Document:

EX-10.25

 

     Confidential Treatment

Exhibit 10.25

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO REGISTRANT’S APPLICATION OBJECTING TO
DISCLOSURE AND REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406. THE OMITTED
PORTIONS HAVE BEEN MARKED WITH BRACKETS.

LEXINGTON INSURANCE COMPANY

Administrative Offices: 100 Summer Street, Boston, Massachusetts 02110-2103

 (hereinafter called the Company)

EPL STAFF SELECT

(Employment Practices Liability Insurance Policy)

			
	POLICY NO: 7448348
	 	RENEWAL OF: NEW

DECLARATIONS

	 	 	 	 	 	 	 	 	 	 	 
	ITEM 1:	 	NAMED INSURED:	 	STRATEGIC OUTSOURCING, INC.
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	MAILING ADDRESS:	 	5260 PARKWAY PLAZA BLVD.
	 	 	 	 	#140	 	 	 	 
	 	 	 	 	CHARLOTTE	 	 	 	NC 28217
	 
	 	 	 	 	 	 	 	 	 	 
	ITEM 2:

	 	POLICY PERIOD:
	 	From:
	 	01/01/07
	 	To:
	 	01/01/08
	 

	 	 	 	 	 	(Inception Date)
	 	 	 	(Termination Date)
	 	 	 	 	(12:01 A.M. standard time at the address stated in Item 1)

	 	 	 	 	 	 	 
	ITEM 3:	 	LIMITS OF INSURANCE AND RETENTION:	 	 
	 	 	 	 	 	 	 
	 	 	A.	 	Each Insured Event Limit:
	 	$1,000,000
	 	 	 	 	 	 	 
	 	 	 	 	PEO Each Client Company Sublimit:
	 	$5,000,000
	 	 	 	 	 	 	 
	 	 	 	 	Temporary Help Firm Each
Client Company Sublimit:
	 	$N/A
	 	 	 	 	 	 	 
	 	 	B.	 	Total Policy Period Limit:
	 	$10,000,000
	 	 	 	 	 	 	 
	 	 	C.	 	Deductible
	 	$SEE ENDT
	 	 	 	 	 	 	 
	ITEM 4:	 	PREMIUM:	 	$ [___]

	 	 	 	 	 
	 	 	 
	 	             /s/  Shawn E. Kelly
 	 
	 	Authorized Representative OR          	 
	 	Countersignature (in states where applicable) 	 
	 

					
	 	 	 	 	 
	Cmepl-SS	 	 	 	 
	LX9517 (08/02)
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FORMS SCHEDULE

	 	 	 	 	 	 	 
	Named Insured:

	 	STRATEGIC OUTSOURCING, INC.	 	 	 	 
	 
	 	 	 	 	 	 
	Policy No.: 7448348	 	Effective Date:	 	01/01/2007

	 	 	 	 	 	 	 	 	 	 	 
	Form Number	 	Edition Date	 	Endorsement Number	 	Title
	 
	 	 	 	 	 	 	 	 	 	 
	LX9517

	 	08/02
	 	 	 	 	 	 	 	EPL STAFF SELECT
	 
	 	 	 	 	 	 	 	 	 	 
	LEX-CM-EPLIT

	 	03/02
	 	 	 	 	 	 	 	EMPLOYMENT PRACTICES LIAB TEXT
	 
	 	 	 	 	 	 	 	 	 	 
	LX9883

	 	11/05
	 	 	001	 	 	 
	 	COVERAGE TERRITORY LIMITATION
	 
	 	 	 	 	 	 	 	 	 	 
	LX9520

	 	06/02
	 	 	002	 	 	 
	 	EPL STAFF SELECT CLIENT PEO
	 
	 	 	 	 	 	 	 	 	 	 
	LEXCME077

	 	03/86
	 	 	003	 	 	 
	 	MINIMUM EARNED PREMIUM
	 
	 	 	 	 	 	 	 	 	 	 
	LX9492

	 	12/01
	 	 	004	 	 	 
	 	SELF INSURED RETENTION END
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	005	 	 	 
	 	WRONGFUL BUSINESS ENV.
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	006	 	 	 
	 	AMENDATORY ENDORSEMENT
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	007	 	 	 
	 	EXTENDED REPORTING PERIOD
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	008	 	 	 
	 	PREMIUM INSTALLMENT ENDT

					
	 	 	 	 	 
	DOC018(Ed. 12/87)	 	 	 	 
	LX0295
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POLICYHOLDER NOTICE

Thank you for purchasing insurance from a member company of American International
Group, Inc. (AIG). The AIG member companies generally pay compensation to brokers and
independent agents, and may have paid compensation in connection with your policy. You
can review and obtain information about the nature and range of compensation paid by AIG
member companies to brokers and independent agents in the United States by visiting our
website at www.aigproducercompensation.com or by calling AIG at 1-800-706-3102.

					
	 	 	 	 	 
	91222 (7/06)	 	 	 	 
	 
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LEXINGTON INSURANCE COMPANY

ANY REFERENCE IN THE POLICY FORM TO CONTACT IN WRITING THE COMPANY’S CLAIM OR LEGAL DEPARTMENTS
SHOULD USE THE ADDRESSES PROVIDED BELOW.

Attn: Claim Department

Lexington Insurance Company

100 Summer Street

Boston, Massachusetts 02110-2103

Attn: Legal Department

Lexington Insurance Company

100 Summer Street

Boston, Massachusetts 02110-2103

INSURED’S COPY

 

 

LEXINGTON INSURANCE COMPANY

EMPLOYMENT PRACTICES LIABILITY INSURANCE POLICY

CLAIMS-MADE

	I.	 	PREAMBLE
	 
	 	 	THIS IS A CLAIMS-MADE POLICY IN WHICH COSTS OF DEFENSE ARE INCLUDED WITHIN AND SUBJECT TO
THE LIMITS OF INSURANCE. READ THIS POLICY CAREFULLY.
	 
	 	 	Throughout this policy, unless the context otherwise requires, the words you and your refer
to the Named Insured as identified in the Declarations and any other person qualifying as an
Insured under Section III of this policy (WHO IS AN INSURED). The words we, us and our
refer to Lexington Insurance Company
	 
	 	 	Words appearing in boldface type in this policy shall have the meaning as defined in the
DEFINITIONS section or elsewhere in this policy.
	 
	 	 	This policy covers employment related Wrongful Termination, Discrimination, Sexual
Harassment and Workplace Torts liability, all subject to the terms, definitions, conditions,
limitations, exclusions and other provisions set forth in this policy.
	 
	 	 	This policy has been issued by us in reliance upon the statements made to us by you or your
authorized representative in your application for this policy, which application is attached
to and forms a part of this policy.
	 
	II.	 	INSURING AGREEMENT

	 	A.	 	INDEMNITY

	 	1.	 	Subject to all of the terms, limitations, conditions,
definitions, exclusions and other provisions of this policy, we will pay all
Loss Amounts that the Insured is legally obligated to pay because of an Insured
Event to which this insurance applies. The amount we will pay is limited as
described in item 3 of the Declarations and in the Sections of this policy
dealing with LIMITS OF INSURANCE, DEFENSE, DEDUCTIBLE and OTHER INSURANCE.
	 
	 	2.	 	This policy applies only if:

	 	a.	 	Claim because of an Insured Event is first made
against any Insured during the Policy Period as set forth in Item 2 of
the Declarations, and
	 
	 	b.	 	the Insured Event out of which the Claim arises
does not happen or commence prior to the Inception Date of the first
Employment Practices Liability Policy issued by us to the Named Insured,
or after the Policy Period has ended.

	 	3.	 	We have the right to investigate and settle up to the applicable
Limits of Insurance any Claim in the manner and to the extent we, in our sole
discretion, deem proper. Upon receipt by us of notice of circumstances which
are likely to give rise to a Claim, we also have the right (but not the duty) to
investigate and make such a settlement even before a Claim is made.

	 	B.	 	DEFENSE

	 	1.	 	We have the right and duty to defend any Claim because of an
Insured Event to which this insurance applies made or brought against any
Insured(s). We have the

					
	 	 	 	 	 
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	 	 	 	right to select defense counsel with the consent of the Insured, which
consent shall not be unreasonably withheld.

	 	2.	 	a.	 	 Our duty to defend any Claim ends when the Limits of Insurance
applicable to that Insured Event (Item 3A of the Declarations) or to the Policy
Period (Item 3B of the Declarations) have been exhausted.
	 
	 	 	 	b.	 	If the Policy Period Limit (Item 3B of the
Declarations) is exhausted, we will notify the Named Insured of all
outstanding Claims so that the Insured can assume control of the defense
of all such Claims.
	 
	 	 	 	c.	 	In the event of exhaustion of the per Insured
Event Limit and/or the total Policy Period Limit (Items 3A and 3B of the
Declarations, respectively,) so that a transfer of the control of the
defense from us to you becomes appropriate, we agree to continue the
defense of the Claim(s) during that reasonable period of time necessary
for you to assume control of the defense. However, you agree that, by
so doing, we do not waive or surrender any of our rights including the
right to withdraw from the defense of such Claim(s). You also agree to
promptly reimburse us for the expenses we incur in continuing to conduct
the defense during the transition period from the time the applicable
Limits of Insurance were exhausted until the time you have assumed such
defense.
	 
	 	 	 	d.	 	In the event that a claimant offers a settlement
and we recommend that such settlement be accepted, but the Insured
withholds consent to so settle and the Claim later results in a judgment
or settlement in excess of the amount of the earlier settlement offer,
then our liability shall be limited to the amount of such settlement
offer. In such event, the Insured shall also reimburse us for all
Defense Costs we paid subsequent to the date the Insured withheld its
consent to settle.
	 
	 	 	 	e.	 	The costs of defense are not in addition to but
rather are included within and subject to the Limits of Insurance.

	 	C.	 	OTHER BENEFITS

	 	1.	 	Pre-judgment Interest
	 
	 	 	 	We shall pay the amount of pre-judgment interest imposed on a verdict.
However, our obligation to pay pre-judgment interest shall not be in addition
to the applicable Limits of Insurance but rather shall be within and subject
to said Limits of Insurance.
	 
	 	2.	 	Post-judgment Interest
	 
	 	 	 	We shall pay the entire amount of post-judgment interest calculated upon the
amount for which we are liable under this policy until such time as we have
paid or tendered such amount.

	III.	 	WHO IS AN INSURED

	 	A.	 	Individual. If you are shown in the Declarations as an individual, you are
insured only for the conduct of a business of which you are the sole owner.
	 
	 	B.	 	Corporation. If you are shown in the Declarations as a corporation or
organization other than a partnership or joint venture, you, and any entity in which
you own a 50.1% or greater interest at the time of Inception Date of this policy or
which is identified in the

					
	 	 	 	 	 
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	 	 	 	Declarations or by endorsement to this policy, are an Insured. Your officers and
directors are Insureds, but only with respect to their duties as your officers or
directors.
	 
	 	C.	 	Partnership or joint venture. If you are shown in the Declarations as a
partnership or joint venture, you are an Insured. Your partners or joint venturers are
also Insureds but only for the conduct of your business.
	 
	 	 	 	However, no person or organization is covered for the conduct of any current or past
partnership or joint venture not named in the Declarations.
	 
	 	D.	 	Acquisitions. Any organization that you newly acquire or form during the
Policy Period which at the time of acquisition or formation constitutes less than 20%
of the overall total employee count of the Insured becomes an Insured when you own at
least 50.1% of it, but no newly acquired or formed organization is covered for:

	 	a)	 	any Loss Amount that results from an act or incident that
happened or commenced before you acquired or formed it,
	 
	 	b)	 	any Loss Amount covered under other insurance.

	 	 	 	Any newly acquired or formed organization which at the time of acquisition or
formation constitutes 20% or more of the overall total employee count of the Insured
becomes an Insured when you own at least 50.1% of it, but no newly acquired or formed
organization is covered for

	 	a)	 	any Loss Amount that results from an act or incident that
happened or commenced before you acquired or formed it,
	 
	 	b)	 	any Loss Amount covered under other insurance.
	 
	 	c)	 	more than ninety (90) days or the remainder of the Policy Period,
whichever is less, unless the Named Insured gives us written acceptance of any
special terms, conditions, exclusions, or additional premium charge we may
require.

	 	E.	 	Employees. Your Employees are Insureds but only for the conduct of your
business within the scope of their employment. Your Employees’ status as Insureds will
be determined as of the date of the alleged Discrimination, Sexual Harassment, Wrongful
Termination or Workplace Torts.

	IV.	 	EXCLUSIONS

	 	A.	 	Workers’ Compensation. This policy does not cover any obligation
under a workers’ compensation, disability benefits or unemployment compensation law, or
any similar law.
	 
	 	B.	 	Liability Assumed by Contract. This policy does not cover any Loss Amount which
the Insured is obligated to pay by reason of the assumption of another’s liability for
an Insured Event in a contract or agreement.
	 
