SERVICE EXPENSE REIMBURSEMENT AGREEMENT
BY THIS AGREEMENT, the insurance companies, managers and agencies named in
the Schedule A(s) attached to and forming a part of this Agreement, hereinafter
referred to as "Company," and CAI Credit Insurance Agency, Inc., its
subsidiaries and affiliates hereinafter referred to as "Customer," agree as
follows effective July 1, 1998.
1. Company has offered to provide insurance coverage, service and facilities
through its agents for insurance programs, as described in the Schedule
A(s) attached, for insuring Credit Life, Credit Accident & Health, Credit
Property, Leased Property, and Involuntary Unemployment Insurance. The
borrowers, members, customers, lessees or any other person having an
interest in a policy of certificate subject to this Agreement shall be
referred to as "Participant(s)."
2. The development and implementation of such insurance program will result
in additional administrative costs and expenses for Customer.
3. Customer and Company have agreed upon their respective duties and
responsibilities in the matter of providing services, coverages and
facilities in connection with such insurance program and upon a formula
for reimbursement to Customer of sums necessary to compensate Customer for
its costs and expense therein incurred.
4. Because it is impossible to determine precisely the cost and expense which
will be incurred by Customer in carrying out its duties and
responsibilities as herein specified, Company agrees to reimburse Customer
for its costs and expenses in the service and administration of insurance
furnished under said programs as follows:
Company shall pay to Customer an Expense Reimbursement:
equal to the percentage of net premiums written or the fixed fee
shown in the column headed Reimbursement Rate in the Schedule A(s)
attached hereto.
It is a condition of this Agreement that Customer refund ratably to
Company on canceled coverages and on reductions in premiums at the same
rate at which such Expense Reimbursement was originally paid.
5. Customer agrees to cooperate with Company in all reasonable particulars
contemplated by this Agreement and understands that its duties and
responsibilities in the matter of providing services, coverages and
facilities and for which it is to be reimbursed hereunder are:
(A) Distribute to Participants, Company's forms, supplies and
instructions for use as well as material covering the administration
and distribution of policies or certificates of insurance;
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(B) Permit the use of its credit card, or such other method as it
authorized by law, for the collection of premium contributions by
Participants. Maintain an insurance escrow account, receive, and
account for all premiums and remit to Company premiums on insurance
written less cancellation refunds with respect to insurance programs
contemplated by this Agreement;
(C) Perform clerical functions, typing and mailing of insurance policies
or certificates, endorsements, cancellations and periodic statements
covering premium due, net of refunds and other allowances;
(D) Furnish Company with reports of all transactions of Participants
pursuant to insurance programs of Company, contemplated under this
Agreement;
(E) Perform such other similar administrative actions as may be required
by Company.
All premiums held by Customer pursuant to (B) above shall be held as
trustee for Company until delivered to it. Company reserves the right to
require Customer to deposit all premiums, less Customer's Expense
Reimbursement as set forth in Paragraph 4 hereof, in a premium trust or
escrow account.
The reports and remittances provided for in (B) and (D) above shall be on
forms provided by or acceptable to Company, and shall be transmitted in
time to be received by Company not later than twenty (20) days after the
end of each calendar month. Premium payments not made by the due date
above shall bear interest from the due date at the rate of one percent
(1%) per month, or the applicable legal maximum rate, whichever is less.
6. Periodically, Company may require evidence that expense incurred by
Customer was approximately equal to reimbursement calculated hereunder.
Customer shall upon request by Company's authorized representative, during
normal business hours, make available for inspection all books and records
pertaining to business covered by this Agreement and the Schedules and
Addenda attached hereto.
7. Company reserves the right to offset any amounts due to or from Customer
under this Agreement and its Schedules and Addenda (if any) Credit Life,
Credit Accident & Health, Credit Property, Involuntary Unemployment, and
Leased Property Insurance, against any amounts due to or from Customer
under this or any agreements Customer may have from time to time with
Company and/or any other subsidiaries or affiliates of American Bankers
Insurance Group, Inc. Customer will have thirty (30) days to challenge any
amounts due Company prior to such offset being made and, if challenged, no
offsets will be made. The issue will be referred to arbitration, as in
Paragraph 10.
8. Company may authorize Customer to offer new products and may establish
rates of Expense Reimbursement on such new products. Company also reserves
the right to cease offering any product listed on Schedule A at any time.
Company may also prospectively change the rates of Expense Reimbursement
for products on Schedule A upon thirty (30) days advance notice if
required by state regulatory authority, or with the written consent of
Customer if one or more product lines is in deficit. This written consent
shall not be made unreasonably withheld. In all other respects, this
Agreement may be altered or amended only in writing signed by both of the
parties.
