Exhibit 10.8
PLATINUM UNDERWRITERS REINSURANCE, INC.
RUN-OFF SERVICES AGREEMENT
This Agreement, dated as of [ ], 2002 is entered into by and
between Platinum Underwriters Reinsurance, Inc., a Maryland insurance company
("PLATINUM"), and St. Xxxx Fire and Marine Insurance Company, a Minnesota
insurance company ("FIRE AND MARINE") and Mountain Ridge Insurance Company, a
Vermont insurance company ("Mountain Ridge", and together with Fire and Marine,
the "St. Xxxx Parties").
RECITALS:
WHEREAS, The St. Xxxx Companies, Inc., a Minnesota corporation and the
ultimate parent of the St. Xxxx Parties ("ST. XXXX"), and Platinum Underwriters
Holdings, Ltd., a Bermuda company and the ultimate parent of Platinum
("PARENT"), have entered into a Formation and Separation Agreement, dated as of
[ ], 2002 (the "FORMATION AND SEPARATION AGREEMENT"), pursuant to which
St. Xxxx and Parent have set forth terms governing St. Paul's sponsorship of the
organization of Parent and its subsidiaries, actions to be taken in respect of
Parent's initial public offering of its common shares (the "PUBLIC OFFERING"),
and the ongoing relationships between St. Xxxx and its subsidiaries and Parent
and its subsidiaries following the effective date of the Public Offering (the
"CLOSING DATE");
WHEREAS, the St. Xxxx Parties have issued certain reinsurance
contracts, which contracts will not be renewed following the Closing Date (the
"RUN-OFF CONTRACTS") and have issued and may issue or renew certain reinsurance
contracts (the "REINSURANCE CONTRACTS") which will be one hundred percent (100%)
reinsured by Platinum pursuant to the Quota Share Retrocession Agreements (as
defined in the Formation and Separation Agreement);
WHEREAS, pursuant to Section 3.01(c) of the Formation and Separation
Agreement, St. Xxxx and Parent have agreed that Parent's Post-closing
Subsidiaries shall, at the request of St. Xxxx and its Post-closing
Subsidiaries, provide to St. Xxxx and its Post-closing Subsidiaries, following
the Closing Date, certain services reasonably necessary to administer the
Run-off Contracts and the Reinsurance Contracts.
NOW, THEREFORE, in furtherance of the transactions contemplated by the
Formation and Separation Agreement and in consideration of the premises and the
mutual covenants and agreements contained therein and herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. RUN-OFF SERVICES TO BE PROVIDED.
(a) DESCRIPTION OF RUN-OFF SERVICES. Platinum shall provide from time to
time after the Closing Date, at the reasonable request of the St. Xxxx Parties,
the services of senior personnel with appropriate expertise and experience that
are reasonably acceptable to the St. Xxxx Parties as may be reasonably necessary
to oversee the administration of the Run-off Contracts and the Reinsurance
Contracts by the St. Xxxx Parties, including such services as specified in
Exhibit A hereto (the "RUN-OFF SERVICES").
(b) STANDARD FOR RUN-OFF SERVICES. Platinum shall provide each of the
Run-off Services in such manner as the St. Xxxx Parties may reasonably request
from time to time for purposes of this Agreement; PROVIDED that Platinum shall
not be required to provide, or cause to be provided, the Run-off Services at a
standard materially higher than the standard generally provided by Platinum in
respect of other business of Platinum. Platinum shall maintain all licenses and
authorizations required for it to provide the Run- off Services pursuant to this
Agreement.
(c) PERIOD OF RUN-OFF SERVICES. (i) Platinum hereby agrees to provide
Run-off Services for up to a period of two years following the date hereof;
PROVIDED that Platinum shall in good faith consider requests by the St. Xxxx
Parties to reasonably extend the time period for Run-off Services in light of
the circumstances at the time of such request. Platinum and the St. Xxxx Parties
shall agree upon the terms that will govern the provision of Run-off Services to
be so provided at the time the St. Xxxx Parties makes such request; and
(ii) Platinum or the St. Xxxx Parties may terminate this Agreement for
cause.
