Exhibit 10.14
E&Y Draft -- 11/02/95
Piedmont Management Company Inc.
as Issuer of the Notes Referred to Below
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
, 1995
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Ernst & Young LLP
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
HOLDER ACTUARY AGREEMENT
Ladies and Gentlemen:
This agreement (the "Holder Actuary Agreement") confirms our understanding with
respect to the engagement by Piedmont Management Company Inc. (the "Company") of
Ernst & Young LLP ("E&Y") to act as Holder Actuary with respect to the
contingent Interest Notes Due June 30, 2006 (the "Notes") issued under the
Indenture (the "Indenture") dated as of , 1995 between the
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Company and , national association, as trustee
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thereunder (the "Trustee"). Capitalized terms used but not defined herein shall
have the meanings set forth in the Indenture.
In connection with our engagement, E&Y agrees to undertake the services, duties,
obligations, rights and responsibilities of the Holder Actuary as set forth in
the Indenture. [Option: Reference or Restate Specific Applicable Indenture
Sections.]
As compensation for the services to be provided by E&Y as Holder Actuary under
the Indenture, the Company agrees to promptly pay E&Y in full for its services
performed in connection with this Agreement and the Indenture. E&Y will ▇▇▇▇ the
Company at its standard hourly rates and for its actual out-of-pocket expenses
in connection with this engagement. E&Y may, at its election, pre-pay any
accountants, attorneys, auditors or other professionals or agents retained to
advise or assist E&Y in performing such services and obtain reimbursement from
the Company, or E&Y may submit (or cause such professionals to submit) invoices
directly to the Company for payment. E&Y does not anticipate that its fees and
expenses, including other professionals' fees, will exceed in aggregate the
amounts set forth in Section 10.2 of the Indenture. The Company's payment and
other obligations under this letter agreement shall not be limited by the terms
of the Indenture. The Company further agrees to indemnify E&Y as set forth in
Schedule I hereto, which is an integral part of this Holder Actuary Agreement.
The obligations of the Company to compensate and indemnify E&Y and to pay or
reimburse E&Y shall constitute additional indebtedness under the Indenture and
shall survive the satisfaction and discharge of the Indenture or the rejection
or termination of the Indenture under bankruptcy law. If E&Y renders services
or incurs expenses following an Event of Default (as defined in the Indenture)
under Section 6.1(c) or Section 6.1(d) of the Indenture, the parties hereto
hereby agree that such expenses are intended to constitute expenses of
administration under any bankruptcy law.
Except as set forth in this paragraph, this Holder Actuary Agreement shall
terminate and cease to be of further effect upon the earlier to occur of (a) the
satisfaction and discharge of the Indenture pursuant to Section 8.1 of the
Indenture, (b) the resignation of E&Y as Holder Actuary which shall be delivered
to the Company and the Trustee pursuant to Section 11.2 of the Indenture and (c)
any other circumstance whereby E&Y shall cease to perform or otherwise not be
available to perform its duties under the Indenture and the Trustee shall have
selected a successor Holder Actuary pursuant to Section 10.2(b) of the
Indenture. However, the Company's obligations which, by their terms, or nature,
are intended to survive termination, including but not limited to (i) the
Company's obligation to pay E&Y for fees and expenses previously incurred but
not paid in full, (ii) the indemnity provisions contained in Schedule I hereto,
and (iii) the non-recourse and covenant-not-to-▇▇▇ provisions herein, will
remain operative and in full force and effect regardless of any termination of
the Holder Actuary Agreement.
The Company agrees to allow E&Y (and associated agents and accounting firms)
reasonable access, during normal business hours, to the books and records
(including tax returns, statements, reports, forms, claim files, and related
documentation) and personnel of the Company, during the period that the Notes
are outstanding. With respect to E&Y, prior to its review in connection with
preparing E&Y's Reserve Report (as defined in the Indenture), such access shall
be provided only during a limited period during each year as shall be reasonable
and adequate to review the annual reports referred to in Section 10.6 of the
Indenture and to review the Company's compliance during the previous year with
the matters referred to in Section 10.6 of the Indenture. The Company agrees
that such access will be designed to assure that E&Y will obtain full and
adequate information regarding the adjustment, settlement and/or defense of any
claims, disputes or other matters arising out of the Protected Business (as
defined in the Indenture).
E&Y shall be entitled to rely upon all information supplied to it by the Company
or its advisors and shall not in any respect be responsible for the accuracy or
completeness of, or have any obligation to verify, the Company's books and
records or to conduct any appraisal of any of the Company's assets. To the
extent consistent with legal requirements, all information given to E&Y by the
Company will be held by E&Y in confidence and will not be disclosed to anyone
(other than E&Y personnel and professionals or agents retained or consulted by
E&Y in connection with this engagement) without the Company's prior approval or
used for any purpose other than to fulfill its obligations under the Indenture,
except as follows: Nothing in this Agreement shall prohibit or limit E&Y's use
of information (i) previously and lawfully known to it, (ii) independently
developed by it without any reference to, or use of, the Company's confidential
information, (iii) acquired by E&Y from a third party which was not, to the best
of the E&Y's knowledge, after diligent inquiry, under an obligation to the
Company not to disclose such information, (iv) which is or becomes publicly
available through no breach by the E&Y of this Agreement, or (v) in the event
E&Y receives a subpoena or other validly issued administrative or judicial
process demanding access to such information.
