Document:

exv10w64

EXHIBIT 10.64

MANAGEMENT AGREEMENT

     THIS MANAGEMENT AGREEMENT, effective as of July 1, 2003 (hereinafter referred to as
this “Management Agreement”) is made and entered into by and between Peerless Insurance
Company, a New Hampshire corporation (“PIC”), on behalf of itself and its “affiliates”,
(defined as all those companies owned or controlled by Liberty Mutual Insurance Company and
operated collectively as the Regional Agency Markets strategic business unit.”)
and Liberty Mutual Insurance Company, a Massachusetts mutual property and casualty
insurance company (“LMIC”).

Recitals

	A.	 	PIC and LMIC are indirect, wholly owned subsidiaries of Liberty Mutual Holding
Company, Inc. which consists of a group of insurance and affiliated companies engaged in the
transaction of insurance and other related enterprises (the “Liberty Group”).

	B.	 	PIC is a stock company domiciled in New Hampshire engaged in the transaction of property
and casualty insurance business in the United States. It is operated as a member of the
Liberty Group’s Regional Agency Markets strategic business unit and is authorized
to contract on behalf of its affiliates.

	C.	 	Liberty Bond Services (“LBS”) is also a strategic business unit in the Liberty
group and is authorized by Liberty Mutual Insurance Company to transact bond business on its
behalf.

	D.	 	The parties believe it is mutually beneficial to have LMIC provide certain management
services for and on behalf of PIC through its designee LBS. The management services included
within this agreement are explained below and generally consist of LBS underwriting and
billing services for bond business originally underwritten by PIC such that no new bonds will
be issued and existing bonds will continue to be serviced until expiration or termination and
eventual cessation of Peerless bond business. This agreement is not intended to affect
existing management services agreements including, but not limited to, a Reciprocal
Claims Service Agreement between LMIC and PIC dated February 14, 2000.

NOW, THEREFORE, in consideration of the mutual promises and undertakings hereinafter set
forth, the parties do agree as follows:

Article I

Appointment

     Section 1.1 Exclusive Appointment. PIC hereby appoints LMIC as its exclusive
contractor to provide PIC with the Services (as defined herein), on the terms, and subject to
the conditions, set forth in this Management Agreement. LMIC hereby accepts such appointment,
on such terms and subject to such conditions.

Article II

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Services Provided by LMIC

     At the direction of the Board of Directors of PIC (the “PIC Board”), and except as
otherwise provided in any other services agreement (or amendment to such services agreement)
between or among PIC and one or more companies of the Liberty Group, LMIC, or its designee as
approved by PIC, shall provide to PIC services necessary for the continuing operation of PIC’s
already existing bond business (the “Services”), which services may include, but not be
limited to, the following:

     (a) Underwriting Services: including (i) the review of applications for additional limits
on existing coverage; (ii) risk analysis and premium calculation; (iii) the provision of
quotes and the acceptance and refusal of applications; (iv) the issuance of bonds and
certificates; (v) the modification and amendment of existing bonds; (vi) the termination,
cancellation, rescission, renewal and nonrenewal of bonds; (vii) compliance with underwriting
file maintenance, record retention and reconciliation requirements in conformity with this
Management Agreement, or as otherwise agreed to by the parties; and (viii) generally, all such
other acts or things reasonably necessary or otherwise required in connection with the
underwriting of existing bond business.

     (b) Billing and Ancillary Services: including (i) collection of premiums due
under PIC bond, insurance and reinsurance policies or contracts, audits and remittances; (ii)
negotiation and purchase of reinsurance coverage; (iii) administration of letters of credit
and other arrangements for the provision of security by or to PIC in connection with the
Portfolio; and (iv) administration of reinsurance contracts and retrospectively rated
policies.

     (c) Litigation Services: including the commencement, continuation, defense, compromise,
settlement, withdrawal of any action, suit or proceeding (through arbitration or otherwise) in
connection with underwriting or billing services.

     (d) Management
Information Systems Services: including assistance in the
installation, operation and maintenance of data processing systems or other computer-related
services or provision of such services to PIC, as required, provided that any such
services shall be furnished only in accordance with and subject to the limitations of any
applicable license agreements.

     (e) Agent and Broker-Related Services: including (i) payment of commissions from the
assets of PIC; (ii) management and recovery of agent and broker balances; (iii) transmittal
to agents and brokers of all required communications, all as related to the Portfolio,
including, but not limited to, rate revision notices and agents’ and brokers’ compensation
calculation and support; (iv) oversight of licensing, disciplinary and other regulatory
issues; and (v) resolution of disputes with agents and brokers.

     (f) Regulatory Communications Services: including (i) responses to inquiries,
complaints, requests or proceedings received from or initiated by state and federal
regulatory and governmental authorities; (ii) required filings with state and/or federal
regulators and governmental agencies; (iii) delivery of reports or communications and notices
from regulators to PIC; and (iv) participation in, and responses to, financial and market
conduct examinations.

     (g) Treasury Services: as required for the business of PIC.

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     (h) Management Reporting Services: including the establishment and/or
maintenance of management reporting systems.

     (i) Accounts Receivable Services: including the identification,
documentation, evaluation, assertion, billing and collection of amounts due PIC and the
commencement, continuation, defense, compromise, settlement, withdrawal or abandonment of any
action, suit or proceeding (through arbitration or otherwise) related to such collections.

     (j) External Communication Services: including press releases, public
relations, government affairs, policyholder relations and rating agency and analyst
presentations.

     (k) Internal Communication Services: including (i) notification to PIC of
significant communications, notices and inquiries affecting PIC; and (ii) provision to PIC of
all relevant information reasonably requested by PIC, including, but not limited to,
financial, regulatory, statistical and tax information.

     (1) Legal Services: including all legal services required by PIC in the
ordinary course of business, which shall include engaging and directing outside counsel.

     (m) General Business Services: including all other services required by PIC
in the ordinary course of its business.

     (n) Additional Miscellaneous Services: If PIC requires from LMIC additional,
miscellaneous, services which are not otherwise contemplated under this Management Agreement,
the parties shall negotiate in good faith to reach a mutually acceptable arrangement with
respect to the provision of such services.

