TITLE INSURANCE UNDERWRITING AGREEMENT
(NON-EXCLUSIVE FORM)
THIS AGREEMENT entered into this 1st day of July, 1999, between XXXXXXX
TITLE GUARANTY COMPANY, a Texas Corporation (referred to herein as
"UNDERWRITER"), and NEW CENTURY TITLE COMPANY, a California Corporation
(referred to herein as "Company"). UNDERWRITER appoints COMPANY as its limited
agent only for the purpose of issuing title policies in the name of UNDERWRITER
with the authority, duties, limitations, and conditions set forth in this
Agreement and in accordance with UNDERWRITER's guidelines and instructions.
"Title policies" includes all contracts of title insurance or guaranty,
including title insurance policies, endorsements, binders, and commitments.
1. TERRITORY: COMPANY is a non-exclusive agent authorized to issue
UNDERWRITER's title policies covering property in the State of California,
in the Counties of Alameda, Contra Costa and Sonoma (hereinafter referred
to as "Territory"), and in those areas within said state where UNDERWRITER
does not now have, nor in the future acquires, an exclusive title insurance
representative. COMPANY shall not issue UNDERWRITER's title policies on
property located outside of said Territory.
2. DUTIES OF UNDERWRITER:
(a) UNDERWRITER shall furnish to COMPANY all regularly issued title
policy, binder, commitment, and endorsement forms necessary for the
issuance of title insurance.
(b) UNDERWRITER shall maintain a capacity for the research of matters
pertaining to title insurance risks and shall remain active in the
various trade associations relating to title insurance. In this regard
UNDERWRITER shall:
(1) Furnish COMPANY from time to time with rules and instructions
involving matters of importance to the business of title
insurance.
(2) Promptly determine questions submitted by COMPANY regarding the
issuance of title policies.
(c) UNDERWRITER shall pay premium and other similar taxes on the actual
cash (gross premium [risk rate]) charged for and remitted to
UNDERWRITER by COMPANY pursuant to paragraph 11 hereof. Except that
UNDERWRITER shall deduct therefor the cost of any reinsurance or
coinsurance purchased by UNDERWRITER, and UNDERWRITER shall not be
liable for any other taxes of any kind due on income derived by
COMPANY. Should UNDERWRITER be required to pay premium tax on any
amount greater than that specified above, COMPANY agrees to reimburse
UNDERWRITER for such additional tax.
(d) UNDERWRITER shall defend at its own expense all actions and pay all
losses under its title policies except as herein otherwise provided
subject to the right of reimbursement in paragraph 5 hereof.
UNDERWRITER does not have any obligation to defend COMPANY in any
action filed against COMPANY for COMPANY's malfeasance or negligence,
even though COMPANY may have issued UNDERWRITER's title policy.
(e) UNDERWRITER shall furnish its usual form of insured closing letter to
each of COMPANY's customers that requests such a letter.
3. DUTIES OF COMPANY:
(a) COMPANY shall conduct its business in a sound and ethical manner and
shall issue title policies according to recognized underwriting
practices, the rules and instructions given by UNDERWRITER, and those
rules and instructions imposed by the Department of Insurance or other
regulatory body.
(b) All title policies must be based on a written report of title
resulting from a complete search and examination of those public
records, surveys, and inspections relevant to the insurance afforded
by such policies. Where outside attorneys are used for examination,
they shall act for and be paid by COMPANY but shall be approved by
UNDERWRITER. Each title policy shall be on a form designated by
UNDERWRITER and shall correctly reflect the status of title as of the
date and time of said policy with appropriate exceptions as to liens,
defects, encumbrances, and/or objections disclosed by the search and
examination of title or known by COMPANY to exist.
(c) For each title policy issued, COMPANY shall preserve in a separate
file all documents supporting the search, examination, and report of
title on which the title policy is based. UNDERWRITER shall have the
right to make copies of all said title reports and documents at any
time within ten (10) years after termination of this Agreement.
(d) No later than the fifteenth (15th) day of each month, COMPANY shall
send to UNDERWRITER a register which shall consist of the following:
(1) A numerical list of all policies issued or charged for or voided
during the previous month.
(2) A copy of each policy issued or charged for during the previous
month and the original of each policy voided.
