Exhibit 10.5
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CLAIMS MANAGEMENT SYSTEM AND SUPPORT SERVICES AGREEMENT
AND FIRST AMENDMENT TO CLAIMS ADMINISTRATION
SERVICES AGREEMENT
by and among
INSPIRE CLAIMS MANAGEMENT, INC.,
INSPIRE INSURANCE SOLUTIONS, INC.
and
ARROWHEAD CLAIMS MANAGEMENT, INC.
Dated as of January _, 2002
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This Agreement is subject to arbitration under
the rules and regulations of the American
Arbitration Association as provided
in Article X hereof.
CLAIMS MANAGEMENT SYSTEM AND
SUPPORT SERVICES AGREEMENT
AND FIRST AMENDMENT TO CLAIMS
ADMINISTRATION SERVICES AGREEMENT
THIS CLAIMS MANAGEMENT SYSTEM AND SUPPORT SERVICES AGREEMENT and FIRST
AMENDMENT TO CLAIMS ADMINISTRATION SERVICES AGREEMENT, dated as of January __,
2002 (the "Signing Date"), is by and among INSpire Claims Management, Inc., a
Delaware corporation ("INSpire Claims"), INSpire Insurance Solutions, Inc., a
Texas corporation ("INSpire Insurance"), and Arrowhead Claims Management, Inc. a
California corporation ("Customer" or "ACM"). INSpire Insurance and Customer are
sometimes collectively referred to as the "Parties," and individually referred
to as a "Party." This Claims Management System and Support Services Agreement
and First Amendment to Claims Administration Services Agreement, together with
the Schedules referenced herein are referred to as this "Agreement."
RECITALS
A. INSpire Claims currently provides certain claims administration
services to Customer pursuant to that certain Claims Administration Services
Agreement, dated as of December 1, 1998 by and between INSpire Claims and
Arrowhead General Insurance Agency, Inc. ("AGIA"), which was assigned to
Customer (the "Claims Administration Agreement"). Pursuant to the Claims
Administration Agreement, INSpire Claims provides claims administration services
to Customer for personal automobile, commercial automobile, homeowners, mobile
home, motorcycle, personal watercraft and business owners' protection ("BOP")
claims.
B. INSpire Claims and Customer desire to amend the Claims
Administration Agreement to remove the personal auto claims servicing business
from the Claims Administration Agreement, subject to the terms and conditions
set forth in this Agreement.
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
FRAMEWORK; PURPOSE
Section 1.1 Purpose; Amendment. The purpose of this Agreement is to set
forth the terms and conditions by which INSpire Claims will transfer the
personal auto claims files back to the Customer and under which INSpire
Insurance will provide certain services for Customer. INSpire Claims will
transfer to Customer and Customer will assume all of the personal auto claim
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files currently handled by INSpire Claims under the Claims Administration
Agreement, effective January 14, 2002, and will process current and future
personal auto claims. This Agreement shall amend the Claims Administration
Agreement only with respect to personal auto claims processing business pursuant
to the terms and conditions of this Agreement. This Agreement supercedes and
wholly replaces all terms, covenants and provisions of the Claims Administration
Agreement with respect to personal auto claims processing business. Except as
expressly amended herein, for commercial automobile, homeowners, mobile home,
motorcycle, personal watercraft and BOP claims processing, all terms, covenants
and provisions of the Claims Administration Agreement are and shall remain in
full force and effect.
Section 1.2 Waiver Regarding Employees. INSpire Claims hereby waives
the restriction in Section 5.3 of the Claims Administration Agreement which
prohibits Customer from hiring INSpire Claims employees.
Section 1.3 Mutual Release.
(a) Mutual Release. Solely with respect to the waived claims
described in Section 9.1(b) below, and specifically excluding any obligations
created under this Agreement, each Party and INSpire Claims hereby presently,
generally, fully, finally and forever, irrevocably releases, acquits and
discharges the other Party and INSpire Claims, and their past, present, and
future officers, directors, agents, servants, employees, shareholders, partners,
joint venturers, attorneys and all other persons associated with the other Party
and INSpire Claims, from any and all claims, liabilities, demands, actions,
causes of action and/or lawsuits, of whatsoever kind and character, known and
unknown, specifically including claims for attorneys' fees, that have or may
have arisen or accrued on or before January 14, 2002 relating to or arising from
such waived claims.
(b) Notwithstanding the foregoing, nothing contained herein
shall give rise to liability on the part of INSpire Insurance, INSpire Claims or
Customer, or shall release, waive or impair any release afforded to INSpire
Insurance, INSpire Claims or Customer or resurrect any claim settled by INSpire
Insurance, INSpire Claims or Customer, arising out of Clarendon National
Insurance Company v. ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, Arrowhead Claims
Management, Inc., et. al or any claims that were alleged or could have been
alleged against INSpire Insurance, INSpire Claims or Customer based upon any
facts pertaining to the handling of any claim involved in such matter.
ARTICLE II
SERVICES; TERM; FEES
Section 2.1 Services. During the Term (as defined below), Customer will
engage INSpire Insurance to exclusively provide the services set forth on
Schedule 2.1 (the "Services") for Customer's existing personal automobile
business; provided however, that Customer may elect to obtain the same or
similar services from a provider other than INSpire Insurance, so long as
Customer pays the Service Fee (as defined in Section 2.4(b)) to INSpire
Insurance for the Term of the Agreement. INSpire Insurance will provide the
Services to Customer, each upon the terms and conditions set forth in this
Agreement. If the San Diego facility, described on Schedule 2.6, is no longer
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available to Customer due to an expiration or termination of the master lease or
the sublease for that property, INSpire Insurance will bear the expense of
continuing to provide the Services to Customer at a new location, including but
not limited to, installation of telephone lines, computer lines, systems and
work space.
