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EXHIBIT 10.25
GENERAL AGENCY AGREEMENT
THIS GENERAL AGENCY AGREEMENT (this "Agreement") is made and
entered into
as of December 1, 2003, by and among STATE NATIONAL INSURANCE
COMPANY, INC., an
insurance company organized under the laws of the State of Texas
("Company"),
NORTH POINTE INSURANCE COMPANY, an insurance company organized
under the laws of
the State of Michigan ("Reinsurer"), and NORTH POINTE FINANCIAL
SERVICES, INC.,
a company organized under the laws of the State of Michigan
("General Agent");
WITNESSETH:
THAT, in consideration of the mutual covenants hereinafter
contained and
upon the terms and conditions herein below set forth, the
parties hereto agree
as follows:
PREAMBLE
The Company, the Reinsurer and the General Agent have entered
into a 100%
Quota Share Reinsurance Agreement dated as of December 1, 2003
(the "Reinsurance
Agreement"), a true and complete copy of which is attached
hereto as Exhibit A,
and fully incorporated herein by this reference, which
Reinsurance Agreement
requires the appointment of the General Agent to perform certain
specified acts
on behalf of the Company and Reinsurer. These acts will include
the marketing
and production of insurance for bowling center proprietors in
several states
(the "Bowling Program"). The General Agent desires to perform
the functions and
duties necessary under the Reinsurance Agreement. It is
therefore mutually
agreed by the parties that the General Agent will perform all
functions
necessary for the production, service and management of policies
issued under
the Reinsurance Agreement in accordance with the terms and
conditions set forth
therein and herein. To the extent that there is any conflict
between the terms
of this Agreement and the Reinsurance Agreement, the Reinsurance
Agreement shall
govern. Notwithstanding any provisions to the contrary contained
elsewhere
herein or in any other document, it is expressly understood that
the execution
and delivery of this Agreement and the Company's performance
hereunder shall not
under any circumstances be interpreted to affect, weaken or
modify the
Reinsurer's obligation to indemnify and hold the Company
harmless from and
against the business, credit and insurance risks as set forth in
the Reinsurance
Agreement. The contractual assumption by the Reinsurer of these
risks in the
Reinsurance Agreements is a condition precedent to the Company's
entering into
this Agreement with the General Agent.
ARTICLE I
APPOINTMENT AND DUTIES
1.01 The Company, at the direction of the Reinsurer, hereby
appoints the General
Agent as its managing general agent for the purpose of producing
and handling
the business which is the subject of the Reinsurance Agreement
issued or renewed
on or after the effective date of this Agreement. The Company,
at the request of
the Reinsurer, hereby grants authority to the General Agent to
solicit, accept
and receive applications for such classes of coverage as are
specified in the
Reinsurance Agreement; to secure, at its own expense, reasonable
underwriting
information through reporting agencies or other appropriate
sources relating to
each risk insured; to issue, renew and countersign policies,
certificates,
endorsements and binders which the Company may, from time to
time, authorize to
be issued, delivered, renewed and countersigned; and to collect
and receipt for
the premiums thereon and therefor.
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1.02 All activities of the General Agent pursuant to this
Agreement shall be in
strict compliance with the terms of the Reinsurance Agreement
and all rules,
regulations and instructions of the Company, including, but not
limited to, all
rules, instructions and specifications included in the Company's
rate manuals,
rate brochures and rate schedules.
