Ex.2.2
AGGREGATE
EXCESS OF LOSS
REINSURANCE AGREEMENT
as of June 2, 1997 (the "Execution Date")
(hereinafter referred to as the "AGREEMENT")
In consideration of the mutual covenants hereinafter contained and
upon the terms and conditions hereinafter set forth
CENTRE REINSURANCE COMPANY OF NEW YORK
New York, New York
(hereinafter referred to as the "REINSURER")
does hereby indemnify, as herein provided and specified,
PCA PROPERTY & CASUALTY INSURANCE COMPANY
Longwood, Florida
(hereinafter referred to as the "COMPANY")
ARTICLE 1
DEFINITIONS
"AGREEMENTS" shall mean, taken together, this Agreement, the New Claims
Servicing Agreement, the Investment Management Agreement, the New Tax Sharing
Agreement and the Collateral Agreements. With respect to the parties identified
in the Agreements, should any conflict arise as concerns the duties, obligations
and rights of any of the parties thereto relative to the respective duties,
obligations and rights of the parties as delineated in the Agreements, the terms
of the Reinsurance Agreement shall prevail.
"ALLOCATED LOSS ADJUSTMENT EXPENSES" or "ALAE" shall mean legal expenses and
other expenses (including interest accruing before and/or after entry of
judgment) incurred by the Company in connection with the investigation,
adjustment, settlement, litigation, mediation or arbitration of claims or
losses. ALAE shall not include costs of "in-house counsel," claims staff or
other overhead or general expenses of the Company or its agents, including the
claims services provided by PCA Solutions, Inc. ("Solutions") (or any third
party replacing Solutions).
"ASSETS" shall mean, at any point in time (1) all of the tangible and intangible
assets of the Company and the proceeds thereof, including, but not limited to,
non-admitted assets, all ceded reinsurance recoverables, agents balances,
receivables, uncollected or retrospective premiums, interest due and accrued,
federal and state income taxes or other taxes refunded or recoverable,
dividends, proceeds from commutations of the Prior Agreements (as hereinafter
defined) and other agreements, recoveries under the Special Disability Trust
Fund (or any successor fund), salvage and subrogation, amounts recovered under
managed care agreements, recoveries from annuity contracts, all intangible
assets, properties, rights, choses in action, and all other assets, proceeds
thereof, and amounts due and payable to the Company, whether owned by the
Company on the Effective Date or acquired, received or realized by the Company
thereafter; less (2) Restricted Assets. Schedule 1 hereto summarizes Assets of
the Company as of March 31, 1997 for purposes of statutory and generally
accepted accounting principles ("GAAP").
"BUYER NOTICE" shall mean a written notice delivered by Humana within ten
business days of the Notice Date to each of the Reinsurer, the Company and the
Florida Department of Insurance requesting that this Agreement and each of the
other Agreements be terminated pursuant to the provision of Article 2 effective
as of the effective date of the Financing Transaction which notice shall contain
and undertaking consistent with Section 7.12(b) of the Merger Agreement.
"CASH AVAILABLE" shall mean, as of any date, all cash or Cash Equivalents owned
or held by or on behalf of the Company or any successor thereto as of such date,
including, without limitation, any duly appointed administrator, liquidator,
conservator, rehabilitator, receiver, trustee, supervisor or other person or
entity of like capacity, in excess of the sum of the Restricted Assets.
"CASH EQUIVALENTS" shall mean (i) readily marketable direct obligations of the
United States of America, provided that such obligations mature no later than
one year from the date of acceptance thereof and (ii) certificates of deposit
denominated in dollars or bankers' acceptances issued by any United States
commercial banks maturing not later than one year from the date of acquisition
thereof.
"CLOSING CONDITIONS" shall mean, taken as a whole, the conditions precedent to
the performance of Reinsurer's obligations hereunder as set forth in Article
2(b) hereof.
"CLOSING DATE" shall mean the date following the Execution Date upon which (i)
each of the Closing Conditions have been fully satisfied or waived as the case
may be and (ii) the Reinsurance Premium shall have been paid to the Reinsurer in
accordance with the terms of Article 8 hereof.
"CLOSING NOTICE" shall have the meaning ascribed thereto in Article 2(a) hereof.
"COLLATERAL" shall mean, taken together and subject only to the liens described
in Schedule 3 hereto, (i) a fully perfected, first priority security interest in
each of all of the assets of Solutions, including but not limited to, any and
all real property held thereby, (ii) a fully perfected security interest in all
of the issued and outstanding capital stock of Solutions, and (iii) a trust fund
arrangement in the amount of $45.0 million securing the performance of
Solutions' and PCA's obligations under and pursuant to the terms of the New
Claims Servicing Agreement, each of which interests and guarantees shall be
reasonably satisfactory in form and substance to the Reinsurer, (iv) including
the proceeds of any of the foregoing.
"COLLATERAL AGREEMENTS" shall mean the agreements, dated as of the Closing Date,
establishing or governing the interests of the Reinsurer with respect to the
Collateral which agreements shall be substantially in the form attached hereto
as Appendix A, including, without limitation, (i) a Security Trust Agreement
concerning interests in a pool of certain investable assets established by PCA
(the "Security Trust Fund"), (ii) a mortgage with respect to the real property
held by Solutions (the "Mortgage"), (iii) a security agreement with respect to
the personal property held by Solutions (the "Security Agreement") and (iv) a
stock pledge (the "Stock Pledge") with respect to all of Solutions' issued and
outstanding shares of capital stock.
"COMMUTATION AGREEMENTS" shall mean the agreements, dated as of the Closing
Date, providing for the commutation of the Prior Agreements other than the 1996
Agreement, which shall be substantially in the form attached hereto as Appendix
B.
"DEPOSIT PREMIUM" shall mean $4.0 million.
"EFFECTIVE DATE" shall have the meaning ascribed thereto in Article 3 hereof.
"EXCESS OF ORIGINAL POLICY LIMITS LOSS" shall mean any loss of the Company in
excess of the limit of the Original Policy, but otherwise within the terms of
such Policy, such loss in excess of the limit having been incurred because of
improper failure by it to settle within the policy limit or by reason of alleged
or actual negligence, fraud or bad faith in rejecting an offer of settlement or
in the preparation of the defense or in the trial of any action against its
insured or in the preparation or prosecution of an appeal consequent upon such
action.
"FINANCING TRANSACTION" means the merger contemplated by that certain Agreement
and Plan for Merger by and among Humana, PCA Acquisition Corp. and PCA, dated as
of June 2, 1997 (the "Merger Agreement").
"HUMANA" shall mean Humana Inc., a Delaware corporation, as party to the
Financing Transaction.
