|
Exhibit
10.81
COMMUTATION & RELEASE AGREEMENT
This COMMUTATION &
RELEASE AGREEMENT (this "Agreement") is entered into effective
as at 31 December 2006 (the "Effective Date") by and among
SCPIE Holdings Inc. ("SCPIE Holdings"), SCPIE Indemnity
Company ("SCPIE Indemnity") and American Healthcare
Indemnity Company ("AHI"), each of 1888 Century Park East,
Suite 800, Los Angeles, California, CA 90067-1712, USA (SCPIE
Holdings, SCPIE Indemnity and AHI, collectively, "SCPIE"), and
Chaucer Syndicates Limited as managing agent for and on
behalf of The Members of Lloyd’s who constitute Syndicate
1204, Syndicate 1084 and their respective successors and assigns of
9 Devonshire Square, Cutlers Gardens, London EC2M 4WL ("Chaucer"),
with reference to the following facts:
W I T N E S S E T
H
A. AHI entered into a Quota Share
Agreement dated April 3, 2000, in respect of the 2000 year of
account of Syndicate 1204, as amended, a copy of which is appended
hereto as Appendix One (the "Quota Share").
B. By virtue of certain reinsurance
to close agreements, the liability for business written by the
members of Syndicate 1204 for the 2000 year of account and the
benefit of reinsurance protecting such business have been reinsured
into the 2004 year of account of Syndicate 1084.
C. Chaucer, SCPIE Holdings and AHI
entered into a Deed of Undertaking dated March 8, 2006, a copy
of which is appended hereto as Appendix Two (the "Deed"),
requiring, among other matters, that SCPIE Holdings procure an
irrevocable standby letter of credit with Barclays Bank Plc (the
"Issuing Bank") in the sum of £2.5 million (two million
five hundred thousand pounds sterling) in favor of Chaucer and the
member of Syndicate 1084 for the 2004 and subsequent years of
account, a copy of which is appended hereto as Appendix
Three (the "LoC"), to secure AHI’s obligations under the
Quota Share.
D. SCPIE Indemnity entered into a
Stop Loss Reinsurance Agreement dated March 8, 2006 in respect
of the 2004 year of account of Syndicate 1084, a copy of which is
appended hereto as Appendix Four (the "Stop Loss" and the
Quota Share, collectively, the "Reinsurance
Agreements").
E. SCPIE and Chaucer now desire to
fully and finally settle and commute all their respective past,
present and future claims, rights, duties, obligations and
liabilities of whatsoever nature, known and unknown, under the
Reinsurance Agreements and the Deed, to terminate the Reinsurance
Agreements and the Deed and to enter into mutual releases relating
thereto, all in accordance with the terms, covenants and conditions
hereinafter contained.
NOW, THEREFORE , in
consideration of the covenants set forth herein, and the payments
made hereunder, it is agreed between SCPIE and Chaucer as
follows:
|
1.
|
|
The recitals contained above are
hereby incorporated by reference as though fully set forth
herein.
|
|
2.
|
Within fifteen (15) business
days following execution of this Agreement by both SCPIE and
Chaucer, AHI shall pay the sum of GBP 1,067,000 (one million no
hundred and sixty seven thousand pounds sterling) USD 3,876,000
(three million eight hundred and seventy six thousand US dollars)
and CAD 261,000 (two hundred and sixty one thousand Canadian
dollars) to Chaucer in connection with the Quota Share (in the
aggregate, the "AHI Payment"), and SCPIE Indemnity shall pay USD
350,000 (three hundred and fifty thousand US dollars) to Chaucer in
connection with the Stop Loss (the "SCPIE Indemnity Payment" and
the AHI Payment, collectively the "Payments"). The remittance of
the Payments by AHI and SCPIE Indemnity to Chaucer shall be paid
within the above amounts by wire transfer, with Chaucer’s
wiring instructions as follows:
|
2
|
3.
