EXHIBIT 10.1
AMENDED AND RESTATED
MANAGEMENT AGREEMENT
This Amended and Restated Management Agreement (this "Agreement") is made
effective as of the 1st day of January, 1999 ("Effective Date"), by and between
J. Xxxxxx Xxxxxx, Inc., a Delaware corporation (hereinafter referred to as
"Xxxxxx") and Vesta Fire Insurance Corporation, Sheffield Insurance Corporation,
and Vesta Insurance Corporation (Alabama corporations), Vesta Lloyds Insurance
Company, a Texas Lloyds Company, The Hawaiian Insurance and Guaranty Company,
Limited (a Hawaiian corporation), The Shelby Insurance Company, Affirmative
Insurance Company, Insura Property and Casualty Insurance Company (Ohio
corporations), and Shelby Casualty Insurance Company, (an Indiana corporation)
(all hereinafter collectively referred to as the "Company" and each of which
hereby appoints Vesta Fire Insurance Corporation ("Vesta Fire") as Agent for the
purpose of this Agreement to act and sign on behalf of each of them).
RECITALS
x. Xxxxxx and the Company (other than Shelby Casualty Insurance Company, which
is added as a party by this Agreement) are parties to the Management
Agreement dated November 15, 1993, as previously amended (the "Existing
Management Agreement"), and now desire to amend and restate the Existing
Management Agreement as set forth herein and as set forth in Article XI.
x. Xxxxxx and the Company are affiliated companies, each being a subsidiary of
Vesta Insurance Group, a Delaware corporation ("Vesta"), a holding company
for a group of property and casualty insurance companies.
c. The Company is in the business of writing property and casualty insurance
and reinsurance in the United States and certain other countries.
x. Xxxxxx is a general agency and desires to represent the Company for the
purpose of marketing, underwriting, and providing all administrative
services for the production and servicing of the various classes of
property and casualty insurance and reinsurance contemplated by this
Agreement.
e. The Company has determined it is desirable and in its best interest to
enter into this Agreement with Xxxxxx, whereby the Company will take
advantage of the experience and facilities of Xxxxxx to provide the various
administrative services as hereinafter set forth. Xxxxxx has concluded it
is desirable and in its best interest to enter into this Agreement with the
Company for the provision of the services and facilities.
f. The Company is authorized to conduct the insurance and reinsurance business
contemplated by this Agreement in the several states, territories and
possessions of the United States and those certain other countries in which
the parties to this Agreement propose to do business.
x. Xxxxxx has the required authority to represent the Company as contemplated
by this Agreement.
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NOW THEREFORE, in CONSIDERATION of the premises and of the mutual covenants
and agreements contained herein, the parties do agree as follows:
ARTICLE I
APPOINTMENT OF XXXXXX
1.01 Subject to the provisions hereof, the Company hereby appoints Xxxxxx as
its representative for the marketing, underwriting, and servicing of the
insurance and reinsurance business contemplated under this Agreement.
Xxxxxx hereby agrees to represent the Company pursuant to the provisions of
this Agreement.
1.02 Xxxxxx shall represent the Company according to the provisions of this
Agreement, and shall comply with all applicable laws and regulations of
each state or other jurisdiction relative to Xxxxxx' performance under this
Agreement.
