Exhibit 10.(p)

 

Certain portions of this Exhibit have been omitted pursuant to a request for
confidential treatment.  The non-public information has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.  The omitted portions of this
Exhibit are indicated by the following:  [****].

 

 

 

SECOND AMENDED AND RESTATED

 

REIMBURSEMENT AGREEMENT

 

dated as of

 

August 7, 2013

 

between

 

GOLDEN GATE III VERMONT CAPTIVE INSURANCE COMPANY,

 

as Borrower,

 

and

 

UBS AG, STAMFORD BRANCH,

 

as Issuing Lender

 

 

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TABLE OF CONTENTS

 

 

Page

Article I

 

 

 

DEFINITIONS

 

 

 

Section 1.01.

Defined Terms

1

Section 1.02.

Terms Generally

18

Section 1.03.

Accounting Terms

18

 

 

Article II

 

 

 

LETTER OF CREDIT FACILITY

 

 

 

Section 2.01.

Letter of Credit Facility

19

Section 2.02.

Termination of the Letter of Credit

24

Section 2.03.

Fees

25

Section 2.04.

Yield Protection

25

Section 2.05.

Taxes

27

Section 2.06.

Payments

30

Section 2.07.

Evidence of Indebtedness

30

 

Article III

 

 

 

REGULATORY ACCOUNT; SURPLUS ACCOUNT; REINSURANCE TRUST ACCOUNT; PRIORITY OF
PAYMENTS

 

 

Section 3.01.

Regulatory Account and Administrative Account

31

Section 3.02.

Surplus Account of the Borrower

31

Section 3.03.

Reinsurance Trust Account

32

Section 3.04.

Procedures for Depositing Cash and Crediting Securities to Surplus Account

32

Section 3.05.

Priority of Payments

32

 

 

Article IV

 

 

 

REPRESENTATIONS AND WARRANTIES

 

 

 

Section 4.01.

Borrower Representations and Warranties

35

 

 

Article V

 

 

 

CONDITIONS

 

 

 

Section 5.01.

Closing Conditions

38

 

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Section 5.02.

Conditions to Increase the LOC Amount

40

 

 

Article VI

 

 

 

BORROWER COVENANTS

 

 

 

Section 6.01.

Borrower Covenants

41

 

 

Article VII

 

 

 

COLLATERAL AND SECURITY

 

 

 

Section 7.01.

Obligations Secured Hereby

50

Section 7.02.

Collateral

50

Section 7.03.

Perfection of Security Interest in Collateral

51

Section 7.04.

Continuing Security Interest, Termination

52

Section 7.05.

Protection of Collateral

52

Section 7.06.

Performance of Obligations

52

Section 7.07.

Power of Attorney

53

Section 7.08.

No Pledge of Collateral to Others

53

Section 7.09.

No Change in Borrower Name, Structure or Office

53

Section 7.10.

Release of Collateral

53

Section 7.11.

Notice of Exclusive Control

54

 

 

Article VIII

 

 

 

EVENTS OF DEFAULT

 

 

 

Section 8.01.

Events of Default

54

 

 

Article IX

 

 

 

MISCELLANEOUS

 

 

 

Section 9.01.

Notices

57

Section 9.02.

Waivers; Amendments

58

Section 9.03.

Survival of Representations and Warranties

58

Section 9.04.

Indemnity

58

Section 9.05.

Successors and Assigns; Participations and Assignments

59

Section 9.06.

Counterparts; Integration; Effectiveness

60

Section 9.07.

Governing Law; Jurisdiction

60

Section 9.08.

Right of Setoff

61

Section 9.09.

Collateral Assignment of Rights

61

Section 9.10.

Expenses

61

Section 9.11.

Further Assurances

62

Section 9.12.

Headings

62

 

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Section 9.13.

Confidentiality

62

Section 9.14.

Special Dividend

63

Section 9.15.

Severability

63

Section 9.16.

WAIVER OF JURY TRIAL

63

Section 9.17.

USA Patriot Act

63

Section 9.18.

Usury Savings Clause

63

Section 9.19.

Third Party Beneficiary

64

Section 9.20.

Consent to Amendments

64

 

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SCHEDULES:

 

 

 

SCHEDULE 1

Borrower Reporting Documents

SCHEDULE 2

Dividend Formula

SCHEDULE 3

Scheduled LOC Amount

SCHEDULE 4

Restricted List

SCHEDULE 5

Financial and Actuarial Projections and Modeling Information

 

 

EXHIBITS:

 

 

 

EXHIBIT A

Draw Certification Notice

EXHIBIT B

Investment Guidelines

EXHIBIT C

Reinsurance Agreement

EXHIBIT D

Form of Letter of Credit

EXHIBIT E

Form of Assignment and Acceptance

EXHIBIT F

Form of Officer’s Certificate pursuant to Section 2.01(b)

EXHIBIT G

Form of Officer’s Certificate pursuant to Section 2.01(c)

EXHIBIT H

PLICO Reinsurance Agreement

 

iv

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This SECOND AMENDED AND RESTATED REIMBURSEMENT AGREEMENT (this “Agreement”),
dated as of August 7, 2013 (the “Amendment Closing Date”), by and between Golden
Gate III Vermont Captive Insurance Company, a special purpose financial captive
insurance company incorporated under the laws of the State of Vermont (the
“Borrower”) and UBS AG, Stamford Branch, as the issuing lender (the “Issuing
Lender”) amends and restates in its entirety, the Amended and Restated
Reimbursement Agreement, dated as of April 23, 2010 and amended and restated as
of February 14, 2011 and as of November 21, 2011 (the “Prior Closing Date”),
between the Borrower and the Issuing Lender (the “Original Agreement”).

 

WHEREAS, the Borrower is an Affiliate of the Ceding Company and a direct
Subsidiary of PLICO;

 

WHEREAS, the Borrower and the Ceding Company are parties to the Reinsurance
Agreement pursuant to which the Ceding Company cedes, and the Borrower reinsures
certain blocks of term life insurance policies written or assumed by the Ceding
Company;

 

WHEREAS, pursuant to the Original Agreement, the Borrower requested that the
Issuing Lender establish a Letter of Credit for the benefit of the Reinsurance
Trustee;

 

WHEREAS, in consideration of the issuance by the Issuing Lender of a Letter of
Credit, the Borrower has agreed to reimburse promptly the Issuing Lender for any
draws on the Letter of Credit in accordance with the terms of this Agreement;
and

 

WHEREAS, the Borrower and the Issuing Lender have agreed to amend and restate
the Original Agreement to make certain modifications as set forth herein;
provided, that all matters occurring under or in connection with the Agreement
prior to the Amendment Closing Date shall be determined in accordance with the
provisions of the Original Agreement.

 

NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the Borrower and the Issuing Lender agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01.                          Defined Terms.  As used in this
Agreement, the following terms have the meanings specified below:

 

“Acceleration Notice” means a written notice from the Issuing Lender to the
Reinsurance Trustee, as beneficiary of the Letter of Credit, with a copy to the
Borrower, in the form of Schedule C to the Letter of Credit.

 

“Additional Business” has the meaning assigned to it in Section 6.01(h)(ii).

 

“Administrative Account” has the meaning assigned to it in Section 3.01(c).

 

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“Administrative Services Agreement” means the Administrative Services Agreement,
dated as of April 23, 2010, between the Ceding Company and the Borrower.

 

“Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified.

 

“Affiliated Services Agreements” means (i) the Administrative Services
Agreement, (ii) the Investment Management Agreement and (iii) the PLC Service
Agreements.

 

“Agreement” has the meaning assigned to it in the preamble.

 

“Amendment Closing Date” has the meaning assigned to it in the preamble.

 

“Amendment Effective Date” means July 1, 2013.

 

“Anti-Terrorism Laws” shall mean any applicable law, rule, regulation, executive
order, decree, ordinance, rule or regulation related to terrorism financing or
money laundering including the USA Patriot Act, The Currency and Foreign
Transactions Reporting Act (also known as the “Bank Secrecy Act”, 31 U.S.C. §§
5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959), the Trading With the
Enemy Act (50 U.S.C. § 1 et seq., as amended) and Executive Order 13224
(effective September 24, 2001).

 

“Applicable Governmental Authority” has the meaning assigned to it in
Section 2.04(a).

 

“Approval” means the prior approval of the Vermont Commissioner in accordance
with the terms of the Licensing Order for the payment by the Borrower of any LOC
Reimbursement Obligation payable hereunder, or any amounts payable with respect
to Surplus Notes of the Borrower.

 

“Assignee” has the meaning assigned to it in Section 9.05(b).

 

“Assumed IBNR Amount” means $240,998.

 

“Attributable Indebtedness” means, on any date, in respect of any capital lease
of any Person, the capitalized amount thereof that would appear on a balance
sheet of such Person prepared as of such date in accordance with SAP.

 

“Borrower” has the meaning assigned to it in the preamble.

 

“Borrower Reporting Documents” has the meaning assigned to it in
Section 6.01(d).

 

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York, New York, Montpelier, Vermont or Lincoln,
Nebraska are authorized or required by law to remain closed.

 

2

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“Calculation Date” means six (6) months from the Amendment Effective Date.

 

“Capital Adequacy” has the meaning assigned to it in Section 2.04(b).

 

“Cash” means immediately available funds denominated in U.S. Dollars.

 

“Cash Collateral Account” means an account established by the Issuing Lender and
maintained for its benefit upon the occurrence of an Event of Default, which
shall be funded by any payments made by the Borrower under item Eighth of the
Priority of Payments.

 

“Cash Equivalents” means commercially reasonable overnight repurchase agreements
fully collateralized by the United States Treasury or any agency of the United
States Government, the obligations of which are backed by the full faith and
credit of the United States Government.

 

“Ceding Company” means West Coast Life Insurance Company and its successors and
assigns.

 

“Ceding Company Letter Agreement” means that certain letter agreement,
originally dated as of April 23, 2010 and amended and restated as of the
Amendment Closing Date, by and between the Ceding Company and the Issuing
Lender.

 

“Closing Conditions” has the meaning assigned to it in Section 5.01.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Collateral” has the meaning assigned to it in Section 7.02(a).

 

“Company Action Level Risk Based Capital” has the meaning assigned to it in
Section 8301(12)(A) of Title 8 of the Vermont Statutes Annotated in effect as of
the RBC Reference Date and calculated using the risk based capital factors and
formula prescribed by the National Association of Insurance Commissioners as of
the RBC Reference Date.

 

“Confidentiality Agreement” has the meaning assigned to it in Section 9.13.

 

“Constituent Documents” means the constituent documents of an entity, and, when
used in relation to the Borrower, shall also include the Plan of Operation, the
Licensing Order, its Certificate of General Good and its Certificate of
Authority.

 

“Control,” “Controlled,” or “Controlling” mean, as the context requires, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise.

 

“Default” means any occurrence of any event or condition that constitutes an
Event of Default or that, with the giving of any notice, the passage of time or
both, would, unless cured or waived, be an Event of Default.

 

3

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“Dividend Amount” has the meaning assigned to it in Schedule 2.

 

“Dividend Catch-Up Contribution” has the meaning assigned to it in Schedule 2.

 

“Dividend Formula” has the meaning assigned to it in Schedule 2.

 

“Dividend Declaration Date” has the meaning assigned to it in Schedule 2.

 

“Dividend Test” has the meaning assigned to it in Schedule 2.

 

“Dividend Year” has the meaning assigned to it in Schedule 2.

 

“Dollars” or “$” refers to lawful money of the United States of America.

 

“Draw Certification Notice” means a duly certified notification letter, signed
by a Responsible Officer of the Ceding Company in the form attached hereto as
Exhibit A.

 

“Drawn Rate” means LIBOR plus [****] basis points per annum.

 

“Early Termination Fee” has the meaning assigned to it in the Fee Letter.

 

“Economic Reserves” has the meaning assigned to it in the Reinsurance Agreement.

 

“Eligible Bank” means a lender which is (a) on the list of banks approved by the
NAIC Securities Valuation Office, (b) a “Qualified United States financial
institution” as defined in Section 44-416.08 of the Nebraska Insurance Code or
any applicable amended or successor statute (or, if the Ceding Company is no
longer domiciled in Nebraska, the corresponding statute in its jurisdiction of
domicile) and (c) a “qualified U.S. financial institution” as defined in
Regulation 97-3 s 11 of the Vermont Insurance Code or any applicable amended or
successor statute (or, if the Borrower is no longer domiciled in Vermont, the
corresponding statute in its jurisdiction of domicile).

 

“Embargoed Person” shall mean any party that (i) is publicly identified on the
most current list of “Specially Designated Nationals and Blocked Persons”
published by OFAC or resides, is organized or chartered, or has a place of
business in a country or territory subject to OFAC sanctions or embargo programs
or (ii) is publicly identified as prohibited from doing business with the United
States under the International Emergency Economic Powers Act, the Trading With
the Enemy Act, or any similar applicable law, rule, regulation, executive order,
decree, ordinance, rule or regulation.

 

“Enhanced Yield Protection Provisions” has the meaning assigned to it in
Section 2.04(e).

 

“Entitlement Holder” means an “entitlement holder” as defined in
Section 8-102(a)(7) of the UCC.

 

4

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“Entitlement Order” means an “entitlement order” as defined in
Section 8-102(a)(8) of the UCC.

 

“Events of Default” has the meaning assigned to it in Section 8.01.

 

“Excluded Taxes” means, with respect to the Issuing Lender and any other
recipient of any payment to be made by or on account of any obligation of the
Borrower hereunder, (a) income, franchise or similar taxes, in each case,
imposed on (or measured by) its net income by the United States of America, or
by the jurisdiction (or any political subdivision thereof) under the laws of
which such recipient is organized or in which its principal office is located
or, in the case of a jurisdiction (or any political subdivision thereof) that
imposes taxes on the basis of management or control or other concept or
principle of residence, the jurisdiction (or any political subdivision thereof)
in which such recipient is so resident, (b) Taxes imposed by reason of such
Person having a former or present connection with or being engaged in business
in the jurisdiction (or any political subdivision thereof) imposing such Taxes,
other than a connection or business arising or deemed to arise as a result of
the execution and delivery of this Agreement or the performance of any action
provided for or enforcement of any rights hereunder, (c) any branch profits
taxes imposed by the United States of America or any similar tax imposed by any
other jurisdiction in which the Borrower is located, (d) any withholding tax
that is attributable to the Issuing Lender’s failure to comply with
Section 2.05(e) and (e) any U.S. federal withholding Taxes imposed by
Section 1471 through 1474 of the Code and any regulations or official
interpretations thereof.

 

“Existing Letter of Credit” means Letter of Credit No. WALI-A04759-1MON issued
by the Issuing Lender to the Reinsurance Trustee for the account of the Borrower
pursuant to the Original Agreement on the Prior Closing Date, as amended
thereafter.

 

“Facility Maturity Date” means October 1, 2023, unless accelerated to an earlier
date in accordance with Section 2.01(c).

 

“Facility Reserves” has the meaning assigned to it in the Reinsurance Agreement.

 

“Federal Funds Effective Rate” means for any day, the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Issuing Lender from
three (3) federal funds brokers of recognized standing selected by it.

 

“Fee Letter” means that certain Amended and Restated Fee Letter, dated as of the
Amendment Closing Date, by and between the Borrower and the Issuing Lender.

 

“Fees” means, collectively, any Utilization Fee and Early Termination Fee.

 

“Fifth Remainder Contribution” means, in the event that the Fifth Required
Additional Contribution is less than the sum of (i) the Fifth Scheduled
Additional Contribution and (ii) the Fourth Remainder Contribution, the absolute
value of the difference between such

 

5

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Fifth Required Additional Contribution and such sum of (a) the Fifth Scheduled
Additional Contribution and (b) the Fourth Remainder Contribution.

 

“Fifth Required Additional Contribution” means the additional equity
contribution, if any, contributed on or prior to the Fifth Required Additional
Contribution Date, from an Affiliate of the Borrower and deposited in the
Surplus Account, in an amount equal to the lesser of:

 

(a) the sum of (i) the Fifth Scheduled Additional Contribution and (ii) the
Fourth Remainder Contribution, if any, and

 

(b) the applicable Reduced Contribution.

 

“Fifth Required Additional Contribution Date” means December 31, 2019.

 

“Fifth Scheduled Additional Contribution” means the excess (if any) of
(a) $[****] over (b) the Dividend Amount, if any, for the Dividend Year ending
on [****].

 

“First Remainder Contribution” means, in the event that the First Required
Additional Contribution is less than the First Scheduled Additional
Contribution, the absolute value of the difference between such First Required
Additional Contribution and such First Scheduled Additional Contribution.

 

“First Required Additional Contribution” means the additional equity
contribution, if any, contributed at least forty (40) calendar days prior to the
First Required Additional Contribution Date, from an Affiliate of the Borrower
and deposited in the Surplus Account, in an amount equal to the lesser of
(i) the First Scheduled Additional Contribution and (ii) the applicable Reduced
Contribution.

 

“First Required Additional Contribution Date” means April 1, 2012.

 

“First Scheduled Additional Contribution” means $[****].

 

“Fitch” means Fitch Ratings.

 

“Fourth Remainder Contribution” means, in the event that the Fourth Required
Additional Contribution is less than the sum of (i) the Fourth Scheduled
Additional Contribution and (ii) the Third Remainder Contribution, the absolute
value of the difference between such Fourth Required Additional Contribution and
such sum of (a) the Fourth Scheduled Additional Contribution and (b) the Third
Remainder Contribution.

 

“Fourth Required Additional Contribution” means the additional equity
contribution, if any, contributed on or prior to the Fourth Required Additional
Contribution Date, from an Affiliate of the Borrower and deposited in the
Surplus Account, in an amount equal to the lesser of:

 

6

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(a) the sum of (i) the Fourth Scheduled Additional Contribution and (ii) the
Third Remainder Contribution, if any, and

 

(b) the applicable Reduced Contribution.

 

“Fourth Required Additional Contribution Date” means December 31, 2017.

 

“Fourth Scheduled Additional Contribution” means the excess (if any) of
(a) $[****] over (b) the Dividend Amount, if any, for the Dividend Year ending
on [****].

 

“Funding Costs” means all losses, costs and expenses incurred by the Issuing
Lender as a result of the Borrower’s failure to pay any LOC Reimbursement
Obligation on or prior to the LOC Reimbursement Date, but only to the extent
such losses, costs or expenses relate to the funding of the related LOC
Disbursement.  For the avoidance of doubt, “Funding Costs” does not include LOC
Disbursements.

 

“Funds Withheld Account” means a funds withheld account established and
maintained in accordance with the Reinsurance Agreement.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

 

“Hedge Counterparty” has the  meaning assigned to it in Section 9.13.

 

“Increase Conditions” has the meaning assigned to it in Section 5.02.

 

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with SAP:

 

(a)                                 all obligations of such Person for borrowed
money and all obligations of such Person evidenced by bonds, debentures, notes,
loan agreements or other similar instruments;

 

(b)                                 all direct or contingent obligations of such
Person arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

 

(c)                                  all obligations of such Person to pay the
deferred purchase price of property or services (other than trade accounts
payable in the ordinary course of business);

 

(d)                                 indebtedness (excluding prepaid interest
thereon) secured by a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse;

 

7

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(e)                                  capital leases of which such Person is the
lessee; and

 

(f)                                   all guarantees of such Person in respect
of any of the foregoing.

 

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person.  The amount of any capital lease as of any
date shall be deemed to be the amount of Attributable Indebtedness in respect
thereof as of such date.  For the avoidance of doubt, commitments or obligations
in connection with any insurance policies, reinsurance agreements, retrocession
agreements, guaranteed investment contracts and funding agreements shall not
constitute Indebtedness.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Indemnitee” has the meaning assigned to it in Section 9.04.

 

“Independent Director” means a member of the Board of Directors of the Borrower
who (i) shall not have been at the time of such Person’s appointment or at any
time during the preceding five (5) years, and shall not be as long as such
Person is a director of the Borrower, (a) a director, officer, employee,
partner, shareholder, member, manager or Affiliate of the Borrower, (b) a
supplier to the Borrower, (c) a Person controlling or under common control with
any partner, shareholder, member, manager, Affiliate or supplier of the Borrower
or (d) a member of the immediate family of any director, officer, employee,
partner, shareholder, member, manager, Affiliate or supplier of the Borrower, in
the case of each of (a), (b), (c) and (d), other than in connection with his or
her service as an Independent Director or in a similar capacity with any other
captive insurance company Affiliate of the Borrower; (ii) has prior experience
as an independent director for a corporation or limited liability company whose
charter documents required the unanimous consent of all independent directors
thereof before such corporation or limited liability company could consent to
the institution of bankruptcy or insolvency proceedings against it or could file
a petition seeking relief under any applicable federal or state law relating to
bankruptcy and (iii) has at least three (3) years of employment experience with
one or more entities that provide, in the ordinary course of their respective
businesses, advisory, management or placement services to issuers of
securitization or structured finance instruments, agreements or securities.

 

“Initial LOC Amount” means $710,000,000.

 

“Instrument” means an “Instrument” as defined in Section 9-102(a)(47) of the
UCC.

 

“Investment Guidelines” means those certain investment guidelines attached
hereto as Exhibit B.

 

“Investment Management Agreement” means that certain investment services
agreement, originally dated as of April 23, 2010 and amended and restated as of
the Amendment Closing Date, between PLC and the Borrower.

 

8

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“Issuing Lender” has the meaning assigned to it in the preamble.

 

“Lender Counterparty” means a counterparty to a swap or similar hedging
transaction with the Issuing Lender related to this Agreement.

 

“Letter of Credit” has the meaning assigned to it in Section 2.01(a).

 

“LIBOR” means, for any date, a rate determined in accordance with the following
provisions:

 

(a)                                 LIBOR for such date shall equal the offered
rate for deposits in U.S. dollars having a three-month maturity, as determined
by the Issuing Lender, which appears on the LIBOR Reference Page as of
approximately 11:00 a.m. (London time) on the applicable LIBOR Determination
Date.

