EXHIBIT 10(o)
ADMINISTRATOR AGREEMENT - CONSUMER PRODUCTS
THIS ADMINISTRATOR AGREEMENT - CONSUMER PRODUCTS (The "Agreement") is made and
entered into this 1st day of November 1995 by and between WARRANTECH CONSUMER
PRODUCTS SERVICES, INC., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("Warrantech"), and HOUSTON GENERAL INSURANCE COMPANY, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Houston General").
WHEREAS, Warrantech engages in the business of marketing and administering
service and extended service contract Programs which are offered through
retailers and manufacturers to purchasers of certain consumer goods; and
WHEREAS, Houston General engages in the business of providing various types of
insurance; and
WHEREAS, Houston General has issued a policy of insurance to Warrantech
including all other insureds per policy definitions (collectively, called
Insureds) for the purpose of insuring contractual liability arising out of the
cost of performing the repairs and services required under the Service Plan
Certificates to be issued pursuant to the terms of this Agreement; and
WHEREAS, Houston General desires to retain Warrantech to administer, and
Warrantech desires to market and administer, such Programs, all subject to the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties agree as follows:
1. DEFINITIONS
(a) "Service Plan Certificate" or "Certificate" shall mean Service Plan
Certificate, or Service Plan Extension Certificate issued by an
Insured: (i) while as Service Plan Certificate Contractual Insurance
Policy issued by Houston General is in force; (ii) on a form approved
in writing by Houston General; (iii) for which the net premium has
been paid to Houston General or its authorized insurance agent/broker;
and (iv) as described in the business description shown on the
declarations page of the Policy in effect with respect to the Program
pursuant to which such certificate has been issued.
(b) "Service Plan Certificate Holder" shall mean any person or other legal
entity who acquires the rights to a valid Service Plan Certificate as
defined herein.
(c) "Claim" shall mean a claim made by a Service Plan Certificate Holder
in accordance with the terms of a valid Service Plan Certificate.
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(d) "Program" shall mean any of the various programs under which
Warrantech markets and administers Service Plan Certificates and which
have been approved by Houston General pursuant to the terms herein.
(e) "Premium" shall mean all monies payable to Houston General for the
procurement and collection of insurance relating to repairs under
Certificates covered by the Service Plan Certificate Contractual
Insurance Policies issued by Houston General. Premium shall be net of
and shall not include fees collected by Warrantech from Dealers under
the Programs relating to Warrantech's administrative expenses or to
Dealer commissions, if any.
(f) "Net Premium" shall mean the aggregate amount of the Premium collected
by Warrantech from other insureds during any calendar month, less
Return Premium.
(g) "Return Premium" shall mean the aggregate amount of unearned premium
attributable to the cancellation of Certificates for which Houston
General has previously received payment of Net Premium.
(h) "Dealers" shall mean retailers and manufacturers who sell and issue
Certificates to consumers, and who are insured under the Contractual
Liability Policies in force.
2. POLICIES
This Agreement is entered into in conjunction with certain policies of
insurance issued by Houston General as in effect from time to time
(collectively any "Policy") and shall be effective only so long as a Policy
is in effect, except as set out below in Paragraph 12(h). To the extent
that the terms of this Agreement conflict in any way with any of the terms
and conditions of any Policy, the terms and conditions of said Policy shall
prevail. Further, any and all obligations of Houston General contained
herein are limited by the terms and conditions of such Policy.
3. ADMINISTRATION
Houston General and Warrantech hereby agree that Warrantech shall serve as
Houston General's administrator for the Programs of Service Plan
Certificates for consumer products (collectively, the "Certificates") to be
offered pursuant to this Agreement. During the term hereof, Houston
General shall not enter into an agreement with another administrator
without the prior knowledge of Warrantech. The decision to pursue an
arrangement with another administrator, however, shall be left to the sole
discretion of Houston General.
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4. TERM
The term of this Agreement shall be for five (5) years from the effective
date set forth in Paragraph 12(a) below, unless terminated earlier pursuant
to the additional provisions herein.
5. PAYMENTS
(a) Liability for Payment of Premiums. Warrantech shall pay Houston
General, in accordance with Paragraph 5(c) below, all Net Premiums
payable as a result of the issuance of Certificates. In the event
Houston General is held liable for a Claim relating to a Certificate
for which no Net Premium has been paid to Houston General, Warrantech
shall promptly reimburse Houston General for the amount of such Claim.