Section 2.2 Exclusivity of Services. During the Term, INSpire Insurance
will be the sole and exclusive provider to Customer of the Services for
Customer's existing personal automobile business, except with respect to
workspace as described on Schedule 2.1 and the facilities described on Schedule
2.6. Customer acknowledges that during the Term (i) INSpire Insurance will have
the exclusive right to provide the Services to Customer's existing personal
automobile business, (ii) except as is allowed in Section 2.1, Customer will not
use or engage any other person or entity to render the Services for Customer's
existing personal automobile business and (iii) INSpire Insurance will have no
restrictions on its right to market to, and perform services for, the property
and casualty insurance industry which are similar to the Services provided
pursuant to this Agreement. If, in the sole and absolute discretion of Customer,
INSpire Insurance is meeting the Services Levels and providing the Services in
an acceptable manner to Customer, then INSpire Insurance (a) shall receive
notice from Customer of the opportunity of future business and (b) shall have
the opportunity to provide a bid to Customer to provide the Services for the
future business, acceptance or rejection of which is in the sole and absolute
discretion of Customer.
Section 2.3 Term. The term during which INSpire Insurance will provide
the Services to Customer will commence on January 14, 2002 (the "Transfer Date")
and will expire on November 30, 2008 (the "Expiration Date") unless extended or
terminated pursuant to the terms of this Agreement (the "Term").
Section 2.4 Service Fees and Related Expense.
(a) Transfer Fee. Customer will pay to INSpire Insurance
a fee equal to $75,000 (the "Transfer Fee") due on the date of the transfer of
the claims files.
(b) Service Fee. INSpire Insurance will provide to Customer
comprehensive services as defined herein for a fee (the "Service Fee") of 1.1%
of personal automobile earned premium, defined as that premium on which Customer
adjusts personal automobile claims either today or in the future using the
INSpire Insurance claims management systems (the "Personal Automobile Earned
Premium"), subject to a minimum fee as follows. The minimum fee during the first
calendar quarter of this Agreement shall be 1.1% of $20,000,000, pro-rated from
January 14, 2002 (pro-rated, the minimum fee for January is $42,580.64 and the
minimum fee for February and March is $73,333.33 for each such month). The
minimum fee for each quarter thereafter shall be the greater of (i) 1.1% of the
Personal Automobile Earned Premium for the quarter or (ii) 1.1% of 80% of the
Personal Automobile Earned Premium for the prior quarter. For example, if the
first quarter Personal Automobile Earned Premium is $15,000,000, the minimum fee
in the second quarter is the greater of 1.1% of Personal Automobile Earned
Premium or 1.1% of 80% of $15,000,000 (that is, 1.1% of $12,000,000). The
Service Fees will be due and payable on the 30th day of the month following the
month in which the Services were performed. At the beginning of each quarter,
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Customer will provide INSpire Insurance an estimate of monthly written premiums
for the following twelve months. The forecast of written premiums for the first
twelve month period is attached hereto as Schedule 2.4(b).
(c) Unanticipated and Increased Service Level Changes. Each
Party agrees to negotiate in good faith for an adjustment to the Service Fees in
the event of any statutory, regulatory or judicial changes that require
additional activities not then provided for pursuant to this Agreement. Further,
each Party agrees to negotiate in good faith for an adjustment to the Service
Fees in the event the Service Levels, as defined in Section 5.2, or Services are
changed.
Section 2.5 Fee Upon Sale of Customer's Auto Claims Business. For a
period of four years from the date of this Agreement, Customer will pay to
INSpire Insurance 50% of the net proceeds from the sale of the existing personal
automobile claims servicing business or any of the primary functions being
transferred to Customer by INSpire Claims. Net proceeds shall be the proceeds
from the sale less the customary third party closing costs of selling the
business, including broker's fees. Such fee shall be due and payable upon
receipt by Customer of the purchase price. As an example, if Customer sells said
auto claims business for $1,000, then INSpire Insurance will receive $500 from
Customer at the time of Customer's receipt of the proceeds of sale. If Customer
completes the sale of the auto claims servicing business then Customer may
terminate this Agreement upon one days' notice after receipt by INSpire
Insurance of 50% of the proceeds from the sale.
Section 2.6 Facilities. INSpire Insurance will lease facilities to
Customer as set forth on Schedule 2.6. These leased facilities will be governed
by a separate lease agreement for each facility, attached hereto.
Section 2.7 Third Party Contracts. Customer will assume the third party
contracts set forth on Schedule 2.7, as of January 14, 2002. INSpire Insurance
will be obligated for all expenses and fees in connection with those third party
contracts prior to January 14, 2002, and shall indemnify and reimburse Customer
for any and all costs incurred by Customer or asserted against Customer arising
prior to January 14, 2002. Customer will be obligated for all expenses and fees
in connection with those third party contracts beginning January 14, 2002, and
shall indemnify and reimburse INSpire Insurance for any and all costs incurred
by INSpire Insurance or asserted against INSpire Insurance from and after
January 14, 2002.
ARTICLE III
REPRESENTATION AND WARRANTIES OF CUSTOMER
Customer represents and warrants that the statements contained in this
Article are correct and complete.
Section 3.1 Corporate Status Qualification. Customer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California. There is no pending or threatened proceeding for the
dissolution, liquidation, insolvency or rehabilitation of Customer. Customer is
duly qualified and in good standing as a foreign entity under the laws of each
jurisdiction where qualification is required, except where the lack of such
qualification would not have a material adverse effect.
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Section 3.2 Corporate Power and Authority. Customer has the corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
Customer has taken all corporate action necessary to authorize its execution and
delivery of this Agreement, the performance of its obligations hereunder and the
consummation of the transactions contemplated hereby.