 

(b)                                 If, on any LIBOR Determination Date, such
rate does not appear on the LIBOR Reference Page, then LIBOR shall be determined
by the Issuing Lender on the basis of the offered quotations of the Reference
Bank to prime banks in the London interbank market for Eurodollar deposits
having a three-month maturity, as determined by the Issuing Lender, by reference
to quotations as of approximately 11:00 a.m. (London time) on such LIBOR
Determination Date.

 

(c)                                  If the Issuing Lender is unable to
determine LIBOR in accordance with the provisions set forth above, LIBOR with
respect to such date shall be deemed to be the Alternate Base Rate plus one and
one-half percent (1.50%) for such period.

 

For purposes of clause (a) above, all percentages resulting from such
calculations shall be rounded, if necessary, to the nearest one hundred
thousandth of a percentage point and for the purposes of clause (b) above, all
percentages resulting from such calculations shall be rounded, if necessary, to
the nearest one thirty-second (1/32) of a percentage point.  As used in this
definition of LIBOR:

 

“Alternate Base Rate” means, for any day, a rate per annum (rounded upward, if
necessary, to the nearest one one-hundredth (1/100) of a percentage point) equal
to the greater of (a) the Base Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus one-half percent (0.50%).  If
the Issuing Lender shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including the inability or failure of the
Issuing Lender to obtain sufficient quotations in accordance with the terms of
the definition thereof, the Alternate Base Rate shall be determined without
regard to clause (b) of the preceding sentence until the circumstances giving
rise to such inability no longer exist.  Any change in the Alternate Base Rate
due to a change in the Base Rate or the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Base Rate or the Federal
Funds Effective Rate, respectively.

 

“Base Rate” means, for any day, a rate per annum that is equal to the corporate
base rate of interest established generally for its customers by the Issuing
Lender from time to time; each change in the Base Rate shall be effective on the
date such change is effective.  The

 

9

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corporate base rate is not necessarily the lowest rate charged by the Issuing
Lender to its customers.

 

“LIBOR Determination Date” means, for any date, the second London Banking Day
prior to such date.

 

“LIBOR Reference Page” means Reuters Page LIBOR01 (or such other page as may
replace such Reuters Page LIBOR01 for purposes of displaying comparable rates).

 

“London Banking Day” means a day on which commercial banks are open for business
(including dealings in foreign exchange and foreign currency deposits) in
London.

 

“Reference Bank” means the principal London branch of UBS AG.

 

“Licensing Order” means the Amended and Restated Licensing Order issued by the
Vermont Department to the Borrower dated July 26, 2013.

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement in the nature of
a security interest of any kind or nature whatsoever (including any conditional
sale or other title retention agreement, and any financing lease having
substantially the same economic effect as any of the foregoing).

 

“LOC Amount” means the aggregate issued and outstanding face amount of the
Letter of Credit at any time and from time to time, including any adjustment
pursuant to Section 2.01, but excluding, for the avoidance of doubt, any amounts
drawn thereon for which such face amount is not reduced.

 

“LOC Commitment” has the meaning assigned to it in Section 2.01(a)(i).

 

“LOC Disbursement” means a payment made by the Issuing Lender pursuant to the
Letter of Credit.

 

“LOC Reimbursement Date” has the meaning assigned to it in Section 2.01(f)(i).

 

“LOC Reimbursement Obligation” has the meaning assigned to it in
Section 2.01(f)(i).

 

“Market Value” means (i) in the case of Cash and Cash Equivalents, the face
amount thereof; and (ii) in the case of any security or other instrument, the
fair market value thereof.

 

“Material Adverse Effect” means a material adverse effect on (i) the business,
operations, assets, property or financial condition of the Borrower, (ii) the
Reinsured Policies (iii) the ability of the Issuing Lender to enforce its rights
and remedies under this Agreement and the other Transaction Documents, (iv) the
ability of the Borrower to perform any of its obligations under this Agreement
or any other Transaction Documents to which it is a party or

 

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(v) the binding nature, validity or enforceability of this Agreement or any
other Transaction Document other than the PLC Service Agreements.

 

“Maximum Lawful Amount” has the meaning assigned to it in Section 9.18.

 

“Modified Total Adjusted Capital” has the meaning assigned to the term “Total
Adjusted Capital” in Section 8301(15) of Title 8 of the Vermont Statutes
Annotated in effect as of the RBC Reference Date; provided that (i) any net
positive capital and surplus benefit relating to the deferred tax asset,
(ii) any asset valuation reserves and (iii) the treatment of any amount of the
Letter of Credit in excess of the Facility Reserves as an admitted asset, shall
be excluded from such calculation.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“NAIC” means the National Association of Insurance Commissioners.

 

“Nebraska Director” means the Director of Insurance in the State of Nebraska or
any successor or subsequent domestic insurance regulator of the Ceding Company.

 

“Nebraska Insurance Code” means the insurance laws and regulations of the State
of Nebraska.

 

“Non-Increase Notice” means a written notice from the Issuing Lender to the
Borrower and the Reinsurance Trustee, as beneficiary of the Letter of Credit, in
the form of Schedule A to the Letter of Credit.

 

“OFAC” means the U.S. Treasury Department’s Office of Foreign Assets Control.

 

“Optional LOC Reduction” has the meaning assigned to it in Section 2.01(d).

 

“Optional LOC Reduction Amount” has the meaning assigned to it in
Section 2.01(d).

 

“Original Agreement” has the meaning assigned to it in the preamble.

 

“Original Block” has the meaning assigned to it in the Reinsurance Agreement.

 

“Original Block Independent Actuary” means Milliman Inc.’s Chicago office.

 

“Original Block Initial Funds Withheld Amount” has the meaning assigned to it in
the Reinsurance Agreement.

 

“Original Closing Date” means April 23, 2010.

 

“Other Letter of Credit Transaction” means one or more letter of credit
transactions arranged by the Issuing Lender whether before or after the Original
Closing Date with an insurance company or reinsurer for the primary purpose of
financing statutory reserves

 

11

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established in connection with life insurance policies that exceed the economic
reserves required in connection with such life insurance policies.

 

“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise in respect to, this Agreement.

 

“Participant” has the meaning assigned to it in Section 9.05(e).

 

“Payment Restrictions” has the meaning assigned to it in Section 3.05(g).

 

“PDF” means, when used in reference to notices via electronic mail attachment,
portable document format or a similar electronic file format.

 

“Permitted Liens” means (i) Liens for Taxes, assessments or governmental charges
or claims not delinquent or being contested in good faith and by appropriate
proceedings and for which reserves adequate under SAP are being maintained;
(ii) deposits or pledges to secure obligations under workers’ compensation,
social security or similar laws, or under unemployment insurance;
(iii) mechanics’, workers’, materialmen’s, carriers’ or other like Liens arising
in the ordinary course of business with respect to obligations that are not due
or that are being contested in good faith; (iv) Liens granted under repurchase
and reverse repurchase agreements and derivatives entered into in the ordinary
course of business as permitted under this Agreement or any other Transaction
Document; (v) clearing and settlement Liens on securities and other investment
properties incurred in the ordinary course of clearing and settling transactions
in such assets and holding them with custodians; (vi) insurance regulatory
Liens; (vii) judgment Liens in respect of judgments that are being contested in
good faith and by appropriate proceedings and for which reserves adequate under
SAP are being maintained; and (viii) Liens contemplated by this Agreement and
any other Transaction Document, including the Reinsurance Trust Account.

 

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

“PLC” means Protective Life Corporation, a Delaware corporation, and its
successors and assigns.

 

“PLC Guarantee” means that certain letter agreement, originally dated as of
April 23, 2010 and as amended and restated as of the Amendment Closing Date,
between PLC and the Issuing Lender.

 

“PLC Service Agreements” means collectively (i) the Amendment to the Agreement
for Administrative Services, dated as of April 23, 2010, between PLC and the
Borrower, (ii) the Agreement for Legal Services, dated as of April 23, 2010,
between PLC and the Borrower and (iii) the Agreement for Data Processing
Programming Services, dated as of April 23, 2010, between PLC and the Borrower.

 

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“PLICO” means Protective Life Insurance Company, a Tennessee stock insurance
company, and its successors and assigns.

 

“PLICO Reinsurance Agreement” means that certain indemnity reinsurance agreement
effective as of July 1, 2013, by and between the Ceding Company and PLICO,
attached hereto as Exhibit H.

 

“Present Value” has the meaning assigned to it in Schedule 2.

 

“Prime Rate” means a rate per annum equal to the prime rate of interest
announced from time to time by UBS AG, Stamford Branch (which is not necessarily
the lowest rate charged to any customer), changing when and as such prime rate
changes.

 

“Prior Closing Date” has the meaning assigned to it in the preamble.

 

“Priority of Payments” has the meaning assigned to it in Section 3.05.

 

“Projected ETI Costs” has the meaning referred to in Exhibit B of Appendix I to
Schedule 2.

 

“RBC Reference Date” means (a) December 31, 2009 or (b) any later date otherwise
agreed to by the Borrower and the Issuing Lender.

 

“Reduced Contribution” means, at any date of determination, the excess, if any,
of the Borrower’s Company Action Level Risk Based Capital over the Borrower’s
Modified Total Adjusted Capital, each, determined as of the end of the most
recent calendar quarter, or, if no such excess exists, the Reduced Contribution
shall be zero.

 

“Regulatory Account” has the meaning assigned to it in Section 3.01(a).

 

“Reinsurance Agreement” means that certain indemnity reinsurance agreement,
originally effective as of April 1, 2010, as amended as of February 14, 2011, as
amended and restated effective as of July 1, 2011, as amended and restated
effective as of October 1, 2011 and as amended and restated as of the Amendment
Closing Date effective as of the Amendment Effective Date by and between the
Borrower and the Ceding Company attached hereto as Exhibit C.

 

“Reinsurance Trust Account” means a trust account established and maintained in
accordance with the Reinsurance Trust Agreement.

 

“Reinsurance Trust Agreement” means that certain trust agreement, originally
dated as of April 23, 2010 and as amended as of the Amendment Closing Date,
among the Reinsurance Trustee, the Borrower and the Ceding Company.

 

“Reinsurance Trustee” means The Bank of New York Mellon in its capacity as
trustee pursuant to the Reinsurance Trust Agreement, and any successor
hereunder.

 

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“Reinsured Policies” has the meaning assigned to it in the Reinsurance
Agreement.

 

“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person’s Affiliates.

 

“Required Additional Contribution” means any or all of the First Required
Additional Contribution, the Second Required Additional Contribution, the Third
Required Additional Contribution, the Fourth Required Additional Contribution
and the Fifth Required Additional Contribution.

 

“Required Additional Contribution Date” means, as applicable, the First Required
Additional Contribution Date, the Second Required Additional Contribution Date,
the Third Required Additional Contribution Date, the Fourth Required Additional
Contribution Date or the Fifth Required Additional Contribution Date.

 

“Required Participants” means, at any date of determination, more than fifty
percent (50%) of Participants.

 

“Responsible Officer” of a Person means the chief executive officer, president,
chief financial officer, principal accounting officer, treasurer, assistant
treasurer or controller of such Person.  Any document delivered hereunder that
is signed by a Responsible Officer of the Borrower or the Ceding Company shall
be conclusively presumed to have been authorized by all necessary corporate,
partnership and other action on the part of the Borrower or the Ceding Company,
as the case may be, and such Responsible Officer shall be conclusively presumed
to have acted on behalf of the Borrower or the Ceding Company, as the case may
be.

 

“Restricted List” means the list set forth on Schedule 4 (as such Schedule 4 may
be amended, modified or supplemented by the Borrower from time to time, and at
any time, by written notice to the Issuing Lender).

 

“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial
Services LLC business.

 

“SAP” means the accounting procedures and practices prescribed or permitted by
the applicable insurance regulatory authority, consistently applied.

 

“Scheduled LOC Adjustment Amount” means, with respect to any date, the amount
set forth in the “Scheduled LOC Adjustment Amount” column of Schedule 3 in the
row corresponding to such date.

 

“Scheduled LOC Adjustment Date” means each date on which the Scheduled LOC
Adjustment Amount set forth in Schedule 3 is greater than zero.

 

“Scheduled LOC Amount” means, with respect to any date, the amount set forth in
the “Scheduled LOC Amount” column of Schedule 3 in the row corresponding to such
date.

 

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“Scheduled LOC Increase” has the meaning assigned to it in Section 2.01(b).

 

“Second Remainder Contribution” means, in the event that the Second Required
Additional Contribution is less than the sum of (i) the Second Scheduled
Additional Contribution and (ii) the First Remainder Contribution, the absolute
value of the difference between such Second Required Additional Contribution and
such sum of (a) the Second Scheduled Additional Contribution and (b) the First
Remainder Contribution.

 

“Second Required Additional Contribution” means the additional equity
contribution, if any, contributed at least forty (40) calendar days prior to the
Second Required Additional Contribution Date, from an Affiliate of the Borrower
and deposited in the Surplus Account, in an amount equal to the lesser of:

 

(a)                                 the sum of (i) the Second Scheduled
Additional Contribution and (ii) the First Remainder Contribution, if any, and

 

(b)                                 the applicable Reduced Contribution.

 

“Second Required Additional Contribution Date” means April 1, 2013.

 

“Second Scheduled Additional Contribution” means $[****].

 

“Secured Obligations” has the meaning assigned to it in Section 7.01.

 

“Securities Account” has the meaning assigned to it in Section 8-501 of the UCC.

 

“Securities Account Control Agreement” means that certain securities account
control agreement, originally dated as of April 23, 2010 and amended as of the
Prior Closing Date, by and among the Borrower, the Issuing Lender and the
Securities Intermediary.

 

“Securities Intermediary” means The Bank of New York Mellon acting as securities
intermediary (as defined in Section 8-102(a)(14) of the UCC) with respect to the
Surplus Account.

 

“Six-Month IBNR Amount” means the aggregate amount of any Covered Benefits (as
defined in the Reinsurance Agreement) in respect of the UILIC Block incurred but
not reported to the Ceding Company prior to the Amendment Effective Date and
paid by the Ceding Company prior to the Calculation Date.

 

“Solvent” means that (i) the assets of the Borrower are greater than the total
amount of liabilities, including contingent liabilities, of the Borrower
determined in accordance with SAP as of the Original Closing Date; (ii) the
Borrower does not intend to, and does not believe that it will, incur debts or
liabilities beyond its ability to pay as such debts and liabilities mature; and
(iii) the Borrower is not engaged in a business or transaction, and is not about
to engage in a business or transaction, for which the Borrower’s property, as
applicable, would constitute unreasonably insufficient capital.

 

“Special Dividend” has the meaning assigned to it in Section 9.14.

 

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“Special Payment” has the meaning assigned to it in Section 9.14.

 

“Special Tax Allocation Agreement” means the Special Tax Allocation Agreement,
dated as of April 23, 2010, by and between the Borrower and PLC.

 

“Statutory Reserves” has the meaning assigned to it in the Reinsurance
Agreement.

 

“Stop Loss Reinsurance Agreement” means that certain Stop Loss Indemnity
Reinsurance Agreement, originally dated as of April 23, 2010 and amended and
restated as of the Amendment Closing Date and effective as of the Amendment
Effective Date, by and between the Ceding Company and PLICO.

 

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person.

 

“Surplus Account” has the meaning assigned to it in Section 3.02(a).

 

“Surplus Notes” has the meaning assigned to it in Section 6.01(bb).

 

“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority
including penalties, interest and additions to tax imposed with respect thereto.

 

“Tax Sharing Agreement” means that certain Amendment and Clarification of the
Tax Allocation Agreement dated January 1, 1988, effective as of January 1, 1988,
by and between PLC and its Subsidiaries.

 

“Third Party Expenses” means expenses relating to (i) services provided by
Affiliates of the Borrower, including administrative services, investment
management services, data processing services, legal services and any other
amounts incurred under any of the Affiliated Services Agreements and (ii) third
party services including accounting services, actuarial services, legal
services, management of the Borrower, custodial or trustee services and wages
for, and reimbursable expenses of any, outside director of the Borrower,
pursuant to the Reinsurance Agreement, and any other amounts incurred under any
Third Party Service Agreement.

 

“Third Party Service Agreements” means (i) the Captive Management Agreement,
dated as of April 23, 2010, between the Borrower and Marsh Management
Services, Inc., (ii) the Reinsurance Trust Agreement and (iii) the Custody
Agreement, dated as of April 23, 2010, between the Borrower and The Bank of New
York Mellon.

 

“Third Remainder Contribution” means, in the event that the Third Required
Additional Contribution is less than the sum of (i) the Third Scheduled
Additional Contribution

 

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and (ii) the Second Remainder Contribution, the absolute value of the difference
between such Third Required Additional Contribution and such sum of (a) the
Third Scheduled Additional Contribution and (b) the Second Remainder
Contribution.

 

“Third Required Additional Contribution” means the additional equity
contribution, if any, contributed at least forty (40) calendar days prior to the
Third Required Additional Contribution Date, from an Affiliate of the Borrower
and deposited in the Surplus Account, in an amount equal to the lesser of:

 

(a)                                  the sum of (i) the Third Scheduled
Additional Contribution and (ii) the Second Remainder Contribution, if any, and

 

(b)                                 the applicable Reduced Contribution.

 

“Third Required Additional Contribution Date” means April 1, 2014.

 

“Third Scheduled Additional Contribution” means the sum of (a) and (b), where

 

(a) equals $[****], and

 

(b) equals (i) 0 if (A) the Six-Month IBNR Amount does not exceed the Upper
True-Up Threshold or (B) that the Ceding Company has satisfied its obligations
under Section 6.4 of the Reinsurance Agreement or (ii) if (A) the Six-Month IBNR
Amount exceeds the Upper True-Up Threshold and (B) Ceding Company has not
satisfied its obligations under Section 6.4 of the Reinsurance Agreement, the
difference, expressed as a positive number, between the Six-Month IBNR Amount
and the Assumed IBNR Amount.

 

“Total Adjusted Capital” has the meaning assigned to it in Section 8301(15) of
Title 8 of the Vermont Statutes Annotated in effect as of the RBC Reference
Date.

 

“Transaction Documents” means collectively, this Agreement (including the
Investment Guidelines), the Fee Letter, the Letter of Credit, the Reinsurance
Agreement, the Reinsurance Trust Agreement, the PLICO Reinsurance Agreement, the
Ceding Company Letter Agreement, the Affiliated Services Agreements, the Third
Party Service Agreements, the PLC Guarantee, the Stop Loss Reinsurance
Agreement, the Catastrophic Loss Capital Support Agreement, originally dated as
of April 23, 2010 as amended and restated as of the Prior Closing Date, by and
between PLC and the Borrower, the Investment Management Agreement, the Tax
Sharing Agreement, Special Tax Allocation Agreement, the Securities Account
Control Agreement, the Transaction Expense Support Agreement, and the
Constituent Documents of the Borrower, as the same may be amended, modified or
supplemented from time to time.

 

“Transaction Expense Support Agreement” means that certain transaction expense
support agreement dated as of April 23, 2010 between the Borrower and PLC.

 

“Transactions” means the execution, delivery and performance by the parties to
this Agreement and the other Transaction Documents of the Transaction Documents
and all certificates and other documents contemplated in connection therewith.

 

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“UCC” means the Uniform Commercial Code as in effect in the State of New York.

 

“UILIC Block” has the meaning assigned to it in the Reinsurance Agreement.

 

“UILIC Block Independent Actuary” means Towers Watson Pennsylvania Inc.

 

“Upper True-Up Threshold” means the sum of the Assumed IBNR Amount and $[****].

 

“USA Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Title III of Pub. L. 107-56).

 

“Utilization Fee” has the meaning assigned to it in the Fee Letter.

 

“Vermont Commissioner” means the commissioner of the Vermont Department.

 

“Vermont Department” means the department of banking, insurance, securities and
health care administration in the State of Vermont.

 

“Vermont Insurance Code” means the insurance laws and regulations of the State
of Vermont.

 

Section 1.02.                             Terms Generally.  The definitions of
terms herein shall apply equally to the singular and plural forms of the terms
defined.  Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.  The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation.”  The word “will” shall be construed to have the same meaning and
effect as the word “shall.”  Unless the context requires otherwise (i) any
reference herein to any Person shall be construed to include such Person’s
successors and permitted assigns, (ii) the words “herein,” “hereof” and
“hereunder,” and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (iii) the
word “from” in connection with a time period means “from and including” and the
word “until” means “to but not including”, (iv) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement and
(v) all references to agreements, documents, guidelines or instruments, laws,
rules, regulations or orders shall be to the same as amended, modified or
supplemented from time to time, and at any time, except as otherwise provided
herein.

 

Section 1.03.                             Accounting Terms.  Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with SAP, as in effect from time to time, with
respect to entities that prepare SAP financial statements.

 

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ARTICLE II

 

LETTER OF CREDIT FACILITY

 

Section 2.01.                             Letter of Credit Facility.

 

(a)                                  Letter of Credit.  Subject to the return of
the Existing Letter of Credit by the Reinsurance Trustee to the Issuing Lender
for cancellation on or prior to the Amendment Closing Date, the Issuing Lender
agrees, on the terms and conditions hereinafter set forth and subject to the
prior satisfaction (or waiver by the Issuing Lender) of the Closing Conditions,
to issue and deliver to the Reinsurance Trustee on the Amendment Closing Date an
irrevocable and non-transferable standby letter of credit hereunder, in the form
of Exhibit D (the “Letter of Credit”), at the request of the Borrower as
applicant therefor, for the benefit of the Reinsurance Trustee as beneficiary
thereof, and for deposit in the Reinsurance Trust Account, with a face amount
equal to the Initial LOC Amount.