ARTICLE II
THE SERVICE
2.01 Xxxxxx shall provide the following goods and services (herein "services")
to the Company:
(a) Furniture and equipment for the Company as may reasonably be required;
(b) A computer and system sufficient to administer the insurance and
reinsurance business, contemplated under this Agreement;
(c) A Personnel/Human Resources Department and staff sufficient to provide
the services contemplated under this Agreement;
(d) Maintenance of properly staffed claims, accounting, underwriting,
personnel/human resources departments and staff to provide other
administrative services as may reasonably arise with regard to the
services contemplated and agreed to be provided by Xxxxxx under this
Agreement;
(e) Its internal legal staff for legal advice and assistance;
(f) Its internal accounting staff for auditing and accounting advice and
assistance;
(g) Its internal Risk Management/Corporate Insurance Department for advice
and assistance in the placement of all insurance and other risk
management services necessary for the operation of the business
contemplated under this Agreement;
(h) Its internal employee benefit staff for advice and assistance in
connection with employee benefits;
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(i) Its internal Treasury Department for advice and assistance with
banking relations, cash management and corporate finance;
(j) Its internal Investment Department for advice and assistance in the
maintenance and the management of the Company's assets and liabilities
and the assets and liabilities of current employee benefit plans and
any successor plans operated or established in whole or part for the
benefit of the employees of Xxxxxx or the Company;
(k) Its other staff, of any nature, for advice and assistance in
connection with such other matters that the parties may from time to
time require;
(l) Billing and collection of premiums;
(m) Adjustment and payments of losses and loss adjustment expenses;
(n) Receiving and processing applications and issuance of policies of
insurance in accordance with guidelines and standards established by
the Company;
(o) Maintenance of all necessary records relating to the property and
casualty insurance and reinsurance contemplated and written through
the Company pursuant to this Agreement, including policies,
endorsements, cancellation notices, and other related evidences of
insurance for a period of time mutually agreed to but not less than
seven (7) years from date of expiration of coverage;
(p) Maintenance of agency records, including licensing of Agents and
commission accounting;
(q) All information which the Company shall require or consider necessary
for reports required by regulatory authorities;
(r) Maintenance of records of the insurance business under its supervision
pursuant to this Agreement in a form and manner as required by the
laws and regulations of the various jurisdictions in which the Company
shall do business;
(s) The right to use the service xxxx of Vesta Insurance Group, Inc.;
(t) Such other administrative and other services performed by Xxxxxx under
this Agreement and those which may arise from time to time as
contemplated by this Agreement, and although not specifically
enumerated herein are nevertheless included herein.
2.02 Reports and Remittances; Settlement of Accounts
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(a) Xxxxxx shall furnish the Company as of dates and on forms acceptable
to Xxxxxx and the Company, reports and accounts in a bordereau format
within 30 days after the end of each calendar month or at such other
intervals as the parties hereto may agree.
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The reports and accounts shall reflect the business processed by
Xxxxxx on behalf of the Company. These reports shall include, but not
be limited to, the following:
(1) Services provided to the Company;
(2) Premium bordereaux;
(3) Loss and loss adjustment expense bordereaux;
(4) Premium and loss reserve reports; and
(5) Any other report as required by the Company.
(b) Xxxxxx shall remit to the Company, within sixty (60) days of the close
of the month, all funds due the Company as specified in the premium
bordereaux (Section 2.02(a)(2)). The Company shall remit to Xxxxxx,
within sixty (60) days of the close of the month, all funds due Xxxxxx
as specified in the loss and loss adjustment expense bordereaux
(Section 2.02(a)(3)).
(c) In lieu of all or part of the requirements of Section 2.02(b), the
Company shall empower Xxxxxx to establish bank account(s), in the name
of the Company and in banks approved by the Company, for the purpose
of depositing or withdrawing funds as specified in Section 2.02(b).
2.03 Cost of Services.
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(a) The Company agrees to reimburse Xxxxxx for the services agreed to and
provided by Xxxxxx according to the following schedule:
(1) The actual cost incurred by Xxxxxx in providing services under
Section 2.01 to be paid on a monthly basis; plus
(2) An amount equal to 10% of the total actual cost incurred by
Xxxxxx for services under Section 2.01 to be paid on a monthly
basis.
(b) Xxxxxx agrees to maintain books and records as are necessary and
appropriate to substantiate the charges made to the Company for
services performed and expenses incurred by Xxxxxx for the benefit of
the Company.
2.04 Claims.
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(a) Xxxxxx will be responsible for the supervision, adjustment and payment
of all claims arising under contracts of insurance and reinsurance
entered into on behalf of the Company pursuant to the terms of this
Agreement, including, but not limited to: assignment and supervision
of all adjusters and investigators; retention of legal counsel;
negotiation of settlement; acceptance of Proofs of Loss; settlement of
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subrogation and sale of salvage; the issuance of checks for claims
settlements and payment of all allocated adjustment expenses.
(b) Xxxxxx shall be responsible for providing the Company and its
reinsurers with Notices of Loss and Proofs of Loss. The Company shall
be advised monthly of all claims established including reserves, paid
losses and paid loss adjustment expenses by bordereaux. Additionally,
Xxxxxx shall notify the Company and its reinsurers of each claim
exceeding $25,000 (or lesser amounts if required by the Company).
(c) The power hereby granted Xxxxxx with respect to claims handling is
subject to the supreme authority and instruction of the Company,
including but not limited to the designation of adjusters, the
acceptance of declination of liability and the designation of counsel.
(d) All allocated loss adjustment expense shall be the responsibility of
the Company and shall be paid by Xxxxxx on behalf of the Company.
