Document:

Exhibit 10.34

 

SECOND AMENDMENT TO MANAGEMENT COMPANY

CONTRACT ENTERED INTO BETWEEN

FLORIDA ADMINISTRATORS, INC.,

AND PINNACLE ASSURANCE CORPORATION

DATED APRIL 7, 1995

 

This Second Amendment to
Management Company Contract is made and entered into this 1st day of
January 2000, but made effective as of the 21st day of January, 2000.

 

RECITALS

 

WHEREAS, Florida
Administrators, Inc., and Pinnacle Assurance Corporation have previously
entered into that certain Management Company Contract dated April 7, 1995,
and

 

WHEREAS, the Management
Company Contract was amended by Amendment dated January 26, 1996, and

 

WHEREAS, Florida
Administrators, Inc., has changed its name to Pinnacle Administrative
Company by amendment to its Articles of Incorporation filed with the Secretary
of State, State of Florida, on September 26, 1997, and

 

WHEREAS, Pinnacle
Assurance Corporation has changed its name to AmCOMP Preferred Insurance
Company by amendment to its Articles of Incorporation filed with the Secretary
of State, State of Florida, on January 21, 1998.

 

NOW, THEREFORE, for good
and valuable consideration, the receipt, sufficiency and adequacy of which is
hereby conclusively acknowledged, it is agreed as follows:

 

1.             The above Recitals are true and
correct.

 

2.             All references to Florida Administrators, Inc., or “Management
Company” in the Management Company Contract and in the First Amendment thereto
are hereby amended by substituting the name “Pinnacle Administrative Company”
in lieu of “Florida Administrators, Inc.” or “Management Company”.

 

3.             All references to
Pinnacle Assurance Corporation or “PINNACLE” in the Management Company Contract
and in the First Amendment thereto are hereby amended by substituting the name “AmCOMP
Preferred Insurance Company in lieu of “Pinnacle Assurance Corp.” or “PINNACLE”.

 

1

 

4.             All remaining terms
and provisions of the Management Company Contract as previously amended and as
herein amended, shall remain in full force and effect and are hereby ratified
and reaffirmed.

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
to Management Company Contract this 5th day of May, 2000.

 

 

	
   

  	
  PINNACLE ADMINISTRATIVE
  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Debra
  Cerre-Ruedisili

  	
   

  
	
   

  	
   

  	
  Its Director, Executive
  Vice President

  
	
   

  	
   

  	
   and COO

  

 

	
  STATE OF FLORIDA

  	
  )

  
	
   

  	
    SS

  
	
  COUNTY OF PALM BEACH

  	
  )

  

 

The foregoing instrument
was acknowledged before me this 5th day of May, 2000, by (name of
officer or agent, title of officer or agent) of Pinnacle Administrative Company,
on behalf of the corporation. He/she is personally known to me or has produced                                              
as identification.

 

	
   

  	
   

  	
   

  	
  /s/
  Sally Blatt

  
	
   

  	
   

  	
   

  	
  Notary
  Public, State of Florida

  
	
  [SEAL]

  	
  SALLY BLATT

  MY COMMISSION # CC 695968

  EXPIRES: November 12, 2001

  Bonded Thru Notary Public Underwriters

  	
   

  	
  Name typed, printed or stamped:

  Commission expires:

  Serial number:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  AmCOMP
  Preferred Insurance Company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Its Secretary

  	
   

  

 

2

 

	
  STATE OF FLORIDA

  	
  )

  
	
   

  	
    SS

  
	
  COUNTY OF PALM BEACH

  	
  )

  

 

The foregoing instrument
was acknowledged before me this 5th day of May, 2000, by (name of
officer or agent, title of officer or agent) of AmCOMP Preferred Insurance
Company, on behalf of the corporation. He/she is personally known to me or has
produced                                      as
identification.

