Document:

ex101a9302022

Exhibit 10.1  Execution Version  Certain identified information marked with “[***]” has been omitted from this document  because it is both (i) not material and (ii) the type that the registrant treats as private or  confidential.          AMENDED AND RESTATED  LOSS PORTFOLIO TRANSFER  REINSURANCE AGREEMENT    by and between    ARGONAUT INSURANCE COMPANY  of Illinois    and    CAVELLO BAY REINSURANCE LIMITED  Hamilton, Bermuda      

 

  TABLE OF CONTENTS  ARTICLES PAGE  1. DEFINITIONS; INTERPRETATION ....................................................................................... 2  2. CLOSING ................................................................................................................................. 12  3. LPT COVERAGE .................................................................................................................... 12  4. ADMINISTRATION; CLAIMS COOPERATION ................................................................. 13  5. REPORTING ............................................................................................................................ 15  6. TERM OF THIS AGREEMENT .............................................................................................. 17  7. CONSIDERATION AND RECONCILIATION ...................................................................... 18  8. COLLATERAL ........................................................................................................................ 20  9. REPRESENTATIONS AND WARRANTIES ........................................................................ 24  10. CLOSING CONDITIONS ........................................................................................................ 28  11. INDEMNIFICATION .............................................................................................................. 30  12. CONFIDENTIALITY .............................................................................................................. 32  13. ACCESS TO RECORDS ......................................................................................................... 33  14. REASONABLE BEST EFFORTS; REGULATORY MATTERS .......................................... 34  15. INSOLVENCY ......................................................................................................................... 35  16. NOTICES ................................................................................................................................. 36  17. MISCELLANEOUS ................................................................................................................. 38  18. ARBITRATION ....................................................................................................................... 41  19. EXPEDITED DISPUTE RESOLUTION ................................................................................. 43  20. GOVERNING LAW ................................................................................................................ 43  21. INTERMEDIARY .................................................................................................................... 43  22. WAIVER OF DUTY OF UTMOST GOOD FAITH ............................................................... 43  ATTACHMENTS  SCHEDULE A - REPORTS .........................................................................................................   SCHEDULE B - RECONCILIATION STATEMENT FORM ....................................................   SCHEDULE C - ELIGIBLE COLLATERAL .............................................................................   SCHEDULE D - ADMINISTRATIVE RIGHTS .........................................................................   SCHEDULE E – REQUIRED REGULATORY APPROVALS ..................................................   SCHEDULE F - POLICIES .........................................................................................................           

 

  Page 1   AMENDED AND RESTATED  LOSS PORTFOLIO TRANSFER  REINSURANCE AGREEMENT  (hereinafter referred to as the “Agreement”)    by and between    ARGONAUT INSURANCE COMPANY  of Illinois  (hereinafter referred to as the “Company”)    and    CAVELLO BAY REINSURANCE LIMITED  Hamilton, Bermuda  (hereinafter referred to as the “Reinsurer”)    (each a “Party” and collectively the “Parties”)  PREAMBLE  WHEREAS:  A. The Parties entered into that certain Loss Portfolio Transfer Reinsurance Agreement, dated  as of August 8, 2022 (the “Original Agreement”), and agree that this Agreement shall  amend and restate the Original Agreement in its entirety; provided that “the date hereof,”  “the date of this Agreement” and words and phrases of similar import used herein shall  refer to the date of the Original Agreement.  B. Subject to receipt of the Required Regulatory Approvals, the Company intends to reinsure  all liabilities in respect of the Subject Business of the following affiliated insurance  companies pursuant to an inter-company reinsurance pooling agreement (the  “Intercompany Pooling Agreement”): Argonaut-MidWest Insurance Company, an Illinois  insurance company; Argonaut Great Central Insurance Company, an Illinois insurance  company; Colony Insurance Company, a Virginia insurance company; Peleus Insurance  Company, a Virginia insurance company; and Colony Specialty Insurance Company, an  Ohio insurance company.  C. The Company and the Reinsurer desire to enter into this Agreement, whereby, upon the  terms and subject to the conditions set forth in this Agreement, on the Closing Date, the  Company shall cede to the Reinsurer, and the Reinsurer shall assume from the Company,  the UNL of the Company pursuant to the terms of this Agreement.  D. The reinsurance of UNL contemplated by this Agreement will become effective on the  third Business Day following the date on which all of the conditions to Closing have been  satisfied (other than those to be satisfied on the Closing Date), including the receipt of the  Required Regulatory Approvals, as more specifically set forth in the Closing Article.  

 

  Page 2   E. On or prior to the Closing Date, the Reinsurer shall establish a trust in accordance with a  trust agreement that shall comply with all requirements necessary to provide the Company  with statutory financial statement and regulatory credit for the reinsurance ceded hereunder  and that will be negotiated in good faith by the Company and the Reinsurer and with the  Trustee on commercially reasonable terms (the “Trust Agreement”).  F. On the Closing Date, the Company shall pay into the Trust Account cash or Eligible  Investments reasonably acceptable to the Reinsurer with a fair market value equal to the  Required Collateral Amount and pay any remaining portion of the Initial Reinsurance  Premium to the Reinsurer by wire transfer of immediately available funds.  ARTICLE 1 - DEFINITIONS; INTERPRETATION  In this Agreement:  “Administrative Rights Triggering Event” shall be deemed to occur if,  as of any calendar  quarter end, the sum of Ultimate Net Loss paid by or on behalf of the Company on or after  the Effective Date plus the Net Subject Reserves as of such date exceeds an amount equal  to the Loss Corridor Detachment Point.   “Administrative Services Agreement” means an administrative services agreement to be  entered into by and between the Reinsurer (or an Affiliate thereof) and the Company on  the Closing Date to be effective upon an Administrative Rights Triggering Event with  respect to the Reinsurer’s (or such Affiliate’s) administration of all Subject Business, which  shall be in a customary form for similar services and reasonably acceptable to the Reinsurer  and the Company. The Administrative Services Agreement will include provisions related  to the transition of the administration of the Subject Business from the Company to the  Reinsurer.  “Adverse Modification Notice” has the meaning given to it in the Administration; Claims;  Cooperation Article.  “Affiliate” means, with respect to any Person, at the time in question, any other Person  Controlling, Controlled by or under direct or indirect common Control with such Person.  “Aggregate Limit” means an amount equal to one billion ninety-six million dollars  ($1,096,000,000), which amount is inclusive of the Loss Corridor .  “Aggregate Sub-Limits” means the following:  [***].  UNL shall be allocated to each such operating unit in a manner consistent with the past  practice of the Company and its Affiliates unless the Reinsurer consents in writing to a  change in that past practice.  For the avoidance of doubt, the foregoing allocations to sub- limits are solely for purposes of determining the Reinsurer’s liability hereunder and shall  not restrict the Company from allocating UNL in a manner that departs from its historical  practice for any purpose unrelated to this Agreement.  

 

  Page 3   “Applicable Law” means all applicable federal, state, local or foreign law, statute,  ordinance, rule, regulation, or principle of common law or equity imposed by or on behalf  of a Governmental Authority.    “BMA” means the Bermuda Monetary Authority.    “Business Day” means any day other than a Saturday, Sunday or any other day on which  banks are authorized or required by law to be closed in Chicago, Illinois or Hamilton,  Bermuda.  “Cap” has the meaning given to it in the Indemnification Article.   “Claims Practice Modification” has the meaning given to it in the Administration; Claims;  Cooperation Article.  “Closing” means the closing of the transaction contemplated by this Agreement.    “Closing Date” means the date on which the Closing occurs.    “Code” means the U.S. Internal Revenue Code of 1986.  “Collectible Third-party Reinsurance” means all recoverables under Third-party  Reinsurance, when and as calculated in accordance with the terms of the applicable  agreement related thereto and whether or not billed or collected and not subject to any  limits or caps within the applicable agreements.    “Commutation Amount” has the meaning given to it in the Term of this Agreement Article.  “Company Authorized Representative” means Thomas McCartney, or any other person  appointed by the Company to that role from time to time as notified in writing to the  Reinsurer.  “Company Disclosure Schedule” shall have the meaning given to it in the Representations  and Warranties Article.  “Company Extra Contractual Obligations” means all Extra Contractual Obligations other  than Reinsurer Extra Contractual Obligations.  “Company Fundamental Representations” means the representations and warranties set  forth in subparagraphs 1, 2(a), 2(b)(i) and 5 of paragraph A of the Representations and  Warranties Article.  “Confidential Information” has the meaning given to it in the Confidentiality Article.  “Control” means the power to direct the management and policies of a Person through the  ownership of securities, by contract or otherwise, and the terms “Controlling” and  “Controlled” have meanings correlative to the foregoing.   “Damages” means any and all liabilities (including, for the avoidance of doubt, taxes),  claims, damages and expenses (including reasonable attorneys’ fees and expenses);  provided, however, that Damages hereunder shall not include (i) indirect, special or  

 

  Page 4   consequential damages or lost profits (other than reasonably foreseeable consequential  damages or lost profits) or diminution in value or (ii) punitive or exemplary damages,  except, in each case, to the extent actually paid to a non-Affiliated Person pursuant to a  third party claim.  “Declaratory Judgment Expense” means all reasonable costs and expenses incurred in  connection with coverage analysis, or declaratory judgment actions or other coverage  dispute resolution procedures brought to determine the Company’s defense,  indemnification or other payment obligations that are allocable to a claim, in each case, in  respect of Subject Business, regardless of whether a Loss is paid.  Declaratory Judgment  Expense shall be deemed to have been incurred on the date of the original Loss or alleged  Loss giving rise to the applicable coverage analysis, declaratory judgment action or other  coverage dispute resolution procedure.  “Deductible” has the meaning given to it in the Indemnification Article.   “Disclosing Party” has the meaning given to it in the Confidentiality Article.  “Effective Date” means January 1, 2022.  “Eligible Investments” means cash in U.S. dollars, certificates of deposit issued by a U.S.  bank and payable in U.S. dollars, and investments permitted by the Illinois Insurance Code,  or any combination of the above and that comply with the requirements set forth in  Schedule C attached hereto; provided investments in or issued by an entity Controlling,  Controlled by, or under common Control with, either the Reinsurer or the Company shall  not exceed 5% of total investments.  “Enforceability Exceptions” has the meaning given to it in the Representations and  Warranties Article.   “Extra Contractual Obligations” means all Liabilities and any other related expenses  (including attorneys’ fees) arising out of or relating to the Subject Business other than those  arising under or relating to the express terms of and within the express limits of the Policies,  whether to principals, obligees, Governmental Authorities or any other Person, which  liabilities and expenses shall include losses in excess of policy limits, consequential,  compensatory, punitive, exemplary, special, statutory or regulatory damages (or fines,  penalties, forfeitures or similar charges of a penal or disciplinary nature), in each case, not  within the express terms and limits of the Policies, or any other form of extra contractual  damages or liabilities arising out of or relating to the Policies, including those that arise  from any alleged or actual act, error or omission, whether or not intentional, in bad faith or  otherwise, including any act, error or omission relating to: (a) the marketing, underwriting,  production, sale, issuance, cancellation, termination, novation or administration of the  Policies; (b) the investigation, defense, trial, settlement or handling of claims, benefits, or  payments arising out of or relating to the Policies; or (c) the failure to pay, or the delay in  payment of, claims, benefits or any other payments due or alleged to be due under the  Policies; provided, however, for the avoidance of doubt, “Extra Contractual Obligations”  shall not include LAE or Ex Gratia Payments to the extent such items do not relate to a  claim for extra contractual obligations.  

 

  Page 5   “Ex Gratia Payments” means ex gratia payments in respect of the Subject Business (a) to  the extent less than $10,000 or (b) in the amount of $10,000 or more solely to the extent  made with the written consent of Reinsurer (provided that Reinsurer shall consult in good  faith with the Company regarding the proposed inclusion of ex gratia payments valuing  $10,000 or more to the extent payment of such ex gratia would be reasonably likely to  reduce Losses, LAE or premiums paid in respect of Third-party Reinsurance).  “FATCA” means Sections 1471 through 1474 of the Code, any current or future  regulations or official interpretations thereof, any agreements entered into pursuant to  Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices  adopted pursuant to any intergovernmental agreement, treaty or convention among  Governmental Authorities and implementing such Sections of the Code.  “Federal Excise Tax” means the Tax imposed under Section 4371 of the Code.  “Final Reconciliation Statement” has the meaning given to it in the Consideration and  Reconciliation Article.  “Final Reinsurance Premium” has the meaning given to it in the Consideration and  Reconciliation Article.  “Governmental Authority” means any government, political subdivision, court, board,  commission, regulatory or administrative agency or other instrumentality thereof, whether  federal, state, local or foreign and including any regulatory authority which may be partly  or wholly autonomous, and any self-regulatory organization or securities exchange, and  any other entity that exercises a legislative, judicial, regulatory, administrative,  expropriation or taking power or function of or pertaining to government.  “IBNR” has the meaning given to it in the Representations and Warranties Article.   “Initial Administrative Rights” has the meaning given to it in the Administration; Claims;  Cooperation Article.  “Initial Reconciliation Statement” has the meaning given to it in the Consideration and  Reconciliation Article.  “Initial Reinsurance Premium” has the meaning given to it in the Consideration and  Reconciliation Article.  “Intercompany Pooling Agreement” has the meaning given to it in the Preamble.  “Intermediary” has the meaning given to it in the Intermediary Article.  “Letter of Credit” means any letter of credit for the benefit of the Company to secure the  Reinsurer’s obligations hereunder in customary form, and from an institution, reasonably  acceptable to the Company (it being agreed that any bank listed on the then most recent  NAIC List of Qualified U.S. Financial Institutions shall be deemed acceptable to the  Company) and that satisfies in full all applicable requirements in order to allow the  Company to take full statutory financial statement and regulatory credit for the reinsurance  provided hereunder in all applicable jurisdictions.  

 

  Page 6   “Liability” means any and all debts, liabilities, duties, commitments and obligations of any  kind, character or description, whether direct or indirect, fixed or unfixed, contingent or  absolute, matured or unmatured, liquidated or unliquidated, accrued or not accrued,  asserted or unasserted, known or unknown, disputed or undisputed, joint or several, secured  or unsecured, determined, determinable or otherwise, whenever or however arising  (including whether arising out of any contract or tort based in negligence or strict liability),  and whether or not the same would be required by statutory accounting principles,  generally acceptable accounting principles, international financial reporting standards or  by accepted actuarial practices in the jurisdiction of domicile of the Company or any of its  Affiliates to be reflected in its financial statements or disclosed in the notes thereto.  “Loss Adjustment Expense(s)” (“LAE”) means costs and expenses awarded, payable, paid  or assessed on or after the Effective Date and not discharged prior to the Closing Date in  connection with any investigation, appraisal, adjustment, settlement, litigation, defense or  appeal that is allocable to specific Losses with respect to the Subject Business, including  the following:  1. Court costs;  2. Costs of supersedeas and appeal bonds;  3. External defense costs for the adjustment, appraisal, defense, resistance,  investigation, audit, negotiation, settlement, payment or appeal, including  arbitration, mediation, or other dispute resolution costs, attorneys’ fees, expenses  and pre- and post-judgment interest;   4. Legal expenses and costs incurred in connection with coverage questions and legal  actions connected thereto;   5. Declaratory Judgment Expense; and  6. Subrogation, salvage and recovery expenses.  LAE does not include ULAE of the Company or any of its Affiliates.  For the avoidance  of doubt, whether or not the Company reflects an expense as a LAE on its financial  statements or other books and records shall not affect whether such expense qualifies as  LAE for purposes of this Agreement.  “Loss Corridor” has the meaning given to it in the LPT Coverage Article.  “Loss Corridor Attachment Point” means seven hundred forty-six million dollars  ($746,000,000).    “Loss Corridor Detachment Point” means eight hundred twenty-one million dollars  ($821,000,000).    “Losses” means all Liabilities and other obligations of the Company to make payments to,  on behalf of or for the benefit of policyholders or other insureds, reinsureds or other  beneficiaries or Persons awarded, payable, paid or assessed, in each case, in respect of the  Subject Business, including any monetary demand, suit, occurrence, Liability or loss  

 

  Page 7   (including any return of premium), actual or alleged, arising out of or relating to the Subject  Business, in each case, with dates of loss on or after January 1, 2011 and on or prior to  December 31, 2019 (it being agreed and understood that in the case of any continuous  trigger losses, the date of loss shall be at the determination of the Company, and if the  Company is unable to make such a determination, the date of loss shall be at the inception  date of the applicable Policy, however, should subsequent information become available  which clarifies the date of loss then the date of loss should be so amended); provided,  however, “Losses” shall not include LAE.  “Net Subject Reserves” means all of the Company’s reserves in respect of the UNL  hereunder, calculated in accordance with U.S. generally accepted accounting principles,  consistently applied, including reserves for incurred but not reported UNL, reserves for  UNL paid but not recovered from the Reinsurer, reserves for UNL reported and  outstanding, and any other reserves for UNL, in each case, net of all reserves ceded  pursuant to Third-party Reinsurance.  “Notice” has the meaning given to it in the Notices Article.  “Order” means any order, writ, judgment, injunction, decree, award or similar proceeding  entered by or with any Governmental Authority.  “Panel” has the meaning given to it in the Administration; Claims Cooperation Article.  “Person” means any natural person, corporation, partnership, limited liability company,  trust, joint venture or other entity, including a Governmental Authority.   “Policies” means the policies, contracts, agreements and binders of insurance or  reinsurance (including any endorsements, modifications or amendments thereto) on the  Subject Business (a) set forth on Schedule F attached hereto or (b) identified by the  Company or the Reinsurer after the date hereof and for which historical premium and Loss  information was included in the Loss and other actuarial information provided by the  Company to the Reinsurer prior to the date hereof.  “Qualifying Collateral” means Eligible Investments posted to the Trust Account and  Letters of Credits.  “Receiving Party” has the meaning given to it in the Confidentiality Article.  “Reinsurance Credit Event” has the meaning given to it in the Collateral Article.  “Reinsurance Representations and Warranties” has the meaning given to it in the  Indemnification Article.   “Reinsurer Authorized Representative” means Paul Brockman, or any other person  appointed by the Reinsurer to that role from time to time as notified in writing to the  Company.  “Reinsurer Extra Contractual Obligations” means (a) all Extra Contractual Obligations  relating to the Policies reinsured hereunder that arise from any act, error or omission  (whether or not intentional, in bad faith or otherwise) of Reinsurer after the Closing without  

 

  Page 8   the written direction of the Company or any act, error or omission of the Company taken  or not taken at the written direction of the Reinsurer, after informed consultation with the  Company in which the Company disclosed all material facts and information, and that the  Company is required to take or not take pursuant to the terms of this Agreement and (b) all  Extra Contractual Obligations relating to the Policies reinsured hereunder from and after  the date Reinsurer assumes administration of the Subject Business, other than, in respect  of this clause (b), any Extra Contractual Obligations relating to the Policies reinsured  hereunder that arise from (i) any act, error or omission (whether or not intentional, in bad  faith or otherwise) of the Company taken or not taken without the written direction of the  Reinsurer or (ii) any act, error or omission of the Reinsurer taken or not taken at the written  direction of the Company, after informed consultation with the Reinsurer in which the  Reinsurer disclosed all material facts and information, and that the Reinsurer is required to  take or not take pursuant to the terms of this Agreement or the Administrative Services  Agreement.  “Reinsurer Fundamental Representations” means the representations and warranties set  forth in subparagraphs 1, 2(a), 2(b)(i) and 5 of paragraph B of the Representations and  Warranties Article.  “Reinsurer’s Posted Collateral” means, as of any date of determination, the aggregate  amount of (a) the face amount of all Letters of Credit,  (b) the aggregate fair market value  of the Eligible Investments held in the Trust Account and (c) the aggregate amount of any  other collateral provided by the Reinsurer for the benefit of the Company that satisfies all  applicable requirements in order to allow the Company to take full statutory financial  statement and regulatory credit for the reinsurance provided hereunder.  “Replacement Assets” has the meaning given to it in the Collateral Article.  “Required Collateral Amount” means, as of any date, (a) the minimum amount of collateral  that must be posted by the Reinsurer in order for the Company to take full financial  statement and regulatory credit for the reinsurance provided hereunder minus (b) the fair  market value of the assets and cash on deposit in the Working Account (as defined in the  Administrative Services Agreement); provided, that the Required Collateral Amount as of  the Closing Date shall equal (x) $746,000,000, minus the Roll-forward Amount, multiplied  by (y) 102%.  “Required Regulatory Approvals” means the regulatory approvals set forth on Schedule E  hereto.  “Reserve Standard” has the meaning given to it in the Representations and Warranties  Article.   “Roll-forward Amount” has the meaning given to it in the Consideration and  Reconciliation Article.  “SAP Statements” has the meaning given to it in the Representations and Warranties  Article.  “Senior Executive” has meaning given to it in the Expedited Dispute Resolution Article.  

 

  Page 9   “Senior Insurance Professional” means a jointly selected senior employee at a nationally  recognized property and casualty insurance company that is not, and not Affiliated with,  the Company or the Reinsurer or their respective Affiliates, with at least 15 years of  experience in the management and oversight of claims and administration of policies of the  type included in the Policies reinsured hereunder; provided, however, that if the parties are  unable to select such Person to serve as the Senior Insurance Professional within 20  Business Days of either party’s notice to the other party of an intent to submit a dispute to  a Panel, either party may request the American Arbitration Association to appoint within  ten Business Days from the date of such request, or as soon as practicable thereafter, a  senior employee at a nationally recognized property and casualty insurance company that  is not, and not Affiliated with, the Company or the Reinsurer or their respective Affiliates,  with at least 15 years of experience in the management and oversight of claims and  administration of policies of the type included in the Policies reinsured hereunder, who is  independent and impartial, to be the Senior Insurance Professional.  “Special Termination Triggering Event” has the meaning given to it in the Collateral  Article.  “Subject Business” means those Policies written, issued or assumed by the Company under  the following business units as defined prior to the date hereof by the Company:  [***]  “Tax” means any and all federal, state, foreign or local income, gross receipts, premium,  capital stock, franchise, guaranty fund assessment, retaliatory, profits, withholding, social  security, unemployment, disability, real property, ad valorem/personal property, stamp,  excise, occupation, sales, use, transfer, value added, alternative minimum, estimated or  other tax, fee, duty, levy, custom, tariff, impost, assessment, obligation or charge of the  same or of a similar nature to any of the foregoing, including any interest, penalty or  addition thereto.  “Third Party Accountant” means a nationally recognized independent accounting firm  which is mutually acceptable to the Company and the Reinsurer or, if the Company and  the Reinsurer are unable to agree on such an accounting firm, an independent accounting  firm selected by mutual agreement of the Company’s and the Reinsurer’s independent  accountants.    “Third Party Actuarial Firm” means a nationally recognized independent actuarial firm  which is mutually acceptable to the Company and the Reinsurer or, if the Company and  the Reinsurer are unable to agree on such an actuarial firm, an independent actuarial firm  selected by mutual agreement of the Company’s and the Reinsurer’s independent auditors.  “Third-party Reinsurance” means that part or all of any contracts of reinsurance pursuant  to which the Company has ceded any portion of Losses or LAE with respect to the Subject  Business to another Person that is not an Affiliate of the Company.  “Transaction Agreements” means collectively this Agreement, the Trust Agreement and  the Administrative Services Agreement.  

 

  Page 10   “Trust Account” has the meaning given to it in the Collateral Article.  “Trust Agreement” has the meaning given to it in the Preamble.  “Trustee” has the meaning given to it in the Collateral Article.  “Ultimate Net Loss” (“UNL”) means, without duplication, all Liability for (a) Losses, plus  (b) LAE, plus (c) Ex Gratia Payments, plus (d) premiums paid in respect of Third-party  Reinsurance, less (e) Collectible Third-party Reinsurance, less (f) other recoverables in  respect of the Subject Business, including salvage and subrogation (net of related recovery  expenses to the extent not otherwise included in LAE).  UNL shall exclude the following:  1. Any amounts paid prior to the Effective Date;  2. Commissions under the Subject Business, including but not limited to profit  sharing.  3. ULAE with respect to the Subject Business.  4. Company Extra Contractual Obligations.  5. Any Taxes imposed on or payable by the Company.  6. Any ex gratia payments other than those included in the definition of “Ex Gratia  Payments.”  Nothing in the foregoing shall be construed as implying that amounts are not recoverable  hereunder by the Company until a final determination of UNL.  “Unallocated Loss Adjustment Expenses” (“ULAE”) means those costs and expenses in  respect of the administration, servicing, handling of management of the Subject Business  and that are not LAE, including, personnel costs, overhead, or similar internal costs and  expenses.  For the avoidance of doubt, whether or not the Company reflect an expense as  a ULAE on its financial statements or other books and records shall not affect whether such  expense qualifies as ULAE for purposes of this Agreement.  Unless otherwise expressly provided, for purposes of this Agreement the following rules of  interpretation and construction shall apply:  1. The headings and subheadings contained in this Agreement are for convenience of  reference only and shall not affect in any way the meaning or interpretation of this  Agreement.  2. When a reference is made in this Agreement to the preamble or to an article,  paragraph, exhibit or schedule, as applicable, such reference shall be to the  preamble or to an article, paragraph or schedule of this Agreement.  3. Whenever the words “include,” “includes” or “including” are used in this  Agreement they shall be deemed to be followed by the words “without limitation.”  

 

  Page 11   4. The words “hereof,” “herein” and “herewith” and words of similar import shall be  construed to refer to this Agreement as a whole and not to any particular provision  of this Agreement.  5. The word “or” need not be disjunctive and shall mean “and/or” unless otherwise  provided.  6. The word “will” shall be construed to have the same meaning and effect as the word  “shall.”  7. The meaning assigned to each term defined herein shall be equally applicable to  both the singular and the plural forms of such term, and words denoting any gender  shall include all genders.  Where a word or phrase is defined herein, each of its  other grammatical forms shall have a corresponding meaning.  8. A reference to any party to this Agreement or any other agreement or document  shall include such party’s successors and permitted assigns.  9. A reference to any Applicable Law shall include any amendment thereto, any  modification or re-enactment thereof, any provision substituted therefor and all  rules, regulations and statutory instruments issued thereunder or pursuant thereto  (including any amendment to, or modification of, such rules, regulations or  statutory instruments).   10. A reference to any period of days shall be deemed to be to the relevant number of  calendar days unless otherwise specified.  11. The Parties have participated jointly in the negotiation and drafting of this  Agreement; consequently, in the event an ambiguity or question of intent or  interpretation arises, this Agreement shall be construed as jointly drafted by the  Parties and no presumption, burden of proof or rule of strict construction shall arise  favoring or disfavoring any Party by virtue of its authorship of any provision of this  Agreement.  12. This Agreement shall be interpreted as if the reinsurance ceded hereunder is able to  be, and is, accounted for as prospective reinsurance under statutory accounting  principles applicable to the Company (regardless of whether the Company actually  accounts for this Agreement utilizing retroactive accounting).  Specifically,  references to “full statutory financial statement credit for the reinsurance provided  under this Agreement”, “statutory financial statement and regulatory credit for the  reinsurance ceded hereunder”, “full credit on [the Company’s] statutory financial  statements for the reinsurance provided by this Agreement” and words and phrases  of similar import shall mean the maximum amount of credit that the Company  would be eligible to record for the reinsurance ceded hereunder, assuming that the  Company were able to account for this Agreement as prospective reinsurance under  statutory accounting principles applicable to the Company (regardless of whether  the Company actually accounts for this Agreement utilizing retroactive  accounting).  For the avoidance of doubt, the failure of the reinsurance ceded under  this Agreement to be accounted for as prospective reinsurance under statutory  accounting principles applicable to the Company shall not, in and of itself,  constitute a Reinsurance Credit Event.  

 

  Page 12   All exhibits and schedules are incorporated in and made a part of this Agreement as if set forth in  full herein.  ARTICLE 2 - CLOSING   The Closing shall occur and the reinsurance contemplated hereby shall become effective in  accordance with the terms hereof no later than the third Business Day following the date on which  all of the conditions set forth in the Closing Conditions Article have been satisfied or waived in  writing by the party waiving such conditions (other than those conditions which by their nature  are to be satisfied on the Closing Date) at the offices of Hogan Lovells US LLP, 1735 Market  Street, Floor 23, Philadelphia, PA 19103 (or remotely via the electronic exchange of documents in  .pdf format or by using generally recognized e-signature technology (e.g., DocuSign or Adobe  Sign)), unless another date, time or place is agreed to in writing by the Parties. All transactions at  the Closing shall be deemed to take place simultaneously, and no transaction shall be deemed to  have been completed and no documents or certificates shall be deemed to have been delivered  until all other transactions are completed and all other documents and certificates are delivered.    ARTICLE 3 - LPT COVERAGE  A. On the Closing Date, the Company hereby cedes, and the Reinsurer hereby accepts and  agrees to reinsure, 100% of all UNL; provided, however, that the aggregate amount paid  by the Reinsurer in respect of UNL hereunder shall be subject to the Aggregate Limit, the  Aggregate Sub-Limits, and the Loss Corridor.   The Reinsurer’s liability under this Agreement shall commence on the Closing Date, and  will be subject in all respects to the same terms, rates, conditions, interpretations,  assessments, waivers, modifications, endorsements, alterations, and cancellations as in the  Subject Business, and shall be bound, without limitation, by all payments and settlements  entered into by or on behalf of the Company, subject only to the terms, conditions and  limits of this Agreement.  B. Notwithstanding any provision of this Agreement to the contrary, the Company shall retain  and be responsible for, and the Reinsurer shall not pay or be liable for, all Ultimate Net  Loss in excess of the Loss Corridor Attachment Point up to the Loss Corridor Detachment  Point (the “Loss Corridor”).  C. This Agreement excludes any Liability to the extent that, in the Company’s reasonable  determination, the cession of such Liability to the Reinsurer hereunder would cause the  Company to breach any term or condition of, or otherwise cause a reduction in the amount  recoverable under, any Third-party Reinsurance.  Any amounts excluded pursuant to this  paragraph C shall not qualify as UNL.     D. The Reinsurer will not be liable to provide any coverage or make any payment hereunder  if such coverage or payment would be in violation of any Applicable Law related to  economic or trade sanctions that would expose the Reinsurer or any of its Affiliates to any  sanctions, prohibition, restriction or penalty under such Applicable Law.  E. From and after the date hereof, the Company will not purchase any reinsurance protection,  except for intercompany reinsurance, after the Closing Date for all or any part of the  

 

  Page 13   Subject Business ceded hereunder without the prior written consent of the Reinsurer;  provided, however, the foregoing restriction shall not apply following an Administrative  Rights Triggering Event to the extent that the reinsurance protection to be obtained is in  respect of Ultimate Net Loss in excess of the Aggregate Limit.  F. From and after the date hereof, the Company will not, and will cause its Affiliates not to,  amend or waive any terms or rights with respect to the Policies unless such amendment or  waiver is required by Applicable Law or consented to in writing by the Reinsurer.  G. From and after the date hereof, the Company will not, and will cause its Affiliates not to,  settle, commute, compromise or waive any Third-party Reinsurance without the prior  written consent of the Reinsurer.  ARTICLE 4 - ADMINISTRATION; CLAIMS COOPERATION  A. Subject to the terms of this Article, the Subject Business will continue to be administered  by the Company.  From the date hereof through the termination of this Agreement, the  Company shall administer or cause to be administered the Subject Business (i) in good  faith, (ii) in compliance with Applicable Law, (iii) consistent with sound administrative  practices consistently applied, and (iv) with no less skill and diligence as have been applied  by the Company prior to the date hereof.  The Company shall notify the Reinsurer of any  material changes that it makes to its claims handling practices after the date hereof with  respect to the Subject Business, which notice shall include an explanation of the rationale  for such changes.  If the Company changes its claims practices or, without a formal change,  engages in a pattern of claims practices having, in the aggregate, the effect of such a  change, in a manner that the Reinsurer reasonably believes has a material adverse effect on  the Reinsurer’s liability or the attachment of the Reinsurer’s liability, the Reinsurer shall  notify the Company promptly after becoming aware of such effect (an “Adverse  Modification Notice”) and the Parties shall work together in good faith to seek to modify  such change to the practices in a manner reasonably acceptable to the Company; provided,  however, that if the Parties, acting in good faith, are unable to agree with respect to whether  there has been a material change in the claims practices or whether and how a corrective  modification shall be implemented or the impact of such changes, the Reinsurer shall have  the right, within 90 days following the submission of the Adverse Modification Notice, to  submit the dispute as to whether there was a material change to the claims handling  practices and, if so, whether the change did cause a material adverse effect on the  Reinsurer’s liability hereunder or the attachment thereof (a “Claims Practice Modification  Dispute”) to a panel comprising a neutral Senior Insurance Professional and the Third Party  Actuarial Firm (the “Panel”) to resolve such Claims Practice Modification Dispute.  Each  Party shall furnish to the Panel such work papers, books, records and documents and other  information pertaining to the Claims Practice Modification Dispute, as the Panel may  request. The Panel shall issue its written determination with respect to Claims Practice  Modification Dispute within 30 days after such matters are submitted to the Panel;  provided, however, that the failure of the Panel to make its written determination in such  thirty (30) day period shall not be grounds to defend against, object to the enforcement of  or contest the validity or enforceability of such written determination. If the Panel  determines that there was a material change to the claims handling practices and that the  change did cause a material adverse effect on the Reinsurer’s liability hereunder or the  

 

  Page 14   attachment thereof, then the Panel shall be authorized to adjust the calculation of Ultimate  Net Loss under this Agreement, with the Company bearing the difference at its own  expense, to put the Reinsurer in substantially the same economic position it would have  been in had the Company not made the adverse change to its claims practices, and the  Company at its own expense shall implement in a reasonable time frame and in good faith  steps to cure the cause of the material adverse effect that the Panel determined the Reinsurer  suffered or incurred as a result of such practice, action or inaction.  The costs and expenses  of the Panel shall be split evenly between the Company and the Reinsurer. The  determinations by the Panel shall be binding on the Parties with respect to the Claims  Practice Modification Dispute.  The Panel shall act as an expert, not as an arbitrator, and  neither the determination of the Panel, nor this Agreement to submit to the determination  of the Panel, shall be subject to or governed by the Federal Arbitration Act, 9 U.S.C. § 1 et  seq., or any state arbitration law or regime.  B. During the duration of this Agreement:  1. from the Closing Date until the date on which an Administrative Rights Triggering  Event (if any) occurs, the Reinsurer and each of its designated Affiliates shall have  the administrative rights set forth on Schedule D attached hereto (the “Initial  Administrative Rights”); and  2. from the date on which an Administrative Rights Triggering Event occurs until such  time as the Ultimate Net Loss exceeds the Aggregate Limit, the Reinsurer and each  of its designated Affiliates shall have the right to administer all of the Subject  Business reinsured hereunder at its cost pursuant to the Administrative Services  Agreement, including the right to retain third-party administration.  C. The Company shall retain control over the administration of any Third-party Reinsurance;  provided that following an Administrative Rights Triggering Event, the Reinsurer or its  designated Affiliate shall have the right to either supervise the administration of the Third- party Reinsurance by the Company or assume management of the Third-party Reinsurance.   D. Each Party shall use its commercially reasonable efforts to cooperate with the other Party  as reasonably requested by such other Party in connection with the administration of the  Subject Business as contemplated by this Article, and take such further actions and execute  such further documents and agreements as may be necessary to carry out the purpose and  intent of this Article. If the Reinsurer elects to assume the administration of the Subject  Business following the occurrence of an Administrative Rights Triggering Event, the  Company shall, and shall cause its Affiliates to, provide reasonable transition and  migration services, which, (i) in the case of transition services (e.g., services that would  require the Company to host the Reinsurer or any of its Affiliates on any system of the  Company or its Affiliates or require the services of one or more full time employees) shall  be provided pursuant to a negotiated transition services agreement that shall be in a  customary form (including with respect to compensation to the Company and its Affiliates  for providing such services) and (ii) in the case of data migration services, the Company  shall bear the cost of delivering the data in a reasonable format agreed upon by the Parties.  

 

  Page 15   ARTICLE 5 - REPORTING  A. Prior to an Administrative Rights Triggering Event pursuant to which the Reinsurer has  asserted its rights to assume administration of the Subject Business, within 15 days of the  end of each calendar month, the Company shall provide the Reinsurer with a report in  respect of the Subject Business.  The specific content and format of the report shall be  mutually agreed by the Parties prior to the Closing and set forth on a revised version of  Schedule A hereof.  At a minimum, the report shall include the following monthly  information with respect to the Subject Business:  (i) gross and net paid and incurred Losses  and LAE, (ii) gross and net outstanding case reserves for Losses and LAE and gross and  net outstanding IBNR reserves for Losses and LAE, (iii) applicable reinsurance,  subrogation, salvage or other recoveries, (iv) cumulative net paid Ultimate Net Loss since  the Effective Date, (v) each of the items referenced in paragraph (a)(ii) of Schedule D  attached hereto, (vi) with respect to any calendar quarter end, any amounts withdrawn by  the Company from any Trust Account or drawn on any Letters of Credit or other form of  collateral posted by the Reinsurer, if applicable, and (vii) with respect to any calendar  quarter end, any amounts due to or from the Reinsurer pursuant to this Agreement.  B. Following an Administrative Rights Triggering Event pursuant to which the Reinsurer has  asserted its rights to assume administration of the Subject Business, within 15 days of the  end of each calendar month, the Reinsurer or one of its Affiliates shall provide the  Company with a report in respect of the Subject Business.  The specific content and format  of the report shall be mutually agreed by the Parties prior to the Closing and set forth on a  revised version of Schedule A hereto.  At a minimum, the report shall include the following  monthly information with respect to the Subject Business: (i) gross and net paid and  incurred Losses and LAE, (ii) gross and net outstanding case reserves for Losses and LAE  and gross and net outstanding IBNR reserves for Losses and LAE, (iii) applicable  reinsurance, subrogation, salvage or other recoveries, (iv) cumulative net paid Ultimate Net  Loss since the Effective Date, (v) with respect to any calendar quarter end, any amounts  withdrawn by the Company from any Trust Account or drawn on any Letters of Credit or  other form of collateral posted by the Reinsurer, if applicable, and (vi) with respect to any  calendar quarter end, any amounts due to or from the Reinsurer pursuant to this Agreement.   The Company shall provide reasonable transition services to the Reinsurer and its Affiliates  in connection with the Reinsurer asserting its rights to assume administration of the Subject  Business in connection with an Administrative Rights Triggering Event, including  reasonable assistance with the preparation of the reports required by this paragraph G  during a reasonable transition period.  C. The data presented in the reports delivered hereunder shall be segmented in a manner  consistent with how it is currently maintained by the Company. Actuaries from both Parties  shall meet at least quarterly to discuss the data quality, any modifications to the data  segmentation or reporting systems, any changes in claims practices and such other  information as they mutually agree during the term of this Agreement.  D. Without limiting the terms of this Article, the Company shall provide to Reinsurer such  periodic accounting and other reports with respect to the Subject Business and the liabilities  reinsured hereunder (including, an annual external actuarial report prepared at the  Reinsurer’s sole cost and expense) as the Reinsurer may reasonably request and to the  

 

  Page 16   extent reasonably available and not burdensome to the Company.  The Reinsurer will  identify and communicate any such requests to the Company sufficiently in advance of any  required deadlines, to the extent practicable, such that the applicable information and  timing for the provision thereof can be mutually agreed by the parties.  Furthermore, the  Company shall, at the Reinsurer’s reasonable request, provide reports and similar  information and attestations regarding the adequacy of the controls associated with the  finance, actuarial, claims and ceded reinsurance reporting provided by the Company and  its Affiliates to the Reinsurer, and the Reinsurer shall have the right, at its sole cost and  expense, to appoint a third party of its choosing to perform any confirmatory testing  reasonably required by the Reinsurer and its Affiliates, provided that any such testing shall  not unreasonably interfere with the business of the Company or its Affiliates shall occur  no more than once per calendar year and such third party shall agree to enter into a  confidentiality and nondisclosure agreement reasonably acceptable to the Company.  E. If the report delivered with respect to any calendar quarter end reflects a payment owed to  the Company, the Company may withdraw such amount from the Trust Account to  reimburse itself.  If the balance of the Trust Account is insufficient, the Reinsurer shall  make such payment to the Company within 15 Business Days following the date of  delivery of the report.  If any such report reflects a payment owed to the Reinsurer, any  such payment shall be made within 15 Business Days following the date of delivery of the  report, by the Company depositing such amount into the Trust Account to reimburse the  Reinsurer.  F. If the Party receiving any report delivered with respect to any calendar quarter end has any  objection to such report on the basis of (i) manifest arithmetic error, or (ii) the amounts  therein not being calculated in accordance with the terms of this Agreement, the receiving  Party shall deliver to the preparing Party written notice thereof together with reasonable  supporting detail concerning its objection. If a notice of objection in respect of the  calculations in a report is provided by the receiving Party within 30 business days of  receipt, the Parties shall attempt in good faith to resolve the objection between themselves.  If such objection is resolved, the calculations in the report shall be agreed in writing and  the Parties shall be bound by such calculation. If the Parties are unable to reach a resolution  on the calculations in the report within 20 Business Days after receipt of the notice of  objection, the dispute shall be submitted to the Third Party Accountant or Third Party  Actuarial Firm, as appropriate, or resolution as soon as practicable whose decision shall be  final and binding on the Parties.    G. In making its determination in respect of calculations in any report, the Third Party  Accountant or Third Party Actuarial Firm shall (i) consider only those items that (A) are  identified as in dispute and (B) were not resolved in writing by the Company and Reinsurer,  (ii) base its determination solely on such reports submitted by the Company and the  Reinsurer and the applicable provisions of this Agreement, and not on the basis of an  independent review, (iii) not assign a value to any item greater than the greatest value for  such item claimed by either the Company or the Reinsurer or less than the smallest value  for such item claimed by either the Company or the Reinsurer and (iv) barring exceptional  circumstances, make its determination within 30 Business Days of its appointment;  provided, that the failure of the Third Party Accountant or Third Party Actuarial Firm to  make its determination in such 30 Business Day period shall not be grounds to defend  

 

  Page 17   against or object to the enforcement of such determination.  The cost of the Third Party  Accountant or Third Party Actuarial Firm shall be borne by the Party whose position in  respect of the dispute is not upheld by the Third Party Accountant or Third Party Actuarial  Firm.    ARTICLE 6 - TERM OF THIS AGREEMENT  A. This Agreement shall commence on the Closing Date and shall remain in force until the  earliest of:  1. The date on which all Liabilities in respect of Net Subject Reserves are extinguished  and the Company has received full payment in respect thereof;   2. The date on which the net aggregate amount paid by the Reinsurer hereunder in  respect of UNL equals the amount of the Aggregate Limit (for the avoidance of  doubt, inclusive of the Loss Corridor);  3. The effective date of commutation of this Agreement, subject to receipt by the  Company of the Commutation Amount.  4. The delivery of written notice by either Party to the other Party, in the event that  the Closing Date has not occurred within 180 days following the date hereof, unless  the failure of the Closing Date to occur by such date arises out of, or results from,  the failure of such Party seeking to terminate this Agreement (or any of its  Affiliates) to perform any of its obligations under this Agreement.  5. The delivery of written notice by either Party to the other Party, in the event that  any of the Required Regulatory Approvals shall have been affirmatively denied or  disapproved pursuant to a final and non-appealable Order.  B. This Agreement may be commuted only:  1. At any time by mutual written agreement of the Parties;   2. As may be required by the Company as provided in the Collateral Article following  the occurrence of a Special Termination Triggering Event.  In the event this Agreement is commuted, the Company shall prepare a settlement  statement setting forth the settlement amount (the “Commutation Amount”) within  30 Business Days of the following:  1. The date of mutual agreement as respects subparagraph (1) above;   2. The date by which the Reinsurer may no longer cure any default as respects  subparagraph (2) above.  Within 20 Business Days of receipt of the Company’s calculation of the Commutation  Amount, the Reinsurer may elect to dispute the Company’s calculation of the Commutation  Amount by delivering a notice of objection.  In such case, the Company and the Reinsurer  shall attempt in good faith to resolve the objection between themselves.  If such objection  is resolved, the calculation of the Commutation Amount shall be agreed in writing between  

 

  Page 18   the Company and the Reinsurer and the Parties shall be bound by such calculation.  If the  Company and the Reinsurer are unable to reach a resolution on the calculation of the  Commutation Amount within 20 Business Days after receipt by the Company of the  Reinsurer's notice of objection, the dispute shall be submitted to the Third Party Actuarial  Firm for resolution as soon as practicable whose decision shall be final and binding on the  Parties.  In making its determination in respect of the calculation of the Commutation Amount,  paragraph H of the Reporting Article shall apply mutatis mutandis.  C. In the event this Agreement is commuted in accordance with paragraph B above, the  Company shall withdraw cash from the Trust Account equal to the Commutation Amount,  and, to the extent the Commutation Amount exceeds the balance therein, the Reinsurer  shall pay any shortfall directly to the Company within 30 Business Days of the  Commutation Amount being finalized. If the Reinsurer’s Posted Collateral exceeds the  Commutation Amount, the Company shall release its rights with respect to such excess  collateral and permit any such excess collateral held in the Trust Account to be distributed  to the Reinsurer within ten Business Days of the Commutation Amount being finalized.  D. Following a commutation pursuant to this Article, including the payment of any amounts  due under such commutation, both the Company and the Reinsurer will be fully and finally  released from all rights and obligations under this Agreement, other than any payment  obligations due hereunder prior to the commutation date but still unpaid on such date to  the extent not reflected in the Commutation Amount and the provisions of the  Confidentiality Article, the Arbitration Article and the Governing Law Article.  ARTICLE 7 - CONSIDERATION AND RECONCILIATION  A. As consideration for the transactions contemplated by the Transaction Agreements, on the  Closing Date, the Company shall pay to the Reinsurer an amount equal to the following  (the “Initial Reinsurance Premium”):  1. eight hundred sixty-seven million ($867,000,000); less  2. Loss payments booked by the Company on or after Effective Date and prior to the  Closing Date in respect of the Subject Business, net of Collectible Third-party  Reinsurance (the “Roll-forward Amount”).  For the avoidance of doubt, for all  purposes under this Agreement, the Roll-forward Amount shall be considered an  amount paid by the Reinsurer in respect of UNL.  The Initial Reinsurance Premium shall be determined in accordance with the Initial  Reconciliation Statement following the procedure set forth in paragraphs C and D below  which shall reconcile the balances owed between the Company and the Reinsurer as of the  Closing Date and set forth the aggregate net payment due to the Reinsurer.  The Company  shall deposit an amount equal to the Required Collateral Amount into the Trust Account  and pay any remaining portion of the Initial Reinsurance Premium to the Reinsurer by wire  transfer of immediately available funds on the Closing Date.  

