ARTICLE I | DEFINITIONS | 2 | ||||
ARTICLE II | PURCHASE AND SALE OF SECURITIES AND ASSETS; RENEWAL RIGHTS | 20 | ||||
Section 2.1. | Purchase and Sale of Securities and Assets | 20 | ||||
Section 2.2. | Estimated Purchase Price | 21 | ||||
Section 2.3. | Post-Closing Adjustment | 21 | ||||
Section 2.4. | Renewal Rights | 25 | ||||
Section 2.5. | Accommodation Policies | 27 | ||||
ARTICLE III | THE CLOSING | 27 | ||||
Section 3.1. | Closing | 27 | ||||
Section 3.2. | Payment of Purchase Price; Delivery of Securities | 27 | ||||
Section 3.3. | Other Closing Deliveries | 28 | ||||
ARTICLE IV | REPRESENTATIONS AND WARRANTIES OF SELLER PARENT | 30 | ||||
Section 4.1. | Organization and Related Matters | 30 | ||||
Section 4.2. | Authority; No Violation | 31 | ||||
Section 4.3. | Consents and Approvals | 33 | ||||
Section 4.4. | Securities Ownership | 33 | ||||
Section 4.5. | Subsidiaries | 34 | ||||
Section 4.6. | Financial Statements | 35 | ||||
Section 4.7. | Legal Proceedings | 36 | ||||
Section 4.8. | Undisclosed Liabilities | 36 | ||||
Section 4.9. | Absence of Certain Changes; No Material Adverse Effect | 37 | ||||
Section 4.10. | Compliance with Law; Permits; Regulatory Matters | 39 | ||||
Section 4.11. | Filings | 41 | ||||
Section 4.12. | Agents | 41 | ||||
Section 4.13. | Underwriting | 42 | ||||
Section 4.14. | Market Conduct | 42 | ||||
Section 4.15. | Insurance Issued by the Companies; Subject Policies | 42 | ||||
Section 4.16. | Reinsurance and Retrocessions | 43 | ||||
Section 4.17. | Material Contracts | 44 | ||||
Section 4.18. | Technology and Intellectual Property | 45 | ||||
Section 4.19. | Real Property | 48 | ||||
Section 4.20. | Title to Assets | 49 | ||||
Section 4.21. | Sufficiency of Assets and Contractual Rights | 49 | ||||
Section 4.22. | In-Force Policies | 49 | ||||
Section 4.23. | Reserves | 50 | ||||
Section 4.24. | Taxes | 50 | ||||
Section 4.25. | Employee Matters | 53 | ||||
Section 4.26. | Collective Bargaining; Labor Disputes; Compliance | 54 |
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Section 4.27. | Internal Controls and Procedures | 55 | ||||
Section 4.28. | Transactions with Certain Persons | 56 | ||||
Section 4.29. | Investment Company | 56 | ||||
Section 4.30. | Environmental Laws | 56 | ||||
Section 4.31. | Insurance Coverage | 57 | ||||
Section 4.32. | Bank Accounts | 57 | ||||
Section 4.33. | No Broker | 57 | ||||
Section 4.34. | Disclaimer | 57 | ||||
ARTICLE V | REPRESENTATIONS AND WARRANTIES OF BUYER | 58 | ||||
Section 5.1. | Organization and Related Matters | 58 | ||||
Section 5.2. | Authority; No Violation | 58 | ||||
Section 5.3. | Consents and Approvals | 59 | ||||
Section 5.4. | Legal Proceedings | 59 | ||||
Section 5.5. | Investment Intent of Buyer | 59 | ||||
Section 5.6. | Investment Company | 60 | ||||
Section 5.7. | No Broker | 60 | ||||
Section 5.8. | Financing | 60 | ||||
ARTICLE VI | COVENANTS AND AGREEMENTS | 60 | ||||
Section 6.1. | Conduct of Business | 60 | ||||
Section 6.2. | Announcements | 61 | ||||
Section 6.3. | Confidentiality | 61 | ||||
Section 6.4. | Filings | 63 | ||||
Section 6.5. | Expenses | 65 | ||||
Section 6.6. | Third Party Consents | 65 | ||||
Section 6.7. | Access to Information; Due Diligence | 66 | ||||
Section 6.8. | Notification of Certain Matters | 67 | ||||
Section 6.9. | Reinsurance | 67 | ||||
Section 6.10. | Employees | 67 | ||||
Section 6.11. | Investment Assets | 69 | ||||
Section 6.12. | Intercompany Accounts; Related Party Transactions | 70 | ||||
Section 6.13. | Bank Accounts | 70 | ||||
Section 6.14. | Transfers of Securities and Assets of the Companies | 70 | ||||
Section 6.15. | Pre-Closing Restructuring Transactions | 70 | ||||
Section 6.16. | Interim Financial Statements | 70 | ||||
Section 6.17. | Subsequent Financial Statements; Reference Balance Sheets | 71 | ||||
Section 6.18. | Non-Competition; Non-Solicitation; Non-Hire | 74 | ||||
Section 6.19. | Excluded Policies | 76 | ||||
Section 6.20. | Acquired Companies Statutory Capital; Management Companies; Reciprocals | 76 | ||||
Section 6.21. | Transition Assistance; Transition Services Agreement | 76 | ||||
Section 6.22. | Data Separation | 77 | ||||
Section 6.23. | Certain Intellectual Property Transfers | 77 | ||||
Section 6.24. | Cooperation | 77 | ||||
Section 6.25. | Actions with respect to York | 78 |
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Section 6.26. | Release | 78 | ||||
Section 6.27. | Lease Agreements | 78 | ||||
Section 6.28. | Tiered Claims | 78 | ||||
Section 6.29. | Records License | 78 | ||||
ARTICLE VII | TAX MATTERS | 79 | ||||
Section 7.1. | Tax Indemnity | 79 | ||||
Section 7.2. | Tax Returns and Payments | 80 | ||||
Section 7.3. | Tax Controversy | 81 | ||||
Section 7.4. | Tax Cooperation | 82 | ||||
Section 7.5. | Transfer Taxes | 83 | ||||
Section 7.6. | Miscellaneous | 83 | ||||
Section 7.7. | Tax Exclusivity | 84 | ||||
ARTICLE VIII | CONDITIONS TO CLOSING | 84 | ||||
Section 8.1. | Conditions to Buyer’s Obligations | 84 | ||||
Section 8.2. | Conditions to Sellers’ Obligations | 85 | ||||
Section 8.3. | Frustration of Closing Conditions | 86 | ||||
ARTICLE IX | SURVIVAL; INDEMNIFICATION | 86 | ||||
Section 9.1. | Survival | 86 | ||||
Section 9.2. | Indemnification | 87 | ||||
Section 9.3. | Indemnification Procedures | 88 | ||||
Section 9.4. | Certain Limitations | 89 | ||||
Section 9.5. | Tax Indemnification | 90 | ||||
ARTICLE X | TERMINATION | 90 | ||||
Section 10.1. | Termination | 90 | ||||
Section 10.2. | Obligations upon Termination | 91 | ||||
Section 10.3. | Termination Fee | 91 | ||||
ARTICLE XI | MISCELLANEOUS | 92 | ||||
Section 11.1. | No Strict Construction Against the Drafter | 92 | ||||
Section 11.2. | Waivers and Amendments; Remedies | 92 | ||||
Section 11.3. | Entire Agreement | 92 | ||||
Section 11.4. | Interpretation | 93 | ||||
Section 11.5. | Construction | 93 | ||||
Section 11.6. | Severability | 94 | ||||
Section 11.7. | Notices | 94 | ||||
Section 11.8 | Seller Representative | 95 | ||||
Section 11.9. | Specific Performance | 96 | ||||
Section 11.10. | No Third Party Beneficiaries; Binding Effect | 96 | ||||
Section 11.11. | Counterparts | 97 | ||||
Section 11.12. | Governing Law | 97 | ||||
Section 11.13. | Waiver of Jury Trial | 97 |
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Schedule | Description | |
Schedule 1.1A | Associated Assets | |
Schedule 1.1B | Specialty Lines Programs | |
Schedule 1.1C | Knowledge (Seller Parent) | |
Schedule 1.1D | Knowledge (Buyer) | |
Schedule 1.1E | Pro Forma Adjustments | |
Schedule 4.3 | Consents and Approvals (Seller Parent) | |
Schedule 4.4(a) | Shares; Units; Surplus Notes | |
Schedule 4.7(a) | Legal Proceedings | |
Schedule 4.8(b) | Guaranty Fund Assessments | |
Schedule 4.8(c) | Company Defaults | |
Schedule 4.9(a) | Absence of Certain Changes | |
Schedule 4.9(a)(ii)(F) | Entry into Material Affiliate Agreements | |
Schedule 4.9(b) | Business of Renewal Rights Sellers | |
Schedule 4.9(c) | No Material Adverse Effect | |
Schedule 4.10(a) | Compliance with Law | |
Schedule 4.10(b) | Licensed Jurisdictions; State of Domicile | |
Schedule 4.10(f) | Insurance Companies’ Premium Rates | |
Schedule 4.11 | Filings | |
Schedule 4.12(a)(i) | Agents of Insurance Companies and Renewal Rights Sellers | |
Schedule 4.12(a)(ii) | Binding Authority | |
Schedule 4.12(b) | Agent Compensation | |
Schedule 4.14 | Market Conduct | |
Schedule 4.15(a) | Insurance Issued by the Companies; Subject Policies | |
Schedule 4.15(b) | Tiered Claims | |
Schedule 4.16(a) | Reinsurance and Retrocession Treaties and Agreements | |
Schedule 4.16(a)(i) | Consents under Ceded Reinsurance Agreements | |
Schedule 4.17(a) | Material Contracts | |
Schedule 4.17(b) | Certain Seller and Company Contracts | |
Schedule 4.17(c) | Commercial Lines Agreement Covenants | |
Schedule 4.18(a)(i) | Owned Exclusively Used Intellectual Property | |
Schedule 4.18(a)(ii) | Licensed Exclusively Used Intellectual Property | |
Schedule 4.18(b)(i) | Owned Generally Used Intellectual Property | |
Schedule 4.18(b)(ii) | Licensed Generally Used Intellectual Property | |
Schedule 4.18(c) | Excluded Intellectual Property | |
Schedule 4.18(d) | Intellectual Property Encumbrances | |
Schedule 4.18(f) | Material Agreements or Arrangements | |
Schedule 4.18(i) | Employee Confidentiality Agreements | |
Schedule 4.19(a) | Real Estate Leases | |
Schedule 4.19(b) | Right to Quiet Enjoyment | |
Schedule 4.19(d) | Third-Party Right to Occupancy | |
Schedule 4.20 | Title to Assets | |
Schedule 4.21 | Sufficiency of Assets and Contractual Rights | |
Schedule 4.22(i) | In-Force Policies | |
Schedule 4.22(ii) | Business Written on a Reinsurance Basis | |
Schedule 4.24(b) | Affiliated Group Companies | |
Schedule 4.24(c) | Tax Returns | |
Schedule 4.24(e) | Audits | |
Schedule 4.24(f) | Tax Return Extensions |
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Schedule | Description | |
Schedule 4.24(g) | Power of Attorney | |
Schedule 4.24(h) | Tax Sharing and Allocation Agreement Parties | |
Schedule 4.24(t) | Surplus Notes | |
Schedule 4.24(x) | Internal Revenue Code Section 846(e) Elections | |
Schedule 4.25(a) | Benefit Plans | |
Schedule 4.26(b) | Labor Disputes | |
Schedule 4.27(b) | Governmental Authority | |
Schedule 4.28 | Agreements of Related Party Transactions | |
Schedule 4.30 | Environmental Matters | |
Schedule 4.32 | Bank Accounts | |
Schedule 5.3 | Consents and Approvals (Buyer) | |
Schedule 6.1(A) | Conduct of Business | |
Schedule 6.1(B) | Continuation of Current Plans | |
Schedule 6.6(a) | Costs of Obtaining Certain Consents | |
Schedule 6.6(b) | Cost of Services | |
Schedule 6.10(i) | Severance | |
Schedule 6.12(b) | Related Party Transactions | |
Schedule 6.17(c) | Carried Loss and Loss Expense Reserves as of December 31, 2009 | |
Schedule 6.17(c-1) | Description of Process | |
Schedule 6.17(c-2) | Unreported Patterns and Loss Ratios | |
Schedule 6.17(c-3) | Costs Per Claim | |
Schedule 6.17(c-4) | Recording of IBNR for ULAE | |
Schedule 6.18(d) | Restricted Policyholders | |
Schedule 6.20(b) | Management Companies Surviving Contracts | |
Schedule 6.27 | Lease Agreement Terms |
Exhibit | Description | |
Exhibit A | Form of Acquired Business Administrative Services Agreements | |
Exhibit B | Form of Acquired Business Reinsurance Agreements | |
Exhibit C | Form of Purchase Notes | |
Exhibit D | Form of Bill of Sale | |
Exhibit E | Form of Commutation Agreements | |
Exhibit F | Form of Excluded Business Administrative Services Agreements | |
Exhibit G | Form of Excluded Business Reinsurance Agreements | |
Exhibit H | Form of Transition Services Agreement | |
Exhibit I | Form of Trust Agreements |
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1 Beacon Lane
Canton, MA 02021
Attention: Bradford W. Rich
Senior Vice President and General Counsel
71 S. Wacker Drive
Chicago, IL 60606
Facsimile: (312) 701-7711
Attention: Edward S. Best
Andrew J. Noreuil
94
120 Broadway, 31st Floor
New York, NY 10271
Attention: Elliot S. Orol
Senior Vice President and General Counsel
1301 Avenue of the Americas
New York, NY 10019
Facsimile: (212) 259-6333
Attention: Jeffrey S. MacDonald
Elizabeth B. Bannigan
95
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ONEBEACON INSURANCE GROUP, LTD. | ||||
By: | /s/ Jane E. Freedman | |||
Name: | Jane E. Freedman | |||
Title: | Secretary | |||
ONEBEACON INSURANCE GROUP LLC | ||||
By: | /s/ T. Michael Miller | |||
Name: | T. Michael Miller | |||
Title: | President and Chief Executive Officer | |||
ONEBEACON AMERICA INSURANCE COMPANY | ||||
By: | /s/ T. Michael Miller | |||
Name: | T. Michael Miller | |||
Title: | President and Chief Executive Officer | |||
THE EMPLOYERS’ FIRE INSURANCE COMPANY | ||||
By: | /s/ T. Michael Miller | |||
Name: | T. Michael Miller | |||
Title: | President and Chief Executive Officer | |||
THE CAMDEN FIRE INSURANCE ASSOCIATION | ||||
By: | /s/ T. Michael Miller | |||
Name: | T. Michael Miller | |||
Title: | President and Chief Executive Officer | |||
99
HOMELAND INSURANCE COMPANY OF NEW YORK | ||||
By: | /s/ T. Michael Miller | |||
Name: | T. Michael Miller | |||
Title: | President and Chief Executive Officer | |||
ONEBEACON INSURANCE COMPANY | ||||
By: | /s/ T. Michael Miller | |||
Name: | T. Michael Miller | |||
Title: | President and Chief Executive Officer | |||
ONEBEACON MIDWEST INSURANCE COMPANY | ||||
By: | /s/ T. Michael Miller | |||
Name: | T. Michael Miller | |||
Title: | President and Chief Executive Officer | |||
PENNSYLVANIA GENERAL INSURANCE COMPANY | ||||
By: | /s/ T. Michael Miller | |||
Name: | T. Michael Miller | |||
Title: | President and Chief Executive Officer | |||
NORTHERN ASSURANCE COMPANY OF AMERICA | ||||
By: | /s/ T. Michael Miller | |||
Name: | T. Michael Miller | |||
Title: | President and Chief Executive Officer | |||
100
TOWER GROUP, INC. | ||||
By: | /s/ Michael H. Lee | |||
Name: | Michael H. Lee | |||
Title: | Chairman of the Board, President and Chief Executive Officer | |||
101
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(i) | Administrator shall assume all responsibility for (A) the provision of all materials to producers, agents and insureds regarding the issuance and renewal of Accommodation Policies, (B) all underwriting necessary or appropriate with respect to the issuance and renewal of Accommodation Policies, (C) the processing of transactions applicable to the issuance and renewal of Accommodation Policies and (D) all other administrative obligations necessary or appropriate with respect to the issuance and renewal of Accommodation Policies. | ||
(ii) | Administrator shall (A) prepare and provide to Policyholders all revisions to the Insurance Contracts that are made due to changes to the applicable contract forms that are required by Applicable Law to be made by Company, or which Administrator elects to make on behalf of Company as permitted by the terms of the Insurance Contracts and this Agreement and (B) prepare and provide all required notices of non-renewal by Company in respect of the Accommodation Policies in accordance with the terms of the Purchase Agreement. |
5
(i) | provide claimants and their authorized representatives (collectively, “Claimants”) with claim forms and explanatory guidance as required by Applicable Law; | ||
(ii) | establish, maintain and organize claim files and maintain and organize other claims-related records; | ||
(iii) | conduct an investigation of each Claim, including the identification of any coverage issues arising from the facts and circumstances of the Claim; | ||
(iv) | adjust and manage each Claim; | ||
(v) | prepare and distribute to the appropriate recipients any reports required by Applicable Law; |
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(vi) | respond to all written or oral claims-related communications as required by Applicable Law; and | ||