Article III

Standards of Performance of Services; Authority

Section 3.1 Performance Standards in Provision of the Services. LMIC shall employ
and utilize its own personnel to perform the Services rendered to PIC under this Management
Agreement except to the extent otherwise contemplated under any services agreement, or
amendment to any services agreement, between or among PIC and one or more companies of the
Liberty Group, and provided further that except as otherwise has been previously agreed by
PIC, LMIC may retain such legal, financial, actuarial, and other advisors and service
providers, including other members of the Liberty Group (not otherwise contemplated in any
other services agreement, or amendment to such services agreement) and other companies
otherwise affiliated with the Liberty Group, as LMIC reasonably deems necessary in its
discretion to perform the Services in compliance with the terms and conditions of this
Management Agreement. LMIC shall act in good faith in a commercially reasonable manner and in
accordance with customary industry standards, and applicable laws, in providing the Services,
or retaining others to provide the Services, under this Management Agreement. Except as
otherwise provided for in this Management Agreement, or by any other agreement between the
parties, LMIC shall be responsible for the payment of all employment, income and social
security taxes arising in connection with the compensation payable to its personnel involved
in the provision of the Services under this Management Agreement.

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Section 3.2 Notification and Required Approvals. LMIC shall promptly notify the
PIC Board of (i) all matters for which PIC Board notification is required by law, and (ii) any
Significant Transaction (as defined herein) related to PIC undertaken pursuant to this
Management Agreement. LMIC shall not enter into any Significant Transaction affecting PIC
without the prior approval of the PIC Board, provided, however, that LMIC shall not be in
breach of this Management Agreement if it is unable, in its good faith determination, to
obtain the approval of the PIC Board prior to entering into any such Significant Transaction
as long as LMIC notifies the Chairman, Vice Chairman or President of PIC prior to entering
into any such Significant Transaction. Unless otherwise directed by the PIC Board, for the
purposes of this Management Agreement, a “Significant Transaction” shall mean any non-claim
related transaction or series of transactions requiring an expenditure or commitment by PIC,
which is not in the ordinary course of business, in excess of Two Hundred and Fifty Thousand
Dollars ($250,000.00), provided, however, that the PIC Board shall have the right to specify
in writing to LMIC such other transactions that shall require notification to, or prior
approval of, the PIC Board.

Article IV

PIC’s Responsibilities

All Services provided by LMIC to PIC shall be subject to oversight by the PIC Board.
PIC shall direct and control the business that is being carried out by LMIC on behalf of PIC,
including the control and direction of LMIC employees in the performance of services on behalf
of PIC.

Article V

Books and Records

Section 5.1 Maintenance of Books and Records. LMIC shall maintain, at LBS’
principal administrative offices and retain for applicable periods of time, consistent with
PIC’s current policies and procedures, or as required by applicable law, books and records
relating to the Services provided under this Management Agreement (the “Books and Records”).
PIC, state and/or federal governmental agencies, and their respective representatives, shall
have the right to inspect the Books and Records, upon reasonable prior notice and during
LMIC’s normal business hours.

Section 5.2 Ownership of Books and Records. PIC acknowledges that the Books
and Records are, and shall remain, the property of LMIC. However, in the event that a dispute
arises between PIC and LMIC, PIC shall have the right, after the termination of this
Management Agreement, and with prior reasonable notice to LMIC, to inspect the Books and
Records of LMIC, but only insofar as such Books and Records relate to the dispute, and to make
copies of such Books and Records or extracts therefrom. In addition, and in
accordance with Article IX hereof, upon termination of this Management Agreement, PIC shall
have the right to access all computer programs and the like used by LMIC in the maintenance of
the Books and Records hereunder for LMIC’s provision of services to PIC, until such time as
PIC is able to make arrangements for the transfer of all such computer files and/or programs
to an alternative computer system. Nothing in this Section 5.2 shall supersede, preclude or
otherwise limit any discovery rights otherwise available to LMIC or PIC.

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Article VI

Relationship between LMIC and PIC

PIC and LMIC acknowledge the following:

     (a) PIC and LMIC are not partners or joint venturers with each other, and nothing herein
shall be construed as to make them such partners or joint venturers, or impose any liability
as such on either party. LMIC shall perform its duties hereunder as an independent contractor
and not as an employee or agent of PIC. Except as expressly granted in this Management
Agreement, or otherwise by the other party in writing or as may be required by law or as is
necessary to perform the Services to be provided under this Management Agreement, no party
shall have any authority, express or implied, to act on behalf of the other party or its
subsidiaries.

     (b) During the term of this Management Agreement, LMIC shall not be prohibited or
otherwise limited from entering into arrangements similar to this Management Agreement with
one or more of the companies of the Liberty Group.

     (c) The Services provided by LMIC, or its designee as approved by PIC, shall not violate,
conflict with, or result in the breach of any (i) charter document of PIC; (ii) statute, law,
rule, regulation, judgment, decree, order, or permit of or from, any governmental authority;
or (iii) material agreement to which PIC is a party or by which it is bound.

     (d) Each party agrees to notify the other party within a reasonable time upon receipt of
any written or oral communication from any state insurance department or any other
governmental or regulatory department or agency of such department’s or agency’s intention to
proceed with any administrative action, such as a hearing, fine, license suspension or
revocation or similar action, against LMIC or PIC, which administrative action relates in any
way to LMIC’s or PIC’s performance under this Management Agreement or which otherwise relates
to the Portfolio.

     (e) In the event that PIC or LMIC, or both, are made parties to, or threatened with, any
legal or regulatory proceeding arising out of or in connection with the Services or Portfolio,
it is agreed that they will promptly notify and cooperate fully with each other to defend,
settle, compromise or otherwise resolve such legal or regulatory proceeding consistent with
the intent of this Management Agreement.

     (f) PIC shall reasonably cooperate with LMIC in connection with the provision of the
Services under this Management Agreement. Notwithstanding anything to the contrary in this
Management Agreement, PIC shall retain the ultimate authority to make all decisions with
respect to the Services.

Article VII

Service Fee and Expenses

PIC shall reimburse LMIC for the reasonable cost of performing any of the services
provided pursuant to this Agreement. Charges for such services shall include direct expenses
and directly allocable expenses allocated to PIC by LMIC in conformity with customary
insurance accounting practices consistently applied. The method of expense allocations under
this Agreement shall be consistent with the principles stated in the Statement of Statutory
Accounting Principles No. 70, “Allocation of Expenses.”

