EXHIBIT 10(d)
SECURITY FUND AGREEMENT
(hereinafter referred to as the "Agreement")
entered into by and among
American Hallmark Insurance Company of Texas
City, State
(hereinafter referred to as the "Depositor")
and
State And County Mutual Fire Insurance Company
Fort Worth, Texas
(hereinafter referred to as the "Beneficiary")
Held By
First Tennessee Bank, National Association
Memphis, Tennessee
(hereinafter referred to as the "Custodian")
SECTION 1. PURPOSE OF AGREEMENT
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1.1 The Depositor has assumed all liabilities of Beneficiary arising
from insurance business subject to that certain Quota Share Reinsurance
Agreement dated effective April 1, 2003, between Depositor and
Beneficiary (hereinafter referred to as the "Reinsurance Agreement").
1.2 Depositor desires to secure the payment of its liabilities and the
performance of its obligations to Beneficiary under the Reinsurance
Agreement. Beneficiary reserves the right to require deposits to
secure the payment of Depositor's liabilities and performance of its
obligations to Beneficiary under (i) that certain Quota Share
Reinsurance Agreement, and (ii) that certain General Agency Agreement,
both dated effective April 1, 2003, between Depositor and Beneficiary.
1.3 Depositor desires to deliver to Custodian "Securities" (as defined
in Section 4.1 hereof) to be held by Custodian as collateral and
security for the sole use and benefit of Beneficiary, which securities
may hereinafter be referred to as the "Fund."
SECTION 2. SECURITY GRANTED BY DEPOSITOR
-----------------------------
2.1 Pursuant to the terms hereof, the Depositor hereby obligates
itself to deliver to and deposit with the Custodian securities in
accordance with Section 3 hereof as collateral and security for the
Depositor's obligations to Beneficiary under the Reinsurance Agreement
including the obligations for Run-Off Risk, Credit Risk, Unearned
Premiums Reserves, if any, and Reserves For Losses Incurred But Not
Reported And Losses Reported But Unpaid. The Loss Reserves shall
include all allocated loss adjustment expenses and appropriate
unallocated loss adjustment expenses. For purposes of this Agreement,
the following terms shall have the following meanings:
(a) "Unearned Premiums" means, as of any given date, the aggregate
premium attributable to the unexpired coverage period of all
insurance policies produced under the Reinsurance Agreement, as
determined in accordance with generally accepted accounting
principles consistently applied. For this purpose, premium shall
be the written premium charged on the insurance policy for the
period such policy is in force irrespective of the subsequent
billing and collection of such premium.
(b) "Loss Reserves" means, as of any given date, the reserve
attributable to losses incurred but not reported and losses
reported but not paid with respect to the insurance policies
produced under the Reinsurance Agreement, and shall include
provision for both allocated and unallocated loss adjustment
expense, in each instance as determined in accordance with
generally accepted accounting principles consistently applied.
(c) The Run-Off Risk is $1,100,000. The calculation of the Run-Off
Risk is based on average monthly written premium of $4,000,000
(the "Target Premium"). If the average monthly written premium
during any calendar quarter is more or less than the Target
Premium, the Run-Off Risk shall be adjusted on a pro rata basis.
The collateralization for Run-Off Risk shall be funded in four
equal installments via the security fund. The first installment
shall be funded as soon as possible or within 10 business days of
the effective date of this Agreement. The second, third and
fourth installments shall be funded within 10 business days prior
to the end of each calendar quarter thereafter. Within 10
business days following the end of each calendar quarter, the
General Agent shall provide a report to the Company and Reinsurer
setting forth the actual run off risk hereunder (in force policy
count x $7.20 per month to policy expirations = total run off
risk) for that calendar quarter and the Beneficiary and Depositor
shall immediately adjust the security fund accordingly.
(d) The Credit Risk is $3,000,000. The calculation of the Credit Risk
is based on average monthly written premium of $4,000,000 (the
"Target Premium"). If the average monthly written premium during
any calendar quarter is more or less than the Target Premium, the
Credit Risk shall be adjusted on a pro rata basis. The
collateralization for Credit Risk shall be funded as soon as
possible or within 10 business days of the effective date of this
Agreement.
(e) Should the amount of the security fund at the end of any calendar
quarter be greater than the amount required in this Section 2, the
Depositor shall be entitled to reduce the amount of the security
fund to an amount not less than the amount required in this
Section 2. The Qualified United States Financial Institution
shall permit such reduction upon receipt by it of the
Beneficiary's written statement that Depositor is entitled to such
reduction, which written statement shall not be unreasonably
withheld by Beneficiary.