Section 3.3 Enforceability. This Agreement has been duly executed and
delivered by Customer and constitutes a legal, valid and binding obligation of
Customer enforceable against it in accordance with the terms of this Agreement,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INSPIRE INSURANCE
INSpire Insurance represents and warrants that the statements
contained in this Article are correct and complete.
Section 4.1 Corporate Status; Qualification. INSpire Claims is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. INSpire Insurance is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas.
There is no pending or threatened proceeding for the dissolution, liquidation,
insolvency or rehabilitation of INSpire Claims or INSpire Insurance. INSpire
Claims and INSpire Insurance are each duly qualified and in good standing as a
foreign entity under the laws of each jurisdiction where qualification is
required, except where the lack of such qualification would not have a material
adverse effect.
Section 4.2 Corporate Power and Authority. Each of INSpire Claims and
INSpire Insurance has the corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. Each of INSpire Claims and INSpire Insurance
has taken all corporate action necessary to authorize its execution and delivery
of this Agreement, the performance of its obligations hereunder and the
consummation of the transactions contemplated hereby.
Section 4.3 Enforceability. This Agreement has been duly executed and
delivered by INSpire Claims and INSpire Insurance and constitutes a legal, valid
and binding obligation of INSpire Claims and INSpire Insurance enforceable
against it in accordance with the terms of this Agreement, except as the same
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
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ARTICLE V
PERFORMANCE OF SERVICES
Section 5.1 Designated Representative. Each Party will appoint an
individual (a "Designated Representative") who will (a) oversee and manage the
performance of its obligations under this Agreement, (b) serve as its primary
managerial point of contact with the other Party and (c) be authorized to act
for it and on its behalf with respect to all matters relating to this Agreement.
Section 5.2 Establishment of Service Levels. Each Party agrees to the
service levels set forth on Schedule 5.2 (the "Service Levels").
Section 5.3 Evaluation and Review Process
(a) Delivery of Service Level Report. The Designated
Representatives will develop a mutually agreed upon format for a monthly report
that compares INSpire Insurance's actual performance against the Service Levels
(the "Monthly Service Report"). During the Term, INSpire Insurance will provide
Customer with the Monthly Service Report within 30 days after the end of each
calendar month.
(b) Review of Service Level Achieved. The Designated
Representatives will meet on a monthly basis after the delivery of the Monthly
Service Report to review INSpire Insurance's performance hereunder and will meet
at such other times as may be reasonably requested by either Designated
Representative to discuss any related matters. The senior executives of each
Party to whom such Designated Representatives report will meet on a periodic
basis to review the relationship between the Parties and to discuss ways to
improve the relationship.
Section 5.4 Ownership of Property.
(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 products created or developed in
connection with, as a result of or incident to the performance of the Services.
(b) INSpire Insurance's Property. Subject to the foregoing,
INSpire Insurance 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 Insurance in connection with, as a
result of or incident to the performance of the Services.
Section 5.5 Customer's Performance Obligations and Acknowledgements.
INSpire Insurance's performance of the Services require the support and
cooperation of Customer. As such, Customer agrees and acknowledges as follows:
Customer will provide, in a timely manner and in a format reasonably acceptable
to INSpire Insurance, the data and materials necessary for INSpire Insurance to
perform the Services, including Customer's banking institution account
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information, corporate and subsidiary logos (if applicable), style and
specifications of printed documents such as insurance policies.
ARTICLE VI
CONFIDENTIALITY
Section 6.1 Definitions. For purposes of this Article the following
definitions will apply:
(a) "Arrowhead Group" means Customer, Arrowhead Management
Company, AGIA and their respective affiliates, parent corporations, or
subsidiaries, agents, directors, officers, employees, accountants, attorneys and
advisors.
(b) "INSpire Group" means INSpire Insurance, INSpire Claims,
and their affiliates, any parent corporation or subsidiaries, agents, directors,
officers, employees, 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
contemplated by this Agreement. 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 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 6.2 Nondisclosure. The Parties hereby agree as follows:
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(a) Use of Information. All Confidential Information will be
used solely for the purpose of performing 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 6.3 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
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 this paragraph.
Section 6.4 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 writings prepared by the Receiving Party or its
Representatives based on 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 such destruction.
Section 6.5 Remedies for Breach. The Parties acknowledge that a breach
of the covenant of confidentiality contained in this Agreement may 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
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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 and further relief, including monetary damages, as
provided by law.
ARTICLE VII
TRADE SECRET AND PROPRIETARY RIGHTS
Section 7.1 No Rights to Software. Notwithstanding INSpire Insurance's
use of its proprietary computer software programs in the performance of the
Services, neither this Agreement nor the performance of any Services hereunder
will be construed as a grant of a license or any other interest in or to INSpire
Insurance'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 their 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 to transmit, copy or
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
any part of the Services, Customer will immediately notify INSpire Insurance and
return such computer software programs and all copies of any kind thereof to
INSpire Insurance.
Section 7.2 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 7.3 Survival. THE OBLIGATION OF PARTIES UNDER THIS ARTICLE AND
ARTICLE VI WILL CONTINUE AFTER THIS AGREEMENT EXPIRES OR IS TERMINATED.