"EXTRA CONTRACTUAL OBLIGATIONS" shall mean those liabilities for monetary
damages not covered under any other provision of this Agreement and which arise
from the handling of any claim on the Subject
Obligations, such liabilities arising because of, but not limited to, the
following: improper failure by the Company to settle within the policy limit,
or by reason of alleged or actual negligence, fraud or bad faith in rejecting an
offer of settlement or in the preparation of the defense or in the trial of any
action against its insured or in the preparation or prosecution of an appeal
consequent upon such action.
"FUNDING CONDITIONS" shall mean, taken together, (i) the conversion of all
equity securities held by the Company into an amount of cash not less than the
GAAP carrying therefor such that, on and as of the Closing Date, the Company
shall hold no equity securities, (ii) funding in cash of all net intercompany
and affiliate balances then due to or from the Company as set forth in Schedule
2 hereof, and (iii) the conversion of the following Assets into cash or Cash
Equivalents equal to GAAP carrying values therefor as set forth on Schedule 2
hereof: (x) the escrow receivable from Health Partners South East, (y) the
covenant not to compete as part of the sale of the Georgia and Alabama HMO
operations and (z) the collateral loan with Hallmark Re Ltd.
"INVESTED ASSETS" shall mean, at any point in time, each and every Asset which
may then be converted into cash or Cash Equivalents in a reasonable period of
time to pay Subject Obligations.
"INVESTMENT MANAGEMENT AGREEMENT" shall mean the agreement concerning
management of the Company's investment portfolios, of even date herewith, which
shall be substantially in the form attached hereto as Appendix C.
"LOSS DIVISOR ARRANGEMENTS" shall mean those certain arrangements with respect
to the payment of certain additional ceded reinsurance premiums by and between
the Company and Solutions referenced in Article 8 hereof as were implemented by
and between the Company and Solutions.
"NEW CLAIMS SERVICING AGREEMENT" shall mean the agreement, of even date
herewith, as referenced in Articles 2C and 16 hereof and pertaining to the
run-off administration of the Company following the date hereof, which agreement
shall be substantially in the form attached hereto as Appendix D.
"NEW TAX SHARING AGREEMENT" shall mean the agreement, of even date herewith,
pertaining to tax sharing arrangements between the Company and other PCA Members
following the Closing Date, which shall be substantially in the form attached
hereto as Appendix E.
"NOTICE DATE" shall mean the date which is 45 days prior to the date upon which
the consummation of the Financing Transaction is expected to occur as the same
is set forth in the Closing Notice. .
"ORIGINAL POLICY" shall mean any policies, certificates, binders, slips and
other contracts of insurance or reinsurance or other evidences of insurance
liability, whether oral or written, contracted for or issued or renewed by the
Company or an SIF.
"PAYMENT CONDITIONS" shall be as defined in Article 7 hereof.
"PCA" shall mean the Company's parent company, Physician Corporation of America.
"PCA MEMBER" shall mean any and all entities affiliated, owned or controlled by
PCA or any successor to PCA, but not to include individuals.
"PRIOR AGREEMENTS" shall mean, taken together and to the extent that any such
agreements have become effective, (i) the Aggregate Excess of Loss on Portfolio
Agreement, considered effective by the Company
and dated as of December 20, 1996 (placement slip dated November 1, 1996),
between the Company and the Reinsurer (the "1996 Agreement"), (ii) the Aggregate
Excess Reinsurance Contract, effective as of January 15, 1995, between, on the
one hand, the Reinsurer and, on the other hand, Florida United Businesses Self
Insurers Fund and Florida Agri-Business & Industries Self Insurers Fund and
(iii) the Aggregate Excess Reinsurance Contract, effective as of January 15,
1995, between the Reinsurer and Florida Builders & Employers Mutual Insurance
Company.
"REINSURER NOTICE" shall mean a written notice delivered by the Reinsurer within
ten business days of the Notice Date to each of the Company, Humana and the
Florida Department of Insurance requesting that this Agreement and each of the
other Agreements be terminated pursuant to the provision of Article 2 effective
as of the effective date of the Financing Transaction.
"REINSURANCE PREMIUM" shall mean the sum of (i) the difference between $84.0
million and the Deposit Premium and (ii) an additional amount as simple interest
on thereon determined at a rate of 10% per annum in respect of the period
commencing on the Execution Date and ending on the Closing Date.
"RESTRICTED ASSETS" shall mean (i) an amount not to ultimately exceed $1.5
million in cash or Cash Equivalents (which amount is available to the Company
for any purpose, including, without limitation, to reserve amounts necessary
through the estimated closing date of the estate of the Company, if such an
estate is created, for the payment of reasonable expenses of administration),
(ii) all assets of the Company in government or governmental agency mandated
security deposit accounts, (iii) intellectual property and intellectual property
rights of the Company, including, without limitation, trade and service marks,
patents, licenses etc., (iv) fixed assets of the Company (including certain
furniture and fixtures, computer hardware etc.) which is both (y) essential to
the administration of the Company's business and (z) specifically identified on
an inventory of such Assets to be jointly developed by the Reinsurer and the
Company within 45 days of the Closing Date, and (iv) all assets of the Company
that otherwise cannot be used by the Company to pay Subject Obligations by
reason of being subject to a lien, mortgage, pledge, security interest, lease,
easement, servitude or similar encumbrance; provided, however, that Restricted
Assets shall not include any such amount or such assets included in clauses (i),
(ii) and (iii) above on the date when all Subject Obligations have been paid,
settled, commuted or released.
"SIF" shall mean a workers compensation self insurance fund, assessable mutual
insurer or other like entity, substantially all the assets and liabilities of
which the Company assumed, reinsured or indemnified, including Florida United
Businesses Self Insurers Fund, Florida Agri-Business & Industries Self Insurers
Fund, Florida Builders & Employers Mutual Insurance Company, Florida Business
Mutual Insurance Company, Florida Auto Dealers Self Insurers Fund and Florida
Home Builders Self Insurers Fund, or any predecessor entity of the foregoing.
"SOLUTIONS" shall mean PCA Solutions, Inc., a Florida corporation.
"SUBJECT OBLIGATIONS" shall mean the ultimate developed amount of any and all of
the obligations of the Company arising under its insurance, excess insurance, or
reinsurance agreements, policies, certificates, binders, slips and other
contracts of insurance, excess insurance, or reinsurance or under other
evidences of insurance liability, whether oral or written, issued or renewed by
or contracted for by the Company or by an SIF on or prior to November 15, 1996,
that is paid or payable by the Company on or after the Effective Date, including
ALAE, provided however that Subject Obligations shall specifically exclude:
(i) distributions or dividends payable or declared by the Board of
Directors of the Company or the
corollary governing board of any SIF (whether policyholder dividends
or shareholder dividends or otherwise);
(ii) obligations of the Company or any SIF to make payments to state
guaranty or insolvency funds, organizations or associations or similar
entities;
(iii) Extra Contractual Obligations;
(iv) Excess of Original Policy Limits Loss;
(v) Participation in involuntary pools, associations or other residual
market mechanisms whether classified as insurance or reinsurance,
whether with respect to the Company or any SIF; and
(vi) any Unallocated Loss Adjustment Expenses.