Beneficiary shall be entitled at any time, at its expense, to
engage an independent actuary to review the adequacy of the Unearned
Premiums and Loss Reserves. In the event of a dispute or difference of
opinion between the amount of Unearned Premiums and Loss Reserves, as
determined by the actuary engaged by Beneficiary, and such amounts as
determined by the Depositor or its affiliate, the amounts determined by
the actuary engaged by Beneficiary shall govern for purposes of
determining the amount of the securities to be deposited under this
Agreement.
2.2 During the term of this Agreement, Depositor hereby agrees that
Custodian shall act for the benefit of Beneficiary in taking delivery
and possession of the said securities pursuant to Section 3 hereof and
in holding such securities as collateral for the purposes expressed
herein for Beneficiary's benefit, and Depositor hereby grants to
Custodian all powers necessary and reasonable in the performance
hereunder.
2.3 The existence of the Fund, as security for obligations of
Depositor to Beneficiary, shall not affect Depositor's obligations
under the Reinsurance Agreement, nor shall the securities of the Fund
be used as a set off by Depositor for any obligations to Beneficiary,
except for Depositor's right to withdraw securities from the Fund in
accordance with Section 3 or to receive any excess securities held by
Beneficiary pursuant to Section 5.5.
SECTION 3. DEPOSITS TO AND INVESTMENT OF SECURITY
--------------------------------------
3.1 Within 10 business days of the effective date of this Agreement,
and within 10 business days prior to the end of each calendar quarter
thereafter, Beneficiary shall provide Depositor with a good faith
estimate of the expected sum of Depositor's Run-Off Risk, Credit Risk,
Ceded Outstanding Unearned Premium And Loss Reserves as of the end of
the forthcoming calendar quarter (the "Estimate"). The Depositor shall,
within two business days prior to the commencement of such forthcoming
calendar quarter, fund the security fund in an amount equivalent to
100% of the Estimate.
3.2 Should the aggregate market value of the Fund at the end of any
calendar quarter be greater than the amount required in Section 2, the
Depositor shall be entitled to withdraw such securities from the Fund
held in custody so as to reduce the aggregate market value of the Fund
to an amount not less than the amount required in the said Section 2.
The Custodian shall permit such withdrawal upon receipt by it of the
Beneficiary's written statement that Depositor is entitled to withdraw
the designated securities, which written statement shall not be
unreasonably withheld by Beneficiary.
3.3 The Depositor shall be entitled at any time to withdraw securities
from the Fund if concurrently therewith securities (as defined in
Section 4.1 hereof) of equal or greater market value are deposited in
the Fund, and the Custodian is authorized to permit such substitution
of securities upon receipt of the Beneficiary's written approval, which
shall not be unreasonably withheld.
3.4 All securities deposited by the Depositor (i) shall be free and
clear of all encumbrances, and (ii) shall be fully negotiable or in
such form that Custodian may sell, transfer or otherwise deposit the
same without any additional signature or agreement from Depositor.
SECTION 4. SECURITIES
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4.1 The term "Securities" as used herein is defined as any combination
of (a) cash, or deposits held, or certificates of deposit issued by any
national or state chartered bank or savings and loan association with a
rating of B+, or better, by Lace Financial Corporation, (b) United
States Government issued or guaranteed bonds, bills or notes, or (c)
any other bonds with a Standard & Poor's or Moody's quality rating of
"A" or better. All securities and assets held in the Fund shall be
readily marketable over a national exchange and shall be listed by the
Securities Valuation Office of the National Association of Insurance
Commissioners with designations of "1-Highest Quality". All securities
and assets held in the Fund shall be of the type specified in the Texas
Insurance Code Article 5.75-1(d), any successor section thereto, or
other similar applicable laws or regulations. All such securities
shall be in conformance with the investment requirements described in
Article 2.10 of the Insurance Code of Texas, or other similar
applicable laws or regulations.
4.2 For purposes of this Agreement, the market value of securities
shall be determined as follows: (a) at the time any securities are
deposited initially with the Custodian, and as respects securities on
deposit at the end of each calendar month, the Depositor shall in good
faith place a tentative market value on said securities and shall
notify the Beneficiary of such valuation by supplement to the
Custodian's monthly activities report; (b) if the Beneficiary disagrees
with such tentative market valuation, it may so notify the Depositor
within 30 days after the date it receives the Custodian's monthly
activities report and the Depositor's supplement thereto; and (c) in
the event the parties cannot resolve any difference with respect to the
market value of the securities, the market value of the security in
dispute shall be determined by the Securities Valuation Office of the
National Association of Insurance Commissioners.