1.03 The Company, at the Reinsurer's request, further authorizes
the General
Agent to perform all acts and duties under policies of insurance
issued by the
Company as would otherwise be performed by the Company,
including, but not
limited to, properly sending and/or receiving reports and
notices and remitting
and/or receiving monies due from or to the Company, and
adjusting and paying
losses or other claims. The Company grants to the General Agent
the authority to
settle claims on behalf of the Company. However, the maximum
dollar amount of
such authority per claim shall not exceed $50,000. For claims
settlement in
excess of $50,000, the General Agent may only settle such claims
with prior
approval of the Company and Reinsurer. The Company retains final
authority to
determine any disputes relating to claims settlement and setting
of loss
reserves. In performing each of the acts mentioned above, the
General Agent
shall be under the direct supervision and control of the
Reinsurer, and the
Reinsurer shall be solely responsible for the acts of the
General Agent. While
there are acts of the General Agent which may be required by
applicable law to
be performed on behalf of the Company, the Reinsurer shall
remain ultimately
responsible for such acts and will indemnify and hold the
Company completely
harmless for any damage, cost, liability, expense and/or loss
(including
attorneys' fees and expenses) incurred by the Company as
respects such acts of
the General Agent. The General Agent must send to the Company a
report, as soon
as it becomes known, that a claim (i) involves a coverage
dispute; (ii) involves
a demand in excess of policy limits; (iii) alleges bad faith;
(iv) exceeds
General Agent's claims settlement authority; (v) is open for
more than six
months; or (vi) alleges a violation of any applicable unfair
practices and
unfair competition statutes. The Company may suspend or
terminate the settlement
authority of the General Agent during the pendency of any
dispute regarding any
event of default by the General Agent.
1.04 The General Agent is authorized to have claims adjusted
through independent
claims adjusters, subject to the supervision of the Reinsurer.
The selection of
independent claims adjusters shall be subject to prior written
approval of the
Reinsurer and Company. Such independent claims adjusters are not
the agents of
the Company and the Company shall be held harmless and
indemnified by the
Reinsurer for any liability, claim, demand, expense and/or cost
of whatever kind
or character as a result of, related to or connected with any
action or inaction
of such claims adjusters.
1.05 The Company shall not be responsible for the General
Agent's expenses and
costs, including, but not limited to, salaries, bonuses,
rentals, transportation
facilities, clerk hire, solicitors' fees, postage, advertising,
exchange,
personal license fees, adjustment by the General Agent of losses
under policies
issued by the General Agent, or any other agency expenses
whatsoever. The
General Agent's sole compensation shall be the amounts payable
to the General
Agent in Article VIII of the Reinsurance Agreement and in
Article III of this
Agreement.
1.06 The General Agent understands and agrees that it has no
power or authority
granted to it by the Company independent of the Reinsurance
Agreement or
documents executed in connection with the Reinsurance Agreement,
and that this
Agreement and the General Agent's authority hereunder shall
cease immediately
upon termination, for any reason, of this Agreement or of the
Reinsurance
Agreement (excepting only the General Agent's responsibilities
with regard to
run-off and other matters as set forth herein or in the
Reinsurance Agreement).
1.07 The General Agent shall not have the power to accept or
bind risk other
than as set forth herein, as set forth in the Reinsurance
Agreement or as may be
subsequently authorized by the
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Company and Reinsurer in writing. The General Agent may not bind
or cede
reinsurance or retrocession on behalf of the Company, may not
commit the Company
to participation in insurance or reinsurance syndicates, and may
not commit the
Company to a claim settlement with a reinsurer without the prior
written
approval of the Company. If such prior written approval is
given, the General
Agent shall forward promptly a report to the Company concerning
such transaction
and/or payment. The Company hereby authorizes the General Agent
to collect
payments for losses and loss adjustment expenses from a
reinsurer. The General
Agent shall send a report to the Company concerning such
transactions promptly.
1.08 The General Agent acknowledges that, with respect to any
state in which
business is permitted to be written under the Reinsurance
Agreement, this
Agreement shall not become effective until the General Agent is
first duly
appointed by the Company with the applicable Department of
Insurance. The
General Agent agrees that any producing agent receiving
commission pursuant to
this Agreement shall first be duly registered by the Company and
said
appointment on file with any applicable state insurance
department. The General
Agent further agrees to be responsible for the payment of any
penalty assessed
to the Company for any violation by the General Agent or any
producing agent or
broker registered by the General Agent pursuant to the
provisions of Article IV
hereof of any license or appointment provision of the Texas
Insurance Code or
other applicable state statutes, and the rules and regulations
promulgated
thereunder. If the General Agent fails to pay such penalty, the
Reinsurer shall
pay it immediately upon written notification by the Company of
the General
Agent's failure to pay such penalty.
