EXHIBIT 10(c)
PROCESSING SERVICES AGREEMENT
This Processing Services Agreement, effective as of July 1, 2003 at 12:01
a.m. ("Effective Date"), is by and between CGI Information Systems &
Management Consultants, Inc. ("CGI"), with a principal place of business at
000 Xxxxxxx Xxxxxx, Xxxx Xxxxx, XX 00000, Millers General Agency and
Effective Claims Management, Inc., with a principal place of business at 000
Xxxx Xxxxxx, Xxxxx 0000, Xxxx Xxxxx, XX 00000 ("Client"), collectively
referred to as the "Parties" and individually referred to as a "Party." This
Processing Services Agreement, together with the Schedules and Statements of
Work referenced herein and attached hereto, are collectively referred to as
the "Agreement".
ARTICLE 1.
SERVICES; TERM; FEES
1.1 Services. CGI agrees to provide the services set forth on Schedule 1
("Initial Services") to the Client according to the terms and conditions
set forth in this Agreement. In addition to the Initial Services, CGI
will provide to the Client such other services as the Client may
reasonably request in writing from time to time during the Term and with
respect to which the Parties agree regarding the scope, nature and
pricing of such services and the time period during which such services
will be provided ("Additional Services"). The Initial Services and the
Additional Services are sometimes referred to collectively as the
"Services".
1.2 Additional Services. Additional Services may be performed under this
Agreement by either executing an additional Schedule or a Statement of
Work.
a) Schedules. Once Client and CGI agree to CGI providing additional, on-
going business services, those services, associated service levels,
pricing. and any special conditions will be documented in the form of
a "Schedule." Each Schedule will reference this Agreement and will be
numbered sequentially.
b) Statements of Work. During the initial implementation of the Initial
Services and from time to time thereafter, the Client may elect to
have CGI perform work that is not within the scope of the services
defined in any Schedule. Such work will be agreed upon in writing
("Statement of Work", "SOW") and will be attached to and incorporated
into this Agreement as a separate SOW specifying the start date and
duration of the work, the work to be performed, and any deliverables
to be furnished by CGI. Each SOW shall reference this Agreement and
will be numbered sequentially.
1.3 Service Levels. CGI agrees to make a commercially reasonable effort to
achieve the service levels documented in Schedule 1 for the Initial
Services and any service levels documented in further Schedules defining
Additional Services.
1.4 Term. The term during which CGI will provide the Initial Services to
Client will commence on the Effective Date and will expire three years
from the Effective Date (or as such date may be extended pursuant to this
Section, the "Expiration Date") unless extended or terminated pursuant to
the terms of this Agreement (the "Term"). The Expiration Date will be
extended automatically for a period of one (1) year unless either Party
gives written notice of non-extension to the other Party at least six (6)
months prior to the then current Expiration Date. If services defined in
any Schedule or SOW that extends beyond the Expiration Date, this
Agreement will extend, for only those services, until such time as the
services or service request is completed.
1.5 Service Fees and Payments.
a) Service Fees. During the Term, Client will pay to CGI for the
performance of the Initial Services the fees set forth in Schedule 1
and the fees for Additional Services established in either a Schedule
or SOW ("Service Fees").
b) Payment. CGI will invoice Client within 15 days after the end of the
month for services rendered during the prior month. Client will remit
all payments due to CGI for services rendered within 15 days of
receipt of such invoice.
c) Interest on Past Due Payments. Any undisputed sum due CGI pursuant to
this Agreement that is not paid within 15 days of when payment is due
shall bear interest from that date until the date such sum is paid at
the lesser of 1.5 percent per month or the maximum rate of interest
allowed by applicable law. Client will also pay CGI for any reasonable
expenses, including attorney's fees, incurred by CGI in the collection
of any amounts due and payable under this Agreement.
d) Payment Disputes. Any disagreement between the parties with respect to
payments shall be notified to the other party and the parties shall
initially meet to resolve any such dispute. If the parties are unable
to resolve the dispute within five (5) business days of the initial
meeting, either party may submit such claim to arbitration pursuant to
the disputes clause specified in Section 19. In the event that there
is an amount in dispute, Client is still obligated to pay all
undisputed amounts on all invoices.
e) Electronic Funds Transfer. CGI will provide Client bank routing
information. All payments are to be via Electronic Funds Transfer
(EFT), unless otherwise agreed to in writing by the parties, to the
account specified in writing by CGI.
1.6 Unanticipated and Increased Service Level Changes. Each Party agrees to
negotiate in good faith for an adjustment to the Services Fees in the
event of any statutory, regulatory or judicial changes that require
additional activities not then provided for pursuant to this Agreement.
