EXHIBIT 10.3
PROGRAM ADMINISTRATOR'S AGREEMENT
AGREEMENT between HealthExtras, LLC at 0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx,
Xxxxxxxx ("Administrator"), and Reliance National Insurance Company ("Reliance
National"), a division of Reliance Insurance Company, on behalf of the following
insurance companies:
Reliance Insurance Company
Reliance National Insurance Company
with offices located at:
00 Xxxxx Xxxxxx
Xxx Xxxx Xxxx, Xxx Xxxx
(all referred to as Reliance National)
Whereas, Administrator has developed a unique program of insurance benefits and
medical benefits ("Program") and such Program may be marketed to [
]* ("Target Market");
Whereas, Administrator has an exclusive contract with Xxxxxxxxxxx Xxxxx, via the
Xxxxxxx Xxxxxx Agency to represent Administrator in the promotion and marketing
of Program;
Whereas, the Parties contemplate a [ ]*
based upon the Benefits available; and
Whereas, Reliance National desires to underwrite the insurance benefits
("Benefits") of the Program, file the underlying Benefit insurance policies in
all fifty (50) United States, use best efforts to obtain state approvals, and
provide marketing and sales expertise.
Administrator and Reliance National agree as follows:
ARTICLE I. Term of Agreement
This Agreement begins on March 1, 1998 and shall continue until February
28, 2002 unless terminated under the provisions of Article XI.
*Removed pursuant to a confidentiality request.
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ARTICLE II. Appointment of Administrator; Lines of Authority
Reliance National appoints Administrator for Reliance National for the
Program as follows:
A. Lines of Authority Administrator's appointment and authority extends
------------------
to the classes of business, policies of insurance, including all
endorsements, (the "Policies"); and lines and limits of insurance described
in Exhibit A attached to this Agreement (the "Business").
B. Territory Administrator's appointment and authority extends to risks
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principally located in the following territory:
The United States and its territories.
C. Restrictions Administrator's appointment and authority is subject to
------------
any restrictions set forth in Exhibit A.
D. Reinsurance Availability Administrator's appointment and authority
------------------------
for Business written under this Agreement is subject to the following:
1. Reliance National is able to obtain and maintain in force at all
times reinsurance satisfactory to Reliance National for the Business.
2. Obtaining reinsurance is the sole responsibility of Reliance
National. Reliance National will notify Administrator that it has
obtained satisfactory reinsurance for all or some of the Business.
Reliance National will give Administrator notice that Administrator
may offer those classes of business, policies, and lines and limits of
insurance for which reinsurance has been obtained in the national
roll-out of the Program.
3. If reinsurance is terminated or no longer in full force and
effect for all or any part of the Business, Administrator's authority
for the Business affected shall be suspended, or limited immediately
upon notice to Administrator from Reliance National, until further
notice.
5. Right of First Refusal for New Products Administrator shall give
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Reliance National the right to accept any and all Business. Administrator
shall give Reliance National the first right of refusal to develop
additional insurance programs. Reliance National agrees to respond in
writing within [ ]* as to the acceptability to Reliance National of
any such insurance programs presented in writing to Reliance National.
F. Program Manager Reliance National and Administrator designate the
---------------
Sklover Group, Inc. as the Program Manager for all Business written under
this Agreement. Reliance National and Administrator may mutually agree to
replace the Sklover
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Group as Program Manager at any time by giving notice to the Sklover Group.
ARTICLE III. Administrator's Duties and Responsibilities
Administrator will faithfully perform all of its duties to the best of its
professional knowledge, skill and judgement. The Administrator's duties include
the following:
[ ]*
[ ]*
[ ]*.
Article IV. Insurance Policy Filings and Reliance National's Duties and
Responsibilities
Reliance National shall file the underlying Benefit insurance policies in
all fifty (50) United States and Reliance National shall use best efforts to
obtain Benefit approval from state insurance departments. In using their best
efforts, [
]*.
ARTICLE V. Claims Settlement
Administrator has no authority to adjust, compromise, settle or pay any
claim made on the Policies written or bound under this Agreement. Administrator
shall:
[ ]*
[ ]*
[ ]*.
