EXHIBIT 10.11
INSURANCE ADMINISTRATION SERVICES AGREEMENT
THIS INSURANCE ADMINISTRATION SERVICES AGREEMENT ("Agreement") is
effective as of the 30th day of September, 2001("Effective Date"), by and
between INSURANCE MANAGEMENT SOLUTIONS, INC. ("IMS"), a corporation organized
and existing under the laws of the State of Florida with its principal place of
business located at 360 Central Avenue, St. Petersburg, Florida 33701, and each
of MOBILE USA INSURANCE COMPANY AND PHILADELPHIA INDEMNITY INSURANCE COMPANY
(herein collectively referred to as "Customer"), each having their principal
place of business at 7785 66th Street North, Pinellas Park, FL 33780 and One
Bala Plaza, Suite 100, Bala Cynwyd, PA 19004, respectively.
WHEREAS, Customer wishes to engage the services of IMS to administer
certain of the Customer's obligations for the lines of business ("Authorized
Lines of Business") in the state(s) ("Authorized States") set forth in SCHEDULE
A;
WHEREAS, IMS wishes to provide such insurance administration services
as set forth herein.
NOW THEREFORE, IN CONSIDERATION OF the mutual covenants and agreements
hereinafter set forth, the parties hereto do covenant and agree as follows:
ARTICLE I. DEFINITIONS
Unless the context clearly requires otherwise, the following terms when used in
this Agreement shall have the meanings set forth below:
A. "Affiliate" is any company which controls, is controlled by, or under
common control with, a party, and "control" is defined as owning 50% or
more of such entity.
B. "Authorized Lines of Business" means the lines of business expressly
set forth in SCHEDULE A of this Agreement.
C. "Authorized States" means the states expressly set forth in SCHEDULE A
of this Agreement.
D. "Business Day" means any day other than a Saturday, Sunday or other day
which is a bank holiday for Florida State banks or an IMS paid holiday
(New Year's Day, Memorial Day, Independence Day, Thanksgiving Day, day
after Thanksgiving, Christmas Eve (after 12 P.M. Eastern Standard Time)
and Christmas Day).
E. "Change of Control" means (a) a sale, transfer or pledge, or the
issuance to a new shareholder, of fifty (50%) percent or more of the
voting stock of a party hereto to any third party that is not an
Affiliate of such party; or (b) a sale, transfer or pledge of a
substantial portion of the material assets of a party, or any merger or
consolidation of a party with another entity or entities.
F. "Insurance Administration Services" means the services set forth in
this Agreement and EXHIBIT I hereto in the Authorized States in
accordance with the terms of the Agreement, and all applicable laws and
regulations.
G. "Insurance Program" means the Customer's insurance products within the
Authorized Line(s) of Business to be offered within the Authorized
States.
H. "Technical Information" means and shall include (without limitation)
computer programs, databases, designs, algorithms, processes,
structures, data formats, business methods, know how, and research and
development information.
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ARTICLE II. TERM
The term of the Agreement shall commence on the Effective Date and shall have a
minimum operating term ("Minimum Operating Term") of Thirty Six (36) full
calendar months following the Effective Date. However, the term of this
Agreement shall automatically extend for an additional operating term ("Extended
Operating Term") of twelve (12) calendar months at the end of the Minimum
Operating Term, or at the end of any Extended Operating Term, unless terminated
earlier pursuant to the termination provisions within Article VIII.
ARTICLE III. RESPONSIBILITIES OF IMS
A. IMS shall dedicate the human, equipment and computer resources
commercially reasonably required to provide Customer with the Insurance
Administration Services, during the term of this Agreement, for the
Insurance Program within Authorized States specified in SCHEDULE A.
B. IMS shall designate an employee ("Account Manager") of sufficient
status and authority to act as liaison with Customer to facilitate IMS'
performance of the Insurance Administration Services under this
Agreement. The Account Manager shall provide written and/or oral
communication of the status of administration of the Insurance
Administration Services as agreed to by and between Account Manager and
Customer.
C. IMS shall, based on accepted industry standards and in accordance with
generally accepted insurance and accounting practices as designated by
the applicable regulatory bodies and the National Flood Insurance
Program ("NFIP"), maintain complete and orderly records and policy
and/or claims files as may be required as a result of IMS performing
the Insurance Administration Services on behalf of Customer. These
files shall be retained by IMS, in a format or media defined by IMS
which shall be in compliance with applicable laws and regulations, for
a minimum of four (4) years or the period specified by the applicable
statutes regulating the preservation of records, unless the Customer
requests that its records be returned to it at its expense at the
expiration of the minimum four (4) year period; however, that IMS shall
be entitled to retain copies thereof.
ARTICLE IV. RESPONSIBILITIES OF CUSTOMER
A. During the term of this Agreement, Customer shall provide to IMS, in a
timely manner, any and all data, information and other items reasonably
required to enable IMS to perform the Insurance Administration Services
specified in EXHIBIT I of this Agreement. Customer represents and
warrants to IMS that it owns and possesses all property rights to its
corporate and subsidiary logos and hereby grants and warrants to IMS a
limited, non-transferable, non-assignable, license to use Customer's
corporate and subsidiary logos (and any other copyrighted or
trademarked property of Customer that may be provided to IMS under this
Agreement) while performing the Insurance Administration Services.
Customer acknowledges and agrees that delays in delivery of required
documentation, data and/or information by Customer will result in a
similar delay in fulfilling Insurance Administration Services, and that
such a delay in performing the Insurance Administration Services shall
not be deemed a breach of the Agreement.
B. CUSTOMER ACKNOWLEDGES AND AGREES THAT IMS ASSUMES NO INSURANCE RISK FOR
THE BUSINESS PROCESSED UNDER THIS AGREEMENT.