1.7 Taxes. Client shall be responsible for any tariffs and taxes, however
designated or levied, now existing or imposed in the future that are
applicable to the Services. Such tariffs and taxes include state and
local privilege and excise taxes, sales taxes, and any other tariff or
tax based on Services performed.
1.8 Travel. If approved by Client in writing, CGI personnel will undertake
reasonable travel necessary for the performance of the Services. CGI
personnel will make travel arrangements and incur travel expenses
necessary for performance of the Services pursuant to the terms of CGI's
then current Travel and Expense Policy. Expenses will be billed to the
Client at cost. Travel fees will be invoiced monthly as appropriate.
ARTICLE 2
REPRESENTATION AND WARRANTIES OF CLIENT
Client represents and warrants that the statements contained in this Article
are correct and complete as of the Effective Date.
2.1 Corporate Status; Qualification. Client is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Texas. There is no pending or, to the Client's knowledge,
threatened proceeding for the dissolution, liquidation, insolvency or
rehabilitation of Client. Client 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.
2.2 Corporate Power and Authority. Client has the corporate power and
authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby. Client 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.
2.3 Enforceability. This Agreement has been duly executed and delivered by
Client and constitutes a legal, valid and binding obligation of Client
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 3
REPRESENTATIONS AND WARRANTIES OF CGI
CGI represents and warrants that the statements contained in this Article
are correct and complete as of the Effective Date.
3.1 Corporate Status; Qualification. CGI is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. There is no pending or, to CGI's knowledge, threatened
proceeding for the dissolution, liquidation, insolvency or rehabilitation
of CGI. CGI 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.
3.2 Corporate Power and Authority. CGI has the corporate power and
authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby. CGI 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.
3.3 Enforceability. This Agreement has been duly executed and delivered by
CGI and constitutes a legal, valid and binding obligation of CGI
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 4
PERFORMANCE OF SERVICES
4.1 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 such
Party's 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.
4.2 Access to Records and Facilities. CGI will provide Client reasonable
access to its facilities and all books, records and accounts, in a format
readable by the Client and necessary to verify compliance with this
Agreement. Such access will be made available upon prior written notice
during normal business hours for the Term of this Agreement and during
the periods in which CGI is required to maintain such records. CGI will
provide the appropriate state insurance department reasonable access to
its facilities and all necessary books, records and accounts in a form
usable by such department. Client remains responsible for ensuring that
all persons given access comply with the confidentiality provisions of
Article V.
4.3 Ownership of Property.
a) Client's Property. Client will own all right, title, and interest in
and to the content of the data, output, files, and computer images
created or developed in connection with, as a result of or incident to
the performance of the Services.
b) CGI's Property. Subject to the immediately foregoing paragraph, CGI
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 CGI in connection with,
as a result of or incident to the performance of the Services.
4.4 Client Responsibilities. Client acknowledges that CGI's performance of
the Services requires the support and cooperation of Client. As such,
Client agrees to cooperate with CGI, and will perform the duties in a
timely manner. Client will provide any information, data and/or
documentation (collectively, "Data") that CGI reasonably requests from
Client that is necessary for CGI to properly perform its obligations
hereunder. Such Data shall be provided by Client in the form and by the
dates mutually agreed upon, and shall be kept confidential by CGI in
accordance with this Agreement. To reduce the possibility of delays,
errors or inaccuracies, CGI agrees to promptly assess such Data received
from Client with respect to the accuracy and usability thereof and to
notify Client within a commercially reasonable timeframe not to exceed 10
business days or other mutually agreed upon timeframe of any resultant
impact on CGI performance of the Services. Thereafter, CGI shall not be
liable for any Client caused delays, errors or inaccuracies, the
potential for which proper notification was given to Client. CGI shall be
entitled to appropriate adjustments (pricing, scheduling, etc.) resulting
from such delays, errors or inaccuracies. In the event that Client fails
to perform its duties in a timely manner and such delays require
modifications related to CGI's performance of the Services, then any
costs associated therewith shall be the responsibility of Client and CGI
shall be entitled to appropriate adjustments resulting from such failure
by Client.
4.5 Maintenance of Documents and Files. During the Term, CGI will maintain
appropriate documents and files as required. CGI will not destroy these
documents and files without the written permission of Client for a period
of at least ten years from the loss or termination date of the applicable
policy, or the period specified by the applicable state or federal
statute regulating preservation of records, whichever is longer. CGI may,
at its discretion, use magnetic, optical, and other types of technology
to store such data.
4.6 Commercially Reasonable Efforts. Each Party will use its commercially
reasonable efforts to satisfy its respective obligations hereunder.