(b) Claims Reserves. Houston General shall establish, at its sole
discretion, actuarially sound reserves to meet its obligations for
future losses on Claims submitted to it under the Certificates,
including those claims incurred but not reported.
(c) Accounting and Payment. During the terms of this Agreement and for so
long as any Certificates are outstanding: (i) Warrantech should report
to Houston General, (or its designated representative) on or about the
25th day after the end of each month the total Certificates sold and
canceled that are reported to and paid to Warrantech, along with the
respective premiums; (ii) Warrantech should report to Houston General,
on or about the 25th day after the end of each month the total
Certificates sold and canceled, the Net Premium for which Warrantech
has received during the month; and (iii) Warrantech assumes the
obligation for any extensions of credit by Warrantech and the overall
credit risks of its Dealers and will be fully responsible for the full
amount of premium due Houston General on Certificates sold, whether or
not Warrantech has collected the premium due from the Dealer.
Warrantech will accept business only from Dealers who have agreed in
advance, in writing, to submit payment for the dealer cost of
certificates sold by them during a monthly period to Warrantech not
later than ninety (90) days after the reporting to Warrantech of the
Certificates sold by them. In the event that this Agreement is
terminated then Warrantech, not later than ninety (90) days after the
last reporting of Certificates by Warrantech to Houston General, shall
remit to Houston General the Net Premiums which have been previously
reported to Houston General but not previously paid for by Warrantech.
In any event Warrantech will be responsible for and immediately pay
any premiums which have been reported but not remitted within the
applicable ninety (90) day period.
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6. PROGRAM ADMINISTRATION
(a) Authorization of Programs. Only those Certificates and Programs to
which Houston General has given prior written authorization shall be
marketed and administered by Warrantech under this Agreement.
Warrantech shall propose such programs to Houston general and shall
provide Houston General with all pertinent information (including, but
not limited to the products to be warranted) requested by Houston
General or otherwise reasonably necessary for Houston General to
analyze such Programs and Houston General shall indicate its approval
or disapproval (in its sole discretion) of such proposed Programs in
writing within thirty (30) days of its receipt of all such
information, required by Houston General. The failure of Houston
General to act within such period shall be deemed a rejection of the
proposed Program. Programs accepted by Houston General shall become
effective upon the receipt by Warrantech of Houston General's written
approval of such Program. Any change in authorized Programs must have
the prior written consent of Houston General. Houston General shall
have right of first refusal or all consumer product Programs
administered by Warrantech in the United States that are within the
parameters of the Programs currently being written.
(b) Establishment of Premium Rates. Houston General shall establish in
writing the Premium rates for each Program pursuant to the terms of
the then effective Policies. Warrantech shall provide Houston General
with all information requested by Houston General or otherwise
reasonably necessary to establish such Premium rates. Any change in
Premium rates must be made in writing by Houston General.
(c) Review of Certificates. Warrantech shall review all Certificates
submitted by Dealers to insure their compliance with all underwriting,
pricing, eligibility, and other requirements for each Program.
(d) Compliance with Law. Warrantech shall maintain operating standards
and procedures to assure that the Programs, the Certificates issued in
connection with the Programs, and the operations of Warrantech
conducted in connection with the marketing and administration of the
Programs and Certificates are all in compliance with all applicable
state and federal laws and regulations. Warrantech will procure and
maintain certificates of authority and all other licenses, permits and
authorizations legally required for it to market and administer
extended service contract Programs, and otherwise comply with all
applicable laws, in those states where the parties have agreed that
Programs will be offered under this Agreement.
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(e) Data Collection. Warrantech shall maintain adequate systems for the
collection and review of data relating to the operation of each
Program and shall make such data available to Houston General as
reasonably requested. This information shall include, but not be
limited to, results by Certificate type and within Certificate type by
plan code, manufacturer and model of covered products, production and
loss statistics by Dealer, and such other information as may be
reasonably requested by Houston General from time to time.
(f) Promotional Materials; Advertising. Warrantech shall be responsible
for and pay the costs of printing all promotional and administrative
materials pertaining to the Programs. Warrantech shall submit all
such materials for review and approval by Houston General prior to
use, if Houston General is referenced in such material. Houston
General's approval of such materials shall not be unreasonably
withheld. No party to this Agreement shall publish any advertisement
which contains a reference to the other party without prior written
approval of the form of such Advertisement by the other party. It is
understood however, that such materials may be required to conform
with certain regulatory guidelines which neither party can predict at
this time.
