<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
-----------------------------------
MARK ONE FORM 10K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD
FROM ____ TO _____
Commission file number 0-13084
WARRANTECH CORPORATION
----------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3178732
- --------------------------------- ------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
300 Atlantic Street, Stamford, Connecticut 06901
- ------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (203) 975-1100
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of each Exchange on which registered
------------------- -----------------------------------------
Common Stock $.007 par value NASDAQ National Market
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.007 par value
------------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ].
-------------------------
The number of shares outstanding of the Registrant's common stock is
13,082,181 as of (June 21, 1996).
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant is $35,756,096 (as of June 21, 1996).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Definitive Proxy Statement for its 1996
Annual Meeting of Shareholders to be filed pursuant to Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended, are
incorporated by reference in Part III.
Index to Exhibits is on page 2.
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PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K.
(a) 1. and 2. Financial Statements and Financial Statement Schedule: see
Index to Financial Statements and Financial Statement
Schedule, page 19 of the Company's Annual Report on Form 10-K for
the fiscal year ended March 31, 1996..
(b) Reports on Form 8-K during the last quarter: None.
(c) Exhibits
3(a) - Certificate of Incorporation filed June 22, 1983. Incorporated
by reference to the Company's Registration Statement on Form
S-18, filed on November 23, 1983, Registration No. 2-88097-NY.
(b) - Certificate of Amendment of Certificate of Incorporation filed
October 24, 1983. Incorporated by reference to the Company's
Registration Statement on Form S-18, filed on November 23, 1983,
Registration No. 2-88097-NY.
(c) - Certificate of Amendment of Certificate of Incorporation dated
June 29, 1987. Incorporated by reference to the Company's Form 8
Amendment to the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1987, file no. 0-13084.
(d) - Certificate of Designation of the Company with respect to the
Preferred Stock as filed with the Secretary of State of Delaware
on October 12, 1993. Incorporated by reference to the Company's
Report on Form 10-K for the fiscal year ended March 31, 1994,
file no. 0-13084.
(e) - By-laws of the Company, as amended. Incorporated by reference to
the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 10, 1988, file no. 0-13084.
10(a)- Form of Sales Distributor Agreement. Incorporated by
reference to the Company's Annual Report on Form 10-K for
the fiscal year ended March 31, 1985, file no. 0-13084.
(b) - Form of Service Center Agreement. Incorporated by reference to
the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1985, file no. 0-13084.
2
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(c) - Form of Dealer Agreement. Incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1985, file no. 0-13084.
(d) - Form of Sales Agent Agreement. Incorporated by reference to the
Company's Registration Statement on Form S-1, filed on September
5, 1986, Registration No. 3-8517.
(e) - 1988 Employee Incentive Stock Option Plan of the Company.
Incorporated by reference to the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 1990, file no. 0-13084.
(f) - Employment Agreement dated April 1, 1996, between the Company and
Michael J. Salpeter. Incorporated by reference to the Company's
Annual Report on Form 10-K for the fiscal year ended March 31,
1996, file no. 0-13084.
(g) - Insurance policy between the Company and Houston General
Insurance Company pertaining to service contracts issued by
Inacom Corporation. Incorporated by reference to the Company's
Report on Form 10-K for the fiscal year ended March 31, 1992,
file no. 0-13084.
(h) - Insurance policy between the Company and Houston General
Insurance Company pertaining to service contracts issued by
Damark Inc. Incorporated by reference to the Company's Report on
Form 10-K for the fiscal year ended March 31, 1992, file no.
0-13084.
(i) - Insurance policy between the Company and Houston General
Insurance Company pertaining to service contracts written in all
states except Florida. Incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1996, file no. 0-13084.
(j) - Insurance policy between the Company and Houston General
Insurance Company pertaining to service contracts issued by
CompUSA. Incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1996,
file no. 0-13084.
(k) - Insurance policy between the Company and Houston General
Insurance company pertaining to service contracts written by WCPS
of Florida, Inc. (excluding Inacom Corporation). Incorporated by
reference to the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1996, file no. 0-13084.
3
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(l) - Insurance policy between the Company and Houston General
Insurance company pertaining to service contracts written by WCPS
of Florida, Inc. through CompUSA. Incorporated by reference to
the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1996, file no. 0-13084.
(m) - Settlement and Runoff Agreement between the Company, its wholly
owned subsidiaries Warrantech Dealer Based Services, Inc. and
Warrantech Consumer Product Services, Inc. and American Hardware
Mutual Insurance Company ("AHM") regarding termination of
insurance coverage by AHM. (This document has been omitted and
accorded confidential treatment by the Securities and Exchange
Commission pursuant to an Order Granting Application Pursuant to
Rule 24b-2 Under the Securities Exchange Act of 1934, As Amended,
Respecting Confidential Treatment of Exhibits 10(v) and 10(w)
Contained in Registrant's Form 10-K for the fiscal year ended
March 31, 1992, issued by the Division of Corporation Finance.)
(n) - Revolving Loan Agreement between the Company and Peoples Bank.
Incorporated by reference to the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 1996, file no. 0-13084.
(o) - Administrator Agreement - Consumer Products, between Houston
General Insurance Company and Warrantech Consumer Product
Services, Inc. (Certain portions of the document have been
redacted and have been filed separately with the Securities
and Exchange Commission pursuant to a Confidential Treatment
Request.)
(p) - General Agency Agreement between American International Group,
Inc. and Warrantech Automotive, Inc. (Certain portions of
the document have been redacted and have been filed
separately with the Securities and Exchange Commission
pursuant to a Confidential Treatment Request.)
(q) - Master Agreement between American International Group, Inc.
and the Company. (Certain portions of the document have been
redacted and have been filed separately with the Securities
and Exchange Commission pursuant to a Confidential Treatment
Request.)
11 - Statements re: computation of per share earnings. Incorporated
by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1996, file no. 0-13084.
4
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21 - Subsidiaries of the Company. Incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1996, file no. 0-13084.
27 - Financial Data Schedule. Incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1996, file no. 0-13084.
28 - Stipulation and Consent Order of Illinois. Incorporated by
reference to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended December 31, 1988, file no. 0-13084.
99(a)- Complaint in Action entitled David Robertson v. Warrantech
Corporation and Warrantech Automotive. Incorporated by
reference to the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended December 31, 1993, file no.
0-13084.
(b) - Amended Complaint in Action entitled The Oak Agency, Inc. and The
Oak Financial Services, Inc. vs. Warrantech Dealer Based
Services, Inc., Case No. 91 C 6677, filed in the United States
District Court for the Northern District of Illinois.
Incorporated by reference to the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 1996, file no. 0-13084.
(c) - Compliant in Action entitled The Oak Agency, Inc., et al v.
Warrantech, Inc., et al., Case No. 96 C 1106, filed in the United
States District Court for the Northern District of Illinois.
Incorporated by reference to the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 1996, file no. 0-13084.
5
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
WARRANTECH CORPORATION
Dated: May 20, 1997 By: /s/ Bernard J. White
--------------------------
Bernard J. White
Vice President, Finance & Treasurer/
Chief Financial Officer
<PAGE>
EXHIBIT LIST
3(a) - Certificate of Incorporation filed June 22, 1983. Incorporated
by reference to the Company's Registration Statement on Form
S-18, filed on November 23, 1983, Registration No. 2-88097-NY.
(b) - Certificate of Amendment of Certificate of Incorporation filed
October 24, 1983. Incorporated by reference to the Company's
Registration Statement on Form S-18, filed on November 23, 1983,
Registration No. 2-88097-NY.
(c) - Certificate of Amendment of Certificate of Incorporation dated
June 29, 1987. Incorporated by reference to the Company's Form 8
Amendment to the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1987, file no. 0-13084.
(d) - Certificate of Designation of the Company with respect to the
Preferred Stock as filed with the Secretary of State of Delaware
on October 12, 1993. Incorporated by reference to the Company's
Report on Form 10-K for the fiscal year ended March 31, 1994,
file no. 0-13084.
(e) - By-laws of the Company, as amended. Incorporated by reference to
the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 10, 1988, file no. 0-13084.
10(a)- Form of Sales Distributor Agreement. Incorporated by reference
to the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1985, file no. 0-13084.
(b) - Form of Service Center Agreement. Incorporated by reference to
the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1985, file no. 0-13084.
(c) - Form of Dealer Agreement. Incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1985, file no. 0-13084.
(d) - Form of Sales Agent Agreement. Incorporated by reference to the
Company's Registration Statement on Form S-1, filed on September
5, 1986, Registration No. 3-8517.
7
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(e) - 1988 Employee Incentive Stock Option Plan of the Company.
Incorporated by reference to the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 1990, file no. 0-13084.
(f) - Employment Agreement dated April 1, 1996, between the Company and
Michael J. Salpeter. Incorporated by reference to the Company's
Annual Report on Form 10-K for the fiscal year ended March 31,
1996, file no. 0-13084.
(g) - Insurance policy between the Company and Houston General
Insurance Company pertaining to service contracts issued by
Inacom Corporation. Incorporated by reference to the Company's
Report on Form 10-K for the fiscal year ended March 31, 1992,
file no. 0-13084.
(h) - Insurance policy between the Company and Houston General
Insurance Company pertaining to service contracts issued by
Damark Inc. Incorporated by reference to the Company's Report on
Form 10-K for the fiscal year ended March 31, 1992, file no.
0-13084.
(i) - Insurance policy between the Company and Houston General
Insurance Company pertaining to service contracts written in all
states except Florida. Incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1996, file no. 0-13084.
(j) - Insurance policy between the Company and Houston General
Insurance Company pertaining to service contracts issued by
CompUSA. Incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1996,
file no. 0-13084.
(k) - Insurance policy between the Company and Houston General
Insurance company pertaining to service contracts written by WCPS
of Florida, Inc. (excluding Inacom Corporation). Incorporated by
reference to the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1996, file no. 0-13084.
(l) - Insurance policy between the Company and Houston General
Insurance company pertaining to service contracts written by WCPS
of Florida, Inc. through CompUSA. Incorporated by reference to
the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1996, file no. 0-13084.
(m) - Settlement and Runoff Agreement between the Company, its wholly
owned subsidiaries Warrantech Dealer Based Services, Inc. and
Warrantech Consumer Product Services, Inc. and American Hardware
Mutual Insurance Company ("AHM") regarding termination of
insurance coverage by AHM. (This document has been omitted and
accorded confidential treatment by the Securities and Exchange
Commission pursuant to an Order Granting Application Pursuant to
Rule 24b-2 Under the Securities Exchange Act of 1934, As Amended,
Respecting Confidential Treatment of Exhibits 10(v) and 10(w)
Contained in Registrant's Form 10-K for the fiscal year ended
March 31, 1992, issued by the Division of Corporation Finance.)
8
<PAGE>
(n) - Revolving Loan Agreement between the Company and Peoples Bank.
Incorporated by reference to the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 1996, file no. 0-13084.
(o) - Administrator Agreement - Consumer Products, between Houston
General Insurance Company and Warrantech Consumer Product
Services, Inc. (Certain portions of the document have been
redacted and have been filed separately with the Securities
and Exchange Commission pursuant to a Confidential Treatment
Request.)
(p) - General Agency Agreement between American International Group,
Inc. and Warrantech Automotive, Inc. (Certain portions of
the document have been redacted and have been filed
separately with the Securities and Exchange Commission
pursuant to a Confidential Treatment Request.)
(q) - Master Agreement between American International Group, Inc.
and the Company. (Certain portions of the document have been
redacted and have been filed separately with the Securities
and Exchange Commission pursuant to a Confidential Treatment
Request.)
11 - Statements re: computation of per share earnings. Incorporated
by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1996, file no. 0-13084.
21 - Subsidiaries of the Company. Incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1996, file no. 0-13084.
27 - Financial Data Schedule. Incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1996, file no. 0-13084.
9
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28 - Stipulation and Consent Order of Illinois. Incorporated by
reference to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended December 31, 1988, file no. 0-13084.
99(a)- Complaint in Action entitled David Robertson v. Warrantech
Corporation and Warrantech Automotive. Incorporated by
reference to the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended December 31, 1993, file no.
0-13084.
(b) - Amended Complaint in Action entitled The Oak Agency, Inc. and The
Oak Financial Services, Inc. vs. Warrantech Dealer Based
Services, Inc., Case No. 91 C 6677, filed in the United States
District Court for the Northern District of Illinois.
Incorporated by reference to the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 1996, file no. 0-13084.
(c) - Compliant in Action entitled The Oak Agency, Inc., et al v.
Warrantech, Inc., et al., Case No. 96 C 1106, filed in the United
States District Court for the Northern District of Illinois.
Incorporated by reference to the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 1996, file no. 0-13084.
10
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EXHIBIT 10(o)
ADMINISTRATOR AGREEMENT - CONSUMER PRODUCTS
THIS ADMINISTRATOR AGREEMENT - CONSUMER PRODUCTS (The "Agreement") is made and
entered into this 1st day of November 1995 by and between WARRANTECH CONSUMER
PRODUCTS SERVICES, INC., 300 Atlantic Street, Stamford, Connecticut 06901
("Warrantech"), and HOUSTON GENERAL INSURANCE COMPANY, 4055 International Plaza,
Fort Worth, Texas 76113 ("Houston General").
WHEREAS, Warrantech engages in the business of marketing and administering
service and extended service contract Programs which are offered through
retailers and manufacturers to purchasers of certain consumer goods; and
WHEREAS, Houston General engages in the business of providing various types of
insurance; and
WHEREAS, Houston General has issued a policy of insurance to Warrantech
including all other insureds per policy definitions (collectively, called
Insureds) for the purpose of insuring contractual liability arising out of the
cost of performing the repairs and services required under the Service Plan
Certificates to be issued pursuant to the terms of this Agreement; and
WHEREAS, Houston General desires to retain Warrantech to administer, and
Warrantech desires to market and administer, such Programs, all subject to the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties agree as follows:
1. DEFINITIONS
(a) "Service Plan Certificate" or "Certificate" shall mean Service Plan
Certificate, or Service Plan Extension Certificate issued by an
Insured: (i) while as Service Plan Certificate Contractual Insurance
Policy issued by Houston General is in force; (ii) on a form approved
in writing by Houston General; (iii) for which the net premium has
been paid to Houston General or its authorized insurance agent/broker;
and (iv) as described in the business description shown on the
declarations page of the Policy in effect with respect to the Program
pursuant to which such certificate has been issued.
(b) "Service Plan Certificate Holder" shall mean any person or other legal
entity who acquires the rights to a valid Service Plan Certificate as
defined herein.
(c) "Claim" shall mean a claim made by a Service Plan Certificate Holder
in accordance with the terms of a valid Service Plan Certificate.
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Page 2 of 12
(d) "Program" shall mean any of the various programs under which
Warrantech markets and administers Service Plan Certificates and which
have been approved by Houston General pursuant to the terms herein.
(e) "Premium" shall mean all monies payable to Houston General for the
procurement and collection of insurance relating to repairs under
Certificates covered by the Service Plan Certificate Contractual
Insurance Policies issued by Houston General. Premium shall be net of
and shall not include fees collected by Warrantech from Dealers under
the Programs relating to Warrantech's administrative expenses or to
Dealer commissions, if any.
(f) "Net Premium" shall mean the aggregate amount of the Premium collected
by Warrantech from other insureds during any calendar month, less
Return Premium.
(g) "Return Premium" shall mean the aggregate amount of unearned premium
attributable to the cancellation of Certificates for which Houston
General has previously received payment of Net Premium.
(h) "Dealers" shall mean retailers and manufacturers who sell and issue
Certificates to consumers, and who are insured under the Contractual
Liability Policies in force.
2. POLICIES
This Agreement is entered into in conjunction with certain policies of
insurance issued by Houston General as in effect from time to time
(collectively any "Policy") and shall be effective only so long as a Policy
is in effect, except as set out below in Paragraph 12(h). To the extent
that the terms of this Agreement conflict in any way with any of the terms
and conditions of any Policy, the terms and conditions of said Policy shall
prevail. Further, any and all obligations of Houston General contained
herein are limited by the terms and conditions of such Policy.
3. ADMINISTRATION
Houston General and Warrantech hereby agree that Warrantech shall serve as
Houston General's administrator for the Programs of Service Plan
Certificates for consumer products (collectively, the "Certificates") to be
offered pursuant to this Agreement. During the term hereof, Houston
General shall not enter into an agreement with another administrator
without the prior knowledge of Warrantech. The decision to pursue an
arrangement with another administrator, however, shall be left to the sole
discretion of Houston General.
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Page 3 of 12
4. TERM
The term of this Agreement shall be for five (5) years from the effective
date set forth in Paragraph 12(a) below, unless terminated earlier pursuant
to the additional provisions herein.
5. PAYMENTS
(a) Liability for Payment of Premiums. Warrantech shall pay Houston
General, in accordance with Paragraph 5(c) below, all Net Premiums
payable as a result of the issuance of Certificates. In the event
Houston General is held liable for a Claim relating to a Certificate
for which no Net Premium has been paid to Houston General, Warrantech
shall promptly reimburse Houston General for the amount of such Claim.
(b) Claims Reserves. Houston General shall establish, at its sole
discretion, actuarially sound reserves to meet its obligations for
future losses on Claims submitted to it under the Certificates,
including those claims incurred but not reported.