4.7 Insurance. During the Term, CGI will maintain errors and omissions
insurance under a current and paid up policy, effective as of the
Effective Date, issued by an insurer reasonably acceptable to Client,
which insurance will have a policy limit of no less than $5,000,000 and a
deductible no greater than $500,000. If CGI fails to maintain coverage or
incurs a lapse in coverage, Client may purchase tail coverage (at CGI's
expense) in the amount set forth herein. CGI will provide a copy of said
insurance policy to Client and annually provide to Client a certificate
of insurance issued by CGI's carrier. Client will be named as an
additional insured to CGI's errors and omissions policy.
ARTICLE 5
CONFIDENTIALITY
5.1 Definitions. For purposes of this Article definitions will apply:
a) "Affiliate" means a company that has a 50% or more ownership interest
in another company or a company in which another company has 50% or
more ownership interest.
b) "Client" means Client and its directors, officers, and
Representatives, but in no circumstances includes a third party
competitor of CGI.
c) "CGI" means CGI, its Affiliates, any parent corporation or
subsidiaries, directors, officers, and Representatives.
d) "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
contemplated Transaction. 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, Client information and lists, vendor sources, development and
marketing plans, statistical data, forecasts, marketing strategies, or
other commercial, technical, strategic or human resources information,
and know how obtained from the foregoing. 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.
e) "Disclosing Party" means Client or CGI, as the case may be, with
respect to any Confidential Information provided by such party to the
other party.
f) "Receiving Party" means Client or CGI, as the case may be, with respect
to any Confidential Information received by such party from the other
party.
g) "Representative" means any employee, agent, attorney, accountant,
financial advisor or other person acting on behalf of a party under a
contractual relationship in connection with this Agreement.
5.2 Nondisclosure. The Parties hereby agree as follows:
a) Use of Information. All Confidential Information will be used solely
for the purpose of performing of the Services. In no event will
Confidential Information be used by any party or person receiving
Confidential Information for business or competitive purposes.
b) Confidentiality. All Confidential Information will be kept strictly
confidential by the Receiving Party and the Receiving Party will restrict
disclosure of Confidential Information to only those employees, agents
and advisors of the Receiving Party who have a need to know such
information for the purpose of performing the Services.
c) Disclosure to Representatives. Representatives of the Receiving Party
shall be informed by the Receiving Party of the confidential nature of
such information and the covenant of confidentiality by the Receiving
Party hereunder, and they shall be directed by the Receiving Party to
treat such information confidentially. Before any disclosure or
dissemination of any Confidential Information subject to this Agreement
is made to any person, other than an officer, director, or employee of
the Receiving Party or its counsel or independent accountant, the person
to whom such disclosure is made shall execute a confidentiality and non-
disclosure agreement in favor of, and in form acceptable to, the
Disclosing Party.
5.3 No Solicitation. Each Party acknowledges that the other Party makes a
substantial investment in the training and development of its employees
and each Party therefore agrees, during the term of this agreement and
for a period of twelve (12) months thereafter, not to hire, either
directly or indirectly, whether through solicitation or otherwise, any
employee of the other Party without the other Party's prior express
written consent. If a Party hires such an employee within 90 days of that
employee's employment separation from the former employer, the acquiring
Party agrees to compensate the other party in an amount equal to twelve
(12) months of that that employee's annual compensation.
5.4 Required Disclosure. In the event the Receiving Party or its
Representatives are requested or required in a judicial, administrative
or governmental proceeding to disclose any Confidential Information, the
Receiving 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.
5.5 Return of Confidential Information. Upon the expiration or termination
of this Agreement, the Receiving Party shall promptly, and in any event
upon request by the Disclosing Party, deliver to the Disclosing Party all
Confidential Information, including all written and electronically stored
copies in a form and by the dates mutually agreed upon. Neither the
Disclosing Party nor its Representatives will retain any copies, extracts
or other reproductions, in whole or in part, of such Confidential
Information except where such Confidential Information is stored by CGI
as part of its process of copying data for disaster recovery purposes. 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.
5.6 Remedies for Breach. The Parties acknowledge that a breach of the
covenant of confidentiality contained in this Article 5 will result in
irreparable and continuing damage to the Disclosing Party for which there
will be no adequate remedy at law. In the event of any breach of the
covenant of confidentiality, the Receiving Party agrees that the
Disclosing Party shall be entitled to seek and obtain specific
performance of the covenants set forth in section 5.2 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.
5.7 Survival. THE OBLIGATIONS UNDER THIS ARTICLE V WILL CONTINUE AFTER THIS
AGREEMENT EXPIRES OR IS TERMINATED.
ARTICLE 6
TRADE SECRET AND PROPRIETARY RIGHTS
6.1 No Rights to Software. Notwithstanding CGI's use of its proprietary
computer software programs, or other trade secrets, 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 CGI's computer software programs or other trade secrets.
