Document:

exv10w64

Exhibit 10.64

THOMAS M. ST. DENNIS

SEPARATION AGREEMENT AND RELEASE

     This Separation Agreement and Release (“Agreement”) is made by and between Thomas M. St.
Dennis (“Employee”) and Applied Materials, Inc. (the “Company”) (jointly referred to as the
“Parties” or individually referred to as a “Party”).

RECITALS

     WHEREAS, Employee is employed by the Company as its Senior Vice President, General Manager
Silicon Systems Group;

     WHEREAS, Employee signed the standard Employee Agreement with the Company dated September 13,
2005 (the “Confidentiality Agreement”);

     WHEREAS, Employee’s employment with the Company shall terminate on or about October 2, 2009
(the “Termination Date”);

     WHEREAS, the Company and Employee have entered into Stock Option and Performance Share
Agreements dated September 19, 2005, January 25, 2007, December 10, 2007 and March 9, 2009,
granting Employee certain performance shares (also called restricted stock units) and the option to
purchase shares of the Company’s common stock subject to the terms and conditions of the Company’s
Employee Stock Incentive Plan and the relevant Performance Share Agreements and Stock Option
Agreements (collectively the “Stock Agreements”); and

     WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints, grievances,
charges, actions, petitions, and demands that the Employee may have against the Company and any of
the Releasees as defined below, including, but not limited to, any and all claims arising out of,
or in any way related to Employee’s employment with, or separation from, the Company;

     NOW, THEREFORE, in consideration of the mutual promises made herein, the Company and Employee
hereby agree as follows:

COVENANTS

     1. Consideration.

          a. Continuing Employment. The Company shall continue to employ Employee on an at-will
basis in his role as Senior Vice President, General Manager Silicon Systems Group up to and
including the Termination Date, and shall continue to pay Employee his base salary in accordance
with the Company’s regular payroll practices up to and including the Termination Date. Employee
shall continue to comply with his Confidentiality Agreement as well as all other Company policies.
During his employment with the Company, Employee shall continue to be eligible to participate in
all benefits and incidents of employment, including the Company’s health insurance plan, and he
shall continue to accrue vacation. In addition, Employee shall continue to vest in stock options
and performance shares on the same terms, schedule and conditions as set forth in the Stock

 

 

Agreements. As a result of such continued vesting, from the date of this Agreement through the
Termination Date, Employee is scheduled to vest in the number of stock options indicated in
Exhibit A attached hereto.

          b. Cash. The Company agrees to pay Employee a total of $1,035,000.00 as cash
severance, less applicable withholding. Provided Employee does not breach this Agreement
(including without limitation Section 12), this cash severance will be paid to Employee in three
substantially equal installments as follows: (1) a lump sum cash payment of $369,000.00 (less
applicable withholding) shall be paid to Employee no later than thirty (30) days after the
Effective Date of this Agreement (as set forth in paragraph 24 below); (2) a lump sum cash payment
of $333,000.00 (less applicable withholding) shall be paid to Employee on October 1, 2010; and (3)
the final lump sum cash payment of $333,000.00 (less applicable withholding) shall be paid to
Employee on October 1, 2011. Prior to Employee’s execution of this Agreement, Employee may elect
for all or a portion of these payments to be deferred and credited to Employee’s account(s) under
the 2005 Executive Deferred Compensation Plan (the “Deferred Compensation Plan”) in accordance with
such election. In order to be valid, such election must be properly executed in accordance with the
terms of the election form and returned to the Company prior to the date Employee executes this
Agreement. Any such deferred amount shall be credited to Employee’s applicable Deferred
Compensation Plan account as of the day on which the amount (but for the deferral) would have been
paid to Employee pursuant to this Agreement.

          c. Benefits. Employee’s health insurance benefits shall cease on October 31, 2009,
subject to Employee’s right to continue his health insurance benefits under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA). Except as otherwise provided
herein, Employee’s participation in all benefits and incidents of employment, including, but not
limited to, the accrual of bonuses, vacation, paid time off, and vesting (including, but not
limited to, vesting of equity awards), shall cease as of the Termination Date.

          d. Equity Compensation. The Company agrees to accelerate the vesting of stock options
and the vesting of performance shares, effective as of the Effective Date, to reflect the number of
stock options (the “Accelerated Stock Options”) and/or performance shares (the “Accelerated
Performance Shares”) which would have vested pursuant to the passage of time under such awards’
time-based vesting schedule as of October 2, 2010, as detailed in Exhibit B attached
hereto. The Accelerated Performance Shares shall be paid out to Employee not later than two and 1/2
months of the Effective Date. Employee’s vested options (including but not limited to the
Accelerated stock Options) will remain outstanding and exercisable until November 20, 2009. Except
as provided in the prior sentence, the exercise of Employee’s vested options (including
specifically the Accelerated Stock Options) and the issuance of shares pursuant to performance
awards (including specifically the Accelerated Performance Shares) shall continue to be governed by
the terms and conditions of the Stock Agreements. All stock options, performance shares and the
shares issuable under such awards shall continue to be subject to the terms and conditions of the
Stock Agreements. The acceleration provided in this Section 1(d) constitutes an amendment to the
Stock Agreements relating to the stock option and performance share awards listed in Exhibit
B attached hereto. The extension of exercisability of Employee’s vested stock options provided
in this

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Section 1(d) constitutes an amendment each of the Stock Agreements relating to such stock options. To the
extent not explicitly amended hereby, the Stock Agreements remain in full force and effect.

          e. Fiscal Year 2009 Bonus. Employee shall not be eligible to receive any payment, or
partial payment thereof, with respect to any of the Company’s Fiscal Year 2009 bonus programs,
plans or other arrangements pursuant to which Employee was or may have been eligible prior to his
Termination Date.

     2. Payment of Salary. Employee acknowledges and represents that, other than the
consideration set forth in this Agreement, the Company has paid or provided all salary, wages,
bonuses, accrued vacation/paid time off, housing allowances, relocation costs, interest, severance,
outplacement costs, fees, reimbursable expenses, commissions, stock, stock options, vesting, and
any and all other benefits and compensation due to Employee.

     3. Release of Claims. Employee agrees that the consideration set forth in this
Agreement represents settlement in full of all outstanding obligations owed to Employee by the
Company and its current and former officers, directors, employees, agents, investors, attorneys,
shareholders, administrators, affiliates, divisions, and subsidiaries, and predecessor and
successor corporations and assigns (collectively, the “Releasees”). Employee, on his own behalf
and on behalf of his respective heirs, family members, executors, agents, and assigns, hereby and
forever releases the Releasees from, and agrees not to sue concerning, or in any manner to
institute, prosecute or pursue, any claim, complaint, charge, duty, obligation, or cause of action
relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected,
that Employee may possess against any of the Releasees arising from any omissions, acts, facts, or
damages that have occurred up until and including the Effective Date of this Agreement, including,
without limitation:

          a. any and all claims relating to or arising from Employee’s employment relationship with the
Company and the termination of that relationship;

          b. any and all claims relating to, or arising from, Employee’s right to purchase, or actual
purchase of shares of stock of the Company, including, without limitation, any claims for fraud,
misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law,
and securities fraud under any state or federal law;

          c. any and all claims for wrongful discharge of employment; termination in violation of public
policy; discrimination; harassment; retaliation; breach of contract, both express and implied;
breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel;
negligent or intentional infliction of emotional distress; fraud; negligent or intentional
misrepresentation; negligent or intentional interference with contract or prospective economic
advantage; unfair business practices; defamation; libel; slander; negligence; personal injury;
assault; battery; invasion of privacy; false imprisonment; conversion; and disability benefits;

          d. any and all claims for violation of any federal, state, or municipal statute, including,
but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the
Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Equal Pay Act; the
Fair Labor Standards Act, except as prohibited by law; the Fair Credit Reporting Act; the Age

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Discrimination in Employment Act of 1967; the Older Workers Benefit Protection Act; the Employee
Retirement Income Security Act of 1974; the Worker Adjustment and Retraining Notification Act; the
Family and Medical Leave Act, except as prohibited by law; the Sarbanes-Oxley Act of 2002; the
California Family Rights Act; the California Labor Code, except as prohibited by law; the
California Workers’ Compensation Act, except as prohibited by law; and the California Fair
Employment and Housing Act;

          e. any and all claims for violation of the federal or any state constitution;

          f. any and all claims arising out of any other laws and regulations relating to employment or
employment discrimination;

          g. any claim for any loss, cost, damage, or expense arising out of any dispute over the
non-withholding or other tax treatment of any of the proceeds received by Employee as a result of
this Agreement; and

          h. any and all claims for attorneys’ fees and costs.

Employee agrees that the release set forth in this section shall be and remain in effect in all
respects as a complete general release as to the matters released. This release does not extend to
any obligations incurred under this Agreement. This release does not release claims that cannot be
released as a matter of law, including, but not limited to: (1) Employee’s right to file a charge
with, or participate in a charge by, the Equal Employment Opportunity Commission or comparable
state agency against the Company (with the understanding that any such filing or participation does
not give Employee the right to recover any monetary damages against the Company; Employee’s release
of claims herein bars Employee from recovering such monetary relief from the Company); (2) claims
under Division 3, Article 2 of the California Labor Code (which includes California Labor Code
section 2802 regarding indemnity for necessary expenditures or losses by employee); and (3) claims
prohibited from release as set forth in California Labor Code section 206.5 (specifically “any
claim or right on account of wages due, or to become due, or made as an advance on wages to be
earned, unless payment of such wages has been made”).

     4. Acknowledgment of Waiver of Claims under ADEA. Employee acknowledges that he is
waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967
(“ADEA”), and that this waiver and release is knowing and voluntary. Employee agrees that this
waiver and release does not apply to any rights or claims that may arise under the ADEA after the
Effective Date of this Agreement. Employee acknowledges that the consideration given for this
waiver and release is in addition to anything of value to which Employee was already entitled.
Employee is advised to consult with an attorney about this Agreement prior to executing
this Agreement. Employee acknowledges (a) he has twenty-one (21) days from receipt of this
Agreement to consider this Agreement; (b) he has seven (7) days after his execution of this
Agreement to revoke this Agreement; (c) this Agreement shall not be effective until after the
revocation period has expired; and (d) nothing in this Agreement prevents or precludes Employee
from challenging or seeking a determination in good faith of the validity of this waiver under the
ADEA, nor does it impose any condition precedent, penalties, or costs for doing so, unless specifically authorized by
federal law. In the event Employee signs this Agreement and returns it to

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the Company in less than the 21-day period identified above, Employee hereby acknowledges that he has freely and voluntarily
chosen to waive the time period allotted for considering this Agreement. Employee acknowledges and
understands that revocation must be accomplished by a written notification to Michael R. Splinter,
Chairman, President and Chief Executive Officer, that is received prior to the Effective Date.

     5. California Civil Code Section 1542. Employee acknowledges that he has been advised
to consult with legal counsel and is familiar with the provisions of California Civil Code
Section 1542, a statute that otherwise prohibits the release of unknown claims, which provides as
follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

     Employee, being aware of said code section, agrees to expressly waive any rights he may have
thereunder, as well as under any other statute or common law principles of similar effect.

     6. No Pending or Future Lawsuits. Employee represents that he has no lawsuits,
claims, or actions pending in his name, or on behalf of any other person or entity, against the
Company or any of the other Releasees. Employee also represents that he does not intend to bring
any claims on his own behalf or on behalf of any other person or entity against the Company or any
of the other Releasees.

     7. Trade Secrets and Confidential Information/Company Property. Employee reaffirms
and agrees to observe and abide by the terms of the Confidentiality Agreement, specifically
including the provisions therein regarding nondisclosure of the Company’s trade secrets and
confidential and proprietary information. Employee’s signature below constitutes his certification
that he has returned to the Company all documents and other items provided to Employee by the
Company, developed or obtained by Employee in connection with his employment with the Company, or
otherwise belonging to the Company. Employee hereby grants consent to notification by the Company
to any new employer about Employee’s obligations under this section. Employee represents that he
has not to date misused or disclosed the Company’s trade secrets and confidential and proprietary
information to any unauthorized party.

     8. No Cooperation. Employee agrees that he will not knowingly encourage, counsel, or
assist any attorneys or their clients in the presentation or prosecution of any disputes,
differences, grievances, claims, charges, or complaints by any third party against any of the
Releasees, unless under a subpoena or other court order to do so. Employee agrees both to
immediately notify the Company upon receipt of any such subpoena or court order, and to furnish,
within three (3) business days of its receipt, a copy of such subpoena or other court order to the
Company. If approached by anyone for counsel or assistance in the presentation or prosecution of
any disputes, differences, grievances, claims, charges, or complaints against any of the Releasees, Employee shall state
no more than that he cannot provide counsel or assistance.