C. Customer shall designate manager level employee(s) of sufficient status
and binding decision making authority to act as liaisons with IMS and
to facilitate Customer's role as IMS performs the Insurance
Administration Services specified in EXHIBIT I of this Agreement.
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ARTICLE V. CUSTOMER ACCESS TO RECORDS / CONFIDENTIAL INFORMATION
A. At Customer's expense, Customer will be permitted reasonable access (as
set forth herein) to all records and information maintained by IMS on
behalf of Customer (excluding, specifically, proprietary Technical
Information) reasonably necessary to: (i) audit the completeness and
accuracy of the Insurance Administration Services provided under this
Agreement and reports produced for Customer pursuant to this Agreement;
(ii) verify the accuracy and validity of all billings and charges to
Customer under this Agreement; and (iii) verify IMS' overall compliance
with the material terms of this Agreement and applicable laws and
regulations.
Access to IMS' records, for the foregoing purposes, will be provided
during normal business hours upon ten (10) Business Days prior written
notice to IMS by Customer for so long as IMS is required to maintain
such records under this Agreement; except in the case of regulatory
inquiry, in which case access will be granted on any Business Day with
twenty four (24) hours of prior written notice to IMS.
At Customer's expense, Customer will be permitted to copy those IMS
records subject to audit in accordance with this Article. Upon
reasonable written request by Customer, and at Customer's expense, IMS
will promptly mail or fax to Customer supporting documentation
concerning any specific transaction processed by IMS under the terms of
this Agreement.
IMS will provide reasonably adequate work space for Customer to conduct
audits in accordance with this Article. Further, Customer or its
representatives shall take precautions, when conducting audits under
this Article, not to disrupt IMS' ongoing business activities.
B. The recipient ("Recipient") of confidential data and/or information
pursuant to this Agreement shall maintain the confidentiality of all
data and/or information which is the property of the other party
("Disclosing Party"), whether originally supplied by the Disclosing
Party, or whether generated by the Disclosing Party in the course of
performing or facilitating the Insurance Administration Services under
this Agreement and which is directly accessible to the Recipient or is
in the possession of Recipient in the implementation, facilitation
and/or performance of the Insurance Administration Services. During any
term of this Agreement, Recipient may acquire, know, or have within its
possession, information (including, but not limited to, Technical
Information) and/or data of the Disclosing Party concerning commercial
and trade affairs, rating and underwriting rules and guidelines, the
identity of clients, the identity of insureds and beneficiaries,
claims, benefits, rates and Agents, financial information, the
Proprietary System (as defined at Article VII (A) herein), the Third
Party Proprietary System (as defined in Article VII (B) herein) and
business practices of the Disclosing Party ("Confidential
Information"). Confidential Information which is provided in tangible
form must be clearly marked "Confidential", "Proprietary" or the
substantial equivalent thereof, or if orally disclosed must be clearly
identified as "Confidential" or "Proprietary" at the time of the
disclosure (except for IMS' Technical Information, the identity of
Customer's clients, the identity of Customer's insureds and
beneficiaries, claims, benefits, and Agents, which will be deemed
"Confidential Information" under this Agreement, regardless of whether
marked as such). Except as required by law, and in accordance with
Gramm Leach Bliley Act, Recipient shall keep Disclosing Party's
Confidential Information confidential and shall only use the
Confidential Information in performing or facilitating the Insurance
Administration Services under this Agreement. Recipient shall not
disclose the Confidential Information without Disclosing Party's prior
written permission except to Recipient's employees who require the
information to perform or facilitate the Insurance Administration
Services under this Agreement. Each party hereto, as a Recipient,
warrants to the other that appropriate measures shall be taken by
Recipient to safeguard the confidentiality of the Confidential
Information, with a level of care at least equal to the level of care
with which Recipient safeguards its own confidential or proprietary
information. All employees, agents or representatives of Recipient and
any third parties who are given access to the Confidential
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Information shall be under written obligation to Recipient to maintain
such information in confidence.
IMS and Customer agree that any Recipient shall have no obligation with
respect to any information or data which:
a) is already rightfully known to Recipient through means other
than Disclosing Party; or
b) is or becomes publicly known through no wrongful act of
Recipient; or
c) is rightfully obtained by Recipient from a third-party without
similar restriction and without breach of this Agreement; or
d) is independently developed by Recipient without breach of this
Agreement.
Disclosing Party shall retain title to all Confidential Information
(whether tangible or intangible) delivered thereby pursuant to this
Agreement. Recipient shall not copy, reproduce or use any Confidential
Information without written authorization of Disclosing Party, except
as may be reasonably required to accomplish the Insurance
Administration Services under this Agreement. Upon written request of
Disclosing Party Recipient shall promptly return, or destroy with
specific written permission of the Disclosing Party, all tangible
copies containing Confidential Information, except those copies kept in
the regular course of business, or that are required to be kept
pursuant to any state or federal administrative, regulatory or
statutory mandates. The obligations under this Paragraph (B) shall
survive the termination of this Agreement. Notwithstanding the
foregoing, this Article shall not prevent the disclosure of
Confidential Information to the extent legally required by any court or
regulatory entity having jurisdiction over the parties.
For purposes of Article V (B), Recipient and Disclosing Party shall
include within their meaning all respective subsidiaries, agents, or
Affiliates of the Recipient and Disclosing Party.
ARTICLE VI. EXPENSES AND FEES
A. In consideration of IMS providing Insurance Administration Services
described herein, Customer shall pay IMS, as applicable, miscellaneous
fee ("Miscellaneous Fee"), servicing fee ("Service Fee") and claim
administration fee ("Claim Administration Fee") for each Authorized
Line of Business, as specified in SCHEDULE B. The performance by IMS of
any service or function that is outside of the scope of the Insurance
Administration Services shall require the payment by Customer of
additional consideration (in addition to the Service Fees) as mutually
agreed between IMS and Customer.