	 	 	 	This exclusion shall not apply to liability for damages because of an Insured Event
that the Insured would have had even in the absence of such contract or agreement.
	 
	 	C.	 	Employee Retirement Income Security Act. This policy does not cover any
liability imposed on the Insured under the Employee Retirement Income Security Act of
1974, Public Law 93-406, or any amendments thereto.
	 
	 	D.	 	Strikes and Lockouts. This policy does not cover any Loss Amount(s) or costs arising out of or
associated with a lockout, strike, picket line, replacement or other similar actions

					
	 	 	 	 	 
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	 	 	 	in connection with labor disputes or labor negotiations. This exclusion shall not
apply to a Claim brought by an Employee(s) alleging Wrongful Termination or
retaliation as a result of strike activity or union involvement.
	 
	 	E.	 	W.A.R.N. Act. This policy does not cover any liability arising out of the
Workers’ Adjustment and Retraining Notification Act, Public Law 100-379 (1988), or any
amendment thereto, or any similar federal, state or local law.
	 
	 	F.	 	This policy does not apply with respect to liability or costs incurred by any
Insured to modify any building or property in order to make said building or property
more accessible or accommodating to any disabled person.
	 
	 	G.	 	This policy does not apply, other than Defense Costs, to damages imposed as a
result of the termination of an express contract of employment.
	 
	 	H.	 	Wage Claims. This policy does not cover any Claim brought against any Insured
for failure to pay wages earned by an employee, including but not limited to any claim
brought under the overtime compensation or minimum wage provisions of the Fair Labor
Standards Act, 29 U.S.C. 201 et seq., or any state or local law governing the payment
of overtime compensation or minimum wage. This exclusion does not apply to any claim
brought pursuant to the Equal Pay Act, 29 U.S.C. s. 206 (d).

	V.	 	LIMITS OF INSURANCE

	 	A.	 	Each Insured Event Limit.
	 
	 	 	 	The amount shown as the Each Insured Event Limit in Item 3A of the Declarations is
the most we will pay for all Claims made or brought arising out of one Insured Event,
regardless of the number of Claims made, claimants, or Insureds against whom such
Claims are made.
	 
	 	B.	 	Total Policy Period Limit.
	 
	 	 	 	Subject to the Each Insured Event Limit, the amount shown as the Total Policy Period
Limit in Item 3B of the Declarations is the most we will pay under this policy for
all Claims made or brought during the Policy Period.

	VI.	 	WHEN COVERAGE IS PROVIDED

	 	A.	 	Subject to the other provisions of this policy, including those regarding
Limited and Extended Reporting Periods, if applicable, this policy applies only to
Claims first made against any Insured during the Policy Period.
	 
	 	B.	 	A Claim shall be considered to be made on the earlier of:

	 	1.	 	the date any Insured receives a written notice of a Claim being
made against any Insured seeking damages covered by this policy; or
	 
	 	2.	 	the date we make a settlement on account of an Insured Event but
in advance of written Claim being made.

	 	C.	 	All Claims arising out of one Insured Event shall be considered to be one Claim
and shall be deemed to be made at the time the first of such Claims is made. If such
Claims are made while this policy is in effect and also while predecessor or successor
policies issued by us are in effect, all such Claims shall still be considered to have
been made at the time the first of such Claims is made and only the policy in effect at
that time shall apply to all such Claims.

					
	 	 	 	 	 
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	VII.	 	DEFINITIONS

	 	A.	 	Claim means a written demand or notice received by an Insured in which damages
likely to be covered by this policy are alleged. Claim includes a civil action, an
administrative proceeding, alternative dispute resolution proceeding, or an action
brought by a person or entity acting on behalf of an Employee(s) of the Insured to
which you must submit or to which you submit with our consent. Claim shall include a
proceeding for injunctive or non-monetary relief. Claim shall not include labor or
grievance arbitration subject to a collective bargaining agreement. A class action
lawsuit is considered one Claim.
	 
	 	B.	 	Defense Costs means those reasonable and necessary expenses that result from
the investigation, settlement, defense of a specific Claim, including attorney fees and
expenses, the cost of legal, administrative, or alternative dispute resolution
proceedings, the cost of appeal bonds, the cost of bonds to release property being used
to secure a legal obligation (but only for bond amounts within the Limit of Insurance
that applies: we have no obligation to furnish such bonds), all reasonable expenses
that any Insured incurs at our request while helping us investigate or defend a Claim
and, subject to Section II, C of this policy, all costs taxed against any Insured in a
suit.
	 
	 	 	 	Salaries and expenses of any Insured’s Employees shall not be deemed to be covered
Defense Costs.
	 
	 	 	 	Defense Costs are included within, and are not in addition to, the applicable Limits
of Insurance and Retention.
	 
	 	C.	 	Discrimination means termination of an employment relationship or a demotion or
a failure or refusal to hire or promote or otherwise to take any action against any
individual with respect to his or her compensation, terms, conditions, privileges or
opportunities of employment because of race, color, religion, age, sex, disability,
pregnancy, national origin, sexual orientation or other protected category or
characteristic established pursuant to any applicable United States federal, state, or
local statute or ordinance.
	 
	 	D.	 	Employee means an individual whose labor or service is engaged by and directed
by an Insured. This includes part-time, seasonal and temporary Employees as well as
any individual employed in a supervisory, managerial or confidential position.
Supervisory Employee means an officer or director of an Insured or any Employee of an
Insured who has the authority to employ or terminate the employment of other Employees
of an Insured. An individual who is leased to the Insured shall be an Employee, but
only if the Insured provides indemnification to such leased individual in the same
manner as is provided to the Insured’s Employees. Any other individual who is
contracted to perform work for the Insured, or who is an independent contractor for the
Insured shall also be an Employee, but only if the Insured provides indemnification to
such individual in the same manner as that provided to the Insured’s Employees, and
such individual is scheduled by written endorsement attached hereto.
	 
	 	E.	 	Insured Event means (1) your Employee or former Employee, or an applicant for
employment with you, alleging Discrimination by an Insured, or (2) your Employee or
former Employee alleging Sexual Harassment by an Insured, or (3) your former Employee
alleging Wrongful Termination by an Insured, (4) your Employee or former Employee or an
applicant for employment with you alleging Workplace Torts by an Insured. Alleging
means lodging an oral or written complaint or charge with your management or
Supervisory Employee(s) or with your corporate legal or human resource departments.
	 
	 	F.	 	Loss Amount means all forms of compensatory damages, monetary damages,
statutory damages, multiplied damages, punitive or exemplary damages, judgments,
settlements,

					
	 	 	 	 	 
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	 	 	 	statutory attorney fees, and Defense Costs arising out of Claim(s) alleging
Discrimination, Sexual Harassment, Wrongful Termination or Workplace Torts .
	 
	 	 	 	It is agreed that the law of the jurisdiction most favorable to the insurability of
punitive or exemplary damages shall control for the purpose of resolving any issue or
dispute regarding whether these damages are insurable under this policy.
	 
	 	 	 	Loss Amount shall not include criminal fines or penalties.
	 
	 	 	 	Loss Amount also shall not include payment of insurance plan benefits claimed by or
on behalf of any retired Employee, or that a claimant would have been entitled to as
an Employee had the Insured provided the claimant with a continuation of insurance.
	 
	 	 	 	Loss Amount also shall not include amounts awarded pursuant to a labor or grievance
arbitration pursuant to a collective bargaining agreement.
	 
	 	 	 	Loss Amount also shall not include vested and non-vested stock options, retirement
benefits, severance pay, bonus, prerequisites, commissions, fringe benefits, vacation
days or sick days.
	 
	 	G.	 	Policy Period means the period of time commencing with the Inception Date shown
in Item 2 of the Declarations and the earlier of the termination date shown in Item 2
of the Declarations or the date on which this policy is terminated by cancellation by
you or by us.
	 
	 	H.	 	Sexual Harassment means unwelcome sexual advances and/or requests for sexual
favors and/or other verbal or physical conduct of a sexual nature that: (1) are made a
condition of employment and/or (2) are used as a basis for employment decisions and/or
(3) create a work environment that interferes with performance or creates an
intimidating, hostile, or offensive work environment.
	 
	 	I.	 	Workplace Torts means retaliation, defamation, infliction of emotional
distress, invasion of privacy, negligent evaluation, wrongful discipline, wrongful
reference, failure to grant tenure, wrongful failure to employ or promote, or wrongful
demotion.
	 
	 	J.	 	Wrongful Termination means termination of an employment relationship in a
manner which is against the law and wrongful or in breach of an implied agreement to
continue employment. Wrongful Termination shall include but shall not be limited to
breach of an implied employment contract, retaliation, or the filing of a Claim under
federal, state, local or foreign “whistleblower” laws.

	VIII.	 	DEDUCTIBLE

	 	A.	 	Deductible
	 
	 	 	 	Our obligation to pay under this policy applies only to the Loss Amount in excess of
the deductible amount stated in Item 3C of the Declarations. The deductible shall
apply separately to each Claim.
	 
	 	B.	 	The Named Insured shall reimburse us promptly for any amounts we have paid
which are within the deductible amount.

	IX.	 	LIMITED AND EXTENDED REPORTING PERIODS

	 	A.	 	Limited Reporting Period means the sixty (60) day period starting with the end
of the Policy Period. Any Claim which is first made during the Limited Reporting
Period because of an Insured Event which happened or commenced after the inception date
of

					
	 	 	 	 	 
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	 	 	 	the first Employment Practices Liability Policy issued by us to the Named Insured
because of an act or incident which happened or commenced prior to the end of the
Policy Period shall be deemed to have been made on the last day of the Policy Period.
	 
	 	B.	 	When the Limited Reporting Period will apply. The Limited Reporting Period
will apply only if this insurance is cancelled by us or not renewed by us for any
reason other than your non-payment of a premium or deductible or non-compliance with
the terms and conditions of this policy. An increase in premium or other changes in
the terms and conditions of this coverage shall not constitute a non-renewal for the
purpose of this provision. However, the Limited Reporting Period will not apply to
Claims if other insurance you buy covers them or would cover them if its Limits of
Insurance had not been exhausted.
	 
	 	C.	 	How to add an Extended Reporting Period. If the Limited Reporting Period
applies, an Extended Reporting Period, starting at the end of the Limited Reporting
Period, can be added by means of an Extended Reporting Period Endorsement and the
payment of an additional premium. The Extended Reporting Period Endorsement attached
to this policy sets forth the terms and conditions of the Extended Reporting Period.
	 
	 	 	 	Any Claim which is first made during the Extended Reporting Period because of an
Insured Event which happened or commenced after the inception date of the first
Employment Practices Liability Policy issued by us to the Named Insured because of an
act or incident which happened or commenced prior to the end of the Policy Period
shall be deemed to have been made on the last day of the Policy Period.
	 
	 	 	 	The Extended Reporting Period Endorsement will not be issued unless we receive a
written request for it within sixty (60) days after the end of the Policy Period, nor
will it take effect unless the additional premium is paid when due.
	 
	 	 	 	The additional premium for the Extended Reporting Period will be determined by Us
pursuant to Our underwriting review and discretion.
	 
	 	D.	 	How the Limits of Insurance apply to the Limited and Extended Reporting
Periods. The Limits of Insurance that remain at the end of the Policy Period after
payment of all Loss Amounts and Defense Costs made on account of Claims made during the
Policy Period are not reinstated, renewed or increased for Claims first made or brought
during the Limited Reporting Period or the Extended Reporting Period. Any Claim first
made or brought during the Limited Reporting Period or the Extended Reporting Period
will be deemed to have been first made on the last day of the Policy Period which
terminated immediately prior to the start of the Limited Reporting Period.

	X.	 	CONDITIONS
	 
	 	 	It shall be a condition precedent to our obligations under this policy that the Insureds
comply with all of the Conditions.

	 	A.	 	DUTIES IN THE EVENT OF AN INCIDENT, CLAIM OR SUIT

	 	1.	 	Notice of incident - You shall give us written notice as soon as
practicable after an Insured becomes aware of any incident which is likely to
give rise to a Claim covered by this policy. Such notice shall include as much
detail as possible and shall include, to the extent possible:

	 	a.	 	the identity of the person(s) alleging
Discrimination, Wrongful Termination, Sexual Harassment or Workplace
Torts;

					
	 	 	 	 	 
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	 	b.	 	the identities of the Insured(s) who allegedly committed the
Discrimination, Wrongful Termination, Sexual Harassment or Workplace
Torts and any witnesses;
	 
	 	c.	 	the date the alleged incident took place; and
	 
	 	d.	 	any other information or documentation pertinent
to the alleged incident.

	 	 	 	Notice of such an incident likely to give rise to a Claim nevertheless does
not constitute a Claim being made.
	 