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     9. Non-Disparagement. Employee agrees to refrain from any disparagement, defamation,
libel, or slander of any of the Releasees, and agrees to refrain from any tortious interference
with the contracts and relationships of any of the Releasees. Employee shall direct any inquiries
by potential future employers to Mary Humiston, the Company’s Corporate Vice President of Global
Human Resources, who shall use her best efforts to provide only the Employee’s last position and
dates of employment. The Parties further agree that each Party shall have the opportunity to
review and approve any press release or other publicly-distributed communication regarding
Employee’s departure from the Company prior to publication or release of such communication.

     10. Breach. Employee acknowledges and agrees that any material breach of this
Agreement (including Section 12) or the Confidentiality Agreement shall entitle the Company
immediately to recover and/or cease providing the consideration provided or scheduled to be
provided to Employee under Section 1 of this Agreement, unless such breach constitutes a legal
action by Employee challenging or seeking a determination in good faith of the validity of the
waiver herein under the ADEA or as otherwise provided by law. Except as provided by law, including
for a legal action by Employee challenging or seeking a determination in good faith of the validity
of the waiver herein under the ADEA, Employee shall also be responsible to the Company for all
damages incurred by the Company in (a) enforcing Employee’s obligations under this Agreement or the
Confidentiality Agreement, including the bringing of any action to recover the consideration, and
(b) defending against a claim or suit brought or pursued by Employee in violation of the terms of
this Agreement.

     11. No Admission of Liability. Employee understands and acknowledges that this
Agreement constitutes a compromise and settlement of any and all actual or potential disputed
claims by Employee. No action taken by the Company hereto, either previously or in connection with
this Agreement, shall be deemed or construed to be (a) an admission of the truth or falsity of any
actual or potential claims or (b) an acknowledgment or admission by the Company of any fault or
liability whatsoever to Employee or to any third party.

     12. Non-Competition. During the period commencing on the Termination Date and ending
on October 2, 2010 (the “Non-Competition Period”), Employee shall not (other than in connection
with his employment services to the Company through the Termination Date), without the prior
express written permission of the Company’s CEO, work as an employee, officer, director,
consultant, contractor, advisor, or agent of any of the Company’s Competitors (as defined below).
The Company’s Competitors (“Competitors”) for purposes of this Agreement are the following:
Novellus, ASM International, Lam, TEL (Tokyo Electron), AMEC, KLA, Oerlikon, Ebara Technologies,
Hitachi and Varian Semiconductor.

     13. Non-Solicitation. Employee agrees that for the duration of the Non-Competition
Period, Employee shall not directly or indirectly solicit, induce, recruit or encourage any of the
Company’s employees to leave their employment at the Company.

     14. Costs. The Parties shall each bear their own costs, attorneys’ fees, and other
fees incurred in connection with the preparation, negotiation and execution of this Agreement.

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     15. ARBITRATION. THE PARTIES AGREE THAT ANY AND ALL DISPUTES ARISING OUT OF THE TERMS
OF THIS AGREEMENT, THEIR INTERPRETATION, AND ANY OF THE MATTERS HEREIN RELEASED, SHALL BE SUBJECT
TO ARBITRATION IN SANTA CLARA COUNTY, CALIFORNIA, BEFORE JAMS, PURSUANT TO ITS EMPLOYMENT
ARBITRATION RULES & PROCEDURES (“JAMS RULES”). THE ARBITRATOR MAY GRANT INJUNCTIONS AND OTHER
RELIEF IN SUCH DISPUTES. THE ARBITRATOR SHALL ADMINISTER AND CONDUCT ANY ARBITRATION IN ACCORDANCE
WITH CALIFORNIA LAW, INCLUDING THE CALIFORNIA CODE OF CIVIL PROCEDURE, AND THE ARBITRATOR SHALL
APPLY SUBSTANTIVE AND PROCEDURAL CALIFORNIA LAW TO ANY DISPUTE OR CLAIM, WITHOUT REFERENCE TO ANY
CONFLICT-OF-LAW PROVISIONS OF ANY JURISDICTION. TO THE EXTENT THAT THE JAMS RULES CONFLICT WITH
CALIFORNIA LAW, CALIFORNIA LAW SHALL TAKE PRECEDENCE. THE DECISION OF THE ARBITRATOR SHALL BE
FINAL, CONCLUSIVE, AND BINDING ON THE PARTIES TO THE ARBITRATION. THE PARTIES AGREE THAT THE
PREVAILING PARTY IN ANY ARBITRATION SHALL BE ENTITLED TO INJUNCTIVE RELIEF IN ANY COURT OF
COMPETENT JURISDICTION TO ENFORCE THE ARBITRATION AWARD. THE PARTIES TO THE ARBITRATION SHALL EACH
PAY AN EQUAL SHARE OF THE COSTS AND EXPENSES OF SUCH ARBITRATION, AND EACH PARTY SHALL SEPARATELY
PAY FOR ITS RESPECTIVE COUNSEL FEES AND EXPENSES; PROVIDED, HOWEVER, THAT THE ARBITRATOR SHALL
AWARD ATTORNEYS’ FEES AND COSTS TO THE PREVAILING PARTY, EXCEPT AS PROHIBITED BY LAW. THE PARTIES
HEREBY AGREE TO WAIVE THEIR RIGHT TO HAVE ANY DISPUTE BETWEEN THEM RESOLVED IN A COURT OF LAW BY A
JUDGE OR JURY. NOTWITHSTANDING THE FOREGOING, THIS SECTION WILL NOT PREVENT EITHER PARTY FROM
SEEKING INJUNCTIVE RELIEF (OR ANY OTHER PROVISIONAL REMEDY) FROM ANY COURT HAVING JURISDICTION OVER
THE PARTIES AND THE SUBJECT MATTER OF THEIR DISPUTE RELATING TO THIS AGREEMENT AND THE AGREEMENTS
INCORPORATED HEREIN BY REFERENCE.

     16. Tax Consequences. The Company makes no representations or warranties with respect
to the tax consequences of the payments and any other consideration provided to Employee or made on
his behalf under the terms of this Agreement. Employee agrees and understands that he is
responsible for payment, if any, of local, state, and/or federal taxes on the payments and any
other consideration provided hereunder by the Company and any penalties or assessments thereon.
Employee further agrees to indemnify and hold the Company harmless from any claims, demands,
deficiencies, penalties, interest, assessments, executions, judgments, or recoveries by any
government agency against the Company for any amounts claimed due on account of (a) Employee’s
failure to pay or the Company’s failure to withhold, or Employee’s delayed payment of, federal or
state taxes, or (b) damages sustained by the Company by reason of any such claims, including
attorneys’ fees and costs.

     17. Authority. The Company represents and warrants that the Company’s CEO has the
authority to act on behalf of the Company and to bind the Company and all who may claim through it
to the terms and conditions of this Agreement. Employee represents and warrants that he has the
capacity to act on his own behalf and on behalf of all who might claim through him to bind them to

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the terms and conditions of this Agreement. Each Party warrants and represents that there are no
liens or claims of lien or assignments in law or equity or otherwise of or against any of the
claims or causes of action released herein.

     18. No Representations. Employee represents that he has had an opportunity to consult
with an attorney, and has carefully read and understands the scope and effect of the provisions of
this Agreement. Employee has not relied upon any representations or statements made by the Company
that are not specifically set forth in this Agreement.

     19. Severability. In the event that any provision or any portion of any provision
hereof becomes or is declared by a court of competent jurisdiction or arbitrator to be illegal,
unenforceable, or void, this Agreement shall continue in full force and effect without said
provision or portion of provision.

     20. Attorneys’ Fees. Except with regard to a legal action challenging or seeking a
determination in good faith of the validity of the waiver herein under the ADEA, in the event that
either Party brings an action to enforce or effect its rights under this Agreement, the prevailing
Party shall be entitled to recover its costs and expenses, including the costs of mediation,
arbitration, litigation, court fees, and reasonable attorneys’ fees incurred in connection with
such an action.

     21. Entire Agreement. This Agreement, the Confidentiality Agreement, and the Stock
Agreements (as amended hereby) represent the entire agreement and understanding between the Company
and Employee concerning the subject matter of this Agreement and Employee’s employment with and
separation from the Company and the events leading thereto and associated therewith, and supersede
and replace any and all prior agreements and understandings concerning the subject matter of this
Agreement and Employee’s relationship with the Company. To the extent that there is any conflict
or inconsistency between this Agreement and the Confidentiality Agreement, this Agreement shall
govern.

     22. No Oral Modification. This Agreement may only be amended in a writing signed by
Employee and the Company’s CEO.

     23. Governing Law. This Agreement shall be governed by the laws of the State of
California, without regard to choice-of-law provisions.

     24. Effective Date. Each Party has seven (7) days after that Party signs this
Agreement to revoke it. This Agreement will become effective on the eighth day after it has been
signed by both parties, provided that it has not been revoked by either Party before that date (the
“Effective Date”).

     25. Counterparts. This Agreement may be executed in counterparts and by facsimile,
and each counterpart and facsimile shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the undersigned.

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     26. Internal Revenue Code Section 409A.

          a. Notwithstanding anything to the contrary in this Agreement, no “Deferred Compensation
Separation Benefits” (as defined below) will become payable under this Agreement until Employee has
a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), and the final regulations and guidance promulgated thereunder
(“Section 409A”). Further, if Employee is a “specified employee” within the meaning of Section
409A at the time of Employee’s termination (other than due to death), and the severance payable to
Employee, if any, pursuant to this Agreement, when considered together with any other severance
payments or separation benefits, are considered deferred compensation under Section 409A (together,
the “Deferred Compensation Separation Benefits”), such Deferred Compensation Separation Payments
that are otherwise payable within the first six (6) months following Employee’s termination of
employment will become payable on the first payroll date that occurs on or after the date six (6)
months and one (1) day following the date of Employee’s termination of employment. All subsequent
Deferred Compensation Separation Benefits, if any, will be payable in accordance with the payment
schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary,
if Employee dies following his termination but prior to the six (6) month anniversary of his
termination, then any payments delayed in accordance with this paragraph will be payable in a lump
sum as soon as administratively practicable after the date of Employee’s death and all other
Deferred Compensation Separation Benefits will be payable in accordance with the payment schedule
applicable to each payment or benefit. Each payment and benefit payable under this Agreement is
intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury
Regulations.

          b. Any amount paid under this Agreement that satisfies the requirements of the “short-term
deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations shall not constitute
Deferred Compensation Separation Benefits for purposes of Section 26(a) above.

          c. Any amount paid under this Agreement that qualifies as a payment made as a result of an
involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury
Regulations that does not exceed the “Section 409A Limit” (as defined below) shall not constitute
Deferred Compensation Separation Benefits for purposes of Section 26(a) above. For purposes of
this Section 26(c), “Section 409A Limit” will mean the lesser of two (2) times: (i) Employee’s
annualized compensation based upon the annual rate of pay paid to Employee during the Employee’s
taxable year preceding the Employee’s taxable year of Employee’s termination of employment as
determined under Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1); or (ii) the maximum amount that may
be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code for the
2009 calendar year.

          d. The provisions of this Section 26 are intended to comply with the requirements of Section
409A so that none of the severance payments and benefits to be provided hereunder will be
subject to the additional tax imposed under Section 409A, and any ambiguities herein will be
interpreted to so comply.

     27. Voluntary Execution of Agreement. Employee understands and agrees that he
executed this Agreement voluntarily, without any duress or undue influence on the part or behalf of

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the Company or any third party, with the full intent of releasing all of his claims against the
Company and any of the other Releasees. Employee acknowledges that:

	 	a.	 	he has read this Agreement;
	 
	 	b.	 	he has been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of his own choice or has elected
not to retain legal counsel;
	 
	 	c.	 	he understands the terms and consequences of this Agreement and
of the releases it contains; and
	 
	 	d.	 	he is fully aware of the legal and binding effect of this Agreement.

IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth
below.

	 	 	 	 	 
	 

	 	THOMAS M. ST. DENNIS, an individual	 	 
	 
	 	 	 	 
	Dated:
October 5, 2009

	 	/s/ Thomas M. St. Dennis
 

Thomas M. St. Dennis
	 	 
	 
	 	 	 	 
	 

	 	APPLIED MATERIALS, INC.	 	 
	 
