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CORE COINSURANCE AGREEMENT
BY AND BETWEEN
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
AND
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
DATED
DECEMBER 30, 2005
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS 1
1.01 DEFINITIONS 1
ARTICLE II BUSINESS REINSURED 2
2.01 GENERAL 2
2.02 LIABILITY 2
2.03 DEFENSES 2
2.04 DECLARATION OF NON-GUARANTEED ELEMENTS 2
2.05 CONTRACT CHANGES 3
2.06 REPLACEMENT 3
ARTICLE III TERRITORY; TERM 3
3.01 TERRITORY 3
3.02 TERM 3
ARTICLE IV EFFECTIVENESS; LICENSES 4
4.01 EFFECTIVENESS 4
4.02 LICENSES 4
ARTICLE V REINSURANCE CREDIT; RESERVES 4
5.01 ESTABLISHMENT OF GENERAL ACCOUNT STATUTORY RESERVES 4
5.02 ESTABLISHMENT OF SEPARATE ACCOUNT RESERVES 7
5.03 RESERVE REPORTS 7
5.04 REPORTS 7
5.05 UNREGISTERED SEPARATE ACCOUNTS 7
ARTICLE VI ACCOUNTING AND SETTLEMENT 8
6.01 NET DAILY ADJUSTMENT 8
6.02 BENEFIT PAYMENTS 9
6.03 CASH SETTLEMENT AND ACCOUNTING 9
6.04 MONTHLY REPORT 10
ARTICLE VII ADMINISTRATION; RECORDS; NOTICES 11
7.01 ADMINISTRATION 11
ARTICLE VIII CEDING COMMISSION; TRANSFER OF ASSETS; POST-EFFECTIVE
DATE ACCOUNTING 11
8.01 CEDING COMMISSION 11
8.02 TRANSFER 11
8.03 ONGOING PAYMENTS 13
8.04 ASSIGNMENT 13
8.05 SEPARATE ACCOUNT CONTRA-LIABILITY 14
8.06 POST-EFFECTIVE DATE ACCOUNTING 14
8.07 DISPUTES REGARDING FINAL STATEMENT AND POST-EFFECTIVE
DATE ACCOUNTING 15
ARTICLE IX [INTENTIONALLY OMITTED] 16
ARTICLE X NOVATION 16
10.01 NOVATION 16
ARTICLE XI RIGHT OF INSPECTION 17
11.01 RIGHT OF INSPECTION 17
ARTICLE XII INDEMNIFICATION 17
12.01 INDEMNIFICATION 17
ARTICLE XIII INSOLVENCY 18
13.01 INSOLVENCY 18
ARTICLE XIV NO THIRD PARTY RIGHTS 18
14.01 NO THIRD PARTY RIGHTS 18
ARTICLE XV DUTY OF COOPERATION 18
15.01 DUTY OF COOPERATION 18
ARTICLE XVI ARBITRATION 19
16.01 DISPUTE RESOLUTION 19
ARTICLE XVII GENERAL PROVISIONS 20
17.01 DAC TAX ELECTION 20
17.02 NOTICES 20
17.03 ENTIRE AGREEMENT 22
17.04 EXPENSES 22
17.05 COUNTERPARTS 22
17.06 NO THIRD PARTY BENEFICIARY 22
17.07 WAIVERS AND AMENDMENTS; PRESERVATION OF REMEDIES 22
17.08 BINDING EFFECT; NO ASSIGNMENT 22
17.09 SEVERABILITY 22
17.10 GOVERNING LAW 23
17.11 HEADINGS, ETC 23
17.12 JURISDICTION 23
17.13 OFFSET 23
17.14 COMPLIANCE WITH LAWS 23
17.15 ERRORS AND OVERSIGHTS 23
17.16 WAIVER OF JURY TRIAL 24
ii
SCHEDULES
Schedule 1.01(a) Insurance Contracts
Schedule 1.01(b) Separate Accounts
Schedule 4.01 Required Regulatory Approvals
Schedule 10.01(a) Required Third Party Reinsurance Consents
iii
EXHIBITS
Exhibit A Definitions
Exhibit B Form of Trust Agreement
Exhibit C Tax Election
iv
CORE COINSURANCE AGREEMENT
THIS CORE COINSURANCE AGREEMENT (this "AGREEMENT"), dated as of
December 30, 2005 (the "CORE COINSURANCE CLOSING DATE"), is made by and between
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY, a
Massachusetts stock
insurance company ("FAFLIC"), and ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY
COMPANY, a
Massachusetts stock insurance company (the "REINSURER").
RECITALS:
WHEREAS, The Xxxxxxx Xxxxx Group, Inc., a Delaware corporation,
and The Hanover Insurance Group, Inc. (formerly known as Allmerica Financial
Corporation), a Delaware corporation and the ultimate parent of FAFLIC (the
"SELLER"), and prior to the Effective Date the Reinsurer, have entered into that
certain Stock Purchase Agreement, dated as of August 22, 2005 (the "SPA"), which
agreement calls for, among other things, the transfer of the Core Business in
FAFLIC from FAFLIC to the Reinsurer and the acquisition of all of the shares of
stock of the Reinsurer by The Xxxxxxx Sachs Group, Inc.;
WHEREAS, subject to satisfaction of the conditions set forth in
Section 4.01, and upon the terms and conditions set forth herein, FAFLIC desires
to cede or retrocede, on a coinsurance or modified coinsurance basis (as
specified herein), to the Reinsurer all of FAFLIC's specified rights,
liabilities, and obligations in respect of the Contracts;
WHEREAS, subject to satisfaction of the conditions set forth in
Section 4.01, and upon the terms and conditions set forth herein, the Reinsurer
desires to reinsure on a coinsurance or modified coinsurance basis all of
FAFLIC's specified rights, liabilities, and obligations in respect of the
Contracts; and
WHEREAS, subject to satisfaction of the conditions set forth in
Section 4.01, the Reinsurer desires to novate and assume as its direct
obligation performance under the Transamerica Reinsurance Agreements and FAFLIC
and the Reinsurer intend to cooperate fully in effecting such novation.
NOW, THEREFORE, in consideration of the mutual covenants and
promises, and upon the terms and conditions, hereinafter set forth, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. Unless otherwise defined herein, capitalized terms
used herein shall have the meanings given them in EXHIBIT A hereto.
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ARTICLE II
BUSINESS REINSURED
2.01 GENERAL. Effective as of the Closing Date (the "EFFECTIVE
DATE"), to the extent set forth herein, FAFLIC hereby cedes or retrocedes to and
reinsures with the Reinsurer all of FAFLIC's rights, interests, duties,
obligations, and liabilities in the Contracts to the extent of the Contract
Liabilities, and the Reinsurer hereby assumes and reinsures from FAFLIC, on an
indemnity reinsurance basis, 100% of the Contract Liabilities under any and all
Contracts and, to the extent provided by Article X herein, agrees to assume and
novate the Transamerica Reinsurance Agreements. Such indemnity reinsurance shall
be based on (i) 100% coinsurance with respect to general account liabilities
related to the Contracts and (ii) 100% modified coinsurance with respect to
Separate Account Liabilities related to the Contracts. In addition to the
Reinsurer's coinsurance of Contract Liabilities, the Reinsurer hereby accepts
and agrees to discharge 100% of all Extra Contractual Obligations. Except as
explicitly set forth herein, the Reinsurer does not assume hereunder any other
liabilities of any kind or description.
2.02 LIABILITY.
(a) From and including the Effective Date and thereafter, as
between the parties hereto, to the extent set forth herein, the Reinsurer shall
bear and shall have responsibility for paying all Contract Liabilities and Extra
Contractual Obligations, including, without limitation, liabilities for
surrenders, withdrawals, and claims for benefits on or after the Effective Date.
The Reinsurer hereby agrees to pay, to the extent set forth herein or under the
Core Administrative Services Agreement, any Contract Liabilities or Extra
Contractual Obligations under the Contracts on behalf of, and in the name of,
FAFLIC; provided, however, that the Reinsurer shall have no direct or indirect
obligation itself to insureds, claimants, or beneficiaries under such Contracts.
(b) Should a lapsed or surrendered Contract be reinstated in
accordance with its terms on or after the Effective Date, the insurance under
such Contract shall be reinsured herein automatically and such reinstated
insurance under such Contract shall be included in Contracts. Premiums and
interest on such reinstated and reinsured Contracts shall be payable to the
Reinsurer for the period on and after the Effective Date and FAFLIC shall pay
such amount to Reinsurer to the extent FAFLIC receives premiums and interest on
such insurance from Contract holders.
(c) Notwithstanding the foregoing, nothing herein shall affect the
rights and obligations of the parties thereto under Article 10 of the SPA.
2.03 DEFENSES. The Reinsurer accepts, reinsures, and assumes, as
applicable, the Contract Liabilities and Extra Contractual Obligations subject
to any and all defenses, setoffs, and counterclaims to which FAFLIC would be
entitled with respect to the Contract Liabilities and Extra Contractual
Obligations, it being expressly understood and agreed by the parties hereto that
no such defenses, setoffs, or counterclaims are or shall be waived by the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby and that the Reinsurer is and shall be fully subrogated in
and to all such defenses, setoffs, and counterclaims.
2.04 DECLARATION OF NON-GUARANTEED ELEMENTS. Some of the Contracts
ceded under this Agreement provide that FAFLIC may in its discretion, from time
to time, as provided in the
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Contract, declare interest rates, cost of insurance rates or other
non-guaranteed elements that are used to determine Contract values (the
"NON-GUARANTEED ELEMENTS"). During the Reinsurance Period, FAFLIC agrees to set
such Non-Guaranteed Elements to be declared on the Contracts and the effective
dates thereof, taking into account the recommendations of the Reinsurer (whether
in response to a change proposed by FAFLIC or at the initiative of the
Reinsurer) with respect thereto. With respect to the Contracts, FAFLIC shall, in
its discretion after giving due consideration to such recommendations of the
Reinsurer, either (i) follow such recommendations or (ii) reject such
recommendations. To the extent permitted by Applicable Law, FAFLIC agrees to
allow the Reinsurer to notify policyholders and contractholders of such changes
and the effective dates thereof.
2.05 CONTRACT CHANGES. FAFLIC agrees that it shall not make any
changes after the Core Coinsurance Closing Date in the provisions and conditions
of a Contract except (i) with Reinsurer's prior written consent or (ii) to the
extent that any change to the terms of any Contract is required under Applicable
Law or as permitted pursuant to Section 10.03(e) of the SPA. FAFLIC shall
promptly notify the Reinsurer in writing of any such change to the terms of any
Contract made pursuant to clause (ii) of the previous sentence.
2.06 REPLACEMENT. FAFLIC shall not initiate any general offer of
conversion or replacement under which it would offer to Contract holders any
inducement to surrender their Contracts or offer them replacement policies
without the prior written approval of the Reinsurer or as permitted pursuant to
Section 10.03(e) of the SPA.
ARTICLE III
TERRITORY; TERM
3.01 TERRITORY. This Agreement shall apply to Contracts covering
lives and risks wherever resident or situated.
3.02 TERM. This Agreement shall remain in full force and effect until
the expiration or termination of all Contract Liabilities in respect of the
Contracts and until all obligations of both parties hereunder have been
discharged in full.
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ARTICLE IV
EFFECTIVENESS; LICENSES
4.01 EFFECTIVENESS. It shall be a condition to the effectiveness of
this Agreement that FAFLIC and the Reinsurer shall have obtained prior approval
(or non-disapproval, as applicable under Applicable Law) of this Agreement from
those state insurance departments as set forth on Schedule 4.01.
4.02 LICENSES.
(a) At all times during the term of this Agreement, the Reinsurer
and FAFLIC each shall hold and maintain all licenses and
authorities required under Applicable Laws to perform its
respective obligations hereunder unless mutually agreed by the
parties (which agreement shall not be unreasonably withheld by
either party).
(b) At all times during the term of this Agreement, the Reinsurer
shall hold and maintain all licenses and authorizations required
under Applicable Law or otherwise take all action that may be
necessary so that FAFLIC shall receive full reserve credits for
reinsurance ceded and retroceded under this Agreement in the
statutory financial statements filed with the New York State
Insurance Department and the
Massachusetts Division of
Insurance, and in statutory financial statements required to be
filed with regulatory authority(ies) in such other jurisdictions
in which FAFLIC must file such statements.
ARTICLE V
REINSURANCE CREDIT; RESERVES
5.01 ESTABLISHMENT OF GENERAL ACCOUNT STATUTORY RESERVES.
(a) RESERVES. The Reinsurer shall be responsible for establishing
and maintaining appropriate general account statutory reserves, computed in
accordance with applicable statutory reserving requirements, for the Contract
Liabilities as required by applicable state insurance regulatory authorities and
Applicable Law.
(b) SECURITY. On the Core Coinsurance Closing Date, the Reinsurer,
as grantor, will establish a trust account with a trustee approved by FAFLIC
(the "TRUSTEE"), such approval not to be unreasonably withheld, naming FAFLIC as
sole beneficiary thereof (the "FAFLIC TRUST ACCOUNT"). The trust assets are held
subject to withdrawal by, and under the control of, FAFLIC, as set forth in the
FAFLIC Trust Agreement, dated as of the Core Coinsurance Closing Date, among
FAFLIC, the Reinsurer and the Trustee, substantially in the form attached hereto
as EXHIBIT B, as the same may be amended from time to time (the "
FAFLIC TRUST
AGREEMENT"). Except as set forth therein or herein, the cost of the FAFLIC Trust
Account shall be borne by the Reinsurer.
(c)
FAFLIC TRUST AGREEMENT. The Trustee shall hold assets in the
FAFLIC Trust Account pursuant to the terms of the
FAFLIC Trust Agreement. The
FAFLIC Trust Account shall be established and maintained in compliance with all
applicable requirements of New York Insurance Department Reg. 114 (11 NYCRR Part
126) or any successor provision thereto
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("REGULATION 114") and all other Applicable Laws governing FAFLIC's right to
take financial statement credit for reinsurance under this Agreement and the
FAFLIC Trust Agreement. The parties hereto acknowledge and agree that the
provisions of this Article V are intended to provide FAFLIC with such credit.
In the event that FAFLIC is not permitted to take such credit for reinsurance
because any provision of this Agreement or the
FAFLIC Trust Agreement is
determined not to comply with Regulation 114 or other Applicable Laws, the
parties hereto agree to reasonably cooperate to amend this Agreement or the
FAFLIC Trust Agreement as necessary to provide such credit. The fair market
value of assets in the FAFLIC Trust Account shall be not less than the amount
required (determined pursuant to SAP) in order for FAFLIC to receive full
statutory reserve credit for the reinsurance of the Contracts that FAFLIC has
ceded and retroceded hereunder.
