General Agency Agreement

GENERAL AGENCY AGREEMENT
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FEDERATED NATIONAL INSURANCE COMPANY
HOME OFFICE, 4161 N.W. 5TH STREET, PLANTATION, FLORIDA 33317


Federated National Insurance Company, a Florida Corporation, is a party to this Agreement and shall be referred to as the "Company".


Assurance Managing General Agents, Inc., a Florida Corporation, whose address is 4161 N.W. 5th Street, Plantation, Florida 33317, is a party to this Agreement and shall be referred to as the "General Agent".


THIS AGREEMENT is entered into this __1__ day of August , 1998 by and between the entity or person(s) designated and executing this General Agency Agreement (hereinafter referred to as the "General Agent") and the company designated, organized under the laws of Florida (hereinafter referred to as the "Company").


NOW THEREFORE, IT IS UNDERSTOOD AND AGREED:


I. APPOINTMENT AND AUTHORITY:


A. The General Agent is authorized to manage the portions of the Company
business as set forth herein. General Agent is authorized to solicit
applications for and to issue policies of insurance on such class or
classes of business and in such territory or territories as are
indicated by the various authorized and executed product line addendum
agreements attached hereto and incorporated herein by this reference.
This Agreement shall be between the General Agent and the Company
authorizing the writing of the aforesaid class or classes of business.
It shall also be effective as to any addendum subsequently attached
hereto amending the provision of an existing authorized product line or
adding a new product line.


B. In carrying on the business contemplated by this Agreement, the General
Agent shall comply with such rules, regulations or instructions as the
Company may prescribe and the General Agent hereby agrees and is hereby
authorized:


1. To collect, receive and account for premiums on insurance policies
pursuant to this Agreement.


2. To deliver and countersign policies of insurance which have been
executed by authorized officers of the Company.


3. To make endorsements, changes, assignments, transfers and
modifications to policies as authorized by the Company.


4. To effect cancellation of policies as provided in Section IX of this
Agreement.


5. To enter into agreements with sub-agents, however, the General Agent
shall have no authority to appoint sub-agents or to accept business
from an Insurance Broker except upon specific written authority from
the Company. If granted, the General Agent shall report the name,
address and required licensing information of any authorized sub-agent


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to the Company for appointment with the State Insurance Departments, as
required by law.


II. LIMITATIONS OF AUTHORITY:


A. With respect to certain classes of business which the General Agent may
be authorized to solicit under this Agreement, the General Agent will
not solicit or accept proposals or bind the Company for insurance
coverage on the following:


1. Risks which are unacceptable in accordance with the Company's
underwriting standards which the Company, from time to time, may
communicate to the General Agent. Such communications may be in such
form or in such manner as the Company may deem appropriate under the
circumstances.


2. Policy limits which are in excess of those specified in any product
line addendum attached hereto.


3. Risks which are not in compliance with the applicable forms, rules,
rates or filings of the Company according to their exact terms and to
the laws and regulations in effect in the General Agent's territory.


B. In the event the General Agent binds the Company to the aforesaid risks
or excess policy limits without prior written approval from the
Company, whether intentional or not, the General Agent will do such
things and take such actions as necessary to remove or to reduce the
Company's exposure on such risks or to such excess policy limits and to
hold the Company harmless against any liability or loss which may be
incurred by the Company as a result of such binder.


III. COMPLIANCE WITH STATE INSURANCE CODES:


The General Agent agrees to operate at all times in compliance with every applicable State Insurance Code set forth in the territories where and pertaining to the various product lines that the General Agent is authorized to write for the Company under this Agreement.


The General Agent further agrees that in the event the Company is in violation of any State code or statute, due to the acts of the General Agent, the General Agent shall assume the responsibility of such act and shall hold the Company harmless in the event of such violation. If the Company, because of a violation of an Insurance Code or regulation by the General Agent, is reprimanded, fined or otherwise involved in any action caused by the General Agent, the General Agent agrees to reimburse the Company for all expenses, fines or other fees incurred by the Company as a result of such action.


IV. COMMISSIONS:


Subject to compliance by the General Agent with the terms and conditions of this Agreement, the Company will pay and the General Agent will accept as full compensation on business placed with and accepted by the Company, commissions to the extent provided in the product line addendum in effect on the date commissions are allowed or paid.


ADVANCE COMMISSIONS - As advance commissions, the General Agent may retain from the total premiums written, net of cancellations for each authorized class of


2 business, the percentage of net written premium which may be indicated for such class of business in the Advance Commission column of the product line addendum. With respect to cancellations or endorsements resulting in return premiums, advance commissions shall be refunded at the same rate at which the commissions allowed initially had been computed. If the General Agent has succeeded to and is carrying on the business previously written by another General Agent with the Company (a "predecessor General Agent"), the advance commission, if any, shall be refunded at the same rate and in the manner allowed to such predecessor or General Agent, unless otherwise agreed upon in writing by the Company and the General Agent.