 

(i)                                     The obligation of the Issuing Lender
(A) to issue the Letter of Credit, (B) not to exercise its right to prevent the
increase of the LOC Amount pursuant to Section 2.01(b)(i) and (C) not to
exercise its right to accelerate the Facility Maturity Date to an earlier date
pursuant to Section 2.01(c), on and subject to the terms and conditions hereof
is herein called the “LOC Commitment.”

 

(ii)                                  Unless previously terminated in accordance
with Section 2.02, the LOC Commitment shall terminate on the Facility Maturity
Date, as it may be accelerated to an earlier date from time to time in
accordance with Section 2.01(c).  The Letter of Credit shall be denominated in
Dollars.

 

(b)                                 Letter of Credit Adjustments.

 

(i)                                     If at least ten (10) Business Days prior
to each of the Scheduled LOC Adjustment Dates occurring on or prior to
December 15, 2015, the Borrower shall deliver to the Issuing Lender an officer’s
certificate of the Borrower in the form attached hereto as Exhibit F, dated as
of such date and stating that the Increase Conditions set forth in Sections
5.02(a), (b) and (c) (other than those that have been waived in writing by the
Issuing Lender) have been fully satisfied as of such date, then the LOC Amount
shall be automatically increased by an amount equal to the applicable Scheduled
LOC Adjustment Amount (each, a “Scheduled LOC Increase”), effective as of the
applicable Scheduled LOC Adjustment Date. If the Issuing Lender has not received
the officer’s certificate of the Borrower described in the immediately preceding
sentence and the Issuing Lender has delivered a Non-Increase Notice, then the
LOC Amount shall not be increased above the then-current LOC Amount.  The
Issuing Lender agrees not to issue any such Non-Increase Notice with respect to
a Scheduled LOC Increase if it has received the officer’s certificate of the
Borrower described in the first sentence of this Section 2.01(b)(i). 
Notwithstanding anything in this Agreement to the contrary, the only consequence
of the failure of the Borrower to deliver an

 

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officer’s certificate pursuant to this Section 2.01(b)(i), shall be the Issuing
Lender’s right to issue a Non-Increase Notice as provided in this
Section 2.01(b)(i). For the avoidance of doubt, any such failure of the Borrower
to deliver an officer’s certificate pursuant to this Section 2.01(b)(i) shall
not constitute a Default or an Event of Default.

 

(ii)                                  If on any of the Scheduled LOC Adjustment
Dates occurring on or after March 15, 2017, the then-current LOC Amount is
greater than the then-applicable Scheduled LOC Amount, then the LOC Amount shall
be automatically decreased (effective as of the applicable Scheduled LOC
Adjustment Date) to the then-applicable Scheduled LOC Amount.

 

(c)                                  Facility Maturity Date.  The Issuing Lender
shall have the right to accelerate the Facility Maturity Date to an earlier date
in accordance with the following terms and conditions:

 

(i)                                     If at least forty (40) calendar days
prior to the First Required Additional Contribution Date, the Borrower shall
deliver to the Issuing Lender an officer’s certificate of Borrower in the form
attached hereto as Exhibit G, dated as of such date, (A) stating that the First
Required Additional Contribution has been made and setting forth the date on
which such contribution was received by the Borrower and (B) stating that no
event that constitutes an Event of Default pursuant to Sections 8.01(l) or
(m) has occurred and is continuing as of such date, then the Facility Maturity
Date shall remain the same date as in effect immediately prior to such fortieth
(40th) calendar date prior to the First Required Additional Contribution Date. 
If the Issuing Lender has not received the officer’s certificate of the Borrower
described in the immediately preceding sentence and the Issuing Lender has
delivered an Acceleration Notice before March 1, 2012, then the Facility
Maturity Date shall be accelerated to April 1, 2013 effective on the First
Required Additional Contribution Date and shall remain effective until the
Letter of Credit is terminated pursuant to the terms of this Agreement.  The
Issuing Lender agrees not to issue any such Acceleration Notice if it has
received the officer’s certificate of the Borrower described in the first
sentence of this Section 2.01(c)(i).

 

(ii)                                  If the Facility Maturity Date has not been
accelerated pursuant to Section 2.01(c)(i) and if at least forty (40) calendar
days prior to the Third Required Additional Contribution Date, the Borrower
shall deliver to the Issuing Lender an officer’s certificate of Borrower in the
form attached hereto as Exhibit G, dated as of such date, (A) stating that the
Second Required Additional Contribution has been made at least forty (40)
calendar days prior to the Second Required Additional Contribution Date and
setting forth the date on which such contribution was received by the Borrower
and stating that the Third Required Additional Contribution has been made and
setting forth the date on which such contribution was received by the Borrower
and (B) stating that no event that constitutes an Event of Default pursuant to
Sections 8.01(l) or (m) has occurred and is continuing as of such date, then the
Facility Maturity Date shall remain the

 

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same date as in effect immediately prior to such fortieth (40th) calendar date
prior to the Third Required Additional Contribution Date.  If the Issuing Lender
has not received the officer’s certificate of the Borrower described in the
immediately preceding sentence and the Issuing Lender has delivered an
Acceleration Notice before March 1, 2014, then the Facility Maturity Date shall
be accelerated to April 1, 2015 effective on the Third Required Additional
Contribution Date and shall remain effective until the Letter of Credit is
terminated pursuant to the terms of this Agreement.  The Issuing Lender agrees
not to issue any such Acceleration Notice if it has received the officer’s
certificate of the Borrower described in the first sentence of this
Section 2.01(c)(ii).

 

(iii)                               If the Facility Maturity Date has not been
accelerated pursuant to Section 2.01(c)(i) or (ii) and if on or prior to the
Fourth Required Additional Contribution Date, the Borrower shall deliver to the
Issuing Lender an officer’s certificate of Borrower in the form attached hereto
as Exhibit G, dated as of such date, (A) stating that the Fourth Required
Additional Contribution has been made and setting forth the date on which such
contribution was received by the Borrower and (B) stating that no event that
constitutes an Event of Default pursuant to Sections 8.01(l) or (m) has occurred
and is continuing as of such date, then the Facility Maturity Date shall remain
the same date as in effect immediately prior to the Fourth Required Additional
Contribution Date.  If the Issuing Lender has not received the officer’s
certificate of the Borrower described in the immediately preceding sentence and
the Issuing Lender has delivered an Acceleration Notice before January 10, 2018,
then the Facility Maturity Date shall be accelerated to April 1, 2018 effective
on January 10, 2018 and shall remain effective until the Letter of Credit is
terminated pursuant to the terms of this Agreement.  The Issuing Lender agrees
not to issue any such Acceleration Notice if it has received the officer’s
certificate of the Borrower described in the first sentence of this
Section 2.01(c)(iii).

 

(iv)                              If the Facility Maturity Date has not been
accelerated pursuant to Section 2.01(c)(i), (ii) or (iii) and if on or prior to
the Fifth Required Additional Contribution Date, the Borrower shall deliver to
the Issuing Lender an officer’s certificate of Borrower in the form attached
hereto as Exhibit G, dated as of such date, (A) stating that the Fifth Required
Additional Contribution has been made and setting forth the date on which such
contribution was received by the Borrower and (B) stating that no event that
constitutes an Event of Default pursuant to Sections 8.01(l) or (m) has occurred
and is continuing as of such date, then the Facility Maturity Date shall remain
the same date as in effect immediately prior to the Fifth Required Additional
Contribution Date.  If the Issuing Lender has not received the officer’s
certificate of the Borrower described in the immediately preceding sentence and
the Issuing Lender has delivered an Acceleration Notice before January 10, 2020,
then the Facility Maturity Date shall be accelerated to April 1, 2020 effective
on January 10, 2020 and shall remain effective until the Letter of Credit is
terminated pursuant to the terms of this Agreement.  The Issuing Lender agrees
not to issue any such Acceleration Notice

 

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if it has received the officer’s certificate of the Borrower described in the
first sentence of this Section 2.01(c)(iv).

 

(v)                                 Notwithstanding anything in this Agreement
to the contrary, the only consequence of the failure of the Borrower to deliver
an officer’s certificate pursuant to Section 2.01(c)(i), (ii), (iii) or
(iv) shall be the Issuing Lender’s right to issue an Acceleration Notice and
accelerate the Facility Maturity Date to the applicable date set forth in
Section 2.01(c)(i), (ii), (iii) or (iv) and any such failure of the Borrower to
deliver an officer’s certificate pursuant to this Section 2.01(c) shall not
constitute a Default or an Event of Default.

 

(d)                                 Optional LOC Reductions.  The Borrower
shall, subject to the prior written consent of the Ceding Company and the
Reinsurance Trustee, have the right at any time to reduce, upon fifteen (15)
calendar days prior written notice to the Issuing Lender, the LOC Amount (an
“Optional LOC Reduction”).  Upon (A) the Issuing Lender’s receipt of such notice
and expiration of such fifteen (15) calendar day notice period and (B) the
Borrower’s payment to the Issuing Lender of any applicable Early Termination
Fee, then an Optional LOC Reduction shall immediately become effective (it being
understood that any such reduction shall not become effective until the
Reinsurance Trustee has countersigned such amendment).  In connection with any
Optional LOC Reduction, the Issuing Lender shall immediately amend the Letter of
Credit to reduce the LOC Amount to the corresponding amount requested by the
Borrower and consented to by the Reinsurance Trustee, (the “Optional LOC
Reduction Amount”) and the Borrower shall request that the Reinsurance Trustee
countersign such amendment.  Any Optional LOC Reduction shall remain effective
until the LOC Amount is further amended in accordance with the terms hereof or
the Letter of Credit is terminated pursuant to the terms of this Agreement.

 

(e)                                  Termination of LOC Commitment.  The LOC
Commitment of the Issuing Lender shall terminate upon any termination in full of
the Letter of Credit in accordance with Section 2.02(a).

 

(f)                                    Reimbursement of LOC Disbursements;
Funding Costs.

 

(i)                                     If the Issuing Lender shall make any LOC
Disbursements in respect of the Letter of Credit, the Borrower unconditionally
agrees to reimburse the Issuing Lender for the full amount of such LOC
Disbursements (each, an “LOC Reimbursement Obligation”), on the Business Day
immediately following each date on which, and to the fullest extent that, funds
become available in accordance with the Priority of Payments and the Payment
Restrictions (each such date, an “LOC Reimbursement Date”).  The Borrower agrees
to pay to the Issuing Lender all Funding Costs on the LOC Reimbursement Date.

 

(ii)                                  To the extent that any LOC Reimbursement
Obligation is owing at such time as the Borrower’s Total Adjusted Capital is
less than [****] percent ([****]%) of its Company Action Level Risk Based
Capital, the Borrower shall use its best efforts to obtain an Approval from the
Vermont Commissioner for the payment by the Borrower of such LOC Reimbursement
Obligation as promptly as

 

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practicable following the applicable LOC Disbursement.  In the event any such
Approval has not been obtained for such payment on or prior to the date on which
such amount is first due, the Borrower shall continue to use its best efforts to
obtain such Approval as promptly as practicable thereafter; provided, that the
Borrower shall not be required to amend the Transaction Documents in order to
obtain such Approval.

 

(g)                                 Obligations Absolute.  Notwithstanding
anything herein to the contrary, the Issuing Lender’s obligation to make payment
of any draw on the Letter of Credit in strict compliance with its terms will not
be subject to any conditions or qualifications not expressly included and set
forth in the Letter of Credit, including any action or failure to act or to make
any payment by any Lender Counterparty.  Subject to the Priority of Payments and
the Payment Restrictions, the LOC Reimbursement Obligation of the Borrower shall
be absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of:

 

(i)                                     any lack of validity or enforceability
of the Letter of Credit or this Agreement, or any term or provision therein;

 

(ii)                                  any amendment or waiver of or any consent
to departure from all or any of the provisions of the Letter of Credit or this
Agreement;

 

(iii)                               the existence of any claim, setoff, defense
or other right that the Borrower or any other Person may at any time have
against the Issuing Lender or any other Person, whether in connection with this
Agreement or any other related or unrelated agreement or transaction;

 

(iv)                              any draft or other document presented under
the Letter of Credit proving to be forged, fraudulent or invalid in any respect
or any statement therein being untrue or inaccurate in any respect;

 

(v)                                 payment by the Issuing Lender under a Letter
of Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit; and

 

(vi)                              any other act or omission to act or delay of
any kind of the Issuing Lender or any other Person to perform any obligation
under the Letter of Credit, or any release of any such obligation, or any other
event or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section 2.01, constitute a
legal or equitable discharge of the obligations of the Borrower hereunder.

 

Without limiting the rights of the Reinsurance Trustee, as directed by the
Borrower, to draw upon the Letter of Credit, neither the Issuing Lender, nor any
of its Related Parties, shall have any liability or responsibility by reason of
or in connection with the issuance or transfer of the Letter of Credit or any
payment or failure to make any payment thereunder, including any of the
circumstances specified in Section 2.01(g)(i) through (vi), as well as any
error, omission, interruption, loss or delay in transmission or delivery of any
draft, notice or

 

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other communication under or relating to the Letter of Credit (including any
Draw Certification Notice or any other document required to make a drawing
thereunder), any error in interpretation of technical terms or any consequence
arising from causes beyond the control of the Issuing Lender; provided, that the
foregoing shall not be construed to excuse the Issuing Lender or any of its
Related Parties from liability to the Borrower to the extent of any direct
damages (as opposed to consequential damages, claims in respect of which are
hereby waived by the Borrower to the extent permitted by applicable law)
suffered by the Borrower that are caused by the Issuing Lender’s failure to
exercise the agreed standard of care (as set forth below) in determining whether
drafts and other documents presented under the Letter of Credit comply with the
terms hereof.  The parties hereto expressly agree that the Issuing Lender shall
have exercised the agreed standard of care in the absence of gross negligence or
willful misconduct on the part of the Issuing Lender.

 

(h)                                 LOC Disbursement Procedures; Draw
Certification Notice.  The Issuing Lender shall, promptly upon its receipt of a
Draw Certification Notice, examine the Draw Certification Notice purporting to
represent a demand for payment under the Letter of Credit.  The Issuing Lender
shall promptly notify the Borrower by telephone or electronic mail (confirmed by
overnight courier service) whether the Issuing Lender has made or will make an
LOC Disbursement thereunder (without, for the avoidance of doubt, relieving the
Issuing Lender of any obligation to make an LOC Disbursement); provided, that
any failure to give or delay in giving such notice shall not relieve the
Borrower of its LOC Reimbursement Obligations, if applicable.  Without limiting
any other provisions of this Agreement, the parties agree that, with respect to
any Draw Certification Notice presented in respect of the Letter of Credit, the
Issuing Lender may, in its sole discretion, (i) either make payment upon such
Draw Certification Notice without responsibility for further investigation,
regardless of any notice or information to the contrary, or (ii) refuse to make
payment upon such Draw Certification Notice if such document is not in strict
compliance with the terms of the Letter of Credit.  For the avoidance of doubt,
delivery of a sight draft and a Draw Certification Notice strictly adhering to
the requirements of the Letter of Credit shall be the sole condition to a draw
under such Letter of Credit.

 

(i)                                     Interest.  Subject to the Priority of
Payments, the Borrower unconditionally agrees to pay to the Issuing Lender
interest on the amount of each LOC Disbursement, for the period from and
including the date of such LOC Disbursement to but excluding the date of payment
in full, at the Drawn Rate.  Subject to the Priority of Payments, interest
accrued in respect of any LOC Disbursement shall be payable on the relevant LOC
Reimbursement Date, and thereafter on demand from time to time by the Issuing
Lender and upon payment of any LOC Reimbursement Obligation.

 

Section 2.02.                             Termination of the Letter of Credit.

 

(a)                                  Termination of the Letter of Credit.  The
Letter of Credit shall terminate on the earliest to occur of (i) the election of
the Borrower to terminate the Letter of Credit in accordance with
Section 2.02(b), (ii) the drawing of one hundred percent (100%) of the Letter of
Credit and (iii) its stated expiry date.

 

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(b)                                 The Reinsurance Trustee, at the direction of
the Borrower, may, subject to the prior written consent of the Ceding Company at
any time, by giving at least three (3) Business Days’ prior signed written
notice to the Issuing Lender, terminate the Letter of Credit.

 

(c)                                  Each notice delivered by the Borrower in
accordance with this Section 2.02 shall be irrevocable.  Any termination of the
Letter of Credit shall be permanent.

 

Section 2.03.                             Fees.

 

(a)                                  The Borrower shall pay any and all Fees due
and payable under the Fee Letter to the Issuing Lender in the manner
contemplated therein; provided, that such Fees shall be treated for all purposes
as if paid under and pursuant to this Agreement.

 

(b)                                 The Borrower agrees to pay all amounts owed
in connection with the issuance and maintenance of the Letter of Credit required
to be made hereunder to the Issuing Lender.

 

(c)                                  All Fees shall be paid on the dates due, in
immediately available funds, to the Issuing Lender.  Fees paid shall not be
refundable under any circumstances.

 

Section 2.04.                             Yield Protection.

 

(a)                                  Increased Costs.  In the event that by
reason of any change after the Amendment Closing Date in applicable law, rule or
regulation of any Swiss Governmental Authority with authority over Swiss banks
or any U.S. Governmental Authority with authority over non-U.S. banks with U.S.
banking business (each, an “Applicable Governmental Authority”) or in the
interpretation thereof by any Applicable Governmental Authority charged with the
administration, application or interpretation thereof, or by reason of the
adoption or enactment, as of and following the Amendment Closing Date, of any
requirement, request or directive (whether or not having the force of law) of
any such Applicable Governmental Authority with respect to this Agreement that
shall impose, modify or deem applicable any reserve, special deposit assessment
or insurance fee or similar requirement against assets of, deposits with or for
the account of, or credit extended by UBS AG, Stamford Branch, in its capacity
as Issuing Lender, or shall subject UBS AG, Stamford Branch, in its capacity as
Issuing Lender, or its Controlling Persons to any tax, levy, impost, charge,
fee, duty, deduction or withholding of any kind whatsoever with respect to the
Letter of Credit, this Agreement or any other Transaction Document, or change
the basis of taxation of UBS AG, Stamford Branch, in its capacity as Issuing
Lender, with respect to any amounts payable under this Agreement (in either
case, except for Indemnified Taxes or Other Taxes indemnifiable under
Section 2.05 and the imposition of, or any change in the rate of, any Excluded
Tax payable by the Issuing Lender); and if any of the above-mentioned measures,
events or circumstances shall result in an increase in the cost to UBS AG,
Stamford Branch, in its capacity as Issuing Lender, of making, issuing,
maintaining, amending or funding the Letter of Credit, or taking any other
action with respect to the Letter of Credit contemplated under this Agreement,
or a reduction in the amount of principal or interest or Utilization Fees
received or receivable by UBS AG, Stamford Branch, in its capacity as Issuing
Lender, in respect thereof, the Borrower agrees to pay to UBS AG, Stamford
Branch, in its capacity as Issuing Lender, an amount equal to such additional
cost, reduction,

 

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other loss or damage or foregone interest or other amount; provided, that UBS
AG, Stamford Branch, in its capacity as Issuing Lender, shall only exercise its
rights under this Section 2.04(a) if it exercises such rights under all other
similar transactions to which it is a party.

 

(b)                                 Capital Requirements.  In the event that UBS
AG, Stamford Branch, in its capacity as Issuing Lender, shall have determined,
after the Amendment Closing Date, a change in, or any introduction or adoption
of, any applicable law, rule or regulation of an Applicable Governmental
Authority regarding capital adequacy, capital maintenance, solvency, reserves,
weighting, foreign claims of deposits or other similar matters (hereafter
“Capital Adequacy”) or any change in the interpretation or administration
thereof by any Applicable Governmental Authority, charged with the
interpretation or administration thereof, or any request or directive regarding
Capital Adequacy (whether or not having the force of law) of any Applicable
Governmental Authority, has or would have the effect of reducing the rate of
return on capital of UBS AG, Stamford Branch, in its capacity as Issuing Lender,
or its Controlling Persons as a consequence of the obligations of UBS AG,
Stamford Branch, in its capacity as Issuing Lender, under or with respect to
this Agreement or the Letter of Credit to a level below that which UBS AG,
Stamford Branch, in its capacity as Issuing Lender, or its Controlling Persons
could have achieved but for such introduction, adoption, change, request or
directive (taking into consideration the policies of UBS AG, Stamford Branch, in
its capacity as Issuing Lender, or its Controlling Persons with respect to
Capital Adequacy) (in any case other than with respect to such a change or
proposed change regarding Taxes, the consequences of which are addressed in
Section 2.04(a), the Borrower agrees to pay to UBS AG, Stamford Branch, in its
capacity as Issuing Lender, such additional amount or amounts as will compensate
UBS AG, Stamford Branch, in its capacity as Issuing Lender, or its Controlling
Persons for such reduction; provided, however, that UBS AG, Stamford Branch, in
its capacity as Issuing Lender, shall only exercise its rights under
Section 2.04(b) if it exercises such rights under all other similar transactions
to which it is a party.