(d) INVESTMENT OF TRUST ASSETS. The assets held in the FAFLIC Trust
Account shall be valued at their fair market value as of the date as of which
such assets are required to be valued. The assets that may be held in the
FAFLIC Trust Account (the "ELIGIBLE ASSETS") shall consist of cash, certificates
of deposit issued by a U.S. bank and payable in U.S. dollars and investments of
the type permitted by Regulation 114; provided, that each such investment that
is a security is issued by an institution that is not the Reinsurer, FAFLIC or
an Affiliate of either party. FAFLIC acknowledges and agrees that the Reinsurer
shall have the right to manage the investment of the assets in the FAFLIC Trust
Account, subject to any substitution, withdrawal or other provisions of
Regulation 114 and the provisions set forth herein. The Reinsurer shall make
recommendations to FAFLIC as to the investment, reinvestment, substitution and
withdrawal of the assets in the FAFLIC Trust Account; provided, however, that
FAFLIC shall, in its discretion after giving due consideration to such
recommendations of the Reinsurer, either (i) follow such recommendations or
(ii) reject such recommendations.
(e) DEPOSIT OF ASSETS. Prior to depositing assets in the FAFLIC
Trust Account, Reinsurer 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 FAFLIC, or the Trustee upon the
direction of FAFLIC, may whenever necessary negotiate these assets without the
consent or signature from the Reinsurer or any other entity.
(f) ADJUSTMENT OF SECURITY AND WITHDRAWALS. The Reinsurer shall
maintain Eligible Assets in the FAFLIC Trust Account with an aggregate fair
market value at least equal to the Required Balance. The amount of assets held
in the FAFLIC Trust Account shall be adjusted following the end of each calendar
month.
(i) If the aggregate fair market value of the Eligible
Assets held in the FAFLIC Trust Account at the end of
any calendar month is less than the Required Balance,
the Reinsurer shall, no later than fifteen (15) calendar
days following delivery of the reserve report included
in the monthly report provided pursuant to Section 5.03,
transfer additional Eligible Assets to the FAFLIC Trust
Account so that the aggregate fair market value of the
Eligible Assets held in the FAFLIC Trust Account is not
less than the Required Balance.
(ii) If the aggregate fair market value of the Eligible
Assets in the FAFLIC Trust Account at the end of any
calendar month exceeds the Required Balance, then the
Reinsurer shall have the right to seek approval (which
5
shall not be unreasonably or arbitrarily withheld,
delayed or conditioned) from FAFLIC to withdraw the
excess. For the purposes of the foregoing sentence, in
the event that a Triggering Event has occurred, the
parties acknowledge and agree that it shall not be
unreasonable for FAFLIC to withhold its consent to any
such withdrawal. FAFLIC shall be the sole judge as to
the application of this provision, but shall not
unreasonably or arbitrarily withhold its approval.
(g) WITHDRAWALS BY FAFLIC. FAFLIC may withdraw the assets held in
the FAFLIC Trust Account at any time and from time to time, notwithstanding any
other provisions of this Agreement, and assets withdrawn from such FAFLIC Trust
Account shall be utilized and applied by FAFLIC (or any successor by operation
of law of FAFLIC, including, without limitation, any liquidator, rehabilitator,
receiver or conservator of FAFLIC), without diminution because of insolvency on
the part of FAFLIC or the Reinsurer; provided, however, that following any such
withdrawal, FAFLIC (or any successor by operation of law of FAFLIC, including,
without limitation, any liquidator, rehabilitator, receiver or conservator of
FAFLIC) may only apply such assets for one or more of the following purposes:
(i) to pay, or reimburse FAFLIC for payment of, premiums
received by Reinsurer hereunder which are to be returned
to policyholders or ceding companies because of
cancellations of Contracts reinsured hereunder;
(ii) to pay, or reimburse FAFLIC for payment of, surrenders,
benefits, losses or other amounts payable pursuant to
the provisions of the Contracts reinsured hereunder;
(iii) to fund an account with FAFLIC in an amount no less than
the deduction, for reinsurance ceded and retroceded,
from FAFLIC' s liabilities for the general account
statutory reserves to be maintained with respect to the
Contract Liabilities reinsured hereunder; and
(iv) to pay any other amounts FAFLIC claims are due under
this Agreement.
(h) ASSETS IN ACCOUNT OF FAFLIC. Any assets deposited into an
account of FAFLIC (or any successor by operation of law of FAFLIC, including,
without limitation, any liquidator, rehabilitator, receiver or conservator of
FAFLIC) pursuant to Section 5.01(g)(iii), and any interest or other earnings
thereon shall be notionally accounted for by FAFLIC as a funds withheld from the
Reinsurer on the books of FAFLIC.
(i) LIQUIDATION OF TRUST. The Reinsurer shall have the discretion to
utilize any means available in the applicable jurisdiction to make full reserve
credits, as contemplated by Section 4.02(b), available to FAFLIC, which may
include, but not be limited to, posting a letter of credit. If the Reinsurer
elects to exercise such discretion, the FAFLIC Trust Account shall be liquidated
pursuant to the terms of the
FAFLIC Trust Agreement. If a letter of credit is
utilized, it shall be furnished and maintained by the Reinsurer, and at the
Reinsurer's sole expense, for the benefit of FAFLIC and be clean, irrevocable
and unconditional and otherwise of such nature and amount as to satisfy the
requirements of the particular jurisdiction for purposes of establishing full
statutory
6
reinsurance reserve credit for FAFLIC. In the event that the Reinsurer shall
fail or refuse to fulfill any of its obligations under this Agreement relating
to the payment of liability, FAFLIC shall be entitled to proceed under the terms
and conditions of any letter of credit or any other agreement relating to the
same and seize and take possession of the funds represented by the same and
apply those funds to reduce the Reinsurer's obligations to FAFLIC or otherwise
apply those funds in accordance with New York Insurance Department Regulation
133. If a letter of credit is utilized, this Agreement shall be modified to
comply with such Regulation 133.
5.02 ESTABLISHMENT OF SEPARATE ACCOUNT RESERVES.
(a) CONTRACT ACCOUNT. For each direct written Contract,
(i) an amount equal to the account value thereof invested on a variable
basis shall be held by FAFLIC in the applicable Registered Separate
Account and (ii) an amount equal to the account value thereof invested
on a non-variable basis shall be held by FAFLIC in an Unregistered
Separate Account or transferred to FAFLIC's general account, in each
case as required by the relevant Contract and Applicable Law. For the
avoidance of doubt, in the event that any Contract or any Applicable Law
is deemed to require the transfer of additional assets to an
Unregistered Separate Account at any time, such transfers shall be made
from FAFLIC's general account and shall be reimbursed in full by the
Reinsurer as a liability reinsured hereunder.
(b) CONTRACT ACCOUNT RESERVE. The total statutory reserve
liability relating to the assets held with respect to the Contract
Accounts pursuant to Section 5.02(a) shall be shown by FAFLIC on its
Separate Account balance sheets, consistent with SAP. FAFLIC and the
Reinsurer acknowledge and agree that FAFLIC has and will retain sole and
absolute title to and possession of the Separate Account statutory
reserves, and that the Reinsurer has no right, title, or interest
(whether legal, equitable, secured, or otherwise) in or to any portion
of the statutory reserves associated with the Separate Accounts (it
being understood that the Reinsurer has an interest that the Separate
Accounts be maintained for the benefit of Separate Account Contract
holders).
5.03 RESERVE REPORTS. The Reinsurer or its designee shall provide
FAFLIC, within six (6) Business Days after the end of each calendar month, with
valuation summary reports which shall itemize reserves and Contracts in force by
plan code, in a form agreed to by FAFLIC and the Reinsurer in writing. Such
reports shall reflect 100% of any changes in the reserves described in Sections
5.01 and 5.02 above which occurred during the accounting period for which such
reports are made. Each report shall include SAP reserves, Tax reserves and all
information available to the Reinsurer as reasonably necessary for FAFLIC to
calculate its GAAP reserves.
5.04 REPORTS. The Reinsurer shall provide FAFLIC with its annual and
quarterly statutory financial statements filed with state insurance regulators
and a copy of its audited statutory financial statements along with the audit
report thereon.
5.05 UNREGISTERED SEPARATE ACCOUNTS. The Reinsurer shall be
responsible for insuring that the Unregistered Separate Accounts are funded in
compliance with the applicable
7
Contracts and any Applicable Law. Upon expiration or termination of all Contract
Liabilities with respect to the Contracts and the discharge in full of all of
the Reinsurer's obligations hereunder, FAFLIC shall transfer to the Reinsurer
all of its right, title and interest in and to all assets remaining at such time
in the Unregistered Separate Accounts.
ARTICLE VI
ACCOUNTING AND SETTLEMENT
6.01 NET DAILY ADJUSTMENT. With respect to any Business Day, the
"NET DAILY ADJUSTMENT" shall be the amount calculated by comparing:
(a) the sum of:
(i) the gross premium collected on all Contracts, net of
premiums to be allocated to the Separate Accounts
pursuant to Contract owner instructions;
(ii) the interest payments and principal repayments on all
Contract Loans;
(iii) the mortality and expense risk, administrative, cost of
insurance, and other fees and charges deducted under the
Contracts and/or from the Separate Accounts (whether
through the calculation of unit values or by direct
deduction);
(iv) the payments made to FAFLIC or its broker-dealer under
distribution agreements and/or participation agreements
in each case with respect to the Contracts;
(v) the amount of funds transferred from the Separate
Accounts to the general account in connection with (a)
the payment of Contract benefits, including, without
limitation, death benefits, full or partial cash
surrender benefits, full or partial withdrawal benefits,
maturity benefits, annuity payments, Contract Loans and
premium (or other) refunds, (b) annuitization of
Contracts, or (c) in connection with a transfer to a
general account option under a Contract;
(vi) the amount of any net gain from any investment or
disinvestment in the Registered Separate Accounts,
whenever occurring, having resulted in a value other
than the corresponding value charged or credited under
the Contracts (i.e., breakage); and
(vii) any other fees, charges, premiums, costs, recoveries
from reinsurers under the Reinsurance Agreements,
commission refunds or other amounts, or portion(s)
thereof, collected, which would be payable to the
general account of FAFLIC in the absence of the
reinsurance of the Contracts affected by this Agreement
in each case with respect to the Contracts.
(b) with the sum of the following:
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(i) the Contract Liabilities paid, including death benefits,
full or partial cash surrender benefits, full or partial
withdrawal benefits, maturity benefits, annuity
payments, Contract Loans and premium (or other) refunds;
(ii) the amount of funds transferred from the general account
to the Separate Accounts in connection with maintaining
the Contract Accounts (including, without limitation,
transfers to a Separate Account from a general account
option under a Contract);
(iii) the amount of any net loss from any investment or
disinvestment in the Registered Separate Accounts,
whenever occurring, having resulted in a value other
than the corresponding value charged or credited under
the Contracts (i.e., breakage); and
(iv) any other fees, charges, premiums (including, without
limitation, premiums paid to reinsurers), costs,
commissions or other amounts, or portion(s) thereof,
payable on such day by the general account under the
terms of the Contracts or under the Reinsurance
Agreements.
All calculations shall be made in conformity with Applicable Law and the
terms of the relevant Contracts. If the sum of items in Section 6.01(a) exceeds
the sum of items in Section 6.01(b) for the preceding Business Day, then
(subject to the provisions of Section 6.03) such excess (to the extent not
already paid to or on behalf of the Reinsurer) shall be paid by FAFLIC to the
Reinsurer by wire transfer of immediately available funds before the end of
business on the current Business Day. Conversely, if the sum of the items in
Section 6.01(b) exceeds the sum of the items in Section 6.01(a) for the
preceding Business Day, then (subject to the provisions of Section 6.03) such
excess (to the extent not already paid to or on behalf of FAFLIC) (y) shall be
paid from FAFLIC's general account to the applicable FAFLIC Separate Account and
reimbursed in full by the Reinsurer as a liability reinsured hereunder or
(z) shall be paid by the Reinsurer to the account of FAFLIC designated under the
Core Administrative Services Agreement to receive such funds in connection with
the administration of the Contracts, as the case may be, by wire transfer of
immediately available funds before the end of business on the current Business
Day.
6.02 BENEFIT PAYMENTS. Subject to the provisions of the Core
Administrative Services Agreement, the Reinsurer shall have responsibility and
authority for all benefit payment determinations or settlements, and shall be
solely responsible for all expenses associated with benefit payment
determinations or settlements pursuant to and in accordance with the Core
Administrative Services Agreement, dated as of the Closing Date, between FAFLIC
and the Reinsurer, as the same may be amended from time to time (the "CORE
ADMINISTRATIVE SERVICES AGREEMENT").
6.03 CASH SETTLEMENT AND ACCOUNTING.
(a) DAILY CASH SETTLEMENTS. By 3:00 p.m. Eastern time of each
Business Day, the Reinsurer shall notify FAFLIC of the payments required for the
next Business Day under Section 6.01 in the form of a daily statement (the
"DAILY STATEMENT"). The Reinsurer or FAFLIC, as the
9
case maybe, shall make the required payments on such next Business Day by wire
transfer of immediately available funds. Daily Statements, to the extent
necessary, may be based upon reasonable approximations determined in good faith.
Daily Statements shall be in a form agreed to by FAFLIC and the Reinsurer in
writing.
(b) MONTHLY CASH STATEMENTS AND SETTLEMENTS. By the end of the
twentieth Business Day next succeeding the end of each calendar month, the
Reinsurer will provide FAFLIC with a statement for such calendar month (the
"MONTHLY STATEMENT"), which reconciles each Net Daily Adjustment (without the
use of reasonable approximations permitted in Section 6.03(a)). Monthly
Statements shall be in a form agreed to by FAFLIC and the Reinsurer in writing.
The Monthly Statement shall include an itemization of any deficit or surplus
attributable to the actual investment performance of Unregistered Separate
Account assets, with a reflection of funding from FAFLIC's general account of
any deficit amount that is required, under the terms of this Agreement, to be
funded and not reflected as a payable from the general account to an
Unregistered Separate Account, which funding shall be reimbursed in full by the
Reinsurer as a liability reinsured hereunder. The Monthly Statement may also
reflect a correction or adjustment of prior Monthly Statements or computations
thereto. The Reinsurer or FAFLIC, as the case may be, will pay by wire transfer
of immediately available funds the net amount reflected as due in a Monthly
Statement within three (3) Business Days of provision of the Monthly Statement
to FAFLIC. Any further adjustment as maybe required shall be made promptly
following agreement of the parties or completion of any audit pursuant to
Section 6.03(d) below.
(c) FORM OF STATEMENTS. All Daily Statements or Monthly Statements
provided pursuant to Sections 6.03(a) and 6.03(b), respectively (the
"STATEMENTS"), shall summarize the items to be settled in reasonable detail. It
is intended that the Statements be transmitted by e-mail, facsimile or other
similar means of convenient written communication, but, in the event that any
Statement cannot be transmitted after application of commercially reasonable
efforts, the Reinsurer may notify FAFLIC of any settlement due by oral
communication, in which case the Reinsurer shall provide a hard copy of the
Statement as promptly as practicable.
(d) RIGHT TO AUDIT. Upon reasonable notice to the Reinsurer and no
more than twice during any calendar year, FAFLIC shall, at its sole expense,
have the right to audit the amounts contained in any Statements delivered under
this Section 6.03. For such purposes, FAFLIC and its employees and professional
advisors shall have a right to review and copy the relevant books and records of
the Reinsurer relating to the Contracts and to discuss such matters with
employees of the Reinsurer during normal business hours. The Reinsurer agrees to
render reasonable assistance to FAFLIC in conducting any such audit and to
instruct its independent public accountants and actuaries to provide information
to FAFLIC relating thereto. All audits shall be performed in a manner intended
to minimize disruption to the parties' respective businesses.
