Whereas, pursuant to title XII of the Merchant Marine Act, 1986, as amended (herein called the "Act"), the Secretary is authorized under certain circumstances to provide marine insurance and reinsurance against loss or damage by the risks of war, and to employ domestic companies or groups of domestic companies authorized to do a marine insurance business in any State of the United States to act as his underwriting agent; and

Whereas, the Secretary has delegated authority to the Administrator to perform the functions vested in the Secretary by title XII of the act (Section 8.01, subsection 3, of Department Order No. 117 (Revised), published in the FEDERAL REGISTER July 21, 1960, 25 F.R. 6934); and

Whereas, the Administrator is prepared, under the authority of section 1209 (d) of the act, to enter into Underwriting Agency Agreements with each of the Participating Members and with other Domestic Companies authorized to do an insurance business in any State of the United States and having facilities similar to the Participating Members (hereinafter collectively called the "Underwriting Agents"), for the purpose of performing certain functions on behalf of the Administrator, including the receipt of appli

cations and countersignature of policies, in connection with the issuance of insurance pursuant to section 1203 (b) of the act; and Whereas, the Administrator has determined to utilize the services and facilities of to act as clearing

agent to coordinate the issuance of cargo war risk insurance and facilitate the administration of the cargo war risk program by the Administrator;

Now, therefore, in consideration of the premises and of the mutual covenants and agreements, and upon the terms and conditions hereinafter set forth, the parties hereto agree as follows:

1. Appointment of Agent. The Administrator hereby authorizes the Clearing Agent, as an agent acting on behalf of the Administrator and not as an independent contractor, to utilize its offices and facilities in cooperation with the Underwriting Agents for the purpose of coordinating and facilitating the issuance of cargo war risk insurance pursuant to section 1203 (b) of the act and to perform the functions hereinafter provided for, upon the terms and conditions hereinafter set forth and in accordance with the rules, regulations and instructions which will be issued from time to time by the Administrator to the Clearing Agent. The Clearing Agent hereby agrees to utilize its offices and facilities and to perform the functions hereinafter provided for to the best of its ability on behalf of the Administrator. The Clearing Agent may act through and use the facilities of the and such other

agents as may be approved by the Administrator, to the extent it deems necessary in the performance of its duties hereunder.

2. Duties of Agent. The duties of the Clearing Agent shall be as follows:

(a) The Clearing Agent, when and as instructed by the Administrator, shall promptly transmit to the Underwriting Agents all applicable rules, regulations, instructions and information which it receives from the Administrator in connection with the program of insurance authorized by section 1203 (b) of the act. The Clearing Agent shall promptly transmit to the Administrator any notice, demand, request or report submitted to it by the Underwriting Agents for transmission to the Administrator, in accordance with this Agreement and the Underwriting Agency Agreements.

(b) The Clearing Agent, when and as required by the Administrator, shall receive reports from the Underwriting Agents, setting forth in summary form, all applications received, policies issued, invalidated, cancelled, reduced or extended, premiums collected and returned and such other information as the Administrator may from time to time request. The Clearing Agent shall prepare and submit to the Administrator, at such regular intervals as the Administrator may direct, a report on a form approved by the Administrator, combining and summarizing the information which shall have been reported to

it by the Underwriting Agents as aforesaid and including such other information as may be reasonably required by the Administrator. The Clearing Agent shall from time to time prepare and submit to the Administrator such other reports and information relating to its activities hereunder as the Administrator may from time to time reasonably request.

(c) The Clearing Agent shall receive from the Underwriting Agents reports and claims of losses submitted to said Agents together with the pertinent documents and recommendations relating thereto which the Underwriting Agents shall have prepared and assembled. The Clearing Agent shall promptly transmit all such reports, documents and recommendations to the Administrator, together with any additional information relating to such claims which the Administrator may reasonably require in determining their eligibility for settlement and payment.

(d) The Clearing Agent shall receive from the Underwriting Agents claims submitted to said Agents for return of all or part of premiums previously collected under policies, if any, providing for return premiums, together with the required certifications of said Agents in connection with such claims. The Clearing Agent shall promptly transmit said claims and certifications to the Administrator, together with any further information which the Administrator may reasonably require in connection therewith.

