EXHIBIT 10.5
ADMINISTRATIVE SERVICES AGREEMENT
(AMENDED AND RESTATED)
THIS AGREEMENT is made as of the 1st day of July, 2006 among IPCRE, LIMITED, a
company organized under the laws of Bermuda (the "Company"), IPC HOLDINGS, LTD.,
a company organized under the laws of Bermuda (the "Parent") which owns all the
issued and outstanding shares of the Company, and AMERICAN INTERNATIONAL
COMPANY, LIMITED, a company organized under the laws of Bermuda ("AICL").
WITNESSETH
WHEREAS, the Company and the Parent (hereinafter collectively referred to as the
"Companies") desire that AICL, or one or more of its affiliates, furnish the
Companies with certain office space, equipment, administrative services and
personnel, and AICL is willing to provide such equipment, space, administrative
services and personnel, all subject to the terms and conditions hereinafter
provided.
NOW, THEREFORE, it is agreed as follows:
1. SERVICES TO BE PROVIDED
1.1 AICL shall furnish or cause to be furnished (in the same manner and
reasonably of the same quality as such services and facilities are
furnished to its affiliates) services and facilities to the Companies
(which, to the extent not specified below to be subject to separate
billing by AICL will be provided in Bermuda) required by the Companies
in the ordinary course of the business of the Companies which are
described and classified as follows:
(a) office space in Bermuda not to exceed 7,508 usable square feet,
which space may be owned by AICL or one of its affiliates or may
be leased from others, and which shall include as a part thereof
cleaning, elevator service, repair and engineering services,
provided that the Companies shall have no right to use the said
office space for any purpose other than as office space for their
own respective business purposes and shall not licence, let or
otherwise demise (or purport to) the said office space to any
person, company or other entity ;
(b) the information technology services set out in Part A of Schedule
1 hereto;
(c) payroll and pension administration services as described in
Schedule 2 hereto (provided that pension plan portfolio
management services will, to the extent required by either of the
Companies, be separately contracted for by AICL and billed to the
Companies);
(d) human resource services as described in Schedule 3 hereto;
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(e) making travel arrangements for overseas travel by employees of
the Company for business purposes and making hotel bookings in
each case, as required;
(f) a purchasing department , provided that, to the extent that any
supplies are purchased by AICL on behalf of either of the
Companies, the cost of such supplies shall be billed to the
Companies;
(g) telephone services (provided that the cost of such services shall
additionally be billed to the Companies);
(h) printing, reproduction and document binding services (provided
that the cost of such services shall additionally be billed to
the Companies); and
(i) a mail and communications department, including, but not limited
to, messenger, mail handling and postage services (provided that
the cost of such services shall additionally be billed to the
Companies).
Any other services or departments found to be necessary or desirable by
either of the Companies should be provided by AICL only after separate
negotiation and agreement by all parties hereto. The additional costs of
any such other services or departments shall be allocated in an equitable
manner to be agreed upon by the parties hereto.
1.2 AICL hereby represents and warrants to the Companies that any software
licensed or otherwise provided to the Companies hereunder by AICL
shall not infringe upon the copyrights of any other person . With
respect to any computer software provided to either of the Companies
pursuant to Section 1.1 hereof ("AICL Computer Software"), each of the
Companies acknowledges that it hereby accepts from AICL the
non-exclusive, non-transferable, non-assignable right to use such AICL
Computer Software solely and exclusively in connection with its
insurance operations, all in accordance with the further terms and
conditions of the Agreement. Any and all copyrights, of common law or
statutory rights and powers, relating to any such AICL Computer
Software (or any operating manuals relating thereto) shall be and
remain at all times the sole and exclusive property of AICL, and the
right of the Companies to use such AICL Computer Software shall be
solely as a licensee of AICL pursuant hereto. Such AICL Computer
Software may not be copied, duplicated or otherwise reproduced, in
whole or in part, without the prior written consent of AICL, and
nothing there from may be disclosed to any person other than those to
whom such disclosure is authorized by AICL. Such AICL Computer
Software shall be returned to AICL upon termination of this Agreement
and, in any event, upon completion of the use for which they are
hereby provided.
