Document:

EXHIBIT 10.27

 

SERVICE COMPANY CONTRACT

 

THIS SERVICE COMPANY CONTRACT (this “Agreement”) made and entered into as of
the 7th day of APRIL, 1995, by and between FLORIDA
ADMINISTRATORS, INC., a Florida corporation, (hereinafter referred
to as “Management Company”) and COMPENSATION BENEFITS, INC., a Florida
corporation, (hereinafter referred to as the “Service
Company”).

 

W-I-T-N-E-S-S-E-T-H :

 

WHEREAS, Management
Company and Pinnacle Assurance Corporation, a Florida Assessable Mutual
Insurance Company, have entered into a Management Company Contract of even date
herewith; and

 

WHEREAS, the Service
Company represents and warrants that it is a Florida corporation that (a) has
met all of the requirements of applicable Florida law, and (b) has
obtained all necessary approval from the Department of Insurance to provide all
services necessary under this Agreement; and

 

WHEREAS, it is the
desire of the Management Company to retain the Service Company as an
independent contractor to provide the services set forth herein; and

 

WHEREAS, it is the
desire of the Service Company to be retained by the Management company to
provide such services as hereinafter set forth; and

 

WHEREAS, the
Management Company has, by a duly adopted resolution of its board of directors,
authorized the execution of 

 

 

this Agreement by its President, to be attested by its Secretary; and

 

WHEREAS, the Service
Company has by a duly adopted resolution of its Board of Directors authorized
the execution of this Agreement by its President, to be attested by its
Secretary.

 

NOW, THEREFORE, in
consideration of the premises and the mutual covenants herein set forth and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby covenant and agree as
follows:

 

ARTICLE I - DEFINITIONS

 

As used in this Agreement, the following capitalized terms shall have
the following meanings:

 

1.1          “Management
Company” means FLORIDA
ADMINISTRATORS, INC., who has been engaged by PINNACLE to carry out the policies of the
Board of Directors and to provide day-to-day management of PINNACLE, subject to the authority of the
Board of Directors.

 

1.2          “Agreement”
means this Service Company Contract and any and all amendments and
modifications hereto executed and delivered by the parties herein in the manner
specified herein.

 

1.3          “Applicable
Percentage” means the percentage of Earned Normal
Premium set forth on Exhibit “A” hereto that is used to compute the
Service Fees of the Service Company.

 

1.4          “Pinnacle”
means PINNACLE ASSURANCE CORPORATION,
a Florida Assessable Mutual Insurance company.

 

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1.5          “Department”
means the Department of Insurance of the State of Florida, or any successor
agency performing like functions involving workers’ compensation insurance.

 

1.6          “Audited
Standard Premium” is defined as the premium
determined by multiplying (a) the payroll (segregated into the proper
workers’ compensation job classification), divided by 100, by (b) the
produce obtained by multiplying the appropriate manual premium rates by member
experience modifications with such adjustments as are necessary after routine
or other audits to account for inaccurate or incomplete payroll or employee
coverage and other data used to compute a member’s premium.

 

1.7          “Field
Audits” means on-site (and to the extent waived by
the Department as permitted in certain cases by the Florida Administrative
Code, off-site) audits of Participating Employers for the purpose of
determining normal premium due from each Participating Employer in each policy
year based upon actual payroll of each Participating Employer.

 

1.8          “Normal
Performance Standards” means the standards by
which the quality of the Service Company’s performance of its duties under this
Agreement shall be measured, it being agreed that the quality of the Service
Company’s performance of its duties under this Agreement shall be at least
equal to that required by statute, and the rules and regulations of the
Department (and may exceed, although the Service Company shall have no
liability for failing to exceed reasonable care in accordance with industry
standards).

 

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1.9          “Participating
Employers” means all persons, partnerships, joint
ventures, cooperations, companies, or unincorporated organizations which are
insureds in good standing of PINNACLE.

 

1.10        “Service
Company” means COMPENSATION BENEFITS, INC., a
Florida corporation, and its successors and permitted assigns, if any.

 

1.11        “Service
Fees” means the ordinary fees payable by
Management Company to the Service Company for providing services specified in
this Agreement, such Service Fees to be calculated by multiplying the audited
Standard Premium of PINNACLE by the Applicable Percentage.  Service Fees do not include (and shall not be
diminished by) any amounts payable by insurers to the Service company as
commissions under Sections 3.2 or 3.3 of this Agreement or any other sums
payable to the Service Company by PINNACLE or others as specified in or
contemplated by this Agreement.

 

1.12        “Utilization
Management/Review” means any hospital or medical
review programs performed by subcontracted organizations or individuals who
provided services including, but not limited to, hospital pre-admission review,
length of stay monitoring, discharge planning, second opinion referral, or
large case medical management.

