ADMINISTRATION AGREEMENT
This AGREEMENT is made and entered into on this 24 day of July 2000, by and
between Kemper Cost Management with its principal offices at 4343 Will Rogers
Parkway, Oklahoma City, OK 73108- 1817 (hereinafter referred to as ("COMPANY"),
and Mechanical Breakdown Administrators, Inc., a Delaware Corporation, and
Mechanical Breakdown Administrators, Inc. of Arizona, with their principal
offices at 9419 E. San Salvador, Suite 105, Scottsdale, AZ 85261 (hereinafter
collectively referred to as ("ADMINISTRATOR").
WHEREAS, ADMINISTRATOR is engaged in the business of soliciting Vehicle Service
Contracts for the sale and administration of Contracts covering Recreation
Vehicles ("the Subject Business), and
WHEREAS, COMPANY is engaged in the business of underwriting reimbursement
insurance policies for the Subject Business ("Policies") for the benefit of the
ADMINISTRATOR and or Accounts and
WHEREAS, the COMPANY and the ADMINISTRATOR mutually desire that the
ADMINISTRATOR perform the administrative and claim handling functions as defined
herein.
NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein, the parties hereto agree as follows:
I. APPOINTMENT. Subject to the terms and conditions of this AGREEMENT,
ADMINISTRATOR is hereby appointed to solicit and administer the Subject Business
as expressly set forth in the Underwriting Guidelines and Administrative
Procedures set forth in Section 5 to this AGREEMENT. ADMINISTRATOR hereby
accepts such appointment, and agrees to perform faithfully the duties therefore
to the best of its knowledge, skill and judgment. It is understood and agreed
that ADMINISTRATOR will market the programs intended and anticipated hereunder
to Accounts that are willing to sell Contracts in accordance with the guidelines
and procedures established by the ADMINISTRATOR and approved by the COMPANY in
accordance with Exhibit A. COMPANY will insure ADMINISTRATOR'S and/ or Accounts'
obligations under the Contracts as set forth by the terms and conditions of its
duly issued Policies.
II. DEFINITIONS. The following terms as used in this AGREEMENT will have the
following meanings whether used in the singular or plural.
A) "AGREEMENT" shall be understood to include any and all Addenda attached
in accordance with the terms and conditions specified herein.
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B) "Contracts" mean extended support plans, product replacement plans,
extended service plans, extended service contracts or extended warranty
contracts issued by or on behalf of the ADMINISTRATOR: (i) Only while the
Policies are in force; (ii) On electronic or printed form approved by the
COMPANY and attached as an Exhibit to the Policies.
C) "Claim" means a demand for service made by a Contract Holder in
accordance with the terms of a Contract or in accordance with any business
rules or exceptions outlined in the AGREEMENT.
D) "Contract Holder" means any person or Persons or legal entity that
purchases a Contract from the ADMINISTRATOR or Accounts.
E) "Dealer Cost" means all monies payable to the ADMINISTRATOR from
Accounts for the purchase of Contracts.
F) "Account" means a business entity that has entered an Account AGREEMENT
with the ADMINISTRATOR to sell Contracts. The Account AGREEMENT is attached
as Exhibit B. The form of the Account AGREEMENT may not be modified or
altered by ADMINISTRATOR without COMPANY' s written approval.
G) "Obligor" shall mean either the ADMINISTRATOR or Account that is
contractually obligated to the Contract Holder under the terms of the
Contract.
H) "Policies" mean a Contractual Liability Policy Form together with any
Endorsements attached thereto issued by COMPANY to Obligor of any Contract
pertaining to the Subject Business governed by this AGREEMENT. Policies
will be issued in a form substantially similar to that attached as Exhibit
C and may change from time to time in accordance with state laws and
regulations or as deemed necessary and appropriate by COMPANY.
I) "Premium" means all monies payable to COMPANY by ADMINISTRATOR whether
or not collected by ADMINISTRATOR from Accounts and as specified under the
terms of the Policies issued by COMPANY to ADMINISTRATOR or Accounts.
J) "Net Premium" means the aggregate amount of Premiums less Return
Premiums as the net result of a cancellation/ void of a Contract by any
party to the Contract.
K) "Retail Price" means the amount of money paid by the Contract Holder for
the purchase of a Contract.
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L) "Return Premium" means the aggregate amount of unearned Premium
attributable to the cancellation/ void of Contracts for which COMPANY has
previously received payment.
M) "Unearned Premium" means that portion of the Premium received by COMPANY
that relates to the unexpired part of the Policies.
III. TERRITORY. ADMINISTRATOR shall be the sole judge as to where ADMINISTRATOR
shall operate. However, COMPANY's indemnity obligation is limited to the
Policies and covers only those states agreed to in writing by COMPANY.