(3) A check for the gross premiums charged for the account of
UNDERWRITER for the previous month.
(e) COMPANY agrees to keep safely in its escrow account, separate from
COMPANY's individual accounts, all funds received by COMPANY from any
source(s) in connection with transactions in which UNDERWRITER title
policies will be issued, and to disburse said funds only for the
purpose for which they were entrusted. Said account shall be
designated "New Century Title Company Escrow Account" COMPANY agrees
to reconcile said escrow account each month within thirty (30) days of
the date of the bank statement. UNDERWRITER may at any time make, but
shall have no obligation to make, an audit of said escrow account and
the general books of accounts and of all accounts, checks, records, or
files of COMPANY pertaining to transactions in which UNDERWRITER's
title policies are or will be issued.
(f) COMPANY shall at its own expense obtain a fidelity bond or insurance
policy which covers losses caused by misappropriation, disappearance
or wrongful use of escrow funds deposited with COMPANY. Said bond or
policy shall name UNDERWRITER as an additional insured, co-insured or
joint-loss payee, and shall be in an amount not less than ten (10)
times COMPANY'S required statutory net worth as set forth in Insurance
Code Section 12389. The bond or policy may not exclude coverage due to
acts or omissions of any officer, director, employee, or principal of
the COMPANY. A copy of said bond or policy naming UNDERWRITER as an
additional insured, co-insured or joint-loss payee shall be submitted
to UNDERWRITER by COMPANY within fourteen (14) days of the effective
date of this Agreement. Said bond or policy shall remain in effect
throughout the term of the AGREEMENT. And copies of paid renewal
receipts shall be directed to UNDERWRITER annually. Said bond or
policy shall provide that, in the event of cancellation or non-renewal
of said bond or policy, UNDERWRITER shall be given advance written
notice by the underwriter of the bond or policy.
(g) Prior to the issuance of a binder, commitment, or title policy in
excess of UNDERWRITER's single policy retention limit, as determined
by UNDERWRITER from year to year, or if a customer requests
reinsurance at any level, COMPANY shall immediately obtain
UNDERWRITER's consent and send a copy immediately to the Reinsurance
Department of UNDERWRITER in order that UNDERWRITER may contract for
such reinsurance as it deems necessary. UNDERWRITER will pay the
percentage of the reinsurance cost equal to the percentage remitted to
it by COMPANY pursuant to paragraph 11 hereof, and the balance of the
reinsurance costs will be paid by COMPANY. COMPANY shall obtain
UNDERWRITER's consent as specified in paragraph 4b.
(h) Pursuant to Section 2695.2(m) of California Code of Regulations, Title
10, Chapter 5, Subchapter 8, entitled "Unfair Claims Settlement
Practices Regulations", upon COMPANY'S receipt of a notification of a
claim against a policy of title insurance which the COMPANY issued or
participated in the issuance of, COMPANY shall immediately forward
such claim to UNDERWRITER in Houston, to the attention of the National
Legal Department-Claims. Pursuant to Section 2695.2 (m) of the
California Code of Regulations, COMPANY will not be handling title
insurance clams for UNDERWRITER. COMPANY shall give immediate notice
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thereof to UNDERWRITER and furnish to UNDERWRITER a Claim Report Form,
a copy of the title policy involved, and all documents and information
available relating to the claim. COMPANY shall conduct all
investigations requested by UNDERWRITER and shall cooperate with
UNDERWRITER in the defense or settlement of the claim, whether such
claim be made before or after the termination of this Agreement.
(i) COMPANY shall furnish UNDERWRITER with a copy of any audit or report
that COMPANY is required to make to the Department of Insurance (or
similar regulatory body) and a copy of those reports of operations and
financial status as stockholders and directors of the COMPANY are
permitted by law to see.
(j) COMPANY authorizes UNDERWRITER to verify and exchange information
regarding COMPANY and/or its principals and any current or subsequent
contractual agreement including, but not limited to, requesting
investigative consumer reports, records of criminal convictions,
credit reports, and/or consumer report information at any time.