(c) Accounting and Payment. During the terms of this Agreement and for so
long as any Certificates are outstanding: (i) Warrantech should report
to Houston General, (or its designated representative) on or about the
25th day after the end of each month the total Certificates sold and
canceled that are reported to and paid to Warrantech, along with the
respective premiums; (ii) Warrantech should report to Houston General,
on or about the 25th day after the end of each month the total
Certificates sold and canceled, the Net Premium for which Warrantech
has received during the month; and (iii) Warrantech assumes the
obligation for any extensions of credit by Warrantech and the overall
credit risks of its Dealers and will be fully responsible for the full
amount of premium due Houston General on Certificates sold, whether or
not Warrantech has collected the premium due from the Dealer.
Warrantech will accept business only from Dealers who have agreed in
advance, in writing, to submit payment for the dealer cost of
certificates sold by them during a monthly period to Warrantech not
later than ninety (90) days after the reporting to Warrantech of the
Certificates sold by them. In the event that this Agreement is
terminated then Warrantech, not later than ninety (90) days after the
last reporting of Certificates by Warrantech to Houston General, shall
remit to Houston General the Net Premiums which have been previously
reported to Houston General but not previously paid for by Warrantech.
In any event Warrantech will be responsible for and immediately pay
any premiums which have been reported but not remitted within the
applicable ninety (90) day period.
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Page 4 of 12
6. PROGRAM ADMINISTRATION
(a) Authorization of Programs. Only those Certificates and Programs to
which Houston General has given prior written authorization shall be
marketed and administered by Warrantech under this Agreement.
Warrantech shall propose such programs to Houston general and shall
provide Houston General with all pertinent information (including, but
not limited to the products to be warranted) requested by Houston
General or otherwise reasonably necessary for Houston General to
analyze such Programs and Houston General shall indicate its approval
or disapproval (in its sole discretion) of such proposed Programs in
writing within thirty (30) days of its receipt of all such
information, required by Houston General. The failure of Houston
General to act within such period shall be deemed a rejection of the
proposed Program. Programs accepted by Houston General shall become
effective upon the receipt by Warrantech of Houston General's written
approval of such Program. Any change in authorized Programs must have
the prior written consent of Houston General. Houston General shall
have right of first refusal or all consumer product Programs
administered by Warrantech in the United States that are within the
parameters of the Programs currently being written.
(b) Establishment of Premium Rates. Houston General shall establish in
writing the Premium rates for each Program pursuant to the terms of
the then effective Policies. Warrantech shall provide Houston General
with all information requested by Houston General or otherwise
reasonably necessary to establish such Premium rates. Any change in
Premium rates must be made in writing by Houston General.
(c) Review of Certificates. Warrantech shall review all Certificates
submitted by Dealers to insure their compliance with all underwriting,
pricing, eligibility, and other requirements for each Program.
(d) Compliance with Law. Warrantech shall maintain operating standards
and procedures to assure that the Programs, the Certificates issued in
connection with the Programs, and the operations of Warrantech
conducted in connection with the marketing and administration of the
Programs and Certificates are all in compliance with all applicable
state and federal laws and regulations. Warrantech will procure and
maintain certificates of authority and all other licenses, permits and
authorizations legally required for it to market and administer
extended service contract Programs, and otherwise comply with all
applicable laws, in those states where the parties have agreed that
Programs will be offered under this Agreement.
<PAGE>
Page 5 of 12
(e) Data Collection. Warrantech shall maintain adequate systems for the
collection and review of data relating to the operation of each
Program and shall make such data available to Houston General as
reasonably requested. This information shall include, but not be
limited to, results by Certificate type and within Certificate type by
plan code, manufacturer and model of covered products, production and
loss statistics by Dealer, and such other information as may be
reasonably requested by Houston General from time to time.
(f) Promotional Materials; Advertising. Warrantech shall be responsible
for and pay the costs of printing all promotional and administrative
materials pertaining to the Programs. Warrantech shall submit all
such materials for review and approval by Houston General prior to
use, if Houston General is referenced in such material. Houston
General's approval of such materials shall not be unreasonably
withheld. No party to this Agreement shall publish any advertisement
which contains a reference to the other party without prior written
approval of the form of such Advertisement by the other party. It is
understood however, that such materials may be required to conform
with certain regulatory guidelines which neither party can predict at
this time.
7. CLAIMS ADMINISTRATION
Warrantech shall adjust and pay, within the scope of its authority as
expressly set forth in Exhibit A, all valid Claims arising under the
Certificates and shall make available to Houston General all records
pertaining to the adjustment and payments of such Claims, including without
limitation the "Claim Record".
8. EXAMINATION OF BOOKS AND RECORDS
Warrantech shall permit Houston General, its auditors and agents, and any
authorized representative of any governmental or regulatory authority
having jurisdiction to examine the books and records of Warrantech
pertaining to this Agreement. Any such examination/audit shall require
five (5) business day's advance notice.
9. DUTIES OF HOUSTON GENERAL
(a) Regulatory Assistance. Houston General shall use reasonable efforts
to make available to Warrantech any and all documents in Houston
General's possession and information known to it which may be
necessary or helpful to Warrantech in connection with any regulatory
filing or form of compliance required of Warrantech to effect the
marketing and administration of the Programs.
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Page 6 of 12
(b) Certificates of Insurance. For those Policies issued by Houston
General, Houston General will provide certificates of insurance when
necessary or when required by a regulatory authority. Nothing in this
paragraph shall limit Houston General's right to not issue, to non-
renew, or to cancel any policy of insurance.
(c) Licenses and Authorizations. Houston General will procure and
maintain certificates of authority and all other licenses, permits and
other authorizations legally required for it to issue Policies, and
will otherwise comply with all applicable laws in those states where
the parties have agreed that Programs will be offered under this
Agreement.
(d) Changes. Houston General will not notify Warrantech, in writing,
within ten (10) days if there is a change in (a) ownership of ten
percent (10%) or more of the stock of Houston General, its parent or
subsidiaries and/or (b) any officer ranked Senior Vice President or
above.
10. CONFIDENTIALITY
(a) Obligations of Houston General. It is recognized that during the
terms of this Agreement, Houston General may receive confidential and
proprietary information of Warrantech. Houston General agrees that it
will use reasonable efforts to keep all "Confidential Information" (as
defined below) of Warrantech confidential; provided, however, that:
(1) any such Confidential Information may be disclosed to such
directors, officers, employees, advisors and authorized
representatives (collectively, "Representatives") of Houston General
as need to know such information for the purpose of Houston General's
performance or administration of this Agreement or any Certificate,
Program or Policy, (it being understood that such Representatives
shall be informed of the confidential nature of such information and
shall agree to treat such information confidentially); (ii) any such
Confidential Information may be disclosed to the extent Warrantech
consents in writing; and (iii) such Confidential Information may be
disclosed by Houston General or any of its Representatives to the
extent that Houston General or such Representatives is legally
compelled to do so, provided that, prior to making such disclosure,
Houston General or such Representative, as the case may be, advises
and consults with Warrantech regarding such disclosure and provided
further that Houston General or such Representative, as the case may
be, discloses only that portion of such Confidential Information as is
legally required.
(b) Obligations of Warrantech. It is recognized that during the term of
this Agreement, Warrantech may receive confidential and proprietary
information of Houston General. Warrantech agrees that it will use
reasonable efforts to keep all Confidential Information of Houston
General confidential; provided,
<PAGE>
Page 7 of 12
however, that: (i) any such Confidential Information may be disclosed
to such Representatives of Warrantech as need to know such information
for the purpose of Warrantech's performance or administration of this
Agreement or any Certificate, Program or Policy, (it being understood
that such Representatives shall be informed of the confidential nature
of such information and shall agree to treat such information
confidentially); (ii) any such Confidential Information may be
disclosed to the extent Houston General consents in writing; and (iii)
such Confidential Information may be disclosed by Warrantech or any of
its Representatives to the extent warranted, or to the extent any of
its Representatives are legally compelled to do so. Prior to making
such disclosure, however, Warrantech or such Representative will
advise and consult with Houston General regarding such disclosure.
Warrantech or such Representative will disclose only that portion of
such Confidential Information as is legally required.
(c) Confidential Information. As used herein, the term "Confidential
Information" of any party shall mean all information obtained from
such party other than information that: (i) is or becomes generally
available to the public other than as a result of any breach of this
agreement; (ii) was previously known to the other party or
independently derived or developed by such other party; (iii) is
disclosed to the other party on a nonconfidential basis by a third
party who has the right to disclose such information; or (iv) is
statistical data relating to program underwriting results, such as
premium rate amounts and earnings and losses; if required by any
regulatory authority.
11. RELATIONSHIP OF HOUSTON GENERAL AND WARRANTECH
(a) Nature of Relationship. Nothing contained herein shall be construed
to create the relationship of employer/employee, partners, joint
venture or association between the parties.
(b) Indemnification of Houston General. Warrantech agrees to indemnify,
defend and hold Houston General, its affiliates, directors, officers,
agents, representatives, and employees harmless from and against any
and all claims, suits, actions, liability, loss expense or damage,
(including compensatory and punitive and exemplary damages and
attorneys' fees), which Houston General, its affiliates, directors,
officers, agents or employees may sustain, due to or arising out of:
(i) any wrongful or negligent act, error or omission by Warrantech,
its affiliates, directors, officers, agents, representatives, or
employees) failure to comply with any law or regulation regardless of
whether such failure was intentional or unintentional, or resulted
from mistake, negligence or lack of knowledge; or (iii) any inaccuracy
in or any breach of any representative, warranty, covenant or
agreement of Warrantech contained
<PAGE>
Page 8 of 12
in this Agreement or in any agreement, instrument, document, or
certificate delivered in connection herewith. Warrantech shall
furnish prompt notice to Houston General of any notice of alleged
violation from any regulatory authority and shall promptly take steps
to correct any existing violation.
(c) Indemnification of Warrantech. Houston General agrees to indemnify,
defend and hold Warrantech, its affiliates, directors, officers,
agents and employees, harmless from and against any and all claims,
suits, actions, liability, loss, expense or damage (including
compensatory and punitive or exemplary damages and attorneys' fees),
which Warrantech, its affiliates, directors, officers, agents or
employees may sustain, due to or arising out of: (i) any wrongful or
negligent act, error or omission by Houston General, its affiliates,
directors, officers, agents, representatives, or employees; (ii)
Houston General's (or its affiliates, directors, officers, agents or
employees) failure to comply with any law or regulation, regardless of
whether such failure was intentional or unintentional, or results from
mistakes, negligence or lack of Houston General's knowledge; or (iii)
any inaccuracy in or any breach of any representation, warranty,
covenant or agreement of Houston General contained in this Agreement
or in any agreement, instrument, document or certificate delivered in
connection herewith. Houston General shall furnish prompt notice to
Warrantech of any notice of alleged violation from regulatory
authority and to promptly take steps to correct any existing
violation.
(d) Notice. Any party claiming that it is entitled to indemnification
hereunder shall notify the other party within thirty (30) days of the
assertion of any claim or the discovery of any fact upon which such
claiming party intends to base its claim for indemnification
hereunder. Such claiming party's failure to so notify the other party
shall not, however, relieve the other party from any liability under
this Agreement with respect to such claim, except to the extent such
other party is actually prejudiced thereby. The party claiming
indemnification shall have the right to participate jointly with the
indemnifying party in the defense of any claim, demand, suit or other
proceeding in connection with which such claim for indemnification is
made, and no such claim, demand, suit or other proceeding may be
settled or otherwise compromised without the consent of both such
parties.
(e) For purposes of this Section, Warrantech and Houston General shall not
be considered affiliates or agents for each other.
12. TERMINATION
(a) Effective Date. This Agreement shall take effect as of 12:01 a.m.
Standard Time on November 1, 1995, at the location of Houston
General's office in Fort Worth, Texas, and shall be and remain in full
force and effect unless and until written notice of non-renewal,
cancellation, or termination is given by either party, as provided
below.
<PAGE>
Page 9 of 12
(b) Automatic Renewal. At the conclusion of the initial term hereof, this
Agreement shall renew automatically for an additional one (1) year
term unless either party shall have provided to the other with written
notice of non-renewal. Such written notice shall be given not less
than ninety (90) days nor more than one hundred twenty days (120) days
before the date five (5) years from the Effective Date.
(c) Policies. Any cancellation or non-renewal of the Policies, pursuant
to the terms therein, shall automatically terminate this Agreement.
Any notice of such cancellation or non-renewal of the Policies shall
constitute sufficient notice of termination of this Agreement under
this Section.
(d) Nonpayment of Premium. This Agreement may be terminated by Houston
General upon ten (10) days advance notice for nonpayment of any of the
Net Premium by Warrantech; provided, however, that if the failure to
pay such Premium when due resulted from clerical or an inadvertent
error by Warrantech, then the cancellation otherwise effected shall be
rescinded provided that any delinquent Net Premium is paid by
Warrantech within ten (10) days of Warrantech's receipt of notice of
termination under this paragraph.
(e) Events of Termination by Either Party. Either party may terminate
this Agreement upon sixty (60) days written notice to the other upon
the occurrence of any of the following events (if such events have not
been cured within the sixty (60) day period following such notice):
(i) the other party shall fail to perform any of its obligations and
agreements under, or shall fail to comply with any of the provisions
of, this Agreement or any other agreement between such parties; (ii)
if any warranty or representation of the other party contained herein
or in any financial data, document or agreement delivered in
connection herewith shall prove to be false or misleading in any
material respect; or (iii) if the other party suspends transaction of
its business; or if the other party shall not pay its debts as they
mature or shall make a general assignment for the benefit of its
creditors; or proceedings in bankruptcy, or for reorganization or
liquidation of the other party federal bankruptcy law or under any
sate or federal law for the relief of creditors shall be commenced by
or against the other party; or receiver, trustee or custodian shall be
appointed for the other party or for a substantial portion of its
properties or assets.
(f) Events of Termination at Election of Houston General. Houston General
may terminate this Agreement upon thirty (30) days written notice to
Warrantech upon the occurrence of any of the following events (if such
events have not been cured by Warrantech within the thirty (30) day
period following such notice): (i) if Warrantech fails throughout the
term of this Agreement to
<PAGE>
Page 10 of 12
disclose to Houston General those facts known to Warrantech that might
materially or adversely effect Houston General's judgment in
evaluating the acceptability of the Policy(ies) written under this
Agreement or the continuation or renewal of such Agreement; or (ii) if
Warrantech fails to notify Houston General, in writing, within ten
(10) days if there is a change in (a) ownership of ten percent (10%)
or more of the outstanding stock of Warrantech, its parent or consumer
product subsidiaries and/or (b) any officer ranked Senior Vice
President or above.
(g) Obligations upon Termination. Upon any termination or cancellation of
this Agreement in accordance with this Section, Warrantech and Houston
General agree to continue to perform all functions and obligations
required by this Agreement as if this Agreement were in full force in
effect with respect to all Certificates with an effective date prior
to the termination of this Agreement and during the effective date of
the Policies in effect with respect to their Programs pursuant to
which such Certificates were issued. Such obligations shall include
the payment of amounts due to any party in connection with the
purchase or cancellation of such Certificates. The obligations of the
parties under this paragraph shall continue until such Certificates
have expired or been cancelled and all Claims thereunder have been
paid or until a mutually acceptable arrangement for the fulfillment of
such obligations is evidenced by a written agreement of the parties.
Upon any termination of this Agreement, Warrantech shall provide to
Houston General within ninety (90) days of such termination, a
complete list of all Certificates which Warrantech asserts are covered
by this paragraph.
(h) Survival. The provisions of Sections 10, 11, and 13 of this Agreement
shall survive and remain in effect following any termination,
cancellation, non-renewal or expiration of this Agreement.
13. ARBITRATION
(a) Initiation of Proceedings. The parties shall submit to binding
arbitration by a board of three arbitrators any dispute, question or
controversy arising under this Agreement or arising out of or relating
to the transactions contemplated by the Agreement. Any such
arbitration shall be conducted at Forth Worth, Texas. Either party
may initiate the arbitration, by notice in writing to the other party,
setting forth the nature of the dispute, the amount involved, if any,
and the remedy sought. Any party desiring to initiate arbitration
shall serve a written notice of intention to arbitrate to the other
party and to the American Arbitration Association office in or closest
to Forth Worth, Texas within one hundred eighty (180) days after a
dispute has risen. A dispute is deemed to have arisen upon receipt of
written demand via Certified Mail, Return Receipt Requested. Failure
to serve a notice of intention to arbitrate
<PAGE>
Page 11 of 12
within the time specified above shall be deemed a waiver of the
notifying party's right to compel arbitration of such claim. Such
written notice of intention to arbitrate may be informal and need not
comply with Rule 6 of the American Arbitration Association. The issue
of waiver pursuant to this paragraph is an arbitrable issue.
(b) Arbitrators; Discovery; Rules. The board of three arbitrators shall
be appointed promptly upon written application of the initiating
party, and shall be selected in accordance with the Commercial
Arbitration Rules of the American Arbitration Association in effect at
the dispute arises. All of the arbitrators shall be members of the
American Arbitration Association. Depositions may be taken and other
discovery obtained in any arbitration under this Agreement. The board
of arbitrators appointed hereunder shall conduct the arbitration
pursuant to the Commercial Arbitration Rules of the American
Arbitration Association then in effect.
(c) Award Binding. The award of the arbitrators shall be final and
binding upon the parties and the judgment thereon may be entered in
any court having jurisdiction.
(d) Statutes of Limitations. All statues of limitations which would
otherwise be applicable shall apply to any arbitration proceeding
hereunder. The statute of limitations shall toll upon receipt of the
written demand required under Paragraph 13(a) above.
