FLOOD INSURANCE
FULL SERVICE VENDOR AGREEMENT
Entered into by and between
FIRST COMMUNITY INSURANCE COMPANY
Santa Barbara, California
And
INSURANCE MANAGEMENT SOLUTIONS, INC.
St. Petersburg, Florida
FLOOD INSURANCE
FULL SERVICE VENDOR AGREEMENT
(the "Agreement")
Entered into by and between
FIRST COMMUNITY INSURANCE COMPANY
(Hereinafter referred to as "Company")
Santa Barbara, California
and
INSURANCE MANAGEMENT SOLUTIONS, INC.
(Hereinafter referred to as the "Vendor")
St. Petersburg, Florida
This 3rd day of January, 2003
WHEREAS, as more fully described in Article I.A. below, Company is party to
that certain Stock Purchase Agreement dated as of October 4, 2002 (the "FCIC
Stock Purchase Agreement"), by and among Bankers Insurance Group, Inc. ("BIG"),
Company and Fidelity National Financial, Inc. ("FNF"), whereby, among other
things, FNF intends to acquire the capital stock of Company from BIG (the "FNF
Transactions");
WHEREAS, FCIC is a licensed property/casualty company participating in the
National Flood Insurance Program ("NFIP") Write Your Own ("WYO") Program of the
Federal Insurance Administration ("FIA") of the Federal Emergency Management
Agency ("FEMA");
WHEREAS, the Vendor is in the business of providing flood insurance
administrative and related services with respect to the business of flood
insurance; and
WHEREAS, effective in the event and only upon the consummation of the FNF
Transactions, (i) Company desires to contract with the Vendor to provide flood
insurance administrative and related services pursuant to the terms and
conditions set forth herein, and (ii) Company and Vendor desire to remove
Company as a party from that certain Insurance Administration Services
Agreement dated as of October 1, 2001, by and among Vendor, Bankers Insurance
Company, Bankers Security Insurance Company and Company, as amended (the "Old
Company Agreement");
NOW THEREFORE, in consideration of the mutual representations, covenants and
agreements, the parties hereto, intending to be legally bound, do hereby agree
as follows:
ARTICLE I - CONDITION PRECEDENT
A. In connection with the FNF Transactions, FNF and certain of its
affiliates (collectively, "Fidelity") have entered into agreements
with BIG and certain of its affiliates (collectively, "Bankers')
related to a series of transactions, pursuant to which, among other
things, Fidelity is acquiring (i) all of the capital stock of Company,
and (ii) the renewal rights to the in-force NFIP flood insurance
policies of Bankers (the "Bankers NFIP Policies") and certain assets
related thereto. The consummation of the FNF Transactions are subject
to certain conditions,
including, without limitation, the execution by Company and Vendor of
this Agreement, pursuant to which Company is engaging Vendor to
administer all of Company's NFIP flood insurance policies, including,
without limitation, all (i) Company renewals of the Bankers NFIP
Policies, and (ii) any other books of NFIP flood insurance policies
acquired or otherwise obtained by FNF and its affiliates through new
agent relationships or through a stock purchase, merger, asset
purchase (including renewal rights purchase) or other change of
control transaction with a non-affiliate of FNF (collectively,
"Acquired NFIP Policies").
B. Company and Vendor expressly acknowledge and agree that the
effectiveness of this Agreement is conditioned in its entirety upon
the consummation of the FNF Transactions. In such event, this
Agreement (i) shall be deemed to be effective as of the date of the
consummation of the FNF Transactions (hereinafter, the "Effective
Date"), and (ii) with respect to Company and Vendor only, supersedes
and replaces in its entirety the Old Company Agreement as of the
Effective Date. All representations, warranties, covenants and all
other rights and obligations set forth in this Agreement shall be
deemed to have been made and or shall commence as of the Effective
Date.
C. For purposes of clarity, Company and Vendor expressly acknowledge and
agree that if the FNF Transactions are not consummated, then (i)
neither party shall have any obligation to the other under this
Agreement, (ii) this Agreement shall become null and void and of no
force or effect, and (iii) the Old Company Agreement shall remain in
full force and effect.
ARTICLE II - REPRESENTATIONS AND WARRANTIES.
A. Each of Company and Vendor hereby represents and warrants to the other
party that (i) it is a corporation duly incorporated, validly existing
and in good standing (or of active status) under the laws of the
jurisdiction of its incorporation, (ii) it is qualified, licensed or
domesticated as a foreign corporation in all jurisdictions where such
qualification, license or domestication is required to conduct its
business in the manner and at the places presently conducted, and
(iii) it has full power and authority (corporate and other) to carry
on its business as presently conducted and as proposed to be conducted
pursuant to this Agreement, except in the case of clauses (ii) and
(iii) where such failure or failures, individually or in the
aggregate, to be qualified, licensed or domesticated or to have full
power or authority would not have a material adverse effect on the
ability of such party to perform its obligations under this Agreement.
Each of Company and Vendor hereby represents and warrants to the other
party that it has all requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. Each
of Company and Vendor hereby represents and warrants to the other
party that the execution, delivery and performance by it of this
Agreement and the taking by it of any other action contemplated by
this Agreement will not result in any violation or be in conflict with
or constitute a breach or default (with or without notice or lapse of
time or both) under its certificate of incorporation or by-laws or any
applicable law, rule, regulation, judicial order or agreement, except
for such violations, conflicts, breaches or defaults which,
individually or in the aggregate, would not be reasonably expected to
have a material adverse effect on the ability of such party to perform
its obligations under this Agreement.
B. Vendor hereby represents and warrants that all confidential
information, patents, copyrights, trademarks, service marks, trade
names, trade secrets, licenses, computer programs, computer software,
computer software data bases, technology and other proprietary rights
and
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processes utilized by Vendor to render the Services under this
Agreement (collectively, the "Proprietary Systems") are (i) either
owned by Vendor or used by Vendor under valid rights held by Vendor,
and (ii) to the extent owned by Vendor, do not infringe in any
material respect upon, and or are not infringed in any material
respect by, the rights of any third person or entity.
