Exhibit 10.1

Table of Contents

 

1.

   APPOINTMENT/AUTHORITY    2

2.

   TERM OF AGREEMENT    4

3.

   LIMITATIONS OF AUTHORITY    5

4.

   GENERAL RIGHTS AND OBLIGATIONS OF AGENT    7

5.

   PREMIUMS, ACCOUNTING AND REPORTING    12

6.

   COMPENSATION OF AGENT    14

7.

   GENERAL RIGHTS AND OBLIGATIONS OF COMPANY    15

8.

   CONFIDENTIAL INFORMATION    16

9.

   INSURANCE AND INDEMNITY    18

10.

   TERMINATION    23

11.

   GENERAL PROVISIONS    32

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AGENCY AGREEMENT

This Agency Agreement (the “Agreement”) is effective as of 12:01 a.m. Eastern
Time on the 24th day of September, 2009 (“Effective Date”), between The North
River Insurance Company, Crum & Forster Indemnity Company, Crum and Forster
Insurance Company, Crum & Forster Specialty Insurance Company and United States
Fire Insurance Company, (hereinafter collectively referred to as the “Company”)
and AmerInst Professional Services, Limited (hereinafter referred to as the
“Agent”).

WHEREAS, Company are duly licensed insurance companies in various states of the
United States; and

WHEREAS, Agent has expertise in soliciting, marketing, underwriting and issuing
Accountants Professional Liability Coverage and Lawyers Professional Liability
Coverage which meet the unique insurance needs of accounting and law firms; and

WHEREAS, Company may enter into reinsurance agreements with certain reinsurers
(the “Reinsurers”) reinsuring the business covered under this Agreement
(“Reinsurance Agreement(s)”).

NOW, THEREFORE, In consideration of the mutual promises contained herein and
other good and valuable consideration, Company and Agent agree as follows:

 

1. APPOINTMENT/AUTHORITY

 

  1.1

Subject to the terms and limitations contained in this Agreement, Company hereby
appoints Agent as its exclusive agent for the purposes of soliciting,
underwriting, quoting, binding, issuing, cancelling, non-renewing and endorsing
Accountants Professional Liability and Lawyers Professional Liability insurance
coverages. Agent accepts this

 

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appointment to act exclusively for Company for the purposes of soliciting,
underwriting, quoting, binding, issuing, cancelling, non-renewing and endorsing
policies or contracts of insurance and endorsements thereto (individually a
“Policy” or collectively, the “Policies”) within the fifty (50) states of the
United States and the District of Columbia (the “Territory”), on such forms and
subject to the conditions and limitations, and in accordance with Company’s
guidelines, program manuals, procedures, instructions, and authority limits, as
set forth in Exhibit A attached to this Agreement and incorporated herein by
reference. The Company in its sole discretion may amend Exhibit A from time to
time.

 

  1.2 Subject to the limitations contained in this Agreement, Agent is
authorized to and shall act on behalf of the Company in performing all acts
necessary to effectuate the solicitation, underwriting, quoting, binding,
issuing, cancelling, non-renewing and endorsing of the Policies, including:

 

  a. underwriting and servicing Policies on forms and at rates approved by
Company; and

 

  b. collecting, receiving, accounting for and remitting premiums to Company on
the Policies; and

 

  c. conducting any other related activities or services incidental or necessary
to the solicitation, underwriting, quotation, binding, issuance, cancellation,
non-renewing and endorsing of Policies covered hereunder.

 

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  1.3 Company, at its sole discretion, will file rates and forms with those
insurance departments requiring such filings. Communication and correspondence
with the various insurance departments or other regulatory authorities relating
to rate and form filings will be solely by or through Company.

 

  1.4 Nothing contained herein shall create the relationship of employer and
employee between Company and Agent or between Agent and any other representative
of Company. Except as set forth herein, Company shall have no right of control
over Agent as to the time, means, or manner of Agent’s performance of its duties
and obligations hereunder. Agent shall conduct itself and its business under the
terms of this Agreement solely as an independent contractor.

 

  1.5 Agent shall have no authority or obligation to handle claims arising out
of the Policies, including investigating, adjusting, handling, administering,
paying, resisting and/or settling any lawsuits or claims; except, however, that
if Agent receives notice of claim under a policy, it will immediately forward
such notice in accordance with the procedure detailed in Exhibit B to this
Agreement, which is incorporated herein by reference.

 

2. TERM OF AGREEMENT

The initial term of this Agreement shall be for a period of four (4) years,
commencing on the Effective Date (“Initial Term”), and shall be automatically
renewed for successive additional term(s) of one (1) year each (“Successive
Term[s]”) unless terminated earlier as set forth in Article 10. below. The
Initial Term and the successive Term(s) shall be referred to individually or
collectively as the “Term(s).”

 

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3. LIMITATIONS OF AUTHORITY

 

  3.1 With respect to the Policies which Agent is now or may in the future be
authorized to solicit, underwrite, quote, bind, issue, cancel, non-renew and
endorse under this Agreement, Agent shall not solicit, quote, bind, issue or
endorse the following:

 

  a. Policies which are not in accordance with the express terms of this
Agreement, or the Underwriting Guidelines attached hereto as Exhibit A and
incorporated herein by reference, or outside the scope of or excluded by any
reinsurance agreement applicable to the Policies;

 

  b. Policies which are not in compliance with the applicable forms, rules,
rates, or filings of Company or with the laws and regulations in effect in the
Territory.

 

  3.2 In the event that Agent binds a Policy prohibited by Article 3.1 above
without the prior written approval of Company, Agent will immediately take such
actions as are necessary to eliminate or minimize Company’s exposure as an
insurer on such Policy.

