EXHIBIT 10.6
OUTSOURCING SERVICES AGREEMENT
BY AND BETWEEN
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ SERVICES, INC
(MAIN STREET)
AND
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ AND COMPANY, P.A.
(VENDOR)
April 1, 1998
This Agreement shall not be valid unless signed and accepted by both parties on
or before April 27, 1998.
NOTICE OF CONFIDENTIALITY
This Agreement contains confidential information. Disclosure of any information
included herein to others without the express written permission of ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Corporation is expressly prohibited.
TABLE OF CONTENTS
1. DEFINITIONS...............................................2
2. TERM.....................................................4
2.1 Term......................................................4
3. PROVISION OF SERVICES....................................5
3.1 Generally................................................5
3.2 Subcontractors............................................5
3.3 Provision of Personnel...................................5
3.4 Payment of Personnel.....................................6
3.5 Subcontractors for Non-Fixed Fee Work.....................6
4. SERVICE LEVEL ADJUSTMENTS.................................6
4.1 Minor Changes............................................7
4.2 Major Changes............................................7
4.3 Change Order Forms.......................................7
5. OBLIGATIONS OF PROJECT MANAGERS..........................8
5.1 Main Street's Project Manager.............................8
5.2 Vendor's Project Manager.................................8
5.3 Coordination.............................................8
6. USE OF ASSETS............................................9
6.1 Ownership of Hardware, Software and Other Assets..........9
6.2 Licenses...............................................10
7. COOPERATION..............................................10
8. COMPENSATION AND EXPENSES................................10
8.1 Fees.....................................................10
8.2 Additional Charges.......................................11
8.3 Reimbursable Expenses....................................11
8.4 Time and Method of Payment...............................11
8.5 Taxes....................................................12
9. CONFIDENTIALITY..........................................12
9.1 Obligations on Confidentiality...........................12
9.2 Non-Confidential Information.............................13
9.3 Copyright Notice.........................................13
10. TERMINATION..............................................13
10.1 Termination for Breach..................................13
10.2 Termination Option.....................................14
10.3 Termination for Insolvency..............................14
10.4 Return of Materials.....................................15
10.5 Rights Upon Termination.................................15
10.6 Survival of Terms.......................................16
10.7 Conversion to Another Service Provider.................16
10.8 Master File Data........................................16
10.9 Return of Software.....................................16
11. WARRANTIES..............................................17
11.1 Warranties by Vendor....................................17
12. INDEMNIFICATION / INSURANCE.............................17
12.1 Indemnification by Vendor...............................17
12.2 Insurance...............................................18
13. DISPUTE RESOLUTION......................................19
14. MISCELLANEOUS...........................................21
14.1 Force Majeure...........................................21
14.2 Assignment..............................................21
14.3 Governing Law...........................................21
14.4 Non-Hire................................................21
14.5 Currency; Language......................................22
14.6 Entire Agreement........................................22
14.7 Service Provider........................................22
14.8 Injunctive Relief.......................................22
14.9 No Strict Construction..................................22
14.10 Independent Contractor.................................23
14.11 Counterparts...........................................23
14.12 Notices................................................23
14.13 Headings...............................................24
14.14 Limitation on Actions..................................24
14.15 Severability...........................................25
14.16 No Third Party Beneficiaries...........................25
14.17 Attorneys' Fees........................................25
14.18 Authority of Signatures................................25
14.19 Non-Waiver.............................................25
15. LIST OF SCHEDULES.......................................26
SCHEDULE A....................................................1
SCHEDULE B....................................................1
SCHEDULE C....................................................1
THIS OUTSOURCING SERVICES AGREEMENT (the "Agreement") is made and
entered into this 25th day of April, 1998 (the "Effective Date") by and between
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ SERVICES, INC. (hereinafter referred to as "Main street") and
▇▇▇▇▇▇▇ HAMMOCK RANES AND COMPANY, P.A. (hereinafter referred to as "Vendor").
BACKGROUND
Main Street is a company which has contractually agreed to provide all
services required by RISCORP, Inc., an insurance company (hereinafter the
"Insurance Company") to assist in the Insurance Company's dissolution. Vendor is
in the business of providing professional accounting services.
As of the Effective Date of this Agreement, Main Street desires to
engage Vendor to provide those specific services which are described on Exhibit
"A" to this Agreement and are hereinafter referred to as the "Services."
Main Street and Vendor desire to enter into this Agreement so that Main
Street can provide the services it has contracted to provide to the Insurance
Company, which will entail the use of Vendor's Services as provided for in
detail in this Agreement. The Services to be provided under this Agreement shall
be for the benefit of Main Street and the Insurance Company. Vendor shall ensure
that any of its employees or authorized subcontractors having access to any
Confidential Information as hereinafter defined will comply with all of the
confidentiality and non-disclosure obligations of Vendor provided in the
Agreement.
Wherever the context requires, the term Main Street shall include the Insurance
Company.
Main Street will be directed by, and under the control for management
purposes of The Phoenix Management Company, Ltd. In that regard, Vendor will be
required to take direction from, and perform all services requested by The
Phoenix Management Company, Ltd., as if The Phoenix Management Company, Ltd. was
Main Street.
In entering into this Agreement, the parties each have several primary
objectives. Of particular importance to Main Street is that it receive from
Vendor the Services sufficient to meet the needs of Main Street to discharge its
contractual obligations to the Insurance Company and that the services be
rendered by Vendor in a timely, good and workmanlike manner.
Of particular importance to Vendor is that it be permitted to perform
the Services required of it for the fees provided for herein so that it may
recover its costs in implementing the necessary resources to fulfill its
obligations under this Agreement and that Vendor receive timely payment for the
services it renders to Main Street.
The provisions of this background section are intended to be a general
introduction to this Agreement. To the extent that the terms and conditions of
this Agreement do not address a particular circumstance or are otherwise unclear
or ambiguous, such terms and conditions are to be interpreted and construed so
as to give the fullest possible effect to the objectives set forth in this
background section. To the extent the terms and conditions of this Agreement
conflict with this background section, the terms and conditions of this
Agreement shall control over this background section.
In consideration of the premises and the mutual promises established in
this Agreement, and the monies to be paid hereunder, the parties agree as
follows:
. DEFINITIONS
As used herein, the terms set forth will have the following meanings:
"Agreement" will mean this Agreement as it may be amended from time to
time, by the parties in writing, including all Change Orders executed by
Main Street.
"Change Order" will mean any work request outside the Services
described in Exhibit "A," which change order describes work which will
be administered in accordance with the procedures specified in Exhibit
"B."