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Article VIII

Indemnification and Insurance

Section 8.1 Indemnification by LMIC. Notwithstanding anything to the contrary in this
Management Agreement, LMIC shall indemnify, defend and hold PIC, its affiliates, and their
respective directors, officers, employees and agents, harmless from and against any and all
claims, losses and reasonable costs and expenses (including, but not limited to, reasonable
attorneys’ fees and costs) arising: (i) as a result of LMIC’s breach of any provision of this
Management Agreement requiring LMIC’s compliance with applicable state and federal laws and
regulations governing PIC’s business; (ii) as a result of LMIC’s breach of this Management
Agreement (other than as set forth in (i)); (iii) the failure of LMIC to make available to PIC
any information or to provide any administrative or other services required to be made
available to or provided to PIC under this Management Agreement; or (iv) out of negligence or
willful misconduct of LMIC, its directors, officers, agents, brokers or employees, in
performing their obligations under this Management Agreement. Notwithstanding the foregoing,
LMIC shall not indemnify PIC for any claims, losses and reasonable costs and expenses
(including, but not limited to, reasonable attorneys’ fees and costs) to the extent arising
from negligence or willful misconduct: (i) occurring prior to the effective date of this
Management Agreement; (ii) on the part of PIC or its affiliates or their respective directors,
officers, employees and agents, other than LMIC; or (iii) occurring solely because of LMIC’s
reliance on Article IV, herein, unless the specific guideline, practice or instruction
involved was rejected, modified or altered by LMIC pursuant to the provisions of Article IV.

Section 8.2 Indemnification by PIC. Notwithstanding anything to the contrary in this
Management Agreement, PIC shall indemnify, defend and hold LMIC, its affiliates, and their
respective directors, officers, employees and agents, harmless from and against any and all
claims, losses and reasonable costs and expenses (including, but not limited to, reasonable
attorneys’ fees and costs) arising: (i) out of negligence or willful misconduct of PIC, its
directors, officers, agents, brokers or employees in performing their obligations under this
Management Agreement; (ii) as a result of PIC’s breach of this Management Agreement; or (iii)
the failure of PIC to make available to LMIC any information or to provide any administrative
or other services required to be made available or to be provided to LMIC under this
Management Agreement; provided, however, that LMIC shall not be entitled to
indemnification under this provision to the extent that such claims, losses and reasonable
costs and expenses (including, but not limited to, reasonable attorneys’ fees and costs) arise
from a failure of LMIC to comply with the provisions of this Management Agreement. PIC shall
not indemnify LMIC for any claims, losses and reasonable costs and expenses (including, but
not limited to, reasonable attorneys’ fees and costs) to the extent arising from negligence or
willful misconduct: (i) occurring prior to the effective date of this Management Agreement, or
(ii) on the part of LMIC or its affiliates and their respective directors, officers, employees
and agents, other than PIC.

Section 8.3 Indemnification Notice. If any person entitled to indemnification pursuant
to this Article VIII (the “Indemnified Party”) asserts that either party hereto
(the “Indemnifying Party”) has become obligated to indemnify pursuant to this Article
VIII, or if any action, suit, investigation, claim or proceeding is begun, made
or instituted as a result of which the Indemnifying Party may become obligated to the
Indemnified Party hereunder, the Indemnified Party shall give written notice to the
Indemnifying Party within a sufficiently prompt time to avoid prejudice, to the Indemnifying
Party specifying in reasonable detail the facts upon which

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the claimed right to
indemnification is based. Failure to provide such notice in a timely manner shall not be
deemed a waiver of the Indemnified Party’s right to indemnification hereunder in connection
with such claim, but the amount of reimbursement to which the Indemnified Party is entitled
shall be reduced by the amount, if any, by which the Indemnified Party’s losses would have
been less had such notice been timely delivered.

Section 8.4 Indemnification Procedure. Any payment to be made under this Article
VIII shall be made within twenty (20) business days of the delivery of notice of
an uncontested claim to indemnification or, in the case of a contested claim, within twenty
(20) business days of final determination of the amount to be indemnified. Any amount not paid
within such twenty (20) business days period shall bear simple interest at the 30-day C.P.
Rate from the twentieth day until the day of payment.

Section 8.5 Insurance. During the term of this Management Agreement, LMIC and PIC agree
to maintain insurance adequate for its business operations in light of this Management
Agreement and the delegation of functions hereunder.

Article IX

Termination

Section 9.1
Termination upon Mutual Agreement. This Management Agreement may be
terminated upon the mutual agreement of LMIC and PIC.

Section 9.2 Termination by LMIC. This Management Agreement may be terminated by the Board
of Directors of LMIC in accordance with the following terms:

     (a) upon (i) one hundred eighty (180) days written notice; or (ii) forty-five (45)
days written notice by LMIC if PIC becomes insolvent, files a voluntary petition in
bankruptcy, rehabilitation or liquidation, or makes an assignment for the benefit of
creditors, or if a committee of creditors or other representatives is appointed to represent
its business, or an involuntary petition in bankruptcy, rehabilitation or liquidation is
filed against it, and PIC fails, within thirty (30) days following the appointment of such
committee or representative, to cause the discharge of such committee or representative or
the dismissal of such petition, except to the extent that the receiver, liquidator or trustee
confirms a part or all of the services to be provided by LMIC under this Management Agreement
and continues to make payments to LMIC in accordance with Article VII for the services so
confirmed; or

     (b) upon written notice by LMIC if PIC fails to make payment of any fees or expenses in
accordance with Article VII and such failure has not been cured with thirty (30) days after
the date such payment was due.

Section 9.3 Termination by PIC. This Management Agreement may be terminated by the PIC
Board upon (a) one hundred eighty (180) days written notice; (b) forty-five (45) days
written notice by PIC if LMIC becomes insolvent, files a voluntary petition in bankruptcy,
rehabilitation or liquidation, or makes an assignment for the benefit of creditors, or if a
committee of creditors or other representatives is appointed to represent its business, or an
involuntary petition in bankruptcy, rehabilitation or liquidation is filed against it, and
LMIC fails, within thirty (30) days following the appointment of such committee or
representative, to cause the discharge of such committee or representative or the dismissal
of such petition; or (c)

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LMIC’s material breach of the terms and conditions of this Management Agreement and
such breach has not been cured within forty-five (45) days following written notice by PIC
setting forth the breach.

Section 9.4 Automatic Termination. This Management Agreement shall be
automatically terminated as of the date and time the last PIC bond expires.

Section 9.5 No Prejudice. The termination of this Management Agreement shall
be without prejudice to any rights or liabilities of any party hereunder which shall have
accrued prior to such termination and shall not affect any provisions of this Management
Agreement that are expressly or by necessary implication, intended to survive such
termination.

Section 9.6 Transition Period. In the event of termination of this Management
Agreement, except with respect to termination in accordance with Section 9.4, LMIC shall
continue to provide the Services for a period of time that is reasonably necessary to transfer
the Services to a succeeding administrator, or back to PIC, as appropriate.