 

  Page 19   B. The Initial Reinsurance Premium will be adjusted in accordance with the mutual agreement  of the Final Reconciliation Statement following the procedure set forth in paragraphs C  and D below and any return or additional amounts due either Party shall be paid in  accordance with paragraph E below within 15 Business Days after the Final Reconciliation  Statement is agreed.  The final agreed calculation of the Initial Reinsurance Premium as  reflected on the Final Reconciliation Statement shall be referred to as the “Final  Reinsurance Premium.”  C. The Company and the Reinsurer will follow the procedure set forth below in achieving  fully and finally reconciled amounts of these balances:  1. No later than two Business Days prior to the Closing Date, the Company will  provide to the Reinsurer an estimated reconciliation statement as of the last day of  the month preceding the Closing Date (the “Initial Reconciliation Statement,”  substantially in the form contained in Schedule B attached hereto).  2. Within 30 Business Days following the Closing Date, the Company will provide to  the Reinsurer a reconciliation statement (the “Interim Reconciliation Statement,”  substantially in the form contained in Schedule B attached hereto), setting forth the  adjusted aggregate net payment calculated as of the Closing Date.  D. After the receipt by the Reinsurer of the Interim Reconciliation Statement and until such  time as the Final Reconciliation Statement is final and binding on the Parties, the Reinsurer  and the Reinsurer Authorized Representative will have, upon prior written Notice,  reasonable electronic access during normal business hours to the working papers of the  Company and the Company Authorized Representative relating to the Interim  Reconciliation Statement and the calculations set forth thereon.  The Reinsurer will have  the right to review the Interim Reconciliation Statement and comment thereon for a period  of 45 Business Days after receipt thereof.  Any changes in the Interim Reconciliation  Statement that are agreed to by the Company and the Reinsurer within such 45 Business  Day review period will be incorporated into a Final Reconciliation Statement (the “Final  Reconciliation Statement,” substantially in the form contained in Schedule B attached  hereto).  In the event the Reinsurer does not dispute the Interim Reconciliation Statement  within such 45 Business Day review period, the Interim Reconciliation Statement will be  deemed the Final Reconciliation Statement.  In the event that the Reinsurer wishes to  dispute the Company’s calculation set forth in the Interim Reconciliation Statement, the  Reinsurer shall deliver to the Company a notice of objection.  In such case, the Company  and the Reinsurer shall attempt in good faith to resolve the objection between themselves.  If such objection is resolved, the Final Reconciliation Statement be agreed in writing  between the Company and the Reinsurer and the Parties shall be bound thereby.  If the  Company and the Reinsurer are unable to reach a resolution on the Final Reconciliation  Statement within 20 Business Days after receipt by the Company of the Reinsurer's notice  of objection, the dispute shall be submitted to a Third Party Accountant for resolution as  soon as practicable whose decision shall be final and binding on the Parties.  In making its determination in respect of the calculation of the Final Reconciliation  Statement, paragraph H of the Reporting Article shall apply mutatis mutandis.  

 

  Page 20   E. All amounts required to be transferred from the Company to the Reinsurer will be made by  depositing cash or other Eligible Investments approved by the Reinsurer in the Trust  Account with a fair market value (determined in accordance with the terms of the Trust  Agreement) equal to any amount due hereunder and all amounts required to be transferred  from the Reinsurer to the Company will be made by the Company withdrawing the amount  it is due from the Trust Account or, to the extent the balance of the Trust Account is  insufficient, by the Reinsurer by wire transfer of immediately available funds equal to such  shortfall, to the account or accounts designated by the Company in writing to the Reinsurer  no later than five Business Days prior to the due date of any such payment.  ARTICLE 8 - COLLATERAL  A. On or prior to the Closing Date, Reinsurer will establish a trust account (the “Trust  Account”) in order to provide collateral to support its obligations hereunder and to provide  to the Company credit for the reinsurance provided hereunder under the terms of the Trust  Agreement.  During the term of the Trust Agreement, Reinsurer shall not, and shall direct  that the Trustee shall not, grant or cause to be created in favor of any third person any  security interest whatsoever in any of the assets in the Trust Account or in the residual  interest therein.  The quality and types of the assets held in the Trust Account must meet  the requirements of each applicable insurance regulatory authority having jurisdiction over  the Company’s reserves; provided, that the Trust Account will be permitted to hold Eligible  Investments.  B. On the Closing Date, on behalf of Reinsurer, the Company shall deposit cash or Eligible  Investments reasonably acceptable to the Reinsurer with a fair market value equal to the  Required Collateral Amount.    C. It is understood that:  1. The trustee under the Trust Agreement (the “Trustee”) shall be the Bank of New  York Mellon, JPMorgan Chase Bank or other qualified financial institution for  purposes of the Illinois credit for reinsurance laws approved by the Company, with  such approval not to be unreasonably withheld; and  2. Trust assets will be managed by the Reinsurer or its assigned representative in  accordance with the Trust Agreement.   D. Reinsurer shall, at its own expense, be required to take all steps (including the posting of  letters of credit or other acceptable security) necessary to comply with all Applicable Laws  in any applicable United States jurisdiction so as to permit the Company to obtain full  credit on its statutory financial statements for the reinsurance provided by this Agreement  in all applicable United States jurisdictions throughout the entire term of this Agreement  to the extent credit is not otherwise available under such Applicable Law. Any event that  results or is reasonably likely to result, given the passage of time, in the Company being  unable to obtain full statutory financial statement credit for the reinsurance provided under  this Agreement in any applicable United States jurisdiction at any point in time during the  term of this Agreement shall be referenced herein as a “Reinsurance Credit Event.”   Reinsurer shall promptly notify the Company of any event or change or condition that will  reasonably likely result in a Reinsurance Credit Event.   

 

  Page 21   E. The amount of Reinsurer’s Posted Collateral shall not be less than the Required Collateral  Amount. Notwithstanding the foregoing, except to prevent or resolve a Reinsurance Credit  Event, the Required Collateral Amount shall not exceed the Aggregate Limit less paid  UNL.  F. Within 30 Business Days of the end of each calendar quarter, beginning with the calendar  quarter (or portion thereof) ending after the Closing Date, the Company shall determine  the Required Collateral Amount for the subsequent quarter and provide written notice  thereof to the Reinsurer.  If the Reinsurer’s Posted Collateral is less than the Required  Collateral Amount, the Reinsurer shall deposit into the Trust Account additional Eligible  Investments with a fair market value (determined in accordance with the terms of the Trust  Agreement) equal to such deficiency within five Business Days of receipt of the applicable  Required Collateral Amount. Alternatively, the Reinsurer may post Letters of Credit for  the benefit of the Company having a face amount that, together with the fair market value  (determined in accordance with the terms of the Trust Agreement) of the Eligible  Investments held in the Trust Account, is not less than the Required Collateral Amount. If  the Reinsurer’s Posted Collateral is in excess of the applicable Required Collateral  Amount, so long as the Reinsurer is not in default of any of its obligations under this  Agreement or any Transaction Agreement, the Reinsurer may request such excess funds  be released to the Reinsurer (or any such Letter of Credit returned) within 15 Business  Days of receipt of the Company’s determination of the applicable Required Collateral  Amount, subject to the Reinsurer’s obligation to maintain at all times Qualifying Collateral  in an amount not less than the Required Collateral Amount.   G. It is understood and agreed that at all times the Net Subject Reserves will be determined in  good faith by the Company in accordance with the Company's usual and customary  reserving practices in the preparation of quarterly and annual statutory financial statement,  and in compliance with statutory accounting principles, generally accepted actuarial  standards and principles and Applicable Law.  It is further understood and agreed that no  more often than annually, the Reinsurer may perform its own estimate of Net Subject  Reserves as of the end of the calendar year, and in the event this calculation differs by more  than 5.0% from the Company’s calculation of such Net Subject Reserves, then, the  Reinsurer may dispute the Company’s calculation.  The parties shall seek to resolve such  dispute in good faith. If the parties are unable to resolve such dispute within 60 days of  written notice of such dispute delivered by Reinsurer to the Company, the dispute shall be  submitted to a Third Party Actuarial Firm to resolve such dispute and determine the Net  Subject Reserves.   In making its determination in respect of the Net Subject Reserves, paragraph H of the  Reporting Article shall apply mutatis mutandis.  H. The Company and Reinsurer acknowledge and agree that, upon the occurrence of a  Reinsurance Credit Event, this Agreement, the Trust Agreement and the Trust Account  shall be modified for that period of time for which the Reinsurance Credit Event continues  to apply, to fully conform to the requirements of the laws and regulations governing credit  for reinsurance of the Company and any other relevant jurisdictions within the United  

 

  Page 22   States and to provide to the Company full statutory financial statement credit for the  reinsurance provided hereunder.   I. If any of the following events occurs (each, a “Special Termination Triggering Event”):  1. The Reinsurer fails to provide additional collateral in accordance with paragraph F  above and within the timeframe specified; or  2. The Reinsurer is in material breach of this Agreement (other than as a result of any  act or omission by the Company); or  3. The Reinsurer has its authority to transact any classes of reinsurance or insurance  withdrawn or suspended; or  4. Local statutory regulations restrict or prohibit the Reinsurer’s performance of any  or all of its material obligations under this Agreement; or  5. The initiation or commencement of a liquidation, insolvency, rehabilitation,  conservation, supervision or similar proceeding by or against the Reinsurer; or  6. A Reinsurance Credit Event has occurred and is continuing,  the Company, in addition to any other remedies it has under the terms of this Agreement  or otherwise, may provide Notice to the Reinsurer of such default and may, if the Reinsurer  fails to cure the applicable Special Termination Triggering Event within 60 days from  receipt of the Notice (except the Special Termination Triggering Events described in  subparagraphs 5 and 6 above, which shall have no cure period), in the Company’s sole  discretion, commute this Agreement pursuant to the Term of this Agreement Article.   J. The Reinsurer may substitute or exchange assets in the Trust Account (and the Company  shall instruct the Trustee to effect such substitution or exchange), provided (i) any assets  to be so substituted or exchanged (the “Replacement Assets”) are Eligible Investments, (ii)  the Replacement Assets are deposited in such Trust Account on the day of the substitution  or exchange and (iii) the aggregate fair market value of the Replacement Assets is at least  equal to the aggregate fair market value of the assets being removed from such Trust  Account.  The Reinsurer shall also be permitted to withdraw assets from the Trust Account  immediately following the posting of a Letter of Credit securing the Reinsurer’s obligations  hereunder in a face amount equal to the fair market value of the assets to be so withdrawn,  and the Company shall instruct the Trustee to effect any such withdrawal.  K. Assets in the Trust Account, Letters of Credit and any other collateral provided by the  Reinsurer may be drawn upon by the Company (or any successor by operation of law of  the Company, including any liquidator, rehabilitator, receiver or conservator of the  Company) at any time, and shall be utilized and applied by the Company (or any successor  by operation of law of the Company, including any liquidator, rehabilitator, receiver or  conservator of the Company), without diminution because of insolvency on the part of the  Company or the Reinsurer, only for one or more of the following purposes:  

 

  Page 23   1. to pay or reimburse the Company for the Reinsurer’s share under this Agreement  of Losses and LAE paid by the Company, but not recovered from the Reinsurer, or  for unearned premiums due to the Company if not otherwise paid by the Reinsurer;  2. to make payment to the Reinsurer of any excess collateral amounts in the event and  to the extent that the Reinsurer’s Posted Collateral exceeds the Required Collateral  Amount; provided, however, with respect to Qualifying Collateral held in the Trust  Account, such excess shall exceed the actual amount required to fund the portion  of the Required Collateral Amount held in the Trust Account; or  3. (i) when the Company has received notification of the termination of the Trust  Account or the termination or non-renewal of the Letter of Credit (as applicable)  and (ii) when the Reinsurer’s entire obligations under this Agreement remain  unliquidated and undischarged ten days prior to the date of such termination or non- renewal, to withdraw amounts equal to the Reinsurer’s obligations under this  Agreement and deposit those amounts in a separate account, in the name of the  Company in any qualified U.S. financial institution as defined in Section  173.1(3)(B) of the Illinois Insurance Code apart from its general assets, and in trust  for the uses and purposes specified in subparagraphs (1) and (2) of this paragraph,  as may remain executory after the withdrawal and for any period after the  termination date.  The Company shall deposit in the Trust Account, within five Business Days, assets  withdrawn from the Trust Account or amounts drawn against the Letters of Credit in excess  of all amounts due under subparagraph (1) above or, in the case of subparagraph (3) above,  assets that are subsequently determined not to be due.  Any such excess amount shall at all  times be held by the Company (or any successor by operation of law of the Company,  including any liquidator, rehabilitator, receiver or conservator of the Company) in trust for  the sole and exclusive benefit of the Reinsurer and be maintained in a segregated account,  separate and apart from any assets of the Company for the sole purpose of funding the  payments and reimbursements described in paragraph K above.  The Company shall pay  interest at a rate not in excess of the prime rate of interest in cash to the Reinsurer on the  amount withdrawn, equal to the actual amount of interest, dividends, and other income  earned on the assets in such segregated account.    L. The Reinsurer may withdraw assets from the Trust Account or cause any Letters of Credit  or other forms of collateral provided by the Reinsurer to be amended or terminated if, but  only to the extent that, the Reinsurer’s Posted Collateral exceeds the Required Collateral  Amount, and the Company shall take such action as is necessary to allow the Reinsurer to  so withdraw assets or cause any such Letters of Credit or other forms of collateral to be so  amended or terminated.  M. Promptly following termination of this Agreement and payment of any and all amounts  due to the Company, the Company and the Reinsurer shall take all actions necessary or  reasonably advisable to terminate the Trust Account and the Trust Agreement and to cause  the termination, release or return, as applicable, of any Letters of Credit or other collateral  provided by the Reinsurer pursuant to this Agreement.  

 

  Page 24   ARTICLE 9 - REPRESENTATIONS AND WARRANTIES  A. Except as set forth in the disclosure schedules delivered by the Company to Reinsurer on  the date hereof (the “Company Disclosure Schedule”), the Company hereby represents and  warrants to the Reinsurer, as of the date hereof and as of the Closing Date (except for  representations and warranties which address matters only as of a specific date, which  representations and warranties shall be true and correct as of such specific date), as follows:   1. The Company is duly incorporated, validly existing and in good standing under the  laws of its jurisdiction of domicile, and has the requisite corporate power and  authority to: (a) own its properties and assets and to carry on its business as  currently conducted; (b) enter into and consummate the transactions contemplated  by, and carry out its obligations under, this Agreement; and (c) execute and deliver  the Transaction Agreements, perform its obligations under the Transaction  Agreements and consummate the transactions contemplated under the Transaction  Agreements.  2. (a) The Transaction Agreements and the consummation of the transactions  contemplated hereunder and thereunder have been or will be duly authorized by all  requisite corporate action on the part of the Company.  This Agreement has been  and, the Transaction Agreements to be delivered at or after Closing will be, duly  executed and delivered by the Company, and, assuming due authorization,  execution and delivery by the Reinsurer, this Agreement constitutes, and the other  Transaction Agreements to be delivered at or after Closing will constitute, the legal,  valid and binding obligation of the Company, enforceable against it in accordance  with their terms except to the extent such enforceability may be subject to, and  limited by, applicable bankruptcy, insolvency, fraudulent conveyance,  reorganization, moratorium, receivership and similar law affecting the enforcement  of creditors’ rights generally, and general equitable principles (regardless of  whether enforceability is considered a proceeding at law or in equity) (collectively,  the “Enforceability Exceptions”).  (b) The execution, delivery and performance by  the Company of the Transaction Agreements does not, and the consummation of  the transactions contemplated hereunder and thereunder will not, with or without  notice or lapse of time, or both: (i) conflict with, be prohibited by or require any  approval that has not already been obtained under any of the provisions of the  organizational documents of the Company; (ii) conflict with, result in a breach of  or default under, be prohibited by, require any consent or other action under, or give  rise to a right of termination, amendment or acceleration under, any contract or  instrument to which the Company is a party, except as would not have or be  reasonably expected to have a material adverse effect on the Company; or (iii)  contravene any requirements of Applicable Law or any Order, permit or license  applicable to the Company in any material respect.  3. Other than the Required Regulatory Approvals, no consent, approval or  authorization of, or declaration or filing with, or notice to, any Governmental  Authority is required to be made by or with respect to the Company in connection  with the execution, delivery and performance of the Transaction Agreements by the  Company or the consummation by the Company of any of the transactions  

 

  Page 25   contemplated hereunder and thereunder, other than such consent, approval, or  authorization from any Governmental Authority that has already been obtained by  the Company or any declaration, filing with or notice to any Governmental  Authority that has already been made by the Company.   4. The Company is in material compliance with each of the following: (a) its  organizational documents; (b) all Applicable Law to the extent related to the  Policies or the Subject Business; and (c) all material Orders, permits and licenses  issued to it by any Governmental Authority in connection with the Policies or the  Subject Business.  5. No broker or finder, other than the Intermediary, whose fee shall be paid by the  Company, has acted directly or indirectly for the Company, and neither the  Company nor any Affiliate thereof has incurred any obligation in respect of any  broker or finder which might be entitled to any fee or commission from the  Reinsurer or its Affiliates in connection with the transactions contemplated by this  Agreement.                6. With respect to Section 9(A)(6) of the Company Disclosure Schedule, (a) the  factual data made available to the Reinsurer by the Company and its Affiliates as  regards the Subject Business set forth thereon was accurate in all material respects  as of the date indicated therein, (b) the IBNR set forth thereon was calculated in  accordance with the Reserve Standard and (c) the actuarial work product thereon  was produced in accordance with generally accepted actuarial principles and sound  actuarial judgment. The reserves and other provisions made for claims, benefits and  any other liabilities with respect to the Subject Business, whether reported or  incurred but not reported (“IBNR”), as established or reflected on the Company’s  most recent statutory annual statement were calculated in all material respects in  accordance with: (a) applicable statutory accounting principles and generally  accepted actuarial principles, in each case consistently applied; (b) Applicable Law;  and (c) otherwise in accordance with the terms of the Policies; provided, however,  nothing in this subparagraph 6 shall be deemed a representation or warranty with  respect to the adequacy or sufficiency of reserves (the preceding clauses (a), (b) and  (c), together with the proviso, the “Reserve Standard”).   

 

  Page 26   7. Since the Effective Date, (a) the Subject Business has been conducted in all material  respects in the ordinary course consistent with past practices and (b) there has not  been any adverse event, change or circumstance that, individually or in the  aggregate, has had or would reasonably be expected to have a material adverse  effect on the Subject Business or the Liabilities reinsured under this Agreement.  8. As of the date hereof, there is no material claim, action, suit, litigation, legal,  administrative or arbitrative proceeding, regulatory inquiry, investigation,  examination or Order  relating to the Policies or the Subject Business that, in each  case, challenges or may reasonably be expected to have the effect of preventing,  delaying or making unlawful the consummation of the transactions contemplated  by the Transaction Agreements.  9. The Policies are (or were, with respect to expired or cancelled Policies) in full force  and effect with respect to the coverage periods stated therein and are valid and  enforceable by the issuing insurance company in accordance with their terms,  subject to the Enforceability Exceptions. With respect to the Policies (a) the issuing  insurance company is not in default under such Policy in any material respect and  no event has occurred or is occurring which would create such a default by the  issuing insurance company under such Policy (it being understood that claims under  the Policies that are the subject of a good faith dispute shall not constitute defaults  under the Policies for purpose of this subparagraph) and (b) each such Policy was  issued in compliance in all material respects with Applicable Law. There are no  material pending or, to the knowledge of the Company, threatened disputes with  respect to the validity of any Policy.  10. [***] for incurred but not reported losses and which was calculated in all material  respects in accordance with: (a) applicable statutory accounting principles and  generally accepted actuarial principles, in each case consistently applied; (b)  Applicable Law; and (c) otherwise in accordance with the terms of the agreement(s)  relating to such Third-Party Reinsurance.  11. (a) No agreement relating to any material Third-party Reinsurance contains any  provision under which the reinsurer thereunder may terminate such agreement by  reason of the transactions contemplated by this Agreement and (b) there has been  no separate contract between the applicable ceding company (or its Affiliates) and  any other party to such agreement that would under any circumstances reduce,  limit, mitigate or otherwise affect any actual or potential loss to the parties under  any such agreement, other than inuring contracts that are explicitly defined in any  such agreement.  12. With respect to each agreement relating to any material Third-party Reinsurance:  (a) neither the applicable ceding company (or its Affiliates), on the one hand, nor,  to the knowledge of the Company, the reinsurer, on the other hand, is in default  under such agreement, and no event has occurred which would create a material  default or breach by the applicable ceding company (or its Affiliates) under such  agreement; (b) such agreement is in full force and effect and is valid and  enforceable in accordance with its terms subject to the Enforceability Exceptions;  

 

  Page 27   and (c) such agreement complies in all material respects with Applicable Law.  There are no material pending or, to the knowledge of the Company, threatened  disputes with respect to the validity of any such agreement.  13. The Company has made available to the Reinsurer true and correct copies of all  external actuarial reports of which the Company is aware with respect to periods  ended on or after September 30, 2021 as regards the Subject Business and the  factual information and factual data upon which such reports are based are true and  correct in all material respects.  No material information related to the Subject  Business has been (a) knowingly withheld from the Reinsurer with the intent of  misleading the Reinsurer or (b) knowingly misstated.  B. The Reinsurer represents and warrants to the Company as follows as of the date hereof and  as of the Closing Date:  1. The Reinsurer is duly incorporated, validly existing and in good standing under the  laws of Bermuda and has the requisite corporate power and authority to: (a) own  its properties and assets and to carry on its business as currently conducted;  (b) enter into and consummate the transactions contemplated by, and carry out its  obligations under, this Agreement; and (c) execute and deliver the Transaction  Agreements, perform its obligations under the Transaction Agreements and  consummate the transactions contemplated under the Transaction Agreements.  2. (a) The Transaction Agreements and the consummation of the transactions  contemplated hereunder and thereunder have been or will be duly authorized by all  requisite corporate action on the part of the Reinsurer.  This Agreement has been  and, the Transaction Agreements to be delivered at or after Closing will be, duly  executed and delivered by the Reinsurer, and, assuming due authorization,  execution and delivery by the Company, this Agreement constitutes, and the other  Transaction Agreements to be delivered at or after Closing will constitute, the legal,  valid and binding obligation of the Reinsurer, enforceable against it in accordance  with their terms except to the extent such enforceability may be subject to, and  limited by, the Enforceability Exceptions. (b) The execution, delivery and  performance by the Reinsurer of the Transaction Agreements does not, and the  consummation of the transactions contemplated hereunder and thereunder will not,  with or without notice or lapse of time, or both: (i) conflict with, be prohibited by  or require any approval that has not already been obtained under any of the  provisions of the organizational documents of the Reinsurer; (ii) conflict with,  result in a breach of or default under, be prohibited by, require any consent or other  action under, or give rise to a right of termination, amendment or acceleration  under, any contract or instrument to which the Reinsurer is a party, except as would  not have or be reasonably expected to have a material adverse effect on the  Reinsurer; or (iii) contravene any requirements of Applicable Law or any Order,  permit or license applicable to the Reinsurer in any material respect.  3. Other than the Required Regulatory Approvals, no consent, approval or  authorization of, or declaration or filing with, or notice to, any Governmental  Authority is required to be made by or with respect to the Reinsurer in connection  

 

  Page 28   with the execution, delivery and performance of the Transaction Agreements by the  Reinsurer or the consummation by the Reinsurer of any of the transactions  contemplated hereunder and thereunder, other than such consent, approval, or  authorization from any Governmental Authority that has already been obtained by  the Reinsurer or any declaration, filing with or notice to any Governmental  Authority that has already been made by the Reinsurer.  4. Since December 31, 2020, the Reinsurer has filed all statutory annual statements,  together with all material exhibits, interrogatories, notes, schedules and any  actuarial opinions, affirmations or certifications or other supporting documents in  connection therewith, in each case required by Applicable Law to be filed by  Reinsurer with its domiciliary regulator on forms prescribed or permitted thereby  (collectively, the “SAP Statements”).  The Reinsurer has made available to the  Company correct and complete copies of the SAP Statements.  Subject to the notes  thereto, the SAP Statements present fairly, in all material respects, the statutory  financial position and the statutory results of operations, capital and surplus of the  Reinsurer, respectively, as of the respective dates and for the respective periods  referred to therein, subject to normal year-end adjustments.  5. No broker or finder has acted directly or indirectly for the Reinsurer, and neither  the Reinsurer nor any Affiliate thereof has incurred any obligation in respect of any  broker or finder which might be entitled to any fee or commission from the  Company or its Affiliates in connection with the transactions contemplated by this  Agreement.  ARTICLE 10 - CLOSING CONDITIONS  A. The Reinsurer’s obligation to consummate the transactions contemplated by this  Agreement to be consummated at the Closing is subject to the satisfaction (or waiver, if  permissible under Applicable Law) on or prior to the Closing Date of the following  conditions:    1. The representations and warranties of the Company set forth in this Agreement  (without giving effect to any limitation set forth therein as to materiality or material  adverse effect) shall be true and correct on and as of the Closing Date as though  made on and as of the Closing Date (except to the extent any such representation  and warranty speaks only as of an earlier date, in which event such representation  and warranty shall have been true and correct as of such date), except where the  failure of such representations and warranties to be so true and correct would not,  individually or in the aggregate, reasonably be expected to materially adversely  affect the Subject Business.  2. The Company shall have performed and complied with all covenants and  agreements required by this Agreement to be performed or complied with, in each  case, in all material respects by the Company at or prior to the Closing.  3. The Reinsurer shall have received a certificate from the Company, dated as of the  Closing Date and signed by a duly authorized officer of the Company, that each of  

 

  Page 29   the conditions set forth in the foregoing subparagraphs (1) and (2) above have been  satisfied.  4. There shall be no final, non-appealable Order, stipulation or determination of any  Governmental Authority restraining, enjoining or otherwise prohibiting the  consummation of the transactions contemplated by this Agreement.  5. The Required Regulatory Approvals listed under the heading “Reinsurer  Regulatory Approvals” on Schedule E shall have been made or obtained, as  applicable.  6. The Reinsurer shall have received executed copies of each of the Transaction  Agreements to be executed and delivered by the Company.  B. The Company’s obligation to consummate the transactions contemplated by this  Agreement to be consummated at the Closing is subject to the satisfaction (or waiver, if  permissible under Applicable Law) on or prior to the Closing Date of the following  conditions:  1. The representations and warranties of the Reinsurer set forth in this Agreement  (without giving effect to any limitation set forth therein as to materiality) shall be  true and correct on and as of the Closing Date as though made on and as of the  Closing Date (except to the extent any such representation and warranty speaks  only as of an earlier date, in which event such representation and warranty shall  have been true and correct as of such date), except where the failure of such  representations and warranties to be so true and correct would not, individually or  in the aggregate, impair the ability of the Reinsurer to consummate any of the  transactions contemplated by the Transaction Agreements.  2. The Reinsurer shall have performed and complied in all material respects with all  covenants and agreements required by this Agreement to be performed or complied  with, in each case, in all material respects by the Reinsurer at or prior to the Closing.  3. The Company shall have received a certificate from the Reinsurer, dated as of the  Closing Date and signed by a duly authorized officer of the Reinsurer, that each of  the conditions set forth in the foregoing subparagraphs (1) and (2) above have been  satisfied.  4. There shall be no final, non-appealable Order, stipulation or determination of any  Governmental Authority restraining, enjoining or otherwise prohibiting the  consummation of the transactions contemplated by this Agreement.  5.  The Required Regulatory Approvals listed under the heading “Company  Regulatory Approvals” on Schedule E shall have been made or obtained, as  applicable.  6. The Company shall have received executed copies of each of the Transaction  Agreements to be executed and delivered by the Reinsurer.  

 

  Page 30   7. The Company shall have received from the Reinsurer a properly completed and  executed IRS Form W-8BEN-E, reasonably satisfactory to the Company,  indicating that the Reinsurer is not subject to any withholding under FATCA and,  if applicable, the Reinsurer’s status as a FATCA compliant Foreign Financial  Institution has been corroborated by the Reinsurer’s name and Global Intermediary  Identification Number appearing on the list of FATCA compliant Foreign Financial  Institutions published periodically by the U.S. Internal Revenue Service.  ARTICLE 11 - INDEMNIFICATION  A. Survival of Representations, Warranties, Covenants and Agreements  1. The representations and warranties of the parties contained in this Agreement shall  survive the Closing solely for purposes of this Article and shall terminate and expire  eighteen (18) months from the Closing Date; provided that the Company Fundamental  Representations and the Reinsurer Fundamental Representations shall survive until the  expiration of the applicable statute of limitations. Any claim for indemnification in  respect of any representation or warranty that is not asserted by notice given as required  herein prior to the expiration of the applicable survival period specified in this  subparagraph 1 shall not be valid and any right to indemnification is hereby irrevocably  waived after the expiration of such period of survival.  2. To the extent that it is to be performed after the Closing, each covenant in this  Agreement will, for purposes of this Article, survive and remain in effect in accordance  with its terms plus a period of six months thereafter, after which no claim for  indemnification with respect thereto may be brought hereunder. All covenants in this  Agreement that by their terms are required to be fully performed prior to the Closing  will survive the Closing for a period of six months from the Closing Date, after which  time no claim for indemnification with respect thereto may be brought hereunder.  3. For purposes of determining whether a breach of a representation or warranty has  occurred and in determining the amount of any Damages under this Article, each  representation and warranty contained in this Agreement shall be read without regard  to any materiality or material adverse effect qualifier contained therein, except to the  extent that the foregoing results in a breach of a representation or warranty due solely  to the failure of a Party to list any item or matter on a schedule hereto in reliance on  such qualification.  B. Indemnification of the Reinsurer by the Company:   The Company shall indemnify and hold harmless the Reinsurer and its representatives  from and against any and all (i) Damages to the extent arising from (A) any breach of  any representation or warranty of the Company made in paragraph A of the  Representations and Warranties Article or any certificate delivered hereunder or (B)  any breach of nonfulfillment of any agreement or covenant of the Company under this  Agreement and not attributable to any acts or omissions of the Reinsurer or its  representatives unless performed (or not performed) at the written request of the  Company and (ii) Company Extra Contractual Obligations.  

 

  Page 31   C. Indemnification of the Company by the Reinsurer:  The Reinsurer shall indemnify and hold harmless the Company and its respective  representatives from and against any and all (i) Damages to the extent arising from (A)  any breach of any representation or warranty of the Reinsurer made in paragraph B of  the Representations and Warranties Article or any certificate delivered hereunder or  (B) any breach of nonfulfillment of any agreement or covenant of the Reinsurer under  this Agreement and not attributable to any acts or omissions of the Company or its  representatives unless performed (or not performed) at the written request of the  Reinsurer and (ii) Reinsurer Extra Contractual Obligations.  D. Certain Limitations:  1. Except in the case of fraud, the Company shall not be obligated to indemnify and  hold harmless the Reinsurer under sub-section (i)(A) of paragraph B of this Article  with respect to any claim, unless and until the aggregate amount of all Damages of  the Reinsurer under sub-section (i)(A) of paragraph B of this Article exceeds  $5,000,000 (the “Deductible”), at which point the Company shall be liable to the  Reinsurer for the value of claims under sub-section (i)(A) of paragraph B of this  Article that is in excess of the Deductible, subject to the limitations set forth in this  Article; provided, however, that any and all Damages to the extent arising from any  breach of any representation or warranty of the Company made in subparagraphs  10, 11 and 12 of paragraph A of the Representations and Warranties Article (the  “Reinsurance Representations and Warranties”) shall not be subject to the  Deductible; and, provided, further, that the maximum aggregate liability of the  Company to the Reinsurer for any or all Damages under sub-section (i)(A) of  paragraph B of this Article (i) excluding any and all Damages to the extent arising  from any breach of the Reinsurance Representations and Warranties, shall not  exceed $50,000,000 (the “Cap”) and (ii) with respect to any and all Damages to the  extent arising from any breach of any Reinsurance Representations and Warranties,  shall not exceed $100,000,000.  2. Each party shall use commercially reasonable efforts to avoid or mitigate its  Damages upon and after becoming aware of any event or condition which would  reasonably be expected to give rise to any Damages.  3. Except in the case of fraud, the Reinsurer shall not be obligated to indemnify and  hold harmless the Company under sub-section (i)(A) of paragraph C of this Article  with respect to any claim, unless and until the aggregate amount of all Damages of  the Company under sub-section (i)(A) of paragraph C of this Article exceeds the  Deductible, at which point the Reinsurer shall be liable to the Company for the  value of claims under sub-section (i)(A) of paragraph C of this Article that is in  excess of the Deductible, subject to the limitations set forth in this Article; provided  that the maximum aggregate liability of the Reinsurer to the Company for any or  all Damages under this Agreement shall not exceed the Cap.  4. [Reserved].  

 

  Page 32   5. In the event a claim for indemnification under this Article has been finally  determined, the amount of such final determination shall be paid (i) if the  indemnified party is the Reinsurer, by the Company to the Reinsurer and, (ii) if the  indemnified party is the Company, by the Reinsurer to the Company, in each case  on demand by wire transfer of immediately available funds to an account  designated by the Company or the Reinsurer, as applicable. A claim for  indemnification, and the liability for and amount of damages therefor, shall be  deemed to be “finally determined” for purposes of this Article when the Parties  have so determined by mutual agreement or, if disputed, when a final non- appealable Order has been entered into with respect to such claim.  E. Exclusive Remedy: Except for fraud, this Article shall be the sole and exclusive  remedies of the Reinsurer and the Company for the breach of any representation,  warranty, covenant or agreement contained in this Agreement.  Each Party hereby  waives any and all rights to rescission of this Agreement.  ARTICLE 12 - CONFIDENTIALITY  A. Each Party (the “Receiving Party”) hereby acknowledges that the terms and conditions of  this Agreement, any materials provided by the other Party in the course of audit or  inspection and any documents, information and data provided to it by the other Party,  whether directly or indirectly, in connection with the placement, negotiation, execution and  performance of this Agreement (hereinafter referred to as “Confidential Information”), are  proprietary and confidential to the other Party (the “Disclosing Party”).  Confidential  Information shall not include documents, information or data that the Receiving Party can  show:    1. Are publicly available or have become publicly available through no unauthorized  act of the Receiving Party;    2. Have been rightfully received from a third Person authorized to transmit such  information who is not subject to an obligation of confidentiality to the Disclosing  Party or its Affiliates with respect to such information;     3. Were known by the Receiving Party prior to the date of this Agreement without an  obligation of confidentiality and not derived from any Confidential Information; or    4. Was independently developed by the Receiving Party or its Affiliates without the  use or benefit of any information that would otherwise be Confidential Information.    B. Absent the written consent of the Disclosing Party, the Receiving Party shall not disclose  any Confidential Information to any third parties, except:    1. When required by Applicable Law or a Governmental Authority, including in  connection with the performance of an audit of the Receiving Party’s records and/or  financial condition;    

 

  Page 33   2. When required by external auditors performing an audit of the Receiving Party’s  records;    3. In connection with the Receiving Party’s performance of its obligations or  enforcement of its rights under this Agreement or any other Transaction  Agreement; or    4. To those of such Receiving Party’s Affiliates who need to know such information  for the foregoing purposes.    Notwithstanding the foregoing, prior to disclosure of Confidential Information to any third  party under this paragraph B, the Reinsurer shall advise such third party that it shall be  bound by the obligations and provisions of this Article and shall be responsible for  disclosure of Confidential Information in violation of this Article by any such third party.    C. Notwithstanding the above, in the event the Receiving Party is required by Order, other  legal process or any Governmental Authority to release or disclose any or all of the  Confidential Information, the Receiving Party agrees to provide the Disclosing Party with  Notice of same at least ten Business Days prior to such release or disclosure, unless  otherwise prohibited by Applicable Law, and to use its commercially reasonable efforts to  assist the Disclosing Party, at the Disclosing Party’s expense, to obtain a protective order  or otherwise in maintaining the confidentiality provided for in this Article.    D. The Receiving Party shall comply with all Applicable Laws and industry requirements that  relate to the confidentiality, processing, use, storage, modification, deletion, privacy,  security, protection, transfer or trans-border flow of information or data.    E. The provisions of this Article shall extend to the officers, directors, employees, agents and  representatives of each Party and its Affiliates, and shall be binding upon their successors  and assigns, and the obligations contained in this Article shall survive the termination or  expiration of this Agreement.  ARTICLE 13 - ACCESS TO RECORDS   The Reinsurer or its duly appointed representative shall have access to the books and records of  the Company solely with respect to matters relating to the Subject Business upon reasonable  advance written notice to the Company and at reasonable times during the regular business hours  of the Company from time to time (but no more frequently than once per calendar half year), at  the location where such books and records are maintained in the ordinary course of business, for  the purpose of obtaining information concerning the Subject Business as it relates to this  Agreement; provided, however, such access shall not unreasonably interfere with any of the  business or operations of the Company.  It is understood that reasonable advance written notice  shall not be less than three Business Days.  The Reinsurer may make copies of records of the  Company solely with respect to matters relating to the Subject Business and at the Reinsurer’s sole  expense.  In no event will the rights of the Reinsurer under this Article delay the prompt payment  of amounts due hereunder.   

 

  Page 34   ARTICLE 14 - REASONABLE BEST EFFORTS; REGULATORY MATTERS  A. Upon the terms and subject to the conditions set forth in this Agreement, each of the  Company and the Reinsurer shall, and shall cause their respective Affiliates to, use  reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be  done, and to assist and cooperate with the other Party in doing, all things reasonably  necessary, proper or advisable to consummate and make effective, in the most expeditious  manner practicable, the transactions contemplated by this Agreement, including (i)  preparing and filing with any Governmental Authority all consents, approvals, waivers,  authorizations, notices and filings necessary, proper or advisable to consummate the  transactions contemplated by this Agreement, (ii) using reasonable best efforts to provide  and causing their respective Affiliates to use reasonable best efforts to provide, such  information and documents to Governmental Authorities as such Governmental  Authorities may reasonably request and (iii) using reasonable best efforts to obtain all  consents, approvals, waivers or authorizations of Governmental Authorities necessary,  proper or advisable to consummate the transactions contemplated by this Agreement and  the other Transaction Agreements.  For the avoidance of doubt, each party shall be solely  responsible for the costs of making or obtaining any such consents, approvals, waivers,  authorizations, notices and filings that it is required to make or obtain.  B. The actions required by this Article shall not include acceptance by a Party together with  its Affiliates of any requirement or condition that would or would reasonably be expected  to materially decrease the aggregate economic benefits of the transactions contemplated by  this Agreement and the other Transaction Agreements to such Party and its Affiliates taken  as a whole.  C. Without limiting the generality of the foregoing, (i) each of the Company and the Reinsurer  will make any filings required by the BMA as promptly as practicable, but in no event later  than ten Business Days from the date hereof, with the BMA and (ii) the Parties hereto shall  promptly, but in no event later than ten Business Days from the date hereof, make all other  filings or submissions required with respect to other required approvals of Governmental  Authorities.  D. The Company and the Reinsurer agree that they shall consult with each other with respect  to the obtaining of all consents, approvals, waivers and authorizations necessary, proper or  advisable to consummate the transactions contemplated by this Agreement and the other  Transaction Agreements and each Party shall keep the other apprised at reasonable  intervals of the status of such matters relating to such consents, approvals and waivers.  The  Company and the Reinsurer shall have the right to review in advance and shall be provided  with a reasonable opportunity to comment on, and to the extent practicable each shall  consult the other on, in each case subject to Applicable Law, any material filing made with,  or written materials submitted to, any Governmental Authority in connection with the  transactions contemplated by this Agreement and the other Transaction Agreements, and  each Party agrees to in good faith consider and reasonably accept comments of the other  Party thereon.  Each of the Company and the Reinsurer shall promptly deliver to the other  Party copies of all such filings, applications and submissions relating thereto, and any  supplement, amendment or item of additional information in connection therewith.  The  Company and the Reinsurer shall at reasonable intervals advise each other upon receiving  

 

  Page 35   any substantive communication from any Governmental Authority with respect to any  consent, approval, waiver or authorization required to consummate the transactions  contemplated by this Agreement and the other Transaction Agreements, including at  reasonable intervals furnishing each other copies of any written or electronic  communication, and shall promptly advise each other when any such communication  causes such Party to believe that there is a reasonable likelihood that any such consent,  approval, waiver or authorization will not be obtained or that the receipt of any such  consent, approval, waiver or authorization will be materially delayed or conditioned. Each  of the Company and the Reinsurer shall not, and shall cause its respective Affiliates not to,  permit any of their respective directors, officers, employees, partners, members,  shareholders or any other representatives to participate in any pre-scheduled live or  telephonic meeting (other than non-substantive scheduling or administrative calls) with any  Governmental Authority in respect of any filings, investigation or other inquiry relating to  the transactions contemplated hereby unless it consults with the other in advance and, to  the extent permitted by Applicable Law and by such Governmental Authority, gives the  other Party the opportunity to attend and participate in such meeting.  Notwithstanding  anything herein to the contrary no Party shall be required to disclose to the other Party any  of its or its Affiliates’ confidential competitive information or any personally identifiable  information of their respective officers, directors other applicable individuals.  E. In the event that any Governmental Authority requests that this Agreement be amended or  any other Transaction Agreement be modified in connection with receipt of a Required  Regulatory Approval, subject to the standard set forth in paragraph A of this Article and  the limitations set forth in paragraph B of this Article, the parties shall work together in  good faith to agree upon language with the applicable Governmental Authority and  thereafter implement such language in such amendment or modification, as applicable.    ARTICLE 15 - INSOLVENCY  A. In the event of the insolvency of the Company, all reinsurance made, ceded, renewed or  otherwise becoming effective under this Agreement shall be payable by the Reinsurer on  the basis of the liability of the Company under the Policies reinsured hereunder without  diminution because of the insolvency of the Company.  In the event of insolvency of the  Company and the appointment of a liquidator, receiver or statutory successor of the  Company, such payments by the Reinsurer shall be made directly to the Company or its  liquidator, receiver or statutory successor, except where the contract specifically provides  another payee of such reinsurance in the event of the insolvency of the Company or where  the Reinsurer with the consent of the direct insured or insureds has assumed such policy  obligations of the Company to the payees under such policies and in substitution for the  obligations of the Company to such payees.  Except as provided in this paragraph, the  Reinsurer may not pay or settle, or agree to pay or settle, any Policy claim, or any portion  thereof, directly to or with a policyholder of the Company if an Order of Rehabilitation or  Liquidation (as defined in Chapter 215 of the Illinois Insurance Code) has been entered  against the Company.  Unless otherwise required by Applicable Law, under no  circumstances shall the Reinsurer’s liability hereunder be accelerated or enlarged by the  insolvency of the Company.  

 

  Page 36   B. It is agreed and understood that in the event of the insolvency of the Company, the  liquidator or receiver of the Company shall give written notice to the Reinsurer of the  pendency of a claim against the Company on the Policies reinsured hereunder within a  reasonable time after such claim is filed in the insolvency proceedings and that, during the  pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own  expense, in the proceeding where such claim is to be adjudicated, any defense or defenses  which it considers available to the Company or its liquidator or receiver.  It is further  understood that the expense thus incurred by the Reinsurer shall be chargeable against the  Company as a part of the expenses of liquidation to the extent of a proportionate share of  the benefit which accrues to the Company solely as a result of the defense undertaken by  the Reinsurer.  ARTICLE 16 - NOTICES  A. A notice or other communication pursuant to this Agreement (a “Notice”) shall be:  1. In writing;  2. In the English language; and  3. Delivered personally or sent by first class post pre-paid recorded delivery (and air  mail if overseas) or by courier using an internationally recognized courier company  or by email to the Party due to receive the Notice to the address set out in paragraph  C below or to an alternative address or person specified by that Party by not less  than five Business Days’ written notice to the other Party received before the Notice  was dispatched.  B. Unless there is evidence that it was received earlier, a Notice is deemed given if:  1. Delivered personally or by courier, when left at the address referred to in paragraph  C below or, where left other than on a Business Day or outside normal business  hours, on the next Business Day;  2. Sent by mail, except air mail, six Business Days after posting it;  3. Sent by air mail, two Business Days after posting it; and  4. Sent by email, when confirmation of its transmission has been recorded by the  sender’s email capable device and where transmitted other than on a Business Day  or outside normal business hours, on the next Business Day.  

 

  Page 37   C. The addresses referred to in this Article are:    If to the Company:    Argonaut Insurance Company  225 W. Washington Street, 24th Floor  Chicago, Illinois 60606  United States of America  Attention: Thomas McCartney  Email: thomas.mccartney@argogroupus.com    with copies (which shall not constitute notice) to:    Argonaut Insurance Company  225 W. Washington Street, 24th Floor  Chicago, Illinois 60606  United States of America  Attention: Allison Kiene  Email: allison.kiene@argogroupus.com    with additional copies (which shall not constitute notice) to:    Skadden, Arps, Slate, Meagher & Flom LLP  One Manhattan West  New York, New York 10001  Email: elena.coyle@skadden.com   chris.ulery@skadden.com  Attention: Elena M. Coyle    Christopher J. Ulery    If to the Reinsurer:    Cavello Bay Reinsurance Limited  Windsor Place, 3rd Floor  22 Queen Street  Hamilton, HM11  Bermuda  Attention:  Paul J. O’Shea  Email:  Paul.OShea@enstargroup.com    

 

  Page 38   with copies (which shall not constitute notice) to:    Hogan Lovells US LLP   1735 Market Street, Suite 2300  Philadelphia, PA 19103-6996  Attention:  Robert C. Juelke  Telephone:  267-675-4615  Email:  bob.juelke@hoganlovells.com  ARTICLE 17 - MISCELLANEOUS   A. Amendments  1. This Agreement may be amended only by mutual consent of the Parties expressed  in a written addendum executed by the Parties with the same formalities as this  Agreement, and such addendum shall be deemed to be an integral part of this  Agreement and binding on the Parties accordingly.  The expression amendment  shall include any variation, supplement, deletion or replacement howsoever  effected.  2. Unless expressly agreed, no variation shall constitute a general waiver of any  provisions of this Agreement, nor shall it affect any rights, obligations or liabilities  under or pursuant to this Agreement which have already accrued up to the date of  variation, and the rights and obligations under or pursuant to this Agreement shall  remain in full force and effect, except and only to the extent that they are so varied.  B. Costs  Each of the Parties shall pay its own costs incurred in connection with the negotiation and  entering into of the Transaction Agreements, unless otherwise agreed in writing or unless  otherwise specified in this Agreement.  C. Counterparts  This Agreement may be executed in any number of counterparts and by each Party on  separate counterparts, each of which when executed and delivered is an original and all of  which together evidence the same Agreement.  Delivery of a counterpart of this Agreement  by email attachment or telecopy shall be an effective mode of delivery.  D. Currency  The sign “$” in this Agreement refers to United States of America dollars, and all payments  will be made in that currency.  E. Entire Agreement  This Agreement and the other Transaction Agreements represent the entire agreement  between the Company and the Reinsurer with respect to the subject matter hereof and  thereof. There are no understandings between the Parties other than as expressed in this  Agreement and the Transaction Agreements. All prior agreements, understandings and  

 

  Page 39   representations made by the Company and the Reinsurer are superseded by this Agreement  and the Transaction Agreements.   F. Errors and Omissions  Any inadvertent delay, omission, or error will not relieve the non-erring Party hereto from  any liability, which would attach to it hereunder if such delay, omission or error had not  been made, provided, such omission or error is rectified promptly upon discovery.  G. Further Assurances  Each of the Parties shall at any time (and from time to time on being reasonably required  by the other Party) execute or procure all acts, deeds, documents and things reasonably  necessary and within its power to give effect to the terms of this Agreement.  Within 30  days of the date hereof or, if earlier, the Closing, the Company will provide the Reinsurer  with a true and correct list of all policies, contracts, agreements and binders providing  Third-party Reinsurance, and the Company will reasonably cooperate and provide  assistance to the Reinsurer in its review of the aggregate value of the Third-party  Reinsurance stated in Article 9, Section A, sub-section 10.   H. Severability  1. If any provision of this Agreement shall be rendered illegal or unenforceable by the  laws, regulations or public policy of any jurisdiction, such provision shall be  considered void in such jurisdiction, but this shall not affect the validity or  enforceability of any other provision of this Agreement or the validity or  enforceability of such provision in any other jurisdiction.  2. The Parties shall negotiate in good faith to attempt to agree to such provision so  that it will comply with the Applicable Laws of the jurisdiction in which it was  rendered illegal and unenforceable in order to effectuate the Parties’ original intent.  I. No Waiver  The failure to exercise or delay in exercising a right or remedy provided by this Agreement  or by Applicable Law does not impair or constitute a waiver of the right or remedy or an  impairment of or a waiver of other rights or remedies.  No single or partial exercise of a  right or remedy provided by this Agreement or by Applicable Law presents further exercise  of the right or remedy, or the exercise, of another right or remedy.  J. Parties to this Agreement   The Parties shall not assign, novate, transfer, declare a trust or in any other way alienate  any other rights under this Agreement, whether in whole or in part, without the prior written  consent of the other Party.  This Agreement shall be binding upon all successors, assignees  and transferees of the Parties to this Agreement; provided, however, that neither this  Agreement nor any rights or obligations under this Agreement may be novated, assigned,  charged or otherwise transferred or disposed of by either Party without the prior written  consent of the other Party. Notwithstanding the foregoing, the Reinsurer shall have the  right to reinsure or otherwise share the losses reinsured hereunder, provided that in no way  

 

  Page 40   shall such reinsurance or other sharing of losses lessen or in any way diminish the  Reinsurer’s obligations to the Company hereunder.  K. Rights and Remedies  No failure or delay by any Party in exercising any right or remedy provided by law or under  this Agreement or any Transaction Agreement shall impair such right or remedy or operate  or be construed as a waiver or variation of it or preclude its exercise at any subsequent time  and no single or partial exercise of any such right or remedy shall preclude any further  exercise of it or the exercise of any other remedy.  L. Third Party Rights  Nothing will in any manner create any obligations or establish any rights against the  Reinsurer in favor of any third parties or any persons not parties to this Agreement except  as expressly provided otherwise herein.  M. Taxes  1. Federal Excise Tax.  The Company shall pay to the applicable Governmental  Authority, any and all Federal Excise Tax due with respect to the premium payable  to the Reinsurer hereunder, to the extent such premium is subject to the Federal  Excise Tax.  2. Federal Excise Refunds Tax.  In the event of any return of premium becoming due  hereunder, to the extent Federal Excise Tax was withheld from the premium by the  Company the Reinsurer shall be entitled to deduct the applicable percentage of  Federal Excise Tax from the return premium payable hereon, and the Company  shall be entitled to take steps to recover and retain for its own account any refund  of such Federal Excise Tax from the applicable Governmental Authority  attributable to such return premium.  3. Withholding Taxes.  The Company shall be entitled to deduct and withhold from  amounts payable to the Reinsurer pursuant to this Agreement any amounts of Taxes  pursuant to FATCA, except to the extent that both (i) the Reinsurer timely delivers  to the Company such properly completed and executed documentation as  prescribed by applicable Law or reasonably requested by the Company (and  periodically updates such documentation as prescribed by applicable Law or  reasonably requested by the Company) indicating that the Reinsurer is not subject  to any withholding under FATCA, and (ii) if the Reinsurer indicates that it is a  FATCA compliant Foreign Financial Institution within the meaning of FATCA,  such status is corroborated by the Reinsurer’s name and Global Intermediary  Identification Number appearing on the list of FATCA compliant Foreign Financial  Institutions published periodically by the U.S. Internal Revenue Service.  To the  extent that any amounts of Taxes are deducted and withheld by the Company and  remitted to the appropriate Governmental Authority, such withheld and remitted  amounts shall be treated for all purposes of this Agreement as having been paid to  the Reinsurer.  N. Notification of Investigations.   