 

(c)                                  Requests for Compensation.  UBS AG,
Stamford Branch, in its capacity as Issuing Lender, will promptly notify the
Borrower of any event of which it has actual knowledge entitling UBS AG,
Stamford Branch, in its capacity as Issuing Lender, to compensation and the
amount of such compensation as set forth in this Section 2.04 and the Borrower
shall compensate UBS AG, Stamford Branch, in its capacity as Issuing Lender,
within thirty (30) calendar days of such demand being made by UBS AG, Stamford
Branch in its capacity as Issuing Lender; provided, that the Borrower shall be
responsible for compliance herewith and the payment of increased costs or other
amounts under this Section 2.04 only to the extent that any change in law, rule,
regulation, interpretation or administration giving rise thereto occurs after
the Amendment Closing Date.  UBS AG, Stamford Branch, in its capacity as Issuing
Lender, shall furnish to the Borrower a certificate setting forth the basis,
amount and calculation of each request by such party for compensation under this
Section 2.04.  Failure or delay on the part of UBS AG, Stamford Branch, in its
capacity as Issuing Lender, to demand compensation pursuant to this Section 2.04
shall not constitute a waiver of the right of UBS AG, Stamford Branch, in its
capacity as Issuing Lender, to demand such compensation; provided, that the
Borrower shall not be required to compensate UBS AG, Stamford Branch, in its
capacity as Issuing Lender, pursuant to this Section 2.04 for any increased
costs incurred or reductions suffered or other loss, damage, forgone interest or
amount suffered more than ninety (90) calendar days prior to the date that UBS
AG, Stamford Branch, in its capacity as Issuing Lender, notifies the Borrower of

 

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the change in law, rule, regulation, interpretation or administration giving
rise to such increased costs or reductions or other loss, damage, forgone
interest or amount suffered and of the intention of UBS AG, Stamford Branch, in
its capacity as Issuing Lender, to claim compensation thereof (except that, if
the change in law rule, regulation, interpretation or administration giving rise
to such increased costs or reductions is retroactive, then the ninety (90)
calendar day period referred to above shall be extended to include the period of
retroactive effect thereof).

 

(d)                                 UBS AG, Stamford Branch, in its capacity as
Issuing Lender, shall use reasonable efforts (consistent with its internal
policy applied on a non-discriminatory basis and legal and regulatory
restrictions) to designate a different existing office that is an Eligible Bank
for purposes of this Agreement or to take other appropriate actions if such
designations or actions, as the case may be, will avoid the need for or relieve,
the amount of, any increased costs of, any amounts payable or otherwise payable
under this Section 2.04 and will not, in the reasonable opinion of UBS AG,
Stamford Branch, in its capacity as Issuing Lender, be otherwise disadvantageous
to UBS AG, Stamford Branch, in its capacity as Issuing Lender.  Reasonable costs
and expenses of such mitigation shall be at the expense of Borrower; provided,
that UBS AG, Stamford Branch, in its capacity as Issuing Lender, shall not incur
any such costs and expenses without the prior written approval of the Borrower;
provided, further, that, in the absence of such approval, the UBS AG, Stamford
Branch, in its capacity as Issuing Lender, will have no obligations under this
Section 2.04(d).

 

(e)                                  If, in connection with an Other Letter of
Credit Transaction, UBS AG, Stamford Branch, in its capacity as Issuing Lender,
agrees to increased cost or capital requirements provisions (the “Enhanced Yield
Protection Provisions”) that are more favorable to the Borrower in such Other
Letter of Credit Transaction than the provisions set forth in Sections
2.04(a) or (b), UBS AG, Stamford Branch, in its capacity as Issuing Lender, will
promptly notify the Borrower in writing of such Enhanced Yield Protection
Provisions (including a copy of such provisions in such notice) and, at the
Borrower’s request, will use its commercially reasonable efforts to amend this
Agreement to include such Enhanced Yield Protection Provisions.

 

Section 2.05.                          Taxes.

 

(a)                                 Any and all payments by the Borrower
hereunder shall be made free and clear of and without deduction for any
Indemnified Taxes; provided, that if the Borrower shall be required to deduct
any Indemnified Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.05) UBS
AG, Stamford Branch, in its capacity as Issuing Lender, receives an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.

 

(b)                                 In addition, the Borrower shall pay any
Other Taxes to the relevant Governmental Authority in accordance with applicable
law.

 

(c)                                  The Borrower shall indemnify UBS AG,
Stamford Branch, in its capacity as Issuing Lender, within twenty (20) calendar
days after written demand therefor, for the full

 

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amount of any Indemnified Taxes or Other Taxes paid by UBS AG, Stamford Branch,
in its capacity as Issuing Lender, on or with respect to any payment by or on
account of any obligation of the Borrower hereunder (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section 2.05) and any penalties, interest, additions to tax and reasonable
expenses arising therefrom or with respect thereto whether or not correctly or
legally imposed; provided, that the Borrower shall not be obligated to make a
payment pursuant to this Section 2.05 in respect of penalties, interest and
additions to Tax attributable to any Indemnified Taxes or Other Taxes (and, for
the avoidance of doubt, reasonable expenses arising therefrom or with respect
thereto), if (i) such penalties, interest and additions to Tax are attributable
to the failure of UBS AG, Stamford Branch, in its capacity as Issuing Lender, to
pay amounts paid to UBS AG, Stamford Branch, in its capacity as Issuing Lender,
by the Borrower (for Indemnified Taxes or Other Taxes) to the relevant
Governmental Authority within thirty (30) calendar days after receipt of such
payment from the Borrower or (ii) such penalties, interest and additions to Tax
are attributable to the gross negligence or willful misconduct of UBS AG,
Stamford Branch, in its capacity as Issuing Lender.  Within ten (10) Business
Days after UBS AG, Stamford Branch, in its capacity as Issuing Lender, learns of
the imposition of Indemnified Taxes or Other Taxes, UBS AG, Stamford Branch, in
its capacity as Issuing Lender, shall give notice to the Borrower of the payment
or obligation to pay by UBS AG, Stamford Branch, in its capacity as Issuing
Lender, of such Indemnified Taxes or Other Taxes, and of the assertion by any
Governmental Authority that such Indemnified Taxes or Other Taxes are due and
payable, but the failure to give such notice shall not affect the Borrower’s
obligations hereunder to reimburse UBS AG, Stamford Branch, in its capacity as
Issuing Lender, for such Indemnified Taxes or Other Taxes, except that the
Borrower shall not be liable for penalties, interest and other liabilities
accrued or incurred after such ten (10) Business Day period until such time as
it receives the notice contemplated above, after which time it shall be liable
for penalties, interest and other liabilities accrued or incurred prior to or
during such ten (10) Business Day period and accrued or incurred after such
receipt.  A certificate as to the amount of such payment or liability delivered
to the Borrower by UBS AG, Stamford Branch, in its capacity as Issuing Lender,
shall be conclusive absent manifest error.  If so directed by the Borrower, the
Issuing Lender shall cooperate in any contest of Indemnified Taxes (or Other
Taxes) and any penalties, interest and other liabilities arising with respect
thereto in accordance with the reasonable discretion of the Borrower and, at the
Borrower’s expense, if (i) the Borrower furnishes to such party an opinion of
reputable tax counsel, which counsel shall be acceptable to such party, to the
effect that such Indemnified Taxes, Other Taxes or other liabilities were
wrongfully or illegally imposed and (ii) such party determines in its good faith
judgment that it would not be disadvantaged or prejudiced in any manner as a
result of such cooperation; provided, that the Borrower shall indemnify the
Issuing Lender for such Indemnified Taxes (or Other Taxes) in accordance with
this Section 2.05(c) without regard to the pendency of any such contest.  This
Section 2.05(c) shall not be construed to require UBS AG, Stamford Branch, in
its capacity as Issuing Lender, to disclose to the Borrower its Tax return
information or other information it reasonably considers proprietary or
confidential.

 

(d)                                 As soon as reasonably practicable after any
payment of Indemnified Taxes by the Borrower to a Governmental Authority, and in
any event within thirty (30) days of such payment being made, the Borrower shall
deliver to UBS AG, Stamford Branch, in its capacity as Issuing Lender, the
original or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other

 

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evidence of such payment reasonably satisfactory to UBS AG, Stamford Branch, in
its capacity as Issuing Lender.

 

(e)                                  UBS AG, Stamford Branch, in its capacity as
Issuing Lender, shall provide the Borrower with two (2) accurate, complete and
signed originals of U.S. Internal Revenue Service Form W-8ECI, W-8BEN, W8-IMY or
any applicable successor forms, along with necessary supporting documentation,
certifications and attachments, if any, indicating that UBS AG, Stamford Branch,
in its capacity as Issuing Lender, is, on the date of delivery thereof, entitled
to receive payments of interest hereunder free from withholding of United States
Federal tax.  To the extent permitted or required by applicable law, from time
to time thereafter, UBS AG, Stamford Branch, in its capacity as Issuing Lender,
shall deliver renewals or additional copies of such forms (or successor forms)
on or before the date that such forms expire or become obsolete or upon the
written request of the Borrower; additionally, UBS AG, Stamford Branch, in its
capacity as Issuing Lender, agrees to deliver to the Borrower additional copies
of such forms (or successor forms) after the occurrence of any event (including
a change in its applicable lending office) requiring a change in its most recent
forms delivered to the Borrower.  If UBS AG Stamford Branch, in its capacity as
Issuing Lender, is a “U.S. branch” of a non-U.S. person and delivers an Internal
Revenue Service Form W-8IMY for purposes of this subsection, the Issuing Lender
must certify in that form that it is a “U.S. branch” and that the payments the
Issuing Lender receives for the account of others are not effectively connected
with the conduct of the Issuing Lender’s trade or business in the United States
and that it is using such form as evidence of its agreement with the Borrower to
be treated as a U.S. person with respect to such payments (and the Borrower and
the Issuing Lender agree to so treat the Issuing Lender as a U.S. person with
respect to such payments), with the intended effect that the Borrower can make
payments to the Issuing Lender without deduction or withholding of any Taxes
imposed by the United States.

 

(f)                                   If UBS AG, Stamford Branch, in its
capacity as Issuing Lender, determines, in its good faith judgment, that it has
actually received or realized any refund of Tax or any reduction of its Tax
liabilities or otherwise recovered any amount that is attributable to any
deduction or withholding or payment of Indemnified Taxes or Other Taxes with
respect to which the Borrower has paid any additional amount pursuant to this
Section 2.05, UBS AG, Stamford Branch, in its capacity as Issuing Lender, shall
reimburse the Borrower within sixty (60) calendar days in an amount equal to the
net benefit, after Tax, and net of all reasonable out-of-pocket expenses
incurred by UBS AG, Stamford Branch, in its capacity as Issuing Lender, in
connection with such refund, reduction or recovery; provided, that nothing in
this Section 2.05(f) shall require UBS AG, Stamford Branch, in its capacity as
Issuing Lender, to make available its Tax returns (or any other information
relating to its Taxes which it deems to be confidential).

 

(g)                                  UBS AG, Stamford Branch may withhold any
Taxes required to be deducted and withheld from any payment hereunder with
respect to which the Borrower is not required to pay additional amounts under
this Section 2.05.

 

(h)                                 The agreements of the Borrowers in this
Section 2.05 shall survive the payment of all amounts payable hereunder and the
termination of this Agreement in accordance with its terms.

 

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Section 2.06.                          Payments.

 

(a)                                 Payments Generally.

 

(i)                                     Unless otherwise specified herein, the
Borrower shall be obligated to make each payment required to be made by it
hereunder prior to 3:00 p.m., New York time, on the date when due and in
immediately available funds, without set off or counterclaim.  Any amounts
received after such time on any date may, in the discretion of the Issuing
Lender, be deemed to have been received on the next succeeding Business Day for
purposes of calculating interest thereon and for determining whether an Event of
Default has occurred.  All such payments shall be made by wire transfer to the
Issuing Lender to the accounts specified by the Issuing Lender in a written
notice to the Borrower at least five (5) Business Days prior to payment.  The
Issuing Lender shall distribute any such payments received by it for the account
of any other Person to the appropriate recipient promptly following receipt
thereof.  If any payment hereunder shall be due on a calendar day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension.

 

(ii)                                  If at any time insufficient funds are
received by and available to the Issuing Lender to pay fully all amounts of
principal, unreimbursed LOC Disbursements, interest and fees then due hereunder,
such funds shall be applied in accordance with the Priority of Payments and,
solely with respect to the unreimbursed LOC Reimbursement Obligations, the
Payment Restrictions.

 

(iii)                               Except as otherwise provided herein, all
interest payable hereunder shall be computed on the basis of (i) if based on the
Federal Funds Effective Rate, a year of three hundred sixty (360) days and the
actual number of days elapsed, (ii) if based on the Prime Rate, a year of
365/366 days and the actual number of days elapsed and (iii) if based on LIBOR,
a year of three hundred sixty (360) calendar days and the actual number of
calendar days elapsed.

 

(b)                                 Late Payments.  All amounts due and payable
to the Issuing Lender in connection with this Agreement but not paid as of the
due date therefor (without regard to grace periods) (other than LOC
Reimbursement Obligations not paid when due, which shall accrue interest at the
Drawn Rate) shall accrue interest at a rate equal to LIBOR plus [****] ([****])
basis points per annum, computed from and including the date payment was due to
(but not including) the date of payment in full.

 

Section 2.07.                          Evidence of Indebtedness.  The Issuing
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to the Issuing Lender
resulting from the Issuing Lender’s interest in the Letter of Credit, including
the amounts of principal and interest payable and paid to the Issuing Lender
from time to time hereunder in respect of unreimbursed LOC Reimbursement
Obligations.  The Issuing Lender shall maintain an account in which it shall
record (i) the amount of each LOC

 

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Disbursement made hereunder, (ii) the amount of any LOC Reimbursement
Obligations and interest payable from the Borrower to the Issuing Lender
hereunder and (iii) the amount of any sum received by the Issuing Lender.  The
entries made in the accounts maintained pursuant to this Section 2.07 shall be
prima facie evidence of the existence and amounts of the obligations recorded
therein absent manifest error; provided, that the failure of the Issuing Lender
to maintain such accounts or any error therein shall not in any manner affect
the obligation of the Borrower to pay such amounts in accordance with the terms
of this Agreement.

 

ARTICLE III

 

REGULATORY ACCOUNT; SURPLUS ACCOUNT; REINSURANCE TRUST ACCOUNT; PRIORITY OF
PAYMENTS

 

Section 3.01.                          Regulatory Account and Administrative
Account.

 

(a)                                 The Borrower shall cause to be established
and maintained as provided in Section 3.01(b) a segregated account (the
“Regulatory Account”) in its own name, which shall at all times hold Cash or
Cash Equivalents with a Market Value at least equal to $250,000.  Except as
required by applicable law, no amounts held in the Regulatory Account shall be
(i) commingled with the assets of the Surplus Account or (ii) withdrawn prior to
the Facility Maturity Date for any reason.

 

(b)                                 On or prior to the Original Closing Date,
the Regulatory Account was funded with Cash having an aggregate Market Value
equal to $250,000. No additional contributions shall be made to the Regulatory
Account other than in accordance with the Priority of Payments.

 

(c)                                  Notwithstanding anything in this Agreement
or any other Transaction Document to the contrary, the Borrower shall be
permitted to establish, maintain and utilize a deposit account and a
disbursement account (together, the “Administrative Account”) with Regions Bank,
N.A., and its successor and assigns or, with the consent of the Issuing Lender,
such consent not to be unreasonably withheld, an Eligible Bank designated by the
Borrower, solely for purposes of making payments to, and receiving payments
from, its Affiliates in connection with the PLC Service Agreements,
Administrative Services Agreement and Investment Management Agreement; provided,
that the ending daily account balance of the Administrative Account shall not,
at the close of any three consecutive Business Days, exceed $1,000, and the
Borrower shall promptly deposit any funds received from its Affiliates in the
Administrative Account into the Surplus Account.

 

Section 3.02.                          Surplus Account of the Borrower.

 

(a)                                 The Borrower shall cause to be established
and maintained as provided in Section 3.02(b) a segregated account (the “Surplus
Account”).  No amounts held in the Surplus Account shall be commingled with the
general assets of the Borrower or the assets held in the Regulatory Account. 
Except as provided in Section 3.01(c), all funds and assets received by the
Borrower pursuant to any Transaction Document or otherwise (including any
distributions related to the grantor interest in the Reinsurance Trust Account)
shall be deposited into and held

 

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in the Surplus Account subject to disbursement in accordance with the Priority
of Payments and, solely with respect to LOC Reimbursement Obligations, the
Payment Restrictions.  All funds held in the Surplus Account (including any
products and proceeds of any such funds), including any investments or
reinvestments of such proceeds, shall be retained in the Surplus Account subject
to disbursement in accordance with the Priority of Payments and, solely with
respect to LOC Reimbursement Obligations, the Payment Restrictions and invested
and applied in accordance with the Investment Guidelines.  The Borrower hereby
agrees that any assets credited to or deposited in the Surplus Account may only
be withdrawn or applied as provided in this Agreement.

 

(b)                                 The parties agree that, for purposes of the
UCC, New York law shall be the law of the jurisdiction of The Bank of New York
Mellon in its capacity as Securities Intermediary, with respect to the Surplus
Account, and that The Bank of New York Mellon has agreed in the Securities
Account Control Agreement, in its capacity as Securities Intermediary, to treat
all assets credited to the Surplus Account as “financial assets” within the
meaning of Section 8-102(a)(9) of the UCC; provided, to the extent that the
Surplus Account is not considered a Securities Account, such account shall be
deemed to be a “Deposit Account” (as defined in Section 9-102(a)(29) of the
UCC), and a security interest is hereby granted by the Borrower to the Issuing
Lender and perfected under the UCC in the Surplus Account as a Deposit Account,
which The Bank of New York Mellon shall maintain acting not as Securities
Intermediary but as a “bank” (within the meaning of Section 9-102(a)(8) of the
UCC).

 

(c)                                  All deposits into the Surplus Account shall
be made in accordance with the procedures set forth in Section 3.04.  On or
prior to the Original Closing Date, the Surplus Account was initially funded
with Cash or securities having an aggregate Market Value equal to $[****], after
giving effect to the expenses set forth in Section 6.01(n)(i) and any rating
agency fees, legal fees of the Borrower’s Vermont counsel and other formation
costs of the Borrower incurred in connection with the Transactions as of the
Original Closing Date.  After the Original Closing Date, except as provided in
Section 3.01(c), all amounts received by the Borrower shall immediately be
deposited into the Surplus Account.

 

(d)                                 All withdrawals and releases of capital from
the Surplus Account shall be made in accordance with the Priority of Payments
and, solely with respect to LOC Reimbursement Obligations, the Payment
Restrictions.

 

Section 3.03.                          Reinsurance Trust Account.  The
Reinsurance Trust Account shall be established by the Borrower, as grantor,
subject to and in accordance with the terms of the Reinsurance Trust Agreement.

 

Section 3.04.                          Procedures for Depositing Cash and
Crediting Securities to Surplus Account.  The Borrower may, on any Business Day,
transfer, deliver or deposit or cause to be transferred, delivered or deposited,
as the case may be, Cash or securities to the Surplus Account.

 

Section 3.05.                          Priority of Payments.  Except as
otherwise provided for in Section 9.14, the Borrower shall apply all funds held
in the Surplus Account on any Business Day (except in the case of item
Thirteenth), without duplication, in the following order of priority (the
“Priority of Payments”):

 

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(a)                                 First, for the payment of any Taxes or
provisions for Taxes and other governmental charges due and payable by the
Borrower as of such date;

 

(b)                                 Second, to the extent the Market Value of
the assets held in the Regulatory Account is less than $250,000, for the payment
of Cash or Cash Equivalents in an amount equal to the excess of $250,000 over
such Market Value;

 

(c)                                  Third, to the extent amounts drawn under
any Letter of Credit are in excess of the actual amounts required for Permitted
Purposes (as such term is defined in the Reinsurance Agreement) or are
subsequently determined pursuant to Section 7.3(c) of the Reinsurance Agreement
not to be due under the Reinsurance Agreement, for the payment of that portion
of the Borrower’s obligations due and payable by the Borrower as of such date
consisting of (i) unpaid interest at the Drawn Rate on all LOC Reimbursement
Obligations with respect to such amounts drawn, and (ii) after all such unpaid
interest has been paid in full, unpaid principal of all LOC Reimbursement
Obligations with respect to such amounts drawn;

 

(d)                                 Fourth, for the payment of any amounts due
and payable by the Borrower to the Ceding Company under, and subject to the
terms of, the Reinsurance Agreement as of such date (including any deposits to
the Reinsurance Trust Account required in accordance with the terms of the
Reinsurance Agreement);

 

(e)                                  Fifth, for the payment of any Third Party
Expenses incurred directly by the Borrower that are due and payable on such
date;

 

(f)                                   Sixth, for the payment of Utilization Fees
that are due and payable by the Borrower to the Issuing Lender as of such date;

 

(g)                                  Seventh, to the extent not otherwise
contemplated in item Third above, for the payment of that portion of the
Borrower’s obligations that are due and payable as of such date under this
Agreement consisting of unpaid principal of the LOC Reimbursement Obligations
and interest at the Drawn Rate on all LOC Reimbursement Obligations; provided,
that payment of such LOC Reimbursement Obligations shall only be made to the
extent that (i) the Borrower’s Total Adjusted Capital will equal or exceed
[****] percent ([****]%) of the Borrower’s Company Action Level Risk Based
Capital after giving effect to such payment, or (ii) an Approval has been
received in respect of all or a portion of such payment if the Borrower’s Total
Adjusted Capital will not equal or exceed [****] percent ([****]%) of the
Borrower’s Company Action Level Risk Based Capital after giving effect to such
payment (the “Payment Restrictions”);

 

(h)                                 Eighth, to the extent not otherwise
contemplated in items Third, Sixth or Seventh, for payments due to the Issuing
Lender from the Borrower upon the occurrence of an Event of Default, including,
without limitation, the posting of collateral or acceleration of any outstanding
amounts under the Letter of Credit, which payments shall be made to and held in
the Cash Collateral Account, other than, for the avoidance of doubt, any LOC
Reimbursement Obligations;

 

(i)                                     Ninth, for the payment of any amounts
due and payable by the Borrower as of such date under the Tax Sharing Agreement
or the Special Tax Allocation Agreement;

 

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(j)                                    Tenth, to the extent not otherwise
contemplated in items Third, Sixth, Seventh and Eighth above, for the payment of
Fees, indemnities, expenses and other amounts payable to the Issuing Lender by
the Borrower that are due and payable as of such date, other than, for the
avoidance of doubt, any LOC Reimbursement Obligations;

 

(k)                                 Eleventh, subject to an Approval, on any
interest payment date specified in any Surplus Note of the Borrower, for the
payment of any interest due and payable by the Borrower in respect of any such
Surplus Note as of such date to the extent that, immediately following payment
thereof, the Dividend Test shall be satisfied; provided, however, that no
payment of interest may be made under this item Eleventh so long as (y) a
Default or Event of Default has occurred and is continuing, or (z) any amounts
due and payable by the Borrower to the Issuing Lender shall remain due and
unpaid;

 

(l)                                     Twelfth, subject to an Approval, on any
interest payment date specified in any Surplus Note of the Borrower, for the
payment of any principal, premium and any other amount due and payable by the
Borrower in respect of any such Surplus Note as of such date to the extent that,
immediately following payment thereof, the Dividend Test shall be satisfied;
provided, however, that no payment of principal may be made under this item
Twelfth so long as (x) a Default or Event of Default has occurred and is
continuing, (y) any amounts due and payable by the Borrower to the Issuing
Lender shall remain due and unpaid for more than five (5) Business Days after
notice from the Issuing Lender or (z) the Letter of Credit shall remain
outstanding; and

 

(m)                             Thirteenth, for the payment of any dividends
declared on or subsequent to [****], subject to and in accordance with the
Dividend Formula; provided, however, that no dividends will be payable under
this item Thirteenth if on the date of declaration thereof (w) a Default or
Event of Default has occurred and is continuing, (x) any amounts due and payable
by the Borrower to the Issuing Lender shall remain due and unpaid, (y) any
Dividend Catch-Up Contribution shall remain unpaid or (z) any amounts due and
payable in excess of $[****] by PLC to the Borrower pursuant to any Transaction
Document to which PLC is a party shall remain due and unpaid and such failure to
pay shall have continued for thirty (30) calendar days; provided, further, that
any dividend declared on or subsequent to [****] in accordance with this
Agreement that satisfied the requirements of this item Thirteenth on its date of
declaration if it had been paid on such date, shall be payable by the Borrower
on any future date, notwithstanding the provisions of this item Thirteenth or
any other provisions to the contrary herein.