1.2.1 The Companies hereby agree that they will establish, within eighteen
(18) months from the effective date of this Agreement, their own IT
environment and systems (including network, internet, email and
disaster recovery) and that the costs associated therewith, including
without limitation costs of or relating to (i) any hardware, including
but not limited to servers and photocopiers, (ii) non-AICL technical
support, (iii) software or other licenses that may be required, and
(iv) internet access, data communication lines,
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telephone lines and maintenance contracts, will be for the account of
the Companies. Notwithstanding the provisions of this Section 1.2.1,
unless otherwise specified in this Agreement, the costs and expenses
associated with the provision by AICL of the services set out in Part
A of Schedule 1 hereto, shall be for the account of AICL until such
time as the Companies establish their own IT environment as
contemplated hereby at which time the costs and expenses relating to
the services listed under the heading "Miscellaneous Services" shall
be for the account of the Companies.
1.3 With respect to any equipment, furniture or other furnishings or
fixtures (collectively, "Equipment") provided to either of the
Companies pursuant to Section 1.1 hereof, each of the Companies
acknowledges that such Equipment is, and at all times during the term
of this Agreement and thereafter shall remain, the property of AICL
and neither of the Companies shall have any right, title of interest
therein or thereto except as provided herein. Upon AICL's request, the
Companies shall affix and keep in a prominent place on each item of
Equipment labels, plates or other markings indicating that the
Equipment is owned by AICL. The Companies shall not make any
modifications, alterations, additions or improvements to the Equipment
without AICL's prior written consent. All such additions and
improvements shall belong to AICL. The Equipment shall remain personal
property of AICL regardless of its affixation to any realty. The
Companies shall keep the Equipment at the office space provided to the
Companies by AICL pursuant to Section 1.1 hereof and, unless otherwise
agreed to by AICL in writing, shall not remove any of the same there
from without AICL's prior written consent. The Companies covenant and
agree to (i) keep the Equipment in good repair (reasonable wear and
tear excepted) and comply with all laws, ordinances, regulations or
requirements of any governmental authority relating to its
installation, possession, use or maintenances and (ii) keep the
Equipment free and clear of all liens and encumbrances.
2. PAYMENT AND REIMBURSEMENT OF SERVICE FEES AND COSTS
2.1 As remuneration for the services provided under this Agreement, the
Companies shall (in addition to the reimbursement of any costs
described in Section 1 hereof) pay to AICL an annual fee based upon
the Company's Gross Written Premiums (as defined below) as follows: $2
million in the event the Company's annual Gross Written Premiums equal
or are less than $200 million and 0.5% of any additional Gross Written
Premiums of the Company in excess of $200 million. For purposes of
this Agreement, "Gross Written Premiums" of the Company shall mean any
direct insurance premiums arising from policies issued by the Company,
together with any insurance premiums (less return premiums) arising
from policies issued to reinsure another insurance company which is
affording the related primary coverage, all computed in accordance
with U.S. generally accepted accounting principles consistently
applied throughout the periods in question. If this Agreement is
terminated in accordance with the provisions of Section 3.3,
notwithstanding the other provisions of this Section 2, the Companies
shall (in addition to the reimbursement of any costs described in
Section 1 hereof) pay to AICL in the year in which the termination
occurs a fee calculated in accordance with this Section 2.1 above.
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2.2 Within thirty (30) days after the end of each calendar quarter, AICL
shall deliver an invoice to the Companies showing fees to be paid by
the Companies for all the services and functions to be provided by
AICL during the then current calendar quarter. Such fees shall be
calculated based upon annual Gross Written Premiums of the Company
achieved during the previous calendar quarter (and with respect to the
Company's first quarter, based upon AICL's reasonable estimate of the
annual Gross Written Premiums of the Company for such first such
calendar quarter). The Companies shall pay the amount of any such
invoice promptly upon receipt thereof. At the end of each calendar
year, AICL and the Companies shall, based upon the audited annual
financial statements of the Company for such prior calendar year,
reconcile any fee overpayment/underpayment, which may have occurred
during such prior calendar year.