 

ARTICLE II - RETAINMENT OF SERVICE
COMPANY

 

2.1          Employment.  Management Company hereby retains and employs
the Service company to perform as an independent contractor of the Management
Company the services specified in this Agreement, and the Service Company
hereby accepts such employment as an 

 

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independent contractor, all on the terms and conditions and for the
duration of this Agreement.  It is
acknowledged and agreed that Management Company has entered into a Management
Company Contract with PINNACLE of
even date herewith wherein Management Company has the responsibility to perform
such service and is authorized to delegate such services to Service Company.

 

ARTICLE III - DUTIES AND
RESPONSIBILITIES OF THE SERVICE COMPANY

 

3.1          General.  The Service Company shall, during the terms
of this agreement, provide the administrative services specified herein
relative to certain day-to-day claims related activities of PINNACLE, subject, however, to the superior
authority of the Board of Directors of PINNACLE
and the Management Company.  As
hereinafter set forth in this Article III, the administrative services to
be provided by the Service Company during the term of this Agreement shall
consist of: (a) procuring error and omissions coverage, fidelity bonds,
and surety bonds as set forth in Section 3.6; (b) providing claims
services as set forth in Section 3.2; (c) providing general
administrative services as set forth in Section 3.3; (d) abiding by PINNACLE’S and Management Company’s
policies and procedures as set forth in Section 3.4; (e) maintaining
the Service Company’s existence and qualification as set forth in Section 3.5;
(f) maintaining certain insurance as set forth in Section 3.6; (g) performing
all other acts and meeting all standards required by the Department relating to
Service Companies.  All such services
shall be provided to PINNACLE &
Management Company by the Service Company in a commercially reasonable manner
and in accordance with the performance standards set forth in 

 

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Section 3.7.  The
administrative services to be provided by the Service Company under this
Agreement shall be provided to the Service company only during the term of this
Agreement.

 

3.2          Claims
Services. 
The Service Company shall provide PINNACLE
and Management Company with the claims and claims administration services
necessary for the day-to-day administration of a workers’ compensation
insurance company.  Such claims and
claims administration services shall consist of:

 

(a)           Handling all claims
incurred before and during the term of this Agreement until conclusion, where a
liability is asserted that is alleged to be covered by PINNACLE as more particularly set forth in Article VIII;

 

(b)           Investigation of all
covered or allegedly covered claims by employees of Participating Employers,
including special investigations as directed by PINNACLE and the Management Company, of claims suspected of
being questionable or improper;

 

(c)           Coordination with
and response to the reasonable requests of legal counsel employed by PINNACLE or the Management Company to
defend claims or other liability suits;

 

(d)           Paying from the
accounts of PINNACLE such awards,
losses, settlements, final judgements, and expenses as may be required by law,
reserving for the accounting to the Fund on each claim and loss incurred during
the period of this Agreement; and

 

(e)           Maintaining
continuing claim records on each Participating Employer and, as reasonably
requested, providing such records and reports to PINNACLE, the Management Company and any 

 

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insurance carriers providing excess insurance or reinsurance to them.

 

(f)            Coordinating with
the Participating Employer employing any injured employee with a view toward
returning such injured employee to active Employment in an expeditious and
reasonable manner.

 

(g)           Where applicable and
appropriate, pursuing third party claims for subrogation and equitable
distribution or otherwise.

 

(h)           The Service Company
shall also be responsible for all claims and damages caused or brought about by
the errors and omissions of the Service Company unless the conduct or course of
conduct giving rise to such claims and damages has been previously approved by PINNACLE or Management Company.

 

(i)            Reimbursing PINNACLE or Management Company for the use
of Index Systems Statistical Services.

 

The claims services to be provided by the
Service Company under this Agreement shall be (i) substantially in
accordance with PINNACLE and
Management Company’s policies and procedures, (ii) substantially in
accordance with such reasonable rules, regulations, policies, and procedures as
have heretofore been adopted by PINNACLE
or Management Company or as may (subject to Article VII hereof) be
hereafter adopted by PINNACLE or
Management Company, (iii) in accordance with any rules or regulations
adopted by the Department, (iv) in accordance with any other requirement
of law, and (v) substantially in accordance with any express requirements
of any excess insurance or reinsurance contracts 

 

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issued to PINNACLE or
Management Company.  In the event this
Agreement is terminated (in accordance with Article VIII hereof) and so
long as Service Company’s compensation shall continue to be paid, the Service
Company agrees to assist PINNACLE
or Management Company in an orderly transfer of all claim files to the
succeeding service provider, and Management Company agrees to make such
transfer within ninety (90) days or other mutually agreed upon time in order to
ensure a smooth and orderly transfer of termination of this Agreement.  Provided, however, that notwithstanding the
foregoing, Service Company shall not be deemed to have any continuing liability
or responsibility to adjust claims accruing during this Agreement to conclusion.

