights--Conversion upon Specified
Corporate Transactions."
Exchange in Lieu of Conversion..... We may designate a financial institution
to which OCEANs surrendered for
conversion will be initially offered for
exchange in lieu of our converting those
OCEANs. OCEANs will not be offered for
exchange if they are being converted as
a result of our calling them for
redemption or as a result of the
occurrence of certain specified
transactions described under
"Description of the OCEANs--Conversion
Rights--Conversion upon Specified
Corporate Transactions." In order to
accept OCEANs surrendered for
conversion, the designated institution
must agree to exchange for those OCEANs
a number of shares of our common stock
equal to the number of shares the holder
of those OCEANs would receive upon
conversion, plus a cash payment for any
amounts we would have been required to
pay to the holder upon conversion of
such OCEANs. If the designated
institution declines to accept for
exchange any OCEANs in whole or in part,
or if the designated institution does
not timely deliver the related shares of
our common stock and cash required to be
paid, those OCEANs will be converted by
the conversion agent.
Redemption of OCEANs at
Our Option......................... We may redeem the OCEANs for cash at a
price equal to their Accreted Principal
Amount on the redemption date plus
accrued and unpaid interest (including
Stated Interest, Contingent Interest and
Deferred Interest) up to but not
including the redemption date, plus a
Make-Whole Premium if the OCEANs are
redeemed prior to March 6, 2007, if:
- the sale price of our common stock
for at least 20 trading days in the
30 trading-day period ending on the
trading day prior to the day the
notice of redemption is given
exceeds 140% of our Initial Stock
Price;
- a change of control has occurred;
or
- a tax event has occurred and the
conversion value of the OCEANs on
any trading day within the five
trading days immediately preceding
the day the notice of redemption is
given exceeds their Accreted
Principal Amount by at least 10%
(the conversion value for this
purpose equals the product of (a)
the sale price of our common stock
on the determination date and (b)
the number of shares of our common
stock issuable upon conversion of
the OCEANs on that date).
Repurchase at Option of Holder upon
a Change of Control................ If a change of control occurs, each
holder may require us to purchase for
cash all or a portion of that holder's
OCEANs at a price equal to their
Accreted Principal Amount on the date of
repurchase plus accrued and unpaid
6
interest (including Stated Interest,
Contingent Interest and Deferred
Interest) up to but not including the
date of repurchase.
An event that constitutes a change of
control under the OCEANs may be an event
of default under some of our other
indebtedness, which could make it less
likely for us to be able to repurchase
OCEANs surrendered for repurchase upon a
change of control.
Subordination...................... The OCEANs are subordinated in right of
payment to all of our existing and
future senior debt, pari passu with all
of our future senior subordinated debt
and senior to all of our existing and
future junior subordinated debt. In
addition, the OCEANs are effectively
subordinated to all existing and future
liabilities of our subsidiaries. The
Indenture does not limit the amount of
senior debt that we may incur. We expect
from time to time to incur debt
constituting senior debt.
As of March 31, 2002, after giving
effect to the sale of the OCEANs and the
application of the net proceeds, on an
unconsolidated basis, we had $396.9
million of indebtedness, $156.4 million
of which was senior debt and $55.4
million of which was ranked junior to
the OCEANs. In addition, our
subsidiaries had $17.3 billion of
liabilities, all of which were
effectively senior to the OCEANs.
Sinking Fund....................... None.
Use of Proceeds.................... We will not receive any of the proceeds
from the sale by any selling
securityholder of the OCEANs or of the
shares of our common stock issuable upon
conversion of the OCEANs.
DTC Eligibility.................... The OCEANs were issued in book-entry
form and are represented by one or more
permanent global certificates deposited
with a custodian for and registered in
the name of a nominee of The Depository
Trust Company ("DTC"). Beneficial
interests in those securities will be
shown on, and transfers will be effected
only through, records maintained by DTC
and its direct and indirect participants
and those interests may not be exchanged
for certificated securities, except in
limited circumstances.
Trading............................ We do not intend to list the OCEANs on
any national securities exchange. Our
common stock is traded on the New York
Stock Exchange under the symbol "AMH."
United States Federal Income Tax
Considerations..................... The OCEANs are indebtedness subject to
the United States Treasury regulations
governing contingent payment debt
instruments. Each holder will accrue
interest on the OCEANs for United States
federal income tax purposes on a
constant yield to maturity basis at a
rate of 9.917%, which is the rate
comparable to the rate at which we have
determined we would borrow on a
non-contingent, non-convertible
borrowing with terms and conditions
otherwise comparable to the OCEANs
(including the level of subordination,
term, timing of payments and general
market conditions). Accordingly, each
holder will recognize taxable income in
excess of the amount of cash payments
received while the OCEANs are
outstanding.
A holder also will recognize gain or
loss on the sale, exchange, conversion
or redemption of an OCEAN in an amount
equal to the difference between the
amount realized on the sale, exchange,
7
conversion or redemption, including the
fair market value of any common stock
received upon conversion or otherwise,
and the holder's adjusted tax basis in
the OCEAN. Any gain recognized on the
sale, exchange, conversion or redemption
of an OCEAN generally will be ordinary
interest income; any loss will be
ordinary loss to the extent of interest
previously included in income, and
thereafter, capital loss.
Investors should consult their tax
advisors regarding the tax treatment of
the OCEANs and whether a purchase of an
OCEAN is advisable in light of the
above-described tax treatment and the
investor's particular tax situation.
-------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT
INFORMATION, YOU SHOULD NOT RELY ON IT. WE WILL NOT MAKE AN OFFER TO SELL THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. YOU
SHOULD ASSUME THAT THE INFORMATION APPEARING IN THIS PROSPECTUS OR ANY DOCUMENTS
INCORPORATED BY REFERENCE IS ACCURATE ONLY AS OF THE DATE ON THE FRONT COVER OF
THE APPLICABLE DOCUMENT OR AS SPECIFICALLY INDICATED IN THE DOCUMENT. OUR
BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE
CHANGED SINCE THAT DATE.
8
RISK FACTORS
You should consider carefully, in addition to the other information
contained in this prospectus, the following factors before purchasing the
OCEANs.
RISK FACTORS RELATING TO THE OCEANS
THE OCEANS ARE UNSECURED AND SUBORDINATE TO OUR SENIOR DEBT, AND, BECAUSE WE ARE
A HOLDING COMPANY, YOUR RIGHTS UNDER THE OCEANS ARE EFFECTIVELY SUBORDINATE TO
THE LIABILITIES OF OUR SUBSIDIARIES.
The OCEANs are unsecured and rank junior in right of payment to all of
our present and future senior debt (as defined under "Description of the
OCEANs--Subordination"). This means that, in any bankruptcy or insolvency
proceedings involving us, the holders of our senior debt are first entitled to
receive payment in full of the amounts due to them before the holders of the
OCEANs are entitled to receive or retain any payment in respect of the OCEANs.
The indenture relating to the OCEANs does not limit the amount of senior debt
that we may incur and we expect from time to time to incur indebtedness
constituting senior debt. As of March 31, 2002, after giving effect to the sale
of the OCEANs and the application of the net proceeds, on an unconsolidated
basis, we had $156.4 million of senior debt.
As we are a holding company, our cash flow and ability to service debt,
including the OCEANs, depend upon the distribution of earnings, loans or other
payments made by our subsidiaries to us. Our subsidiaries are separate legal
entities and have no obligation with respect to our payment obligations. In
addition, payment of dividends, distributions, loans or advances by our
subsidiaries to us could be subject to statutory or contractual restrictions.
Our right to receive assets of our subsidiaries upon their liquidation or
reorganization and, as a result, your right to participate in those assets will
be effectively subordinated to the claims of each subsidiary's creditors,
including trade creditors. In addition, even if we are recognized as a creditor
of any of our subsidiaries, our rights as a creditor would be subordinate to any
security interest in the assets of our subsidiaries and any debt of our
subsidiaries senior to that held by us. As of March 31, 2002, our subsidiaries
had $17.3 billion of liabilities.
WE MAY NOT BE ABLE TO RAISE THE FUNDS NECESSARY TO FINANCE A CHANGE OF CONTROL
PURCHASE AND YOUR REPURCHASE RIGHT MAY RESULT IN A DEFAULT UNDER OUR SENIOR DEBT
UNDER SOME CIRCUMSTANCES.
If a change of control of AmerUs Group Co. occurs, you will have an
option to require us to purchase your OCEANs for cash. See "Description of the
OCEANs--Repurchase at Option of Holder upon a Change of Control." However, we
may not have sufficient funds at that time to make the required purchase of all
the OCEANs surrendered for purchase. In addition, an event that constitutes a
"change of control" under the OCEANs may be an event of default under certain of
our other indebtedness even though the agreements for such indebtedness define
a "change of control" differently from the OCEANs indenture. As of July 19,
2002, such indebtedness (excluding the OCEANs) that could become due and payable
as a result of the occurrence of a "change of control" amounted to approximately
$91 million, including (i) approximately $63 million outstanding under our $175
million revolving credit facility agreement with The Bank of New York, Mellon
Bank, Fleet National Bank and other financial institutions, and (ii)
approximately $21 million outstanding under our $27.5 million facility and
guaranty agreement with The First National Bank of Chicago and other financial
institutions. As we may be required to repay all outstanding amounts under the
foregoing indebtedness at the same time we repurchase OCEANs surrendered for
repurchase, we may not be able to repurchase all surrendered OCEANs. In
addition, we may be required to obtain the consent of some of our lenders,
including the lenders under our revolving credit agreement, to repurchase the
OCEANs under the terms of our agreements with them. If we do not obtain such
consent or refinance such borrowings, we could default under the terms of those
agreements if we repurchase your OCEANs. If we fail to repurchase your OCEANs
when required to do so, we will be in default with respect to the OCEANs, which
might also constitute a default under the terms of our other debt at that time.
In these circumstances, the subordination provisions in the indenture will
restrict payments to you until our senior debt is repaid in full.
THE VALUE OF THE CONVERSION RIGHTS ASSOCIATED WITH THE OCEANS MAY BE
SUBSTANTIALLY LESSENED OR ELIMINATED IF WE ARE PARTY TO A MERGER, CONSOLIDATION
OR OTHER SIMILAR TRANSACTION.
If we are party to a consolidation, merger or binding share exchange or
transfer or lease of all or substantially all of our assets pursuant to which
our common stock is converted into, or into the right to receive, cash,
securities or other property, at the effective time of the transaction, the
right to convert an OCEAN into our common stock will be changed into a right to
convert it into the kind and amount of cash, securities or other property which
the holder would have received if the holder had converted its OCEAN immediately
prior to the transaction. This change could substantially lessen or eliminate
the value of the conversion privilege associated with the OCEANs in the future.
For example, if we were acquired in a cash merger, each OCEAN would become
convertible solely into cash and would no longer be convertible into securities
whose value would vary depending on our future prospects and other factors.
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AN ACTIVE TRADING MARKET FOR THE OCEANS MAY NOT DEVELOP.
The OCEANs comprise a new issue of securities for which there is
currently no public market. We do not plan to list the OCEANs on any securities
exchange or to include them in any automated quotation system. We cannot assure
you that an active trading market for the OCEANs will develop or as to the
liquidity or sustainability of any such market, your ability to sell your OCEANs
or the price at which you will be able to sell your OCEANs. Future trading
prices of the OCEANs will depend on many factors, including, among other things,
prevailing interest rates, our operating results, the price of our common stock
and the market for similar securities.
YOU SHOULD CONSIDER THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF OWNING
THE OCEANS.
We and each holder, by its purchase of OCEANs, have agreed to treat the
OCEANs as "contingent payment debt instruments" and to be bound by our
application of the Treasury regulations that govern contingent payment debt
instruments. As a result, you will be required to accrue interest on a constant
yield to maturity basis at a rate equal to 9.917%, which is comparable to the
rate at which we would borrow in a non-contingent, non-convertible borrowing. As
a result, you will be required to include amounts as ordinary income, in your
income, in advance of the receipt of a cash payment. The amount of interest
income required to be included by you each year will be in excess of the yield
to maturity of the OCEANs. In addition, you will recognize ordinary income, if
any, upon a sale, exchange, conversion or redemption of the OCEANs at a gain;
any loss will be ordinary loss to the extent of interest previously included in
income, and, thereafter, capital loss. See "Certain United States Federal Income
Tax Considerations."
DEFERRAL OF INTEREST PAYMENTS WILL HAVE TAX CONSEQUENCES FOR YOU AND MAY AFFECT
THE TRADING PRICE OF THE OCEANS.
If no event of default under the OCEANs has occurred and is continuing,
we can defer payments of Stated Interest from time to time for up to 10
consecutive semiannual periods. During any interest deferral period, Stated
Interest will continue to accrue on the OCEANs and the deferred payments of
Stated Interest would also accrue interest, compounded semiannually, at the rate
of 5.00% per annum (to the extent permitted by law).
If we defer interest payments on the OCEANs, you generally will be
required to recognize interest income for United States federal income tax
purposes, before you receive any cash relating to that interest. In addition,
you will not receive the cash paid by us for such deferred interest if you sell
the OCEANs to another investor before the end of any interest deferral period or
before the record date for the payment of such deferred interest.
If we exercise our right to defer payments of Stated Interest in the
future, the OCEANs may trade at a price that does not fully reflect the value of
accrued but unpaid interest on the OCEANs. In addition, our right to defer
payments of Stated Interest on the OCEANs may cause the market price for the
OCEANs to be more volatile than other securities that do not have such right.
See "Certain United States Federal Income Tax Consequences" for more
information regarding the tax consequences of purchasing, holding and selling
the OCEANs.
YOU MAY ONLY CONVERT THE OCEANS INTO SHARES OF OUR COMMON STOCK UNDER CERTAIN
CIRCUMSTANCES, WHICH MAY NOT OCCUR.
The OCEANs may only be converted into shares of our common stock if one
or more of the conditions described under "Description of the OCEANs--Conversion
Rights" are satisfied. We cannot assure you that any OCEANs you purchase will
become convertible into shares of our common stock prior to their stated
maturity. If you are unable to convert your OCEANs prior to their stated
maturity, you may be unable to realize the value of the conversion rights
associated with your OCEANs.
RISK FACTORS RELATING TO OUR BUSINESS AND OPERATIONS
PAYMENT OF DIVIDENDS BY OUR LIFE INSURANCE SUBSIDIARIES TO US IS REGULATED BY
STATE INSURANCE LAWS.
Payment of dividends to us by our life insurance subsidiaries is
regulated by the state insurance laws of their respective jurisdictions of
incorporation. Our significant life insurance subsidiaries are located in Iowa,
Kansas, Indiana and New York. State insurance laws of each of these
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jurisdictions generally impose limitations on the ability of each of these
subsidiaries to pay dividends to us. If any proposed dividend payment exceeds
stated statutory limitations, our subsidiary must obtain the prior approval of
the Commissioner of Insurance of that state to pay that dividend amount. In
addition, the amount of dividends that we actually receive from our subsidiaries
depends upon their respective business and financial performance and may be less
than the maximum amounts permitted under such statutory limitations. If any of
our life insurance subsidiaries cannot pay dividends or interest to us in the
future, our earnings would be significantly reduced, which may adversely affect
the trading prices of our common stock and the OCEANs and our ability to service
interest payments on our indebtedness, including the OCEANs.
WE FACE INTENSE COMPETITION FROM OTHER INSURANCE COMPANIES, BANKS AND
NON-INSURANCE FINANCIAL SERVICE COMPANIES FOR CUSTOMERS AND SALES AGENTS.
We compete for customers and agents and other distributors of life
insurance and annuity products with a large number of other insurers and
non-insurance financial service companies, such as banks, broker-dealers and
mutual funds. Many of our competitors have greater financial resources than we
do and offer alternative products. Many other insurers have higher claims-paying
ability and financial strength ratings than we do. National banks, with their
large existing customer bases, may increasingly compete with insurers as a
result of court rulings allowing national banks to sell annuity products in some
circumstances, and as a result of recently enacted legislation removing
restrictions on bank affiliations with insurers. Specifically, the
Gramm-Leach-Bliley Act of 1999 permits mergers that combine commercial banks,
insurers and securities firms under one holding company. These developments may
increase our competition by substantially increasing the number, size and
financial strength of our potential competitors who may be able to offer more
competitive pricing than we can, due to economies of scale.
IF WE ARE UNABLE TO ATTRACT AND RETAIN SALES REPRESENTATIVES AND DEVELOP NEW
DISTRIBUTION CHANNELS, SALES OF OUR PRODUCTS AND SERVICES MAY BE REDUCED.
We distribute our life insurance and annuity products and services
through a variety of distribution channels, including our own sales
organizations, independent brokers, banks, broker-dealers and other third-party
marketing organizations. We must attract and retain sales representatives to
sell our life insurance and annuity products. Strong competition exists among
financial services companies for efficient sales representatives. We compete
with other financial services companies for sales representatives primarily on
the basis of our financial position, support services and compensation and
product features. Our competitiveness for such agents also depends upon the
relationships we develop with these agents. If we are unable to attract and
retain sufficient sales representatives to sell our products, our ability to
compete and our revenues would suffer.
FUTURE DOWNGRADES IN THE RATINGS OF OUR LIFE INSURANCE SUBSIDIARIES COULD
ADVERSELY AFFECT SALES OF OUR LIFE INSURANCE AND ANNUITY PRODUCTS.
Ratings with respect to claims-paying ability and financial strength
are increasingly important factors in establishing the competitive position of
insurance companies. Each rating agency reviews its ratings periodically and
there can be no assurance that our current ratings will be maintained in the
future. Our claims-paying and financial strength ratings are based upon factors
relevant to policyowners and are not directed toward protection of investors in
our securities.
A rating downgrade, or the potential for such a downgrade, of any of
our life insurance subsidiaries could, among other things:
- materially increase the number of policy or contract surrenders
for all or a portion of their net cash values and withdrawals by
policyholders of cash values from their policies;
- result in the termination of our relationships with
broker-dealers, banks, agents, wholesalers and other distributors
of our products and services;
- reduce new sales, particularly with respect to general account
guarantees and funding agreements purchased by financial
institutions; and
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- result in higher interest rates becoming payable on outstanding
loans under our existing revolving credit facility.
SEVERE INTEREST RATE FLUCTUATIONS COULD HAVE A NEGATIVE IMPACT ON POLICYOWNER
BEHAVIOR AND ADVERSELY AFFECT OUR ABILITY TO PAY POLICYOWNER BENEFITS AND OUR
RESULTS OF OPERATIONS.
Severe interest rate fluctuations could adversely affect the ability of
our life insurance subsidiaries to pay policyowner benefits with operating and
investment cash flows, cash on hand and other cash sources. We seek to limit the
impact of changes in interest rates on the profitability and surplus of our life
insurance operations by managing the duration of our assets relative to the
duration of our liabilities. During a period of rising interest rates, policy
surrenders, withdrawals and requests for policy loans may increase as customers
seek to achieve higher returns. Despite our efforts to reduce the impact of
rising interest rates, we may be required to sell assets to raise the cash
necessary to respond to such surrenders, withdrawals and loans, thereby
realizing capital losses on the assets sold. An increase in policy surrenders
and withdrawals may also require us to accelerate amortization of policy
acquisition costs relating to these contracts, which would further reduce our
net income.
During periods of declining interest rates, borrowers may prepay or
redeem mortgages and bonds that we own, which would force us to reinvest the
proceeds at lower interest rates. Most of our insurance and annuity products
provide for guaranteed minimum yields and we are unable to lower our payouts to
customers in response to the lower return we will earn on our investments. In
addition, it may be more difficult for us to maintain our desired spread between
the investment income that we earn and our payouts to customers during periods
of declining interest rates thereby reducing our profitability. A reduction in
interest rates could also depress the market for our fixed annuity products.
While policyowners may pay surrender charges to terminate policies, such
terminations would reduce our future income.
WE MAY BE EXPOSED TO UNIDENTIFIABLE OR UNANTICIPATED LIABILITIES IF WE CANNOT
EFFECTIVELY MANAGE OUR RISKS, WHICH COULD NEGATIVELY AFFECT THE AMOUNTS THAT OUR
LIFE INSURANCE SUBSIDIARIES MAY DISTRIBUTE TO US AS DIVIDENDS.
We have devoted significant resources to developing our risk management
policies and procedures and we expect to continue to do so in the future.
Nonetheless, these policies and procedures to identify, monitor and manage risks
may not be fully effective. Many of the methods of managing risk and exposures
are based upon the use of observed historical market behavior or statistics
based on historical models. As a result, these methods may not predict future
exposures, which could be significantly greater than historical measures
indicate. Other risk management methods depend upon the evaluation of
information regarding markets, clients or other matters that is publicly
available or otherwise accessible to us and that may not always be accurate,
complete, up-to-date or properly evaluated. Management of operational, legal and
regulatory risks requires, among other things, policies and procedures to record
properly and verify a large number of transactions and events, and these
policies and procedures may not be fully effective. If any of our life insurance
subsidiaries is exposed to unexpected liabilities due to a failure of our risk
management policies or procedures, its results of operations may be negatively
affected, which may also reduce the amount that it can distribute to us as
dividends.