Further, this Agreement grants to Client no right to possess or
reproduce, or any other interest in, any of the computer software
programs or other trade secrets used in the performance of all or any
part of the Services or their specifications in any tangible or
intangible medium. Client may not mortgage, hypothecate, sell, assign,
pledge, lease, transfer, license, sublicense, provide access to,
decompile, or reverse engineer any computer software programs or other
trade secrets used in the performance of all or any part of the Services,
nor allow any person or entity to transmit, copy, reproduce, use,
decompile, or reverse engineer any such computer software programs or
other trade secrets. In the event Client comes into possession of the
computer software programs or other trade secrets used in the performance
of all or any pad of the Services, Client will immediately notify CGI and
return such computer software programs or other trade secrets and all
copies of any kind thereof to CGI, unless such possession is authorized
in writing by CGI as part of providing the Services.
6.2 Nondisclosure. The Parties acknowledge that the duties related to
protection of trade secrets are often more stringent than those for
protection of other forms of proprietary information. Other than Client's
employees that need access to computer software programs or other trade
secrets for the performance of their duties, Client covenants and agrees
not to. disclose or otherwise make available to any person any computer
software programs or trade secrets used in the performance of all or any
part of the Services. Client agrees to take all reasonable steps
necessary to obligate each of its employees who is given access to such
computer software programs or other trade secrets to a level of care
sufficient to protect the computer software programs or other trade
secrets from unauthorized disclosure, and to comply with all applicable
laws and regulations pertaining to protection of trade secrets.
6.3 Survival. THE OBLIGATION OF CLIENT UNDER THIS ARTICLE WILL CONTINUE
AFTER THIS AGREEMENT EXPIRES OR IS TERMINATED.
ARTICLE 7
TERMINATION
7.1 Termination of Agreement. This Agreement may be terminated prior to the
Expiration Date only as follows:
a) by written notice from the non-breaching Party upon a material breach
by the other Party of its duties or obligations under this Agreement;
provided, however, that (i) such breach remains substantially uncured for
thirty (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 thirty (30) day period, should the defaulting
party fail to proceed within thirty (30) days after written notice
specifying the breach to commence curing the breach and thereafter fails
to proceed with all reasonable diligence to cure substantially the breach;
b) by a Party in the event (i) the other Party makes a general assignment
for the benefit of creditors, (ii) the other Party files a voluntary
petition in bankruptcy or petitions for reorganization or similar
arrangement under the bankruptcy laws, (iii) a petition in bankruptcy is
filed against the other Party by a third party and such petition is not
dismissed within ninety (90) 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; or
c) by Client, upon commission by CGI of fraud, criminal conduct or willful
violation of an insurance statute or regulation, if said conduct by CGI
has a material adverse effect on Client's ability to engage in business.
This paragraph does not apply to conduct by CGI employees who are not
acting at the direction of CGI.
d) In the event CGI commits more than 12 service level non-conforming
incidents within a twelve-month period, as described in Section 1 B2 of
Schedule 1 attached hereto and made a part hereof, whether subsequently
cured or not, client may terminate this Agreement upon thirty (30) days
written notice to CGI.
7.2 Procedure upon Expiration or Termination. Upon expiration or
termination of this Agreement:
a. CGI will transfer all data, files, and images to the Client. This
transfer will be completed in a format mutually acceptable to the
Client and CGI. Client will pay CGI a reasonable fee to be mutually
agreed upon based on the effort for CGI to make the transfer unless the
termination is for a reason defined in section 7.1.c. In that
situation, there will be no transfer fee.
b. Client shall be obligated to pay CGI all amounts due and owing to CGI
through the date of termination or expiration in accordance with the
Payment terms of this Agreement; and
c. Such expiration or termination will not in any way limit, restrict or
relieve any Party of liability for any breach of this Agreement.
d. The parties recognize that upon termination of this Agreement, Client
may require a continuation of certain services necessary for winding
down, running off and/or the smooth transition of business. Such
services shall be provided by CGI as an accommodation to Client at a
price and level of service to be mutually agreed upon. In the absence
of a mutual agreement to the contrary, the accommodation price shall be
fixed at the then current monthly minimum policy processing fee set
forth in Schedule I and the service levels shall remain as set forth in
Schedule 1. The Parties shall mutually agree upon any services and the
fee for such services to affect the transition. The obligation(s)
created under this section 7.2 (d) shall survive the termination of
this Agreement.
