Document:

Exhibit 10.10

 

1.   PROSPECTOR PARTNERS, LLC

 

AMENDMENT NO. 1 TO INVESTMENT MANAGEMENT AGREEMENT

 

This Amendment No. 1 (the “Amendment”) is entered into as of this 22nd day of December, 2011 by and between PROSPECTOR PARTNERS, LLC, a Delaware limited liability company (the “Adviser”), having an address at 370 Church Street, Guilford, Connecticut 06437, and OneBeacon Insurance Group, Ltd., a Bermuda Corporation (“OneBeacon”), having an address at 14 Wesley Street, 5th Floor, Hamilton HM 11, Bermuda.

 

WHEREAS, the Adviser and OneBeacon are parties to that certain Investment Management Agreement dated as of March 1, 2011 (this “Agreement”) pursuant to which the parties agreed that the Adviser would act as discretionary adviser with respect to the specified assets of each subsidiary of OneBeacon identified on Schedule A to the Agreement (each, a “Client”) as such schedule may be amended from time to time to add new subsidiaries as Clients.

 

WHEREAS, OneBeacon desires to add certain subsidiaries to Schedule A.

 

NOW, THEREFORE, the parties agree as follows:

 

1.  Schedule A is hereby amended and restated in its entirety and shall read as set forth in Schedule A attached to this Amendment.

 

2.  Schedule D is hereby amended and restated in its entirety and shall read as set forth in Schedule D attached to this Amendment.

 

3.  The effective date of this Amendment shall be December 31, 2011.

 

4.  Except as amended hereby, all other terms and conditions of the Agreement shall remain in full force and effect.

 

5.  Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Agreement.

 

6.  This Amendment may be executed in two counterparts, each one of which shall be deemed to be an original.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized representatives as of the date first written above.

 

	
ADVISER:
    	
 
    	
ONEBEACON:
    
	
 
    	
 
    	
 
    
	
PROSPECTOR   PARTNERS, LLC
    	
 
    	
ONEBEACON   INSURANCE GROUP, LTD.
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/John   Gillespie
    	
 
    	
By:
    	
/s/Jane   E. Freedman
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
Managing   Member
    	
 
    	
Title:
    	
Secretary   and Associate General Counsel
    

 

 

SCHEDULE A

 

SUBSIDIARIES OF ONEBEACON INSURANCE GROUP, LTD. SUBJECT TO THIS INVESTMENT

MANAGEMENT AGREEMENT

 

OneBeacon U.S. Holdings, Inc.*

 

The Employers’ Fire Insurance Company

 

Homeland Insurance Company of New York

 

The Northern Assurance Company of America

 

OneBeacon America Insurance Company

 

OneBeacon Insurance Company

 

Pennsylvania General Insurance Company

 

Mill Shares Holdings (Bermuda), Ltd.*

 

OneBeacon Services, LLC*

 

* Subsidiary is not subject to insurance regulations.

 

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SCHEDULE D

 

CLIENTS OF PROSPECTOR PARTNERS, LLC SUBJECT TO FEE SCHEDULE SET FORTH IN

SCHEDULE C TO AGREEMENT

 

OneBeacon U.S. Holdings, Inc.

 

The Employers’ Fire Insurance Company

 

Homeland Insurance Company of New York

 

The Northern Assurance Company of America

 

OneBeacon America Insurance Company

 

OneBeacon Insurance Company

 

Pennsylvania General Insurance Company

 

Mill Shares Holdings (Bermuda), Ltd.

 

OneBeacon Services, LLC

 

OneBeacon Pension Plan

 

OneBeacon 401(k) Savings and Employee Stock Ownership Plan - Equity

 

OneBeacon 401(k) Savings and Employee Stock Ownership Plan - Fully Managed

 

Trust for the Payment of Non-Qualified Retirement Benefits

 

3Exhibit 10.21

 

ONEBEACON’S 2011 MANAGEMENT INCENTIVE PLAN

 

Purpose

The Management Incentive Plan (MIP) is an integral part of the total compensation program for managers and certain senior key individual contributors. Its primary purpose is to focus attention on 2011 profitability goals and to reward eligible participants for the achievement of those goals.

 

Eligibility

The Plan is limited to senior staff who have a significant impact on OneBeacon’s operating results.

 

Target Awards

Target awards for all participants are expressed as a percent of salary.

 

Performance Measures

The corporate MIP pool will be established primarily based upon achievement of a 95% GAAP combined ratio for total OneBeacon operations. At a corporate combined ratio of 95%, the plan will fund an amount equal the sum of each participant’s potential award at his/her target bonus percentage. The OneBeacon Insurance Group, Ltd. Compensation Committee (the “Compensation Committee”) may adjust the size of the pool based on under- or over-achievement of the Company’s target combined ratio and other objectives at its sole discretion.

