APPENDIX A
GLOSSARY OF TERMS
All capitalized terms used but not otherwise defined in each of the
agreements listed below shall have the meanings set forth in this Glossary of
Terms:
(a) Master Agreement,
(b) Assumption Agreement,
(c) Bill of Sale and General Assignment,
(d) OBIC Indemnity Reinsurance Agreement,
(e) Employee Leasing Agreement,
(f) Imaging Transition Services Agreement,
(g) License Agreements,
(h) Liberty Northwest Indemnity Reinsurance Agreement,
(i) Liberty Northwest Post-Closing Indemnity Reinsurance Agreement,
(j) Offset Agreements,
(k) Post-Closing Serviced Policies Administrative Services Agreement,
(l) Peerless Post-Closing Indemnity Reinsurance Agreement,
(m) Pre-Closing Serviced Policies Administrative Services Agreement,
(n) RAM Indemnity Reinsurance Agreement,
(o) RAM Reinsurance Option Agreement,
(p) Renewal Rights Agreement,
(q) Rewritten Indemnity Reinsurance Agreement,
(r) SCEA, and
(s) Transition Services Agreement.
Whenever the singular term is used in any of the foregoing agreements, the
same shall include the plural, and whenever the plural is used in any of the
foregoing agreements, the same shall include the singular, where appropriate.
"ACQUISITION PROPOSAL" means a proposal or offer concerning any
acquisition, merger, reinsurance arrangement, renewal rights transaction or
other business combination transaction that would result in the transfer to any
Person or Persons of any material part of the Business (other than the
transactions contemplated by the Master Agreement).
"ACTION" means any action, suit, proceeding, mediation, arbitration
or other alternative dispute resolution proceeding.
"ACTUAL COSTS" means the Other Underwriting Expenses and Unallocated
Loss Adjustment Expenses incurred by the RAM Group Companies in providing
Post-Closing Serviced Policies Administrative Services and Pre-Closing Serviced
Policies Administrative Services under the Administrative Services Agreements.
"ADMINISTRATIVE SERVICES AGREEMENTS" means the Pre-Closing Serviced
Policies Administrative Services Agreement and the Post-Closing Serviced
Policies Administrative Services Agreement.
"AFFILIATE" means, with respect to any Person, at the time in
question, any other Person controlling, controlled by or under common control
with such Person. For purposes of the foregoing, "control", including the terms
"controlling", "controlled by" and "under common control with", means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of an institution, whether through the ownership of
voting securities, by contract or otherwise. For the purpose of this Glossary of
Terms, Xxxxxxxxxx Mutual Insurance Company, a Maryland-domiciled mutual
insurance company, is deemed an "Affiliate" of Liberty.
"ALLOCATED LOSS ADJUSTMENT EXPENSES" shall mean defense and cost
containment expenses, including declaratory judgment actions.
"ANCILLARY AGREEMENTS" means the Indemnity Reinsurance Agreements,
the Administrative Services Agreements, the Transition Services Agreement, the
Lease Agreements, the Sublease Agreements, the License Agreements, the RAM
Reinsurance Option Agreement (including the RAM Indemnity Reinsurance Agreement
attached as an exhibit thereto), the Renewal Rights Agreement, the Employee
Leasing Agreement, the Stock Purchase Agreement, the Assumption Agreement, the
Assignment and Assumption Agreements, the Offset Agreements, the Imaging
Transition Services Agreement, the SCEA and the other Transfer Documents.
"APPLICABLE POST-RETIREMENT WELFARE PLAN" means the employee benefit
plan of Liberty or the Liberty Group which provides post-retirement medical,
dental and life insurance to eligible employees of Liberty and the Liberty Group
and which is attached to Schedule 5.09(e)(iii) of the Master Agreement.
"ASSIGNABLE LICENSED EXCLUSIVELY USED SOFTWARE" means the Licensed
Exclusively Used Software as to which (i) no consent to the assignment thereof
is required or (ii) consent to the assignment thereof has been obtained on or
prior to the Closing Date.
"ASSIGNED AND ASSUMED CONTRACTS" means (i) those contracts and other
agreements to which a OneBeacon Subsidiary or OneBeacon is a party, to the
extent such agreements or divisible sub-agreements thereof exclusively relate to
the Business and which are listed on SCHEDULE 1.01(a) of the Master Agreement,
and (ii) any other contracts or agreements that exclusively relate to the
Business that either (a) are entered into by a OneBeacon Subsidiary or OneBeacon
between the date of the Master Agreement and the Closing Date with the prior
written approval of Liberty which shall not be unreasonably withheld, (b) exist
on the date hereof and are of the type intended to be included in SCHEDULE
1.01(a) but are later identified and added to SCHEDULE 1.01(a) by supplement
with the prior written approval of Liberty, which approval shall not be
unreasonably withheld or (c) are Leased Property Leases, PROVIDED, that the
Assigned and Assumed Contracts shall not include (1) any Insurance Policies, or
(2) any Outward Reinsurance Agreements.
"ASSIGNMENT AND ASSUMPTION AGREEMENTS" means the assignment and
assumption agreements (which shall be in the form of Exhibit O-2 of the Master
Agreement) entered into by OneBeacon and the OneBeacon Subsidiaries which are
the assigning lessees of the Leased
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Property Leases and Liberty or its Affiliates as the assuming lessees of such
Leased Property Leases.
"ASSUMED LIABILITIES" means all liabilities, obligations and
commitments of the OneBeacon Subsidiaries or OneBeacon and accruing (i) from and
after the Closing Date under the Assigned and Assumed Contracts which are
assigned, subleased or transferred (as applicable) on the Closing Date, or (ii)
from and after the date of assignment, sublease or transfer (as applicable) of
the Assigned and Assumed Contracts which are assigned, subleased or transferred
after the Closing Date; PROVIDED, that the Assumed Liabilities shall not include
any liability for Taxes (the liability for which shall be governed exclusively
by Section 8.05 of the Master Agreement).
"ASSUMPTION AGREEMENT" means the Assumption Agreement among
OneBeacon, the OneBeacon Subsidiaries and Liberty in the form of Exhibit C of
the Master Agreement.
"BILL OF SALE AND GENERAL ASSIGNMENT" means the Bill of Sale and
General Assignment among OneBeacon, the OneBeacon Subsidiaries and Liberty in
the form of Exhibit D of the Master Agreement.
"BOOKS AND RECORDS" means copies of all records (including computer
generated, recorded or stored records) relating exclusively to the Business or
necessary or appropriate to operate the Business, including customer lists,
Insurance Producer information, policy information, insurance policy forms, rate
filing information, rating plans, all filings and correspondence with
Governmental Entities relevant to operating the Business, claim records, sales
records, underwriting records, advertising and promotional materials, personnel
records related to Business Employees and compliance records in the possession
or control of any OneBeacon Subsidiary or any OneBeacon Subsidiaries' Affiliate
relating exclusively to the operation of the Business or necessary or
appropriate to operate the Business, including the databases maintained by any
OneBeacon Subsidiary relating to and containing the customer lists, claim
records and underwriting records related to the Business and any other database
or other form of recorded, computer generated or stored information or process
relating exclusively to the Business or necessary or appropriate to operate the
Business.
"BUSINESS" means, collectively, the property and casualty insurance
business operations conducted by the OneBeacon Subsidiaries through the use of
Independent Producers, including those operations relating to the underwriting,
issuance, sale, renewal and servicing of insurance policies issued in connection
therewith; PROVIDED, that the "BUSINESS" shall not include (i) any Excluded
Asset, or (ii) (a) the underwriting, issuance, sale, renewal and servicing of
insurance policies issued by any OneBeacon Insurer through an Independent
Producer resident in an Excluded State, (b) the underwriting, issuance, sale,
renewal and servicing of personal lines insurance policies issued by any
OneBeacon Insurer through the use of Independent Producers, which insurance
policy covers risks located in an Excluded State or (c) any insurance policies
covering the Specialty and National Accounts Lines of Business.
"BUSINESS DAY" means any day other than a Saturday, Sunday or a day
on which banking institutions in the Commonwealth of Massachusetts are permitted
or obligated by law to be closed.
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"BUSINESS EMPLOYEES" means the active, full and part-time employees
of OneBeacon or Hawkeye-Security who are principally employed in connection with
the Business (not to exceed 2,700 employees), the names, titles, hire dates,
office locations and salaries of which have been provided to Liberty pursuant to
Section 3.10(a) of the Master Agreement.
"CEDENT'S EXPENSES" means Other Underwriting Expenses subject to the
Expense Cap, and Unallocated Loss Adjustment Expenses, in each case, incurred
with respect to the Post-Closing Policies, the Retroceded Policies or the
Rewritten Policies, as the case may be, which have policy periods that become
effective on or after the Effective Date, whether such expenses are incurred
before or after the Effective Date.
