PROGRAM MANAGEMENT AGREEMENT
This agreement made and entered into this first day of September 1998 between
Stoneville Insurance Company of Jackson, Mississippi hereinafter referred to as
"SIC", and MRM Underwriters, Inc., hereinafter referred to as MRM and supersedes
and replaces all prior agreements between the parties related to this program.
IT IS HEREBY AGREED BETWEEN SIC AND MRM AS FOLLOWS:
1. TERM
A. This Agreement shall be effective as of September 1, 1998 (the
"Effective Date) and shall remain in effect continuously for a
period of ten (10) years ("The Term") unless terminated
pursuant to Paragraph 16 hereof.
B. This Agreement shall automatically, and without any further
action of either party, be extended at the end of the Term, on
each annual anniversary date of the Effective Date for one (1)
additional year (the "Annual Extension"), provided either
party shall have the right to decline the Annual Extension for
the following year on each annual anniversary date by giving
written notice to the other party one hundred and eighty (180)
days prior to such anniversary date. Such notice shall be
given in accordance with Paragraph 22 of this Agreement.
C. This Agreement may be terminated in accordance with the
provisions of Paragraph 16 of this Agreement.
2. APPLICATION OF AGREEMENT
A. The insurance program which constitutes the subject matter of
this Agreement (hereinafter referred to as the "Approved
Program" consists of individual programs as set forth in
Addenda attached hereto and made part hereof. An individual
program is defined as specific coverages relating to workers'
compensation risk classes as documented in Addenda A to this
agreement SIC and MRM hereby acknowledge that both of them and
certain affiliates of each of them have in the past and are
currently involved in the provision of insurance and
insurance-related services which may be considered to compete
in the Classes and Approved Program enumerated in Addendum A.
B. SIC hereby grants Authority to the MRM on an exclusive basis,
except as may be prohibited by law or regulation or, as
excepted herein, to receive and accept proposals for
insurance, to bind coverage only for the Approved Programs
subject to underwriting authorities delegated to the MRM at
SIC's sole discretion. The
1
territory covered by this Agreement is limited to Insured's
domiciled within the fifty (50) United States, its territories
and possessions and submitted by licensed producing brokers or
agents in the United States. MRM is granted authority to
cancel or non-renew such policies at MRM's underwriting
discretion as permitted by, and in accordance with applicable
laws and regulations as interpreted by SIC. MRM shall have the
right to rely on any such interpretations of law and
regulations by SIC: Such Authority is also subject to the
terms and conditions hereinafter set forth in or pursuant to
written SIC guidelines, practices, or other such instructions
as may be given to MRM by SIC. The underwriting authorities
and guidelines may be changed at SIC's sole discretion. Any
such action by SIC shall not be unreasonably exercised. MRM
hereby acknowledges that certain affiliates have in the past
and are currently involved in the provision of insurance and
insurance-related services which may be considered to compete
in the Classes and Approved Program enumerated in Addendum A.
Any facility established to write business for Insureds domiciled
outside the (50) United States will require a separate written contract
and approval of the current treaty carriers. SIC will expect that only
Approved Program risks will be eligible, and that underwriting
guidelines and authorities as respects this program will take effect.
C. MRM may accept proposals for insurance which comply with the
terms of this Agreement only from duly licensed brokers,
agents or solicitors (the "Subproducer"). SIC agrees that any
amounts payable to any Subproducer for business submitted
under this Agreement, will be its sole responsibility, and MRM
will have no liability for any such compensation.
D. Unless applicable law requires otherwise, MRM shall be
responsible for providing notices of cancellation or
nonrenewal of policies issued under the Approved Program. When
MRM cancels or nonrenews any policy, MRM shall comply with
applicable notification and other regulatory requirements as
interpreted by SIC. If SIC cancels or non-renews a policy,
such compliance is SIC's responsibility. All policies canceled
or non-renewed are to be reported to SIC by copy of the
non-renewal or cancellation notice.
E. It is further agreed that MRM's authority delegated by SIC
shall only apply to MRM and except as specifically approved in
writing by SIC, such authority may not be delegated to others.
F. Nothing contained in this agreement shall be deemed to create
the relationship of employer and employee between SIC and MRM.
