Exhibit 10.9
PROFESSIONAL SERVICES AGREEMENT
By and between
INSPIRE INSURANCE SOLUTIONS, INC., Debtor and Debtor-in-Possession,
ARROWHEAD GENERAL INSURANCE AGENCY, INC.,
And
ARROWHEAD CLAIMS MANAGEMENT, INC.
Dated as of May 14, 2002
PROFESSIONAL SERVICES AGREEMENT
THIS PROFESSIONAL SERVICES AGREEMENT, dated as of May 14, 2002 (the
"Signing Date"), is by and between INSpire Insurance Solutions, Inc., a Texas
corporation, and debtor and debtor-in-possession ("INSpire"), and Arrowhead
General Insurance Agency, Inc., a Minnesota corporation, and Arrowhead Claims
Management, Inc. (collectively "Customer"). INSpire and Customer are sometimes
collectively referred to as the "Parties," and individually as a "Party." This
Professional Services Agreement, together with the Schedules referenced herein
and attached hereto, are referred to as this "Agreement."
RECITALS
A. INSpire provides certain policy processing, servicing and
administration services to Customer pursuant to a Policy Administration Services
Agreement, dated as of December 1, 1998 by and between INSpire and Customer (the
"Policy Administration Agreement").
B. INSpire and Customer desire to terminate the Policy Administration
Agreement and to concurrently enter various new agreements, including a Software
License Agreement and this Agreement which will provide Customer with certain
professional services required in order to maintain and enhance the software
systems licensed by Customer from INSpire (the "Systems") under the Software
License Agreement.
C. This Agreement is being entered into by INSpire and Customer as a
result of, and in consideration of, the termination of the Policy Administration
Agreement, INSpire's agreement to forgo revenue related to the trained technical
employees that will be hired by Customer, and INSpire's agreement to provide
upgrades to the Systems pursuant to the terms of the Software License Agreement.
D. On February 15, 2002, INSpire voluntarily filed a petition for
relief under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy
Code") with the United States Bankruptcy Court for the Northern District of
Texas, Fort Worth Division (the "Bankruptcy Court"), which is administered under
Case No. 02-41228-DML (the "Bankruptcy Case").
E. INSpire and Customer further desire that this Agreement, as well as
the other agreements referenced in it, shall only be effective and binding on
them if (1) all of such agreements are approved by a final order of the
Bankruptcy Court acceptable in form and substance to Customer, and (2) INSpire's
rejection of the Policy Administration Agreement, the Claims Administration
Services Agreement and the Claims Management Agreement is approved by a final
order of the Bankruptcy Court acceptable in form and substance to Customer.
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STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants, representations and warranties set forth in this
Agreement and for other good, valid and binding consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, hereby agree as follows:
ARTICLE I
PROFESSIONAL SERVICES;TERM; FEES
Section 1.1 Services. Effective on the later of the Signing Date or the
date when this Agreement is approved by final order of the Bankruptcy Court as
provided for in Section 9.20 herein (the "Effective Date") and during the Term
(as defined below), INSpire will provide and make available to Customer a
certain number of experienced computer software professionals ("Consultants")
each month (as defined below) to perform services to maintain, fix and improve
the Systems (the "Services"). The Services to be provided under this Agreement
will be delivered pursuant to the specifications set forth on individual
statements of work (the "Work Orders"), the template for which is attached as
Schedule 1.1. All terms and conditions of this Agreement apply to and govern all
Work Orders. The Services shall specifically not include services to be provided
by INSpire to Customer to complete the "Spot Report" items that are to be
completed pursuant to the separate Software Licensing Agreement between Customer
and INSpire. In addition to the Services, INSpire will provide to Customer such
other professional services as Customer may reasonably request in writing from
time to time during the Term and with respect to which the Parties will have
agreed to (a) the number of dedicated resources or (b) the scope, nature and
number of hours required to perform such services (the "Additional Services"),
which will subsequently be billed to Customer at the Additional Services Fee
Rates defined below. Customer may assume certain of the Services from INSpire
upon terms and conditions which are mutually-agreeable to the Parties and, with
respect to such transferred services, the Parties have agreed that INSpire's
costs associated with such services (the "Transferred Services") shall be borne
by Customer and then offset against the Services Fee as set forth in Section
1.4(a). In the event Services are transferred, the Transferred Services and
costs to be offset by Customer will be attached as a written addendum to this
Agreement.
Section 1.2 Term. The term during which INSpire will provide the
Services to Customer will commence on the Effective Date and will expire on
December 31, 2008 (the "Expiration Date"), unless extended or terminated
pursuant to the terms of this Agreement (the "Term"). The Expiration Date will
be extended automatically for a period of one year unless either Party gives
written notice of non-extension to the other Party at least six months prior to
the then current Expiration Date.
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Section 1.3 Services Fee, Number of Hours Deliverable, Quarterly
Minimums, Hourly Fee Rates, Volume Based Fee Reductions and Service Level
Penalties.
(a) Services Fee. During the first year of the Term, Customer
will pay to INSpire for the performance of the Services a fee of $400,000, which
will be payable in twelve equal monthly installments. After the first year of
the Term and until the Expiration Date, Customer will pay to INSpire for the
performance of the Services a fee which will be payable monthly and calculated
by multiplying (i) the amount of Written Premium processed on the Systems in the
immediately preceding month, by (ii) 1.9% which shall be subject to a Volume
Based Fee Reduction as set forth in Subsection (f) hereunder (the "Services
Fees"). For the purposes of this Agreement, "Written Premium" will mean the
aggregate amount of private passenger automobile, commercial general liability,
commercial inland marine, and commercial automobile premiums paid to Customer by
insureds during a particular time period. The Services Fee will be due and
payable in arrears on the last day of the month following the close of the
calendar month in which the Services were performed.
