Exhibit 10.8
SOFTWARE LICENSE AGREEMENT
between
INSPIRE INSURANCE SOLUTIONS, INC., debtor and debtor-in-possession
and
ARROWHEAD GENERAL INSURANCE AGENCY, INC.
Dated as of May 14, 2002
SOFTWARE LICENSE AGREEMENT
THIS SOFTWARE LICENSE AGREEMENT, dated as of May 14, 2002 (the "Signing
Date"), is by and between INSpire Insurance Solutions, Inc., a Texas
Corporation, and debtor and debtor-in-possession ("INSpire"), and Arrowhead
General Insurance Agency, Inc. a Minnesota Corporation ("Customer" or "AGIA").
INSpire and Customer are sometimes collectively referred to as the "Parties,"
and individually referred to as a "Party". This Software License Agreement,
together with the Schedules and Exhibits referenced herein and attached hereto,
are referred to as this "Agreement."
RECITALS
A. INSpire provides certain policy processing, servicing and
administration services to Customer pursuant to a Policy Administration Services
Agreement, dated as of December 1, 1998 by and between INSpire and Customer (the
"Policy Administration Agreement").
B. INSpire and Customer desire to terminate the Policy Administration
Agreement and to concurrently enter into various new agreements, including this
Agreement, which will collectively establish a new business relationship between
the Parties.
C. On February 15, 2002, Inspire voluntarily filed a petition for
relief under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy
Code") with the United States Bankruptcy Court for the Northern District of
Texas, Fort Worth Division (the "Bankruptcy Court"), which is administered under
Case No. 02-41228-DML (the "Bankruptcy Case").
D. INSpire and Customer further desire that this Agreement, as well as
the other agreements referenced in it, shall only be effective and binding on
them if (1) all of such agreements are approved by a final order of the
Bankruptcy Court acceptable in form and substance to Customer, and (2) INSpire's
rejection of the Policy Administration Agreement is approved by a final order of
the Bankruptcy Court acceptable in form and substance to Customer.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the promises and the mutual
agreements, covenants, representations and warranties set forth in this
Agreement and for other good, valid and binding consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, hereby agree as follows:
ARTICLE I
LICENSE; LICENSING FEE; OTHER AGREEMENTS
Section 1.1 Grant of License. Effective on the later of the Signing
Date or the date when this Agreement is approved by the Bankruptcy Court as
provided for herein (the "Effective Date"), INSpire grants to Customer, its
affiliates and subsidiaries, and Customer accepts, subject to all terms and
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conditions of this Agreement, a non-exclusive, fully paid (upon receipt of the
fees due hereunder) non-transferable, perpetual (unless earlier terminated in
accordance with Section 6.1) license to receive and install those software
programs and systems more fully described in Schedule 1.1 to this Agreement (the
"System") and to use, develop, maintain, support, modify and execute the System
for the purpose of processing Customer's data, information, files, claims and
policies, all as more fully described in this Agreement (the "License").
Notwithstanding the foregoing, and except for APPS, CARS and the Legacy System
(as defined below), Customer shall have no right to receive copies of or modify
the source code of the System prior to the release of the Deposit Materials for
a Release Event under the Comprehensive Preferred Escrow Agreement, all as
defined in Section 2.1(b), or until expiration of the PSA (as defined below) on
December 31, 2008. INSpire shall deliver the System (object code version only,
except for APPS, CARS and the Legacy System for which the source code version
will also be delivered) to Customer, including all related documentation and
information available in print and electronic form and necessary to operate and
utilize the System, on a date to be mutually agreed to by the Parties, but
within 5 days after the Signing Date (the "Delivery Date") as provided for
below. INSpire shall offer Customer any object code versions of the System
software and/or related documentation issued by INSpire from time to time to its
customers pursuant to fee-paid standard maintenance, including patches,
maintenance releases and/or error corrections, and new releases (collectively
"Upgrades"), at no additional cost to Customer until December 31, 2008. Customer
will bear the costs of implementing such Upgrades that it should wish to
integrate into the System.
Section 1.2 Licensing Fee. In return for the License and upon delivery
of the System to Customer, Customer will pay to INSpire a one-time licensing fee
of $1,500,000 payable in 12 equal monthly installments (the "Licensing Fee").
The first installment payment of the Licensing Fee is due at the end of the 1st
full calendar month after the Effective Date of this Agreement and thereafter
each payment will be due by the 10th of the following month. (See Schedule 1.2
attached.)
Section 1.3 Systems Maintenance. All System maintenance services
performed by Inspire for Customer will be subject to a separate Professional
Services Agreement ("PSA") between INSpire and Customer to be executed
concurrently with this Agreement.
Section 1.4 Risk of Loss. Upon delivery of the System to Customer, the
risk of loss, damage or destruction shall be borne by Customer. In the event of
such loss, damage or destruction, INSpire agrees to furnish replacement
materials at reasonable replacement costs, but in no event will INSpire be
liable for the loss or replacement of Customer's data used with the System or
any other cost, expense, damage or loss incurred by Customer.
Section 1.5 Taxes. Inspire shall pay any and all sales, excise, use,
value-added or other similar taxes or duties levied or based on payments made
pursuant to this Agreement.
Section 1.6 Payment.
(a) Interest on Past Due Payments. Any sum due INSpire
pursuant to this Agreement that is not paid by the date on which payment is due
shall bear interest from that date until the date such sum is paid at the lesser
of 1.5% per month or the maximum rate of interest allowed by applicable law.