ARTICLE 8 - REMEDIES AND LIMITATION OF LIABILITY
8.1 Indemnification of the Parties. Each Party (the "Indemnitor") will
indemnify, defend, and hold harmless any 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 attorney's 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 or any Schedule or Statement of Work attached from time to
time hereto and made a pad hereof. Upon Indemnitee's request, the
Indemnitor will indemnify the Indemnitees 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 an Indemnitee requests the Indemnitor to
indemnify such Party's directors, employees, officers, agents,
attorneys, representatives and shareholders, the Indemnitee will cause
such persons or entities to comply with the indemnification provisions
and abide by the indemnification limitations set forth in this
Agreement.
8.2 Limitations of Liability.
(a) The parties hereby agree that except to the extent otherwise
covered by Professional or General Liability insurance policies issued
to or on behalf of CGI, CGI will only be liable for direct damages, as
defined herein, sustained by Client as a result of CGI's breach of
this Agreement whether such breach is the result of negligence, gross
negligence or willful misconduct in the performance of the services
provided in the Agreement and/or any Schedule or Statement of Work
attached from time to time hereto and made a part hereof provided
however, that CGI will not be deemed to have been grossly negligent in
connection with any action or any failure to take an action, taken at
the direction of Client. For the purposes of this Agreement, direct
damages are defined as those damages which usually, naturally and
necessarily flow from a wrongful act or breach and are of a nature
that the mere allegation of breach gives sufficient notice to the
breaching party that they will result from that party's breach of this
Agreement. Direct damages will include, by way of example only:
additional operational expenses, remedial expenses, mitigation
expenses, and cover damages.
(b) In no event, except when covered by liability insurance, shall a
party be liable for any consequential, indirect, punitive, exemplary,
incidental, multiple or special damages with respect to any breach of
this agreement; provided, however, that this subsection will not limit
the amount of a Claim for indemnification (as opposed to a Claim for
damages) which is based on an amount paid by an Indemnitee to a third
party that contains consequential, incidental, punitive, or special
damages as a component of such amount paid by the Indemnitee to the
third party.
(c) Notwithstanding subsections (a) and (b) above, CGI's liability for
damages on a per claim basis shall not exceed the greater of either
the amounts which were paid to CGI during the eighteen (18) month
period prior to the event which is subject to the claim or, if 18
monthly payments have not yet been received by CGI, the total amount
of those previously received payments plus those anticipated to be
made into the future until a total of 18 monthly payments would have
been received.
8.3 Limitation Acknowledgment. Each Party expressly acknowledges that the
limitations set forth in this Article represent the express agreement of
the Parties with respect to the allocation of risks between the Parties,
including the level of risk to be associated with the performance of the
Services as related to the amount of payment to be made to CGI for such
Services, and each Party fully understand and irrevocably accepts such
limitations.
8.4 Notice of Claim. My award of damages or indemnification pursuant to this
Agreement is conditioned upon the Indemnitor having received full
written notice within 3 business days of receipt of the Claim by
Indemnitee and the Indemnitee allowing the Indemnitor to fully direct
the defense or settlement of such Claim; provided, however, that the
failure to receive notice as required in this section 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 and such consent shall not be unreasonably withheld
or delayed.
ARTICLE 9
ARBITRATION AND EQUITABLE REMEDIES
9.1 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 or does not avail itself to a Settlement Meeting within twenty
days after delivery of a notice of dispute the other Party may proceed
to seek such remedy.
9.2 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 (AAA) (the "Arbitration Rules").
The decision of a majority of the panel will be the decision of the
arbitrators.
9.3 Arbitration Notice. To submit a monetary dispute to arbitration, a
Party shall furnish the other Parties and the AAA 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.
9.4 Selection of Arbitrators. Within ten days after delivery of the
Arbitration Notice, each Party shall 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 two arbitrators,
those two arbitrators will select the third arbitrator from such list
and two alternates, and each party shall have one veto, to use at its
sole discretion, to disqualify a selected third arbitrator, in which
case, the two arbitrators will select from the remaining alternate
arbitrators. If the first two arbitrators cannot select a third
arbitrator and two alternate arbitrators within such ten day period, the
AAA will select such third arbitrator from the list and neither party
shall have veto power over such AAA selected third arbitrator. 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.
9.5 Arbitration Final. The arbitration of the matters in controversy and the
determination of any amount of damages or indemnification shall 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.
9.6 Place of Arbitration. Any arbitration proceedings will be conducted at
such location as the Parties may agree. If the parties cannot agree on a
mutually acceptable location, the location of the arbitration shall in
Fort Worth, Texas. The arbitrators will hold the arbitration proceedings
within sixty (60) days after the selection of the third arbitrator.
9.7 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.
9.8 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.
9.9 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.
9.10 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.
9.11 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.
9.12 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 10
MISCELLANEOUS
10.1 Amendment. No amendment of this Agreement will be effective unless in
writing, signed by the Parties.
