Document:

First Amended and Restated Managing General Agency Agreement

 Exhibit 10.14 
  
 First Amended and Restated 
 Managing General Agency Agreement 
 Number AA-01-001 
  
 Table of Contents 
  

					
	 	  	 	  	Page

	 Article 1
	  	 Appointment
	  	2
	 Article 2
	  	 Authority of the Managing General Agent
	  	2
	 Article 3
	  	 Compensation
	  	3
	 Article 4
	  	 Accounting and Records
	  	5
	 Article 5
	  	 Managing General Agent’s Reports and Remittances
	  	6
	 Article 6
	  	 Expenses
	  	7
	 Article 7
	  	 Premium Escrow Accounts
	  	8
	 Article 8
	  	 Ownership of Books and Records
	  	9
	 Article 9
	  	 Independent Contractor Relationship
	  	10
	 Article 10
	  	 Advertising
	  	10
	 Article 11
	  	 Agents Licensing
	  	10
	 Article 12
	  	 Agency Sale or Transfer
	  	11
	 Article 13
	  	 Hold Harmless
	  	11
	 Article 14
	  	 Arbitration
	  	11
	 Article 15
	  	 Termination
	  	12
	 Article 16
	  	 Claims Handling
	  	13
	 Article 17
	  	 Reinsurance
	  	14
	 Article 18
	  	 Miscellaneous
	  	15

  

 1 

 FIRST AMENDED AND RESTATED 
 MANAGING GENERAL AGENCY AGREEMENT 
 NUMBER AA-01-001

  
 This Agreement is made and entered into by and between OLD AMERICAN
COUNTY MUTUAL FIRE INSURANCE COMPANY, a Texas Company (Company) and AMERICAN AGENCIES GENERAL AGENCY INC., a Texas Corporation with administrative offices in Addison, Texas, (Managing General Agent). 
  
 THE COMPANY AND THE MANAGING GENERAL AGENT AGREE AS FOLLOWS: 
  
 ARTICLE 1 - APPOINTMENT 
  

	1.1	The Company appoints the Managing General Agent to act as its Managing General Agent as that term is defined in Article 21.07-3 of the Texas Insurance Code and the Texas
Administrative Code. This appointment is originally effective October 1, 2001 and continuous in nature and shall remain in effect until terminated in accordance with Article 15. 

  

	1.2	The Managing General Agent acknowledges and agrees that the Company’s appointment of the Managing General Agent does not restrict in any manner the Company’s right to
appoint agents writing any lines of insurance the Company writes through any other agent, sub-agent or managing general agent either direct to the Company or through other agents. 

  

	1.3	This First Amended and Restated Managing General Agency Agreement Number AA-01-001 hereby amends and restates that certain Managing General Agency Agreement Number AA-01-001 dated
October 1, 2001, as amended, made by and between Company and Managing General Agent. 

  
 ARTICLE 2 - AUTHORITY OF THE MANAGING GENERAL AGENT 
  

	2.1	The Managing General Agent has the authority and duty to act on behalf of the Company in all respects, insofar as necessary for the Managing General Agent to perform the function of
a Managing General Agent for the Company. The Company may, from time-to-time, place reasonable written restrictions upon the Managing General Agent. The Managing General Agent’s authority includes, but is not limited to, production, appointment
and supervision of agents for the Company, underwriting, accounting and claims handling. All acts of the Managing General Agent, insofar as the Company’s business is concerned, are subject to the ultimate authority of the Company.

  

	2.2	The original source of all business produced under this Agreement shall be property/casualty agents or general lines agents in the State of Texas (Agent(s)).

  

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	2.3	The Managing General Agent has the authority to accept, on forms approved by the Company, applications, binders, and/or Policies written by or through Agents, for classes or lines
of insurance as described in the attached Schedule of Business and in Quota Share Reinsurance Agreements between the Company and various reinsurers (the Reinsurer) effective July 1, 2001, as amended and all substitutions thereof, (Reinsurance
Agreement), a copy of said Agreement is attached hereto and fully incorporated herein. 

  

	2.4	The Managing General Agent acknowledges and agrees that the term(s) of any Policy shall not exceed twelve (12) months. “Policy” is defined as any policy, endorsement,
binder, certificate, proposal for insurance and other document which binds the Company to insurance coverage. 

  

	2.5	The Managing General Agent has the authority to cancel Policies, at its discretion, subject to the requirements imposed by law and in compliance with the applicable provisions
contained in this Agreement and the Policies. 

  

	2.6	The Managing General Agent has the authority to receive and receipt for premiums and to retain commissions out of such collected premiums subject to the terms and conditions of this
Agreement. 

  

	2.7	The Managing General Agent or its designated claims handler shall have the authority to set loss reserves, adjust and pay losses and loss adjustment expenses on behalf of the
Company. 

  

	2.8	The Company shall retain the authority to restrict the premium volume. 

  

	2.9	The Managing General Agent may not authorize policy issuance on behalf of the Company to any broker, agent, managing general agent or any other entity without the prior written
consent of the Company. 

  

	2.10	Any and all agreements with Agent(s) shall be made directly between the Managing General Agent and such Agent(s). It is understood that the Agent shall have no claim or cause of
action against the Company and said Agent(s) shall look solely to the Managing General Agent for any and all expenses, costs, causes of action and damages, including, but not limited to, extra contractual obligations, arising in any manner from
actions or inactions by the Agent(s) or the Managing General Agent. 

  

	2.11	The Managing General Agent shall bear sole responsibility to oversee the proper licensing of any Agents(s). Should any fines be levied against the Company as the result of the
Managing General Agent accepting business from an unlicensed Agent, the Managing General Agent shall hold the Company harmless and reimburse the Company for any and all expenses so incurred including, but not limited to, legal fees, fines and travel
expenses. 

  
 ARTICLE 3 - COMPENSATION 
  

	3.1	The Managing General Agent’s compensation shall be the commission allowed under the Reinsurance Agreement less fronting fees and premium taxes. As used in the Article,
the term “Net Written Premium” is defined as the total of all premium amounts on policies written by the Managing General Agent between the Company and the Managing General Agent less return premium and cancellations.

  

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	3.2	Amounts paid to the Company shall be a percentage of aggregate Net Written Premiums (NWP) and policy fees charged (PF) on all policies produced and serviced by AAGA, Harbor
Insurance Managers, Inc. and Old American Insurance Services, Inc. (OAIS) as follows: 

  

				
	 NWP/PF

	  	Percentage

	 
	 0 - $236,565,000
	  	3.275	%
	 excess of $236,565,000
	  	1.625	%

  
 Until Harbor, OAIS and
AAGA produce $236,565,000 aggregate Net Written Premiums and policy fees charged, or until December 31, 2006, whichever occurs first, the Company shall be entitled to receive a minimum annual fronting fee of $1,000,000. The calculation and payment
of the remainder of the minimum fronting fee, if any, shall be due on February 15 of each succeeding year. In addition, premium taxes of one and seventy-five percent (1.75%) are due in addition to the payments above based upon NWP and PF.

  
 The Company agrees to apply all amounts paid in excess of
1.625% to satisfy the reinsurance payable of approximately $2.3 million as reflected in the consolidated balance sheet of Old American Investments Inc. (OAII) as of December 31, 2001. In the event of termination of this agreement, the lesser of the
reinsurance payable balance or $500,000 shall be forgiven. Notwithstanding the foregoing, it is agreed that all amounts paid to the Company shall be considered for the purpose of determining whether the minimum annual fronting fee has been received
by the Company. The calculation and payment of the remainder of the minimum annual fronting fee, if any, shall be due on February 15 of each succeeding year. 
  

	3.3	All aggregate Net Written Premiums and policy fees charged on all policies produced and serviced by Harbor, OAIS and AAGA in excess of $236,565,000 shall be included in the
calculation of the $100,000,000 combined annual Net Written Premium and policy fees charged threshold for A-Affordable Managing General Agency, Inc., as contemplated by that Managing General Agency Agreement addenda of even date herewith between the
Company and A-Affordable. Such Agreement allows for a reduction in the fronting fee charged by the Company for business produced and serviced by A-Affordable and its affiliates from 1.625% to 1.500% after such $100,000,000 threshold is
attained. 

  

	3.4	The tax provision of one and three-quarters percent (1.75%) of Net Written Premium and policy fees charged includes premium tax and the Texas Overhead Assessment. Amounts due
for the Automobile Theft Prevention Pool will be settled separately on a semiannual basis. The Company retains the right to adjust the premium tax of 1.75% to any new effective rate determined by the Texas Department of Insurance or other such
agency. The Company will be liable for remitting state premium taxes based on Net Written Premium and policy fees charged. 

  

	3.5	Should service fees be charged on any policy covered by this Agreement, and such fees be deemed taxable for premium tax purposes, then such service fees are to be added to
the Net Written Premium and net policy fees charged to determine the amount subject to Fronting Fees. 

  

 4 

	3.6	The Managing General Agent shall be entitled to retain the policy fee less premium taxes of one and three quarters percent (1.75%) and fronting fees as stated in Articles 3.2
and 3.3 plus billing and other service fees charged by the Managing General Agent. 

  

	3.7	In the event there is no Agent to receive the designated commission on a Policy, the Managing General Agent may retain the commission. 

  

	3.8	The commission may, from time to time, be amended upon mutual agreement of the Company and the Managing General Agent without otherwise affecting the terms and conditions of
this Agreement. 

  

	3.9	The Company agrees to pass through to the Managing General Agent any Contingent or Profit Commission allowed by the Reinsurer(s) as referenced in the Reinsurance Agreement.

  
 ARTICLE 4 - ACCOUNTING AND RECORDS 
  

	4.1	The Managing General Agent shall provide and maintain all necessary books, records, policies, claim files, dailies and correspondence with policyholders to determine the amount of
liability of the Company and the amount of premiums therefrom. 

  

	4.2	The Managing General Agent shall prepare separate, itemized, monthly statements for each Agent on the business placed by the Agent through the Managing General Agent, and furnish
the Agent with an IRS Form 1099 each year when required. 