"Insurance Company" means RISCORP, Inc., and its subsidiaries and
affiliates.
"Main Street Confidential Information" will mean and refer to
information that relates in any way to the information, procedures,
customer lists, policy holder lists, and databases, and all information
about Main Street's internal affairs, business plans, and business
practices or any other information of a sensitive or confidential
nature that is provided to Vendor by Main Street in order for Vendor to
perform the Services, or that is learned or is discovered by Vendor in
the performance of the Services.
"Main Street's Equipment" means the computer hardware, including
without limitation servers and workstations, printers, peripheral
equipment, modems, communications hardware, network hubs, cabling and
related items owned or leased by Main Street or provided to Main Street
for its use and which are located at Main Street's Data Center, the
Insurance Company's Data Center, or any of Main Street's Other Vendor
Sites, and all future additions to such computer hardware, printers,
peripheral equipment and related items that may be made in accordance
with this Agreement and that are owned or leased by ▇▇▇▇ ▇▇▇▇▇▇.
"▇▇▇▇ ▇▇▇▇▇▇ Data Center" shall mean the location of Main Street's
servers and other equipment at Main Street's offices at
____________________________, Orlando, FL.
"Main Street's Software" will mean the Software and Documentation
licensed by Main Street from any source, which shall initially include
that Software and Documentation that is described on Exhibit "C",
together with any upgrades, enhancements or modifications thereto.
"Normal Operating Hours" shall mean those hours between the hours of
8:00 a.m. through 5:00 p.m. in the Eastern Time Zone, Monday through
Friday, and 8:00 a.m. through 1:00 p.m. Saturdays, excluding nationally
recognized holidays.
"Other Vendor" or "Other Vendors" will mean other parties with whom
Main Street has entered into outsourcing agreements similar to this
Agreement for the provision of outsourcing services.
"Other Vendor Sites" will mean collectively the facilities where any
portion of Main Street's Equipment is located and is being used by any
vendor of services to Main Street.
"Phoenix" shall mean and refer to The Phoenix Management Company, Ltd.
"Project Manager" means the individual designated by Main Street and
the individual designated by Vendor to manage the Services provided
pursuant to this Agreement.
"Service Level Adjustment" means a modification in the Services Vendor
is to render or the tasks Vendor is to perform as agreed by the parties
in accordance with Section 4 of this Agreement.
"Subcontractor" means an individual or entity under contract with
Vendor to assist Vendor in performing the Services under this Agreement.
"Term" means the term of this Agreement as is provided in Section 2.1
"Vendor Provided Software" means software which is obtained by Vendor
from a third party and is provided by Vendor to Main Street for use at
the Main Street Data Center in order for Vendor to perform its Services
under this Agreement.
. TERM
The term of this Agreement shall commence on the Effective Date
and shall continue for a period of three (3) years, unless
otherwise extended or terminated pursuant to the terms of this
Agreement.
. PROVISION OF SERVICES
Vendor hereby agrees to provide the Services described in Exhibit "A"
to Main Street in a professional, workmanlike and competent
manner. Vendor agrees to take direction from, and act in
response to requests from, Phoenix in the same manner as if
Phoenix were Main Street. Vendor hereby acknowledges that it
has been instructed by Main Street to respond to Phoenix's
instructions as set forth herein.
.2 Subcontractors. Vendor shall have the right at its discretion
to use Subcontractors to assist Vendor in performing the
Services required under this Agreement; subject, however, to
such Subcontractor(s) entering into appropriate agreements
which, in the case of Subcontractors retained specifically to
provide Services to Main Street, shall be enforceable by Main
Street, requiring such Subcontractor(s) to adhere to the
confidentiality and non-disclosure provisions of this
Agreement.
.3 Provision of Personnel. Vendor shall be solely responsible for
providing those personnel or Subcontractors it believes are
necessary to provide the Services. Vendor shall be solely
responsible for ensuring that the personnel or Subcontractors
it provides are fully capable of performing the Services or
such part of the Services assigned to them to be performed.
Vendor shall be solely responsible for the performance of the
personnel or Subcontractors it assigns to perform Services.
Vendor warrants that, in engaging its personnel and
Subcontractors and assigning them to perform services for Main
Street it will not discriminate on the basis of age, sex,
race, religion, national origin, disability, or any other
legally prohibited basis. Vendor will review its selection
process and criteria with Main Street and make any changes
reasonably requested by Main Street to make such process and
criteria non-discriminatory. In the event of any claims or
suits brought against Main Street, or against both Vendor and
Main Street, on the basis that Vendor's hiring or selection or
non-selection of personnel is discriminatory, Vendor shall
defend Main Street from any such claims or suits, including
attorney's fees, court costs, damages, and settlement
payments.
Vendor shall be solely responsible for paying any and all personnel
or Subcontractors it assigns to perform Services. Vendor shall
ensure that no liens are filed against Main Street or any of
its equipment for any work performed by Vendor or any of its
personnel or Subcontractors.
.5 Subcontractors for Non-Fixed Fee Work. If Vendor makes use of
Subcontractors to provide services for which it would be
entitled to ▇▇▇▇ ▇▇▇▇ Street in addition to receipt of the
monthly fee amount to be paid under this Agreement, then
Vendor may pass the cost of such subcontractors through to
Main Street provided Main Street has previously approved the
subcontractor so used, and further provided the work done by
such subcontractor falls within the description of services on
Schedule A for which Vendor would be entitled to ▇▇▇▇ ▇▇▇▇
Street if performed by Vendor. There shall be no ▇▇▇▇-up for
work performed by subcontractors and billed to Main Street
under this paragraph 3.5
. SERVICE LEVEL ADJUSTMENTS
From time to time Main Street may request changes in the Services rendered by
Vendor pursuant to this Agreement. Requested changes may be "Minor Changes" or
"Major Changes" (as defined below). A Minor Change means any change that Vendor
and Main Street reasonably agree can reasonably be effected without increasing
Vendor's time, effort, or expense of performing its Services under this
Agreement. All other changes shall be Major Changes.
Vendor will implement Minor Changes reasonably requested by Main
Street. There shall be no additional charges or increased fees
for Minor Changes. However, if a number of Minor Changes taken
together result in increased cost or effort for Vendor, Vendor
may treat those Minor Changes collectively as a Major Change.