(vii) | maintain a complaint log with respect to the Claims in accordance with applicable requirements of Governmental Authorities and provide a copy of such log, continuously updated through the last day of each calendar quarter during the term of this Agreement, to Company on or before the thirtieth day of each calendar quarter covering changes during the preceding calendar quarter. |
(i) | promptly notify Company of any Claims or non-Claims payment related complaints, inquiries or proceedings initiated by a Governmental Authority after the Effective Date and involving the Insurance Contracts, Claims or the Ceded Reinsurance Agreements, and prepare and send to the Governmental Authority, with a copy to Company, a response within the Governmental Authority’s requested time frame for response or if no such time frame is provided, within the time frame as allowed by Applicable Law;provided, that the Administrator shall promptly provide such response to the Company for its prior review and comment; | ||
(ii) | except as set forth herein, following receipt of notice thereof, supervise and control the investigation, contest, defense and/or settlement of all complaints, inquiries and proceedings by Governmental Authorities involving the Insurance Contracts, Claims or the Ceded Reinsurance Agreements at its own cost and expense, and in the name of Company when necessary, including those investigations, contests, defenses and settlements initiated prior to the Effective Date and pending on the Effective Date; and | ||
(iii) | on a monthly basis, provide to Company a report in a form mutually agreed by the parties summarizing the nature and status of any such complaints, inquiries or proceedings by Governmental Authorities, the |
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alleged actions or omissions giving rise to such complaints, inquiries or proceedings and copies of any files or other documents that Company may reasonably request in connection with its review of these matters. |
(i) | notify Company promptly of any lawsuit, action, arbitration or other dispute resolution proceedings that are instituted or threatened with respect to any matter relating to the Insurance Contracts, Claims or the Ceded Reinsurance Agreements (“Legal Proceeding(s)”), and in no event more than five (5) Business Days after receipt of notice thereof;provided,however, that Administrator’s notification obligations under this clause (i) shall only apply to Legal Proceedings initiated or threatened after the Effective Date; | ||
(ii) | except as set forth herein, following receipt of notice thereof, supervise and control the investigation, contest, defense and/or settlement of all Legal Proceedings at its own cost and expense, and in the name of the Company when necessary, including those Legal Proceedings initiated prior to the Effective Date and pending on the Effective Date; and | ||
(iii) | keep Company fully informed of all material developments of all Legal Proceedings and, on a monthly basis, provide to Company a report summarizing the nature and status of any Legal Proceedings, the alleged actions or omissions giving rise to such Legal Proceedings and copies of any files or other documents that Company may reasonably request in connection with its review of these matters. |
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(i) | Administrator shall promptly prepare and furnish to Company or, at Company’s election, directly to Governmental Authorities all reports and related summaries (including statistical summaries), certificates of compliance and other reports required or requested by a Governmental Authority with respect to the Insurance Contracts, Claims or Ceded Reinsurance Agreements. | ||
(ii) | Administrator shall assist Company and cooperate with Company in doing all things necessary, proper or advisable, in a commercially reasonable manner in connection with any and all market conduct or other Governmental Authority examinations relating to the Insurance Contracts, Claims or Ceded Reinsurance Agreements. |
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(i) | Within thirty (30) days after the end of each calendar quarter that this Agreement is in effect, Administrator shall provide to Company a report in respect of the Insurance Contracts, Claims and Ceded Reinsurance Agreements for such calendar quarter in the form attached asSchedule A, or in another form mutually acceptable to Company and Administrator (the “Quarterly Report”). Without limiting the foregoing, the Quarterly Report shall include the amount of Gross Statutory Reserves as of the end of such calendar quarter. | ||
(ii) | Administrator shall timely provide notice to Company of (A) any changes in the reserve methodology of Administrator in calculating reserves for the Insurance Contracts or Claims and (B) any significant changes to the Gross Statutory Reserves in respect of the Insurance Contacts that are recommended or deemed appropriate by the Administrator, any of its Affiliates or any third party. | ||
(iii) | On an annual basis, Administrator shall provide Company with actuarial work papers and analysis prepared by a qualified actuary, setting forth such actuary’s unpaid claim estimate relating to loss and loss adjustment expenses in respect of the Insurance Liabilities. The parties shall cooperate in good faith to establish the timing for the provision of such documentation. Administrator shall provide, or cause to be provided, to Company reasonable access to such actuary in connection with Company’s review of such work papers, analysis and estimates. | ||
(iv) | Administrator shall timely provide to Company and Company’s designated independent auditors such additional reports and summaries (and, upon request of Company, detailed supporting records) related to the Insurance Contracts, Claims and Ceded Reinsurance Agreements as may be reasonably required for use in connection with the preparation of Company’s statutory and GAAP financial statements, tax returns and other required financial reports. The parties shall cooperate in good faith to establish the manner and schedule for the providing of such reports. | ||
(v) | For so long as this Agreement remains in effect, upon reasonable notice, Administrator shall from time to time furnish to Company such other reports and information related to the Insurance Contracts, Claims and Ceded Reinsurance Agreements as may be reasonably requested by Company for regulatory, tax, financial reporting or similar purposes and reasonably available to it. At Company’s reasonable request, Administrator shall supply to Company a copy of all supporting information used by Administrator in preparing any Quarterly Report or any other reports, summaries and certifications provided hereunder. |
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(vi) | On a monthly basis, provide to Company a report in a form mutually agreed by the parties summarizing deposits and withdrawals from the Bank Accounts and such other information as Company may reasonably request in connection with such Bank Accounts. |
(i) | Administrator shall timely pay, from Administrator’s own funds, to the Policyholders, any refunds of any kind due under the Insurance Contracts to the extent such refunds constitute Insurance Liabilities. | ||
(ii) | Administrator shall have the exclusive authority to manage and administer the Ceded Reinsurance Agreements as relates to the Insurance Contracts, including providing all reports and notices required with regard to the Ceded Reinsurance Agreements to the reinsurers within the time required by the applicable reinsurance agreement and doing all other things necessary to comply with the terms and conditions of the Ceded Reinsurance Agreements. Without limiting the foregoing, Administrator shall timely pay all reinsurance premiums due to reinsurers under the Ceded Reinsurance Agreements and collect from such reinsurers all reinsurance recoverables due thereunder. Notwithstanding the foregoing, Company shall reasonably cooperate with Administrator in the administration of such Ceded Reinsurance Agreements to the extent that Company’s participation is required under the terms of any such Ceded Reinsurance Agreement or is requested by the counterparty to the Ceded Reinsurance Agreement. In no event may the Administrator enter into any new ceded reinsurance agreements on behalf of Company without the Company’s prior written consent. | ||
(iii) | Administrator shall process all policy changes, lapses, cancellations, and reinstatements in accordance with the terms of this Agreement and the express terms of the Insurance Contracts. | ||
(iv) | Administrator shall pay Commissions due under the Insurance Contracts to the extent such Commissions constitute Insurance Liabilities. | ||
(v) | Administrator shall provide all customer service in connection with the Insurance Contracts. | ||
(vi) | Administrator shall provide such other Administrative Services with respect to the Insurance Contracts and Claims as are necessary or appropriate to fully effectuate the purpose of the Purchase Agreement, the |
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Acquired Business Reinsurance Agreement and this Agreement, including such Administrative Services as are not performed by or on behalf of Company on the date hereof but the need for which may arise due to changes or developments in Applicable Law or for any other reason. |
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(i) | Commencement of a voluntary or involuntary proceeding in any jurisdiction by or against Administrator for the purpose of conserving, rehabilitating or liquidating Administrator; |
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(ii) | There is a material breach by the Administrator of any term or condition of this Agreement that is not cured by the Administrator within thirty (30) days after receipt of written notice from Company of such breach or act; | ||
(iii) | Any license required to be held by Administrator to provide the Administrative Services shall be revoked or the Administrator shall fail to obtain such license; or | ||
(iv) | Administrator is unable to perform the services required under this Agreement for a period of thirty (30) consecutive days for any reason. |
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OneBeacon Insurance Group, Ltd.
1 Beacon Lane
Canton, MA 02021
Attention: Bradford W. Rich
Senior Vice President and General Counsel
71 S. Wacker Drive
Chicago, IL 60606
Facsimile: (312) 701-7711
Attention: Edward S. Best
Andrew J. Noreuil
120 Broadway, 31st Floor
New York, NY 10271
Attention: General Counsel
1301 Avenue of the Americas
New York, NY 10019
Facsimile: (212) 259-6333
Attention: Jeffrey S. MacDonald
Elizabeth B. Bannigan
22
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[RENEWAL RIGHTS SELLER] | ||||
By: | ||||
Name: | ||||
Title: | ||||
[TOWER ENTITY] | ||||
By: | ||||
Name: | ||||
Title: | ||||
24
Page | ||||
ARTICLE I DEFINITIONS | 1 | |||
ARTICLE II BUSINESS REINSURED | 5 | |||
ARTICLE III TERRITORY | 5 | |||
ARTICLE IV ADMINISTRATION; CHANGES | 6 | |||
Section 4.1. Administration | 6 | |||
Section 4.2. Contract Changes | 6 | |||
Section 4.3. Follow the Fortunes | 6 | |||
Section 4.4. Accounting | 6 | |||
Section 4.5. Financial Information | 6 | |||
Section 4.6. Losses and Loss Adjustment Expenses | 6 | |||
ARTICLE V CONSIDERATION; CEDED REINSURANCE AGREEMENTS | 7 | |||
Section 5.1. Consideration | 7 | |||
ARTICLE VI INSOLVENCY | 9 | |||
Section 6.1. Payments | 9 | |||
Section 6.2. Notice | 9 | |||
Section 6.3. Expenses | 10 | |||
ARTICLE VII OFFSETS | 10 | |||
ARTICLE VIII REINSURANCE CREDIT; TRUST ACCOUNT | 10 | |||
Section 8.1. Reinsurance Credit | 10 | |||
Section 8.2. Trust Account | 10 | |||
Section 8.3. Value of Assets in Trust | 10 | |||
Section 8.4. Depositing Assets in Trust | 11 | |||
Section 8.5. Initial Deposit with Trustee | 11 | |||
Section 8.6. Rebalancing the Trust Account | 11 | |||
Section 8.7. Trust Account Withdrawals | 11 | |||
Section 8.8. Application of this Article | 12 | |||
Section 8.9. Holdback | 12 | |||
ARTICLE IX RIGHTS WITH RESPECT TO INSURANCE LIABILITIES | 12 | |||
ARTICLE X ERRORS AND OMISSIONS | 12 | |||
ARTICLE XI DUTY OF COOPERATION | 13 | |||
ARTICLE XII INDEMNIFICATION | 13 | |||
Section 12.1. Indemnification by Reinsurer | 13 | |||
Section 12.2. Indemnification by Seller | 13 |
Page | ||||
ARTICLE XIII MISCELLANEOUS PROVISIONS | 13 | |||
Section 13.1. No Strict Construction Against the Drafter | 13 | |||
Section 13.2. Waivers and Amendments; Remedies | 14 | |||
Section 13.3. Entire Agreement | 14 | |||
Section 13.4. Interpretation | 14 | |||
Section 13.5. Notices | 14 | |||
Section 13.6. Seller Representative | 15 | |||
Section 13.7. Binding Effect | 15 | |||
Section 13.8. Counterparts | 16 | |||
Section 13.9. Governing Law | 16 | |||
Section 13.10. Waiver of Jury Trial | 16 | |||
Section 13.11. No Reinsurance Intermediary | 16 |
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DEFINITIONS
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“Tier 1 Pre-Closing Claims” shall have the meaning set forth in the Purchase Agreement. |
BUSINESS REINSURED
TERRITORY
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ADMINISTRATION; CHANGES
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CONSIDERATION; CEDED REINSURANCE AGREEMENTS
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INSOLVENCY1
1 | Note to draft:To be conformed to requirements of law in the state of domicile for Seller. |
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OFFSETS
REINSURANCE CREDIT; TRUST ACCOUNT
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RIGHTS WITH RESPECT TO INSURANCE LIABILITIES
ERRORS AND OMISSIONS
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DUTY OF COOPERATION
INDEMNIFICATION
MISCELLANEOUS PROVISIONS
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1 Beacon Lane
Canton, MA 02021
Attention: Bradford W. Rich
Senior Vice President and General Counsel
71 S. Wacker Drive
Chicago, IL 60606
Facsimile: (312) 701-7711
Attention: Edward S. Best
Andrew J. Noreuil
120 Broadway, 31st Floor
New York, NY 10271
Attention: General Counsel
1301 Avenue of the Americas
New York, NY 10019
Facsimile: (212) 259-6333
Attention: Jeffrey S. MacDonald
Elizabeth B. Bannigan
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[RENEWAL RIGHTS SELLER] | ||||
By: | ||||
Name: | ||||
Title: | ||||
[TOWER ENTITY] | ||||
By: | ||||
Name: | ||||
Title: | ||||
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$[___]1 | [___], 2010 | |
New York, New York |
[___]2 (the “Lender” and together with any subsequent holder of this Note, the “Holder”), in accordance with the provisions of this Secured Promissory Note (the “Note”), the principal amount of $[___] (as adjusted pursuant toSection 1, the “Principal Amount”), together with interest thereon, as provided herein.