ARTICLE VI. Advertising
Administrator will not refer to Reliance National or the Business covered
by this Agreement in any advertisement, letter, circular, pamphlet or other
publication or statement without the prior consent of Reliance National.
[ ]*
Article VII. Representation With Respect to Policies
Administrator will not make nor allow any other person to make any
representation to applicants, insureds, policyholders or claimants as to the
existence or extent of coverage either available from Reliance National or under
a Policy that is not consistent with the terms and conditions of coverages
available from Reliance National or of a Policy. Administrator shall establish
procedures to ensure that Administrator and Administrator's employees will make
known to any applicant, insured or policyholder the full scope and effect of all
exclusions and
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limitations upon or under coverage provided under the Policy.
ARTICLE VIII. Insurance of Administrator
Administrator shall require the Program Manager, call center and claims
administrator to each maintain for as long as this Agreement remains in force
and on forms with insurers and on forms acceptable to Reliance National:
[ ]*
[ ]*
[ ]*.
Reliance National may require certificates of insurance or other evidence
that the insurance required by this Article is and remains in force.
ARTICLE IX. Indemnification
A. Administrator shall be responsible to Reliance National and shall
indemnify, save, defend and hold Reliance National, including its
affiliates, and all officers, directors and employees harmless against any
and all claims, suits, hearings, actions, damages of any kind, liability,
fines, penalties, loss or expense, including attorney's fees caused by or
resulting from any allegation of any direct misconduct, error, omission or
other act; or breach of this Agreement by Administrator, or Administrator's
employees, or representatives, unless the conduct giving rise to the
allegation was performed at the specific direction of Reliance National and
provided Reliance National has not contributed to or compounded the act
alleged.
B. Reliance National shall be responsible to Administrator and shall
indemnify, save, defend and hold Administrator harmless against any and all
claims, suits, hearings, actions, damages of any kind, liability, fines,
penalties, loss or expense, including attorney's fees caused by or
resulting from any allegation of an direct misconduct, error, omission, or
other act by Reliance National, provided Administrator has not contributed
to or compounded the act alleged.
ARTICLE X. Suspension of Administrator's Authority
Reliance National may, by immediate notice to Administrator, suspend any
part or all of Administrator's authority under this Agreement for such time as
Reliance National may deem necessary to protect its interests or reputation if
any of the following occur:
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A. Loss of Reinsurance In accordance with Article II.D.3; or
-------------------
B. Administrative Action An administrative accusation of violation of
---------------------
insurance law or regulation against Administrator or any of Administrator's
executive officers by an insurance regulatory agency; or
C. Grounds for Immediate Termination For any reason that would permit
---------------------------------
termination of Administrator under this Agreement under Article XI.A.1; or
D. Default The failure of Administrator to perform its duties and
-------
responsibilities under this Agreement including
[ ]*
[ ]*.
E. Termination by Administrator If the Administrator gives notice of
----------------------------
termination under Article XI; or
F. Dispute Over Termination In the event of a dispute over the reason for
------------------------
termination of the Agreement.
ARTICLE XI. Termination of Agreement
A. Reliance National may terminate this Agreement as follows:
1. Immediately upon notice to Administrator in the event of:
a. Suspension or Revocation An order of suspension or
------------------------
revocation of Administrator's authority to do business; or
b. Misapplication of Funds A misapplication, misdirection or
-----------------------
misappropriation by Administrator of funds or property of
Reliance National or funds received for it or Program Members by
Administrator, or in the event of failure by Administrator to
remit to Reliance National or the Program Members, funds due
promptly after written demand therefore by Reliance National; or
c. Violation of Law A charge brought against Administrator or
----------------
any of Administrator's executive officers of violation of the
insurance laws or regulations of any jurisdiction, or of any law
constituting a felony in the jurisdiction in which committed, or
of any law whose violation reflects adversely upon the honesty or
integrity of Administrator or any of Administrator's executive
officers whether or not classified as a felony; or
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d. Insolvency The Administrator shall become insolvent or
----------
make a general assignment for the benefit of creditors; if a
petition is filed for bankruptcy or other law providing for its
reorganization, dissolution or liquidation; or a trustee or
receiver is appointed for the Administrator, its assets or a
substantial part thereof.
