Exhibit 99.2
NON-COMPETITION AND RENEWAL RIGHTS AGREEMENT
THIS NON-COMPETITION AND RENEWAL RIGHTS AGREEMENT (this "Agreement"),
dated as of August 28, 2002 (the "Effective Date"), is by and among THE MIIX
GROUP, INC., a Delaware corporation ("MIIX Group"), MIIX INSURANCE COMPANY, a
New Jersey corporation ("MIIX Insurance" and together with MIIX Group, "MIIX"),
NEW JERSEY STATE MEDICAL UNDERWRITERS, INC., a New Jersey corporation
("Underwriter"), MIIX ADVANTAGE HOLDINGS, INC., a New Jersey corporation
("Holdings") and its wholly-owned subsidiary, MIIX ADVANTAGE INSURANCE COMPANY
OF NEW JERSEY, a New Jersey corporation ("MIIX Advantage" and together with
Holdings, "Advantage").
BACKGROUND
A. Holdings and MIIX Advantage were formed to enable MIIX Advantage to
issue to (i) certain physicians, osteopaths, surgeons, dentists and podiatrists
(collectively, "Physicians") who are licensed to practice medicine, dentistry or
podiatry in New Jersey and who conduct at least 51% of such practice in New
Jersey and (ii) entities formed for the purpose of such Physicians' practices
which are not wholly-owned by one or more Institutional Providers, as defined in
Section 5.1 hereof (those persons described in clauses (i) and (ii) collectively
referred to as "New Jersey Physicians") medical professional liability and
associated general liability insurance policies (the "Insurance Business").
B. MIIX Insurance is engaged in the Insurance Business and generally must
cease renewing Policies on and after the Effective Date.
C. Pursuant to a Management Services Agreement entered into
contemporaneously herewith by and among MIIX Group, Underwriter, and Advantage
("Management Agreement"), MIIX Group and Underwriter will provide to Advantage
certain management services in connection with the Insurance Business.
D. Pursuant to an Intellectual Property License Agreement entered into
contemporaneously herewith by and among Underwriter, MIIX Advantage and Holdings
("License Agreement"), the "MIIX" name and associated marks will be licensed to
Advantage for use in connection with the Insurance Business.
E. Pursuant to a Reimbursement Agreement entered into contemporaneously
herewith by and among MIIX Advantage, Holdings and MIIX Group (the
"Reimbursement Agreement"), MIIX Group, together with its affiliates, has agreed
to pay certain costs and expenses of Advantage in connection with the
organization of the Insurance Business, and Advantage has agreed to reimburse
MIIX Group for such costs and expenses pursuant to the terms and conditions set
forth in such agreement.
F. In connection with the Management Agreement and License Agreement
(collectively with this Agreement and the Reimbursement Agreement, the
"Definitive Agreements"), MIIX Advantage desires to obtain from MIIX Group and
MIIX Insurance the right to issue MIIX Advantage policies ("Advantage Policies")
to New Jersey Physicians upon the date of renewal of each of their Policies, and
MIIX Group and MIIX Insurance desire to assist MIIX Advantage in issuing
Advantage Policies to New Jersey Physicians, in each case subject to the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the background recitals and the
premises and the mutual covenants herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS. Capitalized terms used and not otherwise defined herein
shall have the meanings ascribed to them in the Glossary of Terms, which is
attached hereto as Exhibit A and incorporated herein.
2. RENEWALS.
2.1. NONRENEWAL OF POLICIES.
(a) Except as provided in Section 2.1(b) hereof, MIIX
Insurance shall not issue any Policies on or after the Effective Date.
(b) During the Transition Period (defined below), MIIX
Insurance may issue a Policy to an Insured when MIIX Insurance did not deliver
to such Insured a notice of nonrenewal prior to the Effective Date. For the
purposes of this Agreement, "Transition Period" shall mean the period beginning
on the Effective Date and ending on the earlier of 30 days after the Effective
Date or such other date as the Commissioner may permit.
2.2. RENEWAL RIGHTS.
(a) On or before the Effective Date, MIIX shall provide to
MIIX Advantage a true and complete list of the Insureds together with: (i) a
summary of the coverages provided under the Policies; and (ii) a detailed claims
history for each Insured (collectively, "Insured Information"). MIIX represents
and warrants that, to its knowledge, the Insured Information is complete, true
and correct in all material respects.
(b) In connection with the non-renewal of the Policies by MIIX
Insurance, to the extent permitted by applicable law and contractual
obligations, MIIX shall from time to time send to each Insured prior to the
renewal date of such Insured's Policy written notice advising such Insured that
(i) MIIX Insurance cannot renew the Policy, (ii) MIIX Advantage can issue an
Advantage Policy to the Insured, subject to MIIX Advantage's underwriting
guidelines and standards and the receipt of capital contributions. The parties
acknowledge that Holdings has mailed to each New
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Jersey Physician policyholder a copy of an Offering Letter and related materials
dated May 24, 2002, as well as a supplemental letter dated August 5, 2002.