Article X

Confidentiality

A. As used in this Article X, the term “Confidential Information” shall mean any and
all information, whether stored or transferred orally, visually, electronically or by any
other means, concerning the business, property, operations, policies of insurance and
reinsurance, software, finances, claims information, practices and procedures,
policyholder/client data, underwriting information, and reinsurance arrangements, including
summaries, analyses, studies or other compilations of such information derived in connection
with the provision of Services by LMIC. Confidential Information shall not include information
which is, or becomes, available to the public other than as a result of disclosure by LMIC or
one or more of the companies of the Liberty Group, and their respective directors, officers,
employees, agents or representatives.

B. LMIC shall not disclose any Confidential Information of PIC to any person who or which
is not part of the Liberty Group, except as may be required to perform the Services under this
Management Agreement and as authorized in advance by PIC, in writing or otherwise, or as may
be required by law, in which case LMIC shall promptly provide written notice to PIC that such
Confidential Information has been subpoenaed or otherwise demanded, in sufficient time to
allow PIC to seek a protective order or other appropriate legal or equitable remedy. LMIC
shall use its reasonable best efforts to obtain or assist PIC in obtaining such protective
order or other remedy, provided, however, that LMIC shall not be required to
expend any out-of-pocket expenses or costs in providing such assistance to PIC.

Article XI

Miscellaneous

Section 11.1 Assignment. Neither LMIC nor PIC may assign, transfer or permit the
assignment or transfer of this Management Agreement without the prior written consent of the
other, which consent shall not be unreasonably withheld.

Section 11.2 Amendments and Waivers. This Management Agreement may not be
amended, and none of its provisions may be modified, except by a written document executed by

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 both LMIC and PIC. No failure or delay of a party in exercising any power or
right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise
of any such right or power, or any abandonment or discontinuance of steps to enforce such a
right or power, preclude any other or further exercise thereof or the exercise of an other
right or power. No waiver by a party of any provision of this Management Agreement or consent
to any departure therefrom shall be effective unless the same shall be in writing and signed
by the appropriate party, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.

Section 11.3 Entire Agreement. This Management Agreement constitutes the
entire agreement among the parties with respect to the subject matter hereof and supersedes
all other prior negotiations, commitments, agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof.

Section 11.4 Governing Law. This Management Agreement shall be deemed to have
been made under and governed by the laws of Commonwealth of Massachusetts, without regard to
Massachusetts’s choice of law rules.

Section 11.5 Notices. All notices and other communications under this
Management Agreement shall be in writing and shall be delivered personally, or sent by
confirmed facsimile transmission or nationally recognized overnight delivery service. Any such
notice or other communication shall be deemed given upon actual delivery to each party at
their respective principal administrative office address.

Section 11.6 No Third party Beneficiaries. Nothing in this Management
Agreement is intended to confer any rights or remedies under, or by reason of, this Management
Agreement on any persons other than LMIC, PIC, a person entitled to indemnification under
Article VIII and their respective heirs, executors, successors and assignees.
Nothing in this Management Agreement is intended to relieve or discharge the obligations or
liability of any third persons to LMIC or PIC. No provision of this Management Agreement shall
give any third persons any right of subrogation or action over or against LMIC or PIC.

Section 11.7 Counterparts. This Management Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all of which shall
constitute one and the same instrument.

Section 11.8 Interpretation. The descriptive headings herein are inserted for
convenience of reference only, and are not intended to be part, or to affect the meaning or
interpretation, of this Management Agreement.

Section 11.9 Legal Enforceability. Any term or provision of this Management
Agreement which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this Management
Agreement or affecting the validity or enforceability of any of the terms or provisions of
this Management Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, that provision shall be interpreted to be only so broad as is
enforceable.

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Section 11.10 Specific Performance. Each of the parties hereto acknowledges that in
the event of a breach of this Management Agreement, the non-breaching party would be
irreparably and immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that the parties hereto shall (i) waive, in any action for specific
performance, the defense of adequacy of a remedy at law; and (ii) be entitled, in addition to
any other remedy to which they may be entitled at law or in equity, to compel the specific
performance of this Management Agreement in any action instituted in any court of the United
States or any state thereof having subject matter jurisdiction.

     IN WITNESS WHEREOF, the parties hereto have executed this Management Agreement effective
as of the date first written above.

LIBERTY MUTUAL INSURANCE COMPANY

	 	 	 
	By:
	 	/s/
	 	 	 
	Name:
	 	 
	 	 	 
	Title:
	 	SVP Commercial Markets Admin
	 	 	 

PEERLESS INSURANCE COMPANY

	 	 	 
	By:
	 	/s/
	 	 	 
	Name:
	 	 
	 	 	 
	Title:
	 	VP, Underwriting-Peerless
	 	 	 

11exv10w65

EXHIBIT 10.65

CLAIMS SERVICE AGREEMENT

Between

PEERLESS INSURANCE COMPANY

AND

LIBERTY MUTUAL INSURANCE COMPANY

Dated:
January 1, 2010

 

 

TABLE OF CONTENTS

	 	 	 

	Article
	 	 
	ARTICLE I APPOINTMENT; REGULATORY APPROVALS
	 	1
	Section 1.1 Appointments
	 	1
	Section 1.2 Regulatory Approvals
	 	1
	 
	 	 
	ARTICLE II SERVICES PROVIDED BY AGENCY MARKETS
	 	1
	 
	 	 
	ARTICLE III PERFORMANCE ON SERVICES
	 	2
	 
	 	 
	ARTICLE IV COMPANY’S RESPONSIBILITIES
	 	3
	Section 4.1 Duty to Oversee
	 	3
	 
	 	 
	ARTICLE V BOOKS AND RECORDS
	 	3
	Section 5.1 Books and Records Maintained by Agency Markets
	 	3
	Section 5.2 Property of Liberty Mutual
	 	3
	 
	 	 
	ARTICLE VI THE RELATIONSHIP BETWEEN LIBERTY MUTUAL AND AGENCY MARKETS
	 	3
	 
	 	 
	ARTICLE VII SERVICE FEES AND EXPENSES
	 	4
	Section 7.1 Fees and Expenses
	 	4
	Section 7.2 Cost Recovery by Agency Markets
	 	4
	Section 7.3 Accounts and Disbursements
	 	4
	 
	 	 
	ARTICLE VIII INDEMNIFICATION
	 	4
	Section 8.1 Dispute Resolution
	 	4
	Section 8.2 Indemnification by Agency Markets
	 	7
	Section 8.3 Indemnification by Liberty Mutual
	 	7
	Section 8.4 Indemnification Procedure
	 	7
	Section 8.5 Insurance
	 	7
	 