V. EXPENSES:


All agency expense, including but not limited to rentals, transportation, salaries, attorney or legal fees, postage, advertising, currency exchange fees, countersignature fees or commissions, agent's occupational taxes, whether billed to the General Agent or Company, shall be the liability of the General Agent. The General Agent will remit promptly to the Company the amount of any such item billed to the General Agent upon notice by the Company to the General Agent of the charge therefor.


VI. REPORTS AND RECORDS:


A. The General Agent will forward to the Company no later than ten (10)
days after the effective date, or when otherwise directed by the
Company, exact copies of all policies or other appropriate evidences of
insurance written, modified or canceled pursuant to this Agreement. The
General Agent shall keep true and complete records of all transactions
and correspondence with policyholders and the Company. Such records may
be examined by representatives of the Company at any time. The Company
shall have access and the right to copy all accounts and records
related to its business in the possession of the General Agent, in a
form usable by the Company. The General Agent shall provide access to
the Florida Department of Insurance to all books, bank accounts and
records of the General Agent in a form usable by the Department. The
General Agent shall retain records according to law.


B. Supplies furnished by the Company shall remain the property of the
Company and shall be returned immediately upon request. Upon
termination of this Agreement or the General Agent's authority
hereunder, the General Agent, at the direction of the Company, shall
return all such property to the Company or to its designated
representative and shall hold the Company harmless with respect to any
unauthorized use thereof. If, at the time of such termination, the
General Agent is not in default in remitting premiums or other balances
due the Company and if it promptly thereafter accounts for and pays
over balances of premiums due but not in default, the General Agent's
records, use and control of expirations shall be deemed the property of
the General Agent and left in its undisputed possession; otherwise, the
records and use and control of expirations shall be turned over to and
vested in the Company.


VII. PREMIUM AND ACCOUNTINGS:


A. The General Agent shall be liable for and shall pay to the Company all
net premiums attributable to the business produced by the General Agent
hereunder. Net premiums shall be gross premiums on such business
produced by the General Agent, less return premiums and applicable
commissions. An accounting of new premiums due the Company for business


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produced by the General Agent each month shall be rendered by the
Company to the General Agent on or about the fifth (5th) day of the
following month. The amount so indicated to be due shall be paid to the
Company in accordance with the payment terms specified on the product
line addendum. However, funds due shall be remitted to the Company at
least monthly, except the Company may require remittance every fifteen
(15) days. Should the General Agent default in any such payment, all
premiums on the unpaid business produced by the General Agent under
this Agreement shall be due and payable immediately. If the default is
not corrected within thirty (30) days, all provisions of this Agreement
providing for payment of contingent commissions are null and void and
shall not be reinstated except by a signed Letter of Reinstatement from
an officer of the Company. In addition, the Company may withhold or
offset payment of any commissions until all premium or other money due
from the General Agent is received by the Company.


B. For the purpose of this Agreement, and unless prior approval is
obtained from the Company, any cancellation of a policy effected by the
General Agent which is not received by the Company within thirty (30)
days following the effective date of such policy, shall be deemed to
have been a cancellation with earnings, and the General Agent shall be
charged for the net premiums earned thereon by the Company.


C. All premiums received by the General Agent shall be held in a fiduciary
capacity in a bank which is a member of the Federal Reserve System as
trustee for the Company until delivered to the Company unless otherwise
specified in writing. The account shall be used for all payment as
directed by the Company. The premiums received by the General Agent,
net of advance commissions allowed, shall be kept in a separate
fiduciary bank account, separate from any other company's accounts,
unless the Company otherwise consents in writing. The keeping of an
Account with the General Agent on the Company's books, as a creditor or
debtor account, is declared a record memorandum of business transacted
and the keeping of such account, or an alteration in compensation rate,
or a failure to enforce prompt remittance or compromise or settlement
or declaration of balance of account, shall not waive the Company's
right to assert the fiduciary nature of the premiums collected by the
General Agent.


D. The General Agent may retain no more than sixty (60) days of estimated
claims payments and allocated loss adjustment expenses.


VIII. CLAIMS:


A. The General Agent shall promptly report all claims to the Company or an
Assigned Adjuster(s) or claim representative(s) who has been designated
by the Company. The Company shall have the sole responsibility for
adjustment and payment for claims arising under policies written by the
General Agent. Payment of all claims shall be effected by drafts or
checks drawn upon the Company at the Company's Home Office, unless
otherwise agreed upon and authorized in writing by an officer of the
Company.


B. Acceptance and endorsement of the Company's check in payment of
commissions due under the terms of this Agreement shall constitute a
representation by the General Agent that all known claims under the
policies issued by or on behalf of the Company ...