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EXECUTION VERSION
THE REGISTRANT HAS APPLIED TO THE SECURITIES AND EXCHANGE COMMISSION FOR
CONFIDENTIAL TREATMENT OF CERTAIN TERMS IN THIS EXHIBIT. THE CONFIDENTIAL
PORTIONS OF THIS EXHIBIT ARE MARKED WITH AN ASTERISK (*) AND HAVE BEEN OMITTED.
THE OMITTED PORTIONS OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.
REINSURANCE AGREEMENT
by and between
FORETHOUGHT LIFE INSURANCE COMPANY
(the "CEDING COMPANY")
and
COMMONWEALTH ANNUITY AND LIFE REINSURANCE COMPANY LIMITED,
acting in respect of its general account
(the "REINSURER")
Dated as of January 1, 2015
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions 1
Section 1.2. Interpretation 4
ARTICLE II
EFFECTIVE TIME
Section 2.1. Effective Time 5
ARTICLE III
BUSINESS REINSURED; INITIAL PAYMENTS; SEGREGATED ACCOUNT
Section 3.1. Reinsurance; Initial Payments 5
Section 3.2. Follow the Fortunes 6
Section 3.3. Information; Audits 6
Section 3.4. Confidential Information 7
Section 3.5. Premium Taxes and Guaranty Fund Assessments 7
ARTICLE IV
TRUST ACCOUNT; CREDIT FOR REINSURANCE
Section 4.1. Trust Account 7
Section 4.2. Balancing the Trust Account 8
Section 4.3. Trust Account Withdrawals and Substitutions 8
Section 4.4. Credit for Reinsurance 9
ARTICLE V
REINSURANCE PREMIUM
Section 5.1. Reinsurance Premium 10
ARTICLE VI
REPORTS; SETTLEMENTS; SETOFF RIGHTS
Section 6.1. Quarterly Reports 10
Section 6.2. Quarterly Settlements 10
Section 6.3. Offsets 11
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1. Representations and Warranties of the Ceding Company 11
Section 7.2. Representations and Warranties of the Reinsurer 11
</Table>
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ARTICLE VIII
ADMINISTRATION; SEPARATE ACCOUNTS
Section 8.1. Administration 12
Section 8.2. Separate Accounts 12
ARTICLE IX
TAXES
Section 9.1. Tax Status 12
Section 9.2. Policy Acquisition Expenses 12
Section 9.3. Excise Taxes 13
ARTICLE X
INSOLVENCY
Section 10.1. Insolvency of Ceding Company 13
Section 10.2. Insolvency of Reinsurer 14
ARTICLE XI
ARBITRATION
Section 11.1. Agreement to Arbitrate 14
Section 11.2. Initiation of Arbitration 14
Section 11.3. Appointment of Arbitration Panel 14
Section 11.4. Location of Arbitration 15
Section 11.5. Arbitration Award 15
Section 11.6. Waiver of Jury Trial 15
ARTICLE XII
OVERSIGHTS, ERRORS AND OMISSIONS
ARTICLE XIII
TERMINATION
Section 13.1. Duration 15
Section 13.2. Termination 16
Section 13.3. Management of Product Offerings 16
Section 13.4. Settlement Upon Termination 16
ARTICLE XIV
INDEMNIFICATION
Section 14.1. Reinsurer's Obligation to Indemnify 16
Section 14.2. Ceding Company's Obligation to Indemnify 17
ARTICLE XV
MISCELLANEOUS
Section 15.1. Currency 17
Section 15.2. Notices 17
Section 15.3. Amendments; Waiver 18
</Table>
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<Table>
Section 15.4. Successors and Assigns; Third Party Beneficiaries 18
Section 15.5. Duty of Cooperation 18
Section 15.6. Submission to Jurisdiction 19
Section 15.7. Governing Law 19
Section 15.8. Entire Agreement 19
Section 15.9. Severability 19
Section 15.10. Counterparts 19
INDEX OF SCHEDULES
Schedule A [*]
Schedule 1.1A Riders to Subject Contracts
Schedule 1.1B Policy Forms Constituting the Subject Contracts
INDEX OF EXHIBITS
Exhibit A Form of Quarterly Report
Exhibit B Form of Trust Agreement
</Table>
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REINSURANCE AGREEMENT
This Reinsurance Agreement (together with the Schedules and Exhibits
hereto, this "AGREEMENT"), dated as of January 1, 2015, is made by and between
FORETHOUGHT LIFE INSURANCE COMPANY, a life insurance company domiciled in the
State of Indiana (together with its successors and assigns, the "CEDING
COMPANY"), and COMMONWEALTH ANNUITY AND LIFE REINSURANCE COMPANY LIMITED, a
reinsurance company domiciled in Bermuda and registered as a segregated accounts
company under the Bermuda Segregated Accounts Companies Act 2000, as amended
(the "SAC ACT") ("COMMONWEALTH RE"), acting in respect of its "general account"
(as such term is defined in the SAC Act, together with its successors and
assigns, the "REINSURER"). [*]
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. DEFINITIONS. The following terms, when used in this 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) "Additional Ceding Commission" shall have the meaning set
forth in Section 3.1(d)
(b) "AFFILIATE" of any Person means another Person that directly
or indirectly controls, is controlled by, or is under common control with, such
first Person, where "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management policies of a
Person, whether through the ownership of voting securities, by contract, as
trustee or executor, or otherwise (except as a result of an office or other
official position).
(c) "AGREEMENT" shall have the meaning set forth in the preamble.
(d) "AUTHORIZED INVESTMENTS" shall have the meaning set forth in
Section 4.1(b).
(e) "BAP" means, with respect to the Reinsurer, the accounting
principles prescribed or permitted by the Bermuda Monetary Authority.
(f) "BUSINESS DAY" means a Monday, Tuesday, Wednesday, Thursday,
or Friday on which banking institutions in Bermuda or the State of Indiana are
not obligated by applicable law to close.
(g) "CEDING COMPANY" shall have the meaning set forth in the
preamble.
(h) "CEDING COMPANY INDEMNITEES" shall have the meaning set forth
in Section 14.1.
(i) "CESSION PERIOD END DATE" shall mean the date designated by
the Ceding Company or by the Reinsurer, with no fewer than thirty (30) days'
prior written notice to the
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other party, after which no new Subject Contracts will be reinsured hereunder
(PROVIDED, that Covered Liabilities in respect of Subject Contracts ceded prior
to the Cession Period End Date will remain subject to this Agreement until its
termination).