Provided, however, that Vendor in order to treat Minor Changes
collectively as a Major Change must first give Main Street a
written notice stating (i) that such Minor Changes are, in
Vendor's opinion collectively a Major Change, (ii) describing
with specificity those Minor Changes which if eliminated would
render the remaining Minor Changes not a Major Change, and
(iii) stating the additional charges or fee increases Vendor
will charge for such Major Change. Main Street shall be
entitled to determine which of the Minor Changes it can
eliminate, or in the alternative negotiate with Vendor
regarding the fee increase in the same manner as provided for
in Section 4.2 below.
.2 Major Changes. Main Street and Vendor will attempt in good
faith to agree on reasonable additional charges or fee
increases, including without limitation, increases in
personnel charges, ongoing fees resulting from the change, and
expenses related to implementing the change, for each Major
Change requested by Main Street. Vendor shall implement Major
Changes requested by Main Street only after Vendor and Main
Street have agreed in writing on such additional charges or
fee increases.
Requests for change may be oral, however, all oral requests must be
confirmed as soon as reasonably possible with a Change Order
form completed by the Main Street. Vendor and Main Street will
agree upon a suitable Change Order format. Vendor agrees to
suggest a format for review and discussion by Main Street.
Facsimile transmission of appropriately authorized Change
Order forms shall be acceptable.
. OBLIGATIONS OF PROJECT MANAGERS
Main Street shall designate one of its employees to be its Project
Manager. The Main Street Project Manager shall have the
day-to-day responsibility for interacting with Vendor's
Project Manager, for supervising the performance by Main
Street of its obligations under this Agreement, for
authorizing payments, and generally directing the work to be
performed by Main Street. Vendor may rely upon the
representations and agreements of Main Street's Project
Manager as lawfully binding on Main Street; provided, however,
Main Street's Project Manager shall not have authority to
enter into written agreements to modify or supersede this
Agreement, except to the extent this Agreement is modified by
Change Orders executed by Main Street's Project Manager. Main
Street shall promptly notify Vendor in writing of any
replacement of the Main Street's Project Manager.
Vendor shall designate one of its employees to be its Project
Manager. Vendor's Project Manager shall have day-to-day
responsibility for interacting with Main Street's Project
Manager regarding all matters relating to the services to be
provided hereunder and for supervising the daily progress and
completion of the work performed by Vendor under this
Agreement. Vendor shall promptly notify Main Street in writing
of any replacement of Vendor's Project Manager. Main Street
shall have the reasonable right to approve Vendor's Project
Manager, and in the event that Main Street is reasonably
dissatisfied with Vendor's Project Manager, Main Street shall
be entitled to request that Vendor replace Vendor's Project
Manager with another person reasonably satisfactory to Main
Street.
The Project Managers or their designated representatives shall
meet as needed, but no less often than monthly, to review
progress and to resolve problems related to the completion of
Services to be performed by Vendor. In the event that a
dispute arises as to the performance of obligations by either
party, the Project Managers shall immediately meet and in good
faith attempt to resolve such dispute. It shall be a primary
responsibility of the Project Managers to resolve such
disputes without invoking the dispute resolution provisions of
this Agreement.
. USE OF ASSETS
Main Street may require in its reasonable discretion that certain
of Main Street's Equipment, Software and other assets
(collectively, "Assets") be installed at the Vendor's Site(s).
The following terms apply to the ownership of the Assets:
.▇ ▇▇▇▇ ▇▇▇▇▇▇ at its reasonable discretion may require
the Vendor to be the direct owner, lessee or
licensee, as the case may be, of any of the Assets
installed at Vendor's Site(s). Main Street at its
sole discretion may require that it be the direct
owner, lessee or licensee, as the case may be, of any
of the Assets located at Vendor's Site. Main Street
at its reasonable discretion may require the Vendor
to be the direct owner, lessee or licensee, as the
case may be, of any of the Assets installed at
Vendor's Site(s). Main Street at its sole discretion
may require that it be the direct owner, lessee or
licensee, as the case may be, of any of the Assets
located at Vendor's Site.
.2 Each of the parties shall be responsible for the
physical security of any Assets located on its own
premises. Each of the parties shall maintain
insurance policies insuring its own Assets, whether
located on its own premises or the other party's
premises. Each of the parties shall be responsible
for the physical security of any Assets located on
its own premises. Each of the parties shall maintain
insurance policies insuring its own Assets, whether
located on its own premises or the other party's
premises.
.3 Upon termination of this Agreement, Main Street may
request and Vendor shall cooperate in the transfer
back to Main Street of any Third Party Software
license agreements which (a) were transferred by Main
Street to Vendor, or (b) for which Main Street paid
the license fees. Main Street shall pay any transfer
fees associated with such transfers of Third Party
Software license agreements required hereunder.
.4 Vendor and Main Street shall cooperate in achieving a
reasonable alternative in the event that the
attempted transfer of an Asset as required hereunder
violates the terms of an applicable agreement with an
outside party and thus cannot be transferred. The
inability to transfer the Asset in such case shall
not constitute a breach of this Agreement and shall
not be grounds for termination.
If, in order for Vendor to provide its Services pursuant to this
Agreement, Vendor provides Main Street with any Vendor
Provided Software for installation at the Main Street Data
Center, Main Street shall have a license to use such Vendor
Provided Software at the Main Street Data Center subject to
the terms and conditions of the license with the vendor of the
Vendor Provided Software. Vendor shall be responsible for
obtaining and paying for any license required to enable Main
Street to use the Vendor Provided Software at the Main Street
Data Center.
. COOPERATION
In order that Vendor may perform its obligations in a timely and acceptable
manner, Main Street and Vendor shall cooperate fully at all times during the
Term of this Agreement, and Main Street shall provide, as reasonably requested
by Vendor, management decisions, information, and access to Main Street's data,
and personnel.
. COMPENSATION AND EXPENSES
.1 Fees. As consideration for the Services provided by Vendor
pursuant to this Agreement, Main Street shall pay Vendor the fees
which are set out in Exhibit "D."
For any services that Vendor shall render to Main Street that are
not specifically described in this Agreement as part of the
Services, Main Street shall pay Vendor such additional fees as
the parties shall mutually agree upon in advance. In the event
that no mutual agreement has been reached as to such
additional fees, Vendor shall not be entitled to ▇▇▇▇ for, or
be paid for, such additional services.
.3 Reimbursable Expenses. In addition to the fees described
above, Main Street will reimburse Vendor for any reasonable
expenses Vendor incurs (other than Vendor's normal salary and
overhead costs, or subcontractor fees) to provide Services at
the request of Main Street. Common reimbursable expenses
include transportation costs, meals, and lodging for persons
who travel to provide services, and charges paid to service
providers such as delivery charges and voice long distance
telephone charges. There shall be no ▇▇▇▇ up or overhead
charges added to any expenses incurred by Vendor and billed to
Main Street pursuant to this Paragraph.
