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EXHIBIT 10.2
AMENDED SERVICE CONTRACT
THIS AMENDED SERVICE CONTRACT ("Agreement") dated as of July
1, 1997, is made by and between The Millers Mutual Fire Insurance Company, a
Texas mutual insurance company ("Millers Mutual"), The Millers Casualty
Insurance Company, a Texas insurance company ("Millers Casualty"), and
MiliRisk, Inc., a Texas corporation ("MiliRisk," and together with Millers
Mutual and Millers Casualty, the "Parties").
PRELIMINARY STATEMENTS
A. Millers Mutual, MiliRisk, and Millers Casualty are parties to
a service contract, effective as of December 1, 1996, as amended (the "Prior
Service Contract"), pursuant to which MiliRisk provides certain claims
processing services to Millers Mutual and Millers Casualty.
B. Millers Mutual, Millers Casualty, and MiliRisk desire to amend
in its entirety the Prior Service Contract.
C. Millers Mutual and Millers Casualty desire to procure certain
claims processing services from MiliRisk in connection with the business of
Millers Mutual and Millers Casualty and MiliRisk is willing to provide such
services.
NOW, THEREFORE, in consideration of the foregoing preliminary
statements and the mutual covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
STATEMENT OF AGREEMENT
ARTICLE I.
DEFINITIONS
Unless the context otherwise requires, the terms defined in this
Article I shall, for the purposes of this Agreement, have the meanings herein
specified:
"Effective Date" means July 1, 1997.
"Fiscal Year" shall mean the period from January 1 through December 31
of each year.
"Term of Agreement" means the period from the Effective Date until the
Agreement is terminated pursuant to Article 5.
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ARTICLE II.
DUTIES AND OBLIGATIONS OF MILIRISK
Section 2.1 Claims Processing Services. MiliRisk shall provide
claims processing services for and on behalf of Millers Mutual and Millers
Casualty which shall include, but shall not be limited to:
(a) investigating, evaluating, appraising, settling and/or giving
notice of the necessity to defend all claims;
(b) reporting claims settlements to Millers Mutual and Millers
Casualty which, if any payment is required, Millers Mutual or
Millers Casualty, as appropriate, shall pay directly;
(c) apprising Millers Mutual and Millers Casualty of major
developments which arise in the administration, investigation,
adjustment, or settlement of a particular claim and to
communicate with Millers Mutual or ▇▇▇▇▇▇'▇ Casualty's
designated representative regarding all important matters
concerning the proper disposition of claims involving complex
or questionable circumstances. "Major developments" within
the context of this section are understood to mean:
(i) controverted claims;
(ii) receipt of an adverse medical report, e.g., "injury
more serious than originally reported;"
(iii) death of claimant;
(iv) adverse ruling from a court; or
(v) the need for attorney representation in a previously
unrepresented case;
(d) refraining from disclosing the contents of Millers Mutual or
Millers Casualty's files to third parties except as is
reasonably necessary in carrying out the responsibilities
under this Agreement or in delegating certain responsibilities
to others as legally required;
(e) maintaining a complete and accurate file on each reported
claim.
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ARTICLE III.
COMPENSATION, EXPENSES AND PAYMENT
Section 3.1 Fee. The compensation due MiliRisk from both Millers
Mutual and Millers Casualty for services provided pursuant to Section 2.1 of
this Agreement shall be an amount equal to the sum of (i) 7.5% of monthly net
earned premiums for the Agribusiness line of business (the "Agribusiness
Percentage"); (ii) 10.2% of monthly net earned premiums for the Commercial
Casualty line of business (the "Commercial Casualty Percentage"), (iii) 8.5% of
monthly net earned premiums for the Commercial Property line of business (the
"Commercial Property Percentage"); and (iv) 7.5% of monthly net earned premiums
for the Personal insurance lines of business (the "Personal Percentage"). The
Agribusiness Percentage, Commercial Casualty Percentage, Commercial Property
Percentage, and Personal Percentage shall be adjusted annually by agreement
between the Parties; provided, however, that if the Parties cannot agree on a
percentage within 60 days after the end of the calendar year, such percentage
shall remain the same as the previous calendar year.
