RESTATED
ADMINISTRATIVE SERVICES AGREEMENT
Originally effective January 1, 2001
This
Restated Administrative Services Agreement (hereinafter the
“Agreement”) is entered into by and between Continental
Casualty Company (“CNA”), and CNA Surety Corporation
(“Surety”) effective as of July 1,
2004.
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(A)
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WHEREAS, Surety and its subsidiaries
operate and maintain personnel for the general purposes of
engagement in the business of marketing, underwriting and
administering certain types of insurance products and programs;
and,
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(B)
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WHEREAS, Surety and its subsidiaries
have certain specialized knowledge, capacity and regulatory
compliance expertise in connection with the administration of
insurance statutes and regulations that require processing of large
volumes of information; and,
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(C)
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WHEREAS, CNA is a large enterprise
which maintains the capacity to provide extensive administrative,
financial and legal support services to Surety; and,
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(D)
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WHEREAS, CNA is the majority
shareholder of Surety, owning approximately sixty — four
percent (64%) of the stock of Surety; and,
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(E)
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WHEREAS, CNA and Surety each wish to
purchase or have access to certain services to be provided by the
other and the parties are willing to sell the services or provide
access to those services to each other and the parties agree that
each should compensate the other for its proportionate share of the
other’s overhead which is required to support those
services.
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NOW,
THEREFORE, in consideration of the premises and mutual covenants
and agreements herein contained, the parties agree as
follows:
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1.
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The
parties shall purchase and/or have access to certain services
provided by each other and shall compensate each other therefor in
accordance with the provisions of this Agreement. Further, each
party shall reimburse the other for the proportionate cost of the
other’s administrative and overhead costs incurred in
supporting the services provided pursuant to this Agreement. The
assessment charged to reimburse such costs (hereinafter the
“Management Fee”) represents each party’s share
of the general and administrative corporate overhead pool of costs
of the other party. The activities included in the pool of costs
are broad in nature and apply to all Surety, Surety affiliates, CNA
Financial Corporation (“CNAF”), CNA and CNA affiliate
— majority owned operations.
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2.
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The
CNA pool of costs includes expenses related to establishing senior
staff direction and developing and promoting the corporate
identity. Such expenses include, but are not limited to, the costs
incurred by CNA which are related to all or parts of the following
functions: Chairman’s Office, Human Resources, Information
Technology, Corporate Finance, Loews Corporation Management Fee,
Internal Audit, Capital Management, and other financial management
activities. The CNA Management Fee will be based upon an agreed
pool of costs. The CNA Management Fee is determined according to
the same cost structure and according to the same allocation
methods as CNA applies to other CNA insurance company affiliates
and subsidiaries. Expenses incurred and payments received shall be
allocated to Surety in accordance with customary insurance
accounting practices consistently applied. The CNA Management Fee
shall change each year based on the total CNA pool of
costs.
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3.
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The
Surety pool of costs includes, but is not limited to, costs
incurred to process all CNA producer licenses and appointments and
such other services as Surety may perform for CNA. The Surety
Management Fee will be based upon an agreed pool of costs. The
Surety Management Fee is determined according to the same cost
structure and according to the same allocation methods as CNA
applies to other CNA insurance company affiliates and subsidiaries.
Expenses incurred and payments received shall be allocated to CNA
in accordance with customary insurance accounting practices
consistently applied. The Surety Management Fee shall change each
year based on the total Surety pool of costs.
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4.
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Surety and any of its subsidiaries
shall have the option of purchasing additional services from
CN
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