Vendor will periodically invoice Main Street for the fees provided in
Exhibit "D" and the reimbursable expenses provided in Section
8.3. Payment will be due upon receipt of the invoice. If any
invoice is not paid within thirty (30) days of receipt by ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ will pay Vendor interest on the amount
due, beginning five (5) days after the invoice is mailed by
Vendor, at a rate of 1.5% per month, or the highest rate
permitted by applicable law if that is less. However, the
charging of interest is not a consent to late payment.
Main Street shall pay Vendor any amounts not in dispute when
due. Any amounts in dispute will be paid by Main Street into
an interest-bearing escrow account at a mutually acceptable
financial institution within thirty (30) days after the date
of the invoice, and Main Street shall contemporaneously
deliver to Vendor a written notice of such payment into escrow
and the specific basis for the dispute. The parties will
thereafter meet as often as reasonably requested by either
party in a good faith effort to resolve any such dispute.
.5 Taxes. Except for income taxes levied on Vendor, Main Street
shall pay or reimburse Vendor as an added item for all taxes
on goods or services delivered hereunder.
. CONFIDENTIALITY
.1 Obligations on Confidentiality. Vendor understands that Main
Street represents, and Vendor agrees not to dispute, that Main
Street's Confidential Information is proprietary to and
contains confidential trade secrets and business information
of Main Street, and were and will be developed at great
expense. Vendor agrees to treat as confidential and keep
secret Main Street's Confidential Information during the Term
of this Agreement and thereafter. Vendor shall take
precautions not less than those employed to protect Vendor's
own most sensitive proprietary information to maintain the
confidentiality of Main Street's Confidential Information.
Without limiting the foregoing, Vendor agrees that it:
.1 will disclose the Confidential Information only:
.1 i. to its own employees who have a legitimate need to know,
who have been instructed to keep the Confidential Information
confidential; to its own employees who have a legitimate need to know,
who have been instructed to keep the Confidential Information
confidential;.
.2 .3 ii. to Main Street's auditors and governmental authorities
responsible for examining Main Street's affairs who have been
instructed to keep Main Street's Confidential Information
confidential;
.2 shall take all necessary steps to ensure that the provisions
of this Agreement are not violated by any person under its control or
in its service.
.2 Non-Confidential Information
.1 is or becomes publicly available in a written publication in
the public domain through no act or omission of the Vendor;
.2 was in Vendor's lawful possession prior to the disclosure as
evidenced by Vendor's tangible records and had not been obtained by
Vendor either directly or indirectly from Main Street;
.3 is lawfully disclosed to Vendor by a third party without
restriction on disclosure; or
.4 is furnished by Main Street to a third party without
restrictions on disclosure.
.3 Copyright Notice. The existence of a copyright notice will not
cause, or be construed as causing, any part of Main Street's
Confidential
Information to be a published copyrighted work or to be in the
public domain.
. TERMINATION
Either Vendor or Main Street may terminate this Agreement if the
other party breaches a material obligation under this
Agreement and fails to cure that breach within one hundred and
eighty (180) days after receipt of a written notice describing
the breach in reasonable detail. Notwithstanding the above,
Vendor may terminate this Agreement if Main Street defaults in
any payment obligation under this Agreement and fails to cure
that breach within thirty (30) days after receipt of a written
notice of the payment default. Payment of a disputed amount
into escrow as provided in Section 8.4 will not constitute a
default. If Vendor terminates this Agreement due to the
default of Main Street, Vendor may exercise any and all
rights, powers and remedies afforded in this Agreement and may
declare the outstanding, unpaid balance of any and all fees,
payments and other obligations required to be paid by Main
Street to Vendor pursuant to the terms of this Agreement,
together with all interest accrued thereon, to be immediately
due and payable. If this Agreement is terminated for any
reason, Vendor will offer services to assist Main Street in
the transition of services to Vendor's successor at 80% of
Vendor's standard time and materials rates as soon as
practicable after notice of termination.
Main Street shall have the right to terminate this Agreement at any
time by giving Vendor six (6) months advanced written notice
and by paying to Vendor a termination fee which equals three
(3) months fees under this Agreement. As a non-refundable
termination fee deposit, Main Street shall pay to Vendor the
sum of $500,000, payable in three equal monthly payments of
$166,667 per month, on October 15, 1998, November 15, 1998,
and December 15, 1998. If this Agreement is not terminated
prior to the last six (6) months of the term of this
Agreement, then the $500,000 shall be applied to the fees due
to Vendor hereunder.
.3 Termination for Insolvency. If either party files for
bankruptcy, becomes or is declared insolvent, or is the
subject of any proceedings related to its liquidation,
insolvency or for the appointment of a receiver or similar
officer for it, makes an assignment for the benefit of all of
its creditors, or enters into an agreement for the
composition, extension, or readjustment of substantially all
of its obligations (in any event hereinafter referred to as
the "Dissolving Party"), then the other party may, by giving
written notice to the Dissolving Party, terminate this
Agreement as of a date specified in such notice of
termination, but not sooner than thirty (30) days after the
date of the notice of termination.
Upon termination of this Agreement, Vendor will return all of the
data and files of Main Street to Main Street. Main Street
agrees to allow Vendor reasonable access to all such returned
records in the event such access is requested by Vendor for
any reasonable and legitimate purpose, including as a result
of any litigation or any similar proceeding.
.5 Rights Upon Termination. If this Agreement is terminated by
reason of a material breach by Main Street, upon termination
of the Agreement, Main Street shall immediately pay Vendor for
all Services performed by Vendor under this Agreement through
the termination date. In addition, Main Street shall
immediately pay Vendor for all reasonable termination costs,
including but not limited to any losses incurred in connection
with the early termination of any lease or other agreement
relating to provision of Services used by Vendor to perform
the Services pursuant to this Agreement; and any other
reasonable, documented costs and expenses related to
termination; additionally, at Vendor's option, Vendor may
assign to Main Street, and Main Street shall accept assignment
of, all leases, licensees, or other agreements relating to the
provision of Services used by Vendor to provide such Services
to Main Street.
Any provision of this Agreement that expressly or by implication
is intended to continue in force shall survive termination of
this Agreement, including, without limitation, confidentiality
terms, indemnification obligations, tax payments, and accrued
payment obligations.