(b) Services. In return for the Services Fee and during the
Term, INSpire will provide to Customer (i) updates to the Systems pursuant to
the terms of the Software License Agreement and (ii) a dedicated number of
Consultants. During the first twelve months of the Term of this Agreement,
INSpire shall assign two dedicated Consultants to Customer. Thereafter, the
number of dedicated Consultants to be provided by INSpire shall be calculated as
follows: Customer will receive one dedicated Consultant if there are over $12
million (on an annualized basis) of Written Premium subject to the Services Fee
plus on additional dedicated Consultant for each additional $12 million (on an
annualized basis) of Written Premium subject to the Services Fee over $12
million and up to $120 million (on an annualized basis) of Written Premium
subject to the Services Fee plus one additional dedicated Consultant for each
additional $15.5 million (on an annualized basis) of Written Premium subject to
the Services Fee thereafter. The dollar values set forth in this paragraph shall
increase 5% per year during the Term beginning with the third year of the Term.
(c) Quarterly Minimums. During each calendar quarter of the
Term, the Services Fee payable each month will not be less than an amount equal
to 80% of the average monthly Services Fee paid in the immediately prior
calendar quarter. During the Term, the Services Fee paid by Customer in any
month will never be lower than $50,000.
(d) Staff Planning and Adjustments. Customer will provide
INSpire a six-month premium forecast on a quarterly basis by which INSpire will
plan and adjust staffing. Such forecast shall be delivered to INSpire within ten
(10) days of the Effective Date and on or before each calendar quarter
thereafter. If Written Premium exceeds the forecast to the extent that INSpire
should have added a Consultant(s) based on the formula defined in Subsection (b)
above, then INSpire will credit the Customer for such unutilized resources
against any Additional Services requested by Customer during the Term. If
Written Premium does not meet the forecast to the extent that INSpire would have
removed a Consultant from the team, then Customer will pay for the Services
delivered as Additional Services.
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(e) Additional Services Fee Rates. During the Term, Customer
will pay INSpire for the performance of the Additional Services pursuant to one
of the two following options:
(i) Should Customer elect to use a Consultant for a
defined term of not less than three calendar months, Customer will pay the
following monthly rates for Consultants: $13,000 for work performed by a Base
Rate Professional, $15,000 for a Business Rate Professional and $18,000 for a
Lead Rate Professional. These rates will increase 5% per year during the Term
beginning with the third year of the Term.
(ii) Customer may elect to retain Consultants on an
hourly basis at the rates set forth on Schedule 1.3(e). These rates will
increase 5% per year during the Term beginning with the third year of the Term.
For the purposes of this Agreement, a "Base Rate Professional" is defined as a
business analyst or systems programmer level individual, a "Business Rate
Professional" is defined as a systems analyst, senior business analyst or
project supervisor and a "Lead Rate Professional" is defined as a project
manager, business consultant or technical architect. Customer's minimum required
qualifications for INSpire's Consultants is set forth on Schedule 1.3(e).
(f) Volume Based Fee Reductions. Customer will receive a
reduction in the Services Fee based upon achieving certain volumes of Written
Premiums processed on the Systems per calendar year as follows:
Range of Annual Written Premiums Services Fee Percentage for Indicated Range
(i) Up to$120 million 1.9% of Written Premium
(ii) $120 - $140 million 1.8% of Written Premium
(iii) $140 - $160 million 1.7% of Written Premium
(iv) $160 - $200 million 1.6% of Written Premium
(v) Over $200 million 1.5% of Written Premium
(g) Taxes. Customer will pay all tariffs and taxes, however
designated or levied, now existing or imposed in the future that are applicable
to the Services or the Services Fee. Such tariffs and taxes include state and
local privilege and excise taxes, sales, use and personal property taxes and any
other tariff or tax based on Services performed, equipment used, and the
communication or storage of data. Notwithstanding the foregoing, Customer will
not be responsible for, and INSpire will pay (i) any franchise or income taxes
based upon the income or INSpire, (ii) any personal property or similar taxes
based upon the personal or real property owned or leased by INSpire and used in
the performance of the Services, and (iii) Texas state sales taxes payable as a
result of the Services Fee due to INSpire under this Agreement.
(h) Service Level Penalties. During the Term, INSpire will
provide Services to Customer pursuant to specific Work Orders and the Service
Levels defined in Section 2.1(a) below. In the event INSpire fails to deliver
each Work Order item to Customer for Acceptance Testing (defined below) by the
Implementation Date at least 90% of the time during any calendar quarter, or if
the Work Orders do not pass Acceptance Testing at least 90% of the time during
any calendar quarter, Customer shall be entitled to receive a penalty payment
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from INSpire for each Work Order that does not meet the Service Levels equal to
the lesser of $5,000 or the cost of completing the Spot Report Item, which shall
be calculated by multiplying the number of hours required to complete the Spot
Report Item by $115 (the "Service Level Penalty"). The Service Level Penalty
shall not be assessed if Customer fails to meet any of its obligations set forth
in the Work Order or any amendment thereto. Service Level Penalties shall not in
the aggregate exceed 15% of the Services Fee. Payment of such Service Level
Penalties will not in any way limit, restrict or relieve any Party of liability
for any breach of this Agreement. Customer may offset, upon thirty (30) days
notice to INSpire, the Service Level Penalties owed by INSpire against the
Services Fees payable by Customer to INSpire. In the event that INSpire believes
that Service Level Penalties have been improperly offset by Customer, INSpire
shall have full recourse to all remedies provided for in Article VII of this
Agreement.
