EXHIBIT 10.10
Lumbermens Mutual Casualty Company
September 15, 2003
SeaBright Insurance Holdings, Inc.
f/k/a Insurance Holdings, Inc.
c/o Summit Partners
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
J. Xxxxx Xxxxxx
Ladies and Gentlemen:
Reference is hereby made to that certain Purchase Agreement
(as amended, the "Purchase Agreement"), dated as of July 14, 2003, by and among
Insurance Holdings, Inc., a Delaware corporation ("Buyer"), Xxxxxx Employers
Group, Inc., a Washington corporation ("KEG"), Lumbermens Mutual Casualty
Company, an Illinois domiciled mutual insurance company ("LMC"), Eagle Pacific
Insurance Company, a Washington domiciled insurance company ("Eagle Pacific"),
and Pacific Eagle Insurance Company, a California domiciled insurance company
("Pacific Eagle" and, together with KEG, LMC and Eagle Pacific, the "Sellers"),
as amended by that certain Side Letter, dated as of July 30, 2002, by and among
Buyer and the Sellers. Buyer and the Sellers are collectively referred to herein
as the "Parties". Capitalized terms used but not defined herein shall have the
respective meanings ascribed to them in the Purchase Agreement.
In connection with the Purchase Agreement, Buyer and Sellers
hereby agree as follows:
1. Transitional Use of KEIC's Name. Notwithstanding the
provisions of Section 8.6(b) of the Purchase Agreement, KEIC shall be
permitted to use the "Xxxxxx" name on a transitional basis to the extent
reasonably necessary until KEIC has obtained amended Certificates of
Authority authorizing it to transact insurance in the name "SeaBright
Insurance Company" in each applicable jurisdiction in which it intends to
conduct business (which registration and approval it shall diligently
pursue); provided that the use of the "Xxxxxx" name by KEIC shall, to the
extent practicable, be limited to administrative, legal and non-marketing
purposes.
2. No Assignments Without Regulatory Approval Where Required.
For avoidance of doubt, Buyer and Sellers acknowledge that none of the
provisions of Section 13.5 of the Purchase Agreement shall be construed to
relieve any party to the Purchase Agreement from any legal requirement to
obtain prior approval from any applicable insurance regulatory authority
prior to the assignment of any of its rights under the Purchase Agreement
to a third party, and each party to this Agreement shall comply with any
legal requirements imposed on it in connection with any such assignment.
3. No Other Modifications; Affirmation. Except as expressly
amended by this letter agreement, the Purchase Agreement is not otherwise
amended or modified and remains in full force and effect in accordance
with its original terms (as previously amended in writing prior to the
date of this letter agreement).
4. Claims Servicing Agreement. Parts 1 and 2 of Exhibit B to
that certain Claims Servicing Agreement to be entered into in connection
with the consummation of the transactions contemplated under the Purchase
Agreement shall be amended and restated to read in their entirety as set
forth on Schedule 1 attached hereto. Except as expressly amended by this
letter agreement, the Claims Servicing Agreement is not otherwise amended
or modified.
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In witness whereof, each of the parties has caused this letter to be
executed as of the date first written above.
SEABRIGHT INSURANCE HOLDINGS, INC. f/k/a INSURANCE
HOLDINGS, INC.
By: /s/ Xxxx Xxxxxxxxxxx
-------------------------------------------
Name: Xxxx Xxxxxxxxxxx
Title: President
XXXXXX EMPLOYERS GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
LUMBERMENS MUTUAL CASUALTY COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President and
Chief Financial Officer
EAGLE PACIFIC INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
PACIFIC EAGLE INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
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SCHEDULE 1
EXHIBIT B
FEE SCHEDULE
1.KEIC REPORTED CLAIM FEE
(a) The Reported Claims Fee shall equal 4.5% of the Claim Losses with respect to
the period from and after the Closing Date with respect to the Reported Claims
until the Reported Claims Fee in the aggregate equals 103% of the amount of the
ULAE reserve for the Reported Claims reflected on the balance sheet of EAGLE as
of the Closing Date.
(b) As of December 31, 2011 (the "Cut-Off Date"), if the total Reported Claims
Fee for Claim Losses paid pursuant to paragraph 1(a) above through the Cut-Off
Date is less than 103% of the amount of the ULAE reserve for Reported Claims
reflected on the balance sheet of EAGLE as of the Closing Date, then on or
before May 1, 2011, EAGLE shall pay to KEIC the difference between said total
and said 103%.
2. KEIC NEW CLAIM FEES
(a) The New Claims Fee shall equal 9.0% of the Claim Losses with respect to the
New Claims until the New Claims Fee in the aggregate equals 6% of the gross
unearned premium reserve reflected on the balance sheet of EAGLE as of the
Closing Date.
(b) As of the Cut-Off Date, if the total New Claims Fee for Claim Losses paid
pursuant to paragraph 2(a) above through the Cut-Off Date is less than 6% of the
gross unearned premium reserve reflected on the balance sheet of EAGLE as of the
Closing Date, then on or before May 1, 2011, EAGLE shall pay to KEIC the
difference between said total and said 6%.
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