 

 

	
   

  	
   

  	
   

  	
  /s/
  Sally Blatt

  
	
   

  	
   

  	
   

  	
  Notary
  Public, State of Florida

  
	
  [SEAL]

  	
  SALLY BLATT

  MY COMMISSION # CC 695968

  EXPIRES: November 12, 2001

  Bonded Thru Notary Public Underwriters

  	
   

  	
  Name typed, printed or stamped:

  Commission expires:

  Serial number:

  

 

3EXHIBIT 10.35

 

MANAGEMENT
COMPANY CONTRACT

of

 

AmCOMP
ASSURANCE CORPORATION,

A
FLORIDA STOCK INSURANCE COMPANY

 

THIS AGREEMENT is
made and entered into effective the 16th day of December, 1997, by and between
AmCOMP ASSURANCE CORPORATION, a Florida stock insurance company, (“AmCOMP”) and
PINNACLE ADMINISTRATIVE COMPANY, a Florida corporation, (formerly known as
FLORIDA ADMINISTRATORS, INC.) (“MANAGEMENT COMPANY”) and provides as follows:

 

WITNESSETH

 

WHEREAS, AMCOMP is a
domestic stock insurer and has received from the Department of Insurance of the
State of Florida, a Certificate of Authority to operate as a domestic stock
insurer; and,

 

WHEREAS, AmCOMP is
also authorized to act as an insurer in certain other states and jurisdictions
in the United States; and

 

WHEREAS, AmCOMP has
selected the MANAGEMENT COMPANY to provide services in connection with the
operations of AmCOMP; and

 

WHEREAS, it is the
desire of the parties hereto that the functions, duties, and responsibilities
of the MANAGEMENT COMPANY and the compensation to be paid to the MANAGEMENT
COMPANY be set forth in a written agreement;

 

NOW THEREFORE, in
consideration of the mutual covenants, conditions, and agreements hereinafter
set forth, and for other good and valuable considerations, the receipt and
sufficiency of

 

 

which is hereby acknowledged the parties hereto do hereby covenant and
agree as follows:

 

ARTICLE
I

 

DEFINITIONS

 

As used in this agreement, the following
terms shall have the following meanings:

 

1.1           “Law”
means the Florida Statutes or, where applicable, the laws of any other
applicable jurisdiction in which AmCOMP does business is an insurer.

 

1.2           “Claims”
means a request for payment to an injured party or his beneficiaries or to
others in connection therewith.

 

1.3           “Costs
and Allocated Expenses Chargeable as Claims” means all costs and expenses
for adjusting, settling, defending and finally disposing of a claim, including
without limitation, disbursements for workers, compensation appeals, loss
adjusting, rehabilitation, job placement and vocational training and
retraining, medical evaluation, nursing care, hearings before judges of
compensation claims or court costs, fees and expenses, all fees for service of
process, fees to attorneys, the cost employing expert witnesses, field adjusters
and investigators, the cost of all copies of transcripts and testimony or
coroner’s inquests or criminal or civil proceedings, the cost of copies of
public records, cost of depositions, cost of court reporters or recorded
statements, any other costs properly chargeable to the defense of a particular
claim, including employer liability

 

2

 

actions, or to the protection of the subrogation rights of AmCOMP and
claims against the Special Disability Trust Fund, or similar funds of other
jurisdictions, and any costs associated with managed care other than the
general cost of administering and overseeing a managed care program.

 

1.4           “Department”
means the Department of Insurance or the Department of the State of Florida
which may succeed to its rights and duties under the Law. Also where
applicable, the term “Department” may also be deemed to refer to the
administrative agency or department of any other jurisdiction in which AmCOMP
does business as an insurer.

 

1.5           “Division”
means Division of Workers’ Compensation of the Florida Department of Labor and
Employment Security or the department of the State of Florida which may succeed
to its rights and duties under the Workers , Compensation Law, Section 440.01, et
seq., Florida Statutes, as amended from time to time. This term may also refer
to any similar government entity having similar jurisdiction in any other state
in which AmCOMP does business as an insurer.

 

1.6           “Eligible
Claims” means claims which in the judgment of the MANAGEMENT COMPANY are
covered by the Florida Workers’ Compensation Law, Section 440.01 et seq.,
Florida Statutes, as amended from time to time, or the law of any other
applicable jurisdiction

 

3

 

1.7           “Producer”
means an individual or agency licensed under the applicable state law to write
the insurance coverage provided by AmCOMP.

