Exhibit 10.1
TRUST AGREEMENT
by and among
ROYAL INDEMNITY COMPANY,
and
ROYAL SURPLUS LINES INSURANCE COMPANY,
(hereinafter referred to collectively as the "Beneficiary")
and
RSUI INDEMNITY COMPANY
(f/k/a Underwriters Reinsurance Company)
(hereinafter referred to as the "Grantor")
and
THE BANK OF NEW YORK
(hereinafter referred to as the "Trustee")
PREAMBLE
This TRUST AGREEMENT (the "Trust Agreement") is made and entered
into as of June 10, 2004 (the "Effective Date") by and among Royal Indemnity
Company, a Delaware property and casualty insurance company ("RIC"), Royal
Surplus Lines Insurance Company, a Delaware property and casualty insurance
company ("RSLIC" and together with RIC and their respective successors and
assigns, the "Beneficiary"), and RSUI Indemnity Company (f/k/a Underwriters
Reinsurance Company), a New Hampshire property and casualty insurance company
("RSUI Indemnity" and, together with its successors and assigns, the "Grantor"),
and The Bank of New York, as trustee (hereinafter referred to as "BONY" or the
"Trustee").
WHEREAS, RIC and RSLIC, as the beneficiary, and RSUI Indemnity, as
the grantor, are parties to that certain Trust Agreement by and among RIC,
RSLIC, RSUI Indemnity and LaSalle Bank National Association, as trustee
("LaSalle"), dated as of July 1, 2003 and amended by Amendment dated as of
September 2, 2003 (such Trust Agreement, as amended by the Amendment, the "Prior
Trust Agreement"); and
WHEREAS, the Prior Trust Agreement was entered into by RIC, RSLIC
and RSUI Indemnity in connection with certain Quota Share Reinsurance
Agreements, effective as of July 1, 2003, by and between RSUI Indemnity, as
reinsurer, and each of RIC and RSLIC, as cedents (the "Quota Share Reinsurance
Agreements"); and
WHEREAS, pursuant to the Prior Trust Agreement, LaSalle established
a trust account in the name of RSUI Indemnity, as grantor, but for the sole
benefit of RIC and RSLIC, as the beneficiary (the "LaSalle Trust Account"); and
WHEREAS, RSUI Indemity, as Grantor, and RIC and RSLIC, as the
Beneficiary, desire to enter into this Trust Agreement as a replacement for the
Prior Trust Agreement; and
WHEREAS, the Grantor and the Beneficiary have requested, and BONY
has agreed, that BONY shall serve as the Trustee hereunder;
WHEREAS, effective as of the date hereof, RSUI Indemnity, RIC, RSLIC
and LaSalle have entered into a Termination Agreement (the "Termination")
providing for, among other things, termination of the Prior Trust Agreement and
the trust created thereunder and for transfer of all of the assets held in the
LaSalle Trust Account to the trust account to be established by the Trustee
hereunder as provided herein; and
WHEREAS, any amounts deposited in the trust account established by
the Trustee hereunder by the Grantor, the Beneficiary and Royal Specialty
Underwriting, Inc., a Georgia company and an agent of the Beneficiary under
certain administrative
services agreements ("RSUI"), hereunder are collateral for any amounts due and
unpaid to the Beneficiary as cedents under the Quota Share Reinsurance
Agreements.
NOW THEREFORE, the Grantor, the Beneficiary and the Trustee, in
consideration of the mutual covenants contained herein and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, and
upon the terms and conditions hereinafter set forth, agree as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions. The following terms, when used in this
Trust Agreement, shall have the meanings set forth herein:
(a) "Acceptable Investments" mean investments prescribed or
permitted under the investment provisions of the insurance
laws of Delaware and New Hampshire and under the URC
Investment Guidelines.
(b) "Assets" shall have the meaning ascribed to such term in
Section 2.1.
(c) "Beneficiary" shall have the meaning ascribed to such term in
the Preamble.
(d) "Business Day" means a Monday, Tuesday, Wednesday, Thursday or
Friday on which banking institutions in the State of Illinois
are not authorized or obligated by Applicable Law to close.
(e) "Cat Cover Reinsurance Recoverables" shall have the meaning
ascribed to such term in the Quota Share Reinsurance
Agreements.