(e) Survival of Provisions. The provisions of this section shall survive
any termination, amendment, or expiration of this Agreement, unless
all the parties otherwise expressly agree in writing.
(f) Attorney's Fees. The arbitrators, or a majority of them, shall award
attorney's fees and costs to the prevailing party.
(g) Venue. Venue of any arbitration proceeding hereunder will be in
Tarrant County, Texas.
(h) Expenses. Subject to paragraph (f) above, each party shall bear its
own expenses in connection with preparation for the presentation of
its case at the arbitration proceedings. The fees and expenses of the
arbitrators and all other expenses of the arbitration (except those
referred to in the preceding sentence) shall be borne equally by the
parties to such arbitration.
<PAGE>
Page 12 of 12
14. GENERAL PROVISIONS
(a) Governing Law. This Agreement shall be interpreted in accordance with
the laws of the State of Texas.
(b) Notices. All notices to either party of this Agreement shall be in
writing and sent to the other party by Certified Mail, Return Receipt
Requested, and addressed to such party at the address set forth above.
Any such notice shall be deemed effective upon actual receipt. Each
party shall give the other party prompt written notice of any change
in address.
(c) No Waiver. Except as set out in Paragraph 13(a) above, if either
Warrantech or Houston General fails to insist on strict Compliance
with this Agreement or fails to exercise any rights under this
Agreement, such failure will not be a waiver of any right or provision
of this Agreement. Nor will such failure prevent either Warrantech or
Houston General from insisting on strict compliance with this
Agreement or exercising such right in the future.
(d) Entire Understanding. This Agreement contains the entire
understanding among the parties with respect to the transactions
contemplated hereby and supersedes all prior agreements and
understandings among the parties, if any.
(e) Assignment. This Agreement is binding on and shall inure to the
benefit of the parties hereto and their respective successors and
assigns; provided, however, that no party hereto may, without the
written consent of the others, assign any rights, powers, duties or
obligations hereunder.
(f) Amendment. This Agreement may not be modified, amended or altered
except by an agreement in writing executed by all parties hereto.
(g) Headings. Section headings are for convenience of reference only and
do not affect the interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the date first written above.
HOUSTON GENERAL INSURANCE WARRANTECH CONSUMER
COMPANY PRODUCT SERVICES, INC.
By: /s/ Berkley E. Hammond, Jr. By: /s/ Bernard J. White
---------------------------- ---------------------
Its: Vice President Its: V.P. Finance/ CFO
------------------------ ---------------------
<PAGE>
EXHIBIT A
Claims Administration
This Exhibit A forms a part of that certain Administrator Agreement - Consumer
Products between Houston General and Warrantech made effective November 1, 1995,
and is governed by the terms and conditions therein.
A. PROVISIONS OF CLAIMS SERVICES.
1. Warrantech will provide those claim services as are set forth in
paragraph 2. below (the "Basic Services"), with respect to any Claims
made under or Certificates covered by the Policies to which this
Agreement applies and which Claims: (i) involve an actual or alleged
loss occurring under such Certificate; and (ii) are reported to
Warrantech while a Certificate is in effect with respect to the
Program pursuant to which such Policy was issued.
2. The Basic Services to be rendered by Warrantech with respect to any
Claims shall be the following:
a. To establish a file with respect to each Claim in accordance with
the instructions set fort in Client Instructions below.
b. To investigate all Claims
c. To document each Claim file with a written chronology of all
actions taken with respect to the underlying Claim, including but
not limited to disbursements.
d. To furnish all claim forms necessary for proper Claims
administration.
e. To adjust, compromise, settle, or resist all Claims within the
discretionary settlement Authority Limit of Warrantech as set
forth below.
f. To adjust, settle or resist Claims in excess of the Authority
Limit only with the express prior approval of Houston General.
g. To retain and then destroy files for each Claim in accordance
with the Claim File Retention Policy set forth in the Client
Instructions below.
h. To provide Houston General, (or its designated representative) on
or about the twenty-fifth (25th) day of each month with monthly
claims file in a format and with data elements prescribed by
Houston General.
<PAGE>
3. Subject to the other provisions of this Agreement below, Warrantech
will provide the Basic Services with respect to all Claims for long as
and until each Claim shall have been paid or until, in the opinion of
Warrantech and Houston General, Houston General shall have no further
liability therefore.
4. Houston General reserves the right to assume at its own expense the
control and handling of any Claim at any time, and Warrantech agrees
to deliver promptly the Claim file to Houston General with Houston
General may request, as well as funds accrued for the purpose of
paying the claim.
5. In the event any governmental or regulatory agency should contact
Warrantech for any reason with respect to any Claim (except for
ordinary and customary contact not in the nature of a complaint),
Warrantech agrees to notify Houston General promptly in writing in the
nature for such communication and, if the communications is in
writing, Warrantech shall send Houston General a copy thereof.
6. Houston General reserves the right to require Warrantech to obtain its
prior written approval before retaining any attorney for any matter
related to any Claim.
7. Warrantech will maintain a "suit log" consisting of the following
entries each suit received: Name of Service Plan Certificate Holder,
name of Dealer, name of repair facility, Claim number, name of
plaintiff(s), name of plaintiff(s) attorney, name of defendant(s),
court in which suit filed, date of suit filed, date of service on
agent, name of defense attorney, and date of defense counsel enters
appearance.
8. Warrantech will use its best efforts to keep abreast of all
governmental, regulatory and matters of compliance concerning the
investigation, settlement and defense of consumer warranty Claims and
will use its best efforts to ensure that it is in compliance with
these requirements.
B. CLAIMS FUNDS
1. Houston General shall open a checking account (the "Claims Account")
at the bank, or other financial institution for the purpose of issuing
payment of losses for Claims under the Policy. The Claims Account
shall be designated and titled so as to be identified as being for the
exclusive use of paying valid Claims made under Houston General's
Policy.
2. Warrantech shall be responsible for issuing checks on the Claims
Account in payment of valid losses incurred under Houston General's
Policy. Warrantech shall be the custodian of checks to be drawn on
the Claims Account and shall exercise the controls necessary to ensure
the safety and security of these checks. Warrantech shall have on
hand, at all times during the term of this
<PAGE>
Agreement and during any run off after termination, at least a six (6)
months' supply of checks for the Claims Account.
C. PAYMENT OF CLAIMS
1. Warrantech will adjust Claims, and issue checks in payment of Claims
in accordance with the terms and provisions of this Agreement.
2. Warrantech will provide Houston General the check numbers issued and
the amounts of checks issued for time periods specified by Houston
General.
D. REPRESENTATION OF WARRANTECH. Warrantech represents and warrants to
Houston General as follows:
1. It is licensed as required under and shall comply with all applicable
federal, state and local governmental laws, rules, regulations and
orders necessary to the performance of its claims duties under this
Agreement.
<PAGE>
CLIENT INSTRUCTIONS
1. Warrantech will maintain a "Claim Record" to include all pertinent
information, including but not limited to, entries as follows: date
reported, name of Service Plan Certificate Holder, name of Dealer,
date of loss and Claim number.
2. Warrantech will pursue recovery from sale of salvageable items, and
maintain a "Salvage Log" to include entries as follows: date of entry,
Claim number, name of Service Plan Certificate Holder, name of Dealer,
date of loss, amount of loss paid, amount recovered and date closed.
[PARAGRAPH 3 HAS BEEN REDACTED AND FILED SEPARATELY AS PART OF A
CONFIDENTIALITY REQUEST WITH THE COMMISSION.]
4. Warrantech will promptly report all litigation arising from the Policy
bound or written under this Agreement to the Company upon first notice
of suit.
AUTHORITY LIMIT
[THIS PARAGRAPH HAS BEEN REDACTED AND FILED SEPARATELY AS PART OF A
CONFIDENTIALITY REQUEST WITH THE COMMISSION.]
CLAIM FILE RETENTION
Warrantech will store closed files for six (6) years from date of
closure.
HOUSTON GENERAL INSURANCE WARRANTECH CONSUMER
COMPANY PRODUCT SERVICES, INC.
By: /s/ Berkley E. Hammond, Jr. By: /s/ Bernard J. White
---------------------------- ---------------------
Its: Vice President Its: V.P. Finance/ CFO
------------------------ ---------------------
<PAGE>
EXHIBIT 10(p)
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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,
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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).
<PAGE>
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
<PAGE>
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
authority to release blank policy or certificate
supplies to sub-brokers or sub-agents. The General
Agent must keep a policy register an all voided
policies must be returned to the Company every thirty
(30) days.
<PAGE>
18. COMPANY'S The Company shall have the right at any
RIGHT TO time to cancel or non-renew any policies
CANCEL OR or contracts of insurance issued by the
NON-RENEW: General Agent under this Agreement. The Company
reserves the right to withdraw authority at any time
from the General Agent by written notice effective
immediately to solicit, bind, or write any one or more
particular lines or classes of insurance and to decline
to accept any particular risk or class of risk.
19. COMPENSATION: Subject to the provisions hereof, the General Agent's
sole remuneration for all services that the General
Agent may perform for the Company shall be its
commissions at the rates set forth on the attached
Addendum A.
[TWO PARAGRAPHS REDACTED AND FILED SEPARATELY AS PART OF
A CONFIDENTIALITY REQUEST FILED WITH THE COMMISSION.]
20. TERMINATION: Either party hereto shall have the right at any and all
times to terminate this Agreement by written notice
specifying the effective date of termination, which
shall be not less than one hundred twenty (120) days
thereafter, such notice to be by certified mail, return
receipt requested, to the other party at its address
hereinabove set forth. Any such termination shall not
affect the rights and obligations of the parties hereto
as to transactions, acts, or things done by either
party prior to the effective date of termination.
This Agreement shall terminate automatically in the
event that reinsurance purchased by Company, which
Company considers to be an integral part of the
underwriting program, has been restricted or cancelled
by reinsures, in which case, General Agent has thirty
(30) days to replace the reinsurer(s) cancelled,
subject to the approval of the Company of their terms
and conditions.
<PAGE>
In the event General Agent fails to replace the
reinsurer(s) to Company's satisfaction, then this
Agreement is deemed cancelled as of the thirty days
after cancellation by reinsurer(s). At the Company's
option this Agreement may be terminated immediately
upon notice to General Agent in the event of (1)
suspension or revocation of the General Agent's license
by any insurance regulatory authority but this
provision shall apply only to the state(s) or
jurisdiction(s) in which the suspension or revocation
occurs, however Company may investigate to determine
whether the violation occurred within other states and
is so, may suspend General Agent in those other states
which have initiated proceedings to revoke the
applicable license; (2) the commission of a fraudulent
act or illegal conduct by General Agent; (3) the
General Agent becoming insolvent or bankrupt or
committing an act of bankruptcy or making an assignment
for the benefit of creditors; (4) the General Agent's
intentional violation of the Underwriting Guidelines or
rules of the Company in connection with the
underwriting program involved or intentionally violates
any provision of this Agreement; (5) a material or
significant change in the ownership of the General
Agent that may influence a material change in General
Agent's business practices or procedures or that may
materially increase Company's potential liability under
this Agreement, as may be determined in the sole
discretion of Company; (6) the execution of an
agreement of sale, transfer or merger of Agent without
transfer or merger of Agent without prior notice to and
consent of Company. (7) the willful misappropriation by
General Agent of funds or property of Company; (8) The
willful or grossly wanton and willful commission of any
act or omission determined by the Company to be
detrimental to its best interest.
At the option of the Company, this Agreement may be
terminated in the event
<PAGE>
of (1) a negligent misapplication or misdirection by
General Agent of funds or property of the Company; (2)
the General Agent's negligent failure to act in
compliance with the Underwriting Guidelines or rules of
the Company in connection with the underwriting program
involved; (3) the General Agent failing to remit
premiums when due; or (4) the General Agent negligently
commits a violation of or allows non-performance of any
other provision of this Agreement not provided for
above; PROVIDED HOWEVER, that the Company shall permit
the General Agent to rectify such breach, or
non-performance, or violation or any act or violation
of this paragraph within ten (10) business days after
receipt of written notice from Company or, where cure
would take longer, to commence to cure within (5)
business days and continues in good faith to cure
thereafter, to Company's satisfaction. The period for
General Agent to cure is thirty (30) days unless
otherwise agreed to by the Company in writing.
Upon termination of this Agreement, unless otherwise
stipulated by the Company the General Agent shall
account to the Company for all premiums or other
transactions unaccounted for at the time of termination
or arising thereafter with respect to insurance covered
by this Agreement.
If this Agreement is terminated and the General Agent
has paid to Company all monies owing to the Company,
the expirations on business written pursuant to this
Agreement shall remain the property of the General
Agent. If the General Agent is in default on the
payment of monies to the Company under the terms of
this Agreement for any reason, any and all expirations
or other business shall become the property of the
Company upon the termination of this Agreement. The
General Agent shall receive no commissions for premiums
which the General Agent fails to collect and which the
Company collects but the
<PAGE>
General Agent shall receive credit for the premium in
their mutual account.
All termination provisions of this Paragraph are
subject to the law of the jurisdiction applicable to
this termination.
After the effective date of termination of this
Agreement, the General Agent shall neither issue any
new policies nor bind any new insurance on behalf of
the Company, nor extend, renew or increase the
Company's liability on any existing policy or binder,
but at the Company's option and except as aforesaid,
all of the General Agent's powers and authorities and
all of the rights and obligations of the parties
hereto, including the collection of premiums and the
accounting of premiums and commissions and settling of
all balances, shall remain in full force and effect
until all liabilities of the Company under all policies
issued by the General Agent hereunder are finally
discharged. Company retains the right to cancel or
non-renew any policy written by the General Agent for
any reason permitted by law.
If Company terminates this Agreement and all Addenda
under paragraphs 1 & 4 of Section 20 ("Termination")
and by doing so terminates the binding and underwriting
of automobile warranties and/or automobile warranty
insurance for all programs provided by Administrator,
then Company shall allow a one-year grace period for
Administrator to continue to bind and underwrite for
the Company. The grace period will not limit Company's
right to choose a different Administrator for all or
part of the grace period to provide claims
administration, or binding and/or underwriting
automobile warranties and/or automobile warranty
insurance.
<PAGE>
After the end of the one-year grace period, any and all
right, option, power or authority to solicit, bind, or
write automobile warranties and/or automobile warranty
insurance held by Administrator shall cease and shall
be of no further force and effect. Authority to
perform claims administration is covered by Addendum B.
21. INDEMNIFI- The General Agent agrees to indemnify and
CATION: save the Company, its affiliates and subsidiaries and
their officers, directors, and employees harmless from
any damage and against any liability for loss, cost,
expenses, fines, penalties, including punitive or
exemplary damages and all cost of defense: (i)
resulting from any act, error or omission, whether
intentional or unintentional, by the General Agent and
its officers, directors, employees, and its
sub-producers, related to or which arise out of the
business covered by this Agreement, except for those
acts, or omissions requested or authorized in writing
by Company, or (ii) resulting from any obligation, act
or transaction created or performed by the General
Agent in violation of, in excess of, or in
contravention of the power and authority of the General
Agent set forth in this Agreement.
The General Agent will choose defense counsel for all
lawsuits hereunder, subject to approval of the counsel
of the Company and defend itself and the General Agent
will pay all expense. The Company shall decide in its
sole opinion whether claims or suits may be settled.
However, if General Agent agrees to pay a settlement
and if Company refuses to agree, Company shall pay all
further attorneys' fees if the lawsuit settles for a
greater amount than what General Agent agreed to.
The General Agent expressly authorizes the Company
without precluding the Company from exercising any
other remedy it may have, to charge against all
<PAGE>
compensation due or to become due to the General Agent
under this Agreement any monies paid or liabilities
incurred by the Company by reason of any occurrence
described herein. The Company shall provide General
Agent with written notice if the Company intends to
exercise its rights hereunder.
22. ASSIGNMENT: No assignment of this Agreement, or of any commissions
or fees hereunder shall be valid unless authorized in
advance in writing by the Company. Every assignment
shall be subject to any indebtedness and obligation of
the General Agent that may be due or become due at any
time.
23. AMENDMENT: This Agreement cannot be amended by any subsequent
practices or courses of dealing by the parties
inconsistent herewith. No oral agreement or
representation concerning this Agreement or the General
Agent's relationship to the Company shall be binding on
the Company. Any amendment to this Agreement must be
in writing and signed by an officer of the Company and
General Agent. If Company proposes an amendment,
Company must give General Agent fifteen (15) days'
written notice.
24. NOTICE: All notices required or permitted to be given hereunder
shall be in writing and shall be given as follows:
A. If given by the Company:
Mailed by certified mail to the General Agent at
its address: 300 Atlantic Street, Stamford, Ct.
06901, Attention: Chief Executive Officer with
copies to Warrentech Automotive, Inc., 150
WestPark Way, Euless, TX. 76040 Att: General
Counsel, and to Newman, Tannenbaum, Helpern,
Syracuse and Hirschtritt, 900 Third Avenue, New
York, New York 10022 or to such other address as
the General Agent may have previously specified to
the Company in writing; or
<PAGE>
B. If given by the General Agent:
Mailed by certified mail, to the Company's office
as hereinabove specified and copy to American
International Group, Inc., Attn: General Counsel,
70 Pine Street, 27th Floor, New York, NY 10270
25. SERVICE In the event any legal process or
OF notice is served on the General Agent
PROCESS: in a suit or proceeding against the Company, the
General Agent shall forthwith forward such process
or notice to American International Group, Inc. at
70 Pine Street (General Counsel), City of New
York, County of New York, State of New York 10270,
by Registered Mail.