2.3 In addition to quarterly invoices for fees, AICL shall separately
invoice the Companies for any costs permitted to be billed separately
pursuant to Section 1.1 hereof. The Companies shall pay the amount of
or otherwise reimburse AICL for any such costs promptly upon receipt
of any such invoice therefore and promptly thereafter, the appropriate
party or parties shall make corresponding payments to the other party
or parties in accordance with such reconciliation.
3. TERM AND TERMINATION OF AGREEMENT
3.1 The term of this Agreement ("Term") shall commence on July 1, 2006 and
shall continue in force until June 30, 2009. Thereafter, the Term
shall continue in force for successive three-year periods unless prior
written notice to terminate shall have been delivered by or to AICL at
least 180 days prior to the expiration date of the then current
three-year period of the Term, which termination shall be effective as
of the last day of such period of the Term in which such notice was
provided.
3.2 Upon termination, neither of the parties shall have any obligation to
the other except for the parties' obligations under clauses 1.2, 1.3,
2, 5, 6, 8, 9 and 10 hereof and, subject to clause 5 hereof, the
obligation of AICL to return to the Companies (as promptly as
practicable in such forms as they may then exist) any records prepared
by AICL on behalf of the Companies, together with a full account of
all fees and reimbursable costs then due and payable up to such date.
3.3 Notwithstanding any other provision hereof, if a Termination Event (as
such term is defined below) occurs, either of the Companies jointly or
AICL shall have the right to terminate this Agreement upon not less
than 180 days notice in writing to the others. For the avoidance of
doubt the provisions of Section 3.2 shall apply in the event of
termination of the Agreement pursuant to this Section 3.3. For the
purposes hereof "Termination Event" shall mean, (i) the acquisition by
an unrelated company of either of the Companies, (ii) the acquisition
of an unrelated company by either of the Companies, (iii) the
amalgamation of either of the Companies with an unrelated company,
(iv) the sale of all or substantially all of the assets of either of
the Companies, (v) the Company ceasing to have any in force policies;
or (vi) the Company being placed into liquidation or any equivalent
proceedings commencing.
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4. RIGHT OF THE COMPANIES TO INSPECT RECORDS
AICL shall keep true and complete books and records of all the
services and facilities furnished under and pursuant to this
Agreement.
AICL shall, to the extent practicable, maintain all Books and Records
with regard to the Companies' business separately from the records of
its other businesses, provided that AICL may use identical computer
and other systems so long as information with regard to the Companies
is maintained in an identifiable manner. The Companies shall have the
right at all times during AICL's business hours, and at its own
expense, to inspect the Books and Records of AICL (or any entity
employed by AICL for any such purpose) relating to the services
provided hereunder. The term "Books and Records" shall mean all
materials, books and records and data in whatever form or medium (i)
furnished by the Companies to AICL in connection with the performance
by AICL of its obligations under this Agreement; (ii) generated by
AICL in connection with the performance by AICL of its obligations
under this Agreement; or (iii) that in any way pertain to the
performance of the obligations of AICL under this Agreement, including
books of account and contracts entered into by either of the Companies
and all correspondence related thereto and any and all materials,
books and records and data relating to Companies' business.
5. OWNERSHIP OF RECORDS
All Books and Records kept by AICL in connection with the Companies'
business managed by AICL shall be and remain the sole property of the
Companies, including all databases maintained by AICL relating to the
Companies' accounting or other records and whether or not such data is
maintained on information systems owned by AICL or the Companies or
neither.
The Companies and/or AICL, as the case may be, shall maintain such
Books and Records for a period of seven (7) years or for the period as
may be required under the Companies' respective records retention
policies if longer or for such longer period of time as may be
required by law or any applicable court order and AICL shall have
reasonable access to and the right to inspect and copy at its own
expense, such Books and Records during such period.
Notwithstanding any other provision of this Section 5 or this
Agreement generally, AICL shall have the right to retain, at its own
expense, a copy of any Books and Records and the original backup tapes
which contain information relating to both the business and operations
of AICL and its affiliates on the one hand and the Companies on the
other hand, provided that AICL shall retain such backup tapes for a
period of seven (7) years or for the period as may be required under
its record retention policies if longer or for such longer period of
time as may be required by law or any applicable court order and
further provided that during such period the Companies, at their own
expense, shall have reasonable access to and the right to inspect and
make a copy of such backup tapes to the extent they relate to the
business and operations of either of
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the Companies or to respond to any tax matters, claims, lawsuits,
legal proceedings, investigations or audit matters.
