EXHIBIT 10.117
PRODUCER - COMPANY AGREEMENT
THIS AGREEMENT, made this 15th day of May, 1996, by and between REGIONAL
BENEFITS INSURANCE SERVICES (hereinafter referred to as the "Company") with
principal offices at 6200 Canoga Avenue, Woodland Hills, CA 91367-2402, and GULF
ATLANTIC MANAGEMENT GROUP, INC. (hereinafter referred to as the "Producer"), a
Florida Corporation, with principal offices at 1901 West Cypress Creek Road,
Fort Lauderdale, Florida 33340.
The parties hereto agree as follows:
1. The Company is a duly licensed General Agent with authority to produce
and administer workers' compensation insurance and accident and health business
from "insurers" which are companies authorized to transact workers' compensation
insurance and/or accident and health business in various states. A non-limiting
list of current insurers is attached hereto as Addendum "A".
2. The Producer is a duly licensed General Agent who, for purposes of this
agreement, is an independent contractor, not an employee of the Company, and is
subject to requirements imposed by law, the terms of this Agreement, the
insurers' maximum volume limits, and the underwriting rules and regulations of
the Company.
3. The Company hereby grants authority, and that authority only, to the
Producer initially in the State of Florida, to solicit and accept applications
for workers' compensation and employers liability and accident and health
insurance on behalf of the insurers from insureds with a minimum potential
standard premium of $75,000, which applications shall be immediately submitted
to the Company for acceptance or rejection. For the purpose of this Agreement,
"standard premium" shall mean manual premium multiplied by experience
modification factors as defined by Florida Statute.
4. The Producer agrees to keep a true and complete record and account for
all business transacted for or on behalf of the Company, and to report all risks
assumed and forward all applications to the Company for acceptance as soon as
practical after the effective date thereof.
5. The Company shall accept or reject such application submitted by the
Producer on behalf of the insurers within a reasonable time of receipt thereof
based upon the information provided, and advise the Producer accordingly, it
being expressly understood and agreed that the decision whether to accept or
reject any application is the responsibility of the Company. The Producer shall
have no authority to make, add to, or in any way alter, any policy of insurance
or other contract affecting the insurer or the Company, nor to waive any of the
insurer or Company's rights thereunder without prior written approval.
6. The Company shall issue Policies and binders on behalf of the insurers
through the Producer who will distribute same through Producer's network of duly
licensed insurance brokers,
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agents and producers in Florida (collectively referred to as "agents"). The
Producer is also granted authority to collect and receipt for premiums thereon.
7. The Producer agrees that all monies or funds of the insurer or of the
Company from whatever source received, and all premiums collected on policies
issued through the Company, less only:
i) commissions payable to sub-agents at the rates outlined in
Addendum "B" attached hereto;
ii) an overriding commission to the Producer of six and one-half
percent (6-1/2%) of standard premium;
iii) an expense constant of $140 per policy to the Producer;
shall be held as a fiduciary trust and be paid to a bank account to be
established and controlled by the Company within seven (7) days of receipt of
same by the Producer and shall not be used for any other purpose whatsoever. It
is also understood and agreed that in the event the Producer produces between
$10,000,000 and $15,000,000 in standard premium to the insurers, net of bad
debts, during any term, then the Producer shall be entitled to an additional
commission of one percent (1%) of the total premium earned during such term and
in the event the Producer produces in excess of $15,000,000 in standard premium
to the insurers, net of bad debts, during any term, then the Producer shall be
entitled to an additional commission of two percent (2%) of the total premium
earned during such term.
8. The Company shall establish a separate bank account to be established
and controlled by the Company in Fort Lauderdale, Florida, and funded with and
thereafter maintained at the level of $25,000 (initial funding, to be increased
as demand warrants) which the Producer may draw upon to pay claims; in
accordance with claims settling decisions made by the Company.
9. The Producer agrees that any credit extended for the payment of
premiums shall be at the sole risk of the Producer, and that the Producer will
account for and pay over to the Company all premiums on such business and will
remit premiums and render account reports to the Company not later than 45 days
following the end of the month after Company billing for new premiums,
additional premiums, renewal premiums and additional premiums developed by
audit. The Producer shall not offset balances due under one contract with any
offset due under any other contract. The Producer may be relieved from
responsibility for payment of uncollectible workers' compensation final audits
by turning back said final audits to Company for direct collection within 30
days of Producer's knowledge of a collection problem. Producer will be relieved
of responsibility for payment of final workers' compensation audit billings
caused by fraudulent reporting provided that Producer provides Company
documentary evidence of such fraudulent reporting within 30 days from the date
of the final workers' compensation audit billing. Only three and one half
percent (3 1/2%) commission will be paid on amounts turned back to the Company
for direct collection, and failure to timely turn back said final audits will
not relieve Producer from liability for the premium. Producer will also be
relieved of responsibility for payment of uncollected premium caused by
intentional acts of premium avoidance by insureds if reported to Company by
Producer within 30 days from the date of the final workers compensation audit
billing. If the insured has sought administrative remedies regarding a disputed
final workers' compensation audit during the initial
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30 day notice period, the 30 day notice period set forth above shall be stayed
until the administrative remedy is exhausted.
