Document:

exv10w9

Exhibit 10.9

SERVICES AGREEMENT

by and between

LIBERTY MUTUAL INSURANCE COMPANY

and

LIBERTY MUTUAL AGENCY CORPORATION

Dated as of [•], 2010

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page
	1. Definitions
	 	 	2	 
	2. Appointment
	 	 	4	 
	3. Authority of LMIC
	 	 	4	 
	A. General
	 	 	4	 
	B. Performance of Specified Services
	 	 	4	 
	C. Right to Delegate to Affiliates
	 	 	5	 
	D. Right to Subcontract to Third Parties
	 	 	5	 
	E. Non-Exclusive Agreement
	 	 	5	 
	F. Contract Authority
	 	 	5	 
	4. Performance Standards
	 	 	5	 
	A. General
	 	 	5	 
	B. Applicable Law, Licenses and Permits
	 	 	5	 
	C. Control
	 	 	6	 
	D. Governmental Authority Inquiries; Notifications
	 	 	6	 
	5. Employees
	 	 	6	 
	A. Employees of LMIC
	 	 	6	 
	B. Employees of the Company
	 	 	6	 
	6. Charges; Payments
	 	 	7	 
	A. Charges
	 	 	7	 
	B. Payments
	 	 	7	 
	7. Records
	 	 	7	 
	A. Maintenance of Books
	 	 	7	 
	B. Ownership and Custody of Records
	 	 	8	 
	8. Indemnification
	 	 	8	 
	A. By the Company
	 	 	8	 
	B. By LMIC
	 	 	8	 
	9. Dispute Resolution
	 	 	9	 
	A. General
	 	 	9	 
	B. CFO Resolution
	 	 	9	 
	C. CEO Resolution
	 	 	9	 
	D. Arbitration
	 	 	9	 
	E. Costs
	 	 	10	 
	F. Confidentiality
	 	 	10	 
	G. Judicial Remedies
	 	 	10	 
	H. Jurisdiction
	 	 	11	 
	10. Confidentiality
	 	 	11	 
	A. General
	 	 	11	 
	B. Disclosure
	 	 	11	 
	C. Enforcement
	 	 	12	 
	D. Exceptions
	 	 	12	 
	E. Return or Restrictions
	 	 	12	 

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	 	 	Page
	11. Term and Termination
	 	 	12	 
	A. Duration
	 	 	12	 
	B. Termination by any Party
	 	 	12	 
	C. Events Causing Termination
	 	 	12	 
	D. Changes of Law
	 	 	13	 
	E. Change in Control
	 	 	14	 
	F. Obligations Upon Termination
	 	 	14	 
	G. Settlement upon Termination of Services
	 	 	15	 
	H. Survival
	 	 	15	 
	I. Force Majeure
	 	 	15	 
	12. Cooperation
	 	 	15	 
	A. General
	 	 	15	 
	13. Miscellaneous
	 	 	15	 
	A. Corporate Authority
	 	 	15	 
	B. Relationship of the Parties
	 	 	16	 
	C. Notices
	 	 	16	 
	D. Binding Nature of Agreement
	 	 	17	 
	E. Descriptive Headings
	 	 	17	 
	F. Specific Performance and Other Remedies
	 	 	17	 
	G. Governing Law
	 	 	18	 
	H. Counterparts
	 	 	18	 
	I. Severability
	 	 	18	 
	J. Amendment and Modification
	 	 	18	 
	K. Entire Agreement
	 	 	18	 
	L. No Assignment
	 	 	18	 
	M. Further Actions
	 	 	19	 
	N. No Third Party Beneficiaries
	 	 	19	 
	O. Drafting of Language
	 	 	19	 
	P. Interpretation
	 	 	19	 
	 
	 	 	 	 
	SCHEDULE I Service Agreements to be Terminated and Replaced
Effective January 1, 2011
	 	 	 	 
	 
	 	 	 	 
	SCHEDULE II Services
	 	 	 	 
	 
	 	 	 	 
	SCHEDULE III Service Charges
	 	 	 	 

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SERVICES AGREEMENT

     This Services Agreement (this “Agreement”), dated as of [•], 2010, is entered into by
and between Liberty Mutual Insurance Company, a Massachusetts stock insurance company
(“LMIC”), and Liberty Mutual Agency Corporation (the “Company”). Each of LMIC and
the Company are referred to individually herein as a “Party” and, collectively, as the “Parties”.

W I T N E S S E T H:

     WHEREAS, the Parties are Affiliates under the ultimate common control of Liberty Mutual
Holding Company Inc.;

     WHEREAS, LMGI (as defined below) has agreed to transfer certain employees (the “Agency Markets
Dedicated Employees”) to a Subsidiary (as defined below) of the Company effective as of 12:01 a.m.
on January 1, 2011 (the “Employee Transfer”);

     WHEREAS, LMIC and its Affiliates (as defined below) possess certain operating assets and
resources, including experienced employees, facilities and equipment, which enable them to
efficiently provide certain management, operating and other services to support the Company and its
Subsidiaries and have been providing such services to the insurance Subsidiaries of the Company
pursuant to management and services agreements (“Subsidiary Service Agreements”) prior to
the date hereof and will continue to provide such services through December 31, 2010;

     WHEREAS, in connection with the Employee Transfer, the Subsidiary Service Agreements set forth
on Schedule I attached hereto will be terminated and replaced by management and services
agreements between each insurance Subsidiary of the Company and the applicable Subsidiary of the
Company to which the employees are transferred; and

     WHEREAS, the Parties desire that, pursuant to the terms and conditions set forth in this
Agreement, LMIC, either directly or through its Affiliates, shall provide, or cause to be provided,
certain management, operating and other services, as more fully described below, to (i) the Company
and its non-insurance Subsidiaries on and after the Effective Date and (ii) the insurance
Subsidiaries of the Company on and after January 1, 2011.

     NOW, THEREFORE, in consideration of the promises and the mutual agreements and undertakings of
the Parties set forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby
agree as follows:

 

 

     1. Definitions. The following terms shall have the respective meanings set forth below throughout the Agreement:

     “Affiliate” means any other Person that from time to time directly or indirectly
controls, is controlled by, or is under common control with, the first Person; provided, however,
for purposes of this Agreement (a) LMGI and its subsidiaries are considered Affiliates of LMIC but
are not considered to be Affiliates of the Company and its Subsidiaries and (b) the Company and its
Subsidiaries are not considered to be Affiliates of LMIC. “Control” (including the terms,
“controlled by” and “under common control with”) means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or credit arrangement, as trustee or
executor, or otherwise.

     “Agreement” shall have the meaning set forth in the Preamble.

     “Applicable Law” means any domestic or foreign federal, state or local statute, law,
ordinance or code, or any written rules, regulations or administrative interpretations issued by
any Governmental Authority pursuant to any of the foregoing, any order writ, injunction, directive,
judgment or decree of a court of competent jurisdiction applicable to the Parties, or any of their
respective Affiliates, properties, assets, officers, directors, employees or agents, as the case
may be.

     “Company” shall have the meaning set forth in the Preamble.

     “Company Indemnified Person” shall mean the Company, its Subsidiaries and its and
their respective directors, officers, agents and employees.

     “Confidential Information” shall have the meaning set forth in Section 10.

     “Dispute” shall have the meaning set forth in Section 9.A.

     “Dispute Notice” shall have the meaning set forth in Section 9.B.

     “Effective Date” means the date of this Agreement.

     “Employee Transfer” shall have the meaning set forth in the Recitals.

     “Final Statement” shall have the meaning set forth in Section 11.G.

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     “Force Majeure” means an event beyond the control of either Party, which by its nature
could not have been foreseen by such Party, or, if it could have been foreseen, was unavoidable and
includes, without limitation, acts of God, storms, floods, riots, fires, sabotage, civil commotion
or civil unrest, interference by civil or military authorities, acts of war (declared or
undeclared) and the failure of energy sources.

     “Governmental Authority” means any federal, state, county, local, foreign or other
governmental or public agency, instrumentality, commission, authority, self-regulatory
organization, board or body, including, without limitation, any state insurance regulatory
authority.

     “LMIC” shall have the meaning set forth in the Preamble.

     “LMIC Indemnified Person” shall mean LMIC, its Affiliates and its and their respective
directors, officers, agents and employees.

     “LMIC Property” shall have the meaning set forth in Section 11.F(iii).

     “LMGI” shall mean Liberty Mutual Group Inc.

     “Losses” shall have the meaning set forth in Section 8.A.

     “Mandated Changes” shall have the meaning set forth in Section 11.D.

     “OSHA” means the Occupational Safety and Health Administration.

     “Party” and “Parties” shall have the meaning set forth in the Preamble.

     “Person” means any individual, corporation, partnership, firm, joint venture, limited
liability company, association, joint-stock company, trust, unincorporated organization,
governmental, judicial or regulatory body, division, business unit or other entity.

     “Rules” shave the meaning set forth in Section 9.D.

     “Services” shall have the meaning set forth in Section 3.B.

     “Service Charges” shall have the meaning set forth in Section 6.A.

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     “Services Termination Date” shall have the meaning set forth in Section 11.G.

     “Subsidiaries” of the Company shall include all corporations, partnerships, joint
ventures, limited liability companies, associations and other entities (a) in which, from time to
time, the Company owns, directly or indirectly, fifty percent (50%) or more of the outstanding
voting stock, voting power, partnership interests or similar ownership interests, (b) of which,
from time to time, the Company otherwise directly or indirectly controls or directs the policies or
operations or (c) which, from time to time, would be considered subsidiaries of the Company within
the meaning of Regulation S-K or Regulation S-X of the General Rules and Regulations under the
Securities Act of 1993, as amended.

     “Subsidiary Service Agreements” shall have the meaning set forth in the Recitals.

     “Transition Services” shall have the meaning set forth in Section 11.F(iii).

     2. Appointment.

     A. Except as expressly provided herein, the Company hereby appoints and engages LMIC,
and LMIC hereby accepts such appointment and engagement, to provide Services to the Company
and its Subsidiaries for the term hereinafter set forth, subject to the terms and conditions
of this Agreement and Applicable Law.

     B. The Parties acknowledge and agree that the Services to be provided under this
Agreement by LMIC shall, at the Company’s request, be provided directly to the Company or
its Subsidiaries. With respect to Services provided to, or procured on behalf of any
Subsidiary of the Company, the Company agrees to pay on behalf of such Subsidiary all
amounts payable by or in respect of such Services.