"TERM" shall be as defined in Article 3 hereof.
"TERMINATION EVENT" shall mean any of the following events: (i) the Closing
shall not have occurred on or before October 31, 1997; (ii) following any
receipt by the Reinsurer of a Buyer Notice, the Financing Transaction shall have
become effective; or (iii) following any delivery by the Reinsurer of a
Reinsurer Notice to the Company, PCA, Humana and the Florida Department of
Insurance, the Financing Transaction shall have become effective.
"TERMINATION DATE" shall mean the effective date of any termination of this
Agreement pursuant to Article 2(a) hereof.
"UNALLOCATED LOSS ADJUSTMENT EXPENSES" or "ULAE" shall mean the costs of
"in-house counsel," claims staff or other overhead or general expenses of the
Company or its agents, including the claims services provided by Solutions (or
any third party replacing Solutions ) and any other costs incurred by the
Company in connection with the investigation, adjustment, settlement, litigation
or arbitration of claims or losses but not included in ALAE.
ARTICLE 2
CLOSING AND CLOSING CONDITIONS
(a) STAGED CLOSING. The final closing with respect to the transactions
contemplated hereby shall occur in two stages. On the Execution Date, each of
the parties' rights and obligations hereunder shall become and be in full force
and effect and the Reinsurer shall receive the Deposit Premium in accordance
with the provisions of Article 8 hereof. On the Closing Date, the Reinsurer
shall receive the Reinsurance Premium in accordance with the provisions of
Article 8 hereof. Humana and PCA will jointly provide each of the Reinsurer and
the Florida Department of Insurance with a written notice (the "Closing Notice")
of the reasonably expected date for closing of Financing Transaction, which
notice shall be delivered at least 45 days prior to such expected date. Upon
the occurrence of a Termination Event, this Agreement and each of the other
agreements shall, without the further action of consent of any person be
rescinded, canceled and terminated ab initio and the Reinsurer shall have no
further liability or obligation hereunder or thereunder, except in respect of
its willful misconduct or prior breach of the terms of such agreement, provided,
however, that (i) the terms of Article 28 "Indemnification" hereof shall
continue in full force and effect and shall expressly survive any such
rescission, cancellation and termination and (ii) the Reinsurer shall be
entitled to retain the full amount of the Deposit Premium.
(b) CLOSING CONDITIONS. Each and every of the obligation of the Reinsurer
hereunder to provide any reinsurance coverage or make any payments hereunder
shall in all respects be conditioned upon the satisfaction or waiver, as the
case may be, of the following conditions precedent
(the "Closing Conditions"), evidence of the satisfaction of each of such
conditions shall be provided to the Reinsurer on or before the Closing Date and
each of which conditions may be waived in writing, in whole or in part, in the
sole discretion of the Reinsurer (due execution and delivery of each of the
Agreements by each party thereto, together with receipt by the Reinsurer of the
full amount of the Reinsurance Premium, shall constitute conclusive evidence
that each of the Closing Conditions have been satisfied or waived):
(A) Each of the Agreements shall have been duly executed and be in full
force and effect on the Closing Date.
(B) PCA shall have contributed an amount of cash equal to $20.9 million to
the Company in satisfaction of the remaining federal and state income tax
recoverable attributable to the Company.
(C) Pursuant to Article 14 hereof (with respect to the assumption by PCA
of certain obligations of the Company), Article 15(A) hereof (with respect to
the obligation of PCA relative to any shortfall upon the liquidation of any
annuities), Article 16 hereof (with respect to the performance of Solutions
under the New Claims Servicing Agreement), and Article 8 hereof (with respect to
the obligations of Solutions as concerns the Loss Divisor Arrangements), PCA and
Solutions shall have taken such actions and conveyed, transferred and
collateralized assets such that enforceable and perfected interests of the
Reinsurer in the Collateral shall have been established pursuant to the
Collateral Agreements.
(D ) The Reinsurer shall have received an opinion of counsel to the Company
and PCA reasonably acceptable to the Reinsurer, which opinion shall be in form
and substance reasonably acceptable to the Reinsurer, to the effect that (i) all
necessary consents, approvals, authorizations, licenses, orders of any
applicable federal, state or local regulatory authority, including the Florida
Department of Insurance, in connection with the execution and delivery of the
Agreements and the transactions contemplated hereby shall have been obtained and
be in full force and effect, except as respects any such consents, approvals,
authorizations, authorizations, licenses or orders the failure of which to
obtain shall not have a material adverse effect on either the Company or the
Reinsurer or the ability of the Company or the Reinsurer to consummate the
transactions contemplated hereby, (ii) the due execution and delivery of each of
the Agreements, including, without limitation, that each of the respective
Boards of Directors of PCA, Solutions and the Company shall have approved the
execution and delivery of the Agreements and the performance of each of their
respective obligations hereunder and thereunder and such approvals shall be in
full force and effect, and (iii) all consents, approvals, authorizations and
waivers as may be required under (y) any material contract to which PCA, the
Company, Solutions or any of their respective subsidiaries is a party or (z) the
charter and by-laws of PCA, the Company, Solutions or any of
their respective subsidiaries, each as may be required in connection with the
execution and delivery of this Agreement or any of the other Agreements and the
consummation of the transactions contemplated hereby and thereby shall have been
obtained and be in full force and effect except as respects any such consents,
approvals, authorizations, licenses or waivers the failure of which to obtain
shall not have a material adverse effect of either the Company or the Reinsurer
or the ability of the Company or the Reinsurer to consummate the transactions
contemplated hereby.
(E) The Company and the Reinsurer shall have entered into the Commutation
Agreements.
(F) The Reinsurer shall have received a certificate executed by the Chief
Executive Officer and Chief Financial Officer of PCA, dated as of the Execution
Date, to the effect that each of the Funding Conditions has been satisfied or
waived.
(G) As of the Closing Date, the Reinsurer shall have received the
Reinsurance Premium in accordance with the terms of Article 8 hereof.
ARTICLE 3
TERM
Subject to the terms and provisions of Article 2 hereof, coverage hereunder
shall become effective as of 11:59 p.m., Eastern Standard Time, March 31, 1997
(the "Effective Date") and, except as provided in Article 11 hereof, shall
remain in full force and effect until the Reinsurer has paid under this
Agreement an amount equal to the Limit and the Reinsurer has notified the
Company in writing that its obligations under this Agreement have been satisfied
in accordance therewith.
ARTICLE 4
COVERAGE
Subject to the terms, conditions and limitations set forth in this Agreement,
including, without limitation, the Limit, the Payment Conditions and the payment
of the Reinsurance Premium to the Reinsurer, the Reinsurer agrees to pay on
behalf of the Company the Subject Obligations that remain outstanding by the
Company following satisfaction of the Payment Conditions, subject always to the
Limit.