(i) Acts Beyond Control. If an event described in Section 8.14
of this Agreement [Force Majeure clause] impacts INSpire's ability to meet a
Service Level, then INSpire will not be penalized for failing to meet that
Service Level to the extent that such event has affected INSpire's ability to
meet its obligations.
(j) Interest on Past Due Payments. Any sum due INSpire
pursuant to this Agreement that is not paid by the date on which payment is due
shall bear interest from that date until the date such sum is paid at the lesser
of 1.5 percent per month or the maximum rate of interest allowed under
applicable law. Customer will also pay INSpire for any reasonable expenses,
including attorney's fees, incurred by INSpire in the collection of any amounts
due and payable under this Agreement.
(k) Electronic Funds Transfer. INSpire will provide Customer
bank routing information. All payments are to be via Electronic Funds Transfer
(EFT), unless otherwise agreed to in writing by the Parties, to the account
specified in Writing by INSpire.
(l) Payment of Undisputed Amounts. In the event that there is
an amount in dispute, Customer is still obligated to pay all undisputed amounts
on all invoices.
(m) Transfer Fee for Sale of Customer's Personal Auto Claims
Servicing Business. For a period of four (4) years from the Effective Date of
this Agreement, Customer will pay to INSpire Fifty Percent (50%) of the net
proceeds from the sale of the existing personal auto claims servicing business.
Net proceeds shall be the proceeds from the sale less the customary third party
closing costs of selling the business, including brokers' fees. Such fees shall
be due and payable upon receipt by Customer of the purchase price. As an
example, if Customer sells the auto claims business for $1,000, then INSpire
will receive $500 from Customer at the time of Customer's receipt of the
proceeds of sale. If Customer completes the sale of personal auto claims
servicing business, then Customer may terminate this Agreement upon one (1)
day's notice after receipt by INSpire of Fifty Percent (50%) of the proceeds
from such sales.
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Section 1.4 Policy Processing and Administration Agreement; Sublease of
Premises; Software License Agreement; Asset Purchase Agreement and Comprehensive
Preferred Escrow Agreement, and Claims Administration Agreement.
(a) Policy Processing and Administration Agreement. Concurrent
with the execution of this Agreement, and as a condition to it, Customer and
INSpire will enter into a separate Policy Processing and Administration
Agreement by which INSpire will provide certain policy processing and
administration services to Customer.
(b) Sublease of Premises. Concurrent with the execution of
this Agreement, and as a condition to it, Customer and INSpire will enter into a
separate Sublease by which INSpire shall sublease office premises located at
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, to Customer.
(c) Software License Agreement. Concurrent with the execution
of this Agreement, and as a condition to it, Customer and INSpire will enter
into a separate Software License Agreement by which INSpire will license certain
software systems to Customer.
(d) Asset Purchase Agreement. Concurrent with the execution of
this Agreement, and as a condition to it, Customer and INSpire will enter into a
separate Asset Purchase Agreement by which INSpire will sell certain assets to
Customer and Customer will purchase such assets from INSpire.
(e) Comprehensive Preferred Escrow Agreement. Concurrent with
the execution of this Agreement, and as a condition to it, Customer and INSpire
will enter into separate Comprehensive Preferred Escrow Agreement by which
Inspire will maintain in escrow a copy of the object code and source code for
the latest version of INSpire's software incorporated in the System in use by
Customer.
(f) Claims Administration Agreement. Concurrent with the
execution of this Agreement, and as a condition to it, Arrowhead Claims
Management, Inc. ("ACM"), INSpire and INSpire Claims Management, Inc. ("INSpire
Claims") will enter into separate Claims Administration Agreement by which
INSpire and INSpire Claims will provide certain claims administration services
to ACM.
ARTICLE II
PERFORMANCE OF SERVICES
Section 2.1 Service Levels. During the Term, INSpire will provide
Services to Customer pursuant to specific Work Orders and will deliver such
Services that meet the specifications set forth on the Work Orders (the "Service
Levels") and by the date set forth thereon (the "Implementation Date"). Customer
will test the Services provided by INSpire pursuant to each Work Order in
accordance with mutually-agreeable test plans and test cases to ensure that they
meet the specifications set forth on the Work Order (the "Acceptance Testing").
INSpire shall use commercially reasonable efforts to provide Additional Services
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as requested by Customer. INSpire will provide Services under this Agreement in
accordance with the Service Levels.
Section 2.2 Evaluation and Review Process. During the Term, Customer
will evaluate INSpire based upon its performance and the timely delivery of the
Service Levels.
Section 2.3 Property Rights
(a) Customer's Property. Customer will own all right, title
and interest in and to the content of the policy, claim, accounting and agent
files and computer images and storage discs created or developed in connection
with or as a result of the performance of the Services.
(b) INSpire's Property. Subject to the foregoing, INSpire will
own all right, title and interest in and to any and all tools, techniques,
processes, procedures, inventions, software, patents, know how, trade secrets
and other copyrights that it already has or that are first discovered, created
or developed by INSpire in connection with, as a result of or incident to the
performance of the Services.