(j) "CODE" means the Internal Revenue Code of 1986, as from time
to time amended.
(k) "COMMONWEALTH RE" shall have the meaning set forth in the
preamble.
(l) "COMPANY ACTION LEVEL RISK-BASED CAPITAL" shall have the
meaning set forth in Indiana Insurance Code Section 27-1-36-6 as of the
Effective Date.
(m) "CONTRACT VALUE" means the Contract Value, as defined in and
determined in accordance with the terms of the Subject Contracts, without regard
to surrender charges.
(n) "COVERED LIABILITIES" means, during the Covered Period, any
claim arising under any rider specified on SCHEDULE 1.1A hereto (as may be
updated by the parties hereto from time to time) to a Subject Contract, to the
extent such claim amount exceeds the Contract Value of such Subject Contract as
of 11:59 p.m. on the date of payment of such claim amount; PROVIDED, that in no
case shall "Covered Liabilities" include any Excluded Liabilities.
(o) "COVERED PERIOD" means the period commencing at the Effective
Time to but excluding the first date, if any, upon which the Ceding Company's
"Tier 4" score (as defined by Alirt Insurance Research, LLC as of the date
hereof) is equal to or greater than "7"; PROVIDED, that in the event that a
"Tier 4" score is not available for the Ceding Company, the parties hereto shall
use a mutually agreed upon alternative performance index.
(p) [*] shall have the meaning set forth in the preamble.
(q) "EFFECTIVE DATE" means January 1, 2015.
(r) "EFFECTIVE TIME" means 12:01 a.m. (Eastern Time) on the
Effective Date.
(s) "EXCLUDED LIABILITIES" means (i) Extra-Contractual Obligations
and (ii) any EX GRATIA payments made by the Ceding Company (i.e. payments the
Ceding Company is not required to make under the express terms of the Subject
Contracts).
(t) "EXTRA-CONTRACTUAL OBLIGATIONS" means all liabilities,
obligations and expenses relating to the Subject Contracts (other than those
arising under the express terms and conditions, and within the limits, of the
Subject Contracts), whether to contractholders, certificate holders, sponsors,
insureds, producers, agents, brokers, distributors, Governmental Entities or any
other Person, which shall include (A) any liability for damages or claims in
excess of applicable policy limits, (B) any liability for statutory or
regulatory fines, damages, penalties, forfeitures or similar charges of a penal
or disciplinary nature, (C) any payment to the Internal Revenue Service or any
other Person resulting from or attributable to any act or omission of the Ceding
Company (including errors of product design, language, or
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administration, or inaccurate or incomplete data maintained in books and records
of the Ceding Company) resulting in non-compliance of any Subject Contract with
the requirements of the Code and (D) any liability for punitive, consequential,
tort, bad faith, exemplary, special, treble or any other form of extra
contractual damages which arises from any act, error or omission, whether or not
intentional, in bad faith or otherwise, including any act, error or omission
relating to (1) the form, marketing, sale, underwriting, production, issuance,
cancellation or administration of any of the Subject Contracts, (2) the
investigation, defense, trial, settlement or handling of claims, benefits,
distributions, disbursements or any other payments arising out of or relating to
any of the Subject Contracts or (3) the payment of claims, benefits,
distributions, disbursements or any other amounts due or alleged to be due under
or in connection with any of the Subject Contracts.
(u) "GOVERNMENTAL ENTITY" shall have the meaning set forth in
Section 7.1(c).
(v) "INITIAL CEDING COMMISSION" shall have the meaning set forth
in Section 3.1(d)
(w) "LOSS" shall have the meaning set forth in Section 14.1.
(x) "PERSON" means an individual, corporation, partnership, joint
venture, association, limited liability company, trust, unincorporated
organization, governmental entity, or other entity.
(y) "QUALIFIED UNITED STATES FINANCIAL INSTITUTION" shall have the
meaning set forth in Indiana Insurance Code Section 27-6-10-6 or any applicable
successor provision.
(z) "QUARTERLY PERIOD" means a calendar quarter, commencing on the
first day of a quarter to and including the final day of such quarter.
(aa) "QUARTERLY REPORT" shall mean the report substantially in the
form set forth on EXHIBIT A.
(bb) "QUARTERLY SETTLEMENT" shall have the meaning set forth in
Section 6.2(a).
(cc) "QUARTERLY SETTLEMENT DATE" shall have the meaning set forth
in Section 6.2(a).
(dd) "REINSURER" shall have the meaning set forth in the preamble.
(ee) "REINSURER INDEMNITEES" shall have the meaning set forth in
Section 14.2.
(ff) "RIDER FEES" shall mean all fees collected by the Ceding
Company under Subject Contracts in respect of those riders specified on SCHEDULE
1.1A hereto (as may be updated by the parties hereto from time to time).
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(gg) "SAC ACT" shall have the meaning set forth in the preamble.
(hh) "SAP" means, with respect to the Ceding Company, the statutory
accounting principles and practices prescribed or permitted by the domiciliary
state of the Ceding Company at the time of determination, applied in a manner
consistent with the historical reporting of the Ceding Company (modified to the
extent required by any changes in applicable law or statutory accounting
principles).
(ii) "SEPARATE ACCOUNTS" means the separate accounts established by
the Ceding Company which serve as funding vehicles for the Subject Contracts.
(jj) "STATUTORY BOOK VALUE" means, for the purposes of valuing
assets in the Trust Account, the admitted value of such assets on the
Reinsurer's statutory balance sheet as determined by the Reinsurer for its
statutory filings with the Bermuda Monetary Authority.
(kk) "SUBJECT CONTRACTS" means the [*] (including any riders and
endorsements) which (i) have been issued by the Ceding Company before the
Effective Time on the policy forms listed on SCHEDULE 1.1B hereto or (ii) are
issued by the Ceding Company at or following the Effective Time on the policy
forms listed on SCHEDULE 1.1B, which SCHEDULE 1.1B may be updated from time to
time by the Ceding Company, with the consent of the Reinsurer, which consent
shall not be unreasonably withheld, [*]
(ll) "SUBPART F" shall have the meaning set forth in Section 9.1.
