SALARY
CONTINUATION AGREEMENT
THIS
AGREEMENT made and entered
into effective as of the 31st day of January, 2006
("Effective Date") between INSURERS ADMINISTRATIVE
CORPORATION (lAC ), an Arizona corporation with its principal
office located in the State of Arizona (hereinafter referred to as
the "Employer" ), and Independence Holding Company, a
Delaware corporation (“IHC”), and Scott M. Wood,
an individual residing in the State of Arizona (hereinafter
referred to as the "Employee" ).
WHEREAS
the
Employee is a key executive and, effective as of the date hereof,
will be employed in the capacity of President and Chief Executive
Officer of IAC;
WHEREAS
the
Employer desires to retain the valuable services and business
counsel of the Employee and to induce the Employee to remain in
such executive capacity with the Employer; and
NOW,
THEREFORE , the parties
agree as follows:
1.
PERFORMANCE OF
DUTIES.
1.1
Prior
to age 65, Employee shall faithfully perform such duties as may be
assigned to him by the Board of Directors of IAC to the best of his
abilities and in conformity with the directions of the Board.
Employee will devote to the performance of those duties all
such time and attention as they may reasonably require and will
not, while thus employed, become associated with or engage in or
render services (other than to affiliates of IAC) to any other
organization competitive with that of IAC.
1.2
If the
Employee voluntarily leaves the service of the Corporation before
the third anniversary of the date hereof, if the Employee is
discharged for “cause,” or if Employee violates the
terms of the Non-Competition Agreement contained in paragraph 5
hereof, then all compensation to be paid hereunder, to the Employee
or others, or the remainder thereof, as the case may be, shall be
forfeited. The parties agree that nothing herein is intended to
create any vested interest in the Employee.
1.3
For
purpose of this Agreement, "Cause" means:
a)
the
conviction of Employee of a felony;
b)
the
repeated failure of Employee to comply with the material terms and
conditions of Employee's employment;
c)
the
violation by Employee of the terms of the Non-Competition Agreement
contained in Paragraph 5 of this Agreement;
2.
EMPLOYEE
COOPERATION/POST-RETIREMENT CONSULTATION
2.1
The
Employee agrees to cooperate with the Employer in implementing this
Agreement and the plan contemplated by this Agreement and agrees to
answer any questions submitted by the Employer (or any person
designated by the Employer for such purposes) regarding his or her
finances, health, background or any matter related thereto, in a
truthful and accurate manner. In the event that any material
misrepresentation is made by the Employee in connection therewith,
no benefit under this Agreement shall be payable.
2.2
The
Employee shall render to the Employer, through the remainder of
Employee’s lifetime following retirement, such services of an
advisory or consultative nature as
1
the
Board of Directors may request. The above-described salary
continuation benefits shall not be affected by Employee’s
physical or mental impairment and inability to provide such
advisory or consultative services.
3.
SALARY
CONTINUATION
Subject to the
other terms hereof, upon the Employee reaching the age of 65
(hereinafter referred to as the "Retirement Date"), the Employer
shall pay Employee monthly payments of $25,000 per month for a
period of ten years. Such payments shall be considered as
compensation and the Employer shall withhold all taxes and other
amounts, which it is legally required to withhold such
payments.
4.
DEATH
BENEFITS
4.1
If the
Employee dies before reaching the age of 75, his designated
beneficiary will continue to receive either such remaining monthly
payments contemplated by Paragraph 3 hereof from the first day of
the month immediately following the date of death for the balance
of the ten year period (or for the full ten years if the Employee
dies prior to age 65) or, alternatively, a lump sum payment in the
amount equal to the then present value of the remaining monthly
payments for the balance of the ten year period or for the full ten
years, as the case may be , The discount rate for
purpose of calculating present value shall be the interest coupon
rate of 5-year Treasury Notes issued by the United States
Department of Treasury effective on the day a notice of election in
a lump sum payment is received by the Employer.
4.2
Such
payments shall be made by the Employer to the beneficiary(ies)
designated by the Employee (hereinafter call "Beneficiary," whether
singular or plural) in Schedule "A" attached hereto and made a part
hereof. The Employee shall have the right to change the Beneficiary
by presenting a written amendment of said Schedule "A" to the
Employer.
4.3
If one
more Beneficiaries begins receipt of death benefit payments, but
dies prior to receiving all payments due hereunder, the balance of
the payments shall be made to the personal representative of the
estate of such Beneficiaries.
5.
NON-COMPETITION
AGREEMENT
The
Employee shall not from and after the date hereof (including the
time during which any benefits are being paid), engage, directly or
indirectly, in any business which may reasonably be deemed
competitive with any business carried on by the Employer, without
the prior written consent of the Employer. Such restriction shall
apply to activity by the Employee in his capacity as individual or
as employee, agent, principal, associate, owner, part owner,
consultant or contractor of, or for any entity. If the Employee
shall contract to be compensated for services rendered to any
person or entity which may be reasonably deemed to be engaged in
any business competitive with the Employer without the prior
written consent of the Employer, it shall be deemed that the
Employee shall have violated the non-competition provisions of this
Agreement, regardless of whether any evidence may be produced that
the Employee has engaged in specifically competitive
activity.
6.
CLAIMS
PROCEDURE
The
following procedure shall govern claims for benefits under this
Agreement by the Employee or his/her Beneficiary. For
purposes of the plan established by this Agreement, the Claims
Manager shall be the Board of Directors of IAC or a designated
committee thereof.
6.1
The
Employee or his/her Beneficiary shall make a claim for benefits by
giving written
2
notice
of such claim to the Claims Manager, who shall promptly file the
appropriate claim information with the insurer, if the claim arises
as a result of Employee's death.
6.2
If for
any reason a claim for benefits is denied in whole or part, written
notice of such decision shall be furnished to the claimant within
ninety (90) days after receipt of the claim by the Claims Manager.
Such notice shall provide the following information:
1.
The
specified reason or reasons for the denial;
2.
Specific reference
to pertinent plan and/or Agreement provisions on
which
the denial is based;
3.
A
description of any additional material or information the Claims
Manager may deem necessary, and an explanation of why such material
or information is necessary; and
4.
An
explanation of the applicable Review Procedure under the plan
and/or this Agreement, as described below.
6.3
If
notice of the claim denial is not furnished within ninety (90)
days, the claim shall be deemed denied and the claimant shall
proceed to the Review Procedure described below.
6.4
This
procedure is established to provide the claimant a reasonable
opportunity to appeal a denied claim and obtain a full and fair
review.
6.5
Upon
denial of a claim, the claimant of his/her duly-authorized
representative may:
1.
Request a review
upon written application to the Claims Manager;
2.
Review
pertinent documents; and
3.
Submit
issues and comments in writing.
6.6
A
request for review must be made in writing by the claimant or
his/her duly authorized representative within sixty (60) days after
receipt by the claimant of written notification of denial of a
claim.
6.7
A
decision on review of a denied claim shal
