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EXHIBIT 10.34
Retainer Agreement Between AIU Crisis Management Division and Xxxxx Associates
In accordance with the Action Plan of the Joint Task Force document, the
Contract details letter of April 19th and Xxxxx'x response of April 23rd
detailing the relevant provisions of the previous retainer agreement of
September 1st, 1994.
Agreement between the parties is hereby reached.
Copies of the relevant documents are attached.
AIU Crisis Management Division Xxxxx Associates, Inc.
By: /s/ Xxx Xxxxxxxx By: /s/ Xxxxxxx X. XxXxxxxxx
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Xxx Xxxxxxxx Xxxxxxx X. XxXxxxxxx
Title: Vice President Title: Managing Director
5/3/96 5/3/96
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KROLL ASSOCIATES
MEMORANDUM
MEMORANDUM
TO: Xxx Xxxxxxxx
FROM: Xxxxxxx X. XxXxxxxxx
DATE: April 15, 1996
RE: AIU and Kroll Crisis Management Plan
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
After Xxxx Xxxxxxxxx gave his approval for the Plan as submitted on 4/11/96, the
following administrative issues were discussed and agreed upon at the 4/11 AIU
meeting.
1. The contract will start 4/1/96 and will run until 11/30/98. There will be
annual reviews to determine if modifications are necessary.
2. The 1996 retainer, $2,280,000.00, (4% of the 1995 AIU Special Services
gross written premium, $57,000,000.00), will be paid quarterly in advance,
on the first day of the quarter. We are using the AIU calendar year which
began on 12/1/95. There will be no payment for the first quarter. The
first payment, due 4/1/96, comprises only two months of the second quarter
or $380,000.00.
The two subsequent quarterly payments, during 1996 will be $570,000.00
each. The total to be paid for 1996 will be $1,520,000.00.
3. Kroll will charge AIU a response fee of $1,500.00 per day for all response
up to 250 days. All response after that will be charged at $1,200.00 per
day. Expenses will be as incurred, without xxxx-up. There will be no 7%
surcharge.
4. Kroll Marketing fees and expenses will be funded from the retainer. This
includes employees and contractors. There will only be two exceptions. In
Latin America where language requirements will necessitate heavy use of
consultants, Kroll and AIU will split these consultant fees and expenses,
50/50.
Additionally, the nine middle market contractors will work off their
$6,000.00 retainers against marketing fees. If they should exceed the
$6,000.00 because of heavy marketing, then these additional fees will be
charged at cost.
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RETAINER AGREEMENT
This Agreement entered into as of September 1, 1994 by and between AIU
Specialty Lines Group ("Specialty Lines") and Xxxxx Associates, Inc. ("Kroll").
WHEREAS, Specialty Lines is in the business of insurance underwriting;
WHEREAS, certain of Specialty Lines' affiliated companies are in the
business of providing insurance coverage;
WHEREAS, Kroll is in the business of providing consultation and advisory
services, including but not limited to crisis management, loss prevention,
information and research services and matters related thereto (as regards kidnap
and xxxxxx ("K&R"), malicious product tampering incidents ("MPT"), emergency
evacuation ("EE"), and Property, terrorism and sabotage ("PTS"), the
"Services"); and
WHEREAS, Specialty Lines desires to retain Kroll to provide Services to
Specialty Lines' insureds and to perform Services for Specialty Lines and its
affiliates on the terms and conditions contained herein:
NOW THEREFORE, in consideration of the mutual promises contained herein,
Specialty Lines and Kroll agree as follows:
I.
PAYMENTS
Specialty Lines shall pay Kroll an annual amount (the "Annual Amount")
equal to $350,000 for each 12-month period following the date of this Agreement,
payable in monthly installments of $29,167 on the last day of each month. In
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accordance with Articles V and VI hereof, Specialty Lines shall also reimburse
Kroll each month, payable on the last day of each month, for the costs incurred
by Kroll in providing the Services in accordance with the rates and terms set
forth on Schedule A hereto.