 

If any amounts are due and payable under items First through Tenth of the
Priority of Payments (other than and excluding amounts due and payable under
item Eighth of the Priority of Payments), and insufficient funds are existing in
the Surplus Account at such time, then funds held in the Cash Collateral Account
(if any) shall be transferred to the Surplus Account to make such payments.

 

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ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

Section 4.01.                          Borrower Representations and Warranties. 
The Borrower represents and warrants to the Issuing Lender, as of the date
hereof, as follows:

 

(a)                                 Organization; Powers.  The Borrower is duly
formed in accordance with its Constituent Documents, validly existing and in
good standing under the laws of the State of Vermont, is duly licensed or
authorized under the laws of the State of Vermont and has the corporate power
and authority to carry on its business as contemplated in the Transaction
Documents.

 

(b)                                 Authorization; Enforceability.  The
Transaction Documents to which the Borrower is a party are within the corporate
powers of the Borrower and have been duly authorized by all necessary corporate
and, if required, stockholder action on the part of the Borrower.  Each of the
Transaction Documents to which the Borrower is a party has been duly executed
and delivered by the Borrower and, assuming the due execution and delivery of
such Transaction Documents by the other parties thereto, constitutes, or will
constitute, legal, valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with its terms, subject, as to enforcement,
to applicable bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors’ rights generally, the rights of creditors of
insurance companies and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.

 

(c)                                  Approvals; No Conflicts.  Except as would
not reasonably be expected to result in a Material Adverse Effect, the
Transaction Documents to which the Borrower is a party (i) are in full force and
effect and do not require any consent or approval of, registration or filing
with, or any other action by, any Governmental Authority or any third party,
except such as have been obtained or made, (ii) do not violate any applicable
law or regulation or the Constituent Documents of the Borrower, or any order of
any Governmental Authority applicable to the Borrower or the Reinsured Policies,
(iii) do not violate or result in a default or other conflict under any material
agreement or other instrument binding upon the Borrower or any of its assets, or
give rise to a right thereunder to require any payment to be made by the
Borrower and (iv) will not result in the creation or imposition of any Lien on
any asset of the Borrower except for Permitted Liens or as expressly permitted
under the terms of such Transaction Documents.

 

(d)                                 Compliance with Laws and Agreements.  The
Borrower is in compliance in all material respects with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
properties, the Transaction Documents to which it is a party and, except as
would not result in a Material Adverse Effect, all other agreements and other
instruments binding upon it or its property.

 

(e)                                  Taxes.  The Borrower has timely filed or
caused to be filed all material Tax returns and reports required to have been
filed and has paid or caused to be paid all material Taxes required to have been
paid by it.

 

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(f)                                   Accuracy of Information.

 

(i)                                     The annual audited financial statement
for the year ending December 31, 2010 and the unaudited quarterly financial
statement for the calendar quarter ending June 30, 2011 of the Ceding Company
provided to the Issuing Lender by the Borrower were prepared in all material
respects in accordance with SAP and, to the extent consistent therewith, fairly
present in all material respects the financial condition and result of
operations of the Ceding Company as of the respective dates thereof and for the
respective periods presented therein, as applicable.  The factual information
(not including any projections, estimates, modeling or other non-factual
information) contained in the actuarial report dated December 3, 2009 prepared
by the Original Block Independent Actuary with respect to the Original Block
that the Borrower has furnished or caused to be furnished to the Issuing Lender
in connection with its analysis and negotiation of the Transactions or the
Transaction Documents, in each case as modified or supplemented by other
information so furnished by the Borrower, is true and correct in all material
respects as of the date of such report.  To the best of the Borrower’s
knowledge, the financial and actuarial projections and modeling contained
therein or otherwise furnished to the Issuing Lender by or on behalf of the
Borrower and listed on Schedule 5 were prepared in good faith based upon
assumptions believed to be reasonable in the circumstances as of their
respective dates or when prepared (it being understood that such projections and
modeling are subject to significant uncertainties and contingencies, many of
which are beyond the Ceding Company’s or the Borrower’s control, and that no
assurances can be given that the projections or modeling will be realized).  To
the best of the Borrower’s knowledge, no report, certificate or information of a
type not otherwise described in this Section 4.01(f)(i) and furnished in writing
by or on behalf of the Ceding Company to the Issuing Lender in connection with
its analysis and negotiation of this Agreement on or prior to the date hereof,
when delivered or as of its respective date, in each case as modified or
supplemented by other information furnished by or on behalf of the Ceding
Company, contained any material misstatement of fact or omitted to state a
material fact.

 

(ii)                                  The annual audited financial statement for
the year ending December 31, 2012 and the unaudited quarterly financial
statement for the calendar quarter ending March 31, 2013 of the Ceding Company
provided to the Issuing Lender by the Borrower were prepared in all material
respects in accordance with SAP and, to the extent consistent therewith, fairly
present in all material respects the financial condition and result of
operations of the Ceding Company as of the respective dates thereof and for the
respective periods presented therein, as applicable.  To the best of the
Borrower’s knowledge, the factual information (not including any projections,
estimates, modeling or other non-factual information) contained in the actuarial
report dated June 5, 2013 prepared by the UILIC Block Independent Actuary with
respect to the UILIC Block that the Borrower has furnished or caused to be
furnished to the Issuing Lender in connection with its analysis and negotiation
of the Transactions or the Transaction Documents, in each case as modified or
supplemented by other

 

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information so furnished by the Borrower, is true and correct in all material
respects as of the date of such report.  To the best of the Borrower’s
knowledge, the financial and actuarial projections and modeling contained
therein or otherwise furnished to the Issuing Lender by or on behalf of the
Borrower and listed on Schedule 5 were prepared in good faith based upon
assumptions believed to be reasonable in the circumstances as of their
respective dates or when prepared (it being understood that such projections and
modeling are subject to significant uncertainties and contingencies, many of
which are beyond the Ceding Company’s or the Borrower’s control, and that no
assurances can be given that the projections or modeling will be realized).  To
the best of the Borrower’s knowledge, no report, certificate or information of a
type not otherwise described in this Section 4.01(f)(ii) and furnished in
writing by or on behalf of the Ceding Company to the Issuing Lender in
connection with its analysis and negotiation of this Agreement on or prior to
the date hereof, when delivered or as of its respective date, in each case as
modified or supplemented by other information furnished by or on behalf of the
Ceding Company, contained any material misstatement of fact or omitted to state
a material fact.

 

(g)                                  Representations and Warranties in Other
Transaction Documents.  Each of the representations and warranties made by the
Borrower in the Transaction Documents to which it is a party, are true, complete
and correct in all material respects as of the date given, subject to any
qualifications and limitations contained therein; provided, that, in each case,
such materiality qualifier shall not be applicable to any representations or
warranties that are already qualified or modified by materiality in the text
thereof.

 

(h)                                 Good Title to Collateral; Absence of
Liens.  The Borrower is the owner of any Collateral pledged hereunder free and
clear of all Liens other than Permitted Liens.

 

(i)                                     Litigation Matters.  There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened in
writing against the Borrower or against the Ceding Company and affecting the
Reinsured Policies (i) that seek to challenge the validity or enforceability of
the Transaction Documents or the Transactions or (ii) that would reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect.

 

(j)                                    No Material Adverse Effect.  There has
been no Material Adverse Effect since December 31, 2012.

 

(k)                                 Investment Company.  The Borrower is not
required to register as an “investment company” or a company controlled by an
“investment company” as defined in the Investment Company Act of 1940.

 

(l)                                     Anti-Terrorism Laws.

 

(i)                                     Each of the Borrower and, to the
Borrower’s knowledge, each of the Borrower’s Affiliates and each of their
respective officers or directors, is in compliance in all material respects with
any Anti-Terrorism Law.

 

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(ii)                                  None of the Borrower and, to the
Borrower’s knowledge, none of the Borrower’s Affiliates and none of their
respective officers or directors who is acting or benefiting in any capacity in
connection with the Letter of Credit, is an Embargoed Person.

 

(m)                             Debt Obligations.  The Borrower does not have
any outstanding Indebtedness in excess of $50,000, except as permitted under or
contemplated by the Transaction Documents.

 

(n)                                 Disclosure.  The Borrower has disclosed in
writing to the Issuing Lender all agreements and instruments to which it is
subject, the breach or noncompliance with which could, individually or in the
aggregate, be expected to result in a Material Adverse Effect.

 

(o)                                 Subsidiaries.  The Borrower has no
Subsidiaries.

 

(p)                                 Capitalization.  The Borrower received, on
or prior to the Original Closing Date, a capital contribution or contributions
with an aggregate Market Value of not less than $[****] in the form of paid-in
capital, $[****] of which was deposited into the Surplus Account, $[****] of
which was deposited into the Reinsurance Trust Account and $250,000 of which was
deposited into the Regulatory Account.

 

(q)                                 Solvency.  The Borrower is and shall be
Solvent both before and immediately after giving effect to the Transactions
taking place on the Amendment Closing Date.

 

(r)                                    Statutory Filings.  The Borrower has made
all required filings under applicable insurance and reinsurance laws in each
jurisdiction where such filings are required, except where the failure to so
file would not reasonably be expected to have a Material Adverse Effect.

 

(s)                                   Borrower Securities.  All capital stock or
other equity interests issued by the Borrower (other than any Surplus Notes
issued subject to and in accordance with Section 6.01(bb)) are owned by PLICO or
any wholly-owned Affiliate of the ultimate Controlling party of the Borrower
that is a regulated insurance company.

 

(t)                                    Non-Consolidation.  From the date of
formation of the Borrower to the Original Closing Date, the Borrower has
complied in all material respects with the non-consolidation covenants set forth
in Section 6.01(l).

 

ARTICLE V

 

CONDITIONS

 

Section 5.01.   Closing Conditions.  The obligation of the Issuing Lender to
issue the Letter of Credit on the Amendment Closing Date is subject to the
satisfaction or waiver in accordance with Section 9.02 of the following
conditions precedent on or prior to the Amendment Closing Date (the “Closing
Conditions”):

 

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(a)                                 Approvals.  All material governmental and
regulatory necessary in connection with the consummation of the Transactions
shall have been obtained and be in full force and effect, and all applicable
waiting periods shall have expired without any action being taken or threatened
by any Governmental Authority that would reasonably be expected to have a
Material Adverse Effect.

 

(b)                                 Transaction Documents.  The Borrower and the
Ceding Company shall have executed (if applicable) and delivered the Transaction
Documents, copies of which shall have been delivered to the Issuing Lender, and
all conditions to the effectiveness of the Transaction Documents (other than
this Agreement) shall have been satisfied.

 

(c)                                  Representations and Warranties.  The
representations, warranties and covenants of the Borrower and the Ceding Company
set forth herein are true, correct and complete in all material respects, as of
the date hereof, unless such representations or warranties are specifically made
as of any earlier date, in which case they shall only be made as of such earlier
date; provided, that, in each case, such materiality qualifier shall not be
applicable to any representations or warranties that are already qualified or
modified by materiality in the text thereof.

 

(d)                                 Payment of Fees.  The Borrower shall have
paid any Fees due and owing to the Issuing Lender as of the Amendment Closing
Date.

 

(e)                                  Financial Strength Rating.  The Borrower
shall have a Counterparty Risk Rating of at least “A” by S&P (or an equivalent
rating by Moody’s or Fitch).  The Ceding Company shall have an Insurer Financial
Strength Rating of at least “A” by S&P (or an equivalent rating by Moody’s or
Fitch).

 

(f)                                   Closing Documents and Certificates.  The
Issuing Lender shall have received certificates signed by Responsible Officers
of the Borrower certifying that the Closing Conditions (other than those set
forth in Sections 5.01(e), (g) and (h) or those that may have been waived in
writing by the Issuing Lender) have been fully satisfied as of the Amendment
Closing Date.

 

(g)                                  Legal Opinions and Memorandum.  The Issuing
Lender or its counsel shall have received the following favorable written
opinions and memorandum (addressed to the Issuing Lender and dated as of the
Amendment Closing Date):

 

(i)                                     Opinion of Vermont counsel for the
Borrower with respect to general corporate matters under Vermont law;

 

(ii)                                  Opinion of counsel for the Borrower with
respect to general corporate matters under Delaware law;

 

(iii)                               Opinion of outside counsel for the Borrower
with respect to general corporate matters and the enforceability of the
Transaction Documents under U.S. federal, New York, and Nebraska law; and

 

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(iv)                              Opinion of counsel for the Borrower with
respect to the enforceability, including in delinquency proceedings, of the
off-set and recoupment provision in the Reinsurance Agreement under Nebraska
law.

 

(h)                                 Letter of Credit Request.  The Issuing
Lender shall have received a correct and complete request for the issuance of
the Letter of Credit.

 

(i)                                     No Default.  No event that constitutes a
Default or an Event of Default hereunder shall have occurred and be continuing.

 

(j)                                    Funds Withheld Account.  On the (i) Prior
Closing Date, the Ceding Company shall have transferred assets received from the
Borrower into the Funds Withheld Account with a Book Value (as defined in the
Reinsurance Agreement) equal to or greater than the Original Block Initial Funds
Withheld Amount and (ii) Amendment Closing Date, the Funds Withheld Balance
shall be equal to or greater than $[****], and the Ceding Company shall have
recorded on its books and records and its statutory financial statements a
payable to the Borrower in an amount equal to or greater than $[****].

 

(k)                                 Third Party Reinsurance.  The reinsurance
agreements relating to the Reinsured Policies set forth on Exhibit B to the
Reinsurance Agreement shall be in full force and effect.

 

Section 5.02.                          Conditions to Increase the LOC
Amount.  The LOC Amount shall be automatically increased on any Scheduled LOC
Adjustment Date pursuant to Section 2.01(b) and the Issuing Lender shall have no
right to deliver a Non-Increase Notice, unless one of the following conditions
precedent has not been satisfied (or waived by the Issuing Lender) or the
Borrower has not delivered the officer’s certificate described in
Section 2.01(b) on the applicable Scheduled LOC Adjustment Date (the “Increase
Conditions”):

 

(a)                                 Contributions.  The First Required
Additional Contribution shall have been paid by or on behalf of PLC to the
Borrower at least forty (40) calendar days prior to the First Required
Additional Contribution Date and, if applicable, the Second Required Additional
Contribution and the Third Required Additional Contribution shall have been paid
by or on behalf of PLC to the Borrower at least forty (40) calendar days prior
to the Second Required Additional Contribution Date and the Third Required
Additional Contribution Date, respectively.

 

(b)                                 No Default.  No event that constitutes a
Default or an Event of Default hereunder shall have occurred and be continuing.

 

(c)                                  Accuracy of Representations and
Warranties.  The representations and warranties of (i) the Borrower made
pursuant to Sections 4.01(a) (Organization; Powers), 4.01(b) (Authorization;
Enforceability), 4.01(c) (Approvals; No Conflicts), 4.01(f) (Accuracy of
Information) (but solely with respect to the first sentence of each subsection
thereof), 4.01(h) (Good Title to Collateral; Absence of Liens),
4.01(i) (Litigation Matters) (but only with respect to clause (i) thereof),
4.01(k) (Investment Company), 4.01(l) (Anti-Terrorism Laws), 4.01(r) (Statutory
Filings) and 4.01(s) (Borrower Securities), shall, in each case, be true and
correct in all material respects before giving effect to any increase of the LOC
Amount as though made on the applicable Scheduled LOC Adjustment Date unless any
such representations or warranties

 

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are specifically made as of any earlier date, in which case they shall only be
made as of such earlier date.

 

ARTICLE VI

 

BORROWER COVENANTS

 

Section 6.01.                          Borrower Covenants.  The Borrower hereby
agrees, so long as the LOC Commitment remains in effect, the Letter of Credit
remains outstanding or any amount is owing to the Issuing Lender, as follows:

 

(a)                                 Corporate Existence.  The Borrower shall
preserve and maintain its corporate existence and rights (both organizational
and statutory) and maintain full corporate right, power, authority and
governmental licenses, approvals and certificates, to perform its obligations
hereunder and to own and operate its assets and to carry on its business except
for such rights, powers, authority, licenses, approvals and certificates, the
loss of which would not reasonably be expected to have a Material Adverse
Effect.

 

(b)                                 Compliance with Laws.  Except as could not
reasonably be expected to have a Material Adverse Effect, the Borrower will
comply with all applicable laws, rules, regulations, and orders of any
Governmental Authority applicable to it, its business or its property.

 

(c)                                  Notices of Material Events.  The Borrower
shall furnish to the Issuing Lender written notice of the following events
within the time frames specified below:

 

(i)                                     the occurrence of any material breach
under any Transaction Document to which it is a party within five (5) Business
Days after the Borrower has knowledge of any such occurrence;

 

(ii)                                  any material correspondence from,
including all orders of, or to any Governmental Authority relating to this
Agreement or the Transactions within twenty (20) Business Days after the actual
receipt by the Borrower thereof, except to the extent prohibited by the terms of
such correspondence or order;

 

(iii)                               the filing or commencement of any action,
suit or proceeding by or before any arbitrator or Governmental Authority against
the Borrower or against the Ceding Company affecting the Reinsured Policies that
would be reasonably expected to result in a Material Adverse Effect with respect
to the Borrower, within ten (10) Business Days after the Borrower has knowledge
of any such filing or commencement; and

 

(iv)                              the occurrence of any Material Adverse Effect
with respect to the Borrower or the Reinsured Policies within five (5) Business
Days after the Borrower has knowledge of any such occurrence.

 

Each notice delivered under this Section 6.01(c) shall be accompanied by a
statement of a Responsible Officer of the Borrower setting forth, in reasonable
detail, the event

 

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or development requiring such notice and any action taken or proposed to be
taken with respect thereto; provided, however, that, to the extent prohibited by
applicable laws, rules or regulations of any Governmental Authority, applicable
privilege policies or as would jeopardize attorney-client or other applicable
privilege, details regarding such breach, correspondence, actions, suits,
proceedings, events or developments need not be furnished to the Issuing Lender
by the Borrower.

 

(d)                                 Financial Reports and Other
Information.  The Borrower will, to the extent permitted by applicable law,
furnish to the Issuing Lender the various reporting documents listed in Schedule
1 attached hereto (the “Borrower Reporting Documents”).  All financial
statements delivered pursuant to this Section 6.01(d) shall be complete and
correct copies thereof in all material respects and, if prepared by the
Borrower, shall be prepared in all material respects in accordance with SAP.

 

(e)                                  Books and Records; Inspection Rights.  The
Borrower shall keep proper books of records and accounts in which entries are
made of dealings and transactions in relation to its business and activities. 
Such entries shall be true, correct and complete in all material respects. 
Subject to restrictions or limitations arising under applicable law and
regulations, the Borrower shall permit one or more employees of the Issuing
Lender and its representatives and advisors upon reasonable prior notice during
the Borrower’s normal business hours and as does not unreasonably disrupt the
business of the Borrower or its Affiliates to (i) inspect the books and records
of the Borrower, (ii) discuss the affairs, finances and accounts of the Borrower
with officers of the Borrower and (iii) discuss the affairs, finances and
accounts of the Borrower with the Borrower’s independent accountants; provided,
that the Issuing Lender shall not exercise such right more than once per
calendar year unless an Event of Default shall have occurred and be continuing;
provided, further, that the Borrower shall bear the expense of (a) one (1) such
audit per calendar year by the Issuing Lender and (b) in the event an Event of
Default shall have occurred and be continuing, all such audits conducted by the
Issuing Lender; provided, further, that the foregoing shall not require the
Borrower to disclose any information that it is prohibited from disclosing under
applicable contractual confidentiality obligations to third parties, privacy or
other applicable law, regulations or orders or that is subject to
attorney-client privilege or attorney work product privilege; provided, further,
that the Issuing Lender shall keep this and all such information provided under
this Agreement confidential pursuant to Section 9.13.