ARTICLE VIII
TERMINATION
Section 8.1 Termination of Agreement. This Agreement may be
terminated prior to the Expiration Date only as follows:
(a) by the non-breaching Party upon a material 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
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specifying the breach to commence curing the default and thereafter fail to
proceed with all reasonable diligence to cure substantially the default;
(b) by a Party in the event (i) the other Party makes a
general assignment for the benefit of creditors (pursuant to a bankruptcy filing
or reorganization), (ii) the other Party files a voluntary petition in
bankruptcy or petitions for reorganization or similar arrangement under the
bankruptcy laws, (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, or (iv) a receiver or trustee is appointed for all or any part of
the property and assets of the other Party;
(c) by Customer, upon commission by INSpire Insurance of
fraud, criminal conduct or willful violation of an insurance statute or
regulation, if said conduct by INSpire Insurance has a material adverse effect
on Customer's ability to engage in business. This paragraph does not apply to
conduct by INSpire Insurance employees who are not acting at the direction of
INSpire Insurance; or
(d) by INSpire Insurance, upon ninety (90) days notice to
Customer, if the annualized Personal Automobile Earned Premium drops below
$40,000,000 in any rolling six-month period, beginning January 1, 2002. If
INSpire Insurance cancels the Agreement pursuant to this Section 8.1(d), then
Customer may, upon ninety (90) days notice to INSpire Insurance, cancel the
lease of the San Diego office described in Schedule 2.6.
Section 8.2 Procedure Upon Expiration or Termination. Upon expiration
or termination of this Agreement:
(a) INSpire Insurance will promptly return to Customer any
policies, forms or other supplies imprinted with Customer's name, regardless of
who incurred the cost for same as well as all files and documents regarding
Customer's policies; and
(b) INSpire Insurance will provide promptly to Customer,
without charge, a tape backup of all data files. Also, for a reasonable fee on a
time and material basis, to be determined at that time, INSpire Insurance will
provide to Customer, the personnel necessary to amend the records layout and
file structures of the data files such that these records and data files can be
transferred to a new data base designated by Customer. Such expiration or
termination will not in any way limit, restrict or relieve any Party of
liability for any breach of this Agreement.
ARTICLE IX
REMEDIES AND LIMITATION OF LIABILITY
Section 9.1 Indemnification of the Parties.
(a) Subject to the provisions of Section 9.1(b) below, 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'
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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.
(b) Customer hereby waives and releases all existing and
potential claims against INSpire Insurance and INSpire Claims, for services
rendered by INSpire Claims which were related to or arose from the personal
automobile claims business being transitioned back to Customer, except for
claims for indemnification arising from INSpire Claims' negligent handling of a
claim prior to January 14, 2002. INSpire Insurance and INSpire Claims hereby
waive and release all existing and potential claims against Customer which were
related to or arose from the personal automobile claims business being
transitioned back to Customer, except for claims for indemnification arising
from Customer's negligent handling of a claim after January 13, 2002. INSpire
Claims will indemnify and defend Customer from liability for negligent handling
of a claim prior to January 14, 2002, unless handling of the claim was in
compliance with the direction of Customer or the carrier. Customer will
indemnify and defend INSpire Claims for Customer's negligent handling of a
claim, unless the handling of the claim was in compliance with the direction of
the carrier.
Section 9.2 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.
Section 9.3 No Consequential Damages. No Party will be liable for
any consequential, incidental and punitive damages with respect to any breach of
this Agreement.
ARTICLE X
ARBITRATION AND EQUITABLE REMEDIES
Section 10.1 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.
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Section 10.2 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 10.3 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
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 10.4 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 10.5 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.
13
Section 10.6 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 10.7 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 10.8 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 10.9 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 XI
MISCELLANEOUS
Section 11. 1 Amendment. No amendment of this Agreement will be
effective unless in a writing signed by the Parties.
Section 11.2 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 11.3 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.
Section 11.4 Expenses. Each Party will bear its own expenses with
respect to the negotiation and preparation of this Agreement.
Section 11.5 No Assignment. No Party may assign its benefits or
delegate its duties under this Agreement without the prior consent of the other
Party; provided, however, that Customer may assign its rights and delegate its
duties under this Agreement to an affiliated entity without INSpire Insurance's
consent so long as such assignment is effected on or prior to the Signing Date.
Any attempted assignment or delegation in violation of the foregoing sentence
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 the Party may similarly assign such
rights.
14
Section 11.6 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 11.7 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
Insurance: Arrowhead Claims Management
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Copy to: L. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Jenkens & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Customer: Attn: Chief Executive Officer
▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Section 11.8 Public Announcement. The Parties will work together
and agree upon all official communications.
Section 11.9 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 11.10 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.
15
Section 11.11 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
or otherwise, if such assignment of other transfer is not otherwise permitted
under this Agreement.
Section 11.12 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 11.13 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 11.14 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 11.15 Attorney's Fees. In the event of any action,
arbitration, claim, proceeding or suit between Customer and INSpire Insurance
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 11.16 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 11.17 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 11.18 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 11.19 Amendment. This Agreement shall amend the Claims
Administration Agreement only with respect to the auto claims processing
business pursuant to the terms and conditions of this Agreement, and the
16
following provisions of the Claims Administration Agreement: (a) Section 1.4 -
The Implementation Fee in Section 1.4 shall be eliminated; and (b) Schedule
1.4(b) - The minimum Claims Administration Fee of $900,312 is hereby amended to
be: for the first quarter of 2002, the greater of (i) 7.15% of homeowners earned
premium for the quarter or (ii) 7.15% of 80% of $7,900,000, (that is, $451,880
for the quarter); and for each quarter thereafter, the greater of (i) 7.15% of
homeowners earned premium for the quarter or (ii) 7.15% of 80% of the homeowners
earned premium for the prior quarter. For example, if the defined earned premium
in a quarter is $12,000,000, then the minimum fee in the next quarter is the
greater of 7.15% of earned premium or 7.15% of 80% of $12,000,000 (that is,
7.15% of $9,600,000). On a quarterly basis, AGIA will provide INSpire Insurance
with an annual homeowners premium forecast, which shall be approved by Customer.