	 	 	 	 
	Dated:
September 30, 2009

	 	By /s/ Michael R. Splinter
 

Michael R. Splinter
	 	 
	 

	 	President and Chief Executive Officer	 	 

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Exhibit A

Options Scheduled to Vest Through the Termination Date

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Grant ID	 	Grant Date	 	 	Number of Options	 	 	Scheduled Vest Date	 
	AMI501184
	 	 	9/19/2005	 	 	 	100,000	 	 	 	9/19/2009	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 

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Exhibit B

Options and Performance Shares to Accelerate on the Effective Date

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Options/Performance	 	 	 	 
	Grant ID	 	Grant Date	 	 	Shares to Accelerate	 	 	Original Vesting Date	 
	AMIP00023
	 	 	1/25/2007	 	 	 	31,250	 	 	 	12/19/2009	 
	AMIP00031
	 	 	1/25/2007	 	 	 	25,000	 	 	 	12/19/2009	 
	AMIP680913A
	 	 	12/10/2007	 	 	 	26,250	 	 	 	12/19/2009	 
	AMI715453
	 	 	3/9/2009	 	 	 	200,000	 	 	 	4/1/2010	 

 Page 12 of 12exv10w62

Exhibit 10.62

Traditional Workers’ Compensation Excess of
Loss 
Reinsurance Contract

Effective: July 1, 2009

issued to

Guarantee Insurance Company

Fort Lauderdale, Florida

and

any other insurance companies and/or affiliates which are now or

hereafter come under the ownership, control or management of

Guarantee Insurance Company

 

 

Traditional Workers’ Compensation Excess of Loss

Reinsurance Contract

Effective: July 1, 2009

issued to

Guarantee Insurance Company

Fort Lauderdale, Florida

and

any other insurance companies and/or affiliates which are now or

hereafter come under the ownership, control or management of

Guarantee Insurance Company

	 	 	 	 	 
	Reinsurers	 	Participations
	Maiden Re Insurance Services LLC
for and on behalf of Maiden Reinsurance Company
	 	 	50.0	 
	Max Bermuda Ltd.
	 	 	30.0	 
	ULLICO Casualty Company
	 	 	10.0	 
	 
	 	 	 	 
	Through Aon Limited trading as Aon Benfield
	 	 	 	 
	Lloyd’s Underwriters Per Signing Page(s)
	 	 	10.0	 
	 
	 	 	 	 
	Total
	 	 	100.0	%

[A]

 

 

Table of Contents

	 	 	 	 	 
	Article	 	 	Page
	I
	 	Classes of Business Reinsured	 	1
	II
	 	Commencement and Termination	 	1
	III
	 	Territory (BRMA 51A)	 	3
	IV
	 	Exclusions	 	3
	V
	 	Special Acceptances	 	5
	VI
	 	Retention and Limit	 	5
	VII
	 	Definitions	 	6
	VIII
	 	Other Reinsurance	 	9
	IX
	 	Terrorism	 	9
	X
	 	Claims	 	9
	XI
	 	Annuities at Company’s Option	 	10
	XII
	 	Commutation	 	10
	XIII
	 	Special Commutation	 	11
	XIV
	 	Salvage and Subrogation	 	13
	XV
	 	Reinsurance Premium	 	13
	XVI
	 	Late Payments	 	13
	XVII
	 	Offset (BRMA 36B)	 	15
	XVIII
	 	Access to Records	 	15
	XIX
	 	Liability of the Reinsurer	 	15
	XX
	 	Net Retained Lines (BRMA 32E)	 	16
	XXI
	 	Errors and Omissions (BRMA 14F)	 	16
	XXII
	 	Currency (BRMA 12A)	 	16
	XXIII
	 	Taxes (BRMA 50B)	 	16
	XXIV
	 	Federal Excise Tax (BRMA 17D)	 	17
	XXV
	 	Reserves	 	17
	XXVI
	 	Insolvency	 	19
	XXVII
	 	Arbitration	 	20
	XXVIII
	 	Agency Agreement (BRMA 73A)	 	21
	XXIX
	 	Severability (BRMA 72E)	 	21
	XXX
	 	Service of Suit (BRMA 49C)	 	21
	XXXI
	 	Confidentiality (BRMA 69D)	 	22
	XXXII
	 	Governing Law (BRMA 71B)	 	22
	XXXIII
	 	Entire Agreement	 	22
	XXXIV
	 	Notices and Contract Execution	 	22
	XXXV
	 	Intermediary	 	23

 

 

Traditional Workers’ Compensation Excess of Loss

Reinsurance Contract

Effective: July 1, 2009

issued to

Guarantee Insurance Company

Fort Lauderdale, Florida

and

any other insurance companies and/or affiliates which are now or

hereafter come under the ownership, control or management of

Guarantee Insurance Company

(hereinafter referred to collectively as the “Company”)

by

The Subscribing Reinsurer(s) Executing the

Interests and Liabilities Agreement(s)

Attached Hereto

(hereinafter referred to as the “Reinsurer”)

Article I — Classes of Business Reinsured

By this Contract the Reinsurer agrees to reinsure the excess liability which may accrue to the
Company under its policies, contracts and binders of insurance or reinsurance (hereinafter called
“policies”) in force at the effective date hereof or issued or renewed on or after that date, and
classified by the Company as Traditional Workers’ Compensation and/or Employers Liability business,
and policies classified by the Company as Preferred Agency Captive business covering Traditional
Workers’ Compensation and/or Employers Liability exposures, subject to the terms, conditions and
limitations hereinafter set forth.

Article II — Commencement and Termination

	A.	 	This Contract shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2009, with
respect to losses arising out of loss occurrences commencing at or after that time and date, and
shall remain in force until 12:01 a.m., Eastern Standard Time, July 1, 2010.
	 
	B.	 	Notwithstanding the provisions of paragraph A above, the Company may terminate a Subscribing
Reinsurer’s percentage share in this Contract at any time by giving written notice to the
Subscribing Reinsurer in the event any of the following circumstances occur:

	 	1.	 	The Subscribing Reinsurer’s policyholders’ surplus (or its equivalent under the
Subscribing Reinsurer’s accounting system) at the inception of this Contract has been
reduced by more than 20.0% of the amount of surplus (or the applicable equivalent) 12
months prior to that date; or

Page 1

 

	 	2.	 	The Subscribing Reinsurer’s policyholders’ surplus (or its equivalent under the
Subscribing Reinsurer’s accounting system) at any time during the term of this Contract
has been reduced by more than 20.0% of the amount of surplus (or the applicable
equivalent) at the date of the Subscribing Reinsurer’s most recent financial statement
filed with regulatory authorities and available to the public as of the inception of
this Contract; or
	 
	 	3.	 	The Subscribing Reinsurer’s A.M. Best’s rating has been assigned or downgraded
below A- and/or Standard & Poor’s rating has been assigned or downgraded below BBB+; or
	 
	 	4.	 	The Subscribing Reinsurer has become merged with, acquired by or controlled by
any other entity or individual(s) not controlling the Subscribing Reinsurer’s operations
at the inception of this Contract; or
	 
	 	5.	 	A State Insurance Department or other legal authority has ordered the Subscribing
Reinsurer to cease writing business; or
	 
	 	6.	 	The Subscribing Reinsurer has become insolvent or has been placed into
liquidation, receivership, supervision, administration, winding-up or under a scheme of
arrangement, or similar proceedings (whether voluntary or involuntary) or proceedings
have been instituted against the Subscribing Reinsurer for the appointment of a
receiver, liquidator, rehabilitator, supervisor, administrator, conservator or trustee
in bankruptcy, or other agent known by whatever name, to take possession of its assets
or control of its operations; or
	 
	 	7.	 	The Subscribing Reinsurer has reinsured its entire liability under this Contract
with an unaffiliated entity or entities without the Company’s prior written consent; or
	 
	 	8.	 	The Subscribing Reinsurer has ceased assuming new or renewal property or casualty
treaty reinsurance business.

	C.	 	Upon termination or expiration of this Contract, the Reinsurer shall have no liability for
losses arising out of loss occurrences commencing at or after the effective time and date of
termination or expiration, unless the Company elects to have reinsurance hereunder on business in
force at the effective time and date of termination or expiration remain in full force and effect
until expiration, cancellation or next premium anniversary of such business, whichever first
occurs.
	 
	D.	 	Notwithstanding the provisions of paragraph C above, if the Company is prohibited or precluded
by the appropriate regulatory authorities, or by law (in those states where applicable and
enforced), from arranging mid-term cancellation or non-renewal of any policies subject to this
Contract beyond their natural expiry, the Reinsurer agrees to
extend coverage under this Contract until such policies may be terminated or non-renewed by the
Company.
	 
	E.	 	“Term of this Contract” as used herein shall mean the period from 12:01 a.m., Eastern Standard
Time, July 1, 2009, until 12:01 a.m., Eastern Standard Time, July 1, 2010.
However, if this Contract is terminated, “term of this Contract” as used herein shall mean the
period from 12:01 a.m., Eastern Standard Time, July 1, 2009, to the effective time and

Page 2

 

	 	 	date of termination. In the event this Contract is terminated or expires on a “runoff” basis,
the period from the effective time and date of termination or expiration through the end of
the runoff period shall be separate from the term of this Contract and shall be referred to as
the “runoff period.”

Article III — Territory (BRMA 51A)

The territorial limits of this Contract shall be identical with those of the Company’s policies.

Article IV — Exclusions

	A.	 	This Contract does not apply to and specifically excludes the following:

	 	1.	 	Assumed reinsurance. However, this exclusion shall not apply to:

	 	a.	 	100% of business ceded by fronting insurance companies;
	 
	 	b.	 	Intercompany reinsurance; or
	 
	 	c.	 	Agency reinsurance where the policies involved are to be reunderwritten in accordance
with the underwriting standards of the Company and reissued as Company policies at the
next anniversary or expiration date.

	 	2.	 	All liability of the Company arising by contract, operation of law, or otherwise
from its participation or membership, whether voluntary or involuntary, in any
insolvency fund. “Insolvency fund” includes any guaranty fund, insolvency fund, plan,
pool, association, fund or other arrangement, however denominated, established or
governed, which provides for any assessment of or payment or assumption by the Company
of part or all of any claim, debt, charge, fee or other obligation of an insurer or its
successors or assigns which has been declared by any competent authority to be
insolvent, or which is otherwise deemed unable to meet any claim, debt, charge, fee or
other obligation in whole or in part.
	 
	 	3.	 	Liability as a member, subscriber or reinsurer of any Pool, Syndicate or
Association; but this exclusion shall not apply to Assigned Risk Plans or similar plans.
	 
	 	4.	 	Loss or damage which is occasioned by war, invasion, hostilities, acts of foreign
enemies, civil war, rebellion, insurrection, military or usurped power, or
martial law or confiscation by order of any government or public authority. Nevertheless,
this exclusion shall not apply to loss or damage occasioned by riots, strikes, civil
commotion, vandalism, malicious damage, and acts of terrorism.
	 
	 	5.	 	All loss or liability of the Company excluded by the “Nuclear Risk Exclusion”
attached to and forming part of this Contract.
	 
	 	6.	 	Manufacturing, packaging, handling, shipping or storage of explosives, substances
intended for use as an explosive, ammunitions, fuses, arms, or fireworks; however,

Page 3

 

	 	 	 	this exclusion shall not apply to the incidental packaging, handling, or storage of same in
connection with the sale or transportation by owner operators of such substances.
	 
	 	7.	 	Loss arising from professional sports teams.
	 
	 	8.	 	Loss sustained by commercial airline personnel on board the aircraft and arising while the
aircraft is in flight. The following definitions shall apply to this exclusion:

	 	 	a.	 	“Commercial airline” shall mean an organization in the business of transporting passengers
and/or goods by aircraft;
	 
	 	 	b.	 	“Personnel” shall mean employees of the commercial airline acting within the scope of
their employment; and
	 
	 	 	c.	 	“In flight” shall mean from the time the door(s) close for departure to the time the
door(s) open for arrival.

	 	9.	 	Liability arising out of, or resulting as a consequence of, insureds principally involved
in the manufacture, distribution, installation, testing, remediation, removal, storage,
disposal, sale, use of or exposure to asbestos.
	 
	 	10.	 	Railroads, except scenic railways, and access lines and industrial aid owner operations
when written as an incidental part of an insured’s overall operations.
	 