(d) PRICE OF RUN-OFF SERVICES. With respect to the provision of Run-off
Services, each of the St. Xxxx Parties, severally but not jointly, shall pay to
Platinum or the Platinum Subsidiary designated by Platinum the "actual cost" to
Platinum or its Subsidiary (which shall consist of Platinum's or such
Subsidiary's direct and reasonable indirect costs), as the case may be, as
certified in good faith by Platinum. For greater certainty, the parties agree
that "actual cost" will include any incremental and out-of- pocket costs
incurred by Platinum in connection with the Run-off Services, including the
conversion, acquisition and disposition cost of software and equipment acquired
for the purposes of providing the Run-off Services and the cost of establishing
requisite systems and data feeds and hiring necessary personnel.
(e) RUN-OFF SERVICES COORDINATORS. (i) Platinum and each of the St. Xxxx
Parties each agrees to assign a Run-off Services coordinator as set forth in
paragraph (ii)
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below and to provide other reasonably necessary assistance to cooperate in
determining the extent of Run-off Services to be provided.
(ii) Platinum and each of the St. Xxxx Parties shall each designate
one Run-off Services coordinator having skills and experience acceptable to the
other party who will provide continuous oversight and coordination of, and
communicate concerning disputes with respect to, the Run-off Services, who will
be available to Platinum and the St. Xxxx Parties during normal business hours
and who will be responsible for providing for or delegating the provision of
assistance regarding the Run-off Services. The Run-off Services coordinators
will cooperate on a regular basis to plan for the delivery of Run-off Services,
including the timetable for the provision of such services and the incurring of
related costs. Platinum and the St. Xxxx Parties may from time to time
substitute the persons serving as Run-off Services coordinators with other
persons qualified to serve in those positions.
(f) COOPERATION. Upon the terms and subject to the conditions and other
agreements set forth herein, each party agrees to use its commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other party in doing, all
things necessary or advisable to perform the transactions contemplated by this
Agreement. In particular, the St. Xxxx Parties shall permit (but shall not
require) Platinum to place one or more of its employees on-site at the St. Xxxx
Parties, and shall provide such employees with the facilities reasonably
necessary to administer the Run-off Contracts and the Reinsurance Contracts as
contemplated in Section 1(a) and Exhibit A. The St. Xxxx Parties shall have the
right to review the qualifications and experience of Platinum's employees prior
to providing them with access to the St. Xxxx Parties' facilities. Such
facilities shall include providing Platinum's employees with workspace
reasonably requested at the site where the St. Xxxx Parties are servicing their
reinsurance run-off operations and the Reinsurance Contracts to the extent such
workspace is available to be provided to Platinum, and access to the St. Xxxx
Parties' reinsurance and accounting systems to the extent necessary, PROVIDED,
HOWEVER, that the St. Xxxx Parties shall not be required to provide such access
to the extent such reinsurance and accounting systems relate to other than the
Run-off Contracts and the Reinsurance Contracts. All such access shall be during
the normal working hours of the St. Xxxx Parties and shall be required to be
provided only in such a manner as not to unreasonably interfere with the normal
operations of the St. Xxxx Parties. Platinum agrees that the employees who will
have access to the St. Xxxx Parties' facilities and information are limited to
using such facilities and information solely and exclusively for the purposes of
providing administration of the Run-off Contracts and the Reinsurance Contracts
as contemplated hereunder, and fulfilling its obligations under this Agreement.
Platinum also agrees that the employees shall not attempt to gain access to any
information relating to contracts other than the Run-off Contracts and the
Reinsurance Contracts. Any non- public information that is not related to the
Run-off Contracts and the Reinsurance Contracts shall be considered
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confidential information and proprietary and Platinum and its employees agree
not to use such information for any purpose and not to disclose the information
to any third parties except as required by applicable law or governmental
authority.