  

	4.3	All records shall be kept in such manner and form as is generally recognized as acceptable in the insurance industry or as may be required by the Company. Such records shall be
maintained for at least five (5) years or for any longer applicable retention period required by the Texas Department of Insurance. All records must be located in Texas, unless approved by the Texas Department of Insurance under Article 1.28 of the
Texas Insurance Code. 

  

	4.4	All records applicable to the Company’s business shall be opened for inspection and/or audit at all reasonable times by the Company, its reinsurers, insurance department
personnel or other governmental authorities. 

  

	4.5	Upon request and pursuant to regulatory requirements, the Managing General Agent shall forward as reasonably required to the Company or the Company’s Designated Accountant
and/or Statistical Agent, exact, as written, copies of all applications, binders, policies, daily reports, monthly reporting forms and endorsements issued by or through licensed Agent(s), including all other evidence of insurance written, modified
or terminated. 

  

	4.6	The Managing General Agent shall be solely responsible for and shall keep accurate records of all policies assigned to the Managing General Agent and shall account to the Company,
upon the Company’s reasonable request, for all outstanding and unused policy supplies. In the event canceled or terminated policies or binders are unavailable, the Managing General Agent shall forward, or cause to be forwarded, properly
executed Lost Policy Receipts. 

  

 5 

	4.7	At renewal of any Policy issued by the Managing General Agent, the Managing General Agent shall be responsible to the insured for the renewal or non-renewal of the Policy and shall
timely communicate any renewal quote or notice of non-renewal to the insured to preclude the extension of coverage beyond the expiration date of the current in-force policy. 

  

	4.8	The Company shall conduct or cause to be conducted a semi-annual examination of the Managing General Agent. This examination will take place at the Managing General Agent’s
business offices or premises where necessary records are maintained, and the Managing General Agent will bear the total cost of $1,500 per audit plus out of pocket expenses actually and reasonably incurred by the Company to conduct each examination.
Such examination must remain on file with the Company for three (3) years, be available to the Commissioner of Insurance for review, and contain, at a minimum, the following information: 

  

	 	a.	claims control procedures; 

  

	 	b.	timeliness of claims payments; 

  

	 	c.	timeliness of premium reporting and collection; 

  

	 	d.	compliance with underwriting guidelines; and 

  

	 	e.	reconciliation of policy inventory. 

  

	4.9	If within any thirty (30) day period, the Company’s aggregate premium volume increases by thirty percent (30%) or more, the Company shall conduct, within ninety (90)
days of said period, an examination of the Managing General Agent if the Managing General Agent: 

  

	 	a.	writes greater than twenty percent (20%) of the Company’s aggregate premium volume; and 

  

	 	b.	has experienced an increase of twenty percent (20%) or more of premium volume during the thirty (30) day period. 

  
 Any such examination shall contain the information required pursuant to
Article 4.8. 
  
 ARTICLE 5 - MANAGING GENERAL AGENT’S REPORTS AND
REMITTANCES 
  

	5.1	The Managing General Agent shall submit a report to the Company, within thirty (30) days after the close of business each calendar month, summarizing the business transacted under
this Agreement during the prior month. Such report shall include the following items: 

  

	 	a.	gross premiums written less returns and cancellations; 

  

	 	b.	Agent’s commissions; 

  

	 	c.	losses paid less recoveries and salvage; 

  

	 	d.	loss adjustment expenses paid; 

  

	 	e.	outstanding loss reserves; 

  

	 	f.	outstanding loss expense reserves; 

  

	 	g.	losses incurred but not reported; 

  

	 	h.	unearned premium reserve; and 

  

	 	i.	earned premium. 

  

 6 

	5.2	The Managing General Agent shall remit all amounts due directly to the Company within forty-five (45) days after the close of the calendar month for which the account is rendered.

  

	5.3	In addition to the return of premium, the Managing General Agent shall refund commissions on policy cancellations, reductions in premiums or any other return premiums at the same
rate at which such commissions were originally retained. 

  

	5.4	The Company may, at its sole option, reasonably alter the frequency and/or content of the Managing General Agent’s report; provided, however, such report is made no less
frequently than monthly. 

  

	5.5	The omission of any item(s) from a monthly statement shall not affect the responsibility of either party to account for and pay all amounts due the other party, nor shall it
prejudice the rights of either party to collect all such amounts due from the other party. 

  

	5.6	The Managing General Agent shall annually furnish to the Company the following summary information in such form as to enable the Company to record such information in its annual
statement: 

  

	 	a.	summaries, with data segregated by major classes, of net premium written, gross loss paid, net salvage, subrogation and adjusting expenses paid during the year; and

  

	 	b.	details of in-force and unearned premium running twelve (12) months or less from the policy inception date. 

  

	5.7	The Managing General Agent agrees to furnish the Company with any additional reports necessary to provide the Company’s monthly, quarterly and/or annual statements to
regulatory authorities including, but not limited to, TICO reporting. 

  

	5.8	The Managing General Agent shall annually furnish the Company current financial statements of the Managing General Agent. These financial statements shall include, but not be
limited to, Profit and Loss, Balance Sheet and Cash Flow Statements. 

  
 ARTICLE 6 - EXPENSES 
  

	6.1	The Managing General Agent is responsible for and shall promptly pay all expenses attributable to the producing and servicing of business under this Agreement, except as specified
in Article 6.2. This responsibility shall not be altered whether the expense is billed to the Managing General Agent or the Company. These expenses include, but are not limited to: 

  

	 	a.	salaries and all other benefits of all employees of the Managing General Agent; 

  

	 	b.	transportation, lodging, and meals of employees of the Managing General Agent; 

  

	 	c.	postage, and other delivery charges; 

  

	 	d.	advertising; 

  

	 	e.	printing of all policies, forms and endorsements; 

  

 7 

	 	f.	EDP hardware, software, and programming; 

  

	 	g.	countersignature fees or commissions; 

  

	 	h.	license and appointment fees for agents, brokers, and solicitors; 

  

	 	i.	adjustment expenses arising from claims on insurance written under this Agreement, except for expenses incurred at the direction of the Company; 

  

	 	j.	provision of office space, equipment and other facilities necessary for the operation of Managing General Agent; and 

  

	 	k.	legal, auditing and other expenses arising from any rate filings, rules, regulations, or business issues affecting the Managing General Agent. 

  

	6.2	The Company is responsible for and shall promptly pay all expenses attributable to the actions of the Company as a result of business produced under this Agreement. This
responsibility shall not be altered whether the expense is billed to the Company or the Managing General Agent. These expenses include but are not limited to: 

  

	 	a.	salaries and all other benefits of all employees of the Company; 

  

	 	b.	transportation, lodging, and meals of employees of the Company; 

  

	 	c.	State or Guaranty Fund Assessments; 

  

	 	d.	losses and loss adjustment expenses incurred at the direction of the Company; 

  

	 	e.	cost of reinsurance; and 

	 	legal	and auditing expense incurred at the direction of the Company (other than as provided for in Article 4.8). 

  
 ARTICLE 7 - PREMIUM ESCROW ACCOUNTS 
  

	7.1	The Managing General Agent shall accept in a fiduciary capacity all premiums collected and other funds relating to the business written under this Agreement. The privilege of
retaining commissions shall not be construed as changing the fiduciary capacity. 

  

	7.2	The Managing General Agent assumes responsibility for, and shall promptly pay, the net written premium currently due the Company, whether collected or not, on Policies issued by the
Managing General Agent or, the Company on behalf of the Managing General Agent, subject to any deductions provided herein. 

  

	7.3	The Managing General Agent shall establish and maintain a Premium Escrow Account entitled “AA/Old American Premium Escrow Account”. Escrow Accounts shall be in a Federally
Chartered Bank which is mutually agreed upon by the Managing General Agent and the Company. All premiums collected by the Managing General Agent on business produced under this Agreement shall be deposited promptly into said account.

  

	7.4	The Managing General Agent shall not commingle any premium or escrow funds with its personal accounts or other agency funds or funds held by the Managing General Agent in any
other capacity. 

  

	7.5	The Managing General Agent and an officer of the Company shall maintain signature authority on said Premium Escrow Account. 

  

	7.6	The Managing General Agent shall act as trustee for the Company on the Premium Escrow Account. 

  

 8 

	7.7	Interest income and the cost of maintaining Escrow Accounts shall belong to the Managing General Agent. 

  

	7.8	Escrow Accounts may consist of: 

  

	 	a.	checking, savings, or money market accounts; 

  

	 	b.	certificates of deposit; or 

  

	 	c.	United States Treasury bills, notes or bonds. 

  

	7.9	The Managing General Agent may use any and all premium and other funds collected by the Managing General Agent for and on behalf of the Company under this Agreement solely for the
payment of: 

  

	 	a.	premium balances due less deductions allowed in accordance with this Agreement; 

  

	 	b.	the return of unearned premiums arising due to cancellation or endorsement; 

  

	 	c.	the Managing General Agent’s and Agent(s) commission; 

  

	 	d.	losses and loss adjustment expenses; or 

  

	 	e.	such other items as mutually agreed upon in writing by the Managing General Agent and the Company. 

  

	7.10	The Company shall not be liable for any loss which occurs by reason of the default or failure of the bank in which an account is carried and such loss shall not affect the Managing
General Agent’s obligations under this Agreement. 

  
 ARTICLE 8 - OWNERSHIP OF BOOKS AND RECORDS 
  

	8.1	The Managing General Agent’s records and the use and control of expirations of the business produced by the Agents appointed by the Managing General Agent or by the
Company at the Managing General Agent’s request shall remain the property of the Managing General Agent and be left in the Managing General Agent’s undisputed possession, provided the Managing General Agent is not in default and accounts
for and pays over all premium and other sums for which the Managing General Agent may be liable to the Company. 