 

3.3          General
Administration. 
The Service company at the Service Company’s expense agrees to:

 

(a)           Attend PINNACLE or Management Company Board
meetings as reasonably directed by Management Company or PINNACLE from time to time.

 

(b)           Coordinate with the
Management Company in an effort to carry out the policies adopted by PINNACLE and to provide day-to-day
management of the Service company.

 

(c)           As directed by PINNACLE or Management Company, make such
reports to PINNACLE, the
Management Company, and their attorneys relating to matters of concern or
general interest with respect to PINNACLE
or Management Company as are reasonably requested by them.

 

(d)           Provide periodic
loss reports as reasonably requested by PINNACLE
or Management Company containing such 

 

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information as may reasonably be required from time to time in order to
permit them and evaluate the status of PINNACLE.

 

(e)           Provide to the
certified public accountants selected by PINNACLE
or Management Company such reports and information as may reasonably be
necessary to enable such accountants to prepare PINNACLE’S or Management Company’s audited financial
statements and to express their professional opinion as to the financial
condition of such entities.

 

(f)            Upon request of PINNACLE or Management Company, represent
them at hearings, meetings, and administrative inquiries involving their
financial interests, and before the Department and any other agency of the
State of Florida; provided, however, that the Service company shall not so represent
where representation by an attorney at law is required.

 

(g)           As directed by PINNACLE or Management Company, provide to
the actuaries employed by them such reports and information as may reasonably
be necessary for such actuaries to express their professional opinion as to the
status of PINNACLE or Management
company.

 

(h)           Assist PINNACLE or Management Company in filing
with the Department such reports as may be required by the Department from time
to time, including but not limited to:

 

(i)            Annual Summary Loss
Reports for each participating Employer as may be required by applicable law,
rules; representations;

 

(ii)           Such other
documents and reports as are required of PINNACLE
or Management company under applicable law.

 

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Notwithstanding the foregoing, nothing in the Subsection 3(h) or
otherwise, shall be construed to require the Service Company to perform duties
that fall within the normal responsibilities of actuaries, certified public
accountants, nor shall the Service company be obligated to pay any such
professional fees in conjunction with therewith.

 

3.4          Abide
by PINNACLE’S and Management Company’s Rules, Regulations, Policies, and
Procedures. 
In the performance of its duties under this Agreement, the Service
company shall, subject to Article VII of this Agreement, conduct itself in
a manner substantially consistent with the reasonable rules, regulations,
policies, and procedures heretofore or hereafter established by PINNACLE or Management Company pursuant to Article IV
of this Agreement.

 

3.5          Maintenance
of Existence and Qualification.  The Service Company shall be as of the date
of this Agreement and shall remain throughout the term of this Agreement:

 

(a)           duly authorized to
transact business in the State of Florida; and

 

(b)           duly authorized and
approved by the Department to contract for the purpose of servicing approved
workers’ compensation insurance policies and programs.

 

3.6          Service
Company Insurance. 
The Service company shall procure and maintain at its own expense,
insurance as a condition precedent to any paying coming due to the Service
Company as follows:

 

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(a)           During any time when
the Service Company has the authority to disburse monies of PINNACLE or Management Company, the Service
Company shall furnish a fidelity bond, or such other bond as necessary, payable
to PINNACLE (and Management
Company, if applicable) in an amount sufficient to protect its assets from
misappropriation or abuse.  Such bond
shall be in such amount as PINNACLE,
or Management Company, may determine, but, in any event, not to exceed
$500,000.00;

 

(b)           The Service Company
shall maintain in effect during the term of this Agreement an errors and
omissions policy and provide a certificate of such coverage to PINNACLE and Management Company.

 

3.7          Matters
Not Responsibility of Service Company.  The Service Company undertakes in this
Agreement to perform only such duties as are specifically set forth in this
Agreement in accordance with normal performance standards.  Without limiting the generality of the
foregoing, it is specifically agreed that the Service Company shall not be
expected to perform any of the following duties;

 

(a)           Any duties that
require the services of a licensed attorney at law;

 

(b)           Any duties that are
the responsibility of PINNACLE’S
or Management Company’s certified public accountants;

 

(c)           Any duties that are
the responsibility of the Management Company (except as specifically undertaken
by Service Company as set forth in this Agreement.)

 

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(d)           Any duties
(including but not limited to, investment of the monies of PINNACLE that would be duties of a fiscal
agent, as that term is defined under applicable law;

 

(e)           Any duties that are
the responsibility of PINNACLE’S
actuaries;

 

(f)            Any duties relative
to utilization management or utilization review, it being specifically
contemplated that PINNACLE or
Management Company will contract with a third party to perform such duties if
they desire to have such duties performed, provided, however, that this
subparagraph (f) shall not in any way negate or amend those duties and
responsibilities of the Service Company as specifically or generally set forth
in this Agreement.

