Exhibit 10.2
EXECUTION VERSION
 
TRUST AGREEMENT
by and among
CONTINENTAL CASUALTY COMPANY,
THE CONTINENTAL INSURANCE COMPANY,
CONTINENTAL REINSURANCE CORPORATION INTERNATIONAL, LTD.
CNA INSURANCE COMPANY LIMITED
(hereinafter referred to individually as the “Beneficiary” and collectively as
the “Beneficiaries”),
NATIONAL INDEMNITY COMPANY
(hereinafter referred to as the “Grantor”)
and
WELLS FARGO BANK, NATIONAL ASSOCIATION
(hereinafter referred to as the “Trustee”)
AUGUST 31, 2010
 

 

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Table of Contents

                    Page   ARTICLE I

 
          DEFINED TERMS

 
        Section 1.1  
Definitions
  2   Section 1.2  
Interpretation
  6  
 
        ARTICLE II

 
        MODIFICATION UPON A COLLATERAL TRIGGERING EVENT

 
        Section 2.1  
Collateral Triggering Event
  7  
 
        ARTICLE III

 
        MODIFICATION UPON A REINSURANCE CREDIT EVENT

 
        Section 3.1  
Reinsurance Credit Event
  7  
 
        ARTICLE IV

 
        CREATION OF TRUST ACCOUNT

 
        Section 4.1  
Obligations of the Beneficiaries and the Grantor
  9   Section 4.2  
Purpose of the Trust
  10   Section 4.3  
Grantor Trust for United States Federal Income Tax Purposes
  10   Section 4.4  
Designation of Agents
  10   Section 4.5  
Title to Assets
  11  
 
        ARTICLE V

 
        MAINTENANCE OF THE TRUST

 
        Section 5.1  
Substitution of Trust Account Assets
  11   Section 5.2  
Valuation of Assets
  11   Section 5.3  
Quarterly Certification
  11  
 
        ARTICLE VI

 
        RELEASE AND ADJUSTMENT OF TRUST ACCOUNT ASSETS

 
        Section 6.1  
Adjustment of Trust Account Assets
  12  

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                      Page   Section 6.2  
Release of Trust Account Assets to the Beneficiaries
    13   Section 6.3  
Release of Trust Account Assets to the Grantor
    13  
 
            ARTICLE VII

 
            DUTIES OF THE TRUSTEE

 
            Section 7.1  
Acceptance of Assets by the Trustee
    14   Section 7.2  
Collection of Interest and Dividends; Voting Rights
    14   Section 7.3  
Obligations of the Trustee
    14   Section 7.4  
Responsibilities of the Trustee
    14   Section 7.5  
Books and Records
    15   Section 7.6  
Activity Reports
    15   Section 7.7  
Resignation or Removal of the Trustee; Appointment of Successor Trustee
    15   Section 7.8  
Release of Information
    16   Section 7.9  
Indemnification of the Trustee
    16   Section 7.10  
Charges of the Trustee
    17   Section 7.11  
Limitations of the Trustee
    17   Section 7.12  
Concerning the Trustee
    17  
 
            ARTICLE VIII

 
            TERMINATION

 
            Section 8.1  
Termination
    18   Section 8.2  
Disposition of Assets Upon Termination
    19  
 
            ARTICLE IX

 
            GENERAL PROVISIONS

 
            Section 9.1  
Notices
    19   Section 9.2  
Entire Agreement
    20   Section 9.3  
Waiver and Amendment
    20   Section 9.4  
Successors and Assigns
    20   Section 9.5  
Headings
    20   Section 9.6  
Governing Law and Jurisdiction
    20   Section 9.7  
No Third Party Beneficiaries
    21   Section 9.8  
Counterparts
    21   Section 9.9  
Severability
    21   Section 9.10  
Specific Performance
    21   Section 9.11  
Waiver of Jury Trial
    22   Section 9.12  
Incontestability
    22   Section 9.13  
Set-Off
    22   Section 9.14  
Currency
    23  

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                      Page   ARTICLE X

 
            DISPUTE RESOLUTION

 
            Section 10.1  
Dispute Resolution
    23   Section 10.2  
Negotiation Amongst the Parties
    23   Section 10.3  
Arbitration
    23  
 
            ARTICLE XI

 
            EFFECTIVE DATE AND EXECUTION

 
            Appendix A  
Trust Provisions Following a Reinsurance Credit Event
       

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TRUST AGREEMENT
          THIS TRUST AGREEMENT (this “Trust Agreement”) is made and entered into
as of August 31, 2010, by and among Continental Casualty Company, an Illinois
property and casualty insurance company (“CCC”), The Continental Insurance
Company, a Pennsylvania property and casualty insurance company (“CIC”),
Continental Reinsurance Corporation International, Ltd., a Bermuda long-term
insurance company (“CRCI”), and CNA Insurance Company Limited, a United Kingdom
property and casualty insurance company (“CICL”) (each of CCC, CIC, CRCI and
CICL, a “Beneficiary” and collectively, the “Beneficiaries”), National Indemnity
Company, a Nebraska property and casualty insurance company (the “Grantor”) and
Wells Fargo Bank, National Association, a national banking association, as
trustee (hereinafter referred to as “Trustee”).
          WHEREAS, in accordance with that certain Master Transaction Agreement,
dated July 14, 2010, by and among the Beneficiaries, the Grantor and Berkshire
Hathaway Inc., a Delaware corporation and the ultimate parent company of the
Grantor, the Beneficiaries and the Grantor have entered into that certain Loss
Portfolio Transfer Reinsurance Agreement of even date herewith (the “LPT
Reinsurance Agreement”), whereby, subject to the terms and conditions thereof,
they have agreed that the Beneficiaries will cede to the Grantor, and the
Grantor will reinsure, all liabilities related to asbestos and pollution claims
under the Business Covered;
          WHEREAS, the LPT Reinsurance Agreement contemplates that the Grantor
and the Beneficiaries enter into this Trust Agreement whereby the Grantor
creates a trust to hold assets as security for the satisfaction of the
obligations of the Grantor to the Beneficiaries under this Trust Agreement with
respect to the Business Covered; and
          WHEREAS, the parties intend that, in the event of a Reinsurance Credit
Event, certain provisions of this Trust Agreement shall cease to be effective,
and other provisions shall be effective thereafter, as described in Article III.
          NOW THEREFORE, the Grantor, the Beneficiaries and the Trustee, in
consideration of the mutual covenants contained herein and for other 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:
[Signature Page to the Trust Agreement]

 

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ARTICLE I
DEFINED TERMS
          Section 1.1 Definitions. The following terms, when used in this Trust
Agreement, shall have the meanings set forth in this Section 1.1. The terms
defined below shall be deemed to refer to the singular or plural, as the context
requires.
               (a) “AAA” shall have the meaning ascribed to such term in
Section 10.3(a).
               (b) “Applicable Interest Rate” shall have the meaning ascribed to
such term in the LPT Reinsurance Agreement.
               (c) “Applicable Law” means any domestic or foreign, federal,
state or local statute, law, ordinance or code, or any written rules,
regulations or administrative interpretations issued by any Governmental
Authority pursuant to any of the foregoing, in each case applicable to any party
hereto, and any Order, writ, injunction, directive, judgment or decree of a
court of competent jurisdiction applicable to the parties hereto.
               (d) “Assets” shall mean the assets held in the Trust Account,
including, as applicable, Eligible Investments and Permitted Investments.
               (e) “Beneficiary” and “Beneficiaries” shall have the meaning
ascribed to such term in the Preamble.
               (f) “Business Covered” shall have the meaning ascribed to such
term in the LPT Reinsurance Agreement.
               (g) “Business Day” shall mean any day other than a Saturday,
Sunday or a day on which commercial banks in Illinois or New York are required
or authorized by law to be closed.
               (h) “Code” shall mean the Internal Revenue Code of 1986, as
amended from time to time.
               (i) “Collateral Triggering Agreement” means any agreement entered
into by the Grantor at any time after the date hereof with any party and with an
effective date after the date hereof, which contains a provision requiring the
Grantor to post collateral (whether by the procurement of a letter of credit,
the establishment of a collateral trust or any other means)

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for the benefit of the counterparty to such agreement upon the occurrence of
certain specified events, changes or conditions. For the avoidance of doubt, any
agreement which requires the establishment of collateral at the time such
agreement becomes effective absent any other triggering events shall not be
considered a Collateral Triggering Agreement.
               (j) “Collateral Reduction Event” shall have the meaning ascribed
to such term in Section 2.1(c).
               (k) “Collateral Triggering Event” shall have the meaning ascribed
to such term in Section 2.1(a).
               (l) “Dispute” shall have the meaning ascribed to such term in
Section 10.1.
               (m) “Eligible Investments” shall mean, with respect to Assets
conforming to the provisions of this Trust Agreement prior to the occurrence of
a Reinsurance Credit Event, cash and any investments of the types permitted
under the laws and regulations of Grantor’s domiciliary state for property and
casualty insurance companies; provided, however, that no Eligible Investments
may be issued by an institution that is the parent, subsidiary or affiliate of
the Grantor; and provided, further, no single Eligible Investment (except cash)
shall comprise more than twenty-five percent (25%) of the Assets in the Trust
Account. All Eligible Investments deposited in the Trust Account shall be free
of all liens, charges or encumbrances at the time so deposited.
               (n) “Governmental Authority” shall mean any government, political
subdivision, court, board, commission, regulatory or administrative agency or
other instrumentality thereof, whether federal, state, provincial, local or
foreign and including any regulatory authority which may be partly or wholly
autonomous.
               (o) “Grantor” shall have the meaning ascribed to such term in the
Preamble.
               (p) “Inception Date” shall have the meaning ascribed to such term
in the LPT Reinsurance Agreement.
               (q) “Initial Reconciliation Statement” shall have the meaning
ascribed to such term in the LPT Reinsurance Agreement.
               (r) “Initial Security Amount” shall have the meaning ascribed to
such term in Section 4.1.

