AGREEMENT made and entered into this ____ day of ____________, 20__ by and between [NAME OF INSURANCE AGENCY], a [State] corporation having a principal place of business in [City, State], (hereinafter the 'Agency') and _____________ of ____________, [State] (hereinafter the 'Producer'). WHEREAS, the Producer is licensed by the [State] as an insurance broker with authority to sell all lines of insurance, including property, casualty and life insurance, and WHEREAS, the Agency conducts a general insurance agency business duly licensed as such by the [State], and WHEREAS, the Producer desires to be associated with the Agency as a producer of insurance business, and the Agency desires to have the Producer associated with it in such capacity upon the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of, and reliance upon, the mutual covenants and agreements herein contained, the parties hereby agree as follows:
W I T N E S S E T H :
1. Definitions. For the purposes of this Agreement, unless the context indicates to the contrary, the following words and phrases shall be defined as follows:
a. The 'Agency' shall mean the [Insurance Agency] and any present or future subsidiary or affiliate, whether partially or wholly owned, or successor in interest of the said [Insurance Agency].
b. The 'Producer's Book of Business' shall mean all insurance accounts, whether personal or commercial, produced solely and exclusively by the efforts of the Producer during the term of this Agreement, which accounts shall be unrelated to any other accounts on the books of the Agency. An account shall be deemed related if (i) it is a parent, child, spouse or sibling of an account otherwise on the books of the Agency or (ii) it is a subsidiary, affiliate of or otherwise under common ownership by an account otherwise on the books of the Agency. Personal accounts developed from officers, directors or employees of a commercial account that is not part of the Producer's Book of Business shall not be included in the Producer's Book of Business.
c. 'Net Annual Commissions' shall mean gross annual commissions less return commissions earned by the Agency on account of insurance business written with an effective date during the period in issue, excluding all so-called contingent, bonus or profit sharing commissions but including commissions on so- called audit premiums which apply to insurance business with an effective date during such period. Additionally, there shall be included within the meaning of Net Annual Commissions all service fees or other fees received during the period in issue (or within 90 days thereafter on account of services rendered during such period) with respect to consulting, risk management or other insurance or risk related services rendered. All investment income and so- called late charges on overdue premiums shall be excluded from the meaning of Net Annual Commissions. Except in the case of so-called direct-bill business, commissions shall be deemed to be earned on the effective date of the policy or endorsement in issue, subject to adjustment in the event of cancellation for nonpayment of premium or other event requiring payment of a return commission. In the event a policy shall be written for a term in excess of one year with premiums paid on an annual or other periodic basis, each annual anniversary of the effective date shall be deemed an effective date. Monthly or other periodic installment billings of premiums shall be deemed to relate back to the effective date of the policy. In the case of commissions received from insurance companies on account of so-called direct-bill business, commissions shall be deemed earned upon receipt, subject to adjustment in the event a return commission shall be required to be paid with respect to a policy on which a commission has been received.
d. 'New Policies of Insurance' shall mean new lines of insurance coverage produced solely and exclusively through the efforts of the Producer for accounts of the Agency assigned to the Producer for servicing. Increased limits of liability and/or endorsements to existing policies or consolidation of existing coverages under separate policies into a single policy or rewriting of existing policies with other insurance companies shall not be deemed New Policies of Insurance.
2. Term. Commencing _________________, 20__, the Producer agrees to serve in the employ of the Agency and the Agency agrees to employ the Producer upon the terms and conditions herein contained until such time as either party shall elect to terminate said employment upon not less than 14 days' advance written notice delivered as provided herein. Notwithstanding the foregoing, the employment of the Producer shall terminate immediately upon his death. Further, the Agency may terminate the employment of the Producer without advance notice for good and sufficient cause which shall be defined as follows:
a. The failure of the Producer to be licensed as an insurance broker by the [State].
b. The material breach by the Producer of any provision of this Agreement.
c. The habitual failure or refusal of the Producer to comply with the operating rules and procedures of the Agency adopted and communicated to the Producer by the Agency from time to time hereafter.
d. Public actions by the Producer which, in the judgment of the Board of Directors of the Agency, reasonably may tend to impair the reputation of the Producer in the market area served by the Agency.