 

  3.3 Agent shall have no authority to bind, commit, or enter into agreements on
behalf of Company to obtain reinsurance or retrocession agreements of any type
with respect to the Policies, and shall have no authority to commit Company to
participate in insurance or reinsurance pools or syndicates.

 

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  3.4 Agent shall not solicit, underwrite, quote, bind or issue for any other
insurer, Policies that are within the scope of this Agreement.

 

  3.5 Agent shall not act as an insurer for any insureds, and this Agreement
shall not be construed as an insurance policy or any contract or agreement of
indemnity of insureds.

 

  3.6 Agent may not offset any balance due from Company to Agent against any
amounts due from Agent to Company under this Agreement or under any other
contract with Company.

 

  3.7 Agent, including any parent or affiliated entity, shall not finance or
extend premium financing for any Policy. Notwithstanding, Agent may arrange for
premium financing through a third-party.

 

  3.8 Agent shall not appoint or authorize other underwriters, brokers,
producers or any other person or entity to perform the functions described in
Article 1.2 (Appointment/Authority) of this Agreement or extend underwriting
authority to any person or entity without Company’s prior consent.

 

  3.9 Agent shall not jointly employ with Company any individual who is employed
by Company.

 

  3.10

Agent shall not submit to another insurer, agent or broker any applications for
Accountants Professional Liability Coverage or Lawyers Professional Liability
Coverage which do not qualify under the Underwriting Guidelines

 

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set forth in Exhibit A, without first submitting such application to the Company
for consideration, and allowing Company first right of refusal to accept such
application outside the scope of this Agreement.

 

  3.11 Except as provided in Article 11.6 (Arbitration) of this Agreement, Agent
shall not take legal action in connection with any matter pertaining to the
business of Company including, but not limited to, the Policies. Agent shall
promptly notify Company of any legal action or threat of legal action involving
Company or Agent with respect to Policies or any other matters which are within
the scope of this Agreement.

 

4. GENERAL RIGHTS AND OBLIGATIONS OF AGENT

 

  4.1 Agent represents and warrants that during the Term of this Agreement and
thereafter while providing any continuing services hereunder, it holds and will
maintain the licenses required by all regulatory authority(ies) having
jurisdiction over it to perform all obligations under this Agreement, and will
not perform any services under this Agreement for which a license is required
unless such license is in full force and effect.

 

  4.2 Agent shall be responsible for its compliance with applicable laws,
regulations, rules, and requirements.

 

  4.3 Agent represents and warrants that (i) the business within the scope of
this Agreement is not subject to any other entity’s or person’s known claim of
interest including, but not limited to, a claim by contract or common law right,
and (ii) Agent’s underwriting and acceptance of business under this Agreement is
not in violation of any duty or obligation it owes to any other entity or
person.

 

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  4.4 Agent shall keep separate, true, accurate, and complete records of all
transactions including, but not limited to, (i) correspondence with
policyholders, producers, and the Company, (ii) commissions paid to producers;
and (iii) Agent’s financial statements and tax records.

 

  4.5 Agent shall maintain all records and accounts pertaining to the business
within the scope of this Agreement, including, but not limited to, policyholder
information, underwriting files, financial documents, and records relating to
Agent’s Premium Trust Account, during the Term and thereafter while providing
any continuing services hereunder, in a manner and form as mutually agreed upon
or as required by Company to be compatible with Company’s internal systems and
in accordance with Generally Accepted Accounting Principles and insurance
regulatory practices. Such records shall be maintained for a period of not less
than seven (7) years (or such longer period as Company may request) after
termination of this Agreement, and in such manner and form as may be required by
Company’s record retention guidelines. At the end of such seven (7) year period,
Agent shall return the originals of Company’s records to Company, whether in
paper or electronic data form.

 

  4.6

During the Term of this Agreement and notwithstanding its termination, the
Company may audit, examine and copy Agent’s records and accounts pertaining to
the Policies during normal business hours upon no less than

 

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ten (10) business days advance notice. Agent will make such records available
for examination by Company, its reinsurers, or any state insurance department or
regulatory body which so requires. Additionally, Agent shall permit authorized
employees and representatives of Company to review the operations of Agent, both
at its place of business and in the field, in order to evaluate the quality of
Agent’s operations and its compliance with its obligation under this Agreement.

 

  4.7 Agent shall provide Company, in an electronic format and within thirty
(30) days of Company’s request, data that Company may require in order to report
to boards, bureaus, associations and states. The form for such information shall
be as shown in Exhibit C, attached hereto and incorporated herein by reference.

 

  4.8

Agent and Company each shall notify the other within two (2) business days of
notice or receipt of any complaint received from any state insurance department
or other regulatory authority relating to the Policies, whether against Company,
Agent, or its producers. Agent shall provide Company with a proposed written
response to each complaint and a copy of all documentation relating to such
complaint including, but not limited to, a written summary of all facts relevant
to such complaint. Company will then respond, or authorize Agent to respond, to
such complaint in such form as Company determines, in Company’s sole discretion,
to be necessary. The parties will work together to promptly and adequately
respond to any such complaint. Agent agrees not to contact any state

 

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insurance department or other regulatory authority, on behalf of the Company,
directly or indirectly, with regard to the Policies, business, rate or form
filings. Notwithstanding the foregoing, Agent may contact or respond to any
insurance department or other regulatory authority as respects matters solely
involving Agent’s capacity or performance as an agent or producer.