(mm) "TRUST ACCOUNT" shall have the meaning set forth in Section
4.1(a).
(nn) "TRUST AGREEMENT" shall have the meaning set forth in Section
4.1(a).
(oo) "TRUSTEE" shall have the meaning set forth in Section 4.1(a).
(pp) "TRUST REQUIRED BALANCE" means, as of a date, the sum of A and
B, where:
"A" equals the excess of (i) the statutory reserves for the
Subject Contracts as of such date, as determined by the Ceding
Company in accordance with SAP (including Actuarial Guideline
43) OVER (ii) the aggregate cash surrender values of the
Subject Contracts as of the close of business on such date;
and
"B" equals the allocable share of the Ceding Company's Company
Action Level Risk-Based Capital in respect of assets held in
the Trust Account and the liabilities ceded hereunder in
respect of the Subject Contracts, all as reasonably determined
by the Ceding Company.
SECTION 1.2. INTERPRETATION.
(a) When a reference is made in this Agreement to an Article,
Section, Exhibit or Schedule, such reference shall be to an Article or Section
of, Exhibit or a Schedule to, this
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Agreement unless otherwise indicated. The Article and Section headings and table
of contents contained in this 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 Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement unless expressly stated otherwise herein. The definitions contained in
this Agreement are applicable to the singular as well as the plural forms of
such terms and to the masculine as well as to the feminine and neuter genders of
such term. Any statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such statute as from time to time
amended, modified or supplemented, including successor statutes. References to a
Person are also to its successors and permitted assigns.
(b) The parties have participated jointly in the negotiation and
drafting of this Agreement; consequently, in the event an ambiguity or question
of intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties thereto, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
ARTICLE II
EFFECTIVE TIME
SECTION 2.1. EFFECTIVE TIME.
This Agreement shall become effective at the Effective Time and shall
remain in force for the Covered Period, unless modified by mutual agreement or
terminated as provided for in Article XIII hereof.
ARTICLE III
BUSINESS REINSURED; INITIAL PAYMENTS; SEGREGATED ACCOUNT
SECTION 3.1. REINSURANCE; INITIAL PAYMENTS.
(a) The Ceding Company hereby agrees to cede on an indemnity
reinsurance basis to the Reinsurer, and the Reinsurer hereby accepts and agrees
to reinsure and indemnify the Ceding Company for, all Covered Liabilities
incurred by the Ceding Company from and after the Effective Time in respect of
Subject Contracts issued before the Effective Time.
(b) From and after the Effective Time, the Ceding Company will
automatically cede on an indemnity reinsurance basis to the Reinsurer, and the
Reinsurer will automatically accept and agree to reinsure and indemnify the
Ceding Company for, all Covered Liabilities incurred by the Ceding Company from
and after the Effective Time in respect of Subject Contracts issued at or after
the Effective Time and before the Cession Period End Date.
(c) On the date this Agreement is executed, the Ceding Company, on
behalf of the Reinsurer, shall transfer to the Trust Account assets with a
current market value equal to the Actuarial Guideline 43 reserve with respect to
the Covered Liabilities as of December 31,
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2014 representing the Initial Ceding Commission. The assets supporting the
Initial Ceding Commission shall be Authorized Investments as defined in Section
4.1 of this Agreement.
(d) For Subject Contracts issued on and after the Effective Date
and reinsured by the Reinsurer hereunder, the Ceding Company shall pay the
Reinsurer [*] percent ([*]%) of the Rider Fees (the "Additional Ceding
Commission").
SECTION 3.2. FOLLOW THE FORTUNES.
The Reinsurer's liability under this Agreement shall commence at the
Effective Time, and all reinsurance with respect to which the Reinsurer shall be
liable by virtue of this Agreement shall be subject in all respects to the same
risks, terms, rates, conditions, interpretations, assessments, waivers,
proportion of premiums paid to, and reinsurance recoveries benefiting, the
Ceding Company, the true intent of this Agreement being that the Reinsurer shall
follow the fortunes of the Ceding Company with respect to the Covered
Liabilities, and the Reinsurer shall be bound, without limitation, by all
payments and settlements that affect or constitute Covered Liabilities entered
into by the Ceding Company at and after the Effective Time.
SECTION 3.3. INFORMATION; AUDITS.
(a) The Ceding Company shall provide to the Reinsurer all material
information available to it relating to the Covered Liabilities and, the
Reinsurer agrees to keep such information confidential in accordance with
Section 3.4 hereof. Notwithstanding the foregoing, the Ceding Company shall not
be required to share any information with the Reinsurer to the extent that (x)
the Ceding Company is subject to a confidentiality agreement which prohibits the
sharing of such information, or (y) the Ceding Company is prohibited from
sharing such information with the Reinsurer pursuant to any applicable law
relating to the privacy of non-public personal information or otherwise. Failure
to provide any such information, or include any claim, policy form or other
information relating to the Covered Liabilities, shall not affect the
reinsurance coverage provided for by this Agreement. The Reinsurer shall be
responsible for any out-of-pocket costs, expenses and payments (including,
without limitation, any fees required in seeking a waiver of confidentiality) in
connection with obtaining and providing any such material information or seeking
a waiver of any confidentiality pursuant to this Section 3.3(a).
(b) The Reinsurer, or its duly authorized legal, accounting, and
actuarial representatives, shall have access, at reasonable times and upon
reasonable notice during the term of this Agreement, to books and records
maintained by the Ceding Company which pertain to the reinsurance provided under
this Agreement and the employees, accountants and other relevant advisors of the
Ceding Company. The Reinsurer shall bear its own expenses in connection with
such access and shall promptly reimburse the Ceding Company for any
out-of-pocket expenses incurred by the Ceding Company in connection with such
access by the Reinsurer and its representatives.
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SECTION 3.4. CONFIDENTIAL INFORMATION.
Each of the Ceding Company and the Reinsurer hereby agree to hold
confidential and not disclose any client or proprietary information (each as
described in the succeeding paragraph) of the other party, except as set forth
in this Agreement, unless otherwise agreed to in writing. The foregoing
limitation shall not apply to proprietary information to the extent such
proprietary information otherwise becomes publicly available, or the disclosure
(i) has been mandated by law, (ii) is duly required by external auditors or
(iii) is requested or required by a Governmental Entity in connection with a
regulatory exam or inquiry.
