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EXHIBIT 10.62
RETAINER AND CONSULTING AGREEMENT
Retainer and Consulting Agreement (this "Agreement") dated as of
December 31, 1997 between SUPERIOR NATIONAL INSURANCE GROUP, INC. ("Superior
Group"), a Delaware corporation having its principal place of business at 26601
Agoura Road, Calabasas, California 91302, SUPERIOR NATIONAL INSURANCE COMPANY
("Superior National"), a California corporation having its principal place of
business at 26601 Agoura Road, Calabasas, California 91302, and SUPERIOR PACIFIC
CASUALTY COMPANY ("Superior Pacific"), a California corporation having its
principal place of business at 6200 Canoga Avenue, Woodland Hills, California
91367-2402, on the one hand (Superior Group, Superior National and Superior
Pacific shall be referred to collectively as "SUPERIOR"), and RISK ENTERPRISE
MANAGEMENT LIMITED ("REM"), a Delaware corporation, having its principal place
of business at 59 Maiden Lane, New York, NY 10038, on the other hand. All of the
parties hereto shall be referred to individually as a "party" and collectively
as "parties."
WITNESSETH:
WHEREAS, SUPERIOR wishes to engage REM to provide certain consulting
services ("Services") in connection with the ownership and formation of a new
stock Delaware corporation formed exclusively for the purpose of administering
certain insurance claims of Superior, which company shall be named Comprehensive
Compensation Claims Management, Inc. ("3CM"), and REM is willing to perform such
Services for SUPERIOR, subject to the terms and conditions of this Agreement;
and
WHEREAS, in consideration of the payment by SUPERIOR to REM of the fee
specified in this Agreement and the indemnification of REM under the Stock
Purchase, Indemnification, and Securityholders' Agreement (the "Stock Purchase
and Indemnification Agreement"), a copy of which is attached hereto as Exhibit
A, REM has agreed to hold seventy-five percent (75%) of the issued and
outstanding common stock of 3CM and to appoint directors of 3CM.
NOW THEREFORE, in consideration of the foregoing recitals, payment of
the fees due hereunder, and the mutual promises and covenants contained herein,
the parties hereby agree as follows:
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ARTICLE I
ENGAGEMENT
SUPERIOR hereby engages REM to provide Services to SUPERIOR, and REM
hereby accepts such engagement, all subject to and in accordance with the terms
and provisions of this Agreement.
Neither this Agreement nor any transaction contemplated hereunder shall
be deemed to create any direct or indirect contractual or other relationship
between SUPERIOR and REM except as set forth herein or to create a partnership
or joint venture, affiliate, agency or similar relationship between SUPERIOR and
REM.
REM and SUPERIOR reserve absolutely and without limitation their
respective rights to acquire, develop and engage, directly or indirectly, in any
business undertakings and opportunities for themselves or as agent for any
other.
ARTICLE II
NATURE OF SERVICES
The Services to be performed by REM under this Agreement at any time or
for any time period shall include any services performed by REM for SUPERIOR in
connection with 3CM and described in the Stock Purchase and Indemnification
Agreement and additional services performed by REM at the request of SUPERIOR.
ARTICLE III
COMPENSATION AND EXPENSES
3.1 Compensation and Expenses
3.1.1 Simultaneously with execution of this Agreement, SUPERIOR shall
pay REM $507,500 in cash by wire transfer in accordance with the wire
instructions attached hereto as Exhibit B; and thereafter, on or before each
December 31 during the term of this Agreement, SUPERIOR shall pay an additional
$500,000 to REM without notice, demand or setoff of any kind. Such sums shall be
deemed fully earned by REM, not refundable and payable on these dates specified.
3.1.2 ln addition to the amounts specified in paragraph 3.1.1, REM shall
invoice SUPERIOR at its then current hourly rates attributable to Services
performed under this Agreement plus Reimbursable Expenses, as defined herein.
Services shall include only those activities related to REM acting as
shareholder or its designees acting as directors of 3CM. For purposes of this
paragraph, REM hourly rates are total employee costs per hour, including salary,
benefits and overhead multiplied by 17.65%, the product of which is added to
employee costs per hour. Overhead includes rent, the costs of forms, supplies,
telephone,
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postage and other corporate or administrative expenses relating to the services
so provided. "Reimbursable Expenses" are those which would normally be incurred
in the rendering or performance of Services. They include, but are not limited
to, any applicable data processing or telecommunications charges, temporary
personnel, hotel, travel, living and out-of-pocket expenses incurred by REM in
rendering services pursuant to this Agreement. The total amount of Services plus
Reimbursable Expenses charged under this paragraph shall not exceed $250,000 in
any calendar year unless SUPERIOR authorizes a higher amount in advance of such
costs being incurred.
3.1.3 Additionally, If Superior requests REM to perform any of the
services described on Exhibit C attached hereto (the "Additional Services"),
SUPERIOR shall pay REM for any such Additional Services at the rates specified
on Exhibit C plus Reimbursable Expenses.
3.2 Reporting: Timing of Payments
For Services performed by REM pursuant to paragraphs 3.1.2 and 3.1.3, REM shall
deliver a statement of services to SUPERIOR for such fees and Reimbursable
Expenses which shall describe, in reasonable detail, the nature of the Services
or the Additional Services provided and the Reimbursable Expenses incurred in
connection therewith. Superior shall make payment to REM pursuant to any such
statement of services within 30 days of receipt.
3.3 Taxes
SUPERIOR shall be responsible to pay directly to the applicable taxing authority
or to REM, if imposed on REM, all federal, state and local taxes (other than net
income taxes) which REM may be required to pay or collect or which may be
incurred or assessed against REM, under any existing or future law, relating to
the sale, delivery, rendering or provision of Services or Additional Services by
REM.
