exv10w14






Exhibit 10.14




LIMITED ASSIGNMENT DISTRIBUTION PROGRAM AGREEMENT




Between




AutoOne Insurance Company, Servicing Carrier




And




Lebanon Mutual Insurance Company, Excused Carrier




PENNSYLVANIA




     This Agreement (“Agreement”), made effective as of the 1st day of January, 2007
between AutoOne Insurance Company (hereinafter called
“Servicing Carrier”), an
insurance company authorized to write insurance in Pennsylvania, and Lebanon Mutual Insurance
Company (hereinafter called the “Excused Carrier”), an insurance company authorized to write
insurance in Pennsylvania, having offices at 137 West Penn Avenue, P.O Box 2005, Cleona, PA
17042.



Preamble




     I. The Servicing Carrier has been approved by the Pennsylvania Assigned Risk Plan
Governing Committee as a Servicing Carrier under the Limited Assignment Distribution Program
(hereinafter called the “LAD program”).



     II. The Excused Carrier is eligible and elects to be excused from its obligations to
accept certain new assignments under the Pennsylvania Assigned Risk Plan (hereinafter called
“PA ARP”), and the Excused Carrier desires to enter into this Agreement with the Servicing
Carrier.



     NOW, THEREFORE, in consideration of the mutual covenants herein contained, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:



 









 





Transfer of PA ARP Assignments




     1.1 The Servicing Carrier hereby agrees to accept assignments from PA ARP that
would otherwise be made to the Excused Carrier during the term of this Agreement, on
the class of business covered by this Agreement, subject to the limitation set forth in
this Agreement and as required by law.



     1.2 The class of business covered by this Agreement is those risks as defined in
Commercial Automobile Part, Section 19 of the PA ARP Plan Manual, submitted to the PA
ARP on or after January 1, 2006.



     1.3 The amount of assignments which the Servicing Carrier will accept under the
terms hereof shall be the quota of assignments during the term of this Agreement which
the Excused Carrier is required by law to write in the Commonwealth of Pennsylvania.




	1.4	 	Each party (an Indemnitor) shall indemnify and hold harmless the other party,
its affiliates, and their respective officers, directors, employees and agents
(collectively the Indemnitee) from and against any and all losses, obligations,
costs, liabilities, damages, fines, actions, suits, causes of action, claims,
demands, settlements, judgments or any other expenses, including, but not limited to,
reasonable attorney’s fees and expenses, which are asserted against, imposed upon or
incurred or suffered by such Indemnitee, and which arise out of or result from:






	 	a.	 	The failure of the Indemnitor, its affiliates or
any of their respective officers, directors, employees or agents
properly to discharge any of their duties or obligations hereunder, or
to observe or comply with any terms, conditions and limitations
contained in this Agreement pertaining to its authority or rights
hereunder.
	 
	 	b.	 	The breach or failure to observe any covenant,
condition, warranty,




 









 






	 	 	 	representation, or limitation contained in this Agreement by the
Indemnitor, its affiliates or any of their respective officers,
directors, employees or agents;
	 
	 	c.	 	The violation of any law, rule, regulation, order or
other legal authority in connection with this Agreement by the Indemnitor,
its affiliates or any of their respective officers, directors, employees
or agents; and
	 
	 	d.	 	The negligence, gross negligence, bad faith or
willful or wanton behavior in connection with this Agreement by the
Indemnitor, its affiliates or any of their respective officers,
directors, employees or agents.




Contributory or comparative negligence or other fault of the Indemnitee shall not be excused by
reason of the indemnification provided herein. The Indemnitor will not be required to indemnify
the Indemnitee for losses resulting in whole or in part from the Indemnitee’s negligence or
other fault. The Indernnitee shall notify the Indemnitor within ninety (90) days of receipt of
any claim or lawsuit for which it seeks indemnity pursuant to this provision and, at the option
of the Indemnitor, the Indemnitor shall control the defense of any such lawsuit. If the
Indemnitee fails to notify the Indemnitor of any action within such ninety (90) day period
and/or fails to cooperate with the Indemnitor in the defense of such action, the Indemnitor
shall be relieved of its indenmification obligations hereunder. If the Indemnitor assumes the
defense of any such action, it shall not be liable to the Indemnitee for any legal or other
expenses subsequently incurred by the Indemnitee in connection with such action absent the
Indemnitor’s approval of such expense.



This Article shall survive termination of the Agreement.




