EXHIBIT 10.23
ADMINISTRATIVE AND FINANCIAL MANAGEMENT AGREEMENT
THIS AGREEMENT is entered into as of the 24th day of December, 1996, by
and between First Mercury Insurance Company ("First Mercury"), an Illinois
insurance corporation, and Mercury Management, Inc. ("MM"), a Michigan
corporation.
WHEREAS, First Mercury is an admitted insurance carrier in the State of
Illinois; and
WHEREAS, MM and its personnel have experience in providing various
management and administrative services to insurance companies and other
organizations; and
WHEREAS, First Mercury and MM desire to enter into an administrative
and financial management agreement, whereby MM shall act as "Administrative and
Financial Manager" of First Mercury, according to the terms and conditions
herein provided.
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants and agreements herein contained, it is mutually agreed as follows:
I. SCOPE AND AUTHORITY. First Mercury hereby engages MM as its
Administrative and Financial Manager, for the term set forth in Section III
hereof, and MM hereby accepts such engagement. As Administrative and Financial
Manager, MM shall have full, general authority to perform the duties hereinafter
set forth, subject to (i) the terms and conditions of this Agreement, (ii) the
authority and direction of First Mercury's Board of Directors and officers,
(iii) First Mercury's Articles of Incorporation and By-Laws, and (iv) the
statutes, rules and regulations governing the business and affairs of First
Mercury in Illinois and other applicable jurisdictions.
II. DUTIES. Without limiting the generality of Section I hereof, and
subject to the general and specific limitations set forth throughout this
Agreement, MM shall perform the following specific duties on behalf of First
Mercury:
a. Provide strategic planning, executive guidance and
consultation with respect to the business activities of First
Mercury, including, without limitation:
(i) the development of First Mercury's insurance
production force;
(ii) the development and implementation of advertising and
promotional strategies and materials;
(iii) the development of First Mercury's marketing
approach, including, without limitation, the
development of overall marketing procedures, policies
and objectives;
(iv) the preparation of market surveys and analyses;
(v) the review and evaluation of performance objectives;
b. Provide executive consultation and administrative oversight
with respect to the activities of First Mercury;
c. Provide and implement an investment program in accordance with
Section VI hereof;
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d. Provide financial oversight and consulting services with
respect to the assets of First Mercury;
e. Provide day to day administrative, records and financial
accounting services; and
f. Provide such other services incident to its performance of the
foregoing activities as reasonably shall be required.
MM further agrees that it will exercise its best efforts to generally
promote and assist in the development of the business of First Mercury, in
accordance with the objectives of First Mercury and in compliance with the
statutes, rules and regulations of the State of Illinois and other regulatory
agencies having jurisdiction over First Mercury.
III. TERM. The term of this Agreement shall commence as of June 28, 1996 and
shall remain in full force and effect until December 31, 2001 or until
terminated as hereinafter provided.
IV. RELATIONSHIP OF THE PARTIES.
a. Nothing herein contained shall be construed to create the
relationship of employer/employee, partners, or joint venturers between First
Mercury and MM or to provide MM with the exclusive or dominant right to manage
or control First Mercury.
b. MM is acting herein as an Administrative and Financial Manager and
may exercise its own judgment, within the parameters set forth herein and in any
written rules, regulations and instructions issued by the Board of Directors or
officers of First Mercury, as to the time and manner in which MM performs the
services required to be performed by it hereunder.
c. First Mercury from time to time may issue rules, regulations and
instructions regarding its business which may affect MM's rights and interests
hereunder, provided that such rules shall not have as their exclusive purpose
the frustration or material adverse impact upon this Agreement.
d. MM shall not have the right to produce any insurance business nor
negotiate any ceded or assumed reinsurance on behalf of First Mercury.