G. MRM shall have no authority to purchase reinsurance accept as
referenced in Addendum B.
2
H. SIC will at all times hold out MRM as its exclusive Program
Manager for the specific Approved Programs, subject to this
Agreement, and agrees to use its best efforts to refer
inquiries to the MRM relating to risks covered by the Approved
Program.
I. SIC agrees that Approved Program risks, or any portion
thereof, specifically declined by or rejected by SIC in
writing, may be submitted by the MRM to other markets.
J. MRM agrees that the Approved Program risks will not be
underwritten by MRM's parent, subsidiaries, or affiliates
subject to the conditions paragraph of 2. J. of this
agreement.
3. COMMISSIONS
SIC shall pay MRM, as commission, a percentage of the premium paid to
SIC, or paid to MRM for the benefit of SIC, as set forth in Addendum C
of this Agreement MRM shall pay SIC a return commission at the same
rate on any return premiums.
4. PREMIUM AND ACCOUNTS
A. SIC is responsible for the collection of all premiums. Account
current statements, in a format mutually acceptable to SIC and
MRM are to be rendered monthly to MRM no later than the tenth
day of the month following the processing date of any
transactions.
B. If, after reasonable effort by SIC to collect premium, any
premium which has not been paid by the insured within the time
period provided in Paragraph A above, MRM shall promptly
cancel such Insureds insurance coverage for nonpayment of
premium. Upon request by SIC, MRM will not accept any business
under the approved Program from Subproducers who cause SIC's
inability to collect premiums due.
C. The MRM agrees to provide SIC a copy of the MRM's most current
financial statements by January 15 of each calendar year this
agreement is in force. SIC acknowledges and agrees that such
financial statements will be unaudited.
5. CLAIMS
A. All claims made against policies issued as part of the
Approved Program shall be handled in conformity with Addendum
D of this Agreement.
3
6. INDEMNIFICATION
A. SIC shall indemnify and hold MRM harmless against all
expenses, losses, fines, penalties, disputes, claims and
liabilities, whether legal or otherwise including attorneys'
fees and costs of investigation of defense incident thereto
arising as a result of:
(1) SIC's acts, errors or omissions, except to the extent
MRM has caused or contributed to such acts, errors or
omissions;
(2) MRM's appropriate use of forms supplied by SIC,
and/or MRM's compliance with instructions,
procedures, or interpretations established by SIC;
(3) The use of any advertisement, statement or
publication identifying the name of SIC which has
been duly authorized by SIC.
B. MRM shall indemnify and hold SIC harmless against all
expenses, losses, fines, penalties, disputes, claims and
liabilities, whether legal or otherwise, including attorneys'
fees and costs of investigation and defense incident thereto
arising as a result of:
(1) MRM's, acts, errors or omissions, except to the
extent SIC has caused or contributed to such acts,
errors or omissions;
(2) MRM's failure to follow instructions, procedures, or
interpretations established by SIC.
Notwithstanding the foregoing, MRM shall not be liable to, nor
required to indemnify or hold harmless SIC, if MRM was acting
upon the instruction or with the express written approval of
SIC.
C. SIC and MRM agree, as a condition to such mutual
indemnification, to promptly notify each other of any claim or
suit against them and to allow the indemnitor to make such
investigation as indemnitor deems prudent and, subject to
written approval of indemnity, make settlement or defense
thereof.
7. ERRORS AND OMISSIONS
MRM shall obtain and maintain in effect throughout the Term of this
Agreement an Errors and Omissions Policy and a separate Fidelity Bond.
Said policies and bonds may be written on a blanket basis. The minimum
amounts of the coverages for each type of policy described will be five
million dollars ($5,000,000) for E&O and five hundred ($500,000)
4
for Fidelity Bonds respectively; provided, however, such minimum
amounts are subject to annual revision based on the level of exposure
to loss.
8. EXPENSES
Except as may otherwise be set forth herein, or agreed to in writing by
SIC, SIC shall not be responsible for any expenses of MRM whatsoever.
9. SUPPLIES
Any supplies furnished to MRM by SIC, including Underwriting, Claims,
Administrative and Financial manuals, shall always remain the property
of SIC and all unused supplies shall be promptly returned upon demand
to SIC or its designated representative, except as defined in Addendum
E.