Buy-Out Fee and Terms of Payment




 









 







2. The Excused Carrier shall pay to the Servicing Carrier a fee (the “Buy-Out Fee”) by
application of the factor set forth in Exhibit A to the Excused Carrier’s total quota of
assignments (in premium dollars) under the PA ARP for the term of this Agreement. The estimated
Buy-Out Fee, which is paid on a QUARTERLY basis, is to be paid within thirty (30) days after
billing beginning with the effective date of this contract and QUARTERLY thereafter, is based on
the Excused Carrier’s then current PA ARP basic quota share of the Other than Private Passenger
(OTPP) estimated premium volume as calculated using the PA ARP published estimate of premium
volume by calendar year. When the PA ARP issues the Plan Annual Report the initial fee shall be
adjusted to represent the E;ccused Carrier’s actual PA ARP share and the actual premium volume
of the OTPP portion_of the PA ARP. This subsequent adjustment may result in additional charge or
refund which shall be calculated and paid to the applicable party within thirty (30) days
following the PA ARP’s publication of the actual premium volume for the applicable calendar
year.




Representation and Warranties




     3.1 The Servicing Carrier hereby warrants and represents that is has been approved by the
Pennsylvania Assigned Risk Plan Governing Committee to act as a Servicing Carrier under the LAD
Program.



     3.2 The Excused Carrier hereby warrants and represents that it is eligible for
participation in the LAD Program as an Excused Carrier.



Duration of Agreement: Cancellation




     4.1 This Agreement shall become effective on the date set forth at the beginning of this
Agreement, or on the date this Agreement is approved by the Pennsylvania Assigned Risk Plan
Governing Committee, whichever is later, and shall continue in force and effect until
December 31, 2007.



 









 





     4.2 Beginning on January 1, 2008 the Agreement shall be automatically renewed for
successive one (1) year terms unless either party sends the other written notice of non-renewal
at least ninety (90) days prior to the renewal effective date.



     4.3 Notwithstanding the foregoing provisions, this Agreement shall terminate at such
earlier date as may be required by law, including, without limitation, any provisions of the
Pennsylvania Insurance Law, the regulations of the Pennsylvania Insurance Department, the rules
of PA ARP, or the lawful order or decree of the Pennsylvania Insurance Department or the PA ARP,
provided, however, that the period within which either party hereto may object to or appeal from
any such order or decree shall have expired.



     4.4 The termination provisions hereof shall not be construed to affect the period for
which the Servicing Carrier must write insurance for assureds assigned to it tinder this
Agreement, it being understood that the rules of the PA ARP, presently require that the
Servicing Carrier issue policies to each assured assigned to it under this Agreement for a
period of three (3) years.



Notice




     5.1 All notices required or otherwise given hereunder shall be in writing, signed by the
party giving notice, and delivered, postage paid, by USPS Certified or Registered Mail,
return receipt requested, or by a nationally recognized overnight courier, to the notice
recipient’s address provided in this Section 5.1.



	 	 	 
	If to Servicing Carrier:

	 	If to Excused Carrier:
	 
	 	 
	AutoOne Insurance Company c/o

	 	Lebanon Mutual Insurance Company 
	OneBeacon Insurance Group One

	 	137 West Penn Avenue
	Beacon Street

	 	P.O. Box 2005
	Boston, MA 02108

	 	Cleona, PA 17042
	 
	 	 
	Attn: General Counsel

	 	Attn: President






 









 





     5.2 Notwithstanding the provisions of Section 5.1 above, a notice shall be deemed to
have been properly given if the party to which it is directed signs a copy of such notice
and returns it to the party giving notice.



Successors and Assigns




     6. This Agreement cannot be assigned without the written consent of both parties.



Entire Agreement Amendment




     7.1 This Agreement, together with Exhibit A attached hereto, constitutes the entire
agreement among the parties hereto with respect to the rights established herein.



     7.2 This Agreement may not be changed orally, and any modification, amendment or repeal
of this Agreement must be in writing and shall be signed by the party against whom it is to
be enforced.



     7.3 This Agreement supersedes all prior agreements among the parties with respect to
the subject matter hereof, and all prior agreements are of no further force or effect.



Arbitration




     8.1 All disputes or differences arising out of the interpretation of this Agreement
shall be submitted to the decision of two arbitrators, one to be chosen by each party, and in
the event of the arbitrators failing to agree, to the decision of an umpire to be chosen by
the arbitrators. The arbitrators and umpire shall be disinterested active or retired
executive officials of fire or casualty insurance or reinsurance companies. If either of the
parties fails to appoint an arbitrator within one (1) month after being required by the other
party in writing to do so, or if the arbitrators fail to appoint an umpire within one (1)
month of a




 









 







request in writing by either party for them to do so, such arbitrators or umpire, as the case
may be, shall at the request of either party be appointed by a Justice of the Supreme Court
of the State of New York.




     8.2 The arbitration proceeding shall take place in New York, New York. The applicant shall
submit its case within one (1) month after the appointment of the arbitrators, and the
respondent shall submit its reply within one (1) month after the receipt of the applicant’s
case. The arbitrators and umpire are relieved from all judicial formality and may abstain from
following the strict rules of law. They shall settle any dispute under this Agreement according
to an equitable rather than a strictly legal interpretation of its terms.