 

(g)           Any duties relative
to exercising ultimate responsibility for PINNACLE
or Management Company, it being specifically agreed that such responsibility
and duties rest with PINNACLE and
Management Company, respectively;

 

(h)           Any duties of an
insurer, reinsurer, or excess insurer, it being specifically acknowledged and
agreed that the Service Company does not insure or underwrite the liability of PINNACLE in respect of any claims covered
by PINNACLE.  In no event or circumstances shall this
Agreement be construed to be either an insurance policy or a contract to
insure;

 

(i)            Except to the
extent required by law or expressly required by this Agreement, any duties
whatsoever in respect of the duties contemplated herein at any time following
the expiration or termination of this Agreement, including, but not limited to
the 

 

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adjusting of claims to conclusion after the termination of this
Agreement.

 

ARTICLE IV - DUTIES AND RESPONSIBILITIES
OF PINNACLE & MANAGEMENT COMPANY

 

4.1          Ultimate
Responsibility. 
Although the Service company has in this Agreement committed itself to
perform on behalf of PINNACLE and
Management Company certain ministerial and discretionary services necessary for
the claims administration activities of PINNACLE
it is acknowledged that PINNACLE
and the Management Company have not delegated to the Service company in this
Agreement (but rather retain for themselves) ultimate responsibility for such
activities.  Without limiting the
generality of the foregoing, PINNACLE
and the Management company retain final authority with respect to:

 

(a)           Claims and claims
administration, including but not limited to, which claims are covered by PINNACLE, which disputed claims shall be
paid and which shall not be paid, and which subrogation claims shall be pursued
and which shall not be pursued;

 

(b)           Marketing, including
but not limited to, the coverages to be offered by PINNACLE and the types of eligible persons to whom they are to
be offered, the materials and information to be used in marketing such coverage
through licensed independent agents, and the insuring of new Participating
Employers;

 

(c)           Underwriting,
including but not limited to, the types of risks to be assumed and the premiums
to be charged for assuming such risks, the criteria for rating, cancelling or 

 

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rejecting any Participating employer or prospective Participating
Employer, the amount of risk to be retained and the amount of risk to be reinsured
or covered by excess insurance policies, and the amounts of any discounts,
allowances, or rebates to be paid or allowed to Participating Employers;

 

(d)           Loss control;

 

(e)           Follow-up servicing;

 

(f)            Billing and
collection of premiums, including but limited to, the amounts to be billed,
cancellation policies, reinstatement policies, and delinquency collection
procedures;

 

(g)           General
Administration and Governmental filings; and

 

(h)           Every other aspect
of the operation and management of PINNACLE
or Management Company.

 

Notwithstanding the foregoing, it is acknowledged by the parties hereto
that the Service Company is authorized, and will be exercising certain
discretionary functions which it believes, in good faith, to be authorized by
PINNACLE or Management company, without first seeking approval from them.

 

4.2          Adoption
of rules, Regulations, Policies, and Procedures.  As a consequence of the ultimate
responsibility of PINNACLE and the
Management Company, respectively, for the operation and management of each and
every aspect of PINNACLE’S
operation, PINNACLE or Management
Company, respectively, may, at their option, adopt certain rules, regulations,
policies, and procedures for the guidance of the Service Company in performing
its duties under this Agreement.  Every
such rule, regulation, policy, and procedure which may be adopted for the
guidance of the Service company shall 

 

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be deemed incorporated into the terms and provisions of this Agreement
by reference.  To the extent that no such
rule, regulation, policy, or procedure now exists, PINNACLE or the Management Company at their option, may
undertake to adopt in due course a reasonable rule, regulation, policy or
procedure for the guidance of the Service company, including, but not limited
to:

 

(a)           Claims processing
and claims administration policies and procedures;

 

(b)           The size of the
revolving claim fund, it any;

 

(c)           Delineation of
authority granted to the Management Company and other fiscal agents, if any;
and

 

(d)           Delineation of
authority granted to the Service Company.

 

In the absence of rules, regulations, policies, or procedures
established by PINNACLE or
Management Company, the Service Company shall be entitled to use and rely upon
its normal operating procedures or its good faith judgment in dealing with each
of the foregoing topics, subject however, to any specific advice or direction
received from PINNACLE or the
Management Company in particular cases.

 

4.3          Service
Fees.

 

(a)           Management Company
agrees to pay to the Service Company, during the term of this Agreement, on a
monthly basis, Service Fees equal to the Applicable Percentage (as set forth on
Exhibit “A”) of Audited Standard Premium. 
Each such payment shall represent, when paid, an estimated monthly
payment of the Service Company’s Service Fees.

 

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(b)           If a substantial
increase or decrease in workers’ compensation insurance rates is approved by
the Department, the parties shall in good faith re-negotiate the compensation
due hereunder.