10. The omission of any item(s) from a monthly statement shall not affect
the responsibility of either party to account for and pay all amounts due the
other, nor shall it prejudice the rights of either party to collect all such
amounts due from the other.
11. The Producer is authorized to advance premiums on behalf of
policyholders, in which event the Producer accepts full responsibility for such
premiums.
12. The Producer agrees that the above terms create a guarantee by the
Producer for the payment of all premiums under the above payment terms.
13. The Producer:
(a) will provide all usual and customary services of an insurance
producer on all insurance contracts produced hereunder,
including sales, advertising, marketing, loss control, billings,
collections, guaranteeing payment of premium, and production of
cancellation notices and reports;
(b) will provide claims administration and managed care support to
the Company, it being expressly understood and agreed that
actual decisions regarding claims adjustment, settling and
reserving levels in relation to those claims remain the
responsibility of the Company. If any revenues are generated by
the application of loss conversion factors to paid claims under
any given policy, the Producer shall be entitled to receive 50%
of such revenues above a base conversion factor of 1.03;
(c) will exercise its authority personally or through its authorized
employees;
(d) may represent other companies;
(e) will exercise exclusive and independent control of its time;
(f) will provide Company with a current certificate of errors &
omissions insurance and crime policy with limits of $5,000,000;
(g) will obtain prior written approval of Company prior to issuing
any advertisement, circular, pamphlet, or other publication
which includes references to Company or insurers; and
(h) will utilize its best endeavors to produce a minimum of
$10,000,000 in standard premium to the insurers, net of bad
debts, during each term.
14. The Company shall not be responsible for any Producer expenses,
including rent, transportation, clerical hire, fees, postage, telegrams,
telephone, advertising or any other expense in connection with the operation or
maintenance of the Producer's office, nor shall it discharge or incur any
liability whatsoever under any policy issued through this Agreement. The Company
shall be responsible for postage relating to the handling and/or processing of
policies and endorsements. All marketing-related postage shall be to the charge
of Producer.
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15. The Company reserves the right to cancel any policy by direct notice
to the insured, and in the event return premiums are refunded thereon by reason
of cancellation, rescission or otherwise, the Producer shall immediately return
to the Company the overriding commission originally retained by it, prorated to
the amount of the premium refunded.
16. This Agreement supersedes all previous agreements, whether oral or
written, between the Company and the Producer. Any amendments and changes to
this Agreement must be in writing and specify the effective date. The Producer
may not assign this Agreement directly or indirectly, in whole or in part,
without prior written approval of Company.
17. In the event of termination of this Agreement, the Producer having
promptly accounted for and paid over premiums for which he may be liable, the
Producer's records and the use and control of expirations shall be its property;
otherwise, the records, use and control of all business placed with the
insurers, including, but not limited to, policy and claims files shall remain
the property and responsibility of the Company, and Company shall have the right
to direct bill and direct collect premiums.
18. The Producer is not authorized to bind policies of insurance.
19. The term of this Agreement is two years effective May 15, 1996, and
will be automatically renewed for subsequent consecutive one-year terms unless
the notice specified below in this paragraph is given. During the term of this
Agreement Producer agrees that, other than working with Clarendon National,
Producer will not submit workers' compensation business to any other source
other than Company. This Agreement may be amended at any time in writing by
mutual consent or it may be terminated at any time by mutual consent upon
written agreement. The Company may suspend the authority of the Producer during
the pendency of any dispute regarding any event of default. Either party may
terminate this Agreement by giving 90 days (180 days after this Agreement has
been in force for a two-year period) advance written notice to the other. No
advance written notice of termination is necessary in those instances in which:
(a) the other has failed to comply with the provisions of this
Agreement;
(b) the Producer has failed to remit funds within 10 days after
receiving written notice that the time limits set forth in
paragraph 9 have not been met;
(c) the other has had its license suspended or revoked by the
Florida Commissioner of Insurance;
(d) the other has engaged in fraudulent acts affecting its
relationship with the Company or its insureds;
(e) the other becomes insolvent;
(f) the Producer has failed to pay premiums; or
(g) the Company or an insurer has failed to pay claims.
20. Upon the receipt by the Producer of written notice of termination, the
Producer shall immediately remit to the Company all fiduciary funds held for the
benefit of the insurers or the
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Company, and forward any deposit premium accepted thereafter immediately to the
Company. Upon the receipt by either party of written notice of termination, both
shall also immediately return to the other all forms and other property of the
other in its possession.