II.
TERMINATION
Either party may terminate this Agreement effective at the end of any
12-month period following the effective date of this Agreement by giving at
least thirty (30) days prior written notice to the other party. In addition, in
the event of a breach by Kroll of its obligations set forth in Articles V and
VII hereof, Specialty Lines may terminate this Agreement if Kroll has not cured
such breach (or commenced cure, which it is diligently pursuing, if such breach
is not capable of cure within ninety (90) days) of written notice from Specialty
Lines identifying the breach being claimed. Upon termination of this Agreement,
Specialty Lines shall promptly pay to Kroll (prorated based on the effective
date of the termination of this Agreement) any payments owed to Kroll pursuant
to Article I of this Agreement or any addendum hereafter entered into under
which Kroll is to provide Services to Specialty Lines or an affiliated company.
III.
DUTIES OF KROLL
As consideration for the Annual Amount, Kroll shall (i) provide Services
to individuals or entities which have purchased insurance coverage from
Specialty Lines or an affiliated company
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(each, an "Insured") as set forth in Article IV and (ii) provide marketing
support to Specialty Lines as set forth in Article V. In addition, at the
request of Specialty Lines, Kroll shall provide Services to Specialty Lines or
an affiliated company on terms to be agreed upon between the parties.
IV.
SERVICES TO INSUREDS
A. Specialty Lines agrees that Kroll is the specialist consultant of
choice for Specialty Lines' insureds under its K&R, EE, PTS and MPT insurance
policies. As such, Kroll shall be recommended to Insureds by Specialty Lines for
response and pre-incident consulting assignments. At the request of Specialty
Lines, Kroll shall enter into discussions with any Insured concerning the
Services that could be made available to the Insured by Kroll. In addition,
Kroll shall provide a twenty-four (24) hour crises telephone "hotline" in both
the U.S. and the U.K. for Specialty Lines' Insureds to call for assistance in
the event of a PTS, EE, K&R or MPT incident. When requested by an Insured, Kroll
shall respond to such an incident within twenty-four (24) hours of such request
subject only to Xxxxx'x consultant being able to obtain the necessary travel
visa.
B. In accordance with Article I hereof, Specialty Lines will pay Kroll
directly for the Services which it provides to Insureds, except for pre-incident
consulting which will be decided on an individual basis. For pre-incident
consulting, Kroll agrees to charge Insureds $1,500 per day, per person utilized
on a consulting assignment, provided, however, that
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Kroll may, in consultation with Specialty Lines, increase such fees on each
anniversary of the date hereof in such amounts as Kroll reasonably determines
are necessary to reflect an increase in Xxxxx'x costs.
X. Xxxxx agrees that it shall, at the request of Specialty Lines, make the
Services available to an Insured on a guaranteed twenty-four (24) hour priority
basis, any other commitments or agreements of Kroll to the contrary
notwithstanding.
D. During the course of an incident where Kroll is retained by one of
Specialty Lines' Insureds, Kroll shall provide Specialty Lines with oral reports
on a periodic basis but not less than weekly) or as reasonably requested by
Specialty Lines summarizing the status of the incident, provided that the
Insured consents to Xxxxx'x provision of such reports to Specialty Lines (which
consent shall be sought by Kroll or the retained consultant upon arrival at the
incident). At the conclusion of an incident, Kroll shall provide Specialty Lines
with a detailed summary report, outlining the events which occurred during the
course of the incident, provided that the Insured consents to Xxxxx'x provision
of such reports to Specialty Lines (which consent shall be sought by Kroll or
the retained consultant upon arrival at the incident). Particular focus in such
reports shall be placed on the extortionist/tamperer's motives and methods, and
such report shall assess whether the incident was legitimate.
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V.
