Exhibit 10.23
COMMUTATION AND MUTUAL RELEASE AGREEMENT
This COMMUTATION AND MUTUAL RELEASE AGREEMENT (the "Commutation
Agreement") is made and effective as of March 26, 2003 by and between
Proformance Insurance Company, a New Jersey insurance corporation (hereinafter
referred to as the "REINSURED"), and Xxxxxxx Global Reinsurance Corporation of
America, a New York insurance corporation (hereinafter referred to as the
"REINSURER").
W I T N E S S E T H :
WHEREAS, the REINSURED and the REINSURER are parties to or successors
in interest to parties to the "Reinsurance Agreements" including, but not
limited to, those indicated in Schedule A attached hereto and made a part of the
Commutation Agreement and whereby, inter alia, the REINSURER, agreed to reinsure
certain insurance policy risks insured by the REINSURED; and
WHEREAS, the REINSURED and the REINSURER now desire to fully and
finally settle and commute all of their respective past, present and future
reinsurance obligations and liabilities known and unknown, discovered and
undiscovered including, all Reinsurance Agreements for the benefit of REINSURED
listed in Schedule A; and
WHEREAS, the parties hereto recognize and understand that a portion of
REINSURER's obligation to REINSURED under the Reinsurance Agreements may become
due in the future; that these future obligations and liabilities have been
evaluated and independently estimated by both parties and cannot be determined
in an amount certain by either party at this time, and that a commutation of
these obligations of REINSURER negotiated on the basis of each parties'
independent calculations of outstanding losses, loss reserves and IBNR will
eliminate the uncertainty of contingent liabilities for presently unresolved and
unasserted claims; and
WHEREAS, the REINSURER has offered to pay and the REINSURED has agreed
to accept in full satisfaction of the REINSURER'S past, present and future
obligations and liabilities under the Reinsurance Agreements for the sum of Six
Million One Hundred Ninety Seven Thousand Four Hundred Thirty Eight Dollars
($6,197,438.00) to be paid in the manner set forth herein;
NOW, THEREFORE, in consideration of the covenants set forth herein and
the payments to be made hereunder, it is agreed by and between the REINSURED and
the REINSURER as follows:
1. Upon execution and delivery of this Commutation Agreement by both the
REINSURED and REINSURER, the REINSURER shall pay the REINSURED the sum of Six
Million One Hundred Ninety Seven Thousand Four Hundred Thirty Eight Dollars ($
6,197,438.00) by wire transfer to [Fleet Bank, ABA# 000000000, Acct# 9404606683,
Proformance Insurance Company], by noon Eastern Standard Time, March 28, 2003.
The REINSURER and REINSURED agree that there are no other amounts due or owing
between them arising out of the reinsurance provided to REINSURED under the
Reinsurance Agreements.
2. The REINSURED shall accept the sum set forth in Paragraph 1 herein, as full
and final settlement of any and all amounts claimed heretofore or hereinafter to
be due by the REINSURER to REINSURED, arising under or in respect of the
Reinsurance Agreements.
3. The REINSURER hereby releases and discharges the REINSURED, its predecessors,
parents, affiliates, agents, employees, officers, directors, shareholders,
policyholders and assigns from any and all liabilities, including, but not
limited to, all obligations, adjustments, executions, offsets, actions, causes
of action, suits, debts, sums of money, accounts, reckonings, bonds, bills,
covenants, contracts, controversies, agreements, promises, damages, judgments,
claims, demands, duties, acts, omissions, costs, expenses and/or losses
whatsoever, whether known or unknown, reported or unreported, discovered or
undiscovered, and whether arising in the past, present or future, which the
REINSURER, and its successors and assigns ever had, now have, or hereafter may
have, whether in law or equity, in contract or in tort, against the REINSURED by
reason of any matter whatsoever arising out of the Reinsurance Agreements, it
being the intention of the parties that this Commutation Agreement operate as a
full and final settlement of the REINSURED'S past, current and future
liabilities to the REINSURER under said Reinsurance Agreement, except as
otherwise provided herein.
