INSURANCE MANAGEMENT AND
ADVISORY SERVICES AGREEMENT
BETWEEN
AON INSURANCE MANAGERS (BARBADOS) LTD
AND
INTEGON RE (BARBADOS), LIMITED
THIS INSURANCE MANAGEMENT AND ADVISORY SERVICES AGREEMENT made the 13th day of
March, 2000.
BETWEEN AON INSURANCE MANAGERS (BARBADOS) LTD. a body corporate having
its Principal Office at One Financial Place, ▇▇▇▇▇▇▇▇▇ Rock, St.
▇▇▇▇▇▇▇, in the Island of Barbados (hereinafter referred to as
"the Manager").
OF THE FIRST PART
AND INTEGON RE (BARBADOS), LIMITED a body corporate having its
Principal Office at The Financial Services Centre, ▇▇▇▇▇▇'▇ Court
Hill, St. ▇▇▇▇▇▇▇, in the Island of Barbados (hereinafter
referred to as "the Company")
OF THE SECOND PART
WHEREAS, the Company is based in Barbados and from such country engages in the
business of reinsurance and desires certain management, financial,
administrative and advisory services to assist it in the accomplishment of such
business; and
WHEREAS, at its offices in Barbados, the Manager maintains a staff of
professional insurance and financial executives and administrative and clerical
personnel experienced in providing such services and
WHEREAS, the Company and the Manager are desirous of entering into an agreement
whereby the Manager will render insurance management, financial, administrative
and advisory services as required by the Company.
1. THE MANAGER agrees and covenants with the COMPANY to undertake and
discharge the following obligations, subject at all times to the
directions, limitations, approval or general supervision of the Company,
the Board of Directors or such other officials of the Company as the Board
of Directors may designate:-
(a) Authority to Underwrite
On the authorisation of the Company to underwrite and accept on behalf
of the Company or decline such reinsurance business as may be offered
to the Company from time to time.
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(b) Authority to Execute Underwriting Documents
On the authorisation of the Company to sign and issue in the name of
the Company policies and contracts of reinsurance together with such
binders and other documents as may be required in relation to the
conduct of the reinsurance business of the Company.
(c) Authority to Act on Claims Matters
On behalf of the Company to receive claims for losses including
recoveries, and on the authorisation of the Company to arrange to have
provided to the Company loss adjustment services, including
arrangements for on-site adjustments, by loss adjusters, and
thereafter, pay all such claims including survey investigation, legal,
and other usual fees and expenses provided that such payment shall be
made only out of funds provided by the Company for the purpose.
(d) Authority to Retrocede
On behalf and with the authorisation of the Company to effect the
reinsurance or retrocession of risks accepted on behalf of the Company
by the Manager.
(e) Maintenance of Books & Records
To assist in maintaining on behalf of the Company, separate from the
Manager's own books and records, such books of account showing the
financial condition of the Company in accordance with the Exempt
Insurance (Amendment) ▇▇▇ ▇▇▇▇ and the Companies Act 1982-54, and
every statutory amendment of the said Acts, and in accordance with
established accounting principles applicable to the business of
insurance and reinsurance and to submit each year an annual balance
sheet and statement of profit and loss to The Board of Directors and
the auditor of the Company. The Company, or its duly authorised
representative(s) may at any reasonable time inspect the records
maintained on its behalf by the Manager.
(f) Financial and Statutory Reporting
To prepare and make available, upon the request of the Company's
directors, interim financial statements and other reports as may
reasonably be required by the Company including the preparation of all
statutory and other reports as may be required by the Barbados
insurance and/or other regulatory authorities, including filings with
the Securities and Exchange Commission of the United States of
America.
(g) Authority to Collect and Invest Funds
To collect, on behalf of the Company, reinsurance premiums and all
other amounts due the Company and manage and invest Company funds
under the Manager's
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control, pending transfer of available funds to the Investment
Manager, as the Board shall from time to time appoint.
(h) Maintenance of Staffed Office
To maintain a properly staffed office in Barbados to enable the due
performance of all duties required under this Agreement.
(i) General Authority
Generally to do all things necessary for the management of any
insurance or reinsurance business which the company is or may
hereafter be authorised to undertake.
(j) Maintenance of Accounts and Authority to Disburse Funds
To maintain on behalf of the Company such bank accounts as shall be
necessary and to make disbursements as required to pay charges and
expenses properly incurred in the operation of the Company.
(k) Other Professional Service Disclaimer
It is agreed that the Manager will not provide legal or tax counsel,
investment advice, secretarial services or independent auditing
services under this Agreement.