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Customer will also pay INSpire for any reasonable expenses, including attorneys'
fees, incurred by INSpire in the collection of any amounts due and payable under
this Agreement.
(b) Electronic Funds Transfer. INSpire will provide Customer
bank routing information. All payments are to be via Electronic Funds Transfer
(EFT), unless otherwise agreed to in writing by the parties, to the account
specified in writing by INSpire.
(c) Payment of Undisputed Amounts. In the event that there is
an amount in dispute, Customer is still obligated to pay all undisputed amounts
on all invoices.
Section 1.7 Policy Processing and Administration Agreement; Sublease of
Premises; Professional Services Agreement; Asset Purchase Agreement,
Comprehensive Preferred Escrow Agreement, and Claims Administration Agreement.
(a) Policy Processing and Administration Agreement. Concurrent
with the execution of this Agreement, and as a condition to it, Customer and
INSpire will enter into a separate Policy Processing and Administration
Agreement by which INSpire will provide certain policy processing and
administration services to Customer.
(b) Sublease of Premises. Concurrent with the execution of
this Agreement, and as a condition to it, Customer and INSpire will enter into a
separate Sublease by which INSpire shall sublease office premises located at
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, to Customer.
(c) Professional Services Agreement. Concurrent with the
execution of this Agreement, and as a condition to it, Customer and INSpire will
enter into separate Professional Services Agreement by which Inspire will
provide certain professional services to Customer.
(d) Asset Purchase Agreement. Concurrent with the execution of
this Agreement, and as a condition to it, Customer and INSpire will enter into a
separate Asset Purchase Agreement by which INSpire will sell certain assets to
Customer and Customer will purchase such assets from INSpire.
(e) Comprehensive Preferred Escrow Agreement. Concurrent with
the execution of this Agreement, and as a condition to it, Customer and INSpire
will enter into separate Comprehensive Preferred Escrow Agreement by which
Inspire will maintain in escrow a copy of the object code and source code for
the latest version of INSpire's software incorporated in the System in use by
Customer ("Deposit Materials").
(f) Claims Administration Agreement. Concurrent with the
execution of this Agreement, and as a condition of it, Arrowhead Claims
Management, Inc., INSpire and INSpire Claims Management, Inc. will enter into a
separate Claims Administration Agreement by which INSpire and INSpire Claims
Management, Inc. will provide certain claims administration services to
Arrowhead Claims Management, Inc.
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ARTICLE II
SYSTEM DELIVERY; ESCROW; TRAINING; PERFORMANCE
Section 2.1 System Delivery. Prior to delivery of the System to
Customer, INSpire will provide Customer with INSide Out Base 6.5 documentation
and the documentation of all completed Spot modifications made to INSide Out
Base 6.5 that are part of Customer's System. INSpire and Customer have agreed
that INSpire will make certain corrections and improvements to the System within
one year after the Effective Date of this Agreement (the "Spot Report Items").
The Spot Report Items are set forth on Schedule 2.1. INSpire shall deliver each
Spot Report Item into production as part of the System pursuant to specific work
orders agreed upon in advance by the Parties and set forth in Appendix A (the
"Work Orders") and by the implementation date set forth thereon (the
"Implementation Date"). Customer will test the Spot Report Items delivered by
INSpire pursuant to each Work Order in accordance with a mutually agreeable test
plan and test cases to ensure that they meet the specification set forth on the
Work Order (the "Acceptance Testing"). INSpire will deliver at least 20 of the
22 "Group I" Spot Report Items within ninety (90) days after the Signing Date.
INSpire will deliver at least 37 of the 40 "Group II" Spot Report Items within
one-hundred eighty (180) days after the Signing Date. INSpire will deliver at
least 65 of the 69 "Group III" Spot Report Items within one (1) year after the
Signing Date. In the event Spot Report Items are amended so that the
Implementation Date is beyond the timeline called for by this Section, INSpire
will deliver 90% of the Spot Report Items remaining within each Group by their
respective Implementation Dates. Spot Report Items included as "Current Programs
Rollout Schedule" on Schedule 2.1 will be delivered within a mutually agreed
upon timeframe after the Signing Date. Customer shall be entitled to receive a
penalty payment from INSpire equal to the lesser of $5,000 or the cost of
completing the Spot Report Item (which shall be calculated by multiplying the
number of hours required to complete the Spot Report Item by $115) for each Spot
Report Item that is not delivered for Acceptance Testing by the Implementation
Date set forth on the respective Work Orders only in the event that the overall
standard set forth above for "Group I", "Group II" and "Group III" Spot Report
Items is not met by INSpire (the "Penalty"). Penalty payments by INSpire shall
not in the aggregate exceed 15% of the License Fee. Such Penalty Payments will
not in any way limit, restrict or relieve any Party of liability for any breach
of this Agreement. Customer may offset, upon thirty (30) days prior written
notice to INSpire, the Penalty payments owed by INSpire against the Licensing
Fees payable by Customer to INSpire. Such Penalty shall not apply to the extent
that INSpire's failure to timely deliver a Spot Report Item is attributable to
Customer's failure to perform its obligations under the relevant Work Order or
any amendment thereto.
(a) Computer Hardware. Customer may install the System on any
computer hardware that meets the minimum requirements specified in Schedule
2.1(a).