MARKETING SUPPORT
X. Xxxxx shall provide the personnel listed on Schedule A under the
heading "Marketing Organization" (or such other qualified personnel satisfactory
to Specialty Lines) to provide marketing support services or pre-incident
consulting services to Specialty Lines. Such Marketing Organization personnel
will attend and give presentations and provide other marketing support
activities at seminars, meetings, luncheons and similar events in accordance
with reasonable schedules to be coordinated between Kroll and Specialty Lines,
and requested by Specialty Lines. Kroll agrees that such marketing personnel
will devote to marketing activities (and assistance on responses to incidents at
the request of Specialty Lines) on behalf of Specialty Lines at least the number
of working days indicated under the column headed "Working Days" on Schedule X.
Xxxxx shall provide marketing support in locations other than those specifically
listed in Article VI hereof as and when reasonably requested by Specialty Lines.
B. Each month, on the last day of such month, Specialty Lines shall pay to
Kroll one-twelfth of the total annual cost of such marketing personnel as
indicated on Schedule A. Specialty Lines shall also reimburse Kroll for the cost
of any retained consultants retained by Kroll to provide services pursuant to
this Article V. In addition, if during a 12-month, period any of the Kroll
marketing personnel listed on Schedule A devote to providing Services pursuant
to this Agreement a greater number of working days than indicated under the
Column headed "Working
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Days," Specialty Lines shall reimburse Kroll for the cost of such personnel at
the "Daily Rate" (as defined below) for up to the number of "Additional Working
Days" indicated on Schedule A for such person. The "Daily Rate" for the
applicable person listed on Schedule A shall equal the compensation for such
person divided by the total number of Working Days indicated for such person on
Schedule A. However, if during a 12-month period any of such personnel devotes
to Services pursuant to this Agreement a total number of working days which
exceeds the sum of the Working Days and Additional Working Days indicated on
Schedule A for such person, such excess days shall be paid for by Specialty
Lines at the rate of $1,000 per Working Day. Finally, if Kroll employees other
than those listed on Schedule A are specifically required by Specialty Lines to
provide Services pursuant to this Article V, Specialty Lines shall pay Kroll for
such Services at the rate of $1500 per working day. All of the foregoing
payments shall be made by Specialty Lines to Kroll on a monthly basis on the
last day of the applicable month. For all Services other than response services,
"working days" shall mean Monday through Friday, excluding national holidays of
the U.S.A.
C. Kroll shall endeavor on all occasions where appropriate to recommend
Specialty Lines' products to its clients. Kroll further agrees that it shall do
nothing to cause its clients not to purchase such insurance coverage or to
decline to consider Specialty Lines as a provider of such products. Specialty
Lines shall pay to Kroll, to the extent permitted by law, the applicable
brokerage commission for any policies purchased by
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clients referred by Kroll to Specialty Lines, as long as no other broker is
designated by the Insured for such policies. Kroll and Specialty Lines shall do
all things possible to ensure that payment by Specialty Lines and receipt by
Kroll of brokerage fees shall be proper and legal under all applicable laws.
X. Xxxxx will provide a report each month summarizing the marketing
activities performed by Kroll for Specialty Lines during the applicable month.
X. Xxxxx shall provide brochures outlining Xxxxx'x capabilities with
respect to the Services, and outlining in general terms the problems posed by
these types of crises and various preventive and response measures. Kroll may
provide such other promotional materials as it may deem appropriate to market
the Services offered by it with respect to the K&R, PTS, EE and MPT insurance
products. Specialty Lines shall provide to Kroll all information it may have
concerning the foregoing which may be useful to Kroll in its preparation of such
brochures and promotional materials. Specialty Lines shall have the right to
review samples of all such brochures and materials and to request reasonable
changes thereto prior to production. Specialty Lines shall pay fifty percent
(50%) of the costs incurred during the term of this Agreement of such brochures
and materials provided that such brochures and materials are separate from and
in addition to the brochures and materials used by Kroll to market its other
services.
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VI.