SECTION 5. BENEFICIARY'S CLAIM ON THE FUND
-------------------------------
5.1 The Beneficiary shall have the right to withdraw securities from
the Fund, without diminution because of the insolvency of the
Beneficiary or the Depositor, for the purposes and to the extent
specified in Sections 5.2 and 5.3 below, with written notice from the
Beneficiary to the Custodian given in accordance with Section 7.1 of
this Agreement. Upon such written notice by the Beneficiary, the
Custodian shall immediately take any and all steps necessary to
transfer to the Beneficiary absolute and unequivocal right, title and
interest in the requested securities and assets in the Fund and to
deliver such securities and assets to the Beneficiary and Beneficiary
shall acknowledge to the Custodian receipt of such withdrawn securities
and assets. Any dispute between Depositor and Beneficiary regarding
Beneficiary's claim on the Fund shall be resolved by arbitration
pursuant to Section 11. Custodian shall strictly comply with its
instructions hereunder without resorting to interpleader. Beneficiary
will hold Custodian harmless if acting upon Beneficiary's instructions
hereunder.
5.2 The Beneficiary may require reimbursement from the Fund for any
losses or unearned premiums, which the Beneficiary is obligated to pay
under the Reinsured Policies if:
(a) the Beneficiary is legally required by order of a court or
regulatory authority having jurisdiction, to pay a loss or
unearned premium amount under a Reinsured Policy; or
(b) the Beneficiary, although not legally required by order, as above,
but acting under its non-delegable responsibility with respect to
claims for losses or unearned premiums under Reinsured Policies,
pays any such claim in good faith; provided that notice of
payment, along with documentation and an explanation of the
circumstances of the payment of the claim, is first delivered to
Depositor and Depositor fails to pay or reimburse any such claim
within 30 days from such notice.
The term "legally required by order" as used in this Agreement shall
mean, in the case of a court, a final unappealable order or judgment,
or an order or judgment which in the opinion of counsel for Beneficiary
should not be appealed. In the case of a regulatory authority, this
shall mean any directive from a person in a supervisory or management
position in an insurance regulatory agency which has the authority to
initiate disciplinary action against the Beneficiary for failure to
follow such directive and which directive, in the opinion of
Beneficiary's counsel, should not be further contested or appealed.
The Beneficiary will reasonably inform Depositor of circumstances
surrounding and preceding any such payment of claim and shall consult
with Depositor.
5.3 The Beneficiary may withdraw all of the securities of the Fund and
hold the same under the Reinsurance Agreement if:
(a) the commissioner of insurance of any state in which business
is produced under the Reinsurance Agreement pursuant to the
applicable insurance code (i) issues an order to the Depositor
notifying the Depositor or its Board of Directors that he has
determined that the Depositor is operating in a manner that could
lead to, or is in a financial condition, which, if continued,
would make it hazardous to the public, or its policyholders; or
(ii) reports that there may be grounds for rehabilitation and
liquidation under the applicable insurance code; or (iii) gives
notice of, or issues an order stating that Depositor is operating
in a manner which appears to be detrimental to the interests of
the policyholders or the general public; or (iv) files
allegations, that a condition exists which would justify a court
order for proceedings under the applicable insurance code;
(b) a court having jurisdiction over the Depositor enters an
order directing the Commissioner of Insurance to take possession
or control of the Depositor, or its property, business, books,
records and accounts; or
(c) the Beneficiary has any other good reason to believe that
there has been a substantial deterioration of the financial
condition of the Depositor.
5.4 In the event the Beneficiary takes control of the securities
pursuant to Section 5.3, such securities shall be held by Beneficiary
as an asset for the purpose of securing the Unearned Premiums and Loss
Reserves, and otherwise securing Beneficiary under the terms of this
Agreement, and shall be maintained in an identifiable manner as "Funds
Held By Beneficiary Under the Quota Share Reinsurance Treaty"
(hereinafter referred to as "Funds Held.") The Beneficiary may disburse
amounts from the Funds Held for the payment of losses and refunds
through the Quota Share Reinsurance Agreement pursuant to the terms of
its General Agency Agreement with Beneficiary, or to any successor
appointed by the Beneficiary to act as general agent in connection
with the business subject to the Reinsurance Agreement. Also, the
Beneficiary may use such Funds Held to reimburse itself for any amounts
Depositor is obligated under the Reinsurance Agreement, including, but
not be limited to, any losses paid, and unearned premiums refunded by
the Beneficiary, and for actual costs of administration incurred by the
Beneficiary in the event Beneficiary is required to assume control of
the servicing and claims handling of the business subject to the
Reinsurance Agreement.
