Exhibit 10.73
-------------
COMMUTATION AND RELEASE AGREEMENT
---------------------------------
This Commutation and Release Agreement (the "Commutation Agreement") is
made and enter into this 12 day of July, 2002, by and between Health Care
Indemnity, Inc. on behalf of itself and its affiliates, assigns, parents and
subsidiaries ("HCII or Reinsured"), and Lawrenceville Property & Casualty
Company ("LP&C") and MIIX Insurance Company ("MIIX") on behalf of their
affiliates, assigns, parents and subsidiaries, (collectively, the "Parties").
COMMUTATION AND RELEASE
-----------------------
WHEREAS, LP&C and Reinsured entered into a reinsurance treaty, attached as
Exhibit A, whereby LP&C, in consideration of payment of premium, agreed to
reinsure a quota share of certain risks insured by Reinsured;
WHEREAS, MIIX provided the Hold Harmless agreement attached as Exhibit B,
under which it undertook to indemnify HCII for amounts which LP&C became unable
or unwilling to pay and which, together with the Agreement in Exhibit A, shall
herein be referred to collectively as the "Agreements";
WHEREAS, HCII settled and paid various claims reinsured under the
aforementioned treaty, gave notice to LP&C and MIIX Insurance and sought
indemnification from them thereunder;
WHEREAS, LP&C and MIIX Insurance refused payment under the aforementioned
treaty and Hold Harmless agreement;
WHEREAS, a dispute among the Parties arose respecting those claims and,
pursuant to the treaty, HCII commenced an arbitration, captioned "Health Care
Indemnity, Inc., Reinsured, and Lawrenceville Property and Casualty Company and
MIIX Insurance Company, Respondent Reinsurers" to resolve the dispute.
WHEREAS, the Parties desire fully and finally to settle, commute, release
and extinguish all rights, obligations and liabilities, known and unknown, of
LP&C, MIIX and Reinsured under the Agreements;
WHEREAS, LP&C and MIIX have offered to pay and, notwithstanding anything in
Article 17 of the Treaty to the contrary, Reinsured has agreed to accept in full
satisfaction of LP&C's and MIIX's present and future liability under the
Agreements the sum described in paragraph 1 below;
NOW, THEREFORE, it is agreed by and between the Parties that:
1. LP&C and/or MIIX shall pay to Reinsured the sum of Thirty-One Million
Seventy-Six Thousand Dollars ($31,076,000) upon execution of this
Commutation Agreement by the Parties, but not later than July 12,
2002. Payment shall be in the currency of the United States and shall
be made by wire transfer.
2. Reinsured shall accept the sum set forth in paragraph 1 herein in full
and final settlement of any and all amounts due or to become due by
LP&C and/or MIIX to Reinsured under the Agreements.
3. Upon full and timely payment of the amount described in paragraph 1 by
LP&C and/or MIIX to the Reinsured, each party and its successors and
assigns shall fully and forever release and discharge the other party
and its respective predecessors, parents, affiliates, subsidiaries,
agents, attorneys, officers, directors, liquidators, receivers,
shareholders, successors and assigns from any and all present and
further payment obligations, adjustments, executions, offsets,
actions, causes of action, suits, arbitration proceedings, debts, sums
of money, accounts, reckonings,
2
bonds, bills, covenants, contracts, controversies, agreements,
promises, damages, judgments, claims, demands, liabilities and/or
loses whatsoever, all whether known or unknown, that it or its
predecessors, successors or assigns ever had, now have, or hereafter
may have, whether grounded in law or in equity, in contract or in
tort, by reason of any matter whatsoever arising out of, in connection
with, or related to the Agreements, including without limitation any
and all treaty business arising under the Agreements, it being the
intention of the Parties that this release operate as a full and final
settlement of any and all of the Parties' respective obligations and
liabilities under the Agreements, it being further understood and
agreed that this release in no way applies to or changes the
obligations of other reinsurers under the treaty in Exhibit A.
4. The Parties acknowledge that they have entered into this Commutation
Agreement in reliance on their own independent investigations and
analyses of the facts underlying the subject matter of the Commutation
Agreement, and that no representations, warranties, or promises of any
kind have been made directly or indirectly to induce them to execute
this Commutation Agreement, other than those which are expressly set
forth herein.
5. Each party acknowledges to the others that it has had the advice of
attorneys of its own choosing in connection with valuation,
negotiations and execution of this Commutation Agreement.
6. The Parties to this Commutation Agreement are entering into it freely,
without duress, in good faith, at arm's length, and in the regular
course of business and believe that it is a good, valid, and
enforceable agreement. In the event, however,
3
that any court of competent jurisdiction renders a final,
nonappealable order or ruling declaring this Commutation Agreement or
the payment hereunder null and void, it is mutually agreed by the
Parties that this Commutation Agreement shall be immediately rescinded
and that each of the Parties hereto shall be restored to the position
it was in just prior to the making of this Commutation Agreement.
7. The Parties hereto expressly warrant and represent that they are
corporations in good standing in their respective places of domicile;
that the execution of this Commutation Agreement is fully authorized
by each of them; that the person or persons executing this Commutation
Agreement have the necessary and appropriate authority to do so; that
there are no pending agreements, transactions, or negotiations to
which any of them are a party that would render this Commutation
Agreement or any part thereof void, voidable, or unenforceable; that
any necessary authorization, consent or approval of any government
entity required to make this Commutation Agreement valid and binding
upon them has been obtained; and that no claim or loss being paid or
settled under this Commutation Agreement has been previously assigned,
sold or transferred to any other person or entity.
8. This Commutation Agreement shall be interpreted under and governed by
the laws of the State of Colorado.
9. The Parties hereby agree to execute promptly any and all supplemental
agreements, releases, affidavits, waivers and other documents of any
nature or kind which may reasonably be required in order to implement
the provisions or objectives of this Commutation Agreement.
4
10. This Commutation Agreement may be executed in multiple counterparts,
each of which, when so executed and delivered shall be an original,
but such counterparts shall together constitute one and the same
instrument and agreement.
11. This Commutation Agreement contains the entire agreement between the
Parties as respects its subject matter. All discussions, agreements,
representations, warranties and statements previously entertained
between the Parties concerning the subject matter of the Commutation
Agreement are merged into this Commutation Agreement. This Commutation
Agreement may not be modified or amended, nor any of its provisions
waived, except by an instrument in writing, signed by the Parties.
12. The Parties expressly agree that the terms and conditions of this
Commutation Agreement shall be confidential and shall not be disclosed
by one party without the prior written consent of the other Parties,
except with respect to reporting to reinsurers, retrocessionaires or
rating agencies, and except where otherwise required by contract or by
authority of a court, administrative tribunal, arbitration panel or
regulatory agency.
IN WITNESS WHEREOF, the Parties hereto have executed this Commutation and
Release Agreement in duplicate, effective as of the day and year first written
above.
5
HEALTH CARE INDEMNITY, INC. LAWRENCEVILLE P & C
/s/ Xxxxx X. Xxxxxx /s/ Xxxxxxxxx X. Xxxxxxxx
------------------- -------------------------
Title: President Title: Sr. Vice President
Date: July 2, 2002 Date: July 12, 2002
MIIX INSURANCE
/s/ Xxxxxxxxx X. Xxxxxxxx
-------------------------
Title: Sr. Vice President
Date: July 12, 2002
6