  

	8.2	Ownership of the records, use and control of expirations and the goodwill relating thereto shall be vested in the Managing General Agent; provided, however, in the event the
Managing General Agent is in default hereunder, and does not remedy such default within a reasonable time and does not account for and pay all premiums or other sums for which it may be liable to the company within a reasonable time following the
due date, such records, use and control of expirations and the good will relating thereto shall become the property of Company. 

  

	8.3	The Managing General Agent assigns to the Company as security for, but not in payment of, the obligations of the Managing General Agent under this Agreement all sums due or to
become due to the Managing General Agent from any insured(s) for whom the Managing General Agent or Agent(s) provided a Policy on behalf of the Company. In the event of default, the Company shall have full authority to demand and collect such sums
and the Managing General Agent or Agent(s) shall not be entitled to any commissions and/or policy fees on any premium so collected by the Company. 

  

 9 

	8.4	The Managing General Agent pledges and/or grants to the Company, so as to further secure payment of any and all sums due the Company under this Agreement, any and all of the
Managing General Agent’s records of expirations of Policies, including but not limited to the ownership and exclusive use of said expirations. In the event of default, the Company shall have the rights of the holder of a security interest
granted by law, including but not limited to the rights of foreclosure to effectuate such security interest, and the Managing General Agent hereby agrees to peaceably surrender possession of such records to the Company upon demand.

  
 ARTICLE 9 - INDEPENDENT CONTRACTOR RELATIONSHIP

  
 Nothing contained in this Agreement shall be construed to
create the relationship of employer and employee, or joint venture or partnership, between the Company and the Managing General Agent, or between the Company and any employees, representatives or Agents of the Managing General Agent. 
  

	ARTICLE	10 - ADVERTISING 

  

	10.1	Any advertising is the responsibility of, and shall be in the name of the Managing General Agent. The Managing General Agent is prohibited from using the
Company’s name or logo without prior written consent of the Company. 

  

	10.2	In the event an advertisement containing the Company’s name or logo is used by the Managing General Agent or Agent(s), the Managing General Agent shall maintain a copy of the
advertisement and full details concerning where, when, and how it was used, and comply with all legal requirements regarding content, review and approval of advertising and maintenance of records. 

  
 ARTICLE 11 - AGENTS LICENSING 
  

	11.1	The Managing General Agent shall maintain current license(s) or certificate(s) of authority as required by law for the conduct of business pursuant to this Agreement.

  

	11.2	The Managing General Agent shall assure that all Agents maintain appropriate license(s), certificate(s) of authority and appointments as required by law for conduct of business
under this Agreement. 

  

	11.3	The Managing General Agent shall maintain in force an Agency Agreement, in a form satisfactory to the Company, with all Agents. 

  

	11.4	Any termination by the Managing General Agent of an Agent shall comply with the Texas Insurance Code and any other applicable law or regulation. 

  

 10 

 ARTICLE 12 - AGENCY SALE OR TRANSFER 
  

	12.1	In the event a majority interest (10% or more of controlling shares) of the Managing General Agent is to be sold or transferred or the Managing General Agent is to merge or be
consolidated with another firm (not affiliated with current ownership), the Managing General Agent shall give thirty (30) days advance written notice to the Company. 

  

	12.2	The Managing General Agent shall also give notice to the Company if there is a change in any principal officer and/or director of the Managing General Agent within 30 days. Under
any of these circumstances, the Company may, at its election: 

  

	 	a.	consent to the assignment of this Agreement to the successor; 

  

	 	b.	enter into a new Managing General Agency Agreement with the successor; or 

  

	 	c.	terminate this Agreement pursuant to Article 15. 

  
 The Company shall notify the Managing General Agent of its decision within thirty (30) days of the receipt of the notice. 
  
 ARTICLE 13 - HOLD HARMLESS 
  

	13.1	The Managing General Agent shall indemnify and hold the Company harmless from any and all claims, demands, causes of action, damages, judgments and expenses (including, but
not limited to, attorney’s fees and costs of court) which may be made against the Company and which arise, either directly or indirectly, out of any action or inaction of the Managing General Agent or the Managing General Agent’s employees
or representatives in connection with any rights or obligations of the Managing General Agent incurred in connection with this Agreement or with asserting rights hereunder including, but not limited to, any action or inaction of the Managing General
Agent concerning the termination of Agent(s) pursuant to the Texas Insurance Code or any other applicable law or regulation. 

  

	13.2	The Company shall indemnify and hold the Managing General Agent harmless from any and all claims, demands, causes of action, damages, judgments and expenses (including, but
not limited to, attorney’s fees and costs of court) which may be made against the Managing General Agent and which arise, either directly or indirectly, out of any action or inaction of the Company including, but not limited to, any such acts
of negligence by the Company in connection with any rights or obligations of the Company incurred in connection with this Agreement or with asserting rights hereunder. 

  
 ARTICLE 14 - ARBITRATION 
  

	14.1	As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Agreement, whether
arising before or after termination of this Agreement, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration. One Arbitrator shall be chosen by the Company, the other by the Managing General Agent,
and an Umpire shall be chosen by the two Arbitrators before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of casualty insurance companies or insurance agencies who are authorized to transact
business in Texas. In the event that either party should fail to choose an Arbitrator within 30 days following a written request by the other party to do so, the requesting party may choose two Arbitrators who shall in turn 

 

 11 

	    	choose an Umpire before entering upon arbitration. If the two Arbitrators fail to agree upon the selection of an Umpire within 30 days following their appointment, the third
Arbitrator shall be selected from a list of six individuals (three named by each Arbitrator) by a judge of the federal district court or state court in Dallas County, Texas. 

  

	14.2	Each party shall present its case to the Arbitrators within 30 days following the date of appointment of the Umpire. The Arbitrators shall consider this Agreement as an honorable
engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law. The decision of the Arbitrators shall be final and binding on both parties; but failing to
agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties. Judgment upon the final decision of the Arbitrators may be entered in any court of competent jurisdiction. 

 

	14.3	Each party shall bear the expense of its own Arbitrator, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration. In the event that
the two Arbitrators are chosen by one party, as above provided, the expense of the Arbitrators, the Umpire and the arbitration shall be equally divided between the two parties. 

  

	14.4	Any arbitration proceedings shall take place at Addison, Texas, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the
laws of the State of Texas. 

  

	14.5	This Article shall survive the termination of this Contract. 

  
 ARTICLE 15 - TERMINATION 
  

	15.1	This Agreement may be terminated by either party giving the other party written notice at any calendar quarter with at least ninety (90) days written notice. Any draft authority of
the Managing General Agent shall terminate upon the date of said notice of termination except as provided in Articles 15.7 and 15.8 or provided otherwise in writing by the Company. 

  
 The Managing General Agency agrees that for ten years, it shall produce
automobile insurance business in the State of Texas solely for the benefit of the Company, provided that the Managing General Agent shall have the option to cancel the agreement after six years if Instant or an affiliate purchases a Texas county
mutual insurance company. Notwithstanding the foregoing, the arrangement shall provide that if the Company’s ability to write non-standard auto business is eliminated or impaired to the extent it unreasonably restricts the business of Instant
or its affiliates under those agreements, the agreement may be terminated at the option of AAGA 
  

	15.2	This Agreement shall automatically terminate simultaneous with and upon the cancellation or termination of the reinsurance agreement referred to in Articles 2.3 and 17, except as
provided in Articles 15.7 and 15.8. 

  

	15.3	The right to solicit and place new business, or renewal, or any modification of existing business, shall be suspended as provided in Article 15.5 in the event of default by the
Managing General Agent. 

  

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 The term “default” means any material breach or material failure to comply with the terms and
conditions of this Agreement and includes, but is not limited to, the following: 
  

	 	a.	failure to adjust all claims arising from all business written under this Agreement; 

  

	 	b.	failure to remit balances due as called for in this Agreement; 

  

	 	c.	failure to maintain Agent’s license(s) or certificate(s) as required by any public authority; and 

  

	 	d.	failure to comply with any and all provisions of the Texas Insurance Code and/or Texas Administrative Code. 

  

	15.4	In the event that the Company determines that the Managing General Agent is in default, the Company may, at its sole discretion, suspend the authority of the Managing General Agent.
Such suspension shall be effective immediately. The Managing General Agent shall have thirty (30) days to cure the default. 

  

	15.5	In the event of cancellation of this Agreement due to fraud or breach of conditions, any indebtedness of the Managing General Agent to the Company and all premiums in the possession
of the Managing General Agent, or for the collection of which the Managing General Agent is responsible, shall, notwithstanding any provisions to the contrary, become immediately due the Company. 

  

	15.6	The failure of the Company or Managing General Agent to declare promptly a default or breach of any of the terms and conditions of this Agreement shall not be construed as a waiver
of any of said terms and conditions, nor estop either party from thereafter demanding a full and complete compliance herewith. 

  

	15.7	Notwithstanding the termination of this Agreement, the provisions of this Agreement shall continue to apply to all unfinished business to the end that all obligations and
liabilities incurred by each party as a result of this Agreement shall be fully performed and discharged. 

  

	15.8	In the event this Agreement is terminated, all fronting fees and premium taxes previously collected will be considered fully earned. 

  
 ARTICLE 16 - CLAIMS HANDLING 
  

	16.1	The Managing General Agent shall have authority to settle all claims arising from business placed with the Company under this Agreement in accordance with established Company
procedures. At the sole option of the Company, the Company may assume any or all of this responsibility. 

  

	16.2	The authority of the Managing General Agent to settle claims shall not exceed $30,000 per claim without consent of the Company. The Company retains authority over disputes
concerning claims settlement and setting of loss reserves. 

  

	16.3	The Managing General Agent shall promptly report to the Company any and all claims involving lawsuits where the Company is named as soon as the Managing General Agent has been made
aware of such claims, losses and lawsuits by any party, and shall cooperate fully with the Company to facilitate reporting, investigation, and adjustment of any claim, loss or lawsuit when and as requested by the Company. 