Any result, opinion, or advice, written or oral, provided by E&Y pursuant to
this Holder Actuary Agreement or the terms of the Indenture (including those set
forth in any Reserve Report) will be used solely for the purpose of enabling the
Company to satisfy and fulfill its obligations under the Indenture and shall not
be used, circulated, quoted or otherwise referred to for any other purpose, nor
shall they be filed with, included in or referred to in whole or in part in any
registration statement, proxy statement or any other document, except in each
case in accordance with E&Y's prior written consent.
The Company agrees not to amend or modify the provisions in the Indenture
affecting or relating to the Holder Actuary without the prior written consent of
E&Y.
This Holder Actuary Agreement shall be binding upon and inure to the benefit of
the Company, E&Y and their respective successors and assigns. Chartwell Re
Corporation, a Delaware corporation ("Chartwell"), shall be deemed to be the
successor to Piedmont after the Merger, and from and after the Merger, "Company"
shall mean Chartwell and its successors and assigns. E&Y may seek the express
assumption of this Holder Actuary Agreement by Chartwell, but E&Y's failure to
do so, or Chartwell's refusal to expressly assume this Holder Actuary Agreement,
shall not affect Chartwell's obligation to perform the obligations of the
Company under this Holder Actuary Agreement, whether by operation of law, or in
accordance with the Indenture or any supplemental indenture or otherwise.
The Company acknowledges that E&Y is being retained to represent the interests
of the Holders of the Securities (as those terms are defined in the Indenture)
and not to represent the interests of the Company. E&Y has no duty to the
Company under the Holder Actuary Agreement or the Indenture or under applicable
statutory law or principles of tort law or other common law, other than the
obligation with respect to confidential information set forth in this Holder
Actuary Agreement and the obligation to render accurate statements for its fees
and expenses (the "E&Y Obligations"). Except with respect to the E&Y
Obligations, the Company shall have no recourse whatsoever against E&Y, its
affiliates, or the respective partners, directors, officers, agents or employees
of E&Y or its affiliates, or any entity or person controlling E&Y or its
affiliates (the "Protected Persons"), in connection with this engagement,
whether by way of claim, counterclaim, action, suit, defense, set-off or
indemnity (each referred to as a "Claim"). The Company specifically covenants
not to ▇▇▇, pursue any Claim against, or assist any person in pursuing a Claim
against, E&Y or any Protected Person except with respect to the E&Y Obligations.
In no event will the liability of E&Y or any Protected Person to the Company,
whether in respect of an E&Y Obligation or otherwise, exceed the fees received
by or payable to such person for performing the services giving rise to such
liability.
E&Y does not warrant or guarantee the accuracy of any Report or deliverable
under this Agreement or the Indenture.
E&Y shall have the absolute right to resign as Holder Actuary at any time, for
any reason or no reason, as E&Y deems appropriate, effective upon delivery of a
notice of resignation to the Company complying with Section 11.2 of the
Indenture. E&Y shall have no liability to the Company for such resignation and
the Company agrees that it shall indemnify E&Y in accordance with Schedule I for
any Claim arising and of E&Y's resignation as Holder Actuary, without regard to
any allegation of gross negligence, willful misconduct or other fault.
Without limiting E&Y's right to retain or consult professionals in connection
with this engagement and to be reimbursed by the Company, the Company
specifically agrees that E&Y may retain counsel to advise E&Y concerning,
without limitation, its obligations under, and the interpretation of, this
Agreement or the Indenture, or concerning legal standards (if any) applicable to
E&Y in connection with this engagement, and such legal fees and expenses will be
considered expenses reimbursable or payable by the Company under this Holder
Actuary Agreement.
The Company agrees to cooperate with E&Y as reasonably requested by E&Y in
connection with this engagement. The Company will not interfere with or impede
E&Y's performance of its obligations as Holder Actuary.
The Company acknowledges that E&Y is not a party to the Indenture and has no
obligations thereunder. E&Y's sole obligations are as set forth in this Holder
actuary Agreement. Notwithstanding the foregoing, the Company understands and
agrees that E&Y is relying on the
undertakings, representations and agreements of the Company contained in the
Indenture which relate to the Holder Actuary and that E&Y is a third-party
beneficiary of such undertakings, representations and agreements.
The Company further recognizes that E&Y has not and will not participate or
assist in the preparation of any prospectus, proxy, registration statement,
offering material or other document prepared, issued, filed or distributed in
connection with any offer, sale or distribution of the Securities or in
connection with the Merger, and that no person (including any Holder or
prospective Holder) may rely on E&Y's agreement to act as Holder Actuary, or
the terms of this Holder Actuary Agreement, or any statement, act or omission
of E&Y in connection herewith, in connection with any offer, sale or
distribution or the Securities or in connection with the Merger.
This Holder Actuary Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of New York.
