EXHIBIT 10.2
ADMINISTRATIVE SERVICES AGREEMENT
This ADMINISTRATIVE SERVICES AGREEMENT ("Agreement") is made and
entered into as of ________ __, 2003 by and between CAVCO INDUSTRIES, INC., an
Arizona corporation ("Cavco"), and CENTEX SERVICE COMPANY, a Nevada corporation
("Service Company").
R E C I T A L S
Cavco desires to engage Service Company to perform certain services for
Cavco as hereinafter set forth, and Service Company desires to accept such
engagement, upon the terms and subject to the conditions set forth in this
Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Cavco and Service
Company do hereby agree as follows.
1. Term of Agreement. The initial term of this Agreement shall extend
from the date hereof to the close of business on the third anniversary of the
date hereof; provided that this Agreement may be sooner terminated in accordance
with the provisions of Section 8 hereof.
2. Services. Service Company shall provide to Cavco such services as
are described in Exhibit A hereto. Following the conclusion of the first year of
the three year term of this Agreement, the parties will implement a mutual plan
to discontinue the Services provided hereunder by Service Company to Cavco
incrementally over the remaining term of this Agreement so that by the end of
the three-year term all of such services will be provided internally by Cavco,
or to Cavco by third parties not affiliated with Service Company.
3. Insurance Coverage. At the commencement of this Agreement, Service
Company will manage and monitor all of Cavco's insurance and bonding programs,
and shall maintain joint insurance coverage, including general liability,
primary and excess umbrella, automobile, liability, and workers' compensation,
as well as joint bonding programs, for the benefit of Cavco. The amount, term
and conditions of coverage to be maintained will be determined by Service
Company in its sole and absolute discretion. The allocation of cost between
Cavco and Service Company will be determined by Service Company and will be
based on, among other things, revenues, number of employees, types of business
and nature of risks. The parties intend that Cavco shall
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develop its own broker relationships and transition to stand alone programs when
such a transition is feasible at reasonable cost.
Cavco will pay its allocated cost to Service Company within ten days
following receipt of an invoice therefor. If payment is not made within said
ten-day period, then the amount so owing by Cavco to Service Company shall bear
interest from and after the date of such invoice until such amount has been paid
in full, at a rate (the "Interest Rate") equal to the lesser of the prime rate
announced or published by Bank of America, N.A. (or its successor) from time to
time or the maximum rate of interest permitted under applicable law.
Service Company shall have the right during the term of this Agreement,
in the sole and absolute discretion of Service Company, to amend or eliminate
any part or all of the insurance coverage described above, with a corresponding
adjustment to the cost allocated to Cavco. Service Company will give Cavco at
least ninety (90) days advance notice of any such action.
4. Liability of Service Company. Service Company shall not be liable,
responsible or accountable in damages or otherwise to Cavco for any act
performed by Service Company on behalf of Cavco in a manner reasonably believed
by Service Company to be within the scope of the authority granted to it by this
Agreement and in the interest of Cavco, provided that Service Company was not
guilty of gross negligence or willful or wanton misconduct.
5. Indemnification. Cavco shall indemnify, save harmless and defend
Service Company and each of Service Company's shareholders, directors, officers,
employees, agents, attorneys and insurers (each individually, an "Indemnitee")
against any and all losses, damages, liabilities, judgments, fines, penalties,
amounts paid in settlement and expenses, including reasonable attorneys' fees,
which are incurred, whether AS THE RESULT OF THE NEGLIGENCE OF ANY INDEMNITEE OR
OTHERWISE, as a result of or in connection with anything done or omitted by such
Indemnitee in connection with the performance by Service Company of its duties
and obligations under this Agreement; provided that such Indemnitee's conduct
did not constitute gross negligence or willful or wanton misconduct.
Notwithstanding anything in this Agreement to the contrary, the obligation of
Cavco to indemnify, save harmless and defend each Indemnitee will survive the
expiration or termination of this Agreement, no matter what the reason thereof,
and such obligation to indemnify, defend and hold harmless will remain binding
upon Cavco thereafter.
6. Compensation. Service Company shall receive a fee for its services
under this Agreement of $75,000 per year, which shall be paid by Cavco to
Service Company in monthly installments of $6,250 within five (5) days after the
end of each month. Such fee is intended to represent an agreed upon estimate of
the fair market value of such services, and the parties hereto hereby agree that
such amount represents such fair market value. If Cavco fails to make such
monthly payment within ten (10)
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days following the first day of any month, the amount so owing by Cavco shall
bear interest from and after the first day of such month until such amount has
been paid in full at a rate equal to the Interest Rate. Prior to March 31 of
each year during the term of this Agreement, the parties will mutually
determine, based on the fair market value of such services, the monthly fee to
be paid to Service Company under this Agreement for the twelve month period
commencing April 1 of the same year.
In addition to the monthly compensation described above, Cavco will
reimburse Service Company for all out-of-pocket expenses incurred by Service
Company in connection with the performance of services described above in
Section 2. Out-of-pocket expenses will not include general and administrative
expenses.
7. Assignment and Delegation. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement may not be assigned by either
party without the prior written consent of the other party hereto. Any consent
granted by either party to an assignment by the other party shall not be deemed
a consent to any subsequent assignment. Notwithstanding the foregoing, Service
Company may, without the consent of Cavco, assign and delegate the performance
of and the responsibility for any duties and obligations of Service Company
hereunder to any corporation, firm joint venture or partnership fifty percent
(50%) or more of whose voting stock (or its equivalent) is owned directly or
indirectly by, or which is otherwise controlled by, Centex Corporation. Upon
execution of any such assignment and delegation, notice thereof in the form of
an executed copy of the document or instrument effecting such assignment and
delegation shall be delivered promptly by Service Company to Cavco and Service
Company shall be released from any further obligation or responsibility under
this Agreement for the performance of the duties and obligations so assigned and
delegated.
