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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,