(f) "Effective Date" shall have the meaning ascribed to such term
in the Preamble.
(g) "Grantor" shall have the meaning ascribed to such term in the
Preamble.
(h) "Net Premium Receivables" shall have the meaning ascribed to
such term in the Quota Share Reinsurance Agreements.
(i) "Quota Share Reinsurance Agreements" shall have the meaning
ascribed to such term in the Preamble.
(j} "Reinsurance Recoverables" shall have the meaning ascribed to
such term in the Quota Share Reinsurance Agreements.
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(k) "Required Balance" shall mean an amount equal to Grantor's
aggregate obligations to the Beneficiary under the Quota Share
Reinsurance Agreements, net of (i) collectible Reinsurance
Recoverables (as such term is defined in the respective Quota
Share Reinsurance Agreements), (ii) collectible Net Premium
Receivables (as such term is defined in the respective Quota
Share Reinsurance Agreements) and (iii) the amount of Royal
Indemnity Company's aggregate obligations to Landmark American
Insurance Company under the RIC (Landmark) Quota Share
Reinsurance Agreement by and between Royal Indemnity Company,
as cedent, and Landmark American Insurance Company, as
reinsurer, dated as of September 2, 2003.
(l) "RSUI" shall have the meaning ascribed to such term in the
Preamble.
(m) "Securities Intermediary" shall mean The Bank of New York.
(n) "Trust Account" shall have the meaning ascribed to such term
in Section 2.1.
(o) "Trust Agreement" shall have the meaning ascribed to such term
in the Preamble.
(p) "Trustee" shall have the meaning ascribed to such term in the
Preamble.
(q) "URC Investment Guidelines" shall have the meaning ascribed to
such term in the Quota Share Reinsurance Agreements.
Section 1.2 Interpretation. When a reference is made in this Trust
Agreement to a Section or Article, such reference shall be to a section or
article of this Trust Agreement unless otherwise clearly indicated to the
contrary. Whenever the words "include", "includes" or "including" are used in
this Trust Agreement, they shall be deemed to be followed by the words "without
limitation." The words "hereof," "herein" and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this Trust
Agreement as a whole and not to any particular provision of this Trust
Agreement. The meaning assigned to each term used in this Trust Agreement shall
be equally applicable to both the singular and the plural forms of such term.
Where a word or phrase is defined herein, each of its other grammatical forms
shall have a corresponding meaning.
ARTICLE II
CREATION OF TRUST ACCOUNT
Section 2.1 Obligation of the Grantor. On or prior to the Effective
Date, the Grantor shall procure with the Trustee, in the name of the Grantor but
for
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the sole benefit of the Beneficiary, an account with number 313121 (ref. account
name: RSUI Indemnity/Royal Surplus) (which in its totality shall be hereinafter
referred to as the "Trust Account"). The Grantor shall maintain in such Trust
Account assets consisting of cash and/or Acceptable Investments (hereinafter
collectively referred to as the "Assets") in an amount equal to the Required
Balance.
Section 2.2 Purpose of Trust. (a) The Assets in the Trust Account
shall be held by the Trustee for the purposes set forth herein. The Grantor
grants to the Trustee all trust powers necessary and reasonable in the
performance of its duties hereunder.
(b) The Grantor agrees that, for United States federal income tax
purposes, (i) the Trust shall be formed and operated in a manner that ensures
that the Trust constitutes a "grantor trust" and, (ii) any and all income or
gain derived from the Assets held in the Trust shall constitute income or gain
of the Grantor as the owner of the Assets.
Section 2.3 Designation of Agents. Except as otherwise expressly
provided in this Trust Agreement, any statement, certificate, notice, request,
consent, approval, or other instrument to be delivered or furnished by Grantor
and/or Beneficiary shall be sufficiently executed if executed in the name of
Grantor and/or Beneficiary by such officer or officers of Grantor and/or
Beneficiary or by such other agent or agents of Grantor and/or Beneficiary as
may be designated in a resolution or letter of advice by Grantor and/or
Beneficiary. Written notice of such designation by Grantor and/or Beneficiary
shall be filed with the Trustee. The Trustee shall be protected in acting upon
any written statement or other instrument made by such officer or agent of
Grantor and/or Beneficiary with respect to the authority conferred on him.