5.5 An amount equal to the market value of the Funds Held shall be
carried by the Beneficiary as a liability under its financial statement
denominated "Funds Held by Beneficiary Under Reinsurance Treaties," and
all amounts paid out of such Funds Held by the Beneficiary pursuant to
Section 5.4 shall reduce the liability of the Depositor. Any
securities in excess of the amount required to pay or reimburse
Beneficiary for the purposes described herein shall be returned to
Depositor, its successor or legal representative, upon the conclusion
of all further obligations of Depositor to Beneficiary under the
Reinsurance Agreement.
5.6 In the event the Beneficiary takes control of the securities
pursuant to Section 5.3, the Depositor shall remain obligated for
amounts due under the Reinsurance Agreement and shall be obligated to
maintain in the Funds Held by Beneficiary a value at least equal to the
Unearned Premium and Loss Reserves in accordance with Section 3.1. The
Depositor's rights and obligations to withdraw and deposit securities
from the Funds Held shall be the same as when the securities were held
in the Fund by the Custodian as provided in Section 3.
SECTION 6. INTEREST, DIVIDENDS AND EXPENSES
--------------------------------
6.1 Any interest, dividends or other investment income generated from
the securities held by Custodian shall remain in the Fund, subject,
however, to Depositor's right to withdraw assets from the Fund in
accordance with Sections 3.2 and 3.3. Depositor shall be liable for
reporting and paying any income taxes arising therefrom.
6.2 Also, Depositor will receive the benefit of the interest,
dividends or other investment income generated from any securities
taken and held by the Beneficiary pursuant to Section 5.3.
6.3 All fees and expenses charged by the Custodian for its services
under the terms of this Agreement shall be paid by the Depositor.
SECTION 7. CUSTODIAN'S AGREEMENT
---------------------
7.1 The Custodian agrees to hold and disburse the Fund in accordance
with the provisions expressed herein. Custodian shall disburse
securities to the Beneficiary upon receipt of a duly executed and
completed Affidavit by Beneficiary in accordance with the form attached
hereto as Exhibit "A". Custodian is authorized and directed by both
parties to act upon such instructions in compliance herewith without
inquiry as to the accuracy of the facts and statements made in any such
affidavit and without regard to protest by any party; provided,
however, Custodian would not be expected to act contrary to any court
order or any arbitration directive pursuant to Section 11, supported by
the affidavit of two of the three arbitrators.
7.2 The Fund shall be (i) in the possession of Custodian at its
offices in Memphis, Tennessee, (ii) kept separate and apart from any
assets of the Custodian and any other securities held by the Custodian
for whomever and for whatsoever purpose, (iii) clearly identifiable as
securities subject to this Agreement at all times while in the
possession of the Custodian, and (iv) in such form that the Beneficiary
or the Custodian upon the direction of the Beneficiary may, whenever
necessary, negotiate any securities in the Fund, without the consent or
signature from the Depositor or any other person or entity.
7.3 The Custodian shall not deposit any securities of the Fund with
correspondent banks, investment bankers, brokers or any other third-
party nor shall such securities be pledged or hypothecated by the
Custodian in any manner nor shall such securities be used by the
Custodian in any manner for the benefit of the Custodian.
7.4 The Custodian shall on request of the Beneficiary, the Depositor,
certify in writing the securities held by the Custodian for the
Beneficiary, which certification shall include the name of the issuer
of each security, the class of security, the "cusip" number of each
security, the number of shares of units, and the face amounts of such
securities.
7.5 The Custodian shall fully and completely respond to any direct
inquiries of any duly authorized insurance regulatory agency of any
state concerning the Fund, including, but not limited to detailed
inventories of securities or funds, and the Custodian will permit the
representative of any such regulatory agency to examine and audit all
securities or funds held hereunder.
7.6 The Custodian agrees to provide copies of monthly activities
reports to the Beneficiary and the Depositor as soon as possible
following the end of each month, which reports shall show all deposits,
withdrawals, substitutions and a listing of securities in the Fund as
of the end of the month. The Custodian agrees to notify the Depositor
and the Beneficiary within 10 days of any deposits to, or withdrawals
from the Fund.
