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EXHIBIT 10C
AMENDED AND RESTATED
MANAGEMENT AGREEMENT
1999
THIS AMENDED AND RESTATED MANAGEMENT AGREEMENT, made and entered into
as of this first day of July, 1999 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, 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:
(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
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MANAGEMENT AGREEMENT
1999
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;
(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;
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MANAGEMENT AGREEMENT
1999
(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.
(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, plus a
10% service charge thereon. 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
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MANAGEMENT AGREEMENT
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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.
(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.
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
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MANAGEMENT AGREEMENT
1999
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.
(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
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MANAGEMENT AGREEMENT
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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.
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. k Any such
arbitration shall take place in the greater Minneapolis-St.
Xxxx area at a mutually acceptable location.
MIDWEST MEDICAL INSURANCE
HOLDING COMPANY
By /s/ Xxxxxx X. X. Xxxxx
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Xxxxxx X. X. Xxxxx, M.D., Chairman
By /s/ Xxxxx Xxxxx
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Xxxxx Xxxxx, President and CEO
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AMENDED AND RESTATED
MANAGEMENT AGREEMENT
1999
MIDWEST MEDICAL INSURANCE COMPANY
By /s/ Xxxxxx X. X. Xxxxx
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Xxxxxx X. X. Xxxxx, M.D., Chairman
By /s/ Xxxxx Xxxxx
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Xxxxx Xxxxx, President and CEO
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