AMENDED AND RESTATED MASSACHUSETTS PERSONAL AUTOMOBILE GROUP MARKETING AGREEMENT
Exhibit
99.2
AMENDED
AND RESTATED MASSACHUSETTS
This
Agreement (“Agreement”) is by and among The Commerce Insurance Company, Citation
Insurance Company, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ (hereinafter referred
to collectively as “Commerce”), AAA Southern New England, ▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (“AAA SNE”) and AAA Insurance
Agency, Inc., a Massachusetts corporation, ▇/▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the “Agency”).
RECITALS
WHEREAS,
Commerce
currently is the exclusive insurance company to offer and underwrite a group
marketing program whereby private passenger automobile insurance is offered
to
eligible AAA SNE members in the Operating Territory of AAA SNE.
WHEREAS,
AAA SNE
previously has granted Commerce the exclusive right to use the AAA Emblem in
AAA
SNE’s Operating Territory in connection with the group marketing program and
Commerce has served as the exclusive underwriter of such group marketing
program.
WHEREAS,
Commerce,
the Agency and AAA SNE desire to enter into respective longer-term agreements
for such purposes.
WHEREAS,
as of the
effective date of this Agreement, the parties agree to amend and restate herein
the respective rights, duties, and obligations of the parties pursuant to the
Massachusetts Personal Automobile Group Marketing Agreement dated June 9,
1995.
NOW
THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS CONTAINED HEREIN, IT IS
AGREED AS FOLLOWS:
ARTICLE
I - DEFINITIONS
For
purposes of this Agreement, the following terms shall have the meanings
indicated.
“AAA
Emblem” shall mean the “Emblem” as such term is defined in the Regulations
Governing the Use of the Emblem and Other Trademarks of the American Automobile
Association, Inc. adopted July 8, 1992, as the same may be amended from time
to
time.
“AAA
Group
Marketing Program” shall mean a group marketing plan whereby private passenger
automobile insurance is offered to eligible AAA SNE members in AAA SNE’s
Operating Territory.
1
“Agent”
shall mean any independent agent, insurance producer, or broker who has entered
into an agreement with Commerce to solicit or produce applications for private
passenger automobile insurance on behalf of Commerce and shall also mean any
independent agent, insurance producer, or broker assigned by a residual market
mechanism, including without limitation, Commonwealth Automobile Reinsurers
or
its successor entity, to represent Commerce in connection with the sale of
private passenger automobile insurance.
“Operating
Territory” shall mean the current and future territorial jurisdiction in the
Commonwealth of Massachusetts in which AAA SNE or any parent, subsidiary, or
affiliate of AAA SNE, or a successor of any of them, does business or is
licensed, as set forth in AAA SNE’s Certificate of Membership issued by the
American Automobile Association, Inc.
“Participating
Agent” shall mean any Agent within the Operating Territory who has entered into
a participation agreement with the Agency to place business in the AAA Group
Marketing Program.
ARTICLE
II - EXCLUSIVE UNDERWRITER OF GROUP MARKETING PROGRAM
AAA
SNE
and the Agency shall promote Commerce as, and Commerce shall be, the exclusive
underwriter of the AAA Group Marketing Program in the Operating Territory for
a
period of twenty (20) years commencing on January 1, 2007 and concluding on
December 31, 2026 (the “Initial Term”). This exclusive underwriting agreement
shall be automatically extended beyond the Initial Term for an extended term
of
five (5) additional years commencing on January 1, 2027 and concluding on
December 31, 2031 (the “First Extended Term”), unless AAA SNE or the Agency, on
the one hand, or Commerce, on the other hand, advises the other in writing
during the period commencing on January 1, 2021 and concluding on December
31,
2021 of its desire not to extend this exclusive underwriting agreement for
such
First Extended Term. The term of this exclusive underwriting agreement shall
subsequently be extended on a “rolling” basis for successive five (5) year
periods (each a “Subsequent Extended Term”), whereby this exclusive underwriting
agreement shall be extended for five (5) years, unless AAA SNE or the Agency,
on
the one hand, or Commerce, on the other hand, advises the other in writing
commencing in 2026 and thereafter during the fifth year of any such Subsequent
Extended Term of its desire not to extend this exclusive underwriting agreement
for an additional Subsequent Extended Term (in which event the term of this
Agreement will expire four (4) years after the conclusion of the Subsequent
Extended Term). Throughout the term of this Agreement, AAA SNE and the Agency
shall not offer or permit any other entity, including without limitation any
parent, subsidiary, or affiliate of AAA SNE or the Agency, or any successor
of
any of them, to offer a AAA Group Marketing Program in the Operating
Territory.