OUR RESERVES ESTABLISHED FOR FUTURE POLICY BENEFITS AND CLAIMS MAY PROVE
INADEQUATE, REQUIRING US TO INCREASE LIABILITIES.
Our earnings depend significantly upon the extent to which our actual
claims experience is consistent with the assumptions used in setting prices for
our products and establishing liabilities for future insurance and annuity
policy benefits and claims. The liability that we have established for future
policy benefits is based on assumptions concerning a number of factors,
including the amount of premiums that we will receive in the future, rate of
return on assets we purchase with premiums received, expected claims, expenses
and persistency, which is the measurement of the percentage of insurance
policies remaining in force from year to year, as measured by premiums. However,
due to the nature of the underlying risks and the high degree of uncertainty
associated with the determination of the liabilities for unpaid policy benefits
and claims, we cannot determine precisely the amounts which we will ultimately
pay to settle these liabilities. As a result, we may experience volatility in
the level of our reserves from period to period. To the extent that actual
claims experience is less favorable than our underlying assumptions, we could be
required to increase our liabilities, which may harm our financial strength and
reduce our profitability.
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OUR INVESTMENT PORTFOLIO IS SUBJECT TO RISKS WHICH MAY DIMINISH THE VALUE OF OUR
INVESTED ASSETS AND AFFECT OUR SALES AND PROFITABILITY.
We are subject to the risk that the issuers of the fixed maturity and
other debt securities we own will default on principal and interest payments,
particularly if a major downturn in economic activity occurs. As of March 31,
2002, our investment operations held $13.5 billion of fixed maturity securities,
or 88.3% of our total invested assets, of which less than 8% were below
investment grade. An increase in defaults on our fixed maturity securities
portfolio could harm our financial strength and reduce our profitability.
We may also have difficulty selling our privately placed fixed maturity
securities, commercial mortgage loans and real estate investments because they
are less liquid than our publicly traded securities. As of March 31, 2002, our
privately placed fixed maturity securities, commercial mortgage loans and real
estate investments represented approximately 15.3% of the value of our invested
assets. If we require significant amounts of cash on short notice, we may have
difficulty selling these investments at attractive prices, in a timely manner,
or both.
We use derivative instruments to hedge various risks we face in our
businesses. We enter into a variety of derivative instruments, including
interest rate swaps, swaptions, currency swaps, financial futures and
mortgage-backed security forward contracts, with a number of counterparties. If,
however, our counterparties fail to honor their obligations under the derivative
instruments, we will have failed to effectively hedge the related risk. That
failure may harm our financial strength and reduce our profitability.
OTHER MARKET FLUCTUATIONS AND GENERAL ECONOMIC, MARKET AND POLITICAL CONDITIONS
MAY ALSO NEGATIVELY AFFECT OUR BUSINESS AND PROFITABILITY.
Our investment returns, and thus our profitability, may also be
adversely affected from time to time by conditions affecting our specific
investments and, more generally, by stock, real estate and other market
fluctuations and general economic, market and political conditions.
Our ability to make a profit on insurance products and annuities
depends in part on the returns on investments supporting our obligations under
these products and the value of specific investments may fluctuate substantially
depending on the foregoing conditions.
We also engage in proprietary trading of equities, commodities and
futures and take proprietary positions in our hedge portfolios and our
proprietary investment and syndication activities. The foregoing activities
expose us to significant market risk as we buy securities or other assets, all
of which are subject to market fluctuation. Even though we generally buy the
securities or other assets for resale and the risk in most, but not all, cases
is short-term, our exposure is often for large amounts. We use a variety of
strategies to hedge our exposure to interest rate and other market risk.
However, hedging strategies are not always available, and our hedging could be
ineffective.
The current uncertain trends in the U.S. and international economic and
investment climates may adversely affect our businesses and profitability in
2002, and can be expected to continue to do so unless conditions improve.
APPLICABLE LAWS AND OUR ARTICLES OF INCORPORATION AND BY-LAWS MAY DISCOURAGE
TAKEOVERS AND BUSINESS COMBINATIONS THAT OUR STOCKHOLDERS AND OCEAN HOLDERS
MIGHT CONSIDER IN THEIR BEST INTERESTS.
State laws and our articles of incorporation and by-laws may delay,
defer, prevent, or render more difficult a takeover attempt that our
stockholders and OCEAN holders might consider to be in their best interests. For
instance, they may prevent our stockholders from receiving the benefit from any
premium to the market price of our common stock offered by a bidder in a
takeover context. Even in the absence of a takeover attempt, the existence of
these provisions may adversely affect the prevailing market price of our common
stock if they are viewed as discouraging takeover attempts in the future. State
laws and our articles of incorporation and by-laws may also make it difficult
for our stockholders to replace or remove our management, which may also delay,
defer or prevent a change in our control, which may not be in the best interests
of our stockholders.
Under the Iowa insurance laws, no person may acquire beneficial
ownership of more than 5% of the outstanding shares of the common stock of
AmerUs without the prior approval of the Iowa Insurance Commissioner prior to
September 20, 2005.
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In addition, laws of the various states where each of our significant life
insurance subsidiaries is located also require the prior approval of the
relevant state insurance commissioner for any change of control in AmerUs and/or
that subsidiary as specified under such state laws.
Provisions in our articles of incorporation and by-laws may delay,
defer or prevent a takeover attempt, including provisions:
- permitting our board of directors to issue one or more series of
preferred stock;
- dividing our board of directors into three classes;
- permitting our board of directors to fill vacancies on our board
of directors; and
- imposing advance notice requirements for stockholder proposals and
nominations of directors to be considered at stockholder meetings.
CHANGES IN INSURANCE, SECURITIES AND OTHER REGULATION IN THE UNITED STATES MAY
REDUCE OUR PROFITABILITY.
Our life insurance subsidiaries are subject to regulation by state
regulators under the insurance laws of states in which they conduct business.
AmerUs Life Insurance Company is regulated by the Iowa Insurance Division. In
addition, American Investors Life Insurance Company, Inc., Delta Life and
Annuity Company and IL Annuity and Insurance Company are regulated by the Kansas
Insurance Department; Indianapolis Life Insurance Company is regulated by the
Indiana Insurance Department; and Bankers Life Insurance Company of New York is
regulated by the New York insurance authority. The purpose of such regulation is
primarily to provide safeguards for policyowners rather than to protect the
interests of shareholders. The insurance laws of the various states establish
regulatory agencies with broad administrative powers including the authority to
grant or revoke operating licenses and to regulate sales practices, investments,
deposits of securities, the form and content of financial statements and
insurance policies, accounting practices and the maintenance of specified
reserves and capital.
Certain of our protection products and accumulation products are
innovative and relatively new. The regulatory framework at the state and federal
level applicable to such products is evolving. The changing regulatory framework
could affect the design of such products and our ability to sell certain
products. For example, the SEC may propose new regulations or policies with
respect to equity-indexed insurance products which may affect the marketing of
such products or impose requirements that some or all such products be
registered with the SEC. In addition, our joint venture with Ameritas Life
Insurance Corporation is also subject to regulation under federal and state
securities laws in connection with its sale of variable life and annuity
products. Changes to laws or regulations that restrict the conduct of such
business could reduce the value of our investment in this joint venture.
WE MAY EXPERIENCE VOLATILITY IN NET INCOME DUE TO CHANGES IN STANDARDS FOR
ACCOUNTING FOR DERIVATIVES.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 requires us to include all
derivatives in our consolidated statement of financial position at fair value.
The accounting for changes in the fair value of a derivative depends on its
intended use. Changes in derivative fair values are either recognized in
earnings as offsets to the changes in fair value of related hedged assets,
liabilities and firm commitments or, for forecasted transactions, deferred and
recorded as a component of equity until the hedged transactions occur and are
recognized in earnings. The ineffective portion of a hedging derivative's change
in fair value is immediately recognized in earnings. Derivatives not used in
hedging activities must be adjusted to fair value through earnings. We adopted
SFAS 133 effective January 1, 2001. The cumulative effect of the application of
SFAS 133 included a negative effect of $8.2 million on net income and a positive
effect of $2.7 million on accumulated other comprehensive income. During the
year ended December 31, 2001, we recognized the change in value related to cash
flow hedges in accumulated other comprehensive income. The impact of the
application of SFAS 133 on net income during the year ended December 31, 2001
was a net unrealized loss of $5.8 million and the impact to accumulated other
comprehensive income was an unrealized loss of $5.9 million. The impact of the
application of SFAS 133 on our net income during the quarter ended March 31,
2002 was a net unrealized loss of $5.3 million and the impact on our accumulated
other comprehensive income was an unrealized gain of $1.6 million.
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WE MAY EXPERIENCE VOLATILITY IN NET INCOME DUE TO RECENT CHANGES IN STANDARDS
FOR BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS.
In July 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards Nos. 141, "Business Combinations"
and 142, "Goodwill and Other Intangible Assets." Accordingly, our accounting for
business combinations, goodwill and other intangible assets changed effective
January 1, 2002. The accounting change includes the adoption of a
non-amortization, impairment-only model for our goodwill and indefinite-lived
intangible assets and a more stringent test methodology for measuring and
recognizing impairment losses. The new statements require testing for impairment
on an annual basis. Net income could be negatively impacted if impairment losses
are recognized. We are presently studying the impact the accounting change will
have on our accounting policies.
CHANGES IN FEDERAL INCOME TAX LAW COULD MAKE SOME OF OUR PRODUCTS LESS
ATTRACTIVE TO CONSUMERS OR INCREASE OUR TAX COSTS.
In June 2001, the Economic Growth and Tax Relief Reconciliation Act of
2001, or the 2001 Act, was enacted. The 2001 Act contains provisions that will,
over time, significantly lower individual tax rates. This will have the effect
of reducing the benefits of deferral on the build-up of value of annuities and
life insurance products. The 2001 Act also includes provisions that will
eliminate, over time, the estate, gift and generation-skipping taxes and
partially eliminate the step-up in basis rule applicable to property held in a
decedent's estate. Some of these changes might hinder sales of insurance
products by our life insurance subsidiaries and result in the increased
surrender of insurance products. We cannot predict the overall effect the tax
law changes included in the 2001 Act may have on the sales of our products.
Congress has, from time to time, also considered other tax legislation
that could make our products less attractive to consumers, including legislation
that would reduce or eliminate the benefit of the current federal income tax
rule under which tax on the build-up of value of annuities and life insurance
products can generally be deferred until payments are actually made to the
policyholder or other beneficiary and excluded when paid as a death benefit
under a life insurance contract. Congress, as well as foreign, state and local
governments, also consider from time to time legislation that could increase the
tax costs associated with our life insurance subsidiaries.
No prediction can be made as to whether any such legislation will be
enacted, what the specific terms of any such legislation will be or how, if at
all, it might affect sales of insurance products by our life insurance
subsidiaries, and thus indirectly, the interests of holders of the OCEANs.
OUR ACQUISITION OF ILICO AND FUTURE ACQUISITIONS THAT WE MAKE MAY RESULT IN
CERTAIN RISKS FOR OUR BUSINESS AND OPERATIONS.
We have made a number of significant acquisitions in the past,
including our acquisition of the Indianapolis Life Insurance Company, or ILICO,
in May 2001, and we may make additional acquisitions in the future. Acquisitions
involve a number of risks, including the diversion of our management's attention
and other resources, the incurrence of unexpected liabilities and the loss of
key personnel and clients of acquired companies. Any intangible assets that we
acquire may have a negative impact on our financial statements. In addition, the
success of our future acquisitions will depend in part on our ability to combine
operations, integrate departments, systems and procedures and obtain cost
savings and other efficiencies from the acquisitions. We may incur significant
additional indebtedness, including assuming an acquired company's debt, in
connection with a future acquisition, which may have an adverse effect on our
financial ratings and results. If we finance an acquisition through the issuance
of our common stock, there may be a dilution of the ownership interests
represented by our common stock into which the OCEANs may be convertible.
Failure to effectively consummate or manage our future acquisitions may
adversely affect our existing businesses and harm our operational results. We
are still in the process of integrating the business and operations of ILICO
with our existing businesses and operations and we cannot assure you that we can
efficiently or effectively do so.
LITIGATION AND REGULATORY INVESTIGATIONS MAY HARM OUR FINANCIAL STRENGTH AND
REDUCE OUR PROFITABILITY.
Life insurance companies have historically been subject to substantial
litigation resulting from claims disputes and other matters. In addition to the
traditional policy claims associated with their businesses, insurance companies
are increasingly facing policyholder suits, class actions and disputes with
reinsurers. The class actions and policyholder suits are often in connection
with life insurance sales practices, policy and claims administration practices
and other market conduct issues. State insurance departments are increasingly
15
focusing on sales practices and product issues in their market conduct
examinations. Negotiated settlements of class action and other lawsuits have had
a material adverse effect on the business, financial condition and results of
operations of life insurance companies.
As a result of these trends, we are in the ordinary course of our
business a plaintiff or defendant in actions arising out of our insurance
business and investment operations, including class actions and reinsurance
disputes, and, from time to time, are also involved in various governmental and
administrative proceedings. Such litigation and proceedings may harm our
financial strength and reduce our profitability. We cannot assure you that such
litigation will not adversely affect our future business, financial condition or
results of operations.
WE MAY NEED TO FUND DEFICIENCIES IN OUR CLOSED BLOCKS; ASSETS ALLOCATED TO THE
CLOSED BLOCKS BENEFIT ONLY THE HOLDERS OF CLOSED BLOCK POLICIES.
In connection with the reorganization undertaken by AmerUs in June
1996, AmerUs Life Insurance Company, or ALIC, allocated specific assets for the
benefit of insurance policies and annuities that pay dividends or provide
interest credits. These allocated assets are referred to as a "Closed Block." We
established a second Closed Block as of March 31, 2000 in connection with the
reorganization of ILICO to a stock form. Each Closed Block was designed to
provide reasonable assurance to policyholders that, after the respective
reorganizations of ALIC and ILICO, assets would be available to maintain policy
dividends and interest credits in effect prior to the reorganization if the
experience underlying the existing scales of such policy dividends and interest
credits were to continue. Any excess of cumulative favorable experience for
Closed Block policies over unfavorable experience will be available for
distribution over time to the Closed Block policyowners and will not be
available to us.
AmerUs will continue to pay guaranteed benefits under the policies
included in the Closed Blocks in accordance with their terms. Assets included in
our Closed Blocks, cash flows generated by these assets and anticipated revenues
from policies included in the Closed Blocks may not be sufficient to provide for
the benefits guaranteed under these policies. If they are not sufficient, AmerUs
must fund the shortfall from its general funds. Even if they are sufficient, we
may choose for business reasons to support dividend payments on policies in
either of the Closed Blocks with our general account funds.
Assets included in each Closed Block, cash flows generated by such
assets and anticipated revenues from policies in each Closed Block will benefit
only the holders of those policies. Any excess earnings will be available for
distribution over time to Closed Block policyholders, but will not be available
to AmerUs stockholders. Unless the relevant state Insurance Commissioner
consents to an earlier termination, each Closed Block will continue to be in
effect until the date on which none of the policies in that Closed Block remain
in force. We bear the costs of operating and managing the Closed Blocks and,
accordingly, such costs were not funded as part of the assets allocated to the
Closed Blocks. Any increase in such costs in the future would be borne by us.
THE IMPACT OF RECENT TERRORIST ATTACKS AND POSSIBLE MILITARY AND OTHER ACTIONS
MAY ADVERSELY AFFECT OUR INVESTMENT PORTFOLIO.
Terrorist attacks in New York City and Washington, D.C. on September
11, 2001 disrupted commerce throughout the United States, resulted in
significant loss of lives and caused significant volatility and declines in the
United States and other securities markets. The continued threat of terrorism
within the United States and Europe, and the military action and heightened
security measures in response to that threat, may cause additional disruptions
to commerce, reduced economic activity and continued volatility in markets
throughout the world, which may decrease our net income, revenue and assets
under management. Some of the assets in our investment portfolio, such as
airline and leisure industry securities, have been adversely affected by the
declines in the securities markets and economic activity caused by the terrorist
attacks and the military action and heightened security measures. The effect of
these events on the valuation of these investments is uncertain and there may be
additional impairments.
Moreover, the cost and possibly the availability, in the future, of
reinsurance covering terrorist attacks for our individual life, accidental death
and dismemberment and disability insurance operations are uncertain. Although
our ratings have not been affected by the terrorist attacks on the United States
and remain stable, over time the rating agencies could re-examine the ratings
affecting the insurance industry generally, including the ratings of our life
insurance subsidiaries. In addition, declines in the securities markets and
reduced commercial and economic activity may impact our assumptions in
16
assessing the value of intangibles from prior acquisitions and the amortization
patterns for deferred policy acquisition costs. In the event there is a need to
change our assumptions, this may lead to a material impairment of these assets.
In our life insurance segment, we estimate our payouts from life
insurance benefit claims resulting from the September 11th attacks to be
approximately $1.2 million. We do not engage in any property and casualty
insurance business.
17
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the documents incorporated by reference,
contains forward-looking statements within the meaning of the United States
Private Securities Litigation Reform Act of 1995. We identify forward-looking
statements by the words such as "may," "will," "plan," "intend," "believe,"
"expect," "estimate," "continue," and similar expressions that refer to the
future. Estimates, forecasts and other forward-looking statements included, or
incorporated by reference, in this prospectus are based on many assumptions
about complex economic and operating factors that cannot be predicted
accurately, and are subject to factors that may cause our actual results to
differ materially from the views, beliefs and projections expressed in those
statements.
Factors that may cause our actual results to differ materially from
those contemplated by these forward-looking statements include, among others,
the following possibilities: (a) general economic conditions and other factors,
including prevailing interest rate levels and stock market performance, which
may affect our ability to sell our products, the market value of our investments
and the lapse rate and profitability of our policies; (b) our ability to achieve
anticipated levels of operational efficiencies and cost-saving initiatives and
to meet cash requirements based upon projected liquidity sources; (c) customer
response to new products, distribution channels and marketing initiatives; (d)
mortality, morbidity, and other factors which may affect the profitability of
our insurance products; (e) our ability to develop and maintain effective risk
management policies and procedures and to maintain adequate reserves for future
policy benefits and claims; (f) changes in the federal income tax laws and
regulations which may affect the relative tax advantages of some of our
products; (g) increasing competition in the sale of insurance and annuities and
the recruitment of sales representatives; (h) regulatory changes or actions,
including those relating to regulation of insurance products and of insurance
companies; (i) our ratings and those of our subsidiaries by independent rating
organizations which we believe are particularly important to the sale of our
products; (j) the performance of our investment portfolios; (k) the impact of
changes in standards of accounting for derivatives and business combinations,
goodwill and other intangibles and purchase accounting adjustments; (l) our
ability to integrate the business and operations of acquired entities; (m)
expected life and annuity product margins; (n) the impact of investment
transactions; and (o) unanticipated litigation or regulatory investigations.
There can be no assurance that other factors not currently anticipated
by us will not materially and adversely affect our results of operations. You
are cautioned not to place undue reliance on any forward-looking statements made
by us or on our behalf. Forward-looking statements speak only as of the date the
statement was made. We undertake no obligation to update or revise any
forward-looking statement. You should refer to the risk factors described in
this prospectus and the documents incorporated by reference in this prospectus
for a fuller description of the risks relating to an investment in the OCEANs.
18
USE OF PROCEEDS
We will not receive any proceeds from the sale by any selling
securityholder of the OCEANs or the underlying shares of our common stock
issuable upon conversion of the OCEANs.
RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERENCE SECURITY DIVIDENDS
Our ratio of earnings to combined fixed charges and preference security
dividends for each of the periods indicated is as follows:
FISCAL YEAR ENDED THREE MONTHS ENDED
---------------------------------------------------------------------- --------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, MARCH 31, MARCH 31,
1997 1998 1999 2000 2001 2001 2002
------------ ------------ ------------ ------------ ------------ --------- ---------
Ratio of earnings to combined fixed
charges and preference security
dividends 4.39x 3.62x 4.26x 4.59x 5.04x 4.65x 7.01x
For purposes of computing the ratio of earnings to combined fixed
charges and preference security dividends, "earnings" consists of income from
operations before income taxes and minority interest, if applicable, fixed
charges and pre-tax earnings required for preference security dividend
requirements. "Fixed charges" consist of interest expense on debt, amortization
of debt expense, preference security dividend requirements and interest within
rental expense, but do not include interest credited to deferred annuity account
balances which are not considered borrowing costs for a life insurance company.
Our consolidated income statement data for 1997 includes the results for Delta
Life and Annuity Company, or Delta, subsequent to the acquisition date of
October 23, 1997 and the results for American Investors Life Insurance Company,
or American, subsequent to the acquisition date of December 19, 1997. Our
consolidated income statement data for 2001 includes the results for
Indianapolis Life Insurance Company, or ILICO, subsequent to the acquisition
date of May 18, 2001.
19
DESCRIPTION OF THE OCEANS
We issued the Optionally Convertible Equity-linked Accreting Notes
(OCEANs(SM)) under an Indenture, dated as of March 6, 2002 (the "Indenture"),
between us and BNY Midwest Trust Company, as Trustee (the "Trustee"). A copy of
the Indenture may be obtained from us upon written request. The statements under
this caption relating to the Indenture and the OCEANs are summaries and do not
purport to be complete. These summaries use a number of terms that are defined
in the Indenture and these summaries are qualified in their entirety by express
reference to the Indenture. The terms of the OCEANs also include those made a
part of the Indenture by reference to the Trust Indenture Act of 1939. For
purposes of this section, the terms "we," "us," "our" and "AmerUs" mean only
AmerUs Group Co. and not its subsidiaries.