	 	2.	 	If a Claim is made or suit is brought against any Insured you
must:

	 	a.	 	immediately record the specifics of the Claim and
the date received; and
	 
	 	b.	 	notify us in writing as soon as practicable;
	 
	 	c.	 	immediately send us copies of any demands,
notices, summonses or legal papers received in connection with the
Claim;
	 
	 	d.	 	authorize us to obtain records and other
information;
	 
	 	e.	 	cooperate with us in the investigation,
settlement or defense of the Claim; and
	 
	 	f.	 	assist us, upon our request, in the enforcement
of any right against any person or organization which may be liable to
any Insured because of injury or damage to which this insurance may also
apply.

	 	3.	 	All notices hereunder of Claims, or of incidents which may
reasonably be expected to give rise to a Claim being made against the Insured,
shall be in writing to Lexington Insurance Company, 100 Summer Street, Boston,
Massachusetts, 02110-2103; Attention: Supervisor of Professional Liability
Claims.

	 	B.	 	OTHER INSURANCE

	 	1.	 	Primary Insurance-Unless expressly written to be excess over
other applicable insurance, it is intended that this insurance be primary with
respect to Wrongful Termination, Discrimination, Sexual Harassment and Workplace
Torts.
	 
	 	2.	 	Excess insurance - When this insurance is specifically written to
be excess of other insurance, we will have no duty to defend any Claim that any
other insurer has a duty to defend until such time as the underlying insurance
is exhausted by payment of Loss Amounts that would, in the absence of such
primary policy, be recoverable under this policy. When this policy is excess, we
will pay only that amount, in excess of the primary insurance, any deductible or
self insured retention in connection with the primary insurance, and the
deductible amount set forth in this policy.

	 	C.	 	VOLUNTARY PAYMENTS
	 
	 	 	 	No Insured shall, except at the Insureds’ sole cost, make any payment, assume any
obligation or incur any expense without our consent
	 
	 	D.	 	REPRESENTATIONS
	 
	 	 	 	By accepting this policy, you agree that:

					
	 	 	 	 	 
	LEX-CM-EPLIT (Ed. 03/02)
	 	 	 	8
	LX0557	 	 	 	 
	 
	 	INSURED’S COPY
	 	 

 

 

	 	1.	 	the statements in the Application and Declarations are accurate and
complete;
	 
	 	2.	 	those statements are based upon representations you made to us;
	 
	 	3.	 	we have issued this policy in reliance upon your representations;
and
	 
	 	4.	 	the representations made are binding on all Insureds.

	 	E.	 	TRANSFER OF RIGHTS OF RECOVERY AGAINST OTHERS TO US
	 
	 	 	 	If any Insured has rights to recover all or part of any payment we have made under
this policy, those rights are transferred to us. The Insured must do nothing after an
Insured Event or a Claim to impair them. At our request, the Insured will transfer
those rights to us and help us enforce them.
	 
	 	F.	 	BANKRUPTCY
	 
	 	 	 	The bankruptcy, insolvency or inability to pay of an Insured or of an Insured’s
estate will not relieve us of our obligations under this policy. However, neither
shall such bankruptcy, insolvency or inability to pay increase our liability with
respect to the deductible, nor in any other way.
	 
	 	G.	 	CANCELLATION

	 	1.	 	The Named Insured shown in the Declarations may cancel this
policy by mailing or delivering to us advance written notice of cancellation.
	 
	 	2.	 	We may cancel this policy by mailing or delivering to the Named
Insured written notice of cancellation at least:

	 	a.	 	10 days before the effective time of cancellation
if we cancel for nonpayment of premium; or
	 
	 	b.	 	30 days before the effective time of cancellation
if we cancel for any other reason.

	 	3.	 	We will mail or deliver our notice to the Named Insured’s last
mailing address known to us.
	 
	 	4.	 	Notice of cancellation will state the effective time of
cancellation. The Policy Period will end at that time.
	 
	 	5.	 	If this policy is cancelled, we will send the Named Insured any
premium refund due in due course. If we cancel, the refund will be pro rata. If
the Named Insured cancels, the refund will be on the customary short rate basis.
The return or tender of a return premium shall not be a condition precedent to
the cancellation becoming effective at the time stated in the cancellation
notice.
	 
	 	6.	 	If notice is mailed, proof of mailing will be sufficient proof of
notice.
	 
	 	7.	 	If any law controlling requires a longer period of notice by us,
we will give the longer notice.

	 	H.	 	CHANGES
	 
	 	 	 	This policy contains all the agreements between you and us concerning the insurance
afforded. The Named Insured shown in the Declarations is authorized by all other
Insureds to negotiate changes in the terms of this policy with us and to receive and
give

					
	 	 	 	 	 
	LEX-CM-EPLIT (Ed. 03/02)
	 	 	 	9
	LX0557	 	 	 	 
	 
	 	INSURED’S COPY
	 	 

 

 

	 	 	 	all notices under this policy. This policy’s terms can be amended or waived only by
endorsement issued by us and made part of the policy.
	 
	 	I.	 	PREMIUMS
	 
	 	 	 	The Named Insured shown in the Declarations:

	 	1.	 	is responsible for the payment of all premiums; and
	 
	 	2.	 	will be the payee for any return premiums we pay.

	 	J.	 	LEGAL ACTION AGAINST US

	 	1.	 	No person or organization has a right under this policy:

	 	a.	 	to join us as a party or otherwise bring us into
a suit asking for damages from any Insured; or
	 
	 	b.	 	to sue us on this policy unless all of its terms
have been fully complied with.

	 	2.	 	A person or organization may sue us to recover on an agreed
settlement or on a final judgment against the Insured obtained after an actual
trial, but we will not be liable for any Loss Amount that is not payable under
the terms of this policy or that is in excess of the applicable Limits of
Insurance. An agreed settlement means a settlement and release of liability
signed by us, the Insured and the claimant or the claimant’s legal
representative.

	 	K.	 	TAKEOVER OF INSURED
	 
	 	 	 	!n the event 51% or more of the controlling interest of any Insured is changed during
the Policy Period, then this policy shall automatically terminate upon the completion
of such change in control. From that point forward, such insurance as is afforded by
this policy shall apply only to Claims which had first been made prior to that change
in control.
	 
	 	L.	 	SERVICE OF SUIT
	 
	 	 	 	It is agreed that in the event of our failure to pay any amount claimed to be due
hereunder, we, at the request of the Insured, will submit to the jurisdiction of a
court of competent jurisdiction within the United States. Nothing in this condition
constitutes or should be understood to constitute a waiver of our rights to commence
an action in any court of competent jurisdiction in the United States, to remove an
action to a United States District Court or to seek a transfer of a case to another
court as permitted by the laws of the United States or of any state in the United
States. It is further agreed that service of process may be made upon Counsel, Legal
Department, Lexington Insurance Company, 100 Summer Street, Boston, Massachusetts,
02110-2103, or his or her representative, and that in any suit instituted against us
upon this policy, we will abide by the final decision of such court or of an
appellate court in the event of any appeal.
	 
	 	 	 	Further, pursuant to any statute of any state, territory, or district of the United
States which makes provision therefor, we hereby designate the Superintendent,
Commissioner, or Director of Insurance, or other officer specified for that purpose
in the statute, or his or her successor or successors in office as our true and
lawful attorney upon whom may be served any lawful process in any action, suit or
proceeding instituted by or on behalf of you or any beneficiary hereunder arising out
of this contract of insurance, and hereby designate the Counsel, Legal Department,
Lexington Insurance Company, 100 Summer

					
	 	 	 	 	 
	LEX-CM-EPLIT (Ed. 03/02)
	 	 	 	10
	LX0557	 	 	 	 
	 
	 	INSURED’S COPY
	 	 

 

 

	 	 	 	Street, Boston, Massachusetts 02110-2103, as the person to whom the said officer is
authorized to mail such process or a true copy thereof.
	 
	 	M.	 	ARBITRATION
	 
	 	 	 	Notwithstanding the Service of Suit condition above, in the event of a disagreement
as to the interpretation of this policy, it is mutually agreed that such dispute
shall be submitted to binding arbitration before a panel of three (3) Arbitrators
consisting of two (2) party-nominated (non-impartial) Arbitrators and a third
(impartial) Arbitrator (hereinafter “umpire”) as the sole and exclusive remedy. The
party desiring arbitration of a dispute shall notify the other party, said notice
including the name, address and occupation of the Arbitrator nominated by the
demanding party. The other party shall, within 30 days following receipt of the
demand, notify in writing the demanding party of the name, address and occupation of
the Arbitrator nominated by it. The two (2) Arbitrators so selected shall, within 30
days of the appointment of the second Arbitrator, select an umpire. If the
Arbitrators are unable to agree upon an umpire, each Arbitrator shall submit to the
other Arbitrator a list of three (3) proposed individuals, from which list each
Arbitrator shall choose one (1) individual. The names of the two (2) individuals so
chosen shall be subject to a draw, whereby the individual drawn shall serve as
umpire.
	 
	 	 	 	The parties shall submit their cases to the panel by written and oral evidence at a
hearing time and place selected by the umpire. Said hearings shall be held within 30
days of the selection of the umpire. The panel shall be relieved of ail judicial
formality, shall not be obligated to adhere to the strict rules of law or of
evidence, shall seek to enforce the intent of the parties hereto and may refer to,
but are not limited to, relevant legal principles. The decision of at least two (2)
of the three (3) pane! members shall be binding and final and not subject to appeal
except for grounds of fraud and gross misconduct by the Arbitrators. The award will
be issued within 30 days of the close of the hearings. Each party shall bear the
expenses of its designated Arbitrator and shall jointly and equally share with the
other the expense of the umpire and of the arbitration.
	 
	 	 	 	The arbitration proceeding shall take place in or in the vicinity of Boston,
Massachusetts. The procedural rules applicable to this arbitration shall, except as
provided otherwise herein, be in accordance with the Commercial Arbitration Rules of
the American Arbitration Association.

IN WITNESS WHEREOF, the Company has caused this policy to be executed and attested, but this policy
shall not be valid unless countersigned in the Declarations by one of its duly authorized
representatives.

	 	 	 
	/s/ Elizabeth M. Tuck
	 	/s/ [Signature illegible]
	 
	 	 
	Secretary
	 	Chairman of the Board and CEO

					
	 	 	 	 	 
	LEX-CM-EPLIT (Ed. 03/02)
	 	 	 	11
	LX0557	 	 	 	 
	 
	 	INSURED’S COPY
	 	 

 

 

ENDORSEMENT # 001

This endorsement, effective 12:01 AM 01/01/2007

Forms a part of policy no.: 7448348

Issued to: STRATEGIC OUTSOURCING, INC.

By: LEXINGTON INSURANCE COMPANY

COVERAGE TERRITORY LIMITATION ENDORSEMENT

This endorsement modifies insurance provided by the policy:

If coverage for a claim or suit under this policy is in violation of any United States of America’s
economic or trade sanctions, laws, or regulations, including, but not limited to, sanctions, laws,
and regulations administered and enforced by the U.S. Treasury Department’s Office of Foreign
Assets Control (“OFAC”) then coverage for that claim or suit shall be null and void.

All other terms and conditions of the policy remain the same.

	 	 	 	 	 
	 	 	 
	 	/s/ [Signature illegible]
 	 
	 	Authorized Representative OR 	 
	 	Countersignature (In states where applicable) 	 
	 

					
	 	 	 	 	 
	LX9883 (11/05)	 	 	 	 
	 	 	 	 	 
	 
	 	INSURED’S COPY
	 	 

 

 

ENDORSEMENT # 002

This endorsement, effective 12:01 AM 01/01/2007

Forms a part of policy no.: 7448348

Issued to: STRATEGIC OUTSOURCING, INC.

By: LEXINGTON INSURANCE COMPANY

EPL Staff Select

Client Company Endorsement for

PEOs (Professional Employer Organizations)

In consideration of the premium charged it is understood and agreed that the Policy is amended
as follows:

	I.	 	Section III. WHO IS AN INSURED is amended to include the following:

	 	F.	 	PEO Client Company. Your PEO (Professional Employer Organization) Client Company
is an Insured for PEO Client Company Claim(s).

	II.	 	Section IV. EXCLUSIONS is amended as follows:

The following exclusion is added:

	 	I.	 	PEO Client Company Claim. This policy does not cover Loss Amounts that a PEO Client
Company is legally obligated to pay because of a breach or severing of a Client Service
Agreement .

The following exclusion is deleted in its entirety and replaced with the following:

	 	B.	 	Contractual Liability. This policy does not cover any Loss Amounts which the Insured
is obligated to pay by reason of the assumption of another’s liability for an Insured
Event in a contract or agreement, provided, this exclusion shall not apply to a PEO Client
Company Claim.

	III.	 	Section V. LIMITS OF LIABILITY is amended by adding the following:

The amount shown in the Declarations as the PEO Each Client Company Sublimit is the most we will
pay on behalf of each PEO Client Company for all PEO Client Company Claims, regardless of the
number of claimants or Insureds against whom such PEO Client Company Claim(s) are made. The PEO
Each Client Company Sublimit is contained within and limited by the Total Policy Period Limit and
is not in addition to the Total Policy Period Limit.