ARTICLE III
MAINTENANCE OF THE TRUST
Section 3.1 Funding of Trust Account. On the Effective Date, (i) all
assets held in the LaSalle Trust Account shall be transferred and delivered to
the Trustee for deposit into the Trust Account; (ii) the Grantor shall execute
and deliver the Assignment of Reinsurance Recoverables attached hereto as
EXHIBIT A; and (iii) the Beneficiary shall execute and deliver the Assignment of
Net Premium Receivables attached hereto as EXHIBIT B.
Section 3.2 Substitution of Trust Account Assets. The Grantor may at
any time substitute or exchange Assets contained in the Trust Account, provided
(i) such assets so substituted or exchanged are cash and/or Acceptable
Investments and (ii) the aggregate fair market value of the Assets is not
decreased below an amount equal to the Required Balance as of the prior month
end. Upon any substitution or exchange as provided for herein, the Grantor shall
certify to the Trustee that such substitution or exchange meets the requirements
of this Section 3.2. The Trustee shall have no responsibility whatsoever to
determine the value of such substituted Assets or whether such substituted
Assets constitute Acceptable Investments.
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Section 3.3 Books and Records. The Trustee shall keep full and
complete records of the administration of the Trust Account. The Grantor and the
Beneficiary may examine such records at any time during business hours through
any person or persons duly authorized in writing by Grantor or the Beneficiary.
Section 3.4 Conversion to Regulation 114 Trust. In the event that
RIC or RSLIC is unable to take financial statement credit for the reinsurance
provided under the Quota Share Reinsurance Agreement to which it is a party, the
parties hereto shall agree to either (i) convert this Trust Agreement to a trust
agreement in form and substance satisfactory to the parties, in compliance with
New York Insurance Regulation 114 or (ii) remove RIC or RSLIC, as the case may
be, as a party to this Trust Agreement (with a corresponding adjustment to the
Required Balance hereunder), with the Grantor providing RIC or RSLIC, as the
case may be, a trust, in form and substance satisfactory to such party and the
Grantor, in compliance with New York Insurance Regulation 114 in order to permit
such party to take full financial statement credit for the reinsurance provided
under the Quota Share Reinsurance Agreement to which it is a party and the
transfer to such trust of Assets in an amount equal to the portion of the
Required Balance related to the obligations to such party.
ARTICLE IV
RELEASE AND ADJUSTMENT OF TRUST ACCOUNT ASSETS
Section 4.1 Change in Required Balance. If as of any month end there
is a reduction or increase in the amount of the Required Balance, the
Beneficiary shall (i) certify in writing to the Trustee as to the amount of such
reduction or increase and (ii) provide the Grantor a copy of the written
certification transmitted to the Trustee.
Section 4.2 Adjustment of Trust Account Assets. (a) If the fair
market value of the Assets maintained in the Trust Account is greater than the
Required Balance as of any month end, then within five (5) Business Days of such
determination, the Trustee shall, upon written signed direction from the
Grantor, withdraw from the Trust Account and transfer to the Grantor Assets
having a fair market value equal to such excess.
(b) If the fair market value of the Assets maintained in the Trust
Account is less than the Required Balance as of such month end, then within five
(5) Business Days of such determination, the Grantor shall cause to be placed
into the Trust Account such additional assets as are necessary to ensure that
the fair market value of the Assets maintained in the Trust Account is no less
than the Required Balance.
Section 4.3 Limitation on Release of Trust Account Assets. EXCEPT AS
PROVIDED IN SECTION 4.4 OR ARTICLE VI HEREOF, IN NO EVENT SHALL THE TRUSTEE BE
INSTRUCTED TO RELEASE ASSETS FROM THE TRUST ACCOUNT WHICH WOULD CAUSE THE
AGGREGATE FAIR MARKET VALUE OF THE ASSETS HELD IN THE TRUST ACCOUNT TO BE
DECREASED BELOW THE AGGREGATE AMOUNT OF THE REQUIRED BALANCE AS OF THE MONTH END
PRECEDING THE RELEASE OF SUCH ASSETS.
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Section 4.4 Release of Trust Account Assets to the Beneficiary. (a)
Except as provided in Section 4.4(b), the beneficiary may not withdraw Assets
from the Trust Account without the prior written consent of the Grantor, a copy
of which shall be provided by the Grantor to the Trustee.