 

1.8           “AmCOMP”
means AmCOMP ASSURANCE CORPORATION, a Florida stock insurance company.

 

1.9           “Audited
Standard Premium” means the premium determined by multiplying: (a) the
payroll (segregated into the proper workers’ compensation job classifications),
divided by 100, by: (b) the product obtained by multiplying the appropriate
manual premium rates by member experience modifications, with such adjustments
as necessary after routine or other audits to account for inaccurate or
incomplete payroll, employee coverage and other data used to compute a Member’s
premiums.

 

1.10         “Policy
Holders” and “Insureds” means all persons, partnerships, joint ventures,
corporations, companies, or unincorporated organizations which are policy
holders or insureds of AmCOMP, which meet underwriting eligibility requirements
established by AmCOMP and whose applications for insurance coverage have been
accepted by AmCOMP.

 

1.11         “Records
of AmCOMP” means, whether hard copy or on computer, without limitation any
records pertaining to underwriting and claims, both open and closed claims;
procedure manuals; mailing lists; safety reports and data; marketing plans,
data and records; statistical reports; accounting records; historical records;
funds received and in the custody of Service Company; records relating to the
book of business, and participating members, producers and

 

4

 

reinsurance contracts and claims; all government filings; and any other
documents, materials, data, computer disks, tapes, source documents, or data
file layouts pertaining to or bearing information about AmCOMP and its members
and in possession of MANAGEMENT COMPANY, its agents or subcontractors.

 

1.12         “Rules”
mean those rules adopted by the Department, pursuant to the Law, or the
Division of Workers’ Compensation, as the case may be, pursuant to the Workers’
Compensation Law.

 

1.13         “Management
Company” means Pinnacle Administrative Company, a Florida corporation,
which serves as the “MANAGEMENT COMPANY” for AmCOMP pursuant to this Agreement
and within the meaning of the Law and the Rules.

 

1.14         “Directors”
mean members of the Board of Directors of AmCOMP.

 

1.15         “Policy”
or “Policies” means plans and documents adopted or revised from time to
time by the Directors, which established guiding principles by which the
MANAGEMENT COMPANY and AmCOMP’s corporate officers shall administer the affairs
of AmCOMP. It is the intent of the parties that the Directors shall not
directly control or manage the means, methods or details of the services to be
provided hereunder by the MANAGEMENT COMPANY. Notwithstanding the foregoing,
the parties acknowledge the special interests of the Directors in the areas of
auditing, budgeting, reinsurance, and investing the funds of AmCOMP. In
recognition of those special interests, and in regard to those specific areas
only, the term

 

5

 

“Policy” or “Policies” shall be more broadly defined to include, but
not be limited to the following powers of the Directors:

 

(a)           Auditing
— Selection and direct employment of external auditors and complete control
over the auditing process;

 

(b)           Budgeting
— Authority to amend, modify, approve and/or revise the annual budget ,
submitted by the MANAGEMENT COMPANY;

 

(c)           Reinsurance
— Authority to review AmCOMP’s reinsurance program to determine its financial
soundness and the reasonableness of its cost to AmCOMP and, if necessary to
modify or revise AmCOMP’s reinsurance program;

 

(d)           Investing
— Development of Policies which shall govern the investment of AmCOMP’s funds,
including the Directors’ selection of investment advisors and managers after
consultation with the MANAGEMENT COMPANY.

 

ARTICLE
II

 

POWERS
AND RESPONSIBILITY OF DIRECTORS

 

2.1           All
corporate powers shall be exercised by or under the authority of the Directors
and the business and affairs of AmCOMP shall be managed and administered
pursuant to the Policies adopted by the Directors.

 

2.2           The
Directors shall appoint independent certified public accountants and actuaries,
as needed, and may appoint, hire or retain such other experts, professionals or
other persons as the Directors may deem appropriate from time to time.

 

6

 

2.3           The
Directors shall approve the payment of dividends to Members.

 

2.4           The
Directors shall approve changes, if any, in corporate structure of AmCOMP.

 

2.5           The
Directors shall adopt a plan submitted by the MANAGEMENT COMPANY, establishing
requirements for membership in AmCOMP, if such plan has been prepared in
accordance with the policies and directives of the Directors.