B. Except for the Service Fee, which is based upon a percentage of the
adjusted net written premium and the Claim Administration Fee, the
Miscellaneous Fees specified in Section IV of SCHEDULE B hereto may be
increased (up to a maximum of five percent (5%) per year from the prior
year) effective as of each anniversary of the Effective Date by the
percentage increase in the United States Consumer Price Index for all
Urban Users (CPI-U) as reported by the United States Bureau of Labor
Statistics for the most recently completed calendar year that IMS is
performing services on behalf of the Customer. In the event that a
vendor supplying a service or product to IMS, which service or product
is used by IMS to provide the Insurance Administration Services to
Customer, increases its rates charged to IMS, IMS may increase the
Service Fees, Claim Administration Fees, and Miscellaneous Fees set
forth in Schedule B to incorporate such increased costs and will
provide Customer with documentation verifying the increase.
C. Customer shall reimburse IMS for travel, living and out-of-pocket
expenses incurred by IMS personnel in the performance of training
relative to the Insurance Administration Services to be performed under
this Agreement.
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D. Customer agrees to pay any and all tariffs and taxes that are now or
may become applicable to the Insurance Administration Services rendered
hereunder, including, but not limited to, sales, use, and personal
property taxes, or any other form of tax based on Insurance
Administration Services performed, equipment used by IMS solely for
Customer, and the communicating or storage of data used by IMS solely
for Customer, but excluding taxes on the net income of IMS.
E. Subject to the terms of this Agreement, all fees and expenses to be
payable by Customer to IMS or any third party under this Agreement
shall be paid within thirty (30) calendar days after Customer's receipt
of IMS' monthly statement for all services provided to Customer under
this Agreement. IMS will calculate the fees owed to IMS by Customer and
will send a statement to Customer within two (2) weeks of the last day
of the month for which fees are owed. Customer's failure to pay all
fees and expenses when due shall be considered a material breach of
this Agreement. Further, if Customer fails to pay any fees and expenses
due IMS as herein provided, Customer shall pay to IMS in addition to
all sums otherwise due, interest which shall accrue at 1.5% per month
on such delinquency from the date the fees or expenses became past due.
Failure or forbearance to exercise any of its rights and privileges
hereunder shall not constitute the forfeiture or waiver of such rights
and privileges on the part of IMS.
F. Prior to renewal of this Agreement for any Extended Operating Term, IMS
may modify SCHEDULE B in its discretion to reflect any increase in the
cost of providing the Insurance Administration Services (including, but
not limited to statutory, regulatory, or judicial changes that require
IMS to incur additional cost or expenses in performing the Insurance
Administration Services) or to remain competitive with the rates
currently being charged within the industry for like services. Any
modification of SCHEDULE B shall be proposed to Customer at least six
(6) months prior to the expiration of any term of this Agreement.
ARTICLE VII. LICENSE, TRADE SECRET AND PROPRIETARY RIGHTS
A. IMS from time to time may use its own proprietary computer software
products and account servicing methods and procedures ("Proprietary
System"), which are identified, described or referenced in EXHIBIT I
hereto, in the performance of the Insurance Administration Services.
During any term of this Agreement, IMS grants a personal,
non-transferable, non-assignable, non-exclusive license to Customer to
use portions of the Proprietary System as necessary for IMS to perform
the Insurance Administration Services under this Agreement. Further, no
provision within this Agreement shall be interpreted as prohibiting IMS
from selling or licensing its Proprietary System to any other customer
or prospective customer of IMS.
B. IMS, from time to time, may also use proprietary third party computer
software products and third party account servicing methods and
procedures ("Third Party Proprietary System"), which are identified,
described or referenced in EXHIBIT I hereto in the performance of the
Insurance Administration Services. No provision within this Agreement
shall be interpreted as prohibiting IMS or the Third Party Proprietary
System vendor from selling or licensing the Third Party Proprietary
System, or modifications and enhancements to the Third Party
Proprietary System, to any other customer or prospective customer of
IMS, so long as Customer's Confidential Information is not disclosed.
C. Other than the limited rights to use the Proprietary System and the
Third Party Proprietary System, as provided in Article VII (A) and (B)
above, this Agreement grants to Customer no right to possess or
reproduce, download, reverse engineer, or obtain any other interest in,
the Proprietary System or the Third Party Proprietary System, or their
specifications in any tangible or intangible medium. Customer may not
mortgage, hypothecate, sell, assign, pledge, lease, transfer, license,
or sublicense the Proprietary System or the Third Party Proprietary
System, nor allow any person, firm, entity or corporation to transmit,
copy, reproduce, download, reverse engineer, or obtain any other
interest in the Proprietary System or the Third Party Proprietary
System, or their
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specifications in whole or in part. In the event Customer shall come
into possession of any source or object code associated with the
Proprietary System or the Third Party Proprietary System, Customer
shall immediately notify IMS and return the source or object code
associated with Proprietary System or the Third Party Proprietary
System in its possession and all copies of any kind thereof to IMS.
D. Customer covenants and agrees not to disclose or otherwise make the
Proprietary System or the Third Party Proprietary System available to
any person other than employees, insurance sales agents ("Agents") or
representatives of the Customer required to have access or use of the
Proprietary System or the Third Party Proprietary System to facilitate
IMS' or Customer's performance under this Agreement. Customer agrees to
obligate each such employee, Agents, or representative to a level of
care sufficient to protect the Proprietary System and the Third Party
Proprietary System from unauthorized disclosure.
E. The obligations of Customer under this Article shall survive
termination of this Agreement, regardless of the reason for
termination.