(e) The Clearing Agent shall maintain a complete, separate system of books of records and accounts covering its operations and activities under this Agreement, including a record of all statements, vouchers and other information received by it from the Underwriting Agents. These books of records and accounts shall be the property of the Administrator. They shall be kept available by the Clearing Agent at all times for audit and inspection by duly authorized representatives of the Administrator and by the Comptroller General of the United States or their duly authorized representatives during the period of this Agreement and up to thirty-six (36) months after its termination and thereafter until final settlement of any outstanding claims against the Administrator by holders of policies issued by the Underwriting Agents.

(f) The Clearing Agent shall receive such periodic statements and vouchers of compensation and other payments claimed by the Underwriting Agents as the Underwriting Agents may be required to submit pursuant to the Underwriting Agency Agreements. The Clearing Agent shall consolidate such statements and vouchers into a single monthly statement of compensation claimed by the Underwriting Agents as of the last day of the month covered by such consolidated statement and shall certify thereon that the amounts set forth therein truly and correctly reflect the statements and vouchers received from the Underwriting Agents. The Clear

ing Agent shall then submit such consolidated statement to the Administrator, who upon his approval thereof, shall promptly forward to the Clearing Agent his check payable to the order of the Clearing Agent in the total amount of such statement as approved by the Administrator. The Clearing Agent shall thereupon make payments to the order of the individual Underwriting Agents in the respective amounts set forth in the statement as approved by the Administrator.

3. Compensation—(a) Fair and reasonable. The Clearing Agent shall receive for its services such amount as the Administrator and the Clearing Agent may, from time to time, agree to be fair and reasonable compensation. In addition to such fair and reasonable compensation, the Clearing Agent shall receive reimbursement for out-of-pocket expenditures reasonably incurred, meaning payments to persons not regularly employed by the Clearing Agent but excluding payments to attorneys unless such einployment has been authorized by the Administrator. provided, however, that all such expenditures shall be subject to the review of the Administrator, and further provided that, except as authorized by section 1209 (d) of the act. such expenditures shall not include any fee or other consideration paid to an insurance broker or any person acting in a similar intermediary capacity for services by virtue of his participation in arranging any of such insurance nor include any payment on account of solicitation for or stimulation of such insurance.

(b) Paid monthly. A statement of the compensation due to the Clearing Agent (including reimbursement for out-of-pocket expenses as herein provided) shall be submitted by the Clearing Agent to the Administrator monthly or at such other intervals as the Administrator may direct, with an appropriate voucher, and the amount of such compensation, if approved, shall be promptly paid to the Clearing Agent.

4. Standard of performance. In the discharge of its duties and obligations pursuant to this Agreement, the Clearing Agent shall conform to a standard of performance and accuracy reasonably to be expected of an insurance company in the administration of its own business and consistent with the highest degree of good faith. It is agreed, however. that the Clearing Agent shall not be responsible for errors or omissions of agents or employees in whose selection and supervision it has exercised reasonable care, provided, however, that the Clearing Agent, in any such case, shall have conformed to the standards of performance required hereunder, and provided further, that the Clearing Agent assumes full and complete responsibility for the disposition of any funds received by it or its agents or employees under and pursuant to this Agreement. The exercise of reasonable care in the selection of agents and employees by the Clearing Agent shall be deemed to include a determination by the Clearing Agent that the agents or employees

so selected are experienced in the transaction of such phases of the marine insurance business as may be delegated to such agents or employees by the Clearing Agent.

5. Writing insurance for own account. It is understood that the Participating Members of the Association constituting the Clearing Agent are or may be engaged in writing for their own account war risk insurance, as well as other types of insurance, for the benefit of holders of policies issued by the Clearing Agent hereunder and of other parties; and it is agreed that such insurance may be written notwithstanding the activities of the Clearing Agent hereunder on behalf of the Administrator, pursuant to this Agreement.

6. Books and records—(a) Maintained subject to audit. The Clearing Agent shall keep books, records and accounts covering the operations and activities under this Agreement which shall be the property of the United States represented by the Administrator and shall be kept separate from those relating to other business of the Clearing Agent

ог of the Participating Members thereof, in accordance with regulations made from time to time by the Administrator, and shall at all times be subject to audit and inspection by the Administrator.

(b) Comptroller General may examine. The Comptroller General of the United States or any of his duly authorized representatives shall have access to and the right to examine any pertinent books, documents, papers and records of the Clearing Agent or of the Participating Members thereof in the performance of and involving transactions related to this Agreement.

7. Act only as agent. The Clearing Agent shall act only in the capacity of agent for the Administrator as principal, in the performance of the functions provided for hereunder. The Clearing Agent shall have no authority other than as provided in this Agreement and in the rules, regulations and instructions issued to it by the Administrator under and pursuant to this Agreement.