ARTICLE III - AUTHORITY OF VENDOR
A. Company hereby retains Vendor in accordance with the terms and
conditions of this Agreement to supervise and administer the WYO Flood
Insurance Program ("WYO Program") of Company in the states listed on
attached Schedule A.
B. Company hereby grants authority to Vendor to act for and on behalf of
Company in matters required for Vendor to properly supervise and
conduct the handling of the aforesaid flood insurance business,
including (but not by way of limitation) the authority to collect and
remit premiums, process applications and other forms, issue policies,
and process claims all in a manner consistent with, pursuant to, and
as authorized or required by this Agreement and the provisions of the
National Flood Insurance Act of 1968, as amended, the Flood Disaster
Protection Act of 1973, as amended, and the regulations issued by the
National Flood Insurance Program ("NFIP") administered by the Federal
Insurance Administration ("FIA") and the terms of the
Financial/Subsidy Arrangement as may be amended from time to time (the
"Arrangement") between FEMA and Company. The Arrangement and all
related guidelines and procedures as issued by the NFIP, FIA and FEMA
are incorporated herein by reference. Any revised version of the
Arrangement and all related guidelines and procedures promulgated in
the future by the NFIP, FIA and FEMA shall be understood to be
incorporated herein for the applicable time period.
C. Vendor hereby accepts such appointment, and the grant of power and
authority, and agrees to carry out the resulting duties and
responsibilities in a professional manner and in accordance with
industry standards in order that Vendor may satisfy all duties and
obligations to (i) Company under this Agreement, and (ii) FEMA and FIA
as set forth under the Arrangement and all related guidelines and
procedures.
D. Vendor hereby covenants and agrees that it shall comply with all
applicable laws, regulations, rules, and requirements relating to the
performance of its obligations hereunder.
ARTICLE IV - SCOPE OF SERVICES
A. Company engages Vendor to provide it with, and Vendor accepts such
engagement and agrees to perform, those services described below
(collectively the "Services") in connection with Company's
administration of its WYO Program to existing or future clients and to
comply with all of those policy administration, claim processing,
accounting, and reporting obligations required of Company in the
Arrangement. Vendor shall perform all such Services on behalf of
Company in accordance with the terms and conditions of this Agreement
and the Arrangement in those states listed in Schedule A, attached. In
general, the Services to be performed by Vendor shall include:
1. Administer on behalf of Company the WYO Program in accordance
with the terms of this Agreement, the Arrangement and the
rules and regulations promulgated from time to time by FEMA
and FIA;
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2. Service flood insurance claims as provided herein;
3. Prepare and file all reports as required by the WYO Program.
These reports shall be prepared in accordance with this
Agreement and the WYO Program. In addition, subject to the
terms and conditions of this Agreement, Vendor shall control,
receive, deposit, and disburse all funds received in
connection with Company's WYO Program;
4. Perform all Services within the time frames mandated by the
Arrangement and to the highest quality utilized in the
insurance and data processing industries.
5. Perform all Services in accordance with the Service Level
Agreement attached hereto as Schedule B. Without in any way
limiting the generality of the foregoing, the Services to be
performed by Vendor on behalf of Company hereunder shall
specifically include:
a. Underwriting:
1. Review WYO Policy application for
completeness and contact Agent as
applicable;
2. Create WYO Policy file; and
3. Underwriting based on NFIP guidelines.
b. Data Entry:
1. New WYO Policy business;
2. WYO Policy changes;
3. Mortgagee changes;
4. WYO Flood insurance Agent changes;
5. Endorsements
6. Cancellations; and
7. Reinstatements.
c. WYO Policy Issuance:
1. WYO Policy for new business, renewals and
endorsements where declaration page
issuance is required;
2. WYO Policy Renewal processing;
3. WYO Policy automated rating; and
4. WYO Policy print declarations and related
WYO Policy forms.
d. Billing & Collection.
1. Print invoices, reminders, cancellation
notification, and return WYO Policy premium
disbursements;
2. Mortgage activity processing;
3. EFT processing; and
4. Process cancellations for non-payment.
e. Customer Service.
1. Provide a dedicated customer service support
call center;
2. Respond to Company's WYO Policyholder and
WYO flood insurance sales Agent telephone
inquires;
3. Process requests for WYO Policy changes;
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4. Respond to correspondence related to WYO Policy and
WYO Policy claim administration services; and
5. Track and respond to complaints related to WYO
Policy and/or WYO Policy claim administration
services; Vendor customer service hours of operation
8:00 a.m. to 8:00 p.m. Eastern Time ("ET") every
business day except where noted.
f. Bureau Reporting.
1. Process and balance WYO Policy premium and WYO
Policy loss data;
2. Edit and correct invalid data;
3. Prepare and mail Bureau transmittals;
4. Provide on-going regulatory changes; and
5. Maintain WYO Policy history files.
g. Accounting Administration/Premium.
1. Posting, balancing, and control of WYO Policy
premium receivable; and
2. Issuance, control and accounting for disbursements
for WYO Policy premium refunds.
h. Financial Accounting.
1. Issuance, control and accounting for disbursements
for general expenses;
2. Day-to-day management of short term cash;
3. Provide reasonable and customary financial
management reports;
4. Calculate and disburse to the Company's agents on a
monthly basis the commission payable; and
5. Provide Internal Revenue Service reporting tax
information to agencies reflecting commission paid
in connection with the issuance of flood insurance
policies under the WYO Program.
i. Treasury.