Section 2.4 Customer's Performance Obligations and Acknowledgements.
INSpire's performance of the Services require the support and cooperation of
Customer. As such, Customer agrees and acknowledges as follows:
(a) Provide Information and Material. Customer will provide,
in a timely manner and in a format reasonably acceptable to INSpire, the data
and materials in its sole possession necessary for INSpire to perform the
Services.
(b) Access to Third Party Software. Customer will provide
INSpire access to all software necessary for INSpire to perform the Services.
Section 2.5 Maintenance of Documents and Files. During the Term,
INSpire will maintain detailed written records and documentation of all work
performed on behalf of Customer. INSpire will not destroy these records and
documents without the written permission of Customer for a period of five years
from the date such work product is first provided to Customer.
Section 2.6 Insurance. During the Term, INSpire will maintain
professional liability insurance under a current and paid up policy, effective
as of the Effective Date, issued by an insurer reasonably acceptable to
Customer, which insurance will have a policy limit of no less than $1,000,000.
If INSpire fails to maintain coverage or incurs a lapse in coverage, Customer
may purchase coverage (at INSpire's expense) in the amount set forth herein.
INSpire will provide a copy of said insurance policy to Customer and annually
provide to Customer a certificate of insurance issued by INSpire's carrier.
Customer will be named as an additional insured under INSpire's errors and
omissions insurance policy.
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ARTICLE III
PROPRIETARY RIGHTS
Section 3.1 Proprietary Rights. None of the professional services and
work performed by INSpire under this Agreement shall be deemed to be "work made
for hire" and Customer agrees that all right, title and interest in and to such
services and work product belongs to and is the exclusive property of INSpire.
Customer agrees to execute any reasonable and appropriate documents necessary to
release any claims it may have to such work product and to confirm that such
services and work property are the exclusive property of INSpire
Section 3.2 Derivative Works. Any development, enhancement or
modification to the System made by INSpire on behalf of Customer will be the
sole property of Customer if the words "Proprietary Product of Arrowhead" are
included in the relevant Work Order. INSpire may independently develop similar
functionality as long as no members of the team that developed the original
modification for the Customer develop the similar functionality. INSpire will
only be prohibited from developing similar functionality if the words "Exclusive
Intellectual Property" are included in the relevant Work Order. In no case, will
INSpire be prohibited from developing similar functionality after 24 months
subsequent to the delivery of the Work Order to the Customer.
ARTICLE IV
CONFIDENTIALITY
Section 4.1 Definitions. For purposes of this Article the following
definitions will apply:
(a) "Arrowhead Group" means Arrowhead Management Company,
Customer, and their respective affiliates, parent entities, subsidiaries,
agents, directors, officers, employees, accountants, attorneys and advisors.
(b) "INSpire Group" means INSpire and INSpire Claims
Management, Inc. and their respective affiliates, parent entities, subsidiaries,
agents, directors, officers, employees, accountants, attorneys and advisors.
(c) "Confidential Information" means any information, oral or
written, whether prepared by the Disclosing Party, its Representatives or
otherwise, which is furnished to the Receiving Party or on behalf of the
Disclosing Party after the date of this Agreement relating to the Services. Such
information includes, but is not limited to, financial information, trade
secrets, processes, inventory, formulas, prices, markets, employee lists,
salaries, reports, computer files, maps, drawings, specifications, title
reports, customer information and lists, vendor sources, development and
marketing, plans, statistical data, forecasts, marketing strategies, or other
commercial, technical, strategic or human resources information. The term
"Confidential Information" does not include: (a) information which is or becomes
generally available to the public other than as a result of any unauthorized
disclosure or any wrongful acts of the Receiving Party; (b) information which is
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independently developed by the Receiving Party without the use of Confidential
Information from the Disclosing Party; (c) information which is rightfully
received from a third party whose disclosure would not violate any
confidentiality obligation or breach of any agreement; or (d) information which
is approved for release by the Disclosing Party in writing signed by the
Disclosing Party specifying the information to be released.
(d) "Disclosing Party" means Arrowhead Group or INSpire Group,
as the case may be, with respect to any Confidential Information provided by
such party to the other party.
(e) "Receiving Party" means Arrowhead Group or INSpire Group,
as the case may be, with respect to any Confidential Information received by
such party from the other party.
(f) "Representative" means any employee, agent, attorney,
accountant, financial advisor or other person acting on behalf of a party in
connection with this Agreement.
Section 4.2 Nondisclosure. The Parties hereby agree as follows:
(a) Use of Information. All Confidential Information will be
used solely for the purpose of performing of the Services. In no event will
Confidential Information be used by any party or person receiving Confidential
Information for business or competitive purposes.
(b) Confidentiality. All Confidential Information will be kept
strictly confidential by the Receiving Party and the Receiving Party will
restrict disclosure of Confidential Information to only those employees, agents
and advisors of the Receiving Party who have a need to know such information for
the purpose of performing the Services.
(c) Disclosure to Representatives. Representatives of the
Receiving Party shall be informed by the Receiving Party of the confidential
nature of such information and the covenant of confidentiality by the Receiving
Party hereunder, and they shall be directed by the Receiving Party to treat such
information confidentially. Before any disclosure or dissemination of any
Confidential Information subject to this Agreement is made to any person, other
than an officer or director of the Receiving Party or its counsel or independent
accountant, the Receiving Party shall provide the person to whom such disclosure
is made with a copy of this Agreement.