ARTICLE 5
TERRITORY
The Reinsurer's liability under this Agreement shall follow the territorial
limits of the Subject Obligations.
ARTICLE 6
LIMIT
(A) The Reinsurer's maximum liability for any and all loss recoverable under
this Agreement for the Subject Obligations shall not exceed $230 million (the
"Limit").
(B) In the event and to the extent the Reinsurer makes any payment under this
Agreement and the Reinsurer subsequently recovers any amounts of cash or Cash
Equivalents (a "Recovery") pursuant to the terms of Article 13, Assignment of
Assets, the amount of any such Recovery shall be available for the payment of
additional Subject Obligations.
(C) Under no circumstances shall the total liability of the Reinsurer under or
related to this Agreement exceed the amount of the Limit.
ARTICLE 7
PAYMENT CONDITIONS
The Reinsurer's obligation to make any payment under this Agreement in respect
of the Subject Obligations shall be subject to the satisfaction of the
conditions (the "Payment Conditions") prior to each payment that the Company:
(1) shall have converted to cash or Cash Equivalents all of its
Invested Assets, other than the Restricted Assets,
(2) after having converted all such Invested Assets to cash or Cash
Equivalents, shall not have any Cash Available; and
(3) shall have so notified the Reinsurer in writing.
Upon any payment by the Reinsurer hereunder, the Company shall assign to the
Reinsurer an interest in the Assets and Restricted Assets in accordance with the
terms of Article 13 hereof.
ARTICLE 8
REINSURANCE PREMIUM; OTHER ACTIONS
(A) PCA shall pay or cause to be paid in cash by wire transfer of immediately
available funds to an account designated by the Reinsurer in writing: (i) on the
Execution Date, the Deposit Premium and (ii) on the Closing Date, the
Reinsurance Premium.
(B) Effective on the Closing Date without any action or consent of any person,
the 1996 Agreement shall be, and shall have been deemed to have been,
terminated, canceled and rescinded ab initio and the Reinsurer shall have no
further liability or obligation thereunder, provided, however, that in
connection with such termination, cancellation and rescission, Reinsurer shall
pay to the Company an amount in cash by wire transfer of immediately available
funds equal to the sum of (y) $15 million plus (z) simple interest thereon at a
rate of interest of 5.5% per annum for the period during which the 1996
Agreement may have been outstanding.
(C) Effective on the Closing Date, PCA hereby guarantees the full and timely
performance by Solutions of the obligations under and in respect of the Loss
Divisor Arrangement, which guarantee shall be secured by a pledge of the
Collateral pursuant to the Collateral Agreements.
ARTICLE 9
EXPERIENCE ACCOUNT
A notional experience account (the "Experience Account") shall be calculated by
the Reinsurer from the Effective Date and maintained until all obligations of
the Reinsurer under this Agreement have been satisfied or discharged in full.
The balance of the Experience Account (the "Experience Account Balance") as of
any date shall be determined as (i) the sum of the amounts of the Deposit
Premium and the Reinsurance Premium less (ii) the Reinsurer's Margin less (iii)
the Subject Obligations paid by the Reinsurer plus (iv) the amount of the
Interest Credit, each determined as of such date.
The "Interest Credit" shall be determined based on the average daily balance in
the Experience Account,
as calculated pursuant to the preceding paragraph, times the Credit Index,
credited annually in arrears. The "Credit Index" shall be equal to the average
effective yield to maturity of U.S. Treasury obligations having a remaining term
to maturity of one year as determined annually in advance and as published by
the Wall Street Journal on the first business day each year in respect of which
this Agreement remains in effect.
ARTICLE 10
REINSURER'S MARGIN
The Reinsurer's Margin shall be equal to $42.0 million.
ARTICLE 11
COMMUTATION
Subject to prior consent of the Florida Department of Insurance and compliance
with the provisions of this Agreement, including, without limitation, Articles
13 and 15(C) hereof each of which provisions shall survive any such commutation,
the Company or its successor may, at its sole option commute this Agreement
provided the Experience Account is positive. If the Experience Account is
positive on such date, the Reinsurer shall pay such positive amount to the
Company within 90 days of request for same. If the Experience Account is not
positive, any commutation must be agreed to by the Reinsurer in its sole
discretion. In the event of a commutation, the Reinsurer's sole liability shall
be to so pay the positive balance, if any, in the Experience Account to the
Company or its designee and such payment shall constitute a full and final
release of the Reinsurer of any and all liability and obligation under or in
respect of this Agreement. In the event that no commutation is elected prior to
December 31, 2007, the balance of the Experience Account shall thereafter be
deemed to be zero.
ARTICLE 12
REPORTS AND REMITTANCES
(A) The Company shall furnish to the Reinsurer and to representatives of the
Florida Department of Insurance as shall have been identified thereby from time
to time, within forty-five (45) days after the close of each calendar quarter
hereof following the Execution Date:
(1) quarterly accounts of gross net earned premium income
segregated by line of business and for the total of all lines
covered under this Agreement;
(2) quarterly accounts of paid and unpaid loss in respect of
Subject Obligations, segregated by line of business, including
the total for all lines of business;
(3) quarterly accounts showing assets, liabilities and cash flow
of the Company, including, without limitation, specifications of
the amounts of any transfers, distributions, dividends or any
other payments, made to or on behalf of any PCA Member, and
explanations of the reasons for such transfers;
(4) the continued receipt on a quarterly basis of the Company's
and associated funds workers' compensation data base files on an
inception-to-date basis in an electronically readable format;
(5) quarterly updates on Restricted Assets, including a
description of payments made therefrom, ,
(6) on a semi-annual basis, certifications by the respective
chief executive officers and chief financial officers of PCA, the
Company and Solutions, or successors thereto, to the best of
their knowledge, following their due review and inquiry, to the
effect that the Company and PCA have complied in all material
respects, with each of the material provisions of each of the
Agreements,
(7) promptly following the occurrence of any facts or
circumstances constituting a breach of any material provisions of
any of the Agreements, a notice of such facts or circumstances
which notice shall set forth with specificity the facts
underlying such possible breach and the intentions of the PCA or
the Company as the case may be with respect to the cure of any
resulting breach,
(8) promptly following the receipt thereof, any notice of any
default received by the Company under any of the Agreements, and
on a quarterly basis, copies of all other notices or reports
received by the Company under any of the Agreements, provided
however, that ordinary and recurring reports provided under the
New Claims Services Agreement need not be provided to the Florida
Department of Insurance if made readily available thereto by the
Company or the Reinsurer, and
(9) any other reports reasonably requested by the Reinsurer from
time to time.
(B) The Company shall furnish to the Reinsurer and the Florida Department of
Insurance within ninety (90) days after the close of each calendar quarter, an
analysis showing the Company's best estimate of projected cash flows over the
next 120 months.