7. CLAIMS ADMINISTRATION
Warrantech shall adjust and pay, within the scope of its authority as
expressly set forth in Exhibit A, all valid Claims arising under the
Certificates and shall make available to Houston General all records
pertaining to the adjustment and payments of such Claims, including without
limitation the "Claim Record".
8. EXAMINATION OF BOOKS AND RECORDS
Warrantech shall permit Houston General, its auditors and agents, and any
authorized representative of any governmental or regulatory authority
having jurisdiction to examine the books and records of Warrantech
pertaining to this Agreement. Any such examination/audit shall require
five (5) business day's advance notice.
9. DUTIES OF HOUSTON GENERAL
(a) Regulatory Assistance. Houston General shall use reasonable efforts
to make available to Warrantech any and all documents in Houston
General's possession and information known to it which may be
necessary or helpful to Warrantech in connection with any regulatory
filing or form of compliance required of Warrantech to effect the
marketing and administration of the Programs.
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(b) Certificates of Insurance. For those Policies issued by Houston
General, Houston General will provide certificates of insurance when
necessary or when required by a regulatory authority. Nothing in this
paragraph shall limit Houston General's right to not issue, to non-
renew, or to cancel any policy of insurance.
(c) Licenses and Authorizations. Houston General will procure and
maintain certificates of authority and all other licenses, permits and
other authorizations legally required for it to issue Policies, and
will otherwise comply with all applicable laws in those states where
the parties have agreed that Programs will be offered under this
Agreement.
(d) Changes. Houston General will not notify Warrantech, in writing,
within ten (10) days if there is a change in (a) ownership of ten
percent (10%) or more of the stock of Houston General, its parent or
subsidiaries and/or (b) any officer ranked Senior Vice President or
above.
10. CONFIDENTIALITY
(a) Obligations of Houston General. It is recognized that during the
terms of this Agreement, Houston General may receive confidential and
proprietary information of Warrantech. Houston General agrees that it
will use reasonable efforts to keep all "Confidential Information" (as
defined below) of Warrantech confidential; provided, however, that:
(1) any such Confidential Information may be disclosed to such
directors, officers, employees, advisors and authorized
representatives (collectively, "Representatives") of Houston General
as need to know such information for the purpose of Houston General's
performance or administration of this Agreement or any Certificate,
Program or Policy, (it being understood that such Representatives
shall be informed of the confidential nature of such information and
shall agree to treat such information confidentially); (ii) any such
Confidential Information may be disclosed to the extent Warrantech
consents in writing; and (iii) such Confidential Information may be
disclosed by Houston General or any of its Representatives to the
extent that Houston General or such Representatives is legally
compelled to do so, provided that, prior to making such disclosure,
Houston General or such Representative, as the case may be, advises
and consults with Warrantech regarding such disclosure and provided
further that Houston General or such Representative, as the case may
be, discloses only that portion of such Confidential Information as is
legally required.
(b) Obligations of Warrantech. It is recognized that during the term of
this Agreement, Warrantech may receive confidential and proprietary
information of Houston General. Warrantech agrees that it will use
reasonable efforts to keep all Confidential Information of Houston
General confidential; provided,
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however, that: (i) any such Confidential Information may be disclosed
to such Representatives of Warrantech as need to know such information
for the purpose of Warrantech's performance or administration of this
Agreement or any Certificate, Program or Policy, (it being understood
that such Representatives shall be informed of the confidential nature
of such information and shall agree to treat such information
confidentially); (ii) any such Confidential Information may be
disclosed to the extent Houston General consents in writing; and (iii)
such Confidential Information may be disclosed by Warrantech or any of
its Representatives to the extent warranted, or to the extent any of
its Representatives are legally compelled to do so. Prior to making
such disclosure, however, Warrantech or such Representative will
advise and consult with Houston General regarding such disclosure.
Warrantech or such Representative will disclose only that portion of
such Confidential Information as is legally required.
(c) Confidential Information. As used herein, the term "Confidential
Information" of any party shall mean all information obtained from
such party other than information that: (i) is or becomes generally
available to the public other than as a result of any breach of this
agreement; (ii) was previously known to the other party or
independently derived or developed by such other party; (iii) is
disclosed to the other party on a nonconfidential basis by a third
party who has the right to disclose such information; or (iv) is
statistical data relating to program underwriting results, such as
premium rate amounts and earnings and losses; if required by any
regulatory authority.