"CHANGE OF CONTROL" means the acquisition, directly or indirectly,
of more than twenty percent (20%) of the voting capital stock of the Person to
which the change of control relates by a Person that was not an Affiliate of the
first Person prior to such acquisition; PROVIDED, HOWEVER, that none of (i) the
creation of a mutual holding company with respect to Liberty, (ii) the issuance
of capital stock in a registered public offering or pursuant to Rule 144A under
the Securities Act of 1933, as amended, or (iii) any other holding company
system restructuring, shall be deemed to give rise to a change of control.
"CLAIM" means any claim reported under a Serviced Policy or a
Post-Closing Policy which, if valid, would result in a Loss.
"CLOSING" means the closing of the transactions contemplated in
Section 2.04 of the Master Agreement.
"CLOSING DATE" means November 1, 2001, unless all of the conditions
set forth in Articles VI and VII of the Master Agreement have not been satisfied
or waived on or prior to such date, in which case "Closing Date" means the day
that is the third Business Day following satisfaction or waiver of all of the
conditions set forth in Articles VI and VII of the Master Agreement, other than
those conditions that by their nature are to be satisfied at the Closing, to the
extent that all such conditions remain satisfied or waived as of such date;
PROVIDED, HOWEVER, that the "Closing Date" may be any other date as agreed to in
writing by Liberty and OneBeacon.
"COBRA" means Section 601 ET SEQ. of ERISA and Section 4980B of
the Code and state and local laws of similar import, including all rules and
regulations promulgated thereunder.
"CODE" means the Internal Revenue Code of 1986, as amended,
including all rules and regulations promulgated thereunder.
"COMPETING BUSINESS" means a multi-state insurance business from
which the majority of the premium is attributable to property and casualty
insurance policies that are issued, written or cover risks located principally
outside of the Excluded States and which are produced through Independent
Producers wherever located or resident.
"COMPENSATION" shall have the meaning set forth in Article VI of the
Employee Leasing Agreement.
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"CONFIDENTIAL DATA" means any non-public competitive information,
including the development of and proposals for new rates, new products, or
claims payment policy.
"CONFIDENTIAL INFORMATION" means information that is proprietary and
relates to the internal affairs, business practices, marketing strategies,
marketing relationships, product development, information technology of a
disclosing party. Confidential Information shall not include information (i)
that is now or subsequently becomes available to the public through no fault of
the party receiving such information, (ii) that a party can demonstrate was
lawfully in the possession of such party prior to the Effective Date without any
obligation of confidentiality, other than the Books and Records, (iii) that the
receiving party can demonstrate was independently developed by such party
without the use of the disclosing party's confidential information, and (iv)
rightfully obtained by the receiving party from a source other than the
disclosing party, which source has the right to transfer such information to the
receiving party without any obligation, fiduciary or otherwise, of
confidentiality. The existence of a copyright notice will not cause, or be
construed as causing, any part of any software or the documentation therefor to
be a published copyrighted work available to the public.
"CONFIDENTIALITY AGREEMENT" means the confidentiality agreement
dated as of August 23, 2001, between OneBeacon and Liberty.
"COPYRIGHT MATERIALS" means all materials contained in the Books and
Records that are copyrighted or copyrightable by OneBeacon or an Affiliate
thereof or are in any other way protected on behalf of OneBeacon or an Affiliate
thereof under copyright law.
"CUSTOMER/CLAIMANT INFORMATION" means any Non-Public Personally
Identifiable Information regarding a customer or claimant provided by any
OneBeacon Insurer to Liberty.
"DATA CENTERS" means (i) all computer equipment, related peripheral
equipment, storage equipment, printers and all other equipment used to support
the data centers owned by OneBeacon or a OneBeacon Subsidiary and which are
included in the Transferred Assets, including without limitation those located
in Des Moines, Iowa, Portland, Oregon and Beaverton, Oregon (ii) any emergency
power equipment used at such data centers and (iii) all software, firmware and
other applications, data and information used at such data centers.
"EFFECTIVE DATE" means 12:01 a.m., Eastern time, on November 1,
2001.
"EMPLOYEE LEASING AGREEMENT" means the Employee Leasing Agreement
among OneBeacon, certain OneBeacon Subsidiaries and Liberty, in the form of
Exhibit L of the Master Agreement.
"ENHANCED PENSION BENEFITS" shall have the meaning set forth in
Section 5.09(c).
"ENVIRONMENTAL CLAIM" means any and all administrative, regulatory
or judicial actions, suits, demands, claims, liens, investigations, proceedings
or notices of non-compliance or violation by any Person, alleging liability for
non-compliance, investigative costs, cleanup costs, response or removal costs,
remediation costs, bodily injury (including death), property damage or damage to
the environment or natural resources arising under or based on
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Environmental Laws, or to the extent based on a Release or threatened Release of
Hazardous Materials.
"ENVIRONMENTAL LAWS" means all applicable federal, state and local
statutes, regulations, ordinances, rules, decrees or directives and any binding
administrative or judicial interpretations thereof, relating to pollution,
protection of human health and safety as it relates to the environment, the
protection, preservation or restoration of the environment (including, without
limitation, indoor and outdoor air, surface water, groundwater, land, wetlands,
surface and subsurface strata) or natural resources, including, without
limitation, those relating to Releases or threatened Releases of Hazardous
Materials or otherwise relating to the manufacture, generation, processing,
distribution, use, treatment, storage, disposal, transportation or handling of
Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, including all rules and regulations promulgated thereunder.
"ERROR" means any malfunction or failure to meet applicable
specifications in the OneBeacon Licensed Software, the Owned Exclusively Used
Software, the Licensed Generally Used Software, the Licensed Exclusively Used
Software or any other software, firmware or database of any kind provided by
OneBeacon or maintained by OneBeacon and used to provide Transition Services or
provided by One Beacon or a OneBeacon Subsidiary to enable the provision by
Liberty of services required under the Administrative Services Agreements which
malfunction or failure significantly degrades the use of the OneBeacon Licensed
Software, the Owned Exclusively Used Software, the Licensed Generally Used
Software, the Licensed Exclusively Used Software such other software, firmware
or database when used in the manner used as of the Closing Date, as directed by
OneBeacon, or in accordance with supporting documentation, if any.
"ESCROW AGENT" shall mean DSI Technology Escrow Services, Inc. or
such other escrow agent mutually agreed upon by the parties to hold in escrow
the Source Code Deposit in accordance with the terms of the SCEA.
"EXCLUDED ASSETS" means (i) except as contemplated by Section
5.01(a) of the Master Agreement, all cash and cash equivalents of OneBeacon or
any of the OneBeacon Subsidiaries attributable to the Business; (ii) all rights,
claims and credits of OneBeacon or any of the OneBeacon Subsidiaries relating to
any other Excluded Asset or any Excluded Liability, including such items arising
under all guarantees, warranties, indemnities and similar rights of OneBeacon or
any OneBeacon Subsidiary in respect of any other Excluded Asset or any Excluded
Liability; (iii) all rights of OneBeacon or any of the OneBeacon Subsidiaries
under this Agreement and the Ancillary Agreements; (iv) all records prepared in
connection with the transactions described in the Master Agreement and the
Ancillary Agreements to the extent that such records do not relate to the
operation or conduct of the Business and (v) all financial and tax records
relating to the Business that form part of the general ledger of OneBeacon.
"EXCLUDED LIABILITY" means any liability or obligation of OneBeacon
or any of its Affiliates which does not constitute (i) Taxes (the liability for
which is governed exclusively by Section 8.05 of the Master Agreement) or (ii)
an Assumed Liability. It being understood for the
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avoidance of doubt, and without limiting the generality of the foregoing, that
any liability or obligation of Liberty or any of its Affiliates arising out of
any litigation, arbitration or other similar proceeding commenced against
Liberty or any of its Affiliates, to the extent such liability or obligation is
based on a claim of "successor" or "transferee" liability as successor to
OneBeacon or any of its Affiliates or transferee of OneBeacon or any of its
Affiliates, including any liability or obligation arising out of WISE ET AL. V.
TRAVELERS INDEMNITY COMPANY, filed in the Circuit Court of Berkeley County, West
Virginia, shall constitute an Excluded Liability, except to the extent that any
such liability or obligation is an Assumed Liability or a Reinsured Liability
under the Indemnity Reinsurance Agreements.
"EXCLUDED STATES" means Connecticut, Maine, Massachusetts, New
Hampshire, New Jersey, New York, Rhode Island and Vermont.
"EXPENSE CAP" means that, for purposes of the (i) Post-Closing
Serviced Policies Administrative Services Fee, and (ii) ceding commission paid
under the Peerless Post-Closing Indemnity Reinsurance Agreement, the Liberty
Northwest Post-Closing Indemnity Reinsurance Agreement, the Rewritten Indemnity
Reinsurance Agreement and the OBIC Indemnity Reinsurance Agreement, Other
Underwriting Expenses for the two year period beginning with the Effective Date
shall be limited, in the aggregate, for each of Year 1 and Year 2, to thirty
five percent (35%) of the aggregate net written premium incurred by the RAM
Group Companies in issuing and/or underwriting, as appropriate, the Rewritten
Policies and the Post-Closing Policies with respect to Year 1 and Year 2,
respectively.