(C) Unless otherwise stated in this Agreement, all amounts due under this
coverage shall be remitted by wire transfer of immediately available funds
within thirty (30) days after receipt of an appropriate statement of account.
At such time as the Reinsurer shall have an obligation to make a payment for the
Subject Obligations, the Reinsurer and the Company will implement a liquidity
facility (such as a zero balance bank account) pursuant to which the Reinsurer
will make deposits into a bank account in the name of the Reinsurer which funds
may then be drawn on by the Company for payment of Subject Obligations then due
and payable by the Reinsurer to or on behalf of the Company hereunder.
(D) Any late payments by either party shall accrue interest per annum at a rate
equal to the effective yield on U.S. Treasury Securities having a remaining term
to maturity of five years plus 150 basis points (determined quarterly in
arrears) as published by the Wall Street Journal on the first business day each
such quarter.
ARTICLE 13
ASSIGNMENT OF ASSETS
In the event the Reinsurer makes any payment under this Agreement, the Company
shall thereupon transfer, convey and assign to the Reinsurer all right, title
and interest in an equivalent amount of Assets or Restricted Assets (if there
are no more Assets) and the proceeds thereof, and execute such instruments as
the Reinsurer reasonably requires to effect such assignment in order to
reimburse the Reinsurer for any such payments made. In the event and at such
time as the Reinsurer has recovered a sufficient amount of cash or Cash
Equivalents pursuant to this Article to reimburse it for any all payments made
under this Agreement, the Reinsurer shall convey and return any such assigned
Assets or Restricted Assets to the Company.
ARTICLE 14
PCA OBLIGATIONS
PCA hereby agrees to pay or arrange for payment, as and when due, any and all
legally binding liabilities and obligations of the Company which have not been
paid by the Company prior to the Effective Date, as are both (i) specifically
excluded from the definition of the Subject Obligations in clauses (i) through
(iv) of such definition and (ii) not reflected on the Company's statutory
quarterly financial statements for the quarter ended March 31, 1997, provided,
however, that obligations of the Company in respect of Extra Contractual
Obligations and Excess of Policy Limits Loss shall not be so undertaken and
assumed. PCA's payment obligations pursuant to this Article shall be
collateralized on a non-recourse basis by a pledge of the Collateral in form and
substance acceptance to the Reinsurer.
ARTICLE 15
COVENANTS AND WARRANTIES
(A) Each of the Company and PCA hereby irrevocably and unconditionally grant
the Reinsurer the right and authority to negotiate, commute or sell on the
behalf of the Company, while this Agreement remains in effect, all or certain of
the annuities that were contracted for by the Company, at commercially
reasonable terms agreed to by the Reinsurer. PCA hereby covenants and agrees
with the Reinsurer to pay the Reinsurer any shortfall between the book value of
such annuities contracted by the Company and the cash value therefor realized by
the Company upon the subsequent liquidation of such annuities. PCA's
obligations to pay any shortfall shall be fully collateralized by pledge of the
Collateral.
(B) Each of the Company and PCA covenant and agree with the Reinsurer that the
Company will not make any payments, distributions, dividends, transfers or the
like, to any PCA Member or any other affiliate without the prior written consent
of the Reinsurer in its sole discretion, other than (i) pursuant to the
contracts and arrangements shown on Schedule 2 hereto on the Execution Date and
otherwise in conjunction with the continuing contractual arrangements thereon,
and (ii) otherwise, amounts paid or transferred in the ordinary course of
business and in accordance with applicable law.
(C) Each of the Company and PCA covenant and agree with the Reinsurer to use
their best reasonable efforts to pursue and collect all assets and third party
recoveries that comprise or would comprise the Assets (admitted or non-admitted)
under this Agreement, including but not limited to, causes of actions whether or
not related to the Subject Obligations, choses in action, reinsurance
recoverables, Special Disability Trust Fund recoveries, premium receivables and
all other recoveries or receivables. Notwithstanding the foregoing, subject to
the provisions of Article 17 hereof, the Company may limit or end such efforts
as to respects any specified Asset based on reasonable and prudent consideration
of the
business and legal costs and expenses of continuing such efforts relative to the
likelihood of success of such efforts. The Company shall implement controls and
procedures to preserve recoveries from the Special Disability Trust Fund (or any
successor fund), which controls and procedures shall be approved by the
Reinsurer, and the Company shall provide periodic reports to the Reinsurer
concerning such procedures and any recoveries received from such Fund. These
obligations shall continue for as long as the Reinsurer shall have any liability
under this Agreement.
(D) The Company and PCA covenant and agree with the Reinsurer that from the
Execution Date until all the Reinsurer's obligations hereunder are extinguished,
the Company shall not sell, dispose, attach a lien, pledge, mortgage, grant a
security interest in, or otherwise encumber any of the assets that comprise
Assets or may in the future comprise Assets under this Agreement, without the
prior written consent of the Reinsurer in its sole discretion (except for tax
liens incurred in the ordinary course of business). Notwithstanding the
foregoing, the Company shall not be prohibited from investing, reinvesting and
dealing in its Invested Assets or otherwise liquidating Assets to pay claims
that are the subject of this of Agreement, provided such actions conform with
the terms and provisions of the Investment Management Agreement.
(E) The Company hereby covenants and agrees with the Reinsurer to use its best
reasonable efforts (i) to cause to be released any lien, mortgage, pledge,
security interest, lease easement, servitude or encumbrance on any Assets of the
Company and (ii) to the extent permitted by law, to cause to be released all
Assets of the Company in government or governmental agency mandated security
deposit accounts.
(F) The parties hereto acknowledge that it is contemplated that the Reinsurer
will merge into one of its affiliated companies, Zurich Reinsurance Centre,
Inc., and the parties agree that such merger shall not be deemed a change in
control since the ultimate parent company of both the Reinsurer and Zurich
Reinsurance Centre, Inc. shall continue to be Zurich Insurance Company. The
parties hereto agree that any such merger shall not affect or terminate this
Agreement, the parties' rights or obligations hereunder or the transactions
contemplated hereby and that the entity surviving such merger shall be bound by
the terms of this Agreement and shall fully perform this Agreement as the
Reinsurer hereunder.
(G) Subject to clause (C) of this Article 15, the Company covenants and agrees
with the Reinsurer to use its best reasonable efforts to liquidate all Assets
into cash or Cash Equivalents, at such time as it no longer has cash or Cash
Equivalents to make payments under this Agreement in respect of the Subject
Obligations.
(H) The Company and Solutions covenant and agree with the Reinsurer that
without the prior written consent of the Reinsurer in its sole discretion it
will not agree to any amendment, modification, waiver, revision, termination or
other compromise to the terms of the Investment Management Agreement, the New
Claims Servicing Agreement, the New Tax Sharing Agreement or any of the security
agreements establishing and governing the Collateral. Any written amendment,
modification, waiver, revision, termination or other compromise entered into by
any affiliate of the Reinsurer shall be deemed to have been approved by the
Reinsurer.