11. RELATIONSHIP OF HOUSTON GENERAL AND WARRANTECH
(a) Nature of Relationship. Nothing contained herein shall be construed
to create the relationship of employer/employee, partners, joint
venture or association between the parties.
(b) Indemnification of Houston General. Warrantech agrees to indemnify,
defend and hold Houston General, its affiliates, directors, officers,
agents, representatives, and employees harmless from and against any
and all claims, suits, actions, liability, loss expense or damage,
(including compensatory and punitive and exemplary damages and
attorneys' fees), which Houston General, its affiliates, directors,
officers, agents or employees may sustain, due to or arising out of:
(i) any wrongful or negligent act, error or omission by Warrantech,
its affiliates, directors, officers, agents, representatives, or
employees) failure to comply with any law or regulation regardless of
whether such failure was intentional or unintentional, or resulted
from mistake, negligence or lack of knowledge; or (iii) any inaccuracy
in or any breach of any representative, warranty, covenant or
agreement of Warrantech contained
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in this Agreement or in any agreement, instrument, document, or
certificate delivered in connection herewith. Warrantech shall
furnish prompt notice to Houston General of any notice of alleged
violation from any regulatory authority and shall promptly take steps
to correct any existing violation.
(c) Indemnification of Warrantech. Houston General agrees to indemnify,
defend and hold Warrantech, its affiliates, directors, officers,
agents and employees, harmless from and against any and all claims,
suits, actions, liability, loss, expense or damage (including
compensatory and punitive or exemplary damages and attorneys' fees),
which Warrantech, its affiliates, directors, officers, agents or
employees may sustain, due to or arising out of: (i) any wrongful or
negligent act, error or omission by Houston General, its affiliates,
directors, officers, agents, representatives, or employees; (ii)
Houston General's (or its affiliates, directors, officers, agents or
employees) failure to comply with any law or regulation, regardless of
whether such failure was intentional or unintentional, or results from
mistakes, negligence or lack of Houston General's knowledge; or (iii)
any inaccuracy in or any breach of any representation, warranty,
covenant or agreement of Houston General contained in this Agreement
or in any agreement, instrument, document or certificate delivered in
connection herewith. Houston General shall furnish prompt notice to
Warrantech of any notice of alleged violation from regulatory
authority and to promptly take steps to correct any existing
violation.
(d) Notice. Any party claiming that it is entitled to indemnification
hereunder shall notify the other party within thirty (30) days of the
assertion of any claim or the discovery of any fact upon which such
claiming party intends to base its claim for indemnification
hereunder. Such claiming party's failure to so notify the other party
shall not, however, relieve the other party from any liability under
this Agreement with respect to such claim, except to the extent such
other party is actually prejudiced thereby. The party claiming
indemnification shall have the right to participate jointly with the
indemnifying party in the defense of any claim, demand, suit or other
proceeding in connection with which such claim for indemnification is
made, and no such claim, demand, suit or other proceeding may be
settled or otherwise compromised without the consent of both such
parties.
(e) For purposes of this Section, Warrantech and Houston General shall not
be considered affiliates or agents for each other.
12. TERMINATION
(a) Effective Date. This Agreement shall take effect as of 12:01 a.m.
Standard Time on November 1, 1995, at the location of Houston
General's office in Fort Worth, Texas, and shall be and remain in full
force and effect unless and until written notice of non-renewal,
cancellation, or termination is given by either party, as provided
below.
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(b) Automatic Renewal. At the conclusion of the initial term hereof, this
Agreement shall renew automatically for an additional one (1) year
term unless either party shall have provided to the other with written
notice of non-renewal. Such written notice shall be given not less
than ninety (90) days nor more than one hundred twenty days (120) days
before the date five (5) years from the Effective Date.
(c) Policies. Any cancellation or non-renewal of the Policies, pursuant
to the terms therein, shall automatically terminate this Agreement.
Any notice of such cancellation or non-renewal of the Policies shall
constitute sufficient notice of termination of this Agreement under
this Section.