"EXTRA CONTRACTUAL OBLIGATIONS" means all liabilities not covered
under the provisions of or in excess of the limits of any policy of insurance
(and related Allocated Loss Adjustment Expenses) to the extent such liabilities
arise from or relate to any alleged or actual act, error or omission by any
party or any Affiliate of such party, whether intentional or otherwise,
including the following: failure to settle within policy limits, or by reason of
actual or alleged negligence, fraud or bad faith in rejecting an offer of
settlement or in preparation of the defense of or in trial of any action against
its insured or any appeal of any judgment with respect thereto, or from any
alleged or actual reckless conduct or bad faith, in connection with the handling
of any claim under any policy or in connection with the issuance, delivery,
cancellation or administration of any policy.
"FIXES" means the repair or replacement of code versions of the
OneBeacon Licensed Software provided by OneBeacon Group in accordance with the
Transition Services Agreement to correct an Error.
"FOREIGN CLAIMS" means claims arising under insurance policies
issued by OneBeacon Insurers in Excluded States, other than those arising under
Specially Serviced Policies.
"FUNDING ACCOUNTS" (i) for purposes of the Pre-Closing Serviced
Policies Administrative Services Agreement shall have the meaning set forth in
Section III.(e)(i) of Schedule 4 thereof and (ii) for purposes of the
Post-Closing Serviced Policies Administrative Services Agreement shall have the
meaning set forth in Section III.(e)(i) thereof.
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"GOVERNMENTAL ENTITY" means any court or governmental or regulatory
authority or agency, domestic or foreign.
"HAWKEYE NAME AND MARKS" means the name "Hawkeye-Security Insurance
Company" and any related trademarks or service marks.
"HAWKEYE-SECURITY" means Hawkeye-Security Insurance Company, an
Iowa-domiciled stock insurance company.
"HAWKEYE-SECURITY NAME AND MARKS LICENSE AGREEMENT" means the
agreement by and between OneBeacon and Liberty attached to the Master Agreement
as Exhibit M-3.
"HAWKEYE SYSTEM" means such computer equipment, related peripheral
equipment, storage equipment, printers and all other equipment and such
software, firmware and other applications data and information as are used as of
the Effective Date in the Data Center located in Des Moines, Iowa.
"HAZARDOUS MATERIALS" means (i) any petrochemical or petroleum
products, waste oil, radon gas, friable asbestos, urea formaldehyde foam
insulation and polychlorinated biphenyls; (ii) any chemicals, materials or
substances defined in any Environmental Law as having the characteristics of or
included in the definition of "hazardous substances," "hazardous chemicals,"
"hazardous wastes," "hazardous materials," "toxic substances," "contaminants,"
or "pollutants"; or (iii) any other chemical, material or substance, the
discharge, emission or Release of which is prohibited, limited or regulated by
Environmental Law.
"IMAGING EQUIPMENT AND APPLICATIONS" means such computer equipment,
related peripheral equipment, storage equipment, printers and all other
equipment and such software, firmware and other applications, data and
information used as of the Effective Date to support the imaging operations of
OneBeacon.
"IMAGING HARDWARE MAINTENANCE AGREEMENTS" means those agreements to
which OneBeacon Group is a party on the Effective Date and pursuant to which
maintenance and support services are provided with respect to the Imaging
Equipment and Applications.
"IMAGING MATERIALS" means any of the documents, records, data or any
other material provided by or on behalf of OBIC to Liberty Group upon which any
Imaging Transition Service may be performed.
"IMAGING TRANSITION PROJECT MANAGER" means the person designated by
OBIC and Liberty Group, respectively, who is primarily responsible for
administering the Imaging Transition Services Agreement, with the authority and
obligations set forth in Section 8(b) thereof.
"IMAGING TRANSITION SERVICES" means those services set forth in
Schedule 2(a) of the Imaging Transition Services Agreement.
"IMAGING TRANSITION SERVICES AGREEMENT" means the Imaging Transition
Service Agreement between Liberty and OBIC, in the form of Exhibit Q to the
Master Agreement.
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"IMAGING TRANSITION SERVICE DATA" means output data from the
delivery of Imaging Transition Services by Liberty to OBIC under the Imaging
Transition Services Agreement.
"IMOW NEW POLICIES" means (i) policies issued by a OneBeacon Insurer
(other than Oregon Auto or North Pacific) to insureds who were not insured under
the Insurance Policies, but excluding assignments under Involuntary Mechanisms
issued by a OneBeacon Insurer, (ii) policies issued to insureds under Insurance
Policies which are not IMOW Renewal Policies or IMOW Required Renewal Policies,
and (iii) any New Commercial Lines Policy that is voluntarily renewed by a
OneBeacon Insurer (other than Oregon Auto or North Pacific), in each case,
pursuant to the terms of the Post-Closing Serviced Policies Administrative
Services Agreement and through an Independent Producer resident in Idaho,
Montana, Oregon or Washington. IMOW New Policies shall also include renewals of
IMOW New Policies.
"IMOW POST-CLOSING POLICIES" means the IMOW Renewal Policies, the
IMOW Required Renewal Policies and the IMOW New Policies, collectively.
"IMOW RENEWAL POLICIES" means (i) renewals of Insurance Policies
that are voluntarily issued by a OneBeacon Insurer (other than Oregon Auto or
North Pacific) and (ii) assignments under Involuntary Mechanisms issued by a
OneBeacon Insurer (other than Oregon Auto or North Pacific), in each case,
pursuant to the terms of the Post-Closing Serviced Policies Administrative
Services Agreement and through an Independent Producer resident in Idaho,
Montana, Oregon or Washington. IMOW Renewal Policies shall also include renewals
of IMOW Renewal Policies, but exclude any New Commercial Lines Policy issued by
a OneBeacon Insurer. Any issuance of an insurance policy by a OneBeacon Insurer
(other than Oregon Auto or North Pacific), pursuant to the terms of the
Post-Closing Serviced Policies Administrative Services Agreement through an
Independent Producer resident in Idaho, Montana, Oregon or Washington that if it
had been issued by another OneBeacon Insurer would have otherwise been a IMOW
Renewal Policy, or been a OneBeacon Renewal Policy or a OA/NP Renewal Policy,
shall be deemed to be a IMOW Renewal Policy.
"IMOW REQUIRED RENEWAL POLICIES" means renewals of Insurance
Policies that are required to be renewed by applicable law or contract, issued
by a OneBeacon Insurer (other than Oregon Auto or North Pacific), pursuant to
the terms of the Post-Closing Serviced Policies Administrative Services
Agreement and through an Independent Producer resident in Idaho, Montana, Oregon
or Washington. IMOW Required Renewal Policies shall also include renewals of
IMOW Required Renewal Policies.
"INDEMNIFIABLE LOSSES" means any losses, liabilities, costs, claims,
damages and expenses (including reasonable attorneys' fees and expenses).
Indemnifiable Losses shall not include any Special Damages, except that, to the
extent Liberty is the Indemnified Party, Indemnifiable Losses shall include
Special Damages with respect to a breach of Section 3.07 of the Master Agreement
or a breach of a covenant or agreement under the Transition Services Agreement
in accordance with its terms; PROVIDED that in such cases Indemnifiable Losses
shall include Special Damages only to the extent such items would be recoverable
as damages by the Indemnified Party in a breach of contract action based on such
breach.
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"INDEMNIFIED PARTY" means (i) for purposes of the Master Agreement,
the meaning set forth in Section 10.03(a) of the Master Agreement; (ii) for
purposes of the Pre-Closing Serviced Policies Administrative Services Agreement,
the meaning set forth in Section 11.2 of such agreement and (iii) for purposes
of the Post-Closing Serviced Policies Administrative Services Agreement, the
meaning set forth in Section 11.2 of such agreement.
"INDEMNIFYING PARTY" means (i) for purposes of the Master Agreement,
the meaning set forth in Section 10.03(a) of the Master Agreement; (ii) for
purposes of the Pre-Closing Serviced Policies Administrative Services Agreement,
the meaning set forth in Section 11.2 of such agreement and (iii) for purposes
of the Post-Closing Serviced Policies Administrative Services Agreement, the
meaning set forth in Section 11.2 of such agreement.
"INDEMNITY REINSURANCE AGREEMENTS" means the Peerless Post-Closing
Indemnity Reinsurance Agreement, the Liberty Northwest Post-Closing Indemnity
Reinsurance Agreement, the Rewritten Indemnity Reinsurance Agreement, the OBIC
Indemnity Reinsurance Agreement and the Liberty Northwest Indemnity Reinsurance
Agreement.
