SEC Contract Filing

Filing Date: 2017-02-27

Document Content:
<DOCUMENT>
<TYPE>EX-10.3.1
<SEQUENCE>2
<FILENAME>ob12312016ex1031.htm
<DESCRIPTION>EXHIBIT 10.3.1
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<div><a name="sd28d9ec253004574a7c99ae6b09711d0"></a></div><div></div><div><br></div><div style="line-height:120%;text-align:right;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Exhibit 10.3.1</font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">SELLER PRIORITY SURPLUS NOTE</font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Number 1</font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:6px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">For Value Received, ONEBEACON INSURANCE COMPANY, a Pennsylvania domiciled, property and casualty insurance company located at OneBeacon Insurance Company, 3 Batterymarch Park, Quincy, MA 02169 (the &#8220;Company&#8221;) promises to pay to OneBeacon Insurance Group LLC of 601 Carlson Parkway, Minnetonka, MN 55305 (the &#8220;Holder&#8221;) the principal sum of $57,900,000 (the &#8220;Surplus Note&#8221;), and to pay interest thereon, from December 23, 2014 or from the most recent Scheduled Interest Payment Date (as defined below) for which interest has been paid or duly provided for, semi-annually in arrears on March 15 and August 31 in each year and on the date on which this Surplus Note matures, commencing March 15, 2015 (each, a &#8220;Scheduled Interest Payment Date&#8221;), at the applicable Stated Rate (as defined below), until the principal hereof is paid or duly provided for. The terms and conditions governing payment of this Surplus Note are as follows:</font></div><div style="line-height:120%;text-align:left;padding-left:6px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;padding-left:6px;text-align:left;text-indent:46px;"><font style="text-align:left;font-family:inherit;font-size:12pt;padding-right:42px;">1.</font><font style="font-family:inherit;font-size:12pt;">This Surplus Note has been issued in accordance with Section 322.2 of the Insurance Company Law of 1921, as amended by Act 216 of November 30, 2004 (40 P.S. &#167; 445.2).</font></div><div style="line-height:120%;text-align:left;padding-left:6px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;padding-left:6px;text-align:left;text-indent:46px;"><font style="text-align:left;font-family:inherit;font-size:12pt;padding-right:42px;">2.</font><font style="font-family:inherit;font-size:12pt;">The obligation of the Company to pay the Holder in accordance with the terms and conditions of this Surplus Note is unconditional and absolute. Nothing contained herein is intended to or shall prevent the Holder, in the event of default by the Company under the terms and conditions of this Surplus Note, from exercising all remedies permitted by applicable law, provided that such rights and remedies of the Holder shall at all times remain subject to the terms and conditions hereof.</font></div><div style="line-height:120%;text-align:left;padding-left:6px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:6px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;padding-left:6px;text-align:left;text-indent:46px;"><font style="text-align:left;font-family:inherit;font-size:12pt;padding-right:42px;">(a)</font><font style="font-family:inherit;font-size:12pt;">Any payment of principal or interest on this Surplus Note shall be subordinated, whether existing or hereafter incurred or created, to payment of all policyholders, other liabilities of the Company, including all claims and beneficiary claims of all policyholders, and all other classes of creditors other than holders of surplus notes the terms of which expressly state that they are subordinated to this Surplus Note.</font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;padding-left:6px;text-align:left;text-indent:46px;"><font style="text-align:left;font-family:inherit;font-size:12pt;padding-right:42px;">(b)</font><font style="font-family:inherit;font-size:12pt;">The annual interest rate on this Surplus Note shall be equal to the applicable Stated Rate.</font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;