Document:

exv10w46

EXHIBIT 10.46

MANAGEMENT SERVICES AGREEMENT

This Management Services Agreement (the “Agreement”) is made and entered into this 15th day of
December, 2001 by and between Liberty Mutual Insurance Company (“Liberty Mutual”), a Massachusetts
mutual insurance company and Mid-American Fire & Casualty Company (“Mid-Am”), an Ohio insurance
corporation.

	I.	 	Performance of Services. Liberty Mutual agrees, to the extent requested by Mid-Am, to perform
such services (collectively, “services”) for Mid-Am as Mid-Am determines to be reasonably
necessary or desirable in the conduct of its operations; provided, however, that Liberty
Mutual may, in its sole discretion, decline to provide any of the services contemplated in
this Agreement if providing the requested services would interfere with Liberty Mutual’s
ability to meet its obligations to its policyholders or would otherwise adversely affect
Liberty Mutual. All services provided under this Agreement shall comply with all applicable
state laws and regulations governing Mid-Am, including all laws and regulations relating to
review of Mid-Am’s books and records. As may be necessary for the performance of Liberty
Mutual’s services under this Agreement, Liberty Mutual shall have the authority to negotiate
or conclude contracts on behalf of Mid-Am or bind Mid-Am to any such contracts.
	 
	 	 	The listing of the following services to be performed under this Agreement is not intended to
limit the performance of other services that may be provided by Liberty Mutual to or on behalf
of Mid-Am, as may be agreed to by the parties from time to time:

	 	A.	 	Accounting, financial, tax and auditing. Subject to the direction and control of
Mid-Am’s Board of Directors and responsible officers, Liberty Mutual shall provide Mid-Am
with such financial and accounting services as may be desirable, 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 Mid-Am is transacting business, the maintenance of necessary and
proper records and books of account with respect to the business of Mid-Am, and the
maintenance and compilation of all data required for the preparation of tax returns.
	 
	 	2.	 	Assistance to Mid-Am in connection with the examination or audit of the
books, records, affairs and activities of Mid-Am by governmental, insurance or taxing
authorities having regulatory or taxing authority with respect to the operations of
Mid-Am, or by any firm of certified public accountants appointed by Mid-Am to audit
its books, records and accounts.
	 
	 	3.	 	Assistance to Mid-Am with treasury and accounts payable functions as may be
determined between the parties. Mid-Am shall certify to Liberty Mutual the names and
specimen signatures of all officers or employees of Mid-Am who are authorized to sign
instructions on its behalf. Liberty Mutual shall have the right to require that all
instructions made in connection with this Agreement meet its satisfaction as to
content, form and authenticity.

 

 

	 	 	Nothing in this Agreement shall be construed to alter the fact that Mid-Am’s books, records and
accounts are owned by Mid-Am; and Mid-Am shall have the right to inspect, or authorize others
to inspect, its books, records and accounts.

	 	B.	 	Purchasing, payroll and employee benefits. Subject to the direction and control of
Mid-Am’s Board of Directors and responsible officers, Liberty Mutual shall provide Mid-Am
with such services involving purchasing (including access to group purchasing contracts
and fleet management services), payroll processing, and employee relations and/or benefits
as may be desirable.
	 
	 	C.	 	Information Technology and Support. Subject to the direction and control of Mid-Am’s
Board of Directors and responsible officers, Liberty Mutual shall provide the technology
infrastructure, information technology systems, software, data center management, network
management services, monitoring, management/oversight, and support services to Mid-Am and
shall provide trouble-shooting functions on behalf of Mid-Am.
	 
	 	D.	 	Policy Administration and Production. Subject to the direction and control of
Mid-Am’s Board of Directors and responsible officers, Liberty Mutual may perform all
policy production, print and mail activities on Mid-Am’s behalf for all the states in
which Mid-Am currently operates and in which it may operate in the future.
	 
	 	E.	 	Real Estate Management. Subject to the direction and control of Mid-Am’s Board of
Directors and responsible officers, Liberty Mutual may handle all matters and issues
relating to Mid-Am’s real estate purchases, sales, leases and lease-backs.
	 
	 	F.	 	Legal. Subject to the direction and control of Mid-Am’s Board of Directors and
responsible officers, Liberty Mutual may provide legal services, including litigation
management services, to or on behalf of Mid-Am.
	 