     3. Authority of LMIC.

     A. General. Subject to the conditions and limitations set forth herein, LMIC and its Affiliates,
acting by and through their employees, shall in the absence of directions from the Company’s
board of directors, its officers or senior management, exercise reasonable judgment and
efforts in connection with the performance of their duties and obligations hereunder.

     B. Performance of Specified Services. Without limiting the foregoing, LMIC and its Affiliates shall perform such Services on
behalf of the Company and its Subsidiaries as described in SCHEDULE II attached hereto (as
such annex may be amended from time to time pursuant to Section 13.J hereof) (the
“Services”). The Services shall be provided in the name and for the benefit of the
Company and as applicable its Subsidiaries.

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     C. Right to Delegate to Affiliates. LMIC, without requiring the Company’s consent, shall have the right to satisfy its
obligations under this Agreement by causing one or more of its Affiliates to provide the
Services, provided that LMIC shall remain responsible for all obligations or liabilities of
such Affiliate with respect to the Services performed by such Affiliate.

     D. Right to Subcontract to Third Parties. LMIC, with the Company’s consent, which consent shall not be unreasonably withheld, shall
have the right to contract with any third party, whether an Affiliate or not, for the
performance of the Services that LMIC is required to provide to the Company and its
Subsidiaries pursuant to this Agreement, provided that LMIC shall remain responsible for all
obligations or liabilities of such subcontractor with respect to the Services.

     E. Non-Exclusive Agreement. Nothing herein shall be deemed to grant LMIC an exclusive right to provide the Company
and its Subsidiaries the Services and the Company retains the right to (i) hire and utilize
its own employees or (ii) contract with any third party, whether an Affiliate of LMIC or
not, for the performance of all or any part of the Services rendered hereunder or for the
use of facilities for the benefit of the Company and its Subsidiaries. Notwithstanding the
foregoing, the Company must comply with Section 11.B (including providing at least 180 days
written notice) prior to reducing or terminating the scope or volume of Services provided by
LMIC under this Agreement.

     F. Contract Authority. As may be necessary for the performance of Services under this Agreement, LMIC or its
Affiliates performing such Services shall have the authority to negotiate or conclude
contracts on behalf of the Company and its Subsidiaries or bind the Company and its
Subsidiaries to any such contracts.

     4. Performance Standards.

     A. General. LMIC shall provide, or cause to be provided, the Services pursuant to this Agreement in a
commercially reasonable manner consistent with the manner, nature, quality and level of care
which such services are conducted by LMIC and its Affiliates for their own account and
purposes.

     B. Applicable Law, Licenses and Permits. LMIC shall, and shall cause its Affiliates to, comply with Applicable Law with respect to
the Services provided pursuant to this Agreement, and shall obtain and maintain in all
material respects any and all necessary licenses and permits required in order to conduct
the business of the Company and its Subsidiaries in accordance with Applicable Law.

5

 

     C. Control. The performance of Services pursuant to this Agreement by LMIC shall in no way impair the
absolute control of the business and operations of LMIC or the Company by their respective
boards of directors and senior management. LMIC and its Affiliates shall act hereunder so
as to assure the separate operating identity of the Company and its Subsidiaries. The
performance of Services by LMIC or its Affiliates under this Agreement with respect to the
business and operations of the Company and its Subsidiaries shall at all times be subject to
the direction and control of the senior management and board of directors of the Company.

     D. Governmental Authority Inquiries; Notifications. LMIC shall immediately notify the Company regarding any inquiries or notifications
received from any Governmental Authority relating to the Company or any of its Subsidiaries,
this Agreement or the Services. LMIC shall cooperate with the Company in responding to any
such inquiry or notification received from any Governmental Authority as such inquiry or
notification relates to its rendering of Services pursuant to this Agreement.

     5. Employees.

     A. Employees of LMIC.

     Except as expressly provided herein, LMIC or its Affiliates shall (i) employ, in their
own name, all personnel necessary to perform the Services contemplated under this
Agreement; (ii) be solely responsible for the employment, supervision, payment and
discharge of all such personnel; (iii) have the exclusive right to appoint, hire, supervise,
suspend, lay-off, promote, assign, discipline and discharge such personnel; and (iv) have
the sole obligation to pay and compensate such personnel. In accordance with the foregoing,
LMIC or its Affiliates (a) will be solely responsible for making all deductions and
withholdings from such employees’ salaries and other compensation, and for the payment of
all contributions, taxes and assessments and will comply with Applicable Law regarding
conditions of employment including, but not limited to, requirements regarding minimum
compensation, unemployment compensation, Social Security, OSHA, overtime, hours of work and
equal opportunities for employment; and (b) may, in its sole discretion, offer additional
benefits to such employees, from time to time.

     B. Employees of the Company. The Company and its Subsidiaries may employ personnel in their own name and, in such
case, the Company and its Subsidiaries shall (i) be solely responsible for the employment,
supervision, and discharge of all such personnel; (ii) have the exclusive right to appoint,
hire, supervise, suspend, lay-off, promote, assign, discipline and discharge such personnel;
and (iii) have the sole obligation to pay and compensate such personnel. In such
situations, the Company and its Subsidiaries will be solely responsible for making all
deductions and withholdings from such employees’ salaries and other compensation, and for
the payment of all contributions, taxes and assessments and will comply with Applicable Law
regarding conditions of employment including, but not limited to, requirements regarding
minimum

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compensation, unemployment compensation, Social Security, OSHA, overtime, hours of
work and equal opportunities for employment.

     6. Charges; Payments.

     A. Charges. The Parties acknowledge that (i) LMIC and its Affiliates are engaged in businesses
similar to those of the Company and its Subsidiaries; (ii) certain of LMIC’s and its
Affiliates’ employees will be engaged in activities for LMIC and its Affiliates in addition
to activities for the Company and its Subsidiaries; and (iii) there shall be no duty of any
one of LMIC’s or its Affiliates’ employees to devote any portion of their time in the
Service of the Company except for the Agency Markets Dedicated Employees. Charges for such
Services are set forth on Schedule III (the “Service Charges”) and shall
include direct expenses and directly allocable expenses allocated to the Company and its
Subsidiaries in conformity with customary insurance accounting practices consistently
applied. The method of expense allocations under this Agreement shall be consistent with
the principles stated in the Statement of Statutory Accounting Principles No. 70,
“Allocation of Expenses” and Applicable Law. All books of account, documents and records
relating to such payrolls and expenses of LMIC shall be made available, during
normal business hours upon reasonable advance notice to LMIC, for inspection by the Company.

     B. Payments. Unless otherwise agreed by the Parties or as otherwise set forth on Schedule III,
LMIC shall use its commercially reasonable efforts to submit to the Company within
forty-five (45) days of the end of each fiscal quarter a written statement of the Service
Charges in that fiscal quarter, and the Company shall pay to LMIC within forty-five (45)
days following receipt of such written statement the amount set forth in the statement;
provided, however, if the Company, in good faith, disputes any amount,
payment of such disputed amount shall only be made after resolution of such dispute. The
Company agrees to notify LMIC promptly, and in no event later than thirty (30) days
following receipt of such written statement, of any disputed amount. At any time, the
Company may request a written statement from LMIC setting forth, in reasonable detail, the
nature of the Services rendered or expense incurred and other relevant information to
support any Service Charges in any written statement.

     7. Records.

     A. Maintenance of Books. LMIC shall maintain accurate and complete books, accounts, and records relating to the
Services in accordance with Applicable Law, and in such a way as to disclose clearly and
accurately the nature and detail of the transactions contemplated by this Agreement,
including such accounting information as is necessary to support the reasonableness of the
charges or fees under this Agreement, and such additional information as the Company may
reasonably request for purposes of its internal bookkeeping and accounting operations. LMIC
shall keep such books, records, and accounts insofar as they pertain to the computation of
charges hereunder available for audit, inspection and copying by the Company and Persons
authorized by it

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or any Governmental Authority having jurisdiction over the Company or its
Subsidiaries during all normal business hours upon reasonable advance notice.

     B. Ownership and Custody of Records. All books, accounts, records, and files established and maintained by LMIC by reason of
its performance of Services under this Agreement, which absent this Agreement would have
been held by the Company or its Subsidiaries, shall be deemed the property of the Company
and shall be maintained by LMIC in accordance with Applicable Law. During the term of this
Agreement, such books, records, and files shall (i) be retained by LMIC to the extent such
books, accounts, records, and files are required by Applicable Law or the record retention
policies of LMIC to be retained; and (ii) be available, during normal
business hours upon reasonable advance notice, for inspection by the Company, anyone
authorized by the Company, and any Governmental Authority that has regulatory authority over
the Company’s business activities. At the sole cost of the Company, copies of such books,
records, and files shall be delivered to the Company upon demand. At the sole cost of the
Company, all such books, records, and files shall be promptly transferred to the Company by
LMIC upon termination of this Agreement, or to a service provider other than LMIC in the
event a Service is provided by a third party; provided, however, that LMIC shall be entitled
to retain copies of such books, records and files.

     8. Indemnification.

     A. By the Company. The Company shall indemnify, defend and hold harmless each LMIC Indemnified Person from
and against any and all costs and expenses arising out of claims (including attorneys’ fees,
interest, penalties and costs of investigation or preparation for defense), judgments,
fines, losses, claims, damages, liabilities, demands, assessments and amounts paid in
settlement (“Losses”), which a LMIC Indemnified Person may suffer or incur arising
out of or in connection with the Services provided by any such LMIC Indemnified Person
pursuant to this Agreement, the transactions contemplated hereby or any LMIC Indemnified
Person’s actions or inactions in connection with such Services or transactions;
provided that the Company shall not be responsible for Losses incurred by any LMIC
Indemnified Person that have resulted from any LMIC Indemnified Person’s gross negligence or
willful misconduct in connection with any of the transactions, actions, inactions or
Services referred to in this Section 8A.

     B. By LMIC. LMIC shall indemnify, defend and hold harmless each Company Indemnified Person from and
against any and all Losses, which a Company Indemnified Person may suffer or incur arising
out of or in connection with the gross negligence or willful misconduct of LMIC or its
Affiliates, their employees or any subcontractor appointed by LMIC with respect to the
provision of, or failure to provide, Services to the Company and its Subsidiaries pursuant
to this Agreement. Upon payment of any such Loss, LMIC shall be subrogated to all of the
rights of recovery therefor of the Company and the Company shall do whatever is necessary to
secure such

8

 

rights, including the execution and delivery of any instruments and papers to
perfect or secure the same, and LMIC shall do nothing to prejudice such rights.