 

 13 

	16.4	The Managing General Agent may appoint (subject to the approval of the Company, which shall not be unreasonably withheld) appropriate claims adjustment firms to handle certain
investigations and settlements relating to claims. 

  

	16.5	Payment of losses shall be made on checks or drafts in the name of the Company. Any expense not directly connected with the settlement of losses or recovery by way of salvage
or subrogation shall be incurred solely by the Managing General Agent except as from time to time specifically authorized by the Company. 

  

	16.6	The Managing General Agent shall be responsible for the safekeeping of all checks and/or drafts of the Company used for settling claims and shall perform the following:

  

	 	a.	the Managing General Agent shall immediately return all voided checks and/or drafts to the Company; 

  

	 	b.	the Managing General Agent shall immediately notify the Company of any irregularities, theft, disappearance or destruction of checks and/or drafts; and 

  

	 	c.	the Managing General Agent shall see to it that all checks and/or drafts are sequentially numbered and issued in order, with all voided checks and/or drafts properly marked and
accounted for. 

  

	16.7	The Managing General Agent shall notify the Company by sending a copy of a form within thirty (30) days of the determination that the claim: 

  

	 	a.	involves a coverage dispute; or 

  

	 	b.	involves a demand in excess of policy limits, allegations of bad faith, violations of the Texas Deceptive Trade Practices Act or Article 21.21 of the Texas Insurance Code.

  
 The form should include the claimant’s
name, claim number, insureds name, policy number and a description of the claim and/or coverage dispute. This information can be faxed or sent via e-mail to the Company. 
  
 ARTICLE 17 - REINSURANCE 
  

	17.1	The Managing General Agent may not bind reinsurance or retrocessions on behalf of the Company, may not commit the Company to participate in insurance or reinsurance
syndicates and may not collect a premium from a reinsurer or commit the Company to a claims settlement with a reinsurer without the prior written approval of the Company. If such prior approval is given by the Company, the Managing General Agent
must promptly forward a report to the Company. 

  

	17.2	The Managing General Agent is prohibited from ceding reinsurance on behalf of the Company. 

  

	17.3	All business coming within the scope of this Agreement shall be reinsured under the attached Reinsurance Agreement. Because of the nature of the Reinsurance Agreement, the Reinsurer
shall have the right to act on all such matters coming within the scope of this Agreement as though the Reinsurer were the Company, but by doing so or not doing so, shall not invalidate the right of the Company to act hereunder.

  

 14 

	17.4	Any violation of the terms and/or conditions of the Reinsurance Agreement resulting in any diminution of the Reinsurer’s liability to the Company shall be the sole
responsibility of the Managing General Agent and the Managing General Agent shall indemnify and hold the Company harmless from any such liability. 

  

ARTICLE 18 - MISCELLANEOUS 
  

	18.1	The obligations and undertaking of each of the parties to this Agreement shall be performable in Dallas County, Texas. The Managing General Agent agrees to pay to the Company all
sums of money which may become payable under this Agreement. 

  

	18.2	Complaints by Insureds - All Texas Department of Insurance (TDI) complaints are to be handled by the Managing General Agent as follows: 

  

	 	a.	the Managing General Agent is to notify the Company immediately of any TDI complaints received and forward a copy of the complaint to the Company; 

  

	 	b.	the Company will promptly notify the Managing General Agent of all complaints it receives on the business written pursuant to this Agreement; 

  

	 	c.	the Managing General Agent is to promptly research the circumstances of each complaint and provide the Company with a written reasonable explanation of the Managing General
Agent’s position and intention; and 

  

	 	d.	the Managing General Agent is to maintain complete records of each complaint and all supporting documentation. 

  
 As regards non-TDI complaints, the Managing General Agent is to maintain a
log and complete records of each complaint and all supporting documentation in a form approved by the Company. 
  

	18.3	The underwriting guidelines of the Company, as may be promulgated from time to time by the Managing General Agent, are incorporated herein by reference.

  

	18.4	The Managing General Agent shall not offset any balances due under this Agreement with any offset due under any other agreement between the Company and the Managing General Agent.

  

	18.5	As regards the subject matter of this Agreement, this Agreement supersedes all previous Managing General Agency Agreements, if any, whether written and oral, between the Company and
the Managing General Agent. 

  

	18.6	The Managing General Agent shall maintain errors and omissions insurance with an insurer acceptable to the Company, covering its operations, including the obligations of this
Agreement, in an amount not less than $1,000,000 per claim and annual aggregate with a deductible no greater than $50,000 per claim. 

  

	18.7	No amendments to or modifications of this Agreement shall be valid unless made in writing and executed by the Company and the Managing General Agent in the form of an Amendment to
this Agreement. 

  

 15 

	18.8	The Managing General Agent shall cause Old American Investments Inc. a.k.a. American Agencies Investments, Inc. to execute a guaranty of the Managing General Agent’s
obligations under this Agreement. 

  

	18.9	The Managing General Agent shall not directly or indirectly assign its rights and obligations under this Agreement in whole or in part to any non-affiliated party without the prior
written approval of the Company. 

  

	18.10	Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and plural and any term stated in either the
masculine, the feminine or the neuter gender shall include the masculine, the feminine and the neuter gender. All captions and section headings are intended to be for purposes of reference only and do not affect the substance of the articles to
which they refer. 

  

	18.11	Each party hereto agrees to perform any further acts and execute and deliver any further documents which may be reasonably necessary to carry out the provisions of this Agreement.

  

	18.12	In the event that any of the provisions, or portions thereof, of this Agreement are held to be illegal, invalid or unenforceable by any court of competent jurisdiction, the validity
and enforceability of the remaining provisions, or portions thereof, shall not be affected by the illegal, invalid or unenforceable provisions or by its severance here from. 

  

	18.13	Any and all notices required or permitted to be given under this Agreement shall be in writing and will be deemed given when deposited in the United States Postal Service, Certified
Mail, Return Receipt Requested, to the parties’ address as provided below. 

  
 This Agreement shall be effective the 1st day of January 2004. 
  

 16 

									
	 The Company
	 	 The Managing General Agent

		
	 OLD AMERICAN COUNTY MUTUAL
 FIRE
INSURANCE COMPANY
	 	AMERICAN AGENCIES GENERAL AGENCY, INC.
				
	 By:
	 	 /s/ BRYAN K. WARD

	 	 By:
	 	 /s/ DAVID B. SNYDER

	 Name:
	 	 Bryan K. Ward
	 	 Name:
	 	 David B. Snyder

	 Title:
	 	 Vice President and Treasurer
	 	 Title:
	 	 Vice President

	 Date:
	 	 January 1, 2004
	 	 Date:
	 	 January 1, 2004

  

 17 

 SCHEDULE OF BUSINESS 
  
 The Company, the Reinsurer and the Managing General Agent agree that the Managing General Agent has the authority to accept,
on forms approved by the Company, any Policy, endorsement, binder, certificate, or proposal for insurance. The Managing General Agent’s authority is limited by this Schedule of Business with regard to lines of business, maximum limits of
liability, annual premium volume, term of policy and territory for the following classes or lines of insurance: 
  

					
	1. Projected premium volume
2. Maximum premium volume
3.
Territory
4. Maximum policy term	  	 To Be Determined

	  	 To Be Determined

	  	 Texas only

	  	 Twelve months

	5. Lines of business and maximum limits of liability

  

			
	 Coverage

	  	 Maximum Limits

	 Bodily Injury Liability
	  	 $ 50,000 each person

	 	  	 $ 100,000 each accident

	 Property Damage Liability
	  	 $ 50,000 each accident

		
	 Uninsured/Underinsured Motorists
	  	 
	             Bodily Injury
	  	 $ 50,000 each person

	 	  	 $ 100,000 each accident

	             Property Damage
	  	 $ 50,000 each accident

		
	 Personal Injury Protection
	  	 $ 2.500 each person

		
	 Medical payments
	  	 $ 2500 each person

		
	 Physical Damage
	  	 $ 75,000 each automobile

  
 This Agreement does
not apply to and specifically excludes the following: 
  

	 	A.	Any business not produced by American Agencies General Agency Inc.. or 

  

	 	B.	Any business not classified as private passenger automobile liability or physical damage, or 

  

	 	C.	Exclusions specified within the Reinsurance Agreement. 

  

											
	 The Company
	 	 	 	 The Managing General Agent

			
	 OLD AMERICAN COUNTY MUTUAL
 FIRE
INSURANCE COMPANY
	 	 	 	AMERICAN AGENCIES GENERAL AGENCY, INC.
					
	 By:
	 	 /s/ BRYAN K. WARD

	 	 	 	 By:
	 	 /s/ DAVID B. SNYDER

	 Name:
	 	 Bryan K. Ward
	 	 	 	 Name:
	 	 David B. Snyder

	 Title:
	 	 Vice President and Treasurer
	 	 	 	 Title:
	 	 Vice President

	 Date:
	 	 January 1, 2004
	 	 	 	 Date:
	 	 January 1, 2004

  

 18Separation Agreement Between Affirmative Insurance and Vesta

 Exhibit 10.16 
  
 SEPARATION AGREEMENT 
  
 THIS SEPARATION AGREEMENT (this “Agreement”) is made this              day of
            , 2004 by and between Affirmative Insurance Holdings, Inc., a Delaware corporation (“Affirmative”), and Vesta Insurance Group, Inc., a Delaware corporation
(“Vesta”). 
  
