Exhibit 10.3
RISK MANAGEMENT AGREEMENT
THIS RISK MANAGEMENT AGREEMENT (this "Agreement") is made and entered
into this 3rd day of May, 1999, by and between PHOENIX HOME LIFE MUTUAL
INSURANCE COMPANY, a New York life insurance company ("PHL"), and HILB, ▇▇▇▇▇
AND ▇▇▇▇▇▇▇▇ COMPANY, a Virginia corporation ("HRH").
Recitals:
WHEREAS, PHL desires to engage HRH to perform certain insurance
brokerage and related services in connection with PHL's insurance coverages; and
WHEREAS, HRH desires to perform such services for PHL on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and promises
made by the parties herein, the parties agree as follows:
1. Appointment. PHL hereby appoints and designates HRH as its
agent, and HRH hereby accepts such appointment and designation subject to the
terms and conditions of this Agreement.
2. Services. During the term of this Agreement, HRH shall provide
to PHL, with respect to those insurance coverages and programs maintained by PHL
that are listed on Schedule A attached hereto (collectively, with such other
coverages and programs as PHL or its subsidiaries may from time to time elect to
place through HRH or its affiliates, the "Insurance Coverages"), those services
customarily provided by an insurance broker (collectively, the "Services"),
including, without limitation, the following:
(a) At least annually, analyzing PHL's Insurance
Coverages and making recommendations to PHL for improvements therein;
(b) Working with PHL to update underwriting data
concerning exposures relative to the Insurance Coverages;
(c) Assisting PHL in the preparation of underwriting
submissions from data gathered pursuant to paragraph (b) above, with such
submissions being reviewed and approved by PHL prior to submission to
underwriters;
(d) Working with PHL prior to coverage placement or
renewal to develop a strategy for negotiations with underwriters, such strategy
to address markets to be solicited, insurance coverage requirements, insurance
limits and pricing of coverage;
(e) Conducting policy placement and renewal negotiations
on behalf of PHL with underwriters, in which negotiations PHL may be involved at
its discretion;
(f) Preparing comparative analyses of all quotations and
proposals submitted by underwriters and properly providing such to PHL;
(g) Placing coverages with underwriters as requested and
approved by PHL;
(h) Meeting with PHL when reasonably requested by PHL to
describe coverages placed by HRH;
(i) Receiving and transmitting claims information as
directed by PHL and providing those claims processing and administrative
services currently provided by PHL's current primary broker;
(j) Identifying, assessing and analyzing risks of PHL;
(k) Working with PHL to develop risk and loss control
programs;
(l) Implementing an account servicing plan satisfactory
to PHL, including coverage interpretation, certificates of insurance, claims
tracking and analysis and related services;
(m) Providing premium/claim cost projections for
budgeting purposes;
(n) Monitoring the effectiveness of each Insurance
Coverage and making appropriate recommendations with respect thereto to PHL; and
(o) Maintaining appropriate records as described below.
HRH will maintain, for six (6) years, the written records customarily
maintained in the brokerage business, including, but not limited to, records and
copies of policies, premium payments, premium audits, correspondence, loss data,
underwriting submissions, coverage interpretations provided by HRH, and risk
analysis, evaluations and identification. All such records will be the property
of PHL and will, unless otherwise directed in writing by PHL, be delivered to
PHL, at PHL's expense, at the earlier of the end of six (6) years, or within
twenty (20) days of termination of this Agreement. HRH shall be permitted to
retain copies of such records, subject to the confidentiality provisions of this
Agreement. The foregoing notwithstanding, PHL shall have the right to obtain and
retain the originals of all policies issued to it or its subsidiaries, all
related forms, and all related correspondence addressed to it or such
subsidiaries.
3. Standard of Care. In providing the Services hereunder, HRH
shall perform in a fashion that at least meets the standard of care exercised by
PHL's current insurance broker.
