Common use of Deposit of Assets to the Trust Account Clause in Contracts

Deposit of Assets to the Trust Account. (a) The Grantor shall establish the Trust Account for the sole use and benefit of the Beneficiary, and the Trustee shall administer the Trust Account in its name as trustee for the Beneficiary. The Trust Account shall be subject to withdrawal by the Beneficiary solely as provided herein. (b) Upon the establishment of the Trust Account, the Grantor shall transfer to the Trustee, for deposit to the Trust Account, the assets listed in Exhibit B hereto with a Fair Market Value of $11,506,072, which is equal to the sum of (i) one hundred five percent (105%) of the sum of case reserves for losses and loss adjustment expenses and case IBNR reserves for losses and loss adjustment expenses and the actuarially determined IBNR reserves as of June 30, 2007, all of which are calculated net of any and all amounts ceded by the Beneficiary under any Inuring Reinsurance, less the lesser of (A) the aggregate amount of losses and loss adjustment expenses paid, or (B) the aggregate amount of case reserves for losses and loss adjustment expenses, plus the aggregate amount of case IBNR reserves for losses and loss adjustment expenses, with respect to claims closed after June 30, 2007 and before the Effective Date, with respect to the liabilities ceded to the Grantor under the Reinsurance Agreement; (ii) for claims made after June 30, 2007 and before the Effective Date in excess of $499,999 in any individual case or in the aggregate, one hundred five percent (105%) of the sum of case reserves for losses and loss adjustment expenses and case IBNR reserves for losses and loss adjustment expenses for such claims, as determined as of the month end for the most recent month for which the financial statements have been completed prior to the Effective Date, all of which are calculated net of amounts ceded by the Beneficiary under any Inuring Reinsurance; (iii) the total amount of the formally disputed portions of reinsurance claims by or on behalf of the Beneficiary which were outstanding on the Effective Date under any Inuring Reinsurance; and (iv) for each Inuring Reinsurance agreement pursuant to which the Beneficiary ceded liabilities to a third party reinsurer that has an A.M. Best Company rating on the Effective Date that is lower than “A-”, the liability ceded to such reinsurer by the Beneficiary as determined as of the month end for the most recent month for which the financial statements have been completed prior to the Effective Date. Thereafter the Grantor shall transfer to the Trustee, for deposit to the Trust Account, such other assets as it may from time to time be required to transfer hereunder (all such assets actually received in the Trust Account are herein referred to individually as an “Asset” and collectively as the “Assets”). The Assets shall consist only of cash (United States legal tender) and Eligible Securities, or any combination thereof. Reserves shall be calculated for the purposes of this Agreement in accordance with the same reserving practices utilized by the Grantor prior to the Effective Date. The monthly financial statements referenced in clause (ii) above shall be as of a month end that is no more than thirty (30) days prior to the Effective Date, and the monthly financial statements referenced in clause (iv) above shall be as of a month end that is no more than forty-five (45) days prior to the Effective Date. (c) The Grantor agrees to deposit with the Trustee additional Assets necessary to maintain an amount in the Trust Account (based on the Fair Market Value of the Assets as of the end of each calendar quarter and including accrued interest as of the end of each calendar quarter) equal to the amount of the Obligations as of the end of such calendar quarter plus five percent (5%) of the amount determined pursuant to clause (i) of the definition of Obligations in Section 12 (the amount so determined, the “Quarterly Obligations Amount”); provided, however, if the Grantor defaults in its obligations to make any deposit hereunder and such default continues for thirty (30) days after written notice thereof, thereafter for the remaining term of this Agreement, the Quarterly Obligations Amount shall be equal to the Obligations as of the end of the applicable calendar quarter plus twenty-five percent (25%) of the amount determined pursuant to clause (i) of the definition of Obligations in Section 12. The Quarterly Obligations Amount shall be determined in accordance with Sections 1(d) and (e). The deposit of any such necessary additional Assets by the Grantor will be made within ten (10) Business Days after the Quarterly Obligations Amount becomes operative for purposes of this