Section 4.3 No Solicitation. Each Party agrees that without the other
Party's prior written consent, neither such Party nor any of its affiliates will
solicit for employment, employ or otherwise contract for the services of any
person who is now employed by the other Party, for a period of one year from the
Effective Date, provided that this paragraph shall not apply to general
commercially published solicitations for employment by a Party or responses
thereto by employees of the other Party or to the hiring of employees as
contemplated by the definitive agreements pursuant to which this Agreement was
executed.
Section 4.4 Required Disclosure. In the event the Receiving Party or
its Representatives are requested or required in a judicial, administrative or
governmental proceeding to disclose any Confidential Information, the Receiving
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Party shall cooperate with the Disclosing Party and provide it with prompt
notice of any such request so that the Disclosing Party may seek an appropriate
protective order and/or waive the Receiving Party's compliance with the
provisions of this Agreement. If, in the absence of a protective order or the
receipt of a waiver hereunder, the Receiving Party or its Representatives are
nonetheless, in the opinion of the Receiving Party's attorneys, legally required
to disclose Confidential Information to any tribunal or else stand liable for
contempt or suffer other penalty, the Receiving Party may disclose such
information to such tribunal without liability hereunder, provided that the
Receiving Party complies with the notice provisions of the paragraph.
Section 4.5 Return of Confidential Information. Upon the expiration or
termination of this Agreement, the Receiving Party shall promptly, and in any
event upon request by the Disclosing Party, deliver to the Disclosing Party all
Confidential Information, including all written and electronically stored
copies. Neither the Disclosing Party nor its Representatives will retain any
copies, extracts or other reproductions, in whole or in part, of such
Confidential Information. At the Disclosing Party's request, all documents,
memoranda, notes and other such writings prepared by the Receiving Party or its
Representatives based upon the information in the Confidential Information, or
which quote from or summarize any Confidential Information, will be destroyed as
soon as reasonably practicable, and such destruction shall be certified in
writing to the Disclosing Party by an authorized officer of the Receiving Party
supervising the destruction.
Section 4.6 Remedies for Breach. The Parties acknowledge that a breach
of the covenant of confidentiality contained in this Agreement will result in
irreparable and continuing damage to the Disclosing Party for which there will
be no adequate remedy at law. In the event of any breach of this Agreement, the
Receiving Party agrees that the Disclosing Party shall be entitled to seek and
obtain specific performance of this Agreement by the Receiving Party, including,
upon making the requisite showing that it is entitled thereto, provisional
injunctive relief restraining the Receiving Party from committing such breach,
in addition to such other further relief, including monetary damages, as
provided by law.
ARTICLE V
TRADE SECRETS AND PROPRIETARY RIGHTS
Section 5.1 No Rights to Software. Notwithstanding any use by INSpire
of any proprietary computer software programs in the performance of the
Services, neither this Agreement nor the performance of the Services hereunder
will be construed as a grant of a license or any other interest in or to
INSpire's computer software programs. Further, this Agreement grants to Customer
no right to possess or reproduce, or any other interest in, any of the computer
software programs used in the performance of all or any part of the Services or
the specifications in any tangible or intangible medium. Customer may not
mortgage, hypothecate, sell assign, pledge, lease, transfer, license or
sublicense any computer software programs used in the performance of all or any
part of the Services, nor allow any person or entity top transmit, copy,
reproduce any such computer software programs. In the event Customer comes into
possession of the computer software programs used in the performance of all or
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any part of the Services, Customer will immediately notify INSpire and return
such computer software programs and all copies of any kind thereof to INSpire.
Section 5.2 Nondisclosure. Other than Customer's employees who need
access to computer software programs for the performance of their duties,
Customer covenants and agrees not to disclose or otherwise make available to any
person any computer software programs used in the performance of all or any part
of the Services. Customer agrees to take all reasonable steps necessary to
obligate each of its employees who is given access to such computer software
programs to a level of care sufficient to protect the computer software programs
from unauthorized disclosure.
Section 5.3 Survival. THE OBLIGATION OF THE PARTIES UNDER THIS ARTICLE
V AND ARTICLE IV WILL CONTINUE AFTER THIS AGREEMENT EXPIRES OR IS TERMINATED.
ARTICLE VI
TERMINATION
Section 6.1 Termination of Agreement. This Agreement may be terminated
prior to the Expiration Date as follows:
(a) by the non-breaching Party upon a breach of the other
Party of its duties or obligations under this Agreement; provided, however, that
(i) such breach remains substantially uncured within 30 days after written
notice specifying such breach is received by the breaching Party, or (ii) with
respect to a breach that cannot be reasonably cured within a 30 day period,
should the defaulting party fail to proceed within 30 days after written notice
specifying the breach to commence curing the default and thereafter fail to
proceed with all reasonable diligence to cure substantially the default; or
(b) by a Party in the event (i) the other Party makes a
general assignment for the benefit of creditors, (ii) the other Party files a
voluntary petition in bankruptcy or petitions for reorganization or similar
arrangement under the bankruptcy laws, excepting the Bankruptcy Case, (iii) a
petition in bankruptcy is filed against the other Party by a third party and
such petition is not dismissed within ninety days of its filing date, (iv) a
receiver or trustee is appointed for all or any part of the property and assets
of the other Party, or (v) the Bankruptcy Case is converted to a case under
Chapter 7 of the Bankruptcy Code; or
(c) by Customer, upon commission by INSpire of fraud, criminal
conduct or willful violation of an insurance statute or regulation, if said
conduct by INSpire has a material adverse effect on Customer's ability to engage
in business. This paragraph does not apply to conduct by INSpire employees who
are not acting at the direction of INSpire.