	 	11.	 	Chemical or petrochemical manufacturing.
	 
	 	12.	 	Underground mining.
	 
	 	13.	 	Loss arising from the intentional wrecking or demolition of buildings or structures in excess
of three stories.
	 
	 	14.	 	Losses arising from the United States Longshore and Harbor Workers’ Compensation Act, Jones
Act, Federal Employers Liability Act, Maritime Employers Liability Act, and any other Federal act
if the payroll for such business is greater than 10.0% of the total payroll for the original
insured’s total operations including such business.
	 
	 	15.	 	Loss, damage, liability, cost or expense of whatsoever nature directly caused by,
contributed to by, resulting from or arising out of or in connection with any act of terrorism
and/or the threat thereof, involving the use of any biological, chemical or nuclear agent,
material, device or weapon.
	 
	 	16.	 	Professional Employment Organizations or Employee Leasing Organizations, including temporary
employment agencies. A “Professional Employment Organization” or an “Employee Leasing Organization”
is defined as an organization that performs various employee administration services on behalf of
an employer by contractually assuming substantial employer rights and responsibilities from the
employer including, at a minimum, the right to hire, assign and fire employees and the
responsibility to pay employee wages and employment taxes out of its own accounts.

Page 4

 

	B.	 	If the Company is bound, without the knowledge and contrary to the instructions of the Company’s
supervisory underwriting personnel, on any business falling within the scope of one or more of the
exclusions set forth in paragraph A, the exclusion shall be suspended with respect to such business
until 30 days after an underwriting supervisor of the Company acquires knowledge thereof.
Notwithstanding the foregoing, if the Company is prevented from canceling a policy within such
period by applicable statute or regulation, such policy shall be covered hereunder until the
earliest date on which the Company may cancel.
However, the provisions of this paragraph B shall not apply to exclusions 1, 2, 3, 4, 5 and 15
of paragraph A above.
	 
	C.	 	If the Company is required to accept an assigned risk which conflicts with one or more of the
exclusions set forth in paragraph A, reinsurance shall apply, but only for the difference between
the Company’s retention and the minimum limit required by the applicable state statute, and in no
event shall the Reinsurer’s liability exceed the limits set forth in the Retention and Limit
Article.

Article V — Special Acceptances

	A.	 	From time to time the Company may make a written request for a special acceptance of reinsurance
falling outside the scope of the provisions of this Contract. Within 15 business days of receipt of
such a request, each Subscribing Reinsurer shall accept such request, ask for additional
information, or reject the request. Any reinsurance that is specially accepted by the Reinsurer
shall be covered under this Contract and shall be subject to the terms hereof, except as such terms
shall be modified by the special acceptance. If a Subscribing Reinsurer fails to respond to a
special acceptance request within 15 business days, the Subscribing Reinsurer will be deemed to
have agreed to the special acceptance.
	 
	B.	 	If Subscribing Reinsurers with total percentage shares in the interests and liabilities of the
Reinsurer of 50.0% or greater agree to a special acceptance, such special
acceptance shall be binding on all Subscribing Reinsurers with respect to their respective shares.
If such percentage agreement is not achieved, such special acceptance shall be made to this
Contract only with respect to the interests and liabilities of each Subscribing Reinsurer that
agrees to the special acceptance.
	 
	C.	 	In the event a reinsurer becomes a party to this Contract subsequent to one or more special
acceptances hereunder, the new reinsurer shall automatically accept such special acceptance(s) as
being covered hereunder. Further, if one or more Subscribing Reinsurers under this Contract agreed
to special acceptance(s) under the contract being replaced by this Contract, such special
acceptance(s) shall be automatically covered hereunder with respect to the interests and
liabilities of such Subscribing Reinsurer(s).

Article VI — Retention and Limit

	A.	 	The Company shall retain and be liable for the first $1,000,000 of ultimate net loss (whether
involving any one or any combination of the classes of business reinsured hereunder, regardless of
the number of policies under which such loss is payable or the number of different interests
insured) arising out of each loss occurrence. The Reinsurer shall then be liable (subject to the
provisions of paragraph B below) for the amount by which such

Page 5

 

	 	 	ultimate net loss exceeds the Company’s retention, but the liability of the Reinsurer shall
not exceed the following:

	 	1.	 	$4,000,000 as respects any one loss occurrence;
	 
	 	2.	 	$4,000,000 as respects all losses arising out of acts of terrorism commencing
during the term of this Contract (including the runoff period, if any); or
	 
	 	3.	 	$20,000,000 as respects all loss occurrences commencing during the term of this
Contract (including the runoff period, if any).

	B.	 	Notwithstanding the provisions of paragraph A above, no claim shall be made under this Contract
unless and until subject excess losses arising out of loss occurrences commencing during the term
of this Contract exceed an annual aggregate retention of $1,000,000. The Company shall retain and
be liable for such annual aggregate retention in addition to its initial loss retention stipulated
in paragraph A above.
	 
	C.	 	“Subject excess losses” as used herein shall mean losses which would otherwise be recoverable
from the Reinsurer under the provisions of paragraph A above, were it not for the provisions of
paragraph B above.

Article VII — Definitions

	A.	 	“Ultimate net loss” as used herein is defined as the sum or sums (including loss in excess of
policy limits, extra contractual obligations and any loss adjustment expense, as hereinafter
defined) paid or payable by the Company in settlement of claims and in satisfaction of judgments
rendered on account of such claims, after deduction of all
salvage, all recoveries and all claims on inuring insurance or reinsurance, whether collectible or
not. Nothing herein shall be construed to mean that losses under this Contract are not recoverable
until the Company’s ultimate net loss has been ascertained.
	 
	B.	 	“Loss in excess of policy limits” and “extra contractual obligations” as used herein shall be
defined as follows:

	 	1.	 	“Loss in excess of policy limits” shall mean 90.0% of any amount paid or payable
by the Company in excess of its policy limits, but otherwise within the terms of its
policy, such loss in excess of the Company’s policy limits having been incurred because
of, but not limited to, failure by the Company to settle within the policy limits, or by
reason of the Company’s alleged or actual negligence, fraud or bad faith in rejecting an
offer of settlement or in the preparation of the defense or in the trial of an action
against its insured or reinsured or in the preparation or prosecution of an appeal
consequent upon such an action.
	 
	 	2.	 	“Extra contractual obligations” shall mean 90.0% of any punitive, exemplary,
compensatory or consequential damages paid or payable by the Company, not covered by any
other provision of this Contract and which arise from the handling of any claim on
business subject to this Contract, such liabilities arising because of, but not limited
to, failure by the Company to settle within the policy limits, or by reason of the
Company’s alleged or actual negligence, fraud or bad faith in rejecting an offer of

Page 6

 

	 	 	 	settlement or in the preparation of the defense or in the trial of an action against its
insured or reinsured or in the preparation or prosecution of an appeal consequent upon
such an action. An extra contractual obligation shall be deemed, in all circumstances, to
have occurred on the same date as the loss covered or alleged to be covered under the
policy.

	 	 	Notwithstanding anything stated herein, this Contract shall not apply to any loss in excess of
policy limits or any extra contractual obligation incurred by the Company as a result of any
fraudulent and/or criminal act by any officer or director of the Company acting individually
or collectively or in collusion with any individual or corporation or any other organization
or party involved in the presentation, defense or settlement of any claim covered hereunder.
	 
	C.	 	“Loss occurrence” as used herein is defined as each and every disaster, casualty, accident, or
loss or series of disasters, casualties, accidents or losses arising out of one event. The Company
shall be the sole judge of what constitutes “one event.” As respects a loss occurrence involving
occupational disease or other disease or cumulative trauma, the Company shall have the option of
electing which of the following provisions shall apply under such loss occurrence:

	 	1.	 	Per Event Coverage: As respects losses arising from occupational disease or other
disease, regardless of the specific kind or class, suffered by employees of one or more
employers, all such losses sustained by the Company from one
event not exceeding 72 hours in duration shall, together with losses not classified as
occupational disease or other disease, be deemed to be a single “loss occurrence.”
	 
	 	2.	 	Per Employee Coverage: As respects losses arising from occupational disease or
other disease or cumulative trauma suffered by a single employee, and not covered under
subparagraph (1) above, the subject loss shall also be limited to events not exceeding
72 hours in duration.

	D.	 	“Occupational disease,” “other disease” and “cumulative trauma” shall be defined by the
applicable state or Federal statutes, regulations or case law having jurisdiction over such losses.
	 
	E.	 	“Loss adjustment expense” as used herein shall mean costs and expenses incurred by the Company
in connection with the investigation, appraisal, adjustment, settlement, litigation, defense or
appeal of a specific claim or loss against a policy reinsured hereunder, including but not limited
to:

	 	1.	 	Court costs;
	 
	 	2.	 	Costs of supersedeas and appeal bonds;
	 
	 	3.	 	Monitoring counsel expenses;
	 
	 	4.	 	Legal expenses and costs incurred in connection with coverage questions and legal
actions connected thereto, including but not limited to declaratory judgment actions;
	 
	 	5.	 	Post-judgment interest;

Page 7

 

	 	6.	 	Pre-judgment interest, unless included as part of the award or judgment;
	 
	 	7.	 	Expenses and a pro rata share of salaries of Company field employees, calculated
in accordance with the time occupied in adjusting such loss, and expenses of other
Company employees who have been temporarily diverted from their normal and customary
duties and assigned to the field adjustment of losses covered by this Contract; and
	 
	 	8.	 	Subrogation, salvage and recovery expenses.

	 	 	Loss adjustment expense does not include salaries and expenses of the Company’s employees,
except as provided in (7) above, and office or other overhead expenses.
	 
	F.	 	“Act of terrorism” as used herein shall mean either:

	 	1.	 	Any act of any person or persons either acting on behalf of or in connection with
any organization or group with activities directed towards overthrowing, intimidating,
coercing or influencing any government de jure or de facto or its
populace or its economic, political or social systems, by force, violence, weapons of
mass destruction, the destruction, disruption or subversion of communication and
information system infrastructures and/or its content thereof, or sabotage, and/or threat
therefrom; or
	 
	 	2.	 	An act of terrorism that is certified by the Secretary of Treasury, in
concurrence with the Secretary of State and the Attorney General of the United States.

	 	 	Notwithstanding the above, in the event of a loss occurrence which arises out of an act of
workplace violence and is not consistent with the provisions of subparagraph 1 or 2 of this
paragraph F, such loss shall be covered hereunder, subject to the provisions of the Retention
and Limit Article and all other provisions of this Contract and shall not be considered an act
of terrorism. Further, any loss occurrence which is not or cannot be determined, classified or
certified in accordance with the provisions of subparagraph 1 or 2 of this paragraph F, shall
be covered hereunder and not considered an act of terrorism.
	 
	G.	 	“Runoff Subscribing Reinsurer” as used herein shall mean a Subscribing Reinsurer that
experiences one or more of the following circumstances:

	 	1.	 	A State Insurance Department or other legal authority has ordered the Subscribing
Reinsurer to cease writing business; or
	 
	 	2.	 	The Subscribing Reinsurer has become insolvent or has been placed into
liquidation, receivership, supervision, administration, winding-up or under a scheme of
arrangement, or similar proceedings (whether voluntary or involuntary) or proceedings
have been instituted against the Subscribing Reinsurer for the appointment of a
receiver, liquidator, rehabilitator, supervisor, administrator, conservator or trustee
in bankruptcy, or other agent known by whatever name, to take possession of its assets
or control of its operations; or
	 
	 	3.	 	The Subscribing Reinsurer has reinsured its entire liability under this Contract
with an unaffiliated entity or entities without the Company’s prior written consent; or

Page 8

 

	 	4.	 	The Subscribing Reinsurer has ceased assuming new or renewal property or casualty
treaty reinsurance business; or
	 
	 	5.	 	The Subscribing Reinsurer has hired an unaffiliated runoff claims manager that is
compensated on a contingent basis or is otherwise provided with financial incentives
based on the quantum of claims paid.

Article VIII — Other Reinsurance

The Company shall be permitted to carry other reinsurance, recoveries under which shall inure
solely to the benefit of the Company and be entirely disregarded in applying all of the provisions
of this Contract.

Article IX — Terrorism

	A.	 	Any loss reimbursement the Company receives from the United States Government under the
Terrorism Risk Insurance Act of 2002, as amended by the Terrorism Risk Insurance Extension Act of
2005 and any subsequent amendments or extensions thereof (together “TRIA”) as a result of loss
occurrences commencing during the term of this Contract and the runoff period, if any, shall inure
to the benefit of this Contract in the proportion that the Company’s ultimate net loss under the
terms of this Contract for insured losses (as defined in TRIA) in that loss occurrence bears to the
Company’s total insured losses in that loss occurrence.
	 