Agreement in accordance with Section 1(d). Upon delivery of such Assets, the Grantor shall advise the Beneficiary in writing that such delivery has been effected. (d) Within forty-five (45) days after the end of each calendar quarter, the Grantor shall deliver to the Beneficiary its calculation of the Quarterly Obligations Amount, and all actuarial and other data reasonably necessary for the Beneficiary to calculate the Quarterly Obligations Amount for such quarter (including updated case reserves and, at Grantor’s sole option and expense, either its own or an independent third party’s analysis or calculation of the IBNR reserves). Within ten (10) Business Days after the Beneficiary’s receipt of the Grantor’s calculation of the Quarterly Obligations Amount and the related data, the Beneficiary may object to the Grantor’s calculation thereof by delivering written notice of such objection to the Grantor and providing a reasonably detailed explanation specifying a reasonable basis for the Beneficiary’s objection and a revised Quarterly Obligations Amount acceptable to the Beneficiary. If the Beneficiary does not object within such ten (10) Business Day period, the Quarterly Obligations Amount calculated by the Grantor shall be operative for purposes of this Agreement. If the Beneficiary objects within such ten (10) Business Day period, the Grantor and the Beneficiary shall use commercially reasonable efforts to resolve such objection within ten (10) Business Days after receipt by the Grantor of the Beneficiary’s notice of objection. If the Grantor and the Beneficiary are unable to agree on the Quarterly Obligations Amount within such ten (10) Business Day period, then each of them shall submit its final Quarterly Obligations Amount (as modified by any partial agreement reached between the Grantor and the Beneficiary during such ten (10) Business Day period) before the end of such ten (10) Business Day period, and the operative Quarterly Obligations Amount shall be equal to the average of their final Quarterly Obligations Amounts. All calculations of the Quarterly Obligations Amount, whether made by the Grantor or the Beneficiary, shall be made (i) in accordance with the Standards of Practice issued by the Actuarial Standards Board (including the Casualty Actuarial Society’s Statement of Principles Regarding Property and Casualty Loss and Loss Adjustment Expense Reserves) as those standards may exist from time to time and (ii) after analysis of the claims insured under the Reinsurance Agreement only on their own merits, without a view to any extraneous factors. (e) Prior to February 15 of each year during the term of this Agreement, the Grantor shall submit to the Xxxxxxxxxxx division of Towers, Perrin, Xxxxxxx & Xxxxxx, Inc. or another independent actuarial firm selected by the Beneficiary and reasonably acceptable to the Grantor (such firm or such other independent actuarial firm, the “Independent Actuary”), such information as the Independent Actuary shall reasonably require to prepare its annual actuarial report (but not an actuarial opinion) and to make a calculation of the Quarterly Obligations Amount for the fourth quarter of the prior calendar year. The Independent Actuary’s calculation of the Quarterly Obligations Amount for the fourth calendar quarter shall be operative for purposes of this Agreement. All fees, costs, charges and expenses of the Independent Actuary for the preparation of the annual actuarial report for the business reinsured under the Reinsurance Agreement (including the determination of gross and net reserves, but not the actuarial certification of such reserves) and the Quarterly Obligations Amount for the fourth quarter shall be borne equally by the Grantor and the Beneficiary. The Grantor and the Beneficiary may at any time by mutual written consent, waive the provisions of this Section 1(e) and instead choose to calculate the Quarterly Obligations Amount pursuant to Section 1(d). (f) The Grantor hereby represents and warrants that all Assets transferred by the Grantor to the Trustee for deposit to the Trust Account shall (i) be in such form that the Trustee, upon receipt of a written direction from the Beneficiary, will be able to immediately negotiate any such Assets without consent or signature from the Grantor or any person other than the Trustee in accordance with the terms of this Agreement and (ii) consist only of cash (United States legal tender) and Eligible Securities, or any combination of the foregoing, which are free and clear of all liens, claims and other encumbrances. (g) The Trustee shall have no responsibility to determine whether the Assets in the Trust Account are sufficient to secure the Grantor’s liabilities under the Reinsurance Agreement.