In the event any legal process or notice served on
the Company in a suit or proceeding against the
General Agent, the Company shall forthwith forward
such process or Notice to 300 Atlantic Street,
Stamford, Ct. 06901, Attention: Chief Executive
Officer, with copies to Warrentech Automotive,
Inc., 150 WestPark Way, Euless, Tx. 76040 Att:
General Counsel, and to Newman, Tannenbaum,
Helpern, Syracuse and Hirschtritt, 900 Third
Avenue, New York, New York 10022.
26. WAIVER: No waiver or modification of this Agreement shall
be effective unless it be in writing and signed by
a duly authorized officer of the Company and
General Agent. The failure of the Company to
enforce any provision of this Agreement shall not
constitute a waiver by the Company of any such
provision. The past waiver of a provision by the
Company shall not constitute a course of conduct
or a waiver in the future of that same provision.
27. CHOICE OF The laws of New York shall govern all
LAWS, VENUE, matters concerning the validity,
JURISDICTION: performance, and interpretation of
<PAGE>
this Agreement. The Venue for any action in law
or equity between the parties shall be designated
exclusively as the Supreme Court of the State of
New York, County of New York. The parties consent
to the jurisdiction of the Supreme Court of the
State of New York for any action between the
parties in law or equity.
28. DIVISIBILITY: If any separable provision hereof shall be held to
be invalid, or unenforceable under the laws or
Insurance Department regulations now or hereafter
in effect in the jurisdiction governing this
Agreement, such invalidity or unenforceability
shall not affect any other provisions hereof.
29. REGULATORY The General Agent shall forward
NOTICES: promptly to the Company all correspondence
pertaining to this Agreement received from any
government regulatory agency.
<PAGE>
30. MERGER: This instrument with Addenda attached embraces the
entire Agreement between the parties and
supersedes all previous Agreements entered into
between the parties hereto, and any prior
statements, agreements or representations between
the parties are merged herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement in
duplicate.
INSURANCE COMPANIES SUBSCRIBING
THIS AGREEMENT
______________________________ ______________________________
(Date) (Name)
_____________________________ ______________________________
(Title)
______________________________
(Name)
______________________________
(Title)
NEW HAMPSHIRE INSURANCE
COMPANY
(Name of Company)
_______________________________
(Address)
Subscribed and sworn to before me this _____ day of _______________, 19___.
My commission Expires:
_______________________________
(Notary Public)
_______________________________ ________________________________
(Date) (Name)
________________________________
(Title)
<PAGE>
________________________________
(Name)
________________________________
(Title)
ILLINOIS NATIONAL
INSURANCE COMPANY
--------------------------------
(Name of Company)
________________________________
(Address)
Subscribed and sworn to before me this ___ day of
___________, 19___.
My commission Expires: ________________________________
________________________________
(Notary Public)
_______________________ ________________________________
(Date) (Name)
________________________________
(Title)
AMERICAN HOME ASSURANCE
-----------------------
COMPANY
-----------------------
(Name of Company)
________________________________
(Address)
Subscribed and sworn to before me this ___ day of _________, 19___.
My commission Expires: _______________________________.
_______________________________
(Notary Public)
__________________________ _______________________________
(Date) (Name)
_______________________________
(Title)
<PAGE>
____________________________ _______________________________
(Date) (Name)
_______________________________
(Title)
NATIONAL UNION FIRE INC.
COMPANY OF LOUISIANA
-------------------------------
(Name of Company)
_______________________________
(Address)
Subscribed and sworn to before me this ____ day of
____________, 19 ____.
My commission Expires: _______________________________.
_______________________________
(Notary Public)
<PAGE>
FOR THE GENERAL AGENT
_____________________________ _____________________________
(Date) (Name)
_____________________________
(Title)
____________________________
(Name)
____________________________
(Title)
____________________________
(Name of Company)
____________________________
(Address)
Subscribed and sworn to before me this ___ day of ___________, 19___.
My commission Expires: ____________________________.
____________________________
Notary Public
<PAGE>
ADDENDUM A (4 PAGES) REDACTED IN ITS ENTIRETY AND FILED SEPARATELY AS PART OF
A CONFIDENTIALITY REQUEST FILED WITH THE COMMISSION.
<PAGE>
ADDENDUM B
Effective this 1st day of March, 1994
BETWEEN
NEW HAMPSHIRE INSURANCE COMPANY, AMERICAN HOME ASSURANCE COMPANY, ILLINOIS
NATIONAL INSURANCE COMPANY AND NATIONAL UNION FIRE INSURANCE COMPANY OF
LOUISIANA of 70 Pine Street, New York, New York 10270 (hereinafter referred to
as the "Company"), and Warrantech Automotive, Inc. whose principal offices are
at 300 Atlantic Street, Stamford, Connecticut 06901, (hereinafter collectively
referred to as the "Administrator").
WITNESSETH
In consideration of the mutual covenants and promises herein contained, the
parties hereto agree as follows:
APPOINTMENT
Subject to the terms, conditions and restrictions of this Agreement, the
Administrator is hereby appointed to perform all administrative services for the
servicing of and claim adjustments regarding the Company's Policies providing
coverage for claims involving Warrantech Automotive Vehicle Service Contract
Programs as defined therein.
The effective dates for providing services are as follows:
Warrantech Automotive Vehicle Service Contract - March 1, 1994
TERRITORY
This Agreement covers services rendered on claims arising from vehicle
services contracts coverage from contract holders in the United States and
Canada.
DEFINITION OF AGREEMENT
The word "Agreement" herein shall be understood to include any and all
Addenda and Exhibits attached in accordance with the terms and conditions herein
supplied. Any amendment to this Agreement shall be in writing and signed by an
officer of the parties.
RELATIONSHIP
Nothing herein contained shall be understood to create the relationship of
employer and employee between the Administrator and the Company or between the
Company and any of the Administrator's employees or representatives. It is the
express intent of the parties hereto that the Administrator is an independent
contractor for all purposes in all situations and it is not an employee of the
Company for any purpose.
<PAGE>
COOPERATION
The Administrator and the Company agree to cooperate fully regarding this
Agreement.
AUTHORITY OF THE ADMINISTRATOR
The Administrator shall have no power or authority, other than for those
powers expressively granted and set forth herein. No other or greater power
shall be implied from the grant or denial of powers specifically mentioned
herein.
DUTIES OF THE ADMINISTRATOR
The Administrator is hereby authorized and obligated to perform the
following services for the Company:
1) Administrator will provide those claim services as are set forth in
paragraph 2. below (the "Basic Services") with respect to any claims made
under any of Company's policies to which this Agreement applies which (i)
involve an actual or alleged loss occurring under Company's policies and
(ii) are reported to Administrator after the date on which Administrator's
Claims Authority under provisions of this Exhibit commences.
2) The Basic Services to be rendered by Administrator with respect to any
claims described above ("Claims") shall be the following:
(a) To establish a file with respect to each Claim in accordance with the
instructions set forth by Company.
(b) To investigate all Claims.
(c) To document each claim file by a written chronology of all actions
taken with respect to underlying Claim, including but not limited to
disbursements.
(d) To furnish all claim forms necessary for proper Claims administration.
(e) To adjust compromise, settle, or resist all Claims and Lawsuits within
the discretionary settlement authority limit of Administrator as
hereinafter set forth ("Authority Limit").
(f) To adjust, settle or resist Claims in excess of the Authority Limit
only with the express prior approval of Company.
(g) To retain and then destroy files for each Claim in accordance with the
File Retention and Destruction Policy set forth in Client
instructions.
<PAGE>
(h) To provide Company by the twenty-fifth (25th) day of each month with a
monthly automated EDP claims file in a format with data elements
prescribed by Company for all claim transactions completed during the
month.
3) Subject to the other provisions of this Agreement below, Administrator will
provide the Basic Services with respect to all Claims for so long as and
until each Claim shall have been paid or until, in the opinion of
Administrator and Company, Company shall have no further liability
therefor.
4) Except as may be otherwise provided for in this Agreement, Company reserves
the right to assume at its own expense the control and handling of any
Claim at any time, and Administrator agrees to deliver promptly any Claim
file to Company which it may request. Claim files are subject to the
review by Company and its employees and authorized agents during
Administrator's regular business hours.
5) In addition to notifying Company, Administrator shall maintain a record of
complaints ("complaints record") made by or through any person or
governmental or regulatory body. This record will document for each
complaint, the name of both the policyholder and contract holder and state
or residence, the name of the repair facility, claim number, identity of
person and governmental or regulatory body making complaint, description of
grievance, date Administrator received notice of the complaint, description
of action taken by Administrator in response to complaint, date complaint
resolved and indication that record will be provided to Company at the end
of each calendar quarter.
6) Administrator will maintain a "suit log" consisting of the following
entries for each suit received: Name of policyholder and contact holder,
name of repair facility, claim number, name of plaintiff(s), name of
plaintiff(s), attorney, name of defendant(s), court in which suit is filed,
date suit filed, date of service on agent, name of defense attorney, and
date defense counsel enters appearance.
7) Administrator will use its best efforts to keep abreast of all
governmental, regulatory and matters of compliance concerning the
investigation, settlement and defense of auto warranty claims and will, use
its best efforts to ensure that Administrator is in compliance with these
requirements.
[PARAGRAPH 8 REDACTED AND FILED SEPARATELY AS PART OF A CONFIDENTIALITY
REQUEST WITH THE COMMISSION]
9) In the event any governmental agency, broker, agent or
<PAGE>
customer should contact General Agent for any reason with respect to any
claim (except for routine contact not in the nature of a complaint),
General Agent agrees to notify Company promptly of the nature of such
communication and, if the communication is in writing, General Agent shall
send Company, a copy thereof. In addition, General Agent must keep a log
of all complaints, including status, disposition and classify each
complaint by type.
[PARAGRAPHS 10 AND 11 REDACTED AND FILED SEPARATELY AS PART OF A
CONFIDENTIALITY REQUEST WITH THE COMMISSION]
PAYMENT OF CLAIMS AND ALLOCATED LOSS EXPENSES
1) Administrator will make all payments with respect to Claims and pay all
Allocated Loss Expenses (as defined in paragraph 2 below).
[PARAGRAPH 2 REDACTED AND FILED SEPARATELY AS PART OF A CONFIDENTIALITY
REQUEST WITH THE COMMISSION]
2) Unallocated loss adjustment expense, such as the salaries, benefits, travel
overhead of Administrator are not reimbursable to Administrator by Company.
Administrator warrants 1) that the Administrator has adequately trained and
staffed the personnel designated to perform the duties herein undertaken
and 2) that Administrator has established and would maintain adequate
facilities, supplies and equipment which will enable the Administrator to
satisfactorily perform the duties herein undertaken. In every manner the
Administrator shall use its best efforts to serve the Company faithfully,
promoting and safeguarding the Company's best interest at all times.
LIMITATION OF AUTHORITY
EXCEPT AS MAY BE OTHERWISE AGREED TO IN WRITING, the Administrator shall
have no authority to nor shall represent itself as having such authority, nor
shall do any of the follows:
(a) Appoint agents, sub-agents and/or sub-administrators;
(b) Make any agreements with any persons on behalf of the Company;
(c) Make any agreements rendering or purporting to render Company liable
for the payment and/or re-payment of
<PAGE>
expenses, commissions or any other sum, besides validly authorized
claims payments duly paid out of a Claims Account;
(d) Make, alter, or discharge any of the terms and conditions of any
policy, contract or receipt of the Company;
(e) Institute, prosecute or maintain any legal proceeding in connection
with any matter pertaining to Company's business, except as provided
herein.
(f) Transact business in contravention of the rules and regulations, of
any Insurance Department and/or other government authorities having
jurisdiction of all subject matters embraced within this Agreement,
and all reasonable instructions issued by the Company;
(g) Hold itself out an Administrator of the Company for any other matter
or for any other purpose than specifically prescribed by this
Agreement or in agreements regarding other programs which
Administrator administer for the Company;
(h) Withhold any monies or property of the Company;
(i) Offer to pay any rebate;
(j) Bind, subject or obligate the Company to any single claim liability
over $6,000 unless specifically authorized in writing to do so by the
Company;
(k) Issue, utter, write or otherwise make any presentation, statement,
promise or warranty of any kind or nature with respect to the business
of the Company unless specifically authorized in writing to do so by
the Company other than to adjust claims pursuant to this agreement;
(l) Engage any attorney to represent the Company for any purpose
whatsoever without the Company's express written consent.
(m) Engage any professional expert auto inspector or to contract for
lubricant analysis for which the fees or costs exceed four hundred
dollars ($400.00) per claim.
CLAIMS FUND
The Administrator shall fund and open a checking account
(the "Claims Account") at a bank, or other financial institution,
acceptable to the Company for the purpose of issuing payment of
losses and loss adjustment expenses for valid claims made under
Company's policies. The Claims Account shall be designated and
titled so as to be identified as being for the exclusive use of
paying valid claims made under Company's policies. Administrator
shall provide Company with the bank name, account name and account
number of the Claims Account.
The Administrator shall be responsible for making payments for valid
losses and loss adjustment expenses incurred under Company's
policies. Administrator shall be custodian of checks to be drawn on
the Claims Account and shall exercise the controls necessary to
ensure the safety and security of these checks.
[ONE PARAGRAPH REDACTED AND FILED SEPARATELY AS PART OF A CONFIDENTIALITY
REQUEST WITH THE COMMISSION.]
<PAGE>
ADVERTISING AND REPRESENTATIONS
The Administrator shall use no advertising material, prospectus, proposal,
or representation, either in general or in relation to a particular Program
unless furnished by the Company or until the consent of the Company thereto in
writing shall first be secured and cleared by the home office legal staff. Such
approval shall not in any event be construed as charging or binding the Company
to bear any part of the cost or expense therein. The Administrator shall not
issue or circulate any illustration, circular, statements or memorandum of any
sort misrepresenting the terms, benefits or advantages of any policy issued by
the Company or making any misleading statement concerning the financial security
of the Company. Administrator agrees that it will not use the Company's name,
logos or trademarks in any materials, without prior written approval of the
Company. Use of the Company's logo or trademarks, in conjunction with materials
connected with this Program, will in no way be construed to mean that
Administrator has acquired any interest in the ownership of or to any of the
logos or trademarks of the Company.
No permission is granted hereby, either express or implied, to Claims
Administrator for the use of trade names, trademarks or service marks of
Company. Administrator shall Company without their prior written permission.
Effective July 1, 1994, the Administrator should designate one or more "800
numbers, of a kind and amount acceptable to Company on an exclusive basis. If
other appropriate "800" numbers become available in Company's reasonable
judgment, Administrator shall reserve the numbers for Company's business.
Telephone numbers agreed upon by the parties shall be publicized by Company and
Administrator for service in connection with the Policy. Company may grant
Administrator permission to use the telephone numbers. While these telephone
numbers, as between the parties will be the sole property of Administrator,
Company shall have right to have those numbers re-assigned to alternate
administrators in the event of a change thereof for any reason in accordance
with the Agreement so that consumer materials will not become confusing.
BOOKS, RECORDS AND ACCOUNTS
The Administrator shall keep full and accurate records of the business
transacted under this Agreement and shall forward to Company such reports of
said business that Company may prescribe. The Company shall have the right to
examine said books anytime during business hours and to make such records as it
may deem necessary. All books, accounts or other documents with the exception
of computer software and software documentation relating to the Company are the
property of the Company whether paid by for it or not. Computer software
systems and software documentation shall be the property of the Company only to
the extent they are specially paid for by the Company. The books and accounts
of the Company shall be accepted in full and final evidence for all
<PAGE>
matters relating to this Agreement.
Administrator shall maintain a separate copy of all computer-stored data
relating to the Program which shall be available at all times to the Company and
can be furnished immediately upon request to Company in the event Company
retains a replacement Administrator to process claims and/or run off the
business which is the subject of this Agreement. Extraordinary costs (such as
reprogramming or reformatting data to be compatible with Administrator's
systems), or obtaining a second copy of this computer stored data, shall be
borne by the Company.
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.
SALVAGE
All salvage and recoveries are the property of the Company. The expense of
recovery of salvage shall be borne by Company. Salvage shall be recovered by
Administrator.
STATEMENTS OF ACCOUNTS
The Administrator shall submit to the Company as agreed after the close of
each month, a statement in the form required by the Company of claims paid,
denied, and closed during such month, and of claims outstanding but unpaid
during such month, giving such reasonable detail as the Company shall require,
including salvage, and subrogation recoveries. Such detailed information shall
be rendered to Company on or about twenty five (25) days after the close of
business each month. A copy of the monthly report that Administrator shall
remit to the Company and other reports to be rendered are attached hereby and
incorporated herein by reference as Exhibit No. 2.
Additionally, the Administrator shall render to Company within twenty-five
(25) days after the close of each month, a monthly bordereaux report which shall
contain all the information which the Company shall require or consider
necessary. The Company may require from time to time for underwriting purposes
special reports from the Administrator.
EXPENSES
The Administrator shall bear and pay all charges and expenses incurred in
the business including compensation of the Administrator's employees. Office
expenses, and other expenses including postage, license fees, and reporting fees
including cost of compliance with this agreement or by law. The Company shall
not be responsible for expenses incurred by the Administrator unless provided
herein.
