Exhibit 10.5
COMMUTATION AND RELEASE AGREEMENT
This Commutation and Release Agreement (hereinafter "Commutation Agreement") is
entered into by and between Tower Insurance Company of New York, an insurance
company organized under the laws of New York (hereinafter referred to as the
"Company"), and PXRE Reinsurance Company, an insurance company organized under
the laws of Connecticut (hereinafter referred to as the "Reinsurer").
WHEREAS, the Company and the Reinsurer have entered into a Quota Share
Reinsurance Agreement, effective December 1, 2001, including Addenda No.1 and
Notification letter dated September 30, 2002 thereto (hereinafter the
"Reinsurance Agreement", a copy attached hereto as Exhibit "A") under which the
Company ceded reinsurance business;
WHEREAS, the Company and the Reinsurer have agreed to terminate and commute the
Reinsurance Agreement, effective June 28, 2006;
WHEREAS, the Company and the Reinsurer desire to fully and finally settle and
commute all rights, obligations and liabilities, known and unknown, of each
other under the Reinsurance Agreement;
NOW, THEREFORE, in order to effect a commutation and mutual release, the parties
hereto agree to the following terms and conditions:
1. As consideration for the commutation of the Reinsurance Agreement, the
Reinsurer shall pay to the Company $15,228,276 (fifteen million two
hundred twenty eight thousand two hundred seventy six dollars) as of
the date of Commutation (such payment hereinafter referred to as the
"Commutation Amount").
2. The Company shall accept the Commutation Amount as full and final
settlement of any and all amounts due or claimed to be due from the
Reinsurer to the Company and arising under, in respect of, or relating
to the Reinsurance Agreement.
3. In consideration of and effective upon payment of the Commutation
Amount, the Company, on behalf of itself, its affiliated companies, and
its successors and assigns, shall release and forever discharge the
Reinsurer and its affiliated companies, its successors and assigns, and
its officers, directors, shareholders, employees and attorneys and
their heirs, executors and assigns from any and all liabilities and
obligations arising under, in respect of, or relating to the
Reinsurance Agreement, including but not limited to any and all
premiums, claims, commissions, liabilities, demands, damages, costs,
offsets, attorney's fees, and other causes of action, whether known or
unknown, vested or contingent, liquidated or unliquidated, matured or
unmatured, reported or unreported, and whether currently existing or
arising in the future it being the intention of the Parties that this
release operates as a full and final settlement of any and all of the
Parties' respective obligations and liabilities under the Reinsurance
Agreement.
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4. The rights, duties, and obligations set forth herein shall inure to the
benefit of and be binding upon any and all officers, directors,
employees, affiliates, stockholders, predecessors, successors,
liquidators, receivers or assigns of the parties hereto. Nothing in
this Commutation Agreement is intended to benefit any third party.
5. 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 or any part
thereof void, voidable, or unenforceable, except as provided for in
section 1. above; that no authorization, consent or approval of any
government entity (including, without limitation, the consent or
approval of the Company's commutation by the New York State Insurance
Department) is required to make this Commutation Agreement valid and
binding upon them; 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.
6. The parties, as between and among themselves, understand that they may
have sustained damages or incurred obligations that may not yet be
manifest and that are presently unknown, but nevertheless, the parties
deliberately intend and do hereby release one another to the extent
that this Commutation Agreement so provides. Furthermore, the parties
expressly accept and assume the risk that the factual or legal
assumptions made by either party in connection with this Commutation
Agreement may be found hereafter to be different from the true facts or
law, and the parties agree that this Commutation Agreement shall be and
remain in full force and effect notwithstanding such differences in
facts or law.
7. The parties specifically agree and acknowledge that the Commutation
Amount is being paid in good faith and constitutes fair consideration
for the discharge of amounts allegedly owing now or potentially owing
in the future by the Reinsurer to the Company in respect of the
Reinsurance Agreement.
8. Each party hereto has had the opportunity to negotiate the terms and
modify the draftsmanship of this Commutation Agreement. Therefore, the
terms of this Commutation Agreement shall be considered and interpreted
without any presumption, inference or rule requiring construction or
interpretation of any provision of this Commutation Agreement against
the interest of the drafter of the Commutation Agreement.
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9. This Commutation Agreement shall be interpreted under and governed by
the laws of the State of New York.
10. The failure of the parties to enforce any provision of this Commutation
Agreement shall not be construed as a waiver of such provision or any
other provision of this Commutation Agreement. No waiver of any
provision of this Commutation Agreement shall be deemed a waiver of any
of its other terms, nor shall such waiver constitute a continuing
waiver.
11. In the event that any part of this Commutation Agreement should for any
reason become or be found to be null, void, illegal or otherwise
unenforceable, it shall be struck out to the extent that it is so null,
void, illegal or unenforceable, and the remaining provisions of this
Commutation Agreement shall remain in full force and effect, except as
provided for in section 1. above. In the event that any court of
competent jurisdiction renders a final, nonappealable order or ruling
declaring this Agreement null and void in its entirety, it is mutually
agreed by the Company and the Reinsurer that this Commutation Agreement
shall be immediately rescinded and that each of the parties shall be
restored to the position it was in just prior to the making of this
Commutation Agreement.
12. This Commutation Agreement contains the entire agreement between the
parties as respects the subject matter. All discussions and agreements
previously entertained between the parties concerning the subject
matter of the commutation 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
duly authorized officers of the parties hereto.
13. This Commutation may be executed in multiple counterparts, each of
which when so executed and delivered shall be considered an original,
but such counterparts shall together constitute one and the same
instrument and agreement.
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IN WITNESS WHEREOF, on this 28th day of June , 2006, the parties hereto have
caused this Commutation and Release Agreement to be executed in duplicate by
their duly authorized representatives.
For and on behalf of Tower Insurance Company of New York:
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
For and on behalf of PXRE Reinsurance Company
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President and Chief Financial Officer
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EXHIBIT A
CONTRACT
Quota Share Reinsurance Agreement between Tower Insurance Company of New York
and PXRE Reinsurance Company, Effective December 1, 2001
a. Addendum No. 1, Effective January 1, 2002
b. Notification letter dated September 30, 2002 regarding cancellation
effective December 31, 2002
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