Client information includes medical, financial and other personal
information about proposed, current and former policyowners, insureds,
applicants, and beneficiaries of Subject Contracts. Proprietary information
includes but is not limited to underwriting manuals and guidelines, applications
and contract forms and premium rates and allowances of the Reinsurer and the
Ceding Company. In addition, the Ceding Company and the Reinsurer will comply
with relevant privacy legislation. Notwithstanding any provision herein to the
contrary, the confidentiality provisions of this Agreement shall survive the
termination hereof.
Notwithstanding any other provision of this agreement to the contrary,
each of the parties hereto may disclose to any Person the tax structure and tax
treatment of this Agreement, to the extent such Person could be reasonably
expected to require knowledge of the tax structure and tax treatment of this
Agreement for BONA FIDE tax preparation purposes.
SECTION 3.5. PREMIUM TAXES AND GUARANTY FUND ASSESSMENTS.
The Ceding Company will pay (or will cause to be paid) all premium
taxes (or other taxes imposed in lieu thereof) and guaranty fund assessments
(whether incurred prior to, on or after the Effective Date) related to the
Subject Contracts and the Reinsurer shall have no responsibility therefor.
ARTICLE IV
TRUST ACCOUNT; CREDIT FOR REINSURANCE
SECTION 4.1. TRUST ACCOUNT.
(a) In order to secure the obligations of the Reinsurer hereunder,
the Ceding Company and the Reinsurer shall enter into a trust agreement,
pursuant to which the Reinsurer as grantor shall establish a trust account (the
"TRUST ACCOUNT") for the benefit of the Ceding Company in substantially the form
as attached hereto as EXHIBIT B ("TRUST AGREEMENT"). The trustee for the Trust
Account ("TRUSTEE") (i) shall be a Qualified United States Financial Institution
authorized to act as a fiduciary of a trust and (ii) shall not be a parent,
subsidiary or Affiliate of the Ceding Company or the Reinsurer. The Trust
Account shall be clearly designated as a segregated account on the books,
records and information systems of the Trustee. On the date this Agreement is
executed , pursuant to Section 3.1(c), the Reinsurer (or the Ceding Company on
its behalf) shall deposit into the Trust Account Authorized Investments (defined
below) having a Statutory Book Value equal to the Trust Required Balance as of
the Effective Date.
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(b) Assets deposited in the Trust Account shall be valued
according to their current Statutory Book Value, and shall consist only of cash
(United States legal tender), certificates of deposit (issued by a United States
bank and payable in United States legal tender), investments of the types
permitted by the laws of the State of Indiana for domestic insurers in the State
of Indiana as in effect as of the date hereof, or any combinations of the above
("AUTHORIZED INVESTMENTS").
(c) Prior to depositing assets in the Trust Account, the Reinsurer
shall, or, if the Ceding Company is depositing assets into the Trust Account on
behalf of the Reinsurer, the Ceding Company shall execute assignments or
endorsements in blank, or transfer legal title to the Trustee of all shares,
obligations or any other assets requiring assignments, in order that the Ceding
Company, or the Trustee upon the direction of the Ceding Company, may whenever
necessary negotiate these assets without consent or signature from the Reinsurer
or any other entity.
SECTION 4.2. BALANCING THE TRUST ACCOUNT. The Reinsurer shall maintain
Authorized Investments, managed by the Reinsurer or its designee in accordance
with the requirements set forth in the Trust Agreement, with an aggregate
Statutory Book Value at least equal to the Trust Required Balance. Subject to
clause (iii) below, the amount of security provided by the Reinsurer shall be
adjusted quarterly in accordance with the related Quarterly Report in respect of
the most recent Quarterly Period provided by the Ceding Company to the Reinsurer
in accordance with Section 6.1(a).
(i) If the aggregate Statutory Book Value of the Authorized
Investments held in the Trust Account as of the end of a Quarterly Period
is less than the Trust Required Balance for such date as set forth in the
Quarterly Report for such Quarterly Period, the Reinsurer shall transfer
additional Authorized Investments to the Trust Account within thirty (30)
days following receipt of such Quarterly Report so that the aggregate
Statutory Book Value of Authorized Investments held in the Trust Account is
not less than the Trust Required Balance; or
(ii) If the aggregate Statutory Book Value of the Authorized
Investments held in the Trust Account as of the end of a Quarterly Period
exceeds the Trust Required Balance for such date as set forth in the
Quarterly Report for such Quarterly Period, then the Reinsurer may reduce
all or any part of such excess through the withdrawal of assets that the
Reinsurer selects from the Trust Account.
(iii) If at any time the Reinsurer becomes aware of an
other-than-temporary impairment loss in the Statutory Book Value of any
Authorized Investment held in the Trust Account, it shall take reasonable
steps within thirty (30) days of becoming aware of such impairment, which
may include the substitution of such impaired Authorized Investment, such
that the aggregate Statutory Book Value of the Authorized Investments held
in the Trust Account is at least equal to the Trust Required Balance set
forth in the most recent Quarterly Report.
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SECTION 4.3. TRUST ACCOUNT WITHDRAWALS AND SUBSTITUTIONS.
(a) The Reinsurer and the Ceding Company agree that the Ceding
Company may withdraw assets from the Trust Account at any time (after giving
full effect to SECTION 6.3) notwithstanding any other provision of this
Agreement. Such withdrawals shall be used by the Ceding Company, or any
successor in interest of the Ceding Company (which successor includes a court
appointed domiciliary receiver of the Ceding Company, including any conservator,
rehabilitator or liquidator), only to pay to the Ceding Company any Covered
Liabilities due and payable by the Reinsurer. Notwithstanding the foregoing, the
Ceding Company shall not withdraw funds from the Trust Account until the
expiration of any applicable payment period or, with respect to any portion of
any payment which is under dispute, until the expiration of any dispute
resolution period afforded the Reinsurer under this Agreement in respect
thereof. Furthermore, in the event that the Ceding Company withdraws assets
pursuant to this SECTION 4.3(A) and the Covered Liabilities that are the subject
of such withdrawal remain due and payable under the Subject Contracts, the
Ceding Company will promptly remit such withdrawn assets (or their cash
equivalent) to contractholders under such Subject Contracts to satisfy, in whole
or in part, such Covered Liabilities.