	 	G.	 	General Administration. Providing all personnel, equipment, data processing programs,
materials and supplies necessary or desirable for the performance of the services
contemplated in this Agreement.
	 
	 	H.	 	Miscellaneous. Subject to the direction and control of Mid-Am’s Board of Directors
and responsible officers, Liberty Mutual may perform such other services on behalf of
Mid-Am as it may desire, and as may be mutually agreed to between Liberty Mutual and
Mid-Am.

	II.	 	Charges. Mid-Am shall reimburse Liberty Mutual for the reasonable
cost of performing any of the services provided pursuant to this
Agreement. Charges for such services shall include direct expenses
and directly allocable expenses allocated to Mid-Am by Liberty Mutual
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.”

	III.	 	 Accounts and Disbursements. Amounts owing between the parties shall
be settled between the parties on a monthly basis, unless otherwise
agreed to between the parties, provided, however, that the parties
shall settle all amounts owing on at least a calendar quarterly
basis.
	 
	IV. 	 	 Confidentiality. Liberty Mutual and Mid-Am are prohibited from
disclosing or communicating to any other person, not a party to this
Agreement, any confidential or

 

 

	 	 	proprietary information or trade secrets relating to the parties’ respective business or
relating to any affiliate or agency of any party to this Agreement, including business methods
and techniques, research data, marketing and sales information, customer lists, know-how and
any other information concerning the business operations of any party of this Agreement, or any
such party’s affiliates and subsidiaries, unless the disclosure of communication of such
information has been consented to in writing by the party whose confidential and propriety
information or trade secrets is to be released. Confidential and proprietary information shall
not include (a) information generally known to the public, (b) information known to Liberty
Mutual or Mid-Am to be non-confidential from other, third party, sources prior to the execution
of this Amendment, and (c) information required to be disclosed by law or a state or federal
governmental agency having authority over the business of Liberty Mutual or Mid-Am, but only
for the limited purpose of such disclosure.
	 
	V.	 	Standards for Performance of Delegated Administrative and Management Functions.

	 	A.	 	At all times during the term of the Agreement, Liberty Mutual shall perform all
delegated administrative and management functions at a level that is at least equal to its
standards for performing such functions on behalf of its own insurance operations. In
addition, all delegated administrative and management functions shall be performed in
accordance with, and subject to, at all times, the relevant and applicable state (or
federal) insurance laws and regulations to which Mid-Am’s insurance operations are, or may
be, subject.
	 
	 	B.	 	In the event that Liberty Mutual receives a notice from any governmental agency,
board, bureau, commission or public authority of any type, of any alleged violation of any
state or federal insurance law, such notice shall immediately be forwarded to Mid-Am.
Liberty Mutual shall cooperate in responding to any such governmental notice as such
notice relates to its rendering of services under the Agreement.

	VI.	 	Term and Termination.

	 	A.	 	Term. This Agreement shall be effective as of the 15th day of December, 2001 and
shall continue in full force and effect until terminated in accordance with subsection B,
below. In the event that this Agreement is required to be approved by any state Department
of Insurance, any request for such approval shall seek an effective date that mirrors the
date expressed above.
	 
	 	B.	 	Termination.
	 
	 	1.	 	Termination without Cause. This Agreement may be terminated, in whole or in relevant
part, as appropriate, by Mid-Am or Liberty Mutual, without cause, upon ninety (90) days
prior written notice. The terminating party shall provide the applicable state
Department(s) of Insurance with written notification of any whole or partial termination
of this Agreement, as may be appropriate, in accordance with state law requirements.
	 
	 	2.	 	Termination with Cause. This Agreement may be terminated immediately, in relevant
parts or in its entirety, as appropriate, for the following reasons:

	 	(a)	 	Material failure by Liberty Mutual to perform the services delegated in
accordance with the standards set forth in this Agreement; provided, however, that
upon notification by Mid-Am that the services so delegated are not being performed in
an appropriate or satisfactory manner, Liberty Mutual shall have thirty (30) days in
which to cure the deficiency. In the event the deficiency is not cured to the
satisfaction of Mid-Am, Mid-Am may immediately terminate this Agreement.