6. CONFIDENTIALITY
6.1 AICL hereby acknowledges that, as a result of its performance of
services for the Companies under this Agreement, AICL shall come into
possession or become familiar with confidential information of the
Companies, such as (a) information relating to the business, finances,
methods of operation, business plans, marketing strategies and other
information relating to the Parent, the Company and its customers and
(b) other trade secrets and proprietary information of the Companies
(hereinafter collectively referred to as "Confidential Information").
6.2 During the Term and at all times thereafter, AICL shall, and shall
cause each of its directors, officers, employees and agents to, keep
confidential (to the extent required hereby) all Confidential
Information which any of them may obtain and not to use such
Confidential Information for any purpose other than in the course of
the performance of this Agreement.
6.3 The obligation of confidentiality set forth in this clause 6 shall not
apply to any Confidential Information (a) which is in the public
domain through no fault of AICL or and of its directors, officers,
employees or agents; (b) the disclosure of which is compelled by
applicable laws, rules or regulations or by any court order; (c) which
is disclosed with the prior approval of the Companies; (d) the
disclosure of which to any director, officer, employee or agent of
AICL is necessary to protect the rights of the Companies with respect
to their Confidential Information; (e) lawfully obtained by AICL,
other than in its capacity as the provider of services to the
Companies under this Agreement, from sources not bound by any
obligation to keep such Confidential Information confidential; or (f)
the disclosure of which to any of AICL's directors, officers,
officers, employees or agents is necessary to carry out the purposes
of this Agreement. In addition, notwithstanding anything to the
contrary provided in this Agreement, the restrictions upon use and
disclosure of information under this Section 6 shall not apply to any
information developed by, and/or provided to the Companies or AICL by,
American International Group, Inc. (to the extent that American
International Group, Inc. is not subject to any confidentiality
obligation to the Companies with respect thereto) or any of its
affiliates (to the same extent) other than information generated by
AICL in connection with the performance by AICL of its obligations
under this Agreement.
7. REVIEW OF SCOPE OF SERVICES
The scope of, and the manner in which, AICL provides facilities and
services to the Companies shall be reviewed annually by AICL and the
Companies.
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8. INDEMNIFICATION BY THE COMPANIES
8.1 The Companies hereby, jointly and severally, indemnify and hold AICL
and each of its directors, officers, servants, agents and employees,
harmless from and agree to defend each of them (collectively,
"Indemnitees") from and against all and any manner of liabilities,
suits, claims, damages and expenses (other than those arising out of
the gross negligence or willful misconduct of any such Indemnitees in
the performance of any of AICL's obligations hereunder) arising out of
or in connection with this Agreement or the good faith performance by
AICL of its obligations hereunder.
8.2 In addition to their respective obligations to indemnify the
Indemnities as described above, the Companies shall obtain, maintain
and keep the Equipment insured against all risks of liability or
damage from every cause whatsoever in an amount not less than the full
replacement value of the Equipment (less commercially reasonable
deductibles). The Companies shall also obtain and maintain for the
duration of the Term comprehensive liability insurance for bodily
injury, including death, and property damage resulting from
maintenance, use or operation of the Equipment or otherwise from the
operation of the Companies at the Premises in such amounts, in such
form and with such insurers as shall be reasonably satisfactory to
AICL. AICL shall be the sole loss payee with respect to insurance for
damage to or loss of the Equipment and AICL shall be an additional
named insured on the comprehensive liability insurance. The Companies
shall deliver to AICL a certificate of insurance with respect thereto.
Said insurance shall provide that it cannot be amended or cancelled
without the insurer first giving AICL, not less than sixty (60) days
prior written notice thereof.
9. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement,
or the breach thereof, shall be submitted to a panel of three
arbitrators. Each party shall appoint an arbitrator and the two
arbitrators so appointed will appoint a third arbitrator who shall act
as the umpire of the panel. Each such arbitrator shall be an executive
of a Bermuda insurance or reinsurance company but shall not be
associated with any of the parties to this Agreement. Any arbitration
hereunder shall take place in Bermuda, shall be deemed an
international commercial arbitration and shall be conducted in
accordance with the UNCITRAL Arbitration Rules and The Bermuda
International Conciliation and Arbitration Xxx 0000. The decision of a
majority of the arbitrators shall be final and not subject to appeal,
and judgment upon the award or determination rendered by the
arbitrators may be entered in any court of competent jurisdiction.
10. NOTICES
All communications provided for hereunder shall be in writing, and if
to the Companies, mailed or delivered to each of the Companies at
American Xxxxxxxxxxxxx Xxxxxxxx, 00 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxx
XX 00, Attention: President, or if to AICL, mailed or delivered to
AICL at its office at American Xxxxxxxxxxxxx Xxxxxxxx, 00 Xxxxxxxx
Xxxx, Xxxxxxxx, Xxxxxxx XX 00, Attention: President, or addressed to
either party may hereafter designate by written notice to the other
party.
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11. ENTIRE AGREEMENT; AMENDMENT
This Agreement constitutes the entire agreement between the parties
with respect to the provision of administrative services to the
Companies by AICL and supersedes and extinguishes any warranty,
representation or arrangement previously given or made with respect
thereto, other than those expressly set out herein. The express terms
hereof supersede any course of performance or usage of the trade. This
Agreement may not be amended except in writing signed by each of the
parties hereto.
12. NO WAIVER
Neither the failure nor the delay on the part of any party in
exercising any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other
or further exercise of the same or of any other right, remedy, power
or privilege, nor shall any waiver of any right, remedy, power or
privilege with respect to any occurrence be construed as a waiver of
such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and
is signed by the party asserted to have granted such waiver.
13. SUCCESSORS AND ASSIGNS
The provisions of the Agreement shall be binding upon and shall enure
to the benefit of and be enforceable by each of the parties' hereto
and their respective successors and assigns. Except to the extent
expressly provided for in this Agreement, AICL shall not have the
right to assign any of its rights, powers and obligations under this
Agreement without prior written consent of the Companies; provided,
however, that nothing contained herein or elsewhere in this Agreement
shall preclude AICL from assigning any or all of its right, powers and
obligations under this Agreement to any wholly-owned subsidiary of
American International Group, Inc.
14. GOVERNING LAW; SUBMISSION TO JURISDICTION
This Agreement shall be governed by and construed in accordance with
the laws of Bermuda, without reference to the principles of conflicts
of law thereof. If any suit is instituted by any of the parties to
enforce any of the terms or conditions of this Agreement, each of the
parties hereby submits to the exclusive jurisdiction of and venue in
the courts of Bermuda.
15. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be an original with the same effect as if the signatures
thereto and hereto were upon the same instrument, and such
counterparts together shall constitute one and the same instrument.
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16. HEADINGS
The section headings contained herein are for convenience only and
shall not alter or limit or define the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in Pembroke, Bermuda, on the date first written above.
IPCRE, LIMITED
By: /s/ Xxxxx X. Xxxxx
------------------------------------
IPC HOLDINGS, LTD.
By: /s/ Xxxxx X. Xxxxx
------------------------------------
AMERICAN INTERNATIONAL COMPANY, LIMITED
By: /s/ S. Xxxxxx Xxxxxx
------------------------------------
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SCHEDULE 1
IT SERVICES
PART A
NETWORK ADMINISTRATION & PERFORMANCE MANAGEMENT
- Maintain / troubleshoot network infrastructure
- LAN / WAN / MAN connections (except firewall)
- Add /remove workstations and servers to domain
- Lock down servers in accordance with AIG Standards
INSTALLATION & MANAGEMENT OF WINDOWS AND AS400 ENVIRONMENT
- Hardware setup / build of servers and desktops
- Installation of Operating System (IPC to supply non-standard software
licenses, where appropriate)
- Troubleshooting operating system issues
- Deployment of security patches and updates
- Management of virus software on Windows servers
- Backup and recovery of data
- Share knowledge from AIG Security directives on changes / enhancements
to operating environments
NETWORK SECURITY
- Set up user id's
- Reset passwords
- Auditing functions
- Enforcement of AIG security policies (while on AIG network)
- Monitoring for network viruses
APPLICATION MANAGEMENT
- Installation of new applications residing on / sharing the AICO domain
and network resources
- Application review to ensure AIG security compliance
- Change Management Process
- Provide primary support services for AICL standard desktop
applications
- Genius support
- SUN Accounts support
- Cognos warehouse products support
- Application security for supported applications
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HELPDESK SUPPORT
- Problem tracking & resolution during standard business hours
- Printer & copier maintenance
- Other miscellaneous services as provided to AICL
HARDWARE PROCUREMENT
- Facilitate the purchase of desktops, laptops, printers, photocopiers,
etc.