(g) REGULATORY MATTERS. Platinum will cooperate, and will cause each of
its Post-closing Subsidiaries providing Run-off Services hereunder to cooperate,
with each of St. Xxxx and its Post-closing Subsidiaries and any regulatory
authorities to satisfy any regulatory requirements applicable to entities that
provide Run-off Services to St. Xxxx or its Post-closing Subsidiaries.
(h) LICENSES. St. Xxxx will xxxxx to Platinum and/or its Post-closing
Subsidiaries licenses to use any service marks, trademarks and other
intellectual property rights necessary for Platinum and its Post-closing
Subsidiaries to provide the Run-off Services in accordance with the provisions
of this Agreement.
(i) RETENTION OF AGREEMENT. This Agreement will be retained as part of the
official records of Platinum and the St. Xxxx Parties for the term of the
Agreement and five years thereafter.
2. BILLING; TAXES.
No later than 30 days following the last day of each calendar quarter,
Platinum shall provide each of the St. Xxxx Parties with a report setting forth
an itemized list of the Run-off Services provided to each of the St. Xxxx
Parties during such last calendar quarter, in a form agreed to by the parties.
Each of the St. Xxxx Parties shall promptly (and in no event later than 30 days
after receipt of such report, unless that St. Xxxx Party is contesting the
amount set forth in the report in good faith) pay to Platinum by wire transfer
in immediately payable funds all amounts payable as set forth in such report.
Each party will pay all taxes for which it is the primary obligor as a result of
the provision of Run-off Services under this Agreement; PROVIDE, that the St.
Xxxx Parties shall be solely responsible for, and shall reimburse Platinum in
respect of any sales, gross receipts or transfer tax payable with respect to the
provision of any Run-off Service under this Agreement, and any such
reimbursement obligation shall be in addition to the St. Xxxx Parties'
obligation to pay for such Service.
3. CONFIDENTIAL INFORMATION.
Platinum agrees to be bound to the provisions of Section 11.03 of the
Formation and Separation Agreement as if it were the Company thereunder.
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4. RELATIONSHIPS AMONG THE PARTIES, RECIPIENTS AND PROVIDERS.
Nothing in this Agreement shall cause the relationship between
Platinum on the one hand and the St. Xxxx Parties on the other to be deemed to
constitute an agency, partnership or joint venture. The terms of this Agreement
are not intended to constitute any of the parties and their Affiliates a joint
employer for any purpose. Each of the parties agrees that the provisions of this
Agreement as a whole are not intended to, and do not, constitute control of the
other party (or any Affiliates thereof) or provide it with the ability to
control such other party (or any Affiliates thereof), and each party hereto
expressly disclaims any right or power under this Agreement to exercise any
power whatsoever over the management or policies of the other (or any Affiliates
thereof). Nothing in this Agreement shall oblige either party hereto to act in
breach of the requirements of any law, rule or regulation applicable to it,
including securities and insurance laws, written policy statements of securities
commissions, insurance and other regulatory authorities, and the by-laws, rules,
regulations and written policy statements of relevant securities and
self-regulatory organizations.
5. INDEMNIFICATION.
(a) Each of the St. Xxxx Parties, severally but not jointly, shall
indemnify and hold harmless, to the full extent permitted by law, Platinum, its
Post- closing Subsidiaries and their respective officers, directors and
employees ("PLATINUM INDEMNITIES") from and against any and all Losses of any of
the Platinum Indemnitees arising out of or based upon any actions taken or
refrained from being taken by any such Platinum Indemnitee at the direction of
such St. Xxxx Party pursuant to this Agreement, or any breach by such St. Xxxx
Party of any of its covenants under this Agreement.
(b) Platinum shall indemnify and hold harmless, to the full extent
permitted by law, the St. Xxxx Parties and their officers, directors and
employees (the "ST. XXXX PARTIES' INDEMNITEES") from and against any and all
Losses of any of the St. Xxxx Parties' Indemnitees arising out of or based upon
the negligence or willful misconduct of any person providing Run-off Services,
or any breach by Platinum of any of its covenants under this Agreement.