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               (s) “Insurance Commissioner” shall mean the Governmental
Authority responsible for the regulation of insurance companies in the
jurisdiction in which the Beneficiary is domiciled.
               (t) “LPT Limit” shall have the meaning ascribed to such term in
the LPT Reinsurance Agreement.
               (u) “LPT Reinsurance Agreement” shall have the meaning ascribed
to such term in the Recitals.
               (v) “Permitted Investments” shall mean, with respect to Assets
conforming to the provisions of this Trust Agreement upon the occurrence of a
Reinsurance Credit Event, cash and any investments of the types permitted under
the laws and regulations of the Beneficiary’s domiciliary state or country for
trusts providing full statutory financial statement credit for reinsurance ceded
by property and casualty insurance companies, provided, however, that no
Permitted Investments may be issued by an institution that is the parent,
subsidiary or affiliate of the Grantor. All Permitted Investments deposited in
the Trust Account shall be free of all liens, charges or encumbrances at the
time so deposited.
               (w) “Order” means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
               (x) “Quarterly Certification” shall have the meaning ascribed to
such term in Section 5.3.
               (y) “Reinsurance Credit Event” shall mean any financial
impairment of the Grantor that results in any Beneficiary being unable to obtain
full statutory financial statement credit for the reinsurance provided by the
LPT Reinsurance Agreement in any applicable United States jurisdiction at any
point in time during the term of the LPT Reinsurance Agreement.
               (z) “Reinsurance Credit Event Certification” shall have the
meaning ascribed to such term in Section 3.1(a).
               (aa) “Reinsurance Credit Event Trust Accounts” shall have the
meaning ascribed to such term in Section 3.1(d).
               (bb) “Reinsurance Credit Event Trust Agreements” shall have the
meaning ascribed to such term in Section 3.1(c).

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               (cc) “Reinsurance Premium” shall have the meaning ascribed to
such term in the LPT Reinsurance Agreement.
               (dd) “Reinsured Contracts” shall have the meaning ascribed to
such term in the LPT Reinsurance Agreement.
               (ee) “Reinsured Liabilities” shall have the meaning ascribed to
such term in the LPT Reinsurance Agreement.
               (ff) “Required Amount” shall mean an amount equal to the least of
(i) the aggregate gross Reserves of the applicable Beneficiary (including
reserves for losses incurred but not reported) calculated in accordance with SAP
with respect to the Business Covered; (ii) the LPT Limit less the Ultimate Net
Loss paid in respect of the applicable Beneficiary; and (iii) the LPT Limit less
the Ultimate Net Loss paid.
               (gg) “Reserves” shall mean, as required by SAP or Applicable Law
of the jurisdiction of domicile of any entity, reserves, funds or provisions for
losses, claims, unearned premiums, benefits, costs and expenses (including
allocated loss adjustment expenses) in respect of the Business Covered.
               (hh) “Rules” shall have the meaning ascribed to such term in
Section 10.3(a).
               (ii) “SAP” shall mean, as to any entity, the statutory accounting
principles prescribed or permitted by the Governmental Authority responsible for
the regulation of insurance companies in the jurisdiction in which such entity
is domiciled.
               (jj) “Security Amount” shall mean, (i) prior to the occurrence of
a Collateral Triggering Event, an amount equal to the Initial Security Amount
minus any Ultimate Net Loss paid by the Grantor under the LPT Reinsurance
Agreement as of the date of calculation of the Security Amount; and (ii) on and
after the occurrence of a Collateral Triggering Event, an amount equal to the
lesser of (A) the aggregate gross Reserves of the Beneficiaries (including
reserves for losses incurred but not reported) calculated in accordance with SAP
with respect to the Business Covered, and (B) the LPT Limit less the Ultimate
Net Loss paid.
               (kk) “Third Party Appraiser” shall mean an independent appraisal
firm which is mutually acceptable to the Grantor and the Beneficiaries, or, if
Grantor and Beneficiaries cannot agree on such an appraisal firm, an independent
appraisal firm selected by the parties’ respective accountants.

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               (ll) “Trust” shall mean the trust formed hereunder, including
such trust following a Reinsurance Credit Event.
               (mm) “Trust Account” shall have the meaning ascribed to such term
in Section 4.1(a).
               (nn) “Trust Agreement” shall have the meaning ascribed to such
term in the Preamble.
               (oo) “Trustee” shall have the meaning ascribed to such term in
the Preamble.
               (pp) “Ultimate Net Loss” shall have the meaning ascribed to such
term in the LPT Reinsurance Agreement.
          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. The Article and Section headings contained in this Trust Agreement are
solely for the purpose of reference, are not part of the agreement of the
parties and shall not affect in any way the meaning or interpretation of this
Trust Agreement. 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 and
to both the masculine as well as the feminine and neuter genders of such term.
Any agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes. Where
a word or phrase is defined herein, each of its other grammatical forms shall
have a corresponding meaning. References to a person are also to its successors
and permitted assigns.

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ARTICLE II
MODIFICATION UPON A COLLATERAL TRIGGERING EVENT
          Section 2.1 Collateral Triggering Event.
               (a) If, at any time after the date hereof, the Grantor is
required to post collateral pursuant to the terms of one or more Collateral
Triggering Agreements as a result of the occurrence of one or more events,
changes or conditions specified in such agreements, and the amount of collateral
required to be posted by the Grantor pursuant to such Collateral Triggering
Agreement(s) is reasonably expected by the Grantor to equal, either on an
individual or aggregate basis, one billion dollars ($1,000,000,000) or more
(such event, the “Collateral Triggering Event”), then the Grantor shall promptly
notify the Beneficiaries of the Collateral Triggering Event and take the
following additional actions as set forth in this Section 2.1.
               (b) Upon the occurrence of a Collateral Triggering Event, all
references in this Trust Agreement to “Security Amount” shall be modified in
accordance with its definition to give effect to the Collateral Triggering
Event. In addition, as soon as is practicable, but no later than
contemporaneously with the posting of the collateral under any Collateral
Triggering Agreement that results in the Grantor posting one billion dollars or
more of collateral either on an individual or aggregate basis, the Grantor shall
deposit such additional assets into the Trust Account so that the aggregate fair
market value of the Eligible Investments in the Trust Account equals the newly
computed Security Amount.
               (c) Until such time as (i) the events, changes or conditions that
gave rise to the collateral requirement under one or more of the Collateral
Triggering Agreements cease to exist or apply and (ii) the Grantor has withdrawn
or reduced the aggregate amount of collateral posted under Collateral Triggering
Agreements ((i) and (ii) together, the “Collateral Reduction Event”), the
Grantor shall ensure that the Trust Account shall hold Eligible Investments at
all times with a fair market value of no less than 100% of the Security Amount
(as defined in clause (ii) of Section 1.1(jj)); provided, however, if a
Collateral Reduction Event has occurred, the Security Amount shall be reduced by
a percentage which is proportionate to each percentage reduction of all
collateral posted under the Collateral Triggering Agreements; provided, further,
however, in no event shall the Security Amount be reduced to an amount less than
100% of the Security Amount (as defined in clause (i) of Section 1.1(jj)).
ARTICLE III
MODIFICATION UPON A REINSURANCE CREDIT EVENT
          Section 3.1 Reinsurance Credit Event.
               (a) Notwithstanding anything in this Trust Agreement to the
contrary, in the event the Beneficiaries provide a written notice to the Trustee
(and contemporaneous notice to the Grantor) certifying that a Reinsurance Credit
Event has occurred (such notice, the “Reinsurance Credit Event Certification”),
upon receipt of such certification by the Trustee, the provisions set forth in
Sections 4.1, 4.2, 5.1(a), 5.3, 6.1, 6.2, 6.3, 7.4, 7.5, 7.8, 7.11 and 9.2
hereof shall automatically be replaced by the provisions set forth in Appendix A
hereof for the equivalent Sections and thereafter not be effective, and the
provisions set forth in Appendix A shall automatically become effective without
further action by any party. In addition, any other