	B.	 	If a loss reimbursement received by the Company under TRIA is based on the Company’s insured
losses (as defined in TRIA) in more than one loss occurrence and the United States Government does
not designate the amount allocable to each loss occurrence, the reimbursement shall be prorated in
the proportion that the Company’s insured losses in each loss occurrence bear to the Company’s
total insured losses arising out of all loss occurrences to which the recovery applies.

Article X — Claims

	A.	 	Whenever a claim is reserved by the Company for an amount greater than 50.0% of its retention
hereunder and/or whenever a claim appears likely to result in a claim under this Contract, the
Company shall notify the Reinsurer. Further, the Company shall notify the Reinsurer whenever a
claim involves a fatality, amputation, spinal cord damage, brain damage, blindness, extensive burns
or multiple fractures, regardless of liability, if the policy limits or statutory benefits
applicable to the claim are greater than the Company’s retention hereunder. The Reinsurer shall
have the right to participate, at its own expense, in the defense of any claim or suit or
proceeding involving this reinsurance.
	 
	B.	 	All claim settlements made by the Company, provided such settlements are within the terms of
this Contract, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for
which it is liable upon receipt of reasonable evidence of the amount paid (or scheduled to be paid)
by the Company.

Page 9

 

Article XI — Annuities at Company’s Option

	A.	 	Whenever the Company is required, or elects, to purchase an annuity or to negotiate a structured
settlement, either in satisfaction of a judgment or in an out-of-court settlement or otherwise, the
cost of the annuity or the structured settlement, as the case may be, shall be deemed part of the
Company’s ultimate net loss.
	 
	B.	 	The terms “annuity” or “structured settlement” shall be understood to mean any insurance policy,
lump sum payment, agreement or device of whatever nature resulting in the payment of a lump sum by
the Company in settlement of any or all future liabilities which may attach to it as a result of a
loss occurrence.
	 
	C.	 	In the event the Company purchases an annuity which inures in whole or in part to the benefit of
the Reinsurer, it is understood that the liability of the Reinsurer is not released thereby. In the
event the Company is required to provide benefits not provided by the annuity for whatever reason,
the Reinsurer shall pay its share of any loss.

Article XII — Commutation

	A.	 	This Article will only take effect should the parties hereto mutually agree to commute one or
any number of the Workers’ Compensation losses under this Contract. There will be no obligation on
the part of either party to so commute.
	 
	B.	 	Should the Company become liable for any loss hereunder, and be required to make periodic
payments to or otherwise set up on its books reserves for such loss, at any time after seven years
following the effective time and date of this Contract and upon mutual agreement of the Company and
the Reinsurer, said loss (including loss adjustment expense) may be commuted. If the value of said
loss, including amounts falling to the share of the Reinsurer, cannot be agreed upon by the parties
to this Contract, said value may be determined by employing one of the following:

	 	1.	 	A present value calculation based on the following criteria:

	 	a.	 	In respect of all unindexed benefits, the present value calculation shall be
determined based upon an annual discount equal to the five-year U.S. Treasury note rate
at the time of commutation;
	 
	 	b.	 	In respect of all future medical costs, the present value calculation shall be based
upon the Company’s evaluation of long term medical care and rehabilitation requirements,
using an annual discount equal to the five-year U.S. Treasury note rate at the time of
commutation, and an annual escalation equal to the Medical Care Consumer Price Index
(CPI-MC) at the time of commutation;
	 
	 	c.	 	Where applicable, impaired life expectancy, survivors’ life expectancy, as well as
remarriage probability shall be reflected in the calculation by employing tables
required by statute.

Page 10

 

	 	2.	 	The Company may determine the present value by purchasing (or obtaining a
quotation for) an annuity from any A.M. Best’s Class VIII IIA+II rated or better annuity
writer, with an AAA rating by Standard & Poor’s.

	C.	 	The Reinsurer’s proportion of the amount determined will be considered its total liability for
such loss and the lump sum payment thereof shall constitute a complete release of the Reinsurer by
the Company and of the Company by the Reinsurer from liability hereunder for the commuted losses.
	 
	D.	 	This Article shall survive the termination or expiration of this Contract.

Article XIII — Special Commutation

	A.	 	In the event a Subscribing Reinsurer is a Runoff Subscribing Reinsurer or meets one or more of
the conditions set forth under paragraph B of the Commencement and Termination Article, the Company
may require commutation of that portion of any excess loss hereunder represented by any outstanding
claim or claims, including any related loss adjustment expense. “Outstanding claim or claims” shall
be defined as known or unknown claims, including any billed yet unpaid claims.
	 
	B.	 	If the Company elects to require commutation as provided in paragraph A above, the Company shall
submit a Statement of Valuation of the outstanding claim or claims as of the last day of the month
immediately preceding the month in which the Company elects to require commutation, as determined
by the Company. Such Statement of Valuation shall include the elements considered reasonable to
establish the excess loss and shall set forth or attach the information relied upon by the Company
and the methodology employed to calculate the excess loss. The Subscribing Reinsurer shall then pay
the amount requested within 30 calendar days of receipt of such Statement of Valuation, unless the
Subscribing Reinsurer needs additional information from the Company to assess the Company’s
Statement of Valuation or contests such amount.
	 
	C.	 	If the Subscribing Reinsurer needs additional information from the Company to assess the
Company’s Statement of Valuation or contests the amount requested, the Subscribing Reinsurer shall
so notify the Company within 15 calendar days of receipt of the Company’s Statement of Valuation.
The Company shall supply any reasonably requested information to the Subscribing Reinsurer within
15 calendar days of receipt of the notification. Within 30 calendar days of the date of the
notification or of the receipt of the information, whichever is later, the Subscribing Reinsurer
shall provide the Company with its Statement of Valuation of the outstanding claim or claims as of
the last day of the month immediately preceding the month in which the Company elects to require
commutation, as determined by the Subscribing Reinsurer. Such Statement of Valuation shall include
the elements considered reasonable to establish the excess loss and shall set forth or attach the
information relied upon by the Subscribing Reinsurer and the methodology employed to calculate the
excess loss.
	 
	D.	 	In the event the Subscribing Reinsurer’s Statement of Valuation of the outstanding claim or
claims is viewed as unacceptable to the Company, the Company may either abandon the commutation
effort, or may seek to settle any difference by using an independent actuary agreed to by the
parties.

Page 11

 

	E.	 	If the parties cannot agree on an acceptable independent actuary within 15 calendar days of the
date of the Subscribing Reinsurer’s Statement of Valuation, then each party shall appoint an
actuary as party arbitrators for the limited and sole purpose of selecting an independent actuary.
If the actuaries cannot agree on an acceptable independent actuary within 20 calendar days of the
date of the Subscribing Reinsurer’s Statement of Valuation, the Company shall supply the
Subscribing Reinsurer with a list of at least three proposed independent actuaries, and the
Subscribing Reinsurer shall select the independent actuary from that list. If the Subscribing
Reinsurer fails to select an independent actuary from the list, the Company shall choose the
independent actuary from the list.
	 
	F.	 	Upon selection of the independent actuary, both parties shall present their respective written
submissions to the independent actuary. The independent actuary may, at his or her discretion,
request additional information. The independent actuary shall issue his or her decision within 45
calendar days after the written submissions have been filed and any additional information has been
provided. Any amount due the Company shall be paid by the Subscribing Reinsurer within 30 calendar
days after such decision has been issued.
	 
	G.	 	The decision of the independent actuary shall be final and binding. The expense of the
independent actuary shall be equally divided between the two parties. For the purposes of this
Article, unless mutually agreed otherwise, an “independent actuary” shall be an actuary who
satisfies each of the following criteria:

	 	1.	 	Is regularly engaged in the valuation of claims resulting from lines of business
subject to this Contract; and
	 
	 	2.	 	Is either a Fellow of the Casualty Actuarial Society or Member of the American
Academy of Actuaries; and
	 
	 	3.	 	Is disinterested and impartial regarding this commutation.

	H.	 	Notwithstanding paragraphs A, B and C above, in the event that the Subscribing Reinsurer no
longer meets the specifications set forth in paragraph A above, this commutation may continue on a
mutually agreed basis.
	 
	I.	 	Payment by the Subscribing Reinsurer of the amount requested in accordance with paragraph B, C
or F above, shall release the Subscribing Reinsurer from all further liability for outstanding
claim or claims, known or unknown, under this Contract and shall release the Company from all
further liability for payments of salvage or subrogation amounts, known or unknown, to the
Subscribing Reinsurer under this Contract.
	 
	J.	 	In the event of any conflict between this Article and any other article of this Contract, the
terms of this Article shall control.
	 
	K.	 	This Article shall survive the termination or expiration of this Contract.

Page 12

 

Article XIV — Salvage and Subrogation

The Reinsurer shall be credited with salvage (i.e., reimbursement obtained or recovery made by the
Company, less the actual cost, excluding salaries of officials and employees of the Company and
sums paid to attorneys as retainer, of obtaining such reimbursement or making such recovery) on
account of claims and settlements involving reinsurance hereunder. Salvage thereon shall always be
used to reimburse the excess carriers in the reverse order of their priority according to their
participation before being used in any way to reimburse the Company for its primary loss. The
Company hereby agrees to enforce its rights to salvage or subrogation relating to any loss, a part
of which
loss was sustained by the Reinsurer, and to prosecute all claims arising out of such rights, if, in
the Company’s opinion, it is economically reasonable to do so.

Article XV — Reinsurance Premium

	A.	 	As premium for the reinsurance provided hereunder during the term of this Contract, the Company
shall pay the Reinsurer 6.1% of its net earned premium for the term of this Contract, subject to a
minimum premium of $3,998,184 (or a pro rata portion thereof if this Contract is terminated).
Notwithstanding the foregoing, if this Contract is terminated on a “cutoff” basis, the minimum
premium shall be waived.
	 
	B.	 	The Company shall pay the Reinsurer a deposit premium of $4,997,730 in four equal installments
of $1,249,432.50 on September 30 and December 31 of 2009, and on March 31 and June 30 of 2010.
However, if this Contract is terminated, no deposit premium installments shall be due after the
effective date of termination.
	 
	C.	 	Within 90 days after the termination or expiration of this Contract, and within 90 days after 12
months following the termination or expiration of this Contract, the Company shall provide a report
to the Reinsurer setting forth the premium due hereunder, computed in accordance with paragraph A,
and any additional premium due the Reinsurer or return premium due the Company shall be remitted
promptly.
	 
	D.	 	As premium for the reinsurance provided hereunder during the runoff period, if any, the Company
shall pay the Reinsurer the percentage set forth in paragraph A above of its net earned premium
during the runoff period. Within 30 days following the end of each three-month period during the
runoff period, the Company shall provide a report to the Reinsurer setting forth the premium due
hereunder for the applicable three-month period, computed in accordance with this paragraph, and
such premium shall be remitted by the Company with its report.
	 
	E.	 	“Net earned premium” as used herein is defined as gross earned premium of the Company for the
classes of business reinsured hereunder, less the earned portion of premiums ceded by the Company
for reinsurance which inures to the benefit of this Contract.

Article XVI — Late Payments

	A.	 	The provisions of this Article shall not be implemented unless specifically invoked, in
writing, by one of the parties to this Contract.

Page 13

 

	B.	 	In the event any premium, loss or other payment due either party is not received by the
intermediary named in the Intermediary Article (hereinafter referred to as the “Intermediary”) by
the payment due date, the party to whom payment is due may, by notifying the Intermediary in
writing, require the debtor party to pay, and the debtor party agrees to pay, an interest penalty
on the amount past due calculated for each such payment on the last business day of each month as
follows:

	 	1.	 	The number of full days which have expired since the due date or the last monthly
calculation, whichever the lesser; times
	 
	 	2.	 	1/365ths of the sum of 1.0% and the U.S. prime rate as quoted in The Wall Street
Journal on the first day of the month for which the calculation is made; times
	 
	 	3.	 	The amount past due, including accrued interest.

	 	 	It is agreed that interest shall accumulate until payment of the original amount due plus
interest penalties have been received by the Intermediary.
	 
	 	 	Notwithstanding the provisions of subparagraph 2 above and the immediately preceding sentence,
the interest rate for a Runoff Subscribing Reinsurer will increase by 1.0% for every month
that payment of the claim is past due, subject to a maximum annual interest rate of 12.0%.
	 