The parties shall indemnify and hold harmless the other, their
<PAGE>
officers, directors, agents and servants and their affiliates, subsidiaries,
divisions and parent and their officers, directors, agents and servants
(hereinafter collectively known as "Indemnitees"), any or all of them, against
all liability loss, damages, whether punitive, exemplary or compensatory,
expense, claims, penalties, fines and reasonable attorney's fees that the
Indemnities may incur or suffer, whenever suffered or incurred, by reason of
either party defending or prosecuting any suit, action or other proceeding
brought in connection with said failure or breach, or in obtaining or attempting
to obtain a release of liability in respect thereof, whether or not it be
claimed or proven that there was breach of duty, or intentional, or wanton or
reckless conduct, or both, and whether or not the damages claimed are punitive
or exemplary.
Each party and both of them shall indemnify and hold harmless the
Indemnitees of the other party against all claims, suits, proceedings,
liabilities, losses, damages, whether punitive, exemplary or compensatory, costs
and expenses whatsoever including reasonable outside attorney's fee arising from
any failure of either party to comply with applicable local, state and federal
regulations concerning performance of services hereunder, or to pay claims in
good faith and in accordance with the Policy, either party shall be released
from any liability hereunder to the extent that any such liability results in
whole or in part from failures, acts, or omissions of the other party or its
Indemnities or from activities at the specific and express written direction of
the other party or actions taken upon the basis of incorrect or inaccurate
information supplied by the other party.
Administrator covenants that it will reimburse Indemnitees on demand for or
pay over to Indemnitees all sums of money which Indemnitees shall pay or become
legally liable to pay by reason of any of the foregoing and will make such
payments to Indemnitees as soon as Indemnitees shall become liable therefore,
whether or not Indemnitees shall have paid out sums of any part thereof.
Indemnitees shall have the right to demand that the indemnifying party
shall defend any and all suits and investigate and defend all claims whether
justified or not, providing only that the suit shall be against the Indemnitees,
any or all of them. Any right to indemnification under this Agreement shall be
conditioned upon whether Indemnitees give timely written notice to the
Indemnifying Party of the claim. Indemnitees shall conduct the defense with
counsel of their choice and the other party will pay all reasonable expenses and
any judgment or settlement. Either party must act reasonably in agreeing to any
judgement or settlement. Either party has the right to be associated in the
defense and/or settlement.
Either party shall indemnify and hold harmless the other party against all
claims, suits, proceedings, liabilities, losses,
<PAGE>
damages, or the punitive, exemplary or compensatory, costs and expenses
whatsoever including reasonable outside attorneys' fees when claim is made
against either party by a claimant and/or an insured alleging the other party's
negligence and/or intentional acts which lead to denial of claimant's and/or
insured's claim. In addition, Company shall hold harmless and indemnify
Administrator against all claims arising due to the insufficiency of the Claims
Account. Either party shall also indemnify and hold harmless the other party
against all claims, suits, etc. which arise due to the negligence and/or
intentional acts of Indemnifying Party which give arise to a wrongful denial
claim. Either party shall have right to defend itself and the other party with
the same counsel and to settle any claims upon a reasonable basis. Either party
shall have the right to participate in the defense as well as consult in the
terms of any settlement and/or judgment.
CONFIDENTIALITY
a. Business Information of the Parties. In performing obligations
pursuant to this Agreement, the parties acknowledge that they may have access to
and receive disclosure of certain information relating to both parties,
including, but not limited to, marketing philosophy and objectives, competitive
advantages and disadvantages, the types of services provided, financial result,
the name, address and account numbers of customers, agents, service providers,
and a variety of other information and material. Administrator and Company
agree that all such information and materials which are disclosed in writing or
other tangible form and conspicuously labeled "Confidential" by each party, its
directors, officers and other employees, and any third parties with which it
contracts, is, and shall be considered, confidential and proprietary. Each
party and both of them further agree that it shall:
(i) protect and preserve the confidential and proprietary nature of all
Confidential Information; and require identical safeguards and promises and
covenants as herein contained to be present in any contract that either party
executes with any contractor;
(ii) not disclose, give, sell or otherwise transfer or make available,
directly or indirectly, any Confidential Information to any third party except
as required in the performance hereunder or as required by law;
(iii) not use the Confidential Information except as expressly provided in
this Agreement;
(iv) to the best of its ability, limit the dissemination of the
Confidential Information within its own organization (including contractors) to
such individuals whose duties justify the need to know such Confidential
Information, and then only provided that
<PAGE>
there is a clear understanding by such individuals of their obligation to
maintain the confidential and proprietary nature of the Confidential Information
and to restrict its use solely to the purposes specified herein;
(v) to the best of its ability, notify each other immediately of any loss
or misplacement of records or copies of Confidential Information.
b. Survival of Confidentiality. All rights, obligations and duties of
the parties with regard to Confidential Information shall survive the
termination of this Agreement.
c. Limitation. All obligations and duties of both parties with respect
to data processing programs, service providers and systems and cardholder
information shall continue indefinitely, but with respect to other Confidential
Information, such as business plans, methods, marketing philosophy, etc. shall
terminate after two years following the termination of this Agreement for any
reason, subject to earlier termination in the event that and to the extent that
such Information:
(i) is developed by a party independently, without reference to any
Confidential Information of the other party's;
(ii) is obtained from a third party authorized to disclose it;
(iii) becomes a part of the public domain without the fault of the party;
(iv) is released by the disclosing party to third parties without similar
restrictions; or
(v) is released from such restrictions by the prior written agreement of
the disclosing party.
Provided, that any termination shall not, without Company's written
consent, be effective until all claims have been closed.
e. Administrator shall not acquire by virtue of this Agreement any
property or other right, claim or interest, including any patent right or
copyright interest, in any of the information, systems, processes, equipment,
computer programs, or data of the Company.
TERMINATION
This Addendum may be terminated by either party in the same way with the
same rights and duties as the General Agency Agreement. Both the Agreement and
the Addendum must be terminated at the same time; however the provisions for
run-off continuation in either can be different. In any event, however
Administrator
<PAGE>
will not be released from performing services under this contract despite any
notice of termination until the Company specifically releases the Administrator.
The Administrator is responsible for providing a smooth and orderly transition
to a new Administrator and will render all services previously rendered at the
Company's request for the period deemed necessary by the Company to effect a
smooth and orderly transition.
At any time during the term of Agreement Company may terminate this
Agreement on at least thirty (30) days written notice, however, at Company's
request, Administrator shall continue to service the needs of the Company for
the period deemed necessary by the Company to provide a smooth and orderly
transition to a new Administrator. Administrator will be paid at the prevailing
contract rate of all services that it renders during these periods.
In the event of substantial delinquency by the Administrator in the
accounting, servicing or adjustment of claims, the Company may suspend the
Administrator's authority to perform administrative services on any new business
during any period of delinquency upon notice to the Administrator.
APPLICABLE LAW
This Agreement shall be governed by and construed in accordance with the
internal laws and not the laws of conflicts of the State of New York, except to
the extent which by law the law of another state must be applied. Jurisdiction
and venue for any litigated matter under this Agreement shall be placed with the
United State District Court for the Southern District of New York sitting in the
County of New York, State of New York at the Foley Square Court House.
ENTIRE AGREEMENT
This Agreement and the Exhibits hereto and all documents referenced herein
and therein constitute the entire Agreement between the parties concerning the
subject matter embraced hereto and all prior Agreements, representations,
warranties, statements and/or negotiations are superseded hereby.
SEVERABILITY
If any term or provision of this Agreement shall be found by a court of
competent jurisdiction to be illegal or otherwise unenforceable, the same shall
not invalidate the whole of this Agreement, but such term or provision shall be
deemed modified to the extent in the Court's opinion to render such term or
provision enforceable, and rights and obligations of the party shall be
construed and enforced accordingly, preserving to the fullest permissible extent
the intent and agreements of the parties herein set forth.
AMENDMENT
Any Amendment to this Agreement must be in writing signed by
<PAGE>
the party against whom enforcement is sought.
NON-WAIVER
No delay or failure by either party to exercise any right under this
Agreement and no partial or single or multiple exercise of any right under the
Agreement shall constitute a waiver of that right or any other right.
HEADINGS
Headings in this Agreement are for convenience only and shall not be used
to interpret or construe its provisions.
COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.
ASSIGNMENT AND TRANSFER; SUBCONTRACTING
Except as expressly stated herein, neither party shall assign or otherwise
transfer this Agreement or any of its rights or obligations hereunder; or
contract with any third party to perform any of its responsibilities or
obligations relating to this Agreement, without the prior written consent of the
other party.
NOTICES
Any notice, request, consent, waiver or other communication required or
permitted to be given hereunder shall be effective only if in writing and shall
be deemed sufficiently given only if delivered in person or sent by telegram,
telex, cable or by certified or registered mail, postage prepaid, return receipt
requested, addressed as follows:
WARRANTECH AUTOMOTIVE, INC.
300 ATLANTIC STREET
STAMFORD CONNECTICUT 06901
cc: WARRANTECH AUTOMOTIVE, INC.
150 WESTPARK WAY
EULESS, TX 76040
ATT: GENERAL COUNSEL
-----------------------------
cc: NEWMAN, TANNENBAUM, HELPERN, SYRACUSE,
& HIRSCHTRITT LLP
900 Third Avenue
NEW YORK, NEW YORK 10022
If to any insurance company providing coverage hereunder:
cc: President
___________________________________
70 Pine Street
<PAGE>
New York, New York 10270
cc: Associate General Counsel
Corporate Law Department
A.I.G., Inc.
70 Pine Street, 22nd Floor
New York, NY 10270 Fax No. 212-514-6894
or to such other person of address as either party may designate by notice
given to the other party as provided herein. Such notice or communication shall
be deemed to have been given as of the date so delivered, telegraphed, cabled or
if mailed, on the fifth day after mailing in the United States of America
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
their respective duly authorized officers.
DATE:
-----------------------
WARRANTECH AUTOMOTIVE, INC.
By:
-------------------------
Name:
------------------------
Title:
-----------------------
Date:
-----------------------
<PAGE>
INSURANCE COMPANIES SUBSCRIBING THIS AGREEMENT
- ---------------- ------------------
(Date) (Name)
------------------
(Title)
------------------
(Name)
------------------
(Title)
NEW HAMPSHIRE
INSURANCE COMPANY
--------------------
(Name of Company)
--------------------
(Address)
Subscribed and sworn to before me
________ of , 19
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
- ---------------- ------------------
(Date) (Name)
------------------
(Title)
------------------
(Name)
------------------
(Title)
ILLINOIS NATIONAL
INSURANCE COMPANY
--------------------
(Name of Company)
--------------------
(Address)
Subscribed and sworn to before me
________ of __________, 19______
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
- ---------------- ------------------
(Date) (Name)
------------------
(Title)
------------------
(Name)
------------------
(Title)
NATIONAL UNION FIRE
INS. COMPANY OF
LOUISIANA
-------------------
(Name of Company)
--------------------
(Address)
Subscribed and sworn to before me
________ of __________, 19______
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
- ---------------- ------------------
(Date) (Name)
------------------
(Title)
------------------
(Name)
------------------
(Title)
AMERICAN HOME
INSURANCE COMPANY
--------------------
(Name of Company)
(Address)
Subscribed and sworn to before me
________ of __________, 19______
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
FOR THE GENERAL AGENT
- ---------------- ------------------
(Date) (Name)
------------------
(Title)
------------------
(Name)
------------------
(Title)
------------------
(Name of Company)
------------------
(Address)
Subscribed and sworn to before me
________ of __________, 19______
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
ADDENDUM C
Effective this 1st day of March, 1994
BETWEEN
NEW HAMPSHIRE INSURANCE COMPANY, AMERICAN HOME ASSURANCE COMPANY,
ILLINOIS NATIONAL INSURANCE COMPANY AND NATIONAL UNION FIRE INSURANCE
COMPANY OF LOUISIANA of 70 Pine Street, New York, New York 10270
(hereinafter referred to as the "Company"), and Warrantech Automotive,
Inc. whose principal offices are at 300 Atlantic Street, Stamford,
Connecticut 06901, (hereinafter collectively referred to as the
"Administrator").
PARENTAL GUARANTEE
Warrantech Corporation, which is the parent of Warrantech Automotive,
Inc., and whose address is 300 Atlantic St., Stamford, CT 06902
(referred to herein as "Guarantor"), herewith in consideration of the
premises grants to American International Group, Inc. and its member
insurance underwriting companies named on this General Agency
Agreement (hereinafter collectively known as the "Company"), a
guarantee of the performance under and the payment of liabilities
incurred due to duties assumed by Warrantech Automotive, Inc. under
this General Agency Agreement.
Guarantor guarantees the following entities:
1. All Guarantor's subsidiaries and affiliates which are or may
become involved in the rendition of services in the warranty
and/or insurance programs offered by Guarantor and/or its
subsidiaries and/or affiliates through Company; and
2. All third parties that provide services pursuant to the
General Agency Agreement which Guarantor agrees to
guarantee. All such entities shall be endorsed to this
Agreement to indicate applicability of this guarantee.
3. This shall be a continuing guarantee and regardless of the
lack of notice or consent to new third-parties providing
services pursuant to the General Agency Agreement, shall
cover all new contracts which relate to the guarantee or,
amendments, extensions, modifications, renewals, or waivers
thereto. When Warrantech Automotive, Inc. utilizes a third
party provider, it shall give notice
<PAGE>
within (30) thirty days pursuant to sub-paragraph 2.
The Guarantor hereto stipulates to the fact the entities guaranteed
are solvent at the time of execution of this guarantee and are able to perform
their obligations under the aforesaid program(s) and to discharge their
liabilities.
By execution herewith and in consideration of the premises, Guarantor
guarantees faithful and complete performance of the General Agency Agreement by
all entities within the time set for thereon. Guarantor also guarantees
payments of all damages, costs and expenses for which the entities may become
liable with respect to the General Agency Agreement. Guarantor herewith waives
all rights to notice of non-performance of or demand by Company except as
provided hereinafter. This guarantee will remain in full force and effect
despite any change, extension, release, substitution, or other modifications of
the General Agency Agreement and all addenda of contracts for services covered
herein.
This Guarantee is unconditional and unlimited in duration. This
guarantee is also absolute and granted in exchange for Company granting the
within General Agency Agreement and in particular to waive the requirement for
personal guarantees of payment and performance from Guarantor's directors and
officers. Attached hereto is a certified copy of a resolution by the Board of
Directors of Guarantor's authorizing the execution of this guarantee.
By execution of this guarantee, Guarantor guarantees that it will
supply all substitute services and perform all tasks otherwise required of the
guaranteed parties and will provide any and all resources to enable Company to
recover lost profits, dividends, income, rights, satisfaction of liability,
damages, interest, indemnifications of and payment of all sums due, liabilities,
claims, at any and all times, including but not limited to reasonable attorney's
fees and costs incurred to recover on the guarantee.
Upon default by any one or all of the entities guaranteed, Guarantor
shall upon demand perform the contracts and pay all sums due and owing
immediately. The obligations defaulted upon shall become the direct and primary
obligations of Guarantor
Company may demand payment of the guarantee in and at its headquarters
at 70 Pine Street, New York, New York 10270 or may demand performance of this
guarantee at the place and time set by Company pursuant to the General Agency
Agreement.
This guarantee shall not terminate unless and until the parties
mutually agree to release each other, provisional upon the previous performance
of all required, actions and payment of all
<PAGE>
sums due and owing Company. The termination shall affect only future
liabilities. Company shall require no security to secure Guarantor's ability to
perform its obligation under this guarantee. The amount of the guarantee shall
be unlimited. All payments under the Guarantee shall go direct to Company and
not to any intervening party. Guarantor shall have all the right to salvage and
subrogation under the guarantee that the law provides. Guarantor shall not
discharge any of liability except by performance or payment. This guarantee may
be amended only by a writing executed by both parties. This guarantee may not
be assigned by Guarantor or any successor in interest.
Guarantor waives notice of acceptance, notice of nonpayment or protest
and notice of protest with respect to the obligation covered. Company shall
give notice of non-performance prior to any demand under the Guarantee. Company
may give notice at any time to Guarantor. Guarantor waives any defense as to
the timeliness of sufficiency of the notice.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement in
duplicate.
INSURANCE COMPANIES SUBSCRIBING THIS AGREEMENT
- ---------------- ------------------
(Date) (Name)
------------------
(Title)
------------------
(Name)
------------------
(Title)
NEW HAMPSHIRE
INSURANCE COMPANY
--------------------
(Name of Company)
--------------------
(Address)
Subscribed and sworn to before me
________ of ____________, 19____
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
- ---------------- ------------------
(Date) (Name)
------------------
(Title)
------------------
(Name)
------------------
(Title)
ILLINOIS NATIONAL
INSURANCE COMPANY
--------------------
(Name of Company)
--------------------
(Address)
Subscribed and sworn to before me
________ of __________, 19______
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
- ---------------- ------------------
(Date) (Name)
------------------
(Title)
------------------
(Name)
------------------
(Title)
NATIONAL UNION FIRE
INS. COMPANY OF
LOUISIANA
-------------------
(Name of Company)
--------------------
(Address)
Subscribed and sworn to before me
________ of __________, 19______
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
- ---------------- ------------------
(Date) (Name)
------------------
(Title)
------------------
(Name)
------------------
(Title)
AMERICAN HOME
INSURANCE COMPANY
--------------------
(Name of Company)
--------------------
(Address)
Subscribed and sworn to before me
________ of __________, 19______
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
FOR THE GENERAL AGENT
- ---------------- ------------------
(Date) (Name)
------------------
(Title)
------------------
(Name)
------------------
(Title)
------------------
(Name of Company)
------------------
(Address)
Subscribed and sworn to before me
________ of __________, 19____
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
[ADDENDUMS D,D-2, D-3 AND D-4 (39 PAGES) HAVE BEEN REDACTED IN THEIR ENTIRETY
AND FILED SEPARATELY AS PART OF A CONFIDENTIALITY REQUEST WITH THE COMMISSION.]