In the event that the Agency shall elect to terminate the employment of the Producer for good and sufficient cause as aforesaid, notice of termination shall specify each and every ground upon which termination for good and sufficient cause shall be based. In the event the Producer shall elect to terminate his employment upon 14 days' advance written notice, the Agency, at its option, shall have the right to terminate his services immediately provided it shall continue to pay the Producer such compensation and other benefits to which he shall otherwise be entitled through the effective date of termination. The Producer acknowledges that his employment is 'at will' and is subject to termination, with or without cause, in accordance with the provisions of this paragraph.
3. Duties and Responsibilities. During the term of this Agreement, the Producer agrees to devote his full and exclusive working time and his best efforts on behalf of the Agency. The Producer shall be primarily responsible for the solicitation and sale of all lines of insurance coverage including, but not limited to, property and casualty, life, disability and accident and health insurance coverage on behalf of the Agency and servicing of customers produced by him or assigned to him for servicing by the Agency from time to time; provided, however, nothing herein shall require the Agency to assign any customers to the Producer for servicing. Additionally, the Producer shall act as the primary liaison with, and account executive for, those customers and accounts constituting the Producer's Book of Business and those additional customers and accounts assigned to him by the Agency for servicing. The Producer also shall be available to render such other services on behalf of the Agency as may be assigned to him from time to time, always consistent with the Producer's primary job responsibilities, experience, training and education. In all matters, the Producer shall act in accordance with the basic policy decisions and operational procedures established from time to time by the principal officers and the Board of Directors of the Agency. Except as specifically set forth herein, the Producer acknowledges that he shall have no authority, express or implied, to incur any liability in the name of the Agency or to bind the Agency or its markets on account of any insurance coverages other than as specifically permitted by agency agreements in effect between the Agency and insurance carriers and as specifically authorized by the Agency.
4. Publicity and Receipts. All correspondence and all publicity and advertising shall be carried on in the name of the Agency. Except in the case where premiums are billed directly to insureds by the insurance company, all premiums shall be billed by, and shall be owed to, the Agency; all checks and drafts in payment of such premiums shall be made payable to the Agency; and all money received in payment of premiums shall be turned over to the Agency in the form received and deposited to the account of the Agency.
5. Ownership of Expirations. All insurance business, including renewals, whether property and casualty, life, disability or accident and health, produced by the Producer during the continuation of his employment shall be written, renewed and serviced through the facilities of the Agency or, if any such business has to be brokered elsewhere, it shall be done only in the name of the Agency and only with the consent of the Agency. All such business produced by the Producer shall be coded or otherwise identified on the Agency books of business so as to indicate its source of production and, where appropriate, shall be further coded or otherwise identified as the Producer's Book of Business; however, notwithstanding such identification, all such business, including the expiration data and all files and records in connection therewith, shall be the exclusive property of the Agency and shall continue to be so after the termination of employment of the Producer, however caused; and, except to the extent provided in paragraph 7 hereof, the Producer hereby waives and releases all claims of right or ownership thereto and covenants that he shall not make or retain copies of such property.
6. The Producer's Equity in Expirations. After this Agreement shall have been in effect for 84 consecutive months and provided the Producer is not in breach or default of the provisions of this Agreement, the Producer's Book of Business shall be subject to the rights of the Producer as set forth in this paragraph, which rights, if exercised, shall create an exception to the provisions of paragraph 10 hereof. It is understood and agreed that in the event of termination of this Agreement, with or without cause, prior to the expiration of said 84 month period, none of the rights set forth in this paragraph shall inure to the benefit of the Producer.
a. In the event of termination of this Agreement at any time subsequent to said 84 month period, the Producer shall have the right to solicit Broker of Record letters from all accounts constituting the Producer's Book of Business.
b. In the event the Producer shall obtain a Broker of Record letter from any such account, he shall have the right to transact insurance business for, or on behalf of, such account (without being deemed in violation of the provisions of paragraph 10 hereof) and, subject to the provisions of the following subparts of this paragraph, he shall have the right, at his expense, to obtain from the Agency copies of the Agency's files for such account; provided, however, the Agency shall be permitted to retain the originals of all or such portions of said files as it may desire for the purpose of preparing tax returns and audits thereof, defense of litigation or other such reasonable business purpose.