2. Upon Thirty (30) days notice to Administrator in the event of:
[ ]*
[ ]*.
b. Adverse Legislation Enactment of legislation which in
-------------------
the opinion of Reliance National would adversely affect
Reliance National's rights under this Agreement or
liabilities under the Policies; or
c. Conflict with Law As provided for in Article XV.B;or
-----------------
d. Default The failure of Administrator to perform its
-------
duties and responsibilities under this Agreement including
[ ]*
[ ]*.
3. Upon 365 days notice to Administrator for any reason after such
reason(s)have been communicated to Administrator in writing and a
reasonable period allowed to cure any deficiencies enumerated in such
written communication. Cure shall be subject to the approval of
Reliance National, which shall not be unreasonably withheld. Such
reasons shall not be arbitrary or frivolous.
2. Administrator may terminate this Agreement as follows:
1. Upon 365 days notice to Reliance National for any reason after
such reason(s) have been communicated to Reliance National in
writing and a reasonable period allowed to cure any deficiencies
enumerated in such written communication. Cure shall be subject
to the approval of Administrator, which shall not be unreasonably
withheld. Such reasons shall not be arbitrary or frivolous; or
2. Upon 30 days notice to Reliance National in the event Reliance
National suspends any or all of Administrator's
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authority in accordance with Article X.
3. In the event Administrator terminates this Agreement [
]*.
ARTICLE XII. Continuing Duties of Administrator after Termination
[ ]*
[ ]*
[ ]*.
ARTICLE XIII. Offset
All amounts due Administrator or Reliance National under this or any other
agreement between the parties shall be subject to the right of offset.
ARTICLE XIV Arbitration
A. Submission to Arbitration As a condition precedent to any right of
-------------------------
action hereunder, any dispute arising out of this Agreement, including its
formation of validity, during or after termination of this Agreement, shall
be submitted to the decision of a board of arbitration composed of two
arbitrators and an umpire meeting in New York unless otherwise mutually
agreed.
B. Notice The notice requesting arbitration shall state in particulars all
------
principal issues to be resolved and shall set a date for the hearing, which
date shall be no sooner than 120 days and no later that 150 days from the
date that the notice requesting arbitration is mailed. The other party may
submit additional issues for resolution by giving notice to the party
requesting arbitration within 10 days of receipt of the notice of
arbitration.
C. Arbitration Board Membership The members of the board of arbitration
----------------------------
shall be disinterested, impartial, active or retired officials within the
insurance industry, with insurance experience. Each party shall appoint
its own arbitrator and the two arbitrators shall choose a third arbitrator
as umpire before the date set for the hearing. If a party fails to appoint
its arbitrator within 30 days after having either received or given the
notice requesting arbitration, the other shall appoint the second
arbitrator. If the two arbitrators fail to appoint the umpire within 30
days after their appointments, either party may apply to the United States
District Court for the Southern District of New York to appoint an umpire
possessing the qualifications set forth above. The umpire shall promptly
notify all parties to the
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arbitration of his selection.
D. Submission of Briefs The parties shall submit their initial briefs
--------------------
within 20 days from appointment of the umpire. Each may submit reply
briefs within 10 days after filing the initial briefs.
E. Arbitration Award The board shall make an award of compensatory
-----------------
monetary damages, but not of punitive or exemplary damages. The award
shall be made with due regard to the custom and usage of the insurance
business and shall be in writing stating the factual and legal basis for
the award. The award shall be based upon a hearing in which evidence may
be introduced without following strict rules of evidence but in which cross
examination and rebuttal shall be allowed. At its own election or at the
request of the board, either party may submit a post-hearing brief for
consideration of the board within 20 days of the close of the hearing. The
board shall make its award within 30 days following the close of the
hearing or the submission of post-hearing briefs, whichever is longer,
unless the parties consent to an extension. A decision by the majority of
the members of the board shall become the award of the board and shall be
final and binding upon all parties to the proceeding. Either party may
apply to the United States District Court for the Southern District of New
York or to a State Court of competent jurisdiction for an order confirming
the award; a judgement of such Court shall thereupon be entered on the
award. If such an order is issued, the attorneys, fees of the party so
applying and court costs will be paid by the party against whom
confirmation is sought.