ARTICLE VIII. TERMINATION
A. Either party may terminate this Agreement after the twelve (12) month
anniversary of the Effective Date, provided the terminating party gives
the other party at least three (3) months prior written notice of such
termination.
B. This Agreement shall also terminate:
a) at the election of the Customer, upon written notice to IMS,
if IMS becomes insolvent, if it makes an assignment for the benefit of
its creditors, if a petition for relief under the United States
Bankruptcy Code is filed by or against it and it is not dismissed
within thirty (30) days of being filed, or if a trustee, receiver or
other custodian of its assets is appointed;
b) at the election of IMS, upon written notice to Customer, if
Customer becomes insolvent, if it makes an assignment for the benefit
of its creditors, if a petition for relief under the United States
Bankruptcy Code is filed by or against it and it is not dismissed
within thirty (30) days of being filed, or if a trustee, receiver or
other custodian of its assets is appointed (including, but not limited
to, any proceeding pursuant to any state or federal action governing
insurer insolvency);
c) at the election of the Customer, if IMS materially breaches
any provision of this Agreement and fails to cure such breach within
sixty (60) days after written notice thereof is given to IMS by the
Customer;
d) at the election of IMS, if Customer materially breaches any
provision of this Agreement and fails to cure such breach within sixty
(60) days after written notice thereof is given to Customer by IMS
(except for Customer's failure to pay any and all fees and expenses due
under Article VI of this Agreement, in which case Customer must cure
such breach within thirty (30) days after written notice thereof is
given to Customer by IMS);
e) at the election of IMS, upon written notice to Customer, in
the event of a Change of Control of Customer unless (i) Customer has
provided IMS not less than sixty (60) days advance written notice of
the proposed Change of Control and (ii) IMS has agreed in writing to
such Change of Control;
f) at the election of Customer, upon written notice to IMS, in
the event of a Change of Control of IMS unless (i) IMS has provided
Customer not less than sixty (60) days advance written notice of the
proposed Change of Control and (ii) Customer has agreed in writing to
such Change of Control.
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The initiation under this Agreement of any dispute resolution procedure
shall not prevent a party from terminating this Agreement in accordance
with this Article VIII.
C. On expiration or termination of this Agreement, IMS shall return to
Customer all of Customer's Confidential Information, either in
electronic or hard copy form, in IMS' possession and delete any
electronic copies thereof related to the Insurance Administration
Services provided by IMS during the term of this Agreement; Customer
shall do the same and cause Customer's agents and representatives
(including, but not limited to, any third party given access to the
Confidential Information) to do the same relative to IMS' Confidential
Information. Customer shall pay IMS (in accordance with SCHEDULE B then
in effect) any and all Service Fees, Claim Administration Fees,
Miscellaneous Fees and third party fees due IMS for Insurance
Administration Services performed pursuant to this Agreement. Further,
if either Mobile USA Insurance Company or Philadelphia Indemnity
Insurance Company is no longer approved by the FIA to act as a WYO
Company under the WYO Flood Program, it shall pay IMS on a per
transaction basis for each cancellation and endorsement that IMS
processes on its behalf for the runoff flood insurance business. IMS
and Customer shall cooperate in any transition period during the
wind-up of Insurance Administration Services provided Customer under
this Agreement. If Customer requires assistance in converting
Customer's data to a new format, or requires assistance from IMS
relative to Customer's transition to an alternative claim
administration arrangement, then IMS shall provide such services at the
then current rates charged by IMS for the services specified in Section
IV of SCHEDULE B. This obligations under this Paragraph (C) shall
survive any termination of this Agreement.
ARTICLE IX. WARRANTIES AND COVENANTS
IMS covenants that IMS will comply in all material respects with the law of the
state or states covered by this Agreement and with the rules and regulations of
all regulatory authorities having jurisdiction over IMS' activities, and shall,
whenever necessary, maintain at its own expense all required licenses to
transact business in such states. IMS warrants to Customer that (a) IMS owns or
otherwise has the right to use the Proprietary System used to perform the
Insurance Administration Services, and the rights to such Proprietary System
granted hereunder will not knowingly infringe upon a third party's copyright or
patent rights; (b) IMS is duly authorized to transact the business of servicing
insurance companies; and (c) the express warranties provided here and elsewhere
in this Agreement are IMS' only warranties and no other warranty, express or
implied, including any warranty of merchantability, fitness or fitness for a
particular purpose, will apply to the provision of Insurance Administration
Services under this Agreement.
ARTICLE X LIABILITY, LIMIT OF LIABILITY, INDEMNITIES AND REMEDIES
A. The parties shall assume the following obligations and liabilities as
specified below and subject to the limitations on liability set forth
in Article X, (B) below:
a) IMS shall indemnify, defend and hold harmless Customer, its
officers, directors, employees and controlling persons from any
liability, cost, loss, fine, penalty, claim, demand, damage or expense,
including reasonable attorneys' fees, incurred solely and directly as a
result of any material breach of IMS' obligations under this Agreement
or the material breach of any representation or warranty made by IMS to
Customer pursuant hereto;
b) Customer shall indemnify, defend and hold harmless IMS, its
officers, directors, employees and controlling persons from any
liability, cost, loss, fine, penalty, claim, demand, damage or expense,
including reasonable attorney's fees, incurred solely and directly as a
result of (i) any material breach of Customer's obligations under this
Agreement, or (ii) the material breach of any representation or
warranty made by Customer to IMS pursuant hereto;
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c) Customer agrees that in the event IMS is in violation of any
code, statute or law(s) due to the acts or omissions of Customer, or
the servants, employees, representatives, adjusters, or Agents of
Customer, then Customer shall assume the responsibility and liability
for such acts or omissions and shall indemnify and hold IMS harmless
for any such liability;
B. Except for: (i) fees and expenses payable to IMS under Article VI of
this Agreement; (ii) acts of fraud, or willful misconduct; and (iii)
violations of Article VII of this Agreement, each party's maximum
liability ("Maximum Liability") to the other party for any cause
whatsoever, during any one calendar year shall be limited to direct
damages incurred by that party and shall not exceed the amount of
compensation paid by the Customer under SCHEDULE B of this Agreement
for the six (6) months immediately preceding the breach or cause of
liability. Further, IMS shall not be liable for any lost profits,
business goodwill, or other consequential, punitive, special or
incidental damages incurred by Customer.
