MANAGEMENT SERVICES AGREEMENT
EXHIBIT 10.36
This Management Services Agreement (the “Agreement”) is made and entered into this 1st day of
January 2009, by and between Liberty Mutual Insurance Company (“Liberty Mutual”), a Massachusetts
stock insurance company and American States Preferred Insurance Company (“ASPIC”), an Indiana stock
insurance company.
The listing of the following services to be performed under this Agreement is not intended to
limit the performance of other services that may be provided by Liberty Mutual to or on behalf
of ASPIC, as may be agreed to by the parties from time to time:
A. Accounting, financial, tax and auditing. Subject to the direction and control of ASPIC’s
Board of Directors and responsible officers, Liberty Mutual shall provide ASPIC with such financial
and accounting services as may be desirable, including:
1. Preparation and maintenance of annual and quarterly financial statements and other reports
providing information required by the state of domicile and other states in which ASPIC is
transacting business, the maintenance of necessary and proper records and books of account with
respect to the business of ASPIC, and the maintenance and compilation of all data required for the
preparation of tax returns.
2. Assistance to ASPIC in connection with the examination or audit of the books, records,
affairs and activities of ASPIC by governmental, insurance or taxing authorities having regulatory
or taxing authority with respect to the operations of ASPIC, or by any firm of certified public
accounts appointed by ASPIC to audit its books, records and accounts.
3. Assistance to ASPIC with treasury and accounts payable functions as may be determined
between the parties. ASPIC shall certify to Liberty Mutual the names and specimen signatures of all
officers or employees of ASPIC who are authorized to sign instructions on its behalf. Liberty
Mutual shall have the right to require that all instructions made in connection with this Agreement
meet its satisfaction as to content, form and authenticity.
Nothing in this Agreement shall be construed to alter the fact that ASPIC’s books records and
accounts are owned by ASPIC; and ASPIC shall have the right to inspect, or authorize others to
inspect, its books, records and accounts.
B. Purchasing, payroll and employee benefits. Subject to the direction and control of ASPIC’s Board
of Directors and responsible officers, Liberty Mutual shall provide ASPIC with such services
involving purchasing (including access to group purchasing contracts and fleet management
services), payroll processing, and employee relations and/or benefits as may be permissible and
desirable.
C. Information Technology and Support. Subject to the direction and control of ASPIC’s Board of
Directors and responsible officers, Liberty Mutual shall provide the technology infrastructure,
information technology systems, software, data center management, network management services,
monitoring, management/oversight, and support services to ASPIC and shall provide trouble-shooting
functions on behalf of ASPIC.
V. Standards for Performance of Delegated Administrative and Management Functions.
A. At all times during the term of this Agreement, Liberty Mutual shall perform all delegated
administrative and management functions at a level that is at least equal to its standards for
performing such functions on behalf of its own insurance operations. In addition, all
delegated administrative and management functions shall be performed in accordance with, and
subject to, at all times, the relevant and applicable state (or federal) insurance laws and
regulations to which ASPIC’s insurance operations are, or may be, subject.
B. In the event that Liberty Mutual receives a notice from any governmental agency, board, bureau,
commission or public authority of any type, of any alleged violation of any state or federal
insurance law, such notice shall immediately be forwarded to ASPIC. Liberty Mutual shall cooperate
in responding to any such governmental notice as such notice relates to its rendering of services
under this Agreement.
Insurance, any request for such approval shall seek an effective date that mirrors the date
expressed above.
(a) Material failure by Liberty Mutual to perform the services delegated in accordance
with the standards set forth in this Agreement; provided, however, that upon notification
by ASPIC that the services so delegated are not being performed in an appropriate or
satisfactory manner, Liberty Mutual shall have thirty (30) days in which to cure the
deficiency. In the event the deficiency is not cured to the satisfaction of ASPIC, ASPIC
may immediately terminate this Agreement.
(b) nonpayment of costs by a delegating party to the party performing the services so
delegated.
(c) The suspension, revocation or other restriction on the insurance license of either
ASPIC or Liberty Mutual.
(d) The insolvency, voluntary or involuntary bankruptcy, reorganization or liquidation
of either ASPIC or Liberty Mutual.
(e) In the event of (i) the acquisition of ASPIC by a third party from Liberty Mutual;
or (ii) any other change in control with causes Liberty Mutual to no longer maintain a
majority on the Board of Directors of ASPIC, then this Agreement shall terminate with
respect to ASPIC as of the effective date of the change of control.
B. ASPIC’s Indemnification of Liberty Mutual. ASPIC shall indemnify Liberty Mutual and hold Liberty
Mutual harmless ASPIC from all actions, liabilities, costs and expenses arising out of or in any
way related to Liberty Mutual’s services under this Agreement, unless directly related to Liberty
Mutual’s willful neglect or gross negligence.
XI. Amendment. This Agreement may only be amended upon the written agreement of both patties
hereto.
XIII. Governing Law. This Agreement shall be governed by and construed in accordance with the laws
of the Commonwealth of Massachusetts (without application of the conflict of laws principles
thereof).
Liberty Mutual Insurance Company |
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/s/ Xxxxx X. Xxxx | ||||
By: | Xxxxx X. Xxxx | |||
Its: Assistant Secretary |
American States Preferred Insurance Company |
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/s/ Xxxxxxx X. Xxxxxx | ||||
By: | Xxxxxxx X. Xxxxxx | |||
Its: Chief Financial Officer | ||||