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EXHIBIT 10C.
AMENDED AND RESTATED
MANAGEMENT AGREEMENT
2000
THIS AMENDED AND RESTATED MANAGEMENT AGREEMENT, made and entered into
as of this first day of January, 2000 by and between Midwest Medical Insurance
Company (the "Company"), a Minnesota stock insurance corporation, and Midwest
Medical Insurance Holding Company (the "Manager"), a Minnesota corporation.
WITNESSETH:
WHEREAS, by Management Agreement dated November 30, 1988 and amended
and restated as of January 1, 1996 and July 1, 1999, at the request of the
Company, the Manager has managed the business of the Company, provided certain
other management services and provided facilities for the conduct of the
Company's business; and
WHEREAS, the parties desire to continue such relationship, amend
certain provisions of the Management Agreement, and restate such agreement and
its various amendments by this Amended and Restated Management Agreement
("Management Agreement");
NOW, therefore, in consideration of the mutual promises set forth
below, the parties agree and contract as follows:
1. Appointment of Manager. The Company hereby confirms the appointment
of the Manager to be the exclusive manager of the business of the Company,
pursuant to the terms and conditions of this Management Agreement.
2. General Powers. The Manager agrees to perform or provide for the
performance of the services hereinafter specified for the management of the
Company in an efficient manner in strict accordance with the law, applicable
requirements of governmental and non governmental regulatory and supervisory
authorities, and generally accepted insurance, accounting, actuarial and
business practices consistent with the financial well-being and general welfare
of the Company and its insureds. The Manager agrees to procure and maintain any
and all licenses that may be necessary in connection with performance of its
duties under this Agreement, including, without limitation, insurance brokers'
and salesmen's licenses.
3. Services. The Manager agrees to perform or provide for the
performance of the following services, unless otherwise stated, at its expense,
on behalf of the Company:
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MANAGEMENT AGREEMENT
2000
(a) to provide general administration and management of the
day-to-day insurance business of the Company including, without
limitation, the production, underwriting and servicing of
insurance and claims;
(b) to solicit, receive and accept or reject applications for
insurance to be issued by the Company and to investigate and pass
upon the desirability of the risks involved in the applications
for insurance; and in such connection to provide marketing and
sales services, as reasonably necessary;
(c) to provide advise and recommendations concerning the strategic
directions and business plans of the Company and to bring to its
attention for appropriate action opportunities for the pursuit of
the business plan of the Company, as it is approved and modified
from time to time;
(d) to underwrite, classify, rate and issue policies and binders of
insurance and reinsurance for the Company;
(e) to establish and maintain for, and as the property of, the
Company complete and accurate records of all insurance policies
written by the Company;
(f) to solicit, collect, receive, and account for all insurance
premiums paid, and to deposit all of said insurance premiums in a
bank or banks to the account of the Company as soon as
practicable; to maintain said premium accounts in accordance with
applicable law;
(g) to invest or cause the investment of such funds in accordance
with legal requirements and the advice or instructions of any
investment advisor or advisors selected by the Company upon the
recommendation of the Manager and to monitor and supervise the
performance of any such investment advisor on behalf of the
Company and its Board of Directors and Investment Committee.
(h) to establish and maintain for, and as the property of, the
Company all financial and business records required by law and by
sound and accepted insurance and business practices; to prepare
for the Company all reports required by governmental and non
governmental regulatory and supervisory authorities, including
insurance reports and income tax returns;
(i) to procure such reinsurance, automatic or facultative, required
by law and by sound and accepted insurance and business
practices; to keep the necessary records for, and as the property
of, the Company in connection with such reinsurance;
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MANAGEMENT AGREEMENT
2000
(j) to provide and equip appropriate and adequate offices for the
business of the Company; to furnish all equipment, stationery,
forms, printing and supplies for the conduct of functions
required to be performed under this Agreement by the Manager;
(k) to provide and maintain an adequate claims service and facilities
for the handling of all claims against the Company and for the
payment thereof on behalf of the Company; to recover promptly for
the Company all reinsurance due on claims paid;
(l) to prepare mailings, advertisements, newsletters and other
promotional material for the Company;
(m) to make all required filings with the Commissioner of Commerce of
the State of Minnesota and any other governmental agencies and
authorities having jurisdiction over the Company including income
taxing authorities; and
(n) to do any and all other things reasonably necessary to carry out
the foregoing.