 RECITALS: 
  
 WHEREAS, in December 2000, Vesta and certain of its subsidiaries acquired a
majority interest in the voting stock of Affirmative, and Vesta and certain of its subsidiaries currently own an aggregate of 98.1% of Affirmative’s outstanding common stock; 
  
 WHEREAS, since December 2000, Affirmative has operated its business as a subsidiary of Vesta, and has relied upon Vesta and
its subsidiaries for assistance with certain financial, tax, administrative, regulatory, managerial and other matters customarily performed by a parent company for its subsidiaries; 
  
 WHEREAS, Affirmative and certain of its subsidiaries are currently parties to a Consolidated Tax Allocation Agreement, dated
June 28, 1995 (the “Tax Allocation Agreement”) among Vesta and certain of its subsidiaries (collectively, the “Vesta Tax Group”), which provides for the filing of consolidated federal income tax returns and the allocation of
federal income tax liability among the members of the Vesta Tax Group; 
  
 WHEREAS, Affirmative proposes to effect an initial public offering of its common stock (the “Initial Public Offering”), to include certain shares that are beneficially owned by Vesta and its subsidiaries as well as certain shares
that will be newly issued by Affirmative, pursuant to a Registration Statement on Form S-1 filed by Affirmative with the Securities and Exchange Commission (as amended from time to time, the “Registration Statement”); 
  
 WHEREAS, upon the completion of the Initial Public Offering, Vesta will
beneficially own approximately     % (approximately     % if the over-allotment option granted to the underwriters in the Initial Public Offering is exercised in full) of Affirmative’s
outstanding common stock, Affirmative will operate its business separately from Vesta, and Affirmative and its subsidiaries will no longer be eligible to participate in the Tax Allocation Agreement as members of the Vesta Tax Group; and 

 
 WHEREAS, in connection with the completion of the Initial Public Offering
and Affirmative’s separation from Vesta, Affirmative and Vesta wish to set forth and confirm in this Agreement certain terms and conditions relating to the separation and their continued relationship, including the ongoing provision by Vesta
and its subsidiaries of certain administrative and other support services to Affirmative and its subsidiaries on a transitional basis, as well as the respective responsibilities and indemnification obligations of Affirmative and Vesta regarding the
payment of federal income taxes for taxable periods ending on or before the completion of the Initial Public Offering. 
  
 NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and for other good and valuable consideration,
the receipt and 

 sufficiency of which is hereby acknowledged by the parties hereto, Affirmative and Vesta hereby agree as follows:

  
 ARTICLE I 
 SEPARATION  
  
 Unless otherwise provided in this Agreement or in any agreement executed or to be executed by Affirmative and Vesta or any of their respective affiliates
in connection with Affirmative’s separation from Vesta (the “Separation”) or this Agreement, the effective time and date of each undertaking or agreement in connection with the Separation shall be the date and time of the closing of
the Initial Public Offering, or, if there shall be more than one such closing, the initial closing thereof (the “Separation Date”). 
  
 ARTICLE II 
 BUSINESS
INDEMNIFICATION 
  
 Section 2.1 Indemnification Against
Third-Party Claims. 
  
 (a) Vesta To Indemnify
Affirmative. Vesta shall indemnify, defend and hold harmless Affirmative and its subsidiaries as of the Separation Date (collectively, the “Affirmative Group”), each of their respective directors and officers (or other persons
performing similar functions for non-corporate entities), employees, agents, consultants, advisors, accountants, attorneys and representatives (collectively, the “Affirmative Personnel”) and each of the heirs, executors, successors and
assigns of any of the foregoing (collectively, and together with the Affirmative Group and the Affirmative Personnel, the “Affirmative Indemnitees”) from and against all losses, liabilities, damages, claims, demands, judgments or
settlements of any nature or kind, known or unknown, fixed, accrued, absolute or contingent, liquidated or unliquidated, including all reasonable costs and expenses (legal, accounting or otherwise as such costs are incurred) relating thereto,
including any reasonable costs or expenses of enforcing any indemnity hereunder (the “Indemnifiable Losses”) arising from any Third-Party Claim (as defined below) asserted by any person or entity other than the Affirmative Indemnitees and

  
 (i) arising from or relating to any businesses, assets,
properties or liabilities heretofore or hereafter conducted, owned or incurred by the Vesta Group (as defined below) (the “Vesta Businesses,” it being understood that such term does not include any Vesta Group members’ direct or
indirect interest of any kind in, or rights in respect of, any member of the Affirmative Group), whether such Indemnifiable Losses relate to events, occurrences or circumstances occurring or existing, or whether claims for such Indemnifiable Losses
are asserted, before or after the Separation Date; or 
  
 (ii)
arising from any misstatement or omission of a material fact (i.e., a misstatement of a material fact or the omission to state a material fact required to be stated or necessary in order to make statements, in light of the circumstances under which
they were made, not misleading, or a “Misstatement”) made by the Vesta Group, the Vesta Personnel (each 
  

 2 

 as defined below), any one or more of them and/or their respective agents and representatives (all such persons other
than Vesta being referred to as the “Other Vesta Parties”), including without limitation any misstatement or omission made by Affirmative or the Other Affirmative Parties (as defined below) in reliance on a misstatement or omission by
Vesta or the Other Vesta Parties in the Registration Statement; provided that Indemnifiable Losses under this clause shall be limited to Indemnifiable Losses relating to Third-Party Claims by purchasers of Affirmative common stock in the
Initial Public Offering or thereafter (including, without limitation, underwriter indemnification claims). 
  
 (b) Affirmative To Indemnify Vesta. Affirmative shall indemnify, defend and hold harmless Vesta and its subsidiaries as of the Separation Date
(collectively, the “Vesta Group,” it being understood that such term does not include any member of the Affirmative Group; each of the Vesta Group and the Affirmative Group being referred to as a “Group”), each of their
respective directors and officers (or other persons performing similar functions for non-corporate entities), employees, agents, consultants, advisors, accountants, attorneys and representatives (collectively, the “Vesta Personnel”) and
each of the heirs, executors, successors and assigns of any of the foregoing (collectively, and together with the Vesta Group and the Vesta Personnel, the “Vesta Indemnitees”) from and against all Indemnifiable Losses arising from any
Third-Party Claim (as defined below) asserted by any person or entity other than the Vesta Indemnitees and 
  
 (i) arising from or relating to any businesses, assets, properties or liabilities heretofore or hereafter conducted, owned or incurred by the Affirmative
Group (the “Affirmative Businesses”), whether such Indemnifiable Losses relate to events, occurrences or circumstances occurring or existing, or whether claims for such Indemnifiable Losses are asserted, before or after the Separation
Date; or 
  
 (ii) arising from any Misstatement made by the
Affirmative Group, Affirmative Personnel, any one or more of them and/or their respective agents and representatives (all such persons other than Affirmative being referred to as the “Other Affirmative Parties”), including without
limitation any misstatement or omission made by Vesta or the Other Vesta Parties in reliance on a misstatement or omission by Affirmative or the Other Affirmative Parties in the Registration Statement; provided that Indemnifiable Losses under
this clause shall be limited to Indemnifiable Losses relating to Third-Party Claims (as defined below) by purchasers of Affirmative common stock in the Initial Public Offering or thereafter (including, without limitation, underwriter indemnification
claims). 
  
 (c) Apportionment of Indemnity. If any
Indemnifiable Loss arises from or relates to the matters referred to in both Sections 2.1(a) and 2.1(b) above, it is the intent of Vesta and Affirmative that each party shall contribute to the total amount paid or payable in connection with such
Indemnifiable Loss in such proportion as is appropriate to reflect the relative portion of such Indemnifiable Loss that is attributable to the matters referred to in Section 2.1(a) on the one hand and to the matters referred to in Section 2.1(b) on
the other hand. In furtherance and not in limitation of this intent, when any Indemnifiable Loss arises from or relates to the matters referred to in both Sections 2.1(a) and 2.1(b) above, Vesta shall indemnify the Affirmative Indemnitees against
any portion of such Indemnifiable Loss that pertains more substantially to the matters referred to in Section 2.1(a) than to the matters referred to in Section 2.1(b), and 
  

 3 

 Affirmative shall indemnify the Vesta Indemnitees against any portion of such Indemnifiable Loss that pertains more
substantially to the matters referred to in Section 2.1(b) than to the matters referred to in Section 2.1(a). 
  
 (d) Certain Personnel. For the avoidance of doubt, the persons listed on the attached Schedule 2.1(d) as Affirmative Personnel shall be deemed
Affirmative Personnel, and the persons listed on Schedule 2.1(d) as Vesta Personnel shall be deemed Vesta Personnel, for all purposes of this Agreement. 
  
 Section 2.2 Procedures For Indemnification Against Third-Party Claims. 
  
 (a) Notices. 
  
 (i) Affirmative shall, and shall cause the other Affirmative Indemnitees to, notify Vesta in writing promptly after learning of any claim, suit,
arbitration, inquiry, proceeding or investigation by or before any court, any governmental or other regulatory or administrative agency or commission or any arbitration tribunal that is asserted by a person or entity who or which is neither a party
hereto nor an affiliate of a party hereto (a “Third-Party Claim”) for which any Affirmative Indemnitee intends to seek indemnification from Vesta under this Article II. 
  
 (ii) Vesta shall, and shall cause the other Vesta Indemnitees to, notify Affirmative in writing promptly after learning of
any Third-Party Claim for which any Vesta Indemnitee intends to seek indemnification from Affirmative under this Article II. 
  
 (iii) The failure of any person or entity entitled to indemnification under this Article II (an “Indemnitee”) to give such notice shall not
relieve any party obligated to indemnify such Indemnitee (an “Indemnifying Party”) of its obligations under this Article II, except to the extent that such Indemnifying Party is actually prejudiced by such failure to give notice.

  
 (iv) Each notice shall describe such Third-Party Claim in
reasonable detail considering the information provided to the Indemnitee. 
  
 (b) Control of Defense. 
  
 (i) Except as otherwise provided in Section 2.2(c), an Indemnifying Party may, by notice to the Indemnitee and to Affirmative, if Vesta is the Indemnifying Party, or to Vesta, if Affirmative is the Indemnifying Party, at any time after
receipt by such Indemnifying Party of such Indemnitees’ notice of a Third-Party Claim, undertake (itself or through an affiliate) the defense or settlement of such Third-Party Claim. 
  
 (ii) Such Indemnifying Party shall control the investigation and defense or settlement of such Third-Party Claim, and the
Indemnitees shall cooperate therewith, except that such Indemnifying Party shall not require any Indemnitee, without its prior written consent, to take or refrain from taking any action in connection with such Third-Party Claim, or make any public
statement, which such Indemnitee reasonably considers to be against its interest. 
  