The quarterly update will be used by INSpire Insurance to determine required
staffing levels. This Agreement supercedes and wholly replaces all terms,
covenants and provisions of the Claims Administration Agreement with respect to
the auto claims processing business. Except as expressly amended herein, as to
commercial automobile, motorcycle, homeowner, mobile home, personal watercraft
and BOP claims processing, all terms, covenants and provisions of the Claims
Administration Agreement are and shall remain in full force and effect.
17
IN WITNESS WHEREOF, the Parties have caused this Agreement and this
Amendment to be executed and delivered by a duly authorized officer as of the
Signing Date.
INSpire Claims: INSPIRE CLAIMS MANAGEMENT, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
INSpire Insurance: INSPIRE INSURANCE SOLUTIONS, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
Customer: ARROWHEAD CLAIMS MANAGEMENT, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
Schedule 2.1
Services
All references in this Schedule 2.1 to INSpire shall mean INSpire
Insurance. During the Term, INSpire will provide (i) the hardware,
software and IT support services necessary for ACM to handle its auto
claims, and (ii) the software, computers, telephones and equipment
defined below. This proposal is not for non-technology related
services. At a high level, it is comprised of an application system
delivered on an ASP (Application Service Provider) basis coupled with
services including application support, network, desktop, helpdesk
services, and telephone communication services. As part of the
Services, the following are included:
------------------------------- ------------------------------------------------
Application Delivery INSpire will provide the version of the
INSideOut system which ACM currently uses or, in
the future, a system with equivalent
functionality. The application will also include
access to policy software for coverage
verification.
------------------------------- ------------------------------------------------
Application Support The existing system will be delivered
with current features and functionality. All
modifications or enhancements to the existing
system would be on a time and materials basis.
Ad hoc reporting will be billed on a time and
materials basis.
INSpire warrants that any systems used to
provide claims services, will provide all of the
features and functionality of the existing AS
400 and WPC claims management systems. INSpire
will provide no other warranty whether expressed
or implied.
In the event INSpire is unable to comply with
the warranty, INSpire agrees to allow
technicians designated by and approved by
INSpire to have access to the Source Code in
order to bring the system into compliance with
the warranty. In the event of non-performance by
INSpire under this agreement, INSpire will make
its claims handling system available to ACM via
an escrow agreement. In the event of
non-performance by INSpire, if we need to
provide a mechanism for transferring data from
the INSpire system to a new claims system, we
will work this out in the escrow agreement.
Any fixes or maintenance of the systems to meet
this warranty shall be at the expense of
INSpire.
ACM will pay for any upgrades or enhancements to
the systems requested by it.
------------------------------- ------------------------------------------------
Network Support INSpire will manage all network connections
using current hardware and lines between
INSpire and AGIA, between ACM's current
offices, and within the current offices.
Customer requested upgrades or changes to the
current network configurations or hardware will
be billed on an hourly basis. Network includes
Local Area Networks (LANs), Wide Area Networks
(WANs), hubs, routers, and T-1 connectivity.
Services provided include:
o Fault management
o Network monitoring and testing
o Performance Management
o Configuration Management
o Provisioning Management
o Security Management
o Operations Management
o Capacity Planning
------------------------------- ------------------------------------------------
Operations Support INSpire will provide operation support
including:
o Production Control and Monitoring
o Back-up Scheduling, Control, and
Resources
o Nightly Cycle Print Operations
o Off-Site back-up Storage
------------------------------- ------------------------------------------------
Server Support INSpire will proactively manage
production servers and infrastructure providing
a high level of application availability.
INSpire will upgrade servers and storage to meet
ACM's growth.
Services Include:
o System Support and Monitoring
o Fault and Problem Management
o Security Management
o Change Management
------------------------------- ------------------------------------------------
System Back-up INSpire will back-up the system on a
nightly basis and provide off-site storage of
production data. INSpire will provide restore
services if and when requested.
------------------------------- ------------------------------------------------
Desktop Support INSpire will provide on-site desktop
support in San Diego from 8AM - 5PM Pacific
Time. Sacramento and Portland support will be
handled using "hot spares" and "drop shipments."
Desktop support will respond to user
connectivity, hardware, software, and
configuration issues. Desktop support will also
add or move desktop units at ACM's request.
INSpire will provide 110 moves, adds, or changes
per year included in the base fee. All MACs over
110 will be billed to ACM at a fee of $93.50 per
MAC. This charge is subject to a CPI increase
after 2002.
------------------------------- ------------------------------------------------
Help Desk INSpire will provide a 24x7 help desk to
service ACM. The help desk will log problems
and make a best effort to resolve basic,
recurring problems with the user. 80% of help
desk calls will be answered in 60 seconds. The
help desk will ensure that all problems are
addressed promptly and closed only upon user
satisfaction. Server and network problems will
receive critical level of attention. Based upon
our contract with Lockheed, INSpire will
provide that 85% of time, the initial response
to a help desk service call will occur within 2
hours. 70% of calls will be remedied within 24
hours.
------------------------------- ------------------------------------------------
E-mail Services INSpire will provide ACM with an email
system and email server support. Each user will
have 20 MG of storage and be permitted an
unlimited number of transactions. The capability
to add and delete user accounts will be
delegated to a specified ACM representative.
------------------------------- ------------------------------------------------
Communications lines INSpire will provide phone lines and
internet access to ACM. INSpire will transfer to
ACM the current 800 number used for Auto First
Notice of Loss. The number is ▇▇▇-▇▇▇-▇▇▇▇. Any
local or long-distance charges will be treated
as a pass-though expense. INSpire will provide
110 telephone moves, adds, or changes per year
included in the base fee.
Any telephone MAC above 110 will be priced at
$25 per MAC. This charge is subject to CPI.