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provisions required under Applicable Law and regulations governing trusts
providing full statutory financial statement credit for reinsurance ceded by
property and casualty insurance companies in the United States to the extent
applicable to CCC and CIC, shall be incorporated herein. Notwithstanding the
foregoing, the Trust created hereunder shall continue in existence. Furthermore,
the Reinsurance Credit Event Certification may, but shall not be required to,
name either CCC or CIC as the sole Beneficiary of the Trust following a
Reinsurance Credit Event. If the Reinsurance Credit Event Certification names
either CCC or CIC as the sole Beneficiary of the Trust, then for purposes of the
Trust following a Reinsurance Credit Event, all references to the term
“Beneficiary” or “Beneficiaries” shall mean either CCC or CIC, as set forth in
the Reinsurance Credit Event Certification. The choice as to which of CCC or CIC
shall be named as the sole Beneficiary of the Trust following a Reinsurance
Credit Event shall be made by the Beneficiaries in their sole discretion at the
time the Beneficiaries become aware that a Reinsurance Credit Event has
occurred.
               (b) Following a Reinsurance Credit Event, the Grantor shall be
required to replace the Assets held in the Trust Account which are not Permitted
Investments for Assets which are Permitted Investments within five (5) Business
Days following the receipt by the Grantor of the Reinsurance Credit Event
Certification. Simultaneously with such replacement of the Assets, the Grantor
shall either: (i) deposit into the Trust Account sufficient additional Assets so
that the aggregate fair market value of the Permitted Investments in the Trust
Account equals the Required Amount or (ii) withdraw from the Trust Account, to
the extent the aggregate fair market value of the Permitted Investments in the
Trust Account exceeds 100% of the Required Amount, Assets equal to such excess
amount; provided, however, with respect to the withdrawal referenced in clause
(ii), all such withdrawn Assets shall be deposited promptly into one or more of
the new trust accounts established pursuant to the Reinsurance Credit Event
Trust Agreements referenced in subparagraph (c) of this Section 3.1.
               (c) If the Reinsurance Credit Event Certification names either
CCC or CIC as the sole Beneficiary of the Trust following a Reinsurance Credit
Event, then within five (5) Business Days following the receipt by the Grantor
of the Reinsurance Credit Event Certification, the Grantor and the Trustee shall
enter into separate trust agreements with each of the remaining Beneficiaries
not named as the sole Beneficiary in the Reinsurance Credit Event Certification
(such trust agreements, the “Reinsurance Credit Event Trust Agreements”). The
Reinsurance Credit Event Trust Agreements shall contain provisions substantially
similar to the provisions set forth in this Trust Agreement (after incorporation
of the provisions set forth in Appendix A hereof), as well as any other
provisions and modifications required under the laws and regulations of the
applicable domiciliary state or country of the remaining Beneficiaries for
trusts providing full statutory financial statement credit for reinsurance ceded
by property and casualty insurance companies.
               (d) The trust account or accounts established pursuant to the
Reinsurance Credit Event Trust Agreements (“Reinsurance Credit Event Trust
Accounts”) shall initially be funded by such Permitted Investments from the
Trust Account that represent the percentage of the remaining value of Assets
reflecting the portion of the Reinsurance Premium

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that was contributed by the applicable Beneficiary, less Ultimate Net Loss paid
in respect of such Beneficiary. In addition to such assets, the Grantor shall
deposit into the Reinsurance Credit Event Trust Accounts sufficient additional
assets so that the aggregate fair market value of each Reinsurance Credit Event
Trust Account equals the applicable Required Amount, provided that the aggregate
fair market value of all Reinsurance Credit Event Trust Account(s) and this
Trust Account shall not exceed an amount equal to the LPT Limit less Ultimate
Net Loss paid. The Reinsurance Credit Event Trust Accounts shall be funded with
Permitted Investments only.
               (e) The provisions set forth in Appendix A shall remain
effective, and the Reinsurance Credit Event Trust Accounts shall remain in place
only for the time, and only to the extent, required to address the event, change
or condition giving rise to the Reinsurance Credit Event. Each Beneficiary
agrees that in the event that the Reinsurance Credit Event ceases to exist or
apply, each Beneficiary shall promptly provide its approval for the termination
of the respective Reinsurance Credit Event Trust Accounts and for the return of
all assets to the Grantor; provided however, the fair market value of the
Permitted Investments transferred from the Trust Account to the Reinsurance
Credit Event Trust Accounts less Ultimate Net Loss paid on behalf of the
Beneficiaries since such transfer shall be transferred to the Trust Account. In
addition, to the extent that the obligations of the Grantor to provide security
diminish, each Beneficiary shall provide its approval for the reduction of the
Trust Account and the respective Reinsurance Credit Event Trust Accounts.
ARTICLE IV
CREATION OF TRUST ACCOUNT
          Section 4.1 Obligations of the Beneficiaries and the Grantor.
               (a) Prior to the execution of this Trust Agreement, the Grantor
shall have procured with the Trustee, in the name of the Trustee, to be held for
the sole benefit of the Beneficiaries pursuant to the provisions of this Trust
Agreement, a segregated trust account maintained by the Trustee with account
number 80460400 (which shall be hereinafter referred to as the “Trust Account”).
Simultaneously with the execution of this Trust Agreement, (i) the Beneficiaries
shall transfer and assign to such Trust Account, on behalf of the Grantor,
Assets consisting of cash in the aggregate amount of the Reinsurance Premium,
together with interest accrued from the Inception Date at the Applicable
Interest Rate, and (ii) the Grantor shall transfer and assign to such Trust
Account, Assets consisting of cash in the aggregate amount of two hundred
million dollars ($200,000,000). The sum of the amounts referenced in (i) and
(ii) in the foregoing sentence shall be referred to herein as the “Initial
Security Amount”.
               (b) If the Beneficiaries owe any amount to the Grantor resulting
from the adjustment of the Reinsurance Premium as reflected in the Initial
Reconciliation Statement delivered pursuant to Section 2.3 of the Master
Transaction Agreement, the Beneficiaries shall transfer and assign to the Trust
Account, on behalf of the Grantor, assets consisting of cash in the

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amount owed. If the Grantor owes any amount to the Beneficiaries resulting from
the adjustment of the Reinsurance Premium as reflected in the Initial
Reconciliation Statement delivered pursuant to Section 2.3 of the Master
Transaction Agreement, the Grantor shall instruct the Trustee to promptly
withdraw from the Trust Account assets consisting of cash in the amount owed and
transfer such amount to an account of the Beneficiaries in accordance with
written instructions provided by the Beneficiaries at the time of such
withdrawal. The Trustee shall promptly comply with such instruction.
               (c) Unless there is a Collateral Triggering Event, the Grantor
shall not be required to transfer and assign additional assets into the Trust
Account after the date hereof. Upon the occurrence of a Collateral Triggering
Event, however, the Grantor shall transfer and assign such additional assets
into the Trust Account in accordance with Section 2.1(b). Until such time the
condition giving rise to the Collateral Triggering Event ceases to exist or
apply, the Grantor shall ensure that the Trust Account shall hold Eligible
Investments at all times with a fair market value of no less than 100% of the
Security Amount.
          Section 4.2 Purpose of the Trust.
               (a) The Assets in the Trust Account shall be held by the Trustee
for the sole purpose of satisfying any obligations of the Grantor to the
Beneficiaries with respect to the Business Covered under the LPT Reinsurance
Agreement.
               (b) The Grantor grants to the Trustee all trust powers necessary
and reasonable in the performance of its duties hereunder except as otherwise
expressly provided herein.
          Section 4.3 Grantor Trust for United States Federal Income Tax
Purposes. The Trust Account shall be treated as a grantor trust (pursuant to
sections 671 through 677 of the Code) for United States federal income tax
purposes. The Grantor shall constitute the grantor (within the meaning of
sections 671 and 677 of the Code) and, thus, any and all income derived from the
Assets held in the Trust shall constitute income or gain of the Grantor as the
owner of such Assets.
          Section 4.4 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 the
Grantor or the Beneficiaries shall be sufficiently executed if executed in the
name of the Grantor or the Beneficiaries by such officer or officers of Grantor
or Beneficiaries or by such other agent or agents of the Grantor or the
Beneficiaries as may be designated in a resolution of the Board of Directors of
the Grantor or the Beneficiaries or Committee thereof or a letter of advice
issued by the President, Secretary or Treasurer of the Grantor or the
Beneficiaries, as applicable. Written notice of such designation by the Grantor
or the Beneficiaries shall be filed with the Trustee. The Trustee shall be
protected in acting upon any written statement or other instrument made by such
officers or agents of the Grantor or the Beneficiaries with respect to the
authority conferred on it.