1 | Principal amount to be determined pursuant to Article II of the Purchase Agreement. | |
2 | The Lender would be the lender under the surplus note for which surplus exceeds the principal amount of the surplus note. |
3 | To be added to any Purchase Note issued to Camden Fire. | |
4 | Use first bracketed language if Homeland Insurance Company is the Lender, and second bracketed language if Camden Fire is the Lender. |
BORROWER: | ||||||
TOWER GROUP, INC., a Delaware corporation | ||||||
By: | ||||||
Name: | ||||||
Title: | ||||||
Address: |
ACKNOWLEDGED AND AGREED: | ||||
LENDER: | ||||
[HOMELAND NEW YORK OR CAMDEN FIRE] | ||||
By: | ||||
Name: | ||||
Title: | ||||
Address: |
ONEBEACON INSURANCE GROUP, LTD. | ||||
By: | ||||
Name: | ||||
Title: | ||||
ONEBEACON INSURANCE GROUP LLC | ||||
By: | ||||
Name: | ||||
Title: | ||||
ONEBEACON AMERICA INSURANCE COMPANY | ||||
By: | ||||
Name: | ||||
Title: | ||||
THE EMPLOYERS’ FIRE INSURANCE COMPANY | ||||
By: | ||||
Name: | ||||
Title: | ||||
THE CAMDEN FIRE INSURANCE ASSOCIATION | ||||
By: | ||||
Name: | ||||
Title: | ||||
HOMELAND INSURANCE COMPANY OF NEW YORK | ||||
By: | ||||
Name: | ||||
Title: | ||||
ONEBEACON INSURANCE COMPANY | ||||
By: | ||||
Name: | ||||
Title: | ||||
ONEBEACON MIDWEST INSURANCE COMPANY | ||||
By: | ||||
Name: | ||||
Title: | ||||
PENNSYLVANIA GENERAL INSURANCE COMPANY | ||||
By: | ||||
Name: | ||||
Title: | ||||
NORTHERN ASSURANCE COMPANY OF AMERICA | ||||
By: | ||||
Name: | ||||
Title: | ||||
1 | In the second Commutation Agreement, the bracketed text will be replaced with the following: “Massachusetts Homeland Insurance Company, a Massachusetts domiciled insurance company formerly known as CU Homeland Insurance Company.” |
2 | Note that this definition tracks the definition of “Liabilities” in the Reinsurance Agreement. |
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1 Beacon Lane
Canton, MA 02021
Attention: Bradford W. Rich
Senior Vice President and General Counsel
71 S. Wacker Drive
Chicago, IL 60606
Facsimile: (312) 701-7711
Attention: Edward S. Best
Andrew J. Noreuil
c/o Tower Group, Inc.
120 Broadway, 31st Floor
New York, NY 10271
Attention: General Counsel
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New York, NY 10019
Facsimile: (212) 259-6333
Attention: Jeffrey S. MacDonald
Elizabeth B. Bannigan
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[COMPANY] | ||||
By: | ||||
Name: | ||||
Title: | ||||
ONEBEACON INSURANCE COMPANY | ||||
By: | ||||
Name: | ||||
Title: | ||||
by and between
and
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(i) | provide claimants and their authorized representatives (collectively, “Claimants”) with claim forms and explanatory guidance as required by Applicable Law; | ||
(ii) | establish, maintain and organize claim files and maintain and organize other claims-related records; | ||
(iii) | conduct an investigation of each Claim, including the identification of any coverage issues arising from the facts and circumstances of the Claim; | ||
(iv) | adjust and manage each Claim; | ||
(v) | prepare and distribute to the appropriate recipients any reports required by Applicable Law; | ||
(vi) | respond to all written or oral claims-related communications as required by Applicable Law; and | ||
(vii) | maintain a complaint log with respect to the Claims in accordance with applicable requirements of Governmental Authorities and provide a copy of such log, continuously updated through the last day of each calendar quarter during the term of this Agreement, to Company on or before the thirtieth day of each calendar quarter covering changes during the preceding calendar quarter. |
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(i) | promptly notify Company of any Claims or non-Claims payment related complaints, inquiries or proceedings initiated by a Governmental Authority and involving the Insurance Contracts, Claims or the Ceded Reinsurance Agreements, and prepare and send to the Governmental Authority, with a copy to Company, a response within the Governmental Authority’s requested time frame for response or if no such time frame is provided, within the time frame as allowed by Applicable Law;provided, that the Administrator shall promptly provide such response to the Company for its prior review and comment; | ||
(ii) | except as set forth herein, supervise and control the investigation, contest, defense and/or settlement of all complaints, inquiries and proceedings by Governmental Authorities involving the Insurance Contracts, Claims or the Ceded Reinsurance Agreements at its own cost and expense, and in the name of Company when necessary, including those investigations, contests, defenses and settlements initiated prior to the Effective Date and pending on the Effective Date; and | ||
(iii) | on a monthly basis, provide to Company a report in a form mutually agreed by the parties summarizing the nature and status of any such complaints, inquiries or proceedings by Governmental Authorities, the alleged actions or omissions giving rise to such complaints, inquiries or proceedings and copies of any files or other documents that Company may reasonably request in connection with its review of these matters. |
(i) | notify Company promptly of any lawsuit, action, arbitration or other dispute resolution proceedings that are instituted or threatened with respect to any matter relating to the Insurance Contracts, Claims or the Ceded Reinsurance Agreements (“Legal Proceeding(s)”), and in no event more than five (5) Business Days after receipt of notice thereof; | ||
(ii) | except as set forth herein, supervise and control the investigation, contest, defense and/or settlement of all Legal Proceedings at its own cost and expense, and in the name of the Company when necessary, including those Legal Proceedings initiated prior to the Effective Date and pending on the Effective Date; and | ||
(iii) | keep Company fully informed of all material developments of all Legal Proceedings and, on a monthly basis, provide to Company a report summarizing the nature and status of any Legal Proceedings, the alleged |
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actions or omissions giving rise to such Legal Proceedings and copies of any files or other documents that Company may reasonably request in connection with its review of these matters. |
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(i) | Administrator shall promptly prepare and furnish to Company or, at Company’s election, directly to Governmental Authorities all reports and related summaries (including statistical summaries), certificates of compliance and other reports required or requested by a Governmental Authority with respect to the Insurance Contracts, Claims or Ceded Reinsurance Agreements. | ||
(ii) | Administrator shall assist Company and cooperate with Company in doing all things necessary, proper or advisable, in a commercially reasonable manner in connection with any and all market conduct or other Governmental Authority examinations relating to the Insurance Contracts, Claims or Ceded Reinsurance Agreements. |
(i) | Within thirty (30) days after the end of each calendar quarter that this Agreement is in effect, Administrator shall provide to Company a report in respect of the Insurance Contracts, Claims and Ceded Reinsurance Agreements for such calendar quarter in the form attached asSchedule A, or in another form mutually acceptable to Company and Administrator (the “Quarterly Report”). Without limiting the foregoing, the Quarterly Report shall include the amount of Gross Statutory Reserves as of the end of such calendar quarter. | ||
(ii) | Administrator shall timely provide notice to Company of (A) any changes in the reserve methodology of Administrator in calculating reserves for the Insurance Contracts or Claims and (B) any significant changes to the Gross Statutory Reserves in respect of the Insurance Contacts that are recommended or deemed appropriate by the Administrator, any of its Affiliates or any third party. | ||
(iii) | On an annual basis, Administrator shall provide Company with actuarial work papers and analysis prepared by a qualified actuary, setting forth |
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such actuary’s unpaid claim estimate relating to loss and loss adjustment expenses in respect of the Insurance Liabilities. The parties shall cooperate in good faith to establish the timing for the provision of such documentation. Administrator shall provide, or cause to be provided, to Company reasonable access to such actuary in connection with Company’s review of such work papers, analysis and estimates. |
(iv) | Administrator shall timely provide to Company and Company’s designated independent auditors such additional reports and summaries (and, upon request of Company, detailed supporting records) related to the Insurance Contracts, Claims and Ceded Reinsurance Agreements as may be reasonably required for use in connection with the preparation of Company’s statutory and GAAP financial statements, tax returns and other required financial reports. The parties shall cooperate in good faith to establish the manner and schedule for the providing of such reports. | ||
(v) | For so long as this Agreement remains in effect, upon reasonable notice, Administrator shall from time to time furnish to Company such other reports and information related to the Insurance Contracts, Claims and Ceded Reinsurance Agreements as may be reasonably requested by Company for regulatory, tax, financial reporting or similar purposes and reasonably available to it. At Company’s reasonable request, Administrator shall supply to Company a copy of all supporting information used by Administrator in preparing any Quarterly Report or any other reports, summaries and certifications provided hereunder. | ||
(vi) | On a monthly basis, provide to Company a report in a form mutually agreed by the parties summarizing deposits and withdrawals from the Bank Accounts and such other information as Company may reasonably request in connection with such Bank Accounts. |
(i) | Administrator shall timely pay, from Administrator’s own funds, to the Policyholders, any refunds of any kind due under the Insurance Contracts. | ||
(ii) | Administrator shall have the exclusive authority to manage and administer the Ceded Reinsurance Agreements as relates to the Insurance Contracts, including providing all reports and notices required with regard to the Ceded Reinsurance Agreements to the reinsurers within the time required by the applicable reinsurance agreement and doing all other things |
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necessary to comply with the terms and conditions of the Ceded Reinsurance Agreements. Without limiting the foregoing, Administrator shall timely pay all reinsurance premiums due to reinsurers under the Ceded Reinsurance Agreements and collect from such reinsurers all reinsurance recoverables due thereunder. Notwithstanding the foregoing, Company shall reasonably cooperate with Administrator in the administration of such Ceded Reinsurance Agreements to the extent that Company’s participation is required under the terms of any such Ceded Reinsurance Agreement or is requested by the counterparty to the Ceded Reinsurance Agreement. In no event may the Administrator enter into any new ceded reinsurance agreements on behalf of Company without the Company’s prior written consent. |
(iii) | Administrator shall process all policy changes, lapses, cancellations, and reinstatements in accordance with the terms of this Agreement and the express terms of the Insurance Contracts. | ||
(iv) | Administrator shall pay Commissions due under the Insurance Contracts to the extent such Commissions constitute Insurance Liabilities. | ||
(v) | Administrator shall provide all customer service in connection with the Insurance Contracts. | ||
(vi) | Administrator shall provide such other Administrative Services with respect to the Insurance Contracts and Claims as are necessary or appropriate to fully effectuate the purpose of the Purchase Agreement, the Excluded Business Reinsurance Agreement and this Agreement, including such Administrative Services as are not performed by or on behalf of Company on the date hereof but the need for which may arise due to changes or developments in Applicable Law or for any other reason. |
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(i) | Commencement of a voluntary or involuntary proceeding in any jurisdiction by or against Administrator for the purpose of conserving, rehabilitating or liquidating Administrator; | ||
(ii) | There is a material breach by the Administrator of any term or condition of this Agreement that is not cured by the Administrator within thirty (30) days after receipt of written notice from Company of such breach or act; | ||
(iii) | Any license required to be held by Administrator to provide the Administrative Services shall be revoked or the Administrator shall fail to obtain such license; or | ||
(iv) | Administrator is unable to perform the services required under this Agreement for a period of thirty (30) consecutive days for any reason. |
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1 Beacon Lane
Canton, MA 02021
Attention: Bradford W. Rich
Senior Vice President and General Counsel
71 S. Wacker Drive
Chicago, IL 60606
Facsimile: (312) 701-7711
Attention: Edward S. Best
Andrew J. Noreuil
19
New York, NY 10271
Attention: General Counsel
1301 Avenue of the Americas
New York, NY 10019
Facsimile: (212) 259-6333
Attention: Jeffrey S. MacDonald
Elizabeth B. Bannigan
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ONEBEACON INSURANCE COMPANY | ||||
By: | ||||
Name: | ||||
Title: | ||||
[YORK INSURANCE COMPANY OF MAINE] | ||||
By: | ||||
Name: | ||||
Title: | ||||
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Page | ||||
ARTICLE I DEFINITIONS | 1 | |||
ARTICLE II BUSINESS REINSURED | 4 | |||
ARTICLE III TERRITORY | 5 | |||
ARTICLE IV ADMINISTRATION; CHANGES | 5 | |||
Section 4.1. Administration | 5 | |||
Section 4.2. Contract Changes | 5 | |||
Section 4.3. Follow the Fortunes | 5 | |||
Section 4.4. Accounting | 5 | |||
Section 4.5. Financial Information | 5 | |||
Section 4.6. Losses and Loss Adjustment Expenses | 5 | |||
ARTICLE V CONSIDERATION; CEDED REINSURANCE AGREEMENTS | 6 | |||
Section 5.1. Consideration | 6 | |||
ARTICLE VI INSOLVENCY | 8 | |||
Section 6.1. Payments | 8 | |||
Section 6.2. Notice | 8 | |||
Section 6.3. Expenses | 9 | |||
ARTICLE VII OFFSETS | 9 | |||
ARTICLE VIII REINSURANCE CREDIT; TRUST ACCOUNT | 9 | |||
Section 8.1. Reinsurance Credit | 9 | |||
Section 8.2. Trust Account | 9 | |||
Section 8.3. Value of Assets in Trust | 9 | |||
Section 8.4. Depositing Assets in Trust | 10 | |||
Section 8.5. Initial Deposit with Trustee | 10 | |||
Section 8.6. Rebalancing the Trust Account | 10 | |||
Section 8.7. Trust Account Withdrawals | 10 | |||
Section 8.8. Application of this Article | 11 | |||
Section 8.9. Holdback | 11 | |||
ARTICLE IX RIGHTS WITH RESPECT TO INSURANCE LIABILITIES | 11 | |||
ARTICLE X ERRORS AND OMISSIONS | 11 | |||
ARTICLE XI DUTY OF COOPERATION | 12 | |||
ARTICLE XII INDEMNIFICATION | 12 | |||
Section 12.1. Indemnification by Reinsurer | 12 | |||
Section 12.2. Indemnification by Company | 12 |
Page | ||||
ARTICLE XIII MISCELLANEOUS PROVISIONS | 12 | |||
Section 13.1. No Strict Construction Against the Drafter | 12 | |||
Section 13.2. Waivers and Amendments; Remedies | 13 | |||
Section 13.3. Entire Agreement | 13 | |||
Section 13.4. Interpretation | 13 | |||
Section 13.5. Notices | 14 | |||
Section 13.6. Seller Representative | 15 | |||
Section 13.7. Binding Effect | 15 | |||
Section 13.8. Counterparts | 15 | |||
Section 13.9. Governing Law | 15 | |||
Section 13.10. Waiver of Jury Trial | 15 | |||
Section 13.11. No Reinsurance Intermediary | 16 |
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DEFINITIONS
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BUSINESS REINSURED
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TERRITORY
ADMINISTRATION; CHANGES
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CONSIDERATION; CEDED REINSURANCE AGREEMENTS
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INSOLVENCY1
1 | Note to draft:To be conformed to requirements of law in the state of domicile for Seller. |
-8-
OFFSETS
REINSURANCE CREDIT; TRUST ACCOUNT
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RIGHTS WITH RESPECT TO INSURANCE LIABILITIES
ERRORS AND OMISSIONS
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DUTY OF COOPERATION
INDEMNIFICATION
MISCELLANEOUS PROVISIONS
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1 Beacon Lane
Canton, MA 02021
Attention: Bradford W. Rich
Senior Vice President and General Counsel
71 S. Wacker Drive
Chicago, IL 60606
Facsimile: (312) 701-7711
Attention: Edward S. Best
Andrew J. Noreuil
120 Broadway, 31st Floor
New York, NY 10271
Attention: General Counsel
1301 Avenue of the Americas
New York, NY 10019
Facsimile: (212) 259-6333
Attention: Jeffrey S. MacDonald
Elizabeth B. Bannigan
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[YORK INSURANCE COMPANY OF MAINE] | ||||
By: | ||||
Name: | ||||
Title: | ||||
ONEBEACON INSURANCE COMPANY | ||||
By: | ||||
Name: | ||||
Title: | ||||
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TERM AND TERMINATION
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(i) | purchase, or assume the lease for, any information technology hardware assets (other than software) that are owned or leased by Service Provider, or its Affiliates and that are used by Service Provider or its Affiliates solely to perform the Services, including the Personal Lines Hardware owned or leased by Service Provider that is set forth in Exhibit E hereto. | ||
(ii) | obtain all of Service Provider’s rights in the Personal Lines Software Platforms used solely to provide the Services, but excluding any software licensed by Service Provider from any third Person and excluding any software owned by Service Provider that is not used solely to perform the Services (“Purchased Software”); and | ||
(iii) | obtain a perpetual, irrevocable, nonexclusive, transferable, sub-licenseable (through multiple tiers), royalty-free, worldwide, fully-paid up license to use, copy, perform, display, edit, modify, adapt, translate, exhibit, publish, transmit, distribute and prepare derivative works of any other software owned by Service Provider that is used by Service Provider to perform the Services (but is not solely used to perform the Services). |
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If to Service Provider, to: |
One Beacon Lane
Canton, Massachusetts 02021
Attention: Bradford W. Rich
Senior Vice president and General Counsel
Phone: (781) 332-7189
Facsimile: (888) 862-8724
With a copy (which shall not constitute notice) to: |
71 South Wacker Drive
Chicago, Illinois 60606
Attention: Edward S. Best, Esq.