GENERAL
The OCEANs are our general unsecured senior subordinated obligations
limited to an aggregate original principal amount of $185,000,000 and an
aggregate principal amount at maturity of $234,950,000. The OCEANs will mature
on March 6, 2032. The OCEANs were issued in an original principal amount of
$1,000.00 per OCEAN, with a principal amount at maturity of $1,270.00 per OCEAN.
The yield on the OCEANs (without taking into account any Contingent
Interest) will be approximately 3.83% per annum compounded semiannually from the
date of issuance through March 6, 2007, and approximately 2.28% per annum
compounded semiannually from March 6, 2007 through maturity. We will pay a
portion of the yield ("Stated Interest") as cash interest semiannually on each
March 6 and September 6, commencing on September 6, 2002 (each an "Interest
Payment Date") at a rate of 2.00% per annum of the original principal amount of
the OCEANs (or $20.00 per annum per $1,000.00 original principal amount of
OCEANs) to the registered holders of record on the preceding February 20 and
August 23 (each a "Record Date"). We call this cash interest the "Stated
Interest." We will also pay Contingent Interest on the OCEANs as described below
under "--Contingent Interest." Interest will be calculated on the basis of a
360-day year of twelve 30-day months.
As described below, the principal amount of the OCEANs will increase on
each Interest Payment Date at a rate per annum equal to the applicable yield on
the OCEANs less the Stated Interest to be paid on such Interest Payment Date,
whether or not such Stated Interest is deferred as described below. Between
Interest Payment Dates, the Accreted Principal Amount will be the linear
interpolation of the Accreted Principal Amounts as of the immediately preceding
and immediately succeeding Interest Payment Dates as set forth in the following
paragraph.
The "Accreted Principal Amount" for any date, for each $1,000.00
original principal amount of OCEANs:
(1) if such date occurs on an Interest Payment Date, the
Accreted Principal Amount will equal the amount set forth below for
such date:
INTEREST PAYMENT DATE ACCRETED PRINCIPAL AMOUNT INTEREST PAYMENT DATE ACCRETED PRINCIPAL AMOUNT
--------------------- ------------------------- --------------------- -------------------------
September 6, 2002 $1,009.17 September 6, 2017 $1,159.91
March 6, 2003 $1,018.51 March 6, 2018 $1,163.14
September 6, 2003 $1,028.03 September 6, 2018 $1,166.40
March 6, 2004 $1,037.74 March 6, 2019 $1,169.70
September 6, 2004 $1,047.63 September 6, 2019 $1,173.03
March 6, 2005 $1,057.71 March 6, 2020 $1,176.41
September 6, 2005 $1,067.98 September 6, 2020 $1,179.82
March 6, 2006 $1,078.45 March 6, 2021 $1,183.27
September 6, 2006 $1,089.12 September 6, 2021 $1,186.76
March 6, 2007 $1,100.00 March 6, 2022 $1,190.29
September 6, 2007 $1,102.54 September 6, 2022 $1,193.86
20
INTEREST PAYMENT DATE ACCRETED PRINCIPAL AMOUNT INTEREST PAYMENT DATE ACCRETED PRINCIPAL AMOUNT
--------------------- ------------------------- --------------------- -------------------------
March 6, 2008 $1,105.11 March 6, 2023 $1,197.48
September 6, 2008 $1,107.71 September 6, 2023 $1,201.13
March 6, 2009 $1,110.34 March 6, 2024 $1,204.82
September 6, 2009 $1,113.00 September 6, 2024 $1,208.56
March 6, 2010 $1,115.69 March 6, 2025 $1,212.34
September 6, 2010 $1,118.41 September 6, 2025 $1,216.16
March 6, 2011 $1,121.16 March 6, 2026 $1,220.03
September 6, 2011 $1,123.94 September 6, 2026 $1,223.94
March 6, 2012 $1,126.76 March 6, 2027 $1,227.89
September 6, 2012 $1,129.60 September 6, 2027 $1,231.89
March 6, 2013 $1,132.48 March 6, 2028 $1,235.93
September 6, 2013 $1,135.39 September 6, 2028 $1,240.03
March 6, 2014 $1,138.34 March 6, 2029 $1,244.16
September 6, 2014 $1,141.32 September 6, 2029 $1,248.35
March 6, 2015 $1,144.33 March 6, 2030 $1,252.58
September 6, 2015 $1,147.38 September 6, 2030 $1,256.86
March 6, 2016 $1,150.46 March 6, 2031 $1,261.19
September 6, 2016 $1,153.57 September 6, 2031 $1,265.57
March 6, 2017 $1,156.73 March 6, 2032 $1,270.00
(2) Prior to September 6, 2002, the Accreted Principal Amount
will equal the sum of (a) $1,000.00 and (b) an amount equal to the
product of (x) the Accreted Principal Amount on September 6, 2002 less
$1,000.00 multiplied by (y) a fraction, the numerator of which is the
number of days from March 6, 2002 to such date, using a 360-day year of
twelve 30-day months, and the denominator of which is 180; and
(3) Between any two Interest Payment Dates, the Accreted
Principal Amount will equal the sum of (a) the Accreted Principal
Amount for the Interest Payment Date immediately preceding such date
and (b) an amount equal to the product of (x) the Accreted Principal
Amount for the immediately following Interest Payment Date less the
Accreted Principal Amount for the immediately preceding Interest
Payment Date multiplied by (y) a fraction, the numerator of which is
the number of days from the immediately preceding Interest Payment Date
to such date, using a 360-day year of twelve 30-day months, and the
denominator of which is 180.
If an Interest Payment Date falls on a date that is not a business day,
payment will be made on the next business day (and without any interest or other
payment in respect of this delay). A "business day" means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in the City of New York are authorized or obligated by law or regulation to
close.
Each holder is deemed to agree in the Indenture, for United States
federal income tax purposes, to treat the OCEANs as "contingent payment debt
instruments" and to be bound by our application of the United States Treasury
regulations governing contingent payment debt instruments under which each
holder will be required to recognize taxable income in excess of the amount of
cash payments received while the OCEANs are outstanding. See "Certain United
States Federal Income Tax Considerations--Classification of the OCEANs" and
"--United States Holders--Accrual of Interest on the OCEANs."
See "--Book-Entry System" for information regarding the form, documents
and mechanics for transferring the OCEANs.
CONTINGENT INTEREST
On and prior to March 6, 2004, we will pay an additional cash amount on
the OCEANs that is not included in the calculation of the yield on the OCEANs
("Contingent Interest") on each Interest Payment Date equal to $11.70 per annum
per OCEAN. After March 6, 2004, for each $1,000.00 original principal amount of
OCEANs, Contingent Interest will accrue from the record date for any Regular
Cash Dividends (as defined below) on our common stock and will be payable in
cash on the next following March 6, June 6, September 6 or December 6 (each a
"Quarterly Contingent Interest Payment Date") to the registered holders of
record on the February 20, May 23, August 23, or November 22 preceding each such
Quarterly Contingent Interest Payment Date (each a "Quarterly Contingent
Interest Record Date") in an amount equal to the Regular Cash Dividends, if any,
paid by us on our common stock since the immediately preceding Quarterly
21
Contingent Interest Payment Date, multiplied by the amount obtained by dividing
$1,100.00 (the Accreted Principal Amount of an OCEAN on March 6, 2007) by the
conversion price in effect on the record date for such Regular Cash Dividends.
"Regular Cash Dividends" are regular, fixed, annual, quarterly or other
periodic cash dividends as declared by our board of directors as part of our
dividend payment practice or stated cash dividend policy, whether publicly
announced or not, and do not include any other dividends or distributions (such
as any dividends designated by our board of directors as extraordinary, special
or otherwise nonrecurring).
Any holder that surrenders OCEANs for conversion after March 6, 2004 is
entitled to any accrued and unpaid Contingent Interest and, if the holder
surrenders OCEANs for conversion after any Quarterly Contingent Interest Record
Date but on or before the related Quarterly Contingent Interest Payment Date,
shall be entitled to keep the Contingent Interest payable on such OCEANs on such
Quarterly Contingent Interest Payment Date.
SUBORDINATION
The OCEANs are senior subordinated debt of AmerUs, subordinate in right
of payment to all of our Senior Debt (as defined below), pari passu with all of
our other senior subordinated debt, if any, and senior to all of our existing
and future junior subordinated debt, including our Junior Subordinated
Debentures due February 1, 2027 and our Junior Subordinated Debentures due July
27, 2003. No payment or distribution on account of principal of or premium (if
any) or interest on, the OCEANs or on account of the purchase or other
acquisition of OCEANs by us or any of our subsidiaries may be made (a) in the
event and during the continuation of any default in the payment of principal of
or premium (if any) or interest on any Senior Debt, or if the maturity of any
Senior Debt has been accelerated because of a default until such event of
default shall have been cured or waived or shall have ceased to exist and such
acceleration shall have been rescinded or annulled, or (b) in the event of any
judicial proceeding with respect to any such default in payment or such event of
default. In the case of any pending liquidation, reorganization, bankruptcy,
insolvency, receivership, arrangement, adjustment, composition or other judicial
proceeding relative to AmerUs, all principal of or premium (if any) or interest
on all Senior Debt must be paid in full or provision must be made for such
payment in cash or cash equivalents or otherwise in a manner satisfactory to the
holders of Senior Debt, before the holders of the OCEANs are entitled to receive
or retain any payment or distribution thereon. Subject to the prior payment of
all Senior Debt, the rights of the holders of the OCEANs will be subrogated to
the rights of the holders of Senior Debt to the extent of the payments or
distributions made to the holders of such Senior Debt until all amounts owing on
the OCEANs are paid in full.
"Debt" means with respect to any entity, whether recourse is to all or
a portion of the assets of such entity and whether or not contingent, (i) every
obligation of such entity for money borrowed; (ii) every obligation of such
entity evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such entity with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such entity; (iv) every obligation of such entity issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such entity; and (vi) every
obligation of the type referred to in clauses (i) through (v) of another entity
and all dividends of another entity the payment of which, in either case, such
entity has guaranteed or is responsible or liable for, directly or indirectly,
as obligor or otherwise.
"Senior Debt" means the principal of and premium (if any) and interest,
including interest accruing on or after the filing of any petition in bankruptcy
or for reorganization relating to AmerUs (whether or not such claim for
post-petition interest is allowed in such proceeding), on our Debt, whether
incurred on or prior to the date of the Indenture or thereafter incurred,
unless, in the instrument creating or evidencing the same or pursuant to which
the same is outstanding, it is provided that such obligations are not superior
in right of payment to the OCEANs or to other Debt which is pari passu with or
subordinated to the OCEANs; provided, however, that Senior Debt shall not be
deemed to include (i) any Debt of AmerUs which, when incurred and without
respect to any election under Section 1111(b) of the Bankruptcy Reform Act of
1978, as amended, was without recourse to AmerUs, (ii) any Debt of AmerUs to any
of its subsidiaries, (iii) Debt to any employee of AmerUs, (iv) trade accounts
payable of AmerUs, (v) accrued liabilities arising in the ordinary course of
business of AmerUs, (vi) the Junior Subordinated Debentures due February 1,
2027, and guarantee issued by AmerUs in connection with the 8.85% Capital
Securities, Series A issued by AmerUs Capital I, and (vii) the Junior
Subordinated Debentures due July 27, 2003 and guarantee issued by AmerUs in
connection with the 7.00% Adjustable Conversion-Rate Equity Security Units
issued by AmerUs Capital II.
Because we are a holding company, the OCEANs are effectively
subordinated to all existing and future liabilities of our subsidiaries, except
to the extent that we are a creditor of the subsidiary recognized as such. In
addition, our ability to service our debt, including the OCEANs, depends upon
the earnings of our subsidiaries and their ability to distribute their earnings,
or make loans or other payments, to us. See "Risk Factors--Risk Factors Relating
to the OCEANs" and "Risk Factors--Risk Factors Relating to Our Business and
Operations--Payment of dividends by our life insurance subsidiaries to us is
regulated by state insurance laws."
22
The Indenture places no limitation on the amount of Senior Debt that we
may incur. After giving effect to the application of the net proceeds we
received from our private placement of the OCEANs in March 2002, as of March 31,
2002, on an unconsolidated basis, we had $396.9 million of indebtedness, $156.4
million of which was Senior Debt and $55.4 million was ranked junior to the
OCEANs. In addition, our subsidiaries had $17.3 billion of liabilities, all of
which were effectively senior to the OCEANs.
LIMITATION ON SENIOR SUBORDINATED DEBT
We have agreed that we will not incur any Debt that is expressly made
subordinate in right of payment to any of our Senior Debt unless such Debt, by
its terms or by the terms of any agreement or instrument pursuant to which such
Debt is outstanding, is expressly made pari passu with, or subordinate in right
of payment to the OCEANs. The foregoing limitation does not apply to
distinctions between categories of our Senior Debt that exist by reason of any
liens or guarantees arising or created in respect of some but not all of such
Senior Debt. We expect from time to time to incur Debt constituting Senior Debt.
DEFERRAL OF INTEREST PAYMENTS
If no Event of Default (as defined under "--Events of Default and
Notice Thereof" below) has occurred and is continuing, at any time during the
term of the OCEANs, we can defer payments of Stated Interest on the OCEANs for
successive periods not exceeding 10 consecutive semiannual periods, commencing
from the first Interest Payment Date on which such payment of Stated Interest
which would otherwise have been payable is so deferred. A deferral of interest
may not extend, however, beyond March 6, 2032. Interest on any deferred payment
of Stated Interest will accrue at the rate of 5.00% per annum, compounded
semiannually, on each Interest Payment Date. Such interest will be calculated on
the basis of a 360-day year of twelve 30-day months. We call any period during
which payments of Stated Interest on the OCEANs are deferred, an "Interest
Deferral Period," and the aggregate amount of such deferred payments of Stated
Interest outstanding at any time, together with any accrued and unpaid interest
thereon, "Deferred Interest." Upon the termination of any Interest Deferral
Period, we are required to pay all Deferred Interest then due. Before the
termination of any Interest Deferral Period, we may elect to extend the Interest
Deferral Period, subject to the 10 consecutive semiannual period limitation.
Notwithstanding the foregoing, all Deferred Interest owing during an
Interest Deferral Period shall become immediately due and payable (a) upon the
next Interest Payment Date, unless further deferred as described above, (b) with
respect to all the OCEANs, upon the fifth anniversary of the commencement of an
Interest Deferral Period, or (c) with respect to any OCEAN converted,
repurchased or redeemed during an Interest Deferral Period, upon the conversion,
repurchase or redemption of such OCEAN.
During an Interest Deferral Period, we (a) may not declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to any of our capital stock
(other than stock dividends paid by AmerUs which consist of stock of the same
class as that on which such dividend is being paid and purchases of our common
stock related to the issuance of common stock under any stock option or other
benefit plan for the directors, officers, employees or agents of AmerUs or its
subsidiaries), (b) shall not make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any of our Debt securities that rank
pari passu with or junior to the OCEANs (other than any payment, repayment,
repurchase or redemption made on Debt relating to employee stock ownership
plans), and (c) shall not make any guarantee payments with respect to the
foregoing.
If we elect to defer any Stated Interest payments on the OCEANs, we
will give the Trustee notice, and prepare and provide a press release to DTC for
dissemination through the DTC broadcast facility, at least one business day
before the Record Date for the next Interest Payment Date, unless otherwise
required by any applicable law or regulation.
We have no current intention of deferring Stated Interest payments on
the OCEANs.
CONVERSION RIGHTS
General
The conversion price for each OCEAN will be $37.598 per share, subject
to adjustment as described below under "--Adjustment of the Conversion Price."
Holders may convert any outstanding OCEAN prior to their stated
maturity only under the following circumstances, each of which is described in
greater detail below:
23
- on any day if the Sale Price (as defined below under
"--Conversion upon Satisfaction of Market Price Condition")
per share of our common stock for at least 20 trading days in
the 30 trading-day period ending on the trading day prior to
such day on which OCEANs are surrendered for conversion
exceeds 140% of the Initial Stock Price (as defined under
"--Conversion upon Satisfaction of Market Price Condition"
below);
- during any period in which an Event of Default has occurred
and is continuing;
- if we have called the OCEANs for redemption, during the period
specified below under "--Conversion upon Notice of
Redemption";
- during the five business-day period following notice of a
Special Conversion Event (as defined under "--Conversion upon
a Special Conversion Event" below);
- during any Interest Deferral Period;
- during any period in which our senior long-term unsecured
credit rating is downgraded by Standard & Poor's to BB+ or
lower and by Moody's to Ba2 or lower, or if our senior
long-term unsecured credit rating is suspended or withdrawn by
both rating agencies, or if neither rating agency continues to
provide ratings services or coverage to us; or
- during specified periods upon the occurrence of the corporate
transactions, including a Change of Control, described below
under "--Conversion upon Specified Corporate Transactions."
If at least one of the conditions for conversion is satisfied, we, or
at our request, the Trustee will notify holders of the event triggering the
convertibility of the OCEANs by first class mail at each holder's address as it
appears in the books of the registrar. Upon conversion, holders would be
entitled to receive:
- an amount of shares of our common stock per OCEAN equal to:
(i) if the OCEANs are converted prior to March 6, 2007,
the Accreted Principal Amount of the OCEANs on the
date of conversion divided by the conversion price
then in effect;
(ii) if the OCEANs are converted on or after March 6,
2007, $1,100.00 (the Accreted Principal Amount of the
OCEANs on March 6, 2007) divided by the conversion
price then in effect; or
(iii) notwithstanding the foregoing, if the OCEANs are
convertible solely as a result of a Special
Conversion Event, $990.00 divided by the conversion
price then in effect;
- cash in lieu of fractional shares;
- any accrued and unpaid Contingent Interest on such OCEANs
which accrued after March 6, 2004 (other than for OCEANs
surrendered after a Quarterly Contingent Interest Record Date
and prior to the related Quarterly Contingent Interest Payment
Date, for which Contingent Interest will be paid on such
payment date);
- if such OCEANs were converted upon the exercise of conversion
rights arising by reason of a notice of redemption or a Change
of Control or distribution described below under "--Conversion
upon Specified Corporate Transactions," the sum of (i) any
accrued and unpaid Stated Interest on such OCEANs up to but
not including the conversion date, (ii) on or prior to March
6, 2004, accrued and unpaid Contingent Interest up to but not
including the conversion date, and (iii) if such redemption or
Change of Control or distribution occurs prior to March 6,
2007, an amount equal to the Make-Whole Premium (as defined
under "--Maturity; Redemption of OCEANs at Our
Option--Optional Redemption upon Satisfaction of Market Price
Condition") that would have been payable if such OCEANs had
been redeemed on the conversion date; plus
- if such conversion is during an Interest Deferral Period, all
Deferred Interest on such OCEANs.
If a holder surrenders OCEANs for conversion during the period after
any Record Date but prior to the corresponding Interest Payment Date, the holder
must pay us at the time of surrender the Stated Interest payable on such OCEANs
on such Interest Payment Date, and if the OCEANs are surrendered for conversion
prior to March 6, 2004, the Contingent Interest payable on such OCEANs.
24
Our delivery to the holder of a certificate for the full number of
shares of our common stock into which the OCEANs are convertible, together with
the payments set forth above, will be deemed to satisfy our obligation to pay
the Accreted Principal Amount of, and all accrued and unpaid interest on, the
OCEANs and all unpaid interest will be deemed to be paid in full, rather than
cancelled, extinguished or forfeited. Other than as described above and under
"--Conversion Rights--Adjustment of the Conversion Price" below, no payment or
adjustment will be made for accrued and unpaid interest, or for dividends or
distributions on any of our common stock, upon conversion of an OCEAN.
Conversion upon Satisfaction of Market Price Condition
A holder may convert its OCEANs into our common stock if the Sale Price
per share of our common stock for at least 20 trading days in the 30 trading-day
period ending on the trading day prior to the date on which OCEANs are
surrendered for conversion exceeds 140% of the Initial Stock Price.
The "Initial Stock Price" means $34.18; provided that, upon the
occurrence of any event which results in an adjustment of the conversion price
as described under "--Adjustment of the Conversion Price," the Initial Stock
Price shall be adjusted by multiplying it by a fraction, the numerator of which
shall be equal to the adjusted conversion price and the denominator of which
shall be the conversion price in effect immediately prior to such adjustment.
The "Sale Price" of a security on any date of determination means: (1)
the closing sale price (or if no closing sale price is reported, the last
reported sale price) of that security (regular way) on the New York Stock
Exchange on that date; (2) if that security is not listed on the New York Stock
Exchange on that date, the closing sale price as reported in the composite
transactions for the principal U.S. securities exchange on which that security
is listed; (3) if that security is not so listed on a U.S. national or regional
securities exchange, the closing sale price as reported by the Nasdaq National
Market; (4) if that security is not so reported, the last price quoted by
Interactive Data Corporation for that security or, if Interactive Data
Corporation is not quoting such price, a similar quotation service selected by
us; or (5) if that security is not so quoted, the average of the mid-point of
the last bid and ask prices for that security from at least two dealers
recognized as market-makers for that security.