8. Special circumstances—(a) Reimbursement of taxes and fees. In the event that the Clearing Agent or any Participating Member or Members thereof, after giving notice to the Administrator, shall be compelled to pay to the United States, its territories or possessions, or to any State of the United States or political subdivision thereof, or to any foreign country or political subdivision thereof, any tax (excepting income taxes of every nature) or fee or interest or penalty relating thereto claimed to be due by reason of the business transacted pursuant to this Agreement and which would not have been payable except for the activities of the Clearing Agent hereunder, the Administrator shall reimburse the Clearing Agent and any Participating Member or Members therefor and for any special expenses necessarily incurred in connection therewith.

(b) Indemnification. If any legal suit or proceeding (whether or not based on negligence) is brought against the Clearing Agent

or any Participating Member or Members thereof on account of anything done or not done, by the Clearing Agent or any Participating Member or Members thereof or the Administrator, in connection with the issuance or non-issuance or cancellation of insurance on behalf of the Administrator or the payment or non-payment of claims for loss or return premiums arising thereunder (including, without in any way limiting the foregoing, anything done or not done pursuant to any rules, regulations, or instructions of the Administrator or anything done or not done in conflict with or because of any limitation on the powers of the Administrator), the Administrator shall, upon due notice and at the expense of the United States, defend any such proceeding. If, in or as a result of any such legal suit or proceeding, the Clearing Agent or any Participating Member or Members thereof be compelled or required to make any payment or incur any expense, the Administrator shall reimburse the Clearing Agent or any Participating Member or Members thereof for the amount thereof; provided always that the Administrator shall not be obligated to make any such reimbursement unless, in connection with the action complained of, the Clearing Agent shall have complied with the standard of performance required thereunder. In any of the fore

going cases, the Clearing Agent shall render to the Administrator such reasonable cooperation and assistance as the Administrator may require.

9. Effective date, amendment, termination. This Agreement shall become effective as of the date of its execution by the Administrator and shall continue in force until terminated. This Agreement may be terminated, modified or amended at any time by mutual written consent. Once this Agree

ment becomes effective, it shall continue in force until terminated by mutual written consent or by either party, giving at least thirty (30) days' written notice by registered mail to the other party, stating the effective date and time on which this Agreement shall terminate. Such termination shall not affect the obligations of the parties hereto with respect to any binders or policies of insurance issued or expenditures incurred prior to the effective date of such termination.

10. No commission or contingent fee. The Clearing Agent warrants that no person or selling agency has been employed or retained to solicit or secure this contract upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee, excepting bona fide employees or bona filde established commercial or selling agencies maintained by the Clearing Agent for the purpose of securing business. For breach or violation of this warranty the Administrator shall have the right to annul this contract without liability or in his discretion to deduct from the contract price or consideration the full amount of such commission, percentage, brokerage, or contingent fee.

11. No discrimination. In connection with the performance of work under this contract, the Clearing Agent agrees not to discriminate against any employee or applicant for employment because of race, color, creed, or national origin; and further agrees to insert the foregoing provision in all subcontracts hereunder except subcontracts for standard commercial supplies or for raw materials. 12. No member or delegate. No Member of or Delegate to Congress, or Resident Commissioner, shall be admitted to any share or part of this contract, or to any benefit that may arise therefrom; but this provision shall not be construed to extend to this contract if made with a corporation for its general benefit.

18. Renegotiation. This contract shall be subject to any act of the Congress, whether heretofore or hereafter enacted and to the extent indicated therein, providing for the renegotiation of said contract and shall be deemed to contain all of the provisions required by any such act without subsequent amendment of this contract specifically incorporating such provisions.

The contractor (which term as used in this sentence means the party contracting to perform the work or furnish the materials required by this contract) shall insert the provisions of this article in each subcontract and purchase order made or issued in carrying out the contract.

Nothing contained in this clause shall impose any renegotiation obligation with respect to this contract or any subcontract hereunder which is not imposed by an act of the Congress, heretofore or hereafter enacted.

14. Participating Members-(a) Indebted to United States. The Participating Members of the association constituting the Clearing Agent, severally but not jointly and limited each to its participation therein, shall be indebted to the United States for such amounts as the Secretary is entitled to recover from the Clearing Agent in accordance with the foregoing provisions and, in the event of failure to pay on demand, the Secretary may bring an action or actions in any court in the United States to recover such amount or amounts from the Participating Members, severally but not jointly, on behalf of the United States.