After reviewing this letter, please confirm that the foregoing is in accordance
with your understanding by signing and returning to me the duplicate of this
Holder Actuary Agreement, whereupon it shall be our binding agreement.
Very truly yours,
PIEDMONT MANAGEMENT COMPANY INC.
By:
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Name:
Title:
Accepted and agreed to
this ____ day of _________,1995
ERNST & YOUNG LLP
By:
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Name:
Title:
SCHEDULE I
The Company, as the term is used in the foregoing Holder Actuary
Agreement (the "Agreement"), including Chartwell Re Corporation, a Delaware
corporation, as the successor to Piedmont Management Company, Inc. after the
Merger, agrees to indemnify and hold harmless Ernst & Young LLP ("E&Y") and its
affiliates, and the respective partners, directors, officers, agents and
employees of E&Y and its affiliates and each other entity or person, if any,
controlling E&Y or any of its affiliates, including but not limited to any
accountants, attorneys, actuaries or other professional advisors retained by E&Y
in connection with the performance of its duties under the Agreement or the
Indenture (E&Y and each such entity or person being referred to as an
"Indemnified Person"), from and against any losses, claims, damages or
liabilities (or actions in respect thereof) relating to or arising out of
activities performed pursuant to the Agreement or the Indenture (as defined in
the Agreement), the services, duties, rights and responsibilities contemplated
thereby or E&Y's role in connection therewith, and will reimburse E&Y and any
other Indemnified Person on a current basis for all expenses (including, without
limitation, fees and disbursements of counsel) incurred by E&Y or any such other
Indemnified Person in connection with investigating, preparing or defending any
such action or claim, whether or not in connection with pending or threatened
litigation to which E&Y (or any other Indemnified Person) is a party, in each
case, as such expenses are incurred or paid. The Company will not, however, be
responsible for any such losses, claims, damages, liabilities or expenses of any
Indemnified Person that are determined by final judgment of a court of competent
jurisdiction to have resulted solely from actions taken or omitted to be taken
by such Indemnified Person in bad faith or from such Indemnified Person's
willful misconduct or gross negligence. [The Company also agrees that no
Indemnified Person shall have any liability (whether direct or indirect, in
contract or tort or otherwise) to the Company for or in connection with the
Agreement or the Indenture, the services, duties, obligations, rights and
responsibilities contemplated thereby or E&Y's role in connection therewith,
except for any such liability for losses, claims, damages, liabilities or
expenses incurred by the Company that are determined by final judgment of a
court of competent jurisdiction to have resulted solely from actions taken or
omitted to be taken by such Indemnified Person in bad faith or from such
Indemnified Person's willful misconduct or gross negligence. In no event,
however, shall the liability of E&Y or any Indemnified Person exceed the fees
received by or payable to such person for performing the services giving rise to
such liability. (Note: the bracketed language is an alternative to the
non-recourse provision in the text of the Agreement)]
Upon receipt by an Indemnified Person of actual notice of a claim,
action or proceeding against such Indemnified Person in respect of which
indemnity may be sought hereunder, such Indemnified Person shall promptly notify
the Company with respect thereto. In addition, an Indemnified Person shall
promptly notify the Company after any action is commenced (by way of service
with a summons or other legal process giving information as to the nature and
basis of the claim) against such Indemnified Person. In any event, failure to
so notify the Company shall not relieve the Company
from any liability which the Company may have on account of this indemnity or
otherwise, except if the Company shall have been materially prejudiced by such
failure, and only to the extent of such prejudice. The Company will, if
requested by an Indemnified Person, assume the defense of any litigation or
proceeding in respect of which indemnity may be sought hereunder, including the
employment of counsel reasonably satisfactory to E&Y and the payment of the fees
and expenses of such counsel, in which event, except as provided below, the
Company shall not be liable for the fees and expenses of any other counsel
retained by any Indemnified Person in connection with such litigation or
proceeding. In any such litigation or proceeding the defense of which the
Company shall have so assumed, any Indemnified Person shall have the right to
participate in such litigation or proceeding and to retain its own counsel, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Person unless (i) the Company and such Indemnified Person shall have
mutually agreed in writing to the retention of such counsel or (ii) the named
parties to any such litigation or proceeding (including any impleaded parties)
include, in addition to such Indemnified Person, the Company and/or another
Indemnified Person, together with such Indemnified Person, by the same counsel
would, in the opinion of counsel to such Indemnified Person, be inappropriate
due to actual or potential differing interests. If the Company assumes the
defense of any claim as required by this Agreement, the Company shall not be
liable for any settlement of any litigation or proceeding effected without its
written consent, but if settled with such consent of if there be a final
judgment for the plaintiff or claimant, the Company agrees to indemnify each
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. The Company will not settle any claim, action or
proceeding in respect of which indemnity may be sought hereunder, whether or not
any Indemnified Person is an actual or potential party to such claim, action or
proceeding, without E&Y's written consent, which shall not be unreasonably
withheld.
The provisions contained in this Schedule I shall remain operative and
in full force and effect regardless of the expiration or any termination of the
Agreement or the Indenture and constitute a material part of the Agreement.