 

  4.9 Since Agent and its employees are independent contractors and not
employees of Company, all agency expenses including, but not limited to, Agent’s
office rent; transportation; salaries; utilities; furniture; fixtures;
equipment; telephone; attorney or other legal fees; postage; promotional
advertising and public relations expenses; printing costs of proposals, premium
notices, records, and reports; inspection fees; retail credit reports and any
other documents required to fulfill the obligations of Agent under this
Agreement; commissions, fees, or countersignature fees due to producers; and
Agent’s license fees (for both acquiring and maintaining required licenses) and
occupational taxes, whether billed to Agent or Company, shall be the sole
liability of Agent, unless assumption of such expense by Company is agreed to in
writing by Company.

 

  4.10 Agent shall not charge or commit Company to any expense, agreement,
payment, debt, settlement, or obligation other than as expressly provided by
this Agreement without the prior written consent of Company. All supplies and
other materials provided to Agent by Company to be used by Agent in connection
with the Policies shall remain the property of Company and shall be returned
immediately upon request.

 

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  4.11 Agent shall notify Company in writing:

 

  a. ten (10) days prior to any change of ownership of five percent (5%) or more
of the outstanding stock of or other ownership interest in Agent; and

 

  b. ten (10) days prior to any change in control of Agent or the owner of a
controlling interest in Agent not related to the transfer of shares of or other
ownership interest in Agent.

 

  4.12 If Company provides access to Company information through computer
access, Agent shall be responsible for maintaining the security and integrity of
such information and of Company’s systems including, but not limited to, using
its best efforts to avoid introducing into Company’s systems any virus or other
harmful agent.

 

  4.13 Agent agrees to furnish Company with annual financial statements compiled
in accordance with Generally Accepted Accounting Principles (“GAAP”). Should
Agent obtain audited financial statements, Agent agrees to furnish such audited
financial statements to Company, together with all notes and schedules attached
thereto. Such financial statements shall be furnished to Company within three
(3) months following the close of Agent’s fiscal year. Agent also agrees to
furnish Company with annual consolidated audited financial statements of the
holding company which is Agent’s ultimate corporate parent, prepared on a GAAP
basis.

 

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  4.14 Agent may not use the name, logo, or service mark of Company or any of
its affiliates in any advertising, promotional material, or in any material
disseminated by Agent, without the prior written consent of Company. Further,
Agent shall provide all marketing materials relating to the business within the
scope of this Agreement, including those used by producers, and brokers, to
Company for review and approval prior to publication. Agent shall maintain
copies and provide an original to Company of any advertisement or other
materials relating to the business within the scope of this Agreement, along
with full details concerning where, when, and how it was or will be used. Agent
shall be liable for any liability of or costs incurred by the Company as a
result of unauthorized advertisement or other unapproved materials. Agent agrees
not to utilize any advertising or sales forms and materials referring to Company
or its products which deviate in any manner from those approved by Company.

 

  4.15 During the Term, Agent shall employ Kyle Nieman (“Nieman”) who will
function as the ultimate supervisor over all underwriting performed by Agent and
all of Agent’s other obligations under this Agreement. Should Nieman no longer
function in this capacity and Company and Agent do not agree on a replacement
for Nieman within sixty (60) days after Nieman ceases to function in such
capacity, Company may terminate this Agreement in accordance with Article
10.2.k.

 

5. PREMIUMS, ACCOUNTING AND REPORTING

 

  5.1

Agent will submit to Company a monthly premium bordereau in the form provided in
Exhibit D attached hereto and incorporated herein by

 

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reference, no later than ten (10) days following the end of the month in which
each Policy is effective. Agent shall remit funds to Company in accordance with
the monthly premium bordereaux no later than forty-five (45) days following the
end of the month in which each Policy is effective. Agent shall also maintain on
a continuous basis during the term of this Agreement, and make available to the
Company upon request, a Policy Register in the form attached hereto as Exhibit
E, and incorporated herein by reference.

 

  5.2 All premiums for the Policies collected by or due from Agent are the
property of Company and shall be held in trust on behalf of Company in a
fiduciary capacity (“Premium Trust Funds”). Such premiums shall be deposited and
maintained in an interest-bearing account in a non-affiliated bank approved by
Company in writing (“Premium Trust Account”) which meets the “Premium Trust
Account Guidelines”, a copy of which is set forth in Exhibit F attached hereto
and incorporated herein by reference. Agent shall be responsible for full
compliance with all applicable laws, regulations, rules, and requirements
regarding the Premium Trust Funds. Interest on Premium Trust Funds accrued until
such amounts are due to Company as set forth below shall be payable to Agent.
The Premium Trust Account shall be maintained in an amount at least equal to the
premiums (unpaid to Company), and return premiums (unpaid to policyholders or
insureds) collected by or due from Agent. After such funds have been deposited
into the Premium Trust Account, Agent may deduct from such account the
Commission allowed pursuant to Article 6.1 below.

 

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  5.3 Agent shall be responsible for payment to the Company premiums on all
Policies written under this Agreement, regardless of whether Agent collects such
premium from a producer or policyholder, and Agent hereby guarantees payment to
Company of all such uncollected premiums, net of Commission allowed under
Article 6.1 below.

 

  5.4 Agent shall have no interest in the premium collected for Policies under
this Agreement and shall make no deductions other than for the appropriate
Commission. Agent shall not use premiums relating to Policies for any purpose
whatsoever other than payment to Company or return to policyholders, including,
but not limited to, paying expenses of Agent.

 

6. COMPENSATION OF AGENT

 

  6.1 Subject to compliance by Agent with the terms and conditions of this
Agreement, Company shall allow Commission to Agent subject to the Commission
Schedule attached hereto as Exhibit G and incorporated by reference. The
Commissions payable to Agent pursuant to this Agreement, and interest on the
Premium Trust Account as provided in Article 5.2, shall be Agent’s sole
compensation for performance of its obligations under this Agreement. Agent may
not receive any other form of compensation in connection with the business
covered under this Agreement without the Company’s prior written consent.

