COMMUTATION
AND RELEASE AGREEMENT
This
Commutation and Release Agreement (hereinafter the
“Commutation Agreement”) is entered into by and between
Continental Casualty Company (hereinafter the
“Company”) of the one part and Western Surety Company
(hereinafter the “Reinsurer”) of the other part,
effective as of June 30, 2009.
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A.
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The
Reinsurer and the Company have entered into the following
reinsurance agreements as respects surety business:
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1.
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Surety Quota Share Treaty, effective
October 1, 1997
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2.
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Surety Quota Share Treaty, effective
January 1, 2002
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3.
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Surety Quota Share Treaty, effective
October 1, 2002
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4.
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Surety Quota Share Treaty, effective
January 1, 2004
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5.
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Surety Quota Share Treaty, effective
January 1, 2005
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6.
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Surety Quota Share Treaty, effective
January 1, 2006
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7.
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Surety Quota Share Treaty, effective
January 1, 2007
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8.
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Surety Quota Share Treaty, effective
January 1, 2008
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9.
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Surety Quota Share Treaty, effective
January 1, 2009
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Included in the surety business
ceded to these reinsurance agreements are certain bonds issued for
the principal Dick Corporation (collectively hereinafter the
“Reinsurance Agreements as respects Surety Business for the
Dick Corporation”); and
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B.
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the
Reinsurer assumes the Surety Business for the Dick Corporation
under the above named reinsurance agreements which the Company then
assumes pursuant to the Surety Excess of Loss Reinsurance Contract
as Respects Only Surety Business for the Dick Corporation,
effective January 1, 2005 (the “Excess of Loss
Contract”). The Reinsurer’s retention under the Excess
of Loss Contract is $60,000,000 under which the Reinsurer has to
date retained the amount of $58,206,033. Simultaneously with the
execution of this Commutation Agreement, the Company and the
Reinsurer shall terminate the Excess of Loss Contract;
and
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C.
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the
Company and the Reinsurer desire to fully and finally settle and
commute all past, present and future liabilities and obligations
known and unknown of the Company and the Reinsurer under, arising
out of, or in any way related to the Reinsurance Agreements as
respects Surety Business for the Dick Corporation; and
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D.
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the
Reinsurer has agreed to pay and the Company has agreed to accept in
full and final satisfaction of the Reinsurer’s past, present
and future liability under the Reinsurance Agreements as respects
Surety Business for the Dick Corporation, the Commutation Amount,
being the difference between the Reinsurer’s retention under
the Excess of Loss Contract ($60,000,000) and the actual amount
retained to date by the Reinsurer under the Excess of Loss Contract
($58,206,033) which equals $1,793,967);
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Page 1 of
6
NOW
THEREFORE, it is agreed by and between the Reinsurer and the
Company that:
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1.
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In
consideration of the payment, within five days of the execution of
this Commutation Agreement, by the Reinsurer to the Company of the
Commutation Amount, being $1,793,967, the Company shall release and
discharge the Reinsurer, its predecessors, parents, affiliates,
subsidiaries, agents, past, present and future officers, directors,
employees, consultants, shareholders, attorneys, agents,
administrators, successors, assigns and receivers from any and all
past, present and future liabilities and obligations, whether known
or unknown, reported or unreported, and whether currently existing
or arising in the future, including but not limited to, all claims,
obligations, offsets, debts, demands, actions, causes of actions,
suits, sums of money, covenants, contracts, controversies,
agreements, reckonings, bonds, bills, promises, damages, omissions,
judgments, arbitrations, mediations, costs, expenses, losses,
adjustments, accounts, executions, representations and warranties
whatsoever, which the Company and their successors and assigns ever
had, now have, or hereafter may have, whether grounded in law or
equity, in contract or in tort, against the Reinsurer or any of
them by reason of any matter whatsoever under, arising out of, or
in any way related to the Reinsurance Agreements as respects Surety
Business for the Dick Corporation, it being the intention of the
parties that this release operate as a full and final settlement of
the Reinsurer’s past, current and future liabilities and
obligations, whether known or unknown, to the Company under,
arising out of or in any way related to the Reinsurance Agreements
as respects Surety Business for the Dick Corporation.
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2.
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The
Company shall accept the Commutation Amount in full and final
settlement of any and all amounts due by the Reinsurer to the
Company under, arising out of, or in any way related to the
Reinsurance Agreements as respects Surety Business for the Dick
Corporation.
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3.
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Effective on the same date on which
the Company shall release the Reinsurer as provided for in
Section 1 above, the Reinsurer shall release and discharge the
Company, its predecessors, parents, affiliates, subsidiaries,
agents, past, present and future officers, directors, employees,
consultants, shareholders, attorneys, agents, administrators,
successors, assigns and receivers from any and all past, present
and future liabilities and obligations, whether known or unknown,
reported or unreported, and whether currently existing or arising
in the future, including but not limited to, all claims,
obligations, offsets, debts, demands, actions, causes of actions,
suits, sums of money, covenants, contracts, controversies,
agreements, reckonings, bonds, bills, promises, damages, omissions,
judgments, arbitrations, mediations, costs, expenses, losses,
adjustments, accounts, executions, representations and warranties
whatsoever, which the Reinsurer and its successors and assigns ever
had, now have or hereafter may have, whether grounded in law or
equity, in contract or in tort, against the Company or any of them
by reason of any matter whatsoever under, arising out of, or in any
way related to the Reinsurance Agreements as respects Surety
Business for the Dick Corporation, it being the intention of
the
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