 

(c)           Upon final audit of PINNACLE and Management Company for the
preceding fiscal year, the estimated Service Fees shall be reconciled and
adjusted to the Applicable Percentage and Management Company shall pay to the
Service Company (or in the case of a negative reconciliation and balance due
necessary to effectuate such reconciliation and adjustment from estimated fees
to actual fees.  The foregoing
reconciliation payment (whether by Management Company to the Service Company or
vice versa, whichever applicable, shall be made within twelve (12) months of
the end of such fiscal year.  In the
event of a partial year, the reconciled and adjusted amount due shall be
prorated on the basis of the number of months during which the Service company
serves Management Company.

 

4.4          Other
Expenses. 
Management Company agrees to be responsible for all other expenses of
operating PINNACLE or Management
Company, as set forth in the Management Company Contract, except for expenses
directly relating to the performance by the Service Company of its obligations
under this Agreement.

 

ARTICLE V - OWNERSHIP OF RECORDS AND
FILES

 

5.1          General.  The Service Company shall maintain and retain
custody of the claims records and files (but not financial records) of PINNACLE or Management Company for the
duration of this Agreement.  Such records
and files shall remain the exclusive property of PINNACLE or Management Company, respectively.  All such 

 

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records and files in the possession of the Service Company shall be
open for inspection by PINNACLE,
the Management Company or the Department during regular business hours.

 

5.2          Disposition
on Termination. 
If this Agreement expires or is terminated as provided in Article VIII
hereof, all applicable records and files of PINNACLE
or Management Company of whatever nature or description in the possession of
the Service Company (other than records and files on matters that the Service
Company is to handle to conclusion, if any) shall promptly be released or
delivered to PINNACLE, Management
Company on their designated successor service company.  Notwithstanding the foregoing, the Service
Company shall be entitled to retain a copy of all applicable records and files
(including, without limitation, computer tapes or records of such items) for a
period of two (2) years from the date of termination; at the end of such
two (2) year period, the copy of such records and files so retained by the
Service Company shall either be returned to PINNACLE
or Management Company, whichever applicable, or shall be destroyed by the
Service Company.

 

ARTICLE VI - CERTAIN PROHIBITED SERVICE
COMPANY ACTIVITIES

 

6.1          Disclosure
of Information. 
During the term of this Agreement, the Service company shall not, except
in connection with the performance of its duties under this Agreement, (a) disclose
to any person the names of the Participating Employers, or (b) utilize any
propriety information concerning PINNACLE
or Management Company to intentionally divert any business of PINNACLE or Management Company to any
competitor.  Nothing in this Agreement
shall be 

 

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deemed to prohibit the Service Company from disclosing in any fashion
any information concerning PINNACLE
or Management company if such information is in the public domain, whether by
virtue of operation Florida Statutes, the Florida Public Records Law, or
otherwise.

 

6.2          Impairment
of Relationship. 
During the term of this Agreement, the Service Company shall not engage
in any activity intentionally designated to impair (a) PINNACLE or Management Company or (b) the
relationship between PINNACLE and
Management Company.

 

6.3          The Service Company shall work
exclusively for Management Company and PINNACLE
and shall not provide claim service for any other insurers without the express
written agreement of PINNACLE and
Management Company.

 

ARTICLE VII - RELIANCE AND POLICY
CHANGES

 

7.1          Reliance
by Service Company.  The Service company shall be fully authorized
to act or refrain from acting in accordance with any specific written
instructions from PINNACLE or The
Management Company even though such instructions shall be contrary to or
inconsistent with the established rules, regulations, policies, or
procedures.  However, in such events the
Service company shall state, in writing, to the Management Company that it
believes such instructions are contrary to such rules, regulations, policies,
and procedures.

 

7.2          Policy
Changes.  It
is recognized by the parties that it may be necessary or desirable for PINNACLE or Management Company to amend its
rules, regulations, policies, and procedures 

 

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(including those contemplated by article IV hereof) from time to
time, and that PINNACLE and the
Management Company have the power to effect such changes.  Notwithstanding that fact, no change in such
rules, regulations, policies, or procedures (other than such changes as may be
required by law) that substantially increases the duties or obligations of the
Service Company or otherwise materially and adversely affects the Service
Company shall become effective unless the Service company shall give its
express written consent thereto.

 

ARTICLE VIII - TERM OF AGREEMENT AND
TERMINATION

 

8.1          General.  It is acknowledged and agreed that in
consideration of, among other things, the Service company’s agreement to handle
claims arising during the term of this Agreement shall become effective as of
the effective date as described in this Agreement and shall remain in full
force and effect until the fifth (5th) anniversary of the effective date.  Said Agreement shall be automatically renewed
for two (2) year periods upon the expiration of the fifth (5th) anniversary,
unless at least ninety (90) days prior to the third (3rd) anniversary, either
party shall provide to the other party written notice that this Agreement shall
be terminated upon the expiration of the fifty (5th) anniversary date.  It is the intent of the parties hereto that
on each anniversary date, this Agreement will continue annually to
automatically renew for a successive two (2) year period; such automatic
two (2) year renewal shall convert to a fixed two (2) year term upon
receipt of the ninety (90) day notification described above.