 4 

 (iii) The Indemnifying Party also shall not, without the prior written consent of the Indemnitee and of
Affirmative, if the Indemnitee is an Affirmative Indemnitee, or of Vesta, if the Indemnitee is a Vesta Indemnitee, consent to any settlement that does not include as a part thereof an unconditional release of the Indemnitees from liability with
respect to such Third-Party Claim or that requires the Indemnitee or any of its representatives or affiliates to make any payment that is not fully indemnified under this Article II or to submit to any non-monetary remedy. 
  
 (iv) Subject to the Indemnifying Party’s control rights, as specified
herein, the Indemnitees may participate in such investigation and defense, at their own expense. 
  
 (c) Conflicts of Interest. 
  
 (i) With respect to any Third-Party Claim, if there is a material conflict of interest between the Indemnifying Party and the Indemnitees involved in the
reasonable judgment of counsel to such Indemnitees, neither the Indemnifying Party nor the Indemnitees shall be entitled to control the defense or settlement thereof. In any such event, the Indemnifying Parties and the Indemnitees involved shall
each be entitled to conduct their own investigation and defense, but the Vesta Indemnitees and the Affirmative Indemnitees shall cooperate to conduct such investigation and defense as efficiently as possible. 
  
 (ii) No Indemnitee may compromise or settle any Third-Party Claim as to which
indemnification from an Indemnifying Party has or will be sought under this Article II without the prior written consent of such Indemnifying Party. 
  
 (iii) If an Indemnifying Party is required to indemnify any Indemnitees with respect to a Third-Party Claim and Section 2.2(c)(i) applies, such
Indemnifying Party shall only be required to pay the reasonable attorneys’ fees and expenses of one law firm representing all Indemnitees involved (and, if required, local counsel in each applicable jurisdiction) with respect thereto.

  
 (d) Cooperation. Affirmative shall, and shall cause the
other Affirmative Indemnitees to, and Vesta shall, and shall cause the other Vesta Indemnitees to, make available to each other, their counsel and other representatives, all information and documents reasonably available to them which relate to any
Third-Party Claim, and otherwise cooperate as may reasonably be required in connection with the investigation, defense and settlement thereof. 
  
 Section 2.3 Limitations on Indemnification Obligations. The amount that any Indemnifying Party is or may be required to pay to any Indemnitee under
this Article II shall be reduced (retroactively or prospectively) by any insurance proceeds, settlement recoveries or other amounts actually recovered by or on behalf of such Indemnitee in respect of the related Indemnifiable Loss (an “Actual
Recovery”). If an Indemnitee shall have received the payment required by this Article II from an Indemnifying Party in respect of an Indemnifiable Loss and shall subsequently receive an Actual Recovery, then such Indemnitee shall pay to such
Indemnifying Party a sum equal to the amount of such Actual Recovery up to the aggregate payments made by such Indemnifying Party pursuant to this Article II in respect of such Indemnifiable Loss. 
  

 5 

 Section 2.4 Survival of Indemnities. The rights and obligations of each of the Vesta Indemnitees
and the Affirmative Indemnitees under this Article II and any of the liabilities related thereto shall survive the Separation and any sale, reorganization or transfer of all or part of the Vesta Businesses or the Affirmative Businesses. 

 
 Section 2.5 Remedies Cumulative. The remedies provided in this
Article II shall be cumulative and shall not preclude assertion by any Indemnitee of any other rights or the seeking of any other remedies against any Indemnifying Party whether under this Agreement or otherwise. The procedures set forth in this
Article II shall be the exclusive procedures governing any indemnity action brought under this Article II, but shall not govern any other indemnity action that may be brought under any other provision of this Agreement. 
  
 Section 2.6 Survival of Agreements. Except as otherwise contemplated
by this Agreement, all covenants and agreements of Vesta and Affirmative contained in this Agreement shall survive the Separation Date. 
  
 ARTICLE III 
 COOPERATION AND
ASSISTANCE; ACCESS TO INFORMATION 
  
 Section 3.1
Cooperation and Assistance. From and after the Separation Date, each of Affirmative and Vesta shall, and shall cause the members of its respective Group to, cooperate with and assist the other in good faith as described in this Article III in
order to facilitate an orderly separation of Affirmative from Vesta. 
  
 Section 3.2 Access to Information. 
  
 (a) From
and after the Separation Date, Vesta shall, and shall cause each of the other members of the Vesta Group to, afford to the members of the Affirmative Group and their authorized accountants, counsel and other designated representatives reasonable
access (including using commercially reasonable efforts to give access to appropriate facilities and personnel or other relevant persons or entities possessing information) and duplicating rights during normal business hours to all books, records,
files, documents, computer data and other information and materials (“Materials”) within the Vesta Group’s possession relating to the Affirmative Businesses and the Vesta Businesses as conducted on or prior to the Separation Date,
insofar as such access is reasonably required by any member of the Affirmative Group for the ongoing operations of the Affirmative Businesses (including for historical reporting requirements) and is requested for one or more of the purposes
described in Section 3.2(c). 
  
 (b) From and after the Separation
Date, Affirmative shall, and shall cause each of the other members of the Affirmative Group to, afford to the members of the Vesta Group and their authorized accountants, counsel and other designated representatives reasonable access (including
using commercially reasonable efforts to give access to appropriate facilities and personnel or other relevant persons or entities possessing information) and duplicating rights 
  

 6 

 during normal business hours to Materials within the Affirmative Group’s possession relating to the Vesta Businesses
and the Affirmative Businesses as conducted on or prior to the Separation Date, insofar as such access is reasonably required by any member of the Vesta Group for the ongoing operations of the Vesta Businesses (including for historical reporting
requirements) and is requested for one or more of the purposes described in Section 3.2(c). 
  
 (c) Subject to the confidentiality provisions set forth in Section 6.1 below, Materials may be requested under this Section 3.2 (i) for audit, accounting, regulatory, claims, litigation (other than any litigation
between the parties hereto or their respective affiliates) and tax purposes; (ii) for purposes of fulfilling disclosure, filing, reporting or similar obligations under any federal, state or local law or authority or any securities exchange; or (iii)
for performing the transactions contemplated by this Agreement. 
  
 Section 3.3 Delivery and Retention of Records. 
  
 (a) Vesta shall deliver to Affirmative on or prior to the Separation Date any and all original corporate organization books and records that the Vesta Group has in its possession relating solely to the Affirmative Group, copies of
which may be retained by the Vesta Group. 
  
 (b) Each of the
Vesta Group and the Affirmative Group shall retain all documents, records and other information relating to the other Group consistent with its retention policies in the ordinary course of business as such policies are in effect on the Separation
Date, except as otherwise provided herein or as required by law. 
  
 Section 3.4 Future Litigation and Other Proceedings; Production of Witnesses. 
  
 (a) In the event that Vesta or any other member of the Vesta Group or Affirmative or any other member of the Affirmative Group at any time after the Separation Date initiates or becomes subject to any
litigation or other proceedings in respect of any matter occurring or arising, in whole or in part, at any time on or prior to the Separation Date or in connection with the Separation whether occurring or arising prior to or following the Separation
Date regarding the Vesta Businesses or the Affirmative Businesses, the relationships between the members of the Vesta Group, on the one hand, and the Affirmative Group, on the other hand, or otherwise (each, a “Covered Matter”) before any
governmental authority or arbitration panel not otherwise specifically provided for in this Agreement, the party that has not initiated and is not subject to such litigation or other proceedings shall comply, at the other party’s expense, with
any reasonable requests by the other party for assistance in connection with such litigation or other proceedings (including by way of provision of information). In the event that Vesta or any other member of the Vesta Group, on the one hand, and
Affirmative or any other member of the Affirmative Group, on the other hand, at any time after the Separation Date initiate or become subject to any litigation or other proceedings in respect of any Covered Matter before any governmental authority
or arbitration panel with respect to which the parties have no prior agreements (as to indemnification or otherwise), the parties shall, at their own expense, coordinate their strategies and actions with respect to such litigation or other
proceedings to the extent such coordination would not be detrimental to their respective interests and shall comply, at the expense of the requesting party, with requests for assistance in connection therewith (including by way of provision of
information). 
  

 7 

 (b) At all times from and after the Separation Date, each of Vesta and Affirmative shall, and shall cause
the other members of its respective Group to, use commercially reasonable efforts to make available to the members of the other Group, upon written request, its officers, directors, employees and agents as witnesses to the extent that such persons
or entities may reasonably be required in connection with legal, administrative or other proceedings in which the requesting party may from time to time be involved and relating to any Covered Matter. 
  
 Section 3.5 Reimbursement. All costs (including without limitation
supplies, disbursements and other out-of-pocket expenses) reasonably incurred by a party providing cooperation and assistance pursuant to its obligations under any provision of this Article III shall be paid by the party receiving such cooperation
and assistance. 
  
 ARTICLE IV 
 TRANSITIONAL SERVICES 
  
 Section 4.1 Provision of Transitional Services. 
  
 (a) Scope of Transitional Services. During the Term (as defined below), Vesta shall, and shall cause the other members of the Vesta Group to,
provide to the Affirmative Group the following services (collectively, the “Transitional Services”) in a manner consistent with past practice: 
  
 (i) Tax Return Preparation. Assistance with preparation and filing of federal, state and local tax returns. 
  
 (ii) Financial Reporting. Assistance with statutory financial
reporting, including preparation and filing of statutory financial statements with the appropriate regulatory authorities. 
  
 (iii) Regulatory Compliance. Assistance with regulatory compliance matters, including preparation and filing of rate changes with the appropriate
regulatory authorities. 
  
 The appropriate officers of Affirmative and Vesta
shall consult with one another to resolve any ambiguity concerning the scope of the Transitional Services contemplated by this Article IV. Affirmative and Vesta agree that the scope of the Transitional Services may change from time to time upon the
mutual agreement of the parties. 
  