Section 3.2 Invoicing and Payment. MiliRisk shall ▇▇▇▇ each of
Millers Mutual and Millers Casualty monthly for services within 15 days after
the end of each calendar month during the Term of Agreement. Payment shall be
made by each of Millers Mutual and Millers Casualty within 30 days after the
delivery of such invoice.
Section 3.3 Late Payment. Any amount owing from Millers Mutual
and/or Millers Casualty to MiliRisk that has not been paid by the due date
shall be subject to a late payment charge of 1% per month.
ARTICLE IV.
ACCESS TO INFORMATION, BOOKS AND RECORDS
MiliRisk and its duly authorized representatives shall have access, to
the extent necessary to perform the services pursuant to Section 2.1, to each
of Millers Mutual and Millers Casualty's offices, facilities and records
wherever located, in order to discharge MiliRisk's responsibilities hereunder;
provided, however, Millers Mutual and Millers Casualty shall provide and make
available to MiliRisk and its duly authorized representatives at MiliRisk's
Fort Worth, Texas, USA offices, at MiliRisk's request, all such records
required by MiliRisk to perform its duties pursuant to this Agreement. All
records and materials furnished to MiliRisk by Millers Mutual and Millers
Casualty in performance of this Agreement shall at all times during the Term of
Agreement remain the property of Millers Mutual and Millers Casualty, as
appropriate.
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ARTICLE V.
TERM AND TERMINATION OF THE AGREEMENT
Section 5.1 Initial Term. This Agreement shall be effective from
the Effective Date and shall continue for three (3) years thereafter (the
"Initial Term"); subject, however, to the terms of Section 5.2 hereof. At the
end of the Initial Term, this Agreement shall continue in force and effect for
subsequent one (1) year periods unless terminated by any Party by written
notice at least sixty (60) days prior to the anniversary date of the Effective
Date.
Section 5.2 Termination. This Agreement may be sooner terminated
on the first to occur of the following:
(a) Termination by Mutual Agreement
In the event the Parties shall mutually agree in writing, this
Agreement may be terminated on the terms and dates stipulated
therein.
(b) Uncorrected Material Breach
In the event any Party shall fail to discharge any of its
material obligations hereunder, or shall commit a material
breach of this Agreement, and such default or breach shall
continue for a period of thirty (30) days after any other
Party has served notice of such default, this Agreement may
then be terminated at the option of any nonbreaching Party by
notice thereof to the breaching Party.
Section 5.3 Effects of Termination. Except for covenants or
other provisions herein that, by their terms, expressly extend beyond the Term
of Agreement, the Parties' obligations hereunder are limited to the Term of
Agreement.
Section 5.4 Reimbursement by MiliRisk. In the event of
termination under this Agreement, MiliRisk shall reimburse Millers Mutual and
Millers Casualty within 30 days after such termination for fees paid by Millers
Mutual and Millers Casualty but unearned by MiliRisk.
Section 5.5 Force Majeure. If any Party shall be prevented from
performing any portion of this Agreement (except the payment of money) by
causes beyond its control, including labor disputes, civil commotion, war,
governmental regulations or controls, casualty, inability to obtain material or
services or acts of God, the defaulting party shall be excused from performance
for the period of the delay and for a reasonable time thereafter.
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ARTICLE VI.
INDEMNIFICATION OF MILIRISK
Section 6.1 Limitation of Liability. In providing services
hereunder, MiliRisk shall have a duty to act, and cause its affiliates and
designees to act, in a reasonably prudent manner. Neither MiliRisk, nor any
officer, director, employee or agent of MiliRisk shall be liable to Millers
Mutual and/or Millers Casualty for any error of judgment or for any loss
incurred by Millers Mutual and/or Millers Casualty in connection with the
matters to which this Agreement relates, except a loss resulting from the gross
negligence or willful misconduct on the part of MiliRisk.