 

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8.2          Termination
For Cause. 
Either party, or PINNACLE,
may terminate this Agreement for cause only upon the basis hereinafter set
forth by giving written notice thereof to the other party.  Such notice shall specify the cause, shall
state the termination date, and shall be sent by certified mail, return receipt
requested, to the other party at the notice address specified in Section 10.2
of this Agreement.  The termination date
shall not be less than ninety (90) days from the date of mailing the
termination notice.  The Service Company
may terminate this Agreement “for cause” only if Management Company or PINNACLE (i) has failed to pay, when
due, any amounts owing to the Service Company, or (ii) is engaging in
conduct that substantially impairs the ability of the Service company to
perform its duties under this Agreement. 
Management Company or PINNACLE
may terminate this Agreement “for cause” only upon (a) the deliberate refusal
of the Service Company to perform any material obligation under this Agreement,
or (b) the Service Company’s failing to meet Normal Performance Standards,
which failure shall not have been corrected within a reasonable period of time
after written notice from Management Company or from the Department.  The receipt of written notice by the Service
Company and the opportunity to cure any and all failure or refusal to perform
properly under either (a) or (b) above, shall be a condition
precedent to the termination of this Agreement “for cause”.

 

8.3          Termination
Without Cause. 
If this Agreement is terminated by Management Company or PINNACLE without cause, then the Service
Company agrees that only for a period up to ninety (90) 

 

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days thereafter, it will continue to provide claims adjusting services
on all claims incurred during the term of this Agreement if requested to do so
by Management Company or PINNACLE;
but the Service Company shall not, under any circumstances, be obligated to
handle any claims thereafter in the event of a termination by Management
Company or PINNACLE without cause
or without following the notice and termination procedures described in 8.1
above.  In such event, the Service Company
shall be entitled to payment for its continuing services at the rate set forth
in this Agreement.  Further, in such
event, any continuation of claims handling by the Service company shall not, in
any way, be deemed as a waiver of the Service company’s rights or remedies in
the event of a wrongful termination.

 

8.4          Post-Termination
Claims.  In
no event, shall the Service Company be responsible to continue providing claims
adjusting services on any claims arising out of accidents which take place
after the termination of this Agreement, whether such termination is with or
without cause.

 

8.5          Transfer
to New Service Company.  In the event that claims servicing
responsibilities are transferred to a new Service Company, the Service Company
will provide a detailed accounting of all claims and claims activity sufficient
to allow the new Service Company to establish its claims and accounting systems
using active data.  Included in said
accounting will be all records and documents, including computer records and programs,
sufficient to enable the new Service Company to establish its systems.

 

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8.6          Servicing
After Insolvency of PINNACLE or Management Company.  Notwithstanding the foregoing, in the event
of insolvency of PINNACLE or
Management Company, the Service Company will agree to provide claims adjusting
services for ninety (90) days or until relieved of such responsibility by the
Department, whichever occurs earlier. 
The Service Company shall be entitled to payment for its services at the
rate set forth in this Agreement or at a rate which is agreed upon by the
Service Company and the Department. 
Nothing set forth herein shall be construed to require the Service
Company to pay claims or otherwise incur liabilities for unpaid claims due to PINNACLE’S or Management Company’s failure
to fund claim’s payment.

 

8.7          Assignment
of Service Company’s Post-Termination Responsibilities.  Notwithstanding any other provision of this
Agreement to the contrary, the Service Company shall have the right to assign
any post-termination claims handling responsibilities, if any, to another duly
qualified and licensed Service Company within the State of Florida so long as
such assignment is approved by the Department and, further, so long as such
assignment shall not result in any additional compensation or other payment due
to the Service Company or the new Service Company.

 

ARTICLE IX - INDEMNIFICATION

 

9.1          Indemnification
by Management Company.  Management Company agrees to indemnify and
hold the Service Company harmless from and against all costs, damages,
judgment, attorneys’ fees, expenses, (other than those expenses which are the
obligations of the Service Company under this Agreement) and obligations of any

 

22

 

kind or nature which the Service Company may incur or sustain in
connection with or arising from this Agreement or any court action arising
hereunder, provided such costs, damages, judgments, attorneys’ fees, expenses
and obligations are not determined to have resulted from a breach of this
Agreement or errors or omissions by the Service Company.

 

9.2          Indemnification
by Service Company.  The Service Company agrees to indemnify and
hold PINNACLE and Management
Company harmless from and against all costs, damages, judgments, attorneys’
fees, expenses, obligations and liabilities or any kind or nature which occur
as a result of a breach of this Agreement by the Service Company.