C. If data is processed in error due directly to an error or defect in the
Insurance Administration Services provided by IMS, then upon IMS
receiving notice of such error or defect, IMS shall reprocess such data
without charge to Customer.
D. All parties agree to promptly give the others notice upon being
notified or becoming aware of any and all allegations or claims, which
could give rise to a claim under this Article.
ARTICLE XI. GENERAL AGREEMENTS
A. This Agreement and all matters arising hereunder shall be governed by
and determined in accordance with the laws of the State of Florida
without giving effect to any choice of law provisions.
B. The parties shall not be liable or deemed to be in default hereunder
for any delay or failure in performance under this Agreement or
interruption of the Insurance Administration Services resulting,
directly or indirectly, from acts of God (including but not limited to
weather catastrophes such as floods, hurricanes, tornadoes, windstorms,
ice storms, blizzards and hail storms), civil or military authority,
labor disputes, shortages of suitable parts, materials, labor or
transportation or any similar cause beyond the reasonable control of
the parties.
C. Any and all notices, designations, consents, offers, acceptances, or
any other communication provided for herein shall be given in writing
by hand delivery, by overnight carrier, by registered or certified mail
or by facsimile transmission and shall be addressed as follows:
As to Customer: Mobile USA/Philadelphia Indemnity Insurance Company
7785 66th Street North
PO Box 8080
Pinellas Park, FL 33780
Fax Number: (727) 545-1274
Attention: Dan Eldridge, President
As to IMS: Insurance Management Solutions, Inc.
360 Central Avenue, 16th Floor
St. Petersburg, FL 33701
Fax Number: (727) 803-2076
Attention: David Howard, President
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Notices sent by hand delivery shall be deemed effective on the date of
actual hand delivery. Notices sent by overnight carrier shall be deemed
effective on the next Business Day after being placed into the hands of
the overnight carrier. Notices sent by registered or certified mail
shall be deemed effective on the fifth Business Day after being
deposited into the post office. Notices sent by facsimile transmission
shall be deemed to be effective on the day when sent if sent prior to
4:30 p.m. (the time being determined by the time zone of the
recipient), otherwise they shall be deemed effective on the next
Business Day.
D. This Agreement, and the exhibits, schedules and appendices attached
hereto, contain all of the prior oral and/or previously written
agreements, representations, and arrangements between the parties
hereto. There are no representations or warranties other than those set
forth herein. No change or modification of this Agreement, including
the exhibits, schedules and appendices hereto, shall be valid unless
the same shall be in writing and signed by all of the parties hereto.
All exhibits, schedules, appendices, addenda of any kind, or
attachments to this Agreement shall be made a part of this Agreement
and shall be subject to all terms and conditions of this Agreement.
Articles V (B), VII, and VIII (C) shall survive any termination of this
Agreement.
E. Words of a gender used in this Agreement shall be held to include any
other gender, the words in a singular number held to include the
plural, when the sentence so requires. Article headings are intended
for purposes of description only and shall not be used for purposes of
interpretation of this Agreement.
F. Should any part of this Agreement for any reason be declared invalid,
such decision shall not effect the validity of any remaining portion,
which remaining portion shall remain in full force and effect as if the
Agreement had been executed with the invalid portion thereof
eliminated. It is, therefore, declared the intention of the parties
hereto that each of them will have executed the remaining portion of
this Agreement without including therein any such part, parts or
portion which may, for any reason, be hereafter declared void.
G. If either party should bring a Court action alleging breach of this
Agreement or seeking to enforce, rescind, renounce, declare, void or
terminate this Agreement or any provisions thereof, the prevailing
party shall be entitled to recover all of its legal expenses, including
reasonable attorneys' fees and costs (including legal expenses for any
appeals taken), and to have the same awarded as part of the judgment in
the proceeding in which such legal expenses and attorneys' fees were
incurred.
H. Neither IMS nor Customer shall assign this Agreement or any of its
rights hereunder without the prior written consent of the non-assigning
party.
I. The parties agree not to disclose the terms and conditions of this
Agreement to any third party, except (i) as required in the normal
conduct of Customer's business, or (ii) as required by law or
regulation including, without limitation, any Federal securities law,
or regulation.
ARTICLE XII. DISPUTE RESOLUTION PROCEDURES
A. The parties will attempt in good faith to promptly resolve any material
dispute regarding this Agreement by negotiations between senior
management ("Senior Management") of the parties. Senior Management of
each party will meet within ten (10) calendar days of notice ("Notice
of Dispute") by a party of the existence of a material dispute, at a
mutually agreed time and place, to resolve the material dispute. Senior
Management, who shall have the authority to settle the dispute, shall
prepare and exchange memoranda stating the issues in the material
dispute and their positions. If the material dispute is not resolved to
the mutual satisfaction of the parties within seven (7) calendar days
of the meeting of Senior Management, then the parties may attempt to
resolve the controversy using mediation.
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B. If the matter has not been resolved pursuant to the aforesaid mediation
procedure within thirty (30) calendar days of the issuance of a party
of a Notice of Dispute, or if either party will not participate in
mediation, then either party may initiate arbitration upon fifteen (15)
calendar days written notice to the other party. Notwithstanding the
foregoing, all deadlines specified above may be extended upon mutual
written agreement of the parties.