     8.3 Their written decision shall be provided to both parties and shall be. final and not
subject to appeal.



     8.4 Each party shall bear the expenses of his arbitrator and shall jointly and equally
share with the other the expenses of the umpire and of the arbitration.



     8.5 This article shall survive the termination of this Agreement.



Gender, Singular and Plural




     9. The use of any one or more genders shall be construed to include all other genders,
unless the context clearly indicates that less than all the genders are intended. The use of
the singular or of the plural shall be construed to include both the singular and the plural
unless the context clearly indicates that only the singular or the plural is intended.



 









 





Captions




     10. Captions in this Agreement are inserted for ease of reference only and shall not be
used in construing the terms of this Agreement.



Severability




     11. If any part of this Agreement is determined to be invalid, the validity of
this Agreement shall not be affected and the parties agree that all remaining parts
shall remain in full force and effect.



Governing Law




     12. This Agreement shall be governed and construed in accordance with the laws
of the State of New York, except all obligations of the Excused Carrier and the
Servicing Carrier to PA ARP will be governed and construed by Pennsylvania law.



     IN WITNESS WHEROF, we have executed this instrument on the date first written above.



	 	 	 	 	 	 	 	 	 
	Servicing Carrier:	 	 	 	Excused Carrier:
	 
	AutoOne Insurance Company	 	 	 	Lebanon Mutual Insurance Company
	 
	By:

	 	/s/ Carey D. Benson
	 	 	 	By:
	 	/s/ Rollin Rissinger
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	Carey D. Benson
	 	 	 	Name:
	 	Rollin Rissinger
	Title:

	 	President
	 	 	 	Title:
	 	President
	Date:

	 	11/3/06
	 	 	 	Date:
	 	10/31/06






 









 






LIMITED ASSIGNMENT DISTRIBUTION PROGRAM AGREEMENT




Between




AutoOne Insurance Company, Servicing Carrier




And




Lebanon Mutual Insurance Company, Excused Carrier




PENNSYLVANIA




EXHIBIT A — BUY-OUT FEE





	a.	 	The percentage to be used in calculating the Buy-Out Fee for all
accounting years beginning on or after January 1, 2007, shall be 40.0% payable
quarterly.






	b.	 	In. the event, however, the application of this percentage,
inclusive of any subsequent adjustments to the estimated premium volume,
produces a total buy-out fee of less than $1,500, the above percentage will
be increased such that the annual buy-out fee will equal $1,500.






	c.	 	The estimated Buy-Out Fee for all accounting years beginning on or
after January 1, 2007, shall be in quarterly installments, to be paid within
thirty (30) days of billing.





	 	 	 	 	 	 	 	 	 
	Servicing Carrier:	 	 	 	Excused Carrier:
	 
	AutoOne Insurance Company	 	 	 	Lebanon Mutual Insurance Company
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Carey D. Benson
	 	 	 	By:
	 	/s/ Rollin Rissinger
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	Carey D. Benson
	 	 	 	Name:
	 	Rollin Rissinger
	Title:

	 	President
	 	 	 	Title:
	 	President
	Date:

	 	11/3/06
	 	 	 	Date:
	 	10/31/06






 









 






LIMITED ASSIGNMENT DISTRIBUTION PROGRAM AGREEMENT




Between




AutoOne Insurance Company, Servicing Carrier




And




Lebanon Mutual Insurance Company, Excused Carrier




PENNSYLVANIA




AMENDMENT TO EXHIBIT B: 2008 BUY-OUT FEE



The Agreement dated January 1st 2007, between AutoOne Insurance Company (“Servicing
Carrier”) and Lebanon Mutual Insurance Company (“Excused Carrier”) is hereby amended to include
the following:





	 	a.	 	The percentage to be used in calculating the Buy-Out Fee for all
accounting years beginning on or after January 1, 2008, shall be 45 % payable
quarterly.
	 
	 	b.	 	In the event, however, the application of this percentage, inclusive of
any subsequent adjustments to the estimated premium volume, produces a total buy-
out fee of less than $1,500, the above percentage will be increased such that the
annual buy-out fee will equal $1,500.
	 
	 	c.	 	The estimated Buy-Out Fee for all accounting years beginning on or
after January 1, 2008, shall be in quarterly installments, to be paid within thirty (30) days of
billing.





	 	 	 	 	 	 	 	 	 
	Servicing Carrier:	 	 	 	Excused Carrier:
	 
	AutoOne Insurance Company	 	 	 	Lebanon Mutual Insurance Company
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Paul F. DiFrancesco
	 	 	 	By:
	 	/s/ Rollin P. Rissinger, Jr.
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	Paul F. DiFrancesco
	 	 	 	Name:
	 	Rollin P. Rissinger, Jr.
	Title:

	 	President
	 	 	 	Title:
	 	Pres./Sec.
	Date:

	 	11-26-07
	 	 	 	Date:
	 	11/7/2007