 

Individual Awards

Each business unit will be judged against a number of performance metrics including, where appropriate, a combined ratio target.  Generally these metrics will relate to the aggregate financial plan rolled up by line of business. If the financial metrics are achieved, in conjunction with other business metrics, the business may be awarded 100% of its indicated share of the corporate pool. Businesses failing to meet goals may or may not, at the discretion of the CEO, receive a reduced, partial allocation of the pool. Businesses exceeding objectives may receive greater than 100% of indicated allocation.  In no event will the sum of the performance-adjusted business unit pools be greater than the performance-adjusted Company pool as authorized by the Compensation Committee.

 

Within each business, it will be the prerogative of the business leader, with guidance from and after consultation with the CEO, to further allocate the business’ pool amount to the constituent branches, lines of business and individuals, based upon performance.

 

For corporate or administrative functions that support all or multiple businesses, participants will receive allocations from the corporate pool based upon attainment of their department and individual goals for 2011.

 

The salary used to determine the amount of the individual awards will be that in effect at the end of the plan year (12/31/11).

 

Plan Participation for New Hires

Employees hired during the plan year are eligible to participate in the MIP.  Awards will be pro-rated specifically based on date of hire unless other arrangements are agreed to at the time of the employment offer.

 

Payment of Awards

Unless payment is deferred in accordance with an election made pursuant to the OneBeacon Deferred Compensation Plan and any related procedures adopted by the Company, payment of any MIP award shall be 

 

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made by the Company no later than 2 1/2 months after the end of the Company’s fiscal year in which such MIP award is earned, but in any event not prior to the Compensation Committee’s certification of performance results following the end of the plan year.  In all cases, payment will not be made unless and until the Compensation Committee approves the overall corporate performance factor and performance-adjusted MIP pool and no payment will be made to the CEO, the Executive Team or any of the other executive officers without specific approval from the Committee.

 

Clawback Policy

Amounts paid pursuant to the MIP are subject to clawback by OneBeacon pursuant to the Clawback Policy adopted by the Board of Directors of OBIG on June 16, 2010.  The Clawback Policy provides that, in the event of a restatement of the financial statements of OBIG for failure to comply with the federal securities laws due to misconduct of a MIP participant, the Board of Directors of OBIG may require the participant to reimburse OneBeacon for all or a portion of his or her MIP award; provided, however, that in the event of fraud, the MIP participant shall reimburse OneBeacon for all of his or her MIP award.

 

Special Circumstances

The Compensation Committee may, in its sole discretion, also recognize extraordinary conditions or circumstances in determining payment levels.

 

In the event of termination prior to the payment of awards, no incentive payments will be made.  However, in the event of retirement or reduction in force at or after the end of the plan year, but before payment is made, MIP payments may be made if approved by the senior business leader. Payment shall be contingent upon the participant signing a OneBeacon Agreement and Release as consideration for all incentive payments. No participant who was terminated prior to the payment of awards due to a reduction in force may be considered for a MIP payment unless the participant also signed the Agreement and Release provided to the participant at the time of termination within the time period specified in the Agreement and Release. For purposes of the MIP, “retirement” shall mean termination of service with the Company, other than for cause, at any time after attaining age sixty (60) or termination of service under circumstances which the Committee deems equivalent to retirement. These exceptions will be made on a case by case basis. In the event of death or disability, the participant or beneficiary may be considered for a partial award payment if approved by the senior business leader.

 

The MIP is discretionary; in no way does eligibility in this plan imply an obligation of payment on the part of OneBeacon nor should it be construed as a promise of continued employment.

 

Effect on Benefit Plans

Amounts paid under the terms of the MIP will not be counted for purposes of determining compensation under any other employee benefit plan sponsored by OneBeacon.

 

Plan Continuation

Notwithstanding any of the aforementioned, the MIP may be amended or terminated, in whole or in part, at any time, by the Compensation Committee.

 

2Exhibit 10.22

 

RESTRICTED SHARE AWARD AGREEMENT

 

THIS AGREEMENT (this “Agreement”) is made effective as of the 25th day of May, 2011 between OneBeacon Insurance Group, Ltd. (the “Company”) and T. Michael Miller (the “Participant”).