6.04 MONTHLY REPORT. By the end of the sixth (6th) Business Day next
succeeding the end of each calendar month, the Reinsurer or its designee shall
provide FAFLIC with a statement for the next preceding calendar month setting
forth the following information:
(a) the commissions paid (net of refunds) on behalf of FAFLIC for
all Contracts;
(b) the amount of any state, municipal or other premium or gross
receipts Taxes paid on behalf of FAFLIC with respect to Contract
premiums collected;
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(c) the amount of brokerage and any similar charges paid on behalf
of FAFLIC in connection with the purchase, sale, redemption or
maintenance of Separate Account assets;
(d) the premiums (net of refunds) paid on behalf of FAFLIC under the
Reinsurance Agreements;
(e) any amounts paid on behalf of FAFLIC pursuant to the existing
participation agreements or any other agreement or arrangement
between FAFLIC and the mutual fund organization in which assets
of the Separate Accounts are invested (net of any amounts paid
to FAFLIC pursuant to such agreements and arrangements); and
(f) any other amounts paid by or on behalf of FAFLIC with respect to
the Contracts pursuant to this Agreement.
ARTICLE VII
ADMINISTRATION; RECORDS; NOTICES
7.01 ADMINISTRATION. Administration and servicing of all of the
Contracts shall be conducted by the Reinsurer pursuant to the terms and subject
to the conditions set forth in the Core Administrative Services Agreement.
Reports, files, and other records and information relating to the Contracts
shall be transferred and maintained pursuant to the terms and subject to
the conditions set forth in the Core Administrative Services Agreement.
ARTICLE VIII
CEDING COMMISSION; TRANSFER OF ASSETS; POST-EFFECTIVE DATE
ACCOUNTING
8.01 CEDING COMMISSION. In accordance with this Agreement and the
SPA, concurrently with the execution of this Agreement, the Reinsurer is paying
to FAFLIC a ceding commission in the amount of(i) $8,600,000 plus (ii) interest
on such $8,600,000 at a rate per annum equal to the LIBOR rate with respect to
the period from and including the Closing Date to but excluding the Core
Coinsurance Closing Date.
8.02 TRANSFER.
(a) FAFLIC hereby transfers to the Reinsurer, Investment Assets
having an aggregate Estimated Book Value at least equal to: (i) the general
account statutory reserves maintained by FAFLIC with respect to the Contracts,
minus (ii) the dollar amount of outstanding Contract Loans (to the extent such
loans constitute admitted assets under SAP), minus (iii) the amount of the
contra-liability described in Section 8.05, each estimated in good faith by
FAFLIC as of the Effective Date. Such Investment Assets shall be as identified
within the Company Investment Assets Backing Reserves (as defined in the SPA)
and selected in good faith to as closely as practicable approximate the minimum
amount required to be transferred pursuant to the immediately preceding
sentence. FAFLIC hereby further transfers to the Reinsurer, Investment
11
Assets having an aggregate Estimated Book Value at least equal to the reserves,
if any, held by FAFLIC as of the Effective Date with respect to Extra
Contractual Obligations. In the event that the aggregate Estimated Book Value of
the Investment Assets transferred by FAFLIC exceeds the minimum amount required
to be transferred pursuant to the immediately preceding two sentences, the
Reinsurer shall pay to FAFLIC the amount of such excess in cash on the Core
Coinsurance Closing Date, together with simple interest thereon from, and
including, the Effective Date to, but not including, the date of payment
computed at an annual rate equal to the LIBOR rate.
(b) All cash required to be transferred pursuant to this Section
8.02 or Section 8.06 shall be transferred by wire transfer of immediately
available funds in U.S. dollars in the amounts and to the bank account
designated in writing by the relevant party.
(c) FAFLIC has delivered to the Reinsurer a statement reflecting the
amounts, as of the Effective Date, of the items included in a determination of
the aggregate amount to be transferred pursuant to Section 8.02(a) (the "CLOSING
DATE STATEMENT") in a form as agreed to by the parties.
(d) FAFLIC shall, on the later of(i) the Core Coinsurance Closing
Date or (ii) the date on which the Seller delivers to the Buyer (as defined in
the SPA) the calculation of the "ADJUSTMENT" as defined in and pursuant to
Section 2.03 of the SPA, prepare a proposed final calculation of the general
account statutory reserves with respect to the Contract Liabilities, the dollar
amount of outstanding Contract Loans (to the extent such loans constitute
admitted assets under SAP) and the amount of the contra-liability described in
Section 8.05, each as of the Effective Date and each in accordance with SAP
consistently applied (the "PROPOSED FINAL STATEMENT"), produced using the same
assumptions, methodology and procedures and in the same detail as used to
prepare the Closing Date Statement. The Proposed Final Statement shall be in the
same format as the Closing Date Statement, but shall specify the Book Value
rather than the Estimated Book Value with respect to Investment Assets. Promptly
after its preparation, FAFLIC shall deliver copies of the Proposed Final
Statement to the Reinsurer.
(e) If the Reinsurer disputes any item reflected in the Proposed
Final Statement delivered by FAFLIC pursuant to Section 8.02(d) (each such item
with disputed items arising under Section 8.06, a "DISPUTED ITEM"), then FAFLIC
and the Reinsurer shall proceed as set forth in this subsection (e), subsection
(f) below and Section 8.07; provided, that the Reinsurer may only dispute (i)
items reflected on the Proposed Final Statement on the basis that such amounts
were not determined in accordance with the accounting principles, procedures,
policies and methods to be employed by FAFLIC in preparing the Proposed Final
Statement and agreed to by the Reinsurer, or (ii) items reflected on the
Proposed Final Statement on the basis of arithmetic error or on the basis that
the information utilized in the preparation and calculation of the Proposed
Final Statement was not true and correct or not prepared in good faith from the
Books and Records of FAFLIC.
(f) The Reinsurer shall, within 45 days after receiving such
statement, deliver a notice of disagreement to FAFLIC. Any such notice of
disagreement must specify in reasonable detail all Disputed Items as to which
the Reinsurer disagrees, the reasons therefor and the adjustments to such
Disputed Items that the Reinsurer believes should be made. The Reinsurer shall
be deemed to have agreed with all other items and amounts contained in the
Proposed Final
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Statement. The Reinsurer and FAFLIC shall, during the 15 days following the
delivery of such notice, use their reasonable best efforts to reach agreement on
the Disputed Items in order to determine and agree upon the Disputed Items.
FAFLIC agrees that the Reinsurer and its accountants may have access to the
accounting and actuarial records of FAFLIC relating to its preparation of the
Proposed Final Statement for the purpose of conducting its review.
(g) Following the resolution of all Disputed Items pursuant to
subsections (e) and (f) above or Section 8.07 (as applicable), FAFLIC shall
prepare a final statement (the "FINAL STATEMENT") and shall deliver copies of
such statement and calculation to the Reinsurer. Notwithstanding any provision
of this Agreement to the contrary, the resolution of all Disputed Items with
respect to the Proposed Final Statement shall be consistent with, and shall
occur no later than, the date on which all Disputed Items are resolved pursuant
to Section 2.05 of the SPA.
(h) In the event that the aggregate Book Value of the Investment
Assets transferred by FAFLIC to the Reinsurer minus the amount, if any, of cash
transferred from the Reinsurer to FAFLIC pursuant to Section 8.02(a), is less
than the amount of(i) the general account statutory reserves with respect to the
Contracts, minus (ii) the dollar amount of outstanding Contract Loans (to the
extent such loans constitute admitted assets under SAP), minus (iii) the amount
of the contra-liability described in Section 8.05, all as reflected in the Final
Statement, FAFLIC shall, within two (2) Business Days of the determination
thereof, transfer to the Reinsurer the amount of such difference, together with
simple interest thereon from, and including, the Effective Date to, but not
including, the date of payment computed at an annual rate equal to the Prime
Rate. In the event that the aggregate Book Value of the Investment Assets
transferred by FAFLIC to the Reinsurer minus the amount, if any, of cash
transferred from the Reinsurer to FAFLIC pursuant to Section 8.02(a) is greater
than the amount of (i) the general account statutory reserves with respect to
the Contracts, minus (ii) the dollar amount of outstanding Contract Loans (to
the extent such loans constitute admitted assets under SAP), minus (iii) the
amount of the contra-liability described in Section 8.05, all as reflected in
the Final Statement, the Reinsurer shall, within two (2) Business Days of the
determination thereof, transfer to FAFLIC the amount of such difference,
together with simple interest thereon from, and including, the Effective Date
to, but not including, the date of payment computed at an annual rate equal to
the LIBOR rate.
8.03 ONGOING PAYMENTS. To the extent that FAFLIC receives monies,
checks, drafts, money orders or other instruments payable to, or to the order
of, FAFLIC and allocable to FAFLIC's general account from any third party
relating to the Contracts, FAFLIC shall transfer such amounts to the Reinsurer
no later than on the date the Monthly Statements are due. If applicable, FAFLIC
shall pay such amounts, together with simple interest thereon from, and
including, the earliest Monthly Statement on which such amounts could have been
recorded to, but not including, the date of payment computed at an annual rate
equal to the LIBOR rate.
8.04 ASSIGNMENT. Except to the extent otherwise provided in Section
7.07 and the related schedule of the SPA, the Reinsurer shall be entitled to all
premiums, recoveries and other amounts allocable to FAFLIC's general account
(including, but not limited to, principal and interest on Contract Loans,
abandoned property accounts, revenue sharing, service fees and l2b-1 fees) paid
or payable in respect of the Contracts. FAFLIC hereby also assigns and transfers
to
13
the Reinsurer all cash flows related to (a) all Contract Loans, whether
outstanding on the Core Coinsurance Closing Date or arising thereafter, (b) due
and deferred Contract premiums outstanding on the Core Coinsurance Closing Date,
and (c) other payments or recoveries made in respect of the Contracts allocable
to FAFLIC' s general account except to the extent otherwise provided in Section
7.07 and the related schedule of the SPA.
8.05 SEPARATE ACCOUNT CONTRA-LIABILITY. It is the intent of FAFLIC
and the Reinsurer that the contra-liability relating to the Separate Accounts
recorded as the amount "accrued for expense allowances recognized in reserves"
in the parenthetical on line 13, column 1 of page 3, Liabilities, Surplus and
Other Funds of the Annual Statement of FAFLIC, measured as of the Effective
Date, will be transferred from FAFLIC to the Reinsurer, and will be recorded by
the Reinsurer in accordance with SAP; provided, however, that FAFLIC shall have
no liability for such contra-liability, nor does FAFLIC make any assurance of
collection, realization or accounting treatment available to the Reinsurer.
8.06 POST-EFFECTIVE DATE ACCOUNTING.
(a) Any cash representing investment income accrued from the Closing
Date to the Core Coinsurance Closing Date (to the extent not reinvested as
Investment Assets) on the Investment Assets transferred pursuant to Section
8.02(a) shall be paid by FAFLIC to the Reinsurer on the Core Coinsurance Closing
Date.
(b) Cash flows arising out of the Contracts between the Effective
Date and the Core Coinsurance Closing Date (excluding, for the avoidance of
doubt, the cash investment income specified in Section 8.06(a)) shall be
calculated in an accounting delivered by FAFLIC not later than the 30th day
following the Core Coinsurance Closing Date (the "PROPOSED POST-EFFECTIVE DATE
ACCOUNTING"). The Proposed Post-Effective Date Accounting shall consist of a
Daily Statement with respect to each Business Day, and a Monthly Statement with
respect to the end of each calendar month (if any), from, and including, the
Effective Date to, but not including the Core Coinsurance Closing Date, in each
case in the form agreed upon pursuant to Section 6.03. FAFLIC agrees to supply
the Reinsurer with a copy of all computer runs, work papers and supporting data
used in preparing the Proposed Post-Effective Date Accounting.
(c) If the Reinsurer disputes any item reflected in the Proposed
Post-Effective Date Accounting delivered by FAFLIC pursuant to Section 8.06(b),
then FAFLIC and the Reinsurer shall proceed as set forth in this subsection
(c), subsection (d) below and Section 8.07; provided, that the Reinsurer may
only dispute (i) items reflected on the Proposed Post-Effective Date Accounting
on the basis that such amounts were not determined in accordance with the
accounting principles, procedures, policies and methods employed by FAFLIC and
in accordance with Article VI, including, without limitation, the forms of Daily
Statement and Monthly Statement agreed upon pursuant to Section 6.03, or
(ii) items reflected on the Proposed Post-Effective Date Accounting on the basis
of arithmetic error or on the basis that the information utilized in the
preparation and calculation of the Proposed Post-Effective Date Accounting was
not true and correct or not prepared in good faith from the Books and Records of
FAFLIC.
(d) The Reinsurer shall, within 45 days after receiving such
statement, deliver a notice of disagreement to FAFLIC. Any such notice of
disagreement must specify in reasonable detail all Disputed Items as to which
the Reinsurer disagrees, the reasons therefor and the
14
adjustments to such Disputed Items that the Reinsurer believes should be made.
The Reinsurer shall be deemed to have agreed with all other items and amounts
contained in the Proposed Final Statement. The Reinsurer and FAFLIC shall,
during the 15 days following the delivery of such notice, use their reasonable
best efforts to reach agreement on the Disputed Items in order to determine and
agree upon the Disputed Items. FAFLIC agrees that the Reinsurer and its
accountants may have access to the accounting and actuarial records of FAFLIC
relating to its preparation of the Proposed Final Statement for the purpose of
conducting its review.
(e) Following the resolution of all Disputed Items pursuant to
subsections (c) and (d) above or Section 8.07 (as applicable), FAFLIC shall
prepare a final Post-Effective Date Accounting (the "POST-EFFECTIVE DATE
ACCOUNTING") and shall deliver copies of such statement and calculation to the
Reinsurer
(f) In the event the Post-Effective Date Accounting reflects a
balance due the Reinsurer, such balance shall be paid by FAFLIC to the Reinsurer
in cash simultaneously with the delivery of the Post-Effective Date Accounting.
If the Post-Effective Date Accounting reflects a balance due FAFLIC, such
balance shall be paid by the Reinsurer to FAFLIC in cash not later than three
(3) Business Days following its receipt of the Post-Effective Date Accounting.
Payment under the preceding two sentences shall be made with simple interest
thereon from, and including, the Effective Date to, but not including, the date
of payment computed at an annual rate equal to the LIBOR rate (based on the
daily average balance) in effect on the Core Coinsurance Closing Date.
8.07 DISPUTES REGARDING FINAL STATEMENT AND POST-EFFECTIVE DATE
ACCOUNTING.