1.09 It is understood that the Reinsurer has acknowledged that
the Company shall
not be required to monitor the General Agent's compliance with
the terms of
either the Reinsurance Agreement or this Agreement and the
Reinsurer shall be
responsible for monitoring the General Agent's compliance with
the Reinsurance
Agreement and this Agreement.
1.10 The authority and limitations of the General Agent to issue
policies are as
follows:
(a) the maximum annual premium volume the General Agent may
produce
under this Agreement is $20,000,000;
(b) the basis of the rates charged are as provided in the
Company's
rate manuals, rate brochures and rate schedules which the
General
Agent shall follow, and the General Agent shall not decrease
rates
or increase discounts without the prior approval of the Company
and
Reinsurer;
(c) the only classes of business the General Agent is authorized
to
produce and handle under this Agreement are the classes of
business
specified in the Reinsurance Agreement;
(d) the maximum limits of liability for policies to be
produced
pursuant to this Agreement are set forth in the Reinsurance
Agreement;
(e) the General Agent may issue policies under this Agreement
only
to insured residents in the states in which business is
permitted to
be produced under the Reinsurance Agreement; but this
limitation
shall not apply to losses if said policies provide coverage
outside
the aforesaid territorial limit;
(f) the General Agent shall only cancel policies as set forth in
the
policy form for the policies produced hereunder or as
otherwise
permitted by applicable law;
(g) the maximum term for any policy issued hereunder shall be
twelve
(12) months;
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(h) the General Agent shall employ all reasonable and
appropriate
measures to control and keep a record of the issuance of the
Company's insurance policies hereunder, including, but not
limited
to, keeping records of policy numbers issued and maintaining
policy
inventories,
(i) the excluded risks are those set forth in the
Reinsurance
Agreement.
In underwriting policies, the General Agent shall follow the
underwriting
guidelines developed by the General Agent, the Reinsurer and the
Company, and
these guidelines are herein incorporated by reference.
ARTICLE II
PREMIUMS
2.01 It is expressly agreed and understood that all premiums
collected by the
General Agent are collected on behalf of the Company; that such
premiums are the
property of the Company and the Reinsurer as their respective
interests may
appear pursuant to the Reinsurance Agreement, less such
commissions and fees as
are due the General Agent as specified herein and in the
Reinsurance Agreement.
All premiums collected by the General Agent on the business
produced under the
Reinsurance Agreement shall be deposited in a premium trust
account. Despite the
General Agent's ownership of the account, funds deposited
therein on behalf of
the Company are understood to be owned by the Company. The only
disbursements
from such account shall be the payment of claims, claims
expenses, return
premiums, commission due the General Agent as authorized herein
and in the
Reinsurance Agreement, and remittance of premiums to the
Reinsurer and Company.
The General Agent shall not make personal use of any funds in
this account. The
commissions payable to the General Agent are debts due to the
General Agent by
the Reinsurer and the privilege herein granted of deducting
commissions from
said premiums should not be taken as a waiver by the Company of
its exclusive
ownership rights of premiums as provided herein. Should any
dispute arise
between the Company, the Reinsurer and/or the General Agent
regarding payment of
premium, the General Agent shall remit immediately all money and
property,
without deductions for commissions, to the premium trust account
with full
reservation of any and all rights reserved by the parties.
2.02 The General Agent shall furnish to the Company and the
Reinsurer all
necessary premium and loss data (in a form acceptable to the
Reinsurer and the
Company) no later than forty-five (45) days following the end of
the month
during which the business is written or losses are incurred to
enable the
Company to record statistics required by statutes, regulation or
upon call by
authorities having competent jurisdiction. Such data shall
include, but is not
limited to, premiums written and unearned premium. Said data
shall be segregated
by lines of insurance and the state in which the risk is
located.