F. Arbitration Expense Each party shall bear the expense of its own
-------------------
arbitrator and shall jointly and equally bear with the other party the
expense of the umpire. The remaining costs of the arbitration proceedings
shall be allocated by the board.
G. Survival This Article shall survive the termination of this Agreement.
--------
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ARTICLE XV. Other Terms and Conditions
A. Waiver The failure of Reliance National or Administrator to insist on
------
strict compliance with this Agreement, or to exercise any right or remedy
shall not constitute a waiver of any rights provided under this Agreement,
nor stop the parties from thereafter demanding full and complete compliance
nor prevent the parties from exercising such a remedy in the future.
B. Conflict with Law If any provision of this Agreement should be
-----------------
declared invalid by a court of general jurisdiction and superseded by
specific law or regulation, such law or regulation shall control to the
extent of such conflict without affecting the remaining provisions of this
Agreement. However, if either party believes that the voiding of any
provision hereof materially affects the whole Agreement or the relationship
of the parties under this Agreement, that party by notice may terminate
this Agreement by giving thirty (30) days notice to the other.
C. Assignment Neither this Agreement nor any rights or obligations under
----------
this Agreement may be assigned or delegated by Administrator without the
prior written consent of Reliance National except for assignments among
related parties of the Administrator.
D. Authority of Reliance National Reliance National is authorized by the
------------------------------
Companies listed above to act on their behalf in all matters in connection
with this Agreement and the Business.
E. Headings The headings preceding the text of the articles and
--------
paragraphs of this Agreement are intended and inserted solely for the
convenience of reference and shall not affect the meaning, construction or
effect of this Agreement.
F. Governing Law This Agreement shall be governed as to performance,
-------------
administration and interpretation by the laws of the State of New York.
G. Honorable Undertaking This Agreement shall be considered an honorable
---------------------
undertaking made in good faith and shall be subject to a liberal
construction for the purpose of giving effect to the good faith and
honorable intentions of Administrator and Reliance National.
H. Promptly Unless the context and circumstances require action sooner,
--------
the term "promptly" in this Agreement shall be defined to mean "within five
(5) working days".
I. Notices Wherever notice is required under this Agreement, it shall be
-------
in writing, and deemed to have been received either when actually received
or 3 days after having been sent by certified mail, and addressed:
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1. If to Reliance National:
------------------------
[ ]*
Reliance Integramark
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxx 00000
2. If to Administrator:
--------------------
[ ]*
HealthExtras, LLC
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
J. Independent Contractor This Agreement is not a contract of employment
----------------------
and nothing contained in this Agreement shall be construed to create the
relationship of joint venture, partnership, or employer and employee
between Reliance National and Administrator.
Administrator is an independent contractor and shall be free, subject to
the terms and conditions of this Agreement, to exercise judgement and
discretion with regard to the conduct of business.
K. Negotiated Agreement This Agreement has been negotiated by the parties
--------------------
and the fact that the initial and final draft shall have been prepared by
Reliance National shall not be used in any forum in the construction or
interpretation of this Agreement or any of its provisions.
L. Entire Agreement This Agreement supersedes all previous agreements,
----------------
whether written or oral, between Reliance National and Administrator, or
their predecessors with respect to the Business to be written under this
Agreement.
1. This Agreement may be amended, altered or modified only in writing
signed by both parties.
[ ]*.
M. Counterparts This Agreement may be executed in duplicate counterparts
------------
each of which shall be deemed an original but both of which when taken
together shall be deemed one and the same document.
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The Administrator and Reliance National, intending to be bound, have
executed this Agreement in duplicate, each of which shall serve as an original:
FOR Administrator: FOR Reliance National:
[___________________________ [______________________
By: ________________________ By: ___________________
Title: _____________________]* Title: ________________]*
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