Further, COMPANY and/or its principals understand that upon reasonable
written request they may obtain additional information about such
reports under the Fair Credit Reporting Act. COMPANY shall provide
UNDERWRITER with a list of COMPANY's ten (10) largest customers as
well as any entity in which COMPANY or its principals may have the
ability to direct such entity's activities.
4. COMPANY'S AUTHORITY AND LIMITATIONS THEREON:
(a) COMPANY is authorized to issue title insurance on forms furnished by
UNDERWRITER subject to the provisions of this paragraph, but COMPANY
shall not alter forms without the prior written consent of
UNDERWRITER.
(b) No title policy shall be issued by COMPANY in excess of One Million
Dollars ($1,000,000.00) without first obtaining the prior written
consent of UNDERWRITER.
(c) COMPANY's Board of Directors shall approve in writing the names of its
employees given authority to countersign UNDERWRITER's title policies,
and shall provide UNDERWRITER a list of said authorized employees.
(d) COMPANY shall not without UNDERWRITER's prior written consent settle,
compromise, or negotiate any claim under a title policy of
UNDERWRITER, or employ counsel for UNDERWRITER or an insured in regard
to a claim, or accept service of process on behalf of UNDERWRITER.
(e) COMPANY shall not without UNDERWRITER's prior written consent insure
over a title defect, lien, or encumbrance, regardless of any indemnity
or deposit that COMPANY shall obtain.
(f) COMPANY is expressly not appointed as an agent of UNDERWRITER for
purposes of providing abstracting and/or escrow services, and
UNDERWRITER shall have no liability or responsibility for any claims
or losses due to COMPANY acting as principal in providing such
abstracting and/or escrow services.
(g) COMPANY is expressly not appointed by UNDERWRITER as its agent for
receipt of service of process, a notice of claim and/or complaint. In
the event COMPANY receives said service of process, a notice of claim
and/or complaint, COMPANY shall immediately inform the person or
entity giving said service of process, notice of claim and/or
complaint that COMPANY is not the agent of UNDERWRITER for the purpose
of service of process, receipt of notice of claim, or receipt of
complaint. COMPANY shall immediately inform the Insured to file its
claim directly with the UNDERWRITER as required by the policy and
inform the UNDERWRITER of the attempt to deliver service of process,
notice of claim and/or complaint.
5. DIVISION OF LOSS AND LOSS EXPENSE: The term "Loss" shall include the amount
paid to or for the benefit of the insured as well as loss adjustment
expense including any cost of defending the claim resulting in the loss.
(a) On each such loss under a title policy issued pursuant to this
Agreement not due to COMPANY'S negligence or fraud, COMPANY shall be
liable to UNDERWRITER for the first $5,000.00 of such loss.
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(b) On each such loss due to the fraud or intentional act or omission of
COMPANY or its employees, representatives, or agents, or due to the
gross negligence thereof, COMPANY shall be liable to UNDERWRITER for
the entire amount of such loss including, but not limited to,
attorneys' fees, litigation expenses, and costs of settlement
negotiations. Such losses include but are not limited to:
(1) Failure of title plant to disclose matters causing losses.
(2) Failure to discover or report any instrument of record affecting
title.
(3) Violations of escrow instructions.
(4) Failure to follow underwriting guidelines and/or instructions of
UNDERWRITER.
(5) Failure to prepare a title policy which shows defects and matters
affecting title disclosed in the title search or which should
have been disclosed in the title search.
(c) On each loss suffered by UNDERWRITER by reason of its Insured Closing
Letter issued pursuant to paragraph 2E of this Agreement, COMPANY
shall be liable to UNDERWRITER for the entire amount of such loss
including, but not limited to, attorneys' fees, litigation expenses,
and costs of settlement negotiation.
6. TERMINATION OF AGREEMENT: This Agreement is terminable without cause by
either COMPANY or UNDERWRITER at any time on thirty (30) days written
notice.
7. TERMINATION UPON DEFAULT, ETC.: In addition to other termination provisions
contained in this Agreement, UNDERWRITER may immediately terminate this
Agreement at any time by written notice to COMPANY upon the happening of
any of the following:
(a) Any bankruptcy proceedings (voluntary or involuntary), insolvency,
receivership, or any like proceedings involving the financial
stability of COMPANY.