 

2.6           The
Directors shall, from time to time, adopt, promulgate, amend, and re-promulgate
its own rules, policies, directives and procedures, not in conflict with this
Agreement, which shall govern Members and MANAGEMENT COMPANY’s handling of its
duties hereunder. The MANAGEMENT COMPANY agrees to abide by such rules,
policies, directives and procedures.

 

ARTICLE
III

 

DUTIES
AND RESPONSIBILITIES OF MANAGEMENT COMPANY

 

3.1           MANAGEMENT
COMPANY represents and warrants that its principals and employees have the
experience and qualifications to meet the needs of AMCOMP, including, but not
limited to, claims administration, providing assistance in the overall planning
and coordination of the business of AMCOMP, providing summary data relating to
AmCOMP’s cost of providing benefits, including the frequency and distribution
by type and cause, and the skill and experience to assist AmCOMP in correcting
deficiencies which may arise in the operation of AmCOMP.

 

7

 

3.2           MANAGEMENT
COMPANY shall be solely responsible for managing and administering the affairs
of AmCOMP, in accordance with the Policies of the Directors, including but not
limited to marketing, underwriting, billings, collection, claims
administration, termination, reinstatement, safety and loss prevention, reinsurance,
policy issuance, accounting, regulator reporting, investment, and general
administration. The MANAGEMENT COMPANY shall have no liability or
responsibility whatsoever to adjust until conclusion of any claims occurring
during the contract period in the event that this Management Company Contract
is terminated. Any such responsibility for continuing claims adjusting shall
terminate with the termination of the Management Company Contract.
Additionally, MANAGEMENT COMPANY is authorized to delegate to a service
company, claims administration activities, provided, however, that MANAGEMENT
COMPANY shall retain the ultimate responsibility and authority for such
activities. Notwithstanding any other provision of this agreement, upon
expiration or termination of this agreement for any reason, MANAGEMENT COMPANY,
with notice to and approved by the Directors, shall be entitled to delegate and
assign its claims handling and adjusting responsibilities hereunder to any
business entity which is permitted under the Law and Rules to administer and
adjust claims. AmCOMP’s Board of Directors shall not unreasonably withhold
approval of MANAGEMENT COMPANY’s delegation or assignment of its claims
handling adjusting responsibilities.

 

8

 

3.3           MANAGEMENT
COMPANY shall prepare and submit to the Directors a plan establishing the
requirements for membership in AmCOMP in accordance with the policies and
directives of the Directors. Such plan shall include, but not be limited to,
loss prevention, claims experience, billings, underwriting criteria and
qualifications, credit worthiness, termination and reinstatement.

 

3.4           MANAGEMENT
COMPANY acknowledges its fiduciary duty to AmCOMP and agrees to exercise utmost
good faith in all transactions of behalf of AmCOMP and MANAGEMENT COMPANY
agrees to comply with all of the Directors’ policies and directives.

 

3.5           The
parties acknowledge that MANAGEMENT COMPANY will maintain frequent contact with
the Department in carrying out its duties under this Agreement. The MANAGEMENT
COMPANY is hereby designated AmCOMP’s agent for purposes of representing AmCOMP
in all dealings with the Department. MANAGEMENT COMPANY acknowledges its
fiduciary duty and obligation to fully and completely inform AmCOMP and the
Directors. Such information shall be given to the Chairman of the Board.

 

3.6           Notwithstanding
anything to the contrary herein contained, the MANAGEMENT COMPANY shall have
the right to delegate its duties under this Agreement to such persons or
entities as agents, delegates or assignees as it may properly deem necessary to
the efficient performance of the duties and responsibilities assigned to the
MANAGEMENT COMPANY hereunder, subject to the approval of the Directors. In
extending their approval, the

 

9

 

Directors shall not unreasonably withhold their approval or impose
arbitrary conditions or requirements.

 

ARTICLE
IV

 

POWERS
AND RESPONSIBILITY OF OFFICERS

 

4.1           AmCOMP
shall have two categories of officers. Board officers shall be members of the
Board of Directors and shall perform those duties prescribed in the By-Laws.
Corporate Officers shall be a president, secretary and treasurer and such other
officers as deemed necessary by the MANAGEMENT COMPANY, and shall only have
those powers and responsibilities as expressly stated in the By-Laws or in a
Director resolution and shall not have any implied powers or responsibilities
not customary to that office.

