Exhibit 10.2
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (this "Agreement") is made and entered into as
of the 15th day of November, 2002, by and between INDEPENDENCE HOLDING COMPANY,
a Delaware corporation ("IHC"), and AMERICAN INDEPENDENCE CORP., a Delaware
corporation ("AMIC").
WITNESSETH:
WHEREAS, AMIC and affiliates of IHC entered into a series of agreements
as a result of which, among other things, (i) an indirectly wholly-owned
subsidiary of IHC has become the largest shareholder of AMIC and (ii) AMIC has
purchased certain other indirectly wholly-owned subsidiaries of IHC (the
operation of the business conducted by such subsidiaries as of the date hereof
is referred to herein as the "Business");
and
WHEREAS, AMIC desires IHC to render to it management and administrative
services as more particularly described in the "Statement of Services" which is
attached as Exhibit A hereto and made a part hereof (the "Services").
NOW THEREFORE, in consideration of the premises and mutual obligations
contained herein, the parties hereto agree as follows:
ARTICLE 1
SERVICES ENGAGEMENT
1.1 AMIC hereby engages IHC and IHC hereby agrees to perform the Services
in accordance with the terms and subject to the conditions contained in
this Agreement.
1.2 The Services shall be performed at and from such locations as IHC shall
deem necessary or appropriate for the proper performance of the
Services.
ARTICLE 2
AMIC OBLIGATIONS
2.1 AMIC shall cooperate with IHC in IHC's performance of the Services
hereunder, including, without limitation, providing IHC, in a timely
manner, with access to data, information and personnel of AMIC and all
other assistance and cooperation as is reasonably requested by IHC.
AMIC shall be responsible for the accuracy and completeness of all data
and materials provided to IHC hereunder (other than any such data and
materials that are provided to AMIC by IHC or any of its subsidiaries).
2.2 AMIC acknowledges and agrees that IHC's performance of the Services
hereunder is dependent upon the timely and effective satisfaction of
AMIC's responsibilities hereunder and timely decisions and approvals of
AMIC in connection with the Services.
ARTICLE 3
COMPENSATION
3.1 For the performance of the Services hereunder, AMIC shall compensate
IHC in accordance with "Statement of Compensation" attached hereto as
Exhibit B and made a part hereof.
3.2 AMIC shall reimburse IHC for all reasonable out-of-pocket expenses
incurred by IHC in performing the Services, including without
limitation all reasonable travel, meal, lodging, mileage, and
telecommunications expenses; according to the standards and practices
applied by IHC in the provision of its own business.
3.3 IHC will issue invoices to AMIC for Services and reimbursable expenses
on a quarterly basis. Such invoices shall include information on the
services provided each quarter, together with the charges and expenses
associated with such services. All amounts due IHC hereunder shall be
payable in U.S. dollars. AMIC shall pay all invoices rendered by IHC
within thirty (30) days of the date of invoice in cash by wire transfer
or check to an account specified by IHC in the invoice. Invoices for
which payment is not received within thirty (30) days of the invoice
date shall accrue a late charge of the lesser of (i) 1.5% per month or
(ii) the highest rate allowable by law, in each case compounded monthly
to the extent allowable by law. All invoices shall be subject to
approval by the Board of Directors of AMIC.
3.4 All fees and other amounts payable by AMIC under this Agreement are
exclusive of any taxes, duties, fees or other levies or charges which
may be imposed on or in respect of the rights granted by this Agreement
or the Services provided by IHC. AMIC shall pay any and all taxes,
however designated or levied, based upon the rights granted by this
Agreement and/or the performance of the Services as contemplated under
this Agreement, including without limitation foreign, federal, state
and local sales, privilege, use, value added and excise taxes;
provided, however, that AMIC shall not be responsible or liable for any
taxes measured by or based upon the net income of IHC.