2
Throughout
the term of this Agreement, AAA SNE and the Agency shall actively promote the
AAA Group Marketing Program to eligible and prospective members of the AAA
Group
Marketing Program.
AAA
SNE
and the Agency understand, acknowledge, and agree that Commerce shall be
permitted to underwrite private passenger group marketing programs for other
AAA
clubs in the Operating Territory or otherwise, on such terms and conditions
as
may be determined by Commerce in its sole discretion.
ARTICLE
III - RIGHT
TO USE AAA EMBLEM
During
the
term of this Agreement, AAA SNE grants Commerce the exclusive right to use
and
display the AAA Emblem in the Operating Territory for purposes of automobile
insurance sales, marketing, advertising, underwriting, processing, claim
adjustment, and any other related purpose. Commerce is authorized to use and
display the AAA Emblem on insurance policy forms, endorsements, declarations
pages, invoices, envelopes, letterhead, instruction manuals, advertising and
promotional materials, and any other written or electronic materials
(“Materials”) as long as Commerce clearly identifies itself as the source of the
Materials displaying the AAA Emblem. AAA SNE warrants and represents that it
is
authorized to grant permission to Commerce to use the AAA Emblem in this manner.
Except as provided herein, AAA SNE shall not grant the right to any other person
or entity, including without limitation, any parent, subsidiary, or affiliate
of
AAA SNE or the Agency, or any successor of any of them, to use the AAA Emblem
in
the Operating Territory during the term of this Agreement, for purposes of
automobile insurance sales, marketing, advertising, underwriting, processing,
claim adjustment, or any related purposes.
The
AAA
Emblem is the property of the American Automobile Association, Inc. and, upon
expiration or termination of this Agreement, Commerce agrees to discontinue
immediately the use of the AAA Emblem in any manner whatsoever. During the
term
of this Agreement, Commerce shall use the AAA Emblem only in conformance with
the rules and regulations with respect to the use of the AAA Emblem promulgated
by the American Automobile Association, Inc. from time to time. It is expressly
agreed that the American Automobile Association, Inc. retains full ownership
of
the AAA Emblem and registration thereof. This
paragraph survives any termination or expiration of this Agreement.
For
purposes of this Article III, “Prohibited Conduct” shall mean any conduct by
Commerce as a corporate entity that AAA SNE reasonably determines, based on
the
facts known to it at the time and notwithstanding any later judicial or
regulatory decision to the contrary,
is
unlawful or criminal. If AAA SNE reasonably determines that on account of the
Prohibited Conduct, Commerce’s continued use of the AAA Emblem or any related
logos, trademarks, or Materials jeopardizes the favorable standing, reputation,
or relationship of AAA SNE or any of its parents, subsidiaries or affiliates
with its or their government regulators, members or customers, AAA SNE shall
notify Commerce in writing, and Commerce shall cure the Prohibited Conduct
within seven (7) business days of receipt of such notice (the “Cure Period”).
Commerce’s failure to cure the Prohibited Conduct to AAA SNE’s reasonable
satisfaction within the Cure Period shall entitle AAA SNE to suspend, until
the
Prohibited Conduct is cured to AAA SNE’s reasonable satisfaction, Commerce’s
right to use the AAA Emblem or any related logos, trademarks or Materials.
AAA
SNE shall reinstate Commerce’s rights to use the AAA Emblem or any related
logos, trademarks or Materials promptly after Commerce has cured the Prohibited
Conduct.
3
Commerce
agrees to obtain AAA SNE’s specific written approval prior to Commerce’s first
and novel intended use and display of the AAA Emblem or any related logo or
trademark. AAA SNE shall be deemed to have granted such approval unless AAA
SNE
sends a written notice of nonapproval to Commerce within thirty (30) days of
AAA
SNE’s receipt of a written notice from Commerce seeking such approval. AAA SNE
shall not unreasonably withhold approval of any use or display by Commerce
of
the AAA Emblem or any related logo or trademark.