 

  Page 41   The Reinsurer will notify the Company in writing of any and all investigations of the  Reinsurer conducted by any Governmental Authority, other than routine regulatory  examinations.  O. Offset  The Company and the Reinsurer may offset any balance or amount due from one Party to  the other Party under this Agreement, and only the net balance shall be allowed or paid.   This paragraph shall apply, to the fullest extent permitted by Applicable Law,  notwithstanding the initiation or commencement of a liquidation, insolvency,  rehabilitation, conservation, supervision or similar proceeding by or against the Company  or the Reinsurer.  P. Certain Limitations  Notwithstanding anything to the contrary contained herein, the other Transaction  Agreements, the Company Disclosure Schedule, or any of the schedules or exhibits hereto  or thereto each Party acknowledges and agrees that neither the other Party nor any of its  Affiliates, nor any representative of any of them, makes or has made, and such Party has  not relied on, any inducement, promise, representation or warranty, oral or written, express  or implied, other than except as expressly made the other Party in this Agreement or any  certificate delivered hereunder.  With respect to any estimation, valuation, appraisal,  projection, or forecast included in data that is the subject of a representation or warranty  pursuant to paragraph A of the Representations and Warranties Article, the Reinsurer  acknowledges and agrees that: (i) there are uncertainties inherent in attempting to make  such estimations, valuations, appraisals, projections, and forecasts; (ii) it is familiar with  such uncertainties; and (iii) it is not acting and has not acted in reliance on, and the  Company has not made any representation or warranty as to, the accuracy of any such  estimation, valuation, appraisal, projection, or forecast delivered by or on behalf of the  Company to the Reinsurer, its Affiliates or their respective representatives other than (to  the extent set forth in an express representation or warranty set forth in paragraph A of the  Representations and Warranties Article) with respect to the accuracy of factual data or  information upon which such estimation, valuation, appraisal, projection, or forecast is  based or, with respect to IBNR, that such IBNR was determined utilizing the Reserve  Standard.  The Company makes no express or implied representation, warranty under this  Agreement or otherwise guaranteeing the future experience or other development of  Subject Business.   ARTICLE 18 - ARBITRATION  A. Except as set forth in paragraph A of the Administration; Claims Cooperation Article,  paragraph G of the Reporting Article, paragraph B of the Term of this Agreement Article,  paragraph D of the Consideration and Reconciliation Article and paragraph G of the  Collateral Article, any dispute arising out of the interpretation, performance or breach of  this Agreement, including the formation and validity thereof, shall be submitted for  decision to a panel of three arbitrators.  Notice requesting arbitration shall be in writing  and sent certified or registered mail, return receipt requested.  

 

  Page 42   B. One arbitrator shall be chosen by each Party and the two arbitrators shall then choose an  impartial third arbitrator who shall preside at the hearing.  If either Party fails to appoint its  arbitrator within 30 days after being requested to do so by the other Party, the latter, after  ten days’ prior notice by certified or registered mail of its intention to do so, may appoint  the second arbitrator.  C. If the two arbitrators do not agree on a third arbitrator within 60 days of their appointment,  the third arbitrator shall be chosen in accordance with the following procedures: Each Party  shall each exchange within ten calendar days thereafter, five names of individuals who are  qualified to serve hereunder. Within seven calendar days of the exchange of names, the  petitioner and respondent will agree on an umpire questionnaire to be sent to the umpire  candidates by the party arbitrators. Umpire candidates must return a fully completed  questionnaire to both Parties within 14 calendar days from when the questionnaire was  sent.  If any individual fails to return a questionnaire within the required time period or  refuses to serve, the Party whose candidate did not respond or cannot serve, shall within  five calendar days from the expiration of the period for return of the questionnaire, or notice  of the refusal to serve, replenish its candidate pool to five individuals who could be  qualified to serve hereunder and who shall answer the umpire questionnaire sent with the  request to serve, within 14 calendar days from it being sent.  After completion of this  process, if there is one common individual chosen by the Parties, that individual shall serve  as umpire. If there is more than one common individual chosen by the Parties, the Parties,  unless they then agree to one individual, shall draw lots from among those chosen, and the  individual chosen by lot shall act as umpire. If there are no common individuals chosen by  Parties, each shall rank each of ten selected names in order of preference, with the number  “one” being the most preferred and shall simultaneously notify the other Party of such  ranking on a mutually agreed date.  The individual with the lowest total numerical ranking  shall act as umpire.  If the ranking results in a tie, the Parties shall draw lots from among  the individuals tied for the lowest total numerical rank, and the individual chosen by lot  shall act as umpire.  The arbitrators shall be persons knowledgeable about insurance and  reinsurance who have no personal or financial interest in the result of the arbitration.  If a  member of the panel dies, becomes disabled or is otherwise unwilling or unable to serve, a  substitute shall be selected in the same manner as the departing member was chosen and  the arbitration shall continue.  D. Within 30 days after all arbitrators have been appointed, the panel shall meet and determine  timely periods for briefs, discovery procedures, and schedules of hearings.  E. The panel shall be relieved of all judicial formality and shall not be bound by the strict  rules of procedure and evidence.  Notwithstanding anything to the contrary in this  Agreement, the arbitrators may at their discretion consider underwriting and placement  information provided by the Company to the Reinsurer, as well as any correspondence  exchanged by the parties that is related to this Agreement.  The arbitration shall take place  in Chicago, Illinois or at such other place as the Parties shall agree.  The decision of any  two arbitrators shall be in writing and shall be final and binding.  The panel is empowered  to grant relief as it may deem appropriate; however, in no event will the panel be authorized  to award punitive damages.   

 

  Page 43   F. The panel shall interpret this Agreement as an honorable engagement rather than as merely  a legal obligation and shall make its decision considering the custom and practice of the  applicable insurance and reinsurance business as promptly as possible after the hearings.  Judgment upon an award may be entered in any court having jurisdiction thereof.  G. Each Party shall bear the expense of its own arbitrator and shall jointly bear with the Other  party the cost of the third arbitrator.  The remaining costs of the arbitration shall be  allocated by the panel.  The panel may, at its discretion, award such further costs and  expenses as it considers appropriate, including but not limited to attorney’s fees, to the  extent permitted by law.  H. This Article shall survive the termination or expiration of this Agreement.  ARTICLE 19 - EXPEDITED DISPUTE RESOLUTION  Prior to the commencement of arbitration in accordance with the Arbitration Article, the Parties  will utilize an expedited dispute resolution process involving one senior executive from each of  the Company and the Reinsurer (each, a “Senior Executive”).  If such Senior Executives are unable  to resolve the dispute within ten Business Days of the dispute being referred to them, either Party  may seek to resolve the dispute in accordance with the Arbitration Article.  ARTICLE 20 - GOVERNING LAW  This Agreement, and any dispute, controversy, or claim arising out of or relating to this Agreement,  will be governed by and construed according to the laws of the State of Illinois.    ARTICLE 21 - INTERMEDIARY  A. [***] is hereby recognized as the Intermediary (the “Intermediary”).  B. The Company shall pay the Intermediary brokerage equal to [***] within three Business  Days after receipt of the Initial Reinsurance Premium.  ARTICLE 22 - WAIVER OF DUTY OF UTMOST GOOD FAITH   With respect to the reinsurance relationships and transactions among the parties and their Affiliates  contemplated by this Agreement and the other Transaction Agreements, each party absolutely and  irrevocably waives resort to the duty of “utmost good faith” or any similar principle in connection  with the negotiation or execution of this Agreement and the other Transaction Agreements;  provided that the foregoing shall not be deemed or interpreted to limit in any manner the express  representations and warranties made by the Parties in this Agreement.  Notwithstanding anything  to the contrary contained in this Agreement or the other Transaction Agreements, each party agrees  that it does not waive any such duty of “utmost good faith” or any similar principle relating to the  conduct of the parties under this Agreement after the Closing.       

 

  Page 44   IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their  duly authorized representatives:  ARGONAUT INSURANCE COMPANY      By:  /s/ Gary Grose___________________________  Printed Name:  Gary Grose_____________________  Title:  President______________________________      CAVELLO BAY REINSURANCE LIMITED      By:  /s/ Paul Bohus___________________________  Printed Name:  Paul Bohus_____________________  Title:  Chief Executive Officer___________________ex1029302022

EXECUTION VERSION      Exhibit10.2  Certain identified information marked with “[***]” has been omitted from this document  because it is both (i) not material and (ii) the type that the registrant treats as private or  confidential.    DATED 8 SEPTEMBER 2022  ARGO INTERNATIONAL HOLDINGS LIMITED  and  OHIO FARMERS INSURANCE COMPANY  SHARE PURCHASE AGREEMENT  FOR THE SALE AND PURCHASE OF THE ENTIRE  ISSUED SHARE CAPITAL OF ARGO UNDERWRITING  AGENCY LIMITED        

 

  i    CONTENTS  Clause Page  1. Definitions and Interpretation ........................................................................................ 5  2. Sale and Purchase ........................................................................................................ 27  3. Conditions Precedent to Completion ........................................................................... 27  4. Conduct of the Target Group’s Business Before Completion ..................................... 32  5. Consideration ............................................................................................................... 38  6. Completion ................................................................................................................... 38  7. Completion Balance Sheet ........................................................................................... 40  8. Warranties .................................................................................................................... 40  9. Tax Covenant ............................................................................................................... 40  10. Seller’s Limitations On Liability ................................................................................. 41  11. Purchaser Warranties ................................................................................................... 42  12. Further Undertakings ................................................................................................... 42  13. Restrictive Covenants .................................................................................................. 50  14. Termination of Intra-Group Agreements ..................................................................... 52  15. Termination .................................................................................................................. 52  16. Intellectual Property and Business Information ........................................................... 53  17. Insurance ...................................................................................................................... 55  18. Employees .................................................................................................................... 55  19. Reinsurance Protocols .................................................................................................. 55  20. Access .......................................................................................................................... 56  21. Effect of Completion .................................................................................................... 56  22. Remedies and Waivers ................................................................................................. 56  23. Assignment .................................................................................................................. 56  24. Further Assurance ........................................................................................................ 57  25. Entire Agreement ......................................................................................................... 57  

 

  ii    26. Notices ......................................................................................................................... 58  27. Announcements............................................................................................................ 60  28. Confidentiality ............................................................................................................. 60  29. Costs, Expenses and Payments .................................................................................... 62  30. Counterparts ................................................................................................................. 63  31. Invalidity ...................................................................................................................... 63  32. Contracts (Rights of Third Parties) Act 1999 .............................................................. 63  33. Interest.......................................................................................................................... 64  34. Choice of Governing Law ............................................................................................ 64  35. Jurisdiction ................................................................................................................... 64  36. Agent for Service (Purchaser) ...................................................................................... 64  37. Agent for Service (Seller) ..................................................................... 65  Schedule 1 (Shares)...................................................................................................... 66  Schedule 2 (Conditions to Completion) ....................................................................... 67  Schedule 3 (Completion Arrangements) ...................................................................... 69  Part A (The Seller’s Obligations) .................................................................... 69  Part B (Purchaser’s Obligations) ..................................................................... 72  Part C (General) ............................................................................................... 72  Schedule 4 (Warranties) ............................................................................................... 74  Schedule 5 (Limitations on the Seller’s Liability) ..................................................... 103  Schedule 6 (Purchaser Warranties) ............................................................................ 109  Schedule 7 (Conduct of Target Group’s Business Before Completion) .................... 111  Schedule 8 (Employment).......................................................................................... 116  Schedule 9 (Basic Information About the Target Group) .......................................... 118  Schedule 10 (Relevant Property) ............................................................................... 138  Schedule 11 (Preparation of Completion Balance Sheet) .......................................... 141  Schedule 12 (Base Balance Sheet) ............................................................................. 147  

 

  iii    Schedule 13 (Form of Completion Balance Sheet) .................................................... 148  Schedule 14 (Reinsurance Protocols) ........................................................................ 149  Schedule 15 (Tax Covenant) ...................................................................................... 150  Schedule 16 (Business Lines) .................................................................................... 158  Schedule 17 (Indemnities) ......................................................................................... 159  Schedule 18 (Fronting Principles) ............................................................................. 181              

 

    AGREED FORM DOCUMENTS    TPV/ PRI Reinsurance Agreement  TPV/ PRI Claims Management Agreement Principles  D&F/ Casualty Reinsurance Agreement  D&F/ Casualty Claims Management Agreement Principles  Power of Attorney  Transitional Services Agreement     

 

  5    THIS AGREEMENT (this “Agreement”) is made on 8 September 2022  BETWEEN:  (1) ARGO INTERNATIONAL HOLDINGS LIMITED, a private company limited by  shares (registered in England and Wales No. 06543704), whose registered address is 6  Devonshire Square, London, England, EC2M 4YE (the “Seller”); and  (2) OHIO FARMERS INSURANCE COMPANY, an Ohio, United States corporation  whose registered office is at 1 Park Circle, Westfield Center, OH, 44251-9700 United  States (the “Purchaser”),  (the Seller and the Purchaser together, the “Parties” and each individually a “Party”).  WHEREAS:  (A) Particulars of each Target Company (as defined in this Agreement) are set out in  Schedule 9 (Basic information about the Target Group).  (B) The Seller has agreed to sell those Shares (as defined in this Agreement) set against its  name in Schedule 1 (Shares) and the Purchaser has agreed to purchase and pay for the  Shares in each case on the terms and subject to the conditions of this Agreement.  IT IS AGREED as follows:  1. DEFINITIONS AND INTERPRETATION  1.1 In this Agreement, unless the context otherwise requires:  “1910 Letter of Credit” means the irrevocable standby letter of credit dated 14  November 2019 issued by JP Morgan Chase Bank, N.A. for the benefit of Citibank NA  as trustee of credit for Reinsurance Trust Syndicate 1910 and with Argo Managing  Agency Limited as account party (as amended and restated from time to time);  “2022 YOA Argo Active Corporate Members” means Nomina No 550 LLP, Argo  (No. 604) Limited and Argo (Epsilon) Limited;  “Accounts” means documents 9.2.4.3, 9.2.1.2.1, 9.2.1.2.2, 9.2.1.2.3, 9.2.1.1.8 folder  9.2.1.1 (excluding document 9.2.1.1.9, 9.2.1.1.12, 9.2.1.1.3, 9.2.1.1.4, 9.2.1.1.7,  9.2.1.1.8, 9.2.1.1.13, 9.2.1.1.15, 9.2.1.1.17, 9.2.1.1.18, and 9.2.1.1.20) of the Data  Room;  “Accounts Date” means 31 December 2020 (except in respect of AUA, ArgoGlobal  Underwriting Asia Pacific Pte Ltd., ArgoGlobal Underwriting (Dubai) Limited and  Syndicate 2012 where it shall mean 31 December 2021);  “Affiliate” means, with respect to any person, any other person directly or indirectly  controlling, controlled by, or under common control with such person. For purposes of  this definition, “control” when used with respect to any person means the power to  direct the management and policies of such person, directly or indirectly, whether  through the ownership of voting shares, by contract or otherwise, and the terms  “controlling” and “controlled” have correlative meanings; provided that (a) for all  

 

  6    periods prior to the Completion, neither Purchaser, on the one hand, nor any member  of the Target Group, on the other hand, will be treated as an Affiliate of the other, and  (b) for all periods after the Completion, neither Seller, on the one hand, nor any member  of the Target Group, on the other hand, will be treated as an Affiliate of the other.  “Adjustment Date” means 15 Business Days following the date on which the  Completion Balance Sheet and the Net Assets Statement are agreed or determined in  accordance with Schedule 11 (Preparation of Completion Balance Sheet);  “After-Acquired Business” has the meaning given in Clause 13.4(c);  “Agent’s Agreement” means each agent’s agreement between AMA and any Lloyd’s  member’s agent acting on behalf of a Member of the Syndicates (in the form prescribed  by Lloyd’s under the Agency Agreements Byelaw (No. 8 of 1988)) and as amended  from time to time;  “AMA” means Argo Managing Agency Limited;  “AML Laws” means all Applicable Law in any jurisdiction in relation to money  laundering, anti-money laundering, terrorist financing or counter-terrorist financing,  including in the case of the UK (without limitation) the Proceeds of Crime Act 2002,  the Terrorism Act 2000, the Money Laundering, Terrorist Financing and Transfer of  Funds (Information on the Payer) Regulations 2017 and all related rules and guidance  (including, without limitation, the related rules and guidance issued by the PRA or the  FCA and the guidance issued by the Joint Money Laundering Steering Group);  “Anti-Bribery Laws” means the United Kingdom Bribery Act 2010 and the Irish  Criminal Justice (Corruption Offences) Act 2018 and the rules and regulations issued  thereunder, the United States Foreign Corrupt Practices Act 1977 (as amended from  time to time), and any other domestic legislation implementing the Organisation for  Economic Cooperation and Development Convention on Combating Bribery of  Foreign Public Officials in International Business Transactions, 1997 and any other  similar international conventions) applicable to any member of the Target Group or the  business of any member of the Target Group, and all Applicable Laws involving anti- bribery and anti-corruption that are of binding force and effect;  “Antitrust Laws” means applicable supranational, national, federal, state, provincial  or local Applicable Law designed or intended to prohibit, restrict or regulate actions  having the purpose or effect of monopolising or restraining trade or lessening  competition through merger or acquisition;  “Applicable Law” means any and all:  (i) legislation (including statutes, statutory instruments, treaties, regulations,  orders, directives, by-laws and decrees) and common law;  (ii) rules, binding guidance and supervisory statements of any Regulatory  Authority, Tax Authority or Competition Authority;  (iii) Lloyd’s Regulations; or  

 

  7    (iv) rules and regulations of any stock exchange on which the securities of a member  of the Seller’s Group or Purchaser’s Group are listed or quoted,  in each case to the extent applicable to the relevant person, enforced in each case from  time to time;  “Argo Active Corporate Members” means Nomina No 550 LLP, Argo (No. 604)  Limited, Argo (Alpha) Limited, Argo (Delta) Limited, Argo (Zeta) Limited and Argo  (Epsilon) Limited;  “Argo Corporate Members” means Argo (No. 604) Limited, Nomina No 550 LLP,  Argo (Epsilon) Limited, Argo (No. 617) Limited, Argo (No. 616) Limited, Argo (No.  607) Limited, Argo (No. 703) Limited, Argo (No. 704) Limited, Argo (Alpha) Limited,  Argo (Chi) Limited, Argo (Delta) Limited, Argo (Gamma) Limited, Argo (Eta) Ltd.,  Argo (Zeta) Limited, and Ariel Corporate Member Limited;  “Argo Group FAL” means:  (a) the FAL provided to Lloyd’s by ARL on behalf of the Argo Active Corporate  Members (as at 31 March 2022, being: $137,000,00) (less any amount of FAL  required to be provided under the terms of the D&F/ Casualty Reinsurance  Agreement); and  (b) the FAL provided to Lloyd’s in the form of a letter of credit issued by Barclays  Bank PLC as FAL on behalf of Argo (No. 604) Limited (as at the date of this  Agreement, being: $35,300,000);   “ARL” means Argo Re Ltd.;  “Asset” means (consistent with the US GAAP definition of an asset as provided in  Statement of Financial Accounting Concepts No.8) a present right of an entity to an  economic benefit;  “AUA” means Argo Underwriting Agency Limited;  “Barclays Facility Agreement” means the £26,000,000 letter of credit facility  agreement between Argo Group International Holdings, Ltd., Argo (No. 604) Limited  and Barclays Bank PLC dated 3 November 2021;  “Base Balance Sheet” means the balance sheet in respect of the Target Group as at 31  March 2022 included at Schedule 12 (Base Balance Sheet);  “Base Balance Sheet Date” means 31 March 2022, being the period end date for the  Base Balance Sheet;  “Base Consideration” means the sum of $125,000,000;  “Base Net Assets” has the meaning given to it in the Base Balance Sheet;  “BMA” means the Bermuda Monetary Authority (or its successors from time to time);  

 

  8    “BMA Condition” means the Condition set forth in paragraph 1.6 of Schedule 2   (Conditions to Completion);  “Burdensome Condition” means any condition, limitation or qualification imposed by  any Regulatory Authority on its grant of any consent, authorisation, order, approval or  exemption sought, or no objection confirmation provided in connection with the  transactions contemplated by this Agreement that, individually or in the aggregate with  all such conditions, limitations or qualifications, would or would reasonably be  expected to:  (i) have a material adverse effect on the business, results, operations or financial  condition of the Purchaser’s Group;  (ii) have a material adverse effect on the business, results, operations or financial  condition of the Target Group;  (iii) require or involve a material increase in the Funds at Lloyd’s supporting the  Members of Syndicate 1200 above that required by Lloyd’s for Coming Into  Line for the 2023 YOA; or  (iv) require or involve a material modification to the terms of this Agreement, the  TPV/ PRI Reinsurance Agreement, the TPV/ PRI Claims Management  Agreement, the D&F/ Casualty Reinsurance Agreement or the D&F/ Casualty  Claims Management Agreement that has or would reasonably be expected to  have a material adverse impact on: (a) the Target Group, taken as a whole; or  (b) the Purchaser’s Group;  “Business Day” means a day (other than a Saturday or a Sunday) on which banks are  open for general business in Ohio (United States), Texas (United States), London  (United Kingdom) and Hamilton (Bermuda);  “Business Information” means all information (in whatever form held) including  (without limitation) all:  (i) formulas, designs, specifications, drawings, know-how, manuals and  instructions;  (ii) customer lists, sales, marketing and promotional information;  (iii) business plans and forecasts;  (iv) technical or other expertise; and  (vi) all corporate accounting and Tax records, correspondence, orders and enquiries;  “CFA 2017” means the Criminal Finances Act 2017;  “Claim” means any proceedings, claim, suit or action made by a Party arising out of  the Share Purchase Documents (excluding the TPV/ PRI Reinsurance Agreement, the  TPV/ PRI Claims Management Agreement, the D&F/ Casualty Reinsurance  Agreement, the D&F/ Casualty Claims Management Agreement, Fronting Agreement,  

 

  9    the Transitional Services Agreement and any other documents in the Agreed Form) or  the transactions contemplated hereby;  “Coming into Line” means, in relation to any Year of Account, the last date prescribed  by Lloyd’s by which each Member must have provided its Funds at Lloyd’s if it is to  be eligible to underwrite or to continue to underwrite insurance business at Lloyd’s for  such Year of Account;   “Companies Act” means the Companies Act 2006;  “Companies House Filings” means the filings disclosed in Folder 28.6.5 of the Data  Room;  “Company Privacy Policies” means any (a) internal or external past or present data  protection, data usage, privacy and security policies of the Target Group, (b) public  statements, representations, obligations, promises, commitments relating to privacy,  security, or the processing of personal data, and (c) policies and obligations applicable  to the Target Group as a result of any certification relating to privacy, security, or the  processing of personal data;  “Competing Business” has the meaning given in Clause 13.4;  “Competition Authority” means any relevant competition or antitrust body or other  governmental or supranational authority which is responsible for applying Antitrust  Laws. To the extent that such a body, governmental or supranational authority has other  responsibilities it shall only be considered a Competition Authority when applying  Antitrust Laws;  “Completion” means completion of the sale and purchase of the Shares under this  Agreement;  “Completion Balance Sheet” the balance sheet of the Target Group as at the  Completion Date (including the notes thereon), as prepared and agreed or determined  (as the case may be) in accordance with Schedule 11 (Preparation of Completion  Balance Sheet);  “Completion Date” means the date on which Completion occurs;  “Completion Net Assets” the aggregate Assets less the aggregate Liabilities of the  Target Companies less goodwill and intangible assets, in each case as derived from the  Completion Balance Sheet and shown in the Net Assets Statement, calculated on a  consolidated basis in accordance with the accounting principles, policies, standards,  practices, evaluation rules and estimation techniques referred to in paragraph 3 of  Schedule 11 (Preparation of Completion Balance Sheet);  “Completion Obligations” has the meaning given in Clause 6.2;  “Completion Payment” has the meaning given in Clause 5.2;  “Condition” has the meaning given in Clause 3.1;  

 

  10    “Confidentiality Agreement” means the confidentiality agreement effective as of  19 May 2022 between Argo Group International Holdings, Ltd. and Westfield Group;  “Consideration” has the meaning given in Clause 5.1;  “Continuing Intra-Group Agreements” means:  (i) quota share reinsurance agreement dated 26 April 2022 between Argonaut  Insurance Company and AMA (acting on behalf of Syndicate 1200), for risks  attaching from 1 May 2022 to 1 May 2023, related to Amwins Specialty  Logistics Underwriters LLC (Logistics), an MGA writing on behalf of Argonaut  Insurance Company;  (ii) quota share reinsurance agreement dated 26 April 2022 between Argonaut  Insurance Company and AMA (acting on behalf of Syndicate 1200), for risks  attaching from 1 May 2022 to 1 May 2023, related to Amwins Specialty  Logistics Underwriters LLC (Cargo) (formally writing business as Sentinel  Marine Underwriters, LLC), an MGA writing on behalf of Argonaut Insurance  Company;  (iii) quota share reinsurance agreement dated 23 December 2021 between Argonaut  Insurance Company and AMA (acting on behalf of Syndicate 1200), for risks  attaching from 1 December 2021 to 1 December 2022, related to Amwins  Specialty Logistics Underwriters LLC (Contractors’ Equipment), an MGA  writing on behalf of Argonaut Insurance Company;  (iv) quota share reinsurance agreement dated 25 November 2021 Argonaut  Insurance Company and AMA (acting on behalf of Syndicate 1200) for risks  attaching from 1 December 2021 to 1 December 2022, related original  declarations of insurance issued by Insurmark, a division of Financial &  Professional Risk Solutions, Inc.;   (v) quota share reinsurance agreement dated 29 April 2022 between Argonaut  Insurance Company and AMA (acting on behalf of Syndicate 1200) for risks  attaching from 1 May 2022 to 30 April 2023, related to business written and/or  administered by the appointed agent, Marine Underwriters of America, Inc.;   (vi) whole account stop loss agreement between AMA dated 11 April 2022 (acting  on behalf of Syndicate 1200) and ARL for risks attaching during the 12 month  period commencing 1 January 2022 to 31 December 2022, being the 2022  underwriting year, related to all business written by Syndicate 1200 s more fully  defined in Syndicate 1200’s syndicate business forecast; and  (vii) any reinsurance agreement and related claims administration agreements  between a Retained Group company and a Target Group company or Syndicate  1200 that is not listed in Annex III to the Reinsurance Protocol (including,  without limitation, the D&F/ Casualty Reinsurance Agreement, D&F/ Casualty  Claims Management Agreement, TPV/ PRI Reinsurance Agreement and TPV/  PRI Claims Management Agreement), unless agreed in writing by the Parties.    

 

  11    “Covered Liability” means any and all debts, liabilities, expenses, commitments, or  obligations, whether direct or indirect, accrued or fixed, known or unknown, absolute  or contingent, matured or unmatured, determined or determinable, disputed or  undisputed, joint or several, secured or unsecured, liquidated or unliquidated, whenever  (including in the past, present or future) and however arising (including out of any  contract or tort based on negligence or strict liability) and whether or not the same  would be required to be reflected in the Accounts or disclosed in the notes thereto;  “Credit Agreement” means the credit agreement, dated as of 2 November 2018,  among the Seller, Argo Group US, Inc., Argo Group International Holdings, Ltd., and  Argo Underwriting Agency Limited, as borrowers, JPMorgan Chase Bank, N.A., Wells  Fargo Bank, N.A., Bank of America, N.A., U.S. Bank National Association, HSBC  Bank USA, N.A., and the other parties thereto, as amended;  “D&F/ Casualty Reinsurance Agreement” means the reinsurance agreement in  respect of the D&F/ Casualty Risks in the Agreed Form to be entered into between Argo  (604) Limited, Nomina No. 550 LLP and ARL immediately prior to Completion;   “D&F/ Casualty Claims Management Agreement” means the claims management  agreement in respect of the D&F/ Casualty Risks based on the Argo (604) D&F/  Casualty Claims Management Agreement Principles to be entered into between Argo  (604) Limited and Argo Insurance Services Bermuda Limited immediately prior to  Completion;   “D&F/ Casualty Claims Management Agreement Principles” means the principles  in respect of the terms of the proposed claims management and administration  agreement for the D&F/ Casualty Claims Management Agreement, in the Agreed Form;  “Damages Payment” has the meaning given in paragraph 6.4(a) of Schedule 5;  “Data Protection Laws” means the following legislations to the extent applicable from  time to time: (a) national laws implementing the Directive on Privacy and Electronic  Communications (2002/58/EC); (b) the General Data Protection Regulation (2016/679)  (the “GDPR”), the UK GDPR (as defined in the Data Protection Act 2018) and any  national law supplementing the GDPR / UK GDPR; and (c) any other data protection  or privacy laws, regulations, or regulatory requirements applicable to the processing of  personal data (as amended and/or replaced from time to time);  “Data Room” means the contents of the Project Diamond electronic data room  maintained on behalf of the Seller by Datasite as at 8 p.m. (BST) on 7 September 2022,  an electronic file containing a copy of such electronic data room has been sent by the  Seller’s Solicitors to the Purchaser’s Solicitors at 8 p.m. (BST) on 8 September 2022;  “Dekania Notes” means:  (i)  the US $10,000,000 floating rate notes due 2036 issued by Heritage  Underwriting Agency Limited pursuant to a note purchase agreement dated 2  November 2006 (as subsequently replaced pursuant to an amendment  agreement dated 12 November 2008);  

 

  12    (ii) the €12,000,000 floating rate notes due 2035 issued by Heritage Underwriting  Agency Limited pursuant to a note purchase agreement dated 6 September 2005  (as subsequently replaced pursuant to an amendment agreement dated 12  November 2008);  (iii) the €1,500,000 floating rate notes due 2037 issued by Heritage Underwriting  Agency Limited pursuant to a note purchase agreement dated 8 June 2007 (as  subsequently replaced pursuant to an amendment agreement dated 12  November 2008);  (iv)  the €12,000,000 floating rate notes due 2037 issued by Heritage Underwriting  Agency Limited pursuant to a note purchase agreement dated 8 June 2007 (as  subsequently replaced pursuant to an amendment agreement dated 12  November 2008);  (v) the US $6,500,000 floating rate notes due 2034 issued by Heritage Underwriting  Agency Limited pursuant to a note purchase agreement dated 7 December 2004  (as subsequently replaced pursuant to an amendment agreement dated 12  November 2008); and  (vi) the €10,500,000 floating rate notes due 2036 issued by Heritage Underwriting  Agency Limited pursuant to a note purchase agreement dated 31 October 2006  (as subsequently replaced pursuant to an amendment agreement dated 12  November 2008);  “DEWS Scheme” means the DIFC Workplace Savings scheme;   “DFSA” means the Dubai Financial Services Authority (or its successors from time to  time);  “DIFC” means the Dubai International Financial Centre;   “DIFC Lease Agreement” means the lease agreement entered into on 22 January 2022  by and between DIFC Investments Ltd., as landlord, and ArgoGlobal Underwriting  (Dubai) Limited, as tenant, for the lease of premises at unit Gv-00-08-05-Of-030, Level  5, Gate Village 8, Dubai International Financial Centre, Dubai, United Arab Emirates;  “Disclosed” means fairly disclosed to the Purchaser in or with sufficient detail to allow  the Purchaser, acting with reasonable diligence, to identify the nature and scope of the  fact, matter, or circumstances so disclosed;  “Disclosure Letter” means the letter of the same date as this Agreement from the Seller  to the Purchaser for the purposes of Clause 10.4 and delivered to the Purchaser before  the execution of this Agreement;  “Disclosed Scheme” means each of the employee pension benefit plans in the United  Kingdom listed at Folder 4 in the Data Room;  “Dispute” has the meaning given in Clause 4.7(d);   “Dispute Resolution Procedure” has the meaning given in Clause 4.7(d);  

 

  13    “Dormant Company” has the meaning given in paragraph 5.7 of Schedule 4  (Warranties);  “Draft Migration Plan” has the meaning given to it in Clause 4.7(a);  “DTA Assumed Savings Amount” has the meaning given to it in paragraph 1.1 of  Schedule 15;  “DTA Relief” has the meaning given to it in paragraph 1.1 of Schedule 15;  “Employee” means any employee, officer or director having a contract of employment  or service agreement with a Target Company;  “Estimated Completion Net Assets” means the Seller’s good faith estimate of what  the Completion Net Assets of the Target Companies will be as at Completion, as  delivered to the Purchaser not less than ten (10) Business Days prior to Completion;  “Excess” has the meaning given in Clause 10.1;  “Excess Recovery” has the meaning given in paragraph 6.4(d) of Schedule 5;  “Excluded Business” means:   (a) the insurance business of the Seller and the Target Companies (and other  Members of Syndicate 1200) in respect of Bermuda direct and facultative  property business and  power generation business  (including, without  limitation, all business underwritten by Argo Insurance Services Bermuda, Ltd.  on behalf of the Retained Group and/or the Target Companies);  (b) the insurance business of the Seller and the Target Companies (and other  Members of Syndicate 1200) in respect of United States casualty business;  (c) the Seller and the Target Companies’ business and operations in Brazil and   Malta  (including  the  disposals  thereof); and  (d) the Seller and the Target Companies’ discontinued operations in Singapore;  “Excluded Liabilities” means any Covered Liability related to or arising from the  operation or conduct of Excluded Business prior to the Completion Date other than:  (a) any Covered Liability in respect of (and to the extent to) which there is specific  and identifiable on its face accrual, provision, reserve or liability in the  Completion Balance Sheet for such specified Covered Liability;  (b) insurance policy liabilities (including, for the avoidance of doubt, Ex Gratia  payments (as such term is defined in the D&F/  Casualty Reinsurance  Agreement) that are, or would be reinsured under the D&F/  Casualty  Reinsurance Agreement entered into prior to Completion in accordance with  this Agreement but for (i) any specific, agreed exclusion of such liabilities from  coverage thereunder or (ii) any termination or commutation thereof;  

 

  14    (c) any contractual liability or liabilities in respect of the breach of a contractual  obligation of a Target Group Company under the D&F/Casualty Reinsurance  Agreement and the D&F/ Casualty Claims Management Agreement, each  entered into prior to Completion in accordance with this Agreement; and  (d) any Loss of a Target Company to the extent such Loss is otherwise reimbursed  by a Seller Group Company under the D&F/Casualty Reinsurance Agreement  or the D&F/Casualty Claims Management Agreement, each entered into prior  to Completion in accordance with this Agreement;  “Existing Intra-Group Agreements” means the intra-group agreements and  arrangements, whether formal or informal by and between: (i) members of the Seller’s  Group (excluding the Target Companies) on the one hand, and (ii) any Target Company  on the other hand, and excluding only the Continuing Intra-Group Agreements;   “FAL” or “Funds at Lloyd’s” shall have the meaning given to that expression in the  Lloyd’s Membership Byelaw (No. 5 of 2005);  “FCA” means the Financial Conduct Authority (or its successors from time to time);  “Fronting Agreement” means the fronting agreement relating to the arrangements  reinsured under the Fronting Reinsurances based on the Fronting Principles to be  entered into between AMA (for and on behalf of the Members of Syndicate 1200) and  relevant members of the Retained Group at Completion;  “Fronting Reinsurances” means the Continuing Intra-Group Agreements other than  those listed in paragraphs (vi) and (vii) of that definition);  “Fronting Principles” means the principles in respect of the terms of the proposed  Fronting Agreement as set out in Schedule 18;  “FSMA” means the Financial Services and Markets Act 2000;  “Fundamental Warranties” means the Warranties set out in paragraphs 1 (Capacity  of the Seller), 2 (Shares), 3 (Corporate matters), 4 (Share Capital), and 5 (Subsidiaries)  of Schedule 4, and “Fundamental Warranty” shall be construed accordingly;  “Group” means with respect to a Party, such Party’s subsidiaries and subsidiary  undertakings from time to time, any holding company of the Party and all other  subsidiaries or subsidiary undertakings of any such holding company;  “Indebtedness” means all obligations and/or indebtedness in the nature of borrowings  (including all interest accrued but unpaid thereon (and prior to any withholding and  including any obligation to increase any payment on account of withholding) and  accrued but unpaid penalties, costs, fees (including but not limited to legal and other  professional fees) and charges in respect thereof, whether arising on the early settlement  thereof or otherwise) which have not been paid or repaid, including:  (i) monies borrowed (including overdrafts);  

 

  15    (ii) obligations under any lease or hire purchase agreement or other deferred  purchase, credit sale or conditional sale agreement (whether in respect of land,  buildings, plant, machinery, equipment or otherwise) which is treated as a  finance or capital lease in accordance with applicable accounting principles (but  not including liabilities under operating leases);  (iii) any derivative transaction for managing or hedging currency and/or interest rate  risk provided that, where the agreement relating to that transaction provides for  netting to occur, this paragraph (iii) shall include only the net amount of the  payment obligation outstanding from the relevant person thereunder after such  netting-off has occurred;  (iv) amounts raised under any other transaction required to be accounted for as a  borrowing in accordance with applicable accounting principles; and  (v) any guarantee, indemnity or similar assistance against financial loss of any  person in respect of any indebtedness falling within paragraphs (i) to (iv) above;  “Independent Accountants” has the meaning given to it in Schedule 11 (Preparation  of Completion Balance Sheet);  “Indemnity Claim” means a claim by the Purchaser in respect of any of the indemnities  set out in paragraph 1.1 of Schedule 17 (Indemnities);  “Indemnity Dormant Company” means all Argo Corporate Members other than the  2022 YOA Argo Active Corporate Members;  “Information Technology” means the hardware, software, firmware, middleware,  equipment, electronics, platforms, servers, workstations, routers, hubs, switches,  interfaces, data, databases, data communication lines, network and telecommunications  equipment, websites and Internet-related information technology infrastructure, wide  area network and other data communications or information technology equipment,  owned or leased by, licensed to, or used to process Business Information and/or  personal data in the conduct of the Target Business, including in respect to Syndicate  1200;  “Insurance Contracts” means the insurance and inward reinsurance policies and  contracts, together with all binders, slips, certificates, endorsements, amendments and  riders thereto issued or entered into that are written by any Target Company (including,  for the avoidance of doubt, as a Member of a Lloyd’s syndicate or in the case of AMA  as managing agent on behalf of the Member(s) of a Lloyd’s syndicate);  “Insurance Policy” has the meaning given to it in paragraph 29.1 of Schedule 4;  “Intellectual Property” means all intellectual property and intellectual property rights  in any jurisdiction throughout the world including the following: patents, trademarks,  rights in designs, copyrights and database rights (whether or not any of these is  registered and including applications for registration of any such thing) and all rights  or forms of protection of a similar nature or having equivalent or similar effect to any  of these which may subsist anywhere in the world;   

 

  16    “Inter-Company Payables” means any amounts owing, including in respect of interest  accrued on such amounts, from any Target Company to any member of the Retained  Group (but excluding Ordinary Trading Items);  “Inter-Company Receivables” means any amounts owing, including in respect of  interest accrued on such amounts, from members of the Retained Group to any Target  Company (but excluding Ordinary Trading Items);  “Liability” means, (consistent with the US GAAP definition of a liability as provided  in Statement of Financial Accounting Concepts No.8), a present obligation of an entity  to transfer an economic benefit;  “Lloyd’s” means the Society and Corporation of Lloyd’s, incorporated by the Lloyd’s  Act 1871 (or their successors from time to time) and, where the context requires, shall  include the Council of Lloyd’s (as constituted by the Lloyd’s Act 1982, including its  delegates and persons by whom it acts) (or its successors from time to time);  “Lloyd’s Argo Group FAL Release” means the irrevocable release of any Argo Re  FAL so that the Argo Re FAL is no longer subject to any restrictions imposed by  Lloyd’s;   “Lloyd’s Asia Administrator Notice” has the meaning given to it in Clause 3.17.  “Lloyd’s Regulations” means the Lloyd’s Acts 1871 to 1982, byelaws, regulations,  codes of practice, bulletins and mandatory directions and requirements governing the  conduct and management of underwriting business at Lloyd’s from time to time;  “LMA” means the Lloyd’s Market Association which provides representation,  information and technical services to underwriting business in the Lloyd’s market;  “Long Stop Date” means 30 June 2023 or such other date as the Seller and the  Purchaser may agree in writing, provided that if Completion has not occurred on or  before such date solely due to the failure of the Regulatory Conditions save where such  failure results from the Purchaser’s failure to comply in all material respects with its  obligations hereunder in respect of the Regulatory Conditions hereunder, the Seller and  the Purchaser agree that the Long Stop Date shall be automatically extended to 30  September 2023;  “Losses” means any and all damages, losses, Taxes, interest, fees, disbursements, costs,  expenses, penalties, fines, compensation, remedial payments settlement payments,  awards, judgments against, deficiencies, financial obligations, third party assessments   or other charges (and any of the same incurred in disputing, defending, investigating or  providing evidence in connection with establishing the right to be indemnified);  “Malicious Code” means any “back door,” “drop dead device,” “time bomb,” “Trojan  horse,” “virus,” “ransomware,” or “worm” (as such terms are commonly understood in  the software industry) or any other code designed or intended to have, or capable of  performing, any of the following functions: (a) disrupting, disabling, harming,  interfering with or otherwise impeding in any manner the operation of, or providing  unauthorised access to, a computer system or network or other device on which such  

 

  17    code is stored or installed; or (b) damaging or destroying any data or file without the  user’s consent;  “Managing Agency Agreements” means the Managing Agent’s Agreement between  AMA and each Member of the Syndicates (in the form prescribed by Lloyd’s under the  Agency Agreements Byelaw (No. 8 of 1988)) and as amended from time to time;  “MAS” means the Monetary Authority of Singapore (or its successors from time to  time);  “Material Adverse Effect” means a material adverse effect on the business, assets,  liabilities, operations, conditions (financial or otherwise), or results of operations of the  Target Group or the Target Business; provided, that no effect of any fact, circumstance  or change arising out of or resulting from any of the following shall constitute or be  taken into account in determining whether a Material Adverse Effect has occurred or  would reasonably be expected to occur:  (i) the global economy or capital or financial markets, including changes in interest  or exchange rates or changes in equity markets and related changes in the value of the  investment assets of the Target Group;  (ii) political conditions generally and any hostilities or the worsening thereof, acts  of war, sabotage, terrorism or military actions;  (iii) any occurrence or condition generally affecting participants in the insurance  industries that write similar business in the countries in which the Target Group  operates;  (iv) public announcement of this Agreement and the transactions contemplated  hereby including any adverse change in customer, supplier, governmental, landlord,  employee or similar relationships resulting therefrom;  (v) any changes in Applicable Law, US GAAP, UK GAAP, Singapore GAAP, or  IFRS (or such other accounting rules as apply to any member of the Target Group), or  the enforcement or interpretation of any of the foregoing;  (vi) any action taken by the Purchaser or its Affiliates, or taken by any of the Seller,  any Target Group Company or any of their respective Affiliates at the request of the  Purchaser;  (vii) any change (or threatened change) in the credit, financial strength or other  ratings (other than the facts underlying any such change (or threatened change)) of the  Target Group (provided, that this paragraph (vii) shall not exclude the impact of such  change (or threatened change) on the Target Group, including contractual arrangements  and relationships with distribution channels resulting therefrom from being considered  in determining whether a Material Adverse Effect has occurred or is reasonably  expected to occur);   (viii) any proposed business plan of the Purchaser’s Group;   

 

  18    (ix) any failure by the Target Group to achieve any earnings, premiums written or  other financial projections or forecasts (other than the underlying facts and  circumstances that may have given rise or contributed to such failure);  (x) weather conditions, any epidemic, pandemic, disease outbreak (including  COVID-19) or other governmental restrictions that arise out of, a pandemic, epidemic  or disease outbreak or other force majeure events, acts of God or natural disaster; or  (xi) the taking of any action (or the omission of any action) expressly required by  this Agreement;    provided, however, that, with respect to paragraphs (i), (ii), (iii), (v) or (x), such  effect shall be taken into account in determining whether a Material Adverse Effect has  occurred or would reasonably be expected to occur solely to the extent such effect,  individually or in the aggregate, is disproportionately adverse with respect to the Target  Group or the Target Business as compared to other participants in the insurance  industries that write similar business to similar customers in the markets in which the  Target Group operates;   “Material Completion Obligations” means: (i) in respect of the Seller, those  Completion Obligations set out in Part A paragraphs 1.1(a) to 1.1(g), 1.2 to 1.5 and  1.8(a) of Part A (The Seller’s obligations) of Schedule 3 (Completion Arrangements);  and (ii) in respect of the Purchaser, those Completion Obligations set out in paragraphs  1(a) and 1(b) of Part B (Purchaser’s obligations) of Schedule 3 (Completion  Arrangements);  “Material Contracts” has the meaning given in paragraph 8.1 of Schedule 4;  “Material Inwards Reinsurance Contracts” means all material in-force reinsurance  agreements which are between any member of the Target Group (whether as a member  of the Syndicates or otherwise) and a cedant, as applicable;  “Material Outsourcing Contracts” means all agreements which are between any  member of the Target Group and any third party supplier that fall within the definition  of “Material Outsourcing” in the FCA Handbook or involve the outsourcing of critical  or important functions or activities of the Target Group;  “Material Reinsurance Contracts” means all material in-force reinsurance  agreements which are between any member of the Target Group (whether as a member  of the Syndicates or otherwise) and a reinsurer, as applicable;  “Material Supplier Contracts” means any contract between a Target Company and a  third party supplier (excluding professional advisers), which would be considered  material to the Target Companies by any Regulatory Authority (acting reasonably)  when assessing the Target Companies’ operational resilience and third party risk  management systems and controls;  “Material Target Group Licence” has the meaning given in paragraph 21.1 of  Schedule 4 (Warranties);  

 