     9. Dispute Resolution.

          A. General. Any controversy, claim or dispute arising out of or relating to this Agreement, or the breach,
termination or validity hereof (each, a “Dispute”) shall be resolved as set forth in this
Section 9.

          B. CFO Resolution. LMIC and the Company shall attempt in good faith to resolve any dispute promptly by negotiation
between each such party’s designated representatives. Within ten (10) days after any Party’s
receipt of a notice of Dispute from the other Party setting forth in detail and together with
supporting documentation, if any, the nature and basis of the Dispute (the “Dispute
Notice”), the general counsel and the chief financial officer of LMIC and the general counsel
and the chief financial officer of the Company shall meet in person at a mutually acceptable time
and place, and thereafter as often as they reasonably deem necessary, to attempt in good faith to
resolve the Dispute.

          C. CEO Resolution. If the chief financial officer of either LMIC or the Company declares an impasse then within
thirty (30) days after receipt of the Dispute Notice or as soon thereafter as practicable, the
respective chief executive officers of LMIC and the Company shall meet in person at a mutually
acceptable time and place, and thereafter as often as they reasonably deem necessary, to attempt in
good faith to resolve the Dispute.

          D. Arbitration. If the chief executive officer of either LMIC or the Company declares an impasse then within
sixty (60) days after receipt of the Dispute Notice (or such longer period, if the Parties so agree
in writing), at the demand of either Party, the Dispute shall be referred to, and finally settled
by, confidential and binding arbitration in accordance with the then-prevailing JAMS Streamlined
Arbitration Rules and Procedures as modified as follows (the “Rules”):

          (i) There shall be three (3) neutral arbitrators of whom each Party shall select one.
The claimant shall select its arbitrator in its demand for arbitration and the respondent
shall select its arbitrator within thirty (30) days after receipt of the demand for
arbitration. The two (2) arbitrators so appointed shall select a third arbitrator to serve
as chairperson within fourteen (14) days of the designation of the second of the two (2)
arbitrators. If any arbitrator is not timely appointed, at the request of any Party such
arbitrator shall be appointed by JAMS pursuant to the listing, striking and ranking
procedure in the Rules.

          (ii) Each arbitrator appointed by a Party shall be either an attorney with substantial
experience with the property and casualty reinsurance and insurance industry and at least
ten (10) years admission to the bar, or a property and casualty reinsurance and insurance
industry professional of at least ten (10) years standing. The

9

 

chair of the arbitral
tribunal shall either be a practicing attorney with no less than ten (10) years of practice
and experience as an arbitrator, with, if possible, experience relating to insurance or
reinsurance disputes, or be a retired judge.

          (iii) The place of arbitration shall be Boston, Massachusetts, unless some other place
is mutually selected by the Parties. The arbitral tribunal shall be required to follow the
law of the Commonwealth of Massachusetts. The decision and award of the arbitral tribunal
shall be final and binding on the Parties and shall be the sole and exclusive remedy between
the Parties regarding the matter presented to the arbitral tribunal, including any claims,
counterclaims, issues or accounting presented to the tribunal. Judgment upon the decision
and award may be entered in any court having jurisdiction. The arbitral tribunal is
empowered to award any remedy provided for under Applicable Law and the terms of this
Agreement, including injunction, specific performance or other forms of equitable relief.
The arbitral tribunal is not empowered to award damages in excess of compensatory damages.
Each Party hereby irrevocably waives any right to recover punitive, exemplary or similar
damages with respect to any Dispute.

          (iv) Any arbitration proceedings, decision or award rendered hereunder and the
validity, effect and interpretation of this arbitration agreement shall be governed by the
Federal Arbitration Act, 9 U.S.C. Section 1 et seq.

     E. Costs. Each Party shall bear its own costs in any negotiations pursuant to Section 9.B or
Section 9.C and any arbitration, provided that the Parties shall share the fees and
expenses of the arbitrators equally as well as any JAMS fees and expenses.

     F. Confidentiality. All negotiations conducted pursuant to Section 9.B or Section 9.C shall be
confidential and shall be treated as compromise and settlement negotiations and may not be
introduced as evidence of an admission against interest of either Party and shall not be
admissible as evidence in any other proceeding.

     G. Judicial Remedies. Notwithstanding the foregoing provisions, without first resorting to the negotiation
procedures set forth in Sections 9.B and 9.C herein, either Party may seek the provisional
judicial remedy of a preliminary injunction or any other form of temporary injunctive relief
(including specific performance), if in its reasonable judgment such action is necessary to
avoid irreparable harm. Without prejudice to such provisional remedies as may be available
under the jurisdiction of such court, the arbitral tribunal shall have full authority to
grant provisional remedies and to direct the Parties to request that any court modify or
vacate any temporary or preliminary relief issued by such court, and to award damages for
the failure of any Party to respect the arbitral tribunal’s orders to that effect.

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     H. Jurisdiction. The Parties hereby submit to the jurisdiction of the courts of the Commonwealth of
Massachusetts located in Boston, Massachusetts, for the purpose of seeking any provisional
remedies as contemplated by Section 9.G or for any action to compel arbitration or in aid of
arbitration or for the enforcement of any arbitral award rendered thereunder. In any such
action, suit or proceeding, each of the Parties irrevocably and unconditionally waives, and
agrees not to assert by way of motion, as a defense or otherwise, any claim that the Party
is not subject to the jurisdiction of the above courts, that such action or suit is brought
in an inconvenient forum or that the venue of such action, suit or other proceeding is
improper. To the fullest extent permitted by Applicable Law, each of the Parties
irrevocably waives all rights to trial by jury in any such action, suit or other proceeding.

     10. Confidentiality.

     A. General. Each Party agrees at all times during the term of this Agreement and thereafter to
keep strictly confidential all Confidential Information (as hereinafter defined) belonging
to the other Party. “Confidential Information” shall mean any information,
underwriting rules, technical data or know-how including, but not limited to, that which
comprises or relates to the other Party’s confidential and proprietary trade secrets,
specifications, designs, plans, drawings, data, prototypes, patents, patent applications,
trademarks, trademark registrations, applications for trademark registrations, service
marks, service mark registrations, applications for service mark registrations, trade names,
labels, slogans, claims of copyright, copyright registrations, applications for copyright
registrations, copyrights, drawings, designs, proprietary know-how or information, or other
rights with respect thereto, market research, marketing techniques and plans, business plans
and strategies, customer data, price lists, pricing policies and financial information or
other business and/or technical information and materials, in oral,
demonstrative, written, electronic, graphic or machine-readable form and any analyses,
compilations, studies or documents containing Confidential Information.

     B. Disclosure. Each Party shall at all times protect and safeguard the Confidential Information of
the other and agrees not to, in whole or in part, sell, lease, license, assign, transfer, or
disclose the Confidential Information to any third party and shall not copy, reproduce or
distribute the Confidential Information except as expressly permitted in this Agreement or
as otherwise agreed by the Parties. Each Party shall take every reasonable precaution to
prevent the theft, disclosure, and the unauthorized copying, reproduction or distribution of
the Confidential Information. The Parties agree, however, that either Party may disclose
certain Confidential Information on a confidential basis to its employees, agents,
Affiliates or consultants in connection with any work being performed on behalf of the other
Party in order to carry out its obligations hereunder; provided, however,
further that LMIC may disclose such Confidential Information to its employees, agents or
Affiliates and use it at all times, including subsequent to the termination of the
Agreement, for purposes of assuring efficiencies and best practices by LMIC and its
Affiliates.

11

 

     C. Enforcement. Each Party acknowledges that the other Party shall have the right to take all
reasonable steps to protect its Confidential Information, including, but not limited to,
injunctive relief and any other remedies as may be available at law or in equity in the
event the other Party does not fulfill its obligations under this Section 10.

     D. Exceptions. Without granting any right or license, the obligations of the Parties shall not
apply to any material or information that: (i) is or becomes a part of the public domain
through no act or omission by the receiving Party; (ii) is independently developed by the
receiving Party using individuals who have had no contact with the disclosing Party’s
Confidential Information; or (iii) was in the receiving Party’s possession prior to receipt
from the disclosing Party. In addition, neither Party shall be liable for disclosure of
Confidential Information if made in response to a valid order of a court or authorized
Governmental Authority, provided that notice is promptly given to the Party whose
Confidential Information is to be so disclosed so that such Party may seek a protective
order and/or engage in other efforts to minimize the required disclosure. The Parties shall
cooperate in seeking the protective order and engaging in such other efforts.

     E. Return or Restrictions. All materials shared or disclosed during the term of this Agreement, including, but
not limited to, Confidential Information, shall always remain the property of the disclosing
Party and shall be returned to the disclosing Party or its representative or destroyed,
along with all reproductions, copies, extracts and compilations, upon demand.
Notwithstanding the foregoing, receiving Party (i) need not expunge electronic copies of
Confidential Information created as a result of automatic back-up procedures, and (ii) may
retain such Confidential Information as receiving Party is required to retain for legal
and/or compliance purposes.

     11. Term and Termination.

     A. Duration. This Agreement shall commence on the Effective Date and remain in full force and effect,
unless terminated by mutual agreement of the Parties or otherwise pursuant to this Section
11.

     B. Termination by any Party. Each Party may terminate this Agreement and the Services provided hereunder, in whole or
in part, without cause by giving notice in writing to the other Party of its intention to do
so, specifying the termination date which shall be not less than one hundred eighty (180)
days after delivery or mailing of said notice.

     C. Events Causing Termination.

	 	(i)	 	By the Company.

12

 

	 	(a)	 	Dissolution, cessation of
business for any reason whatsoever, insolvency or receivership
of LMIC shall, at the option of the Company, cause an immediate
termination of this Agreement unless, prior to such event, the
Company shall have been notified and shall have consented to the
continuance of the operation and effect of all or any part of
the Services provided under this Agreement, which consent may be
withheld for any reason and shall be evidenced in writing.
	 
	 	(b)	 	The Company may terminate the
Agreement and the Services provided hereunder, in whole or in
part, at any time if (x) LMIC shall have failed to perform any
of its material obligations under this Agreement, (y) the
Company has notified LMIC of such failure and (z) such failure
shall have continued for a period of thirty (30) days after
LMIC’s receipt of notice of such failure.

	 	(ii)	 	By LMIC.