Phone: (312) 701-7100
Facsimile: (312) 706-8106
If to Service Recipient: |
120 Broadway, 31st Floor
New York, NY 10271
Attention: Elliot S. Orol
Senior Vice President, General Counsel and Secretary
Phone: (212) 655-4001
Facsimile: (212) 202-3987
With copies (which shall not constitute notice) to: |
1301 Avenue of the Americas
New York, New York 10019
Attention: Jeffrey S. MacDonald, Esq. and Elizabeth B. Bannigan, Esq.
Phone: (212) 259-8000
Facsimile: (212) 259-6333
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ONEBEACON INSURANCE GROUP LLC | ||||
By: | ||||
Name: | l | |||
Title: | l | |||
TOWER GROUP, INC. | ||||
By: | ||||
Name: | l | |||
Title: | l | |||
1. | Pricing Methodology |
Service Provider shall be reimbursed for all costs incurred by Service Provider in providing the Services, including as described in this Exhibit. References to use of the Services by Service Recipient shall include any Acquired Companies and Affiliates that are receiving Services under the TSA. The Parties acknowledge that any specific Fees referred to herein are intended to comply with the last paragraph ofSection 9.1 of the TSA. | |||
a. | Definitions |
i. | “Annual Productive Hours” shall equal 1920 hours. | ||
ii. | “Application Software Charges” shall be defined as the sum of Initial Application Software Charges and Incremental Application Software Charges. | ||
iii. | “Base Hardware Charges” shall be defined as the charges associated with the fully loaded hardware costs (including rent, associated utilities, maintenance, equipment costs, etc.), as determined during the baseline period described inSection 5 (Base Utilization). The Base Hardware Charge does not include any additional hardware added to the Services after the baseline period. | ||
iv. | “Data/Voice Charges” shall be defined as the cost to Service Recipient per Service Recipient employee of access to the Service Provider communications infrastructure. The Data/Voice Charges for 2010 is $315.00 per Service Recipient employee using the Service Provider communications infrastructure per month. The Data/Voice Charges for subsequent years shall be set by Service Provider in January of each subsequent year. | ||
v. | “Desktop Charges” shall be defined as $250.00 per Continuing Business Employee desktop leased to Service Recipient from the Closing Date through the end of the Term. | ||
vi. | “Discretionary Development Charge” shall be equal to the IT Hourly Ratemultiplied by the Annual Productive Hoursmultiplied by the number of Discretionary Development Personnel. The Discretionary Development Charge for 2010 shall be $63,440 per month (i.e., $79.30 * 1920 * 5 / 12 ). The Discretionary Development Charge for subsequent years shall be recalculated in January of such subsequent year based on the updated IT Hourly Rate and/or any change in the number of Discretionary Development Personnel. |
1 | For the avoidance of doubt, costs on this Exhibit are not subject to any limit or Service Recipient’s responsibility for consent costs. |
Exhibit A-1
vii. | “Discretionary Development Personnel” shall be defined as the dedicated Service Provider employees assigned to provide the Discretionary Development Services. | ||
viii. | “FTE” means a full time equivalent, based on 1920 hours per year. | ||
ix. | “Incremental Application Software Charges” shall be defined as incremental charges for the in-scope applications required to support the Business on an ongoing basis. Incremental Application Software Charges may include, for example, additional seats required by Service Recipient, additional CPU licenses required by Service Recipient, additional maintenance costs and any new interfaces and charges that Service Provider incurs from the software vendors. | ||
x. | “Incremental Hardware Charges” shall be defined as the incremental charges associated with additional hardware added after the baselining period for the fully loaded hardware costs (including rent, associated utilities, maintenance, equipment costs, etc.). Incremental Application Software Charges may include additional servers or additional memory or storage added to support the Services. | ||
xi. | “Initial Application Software Charges” shall be defined as $194,871.00 per month. The Initial Application Software Charge is based on the Parties’ agreed allocation of the in-scope application software for the Business as of the Closing Date, as compared with Service Provider’s use of the in-scope application software other than for the Business. Such allocation was calculated using various methodologies to approximate the percentage of the total cost for the in scope applications that is used by the Business, including the percentage of seats that are attributable to the Business and the percentage of CPUs associated with the Business. | ||
xii. | “Initial Estimated Hardware Charges” shall be defined as $145,833.00 per month. The Initial Estimated Hardware Charges are based on Unix/Wintel maintenance costs and mainframe MIP costs, as each is due to the usage and volume of the Business. | ||
xiii. | “IT Hourly Rate” shall be defined as the average rate across the IT department employees associated with the TSA and shall be for all direct costs of employment, which shall include such employee’s full and part-time salaries (plus overtime), contract labor costs, incentive expenses, fringe expenses (including state and federal payroll taxes, costs associated with provision of benefit plans and costs associated with provision of 401k) and employee education expenses (including membership of professional bodies), communication and information technology networking costs (including telephone charges, data mega charges, desktop charges, application support and infrastructure charges) and occupancy (including rent and utilities). Travel expenses are not included in the IT Hourly Rate and shall be billed separately, in accordance with Section 9.1.4 of the Agreement. The IT Hourly Rate for 2010 is $79.30. The IT Hourly Rate for subsequent years shall be set based on the criteria listed herein in January of each subsequent year. | ||
xiv. | “IT Personnel” shall be defined those FTEs assigned to provide IT Services. | ||
xv. | “IT Services” shall be defined as those Services defined inSection 2 (including Production Support Services, infrastructure Services and helpdesk Services), other than Discretionary Development Services. |
Exhibit A-2
xvi. | “Non-IT Hourly Rates” shall be defined as the average rates for the applicable non-IT department employees and shall be for all direct costs of employment, which shall include such employee’s full and part-time salaries (plus overtime), contract labor costs, incentive expenses, fringe expenses (including state and federal payroll taxes, costs associated with provision of benefit plans and costs associated with provision of 401k), communication and information technology networking costs (including telephone charges, data mega charges, desktop charges, application support and infrastructure charges) and occupancy (including rent and utilities). The Non-IT Hourly Rates shall be different for each Service Provider non-IT department and shall be set each year based on the criteria listed herein. | ||
xvii. | “Non-IT Personnel” shall be defined those FTEs assigned to provide Non-IT Services. | ||
xviii. | “Non-IT Services” shall be defined as those Services defined inSection 3. | ||
xix. | “Third Person Charges” shall be defined as the actual charges charged by a third Person provider for Third Person Personnel. | ||
xx. | “Third Person Personnel” shall be defined as third Person personnel engaged by Service Provider in order to provide the Services. |
b. | IT Services and Discretionary Development Services | ||
Service Provider shall provide the Services described inSection 2 below using IT Personnel and Discretionary Development Personnel. |
i. | IT Services |
1. | Service Recipient will pay for Services with the pricing mechanism “IT Personnel” based on actual hours worked by IT Personnel at the IT Hourly Rate. | ||
2. | To the extent Service Provider provides any IT Services using Third Person Personnel, Service Provider shall pass through all Third Person Charges to Service Recipient. To the extent the provision of IT Services requires additional hardware or software, Service Provider shall pass through all Incremental Hardware Charges and Incremental Application Software Charges to Service Recipient. | ||
3. | If there are IT Personnel not otherwise engaged in IT Services, such IT Personnel may perform Discretionary Development Services at Service Recipient’s request. Service Provider cannot commit to delivery timelines when IT Personnel are performing Discretionary Development Services because such IT Personnel’s priority will be to perform the IT Services. |
ii. | Discretionary Development Services |
1. | Service Recipient will pay for Services with the pricing mechanism “Discretionary Development Personnel” at the Discretionary |
Exhibit A-3
Development Charge. As of the Closing Date, there shall be five (5) Discretionary Development Personnel. Service Recipient shall be charged the Discretionary Development Charge for the Discretionary Development Personnel regardless of the number of actual hours worked by such personnel. | |||
2. | To the extent Service Provider provides any Discretionary Development Services using Third Person Personnel, Service Provider shall pass through all Third Person Charges to Service Recipient. To the extent the provision of Discretionary Development Services requires additional hardware or software, Service Provider shall pass through all Incremental Hardware Charges and Incremental Application Software Charges to Service Recipient. | ||
3. | If any Discretionary Development Personnel are not being fully utilized, Service Provider reserves the right to remove such Discretionary Development Personnel, subject to Service Recipient’s consent. If any Discretionary Development Personnel are removed, the Discretionary Development Charge shall be re-calculated based on the updated number of Discretionary Development Personnel, net of any removal costs. If Service Recipient requires additional personnel to perform the Discretionary Development Services beyond the Discretionary Development Personnel, Service Provider will use commercially reasonable efforts to provide such additional personnel, provided that such personnel shall be charged as IT Personnel or Third Person Personnel, as applicable. |
iii. | Additional Services. If there are IT Personnel not otherwise engaged in IT Services or Discretionary Development Personnel not otherwise engaged in performing Discretionary Development Services, such IT Personnel or Discretionary Development Personnel may perform Additional Services agreed by the Parties in accordance with the Agreement. In addition or in the alternative, the Parties may agree that Additional Services shall be provided by Third Person Personnel for the Third Person Charges. | ||
iv. | Retention Bonuses. Service Recipient acknowledges the importance of Service Provider’s ability to retain Service Provider employees for the duration of the Term. Service Provider may, in its sole discretion, provide bonuses throughout the Term to various employees that support the IT Services and Discretionary Development Services (“Retention Bonuses”). Service Recipient shall reimburse Service Provider for all such Retention Bonuses, up to $3,500,000. |
c. | Non-IT Personnel |
i. | Service Recipient will pay for Services with the pricing mechanism “Non-IT Personnel” based on actual hours worked by Non-IT Personnel at the Non-IT Hourly Rates. | ||
ii. | To the extent Service Provider provides any Non-IT Services using Third Person Personnel, Service Provider shall pass through all Third Person Charges to Service Recipient. To the extent the provision of Non-IT Services requires additional |
Exhibit A-4
hardware or software, Service Provider shall pass through all Incremental Hardware Charges and Incremental Application Software Charges to Service Recipient. |
d. | Application Software Charges | ||
Service Recipient will pay for Services with the pricing mechanism “Application Software Charges” based on Application Software Charges. | |||
In the event Service Provider purchases or licenses additional software or acquires additional rights in software solely in connection with its obligation to provide the Services, Service Provider shall pass through all Incremental Application Software Charges to Service Recipient and Service Recipient will be responsible for the entire Incremental Application Software Charge. In the event Service Provider purchases or licenses additional software or acquires additional rights in software in connection with its obligation to provide the Services but that will also be used by Service Provider for other purposes, Service Provider shall pass through the proportion of the Incremental Application Software Charges to Service Recipient in relation to Service Recipient’s usage relative to the other users of such software and Service Recipient will be responsible for such portion of the Incremental Application Software Charge. | |||
e. | Hardware Charges | ||
Service Recipient shall be responsible for the Initial Estimated Hardware Charges beginning on the Closing Date. Service Provider will perform the baselining process specified inSection 5, in order to gather data to verify whether the Initial Estimated Hardware Charges accurately reflect the cost to Service Provider of providing the hardware during the baselining period. The Parties acknowledge that the Initial Estimated Hardware Charges are expected to be less than the Base Hardware Charges, since the Initial Estimated Hardware Charges are only based on two of the baselined charges. At the conclusion of the baselining period, Service Provider shall set the Base Hardware Charges based on the information gathered during the baselining period. | |||
If the Base Hardware Charges are greater than the Initial Estimated Hardware Charges, Service Recipient shall be responsible for the difference between the Initial Estimated Hardware Charges and the Base Hardware Charges for the baselining period. If the Base Hardware Charges are less than the Initial Estimated Hardware Charges, Service Provider shall be provide a credit to Service Recipient for the difference between the Base Hardware Charges and the Initial Estimated Hardware Charges for the baselining period. | |||
After the baselining period, Service Recipient shall be responsible for the Base Hardware Charges and any Incremental Hardware Charges each month. | |||
In the event Service Provider purchases hardware solely in connection with its obligation to provide the Services, Service Provider shall pass through all Incremental Hardware Charges to Service Recipient and Service Recipient will be responsible for the entire Incremental Hardware Charge. In the event Service Provider purchases hardware in connection with its obligation to provide the Services but that will also be used by Service Provider for other purposes (such as refresh of Service Provider’s commonly used systems), Service Provider shall pass through the proportion of the Incremental Hardware Charges to Service Recipient in relation to Service Recipient’s usage relative |
Exhibit A-5
to the other users of such hardware and Service Recipient will be responsible for such portion of the Incremental Hardware Charges. | |||
f. | Third Person Personnel | ||
Service Recipient will pay for Services with the pricing mechanism “Third Person Personnel” based on the Third Person Charges. | |||
In the event Service Provider engages Third Person Personnel solely in connection with its obligation to provide the Services, Service Provider shall pass through all Third Person Charges to Service Recipient and Service Recipient will be responsible for the entire Third Person Charge. In the event Service Provider engages Third Person Personnel in connection with its obligation to provide the Services but that will also be used by Service Provider for other purposes (such as to provide maintenance of Service Provider’s commonly used systems), Service Provider shall pass through the proportion of the Third Person Charges to Service Recipient in relation to Service Recipient’s usage relative to the other users of the subject of the work performed by such Third Party Personnel and Service Recipient will be responsible for such portion of the Third Person Charges. | |||