 

 

	 	(b)	 	nonpayment of costs by a delegating party to the party performing the
services so delegated.
	 
	 	(c)	 	The suspension, revocation or other restriction on the insurance
license of either Mid-Am or Liberty Mutual.
	 
	 	(d)	 	The insolvency, voluntary or involuntary bankruptcy,
reorganization or liquidation of either Mid-Am or Liberty Mutual.
	 
	 	(e)	 	In the event of (i) the acquisition of Mid-Am by a third party
from Liberty Mutual; or (ii) any other change in control which causes Liberty
Mutual to no longer maintain a majority on the Board of Directors of Mid-Am,
then this Agreement shall terminate with respect to Mid-Am as of the effective
date of the change of control.

	 	C.	 	Effect of Termination. In the event that this Agreement is terminated, with, or
without, cause, in whole or in part, as appropriate, the relevant services shall continue
to be provided by Liberty Mutual until alternate arrangements reasonably can be made by
Mid-Am (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. In the event
that this Agreement is terminated, in whole or in part, as appropriate, for any reason
other than those relating to change of control as described in Section VI.B.2(e), above,
all such Transition Services shall continue to be compensated for on a cost basis. In the
event that this Agreement is terminated for reasons specified in Section VI.B.2(e), above,
all such Transition Services shall be compensated for at the then-prevailing market rate
for the provision of such services.

	VII.	 	Indemnification.

	 	A.	 	Liberty Mutual Indemnification of Mid-Am. Liberty Mutual shall indemnify, defend and
hold harmless Mid-Am from and against any expenses, damages, liability, actions, costs or
other claims, including but not limited to reasonable attorney’s fees and associated
costs, incurred by Mid-Am either (i) as a result of the failure of Liberty Mutual or any
subcontractor appointed by Liberty Mutual to comply with any law or administrative
regulation, only if such failure is the result of willful neglect or gross negligence, or
(ii) as a result of, or in connection with, Liberty Mutual’s breach of any duty or
obligation hereunder or the breach of any duty or obligation of any subcontractor
appointed by Liberty Mutual if such breach is the result of willful neglect or gross
negligence. Mid-Am may set off against any amount due Liberty Mutual any amount due to
Mid-Am, pursuant to this or any other agreement to which the parties to this
indemnification are also parties.
	 
	 	B.	 	Mid-Am’s Indemnification of Liberty Mutual. Mid-Am shall indemnify Liberty Mutual and
hold Liberty Mutual harmless from all actions, liabilities, costs and expenses arising out
of or in any way related to Liberty Mutual’s services under this Agreement, unless
directly related to Liberty Mutual’s willful neglect or gross negligence.

	VIII.	 	No Waiver. The parties hereto agree that no indulgence or acceptance of any delinquent or
partial payment or ratification after the fact of any violation or breach of any provision of
this Agreement by any party hereto shall be construed as a waiver of any party’s rights
hereunder.

 

 

	IX.	 	Notices. Any notice required to be given pursuant to any provision of this Agreement shall
be in writing and shall be sent to the parties at their respective last known address by first
class mail, postage prepaid, by overnight delivery service, or by confirmed facsimile
transmission.
	 
	X.	 	Severability. If any provision of this Agreement is held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provision, and the Agreement shall
be construed and enforced as if that provision had not been included.
	 
	XI.	 	Amendment. This Agreement may only be amended upon the written agreement of both parties hereto.
	 
	XII.	 	Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be considered an original, but
all of which together, shall be considered one and the same.
	 
	XIII.	 	Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts (without application of the conflict of laws principles thereof).

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement under seal
as of the day and year first above written.

	 	 	 	 	 	 	 	 

	Liberty Mutual Insurance Company	 	Mid-American Fire & Casualty Company	 
	 
	 	 	 	 	 	 	 
	/s/ J. Paul Condrin, III	 	/s/ James F. Dore	 
	 	 	 	 
	By:

	 	J. Paul Condrin, III
	 	By:
	 	James F. Dore	 
	Its:

	 	CFO
	 	Its:
	 	CFO and SVP	 

 

 

AMENDMENT NO. 1

(the “Amendment”)

TO

MANAGEMENT SERVICES AGREEMENT

(the “Agreement”)

by and between

LIBERTY MUTUAL INSURANCE COMPANY (“Manager”) and MID-AMERICAN FIRE & CASUALTY COMPANY (“Company”);
(hereinafter together called the “Parties”).