  19    “Member” means a person who has been duly admitted to membership of Lloyd’s  pursuant to the Membership Byelaw (No. 5 of 2005);  “Migration Plan” has the meaning given in Clause 4.7(a);  “Net Assets Statement” means the statement setting out the amount of the Completion  Net Assets as derived from the Completion Balance Sheet, and as prepared and agreed  or determined (as the case may be) in accordance with this Schedule 11 (Preparation  of Completion Balance Sheet);  “Non-Compete Period” has the meaning given in Clause 13.3;  “Non-Fundamental Warranties” means the Warranties excluding the Fundamental  Warranties;  “Non-Fundamental Warranty Claim” means any claim, proceeding, suit or action  against the Seller arising out of or in connection with the Non-Fundamental Warranties;  “Objection Notice” has the meaning given to it in Schedule 11 (Preparation of  Completion Balance Sheet);  “OFAC” means the Office of Foreign Assets Control of the United States Department  of the Treasury;  “Ombudsman” means the Financial Ombudsman Service as established under  Part XVI and Schedule 17 of FSMA (or its successors from time to time);  “Ordinary Trading Items” means ordinary trade indebtedness outstanding at  Completion between, on the one hand, a Target Company and, on the other hand,  members of the Retained Group;  “Permitted Purposes” has the meaning given in Clause 20.1;  “Power of Attorney” means the power of attorney in the Agreed Form referred to at  paragraph 1.1(c) of Part A of Schedule 3 (Completion Arrangements);  “PRA” means the Prudential Regulation Authority (or its successors from time to time);  “Proceedings” means any proceeding, suit or action arising out of or in connection with  this Agreement or the negotiation, existence, validity or enforceability of this  Agreement, whether contractual or non-contractual;  “Producer” means any producer, broker, agent, general agent, managing general agent,  master broker agency, broker general agency, financial specialist or other person,  including any employee of any Target Company, the Seller or its Affiliates, responsible  for writing, marketing, producing, selling, soliciting or servicing Insurance Contracts  prior to the Completion Date;  “Property Owner” means, in relation to any Relevant Property, the person referred to  as the owner, or in respect of leasehold or licensed property the lessee or the licensee  (as applicable) in Schedule 10 (Relevant Property);  

 

  20    “Purchaser’s Group” means the Purchaser, its subsidiaries and subsidiary  undertakings, any holding company of the Purchaser and all other subsidiaries of any  such holding company from time to time, including, from Completion, the Target  Group Companies;  “Purchaser’s Solicitors” means Sidley Austin LLP of One South Dearborn, Chicago,  IL 60603;  “Purchaser Warranties” means the warranties set out in Schedule 6 (Purchaser  Warranties), and “Purchaser Warranty” shall be construed accordingly;  “Regulatory Authorisation” means any consents, authorisations, licences, permits,  approvals, exemptions and waivers as are and have been necessary from any Regulatory  Authority for the carrying on of the relevant part of the Target Group’s (or, as the case  may be, a Target Group Company) or the Purchaser’s Group’s (or, as the case may be,  a member of the Purchaser’s Group) business (as appropriate) in the manner that it is  carried on at the date of this Agreement;  “Regulatory Authority” means any government, government department, quasi- governmental, supranational, statutory, regulatory or investigative body, authority,  agency, bureau, board, commission, court, association, institution, department, tribunal  or instrumentality thereof, and any other insurance or financial services or other  regulatory authority which is not a Competition Authority or a Tax Authority and which  regulates or supervises any member of the Purchaser’s Group, any member of the  Retained Group or any member of the Target Group (as applicable) including the FCA,  the PRA, Lloyd’s, the Bermuda Monetary Authority, the UK Information  Commissioner and the Ombudsman (as applicable);  “Regulatory Condition” means the Conditions set forth in paragraphs 1.1 to 1.5 of  Schedule 2 (Conditions to Completion);  “Relevant Affiliate” means any member of the Seller’s Group as of the date of this  Agreement excluding the Target Group, and, for the avoidance of doubt, shall not mean  or include:  (i) any purchaser of, or investor in, any member of the Seller’s Group;  (ii) any Affiliate of such purchaser or investor (other than the Seller and its  subsidiaries as of the date of this Agreement excluding the Target Group); or  (iii) any person with whom any member of the Seller’s Group merges,  amalgamates, combines or Affiliates or any Affiliate of such person (other than  any member of the Seller’s Group as of the date of this Agreement excluding  the Target Group);  “Relevant Property” means those real property interests listed in Schedule 10  (Relevant Property) and “Relevant Properties” shall be construed accordingly;   “Relief” has the meaning given in paragraph 1 of Schedule 15;  

 

  21    “Representatives” means, in respect of a person, the directors, officers, employees,  consultants, advisers, agents, accountants, investment bankers or other representatives  of such person;  “Retained Group” means the Seller, each of the Seller’s direct or indirect subsidiaries  and subsidiary undertakings from time to time, any direct or indirect holding company  of the Seller and all other direct or indirect subsidiaries or subsidiary undertakings of  any such holding company (except the Target Group Companies);  “Retained Group Shared IP” has the meaning given in Clause 16.1;  “Sanctioned Country” means any country or territory that is the target of  comprehensive Sanctions, which at the time of signing include Cuba, Iran, North Korea,  Syria, and the so-called Luhansk People’s Republic, Donetsk People’s Republic, and  Crimea regions of Ukraine, as well as Russia and Belarus;  “Sanctioned Person” means (i) a person listed on a prohibited or restricted party list,  including those maintained by the United States (including the U.S. Office of Foreign  Assets Control “Specially Designated Nationals and Blocked Persons List” and  “Consolidated Sanctions List,” or similar U.S. lists), the United Kingdom (including  the United Kingdom Consolidated List of Financial Sanctions Targets), the European  Union or its Member States (including the EU Consolidated Financial Sanctions List),  or other applicable local or competent authority; (ii) the government, including any  political subdivision, agency, or instrumentality thereof, of any Sanctioned Country or  Venezuela; (iii) a person located in, resident in, or organised under the jurisdiction of,  a Sanctioned Country; or (iv) a person, directly or indirectly, owned (50% or more) or  controlled by, or acting or purporting to act on behalf of, a person or persons listed in  (i)-(iii);  “Sanctions” means all trade, economic or financial sanctions or embargoes imposed,  administered, or enforced by the United States (including the U.S. Department of  Treasury’s Office of Foreign Assets Control, the U.S. Department of Commerce, and  the U.S. Department of State), the United Kingdom (including HM Treasury’s Office  of Financial Sanctions Implementation, the Foreign, Commonwealth & Development  Office or Department for International Trade), the European Union and its Member  States, or any other applicable local or competent authority;  “Security Incident” has the meaning given in paragraph 25.5 of Schedule 4;  “Seller’s Group” means the Retained Group and, prior to Completion, the Target  Group;  “Seller’s Solicitors” means Skadden, Arps, Slate, Meagher & Flom (UK) LLP of 40  Bank Street, Canary Wharf, London E14 5DS;  “Senior Employee” means any Employee with an annual basic salary as at the date of  this Agreement equal to or greater than £[***];   “Senior Representative” has the meaning given in Clause 4.7(e), and “Senior  Representatives” shall be construed accordingly;  

 

  22    “Senior Representative Resolution Period” has the meaning given in Clause 4.7(e);  “Service Company” means ArgoGlobal Underwriting (Dubai) Limited and  ArgoGlobal Underwriting Asia Pacific Pte Ltd.;  “Service Document” means a claim form, application notice, order, judgment or any  other document relating to any Proceedings;  “Share Purchase Documents” means the Confidentiality Agreement, the TPV/ PRI  Reinsurance Agreement, the TPV/ PRI Claims Management Agreement, D&F/  Casualty Reinsurance Agreement, the D&F/ Casualty Claims Management Agreement,  this Agreement, the Disclosure Letter, Fronting Agreement, the Transitional Services  Agreement, the Power of Attorney and any other documents in the Agreed Form and  any other agreements entered into pursuant to this Agreement;  “Shares” means the entire issued share capital of Argo Underwriting Agency Limited;  “Singapore GAAP” means the accounting principles, standards and practices  generally accepted in Singapore, including the Singapore Financial Reporting  Standards;  “Subsidiaries” means the Target Group (excluding AUA);  “Surviving Clauses” means Clause 1, Clause 3.16, Clause 6.5, Clause 15.3, Clause 22,  Clause 23, Clause 24, Clause 25, Clause 26, Clause 27, Clause 28, Clause 29, Clause  30, Clause 31, Clause 34, Clause 35, Clause 36 and Clause 37  (inclusive);  “Surviving Intra-Group Agreement” has the meaning given in Clause 14.2(b);  “Syndicate 1200” means the Lloyd’s syndicate 1200 as constituted from time to time;  “Syndicate 1910” means the Lloyd’s syndicate 1910 constituted from time to time;  “Syndicate 6117” means the Lloyd’s syndicate 6117 as constituted from time to time;  “Syndicates” means Syndicate 1200, Syndicate 1910 and Syndicate 6117;  “Target Business” means the business of the Target Group Companies;  “Target Group” means those entities listed in Schedule 9 (Basic information about the  Target Group), and “Target Company” or “Target Group Company” means any one  of them;  “Target Group Shared IP” has the meaning given in Clause 16.2;  “Target Tenancy Rights” has the meaning given in Clause 12.9;  “Tax” or “Taxation” means all governmental, state, community, municipal or regional  taxes, levies, imposts, duties, charges, deductions, withholdings and social security or  national insurance contributions of any kind arising in any part of the world and all  penalties, surcharges, costs and interest included in or relating to any Tax, in all cases,  wherever and whenever imposed and regardless of whether such taxes, penalties,  

 

  23    charges, surcharges, costs and interest are directly or primarily chargeable against or  attributable to a Target Company or any other person and regardless of whether a Target  Company has or may have any right of reimbursement against any other person and any  liability for the payment of any amounts of the type described above in this definition  as a result of being a transferee of or successor to any person or as a result of any  contract;  “Tax Authority” means Her Majesty’s Revenue & Customs in the United Kingdom,  and any other government, state or municipality or any local, state, federal or other  fiscal, revenue, customs or excise authority, body or official (whether in the United  Kingdom, the United Arab Emirates, Singapore or elsewhere) competent to assess,  demand, impose, collect or administer Tax or make any decision or ruling on any matter  relating to Tax and any other person who has a right to demand or recover amounts of,  or in respect of, Tax or a Tax liability;  “Tax Claim” means a Tax Covenant Claim or Tax Warranty Claim;  “Tax Covenant” means the tax covenant in Schedule 15 to this Agreement;  “Tax Covenant Claim” means a claim by the Purchaser under the Tax Covenant;  “Tax Warranties” means the Warranties contained in paragraph 34 of Schedule 4  (Warranties), and “Tax Warranty” shall be construed accordingly;  “Tax Warranty Claim” means a claim by the Purchaser in respect of a breach of any  Tax Warranty;  “Third Party Beneficiary” has the meaning given in Clause 32  “Third Party Consent” means any consent, license or permission of, or waiver or other  action by any third party (other than a governmental entity or an Affiliate of the Seller  or the Purchaser), which, if not obtained prior to Completion, would provide a third  party the right to terminate, accelerate, impair, alter or cancel a contract (or provide  such counterparty with remedies thereunder) or result in the creation of any lien in  respect of the Target Companies or their assets, in each case, as a result of the  consummation of the transactions contemplated by this Agreement, the Share Purchase  Documents and the other transactions contemplated hereunder;  “Third Party Consent Costs” has the meaning given to that term in Clause 4.7 (b);  “Third Party Right” means any interest or equity of any person (including any right  to acquire, option or right of pre-emption or conversion) or any mortgage, charge,  pledge, lien, assignment, hypothecation, encumbrance, security interest (including any  created or imposed by law), title retention or any other security agreement or  arrangement, or any agreement to create any of the foregoing;  “Third Party Rights Clause” has the meaning given in Clause 32;  “Third Party Sum” has the meaning given in paragraph 6.4(b) of Schedule 5  (Limitations on liability);  

 

  24    “Third Party Sum” has the meaning given in paragraph 6.4(b) of Schedule 5;   “TPV/ PRI Reinsurance Agreement” means the reinsurance agreement in the Agreed  Form to be entered into by AMA (acting on behalf of Syndicate 1200) and ARL  immediately prior to Completion;  “TPV/ PRI Claims Management Agreement” means the claims management  agreement based on the TPV/ PRI Claims Management Agreement to be entered into  by AMA (acting on behalf of Syndicate 1200) and Argo Management Services Limited  immediately prior to Completion;  “TPV/ PRI Claims Management Agreement Principles” means the principles in  respect of the terms of the proposed claims management and administration agreement  for the TPV/ PRI Reinsurance Agreement in the Agreed Form;  “Transaction” means the transaction that is the subject of the Share Purchase  Documents;  “Transitional Services Agreement” or “TSA” means the transitional services  agreement in the Agreed Form to be entered into by ARL and AUA on the Completion  Date, together with the schedule of Services (as defined in the TSA);  “TSA Forum” has the meaning given in Clause 4.7 (d);  “TSA Representative” has the meaning given in Clause 4.7 (d);  “UK GAAP” means the United Kingdom General Accepted Accounting Practice,  including FRS 102 The Financial Reporting Standard applicable in the UK and  Republic of Ireland;  “US GAAP” means United States generally accepted accounting principles;   “VAT” means (a) in the United Kingdom, the value added tax imposed by the VATA  and legislation and regulations supplemental thereto, (b) in relation to any jurisdiction  within the European Union, the value added tax provided for in Directive 2006/112/EC  and charged under the provisions of any national legislation implementing that directive  or Directive 77/388/EEC together with legislation supplemental thereto, and (c) in  relation to any other jurisdiction, the equivalent Tax (if any) in that jurisdiction;  “VATA” means the Value Added Tax Act 1994;  “Warranties” means the warranties set out in Schedule 4 (Warranties) and  “Warranty” shall be construed accordingly;  “Warranty Claim” means a claim by the Purchaser in respect of a breach of a  Warranty;  “Warranty Insurance Policy” means the warranty and indemnity insurance policy  arranged by the Purchaser with Euclid Transaction LLC, as underwriting  representative, dated on or about the date of this Agreement with policy number  #ET111-004-072; and  

 

  25    “Working Hours” means 9.00 a.m. to 5.00 p.m. on a Business Day; and  “Years of Account” or “YOA” means an underwriting year of account as defined in  Lloyd’s Regulations.  1.2 In this Agreement, unless otherwise specified:  (a) references to Clauses, paragraphs and Schedules are to Clauses and paragraphs  of, and Schedules to, this Agreement;  (b) references to any document in the “Agreed Form” means that (i) document in  (subject to Clause 12.3) a form agreed by the Parties, as emailed by the Seller’s  Solicitors to the Purchaser’s Solicitors at 12:56 on 8 September 2022 and  confirmed as being so agreed by the Purchaser’s Solicitors by email at 13:21 on  8 September 2022 as that form may be amended by the written agreement of the  Purchaser and the Seller from time to time prior to Completion;   (c) the singular includes the plural and vice versa and use of any gender includes  each gender;  (d) a reference to any statute or statutory provision shall be construed as a reference  to the same as it may have been, or may from time to time be, amended,  modified, re-enacted or replaced, except to the extent that any amendment,  modification, re-enactment or replacement after the date of this Agreement  would increase the liability of any Party under this Agreement;  (e) references to a contract shall be constructed so as to include all amendments,  amendment and restatements, supplements and other modifications to such  contract;  (f) references to a “company” shall be construed so as to include any company,  corporation or other body corporate, wherever and however incorporated or  established;  (g) references to a “person” shall be construed so as to include any individual,  person, firm, company, corporation, body corporate, government, state or  agency of a state, local or municipal authority or Regulatory Authority or any  joint venture, association or partnership (whether or not having separate legal  personality);  (h) the expressions, “allotment”, “body corporate”, “debenture”, “financial  year” “holding company”, “holding undertaking”, “paid up”, “subsidiary”  and “subsidiary undertaking” shall have the meaning given in the Companies  Act 2006;  (i) any reference to a “day” (including the phrase “Business Day”) shall mean a  period of 24 hours running from midnight to midnight;  (j) references to times are to London time;  

 

  26    (k) references to “costs” and/ or “expenses” incurred by a person shall not include  any amount in respect of VAT comprised in such costs or expenses for which  either that person or, if relevant, any other member of the VAT group to which  that person belongs is entitled to credit, repayment or other Relief as input tax;  (l) the expressions “include” and “including” are to be construed as being by way  of illustration or emphasis only and are not to be construed so as to limit the  generality of any words preceding them;  (m) the expression “to the extent that” shall be read as meaning “if, but only to the  extent that”;  (n) references to writing shall include any modes of reproducing words in a legible  and non-transitory form and whether sent or supplied by electronic mail;  (o) references to the knowledge, belief or awareness of the Seller (or similar  phrases) shall be limited to the actual knowledge of:  (i) Scott Kirk (CFO, Argo Group);  (ii) Allison Kiene (General Counsel, Argo Group);  (iii) Susan Comparato (Chief Administrative Officer, Argo Group);  (iv) Tobias Mills (Head of Compliance, Argo Group);  (v) Thomas McCartney (Group Head of Ceded Reinsurance, Argo Group);  (vi) Dominic Kirby (Managing Director, AMA);  (vii) Darren Argyle (Chief Financial Officer, Argo International);  (viii) Paul Lucas (Argo International Chief Actuary) (solely in respect of actuarial  matters);  after due enquiry of their direct reports;  (p) references to any English legal term for any action, remedy, method of judicial  proceeding, legal document, legal status, court, official, or any legal concept or  thing shall in respect of any jurisdiction other than England be deemed to  include what most nearly approximates in that jurisdiction to the English legal  term;  (q) each notice, demand, request, statement, instrument, certificate or other  communication under or in connection with this Agreement shall be in English;  (r) a reference to “pounds” or “£” shall be construed as a reference to the lawful  currency for the time being of England and Wales;  (s) a reference to “dollars” or “$” shall be construed as a reference to the lawful  currency for the time being of the United States of America;  

 

  27    (t) all headings and titles are inserted for convenience only and are to be ignored  in the interpretation of this Agreement; and  (u) the Schedules form part of this Agreement and shall have the same force and  effect as if expressly set out in the body of this Agreement, and any reference  to this Agreement shall include the Schedules.  2. SALE AND PURCHASE  2.1 On and subject to the terms and conditions of this Agreement, the Seller shall sell those  Shares set against the Seller’s name in Schedule 1 (Shares) on the basis that the same  covenants shall be deemed to be given by the Seller at Completion in relation to the  Shares as are implied under Part 1 of the Law of Property Miscellaneous Provisions  Act 1994 where a disposition is expressed to be made with full title guarantee, and the  Purchaser shall purchase the Shares, in each case together with all rights attached to  them at Completion (including the right to receive all distributions and dividends  declared, paid or made in respect of the Shares after Completion) and free from all  Third Party Rights.  2.2 Neither of the Seller nor the Purchaser will be obliged to complete the sale and purchase  of any Shares unless the sale and purchase of all of the Shares is completed  simultaneously.  3. CONDITIONS PRECEDENT TO COMPLETION  The Conditions and responsibility for their satisfaction  3.1 The sale and purchase of the Shares pursuant to this Agreement is in all respects  conditional upon those matters listed in Schedule 2 (Conditions to Completion) (each a  “Condition” and, together, the “Conditions”).  3.2 Each of the Seller and the Purchaser undertakes to disclose in writing to the other  anything which will or might reasonably be expected to prevent any of the Conditions  from being fulfilled at or before 5.00 p.m. on the Long Stop Date within two (2)  Business Days after it comes to their attention. Without prejudice to the generality of  the foregoing, this includes disclosure of any indication that any Regulatory Authority  may intend to withhold its approval of, or raise an objection to, or withdraw any licence  or authorisation following, or impose a condition that would, if imposed, constitute a  Burdensome Condition on or following, the sale and purchase of the Shares.  Regulatory consents  3.3 The Purchaser undertakes to keep the Seller informed as to progress towards  satisfaction of the Regulatory Conditions, as may be reasonably requested by the Seller,  and undertakes to:  (a) use its best endeavours, and shall procure that all persons who will acquire  control (as defined in Schedule 2) of AMA shall use their best endeavours to  secure the satisfaction of the Conditions in paragraph 1.1 and 1.3 of Schedule 2  as soon as practicable and in any event by the Long Stop Date;  

 

  28    (b) use its best endeavours, and shall procure that all persons who will acquire  control (as defined in Schedule 2) of Argo Direct Limited shall use their best  endeavours to secure the satisfaction of the Condition in paragraph 1.2 of  Schedule 2 (Conditions to Completion) as soon as practicable and in any event  by the Long Stop Date;  (c) use its best endeavours, and shall procure that all persons who will acquire  control (as defined in Schedule 2) of each Argo Corporate Member shall use  their best endeavours to secure the satisfaction of the Condition in paragraph  1.3 of Schedule 2 (Conditions to Completion) as soon as practicable and in any  event by the Long Stop Date;  (d) use its best endeavours, and shall procure that all persons who will acquire  control of ArgoGlobal Underwriting (Dubai) Limited shall use their best  endeavours to secure the satisfaction of the Condition in paragraph 1.5 of  Schedule 2 (Conditions to Completion) as soon as practicable and in any event  by the Long Stop Date;  (e) use its best endeavours to ensure that all relevant persons prepare and submit  the notifications (including any business plan, schedules and other  supplementary documentation to be appended thereto), at the Purchaser’s own  cost, to the FCA, the PRA, Lloyd’s, and the DFSA and/or the MAS which are  necessary to satisfy the Regulatory Conditions and (subject to any contrary  request or direction of the PRA and/or the FCA (in the case of the Condition at  paragraphs 1.1 and/or 1.2 of Schedule 2 (Conditions to Completion)) or the  Lloyd’s (in the case of the Conditions at paragraph 1.3 and 1.4 of Schedule 2  (Conditions to Completion)), or the DFSA (in the case of the Condition at  paragraph 1.5 of Schedule 2 (Conditions to Completion) by the date that is the  later of the date that is:   (i) twenty (20) Business Days from the date of this Agreement; or   (ii) ten (10) Business Days from the date on which the Seller provides to the  Purchaser all of the information in relation to the Target Group that is required  by the Purchaser (acting reasonably) for this purpose;  (f) notify the Seller (or advisers designated by the Seller), and to the extent  permitted under Applicable Law provide copies of any material  communications from any Regulatory Authority or other person in relation to  obtaining any consent, approval or action required to effect the transactions  contemplated hereby as soon as reasonably practicable;  (g) to the extent permitted by Applicable Law provide the Seller (or advisers  nominated by the Seller) with draft copies of all submissions and material  communications to Regulatory Authorities in relation to obtaining any consent,  approval or action at such time as will allow the Seller a reasonable opportunity  to provide comments on such submissions and communications before they are  submitted or sent and provide the Seller (or such nominated advisers) with  copies of all such submissions and communications in the form submitted or  sent;  

 

  29    (h) unless otherwise agreed by the Parties, where reasonably requested by the  Seller, and where permitted by the Regulatory Authority concerned, use  reasonable endeavours to procure permission for the attendance of persons  nominated by the Seller at all material meetings (other than non-substantive  scheduling or administrative calls or telephone calls initiated by a Regulatory  Authority and not scheduled in advance) with the applicable Regulatory  Authority in connection with the Regulatory Conditions, provided that to the  extent that a meeting with any Regulatory Authority involves any confidential  and/or commercially sensitive information relating to the Purchaser or any other  individual or entity involved in the filing (including, without limitation, plans  with respect to the Target Companies), the Purchaser shall seek to arrange for  two separate meetings to be held with such Regulatory Authority, as follows:  (i) the first meeting shall involve discussion of the said confidential and/or  commercially sensitive information and shall be attended by the Purchaser only;  and   (ii) the second meeting shall involve discussion of the status of the relevant  Regulatory Conditions but shall not involve any discussion of the said  confidential and/or commercially sensitive information and the Seller shall be  permitted to attend;  (i) use its best endeavours to ensure that the Seller is provided with such  information and co-operation as is reasonably necessary for the purpose of  making any submissions, requests, and other communications in connection  with the Regulatory Conditions,  provided that notwithstanding anything to the contrary contained in this Agreement,  none of the Purchaser nor any of the Purchaser’s Group nor any other person acquiring  control (within the meaning, in each case, of that term as set out in Schedule 2) of any  Target Company shall, without prejudice to the Purchaser’s obligations under Clause  3.4 below, be obligated to permit or suffer to exist any condition, limitation, restriction,  or requirement of or imposed by a Regulatory Authority that, individually or in the  aggregate with any other actions, conditions, limitations, restrictions or requirements  of or imposed by any Regulatory Authority would result in a Burdensome Condition.  3.4 If either the Seller or the Purchaser becomes aware of any proposal by any Regulatory  Authority to impose a condition in respect of any licence or authorisation or otherwise  in respect of any Target Group Company that would, if imposed, constitute a  Burdensome Condition, the Purchaser shall take all reasonable steps to avoid the  imposition of such condition (or to alter or limit any condition actually imposed by such  Regulatory Authority such that it does not constitute a Burdensome Condition) and the  Seller shall and shall procure that each relevant member of the Seller’s Group shall  provide such reasonable assistance and cooperation to the Purchaser as reasonably  required provided that, in each case, neither the Purchaser nor the Seller shall be  required to take any action to avoid or mitigate a Burdensome Condition (or a proposal  to any Regulatory Authority to impose a Burdensome Condition) if such action would,  or would reasonably be expected to have, an adverse economic effect on such party.  

 

  30    3.5 The Seller undertakes to keep the Purchaser informed as to progress towards  satisfaction of the BMA Condition, as may be reasonably requested by the Purchaser,  and undertakes to:  (a) use its best endeavours to secure the satisfaction of the Bermuda Condition as  soon as practicable and in any event by the Long Stop Date;  (b) use its best endeavours to prepare and submit the notifications (including any  business plan, schedules and other supplementary documentation to be  appended thereto), at the Seller’s own cost, required by the BMA which are  necessary to satisfy the BMA Condition and (subject to any contrary request or  direction of the BMA) by the date that is twenty (20) Business Days from the  date of this Agreement;   (c) notify the Purchaser (or advisers designated by the Purchaser), and to the extent  permitted under Applicable Law, provide copies of any material  communications from the BMA or other person in relation to obtaining any  consent, approval or action required to effect the BMA Condition;  (d) to the extent permitted by Applicable Law, provide the Purchaser (or advisers  nominated by the Purchaser) with draft copies of all submissions and material  communications to the BMA in relation to obtaining any consent, approval or  action at such time as will allow the Purchaser a reasonable opportunity to  provide comments on such submissions and communications before they are  submitted or sent and provide the Purchaser (or such nominated advisers) with  copies of all such submissions and communications in the form submitted or  sent;  (e) unless otherwise agreed by the Parties, where reasonably requested by the  Purchaser, and where permitted by the BMA, use reasonable endeavours to  procure permission for the attendance of persons nominated by the Purchaser at  all material meetings (other than non-substantive scheduling or administrative  calls or telephone calls initiated by the BMA and not scheduled in advance) with  the BMA in connection with the BMA Condition, provided that to the extent  that a meeting with the BMA involves any confidential and/or commercially  sensitive information relating to the Seller or any other individual or entity  involved in the filing, the Seller shall seek to arrange for two separate meetings  to be held with the BMA, as follows:  (i) the first meeting shall involve discussion of the said confidential and/or  commercially sensitive information and shall be attended by members of the  Seller’s Group only; and   (ii) the second meeting shall involve discussion of the status of the BMA Condition  but shall not involve any discussion of the said confidential and/or commercially  sensitive information and the Purchaser shall, where permitted by the BMA as  above, be permitted to attend,  for avoidance of doubt, neither the Purchaser nor any member of the Purchaser’s  Group shall be entitled to attend any BMA supervisory college meeting between  any member of the Retained Group and the BMA; and  

 

  31    (f) use its best endeavours to ensure that the Purchaser is provided with such  information and co-operation as is reasonably necessary for the purpose of  making any submissions, requests, and other communications in connection  with the BMA Condition.  3.6 The Seller undertakes to keep the Purchaser informed as to progress towards  satisfaction of the Conditions in paragraphs 2.2 to 2.6 of Schedule 2 (Conditions to  Completion) and undertakes to use its best endeavours to procure the satisfaction of the  Condition in paragraphs 2.2 to 2.6 of Schedule 2 as soon as practicable and in any event  by the Long Stop Date.  3.7 The Seller shall use best endeavours (and shall procure that the other members of the  Seller’s Group use best endeavours) to provide the Purchaser and any other relevant  member(s) of the Purchaser’s Group with such information, access and cooperation  (including from AMA for the purpose of the Purchaser making any regulatory  notifications or other submissions in the context of the satisfaction of the Condition in  paragraph 1.4 of Schedule 2) as is reasonably necessary for the purpose of making any  regulatory notifications in connection with the Conditions in paragraphs 1.1 to 1.5 of  Schedule 2 or with respect to any non-objection by the MAS in respect of the Purchaser  (and any other person who will acquire control of ArgoGlobal Underwriting Asia  Pacific Pte. Ltd. pursuant to this Agreement) acquiring control of ArgoGlobal  Underwriting Asia Pacific Ptd. Ltd.   3.8 The Purchaser shall use best endeavours (and shall procure that the other members of  the Purchaser’s Group use best endeavours) to provide the Seller and any other relevant  member(s) of the Seller’s Group with such information as is reasonably necessary for  the purpose of making any regulatory notifications in connection with the Conditions  in paragraph 1.6 of Schedule 2.  3.9 In the event that the Seller or any member of the Seller’s Group is required to make any  regulatory notifications in connection with the sale and purchase of the Shares that are  additional to those set out in paragraphs 1.1 to 1.5 of Schedule 2 (Conditions to  Completion), the Purchaser shall use best endeavours (and shall procure that the other  members of the Purchaser’s Group use best endeavours) to provide the Seller and any  other relevant member(s) of the Seller’s Group with such information and co-operation  as is reasonably necessary for that purpose.  3.10 In the event that the Purchaser or any member of the Purchaser’s Group is required to  make any regulatory notifications in connection with the sale and purchase of the Shares  that are additional to those set out in paragraphs 1.1 to 1.5 of Schedule 2 (Conditions to  Completion), the Seller shall use reasonable endeavours (and shall procure that the other  members of the Seller’s Group use reasonable endeavours) to provide the Purchaser  and any other relevant member(s) of the Purchaser’s Group with such information and  co-operation as is reasonably necessary for that purpose.  Information sharing  3.11 Subject to Clause 28.3, nothing in Clauses 3.3 to 3.8 (inclusive) shall require any Party  to share information with another Party that it determines (acting reasonably) is  commercially sensitive or which is privileged or where such disclosure is likely to give  rise to a breach of Applicable Law. This shall not, however, limit the sharing of relevant  

 

  32    commercially sensitive information to external legal counsel on an external-counsel- only basis. Where a Party determines that any such commercially sensitive information  is not relevant and decides not to share such information with the other Party, the first  mentioned Party shall provide the other Party with a description of the nature of such  information.  Other Conditions  3.12 The Seller undertakes to use its (and procure that each member of the Seller’s Group  use their) best endeavours to ensure the satisfaction of paragraphs 2.1 to 2.6 of  Schedule 2 (Conditions to Completion) as soon as practicable and in any event by the  Long Stop Date.  Waiver / non-fulfilment of the Conditions  3.13 The Regulatory Conditions and the BMA Condition may only be waived, in whole or  in part, by the written agreement of the Purchaser and the Seller.  3.14 The Conditions listed in paragraph 2.1 to 2.6 of Schedule 2 (Conditions to Completion)  may be waived in whole or in part by the Purchaser.  3.15 If any of the Conditions are not fulfilled (or waived in accordance with Clauses 3.12 to  3.14) before 5.00 p.m. on the Long Stop Date then, unless otherwise agreed by the  Purchaser and the Seller in writing, this Agreement shall automatically terminate at that  time.  3.16 If this Agreement terminates in accordance with Clause 3.14, and without limiting any  Party’s right to claim damages, all obligations of the Parties under this Agreement, other  than pursuant to the Surviving Clauses shall end but, for the avoidance of doubt, all  rights and liabilities of the Parties which have accrued before termination shall continue  to exist.  Notification to Lloyd’s Asia Administrator  3.17 The Seller shall notify the Lloyd’s Asia Administrator of the proposed change in the  shareholding structure of ArgoGlobal Underwriting Asia Pacific Pte Ltd. resulting from  the Transaction (the “Lloyd’s Asia Administrator Notice”) by the date that is twenty  (20) Business Days from the date of this Agreement.  3.18 The Purchaser shall, and shall procure that each member of its Group shall, use its best  endeavours to ensure that the Seller is provided with such information and co-operation  as is reasonably necessary for the purpose of making any submissions, requests, and  other communications in connection with the Lloyd’s Asia Administrator Notice.  4. CONDUCT OF THE TARGET GROUP’S BUSINESS BEFORE COMPLETION  4.1 Subject to Clause 4.2, the Seller shall, except as may be approved by the Purchaser  (such approval not to be unreasonably withheld, conditioned or delayed), procure in  respect of the Target Companies that, between the date of this Agreement and  Completion:  

 

  33    (a) each Target Company will, in all material respects, carry on its business  (including the business of Syndicate 1200) in a manner which is consistent with  the practice of the previous 12 months (including processing and administering  all claims in a timely manner) and in compliance with Applicable Law, insofar  as the Seller reasonably understands such Applicable Law to apply as at the  relevant time (provided that such reasonable understanding is consistent with  the prevailing market practice at the relevant time of entities of a similar nature  to the Target Company in the relevant territory with respect to the same  Applicable Law); and  (b) no relevant member of the Target Group will undertake any of the acts or  matters listed in Schedule 7 (Conduct of Target Group’s Business Before  Completion).  4.2 Clause 4.1 shall not operate so as to restrict or prevent:  (a) any member of the Target Group entering into or amending any contract or  commitment which terminates or is terminable in accordance with its terms by  written notice of 12 months or less and which is not material in relation to any  member of the Target Group   (b) subject to the Seller procuring that a representative nominated by the Purchaser  shall be entitled to attend each of AMA’s underwriting and reinsurance  committees which may be a different representative in respect of each of the  committees, any member of the Target Group entering into or amending any  contract or commitment in respect of any (re)insurance contracts in the ordinary  course of its business;   (c) any matter reasonably undertaken by any member of the Target Group in the  case of an emergency or disaster with the intention of and only to the extent of  those matters required with a view to minimising any adverse effect of such  situation (and of which the Purchaser will be promptly notified once the Seller  is made aware of same and, in any event, within two (2) Business Days of the  Seller becoming aware of same) and which the relevant Target Company  considers reasonably necessary in the context of the emergency or disaster  situation;  (d) the termination of any Existing Intra-Group Agreement in accordance with  Clause 14 (for the avoidance of doubt, excluding any Continuing Intra-Group  Agreement);  (e) the completion or performance of any obligation undertaken pursuant to any  contract or arrangement entered into by or relating to any member of the Target  Group prior to the date of this Agreement provided that, to the extent such  contract or arrangement is a Material Contract, such Material Contract has been  Disclosed in the Data Room;  (f) any step reasonably taken by any Target Company or the Retained Group in  accordance with the Migration Plan;  

 

  34    (g) any step reasonably taken by any Target Company to effect the reinsurance to  close of:  (i) the 2020 and prior years of account of Syndicate 1200; and/ or  (ii) the 2020 year of account of Syndicate 1910,  (iii) novation of the management of Syndicate 1910 and Syndicate 6117 to Ariel Re  Managing Agency Limited,  provided that, in each case, such action is taken in accordance with the terms of  this Agreement;  (h) any payment being made for or in respect of any Tax due and payable in  accordance with Applicable Law;  (i) any filing in respect of any Tax being made to comply with any requirement of  any Tax Authority;  (j) any matter expressly contemplated by the Share Purchase Documents or  reasonably necessary to implement the transfer of the Shares to the Purchaser;  (k) any matter being undertaken by any member of the Target Group at the written  request, or with the prior written consent, of the Purchaser; or  (l) any matter required in order to comply with Applicable Law by any member of  the Target Group.   4.3 Access  In the period from the date of this Agreement to the Completion Date, the Seller shall,  to the extent permissible under Applicable Law, procure that the Purchaser and its  Representatives are provided with such reasonable resources and assistance as may be  necessary to prepare for the integration of the Target Companies into the Purchaser’s  Group, including but not limited to:  (a) keeping the Purchaser reasonably informed of any material developments in the  business and affairs of the Target Group as a whole;   (b) giving the Purchaser reasonable advance notice of meetings of boards of  directors of each Target Group Company and permitting a representative of the  Purchaser to attend all meetings of the board of AMA and (on reasonable  request each other Target Group Company), except in each case to the extent  that any such meeting relates to Syndicate 1910; and  (c) allowing the Purchaser’s Representatives such access as is reasonably  requested, upon reasonable notice and during Working Hours, to the books and  records of each Target Company (including all statutory books, minute books,  and leases) to the extent available.  4.4 Information, Lloyd’s Reporting, Correspondence with Regulatory Authorities and  Senior Employees  

 

  35    (a) In the period from the date of this Agreement to the Completion Date, the Seller  shall, to the extent permissible under Applicable Law, procure that the  Purchaser and its Representatives are provided with the following information  to the extent such information has been produced and is available (and subject  to redaction of any confidential and/or commercially sensitive information):  (i) the unaudited combined profit and loss accounts and balance sheet of the Target  Group (if such profit and loss accounts and balance sheet are routinely produced  by the Target Group), and the unaudited accounts for each of the Syndicates (if  such unaudited accounts are routinely produced by each of the Syndicates),  relating to each month during such period no later than the 28th day of the month  following the month to which such accounts relate;  (ii) the unaudited combined profit and loss accounts, balance sheet and statement of  cash flows of the Target Group and each of the Syndicates relating to each  quarterly period during such period no later than five weeks following the last  day of such quarterly period; and  (iii) any material correspondence with, and any material reports and submissions  made to, the PRA, the FCA, Lloyd’s, MAS, the BMA or the DFSA relating to  any Target Company regulated thereby.  (b) In the period from the date of this Agreement to the Completion Date, the Seller  shall:  (i) provide to the Purchaser, to the extent produced and available, copies of:   (A) Quarterly Monitoring Returns (“QMR”) as filed by AMA with  Lloyd’s no later than five (5) Business Days after such QMR is  filed with Lloyd’s;   (B) any material correspondence with, and any material reports and  submissions made to Regulatory Authorities relating to any  Target Company; and  (C) on a monthly basis, a Divisional Summary in a format  substantially similar to the file located in folder 3.2.2.8 of the  Data Room; and  (ii) use reasonable endeavours to ensure that the Purchaser shall have reasonable  access to the executive officers of the Target Group (and/or the Retained  Group), and that they shall make themselves available to discuss and respond to  any reasonable queries of the Purchaser in relation to the business of the Target  Group (including Syndicate 1200);  (iii) procure that the Purchaser and its advisers are given, upon reasonable notice to  the Seller, and at the cost of the Purchaser, reasonable access to the Senior  Employees of the Target Group for the purposes of agreeing retention  arrangements with the Senior Employees of the Target Group which the  Purchaser proposes to effect immediately following Completion.  

 

  36    4.5 Nothing in Clauses 4.5 to 4.6 (inclusive) shall require any Party to share information  with another Party that it determines (acting reasonably) is commercially sensitive,  which is privileged, that it determines (acting reasonably) to include personal  information relating to any individual(s) or where such disclosure is likely to give rise  to a breach of Applicable Law. This shall not, however, limit the sharing of relevant  commercially sensitive information to external legal counsel on an external-counsel- only basis.   4.6 Go-forward Contracts and Third Party Consents  (a) Subject to Clause 4.7, the Seller and the Purchaser shall agree prior to  Completion a definitive version of the TSA, together with all documents  required to be executed in connection with such agreement.  (b) The Seller shall, and shall procure that the Seller’s Group shall, use reasonable  endeavours to identify and obtain by Completion, all necessary Third Party  Consents, including any that may be required by the terms of, or in order to  provide the services contemplated by, the TSA, provided that: (i) upon the  Seller’s request, the Purchaser shall provide to the Seller such assistance as the  Seller may reasonably require to obtain any Third Party Consent, including  negotiating the terms of any Third Party Consent; and (ii) the costs and expenses  incurred by the Seller in obtaining any Third Party Consent shall be borne  equally between the Purchaser and the Seller (such costs and expenses, the  “Third Party Consent Costs”). The Parties acknowledge and agree that, prior  to obtaining any Third Party Consent, an estimate of the applicable Third Party  Consent Costs shall be notified by the Seller to the Purchaser in writing, and the  Purchaser shall have the option to decline in writing to make payment of its  share of the Third Party Consent Costs and, if applicable, exclude the relevant  Service(s) from the TSA.  4.7 Migration Plan and Services Schedule under the TSA  (a) The Seller and Purchaser shall, and shall cause their respective Affiliates and  Representatives to, as soon as reasonably practicable following the date of this  Agreement, discuss in good faith and cooperate and use reasonable endeavours  to develop, agree and implement a process and timetable for AUA’s migration  away from its use of the services under the TSA by implementing alternative  internal services and processes (the “Draft Migration Plan”).  (b) Notwithstanding the generality of Clause 4.7(a), and subject to Applicable  Laws, each Party shall, and shall cause their respective Affiliates and  Representatives to, use reasonable endeavours to review, revise and cooperate  in good faith to finalise the Draft Migration Plan pursuant to Clause 7.2 of the  TSA (such finalised plan, the “Migration Plan”).  (c) The Seller and Purchaser shall, and shall cause their respective Affiliates and  Representatives to, between the date of this Agreement and Completion, use all  reasonable endeavours to work together in good faith to negotiate and complete  the Services schedule under the TSA. The Parties agree that the finalised Service  schedule under the TSA shall be exhaustive, other than those services identified  

 

  37    as Omitted Services, Ancillary Services and Excluded Services (as these terms  are defined in the TSA), with:  (i) a list of the Services as may be broken down by Service Category, other than  those services identified as Omitted Services, Ancillary Services and Excluded  Services (as these terms are defined in the TSA) to the extent that it is reasonably  practicable to segregate them;  (ii) service Term (as defined in the TSA) informed for each Service or Service  Category; and  (iii) any In-Flight Projects or planned projects as deemed necessary by Service  Provider to effect the Migration Plan’s implementation. Such dependent In- Flight Projects or planned projects shall be paid for pursuant to the applicable  Service Charges (as these terms are defined in the TSA).  (d) Promptly after the date of this Agreement, the Parties shall each appoint a  representative (each, a “TSA Representative”) that has sufficient skill,  knowledge and experience with respect to the services under the TSA and the  requisite power and authority to act on behalf of that Party in respect of all  matters relating to the preparation of the Migration Plan and the finalisation of  the Services Schedule and the TSA which shall sit on the TSA forum (“TSA  Forum”). Any matter that cannot be resolved by the TSA Representatives  within thirty (30) days from the day on which first discussed by the TSA  Representatives shall be referred to the TSA Forum. If the TSA Forum fails to  resolve the matter within ten (10) Business Days after referral to the TSA  Forum, this will become a dispute (“Dispute”) to be resolved in accordance  with Clause 4.7(e) of this Agreement (the “Dispute Resolution Procedure”).   (e) The Dispute shall, in the first instance, be referred to the Chief Financial Officer  (representing Seller) and Jack Kuhn (representing the Purchaser) (each, a  “Senior Representative”), who shall cooperate in good faith to resolve such  Dispute within ten (10) Business Days of the referral (the “Senior  Representative Resolution Period”). Either Party may replace its Senior  Representative at any time by providing the other Party with prior written  notice, such replacement to be effective immediately upon receipt of such  notice.   4.8 TPV/ PRI Claims Management Agreement and D&F/ Casualty Claims Management  Agreement  (a) The Seller and the Purchaser shall, and shall cause their respective Affiliates  and Representatives to, between the date of this Agreement and Completion,  use reasonable endeavours to work together in good faith to negotiate and  finalise the TPV/ PRI Claims Management Agreement and the D&F/ Casualty  Claims Management Agreement, in each case based on the terms of the TPV/  PRI Claims Management Agreement Principles and the D&F / Casualty Claims  Management Agreement Principles respectively.   

 

  38    5. CONSIDERATION  5.1 The total consideration payable by the Purchaser to the Seller in connection with the  sale of the Shares (the “Consideration”) shall be an amount in cash equal to the sum  of the Base Consideration:  (a) plus the amount (if any) by which the Completion Net Assets exceed the Base  Net Assets; or  (b) minus the amount (if any) by which the Completion Net Assets fall short of the  Base Net Assets.  5.2 At Completion, the Purchaser shall pay to the Seller in cash an amount which is equal  to the Base Consideration:  (a) plus the amount (if any) by which the Estimated Completion Net Assets exceed  the Base Net Assets; or  (b) minus the amount (if any) by which the Estimated Completion Net Assets fall  short of the Base Net Assets;  (the “Completion Payment”).  6. COMPLETION  6.1 Completion shall take place:  (a) via the electronic exchange of documents and signatures by electronic mail in  portable document format (.pdf) on the last Business Day of the calendar month,  in which the last in time of the Conditions listed in Schedule 2 (Conditions to  Completion) is fulfilled (or waived by the Purchaser and the Seller in  accordance with Clauses 3.12 to 3.14), PROVIDED THAT if the date on  which the last such Condition shall have been fulfilled or waived is less than  five (5) Business Days before the last Business Day of that calendar month, then  Completion shall take place on the last Business Day of the next following  calendar month, or  (b) in such other manner, at a location, at such other time and/or on such other date  as the Seller and the Purchaser may in writing agree.  6.2 At Completion, the Seller shall do those things listed in Part A (The Seller’s obligations)  of Schedule 3 (Completion Arrangements) and the Purchaser shall do those things listed  in Part B (Purchaser’s obligations) of Schedule 3 (Completion Arrangements).  Completion shall take place in accordance with Part C (General) of Schedule 3  (Completion Arrangements) (the “Completion Obligations”).  6.3 If the Seller (on the one hand) or the Purchaser (on the other) fails to comply with any  Material Completion Obligation, then the other Party shall be entitled (in addition to  and without prejudice to any other rights and remedies that may be available to that  Party) by written notice to the Party in default on the date Completion would otherwise  have taken place, to:  

 

  39    (a) require Completion to take place so far as practicable having regard to the  defaults which have occurred; or  (b) notify the Party in default of a new date for Completion (being not more than  ten (10) Business Days after the original date for Completion) in which case the  provisions of this Clause 6 (other than this Clause 6.3) and Schedule 3  (Completion Arrangements) shall apply to Completion as so deferred but on the  basis that such deferral may only occur once.  6.4 If the Seller (on the one hand) or the Purchaser (on the other):  (a) complies with all its Material Completion Obligations, but fails to comply with  any Completion Obligation that is not a Material Completion Obligation; or  (b) fails to comply with any Material Completion Obligation, and the other Party  exercises its rights under Clause 6.3(b) to require Completion to take place so  far as practicable having regard to the defaults which have occurred,  (c) then the other Party shall be required to proceed to Completion and, to the extent  that any such obligation is not complied with at Completion, the defaulting Party  shall (without affecting any other rights and remedies available to the other  Party) ensure that such obligation is fulfilled as soon as practicable following  Completion.  6.5 If in accordance with clause 6.3(b), Completion is deferred and at such deferred  Completion a Party fails to comply with its Material Completion Obligations, the non- defaulting Party shall have the right to terminate this Agreement by written notice to  the other Party, in which event neither Party nor any of its Affiliates shall have any  claim under this Agreement of any nature against the other Party or its Affiliates (except  in respect of any rights and liabilities which have accrued before termination or under  any of the Surviving Clauses). If this Agreement is so terminated, neither Party nor any  of their Affiliates shall have any claim under this Agreement of any nature against the  other Party or its Affiliates (except in respect of any rights and liabilities which have  accrued before termination or under any of the Surviving Clauses).  6.6 The Seller shall procure that the Inter-Company Payables and Inter-Company  Receivables will be settled at par (or as otherwise contemplated by the Share Purchase  Documents) prior to Completion. Without limiting the foregoing, and without prejudice  to any other rights which the Parties may have under this Agreement, to the extent that  any Inter-Company Payable or Inter-Company Receivable remains outstanding at  Completion, the Parties shall cooperate to procure the settlement of such Inter- Company Payable or Inter-Company Receivable as soon as practicable after  Completion. Without prejudice to any other rights which the Parties may have under  this Agreement or otherwise in respect of any Inter-Company Payables or Inter- Company Receivables (including the right to the payment of any such amounts), for the  purposes only of preparing the Completion Balance Sheet, the Parties acknowledge and  agree that any such Inter-Company Payable or Inter-Company Receivable that remains  outstanding at Completion shall be deemed to have been settled immediately prior to  Completion.  