 

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  6.2 Commission paid to Agent on canceled Policies and reduced premiums shall
be refunded to Company at the same rate at which such Commission was originally
paid to Agent.

 

7. GENERAL RIGHTS AND OBLIGATIONS OF COMPANY

 

  7.1 Company shall have the sole right to respond to any state insurance
department or other regulatory authority complaint or inquiry, after consulting
with Agent as provided in Article 4.8 of this Agreement. The provisions of this
Article 7.1 do not restrict the ability of Agent to contact or respond to any
insurance department or other regulatory authority as respects matters solely
involving Agent’s capacity as an agent or producer.

 

  7.2 Company may combine or offset any balances or funds owed by Agent to
Company against any balances or funds owed to Agent by Company under this
Agreement or any other agreement between the parties.

 

  7.3 If Agent provides access to Agent information through computer access,
Company shall be responsible for maintaining the security and integrity of such
information and of Agent’s systems including, but not limited to, using its best
efforts to avoid introducing into Agent’s systems any virus or other harmful
agent.

 

  7.4 Notwithstanding Agent’s authority to effect cancellation of Policies,
Company retains the right to cancel or otherwise terminate a Policy.

 

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  7.5 Company shall reimburse Agent for the cost of obtaining reports required
by Company for purposes of risk evaluation pursuant to Company’s Underwriting
Guidelines.

 

8. CONFIDENTIAL INFORMATION

 

  8.1 Any information as may have been or shall be provided by Company to Agent,
including the rates, forms, policies, program manuals, manuals, underwriting
guidelines, program analysis, claim and loss information, claims adjusting
techniques, underwriting records, personal information of policyholders, shall
be considered confidential and proprietary to Company and shall be considered
trade secrets of Company (the “Company Confidential Information”). The Company
Confidential Information is furnished to Agent only to facilitate the
performance of Agent’s duties pursuant to this Agreement. Agent warrants that
any Company Confidential Information provided hereunder shall be used only for
the purpose provided herein and that Agent shall make no other use of such
Company Confidential Information. Agent agrees to maintain the confidentiality
of the Company Confidential Information and shall not knowingly cause or permit
any officer, employee, agent, or any third party to use, copy, modify, sell,
transfer, cause to be used, copied, modified, sold, or transferred, or otherwise
make available the Company Confidential Information, directly or indirectly,
except as expressly provided for herein, for any purpose, without prior written
consent of Company. If Company gives Agent any written authorization to make any
disclosure of Company Confidential Information, Agent will do so only within the
limits and to the extent of such written authorization.

 

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  8.2 Agent shall be responsible for maintaining the security and integrity of
the Company Confidential Information. Additionally, Agent shall be responsible
for ensuring that Agent’s employees, agents, and representatives are aware of
the sensitive and proprietary nature of the Company Confidential Information, of
the importance of confidentiality, and of the conditions described in this
Agreement.

 

  8.3

Any information as may have been or shall be provided by Agent to Company,
including the rates, forms, policies, renewals, expirations, program manuals,
manuals, underwriting guidelines, program analysis, loss and risk analysis,
claim and loss information, compiled loss experience data, track inspection
data, claims adjusting techniques, underwriting records and data, customer
information and personal information of policyholders, shall be considered
confidential and proprietary to Agent and shall be considered trade secrets of
Agent (the “Agent Confidential Information”). The Agent Confidential Information
is furnished to Company only to facilitate the performance of Company’s duties
pursuant to this Agreement. Company warrants that any Agent Confidential
Information provided hereunder shall be used only for the purpose provided
herein and that Company shall make no other use of such Agent Confidential
Information. Company agrees to maintain the confidentiality of the Agent
Confidential Information and shall not

 

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knowingly cause or permit any officer, employee, agent, or any third party to
use, copy, modify, sell, transfer, cause to be used, copied, modified, sold, or
transferred, or otherwise make available the Agent Confidential Information,
directly or indirectly, except as expressly provided for herein, for any
purpose, without prior written consent of Agent. If Agent gives Company any
written authorization to make any disclosure of Agent Confidential Information,
Company will do so only within the limits and to the extent of such written
authorization.

 

  8.4 Company shall be responsible for maintaining the security and integrity of
the Agent Confidential Information. Additionally, Company shall be responsible
for ensuring that Company’s employees, agents, and representatives are aware of
the sensitive and proprietary nature of the Agent Confidential Information, of
the importance of confidentiality, and of the conditions described in this
Agreement.

 

  This Article 8 shall survive termination of this Agreement.

 

9. INSURANCE AND INDEMNITY

 

  9.1 Agent is required to maintain in full force and effect the following
policies issued by an insurer rated no less than “A-”, Class X by A. M. Best
Company during the Term of this Agreement and thereafter while Agent has any
obligations hereunder:

 

  a. Errors and Omissions insurance covering Agent and its employees in the
minimum amount of Five Million Dollars ($5,000,000) each claim or occurrence,
with a deductible or self-insured retention not to exceed Ten Thousand Dollars
($10,000) each claim or occurrence;

 

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  b. Fidelity insurance covering Agent and its employees in the minimum amount
of Two Million Dollars ($2,000,000) with a per occurrence deductible not to
exceed Five Thousand Dollars ($5,000);

 

  c. Commercial General Liability insurance (including personal and advertising
injury coverage) covering Agent and its employees in the minimum amount of One
Million Dollars ($1,000,000) per occurrence;

 

  d. The insurance described in a. – c. immediately above shall be maintained by
Agent at its sole cost and expense and shall be primary and noncontributing
coverage with regard to any valid and collectible insurance available to
Company. Agent agrees to notify Company immediately when it receives notice of
nonrenewal or cancellation, increased deductibles or self-insured retentions or
decreased coverage. On or before January 30 of each year during the Term of this
Agreement, and while Agent has any continuing obligations hereunder, Agent shall
furnish to Company proof of such insurance. Agent further agrees to notify
Company promptly of any claim brought under any such policy which arises out of
or is connected with the Policies.