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          Section 4.5 Title to Assets. Title to any Assets transferred by the
Grantor to the Trustee for deposit to the Trust Account will be recorded in the
name of the Trustee. The out-of-pocket costs of transfers of title between the
Grantor and the Trustee shall be shared equally by the Grantor and the
Beneficiaries, and the Grantor shall use reasonable efforts to limit such costs.
The Beneficiaries shall not have legal title to any part of the Assets, but
shall have an undivided beneficial interest in all Assets.
ARTICLE V
MAINTENANCE OF THE TRUST
          Section 5.1 Substitution of Trust Account Assets.
               (a) The Grantor may, from time to time, substitute or exchange
Assets contained in the Trust Account, provided, however, (i) the Assets so
substituted or exchanged must be Eligible Investments, (ii) after giving effect
to such substitution, the fair market value of the newly deposited Assets are at
least equal to the fair market value of the substituted Assets and (iii) the
replacement Assets to be deposited in the Trust Account in such substitution or
exchange are deposited therein on the day of withdrawal of the substituted or
exchanged Assets. Upon any substitution or exchange as provided for herein, the
Grantor shall certify to the Trustee and Beneficiaries that such substitution or
exchange meets the requirements of this Section 5.1. The Trustee shall act on
the instruction and certification of the Grantor and shall give the
Beneficiaries prompt written notice of any substitution made pursuant hereto.
               (b) The Grantor shall, prior to depositing any Assets into the
Trust Account, and from time to time as required, execute all assignments and
endorsements in blank, or transfer legal title to the Trustee of all shares,
obligations or any other assets requiring assignment in order that the Trustee,
upon direction of the Beneficiaries, may whenever necessary negotiate any such
assets without consent or signature from the Grantor or any other entity.
          Section 5.2 Valuation of Assets. The Grantor shall determine the fair
market value of any Assets in the Trust Account. In making this determination,
the Grantor shall use prices published by a nationally recognized pricing
service for Assets for which such prices are available, and for Assets for which
such prices are not available, the Grantor shall use methodologies consistent
with those which it uses for determining the fair market value of assets held in
its own general account (other than the Assets) in the ordinary course of
business.
          Section 5.3 Quarterly Certification. Within fourteen (14) calendar
days following the end of each calendar quarter, the Grantor shall provide the
Beneficiaries (with a copy to the Trustee) a written certification (the
“Quarterly Certification”) stating the Security Amount as of the calendar
quarter end and the aggregate fair market value of the Eligible Investments held
in the Trust Account as of the calendar quarter end (both on an asset-by-asset
basis and a cumulative basis). Such certification shall separately state the
effect on the fair

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market value of the Assets of withdrawals by the Grantor from the Trust Account
effected during such calendar quarter. As soon as is practicable, but in no
event more than ten (10) Business Days following its receipt of the Quarterly
Certification, CCC, on behalf of the Beneficiaries, shall either (i) countersign
such certification and forward it to the Trustee or (ii) notify the Grantor that
it objects to the Grantor’s calculation of the Security Amount or the Grantor’s
valuation of any Asset. If the parties are able to resolve such dispute within
ten (10) Business Days of CCC’s transmittal to the Grantor of its notice of
objection, they shall promptly forward to the Trustee a jointly signed
certification of the Security Amount. If the parties are unable to resolve such
dispute within ten (10) Business Days of CCC’s transmittal to the Grantor of its
notice of objection, and the dispute relates to the valuation of an Asset, the
value of such Asset shall be determined by a Third Party Appraiser and the
parties shall be bound by such valuation. All other disputes shall be resolved
in accordance with Section 10.1. Upon resolution of such dispute, the parties
shall forward to the Trustee a copy of the corrected Quarterly Certification
setting forth the Security Amount as resolved through such Third Party Appraiser
or arbitration. The Grantor shall, to the extent reasonably necessary or
required in order to verify Grantor’s certification, permit CCC to audit its
records in order to determine its compliance with this Section 5.3. The Grantor
shall cooperate fully with such audit. Access to the Grantor and its employees
by CCC in connection with such audit shall be at reasonable times during regular
business hours upon reasonable prior written notice (including by e-mail) in a
manner which does not unreasonably interfere with the business or operations of
the Grantor.
ARTICLE VI
RELEASE AND ADJUSTMENT OF TRUST ACCOUNT ASSETS
          Section 6.1 Adjustment of Trust Account Assets.
               (a) The Security Amount as of the end of each calendar quarter
shall be certified to the Trustee by the Grantor in the manner set forth in
Section 5.3 hereof.
               (b) Following the occurrence of a Collateral Triggering Event, if
the aggregate fair market value of the Eligible Investments maintained in the
Trust Account as of any calendar quarter end is less than the Security Amount
(computed taking into account the occurrence of the Collateral Triggering Event)
as of such calendar quarter end, then within five (5) Business Days Grantor
shall deposit into the Trust Account such additional Assets with an aggregate
fair market value as are necessary to ensure that the aggregate fair market
value of the Eligible Investments held in the Trust Account is no less than 100%
of the Security Amount as of the immediately prior calendar quarter end.
               (c) If, following a Collateral Triggering Event, the event,
change or condition which gave rise to the collateralization requirement ceases
to exist or apply, then the Security Amount shall thereafter (until the
occurrence of a further Collateral Triggering Event) be computed without regard
to such Collateral Triggering Event.

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          Section 6.2 Release of Trust Account Assets to the Beneficiaries. By
transmittal of prior written notice to the Trustee (with a copy to Grantor),
together with a final order of an arbitration panel or court of competent
jurisdiction, any of the Beneficiaries may withdraw Assets from the Trust
Account to make payment of, or reimburse itself for, any amount which it may be
required to pay under or arising out of the Reinsured Contracts to the extent
relating to the Business Covered; provided that notice of such withdrawal is
provided not less than five (5) Business Days in advance of the requested
withdrawal. The Trustee shall promptly comply with such notice. The Security
Amount shall be reduced by any amount so withdrawn.
          Section 6.3 Release of Trust Account Assets to the Grantor.
               (a) The Grantor agrees that all proceeds from the sale or
substitution of the Assets in the Trust Account and the collection of interest,
dividends and other income in respect to the Assets in the Trust Account shall
be retained in the Trust Account and shall not be released to the Grantor,
except in accordance with the provisions set forth in subparagraphs (b) and
(c) in this Section 6.3.
               (b) At each calendar quarter end, by transmittal of prior written
notice to the Trustee and contemporaneous notice to the Beneficiaries, the
Grantor may withdraw Assets from the Trust Account in the amount of the Ultimate
Net Loss it has actually paid under the LPT Reinsurance Agreement during such
quarter; provided, however, that in connection with any such withdrawal, the
Grantor shall provide a written certification to the Trustee stating the fair
market value of each non-cash Asset withdrawn. The Trustee shall promptly comply
with such notice.
               (c) Commencing at the fifth anniversary of the date hereof, at
any calendar quarter end following the delivery of the Quarterly Certification
as to which there is no dispute outstanding between the Grantor and the
Beneficiaries, in the event the aggregate fair market value of the Eligible
Investments maintained in the Trust Account exceeds 150% of the gross Reserves
of the Beneficiaries (including reserves for losses incurred but not reported)
calculated in accordance with SAP with respect to the Business Covered as of
such calendar end, then by transmittal of fourteen (14) calendar days’ prior
written notice to the Trustee and the Beneficiaries, the Grantor may direct the
Trustee to withdraw from the Trust Account and transfer to the Grantor Assets
having a fair market value equal to the amount of such excess; provided,
however, following a Collateral Triggering Event, the Grantor shall be permitted
to withdraw Assets from the Trust Account pursuant to this Section 6.3(c) only
to the extent that the aggregate fair market value of the Eligible Investments
remaining in the Trust Account after such withdrawal is not less than 100% of
the Security Amount. The Trustee shall promptly comply with such notice.

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ARTICLE VII
DUTIES OF THE TRUSTEE
          Section 7.1 Acceptance of Assets by the Trustee.
               (a) The Trustee shall not accept any Assets (other than cash) for
deposit into the Trust Account unless the Trustee determines that it is or will
be the registered owner of and holder of legal title to the Assets or that such
Assets are in such form that the Trustee may, if applicable to such asset class,
negotiate any such Assets, without consent or signature from the Grantor or any
other person or entity. Any Assets received by the Trustee which, if applicable
to such asset class, are not in such proper negotiable form or for which title
has not been transferred to the Trustee shall not be accepted by the Trustee and
shall be returned to the Grantor as unacceptable.
               (b) The Trustee and its lawfully appointed successors is and are
authorized and shall have the power to receive such Assets as the Grantor (or
the Beneficiaries on behalf of the 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 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 7.2 Collection of Interest and Dividends; Voting Rights. The
Trustee is hereby authorized, without prior notice to the Grantor or the
Beneficiaries, to demand payment of and collect all interest or dividends on the
Assets comprising the Trust Account if any. All payments of interest, dividends
and other income in respect to Assets in the Trust Account shall be deposited
promptly upon receipt by the Trustee into the Trust Account. Subject to the
other provisions of this Trust Agreement, the Grantor shall have the full and
unqualified right to direct the Trustee to vote, and to execute consents, bond
powers, stock powers, mortgage and title instruments and other instruments of
transfer, pledge and release with respect to any Assets comprising the Trust
Account.
          Section 7.3 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.
          Section 7.4 Responsibilities of the Trustee.
               (a) The Trustee, in the administration of the Trust Account, is
to be bound solely by the express provisions herein, and such further written
and signed directions 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 Trust Agreement,
except as otherwise expressly provided or directed pursuant hereto. The Trustee