10.2 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.
10.3 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.
10.4 Expenses. Each Party will bear its own expenses with respect to the
negotiation and preparation of this Agreement.
10.5 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Texas, without regard to the
conflicts of laws, principles or provisions thereof; Each Party submits
to the exclusive jurisdiction and venue of the State of Texas.
10.6 No Assignment. Neither Party may assign its benefits or delegate its
duties under this Agreement without the prior consent of the other
Party; provided, however, that Client may assign its rights and delegate
its duties under this Agreement to an affiliated entity without CGI's
consent, but with prior notice to CGI. 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 any third party which acquires (through purchase,
merger, reorganization or other combination) all or substantially all of
the assets or equity of such Party without the other Party's consent,
but with notice to the other Party.
10.7 No Third Party Beneficiaries. This Agreement is solely for the benefit
of the Parties and no other Person will have any right, interest, or
claim under this Agreement.
10.8 Public Announcements. The Parties will agree on the terms of any press
releases or other public announcements related to this Agreement, and
will consult with each other before issuing any press releases or other
public announcements related to this Agreement; provided, however, that
any Party may make a public disclosure if in the opinion of such Party's
counsel it is required by law or the rules of any applicable stock
exchange or dealer quotation system to make such disclosure. The Parties
agree, to the extent practicable, to consult with each other regarding
any such public announcement in advance thereof. The Parties may,
however, include the other Party and the Party's logos on any serial
list of clients and are not prohibited from discussing the general
existence of the relationship.
10.9 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.
10.10 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.
10.11 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.
10.12 Time of the Essence. Time is of the essence in the performance of
this Agreement and all dates and periods specified in this Agreement.
10.13 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.
10.14 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, acts of terrorism, civil or military authority, labor disputes,
shortages of suitable materials, labor or transportation or any similar
cause beyond the reasonable control of the Parties.
10.15 Attorney's Fees. In the event of any action, arbitration, claim,
proceeding or suit between Client and CGI 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.
10.16 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 ventures.
10.17 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.
10.18 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by theft duly authorized representatives as of the day
and year first written above.
CGI Information Systems & Management Consultants, Inc.
/s/ Xxxxxxx X. Xxxxxx
---------------------
Authorized Signature
Xxxxxxx X. Xxxxxx
---------------------
Name
SVP 8/22/03
---------------------
Title Date
Customer Company
/s/ Xxxxx Xxxxxx
---------------------
Authorized Signature
Xxxxx Xxxxxx
---------------------
Name
President 8/22/03
---------------------
Title Date
PROCESSING SERVICES AGREEMENT - SCHEDULE 1
POLICY PROCESSING SERVICES
This Schedule is an attachment to the Processing Services Agreement, dated
July 1, 2003, between Client and CGI. CGI will perform the following
services for the Client subject to the provisions to which the Parties have
agreed. This Schedule is effective as of July 1, 2003, 12:01 am.
SECTION 1A
SERVICES
The following is a list of services that CGI will perform on behalf of the
Client.
1. Nightly data processing services for each business day and a monthly
cycle run per a schedule provided by the Client and mutually agreed upon
by CGI.
2. Toll free Help Desk support from 7:00 am to 7:00 pm CST Monday through
Friday (excluding eight holidays) for the resolution of issues with the
services defined in this schedule.
3. Up to 25 hours per month of additional technical support for issues not
related to the services.
4. Client accesses to the system from 7:00 am to 7:00 pm CST Monday through
Saturday (excluding eight holidays)
5. The printing of all data center output such as declaration pages, policy
forms, bills, notices, mail reports, and agency performance reports and
any other documents and reports that CGI printed for the Client as of the
Effective Date of the Agreement
6. System maintenance, as defined by the system not materially conforming
to: a) the base design of the system; and b) any additional modifications
previously implemented by CGI personnel. System components are WPC,
TransFluent and PSP.
7. Non-code change customizations, as may be required by Client, subject to
a maximum of 100 hours per year. Non-code change customizations are
defined as ad-hoc reports that require only the use of query tools and
table changes. When requests exceed 100 hours per year, billing will be
per rate in 1C.7.
8. System code modifications and enhancements up to 100 hours in a calendar
year as may be requested by Client. When requests exceed 100 hours per
year, billing will be at the rate in Section 1C.7.
9. Preparation of a magnetic tape of commission data for Client to prepare
Federal 1099 tax statements for commission paid to agents.