C. Except for the right of either party to apply to a court of competent
jurisdiction for review of the award of arbitration, for a temporary
restraining order, preliminary injunction or other equitable relief to
preserve the status quo, or disputes relating to breach of the
confidentiality, non-disclosure or trade secret provisions of this
Agreement, all claims, disputes, controversies and other matters
relating to breach of this Agreement, and which cannot be resolved by
the parties shall be settled by arbitration in accordance with this
Agreement.
D. Notice requesting arbitration ("Arbitration Notice"), or any other
notice made in connection therewith, shall be made in writing by one
party and sent by certified mail, return receipt requested, to the
other party. The Arbitration Notice shall state in particular all
issues to be resolved in the view of the complaining party, shall
appoint the arbitrator selected by the complaining party and shall set
a tentative date for the arbitration hearing, which date shall be no
sooner than forty-five (45) calendar days and no later than ninety (90)
calendar days from the date that the Arbitration Notice is mailed.
Within twenty (20) calendar days of receipt of the complaining party's
Arbitration Notice, the respondent shall notify the complaining party
of the location for conducting arbitration and the name of its
appointed arbitrator. When the two arbitrators have been appointed,
they shall agree on a third independent arbitrator and shall appoint
such person by written notice to the parties signed by both arbitrators
within thirty (30) calendar days from the date of the appointment of
the second arbitrator. If the two arbitrators fail to agree upon the
appointment of an independent arbitrator at the end of thirty (30)
calendar days following the appointment of the second arbitrator, then
the independent arbitrator shall be appointed by the American
Arbitration Association ("AAA"), or its successor, in accordance with
its then prevailing commercial arbitration rules then in effect. The
three (3) arbitrators shall constitute the arbitration board ("Board").
E. The members of the Board shall be active or retired (i) lawyers or
professionals familiar with insurance and/or (ii) active or former
officers or management employees of insurance and/or data processing
firms and/or software development companies. The person selected by the
two respective arbitrators appointed by the parties shall be the umpire
or chief arbitrator and must be a licensed attorney.
F. Arbitration shall be conducted in accordance with the Commercial Rules
of the American Arbitration Association ("AAA") then in effect except
as modified herein.
G. The parties agree that all then current employees of each with material
relevant information will be voluntarily produced, at the employer's
expense, for all proper discovery and arbitration hearings.
H. The cost of the arbitration relative to the arbitrators and the AAA
("Costs") shall be borne equally pending the arbitrators' award. Each
party shall bear its own expenses for attorneys' fees. The prevailing
party in any arbitration proceeding hereunder shall be entitled, in
addition to such other relief as may be granted, to recover the portion
of the Costs incurred by that party in connection with arbitration
under the Agreement prior to the award.
I. The parties agree that the Board shall be required to render its
decision in writing within thirty (30) calendar days of the conclusion
of the arbitration proceedings, unless such time shall be extended by
mutual written agreement of the parties.
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J. With respect to any matter brought before the Board, the Board shall
make a decision having regard to the intentions of the parties, the
terms of this Agreement, and custom and usage of the insurance and data
processing industry. Such decisions shall be in writing and shall state
the findings of fact and conclusions of law upon which the decision is
based, provided that such decision may not (i) award consequential,
punitive, special, incidental or exemplary damages, or (ii) include a
suspension of this Agreement or any provisions hereof. The decision
shall be based exclusively upon the evidence presented by the parties
at a hearing in which evidence shall be allowed. Said decisions may be
reviewable and vacated, modified or corrected, in whole or in part, by
appropriate courts of competent jurisdiction for clear abuses of
discretion or errors at law by the Board. If the decision is not
vacated, modified, or corrected in whole or in part upon an appeal,
such decision shall be final and binding upon all parties to the
proceeding and may be entered by either party in any court having
competent jurisdiction.
(The remainder of this page is intentionally left blank.)
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IN WITNESS WHEREOF, the parties hereto by their respective duly authorized
representatives have executed this Agreement to be effective as of the 12th day
of Sept., 2001.
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"IMS"
INSURANCE MANAGEMENT SOLUTIONS, INC.
- -------------------------------------------------------------------------------
By: s/s D.M. Howard
------------------------------------
As its: President/CEO
--------------------------------
Date: September 12, 2001
----------------------------------
- -------------------------------------------------------------------------------
"CUSTOMER"
- -------------------------------------------------------------------------------
MOBILE USA INSURANCE COMPANY
By: P. Daniel Eldridge
------------------------------------
As its: President, CEO
--------------------------------
Date: September 12, 2001
----------------------------------
- -------------------------------------------------------------------------------
PHILADELPHIA INDEMNITY INSURANCE COMPANY.
By: P. Daniel Eldridge
------------------------------------
As its: President, CEO
--------------------------------
Date: September 12, 2001
----------------------------------
- -------------------------------------------------------------------------------
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SCHEDULES:
SCHEDULE "A" - AUTHORIZED STATES AND INSURANCE PROGRAM
SCHEDULE "B" - FEE SCHEDULE
EXHIBITS:
EXHIBIT 1 - WYO FLOOD INSURANCE SERVICES
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SCHEDULE A
AUTHORIZED STATES AND INSURANCE PROGRAM
IMS shall provide Insurance Administration Services as described in EXHIBIT I
for the following authorized line(s) of business ("Authorized Line of Business")
in the following authorized state(s) ("Authorized States"):
1. AUTHORIZED LINE OF BUSINESS:
WYO Flood Insurance
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
2. AUTHORIZED STATES:
All states within the United States of America.