	 	(a)	 	Dissolution, cessation of
business for any reason whatsoever, insolvency or receivership
of the Company shall cause an immediate termination of this
Agreement unless, prior to such event, LMIC shall have been
notified and shall have consented to the continuance of the
operation and effect of all or any part of the Services provided
under this Agreement, which consent may be withheld for any
reason and shall be evidenced in writing.
	 
	 	(b)	 	LMIC may terminate this Agreement
and the Services provided hereunder, in whole or in part, at any
time if (x) the Company shall have failed to perform any of its
material obligations under this Agreement, (y) LMIC has notified
the Company of such failure and (z) such failure shall have
continued for a period of thirty (30) days after the Company’s
receipt of notice of such failure.

     D. Changes of Law. In the event that (i) any Applicable Law has or could reasonably be expected to have a
significant adverse impact on either LMIC or the Company in connection with performance of
this Agreement; or (ii) performance of any provision of this Agreement should for any reason
amount to, cause or be a violation of any Applicable Law, or otherwise be deemed illegal
(the “Mandated Changes”), then the affected Party shall have the right to require
the other Party to use best efforts to renegotiate the affected or pertinent terms of this
Agreement to the extent necessary to

13

 

comply with any Mandated Changes while still
maintaining the purposes, intent and character of the Agreement. If the Parties fail to
reach an agreement satisfactory within thirty (30) days of the request for renegotiation,
the Party requesting such renegotiation may terminate this Agreement effective (y) thirty
(30) days after prior written notice to the other Party or (z) as soon as necessary to
comply with the Mandated Changes.

     E. Change in Control. If LMIC or its Affiliates cease to Beneficially Own, in the aggregate, shares entitled to
more than fifty percent (50%) of the votes entitled to be cast by the holders of the then
outstanding common stock of the Company, this Agreement shall immediately terminate unless,
prior to such event, LMIC shall have consented to the continuance of the operation and
effect of this Agreement, which consent may be withheld for any reason and shall be
evidenced in writing.

     F. Obligations Upon Termination.

          (i) Upon termination of this Agreement (other than pursuant to Section 11.C or 11.D) by
either Party, in whole or in part, at the request of the Company the relevant Services shall
continue to be provided by LMIC to assist in the orderly transition of control over the
day-to-day operation of the Company until alternate arrangements can reasonably be made by
the Company (the “Transition Services”); provided, however, that the
Transition Services shall not be required to be provided for a period of time extending
beyond ninety (90) days from the effective date of termination, unless otherwise agreed to
by the Parties.

          (ii) Upon termination of this Agreement by either Party, LMIC shall, upon the request
and sole cost of the Company, promptly deliver to the Company all books and records that
are, or are deemed by this Agreement, the property of the Company; provided, however, that
LMIC shall be entitled to retain copies of such books, records and files.

          (iii) Notwithstanding the foregoing, LMIC shall not be obligated to make available any
software, information management systems, proprietary underwriting standards and methods or
any other Confidential Information of LMIC (“LMIC Property”). Upon the provision of
any LMIC Property to the Company for any period of time following the termination of this
Agreement at the sole discretion of LMIC, the Company shall, upon the request of LMIC,
execute confidentiality and license agreements, in form and substance satisfactory to LMIC
in its sole discretion, with respect to any LMIC Property.

          (iv) LMIC shall have the right to charge a reasonable fee for the use LMIC Property and
for its provision of Transition Services to the Company, as provided in this Section 11.F,
including but not limited to charges consistent with Section 6.A. All costs associated with
the provision of Transition Services to the Company shall be the responsibility of the
Company and shall be due within forty five (45) days after invoice

14

 

from LMIC, which invoice
may be provided monthly by LMIC. No later than forty five (45) days after LMIC ceases to
provide Transition Services to the Company pursuant to this Agreement, LMIC shall deliver to
the Company detailed written statements for all transition charges incurred and not included
in any previous statements submitted to the
Company. The amounts owed hereunder shall be due and payable within forty five (45)
days of receipt of such statements.

          (v) All obligations of LMIC and the Company which expressly or by their nature survive
termination of this Agreement shall continue in full force and effect subsequent to and
notwithstanding termination of this Agreement, until they are satisfied in full or, by their
nature, expire.

     G. Settlement upon Termination of Services. No later than forty five (45) days after LMGI ceases to provide Services to the Company
pursuant to this Agreement (“Services Termination Date”), LMIC shall deliver to the
Company detailed written statements for all charges incurred and not included in any
previous statements submitted to the Company (the “Final Statement”). LMIC shall be
entitled to receive payment of all amounts unpaid but earned up to Service Termination Date,
which payments shall be due within forty five (45) days after the Company’s receipt of the
Final Statement.

     H. Survival. The terms and provisions of Sections 8, 9, 10, 11 and 13 hereof shall remain in full
force and effect after the termination of this Agreement.

     I. Force Majeure. No Party will have any liability or responsibility for failure to fulfill any obligation
(other than a payment obligation) under this Agreement so long as and to the extent to which
the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a
consequence of circumstances of Force Majeure. Any Party claiming the benefit of this
Section 11.I will, as soon as reasonably practicable after the occurrence of any such event
(i) notify the other Party of the nature and extent of any such Force Majeure condition and
(ii) use commercially reasonable efforts to remove any such causes and resume performance
under this Agreement as soon as feasible.

     12. Cooperation.

     A. General. Each Party shall perform such acts, execute and deliver such instruments, assignments and
other documents and do all such other things consistent with the terms of this Agreement as
may be reasonably necessary to accomplish the transactions contemplated hereby or otherwise
carry out the purposes of this Agreement. The Parties agree that they shall at all times
during the term of this Agreement freely and fully exchange information regarding all
matters directly or indirectly related to the Parties and this Agreement, consistent with
all provisions of this Agreement.

     13. Miscellaneous.

     A. Corporate Authority.

15

 

          (i) The Company. The Company represents and warrants to LMIC that it has the
right, power, legal capacity and authority to enter into and perform its obligations under
this Agreement, and that all necessary approvals and consents have been obtained in
connection with the execution and performance of this Agreement. The Company further
represents and warrants that the execution and delivery of this Agreement by the Company has
been approved by all necessary corporate action.

          (ii) LMIC. LMIC represents and warrants to the Company that it has the right,
power, legal capacity and authority to enter into and perform its obligations under this
Agreement, and that all necessary approvals and consents have been obtained in connection
with the execution and performance of this Agreement. LMIC further represents and warrants
that the execution and delivery of this Agreement by LMIC has been approved by all necessary
corporate action.

     B. Relationship of the Parties. The relationship of LMIC to the Company arising from the Agreement shall be that of an
independent contractor and not that of a partner, joint venturer, servant or agent. LMIC
and the Company acknowledge that neither it nor its respective shareholders, officers,
directors, employees or agents shall have any authority to bind the other to any contractual
obligation whatsoever, except as expressly permitted herein.

     C. Notices. All notices and other communications provided for hereunder shall be dated and in writing
and shall be deemed to have been given (i) when delivered, if delivered personally, sent by
email or sent by registered or certified mail, return receipt requested, postage prepaid,
(ii) on the next business day if sent by overnight courier or (iii) when received if
delivered otherwise. Such notices shall be delivered to the address set forth below, or to
such other address or email address as a Party shall have furnished to the other Party in
accordance with this Section 13.C.

If to LMIC:

Liberty Mutual Insurance Company

175 Berkeley Street

Boston, MA 02116

Attention: Chief Financial Officer

With a copy to:

Liberty Mutual Insurance Company

175 Berkeley Street

Boston, MA 02116

Attention: General Counsel

16

 

If to the Company:

Liberty Mutual Agency Corporation

175 Berkeley Street

Boston, MA 02116

Attention: Chief Financial Officer

With a copy to:

Liberty Mutual Agency Corporation

175 Berkeley Street

Boston, MA 02116

Attention: General Counsel

     D. Binding Nature of Agreement. This Agreement shall be binding upon and inure to the benefit of and be enforceable by
the Parties hereto or their successors in interest, except as expressly otherwise provided
herein.

     E. Descriptive Headings. The descriptive headings of the several articles and sections of this Agreement are
inserted for reference only and shall not limit or otherwise affect the meanings hereof.

     F. Specific Performance and Other Remedies.

          (i) The Parties hereby expressly recognize and acknowledge that immediate, extensive
and irreparable damage would result, no adequate remedy at law would exist and damages would
be difficult to determine in the event that any provision of this Agreement is not performed
in accordance with its specific terms or is otherwise
breached. Therefore, in addition to, and not in limitation of, any other remedy
available to any Party, except as otherwise expressly provided herein, an aggrieved Party
under this Agreement would be entitled to specific performance of the terms hereof and
immediate injunctive relief, without the necessity of proving the inadequacy of money
damages as a remedy. Neither Party shall be required to obtain or furnish any bond or
similar instrument in connection with or as a condition to obtaining or seeking any such
remedy. For the avoidance of doubt, nothing in this Agreement shall diminish the
availability of specific performance of the obligations under this Agreement or any other
injunctive relief.

          (ii) Such remedies, and any and all other remedies provided for in this Agreement,
shall be cumulative in nature and not exclusive and shall be in addition to any other
remedies whatsoever which any Party may otherwise have. Each of the Parties hereby
acknowledges and agrees that it may be difficult to prove damages with reasonable certainty,
that it may be difficult to procure suitable substitute performance and that injunctive
relief and/or specific performance will not cause an undue hardship to the Parties. Each
Party hereby further agrees that in the event of any action by the other Party for specific
performance or injunctive relief, it will not assert that a remedy at law

17

 

or other remedy
would be adequate or that specific performance or injunctive relief in respect of such
breach or violation should not be available on the grounds that money damages are adequate
or any other grounds.

     G. Governing Law. This Agreement shall be construed and enforced in accordance with, and the rights and
duties of the Parties shall be governed by, the laws of the Commonwealth of Massachusetts
applicable to contracts made and to be performed entirely in such Commonwealth (without
giving effect to conflicts of laws provisions thereof).

     H. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed
an original, but both of which together shall constitute one and the same instrument.

     I. Severability. In the event that any one or more of the provisions contained herein, or the application
thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for
any reason, the validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the Parties hereto shall
be enforceable to the fullest extent permitted by applicable law. To the extent that any
such provision is so held to be invalid, illegal or unenforceable, LMIC and the Company
shall in good faith use their best efforts to find and effect an alternative means to
achieve the same or substantially the same result as that contemplated by such provision.