(b) Escrow of Source Code. Concurrent with the execution of
this Agreement, INSpire and Customer shall enter into a Comprehensive Preferred
Escrow Agreement (the "Escrow Agreement"), in the form attached hereto as
Exhibit A, at Customer's sole cost and expense, for the escrowing of the Deposit
Materials, along with any necessary existing documentation and information for
the same. Pursuant to the Escrow Agreement, within 60 days of the material
modification to the source code embodied in the Deposit Materials but in no
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event less than once per calendar quarter, INSpire shall place the most current
version of the Deposit Materials in escrow. In the event of an uncured breach of
this Agreement or the PSA by INSpire or INSpire's bankruptcy or business failure
other than the Bankruptcy Case, or the Bankruptcy Case is converted to a case
under Chapter 7 of the Bankruptcy Code, or the expiration of the PSA on December
31, 2008 or such earlier termination of the PSA that does not involve an uncured
breach by Customer, Customer may request release of the Deposit Materials, as
provided for in the Escrow Agreement (the "Release Event"). Upon release of the
Deposit Materials to Customer, Customer shall be entitled to install and use the
Deposit Materials in order to develop, maintain, modify, support and/or execute
the System as provided in this License Agreement.
(c) Multiple Copies. Customer may make more than one copy of
each software program delivered to it under this Agreement for non-productive
backup and testing purposes, provided that any and all proprietary and copyright
notices of INSpire are included thereon.
Section 2.2 Customer Training. INSpire shall provide training as
requested by Customer, using resources provided under the Professional Services
Agreement.
Section 2.3 Warranty Period. For six months following the Effective
Date of this Agreement (the "Warranty Period"), INSpire will correct each System
Failure, which are defined as a failure causing the System to be down, which
precludes Customer from successful operation of either the total System or an
application or component critical to operation and which requires immediate
attention (for example, abnormal terminations or data integrity problems)
("System Failure"). In the event of a System Failure during the Warranty Period,
the following procedure shall be adhered to by INSpire and Customer:
(a) Customer shall notify INSpire promptly following discovery
of the System Failure.
(b) Customer shall, upon request of INSpire, submit to INSpire
a list of output and any other data that INSpire may require in order to
reproduce any such error and the operating conditions under which the System
Failure occurred or was discovered and that which may further support INSpire in
its attempts to address and correct the System Failure. INSpire will respond
within four hours of receiving notification of the System Failure and shall not
substantially interrupt its response until the System Failure is corrected.
(c) INSpire shall provide telephone services to correct the
System Failure. If the System Failure persists for more than one business day,
INSpire shall provide on-site support the following day to correct the System
Failure.
(d) If the System Failure is solely due to or arises from an
act or omission of Customer, Customer agrees to pay for the services rendered in
analyzing and correcting the System Failure at a Hourly Rate of $115 per hour,
plus reasonable incurred travel expenses. Customer's failure must be clear, as
it relates to the System documentation furnished by INSpire. If INSpire believes
that a System Failure is due to or arises solely from an act or omission on the
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part of Customer, INSpire must notify Customer and receive a written
acknowledgment of receipt of notice from Customer. If the System Failure is
solely due to or arises from an act or omission on the part of INSpire, Customer
will not be charged to correct the System Failure. If a System Failure is due to
or arises from an INSpire failure and that System Failure persists uncorrected
for more than three (3) business days, INSpire will credit Customer $10,000 for
each day thereafter until the System Failure is corrected. Customer may offset,
after thirty days prior written notice to INSpire, the Service Level Penalties
owed by INSpire against the Services Fees payable by Customer to INSpire. In the
event that INSpire Claims believes that Service Level Penalties have been
improperly offset by Customer, INSpire shall have full recourse to all remedies
provided for in Article IX of this Agreement.
ARTICLE III
LIMITATIONS OF LICENSE
Section 3.1 Purpose and Limitation of License. The license granted
pursuant to this Agreement is limited to use of the System solely in Customer's
business operations to process and administer policies, claims and data of its
affiliates and its subsidiaries, its customers and its insurers. Customer may
use the System at any location and on any network. The Parties further agree
that Customer's agents, customers, and representatives will have the right and
capability to interact with the System by using the System's online or remote
access capabilities for inquiry and input. If Customer chooses to use a third
party to process and administer its business, that third party will also have
the right to use the System solely for the purpose of processing and administer
Customer's policies, claims and data pursuant to this Agreement, provided the
third party agrees in writing to be bound by the terms and conditions of this
Agreement prior to disclosure or access to the System.
Section 3.2 Work Product. Customer acknowledges that INSpire retains
ownership of the System and all the components thereof, and any development,
enhancement or modification made by it thereto, and all intellectual property
rights therein, subject to the license granted by this Agreement.
Notwithstanding the foregoing, INSpire agrees that any customization of the
System made by INSpire solely for the benefit of Customer will be the sole
property of Customer only if the words "Proprietary Product of Arrowhead" are
identified in the relevant Work Order ("Customer Proprietary Product"). INSpire
may independently develop similar functionality as long as no members of the
team that developed the Customer Proprietary Product for the Customer develop
the similar functionality. INSpire will only be prohibited from developing
similar functionality if the words "Exclusive Intellectual Property" are
included in the relevant Work Order. In no case will INSpire be prohibited from
developing similar functionality after 24 months subsequent to the delivery of
the Work Order to the Customer. INSpire may at its sole discretion elect not to
perform the Services relative to Work Orders that contain the words "Exclusive
Intellectual Property."
Section 3.3 Non-Exclusivity. The rights granted under the terms of this
Agreement are non-exclusive. No provision of this Agreement is meant to preclude
the sale, distribution or license of the System by INSpire to any other party
for sale as a stand-alone product, or in combination with any other product.