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SCHEDULE B
FEE SCHEDULE
[*]
Indicates that material has been omitted and confidential treatment has been
requested therefor. All such omitted material has been filed separately with
the SEC pursuant to Rule 24b-2.
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EXHIBIT I
INSURANCE ADMINISTRATION SERVICES (WYO FLOOD)
WHEREAS, The Federal Emergency Management Agency ("FEMA") and the
Federal Insurance Administration ("FIA") administer the National Flood Insurance
Program ("NFIP") and Customer is an insurance company duly licensed to write
flood insurance in the state or states to which this Agreement pertains and is
approved by FIA to act as a Write Your Own Company ("WYO Company") under the
Write Your Own Flood Insurance Program ("WYO Flood Program"), a program offered
under the NFIP; and
WHEREAS, Customer wishes to engage the services of IMS to administer
certain of the Customer's obligations as a WYO Company in the state(s)
("Authorized States") set forth in SCHEDULE A.
1) DEFINITIONS. Capitalized terms not otherwise defined in the Agreement
or in this Exhibit shall be construed as otherwise generally understood
in the insurance and data processing industry.
2) POLICY ADMINISTRATION. IMS shall administer Customer's WYO Flood
Program policies ("WYO Policies") performing the services listed
hereunder in accordance with the NFIP, as amended, and all implementing
regulations as well as Customer's Write Your-Own Arrangement
("Arrangement") with FEMA. The same standards by which Customer is
bound shall be those by which IMS is bound to Customer.
a) Underwriting.
- Review WYO Policy application for completeness/contact Agent
as applicable;
- Create WYO Policy file;
- Underwriting based on NFIP guidelines.
b) Data Entry. (subject to the 120 Day Internet Access Milestones
specified in Schedule B)
- New WYO Policy business;
- WYO Policy changes;
- Mortgagee changes;
- WYO Flood insurance Agent changes;
- Endorsements;
- Cancellations.
c) WYO Policy Issuance.
- WYO Policy for new business, renewals and endorsements where
declaration page issuance is required;
- WYO Policy Renewal processing;
- WYO Policy automated rating;
- WYO Policy print declarations and related WYO Policy forms.
d) Billing & Collection.
- Print invoices, reminders, cancellation notification, return
WYO Policy premium disbursements;
- Mortgage activity processing;
- EFT processing;
- Process cancellations for non-payment.
e) Customer Service.
- Provide a dedicated customer service support call center;
- Respond to Customer's WYO Policyholder and WYO flood insurance
sales Agent telephone inquires;
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- Process requests for WYO Policy changes;
- Respond to correspondence related to WYO Policy and WYO Policy
claim administration services;
- Track and respond to complaints related to WYO Policy and/or
WYO Policy claim administration services; IMS customer service
hours of operation 8:00 a.m. to 8:00 p.m. Eastern Standard
Time ("EST").
f) Bureau Reporting.
- Process and balance WYO Policy premium and WYO Policy loss
data;
- Edit and correct invalid data;
- Prepare and mail Bureau transmittals;
- To the best of IMS knowledge, provide on-going regulatory
changes;
- Maintain WYO Policy history files.
g) Accounting Administration/Premium.
- Posting, balancing, and control of WYO Policy premium
receivable;
- Accounting and payment of Customer's WYO flood insurance
Agents WYO Policy commissions;
- Issuance, control and accounting for disbursements for WYO
Policy premium refunds, WYO Policy commissions.
h) Financial Accounting.
- Issuance, control and accounting for disbursements for general
expenses;
- Day-to-day management of short term cash;
- Provide reasonable and customary financial management reports.
i) Treasury.
- Receive and post WYO Policy payments;
- Issuance, control and accounting for disbursements of WYO
Policy premium related expenses;
- Bank reconciliation of WYO Policy premium disbursements;
- OCR WYO Policy payment processing;
- Mortgagee billing.
j) Agency Administration.
- Agent of record assignment and control;
- 1099 reporting;
- Maintain WYO flood insurance Agent files.
k) Print & Distribution Services.
- Automated document library;
- Electronic document assembly;
- Electronic document archival/retrieval;
- Automated finishing/insertion facility;
- Mail pre-sort facility;
- Mailing WYO Policy, WYO Policy billings and WYO Policy
renewals (including postage and supplies);
- Document Imaging.
l) System Administration.
- Availability of Proprietary System to Customer and Customer's
WYO Policy claim vendor;
- Process daily, weekly, monthly, and annual cycles;
- Internet processing capabilities subject to Internet use
limitations specified in Schedule B.
3) CASH MANAGEMENT.
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a) Banking Arrangement. IMS and Customer shall establish a
banking arrangement that complies with the Arrangement and other WYO
Flood program requirements, and which will provide for the
establishment of an NFIP restricted account ("Restricted Account") with
Customer as custodian, and a FEMA letter of credit ("Letter of
Credit"), with additional accounts as needed to facilitate WYO Flood
Program operations, all in conformity with FEMA/FIA guidelines.