     J. Amendment and Modification. Subject to applicable law, this Agreement may be amended, modified or supplemented only
by written agreement executed by the Parties hereto. Any failure of a Party to comply with
any obligation, covenant or agreement contained in this Agreement may be waived by the Party
entitled to the benefits thereof only by a written instrument duly executed and delivered by
the Party granting such waiver, but such waiver or failure to insist upon strict compliance
with such obligation, covenant or agreement shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure of compliance.

     K. Entire Agreement. This Agreement, including any schedules annexed hereto, embodies the entire agreement and
understanding of the Parties hereto in respect of the transactions contemplated by this
Agreement. There are no restrictions, promises, representations, warranties, covenants or
undertakings, other than those expressly set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings between the Parties with respect to such
subject matter other than the Intercompany Agreement. In the event and to the extent that
there shall be a conflict between the provisions of this Agreement and the provisions of
Intercompany Agreement, the Intercompany Agreement shall control, except as otherwise
provided therein.

     L. No Assignment. Except as otherwise provided for in this Agreement, neither this Agreement nor any of the
rights, interests or obligations of any Party hereto may be assigned by such Party without
the prior written consent of the other Parties,

18

 

except that LMIC may assign this Agreement
to an Affiliate upon the prior written consent of the Company, which consent shall not be
unreasonably withheld.

     M. Further Actions. Each Party hereto shall, on notice of request from any other Party hereto, take such
further action not specifically required hereby at the expense of the requesting Party, as
the requesting Party may reasonably request for the implementation of the transactions
contemplated hereby.

     N. No Third Party Beneficiaries. Nothing in this Agreement shall convey any rights upon any person or entity which is not
a Party or a permitted assignee of a Party to this Agreement.

     O. Drafting of Language. Each of LMIC and the Company agrees that the drafting of the language contained in this
Agreement was a cooperative effort, that each Party was equally responsible for such
drafting and that it would be inequitable for either Party to be deemed the “drafter” of any
specific language contained herein pursuant to any judicial doctrine or presumption relating
thereto.

     P. Interpretation. Whenever the words “include,” “includes” or “including” are used in this Agreement, they
shall be deemed to be followed by the words “without limitation.” Unless the context
requires otherwise, the terms “hereof,” “herein,” “hereby,” “hereto” and derivative or
similar words in this Agreement refer to this entire Agreement. Unless the context requires
otherwise, words in this Agreement using the singular or plural number also include the
plural or singular number, respectively, and the use of any gender herein shall be deemed to
include the other genders. Unless otherwise specified, references in this agreement to
“agent” and “agents” do not refer to independent insurance agents or brokers of LMIC and its
Affiliates or the Company and its Subsidiaries.

Signature Page Follows

19

 

     IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their
respective duly authorized officers as of the day and year first above written.

	 	 	 	 	 
	 	LIBERTY MUTUAL INSURANCE COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	LIBERTY MUTUAL AGENCY CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

20

 

SCHEDULE I

Service Agreements to be Terminated and Replaced Effective January 1, 2011

SCHEDULE I

to the Services Agreement between LMAC and PIC

The Following Agreements will terminate effective January 1, 2011:

	1.	 	Services Agreement originally dated January 1, 1999 and as amended between Peerless Insurance
Company and The Netherlands Insurance Company, Excelsior Insurance Company, Indiana Insurance
Company, Consolidated Insurance Company, Peerless Indemnity Insurance Company, America First
Insurance Company, The Midwestern Indemnity Insurance Company, Mid-American Fire & Casualty
Company, Montgomery Mutual Insurance Company, Colorado Casualty Insurance Company, Golden
Eagle Insurance Corporation, America First Lloyd’s Insurance Company, Liberty Northwest
Insurance Corporation, North Pacific Insurance Company, Oregon Automobile Insurance Company,
The Ohio Casualty Insurance Company, Ohio Security Insurance Company, American Fire and
Casualty Company, West American Insurance Company, Hawkeye-Security Insurance Company,
National Insurance Association, American Economy Insurance Company, American States Insurance
Company of Texas, American States Insurance Company, American States Preferred Insurance
Company, First National Insurance Company of America, American States Lloyds Insurance
Company, Safeco Lloyds Insurance Company, General Insurance Company of America, Safeco
Insurance Company of Indiana, Safeco Insurance Company of America, Safeco Insurance Company of
Oregon, Safeco Surplus Lines Insurance Company, Insurance Company of Illinois and Safeco
National Insurance Company.
	 
	2.	 	Management and Services Agreement between LMIC and American Economy Insurance Company.
	 
	3.	 	Management and Services Agreement between LMIC and American Fire and Casualty Company.
	 
	4.	 	Management and Services Agreement between LMIC and America First Insurance Company.
	 
	5.	 	Management and Services Agreement between LMIC and American States Insurance Company.
	 
	6.	 	Management and Services Agreement between LMIC and American States Insurance Company of
Texas.
	 
	7.	 	Management and Services Agreement between LMIC and American States Preferred Insurance
Company.
	 
	8.	 	Management and Services Agreement between LMIC and Colorado Casualty Insurance Company.
	 
	9.	 	Management and Services Agreement between LMIC and Consolidated Insurance Company.
	 
	10.	 	Management and Services Agreement between LMIC and Excelsior Insurance Company.
	 
	11.	 	Management and Services Agreement between LMIC and First National Insurance Company of
America.

 

 

	12.	 	Management and Services Agreement between LMIC and General Insurance Company of America.
	 
	13.	 	Management and Services Agreement between LMIC and Golden Eagle Insurance Corporation.
	 
	14.	 	Management and Services Agreement between LMIC and Gulf States AIF.
	 
	15.	 	Management and Services Agreement between LMIC and Hawkeye-Security Insurance Company.
	 
	16.	 	Management and Services Agreement between LMIC and Indiana Insurance Company.
	 
	17.	 	Management and Services Agreement between LMIC and Liberty Northwest Insurance Corporation.
	 
	18.	 	Management and Services Agreement between LMIC and Mid-American Fire & Casualty Company.
	 
	19.	 	Management and Services Agreement between LMIC and Montgomery Mutual Insurance Company.
	 
	20.	 	Management and Services Agreement between LMIC and The National Corporation.
	 
	21.	 	Management and Services Agreement between LMIC and North Pacific Insurance Company.
	 
	22.	 	Management and Services Agreement between LMIC and Ohio Security Insurance Company.
	 
	23.	 	Management and Services Agreement between LMIC and Oregon Automobile Insurance Company.
	 
	24.	 	Management and Services Agreement between LMIC and Peerless Indemnity Insurance Company.
	 
	25.	 	Management Agreement between LMIC and Peerless Insurance Company.
	 
	26.	 	Management and Services Agreement between LMIC and Peerless Insurance Company.
	 
	27.	 	Management and Services Agreement between LMIC and Safeco Insurance Company of America.
	 
	28.	 	Management and Services Agreement between LMIC and Safeco Insurance Company of Illinois.
	 
	29.	 	Management and Services Agreement between LMIC and Safeco Insurance Company of Indiana.
	 
	30.	 	Management and Services Agreement between LMIC and Safeco Insurance Company of Oregon.
	 
	31.	 	Management and Services Agreement between LMIC and Safeco Lloyds Insurance Company by its
attorney in fact General America Corporation of Texas.
	 
	32.	 	Management and Services Agreement between LMIC and Safeco National Insurance Company.
	 
	33.	 	Management and Services Agreement between LMIC and Safeco Surplus Lines Insurance Company.
	 
	34.	 	Management and Services Agreement between LMIC and The Midwestern Indemnity Company.
	 
	35.	 	Management and Services Agreement between LMIC and The Netherlands Insurance Company.
	 
	36.	 	Management and Services Agreement between LMIC and The Ohio Casualty Insurance Company.
	 
	37.	 	Management and Services Agreement between LMIC and West American Insurance Company.

 

 

SCHEDULE II

Services

     The list of the following services to be performed pursuant to this Agreement is not intended
to limit the performance of management and operating services, or other services that may be
provided by LMIC to the Company, as may be agreed to by the Parties from time to time:

	a.	 	Accounting, actuarial, risk management, financial, tax and auditing services, including:

	 	(1)	 	Preparation and maintenance of annual and quarterly financial
statements and other reports providing information required by the state of
domicile and other states in which the Company and its Subsidiaries are transacting
business, the maintenance of necessary and proper records and books of account with
respect to the business of the Company and its Subsidiaries, and the maintenance
and compilation of all data required for the preparation of tax returns; and
	 
	 	(2)	 	Assistance to in connection with the examination or audit of the books,
records, affairs and activities by governmental, insurance or taxing authorities
having regulatory or taxing authority with respect to the operations of the Company
and its Subsidiaries, or by any firm of certified public accounts appointed by the
Company and its Subsidiaries to audit their books, records and accounts.
	 
	 	(3)	 	Assistance in connection with treasury and accounts payable functions,
including payment of taxes on premiums, fees for licensing, advertising, losses,
claims and any other expenses incurred in the conduct of the insurance business.
Agency Markets and its Subsidiaries shall certify to LMIC the names and specimen
signatures of all officers or employees who are authorized to sign instructions on
its behalf. Agency Markets and its Subsidiaries shall have the right to require
that all instructions made in connection with this Agreement meet its satisfaction
as to content, form and authenticity.

	b.	 	Purchasing (including fleet management), payroll processing, human resources, and employee
relations and/or benefits services.
	 
	c.	 	Marketing and strategic support services, including promotional and advertising,
communications, coordination of the development of corporate plans and consulting services.
	 
	d.	 	Information technology and software support services, including technology infrastructure and
systems maintenance, business continuity planning, data center

 

 

	 	 	management, network management services, monitoring, management/oversight, support and
trouble-shooting services but excluding any software.
	 
	e.	 	Policy administration and production services, including policy production, print and mail
activities.
	 
	f.	 	Real estate management services, including handling all matters and issues relating to real
estate purchases, sales, leases, licenses and lease-backs.
	 
	g.	 	Legal, compliance and complex and emerging risks claims services, including litigation
management services.
	 
	h.	 	Reinsurance services including (i) agreements to reinsurance policy and/or contract wordings
and endorsements to existing policies; (ii) processing of reinsurance policy cancellations,
nonrenewals and endorsements and other amendatory addenda; (iii) collection of premiums due
under reinsurance policies or contracts, audits and remittances; (iv) negotiation and purchase
of reinsurance coverage; (v) administration of letters of credit and other arrangements for
the provision of security; and (vi) administration of reinsurance contracts.
	 
	i.	 	General administration services including providing all personnel, equipment (including fleet
vehicles and furniture), data processing programs, materials and supplies necessary or
desirable for the performance of the services contemplated in this Agreement
	 
	j.	 	Other services on behalf of the Company and its Subsidiaries as are reasonable and consistent
with the efficient operation of companies within an insurance holding company system and offered by
LMIC or its Affiliates to other members within its system.