------------------------------- ------------------------------------------------
Call Center Technology Automated call distribution services: INSpire
Services will provide ACD phone services that will
enable ACM to operate its own call center with
an appropriate phone loop. ACM will not require
call center staff services from INSpire.
------------------------------- ------------------------------------------------
MS Office Licenses MS Office licenses for Excel,
Powerpoint and Word, are included in the base
fee. Replacement software will be at the expense
of ACM.
------------------------------- ------------------------------------------------
Subrogation Software INSpire will provide use of the Collect
One software as part of the comprehensive
service agreement. ACM will be provided access
for five users. Any additional users above that
will cost $250/month.
------------------------------- ------------------------------------------------
Network Printers INSpire will provide 5 Network
Printers. Consumables: Paper and toner
cartridges will be at the expense of ACM.
Replacement equipment will be at the expense of
ACM. If ACM desires to replace this equipment,
it will notify INSpire and INSpire will remove
the equipment within 48 hours. Replacement
equipment will continue to be supported under
the comprehensive agreement.
------------------------------- ------------------------------------------------
Copiers INSpire will provide 2 copiers (specifications
TBD). Consumables: Paper and toner will be at
the expense of ACM. Replacement equipment will
be at the expense of ACM. If ACM desires to
replace this equipment, it will notify INSpire
and INSpire will remove the equipment within 48
hours. Replacement equipment will continue to be
supported under the comprehensive agreement.
------------------------------- ------------------------------------------------
Fax Line and Fax Machine INSpire will provide one
phone line and one fax machine (specification
TBD). Consumables: Paper and toner will be at
the expense of ACM. Replacement equipment will
be at the expense of ACM. If ACM desires to
replace this equipment, it will notify INSpire
and INSpire will remove the equipment within 48
hours. Replacement equipment will continue to be
supported under the comprehensive agreement.
------------------------------- ------------------------------------------------
Workspace INSpire will provide a workspace in INSpire's
current offices in San Diego, Portland and
Sacramento, utilizing currently owned
furniture, in its current configuration, for 87
ACM employees. The workspace in San Diego
includes 12 contiguous executive office suites
with installed computers and 69 cubicles with
computers and described software, cabinets and
work surfaces, a chair, and a phone. In San
Diego, INSpire will provide an additional 21
cubicles with cabinets and work surfaces, but
without computers, software, chairs and phones.
Replacement equipment will be at the expense of
ACM. The remaining 50 cubicles on site will be
removed by INSpire at its expense. When ACM
desires to replace any cubicles, it will notify
INSpire. If INSpire fails to remove the item
within 48 hours, ACM may remove it. ACM, at its
expense, can change the configuration of any
cubicle or office, including the removal or
addition of office or cubicle walls. Any
changes will be subject to the approval of
INSpire, which will not be unreasonably
withheld.
------------------------------- ------------------------------------------------
Desktop Technology INSpire will provide Desktop
Technology in INSpire's existing facility,
utilizing currently owned equipment, in its
current configuration. The typical setup
consists of a computer (PII, 64K RAM), a 15"
monitor, keyboard, mouse, and a Windows 95
operating system.
Replacement equipment will be at the expense of
ACM.
INSpire's technical direction is to move to a
thin-client environment which should reduce
ACM's expected replacement costs. At the point
that INSpire is prepared to process ACM in that
manner, INSpire must be allowed to configure
ACM workstations to work in that environment.
This should benefit ACM by extending the life
of the desktop and reducing refresh costs.
If ACM desires to replace this equipment, it
will notify INSpire and INSpire will remove the
equipment within 48 hours. Replacement
equipment will continue to be supported by
under the comprehensive agreement.
------------------------------- ------------------------------------------------
Schedule 2.4(b)
Twelve Month Written Premium Forecast
See attached.
YR 2002 Projections
Auto Lines
Collected Premium
Program
# State Jan Feb March April May June July Aug Sept Oct
12 CA 267,983 252,135 242,980 233,482 229,848 225,613 229,989 225,071 224,450 220,058
17 WA 183,750 187,950 191,646 196,755 199,644 202,187 195,223 192,194 191,343 190,526
19 AZ 67,500 62,813 51,666 48,507 46,437 43,982 43,513 39,682 37,825 36,179
21 CA 260,400 234,360 213,192 191,873 174,523 157,070 157,236 139,340 125,597 113,432
23 CA 375,000 318,750 270,938 230,297 195,752 166,389 166,384 135,452 114,472 97,237
28 GA 3,280 3,838 4,351 4,823 5,257 5,656 5,714 5,958 6,203 6,429
29 CA 6,000 7,770 9,398 10,897 12,275 13,543 13,689 14,544 15,361 16,115
37 OR 145,000 141,800 139,112 136,854 134,957 133,364 122,184 115,820 112,340 109,642
39 FL 175,000 131,250 98,438 73,828 55,371 41,528 17,677 8,337 2,664 (1,356)
44 TX 282,100 245,427 215,657 187,621 164,847 143,417 143,445 121,342 105,682 92,405
46 CA 294,000 276,360 259,778 244,192 229,540 215,768 216,930 201,985 189,780 178,389