MANAGEMENT AND RESPONSE SUPPORT
X. Xxxxx shall retain the personnel set forth on Schedule A under the
heading "Management and Response Organization" (or such other qualified
personnel satisfactory to Specialty Lines) to provide management and response
support for the Services which Kroll will provide pursuant to this Agreement.
Kroll agrees that such personnel will devote at least the number of working days
indicated for such person under the column headed "Working Days" on Schedule A
to the management of Xxxxx'x Services under this Agreement. In addition, in
support of Specialty Lines' activities related to the PTS, EE, K&R and MPT
coverages, Kroll shall have qualified response personnel located in the
following areas: U.S., U.K., Europe, Latin America and Asia/Pacific. Such
staffing shall be in place upon signing of this Agreement and shall be
maintained on a continuous basis except for replacement of routine turnover
within a reasonable period of time.
B. Each month, on the last day of each month, Specialty Lines shall pay to
Kroll one-twelfth of the total annual cost of such management and response
personnel as indicated on Schedule A. Specialty Lines and Kroll will mutually
agree on the amount of retainers to be paid to retained consultants in order to
ensure the availability of such consultants' services. Specialty Lines shall
reimburse Kroll for the cost (including the cost of the retainers which have
been agreed upon) of any retained by Kroll to provide Services pursuant to this
Article VI. In addition, working days devoted to such Services by Kroll
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employees listed on Schedule A.II in excess of the number of Working Days
indicated on Schedule A shall be paid for by Specialty Lines at the Daily Rate
for such employees. Working days devoted to such Services by Kroll employees not
listed on Schedule A will be paid for by Specialty Lines at the rate of (a)
$1,000 per working day for response services and (b) $1,500 per working day for
all services other than response services. All of the foregoing payments shall
be made by Specialty Lines to Kroll on a monthly basis on the last day of the
applicable month. For response services, "working days" shall mean Monday
through Sunday, including national holidays.
VII.
EXPENSES, ETC.
Non-administrative out-of-pocket expenses Incurred by Kroll in the
performance of its obligations under this Agreement shall be reimbursed by
Specialty Lines based on their actual cost and will include, but shall not be
limited to, commercial airline fares, automobile rentals, lodging, and meals,
tolls and parking fees, postage, telephone and messenger/express courier costs,
database subscription costs, reproduction costs and mileage for personal vehicle
use. Kroll shall provide supporting documentation of such expenses (i.e. hotel
bills, airline tickets, etc.). Kroll shall provide such supporting documentation
on a timely basis. The policies governing reimbursable expenses incurred by
Kroll, and the documentation thereof, shall be generally consistent with the
policies followed by Specialty Lines, including airline travel.
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Certain of Xxxxx'x Services are subject to the imposition of New York
State and New York City sales taxes when oral or written reports are delivered
by Kroll in New York State or, in the case of New York City sales taxes, New
York City.
VIII.
PRIVATE AGREEMENTS
Kroll shall not be required to consult with or account to Specialty Lines
for any services provided to an Insured by Kroll under any private agreement
Kroll may enter into with an Insured concerning services not covered under
Article V and VI hereof unless a conflict of interest exists between a Specialty
Lines' business and the services to be provided by Kroll, it being understood
that such services being performed by Kroll for the Insured under such private
agreement are for the benefit and for the account of the Insured, and the
Insured will have complete authority to accept or reject the advice of Kroll, in
the Insured's sole and absolute discretion.
IX.