(b) In the event the amount withdrawn by the Ceding Company from
the Trust Account exceeds the actual amount required under subsection (a) above,
the Ceding Company shall promptly return to the Trust Account the excess amounts
so withdrawn and, until such excess amounts are returned to the Trust Account,
such amounts, together with interest thereon, shall be held by the Ceding
Company for the benefit of the Reinsurer and the Reinsurer shall be entitled to
all rights, title and interest in said amounts. The interest rate applicable to
such amounts will be at a rate equal to the prime rate of interest as stated in
the Federal Reserve Statistical Release H.15. Interest will be earned from the
date the amount is withdrawn until that amount is repaid. All the foregoing
shall be applied without diminution because of insolvency on the part of the
Ceding Company or the Reinsurer.
(c) The Reinsurer has the right to substitute all or any part of
the assets of the Trust Account, PROVIDED, the aggregate Statutory Book Value of
the Authorized Investments in the Trust Account immediately following such
substitution shall not be less than the Trust Required Balance.
SECTION 4.4. CREDIT FOR REINSURANCE.
If at any time during the term of this Agreement, the Ceding Company
desires to receive statutory reserve credit in its state of domicile for the
reinsurance ceded to the Reinsurer under this Agreement, the Reinsurer at its
option, shall either: (i) cooperate in good faith with the Ceding Company to
amend this Agreement and the Trust Agreement to the extent required under
applicable law in order to establish and maintain security in the form of assets
held in a reinsurance trust that meets the requirements of all applicable laws
regarding credit for reinsurance so as to permit the Ceding Company to receive
full statutory financial statement credit in its state of domicile or (ii)
become certified as a "certified reinsurer" under applicable laws and maintain
security in accordance with the requirements set forth therein for certified
reinsurers (but in no event fail to satisfy the requirements of SECTION 4.2
hereof). It is understood and agreed that in that event, any term or condition
required by applicable law to be included in this Agreement for the Ceding
Company to receive full statutory financial statement credit in its state of
domicile for the reinsurance provided hereunder shall be deemed to be
incorporated in
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this Agreement by reference. The Reinsurer may, by giving at least ninety (90)
days' prior written notice to the Ceding Company, elect to switch the method for
providing financial statement credit to the Ceding Company from a reinsurance
trust account to certification as a "certified reinsurer", or vice versa.
ARTICLE V
REINSURANCE PREMIUM
SECTION 5.1. REINSURANCE PREMIUM.
On each Quarterly Settlement Date, the Ceding Company shall pay the
Reinsurer the Additional Ceding Commission with respect to the Subject Contracts
for the Quarterly Period corresponding to such Quarterly Settlement Date.
Settlement of amounts owed under this Section shall be made in accordance with
Article VI.
ARTICLE VI
REPORTS; SETTLEMENTS; SETOFF RIGHTS
SECTION 6.1. QUARTERLY REPORTS.
(a) Within thirty (30) calendar days following the end of each
Quarterly Period ending after the Effective Date, the Ceding Company shall
provide the Quarterly Report for such Quarterly Period in the form set forth in
EXHIBIT A. The parties agree that such Quarterly Report may contain adjustments
and modifications to previously delivered Quarterly Reports in respect of prior
Quarterly Periods.
(b) The Ceding Company shall provide the Reinsurer with supporting
calculations with respect to the amounts reflected on the Quarterly Report as
reasonably requested by the Reinsurer. The Reinsurer and its employees, advisors
and agents shall have a reasonable right to review and discuss the Quarterly
Report with employees, accountants and other relevant advisors of the Ceding
Company during normal business hours.
SECTION 6.2. QUARTERLY SETTLEMENTS.
(a) If the "Quarterly Aggregate Settlement Amount" set forth on
the Quarterly Report reflects a net amount due the Reinsurer, then the Ceding
Company shall pay to the Reinsurer such amount. If the "Quarterly Aggregate
Settlement Amount" set forth on the Quarterly Report reflects a net amount due
the Ceding Company, then the Reinsurer shall pay to the Ceding Company such
amount. In each case, the "Quarterly Aggregate Settlement Amount" with respect
to each Quarterly Period ending after the Effective Date as reflected on a
Quarterly Report (the "QUARTERLY SETTLEMENT") shall be paid by the owing party
within ten (10) days of delivery of the Quarterly Report (the "QUARTERLY
SETTLEMENT DATE"); PROVIDED, that any such payment that would otherwise be due
on a day that is not a Business Day shall be due on the next following Business
Day.
(b) All payments due directly to the Reinsurer or the Ceding
Company shall be remitted by wire transfer in immediately available funds.
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SECTION 6.3. OFFSETS.
Any debits or credits incurred at or after the Effective Time in favor
of or against either the Ceding Company or Reinsurer with respect to this
Agreement shall be setoff, and only the net balance shall be paid.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. REPRESENTATIONS AND WARRANTIES OF THE CEDING COMPANY.
The Ceding Company represents and warrants to the Reinsurer as of the
date hereof and, unless otherwise specified in any representation or warranty
below, shall be deemed to have represented and warranted as of the Effective
Date, as follows:
(a) The Ceding Company is a corporation duly organized and validly
existing under the laws of the State of Indiana and it has the requisite
corporate power and authority to perform its obligations under this Agreement.
(b) This Agreement has been duly authorized, executed and
delivered by it and, assuming the due authorization, execution and delivery of
this Agreement by the Reinsurer, constitutes a legal, valid and binding
obligation of the Ceding Company, enforceable against the Ceding Company in
accordance with its terms.
(c) The execution and delivery of this Agreement do not, and the
performance by the Ceding Company of its obligation hereunder will not conflict
with, or result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination or cancellation
under, any provision of (i) the articles or certificate of incorporation and
by-laws or comparable organizational documents of the Ceding Company, (ii) any
contract, permit, order, judgment or decree to which the Ceding Company is a
party, (iii) any order of any governmental agency, authority, entity or
instrumentality ("GOVERNMENTAL ENTITY") or (iv) any applicable law, except for
such violations or defaults which would not reasonably be expected to have a
material adverse effect on the business being reinsured hereunder or the Ceding
Company's ability to satisfy its obligations hereunder.
SECTION 7.2. REPRESENTATIONS AND WARRANTIES OF THE REINSURER.