(I) PCA hereby warrants to the Reinsurer (i) that the Company is not a party to
the escrow agreement between Health Partners South East and PCA and (ii) to the
best knowledge and belief of PCA after due investigation, the Company has no
liability and no claims have been or are reasonably likely to be made against
the Company arising out of or relating to such escrow agreement.
(J) PCA and Solutions represent and warrant that the listing of assets attached
hereto, with respect to
each such party's assets, (i) indicates all liens, security interests and any
other encumbrances thereon, and (ii) such listing is true, complete and accurate
in every respect in accordance with GAAP.
The foregoing representations and warranties set forth in clauses (I) and (J)
above shall survive for a period of three (3) years following the Closing Date.
Reinsurer's recourse with respect to any breach of the provisions of clauses
(A), (B), (D), (F), (I) and (J) shall be limited to a cause of action for money
damages as against PCA. As a condition precedent to the assertion of any breach
of any provision of this Article 15, the Reinsurer shall provide to each of the
Company, PCA and the Florida Department of Insurance a written notice specifying
the facts underlying any such asserted breach and suggesting, to the extent
practicable, a proposed plan for curing such asserted breach to the satisfaction
of the Reinsurer. To the extent that such asserted breach is reasonably
susceptible to cure, such notice shall specifically provide for a reasonable
period during which such cure may be commenced and completed. Reinsurer
covenants that it shall provide to each of the Company, PCA and the Florida
Department of Insurance a written notification of any matter, fact or
circumstance of which it is aware, which in its best reasonable judgment, could
reasonably give rise to a material breach of any of the provisions of this
Article 15. Reinsurer covenants to cooperate with representatives of PCA, the
Company and the Florida Department of Insurance to ensure that any matter, fact
or circumstance which reasonably could constitute a material breach of the
provisions of this Article 15 is identified to each of the foregoing as early as
practicable such that a corrective course of action can be developed and
implemented as soon as practicable.
ARTICLE 16
CLAIMS MANAGEMENT
Pursuant to the terms of the New Claims Servicing Agreement, Solutions shall
provide claims management and certain other services with respect to the Subject
Obligations and the administration of the Company. Except as respect to
Allocated Loss Adjustment Expenses, Solutions' expenses incurred in connection
with the services required under the terms of the New Claims Servicing Agreement
shall not be paid to Solutions, but shall be further subordinated to the full
and prior performance or accommodation of all of the Company's other liabilities
and obligations, until such time as this Agreement shall have been terminated in
accordance with the provisions of Article 2(b) or Article 11 hereof. As
provided for under the New Claims Servicing Agreement, the performance of
Solutions' obligations pursuant to such Agreement shall be secured by a pledge
of the Collateral, and Reinsurer shall have the right to draw down against the
Collateral as provided for therein. In the event that (i) the Payment
Conditions have been satisfied, (ii) the Collateral shall have been exhausted
and (iii) Solutions shall for any reason no longer continue to be performing the
claims management and other administrative services with respect to the Company
contemplated under the New Claims Servicing Agreement, then during such time as
the Limit shall not have been exhausted, the Reinsurer shall provide for, or
cause to be provided, such services as have been contemplated by the New Claims
Services Agreement.
ARTICLE 17
CONSENT RIGHTS OF THE REINSURER
With effect from the Execution Date, the Reinsurer will be afforded consent
rights as respects the administration of the Company's runoff, including,
without limitation, with respect to (i) settlement of litigation issues, claims
or groups of claims involving amounts incurred at an amount greater than
$250,000 gross of ceded reinsurance, (ii) reinsurance commutations (ceded or
assumed) and other compromises of contractual obligations, including any waiver
of rights, stipulations that amount to terminations, material modifications
involving the Company or the SIFs, (iii) material changes to the Company's ceded
reinsurance program, including, without limitation, managed care arrangements,
(iv) asset dispositions not in the ordinary course of business involving a book
value amount in respect of any single asset in excess of $250,000, (v) the
implementation of investment management guidelines pursuant to the Investment
Management Agreement, (vi) staffing, operating expense, outsourcing decisions
and all material capital expenditures, (vii) any modification, change, amendment
or alteration of, or waiver of rights or obligations under any of the Agreements
or any successor agreements, (viii) the execution and delivery of any successor
or replacement agreement as respects any of the Agreements, and (ix) any
modification, change, amendment or alteration, or waiver of any material rights
or obligations under, any of the affiliated agreements or arrangements set forth
on Schedule 2 hereof or any successor. In each such case, the Reinsurer's
prior written consent shall not be unreasonably withheld, conditioned or
delayed.
ARTICLE 18
PLEDGE BY THE COMPANY; COLLATERAL AGREEMENTS
(A) Effective on the Closing Date, the Company hereby specifically grants to
the Reinsurer a continuing security interest in all of the assets of the Company
now or hereafter held (in the event of the appointment of a statutory receiver
with respect to the Company pursuant to Chapter 631, Florida Statutes, or any
successor statute, such priority security interest shall, at the election of the
Florida Department of Insurance, be conveyed, assigned to, or subordinated to
the interests of such receiver or otherwise terminated in favor of such
statutory receiver), including without limitation, all tangible property,
intangible property, real property or personal property, rights, causes of
action, and other interests, and the proceeds thereof (the "Company
Collateral"), to secure the performance of its obligations hereunder, including
all renewals and extensions hereof, and any and all obligations of every kind
whatsoever, whether heretofore, now or hereafter existing or arising between the
Company and the Reinsurer and howsoever incurred or evidenced, whether primary,
secondary, contingent or otherwise. Reinsurer shall have all rights of a
secured party under Chapter 679, Florida Statutes. In satisfaction of such
pledge, the Company Collateral may be sold either at public or private sale and
the parties agree that three (3) business days prior notice of such sale shall
be commercially reasonable. Each party hereto agrees, at the Company's expense,
to execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Reinsurer may from
time to time reasonably request in connection with the administration and
enforcement of this Article 18 or with respect to any of the Company Collateral
or to better assure and preserve the security interests and the rights and
remedies created hereby, including the payment of any fees and other charge
required in connection with the execution and delivery of this pledge, the
granting or perfection of the security interests created hereby and the filing
of any financing statements or other documents in connection herewith.
(B) Notwithstanding anything in this Agreement or the Collateral Agreements to
the contrary, Reinsurer agrees that in the event of the appointment of a
statutory receiver with respect to the Company pursuant to
Chapter 631, Florida Statutes, or any successor statute, each of the security
interests established under and pursuant to the Collateral Agreements, shall at
the election of the Florida Department of Insurance, be conveyed to, assigned
to, or subordinated to the interests of such statutory receiver, or otherwise
terminated in favor of such statutory receiver, provided however, that the
Collateral shall be used to perform the obligations secured thereby.