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4. Responsibilities of PHL. In addition to its other obligations
contained herein, PHL agrees as a condition to the performance by HRH of its
obligations hereunder, to be responsible for:
(a) Making final decisions with respect to underwriting
submissions and all matters relating to the Insurance Coverages and risk
management;
(b) Rendering to HRH promptly complete and accurate
information as to PHL's loss experience, risk exposures (including any changes
in the analysis or scope of PHL's risk exposures) and any other information in
PHL's possession reasonably requested by HRH except that loss experience reports
for PHL's workers compensation, property and general liability coverages shall
be promptly prepared by HRH and provided to PHL;
(c) Advising HRH promptly of any changes in PHL's
business operations that may affect the Services provided or the Insurance
Coverages procured hereunder;
(d) Promptly paying all invoices for premiums, fees,
charges and taxes due on any Insurance Coverages placed by HRH for PHL; and
(e) Designating one or more representatives to be
responsible for providing all instructions, data, information and assistance
reasonably required of PHL by HRH hereunder.
5. Compensation.
(a) In consideration for the Services to be provided by
HRH hereunder with respect to the Insurance Coverages, compensation will be
targeted at PHL's current payments for agency services (which are described in
Schedule 5 hereto) plus inflation costs. Whenever reasonably possible, the
compensation shall be fee-based. All commissions and fees shall be disclosed in
writing to PHL on or before the time of billing.
(b) The parties agree to renegotiate the compensation
provided in paragraph (a) above in the event of any merger, acquisition,
consolidation, divestiture or dissolution involving PHL or any of its
subsidiaries or such other substantial change in PHL's or such subsidiaries'
businesses as results in a material increase or decrease in the responsibilities
of and time required by HRH in the performance of the Services hereunder.
(c) Any sales, use, excise, value added or similar taxes
incurred in connection with this Agreement shall be the responsibility of PHL,
whether or not billed by HRH.
(d) PHL acknowledges and agrees that unaffiliated
wholesalers, intermediaries and other parties may be used by HRH in the
placement and servicing of Insurance Coverages for PHL, provided, however, that
no such use by HRH of wholesalers, intermediaries or other parties shall relieve
HRH of any liability under this Agreement for performance of the Services in
accordance with the terms and conditions of this Agreement. PHL acknowledges
that such persons' compensation for Services will sometimes be separate and not
included in the
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compensation of HRH provided for in paragraph (a) above or otherwise governed by
the terms of this Agreement. HRH agrees that to the extent such persons are so
compensated, PHL will not also be required to compensate HRH for provision of
such Services.
6. Certain Limitations.
(a) The Services to be provided by HRH are not of a legal
nature, and HRH shall in no event give, or be required to give, any legal
opinions or provide any legal representation to PHL.
(b) With PHL's prior approval, HRH may assign performance
of the Services under this Agreement to any of its personnel and to assign to
its subsidiaries any part or all of HRH's rights and duties hereunder. HRH
reserves the right to subcontract to any third party where such subcontracting
is necessary to comply with any state insurance or other applicable law. The
foregoing notwithstanding, no such assignment or subcontract shall relieve HRH
of liability hereunder for performance of the Services or otherwise.
Furthermore, HRH shall cause such subsidiaries and third parties to abide by the
terms of this Agreement to the same extent as if they were parties hereto and
HRH shall be liable to PHL for all actions by such persons which, if they were
parties hereto, would constitute breaches of this Agreement.
(c) PHL acknowledges and agrees that HRH is not the
insurer of any exposure, and that HRH does not guarantee the availability of any
form of insurance coverage, the reasonableness of any terms and conditions
thereof nor the financial solvency of the insurer.
(d) The Services provided by HRH hereunder are provided
for the exclusive use of PHL and its subsidiaries, and such Services, data,
recommendations, proposals, reports and similar information provided by HRH, are
not to be distributed to, used or relied upon by other parties.