(b) Change of shares. Without cancelling this Agreement, the Participating Members of the association constituting the Clearing Agent may, upon not less than ten (10) days' prior written notice to the Administrator, change their share of participation by agreement among themselves, including the termination of the interests of one Participating Member and the assumption of its share by one or more of the other Participating Members or by the admission of other eligible domestic insurance companies to membership in the association. Any such change of apportionment or termination of participation shall not relieve any Participating Member of its obligations in respect to

matters which occurred prior to any change or termination of its interest. Unless the Clearing Agent is notified in writing by the Administrator, within ten (10) days after receipt of notice from the Clearing Agent, that the proposed change in participation or termination or assumption is disapproved, such change shall be understood to be acceptable to the Administrator.

In witness whereof, the parties hereto have duly executed this Agreement in quadruplicate as of the day and year first above written. UNITED STATES OF AMERICA, SECRETARY OF COMMERCE, By: MARITIME ADMINISTRATOR.

I,

certify that I am the duly chosen, qualified, and acting Secretary of a party

to this Agreement, and, as such, I am the custodian of its official records and the minute books of its governing body; that who signed this Agreement on behalf of said association, was then the duly qualified of said association; that said officer affixed his manual signature to said agreement in his official capacity as said officer for and on behalf of said association by authority and direction of its governing body duly made and taken; that said Agreement is within the scope of the lawful powers of this association.

This subpart shall become effective as and when the Maritime Administrator finds that war risk cargo insurance adequate for the needs of the waterborne commerce of the United States cannot be obtained on reasonable terms and conditions from companies authorized to do an insurance business in a State of the United States.

NOTE: The records specified in sections 308.8, 308.517, and 308.548 of this part shall be retained until a release is granted by the Maritime Administration, at which time the Maritime Administration will take custody of the records.

[G.O. 75, 2d Rev., 26 F.R. 4541, May 26, 1961, as amended at 32 FR. 17891, Dec. 14, 1967]

§ 309.1

FINDINGS AND SCOPE
Findings.

The Ship Valuation Committee, Maritime Administration, has found that the values provided in this part constitute just compensation for the vessels to which they apply, computed in accordance with subsection 902 (a) of the Merchant Marine Act, 1936, as amended (46 U.S.C. 1242), pursuant to section 1209(a), Merchant Marine Act, 1936, as amended (46 U.S.C. 1289(a)), and the authority delegated to the Maritime Administrator by the Secretary of Commerce in section 3 of Department Order No. 117-A, effective May 20, 1966 (31 F.R. 8087), and redelegated to the Ship Valuation Committee.

XII, Merchant Marine Act, 1936, as amended (46 U.S.C. 1281-1294). The values established by §§ 309.1-309.101 represent the maximum amounts for which the Maritime Adininistration will provide war risk hull insurance for damage to or actual or constructive total loss of the vessel and for which claims for damage to or actual or constructive total loss of such insured vessels may be adjusted, compromised, settled, adjudged, or paid by the Maritime Administration with respect to insurance attaching during the period July 1, 1969, to December 31, 1969, inclusive, under the standard forms of war risk hull insurance interim binder or policy prescribed by §§ 308.106 and 308.107 of this chapter (General Order 75, 2d Rev., as amended): Provided, however, That if there is a substantial change in market values during said period, the Maritime Administration reserves the right to revise the values provided for herein or determined pursuant hereto at any time during said period.

(2) It is contemplated that the next revised values will be published as soon as practicable after January 1, 1970, to be effective with respect to insurance attaching during the period January 1, 1970, to June 30, 1970, inclusive.

(b) Vessels excluded. The values established pursuant to §§ 309.3 through 309.5 do not apply to passenger vessels, lumber schooners, car ferries, seatrains, cable ships, bulk cement and ore carriers, vessels operated on the Great Lakes and inland waterways, fully refrigerated vessels, vessels of less than 1,500 gross tons, or any other vessels or class of vesels to which the Maritime Administration finds that the provisions of said sections would not be appropriate. Values for vessels excluded by this paragraph (b) shall be specifically determined by the Maritime Administration and set forth in § 309.101, revised, as provided therein.

(c) Fuel, stores, and supplies. Values for fuel, stores, and supplies shall be determined in accordance with §§ 309.201 through 309.204 (General Order 100, 29 F.R. 2944, Mar. 4, 1964; 29 F.R. 3706, Mar. 25, 1964).