 

  40    7. COMPLETION BALANCE SHEET  7.1 The Completion Balance Sheet and the Net Assets Statement shall be prepared and  agreed or determined (as the case may be) in accordance with Schedule 11 (Preparation  of Completion Balance Sheet).  7.2 Following agreement or determination of the Completion Balance Sheet and the Net  Assets Statement, if the amount of the Completion Net Assets:  (a) exceeds the Estimated Completion Net Assets, the Purchaser shall (subject to  Clause 7.3) pay to the Seller on or before the Adjustment Date an amount equal  to the excess; or  (b) is less than the Estimated Completion Net Assets, the Seller shall pay to the  Purchaser on or before the Adjustment Date an amount equal to the shortfall.  7.3 Any payment due to the Purchaser under Clause 7.2 shall be made by electronic transfer  to such account of the Purchaser as is notified to the Seller by the Purchaser no later  than two (2) Business Days before the Adjustment Date.  7.4 Any payment due to the Seller under Clause 7.2 shall be made by electronic transfer to  such account of the Seller as is notified to the Purchaser by the Seller no later than two  (2) Business Days before the Adjustment Date.  8. WARRANTIES AND INDEMNITIES  8.1 Subject to Clauses 8.3 and to Clauses 10.1 to 10.4, 10.5 and 10.6:  (a) the Seller warrants to the Purchaser that, each of the Warranties is accurate at  the date of this Agreement; and  (b) immediately prior to Completion the Seller shall be deemed to warrant to the  Purchaser that each of the Fundamental Warranties is accurate, by reference to  the facts and circumstances then existing at that time, on the basis that any  express or implied reference in such warranties to the date of this Agreement  shall be substituted by a reference to the Completion Date.  8.2 The Seller undertakes to indemnify the Purchaser in respect of those matters set out in,  and on and subject to the terms of, Schedule 17 (Indemnities), with effect from  Completion.   8.3 Except in the case of fraud, wilful misconduct or fraudulent misrepresentation by the  Seller, any member of Retained Group, or any of their respective Representatives the  Purchaser acknowledges that it does not rely on and has not been induced to enter into  this Agreement on the basis of any warranties, representations, covenants,  undertakings, indemnities or other statements, other than to the extent expressly  provided in this Agreement and the other Share Purchase Documents.  9. TAX COVENANT  9.1 The provisions of Schedule 15 shall have effect from Completion.  

 

  41    10. SELLER’S LIMITATIONS ON LIABILITY  Maximum Liability   10.1 The aggregate liability of the Seller in respect of all Warranty Claims shall not exceed:   (a) in respect of any Fundamental Warranty Claims, an amount equal to the  Consideration less any amounts recovered in respect of Fundamental Warranty  Claims under the Warranty Insurance Policy; or  (b) in respect of any Non-Fundamental Warranty Claims, $1.  10.2 Subject to Clause 10.4, the aggregate liability of the Seller in respect of all other Claims  shall not exceed:  (a) in respect of Tax Covenant Claims pursuant to Part B of Schedule 15 and subject  to the limitations set out therein, an amount equal to the DTA Assumed Savings  Amount;  (b) in respect of any Tax Covenant Claims pursuant to Part A of Schedule 15, $1;   (c) in respect of all other Claims, an amount equal to the Consideration.  10.3 Subject to paragraph 11 of Schedule 5, but otherwise notwithstanding anything to the  contrary in this Agreement, the Purchaser confirms that its sole recourse for any Claim  against the Seller for any amount in excess of the limit of the liability set out in Clause  10.1(b) (any such amount being an “Excess”) shall be against the Warranty Insurance  Policy and, accordingly, the Purchaser shall have no right to, and shall not initiate or  pursue any claim, proceeding, suit or action against the Seller in respect of any Excess.  The Purchaser acknowledges and agrees that it shall be fully liable for any retention  amount under the Warranty Insurance Policy with respect to any Excess and,  accordingly, the Seller shall not be liable for any such amount.  10.4 The aggregate liability of the Seller in respect of all Claims for which the Seller is liable  (including, for the avoidance of doubt, all legal and other professional fees and expenses  payable by the Seller in respect of all such Claims) shall not exceed an amount equal to  the Consideration.  Disclosure  10.5 The Purchaser shall not be entitled to claim that any fact, matter or circumstance causes  any of the Non-Fundamental Warranties to be breached if it has been Disclosed in the  Disclosure Letter or in any document delivered with the Disclosure Letter.  10.6 The Purchaser shall not be entitled to claim that any fact, matter or circumstance causes  any of the Fundamental Warranties to be breached if it has been Disclosed in (or, solely  in respect of any reference to the Regulatory Conditions, pursuant to) the Disclosure  Letter as a specific disclosure against the applicable Fundamental Warranty on the date  of this Agreement.  Recourse against certain Representatives  

 

  42    10.7 The Purchaser undertakes and agrees that (except in the case of fraud or fraudulent  misrepresentation by the Seller, any member of the Retained Group, or any of their  respective Representatives) it has no rights against, and shall not make any claim  against, any Representative of any member of the Retained Group or any  Representative of any member of the Target Group on whom it may have relied before  agreeing to any term of, or to any term of any agreement or document entered into  pursuant to, this Agreement or any other Share Purchase Document or entering into this  Agreement or any other Share Purchase Document.  Applicability of Schedule 5 (Limitations on liability)  10.8 The liability of the Seller, other than with respect to Indemnity Claims, is subject to the  limitations set out in Schedule 5 (Limitations on liability), save that paragraphs 3,  4.1  and paragraph 7 of Schedule 5 (Limitations on liability) shall apply to Indemnity  Claims.  11. PURCHASER WARRANTIES  11.1 The Purchaser warrants to the Seller that each of the Purchaser Warranties is accurate  at the date of this Agreement. Immediately prior to Completion, the Purchaser shall be  deemed to warrant to the Seller that each of the Purchaser Warranties is true, accurate  and not misleading by reference to the facts and circumstances then existing at that  time, on the basis that any express or implied reference in such warranties to the date  of this Agreement shall be substituted by a reference to the Completion Date.  11.2 The liability of the Purchaser is subject to the limitations set out in Schedule 5  (Limitations on liability).  12. FURTHER UNDERTAKINGS  Wrong pockets  12.1 If, following Completion, any member of the Purchaser’s Group becomes aware that it  owns any property, asset or right which in the 12 months prior to Completion had been  predominantly used in the businesses of the Retained Group, the Purchaser shall  procure that such member of the Purchaser’s Group shall immediately inform the Seller  of that fact. Thereafter, at the request of the Seller, the Purchaser undertakes to execute  and/ or procure that the relevant member of the Purchaser’s Group executes such  agreements or other documents as may be reasonably necessary to procure the transfer  of any such property, asset or right to a member of the Retained Group nominated by  the Seller, and the Seller shall each do all such things as are reasonably necessary to  facilitate such transfer. Such property, asset or right shall be transferred for an amount  equal to:   (a) where such property, asset or right is material to the operation of the Target  Business, including with respect to Syndicate 1200, the fair market value of  such property, asset or right as at the Completion Date;   (b) in any other case, the book value of such property, asset or right as at the  Completion Date,   

 

  43    in each case, which amount shall be paid by the relevant member of the Retained Group  to the relevant member of the Purchaser’s Group within ten (10) Business Days of the  date of transfer of the property, asset or right.  12.2 If, following Completion, any member of the Retained Group becomes aware that it  owns any property, asset or right which in the 12 months prior to Completion had been  predominantly used in the businesses of the Target Group, the Seller shall procure that  such member of the Retained Group shall immediately inform the Purchaser of that  fact. Thereafter, at the request of the Purchaser, the Seller undertakes to execute and/  or procure that the relevant member of the Retained Group executes such agreements  or other documents as may be reasonably necessary to procure the transfer of any such  property, asset or right to a member of the Purchaser’s Group nominated by the  Purchaser and the Purchaser shall do all such things as are reasonably necessary to  facilitate such transfer. Such property, asset or right shall be transferred for an amount  equal to:   (a) where such property, asset or right is material to the operation of the business  of the Retained Group, the fair market value of such property, asset or right as  at the Completion Date;   (b) in any other case, the book value of such property, asset or right as at the  Completion Date,   in each case, which amount shall be paid by the relevant member of the Purchaser’s  Group to the relevant member of the Retained Group within ten (10) Business Days of  the date of transfer of the property, asset or right.  Finalisation of transaction documents  12.3 The Parties agree that, in the case of any Agreed Form documents which are in a “heads  of terms” or “substantive draft” format as at the date of this Agreement, they will work  together in good faith between the date of this Agreement and Completion to develop  and finalise full Agreed Form versions of such documents as soon as possible after the  date of this Agreement.  Purchaser’s financial resources  12.4 The Purchaser warrants and undertakes to the Seller that:  (a) as at the date of this Agreement, there is cash or assets available to the  Purchaser’s Group sufficient to enable the Purchaser to fulfil its obligation to  pay the Consideration and to replace FAL in accordance with Clause 12.12 (the  “Purchaser Funds).  (b) there are no events or circumstances of which the Purchaser is aware as to why  there should not continue to be Purchaser Funds until Completion; and  (c) the Purchaser will procure that, at or prior to Completion, it takes all steps  necessary so as to ensure that the Purchaser is able to fulfil its obligation to pay  the Consideration in accordance with the provisions of this Agreement.  

 

  44    Co-operation  12.5 Subject to Applicable Law and regulation, each Party undertakes to and agrees with the  other Party that it shall, and shall procure that all other members of its Group shall, as  well before as after Completion, provide the other Party with all such assistance  (including access to and ensuring the provision and assistance by the Party’s  professional advisers), information and documentation as the other Party and their  advisers may reasonably request in connection with:  (a) the reinsurance to close of the 2020 and prior years of account of Syndicate  1200;  (b) the reinsurance to close of the 2020 year of account of Syndicate 1910;   (c) the novation of the management of Syndicate 1910 and Syndicate 6117 to Ariel  Re Managing Agency Limited, and  (d) the release of the 1910 Letter of Credit to the extent not released at or prior to  Completion.  (“Cooperation Deliverables”).  12.6 The Seller undertakes and agrees with the Purchaser that:  (a) with respect to the reinsurance to close contracts with respect to the 2020 and  prior Years of Account of Syndicate 1200 and Syndicate 1910:  (i) the terms of such agreements shall comply with Applicable Law, including  without limitation, the reinsurance to close contract requirements set out in  Lloyd’s Performance Management – Supplemental Requirements & Guidance  (July 2020, or such version as is then in force at the date of execution of the  agreement); and  (ii) [***]   (b) with respect to the proposed replacement of the excess of loss reinsurance  contracts relating to Argo (No. 604) Limited's participation in Syndicate 1200  for the 2022 Year of Account and comprising part of the 2022 FAL provided to  Lloyd's on behalf of Argo (No. 604) Limited (the “2022 XOL Stack”) with  excess of loss reinsurance contracts with respect to the 2023 Year of Account   (the “2023 XOL”);   (i) any such replacement contracts (and associated FAL providers deed) shall  comply with Applicable Law;  (ii) [***]  (iii) [***]  (iv) [***]    

 

  45    (c) it shall, and shall procure that all other members of the Target Group and the  Retained Group shall, as part of the process in respect of the Cooperation  Deliverables, consult with the Purchaser and take account of the reasonable  opinions of the Purchaser regarding the approach to and terms of the  Cooperation Deliverables (including by providing the Purchaser with copies of  the proposed agreements relating to the Cooperation Deliverables and taking  account of the Purchaser’s reasonable comments prior to executing such  agreements).  Lloyd’s Syndicate Business Forecast  12.7 Except to the extent prohibited by Applicable Law or by a relevant Regulatory  Authority, the Seller shall and shall procure that AMA (and the other members of the  Target Group and the Retained Group) shall, acting reasonably and in good faith,  consult with, involve and take account of the reasonable views of the Purchaser (as its  designated representatives) in preparing the 2023 Year of Account syndicate business  forecast for Syndicate 1200 (including, without limitation, involving the Purchaser (and  its designated representatives) in meetings and correspondence with Lloyd’s).   12.8 The Seller shall and shall procure that AMA (and the other members of the Retained  Group) shall not submit a 2023 Year of Account syndicate business forecast for  Syndicate 1200 or otherwise act between the date of this Agreement and Completion  such that it materially changes the level of FAL required to be provided with respect to  the underwriting by Syndicate 1200, unless the Purchaser expressly agrees in writing.  2023 Year of Account FAL   12.9 The Parties acknowledge and agree that:  (a) [***]  (b) if Completion does not occur prior to Coming into Line for the 2023 YOA, FAL  in respect of Syndicate 1200 for the 2023 Year of Account will be required to  be provided by the Seller Group; and   (c) the provision of FAL by the Purchaser in place of the Retained Group will  follow as soon as reasonably practicable following Completion by the Purchaser  replacing the Argo Group FAL.  12.10 [***]  12.11 [***]  12.12 [***]  Replacement of Argo Group FAL   12.13 The Parties acknowledge and agree that the Purchaser shall be required to take all such  reasonable actions within its power and control (as well before as after Completion) to  ensure that, as soon as reasonably practicable after Completion, Lloyd’s releases to the  Seller:  

 

  46    (a) that part of the Argo Group FAL provided to Lloyd’s by ARL on behalf of Argo  (No. 604) Limited (the “Argo Cash FAL”); and  (b) that part of the Argo Group FAL as is provided to Lloyd’s in the form of a letter  of credit or letters of credit on behalf of Argo (No. 604) Limited (the “Argo 604  LOCs”).  12.14 To the extent that the Argo FAL is not released and/ or returned (as applicable) to the  Seller by Lloyd’s at or by the next applicable quarterly return date following  Completion (or, if Completion occurs within 15 Business Days prior to a quarterly  return date, at or by the next following quarterly return date) (the “Reference FAL  Release Date”) and to the extent that any such failure by Lloyd’s to release and/ or  return (as applicable) any such Argo FAL at or by the Reference FAL Release Date is  as a result of the Purchaser, or any member of the Purchaser’s Group (including, without  limitation, Argo (604) Limited) failing to comply with its obligations pursuant to  Clauses 12.13, 12.19 or otherwise to ensure that Argo (No. 604) Limited has sufficient  FAL (when the Argo FAL is excluded) to meet any relevant requirement of Lloyd’s or  Applicable Law) the Purchaser shall:  (a) where such FAL is Argo Cash FAL (the “Held Back Argo Re FAL”), pay to  ARL an amount equal to the amount of such Held Back Argo Re FAL provided  that ARL undertakes (on terms reasonably acceptable to the Purchaser) to: (i)  assign all of its rights to the Held Back Argo Re FAL to the Purchaser and grants  to the Purchaser a first priority security interest in the Held Back Argo Re FAL;  (ii) hold any Held Back Argo Re FAL received by it in trust for the Purchaser;  and (iii) promptly pay to the Purchaser any such Held Back Argo Re FAL  released by Lloyd’s and paid to ARL; and/ or  (b) where such FAL is any Argo 604 LOC (the “Unreleased Argo 604 LOCs”),  indemnify each member of the Seller’s Group for all reasonable costs and  expenses including, for the avoidance of doubt, any fees charged in respect of  each Unreleased Argo 604 LOC by the letter of credit provider, incurred with  respect to Unreleased Argo 604 LOCs from the Reference FAL Release Date  until such time as the relevant Unreleased Argo 604 LOC is released by Lloyd’s.   Each Party undertakes to and agrees with the other Party that it shall, and shall procure  that all other members of its Group shall, as well before as after Completion, provide  the other Party with all such assistance (including access to and ensuring the provision  and assistance by the Party’s professional advisers), information and documentation as  the other Party and their advisers may reasonably request in connection with the release  and repayment to ARL of the Argo Cash FAL and release of the Argo 604 LOCs. The  Purchaser shall inform the Seller as soon as practicable if notified by Lloyd’s that the  Argo FAL will not be released and/ or returned (as applicable) by Lloyd’s by the  Reference FAL Release Date.   12.15 Any payment due to any member of the Seller’s Group under Clause 12.14 shall be  made by electronic transfer to such account of the relevant member of the Seller’s  Group as is notified to the Purchaser by the Seller.  12.16 In any case, the Purchaser shall use reasonable endeavours to procure that any Argo Re  FAL the subject of a Lloyd’s Argo Group FAL Release that is returned or released (as  

 

  47    applicable) to Argo (No. 604) is returned to ARL within five Business Days of the  relevant Lloyd’s Argo Group FAL Release.  12.17 Without prejudice to the generality of Clause 12.13, the Parties shall, and shall procure  that their Groups shall, cooperate with each other and, acting reasonably and in good  faith, work together to:  (a) provide to Lloyd’s such information and documents as Lloyd’s may require for  the Purchaser Group to replace the Argo Group FAL as soon as reasonably  practicable following Completion; and  (b) [***]  12.18 Where either:  (a) any Argo Cash FAL following Completion but prior to the relevant Lloyd's  Argo Group FAL release, is called upon to meet any Lloyd's Obligations, save  in respect of any FAL provided as collateral pursuant to the D&F/Casualty  Reinsurance Agreement; or   (b) following Completion a Seller Group Company remains as guarantor of Argo  (No. 604) Limited under the 2023 XOL (including in respect of any FAL  providers deeds made in association therewith), or of any other constituent  element of FAL provided in respect of Argo (No 604) Limited where the giving  of such guarantee was given prior approval by the Purchaser, and such guarantee  is called in respect of Argo (No. 604) Limited's obligations thereunder,  the Purchaser agrees to pay to the Seller an amount equal to any amount referred to in  (a) or (b) above at the date of the next Lloyd's Argo Group FAL Release provided that  it is acknowledged and agreed that the amount of Argo Group FAL shall be reduced by  the amount called under (a) above and any payment by the Purchaser under(a) above  shall reduce the amount of the Argo Group FAL that is the subject of the Purchaser’s  obligations under Clause 12.13.   12.19 The Seller acknowledges and agrees that Lloyd’s main relationship is with the 2022  YOA Active Argo Corporate Members and the Seller shall (prior to Completion)  facilitate the Parties, through the 2022 YOA Active Argo Corporate Members, liaising  with Lloyd’s regarding the replacement of the Argo Group FAL.  12.20 As soon as reasonably practicable following Completion:  (a) the Parties shall provide (or shall procure that their respective Group provides)  to Lloyd’s such executed deeds and/or signed documents as Lloyd’s may  reasonably require with respect to the Argo Group FAL replacement process;  (b) the Parties shall execute and deliver relevant FAL providers’ deed(s) and obtain  applicable Lloyd’s comfort letters; and  (c) the Purchaser shall procure the delivery to Lloyd’s of cash, assets, letters of  credit and/or guarantees in each case acceptable to Lloyd’s as Funds at Lloyd’s  

 

  48    in such amount as Lloyd’s reasonably requires to release and replace the Argo  Group FAL.   Cessation of underwriting outside of deal perimeter  12.21 [***]  12.22 [***]  Cessation of Fronting Arrangements  12.23 [***]  Regulatory approvals and notifications with regards to new appointments  12.24 The Purchaser and the Seller shall (and the Seller shall procure that the Target  Companies shall) collaborate in order to submit the relevant applications, obtain the  relevant regulatory approvals and make the necessary notifications required under the  Applicable Laws with regard to the appointments set out under paragraphs 1.9(a) and  1.10(a) of Part A of Schedule 3.  13. RESTRICTIVE COVENANTS  Non-Solicitation  13.1 Subject to Clause 13.2, the Seller undertakes to the Purchaser that it shall not, and shall  procure that each of its Relevant Affiliates and their Representatives shall not, between  the date of this Agreement and the Completion Date and during the period of two (2)  years from the Completion Date, (i) hire, employ or otherwise engage; or (ii) directly  or indirectly solicit or contact with a view to his or her engagement or employment by  a member of the Retained Group, (a) any senior management-level employee of any  Purchaser Group entity or (b) any employee of any Purchaser Group entity (including  AUA) with whom the Seller or its Relevant Affiliates have had substantial contact in  connection with the transactions contemplated by this Agreement, except to the extent  expressly required or permitted by any Share Purchase Document.  13.2 Nothing contained in this Agreement shall preclude or restrict the Seller or its Relevant  Affiliate from: (a) engaging in general solicitations, through third-party recruiters or  otherwise, not directed at such employees described in Clause 13.1; (b) hiring,  employing or otherwise engaging any person who has responded to a bona fide  recruitment advertisement or other solicitation (whether through a recruitment agency  or otherwise) not specifically targeted at such person; or (c) soliciting the services of  any such person whose employment with the Purchaser’s Group has been terminated  for a period of at least six months prior to the first contact with such person.  Non-Competition  13.3 From the Completion Date until the second (2nd) anniversary of the Completion Date  (the “Non-Compete Period”), the Seller agrees not to, and shall cause each of its  Relevant Affiliates not to, directly or indirectly, solicit, induce or persuade or attempt  to solicit, induce or persuade any Producer or other person through which Insurance  

 

  49    Contracts were written, marketed, produced, sold or solicited during the 12 months  preceding the Completion Date to alter, terminate, restrict or avoid entering into any  business relationship or dealings with the Purchaser or any of its Affiliates (including  any Target Company after Completion).  13.4 During the Non-Compete Period, the Seller shall not, and shall cause each of its  Relevant Affiliates not to, directly or indirectly, engage in a business that competes  with the business of the Target Group as conducted as at the date of this Agreement  (the “Competing Business”), save that any member of the Retained Group shall be  entitled to provide FAL as part of a consortium at Lloyd’s in the ordinary course of  business up to a limit of 20% of a Member’s FAL required to be provided with respect  to the underwriting by that Member. Notwithstanding the foregoing, and without the  implication that the following activities otherwise would be subject to the provisions of  this Clause 13.4, nothing in this Agreement shall preclude, prohibit or restrict the Seller  or any of its Relevant Affiliates from engaging, or require the Seller or any of its  Relevant Affiliates not to engage, in any manner in any of the following:  (a) making investments in the ordinary course of business, including in a general  or separate account of an insurance company, directly or indirectly, in a person  engaged in the Competing Business; provided, that each such investment is a  passive investment of less than fifteen percent (15%) of the outstanding  securities of such person and where neither the Seller nor any of its Relevant  Affiliates has the ability to control any such entity;  (b) selling any of its assets or businesses to any person;  (c) acquiring, merging or combining with any business, person or assets that would  otherwise violate the restrictions of this Clause 13.4 after the Completion Date  (an “After-Acquired Business”) and following such acquisition, merger or  combination, operating such After-Acquired Business; provided, that as of the  date of such acquisition, merger or combination, the net operating revenue from  such Competing Business constituted no more than fifteen percent (15%) of the  total net operating revenue of such After-Acquired Business on a consolidated  basis (measured in accordance with the accounting principles principally  applicable to such After-Acquired Business) for the most recent fiscal year  value; provided, further, that following such acquisition, merger or  combination, no Competing Business undertaken by such After-Acquired  Business shall represent, in any fiscal quarter during the three (3) year period  following the Completion Date, more than fifteen percent (15%) of the net  operating revenue on a consolidated basis of such After-Acquired Business; or  (d) those business lines set out in Schedule 16 (Business Lines) to the extent carried  on by the Retained Group immediately prior to the date of this Agreement.  General  13.5 The Parties acknowledge and confirm that the provisions of Clauses 13.1 to 13.4 are  reasonable in all the circumstances and any breach of Clauses 13.1 to 13.4 would have  a material impact on the Purchaser’s Group (or the relevant member(s) of the Purchaser  Group), and therefore the provisions of Clauses 13.1 to 13.4 are wholly reasonable as  to scope, nature and duration to protect the legitimate interests of the Purchaser Group.  

 

  50    The Parties acknowledge that the acceptance of these provisions by the Seller is a  material inducement for the Purchaser’s entry into this Agreement.  13.6 Each covenant contained in Clauses 13.1 to 13.4 shall be construed as separate and  severable and if any such covenant is held to be unenforceable in whole or part for any  reason, the remaining covenants shall continue to bind Seller, and if such covenants  would be valid if part of the wording thereof were deleted or the periods thereof  reduced, the said restriction shall apply with such modifications as may be necessary to  make them valid and effective.  13.7 The Parties acknowledge that damages may not be an adequate remedy for breach of  Clauses 13.1 to 13.4, in which case the relevant Party may seek an injunction or such  other equitable relief as a court of competent jurisdiction may see fit to award to enforce  such covenants.  14. TERMINATION OF INTRA-GROUP AGREEMENTS  14.1 It is each Party’s intention that on or before the Completion Date all Existing Intra- Group Agreements, should be terminated.  14.2 Accordingly:  (a) the Seller shall procure the termination of all Existing Intra-Group Agreements  with effect from the Completion Date (or a date prior to the Completion Date as  the Seller may deem fit, provided that such prior termination shall not have an  adverse effect on any Target Company) without any break-fees or any other  payments being payable on account of such termination by any Target  Company;  (b) to the extent that any Existing Intra-Group Agreement is found at any time after  the Completion Date not to have been terminated in accordance with  Clause 14.2(a) above (each such agreement being a “Surviving Intra-Group  Agreement”):  (i) the Party becoming aware of the Surviving Intra-Group Agreement shall inform  the other Party without delay;  (ii) the Purchaser shall procure that each relevant Target Company, as applicable  shall, at the request of the Seller agree to the termination of any Surviving Intra- Group Agreement with effect from the Completion Date provided that (i) no  break fees or any other payments are payable by any Target Company (as the  case may be) on account of such termination, and (ii) the provisions of  Clause 14.2(b)(iii) are reflected in any related termination agreement; and  (iii) the Seller shall, and shall procure that each member of the Seller’s Group shall,  agree to the termination of any Surviving Intra-Group Agreement as soon as  practicable on the basis that (A) no break fees or any other payments are payable  by any Target Company (as the case may be) on account of such termination,  and (B) the provisions of Clause 14.2(b)(iii) are reflected in any related  termination agreement.  

 

  51    For the avoidance of doubt, no action taken by the Seller pursuant to Clause 14.2(b)shall  release Seller from its obligations set forth in Clause 14.2(a) , and the Purchaser shall  retain the right to enforce the rights and remedies otherwise available to the Purchaser  under this Agreement in respect of any failure of Seller to comply with its obligations  under Clause 14.2(a).   15. TERMINATION  15.1 Save as set out in Clauses 3.15, 6.5 and 15.2, and except in the case of repudiatory  breach, fraud or fraudulent misrepresentation on the part of the other Party, no Party  shall be entitled to terminate or rescind this Agreement in any circumstances  whatsoever (whether before or after Completion).   15.2 The Purchaser may terminate this Agreement (other than the Surviving Clauses) by  notice to the Seller if any of the Regulatory Conditions becomes impossible to satisfy  before the Long Stop Date and, if it is a Regulatory Condition which can be waived by  a party, has not been waived within five (5) Business Days of such Regulatory  Condition becoming impossible to satisfy.   15.3 If the Purchaser terminates this Agreement under Clause 15.2, neither party shall have  any claim of any nature against the other party under this Agreement (except in respect  of any rights and liabilities which have accrued before termination or under any of the  Surviving Clauses).  15.4 The Seller undertakes to disclose as soon as practicable to the Purchaser in writing any  breach, matter, event, condition, circumstance, fact or omission of which any member  of the Target Group and the Retained Group is or becomes aware that may give rise to  a right of termination under Clause 15.2.  16. INTELLECTUAL PROPERTY AND BUSINESS INFORMATION   16.1 If a member of the Target Group owns on or after Completion any Intellectual Property  or rights in Business Information which in the year prior to Completion related to the  business of the Retained Group:  (a) To the extent that such Intellectual Property or rights in Business Information  relate primarily to the business of the Retained Group (the “Retained Group  Shared IP”),   (i) the Purchaser shall procure that such Retained Group Shared IP is transferred to  the Seller or a company nominated by the Seller for nominal consideration as  soon as practicable after becoming aware of the ownership of such rights and,  pending such transfer, the Purchaser shall procure that the relevant member of  the Target Group shall hold such Intellectual Property and/ or rights in Business  Information on trust for the Seller.   (ii) The Seller (or the company nominated by the Seller in accordance with Clause  16.1(a)(i)) shall hereby grant to the Purchaser a non-exclusive, worldwide,  perpetual, irrevocable, transferable, sublicensable, paid-up, and royalty-free  right and licence to use and practice the Retained Group Shared IP solely in  connection with the Target Business including with respect to Syndicate 1200,  

 

  52    as conducted as of Completion, and any natural or reasonably foreseeable  expansions thereof. AUA shall cause its sublicensees to use reasonable care to  maintain and protect the trade secrets included in the Retained Group Shared IP.  (b) To the extent that such Intellectual Property or rights in Business Information  do not relate predominantly to the business of the Retained Group, the Purchaser  shall procure that the relevant Target Company shall grant, and does hereby  grant on behalf of such member of the relevant Target Company, to the Seller a  non-exclusive, worldwide, perpetual, irrevocable, transferable, sublicensable,  paid-up, and royalty-free right and licence to use and practice such Intellectual  Property or rights in Business Information solely in connection with the  business of the Retained Group, as conducted as of Completion, and any natural  or reasonably foreseeable expansions thereof. The Seller shall cause its  sublicensees to use reasonable care to maintain and protect the trade secrets  included in any such Intellectual Property or rights in Business Information.  16.2 Subject to Clause 16.3, if a member of the Retained Group owns on or after Completion  any Intellectual Property or rights in Business Information which in the year prior to  Completion related to the Target Business (including with respect to Syndicate 1200):  (a) to extent that such Intellectual Property or rights in Business Information relate  predominantly to the Target Business or to Syndicate 1200 (the “Target Group  Shared IP”):  (i) the Seller shall procure that such Target Group Shared IP is transferred to AUA  or a company nominated by the Purchaser for nominal consideration;  (ii) as soon as practicable after becoming aware of the ownership of such Target  Group Shared IP and, pending such transfer, the Seller shall, or shall procure  that the relevant member of the Retained Group (as applicable) shall, hold such  Intellectual Property and/ or rights in Business Information on trust for AUA;  and  (iii) the Purchaser shall procure that AUA (or company nominated by the Purchaser  in accordance with Clause 16.2(a)(i)) hereby grant to the Seller a non-exclusive,  worldwide, perpetual, irrevocable, transferable, sublicensable, paid-up and  royalty-free right and licence to use and practice the Target Group Shared IP  solely in connection with the business of the Retained Group, as conducted as  of the Completion, and any natural or reasonably foreseeable expansions  thereof. The Seller shall cause its sublicensees to use reasonable care to maintain  and protect the trade secrets included in the Target Group Shared IP.  (b) to extent that such Intellectual Property or rights in Business Information do not  relate predominantly to the Target Business or to Syndicate 1200, the Seller  shall procure that the relevant member of the Retained Group shall grant, and  does hereby grant on behalf of such member of the relevant Target Company,  to the Purchaser a non-exclusive, worldwide, perpetual, irrevocable,  transferable, sublicensable, paid-up and royalty-free right and licence to use and  practice such Intellectual Property or rights in Business Information, solely in  connection with the Target Business or to Syndicate 1200, as applicable, as  conducted as of the Completion, and any natural or reasonably foreseeable  

 

  53    expansions thereof. The Purchaser shall cause its sublicensees to use reasonable  care to maintain and protect the trade secrets included in any such Intellectual  Property or rights in Business Information.  16.3 The Purchaser hereby undertakes to the Seller to procure that by no later than ten (10)  Business Days after Completion, the Target Companies shall pass all required  resolutions to change their corporate name to a name which does not contain the name  “Argo” or “Argo Group”. For the avoidance of doubt, the Seller hereby agrees that the  Target Companies shall be entitled to use their existing corporate name pending such  name change in accordance with this Clause 3.   16.4 Subject to Clause 3, the Purchaser acknowledges and agrees that nothing in this  Agreement shall transfer or license, or shall operate as an agreement to transfer or  license, any right, title or interest in or to the name “Argo” or “Argo Group” or any  associated logo or device which the members of the Retained Group own or use, or any  confusingly similar name or mark (the “Retained Group Marks”).  16.5 Subject to Clause 3, following Completion, the Purchaser shall not, and shall procure  that no member of the Purchaser’s Group shall, hold itself out as being part of or in any  way connected with either the Retained Group. Nothing in this Agreement shall require  the Purchaser Group to cease its use of the Retained Group Marks in connection with  the Target Business or Syndicate 1200: (a) in any non-trademark use that is factually  accurate; (b) to convey to customers or the public that the Target Business or Syndicate  1200 is no longer associated with the Retained Group; (c) to reference historical details  regarding the Target Business or Syndicate 1200; (d) in internal materials that were  created prior to Completion; and (e) in any other manner that would not constitute  infringement of the Retained Group Marks.  17. INSURANCE  17.1 The Purchaser acknowledges and agrees that the Seller shall be entitled to arrange for  all insurance provided by the Retained Group in relation to any member of the Target  Group (whether under policies maintained with third party insurers or other members  of the Retained Group) to cease upon Completion.   17.2 With respect to events or circumstances relating to the Target Companies that occurred  or existed prior to the Completion Date that are covered by occurrence-based or claims- made third-party insurance policies that run to the benefit of the Target Companies, the  Parties acknowledge and agree that the Target Companies may make claims under such  policies, and that the Seller and its Affiliates shall assist the applicable Target Company  in making such claims as may reasonably be requested by the Purchaser or the  applicable Target Company, at the Purchaser’s or applicable Target Company’s cost  and expense (including providing reasonable access to information regarding such  insurance policies and the claims previously made thereunder, including exposure,  quantum of loss and policy information but without any obligation to provide any  confidential or commercially sensitive information as to the events, circumstances or  matters the subject of such previous claims); provided that the Target Companies shall  not be permitted to make any such claims if, and to the extent that, such claims are  covered by insurance policies sponsored by the Purchaser or any of its Affiliates  (including, after Completion, the Target Companies). Any claim recovery proceeds  received by the Seller or any of its Affiliates from its insurers after Completion for  

 

  54    third-party claims under such third-party insurance policies with respect to losses  resulting from such occurrences occurring prior to the Completion Date in respect of  the Target Companies shall be for the benefit of the Purchaser.  18. EMPLOYEES  18.1 The provisions in Schedule 8 (Employment) shall apply in relation to the Employees.  19. REINSURANCE PROTOCOLS  19.1 Each Party shall comply with the provisions of Schedule 14 (Reinsurance Protocols).  20. ACCESS  20.1 The Purchaser acknowledges that the Seller and each other member of the Retained  Group may need access from time to time after Completion, where required by Tax  Authorities or Regulatory Authorities or where required for the preparation of accounts  in relation to the Seller’s previous direct or indirect ownership of any member of the  Target Group (“Permitted Purposes”), to information held by a Target Group  Company to the extent such records and information pertain to events occurring prior  to Completion, and accordingly the Purchaser agrees that it shall cause each Target  Company to:  (a) properly retain and maintain such records until the date that is seven (7) years  after Completion; and  (b) upon being given reasonable notice by the Seller and subject to the Seller giving  such undertaking as to confidentiality and reasonable use as the Purchaser shall  reasonably require, to allow such Seller and other members of the Seller’s  Group and their respective directors, officers, employees, agents, auditors and  representatives to inspect, review and, at the cost of such Seller make copies of  such records and information for and only to the extent necessary for such  Permitted Purposes.  21. EFFECT OF COMPLETION  Any provision of this Agreement and any other document referred to in it that is capable  of being performed after but which has not been performed at or before Completion and  all warranties, indemnities and covenants and other undertakings contained in or  entered into pursuant to this Agreement shall remain in full force and effect  notwithstanding Completion.  22. REMEDIES AND WAIVERS  22.1 Except as provided in Schedule 5 (Limitations on liability), no delay or omission by  any Party to this Agreement in exercising any right, power or remedy provided by law  or under this Agreement or any other documents referred to in it shall:  (a) affect that right, power or remedy; or  (b) operate as a waiver of it.  

 

  55    22.2 The single or partial exercise of any right, power or remedy provided by law or under  this Agreement shall not, unless otherwise expressly stated, preclude any other or  further exercise of it or the exercise of any other right, power or remedy.  23. ASSIGNMENT  23.1 Subject to the other provisions of this Clause 23 (Assignment), this Agreement will be  binding upon and inure to the benefit of and be enforceable by the respective successors  and permitted assigns of the Parties.  23.2 No Party shall, without the prior written consent of the other Party:  (a) assign, or purport to assign, whether by operation of law or otherwise, all or any  part of the benefit of, or its rights or benefits under, this Agreement (together  with any causes of action arising in connection with it);  (b) make a declaration of trust in respect of or enter into any arrangement whereby  it agrees to hold in trust for any other person all or any part of the benefit of, or  its rights or benefits under, this Agreement; or  (c) sub-contract or enter into any arrangement whereby another person is to perform  any or all of its obligations under this Agreement.  23.3 Any attempted or purported assignment, declaration of trust, sub-contract or other  transfer in violation of this Clause 23 (Assignment) shall be void ab initio.  24. FURTHER ASSURANCE  Each Party, on being reasonably required to do so by the other Party and at the expense  of the requesting Party, shall (insofar as it is able to do so) do or procure the doing of  all acts and/ or execute or procure the execution of all documents as the other Party may  reasonably consider necessary to implement and give effect to this Agreement and to  secure to each of the Parties the full benefit of the rights, powers and remedies conferred  upon them under this Agreement.  25. ENTIRE AGREEMENT  25.1 The Share Purchase Documents constitute the whole and only agreement between the  Parties relating to the sale and purchase of the Shares.  25.2 Each Party acknowledges and agrees that:  (a) in entering into any of the Share Purchase Documents on or after the date of this  Agreement it is not relying upon any pre-contractual statement which is not  expressly repeated in the Share Purchase Documents;  (b) it shall have no right of action against the other Party arising out of or in  connection with any pre-contractual statement except to the extent that it is  expressly repeated in this Agreement;  (c) except as otherwise expressly provided for in the Share Purchase Documents,  its only right or remedy in connection with this Agreement or any other Share  

 

  56    Purchase Documents shall be for breach of this Agreement or the relevant Share  Purchase Documents));  (d) except as otherwise expressly set out in this Agreement, all warranties implied  by law in any jurisdiction (whether by statute, or otherwise) in relation to the  sale of the Shares are excluded to the fullest extent permitted by law or, if  incapable of exclusion, any rights or remedies in relation to them are irrevocably  waived; and  (e) nothing in this Clause 25.2 shall exclude or limit any liability for fraud or  fraudulent misrepresentation or, in respect of Clause 25.2(a) and (b) only, wilful  misconduct.  25.3 For the purposes of this Clause 25 (Entire agreement), “pre-contractual statement”  means any draft, agreement, undertaking, representation, warranty, promise, assurance  or arrangement of any nature whatsoever, whether or not in writing, relating to the  subject matter of the Share Purchase Documents made or given by any person at any  time prior to the date of this Agreement.  25.4 If there is any conflict between the terms of this Agreement and any other Share  Purchase Documents, this Agreement shall, save as expressly provided otherwise in  such Share Purchase Documents, prevail (as between the Parties to this Agreement and  as between any members of the Seller’s Group on the one hand and any members of  the Purchaser’s Group on the other).  25.5 No variation of this Agreement shall be effective unless it is in writing (which, for this  purpose, does not include email) and signed by or on behalf of each of the Parties. For  this purpose, a variation to this Agreement shall include any addition, deletion,  modification, supplement or replacement, however effected.  26. NOTICES  26.1 Except where expressly stated otherwise, a notice under this Agreement shall only be  effective if it is in writing. Email is permitted.  26.2 Notices under this Agreement shall be sent to a Party at its address and for the attention  of the individual set out below:  

 

  57    Party and title  of individual Address For the attention of Email address(es)  Seller 90 Pitts Bay Rd.  Pembroke Bermuda  HM08  Scott Kirk     Allison Kiene  Scott.Kirk@argolimit ed.com  allison.kiene@argogr oupus.com  Purchaser 1 Park Circle |  Westfield Center OH  44251  Frank A. Carrino FrankCarrino@westfi eldgrp.com   with a copy (which shall not constitute notice) to:   Sidley Austin LLP  One South  Dearborn, Chicago  IL 60603  Perry Shwachman         Sean Carney  James Phythian-Adams  pshwachman@sidley. com  scarney@sidley.com  jphythianadams@sidl ey.com      PROVIDED THAT a Party may change its notice details on giving notice to the other  Party of the change in accordance with this Clause 26 (Notices). That notice shall only  be effective on the day falling five (5) clear Business Days after the notification has  been received or such later date as may be specified in the notice.  26.3 Any notice given under this Agreement shall, in the absence of earlier receipt, be  deemed to have been duly given as follows:  (a) if delivered personally, on delivery;  (b) if sent by first class inland post, two (2) clear Business Days after the date of  posting;  (c) if set by airmail, six (6) clear Business Days after the date of posting; and  (d) if sent by email, when sent provided no error message is received by the sender.  26.4 Any notice given under this Agreement outside Working Hours in the place to which it  is addressed shall be deemed not to have been given until the start of the next period of  Working Hours in such place.  26.5 The provisions of this Clause 26 (Notices) shall not apply in relation to the service of  Service Documents.  

 

  58    27. ANNOUNCEMENTS  27.1 No announcement concerning the sale of the Shares or any ancillary matter shall be  made by any Party without the prior written approval of the other Party (such approval  not to be unreasonably withheld, conditioned or delayed). This Clause 27.1 does not  apply in the circumstances described in Clause 27.2.  27.2 A Party may make an announcement concerning the sale of the Shares or any ancillary  matter if required by:  (a) Applicable Law;  (b) any securities exchange or Regulatory Authority or any Tax Authority to which  that Party is subject or submits, wherever situated, including the PRA, FCA  and/or the Council of Lloyd’s whether or not the requirement has the force of  law,  in which case (where reasonably practicable and not otherwise prohibited by Applicable  Law) the Party concerned shall take all such steps as may be reasonable and practicable  in the circumstances to agree the contents of the announcement with the other Party  before making the announcement.  27.3 The restrictions contained in this Clause 27 (Announcements) shall continue to apply  after Completion or the termination of this Agreement without limit in time.  28. CONFIDENTIALITY  28.1 Subject to Clause 27 (Announcements) and Clause 28.2:  (a) each Party shall treat as confidential and not disclose or use any information  received or obtained as a result of entering into or performing the Share  Purchase Documents which relates to:  (i) the provisions of this Agreement; or  (ii) the negotiations relating to this Agreement;  (b) the Purchaser shall treat, and shall procure that each member of the Purchaser’s  Group shall treat, as confidential and not disclose or use any information  concerning any member of the Retained Group (and, prior to Completion, the  Target Group) obtained or received as a result of the negotiation and entering  into of the Share Purchase Documents; and  (c) the Seller shall treat, and shall procure that each member of the Retained Group  shall treat, as confidential and not disclose or use any information obtained or  received concerning any member of the Purchaser’s Group or the Target Group,  including as a result of the negotiation and entering into of the Share Purchase  Documents.  28.2 Notwithstanding the provisions of Clause 28.1, a Party may disclose or use any such  confidential information if and to the extent:  

 

  59    (a) required by Applicable Law of any relevant jurisdiction or for the purposes of  any Proceedings;  (b) required by any securities exchange or Regulatory Authority, Competition  Authority or any Tax Authority to which that Party is subject or submits,  wherever situated, including the FCA, the PRA and/or the Council of Lloyd’s,  whether or not the requirement for information has the force of law;  (c) required to vest the full benefit of any Share Purchase Document in that Party;  (d) where permitted by the Regulatory Authority concerned, permit authorised  representatives of the other Party to be present at each meeting, conference or  telephone/ video call, to make oral submissions at such meetings, and to have  access to and be consulted in connection with any document, opinion or  proposal made or submitted to any Regulatory Authority in connection with  such request or proceeding;  (e) the disclosure is made to the debt financiers (or potential debt financiers) of that  Party on a need to know basis and provided they have a duty or a contractual  obligation to keep such information confidential on a no less onerous basis than  the provisions of this Agreement or otherwise on a basis consistent with  applicable market practice;  (f) the information has come into the public domain through no fault of that Party;  (g) for the purpose of arranging insurance cover in relation to the Target Group  Companies on and from Completion, PROVIDED THAT the recipients have  a duty or a contractual obligation to keep such information confidential on a no  less onerous basis than the provisions of this Agreement;  (h) the disclosure is to a Tax Authority and is reasonably required for the purpose  of dealing with (in the case of a disclosure by the Purchaser) the Tax affairs of  any member of the Purchaser’s Group or (in the case of a disclosure by the  Seller) the Tax affairs of any member of the Seller’s Group; or  (i) the other Party has given prior written consent to the disclosure (such consent  not to be unreasonably withheld, conditioned or delayed),  PROVIDED THAT any such information disclosed pursuant to Clause 28.2(a) or  28.2(b) shall be disclosed (where reasonably practicable and not otherwise prohibited  by Applicable Law) only after notice has been given to the other Party of such  requirement with a view to providing the other Party with the opportunity to contest  such disclosure or use or otherwise agreeing the content and timing of such disclosure.  28.3 Where any obligation on the Purchaser (including in relation to any other member of  the Purchaser’s Group) or the Seller (including in relation to any other member of the  Seller’s Group) to provide information or assistance pursuant to this Agreement is  subject to confidentiality restrictions agreed with the relevant Regulatory Authority or  any other relevant person, or pursuant to Applicable Law or legal or other professional  privilege, the Purchaser shall (and shall procure that the relevant member of the  Purchaser’s Group shall) seek to provide such information as necessary or the Seller  

 

  60    shall (and shall procure that the relevant member of the Seller’s Group) shall seek to  provide such information as necessary to comply with its obligations under this  Agreement by:  (a) using its reasonable endeavours to obtain the consent of the relevant Regulatory  Authority or other relevant person to provision of the information or assistance;  and  (b) agreeing to provide privileged material to the relevant person, PROVIDED  THAT that person has entered into an undertaking on terms acceptable to the  provider relating to the terms on which it will receive and hold such information  so as to not lose the benefit of the privilege.  28.4 The Confidentiality Agreement shall continue in full force and effect notwithstanding  execution of this Agreement and shall terminate on Completion without prejudice to  any accrued rights and liabilities.  28.5 The restrictions contained in this Clause 28 (Confidentiality) shall continue to apply  after Completion or the termination of this Agreement without limit in time.  29. COSTS, EXPENSES AND PAYMENTS  29.1 Except as otherwise stated in this Agreement or the other Share Purchase Documents,  each Party shall pay its own costs and expenses in relation to the negotiations leading  up to the sale and purchase of the Shares and the preparation, execution and carrying  into effect of this Agreement and the other Share Purchase Documents.  29.2 All stamp, transfer, registration and other similar taxes, duties and charges (including  any notaries’ fees) payable in connection with the transfer of the Shares under this  Agreement shall be paid by the Purchaser.  29.3 Unless otherwise expressly provided, if anything done under this Agreement is a supply  or service on which VAT is chargeable, the recipient of that supply or service shall pay  to the maker of it (in addition to any other amounts payable under this Agreement) an  amount equal to any VAT so chargeable for which the maker of the supply or service  is liable to account (or, where any reverse charge VAT applies, the recipient shall duly  and timely account for the same).  29.4 All payments made under this Agreement or other Share Purchase Document shall be  made gross, free and clear of any right of counterclaim or set-off and without deduction  of any kind other than any deduction or withholding required by law. If any deduction  or withholding is required by law to be made from any sum payable by the Seller to the  Purchaser in respect of any Indemnity Claims or Tax Covenant Claims pursuant to Part  B of Schedule 15 (taking into account the limitations contained in Clause 10), the Seller  shall pay such additional amount as shall be required to ensure that the net amount  received and retained by the Purchaser will equal the full amount that would have been  received by it if no such deduction or withholding had been required. Where any  payment is made to the Purchaser by the Seller in respect of any Indemnity Claims or  Tax Covenant Claims pursuant to Part B of Schedule 15 and that sum is subject to a  charge to Taxation in the hands of the Purchaser, the sum payable shall be increased to  such sum as will ensure that after payment of such Taxation the Purchaser shall be left  

 

  61    with a sum equal to the sum that it would have received in the absence of such a charge  to Taxation. The obligation of the Seller to pay any additional or increased amount shall  not apply where the Purchaser has assigned, disposed, novated or otherwise transferred  its rights under this Agreement to another person.   29.5 Any amount paid by the Seller to the Purchaser or by the Purchaser to the Seller in  respect of any claim for breach of this Agreement or pursuant to any indemnity shall,  so far as is possible, be treated as an adjustment to the Consideration, to the extent that  such adjustment would not result in the Consideration being less than nil.  30. COUNTERPARTS  30.1 This Agreement may be executed in any number of counterparts, and by the Parties to  it on separate counterparts, but shall not be effective until each Party has executed at  least one counterpart.  30.2 Each counterpart shall constitute an original of this Agreement, but all the counterparts  shall together constitute one and the same instrument. Email transmissions of .pdf  signatures or other electronic copies of signatures shall be deemed to be originals.  31. INVALIDITY  If at any time any provision of this Agreement is or becomes illegal, invalid or  unenforceable in any respect under the law of any jurisdiction, that shall not affect or  impair:  (a) the legality, validity or enforceability in that jurisdiction of any other provision  of this Agreement; or  (b) the legality, validity or enforceability under the law of any other jurisdiction of  that or any other provision of this Agreement.  32. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999  32.1 Each of Clause 10.7 Clause 12.14 and Clause 12.15, (the “Third Party Rights  Clauses”) confer a benefit on certain persons named therein who are not a party to this  Agreement (each for the purposes of this Clause 32, a “Third Party Beneficiary”) and,  subject to the remaining provisions of this Clause 32, are intended to be enforceable by  the Third Party Beneficiaries by virtue of the Contracts (Rights of Third Parties) Act  1999.  32.2 The Parties to this Agreement do not intend that any term of this Agreement, apart from  the Third Party Rights Clauses, should be enforceable, by virtue of the Contracts  (Rights of Third Parties) Act 1999, by any person who is not a Party to this Agreement.  Notwithstanding the provisions of Clause 32, this Agreement may be rescinded or  varied in any way and at any time by the Parties to this Agreement without the consent  of any Third Party Beneficiary.  32.3 Notwithstanding Clause 32.1, no person who is a Third Party Beneficiary in respect of  Clause 10.7 may enforce, or take any step to enforce, the Third Party Rights Clause  

 

  62    without the prior written consent of the Seller, which may, if given, be given on and  subject to such terms as the Seller may determine.   33. INTEREST  If any sum due for payment under this Agreement is not paid on the due date for  payment, then, without prejudice to any other remedy of the Party under this Agreement  or as provided by Applicable Law, the Party in default shall pay interest on that unpaid  sum from the due date until and including the date of actual payment calculated on a  daily basis and compounded monthly at a rate equal to the aggregate of two (2) per cent.  per annum above the base rate of Barclays Bank plc for the time being unless expressly  provided to the contrary in this Agreement.  34. CHOICE OF GOVERNING LAW  This Agreement is governed by and shall be construed in accordance with English law.  Any matter, claim or dispute arising out of or in connection with this Agreement,  whether contractual or non-contractual, is to be governed by and determined in  accordance with English law.  35. JURISDICTION  35.1 The courts of England are to have exclusive jurisdiction to settle any dispute, whether  contractual or non-contractual, arising out of or in connection with this Agreement. Any  Proceedings shall be brought only in the courts of England.  35.2 Each Party waives (and agrees not to raise) any objection, on the grounds of forum non  conveniens or any other ground, to the taking of Proceedings in the courts of England.  Each Party also agrees that a judgment against it in Proceedings brought in England  shall be conclusive and binding upon it and may be enforced in any other jurisdiction.  35.3 Each Party irrevocably submits and agrees to submit to the jurisdiction of the courts of  England.  36. AGENT FOR SERVICE (PURCHASER)  36.1 The Purchaser irrevocably appoints Law Debenture Corporate Services Limited of 8th  Floor, 100 Bishopsgate, London, EC2N 4AG, United Kingdom to be its agent for the  receipt of Service Documents. The Purchaser agrees that any Service Document may  be effectively served on it in connection with Proceedings in England and Wales by  service on its agent effected in any manner permitted by the Civil Procedure Rules.  36.2 If the agent at any time during the period of 7 years following the date of this  Agreement, ceases for any reason to act as such, the Purchaser shall appoint a  replacement agent having an address for service in England or Wales and shall notify  the Seller of the name and address of the replacement agent. Failing such appointment  and notification, the Seller shall be entitled by notice to the Purchaser to appoint a  replacement agent to act on behalf of the Purchaser. The provisions of this Clause 36  applying to service on an agent apply equally to service on a replacement agent.  