Customer shall grant specific IMS' employees check-signing authority on
any Restricted Account and the authority to initiate appropriate
drawdowns against Customer's Letter of Credit, in order for IMS to act
on Customer's behalf in making disbursements for Customer liabilities
established by the Arrangement, the WYO Flood Program, and this
Agreement. All such authorizations shall be in writing and may be
revoked, amended or modified at any time by Customer upon thirty (30)
days advanced written notice to IMS. Notwithstanding the foregoing, IMS
shall not draw down on Letter of Credit for an amount that exceeds
$50,000.00 without prior approval from the Chief Financial Officer of
Customer, which approval shall not be unreasonably withheld and shall
be given within 24 hours of the request being made by IMS.
b) Premium Remittance -IMS shall establish procedures, as
determined by FIA, for a timely deposit and remittance of funds to the
U.S. Treasury via authorized automatic clearinghouse mechanism. Gross
premium collected by IMS, for WYO Flood program business written under
this Agreement, shall be remitted to the FIA by IMS net of the
established NFIP Expense Allowance. ("Allowance"), which Allowance
expenses to be paid under the Allowance include Carrier's operating and
administrative expenses.
c) Financial Data - IMS shall maintain supporting documentation
for all bank accounts over which it has authority. On a monthly basis,
IMS shall prepare financial data, reflecting all debits and credits
with respect to WYO Flood Program business administered under this
Agreement, including agents' commissions and IMS' Service Fees paid.
d) WYO Flood Program Reimbursements - Any WYO Flood Program
reimbursements made pursuant to the Arrangement, including, but not
limited to, those for the unallocated loss adjustments expenses, the
allocated loss adjustments, and for approved special allocated loss
adjustments expenses, shall be payable to IMS upon receipt by Customer.
e) Marketing Goals - Customer shall maintain responsibility for
any risk, or shall be entitled to any reward, that may be associated
with achieving or failing to achieve any marketing goal set by the FIA
or FEMA.
4) CLAIM ADMINISTRATION. IMS shall provide Claims administration in
accordance with the Arrangement, the Financial Control Plan and the
Agreement, which claim administration processing services are outlined
below. Any litigation costs not reimbursed by FEMA would be the
responsibility of the Customer. IMS may also rely on the information
and direction contained in the WYO Flood Program Claims Manual, the
FEMA Adjuster Manual, the Flood Insurance Agent's Manual, the Standard
Flood Insurance Policy, the WYO Operational Overview, and/or other WYO
Flood Program instructional material.
a) Claim Management Facilitation.
- Twenty-four (24) hour reporting capability, first notice of
loss, coverage for verification and WYO Policy claim;
- Investigation of WYO Policy claim;
- Fast track unit;
- Reinspection and audit;
- Claims handling standards/best practices;
- Claim check issuance;
- Management reports;
- WYO Policyholder satisfaction surveys;
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- Special Investigation Unit ("SIU") services;
- Salvage & subrogation claim processing;
- Litigation support.
b) Catastrophe Preparation and Response.
- Preparedness by developing media reference guides and notices,
adjuster workshops, and training manuals; provide storm
tracking; reserve equipment and supplies; establish
procedures;
- Response in case of a catastrophic event by establishing and
staffing satellite service centers; automating the
distribution of claims to adjusters; internal
examinations/external reinspections;
- Recovery by providing management reports, audit/reinspection
program, SIU and oversight operations.
5) ADJUSTING FIRM. IMS' Colonial Catastrophe Claims Service will be the
authorized adjusting firm ("Adjusting Firm") for all claims adjusting
work on behalf of Customer. However, Customer may designate a different
Adjusting Firm with thirty (30) days written notice to IMS.
6) DISASTER RECOVERY PLAN. IMS shall perform its' full range Disaster
Recovery Plan on an annual basis. Customer has the right to observe the
Disaster Recovery Plan at its own expense, provided that it has
requested in writing to participate within thirty (30) days of planned
execution.
7) STATISTICAL REPORTING. IMS shall maintain Customer's data within IMS'
policy, claims and general ledger systems. IMS shall prepare and submit
to FIA, monthly financial and statistical reports, reconciliation
reports, certifications, and statistical tapes on Customer's behalf, in
accordance with WYO Flood Program Accounting Procedures and the
Transaction Record Reporting and Processing Plan ("TRRP Plan").
8) SPECIAL SERVICES.
a) Audit - At Customer's expense and at IMS' premises, IMS shall
conduct a biennial audit of any and all WYO Flood Program
business written by Customer pursuant to this Agreement. IMS
shall select an independent auditor and IMS shall present the
expense estimate for the biennial audit to Customer. Within
fifteen (15) days of receiving the estimate, Customer shall
have the option of selecting their own independent auditor to
conduct the audit or proceed with the independent auditor
selected by IMS.
b) Zone Determination Services - IMS shall provide flood zone
determinations to the Customer (or Customer's agents) to
assist in writing a WYO Policy to be placed with the Customer
and administered by IMS. .
c) Rating Software - From the Effective Date of this Agreement up
to the one (1) year anniversary of the date that IMS provides
internet access (which shall include deployment of the
internet access into live production) to any of Customer's
insurance sales agents for the Authorized Line of Business
within the Authorized States, IMS will make available to
Customer and/or Customer's insurance sales agents, rating
software (which by definition is a Proprietary System) for the
ability to provide quotations, prepare new business
applications, endorsements and cancellation of the WYO Policy.
d) Training - Upon Customer's request, IMS will provide six (6)
training sessions per calendar year to Customer and/or
Customer's Agents. Customer will provide the training
facility. Additional requests for training will be charged at
One Hundred and Twenty Five Dollars ($125) per day plus
reasonable per diem and travel expenses incurred.
e) Marketing Material. IMS will make available to Customer its
marketing or promotional
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materials, which IMS may customize and produce for Customer at
Customer's expense.
f) Agency Rollover Services. Within a reasonable time of
Customer's request, IMS will provide rollover services to
those Customer agents that wish to roll over 300 or more WYO
Policies in their book of business to Customer. In the event
that there are several Agents within a concentrated
geographical area wishing to roll over 300 or more WYO
Policies to Customer, IMS will provide rollover service to all
Agents within that area at the same time. Due to the potential
size of the project, IMS will need Customer to provide a full
listing of Agents, location and size of business. IMS will
create a schedule to perform this service.
g) Additional Fees & Services. Additional services not specified
in this Agreement may be provided by as mutually agreed upon
in writing between the Customer and IMS in writing.
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