IV. RELATIONSHIP. Nothing contained herein will be construed to create the
relations of employer and employee or joint venture or partnership between
ADMINISTRATOR and COMPANY or between COMPANY and any of ADMINISTRATOR's
employees or representatives. It is the express intent of the parties hereto
that with respect to the services provided by ADMINISTRATOR under this
AGREEMENT, ADMINISTRATOR is an independent contractor for all purposes and in
all situations.
V. AUTHORITY OF THE ADMINISTRATOR. ADMINISTRATOR shall have no power or
authority other than as expressly granted and set forth herein. ADMINISTRATOR
shall have no power or authority to act on behalf of COMPANY in granting
insurance coverage. Nor shall ADMINISTRATOR have the power or authority to award
coverage. Nor shall ADMINISTRATOR have the power or authority to extend any of
the coverage granted to ADMINISTRATOR and/ or Accounts unless ADMINISTRATOR has
been expressly authorized to do so by COMPANY, and then only to the extent so
stated. ADMINISTRATOR will use its best efforts and good faith to represent
COMPANY at all times. ADMINISTRATOR is hereby authorized and obligated to
perform the following services for COMPANY.
A) In addition to the other duties specified in this AGREEMENT,
ADMINISTRATOR shall perform the following services with respect to the
Subject Business.
1) Develop and supply Accounts with supplies either electronically
or in a printed format as necessary for the Subject Business
2) Maintain and operate data processing systems to input and keep
record of all Contracts sold by Accounts.
3) Maintain and utilize an adequate number of personnel having the
requisite experience in the adjustment of claims to authorize the
repair or replacement of covered products and make payments on
service costs for covered Claims.
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4) Collect the Dealer Cost and remit premiums received to COMPANY
net of compensation due to ADMINISTRATOR according to the
provisions of the Definition entitled "Premiums".
5) To notify and forward to COMPANY any notices from any regulatory
authority pertaining to the Subject Business.
6) In the event that actions or omissions of any of the
ADMINISTRATOR'S employees results in a claim or lawsuit against
the COMPANY, the ADMINISTRATOR shall pay indemnity, defend and
hold the COMPANY harmless from any such claim or lawsuit
including costs incurred in order to fulfill their obligations
under this AGREEMENT.
B) ADMINISTRATOR agrees to pay to the COMPANY the premiums as defined and
specified in the policies whether or not collected by the ADMINISTRATOR.
The ADMINISTRATOR does not possess premium received for any other reason.
The ADMINISTRATOR will submit to the COMPANY a detailed and itemized
monthly "account current" of all Premium written and Premium adjustments
made (whether additional or return or whether funds were received or not)
with respect to all business and transactions in that calendar month not
later than fifteen (15) days after the close of business of each calendar
month. The Premium report will be in a format as required by the COMPANY.
Premiums on each Contract and additional Premiums developed by adjustments
are due within fifteen (15) days after the close of business of the
calendar month in which the Contract was purchased.
C) ADMINISTRATOR will establish electronic data files containing Program
data including but not limited to:
1) Contract number; contract holder name & address;
2) Date of sale and place of purchase of Contract;
3) Identification of coverage - Parts only, labor only, parts and
labor, home protection, program title, term of Contract,
effective date and expiration date, manufacturer's warranty
(parts/ labor);
4) Product Description - model number, manufacturer;
5) Retail price, insurance premiums.
D) With respect to any Claims made under any of the Contracts, to which
this AGREEMENT applies, which involve an actual or alleged loss and are
reported to the ADMINISTRATOR after the effective date of this AGREEMENT:
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1) To establish an electronic Claims record with respect to each
covered Claim that shall include but not be limited to
(a) Claimant's name and address;
(b) Date and place of purchase of the Contract;
(c) Date of covered Claim, service authorization and performance
of service;
(d) Contract number;
(e) Product description - model number, dealer cost,
manufacturer;
(f) Type of repair and/ or replacement service performed;
(g) Date and amount of Claim payment (parts, labor, other);
(h) Failure code, servicer's code;
(i) Payment or check number, payment date; and
(j) Claim number.