	 	 
	ARTICLE IX TERMINATION
	 	7
	Section 9.1 Mutual Agreement
	 	7
	Section 9.2 Termination by Agency Markets
	 	7
	Section 9.3 Termination by Liberty Mutual
	 	7
	Section 9.4 Return of Books and Records
	 	7
	Section 9.5 No Prejudice
	 	7
	Section 9.6 Transition Period
	 	7
	 
	 	 
	ARTICLE X CONFIDENTIALITY
	 	8
	 
	 	 
	ARTICLE XI MISCELLANEOUS
	 	10
	Section 11.1 Assignment
	 	10
	Section 11.2 Amendments and Waivers
	 	10

 

 

	 	 	 

	Section 11.3 Entire Agreement
	 	10
	Section 11.4 Governing Law
	 	10
	Section 11.5 Notices
	 	10
	Section 11.6 No Third Party Beneficiaries
	 	11
	Section 11.7 Counterparts
	 	11
	Section 11.8 Interpretation
	 	12
	Section 11.9 Legal Enforceability
	 	12

 

 

CLAIMS SERVICE AGREEMENT

THIS CLAIMS SERVICE AGREEMENT, effective as of January 1, 2010 (“Service Agreement”), is made
and entered into by and between Liberty Mutual Insurance Company, a Massachusetts insurance company
with offices at 175 Berkeley Street, Boston, MA 02116, on behalf of itself and its affiliates when
operating as the National Markets strategic business unit (“Liberty Mutual”) and Peerless Insurance
Company a New Hampshire insurance company with offices at 62 Maple Avenue, Keene, NH 03431 on
behalf of itself and its affiliates and subsidiaries operating as the companies of Liberty Mutual
Agency Markets (“Agency Markets”).

WITNESSETH

WHEREAS, National Markets is a business unit within the Liberty Mutual Group, a group of
insurers and associated companies engaged in the transaction of insurance and other related
enterprises (“Liberty Mutual Group”); and

WHEREAS, Agency Markets is also a member of the Liberty Mutual Group engaged in the
transaction of property and casualty insurance business in the United States; and

WHEREAS, the parties believe it is mutually beneficial to have Liberty Mutual provide certain
claims adjusting and related services for and on behalf of Agency Markets.

NOW, THEREFORE, in consideration of the mutual promises and undertakings hereinafter set forth, the
parties do agree as follows:

ARTICLE I

APPOINTMENT;

REGULATORY APPROVALS

Section 1.1 Appointment. Agency Markets hereby appoints Liberty Mutual as a non-exclusive
contractor to provide Agency Markets with the Services (as defined herein), on the terms and
subject to the conditions set forth herein. Liberty Mutual hereby accepts such appointment, on such
terms and subject to such conditions.

Section 1.2 Regulatory Approvals. It shall be a condition to the effectiveness of this Service
Agreement that Agency Markets shall have obtained approval of this Service Agreement from those
state insurance departments or other regulatory authorities, the approval of which is required for
the effectiveness of this Service Agreement.

ARTICLE II

SERVICES PROVIDED BY LIBERTY MUTUAL

At the direction of the management of Agency Markets, Liberty Mutual shall provide services
requested by Agency Markets and agreed to by Liberty Mutual (the “Services”), including without
limitation:

1

 

(a) Claims Management Services: including (i) receipt, processing, settlement and payment of
claims in states other than Alaska, Idaho, Montana, Oregon and Washington under the policies and
contracts of workers compensation insurance issued by Agency Markets pursuant to requests from
Agency Markets (the “Portfolio”); (ii) acknowledgement of the receipt of notices received from
policyholders in connection with any claims; (iii) investigation of any claim, as necessary, to
determine its validity and compensability, including verification of coverage and status
information and utilization of any relevant documents and/or information made available to Liberty
Mutual and advice to the appropriate person of the results of such investigation; (iv) notification
to policyholders of declined claims and the reasons for such declinations; (v) response to any
inquiry, complaint or request received from any policyholder, agent, broker, regulator or other
interested party pertaining to or regarding any such claim, and recordation of such complaints in
complaint logs to be maintained by Liberty Mutual on Agency Markets’ behalf; (vi) compliance with
claims file maintenance, record retention and reconciliation requirements in conformity with the
standards for performance set forth in this Service Agreement or as otherwise agreed by the
parties; (vii) engagement and direction, as necessary, of attorneys, consultants or other
professionals in connection with the processing, defense and handling
or any such claims; (viii) defense of disputed claims; (ix) delivery of notices and other communications to policyholders; and
(x) generally, all such other acts and things as are reasonably necessary or otherwise required in
the administration of all such claims relating to the Portfolio;

(b) Additional Services; Curtailed Services. If Agency Markets requires from Liberty Mutual
additional services that are not otherwise contemplated under this Service Agreement, the parties
shall negotiate in good faith to reach a mutually acceptable arrangement under which such
additional services shall be provided by Liberty Mutual. Such arrangements shall provide for Agency
Markets to provide reasonable compensation to Liberty Mutual for such additional services. If
Agency Markets curtails its requirement that Liberty Mutual provide certain of the Services that
are contemplated under this Service Agreement, the parties shall negotiate in good faith to reach a
mutually acceptable arrangement under which such curtailed services shall no longer be provided by
Liberty Mutual. Such arrangement shall provide for Agency Markets to no longer provide compensation
to Liberty Mutual for such curtailed services.

ARTICLE III

PERFORMANCE OF SERVICES

Liberty Mutual shall utilize its employees or employees of its affiliates within the Agency
Markets to perform the Services; provided, however, that Liberty Mutual may retain such legal,
financial, actuarial and other advisors and service providers, as Liberty Mutual reasonably deems
necessary in its reasonable discretion to perform the Services in compliance with the terms and
conditions of this Service Agreement. Liberty Mutual shall act in good faith, in a commercially
reasonably manner, and in accordance with customary industry standards and applicable laws for the
provision of the Services.

2

 

ARTICLE IV

AGENCY MARKETS’S RESPONSIBILITIES

Section 4.1 Duty to Oversee; Ultimate Responsibility; Hold Harmless. All Services provided by
Liberty Mutual to Agency Markets shall be subject to oversight by Agency Markets. Agency Markets
shall have the right to direct and control the business which is being serviced by Liberty Mutual
on behalf of Agency Markets.

ARTICLE V

BOOKS AND RECORDS

Section 5.1 Books and Records Maintained by Liberty Mutual; Inspection Rights. Liberty Mutual
shall maintain and retain for applicable periods, consistent with Agency Markets’ current policies
and procedures or as required by law, books and records relating to the Portfolio and the Services
provided hereunder (the “Books and Records”). Agency Markets, insurance regulatory authorities and
their respective designated representatives shall have the right to inspect the Books and Records
upon reasonable notice during Liberty Mutual’s normal business hours.