 

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  9.2 Agent hereby agrees to defend, indemnify, and hold Company harmless from
and against all claims, actions, causes of action, liability, or loss which
result from any acts, errors, or omissions of Agent, or the servants, employees,
representatives, producers, or brokers of Agent, in the performance or failure
to perform Agent’s duties or obligations under this Agreement, whether or not
such acts, errors or omissions are negligent, reckless or intentional. Agent
further agrees that in the event Company is in violation of any state statute,
regulation, or other law due to acts, errors, or omissions of Agent, or the
servants, employees, representatives, producers or brokers of Agent, then Agent
shall assume the responsibility and liability for such act, error or omission
and shall indemnify and hold Company harmless for such liability and loss. Loss
shall include, but not be limited to, all damages, costs, expenses, reasonable
attorneys’ fees and expenses, penalties, fines, direct or consequential damages,
judgments (including punitive damages and multiplied damages), and any other
expense incurred by Company. This Article 9.2 shall survive termination of this
Agreement.

 

  9.3

Company hereby agrees to defend, indemnify, and hold Agent harmless from and
against all claims, actions, causes of action, liability, or loss which result
from any acts, errors, or omissions of Company, or the servants, employees,
representatives, producers, or brokers of Company, in the performance or failure
to perform Company’s duties or obligations under this Agreement, whether or not
such acts, errors or omissions are negligent, reckless or intentional. Company
further agrees that in the

 

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event Agent is in violation of any state statute, regulation, or other law due
to acts, errors, or omissions of Company, or the servants, employees,
representatives, producers or brokers of Company, then Company shall assume the
responsibility and liability for such act, error or omission and shall indemnify
and hold Agent harmless for such liability and loss. Loss shall include, but not
be limited to, all damages, costs, expenses, reasonable attorneys’ fees and
expenses, penalties, fines, direct or consequential damages (including punitive
damages and multiplied damages), judgments and any other expense incurred by
Agent.

This Article 9.3 shall survive termination of this Agreement.

 

  9.4

Upon the assertion by any third party of any claim against Company that may be
indemnifiable under Article 9.2 of this Agreement, Company shall promptly notify
the Agent, in the manner provided in Article 11.1 of this Agreement, of the
existence of such claim; provided, however, that failure to give timely notice
shall not be deemed to be a waiver of the claim to the extent that Agent has not
been prejudiced by such failure to give timely notice. If the Agent believes in
good faith that there is a valid defense to such claim and a reasonable chance
of succeeding thereon and notifies the Company to that effect, the Company shall
give Agent a reasonable opportunity to defend and/or settle such claim at its
own expense and with counsel mutually selected by the Agent and the Company, or
if counsel cannot be mutually selected, then selected by the Agent; provided,
however, that if any such settlement would have an adverse effect on the

 

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Company, the Agent shall not settle such claim without the prior written consent
of the Company, which shall not be unreasonably withheld. The Company shall at
all times have the full right to participate in any such defense at its own
expense. If the Agent, within a reasonable time after receiving notice of a
claim from the Company, fails to defend, the Company shall have the right, but
not the obligation, to undertake the defense, compromise or settlement of such
claim, for the account of Agent. Company and Agent shall make available to each
other such information and render such assistance as may be required for the
defense and/or settlement of the claim.

 

  9.5

Upon the assertion by any third party of any claim against Agent that may be
indemnifiable under Article 9.3 of this Agreement, Agent shall promptly notify
the Company, in the manner provided in Article 11.1 of this Agreement, of the
existence of such claim; provided, however, that failure to give timely notice
shall not be deemed to be a waiver of the claim to the extent that Company has
not been prejudiced by such failure to give timely notice. If the Company
believes in good faith that there is a valid defense to such claim and a
reasonable chance of succeeding thereon and notifies the Agent to that effect,
the Agent shall give Company a reasonable opportunity to defend and/or settle
such claim at its own expense and with counsel mutually selected by the Company
and the Agent, or if counsel cannot be mutually selected, then selected by the
Company; provided, however, that if any such settlement would have an adverse
effect on the Agent, the Company shall not settle such claim

 

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without the prior written consent of the Agent, which shall not be unreasonably
withheld. The Agent shall at all times have the full right to participate in any
such defense at its own expense. If the Company within a reasonable time after
receiving notice of a claim from the Agent, fails to defend, the Agent shall
have the right, but not the obligation, to undertake the defense, compromise or
settlement of such claim, for the account of Company. Agent and Company shall
make available to each other such information and render such assistance as may
be required for the defense and/or settlement of the claim.

 

10. TERMINATION

 

  10.1

At any time during the Term hereof, either party may terminate this Agreement
without cause upon twelve (12) months prior written notice to the other, but in
no event may this Agreement be terminated under this Article 10.1 prior to the
end of the twenty-fourth (24th) month following the Effective Date.