.7 Conversion to Another Service Provider. If Main Street
converts to another service provider, Vendor agrees to provide
reasonable assistance and documents for said conversion and
Vendor shall be entitled to receive compensation for
consultation provided to assist in the conversion on a time
and materials basis at eighty percent (80%) of the standard
prevailing rate charged by Vendor for such services to its
other customers in good standing.
At termination, Vendor will furnish to Main Street or its agent,
upon Main Street's written request, Main Street's master file
data and history transactions ("Data"), if any, maintained by
Vendor as of the date of termination, and Main Street shall
store and maintain a copy of the Data. The Data will be
provided in a standard format provided by Vendor for
conversions.
.9 Return of Software. Upon termination of this Agreement for any
reason, if Main Street so elects, then Main Street shall be
entitled to demand from Vendor and immediately receive, a
reassignment of all software licenses and all hardware and
maintenance agreements or other agreements that have been
previously transferred or delivered by Main Street to Vendor
pursuant to this Agreement, to the extent such licenses and
agreements are still in force and assignable. Main Street
shall pay all transfer fees charged by third parties for such
reassignment. There shall be no other payment required of Main
Street to Vendor for such reconveyance or conveyance
. WARRANTIES
Warranties by Vendor. Vendor makes the following warranties to Main Street.
.1 Vendor warrants that it will perform the Services
required of it under this Agreement for Main Street
in a good and workmanlike manner in accordance with
industry standards. Main Street may not claim a
breach of this warranty for any particular services
more than two (2) years after any defect in the
Services is detectable by Main Street.
.2 The Services performed by Vendor will not violate any
proprietary rights of any third party, including, but
without limitation, confidential relationships,
tradesecrets, patent, trademark and copyright rights.
In the event Vendor used software in the performance
of Services hereunder, such programs or licenses have
been lawfully acquired by Vendor and Vendor has the
absolute right to permit Main Street to use such
programs as contemplated hereunder, as well as the
absolute right to grant all licenses and sublicenses
contemplated by this Agreement, if any.
.3 There may be other warranties in Change Orders.
However, no statement in this Agreement (including
Change Orders) or any other Vendor document is
intended to be a warranty unless it expressly states
that it is a warranty.
. INDEMNIFICATION / INSURANCE
Vendor agrees to and shall defend, indemnify, and hold Main Street
harmless from and against any loss and damage (including court
costs and reasonably attorney's fees) incurred by Main Street
which arises from any inconsistency with, failure of or breach
of warranty, representation, agreement or covenant hereunder.
During the Term of this Agreement, Vendor shall have and maintain in
force the following insurance coverages from a company or
companies qualified to do business in the State of Florida and
carrying at least an A-XI rating by Best (or equivalent rating
by ▇▇▇▇▇ or Standard & Poors):
.1 Worker's Compensation and Employer's Liability
Insurance, including occupational illness or disease
coverage, or other similar social insurance in
accordance with the laws of the country, state, or
territory exercising jurisdiction over the employee
and Employer's Liability Insurance with a minimum
limit of $1,000,000 per occurrence.
.2 Professional Liability Insurance shall be maintained with
limits of not less than $1,000,000.
.3 Comprehensive General Liability Insurance, including
Contractual Liability and Broad Form Property Damage
Liability coverage for damages to any property with a
minimum combined single limit of $1,000,000 per
occurrence.
.4 Employee Dishonesty and Computer Fraud coverage for
loss arising out of or in connection with any
fraudulent or dishonest acts committed by the
Vendor's personnel or Subcontractors, acting alone or
in collusion with others, in a minimum amount of
$500,000.
.5 Umbrella Liability Insurance following the form and amount of
the primary insurance with limits of not less than $2,000,000.
.6 The Comprehensive General Liability Insurance and the
Umbrella Liability Insurance policies required in
subparagraphs 12.2.1 and 12.2.5. shall also be
endorsed to (a) name Main Street as an additional
insured; (b) waive any and all rights of subrogation
against Main Street; (c) provide for cross-liability
and severability of interest as between Main Street
and Vendor; and (d) provide that such insurance is
primary over any insurance carried by Main Street.
. DISPUTE RESOLUTION
.1 If any dispute arises related to this Agreement or any
transaction governed by this Agreement, senior executives of
both Vendor and Main Street, vested with authority to settle
the dispute, will meet and attempt in good faith to resolve
the dispute before resorting to court or arbitration. The
meeting will be held reasonably promptly at the request of
either Vendor or Main Street in the offices of the party
requesting the meeting.
.1 If the parties are unable to resolve the dispute
after a good faith attempt to do so, the dispute will
be settled by arbitration conducted in Orlando, FL,
by a panel of three arbitrators in accordance with
the then-current commercial arbitration rules of the
American Arbitration Association (the "Rules") as
modified or supplemented by this Section 13. The
Rules are modified or supplemented as follows:
.2 The dispute shall be settled by a panel of three
arbitrators. One arbitrator shall be chosen by
Vendor, one arbitrator shall be chosen by Main
Street, and one neutral arbitrator shall be chosen by
the two selected arbitrators from a panel of
arbitrators knowledgeable in business information and
data processing systems.
.3 It is important to the parties that there be prompt,
expeditious handling and disposal of the controversy.
Accordingly, the arbitrators are instructed and
directed to schedule promptly all discovery and other
steps to be taken in resolution of the controversy
and otherwise to assume case management initiative
and control to effect an efficient and expeditious
resolution of the controversy within six (6) months
of the initiation of arbitration proceedings. To
achieve this result, the arbitrators may modify or
supplement the Rules as they may deem fair, provided
that they shall promptly notify the parties of such
modifications and supplements.
.4 The arbitration will be conducted in such a manner
that the subject matter of the controversy (but not
its existence) and any trade secrets of the parties
will remain confidential, not disclosed to
competitors of the parties or to any trade press or
other media.
.5 The arbitrators shall determine the matter(s) in dispute in
accordance with this Agreement and applicable law.
.6 The award of the arbitrators shall be the sole and
exclusive remedy between the parties regarding the
claims, counterclaims, issues or accountings
presented or pled to the arbitrators, provided that
the arbitrators shall have no authority to award
punitive damages or any other form of
non-compensatory damages.
.7 Discovery shall be permitted in accordance with the Federal
Rules of Civil Procedures.
.2 Judgment upon the arbitrators' award may be entered and
enforced in any court of competent jurisdiction.