ARTICLE
IV - MARKETING
Commerce
shall, in its sole discretion, determine which Agents (other than the Agency)
shall be eligible to serve as Participating Agents in the AAA Group Marketing
Program. Agents selected to participate in the servicing of the AAA Group
Marketing Program shall not be permitted to advertise or market the AAA Group
Marketing Program, except as authorized in writing by Commerce.
ARTICLE
V - GROUP RATES
Commerce
shall file for approval, pursuant to applicable law or regulation, to offer
an
appropriate rate modification (discount) to eligible AAA SNE members of the
AAA
Group Marketing Program. At all times during the term of this Agreement, AAA
SNE
and Agency shall cooperate with and assist Commerce and take all actions
reasonably requested by Commerce in support of Commerce’s filing with, and
efforts to obtain from, the Massachusetts Division of Insurance approval of
group discounts on private passenger automobile insurance for AAA SNE members
within the meaning of Massachusetts General Law ch. 175, §193R or any successor
law or regulation. Such cooperation and assistance shall include, without
limitation, AAA SNE and/or Agency providing to Commerce relevant data, records,
or information as may be requested or required by Commerce or the Massachusetts
Division of Insurance to assist Commerce in its efforts to obtain such group
discounts.
***
***
Information omitted pursuant to a request for confidential treatment. Omitted
information has been filed seperately with the Securities and Exchange
Comission.
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ARTICLE
VI - COMMISSIONS
Commissions
and other compensation on business produced by the Agency and placed in the
AAA
Group Marketing Program shall be determined in accordance with the terms and
conditions of the Agency Agreement between Commerce and the Agency dated January
1, 2004 as amended from time to time (the “Agency Agreement”). The Agency shall
also receive an override bonus of *** on private passenger automobile
business produced by Agency and placed in the AAA Group Marketing Program,
to be
established by Commerce on an annual basis. Agency shall pay, in accordance
with
the terms and conditions of the Services Agreement between Commerce and Agency,
dated August 11, 1995 as amended from time to time (the “Services Agreement”), a
reasonable service fee to Commerce, as established annually by Commerce, on
all
AAA Group Marketing Program business written by Participating Agents.
The
Agency
shall also receive an override bonus of *** on private passenger automobile
business produced by Participating Agents, other than Agency, and placed in
the
AAA Group Marketing Program, to be established by Commerce on an annual
basis.
In the
event of termination or expiration of this Agreement, Agency shall be entitled
to the commissions and other compensation set forth herein earned up through
and
including the effective date of termination or expiration of this
Agreement.
ARTICLE
VII - EXCLUSIVITY
During
each year that the Commissioner of Insurance fixes and establishes premium
charges for private passenger automobile insurance, pursuant to Massachusetts
General Laws c. 175, §113B or any successor law or regulation, the Agency shall,
within the Operating Territory, exclusively sell and market Commerce’s private
passenger automobile insurance products to AAA SNE members, its other customers,
and to the general public, and the Agency shall not sell or market to any person
or entity the private passenger automobile insurance products of any person
or
entity other than Commerce. ***
***
Information omitted pursuant to a request for confidential treatment. Omitted
information has been filed seperately with the Securities and Exchange
Comission.
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ARTICLE
VIII - PROFIT SHARING
The
Agency
shall be entitled to profit sharing commissions on business produced directly
by
the Agency in accordance with the terms and conditions of the Profit Sharing
Agreement dated January 1, 2004 between Commerce and the Agency as amended
from
time to time (the “Profit Sharing Agreement”), which Profit Sharing Agreement
shall at no time contain terms and conditions less favorable than those
contained in the standard Profit Sharing Agreement between Commerce and its
other independent agents.
In
accordance with the terms and conditions of Schedule A, the Agency shall also
be
eligible to receive profit sharing commissions on business produced by
Participating Agents, other than the Agency, and placed in the AAA Group
Marketing Program.
In the
event of termination or expiration of this Agreement, Agency shall be entitled
to the commissions and other compensation set forth herein earned up through
and
including the effective date of termination or expiration of this
Agreement.
ARTICLE
IX - DIRECT ▇▇▇▇
It
is
mutually agreed by the parties that all business placed in the AAA Group
Marketing Program shall be submitted to Commerce in accordance with Commerce’s
established direct billed programs.