INDEMNIFICATION
A. Specialty Lines acknowledges that Kroll makes no warrantee or
representation, either express or implied, as to results to be achieved by its
Services or as to the quality and fitness of the work of others. Specialty Lines
agrees (a) to indemnify Kroll and its officers, directors, employees, agents or
representatives from all liability, claims, demands and costs, including
reasonable attorneys' fees and disbursements, arising out of Xxxxx'x performance
of Services for Insureds pursuant to
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this Agreement (including any addendum hereto) and (b) either to defend, at its
expense, or, at its option, to advance the cost of the reasonable expenses
incurred in the defense of any claims against Kroll or its officers, directors,
employees, agents or representatives working under its direction, relating to
Xxxxx'x performance of Services for Insureds pursuant to this Agreement
(including any addendum hereto); provided however that this indemnity will not
be effective to the extent that, in an action against Kroll, or against Xxxxx'x
officers, directors, employees, agents or representatives, it is finally
adjudicated that Kroll, its officers, directors, employees, agents or
representatives are liable for willful, wanton or reckless conduct, negligence
or ordinary negligence in the performance of their Services; in such event,
Kroll shall bear a share of the expenses incurred in its defense in accordance
with the foregoing, such share to be in the same proportion as the liability
attributed to Kroll or its officers, directors, employees, agents or
representatives bears to the total liability assigned in such action, and shall
reimburse Specialty Lines accordingly, with interest from the date such expense
was paid by Specialty Lines, at a rate equal to the discount rate on 13-week
United States Treasury bills as published in the Wall Street Journal on the day
preceding the date such reimbursement is made.
B. If any person or entity requests, subpoenas, or otherwise seeks to
obtain any testimony or materials within Xxxxx'x custody, possession, or control
or the custody, possession, or control of any of its officers, directors,
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employees, agents or representatives, which relate or refer in any way to
Xxxxx'x work under this Agreement, Kroll promptly shall inform Specialty Lines
of such request or subpoena of such testimony or materials. Should Specialty
Lines require Kroll to take any legal action to seek protection against
disclosure, Specialty Lines shall indemnify Kroll and/or the applicable party
for all costs, expenses and liability, including reasonable attorneys' fees and
disbursements incurred in connection with such legal action.
C. The foregoing obligation of Specialty Lines to indemnify shall survive
the completion or termination of any and all work or services provided by Kroll
and/or the termination of this Agreement and shall continue in full force and
effect with respect to any work or services provided by Kroll.
X
RELATIONSHIP OF THE PARTIES
During the term of this Agreement, Kroll shall not enter
into any agreement, contract, arrangement or understanding with any corporation,
partnership, association or any other person or entity which underwrites
insurance coverage (or any of such insurance underwriter) to provide crisis
management or marketing support with respect to EE, PTS, K&R or MPT insurance,
it being the express intent of both parties that Kroll represent Specialty Lines
exclusively with respect to providing marketing support in connection with these
insurance products. Any dispute as to whether the provisions of this Article X
preclude Kroll from entering into any such additional agreement, contract,
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arrangement or understanding with a party other then Specialty Lines or its
affiliates shall be settled pursuant to Article XII.
XI.
CONFIDENTIALITY
Specialty Lines and Kroll agree that neither of them shall knowingly
disclose to any third person or entity and confidential information belong to
the other party to this Agreement without such other party's prior written
consent. Each party further agrees that it shall maintain the confidentiality of
all confidential information of the other party to this Agreement and to prevent
the unauthorized disclosure of any confidential information to any third person
or entity. In no event shall either party hereto use less care to maintain the
confidentiality of the other party's confidential information that it uses to
maintain the confidentiality of its own confidential information.
As used herein, "confidential information" shall mean non-public
information regarding the business plan, business methods or techniques,
clients, marketing plans or financial results of Kroll (or an affiliate of
Kroll) or Specialty Lines (or an affiliate of Specialty Lines), as the case may
be, but shall not include (a) any information required by law to be disclosed or
(b) information (i) which is or becomes generally available to the public other
than as a result of a disclosure by the party to whom this obligation of
confidentiality is being applied, or (ii) which is or becomes available to the
party to whom this obligation of confidentiality is being applied, on a
non-confidential basis from a source other than the other party
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hereto or one of its representatives, provided that such source is not known to
the party against whom this obligation of confidentiality is being applied to be
bound by a confidentiality agreement with the other party hereto.