. MISCELLANEOUS
.1 Force Majeure. If either Vendor or Main Street is unable to
perform its obligations under this Agreement due to
circumstances beyond its reasonable control (other than
obligations for the payment of money or obligations of
confidentiality), such obligations shall be suspended so long
as those circumstances persist, provided that the delaying
party notifies the other promptly of the delay and its causes,
and immediately commences performance as soon as the event
occasioning the delay has ended. Except where a delay is
caused by the act or omission of the other party (in such
event the rights, remedies and liabilities of the parties
shall be those conferred and imposed by the other terms of
this Agreement), any costs arising from such delay shall be
borne by the party incurring the same costs.
.2 Assignment. Except for Vendor's use of Subcontractors to
perform the obligations of Vendor under this Agreement, Vendor
may not otherwise assign or sublicense or otherwise transfer
voluntarily, or by operation of law, any rights or obligations
under this Agreement without Main Street's prior written
consent. This Agreement is personal to Vendor, and Main Street
is entering into this Agreement because of its confidence in
Vendor's ability to perform as stated herein.
.3 Governing Law. THE LAWS OF THE STATE OF FLORIDA GOVERN THIS
AGREEMENT. VENDOR UNCONDITIONALLY SUBMITS TO NONEXCLUSIVE VENUE AND
JURISDICTION FOR ALL DISPUTES ARISING FROM THIS AGREEMENT IN THE
APPROPRIATE FEDERAL OR STATE COURT LOCATED IN ORANDO, FLORIDA.
During the Term of this Agreement and for one year after its
termination, neither Vendor nor Main Street may hire an
employee, or enter into a contract with an employee or former
employee of the other party without first obtaining the other
party's written consent, except for former employees who have
not been an employee for over six (6) months.
.5 Currency; Language. All monetary amounts are in U.S. dollars
and it is the responsibility of Main Street to timely obtain U.S.
dollar funds, freely payable to Vendor, to meet the obligations Main
Street has assumed hereunder. All communications between the parties,
and all documentation and other materials, will be in English.
This Agreement, including any Change Orders, and written amendments
expressly made a part of this Agreement, states the entire
understanding between Vendor and Main Street concerning the
subject matter of this Agreement, and supersedes all prior
oral and written communications. No amendment to this
Agreement shall be effective unless it is in writing and
signed by Vendor and Main Street.
Nothing contained herein shall be construed to restrict Vendor from offering
or providing services similar to the Services to any other party.
The infringement by Vendor of Main Street's Intellectual Property
or any intangible legal rights or interests evidenced by or
embodied in Main Street's Intellectual Property Rights would
cause irreparable harm and significant injury, which may be
difficult to measure with certainty or to compensate through
money damages. Vendor acknowledges, therefore, that Main
Street shall be entitled, without waiving any additional
rights or remedies available to the aggrieved party at law, in
equity or by statute, to such injunctive and equitable relief
as may be deemed proper by a court of competent jurisdiction
without the necessity of proving irreparable injury.
This Agreement has been mutually negotiated by the parties. The
parties therefore agree that no rule of strict construction
against the party who drafted this Agreement shall apply.
All employees of Vendor performing services hereunder for Main
Street shall be under the exclusive direction and control of
Vendor and shall not be considered employees of Main Street.
Vendor shall be an independent contractor as to Main Street
and shall have authority to control and direct the performance
of all Services which Vendor performs hereunder.
.11 Counterparts. The signatures of the parties need not appear
on the same copy of this Agreement, so long as each party signs at
least one copy of this Agreement and the copies contain the same
terms.
.12 Notices. Any notice, request, instruction or other
communication at any time hereunder required or permitted to
be given or furnished by either party hereto to the other
shall be deemed sufficiently given or furnished if in writing
and actually delivered to the party to be notified at the
address stated in this Agreement. It shall be conclusive proof
of delivery if a party has mailed by Unites States Mail,
postage prepaid, return receipt requested, a notice to the
other party and has received proof of delivery from the United
States Postal Service. Either party may change its address for
notice by written notice to the other party.
AS TO Main Street: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ Trail
Sarasota, FL 34236
WITH A COPY TO: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ESQUIRE
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
AS TO VENDOR: ▇▇▇▇▇▇▇ HAMMOCK RANES AND
COMPANY, P.A.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
WITH A COPY TO: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., ESQUIRE
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇., ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
.13 Headings. The headings used herein are inserted only as a
matter of convenience and for reference and shall not affect the
construction or
interpretation of this Agreement.
.14 Limitation on Actions. Any claim or cause of action arising
under or related to this Agreement, whether asserted by
arbitration or in a court of law as may be permitted under
this Agreement, must be initiated or filed by the party
asserting same within one year from the date upon which such
claim or cause of action accrued.
.15 Severability. If any provision of this Agreement is held to
be unenforceable, all other provisions will nevertheless continue in
full force and effect.
Notwithstanding anything herein to the contrary, the parties agree that this
Agreement is for the benefit of Main Street and Vendor only
and is not intended to confer any legal rights or benefits on
any third party, including, but not limited to, any affiliate
of either party, and that there are no third party
beneficiaries to this Agreement or any part or specific
provision of this Agreement. Without limiting the foregoing,
it is specifically agreed between the parties to this
Agreement that no employee of Vendor or Main Street shall be a
third party beneficiary of this Agreement.
In the event it is necessary for either party to enforce any of
the provisions of this Agreement by or through an attorney at
law, the prevailing party, as determined by the court,
arbitrator or other tribunal, shall be entitled to a judgment
against the other party for all reasonable costs of such
enforcement including without limitation, reasonable
attorneys' fees and paralegal fees incurred in such
enforcement, whether incurred before trial, at trial, or at
any appellate level, or in any mediation or arbitration
proceeding.
.18 Authority of Signatures. It is hereby acknowledged and agreed
that the party or parties executing this Agreement have been
empowered and directed to do so and have the requisite
authority to execute this Agreement and thereby bind such
party to the obligations contained herein.
.▇▇ ▇▇▇-▇▇▇▇▇▇. Any failure to enforce, at any time, any of the
provisions of this Agreement shall not constitute a waiver of such
provisions nor of the party's right to enforce such provisions.
. LIST OF SCHEDULES
The Schedules attached to this Agreement are incorporated herein by reference
and for all intents and purposes shall be deemed a part of this Agreement as if
fully set forth in the body hereof. The following is a list of such Schedules:
Schedule A - SERVICES TO BE PROVIDED BY VENDOR
Schedule B - MAIN STREET'S SOFTWARE
Schedule C - FEE SCHEDULE
IN WITNESS WHEREOF, the parties hereto have executed this
Outsourcing Agreement in manner and form sufficient to bind them on
the day and year first written above:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ AND COMPANY, P.A.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ SERVICES, INC.