"INDEPENDENT PRODUCER" means an individual, other than an employee
of OneBeacon or an Affiliate thereof, or entity engaged in the solicitation,
negotiation, effectuation or placement of insurance policies in connection with
the Business.
"INDEPENDENT PRODUCER DELINQUENT BALANCES" means monthly account
balances maintained by Independent Producers on behalf of the OneBeacon Insurers
under agency bill accounts that are (i) more than 30 days aged from the due date
or (ii) reconciled "open items" which are more than 90 days aged from the due
date; PROVIDED, HOWEVER, that the OneBeacon Insurers must have first made a
written demand to the Independent Producer for all such amounts.
"INDEPENDENT PRODUCER DELINQUENT BALANCES REPORT" means a report to
be prepared periodically by OneBeacon setting forth a true and correct list of
all Independent Producers that have Independent Producer Delinquent Balances,
including balances under agent loans and for insurance premiums, due any
OneBeacon Subsidiary or OneBeacon, the amounts of such balances and the number
of days such balances have been outstanding.
"IN-FORCE POLICIES" and "INSURANCE POLICIES" means the treaties,
policies, binders, slips and other agreements of insurance, including insurance
written through Involuntary Mechanisms, written by any OneBeacon Insurer in
connection with the Business and in-force on the day immediately preceding the
Effective Date (including all supplements, endorsements, riders and ancillary
agreements in connection therewith).
"INTANGIBLE ASSETS" means (i) those intangible assets owned by
OneBeacon or any of the OneBeacon Subsidiaries and used exclusively in
connection with the Business, including customer lists and other data necessary
to support and conduct the Business as the Business is being supported and
conducted as of the date of the Master Agreement, (ii) all Copyright Materials
owned by OneBeacon or any of the OneBeacon Subsidiaries and used exclusively in
connection with the Business, (iii) all Intellectual Property Rights owned by
OneBeacon or any of the OneBeacon Subsidiaries and used exclusively in the
conduct of the Business and (iv) all
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right, title and interest of OneBeacon or any of the OneBeacon Subsidiaries in
the name "Hawkeye-Security Insurance Company."
"INTELLECTUAL PROPERTY RIGHTS" shall mean all patents, trademarks,
service marks, trade names, copyrights, the domain name xxxx.xxx (including any
common law rights, registrations, applications, licenses or rights relating to
any of the foregoing), and all content displayed as of the Closing Date on the
web site located at xxx.xxxx.xxx, technology, trade secrets, inventions,
know-how, databases, and information which are used in the conduct of the
Business, except for Licensed Exclusively Used Software, Licensed Generally Used
Software, Owned Exclusively Used Software and Owned Generally Used Software.
"INVOLUNTARY MECHANISM" means any "Assigned Risk Pool," "Syndicate,"
"Association," "Fair Plans," "Boards," "Bureaus," "Joint Underwriting
Associations (JUAs)," "Other government mandated programs," or other
underwriting facility to the extent that any such facility underwrites, on a
mandatory basis, property and casualty business included in the Business.
"IT SERVICES" means such items and services set forth on Schedule
2(a)(ii) of the Transition Services Agreement as Liberty shall reasonably
request to conduct the Business, operate the Data Centers, and provide any
services by Liberty and its designated Affiliates in accordance with the
Administrative Services Agreements and the Imaging Transition Services
Agreement.
"ITSA QUARTERLY INVOICE" means an invoice provided to OBIC in any
given quarter in accordance with Section 3(b) of the Imaging Transition Services
Agreement setting forth the fees due to Liberty Group for the Imaging Transition
Services performed in the prior quarter, with the first such invoice to be
provided for the quarter ended December 31, 2001.
"ITSA SPECIAL PROJECTS" means a service that OBIC requests Liberty
to provide and that Liberty has agreed to provide in writing that does not
reasonably fall within one of the identified categories of Imaging Transition
Services.
"KNOWLEDGE" means, as to any OneBeacon Subsidiary and OneBeacon, the
actual knowledge of any of the persons listed on SCHEDULE 1.01(b)(i)(A) of the
Master Agreement after reasonable inquiry, and as to any RAM Group Company and
Liberty, the actual knowledge of any of the persons listed on SCHEDULE
1.01(b)(ii)(A) of the Master Agreement after reasonable inquiry. For the
purposes of the foregoing, (i) as to any OneBeacon Subsidiary and OneBeacon, the
requirement of reasonable inquiry shall be satisfied if inquiry has been made of
the persons listed on SCHEDULE 1.01(b)(i)(B) of the Master Agreement, and (ii)
as to any RAM Group Company and Liberty, the requirement of reasonable inquiry
shall be satisfied if inquiry has been made of the persons listed on SCHEDULE
1.01(b)(ii)(B) of the Master Agreement.
"LEASE AGREEMENT" means a lease or occupancy agreement entered into
by and between Liberty or an Affiliate and OneBeacon or a OneBeacon Subsidiary
in the applicable form of Exhibit N to the Master Agreement.
"LEASED PROPERTY" means all real property leased or subleased by a
OneBeacon Subsidiary or OneBeacon and used in connection with the Business for
which it is anticipated
11
that a sublease or assignment with Liberty or an Affiliate, subject to obtaining
any required third party consents, will be entered into pursuant to the Master
Agreement and which is set forth on SCHEDULE 3.17(b) of the Master Agreement.
"LEASED PROPERTY LEASES" means leases and subleases of Leased
Property and all amendments thereto.
"LEASING PERIOD" shall have the meaning set forth in Article II of
the Employee Leasing Agreement.
"LIBERTY" means Liberty Mutual Insurance Company, a mutual insurance
company organized under the laws of the Commonwealth of the Massachusetts.
"LIBERTY GROUP" means Liberty and the RAM Group Companies.
"LIBERTY GROUP DATA" means all information relating to Liberty Group
and its businesses and contained in Liberty Group's data files and any additions
or modifications made thereto under the Transition Services Agreement.
"LIBERTY GROUP DATA AND SOFTWARE" means Liberty Group Data and Owned
Exclusively Used Software.
"LIBERTY MATERIAL ADVERSE EFFECT" means any event, occurrence,
circumstance or effect that has a material adverse effect (i) on the business,
financial condition or results of operations of Liberty and the RAM Group
Companies taken as a whole or (ii) on the ability of Liberty or any RAM Group
Company to perform its or their obligations under the Master Agreement or any
Ancillary Agreement.
"LIBERTY NORTHWEST" means Liberty Northwest Insurance Corporation,
an Oregon-domiciled stock insurance company.
"LIBERTY NORTHWEST INDEMNITY REINSURANCE AGREEMENT" means each of
the Reinsurance Agreements between Liberty Northwest on the one hand and, either
Oregon Auto or North Pacific on the other hand, each in the form of Exhibit E-3
of the Master Agreement.
"LIBERTY NORTHWEST OFFSET AGREEMENT" means the Liberty Northwest
Offset Agreement by and among the parties set forth therein in the form of
Exhibit P-2 of the Master Agreement.
"LIBERTY NORTHWEST POST-CLOSING INDEMNITY REINSURANCE AGREEMENT"
means the Liberty Northwest Post-Closing Indemnity Reinsurance Agreement between
Liberty Northwest and OBIC in the form of Exhibit E-2 of the Master Agreement.
"LIBERTY NORTHWEST RETROCEDED POLICIES" means (i) the IMOW Renewal
Policies and the IMOW Required Renewal Policies reinsured by Liberty Northwest
pursuant to the Liberty Northwest Post-Closing Indemnity Reinsurance Agreement
and (ii) the OA/NP Renewal Policies and the OA/NP Required Renewal Policies
reinsured by Liberty Northwest.
12
"LIBERTY PROGRAM" shall have the meaning set forth in Section
5.09(d) of the Master Agreement.
"LIBERTY TRANSITION GROUP" means Liberty for itself and for the
benefit and on behalf of the RAM Group Companies, and their Affiliates and
Subsidiaries.
"LICENSE AGREEMENTS" means the Software License Agreement, the Owned
Generally Used Intellectual Property Rights Agreement and the Hawkeye-Security
Name and Marks License Agreement in the forms of Exhibits M-1, M-2 and M-3 of
the Master Agreement, respectively.
"LICENSED EXCLUSIVELY USED SOFTWARE" shall mean all computer
software programs and databases and external data services used exclusively in
the conduct of the Business which are licensed by a OneBeacon Subsidiary or
OneBeacon.
"LICENSED GENERALLY USED SOFTWARE" shall mean all computer software
programs and databases and external data services used both in the conduct of
the Business and also in the conduct of a OneBeacon Subsidiary or OneBeacon's
other businesses which are licensed from a third party by a OneBeacon Subsidiary
or OneBeacon.