8. Termination. This Agreement may be terminated by any of the
following methods:
(a) This Agreement may be terminated at any time by written
agreement of the parties hereto.
(b) If either party fails to make any payment due hereunder or
breaches any of the other terms of this Agreement in any
material respect, the other party hereto shall give the
breaching party written notice of such breach. If the
breaching party fails to remedy the breach within thirty (30)
days after receiving such notice, the other party may
terminate this Agreement; provided, however, that if at the
expiration of such thirty (30) day period the breaching party
is diligently using its best efforts to remedy the breach, the
other party may not terminate this Agreement on account of
such breach during the additional period, not to exceed sixty
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(60) days, in which the breaching party continues without
interruption to use its best efforts to remedy the breach.
(c) If either party hereto shall be dissolved and its business
terminated, this Agreement shall automatically terminate upon
the effectiveness of such dissolution.
(d) This Agreement may be terminated by notice of Cavco to Service
Company delivered no less than thirty (30) days prior to the
effective date of termination, and such notice may be
delivered for any reason.
No termination of this Agreement shall have the effect of terminating
Service Company's right to collect any amounts owed to it under this Agreement.
Within thirty (30) days following the termination of this Agreement,
Service Company shall deliver to Cavco all instruments, documents, reports,
books, accounts and records, and copies thereof, that Service Company has
received from Cavco in connection with the rendering of services hereunder.
9. Confidentiality. Service Company agrees that any information
regarding Cavco that Service Company obtains or is furnished in connection with
the performance of its duties and obligations under this Agreement, including,
but not limited to, information regarding Cavco's business and operations, is
confidential and proprietary, and Service Company agrees to maintain the
confidentiality of such information and not to disclose such information to any
other party without prior written consent of Cavco, except to the extent that
such disclosure is necessary to enable Service Company to perform its duties and
obligations under this Agreement or to comply with its legal obligations.
Information that is generally known in the industry or to the public or was
known by Service Company prior to disclosure by Cavco pursuant to this Agreement
shall not be deemed confidential or proprietary information for purposes of this
Section 9. The terms of this Section 9 shall survive, and remain in effect
following, the termination of this Agreement.
10. Notices. Any notice, statement or demand required or permitted to
be given under this Agreement shall be in writing and shall be personally
delivered, sent by mail, sent by nationally known overnight courier service or
sent by facsimile transmission, confirmed by letter, addressed to the party in
the manner and at the address shown below, or at such other address as the party
shall have designated in writing to the other party:
To Cavco:
1001 North Central, 8th floor
Phoenix, Arizona 85004
Attention: President
Fax: (602) 256-6176
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To Service Company:
2728 North Harwood
Dallas, Texas 75201
Attention: Secretary
Fax: (214) 981-6855
11. Nature of Relationship. The parties hereto intend that Service
Company's relationship to Cavco shall be that of an independent contractor.
Nothing contained in this Agreement shall constitute or be construed to be or
create a partnership or joint venture between Service Company and Cavco or their
successors or assigns, and neither Service Company nor any officer or employee
of Service Company shall be considered at any time to be an employee of Cavco.
12. Amendments. This Agreement cannot be amended, changed or modified
except by another agreement in writing, duly signed by both parties hereto.
13. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof.
14. Headings. The section headings contained herein are for convenience
of reference only and are not intended to define, limit, or describe the scope
or intent of any provision of this Agreement.
15. Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Texas.
16. Severability. Any provision of this Agreement that is prohibited or
unenforceable under the laws of any jurisdiction shall be ineffective in such
jurisdiction to the extent necessary to render such provision valid and
enforceable, and if such provision cannot be rendered valid and enforceable in
such jurisdiction by limitation it shall be ineffective therein. The invalidity
or unenforceability of any provision of this Agreement shall not render invalid
or unenforceable any other provision of this Agreement, unless the Agreement
without the invalid or unenforceable provisions would be manifestly unfair to
either party.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first set forth above.
CAVCO INDUSTRIES, INC.
By:
---------------------------------
President
CENTEX SERVICE COMPANY
By:
---------------------------------
Vice President
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EXHIBIT A
SERVICES TO BE PROVIDED BY CENTEX SERVICE COMPANY
1. LEGAL AND CORPORATE SECRETARY.
a. Management of intellectual property rights in
protected names and marks used by Cavco
b. Assistance with paralegal management of customer
litigation with consultation by Centex Law Department
attorneys as requested
c. Assistance with public company reporting issues and
required filings with and reports to stock exchanges
and the Securities and Exchange Commission, and
assistance with corporate governance matters
d. Keeping minute books, foreign qualifications and
other corporate secretarial matters
2. PUBLIC AND INVESTOR RELATIONS.
a. Review and distribution of press releases through
existing resources and relationships.
b. Advice on an as-needed basis
3. ACCOUNTING. Advice and assistance with technical questions on
an as-needed basis
4. BENEFITS ADMINISTRATION.
a. Assistance in management of Cavco's health and
welfare and retirement benefit plans
b. Assistance with negotiation and transition of health
and welfare and retirement benefit plans into
separate stand-alone plans.
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