The Reinsurer represents and warrants to the Ceding Company as of the
date hereof and, unless otherwise specified in any representation or warranty
below, shall be deemed to have represented and warranted as of the Effective
Date, as follows:
(a) The Reinsurer is a corporation duly organized, validly
existing and in good standing (to the extent legally applicable) under the laws
of Bermuda and has the requisite corporate power and authority to perform its
obligations under this Agreement.
(b) This Agreement has been duly authorized, executed and
delivered by it and, assuming the due authorization, execution and delivery of
this Agreement by the Ceding
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Company, constitutes a legal, valid and binding obligation of the Reinsurer,
enforceable against the Reinsurer in accordance with its terms.
(c) The execution and delivery of this Agreement do not, and the
performance by the Reinsurer of its obligation hereunder will not conflict with,
or result in any violation of or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination or cancellation
under, any provision of (i) the articles or certificate of incorporation and
bye-laws or comparable organizational documents of the Reinsurer, (ii) any
contract, permit, order, judgment or decree to which the Reinsurer is a party,
(iii) any order of any Governmental Entity or (iv) any applicable law, except
for such violations or defaults which would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
Reinsurer's ability to satisfy its obligations hereunder.
ARTICLE VIII
ADMINISTRATION; SEPARATE ACCOUNTS
SECTION 8.1. ADMINISTRATION.
The Ceding Company and the Reinsurer agree that the Subject Contracts
will be administered by the Ceding Company in good faith, and the Ceding Company
agrees to perform such administrative services: (i) consistent with its current
practice and (ii) in material compliance with all applicable law and the
requirements of the Subject Contracts. The Ceding Company shall have no
liability to the Reinsurer for the administration of the Subject Contracts,
except for bad faith, gross negligence or an intentional breach of this Section
8.1.
SECTION 8.2. SEPARATE ACCOUNTS.
The Reinsurer will have no legal or equitable interest in any Separate
Account or any assets held therein arising by virtue of the reinsurance provided
pursuant to this Agreement.
ARTICLE IX
TAXES
SECTION 9.1. TAX STATUS.
The Ceding Company represents and warrants that it is subject to
taxation under Subchapter "L" of the Code. The Reinsurer represents and warrants
that it is currently subject to indirect taxation under the provisions of
Subpart F of Part III of subchapter N of chapter 1 of the Code ("SUBPART F").
SECTION 9.2. POLICY ACQUISITION EXPENSES.
With respect to this Agreement, the Ceding Company and the Reinsurer
jointly elect pursuant to Section 1.848-2(g) of the Income Tax Regulations
issued December 1992 as follows:
(a) For each taxable year, the party with net positive
consideration, as defined in Treasury Regulations Section 1.848-2, will
capitalize specified policy acquisition expenses
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with respect to this Agreement without regard to the general deductions
limitation of Section 848(c)(1) of the Code. Each party filing a federal income
tax return shall attach a schedule to its federal income tax return for the
first taxable year for which this election is in effect stating that an election
under Treasury Regulations Section 1.848-2(g)(8) has been made for this
Agreement.
(b) The Reinsurer shall take any positive capitalization amount
into account in determining the amount required to be included in income
pursuant to Subpart F by its "United States shareholders," within the meaning of
Section 951(b) of the Code, as determined by comparing the amount of its gross
income allocable to such United States shareholders for any taxable year to all
of its gross income for such year. The Ceding Company agrees to adjust its net
negative capitalization to be consistent with the proportion determined pursuant
to the preceding sentence.
(c) The Ceding Company will submit a schedule to the Reinsurer by
March 1 of each year of its calculation of the net consideration for the
preceding calendar year. The Reinsurer shall provide data to the Ceding Company
by March 1 of each year which will enable the Ceding Company to calculate the
proportion of the Reinsurer's gross income for the preceding calendar year
income that was required to be included in income by its "United States
shareholders" as defined in paragraph (b) above.
(d) This election is effective for 2014 and will remain in effect
for all future taxable years for which this Agreement remains in effect.
SECTION 9.3. EXCISE TAXES. The Ceding Company shall be responsible for
reporting and remitting the tax imposed by Section 4371 of the Code as indicated
on the Quarterly Report. The tax imposed by Section 4371 of the Code shall be
borne by the Reinsurer.
ARTICLE X
INSOLVENCY
SECTION 10.1. INSOLVENCY OF CEDING COMPANY.
(a) In the event of the insolvency of the Ceding Company, the
reinsurance shall be payable directly to the Ceding Company, or to its
liquidator, receiver, conservator or statutory successor on the basis of claims
filed and allowed in the liquidation proceeding, without diminution because of
the insolvency of the Ceding Company.
(b) The reinsurance shall be payable by the Reinsurer directly to
the Ceding Company or to its domiciliary liquidator except where the contract of
insurance or reinsurance specifically provides another payee of such reinsurance
in the event of the insolvency of the Ceding Company.
(c) The liquidator, receiver or statutory successor of the Ceding
Company shall give written notice to the Reinsurer of the pendency of each claim
against the Ceding Company with respect to such Covered Liabilities within a
reasonable time after each such claim is filed in the insolvency, liquidation or
rehabilitation proceeding. During the pendency of any such claims, the Reinsurer
may investigate such claim and interpose, at its own expense, in the proceeding
in which such claim is to be adjudicated any defense or defenses that the
Reinsurer
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may reasonably deem available to the Ceding Company or its liquidator, receiver
or statutory successor. Subject to court approval, the expenses incurred in
connection therewith by the Reinsurer shall be chargeable against the Ceding
Company as part of the expense of such insolvency, liquidation or rehabilitation
to the extent of a proportionate share of any benefit that accrues to the Ceding
Company solely as a result of the defense or defenses undertaken by the
Reinsurer.
SECTION 10.2. INSOLVENCY OF REINSURER.
In the event of the insolvency, liquidation or rehabilitation of the
Reinsurer, the Ceding Company may provide the Reinsurer, its receiver,
rehabilitator, conservator, liquidator or statutory successor with written
notice of its intent to terminate all reinsurance in force under this Agreement,
regardless of the duration the reinsurance has been in force. The effective date
of a termination due to the insolvency, liquidation or rehabilitation of the
Reinsurer is at the election of the Ceding Company.
ARTICLE XI
ARBITRATION
SECTION 11.1. AGREEMENT TO ARBITRATE.