1. Receive and post WYO Policy payments;
2. Issuance, control and accounting for disbursements
of WYO Policy premium related expenses;
3. Bank reconciliation of WYO Policy premium
disbursements;
4. OCR WYO Policy payment processing; and
5. Mortgagee billing.
j. Print & Distribution Services.
1. Automated document library;
2. Electronic document assembly;
3. Electronic document archival/retrieval;
4. Automated finishing/insertion facility;
5. Document Imaging;
6. Mail pre-sort facility; and,
7. Mailing WYO Policy, WYO Policy billings and WYO
Policy renewals.
k. System Administration.
1. Company will have access through the Internet
utilizing the Policy Inquiry System and pre-written
or requested query reports all available online
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2. Process daily, weekly, monthly, and annual cycles;
3. Full Internet processing capabilities;
4. Vendor shall modify all software/internet processing
to include as soon as practical but no later than 45
days prior to such mandated change, any addition,
deletion or change to the WYO Requirements;
5. Notify company of any modifications to its software
that may serve to reduce in a materially adverse
manner the services that are being provided to the
company by vendor;
6. Provide rating disk software as required from the
date of the executed contract; and
7. Vendor will use commercially reasonable efforts to
provide interface capabilities with specified
primary agency management systems.
l. Agency Administration
1. Agent of record assignment and control
2. 1099 reporting
3. Maintenance of agency files.
C. CASH MANAGEMENT.
1. Banking Arrangement. Vendor and Company 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 FEMA 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.
Company shall grant specific Vendor' employees check-signing
authority on any Restricted Account and the authority to
initiate appropriate drawdowns against Company's Letter of
Credit, in order for Vendor to act on Company's behalf in
making disbursements for Company 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 Company upon
thirty (30) days advanced written notice to Vendor.
2. Premium Remittance. Vendor shall establish procedures, as
determined by FEMA, for a timely deposit and remittance of
funds to the U.S. Treasury via authorized automatic
clearinghouse (ACH) mechanism. Gross premium collected by
Vendor, for WYO Flood program business written under this
Agreement, shall be remitted to FEMA by Vendor net of the
established NFIP Expense Allowance. ("Allowance"), which
Allowance expenses to be paid under the Allowance include
Company's operating and administrative expenses.
3. Financial Data. Vendor shall maintain supporting
documentation for all bank accounts over which it has
authority and which relate to the Services performed by
Vendor under this Agreement. On a monthly basis, Vendor shall
prepare financial data, reflecting all debits and credits
with respect to WYO Flood Program business administered under
this Agreement, including Vendor's Service Fees paid.
4. 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
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loss adjustments expenses, Vendor's share shall be payable to
Vendor upon receipt by Company.
5. Marketing Goals. Company 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 FEMA.
D. CLAIM ADMINISTRATION. Vendor shall provide claims administration in
accordance with the Arrangement, the WYO Financial Control Plan and
this Agreement, which claims administration processing services are
outlined below. Any litigation costs not reimbursed by FEMA shall be
the responsibility of Company, as long as such litigation fees are
approved by Company prior to being incurred (which consent shall not
be unreasonably withheld, delayed or conditioned). Vendor 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.
1. Claim Management Facilitation.
a. Twenty-four (24) hour reporting capability, first
notice of loss, coverage verification and WYO Policy
claim;
b. Investigation of WYO Policy claim;
c. Fast track unit;
d. Reinspection and audit;
e. Claims handling standards/best practices;
f. Claim check issuance;
g. Management reports;
h. WYO Policyholder satisfaction surveys;
i. Special Investigation Unit ("SIU") services;
j. Salvage & subrogation claim processing;
k. Litigation support.
2. Catastrophe Preparation and Response.
a. Preparedness by developing media reference guides and
notices, adjuster workshops, and training manuals; provide
storm tracking; reserve equipment and supplies; establish
procedures;
b. 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;
c. Recovery by providing management reports, audit/reinspection
program, SIU and oversight operations.
E. ADJUSTING FIRM. Vendor's subsidiary, Colonial Claims Corporation, will
be the authorized adjusting firm ("Adjusting Firm") for all claims
adjusting work on behalf of Company, unless otherwise mutually agreed.
Company retains the right to require Vendor to utilize an alternative
adjusting firm for specified agents, but only if such agents
specifically request an alternate adjusting firm.
F. DISASTER RECOVERY PLAN. Vendor shall perform its full range Disaster
Recovery Plan on an annual basis. Company shall have 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.
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G. STATISTICAL REPORTING. Vendor shall maintain Company's data within
Vendor's policy claims and general ledger systems. Vendor shall
prepare and submit to FEMA, monthly financial and statistical reports,
reconciliation reports, certifications, and statistical tapes on
Company's behalf, in accordance with WYO Flood Program Accounting
Procedures and the Transaction Record Reporting and Processing Plan
("TRRP Plan").
H. OTHER SERVICES.
1. Audit. At Company's expense and at Vendor's premises, Vendor
shall host a biennial audit of any and all WYO Flood Program
business written by Company pursuant to this Agreement.
Vendor and Company shall mutually agree upon an independent
auditor and Vendor shall present the expense estimate for the
biennial audit to Company. Within fifteen (15) days of
receiving the estimate, Company shall have the option of
selecting its own independent auditor to conduct the audit or
proceed with the independent auditor selected by Vendor.
2. Zone Determination Services. Vendor shall provide, at its
sole expense, flood zone determinations to the Company (or
Company's Agents) to assist in writing a WYO Policy to be
placed with the Company and administered by Vendor.
3. Training. During the Term and upon Company's request, Vendor
will provide, at its sole expense, six (6) training sessions
per calendar year to Company and/or Company's Agents. Company
will provide the training facility. Additional requests for
training will be charged at Two Hundred Dollars ($200) per
day plus reasonable per diem and travel expensed incurred.
4. Marketing Materials. Vendor will distribute Company's
marketing materials at Company's reasonable request, but only
to the extent that such marketing materials can be included
without additional mailing expense in Vendor's routine
mailings.