2) To investigate, adjust, compromise, settle or deny all Claims
within the discretionary authority limit set forth below;
3) To document each Claim file with a written chronology of all
actions taken with respect to the underlying Claim, including but
not limited to coverage, repair/ replacement rationale and
disbursements;
4) To furnish all claim form's necessary for proper Claim
administration;
5) To seek written authorization to pay Claims with costs in excess
of $4000.00 ("Authority Limit"). to the COMPANY within seven (7)
days after ADMINISTRATOR first received information that the
damages are in excess of the Authority Limit. This amount may be
adjusted from time to time at the sole discretion of the COMPANY;
6) To investigate, adjust, settle or deny Claims in excess of the
authority limit only with the prior written approval of COMPANY;
7) To provide to the COMPANY, following the close of each calendar
month, a claims bordereau via electronic transmission or other
agreed upon medium of Claims paid and denied and of Claims
outstanding in excess of 21 days but unpaid during such month,
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giving such reasonable detail as the COMPANY requires. Such
claims bordereau will be provided to the COMPANY in the form of a
monthly bordereau report within fifteen (15) days after the close
of business of each calendar month. The COMPANY may also require,
from time to time, special reports from the ADMINISTRATOR to be
provided at the COMPANY's expense.
8) To make repairs and otherwise fulfill covered Claims made under
the Contracts as referred to herein as well as report such
covered Claims to the COMPANY in the format required by the
COMPANY.
E) ADMINISTRATOR will immediately, but in no event later than within 48
hours, notify COMPANY of any complaints, regarding the Contracts, made by
or through any governmental or regulatory body and forward copies of any
documents received regarding such complaints to the COMPANY. In addition to
notifying COMPANY, ADMINISTRATOR will maintain a chronological record of
all complaints, ("Complaint Log") made by or on behalf of any governmental
or regulatory body. ADMINISTRATOR will document each complaint, the name of
the Policy holder, name of the Contract Holder and state of residence, the
name of the repair facility, claim number, identity of the governmental or
regulatory body making the complaint, description of grievance, date
ADMINISTRATOR received notice of the complaint, description of action taken
by ADMINISTRATOR in response to the complaint and the date the complaint is
resolved. The Complaint Log will be provided to the COMPANY upon 48 hours
written notice.
F) The ADMINISTRATOR will immediately, but in no event later than within 48
hours, notify the COMPANY of any lawsuit, demand, claim, arbitration, or
proceeding of any type involving the COMPANY of which the ADMINISTRATOR
becomes aware. The ADMINISTRATOR will bring to the COMPANY's attention any
Claim when coverage is doubtful or which involves Policy or Contract
interpretation. The ADMINISTRATOR will maintain a "suit log" setting forth
the following information: name and state of residence of the policyholder
and Contract Holder; name of repair facility; Claim number, name and
address of plaintiff(s) and defendant(s); name and address of the attorneys
for both plaintiff(s) and defendant(s); court in which suit is filed; date
suit filed, date of service on agent; and date defense counsel enters
appearance. The ADMINISTRATOR will also immediately forward to the COMPANY
copies of any pleadings and/ or documentation regarding any lawsuit,
demand, claim or proceeding involving the COMPANY, the ADMINISTRATOR or any
corporation affiliated with either the COMPANY or the ADMINISTRATOR.
G) The ADMINISTRATOR will maintain operating standards and procedures to
assure that the Contracts and the operations of the ADMINISTRATOR conducted
in connection with the Programs are all in compliance with applicable
local, state, territorial and federal laws and regulations. The
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ADMINISTRATOR will be in compliance with state registration, certification
and/ or license requirements, and will procure and maintain all licenses,
registrations, permits and authorizations legally required for it to market
and administer the Contracts in those territories where the parties have
agreed that the Contracts will be offered.
H) The ADMINISTRATOR will train and staff personnel or contract personnel
to perform the duties described herein.
VI. CLAIMS IMPREST ACCOUNT.
A) The COMPANY will designate a checking account ("Imprest Account") at a
bank, or other financial institution chosen by ADMINISTRATOR and approved
by COMPANY for the purpose of issuing payment of losses for covered Claims
made under Policies. The Imprest Account will be designated and titled so
as to be identified as being for the exclusive use of paying covered Claims
made under COMPANY's Policies. COMPANY will provide ADMINISTRATOR with the
bank name, account name and account number of the Imprest Account. COMPANY
will be obligated to fund the Imprest Account as may be necessary to
provide for payment by ADMINISTRATOR of losses for covered Claims made
under Policies. All interest earned on the Imprest Account will be the
property of the COMPANY.
B) ADMINISTRATOR will be responsible for issuing checks on the Imprest
Account exclusively for the payment of covered Claims incurred under
COMPANY'S Policies. ADMINISTRATOR will be the custodian of checks to be
drawn on the Imprest Account and will establish the controls necessary to
ensure the safety and security of these checks. ADMINISTRATOR will have on
hand and store in a secure location, at all times during the term of this
AGREEMENT and during any run- off after termination, at least a six (6)
month supply of checks for the Imprest Account.