ARTICLE 19
ACCESS TO RECORDS
With effect from the Execution Date, the Reinsurer or its duly appointed
representatives shall have free access to the books, records, electronic files,
software and papers of the Company or its agents at all reasonable times during
the continuance of this Agreement or any liability hereunder, for the purpose of
obtaining information concerning this Agreement or the subject matter thereof.
The Reinsurer or its designated representatives, without restrictions or
limitations, shall have broad authority to inspect, copy and audit all books and
records of the Company or Solutions pertaining to this Agreement or the subject
matter at any time during regular business hours, and may make copies or
extracts of any books and records pertaining thereto as it may deem necessary or
appropriate without disrupting or unduly burdening the operations of the Company
or Solutions. The Reinsurer and the Company agree to use their best reasonable
efforts to implement the terms of this Agreement, including, without limitation,
the provisions of this Article 19, in a manner which preserves to the greatest
extent practicable any claim or right of privilege or other immunity from
production applicable as any of the books, records, files and papers of the
Company or Solutions.
ARTICLE 20
SALVAGE AND SUBROGATION
With effect from the Execution Date, the Reinsurer shall be subrogated, as
respects any loss for which the Reinsurer shall actually pay or become liable to
pay, but only to the extent of the amount of payment by or the amount of
liability of the Reinsurer, to all the rights of the Company against any person
or other entity who may be legally responsible in damages for said loss. The
Company hereby agrees to enforce such rights, but in case the Company shall
refuse or neglect to do so, the Reinsurer is hereby authorized and empowered to
bring any appropriate action in the name of the Company or its policyholders, or
otherwise to enforce such rights. The costs of any such action of the Reinsurer
shall be treated as the payment of Allocated Loss Adjustment Expense thereby.
All salvages, recoveries or reimbursements, after deduction of loss adjustment
expense applicable thereto, recovered or received subsequent to a loss
settlement under this Agreement shall be applied as if recovered or received
prior to the aforesaid settlement, and all necessary adjustments shall be made
by the parties hereto, provided always, that nothing in this Article shall be
construed to mean that losses under this Agreement are not recoverable until the
Company's ultimate net loss has been ascertained.
ARTICLE 21
OFFSET
The Company and the Reinsurer may offset any balance or amount due either such
party to the other under this Agreement or any other contract heretofore or
hereafter entered into between the Company and the Reinsurer or any insurance or
reinsurance agreement with any affiliate of either party, whether acting as
assuming reinsurer or ceding company or in any other capacity. Notwithstanding,
Reinsurer shall have no right of offset as against the Company for any
obligations of PCA or Solutions.
ARTICLE 22
NO THIRD PARTY RIGHTS
This Agreement is solely between the named parties , and in no instance shall
any other person have any rights under this Agreement except as expressly
provided otherwise in the Insolvency Article.
ARTICLE 23
NO ASSIGNMENT
Except as otherwise specifically provided hereunder, neither this Agreement, nor
any right hereunder, may be assigned by any party without the written consent of
the other party hereto, provided however that the Reinsurer may assign this
Agreement to an affiliated company with the prior consent of PCA and the Florida
Department of Insurance. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors, assigns and legal
representatives.
ARTICLE 24
LOSS SETTLEMENTS
(A) All loss settlements made by the Company or Solutions (or any third party
replacing Solutions) shall be binding upon the Reinsurer, provided, however,
that such claims or losses are within the terms, conditions and limitations of
the Company's policies and within the terms, conditions and limitations of this
Agreement and the Claims Servicing Agreement or are otherwise ordered or awarded
by a court or other tribunal of appropriate jurisdiction over the Company and
such claim or loss.
(B) The Reinsurer shall have no liability to pay Subject Obligations unless and
until the Company has such liability and such amounts have become actually due
and payable by the Company, including, without limitation, by virtue of a valid
and binding agreement of settlement, compromise, or arbitral or judicial award.
ARTICLE 25
ERRORS AND OMISSIONS
Any omission or error by either party to this Agreement will not relieve either
party of liability hereunder, provided such act, omission or error is not
prejudicial to the other party and is rectified promptly upon discovery by the
responsible party.
ARTICLE 26
CURRENCY
Whenever the word "Dollars" or the "$" sign appear in this Agreement, they shall
be construed to mean United States Dollars, and all transactions under this
Agreement shall be in United States Dollars.
ARTICLE 27
GOVERNING LAW
This Agreement shall be interpreted and governed by and enforced in accordance
with the laws of the State of Florida without regard to its rules with respect
to conflicts of law. In the event of any litigation arising from or relating to
this Agreement or the enforcement of any of its terms and conditions, the
parties stipulate and agree that venue for such litigation shall be situated in
the Second Judicial Circuit in and for Xxxx County, Florida. The parties
further stipulate and agree that this shall be the exclusive forum for any
litigation arising from or relating to this Agreement or the enforcement of any
of its terms and conditions.
ARTICLE 28
INDEMNIFICATION
Upon any rightful termination, cancellation or commutation of this Agreement in
compliance with Article 2(a) or Article 11 hereof, the Reinsurer shall have no
obligation hereunder nor shall the Reinsurer have any liability or obligation to
PCA, the Company and Solutions nor to any other person as a result of such
termination, cancellation or commutation. In this event, PCA hereby expressly
agree to indemnify and hold harmless the Reinsurer, its affiliates and
subsidiaries, and their officers, directors, employees, stockholders and
authorized representatives (each, an "Indemnitee") from any damage and against
any liability to any third party other than PCA, any PCA Member and any
affiliate of such Indemnitee (a "Covered Third Party"), for any and all loss,
cost, damage, expenses, suit, claims, fines, penalties, including punitive or
exemplary damages and all cost of defense incurred by or on behalf of any
Indemnitee:
(a) resulting from, arising out of, or based upon the execution of
this Agreement or the performance of any duties, obligations, or any other
actions taken by the Indemnitee under this Agreement or in connection with
this Agreement, or related to or which arise out of the transactions
contemplated hereunder; or
(b) asserted or proved in any suit, proceeding or legal action
commenced by a Covered Third Party against such Indemnitee resulting from,
arising out of, or based upon the execution of this Agreement or the
performance of any duties, obligations, or any other actions taken by the
Reinsurer under this Agreement or in connection with this Agreement, or
related to or which arise out of the transactions contemplated hereunder.