"LIEN" means any pledge, claim, lien, charge, mortgage, encumbrance,
security interest of any nature, option, right of first refusal, warrant, or
restriction of any kind, including any restriction on use, voting, transfer,
alienation, receipt of income, or exercise of any other attribute of ownership.
"LINE OF BUSINESS" means, as amended from time to time by the
parties, for purposes of the Transition Services Agreement, each of one of the
following:
(i) PersonalAuto;
(ii) Homeowners;
(iii) Personal Umbrella;
(iv) Dwelling/Fire;
(v) Commercial Auto;
(vi) Commercial Package (including BOP);
(vii) Commercial Property;
(viii) General Liability;
(ix) Worker's Compensation; and
(x) Commercial Umbrella.
"LOSS" means the amount of liability paid or to be paid by or on
behalf of an insurer with respect to claims arising under policies of insurance.
"MASTER AGREEMENT" means the Master Agreement by and among Parent,
OneBeacon and Liberty.
"METHODOLOGY" means (i) for purposes of the Pre-Closing Serviced
Policies Administrative Services Agreement, the meaning set forth in Section
8.3(a) thereof and (ii) for
13
purposes of the Post-Closing Serviced Policies Administrative Services
Agreement, the meaning set forth in Section 8.3(a) thereof.
"MONTHLY INVOICE" means (i) for purposes of the Pre-Closing Serviced
Policies Administrative Services Agreement, the meaning set forth in Section 8.2
thereof, (ii) for purposes of the Post-Closing Serviced Policies Administrative
Services Agreement, the meaning set forth in Section 8.2 thereof, (iii) for
purposes of the Transition Services Agreement, an invoice provided to Liberty
Group in any given month in accordance with Section 3(b) of the Transition
Services Agreement setting forth the fees owed to OneBeacon Group for the prior
month for performing Transition Services.
"NEW COMMERCIAL LINES POLICY" means (i) a renewal of a commercial
lines Insurance Policy involving annual premium of at least $50,000, (ii) a
renewal of a commercial lines Renewal Policy involving annual premium of at
least $50,000, (iii) any policy, binder, slip or other agreement of insurance
issued by any of the RAM Group Companies to an insured holding a commercial
lines Insurance Policy involving annual premium of at least $50,000, and (iv) a
renewal of a commercial lines Rewritten Policy involving annual premium of at
least $50,000, in each case, where the annual premium due with respect to the
renewal (in the cases of (i), (ii) and (iv)) or re-writing (in the case of
(iii)) of such Insurance Policy, Renewal Policy or Rewritten Policy, as
appropriate, increases by 50% or more (excluding any rate changes) from the
annual premium paid with respect to such Insurance Policy, Renewal Policy or
Rewritten Policy being renewed or re-written.
"NEW POLICIES" means the OneBeacon New Policies, the OA/NP New
Policies and the IMOW New Policies, collectively.
"NON-COMPETITION AREA" means the United States of America, including
the District of Columbia, but excluding the Commonwealth of Puerto Rico, the
U.S. Virgin Islands and all other territories or possessions of the United
States, and excluding the Excluded States.
"NON-PUBLIC PERSONALLY IDENTIFIABLE INFORMATION" means any financial
or medical information of or concerning an individual Person which either has
been obtained from sources which are not available to the general public or
obtained from the Person who is the subject and which information is included in
data files exchanged by any of the parties to the Master Agreement or Ancillary
Agreements. The term shall include data elements such as names and addresses of
individuals.
"NORTH PACIFIC" means North Pacific Insurance Company, an
Oregon-domiciled stock insurance company.
"NOTIFYING PARTY" shall have the meaning set forth in Section 10.06
of the Master Agreement.
"OA/NP NEW POLICIES" means (i) policies issued by Oregon Auto or
North Pacific to insureds who were not insured under the Insurance Policies, but
excluding assignments under Involuntary Mechanisms issued by Oregon Auto or
North Pacific, (ii) policies issued by Oregon Auto or North Pacific to insureds
under Insurance Policies which are not OA/NP Renewal Policies, OA/NP Required
Renewal Policies, or OA/NP Rewritten Policies, and (iii) any New
14
Commercial Lines Policy that is voluntarily renewed by Oregon Auto or North
Pacific, in each case, pursuant to the terms of the Post-Closing Serviced
Policies Administrative Services Agreement prior to the closing of the Stock
Purchase Agreement. OA/NP New Policies shall also include renewals of OA/NP New
Policies.
"OA/NP POST-CLOSING POLICIES" means the OA/NP Renewal Policies, the
OA/NP Required Renewal Policies, and the OA/NP New Policies, collectively.
"OA/NP RENEWAL POLICIES" means (i) renewals of Insurance Policies
that are voluntarily issued by Oregon Auto or North Pacific and (ii) assignments
under Involuntary Mechanisms issued by Oregon Auto or North Pacific, in each
case, and in the case of such issuances prior to the closing of the Stock
Purchase Agreement, pursuant to the terms of the Post-Closing Serviced Policies
Administrative Services Agreement. OA/NP Renewal Policies shall also include
renewals of OA/NP Renewal Policies, but exclude any New Commercial Lines Policy
issued by Oregon Auto or North Pacific. Any issuance of an insurance policy by
Oregon Auto or North Pacific prior to the closing of the Stock Purchase
Agreement, pursuant to the terms of the Post-Closing Serviced Policies
Administrative Services Agreement that if it had been issued by another
OneBeacon Insurer would have been a OneBeacon Renewal Policy or a IMOW Renewal
Policy, shall be deemed to be an OA/NP Renewal Policy.
"OA/NP REQUIRED RENEWAL POLICIES" means renewals of Insurance
Policies that are required to be renewed by applicable law or contract, issued
by Oregon Auto or North Pacific, and in the case of such issuances prior to the
closing of the Stock Purchase Agreement, pursuant to the terms of the
Post-Closing Serviced Policies Administrative Services Agreement. OA/NP Required
Renewal Policies shall also include renewals of OA/NP Required Renewal Policies.
"OA/NP REWRITTEN POLICIES" means all policies, binders, slips and
other agreements of insurance (including all supplements, endorsements, riders
and ancillary agreements in connection therewith) issued by Oregon Auto or North
Pacific on or after the closing of the Stock Purchase Agreement to insureds
holding Insurance Policies (other than Insurance Policies issued by Oregon Auto
or North Pacific), which would be OneBeacon Renewal Policies or OneBeacon
Required Renewal Policies if issued by a OneBeacon Insurer, including renewals
of such OA/NP Rewritten Policies, but excluding any New Commercial Lines Policy
issued by Oregon Auto or North Pacific.
"OBIC" means OneBeacon Insurance Company, a Pennsylvania-domiciled
stock insurance company.
"OBIC INDEMNITY REINSURANCE AGREEMENT" means the OBIC Indemnity
Reinsurance Agreement between Liberty Northwest and OBIC in the form of Exhibit
F-2 of the Master Agreement.
"OFFER OF EMPLOYMENT" shall have the meaning set forth in Section
5.09(b) of the Master Agreement.
"OFFSET AGREEMENT" means the Offset Agreement by and among the
parties set forth therein in the form of Exhibit P-1 of the Master Agreement.
15
"OFFSET AGREEMENTS" means the Offset Agreement and the Liberty
Northwest Offset Agreement.
"OFFSETTABLE AGREEMENTS" has the respective meanings set forth in
each of the Offset Agreements.
"ONEBEACON" means OneBeacon Corporation, a Delaware corporation.
"ONEBEACON DESIGNATED REPRESENTATIVE" means OneBeacon.
"ONEBEACON GROUP" means OneBeacon and the OneBeacon Subsidiaries.
"ONEBEACON IMAGING EQUIPMENT AND APPLICATIONS" means that portion of
the Imaging Equipment and Applications that will be owned by OBIC after the
Effective Date as set forth in SCHEDULE 2(b) of the Imaging Transition Services
Agreement.
"ONEBEACON INSURER" means each OneBeacon Subsidiary that has issued
Insurance Policies, a list of which is set forth on SCHEDULE 3.12(a) of the
Master Agreement.
"ONEBEACON LICENSED SOFTWARE" means all Owned Generally Used
Software and all Fixes and Upgrades.
"ONEBEACON MATERIAL ADVERSE EFFECT" means any event, occurrence,
circumstance or effect that has a material adverse effect (i) on the business,
financial condition or results of operations of the Business taken as a whole,
or (ii) on the ability of OneBeacon or any OneBeacon Subsidiary to perform its
or their obligations under the Master Agreement or any Ancillary Agreement.
"ONEBEACON NEW POLICIES" means (i) policies issued by a OneBeacon
Insurer (other than Oregon Auto or North Pacific) to insureds who were not
insured under the Insurance Policies, but excluding assignments under
Involuntary Mechanisms issued by a OneBeacon Insurer, (ii) policies issued by a
OneBeacon Insurer (other than Oregon Auto or North Pacific) to insureds under
Insurance Policies which are not OneBeacon Renewal Policies or OneBeacon
Required Renewal Policies, and (iii) any New Commercial Lines Policy that is
voluntarily renewed by a OneBeacon Insurer (other than Oregon Auto or North
Pacific), in each case, pursuant to the terms of the Post-Closing Serviced
Policies Administrative Services Agreement and through an Independent Producer
resident in a jurisdiction other than Idaho, Montana, Oregon or Washington.