Section 6.2 Procedure Upon Expiration or Termination. Upon expiration
or termination of this Agreement:
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(a) INSpire will promptly return to Customer any documentation
or information proprietary to Customer;
(b) INSpire will provide promptly to Customer, without charge,
a current and complete historical tape backup of all data files;
(c) Such expiration or termination will not in any way limit,
restrict or relieve any Party of liability for any breach of this Agreement; and
(d) The automatic stay under the Bankruptcy Code will not in
any way limit or restrict Customer from exercising its rights or remedies upon
expiration or termination of this Agreement.
ARTICLE VII
REMEDIES AND LIMITATION OF LIABILITY
Section 7.1 Indemnification of the Parties. Each Party (the
"Indemnitor") will indemnify, defend, and hold harmless the other Party (the
"Indemnitee") from and against any arbitration award, claim, cost, damage,
demand, expense, fine, liability, lawsuit, obligation, payment or penalty of any
kind or nature whatsoever, including any reasonable attorneys fees and expenses
(a "Claim") incurred by the Indemnitee that arises out of or directly relates to
the Indemnitor's performance or breach of this Agreement. Upon an Indemnitee's
request, the Indemnitor will indemnify the Indemnitee's directors, employees,
officers, agents, attorneys, representatives and shareholders to the same extent
as such Indemnitee. No such person, however, will be a third party beneficiary
of the indemnification provision set forth in this Agreement. To the extent that
a Indemnitee requests the Indemnitor to indemnify such party's representatives,
the Indemnitee will cause its representatives to comply with the indemnification
provisions and abide by the indemnification limitations set forth in this
Agreement.
Section 7.2 Limitation Acknowledgement. Each Party expressly
acknowledges that the limitations set forth in this Article VII represent the
express agreement of the Parties with respect to the allocation of risks between
the Parties, including the level of risk to be associated with the performance
of the Services as related to the amount of the payments to be made to INSpire
for such Services, and each party fully understands and irrevocably accepts such
limitations.
Section 7.3 Notice of Claim. Any award of damages or indemnification
pursuant to this Agreement is conditioned upon the Indemnitor having received
full and prompt notice in writing of the Claim and the Indemnitee allowing the
Indemnitor to fully direct the defense or settlement of such Claim; provided,
however, that the failure to receive prompt notice relieves the Indemnitor of
its obligations under this Article only if the Indemnitor is materially
prejudiced by the failure to receive such notice. The Indemnitor will not be
responsible for any settlement or compromise made without its consent.
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ARTICLE VIII
ARBITRATION AND EQUITABLE REMEDIES
Section 8.1 Settlement Meeting. The Parties will attempt in good faith
to resolve promptly through negotiations any dispute under this Agreement. If
any such dispute should arise, the Parties, will meet at least once to attempt
to resolve the matter (the "Settlement Meeting"). Any Party may request the
other Parties to attend a Settlement Meeting at a mutually agreed time and place
within ten days after delivery of a notice of a dispute. The occurrence of a
Settlement Meeting with respect to a dispute will be a condition precedent to
seeking any arbitration or judicial remedy, provided that if a Party refuses to
attend a Settlement Meeting the other Parties may proceed to seek such remedy.
Section 8.2 Arbitration Proceedings. If the Parties have not resolved a
monetary dispute at the Settlement Meeting any Party may submit the matter to
arbitration. A panel of three arbitrators will conduct the arbitration
proceedings in accordance with the provisions of the Federal Arbitration Act (99
U.S.C. Section 1 et seq.) and the Commercial Arbitration Rules of the American
Arbitration Association (the "Arbitration Rules"). The decision of a majority of
the panel will be the decision of the arbitrators.
(a) Arbitration Notice. To submit a monetary dispute to
arbitration, a Party will furnish the other Parties and the American Arbitration
Association with a notice (the "Arbitration Notice") containing (i) the name and
address of such Party, (ii) the nature of the monetary dispute in reasonable
detail, (iii) the Party's intent to commence arbitration proceedings under this
Agreement, and (iv) the other information required under the Federal Arbitration
Act and the Arbitration Rules.
(b) Selection of Arbitrators. Within ten days after delivery
of the Arbitration Notice, each Party will select one arbitrator from the list
of the American Arbitration Association's National Panel of Commercial
Arbitrators. Within ten days after the selection of the last of those two
arbitrators, those two arbitrators will select the third arbitrator from such
list. If the first two arbitrators cannot select a third arbitrator within such
ten-day period, the American Arbitration Association will select such third
arbitrator from the list. Each arbitrator will be an individual not subject to
disqualification under Rule No. 19 of the Arbitration Rules with experience in
settling complex litigation involving the insurance industry.
(c) Arbitration Final. The arbitration of the matters in
controversy and the determination of any amount of damages or indemnification
will be final and binding upon the Parties to the maximum extent permitted by
law, provided that any Party may seek any equitable remedy available under Law
as provided in this Agreement. This agreement to arbitrate is irrevocable.
Section 8.3 Place of Arbitration. Any arbitration proceedings will be
conducted at such neutral location outside of the States of California and Texas
as the Parties may agree. If a neutral location cannot be agreed upon by the
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Parties, then the arbitration proceedings will be held in Albuquerque, New
Mexico. The arbitrators will hold the arbitration proceedings within 60 days
after the selection of the third arbitrator.