C) On a monthly basis ADMINISTRATOR will provide to COMPANY, by electronic
transmission a Claims payment record of the issued Claim checks with a
grand total for all checks issued during the weekly period.
D) ADMINISTRATOR will provide to the COMPANY a written reconciliation of
the Imprest Account within twenty (20) days after the close of each
calendar month.
E) Any check in excess of $15,000.00 will not be issued from the Imprest
Account unless countersigned by a designee of the COMPANY.
F) Allocated Loss Expenses will not be paid from the Imprest Account.
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VII. PAYMENT OF ALLOCATED LOSS EXPENSES AND STATEMENTS.
The ADMINISTRATOR will submit for payment to the COMPANY, and the COMPANY will
pay, all Allocated Loss Expenses as defined and described herein.
The term "Allocated Loss Expenses" will mean the following items of expense,
allocable to a specific Claim, and will be paid by the COMPANY provided prior
written approval has been obtained from the COMPANY for each Allocated Loss
Expense:
A) Attorneys' fees and disbursements;
B) Court reporter services and transcripts;
C) Stenographic services and transcripts;
D) Witness attendance fees.
E) Court costs;
F) Appeal bonds;
G) Printing costs related to trials and appeals;
H) Testimony, opinions, appraisals, reports, surveys, and analyses of
professionals and experts;
I) Trial and hearing attendance fees.'
J) Reports from government agencies and branches;
K) Credit bureau reports;
L) Private investigators;
M) Inspectors and Inspections;
N) Photographs;
O) Extraordinary Claim investigation and/ or travel expense incurred by the
ADMINISTRATOR at the written request of the COMPANY; and
P) Any similar service related to the adjudication of a particular Claim or
the protection of the subrogation rights of the COMPANY for which the
COMPANY will have given prior written approval.
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Unallocated loss adjustment expenses, such as salaries, benefits, travel
overhead of the ADMINISTRATOR or its employees, are not reimbursable to the
ADMINISTRATOR by the COMPANY. The ADMINISTRATOR will bear and pay all
charges and expenses incurred in conducting its business, including
compensation of the ADMINISTRATOR's employees, office expenses, normal
postage, license fees, reporting fees, and costs associated with compliance
with this AGREEMENT. The COMPANY will not be responsible for expenses
incurred by the ADMINISTRATOR not set forth herein.
VIII. LIMITATION OF AUTHORITY. In addition to any other limitation expressed or
implied in this AGREEMENT or any other instructions which may be issued from
time to time by the COMPANY to the ADMINISTRATOR, the ADMINISTRATOR has no
authority to:
A) Appoint agents, sub-agents and/ or sub-ADMINISTRATORS on behalf of the
COMPANY;
B) Make any agreements with any persons on behalf of the COMPANY.
C) Make any agreements rendering or purporting to render the COMPANY liable
for the payment of expenses, commissions or any other sum:
D) Make, alter, or discharge any of the terms and conditions of any policy
or contract of the COMPANY or any Contract insured by the COMPANY;
E) Institute, prosecute or maintain any legal proceeding in connection with
any matter pertaining to the COMPANY'S business;
F) Hold itself out as an ADMINISTRATOR of the COMPANY for any matter or
purpose other than as specifically prescribed by this AGREEMENT;
G) Withhold any monies or property of the COMPANY;
H) Offer to pay any rebate or make any ex-gratia payment;
I) Issue, utter, write or otherwise make any representation, statement,
promise or warranty of any kind or nature with respect to the business of
the COMPANY, other than to adjust covered claims pursuant to this
AGREEMENT, unless specifically authorized in writing to do so by the
COMPANY;
J) Engage or appoint any attorney or legal representative for all lawsuits
to defend any action taken under the Subject Business. Only the COMPANY
shall decide whether claims brought about by suit(s) may be settled that
relates to the Subject Business or arise under the Policies.
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K) Make, accept or endorse notes or otherwise incur any liability, which is
not incurred in the ordinary course of business of the ADMINISTRATOR on
behalf of the COMPANY pursuant to the terms and conditions of this
AGREEMENT. ADMINISTRATOR will not make any ex-gratia payments without the
written authorization of the COMPANY;
L) Waive a forfeiture or issue a guaranty, other than as expressly
permitted in writing by the COMPANY; or
M) Extend the time for the payment of Premium or other monies due the
COMPANY.
N) Directly or indirectly solicit, sell, offer, bind or deliver any
Contracts at any reduction or deviation from the rates, terms, conditions
agreed to by COMPANY, unless part of an advertising, special marketing
promotion or unique Account Contracts agreed to in writing by the COMPANY.