ARTICLE 4
TERM AND TERMINATION
4.1 The effective date of this Agreement shall be November 14, 2002;
provided that, this Agreement shall have been approved by the Board of
Directors of AMIC and that the acquisition by AMIC of certain
indirectly wholly-owned subsidiaries of IHC shall have been
consummated. The initial term of this Agreement shall be through
December 31, 2003; provided, however, that the term of this Agreement
shall automatically be extended on a month-to-month basis unless (a)
AMIC notifies IHC in writing to the contrary upon at least thirty (30)
days notice, (b) IHC notifies AMIC in writing to the contrary upon at
least 180 days notice or (c) if at any time the shares of AMIC common
stock owned by IHC and its subsidiaries shall be either (x) less than
the number of shares owned by any other person or "group" (as defined
in Regulation 13D promulgated under the Securities and Exchange Act of
1934, as amended) or (y) less than 19.9% of the total number of such
shares then outstanding (except as a result of a sale of shares by
IHC), IHC notifies
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AMIC in writing upon at least 90 days notice and within sixty days of
such change in ownership levels.
4.2 In the event AMIC fails to make any payment in a timely manner as
required hereunder or otherwise materially breaches any of its
obligations under this Agreement, or in the event IHC materially
breaches any of its obligations under this Agreement, then, in either
event, the non-breaching party may terminate this Agreement upon
written notice to the breaching party if the breaching party fails to
cure its breach within thirty (30) days (or, in the case of a payment
default, fifteen (15) days) after written notice of such breach is
provided by the non-breaching party.
4.3 Upon the effective date of any termination or expiration of this
Agreement:
(a) AMIC shall pay all amounts due up to the termination date of
this Agreement;
(b) IHC shall immediately have no further responsibility to
provide Services to AMIC; and
(c) Each party shall promptly return all Confidential Information
(as defined below) of the other party in its possession,
whether written, electronically stored or otherwise.
4.4 Upon the notification of termination or expiration of this Agreement by
either party, IHC shall cooperate fully with AMIC (or its designee) in
the transition of records, files and other information so as to enable
AMIC to reassume the management of the matters theretofore handled by
IHC pursuant to this Agreement. IHC shall, upon the reasonable request
of AMIC, license any software or other intellectual property used in
providing the Services, to AMIC at no charge to AMIC and for a limited
period (not to exceed six months from the termination) necessary to
effectuate a smooth transition in the provision of the Services.
4.5 The expiration or termination of this Agreement shall not affect the
parties' accrued rights or obligations under this Agreement or a
party's rights or remedies in respect of the other party's breach of
this Agreement.
ARTICLE 5
PROPRIETARY RIGHTS
5.1 IHC has created, acquired or otherwise has rights in, and may, in
connection with the performance of Services hereunder, employ, provide,
modify, create, acquire or otherwise obtain rights in, various
concepts, ideas, methods, methodologies, procedures, processes,
know-how, techniques, models, templates, software, hardware, user
interfaces, screen designs, tools, utilities, routines and materials
(including, without limitation, billing and reimbursement systems)
(collectively, the "IHC Technology").
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5.2 To the extent that IHC utilizes any of its property, including, without
limitation, the IHC Technology or any hardware, software or equipment
of IHC or its affiliates in connection with the performance of Services
hereunder, such property shall remain the property of IHC or its
affiliates, and AMIC shall acquire no right or interest in or to such
property. The parties acknowledge and agree that IHC and its affiliates
own all right, title, and interest, including, without limitation, all
rights under all copyright, patent and other intellectual property
laws, in and to the IHC Technology. Notwithstanding the foregoing, AMIC
owns all right, title and interest, including, without limitation, all
rights under all copyright, patent and other intellectual property
laws, in and to all database files and written reports generated by IHC
exclusively for AMIC in connection with IHC's performance of Services
hereunder (the "AMIC Files and Reports").
ARTICLE 6
CONFIDENTIALITY
6.1 To the extent that, in connection with this Agreement, either party
comes into possession of any proprietary or confidential information of
the other party ("Confidential Information"), each party agrees to use
the Confidential Information of the other party solely for the purposes
of this Agreement, and will not disclose such Confidential Information
to any third party without the other party's written consent. Each
party shall maintain the Confidential Information of the other party in
confidence using at least the same degree of care as it employs in
maintaining in confidence its own proprietary and confidential
information, but in no event less than a reasonable degree of care.
