Exhibit 10.21.1
COMMUTATION AND RELEASE AGREEMENT
This Commutation and Release Agreement (the "Agreement") effective the 1st day
of July, 2005, by and between Capitol Indemnity Corporation ("CIC"), an
insurance company organized and existing under the laws of the State of
Wisconsin, and Darwin National Assurance Company ("DNA"), an insurance company
organized and existing under the laws of the State of Delaware.
WITNESSETH:
WHEREAS, effective July 1, 2004 CIC and DNA entered into a reinsurance
agreement in the form attached hereto as Exhibit A (the "Reinsurance
Agreement");
WHEREAS, CIC and DNA mutually desire to fully and finally settle and
commute all past, present and future rights, liabilities, privileges, duties and
obligations under the policies ceded in connection with the Reinsurance
Agreement attached hereto as Exhibit A(the "Policies") and to fully and forever
release and discharge one another from any and all of their obligations and
liabilities under the Policies; and
WHEREAS, DNA and CIC agree that it is in each of their best interests
to enter into this Agreement and to fully and finally release the other party
from the rights, liabilities, privileges, duties and obligations under the
Reinsurance Agreement.
NOW THEREFORE, in consideration of the foregoing premises and the
promises and mutual covenants contained herein and for other good and valuable
consideration, the adequacy and receipt of which is hereby acknowledged, the
Parties hereby do mutually agree as follows:
ARTICLE 1
1. Within fifteen (15) business days of the effective date of this Agreement,
CIC shall remit to DNA a sum equal to the June 30, 2005 GAP book value of
the loss and loss adjustment expense reserves assumed from DNA and unearned
premium assumed from DNA, less any deferred acquisition expense related to
the unearned premium.
2. DNA shall accept the sum set forth above in full and final settlement of
any and all amounts due to DNA by CIC under the Reinsurance Agreement. DNA
and CIC may, upon mutual agreement, offset amounts due under this Agreement
against other amounts due between the parties.
3. Upon receipt of the stun noted above, DNA will assume, effective as of July
1, 2005, all existing and future rights, liabilities, duties and
obligations with respect to the Policies. It is the express intention of
the Parties hereto that CIC shall have no further rights, liabilities,
duties or obligations with respect to the Policies and/or the Reinsurance
Agreement, except as set forth in this Agreement.
4. DNA hereby releases and discharges CIC, its officers, directors and
shareholders and their heirs, executors, administrators, successors and
assigns from any and all liabilities, adjustments, obligations, offsets,
actions, causes of actions, suits, debts, sums of money, accounts,
reckonings, bonds, bills, covenants, contracts, controversies, agreements,
promises, damages, judgments, claims and demands whatsoever, all whether
known or unknown, which DNA and DNA's successors and permitted assigns ever
had, now have, or hereafter may have against CIC arising out of or in
connection with the Policies and/or the Reinsurance Agreement, provided,
however, that this Release does not discharge CIC from the obligations that
have been undertaken by CIC pursuant to the terms of this Agreement.
5. CIC hereby releases and discharges DNA, its officers, directors and
shareholders and their heirs, executors, administrators, successors and
assigns from any and all liabilities, adjustments, obligations, offsets,
actions, causes of actions, suits, debts, sums of money, accounts,
reckonings, bonds, bills, covenants, contracts, controversies, agreements,
promises, damages, judgments, claims and demands whatsoever, all whether
known or unknown, which CIC and CIC's successors and assigns ever had, now
have, or hereafter may have against DNA arising out of or in connection
with the Policies and/or the Reinsurance Agreement, provided, however, that
this Release does not discharge DNA from the obligations that have been
undertaken by DNA pursuant to the terms of this Agreement.
6. DNA shall indemnify, defend and hold harmless CIC in respect of any and all
claims, whether by way of direct action or otherwise, made by DNA's
successors and permitted assigns, regulators and other government entities,
insurers and reinsurers with respect to this Agreement, the Reinsurance
Agreement and/or the Policies.
7. DNA shall, on or after the effective date of this Agreement, indemnify,
defend and hold harmless CIC in respect of the claims released hereunder,
including all claims, whether by way of direct action or otherwise, made by
(a) any person claiming to be insured under the Policies; (b) any person
who has made, will or can make a claim under the Policies and (c) any
Person who had acquired or been assigned the right to make a claim under
the Policies.
8. DNA shall have the right to control the defense (including the right to
select counsel) of any claim for which CIC is entitled to and is seeking a
defense from DNA pursuant to Sections 6 and 7 of this Agreement. Counsel
selected to defend CIC may be the same counsel defending DNA unless
representation of both DNA and CIC creates a non-waivable conflict of
interest. In the event of a non-waivable conflict, CIC shall have the right
to select counsel to defend CIC, at DNA expense, subject to approval by
DNA, such approval not to be unreasonably withheld. DNA agrees to waive any
conflicts of interest (other than non-waivable conflicts of interest) that
might otherwise preclude counsel selected by CIC from representing CIC;
provided that such counsel agree to protect any confidential
2
information that is obtained from DNA in connection with providing the
defense specified herein.