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9. This Agreement may be terminated by Company at any time by giving Customer
thirty (30) days notice, in writing, of its intention to terminate.
This Agreement may be terminated at any time by the mutual consent of both
Customer and Company.
This Agreement may be terminated by Customer with cause at any time, upon
thirty (30) days written notice provided to Company. Cause shall be
defined as a material breach of the Agreement which is not cured by
Company within thirty (30) days of written notice thereof.
10. (A) Any and all disputed or disagreements arising between the parties
pertaining to or relating in any manner to this Agreement, including
but not limited to any disputes or disagreements as to the meaning
or interpretation of this Agreement, or any portion thereof, or the
relationship of the parties created under this Agreement, upon which
an amicable understanding cannot be reached, including any breach of
this Agreement, are to be decided by arbitration in accordance with
the rules of the American Arbitration Association, and subject to
applicable provisions of the statutes of the state of Texas. The
parties agree to be bound by the majority decision of the
arbitrators. The arbitration proceeding shall take place in Fort
Worth, Texas, unless another location is mutually agreed to by the
parties. Each party shall be responsible for its own costs and
expenses in arbitrating the dispute.
(B) The arbitrators shall state in their decision the basis upon which
their decision may be made. An appeal may be made from the
arbitrators' decision to a court of general jurisdiction in Fort
Worth, Texas, on the grounds set forth in the Texas code. All
parties to this Agreement, by signing this Agreement, consent to the
personal jurisdiction of the Texas courts.
(C) Three arbitrators shall be selected for the arbitration panel. One
arbitrator shall be selected by each party. The third arbitrator
shall be selected by the arbitrators names by each party. 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. The Federal
Rules of Civil Procedure and the Federal Rules of Evidence shall
govern all procedural issues; however, upon order of the arbitrators
or by agreement of the parties, time limits contained therein may be
shortened or lengthened. The provision shall survive the termination
of this Agreement.
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11. (A) Upon termination of this Agreement, Customer shall promptly account
or and pay over to Company all premiums due Company upon risk(s)
placed by Customer.
(B) Customer further agrees, upon termination of this Agreement, to
render the normal and usual customer services for Company during the
remaining unexpired term of all policies placed by Customer.
(C) Company agrees, upon termination of this Agreement, to transfer 90%
of the net cumulative premiums collected, less (1) the cumulative
total losses paid by the Company, and (2) the cumulative total of
all payments including, but not limited to: advance commissions,
expense reimbursements, and group experience rating/contingent
compensation previously paid to the Agent, to any insurer selected
by Agent provided such insurer is approved by the appropriate
regulatory authorities to write insurance in the State of Texas of
the type(s) for which the net cumulative premiums have been
collected and for which group experience ratings/contingent
compensation payments may be or become due Customer. All liability
for subsequent claims, refunds or any other policy/certificate
obligations regardless of effective or incurred date, shall be
transferred from Company to the approved assuming insurer on the
effective date of such assumption.
12. In performing its obligations pursuant to this Agreement, Company may have
access to and receive disclosure of certain confidential information about
or belonging to Customer, including but not limited to: Customer's
marketing philosophy, techniques, and objectives, advertising and
promotional copy, competitive advantages and disadvantages, financial
results, technological developments, Participant and cardholder lists and
a variety of other information and materials which Customer considers
confidential or proprietary (hereinafter "Confidential Information").
Company agrees that during the term of this Agreement and thereafter,
Confidential Information is to be used solely in connection with
satisfying its obligations pursuant to this Agreement, and that it shall
neither disclose Confidential Information to any third party nor use
Confidential Information for its own benefit, except as may be necessary
to perform its obligations pursuant to this Agreement.
All Confidential Information furnished to Company in connection with this
Agreement is the exclusive property of Customer and, at the request of
Customer or upon termination of this Agreement, Company shall promptly
return to Customer all Confidential Information without copying such
information.
Company shall take measures to prevent its agents, employees and
subcontractors from using or disclosing any Confidential Information,
except as may be necessary for Company to perform its obligations pursuant
to this Agreement. Company agrees that it may not use, rent, sell or
authorize the use of the names and addresses supplied by Customer.
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This provision shall survive the termination of this Agreement.
13. Company hereby agrees to indemnify Customer, its directors, officers,
employees, and corporate affiliates (the "indemnified parties"), and hold
them harmless against and pay on their behalf any sums which any of them
shall become legally obligated to pay as damages, fines, interest, and
judgments which directly or indirectly arise from or are caused by the
wrongful or negligent acts or omissions of Company or its directors,
officers, employees and corporate affiliates, as well as any reasonable
attorney's fees, costs and expenses incurred. It is a condition precedent
to the obligations of Company under this Paragraph that any indemnified
party who is being indemnified hereunder shall cooperate in such defense.