Section 5.2 Property of Agency Markets; Return After Termination; Inspection Rights. Liberty
Mutual acknowledges and agrees that the Books and Records are and shall remain the property of
Agency Markets. Liberty Mutual shall promptly return the Books and Records to Agency Markets upon
the termination of this Service Agreement in accordance with Article 9.4; provided, however, that
in the event that a dispute arises between Agency Markets and Liberty Mutual, Liberty Mutual shall
have the right at any time after the termination of this Service Agreement and with reasonable
prior notice to inspect the Books and Records returned to Agency Markets insofar as the Books and
Records relate to such dispute, and to make copies thereof or extracts therefrom; and provided,
further, that nothing in this Article V shall supersede, preclude or otherwise limit any discovery
rights otherwise available to Liberty Mutual or Agency Markets.

ARTICLE VI

THE RELATIONSHIP BETWEEN AGENCY MARKETS AND LIBERTY MUTUAL

Liberty Mutual and Agency Markets agree that:

(a) Agency Markets and Liberty Mutual are not partners or joint venturers with each other, and
nothing herein shall be construed so as to make them partners or joint venturers with each other,
or to impose any liability as such on either of them. Liberty Mutual shall perform its duties
hereunder as an independent contractor and not as an employee or agent of Agency Markets. Except as
expressly granted in this Service Agreement or otherwise by the other party in writing, or as may
be required by law, or as is necessary to perform the Services to be provided hereunder, no party
shall have any authority, express or implied, to act on behalf of the other party or its
subsidiaries.

(b) Liberty Mutual shall hold any amounts collected by it with respect to the Portfolio for
the benefit of Agency Markets. Funds held in such account shall be remitted to Agency Markets, or

3

 

 transferred to a Agency Markets account, as directed by Agency Markets.

(c) Each party agrees to notify the other party within a reasonable time upon receipt of any
written or oral communication from any state insurance department or any other government or
regulatory department or agency of such department’s or agency’s intention to proceed with any
administrative action, such as a hearing, fine, license suspension or revocation or similar action,
against Agency Markets or Liberty Mutual, which administrative action relates in any way to Agency
Markets’ or Liberty Mutual’s performance under this Service Agreement or which otherwise relates to
the Portfolio.

(d) In the event that Agency Markets or Liberty Mutual or both are made parties to, or
threatened with, any legal or regulatory proceeding arising out of or in connection with the
Services or the Portfolio, it is agreed that they will promptly notify and cooperate fully with
each other to defend, settle, compromise or otherwise resolve such legal or regulatory proceeding
consistent with the intent of this Service Agreement.

(e) Liberty Mutual shall reasonably cooperate with Agency Markets in connection with the
provision of the Services under this Service Agreement. Notwithstanding anything in this Service
Agreement to the contrary, Agency Markets shall retain the ultimate authority to make all decisions
with respect to the Services.

ARTICLE VII

SERVICE FEES AND EXPENSES

Section 7.1 Fees and Expenses. Charges, fees and expenses to be charged by Liberty Mutual and
paid by Agency Markets hereunder for services rendered on the
Portfolio until December 31, 2010 are
set forth in “Fee Schedule — 2010” attached. Thereafter successive Fee Schedules will be negotiated
and agreed by the parties and attached hereto. Fees for losses or loss adjustment expense are not
included in this Agreement and will be billed directly to the file.

Section 7.2 Cost Recovery By Liberty Mutual. Notwithstanding anything herein to the contrary,
Liberty Mutual shall be entitled to receive from Agency Markets, the
amount of Liberty Mutual’s full
actual cost of providing the Services hereunder, and therefore, if the fees charged do not equal
Liberty Mutual’s full actual cost of providing the Services during the term hereof, then Agency
Markets shall pay Liberty Mutual the amount of such deficiency as an additional fee hereunder.

Section 7.3 Accounts and Disbursements. Amounts owing between the parties shall be settled on
a monthly basis and payment of amounts owing shall be made within 45 days after the end of the
calendar quarter.

ARTICLE VIII

DISPUTE RESOLUTION & INDEMNIFICATION

Section 8.1 Dispute Resolution.

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

          (a) Within ten (10) days or as soon as reasonably practicable after any party’s receipt of a
notice of Dispute from the other party setting forth in detail and together with supporting
documentation, if any, the nature and basis of the Dispute (the “Dispute Notice”), to the general
counsel and the chief financial officer of Liberty Mutual and the general counsel and the chief
financial officer of Agency Markets shall meet in person at a mutually acceptable time and place,
and thereafter as often as they reasonably deem necessary, to attempt in good faith to resolve the
Dispute.

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

          (c) If either the chief executive officer of Liberty Mutual or Agency Markets declares an
impasse no earlier than sixty (60) days after receipt of the Dispute Notice (or such shorter
period, if the parties so agree in writing), then, at the instruction of either party’s chief
executive officer, the Dispute shall be referred to, and finally settled by, confidential and
binding arbitration in accordance with the then-prevailing JAMS Streamlined Arbitration Rules and
Procedures as modified as follows (the “Rules”):

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

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

5

 

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

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

          (d) Each party shall bear its own costs in any negotiations pursuant to Section 9(b) or
Section 9(c) and any arbitration, provided that the parties shall share the fees and expenses of
the arbitrators equally as well as any JAMS fees and expenses.

          (e) All negotiations conducted pursuant to Section 9(b) or Section 9(c) shall be confidential
and shall be treated as compromise and settlement negotiations and may not be introduced as
evidence of an admission against interest of either party.

          (f) Notwithstanding the foregoing provisions, either party may seek the provisional judicial
remedy of a preliminary injunction or specific performance, if in its reasonable judgment such
action is necessary to avoid irreparable harm. Without prejudice to such provisional remedies as
may be available under the jurisdiction of such court, the arbitral tribunal shall have full
authority to grant provisional remedies and to direct the parties to request that any court modify
or vacate any temporary or preliminary relief issued by such court, and to award damages for the
failure of any party to respect the arbitral tribunal’s orders to that effect.

          (g) The parties hereby submit to the jurisdiction of the courts of the Commonwealth of
Massachusetts located in Boston, Massachusetts, for the purpose of seeking any provisional remedies
as contemplated by Section 9(g). In any such action, suit or proceeding, each of the parties
irrevocably and unconditionally waives, and agrees not to assert by way of motion, as a defense or
otherwise, any claim that the party is not subject to the jurisdiction of the above courts, that
such action or suit is brought in an inconvenient forum or that the venue of such action, suit or
other proceeding is improper. To the fullest extent permitted by applicable law,

6

 

each of the parties irrevocably waives all rights to trial by jury in any such action, suit or
other proceeding.