The conversion agent (which will initially be the Trustee) will, on our
behalf, determine daily if the OCEANs are convertible due to the foregoing
condition being satisfied, and will notify us and the Trustee accordingly.
Conversion upon an Event of Default
A holder may convert its OCEANs into our common stock during any period
in which an Event of Default has occurred and is continuing.
Conversion upon Notice of Redemption
A holder may surrender for conversion any OCEANs called for redemption
at any time prior to the close of business on the day that is two business days
prior to the redemption date, even if it is not otherwise convertible at such
time.
Conversion upon a Special Conversion Event
At any time after June 5, 2002, any holder may request in writing (a
"Request") that the bid solicitation agent (which shall initially be the
Trustee) obtain, on such holder's behalf, firm bids to buy not less than $1
million original principal amount of OCEANs (or, if such holder beneficially
owns less than $1 million original principal amount of OCEANs, all of such
holder's OCEANs) nor more than $10 million original principal amount of OCEANs
(such amount to be specified in the Request) during the three consecutive
trading days following the Request (the "Measurement Period") from any
nationally recognized securities dealers; provided that in such Request (1) such
holder certifies that it could not obtain a firm bid to purchase such OCEANs
from at least two independent nationally recognized securities dealers for such
OCEANs in an amount at least equal to the Minimum Amount per OCEAN and provides
the names of the securities dealers from which it attempted to obtain such bids,
(2) such holder agrees to use its best efforts to sell such OCEANs on any day
during the Measurement Period to a securities dealer that provides the bid
solicitation agent with a firm bid to purchase such OCEANs in an amount at least
equal to the Minimum Amount per OCEAN and (3) such holder agrees to convert such
OCEANs into our common stock if the bid solicitation agent cannot obtain a firm
bid to purchase for the OCEANs at least equal to the Minimum Amount per OCEAN on
any day during the Measurement Period.
25
If a Request is made by a holder with respect to any OCEANs, on each
day during the Measurement Period for such Request the bid solicitation agent
shall (1) seek to obtain, on behalf of such holder, a firm bid to buy such
OCEANs for at least the Minimum Amount per OCEAN on such day from Credit Suisse
First Boston (or another nationally recognized securities dealer selected by us)
by 1:00 p.m., New York City time, on such day and (2) if Credit Suisse First
Boston (or such other securities dealer) does not provide a firm bid to buy such
OCEANs for at least the Minimum Amount per OCEAN on such day, solicit on such
holder's behalf firm bids from at least two other nationally recognized
securities dealers that we select, on such day.
If the bid solicitation agent receives a firm bid to buy the OCEANs for
at least the Minimum Amount per OCEAN on any day during the Measurement Period,
(1) a Special Conversion Event shall be deemed not to have occurred, (2) the bid
solicitation agent shall provide the holder with the name of the securities
dealer that provided such quote and (3) the holder shall use its best efforts to
sell such OCEANs to such securities dealer on such day for the price quoted by
such securities dealer.
If the bid solicitation agent does not receive a firm bid to buy the
OCEANs for at least the Minimum Amount per OCEAN on any day during the
Measurement Period, a Special Conversion Event shall be deemed to have occurred
and the Trustee shall promptly notify all holders of OCEANs that a Special
Conversion Event has occurred. During the five business-day period commencing on
the first trading day following the giving of such notice, the holder that
submitted the Request shall, and any other holder may, convert each of their
OCEANs into a number of shares of our common stock equal to $990.00 divided by
the conversion price then in effect.
The "Minimum Amount" for an OCEAN on any day means the product of (1)
90% of the Sale Price for our common stock on such day multiplied by (2)
$1,100.00 divided by the conversion price in effect on such day.
Conversion upon an Interest Deferral
A holder may convert its OCEANs into our common stock at any time
during an Interest Deferral Period. See "--Deferral of Interest Payments."
Conversion upon Credit Rating Event
A holder may convert its OCEANs into our common stock during any period
in which (1) Standard & Poor's has downgraded our senior long-term unsecured
credit rating to BB+ or lower and Moody's has downgraded our senior long-term
unsecured credit rating to Ba2 or lower, (2) our senior long-term unsecured
credit rating is suspended or withdrawn by both such rating agencies, or (3)
neither of such rating agencies continues to provide ratings services or
coverage to us.
Conversion upon Specified Corporate Transactions
If:
- we elect to distribute to all holders of our common stock,
rights or warrants entitling them to purchase our common stock
at a price that is less than the current market price (as
defined in the Indenture) of our common stock on the trading
day immediately preceding the date of declaration of such
distribution;
- we elect to distribute to all holders of our common stock,
cash or other assets, debt securities or other evidence of
indebtedness or other rights to purchase our securities, which
distribution, when aggregated with all other such
distributions made within the preceding 180 days, has a per
share value exceeding 15% of the current market price of our
common stock on the trading day preceding the date of
declaration of such distribution; or
- a Change of Control (as defined under "--Repurchase at Option
of Holder upon a Change of Control" below) occurs, other than
a transaction described in the following paragraph;
then we must notify the holders of the OCEANs at least 20 days prior to the
ex-dividend date for such distribution or within 30 days after the occurrence of
the Change of Control, as the case may be. Once we have given that notice,
holders may convert their OCEANs at any time until either (a) the earlier of the
close of business on the business day prior to the ex-dividend date and our
announcement that such distribution will not take place, in the case of a
distribution, or (b) within 30 days after the Change of Control notice is given
by us, in the case of a Change of Control; provided that, in the case of a
distribution, the conversion right described above under this "--Conversion upon
Specified Corporate Transactions" will not arise if (a) holders of the OCEANs
may participate in the distribution without conversion, or (b) the distribution
26
consists of a distribution of rights pursuant to a shareholder rights plan and
holders of OCEANs will receive such rights upon conversion of their OCEANs into
shares of our common stock.
In addition, if we are party to a consolidation, merger, binding share
exchange or transfer or lease of all or substantially all of our assets pursuant
to which our common stock will be converted into, or into the right to receive,
cash, securities or other property, a holder may convert OCEANs at any time from
and after the date which is 15 days prior to the anticipated effective date of
the transaction until 15 days after the effective date of the transaction. If we
are a party to a consolidation, merger, binding share exchange or transfer or
lease of all or substantially all of our assets pursuant to which our common
stock is converted into, or into the right to receive, cash, securities or other
property, then at the effective time of the transaction, the right to convert an
OCEAN into our common stock will be changed into a right to convert such OCEAN
into, or into the right to receive, as applicable, the kind and amount of cash,
securities or other property which the holder would have received if the holder
had converted such OCEAN immediately prior to the transaction.
Adjustment of the Conversion Price
The conversion price will be subject to adjustment as follows:
(a) Upon any dividends or distributions on our common stock
payable in shares of our common stock, the conversion price will be
multiplied by a fraction (1) the numerator of which shall be the number
of shares of our common stock outstanding at the close of business on
the record date for that dividend or distribution, and (2) the
denominator of which shall be the sum of such number of shares plus the
total number of shares constituting such dividend or distribution.
(b) Upon any distributions to all holders of our common stock
of rights or warrants entitling them to purchase our common stock at a
price, or securities convertible into our common stock having a
conversion price per share, that is less than the current market price
of our common stock on the trading day immediately preceding the date
of declaration of such distribution, the conversion price will be
multiplied by a fraction (1) the numerator of which shall be the
number of shares of our common stock outstanding at the close of
business on the record date relating to the distribution of such rights
and warrants, plus the number of shares which the aggregate offering
price of the total number of shares so offered for purchase would
purchase at the current market price of our common stock as of the
business day immediately preceding the date of declaration of such
distribution, and (2) the denominator of which shall be the number of
shares of our common stock outstanding at the close of business on the
record date for such distribution, plus the total number of additional
shares of common stock so offered for purchase.
(c) Upon any subdivisions, combinations and certain
reclassifications of our common stock, the conversion price will be
proportionately adjusted to reflect such subdivision, combination or
reclassification.
(d) Upon any distributions to all holders of our common stock
of cash, debt securities (or other evidence of indebtedness) or other
assets, excluding:
- dividends or distributions described in clause (a) or
(b) above,
- distributions of rights to all holders of our common
stock pursuant to an adoption of a stockholder rights
plan,
- on or prior to March 6, 2004, Regular Cash Dividends,
except where the per share amount thereof, when
aggregated with the per share amounts of other cash
distributions made within the preceding 12 months for
which no adjustment has been made, exceeds 5% of the
current market price of our common stock on the
trading day immediately preceding the date of
declaration of such dividend, and
- after March 6, 2004, dividends resulting in the
payment of Contingent Interest on the OCEANs,
the conversion price will be adjusted in accordance with the provisions
of the Indenture.
(e) Upon any payments to holders of our common stock in
respect of a tender offer (other than an odd-lot offer) for our common
stock by us or any of our subsidiaries at a price in excess of 110% of
the current market price of our common stock on the last date tenders
may be made pursuant to such tender offer, the conversion price will be
multiplied by a fraction (1) the numerator of which shall be the number
of shares of our common stock outstanding at the close of business on
the last date that tenders may be made pursuant to such tender offer
(the "Expiration Time") multiplied by the current market price of our
common stock as of the Expiration Time, and (2) the denominator of
which shall be the sum of (x) the fair market value of the aggregate
consideration payable to our stockholders based on the acceptance of
all shares validly tendered and not withdrawn as of the Expiration
Time, up to the maximum specified in the tender offer (the shares of
common stock so accepted being the "Purchased Shares") and (y) the
product of the number of shares of common stock outstanding as of the
Expiration Time (less any Purchased Shares) and the current market
price of our common stock as of the Expiration Time.
In the event that we distribute shares of capital stock of a subsidiary
of ours pursuant to any event described in clause (d) of the preceding
paragraph, the conversion price will be adjusted based on the market value of
the subsidiary stock so distributed relative to the market value of our common
stock, in each case over a measurement period following the distribution. If we
adopt a new shareholder rights plan, we will be required under the Indenture to
provide that holders of the OCEANs will receive the rights upon conversion of
the OCEANs, whether or not these rights were separate from our common stock
prior to conversion, subject to certain limited exceptions.
No adjustment in the conversion price will be required unless such
adjustment would require a change of at least 1% in the applicable conversion
price; provided that any adjustment that would otherwise be required to be made
shall be carried forward and taken into account in any subsequent adjustment.
Except as stated above, the conversion price will not be adjusted for the
issuance of our common stock or any securities convertible into or exchangeable
for our common stock or carrying the right to purchase any of the foregoing. No
adjustment will be made if holders of the OCEANs may participate in the
transaction that would otherwise give rise to such adjustment without
conversion. The Indenture will permit us to decrease the conversion price from
time to time for a period of at least 20 days.
27
If we are party to a consolidation, merger or binding share exchange
pursuant to which our common stock is converted into cash, securities or other
property, at the effective time of the transaction, the right to convert an
OCEAN into our common stock will be changed into a right to convert it into the
kind and amount of cash, securities or other property which the holder would
have received if the holder had converted its OCEAN immediately prior to the
transaction. This change could substantially lessen or eliminate the value of
the conversion privilege associated with the OCEANs in the future. For example,
if we were acquired in a cash merger, each OCEAN would become convertible solely
into cash and would no longer be convertible into securities whose value would
vary depending on our future prospects and other factors.
Holders of the OCEANs may, in certain circumstances, be deemed to have
received a distribution treated as a dividend for United States federal income
tax purposes as the result of: (a) a taxable distribution to holders of our
common stock that results in an adjustment of the conversion price, or (b) a
decrease in the conversion price at our discretion. See "Certain United States
Federal Income Tax Considerations--United States Holders--Constructive
Dividends."
Conversion Procedure
Holders may convert their OCEANs only in denominations of $1,000.00
original principal amount and integral multiples thereof. If a holder has
already delivered a Change of Control Purchase Notice (as described below under
"--Repurchase at Option of Holder upon a Change of Control") with respect to any
OCEAN, then, the holder may not surrender such OCEAN for conversion until the
holder has withdrawn such notice in accordance with the Indenture. OCEANs called
for redemption may not be surrendered for conversion after the close of business
on the second business day preceding the date fixed for redemption, unless we
default in payment of the redemption price.
The right of conversion attaching to any OCEAN may be exercised (a) if
such OCEAN is represented by a global security, by book-entry transfer to the
conversion agent through the facilities of DTC, or (b) if such OCEAN is
represented by a definitive OCEAN, by delivery of such OCEAN at the specified
office of the conversion agent, accompanied, in either case, by a duly signed
and completed notice of conversion and appropriate endorsements and transfer
documents if required by the conversion agent. A holder delivering an OCEAN for
conversion will be required to pay any taxes or duties payable in respect of the
issue or delivery of our common stock upon conversion in a name other than that
of the holder. In addition, if a holder surrenders OCEANs for conversion after a
Record Date and prior to the corresponding Interest Payment Date, the holder
will be required to pay (1) the Stated Interest payable on such OCEANs on such
Interest Payment Date and (2) if the OCEANs are surrendered for conversion prior
to March 6, 2004, the Contingent Interest payable on such OCEANs on such
Interest Payment Date. The conversion date shall be the business day on which
the OCEAN and all of the items required for conversion shall have been so
delivered and the other requirements for conversion (including the payment of
all applicable taxes and duties, if any) have been met, if all requirements for
conversion shall have been satisfied by 11:00 a.m. New York City time on such
day, and in all other cases, the conversion date shall be the next succeeding
business day.
A certificate for the number of full shares of our common stock into
which any OCEAN is converted, together with any cash payment due upon such
conversion, will be delivered through the conversion agent as soon as
practicable following the conversion date.
For a discussion of the United States federal income tax treatment of a
holder receiving shares of our common stock upon conversion, see "Certain United
States Federal Income Tax Considerations--United States Holders--Sales,
Exchange, Conversion or Redemption."
EXCHANGE IN LIEU OF CONVERSION
We have the option to designate a financial institution to which OCEANs
surrendered for conversion by a holder of OCEANs (other than (1) prior to March
6, 2007, OCEANs called for redemption or OCEANs being converted as a result of
the occurrence of a corporate transaction specified under "--Conversion
Rights--Conversion upon Specified Corporate Transactions" and (2) OCEANs
converted during the period after a Record Date and prior to the corresponding
Interest Payment Date) will be initially offered by the conversion agent for
exchange in lieu of our converting the OCEANs.
When a holder surrenders OCEANs for conversion, the conversion agent
will cause the OCEANs first to be offered to the designated institution for
exchange in lieu of conversion. In order to accept OCEANs surrendered for
conversion, the designated institution must, on the conversion date, agree to
exchange for such OCEANs a number of freely tradeable shares of our common stock
equal to the number of such shares the holder of such OCEANs would receive upon
conversion, plus a cash payment for any amounts we would have been required to
pay to the holder upon conversion of such OCEANs. If the designated institution
agrees to accept any such OCEANs, it will deliver the requisite shares of our
common stock and cash to the conversion agent as soon as practicable but in no
event later than three trading days following the conversion date (or, if
earlier, the day before any record date for any distribution on our common stock
or any effective date for any consolidation, merger, binding share exchange or
transfer or lease of all or substantially all of our assets) and the conversion
agent will deliver the shares and cash to the holder who surrendered the OCEANs.
28
The designation of an institution to which OCEANs may be submitted for
exchange does not require the institution to accept any OCEANs from the
conversion agent. If the designated institution does not agree to accept any
OCEANs in whole or in part on the conversion date, those OCEANs will be
converted into shares of our common stock. If the designated institution agrees
to accept any OCEANs for exchange but does not deliver the requisite common
shares and cash within three trading days following the conversion date (or, if
earlier, the day before any record date for any distribution on our common stock
or any effective date for any consolidation, merger, binding share exchange or
transfer or lease of all or substantially all of our assets), the conversion
agent shall convert such OCEANs and deliver to the holder such number of shares
of our common stock and such cash payment as would have been delivered if the
designated institution had declined to accept the OCEANs for exchange. Any
OCEANs accepted for exchange by the designated institution will remain
outstanding.
For a discussion of the tax treatment of a holder receiving shares on
the exchange of OCEANs in lieu of conversion, see "Certain United States Federal
Income Tax Considerations--United States Holders--Sale, Exchange, Conversion or
Redemption."
We have designated Credit Suisse First Boston Corporation, or CSFB, as
the institution to which offers described above will be made, although we may
change this designation at any time. We have not paid and will not pay any
consideration to or otherwise enter into any arrangement with CSFB for or with
respect to such designation.
MATURITY; REDEMPTION OF OCEANS AT OUR OPTION
We must repay the OCEANs at their stated maturity on March 6, 2032, at
a price equal to their Accreted Principal Amount on such date ($1,270.00 per
OCEAN) plus any accrued and unpaid interest (including Stated Interest,
Contingent Interest and Deferred Interest) thereon up to but not including the
stated maturity, unless earlier redeemed by us, purchased by us at your option
or converted.
We may redeem the OCEANs only if:
(1) the Sale Price per share of our common stock for at least
20 trading days in the 30 trading-day period ending on the trading day
prior to the date on which the notice of redemption is given exceeds
140% of the Initial Stock Price;
(2) a Change of Control has occurred; or
(3) a Tax Event (as defined below under "--Optional Redemption
upon a Tax Event") has occurred and the Tax Event Conversion Value (as
defined below under "--Optional Redemption upon a Tax Event") of the
OCEANs exceeds their Accreted Principal Amount by at least 10%.
Holders may convert OCEANs or portions of OCEANs called for redemption
until the close of business on the day that is two business days prior to the
redemption date, even if the market price condition described under
"--Conversion Rights--Conversion upon Satisfaction of Market Price Condition"
has not occurred.
If we redeem less than all of the outstanding OCEANs, the Trustee shall
select the OCEANs to be redeemed on a pro rata basis in original principal
amounts of $1,000.00 or integral multiples thereof. If a portion of a holder's
OCEANs is selected for partial redemption and the holder converts a portion of
the OCEANs, the converted portion shall be deemed to be the portion selected for
redemption.
Optional Redemption upon Satisfaction of Market Price Condition
We may redeem the OCEANs, at any time in whole or, on or after March 6,
2007, in part, provided that at least $75 million original principal amount of
OCEANs remain outstanding immediately after any such partial redemption, for
cash at a price equal to 100% of their Accreted Principal Amount on the
redemption date plus any accrued and unpaid interest (including Stated Interest,
Contingent Interest and Deferred Interest) thereon up to but not including the
date of redemption, plus, if the OCEANs are redeemed prior to March 6, 2007, a
Make-Whole Premium, on not less than 15 nor more than 60 days' notice by mail to
the holders of the OCEANs, if the Sale Price per share of our common stock for
at least 20 trading days in the 30 trading-day period ending on the trading day
prior to the date on which the notice of redemption is given exceeds 140% of the
Initial Stock Price.
29
"Make-Whole Premium" with respect to any OCEANs on any date of
redemption, means the present value at the date of redemption of (a) all
remaining Stated Interest payments due on such OCEANs through March 6, 2007 and
(b) if the date of redemption occurs prior to March 6, 2004, all remaining
Contingent Interest due on such OCEANs through March 6, 2004, in each case,
exclusive of interest accrued and unpaid up to but not including the date of
redemption (or, if the date of redemption occurs after any Record Date but prior
to the corresponding Interest Payment Date, exclusive of interest accrued and
unpaid up to but not including that Interest Payment Date). The present value of
the remaining payments (if any) will, in each case, be computed using a discount
rate equal to the Treasury Rate.
"Treasury Rate" means the yield to maturity at the time of computation
of United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the date
fixed for redemption (or, if such Statistical Release is no longer published,
any publicly available source for similar market data)) most nearly equal to the
then remaining term to March 6, 2007, provided, however, that if the then
remaining term to March 6, 2007 is not equal to the constant maturity of a
United States Treasury security for which a weekly average yield is given, the
Treasury Rate shall be obtained by linear interpolation (calculated to the
nearest one-twelfth of a year) from the weekly average yields of United States
Treasury securities for which such yields are given, except that if the then
remaining term to March 6, 2007 is less than one year, the weekly average yield
on actually traded United States Treasury securities adjusted to a constant
maturity of one year shall be used.
Optional Redemption upon a Change of Control
We may redeem the OCEANs, in whole but not in part, at any time for
cash at a price equal to 100% of their Accreted Principal Amount on the
redemption date plus any accrued and unpaid interest (including Stated Interest,
Contingent Interest and Deferred Interest) thereon, up to but not including the
date of redemption plus, if the OCEANs are redeemed prior to March 6, 2007, a
Make-Whole Premium, on not less than 15 nor more than 60 days' notice, if a
Change of Control occurs; provided notice of such redemption is mailed within 30
days following the occurrence of such Change of Control.
Optional Redemption upon a Tax Event
We may redeem the OCEANs, in whole but not in part, at any time for
cash at a price equal to 100% of their Accreted Principal Amount on the
redemption date plus any accrued and unpaid interest (including Stated Interest,
Contingent Interest and Deferred Interest) thereon up to but not including the
date of redemption plus, if the OCEANs are redeemed prior to March 6, 2007, a
Make-Whole Premium, on not less than 15 nor more than 60 days' notice, if a Tax
Event has occurred and the Tax Event Conversion Value of the OCEANs on any
trading day within the five trading days immediately preceding the date on which
the notice of redemption is given exceeds their Accreted Principal Amount by at
least 10%.