(b) In the event that the Grantor fails to make a payment of any
amount when due to the Beneficiary pursuant to Section 3.2 of the Quota Share
Reinsurance Agreements, the Beneficiary, without notice to the Grantor, shall be
entitled to withdraw such amount on the first Business Day following the due
date. In the event that the Grantor attempts to terminate the Trust Account
without the written approval of the Beneficiary, the Beneficiary shall be
entitled to withdraw the Assets maintained in the Trust Account prior to the
date of termination and hold such assets in trust as collateral for the
performance of the Reinsurer's obligations under the Quota Share Reinsurance
Agreements.
ARTICLE V
DUTIES OF THE TRUSTEE
Section 5.1 Acceptance of Assets by the Trustee. The Trustee shall
accept for deposit into the Trust Account any asset provided such assets are
cash or Acceptable Investments. Notwithstanding anything herein to the contrary,
the Trustee shall not at any time be under any duty or responsibility to
determine whether any assets constitute Acceptable Investments.
The Trustee and its lawfully appointed successors is and are
authorized and shall have the power to receive such securities and other
property as Grantor from time to time may transfer or remit to the Trust Account
and to hold and dispose of the same for the uses and purposes and in the manner
and according to the provisions herein set forth. All such trusteed assets at
all times shall be maintained as a trust account, separate and distinct from all
other assets on the books and records of the Trustee, and shall be continuously
kept in a safe place within the United States.
Section 5.2 Collection of Interest and Dividends; Voting Rights. The
Trustee is hereby authorized, without prior notice to the Grantor or the
Beneficiary, to demand payment of and collect all interest or dividends on the
Assets comprising the Trust Account if any, and the Trustee shall deposit all of
such interest or dividends collected to the principal of the Trust Account. The
Grantor shall have the full and unqualified right to vote and execute consents
with respect to any shares of stock comprising the Trust Account. The Grantor
and the Beneficiary agree that any interest, dividend or other income
automatically posted and credited on the payment date to the Trust Account which
is not subsequently received by the Trustee shall be reversed by the Trustee.
Section 5.3 Obligations of the Trustee. The Trustee agrees to hold
and disburse the various Assets of the Trust Account in accordance with the
provisions expressed herein.
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Section 5.4 Responsibilities of Trustee. The Trustee, in the
administration of this Trust Account, is to be bound solely by the express
provisions herein, and such further written and signed directions and
certifications as the appropriate party or parties may, under the conditions
herein provided, deliver to the Trustee. The Trustee shall be under no
obligation to enforce the Grantor's obligations under this Agreement, except as
otherwise expressly provided or directed pursuant hereto; the Trustee's
responsibilities shall be limited to the safe holding of the Assets comprising
the Trust Account, and the Trustee shall be liable only for its own negligence,
willful misconduct, lack of good faith or breach of fiduciary duty. The Trustee
further agrees to forward upon request to the Beneficiary and upon request to
the Grantor, a certified list and valuation of all Assets held under this Trust
Agreement.
Section 5.5 Monthly Reports. The Trustee agrees to provide copies of
activity reports to the Beneficiary and the Grantor upon inception and within
five (5) Business Days following the end of each calendar month, which reports
shall show all deposits, withdrawals and substitutions; a listing of securities
held; and cash and cash equivalent balances, in the Trust Account as of the end
of such month. The Trustee agrees to provide written notification to the Grantor
and the Beneficiary within five (5) Business Days of any deposits to or
withdrawals from the Trust Account.
Section 5.6 Resignation or Removal of the Trustee. The Trustee may
at any time resign from, and terminate its capacity hereunder by delivery of
written notice or resignation, effective not less than ninety (90) days after
receipt by both the Beneficiary and the Grantor. The Trustee may be removed by
the Grantor by (i) delivery to the Trustee and the Beneficiary of a written
notice of removal, effective not less than ninety (90) days after receipt by the
Trustee and the Beneficiary of the notice and (ii) receipt of Beneficiary's
consent to such action, which consent shall not be unreasonably withheld.