 

  10.2 Termination by Company. Notwithstanding Article 10.1, Company may
immediately, upon written notice to Agent, terminate this Agreement for cause,
in the event any of the following occurs:

 

  a. Agent, or its parent or any affiliated corporation becomes insolvent,
institutes or acquiesces in the institution of any bankruptcy, financial
reorganization, or liquidation proceeding or any such proceeding is instituted
against Agent or its parent corporation and remains undismissed for thirty
(30) days (Agent shall immediately notify Company of same.); or

 

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  b. Agent, or the owner of a controlling interest in Agent, sells, exchanges,
transfers, assigns, consolidates, pledges or causes to be sold, exchanged,
transferred, assigned, consolidated, or pledged, fifty percent (50%) or more of
the stock, ownership interest or assets of Agent, or any entity controlling
Agent, to a third party (except any entity owned more than fifty percent [50%]
by AmerInst Insurance Group, Limited, its parent or any of its subsidiaries)
without the prior written consent of Company. (Agent shall immediately notify
Company of such sale, exchange, transfer assignment, consolidation or pledge);
or

 

  c. Agent fails to render timely and proper reports or premium accounting as
required, or to remit premiums when due, after Company has provided Agent ten
(10) days written notice of such failure; or

 

  d. Agent fails to maintain Premium Trust Funds in the amount or manner
required by Article 5 of this Agreement; or

 

  e. Agent engages in acts or omissions constituting abandonment, fraud,
insolvency, misappropriation of funds, material misrepresentation, or gross or
willful misconduct; or

 

  f.

Agent’s license or certificate of authority is cancelled, suspended, or is
declined renewal by any regulatory body having jurisdiction

 

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over Agent if, after ninety (90) days, Agent fails to remedy such loss of
license or certificate of authority. Agent shall immediately notify Company of
such cancellation, suspension or non-renewal. As of the effective date of such
cancellation, suspension or nonrenewal, Agent shall immediately cease
soliciting, underwriting, quoting, binding, issuing, cancelling non-renewing,
and endorsing Policies until its license or certificate of authority is
reinstated or renewed during such ninety (90) day period; or

 

  g. Agent materially breaches this Agreement, and Company has provided to Agent
written notice of such breach and Agent has failed to cure within a thirty
(30) day period after such notice; or

 

  h. Agent fails to permit Company to inspect or audit any records or files
relating to the Policies; or

 

  i. Company determines that due to any judicial, legislative, or regulatory
acts, the business covered under this Agreement has becomes illegal; or

 

  j. Company receives or gives Notice of Termination of reinsurance of Company
for the Policies, provided Company allows Agent no less than ninety (90) days to
secure alternative or replacement reinsurance reasonably acceptable to Company);
or

 

  k.

Failure, inability or unavailability of Nieman to function as the ultimate
supervisor over all underwriting performed by Agent and all of Agent’s other
obligations under this Agreement. Should Nieman

 

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no longer function in this capacity, Company and Agent shall, within sixty
(60) days after Nieman fails, is unable or is unavailable to function in such
capacity, select a mutually acceptable replacement for Nieman. Should Company
and Agent fail to do so, Company may thereafter terminate this Agreement.

 

  l.

Company’s loss ratio (ratio of Loss plus Loss Adjustment Expense plus IBNR to
Gross Earned Premium) exceeds eighty per cent (80%) as an average over two
(2) successive accident years. Such loss ratio will first be calculated for the
preceding two (2) accident years at the end of the ninth (9th) quarter of the
term of this Agreement, and then calculated on a rolling quarterly basis
thereafter for the preceding two successive accident years. Should this loss
ratio target be met or exceeded, Company and Agent will undertake a loss ratio
remediation program of no fewer than sixty (60) days, after which Company may
terminate this Agreement.

 

  10.3 Termination by Agent. Notwithstanding Article 10.1 above, upon thirty
(30) days written notice to Company, Agent may terminate this Agreement for
cause, in the event any of the following occurs:

 

  a. A.M. Best assigns Company a rating below A-; or

 

  b.

Company, or its parent company institutes or acquiesces in the institution of
any bankruptcy, financial reorganization or liquidation proceeding, or any such
proceeding is instituted against Company and remains undismissed for thirty
(30) days; provided, however,

 

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Company may substitute for itself as a party to this Agreement an affiliated
company(ies) with a Best’s rating of A- or better and licenses and approved
forms and rate filings in all jurisdictions in which Agent operates or solicits
business subject to this Agreement; or

 

  c. Company’s license or certificate of authority is cancelled or declined
renewal by any regulatory body within the Territory where Company is issuing
Policies hereunder, if after ninety (90) days Company fails to renew or have
such license reinstated; provided, however, Company may substitute for itself as
a party to this Agreement an affiliated company(ies) with a Best’s rating of A-
or better and licenses and approved forms and rate filings in all jurisdictions
in which Agent operates or solicits business subject to this Agreement; or

 

  d. Company engages in acts or omissions constituting abandonment, fraud,
insolvency, misappropriation of funds, material misrepresentation, or gross or
willful misconduct; or

 

  e. Company materially breaches this Agreement, and Agent has provided to
Company written notice of such breach and Company has failed to cure within a
thirty (30) day period after such notice; or

 

  f. Company sells or otherwise disposes of the Accountants and Lawyers
Professional Liability Insurance covered under this Agreement to a nonaffiliated
entity without the consent of Agent.

 

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  10.4 Continued Servicing. In the event this Agreement is terminated, then
Agent shall, without additional compensation and at no expense to Company,
continue to perform all necessary services regarding Policies previously issued
by Agent on behalf of Company in accordance with the provisions of this
Agreement until all such Policies have been completely cancelled, non-renewed,
or otherwise terminated; provided, however, that Company may, in its sole
discretion, immediately suspend or terminate Agent’s continuing service
obligations hereunder.