5. Book Rollover Services. Vendor will promptly provide rollover
services for all Bankers NFIP Policies and Acquired NFIP
Policies, including (i) conversion onto the Proprietary
Systems, (ii) commencing the performance of the Services
related to such policies, and (iii) taking all other actions
reasonably necessary or appropriate to ensure a timely and
proper transition.
ARTICLE V - RECORDS
A. Company, by its duly appointed representatives, shall have the right
at any reasonable time, and upon reasonable notice, to examine and
copy, at Company's expense, documents and records maintained by Vendor
relating to this Agreement.
B. During the term of this Agreement, any renewals thereof and for as
long as is necessary for the Vendor to perform its obligations under
this Agreement, Vendor will maintain complete records in accordance
with all applicable laws, rules and regulations of all transactions
and correspondence concerning the policies issued under this
Agreement, and such files shall be provided to Company, at Company
expense, upon written request to Vendor.
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C. Vendor agrees that it shall retain records relating to the WYO Program
administered on behalf of Company for five (5) years after final
settlement of accounts, claims, or policy expirations/cancellations.
To the extent still available, such information and records shall
thereafter be returned by Vendor to Company, at Company's expense,
upon Company's written request. After such five (5) year period, such
information and records will not be destroyed by Vendor unless
otherwise requested by Company or in accordance with the following
sentence. At least sixty (60) days prior to destruction of any
records, Vendor will notify Company in writing of such intention and
Company, at its option, may, during such period, request the transfer
of such records at Company's expense.
D. It is understood and agreed that all information and data received,
produced and maintained by Vendor pertaining to the provision of
Services to Company under this Agreement shall be, at all times, the
property of Company.
E. Should Vendor, during the term of this Agreement, fail to capture,
generate, or retain data required for processing, reporting, auditing,
or retention as required to support Company, Company's obligations
under the WYO Program, or Vendor's obligations under this Agreement,
Vendor will be responsible for the cost of obtaining, processing,
and/or reporting such data and Company shall retain all of its rights
and remedies under this Agreement, at law, in equity or otherwise.
F. Upon termination or expiration of this Agreement, Vendor, at Company's
written request and sole expense, shall forward all copies of
Company's files to the Company and shall certify by sworn statement of
an officer of the Vendor that all copies have been so forwarded or
otherwise disposed of in accordance with the Company's written
instructions.
G. Vendor will maintain, at its expense and at an off-site protected
location pre-approved by Company (which approval shall not be
unreasonably withheld, delayed or conditioned), backup copies of all
such data and of all daily transactions.
ARTICLE VI - REPORTING FINANCIAL DATA TO COMPANY
A. On or before the 20th day of each month, Vendor shall prepare and send
to Company: Financial reports for the preceding month's activity, and
in accordance with the WYO accounting procedures and the Arrangement,
Vendor shall provide the NFIP Bureau and Statistical Agent with
"Monthly Financial Reporting" and "Statistical Transaction Reporting"
in accordance with the requirements of the NFIP's TRRP Plan for the
WYO Program, the "Financial Control Plan" for business written under
the WYO Program and as otherwise required under the Arrangement. Such
data shall be validated/edited/audited in detail and shall be compared
and balanced against Company's financial reports.
B. Questions by Company regarding the monthly accounting data, and
payment from Vendor, must be made in writing.
ARTICLE VII - EXPENSES, TAXES, AND FEES
A. Except as otherwise provided herein, Vendor agrees to pay, from its
own funds, all expenses incurred by it while processing flood
insurance business pursuant to this Agreement. Such expenses shall
include, but not be limited to, expenses relating to data processing,
postage,
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flood certificates, policy administration, policy forms, customer
service, claims processing, and financial and statistical reporting.
B. Company shall pay any taxes including state premium taxes, dividends,
agents' appointments/license fees, agents' commissions, or any board
exchange, or bureau assessments of Company, and Company audit expenses
(if applicable).
C. Claims adjusting and processing expenses and reimbursements shall be
paid as follows:
1. The Allocated Loss Adjustment Expense ("ALAE") reimbursement
(ALAE as defined under the WYO Program) pursuant to the "Fee
Schedule" in the WYO Arrangement shall be received by Vendor
to pay for claims adjustment.
2. The Unallocated Loss Adjustment Expense ("ULAE")
reimbursement (ULAE as defined under the WYO Program) shall
be shall be allocated between Company and Vendor in
accordance with Schedule C.
3. The Special Allocated Loss Expense ("SALE") reimbursement
(SALE as defined under the WYO Program) (subject to prior
approval of the FIA Administrator to incur) shall be paid to
Vendor for claims handling. If any such SALE is not
reimbursed by the FIA Administrator, the Vendor shall pay
such expenses from Vendor's own funds.
D. As consideration for the Services to be performed by Vendor hereunder,
Company shall pay Vendor the fees set forth on Schedule C attached
hereto; provided, however, that commencing on the second (2nd)
anniversary of the Effective Date, and without any action by the
parties hereto, Schedule C shall automatically be amended such that
(i) the Internet rate shall be reduced from * of GWP to * of GWP,
and (ii) the Manual rate shall be reduced to * of GWP to * of GWP.
Except as otherwise expressly provided in this Agreement, Company
shall have no other payment obligations under this Agreement.
ARTICLE VIII - COMMENCEMENT, TERM AND TERMINATION
A. Subject to the satisfaction of the conditions set forth in Article I
above, this Agreement shall become effective on the Effective Date,
and shall remain in force for a period of six (6) years ("Term"),
unless terminated earlier as set forth below.