A "Tax Event" shall be deemed to have occurred if we have received an
opinion from independent tax counsel experienced in those matters to the effect
that, on or after February 28, 2002, as a result of:
- any amendment to, or change (including any announced prospective
change) in, the laws (or rules or regulations thereunder) of the
United States or any political subdivision or taxing authority of,
or in, the United States; or
- any amendment to, or change in, an interpretation or application
of those laws, rules or regulations by any legislative body,
court, governmental agency or regulatory authority,
in each case which amendment or change is enacted, promulgated, issued or
announced or which interpretation is issued or announced or which action is
taken, on or after February 28, 2002, there is more than an insubstantial risk
(x) that the amount of interest deductible by us for United States federal
income tax purposes with respect to the OCEANs either (i) would not be based on
the treatment of the OCEANs as contingent payment debt instruments or (ii) would
not be calculated using a comparable yield equal to or greater than 9.917% per
annum, or (y) that we would not be entitled to deduct interest on the OCEANs (in
whole or in part) for any reason.
"Tax Event Conversion Value" of any OCEANs on any date of determination
is equal to the product of (a) the Sale Price for our common stock on such date,
multiplied by (b) the number of shares of our common stock issuable upon
conversion of such OCEANs, determined as described under "--Conversion
Rights--General."
REPURCHASE AT OPTION OF HOLDER UPON A CHANGE OF CONTROL
If a Change of Control (as defined below) occurs, each holder will have
the right, in addition to the right described under "--Conversion
Rights--Conversion upon Specified Corporate Transactions," to require us to
purchase for cash all or any portion of the holder's OCEANs, in integral
multiples of $1,000.00 original principal amount. The purchase price for such
OCEANs will equal 100% of their Accreted Principal Amount on the Repurchase Date
plus any accrued and unpaid interest (including Stated Interest, Contingent
Interest and Deferred Interest) thereon, up to but not including the Repurchase
Date. We will be required to purchase the OCEANs as of the date (the "Repurchase
Date") that is 45 business days after we give holders notice of the Change of
Control.
30
Within 30 days after a Change of Control occurs, we must mail a notice
regarding the Change of Control to the trustee, to all holders of OCEANs at
their addresses as shown in the register of the registrar and, if required by
applicable law, to beneficial owners. The notice must state, among other things:
- the events causing a Change of Control;
- the date of the Change of Control;
- the last date on which a holder may exercise the purchase
right;
- the Change of Control purchase price;
- the Repurchase Date;
- the name and address of the paying agent and the conversion
agent;
- the conversion price and any adjustments to the conversion
price;
- that OCEANs with respect to which a Change of Control Purchase
Notice has been given by the holder may be converted only if
the Change of Control Purchase Notice has been withdrawn in
accordance with the terms of the Indenture; and
- the procedures that holders must follow to exercise these
rights.
To exercise this right, the holder must deliver a written notice (the
"Change of Control Purchase Notice") to the paying agent so that it is received
by the paying agent no later than the close of business on the fifth business
day prior to the Repurchase Date. The Change of Control Purchase Notice must
state:
- the certificate numbers of the OCEANs to be delivered by the
holder;
- the portion of the aggregate original principal amount of
OCEANs to be purchased; and
- that we are to purchase such OCEANs pursuant to the applicable
provisions of the OCEANs.
A holder may withdraw any Change of Control Purchase Notice by
delivering a written notice of withdrawal to the paying agent so that it is
received by the paying agent prior to the close of business on the business day
prior to the Repurchase Date. The notice of withdrawal must state:
- the certificate number of the OCEANs being withdrawn;
- the aggregate original principal amount being withdrawn; and
- the aggregate original principal amount, if any, of the OCEANs
that remain subject to a Change of Control Purchase Notice.
Our obligation to pay the Change of Control purchase price for OCEANs
for which a holder has delivered, and not validly withdrawn, a Change of Control
Purchase Notice is conditioned upon delivery of such OCEANs, together with
necessary endorsements, to the paying agent at any time after the delivery of
such Change of Control Purchase Notice. We will cause the Change of Control
purchase price for such OCEANs to be paid promptly following the later of the
Repurchase Date or the date of delivery of such OCEANs.
If the paying agent holds money sufficient to pay the Change of Control
purchase price of the OCEANs on the business day following the Repurchase Date
in accordance with the terms of the Indenture, then, immediately after the
Repurchase Date, the OCEANs submitted for repurchase and not validly withdrawn
will cease to be outstanding and interest on such OCEANs will cease to accrue,
whether or not the OCEANs are delivered to the paying agent. After any OCEAN
has ceased to be outstanding, all other rights of the holder shall terminate,
other than the right to receive the change of control purchase price upon
delivery of the OCEAN.
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Except as described below, a "Change of Control" is deemed to have
occurred at such time as:
(1) any person, including our affiliates and associates, other
than us, our subsidiaries or our respective employee benefit
plans, files a Schedule 13D or Schedule TO, or any successor
schedule, form or report, under the Exchange Act, disclosing
that such person has become the beneficial owner of 50% or
more of the aggregate voting power of our common stock or
other capital stock into which our common stock is
reclassified or changed, with certain exceptions; or
(2) any share exchange, consolidation or merger is consummated
pursuant to which our common stock would be converted into
cash, securities or other property, in each case other than
any share exchange, consolidation or merger in which the
holders of our common stock immediately prior to the share
exchange, consolidation or merger have, directly or
indirectly, at least a majority of the total voting power in
the aggregate of all classes of capital stock of the
continuing or surviving corporation immediately after the
share exchange, consolidation or merger.
However, a Change of Control will be deemed not to have occurred if at least 90%
of the consideration in the transaction or transactions (other than cash
payments for fractional shares) which would otherwise constitute a Change of
Control consists of shares of common stock traded or to be traded immediately
following such Change of Control on a national securities exchange or the Nasdaq
National Market and, as a result of the transaction or transactions, the OCEANs
become convertible into such common stock (and any rights attached thereto). In
addition, solely for the purpose of determining whether a holder's repurchase
right has arisen with respect to the OCEANs (and not for determining whether the
OCEANs are convertible or may be redeemed), a Change of Control will be deemed
not to have occurred if the Sale Price per share of our common stock for any
five trading days within (a) in the case of a Change of Control under clause (1)
above, the period of 10 consecutive trading days ending immediately after the
later of the Change of Control and the public announcement of the Change of
Control, or (b) in the case of a Change of Control under clause (2) above, the
period of 10 consecutive trading days ending immediately before the Change of
Control, equals or exceeds 105% of the amount obtained by dividing the Accreted
Principal Amount of an OCEAN on such trading day by the conversion rate in
effect on such trading day.
The right to require us to repurchase the OCEANs as a result of the
occurrence of a Change of Control could create an event of default under our
existing or future Senior Debt, including our existing revolving credit
facility. Failure by us to repurchase the OCEANs when required will result in an
Event of Default with respect to the OCEANs.
The holders' repurchase right upon the occurrence of a Change of
Control could, in certain circumstances, make more difficult or discourage a
potential takeover of us and, thus, removal of incumbent management. The Change
of Control repurchase right, however, is not the result of management's
knowledge of any specific effort to accumulate shares of our common stock or to
obtain control of us by means of a merger, tender offer, solicitation or
otherwise. Instead, the Change of Control purchase feature is a standard term
contained in other similar debt offerings and the terms of such feature have
resulted from negotiations between us and the initial purchaser.
We could in the future enter into certain transactions, including
highly leveraged recapitalizations, that would not constitute a Change of
Control and would, therefore, not provide the holders with the protection of
requiring us to repurchase the OCEANs.
Rule 13e-4 under the Exchange Act requires the dissemination of certain
information to security holders in the event of an issuer tender offer and may
apply in the event that the repurchase option becomes available to holders of
the OCEANs. We will comply with this rule to the extent applicable at that time.
EVENTS OF DEFAULT AND NOTICE THEREOF
The following are events of default ("Events of Default"):
(a) a default in the payment of interest (including Stated
Interest and Contingent Interest) on any OCEAN that continues for 30
days or more after such payment is due, except to the extent any
payment of Stated Interest is deferred as described under "--Deferral
of Interest Payments,"
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(b) a default in the payment of Accreted Principal Amount,
Deferred Interest, premium (if any), redemption price or Change of
Control purchase price in respect of any OCEAN when due, except to the
extent any payment of Deferred Interest is extended as described under
"--Deferral of Interest Payments,"
(c) a default in the performance of any other of our covenants
or agreements in the Indenture that continues for 90 days after written
notice to us by the Trustee or to us and the Trustee by the holders of
at least 25% in original principal amount of outstanding OCEANs,
(d) failure by us to make any payment when due, including any
applicable grace period, in respect of our indebtedness for borrowed
money, which failure results in acceleration of such indebtedness which
is in an amount in excess of the Applicable Limit (as defined below)
and such indebtedness is not discharged, or such payment default and
acceleration is not cured or rescinded, within 30 days,
(e) any other default by us under any of our indebtedness for
borrowed money, which default results in acceleration of such
indebtedness which is in an amount in excess of the Applicable Limit
and such indebtedness is not discharged, or such acceleration is not
rescinded, within 30 days, and
(f) certain events of bankruptcy, insolvency or
reorganization with respect to us.
The "Applicable Limit" means (i) at any time prior to March 6, 2007,
$25 million, and (ii) at any time on or after March 6, 2007, $50 million.
If an Event of Default occurs and is continuing and if it is known to
the Trustee, the Trustee is required to mail to each holder of the OCEANs a
notice of the Event of Default within 90 days after such default occurs. Except
in the case of a default in payment of the Accreted Principal Amount, premium
(if any) or interest (including Stated Interest, Contingent Interest and
Deferred Interest) on any OCEANs, the Trustee may withhold the notice if and so
long as the Trustee in good faith determines that withholding the notice is in
the interests of the holders of the OCEANs.
If an Event of Default occurs and is continuing, the Trustee or the
holders of not less than 25% in original principal amount of outstanding OCEANs
may declare the Accreted Principal Amount of and all accrued and unpaid interest
(including Stated Interest, Contingent Interest and Deferred Interest) on the
outstanding OCEANs to be due and payable immediately. If the Event of Default
relates to an event of bankruptcy, insolvency or reorganization, the Accreted
Principal Amount of and all accrued and unpaid interest (including Stated
Interest, Contingent Interest and Deferred Interest) on the outstanding OCEANs
shall automatically become due and payable immediately, subject to applicable
law.
Holders of the OCEANs may not enforce the Indenture or OCEANs except as
provided in the Indenture. Subject to the provisions of the Indenture relating
to the duties of the Trustee when an Event of Default occurs and is continuing,
the Trustee has no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any holders of the OCEANs, unless the
holders offer the Trustee indemnity reasonably satisfactory to it. Subject to
certain indemnification provisions and limitations contained in the Indenture,
the holders of a majority in original principal amount of the OCEANs at the time
outstanding will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee. Those holders may, in certain
cases, waive any default except a default in payment of the Accreted Principal
Amount, redemption price or Change of Control purchase price of, or premium, if
any, or interest (including Stated Interest, Contingent Interest and Deferred
Interest) on, any OCEANs or a failure to comply with certain provisions of the
Indenture relating to conversion of the OCEANs.
We are required to furnish the Trustee annually with a certificate as
to our compliance with the conditions and covenants provided for in the
Indenture.
DISCHARGE
We may satisfy and discharge our obligations under the Indenture by
delivering to the Trustee for cancellation all outstanding OCEANs.
MERGER AND CONSOLIDATION
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We may not consolidate with or merge with or into, or sell, lease,
convey or otherwise dispose of all or substantially all of our assets to, any
person, unless (a) we are the surviving person or the person formed by the
consolidation or into which we are merged or to which our assets are so sold,
leased, conveyed or otherwise disposed (the "Surviving Person") is a
corporation, limited liability company, partnership or trust organized under the
laws of the United States, any state thereof or the District of Columbia, (b) if
we are not the Surviving Person, the Surviving Person assumes all of our
obligations under the OCEANs and the Indenture and enters into a supplemental
indenture and (c) after such transaction no Event of Default exists.
Except in the case of a lease of all or substantially all of our
assets, if a person assumes our obligations as described in the foregoing
paragraph, we shall be discharged from all obligations under the OCEANs and the
Indenture. Although such transactions are permitted under the Indenture, they
may constitute a Change of Control, which would permit the holders to require us
to purchase or convert, and would permit us to redeem, their OCEANs as described
above.
MODIFICATION AND WAIVER
Subject to certain exceptions, supplements of and amendments to the
Indenture or the OCEANs may be made by us and the Trustee with the consent of
the holders of not less than a majority in aggregate original principal amount
of the outstanding OCEANs and any existing default or failure to comply with any
provisions may be waived with the consent of the holders of a majority in
aggregate original principal amount of the outstanding OCEANs. Without the
consent of any holders of the OCEANs, we and the Trustee may amend or supplement
the Indenture or the OCEANs to cure any ambiguity, defect or inconsistency, to
provide for the assumption of our obligations to holders of the OCEANs and to
make certain changes with respect to conversion rights in case of a merger or
acquisition otherwise in compliance with the Indenture or to make any change
that does not materially adversely affect the rights of any holder of the
OCEANs. Without the consent of the holders of each OCEAN affected thereby, an
amendment, supplement or waiver may not (a) change the stated maturity date of
the principal of, or interest (including Stated Interest, Contingent Interest
and Deferred Interest) on, any OCEANs, or adversely affect the right to convert
any OCEANs or change the amount of our common stock receivable upon any
conversion, (b) reduce the Accreted Principal Amount, redemption price or Change
of Control purchase price of, or interest (including Stated Interest, Contingent
Interest and Deferred Interest) or premium, (if any), on, any OCEANs, (c) change
the currency for payment of principal or Accreted Principal Amount, redemption
price or Change of Control purchase price of, or interest (including Stated
Interest, Contingent Interest and Deferred Interest) on, any OCEANs, (d) impair
the right to institute suit for the enforcement of any payment on or with
respect to any OCEANs, (e) reduce the above stated percentage of outstanding
OCEANs necessary to amend or supplement the Indenture or waive defaults or
failure to comply (f) make any change in the subordination provisions of the
Indenture or the ranking or priority of any OCEANs in a manner materially
adverse to the holders of the OCEANs, or (g) modify (with certain exceptions)
any provisions of the Indenture relating to modification and amendment of the
Indenture or waiver of failure to comply with conditions and defaults
thereunder.
CONCERNING THE TRUSTEE
BNY Midwest Trust Company, the Trustee under the Indenture, is the
initial paying agent, conversion agent, bid solicitation agent and the registrar
with regard to the OCEANs. We and our subsidiaries may maintain deposit accounts
and conduct other banking transactions with the Trustee or its affiliates in the
ordinary course of business, and the Trustee and its affiliates may from time to
time in the future provide us with banking and financial services in the
ordinary course of their business.
In case an Event of Default shall occur (and shall not be cured) and
holders of the OCEANs have notified the Trustee, the Trustee will be required to
exercise its powers with the degree of care and skill that a prudent person
would exercise under the circumstances in the conduct of such person's own
affairs. Subject to such provisions, the Trustee is under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
of the holders of OCEANs, unless such holders offer the Trustee indemnity
reasonably satisfactory to it.
GOVERNING LAW
The Indenture and OCEANs will be governed by and construed in
accordance with the laws of the State of New York.
BOOK-ENTRY SYSTEM
The OCEANs are only issued in the form of global securities held in
book-entry form. DTC or its nominee is the sole registered holder of the OCEANs
for all purposes under the Indenture. Owners of beneficial interests in the
OCEANs represented by the global securities hold their interests pursuant to the
procedures and practices of DTC. As a result, beneficial interests in any such
securities are shown on, and transfers will be effected only through, records
maintained by DTC and its direct and indirect participants. Any such interest
34
may not be exchanged for certificated securities, except in limited
circumstances. Owners of beneficial interests must exercise any rights in
respect of their interests, including any right to convert or require repurchase
of their interests in the OCEANs, in accordance with the procedures and
practices of DTC. Beneficial owners will not be holders and will not be entitled
to any rights under the global securities or the Indenture. We and the Trustee,
and any of their respective agents, may treat DTC as the sole holder and
registered owner of the global securities.
EXCHANGE OF GLOBAL SECURITIES
The OCEANs represented by a global security, will be exchangeable for
certificated securities with the same terms only if:
- DTC is unwilling or unable to continue as depositary or if DTC
ceases to be a clearing agency registered under the Exchange
Act and we do not appoint a successor depositary within 90
days;
- we decide to discontinue use of the system of book-entry
transfer through DTC or any successor depositary; or
- a default under the indenture occurs and is continuing.
DTC has advised us as follows: DTC is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency" for
registered participants, and it facilitates the settlement of transactions among
its participants in those securities through electronic computerized book-entry
changes in participants' accounts, eliminating the need for physical movement of
securities certificates. DTC's participants include securities brokers and
dealers, including the banks, trust companies, clearing corporations and other
organizations, some of whom and/or their representatives own DTC. Access to
DTC's book-entry system is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
35
DESCRIPTION OF CAPITAL STOCK
The following is a summary description of the material terms of our
capital stock and is qualified in its entirety by reference to our Amended and
Restated Bylaws, filed as an exhibit to our most recent Annual Report on Form
10-K filed with the SEC on March 15, 2002, which is incorporated by reference in
this prospectus. See "Where You Can Find More Information." For purposes of this
section, the terms "we," "us," "our" and "AmerUs" mean only AmerUs Group Co. and
not its subsidiaries.
We are authorized to issue 250,000,000 shares of capital stock,
consisting of 20,000,000 shares of preferred stock, no par value, and
230,000,000 shares of common stock, no par value. As of May 15, 2002, we had
40,440,843 shares of common stock issued and outstanding and no outstanding
shares of preferred stock. We have reserved 3,810,000 shares of our common stock
for issuance under our stock plans, and will reserve shares of our common stock
for the purpose of effecting the conversion of the OCEANs included in this
offering. Our common stock is listed on the New York Stock Exchange under the
symbol "AMH."
In February 2002, our board of directors approved a stock purchase
program under which we may purchase up to three million shares of our common
stock at such times and under such market conditions as we deem advisable. Under
this program, we are permitted to make purchases of our common stock either in
the open market or by other means that we deem appropriate, including privately
negotiated purchases.
Each share of our common stock entitles its holder to one vote per
share on all matters upon which our stockholders are entitled to vote, including
the election of our directors, mergers, sales of assets not in the regular
course of our business, dissolution and amendments to our articles of
incorporation. The shares of our common stock are subject to the relative
rights, preferences, qualifications and limitations of any class or series of
preferred stock. There is no provision in our articles of incorporation that
permits cumulative voting in the election of our directors.
Our board has the authority to determine the voting powers, preferences
and rights and the limitations or restrictions of each series of preferred
stock; provided that no preferred stock may have more than one vote per share.
Thus, any series of preferred stock issued by us in future may have comparable
voting rights with our common stock or be convertible into our common stock or
another security issued by us. Any class or series of preferred stock that we
issue in the future could also have rights that adversely affect the rights of
the holders of our common stock or the OCEANs.
Our articles of incorporation provide that none of our directors shall
be liable to us or to our stockholders for monetary damages for any breach of
fiduciary duty as a director, except to the extent required by the Iowa Business
Corporation Act. This provision does not prevent stockholders from obtaining
injunctive or other equitable relief against our directors nor does it shield
our directors from liability under federal or state securities laws. In
addition, our articles of incorporation provide that we will, to the maximum
extent permitted by law, indemnify any person who incurs any loss by reason of
the fact that (a) he or she is or was, or has agreed to be, a director or
officer of our company, or (b) while acting as a director or officer of our
company, he or she is or was serving at our request as a director, officer,
partner, trustee, employee or agent of any corporation, partnership, joint
venture, trust or other enterprise, including services with respect to employee
benefit plans, provided that such person meets the standards of conduct required
for such indemnification under Iowa law.
Our board has the authority to issue, without our stockholders'
consent, the authorized but unissued shares of our common stock, preferred stock
and other rights from time to time for any corporate purpose, including stock
splits, stock dividends, employee benefit and compensation plans, acquisitions
and public or private sales for cash, as a means of raising capital. The
issuance of a new series of preferred stock could make it more difficult for a
third party to acquire or discourage a third party from acquiring a majority of
our outstanding voting stock. It is possible that our board might use its
authority to issue common stock, preferred stock or other rights in a way that
could deter or impede the completion of a tender offer or other attempt to gain
control of our company. We do not have any plans or commitments to effect any
such issuance, but we may take such action in the future if our board considers
such action to be in the best interests of our stockholders and our company
under the circumstances. The effect of any preferred stock or rights issuance
upon our common stock or the OCEANs will depend on the issuance price, terms or
rights relating to such issuances and cannot be predicted with any certainty.
However, such effects might include (a) restrictions on the payment of common
stock dividends if preferred stock dividends have not been paid; (b) dilution of
the voting power and equity interest of existing common stockholders to the
extent that any future preferred stock series has voting rights or is
convertible into common stock; and (c) subordination of the rights of our common
stockholders to share in our assets upon liquidation, dissolution or winding-up.