(a) In the event that the Reinsurer and FAFLIC are unable to agree
on the manner in which any item or items should be treated in the preparation of
the Proposed Final Statement or the Proposed Post-Effective Date Accounting,
within the fifteen-day period specified above, separate written reports of such
item or items shall be made in concise form and shall be referred to Ernst &
Young LLP or, if Ernst & Young LLP is unavailable, other independent accountants
of one of the other "big four" accounting firms of nationally recognized
standing reasonably satisfactory to the Reinsurer and FAFLIC (who shall not have
any material relationship with the Reinsurer or FAFLIC)(in either case, an
"ARBITER") for resolution in a manner consistent with the provisions of this
Article. Such Arbiter shall consider only those Disputed Items as to which the
parties still disagree. The Arbiter shall determine within thirty (30) days of
receipt of the referral the manner in which such disputed item or items shall be
treated on the Proposed Final Statement or the Proposed Post-Effective Date
Accounting, as the case may be; provided, however, (i) that the treatment of
such items will be in accordance with (A) the definitions of general account
statutory reserves and "CONTRACT LOANS" and (B) Section 8.04 and (ii) that the
dollar amount of each item in dispute shall be determined within the range of
dollar amounts proposed by FAFLIC and the Reinsurer, respectively. The Arbiter
shall simultaneously deliver to the Reinsurer and FAFLIC, a report setting forth
in detail its calculations, methodologies and decisions and the reasons
therefor, The determinations by the Arbiter as to the items in dispute shall be
in writing and shall be final and binding on FAFLIC and the Reinsurer and shall
be so reflected in the Final Statement or the Post-Effective Date Accounting, as
the case may be.
(b) The Arbiter, in its sole discretion, shall determine (i) the
nature and extent of the participation by the Reinsurer and FAFLIC and their
respective independent auditors and
15
actuaries in connection with the resolution of any Disputed Item submitted to
the Arbiter, (ii) the nature and extent of information that the Reinsurer and
FAFLIC may submit to the Arbiter for consideration in connection with such
resolution and (iii) the personnel of the Arbiter who shall review such
information and resolve such disagreement.
(c) The costs of such review and report shall be borne by (i) FAFLIC
if the aggregate difference between the Arbiter's aggregate calculation of the
Disputed Items and FAFLIC's aggregate calculation of the Disputed Items is
greater than the aggregate difference between the Arbiter's calculation of the
Disputed Items and the Reinsurer's aggregate calculation of such Disputed Item,
and (ii) by the Reinsurer if the first such difference is less than the second
such difference and (iii) otherwise equally by the Reinsurer and FAFLIC. Such
determination shall be binding and conclusive on FAFLIC and the Reinsurer.
Following the resolution of all disputed items, FAFLIC shall prepare the Final
Statement or the Post-Effective Date Accounting, as the case may be, and shall
deliver copies of such statement and calculation to the Reinsurer.
ARTICLE IX
[INTENTIONALLY OMITTED]
ARTICLE X
NOVATION
10.01 NOVATION.
(a) Following the Effective Date, FAFLIC and the Reinsurer shall use
reasonable best efforts, as promptly as practicable, at the Reinsurer's option,
to obtain the consent of (i) Transamerica Occidental Life Insurance Company to
novate the Transamerica Reinsurance Agreements and (ii) each of the third party
reinsurers listed on Schedule 10.01(a) hereto to novate each of the retrocession
agreements listed thereon, in each case from FAFLIC to the Reinsurer in order to
ensure that all of FAFLIC's rights, liabilities and obligations thereunder are
solely, directly and exclusively vested in the Reinsurer, it being understood
without any obligation of FAFLIC to make payments or incur any liabilities to
any counterparty. Upon the effectiveness of the novation of the Transamerica
Reinsurance Agreements and such retrocession agreements, the Transamerica
Reinsurance Agreements shall no longer be Contracts and shall no longer be
subject to the indemnity reinsurance provided herein. The Required Balance as of
such date shall be reduced, if applicable to reflect such novation.
(b) FAFLIC agrees that a New York-licensed affiliate of Reinsurer,
or Reinsurer, if it is so licensed, shall have the right, at its option and at
its expense, to assume on a novation basis the Contracts subject to receipt by
FAFLIC and such assuming insurer of all required regulatory approvals.
16
ARTICLE XI
RIGHT OF INSPECTION
11.01 RIGHT OF INSPECTION. Each party hereto and its respective
authorized representatives shall, at such party's expense, have the right, at
all reasonable times during normal business hours, to inspect and review all
books, records, accounts, reports, Tax returns, files, regulatory reports and
filings and other information of the other party hereto to the extent relating
to the Contracts and Contract Liabilities and any other matters hereunder.
ARTICLE XII
INDEMNIFICATION
12.01 INDEMNIFICATION.
(a) The Reinsurer agrees to indemnify, defend and hold harmless
FAFLIC and its directors, officers, employees, Affiliates and assigns from and
against all damages, loss and expense (including, without limitation, reasonable
expenses of investigation and reasonable attorneys' fees and expenses in
connection with any action, suit or proceeding involving a third party claim)
(collectively, "LOSSES," and individually a "LOSS"), asserted against, imposed
upon or incurred by them, (i) directly or indirectly, by reason of or arising
out of or in connection with any breach or nonfulfillment by the Reinsurer of,
or any failure by the Reinsurer to perform, any of the covenants, terms or
conditions of, or any duties or obligations under, this Agreement or the
FAFLIC
Trust Agreement, (ii) for Contract Liabilities or (iii) for Extra Contractual
Obligations.
(b) FAFLIC agrees to indemnify, defend and hold harmless the
Reinsurer and its directors, officers, employees, Affiliates and assigns from
and against all Losses asserted against, imposed upon or incurred by them,
directly or indirectly, by reason of or arising out of or in connection with any
breach or nonfulfillment by FAFLIC of, or any failure by FAFLIC to perform, any
of the covenants, terms or conditions of, or any duties or obligations under,
this Agreement or the
FAFLIC Trust Agreement.
(c) Notwithstanding the foregoing, the assumption of liability for
the Extra Contractual Obligations or any other provision of this Agreement to
the contrary, nothing herein shall affect the rights and obligations of the
parties thereto under Article 10 of the SPA, including, without limitation, any
obligations that the Seller may have under Article 10 of the SPA with respect to
Claims and Warranty Breaches (as each term is defined in the SPA), defenses of
claims and actions and other rights and obligations set forth in Article 10 of
the SPA.
(d) Within twenty (20) days after receipt by an indemnified party of
notice of any demand, claim, suit, action or proceeding indemnified under this
Article XII, or such shorter period as may be necessary to enable the
indemnifying party to respond timely thereto, the indemnified party shall give
notice to the indemnifying party of such demand, claim, suit, action or
proceeding and the indemnifying party shall at its expense assume the defense of
any such demand, claim, suit or proceeding; provided, however, that the failure
by the indemnified party to give timely notice as provided herein shall not
relieve the indemnifying party of its indemnification obligations under this
Agreement except to the extent that such failure results in
17
a failure of actual notice to the indemnifying party and such failure shall have
materially adversely prejudiced the indemnifying party in the defenses or other
rights available to the indemnifying party. In the event that the indemnifying
party has not assumed the defense of any matter within a reasonable period of
time after timely notice as above provided, the indemnified party, at the cost
and expense of the indemnifying party, shall have a full right to defend against
any such claim, suit or proceeding and shall be entitled to settle or agree to
pay in full such claim or demand, in its sole discretion.
ARTICLE XIII
INSOLVENCY
13.01 INSOLVENCY. The Reinsurer hereby agrees that, as to all
reinsurance ceded, retroceded, renewed or otherwise becoming effective
hereunder, the portion of any risk or obligation assumed by the Reinsurer shall
be payable by the Reinsurer on the basis of the liability of FAFLIC under the
Contract or Contracts reinsured and Contract Liabilities assumed and on the
basis of claims filed and allowed in the liquidation proceeding, without
diminution because of the insolvency of FAFLIC. Such payments shall be made
directly to FAFLIC or to its domiciliary liquidator except where the Contract or
Contracts reinsured specifically provides another payee of such reinsurance in
the event of the insolvency of FAFLIC. It is agreed that in the event of the
insolvency of FAFLIC, the liquidator, receiver or other statutory successor of
FAFLIC shall give prompt written notice to the Reinsurer of the pendency or
submission of a claim under the Contract or Contracts reinsured or the Contract
Liabilities assumed. During the pendency of such claim, the Reinsurer may
investigate such claim and interpose, at its own expense, in the proceeding
where such claim is to be adjudicated any defense available to FAFLIC or its
receiver. The expense thus incurred by the Reinsurer is chargeable against
FAFLIC, subject to any court approval, as a part of the expense of liquidation
to the extent of a proportionate share of the benefit which accrues to FAFLIC
solely as a result of the defense undertaken by the Reinsurer.
ARTICLE XIV
NO THIRD PARTY RIGHTS
14.01 NO THIRD PARTY RIGHTS. The Reinsurer's coinsurance of the
Contract Liabilities pursuant to this Agreement with respect to any of the
Contracts is intended for the sole benefit of the parties to this Agreement and
shall not create any right on the part of any policyholder, insured, claimant or
beneficiary under such Contracts against the Reinsurer or any legal relationship
between such policyholders, insureds, claimants or beneficiaries and the
Reinsurer.
ARTICLE XV
DUTY OF COOPERATION
15.01 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; provided, however, that no party may waive,
undermine or fail to take any action necessary to preserve an applicable
privilege without the prior written consent of the affected party hereto (or
18
any affected Affiliate of any such party) except, in the opinion of such party's
counsel, as required by Applicable Law.
ARTICLE XVI
ARBITRATION
16.01 DISPUTE RESOLUTION.
(a) Any dispute that arises out of or is related to this Agreement
or any transaction governed by this Agreement, shall be submitted to senior
executives of the parties, vested with authority to settle the dispute, who will
meet and attempt in good faith to resolve the dispute. The meeting will be held
reasonably promptly at the request of the affected party in the offices of the
party requesting the meeting, or if agreed, at another designated location.
(b) Any dispute arising out of or relating to this Agreement,
including its formation and validity, which is not resolved in accordance with
Section 16.01 hereof, shall be referred to arbitration; provided, however, that
any dispute governed by Sections 8.02(e) or 8.06 of this Agreement shall not be
subject to this Section 16.01. Arbitration shall be initiated by the delivery of
a written demand for arbitration by one party to the other. The arbitration
shall be held in New York, New York or such other place as the parties may
mutually agree. Arbitration shall be conducted before a three-person arbitration
panel appointed as follows: each party shall appoint one arbitrator qualified to
conduct the arbitration as set forth herein, and the two arbitrators so
appointed shall then appoint a neutral umpire before proceeding. If either party
fails to appoint an arbitrator within thirty (30) days after it receives a
written request by the other party to do so, the requesting party may appoint
both arbitrators. Should the two arbitrators fail to choose an umpire within
thirty (30) days of the appointment of the second arbitrator, the parties shall
appoint the umpire pursuant to the XXXXX U.S. Umpire Selection Procedure. The
arbitrators and umpire shall be either present or former executive officers of
life or life and annuity insurance or life or life and annuity reinsurance
companies other than the Reinsurer, FAFLIC or any of their respective
Affiliates. The arbitrators and umpire shall not be under the control of either
party, and shall have no financial interest in the outcome of the arbitration.
(c) The arbitrators and umpire shall interpret this Agreement as an
honorable engagement and shall not be obligated to follow the strict rules of
law or evidence. In making their award, the arbitrators and umpire shall apply
the custom and practice of the insurance and reinsurance industry, with a view
to effecting the intent of the parties as set forth in the terms of this
Agreement and the general purpose of this Agreement. The decision of a majority
of the arbitration panel shall be Final and Binding, except to the extent
otherwise provided in the Federal Arbitration Act. For purposes of this
Agreement, "Final and Binding" shall mean that the aforesaid determinations
shall have the same preclusive effect for all purposes as if such determinations
had been embodied in a final judgment, no longer subject to appeal, entered by a
court of competent jurisdiction. The arbitration panel shall render its award in
writing, setting forth the facts underlying, and the reasons for determining,
such award. Judgment upon the award may be entered in any court having
jurisdiction, pursuant to the Federal Arbitration Act. The non-prevailing party
shall reimburse the prevailing party for (i) the fees and expenses of the
arbitrators, (ii) the fees and expenses of the umpire, and (iii) the other
reasonable expenses of the arbitration, unless (with respect to the foregoing
clauses (i) to (iii)) the arbitration panel
19
determines that the non-prevailing party had reasonable good faith grounds for
asserting its position in such arbitration proceeding, in which case the fees
shall be allocated as determined by the arbitrators. In the event that either
party to this Agreement refuses to submit to arbitration as required by this
Section 16.01, the other party may request the court specified in Section 17.12
to compel arbitration in accordance with the Federal Arbitration Act.
(d) At the request of either party, any arbitration under this
Section 16.01 may be combined with pending arbitration, if any, between the
Reinsurer and FAFLIC or their respective assigns under the Core Administrative
Services Agreement or the Transition Services Agreement so that resolution of
disputes under this Agreement and the Core Administrative Services Agreement or
the Transition Services Agreement maybe resolved in a single arbitration
proceeding.
(e) Notwithstanding the preceding provisions of this Section 16.01,
any Party may enforce the confidentiality terms of this Agreement by commencing
an action for injunctive or other equitable relief, damages or any other
applicable judicial remedy.
ARTICLE XVII
GENERAL PROVISIONS
17.01 DAC TAX ELECTION. With respect to this Agreement, FAFLIC and the
Reinsurer hereby make the election provided for in Section 1.848-2(g)(8) of the
Treasury Regulations issued under Section 848 of the Code, and as set forth in
EXHIBIT C. Each of the parties hereto agrees to take such further actions as may
be reasonably necessary to ensure the effectiveness of such election.
17.02 NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing (including facsimile transmission) and shall be
given:
If to the Reinsurer, to: Allmerica Financial Life Insurance and Annuity
Company
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: President
Facsimile No.: (000) 000-0000
And with a copy of notices or communications with
respect to this Agreement to:
Xxxxxxx Sachs & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx
Facsimile No.: (000) 000-0000
Xxxxxxx Sachs & Co.
00 Xxxxx Xxxxxx
00
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx xxx Xxxxxx
Facsimile No.: (000) 000-0000
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
If to FAFLIC, to: The Hanover Insurance Group, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Financial Officer
Facsimile No.: (000) 000-0000
With a copy to:
The Hanover Insurance Group, Inc
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
And with a copy of notices or communications with
respect to this Agreement to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attention: E. Xxxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Any party may, by notice given in accordance with this Section 17.02 to the
other parties, designate such other address or facsimile number as such party
may hereafter specify for the purpose by notice to the other parties hereto. All
such notices, requests and other communications shall be deemed effective only
upon (i) mailing of such notice, request or other communication and the actual
receipt thereof by the relevant party, or (ii) a facsimile
21
transmission of such notice, request or other communication and the
acknowledgement by the relevant party of receipt thereof.
17.03 ENTIRE AGREEMENT. This Agreement, the SPA and the Ancillary
Agreements (including the Exhibits and Schedules hereto and thereto) contain the
entire agreement between the parties with respect to the transactions
contemplated hereby, and supersedes all prior agreements, written or oral, with
respect thereto.
17.04 EXPENSES. Except as may be otherwise expressly provided in this
Agreement, the SPA or the Core Administrative Services Agreement, each of the
parties hereto shall pay its own costs and expenses incident to preparing for,
entering into and carrying out this Agreement and the consummation of the
transactions contemplated hereby.