B. Company may terminate this Agreement at any time upon written notice
to Vendor upon the following events: (1) a material breach by Vendor
of any material representation, warranty or covenant contained in this
Agreement, which breach has not been remedied in all material respects
within sixty (60) days (or such shorter period as may be reasonable
under the circumstances) after receipt by Vendor of notice in writing
from Company specifying the nature of such breach and requesting that
it be remedied; provided, however, that no such cure period would be
available to Vendor if such material breach would reasonably be
expected to have a material adverse effect on Company's business
during the cure period; (2) the lapse, termination or cancellation of
the fidelity, errors and omissions insurance coverages required by
this Agreement or the bankruptcy, insolvency, conservatorship or
receivership of the insurer providing such fidelity, errors and
omissions insurance coverages without replacement of such coverage
with an insurer having a rating by A.M. Best Company ("A. M. Best") of
"A" or better; (3) the commencement of an involuntary case or other
proceeding
- -------------------
* 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 246-2.
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against Vendor with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect seeking the
appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, which
case or other proceeding has not been dismissed within (90) days; or
(4) Vendor commences a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or
consents to the entry of an order for relief in an involuntary case
under any such law, consents to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of Vendor of all or substantially all
of the property and assets of Vendor or if Vendor effects a general
assignment for the benefit of creditors.
C. Vendor may terminate this Agreement at any time upon written notice to
Company upon the following events: (1) a material breach by Company of
any representation, warranty or covenant contained in this Agreement,
which breach has not been remedied within sixty (60) days (or such
shorter period as may be reasonable under the circumstances) after
receipt by Company of notice in writing from Vendor specifying the
nature of such breach and requesting that it be remedied; (2) the
commencement of an involuntary case or other proceeding against
Company or FNF with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect seeking the
appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, which
case or other proceeding has not been dismissed within ninety (90)
days; or (3) Company or FNF commences a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consents to the entry of an order for relief
in an involuntary case under any such law, consents to the appointment
of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of Company or FNF
of all or substantially all of the property and assets of Company or
FNF, or if Company or FNF effects a general assignment for the benefit
of creditors.
D. Upon termination of this Agreement:
1. If required by the NFIP, Company and Vendor shall fulfill any
obligations on existing policies and comply with the terms of
the Arrangement and all related guidelines and procedures
regardless of any dispute concerning suspension or
termination.
2. Vendor will deliver as soon as reasonably practicable to
Company all policy and claims records, and any unused checks,
drafts, notices, supplies and forms thereto received from
Company, upon Company's written request. Vendor acknowledges
and agrees that all records regarding administration of the
WYO Program for Company are and shall remain the sole
property of Company.
ARTICLE IX - GENERAL
A. Vendor hereby agrees to indemnify, defend and hold the Company and its
directors, officers, representatives, agents, and employees ("Company
Indemnitees") harmless from and against any and all loss, claims,
liability, damages, fines, penalties and expenses, including
reasonable attorneys' fees and costs ("Loss and Expense"), resulting
from any act or omission of Vendor or its agents in violation or
breach of, outside the scope of, or otherwise in contravention of the
terms of this Agreement, including but not limited to losses as a
result of mishandling of bank accounts or claims, negligence in
processing flood insurance applications, or endorsement in the event
of a catastrophic flood, and liabilities resulting from NFIP's refusal
to honor a flood insurance policy due to Vendor's acts or omissions in
processing the flood insurance application,
11
endorsement or any related form required by FIA and/or FEMA. Without
limiting the generality of the foregoing, Vendor further agrees to
indemnify, defend and hold harmless the Company Indemnitees from all
Loss and Expense resulting from Vendor's failure to comply with any
federal or state law, rule or regulation, including but not limited to
the Arrangement, in connection with the performance of its duties
under this Agreement regardless of whether such failure was
intentional or unintentional. Notwithstanding the foregoing, for
purposes of this Article IX.A., "Loss and Expense" shall not include
any losses, claims, liabilities, damages or expenses relating to lost
business or profits, any transfer costs, or any special, consequential
or punitive damages or other damages of a similar nature, except and
to the extent that such losses, claims, liabilities, damages or
expenses arise out of Vendor's gross negligence, bad faith or willful
misconduct.
B. Company hereby agrees to indemnify, defend and hold Vendor and its
directors, officers, representatives, agents and employees ("Vendor
Indemnitees") harmless from and against any and all Loss and Expense
resulting from any act or omission of Company or its agents arising
out of, and in conjunction with, this Agreement. Notwithstanding the
foregoing, for purposes of this Article IX. B., "Loss and Expense"
shall not include any losses, claims, liabilities, damages or expenses
relating to lost business or profits, any transfer costs, or any
special, consequential or punitive damages or other damages of a
similar nature, except and to the extent that such losses, claims,
liabilities, damages or expenses arise out of Company's gross
negligence, bad faith or willful misconduct.
C. During the Term of this Agreement and thereafter as long as Vendor has
any responsibilities pursuant to Article VIII.D.1. hereof, Vendor
shall maintain at its expense a commercial blanket fidelity bond
covering all Vendor's employees responsible for the performance of
this Agreement, and covering the loss of any funds handled by Vendor
in its performance of this Agreement. Such commercial blanket fidelity
bond shall be in an amount not less than $10,000,000, with regard to
each occurrence, with a deductible not greater than $250,000. The
coverage required herein is in addition to and not in lieu of any
other right or remedy of Company under this Agreement, including,
without limitation, Company's indemnification rights under Article
IX.A.
D. During the term of this Agreement and thereafter as long as Vendor has
any responsibilities pursuant to Article VIII.D.1. hereof, Vendor
shall maintain errors and omissions coverage of $10,000,000 per
occurrence with a deductible not greater than $250,000 in connection
with its performance and obligations under this Agreement. The
coverage required herein is in addition to and not in lieu of any
other right or remedy of Company under this Agreement, including,
without limitation, Company's indemnification rights under Article
IX.A.