(e) Xxxxxx shall be responsible for obtaining payment from reinsurers of
the Company of that portion of claims and allocated loss adjustment
expense payments made by Xxxxxx on contracts entered into pursuant to
this Agreement as shall be required by applicable reinsurance
contracts of the Company.
(f) Xxxxxx, on behalf of the Company, shall maintain claim files and
records in the form or manner as are needed to supervise and adjust
settlement of losses. The records shall be maintained for a period
not less than as required by the applicable period of limitations of
the jurisdiction in which the contract of insurance was entered into,
plus one year and in a place and in a form as is mutually agreed to by
the parties.
(g) Xxxxxx shall furnish the Company claim bordereaux accounts within
fifteen (15) days from the close of each month showing the detail of
new claims and reserves, reserve changes, claim and claim expense
payments in the form as set out from time to time by the Company.
Xxxxxx shall provide this information monthly as long as there remains
any liability to the Company under policies issued by Xxxxxx under
this Agreement.
2.05 Insurance Contracts. Xxxxxx shall process applications and issue policies
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of property and casualty insurance and reinsurance in accordance with
guidelines established by the Company and on those classes of risks
designated in Article VI of this Agreement. Xxxxxx shall continue to
utilize current rates, application and policy forms which are presently in
use. The forms and rates may be modified from time to time by the Company.
The Company shall give Xxxxxx appropriate notice in advance of any change
in rates or forms. Subject to the terms of the contract of insurance and
applicable law, the Company may at any time initiate cancellation of any
contract of insurance issued pursuant to this Agreement. The Company shall
give Xxxxxx appropriate notice of any such cancellations it wishes to
affect. Upon receipt of such notice, Xxxxxx shall facilitate the
cancellation of coverages as soon as practical subject to policy provisions
and applicable law.
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2.06 General.
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(a) Xxxxxx shall maintain a sufficient staff of competent and trained
personnel, supplies and equipment to develop, supervise and service
the business which is subject to this Agreement.
(b) Xxxxxx shall use its best efforts to serve faithfully the Company and
at all times promote and safeguard the best interest of the Company
and perform all acts necessary to the proper conduct of the Company's
business on behalf of the Company, including compliance with
applicable statutes and regulations of the jurisdictions in which
business is conducted.
(c) In jurisdictions in which the Company is licensed to do business,
Xxxxxx agrees to have properly licensed resident agents for
countersigning purposes and to maintain Xxxxxx non-resident agents or
brokers license as may be required by the laws and regulations of the
jurisdiction.
(d) In those jurisdictions in which the Company is operating as a non-
admitted, foreign insurer, Xxxxxx shall make surplus lines filings
with the appropriate supervisory officials and pay such taxes as are
required by the laws and regulations of each jurisdiction.
ARTICLE III
OTHER AGREEMENTS
3.01 All expenses incurred by Xxxxxx in the operation of the business covered
by this Agreement shall be paid by Xxxxxx unless otherwise set forth in
this Agreement. To the extent that such expenses actually incurred by
Xxxxxx relate directly to services performed for a particular Company, one
hundred percent of this direct expense shall be paid by the Company for
which the services were performed, except that so long as each of the
entities comprising the Company in this Agreement cede 100% of their
business to Vesta Fire, then those entities hereby appoint Vesta Fire
Insurance Corporation as their agent to pay 100% of this direct expense.
If expenses incurred by Xxxxxx cannot be allocated to work performed for a
particular Company, Xxxxxx will be compensated for the expenses in the
manner described above in Section 2.03 of this Agreement.
3.02 Xxxxxx agrees not to publish or distribute any advertisements, circulars
or other matter referring to the Company by name without first securing the
Company's written approval.
3.03 The Company shall have the right and opportunity to inspect and audit all
records of Xxxxxx relating to this Agreement and all services performed
hereunder and all charges, fees and allocations made hereunder upon
reasonable notice to Xxxxxx. The Company also shall have the right to make
copies of all such records.
3.04 Notwithstanding any other provision of this Agreement, it is understood
that the business and affairs of the Company shall be managed by its Board
of Directors, and to the extent
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delegated by the Board of Directors, by its appropriately designated
officers. It is hereby specifically acknowledged and agreed by Xxxxxx that
the Board of Directors and officers of Xxxxxx shall not have any management
prerogatives or authority with respect to the business affairs and
operations of the Company, except insofar as the directors or officers are
acting within the scope of their authority as directors or officers of the
Company.