 

  63    36.3 A copy of any Service Document served on an agent shall be sent by post to the  Purchaser. Failure or delay in doing so shall not prejudice the effectiveness of service  of the Service Document.  37. AGENT FOR SERVICE (SELLER)  37.1 The Seller irrevocably appoints Law Debenture Corporate Services Limited of 8th  Floor, 100 Bishopsgate, London, EC2N 4AG, United Kingdom to be its agent for the  receipt of Service Documents. The Seller agrees that any Service Document may be  effectively served on it in connection with Proceedings in England and Wales by service  on its agent effected in any manner permitted by the Civil Procedure Rules.   37.2 If the agent at any time during the period of 7 years following the date of this  Agreement, ceases for any reason to act as such, the Seller shall appoint a replacement  agent having an address for service in England or Wales and shall notify the Purchaser  of the name and address of the replacement agent. Failing such appointment and  notification, the Purchaser shall be entitled by notice to the Seller to appoint a  replacement agent to act on behalf of the Seller. The provisions of this Clause 36  applying to service on an agent apply equally to service on a replacement agent.   37.3 A copy of any Service Document served on an agent shall be sent by post to the  Purchaser. Failure or delay in doing so shall not prejudice the effectiveness of service  of the Service Document.       

 

  64    SCHEDULE 1    (SHARES)  Seller Shares owned  Argo International Holdings  Limited   87,824,146 Ordinary Shares of £0.10 each in AUA    

 

  65    SCHEDULE 2    (CONDITIONS TO COMPLETION)     1. REGULATORY CONSENTS & NOTIFICATIONS  1.1 Receipt by the Purchaser of written notice from the PRA in accordance with either  section 189(4)(a) or section 189(7) of FSMA that it approves the Purchaser and any  other person acquiring control (within the meaning of section 181 of FSMA) of AMA  pursuant to this Agreement, or in the absence of such notice, the PRA being treated,  under section 189(6), as having approved the acquisition of control of AMA by the  Purchaser and any other person acquiring control of AMA;   1.2 Receipt by the Purchaser of written notice from the FCA in accordance with either  section 189(4)(a) or section 189(7) FSMA that it approves the Purchaser and any other  person acquiring control (within the meaning of section 181 of FSMA) of Argo Direct  Limited pursuant to this Agreement, or in the absence of such notice, the FCA being  treated, under section 189(6) of FSMA, as having approved the acquisition of control  of Argo Direct by the Purchaser and any other person acquiring control of Argo Direct  Limited;  1.3 Lloyd’s having given written notice in accordance with paragraph 12 of the  Membership Byelaw (No 5 of 2005) that it consents or has no objection to the Purchaser  and any other person acquiring control of each Argo Corporate Member pursuant to  this Agreement (and in this paragraph 1.3 the word “control” shall have the meaning  given to that expression in the Definitions Byelaw (No 7 of 2005)).  1.4 In accordance with paragraph 43 of the Underwriting Byelaw (No. 2 of 2003) that it  consents or has no objection to the Purchaser or any other person acquiring control of  AMA pursuant to this Agreement (and in this paragraph 1.4 the word “control” shall  have the meaning given to that expression in the Definitions Byelaw (No 7 of 2005)).  1.5 Written approval or non-objection as required and allowed for under Applicable Law  from the DFSA approving the Purchaser (and any other person who will acquire control  of ArgoGlobal Underwriting (Dubai) Limited pursuant to this Agreement) acquiring  control of ArgoGlobal Underwriting (Dubai) Limited.  1.6 The Seller shall have filed a notification of the Transaction with the Bermuda Monetary  Authority (the “BMA”) pursuant to the Insurance Act 1978, as amended, and its related  regulations (the “Insurance Act”) and received a “no-objection” response from the  BMA in respect of the Transaction or the statutory time period under the Insurance Act  for an objection from the BMA shall have elapsed.  2. OTHER CONDITIONS TO CLOSING  2.1 The Fundamental Warranties shall be true and correct in all respects as of the date of  this Agreement and as of Completion as if made at Completion. (b) the Non- Fundamental Warranties shall be true and correct (without giving effect to any  limitations as to materiality set forth therein) as of the date of this Agreement and as of  Completion as if made at Completion, except where the failure of the Non-Fundamental  

 

  66    Warranties, individually or in the aggregate, to be true and correct has not had, and  would not reasonably be expected to have a Material Adverse Effect on the Target  Group as a whole.   2.2 [***]  2.3 [***]  2.4 [***]  2.5 [***]  2.6 There being no fact, matter or circumstance subsisting as at Completion that has had or  would be reasonably expected to have a Material Adverse Effect.     

 

  67    SCHEDULE 3    (COMPLETION ARRANGEMENTS)  PART A (THE SELLER’S OBLIGATIONS)  1. At Completion:  1.1 the Seller shall deliver to the Purchaser or the Purchaser’s Solicitors:  (a) duly executed transfers in respect of those Shares set against its name in  Schedule 1 (Shares) in favour of the Purchaser or such person as the Purchaser  may nominate and share certificates for such Shares in the name of the relevant  transferor (or an express indemnity in a form reasonably satisfactory to the  Purchaser, in the case of any found to be missing) and any power of attorney  under which any transfer is executed on behalf of the Seller or any nominee;  (b) such waivers or consents as are necessary to enable the Purchaser or its  nominees to be registered as holders of the relevant Shares;  (c) an irrevocable power of attorney in the Agreed Form from the Seller to allow  the Purchaser or any nominee to vote, exercise the rights to and enjoy the  privileges attaching to the Shares with effect from Completion pending  registration of the transfers referred to in paragraph 1.1(a) of this Schedule;  (d) [***]  (e) [***]  (f) evidence reasonably satisfactory to the Purchaser that:  (i) all Inter-Company Payables and Inter-Company Receivables have been  settled in accordance with Clause 6.6; and  (ii) [***]  and  (g) [***]  save that the Seller and the Purchaser shall work together in good faith between the date  of this Agreement and Completion to agree on what constitutes “evidence reasonably  satisfactory to the Purchaser” in respect of the matters listed above at (d), (e) and (f).  1.2 The Seller shall deliver to the Purchaser or the Purchaser’s Solicitors an original of the  D&F/ Casualty Reinsurance Agreement duly executed by Argo (604) Limited and  Nomina 550 LLP, and ARL together with confirmation from each party thereto that  such agreement remains and will continue in full force and effect with effect from  Completion.  

 

  68    1.3 The Seller shall deliver to the Purchaser or the Purchaser’s Solicitors an original of the  D&F/ Casualty Claims Management Agreement duly executed by Argo (604) Limited,  Nomina 550 LLP, and Argo Insurance Services Bermuda Limited.  1.4 The Seller shall deliver to the Purchaser or the Purchaser’s Solicitors an original of the  TPV/ PRI Reinsurance Agreement duly executed by AMA (acting on behalf of  Syndicate 1200) and ARL.  1.5 The Seller shall deliver to the Purchaser or the Purchaser’s Solicitors an original of the  TPV/ PRI Claims Management Agreement duly executed by AMA (acting on behalf of  Syndicate 1200) and Argo Management Services Limited.  1.6 [***]  1.7 [***]  1.8 The Seller shall procure the delivery to the Purchaser of:  (a) duly executed counterparts of the Share Purchase Documents (excluding the  Confidentiality Agreement) not referred to in 1.2 or 1.3 above and the  Transitional Services Agreement;   (b) an extract from the minutes of a duly held meeting of the directors of the Seller  of the relevant resolution(s) authorising the execution by the Seller of the  Transitional Services Agreement and each of the other Share Purchase  Documents to which it is a party;  (c) the resignation of each of the directors of the Target Companies, other than  those which the Purchaser shall designate to the Seller as non-resigning  directors, executed as a deed and in each case acknowledging that they have no  claim against any Target Group Company, whether for loss of office or  otherwise;  (d) the certificate of incorporation, the common seal (if any) and statutory books  (including minute books) or their equivalents, of the Target Companies;  (e) copies of all bank mandates given by each of the Target Companies;  (f) the log in details and unique authentication code of each of the Target  Companies for online filing at Companies House (Web Filing);  (g) if so required by the Purchaser no later than the fifth (5th) Business Day before  the Completion Date, a copy of the unqualified resignation of the auditors of  such Target Companies as the Purchaser may direct, in each case confirming in  accordance with section 519 of the Companies Act in relation to all companies  to which it applies, that there are no circumstances connected with their  resignation which should be brought to the attention of the members or creditors  of that Target Company and that no fees are due to them, the original of the  letter having been deposited at the registered office of the relevant Target  Company.  

 

  69    1.9 The Seller shall procure that a board meeting of AUA is held (at or prior to Completion)  at which it is resolved effective on Completion that:  (a) the transfers referred to in paragraph 1.1 above (subject only to their being duly  stamped) are approved for registration, pursuant to which the Purchaser or its  nominee shall be registered as the sole holder of the Shares in the register of  members and a new share certificate be executed and issued to the Purchaser;   (b) such persons as the Purchaser nominates are appointed as additional directors  and the secretary of AUA;  (c) such persons as the Purchaser nominates are appointed as auditors of AUA; and  (d) the resignations of the directors of AUA, as referred to in paragraph 1.8(c) above  are approved;  such resolutions remaining effective as at Completion and provide copies of the same  to the Purchaser.  1.10 The Seller shall procure that a board meeting of each Subsidiary and/or a shareholders’  meeting, covered in accordance with the requirements set out under the Applicable Law  and the articles of association, is held (at or prior to Completion) at which it is resolved  (effective on Completion and subject to the applicable regulatory approvals (if any)  having been obtained) that:  (a) such persons as the Purchaser nominates are appointed as additional directors  and the secretary of such Subsidiary;  (b) such persons as the Purchaser nominates are appointed as auditors of such  Subsidiary;  (c) the resignations of the directors of the Subsidiaries as referred to in paragraph  1.8(c) are approved; and  (d) its bank mandates are revised and/or revoked in such manner as the Purchaser  requires,  such resolutions remaining effective as at Completion and provide copies of the same  to the Purchaser.  PART B (PURCHASER’S OBLIGATIONS)  1. At Completion, the Purchaser shall:  (a) pay to the bank account nominated by the Seller (such bank account to be  nominated by the Seller no later than four (4) Business Days prior to the  Completion Date) by way of transfer of funds for same day value the  Completion Payment payable in respect of the Shares. The Parties acknowledge  and agree that the funds transferred pursuant to this paragraph (a) are to be held  by the Seller on trust as the property of the Purchaser until Completion has  occurred;  

 

  70    (b) procure the delivery to the Seller of duly executed counterparts of the Share  Purchase Documents (excluding the Confidentiality Agreement) to which the  Purchaser or any member of the Purchaser’s group is a party to;   (c) [***]  (d) deliver to the Seller a copy of the resolutions of the directors of the Purchaser  authorising the execution by the Purchaser of each of the Share Purchase  Documents to which it is a party.  PART C  (GENERAL)  1. All documents and items delivered on or before the Completion Date pursuant to this  Schedule shall be held by the recipient to the order of the person delivering the same  until such time as Completion shall be deemed to have taken place. Simultaneously  with:  (a) delivery of all documents and items required to be delivered at Completion in  accordance with this Schedule (or waiver of the delivery of it by the person  entitled to receive the relevant document or item); and  (b) receipt of an electronic funds transfer by the Seller of an amount equal to the  total Completion Payment payable in respect of the Shares in accordance with  Part C of this Schedule,  the documents and items delivered in accordance with this Schedule shall cease to be  held to the order of the person delivering them and Completion shall be deemed to have  taken place.    

 

  71    SCHEDULE 4    (WARRANTIES)  1. CAPACITY OF THE SELLER  1.1 The Seller warrants that:   (a) it has the legal right, requisite power, authority and capacity to execute and  deliver, and to exercise its rights, enter into and perform its obligations under  this Agreement and the other Share Purchase Documents to which it is a party;  (b) its obligations under this Agreement constitute, and its obligations under the  other Share Purchase Documents to which it is party will, when executed and  delivered, constitute legal, valid and binding obligations of it in accordance with  their respective terms;  (c) the execution and delivery of, and the performance by it of its obligations under,  and in compliance with the provisions of, this Agreement and the other Share  Purchase Documents to which it is party will not:  (i) result in a breach of any provision of its memorandum or articles of  association;  (ii) result in a breach of, or constitute a default under, any instrument to  which it is a party or by which it is bound;  (iii) result in a breach of any order, judgment or decree of any court or  governmental agency to which it is a party or by which it is bound in  any jurisdiction;  (iv) require the consent, authorisation, licence or approval of or notice to the  Seller’s shareholders; or  (v) require any Regulatory Authority to authorise the execution, delivery,  validity, enforceability or admissibility in evidence of this Agreement or  the performance by the Seller of its obligations under this Agreement;  (d) it is validly incorporated, in existence and good standing and duly registered  under the laws of its jurisdiction of incorporation and has been in continuous  existence since its incorporation;  (e) the Seller is not insolvent or unable to pay its debts within the meaning of the  Insolvency Act 1986 or any other applicable insolvency legislation in any  jurisdiction, nor has it stopped paying its debts as they fall due; and  (f) no process is ongoing in any jurisdiction by or under which:  (i) the Seller has been or may be liquidated, dissolved or struck off or  placed into administration;  

 

  72    (ii) a person has been or may be appointed in connection with the  enforcement of any encumbrance over or affecting any of the assets or  undertaking of the Seller; or  (iii) any composition in satisfaction of, or moratorium in respect of, the debts  of the Seller or any scheme of arrangement or compromise between it  and its creditors or any class of its creditors (including a restructuring  plan under Part 26A of the Companies Act 2006) has been or may be  put in place.  2. SHARES  2.1 The Seller is the sole legal and beneficial owner of those Shares set against its name in  Schedule 1 (Shares) and such Shares (a) constitute the entire issued share capital of  AUA and (b) have been validly issued and allotted in accordance with the constitutional  documents of AUA and are fully paid up or properly credited as fully paid.  2.2 There is no Third Party Right on, over or affecting the shares of any Target Company  and there is no agreement or commitment to give or create any and no claim has been  made by any person to be entitled to any.  2.3 There is no agreement or commitment outstanding which calls for the present or future  allotment, issue, transfer, redemption or repayment of, or accords to any person the  right to call for the allotment, issue, transfer, redemption or repayment of, any shares  or any debentures in or securities of any Target Company (including an option or right  of pre-emption or conversion) and no claim has been made in writing, or, so far as the  Seller is aware as at the date of signing, orally, by any person to be entitled to any.  2.4 There are no existing, pending or threatened in writing, or so far as the Seller is aware,  threatened orally, disputes, claims or proceedings affecting any of the Shares or the  Seller’s ownership or entitlement to dispose of any of them. So far as the Seller is aware,  there are no circumstances which are likely to give rise to any such disputes.  2.5 AUA has not exercised, nor purported to exercise or claim, any lien over the Shares.  3. CORPORATE MATTERS  3.1 Each Target Company is validly incorporated and existing under the laws of its  jurisdiction of incorporation and the particulars set out in Schedule 9 (Basic information  about the Target Group) in relation to each relevant Target Company are true and  accurate.  3.2 No action has been in the 12 month period prior to the date of this Agreement or is  being taken to strike any Target Company off the register.  3.3 No Target Company has any agency, place of business, permanent establishment or  branch outside of its jurisdiction of incorporation.  3.4 No Target Group Company has entered into any transaction ultra vires the Target Group  Company or outside the authority or powers of the directors of the Target Group  Company.  

 

  73    4. SHARE CAPITAL  4.1 No Target Company has at any time since the Accounts Date issued or allotted any  share, security or loan capital, reduced its share capital, redeemed any share capital,  purchased any of its shares, forfeited any of its shares, or agreed to do any of the  foregoing.  4.2 Save for the ownership of the Subsidiaries Shares by AUA or AMA (as applicable), no  Target Company directly or indirectly has any subsidiary or subsidiary undertaking (as  each such term is defined in the Companies Act), nor is any Target Company the legal  or beneficial owner (directly or indirectly) of any shares or securities issued by any  person (whether incorporated in the United Kingdom or not) and is not obliged to  acquire any shares or other securities in any person.   5. SUBSIDIARIES  5.1 The entire issued share capital of each Subsidiary (except Nomina No 550 LLP) set out  in Schedule 9 (Basic information about the Target Group) is legally and beneficially  owned by AUA or (in the case of ArgoGlobal Underwriting (Dubai) Limited, Argo  Direct Limited and Argo Underwriting Asia Pacific Pte Ltd., AMA) (all such shares  together being the “Subsidiary Shares”). AUA is the sole member of Nomina No 550  LLP.   5.2 There is no Third Party Right on, over or affecting the Subsidiary Shares and there is  no agreement or commitment to give or create any and no claim has been made in  writing, or, so far as the Seller is aware, orally, by any person to be entitled to any.  5.3 There is no agreement or commitment outstanding which calls for the present or future  allotment, issue, transfer, redemption or repayment of, or accords to any person the  right to call for the allotment, issue, transfer, redemption or repayment of, any shares  or any debentures in or securities of the Subsidiaries (including an option or right of  pre-emption or conversion) and no claim has been made by any person to be entitled to  any.  5.4 There are no existing, pending or threatened in writing, or, so far as the Seller is aware,  threatened orally, disputes, claims or proceedings affecting any of the Subsidiary Shares  or AUA’s ownership or entitlement to dispose of any of them. So far as the Seller is  aware, there are no circumstances which are likely to give rise to any such disputes.  5.5 The Subsidiary Shares constitute the entire issued share capital of the relevant  Subsidiary and have been validly issued and allotted in accordance with the  constitutional documents of the relevant Subsidiary and are fully paid up or properly  credited as fully paid.  5.6 No Subsidiary has exercised, or purported to exercise or claim, any lien over the  Subsidiary Shares.  5.7 Section 5.7 of the Disclosure Letter includes reference to certain of the Target Group  Companies being dormant (the “Dormant Companies” and each a “Dormant  Company”). In respect of such Group Companies there are no residual liabilities.  

 

  74    5.8 No Dormant Companies have carried on any trade or otherwise carried on business (or  disposed for value any property or rights that it held for the purpose of disposal for gain  in the normal course of trading or otherwise carrying on business) in the two (2) years  ending on the date of this Agreement. Other than as set forth in their respective statutory  statements, no Dormant Companies have any assets or liabilities or owns (legally or  beneficially) any Intellectual Property.  6. CONSTITUTIONAL DOCUMENTS AND CORPORATE INFORMATION /  RECORDS  6.1 The copies of the constitution or articles of association (as applicable) of each relevant  Target Company contained in the Data Room are true, complete and accurate. To the  extent required by law, the Constitution of each relevant Target Company fully sets out  the rights and restrictions attaching to each class of share capital of such Target  Company.  6.2 The register of members and other statutory books required to be kept by each relevant  Target Company under Applicable Law are in the Target Group’s possession or under  its control and have been properly kept in accordance with Applicable Law and contain  a record which is accurate and complete in all material respects. No Target Company  has received any notice or allegation that any of them is incorrect or should be rectified.  6.3 All documents required to be delivered to the Registrar of Companies and the  Regulatory Authorities (or equivalent including the DFSA) with regard to each relevant  Target Company have been properly prepared and filed in accordance with applicable  legal requirements and are true, complete and accurate.  7. ACCOUNTS  7.1 The Accounts:   (a) have been prepared and audited in accordance with (as applicable) UK GAAP,  US GAAP, Singapore GAAP (or such other applicable standards as referred to  in the relevant Target Company’s Accounts) as at the relevant date to which  they were prepared, and have been prepared applying and adopting the same  policies, principles, bases, conventions, rules, practices, techniques, methods  and procedures as were applied and adopted in the financial statements of the  prior two (2) accounting periods;  (b) comply in all material respects with the requirements of Applicable Law; and   (c) give a true and fair view of each Target Company’s state of affairs (including  its assets, liabilities and financial position) as at the relevant date to which they  were prepared, and the profit or loss of each Target Company for the financial  periods to which they relate.  7.2 Without prejudice to the generality of the foregoing, in the Accounts:   (a) depreciation of the fixed assets of each Target Company has been made at a rate  sufficient to write down the value of such assets to nil not later than the end of  

 

  75    their useful working lives and no fixed asset has attributed to it a value  exceeding its market value at the Accounts Date;  (b) the value attributed to stock and work-in-progress does not exceed the lower of  cost and net realisable value at the Accounts Date and all: (i) unsaleable,  defective, redundant and excessive stock; (ii) returns; and (iii) stock which at  the Accounts Date been held for three (3) months or longer, has been written  down to nil;  (c) full provision or reserve has been made for all bad and doubtful debts, all  liabilities and obligations (actual, contingent or disputed) and all capital  commitments;  (d) full provision or reserve has been made for all taxation liable to be assessed on  each Target Company or for which each Target Company is accountable  (whether primarily or otherwise) in respect of income, profits or gains earned,  accrued or received on or before the Accounts Date or deemed to have been or  treated as earned, accrued or received and/or for any event on or before the  Accounts Date, including distributions made down to the Accounts Date or  provided for in the Accounts; and  (e) full provision or reserve in accordance with UK GAAP, US GAAP (or such  other applicable standards as referred to in the relevant Target Company’s  Accounts) has been made for all deferred taxation of each Target Company.   7.3 The Base Balance Sheet has been prepared with due care and attention on a consistent  basis with the preparation, practice and presentation of the Argo Group Securities and  Exchange Commission (SEC) Segment results and the underlying accounting  information in relation to each Target Company has been prepared with due care and  attention on a consistent basis  and using the same accounting and actuarial policies,  principles, estimation techniques, measurement bases, practices and procedures  adopted for the Accounts and present with reasonable accuracy, and do not materially  misstate, each Target Company's state of affairs (including its assets, liabilities and  financial position) as at and for the period(s) ended on the date(s) to which they have  been prepared.  7.4 Within the last five (5) years, AMA has prepared audited accounts for each of the  Syndicates for all applicable years ended 31 December in all material respects in  accordance with the requirements of Applicable Law, the Insurance Accounts Directive  (Lloyd’s Syndicate and Aggregate Accounts) Regulations 2008 and the Syndicate  Accounting Byelaw (No. 8 of 2005) and such accounts give a true and fair view of such  syndicate’s affairs as at 31 December for the applicable year.   7.5 Within the last five (5) years, AMA has prepared and submitted to Lloyd’s Quarterly  Monitoring Returns for each of the Syndicates in all material respects in accordance  with the requirements of Applicable Law and such returns present with reasonable  accuracy and do not materially misstate such syndicate’s affairs for the applicable  period covered by such returns.  7.6 Since the Accounts Date:   

 

  76    (a) each Target Company and each of the Syndicates has carried on the Target  Business in the ordinary and usual course as immediately before the Accounts  Date so as to maintain the same as a going concern without any interruption or  alteration to the nature, scope or manner of the Target Business;  (b) there has been no deterioration in the financial or trading position of any Target  Company;  (c) no fact or condition (other than any facts or conditions similarly affecting  similar businesses to a materially similar extent) exists which might reasonably  be expected to cause any material deterioration in the financial position of any  Target Company;  (d) no Target Company has acquired, or agreed to acquire, any asset, or has sold,  leased, licensed, transferred or otherwise disposed of any of the assets reflected  in the Accounts except in the ordinary and usual course of business;  (e) no Target Company has discharged or paid any obligation or liability (absolute  or contingent) other than: (i) liabilities reflected in the Base Balance Sheet; and  (ii) liabilities incurred (or, in respect of insurance claims, reported) since the  Base Balance Sheet Date in the ordinary and usual course of business consistent  with past practice;  (f) neither the Seller, nor any Target Company nor any of their respective Affiliates  has taken any action or failed to take any action that would, after the date hereof,  be prohibited or has omitted to take any action that would, after the date hereof,  be required, as the case may be, of Clause 4.1;   (g) no Target Company has delayed payment of any account payable thirty (30)  days after its due date or the date when such liability would have been paid in  the ordinary and usual course of business;  (h) there has not been any acceleration of collection of accounts receivable outside  the ordinary and usual course of business;  (i) no dividend or distribution of capital or income has been declared, made or paid  in respect of any share capital of any Target Company;  (j) each Target Company has continued to pay its creditors in the ordinary and  usual course of business, consistent with past practice;   (k) no loan or loan capital of any Target Company has been made, repaid or has  become due;  (l) no Target Company has increased any Employee’s wage, salary or any other  form of compensation or remuneration other than in the ordinary and usual  course of business;  (m) none of the assets of any Target Company has been depleted by any unlawful  act on the part of any person;   

 

  77    (n) no Target Company has agreed or committed to do or authorised any of the  foregoing.  8. MATERIAL CONTRACTS  8.1 The Data Room contains true and complete copies of all Material Contracts, and each  Material Contract is listed in Section 8.1 of the Disclosure Letter. “Material  Contracts” means any contract to which any Target Company is a party or is otherwise  obligated (other than Insurance Contracts), in each case that:   (a) is a Material Outsourcing Contract, Material Supplier Contract or a Material  Reinsurance Contract;  (b) involves aggregate payments by any Target Company in excess of £1,000,000  during the 12-month period ended 30 June 2022 or would reasonably be  expected to involve aggregate payments in excess of such amount in any 12- month period that includes the date hereof, or the delivery by AUA of goods or  services with a fair market value in excess of £1,000,000 during the 12-month  period ended 30 June 2022 or would reasonably be expected to involve  aggregate payments in excess of such amount in any 12-month period that  includes the date hereof;   (c) involves receipt of payments by any Target Company in excess of, or any  property with a fair market value in excess of, £1,000,000 during the 12-month  period ended 30 June 2022 or that would reasonably be expected to involve  aggregate payments in excess of such amount in any 12-month period that  includes the date hereof (excluding Material Reinsurance Contracts which are  addressed in Clause 8.1(a));   (d) provides for the licence of Intellectual Property to or from any Target Company  involving, or is reasonably expected to involve, aggregate payments in excess  of £250,000 during the 12-month period ended 30 June 2022;  (e) (i) contains covenants limiting the ability of any Target Company in any  material respect to engage in any line of business or to compete with any person;  (ii) grants a right of first refusal or first offer or similar right; or (iii) provides  for a “most favoured nations” status for any party thereto;  (f) contains any material restriction on the ability of any Target Company or any  of its Affiliates (or, after consummation of the transactions contemplated  hereby, the Purchaser or any of its Affiliates) to solicit specified customers or  prospective customers for the purchase, renewal, lapse, or surrender of Material  Reinsurance Contracts or to alter or change the terms, features, benefits,  elections or options under the Material Reinsurance Contracts;  (g) provides for any obligation to loan or contribute funds to, or make investments  in, another person;  (h) is a mortgage, indenture, loan or credit agreement, security agreement or other  agreement or instrument relating to the borrowing of money or extension of  credit or the direct or indirect guarantee of any obligation for borrowed money  

 

  78    of any person or any other liability of AUA in respect of indebtedness for  borrowed money of any person, in each case, involving liabilities in excess of  £500,000;  (i) is an agreement that is a material limited liability company, partnership, joint  venture or other similar contract relating to the formation, creation, operation,  management or control of any partnership or joint venture in respect of the  business of any Target Group Company;  (j) is a currently in force hedge agreement or other contract material to a relevant  Target Company’s hedging program;  (k) is a currently in force investment management agreement;  (l) is a contract between a Target Company, on the one hand, and any Senior  Employee or director of any Target Company, on the other hand;  (m) is a material contract that relates to the administration, claims, underwriting or  other insurance policy administration functions, including any collateral  arrangements;  (n) requires a Target Company or any Affiliate thereof to maintain a minimum  rating (including, for the avoidance of doubt, any rating applicable to a company  group of which the relevant Target Company is a member) or solvency ratio  such that a failure to maintain a rating or solvency ratio at or above such rating  or solvency ratio would give rise to any violation, breach or default by the  Target Company thereunder, or that would permit any modification,  acceleration or termination thereof, or that would require the Target Company  to collateralise or otherwise provide security thereunder or with respect thereto;  (o) provides for the acquisition or disposal (whether in a single transaction or series  of transactions) of any business (or any material part of any business) or any  shares in any company from and after the 36 months prior to the date hereof  where the value of that business or those shares exceeds £500,000;  (p) provides for the purchase, sale, transfer or acquisition of any real property from  and after the 36 months prior to the date hereof;  (q) provides for any guarantee or surety by any Target Company of the obligations  of any other person, or by any person for the benefit of the Target Company,  including any guaranty, capital maintenance or keep-well and in each case to  the extent in force;  (r) is a contract, between any Target Company, on the one hand, and any other  member of the Seller’s Group, on the other hand;  (s) is a contract entered into with any Regulatory Authority;   (t) is otherwise material to the conduct of the Target Business and necessary for it  to operate in substantially the manner in which it operated for the 12 months  immediately preceding the date of this Agreement; or   

 

  79    (u) that obligates any Target Company to enter into any of the foregoing.  8.2 Each Material Contract is a legal, valid and binding obligation on the relevant Target  Company, and, as far as the Seller is aware, each other party to such Material Contract,  and is enforceable against the relevant Target Company, and, as far as the Seller is  aware, each such other party, in accordance with its terms and none of the relevant  Target Companies or, as far as the Seller is aware, any other party to a Material Contract  is in material default or material breach or has failed to perform any material obligation  under a Material Contract. As far as the Seller is aware, there does not exist any event,  condition or omission that would constitute such a material breach or material default  (whether by lapse of time or notice or both). The relevant Target Company has not  received any written or, as far as the Seller is aware, oral notice of a material default or  material breach in respect of any Material Contract.   8.3 There are no outstanding agreements or arrangements under which any Target Group  Company is under an obligation to acquire or dispose of all or a substantial part of its  assets or business.  8.4 No written, or as far as the Seller is aware, oral notice of termination or of intention to  terminate, rescind, avoid or repudiate has been received or given by the Seller or any  relevant Target Company in respect of any Material Contract, there are no  circumstances that give rise to any such rights.  8.5 The execution or performance by the Seller of any of its obligations under this  Agreement and the other Share Purchase Documents to which it is a party will not, or  is not likely to, result in a material breach of, or give any third party a right to terminate  or vary or require the consent of a person under any Material Contract.  8.6 Except with respect to Nomina Designated Member No 1 Ltd and Nomina Designated  Member No 2 Ltd acting as designated members of Nomina No. 550 LLP, no Target  Company participates in any joint venture, consortium (other than Lloyd’s consortia in  the ordinary course of business) or partnership arrangements.  9. TRANSACTIONS WITH THE SELLERS  9.1 Save in respect of the Continuing Intra-Group Agreements, there is no outstanding  Indebtedness or other liability (actual or contingent) and no outstanding contract,  commitment or arrangement between any Target Company and any of the following:  (a) the Seller, or any other member of the Retained Group; or  (b) a director of the Seller or a director of any other member of the Retained Group  (or a person connected with any of them).   9.2 Save in respect of the Continuing Intra-Group Agreements, neither the Seller nor any  member of the Retained Group is entitled to a claim of any nature against any Target  Company, or has assigned to any person the benefit of any such claim.  9.3 No person is entitled to receive from any Target Company any finder’s fee, brokerage  or other commission in connection with the purchase of the Shares.   

 

  80    10. ASSETS  10.1 Save in respect of FAL, there are no Third Party Rights affecting any material assets  used in the business of a Target Company that are owned or leased by the relevant  Target Company.  10.2 Save in respect of the Argo Group FAL, as of Completion, the assets, properties,  employees and rights of the Target Group, and the assets, rights, properties and services  provided to the Purchaser or to the Target Group by the Sellers or its Affiliates pursuant  to the TSA, comprise the assets, properties, employees and rights that are sufficient for  the Purchaser to conduct the Target Business as conducted as at the date of this  Agreement (subject to the final sentence of paragraph 24.6 below), and perform its  obligations under this Agreement immediately following the Completion in  substantially the same manner as the Target Business is being conducted as of the date  hereof.   11. BANK BORROWINGS AND EVENTS OF DEFAULT  11.1 The total amount borrowed by each relevant Target Company from its respective  bankers does not exceed its applicable financial facilities and the total amount borrowed  by each Target Company from whatsoever source does not exceed any limitation on  such Target Company’s borrowing contained in its constitutional documents or in any  debenture or loan stock agreement or other instrument (as applicable).  11.2 No event has occurred or is subsisting or been alleged or so far as the Seller is aware is  likely to arise which:  (a) constitutes an event of default, or otherwise gives rise to an obligation to repay,  or to give security under an agreement entered into by a Target Company  relating to borrowing or indebtedness in the nature of borrowing (or will do so  with the giving of notice or lapse of time or both); or  (b) will lead to a lien, guarantee, an indemnity, suretyship or other obligation  created or constituted in connection with borrowing or indebtedness in the  nature of borrowing of any Target Company becoming enforceable (or will do  so with the giving of notice or lapse of time or both).  11.3 No Target Company owes any Indebtedness to any person outside the Target  Companies other than the Indebtedness owed pursuant to agreements or instruments of  which true and complete copies are set out in Section 11.3 of the Disclosure Letter.   11.4 At Completion, except for the Dekania Notes, no Target Group Company will have any  Indebtedness.  12. BANK ACCOUNTS  12.1 A statement of all the bank accounts of the Target Companies and of the credit or debit  balances on such accounts as at 6 September 2022 have been supplied to the Purchaser.  No Target Company has any other bank or deposit accounts (whether in credit or  overdrawn) not included in such statement.  

 

  81    13. GUARANTEES AND INDEMNITIES  13.1 No Target Company is a party to or liable (including contingently) under a guarantee,  indemnity or other agreement to secure or incur a financial or other obligation with  respect to another person’s obligation (other than another Target Company).   13.2 No part of the loan capital, borrowing or indebtedness in the nature of borrowing of any  Target Company is dependent on the guarantee or indemnity of, or security provided  by, another person.   13.3 Save to the extent contained in its standard terms of business or other applicable written  agreements in each case referenced in the Disclosure Letter under which the Target  Companies currently trade with their customers (or otherwise on the same terms in all  material respects as such standard terms of business or written agreements) and any  other Insurance Contracts entered into in the ordinary course of business, no Target  Company has given any guarantee or warranty or made any representation in respect of  service supplied or contracted to be supplied by it save for any guarantee or warranty  implied by law and (save as aforesaid) have not accepted any liability or obligation in  respect of any services that would apply after any such services had been supplied by  it.  14. OFF-BALANCE SHEET FINANCING  14.1 Save in respect of arrangements related to FAL, no Target Company is, or has been,  engaged in any financing arrangements that would not be required to be shown or  reflected in its financial statements.   15. FACTORING  15.1 No Target Company has factored, or securitised any of its current receivables or, save  in respect of the ordinary course of its insurance business, discounted any of them.   16. GRANTS  16.1 No Target Company has ever received any repayable grant, subsidy or other payment  of a similar nature made to it by any person (including, where applicable, the  Department for Business, Innovation and Skills or its predecessor or any equivalent  authority or governing body in other jurisdictions).   17. DEBTS  17.1 No debt shown in the Accounts or the management accounts is overdue by more than  14 weeks, has been subordinated, written off or become irrecoverable.  18. INSOLVENCY  18.1 No order has been made, petition presented insofar as the Seller is aware or resolution  passed for the winding up of or for the appointment of a provisional liquidator to any  Target Company.  

 

  82    18.2 No administration order has been made and no petition or application for such an order  has been made, or (insofar as the Seller is aware) presented, and no administrator has  been appointed in respect of any Target Company.  18.3 No receiver (which expression shall include an administrative receiver) has been  appointed in respect of any relevant Target Company or over all or substantially all of  its assets.  18.4 No voluntary arrangement under section 1 of the Insolvency Act 1986 has been  proposed or approved in respect of any Target Company.  18.5 No compromise or arrangement under section 895 of the Companies Act 2006 has been  proposed, agreed to or sanctioned in respect of any Target Company.  18.6 No Target Company is insolvent or unable to pay its debts as they fall due (provided  that a Target Company shall not be deemed to be insolvent or unable to pay its debts  by virtue only of the definition contained in section 123(1)(a) of the Insolvency Act  1986).  18.7 No distress, execution or other process has been levied on an asset of any Target  Company.  18.8 No Target Company has by reason of actual or anticipated financial difficulties  commenced negotiations with one or more of its creditors with a view to rescheduling  any of its indebtedness and no creditor of any Target Company has taken, or is entitled  to take, any steps to enforce, or has enforced, any security over any assets of any Target  Group Company.  18.9 No event analogous to any of the foregoing provisions of this paragraph 18 has occurred  in or outside England and Wales in respect of any Target Company.  19. COMPLIANCE WITH LAWS  19.1 No Target Group Company nor its respective directors, officers and employees, or any  other person (including agents and representatives) for whose acts or defaults any  Target Company may be vicariously liable:   (a) is liable for any criminal, illegal or unlawful or unauthorised act or breach of  any obligation or duty for which, in respect of directors, officers and, employees  and those other persons for whose acts or defaults any Target Company may be  vicariously liable, a Target Group Company may be liable;  (b) is or has been in the three (3) years prior to the date of this Agreement the subject  of any investigation, inquiry or enforcement proceedings by any Regulatory  Authority in relation to any Target Company, and no Target Company has  received any written notification that any such investigation, inquiry or  proceedings are or have been threatened or are pending and there are no  circumstances existing that could reasonably be expected to give rise to any  such investigation, inquiry or proceedings; or  

 

  83    (c) is liable or subject to further investigations due to internal audit findings,  inquiries and/or proceedings and any recommendations from internal audit  functions have been actioned to the satisfaction of the internal audit function  from time to time in relation to any Target Company;   19.2 Each Target Company has in the three (3) years prior to the date of this Agreement  complied with all Applicable Laws in all material respects.  19.3 Each Target Company has in place (and has had in place at all times since 30 September  2017) such prevention procedures (as defined in sections 45(3) and 46(4) of CFA 2017  as are proportionate to its business risk and are in line with any guidance published  from time to time pursuant to section 47 of CFA 2017.  20. COMPETITION   20.1 No Target Company is engaged in, or has engaged in, any agreement, arrangement,  practice or conduct which would amount to an infringement of any Antitrust Laws.  20.2 No Target Company has been the subject of any investigation, inquiry or enforcement  proceedings by any Competition Authority, or Laws. No Target Company has received  a complaint regarding, or is aware of any violation or infringement of, any applicable  Antitrust Laws in the past five (5) years.  20.3 No Target Company is affected by any existing or pending decisions, judgments, orders  or rulings of any Competition Authority responsible for enforcing any Antitrust Laws  and no Target Company has given any undertakings or commitments to such bodies  which affect the conduct of the Target Business.  21. REGULATORY MATTERS AND LICENCES; PRODUCERS AND  ADMINISTRATORS  21.1 All licences, consents and other permissions, exemptions, registrations and approvals  (the absence of which would have a material impact on the business of the Target Group  taken as a whole) required for or in connection with the carrying on of the business now  being carried on by such Target Company as at the date of this Agreement (each a  “Material Target Group Licence”) are in full force and effect, and, as far as the Seller  is aware there are no grounds or reason for the competent Regulatory Authorities to  refuse the renewal of such licenses, consents and other permissions and approvals upon  their expiry nor is there any non-compliance with any conditions applicable to a  Material Target Group Licence such that the continuation of any Material Target Group  Licence could be impacted. Each Target Company has conducted its business  operations in the past five (5) years prior to the date of this Agreement in all material  respects in compliance with all Applicable Law (and any instances of non-compliance,  in each case or in their aggregate, would not have a material impact upon the business  of the relevant Target Company).  21.2 The Target Group Companies, their respective directors, officers, employees, agents  and other persons acting on their behalf, are, and in the past three (3) years prior to the  date of this Agreement have been in compliance in all material respects with applicable  Sanctions, and in compliance in all material respects with applicable export and import  controls, and anti-boycott laws and regulations (“Trade Laws”) maintained by the  

 

  84    United States, the European Union and its Member States, the United Kingdom, and  any other applicable jurisdiction or competent authority.  21.3 None of the Target Group Companies their respective directors, officers employees,  agents and other persons acting on their behalf, (i) is a Sanctioned Person; or (ii) has,  in the past three (3) years prior to the date of this Agreement engaged in any dealings  with or involving any Sanctioned Person or Sanctioned Country.  21.4 The Target Group maintains policies and procedures reasonably designed to ensure  compliance with Applicable Laws (including Trade Laws) and follow any applicable  recommendation made by internal audit functions. There is not currently, and for the  past three (3) years prior to the date of this Agreement there has not been, any action,  suit, inquiry, investigation (including any internal investigation), disclosure, or any  other proceeding, including those pending or threatened, involving any Target Group  Company or any of their respective directors, officers, employees, or agents or other  persons associated with or acting on their behalf related to violations or potential  violations of Applicable Laws (including Trade Laws).  21.5 The Target Group Companies and their respective directors, officers, employees, agents  and other persons acting on their behalf, are and in the past three (3) years prior to the  date of this Agreement have complied in all material respect with applicable AML  Laws.  21.6 There is not currently, and for the past three (3) years prior to the date of this Agreement  there has not been, any action, suit, inquiry, investigation (including any internal  investigation), disclosure, or any other proceeding, including those pending or  threatened, involving any Target Company or any of their respective directors, officers,  employees, or agents or other persons associated with or acting on their behalf, related  to material violations or potential material violations of applicable AML Laws.  21.7 No written notice has been received by any relevant Target Company that any Material  Target Group Licence is likely to be revoked or materially amended.     21.8 So far as the Seller is aware, there are no circumstances which indicate that any of the  Regulatory Authorisations may be suspended, varied, limited, modified, revoked or not  renewed (in whole or in part) and no Regulated Company has received written notice  that it is or may be in default of, or carrying on business otherwise than in accordance  with, the Regulatory Authorisations.  21.9 No relevant Target Company has received a written notice indicating that it is the  subject of an investigation, enquiry or enforcement proceedings by any Regulatory  Authority and no such investigation, inquiry or proceedings has been threatened in the  last three (3) years.  21.10 In the last three years, no material fines or penalties have been imposed on any relevant  Target Company or threatened to be imposed on such Target Company by any  Regulatory Authority in any jurisdiction in which business is conducted by any  member.  