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ARTICLE IV
WARRANTIES BY INSPIRE
Section 4.1 Warranties by INSpire. INSpire warrants and represents
that: (a) it is the owner of the System and may lawfully grant the license to
the System; (b) to INSpire's actual knowledge, the System nor the use thereof
within the scope of the license, infringes or misappropriates a U.S. patent,
trademark, copyright or trade secret of any person or entity who has not
consented to the granting of the license; (c) for a period of one hundred eighty
(180) days from the Signing Date, INSpire will correct each System Failure; (d)
the System does not contain any virus, time bomb mechanism or other software or
code that can disable or adversely affect the System or destroy any data or
other software; and (e) the System is Year 2000 compliant per INSpire's Year
2000 policy statement.
Section 4.2 Notification by Parties. INSpire agrees to promptly inform
Customer in writing should it become aware of any claim by a third party that
the System infringes or misappropriates a U.S. patent, trademark, copyright or
trade secret of that third party. Customer agrees to promptly inform INSpire in
writing should it become aware of any claim by a third party that the System
directly infringes or misappropriates a U.S. patent, trademark, copyright or a
trade secret of that third party ("Infringement Claim"). INSpire agrees to
defend, indemnify and hold Customer harmless from any Infringement Claim brought
against Customer by a third party, and INSpire agrees to pay all costs and
damages finally awarded against Customer or paid by Customer in settlement of
such Infringement Claim. As a condition precedent to such payment, Customer
agrees to cooperate with said defense by complying with INSpire's reasonable
instructions and requests to Customer in connection with said defense. INSpire
may, at its sole discretion and expense, procure for Customer the right to
continued use of the System or modify the System so that it is non-infringing
and of at least equivalent performance and functionality as provided for in the
specifications to this Agreement, or provide functionality equivalent
replacement products. INSpire's defense and indemnification obligations
hereunder shall not apply if an Infringement Claim arises as a result of: (a)
compliance with Customer's designs, specifications or instructions, or
incorporation of technology provided to INSpire by Customer; (b) the use of the
equipment or software, or any portion thereof, in an infringing combination with
goods, equipment, system, software or data not supplied by INSpire; or (c) the
use of an infringing version of the equipment or software if such infringement
could be avoided by the use of a different version made available to Customer by
INSpire.
ARTICLE V
CONFIDENTIAL INFORMATION
Section 5.1 Confidential Information of the Parties:
(a) Customer acknowledges that the System and all the
components thereof, including, without limitation, documentation, user
interfaces and all material provided by INSpire under this Agreement, regardless
of the form of manifestation thereof (the "Confidential Information") are
confidential and commercially valuable products, information, trade secrets and
know-how of INSpire. INSpire acknowledges that Customer will disclose to it,
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during the course of this Agreement, certain confidential and proprietary
information of the Customer designated as confidential, which shall also be
deemed to be Confidential Information.
(b) The term "Confidential Information" does not include: (i)
information which is or becomes generally available to the public other than as
a result of any unauthorized disclosure or any wrongful acts of the receiving
Party; (ii) information which is independently developed by the receiving Party
without the use of or reference to Confidential Information of the disclosing
Party; (iii) information which is rightfully received from a third party whose
disclosure does not violate any confidentiality obligation or breach of any
agreement; or (iv) information which is approved for release by the disclosing
Party in writing signed by the disclosing Party specifying the information to be
released.
(c) All Confidential Information will be kept strictly
confidential by the receiving Party and the receiving Party will restrict
disclosure of Confidential Information to only those employees, agents and
advisors of the receiving Party who have a need to know such information for the
purpose of performing the System Acceptance Testing or other purposes directly
related to this Agreement, and in no event shall Customer provide access to
Confidential Information to or disclose Confidential Information to any third
party consultant or service provider. The receiving Party also agrees to
exercise at least the same degree of care with respect to the Confidential
Information as it exercises with respect to its own data, records, information,
material and provisions that it deems to be Confidential in nature.
(d) Representatives of the receiving Party will be informed by
the receiving Party of the confidential nature of the Confidential Information
and the covenant of confidentiality by the receiving Party hereunder, and they
will be directed by the receiving Party to treat such information
confidentially. Before any disclosure or dissemination of any Confidential
Information subject to this Agreement is made to any person, other than an
officer or director of the receiving Party or its counsel or independent
accountant, the receiving Party will ensure that the person to whom such
disclosure is made is aware of, and will abide by, the obligations and
restrictions set forth in this Section.
(e) In the event the receiving Party or its representatives
are requested or required in a judicial, administrative or governmental
proceeding to disclose any Confidential Information, the receiving Party will
cooperate with the disclosing Party and provide it with prompt notice of any
such request so that the disclosing Party may seek an appropriate protective
order or waive the receiving Party's compliance with the provisions of this
Agreement. If, in the absence of a protective order or the receipt of a waiver
hereunder, the receiving Party or its representatives are nonetheless, in the
opinion of the receiving Party's attorneys, legally required to disclose
Confidential Information to any tribunal or else stand liable for contempt or
suffer other penalty, the receiving Party may disclose such information to such
tribunal without liability hereunder, provided that the receiving Party complies
with the notice provisions of this subsection.
(f) Upon the termination of this Agreement, the receiving
Party will promptly, and in any event upon request by the disclosing Party,
deliver to the disclosing Party all Confidential Information, including all
written and electronically stored copies. Neither the disclosing Party nor its
Representatives will retain any copies, extracts or other reproductions, in
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whole or in part, of such Confidential Information. At the disclosing Party's
request, all documents, memoranda, notes and other writings prepared by the
receiving Party or its representatives based on the information in the
Confidential Information, or which quote from or summarize any Confidential
Information, will be destroyed as soon as reasonably practicable, and such
destruction will be certified in writing to the disclosing Party by an
authorized officer of the receiving Party supervising such destruction.