g. | Data/Voice Charges | ||
Service Recipient will pay for Services with the pricing mechanism “Data/Voice Charges” based on the Data/Voice Charges per Service Recipient employee using Service Provider’s communication infrastructure. | |||
h. | Desktop Charges | ||
Service Recipient will pay for Services with the pricing mechanism “Desktop Charges” based on the Desktop Charges per Continuing Business Employee desktop leased to Service Recipient as of the Closing Date. |
Exhibit A-6
Description of | ||||||
Activity | Timeframe | Services | Pricing Mechanism | |||
(A) Software | ||||||
(1) Claims Software | Term of TSA | Service Provider will provide access to CWS, EasyLink, Time Matters, ISO Claim Rpt, Customer Satisfaction Surveys, Branch Self-Audit, ACTS and Paybase. | Application Software Charges | |||
(2) Other Software | Term of the TSA | Service Provider will provide mainframe, midrange and windows software and other software used to provide the Services. | Application Software Charges | |||
(3) Warranty | Not applicable | Service Provider does not warrant third party software. | N/A | |||
(B) Application support | ||||||
(1) Production Support Services | Term of TSA | Service Provider will provide Production Support Services. “Production Support Services” are defined as break fix; software upgrades; and regulatory/compliance changes for normal and ordinary development changes. | IT Personnel | |||
Regulatory/compliance changes will be identified, prioritized and requested by Service Recipient, subject toSection 2.4 of the Agreement. |
Exhibit A-7
Description of | ||||||
Activity | Timeframe | Services | Pricing Mechanism | |||
(2) Discretionary Development Services | Term of the TSA | All development changes that are not Production Support Services, including break fix, software upgrades, and regulatory/compliance changes for non-routine or extraordinary development changes, will be considered “Discretionary Development Services”, subject to Section 2.4 of the Agreement. | Discretionary Development Personnel | |||
(3) Interfaces/Set up | Term of the TSA | Service Provider shall build necessary interfaces to Service Recipient (e.g., stat, bureau reports, general ledger, etc.). | Discretionary Development Personnel | |||
(4) Geographic Support (State) | Term of the TSA | Production Support Services are limited to regulatory support for the eight (8) states covered by the Business as of the Effective Date (New England plus NY and NJ). | IT Personnel | |||
(5) Geographic Expansion (State) | Term of the TSA | If Service Recipient requests support beyond the initial eight (8) states, such regulatory support shall be Discretionary Development Services. | Discretionary Development Personnel | |||
(6) Developers - Discretionary Development (Continuing Business Employees) | Not applicable | The Parties acknowledge that there are no Continuing Business Employees that are IAF developers. | N/A | |||
(7) IAF Development | To be determined if requested by Service Recipient | In the event that there are Continuing Business Employees who are IAF developers: - - the Services do not include having developers do any commercial lines (“C/L”) work on any PAS platform prior to 12/4/2012. | Discretionary Development Services, IT Personnel, Incremental Hardware |
Exhibit A-8
Description of | ||||||
Activity | Timeframe | Services | Pricing Mechanism | |||
- Service Recipient will indemnify Service Provider against any harm from Hanover resulting from any work performed by these developers - - Service Recipient developers shall not access any other Service Provider systems | Charges, and/or Incremental Application Software Charges | |||||
If any IAF development is planned by Service Recipient: | ||||||
(i). Separation of C/L and P/L data is required. Service Recipient will pay for Service Provider time and materials for performing this separation which is currently estimated at $1,500,000. | ||||||
(ii). Applicable resources will not be made available for Service Recipient hire, until data separation is complete. | ||||||
(8) Oracle DocuCorp (EDS) Print - extension of support | Term of TSA | Oracle support for Service Provider’s current version of Docucorp expires in 2012. At Service Recipient ‘s option and cost, Service Provider shall: (i) Not upgrade. Service Recipient will accept all risk (including impacts to the Services) associated with the unsupported platform and any costs incurred to repair after the Oracle support is discontinued; (ii) Request an extended support contract from Oracle; or (iii) Perform the upgrade. | (i) N/A (ii) Third Person : Personnel, Hardware Charges and/or Application Software Charges (iii) IT Personnel, Third Person Personnel, Hardware Charges and/or Application Software Charges | |||
(9) Sapiens Recertification | Term of the TSA | Upgrade Sapiens due to IBM software upgrades (e.g., CICS). | Third Person Personnel, Hardware Charges and/or Application Software Charges |
Exhibit A-9
Description of | ||||||
Activity | Timeframe | Services | Pricing Mechanism | |||
(10) Keane Legacy Policy Admin. support and conversion completion | June 30 2011 | Legacy policy administration support and conversion completion (performed by Keane). | Third Person Personnel, Hardware Charges and/or Application Software Charges | |||
(11) CGI MA Auto Policy Admin Support | Term of TSA | CGI support of MA Auto | Third Person Personnel, Hardware Charges and/or Application Software Charges | |||
(12) CGI MA Auto Conversion | To be determined, if requested by Service Recipient | If requested by Service Recipient, migration of MA Auto onto the IAF platform and creation of package product. | Discretionary Development Personnel, Third Person Personnel, Hardware Charges and/or Application Software Charges | |||
(13) CGI I/O Conversion and Landlord Protector Policy Migration | Auto/home policy component of Inside/Out set to be sunset by June 30 2011; Land Protector Policy Migration – To be determined. | CGI I/O Conversion and Landlord Protector Policy Migration until completion of migration. | Third Person Personnel, Hardware Charges and/or Application Software Charges |
Exhibit A-10
Description of | ||||||
Activity | Timeframe | Services | Pricing Mechanism | |||
(C) Infrastructure | ||||||
(1) Technology Refresh — Mainframe Upgrade | Term of TSA | Service Provider and Service Recipient will jointly discuss how any upgrade associated with the Services will be handled. Service Provider will perform technology refresh agreed by the Parties. | Third Person Personnel, Hardware Charges and/or Application Software Charges | |||
(2) Remote Access | Term of TSA | Remote access for the Service Recipient will utilize terminal services. Service Provider will provide the applicable (i) servers, (ii) licenses and (iii) implementation services required for Service Recipient to access Service Provider systems. | (i) servers –Hardware Charges (ii) licenses – Application Software Charges (iii) implementation services – IT Personnel, Hardware Charges, Application Software Charges and/or Third Person Personnel | |||
(3) Data Mega /Voice Mega | Term of TSA | For Service Recipients that are directly connected to the Service Provider network, Service Provider will provide communication infrastructure (voice network, data network, phone, PBX) for use by Service Recipient employees. | Data/Voice Charges | |||
(4) Help Desk Support | Term of TSA | Service Recipient level 1 support will forward any calls concerning Services provided under the TSA to Service Provider. | IT Personnel |
Exhibit A-11
Description of | ||||||
Activity | Timeframe | Services | Pricing Mechanism | |||
(5) E-mail | As specified | (a) On or as soon as practicable (but not more than thirty (30) days) from the date that an employee of Sellers becomes a Continuing Business Employee, Service Provider will export, in a commercially reasonable and legible format that the Parties shall agree upon, the email contact list of such Continuing | IT Personnel | |||
Business Employee for import to Buyer’s email system. (b) From the date that an employee of Sellers becomes a Continuing Business Employee and for six (6) months after the Closing Date, Service Provider will provide forwarding of all email messages for the applicable Continuing Business Employee from the Continuing Business Employee’s account in Sellers’ email system to the Continuing Business Employee’s account in Buyer’s email system. | ||||||
(c) For a period of sixty (60) days from the date that an employee of Sellers becomes a Continuing Business Employee, such Continuing Business Employee shall retain access to and use of his/her email account in Sellers’ email system. During such sixty (60) day period, such Continuing Business Employee’s account in Sellers’ email system will still receive email, and such email will also be forwarded to the Continuing Business Employee’s account in Buyer’s email system. (d) On or around sixty (60) days from the date an employee of Sellers becomes a Continuing Business Employee, Service Provider will prevent access to the Sellers’ email system by the Continuing Business Employee. | ||||||
(e) Service Provider will copy, in a commercially reasonable and legible format that the Parties shall agree upon, all email, including email on the Seller’s archive system, of such Continuing Business Employee for import to Buyer’s email system and will use commercially reasonable efforts to do so within 90 days after such |
Exhibit A-12
Description of | ||||||
Activity | Timeframe | Services | Pricing Mechanism | |||
employee of Sellers becomes a Continuing Business Employee. If any emails copied to Buyer’s emails system contains information for which Service Recipient is not authorized to access, Service Recipient and the applicable Continuing Business Employee shall not have any right to use or retain any such information. Service Recipient shall promptly notify Service Provider of such unauthorized access and delete or destroy any information obtained. | ||||||
(f) Buyer shall formally notify each employee of Sellers who becomes a Continuing Business Employee to move his/her email data on Sellers’ email system to Sellers’ archives prior to and during the period of sixty (60) days from the date that such employee becomes a Continuing Business Employee. | ||||||
(6) Desktops and Laptops | Term of TSA | Seller shall lease the desktops and laptops of the Continuing Business Employees to Service Recipient from the Closing Date through the end of the Term. Seller agrees to provide access to its systems for the Continuing Business Employees who are desktop support staff for the purpose of supporting the Continuing Business Employees. Seller will support desktops of Continuing Business Employees until the end of the Term. If Buyer issues a desktop to a Continuing Business Employee, the previously used desktop will, at the sole discretion of Buyer, become the property of Buyer. Upon expiration or termination of the Term, Buyer can choose whether or not to keep each remaining desktop. If Buyer chooses not to keep any desktops, such desktops will be returned to Service Provider. If Buyer chooses to keep any desktops, Buyer shall remove all Service Provider data and software such that such desktop cannot be unformatted and Buyer cannot forensically retrieve the removed data and software. | Desktop Charges and IT Personnel |
Exhibit A-13
Description of | ||||||
Activity | Timeframe | Services | Pricing Mechanism | |||
(7) Desktop Software | Not Applicable | Service Recipient is responsible for consent costs required to transfer licenses transferred or purchased in connection with the lease of desktops for Continuing Business Employees. The following desktop software will be handled as specified below: | N/A | |||
-Trend- Service Recipient to purchase. | ||||||
-Microsoft (OS & Office)- Service Provider to assign licenses to Service Recipient. | ||||||
Service Recipient to pay Microsoft “true up”. | ||||||
-Night watchman- Service Provider will remove from desktop. | ||||||
-Checkpoint- Service Provider to remove MEPP from the desktop. Service Recipient to purchase FDE. | ||||||
-Diskeeper- Service Provider to remove from desktop. | ||||||
-Contivity VPN– transfers with all laptops for no charge. | ||||||
(D) Post-Signing Activities | ||||||
(1) Preparation of the Environment | From the Effective Date to the Closing Date | After the Effective Date, Service Provider will begin work on Service Recipient’s behalf, to prepare the system(s) for use by Service Recipient by the Closing Date. Examples of this work are items including, but not limited to, logo, form and address changes as needed; creation of user ids for Service Recipient personnel; transfer of agent portal; closure of Continuing Business Employees’ voice and email accounts. | IT Personnel |
Exhibit A-14
Description of | ||||||
Activity | Timeframe | Services | Pricing Mechanism | |||
(E) Administration | ||||||
(1) Invoice preparation | Term of TSA | Service Provider will prepare and present an invoice to Service Recipient in accordance with the TSA. Service Provider will cooperate with Service Recipient in the event Service Recipient initiates an audit. | IT Personnel, Non-IT Personnel, Third Person Personnel, Hardware Charges and/or Application Software Charges | |||
(2) Contract Administration | Term of TSA | Service Provider will manage the TSA on a daily basis and provide project management services. | IT Personnel and/or Non-IT Personnel | |||
(3) Daily Operation | Term of TSA | Service Provider will provide day-to-day operational activities associated with performance of the Services. | IT Personnel and/or Non-IT Personnel |
3. | Non-IT Services | |
Service Provider shall provide the following Non-IT Services: |
Exhibit A-15
Cost Structure/Pricing of | FTE Estimate and Hire | |||||||||
Department | Unit | Description of Activity | Timeframe | Service | Option | |||||
Operations | BIS | Service Provider shall provide information privacy systems administration services to Service Recipient. | Term of the TSA | Non-IT Personnel | .75 FTE. | |||||
Operations | BIS | Service Provider will provide statistical coding, bureau reporting (e.g., ISO, TICO & CAR), DMVS, Medicare, state reporting and information management services. Service provider will re-direct data feeds to Service Recipient. This Service will include the required underlying IT system charges which are include in the IT Discretionary TSA. Service Provider shall develop full specifications for data feeds to cover multiple requirements for the activity. Service Provider may require reverse assistance relating to historical York CL transactions although data is currently in Service Provider systems and future transactions will also be in Service Provider systems. | Twelve (12) months from the Closing Date, with thirty (30) days notice required to terminate earlier. | Non-IT Personnel Re-direction of data feeds shall be covered by the IT Discretionary TSA. | 5 FTE dedicated to this task. Service Recipient shall have the option to hire 4 FTE at TSA conclusion. Service Recipient must give Service Provider at least 90 days notice prior to the termination or expiration of this Service if Service Recipient intends to hire such employees. | |||||
Operations | BSC | Agency receivables, collections, lockbox & cash processing (including commission statements, credit cards/ACH/EFT/return premium check printing) | Six (6) months from the Closing Date | Non-IT Personnel | 5.7 FTE dedicated to these tasks (FTE: collections 1, receivables .7, cash processing 4). | |||||
Cooperation to change Lockbox - Service Provider and Service Recipient agree to change over the Service Provider lockbox and payment coupons to Service Recipient (assumes bank account change on Closing | Service Recipient may make offers to such employees once this Service is complete. Service Recipient must give Service Provider at |
Exhibit A-16
Cost Structure/Pricing of | FTE Estimate and Hire | |||||||||
Department | Unit | Description of Activity | Timeframe | Service | Option | |||||