	IV.	 	Section VII. DEFINITIONS is amended to include the following:

	 	K.	 	PEO Client Company means the worksite employer of your provided Worksite Employee
who may have been a former employee of the worksite employer only. This worksite employer
has a contractual agreement with you that defines the responsibilities of the worksite
employer
in the employer relationship, which includes supervision over the work product.
	 
	 	L.	 	PEO Client Company Claim means a Claim made by your provided Worksite Employee
alleging an Insured Event against the Named Insured and/or a PEO Client Company.
PEO Client Company Claim shall not include any Loss arising out of, based upon, or
attributable to Temporary Help Employees.

					
	 	 	 	 	 
	LX9520 (06/02)
	 	1	 	 
	 	 	 	 	 
	 
	 	INSURED’S COPY
	 	 

 

 

	 	M.	 	Worksite Employee means a person who has been hired to work by you for purposes of
servicing any PEO Client Company pursuant to a Client Service Agreement and who works
subject to the Client Service Agreement for any PEO Firm Client Company.
	 
	 	N.	 	Client Service Agreement means a contractual agreement between you and a PEO Client
Company pursuant to which you assume the legal and administrative responsibilities of a
PEO Client Company for payroll, benefits, and other human resources functions on behalf of all
or most of the PEO Client Company work force on an ongoing basis.
	 
	 	O.	 	Temporary Help Employee means a worker hired by you and provided to a Temporary Help
Firm Client Company under an agreement with a Temporary Help Firm Client Company to
meet, support or supplement the worksite employer’s workforce in work situations such as
employee absences, temporary skill shortages, seasonal workloads, and special assignment or
projects.

	 	 	V. It is further understood and agreed that the coverage provided under this endorsement applies
only if:

The claimant is a Worksite Employee of the Named Insured, a former Worksite Employee of the Named
Insured or an applicant for employment as a Worksite Employee
with the Named Insured; and

The Named Insured and/or a PEO Client Company are named in the PEO Client Company Claim and the PEO
Client Company Claim alleges Discrimination, Sexual Harassment, Wrongful Termination or Workplace
Torts against the Named Insured and/or the PEO Client Company; and

The PEO Client Company Claim is made during the Policy Period; and

The PEO Client Company against whom the PEO Client Company Claim is made has a Client Service
Agreement in effect with the Named Insured when the PEO Client Company Claim is made; and

The Insured Event out of which the PEO Client Company Claim arises first happens or commences: 1)
after the inception date of the Client Service Agreement, and 2) after the inception date of the
first Employment Practices Liability policy issued by us to the Named Insured, and 3) prior to the
expiration date of the policy.

All other terms and conditions shall remain unchanged.

	 	 	 	 	 
	 	 	 
	 	/s/ [Signature illegible]
 	 
	 	Authorized Representative OR 	 
	 	Countersignature (In states where applicable) 	 
	 

					
	 	 	 	 	 
	LX9520 (06/02)
	 	2	 	 
	 	 	 	 	 
	 
	 	INSURED’S COPY
	 	 

 

 

ENDORSEMENT # 003

This endorsement, effective 12:01 AM 01/01/2007

Forms a part of policy no.: 7448348

Issued to: STRATEGIC OUTSOURCING, INC.

By: LEXINGTON INSURANCE COMPANY

MINIMUM EARNED PREMIUM

It is understood and agreed that in the event of cancellation of this policy by or at the direction of the In-
sured, the Company shall retain a Minimum Earned Premium of $[___].

It is further agreed that the provision regarding cancellation by the Insured is amended to read:

“If the Insured cancels this policy, earned premium will be computed in accordance with the
cus-tomary short-rate table and procedure, or the Minimum Earned Premium stated herein,
whichever is greater”.

	 	 	 	 	 
	 	 	 
	 	/s/ [Signature illegible]
 	 
	 	Authorized Representative OR 	 
	 	Countersignature (In states where applicable) 	 
	 

					
	 	 	 	 	 
	LEXCME077 (Ed.03/86)	 	 	 	 
	LX0082	 	 	 	 
	 
	 	INSURED’S COPY
	 	 

 

 

ENDORSEMENT # 004

This endorsement, effective 12:01 AM 01/01/2007

Forms a part of policy no. 744838

Issued to: STRATEGIC OUTSOURCING, INC.

By: LEXINGTON INSURANCE COMPANY

SELF INSURED RETENTION ENDORSEMENT

IT IS UNDERSTOOD AND AGREED THAT

Section VIII A., Part A. Deductible is replaced by this Endorsement, and whenever referenced
in this policy the word Deductible shall be replaced by the term Self Insured Retention.

The Company’s obligation under the coverages provided by this policy to pay Loss Amounts
on behalf of the Insured apply only to Loss Amounts in excess of the Self-Insured Retention
as stated in the Declarations and subject to the Limits of Insurance stated in the policy. The
Insured however shall take no action or settlement which alone or together with Defense Costs will
exceed the Self-Insured Retention without the consent of the Company.

The terms of this policy with respect to the Company’s rights and duties relative to
investigation, settlement and duty to defend apply in excess of the application of the Insured’s
Self-Insured Retention. Lexington retains the right to pre approve defense counsel selected to
represent the Insured on any Claim and retains the exclusive right to select defense counsel to
represent the Insured on any Claim which is a
threatened, proposed or actual class action.

The Insured shall immediately notify the Company in writing of any incident, Claim , or suit to
which this policy applies in which the reasonable estimated or actual value of the Loss Amounts
exceeds 50% of the Self — Insured Retention, or when the Claim is in actual civil litigation, or
when the Claim is brought by three or more Claimants.

Self-Insured Retention Amount:

$75,000 per Claim, including defense costs.

All other provisions of this policy remain the same.

	 	 	 	 	 
	 	 	 
	 	/s/ [Signature illegible]
 	 
	 	Authorized Representative OR 	 
	 	Countersignature (In states where applicable) 	 
	 

					
	 	 	 	 	 
	LX9492 (12/01)	 	 	 	 
	 	 	 	 	 
	 
	 	INSURED’S COPY
	 	 

 

 

ENDORSEMENT #005

This endorsement, effective 12:01 a.m. 01/01/2007

Forms a part of Policy No: 7448348

Issued to: STRATEGIC OUTSOURCING, INC.

Issued by: LEXINGTON INSURANCE COMPANY

Wrongful Business Environment Endorsement for the Alternative Staffing Industry

It is understood and agreed that subject to ail the terms, limitations, conditions,
definitions, exclusions, and other provisions of this policy, we will pay all Loss Amounts that the Insured is legally obligated
to pay because of a Claim alleging Wrongful Business Environment. The amount we will pay is included
within and limited as described in item 3 of the Declarations dealing with LIMITS OF INSURANCE, DEFENSE,
DEDUCTIBLE, AND OTHER INSURANCE.

A. This coverage only applies if the Claim alleging Wrongful Business Environment is first made
against the Insured during the policy period as set forth in item 2 of the Declarations, and

B. The Claim alleging Wrongful Business Environment does not arise out of, is not based upon or
attributable to Known Incidents which happened or commenced prior to the Inception Date of the
policy period as set forth in item 2 of the Declarations.

Wrongful Business Environment is defined as allegations of direct, indirect, intentional, or
unintentional Discrimination, Sexual Harassment or any other civil rights violations committed by
an insured and brought by the Insured’s customer(s), client(s) or any other individual(s), class of individuals or group
which results from exposure to the business environment of the Insured.

Known Incidents are defined as the lodging of an oral or written complaint or charge with your
management or Supervisory Employee(s) or your Risk Management, Corporate Legal, or Human Resource
Department alleging Wrongful Business Environment.

The coverage provided by this endorsement shall not include Claims made by, arising out of, based
upon or attributable to any person who is or was subject to an Alternative Staffing Industry client
service agreement, including but not limited to a Professional Employment Organization (PEO) client service
agreement, an Administrative Service Organization (ASO) client service agreement, or a Temporary
Help Placement services agreement.

All other provisions of this policy remain the same.

	 	 	 	 	 
	 	 	 
	 	/s/ [Signature illegible]
 	 
	 	Authorized Representative OR 	 
	 	Countersignature (In states where applicable) 	 
	 

INSURED’S COPY

 

 

ENDORSEMENT #006

This endorsement effective 12:01 AM: 01/01/2007

Forms a part of policy no.: 7448348

Issued To: STRATEGIC OUTSOURCING, INC.

By: LEXINGTON INSURANCE COMPANY

AMENDATORY ENDORSEMENT

IN CONSIDERATION OF THE PREMIUM CHARGED IT IS UNDERSTOOD AND
AGREE THAT THE POLICY IS AMENDED AS FOLLOWS:

1) THE POLICY IS AMENDED AS FOLLOWS:

Section II. INSURING AGREEMENT Section B. Defense, paragraph 2. D. is deleted and replaced
with the following:

In the event that a claimant offers a settlement and we recommend that such
settlement be accepted, but the Insured withholds consent to so settle and the
Claim later results in a judgement or settlement in excess of the amount of the
earlier settlement offer, then the Insured shall be subject to a 20% coinsurance
obligation with respect to all Loss Amounts in excess of the greater of 1) the Self
Insured Retention or 2) the amount of such settlement offer and Defense Costs
incurred to that time. The Loss Amounts we will pay is limited as described in item
3 of the Declarations and in the Sections of the policy dealing with LIMITS OF
INSURANCE, DEFENSE, RETENTION and OTHER INSURANCE.
This coverage modification applies to the Named Insured PEO only. There is no
amendment to the policy as it relates to coverage that is afforded to any PEO Client
Company.

2) THE POLICY IS AMENDED AS FOLLOWS:

Section II INSURING AGREEMENT Section A Indemnity, paragraph 3. is deleted and replaced
with the following:

	 	3.	 	We have the right to investigate and settle up to the
applicable Limits of Insurance any Claim in the manner and to the
extent we, in our sole discretion, deem proper, subject to the
provisions outlined in Section II B. Defense, paragraph 2.D as
amended in item 1) of this endorsement. Upon receipt by us
of notice of circumstances which are likely to give rise to a
Claim, we also have the right (but not the duty) to investigate
and make such a settlement even before a Claim is made.

INSURED’S COPY

 

 

This coverage modification applies to the Named Insured PEO only. There is no
amendment to the policy as it relates to coverage that is afforded to any PEO Client
Company.

3) THE POLICY IS AMENDED AS FOLLOWS:

Section IV. EXCLUSIONS, paragraph C. Employee Retirement Income Security Act

is deleted and replaced in its entirety with the following:

C. Employee Retirement Income Security Act. This policy does not cover any
liability imposed on the Insured under the Employee Retirement Income Security Act
of 1974, Public Law 93-406, or any amendments thereto. Not withstanding the
preceding statement, a Claim made by an employee(s) against the Insured alleging
Wrongful Termination, Discrimination or retaliation in violation of Section 510 of
the Employee Retirement Income Security Act shall be covered, however we will
not pay as Loss Amounts the benefits, pensions, insurance or other rights sought
by an employee(s) under such Benefit Plan.

4) THE POLICY IS AMENDED AS FOLLOWS:

Section IV. EXCLUSIONS E. is deleted and replaced in its entirety with the

following:

E. W.A.R.N. Act. This policy does not cover any liability arising out of the
Workers’ Adjustment and Retraining Notification Act, Public Law 100-379 (1998),
or any amendment thereto, or any similar law. Not withstanding the preceding
statement, We will pay Defense Costs for Claims of injunctive relief seeking the
enforcement of the Workers’ Adjustment and Retraining Notification Act, Public
Law 100-379 (1998), or any amendment thereto, or any similar law, however We
will not pay indemnity amounts or any Loss Amounts other than Defense Costs
arising out of the Workers’ Adjustment and Retraining Notification Act, Public Law
100-379 (1998), or any amendment thereto, or any similar law. This coverage
modification applies to the Named Insured PEO only. There is no amendment to the
policy as it relates to coverage that is afforded to any PEO Client Company.

5) THE POLICY IS AMENDED AS FOLLOWS:

Section VII. DEFINITIONS A. is deleted and replaced with the following:

	 	A.	 	Claim means a written demand or notice received by an Insured in which
damages likely to be covered by this policy are alleged. Claim includes a
civil action, an administrative proceeding, a criminal proceeding,
alternative dispute resolution proceeding, or an action brought by a
person or entity acting on behalf of an Employee(s) of the Insured to
which you must submit or to which you submit with our consent. Claim
shall include a proceeding for injunctive or non-monetary relief. Claim
shall not include labor or grievance arbitration subject to a collective
bargaining agreement. A class action lawsuit is considered one Claim.
This coverage modification applies to the Named Insured PEO only.

INSURED’S COPY

 

 

There is no amendment to the policy as it relates to coverage that is
afforded to any PEO Client Company.