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shall be restricted to holding title to, operating and collecting the Assets
comprising the Trust Account and the payment and distribution thereof for the
purposes set forth in this Trust Agreement and to the conservation and
protection of such Assets and the administration thereof in accordance with the
provisions of this Trust Agreement, and the Trustee shall be liable only for its
own negligence, willful misconduct or lack of good faith and for the breach of
the Trustee’s obligations under this Trust Agreement; provided, however, that
any actions taken in strict accordance with written instructions provided to the
Trustee from the parties hereto will not constitute a breach of the Trustee’s
obligations under this Trust Agreement. Upon request of the Grantor or the
Beneficiaries, the Trustee further agrees promptly to forward to such party a
statement and valuation of all Assets held in the Trust Account.
               (b) Subject to the other provisions of this Trust Agreement,
including the requirement that only Eligible Investments may be held in the
Trust Account, and provisions relating to the substitution of Assets, (i) the
Grantor shall have the irrevocable authority and sole power to direct the
Trustee, in the Grantor’s sole discretion, with respect to all aspects of the
management or investment of the Assets contained in the Trust Account,
including, but not limited to, directing the Trustee to enter into one or more
investment management, advisory, custodial, depository or other agreements of
form and substance specified by the Grantor, with any other person, including
any affiliate of the Grantor, selected by the Grantor and (ii) the Trustee and
the Beneficiaries each acknowledges that it has no authority with respect to
such management or investment activities, the Trustee agrees it will not
exercise any discretion or take any action with respect to the matters in clause
(i) above and the Trustee will take any actions related thereto as directed by
the Grantor in accordance therewith.
          Section 7.5 Books and Records. The Trustee shall keep full and
complete records of the administration of the Trust Account. The Grantor and the
Beneficiaries may examine such records, upon reasonable notice to the Trustee,
at any time during business hours through any person or persons duly authorized
in writing by Grantor or the Beneficiaries, at the requesting party’s expense.
          Section 7.6 Activity Reports. The Trustee agrees to provide an
activity report to the Beneficiary and the Grantor upon creation of the Trust
Account and within five (5) days following receipt of the report from the
Grantor, which report shall, in reasonable detail, show (i) all deposits,
withdrawals and substitutions during such quarter; (ii) a listing of securities
and other assets held and cash balances in the Trust Account as of the last day
of such quarter and (iii) the fair market value (determined in accordance with
Section 5.2) of each Asset held in the Trust Account (other than cash) and the
amount of cash held in the Trust Account as of the last day of such quarter. The
Trustee agrees to provide written notification to the Grantor and the
Beneficiaries within five (5) days of any deposits to or withdrawals from the
Trust Account.
          Section 7.7 Resignation or Removal of the Trustee; Appointment of
Successor Trustee.
               (a) The Trustee may at any time resign as Trustee and terminate
its capacity hereunder by delivery of written notice of resignation, effective
not less than ninety (90)

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days after receipt by both the Beneficiaries and the Grantor. The Trustee may be
removed by the Grantor by (i) delivery to the Trustee and the Beneficiaries of a
written notice of removal, effective not less than ninety (90) days after
receipt by the Trustee and the Beneficiaries of the notice and (ii) receipt of
the Beneficiaries’ consent to such action, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, 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 by the Grantor and approved by the
Beneficiaries 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 of resignation, shall undertake to obtain the agreement of a qualified,
successor depository, agreeable to the Beneficiaries, to act as a successor
Trustee in accordance with all agreements of the Trustee herein and upon duly
qualifying to act as such pursuant to Section 7.7(b). The Beneficiaries agree
not to withhold unreasonably approval of such Trustee. Upon the Trustee’s
delivery of the Assets to the qualified, successor depository, along with a
closing statement showing all activities from the last quarterly report, the
Trustee shall be discharged of further responsibilities hereunder, subject to
any remaining obligations under Sections 7.4 and 7.7(b).
               (b) Any successor Trustee appointed hereunder shall execute an
instrument accepting such appointment hereunder and shall deliver the same to
the Grantor and to the then acting Trustee. Thereupon such successor Trustee
shall, without any further act, become vested with all the estates, properties,
rights, powers, trusts and duties of its predecessor in the Trust with like
effect as if originally named herein; but the predecessor Trustee shall
nevertheless, when requested in writing by the successor Trustee, execute an
instrument or instruments conveying and transferring to the Trustee upon the
Trust herein all the estates, properties, rights, powers and trusts of such
predecessor Trustee, and shall duly assign, transfer and deliver to the Trustee
all property and money held by such predecessor hereunder. The predecessor
Trustee shall be entitled to reimbursement in accordance with Section 7.10 for
all expenses it incurs in connection with the settlement of its accounts and the
transfer and delivery of the Trust assets to its successor. The predecessor
Trustee shall continue to be indemnified by reason of such entity being or
having been a Trustee in accordance with Section 7.9.
          Section 7.8 Release of Information. The Trustee shall promptly respond
to any and all reasonable requests for information concerning the Trust Account
or the Assets held therein by any of the parties to this Trust Agreement.
Furthermore, the Trustee shall fully and completely respond to any direct
inquiries of any applicable regulatory authority with jurisdiction over the
Grantor or any of the Beneficiaries concerning the Trust Account or the Assets
held hereunder, including detailed inventories of securities or funds, and the
Trustee shall permit such regulatory authority to examine and audit all
securities or funds held hereunder. The Trustee shall promptly provide notice to
the Beneficiaries and the Grantor concerning all such inquiries, and shall
provide seven (7) days’ prior notice to the Beneficiaries and the Grantor of all
such examinations and audits.
          Section 7.9 Indemnification of the Trustee. In consideration of the
Trustee’s acceptance of this Trust Agreement, if the Trustee renders any service
not provided for in this Trust Agreement, the Grantor and the Beneficiary shall,
severally and not jointly, reasonably compensate the Trustee for such
extraordinary services, reimburse the Trustee for all reasonable

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costs, attorneys’ fees and expenses occasioned thereby, and indemnify, defend
and hold the Trustee (and its directors, officers and employees) harmless from
and against any loss, liability, damage, cost and expense of any nature arising
out of or in connection with this Trust Agreement or with the performance of its
duties hereunder, including, among other things, reasonable attorneys’ fees and
court costs, except to the extent such loss, liability, damage, cost and expense
shall be caused by the Trustee’s own negligence, willful misconduct or lack of
good faith. Whenever an action by the Trustee is authorized by written signed
direction pursuant to the provisions of this Trust Agreement and such action is
taken strictly in accordance with such written and signed direction by the
appropriate party or parties, the party or parties authorizing such action
hereby agree to indemnify the Trustee against all losses, damages, costs and
expenses, including reasonable attorneys’ fee, resulting from any action so
taken by the Trustee. The provisions of this paragraph shall survive the
termination of this Trust Agreement and the resignation or removal of the
Trustee for any reason.
          Section 7.10 Charges of the Trustee. The Grantor agrees to pay all
reasonable costs or fees charged by the Trustee for acting as the Trustee
pursuant to this Trust Agreement, as agreed between the Grantor and the Trustee,
including fees incurred by the Trustee for legal services deemed reasonably
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
held in or credited to the Trust Account.
          Section 7.11 Limitations of the Trustee. The Trustee shall in no way
be responsible for determining the amount of Assets required to be deposited, or
monitoring whether or not the Assets held within the Trust Account are Eligible
Investments. The Trustee shall be under no liability for any release of Assets
made by it to the Grantor in accordance with Article VI.
          Section 7.12 Concerning the Trustee.
               (a) No provision in this Trust Agreement shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers.
               (b) The Trustee shall be entitled to rely on advice of or on an
opinion of counsel concerning all matters of trust and its duty hereunder and
shall not be liable for any action taken or not taken by it in reliance on such
advice or on such opinion of counsel.
               (c) The Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution notice,
request, consent, certificate, order, entitlement order, affidavit, letter,
telegram, facsimile transmission, electronic mail or other paper or document
believed by it to be genuine and to have been signed or sent by the proper
person or persons. The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, notice, consent, request,
certificate, order, entitlement order, affidavit, letter, telegram, facsimile
transmission, electronic mail or other paper or document.

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               (d) The permissive right of the Trustee to take action enumerated
in this Trust Agreement shall not be construed as a duty and it shall not be
answerable for other than its negligence, willful misconduct or lack of good
faith. In no event shall the Trustee be liable for indirect, special,
incidental, punitive or consequential losses or damages, including but not
limited to lost profits, whether or not foreseeable, even if the Trustee has
been advised of the possibility thereof.
               (e) The Trustee shall not be required to give any bond or surety
in respect of the execution of the said trusts and powers or otherwise in
respect of the Assets.
               (f) The Trustee shall not be accountable for the use or
application by the Grantor or any Beneficiary or any other party of Assets which
the Trustee has released in accordance with the terms of this Trust Agreement.
               (g) The Trustee makes no representations as to the validity or
sufficiency of the Assets and the Trust Account for any particular purpose and
shall incur no responsibility in respect thereof, other than in connection with
the duties or obligations assigned to or imposed upon it as provided herein.
               (h) The Trustee shall not be responsible for the perfection,
priority or enforceability of any lien or security interest in any of the Assets
or in the Trust Account.
               (i) In accepting the trust hereby created, the Trustee acts
solely as trustee and not in its individual capacity, and all persons having any
claim against the Trustee arising from this Trust Agreement, shall look only to
the Assets held by the Trustee hereunder for payment except as otherwise
provided herein.
               (j) The Trustee shall not be considered in breach of or in
default in its obligations hereunder in the event of delay in the performance of
such obligations due to unforeseeable causes beyond its control (including, but
not limited to, any act or provision of any present or future law or regulation
or governmental authority, any act of God or war, civil unrest, local or
national disturbance or disaster, any act of terrorism, or the unavailability of
the Federal Reserve Bank wire or other wire or communication facility) or
without its willful misconduct, negligence or lack of good faith.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Trust Agreement may not be terminated by the
Grantor unless the Grantor has obtained, and the Trustee has received, a written
consent signed