(b) Any Court or Administrative proceeding or decision against COMPANY for
the violation of any federal or state law or the breach of any rule or
regulation of the Department of Insurance or other regulatory agency.
(c) Any revocation, disqualification, suspension, or termination of
COMPANY's right to do business or any license it may have as a title
insurance agency or abstracter.
(d) Any notice or information of any act by COMPANY of apparent fraud or
dishonesty, or of any shortage in COMPANY's escrow account, or the
refusal of COMPANY to allow UNDERWRITER to perform an audit as set out
in Section 3e above.
(e) Any failure of COMPANY to keep proper accounting records of its escrow
accounts or any failure to reconcile same within thirty (30) days of
the date of the last bank statement.
(f) Any failure, refusal, or neglect by COMPANY to pay any remittances due
to UNDERWRITER within twenty (20) days after written notice from
UNDERWRITER to COMPANY of a deficiency.
(g) Any failure, refusal, or neglect to cure any default by COMPANY within
thirty (30) days after written notice from UNDERWRITER to COMPANY
concerning such default.
(h) Any determination by UNDERWRITER, in its sole discretion, that COMPANY
and/or its principals are pursuing a course of conduct not in keeping
with sound title insurance business practices, or possess a credit
rating which contains negative entries, or upon discovery that COMPANY
or its principals have furnished any misleading or false information
to UNDERWRITER or COMPANY.
8. RELATIONSHIP OF UNDERWRITER AND COMPANY SUBSEQUENT TO TERMINATION:
Subsequent to termination or cancellation of this Agreement under any
provisions of this Agreement:
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(a) COMPANY shall cease and discontinue the issuance of title policies of
UNDERWRITER; provided, however, that UNDERWRITER shall have the right
to have its title policies issued on those title transactions in
process.
(b) COMPANY shall cease the use and/or display of the Xxxxxxx name or to
hold itself out or to advertise itself as an issuing office of
UNDERWRITER.
(c) COMPANY shall return to UNDERWRITER all materials, forms, manuals, and
supplies furnished COMPANY by UNDERWRITER.
(d) COMPANY shall retain all evidence of insurability in its files for the
benefit of both UNDERWRITER and COMPANY, and to comply with any
governmental regulations or laws. UNDERWRITER shall have the right to
copy any such files, which right shall survive the termination of this
Agreement.
(e) COMPANY shall continue to account to UNDERWRITER for all policies in
accordance with the provisions of this Agreement.
9. ASSIGNMENT: This Agreement is binding on and inures to the benefit of any
successor of UNDERWRITER whether by merger, consolidation, affiliation, or
otherwise.
10. NOTICES: All notices provided for in this Agreement shall be given in
writing to the party affected and shall be personally delivered to the
other party or mailed to it by Certified or Registered United States Mail
at the appropriate address shown below.
11. GROSS PREMIUMS - SCHEDULE OF PAYMENTS:
(a) COMPANY may charge any fees it desires of whatever character for its
services which do not impose an obligation on UNDERWRITER, including
the search and examination of title (which are a necessary and
integral part of underwriting) in transactions where title insurance
is being issued, so long as same are permitted by law and not
inconsistent with any rate filing or any rules and regulations of the
Department of Insurance or other regulatory Agency. TEN percent (10%)
of the [X] rate filing, [ ] promulgated rate, [ ] attached schedule of
charges, [X] total customer charges (all fees charged the public),
including all changes in or amendments to any of the above bracketed
items, constitutes the gross premium (risk rate) to be charged for and
remitted to UNDERWRITER by COMPANY. Provided that UNDERWRITER shall
not receive less than thirty-five cents (.35) per $1,000 in policy
liability, excluding simultaneous issue policies. The gross premium
(risk rate) shall include Fifty Percent (50%) of all amounts charged
for standard endorsements not described in paragraph 11b. In the event
COMPANY, under this paragraph, pays UNDERWRITER according to an
attached schedule of charges and COMPANY increases its charges to the
public for title insurance and title examination in conjunction with
the issuance of a title policy, then the amount COMPANY shall pay to
UNDERWRITER shall be increased by the same percentage. COMPANY agrees
to promptly notify UNDERWRITER of any increase in charges to the
public. All amounts constituting the gross premium (risk rate) are the
property of UNDERWRITER, and shall be collected and held by COMPANY in
trust for UNDERWRITER.