Confidential Information includes but is not limited to (i) with
respect to IHC, all IHC Technology, (ii) with respect to AMIC, the
proprietary or confidential information IHC obtains from AMIC and (iii)
with respect to each party, the terms of this Agreement.
6.2 Notwithstanding anything to the contrary in Section 6.1 hereof,
Confidential Information shall not include information which (i) is or
becomes publicly available other than as a result of disclosure by the
receiving party in breach hereof, (ii) was disclosed to the receiving
party on a nonconfidential basis from a source other than the
disclosing party, which the receiving party reasonably believed was not
prohibited from disclosing such information as a result of an
obligation in favor of the disclosing party, (iii) is developed by the
receiving party independently of, or was known by the receiving party
prior to, any disclosure of such information made by the disclosing
party, (iv) is required to be disclosed by order of a court of
competent jurisdiction, administrative agency or governmental body, or
by any law, rule or regulation, or by subpoena, summons or any other
administrative or legal process or proceeding, including without
limitation in connection with litigation pertaining hereto or (v) is
disclosed with the written consent of the disclosing party.
ARTICLE 7
WARRANTIES; DISCLAIMER
7.1 THIS IS A SERVICES ENGAGEMENT. IHC WARRANTS THAT IT SHALL PERFORM
SERVICES HEREUNDER IN GOOD FAITH AND IN A PROFESSIONAL MANNER. IHC
DISCLAIMS ALL OTHER REPRESENTATIONS AND
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WARRANTIES, EITHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT
LIMITATION, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
7.2 Nothing in this Section shall be construed to limit the fiduciary or
other duties or any liability thereunder to AMIC and its shareholders
of IHC (or its representatives) as a major shareholder of AMIC or as
the nominator of members of the Board of Directors of AMIC.
ARTICLE 8
LIMITATION ON DAMAGES AND ACTIONS; INDEMNIFICATION
8.1 AMIC SHALL INDEMNIFY AND HOLD HARMLESS IHC, ITS AFFILIATES, AGENTS AND
SUBCONTRACTORS, AND EACH OF THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS AND REPRESENTATIVES, FROM AND AGAINST ANY AND ALL
ACTIONS, DAMAGES, CLAIMS, LIABILITIES, COSTS, EXPENSES AND/OR LOSSES IN
ANY WAY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE SERVICES
PERFORMED HEREUNDER, EXCEPT TO THE EXTENT FINALLY JUDICIALLY DETERMINED
TO HAVE RESULTED PRIMARILY FROM THE NEGLIGENCE, GROSS NEGLIGENCE, BAD
FAITH OR INTENTIONAL MISCONDUCT OF SUCH INDEMNIFIED PARTY UNDER THIS
AGREEMENT.
8.2 IHC SHALL INDEMNIFY AND HOLD HARMLESS AMIC, ITS AFFILIATES, AGENTS AND
SUBCONTRACTORS, AND EACH OF THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS AND REPRESENTATIVES, FROM AND AGAINST ANY AND ALL
ACTIONS, DAMAGES, CLAIMS, LIABILITIES, COSTS, EXPENSES AND/OR LOSSES IN
ANY WAY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE SERVICES
PERFORMED HEREUNDER, EXCEPT TO THE EXTENT FINALLY JUDICIALLY DETERMINED
TO HAVE RESULTED PRIMARILY FROM THE NEGLIGENCE, GROSS NEGLIGENCE, BAD
FAITH OR INTENTIONAL MISCONDUCT OF SUCH INDEMNIFIED PARTY UNDER THIS
AGREEMENT.
8.3 Nothing in this Section shall be construed to limit the fiduciary or
other duties or any liability thereunder to AMIC and its shareholders
of IHC (or its representatives) as a major shareholder of AMIC or as
the nominator of members of the Board of Directors of AMIC.