6) THE POLICY IS AMENDED AS FOLLOWS:

Section IV. EXCLUSIONS A. is deleted and replaced in its entirety
with the following:

A. Workers’ Compensation. This policy does not coverage any obligation under a
workers’ compensation, disability benefits, or unemployment compensation law, or
any similar law. Not withstanding the preceding statement, a Claim made by an
employee(s) against the Insured alleging Wrongful Termination, Discrimination or
retaliation arising out of the filing of a workers’ compensation claim against the
Insured shall be covered, however, We will not pay as Loss Amounts any obligation
under a worker’s compensation, disability benefits, or unemployment compensation
law, or any similar law.

7) THE POLICY IS AMENDED AS FOLLOWS:

Section X. CONDITIONS, Item ML ARBITRATION, is deleted in its entirety.

8) THE POLICY IS AMENDED AS FOLLOWS:

Section VII. H. is deleted and replaced by the following:

H. Sexual Harassment means unwelcome sexual advances and/or
requests for sexual favors and/or other verbal or physical contact of a
sexual or non-sexual nature that: (1) are made a condition of
employment and/or (2) are used as a basis for employment decisions
and /or (3) create a work environment that interferes with
performance of creates an intimidating, hostile, or offensive work
environment, including same sex sexual harassment.

All other provisions of this policy remain the same.

	 	 	 	 	 
	 	 	 
	 	/s/ [Signature illegible]
 	 
	 	Authorized Representative OR 	 
	 	Countersignature (In states where applicable) 	 
	 

INSURED’S COPY

 

 

ENDORSEMENT #007

This endorsement, effective 12:01 a.m. 01/01/2007

Forms a part of Policy No: 7448348

Issued to: STRATEGIC OUTSOURCING, INC.

Issued by: LEXINGTON INSURANCE COMPANY

EXTENDED REPORTING PERIOD ENDORSEMENT

It is hereby understood and agreed that Section IX. C. is deleted in it’s entirety and replaced
with the following:

	 	C.	 	How to add an Extended Reporting Period. If the Limited Reporting
Period applies, an Extended Reporting Period, starting at the end of
the Limited Reporting Period, can be added by means of an Extended
Reporting Period Endorsement and the payment of an additional premium.
The Extended Reporting Period Endorsement attached to this policy sets
forth the terms and conditions of the Extended Reporting Period.
	 
	 	 	 	Any Claim which is first made during the Extended Reporting Period
because of an Insured Event which happened or commenced after the
inception date of the first Employment Practices Liability Policy issued by us
to the Named Insured because of an act or incident which happened or commenced prior to
the end of the Policy Period shall be deemed to have
been made on the last day of the Policy Period.
	 
	 	 	 	The Extended Reporting Period Endorsement will not be issued unless we receive a
written request for it within sixty (60) days after the end of the
Policy Period, nor will it take effect unless the additional premium is paid
when due.
	 
	 	 	 	The additional premium for the Extended Reporting Period will be no more
than 100% of the annual premium of the policy for a period of 12 months.

	 	 	 	 	 
	 	 	 
	 	/s/ [Signature illegible]
 	 
	 	Authorized Representative OR 	 
	 	Countersignature (In states where applicable) 	 
	 

INSURED’S COPY

 

 

ENDORSEMENT #008

This endorsement, effective 12:01 AM; 01/01/2007

Forms a part of policy no.: 7448348

Issued to: STRATEGIC OUTSOURCING, INC.

By: LEXINGTON INSURANCE COMPANY

PREMIUM INSTALLMENT ENDORSEMENT

It is hereby understood and agreed that the premium for this policy is payable as follows:

	 	 	 
	Due Date	 	Amount Due
	02/01/2007
	 	  [___]
	04/01/2007
	 	  [___]
	07/01/2007
	 	  [___]
	10/01/2007
	 	  [___]
	Total Due:
	 	$[___]

All other terms and conditions of this policy remain unchanged.

	 	 	 	 	 
	 	 	 
	 	/s/ [Signature illegible]
 	 
	 	Authorized Representative OR 	 
	 	Countersignature (In states where applicable) 	 
	 

					
	 	 	 	 	 
	LEXDOC021	 	 	 	 
	LX0404\	 	 	 	 
	 
	 	INSURED’S COPYEX-10.26

 

Confidential Treatment

Exhibit 10.26

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO REGISTRANT’S APPLICATION OBJECTING TO
DISCLOSURE AND REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406. THE OMITTED
PORTIONS HAVE BEEN MARKED WITH BRACKETS.

CLAIM AGREEMENT

between

STRATEGIC OUTSOURCING, INC. (SOI)

(“Customer” or “Insured”)

and

SPECIALTY RISK SERVICES, LLC,

successor to SPECIALTY RISK SERVICES, INC.,

on behalf of itself and its affiliate, HARTFORD FIRE INSURANCE COMPANY

(“SRS”)

COVER PAGES

     IN THIS AGREEMENT, certain terms have these meanings:

	 	 	 	 	 
	1.

	 	CUSTOMER:
	 	Strategic Outsourcing, Inc.
	 

	 	 	 	5260 Parkway Plaza Blvd., Suite 140
	 

	 	 	 	Charlotte, NC 28217
	 
	 	 	 	 
	2.

	 	SRS:
	 	Specialty Risk Services, LLC.
	 

	 	 	 	One Goodwin Square, 225 Asylum Street
	 

	 	 	 	Hartford, Connecticut 06103
	 

	 	 	 	Attention: Michael Ryan
	 

	 	 	 	                 Vice President
	 
	 	 	 	 
	 

	 	 	 	Notice To Hartford by Customer:
	 

	 	 	 	In the event of bankruptcy by Customer,
	 

	 	 	 	notification and any and all correspondence is to
	 

	 	 	 	be sent to:
	 
	 	 	 	 
	 

	 	 	 	Hartford Fire Insurance Company
	 

	 	 	 	The Hartford
	 

	 	 	 	Hartford Plaza
	 

	 	 	 	Hartford, CT 06115
	 

	 	 	 	Attention: Mr. Thomas Makuch, T-21-88
	 
	 	 	 	 
	3.

	 	EFFECTIVE DATE:
	 	March 1, 2007
	 
	 	 	 	 
	4.

	 	PROGRAM DESCRIPTION:
	 	Policy 16 WBRJ76500 The following states will be covered under this policy:

 

 

	 	 	 	 	 
	 

	 	 	 	AL; AR; AZ; CO; CT; DC; DE; HI; IA; IL; IN; KS;
	 

	 	 	 	KY; LA; MA; MD; ME; Ml; MN; MO; MS; NC; ND;
	 

	 	 	 	NE; NJ; NM; NV; NY; OH; OK; OR; PA; Rl; SC; SD;
	 

	 	 	 	VA; WA; Wl; and WV
	 
	 	 	 	 
	 

	 	 	 	Policy 16 WBRJ79226 The following states will be covered under this policy:
	 

	 	 	 	CA; FL; GA; TN; and TX.

	 	 	 
	Policy Period(s):

	 	03/01/2007 — 03/01/2008
	03/01/2
	 	 
	Type(s):

	 	Workers’ Compensation-Conventional Retro
	 
	 	 
	Policy Number(s):
	 	 
	(as assigned)
	 	 
	 
	 	 
	Policy Period(s):

	 	03/01/2007 — 03/01/2008
	Type(s):

	 	Workers’ Compensation-Prefunded Deductible
	 
	 	 
	Policy Number(s):
	 	 
	(as assigned)
	 	 
	Policy Period(s):

	 	03/01/2007 — 03/01/2008
	Type(s):

	 	Workers’ Compensation-Guaranteed Cost

	5.	 	LOSS DEPOSIT OR INTEREST CHARGE:
	 
	 	 	Not Applicable
	 
	6.	 	SERVICE FEES:
	 
	 	 	Variable Fee To Conclusion
	 
	 	 	Customer will pay SRS a per claim Service Fee for all claims. For Covered Claims that are
Other than Medical Claims which remain open more than two years, Customer will also pay SRS
an additional Service Fee each month until the claim is closed, but only as long as it is a
Covered Claim.

Per claim Service Fee

Other Than Medical Only

2

 

	 	 	 	 	 
	*California
	 	$[___] per claim
	Florida
	 	$[___] per claim
	Texas
	 	$[___] per claim
	All other States
	 	$[___] per claim

All “Other Than Medical Only” claims remaining open 24 months from date the claim is reported will
be charged $78 per month and will repeat monthly for the life of the claim.

	 	 	 	 	 
	Medical Only — handle to a conclusion
	 	$[___] per claim
	Claim Incident Report
	 	$[___] per claim

Customer agrees to pre-pay estimated claims fee at a rate of $78,204 per month. Actual claim fees
will be calculated each month using the rates stated above against actual claim activity and will
be deducted from the pre-funded claims fee balance on hand. Upon exhaustion of the pre-funded
balance, customer will be direct billed each month for any additional claim fees incurred.

* California claim handler will be dedicated to Strategic Outsourcing during first quarter of
03/01/07 renewal (March, April, May) irregardless of claim intake and pending. In June
07 intake and pending will be reviewed with client and broker at which time if intake and pending
are below standard of 140 pending and 15 monthly intake discussions will take
place with Strategic Outsourcing and Broker to adding additional account (s) to bring
within SRS standards. If in the event SRS did not conduct these discussions with client
and broker they will waive claims service fees to date for said policy year (03/01/07-08)
in California only.

When a Covered Claim is billed as Medical Only but then becomes Other Than Medical Only; or when
billed as Other Than Medical Only but becomes Medical Only, SRS will issue a credit for the
previous charge and a debit for the new amount charged.

The following defines the SRS claim service fee charges:

	 	•	 	“Medical Only” means a compensable claim in which (i) the indemnity
incurred is zero; (ii) paid medical is less than $2,500; (iii) allocated
expense payments are limited to bill review; (iv) the claim does not require
contacts or investigation for purposes of determining compensability, medical
causation or subrogation; (v) claim does not require a formal denial and there
is no litigation or legal representation.
	 
	 	•	 	“Incident Report” means a Claim reported as such, in which no financial
transaction, liability or payment arises with respect to a Claim handled
hereunder and the amount of indemnity incurred, medical incurred and Allocated
Claim Expenses incurred are each zero.

3

 

	 	•	 	“Other than Medical Only” means a Claim that is not a “Medical
Only” Claim or an “Incident Report”. “Other than Medical Only”
claims include claims in which there is an incurred indemnity
value or which have allocated claim expenses incurred other
than bill review.

     Additional Service Fee

For Other Than Medical Only claims that remaining open more than 2 years, the additional
Service Fee is $[___] each month until the claim is closed.

Management Fees

			
	Annual Administration Fee:	 	$[___]

Customer will pay SRS Management Fees for all claims as described below

     Case Management — $[___] per hour

     Vocational Rehabilitation Management — $[___] per hour.

     Special Investigative Unit — $[___] per hour.

     Utilization Management — $[___] per claim.

     Subrogation Fees — ([___]% of Recoveries)

Medical Cost Containment Charge: SOI will be invoiced semi-annually a per
bill rate of $13.50 for each medical invoice processed by SRS as non
allocated expense and billed as separate line item in invoice

Service Fees include one claim file review per office per year according to the

terms and conditions of Section I.E. of this Agreement.

	7.	 	PAYMENT SERVICE FEES:
	 
	 	 	Prepaid Service Fees:
	 
	 	 	Customer agrees to the following Prepaid Service Fees:

From the Effective Date of this Agreement, Customer agrees to pay SRS
Prepaid Service Fees in twelve (12) installments as follows:

Prepaid Service Fees Installment Schedule

	 	 	 	 	 
	Installment	 	Amount due
	March 1, 2005
	 	$	[___]	 
	April 1, 2005
	 	$	[___]	 
	May 1, 2005
	 	$	[___]	 
	June 1, 2005
	 	$	[___]	 

4

 

	 	 	 	 	 
	Installment	 	Amount due
	July 1, 2005
	 	$	[___]	 
	August 1, 2005
	 	$	[___]	 
	September 1, 2005
	 	$	[___]	 
	October 1, 2005
	 	$	[___]	 
	November 1, 2005
	 	$	[___]	 
	December 1, 2005
	 	$	[___]	 
	January 1, 2006
	 	$	[___]	 
	February 1, 2006
	 	$	[___]	 
	Total
	 	$	[___]	 

The Prepaid Service Fees represent SRS’s initial estimate of Customer’s obligations for
Service Fees for SRS’s services on Worker’s
Compensation claims subject to the this Agreement including claims
arising under the Indemnification provisions of the Policies and for which SRS provides Claim
Services during the 36 month period following the Effective Date of this Agreement. Each
month SRS will deduct actual Service Fees from the Prepaid Service Fees amount until the
Prepaid Service Fees amount is exhausted or all claims are closed. However, not withstanding
the foregoing, if at any time during the 36 month period following the Effective Date of this
Agreement, it is determined by SRS
that Prepaid Service Fees is inadequate, SRS may, at its sole discretion, adjust the Prepaid
Service Fees and Customer agrees to immediately
remit the required amount of additional Prepaid Service Fees to SRS.