IX. ADVERTISING AND REPRESENTATIONS. The ADMINISTRATOR will not use any
advertising material, prospectus, proposal form, or representation, either in
general or in relation to the COMPANY, unless furnished by the COMPANY or until
the prior written authorization of the COMPANY is obtained. Such approval will
not in any event be construed as charging or binding the COMPANY to bear any
part of the cost or expenses thereof. Moreover, the ADMINISTRATOR will not cause
any third party to issue or circulate any illustration, circular, statement or
memorandum of any sort misrepresenting the terms, benefits, or advantages of any
Contract issued by the ADMINISTRATOR, or make any misleading statement as to any
Program or the financial security of the COMPANY.
No permission is hereby granted, either express or implied, to the ADMINISTRATOR
for the use of trade names, trademarks or service marks of the COMPANY and/ or
its affiliates. The ADMINISTRATOR will not use the trade names, trademarks,
service marks of the COMPANY, and/ or its affiliates, without the COMPANY's
prior written authorization.
X. BOOKS, RECORDS AND ACCOUNTS. The ADMINISTRATOR will keep full and accurate
records of the business transacted under this AGREEMENT and will forward to the
COMPANY such reports of said business that the COMPANY may prescribe. The
ADMINISTRATOR will keep copies of each type of Contract issued; the name and
address of each Contract Holder to the extent that the name and address have
been provided by the Contract Holder; a list of locations where Contracts are
marketed, sold, offered for sale, issued, made or proposed to be made or
administered. Books, records and accounts may be compiled in various locations
but a copy of all books, records and accounts must, at all times, be kept at the
ADMINISTRATOR's premises. The COMPANY or its representative will have the right
to examine and audit ADMINISTRATOR's books, records and accounts anytime during
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normal business hours at the ADMINISTRATOR's premises, upon ten (10) business
days written notice, and to make copies of such records as it may deem
necessary. Except as otherwise indicated herein, all books, accounts or other
documents, with the exception of computer software and software documentation,
relating to the Contracts, are the joint property of the COMPANY and
ADMINISTRATOR. The books and accounts of the COMPANY will be accepted in full as
final evidence for all matters relating to this AGREEMENT.
The ADMINISTRATOR will maintain a separate copy of all computer-stored data
relating to the subject matter of this AGREEMENT. Such copy will be available to
the COMPANY and will be provided immediately to the COMPANY in the event the
COMPANY terminates this AGREEMENT or retains a new ADMINISTRATOR to process
claims and/ or run off the business that is the subject of this AGREEMENT. The
ADMINISTRATOR may keep all records on a computer disk or similar technology, but
the records will be capable of duplication to legible hard copy. The
ADMINISTRATOR will keep all records pertaining to each Contract for at least
seven (7) years after coverage has expired.
The provisions of this section will survive termination of this AGREEMENT and
will be applicable until all obligations of the parties are finally discharged.
XI. CONFIDENTIALITY. In performing their obligations pursuant to this AGREEMENT,
the parties hereto acknowledge that they may have access to and receive certain
confidential information relating to the other party, including, but not limited
to, marketing philosophy and objectives, competitive advantages and
disadvantages, the types of services provided, financial results, the names,
addresses and account numbers of customers, agents, service providers, and a
variety of other information and material. The ADMINISTRATOR and the COMPANY
agree that the other will consider all such confidential information and
materials, which are disclosed in writing or otherwise, confidential and
proprietary. Each party further agrees that: (a) it will not disclose, give,
sell or otherwise transfer or make available, directly or indirectly, any
confidential information to any third party, except as required for the
performance of its duties hereunder or as required by law; (b) to the best of
its ability, it will limit the dissemination of the confidential information
within its own organization (including independent contractors) to such
individuals whose duties justify the need to know such confidential information,
and then only provided that there is a clear understanding by such individuals
of their obligation to maintain the confidential and proprietary nature of the
information to restrict its use solely to the purposes specified herein; and (c)
to the best of its ability, it will notify the other party immediately of any
loss or misplacement of records or copies of such confidential information.
All rights, obligations and duties of the parties with regard to confidential
information will survive the termination of this AGREEMENT.
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All obligations and duties of each party hereto with respect to data processing
programs, service providers and systems and cardholder information will continue
indefinitely, but with respect to other confidential information, such as
business plans, methods, and marketing philosophy, such obligations and duties
will terminate after five (5) years following the termination of this AGREEMENT
for any reason. Such obligations and duties are subject to earlier termination
in the event that and to the extent that such confidential information: (a) is
developed by a party independently, without reference to the other party; (b) is
obtained from a third party authorized to disclose it; (c) becomes a part of the
public domain without the fault of the party; (d) is released by the disclosing
party to third parties without similar restrictions; (e) is released from such
restrictions by the prior written Agreement of the disclosing party; or (f) is
required to be disclosed by legal process. Neither party hereto will acquire by
virtue of this AGREEMENT any property of other right, claim or interest,
including any patent right or copyright interest, in any of the information,
systems, processes, equipment, computer programs, or data of the other party.