(d) Nonpayment of Premium. This Agreement may be terminated by Houston
General upon ten (10) days advance notice for nonpayment of any of the
Net Premium by Warrantech; provided, however, that if the failure to
pay such Premium when due resulted from clerical or an inadvertent
error by Warrantech, then the cancellation otherwise effected shall be
rescinded provided that any delinquent Net Premium is paid by
Warrantech within ten (10) days of Warrantech's receipt of notice of
termination under this paragraph.
(e) Events of Termination by Either Party. Either party may terminate
this Agreement upon sixty (60) days written notice to the other upon
the occurrence of any of the following events (if such events have not
been cured within the sixty (60) day period following such notice):
(i) the other party shall fail to perform any of its obligations and
agreements under, or shall fail to comply with any of the provisions
of, this Agreement or any other agreement between such parties; (ii)
if any warranty or representation of the other party contained herein
or in any financial data, document or agreement delivered in
connection herewith shall prove to be false or misleading in any
material respect; or (iii) if the other party suspends transaction of
its business; or if the other party shall not pay its debts as they
mature or shall make a general assignment for the benefit of its
creditors; or proceedings in bankruptcy, or for reorganization or
liquidation of the other party federal bankruptcy law or under any
sate or federal law for the relief of creditors shall be commenced by
or against the other party; or receiver, trustee or custodian shall be
appointed for the other party or for a substantial portion of its
properties or assets.
(f) Events of Termination at Election of Houston General. Houston General
may terminate this Agreement upon thirty (30) days written notice to
Warrantech upon the occurrence of any of the following events (if such
events have not been cured by Warrantech within the thirty (30) day
period following such notice): (i) if Warrantech fails throughout the
term of this Agreement to
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disclose to Houston General those facts known to Warrantech that might
materially or adversely effect Houston General's judgment in
evaluating the acceptability of the Policy(ies) written under this
Agreement or the continuation or renewal of such Agreement; or (ii) if
Warrantech fails to notify Houston General, in writing, within ten
(10) days if there is a change in (a) ownership of ten percent (10%)
or more of the outstanding stock of Warrantech, its parent or consumer
product subsidiaries and/or (b) any officer ranked Senior Vice
President or above.
(g) Obligations upon Termination. Upon any termination or cancellation of
this Agreement in accordance with this Section, Warrantech and Houston
General agree to continue to perform all functions and obligations
required by this Agreement as if this Agreement were in full force in
effect with respect to all Certificates with an effective date prior
to the termination of this Agreement and during the effective date of
the Policies in effect with respect to their Programs pursuant to
which such Certificates were issued. Such obligations shall include
the payment of amounts due to any party in connection with the
purchase or cancellation of such Certificates. The obligations of the
parties under this paragraph shall continue until such Certificates
have expired or been cancelled and all Claims thereunder have been
paid or until a mutually acceptable arrangement for the fulfillment of
such obligations is evidenced by a written agreement of the parties.
Upon any termination of this Agreement, Warrantech shall provide to
Houston General within ninety (90) days of such termination, a
complete list of all Certificates which Warrantech asserts are covered
by this paragraph.
(h) Survival. The provisions of Sections 10, 11, and 13 of this Agreement
shall survive and remain in effect following any termination,
cancellation, non-renewal or expiration of this Agreement.
13. ARBITRATION
(a) Initiation of Proceedings. The parties shall submit to binding
arbitration by a board of three arbitrators any dispute, question or
controversy arising under this Agreement or arising out of or relating
to the transactions contemplated by the Agreement. Any such
arbitration shall be conducted at Forth Worth, Texas. Either party
may initiate the arbitration, by notice in writing to the other party,
setting forth the nature of the dispute, the amount involved, if any,
and the remedy sought. Any party desiring to initiate arbitration
shall serve a written notice of intention to arbitrate to the other
party and to the American Arbitration Association office in or closest
to Forth Worth, Texas within one hundred eighty (180) days after a
dispute has risen. A dispute is deemed to have arisen upon receipt of
written demand via Certified Mail, Return Receipt Requested. Failure
to serve a notice of intention to arbitrate
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within the time specified above shall be deemed a waiver of the
notifying party's right to compel arbitration of such claim. Such
written notice of intention to arbitrate may be informal and need not
comply with Rule 6 of the American Arbitration Association. The issue
of waiver pursuant to this paragraph is an arbitrable issue.