 

ARTICLE X - MISCELLANEOUS

 

10.1        Additional
Agreement. 
The Management Company and the Service Company have also entered into a
Sub-Lease Agreement (including an agreement to pay certain pro rata common
expenses) relating to the physical premises located at 701 U.S. Highway One,
North Palm Beach, Florida and the sharing of certain costs and expenses
relating to the use of common facilities and services.  A copy of said Agreement is attached hereto
and the terms and provisions thereof are incorporated herein by reference.  It is further agreed that said Sub-Lease
Agreement and this Service Company Contract shall run simultaneously and
concomitantly in that in the event this Service Company Contract is terminated,
then and in such event the Sub-Lease Agreement, a copy of which is attached
hereto, shall also be deemed terminated unless otherwise 

 

23

 

specifically agreed, in writing, between the parties hereto at the time
of such termination.

 

10.2        Entire
Agreement. 
This Agreement contains all of the terms agreed upon between the parties
with respect to the subject matter hereof. 
No amendment or modification of this Agreement shall be valid or binding
on either party hereto unless made in writing and fully executed by both parties.

 

10.3        Notices.  All notices provided for herein or
contemplated hereby shall be in writing and shall be deemed to have been duly
given when sent postage prepaid by certified mail, return receipt requested, to
the parties at the following address:

 

If to Management Company:

 

FLORIDA ADMINISTRATORS, INC.

Post Office Box 14846

North Palm Beach, FL 33408

 

If to Service Company:

 

COMPENSATION BENEFITS, INC.

c/o Sam Stephens

Post Office Box 14846

North Palm Beach, FL 33408

 

Either party may change such notice address
for all purposes by providing notice as aforesaid to the other party specifying
the new address.

 

10.4        Governing
Law.  This
Agreement shall be construed and enforced in accordance with the laws of the
State of Florida, without regard to principles of conflicts of laws.

 

10.5        Litigation.  In the event of a dispute arising out of or
related to this Agreement, including, but not limited to, the interpretation of
the Agreement or the performance of this Agreement or the breach of this
Agreement, the parties hereby agree to submit themselves to binding arbitration
under the commercial 

 

24

 

arbitration rules of the American Arbitration Association.  The undersigned further agrees that any such
controversy shall be submitted to three (3) arbitrators selected from the
panels of arbitrators of the American Arbitration Association.  The parties further agree that they will
faithfully observe this arbitration provision and the rules of the
American Arbitration Association and, further, that they shall abide by and
perform any award rendered by the arbitrators and that a judgment of the court
having jurisdiction may be entered upon such award in accordance with the law
of the State of Florida.  Such court shall
be authorized to render judgment on the award or finding of the arbitrators and
for all costs and expenses of arbitration, all in accordance with the laws of
the State of Florida.  The prevailing
party shall be entitled to recover from the non-prevailing party all of its
costs of arbitration, including, but not limited to, reasonable attorneys’
fees.  The venue for any such action or
proceeding shall be in Palm Beach County, Florida.

 

10.6        Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which
constitute one and the same Agreement.

 

10.7        Parties
in Interest. 
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their successors. 
Neither party shall be entitled to assign its rights or obligations
under this Agreement to any other party; provided, however, that nothing in
this Section 10.6 shall be construed (a) to prohibit the Service
Company from granting any lender a security interest in any receivables of the
Service Company due from 

 

25

 

PINNACLE or
Management Company, or (b) to prohibit the Service Company from delegating
its duties under this Agreement to such persons as the Service Company may
properly deem necessary to the efficient performance of its responsibilities
under this Agreement.

 

10.8        Rules of
Construction. 
In construing the terms of this Agreement, it is agreed by the parties
hereto that:

 

(a)           All Article and
Section headings are for convenience of reference only;

 

(b)           All references
herein to any gender shall be deemed to include every other gender;

 

(c)           The singular
includes the plural and the plural includes the singular; and

 

(d)           All accounting terms
used herein shall be construed in accordance with generally accepted accounting
principles.

 

IN WITNESS WHEREOF,
the parties have hereunto set their hands and seals as of the day and year
first above written for themselves, their successors, and their permitted
assigns, if any, and do hereby agree to fully perform the covenants and
agreements as hereinabove set forth.

 

	
   

  	
  Management Company:

  
	
   

  	
  FLORIDA ADMINISTRATORS, INC.

  
	
   

  	
  a Florida corporation,

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Sam A. Stephens, Pres.

  
	
   

  	
   

  	
  As its President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Dale E. Hanson, Sec.

  
	
   

  	
   

  	
  As its Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Service Company:

  
	
   

  	
  COMPENSATION BENEFITS, INC.,

  
	
   

  	
  a Florida corporation

  
	
   

  	
   

  	
   

  

 

 

26

 

	
   

  	
  By:

  	
  /s/Sam A. Stephens, Pres.