(l) Restriction on Services
Except as specifically authorised by the Company, during the term of
this Agreement and for a period of one year after it is terminated the
Manager agrees not to provide management or accounting services for
any other company which, by the nature of its operations, is offering,
insuring or reinsuring automobile insurance policies on a multi-state
basis in the United States of America. The terms of this paragraph
shall apply also to any present or future affiliate of the Manager
operating in Barbados. The Manager represents that it is authorised to
commit to the terms of this paragraph on behalf of such affiliates.
(m) Confidential Treatment of Information
The Manager will treat as confidential all information, from any
source, concerning the business of the Company (including information
in all books and records referred to in paragraph 3(h), will not use
any of it except for the purpose of performing this Agreement, and
will not divulge any of it to any persons except (i) as may be
required in regulatory filings of which the Company has prior notice,
and (ii) to Manager's employees who have a need to know the
information in order to perform this Agreement and who agree to be
bound by the terms of this paragraph. In the event the Manager or any
of its present or former employees becomes legally compelled to
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disclose any of the information, the Manager (or such individuals, as
the case may be) will provide the Company with prompt notice, and will
disclose only such portions of the information which are legally
required to be disclosed. All documents containing any such
information will be provided to the Company upon request, subject to
the rights of the Manager under paragraph 3(h) with respect to books
and records maintained by the Manager. The Company shall be entitled
to specific enforcement in the event of any breach or threatened
breach of this paragraph, as well as to any other remedy at law or in
equity. For purposes of this paragraph, the term "Manager" shall
include any present or future affiliate, wherever located, of Aon
Insurance Managers (Barbados) Ltd.,which represents that it is
authorised to commit to the terms of this paragraph on behalf of such
affiliates. Company data shall not be disclosed to any affiliate of
the Manager operating in Bermuda except on conditions satisfactory to
the Company. The Manager's obligations under this paragraph shall
survive termination of this Agreement.
2. The COMPANY agrees and covenants with the MANAGER to undertake and
discharge the following obligations:-
(a) General Authority
To provide sufficient information and instructions to enable the
Manager to perform all its duties set out in this Agreement and to
promptly comply with any requests by the Manager for information,
instructions, or requests for approval.
(b) Ratification of Actions
To review, and where appropriate, approve or ratify the performance of
reasonable actions taken on behalf of the Company, and the forms of
any documents and contracts arising therefrom, pursuant to the terms
of this Agreement.
(c) Investment Disclaimer
To be responsible and have sole responsibility for investment
decisions, notwithstanding any advice which may be given by the
Manager.
(d) Manager's Fees
To pay the Manager a fee, the amount and basis of which shall be
mutually agreed by the Company and the Manager and which may be
revised from time to time by endorsement to this Agreement.
(e) Indemnification
To indemnify and defend and keep indemnified the Manager against all
costs, expenses, claims, demands and liabilities for which the Manager
and its directors, officers, employees and agents may become liable
and against all actions, suits,
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proceedings, claims or demands of any nature whatsoever which may be
taken or made against the Manager or which may be incurred or which
may arise directly or indirectly by reason of the provision of
services under this Agreement or by reason of anything done or omitted
to be done in relation thereto except as same may relate to acts of
fraud, negligence, contractual breach by default and/or criminal
activity by the Manager.
3. It is mutually agreed and covenanted between the MANAGER and the COMPANY
that:-
(a) Effective Date
This Agreement shall be effective from March 13th, 2000.
(b) Term
This Agreement shall be continuous until terminated by ninety days
prior written notice from one party to the other.
(c) Continuance of Underwriting Contracts on Termination
Termination of this Agreement shall not be deemed to effect the
termination, prior to expiration of their contract terms of any
policies and binders of insurance and reinsurance effected prior to
the date of termination of this Agreement.
(d) Contractual Liability on Termination
Termination of this Agreement shall not relieve either party of
liability for performance of any obligations imposed upon said party
with respect to business entered into pursuant to this Agreement,
which have not been performed at the time of termination, provided
that the Manager shall be reimbursed in full for services rendered and
expenses incurred subsequent to the effective date of termination
under such terms and conditions as may be agreed upon by both parties
to ensure the proper and timely completion of their obligations under
this contract.
(e) Automatic Termination Clause
Anything to the contrary in this Agreement notwithstanding, it shall
be automatically terminated without notice by insolvency,
receivership, bankruptcy or liquidation of either party.
(f) Limitations on Manager's Authority
The Manager shall have no power to enter into any contract on behalf
of Company unless specifically authorised by Company to do so.