 

ARTICLE
V

 

COMPENSATION
TO MANAGEMENT COMPANY

 

The MANAGEMENT COMPANY shall be paid
compensation for the services rendered pursuant to this agreement in accordance
with the following:

 

Annual base service fee (“Base Fee”)

 

1.             The
Base Fee shall be 14% of the Audited Standard Premium. Additionally, the Base
Fee shall include the expense constant less any taxes or assessments
attributable to the expense constant.

 

2.             Either
party may notify the other, not more frequently than once every 36 months as to
each party, that the Base Fee is outside the “range of reasonableness” as
follows:

 

10

 

(a)           Range
of reasonableness shall be determined by comparing the Base Fees to the costs
for similar services incurred by insurers writing the same lines of insurance,
or where available, such expenses as filed by boards, bureaus, and associations
designated by insurers to file such data.

 

(b)           After
such notice is given, the parties shall engage in good faith negotiations to
agree upon a new Base Fee.

 

(c)           If
the parties are unable to negotiate an agreement on a new Base Fee, within 60
days after such notice is given, the parties shall jointly select a qualified
major, national consultant who will conduct a market-based study to determine
whether the fee is within the range of reasonableness. If the consultant
concludes that the fee is outside the range of reasonableness, the consultant
will opine on the appropriate range, and the parties will negotiate a fee
within the range, to be effective the first day of the next calendar year or upon
agreement of the parties.

 

(d)           If
the parties are unable to agree on the selection of a consultant or if either
party disagrees with the consultant’s conclusion, then the issue shall be
submitted to arbitration pursuant to the provisions of the Florida Arbitration
Code. During the period of any such arbitration, the Base Fee provided in this
agreement (or the Base Fee then in effect) shall remain in effect.

 

3.             If
a substantial increase or decrease in worker’s compensation insurance rates is
approved by the Department, the 

 

11

 

parties shall in good faith re-negotiate the amount of the Base Fee.

 

ARTICLE
VI

 

EXPENSE
TO AmCOMP

 

It is understood and agreed by the parties to
this Agreement that the fees paid to the MANAGEMENT COMPANY are consideration
for the MANAGEMENT COMPANY performing all services described herein, but that
such compensation does not include the following services and expenses,
which shall be borne by AmCOMP:

 

6.1           The
cost of services performed by the actuary selected by the Directors.

 

6.2           The
cost of audits by certified public accountants or other auditors selected by
AmCOMP as required by regulations or rules of the Department of other
applicable law, and preparation of financial statements (whether “audited” or
periodic “reviewed”) and all returns and reports required by federal, state or
local taxation authorities. Said audits shall include but not limited to
premium audits.

 

6.3           Legal
fees for services performed by attorneys selected by AmCOMP.

 

6.4           Subject
to Section 10.1, all legal fees, costs and expenses incurred in the defense of
lawsuits filed against AmCOMP unrelated to claims.

 

6.5           The
cost of services performed by any other professional selected by AmCOMP.

 

12

 

6.6           Any
charge by a regulatory agency for any examination or audit performed by any
regulatory agencies or any penalties and interest assessed.

 

6.7           Premiums
for errors and omissions insurance, and officers and directors insurance,
fidelity coverage and surety bonds to satisfy the needs of AmCOMP, its
officers, directors, employees and agents, excluding MANAGEMENT COMPANY and
producers.

 

6.8           The
compensation paid to producers, including cash awards, gifts, travel packages
and other incentive bonuses payable to said Producers,

 

6.9           Cost
of investing fund monies including fiscal agent costs and fees.

 

6.10         Taxes
and assessments to be charged against AmCOMP.

 

6.11         Organizational
costs for AmCOMP.

 

6.12         Excess
insurance or reinsurance premiums.

 

6.13         All
costs related to bad debt, expense constant expense net of applicable taxes or
assessments imposed by Law, Director’s expense (excluding those of MANAGEMENT
COMPANY director’s), bank service charges, depreciation expense, amortization
expense, dividends, and EFT plan expense.