(c) MIIX Advantage shall, in connection with the first
expiration of each Policy on or after the Effective Date, offer to issue or
exercise its best efforts to issue a MIIX Advantage Policy to each Insured who
subscribes to MIIX Advantage, subject to MIIX Advantage's underwriting
guidelines and standards.
3. CONSIDERATION.
(a) Subject to Section 3(b), MIIX Advantage shall pay to MIIX
Group, with respect to each Renewal issued to an Insured, an aggregate one-time
payment equal to: (i) ten percent (10%) of the Gross Written Premiums generated
by Non-Brokered Renewals; and (ii) three percent (3%) of the Gross Written
Premiums generated by Brokered Renewals, with such amounts payable as provided
in the following sentence. Within forty-five (45) days following the end of each
calendar quarter, MIIX Advantage shall pay to MIIX Group (i) amounts due with
respect to Renewals that occurred during such calendar quarter, and (ii) any
amounts due on account of adjustments related to earlier calendar quarters.
(b) A prorated amount shall be due by MIIX Advantage under
Section 3(a) in connection with any MIIX Advantage Policy that lapses or is
cancelled or non-renewed within six (6) months from the date issued by MIIX
Advantage ("Lapsed Policies"). Notice of Lapsed Policies must be given to MIIX
within thirty (30) days after such policies lapse. Amounts due under Section 3
shall also be subject to adjustment for policy refunds, processing errors and
mistakes, or any other amounts required to effect the intent and purposes of the
parties; provided, however, that notwithstanding the foregoing, the parties
agree that with respect to Lapsed Policies, the only adjustment is the refund of
the purchase price of such policies.
4. COVENANTS AND AGREEMENTS. The parties covenant and agree as follows:
4.1. EXPENSES. The parties to this Agreement shall bear their
respective expenses incurred in connection with the preparation, execution and
performance of this Agreement and the transactions contemplated hereby.
4.2. EXAMINATION OF THE BOOKS AND RECORDS. Following the Effective
Date, MIIX Advantage shall be entitled, through its employees, counsel,
accountants, or their representatives, to make such examinations of the Books
and Records of MIIX as MIIX Advantage and its representatives may reasonably
request for the purpose of effectuating the Renewals. Any such examination shall
be conducted at reasonable times during regular business hours and upon
reasonable prior notice.
4.3. FURTHER ASSURANCES. On and from time to time after the
Effective Date, without further consideration, each of the parties shall execute
such documents and
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other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby.
5. NONCOMPETITION. During the term of the Management Agreement and any
renewal thereof and for two years after any termination of the Management
Agreement, MIIX, Underwriters and Advantage agree, unless otherwise agreed in
writing by all such parties, as follows:
5.1. Neither MIIX nor Underwriter shall directly or indirectly: (i)
perform or submit any bid or proposal to perform any Management Services (as
defined in the Management Agreement") in connection with the Insurance Business
of any other entity; (ii) engage in the Insurance Business; (iii) be or become a
stockholder, partner, owner, member or agent of, or give financial or other
assistance to, any person or entity considering engaging in any such activities
or so engaged; (iv) seek in competition with Advantage to procure insurance
policies from or do business with any New Jersey Physician; (v) engage in or
participate in any effort or act to induce any of the New Jersey Physicians to
take any action which might be disadvantageous to Advantage or its affiliates;
provided, however, that nothing herein shall in any manner prohibit, restrict or
impair the right of MIIX to: (1) perform Management Services outside of New
Jersey; (2) perform Management Services for a "Non-New Jersey Provider Insurer"
as hereinafter defined; (3) engage in any premium finance business or
activities; (4) perform Management Services within New Jersey in connection with
the wind-down of MIIX Insurance; (5) perform Management Services within New
Jersey for or in connection with an Institutional Provider, as hereinafter
defined, that directly or through an affiliate self-funds or self-insures
professional liability and/or associated general liability risks; (6) perform
claims and related administrative and data processing services for any company;
(7) issue a Policy during the Transition Period in accordance with Section
2.1(b) hereof or engage in the insurance business in connection with Policies
issued to Insureds prior to the Effective Date or during the Transition Period,
provided in each instance such Policies are nonrenewed in accordance with the
terms of this Agreement; (8) perform Management Services for or issue medical
professional liability and associated general liability insurance policies to an
Institutional Provider; (9) provide business consulting services and
informational seminars to New Jersey Physicians; or (10) own, as passive
investors, in the aggregate no more than 5% of the outstanding publicly traded
stock of any corporation engaged in the activities set forth in this Section
5.1.