Notwithstanding anything to the contrary in this Agreement, the maximum amount
of indemnifiable losses which may be recovered from Platinum hereunder shall
under no circumstances exceed the aggregate fees paid to Platinum by St. Xxxx
pursuant to Section 1(d).
(c) Except with respect to claims relating to actual fraud, the
indemnification provisions set forth in this section are the sole and exclusive
remedy of the parties hereto for any and all claims for indemnification under
this Agreement.
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6. FORCE MAJEURE/DELAY.
No party will be responsible if it is prevented from complying, either
totally or in part, with any of the terms or provisions of this Agreement by
reason of an Event of Force Majeure (as defined below), and such party shall
have no liability to the other party in connection therewith; PROVIDED, that
such party shall have a duty reasonably to mitigate, or cause to be mitigated,
any such failure to comply. As used in the Agreement, an "EVENT OF FORCE
MAJEURE" means any of the following: fires, floods, earthquakes, elements of
nature or acts of God; acts of war, terrorism, riots, civil disorders,
rebellions or revolutions; strikes, lockouts or labor difficulties; power
outages, equipment failures, computer viruses or malicious acts of third
parties; and laws, orders, proclamations, regulations, ordinances, demands or
requirements of governmental authorities.
7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS
CONFLICT OF LAWS PRINCIPLES.
8. DISPUTE RESOLUTION.
(a) MANDATORY ARBITRATION. The parties hereto shall promptly submit any
dispute, claim, or controversy arising out of or relating to this Agreement
and/or the provision of Services hereunder, including effect, validity, breach,
interpretation, performance, or enforcement (collectively, a "DISPUTE") to
binding arbitration in New York, New York at the offices of Judicial Arbitration
and Mediation Services, Inc. ("JAMS") before an arbitrator (the "ARBITRATOR") in
accordance with JAMS' Comprehensive Arbitration Rules and Procedures and the
Federal Arbitration Act, 9 U.S.C. Sections 1 ET SEQ. The Arbitrator shall be a
former judge selected from JAMS' pool of neutrals. The parties agree that,
except as otherwise provided herein respecting temporary or preliminary
injunctive relief, binding arbitration shall be the sole means of resolving any
Dispute. Judgment on any award of the Arbitrators may be entered by any court of
competent jurisdiction.
(b) COSTS. The costs of the arbitration proceeding and any proceeding in
court to confirm or to vacate any arbitration award or to obtain temporary or
preliminary injunctive relief as provided in paragraph (c) below, as applicable
(including, without limitation, actual attorneys' fees and costs), shall be
borne by the unsuccessful party and shall be awarded as part of the Arbitrator's
decision, unless the Arbitrator shall otherwise allocate such costs in such
decision.
(c) INJUNCTIVE RELIEF. The parties hereto may seek or obtain temporary or
preliminary injunctive relief in a court for any breach or threatened breach of
any provision hereof pending the hearing before and determination of the
Arbitrator. The St. Xxxx Parties
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hereby agree that they shall continue to provide, or cause their Affiliates to
provide, any and all Services pending the hearing before and determination of
the Arbitrator, it being agreed and understood that the failure to so provide
may cause irreparable harm to the St. Xxxx Parties and their Affiliates and that
the putative breaching party has assumed all of the commercial risks associated
with such breach or threatened breach of any provision hereof by such party.
(d) COURTS. The parties agree that the State and Federal courts in The
City of New York shall have jurisdiction for purposes of enforcement of their
agreement to submit Disputes to arbitration and of any award of the Arbitrator.
9. ASSIGNMENT.
Neither this Agreement nor the rights or obligations hereunder shall
be assignable by either party hereto, by operation of law or otherwise, without
the prior written consent of the other party hereto, and any purported
assignment shall be null and void. Subject to the foregoing, this Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns.
10. ENTIRE AGREEMENT.
This Agreement and the Formation and Separation Agreement constitute
the entire agreement, and supersede all prior agreements and understandings
(oral and written), by and among the parties hereto with respect to the subject
matter hereof.