XII. INDEMNIFICATION.
A) The ADMINISTRATOR agrees to indemnify, defend and hold harmless the
COMPANY, its affiliates, directors, officers, agents and employees, from
and against any and all liabilities, losses, obligations, damages, costs,
actions, suits, claims, demands, settlements, judgments, penalties, fines,
including punitive or exemplary damages and reasonable attorney fees, or
other expenses arising from: (i) any wrongful, tortious or negligent act,
error or omission by the ADMINISTRATOR, its affiliates, directors,
officers, agents, representatives or employees; (ii) any inaccuracy in or
any breach of any representation, warranty, covenant or agreement of the
ADMINISTRATOR contained in this AGREEMENT or in any AGREEMENT, instrument,
document or Contract delivered in connection herewith. The ADMINISTRATOR
will furnish prompt notice to the COMPANY of any notice of alleged
violation from any regulatory authority and to promptly take steps to
correct any existing violation.
B) The COMPANY agrees to indemnify, defend and hold harmless the
ADMINISTRATOR, its affiliates, directors, officers, agents and employees,
from and against any and all liabilities, losses, obligations, damages,
costs, actions, suits, claims, demands, settlements, judgments, penalties,
fines including punitive or exemplary damages and reasonable attorney fees,
or other expenses arising from: (i) any wrongful, tortious or negligent
act, error or omission by the COMPANY, its affiliates, directors, officers,
agents, representatives or employees; (ii) the COMPANY's (or its
affiliates, directors, officers, agents or employees) failure to comply
with any law or regulation, regardless of whether such failure was
intentional or unintentional, or results from mistake, negligence or lack
of the COMPANY's knowledge; or (iii) any inaccuracy in or any breach of any
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representation, warranty, covenant or AGREEMENT of the COMPANY contained in
this AGREEMENT or in any AGREEMENT, instrument, document or Contract
delivered in connection herewith. The COMPANY will furnish prompt notice to
the ADMINISTRATOR of any notice of alleged violation from any regulatory
authority and to promptly take steps to correct any existing violation. The
COMPANY will furnish prompt notice to the ADMINISTRATOR of any notice of
alleged violation from any regulatory authority and to promptly take steps
to correct any existing violation.
C) Any party claiming that it is entitled to indemnification hereunder will
notify the other party in writing within thirty (30) days of the assertion
of any claim or the discovery of any fact upon which such claiming party
intends to base its claim for indemnification hereunder, whichever is
later. Such claiming party's failure to so notify the other party in the
matter prescribed herein will not, however, relieve the other party from
any liability under this AGREEMENT with respect to such claim, except to
the extent such other party is actually prejudiced thereby. The party
claiming indemnification will have the right to participate jointly with
the indemnifying party in the defense of any claim, demand, suit or other
proceeding in connection with which such claim for indemnification is made,
and no such claim, demand, suit or other proceeding may be settled or
otherwise compromised without the consent of both such parties.
XIII. TERM OF AGREEMENT AND TERMINATION.
A) The term of this AGREEMENT will commence on the effective date hereof
(as indicated supra) and will continue in full force and effect for a
period of three years. Unless earlier terminated pursuant to the provisions
of this Section 13. A, or unless either party gives the other party written
notice of non-renewal at least ninety (90) days prior to expiration of the
initial term hereof, the term of this AGREEMENT will be extended
automatically for an additional one (1) year after the expiration of the
initial term. Upon termination, hereunder any Policies shall also be
terminated.
B) This AGREEMENT may be terminated immediately upon failure of a party to
pay any amount due under this AGREEMENT where such failure continues for a
period of thirty (30) days after receipt of written notice of the amount
due by such party.
C) This AGREEMENT may be terminated immediately should either party fail to
observe or perform any material term or condition of this AGREEMENT and
such failure continues for a period of thirty (30) days after written
notice of such failure has been received by such party. Either party may
terminate this AGREEMENT immediately if any representation of the other
party contained herein or in any financial data, document or
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AGREEMENT delivered in connection herewith prove to be false or misleading
in any material respect.
D) Either party may terminate this greement immediately upon written notice
should the other party file a voluntary petition for bankruptcy or commence
another proceeding, or should an involuntary petition for bankruptcy or
other proceeding be filed or commenced against the other party and not be
discharged within thirty (30) days, seeking reorganization, liquidation, or
other relief with respect to it or its debts, or seeking the appointment of
a trustee, receiver, liquidator, custodian, conservator or similar official
for it or any substantial part of its property, or such other party
consents to any such relief or makes a general assignment for the benefit
of creditors or fails generally to pay its debts as they become due.
