Exhibit 10.8
NOVATION AND TRANSFER AGREEMENT
(hereinafter the "Agreement")
THIS AGREEMENT is effective June 28, 2006 (the "Effective Date"), in
accordance with the terms and conditions hereon, by and among Tower Insurance
Company of New York and/or their subsidiaries, affiliated or controlled
companies (hereinafter referred to collectively as "TOWER"), PXRE Reinsurance
Company (hereinafter referred to as "PXRE"), and Virginia Surety Company, Inc.
and/or its subsidiaries, affiliated or controlled companies (hereinafter
referred to collectively as "VIRGINIA SURETY").
WHEREAS, VIRGINIA SURETY (as the cedant) and PXRE (as a reinsurer)
entered into the Reinsurance Agreement and addenda thereto listed in Exhibit A
and incorporated herein by reference (hereinafter the "Contract").
WHEREAS, the parties hereto now desire to effect a full novation of the
captioned Contract by which TOWER shall be substituted as the reinsurer in place
of PXRE for 100% (one hundred percent) of PXRE's share of the captioned
Contract, in respect of the subject business of the Contract.
WHEREAS, VIRGINIA SURETY agrees to the substitution of TOWER as the
reinsurer in place and instead of PXRE with respect to 100% (one hundred
percent) of PXRE's share of the Contract and VIRGINIA SURETY agrees to perform
all duties and obligations undertaken by the cedant pursuant to the Contract.
WHEREAS, VIRGINIA SURETY agrees to the payment by PXRE to TOWER of the
Profit Account calculated to be four million four hundred fifty three thousand
six hundred four dollars ($4,453,604) and in consideration for such payment
VIRGINIA SURETY and TOWER agree to irrevocably and unconditionally release PXRE
from any and all duties, obligations and liabilities of any nature whatsoever,
whether known or unknown, reported or unreported, vested or contingent, arising
pursuant to the Contract as though PXRE had never been a party to the Contract.
NOW, THEREFORE, in consideration of the covenants, assumptions,
payments and releases set forth herein, the receipt and sufficiency of which is
hereby specifically acknowledged, the parties agree as follows:
ARTICLE I. ASSUMPTION BY TOWER
Effective as of the Effective Date: (i) this Agreement effects a
novation of all existing and future rights, duties, obligations and liabilities
of PXRE of any nature whatsoever to TOWER in respect of 100% (one hundred
percent) of PXRE's share of the Contract; (ii) VIRGINIA SURETY hereby agrees to
enforce any duties, obligations and liabilities of PXRE in respect of 100% (one
hundred percent) of PXRE's share of the Contract solely against TOWER; and (iii)
VIRGINIA SURETY and TOWER hereby irrevocably and unconditionally release PXRE
from any and all duties, obligations and liabilities of any nature whatsoever,
whether known or unknown, reported or unreported, vested or contingent, arising
pursuant to the Contract as though PXRE had never been a party to the Contract.
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Subject to receipt by TOWER of the payment set forth in Article III, TOWER
hereby:
(a) absolutely and unconditionally assumes all existing and future rights,
duties and obligations of PXRE to VIRGINIA SURETY for 100% (one hundred
percent) of PXRE's share under the Contract; and
(b) agrees to perform and satisfy as the assuming reinsurer all duties and
obligations owing to VIRGINIA SURETY in respect of 100% (one hundred
percent) of PXRE's share of the Contract.
Notwithstanding anything else to the contrary in this Agreement, TOWER shall
reinsure VIRGINIA SURETY for 100% (one hundred percent) of PXRE's share under
the Contract and on the basis of the terms and conditions of the Contract.
ARTICLE II. RELEASE
In consideration of the payment to be made by PXRE to TOWER of four
million four hundred fifty three thousand six hundred four dollars ($4,453,604),
receipt of which will be acknowledged upon satisfaction of the payment set forth
in Article III by TOWER and VIRGINIA SURETY, VIRGINIA SURETY consents to the
novation and assumption by TOWER, as described in Article I hereof, of any and
all rights, duties, obligations and liabilities of any nature whatsoever of PXRE
in respect of 100% (one hundred percent) of PXRE's share under the Contract.
VIRGINIA SURETY for itself, its successors and assigns hereby:
(a) absolutely and unconditionally covenants and agrees with PXRE, its
successors and assigns, that VIRGINIA SURETY, its successors and assigns,
will not hereafter for any reason whatsoever demand, claim, initiate or
cause to be initiated any proceeding or file suit against PXRE, its
successors or assigns (other than TOWER), in respect of any and/or all
liabilities, obligations, costs or damages, known or unknown, reported or
unreported, existing or which arise in the future in respect of 100% (one
hundred percent) of PXRE's share of the Contract; and
(b) agrees that TOWER will be solely responsible to VIRGINIA SURETY for the
performance of the duties and obligations of PXRE in respect of 100% (one
hundred percent) of PXRE's share of the Contract; and
(c) agrees that PXRE by signing this Agreement does not assume any liability
either to VIRGINIA SURETY or TOWER, other than the payment of
consideration required by Article III.
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Subject to receipt by TOWER of the payment set forth in Article III, TOWER for
itself, its successors and assigns hereby:
(a) absolutely and unconditionally covenants and agrees with PXRE, its
successors and assigns, that TOWER, their successors and assigns, will
not hereafter for any reason whatsoever demand, claim, initiate or cause
to be initiated any proceeding or file suit against PXRE, its successors
or assigns, in respect of any and/or all liabilities, obligations, costs
or damages, known or unknown, reported or unreported, existing or which
arise in the future in respect of the Contract; and
(b) agrees that TOWER will be solely responsible to VIRGINIA SURETY for the
performance of the duties and obligations in respect of 100% (one hundred
percent) of PXRE's share of the Contract; and
(c) agrees that PXRE by signing this Agreement does not assume any liability
either to VIRGINIA SURETY or TOWER, other than the payment of
consideration required by Article III.