 

 

SCHEDULE III

Service Charges

The Company shall pay compensation to LMIC in accordance with the following formula: LMIC’s
reasonable cost of performing the Services (including any facilities or equipment in connection
therewith), excluding all costs associated with employees principally engaged in corporate finance
and human resources and all charges payable under any investment management agreements or cash
management agreements, plus an annual services fee (the “Service Fee”). The Service
Charges shall also exclude any fees payable under the Subsidiary Service Agreements. The Service
Fee shall be calculated as 1.0% of the sum of the direct and assumed Affiliate written premiums
reported on the combined annual statement of the insurance Subsidiaries of the Company for the year
ended as of the December 31 next preceding. One-quarter of the Service Fee shall be owed
quarterly.exv10w11a

Exhibit 10.11(a)

REAL ESTATE LICENSE AGREEMENT

(Owned Buildings)

     This REAL ESTATE LICENSE AGREEMENT (this “License Agreement”) is made as of the
[___] day of [_________,] 2010, between Liberty Mutual Group Inc., a Massachusetts corporation
(“Licensee” or “LMGI”)), and Liberty Mutual Agency Corporation, a Delaware
corporation (“Licensor” or “LMAC”).

WITNESSETH:

     WHEREAS, a subsidiary of Licensor owns the real property, including the buildings located
thereon, set forth on Schedule I annexed hereto and incorporated herein (each a
“Building” and collectively, the “Buildings” or “Owned Buildings”); and

     WHEREAS, the parties desire, by this License Agreement, to provide for the use and occupancy
of certain spaces as set forth in Schedule I annexed hereto and incorporated herein (each
space to be referred to herein as a “License Area” and collectively, the “License
Areas”), each of which is located in a Building.

     NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereby covenant and agree as follows:

     1. License.

     (a) Licensor hereby grants to Licensee a license (the “License”) to use and occupy the
License Areas and rights of access thereto for the purposes hereinafter provided as of the
Commencement Date (as hereinafter defined), for the applicable License Period (as hereinafter
defined). Licensee hereby accepts and agrees to use such License for the License Period for each
License Area. In connection with its use of each License Area and to the extent applicable,
Licensee shall also have the non-exclusive right to use in common with Licensor and the other
occupants of the Buildings in which the Licensed Areas are located, the Building common areas,
including the hallways, stairways, elevators, restrooms, kitchens, break rooms, photocopy rooms,
facsimile rooms, conference rooms and other areas of the Buildings (including the equipment and
supplies located therein) that may be reasonably necessary for Licensee’s use of the License Areas,
except those areas that Licensor may designate as private.

     (b) Licensee has inspected and is familiar with the License Areas and accepts same in their
“as is” condition as of the Commencement Date. Licensor shall not be required to perform any work
or furnish any materials in order to prepare the License Areas for Licensee’s occupancy.

     (c) Licensor and Licensee acknowledge that certain License Areas may be occupied by both
Licensor and Licensee with no physical segregation by walls or partitions (“Commingled License
Areas”). Each of Licensor and Licensee shall, in its use of respective portions of Commingled
License Areas, respect the procedures that each may establish to maintain the privacy and
confidentiality of its business records, and each party shall promptly return to the other, without
outside disclosure, any misdirected records or information of the other party that may happen to
come into the possession of personnel of that party.

 

 

     (d) Licensor shall have the right to reconfigure date hereof, the departments or uses within
the Buildings to accommodate Licensor’s future requirements and in conjunction therewith, upon
reasonable prior notice (which notice may be oral) to Licensee, to designate reasonably comparable
substitute space (within the Building or in an adjacent or nearby building owned or leased by
Licensor) as the License Area (wholly or partially in lieu of the then current space designated as
the License Area).

     2. License Period.

     (a) The “License Period” for each License Area shall commence on the date hereof (the
“Commencement Date”) and, subject to the provisions of subparagraph (b) below (as and to
the extent applicable), shall continue until (i) terminated by Licensor (A) upon one hundred eighty
(180) days written notice to Licensee or (B) upon written notice to Licensee after such time as
LMGI or its subsidiaries cease to Beneficially Own, in the aggregate, shares entitled to more than
fifty percent (50%) of the votes entitled to be cast by the holders of the then outstanding Common
Stock of LMAC, (each of (A) and (B) a “Licensor Termination Date”), (ii) terminated by
Licensee on January 1 of any calendar year (but no earlier than January 1, 2014) upon twenty-eight
(28) months prior written notice to Licensor (each a “Licensee Termination Date”), or (iii)
terminated (A) by mutual agreement of the parties, (B) pursuant to any term or provision hereof or
(C) pursuant to law (each of (A), (B) and (C) of clause (iii) a “Termination Event”). With
respect to any License Area terminated by Licensor, Licensor agrees to cooperate with Licensee in
the event Licensee requests to continue to occupy the License Area for a reasonable period of time
following a Licensor Termination Date in order to secure alternate space.

     (b) In the event of a sale of a Building covering a License Area, the License Period for the
License Area shall automatically terminate on the date of such sale of such Building (a “Sale
Date”). In such event, Licensor and Licensee agree to cooperate and work with one another to
reach mutually acceptable terms and provisions for reasonably comparable substitute space.

     (c) The term of this License Agreement (“Term”) shall commence on the Commencement
Date and shall continue until the later of the last (i) Licensor Termination Date, (ii) Licensee
Termination Date, (iii) Termination Event or (iv) Sale Date (together the “Termination
Dates”).

     (d) Licensor and Licensee agree to amend Schedule I from time to time to reflect the
then current Buildings and License Areas subject to this License Agreement, including any new
Buildings and License Areas that may be added to this License Agreement by mutual agreement of both
parties.

     3. License Fee. Licensee shall pay a license fee for the License Areas at rates, in
the manner, and on the dates as Licensor shall determine from time to time (the “License
Fee”). The License Fee payable for a particular License Area shall be comparable to Licensor’s
costs in occupying, maintaining and using the Buildings, as determined by Licensor in a fair,
equitable and consistent manner.

2

 

     4. Obligations. To the extent that any services to a License Area have been supplied
directly by Licensor prior to the Commencement Date, then Licensor shall continue to provide such
services to such License Area during the related License Period. Licensor shall provide such
services to such License Area in substantially the same manner and quality as Licensor has provided
the same to the License Area prior to the Commencement Date or in substantially the same manner and
quality as Licensor provides such services to itself.

     5. Uses. Licensee shall only use and occupy a License Area for the purpose of
conducting its business and uses incidental thereto provided, however Licensee shall not use a
License Area for any use that is inconsistent with the historical use of the License Areas by
Licensor or its employees.

     6. Compliance with Law. Licensee shall promptly comply with all present and future
applicable laws and regulations of all state, Federal, municipal and local governments,
departments, commissions and boards and any direction of any public officer pursuant to law, and
all orders, rules and regulations of any Board of Fire Underwriters or any similar body (all of the
foregoing being hereinafter collectively referred to as “Laws”) having jurisdiction which
shall impose any violation, order or duty upon Licensee with respect to the related License Area.
Notwithstanding the foregoing, Licensor shall maintain and operate the Building in accordance with
all Laws and be responsible for the expenditure of any funds to perform any alteration or
improvement to the Buildings so as to comply with Laws, excepting only to the extent such
expenditure is required as a result of Licensee particular manner of use of the Licensed Areas.

     7. Repairs. Licensee, throughout the License Period, shall take good care of the
License Areas and the fixtures and appurtenances therein and shall not permit any waste, misuse of,
or negligent damage to the License Areas. Licensor shall perform any maintenance and repairs to
the Buildings, including the License Areas.

     8. Casualty. In the event a Building or a License Area is damaged by fire or the
occurrence of a casualty or subject to condemnation (each, a “Casualty”), Licensor may
elect
either to (i) repair the Building or the License Area, or (ii) terminate the License Period
with respect to such License Area by giving written notice to Licensee.

     9. Insurance and Indemnity.

     (a) For so long as Licensor and Licensee both have operations at the related Buildings,
Licensor shall, for itself and the benefit of Licensee, effect and maintain with insurance
companies selected by Licensor the following insurance coverages: (i) comprehensive general
liability; (ii) workers’ compensation in compliance with applicable statutory requirements; (iii)
employer’s liability insurance; and (iv) “All Risk” property insurance covering each party’s
property. Notwithstanding the foregoing, Licensor shall have the option to assist Licensee in
finding an acceptable arrangement to replace the insurance coverages referred to in this Section
9(a).

     (b) Licensee shall indemnify, defend and hold harmless Licensor from and against any and all
claims and lawsuits (including reasonable attorneys’ fees), asserted against, imposed upon or
incurred by Licensor by reason of (i) any default or breach by Licensee under this

3

 

License
Agreement, and (ii) any accident, bodily injury (including death resulting therefrom), or damage to
or loss or theft of property, which shall be occasioned wholly or in part by reason of the
negligence or willful misconduct of Licensee, or any of its employees, agents, contractors,
licensees or invitees.

     (c) Licensor shall indemnify, defend and hold harmless Licensee from and against any and all
claims and lawsuits (including reasonable attorneys’ fees), asserted against, imposed upon or
incurred by Licensee by reason of (i) any default or breach by Licensor under this License
Agreement, and (ii) any accident, bodily injury (including death resulting therefrom), or damage to
or loss or theft of property, which shall be occasioned wholly or in part by reason of the
negligence or willful misconduct of Licensor, or any of its employees, agents, contractors,
licensees or invitees.

     10. Assignment; Sublicensing. The License granted hereby is personal to Licensee and
except as set forth in Section 22(h) shall not be assigned nor shall Licensee sublicense or
otherwise permit or suffer the occupancy of all or any part of the License Area(s) by any third
party without first obtaining the prior written consent of Licensor, which may be withheld in its
sole discretion. Any attempted assignment or sublicense or occupancy of the License Area in
contravention of the foregoing shall be void and a default of this License Agreement.