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(g) Professional Conduct of Manager
All services performed by the Manager under this Agreement shall be
performed in a manner consistent with that level of care and skill
ordinarily exercised by professionals providing such services in the
insurance industry. However, the Manager and its directors, officers,
employees and agents (including any person provided by the Manager to
the Company to serve as an officer and/or Director of the Company)
shall not be liable to the Company for any acts and/or omissions in
the conduct of their duties hereunder, except as same may constitute
fraud, negligence, contractual breach by default and/or criminal
activity.
(h) Ownership of Books and Records
All books and records of the Company shall remain the property of the
Company and shall be delivered promptly to the Company, or its
designee following any termination of this Agreement; provided always
that the Manager shall have the right to maintain copies of such books
and records maintained by it and shall have the right at any time
within six years after any termination of this Agreement to inspect
such books and records and to make copies thereof or extracts
therefrom.
(i) Development System Software
The Company and the Manager agree that in the event of termination of
this Agreement the Company shall have the right to continued use of
the development system software. The Company shall be responsible for
the provision of operating system software and appropriate hardware
for the purposes of operating the development systems software. In
consideration for the provision of the development system software and
such related user manuals as may be available at the time of
acquisition the Company shall pay to the Manager an amount equal to
10% of fees paid to the Manager during the 24 months prior to the
termination date under this contract provided that such amount shall
not be less than US$40,000. Ownership of, title to and all rights in
and to the Programs and the Documentation including copyright and any
other proprietary right, shall at times remain with the manager,
except that, enhancements made and used solely for the Company, shall
become proprietary to the Company, and shall not be used by the
Manager relative to any other client without the prior consent of the
Company. Except for proprietary enhancements, the Company agrees not
to market, distribute or otherwise allow access to the operating
software, other than its support staff or technology support vendor.
(j) Assignment of Agreement
This Agreement shall inure to the benefit of, and be binding upon the
parties hereto and shall not be assignable by either party without the
prior written consent of the other.
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(k) Governing Law
This Agreement shall be governed and construed under the laws of
Barbados and the parties hereby agree to submit to the non-exclusive
jurisdiction of the Courts of Barbados.
(l) Execution of Agreement
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
(m) Professional Indemnity Insurance
The Manager shall at all times during the term of this Agreement
maintain:
(i) An errors and omissions insurance policy issued by an insurer
reasonably acceptable to Company in an amount not less than
U.S.$5,000,000; and
(ii) A fidelity bond, issued by a company reasonably acceptable to
Company, providing coverage for all officers and other employees
of the Manager and its affiliates (including "money and
securities" coverage) in an amount not less than U.S.$1,000,000.
(n) Manager's Indemnification
The Manager agrees to hold harmless and indemnify the Company for
losses arising out of fraud, negligence reckless conduct or criminal
activity of its employees and affiliates' employees in performing
services on behalf of Company under this Agreement.
(o) Arbitration
(i) It is the intention of the Company and the Manager that the
customs and practices of the insurance industry shall be given
full effect in the operation and interpretation of this
Agreement. The parties agree to act in all things with the
highest good faith. If the Company and the Manager cannot
mutually resolve any dispute that arises out of or relates to
this Agreement, whether such dispute arises before or after
termination of this Agreement, the disputes shall be decided
through arbitration.
(ii) This Agreement and the performance of the parties hereunder shall
be interpreted, construed and enforced in accordance with the
laws of Barbados. The arbitrators shall consider this Agreement
as an honourable engagement rather than as a mere legal
obligation and they shall reach their decision from the
standpoint of equity and the customs and practices of the
insurance
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industry rather than solely from the standpoint of a strict
interpretation of the applicable substantive and procedural law.
(iii)In initiating arbitration, either the Company or the Manager
shall notify the other in writing of its desire to arbitrate,
stating the nature of its dispute and the remedy sought. The
party to which the notice is sent shall respond to the
notification in writing within ten (10) working days of its
receipt. At that time, the party also shall assert any dispute it
may have that arises out of or relates to this Agreement.
(iv) The arbitration hearing shall be befor a panel of three (3)
arbitrators, each of who must be a present or former officer of a
property, casualty insurance company, other than the Company or
the Manager or either's affiliates. The Company and the Manager
shall each appoint one arbitrator by written notification to the
other within twenty-five (25) days of the date of the mailing of
the notification initiating the arbitration. These two (2)
arbitrators shall then select the third arbitrator within
fourteen (14) days after their selection. Should either the
Company or the Manager fail to appoint an arbitrator, or should
the two (2) arbitrators be unable to agree upon the choice of a
third arbitrator, such appointment shall be left to the then
current President of the Barbados Bar Association. Once selected,
the arbitrators are to decide all substantive and procedural
issues involved by a majority of votes.