 

R  E  C  I  T  A  L  S:

 

WHEREAS, the Board of Directors of the Company has adopted the OneBeacon Long-Term Incentive Plan (2007), as amended (the “Plan”), which Plan is incorporated herein by reference and made part of this Agreement.  Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan; and

 

WHEREAS, the Compensation Committee of the Board of Directors (the “Committee”) has determined that it would be in the best interests of the Company and its shareholders to grant the restricted share award provided for herein to the Participant pursuant to the Plan and the terms set forth herein.

 

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties hereto agree as follows:

 

1.                                      Grant of the Restricted Shares.  Subject to the terms and conditions of the Plan and the additional terms and conditions set forth in this Agreement, including but not limited to Section 4, the Company hereby grants to the Participant a Restricted Share Award (this “Award”) consisting of 630,000 Shares (hereinafter called the “Restricted Shares”).  The Restricted Shares shall be subject to the Company’s option to repurchase such shares in accordance with the provisions of Section 2 hereof.

 

2.                                      Restrictions and Repurchase Option.

 

(a)           During the period beginning on the date of this Award and continuing until each vesting date (the “Restricted Period”), unvested Restricted Shares may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, except by will or the laws of descent and distribution.  The vesting schedule for the Restricted Shares is as follows:

 

	
Vesting Date
    	
 
    	
No. of Shares Vesting
    	
 
    
	
February 22, 2014
    	
 
    	
157,500
    	
 
    
	
February 22, 2015
    	
 
    	
157,500
    	
 
    
	
February 22, 2016
    	
 
    	
157,500
    	
 
    
	
February 22, 2017
    	
 
    	
157,500
    	
 
    

 

(b)            Except as otherwise set forth herein or in the Plan, the Participant shall forfeit, and the Company shall have the option to repurchase unvested Restricted Shares, in accordance with Section 5(b) of the Plan, during the Restricted Period at a price equal to $.001 per Restricted Share, in the event that the Participant’s continuous employment with the Company or any of its subsidiaries is terminated.

 

3.                                      Vesting in the Event of Termination of Employment Due To Death, Disability or Involuntary Termination Other Than For Cause, Including Constructive Termination.

 

(a)              In the event that the Participant dies or become disabled (as defined in Section 8

 

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of the LTIP)  during the Restricted Period, a portion of the Restricted Shares shall become vested.  The number of shares that shall become vested (which number shall include any Restricted Shares that have previously vested in accordance with the terms of this Agreement) shall equal: (A) 630,000 multiplied  by (B) a percentage, the numerator of which is equal to the number of months from February 22, 2011 through the date of death or disability and the denominator of which is equal to seventy-two (72).  The remaining unvested Restricted Shares shall be forfeited, and subject to repurchase in accordance with Section 2(b) of this Agreement.

 

(b)              Except as set forth in Section 3(c) below, in the event that the Participant is involuntarily terminated other than for Cause (as such term is defined in Section 11 of the LTIP) during the Restricted Period, a portion of the Restricted Shares shall become vested.  The number of shares that shall become vested (which number shall include any Restricted Shared that have previously vested in accordance with the terms of this Agreement) shall equal: (A) 630,000 multiplied  by (B) a percentage, the numerator of which is equal to the number of months from February 22, 2011 through the date of termination and the denominator of which is equal to seventy-two (72); provided, however, that in no event shall the number of vested Restricted Shares (including any Restricted Shares that have previously vested in accordance with the terms of this Agreement) shall be less than 315,000.  The remaining unvested Restricted Shares shall be forfeited, and subject to repurchase in accordance with Section 2(b) of this Agreement.

 

(c)              In the event that the Participant is involuntarily terminated other than for Cause  during the Restricted Period within 24 months of a Change in Control (as defined in the Plan), 100% of the Restricted Shares shall vest as of the date on which the termination occurs.

 

(d)              For purposes of this Award, “Constructive Termination” shall mean a termination of employment with the Company or a subsidiary within 24 months of a Change in Control at the initiative of the Participant that the Participant declares by prior written notice delivered to the Secretary of the Company to be a Constructive Termination by the Company or a subsidiary and which follows (a) a material decrease in his total compensation opportunity or (b) a material diminution in the authority, duties or responsibilities of his position with the result that the Participant makes a determination in good faith that he cannot continue to carry out his job in substantially the same manner as it was intended to be carried out immediately before such diminution or (c) a change in the primary geographic location in which the job is expected to be performed that is greater than 50 miles from the previous location, and the Participant chooses not to relocate, then Constructive Termination will be deemed to have occurred after the Participant provides 18 months of service by commuting to the new location from the geographic location of his principal place of residence at the time of the Change in Control, or (d) a change in the primary geographic location in which the job is expected to be performed that is greater than 50 miles from the previous location, the Participant chooses not to relocate, and the acquiring company does not allow the Participant to provide services by commuting to the new location from the geographic location of his principal place of residence at the time of the Change in Control, then Constructive Termination will be deemed to have occurred immediately upon the effective date of the change in geographic location. Notwithstanding anything in the Plan to the contrary, Constructive Termination shall not occur within the meaning of Section 12 of the Plan until and unless 30 days have elapsed from the date the Company receives such written notice from the Participant without the Company curing or causing to be cured the circumstance or circumstances described in Section 12 of the Plan on the basis of which the declaration of Constructive Termination is given.

