General Agency Agreement

GENERAL AGENCY AGREEMENT


THIS AGREEMENT is made effective March 1, 1993 between the Insurance Companies subscribing hereto, (collectively hereinafter referred to as "the Company") and Warrantech Automotive, Inc., 300 Atlantic Street, Stamford, Connecticut 06901 (hereinafter referred to as the "General Agent".)


WITNESSETH: In consideration of the mutual covenants and promises herein contained, the parties hereto agree as follows:


1. APPOINTMENT: Subject to the terms and conditions of this Agreement, the
General Agent is hereby appointed to solicit, bind, write
and administer insurance as expressly set forth in Addendum
A to this Agreement. The General Agent hereby accepts such
appointment, and agrees to perform faithfully the duties
thereof to the best of its knowledge, skill and judgment.


2. TERMS The word "Agreement" herein shall be
OF THE understood to include any and all
AGREEMENT: Addenda attached in accordance with the terms and conditions
herein specified.


3. TERRITORY: The territory within which the General Agent shall operate
is as defined in Addendum A. Such territory is not assigned
exclusively to the General Agent. General Agent and Company
have agreed to certain rights of first refusal as contained
in the Securities Purchase Agreement, dated as of July 1,
1991, among Warrantech Corporation, Joel San Antonio,
William Tweed, Jeffrey T. White, and American International
Group, Inc.


4. RELATIONSHIP: Nothing herein contained shall be construed to create the
relation of employer and employee between the General Agent
and the Company or between the Company and any of the
General Agent's employees or representatives. It is the
express intent of the parties hereto that the General Agent
is not an employee of the Company for any purpose, but is an
independent contractor for all purposes and in all
situations. The General Agent shall not represent that he
is an employee of the Company, nor shall he in any manner
hold himself out to be an employee of the Company.


The General Agent shall be free to exercise independent
judgment as to the place and manner of soliciting insurance
and servicing policyholders; however, the General Agent
shall perform its duties at all times in accordance with
this Agreement.


5. AUTHORITY OF The General Agent shall have no power or
THE GENERAL authority other than as granted and set
AGENT: forth herein and no other or greater power shall be implied
from the grant or deal of powers specifically mentioned
herein. The General Agent shall have no power or authority
on lines of business other than those set forth in the
attached Addendum A.


6. ADMINISTRA-
TIVE SERVICES The General Agent shall perform the
OF THE following administrative services on behalf
GENERAL AGENT of the Company:


A. Assist Company to develop underwriting and Producer
Guidelines and modifications thereof for the
underwriting program, to be approved by the Company in
writing prior to use, which use shall include
advertising, program implementation, and binding
insurance coverage.


B. Process applications for insurance.


C. Collect and account for premises.


D. Rate, quote and issue policies of insurance, and
certificates of insurance consistent with Company's
rate, rule and form filings made or adopted in writing
by Company, and the authority granted herein, as well
as to provide policy information services for insureds.


E. The General Agent shall have no authority to make
modifications in underwriting or binding coverage not
already approved by Company in Addenda, Underwriting
Guideline or related manual without prior written
approval of Company.


F. Develop and maintain proper underwriting files on
behalf of Company which become the property of Company,
except as to the ownership of expirations which are the


property of the General Agent if the General Agent has
paid all monies owed to Company if the General Agent
has performed faithfully all duties set forth in this
Agreement.


G. Use best efforts and good faith to achieve an
underwriting profit on all business placed with
Company.


H. Provide proper and timely cancellation or non-renewal
notice to policyholders, certificate holders and
regulatory bodies as required by the policy, and
statute or regulation, any regulatory order or by the
Company.


I. Remit premiums received net of the compensation due to
General Agent, according to the provisions of the
Paragraph entitled "Premiums", below.


7. LIMITATION In addition to any other Limitations expressly
OF or impliedly contained in this Agreement,
AUTHORITY: any exhibits or addendum thereto or any Underwriting
Guideline, bulletin or instruction which may be issued from
time to time by the Company to General Agent, the General
Agent has no authority to act as outlined below:


A. Make, accept or endorse notes or otherwise incur any
liability which is not incurred in the ordinary course
of business of the General Agent on behalf of the
Company, pursuant to the terms and conditions of this
Agreement.


B. Waive a forfeiture or issue a guaranty on behalf of the
Company other than as permitted expressly in writing by
the Company.


C. Extend the time for the payment of premiums or other
monies due the Company.


D. Institute, prosecute, defend or maintain any legal
proceedings in connection with any matter pertaining to
the Company's business, except as may be otherwise
authorized in the Agreement and Addenda thereto.


E. Directly or indirectly solicit, sell, offer, bind,
issue, or deliver any insurance at any reduction or
deviation from the rates, terms or conditions specified
therefor by the Company, and shall adhere strictly to
the rates and forms promulgated and filed by the
Company.


F. Transact business in contravention of the rules and
regulations of any Insurance Department and/or other
governmental authorities having jurisdiction of the
subject matters embraced within this Agreement; all
instructions issued by the Company; and the applicable
laws of any jurisdiction concerned.