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by the General Counsel of CCC to terminate this Trust Agreement. The
Beneficiaries shall provide their consent to the termination of this Trust
Agreement if the Grantor seeks to terminate this Trust Agreement as a result of
the exhaustion of the LPT Limit.
          Section 8.2 Disposition of Assets Upon Termination. Upon a termination
pursuant to this Article VIII, the Trustee shall distribute all Assets held and
deposited under this Trust Agreement, subject to the written approval of the
Beneficiaries, to the Grantor 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
Grantor or as otherwise directed by the Grantor.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Notices. Any notice, request, demand, waiver, consent, approval or
other communication required or permitted to be given by any party under this
Trust Agreement shall be in writing and shall be delivered personally, sent by
facsimile transmission, sent by registered or certified mail, postage prepaid,
or sent by a standard overnight courier of national reputation with written
confirmation of delivery. Any such notice shall be deemed given when so
delivered personally, or if sent by facsimile transmission, on written
confirmation of receipt, or if mailed, on the date shown on the receipt
therefor, or if sent by overnight courier, on the date shown on the written
confirmation of delivery. Such notices shall be given to the following
addresses:

     
If to the Trustee:
  Wells Fargo Bank, National Association
 
  5 Broadway, 14th floor
 
  New York, New York 10006
 
  Attention: Stephen Bruce
 
  Facsimile: (212) 509-1716
 
   
If to the Grantor:
  National Indemnity Company
 
  100 First Stamford Place
 
  Stamford, CT 06902
 
  Attention: General Counsel
 
  Fax: 203-363-5221
 
   
With a copy to:
  National Indemnity Company
 
  3024 Harney Street
 
  Omaha, NE 68131
 
  Attention: Treasurer
 
  Fax: 402-916-3030
 
   
If to the Beneficiaries:
  CNA Financial Corporation
 
  333 S. Wabash Avenue
 
  Chicago, IL 60604
Attention: Jonathan D. Kantor

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  Executive Vice President,
 
  General Counsel and Secretary
 
  Fax: 312-817-0511
 
   
With a copy to:
  CNA Financial Corporation
 
  333 S. Wabash Avenue
 
  Chicago, IL 60604
 
  Attention: Michael P. Warnick
 
  Senior Vice President and
 
  Deputy General Counsel
 
  Fax: 312-755-2479

Each party to this Trust Agreement may change its notice provisions on fifteen
(15) calendar days’ advance notice in writing to the other parties to this Trust
Agreement.
          Section 9.2 Entire Agreement. Subject to the provisions of
Section 7.4(a), this Trust Agreement, including Appendix A hereto, the LPT
Reinsurance Agreement and any other documents delivered pursuant hereto or
thereto, constitute the entire agreement among the parties hereto and their
respective affiliates with respect to the subject matter hereof and supersede
all prior negotiations, discussions, writings, agreements and understandings,
oral and written, among the parties hereto with respect to the subject matter
hereof and thereof.
          Section 9.3 Waiver and Amendment. This Trust Agreement and the Trust
created hereunder shall be irrevocable, subject solely to the termination
provisions set forth herein. The Grantor shall have no right or power in any
capacity to revoke, terminate or, except as provided in Section 3.1, alter or
amend any terms of this Trust Agreement, in whole or in part, without the prior
written consent of the Beneficiaries and the Trustee. Notwithstanding the
foregoing, this Trust Agreement may be altered, amended or terminated at any
time by written agreement executed by each party hereto. The Beneficiaries’
failure at any time to exercise any of the rights or powers conferred upon them
herein shall constitute neither a waiver of their right to exercise, nor stop
them 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 9.4 Successors and Assigns. The rights and obligations of a
party under this Trust Agreement shall not be subject to assignment without the
prior written consent of the other parties hereto, and any attempted assignment
without the prior written consent of the other parties hereto shall be invalid
ab initio. The terms of this Trust Agreement shall be binding upon, inure to the
benefit of and be enforceable by and against the successors and permitted
assigns of the parties hereto. Notwithstanding the foregoing, any corporation or
association into which the Trustee may be merged or converted, or with which it
may be consolidated, or to which it may sell or transfer all or substantially
all of its corporate trust business shall be the successor to the Trustee
without the execution or filing of any paper or further act.
          Section 9.5 Headings. The headings of this Trust Agreement are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
          Section 9.6 Governing Law and Jurisdiction. This Trust Agreement shall
be governed by and construed in accordance with the laws of the State of New
York without regard

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to such state’s principles of conflict of laws that could compel the application
of the laws of another jurisdiction. SUBJECT TO ARTICLE X, ANY SUIT, ACTION OR
PROCEEDING TO COMPEL ARBITRATION OR FOR TEMPORARY INJUNCTIVE RELIEF IN AID OF
ARBITRATION OR TO PRESERVE THE STATUS QUO PENDING THE APPOINTMENT OF THE
ARBITRATOR(S) SHALL BE BROUGHT BY THE PARTIES HERETO SOLELY IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, PROVIDED THAT IF SAID
COURT DETERMINES THAT IT DOES NOT HAVE SUBJECT MATTER JURISDICTION THEN SAID
ACTIONS MAY BE BROUGHT IN THE SUPREME COURT OF THE STATE OF NEW YORK FOR NEW
YORK COUNTY; AND EACH OF THE BENEFICIARIES, THE GRANTOR AND THE TRUSTEE EACH
HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS FOR SUCH
PURPOSE AND ANY APPELLATE COURTS THEREOF, EXCEPT THAT ANY FINAL ARBITRAL AWARD
RENDERED IN ACCORDANCE WITH ARTICLE XIV MAY BE ENTERED AND ENFORCED IN ANY COURT
HAVING JURISDICTION OVER ANY PARTY HERETO OR ANY OF ITS ASSETS.
          Section 9.7 No Third Party Beneficiaries. Nothing in this Trust
Agreement is intended or shall be construed to give any person, other than the
parties hereto, any legal or equitable right, remedy or claim under or in
respect of this Trust Agreement or any provision contained herein.
          Section 9.8 Counterparts. This Trust Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument binding upon all of the parties hereto
notwithstanding the fact that all parties hereto are not signatory to the
original or the same counterpart. Each counterpart may consist of a number of
copies hereof each signed by less than all, but together signed by all of the
parties hereto. Each counterpart may be delivered by facsimile transmission,
which transmission shall be deemed delivery of an originally executed document.
          Section 9.9 Severability. Any term or provision of this Trust
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Trust Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Trust Agreement in any
other jurisdiction, so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party hereto. If any provision of this Trust Agreement is so
broad as to be unenforceable, that provision shall be interpreted to be only so
broad as is enforceable. In the event of such invalidity or unenforceability of
any term or provision of this Trust Agreement, the parties hereto shall use
their commercially reasonable efforts to reform such terms or provisions to
carry out the commercial intent of the parties hereto as reflected herein, while
curing the circumstance giving rise to the invalidity or unenforceability of
such term or provision.
          Section 9.10 Specific Performance. Each of the parties hereto
acknowledges and agrees that the other parties hereto would be irreparably
damaged in the event that any of the provisions of this Trust Agreement were not
performed or complied with in accordance with

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their specific terms or were otherwise breached, violated or unfulfilled.
Accordingly, each of the parties hereto agrees that the other parties hereto
shall be entitled to an injunction or injunctions to prevent noncompliance with,
or breaches or violations of, the provisions of this Trust Agreement by the
other parties hereto and to enforce specifically this Trust Agreement and the
terms and provisions hereof in any action instituted in accordance with
Section 9.6, in addition to any other remedy to which such party may be
entitled, at law or in equity. In the event that any action is brought in equity
to enforce the provisions of this Trust Agreement, no party hereto will allege,
and each party hereto hereby waives the defense or counterclaim, that there is
an adequate remedy at law. The parties hereto further agree that (i) by seeking
the remedies provided for in this Section 9.10, a party hereto shall not in any
respect waive its right to seek any other form of relief that may be available
to a party under this Trust Agreement, including monetary damages in the event
that this Trust Agreement has been terminated or in the event that the remedies
provided for in this Section 9.10 are not available or otherwise are not granted
and (ii) nothing contained in this Section 9.10 shall require any party hereto
to institute any action for (or limit any party’s right to institute any action
for) specific performance under this Section 9.10 before exercising any
termination right under Article VIII, nor shall the commencement of any action
pursuant to this Section 9.10 or anything contained in this Section 9.10
restrict or limit any party’s right to terminate this Trust Agreement in
accordance with the terms of Article VIII or pursue any other remedies under
this Trust Agreement that may be available then or thereafter.
          Section 9.11 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS TRUST AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS TRUST AGREEMENT. EACH OF THE PARTIES HERETO HEREBY
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTIES HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTIES WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES
THAT IT HAS BEEN INDUCED TO ENTER INTO THIS TRUST AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED BY THIS TRUST AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
          Section 9.12 Incontestability. In consideration of the mutual
covenants and agreements contained herein, each party hereto does hereby agree
that this Trust Agreement, and each and every provision hereof, is and shall be
enforceable by and between them according to its terms, and each party hereto
does hereby agree that it shall not contest in any respect the validity or
enforceability hereof.
          Section 9.13 Set-Off. Any debts or credits, matured or unmatured,
liquidated or unliquidated, regardless of when they arose or were incurred, in
favor of or against any of the Beneficiaries or the Grantor with respect to this
Trust Agreement are deemed mutual debts or credits, as the case may be, and
shall be set off, and only the net balance shall be allowed or paid.