<PAGE>
Addendum E
April 11, 1996
Page 1 of 7
ADDENDUM E
AUTOMOBILE WARRANTY
HOLD HARMLESS AND INDEMNIFICATION AGREEMENT
FOR
CERTAIN BANKING AGREEMENTS
Effective this ___ day of __________, 1996
BETWEEN
NEW HAMPSHIRE INSURANCE COMPANY, ILLINOIS NATIONAL INSURANCE COMPANY, AMERICAN
HOME ASSURANCE COMPANY AND NATIONAL UNION FIRE INSURANCE COMPANY OF LOUISIANA of
70 Pine Street, New York, New York 10270 (hereinafter referred to as the
"COMPANY"), and Warrantech Automotive, Inc. whose principal offices are at 300
Atlantic Street, Stamford, Connecticut 06901, (hereinafter collectively referred
to as the "ADMINISTRATOR").
WHEREAS, in connection with the performance of its duties pursuant to the
General Agency Agreement (referred to as "this Agreement"), to which this
Addendum E is attached and made a part thereof, the ADMINISTRATOR has received
requests from FINANCIAL INSTITUTIONS, for the COMPANY to execute BANKING
AGREEMENTS (hereinafter referred to as "BANKING AGREEMENTS");
WHEREAS, it is desirable and necessary for the COMPANY to execute BANKING
AGREEMENTS, in order that the insured products remain competitive in the
marketplace; and
WHEREAS, the BANKING AGREEMENTS require that COMPANY assume certain
obligations which may exceed COMPANY'S obligation pursuant to the insurance
policy
WITNESSETH:
In consideration of the mutual covenants and promises herein contained, the
parties hereto agree as follows
I. DEFINITIONS
A. FINANCIAL INSTITUTION refers to the entities that finance the retail
purchase price of SERVICE CONTRACTS
B. BANKING AGREEMENT means an agreement with the financial
<PAGE>
institution regarding fulfillment of obligations of the issuer of the SERVICE
CONTRACT pursuant to the insured SERVICE CONTRACTS, if the issuer fails to
perform such obligations
C. SERVICE CONTRACTS are the contracts purchased by the vehicle owner and
which are insured by an insurance policy issued pursuant to Addendum A of this
Agreement.
<PAGE>
Addendum E
April 11, 1996
Page 2 of 7
II. INDEMNIFICATION
ADMINISTRATOR agrees to indemnify and hold COMPANY harmless for any liability
and/or obligations which the COMPANY incurs pursuant to a BANKING AGREEMENT
executed by COMPANY related to business produced by ADMINISTRATOR, except for
such liability as the COMPANY would have pursuant to the insurance policy issued
in accordance with the terms and conditions of this Agreement, in the absence of
the BANKING AGREEMENT.
III. BANKING AGREEMENTS AFFECTED
A. ADMINISTRATOR'S APPROVAL REQUIRED. COMPANY will only executed those
BANKING AGREEMENTS which ADMINISTRATOR has requested that COMPANY execute.
COMPANY will not execute any BANKING AGREEMENT with regards to policies issued
pursuant to this Agreement, without the written request of ADMINISTRATOR.
B. RIGHT TO REFUSE TO EXECUTE. COMPANY has the right to refuse to
execute any BANKING AGREEMENT, for any reason.
IV. RIGHT OF OFFSET
COMPANY may offset any and all payments and liabilities owed to ADMINISTRATOR to
collect any amounts due in connection with the indemnification and hold harmless
provisions of this Addendum E.
V. TERMINATION
A. GENERAL AGENCY AGREEMENT TERMINATION. This Addendum E shall terminate
at any time that the General Agency Agreement to which it is attached
terminates, subject to the ongoing liabilities set out in paragraphs D and E of
this Part V.
B. ADMINISTRATOR. ADMINISTRATOR may terminate this Addendum E by giving
ten (10) days written Notice.
C. COMPANY. COMPANY may terminate Addendum E by giving ten (10) days
written notice Company has the right to terminate.
D. NOTIFICATION OF FINANCIAL INSTITUTIONS. ADMINISTRATOR is responsible
for notifying each and every FINANCIAL INSTITUTION that the BANKING AGREEMENT is
terminated and that COMPANY'S promises under such BANKING AGREEMENT is no longer
in effect, and to provide proof of such notification to COMPANY. Nothing herein
shall prevent COMPANY from notifying some or all the FINANCIAL INSTITUTIONS,
however in the event that a FINANCIAL INSTITUTION is
<PAGE>
not notified, ADMINISTRATOR shall bear any and all resulting liability.
E. ADMINISTRATOR'S CONTINUING OBLIGATION. After termination of this
Addendum whether by ADMINISTRATOR or COMPANY the ADMINISTRATOR'S obligation
shall continue as long as COMPANY may have any liability or obligation under any
SERVICE CONTRACT issued during the time that a BANKING AGREEMENT was in effect
for such SERVICE CONTRACT.
<PAGE>
Addendum E
April 11, 1996
Page 3 of 7
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement in
duplicate.
INSURANCE COMPANIES SUBSCRIBING THIS AGREEMENT
---------------- ------------------
(Date) (Name)
VICE PRESIDENT
------------------
(Title)
------------------
(Name)
VICE PRESIDENT
------------------
(Title)
NEW HAMPSHIRE
INSURANCE COMPANY
--------------------
(Name of Company)
--------------------
(Address)
Subscribed and sworn to before me
________ of __________, 19______
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
Addendum E
April 11, 1996
Page 4 of 7
---------------- ------------------
(Date) (Name)
VICE PRESIDENT
------------------
(Title)
------------------
(Name)
VICE PRESIDENT
------------------
(Title)
ILLINOIS NATIONAL
INSURANCE COMPANY
--------------------
(Name of Company)
--------------------
(Address)
Subscribed and sworn to before me
________ of ____________, 19_____
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
Addendum E
April 11, 1996
Page 5 of 7
---------------- ------------------
(Date) (Name)
VICE PRESIDENT
------------------
(Title)
------------------
(Name)
VICE PRESIDENT
------------------
(Title)
AMERICAN HOME
INSURANCE COMPANY
--------------------
(Name of Company)
--------------------
(Address)
Subscribed and sworn to before me
________ of _________, 19 ______
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
Addendum E
April 11, 1996
Page 6 of 7
---------------- ------------------
(Date) (Name)
VICE PRESIDENT
------------------
(Title)
------------------
(Name)
VICE PRESIDENT
------------------
(Title)
NATIONAL UNION FIRE
INS. COMPANY OF
LOUISIANA
-------------------
(Name of Company)
--------------------
(Address)
Subscribed and sworn to before me
________ of __________, 19______
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
Addendum E
April 11, 1996
Page 7 of 7
FOR THE GENERAL AGENT
---------------- ------------------
(Date) (Name)
CHAIRMAN
------------------
(Title)
------------------
(Name)
CHAIRMAN
------------------
(Title)
WARRANTECH
AUTOMOTIVE
--------------------
(Name of Company)
300 ATLANTIC STREET
STAMFORD, CT 06901
--------------------
(Address)
Subscribed and sworn to before me
________ of ____________, 19____
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
Addendum F
April 11, 1996
Page 1 of 8
ADDENDUM F
AUTOMOBILE WARRANTY
GENERAL AMENDMENTS TO GENERAL AGENCY AGREEMENT
COMMISSION DETERMINATION
[PARAGRAPHS IA, IB(1), (2) AND (3) AND IIA HAVE BEEN REDACTED AND FILED
SEPARATELY AS PART OF A CONFIDENTIALITY REQUEST WITH THE COMMISSION.]
<PAGE>
Addendum F
April 11, 1996
Page 2 of 8
[PARAGRAPHS IIB, C(1) AND (2), D AND E HAVE BEEN REDACTED AND FILED SEPARATELY
AS PART OF A CONFIDENTIALITY REQUEST WITH THE COMMISSION.]
III TERMINATION OF THE GENERAL AGENCY AGREEMENT
A Notwithstanding any other provision of the General Agency Agreement,
the grace period with respect to any termination of the General Agency
Agreement pursuant to the first paragraph of Article 20 (Termination)
of the General Agency Agreement (which grace period is stated in such
Article 20 to be one year) shall not end earlier than 18 months from
the effective date of this Addendum F (the "Earliest Grace Date"). To
the extent that such grace period would, by the terms of such Article
20, end after the Earliest Grace Date, this paragraph A shall have no
effect.
B During the 18 months from the effective date of Addendum F the Company
shall have the unconditional right to terminate Administrator's
ability to administer claims pursuant to the Termination provisions of
Addendum B UNLESS (i) the ratio of losses incurred to earned premium
as determined by the Company on the book of business administrated by
Administrator is less than eighty percent (80%), (ii) Company
terminated the General Agency Agreement pursuant to the first
paragraph of Article 20. Termination, of the General Agency Agreement
and (iii) the Administrator shall not, after the termination of the
General Agency Agreement, have committed any act or acts that would
constitute a basis for termination of the General Agency Agreement of
Addendum B pursuant to the provisions of Article 20. Termination, of
the General Agency Agreement other than the first paragraph thereof.
If the conditions (i), (ii) and (iii) obtain, the effective date of
termination of claims administration shall be no earlier than the day
after the end of such 18 month period.
C. It is understood and agreed that the purpose of the grace period is to
permit Administrator to procure substitute insurers for the business
covered by the General Agency Agreement as such business comes up for
renewal. Accordingly, Administrator will use its best efforts to
procure such substitute insurers as early as possible after notice of
termination is given, and to the extent
<PAGE>
Addendum F
April 11, 1996
Page 3 of 8
(but only to the extent) that such substitute insurers are in fact
procured (e.g., in a given state or group of states or with respect to
a given book of business), the Administrator's authority to bind new
business on behalf of the Company shall terminate notwithstanding that
the grace period has not yet expired.
D. Except as expressly modified herein and in the major Agreement of even
date herewith, all other termination provisions of the General Agency
Agreement shall remain in full force and effect.
[PARAGRAPH IVA AND B HAVE BEEN REDACTED AND FILED SEPARATELY AS PART OF
A CONFIDENTIALITY REQUEST WITH THE COMMISSION.]
V. AUDIT ISSUES
The parties acknowledge that Company has recently conducted (1) a
premium audit of Administrator and (2) an underwriting claims, and compliance
audit of Administrator. So long as Administrator acts promptly to address the
deficiencies identified in the foregoing audits to the reasonable satisfaction
of the Company. Company agrees that such audits will not be asserted as bases
for termination for cause of the General Agency Agreement.
<PAGE>
Addendum F
April 11, 1996
Page 4 of 8
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement in
duplicate.
INSURANCE COMPANIES SUBSCRIBING THIS AGREEMENT
---------------- ------------------
(Date) (Name)
VICE PRESIDENT
------------------
(Title)
NEW HAMPSHIRE
INSURANCE COMPANY
--------------------
(Name of Company)
--------------------
(Address)
Subscribed and sworn to before me
________ of ___________, 19______
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
Addendum F
April 11, 1996
Page 5 of 8
---------------- ------------------
(Date) (Name)
VICE PRESIDENT
------------------
(Title)
------------------
(Name)
VICE PRESIDENT
------------------
(Title)
ILLINOIS NATIONAL
INSURANCE COMPANY
--------------------
(Name of Company)
--------------------
(Address)
Subscribed and sworn to before me
________ of __________, 19______
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
Addendum F
April 11, 1996
Page 6 of 8
---------------- ------------------
(Date) (Name)
VICE PRESIDENT
------------------
(Title)
------------------
(Name)
VICE PRESIDENT
------------------
(Title)
AMERICAN HOME
INSURANCE COMPANY
--------------------
(Name of Company)
--------------------
(Address)
Subscribed and sworn to before me
________ of ____________, 19____
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
Addendum F
April 11, 1996
Page 7 of 8
---------------- ------------------
(Date) (Name)
VICE PRESIDENT
------------------
(Title)
------------------
(Name)
VICE PRESIDENT
------------------
(Title)
NATIONAL UNION FIRE INS.COMPANY OF
LOUISIANA
-------------------
(Name of Company)
--------------------
(Address)
Subscribed and sworn to before me
________ of ____________, 19____
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
Addendum F
April 11, 1996
Page 8 of 8
FOR THE GENERAL AGENT
---------------- ------------------
(Date) (Name)
CHAIRMAN
------------------
(Title)
------------------
(Name)
CHAIRMAN
------------------
(Title)
WARRANTECH
AUTOMOTIVE
--------------------
(Name of Company)
300 ATLANTIC STREET
STAMFORD, CT 06901
--------------------
(Address)
Subscribed and sworn to before me
________ of __________, 19______
My commission Expires:
-----------
--------------------
Notary Public
<PAGE>
Exhibit 10 (q)
AGREEMENT
THIS AGREEMENT dated as of January 1, 1996, by and among WARRANTECH
CORPORATION, a Delaware corporation (the "Corporation"), and AMERICAN
INTERNATIONAL GROUP, INC., a Delaware corporation ("AIG").
WHEREAS, the parties to this Agreement are parties to that certain
Securities Purchase Agreement dated July 19,1993 (the "Securities Purchase
Agreement") and, in accordance with the terms and conditions hereof, desire to
terminate the Securities Purchase Agreement; and
WHEREAS, the Corporation, AIG Europe (UK) Limited, a wholly owned
subsidiary of AIG incorporated in England ("AIGE"), Warrantech (UK) Limited, a
wholly owned subsidiary of the Corporation incorporated in England
("Warrantech (UK)"), and Techmark Services Limited, a company incorporated in
England ("Techmark"), are parties to that certain Joint Venture Agreement dated
as of July 26, 1993 (the "Joint Venture Agreement") and, in accordance with
the terms and conditions hereof, the Corporation and AIG desire to cause the
termination of the Joint Venture Agreement; and
WHEREAS, certain subsidiaries of AIG and Warrantech Automotive, Inc., a
wholly owned subsidiary of the Corporation, are parties to that certain General
Agency Agreement effective March 1, 1993 (the "General Agency
Agreement").
NOW, THEREFORE, in consideration of the mutual covenants and promises herein
contained and for other good and valuable consideration, the parties hereto
agree as follows:
ARTICLE I
TRANSACTIONS COVERED BY THIS AGREEMENT;
______EVENTS TO OCCUR AT CLOSING______
1.1 Purchase of Preferred Stock and Options by the Corporation. Subject
to and in reliance upon the representations, warranties, terms and conditions of
this Agreement, the Corporation agrees to purchase from AIG, and AIG agrees to
sell, (I) 3,234,697 shares of the Corporation's Convertible Preferred Stock,
Series A (par value $.0007 per share) (the "Preferred Stock"), as represented by
that certain stock certificate (number PA 1) dated October 18, 1993 (the "Stock
Certificate"), and (ii) the Principal Option and Secondary Option (as those
terms are defined in Sections 5.01(a) and (b) of the Securities Purchase
Agreement) (the "Options"), as represented by that
<PAGE>
certain option letter issued by the Corporation and dated October 18, 1993 (the
"Option Letter"). The consideration payable by the Corporation for the
Preferred Stock and the Options shall be an aggregate of U.S.$6,430,000.
1.2 Purchase of Joint Venture Interest by AIGE.Subject to and in reliance
upon the representations, warranties, terms and conditions of this Agreement,
AIG agrees to cause AIGE to purchase from the Corporation and Warrantech (UK),
and the Corporation agrees, and agrees to cause Warrantech (UK), to sell, (i) an
aggregate of 8090 B Ordinary Shares of Techmark (the "Techmark Shares"), as
represented by those certain stock certificates (numbers 004, 006 and 008) dated
July 26, 1993, October 25, 1993 and September 30, 1994, respectively (the
"Techmark Share Certificates"), and (ii) that certain loan of the
Corporation to Techmark in the amount of U.S.$980,122.50 (which is deemed to
include all principal and interest accrued and unpaid thereon through the date
hereof) (the "Techmark Loan"), pursuant to that certain loan agreement dated
September 26, 1994 executed by Techmark in favor of Warrantech (UK). The
consideration payable by AIGE for the Techmark Shares and the Techmark Loan
shall be U.S.$2,858,317.50 and U.S.$980,122.50, respectively, for an
aggregate of U.S.$3,838,440. In addition, subject to and in reliance upon the
representations, warranties, terms and conditions of this Agreement, AIG agrees
to cause Techmark to pay to Warrantech (UK) the sum of U.S.$195,600 (the
"Software License Payment") which represents all amounts which are or may be due
and owing to Warrantech (UK) under the Software License Agreement (as Defined in
Section 4.4 hereof) from AIGE and/or Techmark.
1.3 Netting of Payments Under Sections 1.1 and 1.2; Deferred Payment of
Balance of Section 1.1 Payments. (a) At the Closing referred to in Section 1.8
below, the entire amounts otherwise payable by AIGE pursuant to Section 1.2
shall be netted against the amount payable by the Corporation under Section 1.1.