(e) Nothing in this Agreement or any other document shall
be construed to require PHL to place the following coverages through HRH: (i)
any coverages now or hereafter obtained for any subsidiary in which PHL owns,
directly or indirectly, shares representing less than eighty percent (80%) of
the voting power held by all shareholders of such entity; (ii) those coverages
for agents of PHL or its affiliates which are currently obtained through AON
Financial Group; or (iii) any coverages now or hereafter maintained with respect
to any real property owned by a separate account of PHL or any of its
Subsidiaries. The foregoing notwithstanding, PHL will encourage those of its
subsidiaries encompassed under clause (i) to place their insurance through HRH.
7. Confidentiality.
(a) HRH acknowledges that in the course of performance of
this Agreement, it will acquire Confidential Information (as defined below)
regarding the business of PHL and its subsidiaries and that unauthorized
disclosure of such Confidential Information could irreparably harm PHL or its
subsidiaries. As used in this Agreement, the term "Confidential
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Matters" includes, but is not limited to, the following items, whether existing
now or created in the future: (i) all knowledge or information concerning the
business, operations and assets of PHL or its subsidiaries which is not readily
available to the public such as: internal operating procedures; investment
strategies; sales data and customer lists; financial plans, projections and
reports; and insurance and investment company programs, plans and products; (ii)
all property owned, licensed and/or developed by or for PHL or its subsidiaries
and not readily available to the public, such as computer systems, programs,
software devices, plus information about the design, methodology and
documentation therefor; (iii) information about or personal to PHL's or its
subsidiaries' insureds, clients and investors, as well as applicants; (iv)
information, materials, product or any other tangible or intangible assets in
PHL's or its subsidiaries' possession or under its control which is proprietary
to, or confidential about, any other person or entity; and (v) records and
repositories of all of the foregoing, in whatever form maintained.
The foregoing notwithstanding, the following shall not be
considered Confidential Matters: (aa) general skills and experience gained by
HRH in providing Services to PHL or its subsidiaries; (bb) information publicly
available or generally known within the insurance or data processing industries;
(cc) information known to HRH prior to disclosure hereunder; (dd) information
independently developed by HRH; and (ee) information which becomes available to
HRH on a non-confidential basis from sources other than PHL or its subsidiaries,
provided HRH does not know or have reason to know that such sources are
prohibited by contractual, legal or fiduciary obligation from transmitting the
information. Failure to ▇▇▇▇ any material or information "confidential" shall
not affect the confidential nature thereof.
(b) Notwithstanding anything herein to the contrary, HRH
shall not be deemed to be in breach of the provisions of this Section 7 in the
event it is legally required to disclose any Confidential Information pursuant
to an order or other legal process issued by any governmental or judicial
authority having jurisdiction over it. In the event HRH, its subsidiaries or any
of its permitted subcontractors is requested or required (by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or process) to disclose any Confidential Matters, HRH
agrees that it will provide PHL with prompt notice of any such request or
requirement (written, if applicable) so PHL may seek an appropriate protective
order or waive compliance with the provisions of this Agreement. If, failing the
entry of a protective order or the receipt of a waiver hereunder, HRH, any of
its subsidiaries or any of its permitted subcontractors is, in the opinion of
its counsel, compelled to disclose Confidential Matters, HRH, such subsidiary or
such permitted subcontractor, as the case may be, may disclose that portion of
the Confidential Matters which its counsel advises that it is compelled to
disclose and will exercise reasonable efforts to obtain assurance that
confidential treatment will be accorded to that portion of the Confidential
Matters which is being disclosed. In any event, HRH and its subsidiaries will
not oppose any action by PHL to obtain an appropriate protective order or other
reliable assurance that confidential treatment will be accorded the Confidential
Matters.
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(c) HRH stipulates that breach of the provisions of this
Agreement concerning Confidential Matters could cause PHL, or the rightful owner
or subject of such matters, irreparable injury inadequately compensable through
monetary damages, and accordingly, agrees that PHL shall be entitled to
injunctive relief against any such breach or threatened breach in addition to
any other available remedies.