 

(f)                                   Indebtedness.  The Borrower shall not
create, incur, assume, guarantee, acquire, or, contingently or otherwise, enter
into or become responsible for payment of any Indebtedness or other obligations
incurred or entered into in excess of $50,000 other than (i) pursuant to, as
expressly permitted under, contemplated by or in connection with this Agreement,
(ii) Indebtedness or other obligations incurred as permitted under or
contemplated by the Transaction Documents or (iii) Surplus Notes.

 

(g)                                  Conduct of Business.  The Borrower shall
not engage in any business (including but not limited to any transactions with
Affiliates) other than the business contemplated by the Transaction Documents
and its organizational documents or in connection with the financing of its
obligations under the Reinsurance Agreement through the issuance of Surplus
Notes.

 

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(h)                                 No Amendment, Modification or Waiver;
Impairment of Rights.  The Borrower shall obtain the prior written consent of
the Issuing Lender (such consent not to be unreasonably withheld or delayed):

 

(i)                                     for any amendment to a Transaction
Document (including any such amendment described in Section 6.01(h)(ii));
provided, that the prior written consent of the Issuing Lender shall not be
required for (x) any commutation, recapture or termination of the Reinsurance
Agreement in accordance with its terms if the provisions thereof relating to
such commutation, recapture or termination are complied with in all material
respects and (y) any amendment to the definition of “RP Interest Rate” or “RP
Discount Rate” in the Reinsurance Agreement that is required or requested by the
domestic regulator of the Ceding Company so that such definition refers only to
assets of the Borrower deposited in the Reinsurance Trust Account;

 

(ii)                                  for any amendment, on or subsequent to the
date of any Regulatory Event that results in a decrease in excess of [****]
percent ([****]%) in the Statutory Reserves in excess of Economic Reserves for
the Reinsured Policies, to the Reinsurance Agreement to appropriately modify the
definition of “XXX Reserves” therein and to cause to be ceded to, and/or
reinsured with, the Borrower, additional level premium term life business with
an actuarial profile substantially similar to, or more favorable to the Borrower
than, the Reinsured Policies (the “Additional Business”), and to make such other
amendments, supplements and modifications to the Transaction Documents, and to
make such filings with, and to obtain such approvals of, the Nebraska Director
and any other jurisdiction in which the Ceding Company files its statutory
financial statements, and to take such other actions as may be reasonably
necessary in connection with the foregoing; provided, that (A) the aggregate
amount of surplus held by the Borrower to support the Reinsured Policies and the
Additional Business shall be proportionate to the amount of surplus held by the
Borrower (assuming the satisfaction of all contributions contemplated in
Section 2.01(c)) to support the Reinsured Policies prior to such amendment and
(B) the aggregate amount of Statutory Reserves in excess of Economic Reserves
ceded to, and reinsured by, the Borrower shall not increase as a result of such
amendment;

 

(iii)                               subject to Section 6.01(h)(vii), before
entering into any additional contracts or binding agreements other than the
Transaction Documents or any required replacement thereof that would create
material financial or other obligations of the Borrower other than Surplus
Notes;

 

(iv)                              for any actions by the Borrower taken pursuant
to any Transaction Document to which it is a party other than actions that are
(x) ministerial or routine in nature, (y) in the ordinary course of business or
(z) expressly provided for thereunder;

 

(v)                                 prior to using its commercially reasonable
efforts to provide statutory reserve credit for the reinsurance ceded under the
Reinsurance

 

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Agreement in all U.S. jurisdictions, other than the Ceding Company’s state of
domicile, in which the Ceding Company is required to file its statutory
statements pursuant to applicable statutory accounting principles and credit for
reinsurance statutes and regulations of such jurisdictions, other than making or
submitting any commercially reasonable applications for accreditation or
approval, filing, notice, or submission to jurisdiction or service of process as
a reinsurer with any Governmental Authority; provided, that it shall not be
unreasonable for the Issuing Lender to withhold its consent if any such efforts
of the Borrower would reasonably be expected to have an adverse impact on the
economic, risk, or return expectations of the Issuing Lender or any of its
Affiliates in any material respect.  For the avoidance of doubt, nothing in this
Section 6.01(h)(v) shall require the Issuing Lender to agree to any amendment
hereof or of the Letter of Credit;

 

(vi)                              before any material term or condition in any
Transaction Document to which it is a party is waived by the Borrower; and

 

(vii)                           for any other actions of the Borrower not
contemplated or permitted by Sections 6.01(h)(i) through (vi), other than
actions that are contemplated by or consistent with the Transaction Documents or
the Transactions, are ministerial or routine, are required by applicable law,
regulation, rule, order or any Governmental Authority or as would not adversely
affect the rights, remedies and position of the Issuing Lender with respect to
the Transactions.

 

(i)                                     Compliance with and Enforcement of
Transaction Documents.  The Borrower shall comply in all material respects with
the terms and conditions of, and perform its obligations and exercise and fully
enforce in all material respects its rights and remedies available under, each
Transaction Document to which it is a party; provided, that if the Borrower
fails to use reasonable best efforts to so enforce its rights in all material
respects within seven (7) Business Days of notice from the Issuing Lender or
upon the occurrence and continuation of an Event of Default, the Issuing Lender,
may enforce, in the name of the Borrower, the rights of the Borrower under the
Transaction Documents (other than this Agreement) pursuant and to the extent
permitted by the collateral assignment of rights set forth in Section 9.09.

 

(j)                                    Dividends.  Except with respect to any
Special Dividend, the Borrower shall not declare or pay any dividends (i) other
than in accordance with the terms of the Dividend Formula, (ii) during the
period beginning on the Original Closing Date and ending [****], (iii) if any
Default or Event of Default shall have occurred and be continuing and (iv) if
any amounts in excess of $[****] due and payable by PLC to the Borrower pursuant
to any Transaction Document to which PLC is a party shall remain due and unpaid
for a period of thirty (30) calendar days.

 

(k)                                 Non-Petition.  To the extent permitted by
applicable law, the Borrower shall not dissolve or liquidate, in whole or in
part, or institute insolvency proceedings against itself, or file a petition
seeking or consenting to reorganization or relief under any applicable law
relating to bankruptcy or insolvency, on or prior to the date that is one
(1) year and one (1)

 

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calendar day (or, if longer, the preference period then in effect) after payment
in full of all amounts payable in respect of its obligations to the Issuing
Lender.

 

(l)                                     Non-Consolidation.

 

(i)                                     The Borrower shall not have employees. 
The Borrower may enter into service agreements with an Affiliate, such that the
employees of such entity act on behalf of the Borrower; provided, however, that
such employees shall at all times hold themselves out to third parties as
representatives of the Borrower while performing duties under such service
agreements.

 

(ii)                                  Any Affiliates shall act as agents of the
Borrower solely through express agencies; provided, however, that such Affiliate
fully discloses to any third party the agency relationship with the Borrower;
provided, further, that such Affiliate receives fair compensation or
compensation consistent with regulatory requirements, as appropriate, from the
Borrower for the services provided.  The Borrower shall not act as an agent for
any Affiliate.

 

(iii)                               The Borrower shall not nor shall it allow
any Person to acquire any, merge into or consolidate with any Person or entity
or, to the fullest extent permitted by law, dissolve, terminate or liquidate in
whole or in part, transfer, lease or otherwise dispose of any of its assets
other than in accordance with the Transaction Documents, or change its legal
structure, fail to preserve its existence as an entity duly organized, validly
existing and in good standing (if applicable) under the laws of the jurisdiction
of its incorporation or to the fullest extent permitted by law, seek dissolution
or winding up in whole, or in part.

 

(iv)                              The Borrower shall allocate all overhead
expenses (other than expenses allocable to the Borrower’s use of office space
made available by an Affiliate) for items shared between the Borrower and such
Affiliate, on the basis of actual use to the extent practicable and, to the
extent such allocation is not practicable, on a basis reasonably related to
actual use.

 

(v)                                 The Borrower shall ensure that all actions
of the Borrower are duly authorized by its authorized officers, as appropriate.

 

(vi)                              The Borrower shall maintain its bank accounts,
books and records separately from those of its Affiliates, and use the name
“Golden Gate III Vermont Captive Insurance Company” in all correspondence, and
use separate invoices and checks.

 

(vii)                           The Borrower shall maintain its own records,
books, resolutions and agreements, and such books and records shall be adequate
and sufficient to identify all of its assets.

 

(viii)                        The Borrower shall prepare financial statements
for itself that are separate from the financial statements and accounting
records of its Affiliates; provided, that the Borrower may permit such financial
statements to be part of the

 

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consolidated financial statements of another entity which acknowledges that the
Borrower is a separate entity.

 

(ix)                              The Borrower shall not commingle funds or
other assets of the Borrower with those of its Affiliates or any other Person
and shall not maintain bank accounts or other depository accounts to which any
of its Affiliates are an account party, into which any of its Affiliates makes
deposits or from which any of its Affiliates have the authority to make
withdrawals, except that any Affiliate of the Borrower may deposit funds and
assets owed to the Borrower pursuant to the PLC Service Agreements,
Administrative Services Agreement and Investment Management Agreement into, and
any Affiliate of the Borrower may withdraw funds and assets owed to such
Affiliate pursuant to the PLC Service Agreements, Administrative Services
Agreement and Investment Management Agreement from, the Administrative Account.

 

(x)                                 The Borrower shall hold its assets in its
own name.

 

(xi)                              The Borrower shall maintain its assets in such
a manner that it is not, or will not be, costly or difficult to segregate,
identify or ascertain its assets from those of any other Person.

 

(xii)                           The Borrower shall not permit any of its
Affiliates to pay any of the Borrower’s operating expenses, unless such
operating expenses are paid by such Affiliate pursuant to a Transaction Document
or an agreement between such Affiliate and the Borrower providing for the
allocation of such expenses.

 

(xiii)                        The Borrower shall at all times act solely in its
own name and through its duly authorized officers or agents in order for the
Borrower to maintain an arm’s-length relationship its Affiliates.  The Borrower
shall not enter into any contract with an Affiliate except on terms that are
fair and equitable.

 

(xiv)                       The Borrower shall conduct its business solely in
its own name so as to not mislead third parties as to the identity of the
Borrower with which such third parties are conducting business, and shall use
all reasonable efforts to avoid the appearance that it is conducting business on
behalf any Affiliate or that the assets of the Borrower are directly available
to pay the creditors of any Affiliate.

 

(xv)                          The Borrower shall not consent to any of its
Affiliates granting consensual material Liens on the Borrower’s property or
assets.  The Borrower shall maintain its assets in such a manner that it is not
costly or difficult to segregate, identify or ascertain such assets.

 

(xvi)                       Subject to the Transaction Expense Support Agreement
and the PLC Guarantee, the Borrower shall pay its own liabilities and expenses
out of its own funds drawn on its own bank account.

 

(xvii)                    The Borrower shall not assume, guarantee, become
obligated for, pay, hold itself out to be responsible for or pledge its assets
in support of, the

 

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Indebtedness or obligations of any Affiliate or controlling persons or any other
Person and, except as permitted or required pursuant to the Transaction
Documents and the transactions contemplated therein, shall not create, incur,
assume, guarantee, acquire, or, contingently or otherwise, enter into or become
responsible for payment of any Indebtedness or guarantees or consent to any of
its Affiliates assuming, granting, becoming obligated for, paying or holding
itself out to be responsible for the Indebtedness or obligations of the
Borrower.

 

(xviii)                 The Borrower shall not acquire obligations or securities
of any Affiliates.  The Borrower shall not hold out its credit to any person as
available to satisfy the obligation of any other Person or entity.  The Borrower
shall not pledge its assets for the benefit of any other entity or make any
loans or advances to any Person or entity except as provided in the Transaction
Documents.

 

(xix)                       The Borrower shall observe strictly all
organizational and procedural formalities required by this Agreement, its
articles of incorporation and its by-laws, and by applicable law.

 

(xx)                          The Borrower shall not hold itself out as or be
considered as a department or division of (A) any shareholder, partner,
principal, member or Affiliate of the Borrower, (B) any Affiliate of a
shareholder, partner, principal, member or Affiliate of the Borrower or (C) any
other Person or allow any Person to identify the Borrower as a department or
division of that Person.

 

(xxi)                       The Borrower shall not conceal assets from any
creditor, or enter into any transaction with the intent to hinder, delay or
defraud creditors of the Borrower or the creditors of any other Person.

 

(xxii)                    As of the date hereof, the Borrower shall have
adequate capital.

 

(xxiii)                 The Borrower shall have at least one Independent
Director who is not on the board of directors of its sole shareholder of common
stock and shall cause its board of directors to observe all other corporate
formalities.

 

(xxiv)                The Borrower shall use all reasonable efforts to cause its
agents, service providers and other representatives to act at all times without
contravention of the foregoing covenants.

 

(m)                             Taxes.  The Borrower shall file any material Tax
return that is required to be filed by it in any jurisdiction or pay any
material Tax, assessment, charge or fee due and payable with respect to its
properties and assets, other than those being contested in good faith in which
case it shall take all reasonable steps to defend any action brought by a taxing
authority with respect to such Tax, assessment, charge or fee.

 

(n)                                 Expenses.  The Borrower shall reimburse the
Issuing Lender for all reasonable out-of-pocket expenses and other reasonable
costs (including any legal fees and actuarial fees) incurred in connection with
(i) the negotiation and preparation of the Transaction Documents on or prior to
the Original Closing Date, but not to exceed $[****] in aggregate or

 

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(ii) in connection with the negotiation and preparation of any amendment to this
Agreement following the Amendment Closing Date, but not to exceed $[****] in
aggregate per amendment, in the case of (i) or (ii), without the consent of the
Borrower, such consent not to be unreasonably withheld or delayed, and (iii) any
Event of Default.  The Borrower shall reimburse the Issuing Lender for
reasonable out-of-pocket expenses and other reasonable costs (including any
legal fees and actuarial fees) incurred in connection with the negotiation and
preparation of the amendments to the Transaction Documents entered into on the
Amendment Closing Date, but not to exceed $[****] in aggregate.

 

(o)                                 No Future Issuances of Securities.  The
Borrower shall not issue or sell any bonds, notes, debentures, or other debt
securities of the Borrower, or any other securities of the Borrower, and shall
not enter into any subscriptions, options, warrants, conversion or other rights,
agreements, commitments, arrangements or understandings of any kind,
contingently or otherwise, for the sale of any such securities or any securities
convertible into or exchangeable for any such securities, except with respect
to, in each case, Surplus Notes.

 

(p)                                 Maintenance of  Accounts.  The Borrower
shall at all times maintain (or in the case of the Reinsurance Trust Account,
cause to be maintained) (i) the Regulatory Account in accordance with
Section 3.01, (ii) the Surplus Account in accordance with Section 3.02 and
(iii) the Reinsurance Trust Account in accordance with the Reinsurance Trust
Agreement.

 

(q)                                 Investments in Regulatory Account.  The
Borrower shall not make or permit to be made any investments of assets held in
the Regulatory Account other than in Cash and Cash Equivalents.

 

(r)                                    Investments in Surplus Account and
Reinsurance Trust Account.  The Borrower shall not make or permit to be made any
investments of assets (other than the Letter of Credit) held in the Surplus
Account and Reinsurance Trust Account other than in accordance in all material
respects with the Investment Guidelines and in compliance in all material
respects with applicable law, including ensuring that the Investment Guidelines
comply in all material respects with applicable insurance laws and regulations.

 

(s)                                   No New Business.  With respect to the
Reinsured Policies, no new insurance or reinsurance treaties shall be reinsured
by the Borrower after the Original Closing Date, other than the UILIC Block or
as expressly permitted under the Reinsurance Agreement or Section 6.01(h)(ii).

 

(t)                                    Security Interest.  The Borrower shall
not grant a security interest in any of the Collateral and shall not otherwise
create, incur, assume or permit any liens, mortgages, security interests,
pledges, charges, or encumbrances of any kind on any of its property or assets
owned on the date hereof or thereafter acquired, or any interest therein or the
proceeds thereof, in each case other than Permitted Liens or as expressly
permitted in this Agreement or any other Transaction Document.  Subject to the
Priority of Payments and its obligations under this Agreement and the other
Transaction Documents, the Borrower shall not take any action, or fail to take
any action, with respect to the Collateral other than the Transaction Documents
or any rights thereunder, if such action or failure to take action would
reasonably be expected to interfere with the enforcement of any rights hereunder
material to the Issuing Lender.

 

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(u)                                 Change of Control.  The Borrower shall at
all times remain an Affiliate of the Ceding Company and a direct Subsidiary of
PLICO; provided, that nothing herein or in any of the Transaction Documents
shall prevent the Ceding Company or any other Affiliate of the Borrower from
consolidating with or merging into any other Affiliate of PLC (other than the
Borrower) or require any consent, waiver or approval of or by the Issuing Lender
therefor.  The Borrower shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, and the Borrower shall not permit any Person to
consolidate with or merge into the Borrower or convey, transfer or lease its
properties and assets substantially as an entirety to the Borrower.

 

(v)                                 Subsidiaries.  The Borrower shall not have
any Subsidiaries.

 

(w)                               Transaction Documents.  The Borrower shall
deliver to the Issuing Lender copies of any executed (or, if execution is
inapplicable, otherwise finalized) Transaction Documents.

 

(x)                                 Regulations T, U and X.  No proceeds of the
Letter of Credit will be used in violation of Regulation T, U or X of the Board
of Governors of the Federal Reserve System, as in effect from time to time.

 

(y)                                 Changes in Accounting Practices.  Except for
permitted practices provided for in the Licensing Order, the Borrower shall not
seek approval from the Vermont Commissioner in any respect of, and shall not
implement, any permitted practice under SAP as permitted by the State of Vermont
without the prior written consent of the Issuing Lender, such consent not to be
unreasonably withheld.

 

(z)                                  Ratings.  In the event that S&P ceases to
issue a Counterparty Risk Rating for the Borrower for any reason other than at
the request of the Borrower, the Borrower shall seek a substitute rating from
Moody’s or Fitch.  The Borrower shall obtain the written consent of the Issuing
Lender prior to requesting that S&P cease to issue a Counterparty Risk Rating
for the Borrower unless a substitute rating from Moody’s or Fitch has already
been obtained.

 

(aa)                          Independent Director.  The Borrower shall not
replace or appoint any director that is to serve as an Independent Director
unless (i) the Borrower provides the Issuing Lender with ten (10) Business Days
prior written notice of such replacement or appointment, (ii) a Responsible
Officer of the Borrower certifies that the designated Person satisfied the
criteria set forth in the definition of “Independent Director” herein and
(iii) the Issuing Lender acknowledges, in writing, that in its reasonable
judgment the designated Person satisfies the criteria set forth in the
definition of “Independent Director” herein or fails to respond to a request for
such acknowledgement within ten (10) Business Days of such request.

 

(bb)                          Surplus Notes.  During the term of this Agreement,
the Borrower may from time to time issue surplus notes (“Surplus Notes”);
provided, that any such Surplus Notes of the Borrower (i) shall be subordinate
at all times in right of payment of principal, interest or premium and any other
amounts with respect thereto to all fees, expenses, LOC Reimbursement
Obligations and other amounts due in connection with this Agreement and the
Letter of Credit as provided in and pursuant to the terms of the Priority of
Payments, (ii) shall bear interest at a rate

 

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not to exceed the then-applicable 5-year benchmark Treasury Rate plus [****]
bps, (iii) shall not have a maturity date earlier than one year and one day
following the later of (A) the Facility Maturity Date and (B) the date on which
no obligations due hereunder are outstanding, (iv) shall be issued in a form
reasonably acceptable to the Issuing Lender and (v) shall only be issued at
times when the difference between the Statutory Reserves and the Economic
Reserves is greater than the LOC Amount.  Payments of principal, interest or
premium in respect of any Surplus Notes of the Borrower shall only be made in
accordance with, and subject to the restrictions set forth in, the Priority of
Payments.

 

(cc)                            Termination of Letter of Credit.  The Borrower
shall, upon a termination of the Letter of Credit pursuant to Section 2.02,
within thirty (30) calendar days of the effective date of such termination,
(i) deliver written notice of such termination to the Issuing Lender and
(ii) return the Letter of Credit to the Issuing Lender for cancellation in full.

 

(dd)                          Contribution Notices.  The Borrower shall promptly
provide a written notice to the Issuing Lender upon any (i) receipt of the First
Required Additional Contribution, (ii) receipt of the Second Required Additional
Contribution and the Third Required Additional Contribution, (iii) receipt of
the Fourth Required Additional Contribution and (iv) receipt of the Fifth
Required Additional Contribution, and any such notice shall include the dates on
which such contributions were received by the Borrower.

 

ARTICLE VII

 

COLLATERAL AND SECURITY

 

Section 7.01.                          Obligations Secured Hereby.  This
Article VII is made to secure and provide for payment of all amounts due by the
Borrower to the Issuing Lender under this Agreement (such obligations and
liabilities being in this Agreement called the “Secured Obligations”).

 

Section 7.02.                          Collateral.