59 CA 65,650 64,553 63,620 62,827 62,153 61,580 58,540 56,766 55,958 55,350
60 CA 4,730,000 4,351,600 4,003,472 3,716,678 3,419,344 3,145,796 3,161,613 2,875,291 2,650,481 2,445,972
60A CA 66,000 126,720 182,582 236,103 283,815 327,709 331,893 365,266 395,904 424,687
61 CA 15,000 13,500 12,150 10,935 9,842 8,857 8,911 7,858 7,060 6,354
62 AZ 208,000 187,200 170,586 153,527 139,881 125,892 125,820 111,358 100,215 90,364
62A AZ 20,000 38,000 54,878 69,640 83,950 96,055 93,089 101,486 108,896 115,574
63 OR 210,000 178,500 153,242 130,256 111,814 95,042 94,604 77,232 65,346 55,598
63A OR 40,000 74,000 103,929 128,740 151,312 169,415 148,919 158,646 166,736 173,629
64 WA 330,000 293,700 261,393 232,640 207,049 184,274 185,314 157,542 136,733 118,985
64A WA 55,000 103,950 147,516 186,289 220,797 251,509 240,314 249,450 258,542 268,066
71 CA 320,000 288,000 259,200 233,280 209,952 188,957 190,109 167,641 150,620 135,541
81 CA 56,376 56,614 56,078 56,631 56,341 56,129 39,872 37,131 36,076 35,447
86 CA 112,500 103,500 95,220 87,602 80,594 74,147 74,604 67,658 62,187 57,209
90 CA 126,000 110,880 97,574 85,865 75,562 66,494 66,817 57,176 50,171 44,139
91 CA 480,000 432,000 388,800 349,920 314,928 283,435 285,163 251,462 225,930 203,312
101 CA 350 658 929 1,518 2,035 2,491 2,490 2,767 3,011 3,225
Safeway
- - - 400 760 1,084 1,638 2,181 2,647 3,064
8,894,889 8,285,826 7,748,323 7,301,978 6,878,578 6,487,385 6,421,696 5,946,637 5,602,231 5,295,573
TABLE CONTINUED
Collected Premium
Program
# State Nov Dec Total
12 CA 214,027 209,022 2,774,659
17 WA 187,168 181,823 2,300,210
19 AZ 34,600 33,222 545,927
21 CA 102,261 92,230 1,961,515
23 CA 82,647 70,250 2,223,569
28 GA 6,637 6,829 64,973
29 CA 16,808 17,446 153,847
37 OR 104,898 98,750 1,494,721
39 FL (4,335) (1,377) 597,025
44 TX 80,885 70,864 1,853,692
46 CA 167,686 157,625 2,632,032
59 CA 53,591 51,003 711,588
60 CA 2,257,948 2,084,970 38,843,164
60A CA 445,477 459,301 3,645,458
61 CA 5,718 5,146 111,332
62 AZ 81,292 73,147 1,567,283
62A AZ 119,409 120,993 1,021,968
63 OR 47,225 40,129 1,258,989
63A OR 174,250 170,335 1,659,912
64 WA 103,207 89,151 2,299,989
64A WA 271,680 270,447 2,523,560
71 CA 121,987 109,788 2,375,075
81 CA 33,535 30,990 551,218
86 CA 52,632 48,421 916,275
90 CA 38,842 34,181 853,702
91 CA 182,980 164,682 3,562,613
101 CA 3,414 3,580 26,469
Safeway
3,439 3,776 18,989
4,989,908 4,696,727 78,549,752
Schedule 2.6
Facilities
A. San Diego
INSpire will sublease to ACM the portion of the first floor currently occupied
by the claims operation. The current square footage of the claims area is 17,000
square feet. INSpire will lease this area to ACM for $18.00 per square foot
resulting in an annual lease expense of $306,000.
The specified area will be secured for ACM. The area has entry access from both
the front of the building and the rear parking lot. Parking is located by the
back entrance. ACM can designate or reserve spaces as desired.
There are 12 offices in the specified area. ACM can use extra offices for
conference space requested. ACM may use the offices for any business purpose.
INSpire will not provide access to its secured areas, but will provide reception
services for ACM and access to a shared break- room.
INSpire will allow ACM to sublease the space it leases from INSpire subject to a
right of first refusal. The lease will:
o Require INSpire to keep the reception area in a neat and
orderly condition
o Allow ACM to prominently display its logo in the reception
area subject to the approval of INSpire
o Allow ACM to display its logo on the outside of the building
o Allow ACM use of the break room as shared with INSpire
o Provide janitorial, maintenance and services: ACM will receive
the same or similar services to those currently provided
within the building. The sub-lease will cover this in detail.
o Require that ACM will pay for damages caused by its employees,
other than ordinary wear and tear.
o Require that prior to possession of the leased premises in San
Diego by ACM, INSpire will shampoo all carpeting in the leased
space, remove all items from all walls, interior and exterior
office walls, and exterior cubicle walls, and repair any holes
in walls created by such removal. This includes the removal of
any bulletin boards, pictures, posters, awards, and all other
items attached to any wall or outside cubicle wall, whether
owned by INSpire or its employees.
o Require that INSpire must present the leased space to ACM on
the day of possession in a clean, orderly and maintained
condition.
B. Portland
Subject to the consent of the lessors, ACM will assume the INSpire lease in
Portland, and relieve INSpire of any further obligations thereunder. The current
annual lease rate is $27,540. INSpire Insurance shall assign the telephone
lines, fax lines and phone numbers to ACM.
C. Sacramento
Subject to the consent of the lessors, ACM will assume the INSpire lease in
Sacramento, and relieve INSpire of any further obligations thereunder. The
current annual lease rate is $72,900. INSpire Insurance shall assign the
telephone lines, fax lines and phone numbers to ACM.
D. Off-Site Storage
ACM will assume or terminate off-site storage in the following locations and
relieve INSpire of any further related obligations thereto.
Sorrento Roselle $1,899 per month
Mira Mesa $1,600 per month
PS Business Park $4,474 per month
Schedule 2.7
Third Party Contracts
1. Qestrel
The estimated monthly expense for services from Qestrel are $18,135.
2. ▇▇▇▇▇▇▇▇ Medical
The estimated monthly expense for services from ▇▇▇▇▇▇▇▇ Medical are $7,500.