(g) Each Party acknowledges that a breach of the covenant of
confidentiality contained in this Agreement will result in irreparable and
continuing damage to the disclosing Party for which there will be no adequate
remedy at law. In the event of any breach of this Article 5, the receiving Party
agrees that the disclosing Party will be entitled to seek and obtain specific
performance of this Article 5 by the receiving Party, including, upon making the
requisite showing that it is entitled thereto, provisional injunctive relief
restraining the receiving Party from committing such breach, in addition to such
other and further relief, including monetary damages, as provided by law.
(h) The parties expressly agree that the termination of this
Agreement or the return of any Confidential Information will not terminate their
obligations under this Article 5.
ARTICLE VI
TRADE SECRET AND PROPRIETARY RIGHTS
Section 6.1 No Rights to Transfer or Resell System. Notwithstanding
this License to use INSpire's System, this Agreement grants to Customer no right
to resell any of the computer software programs that constitute a component of
INSpire's System or its specifications. Customer may not mortgage, hypothecate,
sell, assign, pledge, lease, transfer, license or sublicense any of INSpire's
System, nor allow any other person or entity to transmit, copy or reproduce any
such System.
Section 6.2 Nondisclosure. Other than Customer's, its affiliates and
subsidiaries, their directors, officers, employees, agents, authorized
representatives and subcontractors who need access to computer software programs
for the performance of their duties, Customer covenants and agrees not to
disclose or otherwise make available to any person any computer software
programs of INSpire. Customer agrees to take all reasonable steps necessary to
obligate each disclosed party who is given access to such computer software
programs to a level of care sufficient to protect the computer software programs
from unauthorized use, dissemination or disclosure.
Section 6.3 Survival. THE OBLIGATIONS OF THE PARTIES UNDER THIS
ARTICLE VI AND ARTICLE V WILL CONTINUE AFTER THIS AGREEMENT EXPIRES OR IS
TERMINATED.
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ARTICLE VII
TERMINATION
Section 7.1 Termination of Agreement. This Agreement may be terminated
only by the non-breaching Party upon a breach by the other Party of its duties
or obligations under this Agreement; provided, however, that (a) such breach
remains substantially uncured within 30 days after written notice specifying
such breach is received by the breaching Party, or (b) with respect to a breach
that cannot be reasonably cured within a 30 day period, should the defaulting
party fail to proceed within 30 days after written notice specifying the breach
to commence curing the default and thereafter fail to proceed with all
reasonable diligence to cure substantially the default.
Section 7.2 No Limitation. Such expiration or termination will not
in any way limit, restrict or relieve any Party of liability for any breach of
this Agreement.
Section 7.3 Effect of Termination. If this Agreement is terminated for
other than Customer's breach, the rights and licenses granted to Customer
pursuant to this Agreement, but only as they pertain to those components of the
System retained by Customer as to which Customer has paid the corresponding
portion of the fees due hereunder, shall continue for so long as Customer
operates the System. Any provisions which by their very nature are intended to
survive expiration or termination of this Agreement shall survive.
ARTICLE VIII
REMEDIES AND LIMITATION OF LIABILITY
Section 8.1 Indemnification of the Parties.
(a) Indemnification by Customer. To the fullest extent
permitted by law, Customer shall, at its own expense, defend and indemnify
INSpire and its directors, officers, employees, agents, successors and assigns
and otherwise hold them harmless from and against any and all claims, demands,
suits, causes of action, liabilities, costs, expenses and damages that arise
from, result in or are claimed to result in whole or in part from any
third-party action or allegation that would constitute a breach of any of
Customer's obligations, representations or warranties set forth in this
Agreement, or any negligent or willful act or omission, including, without
limitation, any act or omission that results in any bodily injury, including
death, or damage to tangible property, of Customer or from any violation by
Customer of any application, law, statute or ordinance or any applicable
governmental administrative order, including, without limitation, any ban or
regulation pertaining to the export of the System, or otherwise arise from or
connected with any services performed by any third party regardless whether
authorized by, or consented to by, INSpire.
(b) Indemnification by INSpire. To the fullest extent
permitted by law, INSpire shall, at its own expense, defend and indemnify
Customer and its directors, officers, employees, agents, successors and assigns
and otherwise hold them harmless from and against any and all claims, demands,
suits, causes of action, liabilities, costs, expenses and damages that arise
from, result in or are claimed to result in whole or in part from any
third-party action or allegation that would constitute a breach of any of
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INSpire's obligations, representations or warranties set forth in this
Agreement, or any negligent or willful act or omission, including, without
limitation, any act or omission that results in any bodily injury, including
death, or damage to tangible property, of INSpire or from any violation by
INSpire of any application, law, statute or ordinance or any applicable
governmental administrative order, including, without limitation, any ban or
regulation pertaining to the export of the System, or otherwise arise from or
connected with any services performed by any third party regardless whether
authorized by, or consented to by Customer ( the "INSpire Claims").
Section 8.2 Notice of Claim. Any award of damages or indemnification
pursuant to this Agreement is conditioned upon the Indemnitor having received
full and prompt notice in writing of the Claim and the Indemnitee allowing the
Indemnitor to fully direct the defense or settlement of such Claim; provided,
however, that the failure to receive prompt notice relieves the Indemnitor of
its obligations under this Article only if the Indemnitor is materially
prejudiced by the failure to receive such notice. The Indemnitor will not be
responsible for any settlement or compromise made without its consent.