(v) The arbitration hearing shall be held on the date fixed by the
arbitrators in the city of Bridgetown, Barbados, unless some
other location is mutually agreed on by the parties. In no event
shall this date be later than three (3) months after the
appointment of the third arbitrator. The arbitrators shall
establish pre-arbitration procedures as warranted by the facts
and issues of the particular case. Within twenty (20) days after
the end of the arbitration hearing, the arbitrators shall issue a
written award, from which there shall be no appeal and which any
court having jurisdiction of the subject matter and the parties
may reduce to judgement.
(vi) In their award, the arbitrators shall apportion the costs of
arbitration including, but not limited to, their own fees and
expenses, as they deem appropriate.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their officers or agents thereunto truly authorised as of the day and year
first here and before written.
Signed On Behalf of:
AON INSURANCE MANAGERS (BARBADOS) LTD.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------ ------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Director Title: Chief Executive Officer,
------------------ Captive Management Services
---------------------------
Date: March 24, 2000 Date: March 27, 2000
------------------ ------------------
Signed on Behalf of:
INTEGON RE (BARBADOS), LIMITED
By: /s/ ▇▇▇▇▇ R. P. ▇▇▇▇▇▇
----------------------
▇▇▇▇▇ R. P. ▇▇▇▇▇▇
Title: Director
----------------
Date: March 24, 2000
----------------
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INSURANCE MANAGEMENT & ADVISORY SERVICES AGREEMENT
BETWEEN
AON INSURANCE MANAGERS (BARBADOS) LTD.
AND
INTEGON RE (BARBADOS), LIMITED
ENDORSEMENT NO: 1
Reference Section 2 (d)
ROUTINE OPERATIONS
Effective April 1, 2000 the fee payable to the Manager for services provided
under the contract in relation to day to day operations considered to be in the
normal course of business will comprise a fixed and variable component payable
monthly in arrears excluding reimbursable out-of-pocket expenses.
Fixed Fee US$70,000 per annum or US$5,833.33 per month.
Variable Fee US$530 per annum/(US$44.17 per month) for each issued and
outstanding series of Participating Stock.
The fees outlined above will cover all normal day to day activities and
reporting requirements of the Company as follows:
(1) Quarterly financial & SEC reporting including production and distribution
of Shareholder Statements.
(2) Annual financial and SEC reporting including production and distribution of
Shareholder Statements, preparation and distribution of IRS Form 5471
income tax returns and preparation of audit file providing assistance to
auditors in the performance of their duties.
(3) Co-ordination and preparation of material relevant to th efficient
operation and execution of the Company's AGM and Board of Directors
meetings held in conjunction therewith, and attendance at such meetings.
(4) Execution of such documents as may be required to be filed by the Company
in relation to SEC and State filing compliance.
(5) Preparation and distribution of annual dividend cheques.
(6) Generally reporting to all enquiries for information and/or reports
relevant to the above.
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SPECIAL PROJECTS
With respect to special projects, defined as projects which are typically
non-recurring and not in the normal course of day to day operations (e.g.
defining, programming and testing of changes to shareholder statements; Board or
Shareholder meetings not forming part of the annual meetings; work related to
review and/or changes in outside service providers; work related to changes in
MIC cession information, etc.) then the Company and the Manager will act in good
faith to determine an appropriate budget and/or fee relative to such projects
which shall be approved by the Company prior to commencement of work by the
Manager.
For the purposes of calculating fees relative to special projects the following
hourly charge out rates will apply.
Managing Director / Vice-President US$150
Account Executives US$125
Senior Administrative Staff US$ 80
Secretarial / Support Staff US$ 45
Reimbursable out-of-pocket expenses will include all costs such as telephone,
facsimile, postage, printing, stationery, travel and any other such expenses
incurred by the Manager on behalf of the Company as may be agreed with the
company from time to time.
Signed On Behalf of:
AON INSURANCE MANAGERS (BARBADOS) LTD.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------ ------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Director Title: Chief Executive Officer,
------------------ Captive Management Services
---------------------------
Date: March 24, 2000 Date: March 27, 2000
------------------ ------------------
Signed on Behalf of:
INTEGON RE (BARBADOS), LIMITED
By: /s/ ▇▇▇▇▇ R. P. ▇▇▇▇▇▇
----------------------
▇▇▇▇▇ R. P. ▇▇▇▇▇▇
Title: Director
----------------
Date: March 24, 2000
----------------
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