No cash payments shall be made at the Closing by either the Corporation or AIGE
in respect of any amounts payable under Section 1.1 or Section 1.2 of this
Agreement and Neither party will have any further obligation after the Closing
with respect to such amounts except for the payment obligations of the
Corporation as set forth in Section 1.3(b) below.
(b) The balance (the "Section 1.1 Balance") of the amount payable by the
Corporation under Section 1.1, U.S. $2,395,960, shall be paid by wire transfer
of immediately available funds in 11 equal quarterly installments, without
interest, of U.S. $205,000 commencing on June 30, 1996 and on each September 30,
December 31,
<PAGE>
March 31 and June 30 thereafter through and including December 31, 1998 with a
final payment of U.S. $140,960 due and payable on March 31, 1999. In the event
that a date on which a quarterly installment of the Section 1.1 Balance is not a
day on which banks in the City of New York are generally open to the public (a
"business day"), the due date for such payment shall be the business day
immediately preceding such date. AIG and its affiliates will have no obligation
to notify the Corporation of the due date of any installment of the Section 1.1
Balance. In the event (I) the Corporation shall fail to pay all or a portion of
any quarterly installment of the Section 1.1 Balance on or prior
to the due date thereof and shall have failed to make such payment within five
(5) days of written notice of such failure to pay, (ii) the Corporation
commences a voluntary case or proceeding under Title 11, U.S. Code or any
similar federal or state law for the relief of debtors (a "bankruptcy law"), or
(iii) an involuntary case or proceeding is commenced under a bankruptcy law
which is not dismissed or withdrawn within 60 days of the commencement of such
involuntary case or proceeding, then in any such event (each, a "Default Event")
and with no further act by AIG or any of its affiliates, the entire remaining
unpaid amount of the Section 1.1 Balance shall become immediately due and
payable and interest shall accrue on and after such date on the entire amount
thereof at the rate of 12% per annum (the "Default Rate"). Upon the occurrence
of any Default Event, AIG shall have the option, exercisable in the sole
discretion of AIG, to convert all or a portion of the remaining unpaid amount of
the Section 1.1 Balance, together with any accrued interest thereon at the
Default Rate to the date of conversion, into an equal aggregate liquidation
preference of convertible preferred stock (the "Default Stock") of the
Corporation having identical terms and provisions to those of the Preferred
Stock as set forth in the Securities Purchase Agreement and in the certificate
of designation of the Preferred Stock, except that the Default Stock shall be
convertible into the Corporation's common stock at any time and the conversion
terms of the Default Stock shall have the benefit of the anti-dilution
provisions contained in the Preferred Stock as if the Default Stock had
been issued on the date of this Agreement. The Corporation will be permitted to
prepay all or a portion of the Section 1.1 Balance remaining at any time and any
such prepayment, if less than the full payment of the remaining Section 1.1
Balance, shall be applied against the then remaining amount of the Section 1.1
Balance in the inverse order of maturity of the remaining quarterly
installments.
1.4 Payment of Contingent commission Funds with Respect to Subject
Business. Subject to and in reliance upon the representations, warranties,
terms and conditions
<PAGE>
of this Agreement, AIG agrees to release contingent commission funds totaling an
aggregate of U.S. $1,480,000.00 (the "Contingent Commission Payment Amount"),
with respect to the following four specific books of business for the 1993 and
1994 policy years (March 1, 1993 - February 28, 1994 and March 1, 1994 - April
30, 1995) (the "Subject Business")and which is comprised of the following
amounts: 1993 used vehicle contracts (no U.S $ payment), 1993 new vehicle
contracts (U.S. $927,917.83 payment), 1994 used vehicle contracts (U.S.
$84,203.98 payment) and 1994 new vehicle contracts (U.S. $467,878.19 payment).
1.5 Provision by the Corporation of Letters of Credit. Subject to and in
reliance upon the representations, warranties, terms and conditions of this
Agreement, the Corporation shall provide to AIG, as agent for each of the
insurance companies subscribing to the General Agency Agreement (the
"Subscribing Companies"), a letter of credit (the "Letter of Credit") to be
in effect initially until July 31, 1996 and issued by Peoples Bank in an
amount equal to U.S. $1,480,000.00 in the form attached hereto as Exhibit
A-1. In addition, the Corporation shall provide to AIG, as agent for each of
the Subscribing Companies, at least thirty (30) days prior to the expiration
of the Letter of Credit or any Replacement Letter of Credit (as hereafter
defined), a replacement letter of credit having terms substantially identical
to those of the Letter of Credit and otherwise in form and substance, and
issued by a bank, satisfactory to AIG (each, a "Replacement Letter of
Credit"), except that the expiration of each Replacement Letter of Credit
shall be at least one year after the date of its issuance. The Corporation
shall have an obligation to provide a Letter of Credit and Replacement
Letters of Credit such that there will be continually in place from the date
of this Agreement through December 31, 2002, a letter of credit substantially
identical to the Letter of Credit or any Replacement Letter of Credit. In
the event that there remain unresolved claims at December 31, 2002 with
respect to matters covered by the Letter of Credit or any Replacement Letter
of Credit, at AIG's request the Corporation will obtain a letter of credit
from a bank acceptable to AIG comparable to that set forth as Exhibit A-1
hereto in form and with a termination date satisfactory to AIG and covering
the full amount of the unresolved claims. The cost of obtaining the Letter
of Credit, each Replacement Letter of Credit and any subsequent letter of
credit (including, but not limited to, commitment and other fees and fees and
expenses of counsel) shall be borne entirely by the Corporation. The Letter
of Credit and each Replacement Letter of Credit are transferable in AIG's
sole discretion to one or more of its affiliates. For purposes of the
preceding sentence "affiliate" means any person directly or indirectly
controlling or controlled by
<PAGE>
or under direct or indirect common control with AIG.
[SECTION 1.6 (4 PAGES) HAS BEEN REDACTED AND FILED SEPARATELY AS
PART OF A CONFIDENTIALITY REQUEST WITH THE COMMISSION]
1.7 Commutation of Houston General Insurance Company Reinsurance. AIG
agrees that it will use its reasonable efforts after the Closing to attempt
to negotiate with Houston General Insurance company ("Houston General"), on
terms reasonably satisfactory to AIG, the transfer back to Houston General of
the reinsurance portfolio relating to consumer product extended service
contract programs provided by Warrantech Consumer Product Services, Inc. and
other affiliates of the Corporation and ceded by Houston General to certain
affiliates of AIG; provided, that the consideration to be paid by AIG in
exchange for the release of liability associated with the commutation and
portfolio transfer shall be either (a) not less than the unearned premium
(net of ceding commission previously paid but including the risk fee portion
of such unearned premium) or (b) all amounts in excess of the sum of U.S.
$1,000,000 and claims previously paid in conjunction with the reinsurance
agreement; and provided, further, that notwithstanding any provision of the
applicable reinsurance agreement to the contrary premiums shall be deemed
earned on a pro rata basis over the lives of the ceded policies. It is
further agreed that AIG will not, and will cause its affiliates not to,
advert in the course of marketing to information derived as a reinsurer of
Houston General.
1.8 Closing. The transactions described in Sections 1.1, 1.2, 1.3, 1.4
and 1.5(a) shall take place at a closing (the "Closing") to be held at the
offices of AIG, 70 Pine Street, New York, New York 10270 on the date of this
Agreement (the "closing Date") or on such other date and at such time as may
be mutually agreed upon. At the Closing, the Corporation shall do the
following: (i) cause
<PAGE>
Warrantech (UK) to deliver the Techmark Share Certificates and assign the
Techmark Loan to AIG with all requisite endorsements for transfer and
assignment; (ii) deliver or cause the delivery of the fully executed Letter
of Credit to AIG; and (iii) deliver to AIG the deeds of resignation of each
of Messrs. Joel San Antonio, William Tweed and Bernard White, each in the
form (but fully completed) set forth as Exhibit B hereto. At the Closing,
AIG shall do the following: (I) deliver the Stock Certificate and the Option
Letter to the Corporation with all requisite endorsements for transfer; (ii)
cause an amount equal to the Contingent Commission Payment Amount to be wire
transferred to the order of the Corporation; and (iii) deliver to the
Corporation the letters of resignation of each of Messrs. Kurt R.
Schwamberger and Joseph Umansky, each in the form (but fully completed) set
forth as Exhibit C Hereto. No transaction shall be deemed to have been
completed at the closing until all transactions to occur at the Closing shall
have been completed.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation represents and warrants to AIG as follows:
2.1 Organization and Standing of the Corporation and Warrantech
(UK); Corporate Action. Each of the Corporation and Warrantech (UK) is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. All necessary actions of the Board of Directors and
shareholders of the Corporation, Warrantech (UK) and any other affiliate of
the Corporation required by law or otherwise for the execution and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been taken. This agreement is a legal, valid and
binding agreement of each of the corporation and the other parties hereto
(other than AIG), enforceable against the corporation and such other parties
in accordance with its terms.
2.2 Consents and Approvals. No authorization, consent, approval,
waiver, license, permit, exemption of or filing with any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or other third party, is required to be
obtained by the Corporation or any other party hereto (other than AIG) or any
affiliate of the Corporation to execute and deliver this Agreement or to
consummate the transactions contemplated hereby.
2.3 Compliance with Other Instruments. Neither
<PAGE>
the execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby by the corporation or any of its affiliates,
will breach, or result in a default under (including after notice and passage
of time), or otherwise violate, (i) any mortgage, indenture, lease, agreement
or instrument to which the Corporation or any of its affiliates is, or any of
their respective properties or assets are, bound, (ii) the certificate of
incorporation (or similar organization document) or by-laws of the
Corporation or any of its affiliates or (iii) any judgment, decree, order,
statute, rule or regulation applicable to the Corporation or any of its
affiliates or any of its or their respective properties and assets.
2.4 Joint Venture Interest. The Techmark Shares and the Techmark Loan
comprise the entire interest of the Corporation and its affiliates in
Techmark, and the transfer at the Closing of the Techmark Shares and the
Techmark Loan to AIGE in accordance with the terms of this Agreement will
vest good title to same in AIGE, free and clear of any and all security
interests, liens, claims or other encumbrances and free of any rights of
first refusal.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AIG
AIG represents and warrants to the Corporation as follows:
3.1 Organization and Standing of AIG and AIGE; Corporate Action.
Each of AIG and AIGE is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has all requisite
corporate power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby. All necessary actions of the Board of
Directors and shareholders of AIG and AIGE and any other affiliate of AIG
required by law or otherwise for the execution and performance of this
Agreement and the consummation of the transactions contemplated hereby have
been taken. This Agreement is a legal, valid and binding agreement of AIG
enforceable against AIG in accordance with its terms.
3.2 Consents and Approvals. No authorization, consent, approval,
waiver, license, permit, exemption of or filing with any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or other third party, is required to be
obtained by AIG or any affiliate of AIG to execute and deliver this Agreement
or to consummate the transactions contemplated hereby.
3.3 Compliance with Other Instruments. Neither the execution and
delivery of this Agreement, nor the
<PAGE>
consummation of the transactions contemplated hereby by AIG or any of its
affiliates, will breach, or result in a default under (including after notice
and passage of time), or otherwise violate, (i) any mortgage, indenture,
lease, agreement or instrument to which AIG or any of its affiliates is, or
any of their respective properties or assets are, bound, (ii) the certificate
of incorporation (or similar organization document) or by-laws of AIG or any
of its affiliates or (III) any judgment, decree, order, statute, rule or
regulation applicable to AIG or any of its affiliates or any of its or their
respective properties and assets.
3.4 Interest in the Corporation. The transfer at the closing of
the Preferred Stock and the Options to the Corporation in accordance with the
terms of this Agreement will vest good title to same in the corporation, free
and clear of any and all security interests, liens, claims or other
encumbrances and free of any rights of first refusal.
ARTICLE IV
POST-CLOSING AGREEMENTS OF THE PARTIES
4.1 Non-solicitation Agreement by the Corporation. During the
period from and after the Closing through and including September 30, 1997,
the Corporation will not, and will cause its affiliates not to, (i) solicit
or service any warranty or extended service contract business from Omni Auto
in the United States and Canada (except for the performance of administrative
services on behalf of AIG and/or its affiliates pursuant to the General
Agency Agreement) and (ii) provide any administrative services related to any
warranty or extended service contract business from Comet in the United
Kingdom except if an affiliate or affiliates of AIG provide insurance related
to such warranties or extended services contracts. In connection with
soliciting or providing any such administrative services for Comet-related
business in the United Kingdom during the period referred to in the preceding
sentence, the Corporation shall not, and shall cause its affiliates not to,
in any way hold themselves out as representing, assisting or otherwise acting
in concert with AIG and/or its affiliates in connection with the writing of
insurance for the Comet program.
4.2 Agreement Not to Compete in Japan. During the period from and
after the Closing, through and including December 31, 1997, the Corporation
and each of the Management Stockholders will not, and each of the Corporation
and each of the Management Stockholders will cause its or his respective
affiliates and associates not
<PAGE>
to, in any way, directly or indirectly (whether in person, by mail, by
telephone or other electronic communication medium or otherwise), on its or
his own behalf or on behalf of or in conjunction with any other person,
partnership, firm, corporation, business trust, estate, joint venture,
limited liability company, association, trade group, holding company,
insurance company or insurance holding company, trading company, consortium,
conglomerate, bank or bank holding company, governmental entity or
organization or any other entity, solicit, engage in, participate in, invest
in, make loans to, consult with, provide services relating to, or otherwise
assist in any activity in Japan including, without limitation, any activity
that directly or indirectly (i) competes with the business of, (ii) would
have the effect of diverting or taking away business from, or (iii) induces
customers or potential customers not to engage in business with, Techmark or
any of its subsidiaries, presently formed or which may be formed in the
future, in Japan, except that the provisions of this Section 4.2 will not
preclude the Corporation from conducting business with CompUSA or any of its
wholly owned subsidiaries in Japan.
4.3 Continuation of Software License and Support Agreement. With
respect to that certain Software License and Support Agreement dated July 26,
1993 by and among the Corporation, Techmark and AIGE (the "Software License
Agreement"), (i) in accordance with the terms of Section 18.2 thereof, the
Software License Agreement is hereby novated as provided in Section 18.2(b)
thereof and Sections 18.2 and 18.3 of the Software License Agreement shall
otherwise be complied with, (ii) as a result of the novation effected by
clause (I) of this sentence, the Software License Agreement shall continue in
accordance with its terms with AIGE as the successor licensee thereunder,
except that the Support Schedule attached to the Software License Agreement
and contemplated by Section 12.1 thereof shall be terminated effective on the
close of business on the Closing Date, and (iii) the parties hereto agree
that, subject to the payment to Warrantech (UK) referred to in the last
sentence of Section 1.2 hereof, no further sums are due to Warrantech (UK)
from AIGE and/or Techmark under the Software License Agreement for past or
future services or with respect to any other matter thereunder.
4.4 Survival of General Agency Agreement. The General Agency
Agreement shall remain in full force and effect on and after the Closing Date
in accordance with its terms (including the terms and provisions of Addendum
D thereto in the form executed by or on behalf of Warrantech Automotive,
Inc., as general agent under the General Agency Agreement, on November 10,
1995 (the "Effective Addendum D")); provided, that, (i) Effective Addendum D
is deemed
<PAGE>
amended consistent with the provisions of paragraph 1.6 above, (ii) Addendum
D-2 (regarding "core" business written after April 30, 1995), Addendum D-3
(regarding "non-core" business written prior to October 1, 1995), Addendum
D-4 (regarding "non-core" business written after September 30, 1995),
Addendum E (regarding Warrantech Automotive's indemnification of Subscribing
Companies), and Addendum F (regarding miscellaneous modifications and
amendments to the General Agency Agreement) which are executed and attached
hereto as Exhibit E shall be in full force and effect, and (iii) any form of
Addendum D which is not specifically listed in this section, executed and
attached as part of Exhibit E (including, but not limited to, the April 1994
draft), whether in draft or executed by any party, has no force and effect
and shall not be used by any person for any purpose (including by using any
terms or provisions thereof for the purpose of interpreting the meaning or
intent of the terms and provisions of Effective Addendum D, D-2, D-3 or D-4
as included in Exhibit E).
4.5 Audit Fees. Any amounts payable by any affiliate of AIG in
connection with overrides and/or audit fees in connection with the writing of
domestic automobile warranty and vehicle service contract business, including
but not limited to amounts pursuant to the agreements entered into regarding
Universal Warranty Corporation and Mechanical Breakdown Administrators, Inc.
production, as well as any other agreements with any other producers, and
regardless of whether any such agreement was executed, in draft, verbally
agreed or otherwise, are hereby waived and all such agreements are hereby
terminated. No further amounts are due in conjunction with such payments
either for previously produced business or for business produced after
Closing Date. This paragraph shall not affect fees received by the
Corporation in connection with business produced by Dimension Holdings Inc.
or any other sub-producer of the Corporation.
ARTICLE V
EFFECT OF THIS AGREEMENT
5.1 Termination of Securities Purchase Agreement. At the close of
business on the closing Date, the Securities Purchase Agreement shall be
terminated and have no further force and effect, and each party hereto waives
entirely any dispute or claim with or against any other party to this
Agreement in respect of the Securities Purchase Agreement or any matter
governed thereby. Effective at the close of business on the Closing Date,
each party to this Agreement hereby releases from liability each other party
hereto with respect to the Securities Purchase Agreement or any matter
governed thereby.