Section 8.3 Limitation Acknowledgement. Each Party expressly
acknowledges that the limitations set forth in this Article VIII represent the
express agreement of the Parties with respect to the allocation of risks between
the Parties, including the level of risk to be associated with the performance
of the obligations hereunder as related to the amount of the payments to be made
to INSpire Claims for such performance, and each party fully understands and
irrevocably accepts such limitations
Section 8.4 Disclaimer.
(a) EXCEPT FOR THE WARRANTIES EXPRESSLY MADE IN SECTION 4.1 OF THIS
AGREEMENT, INSPIRE MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, CONCERNING THE
CAPABILITIES, PERFORMANCE, SPECIFICATIONS, OR CHARACTERISTICS OF THE SYSTEM OR
AS TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR USE, NON-INFRINGEMENT, OR
QUIET ENJOYMENT.
(b) SUBJECT TO THE WARRANTIES OF INSPIRE SET FORTH IN SECTION 4.1,
INSPIRE SHALL NOT BE LIABLE FOR ANY ERROR, OMISSION, DELAY AND LOSS RESULTING
FROM ANY DATA CONVERSION ARISING FROM THE USE AND IMPLEMENTATION OF THE SYSTEM
UNLESS ARISING AS A RESULT OF INSPIRE'S NEGLIGENCE. CUSTOMER IS RESPONSIBLE FOR
ADOPTING REASONABLE MEASURES TO LIMIT THE IMPACT OF ANY SUCH PROBLEM, INCLUDING
BACKING UP DATA, AND ADOPTING PROCEDURES TO ENSURE THE ACCURACY OF INPUT DATA,
EXAMINING, AND CONFIRMING RESULTS AND ADOPTING PROCEDURES TO IDENTIFY AND
CORRECT ERRORS AND OMISSIONS. INSPIRE SHALL NOT BE RESPONSIBLE FOR ANY DAMAGE,
LOSS, EXPENSE, ERROR, OMISSION OR DELAY THAT MAY ARISE SOLELY FROM CUSTOMER
FAILURE.
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ARTICLE IX
ARBITRATION AND EQUITABLE REMEDIES
Section 9.1 Settlement Meeting. The Parties will attempt in good faith
to resolve promptly through negotiations any dispute under this Agreement. If
any such dispute should arise, the Parties, will meet at least once to attempt
to resolve the matter (the "Settlement Meeting"). Any Party may request the
other Parties to attend a Settlement Meeting at a mutually agreed time and place
within ten days after delivery of a notice of a dispute. The occurrence of a
Settlement Meeting with respect to a dispute will be a condition precedent to
seeking any arbitration or judicial remedy, provided that if a Party refuses to
attend a Settlement Meeting the other Parties may proceed to seek such remedy.
Section 9.2 Arbitration Proceedings. If the Parties have not resolved a
monetary dispute at the Settlement Meeting any Party may submit the matter to
arbitration. A panel of three arbitrators will conduct the arbitration
proceedings in accordance with the provisions of the Federal Arbitration Act (99
U.S.C. Section 1 et seq.) and the Commercial Arbitration Rules of the American
Arbitration Association (the "Arbitration Rules"). The decision of a majority of
the panel will be the decision of the arbitrators.
(a) Arbitration Notice. To submit a monetary dispute to
arbitration, a Party will furnish the other Parties and the American Arbitration
Association with a notice (the "Arbitration Notice") containing (i) the name and
address of such Party, (ii) the nature of the monetary dispute in reasonable
detail, (iii) the Party's intent to commence arbitration proceedings under this
Agreement, and (iv) the other information required under the Federal Arbitration
Act and the Arbitration Rules.
(b) Selection of Arbitrators. Within ten days after delivery
of the Arbitration Notice, each Party will select one arbitrator from the list
of the American Arbitration Association's National Panel of Commercial
Arbitrators. Within ten days after the selection of the last of those two
arbitrators, those two arbitrators will select the third arbitrator from such
list. If the first two arbitrators cannot select a third arbitrator within such
ten-day period, the American Arbitration Association will select such third
arbitrator from the list. Each arbitrator will be an individual not subject to
disqualification under Rule No. 19 of the Arbitration Rules with experience in
settling complex litigation involving the insurance industry.
(c) Arbitration Final. The arbitration of the matters in
controversy and the determination of any amount of damages or indemnification
will be final and binding upon the Parties to the maximum extent permitted by
law, provided that any Party may seek any equitable remedy available under Law
as provided in this Agreement. This agreement to arbitrate is irrevocable.
Section 9.3 Place of Arbitration. Any arbitration proceedings will be
conducted at such neutral location outside of the States of California and Texas
as the Parties may agree. The arbitrators will hold the arbitration proceedings
within sixty (60) days after the selection of the third arbitrator. If a neutral
location cannot be agreed by the parties, then the arbitration proceedings will
be held in Albuquerque, New Mexico.
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Section 9.4 Discovery. During the period beginning with the selection
of the third arbitrator and ending upon the conclusion of the arbitration
proceedings, the arbitrators will have the authority to permit the Parties to
conduct such discovery as the arbitrators consider appropriate.
Section 9.5 Equitable Remedies. Notwithstanding anything else in this
Agreement to the contrary, after the Settlement Meeting a Party will be entitled
to seek any equitable remedies available under law. Any such equitable remedies
will be in addition to any damages or indemnification rights that such Party may
assert in an arbitration proceeding.