7.7 The Custodian hereby waives any right of offset and all other
rights and remedies against or affecting the Fund.
7.8 The Custodian may at any time resign from, and terminate its
capacity hereunder by written notice of resignation, effective not less
than 90 days after receipt by both the Beneficiary and the Depositor.
However, no such resignation by the Custodian shall be effective until
a successor to the Custodian shall have been duly appointed as provided
in this Agreement and all the securities and assets in the Fund have
been duly transferred to such successor. The Beneficiary, upon receipt
of such notice, shall undertake to obtain the agreement of a qualified,
successor depository, agreeable to the Depositor, to act in accordance
with all agreements of the Custodian herein. A qualified depository
shall be any United States financial institution member of the Federal
Reserve System. Depositor agrees not to unreasonably withhold approval
if the depository so chosen has capital and surplus of at least
$100,000,000. Upon the Custodian's delivery of the Fund to the
qualified, successor depository, along with a closing statement showing
all activities (as contemplated in Section 7.6) from the last monthly
report, the Custodian shall be discharged of further responsibilities
hereunder.
SECTION 8. CUSTODIAN'S RESPONSIBILITY
--------------------------
8.1 The Custodian shall in no way be responsible for determining (a)
market value or rating of the initial deposit of securities by the
Depositor, (b) market value or rating of any securities as may from
time to time be substituted by the Depositor, (c) the amount of
securities required to be deposited by the Depositor, or (d) monitoring
whether or not the securities conform to investment requirements.
8.2 The Custodian is not a party to, and is not bound by or charged
with notice of the Reinsurance Agreement or any other agreement out of
which this Agreement may arise.
8.3 The Custodian is not responsible or liable in any manner
whatsoever for the sufficiency, correctness, genuineness or validity of
the subject matter of this Agreement or any part thereof, or for the
form or execution thereof, for the identity or authority of any person
executing or depositing it.
8.4 The Custodian shall be protected in acting upon any written
notice, request, affidavit, waiver, consent, certificate, receipt,
authorization, power of attorney or other paper or document which the
Custodian in good faith believes to be genuine and what purports to be
from the Beneficiary or the Depositor.
8.5 The Custodian shall be indemnified and not held liable for
anything which it may do or refrain from doing in connection herewith,
except its own negligence, willful misconduct, lack of good faith, or
breach of fiduciary duty.
8.6 Notwithstanding anything else contained herein to the contrary,
the Custodian acknowledges liability for any certificates lost due to
theft or any error or omission or other comparable act of the
Custodian, or authorized representative thereof, and Custodian agrees
that it shall maintain fidelity or other insurance coverage applicable
to such liability which shall be in addition to the full faith and
credit of the Custodian therefor.
SECTION 9. ACCESS TO RECORDS
-----------------
9.1 The Beneficiary and the Depositor shall have the right at any
reasonable time to examine all papers in the possession of each other,
or with the Custodian, applicable to this Agreement and the Fund
deposited and maintained hereunder.
SECTION 10. TERMINATION
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10.1 This Agreement shall terminate and the Custodian shall release and
deliver to the Depositor all securities held pursuant to this Agreement
upon receipt by the Custodian of written notice from Beneficiary that
Depositor's obligations under the Reinsurance Agreement for Unearned
Premium and Loss Reserves have been discharged, including obligations
for the "run-off" of any business subject to the Reinsurance Agreement.
10.2 The termination of the Reinsurance Agreement shall not terminate
this Agreement, but Depositor shall continue to pay claims under the
terms of the Reinsurance Agreement as if there were no security
provided under this Agreement, subject, however, to Depositor's right
to withdraw securities from the Fund in accordance with Section 3, or
to receive any excess securities held by Beneficiary pursuant to
Section 5.5.
SECTION 11. ARBITRATION
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11.1 It is agreed between Beneficiary and Depositor that any
disagreement between such parties regarding the construction,
application, or implementation of this Agreement may be submitted to
arbitration pursuant to arbitration provisions contained in the
Reinsurance Agreement. However, questions arising out of Section 3 or
Section 5 require an expedited resolution pursuant to these provisions.