SIGNATURE TITLE DATE
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇ Chief Accounting Officer April 25, 1998
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Senior Vice President April 25, 1998
1
SCHEDULE A
SERVICES
BHR shall provide the following services:
The services listed in sections A, B & C below are the fixed monthly fee
services. The fees for these services ($97,000 a month) and the major
assumptions used to determine the fees are described in Schedule C.
Monthly Accounting Services. BHR shall perform the specific duties described
below, at the direction of Main Street or Phoenix.
Deposit and account for all cash receipts.
Monitor cash balances in all bank accounts and prepare cash transfers when
necessary.
Prepare and maintain cash flow projections for all entities to facilitate
proper cash control.
Prepare invoices for all amounts due Company and monitor collection and
aging of receivables.
Maintain accounts payable detail.
Review and approve all vendor invoices for payment and prepare vendor
checks. Subject to the availability of sufficient cash, net of adequate
reserve cash balances, sign and mail checks when required in order to
obtain any vendor discounts.
Prepare payroll for the Company for those former employees continuing to
receive severance benefits.
Maintain all fixed asset schedules and account for all additions and
disposals.
Maintain monthly general ledgers for six entities including:
recording of all cash receipts; recording of all cash disbursements;
recording of all investment activity; recording of the fixed asset
transactions; reconcile all bank accounts; reconcile investment
accounts;
verify the accurate and timely payment of payroll taxes;
reconcile all remaining general ledger balance sheet accounts monthly
to verify account balances; and review all income statement accounts
for reasonableness of balances.
Prepare distribution payments to shareholders after approval by the Board of
Directors of the Insurance Company.
Prepare monthly financial statements on a GAAP and statutory basis.
Prepare GAAP to statutory conversions of the accounting data needed for
certified audits.
Prepare budgets for the Company entities remaining after the Zenith
transaction.
Prepare quarterly reports of actual vs. budgeted results for review by the Board
of Directors.
Prepare explanations of significant budget variances.
Record all investment transactions and maintain Schedule D for all
companies.
Perform such other duties customarily performed by a chief financial officer
and a corporate accounting staff.
Financial Reporting Services. BHR shall perform the specific services described
below, at the direction of Main Street or Phoenix.
Prepare and file the annual Form 10-K.
Prepare and file the quarterly Form 10-Q's.
Prepare and file the Statutory Annual Statements.
Prepare and file the Statutory Quarterly Statements.
Tax Services. BHR shall perform the specific services described below, at the
direction of Main Street or Phoenix.
Prepare and file all local, state and federal tax returns for Company,
including, but not limited to, income, property, franchise, sales and
intangible taxes.
Prepare tax information necessary for the preparation of the financial
statements. This includes all schedules necessary for the annual audit.
Perform quarterly tax calculations and determine the allocation of the tax
liabilities among the entities.
The services listed in sections D, E & F below will be billed to the Company on
an hourly rate basis. The rates for these services are described in Schedule C.
Accounting and Consulting Services. The accounting and consulting services
listed below will be billed to the Company on an hourly rate basis. The
rates for these services are described in Schedule C.
Preparation and defense of the Proposed Business Balance Sheet and the
determination of the Final Business Balance Sheet (as such terms are
defined in the Asset Purchase Agreement) in accordance with the terms
of the Asset Purchase.
Closing of the March 1998 books and records and preparation of the March
31, 1998 Form 10-Q and March 31, 1998 statutory quarterly statements.
Conversion of the Conning data into the new Schedule D program.
Attendance at Board of Director and Audit Committee Meetings.
Consulting on the sale of the licenses or the shell companies.
Consulting on other miscellaneous transactions, including sales of other
assets.
Meeting with attorneys or management and providing litigation support to
the attorneys to defend known and future litigations.
Meeting with the attorneys or management regarding other matters.
Cleaning up the shell companies to prepare them for sale.
Coordination and assistance to the Company's independent auditors in
connection with the year end audits of the Company.
Assisting the in-house attorney in liquidating and consolidating the number
of RISCORP entities to the six assumed in the monthly fee estimate.
Perform the liquidation accounting for the liquidated entities.
Complete the imaging project, including training and transmission of data
to other users of the imaged data.
Respond to all regulatory correspondence.
Maintain document depository of accounting records for litigation and tax
purposes.
Maintain general ledgers for all entities greater than the six entities
included under Schedule A (A).
Tax Services. The tax services listed below will be billed to the Company on an
hourly rate basis. The rates for these services are described in Schedule C.
Defend Company in any audits related to its tax returns, including
gathering information and responding to questions.
To the extent necessary, prepare tax provisions and returns for Third
Coast Insurance Company, Governmental Risk Trust National Alliance for
Risk Management Association and the North Carolina Commerce Fund.
Prepare and file information returns on Forms 1099 and provide backup
withholding notices on Forms B.
Preparing responses to notices from various State Departments of
Revenue (DOR), currently approximately 10 hours a month are spent
responding
to notices.
Assistance with any DOR examinations.
Review Forms 1099 for 1998 and B notices during 1990 and 2000.
Responding to request from RISCORP personnel on tax planning matters.
Prepare all premium tax returns for the Insurance Companies.
The budget assumes that RISCORP will retain ▇▇▇▇▇▇ ▇▇▇▇ in 1998 and 1999 to
prepare the 1998 Form 1099. If BHR prepares the 1099's, the time will be billed
on an hourly rate basis.
General Administration. Perform the following functions outlined below, at the
direction of Main Street or Phoenix.
Makesuch reports pertaining to matters of concern or general interest with
respect to the Company as Main Street, the Company's Board of Directors
or Phoenix, may reasonably request and provide such administrative
assistance and staff support to the Company Board of Directors and its
committees as may be reasonably necessary for the Directors to carry
out their duties and responsibilities to the Company.
Provide to the certified public accountants selected by the Company Board
of Directors such reports and information as may reasonably be
necessary to enable such accountants to express their professional
opinion as to the financial condition of Company.
Uponrequest of the Company Board of Directors, represent Company at
examinations, hearings, meetings and administrative inquiries involving
the financial interests of Company, and before the SEC or any insurance
department or any other agency of a state in which Company does
business.
Uponreasonable request, provide to the actuaries employed by the Company
such reports and information as may reasonably be necessary for such
actuaries to express their professional opinion as to the financial
status of Company.