OneBeacon New Policies shall also include renewals of OneBeacon New Policies.
"ONEBEACON PLAN" shall have the meaning set forth in Section
5.09(c).
"ONEBEACON POST-CLOSING POLICIES" means the OneBeacon Renewal
Policies, the OneBeacon Required Renewal Policies and the OneBeacon New
Policies, collectively.
"ONEBEACON PRIVACY POLICY" means the respective privacy policies of
OneBeacon and the OneBeacon Subsidiaries, copies of which have been made
available to Liberty.
16
"ONEBEACON PROGRAM" shall have the meaning set forth in Section
5.09(d) of the Master Agreement.
"ONEBEACON RENEWAL POLICIES" means (i) renewals of Insurance
Policies that are voluntarily issued by a OneBeacon Insurer (other than Oregon
Auto or North Pacific) and (ii) assignments under Involuntary Mechanisms issued
by a OneBeacon Insurer (other than Oregon Auto or North Pacific), in each case,
pursuant to the terms of the Post-Closing Serviced Policies Administrative
Services Agreement and through an Independent Producer resident in a
jurisdiction other than Idaho, Montana, Oregon or Washington. OneBeacon Renewal
Policies shall also include renewals of OneBeacon Renewal Policies, but exclude
any New Commercial Lines Policy issued by a OneBeacon Insurer. Any issuance of
an insurance policy by a OneBeacon Insurer (other than Oregon Auto or North
Pacific), pursuant to the terms of the Post-Closing Serviced Policies
Administrative Services Agreement through an Independent Producer resident in a
jurisdiction other than Idaho, Montana, Oregon or Washington, that if it had
been issued by another OneBeacon Insurer would have otherwise been a OneBeacon
Renewal Policy, or been a IMOW Renewal Policy or a OA/NP Renewal Policy, shall
be deemed to be a OneBeacon Renewal Policy.
"ONEBEACON REQUIRED RENEWAL POLICIES" means renewals of Insurance
Policies that are required to be renewed by applicable law or contract, issued
by a OneBeacon Insurer (other than Oregon Auto or North Pacific), pursuant to
the terms of the Post-Closing Serviced Policies Administrative Services
Agreement and through an Independent Producer resident in a jurisdiction other
than Idaho, Montana, Oregon or Washington. OneBeacon Required Renewal Policies
shall also include renewals of OneBeacon Required Renewal Policies.
"ONEBEACON SUBSIDIARY" means each of the Subsidiaries of OneBeacon
listed on Exhibit A-1 of the Master Agreement.
"ONEBEACON SUBSIDIARIES DB PLAN" means the qualified deferred
benefit pension plan or plans of the OneBeacon Subsidiaries.
"OPTION" has the definition in Section 2.1 of the RAM Reinsurance
Option Agreement.
"ORDER" means any judgment, decree, injunction or order of any
Governmental Entity or arbitrator.
"OREGON AUTO" means Oregon Automobile Insurance Company, an Oregon-
domiciled stock insurance company.
"OTHER INCOME" means line items 10, 11 and 14A listed under "Other
Income," of the "Underwriting and Investment Exhibit - Statement of Income" of
the NAIC Blank Statutory Annual Statement Form for the year 2000.
"OTHER UNDERWRITING EXPENSES" means those expense items listed under
"Other Underwriting Expenses," Column 2 of Part 4-Expenses of the "Underwriting
and Investment Exhibit" on page 12 of the NAIC Blank Statutory Annual Statement
Form for the year 2000; PROVIDED that Other Underwriting Expenses shall not
include (i) extraordinary one-time expenses
17
of the parties related to effecting the Master Agreement, (ii) Unallocated Loss
Adjustment Expenses, or (iii) Independent Producer roll-over commissions
contemplated by the Renewal Rights Agreement.
"OUTPLACEMENT BENEFITS" shall have the meaning set forth in Section
5.09(c).
"OUTWARD REINSURANCE AGREEMENTS" means all voluntary or involuntary
third-party ceded reinsurance and retrocession treaties, facultative placements,
and agreements or other contracts of ceded reinsurance in-force and relating to
the Business as of the date of the Master Agreement to which any OneBeacon
Insurer is a party, all of which agreements are set forth in SCHEDULE 3.20 of
the Master Agreement.
"OWNED EXCLUSIVELY USED SOFTWARE" shall mean all computer software
programs and databases and external data services, including all source code,
object code, any programs or routines used exclusively to maintain the
aforementioned programs, databases and services, executables and documentation,
used exclusively in the conduct of the Business which are owned by a OneBeacon
Subsidiary or OneBeacon.
"OWNED GENERALLY USED INTELLECTUAL PROPERTY RIGHTS" shall mean all
Intellectual Property Rights used both in the conduct of the Business and also
in the conduct of a OneBeacon Subsidiary or OneBeacon's other businesses and not
used exclusively in the Business and which are owned by a OneBeacon Subsidiary
or OneBeacon.
"OWNED GENERALLY USED INTELLECTUAL PROPERTY RIGHTS LICENSE
AGREEMENT" means the agreement by and between OneBeacon and Liberty attached to
the Master Agreement as Exhibit M-2.
"OWNED GENERALLY USED SOFTWARE" shall mean all computer software
programs and databases and external data services, including all source code,
object code, any programs or routines owned by OneBeacon or any OneBeacon
Subsidiary used generally to maintain the aforementioned programs, databases and
services and the Owned Generally Used Software, executables and documentation,
used both in the conduct of the Business and also in the conduct of a OneBeacon
Subsidiary or OneBeacon's other businesses and not used exclusively in the
Business which are owned by a OneBeacon Subsidiary or OneBeacon.
"OWNED PROPERTY" means real property owned by a OneBeacon Subsidiary
or OneBeacon and used in connection with the Business for which it is
anticipated that a lease with Liberty or an Affiliate will be entered into
pursuant to the Master Agreement.
"PARENT" means White Mountains Insurance Group Ltd., a limited
liability company continued and organized under the laws of Bermuda.
"PEERLESS" means Peerless Insurance Company, a New
Hampshire-domiciled stock insurance company.
"PEERLESS POST-CLOSING INDEMNITY REINSURANCE AGREEMENT" means the
Peerless Post-Closing Indemnity Reinsurance Agreement between Peerless and OBIC
in the form of Exhibit E-1 of the Master Agreement.
18
"PEERLESS RETROCEDED POLICIES" means the OneBeacon Renewal Policies
and the OneBeacon Required Renewal Policies reinsured by Peerless pursuant to
the Peerless Post-Closing Indemnity Reinsurance Agreement.
"PERMITS" means all Federal, state, local or foreign governmental or
regulatory licenses, permits, orders, approvals, registrations, authorizations,
qualifications and filings.
"PERMITTED LIENS" means, as to any asset, (i) Liens for Taxes not
yet due and payable or being contested in good faith by appropriate proceedings
as disclosed in SCHEDULE 3.06 of the Master Agreement, (ii) Liens arising by
operation of law, (iii) other Liens that do not in the aggregate materially
detract from the value or materially interfere with the present or reasonably
contemplated use of such asset in the Business, and (iv) in the case of Leased
Property Leases, Liens affecting the interest of the lessor (or, in the
instances where the Leased Property Leases are subleases, the sublessor and
prime lessor) of the Leased Property Leases.
"PERSON" means any individual, corporation, partnership, firm, joint
venture, association, limited liability company, limited liability partnership,
joint-stock company, trust, unincorporated organization, governmental, judicial
or regulatory body, business unit, division or other entity.
"PLANS" means each employee benefit and compensation plan, practice,
agreement, policy and arrangement maintained by any OneBeacon Subsidiary or any
OneBeacon Subsidiary's Affiliate and which provides benefits, payments or
compensation for any Business Employee.
"POLICY TERM" means the period commencing on January 1, 2004 and
ending on December 31, 2006.
"POST-CLOSING ADMINISTRATIVE SERVICES" means the administrative and
other services to be performed by Liberty set forth in SCHEDULE 4 to the
Post-Closing Serviced Policies Administrative Services Agreement.
"POST-CLOSING ADMINISTRATIVE SERVICES FEE" means an amount equal to
100% of the Actual Costs incurred by Liberty in providing the Post-Closing
Administrative Serviced Policies Administrative Services pursuant to the
Post-Closing Serviced Policies Administrative Services Agreement, determined in
accordance with SCHEDULE 8.3 thereof; PROVIDED, HOWEVER, that the RAM Group
Companies' Other Underwriting Expenses component of the Actual Costs shall be
subject to the Expense Cap.
