Exhibit 10.2
TERMINATION AGREEMENT
     This Agreement, dated as of May 19, 2006 is by and between Special
Investment Risks, Limited, a Texas limited partnership (successor to United
Group Association, Inc.) (“SIR”), and HealthMarkets, Inc. (formerly UICI), a
Delaware corporation (“HealthMarkets”).
     WHEREAS, SIR and HealthMarkets have entered into that certain Sale of
Assets Agreement dated March 3, 1997, as amended by Amendments Nos. 1, 2, 3 and
4 thereto (as amended, the “Asset Sale Agreement”);
     WHEREAS, pursuant to the terms of the Asset Sale Agreement, effective as of
January 1, 1997, SIR transferred and sold to HealthMarkets substantially all of
the equipment, fixed assets and contracts associated with SIR’s former United
Group Agency, a general insurance agency that formerly marketed and sold health
insurance policies (a) issued by insurance subsidiaries of AEGON USA and
coinsured by insurance subsidiaries of the Company and (b) previously issued
directly by insurance subsidiaries of the Company;
     WHEREAS, for and in partial consideration for the transfer made in
accordance with the Asset Sale Agreement, (i) SIR retained the right to receive
all commissions on policies marketed and sold by SIR and written prior to
January 1, 1997 (including policies previously issued by insurance subsidiaries
of AEGON USA and coinsured by insurance subsidiaries of the Company and policies
previously issued directly by the insurance subsidiaries of the Company) and
(ii), with respect to policies marketed and sold by SIR and written after
January 1, 1997, HealthMarkets agreed to pay to SIR 120 basis points (1.20%)
times the UGA Commissionable Renewal Premium Revenue (as such term is defined in
the Asset Sale Agreement) collected in any period (such streams of payments
owing to SIR herein collectively referred to as the “Future Obligation.”)
     WHEREAS, SIR and HealthMarkets desire to discharge in full the Future
Obligation and terminate the Asset Sale Agreement.
     NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the Seller and the Purchaser hereby agree as follows:
     1.     Definitions. Unless otherwise defined herein, the following
capitalized terms shall have the specific meaning hereinafter set forth:
     “Effective Date” shall mean May 19, 2006.
     "Governmental Authority” means any nation or government, any state or
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.
     "Material Adverse Effect” with respect to any Person means the occurrence
of any event or the existence of any condition that reasonably could be expected
to have a material adverse effect on (a) the business, financial condition or
results of operations of such Person, or (b) the validity or enforceability of
this Agreement or the rights and remedies of such Person hereunder.
     “MEGA” shall mean The MEGA Life and Health Insurance Company, an
Oklahoma-domiciled health and life insurance company and indirect, wholly-owned
subsidiary of HealthMarkets.

 

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     “Mid-West” shall mean Mid-West National Life Insurance Company of
Tennessee, a Texas-domiciled health and life insurance company and indirect,
wholly-owned subsidiary of HealthMarkets.
     "Person” shall mean means any individual, corporation, business trust,
association, company, partnership, joint venture, Governmental Authority, or
other entity
     2.      Discharge of Future Obligation; Closing. Upon the terms and,
subject to the conditions of this Agreement, on the Closing Date
(a) HealthMarkets shall pay to SIR or, alternatively, HealthMarkets shall cause
MEGA and/or Mid-West to pay to SIR, an aggregate of $47,500,000 (the
“Consideration”), (b) the Future Obligation shall be discharged in full, (c) SIR
shall release HealthMarkets, MEGA and Mid-West from any and all liability of
HealthMarkets, MEGA or Mid-West, as the case may be, under the Asset Purchase
Agreement, and (c) the Asset Purchase Agreement shall terminate and be of no
further force or effect. The closing of the transaction contemplated hereby (the
“Closing”) shall be consummated at 11:00 a.m. local time on May 19, 2006 or the
date on which the last of the conditions specified in Section 5 hereof is
satisfied or waived, whichever is later, at the offices of HealthMarkets, at
9151 Boulevard 26, North Richland Hills, TX, or at such other time or place as
shall be agreed upon by HealthMarkets and SIR. The time and date on which the
Closing is actually held is referred to herein as the “Closing Date.” The
Closing shall be effective as of the Effective Date.
     3.     Termination of Asset Sale Agreement. At and upon the Closing, any
and all obligations of HealthMarkets, MEGA and/or Mid-West under the Asset Sale
Agreement shall be deemed discharged in full, and the Asset Sale Agreement shall
be terminated and without further force or effect.
     4.     Representations and Warranties.
     4.1.  Representations of SIR. SIR represents and warrants to HealthMarkets
as follows:
       4.1.1. SIR is a corporation duly organized, validly existing and in good
standing under the laws of Nevada and has all requisite power and authority to
own its assets and carry on its business as now being or as proposed to be
conducted.
       4.1.2. SIR has the power and authority and legal right to execute and
deliver this Agreement and to perform its obligations hereunder.
       4.1.3. This Agreement constitutes the legal, valid and binding obligation
of SIR, enforceable against SIR in accordance with its terms, except as limited
by bankruptcy, insolvency or other laws of general application relating to the
enforcement of creditors’ rights and general principles of equity.
     4.2.     Representations and Warranties of HealthMarkets. HealthMarkets
represents and warrants to SIR as follows:
       4.2.1. HealthMarkets is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite power and authority to own its assets and carry on its business as now
being or as proposed to be conducted.
       4.2.2. HealthMarkets has the power and authority and legal right to
execute and deliver this Agreement and to perform its obligations hereunder.
       4.2.3. This Agreement constitutes the legal, valid and binding obligation
of HealthMarkets, enforceable against HealthMarkets in accordance with its
terms, except as limited