4. Extraordinary Services. Manager agrees to provide such special, or
extraordinary, services as may be requested by Company from time to time and
which are outside the scope of the services described in paragraph 3., such as
services in connection with the acquisition of other companies or businesses. At
the time such extraordinary services are provided, the Company and Manager shall
agree on the basis and amount of additional consideration or reimbursement,
including any incentive compensation, as shall be payable with respect to any
such extraordinary services.
5. Reimbursement and Fees. The Company shall make the following
payments with respect to services rendered and expenses incurred by Manager:
(a) It shall reimburse all third party expenses and reimbursements
paid or incurred on its behalf without service fee including,
without limitation, the following:
(i) All board of director and board committee fees and expenses
of the boards of both the Manager and the Company.
(ii) Directors and Officers liability insurance of the Company.
(iii) Legal, audit, consulting and other third party expenses
incurred directly and specifically for the Company which
shall not be considered to be part of Allocated Costs, as
defined below.
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MANAGEMENT AGREEMENT
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(b) Certain third party fees and charges which are direct obligations
of the Company shall be paid by it in the first instance,
including but not limited to items in paragraph 7.
(c) It shall pay promptly upon receipt of invoice all costs, fees and
additional consideration as is agreed upon between the parties
under paragraph 4 with respect to Extraordinary Services.
(d) It shall pay its share of operating, general and overhead
expenses of Manager which are incurred by Manager to provide the
services to the Company under paragraph 3 above. Operating,
general and overhead expenses of Manager shall be allocated
between Manager, the Company and other corporate subsidiaries and
affiliates of Manager in accordance with generally accepted cost
accounting principles consistently applied ("Allocated Costs"),
shall be agreed upon in advance of each year during the term of
this Agreement and memorialized on a schedule which shall be
herein.
Payments shall be made on the first business day of each month based on
Manager's estimate of amounts which will be payable to it hereunder with respect
to such month on a cash basis modified to include accruals out of the ordinary
and, with respect to December of each year, anticipated year end accruals. Such
monthly payments shall include a true-up or adjustment factor to reflect actual
results of the previous month and, annually, shall be trued-up and adjusted
within 60 days after year's end to reflect actual accrued expenses and
obligations incurred during the previous year.
Upon termination of this Agreement, such payments shall be trued-up and adjusted
within 60 days after the last day of the month in which such termination
occurred to reflect actual accrued expenses and obligations hereunder through
the date of termination.
6. Federal Income Taxes. Federal income taxes incurred by either the
Manager or the Company shall be shared in accordance with the separate Tax
Sharing Agreement between the parties dated December 16, 1998 and are excluded
from this Management Agreement.
7. Direct Expenses. It is agreed that certain expenses, to be agreed
upon from time to time, but to include the following, are direct expenses of the
Company and shall be paid directly by the Company:
(a) Agents commissions.
(b) Premium taxes.
(c) Guarantee fund assessments.
(d) Insurance Department licenses and fees.
(e) Donations approved by the Company's Board of Directors.
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(f) Costs of legislative monitoring.
(g) Reinsurance commissions received by the Company from its
reinsurers.
(h) Company membership dues and insurance federation dues.
(i) Endorsement and licensing fees.
(j) Investment Management Fees.
8. Responsibility. The Manager shall remain fully responsible for the
proper performance of any functions which it delegates to agents or independent
contractors as permitted elsewhere in this Agreement.
The Manager assumes no responsibility hereunder other than to render the
services called for, in good faith, and shall not be responsible for any actions
of the Company, or its Board of Directors, in following or declining to follow
the advise or recommendations of the Manager.
9. Non-interference. Upon any termination of this Management Agreement,
Manager agrees to turn over to Company all of its property and records, and to
cooperate with the transition of the Company to other management services,
provided that it receive its reasonable costs incurred in providing such
transitional services, plus ten percent (10%).