All disputes between the parties arising out of this Agreement shall
be referred to and settled by arbitration held in accordance with the guidelines
set forth in the ARIAS-U.S. PRACTICAL GUIDE TO REINSURANCE ARBITRATION PROCEDURE
(2004) (except for the "Streamlined Arbitration Procedures"); PROVIDED, that,
notwithstanding anything to the contrary in the ARIAS-U.S. PRACTICAL GUIDE TO
REINSURANCE ARBITRATION PROCEDURE, the arbitrators to be appointed to the
arbitration panel shall be appointed in accordance with Section 11.3. It is
specifically the intent of both parties that these arbitration provisions will
replace any statutory provision, if any, relating to any arbitration procedures
the provisions cover.
SECTION 11.2. INITIATION OF ARBITRATION.
Arbitration shall be initiated by the delivery of a written notice of
demand for arbitration by one party to the other.
SECTION 11.3. APPOINTMENT OF ARBITRATION PANEL.
The arbitration panel shall consist of three members appointed in
accordance with the ARIAS-U.S. NEUTRAL SELECTION PROCEDURE, as then currently in
effect (including the suggested guidelines therein), except that the ARIAS-U.S.
Executive Director's Office shall be requested to provide its initial list of
thirty ARIAS-U.S. Certified Arbitrators exclusively from a pool of arbitrators
that shall have no less than ten years of experience in the insurance or
reinsurance industry and be active or retired officers of life insurance or life
reinsurance companies.
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SECTION 11.4. LOCATION OF ARBITRATION.
The arbitration proceeding shall take place in Indianapolis, Indiana;
PROVIDED, that the arbitration panel may, for the convenience of the parties and
without changing the situs of the arbitration proceeding, take evidence at any
place within or without Indianapolis, Indiana.
SECTION 11.5. ARBITRATION AWARD.
The arbitrators shall not be obligated to follow judicial formalities
or the rules of evidence and shall make their decisions according to the
practice of the reinsurance business. The decision rendered by a majority of the
arbitration panel shall be final and binding on the parties. Any award of the
arbitration panel may be, alternatively or cumulatively, for money damages, an
order requiring the performance of the obligations under this Agreement, or any
other appropriate order or remedy. The arbitration panel may award interim
relief, including pre-award security. The award shall assign all costs of the
arbitration to one or more of the parties in such proportion as the arbitrators
determine on an equitable basis, except each party shall bear its own attorneys
fees, professional fees and expert witness costs. Judgment upon any award
rendered in the arbitration may be entered in any court having jurisdiction.
SECTION 11.6. WAIVER OF JURY TRIAL.
Each of the parties hereto irrevocably waives any and all right to
trial by jury in any legal proceeding arising out of or related to this
Agreement or the transactions contemplated hereby.
ARTICLE XII
OVERSIGHTS, ERRORS AND OMISSIONS
Any inadvertent delays, errors or omissions on the part of one party
occurring in connection with its obligations under this Agreement or any
transaction hereunder shall not relieve the other party from any liability which
would have otherwise attached had such delay, error or omission not occurred.
ARTICLE XIII
TERMINATION
SECTION 13.1. DURATION.
This Agreement shall commence on the date hereof, effective as of the
Effective Date, and continue until the earlier of (i) the last day of the
Covered Period, (ii) the date on which this Agreement is terminated under
Section 13.2 or (iii) with respect to new Subject Contracts only, the Cession
Period End Date, except that under no circumstances shall any termination of
this Agreement relieve either party from liability for any breach of this
Agreement occurring prior to such termination or from its obligations under
Section 3.4.
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SECTION 13.2. TERMINATION.
This Agreement may be terminated by the mutual written consent of the
Reinsurer and the Ceding Company if the Ceding Company determines in good faith
that there is no further current or potential future liability of the Reinsurer
hereunder.
SECTION 13.3. MANAGEMENT OF PRODUCT OFFERINGS.
The Ceding Company, in its sole discretion, shall have the option to
(a) withdraw from sale any policy form or rider which, absent such withdrawal,
would be subject to reinsurance hereunder; and/or (b) modify any such policy
form or rider (whether required by law or otherwise). Any policy form or rider,
as so modified, shall remain subject to this Agreement; PROVIDED, that the
parties hereto shall make all necessary financial adjustments to reflect such
modification.
SECTION 13.4. SETTLEMENT UPON TERMINATION.
Upon the termination of this Agreement, the Ceding Company shall
recapture all liabilities previously ceded to the Reinsurer and, subject to
payment by the Reinsurer of any amounts due to the Ceding Company pursuant to
this Section 13.4, the Reinsurer's liability under this Agreement will terminate
(provided that such termination shall not relieve any party of any
pre-termination breach of the Agreement). The Ceding Company shall prepare a
Quarterly Report for the period commencing on the first day of the then-current
Quarterly Period and ending on the date this Agreement is terminated pursuant to
Section 13.2. On the fifth (5th) Business Day following delivery of the
Quarterly Report to the Reinsurer, (a) the parties shall pay any amounts due and
owing on such Quarterly Report, (b) the then remaining assets in the Trust
Account shall be transferred to the Reinsurer and (c) the Reinsurer shall
transfer to the Ceding Company assets with an aggregate fair market value, as
determined by the Ceding Company, equal to the Trust Required Balance, as
determined by the Ceding Company as of the date of termination. The amounts paid
pursuant to clause (a), (b) and (c) shall be setoff, and only the balance shall
be allowed or paid by the applicable party hereto.
ARTICLE XIV
INDEMNIFICATION
SECTION 14.1. REINSURER'S OBLIGATION TO INDEMNIFY.
The Reinsurer hereby indemnifies the Ceding Company and its directors,
officers, employees, Affiliates, successors, permitted assigns, agents and
representatives (collectively, the "CEDING COMPANY INDEMNITEES") from and
against, and agrees to hold each of them harmless from, any and all claim,
damage, loss, liability, fine and expense (including reasonable attorneys' fees
and other expenses of investigation in connection with any action, suit or
proceeding) (each, a "LOSS") incurred or suffered by the Ceding Company
Indemnitees arising out of or resulting from any breach by the Reinsurer of any
representation, warranty or term of this Agreement.
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SECTION 14.2. CEDING COMPANY'S OBLIGATION TO INDEMNIFY.