Notwithstanding the indemnification provided herein, it is specifically
agreed that Customer shall participate on a pro rata basis with regard to
any premium refunds or rebates made by Company which may be occasioned by
any claim, controversy, dispute, lawsuit, or administrative proceeding.
14. It is a condition precedent to payment of any amounts under this Agreement
by Company that Customer shall certify in writing to Company that all
known claims have been reported to Company. It is understood and agreed,
however, that no waiver of this condition precedent shall result should
Company fail to require such certification of claims.
15. This Agreement together with any insurance programs designated by the
parties shall constitute the entire contract between the parties and there
are no other agreements, oral or written, prior to or contemporaneous with
this Agreement, other than that stated herein.
16. This Agreement has been executed in a number of Counterparts, any of which
may be taken as an original.
17. This Agreement is executed on behalf of Company and Customer by the
authorized signatures on the Schedule A(s) attached hereto.
18. Customer may assign its right to receive any monies due or to become due
from Company under this Agreement or any of its addenda, including but not
limited to Expense Reimbursement, to any affiliate of Customer, including
any affiliated insurance agent or agency, or any other individual or
entity authorized to sell or receive compensation for the sale of any of
the insurance products covered by this Service Expense Reimbursement
Agreement. An affiliate shall be a parent, a wholly owned or controlled
subsidiary of Customer or any affiliate which is under the same common
control or ownership as Customer. Notice of assignment shall be given to
Company, in writing. Such assignment shall not be binding on Company and
shall be of no effect until and unless Company acknowledges, in writing,
such assignment. Payment by Company of any amount due by Company under
this Agreement or any of its addenda to the assignee shall release Company
of any obligation to Customer for the amount paid. No subsequent
revocation of an assignment shall be binding on Company until and unless
Company acknowledges such revocation in writing.
5
In addition, simultaneous with such assignment, Customer may delegate to
any such affiliate any administrative duties of Customer that can be
performed under this Agreement by such affiliate. Written notice of such
delegation shall be given to Company. Neither the giving of such notice or
Company's acknowledgment or consent to such delegation shall release
Customer from any responsibility for performance of any duties or
obligations under this Agreement or any of its addenda.
19. In consideration of the mutual promises and covenants contained in this
Service Expense Reimbursement Agreement, American Bankers Insurance
Company hereby guarantees to Customer, its affiliates and subsidiaries the
performance by Company of all of Company's obligations contained in the
Service Expense Reimbursement Agreement and any and all future amendments
or schedules thereto.
20. The following Schedules and/or Addendas are attached to and made a part of
this Agreement at its inception:
--------------------------------------------------------------------------------
Name of Schedule or Addenda: Form Number
--------------------------------------------------------------------------------
Service Expense Reimbursement Agreement- SERA/SCH.A/9-10-94
Schedule A
--------------------------------------------------------------------------------
Service Expense Reimbursement Agreement- S:\ASSIST\XXXXXXXX\CAICONT.XXX
Group Experience Rating/Contingent
Compensation Addendum
--------------------------------------------------------------------------------
VLIC Voyager Life Insurance Company
VPCIC Voyager Property & Casualty Insurance Company
ABLAC American Bankers Life Assurance Company of Florida
R&F Ranchers & Farmers County Mutual Insurance Company
s:\assist\xxxxxxxx\caisera.xxx
6
SERVICE EXPENSE REIMBURSEMENT AGREEMENT
SCHEDULE A
This Schedule is attached to and by `reference made a part of the Service
Expense Reimbursement Agreement indicated above between the insurance companies,
managers and agencies named below, hereinafter referred to as "Company", and CAl
Credit Insurance Agency, Inc., hereinafter referred to as "customer", dated July
1, 1998. This Schedule is effective July 1, 1998.
NOW THEREFORE, IT IS MUTUALLY UNDERSTOOD AND AGREED AS FOLLOWS:
1. Customer has agreed to offer, on Company's behalf, types of
insurance as shown in Paragraph 2 to Participants, borrowers,
members, customers or lessees of:
CAI CREDIT INSURANCE AGENCY, INC.
2. Customer has agreed to provide services in connection with the types
of insurance shown in the states listed with maximums as shown and
for the Expense Reimbursement rate shown, which may be either a
fixed amount or a percent of net premiums written. (gross premiums
less cancellations):
-----------------------------------------------------------------------------------------
Expense Monthly
Company* Insurance Type State Reimbursement Coverage Benefits Term
Rate
-----------------------------------------------------------------------------------------
VLIC Credit Life-SP LA 35% $20,000 N/A 60 Mos.
