Item 5.02
Compensatory Arrangements of Certain Officers.
(e)
On May 22, 2012, Independence Holding Company (IHC) entered into employment agreements with each of Messrs. Jeffrey C. Smedsrud, Bernon R. Erickson, Jr., and Michael A. Kemp. The agreements are described below and set forth as exhibits to this Current Report on Form 8-K.
With Mr. Jeffrey C. Smedsrud
Amended and Restated Officer Employment Agreement, by and among IHC, IHC Specialty Benefits, Inc. (SB), an indirect subsidiary of IHC, and Mr. Jeffrey C. Smedsrud, IHCs Chief Marketing and Strategy Officer and Senior Vice President, dated as of May 22, 2012 (see Exhibit 10.1). Under this employment agreement, if Mr. Smedsruds employment by SB or its affiliate were to cease under certain circumstances, Mr. Smedsrud would be entitled to receive a severance amount equal to the average annual aggregate total compensation received by Mr. Smedsrud during the preceding five years, adjusted
pro rata
for the applicable severance period. The applicable severance period would be the sum of: (i) twelve months and (ii) a number of months equal to the aggregate number (not necessarily continuous) of completed years of service as an employee of the Company or any other subsidiary of IHC,
but
only since the Company or such subsidiary became a wholly owned subsidiary of IHC, not to exceed twenty-four months. The circumstances under which such severance would be paid are (i) Mr. Smedsruds employment by SB being involuntarily terminated under circumstances that would not constitute cause (
i.e.
, Mr. Smedsruds material failure to follow SBs or IHCs lawful directions, material failure to follow SBs or IHCs corporate policies, breach of the non-compete covenants in the employment agreement or his engaging in unlawful behavior that would damage SB, IHC or their respective reputations), or such employment being voluntarily terminated under circumstances that would constitute good reason (
i.e.
, in connection with SBs (or its successors) material breach of its obligations under the employment agreement or upon SBs non-renewal of the employment agreement). The initial term of Mr. Smedsruds employment agreement is one year from the date it was entered into, but, by its terms, it will be automatically extended for successive one-year periods unless ninety days notice of non-renewal is given by either SB or Mr. Smedsrud to the other, as applicable.
With Mr. Bernon R. Erickson, Jr.
Amended and Restated Officer Employment Agreement, by and among IHC, Actuarial Management Corporation. (AMC), a wholly owned subsidiary of IHC, and Mr. Bernon R. Erickson, Jr., IHCs Chief Health Actuary and Senior Vice President, dated as of May 22, 2012 (see Exhibit 10.2). Under this employment agreement, if Mr. Ericksons employment by AMC or its affiliate were to cease under certain circumstances, Mr. Erickson would be entitled to receive a severance amount equal to the average annual aggregate total compensation received by Mr. Erickson during the preceding five years (under certain conditions), adjusted
pro rata
for the applicable severance period. The applicable severance period would be the sum of: (i) twelve months and (ii) a number of months equal to the aggregate number (not necessarily continuous) of completed years of service as an employee of the Company or any other subsidiary of IHC,
but
only since the Company or such subsidiary became a wholly owned subsidiary of IHC, not to exceed twenty-four months. The circumstances under which such severance would be paid are (i) Mr. Ericksons employment by AMC being involuntarily terminated under circumstances that would not constitute cause (
i.e.
, Mr. Ericksons material failure to follow AMCs or IHCs lawful directions, material failure to follow AMCs or IHCs corporate policies, breach of the non-compete covenants in the employment agreement or his engaging in unlawful behavior that would damage AMC, IHC or their respective reputations), or such employment being voluntarily terminated under circumstances that would constitute good reason (
i.e.
, in connection with AMCs (or its successors) material breach of its obligations under the employment agreement or upon AMCs non-renewal of the employment agreement). The initial term of Mr. Ericksons employment agreement is one year from the date it was entered into, but, by its terms, it will be automatically extended for successive one-year periods unless ninety days notice of non-renewal is given by either AMC or Mr. Erickson to the other, as applicable.
With Mr. Michael A. Kemp
Officer Employment Agreement, by and among IHC, IHC Risk Solutions, LLC (RS), an indirect subsidiary of IHC, and Mr. Michael A. Kemp, IHCs Chief Underwriting Officer and Senior Vice President, dated as of May 22, 2012 (see Exhibit 10.3). Under this employment agreement, if Mr. Kemps employment by RS or its affiliate were to cease under certain circumstances, Mr. Kemp would be entitled to receive a severance amount equal to the average annual aggregate total compensation received by Mr. Kemp during the preceding five years (under certain conditions), adjusted
pro rata
for the applicable severance period. The applicable severance period would be the greater of: (i) twelve (12);
or
(ii) a number of months equal to the sum of (a) three and five-tenths (3.5) plus (b) the aggregate number (not necessarily continuous) of completed years of service as an employee of the Company or any other subsidiary of IHC,
but
only since the Company or such subsidiary became a wholly owned subsidiary of IHC, not to exceed twenty-four (24) months. The circumstances under which such severance would be paid are (i) Mr. Kemps employment by RS being involuntarily terminated under circumstances that would not constitute cause (
i.e.
, Mr. Kemps material failure to follow RSs or IHCs lawful directions, material failure to follow RSs or IHCs corporate policies, breach of the non-compete covenants in the employment agreement or his engaging in unlawful behavior that would damage RS, IHC or their respective reputations), or such employment being voluntarily terminated under circumstances that would constitute good reason (
i.e.
, in connection with RSs (or its successors) material breach of its obligations under the employment agreement or upon RSs non-renewal of the employment agreement). The initial term of Mr. Kemps employment agreement is one year from the date it was entered into, but, by its terms, it will be automatically extended for successive one-year periods unless ninety days notice of non-renewal is given by either RS or Mr. Kemp to the other, as applicable.
Item 9.01.
Financial Statements and Exhibits.
(d)
Exhibits
.
The following exhibits are filed with this Report.
Exhibit Number
Description
10.1
Amended and Restated Officer Employment Agreement, by and among Independence Holding Company, IHC Specialty Benefits, Inc. and Mr. Jeffrey C. Smedsrud, dated as of May 22, 2012.
10.2
Amended and Restated Officer Employment Agreement, by and among Independence Holding Company, Actuarial Management Corporation and Mr. Bernon R. Erickson, Jr., dated as of May 22, 2012.
10.3
Officer Employment Agreement, by and among Independence Holding Company, IHC Risk Solutions, LLC and Mr. Michael A. Kemp, dated as of May 22, 2012