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EXHIBIT 10.14
MSMS/MICOA
MARKETING SUPPORT
AGREEMENT
This Agreement is effective January 1, 2000 between the Michigan State
Medical Society, a Michigan nonprofit membership corporation ("MSMS"), and
Mutual Insurance Corporation of America, a Michigan insurance corporation
("MICOA").
RECITALS
A. MSMS and MICOA ("the Parties") desire to promote cooperatively
certain MICOA products and programs of interest to physicians and other health
care providers in the State of Michigan; and,
B. MSMS desires to provide its endorsement in behalf of its members to
MICOA on an exclusive basis.
C. MICOA desires to compensate MSMS for its support of MICOA based upon
MICOA's financial strength and improvements in MICOA's book of business
supported by MSMS
NOW THEREFORE, in consideration of the obligation of the Parties as set
forth below, they agree as follows:
I.
ANNUAL JOINT EFFORTS
1.0 ANNUAL ADVERTISING. MICOA shall continue to purchase or otherwise
underwrite annually determined amounts of advertising through MSMS. Such
commitments shall be determined at MICOA's sole discretion and accomplished
separately from the incentive relationship and programs established by this
Agreement.
1.1 ANNUAL MARKETING PLAN AND JOINT COMMITTEE. The Parties shall
develop annually a written joint marketing and program services plan ("the
Plan") to be completed by January 30 of each year. Their efforts toward doing so
shall begin no later than December 1 of each preceding year and shall include
critical assessments of past efforts and each party's recommendations for
improvement, all of which shall be considered for purposes of modifying the Plan
for each ensuing year.
1.1.1 The Plan as modified annually shall be attached and
incorporated into this Agreement as Exhibit A.
1.1.2 The Plan may be amended during any program year by
mutual written agreement of the Parties.
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1.1.3 The Plan shall at all times be treated as
confidential by the Parties and regarded as
proprietary as to each of them. Each Party shall use
its best efforts to maintain such confidentiality and
shall so instruct its staff and affiliates from time
to time.
1.1.4 The Plan shall be managed by a joint MSMS/MICOA
committee appointed from among the staffs or
affiliates of the Parties by their senior management.
Plan alterations shall be administered by the
committee established per paragraph 1.1.5 below,
subject to MICOA's final approval.
1.1.5 Each Party shall appoint 4 members of the joint
committee who shall serve until replaced by the
respective party. The joint committee shall at least
annually report to the Parties in writing concerning
the measurable results achieved pursuant to the Plan
and including recommendations for improvement to the
Plan.
1.2 EXCLUSIVE RELATIONSHIP. The joint efforts described by this
Agreement are intended to establish and confirm an exclusive marketing,
endorsement, programmatic, and promotion relationship between the Parties. It is
their intention to develop a strong marketplace identity in Michigan related to
their mutual health care related interests. Except for MICOA's joint marketing
agreement with the Michigan Osteopathic Association, during the effectiveness of
this Agreement neither MICOA nor MSMS shall enter into a comparable marketing
support relationship or compensated program with any other party, either orally
or in writing. This commitment shall not prohibit MSMS from accepting
advertising or facilitative support from any MICOA competitor for any MSMS
programs. Nor shall it prohibit MICOA from: developing a similar program or
programs with organized or otherwise affiliated physicians or medical societies
in states beyond Michigan; or from receiving the endorsement or promotional
support of physicians, other prospective insureds or agents within Michigan.
MSMS shall at all times maintain its formal endorsement of MICOA as the
preferred source for the purchase of exclusively endorsed insurance products by
MSMS members, physicians and groups. As of the date of this agreement the
following MICOA products are exclusively endorsed by MSMS. Others may be added
upon further agreement by the parties:
- Medical Professional Liability
- Hospital Professional and General Liability
- Managed Care Protection
- Stop Loss insurance
- Errors and Omissions (E&O) and Directors and Officers (D&O)
- Employment Practices Liability Insurance (EPLI)
- Health Care Related Workers' Compensation
- Health Care Related Business and Personal Coverage
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II.