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by bankruptcy, insolvency or other laws of general application relating to the
enforcement of creditors’ rights and general principles of equity.
     5.     Closing Conditions.
     5.1.  The obligation of HealthMarkets to consummate the transactions
contemplated hereby on the Closing Date is subject to satisfaction of each of
the following conditions:
       5.1.1. No order, judgment or decree of any court, arbitrator or
Governmental Authority shall purport or threaten to enjoin or restrain any of
the transactions contemplated hereby.
       5.1.2. All of the representations and warranties contained in Section 4.1
hereof shall be true, correct and complete in all respects on and as of the
Closing Date with the same force and effect as if such representations and
warranties had been made on and as of such date except for any representation or
warranty limited by its terms to a specific date.
       5.1.3. No event shall have occurred which shall reasonably be expected to
have a Material Adverse Effect on HealthMarkets.
     5.2.     The obligation of SIR to consummate the transactions contemplated
hereby on the Closing Date is subject to satisfaction of each of the following
conditions:
       5.2.1. No order, judgment or decree of any court, arbitrator or
Governmental Authority shall purport or threaten to enjoin or restrain any of
the transactions contemplated hereby.
       5.2.2. All of the representations and warranties contained in Section 4.2
hereof shall be true, correct and complete in all respects on and as of the
Closing Date with the same force and effect as if such representations and
warranties had been made on and as of such date except for any representation or
warranty limited by its terms to a specific date.
       5.2.3. No event shall have occurred which shall reasonably be expected to
have a Material Adverse Effect.
     6.     Indemnification.
     6.1.  Indemnification by HealthMarkets. HealthMarkets agrees to indemnify
and hold harmless SIR and its directors, officers, successors, agents,
employees, partners, representatives, heirs, assigns, affiliates and
subsidiaries (collectively, a “SIR Indemnified Party”) harmless from and against
any and all from and against any and all losses, damages (including, without
limitation, actual damages, compensatory damages, punitive damages and
extra-contractual damages), liabilities, penalties, regulatory fines, costs and
expenses (including, without limitation, attorneys’ fees, investigation costs
and all other reasonable costs associated with the defense thereof)
(collectively, “Losses”), as incurred, arising out of or relating to (a) a
breach of any of the respective covenants or agreements to be performed by
HealthMarkets hereunder; and (b) breaches of any representation or warranty made
by HealthMarkets hereunder.
     6.2.  Indemnification by SIR. SIR agrees to indemnify and hold harmless
HealthMarkets and its directors, members, officers, successors, agents,
employees, partners, representatives, heirs, assigns, affiliates and
subsidiaries harmless from and against any and all Losses, as incurred, arising
out of or relating to (a) a breach of any of the respective covenants or
agreements to be performed by SIR hereunder; and (b) breaches of any
representation or warranty made by SIR hereunder.