Deposit of Assets to the Trust Account. (a) The Grantor shall establish the Trust Account for the sole use and benefit of the Beneficiary, and the Trustee shall administer the Trust Account account in its name as trustee Trustee for the Beneficiary. The Trust Account shall be subject to withdrawal by the Beneficiary solely as provided herein. (b) Upon the establishment of the Trust Account, the Grantor shall transfer to the Trustee, for deposit to the Trust Account, the assets listed in Exhibit B hereto with a Fair Market Value in the amount of $11,506,072, which is equal to the sum _______ [105% of (i) one hundred five percent (105%) of the sum of case actuarially determined reserves for losses and losses, IBNR, loss adjustment expenses and case IBNR reserves for losses and loss adjustment expenses and the actuarially determined IBNR reserves unearned premium as of June 30, 2007, all of which are calculated net of any and all amounts ceded by the Beneficiary under any Inuring Reinsurance, 2002 less the lesser of (A) the aggregate amount of losses claims paid and loss adjustment expenses paid, or (B) the aggregate amount of case reserves for losses and loss adjustment expenses, plus the aggregate amount of case IBNR reserves for losses and loss adjustment expenses, with respect to claims closed after June 30, 2007 and before the Effective Date, with respect to the liabilities ceded to the Grantor under the Reinsurance Agreement; (ii) for claims made after June 30, 2007 and before the Effective Date in excess of $499,999 in any individual case or in the aggregate, one hundred five percent (105%) of the sum of case reserves for losses and loss adjustment expenses and case IBNR reserves for losses and loss adjustment expenses for such claims, as determined as of the month end for the most recent month for which the financial statements have been completed prior to the Effective DateClosing], all of which are calculated net of amounts ceded by the Beneficiary under any Inuring Reinsurance; (iii) the total amount of the formally disputed portions of reinsurance claims by or on behalf of the Beneficiary which were outstanding on the Effective Date under any Inuring Reinsurance; and (iv) for each Inuring Reinsurance agreement pursuant to which the Beneficiary ceded liabilities to a third party reinsurer that has an A.M. Best Company rating on the Effective Date that is lower than “A-”, the liability ceded to such reinsurer by the Beneficiary as determined as of the month end for the most recent month for which the financial statements have been completed prior to the Effective Date. Thereafter the Grantor shall thereafter may transfer to the Trustee, for deposit to the Trust Account, such other assets as it may from time to time be required to transfer hereunder desire (all such assets actually received in the Trust Account are herein referred to individually as an “"Asset” " and collectively as the “"Assets”"). The Assets shall consist only of cash (United States legal tender) and Eligible Securities, or any combination thereof. Reserves shall be calculated for the purposes of this Agreement in accordance with the same reserving practices utilized by the Grantor prior to the Effective Date. The monthly financial statements referenced in clause Securities (ii) above shall be as of a month end that is no more than thirty (30) days prior to the Effective Date, and the monthly financial statements referenced in clause (iv) above shall be as of a month end that is no more than forty-five (45) days prior to the Effective Datehereinafter defined). (c) The Grantor agrees to deposit with the Trustee additional Assets necessary to maintain an amount in the Trust Account (based on the Fair Market Value market value of the Assets as of the end of each calendar quarter and including accrued interest as of the end of each calendar quarter) equal to 105% of the amount of the Obligations (as hereinafter defined) as of the end of such each calendar quarter plus five percent (5%) of the amount determined pursuant to clause (i) of the definition of Obligations in Section 12 (the amount so determinedof such Obligations, the “"Quarterly Obligations Amount”"); provided, however, if the Grantor defaults in its obligations to make any deposit hereunder and such default continues for thirty (30) days after written notice thereof, thereafter for the remaining term of this Agreement, the Quarterly Obligations Amount shall be equal to the Obligations as of the end of the applicable calendar quarter plus twenty-five percent (25%) of the amount determined pursuant to clause (i) of the definition of Obligations in Section 12. The Quarterly Obligations Amount shall be determined in accordance with Sections Section 1(d) and (e)below. The deposit of any such necessary additional Assets by the Grantor will be made within ten (10) Business Days after the calculation of the Quarterly Obligations Amount becomes operative for purposes of this Agreement in accordance with Section 1(d) (or, in the limited case of the calendar quarter ending December 31, 2003, in accordance with Section 1(e)). Upon delivery of such Assets, the Grantor shall advise the Beneficiary in writing that such delivery has been effected. (d) Within forty-five thirty (4530) days after the end of each calendar quarter, the Grantor shall deliver to the Beneficiary its calculation of the Quarterly Obligations Amount, and all actuarial and other data reasonably necessary for the Beneficiary to calculate the Quarterly Obligations Amount for such quarter (including updated case reserves and, at Grantor’s 's sole option and expense, either its own or an independent third party’s party analysis or calculation of the IBNR reservesQuarterly