21.1 Any dispute arising out of, or relating to, this Agreement or the
enforcement hereof, may be determined by a board of arbitration meeting in Fort
Lauderdale, Florida. The laws of the State of Florida shall govern the
interpretation and application of this Agreement and the enforcement of the
arbitration award. Either party (hereinafter called the "Claimant") may commence
an arbitration by serving a written Demand for Arbitration upon the other party
(hereinafter called the "Respondent").
21.2 Board of Arbitration. The Board of Arbitration shall be composed of
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two arbitrators and an umpire. Each member of the Board of Arbitration shall be
active or retired officials of insurance or insurance management companies
(other than the parties or their affiliates). Each party shall appoint its
arbitrator, and the two arbitrators shall choose an impartial umpire. The
Claimant shall name its arbitrator in the Demand for Arbitration. If the
Respondent fails to appoint its arbitrator and to notify Claimant of such
appointment within twenty (20) business days of receipt of the Demand for
Arbitration, the Claimant may also appoint the second arbitrator within ten (10)
business days after the expiration of said twenty-day period. If the two
arbitrators fail to agree upon the appointment of an umpire at the end of twenty
(20) business days following the appointment of the second arbitrator, then the
umpire shall be appointed by the American Arbitration Association (or its
successor) in accordance with its then prevailing commercial arbitration rules.
21.3 The Claimant shall submit to the arbitrators, the umpire and the
Respondent its initial statement of claim within twenty (20) business days after
the appointment of the umpire. The Respondent shall submit its statement to the
arbitrators, the umpire and the Claimant within twenty (20) business days after
receipt of the Claimant's statement. The Claimant may submit a reply statement
within ten (10) business days after receipt of Respondent's statement. No other
written statements shall be submitted by either party unless requested to do so
by the entire Board of Arbitration.
21.4 Any hearing shall commence within thirty (30) business days after
submission of Claimant's reply statement, or after submission of Respondent's
statement if Claimant does not submit a reply statement, and shall be held at a
time and place determined by the Board of Arbitration. The Board of Arbitration
shall consider this Agreement an honorable engagement rather than merely a legal
obligation, and shall make its decision with regard to the custom, practice and
usage of the insurance and reinsurance business. The hearing shall be conducted
in accordance with the commercial arbitration rules of the American Arbitration
Association (or its successor); strict rules of evidence need not be followed,
but written evidence and evidence in the form of testimony may be taken and
cross-examination and rebuttal may be allowed.
21.5 The Board of Arbitration shall make its award in writing within
forty-five (45) days following the termination of the hearing (or any continued
hearing) unless the parties consent to an extension. The majority decision of
the Board of Arbitration shall be final and binding on all parties to the
proceeding. Judgment may be entered on the award in any court having
jurisdiction thereof.
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21.6 Each party shall bear the expense of its own arbitrator and shall
jointly and equally bear the expense of the umpire. The other costs of the
arbitration proceeding shall be allocated by the Board of Arbitration. In the
event of subsequent actions or proceedings to enforce any rights hereunder,
including, without limitation, any proceeding to enter judgment on the award,
the prevailing party shall be entitled to recover court costs and its reasonable
attorneys' fees.
22. In the event that any legal action is commenced by either party to
enforce the terms of this Agreement, the prevailing party in such legal action
shall be entitled to, in addition to any other remedies provided hereunder or by
law, its reasonable attorneys' fees and costs incurred in such action. It is
expressly agreed that any litigation related to or connected with this Agreement
shall be subject only to the jurisdiction of the courts within the State of
Florida, both federal and state, and no other jurisdiction.
23. Either party must notify the other in writing if there is a change in
ownership of 10% or more of its outstanding stock or if there is a change in any
of its principal officers or directors.
24. During the term of this Agreement, both the Company and the Producer
may disclose proprietary information to each other. Both agree not to ever
disclose said proprietary information to any third parties, either during this
Agreement or after its termination.
25. In the event that commissions are earned by either party as a result
of the utilization of Accident and Health products by insureds produced under
this Agreement, then that party will share any such commission equally (50/50)
with the other.
IN WITNESS WHEREOF, the Company and the Producer have caused this Agreement
to be executed on the day and year first above written.
GULF ATLANTIC MANAGEMENT GROUP, INC.
(PRODUCER)
By:_________________________________
Title:______________________________
REGIONAL BENEFITS INSURANCE SERVICES
(COMPANY)
By:_________________________________
James K. Hindes
Title: Vice President
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Addendum "A"
LIST OF CURRENT INSURERS
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The Pacific Rim Assurance Company MetraHealth
Blue Cross/Blue Shield - AZ Harden & Co./National Med
Health Plan Services: Greater Pacific-California
United World
Boston Mutual Reliance Insurance Company
Celtic Life
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Addendum "B"
SUB-AGENT COMMISSIONS
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The commissions payable to Producer's licensed sub-agents shall be payable on a
risk-by-risk basis at a rate between 8-10%.
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