	C.	 	If the interest rate provided under this Article exceeds the maximum interest rate allowed by
any applicable law or is held unenforceable by an arbitrator or a court of competent jurisdiction,
such interest rate shall be modified to the highest rate permitted by the applicable law, and all
remaining provisions of this Article and Contract shall remain in full force and effect without
being impaired or invalidated in any way.
	 
	D.	 	The establishment of the due date shall, for purposes of this Article, be determined as follows:

	 	1.	 	As respects the payment of routine deposits and premiums due the Reinsurer, the
due date shall be as provided for in the applicable section of this Contract. In the
event a due date is not specifically stated for a given payment, it shall be deemed due
30 days after the date of transmittal by the Intermediary of the initial billing for
each such payment.
	 
	 	2.	 	Any claim or loss payment due the Company hereunder shall be deemed due 30 days
after the proof of loss and demand for payment is transmitted to the Reinsurer. If such
loss or claim payment is not received within the 30 days, interest will accrue on the
payment or amount overdue in accordance with paragraph B above, from the date the proof
of loss and demand for payment was transmitted to the Reinsurer.
	 
	 	3.	 	As respects any payment, adjustment or return due either party not otherwise
provided for in subparagraphs 1 and 2 of this paragraph, the due date shall be as
provided for in the applicable section of this Contract. In the event a due date is not
specifically stated for a given payment, it shall be deemed due 30 days following
transmittal of written notification that the provisions of this Article have been
invoked.

Page 14

 

	 	 	For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon
receipt by the Intermediary.
	 
	E.	 	Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from
contesting the validity of any claim, or from participating in the defense of any claim or suit, or
prohibiting either party from contesting the validity of any payment or from initiating any
arbitration or other proceeding in accordance with the provisions of this Contract. If the debtor
party prevails in an arbitration or other proceeding, then any interest penalties due hereunder on
the amount in dispute shall be null and void. If the debtor party loses in such proceeding, then
the interest penalty on the amount determined to be due hereunder shall be calculated in accordance
with the provisions set forth above unless otherwise determined by such proceedings. If a debtor
party advances payment of any amount it is contesting, and proves to be correct in its
contestation, either in whole or in part, the other party shall reimburse the debtor party for any
such excess payment made plus interest on the excess amount calculated in accordance with this
Article.
	 
	F.	 	Interest penalties arising out of the application of this Article that are $50,000 or less from
any party shall be waived unless there is a pattern of late payments consisting of three or more
items over the course of any 12-month period.

Article XVII — Offset (BRMA 36B)

The Company and the Reinsurer may offset any balance or amount due from one party to the other
under this Contract or any other contract heretofore or hereafter entered into between the Company
and the Reinsurer, whether acting as assuming reinsurer or ceding company.
However, in the event of the insolvency of any party hereto, offset shall only be allowed in
accordance with applicable law.

Article XVIII — Access to Records

The Reinsurer or its designated representatives shall have access at any reasonable time to all
records of the Company which pertain in any way to this reinsurance. However, a Runoff Subscribing
Reinsurer or its designated representatives shall not have any right of access to the records of
the Company if it is not current in all undisputed payments due the Company.
“Undisputed” as used herein shall mean any amount that the Runoff Subscribing Reinsurer has not
contested in writing to the Company that specifies the reason(s) why the payments are disputed.

Article XIX — Liability of the Reinsurer

	A.	 	The liability of the Reinsurer shall follow that of the Company in every case and be subject in
all respects to all the general and specific stipulations, clauses, waivers and modifications of
the Company’s policies and any endorsements thereon. However, in no event shall this be construed
in any way to provide coverage outside the terms and conditions set forth in this Contract.

Page 15

 

	B.	 	Nothing herein shall in any manner create any obligations or establish any rights against the
Reinsurer in favor of any third party or any persons not parties to this Contract.

Article XX — Net Retained Lines (BRMA 32E)

	A.	 	This Contract applies only to that portion of any policy which the Company retains net for its
own account (prior to deduction of any underlying reinsurance specifically permitted in this
Contract), and in calculating the amount of any loss hereunder and also in computing the amount or
amounts in excess of which this Contract attaches, only loss or losses in respect of that portion
of any policy which the Company retains net for its own account shall be included.
	 
	B.	 	The amount of the Reinsurer’s liability hereunder in respect of any loss or losses shall not be
increased by reason of the inability of the Company to collect from any other reinsurer(s), whether
specific or general, any amounts which may have become due from such reinsurer(s), whether such
inability arises from the insolvency of such other reinsurer(s) or otherwise.

Article XXI — Errors and Omissions (BRMA 14F)

Inadvertent delays, errors or omissions made in connection with this Contract or any transaction
hereunder shall not relieve either party from any liability which would have attached had such
delay, error or omission not occurred, provided always that such error or omission is rectified as
soon as possible after discovery.

Article XXII — Currency (BRMA 12A)

	A.	 	Whenever the word “Dollars” or the “$” sign appears in this Contract, they shall be construed to
mean United States Dollars and all transactions under this Contract shall be in United States
Dollars.
	 
	B.	 	Amounts paid or received by the Company in any other currency shall be converted to United
States Dollars at the rate of exchange at the date such transaction is entered on the books of the
Company.

Article XXIII — Taxes (BRMA 50B)

In consideration of the terms under which this Contract is issued, the Company will not claim a
deduction in respect of the premium hereon when making tax returns, other than income or profits
tax returns, to any state or territory of the United States of America or the District of Columbia.

Page 16

 

Article XXIV — Federal Excise Tax (BRMA 17D)

	A.	 	The Reinsurer has agreed to allow for the purpose of paying the Federal Excise Tax the
applicable percentage of the premium payable hereon (as imposed under Section
4371 of the Internal Revenue Code) to the extent such premium is subject to the Federal Excise Tax.
	 
	B.	 	In the event of any return of premium becoming due hereunder the Reinsurer will deduct the
applicable percentage from the return premium payable hereon and the Company or its agent should
take steps to recover the tax from the United States Government.

Article XXV — Reserves

	A.	 	The Reinsurer agrees to fund its share of the Company’s ceded outstanding loss and loss
adjustment expense reserves (including incurred but not reported loss reserves) by:

	 	1.	 	Clean, irrevocable and unconditional letters of credit issued or confirmed, if
confirmation is required by the regulatory authorities involved, by a bank or banks
meeting the NAIC Securities Valuation Office credit standards for issuers of letters of
credit and acceptable to the Company; and/or
	 
	 	2.	 	Escrow accounts for the benefit of the Company; and/or
	 
	 	3.	 	Cash advances;

	 	 	if the Reinsurer:

	 	1.	 	Is unauthorized in any state of the United States of America or the District of
Columbia having jurisdiction over the Company and if, without such funding, a penalty
would accrue to the Company on any financial statement it is required to file with the
insurance regulatory authorities involved;
	 
	 	2.	 	Is a Runoff Subscribing Reinsurer; or
	 
	 	3.	 	Has its A.M. Best’s rating assigned or downgraded below A- and/or Standard &
Poor’s rating assigned or downgraded below A-.

	 	 	The Reinsurer, at its sole option, may fund in other than cash if its method and form of
funding are acceptable to the insurance regulatory authorities involved.
	 
	 	 	Notwithstanding the provisions of the Arbitration Article, if a Runoff Subscribing Reinsurer
fails to fund its share of the Company’s ceded outstanding loss and loss adjustment expense
reserves (including incurred but not reported loss reserves) under this Contract (the “funding
obligation”) as set forth above, the Company retains its right to apply to a court of
competent jurisdiction for equitable or interim relief.
	 
	B.	 	With regard to funding in whole or in part by letters of credit, it is agreed that each letter
of credit will be in a form acceptable to insurance regulatory authorities involved, will be issued
for a term of at least one year and will include an “evergreen clause,” which automatically

Page 17

 

	 	 	extends the term for at least one additional year at each expiration date unless written
notice of non-renewal is given to the Company not less than 30 days prior to said expiration
date. The Company and the Reinsurer further agree, notwithstanding anything to the contrary in
this Contract, that said letters of credit may be drawn upon by the Company or its successors
in interest at any time, without diminution because of the insolvency of the Company or the
Reinsurer, but only for one or more of the following purposes:

	 	1.	 	To reimburse itself for the Reinsurer’s share of losses and/or loss adjustment
expense paid under the terms of policies reinsured hereunder, unless paid in cash by the
Reinsurer;
	 
	 	2.	 	To reimburse itself for the Reinsurer’s share of any other amounts claimed to be
due hereunder, unless paid in cash by the Reinsurer;
	 
	 	3.	 	To fund a cash account in an amount equal to the Reinsurer’s share of any ceded
outstanding loss and loss adjustment expense reserves (including incurred but not
reported loss reserves) funded by means of a letter of credit which is under non-renewal
notice, if said letter of credit has not been renewed or replaced by the Reinsurer 10
days prior to its expiration date;
	 
	 	4.	 	To refund to the Reinsurer any sum in excess of the actual amount required to
fund the Reinsurer’s share of the Company’s ceded outstanding loss and loss adjustment
expense reserves (including incurred but not reported loss reserves), if so requested by
the Reinsurer.

	 	 	In the event the amount drawn by the Company on any letter of credit is in excess of the
actual amount required for B(1) or 

B(3), or in the case of B(2), the actual amount determined
to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn.
	 
	C.	 	If, during the term of a letter of credit, the issuing bank no longer meets the credit standards
set forth in paragraph A above, the Reinsurer agrees to replace such letter of credit within 15
days with a form of funding that meets the requirements set forth in paragraph A above.
	 
	D.	 	If a Subscribing Reinsurer fails to fulfill its funding obligation (if any) under this Article,
the Company may, at its option, require the Subscribing Reinsurer to pay, and the Subscribing
Reinsurer agrees to pay, an interest charge on the funding obligation calculated on the last
business day of each month as follows:

	 	1.	 	The number of full days that have expired since the earliest of the applicable
following dates:

	 	a.	 	As respects a Subscribing Reinsurer that is unauthorized in any state of the United
States of America or District of Columbia having jurisdiction over the Company, December
31 of the calendar year in which the funding was required;
	 
	 	b.	 	As respects a Runoff Subscribing Reinsurer, the first date such reinsurer becomes a
Runoff Subscribing Reinsurer; or

Page 18

 

	 	c.	 	As respects a Subscribing Reinsurer that has its A.M. Best’s rating assigned or
downgraded below A- and/or Standard & Poor’s rating assigned or downgraded below A-, the
first date such circumstance occurs;

times:

	 	2.	 	1/365ths of the sum of 3.0% and the U.S. prime rate as quoted in The Wall Street
Journal on the first day of the month for which the calculation is made; times
	 
	 	3.	 	The greater of (a) the funding obligation, less the amount, if any, funded by the
Subscribing Reinsurer prior to the applicable date determined in subparagraph 1 above or
(b) $5,000.

It is agreed that interest shall accumulate until the full interest charge amount as provided
for in this paragraph and the funding obligation are paid.

If the interest rate provided under this Article exceeds the maximum interest rate allowed by
any applicable law or is held unenforceable by an arbitrator or a court of competent
jurisdiction, such interest rate shall be modified to the highest rate permitted by the
applicable law, and all remaining provisions of this Article and Contract shall remain in full
force and effect without being impaired or invalidated in any way.

	E.	 	At annual intervals, or more frequently as agreed, but never more frequently than quarterly, the
Company shall prepare a specific statement of the Reinsurer’s share of the Company’s ceded
outstanding loss and loss adjustment expense reserves (including incurred but not reported loss
reserves) for the sole purpose of amending the letter of credit, in the following manner:

	 	1.	 	If the statement shows that the Reinsurer’s share of the Company’s ceded
outstanding loss and loss adjustment expense reserves (including incurred but not
reported loss reserves) exceeds the balance of credit as of the statement date, the
Reinsurer shall, within 30 days after receipt of notice of such excess, secure delivery
to the Company of an amendment to the letter of credit increasing the amount of credit
by the amount of such difference.
	 
	 	2.	 	If, however, the statement shows that the Reinsurer’s share of the Company’s
ceded outstanding loss and loss adjustment expense reserves (including incurred but not
reported loss reserves) is less than the balance of credit as of the statement date, the
Company shall, within 30 days after receipt of written request from the Reinsurer,
release such excess credit by agreeing to secure an amendment to the letter of credit
reducing the amount of credit available by the amount of such excess credit.