c. As a condition precedent to the Producer's receipt of such files, as provided in the preceding subpart of this paragraph, in each instance he shall execute a statement wherein he shall agree that:
i. he shall not cancel for replacement purposes any then existing insurance coverage prior to normal expiration thereof;
ii. he shall assume full responsibility for renewal of all existing coverages and other insurance requirements for said account;
iii. he shall indemnify, defend and hold the Agency harmless from and against any claims by such account for real or alleged errors and omissions with respect to incidents occurring on and after the date of the Broker of Record letter; and
iv. he shall warrant that he has in effect a valid and collectible policy of errors and omissions insurance issued by an underwriter licensed to issue such policies in [State] and shall provide the Agency with evidence satisfactory to it that such policy is in force and effect.
d. As a further condition precedent to the Producer's receipt of such files as provided in the preceding subpart of this paragraph, the Producer shall pay to the Agency the total amount of any accounts receivable, if any, as may then remain due and owing to the Agency from such account. The Agency shall assign and transfer to the Producer all of the Agency's rights to collect such accounts receivable from such account.
e. As full and complete consideration for each such account as the Producer shall acquire hereunder and as a further condition precedent to his right to transact insurance business for and on behalf of such account and to receive the files and records therefore, the Producer shall pay to the Agency in full prior to transacting any insurance business for such account a sum equal to one times the Net Annual Commissions earned by the Agency for all insurance written for such account during the 12 months immediately preceding the month in which the employment of the Producer shall have terminated.
f. In the event that the Producer shall exercise his option and purchase accounts from the Agency as aforesaid, then the Agency does hereby covenant and agree that for a period of 36 months following the effective date of such purchase by the Producer, the Agency shall not, directly or indirectly, solicit, attempt to obtain, accept, write or service insurance business for any customer or account purchased by the Producer from the Agency as aforesaid, nor shall the Agency act or serve in any capacity as risk manager or insurance advisor or consultant to or for any of such customers or accounts.
g. In the event that upon termination of this Agreement, however caused, at any time subsequent to said 84 month period under such circumstances as (i) the Producer does not exercise his right to solicit insurance business from the Producer's Book of Business as provided in subparts (a) and (b) of this paragraph and (ii) the Producer executes a statement acknowledging and reaffirming that the provisions of paragraph 10 hereof are in full force and effect, including a specific acknowledgment that the provisions of paragraph 10(b) shall apply to all of the accounts on the books of the Agency, including, but not limited to, all of the accounts constituting the Producer's Book of Business for a period of 36 months following termination of this Agreement, then the Agency shall pay to the Producer as deferred compensation an amount equal to one-third of all Net Annual Commissions received by the Agency on account of the writing and renewal of insurance business on the Producer's Book of Business with an effective date during the 36 month period commencing with the month immediately following the month in which termination of this Agreement shall occur. The Agency shall produce monthly accountings of all Net Annual Commissions received by the Agency on account of such business during said 36 month period and shall deliver said accountings to the Producer within 25 days of the close of the month to which such accounting pertains, together with payment of an amount equal to one-third of the Net Annual Commissions received by the Agency during such month, provided the premium therefore has been paid to the Agency in case of agency billed business or, in the case of direct billed business, the commission has been paid to the Agency. Notwithstanding said payments, the Producer shall remain liable to the Agency for repayment of one-third of any return commissions paid or allowed as a credit to an insured by the Agency on account of cancellation of, or endorsement to, any insurance business on which the Producer shall have been paid one-third of the commission as aforesaid. The Agency, at its option, shall be entitled to set off against, and deduct from, future sums due the Producer under this paragraph such sums as may be due from the Agency on account of return commissions paid or allowed as a credit by the Agency.
7. The Agency's Right to Refuse Business. The Agency shall be free to decline or accept any insurance business produced by the Producer if, in the sole opinion of the Agency, such business appears to be unprofitable or injurious to the reputation of the Agency. Should the Agency reject any such business, the Producer shall not place such business elsewhere except upon the prior written consent of the Agency.