ARTICLE IV
INDEMNIFICATION
In connection with Services rendered by REM hereunder, SUPERIOR agrees
to hold harmless, defend, release and indemnify REM and REM lndemnitees (as
defined in and pursuant to Article VIII of the Stock Purchase and
Indemnification Agreement) and in the same manner as provided therein, which
indemnification is incorporated herein and made part hereof. The provisions of
this Section shall survive the termination of this Agreement.
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ARTICLE V
TERM AND TERMINATION
5.1 Term. This Agreement shall commence on December 31, 1997 and shall
be valid for an indefinite period of time and may be terminated by either party
only in accordance with subsection 5.2 below.
5.2 Termination.
5.2.1 Superior may terminate this Agreement at any time upon 90 days
prior written notice to REM. The date of such termination shall be the date as
specified in such notice.
5.2.2 REM may terminate this Agreement effective at any December 31 upon
90 days prior written notice to Superior. The date of such termination shall be
the December 31 date specified in such notice.
ARTICLE VI
MISCELLANEOUS
6.1 Governing Law. This Agreement, its validity, formation and
interpretation and the rights and obligations of the parties arising under or in
connection with it shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without regard to its
conflict of laws rules. Each party hereby irrevocably and unconditionally
consents to submit to the exclusive jurisdiction of the courts of the State of
New York and of the United States of America, in each case located in the County
of New York, for any litigation arising out of or relating to this Agreement
(and agrees not to commence any litigation relating thereto except in such
courts), and further agrees that service of any process, summons, notice or
document by United States registered mail to its respective address set forth in
the Agreement shall be effective service of process for any litigation brought
against it in any such court. Each party hereby irrevocably and unconditionally
waives any objection to the laying of venue of any litigation arising out of
this Agreement in the state of federal courts in the State of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such litigation brought in any such court has
been brought in an inconvenient forum.
6.2 Currency. All payments hereunder shall be made in United States
Dollars.
6.3 Assignment. This Agreement may not be assigned by either party
without the prior written consent of the other party hereto except that SUPERIOR
may add as an additional party any regulated insurance subsidiary of Superior
National Insurance Group, Inc.
6.4 Notices. Wherever under this Agreement one party is required or
permitted to give notice to the other, such notice shall be effected either by
personal delivery in writing or
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by mail, registered or certified, postage prepaid, return receipt requested, to
the following addresses:
If to SUPERIOR: Superior National Insurance Company
26601 Agoura Road
Calabasas CA
Attention: General Counsel
If to REM: Risk Enterprise Management Limited
59 Maiden Lane
New York, New York 10038
Attention: General Counsel
Each party to this Agreement may from time to time change the address to
which notices may be given by giving the other party written notice, in the
manner provided in this Subsection, of the new address and the date upon which
it will become effective. Notices delivered personally shall be deemed given
upon receipt; mailed notices shall be deemed given three business days after
mailing.
6.5 Severability. If any provision of this Agreement is held to be void,
illegal or unenforceable under present or future laws effective during the term
hereof, such provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
never comprised a part hereof, and the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected in any way by
the void, illegal or unenforceable provision or by its severance. Furthermore,
in lieu of such severed provision, there shall be added automatically as part of
this Agreement a provision as similar in its terms to such severed provision as
may be possible and be valid, legal and enforceable.
6.6 Captions. The Section and Subsection captions contained in this
Agreement are for the convenience of reference only; such captions doe not
constitute any part of the agreement between the parties and shall not be
considered in the interpretation or construction of it.
6.7 Entire Agreement: Amendments. This Agreement constitutes the entire
agreement between the parties with respect to its subject matter and supersedes
all prior written or oral agreements pertaining to such subject matter. This
Agreement may be modified or amended only by a written instrument signed by both
of the parties hereto.
6.8 No third party rights. This Agreement shall be binding upon the
parties executing this Agreement and their respective successors. Nothing in
this Agreement is intended or shall be construed to give any person, other than
the persons referred to in this
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Subsection 6.8, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
6.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be considered an original, but all of which
taken together shall constitute one single agreement between the parties.
Executed and entered into as of the date first above written.
SUPERIOR NATIONAL INSURANCE GROUP, INC.
BY: /s/ Chris Seaman
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ITS: Chief Financial Officer
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SUPERIOR PACIFIC CASUALTY COMPANY
BY: /s/ Chris Seaman
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ITS: Chief Financial Officer
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SUPERIOR NATIONAL INSURANCE COMPANY
BY: /s/ Chris Seaman
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ITS: Chief Financial Officer
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RISK ENTERPRISE MANAGEMENT LIMITED
BY: /s/ Michael Riney
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ITS: Executive Vice President
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EXHIBIT B
WIRE TRANSFER INSTRUCTIONS
Bank: Risk Enterprise Management
Citibank, NA
399 Park Avenue
New York, NY
ABA#: 021000089
For the account of: Risk Enterprise Management
Account#: 4067-5336
Reference: Superior (National?) (Pacific?)
Attention: S. Marcketta
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EXHIBIT C
ADDITIONAL SERVICES
Utilization of any of the following services shall be at the sole option of
Superior, provided however that Superior agrees that to the extent it acquires
such services, REM shall be its exclusive provider:
1. Leakage Assessment Services, at $110 per hour including on-site
evaluation and report time;
2. Leakage Management Training Services, at $150.00 per hour;
3. Managed Care Services, other than those outsourced to Prudential or
other vendors currently under contract to Superior:
Rate
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Early Intervention Nursing/Telephonic Case
Management $75 Per Hour
Field Case Management Services $80 Per Hour
Hospital Precertification $100 Per Assignment
Utilization Review $100 Per Assignment
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