CONSIST ONLY OF CURRENCY OF THE UNITED STATES OF AMERICA, CERTIFICATES OF
DEPOSIT ISSUED BY A UNITED STATES BANK AND PAYABLE IN UNITED STATES LEGAL
TENDER, AND INVESTMENTS OF THE TYPES SPECIFIED IN PARAGRAPHS (1), (2), (3),
(8) AND (10) OF SECTION 1404(A) OF THE NEW YORK INSURANCE LAW, PROVIDED SUCH
INVESTMENTS ARE ISSUED BY AN INSTITUTION THAT IS NOT THE PARENT, SUBSIDIARY OR
AFFILIATE OF EITHER THE GRANTOR OR THE BENEFICIARY ("AUTHORIZED INVESTMENTS").
4.
THE REINSURER, PRIOR TO DEPOSITING ASSETS WITH THE TRUSTEE, SHALL
EXECUTE ALL ASSIGNMENTS AND ENDORSEMENTS IN BLANK, AND SHALL TRANSFER LEGAL
TITLE TO THE TRUSTEE OF ALL SHARES, OBLIGATIONS OR ANY OTHER ASSETS REQUIRING
ASSIGNMENTS, IN ORDER THAT THE COMPANY, OR THE TRUSTEE UPON DIRECTION OF THE
COMPANY, MAY WHENEVER NECESSARY NEGOTIATE ANY SUCH ASSETS WITHOUT CONSENT OR
SIGNATURE FROM THE REINSURER OR ANY OTHER ENTITY.
13
5.
ALL SETTLEMENTS OF ACCOUNT UNDER THE TRUST AGREEMENT BETWEEN THE
COMPANY AND REINSURER SHALL BE MADE IN CASH OR ITS EQUIVALENT.
6.
THE REINSURER AND THE COMPANY AGREE THAT THE ASSETS IN THE TRUST
ACCOUNT MAY BE WITHDRAWN BY THE COMPANY AT ANY TIME, NOTWITHSTANDING ANY OTHER
PROVISIONS IN THE AGREEMENT, PROVIDED SUCH ASSETS ARE APPLIED AND UTILIZED BY
THE COMPANY OR ANY SUCCESSOR OF THE COMPANY BY OPERATION OF LAW, INCLUDING,
WITHOUT LIMITATION, ANY LIQUIDATOR, REHABILITATOR, RECEIVER OR CONSERVATOR OF
THE COMPANY, WITHOUT DIMINUTION BECAUSE OF THE INSOLVENCY OF THE COMPANY OR THE
REINSURER, ONLY FOR THE FOLLOWING PURPOSES:
(I)
TO REIMBURSE THE COMPANY FOR THE REINSURER'S SHARE OF ANY LOSSES
AND LOSS ADJUSTMENT EXPENSES PAID BY THE COMPANY BUT NOT RECEIVED FROM THE
REINSURER OR FOR UNEARNED PREMIUMS DUE TO THE COMPANY BUT NOT OTHERWISE PAID BY
THE REINSURER UNDER THE AGREEMENT; OR
(II)
TO MAKE PAYMENT TO THE REINSURER OF ANY AMOUNTS HELD IN THE TRUST
ACCOUNT THAT EXCEED 102% OF THE REINSURER'S OBLIGATIONS (LESS THE BALANCE OF
CREDIT AVAILABLE UNDER ANY LETTER(S) OF CREDIT) HEREUNDER; OR
(III)
WHERE THE COMPANY HAS RECEIVED NOTIFICATION OF TERMINATION OF THE
TRUST ACCOUNT, AND WHERE THE REINSURER'S ENTIRE OBLIGATIONS UNDER THE AGREEMENT
REMAIN UNLIQUIDATED AND UNDISCHARGED TEN (10) DAYS PRIOR TO SUCH TERMINATION, TO
WITHDRAW AMOUNTS EQUAL TO SUCH OBLIGATIONS (LESS THE BALANCE OF CREDIT AVAILABLE
UNDER ANY LETTER(S) OF CREDIT) AND DEPOSIT SUCH AMOUNTS IN A SEPARATE ACCOUNT,
IN THE NAME OF THE COMPANY, IN ANY UNITED STATES BANK OR TRUST COMPANY,
APART FROM ITS GENERAL ASSETS, IN TRUST FOR SUCH USES AND PURPOSES SPECIFIED IN
SUB-PARAGRAPHS (I) AND (II) ABOVE AS MAY REMAIN EXECUTORY AFTER SUCH WITHDRAWAL
AND FOR ANY PERIOD AFTER SUCH TERMINATION.
7.
THE REINSURER SHALL HAVE THE RIGHT TO SEEK THE COMPANY'S APPROVAL
TO WITHDRAW ALL OR ANY PART OF THE ASSETS FROM THE TRUST ACCOUNT AND TRANSFER
SUCH ASSETS TO THE REINSURER, PROVIDED THAT THE WITHDRAWAL CONFORMS TO THE
FOLLOWING REQUIREMENTS:
(I)
THE REINSURER SHALL, AT THE TIME OF WITHDRAWAL, REPLACE THE
WITHDRAWN ASSETS WITH OTHER AUTHORIZED INVESTMENTS HAVING A MARKET VALUE EQUAL
TO THE MARKET VALUE OF THE ASSETS