V. INFORMATION SUPPLIED BY FIRST MERCURY. First Mercury agrees to keep MM fully
informed at all times with regard to the securities owned by it, the funds
available or to become available to it for investment, and generally as to the
condition of its affairs. First Mercury periodically shall furnish MM with a
copy of its financial statements, including a signed copy of each report
prepared by certified public accountants with respect to such financial
statements, and with such other information regarding its affairs as MM from
time to time reasonably may request.
VI. INVESTMENT PROGRAM OF FIRST MERCURY.
a. MM agrees to provide financial management services to and to act as
financial manager for First Mercury in accordance with the provisions of this
Agreement. MM continuously shall provide to the Board of Directors of First
Mercury an investment program for the assets of First Mercury, including,
without limitation, advice, statistical data and recommendations with respect to
the acquisition
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(through purchase, exchange or otherwise) of securities and other assets of
First Mercury. All such advice and recommendations shall be consistent with and
in furtherance of the investment objectives and policies of First Mercury, as
heretofore adopted by First Mercury and communicated in writing to MM and as
such investment objectives and policies from time to time may be amended and
communicated in writing to MM, and in full compliance with all applicable laws,
rules and regulations.
b. Subject to the supervision and direction of the Board of Directors
and officers of First Mercury, MM shall take all action necessary or appropriate
to implement and carry into effect First Mercury's investment program or any
part thereof. With respect to the portfolio securities of First Mercury, MM
shall purchase on behalf of First Mercury such securities from or through and
sell such securities to or through brokers, dealers or other persons, within the
investment guidelines given to MM by the Board of Directors of First Mercury. MM
shall provide to the Board of Directors of First Mercury periodic reports with
respect to the implementation of First Mercury's investment program, or part
thereof, and any other reports which First Mercury reasonably may request.
VII. EXPENSES. First Mercury shall be responsible for, pay and discharge all of
its own operating expenses associated with the administrative and financial
management services provided hereunder (including fees or compensation due or
paid to subcontractors). With respect to the performance of services hereunder,
MM shall not incur any expenses to be charged to First Mercury, other than the
following expenses which may be incurred by MM on behalf of First Mercury and
which shall be borne and paid by First Mercury when so incurred:
a. Pension, fringe benefits and related expenses of First
Mercury's employees, officers and directors;
b. Legal, actuarial and accounting fees and expenses relating to
the operations and business of First Mercury;
c. Investment management and brokerage fees;
d. Security account custodial fees;
e. Expenses associated with the transfer of securities, including
transfer and other taxes; and
f. Other expenses of a similar nature consistent with the
foregoing.
VIII. COMPENSATION. As full compensation for the administrative and financial
management services rendered by MM hereunder, First Mercury shall pay to MM
fifteen percent (15%) of direct and assumed premiums written. Payment hereunder
shall be made to MM not less often than quarterly.
IX. DIRECTORS, OFFICERS AND EMPLOYEES - OUTSIDE INTERESTS. Nothing in this
Agreement shall limit or restrict the right of any director, officer, employee
or agent of MM who also may be a director, officer, employee or agent of First
Mercury or any affiliate thereof to engage in any other business or to devote
his time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or limit or restrict the right of MM
to engage in any other business or to render services of any kind to any other
corporation, firm, individual or association; provided, however, that MM shall
disclose to First Mercury any such interests or relationships to the extent they
may represent a conflict of interest with respect to MM's duties and
responsibilities hereunder.
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X. INSPECTION OF BOOKS AND RECORDS. MM shall maintain during the term of this
Agreement all books and records necessary with respect to its obligations under
this Agreement until written authorization to return or destroy said books and
records is received from First Mercury and any governmental authority required
to give such authorization. Said books and records which reflect the
transactions of First Mercury shall remain at all times the property of First
Mercury, and MM, at its own expense, may retain duplicate copies of said books
and records. All books and records maintained by MM which pertain in any way to
this Agreement and the investments and other transactions entered into by MM on
behalf of First Mercury shall be made available for inspection to any duly
authorized representative of any governmental authority having jurisdiction over
MM or First Mercury.