No
interest shall accrue or be payable to Customer in respect of any Prepaid Service Fees.

As soon as practical, at the end of the 36 month period following the Effective Date of this
Agreement, SRS will reconcile Service Fees. SRS will calculate Customer’s actual Service Fees
due for the 36 month period
in accordance with Section 6 of the Cover Pages. SRS will then reconcile
the Service Fees as calculated with estimated Prepaid Service Fees held by SRS. SRS will also
calculate a new Prepaid Service Fee amount, such amount to equal 150% of the prior 12 month’s
actual fees, rounded to the next higher multiple of $10,000. The Subsequent Prepaid Service
Fee will never be less than $[___], unless all claims are closed. To the extent the actual
Service Fees calculated exceed the Prepaid Service Fees, SRS
will bill and Customer will pay to SRS the difference plus the Subsequent Prepaid Service
Fee. To the extent the actual Service Fees calculated
are less than the Prepaid Service Fees plus the Subsequent Prepaid Service Fees, SRS will
remit to Customer the difference.

For each subsequent 12 month interval after the initial 36 month period,
SRS will adjust the Subsequent Prepaid Service Fees to 150% of the previous 12 month’s actual
earned fees, rounded to the next higher
multiple of $10,000, but not less than $[___].

5

 

When all claims are closed, SRS will remit to Customer any remaining balance of Subsequent
Prepaid Service Fees. For any claims that arise after the such reconciliation, SRS will bill
Service Fees to Customer monthly thereafter based on the Service Fee charges in Section 6 of
the
Cover Pages. Customer agrees to pay Service Fees directly to SRS
within thirty (30) days of the billing date.

	8.	 	STATE SURCHARGES, TAXES AND ASSESSMENTS:
	 
	 	 	In accordance with Sections II and IV of this Agreement, Customer agrees
to pay all claims for surcharges, taxes and Assessments of any kind
that may be imposed on Customer or SRS as a result of the issuance of the Policies subject to
this Agreement, whether such surcharges, taxes or Assessments are calculated on the bases of
premium, losses covered under the Policies or any other basis.

	9.	 	CLAIM SETTLEMENT AUTHORITY FOR EXCESS INSURANCE OR SELF-INSURANCE:
	 
	 	 	Not Applicable

	10.	 	PRESETTLEMENT DISCUSSION FOR INSURANCE:
	 
	 	 	SRS may settle Covered Claims for a settlement amount under $15,000 without discussing
settlement with Customer.
	 
	 	 	SRS and Customer will discuss settlement of Covered Claims for a settlement amount in excess
of $15,000 prior to settlement. The failure of SRS to do so will constitute a waiver of
Service Fees on said claim settled for an amount in excess of $15,000 without prior
discussion with Customer.

	11.	 	CASH CALL:
	 
	 	 	None in addition to the cash calls provided for elsewhere.

6

 

WHEREAS:

	1.	 	SRS is engaged in providing Claim Services for insurance and self-insurance, and
	 
	2.	 	Customer wants SRS to provide service for claims under Policies or Self-Insurance as
identified on the Cover Pages, and
	 
	3.	 	SRS agrees to provide such service under the terms of this Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual promises herein, Customer and
SRS agree as follows:

	I.	 	CLAIM SERVICE

	 	A.	 	SRS shall provide Claim Services on behalf of Customer for Covered Claims.
	 
	 	B.	 	If handling Takeover Claims, SRS shall not be liable for the obligations of
Customer as a self-insurer nor for the obligations of any insurance company or other
entity resulting from their handling of claims.
	 
	 	C.	 	In the performance of its duties under this Agreement, SRS may retain attorneys
and others on behalf of Customer.
	 
	 	D.	 	SRS does not assume any liability for claims or expenses under the Policies or
Self-Insurance. When SRS services claims under Self-Insurance or under Policies issued
by a company affiliated with Hartford Fire Insurance Company, it makes payments of
judgments, settlements, losses and Allocated Claim Expenses solely at the expense of
Customer. However, payments under the self-insured retention of a Policy issued by a
company not affiliated with Hartford Fire will be made by SRS solely at the expense of
Customer or of Insurer.
	 
	 	E.	 	Upon written request and execution of a confidentiality agreement, and as
permitted by State and Federal Laws, Customer may be permitted to conduct audits or
claim file reviews of claim files. However, Customer shall not be entitled to any audit
or review unless Customer is current on obligations for Service Fees, premiums and
Security. Reviews will occur at SRS’s locations regular business hours upon a minimum of
thirty days prior notice to SRS (or less if mutually agreed). The result of said audit
or claim file review shall not be divulged to any third party without the prior written
permission of SRS. A copy of the result of each audit or claim file review will be
provided to SRS.

7

 

	 	F.	 	Customer will give SRS prompt notice of all Covered Claims, suits and of any
occurrences that are likely to result in any claims or suits, and Customer will
provide all necessary assistance and cooperation to SRS.
	 
	 	 	 	Nothing in this Paragraph is intended to alter the regulatory or
contractual rights and obligations of Customer or Insurance
Company under either Self- Insurance or Policies.
	 
	 	G.	 	1. SRS shall service Covered Claims in accordance with accepted practices and
applicable state law governing claim practices. SRS shall not be deemed to be an
insurer or a guarantor of Customer’s Obligations.

	 	2.	 	Within one hundred and eighty (180) calendar days after payment is due,
Customer shall notify SRS that it disputes any amount payable under this Agreement
and/or the settlement, adjustment, defense or payment of any claim represented by
such billed amount (“Dispute Notice”). If Customer fails to so notify SRS, then it
shall have waived all rights to dispute such payment and/or the settlement, defense,
adjustment and payment of any claim (“Claim Handling”). Said waiver shall include
the waiver of any potential causes of action sounding in tort or contract for the
alleged negligence or bad faith of SRS or its affiliates.
	 
	 	 	 	If Customer disputes the Claim Handling according to these terms:

	 	a)	 	Customer shall provide SRS, or the other party, with a brief
statement of the dispute within thirty (30) days of Dispute Notice;
	 
	 	b)	 	Represented by individuals with decision-making authority,
the parties will promptly meet to attempt in good faith to negotiate a
resolution;
	 
	 	c)	 	If the parties are unable to negotiate a resolution at said
meeting, the negotiation period shall end, and the parties shall submit the
dispute to mediation in accordance with the commercial Mediation Rules of the
American Arbitration Association and the parties agree to bear the costs of
the mediation equally;
	 
	 	d)	 	The parties will appoint a mediator within thirty (30) days
of the end of the negotiation period, or if the parties are unable to agree on
a mediator they will seek assistance from the American Arbitration
Association; and
	 
	 	e)	 	The parties agree to participate in good faith in the
mediation and negotiations.

8

 

	 	3.	 	If any other dispute arises between the parties with reference to the
interpretation of this Agreement or any rights or Obligations arising under this
Agreement, whether before or after its termination, the parties hereby agree to use
the above procedure to attempt to settle such dispute.

	 	H.	 	Except as required by applicable state or federal law, SRS shall not be
responsible for the reporting of a Loss to any excess insurance carrier. SRS shall
not be responsible for reading or interpreting any excess insurance policies or for
identifying which insurance carriers need to be notified. SRS hereby disclaims any
liability arising out of the failure of Client to render reports or notices to an
excess insurance carrier because of insufficient information provided by Client to
SRS.
	 
	 	 	 	Subsection H. above is replaced by the following provision only when SRS is
providing Claim Services for Client’s self-insured Workers’ Compensation Claims
arising in the State of Michigan: Client will identify in writing to SRS, as
soon as reasonably possible, the excess insurance carriers, policy numbers, and
dollar amounts
at which excess insurance carriers are liable and circumstances under which they
are required to be notified. SRS will notify Client in writing of any Claim which
falls within the guidelines for excess reporting in order for Client to make its
report to the excess carrier, and SRS will send a copy of said notice to the excess
carrier. SRS shall not be responsible for reading or interpreting any excess
insurance policies or to identify which insurance carriers need to be notified. SRS
hereby disclaims any liability arising out of the failure
of Client to render reports or notices to an excess insurance carrier because of
insufficient information provided by Client to SRS.
	 
	 	I.	 	This subsection I. applies only when SRS is providing Claim Services for
Client’s Workers’ Compensation Claims arising in the State of Nevada.

	 	1.	 	For five years after the transaction to which they relate, SRS shall
maintain at its principal office adequate books and records of all transactions
between SRS and Client. Such books and records shall be maintained in accordance with prudent standards of insurance
recordkeeping and Nevada insurance regulations. After five years SRS may remove
such books and records, store their contents on microfilm or return them to the
Client.
	 
	 	2.	 	The Nevada Commissioner of Insurance may examine, audit and inspect the
books and records referenced in subparagraph J.1.

9

 

	 	 	 	above in order to carry out the provisions of Nevada Revised Statutes 679B.230 to
679B.300 inclusive relating to the examination of insurers.
	 
	 	3.	 	The names and addresses of insured persons and any other
material which is in the books and records of SRS are confidential except when used
in a proceeding by the Insurance Commissioner against SRS.
	 
	 	4.	 	Client may inspect and examine the books and records to the extent
necessary to fulfill all contractual obligations to individuals, subject to any
restrictions in its agreement with SRS.
	 
	 	5.	 	Each Claim paid by SRS from money collected for or on behalf of Client
shall be paid by a check or draft upon and as authorized by Client.

	II.	 	SERVICE FEES AND LOSS PAYMENTS

	 	A.	 	Customer shall reimburse SRS for amounts paid on its behalf and pay Service Fees
and charges listed below and on the Cover Pages. Per Claim Service Fees are payable in
the month subsequent to the month in which the claim is reported to SRS.
	 
	 	B.	 	SRS will issue a monthly Billing Statement for the following amounts:

	 	1.	 	Loss reimbursements for amounts paid by SRS, which are not subject to
Cash Call,
	 
	 	2.	 	Service Fees and costs,
	 
	 	3.	 	State Surcharges, Taxes and Assessments if applicable, and
	 
	 	4.	 	Late Charges if applicable.
	 
	 	5.	 	If there is no Loss Deposit, Customer will pay interest for the use of
funds in the amount stated on the Cover Pages.
	 
	 	6.	 	If Customer has Prefunded Deductible Losses, the amount of the
Prefunded Deductible Losses on the Cover Pages is the initial estimate of the
Customer’s obligation for reimbursement of losses within the Policy’s deductible
provision. Customer remains liable
for Prefunded Deductible Loss amounts paid in excess of any amounts actually
received by SRS. For the first year after Policy inception, Customer shall pay by
installments to SRS the total Prefunded Deductible Amount. The Prefunded Deductible
Amount excludes Service Fees and other charges under this Agreement.

10

 

	 	 	 	Any additional amount(s) owed by Customer under the deductible provisions of the
Policy will not be billed until the first or subsequent adjustments, except as
provided for under Section 12 of the Cover Pages.
	 
	 	 	 	Except as provided for under Section 12 of the Cover Pages, there shall be no
change in the original amount of Prefunded Deductible Losses prior to the first
adjustment date shown on the Cover Pages. SRS’s calculation of the Prefunded
Deductible Losses shall be determined according to the calculation indicated on the
Cover Pages.
	 
	 	 	 	If Customer has Prepaid Service Fees, the amount of the Prepaid Service Fees on the
Cover Pages includes the initial estimate of
the Customer’s obligation for claim services provided by Hartford (SRS) under the
Policies subject to this Agreement. Customer remains liable for Service Fees paid
in excess of any Prepaid Service Fee amounts actually received by HARTFORD. For
the first year after Policy inception, Customer shall pay by installments to HARTFORD
(SRS) the total Prepaid Service Fees amount. Any adjustments to the Prepaid Service
Fees shall be made in accordance with Section 7 of the Cover Pages.

	 	C.	 	All amounts are due and payable when billed. If balances in full are not received by
SRS within thirty (30) days of the billing date on a thirty-day billing cycle or within 72
hours of the issuance of SRS’s bill on wire transfer billing agreements, Customer will pay
SRS a late charge of one and one-half percent (1.5%) of the outstanding bill for each
subsequent thirty (30) day period or any part thereof until all balances due are received
by SRS.
	 
	 	 	 	Customer shall not be required to pay interest or late charges in excess of the rate
allowed by the laws of the state having jurisdiction. The parties intend to comply with
applicable statutes and regulations; therefore, the interest or late charges shall be
limited to that permitted under such law.
	 
	 	D.	 	After the Effective Date of this Agreement, if SRS is required by law or under the
authority, enactment, or order of an entity exercising jurisdiction over the parties or
either of them to provide services or documents not currently required, the parties will
negotiate payment to SRS for the cost and fee for providing such service. If the parties
fail to reach agreement, SRS may terminate this Agreement, unless otherwise prohibited by law.