|
|
In the event that AHI fails to make
a payment to Chaucer of all or any part of the AHI Payment and, or
SCPIE Indemnity fails to make a payment to Chaucer of all or any
part of the SCPIE Indemnity Payment on the terms and timelines set
forth in Paragraph 2 herein, AHI and, or SCPIE Indemnity (as
the case may be) agrees to pay interest to Chaucer on any unpaid
sums at 2% above the base rate for the time being of Lloyd’s
TSB Bank plc calculated on a day-to-day basis until the Payments
are fully discharged.
|
3
|
4.
|
|
Chaucer shall accept the AHI Payment
and the SCPIE Indemnity Payment as full and final settlement of any
and all amounts claimed heretofore or hereafter to be due between
SCPIE and Chaucer, arising under or in respect of the Reinsurance
Agreements and the Deed. The parties understand and acknowledge
that the Payments were calculated as of September 30, 2006,
but that the commutations, terminations and releases provided
hereunder shall be effective as of the Effective Date upon full
payment to and receipt of the Payments by Chaucer. The parties are
satisfied that any activities or adjustments under the Reinsurance
Agreements and the Deed for the period from September 30, 2006
through December 31, 2006 are recognized in the Payments and
agree that no additional amounts are or will be due or payable
under the Reinsurance Agreements and the Deed nor will there be any
reconciliation, adjustment or recalculation of the Payments to
reflect the period from September 30, 2006 through the
Effective Date. The parties further agree that the Reinsurance
Agreements and the Deed and other requirements thereunder will be
terminated and of no further force or effect and all rights,
liabilities and obligations thereunder will be cancelled in their
entirety and none of the parties will have any liability of
obligations thereunder, as of the Effective Date upon full payment
to and receipt of the Payments by Chaucer and, to that end, within
two (2) days following Chaucer’s receipt of the Payments
and in accordance with terms of the LoC, Chaucer agrees to the
return the original LoC to the Issuing Bank to procure the release
of the LoC securing the Quota Share pursuant to the
Deed.
|
|
5.
|
|
Upon receipt and clearance of the
Payments and effective as of the Effective Date, SCPIE shall and
hereby does irrevocably and unconditionally release and discharge
Chaucer, its predecessors, parents, affiliates, subsidiaries,
agents, officers, directors, employees, shareholders,
policyholders, successors and assigns from any and all liabilities,
including, but not limited to, all obligations, adjustments,
executions, offsets, actions, causes of action, suits,
arbitrations, mediations, debts, sums of money, accounts, bonds,
bills, covenants, contracts, controversies, agreements, promises,
damages, judgments, claims, demands, duties, omissions, costs,
expenses and/or losses whatsoever, whether known or unknown,
reported or unreported, and whether arising in the past, present or
future, which SCPIE, 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 Chaucer by reason of any matter
whatsoever arising out of the
|
4
|
|
Reinsurance Agreements or the Deed,
it being the intention of the parties that this Agreement shall
operate as a full and final settlement of Chaucer’s current
and future liabilities to SCPIE under the Reinsurance Agreements
and the Deed.
|
|
6.
|
|
Simultaneously with termination and
release set forth in Paragraphs 4 and 5 respectively and effective
as of the Effective Date, Chaucer shall and hereby does irrevocably
and unconditionally release and discharge SCPIE, its predecessors,
parents, affiliates, subsidiaries, agents, officers, directors,
employees, shareholders, policyholders, successors and assigns from
any and all liabilities, including, but not limited to, all
obligations, adjustments, executions, offsets, actions, causes of
action, suits, arbitrations, mediations, debts, sums of money,
accounts, bonds, bills, covenants, contracts, controversies,
agreements, promises, damages, judgments, claims, demands, duties,
omissions, costs, expenses and/or losses whatsoever, whether known
or unknown, reported or unreported, and whether arising in the
past, present or future, which Chaucer, 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 SCPIE by reason
of any matter whatsoever arising out of the Reinsurance Agreements
or the Deed, it being the intention of the parties that this
Agreement operate as a full and final settlement of SCPIE’s
current and future liabilities to Chaucer under the Reinsurance
Agreements and the Deed.
|
|
7.
|
|
Except as otherwise provided above,
SCPIE and C
|
|