Section 8.2 Indemnification by Liberty Mutual. Notwithstanding anything to the contrary in
this Service Agreement, Liberty Mutual shall indemnify Agency Markets and its directors, officers,
employees and agents against all claims, losses and reasonable costs and expenses (including, but
not limited to, reasonable attorneys’ fees and costs) arising out of any action or inaction taken
or omitted to be taken by Liberty Mutual or its agents, employees or subcontractors in connection
with its obligations under this Service Agreement; provided, however, under no circumstances shall
Liberty Mutual be liable or responsible for costs, fees or expenses associated with Portfolio
claims.

Section 8.3 Indemnification by Agency Markets. Notwithstanding anything to the contrary in
this Service Agreement, Agency Markets shall indemnify Liberty Mutual and its directors, officers,
employees and agents against all claims, losses and reasonable costs and expenses (including, but
not limited to, reasonable attorneys’ fees and costs) arising out of any action or inaction taken
or omitted to be taken by Agency Markets or its agents, employees or subcontractors in connection
with its obligations under this Service Agreement.

Section 8.4 Indemnification Procedure. Any payment to be made under this Article VIII shall be
made within twenty (20) Business Days (as defined herein) of the delivery of notice of an
uncontested claim for indemnification or, in the case of a contested claim, within twenty (20)
Business Days of final determination of the amount for which indemnification will be made
hereunder. Any amount not paid within such twenty (20) Business Day period shall bear simple
interest at the 30-Day C.P. Rate from the twentieth (20th) day until the date of payment. As
used in this Service Agreement, the term “Business Day” shall mean any day that is not a Saturday
or Sunday or a day on which the principal place of business of Liberty Mutual is closed or a day on
which banking institutions in the City of Boston are generally authorized or obligated by law or
executive order to close.

Section 8.5 Insurance. Each party agrees to maintain at its own expense during the term of
this Service Agreement reasonable amounts of the following types of insurance: workers compensation
and employees liability, general liability, business automobile liability, professional liability
and fidelity bonds.

ARTICLE IX

TERMINATION

Section 9.1 Mutual Agreement. This Service Agreement may be terminated by mutual consent of
Agency Markets and Liberty Mutual.

Section 9.2 Termination by Liberty Mutual. This Service Agreement may be terminated by Liberty
Mutual:

(a) (i) upon ninety (90) days written notice, or (ii) upon forty-five (45) days written notice
by Liberty Mutual if (l) Agency Markets becomes insolvent or files a voluntary petition in

7

 

 bankruptcy, rehabilitation or liquidation, or makes an assignment for the benefit of
creditors, or (2) if a committee of creditors or other representatives is appointed to represent
its business or an involuntary petition in bankruptcy, rehabilitation or liquidation is filed
against it, and Agency Markets fails within thirty (30) days following the appointment of such
committee or representative to cause the discharge of such committee or representatives or the
dismissal of such petition, except to the extent that the receiver, liquidator or trustee confirms
a part or all of the services to be provided by Liberty Mutual under this Service Agreement and
continues to make payment in accordance with Article VII for the services so confirmed; or

(b) upon written notice by Liberty Mutual if Agency Markets fails to make payment of any fees
or expenses in accordance with Article VII and such failure has not been cured within thirty (30)
days after the date such payment was due.

Section 9.3 Termination by Agency Markets. This Service Agreement may be terminated by Agency
Markets (i) upon ninety (90) days written notice, (ii) upon forty-five (45) days written notice if
(1) Liberty Mutual becomes insolvent or files a voluntary petition in bankruptcy or liquidation, or
makes an assignment for the benefit of creditors, or (2) if a committee of creditors or other
representatives is appointed to represent its business or any involuntary petition in bankruptcy or
liquidation is filed against it, and Liberty Mutual files within thirty (30) days following the
appointment of such committee or representative to cause the discharge of such committee or
representatives or the dismissal of such petition, or (iii) Liberty Mutual materially breaches the
terms and conditions of this Service Agreement and such breach has not been cured within forty-five
(45) days following written notice by Agency Markets setting forth the breach.

Section 9.4 Return of Books and Records to Agency Markets. In the event of termination of this
Service Agreement by Agency Markets, (i) Agency Markets shall
promptly arrange, at its sole cost,
for the return to Agency Markets or transfer to another party of all of the Books and Records of
Agency Markets provided to Liberty Mutual or created in the the provision of the Services, and (ii)
Liberty Mutual shall cooperate fully with Agency Markets in such return or transfer.

Section 9.5 No Prejudice. The termination of this Service Agreement shall be without prejudice
to any rights or liabilities of any party hereunder which shall have accrued prior to such
termination, and shall not affect any provisions of this Service Agreement that are expressly or by
necessary implication intended to survive such termination.

Section 9.6 Transition Period. In the event of termination of this Service Agreement, Liberty
Mutual shall continue to provide the Services at the then current Fee Schedule for a period that is
reasonably necessary to enable the performance of the Services to be transferred to another party
not to exceed ninety (90) days.

ARTICLE X

CONFIDENTIALITY

(a) As used in this Agreement, the term “Confidential Information” shall mean any and all
information concerning the business, property, operations, policies of insurance, software,
finances, claims information, practices and procedures, policyholder/client data, underwriting

8

 

information, and reinsurance arrangements (including summaries, analyses, studies, or other
compilations of such information) of Agency Markets derived in connection with the provision of the
Services by Agency Markets, except such information which is or becomes available to the public
other than as a result of disclosure by Liberty Mutual or the directors, officers, employees,
agents, or representatives of Liberty Mutual, and shall include not only written information but
also information stored or transferred orally, visually, electronically, or by an other means.

(b) Liberty Mutual will hold all Confidential Information confidential and will not disclose
any Confidential Information to any party which is not an affiliate, except as may be required to
provide the Services, as authorized in advance by Liberty Mutual in writing or otherwise, or as may
be required by law, in which case Liberty Mutual shall promptly provide notice to Liberty Mutual
that such Confidential Information has been so required by law so that Liberty Mutual may seek a
protective order or other appropriate remedy. Liberty Mutual will use its commercially reasonable
best efforts (but without out-of-pocket costs or expenses) to obtain or assist Liberty Mutual in
obtaining such protective order or other appropriate remedy.