However, no such resignation by the Trustee or removal by the Grantor shall be
effective until a successor to the Trustee shall have been duly appointed as
provided in this Agreement and all the securities and other Assets in the Trust
Account have been duly transferred to such successor. The Grantor, upon receipt
of such notice, shall undertake to obtain the agreement of a qualified,
successor Trustee, agreeable to the Beneficiary, to act in accordance with all
agreements of the Trustee herein. The Beneficiary agrees not to unreasonably
withhold approval of such Trustee. Upon the Trustee's delivery of the Assets to
the qualified, successor Trustee, along with a closing statement showing all
activities from the last monthly report, such successor Trustee shall succeed to
and become vested with all the rights, powers, privileges and duties of the
resigning or removed Trustee, and the resigning or removed Trustee shall be
discharged from any future duties and obligations under this Trust Agreement,
but the resigning or removed Trustee shall continue after such resignation or
removal to be entitled to the benefits of the indemnities provided herein for
the Trustee.
Section 5.7 Release of Information. The Trustee shall respond to any
and all reasonable requests for information concerning the Trust Account or the
Assets held therein by either of the parties to this Agreement.
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Section 5.8 Indemnification of the Trustee. The Grantor agrees to
indemnify the Trustee and hold the Trustee harmless from and against any and all
loss, damage, claims, liability, cost or expense ("Losses"), arising out of,
resulting from or incurred in connection with the acceptance or administration
of the trust hereunder or the exercise or performance of any of its powers or
duties hereunder, including the costs and expenses of defending itself against
any claim, whether asserted by a party to this Trust Agreement or any other
person. Notwithstanding the foregoing, whenever an action by the Trustee is
authorized by written signed direction of the Beneficiary pursuant to the
provisions of this Trust Agreement and such action is taken by the Trustee
strictly in accordance with such written and signed direction by the
Beneficiary, the Beneficiary so authorizing such action hereby agrees to
indemnify and hold the Trustee harmless from and against any and all Losses
arising out of, resulting from or incurred in connection with any action so
taken by the Trustee, and the Grantor shall not be obligated to indemnify the
Trustee therefor. Neither the Grantor nor the Beneficiary shall in any event be
required to indemnify the Trustee for any Losses directly resulting from the
Trustee's own negligence or willful misconduct. The Grantor and Beneficiary
hereby acknowledge that the foregoing indemnities shall survive the resignation
or discharge of the Trustee or the termination of this Trust Agreement and
hereby grant the Trustee a lien, right of set-off and security interest in any
Assets actually payable to the Grantor from the Trust Account for the payment of
any claim for compensation, reimbursement or indemnity hereunder.
Section 5.9 Charges of the Trustee. The Grantor agrees to pay all
costs or fees charged by the Trustee for acting as the Trustee pursuant to this
Agreement, as agreed between the Grantor and the Trustee, including fees
incurred by the Trustee for legal services deemed necessary by the Trustee as a
result of the Trustee's so acting; provided, however, that no such costs, fees
or expenses shall be paid out of the Assets.
Section 5.10 Limitations of Trustee. The Trustee shall in no way be
responsible for determining the amount of securities required to be deposited;
or to monitor whether or not the securities held within such Trust Account
conform to the investment requirements contained herein. The Trustee shall be
under no liability for any release of Assets made by it to the Grantor pursuant
to Article IV.
ARTICLE VI
TERMINATION OF TRUST ACCOUNT
Section 6.1 Termination with the Beneficiary's Written Consent. Upon
receipt of the Beneficiary's written consent, the Grantor shall terminate this
Agreement by:
(a) giving thirty five (35) days' advance written notice to the
Trustee and the Trustee giving thirty (30) days' advance written notice of such
termination via certified mail to the Beneficiary; and
(b) providing the Beneficiary with alternative security acceptable
to the Beneficiary, in its sole discretion, prior to the effective date of
termination.
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Upon such termination, the Trustee shall release Assets held and
deposited under this Agreement to the Beneficiary and shall take any and all
steps necessary to transfer absolutely and unequivocally all right, title and
interest in such Assets and to deliver physical custody, if applicable, in such
Assets to the Beneficiary or as otherwise directed by the Beneficiary.