 

(a)                                 The Borrower, as security for the prompt
payment and performance of the Secured Obligations when due, hereby assigns,
conveys, transfers, delivers and sets over to the Issuing Lender, and grants to
the Issuing Lender a Lien on and a security interest in all assets of the
Borrower other than its books and records and its right, title and interest (now
existing or hereafter acquired or arising) in, to and under the Regulatory
Account and the Administrative Account, including the Borrower’s right, title
and interest (now existing or hereafter acquired or arising) in, to and under
the following (collectively, the “Collateral”):

 

(i)                                     the Borrower’s interest, if any, in the
Reinsurance Trust Account; provided, that such Lien and security interest is
subject in all cases and in every respect to the rights of the Reinsurance
Trustee in such interest;

 

(ii)                                  the Surplus Account, and all Cash,
securities, Instruments and other property held in the Surplus Account from time
to time, and all certificates and Instruments, if any, from time to time
representing the Surplus Account or any property therein. Notwithstanding the
status of the Surplus Account and

 

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financial assets as Collateral, the Surplus Account and such assets shall remain
available to make payments in the priority and to the recipients identified
pursuant to the Priority of Payments. In addition, the Issuing Lender agrees not
to issue any Notice of Exclusive Control (as defined in the Securities Account
Control Agreement) unless an Event of Default has occurred and is continuing.
The Issuing Lender hereby authorizes any disposition of property from the
Surplus Account free of any security interest if, and only to the extent that,
such disposition is made, and the proceeds are applied, in accordance with the
Priority of Payments;

 

(iii)                               all rights, if any, of the Borrower in
(A) all Cash, securities, Instruments and other property held or deemed to be
held in any express or constructive trust established pursuant to the terms of
the Reinsurance Agreement from time to time, and (B) all certificates and
Instruments, if any, from time to time representing any such express or
constructive trust or any property therein; provided, that such Lien and
security interest is subject in all cases and in every respect to the rights of
the Ceding Company in such rights;

 

(iv)                              any and all of the following, whether now
existing or hereafter arising and wheresoever the same may be located: all
rights of the Borrower under the Transaction Documents, accounts (other than the
Regulatory Account and the Reinsurance Trust Account), chattel paper, deposit
accounts, documents, equipment, general intangibles, goods, instruments,
inventory, investment property, letters of credit, letter-of-credit rights,
payment intangibles, securities accounts and supporting obligations;

 

(v)                                 all other property or rights delivered or
assigned by the Borrower or on its behalf to the Issuing Lender from time to
time under this Agreement or otherwise, to secure or guarantee payment of the
Secured Obligations; and

 

(vi)                              to the extent not covered above, all products
and proceeds of, and all dividends, collections, earnings, accruals, and other
payments with respect to, any or all of the foregoing.

 

Section 7.03.                          Perfection of Security Interest in
Collateral.

 

(a)                                 Entitlement Holder.  The Borrower agrees
that it is the sole Entitlement Holder with respect to each Securities Account
established hereunder, and the Issuing Lender will have control (as defined in
Section 9-104 of the UCC) over any deposit account established hereunder.

 

(b)                                 Further Assurances.  The Borrower hereby
authorizes the Issuing Lender to file all appropriate UCC filings, including
financing or continuation statements, in any jurisdiction and with any filing
offices as the Issuing Lender may determine, in its reasonable discretion, are
necessary to perfect or otherwise perfect the security interest granted to the
Issuing Lender herein.  The Borrower shall promptly prepare, file or record,
such additional notices, financing statements or other documents as the Issuing
Lender may reasonably request

 

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as necessary for the perfection of the security interests granted to the Issuing
Lender hereunder, such instruments to be in form and substance reasonably
satisfactory to the Issuing Lender.

 

Section 7.04.                          Continuing Security Interest,
Termination.

 

(a)                                 This Agreement shall create a continuing
security interest in the Collateral in favor of the Issuing Lender and shall
remain in full force and effect in accordance with its terms until all of the
Secured Obligations are paid or satisfied in full.

 

(b)                                 The security interest created by this
Agreement shall not be considered satisfied by payment or satisfaction of any
part of the Secured Obligations to the Issuing Lender hereby secured but shall
be a continuing security interest and shall not be discharged, prejudiced or
affected in any way by time being given to the Borrower or by any other
indulgence or concession to the Borrower granted by the Issuing Lender, by the
taking, holding, varying, non-enforcement or release by the Issuing Lender of
any other security for all or any of the Secured Obligations, by any other thing
done or omitted to be done by the Issuing Lender or any other Person or by any
other dealing or thing including any variation of or amendment to any part of
the Collateral and any circumstances whatsoever that but for this provision
might operate to discharge any of the Secured Obligations or to exonerate or
discharge the Borrower from its obligations hereunder or otherwise affect the
security interest hereby created.

 

Section 7.05.                          Protection of Collateral.

 

(a)                                 The Borrower shall take any action necessary
to:

 

(i)                                     maintain or preserve any and all Liens
created by this Agreement on the Collateral (and the priorities thereof);

 

(ii)                                  perfect or protect the validity of the
pledge of Collateral and the Liens created by this Agreement;

 

(iii)                               enforce, if commercially reasonable, any
rights with respect to the Collateral; and

 

(iv)                              preserve and defend, if commercially
reasonable, title to the Collateral and the rights of the Issuing Lender in such
Collateral against the claims of all Persons.

 

Section 7.06.                          Performance of Obligations.

 

(a)                                 The Borrower may contract with other Persons
to assist it in performing its duties under this Agreement, and any performance
of such duties by a Person identified to the Issuing Lender in an officer’s
certificate of the Borrower shall be deemed to be action taken by the Borrower.

 

(b)                                 The Borrower shall perform and observe all
its obligations and agreements contained in this Agreement, including, filing or
causing to be filed all documents required to be

 

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filed by the terms of this Agreement in accordance with, and within the time
periods provided for, in this Agreement and therein.

 

Section 7.07.                          Power of Attorney.  The Borrower hereby
irrevocably appoints the Issuing Lender and any receiver, officer or agent
thereof, with full power of substitution, as its true and lawful attorney-in
fact with full power and authority, in each case, to the maximum extent
permitted by law, in the name of the Borrower or the name of such
attorney-in-fact, from time to time in the Issuing Lender’s reasonable
discretion for the purpose of taking such action and executing such agreements,
financing statements, continuation statements, instruments and other documents,
in the name of the Borrower, as provided in this Agreement and as the Issuing
Lender may reasonably deem necessary to perfect, promote and protect and enforce
the security interest of the Issuing Lender in the Collateral.  Notwithstanding
the foregoing or anything else in this Agreement to the contrary, the Issuing
Lender has no responsibility for the validity, perfection, priority or
enforceability of any Lien or security interest and shall have no obligation to
take any action to procure or maintain such validity, perfection, priority or
enforceability.  This power of attorney shall be irrevocable as one coupled with
an interest prior to the payment in full of all the obligations secured hereby
until all amounts due and payable hereunder have been finally and fully repaid
and the Letter of Credit is terminated.

 

Section 7.08.                          No Pledge of Collateral to Others.  The
Borrower shall not (i) create, incur or suffer to exist, or agree to create,
incur or suffer to exist, or consent to cause or permit in the future (upon the
happening of a contingency or otherwise) the creation, incurrence or existence
of any Lien on the Collateral except for (a) Liens the validity of which are
being contested in good faith by appropriate proceedings, (b) Liens for Taxes
that are not then due and payable or that can be paid thereafter without
penalty, (c) Liens otherwise incurred in connection with borrowings permitted
hereunder and made in the ordinary course of business in accordance with the
Borrower’s stated investment objectives, policies and restrictions, (d) Liens in
favor of the Issuing Lender and (e) other Permitted Liens or (ii) sign or file
under the UCC of any jurisdiction any financing statement which names the
Borrower as a debtor, or sign any security agreement authorizing any secured
party thereunder to file such financing statement, except in each case any such
Instrument solely securing the rights and preserving the Lien of the Issuing
Lender.

 

Section 7.09.                          No Change in Borrower Name, Structure or
Office.  The Borrower will not change its name or jurisdictions of organization
unless it has taken such action in advance of such change or removal, if any, or
change its mailing addresses unless it has taken such action within fifteen (15)
calendar days of such change, in each case as is necessary to cause the security
interests of the Issuing Lender in the Collateral to continue to be perfected
without interruption.

 

Section 7.10.                          Release of Collateral.  Upon the payment
in full of all Secured Obligations or upon the other circumstances specified in
this Agreement, all of the Collateral shall be released from the Liens created
hereby, the security interest created hereby and all rights of the Issuing
Lender in such Collateral shall cease, and any remaining amounts or assets held
in the Cash Collateral Account or Surplus Account shall be transferred to, or
for the account of, the Borrower, and all rights to the Collateral shall revert
to the Borrower or any other Person entitled thereto.  At such time, the Issuing
Lender will authorize the filing of appropriate termination

 

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statements and other instruments and documents reasonably requested by the
Borrower to terminate such security interests.

 

Section 7.11.                          Notice of Exclusive Control.  The Issuing
Lender shall not deliver a Notice of Exclusive Control (as defined in the
Securities Account Control Agreement) under the Securities Account Control
Agreement unless an Event of Default shall have occurred and be continuing.

 

ARTICLE VIII

 

EVENTS OF DEFAULT

 

Section 8.01.                          Events of Default.  If any of the
following events (“Events of Default”) shall occur:

 

(a)                                 the Borrower shall fail to make any payment
of an LOC Reimbursement Obligation (including any applicable interest thereon),
immediately following the date on which, and to the fullest extent that, funds
become available in accordance with the Priority of Payments and the Payment
Restrictions, to the Issuing Lender under this Agreement or any other
Transaction Document to which it is a party and such failure to make payment
shall continue for two (2) Business Days; provided, that such failure shall not
constitute an Event of Default (A) in the case of any unpaid LOC Reimbursement
Obligations, such payment would cause the Borrower’s Total Adjusted Capital
following such payment to be less than [****] percent ([****]%) of its Company
Action Level Risk Based Capital and no Approval has been given by the Vermont
Commissioner in respect of such payment, or (B) if and to the extent the
Borrower fails to pay any such amounts when due at a time when the Market Value
of the assets (if any) in the Surplus Account equals zero;

 

(b)                                 the Borrower shall fail to pay when due any
amount payable to the Issuing Lender under this Agreement, or if in excess of
$[****], any other Transaction Documents to which it is a party (including the
posting of collateral and any applicable interest payments) other than any LOC
Reimbursement Obligation or any interest thereon, (i) with respect to the
payment of any Fees that are due and payable, immediately following the date on
which, and to the fullest extent that, funds become available in accordance with
the Priority of Payments and, with respect to the payment of any Fees which are
due and payable, such failure to make payment shall continue for two
(2) Business Days after the date due or, (ii) with respect to any payment
subject to this Section 8.01(b) other than the payment of any Fees which are due
and payable, immediately following the date on which, and to the fullest extent
that, funds become available in accordance with the Priority of Payments, and
such failure to make payment shall continue for five (5) Business Days after
written notice from the Issuing Lender; provided, that in the case of both
(i) and (ii), such failure shall not constitute an Event of Default if and to
the extent the Borrower fails to pay any such amounts when due at a time when
the Market Value of the assets (if any) in the Surplus Account equals zero;
provided, further, that in the case of (i), such failure shall not constitute an
Event of Default if the failure to pay is a result of the illegality,
unlawfulness or conflict with any applicable insurance law, rule or regulation
of the Borrower paying any Fee (or portion thereof) hereunder and the amount the
Borrower has failed to pay has been paid or satisfied by PLC under the PLC
Guarantee when required thereunder;

 

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(c)                                  any representation or warranty made or
deemed to be made by the Borrower or the Ceding Company in any Transaction
Document to which it is a party shall prove to have been incorrect or untrue in
any material respect when made or deemed to be made, as the case may be;

 

(d)                                 a final non-appealable judgment or judgments
for the payment of money in excess of, in the aggregate, $[****] in the case of
the Borrower or $[****] in the case of the Ceding Company, to the extent not
paid or covered by insurance, is rendered by one or more Governmental
Authorities against the Borrower or the Ceding Company, as applicable, and that
the same is not discharged, vacated, bonded or stayed within ninety (90)
calendar days;

 

(e)                                  except as otherwise set forth in Sections
8.01(a) or (b), the Borrower shall fail to observe or perform, in any material
respect, its obligations pursuant to Article VI, and such failure shall continue
for thirty (30) calendar days after written notice from the Issuing Lender;
provided, however, that such thirty (30) calendar day grace period will not
apply, to the extent notice of such breach is required to be given under any
section of Article VI, in the event that the Borrower has provided the Issuing
Lender notice of such breach more than sixty (60) calendar days following the
first day on which the Borrower has knowledge of such breach;

 

(f)                                   the Ceding Company shall fail to observe
or perform its obligations in any material respect pursuant to Sections
2(d) (Draw Certification Notice), 2(e) (Impermissible Draw) and
2(f) (Compliance) of the Ceding Company Letter Agreement, such failure shall
continue for thirty (30) calendar days after written notice from the Issuing
Lender;

 

(g)                                  (i) any Transaction Document becomes
illegal or it becomes unlawful for the Borrower or the Ceding Company to perform
their respective obligations under this Agreement or any other Transaction
Document in any material respect or (ii) the performance of the Borrower’s
obligations under this Agreement or any other Transaction Document conflicts
with any applicable insurance law, rule or regulation in any material respect,
and, in each case, such obligations are not paid or satisfied by PLC under the
PLC Guarantee when required thereunder;

 

(h)                                 any transaction occurs, whether a merger,
sale, asset sale or otherwise, as a result of which the Borrower fails to be an
Affiliate of the Ceding Company or a direct Subsidiary of PLICO;

 

(i)                                     the Borrower or the Ceding Company shall
(i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of any proceeding or petition, (iii) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or the Ceding Company or for a
substantial part of any of their respective assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or
(vi) take any action for the purpose of authorizing or effecting any of the
foregoing;

 

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(j)                                    an involuntary proceeding shall be
commenced or an involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Borrower or the Ceding Company,
or their respective debts, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or the Ceding Company, and, in any such case,
such proceeding or petition shall continue undismissed for thirty (30) calendar
days;

 

(k)                                 The Issuing Lender’s lien on any material
portion of the Collateral shall cease to be, subject to the Permitted Liens, a
valid first priority perfected security interest;

 

(l)                                     PLC shall fail to pay (i) any amount in
excess of $[****] payable to or explicitly required to be made on behalf of the
Borrower under the Tax Sharing Agreement or the Special Tax Allocation Agreement
within thirty (30) calendar days from the date on which such payment was due and
payable; or

 

(m)                             the Tax Sharing Agreement or the Special Tax
Allocation Agreement shall be amended, there shall be a termination of the
Special Tax Allocation Agreement, or there shall be a termination of the rights
of the Borrower with respect to PLC and the obligations of PLC with respect to
the Borrower under the Tax Sharing Agreement, in each case without the prior
written consent of the Issuing Lender (such consent not to be unreasonably
withheld) and such amendment or termination adversely affects, in any material
respect, the rights, remedies or obligations of the Borrower under such
agreement;

 

(n)                                 PLC shall fail to pay any amount in excess
of $[****] payable to the Borrower under the PLC Guarantee within three
(3) Business Days from the date on which such payment was due;

 

then, upon the occurrence and during the continuance of any Event of Default
(except in the case of item (iii) below which shall only apply with respect to
an Event of Default described in either Section 8.01(a) or (b)), subject to any
applicable grace period, the Issuing Lender may declare that (i) all LOC
Reimbursement Obligations and other amounts outstanding shall, at the option of
the Issuing Lender, accelerate and become immediately due and payable by the
Borrower from the available funds of the Borrower subject to the Priority of
Payments and, solely with respect to LOC Reimbursement Obligations, the Payment
Restrictions; (ii) the Borrower will be required to post cash collateral in an
amount equal to the undrawn face amount of the Letter of Credit, such collateral
to be paid as and when available with respect to the Borrower under item Eighth
of the Priority of Payments and to be held in the Cash Collateral Account;
(iii) the Issuing Lender may foreclose on the Collateral (but only, for the
avoidance of doubt, with respect to an Event of Default described in either
Section 8.01(a) or (b)); (iv) the Issuing Lender may enforce in the name of the
Borrower any rights of the Borrower under the Transaction Documents to the
extent permitted under the collateral assignment of such rights set forth in
Section 9.09; and (v) the Borrower shall cease to be allowed to declare or pay
any dividends (other than any Special Dividend).  Notwithstanding the foregoing,
the occurrence and continuation of an Event of Default shall not impair or
otherwise affect the Reinsurance Trustee’s right to draw on the Letter of Credit
in accordance with its terms (it being understood that any assets of the
Borrower pledged as collateral in accordance with clause (ii) and

 

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foreclosed upon in accordance with clause (iii), of the immediately preceding
sentence shall be deemed to have been used to satisfy amounts due and payable
under the Reinsurance Agreement for purposes of satisfying the condition to
drawing on the Letter of Credit described in the Draw Certification Notice).

 

So long as the Letter of Credit shall remain outstanding, the Issuing Lender
shall hold the Cash Collateral Account, which account and all assets thereof
shall be held separate and apart from all its other assets and accounts in the
name of and subject to the control and dominion of the Issuing Lender, as cash
collateral for the obligations of the Borrower owing to the Issuing Lender
hereunder.  Assets of the Cash Collateral Account shall be Cash or Cash
Equivalents, except as otherwise agreed by the Borrower.  Upon the termination
of the Letter of Credit in full, and the payment in full of all secured
obligations, the Issuing Lender shall release all funds and investments held in
the Cash Collateral Account to or upon the account of the Borrower.

 

ARTICLE IX

 

MISCELLANEOUS

 

Section 9.01.                          Notices.  Except as otherwise provided
herein and in the case of notices and other communications expressly permitted
to be given by telephone, all notices and other communications provided for
herein shall be in writing (including by electronic transmission) and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by electronic mail with PDF attachment and confirmed by
overnight courier service, as follows:

 

Borrower:

 

Golden Gate III Vermont Captive Insurance Company

 

 

c/o Marsh Management Services, Inc.

 

 

100 Bank Street

 

 

Burlington, VT 05402

 

 

Fax: (802) 859-3550

 

 

 

 

 

with a copy to:

 

 

 

 

 

Protective Life Corporation

 

 

2801 Highway 280 South

 

 

Birmingham, AL 35223

 

 

Attention: General Counsel

 

 

Fax: (205) 268-3597

 

 

 

Ceding Company:

 

West Coast Life Insurance Company

 

 

2801 Highway 280 South

 

 

Birmingham, AL 35223

 

 

Attention: General Counsel

 

 

Fax: (205) 268-3597

 

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Issuing Lender:

 

UBS AG, Stamford Branch

 

 

677 Washington Boulevard

 

 

Stamford, CT 06901

 

 

Attention: Banking Products Services

 

 

Fax: (203) 719-4176

 

 

E-mail: DL-UBSAgency@ubs.com

 

 

 

 

 

with a copies to

 

 

 

 

 

UBS AG, Stamford Branch

 

 

677 Washington Boulevard

 

 

Stamford, CT 06901

 

 

Attention: Structured Fixed Income

 

 

Fax: (203) 719-2941

 

 

 

 

 

and

 

 

 

 

 

UBS AG, Stamford Branch

 

 

677 Washington Boulevard

 

 

Stamford, CT 06901

 

 

Attention: Fixed Income Legal

 

 

Fax: (203) 719-0680

 

Any party hereto may change its address (street or email) for notices and other
communications hereunder by notice to the other parties hereto.  All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.

 

Section 9.02.                          Waivers; Amendments.  Except as otherwise
provided herein, neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by each of the Borrower and the Issuing Lender.

 

Section 9.03.                          Survival of Representations and
Warranties.  All representations and warranties contained herein shall survive
the execution and delivery of this Agreement and issuance of the Letter of
Credit.  Such representations and warranties have been or may be relied upon by
the Issuing Lender regardless of any investigation made at any time by or on
behalf of the Issuing Lender.

 

Section 9.04.                          Indemnity.  Irrespective of whether the
LOC Commitment or the Letter of Credit is terminated, the Borrower agrees to
indemnify jointly and severally the Issuing Lender and each Related Party of the
Issuing Lender (each such Person being called an “Indemnitee”) against, and hold
each Indemnitee harmless from, any and all losses, claims, damages, liabilities
and related expenses, including the reasonable and documented fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee by any third party arising out of, or as a result of any actual
claim, litigation,

 

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investigation or proceeding relating to (i) the execution or delivery of this
Agreement or the performance by the parties hereto of their respective
obligations hereunder or (ii) the Letter of Credit or any LOC Disbursement
regardless of whether any Indemnitee is a party thereto but excluding in each
case any actual or threatened claim, litigation, investigation or proceeding
solely among Indemnitees and/or Participants and/or Lender Counterparties;
provided, that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
have resulted from the gross negligence, bad faith or willful misconduct of any
Indemnitee; provided, further, that such indemnity shall be subject to, and only
payable in accordance with, the Priority of Payments and, solely with respect to
LOC Reimbursement Obligations, the Payment Restrictions, including, without
limitation, as may limit or restrict payment of any LOC Reimbursement Obligation
or interest thereon.  It is understood and agreed that, to the extent not
precluded by a conflict of interest, each Indemnitee shall endeavor to work
cooperatively with the Borrower with a view toward minimizing the legal and
other expenses associated with any defense and any potential settlement or
judgment.  To the extent reasonably practicable and not disadvantageous to any
Indemnitee and in the absence of any conflict of interest, a single counsel
selected by the Borrower, and approved by the Indemnitee, may be used. 
Settlement of any claim or litigation involving any material indemnified amount
will require the approvals of the Borrower (not to be unreasonably withheld) and
the relevant Indemnitee (not to be unreasonably withheld or delayed).

 

Section 9.05.                          Successors and Assigns; Participations
and Assignments.

 

(a)                                 The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns (including, if applicable, any Affiliate of the Issuing
Lender), except that (y) the Borrower may not assign or otherwise transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Issuing Lender (and any attempted assignment or transfer by the
Borrower without such consent shall be null and void) and (z) the Issuing Lender
may not assign or otherwise transfer its rights or obligations under this
Agreement except in accordance with this Section 9.05.

 

(b)                                 Any assignment under this Agreement by the
Issuing Lender, any Assignee or any assignees thereof (each, an “Assignee”) to
any Person that is not an Affiliate of the Issuing Lender may only be made
(i) pursuant to an Assignment and Acceptance Agreement in the form of Exhibit E
attached hereto, (ii) to a Person that, at the time of such assignment, is an
Eligible Bank that is not on the Restricted List and (iii) with the prior
written consent of the Borrower (which consent shall not be unreasonably
withheld, delayed or conditioned), and any attempted assignment in violation of
this Section 9.05(b) shall be void ab initio.