ARTICLE
X - VALIDATION OF GROUP ELIGIBILITY
Commerce
shall be responsible for determining the availability, acceptability, and
continued eligibility of insureds for placement in the AAA Group Marketing
Program. Commerce and AAA SNE shall cooperate to ensure proper validation of
AAA
membership and proper validation of eligibility for placement in the AAA Group
Marketing Program. AAA SNE shall provide Commerce with all information, records,
and documents necessary to ensure the validity of eligible members, at the
time
of application, renewal, or midterm.
ARTICLE
XI - COUNTERPARTS
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed to be one and the same instrument.
ARTICLE
XII - WAIVER
Neither
party shall be deemed to have waived any right hereunder unless such waiver
is
in writing. No delay or omission on the part of either party in exercising
any
right
shall operate as a waiver of such right or any other right. A waiver on any
one
occasion shall not be construed as a bar to or waiver of any right on any future
occasion.
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ARTICLE
XIII - AUTOMATIC COMPLIANCE
To
the
extent that any provision of this Agreement is or may become in conflict with
any applicable law or regulation or is held to be illegal, invalid, or
unenforceable, such provision of the Agreement shall be deemed to be amended
to
conform to the requirements of such law or regulation, but only to the minimum
extent required by such law or regulation.
ARTICLE
XIV - GOVERNING LAW; CHOICE OF FORUM
This
Agreement shall be governed by and construed in accordance with the law of
the
Commonwealth of Massachusetts. This
Agreement constitutes
the entire agreement (together with all Schedules hereto) among the parties
with
respect to the subject matter hereof, and contains all the terms and conditions
agreed upon by the parties hereto with respect to the transactions contemplated
hereby. The relationships of the parties under this Agreement are that of
independent contractors. Each of the parties hereby irrevocably and
unconditionally submits to the exclusive jurisdiction of any Massachusetts
state
court or federal court of the United States sitting in Massachusetts in any
action or proceeding arising out of or relating to this Agreement or the
transactions contemplated by this Agreement or for the recognition or
enforcement of any judgment relating to this Agreement, and each of the parties
hereby irrevocably and unconditionally agrees that all claims in respect of
any
such action or proceeding shall be heard and determined in such Massachusetts
state court or, to the extent permitted by law, in such federal court. Each
of
the parties agrees that a final judgment in any such action or proceeding will
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Each of the parties hereby irrevocably
and unconditionally waives, to the fullest extent it may legally and effectively
so do, any objection which it may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this Agreement
or the transactions contemplated by this Agreement in any Massachusetts state
court or any Federal court sitting in Massachusetts. Each of the parties hereby
irrevocably waives, to the fullest extent permitted by law, the defense of
an
inconvenient forum to the maintenance of such action or proceeding in such
court.
ARTICLE
XV - ASSIGNMENT OR TRANSFER; SUCCESSORS AND ASSIGNS
This
Agreement may not be assigned or otherwise transferred by a party without the
written consent of the other parties, which consent may be withheld in a party’s
sole and absolute discretion. The rights and obligations contained in this
Agreement shall be binding upon, inure to the benefit of, and be enforceable
by
the parties, the successors and permitted assigns of the parties, and their
respective affiliates, subsidiaries, and parents. This Agreement may be amended
by the parties only in a writing signed by
authorized representatives of the parties.
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ARTICLE
XVI - EFFECTIVE DATE ETC.
This
Agreement supersedes all previous agreements, whether written or oral, among
the
parties regarding the subject matter of this Agreement, excepting the Agency
Agreement, the Services Agreement, the Profit Sharing Agreement, and the
Consulting Services Agreement and shall be effective from and after January
1,
2007.
ARTICLE
XVII - NOTICES
Any
notices, reports, or other communication required or permitted to be given
hereunder shall be in writing and shall be given by being delivered at the
following addresses to the parties hereto:
|
If
to Commerce, to:
|
If
to AAA SNE, to:
|
|
The
Commerce Insurance Company
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AAA
Southern New England
|
|
▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
|
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
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|
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
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|
Attn:
President
|
Attn:
President and CEO
|
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Tel.