-----------------------------------------------------------------------------------------
VLIC Credit Life - MOB LA 35% $20,000 N/A 1 Mo.
-----------------------------------------------------------------------------------------
VLIC Credit Accident & Health - LA 35% N/A $800 60 Mos.
SP
-----------------------------------------------------------------------------------------
VLIC Credit Accident & Health - LA 35% N/A $800 1 Mo.
MOB
-----------------------------------------------------------------------------------------
VPCIC Credit Property - SP LA 35% $20,000 N/A 60 Mos.
-----------------------------------------------------------------------------------------
VPCIC Credit Property - MOB LA 35% $20,000 N/A 1 Mo.
-----------------------------------------------------------------------------------------
VPCIC Lease Property LA 35% $10,000 N/A 1 Mo.
-----------------------------------------------------------------------------------------
VPCIC Involuntary Unemployment LA 35% N/A $500 1 Mo.
-----------------------------------------------------------------------------------------
Execution of this Schedule A also constitutes execution of all of the schedules
and/or addendas listed in Paragraph 19 of this Agreement of which this Schedule
A becomes a part.
s:\assist\rnichelle\caiscala.S8ITI
7
Executed on behalf of the Company Executed by or on behalf of the Agent
at Fort Worth, Texas, this 00xx xx Xxxxxxxx, Xxxxx, this 21st
day of July ____, 1998. day of July ____, 1998.
AMERICAN BANKERS LIFE
ASSURANCE COMPANY OF FLORIDA
RANCHERS & FARMERS COUNTY CAI CREDIT INSURANCE AGENCY INC.
MUTUAL INSURANCE COMPANY
VOYAGER LIFE INSURANCE COMPANY
VOYAGER PROPERTY AND CASUALTY
INSURANCE COMPANY
By: /s/ Xxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxx
-------------------------- ----------------------------
Title: Authorized Representative Title: President
-------------------------- ----------------------------
Witness:
AMERICAN BANKERS
INSURANCE COMPANY
By: /s/ Xxxx Xxxxxx
--------------------------
Title: Authorized Representative
--------------------------
Witness:
*Initials designate the following companies:
ABLAC American Bankers Life Assurance Company of Florida
R&F Ranchers & Farmers County Mutual Insurance Company
VLIC Voyager Life Insurance Company
VPCIC Voyager Property & Casualty Insurance Company
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SERVICE EXPENSE REIMBURSEMENT A GREEMENT
GROUP EXPERIENCE RATING/CONTINGENT COMPENSATION ADDENDUM
THIS ADDENDUM is attached to and by reference made a part of the Service Expense
Reimbursement Agreement indicated above between the insurance companies,
managers and agencies named below, hereinafter referred to as "Company", and CAI
Credit Insurance Agency, Inc., hereinafter referred to as "Customer", dated July
1, 1998. This Addendum is effective July 1, 1998.
NOW THEREFORE, IT IS MUTUALLY UNDERSTOOD AND AGREED AS FOLLOWS:
A. Within 10 days after August 1, 1998 (such date hereinafter deemed the
"accounting date"), and within 10 days after each month thereafter while
said Service Expense Reimbursement Agreement is in force, Company agrees
to return a Group Experience Rating/Contingent Compensation Credit on the
coverages written under said Agreement as follows:
(1) The cumulative earned premiums written in the State of Louisiana for
each type of insurance shown in Paragraph H of this Addendum will be
multiplied by the percent shown in Paragraph H for each type of
insurance and from the product of this multiplication there shall be
deducted the sum of the following items for each type of insurance:
a) The cumulative total of all losses and loss expenses,
including all allocated loss adjustment expenses incurred, and
b) All reserves, and
c) The cumulative total of all earned expense reimbursements,
paid or allowed Customer by Company, and
d) The cumulative total of all amounts previously paid to
Customer in accordance with this Addendum.
(2) "Losses" include, but are not limited to, any amounts Company
becomes obligated to pay to any third party arising out of or
related to claims made under coverages under this Agreement,
including, but not limited to, damages, court awards or judgments or
any kind or nature assessed against Company.
For purposes of this Addendum, any amounts accumulated under that certain
Group Experience Rating/Contingent Compensation Credit Addendum, made
effective December 30, 1994, from the sale of the above described
insurance in Louisiana shall be included in the calculations of the Group
Experience Rating/Contingent Compensation Credit in this Paragraph A.