<PAGE>
5.2 Termination of Joint Venture Agreement. At the close of business on
the Closing Date, the Joint Venture Agreement shall be terminated as between
AIGE on the one hand, and the Corporation and Warrantech (UK) on the other,
and have no further force and effect as between the two sets of parties
(except that Article XI of the Joint Venture Agreement shall survive such
termination; provided, that nothing contained herein shall be construed as an
admission or acknowledgment that any party to the Joint Venture Agreement has
received any confidential information from any other party pursuant to the
Joint Venture Agreement), and the Corporation and Warrantech (UK) on the one
hand, and AIG and AIGE on the other, waive entirely any dispute or claim with
or against each other or against Techmark in respect of the Joint Venture
Agreement or any matter governed thereby (other than the Software License
Agreement) which shall continue as provided in Section 4.3 of this
Agreement). Effective at the close of business on the Closing Date, the
Corporation and Warrantech (UK) on the one hand, and AIG and AIGE on the
other, hereby release from liability each other party with respect to the
Joint Venture Agreement or any matter governed thereby.
5.3 Resolution of dispute Regarding Subject Business. The parties hereto
agree that this Agreement resolves all disputes and claims among the parties
hereto relating to the interim payment of contingent commission funds for the
1993 and 1994 underwriting years with respect to the Subject Business. The
Parties hereto agree that the Subject Business will be run off in the
ordinary course of business and that this Agreement does not purport to
address or resolve other outstanding issues arising pursuant to the
Corporation's performance under the General Agency Agreement whether or not
any of the Corporation and/or its affiliates or AIG and/or its affiliates are
aware of any such other issues.
ARTICLE VI
MISCELLANEOUS
6.1 No Waiver; Cumulative Remedies. No failure or delay on the part of
the Corporation or AIG in exercising any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise
of any such right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy hereunder. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law, except as may be expressly so provided.
6.2 Amendments, Waivers and Modifications. Any provision in this
Agreement to the contrary notwithstanding,
<PAGE>
an amendment in or addition or modification to this Agreement and/or any
Exhibit attached hereto hereof may be made, and compliance with any covenant
or provision contained therein may be omitted or waived, only by a written
instrument making specific reference to this Agreement signed by the party
against whom any such amendment, addition, modification or waiver is sought.
Any waiver or consent may be given subject to satisfaction of conditions
stated therein and any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
6.3 Addresses for Notice, etc. All notices, requests, demands and other
communications provided for hereunder shall be in writing and mailed, or
delivered by overnight courier, or otherwise actually delivered to the
applicable party at the addresses indicated below:
If to the Corporation, to its principal office at:
Warrantech Corporation
300 Atlantic Street
Stamford, Connecticut 06901
Attention: Joel San Antonio
With a copy to:
Ralph A. Siciliano, Esq.
Newman Tannenbaum Helpern
Syracuse & Hirschtritt LLP
900 Third Avenue
New York, New York 10022
If to AIG, to its principal office at:
American International Group, Inc.
70 Pine Street
New York, New York 10270
Attn: Thomas R. Tizzio
With a copy to:
American International Group, Inc.
70 Pine Street
New York, New York 10270
Attn: General Counsel
All such notices, requests, demands and other communications shall, if
mailed, be effective 10 days after being deposited in the mails, or if
delivered to the overnight courier or actually delivered, when actually
delivered; provided, that any notice given pursuant to Section 1.3(b)(i) and
the last
<PAGE>
paragraph of Section 1.6 shall be delivered only by hand or by overnight
courier and shall be deemed effective on the date received if delivered by
hand on the day following the date of delivery to the overnight courier,
whether or not actually received.
Unless AIG otherwise provides notice to the Corporation, all wire
transfers of quarterly installments pursuant to Section 1.5(b) hereof or
payments of Remittance Amounts pursuant to Section 1.6 hereof shall be made
by the Corporation to the following account:
Citibank, NY
ABA# 021000089
AIG CP Pool
A/C# 40654308
6.4 Costs and Expenses. Each party hereto shall be responsible for his
or its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement.
6.5 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the Corporation and AIG and their respective
successors and assigns.
6.6 Survival of Representations and Warranties. All representations and
warranties made in this Agreement or any other instrument or document
delivered in connection herewith shall survive the execution and delivery
hereof.
6.7 Prior Agreements. This Agreement, together with the Exhibits
attached hereto, constitutes the entire agreement among the parties and
supersedes any prior understandings or agreements concerning the specific
subject matter set forth herein, except to the extent expressly provided for
herein.
6.8 Severability. The provisions of this Agreement are severable, and,
in the event that any court of competent jurisdiction shall determine that
any one or more of the provisions or part of a provision contained in this
Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision or part of a provision of this
Agreement; but the Agreement shall be reformed and construed as if such
invalid or illegal or unenforceable provision, or part of a provision, had
never been contained herein, and such provisions or part reformed so that it
would be valid, legal and enforceable to the maximum extent.
<PAGE>
6.9 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without reference to
its conflicts of law provisions.
6.10 Injunctive Relief. The parties hereto agree that, in the event of
a breach of any provision of this Agreement, the aggrieved party may be
without an adequate remedy at law. The parties therefore agree that in the
event of a breach of any provision of this Agreement, the aggrieved party may
elect to institute and prosecute proceedings in any court of competent
jurisdiction to enforce specific performance or to enjoin the continuing
breach of such provision, as well as to obtain damages for breach of this
Agreement. By seeking or obtaining any such relief, the aggrieved party will
not be precluded from seeking or obtaining any other relief to which it may
be entitled.
6.11 Headings. Article, Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement.
6.12 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
6.13 Further Assurances. From and after the date of this Agreement,
upon the request of AIG or the Corporation, the Corporation and AIG, as the
case may be, shall execute and deliver to the requesting person at the
expense of the requesting person, such instruments, documents and other
writings as may be reasonably necessary to confirm and carry out and to
effectuate fully the intent and purposes of this Agreement.
WARRANTECH CORPORATION
BY: /s/ Joel San Antonio
--------------------------
AMERICAN INTERNATIONAL GROUP, INC.
BY: /s/ Thomas Tizzio
--------------------------
BY: /s/ Kathleen E. Shannon
--------------------------
<PAGE>
/s/ Joel San Antonio
--------------------------
JOEL SAN ANTONIO
/s/ William Tweed
--------------------------
WILLIAM TWEED
/s/ Jeff J. White
--------------------------
JEFF J. WHITE
Each of the undersigned hereby
agrees to and confirms as of the
date above written each of the
agreements or obligations imposed
upon or to be performed by it as
a result of the Agreement above.
WARRANTECH (UK) LIMITED
By:
----------------------------
AIG EUROPE (UK) LIMITED
By: /s/ M.J. Sullivan
----------------------------
<PAGE>
EXHIBIT A-1
[Letterhead of Issuer of Letter of Credit]
APRIL , 1996
IRREVOCABLE STANDBY LETTER
OF CREDIT NO.
BENEFICIARY:
AMERICAN INTERNATIONAL GROUP, INC.
70 PINE STREET
NEW YORK, NEW YORK 10270
GENTLEMEN:
WE HEREBY ESTABLISH IN YOUR FAVOR, AT THE REQUEST AND FOR THE ACCOUNT
OF WARRANTECH CORPORATION, 300 ATLANTIC STREET, STAMFORD, CT 06901 OUR
IRREVOCABLE STANDBY LETTER OF CREDIT NO. (THE "LETTER OF CREDIT") IN
AN AMOUNT NOT TO EXCEED IN THE AGGREGATE U.S. DOLLARS ONE MILLION FOUR HUNDRED
EIGHTY THOUSAND AND 00/100 **U.S.$1,480,000.00**, EFFECTIVE IMMEDIATELY, AND
EXPIRING AT OUR CLOSE OF BUSINESS ON JULY 31, 1996 (THE "EXPIRATION DATE") AT
OUR OFFICE LOCATED AT [ ], ATTENTION:
COMMERCIAL LOAN DIVISION, STANDBY LETTER OF CREDIT UNIT.
FUNDS UNDER THIS IRREVOCABLE STANDBY LETTER OF CREDIT ARE AVAILABLE TO
BENEFICIARY OR ITS TRANSFEREE AS HEREIN PROVIDED ( THE "TRANSFEREE") BY PAYMENT,
DURING THE PERIOD COMMENCING ON THE DATE HEREOF AND ENDING ON THE EXPIRATION
DATE BY BENEFICIARY'S OR TRANSFEREE'S PRESENTATION AT OUR OFFICE STIPULATED
HEREIN OF THEIR DRAFT(S) DRAWN AT SIGHT ON OURSELVES AND ACCOMPANIED BY A
WRITTEN CERTIFICATE SIGNED BY BENEFICIARY OR TRANSFEREE READING AS FOLLOWS:
"THE UNDERSIGNED BEING DULY AUTHORIZED DOES HEREBY CERTIFY THAT:
(A) PURSUANT TO SECTION 1.6 OF THAT CERTAIN AGREEMENT DATED AS OF
JANUARY 1, 1996, BY AND AMONG WARRANTECH CORPORATION, A DELAWARE
CORPORATION, AND AMERICAN INTERNATIONAL GROUP, INC., A DELAWARE
CORPORATION ("AIG"), A REMITTANCE AMOUNT (AS DEFINED IN SAID
SECTION 1.6) IS DUE AND PAYABLE TO AIG [OR INSERT NAME OF
TRANSFEREE] OR AN ALTERNATIVE DRAWDOWN EVENT (AS DEFINED IN SAID
SECTION 1.6) HAS OCCURRED; AND
(B) THE AMOUNT OF THE ACCOMPANYING SIGHT DRAFT(S) (TOGETHER WITH THE
AGGREGATE AMOUNT OF ALL PRIOR DRAWINGS UNDER THIS STANDBY LETTER
OF CREDIT) DOES NOT EXCEED THE AMOUNT AVAILABLE FOR DRAWING UNDER
THIS STANDBY LETTER OF CREDIT; AND
<PAGE>
(C) PAYMENT OF THIS DRAWING IS TO BE MADE BY FED FUNDS WIRE TRANSFER
TO [ ] FOR CREDIT TO ACCOUNT NUMBER
, , AND SHOWING THE
'REFERENCE.'"
THERE IS NO LIMITATION ON THE NUMBER OR FREQUENCY OF DRAWINGS PERMITTED
HEREUNDER.
PAYMENT OF A DRAWING UNDER THIS LETTER OF CREDIT SHALL BE MADE BY FED
WIRE TRANSFER TO THE ACCOUNT SPECIFIED IN THE CERTIFICATE ACCOMPANYING THE SIGHT
DRAFT.
THIS LETTER OF CREDIT IS TRANSFERABLE MORE THAN ONCE, IN ITS ENTIRETY
AND NOT IN PART, TO ANY AFFILIATE OF AIG BUT NOT OTHERWISE TRANSFERABLE.
TRANSFER OF THIS LETTER OF CREDIT TO ANY SUCH TRANSFEREE SHALL BE EFFECTED BY
THE PRESENTATION TO US OF THIS LETTER OF CREDIT ACCOMPANIED BY A TRANSFER
INSTRUCTION IN THE FORM OF ANNEX A ATTACHED HERETO. UPON SUCH PRESENTATION, WE
SHALL FORTHWITH EFFECT SUCH TRANSFER OR, IF SO REQUESTED BY THE TRANSFEROR,
ISSUE A REPLACEMENT LETTER OF CREDIT TO ANY SUCH TRANSFEREE WITH PROVISIONS
THEREIN CONSISTENT WITH THE TERMS OF THIS LETTER OF CREDIT, IN WHICH CASE THIS
LETTER OF CREDIT MUST BE PRESENTED TO THE BANK FOR CANCELLATION.
IN THE EVENT THAT THIS LETTER OF CREDIT IS TRANSFERRED, DRAFT(S) AND
CERTIFICATE REQUIRED HEREIN MUST BE EXECUTED BY THE TRANSFEREE.
EXCEPT AS OTHERWISE EXPRESSLY STATED HEREIN, THIS LETTER OF CREDIT IS
SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993
REVISION) (INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 500) OR ANY LATER
REVISION WHICH MAY BE IN EFFECT AT THE TIME (THE "UNIFORM CUSTOMS"). THIS
LETTER OF CREDIT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK, INCLUDING THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN THE
STATE OF NEW YORK, AND SHALL, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS,
BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
ALL DRAWINGS UNDER THIS LETTER OF CREDIT AND ALL COMMUNICATIONS WITH
RESPECT TO THIS LETTER OF CREDIT SHALL BE IN WRITING AND SHALL BE ADDRESSED TO
US AT , ATTENTION: COMMERCIAL LOAN
DIVISION, STANDBY LETTER OF CREDIT UNIT, SPECIFICALLY REFERRING TO THE NUMBER OF
THIS LETTER OF CREDIT.
THIS LETTER OF CREDIT SETS FORTH IN FULL THE TERMS OF OUR UNDERTAKING
AND SUCH UNDERTAKING SHALL NOT IN ANY WAY BE MODIFIED, AMENDED OR AMPLIFIED OR
LIMITED BY REFERENCE TO ANY DOCUMENT, INSTRUMENT OR AGREEMENT REFERRED TO
HEREIN, EXCEPT ONLY THE CERTIFICATE AND THE SIGHT DRAFT(S) REFERRED TO HEREIN;
ANY SUCH REFERENCE SHALL NOT BE DEEMED TO INCORPORATE HEREIN BY REFERENCE ANY
DOCUMENT, INSTRUMENT OR AGREEMENT EXCEPT FOR SUCH CERTIFICATE AND SIGHT
DRAFT(S).
<PAGE>
WE HEREBY AGREE WITH YOU THAT DRAFT(S) DRAWN UNDER AND IN COMPLIANCE
WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT SHALL BE DULY HONORED ON
DUE PRESENTATION TO _____________________________.
VERY TRULY YOURS,
--------------------------------------------
(AUTHORIZED SIGNATURE)
<PAGE>
Exhibit B
DEED OF RESIGNATION
To: Techmark Services Limited
Jordan House,
47 Brunswick Place,
LONDON N1 6EE
April 1996
I, _____________________, c/o __________________________, hereby
resign with effect from the close of business today as a Director of Techmark
Services Limited (the "Company").
I declare that no sums are due to me from the Company by way of
compensation for loss of office or otherwise and that I have no claims
whatsoever against the Company arising out of my tenure of office as a Director
of the Company but, to the extent that any such claim exists, I hereby release
the Company from any liability whatsoever in respect thereof.
IN WITNESS whereof I have executed this Deed the day of April
1996.
Signed as a Deed and delivered by the said______________________ in
the presence of:
Name of witness:
Signature:
Address:
<PAGE>
Exhibit C
LETTER OF RESIGNATION
To: Warrantech Corporation
300 Atlantic Street
Stamford, CT 06901
April , 1996
I, ______________________________, c/o_______________________________,
hereby resign with effect from the close of business today as a Director of
Warrantech Corporation (the "Company").
I declare that no sums are due to me from the Company by way of
compensation for loss of office or otherwise and that I have no claims
whatsoever against the Company arising out of my tenure of office as a Director
of the Company but, to the extent that any such claim exists (other than a claim
properly indemnifiable under the Company's Certificate of Incorporation and
By-laws as in effect on the date hereof), I hereby release the Company from any
liability whatsoever in respect thereof. By accepting this letter of
resignation, the Company agrees and confirms that I am entitled to
indemnification, and will be indemnified to the fullest extent, under the
Company's Certification of Incorporation and By-laws as in effect on the date
hereof.
IN WITNESS WHEREOF, I have executed this letter on the day of
April 1996.
------------------------------------
Name:
Accepted and Confirmed as
of the date above written:
WARRANTECH CORPORATION
By:
-----------------------------------
Name:
Title:
<PAGE>
Exhibit E
[EXHIBIT E (39 PAGES) HAS BEEN REDACTED AND FILED SEPARATELY
AS PART OF A CONFIDENTIALITY REQUEST WITH THE COMMISSION.]
<PAGE>
AGREEMENT
THIS AGREEMENT dated as of January 1, 1996, by and among WARRANTECH
CORPORATION, a Delaware corporation ("Warrantech"), JOEL SAN ANTONIO, WILLIAM
TWEED, and JEFF J. WHITE and AMERICAN INTERNATIONAL GROUP, INC., a Delaware
corporation ("AIG") (hereinafter referred to as the "parties").
WHEREAS, Warrantech and AIG have entered into an Agreement, dated as
of January 1, 1996 (the "Agreement"), which, among other things, provides for
the termination of the Securities Purchase Agreement dated July 19, 1993 (the
"Securities Purchase Agreement") between and among the parties.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained and for other good and valuable consideration, the parties
hereby agree as follows:
As of the close of business on the Closing Date (as defined in the
Agreement), the Securities Purchase Agreement is terminated and shall have no
further force and effect, and each party hereto waives entirely any dispute or
claim with or against any other party in respect of the Securities Purchase
Agreement or any matter governed thereby and all rights thereunder. Effective
at the close of business on the Closing Date, each party hereto hereby releases
from liability each other party hereto hereby released from liability each other
party hereto with respect to the Securities Purchase Agreement or any matter
governed thereby.
<PAGE>
WARRANTECH CORPORATION
By: /s/ Joel San Antonio
-------------------------------------
Title: Chief Executive Officer
AMERICAN INTERNATIONAL GROUP, INC.
By: /s/ Thomas Tizzio
-------------------------------------
Title:
/s/ Joel San Antonio
-------------------------------------
Joel San Antonio
/s/ William Tweed
-------------------------------------
William Tweed
/s/ Jeff J. White
-------------------------------------
Jeff J. White