WHEREAS, the Parties entered into the Agreement for Manager to provide various services effective
December 15, 2001.

WHEREAS, the Parties deem it necessary to amend certain provisions of the Agreement with respect to
settlement of amounts due between them.

NOW, THEREFORE, the Parties hereto agree to amend the Agreement, as follows:

1. Section III “Accounts and Disbursements” of the Agreement is amended and restated as follows:

III. Accounts and Disbursements. Amounts owing between the parties shall be settled
between the parties on a quarterly basis and payments of amounts owing shall be made
within 45 days after the end of the calendar quarter.

2. Section I. “Performance of Services” is hereby amended to include a new subsection I.
“Maintenance and Property Rights of Records:”

I. Maintenance and Property Rights of Records, Manager shall maintain accurate and
complete records as related to this Agreement. Each of the Parties shall retain the rights
to access such records upon request.

3. Section XV. “Successors and Assigns” is hereby added to the Agreement.

XV. Successors and Assigns. No assignment of this Agreement, including by operation of
Law, may be made by any party to this Agreement without the prior written consent of other
party hereto. Notwithstanding the foregoing, the Manager has full discretion to delegate
any of its responsibilities, duties and authority set forth herein to, or otherwise to
utilize any of its affiliates to provide

 

 

services under this Agreement, provided that Manager will be fully accountable for any
acts or omissions of an affiliate pursuant to such an arrangement, as if such acts or
omissions were its own.

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment No. 1 to the Agreement, effective
as of the 31st day of December, 2007 to be executed by their respective duly authorized officers.

	 	 	 	 	 	 	 	 

	Liberty Mutual Insurance Company	 	Mid-American Fire & Casualty Company	 
	 
	 	 	 	 	 	 	 
	/s/ John D. Doyle	 	/s/ James F. Dore	 
	 	 	 	 
	By:

	 	John D. Doyle
	 	By:
	 	James F. Dore	 
	Its:

	 	Vice President and Comptroller
	 	Its:
	 	Chief Financial Officer	 

 

 

Mid-American Fire & Casualty Company

6281 Tri-Ridge Boulevard

Loveland, OH 45140

October 13, 2005

RE: Letter Agreement Regarding Reinsurance Services

          This letter will confirm that, effective as of December 15, 2001, Liberty Mutual Insurance
Company’s performance of the following services for and on behalf of Montgomery Mutual Insurance
Company is encompassed by the terms of the Management Services Agreement dated as of December 15,
2001 between the parties, and as amended by Amendment 1 on January 1, 2004:

          Reinsurance services: including, but not limited to (i) agreement 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.

	 	 	 	 

	/s/ James R. Pugh

	 	/s/ James F. Dore	 
	 

	 	 	 
	James R. Pugh, Asst. Secretary

	 	James F. Dore, Chief Financial Officer
	 
	 
	 	 	 
	Liberty Mutual Insurance Company

	 	Mid-American Fire & Casualty Companyexv10w47

EXHIBIT 10.47

MANAGEMENT SERVICES AGREEMENT

This Management Services Agreement (the “Agreement”) is made and entered into this 15th
day of December, 2001 by and between Liberty Mutual Insurance Company (“Liberty Mutual”), a
Massachusetts mutual insurance company, Liberty Insurance Holdings, Inc. (“LIH”), a Delaware
corporation, and Montgomery Mutual Insurance Company (“MMIC”), a Maryland mutual insurance
corporation.

I. Performance of Services. Liberty Mutual agrees, to the extent requested by LIH, on behalf of
MMIC pursuant to the terms of that certain Management Agreement entered into between MMIC and LIH
effective January 1, 2001, to perform such services (collectively, “services”) for LIH, on behalf
of MMIC, as LIH and MMIC determine to be reasonably necessary or desirable in the conduct of its
operations; provided, however, that Liberty Mutual may, in its sole discretion, decline to provide
any of the services contemplated in this Agreement if providing the requested services would
interfere with Liberty Mutual’s ability to meet its obligations to its policyholders or would
otherwise adversely affect Liberty Mutual. All services provided under this Agreement shall comply
with all applicable state laws and regulations governing MMIC, including all laws and regulations
relating to review of MMIC’s books and records. As may be necessary for the performance of Liberty
Mutual’s services under this Agreement, Liberty Mutual shall have the authority to negotiate or
conclude contracts on behalf of MMIC or bind MMIC to any such contracts.