COMPENSATION AND INCENTIVES
2.0 PERFORMANCE FORMULA. MICOA shall compensate MSMS for implementing
the Plan in accordance with Exhibit B, which is attached and incorporated. The
guaranteed base payment of Exhibit B shall be fixed at $325,000 per year for the
first term of this Agreement. Performance incentives due under Exhibit B and the
formula to determine them will be revised annually by amending Exhibit B.
2.1 PAYMENT. The guaranteed base amounts which may be due for each year
shall be paid by the end of each quarter of the applicable year set forth on
Exhibit B - Part 1. Annual performance incentives which may become due shall be
paid by February 1st of each ensuing year.
2.2 REPORTING AND VERIFICATION. MICOA shall annually report in writing
and verify to the joint committee the financial results for each year and the
calculation of the amounts due to MSMS per Exhibit B.
2.3 MSR PHASE OUT. The marketing support resource (MSR) program
previously in place between the Parties shall be phased out. Payment to reflect
this phase out and to facilitate program transition shall be made by MICOA in
accordance with Exhibit C, attached.
III.
MICOA DIRECT
3.0 DEVELOPMENT SUPPORT. MSMS shall support and be compensated for the
promotion of MICOA Direct, the MICOA e-commerce initiative, in an manner which
will reasonably achieve the goals, objectives, and deliverables, all as
described in Exhibit D, attached.
IV.
TERM AND TERMINATION
4.0 TERM. The first term of this Agreement shall expire on December 31,
2003. Thereafter, this Agreement shall continue on a year to year basis unless
terminated pursuant to paragraph 4.1
4.1 TERMINATION. This Agreement may be terminated as follows:
4.1.1 Without Cause. By at least 180 business days written
notice before the end of each program year.
4.1.2 Mutual Agreement. By an agreement in writing mutually
signed by the Parties.
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4.1.3 Uncured Breach or Failure. Upon written notice of a
material breach of duty or failure to perform any
duty owed by one of the Parties, provided that Party
is unable to cure the breach or failure within 30
business days.
4.1.4 Insolvency, etc. Upon the occurrence of the final
insolvency, bankruptcy or inability of either Party
to perform due to loss of licensure or any other
legal or regulatory impediment imposed by a court or
agency of competent jurisdiction.
4.2 WINDING UP. In the event of termination for any reason, the Parties
shall cooperate in the calculation and payment of amounts which may be due MSMS.
V.
MISCELLANEOUS
5.0 ENTIRE AGREEMENT. This Agreement and its Exhibits constitute the
entire Agreement of the Parties regarding its subject matter. No prior actions
or agreements nor any subsequent activities regarding the marketing of MICOA
products shall be determinative of the rights of the Parties under this
Agreement unless specifically adopted in writing as a separate agreement or as
an amendment to this Agreement. Nothing in this paragraph 5.0 or this Agreement
shall prohibit the Parties from entering into a sales agency agreement directly
or through their affiliates.
5.1 GOVERNING LAW. This Agreement shall be enforced and deemed subject
tot he laws of the State of Michigan.
5.2 AMENDMENT. The Parties may amend this Agreement and its Exhibits by
mutual written consent at any time.
5.3 ASSIGNMENT. Either Party may assign this Agreement to any of its
wholly owned or controlled subsidiaries or affiliates upon 30 days written
notice, provided that doing so does not impede the performance of the assigning
Party's duties to the other Party.
5.4 HEADINGS. Headings used in the text of this Agreement are for
reference only and shall not be considered substantive in nature.
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5.5 COUNTERPARTS. This Agreement may be signed in counterparts by the
Parties, and if so signed shall be deemed binding and enforceable upon receipt
by the Parties of the separately signed counterpart Agreements.
MICHIGAN STATE MEDICAL SOCIETY
By: /s/ Kenneth H. Musser, M.D.
-----------------------------------------
Its:
----------------------------------------
Date
----------------------------------------
MUTUAL INSURANCE CORPORATION
OF AMERICA
By: /s/ Stephen L. Byrnes
-----------------------------------------
Its: CMO
---------------------------------------------
Date March 10, 2000
----------------------------------------
[No Exhibit A has been created at this time.]