Date) and to properly address system feeds. | ||||||||||
Service Provider and Service Recipient will cooperate to effect this change immediately following execution of the agreement so that the bank change does not cause an interruption of the automated check application process. For avoidance of doubt the Bank is the driving factor to implement the change. Service Provider will redirect non-lockbox checks to Service Recipient per Service Recipient instructions. | least 90 days notice prior to the termination or expiration of this Service if Service Recipient intends to hire such employees. | |||||||||
Operations | BSC | Cooperation to change Electronic Payments (credit card and e-check). Service Provider to cooperate with Service Recipient in affecting change for credit card and ach vendor. | Until change is completed | No Cost for cooperative efforts to secure changes to the process | ||||||
Operations | Internal Services | Canton Mailroom — Service Provider will provide full mailroom services including incoming/outgoing distribution and the underwriting/operations/claims imaging/indexing function. | Three (3) months from the Closing Date. | Non-IT Personnel Service Recipient has option to purchase equipment and/or assume lease of equipment used to perform this Service, after the Service expires. | 6 FTE (UW and claims functions) - 4 for scanning/indexing and 2 for mail distribution. Service Recipient or Service Recipient Vendor has option to hire staff after Service expires or terminates with 45 days prior notice. |
Exhibit A-17
Cost Structure/Pricing of | FTE Estimate and Hire | |||||||||
Department | Unit | Description of Activity | Timeframe | Service | Option | |||||
Operations | Internal Services | Record Storage (Iron Mountain) Proposal — share boxes, pro-rata cost for storage; agreement/right to pull material — requires legal review and wording on privacy/confidentiality to accommodate the objective to avoid unnecessary costs | To be agreed by the Parties based on a shared box approach | Cost structure to be developed between the parties prior to Close | ||||||
Operations | Internal Services | Print, Insertion and Postage | Six months from Closing Date with additional options to extend for six month intervals up to the end of the Term of the TSA with 90 days notice required for each extension. | Non-IT Personnel and Third Party Pass-Through Service Recipient responsible for all Service Provider costs associated with move to vendor platform – IT Discretionary TSA | 6.2 FTE. | |||||
A Reduction of Service request will be permitted based on plan to move to vendor system in whole or in part with 60 days notice. | Cost will be actual fully loaded per item charge. Service Provider to provide itemized monthly invoice based on the itemized pricing set forth in this schedule. Costs will be adjusted to reflect actual fully loaded costs as price changes occur to cost structure | |||||||||
Cost: Printing Image Fees: | ||||||||||
$0.0211 per image | ||||||||||
Envelope Printing: Actual | ||||||||||
Envelope cost per piece | ||||||||||
Automated #10/6x9 insertion: $0.0400 per piece | ||||||||||
Automated Flat Insertion: $0.1700 per piece | ||||||||||
Manual Insertion (non standard or large policy): $0.2400 per piece |
Exhibit A-18
Cost Structure/Pricing of | FTE Estimate and Hire | |||||||||
Department | Unit | Description of Activity | Timeframe | Service | Option | |||||
Insertion of cancellations: $0.099 per piece | ||||||||||
Automated insertion of insert: No Charge | ||||||||||
Job Set Up Charge (standard jobs): | ||||||||||
$5.0000 per job | ||||||||||
Manual Function Non-insertion: $25.00 per hour | ||||||||||
Inventory Mgmt & Storage: $25.00 per month/pallet | ||||||||||
Initial Setup Charge: | ||||||||||
$10.00per job | ||||||||||
Change to job set-up: | ||||||||||
$5.00 per change | ||||||||||
DHL/UPS: Actual Cost | ||||||||||
Pull Requests — Manual | ||||||||||
Removals: $3.20 per request Management, Systems Analysis: $2,000 per month | ||||||||||
Postage – at actual cost Claim check printing - $0.0511 per check | ||||||||||
Customer Satisfaction Surveys — $0.0211 per printed image; automated insertion $0.040 per piece and actual envelope per item cost |
Exhibit A-19
Cost Structure/Pricing of | FTE Estimate and Hire | |||||||||
Department | Unit | Description of Activity | Timeframe | Service | Option | |||||
Operations | Producer Management | Preparation, maintenance and delivery of agency reports, profit sharing estimates, ad hoc data requests for communications, operational reporting and producer reports for external reporting. Potential use or allocation of a designated entry operator and/or business analyst to maintain, develop reports and evaluate output. | TSA required for administration of Agency Management until system can be separated of CL/SL agency data or PL data feeds are re-directed to Service Recipient system. Producer Management System will be provided as needed through the Term of the TSA. | Non-IT Personnel Ad Hoc Reporting – provided at cost Data feeds – cost covered under IT Discretionary TSA | 1 FTE. Service Recipient will consider hiring the 1 additional FTE who provides agency interface services and coordinates Comparative Rater vendors in conjunction with the agency plant. | |||||
Claims | Management Reports | Management Information — Reports and information that are customarily produced from the system in the normal course of our business, as requested by Service Recipient. This includes a one-time effort to provide Service Recipient with a copy of the claims audit database containing all available historical PL claims audit data including but not limited to any forms, tables and table structures contained in the claims audit database. Licensing, maintenance of the database, changes/modifications, etc. related to the Branch Self Audit application and database would be the responsibility of the Service Recipient. | Service Provider will provide this Service until data segregation is achieved. Service Recipient will assume direct responsibility through System access once data segregation issues are resolved. | Non-IT Personnel Anything provided by Service Provider to Service Recipient (expected to be agreed upon data feeds and data access) will be charged at additional actual cost. Ad hoc reports provided at cost. | 1 FTE Service Recipient will have the option to hire claims analytics staff dedicated to PL at the point where they are off Service Provider system or once data segregation issues are resolved | |||||
Ad hoc reports produced upon request. |
Exhibit A-20
Cost Structure/Pricing of | FTE Estimate and Hire | |||||||||
Department | Unit | Description of Activity | Timeframe | Service | Option | |||||
Finance | General Ledger activity/data feeds | General Ledger data feeds; Detailed Premium, Loss and ALAE, and Commission and Premium Tax Expense information. — For Direct Business Level of detail for Premium, loss and expense data feed to be prepared by Service Provider and Service Recipient between signing and closing. Accounting and Financial Reporting - Service Provider to supply data as specifically defined in TSA within 8 business days following the calendar month end; Service Provider will not be performing any accounting or financial reporting responsibilities (GAAP or Statutory utilizing the PeopleSoft general ledger or FSI annual/quarterly statement software); | Provide information to populate Service Recipient GL – this includes premium, loss and ALAE, commissions, premium tax expense, etc for internal and non-stat reporting through at least first quarter after close. Note: Unlikely that service will be required after the first quarterly close following transaction but is possible depending upon date of transaction close. | Cost covered under the IT Discretionary TSA | ||||||
Finance | GL History | Service Provider to provide 5 year historical data feed of GL for all Acquired Companies for transfer to Service Recipient GL in NYC | Within one month of Closing Date | AAIF, NJSMC, NJSIA, NJSIC, AIE — Provide Trial Balances as Reported for both GAAP and Statutory MHIC and York — Provide Trial balances as reported Statutory only | ||||||
Finance | Treasury and Accounts Payable | Includes AP, return premium checks, claim finance (claim payments, reconciliation and fraud research, and other reporting performed in the normal course), data to support bank reconciliations, etc. Specifics to be worked through include data feeds to the various bank accounts, funding, etc. Service Provider to complete bank reconciliations through first quarter after close. Dependant upon banking | This Service will continue thru the quarter end of the month of close. | Non-IT Personnel Data feeds – cost covered under IT Discretionary TSA If Service Recipient is interested in processing AP through Sourcenet during a transition period there is a $7.00 per invoice charge (as processing | 1.5 FTE (Financeestimatefor Non-IT work to be performed); | |||||
Exhibit A-21
Cost Structure/Pricing of | FTE Estimate and Hire | |||||||||
Department | Unit | Description of Activity | Timeframe | Service | Option | |||||
relationship. Service | costs. Note: | |||||||||
Recipient has indicated a potential interest in AP services beyond data feed — depending on date of close | this is current cost and subject to change). | |||||||||
Finance | Tax | Premium tax only | This Service will continue until feeds are re-directed to Service Recipient systems and history is available. | Non-IT Personnel | .5 FTE and ratable cost of tax software. | |||||
Finance | Reinsurance Accounting | Reinsurance reporting and accounting Service Provider and Service Recipient to develop full specs between signing and the Closing Date | Until data feeds are established Service Provider to provide support for the reporting/accounting needs of the HO QS in addition to any activity on outstanding reinsurance recoverable. Service Provider to also provide services for the renewal rights business. | Non-IT Personnel Data feeds – cost covered under IT Discretionary TSA | .5 FTE | |||||
Finance | Fixed Assets | Service Provider to provide details on fixed asset accounting to Service Recipient and Service Recipient to take over accounting once data is received | TSA thru the quarter end of the month of close. | Non-IT Personnel | $1500 one time fixed cost (estimate only) |
Exhibit A-22
Cost Structure/Pricing of | FTE Estimate and Hire | |||||||||
Department | Unit | Description of Activity | Timeframe | Service | Option | |||||
Reinsurance | Exposure Aggregation Modeling | Provide PML analysis on the transferred policies. | If requested by Service Recipient, until such Service is competed (anticipated to be short term) | Non-IT Personnel | 1 FTE. |
4. | Excluded Services and Service Recipient Responsibilities | |
The following services are not included in the scope of Services provided by Service Provider under the TSA or are Service Recipient responsibilities: | ||
IT Services: |
Description of | ||||
Activity | Timeframe | Service Recipient Activities/Responsibilities | ||
Claims Software | Term of TSA | Service Recipient is responsible for (and the Services do not include the use of) securing its own licenses for any other Claims software that is required. (Including but not limited to: CCC, Safelite, Exactimate, Mitchell Med-Bill, Colossus/Precendent) Service Recipient is responsible for any new interfaces and charges that Service Provider may incur from the software vendors. | ||
Helpdesk Support | Term of TSA | 1st level support to be provided by Service Recipient. | ||
Control Processes - Service Recipient development option | Term of TSA | For all development activities Service Recipient will follow Service Provider’s existing control process. This includes: (i) providing the priority of all development activities, (ii) providing requirements for all development activities, (iii) work with Service Provider’s reporting structure and assimilate into the teams, (iv) participate |
Exhibit A-23
Description of | ||||
Activity | Timeframe | Service Recipient Activities/Responsibilities | ||
with Service Provider’s resource planning process, (v) comply with Service Provider’s Governance processes, (vi) comply with Service Provider’s time reporting process, (vii) comply with Service Provider’s development, testing and migration processes (including sign-off of work product), and (viii) provide sign off of all requirements, change controls, QA test plans, and approval that a release is ready to be moved into production. | ||||
Adhere to Service Provider Policies | Term of the TSA | Service Recipient ‘s employees, contractors, consultants, third party providers and agents will observe the working rules and all policies including but not limited to the data security policy, and employee handbook, and procedures of Service Provider. |
Non-IT Services: |
Department | Unit | Description of Activity | Timeframe (1) | Issues/Comment | FTE Estimate | |||||
Operations | BIS | State filings — rate/form | Service Recipient will assume on Closing Date. | |||||||
Operations | BIS | Information Privacy | Service Recipient will assume on Closing Date. | Service Recipient will assume responsibility for interpretation, compliance and direction to Service Provider subsequent to closing. | ||||||
Operations | BIS | BBA oversight | Service Recipient will assume on Closing Date. | Service Recipient pays only PL related Expense | ||||||
Operations | BSC | Direct Bill Analyst | Service Recipient will assume on Closing Date. | Service Recipient hires direct staff | 1 FTE — Service Recipient assumes direct staff. |
Exhibit A-24
Department | Unit | Description of Activity | Timeframe (1) | Issues/Comment | FTE Estimate | |||||
Operations | BSC | Service Recipient cooperation to change Lockbox Service Provider and Service Recipient agree to change over the Service Provider lockbox and payment coupons to Service Recipient (assumes bank account change day 1) and to properly address system feeds. | Service Provider and Service Recipient will cooperate to effect this change immediately following execution of the agreement so that the bank change does not cause an interruption of the automated check application process. For avoidance of doubt the Bank is the driving factor to implement the change. | |||||||
Operations | BSC | Buffalo Mailroom — Service Recipient is responsible for full mailroom services including incoming/outgoing distribution and the underwriting/operations/claims imaging/indexing function. | Service Recipient will assume on Closing Date. | Service Recipient hires direct staff and has option to purchase equipment and/or assume Lease | ||||||
Operations | Internal Services | Purchasing | Service Recipient will assume on Closing Date. | .5 FTE. | ||||||
Operations | OFAC | OFAC Screening and IT system generated referral system | Ongoing during period of system use | Advisories sent to Service Recipient designee — Peter Barbano (peterbarbano@twrgrp.com). Service Recipient required sign-off on screening criteria pre-Close. | ||||||
Operations | Producer Management | Agency Contracting and Licensing | Service Recipient will assume on Closing Date. | Service Recipient will take all responsibility for agency re-contracting and licensing (need to re-contract non-reciprocal companies). Service Recipient may require Service Provider to provide data entry to the Producer Management system for a period of time (up to the length of the TSA) due to data segregation issues. In this event a TSA will be established for this data entry/maintenance service. Service Recipient requests producer data file from the Service Provider to facilitate agency licensing with the Service Recipient’s vendor. | 2-3 FTE. Service Recipient may hire staff at their option. |
Exhibit A-25
Department | Unit | Description of Activity | Timeframe (1) | Issues/Comment | FTE Estimate | |||||
Human Resources | Service Recipient will be responsible for all human resource services. | |||||||||
Claims | Staff Counsel | Lawsuits handled by Service Recipient staff counsel | Decision post announcement with resolution pre-close. Expected that Service Recipient will take appropriate numbers of Staff Counsel. | 81 FTE; 10 locations and ~50% split PL/CL although that split varied by office. | ||||||