2.03 The keeping of an account with the General Agent on the
Company's books as
a creditor and debtor account is declared a record memorandum of
business
transacted and neither such keeping of an account, nor
alteration in commission
rate, nor failure to enforce prompt remittance or compromise or
settlement or
declaration of balance of account, shall be held to waive
assertion of the trust
relation as to premiums collected by the General Agent.
2.04 The General Agent shall be liable for the payment of all
premiums upon all
policies of insurance written through the General Agent or any
sub-agents of the
General Agent.
2.05 The General Agent shall remit to the Reinsurer, or Company
as applicable,
any funds of or due to the Company under this Agreement at the
earlier of the
following: (1) forty-five (45) days from the
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end of the month in which premium is recorded; or (2) sixty (60)
days from the
end of the month in which the coverage under this Agreement
became effective.
2.06 The General Agent shall hold all funds of or due the
Company in a fiduciary
capacity.
ARTICLE III
COMPENSATION TO THE GENERAL AGENT
3.01 The Reinsurer shall allow the General Agent in full
compensation for all
services rendered and in full reimbursement for all expenditures
made by the
General Agent the fee specified in Article VIII of the
Reinsurance Agreement.
The General Agent shall pay the Company directly its ceding fee
as specified in
the Reinsurance Agreement (Article VIII), and the amounts for
assignments,
assessments, premium taxes, fines and penalties as specified in
the Reinsurance
Agreement (Articles XI and XII).
3.02 The Company shall not be liable for or responsible for any
commissions or
other monies payable by the Reinsurer to the General Agent. The
General Agent
shall not sue or seek arbitration against the Company for any
actions by, or
debts owing from, the Reinsurer.
3.03 In the event the Company or the Reinsurer, during the
continuance of this
Agreement or after its termination, refunds premiums under any
policy of
insurance by reasons of cancellation or otherwise, the General
Agent agrees
immediately to return to the Company or the Reinsurer, as
applicable, the
commission previously received by it on the portion of the
premium refunded. The
General Agent shall not be required to return, as commission or
return
commission, monies greater than the total commission paid or
otherwise payable
to the General Agent.
ARTICLE IV
SUB-AGENTS
4.01 The General Agent shall comply with, and shall be
responsible to insure the
compliance by, all such producing agents with the terms of this
Agreement and
the Reinsurance Agreement and all other written rules and
regulations of the
Company, and treat as confidential and use only in the interest
of the Company
all instructions, information and materials received from the
Company.
4.02 The General Agent shall be solely responsible for the
performances of any
producing agents under all of the terms and provisions hereof,
including, but
not limited to, the collections of premiums and refunds of
premiums.
4.03 Each such producing agent must be registered or appointed,
as required, as
an agent of the Company through the appropriate regulatory body
before any
application shall be accepted from him or other insurance
performances on behalf
of the Company are performed. The General Agent shall be
ultimately responsible
for the obligation of the producing agent to obtain an
appointment as provided
herein.
4.04 It is also specified that the General Agent shall be
responsible for all
commissions payable to any producing agents. The General Agent
and any producing
agent shall not seek to hold the Company or Reinsurer liable
through litigation,
arbitration or otherwise for commissions payable to such
producing agents.
4.05 The Company, in its sole discretion with or without cause,
and without
prior written notice, may terminate the appointment of any
producing agent.
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4.06 The General Agent shall not permit its subagents or
subproducers to serve
on its Board of Directors.
4.07 The General Agent shall not appoint sub-managing general
agents.
ARTICLE V
ADDITIONAL DUTIES OF AGENT
5.01 The General Agent shall, at all times during the period of
this Agreement,
comply with all applicable laws and all orders, policy decisions
or other
requirements of the Texas Department of Insurance or other
applicable state
insurance department.
5.02 All books, records, accounts, documents and correspondence
of the General
Agent and any producing agent pertaining to the Company's and
Reinsurer's
business shall, at
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