17.05 COUNTERPARTS. This 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. 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 maybe delivered by facsimile transmission, which
transmission shall be deemed delivery of an originally executed document.
17.06 NO THIRD PARTY BENEFICIARY. Except as otherwise provided herein,
the terms and provisions of this Agreement are intended solely for the benefit
of the parties hereto, and their respective successors or permitted assigns, and
it is not the intention of the parties to confer third-party beneficiary rights
upon any other person, and no such rights shall be conferred upon any person or
entity not a party to this Agreement.
17.07 WAIVERS AND AMENDMENTS; PRESERVATION OF REMEDIES. This Agreement
may be amended, superseded, canceled, renewed or extended, and the terms hereof
maybe waived, only by a written instrument signed by all of the parties or, in
the case of a waiver, by the party waiving compliance. No failure or delay on
the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any party
of any right, power, remedy or privilege, nor any single or partial exercise of
any such right, power, remedy or privilege, preclude any further exercise
thereof or the exercise of any other such right, remedy, power or privilege. The
rights and remedies herein provided are cumulative and are not exclusive of any
rights or remedies that any party may otherwise have at law or in equity.
17.08 BINDING EFFECT; NO ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors,
assigns and legal representatives, whether by merger, consolidation or
otherwise. This Agreement may not be assigned by any party without the prior
written consent of the other party hereto; provided, further that nothing in
this provision shall be construed to prohibit the Reinsurer from retroceding all
or any portion of the Contract Liabilities reinsured hereunder, so long as the
Reinsurer remains primarily liable with respect to all liabilities so
retroceded.
17.09 SEVERABILITY. Any term or provision of this 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
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction, so long as the economic
or legal substance
22
of the transactions contemplated hereby is not affected in any manner materially
adverse to any party. If any provision of this Agreement is so broad as to be
unenforceable, that provision shall be interpreted to be only so broad as is
enforceable.
17.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
17.11 HEADINGS, ETC. The headings in this Agreement are for reference
only, and shall not affect the interpretation of this Agreement.
17.12 JURISDICTION. Each of the parties hereto irrevocably and
unconditionally submits to the jurisdiction of the United States District Court
for the District of
Massachusetts or, if such court does not have jurisdiction,
the Commonwealth of
Massachusetts courts situated in the County of Worcester, so
long as one of such courts shall have subject matter jurisdiction over such
suit, action or proceeding, and each of the parties hereby irrevocably consents
to the jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives, to the
fullest extent permitted by Applicable Law, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum. Without limiting the
foregoing, each party agrees that service of process on such party as provided
in Section 17.02 shall be deemed the only means of effective service of process
on such party.
17.13 OFFSET.
(a) Any debits or credits incurred after the Effective Date in favor
of or against either FAFLIC or the Reinsurer with respect to this Agreement are
deemed mutual debits or credits, as the case may be, and shall be set off, and
only the balance shall be allowed or paid; provided, however, no debits or
credits with respect to a Separate Account may be offset against a debit or
credit with respect to the general account of either FAFLIC or the Reinsurer or
with respect to another Separate Account except to the extent set forth in
Section 6.01.
(b) Notwithstanding anything to the contrary in this Agreement, each
of the parties hereto acknowledges and agrees that it shall have no right
hereunder or pursuant to Applicable Law to offset any amounts due or owing (or
to become due or owing) to any other party under this Agreement against any
amounts due or owing by such other party or any of its subsidiaries or
Affiliates under any other agreement (including, without limitation, the SPA,
the Administrative Services Agreements or the other Ancillary Agreements),
contract or understanding, except to the extent certain offsetting claims
relating to certain liabilities or obligations cause such liabilities or
obligations to be excluded from Contract Liabilities pursuant to paragraph (B)
of the definition of such term.
17.14 COMPLIANCE WITH LAWS. The parties hereto shall at all times
comply with all Applicable Laws in performing their obligations under this
Agreement.
17.15 ERRORS AND OVERSIGHTS. Each party to this Agreement will act
reasonably in all matters within the terms of this Agreement. If either of the
parties to this Agreement fails to comply with any of the provisions of this
Agreement because of an unintentional oversight or misunderstanding, the
underlying status of this Agreement will not be changed. Both parties will
23
be restored to the position they would have occupied had no such oversight or
misunderstanding occurred, and such oversight or misunderstanding will be
rectified promptly on an equitable basis.
17.16 WAIVER OF JURY TRIAL. Each of the Parties hereto hereby
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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
24
IN WITNESS WHEREOF, FAFLIC and the Reinsurer have each executed this
Agreement as of the date first written above.
FIRST ALLMERICA FINANCIAL LIFE
INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxx, III
-------------------------------
Name: Xxxxxx X. Xxxxx, III
Title: Chief Financial Officer
ALLMERICA FINANCIAL LIFE INSURANCE
AND ANNUITY COMPANY
By: /s/ Xxxxxxxx xxx Xxxxxx
-------------------------------
Name: Xxxxxxxx xxx Xxxxxx
Title: VP, Chief Operating Officer
EXHIBIT A
DEFINITIONS
For the purposes of this Agreement, the following terms shall have the following
definitions:
"ACTION" means (i) any civil, criminal or administrative action, suit, claim,
litigation or similar proceeding, in each case before a Governmental Entity or
(ii) any investigation or written inquiry by a Governmental Entity, in each case
other than ordinary course complaint activity by policyholders unless and until
any such ordinary course policyholder complaint results in any civil, criminal
or administrative action, suit, claim, litigation or similar proceeding before
or by, as applicable, such Governmental Entity, in which case it shall, without
duplication, be treated as an Action hereunder.
"AFFILIATE" shall mean, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person;
PROVIDED that the Reinsurer shall not be considered an Affiliate of Seller for
any period from and after the Closing.
"AFLIAC READY ACCESS PROGRAM" shall mean benefit payments left on deposit with
the Reinsurer in an interest bearing demand account.
"AGREEMENT" shall mean this Coinsurance Agreement.
"ANCILLARY AGREEMENTS" shall mean the Restructuring Agreement, this Agreement
(including the related trust agreement), the Non-Core Coinsurance Agreement, the
Core Administrative Services Agreement, the Non-Core Administrative Agreement,
the Transition Services Agreement, the AIT Reorganization Agreement, the IP
License Agreement, the employee-related side letter entered into on the date
hereof, and any other document that by its terms expressly constitutes an
Ancillary Agreement.
"APPLICABLE LAW" shall mean any applicable statute, law (including principles of
common law), ordinance, rule, regulation or binding circular, binding bulletin
or binding and published written opinion by any Governmental Entity, all
applicable Orders and written recommendations of Insurance Regulators binding on
FAFLIC (relating to the Core Business).
"ARBITER" shall mean Ernst & Young LLP or, if Ernst & Young LLP is unavailable,
other independent accounts of nationally recognized standing reasonably
satisfactory to the Reinsurer and FAFLIC (who shall not have any material
relationship with the Reinsurer or FAFLIC).
"BOOK VALUE" shall mean, as to any Investment Asset, the carrying value thereof
on the books of FAFLIC for statutory statement blank purposes determined as of
the Effective Date by FAFLIC.
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"BUSINESS DAY" shall mean each day on which a valuation of the Separate Accounts
is required by Applicable Law or the terms of the Contracts, which as of the
Effective Date was each day that the New York Stock Exchange is open for
trading.
"CLOSING DATE" shall mean the closing date of the SPA.
"CLOSING DATE STATEMENT" shall have the meaning set forth in Section 8.02(c).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COLI" shall mean corporate owned life insurance or similar products.
"CONTRACTS" shall mean all Insurance Contracts issued by FAFLIC or to which
FAFLIC is a party, either prior to or if following the Effective Date, limited
to the types identified in clauses (i)(C)(I) through (i)(C)(IV) in the
definition of "Core Business".
"CONTRACT ACCOUNT" shall mean the Separate Account Liabilities as shall from
time to time relate to the Contracts as determined pursuant to Section 5.02(a).
"CONTRACT LIABILITIES" shall mean all liabilities and obligations arising under
the express terms and conditions of the Contracts. Without limiting the
generality of the foregoing, the term "Contract Liabilities" shall include,
without limitation, any and all of FAFLIC's liability:
(1) For premium Taxes arising on account of premiums received by or
on behalf of FAFLIC in respect of the Contracts due and payable
at or after the Effective Date and remitted to the Reinsurer or
otherwise received by the Reinsurer on or after the Effective
Date, except that premium Taxes shall be excluded from Contract
Liabilities: (a) where the Reinsurer is taxed directly and
independently on premiums collected by it from the Reinsured, or
(b) to the extent that a state permits FAFLIC to deduct the
reinsurance premiums paid to the Reinsurer for purposes of
calculating its premium tax liability. With respect to Contracts
that are subject to premium Tax in the State of New York only,
the Reinsurer shall reimburse FAFLIC for premium Taxes imposed
at an assumed rate of 1.5% (which rate (i) represents the
current minimum aggregate rate of premium and franchise tax
payable under New York law and (ii) is currently payable with
respect to life insurance but not annuities), as equitably
adjusted from time to time by the parties to take into
consideration any change in applicable New York law;
(2) With respect to any assessment by any insurance guaranty,
insolvency, comprehensive health association or other similar
fund maintained by any jurisdiction allocable to any insurer
insolvency that occurs before, on or after the Effective Date,
the portion, if any, of such assessment that relates to the
Contracts;
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(3) For returns or refunds of premiums (irrespective of when due)
under the Contracts payable on or after but not prior to the
Effective Date;
(4) For commission payments and other compensation, if any, payable
on or after the Effective Date to or for the benefit of agents
and brokers arising on account of premiums received by or on
behalf of FAFLIC in respect of the Contracts and remitted to the
Reinsurer or otherwise received by the Reinsurer at or after the
Effective Date;
(5) For all liabilities arising out of any changes to the terms or
conditions of the Contracts mandated by Applicable Law;
(6) For all unclaimed property liabilities arising under or relating
to the Contracts; and
(7) For Contract claims incurred but not reported prior to the
Effective Date and Contract claims in course of settlement as of
the Effective Date.
Notwithstanding the foregoing:
(A) Contract Liabilities shall not include any liability or obligation
of FAFLIC for which, in lieu of making payment under this Agreement, the
Reinsurer, as a Buyer Indemnified Person (as defined in the SPA) with respect to
such liability or obligation, has a right to seek indemnification under Article
10 of the SPA, but only to the extent of the amount of the payment the Reinsurer
is actually entitled to receive under Article 10 of the SPA, following
submission of a claim, after giving effect to any applicable limitations on
indemnification; and
(B) With respect to Contract Liabilities relating to FAFLIC's general
account, the Reinsurer's obligation to reinsure shall be net of any reinsurance
recoverables under any Reinsurance Agreement, except such reinsurance
recoverables that are uncollectible in accordance with SAP. For the avoidance of
doubt, the Reinsurer acknowledges its assumption of any risk of uncollectibility
with respect to reinsurance recoverables.
"CONTRACT LOANS" shall mean loans under the Contracts, with the dollar amount of
Contract Loans at any time being the amount of principal indebtedness plus
accrued and unpaid interest, all calculated on a basis consistent with SAP and
the terms of the Contracts.
"CORE ADMINISTRATIVE SERVICES AGREEMENT" shall have the meaning set forth in
Section 6.02.
"CORE BUSINESS" means, with respect to each of the Reinsurer and FAFLIC, (i) (A)
all the variable and fixed annuity businesses (including individual, group,
immediate and deferred), including all associated riders, binders and
certificates, (B) all the variable universal life business (including all
associated riders, binders and certificates and the business assumed in the
Transamerica Reinsurance Agreements), including the individual and group
businesses and the COLI business (but excluding the Excluded COLI Insurance
Contracts), (C) the supplemental contracts business with respect to (A) and (B)
(and any supplemental contracts thereon) including with respect to the foregoing
all (I) contracts that have lapsed and that otherwise would be eligible for
inclusion herein subject to reinstatement provisions contained in such Insurance
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Contract or applicable Law; (II) any payout annuity contracts issued by the
Reinsurer or FAFLIC as a result of the election of payout annuity benefits, upon
annuitization or the payment of death benefit proceeds under any contracts
included in the Core Business; (III) all contracts relating to (A) and (B) above
which are issued by the Reinsurer or FAFLIC (x) following the exercise of
conversion or other rights in accordance with the terms of individual life
policies, (y) with respect to new participants in 401(k) or other retirement
plans that are in existence on the Closing Date or (z) pursuant to qualified
domestic relations orders (QDROs); and (IV) all certificates issued in
accordance with the terms of any contracts described in clauses (A), (B), and
(C)(I) through (C)(III) above (including, in all cases, all supplements,
endorsements, riders and ancillary agreements in connection therewith); and (D)
the AFLIAC Ready Access Program, including as to each of the foregoing all
rights, liabilities, obligations and reserves arising under or related to the
Insurance Contracts, (ii) the rights and obligations of the Reinsurer or FAFLIC,
as applicable, under the Transamerica Reinsurance Agreements and the VUL TPA
Agreements and (iii) the rights and obligations of the Reinsurer under the Core
Coinsurance Agreement, the Core Administrative Services Agreement, and any other
agreements, contracts, leases, subleases and other arrangements (other than the
SPA and the Ancillary Agreements) that are related to the Core Business.
"CORE COINSURANCE CLOSING DATE" shall have the meaning set forth in the
Preamble.
"DAILY STATEMENT" shall have the meaning set forth in Section 6.03(a).
"DISPUTED ITEM" shall have the meaning set forth in Section 8.02(e).
"EFFECTIVE DATE" shall have the meaning set forth in Section 2.01.
"ELIGIBLE ASSETS" shall have the meaning set forth in Section 5.01(d).
"ESTIMATED BOOK VALUE" shall mean, as to any Investment Asset, the carrying
value thereof on the books of FAFLIC for statutory statement blank purposes to
be estimated in good faith by FAFLIC as of the Effective Date.
"EXCLUDED COLI INSURANCE CONTRACTS" shall mean any leveraged and "janitor" COLI
insurance policies.
"EXTRA CONTRACTUAL OBLIGATIONS" shall mean all liabilities and obligations
arising under, relating to or in connection with the Contracts, exclusive of
liabilities or obligations arising under the express terms and conditions of the
Contracts, but including, without limitation, any liabilities or obligations for
fines, toll charges, forfeitures, penalties, actual, consequential,
compensatory, exemplary, punitive, emotional distress, special or other form of
extra-contractual damages, which liabilities or obligations arise from any real
or alleged act, error or omission, whether or not intentional, negligent, in bad
faith or otherwise, relating to (i) the design, marketing, sale, underwriting,
production, issuance, delivery, cancellation or administration (including,
without limitation, failure to administer in accordance with Sections 72(s),
7702 and 7702A of the Code or any other provision of the Code or any other
Applicable Law) of any of the Contracts, (ii) the investigation, defense, trial,
settlement or handling of claims, benefits, or
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payments under any of the Contracts, (iii) the failure to pay or the delay in
payment, or errors in calculating or administering the payment of benefits,
claims or any other amounts due or alleged to be due under or in connection with
any of the Contracts, or (iv) fraud or misrepresentation, or written or oral
representations inconsistent with the written terms of a Contract.