Claims | FNOL | Claims intake | Service Recipient handles task directly without Service Provider involvement. No requests have been made yet by Service Recipient to Service Provider. | Possible telecommunications costs (Service Recipient will need some numbers and assistance rerouting calls that come into call center; they also want to acquire any dedicated PL phone numbers) and software licensing fees (FNOL application). |
Exhibit A-26
Department | Unit | Description of Activity | Timeframe (1) | Issues/Comment | FTE Estimate | |||||
Corporate Actuarial | Complete year end statutory work | Timing dependent - no requests have yet been made by Buyer of Seller re: | ||||||||
Business loss reserves data. | ||||||||||
Corporate Actuarial | Reserving | Detail loss information from corporate databases — used for loss reserve analysis | Service recipient will assume responsibility for reserving. No requests have yet been made by Buyer of Seller re: Business loss reserves data. | Service Recipient will require historical data within a short time period post Close. | ||||||
Corporate Actuarial | Pricing | Provide any relevant pricing databases — premium and loss information, rate history etc - used for pricing indications | Service recipient will assume responsibility for Pricing. Primarily expected to be data feed and data access similar to Management reporting. No Requests have been made yet by Service Recipient to Service Provider. | |||||||
Corporate Actuarial | IBNR and ULAE | Service Recipient has not requested of Service Provider and it is expected that Loss Reserving is entirely a Service Recipient task. | ||||||||
Corporate Actuarial | Corporate Reserving analysis specifically including support for year end opinions for reciprocals | No Requests have been made yet by Service Recipient to Service Provider. | ||||||||
Legal | Service Recipient will be responsible for all legal services. |
Exhibit A-27
Department | Unit | Description of Activity | Timeframe (1) | Issues/Comment | FTE Estimate | |||||
Finance | Statutory Reporting | Prepare legal entity statutory statements Service Recipient will be performing all accounting and financial reporting responsibilities directly utilizing their general ledger system and financial reporting tools with data specified herein supplied by Service Provider. | Service Recipient will assume responsibility for preparation of statements and statutory reporting. | |||||||
Finance | Abandoned Property/ Escheatment | Clear old outstanding checks | Service Recipient will assume responsibility with Service Provider providing detail on historical outstanding drafts after the first quarter close following transaction. Massachusetts deadline is June 30 with reporting required by November 1. Unlikely that TSA will be needed unless transaction does not close until September 2010. Service Recipient will need to do due diligence on the files prepared by Service Provider in July and August. Service Provider needs to consider effect if significant problems encountered with data file. | Service Provider to provide details supporting outstanding transactions prior to close. Subject to due diligence review by Service Recipient following close. Dependant upon banking relationship | ||||||
Finance | Investment Accounting | Investment transaction accounting | Service Recipient will assume on Closing Date. | Service Provider not to trade two weeks prior to close — Change of custodian to take place on date of transaction close — Mellon to State Street. Service Recipient s Investment managers to take over all investment accounts at close. |
Exhibit A-28
Department | Unit | Description of Activity | Timeframe (1) | Issues/Comment | FTE Estimate | |||||
Finance | 1099 Reporting | 1099 reporting to be done by Service Recipient with supporting details from Service Provider for pre-close time frame. | Service Provider to support in time for October and Year End requirements | |||||||
Finance | Sox/Model Audit Rule and Internal Audit | Service Recipient will assume on Closing Date. |
Exhibit A-29
i. | Base Utilization. “Base Utilization” is comprised of the following components based on the average of three (3) complete months of actuals for the following measures: |
a. | “Mainframe Base Utilization” means the total of all CPU cycles (MIPS) used by the Business at peak hour. | ||
b. | “AIX Base Utilization” is defined as the total Rperf of the indentified servers at peak utilization. | ||
c. | “Network Base Utilization” is defined as the 95th percentile utilization of the primary WAN link for the applicable office, at peak time, for Buyer/Acquired Company office being supported by Service Provider on a 10 second level for a 24 hour period. | ||
d. | “ID Base Utilization” is defined as the total number of IDs (both internal IDs and Agent IDs) provisioned on systems used by the Business. | ||
e. | “Email Mailbox Utilization” is defined as the total number of email mailboxes allocated to systems by the Business. | ||
f. | “Help Desk Base Utilization” is defined as the total number of calls (both internal and external calls) placed to the help desk related to the systems used by the Business. | ||
g. | “Portal Utilization” is defined as the total number of “page views” averaged over normal business hours supporting the Business. | ||
h. | “Windows Utilization” is defined as the total number or fraction thereof of windows servers supporting the Business. | ||
i. | “Comparative Rater Utilization” is defined as the total number of quote transactions. |
ii. | Fees. The Fee for Base Hardware Charges covers only Base Utilization levels and will be published within thirty (30) days after the completion of the baselining described inSection 1. In the case of Network Base Utilization, the Base Hardware Charge covers both the primary and backup circuits to any Buyer/Acquired Company office being supported by Service Provider. This Fee will be adjusted over the Term based onSection 3 and4. | ||
iii. | Base Utilization Exceeded. Monthly reports will be created and reviewed with Service Recipient to determine if the Base Utilization has been exceeded. If Base Utilization has been exceeded, the Fees will be adjusted in accordance withSection 4. Base Utilization will be defined as having been exceeded if any one of the following has occurred over a thirty (30) day time period: |
a. | Mainframe Base Utilization has increased by 5% or more above the Base Utilization for the applicable thirty (30) day time period. | ||
b. | AIX Base Utilization has increased by 5% or more for the applicable thirty (30) day time period. |
Exhibit A-30
c. | Network Base Utilization (WAN) link to any office has exceeded the base measure whereby any of the following occur a) the utilization of any specific link during the peak time increases by more than 5% above the Base Utilization or b) employees response times are negatively impacted and a mutual agreement has been concluded to upgrade whatever components are required to perform at the Base Utilization rate for the applicable thirty (30) day time period. | ||
d. | ID Base Utilization has increased by more than 5% above the Base Utilization for the applicable thirty (30) day time period. | ||
e. | Email Mailbox Utilization accounts has increased by more than 5% above the Base Utilization for the applicable thirty (30) day time period. | ||
f. | Help Desk Base Utilization has increased by 5% above the Base Utilization for the applicable thirty (30) day time period. | ||
g. | Portal Utilization has increased by 5% above the Base Utilization for the applicable thirty (30) day time period. | ||
h. | Windows Utilization has increased above the base number of windows servers. | ||
i. | Comparative Rater Utilization has increased by 5% above the Base Utilization for the applicable thirty (30) day time period. |
iv. | Fee Adjustments. If Base Utilization has been exceeded (as provided in Section 3), Service Recipient shall be responsible for the associated Incremental Hardware Charges. | ||
v. | Request for Capacity, Disk Space and Projects. At any time, Service Recipient can request (i) additional capacity, (ii) excess disk space (above normal business increases, which are included in the Base Utilization Fees) or (iii) increased support which requires additional IT support (e.g., adding an application, which may also require additional servers, capacity, etc.), solely at Service Recipient’s cost. In each case, Service Recipient will follow the standard change request process agreed upon by the Parties, with costs allocated on a pass through basis and such change will be subject to the parties’ agreement to a Change Request for such change. | ||
vi. | Production Support & Operations. |
a. | Production Problems. In the event of a production problem (i.e., interruption to a service that impacts the Business) (for example, system performance or system outage), Service Provider is entitled, without notice to Service Recipient to take whatever steps necessary to correct the problem and restore the system to normal operation. Once the problem has been resolved, it will then be determined if the corrective action has caused the system to exceed any Base Utilizations. If the Base Utilization has been exceeded, the Fees will be adjusted in accordance withSection 4. Notifications will be sent out when the condition is first identified and throughout the outage to update the status. A post-mortem will be held twenty-four (24) hours after the root cause is identified. | ||
b. | Capacity Planning. During normal operations, if Service Provider notices any of the above measures are on an increasing trend, Service Recipient will be notified |
Exhibit A-31
and a mutually agreed upon plan will be implemented to avoid any system outages. | |||
c. | Systems Uptime Report. A daily systems operator log will be sent out daily before 6 am ET. This report will provide a status of all systems used by the Business. |
Exhibit A-32
March 13th - 14th | 6:00 p.m. ET Saturday thru | |||
7:00 a.m. ET Monday | ||||
May 15th - 16th | 6:00 p.m. ET Saturday thru | |||
7:00 a.m. ET Monday |
Exhibit B-1
June 19th – 20th | 6:00 p.m. ET Saturday thru | |||
7:00 a.m. ET Monday | ||||
July 10th – 11th | 6:00 p.m. ET Saturday thru | |||
7:00 a.m. ET Monday | ||||
September 18th – 19th | 6:00 p.m. ET Saturday thru | |||
7:00 a.m. ET Monday | ||||
October 23rd – 24th | 6:00 p.m. ET Saturday thru | |||
7:00 a.m. ET Monday | ||||
November 13th – 14th | 6:00 p.m. ET Saturday thru | |||
7:00 a.m. ET Monday | ||||
December 18th – 19th | 6:00 p.m. ET Saturday thru | |||
7:00 a.m. ET Monday |
Exhibit B-2
Target | ||||
Type | Metric* | |||
System Availability | 98.25 | % | ||
Agent Portal Availability | 99.0 | % | ||
Successful Production Changes | 98.5 | % | ||
Unsuccessful Production Changes | 1.3 | % | ||
Backed out Production Changes | .2 | % |
* | As an average for systems & locations utilized by Service Recipient. |
Exhibit B-3
Severity -1 | A problem that denies or substantially impacts the availability or generally accepted usage of a product or service critical to the delivery of Service Provider’s or Service Recipient’s business to a number of IT customers. There is no reasonable workaround for this problem. | |
Examples include the following: | ||
o Application system error or failure by more than 1 person | ||
o CICS region down or an application within a region down | ||
o Network unavailable — inability to connect to network resources | ||
o Application or Network Response Time — Irrespective of the cause of the delay | ||
o Portal, including Onebeacon.com site | ||
o Power failure | ||
o Servers, including print servers | ||
o Software Communications — Email (internal and external), Internet or Intranet access | ||
o Third Party Vendors — Examples include — MCI, Verizon, Equifax, ISO | ||
o Voice — includes any toll free numbers or telephone outage | ||
Severity -1A | This severity code is only to be used when a severity one outage has been resolved, however, root cause analysis continues across BTS. Once the root cause is determined, the incident ticket is updated and closed. The owner of the outage is responsible to notify the Severity One Manager and Enterprise Support Center. | |
Severity -1X | A problem that does not deny availability of a product or service; however; the issue impacts premium, billing, commissions or is of a financial nature which critically impedes the customer’s processing of business. | |
Severity -2 | A problem which may deny the use of a critical product or service threatening future productivity. |
Exhibit B-4
Severity -3 | Urgent high impact problem. This type of problem may impact as few as one person and disrupts a group’s work methods and productivity. | |
Severity -4 | An important issue but does not have a significant current productivity impact. | |
Severity -5 | A service request that has a discretionary time value in which to respond. | |
Severity -6 | An enhancement or modification of a product, system or service. |
Problem | Target | Target | ||
Type | Response Time | Resolution Time | ||
Severity – 1 | 15 Min | 2 Hours | ||
Severity – 2 | 1 Hour | 8 Hours | ||
Severity – 3 | 4 hours | 16 hours (2 days) | ||
Severity – 4 | 8 hours | 24 hours (3 days) | ||
Severity – 5 | 2 Days | >10 Days | ||
Severity – 6 | 2 Days | >10 Days |
Exhibit B-5
Exhibit B-6
Exhibit C-1
XXXXXXX
Exhibit D-1
ONEBEACON INSURANCE GROUP LLC | ||
By | ||
Printed Name: | ||
Title: | ||
Date: | ||
ACCEPTED: |
Exhibit D-2
[AUDITOR] | ||
By | ||
Printed Name: | ||
Title: | ||
Date: | ||
Exhibit D-3
Personal Lines Software Platforms and
Personal Lines Hardware
1. | Personal Lines Software Platforms (key components as of the Effective Date): | |
– | IAF (Insurance Applications Framework) | |
– | IAF Front-end | |
– | Legacy Policy Admin Systems |
• | Master Driver II (MDII) | ||
• | Home Protector (Property) | ||
• | Custom-Pac (CPAC) | ||
• | Dwelling Fire | ||
• | Personal Protector (Umbrella System) | ||
• | Harbormaster |
– | Producer Management | |
– | Claims |
• | CWS (Claims Workstation) | ||
• | ACTS (Claims Financial) |
– | Billing | |
– | Data Warehouse | |
– | EDS (Electronic Document Storage)/Document Creation/PDF Rendering | |
2. | Personal Lines Hardware (key components as of the Effective Date): | |
– | AIX servers (2) | |
– | Wintel Servers (170) | |
– | IBM Mainframe (3) |
Exhibit E-1
Page(s) | ||||
1. Deposit of Assets to the Trust Account | 2 | |||
2. Withdrawal of Assets from the Trust Account | 2 | |||
3. Redemption, Investment and Substitution of Assets | 3 | |||
4. The Income Account | 3 | |||
5. Corporate Actions | 4 | |||
6. Additional Rights and Duties of the Trustee | 4 | |||
7. The Trustee’s Compensation, Expenses, etc | 6 | |||
8. Resignation or Removal of the Trustee | 7 | |||
9. Termination of the Trust Account | 8 | |||
10. Definitions | 8 | |||
11. Governing Law; Etc | 9 | |||
12. Successors and Assigns | 9 | |||
13. Severability | 10 | |||
14. Entire Agreement | 10 | |||
15. Amendments | 10 | |||
16. Notices, etc | 10 | |||
17. Headings | 11 | |||
18. Counterparts | 11 | |||
19. USA Patriot Act | 12 | |||
20. Required Disclosure | 12 |
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Page(s) | ||||
21. Representations | 12 | |||
EXHIBIT A List of Assets Deposited to the Trust Account | ||||
EXHIBIT B Form of Withdrawal Notice |
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(a) | Grantor hereby establishes trust account number [ ] in the name of Trustee for the benefit of Beneficiary (the “Trust Account”) upon the terms and conditions hereinafter set forth. All funds and securities deposited and held in the Trust Account, together with the proceeds thereof, all investments of such assets and proceeds in other assets, and all substitutions of such assets and proceeds for other assets are (except as set forth in Section 5) referred to individually as an “Asset” and collectively as the “Assets.” | ||
(b) | Trustee hereby accepts appointment as trustee and agrees to establish and maintain |
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the Trust Account as provided hereunder and to hold the Assets at its office in the United States. | |||
