EXHIBIT 10.26
MICOA
AGENCY AGREEMENT
Mutual Insurance Corporation of America, a Michigan insurance
corporation (MICOA) and ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇-Nevada, Inc., a Nevada
corporation, ("Agency"), (sometimes commonly referred to as the Parties) agree
as follows:
A. AUTHORITY OF AGENCY
Subject to requirements imposed by law, the underwriting rules,
procedures and regulations of MICOA and this agreement, the Agency is
authorized to:
1. Solicit within the State of Nevada, receive and transmit
immediately and directly to MICOA, proposals for health care
liability insurance contracts for which a commission is
specified in the schedule of commissions provided by Exhibit
A, attached and as amended or supplemented by such attachments
from time to time.
2. Produce and deliver certificates of insurance and written
binders in accordance with MICOA underwriting requirements.
The Agency is not authorized to accept or bind any risk or to
otherwise obligate MICOA without specific authority from
MICOA.
3. Provide all usual and customary services of an Agency on all
policies placed with MICOA subject to the following:
a. MICOA will not be responsible for Agency expenses
including but not limited to rent, transportation,
employee hire or solicitor's fees, postage,
telegrams, telephone, advertising, licensing fees or
any other Agency expenses whatsoever.
b. The Agency will not undertake or initiate advertising
of any nature in connection with business or policies
related to MICOA without the approval of MICOA.
4. To promptly report all claims and losses of which the Agency
has knowledge and properly notify MICOA when the Agency
receives notice of the commencement of any related legal
action. Agency shall refrain from admitting or denying
liability on the part of the company in connection with any
claim or lawsuit.
5. In return for the exclusive appointment of Agency by MICOA to
sell its professional liability products listed on the
attached Commission Schedule
in Nevada, Agency agrees not to sell any competing
professional liability products in Nevada, without the written
consent of MICOA. Provided that, if a particular risk has been
submitted to MICOA and MICOA has declined that risk, then
Agency may search appropriate markets for placement of that
risk, and may place that risk with another insurance company.
6. Designated Agent representatives upon request from MICOA will
be expected to participate in MICOA's Nevada Market Managers
Group activities and to attend all scheduled meetings.
7. MICOA will share on a project basis development costs of all
promotional materials and some advertising costs related to
Nevada sales, provided that all such expenditures or budgets
for them are approved by MICOA in writing in advance.
8. Agency may solicit subagencies for appointment, subject to
MICOA's prior written approval of each subagency following
disclosure to and review by MICOA of information requested by
MICOA for each proposed subagency. All such appointments by
Agent shall stipulate that MICOA may terminate the subagency
at any time without cause upon at least 90 days notice and
that the subagency shall comply with all MICOA requirements
and duties owed MICOA by Agency concerning solicitation,
communications, and service to insureds. Subagencies shall
also be required to submit all proposals immediately and
directly to MICOA.
B. MICOA BILLED POLICIES
For business subject to Exhibit A, placed with and billed by MICOA
directly to the policyholder, the following shall apply in addition to
all the other provisions of this agreement:
1. The processing and submittal of all such business shall be
subject to provisions outlined in MICOA's written requirements
and forms as they may be implemented by MICOA from time to
time;
2. Commissions on premiums shall be paid to the Agency within 30
business days of the month in which such premiums are received
and recorded by MICOA, subject to deduction by MICOA of any
return commissions due from the Agency.
3. Except as provided in Section D or unless authorized by the
Agency, MICOA or its affiliates shall not use its records of
business placed by the Agency with MICOA to solicit individual
policyholders for the sale of other lines of
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insurance or other products or services. When the Agency
grants such authorization, Agency shall be paid the applicable
commission on such sales, provided an appropriate agreement is
in place with MICOA.
4. If this agreement is terminated, MICOA shall, at the Agency's
request, provide the Agency with a list of existing
MICOA-billed policies placed by the Agency including their
expiration dates.
5. The Agency's name shall appear on all policies, premium
notices, and cancellation notices to policyholders. Copies of
all such items sent to policyholders shall be provided by
MICOA to the Agency.
C. POLICY CANCELLATION
Cancellation of any policy in force, when requested in writing by the
insured, will be honored by MICOA, except for those MICOA is not
otherwise permitted to cancel.
D. EXPIRATIONS
1. In the event this Agreement is terminated for any reason,
MICOA agrees to purchase from Agency, and Agency agrees to
sell to MICOA Agency's ownership interest in the expirations
for the MICOA insurance issued pursuant to this Agreement. The
purchase price shall be two times Agency's commissions on
business produced directly by Agency during the last 12 full
months preceding the termination date. The purchase shall be
completed within 60 calendar days after the termination date.
In return for this payment, for a two-year period following
the termination date, Agency will not directly or indirectly
sell any professional liability insurance to any individuals
or entities who were MICOA insureds in Nevada at the time of
termination of this Agreement.
2. If Agency enters into a subagency agreement under which the
subagency has the right to retain ownership of expirations on
business produced by the subagency, then the purchase of
expirations under subparagraph 1 above will not include the
purchase of those subagency expirations, and the purchase
price paid to Agency will not include the commissions paid for
such business produced by the subagency.