(c) Customer Data. Liberty Mutual agrees that should Agency Markets provide or allow access to
information or identity of persons and entities insured by Agency Markets or to whom services are
rendered by Agency Markets including non-public personally identifiable information of individuals
and all of this material shall be treated as highly sensitive Confidential Information by Liberty
Mutual. Liberty Mutual agrees: (1) to hold such information and/or materials as Confidential
Information hereunder; (2) to use such materials and/or information only to perform Services on
behalf of Agency Markets; (3) to delete, destroy, and/or return such material and information upon
completion of the Services rendered to Agency Markets. Except for the purposes of carrying out this
Agreement, Liberty Mutual shall not disclose or use any non-public personally identifiable
information about an insured or claimant provided by Agency Markets to Liberty Mutual. “Non-public
personally identifiable information” is financial or medical information of or concerning a private
person, which has been obtained from sources that are not available to the general public or
obtained from the person who is the subject and may include data elements such as names and
addresses of individuals. Such information shall not be reproduced or shared with any other party
except those entities with which Liberty Mutual may from time to time contract in accordance with
the fulfillment of the terms of this Agreement and which disclosure shall comply with all state and
federal statutes and regulations governing the disclosure of medical records and non-public
personally identifiable information, including any state or federal laws pertaining to the
confidentiality of medical records. Liberty Mutual shall promptly adopt and implement security
procedures to protect Agency Markets/Claimant Information from improper disclosure or use, such
procedures to be in compliance with all applicable federal and state regulatory requirements and
will immediately notify Agency Markets of any breach or suspected breach of data security.

(d) Exclusions. For purposes hereof, “Confidential Information” will not include any
information that the Receiving Party can establish by convincing written evidence: (i) was
independently developed by the Receiving Party without use of or reference to any Confidential
Information belonging to the Disclosing Party; (ii) was acquired by the Receiving Party from a
third party having the legal right to furnish same to the Receiving Party; or (iii) was at the time
in question (whether at disclosure or thereafter) generally known by or available to the public
(through no fault of the Receiving Party).

9

 

(e) Required Disclosures. These confidentiality obligations will not restrict any disclosure
required by order of a court or any government agency, provided that the Receiving Party gives
prompt notice to the Disclosing Party of any such order and reasonably cooperates with the
Disclosing Party at the Disclosing Party’s request and expense to resist such order or to obtain a
protective order.

ARTICLE XI

MISCELLANEOUS

Section 11.1 Assignment. None of the parties hereto shall assign or transfer or permit the
assignment or transfer of this Service Agreement without the prior written consent of the other,
which consent shall not be unreasonably withheld. All such assignments shall be subject to all
necessary regulatory approvals.

Section 11.2 Amendments and Waivers. This Service Agreement may not be amended, and none of
its provisions may be modified, except expressly by a written instrument signed by the parties
hereto. No failure or delay of a party in exercising any power or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. No waiver by a party of any
provision of this Service Agreement or consent to any departure therefrom shall in any event be
effective unless the same shall be in writing and signed by such party, and then such waiver or
consent shall be effective only in the specific instance and for the specific purpose for which it
is given.

Section 11.3 Entire Agreement. This Service Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes all other prior negotiations,
commitments, agreements, and understandings, both written and oral, between the parties or any of
them with respect to the subject matter hereof.

Section 11.4 Governing Law. This Service Agreement shall be deemed to have been made under and
governed by the laws of the Commonwealth of Massachusetts, except for the portion of such laws
having to do with conflicts of law.

Section 11.5 Notices. All notices and other communications under this Service Agreement shall
be in writing and shall be delivered personally, or sent by confirmed facsimile transmission or
nationally recognized overnight delivery service. Any such notice or other communication shall be
deemed given upon actual delivery in each case to the following addresses:

(a) If to Liberty Mutual to:

                    Chris Conway

                    Financial Officer

                    Liberty Mutual, National Market

                    Liberty Mutual Group

10

 

                    175 Berkeley Street

                    Boston, MA 02116-5066

          With a copy to:

                    Stan Hiers, Counsel

                    Liberty Mutual, Commercial Markets

                    Liberty Mutual Group

                    175 Berkeley Street

                    Boston, MA 02116-5066

(b) If to Agency Markets to:

                    Michael J. Fallon, Chief Financial Officer

                    Liberty Mutual Agency Markets

                    Liberty Mutual Group

                    175 Berkeley Street

                    Boston, MA 02116-5066

          With a copy to:

                    Edmund Kenealy, Vice President and General Counsel

                    Liberty Mutual Agency Markets

                    Liberty Mutual Group

                    175 Berkeley Street

                    Boston, MA 02116-5066

Section 11.6 No Third Party Beneficiaries. Nothing in this Service Agreement is intended to
confer any rights or remedies under or by reason of this Service Agreement on any parties other
than Liberty Mutual, Agency Markets, a party entitled to identification under Article IX and their
respective heirs, executors, successors, and assignees. Nothing in this Service Agreement is
intended to relieve or discharge the obligations or liability of any third parties to Liberty
Mutual or Agency Markets. No provision of this Service Agreement shall give any third parties any
right of subrogation or action over or against Liberty Mutual or Agency Markets.

Section 11.7 Counterparts. This Service Agreement may be executed in two or more counterparts,
each of which shall be deemed to be original, but all of which shall constitute one and the same
instrument.

Section 11.8 Interpretation. The descriptive headings are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or interpretation of
this Service Agreement.

11

 

Section 11.9 Legal Enforceability. Any term or provision of this Service Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Service Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Service Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, that provision
shall be interpreted to be only so broad as is enforceable.

          IN WITNESS WHEREOF, this Service Agreement has been duly executed.

	 	 	 	 	 

	LIBERTY MUTUAL INSURANCE COMPANY	 	 
	 
	 	 	 	 
	By:

	 	/s/ George Doonan
	 	 
	 

	 	 	 	 
	Name:

	 	George Doonan	 	 
	Title:

	 	Chief Financial Officer, Commercial Markets	 	 
	 
	 	 	 	 
	PEERLESS INSURANCE COMPANY	 	 
	 
	 	 	 	 
	By:

	 	/s/ Michael J. Fallon	 	 
	 

	 	 	 	 
	Name:

	 	Michael J. Fallon	 	 
	Title:

	 	Chief Financial Officer	 	 

12

 

Fee Schedule -2010

Service Fees payable by Agency Markets to Liberty Mutual for the service period December 31, 2009
to December 31, 2010 are set forth below. Amounts payable hereunder will be direct charges between
the parties.

	 	 	 
	Claim Categories:	 	Rate
	Indemnity
	 	$2,374
	Medical Only
	 	$130
	Record Only
	 	$76

If a claim changes from one category to another, the fee charged Agency Markets shall be
adjusted to reflect such change and Agency Markets will be credited or debited for the difference
in fees as applicable.

13

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