Agent’s continuing service obligations after termination of the Agreement shall
include, but not be limited to:

 

  a. the issuance and countersignature of appropriate endorsements to Policies
when so authorized in writing by Company, provided that such endorsements shall
not increase Company’s liability or extend the term of any Policy; and

 

  b. the timely issuance of all applicable cancellation and/or non-renewal
notices in full compliance with all applicable insurance code(s) or regulations
and in accordance with any written instructions that may be issued by Company;

 

  c. the collection and remittance of all premiums due, and payment of return
premiums due, on the Policies hereunder; and

 

  d.

provide at Company’s request, unrestricted access by Company via Agent’s website
or transmission to Company via digital means, both of which permit printing of
electronically stored information, copies

 

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of all Policy materials and related underwriting documentation. At Company’s
request and expense, Agent will provide Company with paper copies of all Policy
materials and related underwriting documentation.

If Agent fails in any respect to fulfill any of the continuing service
obligations set forth in this Article 10.4, then Agent shall reimburse Company
for any expense Company incurs to service or arrange for the servicing of the
Policies issued by Agent or such amounts may be offset by Company against
commission which may be due Agent; provided further, that if Agent fails to
comply with its obligations under Article 10.4 d., Agent acknowledges that
Company has no adequate remedy at law and consents to issuance of an injunction
against Agent compelling it to fulfill its obligations under Article 10.4 d.

 

  10.5 Upon Company providing written notice of termination to Agent hereunder,
Company is authorized to deal directly with all other persons or entities with
respect to the Policies, including but not limited to, the right to collect from
and to return premiums directly to all producers, brokers, or insureds.

 

  10.6 Notwithstanding anything to the contrary in this Agreement, if Agent
breaches this Agreement, Company upon written notice to Agent may immediately
suspend some or all of the authority of Agent under this Agreement.
Additionally, Company may suspend the authority of Agent during the pendency of
any dispute regarding termination or suspension, and such suspension shall not
be considered a breach by Company of this Agreement.

 

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  10.7 Any termination of this Agreement as provided above shall only terminate
the duty of each party to prospectively perform this Agreement, excepting only
Agent’s continued service as provided for in Article 10.4., and shall not
prevent the enforcement of either party’s rights and remedies as regards any
breach or non-performance occurring prior to such termination.

 

  10.8

Company expressly recognizes and acknowledges that Agent has developed, over
many years and at substantial expense and investments, a significant book of
business which Agent brought to Company at the inception of the relationship
between Agent and Company and which Agent continues to expand and develop. If,
after Company’s or Agent’s termination of this Agreement without cause under
Article 10.1, or Company’s termination of this Agreement for cause other than
under Article 10.2 c. – e. inclusive, or Agent’s termination of this Agreement
for cause under Article 10.3, Agent has satisfied its monetary and reporting
obligations to Company under Article 5 of this Agreement, the use and control of
expirations on Policies written under this Agreement, as between Company and
Agent, shall be considered the sole and exclusive property of Agent. Company
shall have no right of ownership or control of any such expirations. Further,
Company shall not communicate with any producer, broker, insurance, reinsurance
company, policyholder or

 

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sponsoring organization (nor use for itself), for the purpose of solicitation or
otherwise, any client lists or expirations pertaining to the Policies under this
Agreement. Company and/or Company’s successor in interest, for a period of two
(2) years following termination of this Agreement, will not:

 

  a. directly or indirectly, knowingly solicit Accountants or Lawyers
Professional Liability Insurance from any specific policyholder issued such
insurance by Agent for Company pursuant to the terms of this Agreement, which
coverage is in force as of the date of such termination or during the two
(2) years immediately preceding such termination. Nothing in this Article
10.8.a. prohibits Company from quoting and/or underwriting Accountants or
Lawyers Professional Liability Insurance policies submitted to Company in the
normal course of business, provided, however, that Company has not provided any
entity submitting such accounts for Company’s consideration any information
regarding insureds or prospects previously serviced by Agent; or

 

  b. directly or indirectly, knowingly solicit Accountants or Lawyers
Professional Liability Insurance from any producer who placed such insurance
with Company through Agent during the year immediately preceding such
termination; or

 

  c. influence, induce or attempt to influence or induce any employee of Agent
or Company to terminate his or her employment with Agent; or

 

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  d. influence, induce or attempt to influence or induce any insurance producer
to sever his/her contractual or customary relationship with Agent and place
Accountants or Lawyers Professional Liability Insurance directly or indirectly
with Company.

Notwithstanding the foregoing, all financial, policy, and other records of
business covered hereunder shall continue to be maintained by Agent in
accordance with Article 4.4 and 4.5 of this Agreement, provided to Company in
accordance with Article 4.7 of this Agreement, and available to Company as
provided in Article 4.6 of this Agreement. Notwithstanding the foregoing, until
such time as Agent has paid Company all premiums due, and has paid all return
premiums due on business covered by this Agreement, ownership of expirations and
renewals of such business shall be vested with the Company.

 

11. GENERAL PROVISIONS

 

  11.1 Notice. Except as otherwise set forth herein, any notice required under
this Agreement must be in writing and either sent by overnight mail, facsimile,
or personally delivered. Notice shall be effective upon the earlier of actual
receipt by the addressee or five (5) days after mailing to the other party.
Notice shall be sent to:

 

Agent:    F. Kyle Nieman III    AmerInst Professional Services, Ltd.    520 Lake
Cook Road    Suite 510    Deerfield, IL 60015    Facsimile: (847) 267-0606

 

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Company:    Donald R. Fischer    Senior Vice President    Executive Products
Division    Crum & Forster    305 Madison Avenue    Morristown, NJ 07962-1973   
Facsimile: (888) 258-3052

 

  11.2 Integration, Waiver, and Amendment. This Agreement, inclusive of
exhibits, constitutes the entire agreement between Company and Agent and
supersedes any and all other agreements, either oral or written, between Company
and Agent with respect to the Policies. No waiver by either party to enforce any
provision of this Agreement will be effective unless made in writing and signed
by an authorized officer of Company or Agent and shall be effective only as to
the specifically stated matter waived. Subject to Company’s right in its sole
discretion to amend Exhibit A from time to time, as provided in Article 1.1
above, no amendment to this Agreement will be effective unless made in writing
and signed by the parties hereto, specifying the effective date of such
amendment.