4. The REINSURED hereby releases and discharges the REINSURER, its predecessors,
parents, affiliates, agents, employees, officers, directors, shareholders,
policyholders and assigns from any and all liabilities, including, but not
limited to, all obligations, adjustments, executions, offsets, actions, causes
of action, suits, debts, sums of money, accounts, reckonings, bonds, bills,
covenants, contracts, controversies, agreements, promises, damages, judgments,
claims, demands, duties, acts, omissions, costs, expenses and/or losses
whatsoever, whether known or unknown, reported or unreported, and whether
arising in the past, present or future which the REINSURED, and its successors
and assigns ever had, now have, or hereafter may have, whether grounded in law
or equity, in contract or in tort, against the REINSURER by reason of any matter
whatsoever arising out of the Reinsurance Agreements for the benefit of
REINSURED, it being the intention of the parties that this Commutation Agreement
operate as a full and final settlement of the REINSURER'S past, current and
future reinsurance liabilities to the REINSURED under said Reinsurance
Agreements except as otherwise provided herein.
5. The REINSURED and the REINSURER absolutely, irrevocably and unconditionally
covenant and agree with each other, and their respective successors and assigns,
that after the effective date of the Commutation Agreement, neither party will
for any reason whatsoever, demand, claim or file suit or initiate arbitration or
any other proceedings against the other party in respect of any matters relating
to the reinsurance liabilities to REINSURED under the Reinsurance Agreements as
indicated in Schedule A or any other part of this Commutation Agreement.
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6. The REINSURED and the REINSURER acknowledge the payment described in
Paragraph 1 herein, as a complete accord, satisfaction, settlement and
commutation of any and all of the reinsurance liability and obligations of the
parties to each other under the Reinsurance Agreements and do hereby agree to
indemnify and hold each other harmless from and against any and all liability,
costs, damages and expense, including reasonable attorneys fees and expenses,
incurred in connection with any and all claims, actions or proceedings against
the REINSURED or the REINSURER based upon, arising out of, or related to the
reinsurance liabilities and obligations to each other under the Reinsurance
Agreements.
7. The parties agree that in the event payment, as described in Paragraph 1
herein, is not made by the REINSURER, then this Commutation Agreement and a
Commutation Agreement of even date between REINSURED and Xxxxxxx Global
Reinsurance Corporation - U.S. Branch shall be considered null and void.
Moreover, if any court of competent jurisdiction renders a final order or ruling
declaring this Commutation Agreement or the payment made under paragraph 1
herein null and void, then this Commutation shall be rescinded and each the
REINSURER and REINSURED shall be restored to the position they were in just
prior to the execution of this Commutation Agreement.
8. This Commutation Agreement is the product of arm's length negotiations and
the terms hereof have been completely read and fully understood and voluntarily
accepted by both the REINSURED and the REINSURER. Each party has enlisted its
own independent advisors and has been represented by its own legal counsel.
9. The rights, duties and obligations under this Commutation Agreement shall be
final and binding upon and inure to the benefit of the parties hereto and their
respective officers, directors, employees, affiliated companies, stockholders,
parents, predecessors, successors, liquidators, receivers and assigns.
10. The REINSURER represents and warrants to the REINSURED that: (a) it is a
corporation in good standing in its state of domicile; (b) that it is fully
authorized and empowered to execute and deliver this Commutation Agreement; (c)
that the person executing this Commutation Agreement is fully authorized to do
so; (d) that there are no pending conditions, agreements transactions, or
negotiations to which it is a party that would render this Commutation Agreement
or any part thereof void, voidable or unenforceable; (e) that no authorization;
consent or approval of any governmental entity is required to make this
Commutation Agreement valid and enforceable against the REINSURER in accordance
with its terms; (f) no claim or loss being paid or settled by this Commutation
Agreement has been previously assigned, sold and / or transferred to any other
entity.