Notwithstanding the foregoing, PCA shall not be obligated to indemnify any
Indemnitee for Losses arising from or related to any such person's willful
misconduct or breach of the terms of this Agreement or any agreement
contemplated hereby. Each Indemnitee shall be entitled to select counsel as
respects any judicial, administrative, arbitrable, or other proceeding covered
hereby in its sole discretion and to defend itself and PCA and/or a PCA Member
other than the Company will pay or cause to be paid all reasonable losses,
liabilities, expenses and costs, including reasonable attorneys' fees, incurred
by or on behalf of such Indemnitee in connection with such action. In its
reasonable discretion, the Reinsurer shall retain the right to settle or
comprise all actions, claims, litigation or proceedings giving rise to rights
under this Article 28, provided, however, that prior to any such settlement or
compromise, the Reinsurer shall consult with PCA and shall use its best
reasonable efforts to reflect their views thereon. The Reinsurer shall
determine in its sole discretion whether claims or suits may be settled. The
duties, obligations and liabilities of PCA pursuant to this Article 28 shall
survive any termination or cancellation
of this Agreement.
ARTICLE 29
INSOLVENCY
The obligations of the Reinsurer under this Agreement shall continue without
diminution and shall not be changed as a result of the insolvency of the
Company, provided that the Reinsurer shall, in accordance with the terms of this
Agreement, make payments of the Subject Obligations to the rehabilitator,
liquidator, receiver, conservator or statutory successor of the Company.
Reinsurance under this Agreement shall be payable by the Reinsurer on the basis
of the liability of the Company under policy or policies reinsured without
diminution because of the insolvency of the Company, directly to the Company or
to its liquidator, receiver, or statutory successor except as provided by
Section 631.205 of the Florida Statutes or except when the Agreement
specifically provides another payee of such reinsurance in the event of the
insolvency of the Company and when the Reinsurer with the consent of the direct
insured or insureds has assumed such Policy obligations of the Company as direct
obligations of the Reinsurer to the payees under such policies and in
substitution for the obligations of the Company to such payees.
It is agreed, however, that the liquidator or receiver or statutory successor of
the insolvent Company shall give written notice to the Reinsurer of the pendency
of a claim against the insolvent Company on the policy or policies reinsured
within a reasonable time after such claim is filed in the insolvency proceeding
and that during the pendency of such claim, the Reinsurer may investigate such
claim and interpose, at its own expense, in the proceeding when such claim is to
be adjudicated, any defense or defenses which it may deem available to the
Company or its liquidator or receiver or statutory successor. The expense thus
incurred by the Reinsurer shall be chargeable, subject to court approval,
against the insolvent Company as part of the expense of liquidation to the
extent of a proportionate share of the benefit which may accrue to the Company
solely as a result of the defense undertaken by the Reinsurer.
Should any party hereto be placed in rehabilitation or liquidation or should a
rehabilitator, liquidator, receiver, conservator or other person or entity of
similar capacity be appointed as respects such party, all amounts due any of the
parties hereto whether by reason of premiums, losses or otherwise under this
Agreement or any other contract(s) of reinsurance heretofore or hereafter
entered into between the parties (whether or not any such contract(s) be assumed
or ceded) shall at all times be subject to the right of offset at any time and
from time to time, and upon the exercise of same, only the net balance shall be
due and payable in accordance with Section 631.281 of the Florida Statutes to
the extent such statute or any other applicable law, statute or regulation
governing such offset shall apply.
ARTICLE 30
MISCELLANEOUS
No oral explanation or oral information by either of the parties hereto shall
alter the meaning or interpretation of this Agreement. No amendment, change or
addition hereto shall be effective or binding on any party hereto unless reduced
to writing and executed by the respective duly authorized officer of each of the
parties hereto. The failure of either party to enforce any provision of this
Agreement shall not constitute a waiver by either party of any such provision.
The past waiver of a provision by either party shall not constitute a course of
conduct or a waiver in the future to the same provision. This Agreement may be
executed in any number of counterparts, all of which when taken together shall
constitute a single agreement. All headings in this Agreement are for the
purpose of information and identification only and shall not be construed as
forming part of this Agreement.
The parties agree to negotiate in good faith to amend any terms and conditions
of this Agreement which violate or are in conflict with such laws, Insurance
Department regulations, or any other applicable regulations or rulings, with the
aims of eliminating such violation or conflict while preserving the initial
allocation of risks, benefits, rights and duties under this Agreement.
All notices, demands, consents, requests, waivers, elections or other
communications (collectively "Notices") authorized, required or permitted to be
given under this Agreement shall be addressed as follows:
to PCA: Physician Corporation of America
0000 Xxxx Xxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
to Company: PCA Property & Casualty Insurance Company
c/o PCA Solutions, Inc.
X.X. Xxx 000000
Xxxxxxxxx Xxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
to Solutions: PCA Solutions, Inc.
X.X. Xxx 000000
Xxxxxxxxx Xxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
to Reinsurer: Centre Reinsurance Company of New York
One Chase Xxxxxxxxx Xxxxx
Xxxxxx-xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President and Chief Executive Officer
to Florida Department
of Insurance: Florida Department of Insurance
Xxxxxx Building
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxx
Attention: Director of Insurer Services
(b) All Notices shall be given in writing, mailed by first class registered or
certified mail, and via facsimile, and shall be deemed to be received two (2)
business days after the day of mailing. Any party may change its address for
the receipt of Notices or the party to whose attention Notices are sent at any
time by giving notice thereof to the other parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of this 2nd day of June 1997.
PCA PROPERTY & CASUALTY INSURANCE COMPANY
BY: ____________________________________
NAME
TITLE
CENTRE REINSURANCE COMPANY OF NEW YORK
BY: _______________________________________
NAME
TITLE
PHYSICIAN CORPORATION OF AMERICA
BY: ____________________________________
NAME
TITLE
PCA SOLUTIONS, INC.
BY: ____________________________________
NAME
TITLE
SCHEDULE 1
SCHEDULE OF ASSETS OF COMPANY AND SOLUTIONS
SCHEDULE 2
INTERCOMPANY PAYMENTS
& ARRANGEMENTS
PART A
1. Payments pursuant to the certain Managed Care Agreement by and between the
Company, PCA, Solutions and PCA Members, referred to in the Old Management
Agreement, as that term is defined in the New Claims Agreement.
2. Fee payments pursuant to the Old Management Agreement, as that term is
defined in the New Claims Agreement.
Notwithstanding, PCA to retain obligation to effect pro rata refunds in respect
of policy terminations, etc.
PART B
See the attached Schedule of Payments to be made on the Execution and Closing
Dates.
SCHEDULE 3
LIENS & ENCUMBRANCES
1. Sierra Note re: Solutions stock.
2. Bank liens to be discharged/released prior to Closing Date.
3. Mortgages on real property.
4. PMSI re: Equipment.
5. Tax Liens
Representation and Warranty to be provided by PCA and Company within by June 15,
1997.
APPENDIX A
COLLATERAL AGREEMENTS
APPENDIX B
COMMUTATION AGREEMENTS
APPENDIX C
INVESTMENT MANAGEMENT AGREEMENT
APPENDIX D
NEW CLAIMS SERVICING AGREEMENT
APPENDIX E
NEW TAX SHARING AGREEMENT