The listing of the following services to be performed under this Agreement is not intended to limit
the performance of other services that may be provided by Liberty Mutual to or on behalf of LIH,
for MMIC’s benefit, as may be agreed to by the parties from time to time:

     A. Accounting, Financial, Tax and Auditing. Subject to the direction and control of MMIC’s
Board of Directors and responsible officers, Liberty Mutual shall provide MMIC with such financial
and accounting services as may be desirable, 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 MMIC is
transacting business, the maintenance of necessary and proper records and books of account with
respect to the business of MMIC, and the maintenance and compilation of all data required for the
preparation of tax returns.

          2. Assistance to LIH, on behalf of MMIC, in connection with the examination or audit of the
books, records, affairs and activities of MMIC by governmental, insurance or taxing authorities
having regulatory or taxing authority with respect to the operations of MMIC, or by any firm of
certified public accountants appointed by MMIC to audit its books, records and accounts.

          3. Assistance to LIH, on behalf of MMIC, with treasury and accounts payable functions as may
be determined between the parties. LIH or MMIC, as appropriate, shall certify to Liberty Mutual the
names and specimen signatures of all officers or employees of MMIC who are authorized to sign
instructions on its behalf. Liberty Mutual shall have the right to require

 

 

that all instructions made in connection with this Agreement meet its satisfaction as to content,
form and authenticity.

     Nothing in this Agreement shall be construed to alter the fact that MMIC’s books, records and
accounts are owned by MMIC; and MMIC shall have the right to inspect, or authorize others to
inspect, its books, records and accounts.

     B. Purchasing, payroll and employee benefits. Subject to the direction and control of MMIC’s
Board of Directors and responsible officers, Liberty Mutual shall provide LIH, on behalf of MMIC,
with such services involving purchasing (including access to group purchasing contracts and fleet
management services), payroll processing, and employee relations and/or benefits as may be
desirable.

     C. Information Technology and Support. Subject to the direction and control of MMIC’s Board of
Directors and responsible officers, Liberty Mutual shall provide the technology infrastructure,
information technology systems, software, data center management, network management services,
monitoring, management/oversight, and support services to MMIC and shall provide trouble-shooting
functions on behalf of MMIC.

     D. Policy Administration and Production. Subject to the direction and control of MMIC’s Board
of Directors and responsible officers, Liberty Mutual may perform all policy production, print and
mail activities on MMIC’s behalf for all the states in which MMIC currently operates and in which
it may operate in the future.

     E. Real Estate Management. Subject to the direction and control of MMIC’s Board of Directors
and responsible officers, Liberty Mutual may handle all matters and issues relating to MMIC’s real
estate purchases, sales, leases and lease-backs.

     F. Legal. Subject to the direction and control of MMIC’s Board of Directors and responsible
officers, Liberty Mutual may provide legal services, including litigation management services, to
or on behalf of MMIC.

     G. General Administration. Providing all personnel, equipment, data processing programs,
materials and supplies necessary or desirable for the performance of the services contemplated in
this Agreement.

     H. Miscellaneous. Subject to the direction and control of MMIC’s Board of Directors and
responsible officers, Liberty Mutual may perform such other services on behalf of LIH, for the
benefit of MMIC, as it may desire, and as may be mutually agreed to among Liberty Mutual, LIH and
MMIC.

II. Charges. LIH or MMIC, as appropriate, shall reimburse Liberty Mutual for the reasonable cost of
performing any of the services provided pursuant to this Agreement. Charges for such services shall
include direct expenses and directly allocable expenses allocated to MMIC by Liberty Mutual in
conformity with customary insurance accounting practices consistently applied; provided, however,
that all such expenses and costs shall be allocated to MMIC in accordance with MMIC’s pooling
percentage under the Liberty Mutual Inter-Company

 

 

Reinsurance Agreement, including all amendments and endorsements thereto. 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.”