 (b) Access to Information
and Personnel. In order to enable the Vesta Group to perform the Transitional Services in a manner consistent with the requirements established by this Article IV and with applicable legal and regulatory standards, the Affirmative Group shall
provide to the Vesta Group on a timely basis access to all Materials in the possession of the Affirmative Group, and to such personnel, equipment and facilities, as are reasonably requested by any Vesta Group member, and shall take any actions that
may reasonably be requested by any Vesta Group member in connection therewith. The Vesta Group shall return to the Affirmative 
  

 8 

 Group all Materials of the Affirmative Group that were used by the Vesta Group in connection with the provision of the
Transitional Services promptly upon termination of all of the Transitional Services, but in no event later than sixty (60) days after such termination. The Vesta Group may make duplicate copies of the Materials for its legal files at its own cost
and subject to the confidentiality provisions set forth in Section 6.1 below. 
  
 (c) Use of Independent Contractors. The Vesta Group may use such personnel as it deems necessary or appropriate to provide the Transitional Services, and may in its discretion use qualified independent
contractors or consultants or any other third party service providers (collectively, “Independent Contractors”) to perform any of the Transitional Services consistent with past practice. 
  
 Section 4.2 Payment for Transitional Services. 
  
 (a) Quarterly Payment of Transitional Service Costs. In consideration
of the performance of the Transitional Services by the Vesta Group, Affirmative shall pay Vesta on a quarterly basis an amount for all Transitional Services, which amount shall be based upon the reasonable costs of the Vesta Group then in effect at
the time of execution of each such service. In addition, Affirmative shall pay on a timely basis any applicable Independent Contractor Charges incurred on behalf of the Affirmative Group in connection with the provision of Transitional Services, as
described in Section 4.2(b). 
  
 (b) Independent Contractor
Charges. Any fees or other expenses charged by any Independent Contractor retained by the Vesta Group in connection with the performance of the Transitional Services (“Independent Contractor Charges”) shall be passed on directly to
Affirmative. To the extent practicable, Vesta shall apprise Affirmative of any Independent Contractor Charges to be passed on to Affirmative prior to contracting for such services and shall attempt to secure Affirmative’s approval thereof,
which approval shall not be unreasonably withheld. 
  
 Section
4.3 Term and Termination of Transitional Services. 
  
 (a)
Term. The term of the provision of the Transitional Services pursuant to this Article IV (the “Term”) shall commence on the Separation Date and shall continue for a one-year period ending on the first anniversary of the Separation
Date. The Term shall renew for one additional one-year period beginning on the first anniversary of the Separation Date unless thirty (30) days’ advance written notice is given by either party to the other party that the Term shall not be so
renewed. 
  
 (b) Mutual Termination of Transitional
Services. Affirmative and Vesta contemplate that each of the Transitional Services provided by the Vesta Group gradually will be eliminated throughout the Term as the Affirmative Group develops internal capabilities to perform such services or
arranges for other third parties to supply such services. Consequently, Affirmative may at any time notify Vesta in writing that a particular Transitional Service described in Section 4.1 is no longer needed by the Affirmative Group, and upon the
written consent of Vesta, such Transitional Service shall be terminated as of a date mutually agreed upon by Affirmative and Vesta. The mutual termination of any such Transitional Service pursuant to this section shall not 
  

 9 

 modify, terminate or otherwise affect the provision of or payment for any other Transitional Services that have not been
so terminated, nor shall such mutual termination modify, terminate or otherwise affect any other obligations of Affirmative or Vesta under this Agreement. 
  
 Section 4.4 Standard of Care; Disclaimer of Warranties 
  
 (a) Standard of Care. Affirmative and Vesta shall, and shall cause the other members of their respective Groups to, perform their obligations under
this Article IV in good faith and at standards and with a level of performance in all events consistent with the standards and level of performance each party would use in providing similar services to itself. Affirmative and Vesta shall, and shall
cause the other members of their respective Groups to, use reasonable care to ensure material compliance with all applicable laws and regulations in connection with their respective obligations under this Article IV. 
  
 (b) Disclaimer of Warranties. Except as provided in Section 4.4(a),
Affirmative and Vesta acknowledge and agree that all services performed and Materials supplied by the other party or any other member of the other party’s Group under this Article IV are provided or supplied without warranty of any kind,
express or implied, including, but not limited to, any warranties of design, merchantability, fitness for a particular purpose, non-infringement, or any warranties arising from a course of dealing, usage or trade practice. 
  
 Section 4.5 Limitation of Liability; Indemnification. 
  
 (a) Limitation of Liability. With respect to the performance
of the obligations of each party to the other under this Article IV, neither Affirmative nor Vesta, nor any member of the Affirmative Group or the Vesta Group, shall be liable to the other party for special, indirect, incidental, consequential,
exemplary or punitive damages or for any form of damages other than direct damages arising out of or in connection with this Article IV. Notwithstanding the foregoing, the limitations of liability in this Section 4.5(a) shall not apply to limit a
party’s indemnification obligations or damages arising solely from fraud or willful misconduct in connection with the performance of such party’s obligations under this Article IV. 
  
 (b) Force Majeure. No liability under this Article IV shall result
from any delay or failure in performance by either Affirmative or Vesta or any member of the Affirmative Group or the Vesta Group resulting from any cause, condition or event beyond its reasonable control, including, but not limited to, acts of God,
fire, flood, acts of war, terrorism, explosion, power blackout, government action, accident, riot, labor trouble or shortage, or inability to obtain materials, utilities, equipment or transportation (each a “Force Majeure Event”). A party
claiming the benefit of this Section 4.5(b) shall promptly notify the other party upon learning of the occurrence of the Force Majeure Event. Upon the cessation of such Force Majeure Event, the affected party shall use its best efforts to resume
performance hereunder. 
  
 (c) Indemnification. Subject to
the terms of Section 4.5(a) and (b), in addition to any indemnity either Affirmative or Vesta or any member of the Affirmative Group or the Vesta Group may be expressly entitled to under other provisions of this Agreement, each party shall, to the
extent permitted by law, indemnify, defend and hold harmless the other party against all claims, liabilities, damages, losses and expenses (including reasonable attorneys’ fees and court 
  

 10 

 costs) arising out of the gross negligence, recklessness or willful misconduct by such indemnifying party, its employees,
agents, subcontractors and assigns in the performance of this Article IV. The rights and obligations of the parties under this Section 4.5(c) shall survive the expiration of the Term.  
  
 ARTICLE V 
 TAX ALLOCATION AND INDEMNIFICATION 
  
 Section 5.1 Termination of Participation in Vesta Tax Group. Affirmative and Vesta acknowledge and agree that Affirmative and all of
Affirmative’s subsidiaries that are members of the Vesta Tax Group immediately prior to the Separation Date (collectively, the “Affirmative Tax Entities”) will, as of the Separation Date, cease to be members of the Vesta Tax Group.
Consequently, Affirmative and Vesta further acknowledge and agree that the Tax Allocation Agreement will terminate with respect to the Affirmative Tax Entities as of the Separation Date.  
  
 Section 5.2 Pre-Separation Date Tax Obligations and Indemnification.

  
 (a) Vesta shall be responsible for, shall pay all taxes
to be paid and shall indemnify the Affirmative Tax Entities against any and all pre-Separation Date federal income taxes imposed on the Vesta Tax Group that would have been allocated to the members of the Vesta Tax Group other than the Affirmative
Tax Entities (collectively, the “Vesta Tax Entities”) for taxable periods or portions thereof ending on or before the Separation Date. 
  
 (b) Affirmative shall be responsible for, shall pay all taxes to be paid, and shall indemnify the Vesta Tax Entities against any and all pre-Separation
Date federal income taxes imposed on the Vesta Tax Group that would have been allocated to the Affirmative Tax Entities for taxable periods or portions thereof ending on or before the Separation Date. 
  
 (c) Vesta shall be responsible for preparing and filing all federal tax
returns required to be filed by or with respect to the Vesta Tax Group containing income for periods ending on or before or including the Separation Date, shall include the income of the Affirmative Tax Entities for the pre-Separation Date period in
the Vesta Tax Group’s federal consolidated tax returns, and shall be responsible for remitting all taxes reflected on such consolidated returns. All such returns shall be prepared on a basis consistent with the elections, accounting methods,
conventions and principles of taxation used for the most recent taxable periods for which tax returns have been filed. In the case of federal income taxes attributable to taxable periods beginning on or before and ending after the Separation Date,
if any, the taxes for the pre- Separation Date period shall be computed as if such taxable period ended on the Separation Date. The federal income tax allocable to each member of the Vesta Tax Group under this Section 5.2 shall be determined by
reference to, and consistent with, the methodology employed under the Tax Allocation Agreement. Vesta and Affirmative shall cooperate in good faith in determining the appropriate amount of taxes allocable to the Vesta Tax Entities and the
Affirmative Tax Entities, respectively, in accordance with the foregoing principles. 
  
 Section 5.3 Refunds. Any refunds of federal income taxes with respect to taxes allocated to the Affirmative Tax Entities and paid for any period ending on or before the Separation Date shall be for the account
of the Affirmative Tax Entities. Vesta shall, if the 
  

 11 

 Affirmative Tax Entities so request and at the expense of the Affirmative Tax Entities, cause the relevant entity to file
for and obtain any refunds to which the Affirmative Tax Entities are entitled hereunder, including through the prosecution of an administrative or judicial proceeding which the Affirmative Tax Entities, at their discretion, choose to direct such
entity to pursue. Vesta shall permit the Affirmative Tax Entities to participate in (at their own expense), but not control, the prosecution of any such refund claimed and, when deemed appropriate by Vesta, shall cause a relevant entity to authorize
by appropriate power of attorney such persons as the Affirmative Tax Entities shall designate to represent such entity with respect to such refund claim. Without imposing any duty of investigation upon Vesta, Vesta shall, and shall cause the other
Vesta Tax Entities to, notify the Affirmative Tax Entities of the existence of any facts known to the Vesta Tax Entities that would constitute a reasonable basis for claiming a refund of taxes to which the Affirmative Tax Entities are entitled
hereunder. Vesta shall forward to the Affirmative Tax Entities any such refund promptly after the refund is received. 
  