10. OUTSIDE SERVICES
MRM is authorized to select and to make assignments to such outside
service organization as it deems necessary in accordance with SIC's
Administrative and Underwriting Guidelines which are incorporated as if
fully set forth herein and made a part hereof to service the business
produced hereafter. SIC will promptly reimburse MRM monthly for the
actual expenses paid directly by MRM as billed by MRM for the following
services:
A. Errors & Omission Vetting and Defense Attorneys
B. Auditors
The expenses incurred must be established by Expense Reimbursement
Voucher in a format provided by SIC. The MRM agrees to maintain
supporting documentation for all such reimbursable expenses.
11. ADVERTISING
MRM and SIC shall be jointly responsible for developing all promotional
activities or materials, advertising, promotional text or copy, or
other promotional items or materials relating to the Approved Programs.
MRM shall not use any such items or materials, advertising, text or
copy which (i) bears the name or logo of SIC or any service xxxx
trademark or tradename relating to the Approved Programs, or (ii) which
identifies any of the insurance coverages offered under the Approved
Programs, without the prior written consent of SIC; such consent not to
be unreasonably withheld. All cost and expenses incurred in developing
any promotional items or materials, advertising, text or copy described
in (i) above shall be borne equally by MRM and SIC and these costs.
shall not exceed five hundred thousand dollars in any one calendar year
No cost over $1,000 shall
5
be undertaken without the prior written consent of SIC and MRM. All
other costs and expenses shall be the sole responsibility of the party
incurring such costs and expenses, unless prior agreement has been
made.
12. NON-WAIVER OF RIGHTS
Forbearance, neglect or failure by either party to enforce any or all
of the provisions of this Agreement or to insist upon strict compliance
by the other party shall not be construed as a waiver of any rights or
privileges of the fast party. A waiver of a past act or circumstance
shall not constitute or be a course of conduct or waiver of any
subsequent action or circumstance. The exercise of any right or remedy
under this Agreement shall not affect the rights or remedies of the
parties available at law or in equity.
13. CONFORMITY TO STATUTE
Terms of this Agreement which are in conflict with the statutes of the
state(s) wherein this Agreement applies are hereby amended to conform
with such applicable statutes.
14. AUDITS
SIC shall have the right to conduct inspections and audits of any or
all of MRM's files and documents related to SIC's business under this
Agreement at any tune during ordinary business hours upon reasonable
notice, and MRM shall cooperate with SIC in conducting such inspections
and audits. It is expressly understood and agreed that this right
includes without limitations the right to audit premium trust account
records and all accounting records affecting the Approved Program. SIC
agrees to provide MRM with a written report of audit reached at time of
wrap-up by mutual agreement within 15 working days of the completion of
the audit MRM agrees to develop specific action plans to address
operational deficiencies identified in such audits within 30 days of
receipt of written audit results and will provide SIC with monthly
updates of status until all improvements have been achieved. SIC
reserves the right to verify these improvements.
15. SUSPENSION OR TERMINATION OF AGREEMENT
A. This Agreement shall terminate:
(1) Automatically, without notice, in any state which
MRM's license or authorization to engage in an
insurance business has been revoked or suspended by
any regulatory body. Such termination shall apply
only to the state in which the MRM's license or
authorization has been revoked or suspended. MRM will
notify SIC upon receipt of such regulatory notice of
suspension or revocation.
6
(2) Immediately upon written notice from either party to
the other in the event of the other's fraud, willful
misconduct, or material breach of any of the terms of
the Agreement or in the event the other shall fail
pay any sums due under this Agreement within ten (10)
business days following written notice of non-payment
of such funds when due. Either party may terminate
this Agreement immediately upon written notice to the
other party in the event of any action placing a
party in receivership, and a party may also terminate
this Agreement in the event the other party shall
make an assignment for the benefit of creditors,
generally not to pay its debts as they become due or
admit in writing its inability to pay its debts as
they become due, file a petition commencing a
voluntary case under any chapter of the Bankruptcy
Code, 11 U.S.C. Sect 101 et seq, (the "Bankruptcy
Code"), be adjudicated an insolvent, file a petition
seeking for itself a reorganization, arrangement,
composition, readjustment, rehabilitation,
liquidation, dissolution, or similar arrangement
under the Bankruptcy Code or any other present or
future statute, law, rule or regulation, or a case,
proceeding or other action that either results in
such entry, adjudication, relief or issuance or entry
of any other order of judgment having a similar
effect, or remains un-dismissed for thirty (30) days.
