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Exhibit 10.27
NOVATION AND ASSUMPTION AGREEMENT
(hereinafter "Agreement")
by and between
INSURANCE COMPANY OF NORTH AMERICA
(hereinafter called "CIGNA")
and
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA.
(hereinafter called "National Union")
AND
XXXXXX HOLDING CO. (PA), INC.
(hereinafter called "Xxxxxx")
WHEREAS, it is the intent of the parties hereto that effective as of
12:01 a.m., March 31, 1998 (the "Effective Date"), National Union shall assume
all rights, duties, and obligations of CIGNA with respect to the
Products/Completed Operations hazard provided under certain policies of
insurance (listed in Schedule A, the "Policies") issued by CIGNA to Xxxxxx and
its subsidiaries, and that CIGNA shall be relieved of all insurance obligations
and risks transferred hereunder;
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained and upon the terms and conditions hereinafter set forth, the parties
hereto agree as follows:
ARTICLE I
ASSUMPTION OF RIGHTS, DUTIES AND LIABILITIES
CIGNA hereby transfers and assigns to National Union and National Union
hereby accepts all of CIGNA's rights, and assumes direct and sole liability to
all policyholders for all of CIGNA's duties, liabilities and obligations with
respect to the Products/Completed Operations hazard of the Policies only. The
parties agree that National Union shall be bound by and undertakes to perform
such obligations in all respects as if National Union rather than CIGNA were the
original issuer of and party to the Policies; and that CIGNA shall be and hereby
is relieved of all duties, liabilities and obligations with respect to the
Products/Completed Operations hazard of the Policies only, including liability
for claims incurred but not yet reported and for claims reported but not yet
paid as of the Effective Date.
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ARTICLE II
RELEASE & CONSENT TO NOVATION
Notwithstanding the Coverage Restrictions set forth in Articles III and VII
below, Xxxxxx hereby agrees to release and forever discharge CIGNA, its
directors, officers, employees, agents, attorneys, representatives, successors
and assigns, from any and all claims, demands, actions, liabilities,
obligations, duties, or causes of action, known or unknown which Xxxxxx has,
might have had, or might have in the future, arising out of or connected with,
in whole or in part, any event, act omission, or transaction relating in any way
to the Products/Completed Operations hazard of the Policies.
ARTICLE III
COVERAGE RESTRICTIONS
Coverage provided by National Union pursuant to its assumption of
liabilities and obligations hereunder shall be per the original terms and
conditions of the Policies, provided, however, that coverage for Property Damage
and Bodily Injury under the Policies shall be limited to damages arising from an
Occurrence which happened during the Policy Periods described in the Policies
and is subject to the restrictions of aggregate limit as stated below and to the
exclusions under Article VII of this Agreement. Notwithstanding the terms of the
Policies, coverage for Property Damage and Bodily Injury under the Policies
shall not include damages incurred and paid by CIGNA prior to the Effective
Date. Coverage for Supplementary Payments with respect to any claim or suit
shall be limited to work performed or costs and expenses incurred after the
Effective Date.
Notwithstanding the original terms of the Policies, coverage provided by
National Union for Property Damage and Bodily Injury is subject to an absolute
aggregate limit as stated in the Indemnity Agreement attached hereto as Schedule
B. Under no circumstances shall the total liability of National Union under this
Agreement exceed the absolute aggregate limit as stated in the Indemnity
Agreement.
Notwithstanding the original terms of the Policies, coverage provided by
National Union for Property Damage and Bodily Injury is subject to per
occurrence limits as described in the Schedule A attached hereto.
ARTICLE IV
CONSIDERATION
The consideration for National Union's assumption of CIGNA's obligations,
duties and liabilities under this Agreement shall be $548,038.00 payable by or
on behalf of CIGNA to National Union concurrently with the execution and
delivery of this Agreement and
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the execution of a certain commutation agreement between CIGNA and Manufacturers
Indemnity and Insurance Company of America. Receipt of the consideration by
National Union is a condition precedent to National Union's assumption of
CIGNA's obligations, duties and liabilities under this Agreement.