In the event of any such termination, Company agrees not to solicit the
employment or services of employees of Manager, without its prior written
consent, nor retain such employment or services within one year of the effective
date of the termination of this Management Agreement.
10. Term and Termination.
(a) Upon execution, this Agreement shall be effective for an
indefinite term and shall continue unless terminated by either
party at the end of any calendar year by written notice to the
other given at least 180 days prior to the effective date of
termination.
(b) Notwithstanding the provisions of Paragraph 8(a), either party
may terminate this Agreement as hereinafter provided:
(1) Effective immediately upon written notice to the other party
in the event of fraud or dishonesty by the other party,
provided that such notice shall be given as soon as
practicable after discovery of such fraud or dishonesty.
(2) Effective immediately upon written notice to the other party
upon the final judicial determination of the insolvency or
bankruptcy of the other party provided that such notice
shall be given as soon as practicable after discovery of
such fraud or dishonesty.
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MANAGEMENT AGREEMENT
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(3) Upon at least one full month's notice effective the last day
of any month because of the material breach by the other
party of its obligations under this Agreement, provided that
such notice shall be given as soon as practicable after
discovery of such breach and that the other party fails to
remedy such breach within the notice period provided.
(4) Upon at least one full month's notice effective the last day
of any month upon the merger of Company with another entity
or upon the change in controlling ownership of Company by
Manager.
(c) Upon termination of this Agreement the Manager shall deliver to
the Company or its successor in interest all property, records
and information of every kind concerning the affairs of the
Company in the possession, custody, or control of the Manager and
the parties shall make all payments required in paragraphs 4 and
5.
(d) After the effective date of termination of this Agreement for any
reason, the Company shall bear the cost of both allocated and
unallocated loss adjustment expense for all claims open at the
date of termination or reported after the date of termination and
the Manager shall not be responsible for any such expense after
the date of termination.
(e) In the event that either party gives such notice of termination,
the Company shall have the right, during the period preceding the
termination date, to make any and all arrangements necessary or
desirable in its discretion to provide for personnel and
facilities for the performance of the services performed under
this Agreement by the Manager, and the Manager will cooperate
with the Company toward the end that there will be an orderly
transfer of management service functions in respect of the
Company's business from the Manager to the Company or its
designee.
11. Damages for Breach. No provision of this Agreement shall preclude
either party from recovering damages, if any, sustained by reason of any conduct
in breach of the terms hereof.
12. Regulatory Compliance. The Manager agrees and acknowledges that it
shall cooperate in all respects with the relationship between the Company and
the various governmental agencies having jurisdiction over it and its activities
and agrees to make available to such agencies during normal business hours and
upon reasonable request any and all records maintained by it for the Company
under this Agreement.
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13. Arbitration.
(a) In the event any dispute or difference of opinion arises under or
with respect to this Agreement, the controversy shall be
submitted to arbitration. Each party shall select one arbitrator,
and the two arbitrators so selected shall select a third
arbitrator before the entry into arbitration. Each of the
arbitrators shall be persons having no less than five (5) years'
experience in executive position with casualty insurance
companies transacting substantial business.
(b) The arbitrators may use their discretion in conducting the
arbitration proceedings and are relieved of all judicial
formalities except that they shall allow the parties an
opportunity to be heard after reasonable notice before reaching
any decision.
(c) Each party shall bear the expense of its own arbitrator and shall
jointly and equally bear with the other the expense of the third
arbitrator and of the arbitration. Any such arbitration shall
take place in the greater Minneapolis-St. Xxxx area at a mutually
acceptable location.
MIDWEST MEDICAL INSURANCE
HOLDING COMPANY
By___________________________________
Xxxxxx X. X. Xxxxx, M.D., Chairman
By___________________________________
Xxxxx Xxxxx, President and CEO
MIDWEST MEDICAL INSURANCE
COMPANY
By___________________________________
Xxxxxx X. X. Xxxxx, M.D., Chairman
By___________________________________
Xxxx Xxxxxx, President and CEO
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