E. Vendor acknowledges and agrees that as a result of this Agreement, it
will have access to certain information of Company, all of which
Company considers to be trade secrets and proprietary including, but
not limited to, information relating to the names of Company's agents,
the names of Company's insureds, Company's agency agreements and
relations, program terms and structure, renewals, expirations,
underwriting data, loss and risk analyses, compiled loss experience
data, customer information, reports and records addressed within this
Agreement, and account premium and compensation addressed within this
Agreement (collectively, the "Company Information").
1. Vendor agrees to hold, and to cause its officers, directors,
employees, representatives and agents to hold, all Company
Information in trust and confidence and agrees that such
Information shall be used only for the purposes of performing
its obligations under this
12
Agreement and shall not be used for any other purposes nor
disclosed to any third party (except as required or
appropriate in connection with the performance of Vendor's
duties hereunder) without the prior written consent of
Company, it being understood that all officers, directors,
employees, representatives and agents of Vendor shall be
informed of the confidential nature of such Company
Information and shall be directed by Vendor to treat such
Company Information confidentially in accordance with this
Agreement. All Company Information disclosed in writing or
orally by Company to Vendor pursuant to this Agreement shall
be maintained in secrecy by Vendor using such safeguards and
such care as is necessary to protect the confidential nature
of the Company Information. Such Company Information shall be
disclosed only to those officers, directors, employees,
representatives and agents of Vendor with a need to know the
Company Information for the purpose of performing Vendor's
obligations under this Agreement.
2. In the event that Vendor or any of its officers, directors,
employees, representatives or agents are requested pursuant
to, or required by, applicable law, regulation or legal
process to disclose any of the Company Information, Vendor
and such party will notify Company promptly so that Company
may seek a protective order or other appropriate remedy or,
in Company's sole discretion, waive compliance with the terms
of this Article IX.E. In the event that no such protective
order or other remedy is obtained, or that Company does not
waive compliance with the terms of this Article IX.E, the
party being requested to furnish the Company Information will
furnish only that portion of the Company Information that its
legal counsel advises is legally required and will exercise
all reasonable efforts in cooperation with Company to obtain
reliable assurance that confidential treatment will be
accorded the Company Information.
F. Company acknowledges and agrees that as a result of this Agreement, it
will have access to certain information of Vendor, all of which Vendor
considers to be trade secrets and proprietary including, but not
limited to, Vendor's technology, systems and processes (collectively,
the "Vendor Information").
1. Company agrees to hold, and to cause its officers, directors,
employees, representatives and agents to hold, all Vendor
Information in trust and confidence and agrees that such
Information shall be used only for the purposes of performing
its obligations under this Agreement and shall not be used
for any other purposes nor disclosed to any third party
(except as required or appropriate in connection with the
performance of Company's duties hereunder) without the prior
written consent of Vendor, it being understood that all
officers, directors, employees representatives and agents of
Company shall be informed of the confidential nature of such
Vendor Information and shall be directed by Company to treat
such Vendor Information confidentially in accordance with
this Agreement. All Vendor Information disclosed in writing
or orally by Vendor to Company pursuant to this Agreement
shall be maintained in secrecy by Company using such
safeguards and such care as is necessary to protect the
confidential nature of the Vendor Information. Such Vendor
Information shall be disclosed only to those officers,
directors, employees, representatives and agents of Company
with a need to know the Vendor Information for the purpose of
performing Company's obligations under this Agreement.
2. In the event that Company or any of its officers, directors,
employees, representatives or agents are requested pursuant
to, or required by, applicable law, regulation or legal
process to disclose any of the Vendor Information, Company
and such party will notify Vendor promptly so that Vendor may
seek a protective order or other appropriate remedy or, in
Vendor's sole discretion, waive compliance with the terms of
this Article IX.F. In the event
13
that no such protective order or other remedy is obtained, or that
Vendor does not waive compliance with the terms of this Article IX.F,
the party being requested to furnish the Vendor Information will
furnish only that portion of the Vendor Information that its legal
counsel advises is legally required and will exercise all reasonable
efforts in cooperation with Vendor to obtain reliable assurance that
confidential treatment will be accorded the Vendor Information.
G. The relationship of the parties to this Agreement is that of
independent contractors. Neither this Agreement nor any activities
contemplated hereby shall be deemed to create a partnership, joint
venture, agency, or employer/employee relationship between Vendor and
Company.
H. Vendor may not use the name, logo, or service mark of Company, FNF, or
any of their respective subsidiaries in any advertising, promotional
material, or any material disseminated by Vendor or any agent at
Vendor's request without the prior written consent of Company. Vendor
shall maintain copies and shall provide an original to Company of any
advertisement or other material approved by Company along with full
details regarding where, when, and how such advertising was used.
I. Company may not use the name, logo, or service mark of Vendor,
Insurance Management Solutions Group, Inc., a Florida corporation
("IMSG"), or their respective subsidiaries in any advertising,
promotional material, or any material disseminated by Company or any
agent at Company's request without the prior written consent of
Vendor. Company shall maintain copies and shall provide an original to
Vendor of any advertisement or other material approved by Vendor along
with full details regarding where, when, and how such advertising was
used.
J. Except as otherwise set forth herein, any notice required under this
Agreement must be in writing and either sent by first class mail,
facsimile, certified mail, or personally delivered. Notice shall be
effective either upon receipt or five (5) days after mailing to the
other party, whichever comes first. The addresses of the respective
parties are:
Vendor: Insurance Management Solutions, Inc.
801 94th Avenue North
St. Petersburg, FL 33702
Attn: David M. Howard
Phone: 877-711-4674
Fax: 727-803-4093
Company or FNF: Fidelity National Financial, Inc.
4050 Calle Real, Suite 220
Santa Barbara, California 93110
Attn: General Counsel
Phone: 805-696-7000
Fax: 805-696-7814
Either party may change the address to which notices are to be
delivered by giving the other party notice in the manner herein set
forth.