 

6.14         All
“Costs and Allocated Expenses Chargeable as claims” as defined in Article I.

 

6.15         MANAGEMENT
COMPANY shall prepare and submit to the Directors a suggested annual budget for
the fees, awards, costs and other expenses described in Sections 6.8. Any
departure from such

 

13

 

budget in either amount or scope shall be approved in advance by the
Directors.

 

6.16         Except
as otherwise provided below, the MANAGEMENT COMPANY shall bear all costs which
are not specified above in sections 6.1 through 6.15. In the event that any
material, extra costs result from changes in the Law, the parties shall
negotiate in good faith an agreement as to which party shall bear such extra
costs.

 

ARTICLE
VII

 

RECORDS
AND OFFICE

 

7.1           The
MANAGEMENT COMPANY shall maintain, at its principal office, a copy of this
Agreement together with all records of AmCOMP.

 

7.2           The
Directors shall have the right of continuing access to the books and records of
AmCOMP maintained by the MANAGEMENT COMPANY.

 

7.3           Claims
administration and the other primary activities of the MANAGEMENT COMPANY under
this Agreement shall be handled from its principal office in Palm Beach County,
Florida, and books and records of AmCOMP shall be maintained in such office.

 

7.4           The
MANAGEMENT COMPANY recognizes and acknowledges that all programs, products, or
producer reimbursement plans, records of AmCOMP, AmCOMP’s book of business,
list of insureds, and list of Producers, and offering any insurance product of
AmCOMP are the property of AmCOMP and shall be deemed confidential and
proprietary

 

14

 

information of AmCOMP. MANAGEMENT COMPANY covenants and agrees that it
will never, directly or indirectly, during the term of this Agreement or after
termination thereof, use, disseminate, disclose or in any manner publish any
such confidential and proprietary information without AmCOMP’s permission given
in writing; provided, however, the MANAGEMENT COMPANY may, in its discretion,
make copies of or have access any and all of the above specified information,
data and documents to the extent they may be needed for the purpose of
defending or prosecuting any legal, tax, or other administrative investigation
or proceeding.

 

7.5           Upon
termination of this Agreement, all original records of AmCOMP and data utilized
in generating and maintaining those records in the custody of the MANAGEMENT
COMPANY, its agents or its subcontractors shall be assembled by MANAGEMENT
COMPANY at the expense of MANAGEMENT COMPANY and delivered to AmCOMP at the
expenses of AmCOMP. All computer software programs purchased or developed by
MANAGEMENT COMPANY and used to render services hereunder shall remain the sole
and exclusive property of MANAGEMENT COMPANY.

 

ARTICLE
VIII

 

TERM
OF CONTRACT AND TERMINATION

 

8.1           This
Agreement shall become effective as of the date AmCOMP commences operations,
and shall remain in full force and effect for a period of five (5) years
thereafter. Upon the date AmCOMP commences operations, the parties will execute
an addendum to this Agreement, specifying the effective date of this Agreement.

 

15

 

The Agreement shall continuously renew for additional five (5) year
terms unless AmCOMP notifies MANAGEMENT COMPANY that it elects to terminate the
Agreement for a cause described in Section 8.2 of this Agreement.

 

8.2           This
Agreement may be terminated by AmCOMP under the following conditions:

 

(a)           AmCOMP
is dissolved or liquidated;

 

(b)           The
MANAGEMENT COMPANY is disqualified from acting as a MANAGEMENT COMPANY by the
Department and MANAGEMENT COMPANY is thereafter unable to cure the deficiencies
cited by such agency within a reasonable amount of time, not exceeding sixty
(60) days in length;

 

(c)           Failure
of the MANAGEMENT COMPANY to manage and operate AMCOMP’s affairs in a
reasonable and prudent manner; or

 

(d)           MANAGEMENT
COMPANY intentionally and materially violates a Policy concerning auditing,
budgeting, investing or reinsurance.