 

  85    21.11 The Data Room contains all material written correspondence with any Regulatory  Authority related to any relevant Target Company within the last three (3) years,  including, without limitation, any correspondence concerning potential or actual  breaches of Applicable Laws, and correspondence relating to any reviews, supervisory  visits, reports or inspections.  21.12 The Data Room includes the current permissions, permits, consents or approvals  granted by the Regulatory Authorities to each Target Group Company required to have  such a Regulatory Authorisation (a “Regulated Company”).   21.13 There have been no material undertakings, guarantees, indemnities or securities given  by any member of the Seller’s Group within the last three (3) years to any Regulatory  Authority to which a Target Group Company is subject, which are different to or outside  the scope of those usually required by the relevant Regulatory Authority.  21.14 The Regulatory Authorisations from any relevant Regulatory Authority are the only  permissions and permits required from any relevant Regulatory Authority or under  Applicable Law by the Regulated Companies in order to carry on their business as  presently conducted and each Regulated Company has, at all material times, held all  permissions and permits required from all Regulatory Authorities to carry on its  business in the manner carried on as at the date of this Agreement.  21.15 No Target Company’s registration, regulation, permissions, authorisations, exemptions  and consents: (a) are subject to any specific or exceptional directions, conditions or  requirements given or imposed by the FCA, the PRA or Lloyd’s, DIFC or the DFSA or  any other Regulatory Authority; or (b) have not at any stage within the three (3) years  ending on the date of this Agreement been withdrawn and, with respect to AMA, no  notice has been given to AMA to the effect that such registrations, regulation,  permissions, authorisations and consents will be withdrawn or made subject to any  directions, conditions or requirements which are not and would not be of general  application to all managing agents.  21.16 Each of the Argo Corporate Members is duly admitted to membership of Lloyd’s  pursuant to the Membership Byelaw (No. 5 of 2005) and each is party to such of Lloyd’s  membership agreements as are required by Lloyd’s and none of such agreements have  been amended from the standard form provided by Lloyd’s.  21.17 Each person carrying out a senior management function on behalf of AMA for which  approval is required under Applicable Law has been approved for this purpose by the  PRA or FCA (and, where applicable, Lloyd’s or the DFSA).  21.18 Within the last three (3) years there have not been any disciplinary enquiries or  proceedings by any relevant Regulatory Authority in respect of any officers, Employees  or any person employed or engaged in the Target Group carrying out a senior  management function or certification function on behalf of the managing agent.   21.19 Within the last three (3) years, all material returns, reports, statements and other  information, applications and notices required to be filed with or otherwise submitted  to the FCA, the PRA, Lloyd’s and the DFSA in connection with the carrying on of the  business of the Target Group have been prepared duly filed and maintained by AMA  and/or the Argo Corporate Members in accordance with Applicable Law.  

 

  86    21.20 No Target Company has received notice, and the Seller is not otherwise aware, of any  third party administrator that managed or administered insurance business for any  Target Company, at the time such person managed or administered such business for  any Target Company being in material violation (or which would with or without notice  or lapse of time or both, be in material violation) of any term or provision of any  Applicable Law relating to the administration or management of insurance business for  any Target Company.   21.21 As far as the Seller is aware:  (a) each Producer, at any time that it wrote, sold or produced Insurance Contracts  for a Target Company, was duly licensed, authorized and appointed (for the type  of business written, sold or produced by such Producer) in the particular  jurisdiction in which such Producer wrote, sold or produced such Insurance  Contracts; and  (b) no Producer is in material violation of any term or provision of Applicable Law  relating to the writing, sale or production of such Insurance Contracts for any  Target Company.  22. CONDUCT OF BUSINESS AND LLOYD’S  22.1 AMA does not carry on, and has not at any time in the last five (5) years, carried on any  business other than that of acting as managing agent at Lloyd’s.  22.2 Syndicate 1200, Syndicate 1910 and Syndicate 6117 are the only Lloyd’s syndicates  for which AMA is or has in the last five (5) years been a Lloyd’s managing agent and  are the only Lloyd’s syndicates managed by AMA in respect of which there is any open  Year of Account.  22.3 There are no variations to the terms of the standard Managing Agency Agreements or  Agent’s Agreements. AMA has not given to or received from (or on behalf of) any  Member of the Syndicates notice to terminate the Managing Agent’s Agreement  between AMA and such Member (or AMA’s appointment under such agreement) or  applied to Lloyd’s for permission to give any such notice, and AMA has not received  notice of any intention on the part of any such Member not to underwrite for the 2023  Year of Account as a Member of that syndicate (where that Member has tenancy rights  with respect to that syndicate).  22.4 In the last five (5) years, AMA has at all times properly observed, fulfilled, performed,  conducted and carried out in all material respects all obligations imposed on it under  any Managing Agency Agreements and Agent’s Agreements from time to time entered  into by AMA and, so far as the Seller is aware, there have been no acts or omissions on  the part of AMA, its officers, employees or agents which constitute or may constitute a  material breach (whether in contract, tort, trust or otherwise) of the duties AMA owes  to any Member or members’ agent.  22.5 AMA has not entered into any agreement with any Member of the Syndicates other  than in the standard form(s) prescribed by the Council and all Members of the  Syndicates have the same arrangements with AMA regarding profit commission, fees  and the consequences of any deficit.  

 

  87    22.6 All binding authority agreements entered into by AMA on behalf of the Members of  the Syndicates are, in all material respects, on standard LMA standard terms.  22.7 So far as the Seller is aware, there has not been on the part of the managing agent’s  trustees appointed by AMA any breach of trust or of any fiduciary obligations in respect  of any trust established or maintained pursuant to Lloyd’s Regulations for the purposes  of the business of each of the Syndicates and AMA.  22.8 AMA has, in all material respects and at all times, complied with its fiduciary  obligations in relation to funds coming into its hands and required to be treated as trust  assets in connection with the business of the Syndicates.  22.9 All funds of the Syndicates are properly entered in the books and records of the  Syndicates and are invested and held in all material respects in accordance with the  relevant premiums and other trust deeds or instruments and Lloyd’s Regulations, and  (for policies entered into by ArgoGlobal Underwriting Asia Pacific Pte. Ltd. on behalf  of the then members of Syndicate 1200) are properly paid into insurance funds in  accordance with, and established under, regulation 11 of the Insurance (Lloyd’s Asia  Scheme) Regulations.  22.10 So far as the Seller is aware, all outward reinsurance agreements and arrangements in  respect of each of the Syndicates are valid and enforceable, and, other than in the  ordinary course of insurance and reinsurance claims arising in respect of a Target  Company’s participation in any syndicate, there are no disputes (and the Seller is not  aware of any circumstances which exist which are likely to give rise to any dispute)  under any such agreements and arrangements.  22.11 In the last five (5) years, each Service Company has complied in all material respects  with applicable Lloyd’s Regulations and any requirements imposed by the relevant  regulator or its predecessors, as necessary in connection with the conduct of its  business. Each Service Company does not carry on and, in the five (5) years ending on  the date of this Agreement, has not at any time carried on any business other than that  of acting as a service company at Lloyd’s.  23. ARGO CORPORATE MEMBERS, OTHER MEMBERS & FAL  23.1 None of the Argo Corporate Members has conducted any business other than that of  being a corporate member at Lloyd’s and none of the Argo Corporate Members has  participated on any syndicate at Lloyd’s other than Syndicate 1200 and/or Syndicate  1910.  23.2 The 2022 YOA Argo Active Corporate Members own the right to participate on 99.5%  and/or AMA has the right to allocate in its absolute discretion 99.5% of the rights to  participate on Syndicate 1200 for the 2023 Year of Account.  23.3 Ariel Corporate Member Limited has not participated on any syndicate at Lloyd’s other  than the Syndicate 1910 and the only open Year of Account on which Ariel Corporate  Member Limited currently participates is the 2020 Year of Account of Syndicate 1910.  23.4 None of the Argo Corporate Members (other than Ariel Corporate Member Limited)  has made or makes their Funds at Lloyd’s inter-available to any other Member. Ariel  

 

  88    Corporate Member Limited has only made its Funds at Lloyd’s inter-available to Argo  (604) Limited in respect of Argo (604) Limited’s participation on Syndicate 1200.  Policies underwritten by ArgoGlobal Underwriting Asia Pacific Pte. Ltd. on behalf of  the then members of Syndicate 1200 are underwritten only on behalf of Argo Corporate  Members that fulfil the requirements of regulations 3 to 6 and 24 of the LAS  Regulations.  23.5 The Argo Active Corporate Members are the only Argo Corporate Members (other than  Ariel Corporate Member Limited) that participate on any open Years of Account at  Lloyd’s. The only open Years of Account of a Lloyd’s syndicate on which the Argo  Active Corporate Members participate are the open Years of Account of Syndicate  1200.  23.6 Section 23.6 of the Disclosure Letter contains complete and accurate descriptions of the  participations by Argo Corporate Members on the last 5 (five) Years of Account of the  Syndicates. The Funds at Lloyd’s requirement and Member’s syndicate premium limits  of each of the Argo Active Corporate Members and of Ariel Corporate Member Limited  are accurately Disclosed.  23.7 Each of the Members of the open Years of Accounts of the Syndicates has deposited  with Lloyd’s the full amount of their Funds at Lloyd’s requirements in relation to the  Coming into Line process for the each of the open Years of Account and such Funds at  Lloyd’s remain at the levels required by Lloyd’s for the continued underwriting by such  Syndicates in accordance with the current syndicate business plan for the relevant  Syndicate.  23.8 Section 23.8 of the Disclosure Letter contains copies of the arrangements entered into  by each of the Argo Corporate Members relating to the provision of Funds at Lloyd’s  to support an Argo Corporate Member’s participation, or reinsurance of an Argo  Corporate Member’s participation on the open Years of Account of the Syndicates.  23.9 AMA has provided to all Members of the Syndicates all disclosures which AMA is  required to provide in respect of their participation on such Syndicates.  23.10 There are no matters that could lead to a conflict of interest between the interests of  AMA and the Members of the Syndicates, other than those of a Lloyd’s managing agent  acting in the ordinary course of business at Lloyd’s.  23.11 All Years of Account of the Syndicates that have been reinsured to close have been  reinsured to close in the ordinary course (or in the case of the 2017 and prior Years of  Account of Syndicate 1200 have been reinsured to close by Syndicate 3500).  23.12 AMA retains no further responsibility for the management of the 2017 and prior Years  of Account of Syndicate 1200, save for the ordinary residual responsibility that applies  to a Lloyd’s managing agent of a Years of Account of a Lloyd’s syndicate that have  been reinsured to close into a Year of Account of a Lloyd’s syndicate managed by  another Lloyd’s managing agent.  23.13 Where Funds at Lloyd’s have been provided on behalf of an Argo Corporate Member,  all required disclosures have been made to Lloyd’s with respect to such arrangements  

 

  89    and all applicable agreements relating to such arrangements comply with Applicable  Law.  23.14 Within the last five (5) years, there have been no cash calls by Lloyd’s with respect to  the Funds at Lloyd’s provided by or on behalf of the Argo Corporate Members.  23.15 Save for the Funds at Lloyd’s expressly agreed by the Purchaser to be replaced in  accordance with Clause 12.13, with respect to the agreements relating to the capital  stacks forming the Funds at Lloyd’s provided by or behalf of the Argo Corporate  Members, there are no change of control or other termination or acceleration triggers  that would require the replacement of any such fund’s at Lloyd’s or amendment or  termination to any arrangements at Completion.  23.16 As far as the Seller is aware, there are sufficient reserves available with respect to the  2018, 2019 and 2020 Years of Account of Syndicate 1200 and the 2020 Year of  Account of Syndicate 1910 that the reinsurance to close of such Years of Account will  not cause a reduction in the assets of the Argo Corporate Members that participate on  such Years of Account.  24. ACTUARIAL  24.1 The Data Room contains all actuarial reports by external actuaries with respect to  Syndicate 1200 commissioned by AMA within the three (3) year period ending on the  date of this Agreement.  24.2 AMA complies in all material respects with generally accepted actuarial standards and  professional guidance when completing its actuarial and reserving calculations.  24.3 AMA has not materially changed any of its methodologies for making actuarial and  reserving calculations in the last three (3) years.  24.4 So far as the Seller is aware, all premiums, claims and reinsurance claims information  that has been provided in the Data Room is true, complete and accurate in all material  respects.  24.5 So far as the Seller is aware, the data provided in connection with the preparation of the  external actuarial reports was true, complete and accurate in all material respects  (including with respect to all benefits and risks covered under the terms of all Insurance  Contracts) when provided to each adviser.  24.6 The reserves of the Target Companies contained in the Accounts: (a) were determined  in all material respects in accordance with generally accepted actuarial standards  consistently applied (except as otherwise noted in the Accounts) and were fairly stated  in accordance with sound actuarial principles; (b) were based on actuarial assumptions  that produced reserves at least as great as those called for in any Insurance Contract as  to reserve basis and method, and are in accordance with all other applicable provisions  of any Insurance Contract; and (c) satisfied the requirements of Applicable Law in all  material respects, except as otherwise noted in the Accounts and notes thereto included  in such Accounts. For the avoidance of doubt, the Seller makes no warranty as to the  adequacy or sufficiency of reserves.  

 

  90    25. DATA PROTECTION   25.1 For the purpose of this paragraph 25.1, the terms “controller”, “data subject”, “personal  data”, “personal data breach”, “processing”, “processor” and “supervisory authority”  shall have the meaning given to them in the GDPR.  25.2 In the three (3) year period prior to the date of this Agreement, each Target Company  and, with respect to the processing of personal data, its processors comply and have  complied in all material respects with Company Privacy Policies and Data Protection  Laws (including as regards to any cross-border transfers of personal data). In particular  and without limitation, each Target Company to the extent required under Data  Protection Laws: (a) maintains a register of personal data processing, (b) provides  adequate information to data subjects whose personal data are processed and ensures  that all processing of personal data is carried out in reliance on a valid legal basis, and  (c) retains personal data only for as long as is necessary.  25.3 Each Target Company has in place written agreements with third parties which it has  authorised to have access to personal data, including all processors, to ensure that the  confidentiality and security of personal data is protected and maintained as required  under Data Protection Laws.  25.4 Each Target Company has implemented and maintains appropriate technical and  organisational measures designed to keep personal data strictly confidential and protect  personal data against accidental or unlawful destruction or accidental loss, alteration,  unauthorised disclosure or access, which ensure a level of security appropriate to the  risk as required under Data Protection Laws (“Information Security Program”). Each  Target Company has assessed and tested its Information Security Program as necessary  to comply with Data Protection Laws and has remediated all critical, high and medium  risks and vulnerabilities.  25.5 No Target Company, and to the knowledge of the Seller, their processors, have not  during the three (3) year period prior to the date of this Agreement:   (a) suffered any material personal data breach or cybersecurity incident (“Security  Incident”); or  (b) been required to notify any person or Regulatory Authority of any Security  Incident.   25.6 No Target Company has:  (a) received any written notice, request or other communication from any  Regulatory Authority, or has been subject to any enforcement action (including  any fines or other sanctions) or investigation, in each case relating to a breach  of their obligations under Data Protection Laws or any laws applicable to  cybersecurity;  (b) during the three (3) year period prior to the date of this Agreement, been subject  to any proceeding relating to noncompliance or potential noncompliance with  Data Protection Laws or the processing of personal data; or  

 

  91    (c) received any written claim, complaint or other communication from any data  subject, which remains outstanding.  25.7 The Target Companies maintain cyber liability insurance.  26. LITIGATION  26.1 No Target Company, or any Target Company’s , businesses or assets or, in respect of  the Target Business, employee, is engaged, or has in the last three (3) years been  engaged, in any litigation, arbitration, mediation, settlement discussions or other  dispute resolution process, or administrative or criminal investigation or proceedings  (including any involving any ombudsman), whether as claimant, defendant or  otherwise, other than ordinary course insurance claims within applicable policy limits  that do not seek class certification (including with respect to the collection of debts in  the ordinary course of business where the amount is not likely to exceed £2,500,000).  26.2 No litigation, arbitration, mediation or other dispute resolution process, or  administrative or criminal investigation or proceedings (including any involving any  ombudsman), by or against any Target Company or any Target Company’s business or  assets or, in respect of the Target Business, employee, is pending or threatened, where  the amount claimed is likely to exceed £2,500,000.   27. ANTI BRIBERY AND CORRUPTION  27.1 Each Target Company and, its respective directors, officers, employees and Associated  Persons (as defined in the Bribery Act 2010) is conducting and has, in the last three (3)  years conducted its business in compliance in all material respects with Anti-Bribery  Laws, its internal policies and procedures related to the same and any obligations  relating to Anti-Bribery Laws pursuant to any contract with any third party.   27.2 Each Target Company and its directors, officers, employees, and “Associated Persons”  (as defined by the Bribery Act 2010) have not acted in material breach of Anti-Bribery  Laws in the last three (3) years.   27.3 Each Target Company has in place (and has, at all relevant times, had in place) adequate  written anti-corruption policies and procedures (in accordance with the guidance  published from time to time by the Secretary of State pursuant to section 9 of the  Bribery Act 2010) which are designed to prevent each Target Company (and any of its  directors, employees, officers or Associated Persons (as defined by the Bribery Act  2010)) from engaging in any activity, practice or conduct which would constitute an  offence under Anti-Bribery Laws and to ensure compliance with Anti-Bribery Laws,  and copies of all such policies are disclosed in the Data Room at Folder 10.   27.4 No Target Company nor its directors, employees, officers or Associated Persons (as  defined by the Bribery Act 2010) have, in the three (3) years immediately preceding the  date of this Agreement, had any interactions with public officials, other than in the  ordinary course of each Target Company’s business.  

 

  92    28. INTELLECTUAL PROPERTY AND INFORMATION TECHNOLOGY   28.1 The activities of any relevant Target Company do not infringe or otherwise violate, and  have not in the past three (3) years infringed or otherwise violated, the Intellectual  Property of any third party. In the past three (3) years, no relevant Target Company has  received any written charge, complain, claim, demand, or notice (a) alleging any such  infringement or other violation, or (b) challenging the ownership by any relevant Target  Company of the validity or enforceability of any Intellectual Property owned by or  purported to be owned by any relevant Target Company.  28.2 The Information Technology used by any relevant Target Company is in good working  order in all material respects, is sufficient to satisfy the current business requirements  of the Target Group in all material respects and do not contain any Malicious Code or  defect, and operate and perform as necessary to conduct the business of such Target  Company.  28.3 During the three (3) year period prior to the date of this Agreement, no Target Company  has experienced any material disruption in its operations as a result of: (a) any security  breach or other unauthorised access or acts in relation to any Information Technology;  or (b) any failure of any Information Technology howsoever arising, which had or  would have a Material Adverse Effect on the Target Group.   28.4 The Target Group has procedures in place which: (a) take and store on-site and off-site  back-up copies of the software and data in the Information Technology; and (b) are  designed to minimise unauthorised access to and the introduction of viruses and other  contaminants into the Information Technology.  28.5 Section 28.5 of the Disclosure Letter lists, and the Data Room contains details of, all  registered Intellectual Property (or Intellectual Property subject to application for  registration) and material unregistered Intellectual Property owned by any relevant  Target Company. Each relevant Target Company either legally or beneficially owns, or  has licensed to it, all Intellectual Property necessary to carry on its business as currently  conducted. All Intellectual Property owned or purported to be owned by any relevant  Target Company is owned exclusively by the Target Group.  28.6 A list of all material licences (and, where available, copy of such licences) of  Intellectual Property and Information Technology entered into by any relevant Target  Company are set forth in Section 28.6 of the Disclosure Letter.   28.7 So far as the Seller is aware, no third party is infringing, misappropriating, or otherwise  violating, or has in the past three (3) years infringed, misappropriated, or otherwise  violated, any Intellectual Property owned by any relevant Target Company.  28.8 Each relevant Target Company has taken commercially reasonable measures to protect  the confidentiality of all trade secrets and other material confidential information that  is owned by the Target Group. Each current and former employee, consultant and  contractor of each relevant Target Company who materially contributed to the  development of any material Intellectual Property for or on behalf of any relevant  Target Company has assigned all right, title and interest of such employee, consultant  or contractor in such Intellectual Property to a member of the Target Group and agreed  

 

  93    to confidentiality provisions protective of the confidential information of the Target  Group.  29. INSURANCE  29.1 Section 29.1 of the Disclosure Letter sets forth a list of, and the Data Room contains  true and accurate copies of, all insurance policies or indemnity policies (other than  policies: (a) underwritten by the Syndicates; and (b) in the nature of reinsurance, in each  case which relate to the business of the Syndicates/(other than in its capacity as an  insurer, reinsurer or reinsured)) maintained by or for the benefit of each Target Group  Company (known as the “Insurance Policies”, and each an “Insurance Policy”).  29.2 In the past three (3) years, no insurer has disputed any of the Insurance Policies. All  premiums due on the Insurance Policies have been paid when they were due, and, there  are no existing circumstances which materially and adversely affect or likely to affect  any Target Group Company, the effect of which would give rise to an increase in  premium or make any Insurance Policy void or voidable.  29.3 There are no outstanding claims by any Target Company under, or in respect of the  validity of, any of the Insurance Policies and, so far as the Sellers are aware, there are  no circumstances likely to give rise to any claim by any Target Company under any of  the Policies.  29.4 Each Target Company has at all times been prior to the date of this Agreement,  appropriately insured against risks normally insured by a prudent person carrying on a  similar business to the Target Group Companies and has at all times effected all  insurances required by Applicable Law.  29.5 Nothing has been done or omitted to be done by any Target Company or, so far as the  Seller is aware, any other party which has made any of the Insurance Policies void or  voidable. So far as the Seller is aware, none of the insurers under the Insurance Policies  are insolvent.  29.6 So far as the Seller is aware, there are no circumstances which have given or are likely  to give rise to any claim or require notification under any of the Insurance Policies  which have not been notified to the relevant insurers.  30. CLAIMS AND POLICIES  30.1 There has been no material failure by AMA within the last three (3) years to administer  or comply with any policies in accordance with their terms which, taken individually  or collectively, has resulted, or will result, in a Material Adverse Effect on AMA or the  Syndicates.  30.2 The policyholder records of the managing agent are sufficient to enable the managing  agent to deal with claims arising under the policies in all material respects.  30.3 The Target Companies have processed and administered all claims with respect to the  Target Companies and/or the Syndicates in accordance with Applicable Law and, so  far as the Seller is aware, in a timely manner during the last five (5) years.   

 

  94    31. POWER OF ATTORNEY  31.1 No Target Company has given a power of attorney and no person has any authority  (express, implied or ostensible) that is still outstanding or effective to enter into any  contract or commitment or to do anything on its behalf.  32. EMPLOYMENT AND PENSIONS  32.1 The Data Room contains:  (a) true and complete anonymised details (which are accurate in all material  respects as at the date of this Agreement) of the: (i) job title; (ii) annual salary  and bonus or other incentive opportunity; (iii) location of employment and  employing entity; (iv) date of commencement of employment or engagement;  (v) date of birth; (vi) immigration status; (vii) part or full time status; and  (viii) notice period of each Employee;  (b) copies of the standard terms and conditions of employment for the Target Group  (and each Employee is employed under a contract of employment that is  materially in the same form as the standard terms);  (c) copies of the contracts of employment between each relevant Target Company  and each Senior Employee;  (d) material details of any bonus schemes, share incentive schemes, share option  schemes, profit share schemes or commission schemes and entitlements in  which the Employees participate; and  (e) copies of all handbooks and all material staff policies and procedures of the  Target Group which relate to the Employees.  32.2 Section 32.2 of the Disclosure Letter sets forth a true and complete list of all  independent contractors or consultants engaged by each Target Company containing:  (a) country where engaged; (b) engaging entity (or entity such individual provides  services to, if different); (c) whether the individual is engaged directly or via an  intermediary; (d) payments received from the Target Group in calendar years 2021 and  2022; and (e) a brief description of the services provided by each independent  contractor or consultant.  32.3 No offer of employment has been made by a Target Company that has not been  accepted or where the employment has not yet started, in each case to any person who,  on the commencement of employment, would be a Senior Employee and no Senior  Employee has given notice terminating his contract of employment (which has not yet  terminated) or is under notice of termination as at the date of this Agreement.  32.4 All contracts of employment between the each Target Company and its Employees are  terminable at any time on not more than six months’ notice.  32.5 Save as Disclosed, the Transaction will not entitle any Employee, director, worker or  independent contractor of any Target Company to terminate his or her employment,  

 

  95    appointment or engagement or receive any payment or other benefit as a result of the  completion of the Transaction.   32.6 There is no trade union recognised by, or works council, staff association or other  employee representative body established at any Target Company and there is no  dispute between any Target Company and any trade union existing, or threatened in  writing and there is no collective bargaining agreement or other arrangement in place  (whether binding or not) with any trade union or employee representatives to which any  Target Company is a party or subject. No Target Company has received any requests  for recognition from a trade union within the three (3) years prior to the date of this  Agreement and, so far as the Seller is aware, there are no circumstances likely to give  rise to any request for recognition by any trade union, or establishment from any works  council, staff association or other employee representative body.  32.7 There are no current, and have not been in the three (3) years prior to the date of this  Agreement any, material investigations, grievances, protected disclosures, or  disciplinary procedures (including, without limitation, any grievance or disciplinary  appeals), or litigation, relating to any current or former director, Employee, worker, or  independent contractor, and so far as the Seller is aware, there are no circumstances  likely to give rise to any such investigations, grievances, protected disclosures,  disciplinary procedures or litigation.  32.8 In the three (3) year period prior to the date of this Agreement, each Target Company  has materially performed all obligations it is required to perform (whether arising under  contract or applicable law) in respect of their current and former Employees, directors,  officers, workers and independent contractors.  32.9 In the three (3) year period prior to the date of this Agreement, no Target Company has  received any allegations of sexual or racial harassment or discrimination involving any  of their respective current or former directors or Employees. Section 32.9 of the  Disclosure Letter sets forth a list of, and the Data Room contains all settlement  agreements entered into by, any Target Company within the past three (3) years relating  to allegations of sexual or racial harassment or discrimination by any of its current or  former Employees.  32.10 Save as Disclosed, no Target Company has an obligation to provide any maternity,  paternity, adoption or other family friendly or carer-related benefits or sick pay to any  Employee or worker in excess of statutory minimum requirements.  32.11 No Target Company has an obligation to make any payment or provide any benefit on  the redundancy of any employee in excess of the statutory redundancy payment or to  provide enhanced severance payments in case of termination, and has not, in the  three (3) years preceding the date of this Agreement, operated any discretionary  practice of making any such excess payments or benefits to any of their Employees.  32.12 No Target Company has in the three (3) years preceding the date of this Agreement  made, or started implementation of, any collective dismissals that have required or will  require notification and/or consultation with any state authority, trade union, works or  supervisory council, staff association and/or body representing or in relation to any  current or former Employee.  

 

  96    32.13 All Employees in the Target Group have the legal right to work in the country in which  they are employed, and each Target Company has complied with all of its obligations  in this regard.  32.14 In the period of three (3) years preceding the date of this Agreement, no Target  Company has been a party to a relevant transfer for the purposes of the Transfer of  Undertakings (Protection of Employment) Regulations 2006, Section 18A of the  Employment Act 1968 of Singapore or equivalent or similar applicable laws affecting  any Employee or any other person engaged in the business of the Target Group. No  Employee of any Target Company has had their terms and conditions of employment  varied for any reason as a result of or connected with such a transfer.  32.15 Each Target Company has complied with its COVID-19 obligations with respect to  compliance with the Coronavirus Job Retention Scheme and any of its Employees or  workers returning to the workplace, including compliance with any obligation to carry  out a COVID-19 risk or health and safety assessment or to carry out a consultation  exercise with Employees or employee representatives.  32.16 The Disclosed Scheme and the DEWS Scheme are the only scheme or arrangement to  which the Target Group makes payments, or could reasonably be expected to become  liable to make payments, for providing retirement, death, disability or life assurance  benefits in respect of the current or former directors, Employees and workers of the  Target Group.  32.17 True and complete details of the Disclosed Scheme (including details of the  contributions payable) and copies of the current governing documents and all other  material documentation have been included in the Data Room.  32.18 The Disclosed Scheme in the three (3) years prior to the date of this Agreement and the  DEWS Scheme since its implementation on 31 January 2020 have in all material  respects been operated in accordance with the provisions of its governing  documentation, all applicable legislation, and the general requirements of law and  regulatory practice, including that each Target Company in the United Kingdom has  complied with its automatic enrolment obligations under the Pensions Act 2008 and  regulations made thereunder and ArgoGlobal Underwriting (Dubai) Limited has  complied with its enrolment obligations and contribution requirements under the  DEWS Scheme.  32.19 All contributions which have fallen due for payment prior to the date of this Agreement  in respect of the Disclosed Scheme have been paid and there are no other costs or  contributions paid by any Target Company in respect of the Disclosed Scheme and there  are no other costs or contributions paid by any Target Company in respect of the DEWS  Scheme other than ArgoGlobal Underwriting (Dubai) Limited.  32.20 All benefits payable, or prospectively or contingently payable, under the Disclosed  Scheme are “money purchase benefits” within the meaning of section 181(1) Pension  Schemes Act 1993 or are insured, and no Target Company has been a party to, a  sponsoring employer of, or otherwise is under any liability with respect to any defined  benefit pension scheme, any final salary scheme or any death, disability or retirement  benefit calculated by reference to age, salary or length of service or any other item.  

 

  97    32.21 There is no material proceeding or claim (other than routine claims for benefits)  outstanding, pending or threatened against the administrators of the Disclosed Scheme,  or a Target Company, in connection with the Disclosed Scheme.  33. INFORMATION  33.1 The information contained in Schedules 1, 9, and 10 is true, complete and accurate in  all respects.  34. TAX  34.1 All Tax which a Target Company has been liable to pay or account for (including any  Tax that a Target Company has been liable to deduct or withhold or collect from any  payment by a Target Company) has been duly paid or accounted for to the relevant Tax  Authority within the time limits prescribed by law. No relevant Target Company is, nor  has in the past four years been, liable to pay or has paid any penalty, surcharge, fine or  interest in respect of Tax.  34.2 There is not currently and has not been, at any time within the last four (4) years, a  material dispute, disagreement, non-routine audit or enquiry with or by any Tax  Authority involving a Target Company and, so far as the Seller is aware, no such  dispute, investigation, audit or enquiry is threatened or likely to arise based on  circumstances currently existing.  34.3 Each relevant Target Company has, in the past four (4) years, within applicable time  limits made all returns and material claims, elections, disclaimers and notices  (including, for the avoidance of doubt, all claims, elections, disclaimers and notices the  making of which has been assumed for the purposes of the Base Balance Sheet as at the  Base Balance Sheet Date (including to the extent the Base Balance Sheet reflects DTA  Reliefs)), so far as the Seller is aware, on a proper basis, and, so far as the Seller is  aware, these were, when made, and remain true and accurate. Each Target Company  has provided all information and maintained all records in relation to Tax as it is  required to provide, make or maintain.  34.4 Each Target Company has kept and preserved complete, accurate and up-to-date  records and information as required by Applicable Law and sufficient to enable the  relevant Target Company to deliver correct and complete Tax returns.  34.5 Each Target Company has duly registered for VAT purposes where required by  applicable law to do so and has, in the past four 4 years, complied in all material respects  with all applicable legislation relating to VAT.  34.6 All documents in the possession or under the control of each Target Company to which  the relevant Target Company is a party and which are required to be stamped to  establish the relevant Target Company’s rights or title to any asset have been duly  stamped.  34.7 There are no encumbrances for Taxes upon any assets of any Target Company except  statutory liens for Taxes not yet due and payable.  

 

  98    34.8 Each Target Company is and has, since its incorporation, been resident for Tax purposes  solely in its jurisdiction of incorporation. No Target Company has a permanent  establishment or other taxable presence outside of its jurisdiction of incorporation.  34.9 The provisions or reserve for Tax appearing in the Base Balance Sheet have been  prepared in accordance with applicable accounting principles and, so far as the Seller  is aware, are sufficient to cover all Tax for which each Target Company is liable to pay  or account in respect of any period (or part-period) ended on or before the Base Balance  Sheet Date. No material Taxes have been incurred by any Target Company since the  Base Balance Sheet Date other than in the ordinary course of business.  34.10 No Tax Authority has agreed to operate any special arrangement (being an arrangement  not based on a strict and detailed application of the relevant legislation) in relation to  the affairs of any Target Company.   34.11 All clearances and consents obtained from any Tax Authority were based on full and  accurate disclosure of all the facts and circumstances material to the decision of the Tax  Authority of which the Seller was aware at the time. Each Target Company has  complied in all material respects with any conditions to which any such consents or  clearances are subject, and to the knowledge of the Seller has not taken any action which  might materially alter, prejudice or materially disturb any such consent or clearance,  nor, so far as the Seller is aware, will entry into this Agreement or Completion have  such an effect.  34.12 Neither entering into this Agreement nor Completion will result in a charge to  corporation tax, stamp duty, stamp duty land tax arising (including as a result of the  withdrawal of a Relief) for any Target Company in consequence of such Target  Company ceasing to be a member of a group with another person for Tax purposes.  34.13 No Target Company has been under any obligation to pay an increased sum in respect  of any amounts that it is obliged to deduct or withhold in respect of Tax in connection  with the repayment of any premium, interest or other amount comprised in any  Indebtedness of any Target Group Company that will be outstanding immediately after  Completion (other than to the extent such obligation arises as the result of change of  Tax residence of a Target Group Company after Completion).  34.14 No Target Company has at any time entered into or been party to any transactions,  schemes or arrangements which either were notifiable arrangements for the purposes  of Part 7 Finance Act 2004 or was a notifiable scheme for the purposes of Schedule 11A  VATA.  35. RELEVANT PROPERTY  35.1 The details of the Relevant Properties in Schedule 10 (Relevant Property) are true,  complete and accurate in all material respects.  35.2 The Relevant Properties are the only properties used or occupied by the relevant Target  Group Company or in which the relevant Target Group Company has an interest, right  or liability whether contingent or otherwise.  35.3 In relation to each Relevant Property,  

 

  99    (a) the Relevant Property is held by the relevant Property Owner under the terms  of the lease or licence particulars of which are set out in Schedule 10 (Relevant  Property) and the leases and licences referred to in Schedule 10 constitute the  entire agreement relating to occupation by the relevant Target Group Company  of the Relevant Property and there are no other agreements or arrangements  (written or unwritten) relating to the occupation by the relevant Target Group  Company;   (b) it is not subject to any mortgages, charges or other security, options or other  rights to acquire an interest in it and (where applicable) the relevant Property  Owner has in its possession all title deeds and documents necessary to prove its  title to the Relevant Property, free from lien;   (c) the relevant Property Owner is in possession and actual occupation of the whole  of the Relevant Property on an exclusive basis, and no right of occupation or  enjoyment has been granted or acquired or is the course of being granted or  acquired by any third party; and  (d) it is in a good and substantial state of repair and condition (fair wear and tear  excepted).  35.4 All sums due pursuant to the relevant lease or licence under which the Relevant  Properties are held, have been paid in full up to date as and when they became due.  35.5 No Property Owner or relevant Target Group Company has committed or has received  written notice of any material breach of, or material failure to comply with, any  covenants, obligations, conditions, or other obligations or restrictions relating to the  Relevant Properties which notice remains outstanding and, So far as each relevant  Seller is aware, there are no circumstances which may lead to any such notice being  served.  35.6 There are no outstanding disputes, actions, claims, demands or complaints in each case  of a material nature in respect of any Relevant Property nor is the relevant Seller aware  of any threatened or potential claim or action in relation to any Relevant Property which  is or would be material for the Target Group. 

 

  100    SCHEDULE 5    (LIMITATIONS ON LIABILITY)   1. THRESHOLD FOR WARRANTY CLAIMS  The Purchaser shall not be entitled to damages or other payment in respect of any  Warranty Claim unless and until the aggregate amount of all such claims exceeds  $1,250,000, but once the aggregate amount of all such claims has exceeded such sum,  the Seller shall be liable in respect of the full amount of all such claims and not only  the amount by which such sum is exceeded.  2. GENERAL  2.1 In respect of any Warranty Claim or Tax Covenant Claim, the Purchaser shall not be  entitled to claim for any indirect, punitive or consequential losses except to the extent  that any such damages are (a) payable to a third party not affiliated with the relevant  indemnified party or (b) solely with respect to consequential losses (including lost  profits), such losses are the reasonably foreseeable result of the event that gives rise  thereto, regardless of the form of action through which such damages are sought.   2.2 The Purchaser shall not be entitled to claim for a breach of a Warranty Claim if it had  actual knowledge of such breach prior to the date hereof.  2.3 Each provision of this Schedule shall be read and construed without prejudice to each  of the other provisions of this Schedule.  2.4 Nothing in any of the Share Purchase Documents shall or shall be deemed to relieve or  abrogate the Parties of any common law duty to mitigate any loss or damage.  2.5 The only Warranties given in respect of Tax are those contained in paragraph 34 (Tax)  of Schedule 4 (Warranties), and none of the other Warranties shall or shall be deemed  to be, whether directly or indirectly, a Warranty in respect of Tax and the Purchaser  acknowledges and agrees that the Seller does not make any other warranty as to Tax.  3. NOTICE AND TIME LIMITS FOR BRINGING CLAIMS   3.1 No Claim shall be brought against the Seller unless the Purchaser shall have given to  the Seller written notice of such Claim:  (a) in respect of any Claim other than a Fundamental Warranty Claim, Tax Claim,  or Indemnity Claim, no later than the later of: (i) 18 months from the  Completion Date, and (ii) the date on which the audit of the accounts of the  Target Group Companies for the financial year ending 31 December 2023 has  been completed;   (b) in respect of any Fundamental Warranty Claim, no later than seven years from  the Completion Date;   (c) in respect of any Indemnity Claim, no later than six years from the Completion  Date; and  

 

  101    (d) in respect of any Tax Claim, no later than seven years from the Completion  Date.  PROVIDED THAT the liability of the Seller in respect of a Warranty Claim shall  absolutely determine (if such Warranty Claim has not been previously satisfied, settled  or withdrawn) and such Warranty Claim shall be deemed to have been withdrawn and  no new Warranty Claim may be made in respect of the facts giving rise to such  Warranty Claim unless legal proceedings in respect of such Warranty Claim have been  commenced within twelve months of the giving of such notice and for this purpose  proceedings shall not be deemed to have been commenced unless they shall have been  properly issued and validly served upon the Seller and FURTHER PROVIDED  THAT such a Warranty Claim, once commenced, is progressed by the Purchaser as  quickly as reasonably practicable except:  (i) in the case of such a Warranty Claim based upon a liability which is  contingent or otherwise not capable of being quantified, in which case  the twelve-month period shall commence on the date that the contingent  liability becomes an actual liability or the liability is capable of being  quantified;  (ii) in the case of such a Warranty Claim where a member of the Purchaser’s  Group has a corresponding claim against an insurer or a corresponding  entitlement to recovery from some other person, in which case the  twelve-month period shall commence on the date that the corresponding  such claim or entitlement is finally settled or finally determined; or  (iii) in the case of such a Warranty Claim which has arisen as a result of such  a claim made against a member of the Purchaser’s Group, in which case  the twelve-month period shall commence on the date that such  underlying claim is finally settled or finally determined.  3.2 Any notice provided pursuant to paragraph 3.1 of this Schedule 5 shall be provided as  soon as reasonably practicable after the Purchaser becomes aware of any fact, matter or  circumstance that is reasonably likely to give risk to a Warranty Claim, specifying (in  reasonable detail) the matter which gives rise to the Warranty Claim or Tax Covenant  Claim, the nature of such Warranty Claim or Tax Covenant Claim and, if known to the  Purchaser, the amount claimed in respect thereof (detailing to the extent reasonably  practicable the Purchaser’s good faith calculation of the loss thereby alleged to have  been suffered by it or the relevant member of the Purchaser’s Group). Notwithstanding  the foregoing, no delay on the part of the Purchaser in notifying the Seller of such  matters shall relieve the Seller from any obligation or otherwise affect the rights of the  Purchaser unless (and then solely to the extent) that the Seller is actually prejudiced by  such delay.   4. NO LIABILITY FOR CONTINGENT OR NON-QUANTIFIABLE CLAIMS  4.1 If any Claim arises which, at the time such Claim is notified to the Seller in accordance  with paragraph 3.1 of this Schedule or Schedule 17 (Indemnities) (in respect (where  applicable) of an Indemnity Claim) is contingent only or otherwise not capable of being  quantified, then the Seller shall not be under any obligation to make any payment in  respect of such Claim unless and until such liability ceases to be contingent or becomes  

 

  102    capable of being quantified. So long as such Claim shall have been notified to the Seller  in accordance with paragraph 3.1 of this Schedule or paragraph 1.2 of Schedule 17  (Indemnities), as appropriate, then with respect to a Warranty Claim only the proviso  set out at paragraph 3.1(d)(i) of this Schedule shall operate to govern the time limit  within which legal proceedings must be commenced in respect thereof.  5. NO LIABILITY IF LOSS IS OTHERWISE COMPENSATED FOR   5.1 No liability shall attach to the Seller by reason of any Warranty Claim or Tax Covenant  Claim to the extent that the same loss has been recovered by the Purchaser or any  member of the Purchaser’s Group under any other term of this Agreement, the Tax  Covenant or pursuant to any other document entered into pursuant hereto and  accordingly the Purchaser may only recover once in respect of the same loss.  5.2 The Seller shall not be liable for any Warranty Claim or Tax Covenant Claim to the  extent that the subject of the claim has been or is made good or is otherwise  compensated for without cost to the Purchaser or any other member of the Purchaser’s  Group.  5.3 If any member of the Purchaser’s Group is or may be entitled to claim under any policy  of insurance in respect of any matter or event that is likely to give rise to a Warranty  Claim or Tax Covenant Claim, then without limiting the Purchaser’s right to make a  Warranty Claim or Tax Covenant Claim against the Seller the Purchaser shall (and shall  procure that the relevant member of the Purchaser’s Group shall) use all reasonable  endeavours to pursue such an insurance claim and any such insurance claim shall then  extinguish or reduce any such Warranty Claim or Tax Covenant Claim by the amount  so recovered (less all reasonable costs incurred by the Purchaser’s Group in recovering  such amount and any Tax computed by reference to the amount so recovered) (but, for  the avoidance of doubt, the foregoing shall not require the Purchaser to pursue any  claim arising under Part B of Schedule 15 (with respect to any DTA Reliefs Shortfall)  under the Warranty Insurance Policy).  5.4 If:  (a) the Seller pays to the Purchaser an amount in respect of a Warranty Claim or a  Tax Covenant Claim (a “Damages Payment”);  (b) the Purchaser or a member of the Purchaser’s Group subsequently recovers from  a third party (including an insurer) an amount which is referable to that  Warranty Claim or Tax Covenant Claim (a “Third Party Sum”);  (c) the receipt of the Third Party Sum was not taken into account in calculating the  Damages Payment; and  (d) the aggregate of the Damages Payment and the Third Party Sum exceeds the  amount required to compensate the Purchaser in full for the loss or liability  which gave rise to that Warranty Claim or Tax Covenant Claim (such excess  being the “Excess Recovery”),  then the Purchaser shall promptly and in any event within 10 Business Days of receipt  of the Third Party Sum pay to the Seller an amount equal to the lower of: (i) the Excess  

 

  103    Recovery; and (ii) the Damages Payment, in each case less all reasonable costs incurred  by the Purchaser’s Group in recovering such amount and any Tax computed by  reference to the amount so recovered.  6. ACTS OF PURCHASER  6.1 No Warranty Claim (other than a Tax Warranty Claim) shall lie against the Seller to the  extent that such Warranty Claim is attributable to:  (a) any voluntary act, transaction, or arrangement carried out at the express request  or direction of or with the prior written consent of the Purchaser or any member  of the Purchaser’s Group before Completion;  (b) any voluntary act, transaction, or arrangement carried out by the Purchaser or  by a member of the Purchaser’s Group on or after Completion other than an  admission of liability that is not in breach of this Schedule; or  (c) any admission of liability made in breach of the provisions of this Schedule by  the Purchaser or by a member of the Purchaser’s Group on or after Completion.  6.2 The Seller shall not be liable for any Warranty Claim (other than a Tax Warranty Claim)  which would not have arisen but for any reorganisation (including a cessation of the  whole or part of any trade) or change in ownership of any member of the Purchaser’s  Group or of any assets of any such member after Completion or change in any  accounting basis on which any member of the Purchaser’s Group values its assets or  any accounting basis, method, policy or practice of any member of the Purchaser’s  Group which is different from that adopted or used in the preparation of the Accounts.  7. THE COMPLETION BALANCE SHEET  No matter shall be the subject of a Warranty Claim, Tax Covenant Claim or Indemnity  Claim if and to the extent of any identifiable accrual, provision, reserve, or liability  (including as a reduction to the value of an asset) for such matter is recognised in the  Completion Balance Sheet or such matter has been otherwise taken account of or  reflected in the Completion Balance Sheet (including as a result of an accrual provision,  reserve or liability being recognised in the Completion Balance Sheet in respect of any  Tax that would have been saved but for the non-availability of the DTA Reliefs), save  that this paragraph 7 shall not limit the Seller’s liability for amounts in excess of the  relevant recognised accrual, provision, reserve or liability. For the purposes of this  paragraph 7, the expression “identifiable” in relation to the Completion Balance Sheet  means that which is identifiable, or which would be identifiable, through examination  of the accounts and the documents Disclosed to the Purchaser in folders 8 and 9 of the  Data Room.   8. FUTURE LEGISLATION  8.1 No liability shall arise in respect of any Warranty Claim or Tax Covenant Claim to the  extent that such liability occurs or is increased directly or indirectly as a result of:  (a) the passing of, or a change in, any law, rule, regulation, treaty, constitution,  order or administrative action not in force on the date of this Agreement;  

 

  104    (b) any change after the date of this Agreement of any interpretation or application  of any of the foregoing by any Regulatory Authority (or any Tax Authority); or  (c) the withdrawal of any extra-statutory concession or other agreement or  arrangement currently granted by or made with any Regulatory Authority (or  any Tax Authority) (whether or not having the force of law).  9. SOLE REMEDY FOR A BREACH OF WARRANTY  9.1 Except in the case of wilful misconduct, fraud or fraudulent misrepresentation, a claim  for breach of a Warranty shall be the sole and exclusive remedy available to the  Purchaser for any losses (including any losses from Warranty Claims for breach of  contract, warranty, tortious conduct (including negligence) or otherwise and whether  predicated on common law, statute, strict liability or otherwise) that it may at any time  suffer or incur, or become subject to, as a result of, or in connection with, any breach  of or inaccuracy with respect to any Warranty.  10. FORECASTS, ESTIMATES AND RESERVES  10.1 The Purchaser acknowledges and agrees that:  (a) the members of the Purchaser’s Group are responsible for assessing the extent  to which they require appropriate independent actuarial advice relating to the  purchase of the Shares and the terms of this Agreement, the Share Purchase  Documents and any other agreement or document to be executed pursuant to  this Agreement or any of the other Share Purchase Documents, and that the  members of the Purchaser’s Group are responsible for assessing the adequacy  of any actuarially determined reserves of any member of the Target Group or  the Syndicates;  (b) neither the Seller, any member of the Target Group or Retained Group nor any  of their respective Representatives gives or makes any warranty or  representation whatsoever as to the accuracy of the forecasts, assumptions,  estimates (including estimates of value), statements of intent or statements of  honestly expressed opinion provided to any of the members of the Purchaser’s  Group or their respective Representatives or by means of and any other  information supplied to or made available to the Purchaser in the course of the  Purchaser’s due diligence exercise on or prior to the date of this Agreement;   (c) none of the Warranties nor any other provision of any of the Share Purchase  Documents nor any other document to be executed pursuant to any of the Share  Purchase Documents shall be construed as a representation or warranty as to the  future fulfilment of any assumption. In particular, and without prejudice to the  generality of the foregoing, no representation or warranty is made as to the  adequacy of the amount of the reserves relating to any member of the Target  Group’s business;  (d) none of the Warranties nor any of the undertakings of the Seller given under any  of the Share Purchase Documents nor any other provision of any of the Share  Purchase Documents nor any other document to be executed pursuant to any of  

 

  105    the Share Purchase Documents shall be construed as a representation or  warranty as to the future fulfilment of any assumption; and  (e) notwithstanding anything otherwise contained in this Agreement or any of the  other Share Purchase Documents, no provision of this Agreement nor of any of  the other Share Purchase Documents, nor any other agreement or document to  be executed pursuant to this Agreement or any other Share Purchase Document,  shall be construed as constituting, directly or indirectly, such a representation  or warranty as to the adequacy of the amount of the reserves relating to the  business of any member of the Target Group or the Syndicates.  11. FRAUD  None of the limitations in this Schedule and Clause 8 shall apply to any Claim which  arises or is increased, or to the extent to which it arises or is increased, as the  consequence of, or which is delayed as a result of, wilful misconduct, fraudulent  misrepresentation or fraud on the part of the Sellers, any member of the Seller’s Group,  or any of their Representatives to the extent the Seller or any member of the Seller’s  Group shall be vicariously liable for the wilful misconduct, fraudulent  misrepresentation or fraud of any such Representative.   