E) This AGREEMENT shall terminate automatically upon the effective date of
the sale, transfer or merger of the ADMINISTRATOR's business.
F) Termination of this AGREEMENT will have no effect on the continuing
obligations of the ADMINISTRATOR for the run-off of any authorized programs
as described herein, unless otherwise required by applicable law.
G) Upon termination of this AGREEMENT, unless otherwise agreed to by the
COMPANY. ADMINISTRATOR shall account to the COMPANY for all fees or other
transactions unaccounted for at the time of termination or arising
thereafter with respect to fees covered by this AGREEMENT.
H) If this AGREEMENT is terminated and the COMPANY has been paid all monies
owed pursuant to this AGREEMENT, all active service contracts shall remain
the property of ADMINISTRATOR. If ADMINISTRATOR is in default on the
payments of monies to the COMPANY under the terms of this AGREEMENT for any
reason, any and all active business that is underwritten by the COMPANY,
shall become the property of the COMPANY upon termination of this AGREEMENT
but only to the extent necessary to reimburse COMPANY for any sums owed
from ADMINISTRATOR, at which point all remaining active service contracts
shall remain the property of ADMINISTRATOR.
I) Notwithstanding the above, this AGREEMENT can be terminated at any time
by mutual AGREEMENT of both parties.
XIV. PRIMARY DISPUTE RESOLUTION. Except for the right of either party to apply
to a court of competent jurisdiction for a Temporary Restraining Order or other
provisional remedy to preserve the status quo or prevent irreparable harm, the
parties agree to attempt in good faith to resolve any dispute, controversy or
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claim arising out of or relating to this AGREEMENT promptly through negotiations
between the appropriate management level of the parties.
XV. ARBITRATION. If this Primary Dispute Resolution process fails to produce an
adequate resolution within thirty (30) days of written notice of such dispute,
controversy or claim, any dispute arising out of or relating to this contract
shall be settled by arbitration in accordance with the rules of the American
Arbitration Association. Each party shall select on arbitrator. The arbitrators
named by each party shall select a third arbitrator. In the event an AGREEMENT
cannot be reached as to the third arbitrator, either party may petition a court
of competent jurisdiction to appoint a neutral arbitrator as the third
arbitrator. Each party shall be responsible for its own costs and expenses, but
the parties shall share the costs and expenses of the third arbitrator.
XVI. RULES AND REGULATIONS. ADMINISTRATOR shall comply and be bound by all the
underwriting guidelines, rules, bulletins, manuals or other written instructions
issued by and delivered to ADMINISTRATOR by the COMPANY now in force or as
amended or supplemented, and all applicable laws and regulations of the
appropriate jurisdictions. The ADMINISTRATOR shall be given 90 days to implement
any new amendments or supplements that are not the result of laws and
regulations instituted by the appropriate jurisdictions.
XVII. EXPENSES. Each party to this AGREEMENT shall bear and pay any and all
charges and expenses incurred in its own operation, including, but not limited
to, the compensation of its agents or general agents or independent sales force,
if any, the compensation of its own employees, its office expenses, including
postage, printing, license fees and travel expenses.
XVIII. CURRENCY. Unless otherwise specified in an Addenda to this AGREEMENT, all
transactions will be reported and paid in U. S. dollars.
XIX. GOVERNING LAW. This AGREEMENT and any and all of its Exhibits, Addenda,
Amendments and/ or Attachments thereto will be governed by, read, and be
construed in accordance with the laws of the State of Illinois.
XX. SEVERABILITY. If any term or provision of this AGREEMENT will be found by a
court of competent jurisdiction to be illegal or otherwise unenforceable, such
term or provision will not invalidate the whole of this AGREEMENT, but will be
deemed modified so as to render such term or provision enforceable, and the
rights and obligations of the party will be construed and enforced accordingly,
while preserving to the fullest permissible extent the intent of the parties set
forth herein.
XXI. NON-WAIVER. No delay or failure by either party to exercise any right under
this AGREEMENT and no partial or single or multiple exercise of any right under
this AGREEMENT will constitute a waiver of that right or any other right.
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XXII. ASSIGNMENTS AND TRANSFER. Except as expressly stated herein, the
ADMINISTRATOR will not assign or otherwise transfer this AGREEMENT or any of its
rights or obligations hereunder, or contract with any third party to perform any
of its responsibilities or obligations relating to this AGREEMENT, without the
prior written authorization of the COMPANY.