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          Section 9.14 Currency. All financial data required to be provided
pursuant to the terms of this Trust Agreement shall be expressed in United
States dollars. All payments and all settlements of account between the parties
hereto shall be in United States currency unless otherwise agreed by the parties
hereto.
ARTICLE X
DISPUTE RESOLUTION
          Section 10.1 Dispute Resolution. Notwithstanding anything contained
herein to the contrary, any dispute between the Beneficiary and the Grantor
arising out of or relating to this Trust Agreement or the breach, termination or
validity hereof (“Dispute”) will be first addressed in accordance with the
procedures specified in Section 10.2, and subsequently, if necessary,
Section 10.3, which will be the sole and exclusive procedures for the resolution
of any such Disputes.
          Section 10.2 Negotiation Amongst the Parties.
               (a) The Beneficiaries and the Grantor agree that they shall first
attempt to resolve Disputes by informal in-person discussions and negotiations
of their respective representatives. If a Beneficiary and the Grantor are unable
to resolve any such Dispute through such in-person discussions and negotiations
within thirty (30) calendar days of the day on which either the Beneficiary and
the Grantor receives from the other party or parties written notice of a
Dispute, the Dispute shall be submitted for resolution to a designated executive
officer of each of the Beneficiary and the Grantor with authority to make a
decision. If the designated executive officers are unable to reach a mutually
acceptable resolution within ten (10) calendar days after expiration of such
thirty-day period, on the request of either the Beneficiary or the Grantor, the
Dispute shall be resolved in accordance with subsection (b). All negotiations,
discussions, and communications made or conducted pursuant to the procedures set
forth in this Section 10.2(a) are confidential and will be treated as compromise
and settlement negotiations for purposes of the Federal Rules of Evidence and
any other applicable rules of evidence.
               (b) Upon completion of the dispute resolution process described
in subsection (a) of this Section 10.2 without resolution of the Dispute, either
the Beneficiary or the Grantor may submit the Dispute for resolution in
accordance with Section 10.3.
          Section 10.3 Arbitration.
               (a) Except as provided in Sections 10.1 and 10.2, any Dispute
shall be finally determined by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (“AAA”) then in effect
(the “Rules”), except as modified herein. If the amount in controversy is five
million dollars ($5,000,000) or less (including all claims and counterclaims)
there shall be one arbitrator who shall be agreed upon by the Beneficiary and
the Grantor within twenty (20) calendar days of receipt by respondent(s) of a

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copy of the demand for arbitration. The single arbitrator may not award an
amount greater than five million dollars ($5,000,000) in value under any
circumstances. If the amount in controversy is more than five million dollars
($5,000,000) (including all claims and counterclaims) there shall be three
neutral and impartial arbitrators, one of whom shall be appointed by each of
(i) the Beneficiary, on the one hand and (ii) the Grantor, on the other hand,
within thirty (30) calendar days of receipt by respondent(s) of the demand for
arbitration, and the third arbitrator, who shall chair the arbitral tribunal,
shall be appointed by the party appointed arbitrators within fifteen
(15) calendar days of the appointment of the second arbitrator. If any
arbitrator is not appointed within the time limit provided herein, such
arbitrator shall be appointed by the AAA in accordance with the listing,
striking and ranking procedure in the Rules, with each of the Beneficiary and
the Grantor being given a limited number of strikes, except for cause. Any
arbitrator appointed by the AAA shall be a retired federal or state appellate
court judge or a current or retired officer of an insurance company with no less
than fifteen (15) years of experience in the property casualty insurance
industry. The arbitration hearing on the merits shall be commenced within ninety
(90) calendar days of the appointment of the arbitrator(s) or as soon thereafter
as practicable. In rendering an award, the arbitral tribunal shall be required
to follow the laws of the State of New York. The award shall be in writing and
shall briefly state the findings of fact and conclusions of law on which it is
based. The arbitrator(s) shall be permitted to award any relief permitted under
New York law, including damages and any form of temporary or permanent
injunctive relief, but shall not be permitted to award special, indirect,
punitive or incidental damages or damages for lost profits or any other
consequential damages or damages based on multiples or similar valuation
techniques. The award shall be final and binding upon the Beneficiary and the
Grantor and shall be the sole and exclusive remedy between the Beneficiary and
the Grantor regarding any claims, counterclaims, issues or accounting presented
to the arbitrator(s). Judgment upon the award may be entered in any court having
jurisdiction over the Beneficiary and the Grantor or any of their respective
assets. Any costs or fees (including attorneys’ fees and expenses) incident to
enforcing the award shall be charged against the Beneficiary and the Grantor
resisting such enforcement. Arbitrability of any and all disputes shall be
decided by the arbitrator(s). In the event of any inconsistency between the
Rules and the provisions of this Article X, the provisions of this Article X
shall control.
               (b) Arbitration hereunder shall be conducted in Chicago, Illinois
or New York, New York, as determined by the party against whom the arbitration
is demanded.

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ARTICLE XI
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
with an effective date of: August 31, 2010.

 
CONTINENTAL CASUALTY COMPANY, as Beneficiary
    By:   /s/ Lawrence J. Boysen         Title: Senior Vice President and
Corporate Controller   

         Date: August 25, 2010

                  Attest:  /s/ Mary A. Ribikawskis         Title: Assistant Vice
President and Assistant Secretary      Date: August 25, 2010     

  THE CONTINENTAL INSURANCE COMPANY, as Beneficiary
      By:   /s/ Lawrence J. Boysen         Title: Senior Vice President and
Corporate Controller      Date: August 25, 2010     

                  Attest:  /s/ Mary A. Ribikawskis         Title: Assistant Vice
President and Assistant Secretary        Date: August 25, 2010     

 
CONTINENTAL REINSURANCE CORPORATION INTERNATIONAL, LTD., as Beneficiary
    By:   /s/ Lawrence J. Boysen         Title: Chairman of the Board and
President        Date: August 25, 2010     

[Signature Page to the Trust Agreement]

 

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                  Attest:  /s/ Mary A. Ribikawskis         Title: Assistant Vice
President and Assistant Secretary      Date: August 25, 2010     

 
CNA INSURANCE COMPANY LIMITED, as Beneficiary
    By:   /s/ Lawrence J. Boysen         Title: Authorized Representative       
Date: August 25, 2010     

                  Attest:  /s/ Stephen Baker         Title: Company Secretary   
  Date: August 27, 2010     

 
NATIONAL INDEMNITY COMPANY, as Grantor
    By:   /s/ Brian Snover         Title: VP        Date: August 26, 2010     

            Attest:  Kara Raiguel        Title:  Vice President      Date: 
August 26, 2010    

 
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee
    By:   /s/ Stephen M. Bruce         Title: Vice President, Wells Fargo Bank,
N.A., Insurance Trust        Date:     

                  Attest:  /s/ Donny Tong         Title: Vice President     
Date: August 25, 2010     

[Signature Page to the Trust Agreement]

 

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APPENDIX A
TRUST PROVISIONS FOLLOWING A REINSURANCE CREDIT EVENT
          In accordance with Article III of this Trust Agreement, upon the
occurrence of a Reinsurance Credit Event, the provisions set forth in this
Appendix A shall automatically replace the provisions of the equivalent Sections
in this Trust Agreement and become effective.
          Section 4.1 Continuing Obligation of the Grantor.
               (a) The segregated trust account maintained by the Trustee with
account number 80460400 (which shall be hereinafter referred to, including all
successor accounts thereto, as the “Trust Account”) shall continue in existence
upon the occurrence of a Reinsurance Credit Event with a single Beneficiary and
the substitution of Assets as required under Section 3.1 of this Trust
Agreement.
               (b) The Grantor shall ensure that the Trust Account shall hold
Permitted Investments at all times with a fair market value of no less than 100%
of the Required Amount, as determined in accordance with Section 7.6 of this
Trust Agreement.
          Section 4.2 Purpose of the Trust. The Assets in the Trust Account
shall be held by the Trustee for the sole benefit of the Beneficiary. The
Grantor grants to the Trustee all trust powers necessary and reasonable in the
performance of its duties hereunder except as otherwise expressly provided
herein.
          Section 5.1 (a) Substitution of Trust Account Assets. Upon receipt of
the prior written consent of the Beneficiary, the Grantor may, from time to
time, substitute or exchange Assets contained in the Trust Account, provided,
however, (i) the Assets so substituted or exchanged must be Permitted
Investments, (ii) after giving effect to such substitution, the fair market
value of the newly deposited Assets are at least equal to the fair market value
of the substituted Assets and (iii) the replacement Assets to be deposited in
the Trust Account in such substitution or exchange are deposited therein on the
day of withdrawal of the substituted or exchanged Assets. Upon any substitution
or exchange as provided for herein, the Grantor shall certify to the Trustee and
Beneficiary that such substitution or exchange meets the requirements of this
Section 5.1. The Trustee shall act on the instruction and certification of the
Grantor and shall give the Beneficiary prompt written notice of any substitution
made pursuant hereto.
          Section 5.3 Quarterly Certification. Within fourteen (14) calendar
days following the end of each calendar quarter, the Grantor shall provide the
Beneficiary (with a copy to the Trustee) a written certification (the “Quarterly
Certification”) stating the Required Amount as of the calendar quarter end and
the aggregate fair market value of the Permitted