8.4 THE PROVISIONS OF THIS ARTICLE 8 SHALL APPLY NOTWITHSTANDING ANY
PROVISION OF THIS AGREEMENT TO THE CONTRARY AND TO THE FULLEST EXTENT
OF THE LAW AND REGARDLESS OF THE FORM OF ACTION, DAMAGE, CLAIM,
LIABILITY, COST, EXPENSE OR LOSS, WHETHER IN CONTRACT, STATUTE, TORT
(INCLUDING, WITHOUT LIMITATION, NEGLIGENCE), OR OTHERWISE.
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ARTICLE 9
DELEGATION
9.1 IHC shall not subcontract any of the Services hereunder without AMIC's
express written prior approval; provided, however, that such approval
shall not be unreasonably withheld; and provided further that IHC shall
have the right, exercisable from time to time in its own discretion and
upon notice to AMIC, to subcontract or delegate its obligations and
responsibilities hereunder to related parties and affiliates of IHC.
Notwithstanding the foregoing, IHC shall not be relieved of its
obligations hereunder in the event of such a subcontract or delegation.
ARTICLE 10
WAIVER OF JURY TRIAL
10.1 IHC AND AMIC HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED
BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER IN CONTRACT, STATUTE, TORT, INCLUDING WITHOUT
LIMITATION, NEGLIGENCE, OR OTHERWISE) RELATING TO THIS AGREEMENT OR THE
SERVICES PERFORMED HEREUNDER.
ARTICLE 11
NOTICES
11.1 All notices, consents, approvals, requests and other communications
required or permitted under this Agreement shall be given in writing by
hand delivery, internationally recognized courier by air service or
facsimile transmission, and addressed to the addressee at its address
set forth below:
If to AMIC:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to IHC:
00 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
All notices, consents, approvals, requests and other communications
shall be deemed given on the date of actual receipt. Either party to this
Agreement may change its address or
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designate an agent for the receipt of notices at any time by giving notice
thereof to the other as provided in this Article 11. Any notice given by a party
hereunder must be signed by an authorized representative of such party.
ARTICLE 12
MISCELLANEOUS
12.1 Force Majeure. Except for the payment of money, neither party shall be
liable for any delays or other non-performance resulting in whole or in
part from circumstances or causes beyond its reasonable control,
including, without limitation, acts or omissions of the other party,
fuel shortages, fire or other casualty, accidents, acts of God, strike,
lock-out or labor dispute (legal or illegal), civil disorder, inability
to procure materials, failure of telephone companies to provide
necessary telephone service, riots, insurrections, war, terrorism or
other violence, or any law, order or requirement of any governmental
agency or authority.
12.2 Relationship of Parties. The parties intend that an independent
contractor relationship shall be created by this Agreement, and that
nothing contained herein shall be construed to create a partnership,
joint venture or relationship of employer and employee or principal and
agent between the parties hereto. It is understood that IHC cannot and
shall not be deemed an agent of AMIC for any purpose whatsoever, and
neither party shall have any right or authority to assume or create any
obligation of any kind, whether expressed or implied, on behalf of the
other party by reason of this Agreement.
12.3 Binding Nature and Assignment. Neither party may assign or transfer
this Agreement or any of its rights or obligations under this Agreement
without the prior written consent of the other party; provided,
however, that (i) this Section 12.3 shall not be construed to limit
IHC's right to subcontract or delegate its obligations and
responsibilities hereunder as provided in Section 9.1 hereof, and (ii)
either party may assign or transfer this Agreement (and the rights and
obligations hereunder) without the consent of the other party, to an
affiliate of such party or to any entity that has acquired all or
substantially all of such party's assets as a successor to the business
of such party. This Agreement shall be binding upon and inure to the
benefit of each party hereto and its successors and permitted assigns
and is not intended to confer any rights upon any person or entity
except for the parties hereto, their respective successors and
permitted assigns and the persons and/or entities identified in Section
8.3 hereof.
12.4 Entire Agreement. This Agreement, including the Exhibits attached
hereto, constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and supersedes all other oral
or written representations, understandings or agreements relating to
the subject matter hereof.
