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Deductible Claim Fund Agreement TRAVELERSJ DEDUCTIBLE CLAIM FUND AGREEMENT THIS DEDUCTIBLE CLAIM FUND AGREEMENT ("Agreement") dated as of 06/30/2015 (the "Effective Date"), is by and between City of Salina, KS and each of its predecessors, successors, subsidiaries, divisions, and affiliates ("Client"), and The Travelers Indemnity Company, a Connecticut corporation at 385 Washington Street, St. Paul, Minnesota, 55102, and its subsidiaries and affiliates ("Travelers"). WHEREAS, Client and Travelers have entered into insurance policy number 6976X333, 3033P728, and 14S00624 (which together with all applicable riders, endorsements, extensions and renewals are hereinafter referred to as the "Policy") under which Client is responsible for paying a portion of the damages as well as certain expenses as more fully described in the deductible endorsement to the Policy ("Deductible"). NOW, THEREFORE, in consideration of the mutual promises contained in this Agreement, Client and Travelers hereby agree as follows: SECTION I - DEFINITION OF CLAIMS For the purpose of this Agreement, a "Claim(s)" shall be any request or demand by Client for consideration of payment of a loss or investigation of a loss, which is reported by Client to Travelers, and which is within Client's Deductible, and which takes place in the coverage territory as set forth in the Policy. SECTION II - CLAIMS REPORTS Travelers shall provide information on Claimsto Client. This information will include suggested reserves,payments and the disposition of Claims. SECTION III - CLAIM FUND; CLAIM BILLING A. Client shall make a cash payment to Travelers of$25,000 to be used to establish a Claim Fund deposit. Client shall be obligated to pay to Travelers the deposit amount within twenty (20) days of receipt of written notice by Travelers. Travelers has the right to use the amounts in the Claim Fund for the purpose of paying Claims within the Deductible for the Policy subject to this Agreement. B. Travelers has the right to commingle the Claim Fund with its general assets and deposit in its standard banking accounts any and all amounts in the Claim Fund. Travelers shall not be responsible for allocating any amounts between the entities of Client. 1 C. Travelers shall bill Client for paid Claims on a monthly basis. Client shall be obligated to pay to Travelers any amount billed for Claims within thirty (30) days of receipt of written notice by Travelers. D. Travelers shall continually review the adequacy of the Claim Fund and may require such increases or decreases in the Claim fund which Travelers deems necessary. When an increase in the amount of the Claim Fund is required, Client shall pay an amount sufficient to Travelers to increase the Claim Fund within thirty (30) days of receipt of written notice by Travelers. If Travelers determines there are excess amounts held in the Claim Fund, Travelers shall, at its option, either return the amount of any excess to Client or upon agreement by client, credit such excess amount against any other amounts owing by Client to Travelers. SECTION IV— GRANT OF SECURITY INTEREST; RIGHT OF OFFSET A. To secure the payment of the Obligations (as defined below), Client grants to Travelers: (a) a security interest in the moneys on deposit in the Claim Fund as cash collateral as that term is defined in Section 363(a) of the U.S. Bankruptcy Code and acknowledges that the security interest is perfected by Travelers control over the Claim Fund, and (b) the right to set off any of the Obligations against any sums now or at any time owing by Travelers to Client. B. Client agrees to execute such documents as Travelers may require to evidence the attachment or perfection of the security interest granted pursuant hereto, and further agrees to take such other steps as Travelers may reasonably require to establish and maintain the first priority of such security interest. C. "Obligations" shall mean all present or future indebtedness and obligations of Client to Travelers including, but not limited to, those arising at any time under this Agreement and any other prior, present or future agreement and insurance policy between Client and Travelers and any renewals, restatements or extensions thereof, whether or not such indebtedness or obligations are matured, contingent, unliquidated or subject to any recoupment or setoff, as well as any present or future liabilities of Travelers, payment for which Client has undertaken or is otherwise obligated to Travelers under this Agreement or any other agreements and insurance policy(s) or otherwise applicable agreements or law. SECTION V - EVENTS OF DEFAULT Each of the following events shall constitute an Event of Default: A. Client shall fail to fulfill any of its obligations under Section III above; or B. Client shall fail to perform or observe any other condition or agreement to be performed or observed by it under this Agreement; or C. Client becomes insolvent or is unable to pay its debts as they become due or Client is declared bankrupt or insolvent, or if a debtor relief proceeding has been brought by or against it. 2 • SECTION VI - EFFECTIVE DATES AND TERMINATION A. This Agreement shall commence on the Effective Date and shall remain continuous until terminated. B. 1. This Agreement may be terminated by either Travelers or Client with or without cause for any reason whatsoever upon sixty (60) days prior written notice. 2. Upon the occurrence of any Event of Default, and if such Event of Default is not corrected within thirty (30) days after written notice by Travelers to Client of such Event of Default, then Travelers may terminate this Agreement upon fifteen (15) days written notice to Client. 