Section 6.2 Indemnification. Millers Mutual and Millers Casualty
hereby agree to indemnify and hold harmless MiliRisk from and against any and
all claims, causes of action, liabilities, damages, costs, charges, fees,
expenses (including reasonable attorneys' fees and expenses to be reimbursed as
incurred), suits, orders, judgments, adjudications and losses of whatever
nature and kind which MiliRisk or its affiliates or designees or for which
MiliRisk or its affiliates or designees become liable as the result of the
performance of MiliRisk's obligations and duties pursuant to this Agreement;
provided, MiliRisk shall not be indemnified for gross negligence or willful
misconduct on the part of MiliRisk.
ARTICLE VII.
MISCELLANEOUS
Section 7.1 Relationship of Parties. This Agreement does not
create a partnership, joint venture or association; nor does this Agreement, or
the operations hereunder, create the relationship of lessor and lessee or
▇▇▇▇▇▇ and bailee. Nothing contained in this Agreement or in any agreement
made pursuant hereto shall ever be construed to create a partnership, joint
venture or association, or the relationship of lessor and lessee or ▇▇▇▇▇▇ and
bailee, or to impose any duty, obligation or liability that would arise
therefrom with respect to either or both of the Parties. Specifically, but not
by way of limitation, except as otherwise expressly provided for herein,
nothing contained herein shall be construed as imposing any responsibility on
MiliRisk for the debts or obligations of Millers Mutual or Millers Casualty or
any of its affiliates. It is hereby expressly understood that MiliRisk is
hereby engaged by Millers Mutual and Millers Casualty to provide claims
processing services as an agent of Millers Mutual and Millers Casualty.
MiliRisk, its affiliates and designees shall have the right to render similar
services for other business entities and persons, including its own, whether or
not engaged in the same business as Millers Mutual or Millers Casualty, and may
enter into such other business activities as MiliRisk and its affiliates, in
their sole discretion, may determine.
Section 7.2 No Third Party Beneficiaries. Except to the extent a
third party is expressly given rights herein, any agreement herein contained,
expressed or implied, shall be only for the benefit of the Parties and their
respective legal representatives, successors and assigns, and such agreements
or assumption shall not inure to the benefit of any other party whomsoever, it
being the
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intention of the Parties hereto that no person or entity shall be deemed a
third party beneficiary of this Agreement except to the extent a third party is
expressly given rights herein.
Section 7.3 General Representations. Each Party represents and
warrants that on the Effective Date: (i) it is a corporation, duly established,
validly existing and in good standing under the laws of its state or
jurisdiction of incorporation, with power and authority to carry on the
business in which it is engaged and to perform its respective obligations under
this Agreement; (ii) the execution and delivery of this Agreement have been
duly authorized and approved by all requisite corporate action; (iii) it has
all the requisite corporate power and authority to enter into this Agreement
and to perform its obligations hereunder; and (iv) the execution and delivery
of this Agreement do not, and consummation of the transactions contemplated
herein will not, violate any of the provisions of its charter or bylaws or any
applicable state or federal laws applicable to them.
Section 7.4 Assignment. No assignment of this Agreement or any
of the rights or obligations set forth herein by any Party shall be valid
without the specific written consent of the other Parties.
Section 7.5 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally, mailed by first class mail postage prepaid and return
receipt requested or sent by recognized overnight delivery service or facsimile
transmission to the address below indicated:
If to Millers Mutual: The Millers Mutual Fire Insurance Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Millers Casualty: The Millers Casualty Insurance Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
If to MiliRisk: MiliRisk, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
Notice so given shall, in the case of notice so given by mail, be deemed to be
given and received on the fourth calendar day after posting, in the case of
notice so given by recognized overnight delivery service, on the date of actual
delivery and,
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in the case of notice so given by facsimile transmission or personal delivery,
on the date of actual transmission or, as the case may be, personal delivery.
Section 7.6 Failure to Pursue Remedies. The failure of any party
to seek redress for violation of, or to insist upon the strict performance of,
any provision of this Agreement shall not prevent a subsequent act, which would
have originally constituted a violation, from having the effect of an original
violation.