(c) | The Trust Account and the related Assets shall serve to secure only Grantor’s obligations to Beneficiary under the Reinsurance Agreement, and shall not secure Grantor’s obligations to any other party. |
(a) | The Trustee shall administer the Trust Account in its name as Trustee for the Beneficiary. The Trust Account shall be subject to withdrawal by the Beneficiary solely as provided herein. | ||
(b) | The Grantor shall transfer to the Trustee, for deposit to the Trust Account, the assets listed inExhibit A hereto, and may transfer to the Trustee, for deposit to the Trust Account, such other assets as it may from time to time desire. The Assets shall consist only of cash (United States legal tender) and Eligible Securities (as hereinafter defined). | ||
(c) | The Grantor hereby represents and warrants that all Assets transferred by the Grantor to the Trustee for deposit to the Trust Account and all Assets invested at the direction of the Grantor hereunder (i) will be in such form that the Beneficiary whenever necessary may, and the Trustee upon direction by the Beneficiary will, negotiate any such Assets without notice to, or consent or signature from, the Grantor or any person in accordance with the terms of this Agreement and (ii) will consist only of cash and Eligible Securities. |
(a) | Without notice to or the consent of the Grantor, the Beneficiary shall have the right, at any time and from time to time, to withdraw from the Trust Account, upon written notice to the Trustee in substantially the form ofExhibit B hereto (a “Withdrawal Notice”), such Assets as are specified in such Withdrawal Notice. The Withdrawal Notice may designate a third party (the “Designee”) to whom Assets specified therein shall be delivered. The Beneficiary need present no statement or document in addition to a Withdrawal Notice in order to withdraw any Assets. | ||
(b) | Upon receipt of a Withdrawal Notice, the Trustee shall immediately take any and all steps necessary to transfer the Assets specified in such Withdrawal Notice, and shall deliver such Assets to or for the account of the Beneficiary or such Designee |
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as specified in such Withdrawal Notice. | |||
(c) | In the absence of a Withdrawal Notice or an Investment Order (as defined in Section 4 of this Agreement), the Trustee shall allow no substitution or withdrawal of any Asset from the Trust Account. |
(a) | The Trustee shall surrender for payment all maturing Assets and all Assets called for redemption and deposit the principal amount of the proceeds of any such payment to the Trust Account. | ||
(b) | From time to time, at the written order and direction of the Grantor or its designated investment advisor, the Trustee shall invest Assets in the Trust Account in Eligible Securities. | ||
(c) | From time to time, subject to the prior written approval of the Beneficiary, the Grantor may direct the Trustee to substitute Assets of equal value for other Assets presently held in the Trust Account. The Trustee shall have no responsibility whatsoever to determine the value of such substituted securities or that such substituted securities constitute Eligible Securities. | ||
(d) | All investments and substitutions of securities referred to in sections 4(b) and 4(c) above shall be in compliance with the definition of “Eligible Securities” in Section 11 of this Agreement. Any instruction or order concerning such investments or substitutions of securities shall be referred to herein as an “Investment Order”. The Trustee shall execute Investment Orders and settle securities transactions by itself or by means of an agent or broker. The Trustee shall not be responsible for any act or omission, or for the solvency, of any such agent or broker. | ||
(e) | When the Trustee is directed to deliver Assets against payment, delivery will be made in accordance with generally accepted market practice. | ||
(f) | Any loss incurred from any investment pursuant to the terms of this Section 4 shall be borne exclusively by the Trust Account. |
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(a) | The Trustee shall notify the Grantor and the Beneficiary in writing within 10 days following each deposit to, or withdrawal from, the Trust Account. | ||
(b) | Before accepting any Asset for deposit to the Trust Account, the Trustee shall determine that such Asset is in such form that the Beneficiary whenever necessary may, or the Trustee upon direction by the Beneficiary will, negotiate such Asset without consent or signature from the Grantor or any person or entity other than the Trustee in accordance with the terms of this Agreement. | ||
(c) | The Trustee shall have no responsibility whatsoever to determine whether any Assets are or continue to be Eligible Securities. | ||
(d) | The Trustee may deposit any Assets in the Trust Account in a book-entry account maintained at the Federal Reserve Bank of New York or in depositories such as the Depository Trust Company and the Participants Trust Company. The Trustee shall have no liability whatsoever for the action or inaction of any depositary or for any losses resulting from the maintenance of Eligible Securities with a depositary. |
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Assets may be held in the name of a nominee maintained by the Trustee or by any such depository. | |||
(e) | The Trustee shall accept and open all mail directed to the Grantor or the Beneficiary in care of the Trustee. | ||
(f) | The Trustee shall furnish to the Grantor and the Beneficiary a statement of all Assets in the Trust Account no later thano days after the end of each calendar month, which statement shall include the Trustee’s determination of the fair market value of such Assets as of the end of such calendar month. | ||
(g) | Upon the request of the Grantor or the Beneficiary, the Trustee shall promptly permit the Grantor or the Beneficiary, their respective agents, employees or independent auditors to examine, audit, excerpt, transcribe and copy, during the Trustee’s normal business hours, any books, documents, papers and records relating to the Trust Account or the Assets. | ||
(h) | Unless otherwise provided in this Agreement, the Trustee is authorized to follow and rely upon all instructions from time to time by the Grantor, the Beneficiary and any relevant investment advisor of the Grantor; respectively, and by attorneys-in-fact acting under written authority furnished to the Trustee by the Grantor or the Beneficiary, including, without limitation, instructions given by letter, facsimile transmission, telegram, teletype, cablegram or electronic media, if the Trustee believes such instructions to be genuine and to have been signed, sent or presented by the proper party or parties. The Trustee shall not incur any liability to anyone resulting from actions taken by the Trustee in reliance in good faith on such instructions, provided that it was not negligent in doing so. The Trustee shall not incur any liability in executing instructions from any attorney-in-fact prior to receipt by it of notice of the revocation of the written authority of the attorney-in-fact. Each of the Grantor and the Beneficiary acknowledges and agrees that it is fully informed of the protections and risks associated with the various methods of transmitting instructions to the Trustee, and that there may be more secure methods of transmitting instructions than the method selected by the sender. Each of the Grantor and the Beneficiary agrees that the security procedures, if any, to be followed in connection with a transmission of instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances. | ||
(i) | The duties and obligations of the Trustee shall only be such as are specifically set forth in this Agreement, as it may from time to time be amended, and no implied duties or obligations shall be read into this Agreement against the Trustee. The Trustee shall be liable for its own negligence, willful misconduct or lack of good |
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faith. | |||
(j) | No provision of this Agreement shall require the Trustee to take any action which, in the Trustee’s reasonable judgment, would result in any violation of this Agreement or any provision of law. In respect thereto, the Trustee may obtain the advice of counsel and shall be fully protected with respect to anything done or omitted by it in good faith in conformity with such advice, provided that it was not negligent in doing so. | ||
(k) | Anything in this Agreement to the contrary notwithstanding, in no event shall the Trustee be liable under or in connection with this Agreement for indirect, special, incidental, punitive or consequential losses or damages of any kind whatsoever, including but not limited to lost profits, whether or not foreseeable, even if the Trustee, has been advised of the possibility thereof and regardless of the form of action in which such damages are sought. | ||
(l) | The Trustee shall not be responsible for the existence, genuineness or value of any of the Assets or for the validity, perfection, priority or enforceability of the liens in any of the Assets, whether impaired by operation of law or by reason of any action or omission to act on its part hereunder, except to the extent such action or omission constitutes negligence, bad faith or willful misconduct on the part of the Trustee, for the validity of title to the Assets, for insuring the Assets or for the payment of taxes, charges, assessments or liens upon the Assets. | ||
(m) | The Trustee shall not incur any liability for not performing any act or fulfilling any duty, obligation or responsibility hereunder by reason of any occurrence beyond the control of Trustee, including, but not limited to, any act or provision of any present or future law or regulation or governmental authority, any act of God or war or terrorism, accidents, labor disputes, loss or malfunction of utilities or computer software or hardware, or the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility. |
(a) | The Grantor shall pay the Trustee, as compensation for its services under this Agreement, a fee computed at rates determined by the Trustee from time to time and communicated in writing to the Grantor. The Grantor shall pay or reimburse the Trustee for all of the Trustee’s expenses and disbursements in connection with its duties under this Agreement (including attorney’s fees and expenses), except any such expense or disbursement as may arise from the Trustee’s negligence, willful misconduct, or lack of good faith. The Trustee shall be entitled to deduct its compensation and expenses from payments of dividends, interest and other income |
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in respect of the Assets held in the Income Account. The Grantor hereby indemnifies the Trustee for, and holds it harmless against, any loss, liability, costs or expenses (including attorney’s fees and expenses) incurred or made without negligence, willful misconduct or lack of good faith on the part of the Trustee, arising out of or in connection with the performance of its obligations in accordance with the provisions of this Agreement, including any loss, liability, costs or expenses arising out of or in connection with the status of the Trustee and its nominee as the holder of record of the Assets. The Grantor hereby acknowledges that the foregoing indemnity and Grantor payment and reimbursement obligations shall survive the resignation or discharge of the Trustee or the termination of this Agreement and hereby grants the Trustee a lien, right of set-off and security interest in the funds in the Income Account for the payment of any claim for compensation, reimbursement or indemnity hereunder. | |||
(b) | No Assets shall be withdrawn from the Trust Account or used in any manner for paying compensation to, or reimbursement or indemnification of, the Trustee. |
(a) | The Trustee may resign at any time by giving not less than 90 days’ written notice thereof to the Beneficiary and to the Grantor. The Trustee may be removed by the Grantor’s delivery of not less than 90 days’ written notice of removal to the Trustee and the Beneficiary. Such resignation or removal shall become effective on the acceptance of appointment by a successor Trustee and the transfer to such successor Trustee of all Assets in the Trust Account in accordance with paragraph (b) of this Section 9. | ||
(b) | Upon receipt by the proper Parties of the Trustee’s notice of resignation or the Grantor’s notice of removal, the Grantor and the Beneficiary shall appoint a successor Trustee. Any successor Trustee shall be a bank that is a member of the Federal Reserve System or chartered in the State of New York and shall not be a Parent, a Subsidiary or an Affiliate of the Grantor or the Beneficiary. Upon the acceptance of the appointment as Trustee hereunder by a successor Trustee and the transfer to such successor Trustee of all Assets in the Trust Account, the resignation or removal of the Trustee shall become effective. Thereupon, such successor Trustee shall succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Trustee, and the resigning or removed Trustee shall be discharged from any future duties and obligations under this Agreement, but the resigning or removed Trustee shall continue after such resignation or removal to be entitled to the benefits of the indemnity provided herein for the Trustee. |
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(a) | The Trust Account and this Agreement, except for the indemnity provided herein, may be terminated only after (i) the Grantor or the Beneficiary has given the Trustee written notice of its intention to terminate the Trust Account (the “Notice of Intention”), and (ii) the Trustee has given the Grantor and the Beneficiary the written notice specified in paragraph (b) of this Section 10. The Notice of Intention shall specify the date on which the notifying Party intends the Trust Account to terminate (the “Proposed Date”). | ||
(b) | Within 3 days following receipt by the Trustee of the Notice of Intention, the Trustee shall give written notification (the “Termination Notice”) to the Beneficiary and the Grantor of the date (the “Termination Date”) on which the Trust Account shall terminate. The Termination Date shall be (a) the Proposed Date if the Proposed Date is at least 30 days but no more than 45 days subsequent to the date the Termination Notice is given; (b) 30 days subsequent to the date the Termination Notice is given, if the Proposed Date is fewer than 30 days subsequent to the date the Termination Notice is given; or (c) 45 days subsequent to the date the Termination Notice is given, if the Proposed Date is more than 45 days subsequent to the date the Termination Notice is given. | ||
(c) | On the Termination Date, upon receipt of written approval of the Beneficiary, the Trustee shall transfer to the Grantor any Assets remaining in the Trust Account, at which time all liability of the Trustee with respect to such Assets shall cease. |
11. | Definitions. |
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12. | Governing Law; Etc. |
13. | Successors and Assigns. |
9
14. | Severability. |
15. | Entire Agreement. |
16. | Amendments. |
17. | Notices, etc. |
1 Beacon Lane
Canton, MA 02021
Attention: Bradford W. Rich
10
71 S. Wacker Drive
Chicago, IL 60606
Facsimile: (312) 701-7711
Attention: Edward S. Best
c/o Tower Group, Inc.
120 Broadway, 31st Floor
New York, NY 10271
Attention: General Counsel
1301 Avenue of the Americas
New York, NY 10019
Facsimile: (212) 259-6333
Attention: Jeffrey S. MacDonald
11
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[OB ENTITY],as Grantor | ||||
By: | ||||
Name: | ||||
Title: | ||||
[YORK INSURANCE COMPANY OF MAINE],as Beneficiary | ||||
By: | ||||
Name: | ||||
Title: | ||||
[ ], as Trustee | ||||
By: | ||||
Name: | ||||
Title: | ||||
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Re: | Withdrawal Notice re Trust Agreement dated as of [...], 2010, among [OB ENTITY], as Grantor, [YORK INSURANCE COMPANY OF MAINE], as Beneficiary, and [ ], as Trustee, as amended, supplemented or otherwise modified (the “Trust Agreement”). |
By: | ||||
Name: | ||||
Title: |