Notwithstanding the foregoing, Extra Contractual Obligations shall not
include any liability or obligation of FAFLIC for which, in lieu of making
payment under this Agreement, the Reinsurer, as a Buyer Indemnified Person (as
defined in the SPA) with respect to such liability or obligation, has a right to
seek indemnification under Article 10 of the SPA, but only to the extent of the
amount of the payment the Reinsurer is actually entitled to receive under
Article 10 of the SPA, following submission of a claim, after giving effect to
any applicable limitations on indemnification.
"FAFLIC" shall have the meaning set forth in the Preamble.
"FAFLIC TRUST ACCOUNT" shall have the meaning set forth in Section 5.01(b).
"FAFLIC TRUST AGREEMENT" shall have the meaning set forth in Section 5.01(c).
"FINAL AND BINDING" shall have the meaning set forth in Section 16.01(c).
"FINAL STATEMENT" shall have the meaning set forth in Section 8.02(d).
"GAAP" shall mean generally accepted accounting principles in the United States.
"GOVERNMENTAL ENTITY" shall mean any governmental or regulatory authority,
agency, commission, court, tribunal, body or other governmental or
quasi-governmental or self regulatory entity, or any arbitral body.
"INSURANCE CONTRACTS" means the life, annuity and supplemental policies,
certificates and contracts, including policies sold to individuals on a group
form, issued or reinsured, by the Reinsurer or FAFLIC and included in the Core
Business, including as described on Schedule 1.01(a) hereto.
"INVESTMENT ASSETS" shall mean the portfolio of investment assets which were
selected in the manner specified in Section 8.02(a).
"LIBOR" shall mean the London Interbank Offered Rate for deposits in United
States dollars having a maturity of three months that appears on Telerate Page
3750 as of 11:00 a.m., London time, on the second London Banking Day before the
date from and after which interest equal to LIBOR is owing under the applicable
terms of this Agreement. If that London Interbank Offered Rate does not appear
on Telerate Page 3750 at that time, then LIBOR will be determined on the basis
of the rates at which deposits in United States dollars having a maturity of
three months are offered by the Reference Banks to prime banks in the London
interbank market at approximately 11:00 a.m., London time, on that London
Banking Day, as follows: the Reinsurer will request or cause to be requested the
principal London office of each of the Reference Banks to provide a quotation of
its rate. If at least two such quotations are provided, then LIBOR will be the
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arithmetic mean of those quotations. If only one such quotation is provided by
the Reference Banks, then LIBOR will be the arithmetic mean of the rates quoted
at approximately 11:00 a.m., New York City time, on that London Banking Day (or
if that London Banking Day is not a Business Day, on the next following Business
Day) by three major banks in The City of New York selected or caused to be
selected by the Reinsurer for loans to leading European banks in United States
dollars having a maturity of three months. For purposes of this definition, (a)
"London Banking Day" means any day on which dealings in deposits in United
States dollars are transacted in the London interbank market, (b) "Telerate Page
3750" means the display designated as "Page 3750" on MoneyLine Telerate or such
other page as may replace the 3750 page on that service or any successor service
or services that may be nominated by the British Bankers' Association for the
purpose of displaying the London Interbank Offered Rates of major banks for
United States dollars, and (c) "Reference Banks" means four major banks in the
London interbank market selected by Reinsurer.
"LOSS" shall have the meaning set forth in Section 12.01(a).
"MONTHLY STATEMENT" shall have the meaning set forth in Section 6.03(b).
"NET DAILY ADJUSTMENT" shall have the meaning set forth in Section 6.01.
"NON-GUARANTEED ELEMENTS" shall have the meaning set forth in Section 2.04(a).
"ORDER" shall mean any award, injunction, judgment, decree, settlement, order or
verdict (whether temporary, preliminary or permanent) entered, issued, made or
rendered by any Governmental Entity.
"PERSON" shall mean an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"POST-EFFECTIVE DATE ACCOUNTING" shall have the meaning set forth in
Section 8.06.
"PRIME RATE" shall have the meaning set forth in Section 2.06(b) of the SPA.
"PROPOSED FINAL STATEMENT" shall have the meaning set forth in Section 8.02(d).
"PROPOSED POST-EFFECTIVE DATE ACCOUNTING" shall have the meaning set forth in
Section 8.06.
"REGISTERED SEPARATE ACCOUNTS" shall mean the separate accounts of FAFLIC
identified as such on Schedule 1.01(b) hereto.
"REGULATION 114" shall have the meaning set forth in Section 5.01(c).
"REINSURANCE AGREEMENTS" shall mean all reinsurance and retrocession treaties
and agreements in force as of the date of this Agreement to which FAFLIC (to the
extent included in the Core Business) or the Reinsurer is a ceding or assuming
party and which are included in the Business (as defined in the SPA).
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"REINSURANCE PERIOD" shall mean the period of time from and including the
Effective Date of this Agreement through the termination of this Agreement.
"REINSURER" shall have the meaning set forth in the Preamble.
"REQUIRED BALANCE" shall mean, as of a date, one hundred and two percent (102%)
of the applicable general account statutory reserves related to the Contract
Liabilities, computed in accordance with applicable statutory reserving
requirements.
"SAP" shall mean the statutory accounting principles and practices prescribed or
permitted by the applicable Insurance Regulators (as defined in the SPA).
"SELLER" shall have the meaning set forth in the Recitals.
"SEPARATE ACCOUNTS" shall mean the Registered Separate Accounts and the
Unregistered Separate Accounts.
"SEPARATE ACCOUNT LIABILITIES" shall mean liabilities and obligations in respect
of the Contracts that are allocated to the Separate Accounts.
"SPA" shall have the meaning set forth in the Recitals.
"STATEMENT" shall have the meaning set forth in Section 6.03(c).
"TAX" shall have the meaning set forth in the SPA.
"TRANSAMERICA REINSURANCE AGREEMENTS" shall mean the reinsurance agreements,
effective January 1, 1998 and January 1, 1999, respectively, between
Transamerica Occidental Life Insurance Company ("Transamerica") and FAFLIC,
pursuant to which FAFLIC reinsures certain individual variable universal life
insurance policies of Transamerica.
"TRIGGERING EVENT" shall constitute either of the following occurrences:
(a) if the Reinsurer files an RBC Report that indicates that its Total
adjusted capital is less than 125% of its Company Action Level RBC, as
each such term is defined in 211 Code of
Massachusetts Regulations 20.01
(211 CMR 20.01); or
(b) if the Reinsurer, pursuant to or within the meaning of Title 11, U.S.
Code, or any similar Federal, state or foreign law for the relief of
debtors, including, without limitation, any state insolvency or
rehabilitation statutes (collectively, "BANKRUPTCY LAWS"):
(i) commences a voluntary case or proceeding;
(ii) consents to the entry of an order for relief against it in an
involuntary case or proceeding;
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(iii) consents to the appointment of a custodian of it or for all or
for a substantial part of its property;
(iv) makes a general assignment for the benefit of its creditors; or
(v) fails to contest any involuntary case or proceeding filed
against it within the time period fixed by any applicable rules,
and any extensions granted by the court where such involuntary
case or proceeding is pending;
(c) If a court of competent jurisdiction enters an order or decree against
the Reinsurer under any Bankruptcy Law that remains unstayed and in
effect for 60 days and that:
(i) is for relief against the Reinsurer in an involuntary case or
proceeding;
(ii) appoints a custodian of the Reinsurer or a custodian for all or
for a substantial part of the property of the Reinsurer; or
(iii) orders the liquidation of the Reinsurer.
"TRUSTEE" shall have the meaning set forth in Section 5.01(b).
"UNREGISTERED SEPARATE ACCOUNTS" shall mean the separate accounts of FAFLIC
identified as such on Schedule 1.01(b) hereto.
"VUL TPA AGREEMENTS" means the third-party administrative services agreements
between (i) AFLIAC and Connecticut Mutual Life Insurance Company, effective
November 1, 1997, and (ii) the Reinsurer and Transamerica, effective January 1,
1999.
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EXHIBIT B
FORM OF TRUST AGREEMENT
B-1
EXHIBIT B
FAFLIC TRUST AGREEMENT
by and among
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY,
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
and
THE BANK OF NEW YORK
Dated as of December 30, 2005
FAFLIC TRUST AGREEMENT
THIS FAFLIC TRUST AGREEMENT (this "Agreement") is made and entered into
as of December 30, 2005, by and among FIRST ALLMERICA FINANCIAL LIFE INSURANCE
COMPANY, a
Massachusetts stock insurance company (the "Beneficiary"), ALLMERICA
FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY, a
Massachusetts stock insurance
company (the "Grantor"), and THE BANK OF NEW YORK, a New York banking
corporation (the "Trustee").
WITNESSETH
WHEREAS, the Grantor desires to convey and transfer certain assets to
the Trustee for deposit into a trust account;
WHEREAS, the Trustee is willing to act as the trustee of the trust
account under the terms and conditions specified herein; and
WHEREAS, the FAFLIC Trust Account (as defined below) is intended to be a
grantor trust of which the Grantor is the grantor, within the meaning of subpart
E, part I, subchapter J, subtitle A of the Internal Revenue Code of 1986, as
amended (the "Code");
NOW, THEREFORE, the parties agree as follows:
ARTICLE I.
PROVISIONS RELATING TO THE FAFLIC TRUST ACCOUNT
Section 1.01. The Grantor hereby establishes and creates a trust account (the
"FAFLIC Trust Account") with the Trustee at the Trustee's office
in the United States at 000 Xxxxxxx Xx., 0X, Xxx Xxxx, Xxx Xxxx
00000, upon the terms and conditions hereinafter set forth. The
FAFLIC Trust Account established hereunder is for the benefit of
the Beneficiary and the assets deposited therein shall be
subject to withdrawal by the Beneficiary as provided herein. As
used herein, the term "Beneficiary" shall include any successor
of the Beneficiary by operation of law, including, without
limitation, any liquidator, rehabilitator, receiver or
conservator.
Section 1.02. The Trustee and its lawfully appointed successors is and are
authorized and shall have power to receive such funds and other
property as the Grantor from time to time may transfer or remit
to or vest in the Trustee or place in the Trustee's hands or
under the Trustee's control, or as otherwise deposited in the
FAFLIC Trust Account and to hold, invest, reinvest, manage and
dispose of the same in the manner and according to the
provisions hereinafter set forth. All such trusteed assets at
all times shall be maintained as a trust account, separate and
distinct from all other assets.
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(a) The Trustee may hold the trusteed assets in its vaults
or may hold on deposit portions of such assets with
depositories or subcustodians that provide handling,
clearance or safekeeping services. To the extent the
Trustee is responsible for the selection of any agents
or brokers, the Trustee shall remain liable to the
Beneficiary for such agents' acts or omissions to the
same extent as if the assets held in the FAFLIC Trust
Account were held directly. The Trustee shall not be
responsible for any act or omission, or for the
solvency, of any such agent or broker chosen by the
Trustee at the instruction of either the Beneficiary or
the Grantor.
(b) The Trustee shall also have the right to hold property
on an uncertificated basis with the issuer or in
book-entry form or at any other location within the
State of New York. The Trustee will use the same care
with respect to the safekeeping of assets held in the
FAFLIC Trust Account as it uses in respect of its own
similar property.
Section 1.03. Assets deposited in the FAFLIC Trust Account and investments and
reinvestments thereof shall consist only of currency of the
United States of America, certificates of deposit issued by a
United States bank and payable in currency of the United States
of America and investments of the types permitted by New York
Insurance Department Reg. 114(11 NYCRR Part 126) or any
successor provision thereto, provided that such investments are
issued by an institution that is not the parent, subsidiary or
affiliate of either the Beneficiary or the Grantor ("Eligible
Assets"). Any deposit or investment direction by the Grantor (as
provided for in Section 1.08 below) or substitution (as provided
in Section 1.09 below) shall constitute certification by the
Grantor to the Trustee that the assets so deposited or to be
purchased pursuant to such investment direction or so
substituted are Eligible Assets. The Trustee shall not be
responsible for the value of the assets or for determining
whether any assets in the FAFLIC Trust Account are or continue
to be Eligible Assets.
Section 1.04. Any asset received by the Trustee which, together with any
accompanying transfer documents, is not in such form that,
whenever necessary, the Trustee may negotiate such asset without
the consent or signature of the Grantor or any other person or
entity shall not be accepted by the Trustee and shall be
returned to the Grantor as unacceptable.
Section 1.05. (a) The Trustee is authorized to transfer into the name of
nominees selected by it all registered securities from
time to time held under this Agreement. The Trustee
shall be responsible for the acts of its nominee with
respect to such securities.
(b) The Trustee is authorized, without further instructions,
to exchange securities in temporary form for securities
in definitive form, to effect an exchange of the shares
where the par value of stock is changed, and to
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surrender securities at maturity or when advised of
earlier call for redemption, against payment therefor in
accordance with accepted industry practice. The Trustee
shall have no duty to notify the Grantor or the
Beneficiary of any rights, duties, limitations,
conditions or other information set forth in any
security (including mandatory or optional put, call and
similar provisions), but the Trustee shall forward to
the Grantor and the Beneficiary any notices or other
documents subsequently received in regard to any such
security. The Trustee shall maintain securities received
in bearer form in such form unless instructed by the
Grantor to exchange such securities for securities in
registered form.
(c) Where redemption options, tenders or other like rights
with respect to securities have fixed expiration dates,
the Grantor understands that in order for the Trustee to
act, the Trustee must receive the Grantor's instructions
at its offices, addressed as the Trustee may from time
to time request, by no later that 9:00 a.m. (the
Trustee's local time) at least one business day prior to
the last scheduled date to act with respect thereto (or
such earlier date or time as the Trustee may notify the
Grantor). Absent the Trustee's timely receipt of such
instruction, such instruments will expire without
liability to the Trustee unless the Trustee did not,
with due diligence, provide the Grantor with timely and
appropriate information.
Section 1.06. (a) All dividends, interest and other income resulting from
the investment of the assets in the FAFLIC Trust Account
shall be the property of the Grantor. To the extent that
the Trustee shall collect and receive such income from
the FAFLIC Trust Account, it shall promptly pay over the
amount of such income to the Grantor or, at the
Grantor's option, deposit the amount of such income into
an account established in the Grantor's name; provided,
however, that except as provided in subsection (b) below
the Trustee shall have no obligation with respect to the
collection of such income.
(b) From time to time, the Trustee may elect, but shall not
be obligated, to credit the FAFLIC Trust Account with
the amount of interest, dividends or principal payments
due on assets in the FAFLIC Trust Account before
actually receiving such payments from a pay or, central
depository, broker or other agent employed by the
Grantor or the Trustee. Any such crediting shall be at
the Grantor's sole risk, and the Trustee shall be
authorized to reverse any such credit in the event it
does not receive good funds from the payor, central
depository, broker or agent. The Trustee shall not be
required to enforce collection by legal means or
otherwise of any such payment, but shall use reasonable
diligence to make all such collections as may be
effected in the ordinary course of business
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(c) It is understood that the Trustee is not required to
make advances of cash, securities or any other property
on behalf of the FAFLIC Trust Account, or permit
overdrafts in the FAFLIC Trust Account, in connection
with the acquisition or disposition of assets in the
FAFLIC Trust Account.