(b) Arbitrators; Discovery; Rules. The board of three arbitrators shall
be appointed promptly upon written application of the initiating
party, and shall be selected in accordance with the Commercial
Arbitration Rules of the American Arbitration Association in effect at
the dispute arises. All of the arbitrators shall be members of the
American Arbitration Association. Depositions may be taken and other
discovery obtained in any arbitration under this Agreement. The board
of arbitrators appointed hereunder shall conduct the arbitration
pursuant to the Commercial Arbitration Rules of the American
Arbitration Association then in effect.
(c) Award Binding. The award of the arbitrators shall be final and
binding upon the parties and the judgment thereon may be entered in
any court having jurisdiction.
(d) Statutes of Limitations. All statues of limitations which would
otherwise be applicable shall apply to any arbitration proceeding
hereunder. The statute of limitations shall toll upon receipt of the
written demand required under Paragraph 13(a) above.
(e) Survival of Provisions. The provisions of this section shall survive
any termination, amendment, or expiration of this Agreement, unless
all the parties otherwise expressly agree in writing.
(f) Attorney's Fees. The arbitrators, or a majority of them, shall award
attorney's fees and costs to the prevailing party.
(g) Venue. Venue of any arbitration proceeding hereunder will be in
Tarrant County, Texas.
(h) Expenses. Subject to paragraph (f) above, each party shall bear its
own expenses in connection with preparation for the presentation of
its case at the arbitration proceedings. The fees and expenses of the
arbitrators and all other expenses of the arbitration (except those
referred to in the preceding sentence) shall be borne equally by the
parties to such arbitration.
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14. GENERAL PROVISIONS
(a) Governing Law. This Agreement shall be interpreted in accordance with
the laws of the State of Texas.
(b) Notices. All notices to either party of this Agreement shall be in
writing and sent to the other party by Certified Mail, Return Receipt
Requested, and addressed to such party at the address set forth above.
Any such notice shall be deemed effective upon actual receipt. Each
party shall give the other party prompt written notice of any change
in address.
(c) No Waiver. Except as set out in Paragraph 13(a) above, if either
Warrantech or Houston General fails to insist on strict Compliance
with this Agreement or fails to exercise any rights under this
Agreement, such failure will not be a waiver of any right or provision
of this Agreement. Nor will such failure prevent either Warrantech or
Houston General from insisting on strict compliance with this
Agreement or exercising such right in the future.
(d) Entire Understanding. This Agreement contains the entire
understanding among the parties with respect to the transactions
contemplated hereby and supersedes all prior agreements and
understandings among the parties, if any.
(e) Assignment. This Agreement is binding on and shall inure to the
benefit of the parties hereto and their respective successors and
assigns; provided, however, that no party hereto may, without the
written consent of the others, assign any rights, powers, duties or
obligations hereunder.
(f) Amendment. This Agreement may not be modified, amended or altered
except by an agreement in writing executed by all parties hereto.
(g) Headings. Section headings are for convenience of reference only and
do not affect the interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the date first written above.
HOUSTON GENERAL INSURANCE WARRANTECH CONSUMER
COMPANY PRODUCT SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------- ---------------------
Its: Vice President Its: V.P. Finance/ CFO
------------------------ ---------------------
EXHIBIT A
Claims Administration
This Exhibit A forms a part of that certain Administrator Agreement - Consumer
Products between Houston General and Warrantech made effective November 1, 1995,
and is governed by the terms and conditions therein.
A. PROVISIONS OF CLAIMS SERVICES.
1. Warrantech will provide those claim services as are set forth in
paragraph 2. below (the "Basic Services"), with respect to any Claims
made under or Certificates covered by the Policies to which this
Agreement applies and which Claims: (i) involve an actual or alleged
loss occurring under such Certificate; and (ii) are reported to
Warrantech while a Certificate is in effect with respect to the
Program pursuant to which such Policy was issued.
2. The Basic Services to be rendered by Warrantech with respect to any
Claims shall be the following:
a. To establish a file with respect to each Claim in accordance with
the instructions set fort in Client Instructions below.
b. To investigate all Claims
c. To document each Claim file with a written chronology of all
actions taken with respect to the underlying Claim, including but
not limited to disbursements.
d. To furnish all claim forms necessary for proper Claims
administration.
e. To adjust, compromise, settle, or resist all Claims within the
discretionary settlement Authority Limit of Warrantech as set
forth below.
f. To adjust, settle or resist Claims in excess of the Authority
Limit only with the express prior approval of Houston General.
g. To retain and then destroy files for each Claim in accordance
with the Claim File Retention Policy set forth in the Client
Instructions below.
h. To provide Houston General, (or its designated representative) on
or about the twenty-fifth (25th) day of each month with monthly
claims file in a format and with data elements prescribed by
Houston General.