 

  11.3 Remedies Not Exclusive. No right or remedy set forth in this Agreement is
exclusive of any other right or remedy but shall be in addition to every other
right and remedy given under this Agreement or existing now or hereafter at law
or equity.

 

  11.4 Severability. Wherever possible, each provision of this Agreement will be
interpreted in such a manner and to such an extent as to be effective and valid
under applicable law. If any provision is prohibited by or invalid under
applicable law, such provision will be ineffective only to the extent of such
prohibition or invalidity.

 

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  11.5 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its rules
regarding conflict of laws.

 

  11.6 Arbitration. All disputes or controversies between Company and Agent
arising out of or in connection with this Agreement, including its formation,
interpretation or validity, shall be determined by arbitration, in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
then in effect, except as modified herein.

The Board of Arbitration (“Board”) shall consist of one (1) arbitrator chosen by
Company, one (1) arbitrator chosen by Agent, and an umpire chosen as promptly as
possible by the two (2) arbitrators. The arbitrators and umpire shall be
disinterested and present or former executives of insurance, reinsurance,
brokerage, agency, or managing general agency companies.

The party demanding arbitration shall communicate its demand therefor in
writing, identifying the nature of the dispute and the name of its arbitrator,
to the other. The other party shall then be bound to name, in writing, its
arbitrator within thirty (30) days after receipt of such demand. Failure or
refusal of the other to name its arbitrator within the thirty (30) day time
period shall empower the demanding party to name the second arbitrator as well.

If the two (2) arbitrators are unable to agree upon an umpire within thirty
(30) days after the second arbitrator is named, each of them shall name two of
whom the other shall decline one, and the umpire chosen shall be made by drawing
lots.

 

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The applicant for arbitration shall submit its position in writing within thirty
(30) days after selection of the umpire. The respondent shall submit its written
position within thirty (30) days after receipt of the applicant’s position. The
Board may extend any of the time periods set forth above.

The Board is relieved from judicial formalities, and rules of evidence and
procedure. The Board shall have the power to make and determine all procedural
rules for the holding of the arbitration including discretionary power to make
orders as to any matter which they may consider proper in light of circumstances
of the case with regard to pleadings, depositions, discovery, inspection of
documents, examination of witnesses, and any other matter whatsoever relating to
the conduct of the arbitration and may receive and act upon such evidence,
whether oral or written, strictly admissible or not as the Board shall think
fit. The Board shall make its decision based on the terms of this Agreement and
the custom and usage of the insurance industry.

All rules, orders, acts, and decisions of the Board shall be effective if by a
majority of the Board. The final decision of the Board shall be within sixty
(60) days of the conclusion of the arbitration and given in writing to both
parties. Any decision shall be final and binding on the parties, and shall not
be subject to appeal. If either party fails to comply with the Board’s decision,
the other party may apply for its enforcement to a court of competent
jurisdiction.

 

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Each party shall bear the cost of its own arbitrator and shall jointly and
equally bear with the other party the expenses of the umpire. The remaining
costs of the arbitration proceeding shall be allocated by the Board.

The arbitration proceedings shall convene and be held in New York, New York, or
such other location mutually agreed upon by the parties.

This Article 11.6 shall survive termination of this Agreement.

 

  11.7 Conformance to Law / Severability. This Agreement shall, without prior
notice, be automatically modified to conform with any law or regulation having
application to or jurisdiction over the subject matter hereof and the parties
hereto, and the parties shall promptly amend the Agreement to comply with such
modifications.

 

  11.8 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but which together shall constitute
one and the same instrument.

 

  11.9 Currency. All amounts due to either party hereunder shall be payable in
lawful currency of the United States of America.

 

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  11.10  Headings.

The Article headings found in this Agreement are for reference purposes only, do
not constitute a part of the substance of this Agreement and shall not be
construed to limit or expand the provisions of this Agreement.

 

  11.11  Exclusive Benefit of the Parties.

This Agreement is for the sole and exclusive benefit of Agent and Company and
shall not be interpreted as conferring any benefits or rights on any other
party, person or entity.

 

  11.12  Assignment.

Other than as expressly authorized by this Agreement, the rights and obligations
under this Agreement may not be assigned by either Company or Agent without the
prior written approval of the other party.

SIGNATURES APPEAR ON FOLLOWING PAGE

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
effective as of the day and year first above written.

 

AMERINST PROFESSIONAL SERVICES, LIMITED (“Agent”)     THE NORTH RIVER INSURANCE
COMPANY       CRUM & FORSTER INDEMNITY COMPANY       CRUM AND FORSTER INSURANCE
COMPANY       CRUM & FORSTER SPECIALTY INSURANCE COMPANY       UNITED STATES
FIRE INSURANCE COMPANY

 

   

 

By:   Irvin F. Diamond     By:   Donald R. Fischer Its:   Chairman     Its:  
Senior Vice President Date:       Date:  

 

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TABLE OF EXHIBITS

 

EXHIBIT

  

TITLE

A

   Underwriting Guidelines

B

   Claims Procedures

C

   Reporting Standards

D

   Bordereau Format

E

   Policy Register Format

F

   Premium Trust Account Guidelines

G

   Commissions Schedule