ARTICLE VII
SECURITY INTEREST IN THE TRUST ASSETS
Section 7.1 Security Interest. The parties intend that the Trust
Account is and at all times shall be the lawful owner of the Assets. However, to
the extent that the Trust is not valid, the transfer of the Assets by the
Grantor to the Trust Account is not effective, or the Transfer of the Assets by
the Grantor may be characterized as a pledge rather than a lawful conveyance to
the Trust, the Grantor hereby grants and transfers to RIC, as agent for the
benefit of the Beneficiary, for the purposes set forth herein a first priority
perfected security interest in all of the Grantor's right, title and interest
in, to and under the Trust Account, all Assets credited to the Trust Account and
any security entitlements arising with respect thereto to secure Grantor's
obligations hereunder to the Beneficiary and this Trust Agreement shall
constitute a security agreement under applicable law. In addition, the Grantor
shall execute and deliver such UCC financing statements with respect to Trust
Account that are reasonably deemed necessary by the Beneficiary in order to
perfect such security interest in the Assets.
Section 7.2 Appointment as Agent. Solely for the purpose of
effectuating the grant set forth in Section 7.1, RSLIC hereby appoints RIC as
agent, and RIC hereby accepts the appointment.
Section 7.3 "Financial Assets" Election. The Securities Intermediary
hereby agrees that each Asset credited to the Trust Account shall be treated as
a "financial asset" within the meaning of Section 8-102(a)(9) of the UCC. For
purposes of this Trust Agreement, "UCC" shall mean the Uniform Commercial Code
as in effect on the date hereof in the State of New York.
Section 7.4 UCC Securities Account.
The Securities Intermediary hereby confirms and agrees to the
following:
(a) The Trust Account is a "securities account" as such term is
defined in UCC Section 8-501(b). For purposes of this Article VII, the
Securities Intermediary shall be acting solely in its capacity as securities
intermediary for the benefit of the Beneficiary under Article 8 of the Uniform
Commercial Code.
(b) The Securities Intermediary has established for the Trust
Account account number 313121 in the name "RSUI Indemnity/Royal Surplus" and the
Trustee shall not change the name or account number of the Trust Account without
the prior written consent of the Beneficiary. All Assets delivered to the
Trustee pursuant to this Trust Agreement will be promptly credited to the Trust
Account.
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Section 7.5 Entitlement Orders. If at any time the Securities
Intermediary shall receive any order from the Beneficiary directing transfer or
redemption of any Asset (an "Entitlement Order"), the Securities Intermediary
shall comply with such Entitlement Order without further consent by the Grantor
or any other person. If the Grantor is otherwise entitled to issue Entitlement
Orders and such orders conflict with any Entitlement Order issued by the
Beneficiary, the Securities Intermediary shall follow the orders issued by the
Beneficiary.
Section 7.6 Subordination of Lien; Waiver of Set-Off. In the event
that the Securities Intermediary has or subsequently obtains by agreement, by
operation of law or otherwise a security interest in the Trust Account or any
security entitlement credited thereto in any capacity other than as Trustee of
the Trust Account for the benefit of the Beneficiary, the Securities
Intermediary hereby agrees that such security interest shall be subordinate to
the security interest created hereunder. The Assets deposited to the Trust
Account will not be subject to deduction, set-off, banker's lien, or any other
right in favor of any person other than the Beneficiary (except that the
Securities Intermediary may set off (i) all amounts due to the Securities
Intermediary in respect of customary fees and expenses for the routine
maintenance and operation of the Trust Account and (ii) the face amount of any
checks which have been credited to the Trust Account but are subsequently
returned unpaid because of uncollected or insufficient funds).
Section 7.7 Choice of Law; Waiver of Jury Trial. Both this Trust
Agreement and the Trust Account shall be governed by the laws of the State of
New York. Regardless of any provision in any other agreement, for purposes of
the UCC, New York shall be deemed to be the Securities Intermediary's
jurisdiction and the Trust Account (as well as the securities entitlements
related thereto) shall be governed by the laws of the State of New York. Each
party hereto hereby waives trial by jury in any judicial proceeding involving,
directly or indirectly, any matter (whether sounding in tort, contract or
otherwise) in any way arising out of or related to this Trust Agreement or the
relationship established hereunder. The parties agree that the waiver of jury
trial set forth in the preceding sentence is a material inducement for the
parties to enter into this Trust Agreement.
Section 7.8 Conflict with Other Agreements.