8. Compensation. As full compensation for his solicitation and servicing of insurance business hereunder and for such other services as the Producer may render on behalf of the Agency during the term of this Agreement, he shall be entitled to receive the salary and/or commissions, fees and benefits set forth on the annexed Schedule of Compensation. The terms of said Schedule are hereby incorporated into this Agreement and shall be binding upon the parties hereto and their heirs, successors or assigns unless an amendment or change thereto is agreed to in writing and signed by the Agency and the Producer.
9. Accounts Receivable/Return Commissions/Adjustments. The Producer shall be responsible for, and shall pay to the Agency, any accounts receivable for premiums (net of gross commissions) due on insurance business written or renewed by the Agency for insurance business produced and/or serviced by the Producer (hereinafter the 'Producer's Accounts Receivable') that remain outstanding for a period of 30 days or longer from the date first billed. The Agency shall provide the Producer with a monthly list of all Producer's Accounts Receivable billed by the Agency, which list shall indicate the date the receivable was first billed and the number of days it is outstanding. The Producer also shall be responsible for his proportionate share of any return commissions paid or allowed as a credit by the Agency on business for which the Producer shall have been paid a commission as provided in the annexed Schedule of Compensation. The Agency, at its option, shall be entitled to set off against and deduct from future sums due to the Producer pursuant to this Agreement such sums as may be due from the Producer on account of (i) Producer's Accounts Receivable remaining outstanding for a period of 30 days or longer as aforesaid or (ii) the Producer's proportionate share of any return commission paid or allowed as a credit by the Agency. The Producer shall have the right to request the Agency to cancel for nonpayment of premium any insurance business, the premium for which he shall be responsible hereunder. In the event the Agency shall fail to act upon any written request for cancellation of business submitted by the Producer within three business days of submission, then the Producer's liability for unpaid, earned premium on such business shall cease as of the date on which the notice of cancellation for nonpayment would have been effective had it been transmitted to the insured within said three day period. A business day shall mean a day on which (a) the Agency is open for business and (b) the United States Postal Service makes regular deliveries of mail to the Agency. Notwithstanding the right of set off, the Producer shall be, and remain personally responsible for, all unpaid Producer's Accounts Receivable and for his proportionate share of return commissions as may be due after termination of this Agreement, however caused, and he shall pay the same to the Agency within 15 days of receipt from the Agency of an accounting thereof.
10. Covenant Not to Compete. In recognition of the fact that the Agency is engaged in a personal service business involving confidential information constituting trade secrets and personal relationships with insureds, the success of which business is in large part due to the exclusive retention of such confidential information and continuation of such personal relationships with insureds, the Producer does hereby covenant and agree as follows and acknowledges that the following covenants were agreed to by him as a condition precedent to this Agreement with the Agency and that they are reasonably necessary for the protection of the Agency and may be enforced to the extent set forth herein or such extent as any court of competent jurisdiction may deem reasonable and proper:
a. The Producer agrees that all information governing the insurance of the Agency's customers (inclusive of those customers produced by the Producer and constituting the Producer's Book of Business and/or those accounts assigned to him for servicing), including expiration data in connection therewith, and all special forms used by the Agency are confidential information constituting trade secrets and will be treated by him as such; and that both during and after the term of this Agreement, however it may be terminated, he will not, directly or indirectly, make use of such information or any other confidential information concerning the Agency's business for his own benefit or the benefit of anyone other than the Agency, nor will he divulge such information to anyone not duly entitled thereto, nor will he retain or create any lists of the Agency customers nor reveal the same to anyone.