Our bylaws provide that the number of directors be determined by our
board, provided that the number is not fewer than seven nor more than 21. A
majority of our entire board constitutes a quorum for the transaction of
business and the affirmative vote of a majority of the directors present at any
meeting constitutes the act of the board. Our articles of incorporation and
by-laws provide for a classified board of
36
directors consisting of three classes as nearly equal in size as the then
authorized number of directors constituting our board permits. At each annual
meeting of our stockholders, one class of directors is elected for a three-year
term, and the directors in the other two classes continue in office. Each class
holds office until the date of the third annual meeting for the election of
directors following the annual meeting at which such class was elected. As a
result, approximately one-third of our board is elected each year and at least
two annual meetings are normally required to effect a change in the composition
of a majority of our board of directors. In addition, a majority of our board
constituting less than a quorum, or a sole remaining director, may fill
vacancies on our board. Together, these provisions may preclude a stockholder
from removing incumbent directors without cause and simultaneously gaining
control of the board of directors by filling the vacancies created by such
removal with its own nominees.
Other than as specified by our articles of incorporation or bylaws, our
board may amend or repeal our bylaws and a majority of the holders of
outstanding voting securities may amend our articles of incorporation. Under
Iowa law, certain proposed amendments to our articles of incorporation which
adversely affect the rights of a particular class of stock must be approved by a
majority of such class.
Any merger or any acquisition of our company or more than ten percent
of our voting stock is subject to regulatory approval by the Iowa, Indiana, New
York, Arizona and Kansas insurance commissioners. The Iowa Business Corporation
Act provides that, in considering acquisition proposals, our directors may
consider the effect of the proposed acquisition on our employees, suppliers,
creditors, customers, the communities in which we operate and other community
interest factors. Our directors may reach a reasonable determination that such
factors outweigh the financial or other benefits to us or our stockholders
without violating the business judgment rule. The Iowa Business Corporation Act
also permits our board to adopt certain "poison pill" measures to impede an
attempt to acquire control of our company. Such measures may include the
issuance of stock rights or options that preclude or limit the exercise or
transfer of stock rights by persons owning or acquiring a specified percentage
of our outstanding shares. On or prior to September 20, 2005, Iowa insurance
laws require potential acquirors of more than five percent of our voting stock
to obtain the prior approval of the Iowa Insurance Commissioner and our board
for such acquisition. Each five percent or more holder of our common stock is
required to obtain the prior approval of the Iowa Insurance Commissioner and our
board for any additional acquisition of our voting stock. In addition, the Iowa
Business Corporation Act also imposes a three year moratorium on business
combinations between our company and any person owning ten percent or more of
our outstanding voting stock unless (a) the transaction in which the stockholder
became a ten percent or more stockholder was approved in advance by our board,
(b) after becoming a ten percent or more stockholder, the stockholder owned at
least 85% of our outstanding voting stock not owned by our directors, officers
and employee stock plans, or (c) at or after the time the stockholder became a
ten percent or more stockholder, the business combination is approved by our
board and authorized by the holders of two-thirds of our outstanding voting
stock not held by the ten percent or more stockholder. The foregoing provisions
of state law could have the effect of delaying, deterring or preventing attempts
to effect the consummation of a change in control of our company.
37
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following discussion as to United States federal income tax matters
represents the opinion of Shearman & Sterling, our counsel, and is based upon
laws, regulations, rulings and decisions now in effect, all of which are subject
to change (including retroactive changes) or possible differing interpretations.
Subject to the limitations stated below, this is a discussion of the material
United States federal income tax consequences of the purchase, ownership and
disposition of the OCEANs. We have not obtained nor do we intend to obtain a
ruling from the Internal Revenue Service with respect to the United States
federal income tax consequences of purchasing, owning or disposing of the OCEANs
or our common stock. This discussion deals only with OCEANs held as capital
assets and does not purport to deal with persons in special tax situations, such
as financial institutions, insurance companies, regulated investment companies,
dealers in securities or currencies, tax-exempt entities, persons holding OCEANs
in a tax-deferred or tax-advantaged account, or persons holding OCEANs as a
hedge against currency risks, as a position in a "straddle" or as part of a
"hedging" or "conversion" transaction or "constructive sale" or other integrated
transaction for tax purposes, persons who own 10% or more of our voting power
directly or indirectly, or United States Holders, as defined below, whose
functional currency is not the United States dollar.
We do not address all of the tax consequences that may be relevant to
an investor in OCEANs. In particular, we do not address:
- the United States federal income tax consequences to shareholders
in, or beneficiaries of, an entity that is a holder of OCEANs;
- the United States federal income tax consequences to partnerships
or other entities classified as partnerships for United States
federal income tax purposes;
- the United States federal estate, gift or alternative minimum tax
consequences of the purchase, ownership or disposition of OCEANs;
- any state, local or foreign tax consequences of the purchase,
ownership or disposition of OCEANs; or
- any United States federal, state, local or foreign tax
consequences of owning or disposing of the common stock into which
the OCEANs are convertible.
Prospective investors should consult their own tax advisors with
respect to the tax consequences to them of the purchase, ownership and
disposition of the OCEANs and the common stock in light of their own particular
circumstances, including the tax consequences under state, local, foreign and
other tax laws and the possible effects of changes in United States federal or
other tax laws.
A United States Holder is a beneficial owner of the OCEANs who or which
is:
- a citizen or individual resident of the United States, as defined
in section 7701(b) of the Internal Revenue Code of 1986, as
amended (which we refer to as the Code);
- a corporation, including any entity treated as a corporation for
United States federal income tax purposes, created or organized in
or under the laws of the United States, any state thereof or the
District of Columbia;
- an estate if its income is subject to United States federal income
taxation regardless of its source; or
- a trust if
- a United States court can exercise primary supervision over
its administration and
- one or more United States persons have the authority to
control all of its substantial decisions.
Notwithstanding the preceding sentence, certain trusts in existence on August
20, 1996 and treated as United States persons before that date, also may be
treated as United States Holders.
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A Non-United States Holder is a holder of OCEANs other than a United
States Holder. Prospective investors that are Non-United States Holders should
consult their own tax advisors regarding the United States federal income tax
consequences of an investment in the OCEANs, including the application of United
States federal withholding taxes.
No statutory or judicial authority directly addresses the treatment of
the OCEANs or instruments similar to the OCEANs for United States federal income
tax purposes. After our issuance of the OCEANs, the Internal Revenue Service,
which we refer to as the IRS, released Revenue Ruling 2002-31, which addresses
the tax consequences of an instrument that is similar to the OCEANs. We believe
that the conclusions contained in this ruling are generally consistent with the
tax consequences of the OCEANs described below to the extent that the ruling
addresses such tax consequences. However, because the instrument addressed in
the ruling had terms different from those of the OCEANs, no assurance can be
given that the IRS will not take contrary positions with respect to the tax
characterizations and the tax consequences described below.
CLASSIFICATION OF THE OCEANS
The OCEANs will be treated as indebtedness for United States federal
income tax purposes and that the OCEANs will be subject to the special
regulations governing contingent payment debt instruments (which we refer to as
the CPDI regulations).
UNITED STATES HOLDERS
Accrual of Interest on the OCEANs
Pursuant to the terms of the Indenture, we and each holder of the
OCEANs agree, for United States federal income tax purposes, to treat the OCEANs
as debt instruments that are subject to the CPDI regulations. Pursuant to these
regulations, United States Holders of the OCEANs will be required to accrue
interest income on the OCEANs at the "comparable yield", as described below,
regardless of whether the United States Holder uses the cash or accrual method
of tax accounting. Accordingly, United States Holders will be required to
include interest in taxable income in each year in excess of the accruals on the
OCEANs for non-tax purposes and in excess of any interest payments actually
received in each year.
The CPDI regulations provide that a United States Holder must accrue an
amount of ordinary interest income, as original issue discount for United States
federal income tax purposes, for each accrual period before and including the
maturity date of the OCEANs that equals:
- the product of
- the adjusted issue price (as defined below) of the OCEANs as
of the beginning of the accrual period; and
- the comparable yield to maturity (as defined below) of the
OCEANs, adjusted for the length of the accrual period;
- divided by the number of days in the accrual period; and
- multiplied by the number of days during the accrual period that
the United States Holder held the OCEANs.
An OCEAN's issue price is the first price at which a substantial amount
of the OCEANs is sold to the public, excluding sales to bond houses, brokers or
similar persons or organizations acting in the capacity of underwriters,
placement agents or wholesalers. The adjusted issue price of an OCEAN is its
issue price increased by any interest income previously accrued (determined
without regard to any adjustments to interest accruals described below) with
respect to the OCEANs, and decreased by the amount of any noncontingent payments
and the projected amount of any contingent payments previously made on the
OCEANs.
Based in part on the advice of Shearman & Sterling, we intend to treat
the term "comparable yield" as the annual yield we would pay, as of the initial
issue date, on a fixed-rate, non-convertible debt security with no contingent
payments, but with terms and conditions otherwise comparable to those of the
OCEANs. Based in part on that advice, we intend to take the position that the
comparable yield for the OCEANs is 9.917%, compounded semiannually. The precise
manner of calculating the comparable yield is not absolutely clear. If the
comparable yield were successfully challenged by the IRS, the redetermined yield
could be materially greater or less than the comparable yield provided by us.
Moreover, the projected payment schedule (as defined below) could differ
materially from the projected payment schedule provided by us.
39
The CPDI regulations require that we provide to United States Holders,
solely for United States federal income tax purposes, a schedule of the
projected amounts of payments, which we refer to as the projected payment
schedule, on the OCEANs. This schedule must produce the comparable yield. The
projected payment schedule includes an estimate for payments of Contingent
Interest and a payment at maturity taking into account the conversion feature.
The comparable yield and the schedule of projected payments will be set
forth in the Indenture. United States Holders may also obtain the projected
payment schedule by submitting a written request for that information to AmerUs
Group Co., 699 Walnut Street, Des Moines, Iowa 50309-3948, Attention: Treasurer.
For United States federal income tax purposes, a United States Holder
must use the comparable yield and the schedule of projected payments in
determining its interest accruals, and the adjustments thereto described below,
in respect of the OCEANs, unless that United States Holder timely discloses and
justifies the use of other estimates to the IRS. A United States Holder that
determines its own comparable yield or schedule of projected payments must also
establish that our comparable yield or schedule of projected payments is
unreasonable.
The comparable yield and the schedule of projected payments are not
determined for any purpose other than for the determination of a United States
Holder's interest accruals and adjustments thereof in respect of the OCEANs for
United States federal income tax purposes and do not constitute a projection or
representation regarding the actual amounts payable on the OCEANs.
Amounts treated as interest under the CPDI regulations are treated as
original issue discount for all purposes of the Code.
Adjustments to Interest Accruals on the OCEANs
If, during any taxable year, a United States Holder receives actual
payments with respect to the OCEANs for that taxable year that in the aggregate
exceed the total amount of projected payments for that taxable year, the United
States Holder will incur a "net positive adjustment" under the CPDI regulations
equal to the amount of that excess. The United States Holder will treat a "net
positive adjustment" as additional interest income for the taxable year. For
this purpose, the payments in a taxable year include the fair market value of
property received in that year.
If, during any taxable year, a United States Holder receives actual
payments with respect to the OCEANs for that taxable year that in the aggregate
were less than the amount of projected payments for that taxable year, the
United States Holder will incur a "net negative adjustment" under the CPDI
regulations equal to the amount of that deficit. This adjustment will
- reduce the United States Holder's interest income on the OCEANs
for that taxable year, and
- to the extent of any excess after the application of that
reduction, give rise to an ordinary loss to the extent of the
United States Holder's interest income on the OCEANs during prior
taxable years, reduced to the extent that interest was offset by
prior net negative adjustments.
To the extent that the net negative adjustment exceeds the United States
Holder's interest income on the OCEANs during prior taxable years (reduced to
the extent that interest was offset by prior net negative adjustments), the
excess is carried forward to the succeeding taxable year, in general, as a
negative adjustment on the OCEANs.
If a United States Holder purchases OCEANs at a discount or premium to
the adjusted issue price, the discount will be treated as a positive adjustment
and the premium will be treated as a negative adjustment. The United States
Holder must reasonably allocate the adjustment over the remaining term of the
OCEANs by reference to the accruals of original issue discount at the comparable
yield or to the projected payments. It may be reasonable to allocate the
adjustment over the remaining term of the OCEANs pro rata with the accruals of
original issue discount at the comparable yield. Holders should consult their
tax advisors regarding these allocations.
Sale, Exchange, Conversion or Redemption
Generally, the sale or exchange of an OCEAN, or the redemption of an
OCEAN for cash, will result in taxable gain or loss to a United States Holder.
As described above, our calculation of the comparable yield and the schedule of
projected payments for the OCEANs includes the receipt of stock upon conversion
as a contingent payment with respect to the OCEANs. Accordingly, we intend to
treat the receipt of our common stock by a United States Holder upon the
conversion of an OCEAN, or upon the repurchase of an OCEAN at the
40
option of a holder when we elect to pay in common stock, as a contingent payment
under the CPDI regulations. Under this treatment, a conversion or a repurchase
that includes payment in common stock will also result in taxable gain or loss
to a United States Holder.
The amount of gain or loss on a taxable sale, exchange, conversion or
redemption will be equal to the difference between
- the amount of cash plus the fair market value of any property
received by the United States Holder, including the fair market
value of any of our common stock received, and
- the United States Holder's adjusted tax basis in the OCEANs.
A United States Holder's adjusted tax basis in an OCEAN at any time will
generally be equal to the United States Holder's original purchase price for the
OCEAN, increased by any interest income previously accrued by the United States
Holder (determined without regard to any adjustments to interest accruals
described above, other than adjustments to reflect discount or premium to the
adjusted issue price, if any), and decreased by the amount of any payments set
forth on the projected payment schedule, as defined above, scheduled to have
been made through that date. Gain recognized upon a sale, exchange, conversion
or redemption of an OCEAN will generally be treated as ordinary interest income;
any loss will be ordinary loss to the extent of interest previously included in
income, and thereafter, capital loss (which will be long-term if the OCEAN is
held for more than one year). The deductibility of net capital losses by
individuals and corporations is subject to limitations.
A United States Holder's tax basis in our common stock received upon a
conversion of an OCEAN will equal the then current fair market value of that
common stock. The United States Holder's holding period for the common stock
received may commence on the day immediately following the date of conversion or
repurchase of an OCEAN. However, due to an absence of legal authority directly
addressing this issue, the matter is not entirely certain and holders may be
entitled to include their holding period for the OCEAN as part of their holding
period for the common stock received upon conversion (except where the common
stock is delivered by the designated financial institution in exchange for an
OCEAN surrendered for conversion) or repurchase with respect to some or all of
the shares. Holders should consult their own tax advisors regarding the proper
application of the holding period rules to their situation.
Constructive Dividends
If at any time we make a distribution of property to our shareholders
that would be taxable to the shareholders as a dividend for United States
federal income tax purposes and, in accordance with the anti-dilution provisions
of the OCEANs, the conversion price of the OCEANs is increased, that increase
may be deemed to be the payment of a taxable dividend to the holders of the
OCEANs.
For example, an increase in the conversion price in the event of a
distribution of evidences of our indebtedness or our assets or an extraordinary
cash dividend will generally result in deemed dividend treatment to holders of
the OCEANs, but generally an increase in the conversion price in the event of
share dividends or the distribution of rights to subscribe for common stock will
not.
There is no authority directly addressing whether increases in the
number of shares into which the OCEANs may be converted as their value accretes
through March 6, 2007 could constitute an adjustment in the conversion price for
this purpose. Based upon the advice of our counsel, we do not intend to treat
these increases as conversion price adjustments that give rise to deemed
dividends, although there can be no assurance that the IRS will agree with our
position.
TREATMENT OF NON-UNITED STATES HOLDERS
Payments of Contingent Interest made to Non-United States Holders will
not be exempt from United States federal income or withholding tax and,
therefore, Non-United States Holders will be subject to withholding on such
payments of Contingent Interest at a rate of 30%, subject to reduction by an
applicable treaty or upon the receipt of a Form W-8ECI from a Non-United States
Holder claiming that the payments are effectively connected with the conduct of
a United States trade or business. A Non-United States Holder that is subject to
the withholding tax should consult its tax advisors as to whether it can obtain
a refund for a portion of the withholding tax, either on the grounds that some
portion of the Contingent Interest represents a return of principal under the
CPDI regulations, or on some other grounds.
Based upon the advice of our counsel, we do not intend to treat
increases in the number of shares into which the OCEANs may be converted as
their value accretes through March 6, 2007 as adjustments in the conversion
price that give rise to deemed dividends to holders of OCEANs. Accordingly, we
will not withhold tax in respect of those amounts. Because of the absence of
authority addressing this issue, however, there can be no assurance that the IRS
will agree with our position. Were these increases treated as giving rise to
deemed dividends, Non-United States Holders may be subject to a gross basis tax
at a rate of 30% on such amounts (subject to reduction by an
41
applicable treaty) or to tax imposed on a net income basis if the dividends are
effectively connected with the holder's conduct of a United States trade or
business.
All other payments on the OCEANs made to a Non-United States Holder,
including a payment in common stock pursuant to a conversion or repurchase of an
OCEAN, and any gain realized on a sale, exchange or disposition of the OCEANs,
will be exempt from United States federal income and withholding tax, provided
that:
- that Non-United States Holder does not own, actually or
constructively, 10% or more of the total combined voting power of
all classes of our stock entitled to vote, is not a controlled
foreign corporation related, directly or indirectly, to us through
stock ownership, and is not a bank receiving interest described in
section 881(c)(3)(A) of the Code and with respect to the gain, is
not an individual who is present in the United States for 183 days
or more in the year in which the payment is taken into account or
in which the sale, exchange or disposition of the OCEANs occurred;
- the statement requirement set forth in section 871(h) or section
881(c) of the Code has been fulfilled with respect to the
beneficial owner, as discussed below;
- those payments and gain are not effectively connected (or, with
respect to the gain, deemed effectively connected by virtue of
section 897 of the Code, if we became a United States real
property holding corporation, or USRPHC, as described below) with
the conduct by that Non-United State Holder of a trade or business
in the United States, and where a tax treaty applies, are not
attributable to a United States permanent establishment; and
- our common stock continues to be actively traded within the
meaning of section 871(h)(4)(C)(v)(I) of the Code (which, for
these purposes and subject to certain exceptions, includes trading
on the NYSE).
A corporation is generally a USRPHC if more than 50% of the fair market value of
its real property and business assets consists of U.S. real property interests.
We believe that we are not a USRPHC for United States federal income tax
purposes although we may become a USRPHC in the future. However, if a Non-United
States Holder were deemed to have received a constructive dividend (see
"--United States Holders--Constructive Dividends" above), the Non-United States
Holder will generally be subject to United States withholding tax at a 30% rate,
subject to a reduction by an applicable treaty, on the taxable amount of such
dividend.
The statement requirement referred to in the preceding paragraph will
be fulfilled if the beneficial owner of an OCEAN certifies on IRS Form W-8BEN,
under penalties of perjury, that it is not a United States person and provides
its name, address and any other information the form may require.
If a Non-United States Holder of the OCEANs is engaged in a trade or
business in the United States, and if interest or gain on the OCEANs is
effectively connected with the conduct of that trade or business (and where a
tax treaty applies, is attributable to a United States permanent establishment),
the Non-United States Holder, although exempt from the withholding tax discussed
in the preceding paragraphs, will generally be subject to regular United States
federal income tax on interest and on any gain realized on the sale or exchange
of the OCEANs in the same manner as if it were a United States Holder. In lieu
of the certificate described in the preceding paragraph, a Non-United States
Holder described in the previous sentence will be required to provide to the
withholding agent a properly executed IRS Form W-8ECI (or successor form) in
order to claim an exemption from withholding tax. In addition, if that
Non-United States Holder is a foreign corporation, that Non-United States Holder
may be subject to a branch profits tax equal to 30% (or that lower rate provided
by an applicable treaty) of its effectively connected earnings and profits for
the taxable year, subject to certain adjustments.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
Payments of principal, premium, if any, and interest (including
original issue discount and a payment in common stock pursuant to a conversion
or repurchase of the OCEANs) on, and the proceeds of disposition or retirement
of, the OCEANs may be subject to information reporting and United States federal
backup withholding tax if the United States Holder of OCEANs fails to supply an
accurate taxpayer identification number or otherwise fails to comply with
applicable United States information reporting or certification requirements.
Any amounts so withheld will be allowed as a credit against that United States
Holder's United States federal income tax liability, provided that the required
information is provided to the IRS.
A Non-United States Holder may also be subject to United States federal
backup withholding tax on these payments unless the Non-United States Holder
establishes that it is not a United States person. The certification procedures
required to claim the exemption from withholding tax on certain payments on the
OCEANs described above will satisfy the certification requirements necessary to
avoid the
42
backup withholding tax as well. The amount of any backup withholding from a
payment to the Non-United States Holder will be allowed as a credit against the
Non-United States Holder's United States federal income tax liability and may
entitle the Non-United States Holder to a refund, provided that the required
information is furnished to the IRS.