Obligations Amount). Within ten (10) Business Days after the Beneficiary’s its receipt of the Grantor’s such data, Beneficiary shall deliver to Grantor its calculation of the Quarterly Obligations Amount Amount, including supporting schedules and the related data, the Beneficiary may object to the Grantor’s calculation thereof by delivering written notice of such objection to the Grantor and providing a reasonably detailed explanation specifying a reasonable basis for the Beneficiary’s objection and a revised Quarterly Obligations Amount acceptable to the Beneficiaryanalysis. If the Beneficiary does not object within such ten (10) Business Day period, Grantor objects in writing to Beneficiary's calculation of the Quarterly Obligations Amount calculated by the Grantor shall be operative for purposes of this Agreement. If the Beneficiary objects within such ten (10) Business Day periodAmount, the Grantor and the Beneficiary shall use all commercially reasonable efforts to resolve such objection within ten five (105) Business Days after receipt by the Grantor of Beneficiary's calculation of the Beneficiary’s notice of objectionQuarterly Obligations Amount. If the Grantor and the Beneficiary are unable to cannot mutually agree on a calculation of the Quarterly Obligations Amount within such ten five (105) Business Day period, then each Beneficiary's calculation of them shall submit its final the Quarterly Obligations Amount (as modified by any partial agreement reached between the Grantor and the Beneficiary during such five (5) Business Day period) shall be operative for purposes of this Agreement. If Beneficiary does not deliver the calculation of the Quarterly Obligations Amount to Grantor within ten (10) Business Day period) before Days after its receipt of the end data set forth in the first sentence of such ten (10) Business Day periodthis Section 1(d), and any reasonable calculation by Grantor of the operative Quarterly Obligations Amount thereafter delivered to Beneficiary shall be equal to the average operative for purposes of their final Quarterly Obligations Amountsthis Agreement. All calculations of the Quarterly Obligations Amount, whether made by the Grantor or the Beneficiary, shall be made (i) in accordance with the Standards of Practice issued by the Actuarial Standards Board (including the Casualty Actuarial Society’s 's Statement of Principles Regarding Property and Casualty Loss and Loss Adjustment Expense Reserves) as those standards may exist from time to time and (ii) after analysis of the claims insured under the Reinsurance Agreement only on their own merits, without a view to any extraneous factors. Notwithstanding the foregoing provisions of this Section 1(d), the calculation of the Quarterly Obligations Amount for the calendar quarter ended December 31, 2003 shall be made in accordance with Section 1(e) below, and this Section 1(d) shall not apply to such calculation. (e) Prior to February 15 of each year during the term of this AgreementOn or before January 31, the 2004, Grantor shall submit to the Xxxxxxxxxxx division of Towers, Perrin, Xxxxxxx & Xxxxxx, Inc. Tillinghast-Towers Perrin or another independent actuarial firm selected by the Beneficiary and reasonably selexxxx xx Xxxxxxx xxd xxxxxnably acceptable to the Grantor Beneficiary (such firm Tillinghast-Towers Perrin or such other independent actuarial firm, the “Independent Actuary”), xxx "Xxxxxxxxxxx Xcxxxxx") such information as the Independent Actuary shall reasonably require to prepare its annual actuarial report (but not an actuarial opinion) and to make a calculation of the Quarterly Obligations Amount for the fourth calendar quarter of the prior calendar yearended December 31, 2003. The Independent Actuary’s 's calculation of the Quarterly Obligations Amount for the fourth calendar quarter ended December 31, 2003 shall be operative for purposes of this Agreement. All fees, costs, charges and expenses of the Independent Actuary for the preparation of the annual actuarial report for the business reinsured under the Reinsurance Agreement (including the determination of gross and net reserves, but not the actuarial certification of such reserves) and the Quarterly Obligations Amount for the fourth quarter shall be borne equally by the between Grantor and the Beneficiary. The Grantor and the Beneficiary may at any time time, by mutual written consent, waive the provisions of this Section 1(e) and instead choose to calculate the Quarterly Obligations Amount for the calendar quarter ended December 31, 2003 pursuant to Section 1(d). (f) The Grantor hereby represents and warrants (i) that any Assets transferred by the Grantor to the Trustee for deposit to the Trust Account will be in such form that the Beneficiary whenever necessary may, and the Trustee upon direction by the Beneficiary will, negotiate any such Assets without consent or signature from the Grantor or any person in accordance with the terms of this Agreement and (ii) that all Assets transferred by the Grantor to the Trustee for deposit to the Trust Account shall (i) be in such form that the Trustee, upon receipt of a written direction from the Beneficiary, will be able to immediately negotiate any such Assets without consent or signature from the Grantor or any person other than the Trustee in accordance with the terms of this Agreement and (ii) consist only of cash (United States legal tender) and Eligible Securities, or any combination of the foregoing, which are free and clear of all liens, claims and other encumbrances. (g) The Trustee shall have no responsibility to determine whether the Assets in the Trust Account are sufficient to secure the Grantor’s 's liabilities under the Reinsurance Agreement.