Section 1.07. The Grantor directs the Trustee not to disclose the Grantor's
name, address and securities positions to issuers of securities
held in the FAFLIC Trust Account, pursuant to SEC rules
implementing The Shareholder Communications Act of 1985. The
Grantor's address is as set forth on the signature page hereof.
Under the penalties of perjury, the Grantor and the Beneficiary
each certify that their respective Taxpayer Identification
Numbers set forth on the last page hereof are correct and that
the Grantor and the Beneficiary each are not subject to "backup
withholding" under section 3406(a)(1)(c) of the Code. The
Grantor and the Beneficiary agree to notify the Trustee
immediately in writing of any change in the information set
forth in this paragraph.
Section 1.08. The Trustee shall not invest or reinvest the assets in the
FAFLIC Trust Account, except on written instructions from the
Beneficiary. The Trustee shall invest and reinvest the FAFLIC
Trust Account, or any part thereof, in such Eligible Assets as
may be permitted by this Agreement. The Trustee shall execute
any direction to buy or sell securities and settle securities
transactions itself or through a duly licensed broker or agent.
The Trustee shall not be responsible for any act or omission, or
the solvency, of any such broker or agent unless the act or
omission is the result of the Trustee's negligence, willful
misconduct or lack of good faith. Any loss incurred from any
investment directed by the Beneficiary shall be borne
exclusively by the FAFLIC Trust Account.
Section 1.09. The Trustee shall not substitute or withdraw any assets from the
FAFLIC Trust Account, except on written instructions from the
Beneficiary.
Section 1.10. The Grantor shall have the full and unqualified right to vote
and execute consents and to exercise any and all proprietary
rights not inconsistent with this Agreement with respect to any
securities or other property forming a part of the FAFLIC Trust
Account.
Section 1.11. The Beneficiary shall have the right to withdraw assets from the
FAFLIC Trust Account at any time and from time to time, without
notice to the Grantor, subject only to written notice from the
Beneficiary to the Trustee. Requests for withdrawals from the
FAFLIC Trust Account shall be made pursuant to a withdrawal form
substantially in the form contained in Exhibit "A" annexed
hereto. No other statement or document need be presented by the
Beneficiary in order to withdraw assets, except that the
Beneficiary shall be required by the Trustee to acknowledge
receipt of withdrawn assets. Upon written 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 held
5
in the FAFLIC Trust Account to the Beneficiary or any other
party designated by the Beneficiary and to deliver physical
custody of such assets to the Beneficiary or such other party;
provided, that, with respect to deposit or other accounts in
other banks or with respect to book-entry securities, the
Trustee shall execute the written directions of the Beneficiary
with respect to the transfer, deposit or other disposition of
the withdrawn assets. The Trustee shall be protected in relying
upon any written demand of the Beneficiary for such withdrawal
and on any statement made therein. In the absence of a
withdrawal form or other written authorization from the
Beneficiary, the Trustee shall allow no withdrawals or
substitutions of assets from the FAFLIC Trust Account; provided,
however, that the foregoing requirement shall not be deemed to
prohibit substitutions permitted by Section 1.09.
Section 1.12. (a) The Trustee will provide the Grantor and the Beneficiary
with a Schedule of assets and Transaction Statements
showing all transactions in the FAFLIC Trust Account
upon its inception and, thereafter, as of the end of
each month. Such Schedules and Statements shall be given
as soon as practicable, but in no event later than 15
days after such date. Unless the Grantor or the
Beneficiary files with the Trustee a written exception,
or claim of noncompliance with the Grantor's
instructions, within one year of the closing date of the
period covered by such Schedules or Statements, the
Grantor and the Beneficiary will be conclusively deemed
to have waived any such exception or claim.
(b) The Trustee shall furnish to the Grantor and the
Beneficiary notice of any deposits to or withdrawals
from the FAFLIC Trust Account within ten (10) calendar
days of the occurrence of such event.
ARTICLE II.
PROVISIONS RELATING TO THE TRUSTEE
Section 2.01 The Trustee shall be a bank that is a member of the Federal
Reserve System of the United States of America or a New York
state-chartered bank and shall not be a parent, subsidiary or
affiliate of the Grantor or the Beneficiary.
(a) The Trustee shall be entitled to receive as compensation
for its services hereunder, an annual fee, computed and
payable quarterly, at such rate as may be agreed from
time to time in writing between the Grantor and the
Trustee. The Grantor shall be solely responsible for the
payment of the fee of the Trustee and all reasonable
expenses of the Trustee, including reasonable fees of
counsel. The FAFLIC Trust Account shall not be utilized
for the payment of such fees and expenses. The Trustee
may, however, deduct any unpaid fees and expenses from
any dividends, interest and other income of the FAFLIC
Trust Account received by the
6
Trustee before payment to the Grantor pursuant to
Section 1.06(a). The Grantor and the Beneficiary hereby
acknowledge that the foregoing indemnities shall survive
the resignation or discharge of the Trustee or the
termination of this Agreement.
(b) The Grantor indemnifies the Trustee against and holds it
harmless from any claim, loss, liability, damage, cost
or expense (including reasonable attorneys' fees and
expenses), incurred or made without negligence, willful
misconduct or lack of good faith on the Trustee's part,
arising out of or in connection with the Trustee's
performance of its obligations under this Agreement.
This indemnity shall survive the termination of this
Agreement or the Trustee's resignation or discharge.
Section 2.02. [Intentionally Omitted.]
Section 2.03. The Trustee shall be liable for the safekeeping and
administration of the FAFLIC Trust Account in accordance with
provisions of this Agreement. The duties and obligations of the
Trustee shall be only those specifically set forth in this
Agreement, and the Trustee shall have no duty to take any other
action unless specifically agreed to by the Trustee in writing.
Without limiting the generality of the foregoing, the Trustee
shall not have any duty: to appear in or defend any suit with
respect thereto unless requested by the Grantor or the
Beneficiary in writing and indemnified to the Trustee's
satisfaction; to advise, manage, supervise or make
recommendations with respect to the purchase, retention or sale
of assets in the FAFLIC Trust Account; with respect to any
assets in the FAFLIC Trust Account as to which default in the
payment of principal or interest has occurred, to give notice of
default, make demand for payment or take any other action, to
provide notification of the solvency, financial condition or
legal ability, or to be responsible for the consequences of
insolvency or the legal inability, of any broker, dealer, bank
or other agent employed by the Grantor or the Trustee with
respect to the assets in the FAFLIC Trust Account, except to the
extent that the Trustee was negligent, engaged in misconduct or
acted in bad faith in the selection of any such person or
entity; to be responsible for the accuracy of any securities
information, market values or other similar information provided
by third-party services to which the Trustee subscribes or which
the Trustee engages, which information is provided to the
Grantor or the Beneficiary in statements or otherwise, or upon
which the Trustee relies in performing pursuant to this
Agreement, or upon which the Grantor or the Beneficiary relies;
or to be responsible for the failure to redeem any called bond
or take any other action if notice of such call or action was
not provided by any services to which it subscribes, unless the
Trustee has been negligent in the selection of any such service.
The Trustee shall be liable only for its own negligence, willful
misconduct or lack of good faith or to the extent provided for
in the prior sentence.
7
Section 2.04. Unless otherwise provided in this Agreement, the Trustee is
authorized to comply with and rely upon all written
instructions, directions, notices and other communications
furnished to the Trustee from time to time by the Grantor and
the Beneficiary, respectively, and by attorneys-in-fact acting
under written authority furnished to the Trustee by the Grantor
and the Beneficiary, including, without limitation,
instructions, directions, notices and other communications given
by letter, electronic media or facsimile, if the Trustee
reasonably believes such instructions, directions, notices and
other communications to be genuine and to have been signed or
presented by the proper party or parties. With respect to the
facsimile method of giving instructions, directions, notices and
communications, the Grantor and the Beneficiary acknowledge that
there are more secure methods of sending instructions,
directions, notices and communications but have nevertheless
elected to use such method of communication, provided, however,
that the relevant party shall acknowledge receipt of such
facsimile. In the absence of negligence, the Trustee shall not
incur any liability to anyone resulting from actions taken by
the Trustee in reliance in good faith on such instructions,
directions, notices and other communications from any
attorney-in-fact. All notices provided to the Trustee (unless
otherwise provided therein) shall be deemed to be effective when
received by the Trustee.
Section 2.05. [Intentionally Omitted.]
Section 2.06 (a) Except where otherwise expressly provided in this
Agreement, any statement, certificate, notice, request,
consent, approval or other instrument to be delivered or
furnished by or on behalf of the Grantor and/or the
Beneficiary shall be sufficiently executed if executed
in the name of the Grantor and/or the Beneficiary by an
officer or agent of the Grantor. The Trustee shall be
protected in acting upon any written statement or other
instrument made by such officer or agent of the Grantor
and/or the Beneficiary with respect to the authority
conferred on him.
(b) The Trustee shall be under no obligation to determine
whether or not any instruction given by the Grantor
and/or the Beneficiary are contrary to any provision of
law.
Section 2.07 No provision of this Agreement shall require the Trustee to take
any action which, in the Trustee's reasonable judgment, would
result in any violation of this Agreement or any provision of
law.
Section 2.08 The Trustee shall keep full and complete records of the
administration of the Trust. Any person or persons duly
authorized in writing by the Grantor and/or the Beneficiary may
examine such records at any time during business hours.
Section 2.09. (a) The Trustee hereby accepts the Trust herein created and
declared upon the terms herein expressed.
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(b) The Trustee may resign, by written resignation,
effective not less than ninety (90) days after receipt
thereof by the Grantor and the Beneficiary, and the
Grantor may remove the Trustee at any time, without
assigning any cause therefor, by the delivery to the
Trustee and the Beneficiary of a written notice of
removal, effective not less than ninety (90) days after
receipt by the Trustee and the Beneficiary of the
notice, provided that no such resignation or removal
shall be effective until a successor Trustee has been
duly appointed and approved by the Beneficiary and the
Grantor and has accepted such appointment and all assets
in the FAFLIC Trust Account have been duly transferred
to such successor Trustee. In case of the appointment of
a successor Trustee, all of the powers, rights and
duties of the Trustee named herein shall survive and
continue in the successor Trustee and every successor
Trustee shall succeed to take and have all the estate,
powers, rights and duties which belonged to or were held
by its predecessor.
Section 2.10. Upon the written request of the Grantor or the Beneficiary, the
Trustee shall promptly permit the Grantor or the Beneficiary,
its agents or employees, or independent auditors designated by
the Grantor or the Beneficiary to examine, audit, excerpt,
transcribe and copy, during normal business hours, any books,
documents, papers and records relating to the FAFLIC Trust
Account or the assets in the FAFLIC Trust Account.
ARTICLE III.
MISCELLANEOUS
Section 3.01 The FAFLIC Trust Account and this Agreement shall be effective
until terminated by sixty (60) days' advance written notice sent
to the Trustee by the Grantor. Written notice of termination
shall be delivered by the Trustee to the Beneficiary at least
thirty (30) days, but not more than forty-five (45) days, prior
to termination of the FAFLIC Trust Account. Upon the date of
termination of this Agreement, the Trustee shall, at the
Grantor's discretion and with the Beneficiary's written consent,
transfer, pay over and deliver to the Grantor, in exchange for a
written receipt from the Grantor, all of the assets of the
FAFLIC Trust Account not previously withdrawn by the
Beneficiary.
Section 3.02 THE PROVISIONS AND VALIDITY AND CONSTRUCTION OF THIS AGREEMENT
AND ANY AMENDMENTS HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF,
AND THE FAFLIC TRUST ACCOUNT CREATED HEREUNDER SHALL BE
ADMINISTERED IN ACCORDANCE WITH THE INTERNAL LAWS OF
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SAID STATE. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN
ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY,
ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT, OR OTHERWISE) IN
ANY WAY ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
RELATIONSHIP ESTABLISHED HEREUNDER. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS AGREEMENT.
Section 3.03 This Agreement may be amended at any time by a written agreement
signed by the Grantor, the Beneficiary and the Trustee.
Section 3.04 This Agreement is not subject to any conditions or qualification
outside this Agreement.
Section 3.05 In the event any provision of this Agreement shall be held
invalid or unenforceable for any reason, such invalidity or
unenforceability shall not affect the remaining parts of this
Agreement.
Section 3.06 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, and the counterparts
shall constitute but one and the same instrument, which shall be
sufficiently evidenced by any one counterpart. Each counterpart
may consist of a number of copies each signed by less than all,
but together signed by all, the parties hereto.
Section 3.07 This Agreement may not be assigned by any party without the
prior written consent of the other parties, and any such
attempted assignment shall be void. This Agreement shall be
binding upon the successors and permitted assigns of the parties
hereto.
Section 3.08 The Trustee shall not be responsible or liable for any failure
or delay in the performance of its obligations under this
Agreement arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control, including but not
limited to earthquakes, fires, floods, wars, civil or military
disturbances, sabotage, riots, acts of civil or military
authority or governmental actions. The Trustee shall promptly
notify the Grantor and the Beneficiary of the existence of any
circumstance causing any such failure or delay in the
performance of its obligations under this Agreement and the
effect on its ability to perform its obligations and the Trustee
shall undertake all reasonable efforts to mitigate the impact of
such circumstances on the Grantor and the Beneficiary. If such
failure or delay in performance endures for more than sixty (60)
days, the parties shall meet and review in good faith the
desirability and conditions of this Agreement, and the Grantor
and the Beneficiary may determine to terminate this Agreement
without liability to the Trustee.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
By:
---------------------------------------------
Title:
------------------------------------------
Address:
----------------------------------------
------------------------------------------------
Taxpayer Identification No.:
--------------------
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
By:
---------------------------------------------
Title:
------------------------------------------
Address:
----------------------------------------
------------------------------------------------
Taxpayer Identification No.:
--------------------
THE BANK OF NEW YORK
By:
---------------------------------------------
Title:
------------------------------------------
Address:
----------------------------------------
------------------------------------------------
11
EXHIBIT "A"
REQUEST FOR WITHDRAWAL
FROM FAFLIC TRUST ACCOUNT
First Allmerica Financial Life Insurance Company, as the Beneficiary under
the FAFLIC Trust Agreement dated December 30, 2005, among itself, Allmerica
Financial Life Insurance And Annuity Company, as the Grantor, and The Bank of
New York, as the Trustee, requests and authorizes the Trustee (1) to withdraw
the amount or other property described below from FAFLIC Trust Account #
________________, (2) to transfer such amount or property and (3) if applicable,
to sell the property described below to fund the withdrawal and transfer of any
such amount, in each case in accordance with the directions set forth below:
1. PROPERTY TO BE WITHDRAWN AND TRANSFERRED:
Amount: $
------------------------------------------
or Property:
---------------------------------------
2. TRANSFER DIRECTIONS:
Transferee:
----------------------------------------
Location of Account:
-------------------------------
Account No.:
---------------------------------------
3. PROPERTY TO BE SOLD:
Property:
------------------------------------------
Date:
--------------------------
FIRST ALLMERICA FINANCIAL LIFE
INSURANCE COMPANY
By:
---------------------------
Title:
------------------------
EXHIBIT C
TAX ELECTION
FAFLIC and the Reinsurer hereby make an election pursuant to Treasury
Regulations Section 1.848-2(g)(8), issued pursuant to Section 848 of the Code.