b. The Producer covenants and agrees that during the term of this Agreement with the Agency he will not, directly or indirectly, compete with the Agency in any manner and, further, except as provided in paragraph 6 hereof, for a period of 36 months following termination of this Agreement, however caused, he will not, directly or indirectly, on his behalf or on behalf of anyone else, solicit, attempt to obtain, accept, write or service insurance business for any customer or account on the books of the Agency at the time this Agreement shall terminate (inclusive of those customers produced by the Producer and constituting the Producer's Book of Business and/or those accounts assigned to him for servicing); nor, during said period, shall he act or serve in any capacity as risk manager or as insurance advisor or consultant to or for any of said customers; nor shall he aid or assist anyone else in so acting or in any manner soliciting, writing, placing or servicing such business for said customers. It is understood that any leads or prospects on which the Producer may be working or from which the Producer shall have solicited insurance business during the 12 months immediately preceding the date of termination of this Agreement shall be deemed to be a customer and account of the Agency for purposes of this Agreement.
c. The Producer covenants and agrees that he will not during the term of this Agreement nor for a period of 12 months thereafter, directly or indirectly, (i) induce any employee of the Agency or producer associated with the Agency to leave the employ of, or association with, the Agency, as the case may be, nor will he, for said period, directly or indirectly, employ or become associated with any person who was an employee of, or producer associated with, the Agency on the date of termination of this Agreement or within six months prior to such date, and (ii) take any action that shall cause any insurance company, general agency or other insurance market with which the Agency transacts business to terminate or modify in a manner adverse to the Agency any agreement or business relationship in effect with the Agency.
d. In the event of the expiration or termination of this Agreement with the Agency, the Producer agrees, prior to his commencement of any new employment, to advise any new employer in the insurance business of the terms of this paragraph 10, and he agrees to furnish (and consents to the furnishing by the Agency) such new employer with a copy of this Agreement, except that the Producer need not (and the Agency shall not) deliver to such new employer a copy of the Schedule of Compensation annexed hereto.
e. In the event of a breach or threatened breach by the Producer of the provisions of this paragraph, any and/or all of the provisions hereof may be enforced by a restraining order or injunction restraining the Producer from the commission of such breach to the full extent hereof or to such lesser extent as a court of competent jurisdiction may deem just and proper for the reasonable protection of the rights and interests of the Agency. Nothing herein contained shall be construed as prohibiting the Agency from pursuing any other remedies available for such breach or threatened breach including the recovery of money damages which may include an award of reasonable counsel fees and expenses. The covenants contained in this paragraph shall be construed as independent of any other provisions of this Agreement, and the existence of any other claim or cause of action by the Producer against the Agency shall not constitute a defense to the enforcement of the within covenants. In furtherance of the foregoing, the Producer acknowledges that the damage that may be incurred by the Agency by the diversion of its accounts in violation of the provisions of this paragraph may be irreversible and that money damages for such breach may be difficult to calculate; accordingly, the Producer agrees that a court of competent jurisdiction may enter a temporary restraining order ex parte for such period as the court may deem reasonable pending a hearing on the merits of the controversy.
11. The Producer's Freedom to Contract. The Producer does hereby warrant and represent that he is not a party to any agreement which restricts or impairs his right to engage in any aspect of the insurance business within the [State], or which restricts or impairs his right and ability to solicit insurance business from anyone in the [State], or which restricts or impairs his right and ability to enter into this Agreement and carry out his duties and responsibilities hereunder.
12. Arbitration. Any dispute or controversy arising with respect to any provision of this Agreement, or the interpretation or implementation hereof, shall be resolved by binding arbitration under the rules of the American Arbitration Association to be conducted in [City, State]. Both parties agree to cooperate in the expeditious conduct of any such arbitration. It shall be the obligation of the aggrieved party to seek such arbitration forthwith upon the failure of the other party to accede to the demands of the aggrieved party or the failure of the parties to reach a mutually acceptable compromise. Notwithstanding said provisions for binding arbitration, nothing herein shall be deemed to prevent or restrict the right of either party to seek to enforce the provisions of this Agreement or enjoin a breach or threatened breach hereof by an action for specific performance or by a restraining order or injunction obtained in a court of competent jurisdiction.
13. Notices. All notices, requests, demands and other communication required hereunder shall be in writing and shall be deemed to have been duly given and effective (a) on the date delivered if delivered in hand to the Producer or to the President of the Agency, as the case may be, (b) the next following business day after being sent via Federal Express or other overnight carrier service that requires signatures of recipients upon delivery or &c