43
SELLING SECURITYHOLDERS
We originally issued the OCEANs in a private placement in March 2002.
The OCEANs were resold by the initial purchaser of the OCEANs to qualified
institutional buyers under Rule 144A under the Securities Act. Selling
securityholders may offer and sell the OCEANs and the underlying shares of our
common stock pursuant to this prospectus.
When we refer to the "selling securityholders" in this prospectus, we
refer to those persons listed in the table below, as well as the pledgees,
donees, assignees, transferees, successors and others who subsequently hold any
of the selling securityholders' interests.
The table below sets forth the name of each selling securityholder, the
original principal amount of OCEANs that each selling securityholder may offer
pursuant to this prospectus and the number of shares of our common stock into
which such OCEANs are convertible. None of the selling securityholders has, or
within the past three years has had, any material relationship with us or with
any of our affiliates.
ORIGINAL PRINCIPAL
AMOUNT
OF OCEANs PERCENTAGE
BENEFICIALLY PERCENTAGE OF NUMBER OF SHARES OF OF COMMON
OWNED THAT MAY OCEANs COMMON STOCK THAT MAY STOCK
NAME BE SOLD OUTSTANDING BE SOLD(1) OUTSTANDING(2)
---- ------------------ ------------- --------------------- -----------------
AIG DKR SoundShore Holdings Ltd. $11,690,000 6.3 310,921 *
AIG DKR SoundShore Opportunity Holding Fund Ltd. $6,732,000 3.6 179,052 *
AIG DKR SoundShore Strategic Holding Fund Ltd. $6,078,000 3.3 161,658 *
Amaranth LLC $20,888,000 11.3 555,561 1.379%
Argent Classic Convertible Arbitrage Fund L.P. $1,800,000 1.0 47,875 *
Argent Classic Convertible Arbitrage Fund $3,200,000 1.7 85,111 *
(Bermuda) Ltd.
Argent LowLev Convertible Arbitrage Fund LLC $400,000 0.2 10,639 *
Argent LowLev Convertible Arbitrage Fund Ltd. $4,820,000 2.6 128,198 *
Bank of America Pension Plan $1,500,000 0.8 39,896 *
Bay County PERS $225,000 0.1 5,984 *
Bear, Stearns & Co. Inc. $5,000,000 2.7 132,986 *
B.G.I. Global Investors $288,000 0.2 7,660 *
Deeprock & Co $1,000,000 0.5 26,597 *
Delta Airlines Master Trust $1,145,000 0.6 30,454 *
Deutsche Bank Securities Inc. $13,081,000 7.1 347,917 *
Forest Fulcrum Fund L.L.P. $1,116,000 0.6 29,682 *
Forest Global Convertible Fund Series A-5 $4,428,000 2.4 117,772 *
Goldman, Sachs & Co. Profit Sharing Master Trust $224,000 0.1 5,958 *
Highbridge International LLC $10,000,000 5.4 265,972 *
JP Morgan Securities Inc. $14,000,000 7.6 372,360 *
LDG Limited $1,000,000 0.5 26,597 *
LLT Limited $297,000 0.2 7,899 *
Louisiana CCRF $315,000 0.2 8,378 *
Lyxor Master Fund c/o Forest Investment $1,287,000 0.7 34,231 *
Management L.L.C.
Lyxor Master Fund Ref: Argent/LowLev CB $1,000,000 0.5 26,597 *
MLQA Convertible Securities Arbitrage, LTD $10,000,000 5.4 265,972 *
ONEX Industrial Partners Limited $8,055,000 4.4 214,240 *
OZ Convertible Master Fund, Ltd. $946,000 0.5 25,161 *
OZ Mac 13 Ltd. $230,000 0.1 6,117 *
OZ Master Fund, Ltd. $10,852,000 5.9 288,632 *
Pebble Capital Inc. $3,435,000 1.9 91,361 *
Peoples Benefit Life Insurance Company $5,200,000 2.8 138,305 *
Prudential Insurance Co. of America $155,000 0.1 4,123 *
RBC Capital Services Inc. $171,000 0.1 4,548 *
Relay 11 Holdings $144,000 0.1 3,830 *
St. Albans Partners Ltd. $4,600,000 2.5 122,347 *
Silvercreek II Limited $1,230,000 0.7 32,715 *
Silvercreek Limited Partnership $2,780,000 1.5 73,940 *
Sphinx Convertible Arbitrage Fund $81,000 0.0 2,154 *
Sunrise Partners LLC $6,962,000 3.8 185,169 *
Sylvan (IMA) Ltd. $666,000 0.4 17,714 *
TQA Master Fund, LTD $4,000,000 2.2 106,389 *
TQA Master Plus Fund, LTD. $4,000,000 2.2 106,389 *
White River Securities L.L.C. $5,000,000 2.7 132,986 *
Yield Strategies Fund I, L.P. $2,600,000 1.4 69,153 *
Yield Strategies Fund II, L.P. $2,600,000 1.4 69,153 *
Zurich Institutional Benchmark c/o TQA $1,000,000 0.5 26,597 *
Zurich Institutional Benchmark Master Fund, LTD. $3,422,000 1.8 91,015 *
Zurich Institutional Benchmark Master Fund, $500,000 0.3 13,299 *
LTD. c/o Argent
Zurich Master Hedge Fund c/o Forest $522,000 0.3 13,884 *
Investment Management L.L.C.
------------------
* Less than 1%
44
(1) Assumes conversion of all of the holder's OCEANs at the conversion
price of $37.598 per share based on the accreted principal amount of
the OCEANs as of March 6, 2002. However, the accreted principal amount
of the OCEANs will increase as described under "Description of the
OCEANs -- General" and the conversion price is subject to adjustment as
described under "Description of OCEANs -- Conversion Rights." As a
result, the number of shares of common stock issuable upon conversion
of the OCEANs may increase or decrease in the future.
(2) Our calculation of this amount is based on 39,723,639 shares of our
common stock outstanding as of July 19, 2002 plus the number of shares
of common stock issuable upon conversion of all of a particular
holder's OCEANs. We did not assume the conversion of any other holder's
OCEANs.
We prepared the table above based on the information supplied to us by
the selling securityholders named in the table. Certain OCEANs holders
representing in aggregate less than 1% of our outstanding common stock are not
included in this Prospectus. The foregoing statement assumes that such other
holders of OCEANs, or any future transferees, pledgees, donees or successors of
or from any such other holders of OCEANs, do not beneficially own any shares of
our common stock other than the shares of our common stock issuable upon
conversion of the OCEANs at the conversion price based on the accreted principal
amount of the OCEANs as of March 6, 2002. Such OCEANs holders may be named as
selling securityholders and information about them will be set forth in
prospectus supplements, if we receive requests from them to include their OCEANS
under this registration statement. In addition, the selling securityholders
listed in the above table may have sold or transferred, in transactions exempt
from the registration requirements of the Securities Act, some or all of their
OCEANs since the date as of which the information presented in the above table
was proposed. Information about the selling securityholders may change over
time. Any changed information supplied to us will be set forth in prospectus
supplements.
Because the selling securityholders may offer all or some of their
OCEANs or the underlying common stock for sale from time to time, we cannot
estimate the amount of the OCEANs or the underlying common stock that will be
held by the selling securityholders upon the termination of any particular
offering. See "Plan of Distribution."
45
PLAN OF DISTRIBUTION
We are registering the OCEANs and the shares of our common stock
covered by this prospectus to permit selling securityholders to conduct public
secondary trading of those securities from time to time after the date of this
prospectus. We will not receive any of the proceeds from such sales of the
OCEANs and the underlying common stock offered by this prospectus. The selling
securityholders may sell all or a portion of the OCEANs and the underlying
common stock beneficially owned by them from time to time to purchasers:
- directly; or
- through underwriters, broker-dealers or agents who may receive
compensation in the form of discounts, concessions or
commissions from the selling securityholders or the purchasers
of the OCEANs and the underlying common stock.
The selling securityholders and any underwriters, broker-dealers or
agents who participate in the distribution of the OCEANs and the underlying
common stock may be deemed to be "underwriters" within the meaning of Section
2(a)(11) of the Securities Act. Any selling securityholder which is a
broker-dealer or an affiliate of a broker-dealer will be deemed to be an
"underwriter" within the meaning of Section 2(a)(11) of the Securities Act,
unless the selling securityholder purchased in the ordinary course of business,
and at the time of its purchase of the OCEANs to be resold, did not have any
agreements or understandings, directly or indirectly, with any person to
distribute the OCEANs. As a result, any profits on the sale of the OCEANs and
the underlying common stock by selling securityholders who are deemed to be
underwriters, and any discounts, commissions or concessions received by any
broker-dealers or agents who are deemed to be underwriters, will be deemed to be
underwriting discounts and commissions under the Securities Act. Selling
securityholders who are deemed to be "underwriters" within the meaning of
Section 2(a)(11) of the Securities Act will be subject to prospectus delivery
requirements of the Securities Act and to statutory liabilities including, but
not limited to, those relating to Sections 11, 12 and 17 of the Securities Act
and Rule 10b-5 under the Exchange Act.
If the OCEANs and the underlying common stock are sold through
underwriters or broker-dealers, the selling security holders will be responsible
for underwriting discounts or commissions or agent's commissions. The OCEANs and
the underlying common stock may be sold in one or more transactions at:
- fixed prices;
- prevailing market prices at the time of sale;
- varying prices determined at the time of sale; or
- negotiated prices.
These prices will be determined by the securityholders of the
securities or by agreement between these securityholders and underwriters or
dealers who may receive fees or commissions in connection with the sale.
These sales may be effected in transactions:
- on any national securities exchange or quotation service on which
the OCEANs and underlying common stock may be listed or quoted at
the time of the sale, including the New York Stock Exchange in the
case of the common stock;
- in the over-the-counter market;
- in negotiated transactions;
- in transactions otherwise than on such exchanges or services or in
the over-the-counter market; or
- through the writing of options.
These transactions may include block transactions or crosses. Crosses
are transactions in which the same broker acts as an agent on both sides of the
transaction.
In connection with the sales of the OCEANs and the underlying common
stock or otherwise, the selling securityholders may enter into hedging
transactions with broker-dealers. These broker-dealers may in turn engage in
short sales of the OCEANs and the underlying common stock in the course of
hedging their positions. Selling securityholders may sell the OCEANs and the
underlying common stock short, may deliver this prospectus in connection with
such short sales and may deliver OCEANs and the underlying common stock covered
by this prospectus to close out such short positions. This registration
statement and the accompanying prospectus are not available for delivery of
common stock in settlement of shorts entered into prior to the effective date of
this registration statement. Selling securityholders may also loan or pledge
OCEANs and the underlying common stock to broker-dealers that, in turn, may sell
the OCEANs and the underlying common stock.
To our knowledge, there are currently no plans, arrangements or
understandings between any selling securityholder and any underwriter,
broker-dealer or agent regarding the sale of the OCEANs and the underlying
common stock by the selling securityholders. Selling securityholders may decide
not to sell all or a portion of the OCEANs and the underlying common stock
offered by them pursuant to this prospectus or may decide not to sell OCEANs or
the underlying common stock under this prospectus. In addition, any selling
securityholder may transfer, devise or give the OCEANs and the underlying common
stock by other means not described in this prospectus. Any OCEANs or underlying
common stock covered by this prospectus that qualify for sale pursuant to Rule
144 or Rule 144A of the Securities Act may be sold under Rule 144 or Rule 144A
rather than pursuant to this prospectus.
46
Our common stock trades on the New York Stock Exchange under the symbol
"AMH." We do not intend to apply for listing of the OCEANs on any securities
exchange or for quotation through Nasdaq. Accordingly, no assurance can be given
as to the development of liquidity or any trading market for the OCEANs.
The selling securityholders and any other persons participating in the
distribution of the OCEANs or underlying common stock will be subject to the
provisions and rules under the Exchange Act. The Exchange Act rules include,
without limitation, Regulation M, which may limit timing of purchases and sales
of any of the OCEANs and the underlying common stock by the selling
securityholders and any such other person. In addition, Regulation M of the
Exchange Act may restrict the ability of any person engaged in the distribution
of the OCEANs and the underlying common stock to bid for, purchase, or attempt
to induce any person to bid for or purchase the OCEANs or the underlying common
stock for a period of up to five business days prior to the commencement of such
distribution. This may affect the marketability of the OCEANs and the underlying
common stock and the ability to engage in market-making activities with respect
to the OCEANs and the underlying common stock.
Under the registration rights agreement that has been incorporated by
reference as an exhibit to this registration statement, we and the selling
securityholders will each indemnify the other against certain liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection with these liabilities.
We have agreed to pay substantially all of the expenses incidental to
the registration, offering and sale of the OCEANs and the underlying common
stock to the public other than commissions, fees and discounts of underwriters,
brokers, dealers and agents.
LEGAL MATTERS
Certain legal matters in connection with the offering of the OCEANs
will be passed upon for AmerUs by Joseph K. Haggerty, Esq., Senior Vice
President and General Counsel of AmerUs, and by Shearman & Sterling, New York,
New York, counsel to AmerUs. Mr. Haggerty beneficially owns 31,362 shares of our
common stock and options to purchase 22,500 shares of our common stock.
EXPERTS
Our consolidated financial statements as of and for the year ended
December 31, 2001 included in our Annual Report on Form 10-K filed on March 15,
2002 have been incorporated by reference into this prospectus in reliance on the
reports of Ernst & Young LLP, independent auditors, given on the authority of
that firm as experts in auditing and accounting. Our consolidated financial
statements as of December 31, 2000 and for the two years then ended included in
the same Annual Report have been incorporated by reference into this prospectus
in reliance on the reports of KPMG LLP, independent auditors, given on the
authority of that firm as experts in auditing and accounting.
47
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC under the United States Securities Exchange Act
of 1934, or the Exchange Act. You may read and copy this information at the
following locations of the SEC:
Public Reference Room Midwest Regional Office
450 Fifth Street, N.W. 500 West Madison Street
Room 1024 Suite 1400
Washington, DC 20549 Chicago, Illinois 60661
You may also obtain copies of this information at prescribed rates by
mail from the Public Reference Room of the SEC, 450 Fifth Street, N.W., Room
1024, Washington, DC 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains a web site that contains reports, proxy
statements and other information about issuers, like us, who file electronically
with the SEC. The address of that site is www.sec.gov.
You can also inspect reports, proxy statements and other information
about our company at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
We incorporate by reference information into this prospectus, which
means that we disclose important information to you by referring you to another
document filed separately with the SEC. The information incorporated by
reference is deemed to be part of this prospectus. Any information contained in
this prospectus or any document incorporated or deemed to be incorporated by
reference in this prospectus will be deemed to be modified, superseded or
updated to the extent that information contained in this prospectus or any
subsequently filed document incorporated or deemed to be incorporated by
reference in this prospectus modifies, supersedes or updates such earlier
information. Any information so modified, superseded or updated will not be
deemed, except as so modified, superseded or updated, to constitute a part of
this prospectus. We incorporate by reference the documents listed below and all
future documents that we file with the SEC under Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act (other than current reports furnished under item 9 of
Form 8-K).
- Annual Report on Form 10-K for the fiscal year ended December 31,
2001;
- Quarterly Report on Form 10-Q for the fiscal quarters ended March
31, 2002 and June 30, 2002;
- Current Reports on Form 8-K or Form 8-K/A filed with the SEC on
February 6, 2002, February 21, 2002, March 1, 2002, March 19, 2002
and May 9, 2002; and
- Proxy Statement for the Annual Meeting of Shareholders to be held
on May 9, 2002.
You may request a copy of any filings referred to above, at no cost, by
contacting us at the following address or telephone number: James A.
Smallenberger, Senior Vice President and Secretary, AmerUs Group Co., 699 Walnut
Street, Des Moines, Iowa 50309-3948, telephone number (515) 362-3600.
48
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by the
Registrant in connection with the distribution of the securities being
registered. All of the amounts shown are estimates, except the Securities and
Exchange Commission registration fee.
Securities and Exchange Commission registration fee ......... $ 17,020
Printing and engraving fees.................................. $ 15,000
Accountant's fees and expenses .............................. $ 10,000
Legal fees and expenses...................................... $ 50,000
Miscellaneous expenses....................................... $ 10,000
--------
Total............................................. $102,020
--------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 490.832 of the Iowa Business Corporation Act, or the IBCA,
provides that a corporation's articles of incorporation may contain a provision
eliminating or limiting the personal liability of a director to the corporation
or its shareholders for monetary damages for breach of fiduciary duty as a
director, provided that the provision does not eliminate or limit the liability
of a director for a breach of the director's duty of loyalty to the corporation
or its shareholders, for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, for a transaction from
which the director derives an improper personal benefit, or under Section
490.833 of the IBCA. Further, Section 490.851 of the IBCA provides that a
corporation may indemnify its directors against liabilities and reasonable
expenses incurred by reason of such person serving in the capacity of director,
if such person has acted in good faith and in a manner reasonably believed by
the individual to be in or not opposed to the best interests of the corporation,
and in any criminal proceeding if such person had no reasonable cause to believe
the individual's conduct was unlawful.
The indemnity provisions under Section 490.851 do not apply (i) in the
case of actions brought by or in the right of the corporation in which the
director was adjudged liable to the corporation, or (ii) in connection with any
other proceedings charging improper personal benefit to the director, whether or
not involving action in the director's official capacity, in which the director
was adjudged liable on the basis that impersonal benefit was improperly received
by the director. In addition, Section 490.852 of the IBCA provides mandatory
indemnification of reasonable expenses incurred by a director who successfully
defends any action in which the director was a party because the director is or
was a director of the corporation. Finally, Section 490.856 of the IBCA provides
that, unless otherwise provided in a corporation's articles of incorporation:
(i) an officer of the corporation who is not a director is entitled to mandatory
indemnification under Section 490.852 of the IBCA and is entitled to apply for
court-ordered indemnification under Section 490.854 of the IBCA in each case to
the same extent as a director, (ii) the corporation may indemnify and advance
expenses under Section 490.852 to an officer, employee or agent of the
corporation who is not a director to the same extent as to a director, and (iii)
a corporation may also indemnify and advance expenses to an officer, employee or
agent who is not a director to the extent, consistent with law, that may be
provided by its articles of incorporation, bylaws, general or specific action of
its board of directors or contract.
The Registrant's Articles of Incorporation provide that no director of
the Registrant will be liable to the Registrant or its shareholders for monetary
damages for any breach of fiduciary duty as a director, except to the extent
required by the IBCA. This provision will not prevent shareholders from
obtaining injunctive or other equitable relief against directors nor will it
shield directors from liability under Federal or state securities laws. In
addition, the Articles of Incorporation provide that the Registrant will to the
maximum extent permitted by law, indemnify a person who incurs any loss by
reason of the fact that he or she is or was or has agreed to be a director or
officer of the Registrant or while a director or officer of the Registrant is or
was serving at the request of the Registrant as a director, officer, partner,
trustee, employee or agent of any corporation, partnership, joint venture, trust
or other enterprise, including service with respect to employee benefit plans,
subject to such person having met the standards of conduct required for such
indemnification under Iowa law.
The Registrant's Bylaws provide that the Registrant shall indemnify and
advance expenses to any person who was or is a party to or is threatened to be
made a party to any threatened, pending or completed claim, action, suit or
proceeding,
II-1
whether civil, criminal, administrative or investigative (including a grand jury
proceeding) and whether formal or informal, by reason of the fact that such
person (i) is or was a director or officer of the Registrant or any of its
subsidiaries, whether before or after the conversion of the Registrant from a
mutual insurance holding company to a stock company, or (ii) while a director or
officer of the Registrant or any of its subsidiaries, whether before or after
the conversion of the Registrant from a mutual insurance holding company, is or
was serving at the request of the Registrant as a director, officer, employee,
agent, partner or trustee (or in a similar capacity) of another corporation,
partnership, joint venture, trust, other enterprise, or employee benefit plan,
to the maximum extent it is permitted to do so by Part E of Division VIII of the
IBCA. An amendment to the IBCA will be adopted and applied only to the extent
that such amendment permits the Registrant to provide broader indemnification
than previously permitted prior to such amendment. The Bylaws provide for
indemnification of such person against reasonable expenses (including attorneys'
fees), judgments, fines, penalties, including an excise tax assessed with
respect to an employee benefit plan, and amounts paid in settlement actually and
reasonably incurred by such person in connection with such claim, action, suit
or proceeding or any appeal thereof. However, entitlement to such
indemnification is conditional upon the Registrant being afforded the
opportunity to participate directly on behalf of such person in such claim,
action, suit or proceeding or any related settlement discussions. Entitlement to
indemnification with respect to any settlement or other nonadjudicated
disposition is further conditional upon the prior approval by the Registrant of
the proposed settlement or nonadjudicated disposition. Such approval shall be
made (a) by the Board of Directors by majority vote of a quorum consisting of
directors not at the time parties to the claim, action, suit or proceeding, or
(b) by special legal counsel selected by the Board of Directors by majority vote
of a quorum consisting of directors not at the time parties to the claim,
action, suit, or proceeding, or, if the requisite quorum of the full board
cannot be obtained therefor, by a majority vote of the full board, in which
selection of counsel directors who are parties may participate. The Bylaws also
provide that the Registrant shall indemnify a person for costs and expenses
incurred in connection with successfully establishing in any action or
proceeding his or her right to indemnification by the Registrant. Except as
limited by the IBCA, the indemnification and advancement of expenses provisions
of the Bylaws are not exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any other
bylaw, agreement, vote of shareholders or disinterested directors, law or
otherwise.