B. If the combined remainder computed in Paragraph A for all types of
insurance shown in Paragraph H is a positive figure, Company shall pay to
Customer the amount of such remainder provided that all premiums then due
Company shall have been received by Company. If the combined remainder
computed in Paragraph A for all types of insurance shown in Paragraph H is
a negative figure, the negative figure shall be carried over to subsequent
accountings against any amounts that otherwise become payable to Customer
under aforesaid formula. Company reserves the right to require Customer to
repay any Group Experience Rating/Contingent Compensation Credit received
because of errors in calculations or in the event of retroactive
reductions in premium rates mandated by state regulatory authorities.
9
C. The Group Experience Rating/Contingent Compensation Credit to be paid
under this Addendum shall not exceed the maximum amount promulgated by the
insurance statutes and regulations of the state wherein the business is
written.
D. Payments made under the provisions of this Addendum by Company to Customer
shall discharge Company's obligation hereunder for the amounts so paid.
E. Company reserves the right to offset any amounts due to or from Customer
under this Agreement and its Schedules and Addenda (if any) for Credit
Life, Credit Accident & Health, Credit Property, and Leased Property
insurance against any amounts due to or from Customer under this or any
agreements Customer may have from time to time with Company and/or any
other subsidiaries or affiliates of American Bankers Insurance Group, Inc.
The Customer will have thirty (30 days) to challenge any amounts due
Company prior to such offset being made and, if challenged, no offsets
will be made. The issue will be referred to arbitration as in Paragraph 10
of the S.E.R.A. agreement.
F. It is a condition precedent to payment of any amounts under this Addendum
by Company that Customer shall certify in writing to Company that all
known claims have been reported to Company. It is understood and agreed,
however, that no waiver of this condition precedent shall result should
Company fail to require such certification of claims.
G. In the event of termination of the Service Expense Reimbursement
Agreement, Company shall continue to pay expense reimbursement payments as
outlined in Section A of this Addendum. However, in the event of a
"deficit", which is deemed to exist any time the result of the calculation
under the provision of paragraph A of this Addendum is a negative number,
Customer shall pay the amount of said deficit to the Company within 10
days of receiving the respective monthly statement.
When all policy and/or certificate liabilities, including losses and loss
adjustment expenses have been terminated by expiration, cancellation or
prepayment, Company shall render a final accounting to Customer, Company
may withhold payment for this final accounting until customer has
certified in writing to Company that all known claims against company
shall have been duly reported to Company.
H. It is hereby understood that Paragraph A pertains to only the following
types of insurance, at the indicated percent rates as shown for each type
of insurance.
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--------------------------------------------------------------------------------
Type of Insurance Percent Rate
--------------------------------------------------------------------------------
Credit Life 90%
--------------------------------------------------------------------------------
Credit Accident & Health 90%
--------------------------------------------------------------------------------
Credit Property 90%
--------------------------------------------------------------------------------
Involuntary Unemployment Ins. 90%
--------------------------------------------------------------------------------
Leased Property 90%
--------------------------------------------------------------------------------
I. Until such time as this Agreement is terminated, Company agrees to pay
Customer investment income on the cash held by the Company, at the
interest rate of a one year CD, at Chase Bank Texas National Association's
main Fort Worth, Texas branch. The cash held by the Company shall be
calculated according to the following formula:
90% of the cumulative net written premium
Less: the cumulative losses and loss expenses paid;
the cumulative advance commissions paid or retained;
and the cumulative contingent commissions paid or due.
Equals cash held by Company.
Such investment income will be paid within thirty (30) days of the end of
each calendar quarter based on the average of the cash held by Company at
the beginning and end of the prior quarter.
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s:\assist\rnichelle\caiscala.S8ITI
Executed on behalf of the Company Executed by or on behalf of the Agent
at Fort Worth, Texas, this 00xx xx Xxxxxxxx, Xxxxx, this 21st
day of July ____, 1998. day of July ____, 1998.
AMERICAN BANKERS LIFE
ASSURANCE COMPANY OF FLORIDA
RANCHERS & FARMERS COUNTY CAI CREDIT INSURANCE AGENCY INC.
MUTUAL INSURANCE COMPANY
VOYAGER LIFE INSURANCE COMPANY
VOYAGER PROPERTY AND CASUALTY
INSURANCE COMPANY
By: /s/ Xxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxx
------------------------- -----------------------------
Title: Authorized Representative Title: President
------------------------- -----------------------------
Witness:
*Initials designate the following companies:
ABLAC American Bankers Life Assurance Company of Florida
R&F Ranchers & Farmers County Mutual Insurance Company
VLIC Voyager Life Insurance Company
VPCIC Voyager Property & Casualty Insurance Company
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