 

4.             Separation Pay.  In consideration of this Award, the Participant hereby agrees to forfeit any and all right to receive or be paid any separation, severance or termination compensation from the Company or any of its affiliates in the event that the Participant’s employment with the Company ceases at any time during the Restricted Period (other than, within 24 months of a Change in Control, an involuntary termination or Constructive Termination).

 

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5.             Book Entry.  The Restricted Shares shall be registered in the Participant’s name in book entry form on the share transfer books of the Company promptly after the date hereof.

 

6.             Rights as a Shareholder.  The Participant shall be the record owner of the Restricted Shares until or unless such Shares are sold to the Company pursuant to Section 2 hereof and as record owner shall be entitled to all rights of a common shareholder of the Company, including the right to vote the shares and receive dividends thereon.  As soon as practicable following the end of the Restricted Period, the Company shall, on or about such date(s), deliver to the Holder evidence of ownership in book entry form of the number of Shares set forth opposite such date.

 

7.             Legend.  The Restricted Shares shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission, any share exchange upon which such Shares are listed, and any applicable Federal, state or foreign laws, and the Committee may cause an appropriate reference to such restrictions to be made in the Company’s share transfer books or on any certificate that may be issued to evidence the Shares.

 

8.             No Right to Continued Employment.  Neither the Plan nor this Agreement shall be construed as giving the Participant the right to be retained in the employ of, or in any consulting relationship to, the Company or any of its subsidiaries.  Further, the Company or any of its subsidiaries may at any time dismiss the Participant or discontinue any consulting relationship, free from any liability or any claim under the Plan or this Agreement, except as otherwise expressly provided herein.

 

9.             Withholding.  The Participant agrees to make appropriate arrangements with the Company for satisfaction of any applicable federal, state, local or foreign income tax withholding requirements or like requirements, including the payment to the Company, at the termination of the Restricted Period (or such earlier or later date as may be applicable under Section 83 of the Code), or at any other settlement date in respect of the Restricted Shares, of all such taxes and other amounts and the Company shall be authorized to take such action as may be necessary, in the opinion of the Company’s counsel (including, without limitation, withholding Shares otherwise deliverable to Participant hereunder and/or, subject to applicable law, withholding amounts from any compensation or other amount owing from the Company to the Participant), to satisfy all obligations for the payment of such taxes and other amounts.

 

10.          Securities Laws.  At the termination of the Restricted Period, the Participant will make or enter into such written representations, warranties and agreements as the Committee may reasonably request in order to comply with applicable securities laws and with this Agreement.

 

11.          Notices.  Any notice necessary under this Agreement shall be addressed to the Company in care of the Secretary at the principal executive office of the Company and to the Participant at the address appearing in the personnel records of the Company for such Participant or to either party at such other address as such party hereto may hereafter designate in writing to the other.  Any such notice shall be deemed effective upon receipt thereof by the addressee.

 

12.          Restricted Share Award Subject to Plan and Confidentiality and Non-Solicitation Agreement.  By entering into this Agreement, the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan, understands the terms of the Plan and this Agreement and that this Award is subject to all of the terms and provisions set forth in the Plan and in this Agreement and accepts this Award subject to all such terms and conditions which are incorporated herein by reference.  Participant also acknowledges and agrees that this Award is subject to the terms and conditions of the Confidentiality and Non-Solicitation Agreement entered into between Participant and the Company dated as of May 2008, including but not limited to the prohibition on soliciting or hiring employees and soliciting customers and potential customers for twelve (12) months post-termination.  Except with respect to Sections 3 and 4 of this Agreement, in the event of a conflict between any term or

 

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provision contained in this Agreement and a terms or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

 

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13.          Signature in Counterparts.  This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

 

OneBeacon Insurance Group, Ltd.

 

 

	
By:
    	
 
    	
 
    	
By:
    	

    
	
T.   Michael Miller
    	
 
    	
Bradford   W. Rich, Senior Vice President and
   General Counsel
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Award   Details:
    	
 
    
	
 
    	
 
    
	
Restricted Share Award
    	
 
    
	
630,000   Shares Granted
    	
 
    

 

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