XII.
SETTLEMENT OF DISPUTES
Specialty Lines and Kroll agree to settle any dispute, controversy or
claim relating to this Agreement or the formation, application, interpretation
of breach hereof which is not capable of amicable settlement by the parties, by
confidential and private arbitration in New York County, New York, in accordance
with the then prevailing American Arbitration Association rules of procedure for
arbitration. A party desiring to submit any such dispute to arbitration in
accordance with this Article shall notify the other party in writing of its
election to arbitrate such dispute. The number of arbitrators shall be three,
one to be chosen by each party and the third, who shall be chairman, to be
chosen by the two arbitrators so chosen. Should either party fail to appoint its
arbitrator within thirty (30) days of receipt of a request to do so from the
other party, the non-failing party may apply to the American Arbitration
Association to appoint a second arbitrator and the two so chosen will proceed to
choose a third arbitrator. Should the two arbitrators chosen by the parties fail
to agree on a third arbitrator within thirty (30) days after the latter of the
two arbitrators has been appointed, either party may apply to the American
Arbitration Association to appoint a third arbitrator. The language of the
proceedings
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shall be English and the currency in which any award is rendered shall be United
States dollars.
The decision of a majority of the arbitrators (or of the third arbitrator
if there is no such majority) shall be final and binding and shall be
enforceable in any court of competent jurisdiction, and the parties hereby waive
any rights to appeal or to review of such decision by any court or tribunal and
also waive any objections to, or claims of immunity in respect of, such
enforcement.
Each party hereto hereby waives, to the maximum extent not prohibited by
law, any right it may have to claim or recover, in any arbitration or other
legal preceeding arising out of or relating to this Agreement, any
consequential, exemplary or punitive damages and in no case shall the
arbitrators have the power or authority to award consequential, exemplary or
punitive damages.
XIII.
AFFILIATES
As used in this Agreement, "affiliate" or "affiliated company" includes
any company that controls, is controlled by or is under common control with
Specialty Lines.
XIV.
ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties hereto
with respect to its subject the matter covered herein and supersedes any prior
agreement between the parties with respect thereto. No other agreements,
representations,
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warranties or other matters, oral or written, purportedly agreed to or
represented by or on behalf of either party shall be deemed to bind the parties
hereto with respect to the subject matter hereof.
XV.
NOTICES
Except as otherwise provided, herein any written notice required by this
Agreement shall be deemed received when delivered personally or by courier
service to the party for whom intended, or five (5) days following deposit of
the same into the United States mail, registered or certified mail, return
receipt requested, and if to Specialty Lines to:
AIU Specialty Lines Group
00 Xxxx Xxxxxx-00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx
Copy to: Xxxxxx Xxxx, Esq.
8th Floor
and if to Kroll to:
Kroll Associates, Inc
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx XxXxxxxxx
Copy to: Xxxxxx X. Xxxxxxxx, General Counsel
Either party may designate a different address by written notice to the other
given in accordance with this Section.
XVI.
GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without regard to any principles of conflicts of
laws thereunder.
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XVII.
FORCE MAJEURE
Kroll shall not be liable for any failure or delay in performing its
obligations hereunder resulting from any event beyond Xxxxx'x reasonable control
including, but not limited to, acts of God; acts or omissions of civil
authorities; fires; floods; strikes or other labor actions; embargoes; acts of
terrorism or war or civil strike; riots; delays in transportation; need to
comply with regulations or directives of any government; and fuel, power,
materials or labor shortages.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement below
each by signature of its duly authorized representative to be effective the
first day of September, 1994.
AIU SPECIALTY LINES GROUP
By: /s/
-------------------------------------
Title: Division President
XXXXX ASSOCIATES, INC.
By: /s/ Xxxxxxx X. XxXxxxxxx
-------------------------------------
Xxxxxxx X. XxXxxxxxx
Title: Managing Director
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