Article XXVI — Insolvency

	A.	 	In the event of the insolvency of one or more of the reinsured companies, this reinsurance shall
be payable directly to the company or to its liquidator, receiver, conservator or statutory
successor on the basis of the liability of the company without diminution because of the insolvency
of the company or because the liquidator, receiver,
conservator or statutory successor of the company has failed to pay all or a portion of any claim.
It is

Page 19

 

agreed, however, that the liquidator, receiver, conservator or statutory successor of the
company shall give written notice to the Reinsurer of the pendency of a claim against the
company indicating the policy or bond reinsured which claim would involve a possible liability
on the part of the Reinsurer within a reasonable time after such claim is filed in the
conservation or liquidation proceeding or in the receivership, and that during the pendency of
such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the
proceeding where such claim is to be adjudicated, any defense or defenses that it may deem
available to the company or its liquidator, receiver, conservator or statutory successor. The
expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the
Court, against the company as part of the expense of conservation or liquidation to the extent
of a pro rata share of the benefit which may accrue to the company solely as a result of the
defense undertaken by the Reinsurer.

	B.	 	Where two or more reinsurers are involved in the same claim and a majority in interest elect to
interpose defense to such claim, the expense shall be apportioned in accordance with the terms of
this Contract as though such expense had been incurred by the company.
	 
	C.	 	It is further understood and agreed that, in the event of the insolvency of one or more of the
reinsured companies, the reinsurance under this Contract shall be payable directly by the Reinsurer
to the company or to its liquidator, receiver or statutory successor, except as provided by Section
4118(a) of the New York Insurance Law or except (1) where this Contract specifically provides
another payee of such reinsurance in the event of the insolvency of the company or (2) where the
Reinsurer with the consent of the direct insured or insureds has assumed such policy obligations of
the company as direct obligations of the Reinsurer to the payees under such policies and in
substitution for the obligations of the company to such payees.

Article XXVII — Arbitration

	A.	 	As a condition precedent to any right of action hereunder, in the event of any dispute or
difference of opinion hereafter arising with respect to this Contract, it is hereby mutually agreed
that such dispute or difference of opinion shall be submitted to arbitration. One Arbiter shall be
chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two
Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested
executive officers of insurance or reinsurance companies or Lloyd’s London Underwriters. In the
event that either party should fail to choose an Arbiter within 30 days following a written request
by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose
an Umpire before entering upon arbitration. If the two Arbiters fail to agree upon the selection of
an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates
within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by
drawing lots.
Notwithstanding the above, in the event the dispute or difference of opinion involves a Runoff
Subscribing Reinsurer, the Company may, at its option, choose to forego arbitration and may
bring an action in any court of competent jurisdiction.
	 
	B.	 	Each party shall present its case to the Arbiters within 30 days following the date of
appointment of the Umpire. The Arbiters shall consider this Contract as an honorable
engagement rather than merely as a legal obligation and they are relieved of all judicial
formalities and may abstain from following the strict rules of law. The decision of the

Page 20

 

Arbiters shall be final and binding on both parties; but failing to agree, they shall call in
the Umpire and the decision of the majority shall be final and binding upon both parties.
Notwithstanding the foregoing, no exemplary or punitive damages may be awarded in any
arbitration proceedings hereunder. Judgment upon the final decision of the Arbiters may be
entered in any court of competent jurisdiction.

	C.	 	If more than one reinsurer is involved in the same dispute, all such reinsurers shall constitute
and act as one party for purposes of this Article and communications shall be made by the Company
to each of the reinsurers constituting one party, provided, however, that nothing herein shall
impair the rights of such reinsurers to assert several, rather than joint, defenses or claims, nor
be construed as changing the liability of the reinsurers participating under the terms of this
Contract from several to joint.
	 
	D.	 	Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with
the other the expense of the Umpire and of the arbitration. In the event that the two Arbiters are
chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration
shall be equally divided between the two parties.
	 
	E.	 	Any arbitration proceedings shall take place at a location mutually agreed upon by the parties
to this Contract, but notwithstanding the location of the arbitration, all proceedings pursuant
hereto shall be governed by the law of the State of Florida.

Article XXVIII — Agency Agreement (BRMA 73A)

If more than one reinsured company is named as a party to this Contract, the first named company
shall be deemed the agent of the other reinsured companies for purposes of sending or receiving
notices required by the terms and conditions of this Contract, and for purposes of remitting or
receiving any monies due any party.

Article XXIX — Severability (BRMA 72E)

If any provision of this Contract shall be rendered illegal or unenforceable by the laws,
regulations or public policy of any state, such provision shall be considered void in such state,
but this shall not affect the validity or enforceability of any other provision of this Contract or
the enforceability of such provision in any other jurisdiction.

Article XXX — Service of Suit (BRMA 49C)

(Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not
authorized in any State, Territory or District of the United States where authorization is required
by insurance regulatory authorities)

	A.	 	It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due
hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of a court
of competent jurisdiction within the United States. Nothing in this Article constitutes or should
be understood to constitute a waiver of the Reinsurer’s rights to commence an action in any court
of competent jurisdiction in the United States, to remove an action to a

Page 21

 

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.

	B.	 	Further, pursuant to any statute of any state, territory or district of the United States which
makes provision therefor, the Reinsurer hereby designates the party named in its Interests and
Liabilities Agreement, or if no party is named therein, the Superintendent, Commissioner or
Director of Insurance or other officer specified for that purpose in the statute, or his successor
or successors in office, as its true and lawful attorney upon whom may be served any lawful process
in any action, suit or proceeding instituted by or on behalf of the Company or any beneficiary
hereunder arising out of this Contract.

Article XXXI — Confidentiality (BRMA 69D)

The Reinsurer, except with the express prior written consent of the Company, shall not directly or
indirectly, communicate, disclose or divulge to any third party, any knowledge or information that
may be acquired either directly or indirectly as a result of the inspection of the Company’s books,
records and papers. The restrictions as outlined in this Article shall not apply to communication
or disclosures that the Reinsurer is required to make to its statutory auditors, retrocessionaires,
legal counsel, arbitrators involved in any arbitration procedures under this Contract or
disclosures required upon subpoena or other duly-issued order of a court or other governmental
agency or regulatory authority.

Article XXXII — Governing Law (BRMA 71B)

This Contract shall be governed by and construed in accordance with the laws of the State of
Florida.

Article XXXIII — Entire Agreement

This Contract sets forth all of the duties and obligations between the Company and the Reinsurer
and supersedes any and all prior or contemporaneous written agreements with respect to matters
referred to in this Contract. This Contract may not be modified or changed except by an amendment
to this Contract in writing signed by both parties.

Article XXXIV — Notices and Contract Execution

	A.	 	Whenever a notice, statement, report or any other written communication is required by this
Contract, unless otherwise specified, such notice, statement, report or other written communication
may be transmitted by certified or registered mail, nationally or internationally recognized
express delivery service, personal delivery, electronic mail, or facsimile. With the exception of
notices of termination, first class mail is also acceptable.
	 
	B.	 	The use of any of the following shall constitute a valid execution of this Contract or any
amendments thereto:

	 	1.	 	Paper documents with an original ink signature;

Page 22

 

	 	2.	 	Facsimile or electronic copies of paper documents showing an original ink
signature; and/or
	 
	 	3.	 	Electronic records with an electronic signature made via an electronic agent. For
the purposes of this Contract, the terms “electronic record,” “electronic signature” and
“electronic agent” shall have the meanings set forth in the Electronic Signatures in
Global and National Commerce Act of 2000 or any amendments thereto.

	C.	 	This Contract may be executed in one or more counterparts, each of which, when duly
executed, shall be deemed an original.

Article XXXV — Intermediary

Aon Benfield Inc., or one of its affiliated corporations duly licensed as a reinsurance
intermediary, is hereby recognized as the Intermediary negotiating this Contract for all business
hereunder. All communications (including but not limited to notices, statements, premiums, return
premiums, commissions, taxes, losses, loss adjustment expense, salvages and loss settlements)
relating to this Contract will be transmitted to the Company or the Reinsurer through the
Intermediary. Payments by the Company to the Intermediary will be deemed payment to the Reinsurer.
Payments by the Reinsurer to the Intermediary will be deemed payment to the Company only to the
extent that such payments are actually received by the Company.

In Witness Whereof, the Company by its duly authorized representative has executed this Contract as
of the date undermentioned at:

Fort
Lauderdale, Florida, this 1 day of October in the year 2009.

	 	 	 
	 

	 	/s/ Charles Schuver
	 

	 	 
	 

	 	Guarantee Insurance Company (for and on behalf of the “Company”)

Page 23

 

NUCLEAR RISK EXCLUSION

This Contract does not apply to loss arising from, whether directly or indirectly, whether
proximate or remote:

	 	a)	 	Any Nuclear Facility, Nuclear Hazard or Nuclear Reactor;
	 
	 	b)	 	Any Nuclear Material, Radioactive Material, Nuclear Reaction, Nuclear Radiation or
radioactive contamination, all whether controlled or uncontrolled; or
	 
	 	c)	 	Any Nuclear Material, Radioactive Material, Nuclear Reaction, Nuclear Radiation or
radioactive contamination, all whether controlled or uncontrolled, caused directly or
indirectly by, contributed to or aggravated by an Event;
	 
	 	d)	 	Any Spent Fuel or Waste;
	 
	 	e)	 	Any Fissionable Substance; or
	 
	 	f)	 	Any nuclear device or bomb.

As used in this exclusion:

“Fissionable Substance” means any prescribe substance that is, or from which can be obtained,
a substance capable of releasing atomic energy by nuclear fission.

“Nuclear Facility” means:

any Nuclear Reactor;

any apparatus designed or used to sustain nuclear fission in a self-supporting chain
reaction or to contain a critical mass of plutonium, thorium and uranium or any one or
more of them;

any equipment or device designed or used for (i) separating the isotopes of plutonium,
thorium and uranium or any one or more of them, (ii) processing or utilizing spent fuel,
or (iii) handling, processing or packaging Waste;

any equipment or device used for the processing, fabricating or alloying of Special
Nuclear Material if at any time the total amount of such material in the custody of the
insured at the premises where such equipment or device is located consists of or contains
more than 25 grams of plutonium or uranium 233 or any combination thereof, or more than
250 grams of uranium 235;

any equipment or device used for the processing, fabricating or alloying of plutonium,
thorium or uranium enriched in the isotope uranium 233 or in the isotope uranium 235, or
any one or more of them if at any time the total amount of such material in the custody
of the insured at the premises where such equipment or device is located consists of or
contains more than 25 grams of plutonium or uranium 233 or any combination thereof, or
more than 250 grams of uranium 235;

any structure, basin, excavation, premises or place prepared or used for the storage or
disposal of Waste or Radioactive Material, and includes the site on which any of the

Page 1 of 2

 

foregoing is located, all operations conducted on such site and all premises used for such
operations.

“Nuclear Hazard” means the radioactive, toxic, explosive or other hazardous properties of
Radioactive Material or Nuclear Material.

“Nuclear Material” means Source Material, Special Nuclear Material or Byproduct Material.

“Nuclear Reactor” means any apparatus designed or used to sustain nuclear fission in a
self-supporting chain reaction or to contain a critical mass of fissionable material.

“Radioactive Material” means uranium, thorium, plutonium, neptunium, their respective derivatives
and compounds, radioactive isotopes of other elements and any other substances that the Atomic
Energy Control Board may, by regulation, designate as being prescribed substances capable of
releasing atomic energy, or as being requisite for the production, use or application of atomic
energy.

“Source Material,” “Special Nuclear Material,” and “Byproduct Material” have the meanings given
them in the Atomic Energy Act of 1954 or in any law amendatory thereof.

“Spent Fuel” means any fuel element or fuel component, solid or liquid, which has been used or
exposed to radiation in the Nuclear Reactor.

“Waste” means any waste material (i) containing Byproduct Material and (ii) resulting from the
operation by any person or organization of any Nuclear Facility.

Page 2 of 2

 

Interests and Liabilities Agreement

of

Maiden Reinsurance Company

A Missouri Corporation

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Traditional Workers’ Compensation Excess of Loss

Reinsurance Contract

Effective: July 1, 2009

issued to and duly executed by

Guarantee Insurance Company

Fort Lauderdale, Florida

and

any other insurance companies and/or affiliates which are now or

hereafter come under the ownership, control or management of

Guarantee Insurance Company

The
Subscribing Reinsurer hereby accepts a 50.0% share in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2009, and shall
remain in force until 12:01 a.m., Eastern Standard Time, July 1, 2010, unless earlier terminated in
accordance with the provisions of the attached Contract.