 Section 5.4 Audits and Other Proceedings. 
  
 (a) Vesta shall promptly notify Affirmative in writing upon receipt by any of the Vesta Tax Entities of notice of any pending or threatened audit,
assessment or judicial or administrative proceeding involving taxes with respect to the Vesta Tax Group for which Affirmative would be required to indemnify the Vesta Tax Entities pursuant to Section 5.2(b) above; provided, however, that the
failure of Vesta to give such notice shall not relieve Affirmative of its indemnification obligations under Section 5.2(b), except to the extent Affirmative is materially prejudiced thereby. 
  
 (b) Affirmative shall promptly notify Vesta in writing upon receipt by any of
the Affirmative Tax Entities of notice of any pending or threatened audit, assessment or judicial or administrative proceeding involving taxes with respect to the Affirmative Tax Entities for which Vesta would be required to indemnify the
Affirmative Tax Entities pursuant to Section 5.2(a) above; provided, however, that the failure of Affirmative to give such notice shall not relieve Vesta of its indemnification obligations under Section 5.2(a), except to the extent Vesta is
materially prejudiced thereby. 
  
 (c) Affirmative shall have the
right to participate in (at its own expense), but not control, a tax proceeding to the extent it relates to pre-Separation Date taxes which may be the subject of indemnification by Affirmative pursuant to Section 5.2(b) and to employ counsel of its
choice at its expense. Vesta shall not compromise or settle any such tax proceeding without the prior written consent of Affirmative, which consent shall not be unreasonably withheld. If Vesta shall not assume the defense of such tax proceeding,
then Affirmative may assume sole control over such tax proceeding, at its own expense, without relieving Affirmative of its indemnification obligations under Section 5.2(b). 
  
 (d) Vesta shall have the right to control, at its own expense, a tax proceeding to the extent it relates to pre-Separation
Date taxes which may be the subject of indemnification by Vesta pursuant to Section 5.2(a) and to employ counsel of its choice at its expense. 
  

 12 

 ARTICLE VI 
 MISCELLANEOUS 
  
 Section 6.1 Confidential Information. 
  
 (a)
“Confidential Information” Defined. “Confidential Information” includes the following items, whether currently existing or created in the future: 
  
 (i) any and all knowledge or information concerning the business of either of Affirmative or Vesta, or any of their
respective affiliates, in whatever format, that is either identified as or would reasonably be understood to be confidential and/or proprietary, including without limitation, information or knowledge concerning (A) internal operating procedures or
strategy; (B) investment strategy; (C) sales data and customer lists; (D) financial plans, projections and reports; (E) insurance programs, plans and products; (F) assets owned, leased, licensed and/or developed by or for a party or any of its
affiliates, including information about the design, technology, and training or operating procedures relating to such assets; (G) the insureds, clients, agents, employees or applicants (for employment, products or services) of Affirmative or Vesta,
or any of their respective affiliates; (H) materials, products or any other tangible or intangible assets in the possession or under the control of Affirmative or Vesta, or any of their respective affiliates, which are proprietary to, or
confidential to or about any other person or entity; and (I) records and repositories of the foregoing; and 
  
 (ii) any notes, extracts, analyses or materials prepared by the receiving party which are copies of or derivative works of Confidential Information of the
other party or any of its affiliates, or from which the substance of Confidential Information of the other party or any of its affiliates can be inferred or otherwise understood. 
  
 The foregoing notwithstanding, “Confidential Information” shall not include information that: (i) was publicly known and made
generally available in the public domain prior to the time of disclosure by the disclosing party; (ii) becomes publicly known and made generally available after disclosure by the disclosing party to the receiving party through no action or inaction
of the receiving party; (iii) is already in the possession of the receiving party at the time of disclosure by the disclosing party as shown by the receiving party’s files and records immediately prior to the time of disclosure; (iv) is
obtained by the receiving party from a third party without a breach of such third party’s obligations of confidentiality; or (v) is independently developed by the receiving party without use of or reference to the disclosing party’s
Confidential Information, as shown by documents and other competent evidence in the receiving party’s possession. The failure to mark any material or information “confidential” shall not affect the confidential nature thereof.

  
 (b) Obligations of the Receiving Party. Neither
Affirmative or any of its affiliates on the one hand, nor Vesta or any of its affiliates on the other hand, shall, as a receiving party, make use of Confidential Information of the other party or any of its affiliates, as a disclosing party, for any
purpose other than the fulfillment of the receiving party’s obligations under this Agreement. The receiving party shall not disclose Confidential Information of the disclosing party to any third party (other than in connection with the
performance of the activities contemplated by this Agreement or to its auditors, counsel, financial advisors, bankers and other consultants and 
  

 13 

 advisors) and shall protect and treat all Confidential Information of the disclosing party with the same degree of care
as it uses to protect its own confidential information of like importance, but in no event with less than reasonable care. In the event that the receiving party is required to disclose Confidential Information of the disclosing party to a
governmental or other regulatory authority or otherwise pursuant to judicial or administrative procedure or any other law, regulation or applicable rule of any securities exchange, it shall notify the disclosing party of the required disclosure with
sufficient time for the disclosing party to seek relief, cooperate with the other party in taking appropriate protective measures, and make such disclosure in a fashion that maximizes protection of the Confidential Information from further
disclosure. 
  
 Section 6.2 Expenses. Except as otherwise
provided in this Agreement, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such costs and expenses. 
  
 Section 6.3 Notices. Any notices and requests required or permitted to be sent hereunder shall be deemed given as of the day actually received if
sent by telecopy, facsimile transmission, any other form of instantaneous transmission, overnight or faster private courier, or if otherwise hand delivered, but if deposited in the United States mail, shall not be deemed delivered until three (3)
days after being sent, with postage pre-paid, certified or registered, with return receipt requested and addressed as follows: 
  
 If to Affirmative, to: 
  
 Affirmative Insurance Holdings, Inc. 
 4450
Sojourn Drive, Suite 500 
 Addison, Texas 75001 
 Attention: David B. Snyder, Vice President, General Counsel and Secretary 
  
 If to Vesta, to: 
  
 Vesta Insurance Group, Inc. 
 3760 River Run
Drive 
 Birmingham, Alabama 35243 
 Attention: John W. McCullough, Vice President and Associate General Counsel 
  
 Either party may change its address for notices by giving notice of same in the manner specified above. 
  
 Section 6.4 No Partnership. Nothing contained in this Agreement shall be deemed or construed by the parties or any other person to create the
relationship of partnership, joint venture or similar relationship. 
  
 Section 6.5 Remedies. Any person having rights under any provision of this Agreement will be entitled to enforce such rights specifically, to recover damages caused by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law. 
  

 14 

 Section 6.6 Termination, Amendments and Waivers. Except as otherwise expressly provided herein and
subject to any required regulatory approval, this Agreement may be terminated, and the provisions of this Agreement may be amended or waived, at any time, only by the written agreement of Affirmative and Vesta. Any waiver by a party of a breach of
any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. Failure by a party to insist upon strict adherence to any term of
this Agreement on one or more occasions shall not be considered a waiver or deprive such party of the right to insist upon strict adherence to that term or any other term of this Agreement. 
  
 Section 6.7 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties to this Agreement and their respective affiliates, successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to confer on any person other than the parties and their
respective affiliates, successors and permitted assigns any rights or remedies under or by this Agreement. The foregoing notwithstanding, neither this Agreement nor the rights and obligations hereunder may be assigned by either party to this
Agreement without the express written consent of the other party and any purported assignment in violation hereof shall be null and void. 
  
 Section 6.8 No Third Party Beneficiaries. Except for the provisions of this Agreement relating to persons or entities entitled to indemnification
under this Agreement, which are also for the benefit of such indemnitees, this Agreement is solely for the benefit of Affirmative and Vesta and their respective affiliates and is not intended to confer upon any other persons or entities any rights
or remedies hereunder. 
  
 Section 6.9 Entire Agreement.
This Agreement and any schedules hereto and other documents referred to herein constitute the entire agreement of the parties concerning the matters referred to herein, and supersede all prior agreements and understandings relating thereto.

  
 Section 6.10 Severability. Whenever possible, each
provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. 
  
 Section 6.11 Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience of reference only and do not constitute
a part of and shall not be utilized in interpreting this Agreement. 
  
 Section 6.12 Governing Law. The validity, meaning and effect of this Agreement shall be determined in accordance with the laws of the State of Delaware applicable to contracts made and to be performed in that state. 
  
 Section 6.13 Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be deemed an original, and such counterparts together shall constitute one instrument. 
  

 15 

 [The remainder of this page has been intentionally left blank. 
 Signature pages follow.] 
  

 16 

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first set forth above.

  

			
	 AFFIRMATIVE INSURANCE
 HOLDINGS,
INC.

	
	  

		
	 By:
	 	  

	 Its:
	 	  

	
	VESTA INSURANCE GROUP, INC.
	
	  

		
	 By:
	 	  

	 Its:
	 	  

  

 17 

 SCHEDULE 2.1(d) 
  

			
	 AFFIRMATIVE PERSONNEL
	  	 VESTA PERSONNEL

	 Thomas E. Mangold
	  	 Norman W. Gayle, III

	 M. Sean McPadden
	  	 Hopson B. Nance

	 Katherine C. Nolan
	  	 Donald W. Thornton

	 Timothy A. Bienek
	  	 John W. McCullough

	 Scott K. Billings
	  	 E. Murray Meadows

	 George M. Daly
	  	 Charles R. Lambert

	 Wilson A. Wheeler
	  	 Stephen P. Russell

	 David B. Snyder
	  	 K. Gerald Barron

	 	  	 David Lacefield

  

 18

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