3. Subject to the other provisions of this Agreement below, Warrantech
will provide the Basic Services with respect to all Claims for long as
and until each Claim shall have been paid or until, in the opinion of
Warrantech and Houston General, Houston General shall have no further
liability therefore.
4. Houston General reserves the right to assume at its own expense the
control and handling of any Claim at any time, and Warrantech agrees
to deliver promptly the Claim file to Houston General with Houston
General may request, as well as funds accrued for the purpose of
paying the claim.
5. In the event any governmental or regulatory agency should contact
Warrantech for any reason with respect to any Claim (except for
ordinary and customary contact not in the nature of a complaint),
Warrantech agrees to notify Houston General promptly in writing in the
nature for such communication and, if the communications is in
writing, Warrantech shall send Houston General a copy thereof.
6. Houston General reserves the right to require Warrantech to obtain its
prior written approval before retaining any attorney for any matter
related to any Claim.
7. Warrantech will maintain a "suit log" consisting of the following
entries each suit received: Name of Service Plan Certificate Holder,
name of Dealer, name of repair facility, Claim number, name of
plaintiff(s), name of plaintiff(s) attorney, name of defendant(s),
court in which suit filed, date of suit filed, date of service on
agent, name of defense attorney, and date of defense counsel enters
appearance.
8. Warrantech will use its best efforts to keep abreast of all
governmental, regulatory and matters of compliance concerning the
investigation, settlement and defense of consumer warranty Claims and
will use its best efforts to ensure that it is in compliance with
these requirements.
B. CLAIMS FUNDS
1. Houston General shall open a checking account (the "Claims Account")
at the bank, or other financial institution for the purpose of issuing
payment of losses for Claims under the Policy. The Claims Account
shall be designated and titled so as to be identified as being for the
exclusive use of paying valid Claims made under Houston General's
Policy.
2. Warrantech shall be responsible for issuing checks on the Claims
Account in payment of valid losses incurred under Houston General's
Policy. Warrantech shall be the custodian of checks to be drawn on
the Claims Account and shall exercise the controls necessary to ensure
the safety and security of these checks. Warrantech shall have on
hand, at all times during the term of this
Agreement and during any run off after termination, at least a six (6)
months' supply of checks for the Claims Account.
C. PAYMENT OF CLAIMS
1. Warrantech will adjust Claims, and issue checks in payment of Claims
in accordance with the terms and provisions of this Agreement.
2. Warrantech will provide Houston General the check numbers issued and
the amounts of checks issued for time periods specified by Houston
General.
D. REPRESENTATION OF WARRANTECH. Warrantech represents and warrants to
Houston General as follows:
1. It is licensed as required under and shall comply with all applicable
federal, state and local governmental laws, rules, regulations and
orders necessary to the performance of its claims duties under this
Agreement.
CLIENT INSTRUCTIONS
1. Warrantech will maintain a "Claim Record" to include all pertinent
information, including but not limited to, entries as follows: date
reported, name of Service Plan Certificate Holder, name of Dealer,
date of loss and Claim number.
2. Warrantech will pursue recovery from sale of salvageable items, and
maintain a "Salvage Log" to include entries as follows: date of entry,
Claim number, name of Service Plan Certificate Holder, name of Dealer,
date of loss, amount of loss paid, amount recovered and date closed.
[PARAGRAPH 3 HAS BEEN REDACTED AND FILED SEPARATELY AS PART OF A
CONFIDENTIALITY REQUEST WITH THE COMMISSION.]
4. Warrantech will promptly report all litigation arising from the Policy
bound or written under this Agreement to the Company upon first notice
of suit.
AUTHORITY LIMIT
[THIS PARAGRAPH HAS BEEN REDACTED AND FILED SEPARATELY AS PART OF A
CONFIDENTIALITY REQUEST WITH THE COMMISSION.]
CLAIM FILE RETENTION
Warrantech will store closed files for six (6) years from date of
closure.
HOUSTON GENERAL INSURANCE WARRANTECH CONSUMER
COMPANY PRODUCT SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Its: Vice President Its: V.P. Finance/ CFO
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