The Subscribing Reinsurer’s share in the attached Contract shall be separate and apart from the
shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it
being understood that the Subscribing Reinsurer shall in no event participate in the interests and
liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has
executed this Agreement as of the date undermentioned at:

Mt.
Laurel, New Jersey, this 9th day of November in the year 2009.

	 	 	 
	 

	 	/s/ Philip Chu
	 

	 	 
	 

	 	PHILIP CHU 

ASST. VICE-PRESIDENT 

Maiden Re Insurance Services LLC
	 

	 	for and on behalf of Maiden Reinsurance Company

[A]

 

Interests and Liabilities Agreement

of

Max Bermuda Ltd.

Hamilton, Bermuda

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Traditional Workers’ Compensation Excess of Loss

Reinsurance Contract

Effective: July 1, 2009

issued to and duly executed by

Guarantee Insurance Company

Fort Lauderdale, Florida

and

any other insurance companies and/or affiliates which are now or

hereafter come under the ownership, control or management of

Guarantee Insurance Company

The Subscribing Reinsurer hereby accepts a 30.0% share in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2009, and shall
remain in force until 12:01 a.m., Eastern Standard Time, July 1, 2010, unless earlier terminated in
accordance with the provisions of the attached Contract.

The Subscribing Reinsurer’s share in the attached Contract shall be separate and apart from the
shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it
being understood that the Subscribing Reinsurer shall in no event participate in the interests and
liabilities of the other reinsurers.

In any action, suit or proceeding to enforce the Subscribing Reinsurer’s obligations under the
attached Contract, service of process may be made upon Mendes & Mount, 750 Seventh Avenue, New York,
New York 10019.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed
this Agreement as of the date undermentioned at:

Hamilton,
Bermuda, this
7th day of
December in the year 2009.

	 	 	 
	 
	 

	 	/s/
[Illegible]     /s/ [Illegible]
	 

	 	Max Bermuda Ltd.

 

 

Interests and Liabilities Agreement

entered into by and between

Guarantee Insurance Company

Fort Lauderdale, Florida

and

any other insurance companies and/or affiliates which are now or

hereafter come under the ownership, control or management of

Guarantee Insurance Company

(hereinafter referred to collectively as the “Company”)

and

ULLICO Casualty Company

A Delaware Corporation

(hereinafter referred to as the “Subscribing
Reinsurer”)

It Is Hereby Agreed that the Subscribing Reinsurer shall have a 10.0% share in the interests and
liabilities of the “Reinsurer” as set forth in the attached Contract entitled:

Traditional Workers’ Compensation Excess of Loss

Reinsurance Contract

Effective: July 1, 2009

It Is Further Agreed that this Agreement shall become effective at 12:01 a.m., Eastern
Standard Time, July 1, 2009, and shall remain in force until 12:01 a.m., Eastern Standard Time,
July 1, 2010, unless earlier terminated in accordance with the provisions of the attached Contract.

It Is Also Agreed that the Subscribing Reinsurer’s share in the attached Contract shall be separate
and apart from the shares of the other reinsurers, and shall not be joint with the shares of the
other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate
in the interests and liabilities of the other reinsurers.

It Is Also Agreed that as respects the Subscribing Reinsurer’s percentage share in the attached
Contract, the following shall apply:

	1.	 	Subparagraph 3 of paragraph B of Article II — Commencement and Termination — shall be deleted
from the Contract.

Page 1 of 3 [A]

 

	2.	 	In lieu of the provisions of paragraph A of Article XXV — Reserves — the following shall
apply:

	 	“A.	 	 The Reinsurer agrees to fund its share of the Company’s ceded outstanding loss and loss
adjustment expense reserves (including incurred but not reported loss reserves) by:

	 	1.	 	Clean, irrevocable and unconditional letters of credit issued or
confirmed, if confirmation is required by the regulatory authorities involved, by a
bank or banks meeting the NAIC Securities Valuation Office credit standards for
issuers of letters of credit and acceptable to the Company; and/or
	 
	 	2.	 	Escrow accounts for the benefit of the Company; and/or
	 
	 	3.	 	Cash advances;

if the Reinsurer:

	 	1.	 	Is unauthorized in any state of the United States of America or the
District of Columbia having jurisdiction over the Company and if, without such
funding, a penalty would accrue to the Company on any financial statement it is
required to file with the insurance regulatory authorities involved; or
	 
	 	2.	 	Is a Runoff Subscribing Reinsurer.

The Reinsurer, at its sole option, may fund in other than cash if its method and form of
funding are acceptable to the insurance regulatory authorities involved.

Notwithstanding the provisions of the Arbitration Article, if a Runoff Subscribing Reinsurer
fails to fund its share of the Company’s ceded outstanding loss and loss adjustment expense
reserves (including incurred but not reported loss reserves) under this Contract (the ‘funding
obligation’) as set forth above, the Company retains its right to apply to a court of competent
jurisdiction for equitable or interim relief.”

	3.	 	In lieu of the provisions of subparagraph 1 of paragraph D of Article XXV — Reserves — the
following shall apply:

	 	“1.	 	 The number of full days that have expired since the earliest of the applicable
following dates:

	 	a.	 	As respects a Subscribing Reinsurer that is unauthorized in any state of the
United States of America or District of Columbia having jurisdiction over the
Company, December 31 of the calendar year in which the funding was required; or

Page 2 of 3 [A]

 

	 	b.	 	As respects a Runoff Subscribing Reinsurer, the first date such reinsurer becomes a
Runoff Subscribing Reinsurer;

times:”

In Witness Whereof, the parties hereto by their respective duly authorized representatives have
executed this Agreement as of the dates undermentioned at:

Fort
Lauderdale, Florida, this
2nd day of December in the year 2009.

	 	 	 
	 
	 

	 	/s/
Charles Schuver
	 

	 	Guarantee Insurance Company (for and on behalf of the “Company”)

Washington
D.C., this 7th day of December in the year 2009.

	 	 	 
	 
	 

	 	/s/
[illegible]
	 

	 	ULLICO Casualty Company

Page 3 of 3 [A]

 

Interests and Liabilities Agreement

of

Certain Underwriting Members of Lloyd’s

shown in the Signing Page(s) attached hereto

(hereinafter referred to as the “Subscribing Reinsurer")

with respect to the

Traditional Workers’ Compensation Excess of Loss

Reinsurance Contract

Effective: July 1, 2009

issued to and duly executed by

Guarantee Insurance Company

Fort Lauderdale, Florida

and

any other insurance companies and/or affiliates which are now or

hereafter come under the ownership, control or management of

Guarantee Insurance Company

The Subscribing Reinsurer hereby accepts a 10.0% share in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2009, and shall
remain in force until 12:01 a.m., Eastern Standard Time, July 1, 2010, unless earlier terminated in
accordance with the provisions of the attached Contract.

In any action, suit or proceeding to enforce the Subscribing Reinsurer’s obligations under the
attached Contract, service of process may be made upon Mendes & Mount, 750 Seventh Avenue, New
York, New York 10019.

Signed for and on behalf of the Subscribing Reinsurer in the Signing Page(s) attached hereto.

 

 

Signing Page

attaching to and forming part of the

Interests and Liabilities Agreement

of

Certain Underwriting Members of Lloyd’s

with respect to the

Traditional Workers’ Compensation Excess of Loss

Reinsurance Contract

Effective: July 1, 2009

issued to and duly executed by

Guarantee Insurance Company, et al.,

as defined in the above captioned Contract

(Re)Insurer’s Liability Clause — LMA3333

(Re)insurer’s liability several not joint

The liability of a (re)insurer under this contract is several and not joint with other (re)insurers
party to this contract. A (re)insurer is liable only for the proportion of liability it has
underwritten. A (re)insurer is not jointly liable for the proportion of liability underwritten by
any other (re)insurer. Nor is a (re)insurer otherwise responsible for any liability of any other
(re)insurer that may underwrite this contract.

The proportion of liability under this contract underwritten by a (re)insurer (or, in the case of a
Lloyd’s syndicate, the total of the proportions underwritten by all the members of the syndicate
taken together) is shown next to its stamp. This is subject always to the provision concerning
“signing” below.

In the case of a Lloyd’s syndicate, each member of the syndicate (rather than the syndicate itself)
is a (re)insurer. Each member has underwritten a proportion of the total shown for the syndicate
(that total itself being the total of the proportions underwritten by all the members of the
syndicate taken together). The liability of each member of the syndicate is several and not joint
with other members. A member is liable only for that member’s proportion. A member is not jointly
liable for any other member’s proportion. Nor is any member otherwise responsible for any liability
of any other (re)insurer that may underwrite this contract. The business address of each member is
Lloyd’s, One Lime Street, London EC3M 7HA. The identity of each member of a Lloyd’s syndicate and
their respective proportion may be obtained by writing to Market Services, Lloyd’s, at the above
address.

Proportion of liability

Unless there is “signing” (see below), the proportion of liability under this contract underwritten
by each (re)insurer (or, in the case of a Lloyd’s syndicate, the total of the proportions
underwritten by all the members of the syndicate taken together) is shown next to its stamp and is
referred to as its “written line”.

Where this contract permits, written lines, or certain written lines, may be adjusted (“signed”).
In that case a schedule is to be appended to this contract to show the definitive proportion of
liability under this contract underwritten by each (re)insurer (or, in the case of a Lloyd’s
syndicate, the total of the proportions underwritten by all the members of the syndicate taken together). A definitive proportion (or, in
the case of a Lloyd’s syndicate, the total of the proportions underwritten by all the members of a
Lloyd’s syndicate taken together) is referred to as a “signed line”. The signed lines shown in the
schedule will prevail over the written lines unless a proven error in calculation has occurred.

Although reference is made at various points in this clause to “this contract” in the singular,
where the circumstances so require this should be read as a reference to contracts in the plural.

 

 

Now
Know Ye that we the Underwriters, Members of the Syndicates whose definitive numbers in the
after-mentioned List of Underwriting Members of Lloyd’s are set out in the attached Table, hereby
bind ourselves each for his own part and not one for another, our Executors and Administrators, and
in respect of his due proportion only, to pay or make good to the Assured or to the Assured’s
Executors or Administrators or to indemnify him or them against all such loss, damage or liability
as herein provided, such payment to be made after such loss, damage or liability is proved and the
due proportion for which each of us, the Underwriters, is liable shall be ascertained by reference
to his share, as shown in the said List, of the Amount, Percentage or Proportion of the total sum
insured hereunder which is in the Table set opposite the definitive number of the Syndicate of
which such Underwriter is a Member AND FURTHER THAT the List of Underwriting Members of Lloyd’s
referred to above shows their respective Syndicates and Shares therein, is deemed to be
incorporated in and to form part of this policy, bears the number specified in the attached Table
and is available for inspection at Lloyd’s Policy Signing Office by the Assured or his or their
representatives and a true copy of the material parts of the said List certified by the General
Manager of Lloyd’s Policy Signing Office will be furnished to
the Assured on application.

In
Witness whereof the General Manager of Lloyd’s Policy Signing Office has subscribed his name on
behalf of each of us.

	 	 	 	 
	 	LLOYD’S POLICY SIGNING OFFICE,    

 
	 	    
 
	 	General Manager     
	 	 
	 			

If this policy (or any subsequent endorsement) has been produced to you in electronic form, the original

document is stored on the Insurer’s Market Repository to which your broker has access.

(NM)

Definitive Numbers of Syndicates and Amount, Percentage or
Proportion of the Total Sum insured hereunder shared between the
Members of those Syndicates.

 

 

	 	 	 
	

	 	The Table of Syndicates referred to on the face of this Policy follows:

	 	 	 	 	 	 	 	 	 
	BUREAU REFERENCE

	 	61086 11/08/2009            
	 	 	BROKER NUMBER 1108

	 
	 	 	 	 	 	 	 	 
	PROPORTION %

	 	SYNDICATE
	 	 	    UNDERWRITER’S REFERENCE

	 
	 	 	 	 	 	 	 	 
	5.00

	 	 	2001	 	 	DGB0720909SA

	 
	 	 	 	 	 	 	 	 
	5.00

	 	 	1955	 	 	000938010900

	 
	 	 	 	 	 	 	 	 
	TOTAL LINE

	 	No. OF SYNDICATES
	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	10.00

	 	 	2	 	 	 	 	 

THE LIST OF UNDERWRITING MEMBERS

OF LLOYD’S IS IN RESPECT OF 2009

YEAR OF ACCOUNT

EFFECTIVE FROM: 01 JUL 2009

	 	 	 
	BUREAU USE ONLY
	 	 
	NUX5 72      3956

	 	 

RISK CODE:
W2

Page 1 of 1

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