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     6.3.  Conduct of Indemnification Proceedings.
       6.3.1. If any proceeding shall be brought or asserted against any person
entitled to indemnification hereunder (an “Indemnified Party”), such Indemnified
Party promptly shall notify the person from whom indemnity is sought (the
“Indemnifying Party”) in writing, and the Indemnifying Party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, however, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying Party
of its obligations or liabilities pursuant to this Agreement, except (and only)
to the extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further review)
that such failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.
       6.3.2. An Indemnified Party shall have the right to employ separate
counsel in any such proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or
(3) the named parties to any such proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the reasonable
expense of the Indemnifying Party). The Indemnifying Party shall not be liable
for any settlement of any such proceeding effected without its written consent,
which consent shall not be unreasonably withheld. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such proceeding.
       6.3.3. All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) business days of a detailed written notice thereof to
the Indemnifying Party (regardless of whether it is ultimately determined that
an Indemnified Party is not entitled to indemnification hereunder; provided,
that the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
     7.     General Matters.
     7.1.  Any notice, request, instruction or other document to be given
hereunder shall be in writing and: (a) delivered personally; (b) sent by Federal
Express or other similarly reputable overnight courier; or (c) transmitted by
facsimile, according to the instructions set forth below. Such notices shall be
sent to the following addresses and/or facsimile numbers and shall be deemed
given: (w) if delivered personally, at the time delivered; (x) if sent by
Federal Express or other similarly reputable overnight

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courier, at the time sent, or (y) if transmitted by facsimile, at the time when
receipt is confirmed by the sending facsimile machine.
If to SIR, to:
Special Investment Risks, Limited
C/o JFO Group
6500 Belt Line
Suite 170
Irving, TX 75063-6049
Attn:     Jeffrey J. Jensen
If to HealthMarkets, to:
HealthMarkets, Inc.
9151 Boulevard 26
North Richland Hills, TX 76180

Attention:   William J. Gedwed
President

or to such other address as such party may indicate by a notice delivered to the
other parties hereto in accordance with the provisions of this Section 7.1.
     7.2.  This Agreement contains the entire understanding of the parties
hereto with regard to the subject matter contained herein or therein, and
supersedes all prior written or oral agreements, understandings or letters of
intent between or among any of the parties hereto. This Agreement shall not be
amended, modified or supplemented except by a written instrument signed by an
authorized representative of each of the parties hereto.
     7.3.  The rights of each party under this Agreement shall not be assignable
without the written consent of each of the other parties.
     7.4.  This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended or shall be construed to confer
upon any Person other than the parties and successors and assigns permitted by
this Section 7.4 any right, remedy or claim under or by reason of this
Agreement.
     7.5.  Headings to sections herein are inserted for convenience of reference
only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
     7.6.  This Agreement has been mutually prepared, negotiated and drafted by
each of the parties hereto and thereto. The parties agree that the terms of this
Agreement shall be construed and interpreted against each party in the same
manner and that no such provisions shall be construed or interpreted more
strictly against one party on the assumption that an instrument is to be
construed more strictly against the party which drafted the agreement.
     7.7.  Any term or provision of this Agreement may be waived, or the time
for its performance may be extended, pursuant to a written action by the party
or parties entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for purposes of this Agreement if, as to any party,

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it is authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
     7.8.  Except as specifically provided in Section 6 hereof, regardless of
whether the transactions provided for in this Agreement are consummated, each
party hereto will pay its own costs and expenses incident to the negotiation,
preparation and performance of this Agreement, including the fees, expenses and
disbursements of its counsel, financial advisors, and accountants.
     7.9.  Wherever possible, each provision hereof shall be interpreted in such
manner as to be effective and valid under applicable law, but in case any one or
more of the provisions contained herein shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such provision shall be
ineffective to the extent, but only to the extent, of such invalidity,
illegality or unenforceability without invalidating the remainder of such
invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.
     7.10.  This Agreement may be executed in one or more counterparts, each of
which shall be considered an original instrument, and shall become binding when
one or more counterparts have been signed by each of the parties hereto and
delivered to each of the parties hereto.
     7.11.  This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Texas, without giving effect to any choice of
laws provisions that may direct the application of the laws of another
jurisdiction.
     7.12.  Each of the parties hereby: (a) agrees that any action arising out
of or related to this Agreement or any of the transactions contemplated hereby
or thereby shall be filed and shall proceed exclusively in the federal and state
courts located in Dallas, Texas; (b) irrevocably consents to jurisdiction in
such courts; and (c) waives any and all objections to jurisdiction and venue in
such courts that they may have under the federal or state laws of the United
States.

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     7.13.  The provisions of this Agreement are intended for the sole benefit
of the parties hereto and shall not inure to the benefit of any other Person,
other than successors and permitted assigns of parties hereto, whether as third
party or otherwise.
     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

            HealthMarkets, Inc.
      By:   /s/ Glenn W. Reed       Name:   Glenn W. Reed     Its:   Executive
Vice President     

            Special Investment Risks, Limited,
a Texas limited partnership              By:   S.I.R. Holding Corp., Inc.,
its general partner                By:   /s/ Jeffrey J. Jensen       Name:  
Jeffrey J. Jensen      Its:   President    

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