     11. Alterations; Restoration. Licensee shall not make or suffer to be made any
alterations, additions, or improvements in, on, or to the License Areas or any part thereof without
first obtaining the prior consent of Licensor, which consent may be withheld in its sole
discretion. All such alterations shall be at Licensee’s sole cost and expense. Licensor, at the
time of giving consent to any alterations by Licensee, shall notify (which notice may be oral)
Licensee if any such alterations must be removed and the License Area restored, at the expiration
or sooner termination of the applicable License Period.

     12. Default. If either party defaults in the performance of any of its obligations
hereunder with respect to a License Area or the License Areas and such default continues for more
than thirty (30) days after receipt of written notice from the nondefaulting party (except that if
such default cannot be reasonably cured with the exercise of reasonable diligence during said
30-day period, such period shall be extended for reasonable additional time, provided that the
defaulting party has commenced to cure such default within the 30-day period and proceeds
diligently thereafter to effect such cure), the nondefaulting party shall have the right to
terminate the License herein granted with respect to the applicable License Area and pursue any
other remedies available at law or in equity, except as limited in paragraph 13 hereof.

     13. Limitation of Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN
THIS LICENSE AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY PUNITIVE,
INDIRECT, CONSEQUENTIAL, SPECIAL OR INCIDENTAL DAMAGES, INCLUDING LOSS OF GOODWILL OR LOSS OF
PROFITS.

     14. Notices. All notices and other communications provided for hereunder shall be
dated and in writing and shall be deemed to have been given (i) when delivered, if delivered
personally, sent by email or sent by registered or certified mail, return receipt requested,
postage

4

 

prepaid, (ii) on the next business day if sent by overnight courier or (iii) when received
if delivered otherwise. Such notices shall be delivered to the address set forth below, or to such
other address or email address as a party shall have furnished to the other party in accordance
with this Section 15.

If to Licensee:

Liberty Mutual Group Inc.

175 Berkeley Street

Boston, MA 02116

Attention: Director of Facilities

With copies to:

Liberty Mutual Group Inc.

175 Berkeley Street

Boston, MA 02116

Attention: General Counsel

Liberty Mutual Group Inc.

175 Berkeley Street

Boston, MA 02116

Attention: Chief Financial Officer

If to Licensor:

Liberty Mutual Agency Corporation

175 Berkeley Street

Boston, MA 02116

Attention: Chief Financial Officer

With a copy to:

Liberty Mutual Agency Corporation

175 Berkeley Street

Boston, MA 02116

Attention: General Counsel

     15. Waiver of Claims. As to the period from and after the Commencement Date,
notwithstanding anything to the contrary herein, each party hereto waives all claims against the
other party, its agents and employees for damage to property sustained by the waiving party
resulting from damage to the License Areas or the Buildings, as the case may be, its fixtures or
any of the waiving party’s personal property, or resulting directly or indirectly from any act or
omission of the other party. All property belonging to the waiving party or any occupant of the
License Areas or the Buildings, as the case may be, shall be there at the risk of the waiving party
or such other occupant only, and the other party shall not be liable for damage thereto or theft or

5

 

misappropriation thereof. The waiving party (and any such occupant) shall look to any insurance
coverage that it may have for recovery of any loss or damage to property that such waiving party or
such occupant may sustain.

     16. Surrender. On the related Termination Dates or sooner termination of the License
with respect to the related License Area, Licensee, shall surrender the related License Area in
broom-clean condition, ordinary wear and tear, fire and other casualty excepted.

     17. Subordination. The License granted herein is subject and subordinate to all ground
and underlying leases affecting the real property of which the License Areas form a part and to all
mortgages which may now or hereafter affect such leases or such real property.

     18. Warranties. EXCEPT AS SET FORTH IN THIS LICENSE AGREEMENT, THE PARTIES DO NOT MAKE
ANY WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THIS LICENSE AGREEMENT, INCLUDING THE
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

     19. Inability To Perform. Neither party shall be responsible for delays in the
performance of its obligations caused by events beyond that party’s reasonable control, including,
but not limited to, acts of God.

     20. Good Faith. The parties recognize that this License Agreement may not be
dispositive of all matters and issues that may arise during the License Period with respect to the
License Areas. As and when issues and matters arise during the course of the License Period that
are not definitively controlled by the provisions of this License Agreement, the parties shall act
reasonably and in good faith endeavor to adjust and resolve such issues and matters.

     21. Parking. Licensor shall afford Licensee an equitable share of the parking spaces
allocated to the Buildings. Licensee shall have access to such parking areas to the same extent
Licensor has access to the parking areas.

     22. Miscellaneous.

     (a) Counterparts. This License Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original, but all of which together will constitute one and
the same instrument.

     (b) Governing Law. This License Agreement shall be construed and enforced in
accordance with, and the rights and duties of the parties shall be governed by, the laws of the
Commonwealth of Massachusetts applicable to contracts made and to be performed entirely in such
Commonwealth (without giving effect to conflicts of laws provisions thereof).

     (c) Descriptive Headings. The descriptive headings of the several articles and
sections of this License Agreement are inserted for reference only and shall not limit or otherwise
affect the meanings hereof.

     (d) Attachments and Exhibits. All attachments and exhibits to this License Agreement
are hereby made a part hereof as if fully set out herein.

6

 

     (e) Severability. In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable
in any respect for any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by applicable law. To the extent that any
such provision is so held to be invalid, illegal or unenforceable, Licensor and Licensee shall in
good faith use their best efforts to find and effect an alternative means to achieve the same or
substantially the same result as that contemplated by such provision.

     (f) Site Specific Agreement. The parties shall execute or cause their applicable
subsidiaries to execute any additional agreements as may be reasonably necessary to effectuate the
intent of this License Agreement.

     (g) Certain Definitions:

	 	(1)	 	“Beneficially Own,” “Beneficially
Owned” and “Beneficially Owning” shall mean beneficial
ownership within the meaning of Rule 16a-1(a)(2) promulgated by the SEC
under the Exchange Act
	 
	 	(2)	 	“Common Stock” means, collectively, the
Class A Common Stock and Class B Common Stock of LMAC and any other
class or series of common stock of LMAC hereafter created.
	 
	 	(3)	 	“Class A Common Stock” means the Class
A Common Stock, par value $0.01 per share, of LMAC.
	 
	 	(4)	 	“Class B Common Stock” means the Class
B Common Stock, par value $0.01 per share, of LMAC.
	 
	 	(5)	 	“Exchange Act” means the Securities
Exchange Act of 1934, as amended.
	 
	 	(6)	 	“SEC” means the Securities and Exchange
Commission.
	 
	 	(7)	 	“subsidiary” means : (a) any
corporation, association or other business entity of which more than
fifty percent (50%) of the total voting power of shares or other voting
securities outstanding thereof is at the time owned or controlled,
directly or indirectly, by that person or one or more of the other
subsidiaries of that person; and (b) the majority control of the
election of the Board of Directors for any corporation, association, or
other business entities; and (c) any partnership or limited liability
company (i) the sole general partner or the managing general partner or
managing member of which is such Person or one or more of the other
subsidiaries of such person or (ii) the only general partners or
members of which are such person or one or more of the other
subsidiaries of such person; provided that the term subsidiary (i) when used with regard to LMGI excludes LMAC and its subsidiaries.

7

 

     (h) Subsidiary Rights and Obligations. If any of the Buildings are owned by a
subsidiary of Licensor, (a) Licensor shall cause its subsidiary to license the applicable License
Area to Licensee and to perform all of the requirements of Licensor hereunder as to such Building,
(b) such subsidiary may exercise the rights of Licensor hereunder as to such Building, and (c)
references herein to Licensor shall mean Licensor’s subsidiary as to such Building. In addition, if
any of the Licensed Areas are occupied by a subsidiary of Licensee, (i) Licensee’s subsidiary shall
have the right to occupy such License Area and exercise the rights of Licensee hereunder as to such
Building, (ii) Licensee shall cause its subsidiary to perform all of the obligations of Licensee
hereunder as to such License Area, and (iii) references herein to Licensee shall mean Licensee’s
subsidiary as to such License Area.

     (i) Other. Time is of the essence with respect to the performance of every provision
of this License Agreement in which time of performance is a factor. When a party is required to do
something by this License Agreement, it shall do so at its sole cost and expense without right of
reimbursement from the other party unless specific provision is made therefor. Whenever one party’s
consent or approval is required to be given as a condition to the other party’s right to take any
action pursuant to this License Agreement, unless another standard is expressly set forth, such
consent or approval shall not be unreasonably withheld or delayed. This License Agreement may be
executed in counterparts. Any executed copy of this License Agreement shall be deemed an original
for all purposes.

     (j) Relationship of the Parties. The relationship between Licensor and Licensee is
solely that of licensor and licensee, and nothing contained in this License Agreement shall be
construed as creating a leasehold or tenancy. Licensee does not and will not have a claim of any
title, estate or interest in the License Areas or the Buildings. Licensee and Licensor acknowledge
that neither it nor its respective shareholders, officers, directors, employees or agents shall
have any authority to bind the other to any contractual obligation whatsoever, except as expressly
permitted herein.

     (k) Corporate Authority. (1) Licensor represents and warrants to Licensee that it has
the right, power, legal capacity and authority to enter into and perform its obligations under this
License Agreement, and that all necessary approvals and consents have been obtained in connection
with the execution and performance of this License Agreement. Licensor further represents and
warrants that the execution and delivery of this License Agreement by the Licensor has been
approved by all necessary corporate action. (2) Licensee represents and warrants to Licensor that
it has the right, power, legal capacity and authority to enter into and perform its obligations
under this License Agreement, and that all necessary approvals and consents have been obtained in
connection with the execution and performance of this License Agreement. Licensee further
represents and warrants that the execution and delivery of this License Agreement by the Licensee
has been approved by all necessary corporate action.