(▇▇▇) ▇▇▇-▇▇▇▇
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Tel.:
▇▇▇-▇▇▇-▇▇▇▇
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
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Fax:
▇▇▇-▇▇▇-▇▇▇▇
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If
to Agency, to:
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|
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AAA
Insurance Agency, Inc.
|
|
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c/o
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
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Attn:
President
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Tel.:
▇▇▇-▇▇▇-▇▇▇▇
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Fax:
▇▇▇-▇▇▇-▇▇▇▇
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All
notices and other communications required or permitted under this Agreement
that
are addressed as provided in this paragraph may be sent by facsimile, and by
mail, or courier. Notice shall be deemed given upon the first business day
after
actual delivery to the party to whom such notice or other communication is
sent
(as evidenced by the return receipt or shipping invoice signed by a
representative of such party or by the facsimile confirmation). Any party from
time to time may change its address for the purpose of notices to that party
by
giving a similar notice specifying a new address, but no such notice will be
deemed to have been given until it is actually received by the party sought
to
be charged with the contents thereof.
ARTICLE
XVIII - TERMINATION
This
Agreement may be terminated only as follows:
(a)
At
any
time by the mutual consent of the parties.
8
(b)
By
AAA SNE
or the Agency, at any time upon two (2) day’s written notice, if Commerce
establishes a private passenger automobile group marketing program with any
automobile club that is not affiliated with the American Automobile Association,
Inc.
(c)
By
AAA SNE
or the Agency, at
any
time upon
two
(2) days’ written notice, if
Commerce’s A.M. Best Company rating is less than B+ (B plus).
(d)
By
any
party for a material breach of this Agreement, provided that the non-breaching
party seeking to terminate this Agreement has provided written notice of such
breach to the breaching party, and the breaching party fails to cure such breach
to the reasonable satisfaction of the non-breaching party within thirty (30)
days after receipt of such notice; provided, however, that if the breaching
party has made within such thirty (30) day period, and is continuing to make,
a
good faith, diligent effort to cure such breach, the cure period shall be
extended, at the non-breaching party’s discretion.
Notwithstanding the foregoing, if the non-breaching party reasonably determines
that the breach is not capable of being cured, termination is effective upon
notice to the breaching party.
This
Agreement shall be terminated immediately and without notice, if a party is
declared insolvent, files for bankruptcy protection or is placed into
receivership, liquidation or is the subject of a similar
proceeding.
A
party
shall be entitled to pursue, either before or after termination, such rights
and
remedies as may be available at law and in equity, in addition to those rights
and remedies specifically provided for under this Agreement.
ARTICLE
IX - COMPLIANCE AGREEMENT
While
this
Agreement is in effect, each party covenants and agrees that it shall conduct
all activities under this Agreement in full compliance with all applicable
laws
and regulations and
shall
obtain and maintain all applicable licenses and permits, and shall satisfy
any
other legal, regulatory, and administrative requirements relating to its
performance hereunder. No obligation, limitation, restriction or prohibition
under this Agreement shall be applicable or enforceable to the extent that
it
would cause Commerce to be deemed by a regulator or court of competent
jurisdiction to be an affiliate of AAA Southern New England Insurance Company
under applicable state insurance holding company laws.
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ARTICLE
XX - INDEMNIFICATION
Each
party
shall promptly indemnify, defend, and hold harmless the other parties, their
affiliates and subsidiaries, and their respective directors, officers,
shareholders, members, customers, employees, and agents against any and all
losses, costs, claims and expenses (including reasonable attorneys’ fees and
expenses actually incurred) and other damages resulting from the party’s failure
to properly discharge any of its duties or obligations under or to comply with
any terms, conditions and limitations contained in this Agreement, or resulting
from actions of the party hereunder that are the subject of claims brought
or
asserted by any third party against the party. This Article survives any
termination or expiration of this Agreement.
REMAINDER
OF PAGE LEFT INTENTIONALLY BLANK
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IN
WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed by its
duly authorized officers in multiple counterparts on this 12th day of December,
2006.
| THE COMMERCE INSURANCE COMPANY | ||||
| ATTEST: | ||||
| By: | /s/ | |||
| Its: | /s/ | |||
| CITATION INSURANCE COMPANY | ||||
| ATTEST: | ||||
| By: | /s/ | |||
| Its: | /s/ | |||
| AAA SOUTHERN NEW ENGLAND | ||||
| ATTEST: | ||||
| By: | /s/ | |||
| ▇▇▇▇ ▇. ▇▇▇▇, President and CEO | ||||
| AAA INSURANCE AGENCY, INC. | ||||
| ATTEST: | ||||
| By: | /s/ | |||
| ▇▇▇▇ ▇. ▇▇▇▇, President | ||||
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