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MSMS PLAN COMPENSATION
ANNUAL GUARANTEED BASE AMOUNT
EXHIBIT B - PART I
AS SPECIFIED IN SECTION 2.0 OF THE 1-1-00 AGREEMENT
- YEAR 2000 = $325,000
- YEAR 2001 = $325,000
- YEAR 2002 = $325,000
THE ABOVE AMOUNTS SHALL BE PAID QUARTERLY DURING THE YEAR FOR WHICH THEY ARE DUE
BY THE END OF EACH QUARTER. THE GUARANTEED AMOUNT LEVEL IS FOR A THREE-YEAR
PERIOD AND MAY CHANGE IN SUBSEQUENT YEARS.
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2000 MSMS PERFORMANCE INCENTIVE FORMULA
EXHIBIT B - PART II
AS SPECIFIED IN SECTION 2.0 OF THE 1-1-00 AGREEMENT
MICHIGAN
RETENTION
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$13,333 = IF 83% 2000 MICHIGAN
RETENTION LEVEL OF INSUREDS IS
ACHIEVED.
$26,666 = IF 84% 2000 MICHIGAN
RETENTION LEVEL OF INSUREDS IS
ACHIEVED.
TARGET $39,999 = IF TARGET 85% 2000 MICHIGAN
RETENTION GOAL OF INSURED IS
ACHIEVED.
EARNED $53,332 = IF 87% MICHIGAN RETENTION
2000 LEVEL OF INSUREDS IS ACHIEVED.
PAYABLE
2/2001
(A) $66,666 = IF 89% 1999 MICHIGAN
RETENTION LEVELS IS ACHIEVED.
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EXHIBIT B
(CONTINUED)
MICHIGAN
PROFESSIONAL LIABILITY
LOSS RATIO
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$13,333 = IF 86.5% MICHIGAN PROFESSIONAL
LIABILITY LOSS RATIO ACHIEVED.
$26,666 = IF 86% MICHIGAN PROFESSIONAL
LIABILITY LOSS RATIO ACHIEVED.
$39,999 = IF 85.5% MICHIGAN PROFESSIONAL
LIABILITY LOSS RATIO ACHIEVED.
TARGET
$53,332 = IF TARGET 85% MICHIGAN PROFESSIONAL
LIABILITY LOSS RATIO ACHIEVED.
EARNED
2000 (A) $66,666 = IF 82% MICHIGAN PROFESSIONAL
LIABILITY LOSS RATIO ACHIEVED.
PAYABLE
2001
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EXHIBIT B
(CONTINUED)
(B)
MICOA MICHIGAN PROFESSIONAL LIABILITY
UNDERWRITING LOSS GOAL
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$18,333 = IF 104% 2000 MICHIGAN ONLY
PROFESSIONAL LIABILITY LOSS
GOAL ACHIEVED.
$36,666 = IF 102% 2000 MICHIGAN ONLY
PROFESSIONAL LIABILITY LOSS
GOAL ACHIEVED.
EARNED
2000 TARGET $54,999 = IF 100% 2000 MICHIGAN ONLY
PROFESSIONAL LIABILITY LOSS
GOAL ACHIEVED.
$73,332 = IF 96% 2000 MICHIGAN ONLY
PROFESSIONAL LIABILITY LOSS
GOAL ACHIEVED.
PAYABLE
2001
(C) $91,666 = IF 94% 2000 MICHIGAN ONLY
PROFESSIONAL LIABILITY LOSS
GOAL ACHIEVED.
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EXHIBIT B
(CONTINUED)
MICHIGAN
PROFESSIONAL LIABILITY
COMBINED RATIO
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$6,250 = IF MICOA YEAR 2000 COMBINED
RATIO IS 109%.
$12,500 = IF MICOA YEAR 2000 COMBINED
RATIO IS 108.5%.
EARNED
2/2001 TARGET
$18,750 = IF MICOA YEAR 2000 COMBINED
RATIO IS 108%.