XXIII. ENTIRE UNDERSTANDING. This AGREEMENT (together with the Exhibits, Addenda
and other Attachments attached hereto) supersedes any other AGREEMENT, written
or oral, that may have been entered into between the parties (or by any
director, officer or representative of such party) relating to the matters
contemplated hereby. This AGREEMENT (together with the Exhibits, Addenda and
other Attachments attached hereto) constitutes the entire understanding between
the parties with respect to the subject matter hereof. There are no AGREEMENTS
or commitments between the parties with respect to the subject matter hereof
except as expressly set forth herein. The terms and conditions of this AGREEMENT
will prevail over any conflicting provisions of the Policies.
XXIV. ADEQUACY TESTS. From time to time, COMPANY shall submit to ADMINISTRATOR
COMPANY's findings with respect to COMPANY'S rating and reserve adequacy tests.
ADMINISTRATOR shall examine the results of the adequacy tests and advise COMPANY
in writing of ADMINISTRATOR's preferred action to correct any projected
shortfalls. If for any reason the COMPANY disagrees with ADMINISTRATOR's
preferred actions, COMPANY and ADMINISTRATOR shall cooperate fully and
reasonably to establish a course of action within twenty (20) working days. It
is understood and agreed that COMPANY is the sole judge as to the method used to
test the adequacy of the reserves and or rates. If COMPANY and ADMINISTRATOR
cannot agree, COMPANY shall determine the course of action.
XXV. AMENDMENTS. This AGREEMENT may not be amended, modified or otherwise
altered except as agreed to in writing by the parties hereto.
XXVI. COUNTERPARTS. This AGREEMENT may be executed in two or more counterparts,
each of which will be deemed an original, but all of which will constitute one
and the same AGREEMENT.
XXVII. HEADINGS. Headings and titles to articles and sections herein are
inserted for convenience of reference only and are not intended to be part of or
affect the meaning or interpretation of this AGREEMENT.
XXVIII. NOTICES. Any notice, request, consent, waiver or other communication
required or permitted to be given hereunder will be effective only if in writing
and will be deemed sufficiently given only if delivered in person or sent by
certified or registered mail, postage prepaid, return receipt requested,
addressed as follows:
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If to the COMPANY: If to the ADMINISTRATOR:
Kemper Cost Management Mechanical Breakdown Administrators
4343 Will Rogers Parkway 9419 San Salvador Suite 105
Oklahoma City, OK 73108-1817 Scottsdale, AZ 85261
Attention Attention: Mr. Gaylen Brotherson
Mr. Keith Barr & Mr. Ronald Bussey
W/ a copy to: W/ a copy to:
Kemper Cost Management Mechanical Breakdown Administrators
4343 Will Rogers Parkway 9419 San Salvador Suite 105
Oklahoma City, OK 73108- 1817 Scottsdale, AZ 85261
Attention: General Counsel Attention: General Counsel
Or to such other individual or address as any party may from time to time
designate by like notice.
XXIX. ERRORS AND OMISSIONS AND FIDELITY BOND.
A) ADMINISTRATOR will provide copies evidencing to COMPANY that it now has
and will maintain during the term of this AGREEMENT Insurance coverage for
Errors and Omissions Liability in an amount of at least $500,000.00 for any
one event or claim, and in the aggregate of $500,000.00 with an insurance
carrier acceptable to COMPANY. COMPANY will receive a Certificate of
Insurance in its name containing the following provision: COMPANY will
receive thirty (30) days written notice of any change, cancellation or
termination of the Policies.
B) ADMINISTRATOR will maintain a Fidelity Bond in an amount of at least
$300,000.00, covering all operations, employees and subcontractors
servicing the business of this AGREEMENT with a deductible satisfactory to
COMPANY, naming COMPANY as loss payee.
C) The failure of the ADMINISTRATOR to maintain adequate Errors & Omission
coverage and Fidelity Bond, as set forth supra constitutes a material
breach of this AGREEMENT.
XXX. SUBROGATION. If ADMINISTRATOR has rights to recover all or part of any
payment COMPANY has made under the Policies, those rights are transferred to
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COMPANY. ADMINISTRATOR must do nothing after loss to impair them. At COMPANY's
request, ADMINISTRATOR will bring suit or transfer those rights to COMPANY and
help COMPANY enforce them.
IN WITNESS WHEREOF, COMPANY and ADMINISTRATOR have caused this AGREEMENT to be
executed on the date first written above.
KEMPER COST MANAGEMENT
By: __________________________________
Name: ________________________________
Title: _______________________________
MECHANICAL BREAKDOWN ADMINISTRATORS OF DELAWARE, INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
MECHANICAL BREAKDOWN ADMINISTRATORS, INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
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