Section 8.4 Discovery. During the period beginning with the selection
of the third arbitrator and ending upon the conclusion of the arbitration
proceedings, the arbitrators will have the authority to permit the Parties to
conduct such discovery as the arbitrators consider appropriate.
Section 8.5 Equitable Remedies. Notwithstanding anything else in this
Agreement to the contrary, after the Settlement Meeting a Party will be entitled
to seek any equitable remedies available under law. Any such equitable remedies
will be in addition to any damages or indemnification rights that such Party may
assert in an arbitration proceeding.
Section 8.6 Judgments. Any arbitration award under this Agreement will
be final and binding. Any court having jurisdiction may enter judgment on such
arbitration award upon application of a Party.
Section 8.7 Expenses. If any Party commences arbitration proceedings or
court proceedings seeking equitable relief with respect to this Agreement, the
prevailing Party in such arbitration proceedings or case may receive as part of
any award or judgment reimbursement of such Party's reasonable attorneys' fees
and expenses to the extent that the arbitrators or court considers appropriate.
Section 8.8 Cost of the Arbitration. The arbitrators will assess the
costs of the arbitration proceedings, including their fees, to the Parties in
such proportions as the arbitrators consider reasonable under the circumstances.
Section 8.9 Exclusivity of Remedies. To the extent permitted by law,
the arbitration and judicial remedies set forth in this Article will be the
exclusive remedies available to the Parties with respect to any dispute under
this Agreement or claim for damages or indemnification under this Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Amendment. No amendment of this Agreement will be effective
unless in writing signed by the Parties.
Section 9.2 Counterparts. This Agreement may be executed in any number
of counterparts, each of which will be deemed to be an original agreement, but
all of which will constitute one and the same agreement.
Section 9.3 Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the Parties and supersedes all prior
agreements and understandings, both written and oral, with respect to the
subject matter of this Agreement.
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Section 9.4 Expenses. Each Party will bear its own expenses with
respect to the negotiation and preparation of this Agreement.
Section 9.5 Governing Law. THIS AGREEMENT WILL BE GOVERNED BY THE LAWS
OF THE STATE OF DELAWARE REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN
UNDER THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.
Section 9.6 No Assignment. No Party may assign its benefits or delegate
its duties under this Agreement without the prior consent of the other Party.
Any attempted assignment or delegation without such prior consent will be void.
Notwithstanding the foregoing, each Party may assign its rights under this
Agreement to a purchaser of all the assets or equity of such Party without the
other Party's consent, and any such purchaser and any subsequent purchasers of
all of the assets or equity of such Party may similarly assign such rights.
Section 9.7 No Third Party Beneficiaries. This Agreement is solely for
the benefit of the Parties and no other Person will have any right, interest, or
claim under this Agreement.
Section 9.8 Notices. All claims, consents, designations, notices,
waivers, and other communications in connection with this Agreement will be in
writing. Such claims, consents, designations, notices, waivers, and other
communications will be considered received (a) on the day of actual transmittal
when transmitted by facsimile with written confirmation of such transmittal, (b)
on the next business day following actual transmittal when transmitted by a
nationally recognized overnight courier, or (c) on the third business day
following actual transmittal when transmitted by certified mail, postage
prepaid, return receipt requested; in each case when transmitted to a Party at
its address set forth below (or to such other address to which such Party has
notified the other, Parties in accordance with this Section to send such claims,
consents, designations, notices, waivers, and other communications):
INSpire: Attn: Chief Executive Officer
INSpire Insurance Solutions, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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With a copy to: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Jenkens & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Customer: Attn: Chief Executive Officer
Arrowhead General Insurance Agency, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
And: Attn: Chief Executive Officer
Arrowhead Claims Management, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Section 9.9 Public Announcements. The Parties will agree on the terms
of any press releases or other public announcements related to this Agreement,
and will consult with each other before issuing any press releases or other
public announcements related to this Agreement; provided, however, that any
Party may make a public disclosure if in the opinion of such Party's counsel it
is required by law or the rules of any applicable stock exchange or dealer
quotation system to make such disclosure. The Parties agree, to the extent
practicable, to consult with each other regarding any such public announcement
in advance thereof. The Parties may, however, include the other Party on any
general customer lists or in presentations that include a list of current
customers.
Section 9.10 Representation by Legal Counsel. Each Party is a
sophisticated entity that was advised by experienced legal counsel and other
advisors in the negotiation and preparation of this Agreement.
Section 9.11 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction will not invalidate the
remaining provisions of this Agreement or affect the validity or enforceability
of such provision in any other jurisdiction. In addition, any such prohibited or
unenforceable provision will be given effect to the extent possible in the
jurisdiction where such provision is prohibited or unenforceable.
Section 9.12 Successors. This Agreement will be binding upon and will
inure to the benefit of each Party and its heirs, legal representatives,
permitted assigns, and successors, provided that this Section will not permit
the assignment or other transfer of this Agreement, whether by operation of law
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or otherwise, if such assignment of other transfer is not otherwise permitted
under this Agreement.
Section 9.13 Time of the Essence. Time is of the essence in the
performance of this Agreement and all dates and periods specified in this
Agreement.