"POST-CLOSING POLICIES" means the OneBeacon Post-Closing Policies,
the OA/NP Post-Closing Policies and the IMOW Post-Closing Policies,
collectively.
"POST-CLOSING SERVICED POLICIES ADMINISTRATIVE SERVICES AGREEMENT"
means the Post-Closing Serviced Policies Administrative Services Agreement among
OneBeacon, the OneBeacon Insurers and Liberty, in the form of Exhibit B-2 of the
Master Agreement.
19
"POST-CLOSING SERVICED POLICIES BOOKS AND RECORDS" shall have the
meaning set forth in Section 5.1(a) of the Post-Closing Serviced Policies
Administrative Services Agreement.
"PRE-CLOSING ADMINISTRATIVE SERVICES" means the administrative and
other services to be performed by Liberty set forth in SCHEDULE 4 to the
Pre-Closing Serviced Policies Administrative Services Agreement.
"PRE-CLOSING ADMINISTRATIVE SERVICES FEE" means an amount equal to
105% of the Actual Costs incurred by Liberty in providing the Pre-Closing
Serviced Policies Administrative Services pursuant to the Pre-Closing Serviced
Policies Administrative Services Agreement, determined in accordance with
Schedule 8.3 thereof.
"PRE-CLOSING SERVICED POLICIES ADMINISTRATIVE SERVICES AGREEMENT"
means the Pre-Closing Serviced Policies Administrative Services Agreement among
OneBeacon, the OneBeacon Insurers and Liberty, in the form of Exhibit B-1 of the
Master Agreement.
"PRE-CLOSING SERVICED POLICIES BOOKS AND RECORDS" shall have the
meaning set forth in Section 5.1(a) of the Pre-Closing Serviced Policies
Administrative Services Agreement.
"PREMIUM TAX CREDITS" shall have the meaning set forth in Section
10.2 of the Post-Closing Serviced Policies Administrative Services Agreement
"PREVAILING INTEREST RATE" means the London Interbank Offered Rate
quoted for six month periods as reported in The Wall Street Journal on the
Closing Date.
"PURCHASE OFFER" shall have the meaning set forth in Section
8.03(a)(iv)(B) of the Master Agreement.
"PURCHASE PRICE" means ten million and one dollars ($10,000,001) in
cash.
"RAM'S EXPENSES" means Other Underwriting Expenses and Unallocated
Loss Adjustment Expenses, incurred with respect to the Reinsured Policies.
"RAM GROUP COMPANIES" means (i) Liberty Northwest, (ii) the
Affiliates of Liberty which at any point in time, and from time to time, market
their property and casualty insurance products through an independent agency
distribution channel under the Liberty strategic business unit entitled as of
the date of the Master Agreement "Liberty Regional Agency Markets" or any
successor strategic business unit of Liberty, which as of the date of the Master
Agreement, consists of the companies listed on Exhibit A-2 of the Master
Agreement, and (iii) Oregon Auto and North Pacific from and after the closing of
the Stock Purchase Agreement so long as they remain Affiliates of Liberty;
PROVIDED, HOWEVER, that Liberty Northwest shall not be considered a RAM Group
Company for purposes of the Option.
"RAM INDEMNITY REINSURANCE AGREEMENT" has the meaning set forth in
Section 2.1 of the RAM Reinsurance Option Agreement.
"RAM REINSURANCE OPTION AGREEMENT" means the RAM Reinsurance Option
Agreement between OneBeacon and Liberty in the form of Exhibit G of the Master
Agreement.
20
"RAM REWRITTEN POLICIES" means all policies, binders, slips and
other agreements of insurance (including all supplements, endorsements, riders
and ancillary agreements in connection therewith) issued by any of the RAM Group
Companies (other than Oregon Auto and North Pacific) to insureds holding
Insurance Policies, which would be OneBeacon Renewal Policies or OneBeacon
Required Renewal Policies if issued by a OneBeacon Insurer, including renewals
of such RAM Rewritten Policies, but excluding any New Commercial Lines Policy
issued by a RAM Group Company.
"RECONCILIATION INVOICE" means (i) for purposes of the Pre-Closing
Serviced Policies Administrative Services Agreement, the meaning set forth in
Section 8.3 thereof and (ii) for purposes of the Post-Closing Serviced Policies
Administrative Services Agreement, the meaning set forth in Section 8.3 thereof.
"REINSURED LIABILITIES" means the liability for Loss and Allocated
Loss Adjustment Expenses, including Extra Contractual Obligations.
"REINSURED POLICY" means all policies, binders, slips and other
agreements of insurance (including all supplements, endorsements, riders and
ancillary agreements in connection therewith) issued or renewed by the RAM Group
Companies that have policy periods that become effective during the Policy Term;
PROVIDED, HOWEVER, that any policies issued or renewed by a RAM Group Company at
any time that it is no longer an Affiliate of Liberty shall not be deemed
Reinsured Policies.
"RELEASE" means any release, spill, emission, leaking, injecting,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor air, surface water, groundwater, land, wetlands, surface and
subsurface strata.
"RENEWAL POLICIES" means the OneBeacon Renewal Policies, the OA/NP
Renewal Policies and the IMOW Renewal Policies, collectively.
"RENEWAL RIGHTS AGREEMENT" means the Renewal Rights Agreement
between Liberty and the OneBeacon Subsidiaries substantially in the form of
Exhibit H of the Master Agreement.
"REPRESENTATIVE" means any officer, director, employee, agent,
investment banker, attorney, financial advisor, accountant, actuary or other
representative.
"REQUIRED RENEWAL POLICIES" means the OneBeacon Required Renewal
Policies, the OA/NP Required Renewal Policies and the IMOW Required Renewal
Policies, collectively.
"RESUMED IMAGING SERVICES" means any Imaging Transition Service
which has been terminated, but which OBIC requests Liberty Group to resume.
"RESUMED SERVICE" means any Transition Service which has been
terminated at which Liberty's request, including but not limited to any
Scheduled Service or Unspecified Service that has been stopped or otherwise
terminated at Liberty's request, but which Liberty requests OBIC to resume.
21
"RETROCEDED POLICIES" means the Peerless Retroceded Policies and the
Liberty Northwest Retroceded Policies.
"REWRITTEN INDEMNITY REINSURANCE AGREEMENT" means the Rewritten
Indemnity Reinsurance Agreement between Peerless and OBIC in the form of Exhibit
F-1 of the Master Agreement.
"REWRITTEN POLICIES" means the RAM Rewritten Policies and the OA/NP
Rewritten Policies, collectively.
"SALE NOTICE" shall have the meaning set forth in Section
8.03(a)(iv)(B) of the Master Agreement.
"SCEA" shall mean the source code escrow agreement attached as
Exhibit B to the Software License.
"SCHEDULED SERVICES" means each service listed on SCHEDULE 2(a)(ii)
and SCHEDULE 2(a)(ii) of the Transition Services Agreement (as such schedules
may be revised and as additional schedules may be added from time to time
pursuant to Section 2 of the Transition Services Agreement).
"SEPARATION SERVICES" means such services as are reasonably required
to enable OBIC to separate the Business from OBIC, including, without
limitation, claim file separation, conversion assistance services, policy file
separation, physically separating hardware and software and security.
"SERVICED POLICIES" means the In-Force Policies, the Terminated
Policies and the Specially Serviced Policies, collectively.
"SEVERANCE PLANS" means each plan, practice, agreement, policy and
arrangement which provides for severance, termination and/or outplacement
benefits and/or payments for any Business Employee.
"SHARED BUSINESS EMPLOYEES" shall have the meaning set forth in
Section 3.10(a) of the Master Agreement.
"SOFTWARE LICENSE AGREEMENT" means the agreement by and between
OneBeacon and Liberty attached to the Master agreement as Exhibit M-1.
"SPECIAL DAMAGES" shall mean any compensatory, extra contractual,
consequential and/or punitive damages, fines or penalties, and expenses relating
thereto.
"SPECIAL PROJECTS" means a service that Liberty Group requests OBIC
to provide and that OBIC has agreed to provide in writing that does not
reasonably fall within one of the identified categories of Transition Services.
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"SPECIALTY AND NATIONAL ACCOUNTS LINES OF BUSINESS" means the lines
of business described on SCHEDULE 1.01(d) of the Master Agreement and identified
on the systems of OneBeacon by the codes listed on such Schedule.
"SPECIALLY SERVICED POLICIES" means the policies issued by any
OneBeacon Insurer to insureds in the Excluded States that have exposures located
in non-Excluded States and that the OneBeacon Designated Representative has
requested, or will request, Liberty to provide Pre-Closing Administrative
Services for, and Liberty has agreed, or will agree, to provide such services.
"STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement
between Liberty Northwest and OBIC attached as Exhibit I of the Master
Agreement.