PXRE for itself, its successors and assigns hereby absolutely and
unconditionally covenants and agrees with VIRGINIA SURETY and TOWER, their
respective successors and assigns, that PXRE, its successors and assigns, will
not hereafter for any reason whatsoever demand, claim, initiate or cause to be
initiated any proceeding or file suit against VIRGINIA SURETY and TOWER, their
respective successors or assigns, in respect of any and/or all liabilities,
obligations, costs or damages, known or unknown, reported or unreported,
existing or which arise in the future in respect of the Contract.
ARTICLE III. PAYMENTS TO TOWER
As a condition precedent to the obligations of TOWER hereunder, PXRE
will pay to TOWER four million four hundred fifty three thousand six hundred
four dollars ($4,453,604) as soon as practicable. In consideration of the
payment described in this Article III and other considerations as recited in
this Agreement, all premium paid to TOWER in respect of 100% (one hundred
percent) of PXRE's share under the Contract hereto shall be deemed fully earned
and non-refundable.
ARTICLE IV. UNDERTAKINGS
Each party agrees that it shall, from time to time, upon the reasonable
request of any other party, execute and deliver any further documents which may
be required to fully implement the intent of this Agreement.
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ARTICLE V. GENERAL
A. The rights, duties and obligations set forth in this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and
their respective predecessors, successors, parents, affiliates,
subsidiaries, agents, past, present and future officers, directors,
employees, consultants, shareholders, attorneys, agents, trustees,
administrators, liquidators, receivers and assigns.
B. This Agreement shall be governed by and construed in accordance with
the substantive laws of the State of New York, without regard to and
exclusive of the rules with respect to conflicts of law.
C. The parties hereto expressly warrant and represent that they are
corporations or insurance companies in good standing; that the person
or persons executing this Novation and Transfer Agreement have the
necessary and appropriate authority to do so; that to the best of their
knowledge there are no pending agreements, transactions, or
negotiations to which any of them are a party that would render this
Agreement or any part thereof void, voidable, or unenforceable; and
that to the best of their knowledge no authorization, consent or
approval of any government entity is required to make this Agreement
valid and binding upon them.
D. Except as otherwise provided in this Agreement, each party shall be
responsible for its own costs and expenses arising under this
Agreement.
E. This Agreement contains the entire agreement between the parties as
respects its subject matter. All discussions and agreements previously
entertained between the parties concerning the subject hereto are
merged into this Agreement. This Agreement may not be modified or
amended, nor any of its provisions waived, except by an instrument in
writing, signed by the parties hereunder.
F. This Agreement and any of its rights and obligations may not be
assigned in whole or in part without the written approval of all
parties hereto.
G. The parties agree to cooperate and undertake such further acts in the
future as may be reasonably necessary or proper to carry out the terms
and purpose of this Agreement.
H. In consideration of the mutual covenants and agreements contained
herein, each party hereto agrees that this Agreement, and each and
every provision hereof, is and shall be enforceable by and between them
according to its terms subject to applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and similar laws
relating to or affecting creditors' rights generally and to general
principles of equity, and each party does hereby agree that it shall
not, directly or indirectly, contest the validity or enforceability
hereof.
I. This Agreement may be executed and delivered in counterparts, each of
which, when so executed and delivered, shall be an original, but such
counterparts shall together be one and the same instrument and
agreement. The parties hereto agree that this Agreement shall become
effective as of the Effective Date upon the exchange by telecopier of
such counterparts duly signed by each party.
J. It is mutually understood and agreed that VIRGINIA SURETY, PXRE, and
TOWER shall keep all terms and provisions of this Agreement
confidential and shall not disclose such terms or provisions to any
third party, other than their financial or legal advisers, rating
agencies and/or auditors without the prior written consent of VIRGINIA
SURETY, except where otherwise required by operation of law or the
requirements of any regulatory authority and upon reasonable prior
written notice to the other parties.
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K. If any provision in this Agreement is illegal, invalid or
unenforceable, the remaining provisions shall not be impaired.
L. The failure of the parties to enforce any provision of this Agreement
shall not be construed as a waiver of such provision or any other
provision of this Agreement. No waiver of any provision of this
Agreement shall be deemed a waiver of any of its other terms, nor shall
such waiver constitute a continuing waiver.
All other terms and conditions of the Contract remain unchanged.
IN WITNESS WHEREOF, the parties have executed this Agreement by their
duly authorized representatives.
For and on behalf of Virginia Surety Company Inc., this 28th day of June, 2006,
By: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
For and on behalf of PXRE Reinsurance Company, this 28th day of June , 2006
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President and Chief Financial Officer
For and on behalf of Tower Insurance Company of New York, its authorized
representative, this 28th day of June , 2006,
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
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EXHIBIT A
CONTRACT
1.) Quota Share Reinsurance Agreement between Virginia Surety Company, Inc.
and PXRE Reinsurance Company, Effective January 1, 2002, for its
respective 100% (one hundred percent) share (the "Reinsurance
Agreement")
2.) Addendum No. 1 to the Reinsurance Agreement
3.) Addendum No. 2 to the Reinsurance Agreement
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