3. If none of the events referenced in the preceding subsections take place, this Agreement will terminate when both parties agree that all the obligations of each hereunder have been paid or otherwise performed. C. Notwithstanding the termination of this Agreement, each party shall remain fully liable to the other for all sums due or duties assumged in accordance with the terms and provisions of this Agreement and the Policy with respect to Claims reported before such termination, and all such obligations shall be deemed to survive any such termination. SECTION VII - SOLE BENEFIT This Agreement is for the sole benefit of the parties hereto and in no event shall this Agreement be construed to be for the benefit of any third party. SECTION VIII - ASSIGNMENT No assignment by either party of this Agreement shall be valid without the prior written consent of the other party, which consent shall be reasonably given. Notwithstanding the foregoing, Travelers may at any time assign its rights and delegate its duties hereunder to any of its affiliated companies. In addition, Client acknowledges and agrees that all or some of the Claim Services provided hereunder may be provided by affiliated companies of Travelers. SECTION IX - FAILURE OF ENFORCEMENT Either party's failure to enforce at any time any of the provisions of this Agreement, or to exercise any option which is herein provided, or to require at any time performance by the other party of any of the provisions hereof, shall in no way be construed to be a waiver of such provisions, nor in any way to affect the validity of this Agreement or any part thereof, or either party's right to thereafter enforce each and every provision of this Agreement or to exercise any right or remedy available to either party's under applicable law. 3 SECTION X - LEGAL AGREEMENT Nothing in this Agreement shall be construed to require commission of any act contrary to the law. In the event of a conflict between any provision of this Agreement and any law or regulation contrary to which the parties have no legal right to contract, the latter shall prevail; provided however, that in such event, the provision so affected shall be limited only to the extent necessary to permit compliance with the minimum legal requirement, and all such other provisions of this Agreement shall continue in full force and effect. The parties have read this Agreement and they have had a full opportunity to evaluate this Agreement along with all transactions and other matters contemplated by this Agreement. The parties have had the opportunity to consult with, and have consulted with, business advisors and counselors of their choice in connection with this Agreement. If any provision of this Agreement is found ambiguous by a court or arbitration panel, such provision shall not be construed against either party based on the party's alleged drafting of such provision. SECTION XI AGREEMENT TO ARBITRATE The parties recognize that disputes may arise between them and in some instances involving non- parties as well, about the parties' rights and duties relative to this Agreement. The parties will attempt to resolve those disputes without resort to formal procedures. However, in the event such a dispute is not resolved, either party may recommend submitting the matter to arbitration. The other party may or may not accept such recommendation at is sole discretion. Should the parties mutually agree to submit the matter to arbitration, the following provisions will apply: Neither party shall submit to arbitration (i) any coverage dispute which arise under or in connection with the Policy; and/or (ii) any claim which either party purports to arbitrate as a representative or member of a class or as a private attorney general. The arbitrator(s) has no authority, and is not empowered, to consolidate or direct class-action arbitration as to any disputes between the parties to this Agreement with other disputes between Travelers and any other of its customers or other third parties. Nor shall the arbitrator(s) have authority or be empowered to consolidate or direct disputes brought by Client as a private attorney general. Any determination by the arbitrator(s) to so consolidate or direct class-action arbitration or to consolidate or direct disputes brought by Client as a private attorney general shall be beyond the arbitrator's authority and jurisdiction and shall accordingly, be void. Any dispute regarding these prohibitions against consolidation of class-action arbitrations and against disputes brought by Client as a private attorney general shall be heard and resolved by a court having jurisdiction over the parties as provided in the Consent to Jurisdiction provision below, not the arbitrator(s). The parties agree that this Agreement is deemed made in the State of Kansas and involves interstate commerce. Accordingly, Travelers and Client agree that any arbitration proceeding arising out of or related to this Agreement shall be governed by the Federal Arbitration Act ("FAA") and, to the extent not inconsistent with the FAA, Kansas arbitration law. A. All such disputes shall be submitted for decision to a panel of arbitrators composed of two party-appointed arbitrators and an umpire (the "Arbitration Panel"). Each member of the 4 Arbitration Panel shall be a disinterested, active or retired judge, or executive officer of a property-casualty insurance company or claim service provider, or property-casualty broker authorized to transact business in the United States. The arbitration proceedings shall take place in Salina, Kansas unless otherwise agreed by the parties. B. The party demanding arbitration ("Claimant") shall appoint its arbitrator first. The other party ("Respondent") shall appoint its arbitrator no later than two weeks after the date on which Respondent receives notice from Claimant of Claimant's appointment of its arbitrator. If the Respondent fails to appoint its arbitrator within such two week-period, then Claimant shall appoint the second arbitrator and Respondent shall forfeit any right to name the second arbitrator. The two arbitrators shall select an umpire within twenty one (21) days after both arbitrators have been appointed. If the two arbitrators fail to agree on an umpire within the twenty one (21) day period, each arbitrator shall name three umpire