This election shall be effective for the Tax year during which the Effective
Date falls and all subsequent taxable years for which this Agreement remains in
effect. Unless otherwise indicated, the terms used in this Exhibit are defined
by reference to Treasury Regulations Section 1.848-2 as in effect on the Core
Coinsurance Closing Date. As used below, the term "PARTY" or "PARTIES" shall
refer to FAFLIC or the Reinsurer, or both, as appropriate.
1. The party with the net positive consideration with respect to the
transactions contemplated under this Agreement for any taxable year
covered by this election will capitalize specified policy acquisition
expenses with respect to such transactions without regard to the general
deductions limitation of Section 848(c)(1) of the Code.
2. The parties agree to exchange information pertaining to the amount of
net consideration under this Agreement each year to ensure consistency
or as is otherwise required by the Internal Revenue Service. The
exchange of information each year will include the procedures set forth
below:
(a) By June 1 of each year, the Reinsurer will submit a schedule to
FAFLIC of its calculation of the net consideration for the
preceding calendar year. This schedule of calculations will be
accompanied by a statement signed by an authorized
representative of the Reinsurer stating the amount of the net
consideration the Reinsurer will report in its Tax return for
the preceding calendar year.
(b) Within thirty (30) days of FAFLIC's receipt of the Reinsurer's
calculation, FAFLIC may contest such calculation by providing an
alternative calculation to the Reinsurer in writing. If FAFLIC
does not notify the Reinsurer that it contests such calculation
within said 30-day period, the calculation will be presumed
correct and FAFLIC shall also report the net consideration as
determined by the Reinsurer in FAFLIC's Tax return for the
preceding calendar year.
(c) If FAFLIC provides an alternative calculation of the net
consideration pursuant to clause (b), the parties will act in
good faith to reach an agreement as to the correct amount of net
consideration within thirty (30) days of the date the Reinsurer
receives the alternative calculation from FAFLIC. When FAFLIC
and the Reinsurer reach agreement on an amount of net
consideration, each party shall report the applicable amount in
their respective Tax returns for the preceding calendar year.
(3) Each party should attach a schedule to its federal income tax return for
the year in which the Effective Date falls, which schedule identifies
this Agreement and references this Tax Election.
C-1
Agreed and accepted:
FIRST ALLMERICA FINANCIAL LIFE
INSURANCE COMPANY
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
ALLMERICA FINANCIAL LIFE INSURANCE
AND ANNUITY COMPANY
By:
-------------------------------
Name:
Title:
C-2
SCHEDULE 1.01(a)
INSURANCE CONTRACTS
I. Annuity Contracts*
POLICY FORM MARKETING OR PRODUCT NAME
----------- -------------------------
A300l-75 75 series elective pay
A3002-75 75 series elective pay
A3003-75 75 series single pay
A3004-75 75 series single pay
A3005-75 75 Elect Payment Fixed
A3006-75 75 Elect Payment Fixed
X0000-00 Xxxxxxxx XXX (single pay)
A3008-78 78 Single Pay Fixed
A3009-78 78 Single Pay Fixed
A30l0-79 79 Elect Payment Fixed
A3011-79 79 Elect Payment Fixed
A3012-79 78/79 series elective pay
A30l3-79 78/79 series elective pay
A30l4-79 78/79 series single pay
A30l5-79 78/79 series single pay
A3016-84 Exec Xxx Single Pay Fixed
A3017-86 Exec Xxx XX - Single Pay Fixed
A30l8-9l Exec Annuity Plus 91 (3)
A3019-92 Delaware Medallion I
A3020-92 Allmerica Select Resource I
A3021-93 Exec Annuity Plus 93
A3022-93 Delaware Medallion II
A3023-95 Pioneer Vision 1
X0000-00 Xxxxxxxxx Xxxxxxxxx, Xxxxxxxxx Select Resources II,
Delaware Medallion III, Pioneer Vision 0, Xxxxxxx
Xxxxxxx Xxxxx
X0000-00 Xxxxxxx Gateway Custom
A3027-98 Xxxxxx Advisor, Pioneer C- Vision, Select Charter
A3028-99 Delaware Golden Medallion, Pioneer Xtra Vision,
Xxxxxxx Gateway Plus, Select Reward
A3029-99 Allmerica Immediate Advantage
A3030-99 Allmerica Value Generation, Directed Advisory
Solutions
A3031-99 Allmerica Select Acclaim
----------
*This list shall be deemed to include applications, specification pages, state
variations, certificates, binders and administrative forms that are included and
part of the Insurance Contracts. Certain forms, riders and endorsements may have
different or no form numbers and may have been filed for different distribution
channels and products. Therefore, the letter prefix and numeric suffix to the
form numbers can vary. This list shall be deemed to include those variations.
A3035-00 Xxxxxx SBD with EDB, Xxxxxxx Gateway Incentive
A3036-01 Allmerica Premier Choice
A3037-02 Allmerica Optim-L
A3038-02 Gateway Plus II
AVA-FP-67 67 series elective pay
AVA-FP-69 69 series elective pay
AVA-SP-67 67 series single pay
AVA-SP-69 69 series single pay
AVA-ST-67 67 series stipulated pay
VFR--68 67 series group elective (GA)
VFS--68 67 series group elective (GB), Flexible Fixed (84-92)
PRINCIPAL RIDERS AND ENDORSEMENTS*
LIBERALIZATION OF LIVING BENEFIT
SURRENDER CHARGES OR (ACCELERATED DEATH PREMIUM TAX
DEATH BENEFITS WITHDRAWAL RIGHTS BENEFIT) ENDORSEMENT
------------------------------------------ -------------------- ------------------ ---------------
3134-79 3260-99 3290-01 3309-02 3167-82 VAB9-94 3230-92
3197-84 3263-99 3291-00 3311-02 3168-82 2001-91 3232-92
3198-84 3264-99 3292-00 3312-02 3169-82 246-92 3240-92
3231-92 3265-99 3293-00 3313-02 3170L-88 249-94 3241-92
3235-92 3266-99 3303-02 3314-02 3173L-88 3242-92
3249-96 3271-99 3304-02 3315-02 3174L-90 Annuitization 3243-92
3260-99 3272-99 3305-02 3316-02 3239-96 A3104-74
3301-00 3273-99 3306-02 3317-02 3244-96 A3259-99 XXX Endorsement
3240-01 3288-00 3307-02 3318-02 A3268-99 3199-92
3241-01 3289-01 3308-02 A3269-99 3261-98
TSA Endorsement -- 3166-81 and 3250-96
Miscellaneous
3150-80 Guaranteed Interest on General Account 3252-97 HO/BIP
3181-83 Qualified Annuities - Separate Account Usage 3262-99 15 Day Money Market Endorsement
3183-83 Qualified Annuities - Separate Account Usage END 4002-98 NY Automatic Reallocation Endorsement
3184-83 Non-Qualified Annuities - Separate Account Usage 3267-99 MAF: Rider
3201-84 General Endorsement - SEC Exemption 27(c)(i) 3270-99 APR Rider
3214-85 Loan Privilege 3274-99 Group/Employee Endorsement
3215-85 Loan Privilege 3275-99 Group/Employee Endorsement
3237-93 Elective Payment Endorsement 3276-99 Qualified Contracts Endorsements
3245-96 Waiver of Surrender Charges 3297-00 Group Policy Endorsement
3246-96 Disability Rider/Waiver of Surrender 3298-00 Xxxxxx Value Enhancement Endorsement
3247-96 Disability Rider/Waiver of Surrender 3319-99 Discount Rider
3248-96 Living Benefits Rider 8054-95 Name Change
----------
*This list shall be deemed to include applications, specification pages, state
variations, certificates, binders and administrative forms that are included and
part of the Insurance Contracts. Certain forms, riders and endorsements may have
different or no form numbers and may have been filed for different distribution
channels and products. Therefore, the letter prefix and numeric suffix to the
form numbers can vary. This list shall be deemed to include those variations.
II. Variable Life Contracts*
POLICY FORM MARKETING OR PRODUCT NAME
----------- -------------------------
1018-87 VEL 87
1018-91 XXX 00
0000-00 XXX 00
0000-00 XXX PG/VEL Plus
1026-94 Select Variable Inheritage
1027-95 Select Life
1029P-94 Group VEL
1029C-94
1030-96 Agency SPVUL 2nd-to-die, Agency SPVUL Single Life, Select SPVUL
2nd to-die, Select SPVUL Single Life, SPL II
1031-97 Transamerica VUL
1032-98 Transamerica SPVUL
0000-00 XXX, XXX, Xxxxxxx XXX, Select Life Plus, VEL 2001
1034-99 Survivorship XXX
0000-00 Xxxxxx Life
1037-99 PPVUL (Group)
1039-99 PPVUL (Individual), First Union, Transamerica SPVUL 2nd to die,
Transamerica SPVUL Single Life, Transamerica VEL
PRINCIPAL RIDERS AND ENDORSEMENTS*
LIVING BENEFIT
(ACCELERATED GUARANTEED DEATH
DEATH BENEFIT) WAIVER OF PREMIUM BENEFITS RIDERS OTHER INSURED RIDER EXCHANGE OPTION RIDERS
-------------------- -------------------- -------------------- -------------------- -----------------------------
END 239-91 1074-86 1091-97 1067-86 1069-87
1089-95 1086-94 1099-97 1081-94 1090-95
6005-96 CL1O86-99 10490 1088-95 VEOP-94
CL1089-99 TA1094-97 CL1099-99 CL1088-99 1084-94
TA1101-98 XXXX-00 XX0000-00 XXXX-00
TA1O93-97 1085-94 TA1098-97 FUIT 1088-99 Children's Insurance Riders
VAB9-94 FUIT 1086-99 FUIT 1099-99 1068-84
2001-91 250-95 1068-95
246-92 TA1096-97
249-94 1082-94
----------
* This list shall be deemed to include applications, specification pages, state
variations, certificates, binders and administrative forms that are included and
part of the Insurance Contracts. Certain forms, riders and endorsements may have
different or no form numbers and may have been filed for different distribution
channels and products. Therefore, the letter prefix and numeric suffix to the
form numbers can vary. This list shall be deemed to include those variations.
REFUND OF SALES
TERM LIFE LOAD/EXCHANGE TO TERM GUARANTEED ACCIDENTAL DEATH
INSURANCE RIDERS INSURANCE OPTION INSURABILITY RIDER BENEFITS 1035 EXCHANGE RIDERS
---------------- --------------------- ------------------ ---------------- --------------------
1103-99 END 268-97 1066-86 1063-83 8056-96
CL1103-99 END 270-97 1087-95 1080-94 TA1102-98
ll05P-00 END 283-99P TA1097-97 CL1089-99
1078-92 UGIR-94
1092-96 1083-94
MISCELLANEOUS
230-86 Under 18 Non-Smoker Notice
236-88 Limitation of Liability
237-90 Interest Rate
238-90 Interest Rate
241-91 War Exclusion
242-91 Increase and Earn Exchange
243-91 EL & Endorsement
244-91 Guideline Premium Sum Insured
247-93 VEL & Payor Endorsement
251-95 Minimum Sum Insured Table Endorsement
257-95 Group Variable Universal Life
259-96 Cash Value Test
269-97 Cash Value Accumulation Test
295-01 Loan Interest Endorsement(1033-99)
296-01 Loan Interest Endorsement(1034-99)
289-00 Group Private Placement Endorsement
290-00 Group Private Placement Endorsement
291-00 Policy Loan and Death Benefit Endorsement
293-01 Policy Loan and Partial Withdrawal Endorsement
1079-94 Four Year Term Rider
1076-89 Policy Split Option
1104-99 Survivor Term
END 260-96 Preferred Loan Provision
END 264-96 TSA Endorsement
END 263-96 Paid Up Insurance Benefit
252-95 Name Change
----------
* This list shall be deemed to include applications, specification pages, state
variations, certificates, binders and administrative forms that are included and
part of the Insurance Contracts. Certain forms, riders and endorsements may have
different or no form numbers and may have been filed for different distribution
channels and products. Therefore, the letter prefix and numeric suffix to the
form numbers can vary. This list shall be deemed to include those variations.
SCHEDULE 1.01(b)
SEPARATE ACCOUNTS
REGISTERED SEPARATE ACCOUNTS
Annuity Products:
Separate Account VA-P
Separate Account KGC
Separate Account KG
Separate Account VA-K
Fulcrum Separate Account
Allmerica Select
Separate Account I
Life Products:
VEL Account II
Separate Account SPVL
Group VEL Account
Inheiritage Account
Allmerica Select Separate Account II
Separate Account IMO
UNREGISTERED SEPARATE ACCOUNTS
SEP ACCT A
SEP ACCT B
SEP ACCT C
SEP ACCT D
SEP ACCT H
SEP ACCT J
SEP ACCT Y (Y FUNDS)
SCHEDULE 4.01
REQUIRED REGULATORY APPROVALS
New York Department of Insurance
Division of Insurance of the Commonwealth of
Massachusetts
SCHEDULE 10.01(a)
REQUIRED THIRD PARTY REINSURANCE CONSENTS
1. Underlying Reinsurance Agreements (Retrocession) on the 40% assumed
co-insurance business with Transamerica (Tribute):
Reinsurance Agreement between RGA Reinsurance Company and FAFLIC
effective January 1, 1998
Reinsurance Agreement between The Lincoln National Life Insurance
Company and FAFLIC effective January 1, 1998
Reinsurance Agreement between Munich American Reassurance Company and
FAFLIC effective January 1, 1998
Reinsurance Agreement between Employers Reassurance Corporation and
FAFLIC effective January 1, 1998
Reinsurance Agreement between Security Life of Denver Insurance Company
and FAFLIC effective January 1, 1998
Reinsurance Agreement between Swiss Re Life and Health America, Inc. and
FAFLIC effective January 1, 1998
2. Underlying Reinsurance Agreements (Retrocession) on the 40% assumed
co-insurance business with Transamerica (Lineage):
Reinsurance Agreement between RGA Reinsurance Company and FAFLIC
effective May 1, 1999 (Joint Life)
Reinsurance Agreement between RGA Reinsurance Company and FAFLIC
effective May 1, 1999 (Single Life)
Reinsurance Agreement between The Lincoln National Life Insurance
Company and FAFLIC effective May 1, 1999
Reinsurance Agreement between Munich American Reassurance Company and
FAFLIC effective May 1, 1999
Reinsurance Agreement between Employers Reassurance Corporation and
FAFLIC effective May 1, 1999
Reinsurance Agreement between Allianz Life Insurance
Company of North America and FAFLIC effective May 1, 1999
Reinsurance Agreement between Swiss Re Life and Health America, Inc. and
FAFLIC effective May 1, 1999
Reinsurance Agreement between Swiss Re Life and Health America, Inc. and
FAFLIC effective January 1, 1999.