11. The REINSURED represents and warrants to the REINSURER that: (a) it is a
corporation in good standing in its state of domicile; (b) that it is fully
authorized and empowered to execute and deliver this Commutation Agreement; (c)
that the person executing this Commutation Agreement is fully authorized to do
so; (d) that there are no pending conditions, agreements transactions, or
negotiations to which it is a party that
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would render this Commutation Agreement or any part thereof void, voidable or
unenforceable; (e) that no authorization consent or approval of any governmental
entity is required to make this Commutation Agreement valid and enforceable
against the REINSURED in accordance with its terms; (f) no claim or loss being
paid or settled by this Commutation Agreement has been previously assigned, sold
and/or transferred to any other entity.
12. This Commutation Agreement shall constitute the entire agreement between the
parties with respect to its subject matter. This Commutation Agreement may not
be modified or amended, except by written instrument executed by each of the
parties hereto. Waiver by any of the parties of any term, provision or condition
shall not be construed to be a waiver of any other term, provision or condition
of this Commutation Agreement.
13. This Commutation Agreement shall be interpreted under and governed by the
laws of the State of New York without regard to conflict of law principles.
14. The REINSURED and the REINSURER hereby agree to execute promptly any and all
supplemental agreements, releases, affidavits, waivers and all other documents
of any nature or kind which the other party may reasonable require in order to
implement the provisions or objectives of this Commutation Agreement. This
clause also includes, but is not limited to, the duty of REINSURED to continue
to provide REINSURER with financial, claims and other pertinent information to
support REINSURED'S efforts to collect moneys owed to them from its
retrocessionaires.
15. The REINSURED and the REINSURER hereby agree to keep the terms and
conditions of this Commutation Agreement confidential and will not disclose
(except as required by applicable law, regulation, or legal process) the
existence and / or terms and conditions of this Commutation Agreement to third
parties. The REINSURED and the REINSURER hereby agree that their directors,
officers, partners, members, employees, affiliates, retrocessionaires, brokers,
agents, managing general agents or other representatives (including, without
limitation, financial advisors, attorneys, accountants, actuaries) may be
permitted to know the existence and the terms and conditions of this Commutation
Agreement on a confidential, need to know basis in the course of normal
business. Should either REINSURED or REINSURER be requested by subpoena or
similar governmental or judicial notice to disclose the existence and the terms
and conditions of the Commutation Agreement, they must promptly notify the other
party in order that the other may seek a protective order or other appropriate
remedy either by itself or jointly with the party receiving the request. In the
event that no such protective order or other appropriate remedy is sought or
obtained, then the party receiving the subpoena or similar governmental or
judicial notice will furnish only that portion of information concerning this
Commutation Agreement which it is legally required, as it is advised by its own
counsel, and will exercise all reasonable efforts to obtain reliable assurance
that confidential treatment will be accorded the terms and conditions of this
Commutation Agreement.
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16. This Agreement shall neither be construed as, nor asserted by one party
against the other, as an admission of liability of any kind.
17. This Agreement is intended to govern only the rights and obligations of the
parties with respect to the reinsurance of Proformance Insurance Company under
the Reinsurance Agreements and no other contracts, obligations or relationships
between the parties.
18. This Agreement may be executed and delivered in multiple counterparts, each
of which, when so executed and delivered, shall be an original, but such
counterparts shall together constitute but one and the same instrument and
agreement
IN WITNESS WHEREOF, the parties have executed this Commutation Agreement in
triplicate, as of the day and year first written above.
Proformance Insurance Company ("REINSURED")
Signature: /s/ Xxxxx X. Xxxxxx Witness: /s/ Xxxxxxxxx Xxxxxx
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Name: Xxxxx X. Xxxxxx (print or type)
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Title: CFO
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Date: 3/26/2003
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Xxxxxxx Global Reinsurance Corporation of America ("REINSURER") (Formerly
Constitution Reinsurance Corporation)
Signature: /s/ H. Xxxxxxx Xxxxxxx Witness: /s/ Xxxxxx X. Xxxxxxx
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Name: H. Xxxxxxx Xxxxxxx (print or type)
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Title: CFO
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Date: 3/26/2003
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