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Compensation Agreement with Arthur J. Gallagher Risk Management Services, Inc. THIS COMPENSATION AGREEMENT is made and entered into and effective the 26th day of May, 2014 ("Effective Date") by and between CITY OF MIAMI 'BEACH, a Florida municipal corporation ("Client"), and ARTHUR J. GALLAGHER RISK MANAGEMENT SERVICES, INC., an Illinois corporation ("Gallagher"). I. TERM AND TERMINATION This Agreement shall commence on the Effective Date for a term of three (3) years. At the City Manager's sole option and discretion, and upon thirty days (30) days written notice to..Gallagher prior to the expiration of the -initial term,.the client may renew this Agreement for up to (2) additional one (1) year terms. Not withstanding the preceding, this Agreement may be terminated by either party, without cause and for convenience, at any time during the term, upon thirty (30) days prior written notice. II. OBLIGATIONS OF GALLAGHER Gallagher will provide the services set out on Exhibit A attached hereto (collectively, the "Services") to Client. If the Services include the placement of insurance coverages, Gallagher will use its commercial best efforts to secure such insurance coverages on Client's behalf. In the event an insurance company cancels or refuses to place such insurance coverages, Gallagher will use its commercial best efforts to obtain the coverage from another insurance company. III. OBLIGATIONS OF CLIENT Gallagher will receive commissions as compensation for its Services. Gallagher will be compensated by the insurance carriers for insurance coverage that Gallagher has placed on Client's behalf. Gallagher will provide a complete compensation disclosure with all. insurance placements. Prior to receiving any compensation for a specific coverage and/or policy such insurance coverage and/or policy shall be approved by Client's City Manager or City Commission as the case may be. IV. DISCLOSURES A. In addition to such commissions provided herein, Gallagher may also receive investment income on fiduciary funds temporarily held by it, such as premiums or return premiums. Other parties, such as excess and surplus lines brokers, wholesalers, reinsurance intermediaries, underwriting managers, captive managers and similar parties, some of which may be owned in whole or in part by Gallagher's corporate parent, may earn and retain usual and customary commissions and fees in the course of providing insurance products to clients. Any such fees or commission will not constitute compensation to Gallagher under Section III. above. B. Client is responsible for payment of premiums for all insurance placed by Gallagher on its behalf. If any amount is not paid in full when due, including premium payments to insurance companies, that nonpayment will constitute a N:\RMS\CITY OF MIAMI BEACH\2014-15\COMPENSATION AGREEMENT\CITY OF MIAMI BEACH COMEPENSATION AGREEMENT COMMISSION ONLY,FL 052014.DOC Page 1 of 4 material breach of this Agreement that will allow Gallagher to immediately terminate this Agreement, at its option, without notice to Client. In addition, and not in lieu of the right to terminate, Gallagher reserves the right to apply return premiums or any other payment up to $5,000 received by Gallagher on Client's behalf to any amounts owed by Client to Gallagher unless such return premiums or other payments are disputed by Client. C. Where applicable, insurance coverage placements which Gallagher makes on Client's ,behalf, may require the payment of federal excise taxes, surplus lines taxes, stamping or other fees, to the Internal Revenue Service (federal), various state(s) departments of revenue, state regulators, boards or associations. In such cases, Client is responsible for the payment of such taxes and/or fees, which will -be identified separately by Gallagher on invoices covering these placements. Under no circumstances will these taxes or other related fees or charges be offset against the amount of Gallagher's commissions referred to herein. D.' Gallagher will not be operating in a fiduciary capacity, but only as Client's broker, obtaining a variety of coverage terms and conditions to protect the risks of Client's enterprise. Gallagher will seek to bind those coverages based upon Client's authorization, however, Gallagher can make no warranties in respect to policy limits or coverage considerations of the carrier. Actual coverage is determined by policy language, so read all policies carefully. Contact Gallagher with questions on these or any other issues of concern. V. INDEMNIFICATION A. Gallagher agrees to indemnify and hold Client harmless from any loss, cost, damage, or expense (including reasonable attorney's fees) arising from the negligent acts or omissions of Gallagher. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the date first written above. ARTHUR J. G LAGHER RI CITY OF MIAMI BE MANAGEMEN E IC, , I C. By: By: OL Name: fif �.(�� ®�J� Name: ,� IFri, -Pv,�1e Title: /`�/�' �/L/�/� Title: M a or APPROVED AS TO ATTEST: FORM &LANGUAGE � INCORP ORATED: &FOR EXECUTION RafaO E.dad®o City C1or .,',\ ' roc r.. City A rney Date N:\RMS\CITY OF MIAMI BEACH\2014-15\COMPENSATION AGREEMENT\CITY OF MIAMI BEACH COMEPENSATION AGREEMENT COMMISSION ONLY,FL 052014.DOC Page 2 of 4 EXHIBIT A SERVICES I. SCOPE OF SERVICES Gallagher agrees to assist the Client with the following Risk Management Services, as well as others that may become necessary during the contract period: 1. Provide assistance to the Client's Risk Management Department in determining the Client's commercial insurance needs. 2. Prepare reports informing the Client's Risk Management Department regarding insurance market conditions that may affect the Client's policies and risk exposure prior to policy renewal. 3. Prepare bid specifications and underwriting data (subject to the approval of the Client's Risk Management Department) to submit to acceptable insurance markets for the purpose of obtaining quotations for insurance coverage. 4. Upon direction from the Client, approach all acceptable insurance companies on behalf of the Client, and obtain written, competitive quotes for insurance coverage. A complete list of the companies contacted, along with their response, shall be submitted. 5. Present to the Client all insurance coverage proposals obtained. This report must contain a comprehensive analysis by the broker of the proposals obtained with recommendations for the selection of one proposal for the particular risk to be covered. 6. Negotiate, on behalf of, and with direction from, the Client with all insurance carriers to obtain the best prices, terms and conditions available. 7. Review all insurance policies and invoices received for policies purchased by the Client to assure their accuracy and appropriateness. 8. Review and evaluate existing Client policies to provide recommendations for possible improvement of price, terms, and conditions. 9. Service existing policies as necessary. This includes, but is not limited to, issuing certificates of insurance to provide evidence of coverage, promptly making policy changes, and obtaining endorsements. 10. Report any claims to the insurance carrier and monitor the handling and disposition of the claim to assure the Client's policy rights are protected. 11. Provide an annual report summarizing all insurance coverage in place, anticipated market conditions, recommendations and strategies. N:\RMS\CITY OF MIAMI BEACH\2014-15\COMPENSATION AGREEMENT\CITY OF MIAMI BEACH COMEPENSATION AGREEMENT COMMISSION ONLY,FL 052014.DOC Page 3 of 4 12. Provide appraisals for all Client buildings identified by Clients' statement of values. The first 1/3 of the buildings that are identified by the Client will be appraised the first year, the second 1/3 of the buildings that are identified by the Client will be appraised the second year and the third 1/3 of the buildings that are identified by the Client will be appraised in the third year. N:\RMS\CITY OF MIAMI BEACH\2014-15\COMPENSATION AGREEMENT\CITY OF MIAMI BEACH COMEPENSATION AGREEMENT COMMISSION ONLY,FL 052014.DOC Page 4 of 4