	III.	 	SERVICE FEE CALCULATION

11

 

	 	A.	 	SRS shall service Covered Claims commencing on the Effective Date, subject to the
provisions of this Agreement regarding termination, as long as all amounts due and duties owed to SRS by Customer have been paid and performed
and the Policies subject to this Agreement remain in effect.
	 
	 	B.	 	Handle to Conclusion — Customer will pay SRS Service Fees to handle Covered Claims to
conclusion. These Service Fees will be priced either on a per claim basis or as a guaranteed fee for all Covered Claims, according to
the terms established on the Cover Pages.
	 
	 	C.	 	Variable Fee to Conclusion — The per claim Service Fee applies for the term indicated
on the Cover Pages from the date the claim is reported or as a guaranteed fee for all Covered Claims, according to the terms established on the
Cover Pages, if any. After this term or guaranteed Service Fee has expired, the Customer
will be required to pay an additional Service Fee each month until the claim is closed.
	 
	 	D.	 	Management Fee — Customer will pay SRS Management Fees for management services as
indicated on the Cover Pages.
	 
	 	E.	 	Cost Containment Charges — Customer will pay SRS Cost Containment Charges as indicated on the Cover Pages.
	 
	 	F.	 	Percentage of Incurred or Paid Losses - As Service Fees, Customer will pay SRS a
percentage of the total of either Incurred Losses plus incurred Allocated Claim Expenses
or Paid Losses plus paid Allocated Claim Expenses for each Covered Claim, as shown on the
Cover Pages. This Service Fee includes the value of handling Covered Claims to conclusion.
	 
	 	G.	 	SRS will bill Customer for Service Fees as follows:

	 	1)	 	Per Claim Medical Only — In the month following the month in which
payment is made.
	 
	 	2)	 	Per Claim For All Other — In the month following the month in which SRS
has established the Covered Claim in its claims processing system.
	 
	 	3)	 	Management Fees — In the month following the month in which SRS has
established the Covered Claim in its claims processing system or in which the
management services are performed.
	 
	 	4)	 	Cost Containment Charges — In the month following the month in which
the Savings occur.

12

 

	 	5)	 	Percentage of Incurred Losses, Percentage of Paid Losses — SRS will
bill Customer as losses are incurred or paid.

	IV.	 	ASSESSMENTS
	 
	 	 	If at any time while this Agreement is in effect, or within five (5) years after
its termination, any claim arises for premium taxes or Assessments with respect to claim
amounts, Allocated Claim Expenses, or Service Fees that have been paid hereunder, SRS shall
notify Customer of such claim and, if there is, in SRS’ judgment, any credible basis for
contesting such Assessment, afford Customer the opportunity to contest such claim and join in
any proceeding to contest such claim. Customer agrees to defend, indemnify and hold harmless
SRS, its parent or affiliate(s) from such claims for taxes and Assessments according to the
indemnification provisions in
this Agreement.
	 
	 	 	The indemnities provided under this Section shall specifically inure to the benefit of any
parent or affiliated company of SRS that may also be subject
to a claim for premium taxes or Assessments arising out of the amounts
paid pursuant to this Agreement.

	V.	 	INDEMNIFICATION AND REMEDIES

	 	A.	 	SRS agrees to defend, indemnify, and hold Customer, its officers, directors,
employees, agents, and affiliates harmless from and against any and all actions, claims,
suits, damages and punitive damages brought against Customer, whether resolved by judgment
or by settlement, to the extend resulting from:

	 	1.	 	SRS’ negligent acts or omissions, or willful misconduct, in the
use of Confidential Personal Information contained in Client’s claim files; or
	 
	 	2.	 	SRS’ negligent acts or omissions, or willful misconduct, in the
performance of its duties under this Agreement except if such acts were taken
at the direction of Client.

	 	B.	 	Customer agrees to defend, indemnify, and hold SRS, its officers, directors,
employees, agents, and affiliates harmless from and against any and all actions, claims,
suits, damages and punitive damages brought against SRS, whether resolved by judgment or
settlement, to the extent resulting from:

	 	•	 	Customer’s negligent acts or omissions, or willful misconduct, in the use of
Confidential Personal Information which SRS provides to Customer in the handling of
its Claims, or

13

 

	 	•	 	SRS’s being named as the insurer of record in a claim or suit, or an allegation or
claim that SRS is responsible for the obligations of the insurance carrier(s) or
the self-insured, or
	 
	 	•	 	The imposition of Assessments as provided herein, or
	 
	 	•	 	Any action or failure to act by SRS based upon instructions received from
Customer.

	 	C.	 	As a precondition to a claim for indemnity, the parties agree to comply with the
following procedures. The party seeking indemnification
agrees to give the indemnifying party prompt notice of actions, claims and suits brought
or threatened against it. The indemnifying party shall have the right to participate
in, or assume, at its expense, the defense
of any such claim or process or settlement thereof and the party
seeking indemnification shall cooperate in said defense. The party seeking
indemnification retains the right to hire separate counsel to participate in its own
representation.
	 
	 	D.	 	If Customer does not make payments in full to SRS of Service Fees, charges, loss
reimbursements, and Allocated Claim Expenses, SRS will no longer be obligated to advance
funds on behalf of Customer, unless otherwise required by law. If SRS chooses to make
further payments, SRS will either issue to Customer a Cash Call for adequate funds prior
to making any further payments of charges, loss reimbursements, or Allocated Claim
Expenses, or will make payments for which Customer will reimburse SRS.
	 
	 	E.	 	If Customer does not compensate and reimburse SRS in accordance with the terms of
this Agreement, or if Customer has defaulted on any other Obligation to SRS or any of its
affiliates, SRS may draw upon
any applicable Loss Deposit or Prefunded Loss Amount and may hold Customer responsible
for expenses of collection, including but not limited to attorney fees.
	 
	 	F.	 	In no event shall either party be responsible for any indirect, incidental, special
or consequential damages, but damages under this Agreement shall be limited to the amount
of actual damages sustained by SRS or the Customer.
	 
	 	G.	 	The indemnities provided under this Section shall specifically inure to
the benefit of any parent or affiliate company or SRS.
	 
	 	H.	 	Private Investigators

14

 

	 	1.	 	SRS has developed certain guidelines and standards of conduct for private
investigation professionals engaged by SRS (the “Standards of Conduct”).
SRS has entered into agreements with certain private investigation
professionals who are appropriately licensed and who have agreed to provide
“Investigation Services” (as such term is more particularly described
below), in accordance with the Standards of Conduct (“Contracted
Investigators”).
	 
	 	2.	 	Client acknowledges that SRS customarily retains only
Contracted Investigators to provide Investigation Services. Client
acknowledges that it may elect to direct SRS to use private investigators of
Client’s choice who are not Contracted Investigators (such investigators
“Non-Contracted Investigators”).
	 
	 	3.	 	For the purpose of this Agreement, the term “Investigation
Services” shall mean those services provided by the private investigation
professional which include, but are not limited
to, confidential activity checks of specified individuals and confidential
surveillance of specified individuals.
	 
	 	4.	 	Client agrees to indemnify, defend, and hold harmless SRS
from any and all liability, claims, loss, damages, fines, penalties and costs,
including expenses and attorneys’ and other professionals’ fees, which SRS may
sustain by reason of:

	 	a)	 	a Non-Contracted Investigator’s negligence in
performance of Investigation Services or any violation of applicable
state, local and/or federal law(s), including without limitation, violation(s) of state

insurance laws, regulations or rules;
	 
	 	b)	 	a Non-Contracted Investigator’s failure to
comply with the Standards of Conduct, a copy of which is available
from SRS upon Client’s request; or
	 
	 	c)	 	a Non-Contracted Investigator’s failure to
maintain appropriate licensure, including but not limited to any
state, municipal or other licensure.

	 	5.	 	This indemnification provision shall survive the expiration
or prior termination of this Agreement.

	VI.	 	TERMINATION

15

 

A. For Self-Insurance only:

Upon sixty (60) days’ prior written notice (the “Termination Notice”), either
party may terminate this Agreement and SRS will not service claims
occurring or reported beyond the termination date. Upon the giving of the Termination Notice,
if Customer has Percentage of Paid Losses for its
Service Fee calculation, then the Service Fee calculation will be amended
to apply to Percentage of Incurred Losses. This termination provision does not apply to
service provided within the insurance program underwritten by
an affiliate of SRS.

	 	B.	 	Section VI.A. above is replaced by the following termination provision only
when SRS is providing claim services for client’s self-insured Workers’ Compensation
Claims arising in the State of Michigan: 
	 
	 	 	 	Claim Services shall continue until all Covered Claims subject to this Agreement are
handled to conclusion, unless SRS is relieved of that responsibility by the Michigan
Bureau of Workers’ Compensation, subject to the following termination provisions.
SRS will discontinue providing Claim Services, effective on the specified date, only
upon
the approval of the Bureau of Workers’ Compensation. This
Agreement may be terminated in accordance with the following:

	 	1.	 	By either party, without cause, at any time during the term
hereof by providing sixty (60) days’ prior written notice to the other party of
its intent to so terminate, at the expiration of which time this Agreement
shall terminate.
	 
	 	2.	 	Immediately, for cause, at any time by either party due to the
insolvency or bankruptcy of the other party to this Agreement or its successor.
	 
	 	3.	 	By either party in the event of a material breach of the terms
and conditions of this Agreement by the other party, effective thirty (30) days
following written notice of such breach, unless such breach is cured before the
expiration of the thirty (30) day period. Notwithstanding the foregoing, SRS
shall have the right to terminate this Agreement immediately in the event of a
failure to pay any monies required to be paid to SRS under this Agreement.
	 
	 	4.	 	At any time by mutual agreement of the parties.

With respect to Covered Claims required to be handled to conclusion by
SRS following termination under subparagraph A. or subparagraph B.
above that are not finally adjudicated or settled at such time, the terms and

16

 

conditions of this Agreement, with the exception of I.F., Vl.A. and VLB.,

shall continue in full force and effect with respect to such ‘open’ Covered Claims until such
time as the last such Covered Claim is closed or
withdrawn by Client or Client’s insurance carrier.

	VII.	 	Confidential Personal Information
	 
	 	 	For purposes of this Agreement, “Confidential Personal Information” (or “Information”) means
any information that Hartford may, directly or indirectly, disclose to Customer that relates
to an individual and that is not available to the public. This includes, but is not limited
to, credit history; income; financial benefits; application, policy or claim information;
health information; medical records; lists of individuals derived from nonpublic personally
identifiable information; and the identification of an individual as a customer. Only those
employees of Customer who need to know Confidential Personal Information to perform their
duties in furtherance of this Agreement shall be given
access to the Information. Customer shall maintain the security and the confidentiality of
Confidential Personal Information and shall use it only for
the purposes for which we have disclosed it to you under this Agreement. You shall not
disclose said Information to any other person except to your agents and other persons who
require such Information to further the objectives of this Agreement and who agree in writing
to maintain its security and confidentiality. If any applicable state or federal law or
regulation, now or hereafter in effect, imposes a higher standard of confidentiality with
respect to such Confidential Personal Information, such standard shall prevail over the
provisions of this Agreement.
	 
	VIII.	 	DEFINITIONS
	 
	 	 	Agreement means this entire contract, including the Cover Pages, and any exhibits
attached hereto.
	 
	 	 	Allocated Claim Expenses means expenses not otherwise included as loss that can be
directly allocated to the handling of a particular claim as the
result of; 1) independent medical examinations and medical reports/records;
2) court costs and fees for service of process; 3) attorneys and hearing representatives; 4)
court reporter services and transcripts; 5) stenographic services and transcripts; 6) witness
fees and expenses; 7) vendor interface charges; 8) bond premiums; 9) printing costs related to
trials and appeals; 10) testimony, opinions, appraisals, reports, surveys, and analyses of professionals and
experts; 11) trial and hearing attendance fees; 12) depositions, video statements, private
investigators; 13) a charge shown on the Cover Pages for savings realized by the Customer
resulting from services associated with utilization review, hospital bill audit, provider bill
audit; 14) Preferred Provider Organization utilization charges; 15) case management and
vocational rehabilitation management charges to the extent any portion of these costs are attributable to Allocated Claim
Expenses; 16) alternative dispute resolution fees; 17) protection and pursuit

17

 

	 	 	of subrogation and recovery rights; 18) Special Investigative Unit; and 19) expenses which are
not defined as loss and are directly related to and directly allocated to the handling of a particular claim.
	 
	 	 	Assessment means any assessment, tax or other charge, whether payment
is required by law or required as a condition of continued opportunity to service deductible
claims or transact insurance or self-insurance in the applicable state. This includes but is
not limited to assessments for participation in any “residual market plan,” guarantee fund,
guarantee association or other facility protecting claimants against the uncollectibility of
insurance or self-insurance proceeds, second injury fund or state administrative bureau cost.
As used herein, “residual market plan” means
any plan, program or facility (whether voluntary or required by law) by which insurers or self
insurers share in the risk of providing insurance for eligible employers or insureds.
	 