PAYABLE (D) $25,000 = IF MICOA YEAR 2000 COMBINED
2001 RATIO IS 105%.
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EXHIBIT B
(CONTINUED)
A. This Incentive portion may not exceed $66,666. The sums are not
accumulative. Each level pays only the award shown. Award is earned in
2000 and payable 2/2001.
B. This Incentive portion for Michigan Professional Liability Business
Underwriting Gain/Loss only.
C. This Incentive portion may not exceed $91,666. The sums are not
accumulative. Each level pays only the award shown. Award is earned in
2000 and payable 2/2001.
D. This Incentive portion may not exceed $25,000. The sums are not
accumulative. Each level pays only the award shown. Award is earned in
2000 and payable 2/2001.
TOTAL 2000 INCENTIVE OPPORTUNITY = $250,000
The Incentive formula portion of Exhibit B shall be reviewed each year during
the contract term and may be changed annually by MICOA to more accurately
reflect its business needs. The earnings amount opportunity provided by the
Incentive formula for MSMS will be at a total award potential of $250,000 each
year.
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EXHIBIT C
MSR REIMBURSEMENT/SPONSORSHIP PHASEOUT
- YEAR 2000 = $50,000 FIRST YEAR PHASE OUT PAYMENT.
PAYMENTS MADE QUARTERLY BEGINNING JANUARY
2000.
- YEAR 2001 = $25,000 SECOND YEAR PHASE OUT
PAYMENT. PAYMENTS MADE QUARTERLY
BEGINNING JANUARY 2001.
NO PHASE OUT PAYMENTS BEYOND YEAR 2001.
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EXHIBIT D
YEAR 2000
MICOA DIRECT DEVELOPMENT SUPPORT INCENTIVES
- $40,000 TOTAL OPPORTUNITY VALUE PAYABLE BY MICOA TO MSMS IF ALL
OBJECTIVES ARE MET DURING YEAR 2000.
- ENDORSEMENT (10,000).
Endorsement and promotion (press releases, link from msms.org,
promotional material).
- YEAR 2000 DELIVERABLE 1: MSMS/MICOA DIRECT ADVISORY COUNCIL ($5,000).
Create an MSMS/MICOA Direct Advisory Council to meet 6 times per year
to work toward accomplishing the objectives of the MSMS/MICOA Direct
partnership.
- YEAR 2000 DELIVERABLE 2: MARKETING STRATEGIES FOR FOUR TARGET STATES
($10,000).
A. Help MICOA Direct form relationships with other medical
associations including state, county, and specialty
associations in four target states. Introduce MICOA Direct to
medical society leaders and other key business contacts in the
four target states.
B. Provide MICOA Direct with quarterly reports and
recommendations to infuse an extensive understanding of
physicians and other healthcare providers into the MICOA
Direct Marketing strategy for the four target states. Covering
the following topics:
- Help identify niche market opportunities within the
core target market that will be receptive to the
MICOA Direct channel.
- Help identify strategies for reaching young
physicians, medical students, and medical schools.
- Recommend effective promotional strategies for four
target states.
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EXHIBIT D
(Continued)
- YEAR 2000 DELIVERABLE 3: CONTENT "WINDOW TO THE PHYSICIAN" ($5,000).
MSMS will provide MICOA Direct with the right to use and distribute
educational content and seminar materials to select MICOA Direct
customers via password protected sections of micoadirect.com.
- MSMS will contribute news and informational content for the
MICOAdirect.com's password protected visitor and customer
sections.
- Examples: MSMS data surveys, practice checklists and seminar
presentations.
- YEAR 2000 OPPORTUNITY TARGET ($10,000).
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- $3,000 = If 100% MICOA Direct Pre-tax
Income Target achieved.
- $6,000 = If 103% MICOA Direct Pre-tax
Income Target achieved.
- $10,000 = If 105% MICOA Direct Pre-tax
Income Target achieved.
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- DELIVERABLES AND OPPORTUNITY TARGETS RE-ESTABLISHED EACH YEAR AFTER
2000 (2001 AND 2002) AT MICOA'S SOLE DISCRETION. THE $40,000
OPPORTUNITY VALUE LEVEL REMAINS FOR 2001 AND 2002.
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