G. Hold himself out as an agent of the Company in any
other manner, or for any other purpose than is
specifically prescribed in this Agreement.


H. Waive premium payment.


I. Withhold any monies or property of the Company.


J. Offer or pay any rebate of premium.


K. Negotiate or place any reinsurance on behalf of Company
or any insurance company represented by Company whether
such reinsurance is elective or required by the
Underwriting Guidelines.


L. Bind coverage subsequent to effective date without
prior written approval of Company, except during the
fifteen (15) day period after the coverage effective
date but only if the insured has warranted in writing
that there are no known losses. Provided, that a
policy may cover Service Contracts issued prior to the
effective date of the Policy if the VSCs are issued to
current model vehicles and if the Insured warrants no
known losses.


M. Effect or authorize a flat cancellation more than
thirty (30) days after the effective date without prior
written approval of Company. In the event of such flat
cancellation, the General Agent shall document the
existence of substituted coverage or other reasons why
Company has no liability for payment of loss while
coverage was in force.


N. The General Agent shall not reinstate policies or
certificates cancelled by Company for other than non-
payment of premium without the prior written approval
of Company.


O. The General Agent shall have no authority to assign or
delegate its rights and duties hereunder or to appoint
sub-agents for Company without prior written approval
of Company, although the General Agent may employ other
entities to assist it in the performance of its duties
under this Agreement.


P. The General Agent may endorse checks payable to Company
or any insurance company represented by Company.


Q. The General Agent shall not bind coverage hereunder if
the General Agent is aware that the risk was previously
declined or cancelled by any office of the Company, its
affiliates or subsidiaries, without disclosing such
prior declination or cancellation to the Company.


8. CLAIMS A. Except as may otherwise be authorized in an Addendum
AUTHORITY: to this Agreement, the General Agent shall have no
authority to investigate, defend, approve or deny any
Claim made against the Company or an insurance company
represented by the Company or under any policy issued
pursuant to this Agreement and the General Agent shall
have no authority to assign an adjuster or attorney to
investigate or defend any claims.


B. The General Agent agrees to give Company prompt written
notice of any claim,


demand, action, suit or proceeding raised, brought,
threatened, made or commenced against the Company or an
insurance company represented by Company that relates
to any matter to which the provisions of this Agreement
shall apply.


C. The General Agent agrees to cooperate fully in the
investigation and adjustment of all claims against
insurance companies represented by Company and on
policies issued pursuant to this Agreement.


D. The General Agent agrees to send to offices designated
by Company copies of all binders, policies,
endorsements and evidence of cancellations within
thirty (30) days of the effective date of such binder,
policy, endorsement or cancellation.


[PARAGRAPH 9 HAS BEEN REDACTED AND FILED SEPARATELY AS
PART OF A CONFIDENTIALITY REQUEST WITH THE COMMISSION.]


10. ADVERTISING The General Agent shall use no advertising
AND material, prospectus, proposal, or
REPRESEN- representation, either in general or in
TATION: relation to a particular policy of the Company, or use
its name or the name or concerning any of its
affiliates or member companies, or associated
companies, unless furnished by the Company or until the
consent of the Company thereto in writing shall have
first been secured. Such approval shall not in any
event be construed as charging or binding the Company
to bear any part of the cost or expenses thereof. The
General Agent shall not issue or circulate any
illustration, circular, statement or memorandum of any
sort misrepresenting the terms, benefits, or advantages
of any policy issued by the Company or make any
misleading statement as to the financial security of
the Company.


11. RULES AND The General Agent shall comply with and
REGULATIONS: be bound by all of the Underwriting Guides, rules,
bulletins, manuals or other written instructions issued
by the Company now in force as they hereafter may be
amended or supplemented, and all applicable laws and
regulations of the appropriate jurisdiction.


12. LICENSING A. The General Agent warrants that it
AND now has and shall maintain during
COUNTER- the term of this Agreement the
SIGNATURE license or licenses necessary to
REQUIREMENTS: place the business described in this Agreement.
In the event the General Agent will comply with
licensing laws by utilizing the license of a
principal, director, officer, or employee then
General Agent promises, warrants and guarantees
that the licenses will comply with all
requirements of this Agreement and specifically
with this Paragraph. The General Agent is
responsible for all damages, penalties, fines and
liabilities incurred by said parties and for which
the Company is responsible to the same extent as
if the applicable license was held directly by the
General Agent. In the event that any license the
General Agent utilizes to fulfill the requirements
of the Agreement expires, terminates or is
suspended for any reason, this Agreement
terminates automatically and the Company may avail
itself of any rights provided under the paragraph
entitled "Termination."


The General Agent shall be responsible to assure
that all business is properly countersigned. The
General agent shall be responsible for and pay any
necessary countersignature expense. The Company
shall not be responsible for payment of any
countersignature expense.