(3) Upon written notice if legislative, judicial, or
regulatory developments, in SIC'S sole judgment make
continuation of the Approved Program untenable. In
the event such developments, in SIC's sole judgment,
make continuation of the individual Approved Program
untenable in a particular state or states, SIC may,
at its sole option, either continue the Approved
Program or withdraw the individual Approved Program
from that state or states.
(4) At SIC's option, upon MRM's failure to purchase and
maintain insurance under Paragraph 7.
(5) Upon loss of reinsurance applicable to the Approved
Program by SIC; provided that SIC or MRM is unable to
obtain replacement reinsurance reasonably acceptable
to SIC applicable to the Approved Program within
ninety (90) days.
(6) By mutual written agreement of the parties.
B. If this Agreement is terminated pursuant to Paragraph 16 A,
(3), (4), (5) or (6) above, then;
(1) for a period of one year, or for any greater period
required-by law, following termination, MRM shall
continue to represent SIC subject to the
7
terms, conditions, responsibilities and obligations
contained in this Agreement as if this Agreement had
not been terminated, in addition, the following
conditions shall apply:
C. MRM will not solicit or bind any new risk under the Approved
Program.
(1) MRM will retain authority to service in-force.
insurance contracts up to their expiration date.
(2) MRM may renew for a period not to exceed one year
those insurance contracts which meet SIC'S
underwriting standards in effect at the time of such
renewal. Rates on such renewal policies will conform
to the pricing parameters in effect at the time the
Agreement is terminated.
(3) MRM may add to, or increase limits on, insurance
policies in effect, but only with SIC's prior written
approval, such approval not to be unreasonably
withheld.
D. MRM will not continue to represent SIC following termination
if any of the following have occurred:
(1) SIC has terminated this agreement because o MRM's
fraud, insolvency, willful misconduct, or material
breach of any provisions of this Agreement.
(2) If any public authority cancels or declines to renew
MRM's agents, license or certificate of authority;
provided, however, that such prohibition against
representing SIC shall apply only in the state or
states in which such authority issues such
cancellation or declination.
(3) If there has been a transfer or sale of all or a
majority interest in MRM's business by stock
certificate transfer or otherwise, to any third party
or parties, other than any parent, subsidiary or
affiliate of MRM, and SIC did not agree to extend any
form of contract to the successor firm.
16. SALE, TRANSFER, CONSOLIDATION OR MERGER OF MRM
A. MRM shall promptly notify SIC in writing in the event that
sale, assignment, transfer, consolidation or merger of MRM in
whole or in majority part is contemplated. SIC at its sole
option, may elect to enter into negotiations to purchase MRM
and MRM will negotiate exclusively with SIC for a period of
fourteen (14) days in a good faith effort to reach a mutually
acceptable agreement.
8
B. Notwithstanding the provisions of Paragraph 16.C.(2)(c), SIC
may terminate this Agreement immediately by giving MRM written
notice in the event of any sale, assignment, or transfer of
all or a majority interest of MRM by stock certificate
transfer or otherwise to any third party or parties, or the
consolidation or merger of MRM with a successor firm other
than any parent, subsidiary or affiliate of MRM. MRM agrees to
provide SIC prompt written notice as soon as such sale,
assignment, transfer, consolidation or merger is agreed upon.
SIC may, but is not obligated to, do one of the following:
(1) Enter into a new Program Agent Agreement with the
successor, or;
(2) Permit MRM to assign or transfer this Agreement upon
SIC's express written consent to a party acceptable
to SIC.
C. The transfer or sale of all or part of the business of MRM
under item 17.B shall not in any event affect the rights of
SIC hereunder nor obligate SIC to contract with any successor
or assignee of MRM. If SIC does not enter into a new
Management Agreement, then this Agreement shall terminate and
the provisions of Paragraph 16.C of this Agreement shall
apply.