Xxxxxx here acknowledges and agrees that CIGNA's agreement to transfer to
National Union, its rights, duties, obligations and liabilities hereunder
benefits Xxxxxx and constitutes good and adequate consideration to Xxxxxx for
the release provided by Xxxxxx herein. Xxxxxx further acknowledges and
represents that it has had a full opportunity to obtain legal advice and counsel
regarding its rights under the Policies and under this Agreement and that it is
executing this Agreement after obtaining such counsel or after knowing waiver of
same. Xxxxxx further represents that it has read this Agreement in its entirety
and fully understands its content and effect.
ARTICLE V
INDEMNIFICATION
National Union agrees to indemnify, defend and hold CIGNA, Xxxxxx and their
directors, officers, employees, agents, representatives, successors or assigns
harmless from and against any losses, liabilities, damages, actions, claims,
demands, judgments or expenses asserted or incurred after the Effective Date and
arising out of or connected with, in whole or in part, any event, act, omission,
or transaction, relating in any way to CIGNA's transfer and assignment or
National Union's acceptance, assumption or performance of CIGNA's rights,
duties, obligations and liabilities assumed hereunder. Indemnification of Xxxxxx
and its directors, officers, employees, agents, representatives, successors or
assigns under this Article shall not apply to the exclusions covered in Article
VII below.
ARTICLE VI
CLAIMS HANDLING
Xxxxxx represents and warrants that, as of the Effective Date of this
Agreement, claims under the Policies are being handled by Xxxxxx a/k/a Phoenix
Management Services, Inc. (the "Claims Handlers"), and Xxxxxx agrees that it
shall not amend, modify or waive the provisions of any of its current agreements
with the Claims Handlers (to the extent such provisions affect the handling of
claims included within the liabilities assumed by National Union under this
Agreement) without National Union's prior written consent.
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ARTICLE VII EXCLUSIONS
As between National Union and Xxxxxx, this Agreement does not apply to and
will not cover:
1. Any risk not covered by the Policies;
2. Any ex gratia payments; and
3. Damages awarded by a court against Xxxxxx or the Claims Handlers where such
damages are outside the provisions of the Policies and such Damages are due
to bad faith, fraud or gross negligence of Xxxxxx or the Claims Handlers in
the handling of a loss.
ARTICLE VIII
ACCESS TO RECORDS
CIGNA shall allow National Union or its agents or authorized
representatives to inspect, at all reasonable times, or deliver to National
Union upon request all records of CIGNA relevant to claims, losses or legal
proceedings which involve or are likely to involve the Policies assumed
hereunder by National Union.
ARTICLE IX
ERRORS AND OMISSIONS
Any inadvertent error, omission or delay in complying with the terms and
conditions of this Agreement shall not be held to relieve either party hereto
from any liability which would attach to it hereunder if such delay, omission or
error had not been made, provided such delay, omission or error is rectified as
soon as practicable upon discovery.
ARTICLE X
ARBITRATION CLAUSE
All disputes or differences arising out of the interpretation of this
Agreement shall be submitted to the binding decision of three (3) arbitrators,
one to be chosen by each party, and an umpire to be chosen by the arbitrators.
The arbitrators and umpire shall be disinterested active or retired executive
officials of fire or casualty insurance or reinsurance companies. If either of
the parties fails to appoint an arbitrator within one (1) month after being
required by the other party in writing to do so, or if the arbitrators fail to
appoint an umpire, within (1) month of receipt of a request in writing by either
of them to do so, such arbitrator or umpire, as the case may be, shall at the
request of either of them to do so, such arbitrator or umpire, as the case may
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be, shall at the request of either party be appointed by a judge of the State of
New York.