(d) The obligations of HRH under this Section 7 shall
survive any termination of this Agreement and shall remain in full force and
effect thereafter.
8. Exclusion of Liability. HRH shall at all times act in good
faith use its reasonable commercial efforts to ensure the accuracy and
completeness of all Services performed under this Agreement, but assumes no
responsibility and shall not be liable for any loss or damage incurred by PHL
and its affiliates due to errors or omissions unless such errors or omissions
are caused by the gross negligence, bad faith or reckless or willful misconduct
of HRH or its employees, subcontractors and agents. Notwithstanding anything
herein to the contrary, neither HRH nor PHL shall be liable to the other for any
consequential, incidental, exemplary, indirect, punitive or special damages,
including, without limitation, loss of anticipated profits.
9. Relationship of Parties. The parties hereto agree that the
relationship between them is one between independent contractors and that all
personnel supplied by HRH in providing the Services to PHL shall at all times be
employees of HRH, under its supervision and control, and shall not be deemed
employees of PHL for any purposes whatsoever.
10. Term and Termination.
(a) General. The term of this Agreement shall be for a
period commencing on the date of this Agreement and ending, as to each Insurance
Coverage then maintained by PHL or its subsidiaries through HRH, on such
coverages' respective dates of termination in 2005 (such period being the
"Initial Term"), unless sooner terminated as provided hereunder. Upon the
expiration of the Initial Term, this Agreement may be renewed by PHL for
additional one (1) year periods upon written notice given to HRH not less than
ninety (90) days prior to the expiration of the Initial Term or any renewal
term, each of which renewal terms will, unless further renewed, end in their
years of termination with respect to each coverage separately, as provided above
for the Initial Term. HRH's compensation for Services rendered during any
renewal term shall be as agreed upon in writing by the parties.
(b) By PHL for Cause. If HRH shall: (i) breach Section
7(a) of this Agreement; (ii) breach any material provision of this Agreement,
and shall fail to cure such breach within fifteen (15) days after receipt of
written notice from PHL; or (iii) make an assignment for the benefit of
creditors or file, or have filed against it, a petition in bankruptcy, or
petition or apply to any tribunal for any receiver, custodian or any trustee of
any substantial part of its property, or commence any proceeding relating to it
under any reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect, then PHL may terminate this Agreement immediately. In the event of such
termination under this paragraph (b) by PHL, PHL shall pay all sums earned by
HRH hereunder through the
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date of termination. Upon PHL's payment of all such sums earned, if any, PHL
shall have no further obligation hereunder.
(c) By HRH for Cause. If PHL shall (i) breach any
material provision of this Agreement, and shall fail to cure such breach within
fifteen (15) days after receipt of written notice from HRH, or (ii) make an
assignment for the benefit of creditors or file, or have filed against it, a
petition in bankruptcy, or petition or apply to any tribunal for any receiver,
custodian or any trustee of any substantial part of its property, or commence
any proceeding relating to it under any reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect, then HRH may terminate this
Agreement. In such event, PHL shall pay to HRH on the effective date of such
termination, in full settlement of all claims by HRH hereunder, one lump sum
payment in an amount equal to [To be discussed], and any other accrued charges
in accordance with this Agreement.
11. Entire Agreement. This Agreement expresses the entire
understanding of the parties with respect to the subject matter hereof and there
are no oral or written agreements or understandings with respect to such subject
matter which are not set forth herein.
12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia, without
giving effect to any choice or conflict of law provision or rule that would
cause the application of the law of any other jurisdiction.
13. Name, Captions. The name assigned to this Agreement and the
section captions used herein are for convenience of reference only and shall not
affect the interpretation or construction thereof.