11. NO THIRD PARTY RIGHTS.
Nothing contained in this Agreement, express or implied, establishes
or creates, or is intended or will be construed to establish or create, any
right in or remedy of, or any duty or obligation to, any third party.
12. NOTICES.
All notices, requests, claims, demands, and other communications
hereunder will be in writing and shall be deemed to have been duly given if
delivered by hand (with receipt confirmed), or by certified mail, postage
prepaid and return receipt requested, or by facsimile addressed as follows (or
to such other address as a party may designate by written notice to the others)
and shall be deemed given on the date on which such notice is received:
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If to the St. Xxxx Parties:
The St. Xxxx Companies, Inc.
000 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attn.: General Counsel
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxxx
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
If to Platinum:
Platinum Underwriters Holdings, Ltd.
Clarendon Xxxxx
0 Xxxxxx Xxxxxx
Xxxxxxxx XX 00
Xxxxxxx
Xxxx.: Secretary
Facsimile: (000) 000-0000
With a copy to:
Xxxxx X. Xxxxxx
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
13. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
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14. AMENDMENT; MODIFICATION.
The parties may by written agreement, subject to any regulatory
approval as may be required, (a) extend the time for the performance of any of
the obligations or other acts of the parties hereto (b) waive any inaccuracies
in the documents delivered pursuant to this Agreement, and (c) waive compliance
with or modify, amend or supplement any of the agreements contained in this
Agreement or waive or modify performance of any of the obligations of any of the
parties hereto. This Agreement may not be amended or modified except by an
instrument in writing duly signed on behalf of the parties hereto.
15. WAIVER.
No failure by any party to take any action or assert any right
hereunder shall be deemed to be a waiver of such right in the event of the
continuation or repetition of the circumstances giving rise to such right,
unless expressly waived in writing.
16. SEVERABILITY.
To the extent any provision of this Agreement shall be invalid or
unenforceable, it shall be considered deleted herefrom and the remaining
provisions of this Agreement shall be unaffected and shall continue in full
force and effect.
17. SPECIFIC PERFORMANCE AND OTHER EQUITABLE RIGHTS.
Each of the parties recognizes and acknowledges that neither the St.
Xxxx Parties nor Platinum would contemplate the provision of Run-off Services
hereunder unless this Agreement was executed and that a breach by a party of any
covenants or other commitments contained in this Agreement will cause the other
party to sustain injury for which it would not have an adequate remedy at law
for money damages. Therefore, each of the parties agrees that in the event of
any such breach, the aggrieved party shall be entitled to the remedy of specific
performance of such covenants or commitments and preliminary and permanent
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity, and the parties further agree to waive
any requirement for the securing or posting of any bond in connection with the
obtaining of any such injunctive or other equitable relief.
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18. HEADINGS.
Headings contained in this Agreement are for reference purposes only.
They shall not affect in any way the meaning or interpretation of this
Agreement.
19. DEFINITIONS; FORMATION AND SEPARATION AGREEMENT.
Capitalized terms used but not defined in this Agreement have the
meanings specified in the Formation and Separation Agreement.
20. EFFECTIVENESS.
This Agreement shall become effective contingent upon the consummation
of the Public Offering, without any further action by either of the parties
hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
ST. XXXX FIRE AND MARINE INSURANCE
COMPANY
By:
---------------------------------
Name:
Title:
MOUNTAIN RIDGE INSURANCE COMPANY
By:
---------------------------------
Name:
Title:
PLATINUM UNDERWRITERS
REINSURANCE, INC.
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By:
---------------------------------
Name:
Title:
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Run-off Services Agreement
Exhibit A
The St. Xxxx Parties may call upon the individuals listed below, or
individuals holding the positions listed below, as The St. Xxxx Parties may
reasonably request and as may be reasonably necessary to oversee the
administration of the Run-off Contracts by The St. Xxxx Parties, but such
individuals shall not be required to devote more than the amount of time
indicated below to such duties:
INDIVIDUAL/POSITION HOURS/MONTH
[ST. XXXX AND PLATINUM BUSINESS PEOPLE TO FILL IN]