  
	
   

  	
   

  	
  As its President

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Dale E. Hanson, Sec.

  
	
   

  	
   

  	
  As its Secretary

  

 

27EXHIBIT 10.28

 

AMENDMENT TO SERVICE COMPANY CONTRACT

 

THIS AMENDMENT to that certain Service Company
Contract dated April 7, 1995, is made and entered into this 26th day of
January, 1996, by and between FLORIDA
ADMINISTRATORS, INC., a Florida corporation, (hereinafter referred
to as “Management Company”) and Compensation Benefits, Inc., a Florida
corporation, (hereinafter referred to as “Service Company” as follows:

 

RECITALS

 

WHEREAS, PINNACLE
ASSURANCE CORPORATION, a Florida Assessable Mutual Insurance company
as predecessor to PINNACLE ASSURANCE
CORPORATION, a Florida stock insurance company, (hereinafter
referred to as “PINNACLE”) and Management Company have entered into that
certain Management Company Contract dated April 7, 1995; and

 

WHEREAS, PINNACLE
has, as of this date, been converted into a Florida stock insurance company
with the approval of the Florida Department of Insurance; and

 

WHEREAS, PINNACLE
is the successor entity to PINNACLE ASSURANCE
CORPORATION, as assessable mutual; and

 

WHEREAS, PINNACLE
and Management Company executed
that certain Amendment to Management Company contract on January 26, 1996;
and

 

WHEREAS, the Management
Company and the Service Company
have previously entered into that certain Service Company contract dated April 7,
1995, wherein Service Company has agreed to perform certain duties and
responsibilities and to provide certain services to Management Company and to
PINNACLE; and

 

WHEREAS, the Management
Company and the Service Company
wish to amend the Service Company contract to reflect certain changes
hereinafter set forth.

 

NOW, THEREFORE, for Ten Dollars and 00/100 ($10.00),
and other good and valuable consideration, the receipt, sufficiency and
adequacy of which is hereby acknowledged by all parties hereto, it is agreed as
follows:

 

1.             The
above Recitals are true and correct and are incorporated into the terms and
provisions of this Agreement by reference.

 

2.             Management Company and Service Company hereby acknowledge and
agree that, except as amended herein, the Service
Company contract, dated April 7, 1995, shall remain in full
force and effect in accordance with its terms, without interruption,
notwithstanding the conversion of PINNACLE
from an Assessable Mutual corporation to a Stock Insurance 

 

 

Company.  All references to PINNACLE in said Service Company contract shall now be deemed
to refer to PINNACLE ASSURANCE CORPORATION,
a Florida Stock Insurance Company.

 

3.             The
following changes to the Service Company contract are hereby agreed upon:

 

Article III, Section 3.2(a) is hereby
amended by deleting subparagraph (a) in its entirety and substituting the
following in its place and stead:

 

3.2(a)      Handling
all claims incurred before and during the term of this Agreement where a
liability is asserted that is alleged to be covered by PINNACLE as more particularly set forth in Article VIII;
provided, however, that effective as of December 31, 1995, the Service Company shall have no liability or
responsibility whatsoever to adjust until conclusion any claims occurring during
the contract period in the event that this Service Company contract is
terminated for any reason.  Any such
responsibility for continuing claims adjusting shall terminate with the
termination of the Service Company contract.

 

Article VIII, Section 8.4 is hereby
deleted in its entirety and the following is substituted:

 

8.4           Post
Termination Claims.  Effective December 31,
1995, notwithstanding any provision to the contrary in this Agreement, in no
event, shall the Service Company be responsible to continue providing claims
adjusting services after the termination of this Agreement, whether such
termination is with or without cause, except as specifically stated in this
Agreement.

 

4.             All
remaining terms and provisions of the Service Company contract dated April 7,
1995, not specifically or impliedly amended herein shall remain in full force
and effect and are hereby ratified, adopted and reaffirmed.

 

IN
WITNESS WHEREOF, the parties have hereunto set their hands and seals as of the
day and year first above written for themselves, their successors, and their
permitted assigns, if any,

 

and do hereby agree to fully perform the covenants and agreements and
hereinabove set forth.

 

	
   

  	
  Management
  Company:

  
	
   

  	
  FLORIDA
  ADMINISTRATORS, INC.,

  
	
   

  	
  A
  Florida corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Sam
  A. Stephens, Pres.

  
	
   

  	
   

  	
  As its

  

 

 

	
   

  	
  Attest:

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Dale
  E. Hanson, Sec.

  
	
   

  	
   

  	
  As its Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Service
  Company

  
	
   

  	
  COMPENSATION
  BENEFITS, INC.,

  
	
   

  	
  A
  Florida corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Sam
  A. Stephens, Pres.

  
	
   

  	
   

  	
  As its

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Dale
  E. Hanson, Sec.

  
	
   

  	
   

  	
  As its Secretary

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