For purposes of this Section 5.1:
"Non-New Jersey Provider Insurer" shall mean any entity engaged in the insurance
business (z) that is owned or controlled by an Institutional Provider and/or one
or more associations or trade groups in which such Physicians are members, and
(y) in which the number of New Jersey Physicians to whom such entity has issued
medical professional liability and/or associated general liability insurance
policies is less than ten percent (10%) of the total number of Physicians for
whom such entity issues such insurance policies.
"Institutional Provider" shall mean an entity (x) that is not owned nor
controlled by one or more New Jersey Physicians, and (w) that provides any type
of health care product or
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service, including, without limitation, hospitals, health systems, clinics,
medical schools and universities.
5.2. Advantage shall not directly or indirectly: (i) engage in any
business other than the Insurance Business (including, without limitation, with
entities that are not owned and controlled by New Jersey Physicians); (ii) be or
become a stockholder, partner, owner, member or agent of, or give financial or
other assistance to, any person or entity considering engaging in any business
other than the Insurance Business or so engaged; seek in competition with MIIX
to procure insurance policies from or do business with any physician who is not
a New Jersey Physician; or engage in or participate in any effort or act to
induce any physician who is not a New Jersey Physician and who is a policyholder
of MIIX or any of its affiliates to take any action which might be
disadvantageous to MIIX or its affiliates; provided, however, that nothing
herein shall prohibit Advantage and its affiliates from owning, as passive
investors, in the aggregate no more than 5% of the outstanding publicly traded
stock of any corporation so engaged; or (iii) solicit or contact with a view to
engagement or employment any person who is an employee of MIIX.
5.3. MIIX and Advantage agree that damages alone shall not be an
adequate remedy for any breach by either party of their respective covenants set
forth in this Section 5 and accordingly expressly agree that the a non-breaching
party shall be entitled to relief by injunction, specific performance or other
equitable relief, without bond, and without prejudice to any other rights and
remedies that the parties may have for breach of this Agreement.
6. MISCELLANEOUS.
6.1. HEADINGS AND EXHIBITS. Headings used herein are not a part of
this Agreement and shall not affect the terms hereof. The attached Exhibits are
a part of this Agreement.
6.2. NOTICES. Any notice required or which may be given hereunder
shall be in writing and shall be deemed to have been given (i) when delivered to
the addressee in person, (ii) if telexed or faxed, then on the date shown on the
confirming receipt, and, if notice is telexed or faxed, a copy shall be mailed
by registered or certified mail, return receipt requested and postage prepaid,
(iii) when sent by registered or certified mail, return receipt requested and
postage prepaid, on the date shown on the receipt or (iv) when sent by express
mail or courier service, postage or charges prepaid, on the date of delivery as
shown on the receipt or confirmation therefor, in each case, addressed to the
parties as set forth below or at such other address as the party may specify in
a notice complying with this Section 6.2; provided that notice sent by any other
method shall be effective only when received by the party to which such notice
was addressed:
If to MIIX Group or MIIX Insurance:
New Jersey State Medical Underwriters, Inc
Xxx Xxxxxxxx Xxxx, Xxxxxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Corporate Secretary
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The MIIX Group, Inc.
Two Xxxxxxxx Xxxx, Xxxxxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Corporate Secretary
MIIX Insurance Company
Two Xxxxxxxx Xxxx, Xxxxxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Corporate Secretary
If to MIIX Advantage:
MIIX Advantage Insurance Company of Xxx Xxxxxx
Xxx Xxxxxxxx Xxxx, Xxxxxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Corporate Secretary
or at such other address as the party may specify in a notice complying with
this section.
6.3. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors,
assigns and legal representatives. Neither this Agreement, nor any right
hereunder, may be assigned by any party without the prior written consent of the
other party.
6.4. AMENDMENTS. This Agreement may not be changed, altered or
modified unless the same shall be in writing executed by the parties hereto.
6.5. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with New Jersey law without regard to its choice or
conflict of law principles.
6.6. ENTIRE AGREEMENT. This Agreement and the other Definitive
Agreements constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and thereof and supersede all prior and
contemporaneous agreements, understandings, negotiations, and discussions,
whether oral or written, of the parties relating to the subject matter hereof
and thereof, and there are no general or specific warranties, representations or
other agreements by or among the parties in connection with the entering into of
this Agreement or the subject matter hereof except as specifically set forth or
contemplated herein.