17. ADMINISTRATIVE AND UNDERWRITING GUIDELINES
As used in this agreement the term "Administrative Guidelines" means
the procedures established by SIC for the binding of coverage and
endorsements and for the servicing of the insurance business thereto
under the Approved Programs outlined herein, and the criteria for
selection of outside service organizations, and the term "Underwriting
Guidelines" means the underwriting authorities rules and procedures
established by SIC for the acceptance of risks under the Approved
Program outlined herein. The Administrative and Underwriting Guidelines
may be amended from time to time by SIC through written notice directed
to MRM. Any such amendment or modification shall become effective upon
the date of receipt by the MRM of such written communication.
18. INDEPENDENT CONTRACTOR
MRM is acting under this Agreement as an independent contractor with
full power and authority to determine the means, manner and method of
performance of its duties, subject to the Administrative and
Underwriting Guidelines and other limitations and obligations imposed
upon MRM by this Agreement, and with full responsibility and liability
of its acts, errors and omissions in its performance of this Agreement,
MRM agrees it is not an employee of SIC and it is not entitled to any
benefits available to SIC employees.
9
19. AMENDMENTS TO AGREEMENT
This Agreement and the Addenda attached may be amended only by an
instrument in writing executed by both parties, except where provision
is made for amendment only by action of SIC. All amendments made by SIC
must be made by an authorized representative of SIC.
20. CHOICE OF LAWS
This Agreement shall be construed according to the laws of the State of
Mississippi.
21. NOTICE
Unless otherwise provided for in this agreement, any Notice required
under this Agreement shall be given by regular first class mail,
prepaid, and shall be mailed the respective parties as follows:
Xxxxx X. Xxxxx, President Xxxxx Xxxxxxx, President
MRM Underwriters, Inc. Stoneville Insurance Company
000 Xxxxxxxxx Xxxxx, Xxxxx 000 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Any address change may be made by Notice to the other party.
22. CONFIDENTIALITY
MRM acknowledges and agrees that all SIC information, except as
specified below, which it comes to know by reason of this Agreement,
including but not limited to SIC's list of customers and Manuals, is
confidential to SIC and will not be disclosed to unauthorized third
parties or used for unauthorized purposes. MRM will use the same
standard of care (and bind its employees, agents or representatives to
such standard) to prevent disclosure of such information as it uses to
protect its own confidential information.
SIC acknowledges and agrees that all MRM information except as
specified below, which it comes to know by reason of this Agreement,
including but not limited to MRM's list of customers and Manuals, is
confidential to MRM and win not be disclosed to unauthorized third
parties or used for unauthorized purposes. SIC will use the same
standard of care (and bind its employees, agents or representatives to
such standard) to prevent disclosure of such information as it uses to
protect its own confidential information.
Information received by either party under this Agreement will not be
considered confidential if:
10
(1) The information was known to such party at the time
of executing the original Agreement between SIC and
MRM Underwriters, Inc. dated September 1, 1998.
(2) The information was in the public domain at the time
it was disclosed without breach of this Agreement; or
(3) The information was independently developed by such
party; or
(4) The information becomes available to the public
through no fault of such party; or
(5) The information is received in good faith by such
party from a third party who is not subject to an
obligation of confidentiality owed to the other party
hereto; or
(6) The information was disclosed to a third party
without restriction by the other party hereto.
Anything to the contrary notwithstanding, information or material
delivered by one party to the other prior to the effective date of this
Agreement is hereby deemed to be confidential at the time of delivery.
In the event that either party hereto is requested or required in a
judicial, administrative or governmental proceeding to disclose any
information, material, records or files of the other party which are
obtained as the result of this Agreement such party will provide the
other party with prompt notice of such request(s) so that the other
party may seek an appropriate protective order or waive compliance with
the provisions of this Agreement.
Upon termination or expiration of this Agreement MRM and SIC and their
employees shall return to the other all written, descriptive, or
related matter of any type.
The obligation of SIC and MRM pursuant to this Section 23 shall survive
the termination of this Agreement.
23. COMPLETE AGREEMENT
This Agreement, together with the Addenda attached hereto and made a
part of hereof, contains the full and complete Program Management
Agreement between the parties.
IN WITNESS WHEREOF, SIC and MRM have caused this Agreement to be executed by
their duly authorized respective officers this first day of September, 1998.
[SIGNATURES]