11.2 The party invoking arbitration with respect to Section 3 or
Section 5 shall notify the other party and shall provide the name of
its designated arbitrator at that time. The second party shall have 15
days from receipt of notice to designate its arbitrator, who shall
contact the first arbitrator to select a third arbitrator. Both
arbitrators shall use their best efforts to obtain a third arbitrator
within 30 days. Once chosen, the three arbitrators should
expeditiously resolve the issues presented by the parties. If the
party receiving notice of intent to arbitrate does not provide notice
of its arbitrator within the 15 day period required, such party shall
be deemed to have waived its right to designate the second arbitrator
and the arbitrator first designated shall designate the second
arbitrator. The arbitrators shall be disinterested, active or retired
officers of property and casualty insurance companies. The arbitration
provisions of the Reinsurance Agreement may be referred to for guidance
as to matters not specifically provided herein.
11.3 The Beneficiary and the Depositor agree to be bound by the final
or any interim findings and directives of the arbitrators, including
the immediate deposit or return of securities or assets to the Fund if
so directed.
SECTION 12. CONSTRUCTION AND EFFECT
-----------------------
12.1 This Agreement and all proceedings pursuant hereto shall be
governed by the laws of the State of Texas.
12.2 This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, their successors and assigns.
12.3 In the event of the failure of the Depositor to perform its
obligations under the terms of this Agreement or the Reinsurance
Agreement, the Depositor, at the request of the Beneficiary, shall
submit to the jurisdiction of any court of competent jurisdiction in
any State of the United States, will comply with all requirements
necessary to give such court jurisdiction, and will abide by the final
decision of such court or of any Appellate Court in the event of an
appeal.
12.4 The Depositor shall designate the State Board of Insurance in the
state in which business is produced, or a designated attorney, as its
true and lawful attorney upon whom may be served any lawful process in
any action, suit or proceeding instituted by or on behalf of the
Beneficiary. This provision, however, is not intended to conflict with
or override the obligation of the parties to arbitrate their disputes.
SECTION 13. NOTICES
-------
13.1 Unless otherwise specifically provided herein, every notice
required or permitted to be given under this Agreement shall be given
in writing to an officer of the party to whom it is directed by actual
delivery to the address, or by telecopy message to the number, as
follows:
Depositor:
American Hallmark Insurance Company of Texas
00000 Xxxxxx Xxxxxxx Xxxxx 000
Xxxxxx, XX 00000
Telecopy: 000-000-0000
Beneficiary:
State And County Mutual Fire Insurance Company
0000 Xxxxxxxx Xxxxxxxxx
Xxxx Xxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Custodian:
First Tennessee Bank, National Association
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Telecopy: (000) 000-0000
Attn: Trust Department
Any party to this Agreement may change the address and telecopy
number above set out by giving the other parties notice of such
change in the manner specified for notice in this Agreement.
SECTION 14. EFFECTIVE DATE
--------------
14.1 This Agreement shall be effective April 1, 2003.
IN WITNESS WHEREOF, the parties hereto by their respective duly
authorized officers have executed this Agreement.
STATE AND COUNTY MUTUAL FIRE INSURANCE COMPANY
By: _________________________________
Its _________________________________
AMERICAN HALLMARK INSURANCE COMPANY OF TEXAS
By: _________________________________
Its _________________________________
FIRST TENNESSEE BANK, NATIONAL ASSOCIATION
By: _________________________________
Its _________________________________
EXHIBIT A
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CERTIFICATION OF WITHDRAWAL OF SECURITIES
-----------------------------------------
Reference is made to that certain Security Fund Agreement dated
effective _______________, by and among ___________________, ____________ as
"Depositor," __________________, as "Beneficiary," and First Tennessee Bank,
National Association, as "Custodian" (the "Agreement"). Section 5 of the
Agreement set forth circumstances under which the Beneficiary may withdraw
securities from the Fund. Beneficiary hereby certifies to Custodian,
pursuant to Section 7 of the Agreement, that the following event has
occurred which entitles Beneficiary to withdraw securities from the Fund:
Capitalized terms used herein and not otherwise defined shall have the
respective meanings ascribed to such terms in the Agreement.
Dated: STATE AND COUNTY MUTUAL FIRE
INSURANCE COMPANY
By: _________________________________
Its: _________________________________
THE STATE OF TEXAS S
S
COUNTY OF TARRANT S
I, ______________________, a Notary Public, do hereby certify that on this
the __ day of ________, 200_, personally appeared before me ________________
______, who declared that he is _______________ of the corporation executing
the foregoing instrument, and being by me first duly sworn, acknowledged
that he signed the foregoing document in the capacity therein set forth and
declared that the statements therein contained are true.
IN WITNESS WHEREOF, I hereunder set my hand and seal of office, the date and
year before written.
Notary Public in and
for the State of Texas
My Commission expires: ____________