Section 9.14 Waiver. No provision of this Agreement will be considered
waived unless such waiver is in writing and signed by the Party that benefits
from the enforcement of such provision. No waiver of any provision in this
Agreement, however, will be deemed a waiver of a subsequent breach of such
provision or a waiver of a similar provision. In addition, a waiver of any
breach or a failure to enforce any term or condition of this Agreement will not
in any way affect, limit, or waive a Party's rights under this Agreement at any
time to enforce strict compliance thereafter with every term and condition of
this Agreement.
Section 9.15 Force Majeure. The Parties will not be liable or deemed to
be in default for any delay or failure in performance under this Agreement or
interruption of Services resulting, directly or indirectly, from acts of God,
civil or military authority, labor disputes, shortages of suitable materials,
labor or transportation or any similar cause beyond the reasonable control of
the Parties.
Section 9.16 Attorneys' Fees. In the event of any action, arbitration,
claim, proceeding or suit between Customer and INSpire seeking enforcement of
any of the terms and conditions of this Agreement, the prevailing party in such
action, arbitration, claim, proceeding or suit will be awarded its reasonable
costs and expenses, including its court costs and reasonable attorneys' fees.
Section 9.17 Relationship of the Parties. The Parties are independent
contractors of one another, and there should be no instance in which they should
be construed as partners or joint venturers.
Section 9.18 Drafting. Neither this Agreement nor any provision
contained in this Agreement will be interpreted in favor of or against either
Party because such Party or its legal counsel drafted this Agreement or such
provision. No prior draft of this Agreement or any provision contained in this
Agreement will be used when interpreting this Agreement or its provisions.
Section 9.19 Headings. Article and section headings are used in this
Agreement only as a matter of convenience and will not have any effect upon the
construction or interpretation of this Agreement.
Section 9.20 Condition of Bankruptcy Court Approval. This Agreement is
expressly conditioned upon INSpire obtaining a final order from the Bankruptcy
Court in the Bankruptcy Case, approving (a) this Agreement, as well as the
Policy Processing and Administration Agreement, the Sublease, the Software
License Agreement, the Asset Purchase Agreement, the Comprehensive Preferred
Escrow Agreement and the Claims Administration Agreement concurrently entered
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into between members of the INSpire Group, debtor and debtor-in-possession, and
the Arrowhead Group, all without amendment or modification, unless such
amendment or modification is approved in writing by all of the Parties, within
forty-five days after the date this Agreement is entered into; and (b) the
termination of the Policy Administration Agreement, the Claims Administration
Services Agreement and the Claims Management Agreement. The final order of the
Bankruptcy Court shall be in a form and substance acceptable to Customer. This
Agreement shall be implemented by the Parties on a date mutually agreed to by
the Parties, but no later than five days after the Effective Date. If the final
order from the Bankruptcy Court is not obtained within the time specified, this
Agreement and all of its terms and provisions are and shall be null and void and
of no force or effect whatsoever.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed and delivered by a duly authorized officer as of the Signing Date.
INSpire: INSPIRE INSURANCE SOLUTIONS, INC., and
Debtor and Debtor-in-Possession
By:________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President & CEO
Customer: ARROWHEAD GENERAL INSURANCE AGENCY, INC.
By:________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President & CEO
ARROWHEAD CLAIMS MANAGEMENT, INC.
By:_________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
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Schedule 1.1 - Work Orders
TEMPLATE WORK ORDERS WILL BE ATTACHED
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Schedule 1.3(e) - Minimum Requirements For Consultants
Quality Assurance people must have a minimum of five years of relevant
experience. One of those years must be on the portion of the System they are
being asked to work on. Rate to be paid by Customer for Quality Assurance people
will be $100 per hour.
Business Analysts must have a minimum of five years of relevant experience. One
of those years must be on the portion of the System they are being asked to work
on. Rate to be paid by Customer for Business Analysts will be $100 per hour.
Programmers and Programmer Analysts must have a minimum of five years of
relevant experience. One of those years must be on the portion of the System
they are being asked to work on. Rate to be paid by Customer for Programmer and
Programmer Analysts will be $100 per hour.
System Analysts must have a minimum of seven years of relevant experience. One
of those years must be on the portion of the System they are being asked to work
on. Rate to be paid by Customer for Systems Analysts will be $120 per hour.
Senior Business Analysts must have a minimum of seven years of relevant
experience. One of those years must be on the portion of the System they are
being asked to work on. Rate to be paid by Customer for Senior Business Analysts
will be $120 per hour.
Project Supervisors must have a minimum of seven years of relevant experience.
One of those years must be on the portion of the System they are being asked to
work on. Rate to be paid by Customer for Project Supervisors will be $120 per
hour.
Project Managers must have a minimum of ten years of relevant experience. One of
those years must be on the portion of the System they are being asked to work
on. Rate to be paid by Customer for Project Managers will be $148 per hour.
Business Consultants must have a minimum of ten years of relevant experience.
One of those years must be on the portion of the System they are being asked to
work on. Rate to be paid by Customer for Business Consultants will be $148 per
hour.
Technical Architects must have a minimum of ten years of relevant experience.
One of those years must be on the portion of the System they are being asked to
work on. Rate to be paid by Customer for Technical Architects will be $148 per
hour.
If Customer is unsatisfied with the services performed by any Consultant,
INSpire will stop that Consultant from providing any more services for Customer
(other than providing transition information to his or her replacement) and
replace the Consultant with another employee within thirty (30) business days.
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The one year experience requirement referenced above may be waived by Customer
upon written request by INSpire, and such waiver will not be unreasonably
withheld by Customer.
These rates subject to increase pursuant to Section 1.3(e) of Agreement.
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