"SUBLEASE AGREEMENT" means a sublease agreement by and between
Liberty or its Affiliate and OneBeacon or a OneBeacon Subsidiary in the form of
Exhibit O-1 to the Master Agreement.
"SUBSIDIARY" means, with respect to any Person on a given date, any
other Person of which a majority of the voting power of the equity securities or
equity interests is owned directly or indirectly by such Person.
"TANGIBLE ASSETS" means the furniture, fixtures, equipment (computer
and other), supplies and other tangible personal property owned by OneBeacon or
any of the OneBeacon Subsidiaries and used or held for use exclusively in
connection with the Business, including the assets listed by category and
location on SCHEDULE 1.01(c) of the Master Agreement and any other such assets
that are purchased between the date of the Master Agreement and the Closing Date
in accordance with the terms of the Master Agreement.
"TAX" means (a) any net income, gross income, gross receipts,
alternative or add-on minimum, sales, use, ad valorem, franchise, profits,
license, withholding, payroll, employment, excise, transfer, recording,
severance, stamp, occupation, premium, property, environmental, custom duty, or
other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest and any penalty, addition to Tax or
additional amount imposed by a Tax Authority; (b) any liability of any Person
for the payment of any amounts of the type described in clause (a) for any
Taxable Period resulting from the application of Treasury Regulation Section
1.1502-6 or, in the case of any similar provision applicable under state, local
or foreign law; and (c) any liability of any person for the payment of any
amounts described in clause (a) as a result of any express or implied obligation
to indemnify any other party or as successor or transferee.
"TAX AUTHORITY" means the Internal Revenue Service and any other
domestic or foreign governmental entity responsible for the administration
and/or collection of any Tax.
"TAX RETURNS" means all returns, reports, forms, estimates or
information statements relating to or required to be filed in connection with
any Tax.
"TECHNOLOGY CHANGE" means a change to the technology infrastructure
or applications used to provide the Transition Services, which change adds or
revises services,
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functions or features, or has an impact on another party's technology
infrastructure or applications.
"TERMINATED POLICIES" means policies issued by OneBeacon Insurers
that have expired by their terms or that have been otherwise terminated prior to
the Effective Date and that the OneBeacon Designated Representative has
requested, or will request, Liberty to provide Pre-Closing Administrative
Services for, and Liberty has agreed, or will agree, to provide such services.
"TERMINATION ASSISTANCE" means such reasonable services to be
provided under the Transition Services Agreement by OBIC to Liberty Transition
Group as Liberty Transition Group may determine will be reasonably necessary for
Liberty Transition Group or its designee to assume the performance of a
terminated Transition Service.
"THIRD PARTY CLAIM" means, for purposes of the Master Agreement or
any Ancillary Agreement, a claim or demand made by, or an action, proceeding or
investigation instituted by, any Person not a party to such agreement.
"THIRD PARTY CONFIDENTIALITY AGREEMENT" means any confidentiality
agreement under which information concerning the Business has been provided to
potential purchasers of the Business.
"THIRD PARTY VENDOR SERVICES" means the services in effect as of the
Effective Date that are provided to OBIC by a third party vendor in connection
with the Transition Services and which are set forth on SCHEDULE 2(a)(vi) of the
Transition Services Agreement.
"TRANSFER DOCUMENTS" means the Bill of Sale and General Assignment,
the License Agreements, any Lease Agreement, Sublease Agreement or Assignment
and Assumption Agreement contemplated by Section 5.15 of the Master Agreement
and such other documents and instruments as Liberty may reasonably request in
order to transfer, to the extent provided for in the Master Agreement, all of
the right, title and interest of the OneBeacon Subsidiaries or OneBeacon, as
applicable, in the Transferred Assets to Liberty.
"TRANSFERRED ASSETS" means all of the right, title and interest of
OneBeacon and the OneBeacon Subsidiaries in (i) the Assigned and Assumed
Contracts, (ii) the Tangible Assets, (iii) the Intangible Assets, (iv) the
Assignable Licensed Exclusively Used Software, (v) the Owned Exclusively Used
Software, (vi) the Books and Records owned by OneBeacon or any of the OneBeacon
Subsidiaries and used exclusively in connection with the Business, (vii) (A) the
Data Centers (including without limitation the Hawkeye System) and (B) all
hardware owned by North Pacific or Oregon Auto, and (viii) to the extent
assignable, all guaranties, warranties, indemnities and other rights against
third parties of OneBeacon and each OneBeacon Subsidiary with respect to any
asset referred to in clause (i), (ii), (iii), (iv), (v), (vi) or (vii) of this
definition; provided that the "Transferred Assets" shall not include (i) any of
the foregoing to the extent they are terminated, transferred or otherwise
disposed of as permitted by Section 5.01 of the Master Agreement between the
signing date of the Master Agreement and the Closing Date or (ii) any Excluded
Assets.
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"TRANSFERRED EMPLOYEES" means the Business Employees who accept an
Offer of Employment.
"TRANSITION PLAN" means a plan that sets forth how the RAM Group
Companies plan to transition the Insurance Policies to Rewritten Policies in
each RAM Group Company's respective territory following the Closing Date, which
plan is attached at Exhibit K to the Master Agreement.
"TRANSITION PROJECT MANAGER" means the person, designated by
OneBeacon Group and Liberty Group respectively, who is primarily responsible for
administering the Transition Services Agreement, with the authority and
obligations set forth in Section 8(b) thereto.
"TRANSITION SERVICES" means such support services as Liberty shall
reasonably request to conduct the Business, operate the Data Centers, and
provide any services by Liberty and its designated Affiliates in accordance with
the Administrative Services Agreements and the Imaging Transition Services
Agreement, including the Scheduled Services described in Section 2(a)(ii) of the
Transition Services Agreement, the unspecified Transition Services described in
Section 2(a)(iii) of the Transition Services Agreement, the Resumed Services
described in Section 2(a)(iv) of the Transition Services Agreement, the
Separation Services described in Section 2 (a)(v) of the Transition Services
Agreement, Termination Assistance described in Section 2(a)(vii) of the
Transition Services Agreement, and the Special Projects described in Section
2(i) of the Transition Services Agreement.
"TRANSITION SERVICES AGREEMENT" means the Transition Services
Agreement between OneBeacon Insurance Company and Liberty in the form of Exhibit
J of the Master Agreement.
"TRANSITION SERVICES DATA" means output data from the delivery of
Transition Services by OBIC to Liberty under the Transition Services Agreement,
but excluding, in any event, any data or information covered under Section
8.02(a) of the Master Agreement and any other data or information that OBIC is
required to own under any applicable statute, law, ordinance, rule or
regulation.
"TRANSITION SERVICES WORK" means output works (for example, but
without limitation, software modifications and design documents) from the
delivery of Transition Services by OBIC to Liberty under the Transition Services
Agreement, but excluding, in any event, any modifications to the Owned Generally
Used Software (including all Fixes and Upgrades) and Licensed Generally Used
Software and any other works that OBIC is required to own under any applicable
statute, law, ordinance, rule or regulation.
"TSA INPUTS" means data and information produced from the Owned
Exclusively Used Software and Licensed Exclusively Used Software that will be
used by OBIC to produce the premium and loss records for the Transition Services
in a format as of the Effective Date or as the parties otherwise agree.
"TSA LIBERTY EQUIPMENT" means all equipment managed and controlled
by Liberty Transition Group and used to provide the Transition Services and the
Imaging Transition Services.
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"TSA MONTHLY INVOICE" means an invoice setting forth the estimated
fees attributable to each Scheduled Service delivered pursuant to Section 3(b)
of the Transition Services Agreement.
"TSA RECONCILIATION INVOICE" means the reconciliation of Monthly
Invoices for each calendar quarter for each applicable Scheduled Service
delivered pursuant to Section 3(c) of the Transition Services Agreement.
"TSA TERMINATION PLAN" means a proposed transition plan describing
the procedures to be used by Liberty Group for the migration of Transition
Services to its own management control.
"UNALLOCATED LOSS ADJUSTMENT EXPENSES" means other adjusting
expenses incurred in connection with the adjusting, recording, and paying of
claims under policies of insurance, that are not included in the definition of
Allocated Loss Adjustment Expenses.
"UNAUTHORIZED CODE" means any virus, Trojan horse, trap door, worm
or other software routines designed to permit unauthorized access, to disable,
erase or otherwise harm any other software, hardware or data, or to perform
similar or other such action.
"UPGRADE" means each release, point or version upgrade of the
OneBeacon Licensed Software provided by OneBeacon Group in accordance with the
Transition Services Agreement.
"WARN" shall have the meaning set forth in Section 5.09(g) of the
Master Agreement.
"WAIVING PARTY" shall have the meaning set forth in Section 10.06 of
the Master Agreement.
"YEAR 1" means the period from the Effective Date through October
31, 2002.
"YEAR 2" means the period from November 1, 2002 through October 31,
2003.
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