12.5 Severability. If any provision of this Agreement is declared or found
to be illegal, unenforceable or void, such provision shall not affect
the other provisions hereof, but shall be deemed modified to the extent
necessary to render it legal and enforceable, preserving to the fullest
extent permissible the intent of the parties set forth in this
Agreement.
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12.6 Waivers and Amendments.
(a) No delay or omission by either party in enforcing, or failure
to insist upon strict performance of, its rights or remedies
under this Agreement shall impair such right or remedy or be
deemed to be a waiver thereof.
(b) No waiver of any right or remedy under this Agreement with
respect to any occurrence or event on one occasion shall be
deemed a waiver of such right or remedy with respect to such
occurrence or event on any other occasion.
(c) No amendment or waiver of any provision of this Agreement
shall be valid unless in writing and signed by both parties
and approved by the Board of Directors of AMIC.
(d) Except as expressly set forth in this Agreement, all rights
and remedies of the parties are cumulative and in addition to
any and all rights and remedies available to a party under
applicable law, in equity, pursuant to contract or otherwise.
12.7 Section Headings; Interpretation. The section headings contained in
this Agreement are for convenience of reference only and shall not
affect the meaning or interpretation of this Agreement. The words
"hereof", "herein" and "hereunder", and words of a similar import, when
used in this Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement.
12.8 Governing Law. This Agreement shall be construed and enforced in
accordance with and shall be governed by the laws of the State of
Delaware (without giving effect to the choice of law principles
thereof).
12.9 Signing in Counterparts. This Agreement may be executed in several
counterparts and all such executed counterparts shall constitute
originals and one agreement, binding on all of the parties hereto,
notwithstanding that all of the parties hereto are not signatories to
the original or to the same counterpart.
12.10 Purpose of Agreement; Cooperation. The parties acknowledge that the
purpose of this Agreement is to provide the Services on a basis to
ensure the smooth and uninterrupted transition and operation of the
Business from IHC to AMIC following the date hereof. Each of IHC and
AMIC agrees to cooperate in good faith with the other and to take such
other actions as may be reasonably requested by the other to carry out
the intent and purposes of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Services
Agreement to be duly executed and delivered as of the date first set forth
above.
AMERICAN INDEPENDENCE CORP.
By: /s/ Xxxxxx X. Xxxxx
---------------------------
Name: Xxxxxx X. Xxxxx
Title: Director
INDEPENDENCE HOLDING COMPANY
By: Xxxxx X. Xxxxxx
---------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
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EXHIBIT A
STATEMENT OF SERVICES
1. IHC will provide to AMIC services at a level and quality comparable in
all material respects to the services provided by IHC personnel to IHC
and its subsidiaries. Such services shall include the services of IHC
executive personnel and any additional personnel hired or assigned by
IHC to replace or supplement such personnel. The Services shall include
all those necessary to the operation of AMIC as determined by the Board
of Directors of AMIC, including, without limitation: accounting,
financial management, treasury, legal, shareholder services, contract
negotiation, corporate and business development, support for the Board
of Directors, relationship with outside auditors and corporate
communications.
2. IHC will cause each such person to spend such portion of such person's
working hours or the business and affairs of AMIC as he or she
determines to be reasonably necessary or desirable in order to provide
services to AMIC of the quality such persons provide to IHC.
3. IHC will not assign any such person to spend all of his or her working
time on the business and affairs of AMIC without providing prior notice
to the AMIC Board of Directors.
EXHIBIT B
STATEMENT OF COMPENSATION
1. AMIC will be charged on a time and materials basis determined by
multiplying the hours spent on AMIC matters by the persons named or
referred to in Exhibit A by the hourly amount given below (or, in the
case of a personal not named in Exhibit A, the hourly amount reasonably
agreed to by IHC and AMIC):
Name Hourly
---- ------
Xxx Xxxxx $300.00
Xxxxx Xxxxxx $200.00
Xxx Xxxxxxxxx $200.00
Xxxxxx Xxxxxxx $150.00
Xxxxx Xxxxxxx $150.00
2. IHC shall not charge AMIC any additional monies in respect to overhead
(such as occupancy, facilities, benefits or comparable costs incurred
by IHC in employing such personnel).