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E. AGENCY'S ERRORS AND OMISSION, AND FIDELITY & ELECTRONIC CRIME INSURANCE
The Agency will maintain valid errors and omissions insurance, with
minimum limits of $1,000,000 per incident, and a fidelity and
electronic crime policy through an insurer, both of which shall contain
terms and limits of coverage acceptable to MICOA covering the Agency's
solicitors and each of its employees. The Agency shall provide MICOA a
copy of each policy; doing so on a regular and current basis shall be a
precondition to all of Agency's rights under this Agreement, including
but not limited to the payment of all earned commissions.
F. TERMINATION OF AGREEMENT
1. This agreement shall terminate:
a. Automatically if any public authority cancels or
declines to renew the Agency's license or Certificate
of Authority.
b. Immediately if either party gives detailed written
notice to the other of alleged gross and willful
misconduct, fraud or material misrepresentation.
2. This Agreement shall terminate, subject to any automatic
renewal or extension for one year as required by law, upon
either party giving at least one hundred twenty (120) days
advance written notice to the other, if not otherwise contrary
to applicable law or this Agreement.
3. If the Agency is delinquent in either accounting or payment of
monies due MICOA, MICOA may by written notice to the Agency
immediately terminate, suspend or modify any of the provisions
of this agreement. Such action shall not be taken by MICOA
over minor differences between the records of the Agency and
MICOA.
4. All supplies, including forms and policies furnished by MICOA
and any copies or other reproductions of them, shall remain
the property of MICOA and shall be returned to MICOA or its
representative upon demand.
G. INDEMNIFICATION
The respective parties shall indemnify and hold one another harmless as
follows:
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1. MICOA shall indemnify and hold Agency harmless against any
MICOA act or omission, except to the extent the Agency has
caused, compounded, or contributed to such error.
2. Agency shall indemnify and hold Agency harmless against any
act or omission of the Agency, except to the extent MICOA has
caused, compounded, or contributed to such error.
3. The Agency and MICOA shall properly notify one another upon
receiving notice of the commencement of any action related to
such liabilities. MICOA shall be entitled to participate in
any such action or in consultation with Agency and its carrier
to assume the defense of any such action. If MICOA assumes the
defense of any such action, it shall not be liable to the
Agency for any legal or other expenses subsequently incurred
on the Agency's behalf absent MICOA's advance approval of such
expenses.
4. Neither party shall, except at its own risk and expense,
voluntarily assume any liability, make any payment or incur
any expense without the prior written consent of the other.
H. POTENTIAL OPPORTUNITIES
1. Other Programs. Agency and MICOA agree that Agency may be
offered the opportunity to support MICOA's workers'
compensation, and its other nonphysician professional
liability or product programs in Nevada when MICOA proceeds
with related marketing plans. Such plans may also include
Agency's involvement in sales of MICOA commercial and personal
products. Appropriate agreements must be negotiated separately
from this agreement for each such product, and for each such
territory, including but not limited to Nevada.
2. Territory. Agency and MICOA further agree to consider, subject
to successful negotiation of appropriate agreements separate
from this agreement, expansion of Agencies' sales territories
for MICOA beyond Nevada.
I. MISCELLANEOUS
1. Amendment. This agreement may be amended only in writing by
mutual agreement of the Agency and MICOA, except that MICOA's
name herein shall be deemed changed automatically for purposes
of this agreement without written amendment upon approval of
any such change by MICOA's domiciliary regulator.
2. Non Waiver. Any failure by MICOA to insist upon compliance
with any provisions of this Agreement or of the rules and
regulations of MICOA shall not be construed as or constitute a
waiver of them by MICOA.
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3. Integrated Agreement. This Agreement and its attachments as
modified from time to time supersedes and replaces as of its
effective date, all previous agreements, if any, between MICOA
and the Agency. There are other agreements between MICOA and
the Agency's parent corporation, SC&W, which are not
superceded.
4. Independent Contractor. The Agency is an independent insurance
Agency and independent contractor, and not an employee,
manager, officer or owner of MICOA.
5. Applicable Law. This Agreement shall be interpreted under the
laws of the State of Nevada. Any provisions of this Agreement
or any amendments to the Agreement that are or become in
conflict with any applicable statutes or regulations shall be
deemed to be amended to conform to those statutes or
regulations.
6. Counterparts. This Agreement and any Exhibits which require
signatures may be executed in counterparts which shall
together be regarded as binding upon the Parties.
7. Authority. The persons signing below represent and warrant
that they are duly authorized representatives of the
respective Parties, fully willing and able to execute this
Agreement.
8. Assignment. MICOA may assign this Agreement to its parent,
affiliate, or subsidiary corporations who are licensed
insurers upon written notice to Agency. Agency may not assign
this Agreement without the written permission of MICOA or its
successors or assigns.