14
K. Neither party may delegate its duties or assign its rights under this
Agreement either directly or indirectly, in whole or in part (an
"Assignment"), without the prior written consent of the other party
(which consent shall not be unreasonably withheld). For purposes of
this Agreement, a Change of Control (as hereinafter defined) of Vendor
or IMSG shall be deemed an Assignment. For purposes of this Agreement,
a "Change of Control" of Vendor or IMSG occurs if: (x) any "person"
(defined as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended) other than Bankers
Insurance Group, Inc., IMSG and/or any of their respective affiliates
is or becomes the beneficial owner, directly or indirectly, of equity
securities of Vendor or IMSG, as the case may be, representing
fifty-one percent (51.0%) or more of the outstanding securities of
Vendor or IMSG, as the case may be, then entitled to vote for the
election of directors; or (y) the Board of Directors of Vendor or
IMSG, as the case may be, shall approve the sale of all or
substantially all of the assets of Vendor or IMSG, as the case may be,
or any merger, consolidation or issuance of securities of Vendor or
IMSG, as the case may be, the result of which would be the occurrence
of any event described in clause (x) above. Notwithstanding anything
to the contrary above, (i) Company may effect an Assignment to an
affiliate of Company without the consent of Vendor, provided that such
affiliate is a consolidated subsidiary of FNF and FNF agrees in
writing that all flood insurance processing services for FNF and its
affiliates shall be provided by Vendor pursuant to this Agreement, and
assumes or guarantees the obligations of such affiliate hereunder, and
(ii) Vendor may effect an Assignment to a third party (an "Acquiring
Entity") in connection with a Change of Control of Vendor or IMSG
without the consent of Company, provided all of the following are
satisfied: (a) the Acquiring Entity is not a direct competitor of FNF
or any of its affiliates, (b) the Acquiring Entity (or an affiliate
thereof) has (or will cause Vendor to have) sufficient financial
strength at the time of the proposed Assignment to perform the
Services for the duration of the Term, (c) the Acquiring Entity has at
least three (3) years experience in the WYO Program or agrees to
maintain Vendor's operations substantially intact for a period of two
(2) years after such Assignment, and (d) the Acquiring Entity assumes
or guarantees the performance of all of Vendor's obligations under
this Agreement.
L. This Agreement may be executed in separate counterparts, each of which
shall be deemed an original but shall constitute one in the same
instrument.
M. Any modification or amendment of this Agreement must be in writing and
signed by a duly authorized representative of each of the parties
hereto.
N. Subject to the conditions precedent set forth in Article I above, this
Agreement is binding upon the parties hereto and their permitted
successors and assigns.
O. The invalidity of any one or more of the words, phrases sentences,
clauses, sections, or articles contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement
or any part hereof, and this Agreement shall be construed as if such
invalid word or words, phrase or phrases, sentence or sentences,
clause or clauses, section or sections, or article of articles had not
been inserted.
P. The waiver by either party of a breach or violation of any provision
of this Agreement by the other party shall not operate nor be
construed as a waiver of any subsequent breach of violation. The
waiver by either party to exercise any right or remedy it may possess
shall not operate or be construed as a bar to the exercise of such
right or remedy upon the occurrence of any subsequent breach or
violation.
15
Q. This Agreement and the Schedules and Exhibits attached hereto
constitute the entire agreement of the parties with respect to the
subject matter contained herein and supersedes all prior agreements
and understandings, both written and oral among the parties with
respect to the subject matter hereof.
[SIGNATURES ON FOLLOWING PAGE.]
16
IN WITNESS WHEREOF, the parties hereto by their respective duly authorized
representatives have executed this Agreement as of the effective date of this
Agreement.
FIRST COMMUNITY INSURANCE
COMPANY
s/s Mark Davey
------------------------------
(Signature)
President & CEO
------------------------------
(Title)
INSURANCE MANAGEMENT SOLUTIONS,
INC.
s/s David M. Howard
------------------------------
(Signature)
President & CEO
------------------------------
(Title)
17
SCHEDULE A
SERVICE COVERAGE AREA
States in which Company has authorized Vendor to assist in processing flood
insurance under the terms and regulations of the WYO Program:
1. 27.
Alabama Montana
----------------------------------------------- -----------------------------------------------
2. 28.
Alaska Nebraska
----------------------------------------------- -----------------------------------------------
3. 29.
Arizona North Carolina
----------------------------------------------- -----------------------------------------------
4. 30.
Arkansas North Dakota
----------------------------------------------- -----------------------------------------------
5. 31.
California New Hampshire
----------------------------------------------- -----------------------------------------------
6. 32.
Colorado New Jersey
----------------------------------------------- -----------------------------------------------
7. 33.
Connecticut New Mexico
----------------------------------------------- -----------------------------------------------
8. 34.
Delaware Nevada
----------------------------------------------- -----------------------------------------------
9. 35.
District of Columbia New York
----------------------------------------------- -----------------------------------------------
10. 36.
Florida Ohio
----------------------------------------------- -----------------------------------------------
11. 37.
Georgia Oklahoma
----------------------------------------------- -----------------------------------------------
12. 38.
Hawaii Oregon
----------------------------------------------- -----------------------------------------------
13. 39.
Idaho Pennsylvania
----------------------------------------------- -----------------------------------------------
14. 40.
Illinois Rhode Island
----------------------------------------------- -----------------------------------------------
15. 41.
Indiana South Carolina
----------------------------------------------- -----------------------------------------------
16. 42.
Iowa South Dakota
----------------------------------------------- -----------------------------------------------
17. 43.
Kansas Tennessee
----------------------------------------------- -----------------------------------------------
18. 44.
Kentucky Texas
----------------------------------------------- -----------------------------------------------
19. 45.