As permitted by and in accordance with Section 490.857 of the IBCA, the
Registrant maintains a directors' and officers' liability insurance policy to
insure against losses arising from claims made against its directors and
officers, subject to the limitations and conditions as set forth in the
policies. In addition, the Registrant has entered into indemnification
agreements with its directors and certain of its executive officers providing
for the indemnification of such persons as permitted by its Articles of
Incorporation and Iowa law.
ITEM 16. EXHIBITS
Exhibits marked with (*) are incorporated by reference to documents
previously filed by the Registrant with the Securities and Exchange Commission,
as indicated. All other documents are filed with the Registration Statement
amendment.
*4.1 Amended and Restated Articles of Incorporation of the Registrant, filed
as Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q dated
November 14, 2000.
*4.2 Amended and Restated Bylaws of the Registrant, filed as Exhibit 3.2 to
the Registrant's Annual Report on Form 10-K, filed on March 15, 2002.
*4.3 Indenture dated as of March 6, 2002 between the Registrant and BNY
Midwest Trust Company, filed as Exhibit 4.1 to the Registrant's Current
Report on Form 8-K/A filed with the SEC on March 19, 2002.
*4.4 Registration Rights Agreement dated as of March 6, 2002 between the
Registrant and Credit Suisse First Boston Corporation, filed as Exhibit
4.2 to the Registrant's Current Report on Form 8-K/A filed with the SEC
on March 19, 2002.
*4.5 Amended and Restated Trust Agreement dated as of February 3, 1997 among
AmerUs Life Holdings, Inc., Wilmington Trust Company, as property
trustee, and the administrative trustees named therein (AmerUs Capital
I business trust), filed as Exhibit 3.6 to the registration statement
of AmerUs Life Holdings, Inc. and AmerUs Capital I on Form S-1,
Registration Number 333-13713.
II-2
*4.6 Indenture dated as of February 3, 1997 between AmerUs Life Holdings,
Inc. and Wilmington Trust Company relating to the Company's 8.85%
Junior Subordinated Debentures, Series A, filed as Exhibit 4.1 to the
registration statement of AmerUs Life Holdings, Inc. and AmerUs Capital
I on Form S-1, Registration Number, 333-13713.
*4.7 Guaranty Agreement dated as of February 3, 1997 between AmerUs Life
Holdings, Inc., as guarantor, and Wilmington Trust Company, as trustee,
relating to the 8.85% Capital Securities, Series A, issued by AmerUs
Capital I, filed as Exhibit 4.4 to the registration statement on Form
S-1, Registration Number, 333-13713.
*4.8 Amended and Restated Declaration of Trust of AmerUs Capital II, dated
as of July 27, 1998, among AmerUs Life Holdings, Inc., First Union
Trust Company and the administrative trustees named therein, relating
to AmerUs Life Holdings, Inc.'s 7.0% ACES Units, filed as Exhibit 4.5
named therein, relating to AmerUs Life Holdings, Inc.'s 7.0% ACES
Units, filed as Exhibit 4.5 on Form 10-Q, dated August 13, 1998.
*4.9 Certificate of Trust of AmerUs Capital III filed as Exhibit 4.7 to the
registration statement of AmerUs Life Holdings, Inc., AmerUs Capital II
and AmerUs Capital III, on Form S-3 (No. 333-50249).
*4.10 Common Trust Securities Guarantee Agreement, dated as of July 27, 1998,
by AmerUs Life Holdings, Inc., relating to AmerUs Life Holdings, Inc.'s
7.0% ACES Units, filed as Exhibit 4.7 on Form 10-Q, dated August 13,
1998.
*4.11 QUIPS Guarantee Agreement, dated as of July 27, 1998, by AmerUs Life
Holdings, Inc., relating to AmerUs Life Holdings, Inc.'s 7.0% ACES
Units, filed as Exhibit 4.8 on Form 10-Q, dated August 13, 1998.
*4.12 Master Unit Agreement, dated as of July 27, 1998, between AmerUs Life
Holdings, Inc. and First Union National Bank relating to AmerUs Life
Holdings, Inc.'s 7.0% ACES Units, filed as Exhibit 4.9 on Form 10-Q,
dated August 13, 1998.
*4.13 Call Option Agreement, dated as of July 27, 1998, between Goldman,
Sachs & Co. and First Union National Bank relating to AmerUs Life
Holdings, Inc.'s 7.0% ACES Units, filed as Exhibit 4.10 on Form 10-Q,
dated August 13, 1998.
*4.14 Pledge Agreement, dated as of July 27, 1998, among AmerUs Life
Holdings, Inc., Goldman, Sachs & Co. and First Union National Bank
relating to AmerUs Life Holdings, Inc.'s 7.0% ACES Units, filed as
Exhibit 4.11 on Form 10-Q, dated August 13, 1998.
*4.15 Senior Indenture, dated as of June 16, 1998, by and between AmerUs Life
Holdings, Inc. and First Union National Bank, as Indenture Trustee,
relating to the AmerUs Life Holdings, Inc.'s 6.95% Senior Notes, filed
as Exhibit 4.14 on Form 10-Q, dated August 13, 1998.
*4.16 Subordinated Indenture, dated as of July 27, 1998, by and between
AmerUs Life Holdings, Inc. and First Union National Bank, as Indenture
Trustee, relating to AmerUs Life Holdings, Inc.'s 6.86% Junior
Subordinated Deferrable Interest Debentures, filed as Exhibit 4.15 on
Form 10-Q, dated August 13, 1998.
*4.17 First Supplement to Indenture dated February 3, 1997 among American
Mutual Holding Company, AmerUs Life Holdings, Inc. and Wilmington Trust
Company as Trustee, relating to the Company's 8.85% Junior Subordinated
Debentures, Series A, dated September 20, 2000, filed as Exhibit 4.14
on Form 10-Q dated November 14, 2000.
*4.18 Assignment and Assumption Agreement to Amended and Restated Trust
Agreement, dated February 3, 1997 between American Mutual Holding
Company and AmerUs Life Holdings, Inc., dated September 20, 2000, filed
as Exhibit 4.15 on Form 10-Q dated November 14, 2000.
II-3
*4.19 Assignment and Assumption to Guaranty Agreement, dated February 3, 1997
between American Mutual Holding Company and AmerUs Life Holdings, Inc.,
dated September 20, 2000, filed as Exhibit 4.16 on Form 10-Q, dated
November 14, 2000.
*4.20 First Supplement to Subordinated Indenture, dated July 27, 1998,
relating to AmerUs Life Holdings, Inc.'s 6.86% Junior Subordinated
Deferrable Interest Debentures, among American Mutual Holding Company,
AmerUs Life Holdings, Inc. and First Union National Bank, as Indenture
Trustee, dated September 20, 2000, filed as Exhibit 4.17 on Form 10-Q,
dated November 14, 2000.
*4.21 First Supplement to Master Unit Agreement dated July 27, 1998, relating
to AmerUs Life Holdings, Inc.'s 7.0% ACES units, between American
Mutual Holding Company and First Union National Bank, as Unit Agent,
dated September 20, 2000, filed as Exhibit 4.18 on Form 10-Q, dated
November 14, 2000.
*4.22 Assignment and Assumption Agreement to the QUIPS Guarantee Agreement
dated July 27, 1998, relating to AmerUs Life Holdings, Inc.'s 7.0% ACES
units, between American Mutual Holding Company and AmerUs Life
Holdings, Inc., dated September 20, 2000, filed as Exhibit 4.19 on Form
10-Q, dated November 14, 2000.
*4.23 Assignment and Assumption Agreement to the Common Trust Securities
Guarantee Agreement dated July 27, 1998, relating to AmerUs Life
Holdings, Inc.'s 7.0% ACES units, between American Mutual Holding
Company and AmerUs Life Holdings, Inc., dated September 20, 2000, filed
as Exhibit 4.20 on Form 10-Q, dated November 14, 2000.
*4.24 First Supplement to Purchase Contracts between American Mutual Holding
Company and Holders, as specified, dated September 20, 2000, filed as
Exhibit 4.21 on Form 10-Q, dated November 14, 2000.
*4.25 First Supplement to the Pledge Agreement dated July 27, 1998, relating
to AmerUs Life Holdings, Inc.'s 7.0% ACES units, among American Mutual
Holding Company, Goldman Sachs & Co., as Call Option Holder, the Chase
Manhattan Bank, as Collateral Agent and First Union National Bank, as
Unit Agent, dated September 20, 2000, filed as Exhibit 4.22 on Form
10-Q, dated November 14, 2000.
*4.26 First Supplement to Senior Indenture dated June 16, 1998, relating to
AmerUs Life Holdings, Inc.'s 6.95% Senior Notes, among American Mutual
Holding Company, AmerUs Life Holdings, Inc. and First Union National
Bank, as Trustee, dated September 20, 2000, filed as Exhibit 4.23 on
Form 10-Q, dated November 14, 2000.
*5.1 Opinion of Joseph K. Haggerty, Esq., Senior Vice President and General
Counsel of the Registrant.
*5.2 Opinion of Shearman & Sterling filed as Exhibit 5.2 on Form S-3, dated
May 21, 2002.
8.1 Opinion of Shearman & Sterling as to Certain United States Federal
Income Tax Matters.
*12 Statement Regarding Computation of Ratios of Earnings to Combined Fixed
Charges and Preference Security Dividends filed as Exhibit 12 on
Form S-3, dated May 21, 2002.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of KPMG LLP.
*23.3 Consent of Joseph K. Haggerty, Esq., Senior Vice President and General
Counsel of the Registrant (included in Exhibit 5.1).
23.4 Consent of Shearman & Sterling (included in Exhibit 5.2 and Exhibit
8.1).
*24 Power of Attorney included on the signature page to the Form S-3,
dated May 21, 2002.
*25 Statement of Eligibility of Trustee on Form T-1 filed as Exhibit 25 on
Form S-3, dated May 21, 2002.
II-4
ITEM 17. UNDERTAKINGS
a. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by
the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in
the registration statement.
(2) That, for the purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
b. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof.
c. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit
II-5
to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be governed by
the financial adjudication of such issue.
d. The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall
be deemed to be a part of this registration statement as of the time it
was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing this amended registration statement on Form S-3
and has duly caused this amended registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Des Moines,
State of Iowa on the 27th day of August 2002.
AMERUS GROUP CO.
By: /s/ Melinda S. Urion
-----------------------
Name: Melinda S. Urion
Title: Executive vice president
and chief financial
officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
amended registration statement has been signed by the following persons or,
where indicated by a (+), by their attorney-in-fact on the 27th day of August
2002 in the capacities indicated.
SIGNATURE TITLE
--------- -----
+
---------------------------------
Roger K. Brooks Chairman, president, chief executive officer and director
/s/ Melinda S. Urion
---------------------------------
Melinda S. Urion Executive vice president and chief financial officer
+
---------------------------------
Brenda J. Cushing Senior vice president and controller
+
---------------------------------
John R. Albers Director
+
---------------------------------
Malcolm Candlish Director
+
---------------------------------
Alecia De Coudreaux Director
II-7
+
---------------------------------
Thomas F. Gaffney Director
+
---------------------------------
John W. Norris, Jr. Director
+
---------------------------------
Andrew J. Paine, Jr. Director
+
---------------------------------
Jack C. Pester Director
+
---------------------------------
John A. Wing Director
+
---------------------------------
F.A. Wittern, Jr. Director
+By: /s/ Melinda S. Urion
---------------------------
Melinda S. Urion
Attorney-in-Fact
II-8
EXHIBIT INDEX
Exhibits marked with (*) are incorporated by reference to documents
previously filed by the Registrant with the Securities and Exchange Commission,
as indicated. All other documents are filed with the Registration Statement
amendment.
EXHIBIT NO. DESCRIPTION
---------- -----------
*4.1 Amended and Restated Articles of Incorporation of the
Registrant, filed as Exhibit 3.1 to the Registrant's
Quarterly Report on Form 10-Q dated November 14, 2000.
*4.2 Amended and Restated Bylaws of the Registrant, filed as
Exhibit 3.2 to the Registrant's Annual Report on Form 10-K,
filed on March 15, 2002.
*4.3 Indenture dated as of March 6, 2002 between the Registrant
and BNY Midwest Trust Company, filed as Exhibit 4.1 to the
Registrant's Current Report on Form 8-K/A filed with the SEC
on March 19, 2002.
*4.4 Registration Rights Agreement dated as of March 6, 2002
between the Registrant and Credit Suisse First Boston
Corporation, filed as Exhibit 4.2 to the Registrant's Current
Report on Form 8-K/A filed with the SEC on March 19, 2002.
*4.5 Amended and Restated Trust Agreement dated as of February 3,
1997 among AmerUs Life Holdings, Inc., Wilmington Trust
Company, as property trustee, and the administrative trustees
named therein (AmerUs Capital I business trust), filed as
Exhibit 3.6 to the registration statement of AmerUs Life
Holdings, Inc. and AmerUs Capital I on Form S-1, Registration
Number 333-13713.
*4.6 Indenture dated as of February 3, 1997 between AmerUs Life
Holdings, Inc. and Wilmington Trust Company relating to the
Company's 8.85% Junior Subordinated Debentures, Series A,
filed as Exhibit 4.1 to the registration statement of AmerUs
Life Holdings, Inc. and AmerUs Capital I on Form S-1,
Registration Number, 333-13713.
*4.7 Guaranty Agreement dated as of February 3, 1997 between
AmerUs Life Holdings, Inc., as guarantor, and Wilmington
Trust Company, as trustee, relating to the 8.85% Capital
Securities, Series A, issued by AmerUs Capital I, filed as
Exhibit 4.4 to the registration statement on Form S-1,
Registration Number, 333-13713.
*4.8 Amended and Restated Declaration of Trust of AmerUs Capital
II, dated as of July 27, 1998, among AmerUs Life Holdings,
Inc., First Union Trust Company and the administrative
trustees named therein, relating to AmerUs Life Holdings,
Inc.'s 7.0% ACES Units, filed as Exhibit 4.5 named therein,
relating to AmerUs Life Holdings, Inc.'s 7.0% ACES Units,
filed as Exhibit 4.5 on Form 10-Q, dated August 13, 1998.
*4.9 Certificate of Trust of AmerUs Capital III filed as Exhibit
4.7 to the registration statement of AmerUs Life Holdings,
Inc., AmerUs Capital II and AmerUs Capital III, on Form S-3
(No. 333-50249).
*4.10 Common Trust Securities Guarantee Agreement, dated as of July
27, 1998, by AmerUs Life Holdings, Inc., relating to AmerUs
Life Holdings, Inc.'s 7.0% ACES Units, filed as Exhibit 4.7
on Form 10-Q, dated August 13, 1998.
*4.11 QUIPS Guarantee Agreement, dated as of July 27, 1998, by
AmerUs Life Holdings, Inc., relating to AmerUs Life Holdings,
Inc.'s 7.0% ACES Units, filed as Exhibit 4.8 on Form 10-Q,
dated August 13, 1998.
*4.12 Master Unit Agreement, dated as of July 27, 1998, between
AmerUs Life Holdings, Inc. and First Union National Bank
relating to AmerUs Life Holdings, Inc.'s 7.0% ACES Units,
filed as Exhibit 4.9 on Form 10-Q, dated August 13, 1998.
*4.13 Call Option Agreement, dated as of July 27, 1998, between
Goldman, Sachs & Co. and First Union National Bank relating
to AmerUs Life Holdings, Inc.'s 7.0% ACES Units, filed as
Exhibit 4.10 on Form 10-Q, dated August 13, 1998.
*4.14 Pledge Agreement, dated as of July 27, 1998, among AmerUs
Life Holdings, Inc., Goldman, Sachs & Co. and First Union
National Bank relating to AmerUs Life Holdings, Inc.'s 7.0%
ACES Units, filed as Exhibit 4.11 on Form 10-Q, dated August
13, 1998.
*4.15 Senior Indenture, dated as of June 16, 1998, by and between
AmerUs Life Holdings, Inc. and First Union National Bank, as
Indenture Trustee, relating to the AmerUs Life Holdings,
Inc.'s 6.95% Senior Notes, filed as Exhibit 4.14 on Form
10-Q, dated August 13, 1998.
*4.16 Subordinated Indenture, dated as of July 27, 1998, by and
between AmerUs Life Holdings, Inc. and First Union National
Bank, as Indenture Trustee, relating to AmerUs Life Holdings,
Inc.'s 6.86% Junior Subordinated Deferrable Interest
Debentures, filed as Exhibit 4.15 on Form 10-Q, dated August
13, 1998.
*4.17 First Supplement to Indenture dated February 3, 1997 among
American Mutual Holding Company, AmerUs Life Holdings, Inc.
and Wilmington Trust Company as Trustee, relating to the
Company's 8.85% Junior Subordinated Debentures, Series A,
dated September 20, 2000, filed as Exhibit 4.14 on Form 10-Q
dated November 14, 2000.
*4.18 Assignment and Assumption Agreement to Amended and Restated
Trust Agreement, dated February 3, 1997 between American
Mutual Holding Company and AmerUs Life Holdings, Inc., dated
September 20, 2000, filed as Exhibit 4.15 on Form 10-Q dated
November 14, 2000.
*4.19 Assignment and Assumption to Guaranty Agreement, dated
February 3, 1997 between American Mutual Holding Company and
AmerUs Life Holdings, Inc., dated September 20, 2000, filed
as Exhibit 4.16 on Form 10-Q, dated November 14, 2000.
*4.20 First Supplement to Subordinated Indenture, dated July 27,
1998, relating to AmerUs Life Holdings, Inc.'s 6.86% Junior
Subordinated Deferrable Interest Debentures, among American
Mutual Holding Company, AmerUs Life Holdings, Inc. and First
Union National Bank, as Indenture Trustee, dated September
20, 2000, filed as Exhibit 4.17 on Form 10-Q, dated November
14, 2000.
*4.21 First Supplement to Master Unit Agreement dated July 27,
1998, relating to AmerUs Life Holdings, Inc.'s 7.0% ACES
units, between American Mutual Holding Company and First
Union National Bank, as Unit Agent, dated September 20, 2000,
filed as Exhibit 4.18 on Form 10-Q, dated November 14, 2000.
*4.22 Assignment and Assumption Agreement to the QUIPS Guarantee
Agreement dated July 27, 1998, relating to AmerUs Life
Holdings, Inc.'s 7.0% ACES units, between American Mutual
Holding Company and AmerUs Life Holdings, Inc., dated
September 20, 2000, filed as Exhibit 4.19 on Form 10-Q, dated
November 14, 2000.
*4.23 Assignment and Assumption Agreement to the Common Trust
Securities Guarantee Agreement dated July 27, 1998, relating
to AmerUs Life Holdings, Inc.'s 7.0% ACES units, between
American Mutual Holding Company and AmerUs Life Holdings,
Inc., dated September 20, 2000, filed as Exhibit 4.20 on Form
10-Q, dated November 14, 2000.
*4.24 First Supplement to Purchase Contracts between American
Mutual Holding Company and Holders, as specified, dated
September 20, 2000, filed as Exhibit 4.21 on Form 10-Q, dated
November 14, 2000.
*4.25 First Supplement to the Pledge Agreement dated July 27, 1998,
relating to AmerUs Life Holdings, Inc.'s 7.0% ACES units,
among American Mutual Holding Company, Goldman Sachs & Co.,
as Call Option Holder, the Chase Manhattan Bank, as
Collateral Agent and First Union National Bank, as Unit
Agent, dated September 20, 2000, filed as Exhibit 4.22 on
Form 10-Q, dated November 14, 2000.
*4.26 First Supplement to Senior Indenture dated June 16, 1998,
relating to AmerUs Life Holdings, Inc.'s 6.95% Senior Notes,
among American Mutual Holding Company, AmerUs Life Holdings,
Inc. and First Union National Bank, as Trustee, dated
September 20, 2000, filed as Exhibit 4.23 on Form 10-Q, dated
November 14, 2000.
*5.1 Opinion of Joseph K. Haggerty, Esq., Senior Vice President
and General Counsel of the Registrant.
*5.2 Opinion of Shearman & Sterling filed as Exhibit 5.2 on Form
S-3, dated May 21, 2002.
8.1 Opinion of Shearman & Sterling as to Certain United States
Federal Income Tax Matters.
*12 Statement Regarding Computation of Ratios of Earnings to
Combined Fixed Charges and Preference Security Dividends
filed as Exhibit 12 on Form S-3, dated May 21, 2002.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of KPMG LLP.
*23.3 Consent of Joseph K. Haggerty, Esq., Senior Vice President
and General Counsel of the Registrant (included in Exhibit
5.1).
23.4 Consent of Shearman & Sterling (included in Exhibit 5.2 and
Exhibit 8.1).
*24 Power of Attorney included on the signature page to the Form
S-3, dated May 21, 2002.
*25 Statement of Eligibility of Trustee on Form T-1 filed as
Exhibit 25 on Form S-3, dated May 21, 2002.