9. Resolution of Disputes. In the event of any dispute arising
out of this Agreement, MICOA and Agency agree to submit such
dispute to arbitration as follows:
a. There shall be three arbitrators; one shall be
selected by the Agency, one shall be selected by
MICOA, and a third shall be selected by those two
arbitrators. If the two arbitrators cannot agree on
the selection of a third, American Arbitration
Association's regional office closest to Agency's
main office shall be requested to appoint the third
arbitrator.
b. The determination of the arbitrators shall be final
and binding upon the Agency and MICOA.
c. Neither MICOA nor the Agency shall be entitled to
punitive and/or exemplary damages.
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d. The arbitration shall be conducted in accordance with
the procedures of the above referenced regional
office of the American Arbitration Association. The
Agency and MICOA shall pay the cost of their
arbitrator and share equally in the expense of the
third arbitrator.
e. Either Party, may where permitted by the law of
Nevada, enter judgment upon the arbitrators' award.
10. Year 2000 Compliance. Agency must at times assure that any of
its computers, data processing systems, software components,
and network arrangements use for MICOA business completely and
accurately, present, produce, store and calculate all dates
after December 31, 1999; and that they will not produce
abnormally ending or incorrect results involving such dates as
used in any forward or regression data based functions. All
such items must yield date-related functionalities and date
fields which accurately indicate the century and millennium
and correctly perform all calculations involving a four digit
year field.
Signed and effective this 25th day of May, 1999.
AGENCY
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Its: President
MICOA
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
Secretary/Treasurer
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EXHIBIT A
AGENCY AGREEMENT
SCHEDULE OF COMMISSIONS AND WRITTEN PREMIUM
New Business Policies: 12% of the annual premium
Renewal Policies: 12% of the annual premium
Appointed agents who are not a party to a current MICOA agency contract and/or
are not affiliated with an agency which has an agency contract will receive a 1%
commission rate for all lines of business stated above.
Commission will decrease by .5% effective 10/1/99 as part of a repayment program
under a project memorandum dated 4/7/99. This decrease will stay in effect until
SC&W reaches $10MM in premium or at a maximum of 10 years.
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April 7, 1999
▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: NEVADA DEPARTMENT
PROJECT MEMORANDUM
Dear ▇▇▇▇▇:
In response to MICOA's request to develop a complete insurance distribution
system for Nevada, including physicians professional liability and personal and
commercial insurance by July 1999, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. (SC&W) has
spent and will continue to spend a substantial amount of time and money. In
recognition that these expenditures will directly benefit MICOA, SC&W and MICOA
agree to the following:
- During the first two years of developing the Nevada distribution system, a
portion of the start up costs will be shared. Subject to compliance with a
detailed budget developed by SC&W and MICOA, these reimbursable costs shall
include:
- Salaries and benefits for SCW-Nevada, Inc. employees and agents.
- 20% of your total personal benefits and salary, and 100% of your
personal travel expenses incurred with respect to the Nevada office,
which respective percentages are intended to recognize your personal
support of MICOA's Nevada initiative.
- Legal expenses directly attributable to the Nevada initiative.
- Nevada office set up.
- Consultant's expenses paid by SC&W in direct support of the
initiative.
- The above costs are to be designated and itemized in the preapproved
budget and reimbursed by MICOA at 100% for the first full year of
development and 50% for the second year. It is agreed that the first
year began effective October 1, 1997.
- All other costs attributable to the normal operation of the Nevada
insurance agency site are the sole responsibility of SC&W.
- After the first two years (i.e. after October 1, 1999) all expenses will
be borne by SC&W and those amounts paid to SC&W during the first two years
shall be repaid. Repayment shall be through reduction of commissions due
SC&W by 0.5% or if
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SC&W exceeds $10.0 million in premium revenues by offset in the event any
money is owed the Agency by MICOA. Such reduction or offset shall occur for
so long as necessary to repay amounts reimbursed by MICOA during the
two-year period of development; but in no event will repayment be collected
for a period of greater than ten years. Any unpaid amounts at the end of
ten years shall be forgiven by MICOA.
- Nevada rent expenses will be shared on a 50/50 basis between MICOA and
SC&W.
- In order to allow SC&W to expand the distribution system in Nevada with
select and controlled subagents, an exclusive agency agreement will be
negotiated which will spell out the terms and conditions of the
relationship. A commission rate of 12% will be paid for both new and
renewal physicians liability business. Other commission rates will be
determined as products become available. This Agency Agreement should be
finalized by April 30, 1999.
- MICOA may pay future payments advanced pursuant to this letter on a monthly
basis, unless doing so would be impractical, in which case another periodic
form of payment will be arranged. Amounts owed for past time periods will
be paid as follows: one-third by March 25, 1999; one-third by May 1, 1999;
and one-third by June 1, 1999. All other amounts owed under this Project
Memorandum to be paid by October 1, 1999.
SC&W's responsibilities, under this Project Memorandum, will include assisting
MICOA with market assessment, distribution, and sales integration into Nevada.
SC&W agrees not to serve in a strategic marketing capacity for another insurer
in Nevada while it is providing such services for MICOA or for a period of one
year thereafter.
▇▇▇▇▇, please countersign and return this letter to indicate your acceptance.
Sincerely,
MUTUAL INSURANCE CORPORATION OF AMERICA
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
Secretary/Treasurer
ACCEPTED AND AGREED TO:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
CEO