Section 9.6 Judgments. Any arbitration award under this Agreement will
be final and binding. Any court having jurisdiction may enter judgment on such
arbitration award upon application of a Party.
Section 9.7 Expenses. If any Party commences arbitration proceedings or
court proceedings seeking equitable relief with respect to this Agreement, the
prevailing Party in such arbitration proceedings or case may receive as part of
any award or judgment reimbursement of such Party's reasonable attorneys' fees
and expenses to the extent that the arbitrators or court considers appropriate.
Section 9.8 Cost of the Arbitration. The arbitrators will assess the
costs of the arbitration proceedings, including their fees, to the Parties in
such proportions as the arbitrators consider reasonable under the circumstances.
Section 9.9 Exclusivity of Remedies. To the extent permitted by law,
the arbitration and judicial remedies set forth in this Article will be the
exclusive remedies available to the Parties with respect to any dispute under
this Agreement or claim for damages or indemnification under this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Amendment. No amendment of this Agreement will be
effective unless in writing signed by the Parties.
Section 10.2 Counterparts. This Agreement may be executed in any number
of counterparts, each of which will be deemed to be an original agreement, but
all of which will constitute one and the same agreement.
Section 10.3 Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the Parties and supersedes all prior
agreements and understandings, both written and oral, with respect to the
subject matter of this Agreement.
Section 10.4 Expenses. Each Party will bear its own expenses with
respect to the negotiation and preparation of this Agreement.
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Section 10.5 No Assignment. No Party may assign its benefits or
delegate its duties under this Agreement without the prior consent of the other
Party. Any attempted assignment or delegation without such prior consent will be
void. Notwithstanding the foregoing, each Party may assign its rights under this
Agreement to a purchaser of all the assets or equity of such Party without the
other Party's consent, and any such purchaser and any subsequent purchasers of
all of the assets or equity of such Party may similarly assign such rights.
Section 10.6 No Third Party Beneficiaries. This Agreement is solely for
the benefit of the Parties and no other Person will have any right, interest, or
claim under this Agreement.
Section 10.7 Notices. All claims, consents, designations, notices,
waivers, and other communications in connection with this Agreement will be in
writing. Such claims, consents, designations, notices, waivers, and other
communications will be considered received (a) on the day of actual transmittal
when transmitted by facsimile with written confirmation of such transmittal, (b)
on the next business day following actual transmittal when transmitted by a
nationally recognized overnight courier, or (c) on the third business day
following actual transmittal when transmitted by certified mail, postage
prepaid, return receipt requested; in each case when transmitted to a Party at
its address set forth below (or to such other address to which such Party has
notified the other, Parties in accordance with this Section to send such claims,
consents, designations, notices, waivers, and other communications):
INSpire: Attn: Chief Executive Officer
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With copy to: ▇▇▇▇▇ ▇▇▇▇▇▇
Jenkens & ▇▇▇▇▇▇▇▇▇, a
Professional Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇ Fax:
▇▇▇-▇▇▇-▇▇▇▇
Customer: Attn: Chief Executive Officer
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Section 10.8 Public Announcements. The Parties will agree on the terms
of any press releases or other public announcements related to this Agreement,
and will consult with each other before issuing any press releases or other
public announcements related to this Agreement; provided, however, that any
Party may make a public disclosure if in the opinion of such Party's counsel it
is required by law or the rules of any applicable stock exchange or dealer
quotation system to make such disclosure. The Parties agree, to the extent
practicable, to consult with each other regarding any such public announcement
15
in advance thereof. The Parties may, however, include the other Party on any
general customer lists or in presentations that include a list of current
customers.
Section 10.9 Representation by Legal Counsel. Each Party is a
sophisticated entity that was advised by experienced legal counsel and other
advisors in the negotiation and preparation of this Agreement.
Section 10.10 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction will not invalidate the
remaining provisions of this Agreement or affect the validity or enforceability
of such provision in any other jurisdiction. In addition, any such prohibited or
unenforceable provision will be given effect to the extent possible in the
jurisdiction where such provision is prohibited or unenforceable.
Section 10.11 Successors. This Agreement will be binding upon and will
inure to the benefit of each Party and its heirs, legal representatives,
permitted assigns, and successors, provided that this Section will not permit
the assignment or other transfer of this Agreement, whether by operation of law
or otherwise, if such assignment of other transfer is not otherwise permitted
under this Agreement.
Section 10.12 Time of the Essence. Time is of the essence in the
performance of this Agreement and all dates and periods specified in this
Agreement.
Section 10.13 Waiver. No provision of this Agreement will be considered
waived unless such waiver is in writing and signed by the Party that benefits
from the enforcement of such provision. No waiver of any provision in this
Agreement, however, will be deemed a waiver of a subsequent breach of such
provision or a waiver of a similar provision. In addition, a waiver of any
breach or a failure to enforce any term or condition of this Agreement will not
in any way affect, limit, or waive a Party's rights under this Agreement at any
time to enforce strict compliance thereafter with every term and condition of
this Agreement.
Section 10.14 Force Majeure. The Parties will not be liable or deemed
to be in default for any delay or failure in performance under this Agreement or
interruption of Services resulting, directly or indirectly, from acts of God,
civil or military authority, labor disputes, shortages of suitable materials,
labor or transportation or any similar cause beyond the reasonable control of
the Parties.
Section 10.15 Attorneys' Fees. In the event of any action, arbitration,
claim, proceeding or suit between Customer and INSpire seeking enforcement of
any of the terms and conditions of this Agreement, the prevailing party in such
action, arbitration, claim, proceeding or suit will be awarded its reasonable
costs and expenses, including its court costs and reasonable attorneys' fees.