 

8.3           Arbitration.

 

(a)           In
the event AmCOMP alleges that the MANAGEMENT COMPANY has failed to manage and
operate AmCOMP in a reasonable and prudent manner, pursuant to Section 8.2(c),
written notice of such non-compliance shall be given to MANAGEMENT COMPANY,
specifying the specific reasons for alleging the non-compliance and suggesting
corrective measures, and the MANAGEMENT COMPANY shall be given a reasonable
period of time to correct such non-compliance. Within thirty (30) days after
receipt of such written notice, MANAGEMENT

 

16

 

COMPANY shall submit to the Directors a plan to correct the
noncompliance which is reasonably satisfactory to the Directors. In the event
the MANAGEMENT COMPANY shall fail to submit a reasonably satisfactory
corrective plan within said thirty (30) day period, or in the event that
MANAGEMENT COMPANY shall fail to correct the noncompliance within a reasonable
period of time, then AmCOMP may terminate this Agreement, In the event that the
parties disagree as to whether the corrective plan is reasonably satisfactory
or disagree on the issue of whether MANAGEMENT COMPANY has performed the
requirements of the corrective plan, the matter shall be submitted to arbitration.

 

(b)           In
the event that AmCOMP alleges that MANAGEMENT COMPANY has violated Section
8.2(d), the following shall apply:

 

(1)           AmCOMP
shall give written notice of the alleged violation to MANAGEMENT COMPANY.

 

(2)           If
MANAGEMENT COMPANY reasonably believes that performance of the subject Policy
may result in enforcement action against MANAGEMENT COMPANY’s license or AmCOMP’s
certificate of authority, or if MANAGEMENT COMPANY reasonably believes that the
subject Policy is in material violation of the Law or Rules, then MANAGEMENT
COMPANY shall give written notice of such concern to AmCOMP to excuse the
violation of the subject Policy. if AmCOMP accepts MANAGEMENT COMPANY’s
explanation, then the violation shall be excused. If AmCOMP does not accept
MANAGEMENT COMPANY’s explanation, then MANAGEMENT COMPANY may submit the matter
to

 

17

 

arbitration to determine whether MANAGEMENT COMPANY’s material
intentional violation was excusable.

 

(c)           In
the event of arbitration pursuant to this article, each party shall select one
arbitrator and the two arbitrators so selected shall mutually agree upon a
third arbitrator, and the dispute shall otherwise be arbitrated in accordance
with the Florida Arbitration Code.

 

ARTICLE
IX

 

PREVAILING
LAW

 

This Agreement shall be construed according
to the laws of the state of Florida to the extent that such laws are not
preempted by Federal law or by the laws of another jurisdiction in which AmCOMP
is authorized to act as an insurer.

 

ARTICLE
X

 

INDEMNIFICATION

 

10.1         Indemnification
by MANAGEMENT COMPANY. MANAGEMENT COMPANY agrees to indemnify and hold
AmCOMP and its officers, directors and agents harmless from and against all
claims, demands, costs, damages, judgments, attorneys’ fees, expenses,
obligations and liabilities of any kind or nature that occur, arise or result
from MANAGEMENT COMPANY’s performance of its duties hereunder or from a breach
of this Contract by MANAGEMENT COMPANY.

 

10.2         Indemnification
by AmCOMP. AmCOMP agrees to indemnify and hold the MANAGEMENT COMPANY and
its officers, directors and employees harmless from and against all claims,
damages, judgments,

 

18

 

attorney’s fees, expenses, obligations and liabilities of any kind or
nature that occur, arise or result from the directors’ or their agents
mismanagement of AmCOMP’s assets or any other breach of their duties to AmCOMP,
or its members, or any other duties imposed-by law (except to the extent that
such mismanagement or breach of duties results from the action or omission of
MANAGEMENT COMPANY, its officers, directors or employees).

 

ARTICLE
XI

 

11.1         Additional
Insurance Lines. During the term of this Agreement, AmCOMP shall not offer
any other person or firm the right to act as an administrator or management
company on behalf of AmCOMP with respect to any additional insurance lines
AmCOMP may offer, unless AmCOMP first offers such right to the MANAGEMENT
COMPANY upon the same terms and conditions. This right of first refusal must be
exercised by the MANAGEMENT COMPANY within thirty (30) days after the new
opportunity is offered to it by AmCOMP If the MANAGEMENT COMPANY declines such
opportunity, the Management contract or other arrangement with the other person
or firm may then be implemented, but only on the same terms and conditions
stated in the original offer to the MANAGEMENT COMPANY. If the terms and
conditions are different, the MANAGEMENT COMPANY shall again have the right of
the first refusal with respect to such modified offer.