	 	 	Authorized Personnel means employees of Customer who have a business need to know and
have access to data provided to Customer under this Agreement.
	 
	 	 	Billing Statement means the periodic notice of amounts due to SRS by Customer.
	 
	 	 	Canceled Claim means a claim that has been investigated and is closed either without
payment or with only Allocated Claim Expenses having been paid.
	 
	 	 	Cash Call means notice to Customer to make immediate payment of the amount due.
	 
	 	 	Claim Services means those services related to investigation, defense, negotiation and
settlement of Covered Claims, including legally permitted activities related to salvage,
subrogation and other recoveries.
	 
	 	 	Covered Claims means claims that are brought either against Self-
Insurance covered under this Agreement and reported by Customer during the term of this
Agreement; or that are claims to the extent that they are covered under Policies.
	 
	 	 	The definition of covered claims above is replaced by the following definition only when
SRS is providing Services for Client’s self-insured Workers’ Compensation Claims arising in the state of Michigan:
Covered Claims means (1) Claims in Michigan (defined as any monetary demand or suit
arising out of or in connection with any actual or alleged incident, occurrence or accident in
Michigan with dates of injury or disease within the term of this Agreement) that are brought
against Workers’

18

 

	 	 	Compensation self-insurance covered under this Agreement or that are Takeover Claims, or (2)
all other Claims that are brought against insurance
or self-insurance covered under this Agreement and reported by Client
during the term of this Agreement, or that are Takeover Claims. SRS may
be relieved of its responsibility for the future handling of Workers’ Compensation Claims in
Michigan upon approval of the Michigan Bureau of Workers’ Disability Compensation.
	 
	 	 	Cover Pages means the pages specifically described as Cover Pages in
this Agreement.
	 
	 	 	Effective Date means the beginning date for services provided under this Agreement as
defined in the Cover Pages.
	 
	 	 	Incident Report means a Claim reported as such, in which no financial transaction,
liability or payment arises with respect to a Claim handled hereunder and the amount of
indemnity incurred, medical incurred and Allocated Claim Expenses incurred are each zero.
	 
	 	 	Incurred Losses means the total of Paid Losses, Unpaid Losses and Allocated Claim
Expenses for all Covered Claims. Incurred Losses includes expenses for case management and
vocational rehabilitation management, at the current Hartford rates shown on the Cover Pages,
directly allocated to the handling of a particular claim. Case
management and vocational rehabilitation management expenses may be defined as indemnity losses, medical
losses or Allocated Claim Expenses by The National Council on Compensation Insurance, any state
independent rating bureau or any state department of insurance.
	 
	 	 	Insurance Policies means the policy or policies to which service under this Agreement
applies.
	 
	 	 	Insurance Companies or Insurers means companies that have issued Policies.
	 
	 	 	Large Risk Alternative Rating and Insurance Program Agreement
means that contract entered into between Customer and Hartford
establishing their respective rights and obligations pursuant to the insurance
rating programs provided by the policies subject to this Agreement.
	 
	 	 	Loss Deposit means a fund established for the payment of losses as
defined on the Cover Pages.
	 
	 	 	Medical Only means a compensable claim In which (i) the indemnity
incurred is zero; (ii) paid medical is less than $2,500; (iii) allocated expense payments are
limited to bill review; (iv) the claim does not require contacts

19

 

	 	 	or investigation for purposes of determining compensability, medical
causation or subrogation; (v) claim does not require a formal denial and
there is no litigation or legal representation.
	 
	 	 	Other Than Medical Only means a Claim that is not a “Medical Only” Claim or an
“Incident Report”. “Other than Medical Only” claims include claims in which there is an
incurred indemnity value or which have allocated claim expenses incurred other than bill
review.
	 
	 	 	Paid Losses means total payments made on Covered Claims for losses and Allocated Claim
Expenses. Paid Losses includes expenses for case management and vocational rehabilitation
management, at the current Hartford rates shown on the Cover Pages, directly allocated to the
handling of a particular claim. Case management and vocational rehabilitation management expenses may
be defined as indemnity losses, medical losses or Allocated Claim Expenses by The National
Council on Compensation Insurance, any state independent rating bureau or any state department
of insurance.
	 
	 	 	Pre-Settlement Discussion means the discussions between SRS and Customer prior to
settlement of a Covered Claim.
	 
	 	 	Self-Insurance means those programs of Self-Insurance identified on the Cover Pages.
	 
	 	 	Service Fees means payments owed to SRS by Customer for services provided under this
Agreement.
	 
	 	 	Service Period means that period of time during which SRS agrees to
service Covered Claims, conditioned upon the payment of all amounts due and performance of all
duties owed to SRS by Customer.
	 
	 	 	Takeover Claims means those claims identified on the Cover Pages as having been opened
or opened and closed prior to the date shown on the Cover Pages.
	 
	 	 	Unpaid Losses or Unpaid Loss Reserves means those reserves established by SRS for
Unpaid Losses and unpaid Allocated Claim Expenses under the Policy. Unpaid Losses includes
expenses for case management and vocational rehabilitation management, at the current Hartford
rates shown on the Cover Pages, directly allocated to the handling
of a particular claim. Case management and vocational rehabilitation management expenses may be
defined as indemnity losses, medical losses
or Allocated Claim Expenses by The National Council on Compensation

20

 

	 	 	Insurance, any state independent rating bureau or any state department of insurance.
	 
	 	 	Wrapped-Up Loss Deposits means the consolidation of Loss Deposit requirements for all
of the contracts listed on the Cover Pages into a single requirement.

	IX.	 	GENERAL CONDITIONS

	 	A.	 	Except as otherwise provided, all notices shall be in writing and
delivered by personal service or by certified mail, postage prepaid and return receipt
requested, to the party at its address established on the Cover Pages.
	 
	 	B.	 	The rights, duties, and obligations of Customer shall not be assigned, delegated, or
otherwise transferred in whole or in part without the prior express written consent of
SRS. SRS may assign some or all of its rights, duties, and obligations under this
Agreement to any of its “affiliated companies,” which shall mean a company directly or
indirectly controlled by Hartford Fire Insurance Company. A company is
controlled by the direct or indirect ownership of more than fifty (50%) percent of the
stock issued and entitled to vote for directors of the company or persons performing a
function similar to that of directors.
	 
	 	C.	 	The parties hereto agree that claim files may contain confidential and private
medical data related to the adjustment of individuals’ claims.
SRS agrees to handle such medical data as confidential and to comply with applicable
federal and state statutes and regulations when
handling said medical data, the claim files, and the information
contained therein. When said data is transmitted to or reviewed by Customer, Customer
will also handle said data as confidential and according to federal and state law and
regulations, developing and enforcing guidelines and procedures for limited access to
data by Authorized Personnel. Customer agrees to limit its use of medical and other
confidential information to monitor the adjustment of Covered Claims.
	 
	 	 	 	SRS may use data contained in claim files to file reports with governmental or other
regulatory agencies and, without identifying insured or its claimants, to prepare and
disseminate analytical reports.
	 
	 	D.	 	Neither party shall be deemed to have breached this Agreement by reason of any delay
or failure in its performance arising from acts beyond its control.

21

 

	 	E.	 	This Agreement supersedes and cancels all prior agreements between the parties
relating to the subject matter hereof and shall not be amended or revised except by a
written supplement signed by all parties.
	 
	 	F.	 	All the rights and duties of the parties arising from or relating in any way to this
Agreement shall be governed, construed and enforced in accordance with the laws of the
State of Connecticut, without regard to principles or rules of conflict of laws. Any
legal action brought concerning any issues or disputes arising out of
this Agreement must be brought exclusively in an appropriate state or federal court in Connecticut.
	 
	 	G.	 	A waiver of a breach or default under this Agreement shall not be a waiver of any
other previous or subsequent breach or default. The failure or delay by either party to
enforce any term or condition of this Agreement shall not constitute a waiver of such term
or condition unless such term or condition is expressly waived in writing.
	 
	 	H.	 	If any provision of this Agreement shall be held to be invalid, unenforceable or
illegal, the validity, enforceability, and legality of the remaining provisions shall not
in any way be affected or impaired.
	 
	 	I.	 	In any litigation or arbitration between the parties, the prevailing party shall be
entitled to reasonable attorney’s fees and all costs of proceeding incurred in enforcing this Agreement.
	 
	 	J.	 	This Agreement may be executed in two or more counterparts, each of which shall be an
original, but all of which shall constitute one Agreement.
	 
	 	K.	 	The headings of sections of this Agreement are inserted for convenience of reference
only and shall not constitute a part hereof.
	 
	 	L.	 	All words or terms used in this Agreement, regardless of the number or gender in
which they are used, shall be deemed to include any other number and any other gender as
the context may require.
	 
	 	M.	 	This Agreement shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
	 
	 	N.	 	Nothing contained herein is intended to create any relationship between the parties other
than that of independent contractors.

22

 

	 	P.	 	Upon prior written notification to Client, SRS may use the name of, and identify
Client as a SRS customer in advertising, publicity, or similar materials distributed or
displayed to prospective clients.
	 
	 	Q.	 	This Agreement does not govern the provision of access to the ©venture system; such access
is governed by the terms and conditions of the Risk Management Information Services Agreement, which is separate and apart from this
Agreement. The terms and conditions of the Risk Management Information Services Agreement
shall not alter the terms and conditions of this Agreement.
	 
	 	R.	 	Structured Settlements — Structured settlements funded by annuities may be used by SRS, as
appropriate, as part of the claim settlement process. The annuities used to fund these settlements are issued by The Hartford Life
Insurance Company, and through a group of nationally recognized brokers which SRS operates
through. SRS receives a small internal expense allocation offset from Hartford Life as a
result of structured settlements which it generates. Client has the right to direct the use
of a different insurance carrier to write the annuities funding such settlements, and Client
also has the right to direct SRS to use a broker of Client’s choice with respect to these
settlements.

IN WITNESS WHEREOF, the parties hereto have read and agreed to this Agreement and have
directed its execution in duplicate by their respective authorized officers.

	 	 	 	 	 
	 	 	SPECIALTY RISK SERVICES, LLC. (“SRS”)
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Michael Ryan
	 

	 	 	 	 
	 

	 	 	 	(Signature) Its Duly Authorized Officer

Michael Ryan
(Printed/Typed Name)

Title: Vice President

	 	 	 	 	 	 	 
	State of Connecticut

	 	 	 	 	 	 )
	 

	 	 )
	 	ss.	 	 
	County of Hartford

	 	 	 	 	 	 )

     On this 1st day of June, 2007, before me, Loretta W. Richardson the undersigned
officer, personally appeared Michael Ryan who acknowledged him/herself to be the Vice
President of Specialty Risk Services, LLC. (“SRS”), a corporation, and that
he/she, as such officer, being so authorized, executed the foregoing instrument for the purposes therein
contained, by signing the name of the corporation to said instrument, on behalf of the
corporation, by authority of his/her office.

	 	 	 	 	 
	
 

	 	OR
	 	Loretta W. Richardson
	 

	 	 	 	 
	Corporate Secretary

	 	 	 	Notary Public
	(Corporate Seal)
	 	 	 	 
	 

	 	 	 	My commission expires on: 9-29-2009
	(SEAL)
	 	 	 	 

23

 

	 	 	 	 	 
	Corporate Secretary

	 	 	 	Notary Public
	(Corporate Seal)
	 	 	 	 
	 

	 	 	 	My commission expires on:
	(SEAL)
	 	 	 	 

	 	 	 	 	 
	 	 	STRATEGIC OUTSOURCING, INC. (“CUSTOMER”)
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Carl Guidice
	 

	 	 	 	 
	 

	 	 	 	(Signature) Its Duly Authorized Officer

Carl Guidice
(Printed/Typed Name)

Title: CEO

	 	 	 	 	 	 	 
	State of Connecticut

	 	 	 	 	 	 )
	 

	 	 )
	 	ss.	 	 
	County of Hartford

	 	 	 	 	 	 )

     On this 17th day of May     , 2007, before me, __________________, the undersigned officer,
personally appeared Carl Guidice, who acknowledged him/herself to be the  CEO                    of  SOI                   , a corporation, and
that he/she, as such officer, being so authorized, executed the foregoing instrument for the
purposes therein contained, by signing the name of the corporation to said instrument, on behalf of
the corporation, by authority of his/her office.

	 	 	 	 	 
	
 

	 	OR
	 	Roxanne G. Knowles
	 

	 	 	 	 
	Corporate Secretary

	 	 	 	Notary Public
	(Corporate Seal)
	 	 	 	 
	 

	 	 	 	My commission expires on: 8/17/2011
	(SEAL)
	 	 	 	 

24

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