Louisiana Utah
----------------------------------------------- -----------------------------------------------
20. 46.
Massachusetts Vermont
----------------------------------------------- -----------------------------------------------
21. 47.
Maryland Virginia
----------------------------------------------- -----------------------------------------------
22. 48.
Maine Washington
----------------------------------------------- -----------------------------------------------
23. 49.
Michigan Wisconsin
----------------------------------------------- -----------------------------------------------
24. 50.
Minnesota West Virginia
----------------------------------------------- -----------------------------------------------
25. 51.
Missouri Wyoming
----------------------------------------------- -----------------------------------------------
26. 52.
Mississippi Puerto Rico
----------------------------------------------- -----------------------------------------------
18
SCHEDULE B
SERVICE LEVEL AGREEMENT
SERVICE LEVEL AGREEMENT PROCEDURES:
1. Data received by Vendor after 12:00 Noon Eastern Time ("ET")
will be considered "received" on the following Business Day
(as defined in the Agreement).
2. A policy is considered issued when the declaration page and
attachments are generated in the Proprietary System (as
defined in the Agreement) and mailed out.
3. Vendor's "Business Hours" are 8:00 A.M. Eastern Time to 8:00
P.M. Eastern Time. - "Service Standard Levels" (as outlined
below) will be validated using the Vendor received date
stamped on the request.
POLICY ADMINISTRATION SERVICE STANDARD LEVELS:
1. All new business transactions will be issued within seven (7)
Business Days of receipt by Vendor, provided all information
is complete and correct, with an overall business time
service average not to exceed twelve (12) Business Days.
2. All renewal transactions will be issued within five (5)
Business Days of receipt by Vendor, provided all information
is complete and correct, with an overall business time
service average not to exceed ten (10) Business Days.
3. All money endorsements will be issued within seven (7)
Business Days of receipt by Vendor, provided all information
is complete and correct, with an overall business time
service average not to exceed twelve (12) Business Days.
4. All cancellations received will be processed within seven (7)
Business Days of receipt by Vendor, provided all information
is complete and correct, with an overall business time
service average not to exceed twelve (12) Business Days.
5. All non-money endorsements will be issued within seven (7)
Business Days of receipt by Vendor, provided all information
is complete and correct, with an overall business time
service average not to exceed twelve (12) Business Days.
6. All return mail will be re-mailed and issued within fifteen
15) Business Days of receipt by Vendor, provided all
information is complete and correct.
7. Vendor will make contact on all correspondence within seven
(7) Business Days of receipt.
8. Vendor will make contact on all incomplete or incorrect
transactions within seven (7) Business Days of receipt.
19
CUSTOMER SERVICE - SERVICE LEVEL STANDARDS:
1. Vendor will maintain without employing the practice of taking
messages, no more than 5% phone call abandonment rate, based
on the total number of customer calls received and not
answered at or after a 60 second threshold, during Company's
Business Hours.
2. A customer service representative will answer 90% of customer
service calls within 60 seconds, during Company's Business
Hours. A customer service representative will answer 98% of
customer service calls within 90 seconds during Company's
Business Hours.
AGENCY ADMINISTRATION:
New agents will be set up and have the ability to process business
within 5 business days of receipt by Vendor of completed sign up
documents.
OPERATIONAL/SYSTEM PROCESSING GOALS:
1. Vendor will maintain minimum Proprietary System up time of
98% during Company's business hours.
1. Output is generated within one (1) Business Day of print/mail
date.
2. Vendor will verify accurate output (match system data to
filed forms) by means of random weekly quality checking at
point of output in policy assembly.
STATISTICAL REPORTING:
Vendor will be responsible for submitting the Flood statistical data
to the NFIP based on the NFIP guidelines; provided, however, that
Company takes the necessary steps to ensure that the data is
normalized, edited, quality-checked and mapped to corresponding bureau
codes.
CLAIMS:
1. IMS will adjust all claims based on federal, state and
product guidelines.
2. Claims "Business Hours" are 8:00 A.M. Eastern Standard Time
to 8:00 P.M. EST except during a catastrophe then it is 24/7.
3. IMS's performance of claim services, on behalf of Company and
pursuant to the Agreement, shall be in substantial compliance
with "Best Practices" Manual (policy and procedures manual),
which shall be attached to and incorporated by reference into
this Service Level Agreement.
AUDITS:
Company reserves the right to conduct, at its expense, an annual
underwriting and claims audit. Company will provide Vendor with a
minimum 30-day notice.
REPORTS:
Vendor will provide to the Company weekly reports detailing the
Service Standard Levels.
20
SCHEDULE C
FEE SCHEDULE
SECTION I - FEE SCHEDULE
In full consideration for the performance by Vendor of the Services and its
other obligations under this Agreement, Company shall pay Vendor the following
fees:
"GWP" shall mean the sum total of Company's monthly gross written flood
insurance premium as measured on the Effective Date of each Policy.
INTERNET*: MANUAL**:
---------- ---------
*** of GWP *** GWP
* A policy shall be considered an Internet policy if (i) the
data input necessary to issue the initial policy was input by
Company or Company's Agent over the Internet, or (ii) such
policy was deemed an "electronic" policy under the Old
Company Agreement. The "Internet" rate shall apply to all
renewals of an "Internet" policy, as defined in the preceding
sentence.
** All policies that are not Internet policies shall be
considered Manual policies.
*** 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 246-2.
Company and Vendor will agree on fee basis for performance by Vendor of
requirements created by FEMA / FIA beyond those specified in Arrangement to the
extent such requirements impose a material financial burden on Vendor.
SECTION II - ULAE ALLOCATION
The ULAE paid by FEMA (currently 3.3% of the incurred loss) shall be divided
equally between Vendor and Company.
SECTION III - PAYMENT TERMS
Vendor shall deduct monthly service fees due from settlement paid to Company.
21