XI. INDEMNIFICATION OF FIRST MERCURY.
a. MM shall perform its duties hereunder in accordance with all
applicable laws and regulations and immediately shall notify First Mercury of
any notice received of any alleged violations thereof and promptly shall correct
any such violation regardless of the source of the notice.
b. MM shall hold First Mercury harmless and indemnify First Mercury
from and against any expenses, damages, liability, actions, costs or other
claims, including but not limited to reasonable attorneys' fees and associated
costs, incurred by First Mercury either (i) as a result of the failure of MM or
any subcontractor appointed by MM to comply with any law or administrative
regulation, regardless of whether such failure was intentional or unintentional
or resulted from mistake, negligence or lack of MM's knowledge, or (ii) as a
result of or in connection with MM's breach of any duty or obligation hereunder
or the breach of any duty or obligation of any subcontractor appointed by MM.
First Mercury may set off against any amount due MM any amount due to First
Mercury pursuant to this or any other agreement to which the parties hereto are
also parties.
XII. TERMINATION. This Agreement may be terminated as follows:
a. At any time, by mutual agreement of First Mercury and MM,
without notice;
b. By either First Mercury or MM upon 90 days prior written
notice; or
c. Forthwith, upon written notice after the happening of any of
the following:
(i) any act committed by MM or First Mercury which would
render such acting party unable to pay its
liabilities as they become due;
(ii) the commencement of any proceeding in bankruptcy,
receivership or dissolution by or against MM or First
Mercury, and, if such proceeding is involuntarily com
menced, such proceeding is not dismissed within 60
days;
(iii) any material change in the management or control of
MM or MM's assets without First Mercury's prior
written consent; or
(iv) the termination or restriction of MM's authority to
conduct its business, or any part thereof, by any
public authority, board, commission, bureau or
officer.
XIII. GENERAL CONDITIONS.
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a. MM shall not at any time disclose or communicate to any
other person any confidential information or trade secrets relating to the
business of First Mercury, including business methods and techniques,
research data, marketing and sales information, customer lists, know-how and
any other information concerning the business of First Mercury or any
affiliate or agent of First Mercury, their manner of operation, their plans
or other data not disclosed to the general public, unless prior written
consent is obtained from First Mercury.
b. MM and First Mercury agree that no indulgence or acceptance
of any delinquent or partial payment by either or ratification after the fact
of any violation or breach of any provision of this Agreement by either shall
be construed as a waiver of any of its rights hereunder.
c. The terms and provisions contained herein constitute the
entire agreement between the parties and supersede any previous
communications, representations or agreements, either oral or written, with
respect to the subject matter hereof.
d. Any notice provided to MM or First Mercury shall be in
writing and shall be deemed sufficiently given on the date of service, if
served personally, or on the third business day after mailing, if mailed by
certified or registered mail, postage prepaid, or if sent by some other means
at least as fast and reliable as by mail, addressed as follows (or to such
other address as any party may give the other in the manner herein provided
for the giving of notice):
If to First Mercury: First Mercury Insurance Company
00000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, President
If to MM: Mercury Management, Inc.
00000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxx, President
e. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if the invalid or
unenforceable provision had been omitted. To the extent this Agreement
requires the approval of any public official, agency, board, commission or
bureau prior to becoming effective, it shall not be effective until such
approval shall have been obtained or otherwise as required by applicable law.
f. This Agreement shall be binding upon and inure to the
benefit of First Mercury and MM and their respective successors and assigns.
g. This Agreement shall be interpreted in all respects in
accordance with the internal laws of the State of Illinois, without regard to
principles of conflicts of law.
h. This Agreement may be amended only by a written document
signed by First Mercury and MM.
i. This Agreement may be executed in multiple counterparts,
each of which shall be considered an original, but all of which, together,
shall be considered one and the same instrument.
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