III. Accounts and Disbursements. Amounts owing between or among the parties shall be settled among
or between the parties on a monthly basis, unless otherwise agreed to between or among the parties,
provided, however, that the parties shall settle all amounts owing on at least a calendar quarterly
basis.

IV. Confidentiality. Liberty Mutual, LIH and MMIC are prohibited from disclosing or communicating
to any other person, not a party to this Agreement, any confidential or proprietary information or
trade secrets relating to the parties’ respective business or relating to any affiliate or agency
of any party to this Agreement, including business methods and techniques, research data, marketing
and sales information, customer lists, know-how and any other information concerning the business
operations of any party of this Agreement, or any such party’s affiliates and subsidiaries, unless
the disclosure of communication of such information has been consented to in writing by the party
whose confidential and propriety information or trade secrets is to be released. Confidential and
proprietary information shall not include (a) information generally known to the public, (b)
information known to Liberty Mutual, LIH or MMIC to be non-confidential from other, third party,
sources prior to the execution of this Amendment, and (c) information required to be disclosed by
law or a state or federal governmental agency having authority over the business of Liberty Mutual
or MMIC, but only for the limited purpose of such disclosure.

V. Standards For Performance Of Delegated Administrative And Management Functions.

     A. At all times during the term of the Agreement, Liberty Mutual shall perform all delegated
administrative and management functions at a level that is at least equal to its standards for
performing such functions on behalf of its own insurance operations. In addition, all delegated
administrative and management functions shall be performed in accordance with, and subject to, at
all times, the relevant and applicable state (or federal) insurance laws and regulations to which
MMIC’s insurance operations are, or may be, subject.

     B. In the event that Liberty Mutual receives a notice from any governmental agency, board,
bureau, commission or public authority of any type, of any alleged violation of any state or
federal insurance law, such notice shall immediately be forwarded to LIH or MMIC, as appropriate.
Liberty Mutual shall cooperate in responding to any such governmental notice as such notice relates
to its rendering of services under the Agreement.

VI. Term and Termination.

     A. Term. This Agreement shall be effective as of the 15th day of December, 2001
and shall continue in full force and effect until terminated in accordance with subsection B,
below. In the event that this Agreement is required to be approved by any state Department of
Insurance, any request for such approval shall seek an effective date that mirrors the date
expressed above.

 

 

     B. Termination.

          1. Termination Without Cause. This Agreement may be terminated, in whole or in
relevant part, as appropriate, by LIH, MMIC or Liberty Mutual, without cause, upon ninety (90) days
prior written notice. The terminating party shall provide the applicable state Department(s) of
Insurance with written notification of any whole or partial termination of this Agreement, as may
be appropriate, in accordance with state law requirements.

          2. Termination With Cause. This Agreement may be terminated immediately, in relevant
parts or in its entirety, as appropriate, for the following reasons:

               (a) Material failure by Liberty Mutual to perform the services delegated in accordance with
the standards set forth in this Agreement; provided, however, that upon notification by LIH or MMIC
that the services so delegated are not being performed in an appropriate or satisfactory manner,
Liberty Mutual shall have thirty (30) days in which to cure the deficiency. In the event the
deficiency is not cured to the satisfaction of LIH or MMIC, LIH or MMIC, as appropriate, may
immediately terminate this Agreement.

               (b) Nonpayment of costs by a delegating party to the party performing the services so
delegated.

               (c) The suspension, revocation or other restriction on the insurance license of either MMIC or
Liberty Mutual.

               (d) The insolvency, voluntary or involuntary bankruptcy, reorganization or liquidation of
either MMIC or Liberty Mutual.

               (e) In the event of (i) the acquisition of LIH by a third party from Liberty Mutual; or (ii)
any other change in control which causes Liberty Mutual to no longer maintain a majority on the
Board of Directors of LIH or MMIC, then this Agreement shall terminate with respect to LIH or MMIC
as of the effective date of the change of control.

     C. Effect of Termination. In the event that this Agreement is terminated, with, or
without, cause, in whole or in part, as appropriate, the relevant services shall continue to be
provided by Liberty Mutual until alternate arrangements reasonably can be made by LIH or MMIC (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. In the event that this Agreement is
terminated, in whole or in part, as appropriate, for any reason other than those relating to change
of control as described in Section VI.B.2(e), above, all such Transition Services shall continue to
be compensated for on a cost basis. In the event that this Agreement is terminated for reasons
specified in Section VI.B.2(e), above, all such Transition Services shall be compensated for at the
then-prevailing market rate for the provision of such services.