9. Each of the Parties hereto represents and warrants that (a) it is a
corporation duly incorporated, validly existing, and in good standing under
the laws of its state of domicile and, is duly licensed under the insurance
laws of its state of domicile and is in compliance with the terms of its
licensure; (b) it has the power and authority to execute, deliver and
perform its obligations under this Agreement; (c) it has taken all
corporate or other action necessary to authorize the execution, delivery
and performance by it of this Agreement; (d) it has not assigned any of its
rights or obligations under the Policies; (c) any authorizations, consents
or approvals of any governmental or regulatory entity or authority required
to make this Agreement valid and binding upon it have been obtained; (f) it
has entered into (this Agreement based upon its own independent assessment
of its rights and obligations under the Policies and/or the Reinsurance
Agreement which assessment is not based upon any representations made by
the other party to this Agreement; and (g) this Agreement constitutes and
will constitute its legal, valid and binding obligation enforceable against
it in accordance with the terms of this Agreement.
10. This Agreement shall not be assigned by any party to any third party
without the consent of the other party, such consent not to be unreasonably
withheld. Nothing in this Agreement, express or implied, is intended to
confer upon any person or entity other than the Parties hereto or their
respective predecessors, successors, liquidators, receivers and permitted
assigns any rights, remedies, obligations, or liabilities under or by any
reason of this Agreement.
11. This Agreement and the Exhibits attached hereto, which are incorporated by
reference, shall constitute the entire Agreement between the Parties to
this Agreement pertaining to the subject matter thereof, and supersede all
prior or contemporaneous understandings or agreements, whether written or
oral between them with respect to the matters that are the subject matter
thereof. This Agreement may not be amended, changed, modified or terminated
except by written amendment executed by each of the Parties hereto. No
waiver of any provision of this Agreement shall be deemed a waiver of any
terms or part thereof, nor shall such waiver constitute a continuing
waiver.
12. DNA and CIC irrevocably submit to the jurisdiction of a court of competent
jurisdiction within the State of Wisconsin, in the event of any action,
suit or proceeding arising out of this Agreement. If any provisions of this
Agreement as applied to any party or to any circumstance shall be adjudged
by a court to be invalid or unenforceable, the same shall in no way affect
any other provision of this Agreement, the application of such provision in
any other circumstance or the validity or enforceability of this Agreement.
13. Subject to requirements of applicable law, the existence of this Agreement,
and the terms hereof, shall remain confidential. Neither the Parties hereto
nor their
3
respective attorneys, auditors or agents, shall disclose or disseminate in
any way, except as required by legal or regulatory compulsion, the terms of
this Agreement. In the event disclosure is made to third parties not
expressly agreed upon in this Agreement, the disclosing party shall take
all reasonable steps to preserve the confidentiality of such information,
including giving prior written notice to the other parties, specifying the
information to be disclosed, the manner of disclosure, and to whom
disclosure is to be made and obtaining the prior written consent to the
other parties for such disclosure. Each Party agrees to make a reasonable
effort to obtain a written agreement to be bound by this confidentiality
provision from any third party not expressly agreed to above to whom
disclosure is made.
14. This Agreement shall be construed, and the obligations, rights and remedies
of the Parties hereunder shall he determined in accordance with the laws of
the State of Wisconsin without regard to conflict of laws principles or the
application of the laws of any other jurisdiction.
15. Executed copies of this Agreement may be transmitted by facsimile, but
whenever notice is required under this Agreement, it shall only be
effective upon receipt when in writing, delivered by hand or sent by
internationally recognized overnight courier service requiring proof of
delivery and addressed:
If to CIC
Chief Financial Officer
Capitol Insurance Companies
0000 Xxxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
Fax: 000-000-0000
With copies to:
General Counsel
Capitol Insurance Companies
0000 Xxxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
Fax: 000-000-0000
If to DNA:
Chief Financial Officer
Darwin National Assurance Company
0 Xxxx Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
4
With copies to:
General Counsel
Darwin National Assurance Company
0 Xxxx Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
19. This Agreement may be executed and delivered in multiple counterparts by
CIC and DNA hereto, each of which when so executed and delivered shall be
an original and all such counterparts shall together constitute one and the
same Agreement.
IN WITNESS WHEREOF, CIC and DNA have hereunto caused this Agreement to
be duly executed and delivered by their respectful officers, all as of the date
first written above.
CAPITOL INDEMNITY CORPORATION
September 1, 2005 By: /s/ Xxxxx X. Xxxxx
------------------------------------- ------------------------------------
Date Name: Xxxxx X. Xxxxx
----------------------------------
Title: President
---------------------------------
DARWIN NATIONAL ASSURANCE COMPANY
August 31, 2005 By: /s/ Xxxx X. Xxxxxxx, Xx.
------------------------------------- ------------------------------------
Date Name: Xxxx X. Xxxxxxx, Xx.
----------------------------------
Title: CFO
---------------------------------
5