The Ceding Company hereby indemnifies the Reinsurer and its directors,
officers, employees, Affiliates, successors, permitted assigns, agents and
representatives (collectively, the "REINSURER INDEMNITEES") from and against,
and agrees to hold each of them harmless from, any and all Losses incurred or
suffered by Reinsurer Indemnitees arising out of or resulting from (a) any
breach by the Ceding Company of any representation, warranty or term of this
Agreement or (b) any litigation, claim, examination, investigation or other
proceeding brought by a Person that is neither a party to this Agreement nor an
Affiliate of such party, which if brought against the Ceding Company would be an
Extra-Contractual Obligation.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1. CURRENCY.
All transactions hereunder shall be in United States currency.
Premiums and Covered Liabilities expressed in currencies other than United
States currency shall, for the purpose of this Agreement, be converted into
United States dollars at the rates of exchange in effect on the date on which
they are entered in the books of the Ceding Company.
SECTION 15.2. NOTICES.
All notices, requests, demands, approvals and other communications
under this Agreement shall be in writing and shall be (i) delivered personally,
(ii) sent by facsimile transmission or (iii) sent by certified, registered or
express mail, postage prepaid. Any such notice or other communication shall be
deemed given: (a) upon actual delivery, if presented personally, (b) when
electronically confirmed, if sent by facsimile transmission and (c) three (3)
Business Days following deposit in the United States mail, if sent by certified,
registered or express mail, postage prepaid, in each case to the following
addresses:
If to the Ceding Company:
Forethought Life Insurance Company
c/o Commonwealth Annuity and Life Insurance Company
132 Turnpike Road
Southborough, MA 01772
Attention: Michael Reardon
Telephone No.: (508) 460-2477
Facsimile No.: (508) 460-2401
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With a copy to:
Global Atlantic Financial Company
7 World Trade Center, 47th Floor
250 Greenwich Street
New York, NY 10007
Attention: Philip Sherrill
Telephone No.: (212) 389-2268
Facsimile No.: (917) 438-2271
If to the Reinsurer:
Commonwealth Annuity and Life Reinsurance Company Limited
19 Par-La-Ville Road
Hamilton HM 11, Bermuda
Attention: Manu Sareen
Telephone No.: (441) 294-6102
Facsimile No.: (441) 294-6114
SECTION 15.3. AMENDMENTS; WAIVER.
(a) Any provision of this Agreement may be amended if, but only
if, such amendment is in writing and is signed by each party to this Agreement.
Any change or modification to this Agreement shall be null and void unless made
by an amendment hereto signed by each party to this Agreement.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 15.4. SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns; PROVIDED, that no party may assign, delegate or otherwise transfer any
of its rights or obligations under this Agreement without the consent of the
other party hereto, and that any purported assignment without the consent of the
other party shall be void and of no force or effect.
(b) No provision of this Agreement is intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
SECTION 15.5. DUTY OF COOPERATION.
Each party hereto shall cooperate fully with the other party hereto in
all reasonable respects in order to accomplish the objectives of this Agreement.
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SECTION 15.6. SUBMISSION TO JURISDICTION.
In the event of the failure of the Reinsurer to perform its
obligations under the terms of this Agreement, the Reinsurer, at the request of
the Ceding Company, shall submit to the jurisdiction of an alternative dispute
resolution panel or any court of competent jurisdiction in any state of the
United States, will comply with all requirements necessary to give such panel or
court jurisdiction, and will abide by the final decision of such panel or court
or of any appellate court in the event of an appeal of a decision by such panel
or court. The Reinsurer hereby designates the Indiana Insurance Commissioner or
a designated attorney thereof as its true and lawful attorney upon whom may be
served any lawful process in any action, suit or proceeding instituted by or on
behalf of the Ceding Company. The foregoing provision shall not in any way
conflict with, limit or override the obligations of the parties to submit any
disputes hereunder to arbitration in accordance with Article XI hereof.
SECTION 15.7. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Indiana, without giving effect to the principles of
conflicts of law thereof; PROVIDED, that any provisions of this Agreement
relating to the assets or liabilities of the Reinsurer shall be governed by and
construed in accordance with the laws of Bermuda.
SECTION 15.8. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the parties
with respect to the business being reinsured hereunder and supersedes all prior
agreements and understandings, both oral and written, between the parties with
respect to the subject matter of this Agreement. There are no understandings
between the parties with respect to the subject matter of this Agreement other
than as expressed herein and therein.
SECTION 15.9. SEVERABILITY.
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future law or if determined by a court of
competent jurisdiction to be unenforceable, and if the rights or obligations of
the Ceding Company or the Reinsurer under this Agreement will not be materially
and adversely affected thereby, such provision shall be fully severable, and
this Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement, and the
remaining provisions of this Agreement shall remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom.
SECTION 15.10. COUNTERPARTS.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall be deemed to have
been executed and delivered when each party hereto shall have received a
counterpart hereof signed by the other party hereto and then become effective
upon the Effective Date.
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CONFIDENTIAL
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
stated above.
FORETHOUGHT LIFE INSURANCE COMPANY
By:
----------------------------------
Name:
Title:
Date:
COMMONWEALTH ANNUITY AND LIFE
REISURANCE COMPANY LIMITED, acting in
respect of its general account
By:
----------------------------------
Name:
Title:
Date:
<Page>
CONFIDENTIAL
[*]
[*]
[*]
Schedule A-1
<Page>
CONFIDENTIAL
SCHEDULE 1.1A
RIDERS TO SUBJECT CONTRACTS
[*]
<Table>
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
</Table>
Schedule 1.1A-1
<Page>
CONFIDENTIAL
SCHEDULE 1.1B
POLICY FORMS CONSTITUTING THE SUBJECT CONTRACTS
[*]
<Table>
[*] [*]
[*] [*]
[*] [*]
</Table>
Schedule 1.1B-1
<Page>
CONFIDENTIAL
EXHIBIT A
FORM OF QUARTERLY REPORT
<Table>
+ Additional Ceding Commission ([*]% of Rider Fees) $
- Benefits Paid (Net):
Benefits Paid-Gross $
Less Transfer from Separate Account $
- Net Benefits Paid $
- Excise Tax (1% of Rider Fees)
Due (to) from FLIC $ -
===========
</Table>
Exh. A-1
<Page>
CONFIDENTIAL
EXHIBIT B
FORM OF TRUST AGREEMENT
Exh. B-1