Provide to the Company Board of Directors financial information and reports
regarding Company, assist in overseeing the fiscal policies and
financial matters of Company, provide administrative support for the
fiscal operation and management of Company, including preparation,
accumulation and maintenance of the records of Company in accordance
with statutes or regulations promulgated by the SEC, the Internal
Revenue Service or any insurance department or governing authority.
Notwithstanding any foregoing to the contrary, Vendor shall not take direction
directly from the Company Board of Directors, but shall act solely at the
direction of Main Street or its designated contractor.
SCHEDULE B
MAIN STREET'S SOFTWARE
SCHEDULE C
FEE SCHEDULE
Fees Related to Fixed Fee Monthly Services
The monthly fees for the services specified in Schedule A, assuming an April 1,
1998 or May 1, 1998 closing date, are estimated to be $97,000 per month for the
remainder of 1998, $73,000 per month for 1999 and $80,500 per month for 2000 (a
10% increase over 1999). The monthly fees are higher for 1998 because there is
less than a full year (assuming a 4-1-98 or 5-1-98 closing date) to collect the
estimated fees for the regulatory reporting (Form10-K, June and September Form
10-Q's, statutory quarterly and annual filings, etc...) and the 1998 tax
services.
In addition to the monthly fees described above for the monthly accounting
services, the fees to prepare the 1997 tax returns (due in September 1998) are
estimated to be $65,000. This amount relates to 1997 and, therefore, is not
included in the 1998 monthly fee described above and will be billed to RISCORP
in September 1998 as a separate item.
Payment of the monthly accounting and tax fees is due on the
first of the month beginning April 1, 1998 (assuming an April 1, 1998
closing date). The monthly fees for 1998, 1999 and 2000 are as
follows:
1998 -- 97,000
1999 -- 73,000
2000 -- 80,500
In addition, the 1997 tax return preparation fees of $65,000 discussed above
will be due September 1, 1998.
Assumptions Used to Prepare Fixed Fee Monthly Service Estimates
The following major assumptions were used to prepare this fee estimate and the
services that will be provided:
After the sale to Zenith, RISCORP will begin a consolidation of the number
of active companies from 15 to 6 active companies. The six active surviving
companies are expected to be RISCORP of Florida, RIC, RPC, RNIC, 1390 Main
Street, and RISCORP, Inc. It is anticipated the consolidation will be
completed before December 31, 1998. If this consolidation of companies does
not occur, then BHR reserves the right to revise the fee. The revised fee
will be submitted to RISCORP or its designee for approval.
RISCORP will retain ▇▇▇▇▇▇ ▇▇▇▇ as an employee of the tax department on a
full time basis until final liquidation of RISCORP occurs or until her
duties are complete. If ▇▇▇▇▇▇ ▇▇▇▇ is not retained and no arrangement is
made with Zenith to utilize ▇▇▇▇▇▇ ▇▇▇▇ or some other Zenith employee on a
contract basis, then BHR reserves the right to revise the fee relating to
the preparation of the Form 1099's for 1998. The revised fee will be
submitted to RISCORP or its designee for approval.
The final liquidation of RISCORP will occur within 36 months of the sale
to Zenith.
If these assumptions are incorrect, BHR reserves the right to request a
modification of the fee for the fixed fee monthly services.
Hourly Rate Services
The hourly rates listed below will be charged for the consulting and tax
services performed on behalf of RISCORP for services that are not related to the
monthly accounting and tax services. The rates shown below will be charged for
1998 and 1999, hourly charges for 2000 will be based on the 1998 and 1999 rates
increased by 10%. Services that will be performed on an hourly rate basis are
described in more detail in Schedule A.
Accounting and Consulting Rates:
▇▇▇▇▇▇▇ - Partner $ 235
Hammock - Partner $ 185
▇▇▇▇▇▇▇▇▇/▇▇▇▇▇ - Senior Manager $ 130
Sicilian/▇▇▇▇▇▇▇▇▇ - Manager $ 100
Senior Accountants $ 80
Staff Accountants $ 60
Paraprofessionals $ 45
Clerical $ 25
Tax Rates:
▇▇▇▇ - Partner $ 175
▇▇▇▇ - Senior $ 80
Staff Accountants $ 60
For the years 2001 and beyond, the monthly accounting and tax fees will be
negotiated based on the level of services that are necessary for the year 2001
and our current rates at that time; however, our fees for the year 2001 will not
be greater than those for year 2000 unless RISCORP resumed significant
operations.
Out-of-pocket expenses will be billed to RISCORP as incurred. Reimbursed
expenses will include travel, computer software (specific to the RISCORP
engagement), expenses related to document storage, overnight delivery charges,
computer line charges and long distance charges (specific to the RISCORP
engagement), any increase in BHR's insurance costs incurred as a result of the
increased limits of coverage specified in this contract, and other expenses
specifically incurred for the benefit of RISCORP. All normal overhead expenses
are included in the fee estimate and will not be separately billed.
Services to Close the March 31, 1998 Books and Records, Preparation of the
Closing Business Balance Sheet and Preparation of the March 31, 1998 Form 10-Q
and Quarterly Statutory Reports
We have assumed that Zenith personnel will complete the majority of the
accounting and financial statement preparation for the period ended March 31,
1998 under the supervision of BHR. We have also assumed that Zenith personnel
will prepare the audit schedules for KPMG necessary to support the Closing
Business Balance Sheet under the direct supervision of BHR. Any reviews
performed by BHR, either in the supervision or the direct preparation of such
financial statements or schedules, will be billed to RISCORP on an hourly basis
under our existing engagement letter.
Consulting Services Between the Closing Date and the Completion of the Mediation
Process (Estimated to be 135 days)
After the closing date of the Zenith transaction, BHR will be required to
maintain an actual presence in Sarasota to work with KPMG and Zenith personnel
to complete the audit of the Transferred Assets and Liabilities and to consult
with RISCORP management on issues relating to the Zenith transaction. We will
continue to provide such services under our existing engagement letter, as
amended for 1998 rate increases.
Payment for all services and expenses performed on behalf of the Company in
connection with the Transferred Asset and Liability balance sheet will be billed
to the Company on a weekly basis with payment due three business days after
rendering an acceptable billing to the Company.
Non-Refundable Retainer
RISCORP will pay to BHR a non-refundable retainer of $500,000, which shall be
applied by BHR against fees due to BHR during the last six months of the term of
this agreement. This non-refundable retainer will be paid in three payments of
$166,667 per month beginning October 15, 1998.