candidates, of whom the other arbitrator shall strike two and the decision shall be made from the remaining two umpire candidates by drawing lots. C. Notwithstanding anything in this 'Agreement to Arbitrate' Section to the contrary, if the amount claimed by the Claimant in its demand for arbitration is less than $250,000, the parties agree that an abbreviated, streamlined arbitration procedure ("Streamlined Arbitration") will be followed. In such a case, the parties agree to submit the dispute to an Arbitration Panel comprised of a sole arbitrator. The sole arbitrator shall be a disinterested, active or retired judge, or executive officer of a property-casualty insurance company or claim service provider, or property-casualty broker authorized to transact business in the United States. Within fourteen (14) days of the date the arbitration demand is served on Respondent, Claimant and Respondent shall each name three candidates. If a candidate appears on both lists of candidates, then that candidate shall be named the sole arbitrator to resolve the dispute. If there is no match on the lists, each party shall strike two names from the other's list and the sole arbitrator shall be selected from the remaining two candidates by drawing lots. All Streamlined Arbitration proceedings shall be subject to the following rules: 1. Each party will be permitted a maximum of three depositions. 2. The parties agree that time is of the essence and that the final hearing shall commence no later than six months from the date of the arbitration demand. The parties further agree that no continuances or extensions of time with respect to that six month period shall be granted unless both parties agree. 3. The sole arbitrator shall have the authority, in his/her discretion to decide the case without a formal hearing and based upon the written materials submitted by the parties. D. The Arbitration Panel is relieved from all judicial formalities and may abstain from following the strict rule of law. At the hearing, evidence may be introduced without following the strict rules of evidence, but cross examination and rebuttal shall be allowed. 5 E. The Arbitration Panel shall issue its decision within fourteen (14) days following the conclusion of the hearings or, if the case is submitted on the briefs, within fourteen (14) days of the submission of the final briefs. F. The Arbitration Panel shall issue its decision in writing, identifying the reasons and rationale for the decision and, if the arbitration panel feels it is necessary, setting forth the findings of fact with respect to its decision. G. The decision of the majority of the Arbitration Panel shall be final and binding upon all parties to the proceeding. Judgment may be entered upon the award in any court having jurisdiction. II. The Arbitration Panel shall have authority to award pre-judgment interest, post-judgment interest, interim relief, pre-hearing security, and summary judgment. I. Each party shall bear the expense of its own arbitrator and shall jointly and equally bear with the other party all expenses of the umpire and of the arbitration. Unless otherwise required by statute, each party shall be responsible for its own attorneys' fees and costs. SECTION XII CONSENT TO JURISDICTION Subject to the terms and conditions of this Agreement, in the event any suit is commenced to enforce any right hereunder, the non-suing party hereby irrevocably submits to, consents to and waives any objection to the exclusive jurisdiction of the courts of the state of Kansas, including the United States District Court for the State of Kansas. In connection with any such action, process may be served within or outside of the State of Kansas by personal service or by registered mail, return receipt requested, addressed to the address set forth in the Notices Section of this Agreement or such other address as the non-suing party may hereafter designate in writing. The parties agree and consent that the exclusive venue (subject to the applicable rules of the courts concerning the assignment or transfer of cases) for any such action shall lie in the County of Saline in the State of Kansas. SECTION XIII - CHOICE OF LAW This Agreement shall be governed by the internal laws of the State of Kansas, without regard to Kansas's rules regarding conflict of laws. SECTION XIV - ENTIRE AGREEMENT This Agreement, including the Cover Page, its exhibits and any agreement(s) incorporated by reference constitute the entire agreement between the parties with respect to the subject matter hereof, and all such prior agreements,representations, statements, negotiations and undertaking are superseded hereby. 6 • SECTION XV - AMENDMENTS This Agreement may be amended by the parties at any time so long as each amendment is in writing and signed by authorized officers of both parties. SECTION XVI -NOTICES All notices, demands or other communications hereunder (excluding Claim notices) shall be in writing and shall be deemed to have been duly given when sent if delivered by (i) overnight mail via a commercial courier who will provide evidence of delivery or(ii) electronic mail to the other party at the address(es) set forth below: (a) If to Client: City of Salina, KS Attn: Jason Gage 300 W. Ash #202 Salina, KS 67402 (b) If to Travelers: The Travelers Indemnity Company Public Sector Services 385 Washington Street St. Paul, MN 55102 Attention: Melanie Wahlquist, Chief Underwriting Officer E-Mail Address: MWAHLQUI @travelers.com SECTION XVII - COUNTERPARTS This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall constitute an original, but such counterparts together shall constitute but one and the same instrument. 7 IN WITNESS WHEREOF, Client and Travelers have caused this Agreement to be executed by their respective officers duly authorized. City of Salina, Kansas The Travelers Indemnity Company ("Clien-" ("Travelers") By. /1 / ,/, Print Name: J 4C on 4 -'aj Print Name: Beth Kipetz Title: e t y e 9 Q r Title: 2VP Loss Sensitive Lead Date: Date: December 15th , 2015 8