The arbitration proceedings shall take place in New York, New York. The
applicant shall submit its case within one (1) month after the appointment of
the Court of Arbitration, and the respondent shall submit his reply within one
(1) month after receipt of a claim. The arbitrators and umpire are relieved from
all judicial formality and may abstain from following the strict rules of law.
The arbitrators and umpire shall not award punitive damages.. They shall
settle any dispute under this agreement according to an equitable rather than a
strictly legal interpretation of its terms and their decision shall be provided
to the parties in writing and shall be final and not subject to appeal, in the
absence of fraud or other wrongful conduct. Judgement may be entered upon the
award of the arbitrators in any court having jurisdiction thereof.
Each party shall bear the expenses of its arbitrator and shall jointly and
equally share with the other the expense of the umpire and of the arbitration.
This Article shall survive the termination of this Agreement.
ARTICLE XI
TERMINATION
It is agreed that no party to this Agreement may terminate this Agreement.
ARTICLE XII
NOTICE
Any notice or other communication required to be given hereunder shall be
effective only if in writing and shall be deemed sufficiently given only if sent
to the respective address shown below unless a change in address is received by
the notifying party.
CIGNA
TO:
XXXXXX
TO:
NATIONAL UNION
TO:
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ARTICLE XIII
MISCELLANEOUS
A. This Agreement shall not be deemed to give any right or remedy to any
third party whatsoever unless said right or remedy is specifically
granted to such third party by the terms hereof.
B. This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
C. Nothing contained in this Agreement shall be construed, so as to
require the commission of any act contrary to law, and wherever there
is any conflict between any provision(s) of this Agreement and any
statute, law, ordinance or regulation contrary to which the parties
hereto have no legal right to contract, the latter shall prevail;
provided, however, that in such event the provision(s) of this
Agreement so affected shall be curtailed and limited only to extent
necessary to permit compliance with the minimum legal requirement, and
no other provisions of this Agreement shall be affected thereby, and
all such other provisions of this Agreement shall continue in full
force and effect.
D. This Agreement contains the full and complete understanding and
agreement between the parties hereto with respect to the subject
matter hereof, and the parties acknowledge that neither is entering
into this Agreement in reliance upon any term, condition,
representation or warranty not stated herein and that this Agreement
replaces any and all prior agreements whether oral or written,
pertaining to the subject matter hereof.
E. Any capitalized terms used but not defined herein shall have the same
meaning as defined in the Policies.
F. Whenever the text hereof requires the use of a singular term it shall
include the appropriate plural term as the text of the instrument
requires.
G. All changes to this Agreement must be in writing and agreed to by the
parties.
H. This Agreement shall be governed by the laws of the State of New York.
I. No failure or delay by a party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege hereunder.
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J. It is understood and agreed that this Agreement is a manuscript
Agreement that has been negotiated at arm's length and on equal
footing as between the parties hereto, and that any dispute concerning
the meaning of this Agreement or any term or condition hereof, shall
be resolved without reference to the doctrine of contra preferentum or
any related or similar doctrine.
K. Each of the parties hereto represents that it has not assigned any of
its rights under the Policies, and the signatories to this Agreement
represent that they are fully authorized to execute the agreements and
releases set forth herein on behalf of the respective parties hereto.
L. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which together shall be
considered one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives on this 31st day of March,
1998.
INSURANCE COMPANY OF NORTH AMERICA
By: /s/
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Title:
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Address:
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XXXXXX HOLDING CO. (PA), INC.
By: /s/
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Title:
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Address:
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NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, P.A.
By: /s/
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Title:
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Address:
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Schedule A
LIST OF LIABILITY POLICIES
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Excess Policy Statutory Company Policy Term
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XCP G0663770A Insurance Company of North America 05/01/88-89
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XCP G06638934 Insurance Company of North America 05/01/89-90
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XCP X00000000 Insurance Company of North America 05/01/90-91
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XCP G06639707 Insurance Company of North America 05/01/91-92
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