- Configuration/setup/installation of desktops, laptops, printers, etc.
- Inventory tracking
HARDWARE MAINTENANCE
- Management of maintenance contracts with local/overseas vendors - as
appropriate
- Vendor relationship management
BUSINESS CONTINUITY PLANNING
- Assist with IPC business continuity and disaster recovery plans
MISCELLANEOUS SERVICES
- Email
- Remote Access
- Blackberry server and mail delivery
- Easy link fax services
- Firewall Protection
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PART B
SECTION 1.1 IT EQUIPMENT AND SERVICES TO BE EXCLUDED
APPLICATION EXCLUSIONS
- Qknow
- CAT Trader
- Any other application not regarded as standard within AICO
HARDWARE EXCLUSIONS
- Blackberry
- Wireless keyboards
- Label printers
- Photocopiers
- Cellular phones
- Laptops (provided that if an employee of the Companies
responsibilities require a laptop and not a desktop, the laptop will
be for the account of AICL)
- Other miscellaneous non-standard hardware
PC MANAGEMENT EXCLUSIONS
(not part of standard image)
- Visio
- Microsoft project
- Adobe Acrobat
For the avoidance of doubt all expenditures made by AICL or its affiliates in
connection with the matters set out in this Part B of Schedule 1 shall be for
the account of the Companies.
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SCHEDULE 2
PAYROLL SERVICES
1. Processing of payments to employees of the Company of salaries, bonuses,
Cost of Living Allowance ("COLA"), housing allowances and other
compensation as may be agreed between the Company and AICO from time to
time and such employee reimbursements that are included in an employee's
contract or terms of employment (provided that the processing of any equity
based compensation is hereby specifically excluded).
2. Calculating the applicable deductions from employee salaries and other
compensation in respect of the Company's payroll tax, social insurance
deductions, medical, dental, life, accidental death and dismemberment and
long-term disability insurance plans and any other deductions that may
agreed upon or required by law. In addition, deductions will be
administered in compliance with the plan rules for the Company's statutory
Bermuda pension or other applicable pension plans.
3. Preparing the applicable government filing documents required in connection
with the payment of payroll taxes or any applicable regulation fee or
compensation filings, provided that the Company shall in fact submit the
filings and make such payments.
4. Preparing Company's monthly payroll advices and annual compensation
statements for employees, which statements shall include details of gross
compensation, applicable deductions and net compensation (provided that
such statements will contain no information relating to equity based
compensation) for further distribution by Company to employees.
Furthermore, an electronic version of the same shall be provided to
Company.
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SCHEDULE 3
HUMAN RESOURCE SERVICES
RECRUITMENT
Prepare ads
Coordinate running of advertisements
Receive applications
Schedule interviews
Prepare offer packages
Set up & maintenance of employee data
Employment, Criminal and Credit Reference Checks
IMMIGRATION
Temporary permits
Initial applications
Renewals
Good Corporate citizen
Landed without documents letters
Landing permits
TRAINING
Coordinate staff training - internal/external
Reimbursement of educational training
Process educational awards
BENEFITS
Enrolment process for Medical, Life Insurance, AD&D & LTD, and Pension benefits
along with Transact benefits
Administration for the above process
Handling of any queries regarding the above
Orientation
Summer student recruitment
MISC
Disciplinary process
Compliance with government regulations
Assist with maintenance of calling tree
Maintenance of employee handbook
Manage the Probationary Period process
SIGNATURE PAGE TO IPC HOLDINGS, LTD.
CREDIT AGREEMENT