ARTICLE IV
CONTRACT TERM
4.01 This Agreement shall continue indefinitely; provided, however, that either
party may terminate this Agreement with ninety (90) days written notice
given to the other by registered mail. Xxxxxx will, thirty (30) days
after receipt of notice of cancellation, cease writing any new business on
behalf of the Company. It is agreed that business in force pursuant to
this Agreement will continue until its normal expiration date or next
anniversary date, whichever comes first, which date shall not extend
coverage for a period in excess of twelve (12) calendar months beyond the
termination of this Agreement and Xxxxxx agrees to continue such services,
as required by this Agreement, applicable to such business.
4.02 It is agreed that during the existence of this Agreement and for a period
of twelve (12) months after its termination, Xxxxxx shall not solicit,
accept, produce, or place business written of the type or similar type
covered by this Agreement from or to any source other than the Company.
ARTICLE V
TERMINATION OF AGREEMENT
5.01 In addition to the termination rights set forth in Section 4.01, either
party shall have the right to terminate this Agreement immediately by
giving written notice by registered mail to the other if, during the
duration of this Agreement, either party:
(a) shall go into liquidation or if there be appointed for it or its
assets a rehabilitator, receiver, liquidator, conservator, or trustee
in bankruptcy or there be commenced against it proceedings for the
appointment of any such officer or agent by whatever name known and
such proceedings shall not be dismissed after a reasonable time;
(b) shall become insolvent or make an assignment for the benefit of
creditors; or
(c) shall commit or omit any action which gives the other party a right to
terminate for cause. For purposes of this Agreement, "for cause"
shall include (1) a willful violation of applicable insurance laws and
regulations, (2) violation of any material provision of this
Agreement, (3) dishonesty, (4) theft, (5) fraud, (6) embezzlement, (7)
commission of a felony or a crime involving moral turpitude or
trustworthiness, (8) conduct disloyal to the Company or (9) willful
disregard of lawful instructions or directions of any officer or
director of the Company relating to a material matter.
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5.02 Upon termination of this Agreement:
(a) The Company shall be the owner of all insurance expirations and may
make and retain copies of all records pertaining to such expirations,
including agents' copies of dailies as those terms are used and
understood in insurance parlance.
(b) All records that pertain to the business of the Company shall become
the property of the Company and shall be returned to the Company as
directed by the Company.
(c) Xxxxxx shall supervise the runoff of the business and shall retain
records or copies of records as may be necessary for that purpose.
(d) The Company shall continue to pay Xxxxxx compensation as specified in
this Agreement and reimburse Xxxxxx for commissions paid to agents
pursuant to the provisions of this Agreement hereof with regard to
premium transactions on policies written by Xxxxxx during the term of
this Agreement.
ARTICLE VI
CLASSES OF RISK
6.01 Xxxxxx is authorized, subject to underwriting instructions, rates and
guides provided in writing by the Company to take applications and issue
policies of insurance and reinsurance which the Company is authorized to
write in the various jurisdictions in which it does business.
6.02 Xxxxxx is authorized to solicit on behalf of the Company applications for
insurance and reinsurance as set out in Section 6.01 above, subject to
maximum limits of liability as set out by the Company to Xxxxxx from time
to time.
6.03 Xxxxxx is authorized to secure and execute facultative and other
reinsurance on behalf of, and as directed by, the Company and in such
amounts and in such manner as directed by the Company.
ARTICLE VII
INDEMNITY
7.01 Xxxxxx shall indemnify, defend and hold the Company, its directors,
officers and employees harmless from and against all damages, losses, and
out-of-pocket expenses (including fees), caused by or arising out of any
willful failure to perform any obligation or agreement of the Company
herein.
7.02 The Company shall indemnify, defend and hold Xxxxxx, its directors,
officers and employees harmless from and against all damages, losses, and
out-of-pocket expenses (including fees), caused by or arising out of any
willful failure to perform any obligation or agreement of the Company
herein.
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ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.01 This Agreement may not be assigned by Xxxxxx, in whole or in part, unless
prior written consent is given by the Company.