Section 7.7 Cumulative Remedies. The rights and remedies
provided by this Agreement are cumulative and the use of any one right or
remedy by any party shall not preclude or waive its right to use any or all
other remedies. Said rights and remedies are given in addition to any other
rights the parties may have by law, statute, ordinance or otherwise.
Section 7.8 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of all of the parties and, to the extent permitted by
this Agreement, their successors, legal representatives and assigns.
Section 7.9 Interpretation. Throughout this Agreement, nouns,
pronouns and verbs shall be construed as masculine, feminine, neuter, singular
or plural, whichever shall be applicable. All references herein to "Articles,"
"Sections" and paragraphs shall refer to corresponding provisions of this
Agreement.
Section 7.10 Headings. Headings are solely for convenience and
ease of reference and are not to be considered in the construction or
interpretation of any provision of this Agreement.
Section 7.11 Severability. The invalidity or unenforceability of
any particular provision of this Agreement shall not affect the other
provisions hereof, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provision were omitted unless such invalid or
unenforceable provision affects the fundamental purpose of this Agreement.
Section 7.12 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, with the same effect as if all parties hereto had signed the same
document. All such counterparts shall be deemed an original, shall be
construed together and shall constitute one and the same instrument. This
Agreement may also be executed and delivered by exchange of facsimile
transmissions of originally executed copies.
Section 7.13 Integration. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.
Section 7.14 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAW, AND NOT THE LAW OF
CONFLICTS, OF THE STATE OF TEXAS.
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Section 7.15 Arbitration.
(a) To the fullest extent permitted by law, any controversy or
claim arising out of or relating to any alleged breach shall be resolved by
arbitration by a panel of three (3) arbitrators under the American Arbitration
Association ("AAA") Arbitration Rules in force (the "AAA Rules") in accordance
with the following:
(1) In the event of any conflict between the AAA Rules and the
provisions of this Agreement, the provisions of this Agreement
shall prevail.
(2) Either party may refer a matter to arbitration by written
notice to the other party by giving notice as provided in this
Agreement.
(3) The place of the arbitration shall be Fort Worth, Texas.
(4) The claimant party shall appoint one arbitrator and the
respondent party shall appoint one arbitrator, and the two
arbitrators so appointed shall appoint the third arbitrator,
in accordance with the AAA Rules. In the event of an
inability to agree on a third arbitrator, the appointing
authority shall be the AAA.
(5) The decision of the arbitrators shall be made by majority vote
and shall be in writing.
(6) The decision of the arbitrators shall be final and binding on
the parties save in the event of fraud, manifest mistake or
failure by any of the arbitrators to disclose any conflict of
interest.
(7) The decision of the arbitrators may be enforced by any court
of competent jurisdiction and may be executed against the
person and assets of the losing party in any jurisdiction.
(b) In the event any dispute is submitted to arbitration pursuant
to Section 7.15(a) above, the panel of arbitrators may, if it deems such award
appropriate, award a party costs and expenses incurred by such party in
enforcing its rights. Except as so awarded, each party shall bear its own
costs and expenses of enforcing its rights to arbitrate under this Section
7.15.
(c) Except for arbitration proceedings pursuant to Section 7.15(a)
above, no action (other than the enforcement of any arbitration decision) or
lawsuit shall be brought by or between MiliRisk and Millers Mutual and/or
Millers Casualty concerning or arising out of this Agreement.
Section 7.16 Agreement to Perform Necessary Acts. Each party
agrees to perform any further acts and execute and deliver any and all further
documents and/or instruments which may be reasonably necessary to carry out the
provisions of this Agreement and the transactions contemplated hereby.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
THE MILLERS MUTUAL FIRE
INSURANCE COMPANY
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Chief Financial Officer
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THE MILLERS CASUALTY
INSURANCE COMPANY
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Chief Financial Officer
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MILIRISK, INC.
By: /s/ F. ▇▇▇▇▇▇ ▇▇▇▇▇▇, III
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Name: F. ▇▇▇▇▇▇ ▇▇▇▇▇▇, III
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Title: President and Chief Executive Officer
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