 

19

 

ARTICLE
XII

 

MISCELLANEOUS

 

12.1         During
the term of this Agreement, MANAGEMENT COMPANY shall maintain a fidelity bond
covering its employees, with AmCOMP as obligee, in an amount sufficient to
protect all monies placed in any revolving account made available to MANAGEMENT
COMPANY for the payment of claims, judgments and other related expenses. The
coverage and amount for the bond shall be as required by the Department or
other applicable law.

 

12.2         The
Directors will, from time to time, designate a single contact person or
representative from among their membership who will be responsible for
receiving notices and other communications from the MANAGEMENT COMPANY and
reporting the directives and other communications of the directors to the
MANAGEMENT COMPANY. Until otherwise notified in writing, the initial
representative of the Directors shall be the Chairman of the Board serving at
any time, and the representative of MANAGEMENT COMPANY shall be its President
serving at any time.

 

12.3         This
Agreement has been duly adopted by the Board of Directors of MANAGEMENT COMPANY
and by the Board of Directors of AmCOMP at meetings duly called and held by
them, respectively. This Agreement does not and will not conflict with or
violate the charter or other organizational documents of any party, or any
agreement, instrument, law, order, rule, regulation, or other obligation or
arrangement by which a party may be bound.

 

12.4         If
the MANAGEMENT COMPANY is required to assume responsibility for the, open
claims and files of such an organization that has been terminated or is in the
process of

 

20

 

winding up or dissolving, then the parties shall mutually agree upon
the reasonable compensation to which MANAGEMENT COMPANY will be entitled in
consideration for assuming the responsibility for closing out such claims and
files.

 

If AmCOMP acquires, merges, forms, or
consolidates with any other insurance company, self-insurance fund,
organization or other entity providing like insurance coverages or services,
this Agreement shall also apply to such new or additional company, fund,
organization or entity, and the MANAGEMENT COMPANY’s fees shall be based on the
new or additional premiums paid by the Members or Policyholders of such
additional company, fund, organization, or other entity. If the MANAGEMENT
COMPANY is required to assume responsibility for the open Claims and files of
such an organization that has been terminated or is in the process of winding
up or dissolving, then the parties shall mutually agree upon the reasonable
compensation to which MANAGEMENT COMPANY will be entitled in consideration for
assuming the responsibility for closing out such Claims and files.

 

12.5         Neither
party nor any representative, agent, employee, designee or other firm or
individual acting on its behalf or at its direction , shall, in bad faith, take
any action for the primary purpose of circumventing, diminishing or otherwise
avoiding that party’s obligations under this Agreement, terminating this
Agreement, or causing the non-renewal of the same, including the (i) imposition
of unreasonable or unfair obligations upon the other party for the purpose of
causing the other party to request

 

21

 

termination of this Agreement, (ii) the imposition of arbitrary
standards, policies or procedures upon the other party, or (iii) unreasonably
withholding consent or unreasonably exercising its discretion where such
consent or discretion may be requested by MANAGEMENT COMPANY or exercised by
the other party.

 

12.6 This Agreement constitutes the entire
agreement between the parties, cannot be modified except in a writing, signed
by the President of MANAGEMENT COMPANY and Chairman of the Board of Directors,
and shall be binding upon for the benefit of the respective successors and
assigns of the parties (including any entities, funds, or other organizations
merging into, consolidated with, formed by, or acquired by AmCOMP Assurance
Corporation, a Florida stock insurance company.

 

IN WITNESS WHEREOF
the undersigned have executed this Agreement on the date set forth above.

 

 

	
  AmCOMP ASSURANCE CORPORATION

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Fred R. Lowe

  	
   

  
	
   

  	
  President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PINNACLE ADMINISTRATIVE COMPANY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Dale E. Hanson, Sec.

  	
   

  
	
   

  	
  Secretary

  	
   

  

 

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