 

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Investments held in the Trust Account as of the calendar quarter end (both on an
asset-by-asset basis and a cumulative basis). Such certification shall
separately state the effect on the fair market value of the Assets of
withdrawals by the Grantor from the Trust Account effected during such calendar
quarter. As soon as is practicable, but in no event more than ten (10) Business
Days following its receipt of the Quarterly Certification, the Beneficiary shall
either (i) countersign such certification and forward it to the Trustee or
(ii) notify the Grantor that it objects to the Grantor’s calculation of the
Required Amount or the Grantor’s valuation of any Asset. If the parties are able
to resolve such dispute within ten (10) Business Days of the Beneficiary’s
transmittal to the Grantor of its notice of objection, they shall promptly
forward to the Trustee a jointly signed certification of the Required Amount. If
the parties are unable to resolve such dispute within ten (10) Business Days of
the Beneficiary’s transmittal to the Grantor of its notice of objection, and the
dispute relates to the valuation of an Asset, the value of such Asset shall be
determined by a Third Party Appraiser and the parties shall be bound by such
valuation. All other disputes shall be resolved in accordance with Section 10.1
of this Trust Agreement. Upon resolution of such dispute, the parties shall
forward to the Trustee a copy of the corrected Quarterly Certification setting
forth the Required Amount as resolved through such Third Party Appraiser or
arbitration. The Grantor shall, to the extent reasonably necessary or required
in order to verify Grantor’s certification, permit the Beneficiary to audit its
records in order to determine its compliance with this Section 5.3. The Grantor
shall cooperate fully with such audit. Access to the Grantor and its employees
by the Beneficiary in connection with such audit shall be at reasonable times
during regular business hours upon reasonable prior written notice (including by
e-mail) in a manner which does not unreasonably interfere with the business or
operations of the Grantor.
          Section 6.1 Adjustment of Trust Account Assets.
               (a) The Required Amount as of the end of each calendar quarter
shall be certified to the Trustee by the Grantor in the manner set forth in
Section 5.3 hereof.
               (b) If the aggregate fair market value of the Permitted
Investments maintained in the Trust Account as of any calendar quarter end is
less than the Required Amount as of such calendar quarter end, then within five
(5) Business Days of its receipt of the certification set forth in Section 5.3,
the Grantor shall deposit into the Trust Account such additional Assets with an
aggregate fair market value as are necessary to ensure that the aggregate fair
market value of the Permitted Investments held in the Trust Account is no less
than 100% of the Required Amount as of the immediately prior calendar quarter
end.
          Section 6.2 Release of Trust Account Assets to the Beneficiary.
               (a) Notwithstanding anything in this Trust Agreement to the
contrary, the Beneficiary shall have the right to withdraw Assets from the Trust
Account at any time, without notice to the Grantor, subject only to written
notice to the Trustee from the Beneficiary given in accordance with Section 9.1
of this Trust Agreement. Other than such notice, no other statement or document
need be presented by the Beneficiary to withdraw such Assets except that the
Beneficiary shall acknowledge to the Trustee receipt of such withdrawn Assets.
Upon such

 

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written notice of demand of the Beneficiary, the Trustee shall immediately take
any and all steps necessary to transfer absolutely and unequivocally all right,
title and interest in the Assets to the Beneficiary and, to the extent
applicable, deliver physical custody of such Assets to the Beneficiary. Upon
such transfer, Trustee shall promptly forward a copy of such notice to the
Grantor. The Trustee shall not be subject to any liability for any payment made
by it to the Beneficiary pursuant to such written demand by the Beneficiary.
               (b) The Grantor and the Beneficiary agree that the Assets from
the Trust Account may only be withdrawn by the Beneficiary, and utilized and
applied by the Beneficiary, or any successor by operation of law of the
Beneficiary including any liquidator or rehabilitator, receiver or conservator
of the Beneficiary, without diminution because of insolvency on the part of the
Beneficiary or the Grantor, for one or more of the following purposes:
                    (i) to pay or reimburse the Beneficiary for the Grantor’s
share of premiums returned to policyholders or ceding companies of the Reinsured
Contracts because of cancellations of such contracts to the extent same
constitute Ultimate Net Loss;
                    (ii) to reimburse the Beneficiary for the Grantor’s share of
surrenders and benefits or losses paid by the Beneficiary pursuant to the
provisions of the Reinsured Contracts to the extent same constitute Ultimate Net
Loss;
                    (iii) to fund an account with the Beneficiary in an amount
at least equal to the deduction, for reinsurance ceded, from the Beneficiary’s
liabilities for the Reinsured Liabilities. The account must include, but not be
limited to, amounts for policy reserves, claims and losses incurred, including
losses incurred but not reported, allocated loss adjustment expenses, and
unearned premium reserves; and
                    (iv) to pay any other amounts the Beneficiary claims are due
under the LPT Reinsurance Agreement.
          Section 6.3 Release of Trust Account Assets to the Grantor. Subject to
receipt of the Beneficiary’s prior written instructions, the Trustee may, from
time to time, release to the Grantor Assets with an aggregate fair market value
equal to the excess over 102% of the Required Amount as of the prior calendar
quarter end. In connection with any such release of Assets, the Trustee shall
take any and all necessary steps to transfer absolutely and unequivocally all
right, title and interest in such released Assets to the Grantor or its
designee. The Trustee shall not be subject to any liability for any payment made
by it to the Grantor pursuant to such written instructions received by it from
the Beneficiary.

 

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          Section 7.4 Responsibilities of the Trustee.
               (a) The Trustee, in the administration of the Trust Account, is
to be bound solely by the express provisions herein, and such further written
and signed directions 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 Trust Agreement,
except as otherwise expressly provided or directed pursuant hereto. The Trustee
shall be restricted to holding title to, operating and collecting the Assets
comprising the Trust Account and the payment and distribution thereof for the
purposes set forth in this Trust Agreement and to the conservation and
protection of such Assets and the administration thereof in accordance with the
provisions of this Trust Agreement, and the Trustee shall be liable only for its
own negligence, willful misconduct or lack of good faith. The Trustee further
agrees to forward upon request of the Beneficiary, the Grantor or any Insurance
Commissioner a statement and valuation of all Assets held under this Trust
Agreement.
               (b) Subject to the other provisions of this Trust Agreement,
including the requirements that only Permitted Investments may be held in the
Trust Account and provisions relating to the substitution of Assets, (i) the
Grantor shall have the irrevocable authority and sole power to direct the
Trustee, in the Grantor’s sole discretion, with respect to all aspects of the
management or investment of the Assets contained in the Trust Account,
including, but not limited to, directing the Trustee to enter into one or more
investment management, advisory, custodial, depository or other agreements of
form and substance specified by the Grantor, with any other person, including
any affiliate of the Grantor, selected by the Grantor and (ii) the Trustee and
the Beneficiary each acknowledges that it has no authority with respect to such
management or investment activities, the Trustee agrees it will not exercise any
discretion or take any action with respect to the matters in clause (i) above
and will take any actions related thereto as directed by the Grantor in
accordance therewith.
          Section 7.5 Books and Records. The Trustee shall keep full and
complete records of the administration of the Trust Account. The Grantor, the
Beneficiary and/or the Insurance Commissioner may examine such records, upon
reasonable notice to the Trustee, at any time during business hours through any
person or persons duly authorized in writing by Grantor, the Beneficiary and/or
the Insurance Commissioner, at the requesting party’s expense.
          Section 7.8 Release of Information. The Trustee shall promptly respond
to any and all reasonable requests for information concerning the Trust Account
or the Assets held therein by any of the parties to this Trust Agreement.
Furthermore, the Trustee shall fully and completely respond to any direct
inquiries of the Insurance Commissioner, or any of its representatives,
concerning the Trust Account or the Assets held hereunder, including, detailed
inventories of securities or funds, and the Trustee shall permit the Insurance
Commissioner, or its representatives, to examine and audit all securities or
funds held hereunder. The Trustee shall promptly provide notice to the
Beneficiary and the Grantor concerning all such inquiries, and shall provide
seven (7) days prior notice to the Beneficiary and the Grantor of all such
examinations and audits.

 

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          Section 7.11 Limitations of the Trustee. The Trustee shall in no way
be responsible for determining the amount of Assets required to be deposited, or
monitoring whether or not the Assets held within the Trust Account are Permitted
Investments. The Trustee shall be under no liability for any release of Assets
made by it to the Grantor in accordance with this Article VI.
          Section 9.2 Construction and Effect. This Trust Agreement and the
enforceability hereof shall not be subject to the satisfaction of any conditions
or qualifications not expressly included herein.