13. PREMIUMS: A. The General Agent agrees to pay Company all
insurance charges and all premiums on business
produced by the General Agent on behalf of
Company, whether or not collected by the General
Agent from insured. General Agent does not
possess the funds collected for any other reason.
All such premiums received by the General Agent
pursuant to this Agreement shall be held by the
General Agent in a fiduciary capacity as trustee
for Company. The privilege of taking commissions
from premium monies received by the General Agent
shall not be construed as an alteration of this
fiduciary capacity.


B. All monies received on behalf of the Company shall
be promptly deposited in a fiduciary account in a
bank which is a member of the Federal Reserve
System, and shall be invested in the following
types of accounts and/or instruments and no other:
demand accounts, time accounts and certificates of
deposit. General Agent will cooperate with
Company if Company attempts to perfect a security
interest in the account and/or instrument. The
General Agent shall not commingle any premium
monies collected pursuant to this Agreement with
operating funds or funds held by the General Agent
in any other capacity. The General Agent must
procure and maintain a fiduciary account dedicated
to funds held for policies written for the Company
and its affiliates. The General Agent may retain
any interest or income earned from such
investments. Withdrawals from bank accounts must
be in accordance with the laws of the various
states and this Agreement. The net amounts due to
Company shall be forwarded to Company, as
described in this Agreement.


C. The General Agent shall submit to Company all
binders, policies, endorsements and cancellations
within twenty five (25) days of the issue date of
the binder, policy, endorsement or cancellation,
respectively.


D. The General Agent shall submit to Company a
detailed and itemized monthly Account Current of
all premiums written and premium adjustments made
(whether additional or return) with respect to all
business and transactions received and processed
in that month not later than the twenty-fifth day
of the subsequent month. For example, binders,
policies, monthly reports and endorsements
received and processed in December accounting are
to be reported no later than January 25. However,
the Company shall have the privilege, exercisable
at its option, of preparing the Account Current.
Provided, that General Agent shall have the right
to accept business up to ninety (90) days after
the business effective date and place the business
on the Account Current up to (90) days after the
business effective date.


E. Premiums on each binder, policy or transaction are
due within twenty-five (25) days after the end of
the month in which the binder, policy or
transaction was received and processed.
Additional premiums developed by adjustments are
due within twenty-five (25) days after the end of
the month in which policy, binder, or transaction
was received and processes. General Agent will
issue binders, policies and endorsements for the
purpose of providing coverage to Automotive
Dealers for VSCs they may issue. The issuance of
a VSC is an event that requires reporting and
payments of premiums under Company's policy(ies).


F. The General Agent agrees to provide Company with
all pertinent statistical information as requested
by Company in the form required by Company within
a reasonable time.


G. The General Agent shall be responsible for
conducting a quality assurance program for all
premium, accounting and statistical reports and
all policy transactions to assure compliance with
all terms of this Agreement and reconciliation
procedures.


H. If the General Agent is delinquent in either
accounting for or payment of monies due to
Company, then Company may, by written notice to
the General Agent, avail itself of any remedies
contained in this Agreement, and specifically the
remedy contained in Section 20, Termination.


I. The Company may offset any balance or balances due
from the General Agent under this Agreement with
any balance Company holds due the General Agent.


14. BOOKS, The General Agent shall keep complete and
ACCOUNTS, and accurate records of the business
AND RECORDS: transacted by him under this Agreement, including but
not limited to all policy and premium records during
the term of this Agreement and for seven (7) years
thereafter and shall forward to the Company such
reports of said business as the Company may prescribe.
The General Agent shall be responsible for retaining
all policy and premium records on behalf of Company in
hard copy form, microfilm and/or other generally
accepted information storage medium, as well as in any
reasonable back-up form requested by Company for the
period described above. The Company shall have the
right to examine said books, files and records at any
time and to make such records as it may deem necessary.
All books, accounts, or other documents relating to the


business of the Company, except computer software
systems, are the property of the Company whether paid
for by it or not. The books and accounts of the
Company shall be accepted as full and final evidence in
all matters relating to this Agreement.


The provisions of this Section, which are binding upon
the parties subsequent to the termination of this
Agreement, shall survive such termination until all
obligations are finally discharged.


Company may examine all books and records of the
General Agent shall forward to Company all supplies and
policy files pertaining to the terminated Underwriting
Program and shall return all unused policy forms with
an accounting of all such policies provided to the
General Agent.


15. CURRENCY: Unless otherwise specified in the Addenda to this
Agreement, all transactions will be reported and paid
in U.S. dollars.


16. EXPENSES: [THIS PARAGRAPH HAS BEEN REDACTED AND FILED SEPARATELY
AS PART OF A CONFIDENTIALITY REQUEST WITH THE
COMMISSION.]


The General Agent shall not charge or commit the
Company to any expense, agreement, payment, debt or
obligation other than the insurance expressly described
in the Addenda hereto which the General Agent is
authorized to write.


17. SUPPLIES: The ownership of all books, supplies, undelivered
policies, or other property furnished by the Company to
the General Agent shall be vested in the Company, and
these shall be delivered to the Company or its
authorized representatives immediately upon the
termination or cancellation of this Agreement or at any
time upon the request of the Company. The General
Agent agrees, without expense to the Company, to
surrender the same peaceably. The General Agent has no
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