 

  106    SCHEDULE 6    (PURCHASER WARRANTIES)  1. CAPACITY  1.1 The Purchaser is validly incorporated, in existence and duly registered under the laws  of its jurisdiction of incorporation and has the legal right, requisite power, authority and  capacity to execute and deliver, and to exercise its rights, enter into and perform its  obligations under this Agreement and the other Share Purchase Documents to which it  is a party.  1.2 The obligations of the Purchaser under this Agreement constitute, and the obligations  of the Purchaser under the other Share Purchase Documents to which it is party will,  when executed and delivered, constitute legal, valid and binding obligations of the  Purchaser in accordance with their respective terms.  1.3 The execution and delivery of, and the performance by the Purchaser of its obligations  under, this Agreement and the other Share Purchase Documents to which it is party will  not:  (a) result in a material breach of any provision of the memorandum or articles of  association of the Purchaser;  (b) result in a material breach of, or constitute a default under, any instrument to  which it is a party or by which it is bound;  (c) so far as the Purchaser is aware, result in a breach of any order, judgment or  decree of any court or governmental agency to which the Purchaser is a party or  by which the Purchaser is bound in any jurisdiction;   (d) except as expressly set out in Schedule 2 (Conditions to Completion), require  the consent, authorisation, licence or approval of or notice to the Purchaser’s  shareholders; or   (e) so far as it is aware, require any Regulatory Authority to authorise the execution,  delivery, validity, enforceability or admissibility in evidence of this Agreement  or the performance by the Purchaser of its obligations under this Agreement.  1.4 The execution and delivery of, and the performance by the Purchaser of its obligations  under this Agreement and the other Share Purchase Documents to which it is party will  not result in a material breach of, or constitute a default under, any instrument to which  the Purchaser is a party or by which the Purchaser is bound.  1.5 It is validly incorporated, in existence and good standing and duly registered under the  laws of its jurisdiction of incorporation and has been in continuous existence since its  incorporation.  1.6 The Purchaser is not insolvent or unable to pay its debts within the meaning of the  Insolvency Act 1986 or any other applicable insolvency legislation in any jurisdiction,  nor has it stopped paying its debts as they fall due.  

 

  107    1.7 No process is ongoing in any jurisdiction by or under which:  (a) the Purchaser has been or may be liquidated, dissolved or struck off or placed  into administration  (b) a person has been or may be appointed in connection with the enforcement of  any encumbrance over or affecting any of the assets or undertaking of the  Purchaser; or  (c) any composition in satisfaction of, or moratorium in respect of, the debts of the  Purchaser or any scheme of arrangement or compromise between it and its  creditors or any class of its creditors (including a restructuring plan under Part  26A of the Companies Act 2006) has been or may be put in place.    

 

  108    SCHEDULE 7    (CONDUCT OF TARGET GROUP’S BUSINESS BEFORE COMPLETION)  1. CONDUCT OF TARGET GROUP’S BUSINESS BEFORE COMPLETION  1.1 The acts and matters for the purposes of Clause 4.1 are as follows:  (a) make any material change in the nature or organisation of its business (including  any discontinuance or cessation of the operation of all or a material part of its  business, whether commencing or closing new lines of business or otherwise)  which would materially affect any of the Target Companies;  (b) enter into, materially amend or terminate any Material Contract (excluding  Insurance Contracts (and any other arrangements ancillary thereto including  binding agreements and delegations), Material Reinsurance Contacts and  Material Inwards Reinsurance Contracts) with any person;   (c) resolve to be voluntarily wound up or otherwise to enter into, establish,  commence or participate in, or agree to enter into, establish, commence or  participate in any plan or arrangement which would result in the complete or  partial dissolution, liquidation, merger, consolidation, restructuring,  recapitalisation or other reorganisation;  (d) appoint or dismiss (save for in the case of gross misconduct) or make any change  to the remuneration in excess of 5% of then current remuneration or any material  change to the other terms and conditions of employment (including change in  control benefits, severance arrangements, pension benefits or other benefits) of  any Senior Employee, save where required by Applicable Law;  (e) induce, or attempt to induce, any Senior Employee, whether directly or  indirectly, to terminate their employment;  (f) sell, transfer, auction or “drop” any rights to participate as a Member of  Syndicate 1200, or enter into any agreement to allow any person to share  (economically or otherwise) in a participation on Syndicate 1200, save for in  accordance with this Agreement;  (g) carry out the underwriting or reinsurance for and on behalf of the Members of  the Syndicates, (i) other than in accordance with the then current syndicate  business plan for the relevant Syndicate subject to such variations as would not  require Lloyd’s to agree to a variation to such plan;  (h) enter into any inter-syndicate loans or borrowings on behalf of Syndicate 1200  or permit Syndicate 1200 to enter into any new borrowings or facilities with any  person;  (i) make any material amendments to the investment strategy for investments held  by or on behalf of the Target Group for the Syndicate as in place at the date of  this Agreement, except as may be reasonably required to comply with  Clause 4.1;  

 

  109    (j) make any capital expenditure which together with all other capital expenditure  entered into between the date of this Agreement and Completion, exceeds the  sum of $2,000,000 in aggregate;  (k) create, allot or issue any shares or loan capital or securities or agree, arrange or  undertake to do any of those things;  (l) grant any option over or other right to subscribe, call (whether by subscription  or otherwise) or purchase, or redeem, buy back, repay or reduce, any share or  loan capital or securities of any Target Group Company or securities convertible  into any of the foregoing or vary any class rights attached to any Target  Company’s shares;  (m) create any Third Party Right over the Shares or Subsidiary Shares;  (n) redeem or purchase any uncalled or unpaid liability in respect of any shares, or  any capital redemption reserve, share premium account or other reserve that is  not freely distributable;  (o) capitalise any amount standing to the credit of any reserve or otherwise split,  combine, reclassify or reorganise its share capital or loan capital;  (p) authorise any transfer of shares;  (q) enter into any joint venture, consortium (other than Lloyd’s consortia) or  partnership;  (r) declare, authorise, make or pay any dividend or other distribution to  shareholders (whether in cash, stock or kind);  (s) alter, amend or vary any of the accounting principles, practices, estimation  techniques, measurement bases, procedures and policies (including in relation  to the exercise of accounting discretion or judgement or claims administration)  or reserving methodologies, assumptions, policies or principles of the Target  Companies unless such alteration, amendment or variation is required by  Applicable Law or relevant accounting requirements;  (t) enter into any new agreement or arrangements with any member of the Retained  Group (excluding fronting arrangements between any Target Company and any  member of the Retained Group in accordance with the Fronting Principles);  (u) change its residence for Tax purposes or establish any office, branch or  permanent establishment in any jurisdiction other than its jurisdiction of  incorporation;   (v) make or change any material Tax election applicable to a Target Company,  including any election to change the entity classification of any Group Company  for U.S. federal income tax purposes;   (w) other than as may be required or recommended by any legislative, regulatory,  accounting or Tax requirement or practice, change any annual Tax accounting  

 

  110    period, adopt or change any basis, accounting method, policy, principles or  practice relating to Tax or Tax accounting in any material way;   (x) other than as may be required by Applicable Law and is in the ordinary course  of business, materially amend, retract or re-submit any Tax return which has  previously been submitted to a Taxation Authority, or materially amend,  disclaim or revoke any Tax refund or Tax relief or any claim, surrender or  election relating to Tax which has previously been received or submitted or  notified to any Taxation Authority or otherwise given effect pursuant to  Applicable Law;  (y) settle, compromise, agree or materially negotiate any material audit, enquiry,  assessment, dispute or litigation relating to Tax with any Taxation Authority or  consent to any extension or waiver of the limitation period relating to Tax;  (z) sell, license, otherwise dispose of, terminate its to use, fail to renew or fail to  take any action to defend or preserve any Intellectual Property owned or used  by any of the Target Companies which is material to their business(es);  (aa) grant any guarantee or indemnity for the obligations of any person (other than  any member of the Target Group);  (bb) acquire or dispose of, or enter into any arrangement to acquire or dispose of,  any material assets, businesses or undertakings or any material revenues or  assume or incur, or agree to assume or incur, any material liability, obligation  or expense of the Target Group in each case otherwise than in the ordinary  course of business;  (cc) save in respect of any investment assets in respect of the insurance business of  any Target Company in accordance with the investment guidelines of the  applicable Target Company as of the relevant date, acquire or enter into an  agreement to acquire shares, capital stock, options, bonds, debentures or other  securities or the whole or any part of the undertaking of any person or  consolidate with any person, enter into any demerger transaction or participate  in any other type of corporate reconstruction;  (dd) save in respect of investment management actions in relation to FAL that are  consistent with practice prior to signing this Agreement, create or grant any  option, right to acquire, mortgage, charge, pledge, lien (other than a lien arising  by operation of law) or other form of security or encumbrance or equity on, over  or affecting the whole or any material part of its undertaking or assets (other  than rights arising under retention of title clauses in the ordinary course of  business);  (ee) incur any Indebtedness (other than the receipt of trade credit in the ordinary  course of business or pursuant to and in accordance with the limits subsisting at  the date of this Agreement);  (ff) lend any money (other than the granting of any trade credit in the ordinary  course of business) to any person (other than any member of the Target Group);  

 

  111    (gg) accelerate or delay the collection or payment of any account receivable or  account payable beyond or in advance of its due date, other than in the ordinary  course of business;  (hh) change its name or alter any part of its articles of association or equivalent  constitutional documents (or resolve to do so, except as otherwise required by  this Agreement);  (ii) fail to renew such insurance policies as are normally maintained by prudent  companies carrying on business similar to that of the Target Companies or do,  allow or procure any act or omission which would void or render voidable such  insurances;  (jj) amend any of its risk management or governance procedures or policies in any  material respect;  (kk) make any material change to its claims handling, processing and payment  policies, guidelines or practices (including with respect to the time for handling,  processing and paying claims), except as required by Applicable Law;  (ll) commence, discontinue, compromise or settle any litigation or arbitration  proceedings, where the settlement or compromise is likely to exceed:  (i) $5,000,000 in respect  of aggregate claims related to the Target  Companies’ insurance business (save that, for the purposes of the  Warranty set forth in  paragraph 7.6(f) of Schedule 4, such amount shall  be deemed to be $10,000,000);  (ii) $250,000 in respect of any other claim,  other than debt collection in the ordinary course of business;  (mm) agree to any compromise or settlement of any disciplinary or enforcement action  pursued by any Regulatory Authority in relation to the business of any member  of the Target Group or any Representative of the Target Group;  (nn) surrender, vary, limit, or allow to lapse any Regulatory Authorisation other than  Regulatory Authorisations that are de minimis to the Target Business;   (oo) make any new application for any new regulatory licences or permissions;  (pp) change its accounting reference date; or  (qq) enter into any agreement (conditional or otherwise) to do any of the foregoing.      

 

  112    SCHEDULE 8    (EMPLOYMENT)  1. RETAINED EMPLOYEES  1.1 For the purposes of this Schedule 8, “Retained Employees” shall mean those  employees employed by Argo Management Services Limited or any other Target  Company who do not work predominantly for, or are not assigned or dedicated to, the  business of the Target Companies, as agreed between the Parties prior to the date of this  Agreement.  1.2 At its sole cost and expense, the Seller or one of its Affiliates shall, no later than twenty  (20) Business Days prior to the Completion Date, either (a) terminate the employment  of the Retained Employees, or (b) make offers of employment to the Retained  Employees to take effect on the Completion Date (“Employment Offers”) with such  Employment Offers being made on employment terms that are the same or are in the  aggregate no less favourable than the terms of employment for each Retained Employee  immediately prior to or at Completion, or (c) enter into tripartite novation agreements  between Argo Management Services Limited, the member of the Retained Group to  become the employer, and the Retained Employees, to transfer all rights and obligations  arising from the contracts of employment of the Retained Employees to such member  of the Retained Group on or prior to Completion (each, a “Novation Agreement”).  1.3 In the event that, following Completion, the Seller or the Purchaser discovers that:   (a) any (i) Retained Employee; or (ii) other employee of any Target Company who  does not work predominantly for, or is not assigned or dedicated to, the Business  of the Target Companies, has not accepted the Employment Offer or entered  into a Novation Agreement; or   (b) any employee of the Retained Group is otherwise for whatever reason found to,  or claims to be, employed by a Target Company following Completion,   (in each case of subclauses (a) and (b) above, an “Out-of-Scope Employee”) the Seller  shall indemnify the Purchaser and the Target Companies against losses suffered or  incurred at any time by a the Purchaser or Target Company, in respect of the  employment or termination of any Out-of-Scope Employee in the period from  Completion until the termination of their employment in accordance with this Clause  1.3 and any notice, statutory or contractual redundancy or other contractual severance  costs or other reasonable amounts payable arising from or in relation to such  employment and/or termination of employment of any Out-of-Scope Employee,  provided that:  (i) the Purchaser promptly notifies the Seller that a Retained Employee has  not, or has alleged that they have not, transferred to the Retained Group  or that an employee of the Retained Group has transferred or alleged that  they have transferred to the Target Group;   (ii) within ten (10) Business Days of a notification under paragraph 1.3(a)  of Schedule 8 (the “Offer Period”) the Seller or a member of the Seller’s  

 

  113    Group may offer such Out-of-Scope Employee employment in the  Retained Group on the same terms; and  (iii) where the Seller (or a member of the Seller’s Group, if applicable) fails  to make an offer of employment, or the Out-of-Scope Employee rejects  such offer, the Purchaser will serve notice to terminate the employment  of such Out-of-Scope Employee within twenty (20) Business Days  following the expiry of the Offer Period. The Purchaser shall comply  with its obligations to conduct a fair termination process pursuant to  Applicable Law when carrying out such termination,   in each case, save where any losses arise directly from a discriminatory, fraudulent or  dishonest act or omission towards such Out-of-Scope Employee by the Purchaser  between the Completion Date and the date of termination of employment of such Out- of-Scope Employee.     

 

  114    SCHEDULE 9    (BASIC INFORMATION ABOUT THE TARGET GROUP)    [***]    

 

  115    SCHEDULE 10    (RELEVANT PROPERTY)  Particulars of Relevant Properties  [***]    

 

  116    SCHEDULE 11    (PREPARATION OF COMPLETION BALANCE SHEET)  1. DRAFT COMPLETION BALANCE SHEET AND NET ASSET STATEMENT  1.1 The Purchaser will procure that the following are prepared in accordance with the  provisions of this Schedule 11 and delivered to the Seller within 90 Business Days of  Completion:  (a) draft Completion Balance Sheet in the form included in Schedule 13 and  otherwise prepared in accordance with the provisions of paragraph 3 of this  Schedule 11 (the “Draft Completion Balance Sheet”); and  (b) a draft Net Assets Statement, substantially in the form set out in Part 3 of  Schedule 12 (the “Draft Net Assets Statement”).  2. COMPLETION BALANCE SHEET AND NET ASSET STATEMENT  2.1 Following delivery of the Draft Completion Balance Sheet and Draft Net Assets  Statement to the Seller and until the Completion Balance Sheet has been agreed or  determined in accordance with the provisions of this Schedule 11, the Purchaser shall,  and shall procure that each Target Company shall, give the Seller and its  Representatives reasonable access, at reasonable times and on reasonable notice, to all  records, working papers and other information relating to the Draft Completion Balance  Sheet and their preparation (including any such records, working papers and other  information held by their accountants and other advisers) to enable the Seller to agree  and determine the Completion Balance Sheet and Net Asset Statement.  2.2 The Seller will, before the end of 15 Business Days following receipt of the Draft  Completion Balance Sheet and Draft Net Assets Statement, notify the Purchaser in  writing that (i) it agrees with the Draft Completion Balance Sheet and Draft Net Assets  Statement, or (ii) it disagrees with the Draft Completion Balance Sheet and Draft Net  Assets Statement, setting out the items which it disputes and the basis upon which it  disputes such items (such notice, an “Objection Notice”). The Seller and the Purchaser  shall be deemed to have agreed on all amounts in the Draft Completion Balance Sheet  and the Draft Net Assets Statement that are not disputed in the Objection Notice.  2.3 If:  (a) the Seller agrees with the Draft Completion Balance Sheet and Draft Net Assets  Statement (either as original submitted by the Seller or after adjustments agreed  between the Seller and the Purchaser);  (b) the Seller fails to deliver an Objection Notice within the 15 Business Day period  referred to in paragraph 2.2; or  (c) the purported Objection Notice delivered by the Seller fails to set out the items  which the Seller disputes or the basis upon which it disputes such items,  

 

  117    then the Draft Completion Balance Sheet and Draft Net Assets Statement (incorporating  any agreed adjustments) shall constitute the “Completion Balance Sheet” and the “Net  Assets Statement” for purposes of this Agreement and shall be final and binding on the  Seller and the Purchaser.  2.4 If the Seller delivers an Objection Notice, then the Seller and the Purchaser shall  endeavour in good faith to agree on the matters in dispute set out in the Objection  Notice. To the extent that any matters in dispute are agreed by the Seller and the  Purchaser, these shall be deemed to form part of the Draft Completion Balance Sheet  and/or Draft Net Assets Statement.  2.5 To the extent the Seller and the Purchaser are unable to agree on all of the matters in  dispute set out in the Objection Notice within 15 Business Days of the Objection Notice  having been received by the Purchaser, the matters set out in such Objection Notice  remaining in dispute, and no other matters, may be referred by either the Seller or the  Purchaser to a firm of internationally recognised independent chartered accountants  jointly agreed upon between the Seller and the Purchaser or (failing such agreement)  appointed, at the request of either the Seller or the Purchaser at any time, by the  President from time to time of the Institute of Chartered Accountants in England and  Wales, which firm (the “Independent Accountants”) shall then determine the  remaining matters in dispute.  2.6 The following terms of reference will apply to any such appointment of Independent  Accountants:  (a) the Independent Accountants shall be instructed to notify the Seller and the  Purchaser in writing of its determination of the matters in dispute as soon as is  reasonably practicable;  (b) in giving such determination, the Independent Accountants shall state what  adjustments (if any) are necessary to the Draft Completion Balance Sheet and  Draft Net Assets Statement in respect of each of the matters in dispute set out  in the Objection Notice and remaining in dispute, and no other matters, in order  to comply with the requirements of this Agreement;  (c) the Seller and the Purchaser shall be entitled to make written submissions to the  Independent Accountants, but subject thereto, the Independent Accountants  shall have power to determine the procedure to be followed in relation to its  determination;  (d) in making such submissions the Seller and the Purchaser shall state their  respective best estimates of monetary amounts of the matters referred for  determination;  (e) any such Independent Accountants shall act as an expert (and not as an  arbitrator) in making any such determination, which shall in the absence of  manifest error be final and binding on the parties; and  (f) the expenses of any such determination by the Independent Accountants shall  be borne between the Seller and the Purchaser in such proportions as the  

 

  118    Independent Accountants shall in its discretion determine, or, failing such  discretion, equally between the Seller and the Purchaser.  2.7 The Seller and the Purchaser shall each use reasonable endeavours to procure that all  records, working papers and other information within their respective possession or  control as may be reasonably required by the Independent Accountants for the purposes  of this Schedule 11 are promptly made available to the Independent Accountants, and  each of the Seller and the Purchaser shall generally render all assistance reasonably  necessary for the determination of the Completion Balance Sheet and the Net Asset  Statement by the Independent Accountants.  2.8 Nothing in this paragraph 2 shall entitle a Party or the Independent Accountants access  to any information or document which is protected by legal professional privilege, or  which has been prepared by the other party or its accountants and other professional  advisers with a view to assessing the merits of any claim or argument, provided that a  Party shall not be entitled by reason of this paragraph 2.8 to refuse to supply such part  or parts of documents as contain only the facts on which the relevant claim or argument  is based.  2.9 Each Party shall, and shall procure that its Representatives shall, and shall instruct the  Independent Accountants to, keep all information and documents provided to them  pursuant to this paragraph 2 confidential and shall not use them for any purpose, except  for disclosure or use in connection with the agreement and determination of the  Completion Balance Sheet and the Net Asset Statement, the proceedings of the  Independent Accountants or any other matter arising out of this Agreement or in  defending any claim or argument or alleged claim or argument relating to this  Agreement or its subject matter.  2.10 Any determination of the Independent Accountants under paragraph 2.6 shall be  deemed to be incorporated into the Draft Completion Balance Sheet and the Draft Net  Assets Statement, which, as adjusted by the alterations so determined by the  Independent Accountants (if any), shall constitute the “Completion Balance Sheet” and  the “Net Asset Statement” for purposes of this Agreement and shall be final and binding  on the Seller and the Purchaser.  3. BASIS OF PREPARATION  3.1 The Completion Balance Sheet shall be drawn up in accordance with:  (a) the following specific policies, bases, methods, practices and procedures:  (i) the Completion Balance Sheet shall be prepared in U.S. dollars.  Conversion of all other currency values into U.S. dollars for this purpose  shall be made using the applicable Exchange Rate for each relevant  currency as at the Completion Date;  (ii) the Completion Balance Sheet shall reflect the position of the Target  Group Companies as at the close of business on the Completion Date,  which shall be treated as (A) the end of a financial reporting period  (including performance of all normal year-end accounting procedures)  and (B) the end of a tax accounting period;  

 

  119    (iii) the Completion Balance Sheet shall be prepared on the basis that the  Target Group is a going concern;   (iv) the Completion Balance Sheet shall be prepared on the basis set out in  the below.   (b) to the extent not inconsistent with paragraph (a) above, be prepared on a  consistent basis and using the same accounting and actuarial policies, principles,  estimation techniques, measurements bases, practices and procedures utilised in  the preparation of the Base Balance Sheet.  (c) To the extent not inconsistent with paragraphs (a) and (b)above, be prepared in  accordance with US GAAP applied consistently with its application to the Base  Balance Sheet.  3.2 The Completion Balance Sheet will represent the consolidated balance sheet for AUA,  inclusive of legal and adjusting entities listed in Annex 1 to this Schedule II.   Subsidiary balance sheets in the perimeter file are to be extracted from the general  ledger (“GL”) as of the Completion Date with inter-company eliminations associated  with those entities within the perimeter being included to achieve a consolidated  presentation at the AUA level. The subsidiary balance sheets will be prepared in  accordance with U.S. GAAP.  3.3 The Completion Balance Sheet will also include the following six transactions (in  respect of which pro forma adjustments have been included in the Base Balance Sheet  for information and demonstrative purposes based on the terms and conditions outlined  in this Agreement:  (a) Bermuda Property Quota Share – Quota share ceded to ARL for the net  Bermuda property business retained by Argo (No. 604) Limited and Nomina  No 550 LLP under the D&F/Casualty Reinsurance Agreement in the Agreed  Form.  (b) [***]  (c) [***]  (d) Political Risk and Trade Credit – Adverse Development Cover (ADC) – ADC  cover provided by ARL for agreed covers in respect of political risk and trade  credit business under the TPV/PRI Reinsurance Agreement in the Agreed  Form.  (e) U.S. Casualty Quota Share – Quota share ceded to ARL for the net U.S.  casualty business retained by Argo (No. 604) Limited and Nomina No 550  LLP under the D&F/Casualty Reinsurance Agreement in the Agreed Form.  (f) Political Violence and Terrorism – Adverse Development Cover and Quota  Share – cover provided by ARL for agreed covers in respect of political  violence and terrorism business under the TPV/PRI Reinsurance Agreement in  the Agreed Form.  

 

  120           

 

  121    Annex 1  Entities comprising the perimeter:  Argo Global Underwriting Limited (Dubai)  Argo Underwriting Agency  Argo Managing Agency  Argo Direct Limited  Argo Management Services  Argo Global Underwriting Asia  Nameco - Ordinary Shareholder – Company 604  Nameco - A Shareholder – Company 616  Nameco - Hannover – Company 607  Nameco - Berkshire Hathaway – Company 617  Nameco - Everest – Company 703  Nameco - XL – Company 704  Nameco - Sompo – Company Alpha  Nameco - Nomina 550 LLP - Company  Nameco-Sadu Re – Company Chi  Nameco - ANDI – Company Delta  Nameco - Epsilon - Company  Nameco - Zeta - Company  Affinibox, Inc.  Ariel P&C  Nameco-ACML1910        

 

  122    SCHEDULE 12    (BASE BALANCE SHEET)  [***]    

 

  123    SCHEDULE 13    (FORM OF COMPLETION BALANCE SHEET)  [***]      

 

  124    SCHEDULE 14    (REINSURANCE PROTOCOLS)  [***]    

 

    SCHEDULE 15    (TAX COVENANT)   PART A  1. DEFINITIONS AND INTERPRETATION  1.1 In this Schedule 15, unless the context requires otherwise:  “Accounting Period” means any period by reference to which any income, profits or  gains, or any other amounts relevant for the purposes of Tax, are measured or  determined;   “Accounts Relief” means:   (a) a Relief (including any Right to Repayment) that has been treated as an asset in  the Completion Balance Sheet, other than any DTA Relief.; or  (b) a Relief which has been taken into account in computing a provision for deferred  Tax which appears in the Accounts or which has resulted in no provision for  deferred Tax being made in the Accounts, other than any DTA Relief;  “Actual Tax Liability” means any liability of any Target Company (including any  increase in any liability of a Target Company) to make or suffer an actual payment of,  in respect of or on account of Tax with the amount of the Tax Liability being the amount  of the actual liability to make or suffer such payment;  “DTA Relief” means such Relief or Reliefs treated as a deferred tax asset in the Base  Balance Sheet and (collectively) giving rise to and being assumed (for the purposes of  the Base Balance Sheet) to have a value equal to the DTA Assumed Savings Amount;  “DTA Assumed Savings Amount” means $33,500,000 (being the amount of Tax  which, as at the Base Balance Sheet Date, is determined for the purposes of the Base  Balance Sheet (using reasonable assumptions) as being potentially capable of being  saved with respect to Events or income, profits or gains earned, accrued or received  after the Base Balance Sheet Date as a result of the use or set off of DTA Reliefs);  “Effective Tax Liability” has the meaning given in paragraph 1.2 of Part A of this  Schedule 15;   “Event” includes, without limitation, any act, omission, event, circumstance or  transaction and includes, without limitation, the declaration or making of any  distribution, the making of any loan, the acquisition or disposal of any asset, the making  of any supply or payment, becoming or ceasing to be a member of any group or  partnership or any other association for any purpose, the death of any individual, any  change in the residence of any person for Tax purposes, the expiry of any period of  time, the entering into and performance of this Agreement, satisfaction of any condition  pursuant to this Agreement and Completion;  

 

    “non-availability” (and derivative terms) includes and relates to loss, reduction,  modification, cancellation, nullification, disallowance, clawback, non-payment, non- availability (including non-availability ab initio) and non-existence;  “Purchaser’s Group” means the Purchaser and any companies within the same group  or association of companies as the Purchaser for any relevant Tax purposes, including  without limitation a Target Company after the Completion Date;  “Purchaser’s Relief” means:   (a) any Relief arising at any time to the Purchaser or to any member of the  Purchaser’s Group (other than a Target Company);   (b) any Relief of a Target Company to the extent that the same arises as a  consequence of or by reference to an Event occurring after Completion or by  reference to any period ending or any income, profits or gains earned, received  or accrued after Completion;  (c) any Accounts Relief; or  (d) any DTA Relief.  “Relief” means any relief, loss, allowance, claim, credit, exemption, deduction, set off,  or Right to Repayment or payment of or in respect of Tax or relevant to the computation  of Tax, and any reference to the ‘use or set-off’ of a Relief shall be construed  accordingly and shall include use or set-off in part;  “Right to Repayment” means any right to repayment of or in respect of Tax and  includes any repayment supplement or interest in respect thereof;  “Tax Authority Interaction” means:  (a) any claim, notice, demand, assessment, determination, letter or other document  issued or any other action taken by or on behalf of any Tax Authority; or   (b) the preparation, amendment or submission to a Tax Authority after Completion  of any return, computation or assessment by or on behalf of any Target Group  Company;  from which it appears that the Purchaser has or may have a claim against the Seller  under Part B of this Schedule 15; and  “Tax Liability” means any Actual Tax Liability or Effective Tax Liability.   1.2 In this Schedule, “Effective Tax Liability” shall mean the use or set-off of any  Purchaser’s Relief against any Tax or against income, profit or gains earned, accrued  or received in circumstances where, but for such utilisation or set-off, an Actual Tax  Liability would have arisen in respect of which the Seller would have been liable to the  Purchaser under this Schedule disregarding the financial limitations in Schedule 5.  

 

    1.3 The value of an Effective Tax Liability shall (for the purposes of the covenant set out  in paragraph 2 of this Schedule) be the amount of Tax saved by such use or set-off of a  Purchaser’s Relief.  1.4 In this Schedule 15:  (a) references to “income, profits or gains” earned, accrued or received on or  before a particular date or in respect of a particular Accounting Period or part  of an Accounting Period includes income, profits or gains which are deemed for  the purposes of any Tax to have been earned, accrued or received at or before  that date or in respect of that Accounting Period or that part of an Accounting  Period;  (b) references to an “Event” occurring on or before a particular date shall include  an Event deemed for the purposes of any Tax to occur or which is otherwise  treated or regarded as occurring on or before such date, and references to an  Event occurring after a particular date shall include an event deemed for the  purposes of any Tax to occur or which is otherwise treated or regarded as  occurring after such date;  (c) any reference to an Event occurring on or before Completion includes a series  or combination of Events one or more of which occur or occurred on or before  Completion provided that any such Event before Completion occurs outside the  ordinary course of the relevant Target Company’s business and any such Event  on or after Completion occurs in the ordinary course of the relevant Target  Company’s business as carried on at Completion, pursuant to a legal obligation  entered into before Completion or as a consequence of any action taken by, on  behalf of or at the direction of the Seller;  (d) the Accounting Period of a Target Company current at the time of Completion  shall be deemed to end at that time so that:  (i) any Event occurring on the same day as, but after the time of,  Completion shall be regarded as occurring in another Accounting  Period; and  (ii) a Relief arising by reference to an Event occurring in the Accounting  Period of a Target Company current at the time of Completion shall be  apportioned by reference to whether an Event in respect of which that  Relief arises occurred on or before Completion or after Completion.  2. COVENANT  2.1 Subject to paragraph 3 of this Schedule 15, Clause 10 and Schedule 5, the Seller  covenants to pay to the Purchaser an amount equal to:  (a) any Actual Tax Liability arising:  (i) in connection with or as a consequence of an Event which occurred on  or before Completion; or  

 

    (ii) in respect of or with reference to any income, profits or gains which were  earned, accrued or received on or before Completion;   (b) the value of any Effective Tax Liability;  (c) any liability of any Target Company to make any payment or repayment or to  surrender any Purchaser’s Relief, in each case to any party other than a Target  Company, pursuant to group relief, group payment, tax consolidation or other  tax grouping arrangements entered into before Completion; and   (d) any reasonable costs and expenses suffered or incurred by the Purchaser and/or  a Target Company in connection with any Tax Liability or other liability as is  mentioned in this paragraph 2 (or claim for such Tax Liability or other liability).  3. EXCLUSIONS  3.1 The covenant in paragraph 2 of Part A of this Schedule 15 does not apply in respect of  a Tax Liability (and there shall be no Claim for a breach of any Tax Warranty in respect  of a Tax Liability) to the extent that:  (a) the Tax Liability was paid or discharged before Completion and such payment  or discharge has been reflected in the Completion Balance Sheet;  (b) the relevant Tax Liability has been settled or discharged on or before  Completion without cost or loss to the Purchaser or any Target Company;   (c) payment has already been made in respect of the relevant liability under this  Agreement, or pursuant to a statutory right of recovery;  (d) the relevant Tax Liability would not have arisen but for a voluntary act or  transaction of any Target Company or the Purchaser after Completion, in  circumstances where the Purchaser or any member of the Purchaser’s Group or  any Target Company knew or ought reasonably to have known that the act or  transaction would give rise to the Tax Liability in question, other than an act or  transaction which: (i) is in the ordinary course of business carried on by the  relevant Group Company at Completion; or (ii) the relevant Target Company  was legally committed to do under a commitment that existed on or before  Completion; or (iii) is required to comply with any law or the published practice  of any Tax Authority, or any regulatory, financial reporting or accounting  practice or requirement whether coming into force or existing before, on or after  Completion; or (iv) could not reasonably have been avoided;  (e) the relevant Tax Liability would not have arisen or would have been reduced or  eliminated but for a failure or omission on the part of any Target Group  Company to make an election, claim, surrender or disclaimer on or after  Completion the making or claiming of which was properly taken into account  in computing the provision for Tax in the Completion Balance Sheet and  expressly notified as such to the Purchaser within a reasonable amount of time  in order for the Target Company or the Purchaser to make such claim, election,  surrender or disclaimer;  

 

    (f) the relevant Tax Liability would not have arisen but for the withdrawal or  amendment by the Purchaser or any Target Company after Completion of any  election, claim, surrender, disclaimer, notice or consent validly made before  Completion by the Target Company in relation to any Relief; or  (g) any Relief (other than a Purchaser’s Relief) is or has been made available and  can be utilised at no cost or loss to the relevant Target Company in order to  eliminate or reduce a liability of any Target Company to make an actual  payment of taxation, to the extent such liability to make an actual payment of  Taxation would have arisen but for such Relief being or being made so  available.  4. DATE FOR PAYMENT  4.1 Where the Seller becomes liable to make any payment pursuant to a Tax Claim under  this Schedule 15, the Seller shall pay to the Purchaser in cleared funds the amount  claimed or in question on the later of the date falling five (5) Business Days after  demand is made for such amount to be paid and:  (a) where the Tax Claim involves the Purchaser or a Target Company having a  liability to make a payment to any Tax Authority, the fifth (5th) Business Day  before the date on which the amount in question is due and payable to the  relevant Tax Authority without any interest, penalty, fine or surcharge arising  in respect of it;  (b) where the Tax Claim is in respect of the utilisation or set-off of a Purchaser’s  Relief, the fifth (5th) Business Day after the date on which the Tax in question  would have been due and payable (without any interest, penalty, fine or  surcharge arising in respect of it) but for such utilisation or set-off; and  (c) where the Tax Claim is in respect of the DTA Reliefs Shortfall, the fifth (5th)  Business Day after the date of the determination of non-availability of the  relevant DTA Reliefs as is mentioned in paragraph 1.2 of Part B of Schedule  15.  4.2 Where the Seller is liable to make any payment under this Schedule 15, the date for the  payment of which is not determined pursuant to the foregoing provisions of this  paragraph 4 (including, without limitation, where the Seller is liable to make any  payment pursuant to Part B of this Schedule 15), the Seller shall pay to the Purchaser  in cleared funds the amount in question on the fifth (5th) Business Day after demand is  made for such amount to be paid.  4.3 Any sum not paid by the Seller on a date determined pursuant to the foregoing  provisions of this paragraph 4 shall bear interest on that sum from the due date until the  date when the payment is actually made calculated on a daily basis at the rate of two  per cent. (2%) per annum above the base lending rate from time to time of Barclays  Bank plc. Such interest shall be paid as soon as reasonably practicable after the demand  of the Purchaser.  

 

    PART B  5. DTA RELIEFS COVENANT  5.1 Subject to paragraph 5.3 of Part B of this Schedule 15, Clause 10 and Schedule 5, the  Seller covenants to pay to the Purchaser an amount equal to:  (a) the amount of any DTA Reliefs Shortfall; and  (b) any reasonable costs and expenses properly suffered or incurred by the  Purchaser and/or a Target Company in connection with establishing the amount  of any DTA Reliefs Shortfall and bringing a successful claim pursuant to this  Part B of Schedule 15.  5.2 For the purposes of this Part B of Schedule 15, a “DTA Reliefs Shortfall” shall mean  the amount by which the DTA Assumed Savings Amount would have been reduced as  at the Base Balance Sheet Date if any DTA Reliefs which are (at any time) determined  as a result of any Tax Authority Interaction which:   (a) in the case of a Tax Authority Interaction falling within limb (a) of the definition  thereof, has been finally settled or compromised with the relevant Tax  Authority; or  (b) in the case of a Tax Authority Interaction falling within limb (b) of the definition  thereof, has been submitted to the relevant Tax Authority in circumstances in  which the Seller has been given notice of the relevant Tax Authority Interaction  and afforded the opportunity to exercise its rights under paragraph 1.5 of this  Part B of Schedule 15 with respect thereto;  to have been non-available only as at the Base Balance Sheet Date (and, for the  avoidance of doubt, without reference to any Event after the Base Balance Sheet Date  which may result in such DTA Reliefs becoming non-available) and had not been taken  into account in computing the DTA Assumed Savings Amount as at the Base Balance  Sheet Date (but with the DTA Assumed Savings Amount otherwise being calculated  on the basis of the same assumptions).  5.3 If the Purchaser or a Target Company becomes aware of any Tax Authority Interaction  or any other circumstance which gives or may give rise to a claim under this Part B of  Schedule 15, the Purchaser shall or the Purchaser shall procure that a Target Company  shall, as soon as reasonably practicable and in any event within ten (10) Business Days,  give written details of the relevant matters to the Seller but such notice shall not be a  condition precedent to the liability of the Seller except to the extent that any amount  due under paragraph 5.1 of this Part B of Schedule 15 is increased by such failure.  5.4 If the Seller so requests in writing, the Purchaser shall or shall procure that a Target  Company shall supply the Seller with such available and relevant details,  documentation, correspondence and information and shall (subject to paragraph 5.5)  take such action as the Seller may reasonably request in writing to negotiate, avoid,  dispute, resist, compromise, defend or appeal against the Tax Authority Interaction  (including, with respect to a Tax Authority Interaction falling within limb (b) of the  

 

    definition thereof, by making such reasonable amendments to any relevant return,  computation or assessment (or draft thereof) as the Seller may request), provided that:  (a) the Seller shall not be entitled to require a Target Company to delegate the  conduct of such action (or any part of it) to itself or any agent or professional  adviser of the Seller; and  (b) the Seller shall first indemnify any Target Company and the Purchaser to the  reasonable satisfaction of the Purchaser against any loss, damages, reasonable  costs and expenses, and liabilities (including any additional Tax) which may be  suffered or incurred as a consequence of any action taken in accordance with  this paragraph 5.4.  5.5 If the Seller does not request the Purchaser or a Target Company to take action pursuant  to paragraph 5.4 within 15 Business Days of a notice of claim being given in accordance  with paragraph 5.3, or the Seller fails to indemnify the Purchaser or a Target Company  concerned as provided for in paragraph 5.4 above, the Purchaser or a Target Company  shall be free to conduct and settle such Tax Authority Interaction on such terms as they  may in their absolute discretion think fit without further reference to the Seller.  5.6 The Purchaser shall keep the Seller reasonably informed of the progress in pursuing  and settling the relevant Tax Authority Interaction and shall, as soon as reasonably  practicable, forward or procure to be forwarded to the Seller copies of (or the relevant  parts of) all material correspondence pertaining to the Tax Authority Interaction.   5.7 The Purchaser shall not be obliged to take or procure the taking of the following actions:  (a) contesting any Tax Authority Interaction falling within limb (a) of the definition  thereof before any tribunal, court or other appellate body unless, at the sole  expense of the Seller, the Seller obtains the written opinion of Tax counsel of at  least 10 years call after disclosure of all relevant information and documents  and having regard to all the circumstances, that the action has a reasonable  prospect of success;  (b) taking any action or procuring the taking of any action (including agreeing to  the settlement or compromise of any Tax Authority Interaction or any proposal  for the same) which it reasonably considers (i) may be materially prejudicial to  the Tax affairs of the relevant Target Company, the Purchaser or any member  of the Purchaser’s Group or (ii) is contrary to the legal obligations of a Target  Company; or  (c) taking any action against any person who is at the time in question either an  employee or director of any member of the Purchaser’s Group, or any company  that is at the time in question a member of the Purchaser’s Group.  5.8 If it is alleged by any Tax Authority in writing, or there is any pending investigation or  any Court judgment, that the Seller (at any time) or a Target Company (prior to the  Completion Date) has committed any act or omission constituting fraud or gross  negligence relating to the availability of the DTA Reliefs, paragraphs 5.4 to 5.7 shall  not apply and the Seller shall cease to have any rights under that paragraph.  

 

       

 

    SCHEDULE 16 (BUSINESS LINES)              Major Line of Business  (MLOB)       Class of Business  (COB)   Casualty (CAS) General Casualty for US customers only  Commercial General Liability  Financial Lines (FL) Management Liability (Directors and Officers/Financial  Institutions)  Professional Liability (E&O)  Property (PROP) Property  Specialty (SPEC) Cyber  Marine Cargo  Transactional Liability  Accident & Health  

 

    SCHEDULE 17(INDEMNITIES)  6. INDEMNITIES  6.1 The Seller undertakes to the Purchaser to irrevocably and unconditionally indemnify  the Purchaser against, and keep the Purchaser indemnified against, and covenants to  pay to the Purchaser an amount in cash equal to any and all Losses suffered, sustained,  incurred or paid by the Purchaser, any of its Affiliates or any Target Group Company  arising out of, or in connection with:  (a) any Excluded Liability;   (b) any Covered Liabilities arising out of or relating to the Indemnity Dormant  Companies excluding:  (i) any Covered Liability in respect of (and to the extent to) which there is  specific, identifiable on its face allowance, provision or reserve included  in the Completion Balance sheet in respect of the relevant Indemnity  Dormant Company; and  (ii) any Covered Liability which comprises a liability, cost, expense  (including any accounting, filing or regulatory fee) or other payment  relating to the ordinary course maintenance and administration of the  relevant Indemnity Dormant Companies;  (c) any Covered Liabilities arising out of or relating to any sanction imposed by  OFAC (whether by way of fine, civil monetary penalty or other financial  imposition) in respect of the non-USD payment of £41,694.02 dated 13 April  2020 and made by Syndicate 1910 (on behalf of Ariel Re Bda Limited) in  connection with the 2015 allision by a Singapore-flagged vessel named M/T  Alpine Eternity with an Iranian-owned gas platform in the Persian Gulf (the  “OFAC Matter”);   (d) any Covered Liabilities arising out of or relating to the Services Agreement  dated 13 November 2018, entered into between ArgoGlobal Assicurazioni  S.p.A and Argo Management Services Limited to the extent not adequately and  specifically provided for in the Base Balance Sheet and/or the Completion  Balance Sheet;  (e) any Covered Liabilities arising out of or relating to the operation or conduct of  the business of, formation, investment or any action, inaction or omission or  Syndicate 1910 or Syndicate 6117 or any member thereof in their role as such  a member; and  (f) any Covered Liabilities arising out of or relating to the 'global’ letter of claim  from Rubric Lois king Solicitors dated 26 May 2022 (the “Letter of Claim”),  including, for the avoidance of doubt, the facts or circumstances underlying the  Letter of Claim, any appeals arising from the Letter of Claim, any parallel,  consolidated or ancillary proceedings (including proceedings initiated by a  Regulatory Authority) arising from Letter of Claim, and any other proceedings  

 

    that arise from the same facts and circumstances as those set forth in the Letter  of Claim..  6.2 No claim under paragraph 6.1 shall be brought against the Seller unless the Purchaser  shall have given to the Seller written notice of such claim in accordance with paragraph  3 of Schedule 5 (Limitations of the Seller’s Liability) not later than 6 years from the  date of this Agreement.  7. GENERAL TERMS   7.1 In the event of any conflict between this paragraph 2 of Schedule 17 (Indemnities) and  Schedule 5 (Limitations of the Seller’s Liability), this paragraph 2 of Schedule 17  (Indemnities) shall take precedence.   Insurance recovery   7.2 In respect of any Indemnification Claim made in respect of the OFAC Matter only, if  any member of the Purchaser’s Group is or may be entitled to claim under any policy  of insurance in respect of such Indemnification Claim, the Purchaser shall (and shall  procure that the relevant member of the Purchaser’s Group shall) use all reasonable  endeavours to pursue such an insurance claim and any amount recovered pursuant to  such insurance claim (an “OFAC Insurance Recovery”) shall, if recovered prior to  determination of the Indemnity Claim, then reduce (or, if applicable, extinguish) the  relevant claim in respect of the OFAC Matter by the amount so recovered (less all  reasonable costs incurred by the Purchaser’s Group in recovering such amount and any  Tax computed by reference to the amount so recovered).   7.3 In the event that any member of the Purchaser’s Group makes an insurance recovery  (including an OFAC Insurance Recovery) in respect of the claim under paragraph 1.1  in respect of which the Purchaser previously recovered an amount from the Seller as a  result of a claim in respect of  paragraph 1.1 (the “Relevant Claim”), the Purchaser  shall pay to the Seller an amount equal to the lesser of the amount of any such insurance  recovery (less all reasonable costs incurred by the Purchaser’s Group in recovering such  amount and any Tax computed by reference to the amount so recovered) and the amount  recovered from the Seller under the Relevant Claim.  For the avoidance of doubt, no  member of the Purchaser’s Group shall (save as provided for under paragraph 2.1  above) be obliged to pursue any such insurance recovery as a condition to bringing a  claim for indemnity under paragraph 1.1.  7.4 The Purchaser agrees to assign any rights of recovery that any of the Target Companies  may have from Ariel Re after Completion in respect of the OFAC Matter to the Seller  or a designee nominated by the Seller, but only to the extent of any amounts actually  paid by the Seller to a Target Company in respect of the OFAC Matter provided that,  where the Seller is advised by external legal counsel that the continued existence of any  such right of recovery would be prejudiced by a recovery under the indemnity in  paragraph 1.1(c) above, the parties shall acting in good faith (and at the expense of the  Seller) seek to agree such alternative way of proceeding as preserves such right of  recovery.  Third Party Claims and Consultation  

 

    7.5 Upon the Purchaser or any member of the Purchaser’s Group becoming aware of any  claim, action or demand against it by any third party likely to give rise to any claim  under this Schedule 17 (Indemnities), the Purchaser shall, and shall procure that the  relevant member of the Purchaser’s Group shall, as soon as practicable and in any event  within 10 Business Days of becoming aware of such claim notify the Seller by written  notice in accordance with paragraph 3 of Schedule 5 (Limitations of the Seller’s  Liability).  Notwithstanding the foregoing, no delay on the part of any member of the  Purchaser’s Group in notifying the Seller of such matters shall relieve the Seller from  any obligation or otherwise affect the rights of the Purchaser unless (and then solely to  the extent) that the Seller is actually prejudiced by such delay.  7.6 The Purchaser shall, and shall procure that each relevant member of the Purchaser’s  Group shall, in respect of any claim, action or demand against it by any third party  likely to give rise to any claim under paragraph 1.1(c) in this Schedule 17 (Indemnities):  (a) consult with the Seller in good faith with respect to the conduct by the Purchaser  of any member of the Purchaser’s Group of any such claim;   (b) subject to Clause 28, promptly take such action and give such information and  access to personnel, premises, books, records and documents (including in  electronic form) (which the Purchaser shall procure are preserved) to the Seller  or other relevant member of the Retained Group and their professional advisers  as the Seller or such other relevant member of the Retained Group may  reasonably request from time to time in order to facilitate the Seller’s  consultations with the Purchaser in respect of the conduct of any such claim;  (c) make no admission of liability, agreement, settlement or compromise with any  third party in relation to any such claim, action or demand or adjudication  without first consulting with the Seller; and  (d) at the Seller’s sole cost and expense, take or procure that there is taken all  reasonable endeavours to mitigate any loss suffered by it or any member of the  Purchaser’s Group in respect of which a claim under any paragraph in this  Schedule 17 (Indemnities) could be made.  

 

    SCHEDULE 18 (FRONTING PRINCIPLES)  [***]     

 

    IN WITNESS WHEREOF this Agreement has been duly executed by each of the parties on  the date first written above.     EXECUTED by OHIO FARMERS INSURANCE COMPANY acting by an authorised  signatory          /s/ Joseph C. Kohmann_____________________  Name:  Joseph C. Kohmann          

 

    SIGNED for and on behalf of  ARGO INTERNATIONAL HOLDINGS LIMITED      /s/ Dominic Kirby     Name:  Dominic Kirby  Title:   Managing Director  Date:  8 September 2022

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