(b) COMPANY shall promptly remit to UNDERWRITER as gross premium (risk
rate) One Hundred Percent (100%) of all charges made by COMPANY for
extra hazardous risks or coverage assumed by UNDERWRITER. Extra
hazardous risks shall include, but are not limited to, zoning
coverage, usury coverage, non-imputation coverage, shared application
endorsement, option endorsement, and tie-in endorsement. These
endorsements are not to be issued without permission of Houston Legal
Department or a Senior Underwriter.
(c) If loss and loss adjustment expenses (including attorney fees)
incurred by UNDERWRITER in any one calendar year exceed Thirty Percent
(30%) of the gross premium (risk rate) actually remitted to
UNDERWRITER by COMPANY in that calendar year, then COMPANY's
remittance to UNDERWRITER for gross premium (risk rate) shall increase
Ten Percent (10%) (One Hundred Ten Percent (110%) of the above
remittance rate to UNDERWRITER) until UNDERWRITER has recouped all
loss and loss adjustment expenses, including attorney fees, incurred
in the excess of said Thirty Percent (30%) of the gross premium (risk
rate). This clause is cumulative.
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(d) In the event COMPANY becomes delinquent in remitting UNDERWRITER's
gross premium (risk rate) as determined by paragraph 11a above,
COMPANY hereby grants to UNDERWRITER a lien against all the assets of
the COMPANY until UNDERWRITER is fully paid.
IN WITNESS WHEREOF, COMPANY and UNDERWRITER have executed this Agreement
as of the day and year first stated above.
UNDERWRITER: COMPANY:
XXXXXXX TITLE GUARANTY COMPANY NEW CENTURY TITLE COMPANY
X.X. XXX 0000 0000 XXXXX XXXXXXXXXX XXXX, XXXXX #000
XXXXXXX, XXXXX 00000 XXXXXXXXXX, XXXXXXX 00000
By: By:
-------------------------------- --------------------------------------
Senior Vice President Xxxx X. Head, Executive Vice President
Attest: Attest:
---------------------------- ----------------------------------
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AMENDMENT TO UNDERWRITING AGREEMENT
This Amendment made and entered into this 28th day of September, 1999, by
and between XXXXXXX TITLE GUARANTY COMPANY, a Texas corporation, referred to in
this Amendment as "UNDERWRITER," and NEW CENTURY TITLE COMPANY, a California
corporation, hereinafter referred to in this Amendment as "COMPANY."
WITNESSETH
Whereas, UNDERWRITER and COMPANY have heretofore entered into a certain
Underwriting Agreement dated July 1, 1999; and
Whereas, the parties hereto desire to further amend the terms of said
Agreement;
Now, therefore, for good and valuable consideration, the parties hereto
agree that the above referenced Agreement is hereby amended as follows:
AMENDMENT
Paragraph 1 of said Agreement is hereby deleted in its entirety and in the
place and stead thereof shall be substituted the following:
1. TERRITORY
COMPANY is authorized to issue UNDERWRITER's title policies on property
in the following additional county, San Diego County in the State of
CALIFORNIA (hereinafter referred to as Territory). In addition, Company
is authorized to issue Underwriter's title policies on property in Los
Angeles, San Bernardino, Santa Barbara, Ventura, Orange and Riverside
Counties in the State of CALIFORNIA (also herinafter referred to as
Territory) at such time as New Century Title has received license for
same from the California Department of Insurance and Xxxxxxx Title
Guaranty has received all completed forms required for same and has
approved such forms. COMPANY shall not issue title policies on property
located ouside of said Territory. UNDERWRITER expressly reserves the
right to appoint other agents of title assurances in said Territory.
Except as amended hereby, all other provisions contained in the
above referenced Agreement shall remain in full force and effect.
Executed on the date above indicated.
ATTEST: XXXXXXX TITLE GUARANTY COMPANY
By: By:
------------------------------- --------------------------------
Secretary Sr. Vice President
ATTEST: NEW CENTURY TITLE COMPANY
By: By:
------------------------------- --------------------------------
Xxxx X. Head, Exec. Vice President