 

 

VII. Indemnification.

     A. Liberty Mutual Indemnification of LIH and MMIC. Liberty Mutual shall indemnify,
defend and hold harmless LIH and MMIC from and against any expenses, damages, liability, actions,
costs or other claims, including but not limited to reasonable attorney’s fees and associated
costs, incurred by LIH or MMIC either (i) as a result of the failure of Liberty Mutual or any
subcontractor appointed by Liberty Mutual to comply with any law or administrative regulation, only
if such failure is the result of willful neglect or gross negligence, or (ii) as a result of, or in
connection with, Liberty Mutual’s breach of any duty or obligation hereunder or the breach of any
duty or obligation of any subcontractor appointed by Liberty Mutual if such breach is the result of
willful neglect or gross negligence. LIH or MMIC, as appropriate, may set off against any amount
due Liberty Mutual any amount due to LIH or MMIC, as appropriate, pursuant to this or any other
agreement to which the parties to this indemnification are also parties.

     B. LIH and MMIC’s Indemnification of Liberty Mutual. MMIC and LIH shall indemnify
Liberty Mutual and hold Liberty Mutual harmless from all actions, liabilities, costs and expenses
arising out of or in any way related to Liberty Mutual’s services under this Agreement, unless
directly related to Liberty Mutual’s willful neglect or gross negligence.

VIII. No Waiver. The parties hereto agree that no indulgence or acceptance of any delinquent or
partial payment or ratification after the fact of any violation or breach of any provision of this
Agreement by any party hereto shall be construed as a waiver of any party’s rights hereunder.

IX. Notices. Any notice required to be given pursuant to any provision of this Agreement shall be
in writing and shall be sent to the parties at their respective last known address by first class
mail, postage prepaid, by overnight delivery service, or by confirmed facsimile transmission.

X. Severability. If any provision of this Agreement is held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provision, and the Agreement shall be
construed and enforced as if that provision had not been included.

XI. Amendment. This Agreement may only be amended upon the written agreement of both parties
hereto.

XII. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be
considered an original, but all of which together, shall be considered one and the same.

XIII. Governing Law. This Agreement shall be governed by and construed in accordance with the laws
of the Commonwealth of Massachusetts (without application of the conflict of laws principles
thereof).

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement under seal
as of the day and year first above written.

 

 

	 	 	 	 	 	 	 	 	 

	Liberty Mutual Insurance Company	 	Montgomery Mutual Insurance Company	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ John D. Doyle
 

	 	/s/ James F. Dore
 

	 	 
	By:

	 	John D. Doyle
	 	By:
	 	James F. Dore	 	 
	Its:

	 	VP & Comptroller
	 	Its:
	 	CFO & SVP	 	 
	 
	 	 	 	 	 	 	 	 	 
	Liberty Insurance Holdings, Inc.	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	/s/ James F. Dore
 

	 	 	 	 	 	 	 
	By:

	 	James F. Dore	 	 	 	 	 	 	 
	Its:

	 	CFO & SVP	 	 	 	 	 	 	 

 

 

Montgomery Mutual Insurance Company

17810 Meeting House Road

Sandy Spring, MD 20860

October 13, 2005

RE: Letter Agreement Regarding Reinsurance Services

          This letter will confirm that, effective as of December 15, 2001, Liberty Mutual Insurance
Company’s performance of the following services for and on behalf of Montgomery Mutual Insurance
Company is encompassed by the terms of the Management Services Agreement dated as of December 15,
2001 between the parties, and as amended by Amendment 1 on January 1, 2004:

          Reinsurance services: including, but not limited to (i) agreement 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.

	 	 	 	 	 

	/s/ James R. Pugh
 

	 	/s/ James F. Dore
 

	 	 
	James R. Pugh, Asst. Secretary

	 	James F. Dore, Chief Financial Officer	 	 
	 
	 	 	 	 
	Liberty Mutual Insurance Company

	 	Montgomery Mutual Insurance Company

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