14. No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
15. Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if in writing (including
telecopy or similar teletransmission), addressed as follows:
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If to HRH, to it at: Hilb, ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (804) 747- 3138
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
With a copy to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Esquire
If to PHL, Phoenix Home Life Mutual Insurance Company
to it at: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
With a copy to: Phoenix Home Life Mutual Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) in the case of any notice or communication sent other than
by mail, on the date actually delivered to such address (evidenced, in the case
of delivery by overnight courier, by confirmation of delivery from the overnight
courier service making such delivery, and in the case of a telecopy, by receipt
of a transmission confirmation form or the addressee's confirmation of receipt),
or (b) in the case of any notice or communication sent by mail, three (3)
business days after being sent, if sent by registered or certified mail, with
first-class postage prepaid. Each of the parties hereto shall be entitled to
specify a different address by giving notice as aforesaid to each of the other
parties hereto.
16. Successors and Assigns; Assignment. Except as otherwise
provided in this Agreement, this Agreement shall be binding upon and shall inure
to the benefit of and be enforceable by the parties and their respective
permitted successors and assigns. Neither this Agreement nor any rights or
obligations hereunder may be assigned by either party without the prior written
consent of the other party hereto.
17. Cumulative Remedies. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning of
the exercise of any thereof by any party shall not
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preclude the simultaneous or later exercise of any other such right, power or
remedy by such party.
18. Third Party Beneficiaries. Except as otherwise provided in
Section 7, this Agreement is not intended to be for the benefit of and shall not
be enforceable by any person or entity who or which is not a party hereto.
19. Consent to Jurisdiction. Each party to this Agreement, by its
execution hereof, (i) hereby irrevocably submits to the exclusive jurisdiction
of the federal courts located either in the City of Richmond, Virginia, or in
the City of Hartford Connecticut, and in the event that such federal courts
shall not have subject matter jurisdiction over the relevant proceeding, then of
the state courts located in the City of Richmond, Virginia, or in the City of
Hartford, Connecticut, for the purpose of any claim, action, cause of action or
suit (in contract or tort or otherwise), arbitration, proceeding or
investigation by or before any governmental ("Action") arising out of or based
upon this Agreement or relating to the subject matter hereof, (ii) hereby
waives, to the extent not prohibited by applicable law, and agrees not to
assert, by way of motion, as a defense or otherwise, in any such Action, any
claim that it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or execution, that
any such proceeding brought in one of the above-named courts is improper, or
that this Agreement or the subject matter hereof, may not be enforced in or by
such court and (iii) hereby agrees not to commence any Action arising out of or
based upon this Agreement or relating to the subject matter hereof other than
before one of the above-named courts nor to make any motion or take any other
Action seeking or intending to cause the transfer or removal of any such Action
to any court other than one of the above-named courts whether on the grounds of
inconvenient forum or otherwise. Each party hereby consents to service of
process in any such proceeding in any manner permitted by Virginia or
Connecticut law, as the case may be, and agrees that service of process by
registered or certified mail, return receipt requested, at its address specified
pursuant to Section 11.7 hereof is reasonably calculated to give actual notice.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
21. Expenses. Each of the parties hereto shall bear its own
expenses incurred in connection with this Agreement, except that in the event of
a dispute concerning the terms or enforcement of this Agreement, the prevailing
party in any such dispute shall be entitled to reimbursement of reasonable legal
fees and disbursements from the other party or parties to such dispute.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
HILB, ▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇ COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: President and Chief Executive Officer
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Executive Vice President and Chief
Financial Officer
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SCHEDULE 5
Compensation
In consideration of HRH's provision of the Services, as described in
Section 2, compensation to HRH will be targeted at a ten percent (10%)
commission rate. PHL's and its subsidiaries' current coverages are as described
in the exhibit hereto [omitted]. Compensation will be earned and billed on a pro
rata basis. The property-casualty program will be downsized upon the sale of
American Phoenix Corporation; PHL anticipates a corresponding decrease in
premiums and fees.