Section 10.16 Relationship of the Parties. The Parties are independent
contractors of one another, and there should be no instance in which they should
be construed as partners or joint venturers.
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Section 10.17 Drafting. Neither this Agreement nor any provision
contained in this Agreement will be interpreted in favor of or against either
Party because such Party or its legal counsel drafted this Agreement or such
provision. No prior draft of this Agreement or any provision contained in this
Agreement will be used when interpreting this Agreement or its provisions.
Section 10.18 Headings. Article and section headings are used in this
Agreement only as a matter of convenience and will not have any effect upon the
construction or interpretation of this Agreement.
Section 10.19 Condition of Bankruptcy Court Approval. This Agreement is
expressly conditioned upon INSpire obtaining a final order from the Bankruptcy
Court in the Bankruptcy Case approving: (a) this Agreement, as well as the
Sublease, the Policy Processing and Administration Agreement, the Professional
Services Agreement, the Asset Purchase Agreement, the Comprehensive Preferred
Escrow Agreement and the Claims Administration Agreement concurrently entered
into between the Parties and Arrowhead Claims Management, Inc., a California
corporation, and INSpire and INSpire Claims Management, Inc., a Delaware
corporation, and debtor and debtor-in- possession, all without amendment or
modification, unless such amendment or modification is approved in writing by
all of the Parties, within forty-five (45) days after the date this Agreement is
entered into; and (b) the termination of certain agreements currently between
the Parties and/or Arrowhead Claims Management, Inc., and INSpire and INSpire
Claims Management, Inc., entitled Policy Administration Services Agreement,
Claims Administration Services Agreement and Claims Management Agreement. The
final order of the Bankruptcy Court shall be in a form and substance acceptable
to Customer. This Agreement shall be implemented by the Parties on a date
mutually agreed to by the Parties, but no later than five days after the
Effective Date. If the final order from the Bankruptcy Court is not obtained
within the time specified, this Agreement and all of its terms and provisions
are and shall be null and void and of no force or effect whatsoever.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed and delivered by a duly authorized officer as of the Signing Date:
ARROWHEAD GENERAL INSURANCE
INSPIRE INSURANCE SOLUTIONS, INC., AGENCY, INC..
A Texas corporation, debtor and Its subsidiaries and affiliates
debtor in possession
By: ____________________________ By: _______________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President & CEO ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President & CEO
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Schedule 1.1 - Definition of the System
The System shall include current object code and source code versions of the
following software components:
o The most recent version of the Windows into Property & Casualty (WPC)
System currently being used at the INSpire West facility in San Diego, CA
("INSpire West") to process Customer's personal automobile, commercial
general liability and commercial automobile policies and claims. If it is
not currently being used at INSpire West, then the most recent version.
o Base Visual Rater (VR) System currently being used at INSpire West. If it
is not currently being used at INSpire West, then the most recent version.
o Base Underwriting Expert System (UES) currently being used at INSpire West.
If it is not currently being used at INSpire West, then the most recent
version.
o Base Policy Set Production (PSP) currently being used at INSpire West. If
it is not currently being used at INSpire West, then the most recent
version.
o Base Ordering and Receiving System (OARS) currently being used at INSpire
West. If it is not currently being used at INSpire West, then the most
recent version.
o Base eINSpire System currently being used at INSpire West. If it is not
currently being used at INSpire West, then the most recent version.
o Base I/O Imaging System currently being used at INSpire West. If it is not
currently being used at INSpire West, then the most recent version.
o Base EmPOWER for WPC System currently being used at INSpire West. If it is
not currently being used at INSpire West, then the most recent version.
o Workflow Manager currently being used at INSpire West. If it is not
currently being used at INSpire West, then the most recent version.
o Service Manager currently being used at INSpire West. If it is not
currently being used at INSpire West, then the most recent version.
o Carrier Agency Reconciliation System ("CARS") for WPC System currently
being used at INSpire West. If it is not currently being used at INSpire
West, then the most recent version.
o Arrowhead Policy Processing System ("APPS") for WPC System currently being
used at INSpire West. If it is not currently being used at INSpire West,
then the most recent version.
o MAS 90 for WPC System currently being used at INSpire West. If it is not
currently being used at INSpire West, then the most recent version.
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o Visual Rater currently being used at INSpire West. If it is not currently
being used at INSpire West, then the most recent version.
o Transfluent currently being used at INSpire West. If it is not currently
being used at INSpire West, then the most recent version.
o All programs relating to ISO reporting.
o The "old" policy administration system (referred to as "Legacy System")
which includes; Cash Machine, Arrowbind, Homebase, Arrowstat, Electronic
Funds Transfer/Credit Card software and Internet Policy Inquiry (IPI).
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Schedule 1.2 - Fees and Payment Terms
The first payment is due at the end of the 1st full calendar month following the
Effective Date, thereafter each payment will be due by the 10th of the following
month.
Number
of Payments Amount
1st payment $125,000.00
2nd payment $125,000.00
3rd payment $125,000.00
4th payment $125,000.00
5th payment $125,000.00
6th payment $125,000.00
7th payment $125,000.00
8th payment $125,000.00
9th payment $125,000.00
10th payment $125,000.00
11th payment $125,000.00
12th payment $125,000.00
Total of Payments $1,500,000.00
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Schedule 2 - Hardware configuration
Arrowhead Production Schematic to be attached.
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Schedule 2.1 - WPC System Corrections and Improvements "Spot Report Items"
23