     (l) Specific Performance and Other Remedies. (1) The parties hereby expressly
recognize and acknowledge that immediate, extensive and irreparable damage would result, no
adequate remedy at law would exist and damages would be difficult to determine in the event

8

 

that any provision of this License Agreement is not performed in accordance with its specific
terms or is otherwise breached. Therefore, in addition to, and not in limitation of, any other
remedy available to any party, except as otherwise expressly provided herein, an aggrieved party
under this License Agreement would be entitled to specific performance of the terms hereof and
immediate injunctive relief, without the necessity of proving the inadequacy of money damages as a
remedy. Neither party shall be required to obtain or furnish any bond or similar instrument in
connection with or as a condition to obtaining or seeking any such remedy. For the avoidance of
doubt, nothing in this License Agreement shall diminish the availability of specific performance of
the obligations under this License Agreement or any other injunctive relief. (2) Such remedies,
and any and all other remedies provided for in this License Agreement, shall be cumulative in
nature and not exclusive and shall be in addition to any other remedies whatsoever which any party
may otherwise have. Each of the parties hereby acknowledges and agrees that it may be difficult to
prove damages with reasonable certainty, that it may be difficult to procure suitable substitute
performance and that injunctive relief and/or specific performance will not cause an undue hardship
to the parties. Each party hereby further agrees that in the event of any action by the other
party for specific performance or injunctive relief, it will not assert that a remedy at law or
other remedy would be adequate or that specific performance or injunctive relief in respect of such
breach or violation should not be available on the grounds that money damages are adequate or any
other grounds.

     (m) Amendment and Modification. Subject to applicable law, this License Agreement may
be amended, modified or supplemented only by written agreement executed by the parties hereto. Any
failure of a party to comply with any obligation, covenant or agreement contained in this License
Agreement may be waived by the party entitled to the benefits thereof only by a written instrument
duly executed and delivered by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant or agreement shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure of compliance.

     (n) Entire Agreement. This License Agreement, including any schedules annexed hereto,
embodies the entire agreement and understanding of the parties hereto in respect of the
transactions contemplated by this License Agreement. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those expressly set forth or
referred to herein. This License Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter other than the intercompany agreement by
and between Liberty Mutual Agency Corporation and Liberty Mutual Group Inc., dated as of [_________,]
2010 (the “Intercompany Agreement”). In the event and to the extent that there shall be a
conflict between the provisions of this License Agreement and the provisions of the Intercompany
Agreement, the Intercompany Agreement shall control, except as otherwise provided therein.

     (o) Further Actions. Each party hereto shall, on notice of request from any other
party hereto, take such further action not specifically required hereby at the expense of the
requesting party, as the requesting party may reasonably request for the implementation of the
transactions contemplated hereby.

9

 

     (p) No Third Party Beneficiaries. Nothing in this License Agreement shall convey any
rights upon any person or entity which is not a party or a permitted assignee of a party to this
License Agreement.

     (q) Drafting of Language. Each of Licensor and Licensee agrees that the drafting of
the language contained in this License Agreement was a cooperative effort, that each party was
equally responsible for such drafting and that it would be inequitable for either party to be
deemed the “drafter” of any specific language contained herein pursuant to any judicial doctrine or
presumption relating thereto.

     (r) Interpretation. Whenever the words “include,” “includes” or “including” are used
in this License Agreement, they shall be deemed to be followed by the words “without limitation.”
Unless the context requires otherwise, the terms “hereof,” “herein,” “hereby,” “hereto” and
derivative or similar words in this License Agreement refer to this entire License Agreement.
Unless the context requires otherwise, words in this License Agreement using the singular or plural
number also include the plural or singular number, respectively, and the use of any gender herein
shall be deemed to include the other genders.

     23. Nonliabilitv. Licensor and Licensee agree that neither their respective directors,
officers, employees, shareholders nor any of their respective agents shall have any personal
obligation hereunder, and that Licensor and Licensee shall not seek to assert any claim or enforce
any of their rights hereunder against such directors, officers, employees, shareholders or agents.

     24. Dispute Resolution.

          (a) General. Any controversy, claim or dispute arising out of or relating to
this License Agreement, or the breach, termination or validity thereof (each, a
“Dispute”) shall be resolved as set forth in this Section 24.

          (b) CFO Resolution. Licensor and Licensee shall attempt in good faith to
resolve any Dispute promptly by negotiation between each such party’s designated
representatives. Within ten (10) days after any party’s receipt of a notice of Dispute from
the other party setting forth in detail and together with supporting documentation, if any,
the nature and basis of the Dispute (the “Dispute Notice”), the general counsel and
the chief financial officer of Licensor and the general counsel and the chief financial
officer of Licensee shall meet in person at a mutually acceptable time and place, and
thereafter as often as they reasonably deem necessary, to attempt in good faith to resolve
the Dispute.

          (c) CEO Resolution. If the chief financial officer of either Licensor or
Licensee declares an impasse then within thirty (30) days after receipt of the Dispute
Notice or as soon thereafter as practicable, the respective chief executive officers of
Licensor and Licensee shall meet in person at a mutually acceptable time and place, and
thereafter as often as they reasonably deem necessary, to attempt in good faith to resolve
the Dispute.

          (d) Arbitration. If the chief executive officer of either Licensor or Licensee
declares an impasse then within sixty (60) days after receipt of the Dispute Notice (or such
longer period, if the parties so agree in writing), at the demand of either party, the
Dispute shall be referred to, and finally settled by, confidential and binding arbitration
in accordance with the

10

 

then-prevailing JAMS Streamlined Arbitration Rules and Procedures as
modified as follows (the “Rules”):

          (i) There shall be three (3) neutral arbitrators of whom each party shall select one.
The claimant shall select its arbitrator in its demand for arbitration and the respondent
shall select its arbitrator within thirty (30) days after receipt of the demand for
arbitration. The two (2) arbitrators so appointed shall select a third arbitrator to serve
as chairperson within fourteen (14) days of the designation of the second of the two (2)
arbitrators. If any arbitrator is not timely appointed, at the request of any party such
arbitrator shall be appointed by JAMS pursuant to the listing, striking and ranking
procedure in the Rules.

          (ii) Each arbitrator appointed by a party shall be either an attorney with substantial
experience with the property and casualty reinsurance and insurance industry and at least
ten (10) years admission to the bar, or a property and casualty reinsurance and insurance
industry professional of at least ten (10) years standing. The chair of the arbitral
tribunal shall either be a practicing attorney with no less than ten (10) years of practice
and experience as an arbitrator, with, if possible, experience relating to insurance or
reinsurance disputes, or be a retired judge.

          (iii) The place of arbitration shall be Boston, Massachusetts, unless some other place
is mutually selected by the parties. The arbitral tribunal shall be required to follow the
law of the Commonwealth of Massachusetts. The decision and award of the arbitral tribunal
shall be final and binding on the parties and shall be the sole and exclusive remedy between
the parties regarding the matter presented to the arbitral tribunal, including any claims,
counterclaims, issues or accounting presented to the tribunal. Judgment upon the decision
and award may be entered in any court having jurisdiction. The arbitral tribunal is
empowered to award any remedy provided for under applicable law and the terms of this
License Agreement, including injunction, specific performance or other forms of equitable
relief. The arbitral tribunal is not empowered to award damages in excess of compensatory
damages. Each party hereby irrevocably waives any right to recover punitive, exemplary or
similar damages with respect to any Dispute.

          (iv) Any arbitration proceedings, decision or award rendered hereunder and the
validity, effect and interpretation of this arbitration agreement shall be governed by the
Federal Arbitration Act, 9 U.S.C. Section 1 et seq.

          (e) Costs. Each party shall bear its own costs in any negotiations pursuant to
Sections 24(b) and 24(c) and any arbitration, provided that the parties shall share
the fees and expenses of the arbitrators equally as well as any JAMS fees and expenses.

          (f) Confidentiality. All negotiations conducted pursuant to Sections 24(b) and
24(c) shall be confidential and shall be treated as compromise and settlement negotiations
and may not be introduced as evidence of an admission against interest of either party and
shall not be admissible as evidence in any other proceeding.

11

 

          (g) Judicial Remedies. Notwithstanding the foregoing provisions, without first
resorting to the negotiation procedures set forth in Sections 24(b) and 24(c) herein, either
party may seek the provisional judicial remedy of a preliminary injunction or any other form
of temporary injunctive relief (including specific performance), if in its reasonable
judgment such action is necessary to avoid irreparable harm. Without prejudice to such
provisional remedies as may be available under the jurisdiction of such court, the arbitral
tribunal shall have full authority to grant provisional remedies and to direct the parties
to request that any court modify or vacate any temporary or preliminary relief issued by
such court, and to award damages for the failure of any party to respect the arbitral
tribunal’s orders to that effect.

          (h) Jurisdiction. The parties hereby submit to the jurisdiction of the courts
of the Commonwealth of Massachusetts located in Boston, Massachusetts, for the purpose of
seeking any provisional remedies as contemplated by Section 24(g) or for any action to
compel arbitration or in aid of arbitration or for the enforcement of any arbitral award
rendered thereunder. In any such action, suit or proceeding, each of the parties
irrevocably and unconditionally waives, and agrees not to assert by way of motion, as a
defense or otherwise, any claim that the party is not subject to the jurisdiction of the
above courts, that such action or suit is brought in an inconvenient forum or that the venue
of such action, suit or other proceeding is improper. To the fullest extent permitted by
applicable law, each of the parties irrevocably waives all rights to trial by jury in any
such action, suit or other proceeding.

     25. Binding Effect. This License Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto or their respective successors in interest and
permitted assigns except as otherwise provided herein, and shall not be modified except by an
express written agreement signed by duly authorized representative of both parties.

     26. Cooperation. Should the parties desire to license or enter into any other office
sharing agreement with each other for spaces and locations not set forth on Schedule I, or
to renew or extend any license for any space or location set forth on Schedule I, then the
parties agree to cooperate and work with one another to reach mutually acceptable terms and
provisions for any license or related agreement between each other.

     IN WITNESS WHEREOF, the parties have duly executed this License Agreement as of the date first
above written.

	 	 	 	 	 
	 	LICENSEE:

Liberty Mutual Group Inc., a

Massachusetts corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

12

 

	 	 	 	 	 

	 	 	 	 	 
	 	LICENSOR:

Liberty Mutual Agency Corporation, a

Delaware corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

13

 

SCHEDULE I

(As of July 1, 2010)

Owned Buildings

	 	 	 	 	 	 	 	 	 
	Office #	 	Location	 	Address	 	License Area RSF
	0968

	 	Keene, NH
	 	62 Maple Ave.
	 	 	5,394	 
	0969

	 	Indianapolis, IN
	 	350 East 96th St.
	 	 	100,148	 
	049C

	 	Fairfield, OH
	 	9450 Seward Rd.
	 	 	91,939	 
	050B

	 	Indianapolis, IN
	 	310 East 96th St.
	 	 	616

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