Schedule 5.2
Service Levels and Performance Credits
Introduction
Service Levels define the minimum performance criteria, which can be measured
and substantiated by historical record, to be met by INSpire in performing
certain Services provided for in Agreement. The Service Levels are defined in
Table A.
For the purposes of this Exhibit, the following definitions shall apply:
1. System Availability means the production system/subsystem availability as a
percentage measurement determined by dividing actual minutes available for
a system by the scheduled time available for use.
2. Availability is calculated as follows:
a. Actual uptime minutes/schedule uptime minutes minus Excusable Downtime
minutes.
3. Excusable Downtime is defined as the aggregate number of minutes in any
month during which any in scope production platform is not available for
use by ACM due to:
a. Scheduled Downtime - the scheduled hours in any given month, for which
both Parties agree that a platform will not be available due to such
things as preventive maintenance, system upgrades, and Initial Program
Loads (IPLs). INSpire will make every effort to schedule such downtime
in accordance with ACM's business processing needs.
b. Lost time for circumstances out of the control of INSpire.
c. Failure of ACM to perform its obligations under the Agreement
including actions or inactions by ACM.
4. Occurrence shall be defined as a single event that affected one or all
Service Levels causing a Service Level Default.
5. Service Level Default shall be deemed to occur whenever INSpire's level of
performance for a particular performance category fails to meet the monthly
minimum percentage of availability.
6. Weighted Percentage will be the allocated percentage of the total at risk
amount, as defined in Table A.
7. At Risk Amount is 5 percent of the total monthly base invoice charges which
INSpire will pay for a total Service Level Defaults in that given month.
8. Reporting - Within twenty-five (25) days after each month's performance,
INSpire shall provide a summary report to ACM that will include current
month statistics and statistics on INSpire's average monthly performance
(rolling 12 month period);
9. Earn Back Approach. INSpire shall have earn back opportunities with respect
to Service Level Credits as follows:
a. Within twenty-five (25) days after each Contract Year, INSpire shall
provide a report to ACM that will include, with respect to each Service
Level for which there was a Service Level Default during the preceding
Contract Year, the following:
o statistics on INSpire's average monthly performance during the
preceding Contract Year;
o the average of INSpire's average monthly performances in that
Service Level during the preceding Contract Year ("Yearly
Performance Average");
o and the total amount of Service Level Credits imposed for Service
Level Defaults.
b. If, during the preceding Contract Year, INSpire achieved a Yearly
Performance Average in a Service Level as set forth in Table A, that
was greater than, or equal to, the expected Service Level in effect for
such Service Level during the preceding year, INSpire shall be relieved
from paying Service Level credit assessed during the preceding Contract
Year for Service Level Defaults in that Service Level.
c. If, during the preceding Contract Year, ACM deletes a Service Level,
INSpire shall be relieved from paying Service Level credits assessed
during the preceding Contract Year for Service Level Defaults in that
Critical Service Level only if the deletion was effective during the
preceding Contract Year.
d. If the applicable Service Contract is terminated prior to the end of
the Term, the foregoing process shall be undertaken with respect to the
portion of the Contract Year during which the Agreement was in effect.
e. Contract Year shall mean each 12-month period following the Signing
Date.
The method for calculating a Service Level Default is an aggregate score of the
total monthly available time (per the stated measurement window), less the
downtime, as it is related to each Service Level Requirement. In situations
where multiple Service Level Defaults occur from the same incident, ACM will
have the right to select which Service Level is utilized for the penalty
calculation. The following is the Service Level Default calculation to be
utilized:
(Monthly base invoice total x the At Risk Amount x Weighted Percentage)
A new Service Level can be created by first establishing a Service Objective. A
Service Objective is a performance criteria, which cannot be substantiated but
both parties wish to measure in order to establish a new Service Level. A
specific Service Level will be defined and mutually accepted within six (6)
months of establishing and measuring the Service Objective. Changes to the
Service Level schedule shall be in accordance with Section 5.3 of the Agreement.
Table A. Service Level Requirements
Item No. Service Level Performance Tracking Metric Service Level Weighted Percentage
Requirement
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1 Application System Monday - Friday 98% availability 25%
Availability 0700 - 1800 (Pacific Time)
Less Excusable Downtime.
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2 Help Desk Average Monday - Friday 80% of all calls 10%
Speed of Answer 0700 - 1800 (Pacific Time)
ACD Switch statistics for the
Lockheed ▇▇▇▇▇▇ shared customer
service group. Calls answered
within 60 seconds.
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3 Help Desk Abandon Rate Monday - Friday <5% of all calls 5%
0700 - 1800 (Pacific Time)
ACD Switch statistics for the
Lockheed ▇▇▇▇▇▇ shared customer
service group, for calls abandoned
after 30 seconds.
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4 Desktop Problem Monday - Friday 85% of all reported desktop 10%
Resolution Initiation 0800 - 1700 (Pacific Time) problems
2-hour initial response
contact with the reporting
user after problem ticket request for
service (as documented within
the Remedy problem tracking system).
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5 Desktop Problem Monday - Friday 70% of all reported desktop 10%
Resolution 0800 - 1700 (Pacific Time) problems
24-hour problem resolution (as Resolution does not include
documented within the Remedy problem application problems which will
tracking system), less Excusable be prioritized by ACM to be
Downtime. assigned to AGIA contracted
resources.
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6 Network Availability Monday - Friday 95% availability 15%
0700 - 1800 (Pacific Time)
Less Excusable Downtime.
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7 Communications Monday - Friday 98% availability 15%
Phone System and ACD 0700 - 1800 (Pacific Time)
availability Less Excusable Downtime.
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8 Print Delivery Monday - Friday 95% 10%
Nightly batch cycle output, delivered
by 0800 local time next business,
less Excusable Downtime.
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