(a) In the event of any conflict between this Trust Agreement (or
any portion thereof) and any other agreement now existing or hereafter entered
into, the terms of this Trust Agreement shall prevail;
(b) The Securities Intermediary hereby confirms and agrees that:
(i) There are no other agreements entered into between the
Securities Intermediary and the Grantor with respect to the Trust Account;
(ii) It has not entered into, and until the termination of the
this Trust Agreement will not enter into, any agreement with any other
person relating
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to the Trust Account and/or any Assets credited thereto pursuant to which
it has agreed to comply with Entitlement Orders of any person other than
the Beneficiary; and
(iii) It has not entered into, and until the termination of
this Trust Agreement will not enter into, any agreement with the Grantor
or the Beneficiary purporting to limit or condition the obligation of the
Trustee to comply with Entitlement Orders as set forth in Section 7.4
hereof.
Section 7.9 Adverse Claims. Except for the claims and interest of
the Beneficiary and of the Grantor in the Trust Account, the Securities
Intermediary does not know of any claim to, or interest in, the Trust Account or
in any Asset credited thereto. If any person asserts any lien, encumbrance or
adverse claim (including any writ, garnishment, judgment, warrant of attachment,
execution or similar process) against the Trust Account or in any Asset carried
therein, the Securities Intermediary will promptly notify the Beneficiary and
the Grantor thereof.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Failure to Act. The Beneficiary's failure at any time to
exercise any of the rights or powers conferred upon it herein shall constitute
neither a waiver of its right to exercise, nor stop it from exercising, any
rights at any subsequent time, nor shall such failure reduce in any degree any
liability or obligation for which the Grantor is bound hereunder.
Section 8.2 Disputes. Any dispute between the Grantor and the
Beneficiary arising out of, including the formation or validity thereof, or
otherwise relating to, this Trust Agreement shall be subject to the provisions
of Article XIV of the Quota Share Reinsurance Agreements.
Section 8.3 Amendments. This Trust Agreement may be altered, amended
or terminated at any time by written agreement executed by each party hereto
and, in the case of Grantor's and Beneficiary's written agreement, delivered to
the Trustee.
Section 8.4 Assignment. This Agreement may not be assigned without
the consent of the parties hereto and, subject to the receipt of such consent,
shall be binding upon and inure to the benefit of the parties hereto, their
successor and assigns.
Section 8.5 Counterparts. This Agreement may be executed in any
number of counterparts or by attached documents, all of which shall constitute
one and the same original.
Section 8.6 Notices. Unless otherwise specifically provided herein,
every notice required or permitted to be given under this Agreement shall be
given in
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writing by personal delivery to the party to whom it is directed at the
following addresses:
Trustee: The Bank of New York
Attn: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Grantor: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President and Chief Financial Officer
RSUI Indemnity Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with copies to (which shall not constitute notice to Grantor for
purposes of this Section 8.6):
▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
General Counsel
Alleghany Corporation
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Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
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Beneficiary: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Senior Vice President
Royal Indemnity Company
Mail Stop 3322
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Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to (which shall not constitute notice to Beneficiary for
purposes of this Section 8.6):
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
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Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Section 8.7 Severability. In the event any provision of this Trust
Agreement shall be held invalid or unenforceable for any reason, such invalidity
or unenforceability shall not affect the remaining provisions of this Trust
Agreement.
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ARTICLE IX
EFFECTIVE DATE AND EXECUTION
IN WITNESS OF THE ABOVE, this Trust Agreement is executed in
triplicate by the parties' duly authorized officers on the dates indicated below
as of the Effective Date first set forth above.
ROYAL INDEMNITY COMPANY
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Corporate Secretary
ROYAL SURPLUS LINES INSURANCE COMPANY
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Corporate Secretary
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RSUI INDEMNITY COMPANY
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
and Chief Financial Officer
Attest: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Secretary
THE BANK OF NEW YORK
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By: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Treasurer
Attest: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Trust Administrator
THE BANK OF NEW YORK
(AS SECURITIES INTERMEDIARY UNDER
ARTICLE VII OF THIS TRUST AGREEMENT)
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
By: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Treasurer
Attest: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Trust Administrator
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EXHIBIT A
ASSIGNMENT OF REINSURANCE RECOVERABLES
EXHIBIT B
ASSIGNMENT OF NET PREMIUM RECEIVABLES