10. Information and statistical data necessary for Client to prepare the
following submissions/calls:
Submission/call Frequency
--------------- ---------
ISO TCLSP quarterly
ISO CMSP quarterly
ISO CSP quarterly
SAA annually
NM X. 12 weekly
Oregon Vin weekly
For the TCLSP filing, CGI creates the files and runs the edit package. For
the CMSP and CSP filings, CGI creates the files, but the Client runs the
edit package. For the SAA filings, CGI creates the files, corrections are
applied by Client, and Client submits the filing. For NM x. 12, CGI sends
the file directly to Clarendon.
a. Only software changes to the WPC and TransFluent systems prompted by
regulatory changes or statistical agent circulars will be billable. All
other activities necessary to support the listed reporting will be
performed as part of the Services.
b. Client will forward to CGI, within a commercially reasonable time
not to exceed 10 business days or other mutually agreed to timeframe,
notification of stat agent circulars and bulletins to ensure CGI has
the necessary time to review and implement any necessary changes
prompted by these circulars and bulletins.
c. Changes or additions to statistical reporting requirements such as
additional statistical agents, changing reporting levels or frequency,
adding new lines of business or states to the reporting service, adding
companies or carriers to the reporting service are not included and
will be provided on a time and materials basis utilizing the 100 hours
allocated for modifications or at the rate in Section IC.6.
d. Client is responsible for bureau affiliation fees, including edit
package affiliations. In the event external edit package processing
is required, this cost will be passed on to the Client.
e. Fines or assessments - CGI will only be liable for fines and
assessments if CGI fails to meet submission due dates. Furthermore, CGI
will not be liable for fines and assessments if submission due dates
are not met because Client does not respond to data error questions or
requests within a commercially reasonable time not to exceed 5 business
days or other mutually agreed to timeframe.
11. Network infrastructure, which includes configuration management,
security, data communications, remote access, Internet access and
maintenance thereof The cost of the communication line between CGI and
Client will be the Client's responsibility.
12. Internet services, ie: browser, file transfer capabilities, and FTP.
Includes VPN capabilities for up to 20 concurrent users and outbound
capabilities for up to 20 concurrent users.
13. E-mail, including user setup, database access, and maintenance of user
setup and database access. Also includes storage up to 12GB.
14. Back-ups of all data located at CGI. Incremental back-ups are performed
daily and fill system back-ups are performed weekly.
15. Offsite storage of back-up tapes created at CGI for disaster recovery
purposes.
16. Hosting and maintenance of financial reporting system - AS400. Used to
produce the Agency Performance Report and the Actuarial Premium and Loss
Statistical File download.
17. Database services for WPC system. Database services on Oracle databases
(does not include Oracle financials application), as follows:
a. Database maintenance, including database reorganization and
resequencing;
b. Performance tuning;
c. Patch analysis and installation;
d. Migration to new Oracle versions;
e. Database backup and recovery;
f Load balancing;
g. Database statistics; and
h. Database communication with third party applications.
18. Desktop support for applications hosted at CGI, for up to 100 PCs
located at one location.
19. Relocation of all Client servers to CGI (Longhorn, Aggie, Reveille,
Citrix, CoverAll Print). Access provided via dedicated TI circuit for
up to 100 users at one Client location. System access provided via thin
Client to Citrix servers at CGI.
20. CoverAll application moved to CGI. Licensing for CoverAll remains a
Client responsibility. CGI will perform necessary database services on
CoverAll Oracle databases similar to those listed in 16.
21. Server maintenance on all servers located at CGI.
22. Applications and data stored on shared Windows 2000 servers. No
dedicated hardware. Maximum storage space allowed on Windows servers is
100GB.
23. CGI maintains server licenses for system at CGI. Client transfers
Citrix and other applicable application licenses to CCL.
24. Disaster recovery for production hardware and servers located at CGI.
Remote access during disaster will be provided via Internet or up to 10
seats at a recovery center.
25. Network fax services will be provided. Outbound long distance charges
will be charged back to Client. Dedicated inbound fax numbers will be
provided for up to 10 users.
26. Agents will be provided access to CoverAll system via Citrix. Up to
5 agents and one concurrent agent will be provided access for each
400 policies processed on the system.
27. WINS System for Inquiry access only. No WINS system images. Licensing
for WINS remains a Client responsibility.
28. Services are to be provided for the states and lines of business that
are currently being processed as of the effective date of this schedule.
SECTION 1B
SERVICE LEVELS
The following is a list of service levels that CGI and the Client will use
to jointly measure the effectiveness of the services.
1. High level time and cost estimates for Client requiring system program
modifications will be completed within 10 working days after written
request.
2. Any one or all of the following categories of services listed below that
are hosted/supported by CGI will be available M-F 7:00 am to 7:00 pm
(excluding Holidays) central time. Any one or all of these service
categories may become unavailable from time to time, provided that
unavailability does not exceed any one of the following service level
non-conforming incident:
a. more than I consecutive business day
b. more than 3 business days within a 12 month period
c. more than 3 four hour outages in the same calendar month.