8.02 Notices hereunder shall be in writing, and may be delivered by hand, first
class, registered or certified mail, postage prepaid, express delivery, or
telecopy or other telecommunication device capable of confirmation of
receipt, addressed to Xxxxxx or the Company, at the address set forth
below, or at such other address as each party may furnish to the other in
writing:
TO XXXXXX: Xx. Xxxxxx X. Xxxxxxxx
Senior Vice-President and General Counsel
J. Xxxxxx Xxxxxx, Inc.
0000 Xxxxx Xxx Xxxxx
P. O. Xxx 00000
Xxxxxxxxxx, Xxxxxxx 00000
TO THE COMPANY: Xx. Xxxxxx Xxxx Xxxxx, III
President
Vesta Fire Insurance Corporation
0000 Xxxxx Xxx Xxxxx
P. O. Xxx 00000
Xxxxxxxxxx, Xxxxxxx 00000
ARTICLE IX
ARBITRATION
9.01 As a condition precedent to any right of action hereunder, in the event of
any dispute or difference between Xxxxxx and the Company hereafter arising
with respect to this Agreement, it is hereby mutually agreed that the
dispute or difference shall be submitted to arbitration. One arbiter shall
be chosen by the Company, the other by Xxxxxx, and an umpire shall be
chosen by the two arbiters before they enter upon arbitration, all of whom
shall be active or retired disinterested executive officers of insurance or
reinsurance companies. In the event that either party should fail to
choose an arbiter within 30 days following a written request by the other
party to do so and 10 days following a second request, delivered to an
officer of the party, the requesting party may choose two arbiters who
shall in turn choose an umpire before entering upon arbitration. If the
two arbiters fail to agree upon the selection of an umpire within 30 days
following their appointment, each arbiter shall nominate three candidates
within 10 days thereafter, two of whom the other shall decline, and the
umpire shall be chosen from the two remaining candidates by drawing lots.
9.02 The arbiters shall establish the procedures and rules under which the
arbitration shall proceed. The arbiters shall follow the customs and
practices of the insurance industry and
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consider this Agreement as an honorable engagement rather than merely a
legal obligation, are relieved of all judicial formalities, and may abstain
from following the strict rules of law. The majority award of the umpire
and arbiters shall be final and binding on both parties. Judgment upon the
final award of the umpire and arbiters may be entered in any court of
competent jurisdiction.
9.03 Each party shall bear the expenses of its own arbiter, and shall jointly
and equally bear with the other expense of the umpire and of the
arbitration. In the event that the two arbiters are chosen by one party,
as above provided, the expense of the arbiters, the umpire and the
arbitration shall be equally divided between the two parties.
9.04 Any arbitration proceeding shall take place in Birmingham, Alabama or such
other location as may be mutually agreed upon by the parties to this
Agreement, but notwithstanding the location of the arbitration, all
proceedings pursuant hereto shall be governed by the laws of the State of
Alabama.
ARTICLE X
STATE LAW
This Agreement is entered into in accordance with the laws of the State of
Alabama and is to be construed accordingly.
ARTICLE XI
AMENDMENT AND RESTATEMENT
OF EXISTING MANAGEMENT AGREEMENT
The Existing Management Agreement is amended and restated effective on the
effective date of this Agreement. This Agreement shall govern the relationship
of Xxxxxx and the Company beginning on the effective date of this Agreement.
Provided, however, the effectiveness of this Amended and Restated Agreement is
subject to the approval of all appropriate regulatory authorities in all states
where approval is required. If this Amended and Restated Agreement is not
approved by all required regulatory authorities, this Amended and Restated
Agreement shall be void and of no force and the relationship of Xxxxxx and the
Company shall continue to be governed by the Existing Management Agreement.
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IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement
to be executed by its duly authorized officers effective as of the Effective
Date recited above, but actually executed on the dates set forth below.
VESTA FIRE INSURANCE CORPORATION,
INDIVIDUALLY AND AS AGENT FOR
SHEFFIELD INSURANCE CORPORATION, VESTA
INSURANCE CORPORATION, VESTA LLOYDS
INSURANCE COMPANY, THE HAWAIIAN
INSURANCE AND GUARANTY COMPANY,
LIMITED, THE SHELBY INSURANCE
COMPANY, AFFIRMATIVE INSURANCE
COMPANY, INSURA PROPERTY AND
CASUALTY INSURANCE COMPANY,
AND SHELBY CASUALTY INSURANCE
WITNESS: COMPANY
Xxxxx X. Xxxx By /s/ Xxxxxx X. Xxxxx, III
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President of Each Company other than
Vesta Lloyds Insurance Company, and
as authorized underwriter for Vesta Lloyds
Insurance Company
Date Executed: Oct. 4, 1999
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WITNESS: J. XXXXXX XXXXXX, INC.
Xxxxx X. Xxxx By /s/ Xxxxxx X. Xxxxxxxx
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Senior Vice President
Date Executed: Oct. 4, 1999
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