6.7. NO WAIVER. No consent or waiver, express or implied, by any
party to or of any breach or default by any other party in the performance by
such other party of its obligations hereunder shall be deemed or construed to be
a consent or waiver to or of any other breach or default in the performance of
obligations hereunder by such other party. Failure on the part of any party to
complain of any act or failure to act of any other party or to declare any other
party in default, irrespective of how long such failure continues, shall not
constitute a waiver by such party of any of its rights hereunder.
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6.8 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the balance of this Agreement shall not be affected and shall
remain in full force and effect.
6.9 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original but when taken together shall
constitute the same agreement.
6.10 CONFIDENTIALITY. The parties agree that they shall be subject
to and bound by the confidentiality restrictions set forth in Section 9 of the
Management Agreement, which are hereby incorporated herein by reference, to the
extent such restrictions are applicable to them.
7. ARBITRATION. Except claims for equitable relief set forth in Section
5.3, as to which all rights and judicial remedies are reserved, all disputes
hereunder shall be referred to arbitration before a single disinterested
arbitrator, who is a past or present officer of a property or casualty insurance
company. The parties shall act in good faith in the selection of the single
arbitrator by submitting to the other party a list of acceptable arbitrators
until the parties have narrowed the selection to a single arbitrator. If the
parties are unable to select an arbitrator within thirty (30) days of the date
that a party submits a written demand for arbitration, either party may petition
a court or request from the American Arbitration Association ("AAA") to
immediately select an arbitrator in accordance with this Agreement. Arbitration
proceedings shall be held at the MIIX offices, and shall be conducted in
accordance with the Commercial Arbitration Rules of the AAA unless the
arbitrator agrees to a different procedure. The decision of the arbitrator will
be final and binding on the parties, and judgment thereon may be entered in any
court of competent jurisdiction. The parties shall bear their own costs, but the
expenses of arbitration, including the arbitrator's fees, will be shared equally
by the parties.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NEW JERSEY STATE MEDICAL
UNDERWRITERS, INC. (for purposes of Section
5.1 only)
By: /s/ Xxxxxxxx X. Xxxxxxxx
-------------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
MIIX INSURANCE COMPANY
By: /s/ Xxxxxxxx X. Xxxxxxxx
-------------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
MIIX ADVANTAGE INSURANCE
COMPANY OF NEW JERSEY
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Interim Chief Financial Officer
THE MIIX GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxx
-------------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
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EXHIBIT A
GLOSSARY OF TERMS
"Advantage Policies" shall have the meaning specified in Paragraph F of
the Background Section of this Agreement.
"Books and Records" means originals or copies of all records, documents,
data and information (in whatever form maintained) of MIIX relating to the
Insurance Business, including without limitation, all plan rating manuals,
marketing materials and records pertaining to claims, losses and expenses,
customers and sales.
"Brokered Renewals" means MIIX Advantage Policies issued to Insureds by or
through insurance agents or brokers that are not related to, controlled by, or
affiliated in any way with any of the parties hereto and who are paid a
brokerage or agent commission by MIIX Advantage in connection with the issuance
of the MIIX Advantage Policies.
"Definitive Agreements" shall have the meaning specified in Paragraph F of
the Background Section of this Agreement.
"Effective Date" shall have the meaning specified in the opening paragraph
of this Agreement.
"Gross Written Premiums" means the total revenue derived from the sale of
Advantage Policies.
"Insurance Business" shall have the meaning specified in Paragraph A of
the Background Section of this Agreement.
"Insured Information" shall have the meaning specified in Section 2.2(a)
of this Agreement.
"Insureds" mean New Jersey Physicians to whom MIIX Insurance has issued
Policies as of the Effective Date.
"Lapsed Policies" shall have the meaning specified in Section 3(b) of this
Agreement.
"License Agreement" shall have the meaning specified in Paragraph D of the
Background Section of this Agreement.
"Management Agreement" shall have the meaning specified in Paragraph C of
the Background Section of this Agreement.
"New Jersey Physicians" shall have the meaning specified in Paragraph A of
the Background Section of this Agreement.
B-1
"Non-Brokered Renewals" means MIIX Advantage Policies not issued as a
result of Brokered Renewals.
"Person" means an individual, corporation, partnership, firm, joint
venture, association, limited liability company, joint stock company, trust,
unincorporated association or organization or other entity.
"Policies" means the medical professional liability and associated general
liability insurance policies issued by MIIX Insurance to New Jersey Physicians,
which are included in the Insurance Business.
"Reimbursement Agreement" shall have the meaning specified in Paragraph E
of the Background Section of this Agreement.
"Renewal" means the issuance of a MIIX Advantage Policy to an Insured at
the expiration of the Insured's Policy.
"Transition Period" shall have the meaning specified in Section 2.1(b) of
this Agreement.
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