Each service level non-conforming incident will be documented by the Client
and reported to CGI in writing. Once 3 service level nonconforming incidents
have been reached, each subsequent service level non-conforming incident
will result in a credit to Client in the amount equal to 1% of the current
months' service fees.
Client recognizes that CCL may need to make systems unavailable for
maintenance from time to time. When this occurs and CGI provides Client with
notice in a reasonable timeframe not to exceed 48 hours or other mutually
agreed upon timeframe, this will not be considered a service level non-
conforming incident and will not be subject to a fee penalty.
Client and CGI agree that certain events may be beyond CGI's reasonable
control. If such an event occurs, CGI and Client agreed that the
interruption of service caused by such event shall not be considered
a service level non-conforming incident.
Services this clause applies to:
Policy Processing: includes rating, quoting, policy issuance, forms
generation, and endorsement processing.
Claims Processing: includes logging, adjusting, claims payments, and
closing claims.
Premium Billing: includes generating xxxxxxxx, accepting payments, and
generating accounts receivable.
Reporting: includes providing access to systems databases for the purpose
of report development and processing and producing reports as agreed upon
by Client and CGI.
Email: includes sending and receiving electronic mail messages both
inside and outside the company and access to shared calendaring and Lotus
Notes document management databases.
Network Access: includes access to all network accessible files,
databases and printers.
Internet Access: general access to the World Wide Web.
Security: includes local area network security and appropriate internet
firewall management to prevent access to Client systems or data by
unauthorized users or introduction of viruses from reasonably preventable
attacks.
Network Administration: includes activities to create, modify and support
network-connected users and devices as required.
VPN Access: provides remote access to users as agreed to by Client and
CGI.
Affiliate Connectivity: VPN support for permanent site connectivity
between Client and all associated affiliates.
3. The average system response time between entry screens within the WPC
system will be less than three seconds as measured at CGI site. CGI will
run Packeteer software to monitor performance. The software will measure
daily performance. Any day where performance does not average less than
three seconds for the WPC entry screens will be deemed a service level
non-conforming incident. If this occurs more than 5 times in a 12-month
period each subsequent occurrence will constitute a service level non-
conforming incident and will be subject to the same fee penalty listed
in item 2 above.
4. CGI recognizes that the Client perceives risk if CGI should decide to
move the processing center from Fort Worth. If CGI should decide to
relocate its data center from Fort Worth, the penalty for any service
level non-conformance issues will be doubled.
5. During the hours of Help Desk Coverage, phone calls will be answered
within five minutes and c-mails will be responded to
within an hour, 95% of the time.
6. Rate changes involving table changes only will be programmed and tested
within 20 business days after Client provides the required documentation.
Code/algorithm changes will be handled via a Statement of Work.
7. Except for Clarendon Pre-processor, which is addressed below, month end
system processing will be completed within 24 hours after the end of the
day on the established close date. Close dates will be defined for each
month of the calendar year by a document provided by the Client to CGI.
8. Clarendon Pre-processor will be completed and submitted to Client by the
5th calendar day following the established close date.
9. Commission and claim data required for 1099 reporting will be available
within 10 business days after the end of the year.
SECTION 1C
SERVICE FEES
1. The first 10,000 policies will be $6.75 per in-force policy per month.
2. All policies over 10,000 will be $5.55 per in-force policy per month.
3. Monthly per-policy fees are subject to a $45,000 monthly minimum.
4. The price per policy and the rate for time and materials may be changed
effective as of each anniversary date of the Effective Date during the
existence of the agreement by the percentage increase in the United
States Consumer Price index for all Urban Users (CPIU) published by the
United States Bureau of Labor Statistics, for the immediately preceding
calendar year.
5. Fees are not inclusive of any Taxes listed in Article 1.1.7 of the
Processing Services Agreement that this schedule is part of.
6. Any support hours requested beyond the scope of the Services defined in
this Schedule will be billed at $125 per hour.
IN WITNESS WHEREOF, the parties hereto have caused this Schedule to the
Processing Services Agreement to be executed in duplicate by their duly
authorized representatives.
CGI Information Systems & Management Consultants, Inc.
/s/ Xxxxxxx X. Xxxxxx
---------------------
Authorized Signature
Xxxxxxx X. Xxxxxx
---------------------
Name
SVP 8/22/03
---------------------
Title Date
Client Company
/s/ Xxxxx Xxxxxx
---------------------
Authorized Signature
Xxxxx Xxxxxx
---------------------
Name
President 8/22/03
---------------------
Title Date