 

(c)                                  Any assignment under this Agreement by the
Issuing Lender to any Person that is an Affiliate of the Issuing Lender may only
be made pursuant to an Assignment and Acceptance Agreement in the form of
Exhibit E attached hereto and to a Person which, at the time of such assignment,
(i) is an Eligible Bank that is not on the Restricted List and (ii) has a
financial strength rating from S&P (or an equivalent rating by Moody’s or Fitch)
which is equivalent to or higher than the financial strength rating of the
assigning Issuing Lender from S&P (or an equivalent rating by Moody’s or Fitch),
and any attempted assignment in violation of this Section 9.05(c) shall be void
ab initio.

 

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(d)                                 Notwithstanding anything herein to the
contrary, in no event shall the Issuing Lender be released from its obligations
under the Letter of Credit prior to its termination, nor shall it cease to be a
party hereto, nor shall it cease to retain at least [****] percent ([****]%) of
all rights, obligations, assignments, participations, commitments and interests
of the Issuing Lender under this Agreement.

 

(e)                                  The Issuing Lender may, without the consent
of the Borrower and subject to Section 9.05(d), sell participations to one or
more banks or other entities (a “Participant”) in not more than [****] percent
([****]%) of the Issuing Lender’s rights and obligations under this Agreement
(including not more than [****] percent ([****]%) of the LOC Commitment);
provided, that (i) the Issuing Lender’s obligations under this Agreement shall
remain unchanged, (ii) the Issuing Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (iii) the
Borrower shall continue to deal solely and directly with the Issuing Lender in
connection with the Issuing Lender’s rights and obligations under this
Agreement.  Any agreement pursuant to which the Issuing Lender sells such a
participation shall provide that the Issuing Lender shall retain the sole right
to enforce this Agreement and to approve any amendment, modification or waiver
of any provision of this Agreement; provided, that such agreement may provide
that the Issuing Lender will not, without the consent of the Required
Participants, agree to (A) reduce the principal amount due with respect to any
LOC Reimbursement Obligation or (B) reduce the Drawn Rate.

 

(f)                                   The Issuing Lender may at any time pledge
or assign a security interest in all or any portion of its rights under this
Agreement to secure obligations of the Issuing Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this
Section 9.05 shall not apply to any such pledge or assignment of a security
interest; provided, that no such pledge or assignment of a security interest
shall release the Issuing Lender from any of its obligations hereunder or
substitute any such pledgee or Assignee for the Issuing Lender as a party
hereto.

 

Section 9.06.                          Counterparts; Integration;
Effectiveness.  This Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract.  This Agreement constitutes the entire contract among the parties
relating to the subject matter hereof and supersedes any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof.  Subject to Section 5.01, this Agreement shall become effective when it
shall have been executed by the parties hereto and when the parties have
received counterparts hereof which, when taken together, bear the signatures of
each of the other parties hereto, and thereafter shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.  Delivery of an executed counterpart of a signature page of this
Agreement by telecopy or electronic mail with PDF attachment shall be effective
as delivery of a manually executed counterpart of this Agreement.

 

Section 9.07.                          Governing Law; Jurisdiction.

 

(a)                                 This Agreement shall be construed in
accordance with and governed by the law of the State of New York.

 

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(b)                                 Each party hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court.  Each party hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Nothing in this Agreement shall affect any right that any
party may otherwise have to bring any action or proceeding relating to this
Agreement against any other party or its properties in the courts of any
jurisdiction.

 

Section 9.08.                          Right of Setoff.  If any amount shall
have become due and payable by the Borrower hereunder, whether due to maturity,
acceleration or otherwise, the Issuing Lender is hereby authorized, at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Issuing
Lender to or for the credit or the account of the Borrower under this Agreement
(other than any amount payable under the Letter of Credit) against any of and
all the obligations of the Borrower now or hereafter existing under this
Agreement held by the Issuing Lender, irrespective of whether or not the Issuing
Lender shall have made any demand under this Agreement.  Without limiting or
otherwise affecting the provisions of the Letter of Credit, the Issuing Lender
shall have no right under any circumstances to set off or apply any amount
payable under the Letter of Credit against any obligation of or amount payable
by the Borrower, whether or not under this Agreement.  The rights of the Issuing
Lender under this Section 9.08 are in addition to any other rights and remedies
which the Issuing Lender may have.

 

Section 9.09.                          Collateral Assignment of Rights.  The
Borrower hereby irrevocably collaterally assigns to the Issuing Lender (a) upon
the occurrence and during the continuance of an Event of Default, the right
to enforce in the name of the Borrower any right of the Borrower under the
Transaction Documents (other than this Agreement) and (b) upon the failure of
the Borrower to use its reasonable best efforts enforce its rights to compel
performance of required contractual obligations or to pursue remedies available
to it under the Transaction Documents to which it is a party (other than this
Agreement), in each case within seven (7) Business Days following receipt of
written notice from the Issuing Lender requesting such enforcement by the
Borrower and identifying the specific breach of the Transaction Document (other
than this Agreement), the right to enforce in the name of the Borrower and the
right to compel performance of required contractual obligations or remedies
available to the Borrower under the applicable Transaction Document (other than
this Agreement) with respect to the identified breach, in connection with which
the Issuing Lender may pursue in the name of the Borrower (or direct the
Borrower to pursue) any such remedy.

 

Section 9.10.                          Expenses.  Subject to Section 6.01(n),
each party shall pay its own expenses incurred in connection with the
preparation and administration of this Agreement or any amendments,
modifications or waivers of the provisions hereof (whether or not the
Transactions shall be consummated), including any fees, charges and
disbursements of any

 

61

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counsel in connection with the enforcement or protection of its rights under
this Agreement, including its rights under this Section 9.10.

 

Section 9.11.                          Further Assurances.  The Borrower agrees
at its own cost and expense, to do such further acts and things, and to execute
and deliver such additional instruments (including, without limitation, notices
and agreements), as the Issuing Lender may at any time reasonably request or as
may be reasonably necessary at any time in order better to preserve, insure and
confirm the rights, powers and remedies of the Issuing Lender hereunder.

 

Section 9.12.                          Headings.  Article and Section headings
and the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.

 

Section 9.13.                          Confidentiality.  Each party to this
Agreement agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (i) to such party’s Affiliates’
directors, officers, employees and agents (so long as such Affiliate is not on
the Restricted List), including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential), (ii) to the extent requested by any Governmental
Authority or self-regulatory authority having or claiming jurisdiction over such
party or its representatives, (iii) to the extent required by applicable laws or
regulations (including securities laws and regulations) or by any subpoena or
similar legal process, (iv) to any other party to this Agreement, (v) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder,
(vi) by the Issuing Lender or a Participant to any Participant or counterparty
to a hedge transaction reasonably related to the transactions contemplated
hereby (a “Hedge Counterparty”), or to any prospective Participant or Hedge
Counterparty, in each case that is not on the Restricted List, subject to an
agreement containing confidentiality provisions that are either no less
restrictive than those found in this Section 9.13 or that are satisfactory to
the Borrower, in each case expressly inuring to the benefit of PLC and a copy of
which is promptly provided thereto and to the Issuing Lender (each such
agreement a “Confidentiality Agreement”), (vii) with the consent of the other
parties to this Agreement, (viii) to the extent the Information relates to the
tax treatment and any facts that may be relevant to the tax structure of the
Transactions, (ix) to the extent such Information (a) becomes publicly available
other than as a result of a breach of this Section 9.13 or (b) becomes available
to such party or such party has no actual knowledge that the provision of such
information is in violation of a confidentiality restriction or (x) to any
Lender Counterparty not on the Restricted List, upon the consent of the Borrower
(such consent not to be unreasonably withheld or delayed); provided, that such
Lender Counterparty enters into a Confidentiality Agreement and further agrees
such Information will not be used in a manner adverse to the Borrower.  For the
purposes of this Section 9.13, “Information” means all information received in
connection with this Agreement or the Transactions from another party to this
Agreement, or such party’s representatives or Affiliates, relating to such party
or Affiliate or such party’s or its Affiliate’s business, other than any such
information that is available on a nonconfidential basis prior to disclosure by
such party.

 

62

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Section 9.14.                          Special Dividend.  In the event the
Ceding Company makes any payment to the Borrower in excess of that required to
be paid under the express terms of the Reinsurance Agreement as a result of, or
following, any requirement or request of the Ceding Company’s domestic insurance
regulator, whether orally or in writing, therefor (a “Special Payment”), the
Borrower shall, notwithstanding anything herein to the contrary and to the
maximum extent permitted by law, be permitted to pay a dividend (a “Special
Dividend”) in the amount of the proceeds of such payment.

 

Section 9.15.                          Severability.  Any provision of this
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

 

Section 9.16.                          WAIVER OF JURY TRIAL.  EACH PARTY HERETO
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).

 

Section 9.17.                          USA Patriot Act.  The Issuing Lender
hereby notifies the Borrower that pursuant to the requirements of the USA
Patriot Act, it is required to obtain, verify and record information that
(i) identifies the Borrower, (ii) includes the name and address of the Borrower
and (iii) will allow the Issuing Lender to identify the Borrower in accordance
with the USA Patriot Act.

 

Section 9.18.                          Usury Savings Clause.  It is the
intention of the parties that all charges under or in connection with this
Agreement and the LOC Reimbursement Obligations, however denominated, and
including (without limitation) all interest, commitment fees, late charges and
loan charges, shall be limited to the maximum lawful interest rate, if any, that
at any time and from time to time may be contracted for, charged, or received
under the laws applicable to the Issuing Lender, which are presently in effect
or, to the extent allowed by law, under such applicable laws which hereafter be
in effect and which allow a higher maximum non-usurious interest rate than
applicable laws now allow (the “Maximum Lawful Amount”).  Such charges hereunder
shall be characterized and all provisions of this Agreement shall be construed
as to uphold the validity of charges provided for therein to the fullest
possible extent.  Additionally, all charges hereunder shall be spread over the
full permitted term of the LOC Reimbursement Obligations for the purpose of
determining the effective rate thereof to the fullest possible extent, without
regard to prepayment of or the right to prepay the LOC Reimbursement
Obligations.  If for any reason whatsoever, however, any charges paid or
contracted to be paid in respect of the LOC Reimbursement Obligations shall
exceed the Maximum Lawful Amount, then, without any specific action by the
Issuing Lender or the Borrower, the obligation to pay such interest and/or other
charges shall be reduced to the Maximum Lawful Amount in effect from time to
time and any amounts collected by the Issuing Lender or the Borrower that exceed
the Maximum Lawful Amount shall be applied to the reduction of the principal
balance of the LOC Reimbursement Obligations and/or refunded to the Borrower so
that at no time shall the interest or loan charges

 

63

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paid or payable in respect of the LOC Reimbursement Obligations exceed the
Maximum Lawful Amount.  This provision shall control every other provision
herein and in any and all other agreements and instruments now existing or
hereafter arising between the Borrower and the Issuing Lender with respect to
the LOC Reimbursement Obligations.

 

Section 9.19.                          Third Party Beneficiary.  The Ceding
Company shall be a third party beneficiary of Sections 2.01(d), 2.02(b) and
2.02(c).

 

Section 9.20.                          Consent to Amendments.  Pursuant to
Section 6.01(h)(i) hereof, the Issuing Lender hereby consents to (a) the
amendment and restatement of the Reinsurance Agreement, dated as of the
Amendment Closing Date and effective as of the Amendment Effective Date, (b) the
amendment to the Reinsurance Trust Agreement, dated as of the Amendment Closing
Date, (c) the amendment and restatement of the Investment Management Agreement,
dated as of the Amendment Closing Date, (d) the amendment and restatement of the
Ceding Company Letter Agreement, dated as of the Amendment Closing Date, (e) the
amendment and restatement of the PLC Guarantee, dated as of the Amendment
Closing Date, (f) the amendment and restatement of the Stop Loss Reinsurance
Agreement, dated as of the Amendment Closing Date and effective as of the
Amendment Effective Date, and (g) the amendment and restatement of the Fee
Letter, dated as of the Amendment Closing Date.

 

[Remainder of page intentionally left blank.  Signature page to follow.]

 

64

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

 

 

GOLDEN GATE III VERMONT CAPTIVE INSURANCE COMPANY,

 

as Borrower

 

 

 

 

 

By:

/s/ Richard J. Bielen

 

Name:

Richard J. Bielen

 

 

President

 

 

 

 

 

UBS AG, STAMFORD BRANCH,

 

as Issuing Lender

 

 

 

 

 

By:

/s/ Lana Gifas

 

Name:

Lana Gifas

 

Title:

Director, Banking Products Services, US

 

 

 

 

 

By:

/s/ Joselin Fernandes

 

Name:

Joselin Fernandes

 

Title:

Associate Director, Banking Product Services, US

 

Signature Page to the Second Amended and Restated Reimbursement Agreement

 

--------------------------------------------------------------------------------

 

 

SCHEDULE 1

 

BORROWER REPORTING DOCUMENTS

 

The Borrower Reporting Documents consist of:

 

(a)                                 Not later than sixty (60) calendar days
after the end of each fiscal year of the Borrower, a copy of the unaudited
annual statutory financial statements prepared in accordance with SAP, and not
later than June 1 of each calendar year for the Borrower’s preceding fiscal
year, a copy of the audited financial statements prepared in accordance with
SAP.

 

(b)                                 Not later than April 10 after the end of
each fiscal year of the Borrower, an annual cashflow testing report by the
Borrower’s Appointed Actuary (as such may be appointed by the Borrower from time
to time).

 

(c)                                  Not later than forty-five (45) calendar
days after the end of each of the four (4) quarterly periods of each fiscal year
of the Borrower, a report of actual to expected mortality claims and lapses by
face amount and by policy count with respect to the Reinsured Policies.

 

(d)                                 Not later than forty-five (45) calendar days
after the end of each of the four (4) quarterly periods of each fiscal year of
the Borrower, the applicable reserve amounts (including XXX Reserves, Economic
Reserves, Gross Premium Valuation Reserves and Claims Liability (each, as
defined in the Reinsurance Agreement) of the Borrower as at the end of such
quarter.

 

(e)                                  Not later than forty-five (45) calendar
days after the end of each of the four (4) quarterly periods of each fiscal year
of the Borrower, information regarding risks insured with respect to the
Reinsured Policies in the same form as the seriatim policy detail outlined in
Exhibit D of the Reinsurance Agreement.

 

(f)                                   Not later than forty-five (45) calendar
days after the end of each of the first three (3) quarterly periods of each
fiscal year of the Borrower, the unaudited consolidated balance sheet and income
statement (without footnotes) of the Borrower as at the end of such quarter, in
each case prepared in accordance with SAP.

 

(g)                                  Not later than forty-five (45) calendar
days after the end of each of the first three (3) quarterly periods of each
fiscal year of the Borrower, and not later than sixty (60) calendar days after
the end of each fiscal year of the Borrower, information regarding the following
items: Total Adjusted Capital, Modified Total Adjusted Capital, deferred tax
assets, asset valuation reserves, the Letter of Credit in excess of Facility
Reserves, Company Action Level Risk Based Capital, Required Additional
Contribution and Reduced Contribution.

 

(h)                                 Not later than forty-five (45) calendar days
after the end of each of the four (4) quarterly periods of each fiscal year of
the Borrower, a settlement statement for the Reinsured Policies between the
Ceding Company and the Borrower.

 

Schedule 1 - 1

--------------------------------------------------------------------------------

 

(i)                                     Not later than twenty-five (25) calendar
days after the end of each of the twelve (12) monthly periods of each fiscal
year of the Borrower, a listing of the Borrower’s asset portfolio holdings
containing details including, without limitation, security name, book value,
market value, ratings, weighted average life, modified duration, coupon,
interest payment frequency, book yield, market yield and maturity date, to be
supplemented by information contained in a final report to be provided not later
than sixty (60) calendar days after the end of each of the first, second and
third quarterly periods of each fiscal year of the Borrower, and not later than
seventy-five (75) calendar days after the end of each of the fourth quarterly
periods of each fiscal year of the Borrower.

 

(j)                                    Not later than fifteen (15) calendar days
after the end of each of the twelve (12) monthly periods of each fiscal year of
the Borrower, a listing of the Borrower’s asset portfolio holdings containing
details including CUSIP and par amount.

 

(k)                                 Within five (5) Business Days of delivery of
any report delivered to S&P, Moody’s or Fitch by the Borrower, a copy of such
report, to the extent the information has not been previously provided to the
Issuing Lender.

 

(l)                                     Within five (5) Business Days of
delivery or receipt, as applicable, of any material report or notice delivered
to any other party or received from any other party under the Transaction
Documents, a copy of such report.

 

(m)                             Within five (5) Business Days of receipt of any
third party actuarial report, opinion or review of the Borrower, a copy of such
report.

 

(n)                                 Seven (7) Business Days prior notice of any
proposed amendment to the Reinsurance Agreement.

 

(o)                                 Within five (5) Business Days of submission
or receipt of any material correspondence relating to the Borrower to or from
the Nebraska Director or the Vermont Commissioner, a copy of such
correspondence.

 

(p)                                 Within five (5) Business Days of any
material permitted accounting practice of the Borrower or other deviation from
SAP that is proposed to be made applicable, a copy of such proposed deviation.

 

(q)                                 Written notices for certain material events
as identified in Section 6.01(c) within the specified time periods.

 

(r)                                    Promptly after any internal underwriting
audit of the Borrower related to the Reinsurance Agreement, notice of such
audit.

 

(s)                                   Not later than sixty (60) calendar days
after the end of each of the first, second and third quarterly periods of each
fiscal year of the Borrower, and not later than seventy-five (75) calendar days
after the end of each of the fourth quarterly periods of each fiscal year of the
Borrower, information regarding any payments made by the Borrower pursuant to
the Priority of Payments, including amounts paid in accordance with each
individual item of the Priority of Payments.

 

Schedule 1 - 2

--------------------------------------------------------------------------------

 

(t)                                    Not later than ninety (90) calendar days
after September 30 of each fiscal year of the Borrower, information regarding
any Dividend Amount payable by the Borrower, including details on Dividend Test
and Dividend Threshold calculations.

 

(u)                                 Not later than fifteen (15) calendar days
after the end of each calendar month, bank statements evidencing amounts paid
(or received) in accordance with Section 3.05 from (into) the Surplus Account.

 

Schedule 1 - 3

--------------------------------------------------------------------------------

 

SCHEDULE 2

 

DIVIDEND FORMULA

 

No dividends can be declared or paid for any calendar year beginning prior to
[****]. Thereafter, if the Dividend Test is satisfied, dividends, if any, in an
amount not to exceed the Dividend Amount, shall be declared by the Borrower by
December 31 (each such date, a “Dividend Declaration Date”) and paid by
January 30 of the following year (i.e., the first Dividend Declaration Date
would be in [****] and such dividend would be required to be paid by the
Borrower by [****]); provided that (i) in no event shall a dividend be declared
or paid with respect to the Dividend Year ending [****] until the Fourth
Required Additional Contribution, if any, has been made and (ii) in no event
shall a dividend be declared or paid with respect to the Dividend Year ending
[****] until the Fifth Required Additional Contribution, if any, has been made.

 

The Dividend Amount for the Dividend Year ending [****] shall be calculated by
the Borrower by [****].

 

The Dividend Amount for the Dividend Year ending [****] shall be calculated by
the Borrower by [****].

 

The annual period for calculation of dividends in any given calendar year,
commencing in [****], will start from October 1 of the prior calendar year and
end on September 30 of that calendar year (each such period, a “Dividend Year”),
with the first Dividend Year commencing [****] and ending [****].  The annual
and cumulative actual to expected lapse and mortality study will be calculated
on an “Experience Year” basis.  For purposes of this Schedule 2, “Experience
Year” shall mean the period from and including October 1 of a calendar year to
and including September 30 of the next succeeding calendar year, with the first
Experience Year commencing on [****] and ending on [****].  Unless otherwise
specified, the Company Action Level Risk Based Capital and all other amounts
will be calculated as of September 30 of that calendar year (which is
immediately prior to the Dividend Declaration Date).  [****].

 

If all of the following conditions are met, an annual dividend in an amount not
to exceed the Dividend Amount may be declared and paid, subject to
Section 6.01(j) and the Priority of Payments (such conditions, the “Dividend
Test”):

 

[****]

 

“Dividend Catch-Up Contribution” means, in the event that the Fifth Remainder
Contribution is greater than zero, and if the Borrower’s Modified Total Adjusted
Capital is less than [****] percent ([****]%) of the Borrower’s Company Action
Level Risk Based Capital, as of [****] or September 30 of each subsequent
Experience Year, an amount equal to the lesser of (y) the excess, if any, of the
Fifth Remainder Contribution over an amount equal to the sum of any prior
Dividend Catch-Up Contributions and (z) the excess, if any, of [****] percent
([****]%) of the Borrower’s Company Action Level Risk Based Capital over the
Borrower’s Modified Total Adjusted Capital, each as determined as of such
September 30.

 

Schedule 2 - 1

--------------------------------------------------------------------------------

 

The “Dividend Threshold” means (i), plus (ii), plus (iii), minus (iv), where:

 

[****]

 

“Present Value” means present value calculations assuming a discount rate equal
to the lesser of (a) [****] percent ([****]%) per annum and (b) the weighted
average of (x) the annualized realized net yield (net of defaults) of the assets
of the Borrower (excluding the Letter of Credit and any amount recorded as a
receivable by the Borrower in connection with the Funds Withheld Account) from
the Original Closing Date and (y) the assets in the Funds Withheld Account from
the Prior Closing Date, as determined in accordance with SAP.

 

“Dividend Amount” means, in any Dividend Year, the excess, if any, of the lesser
of (i) and (ii) minus the Dividend Threshold, where:

 

i.                            Equals the aggregate book value of the Borrower’s
assets (excluding the Letter of Credit and including, for the avoidance of
doubt, any amounts recorded as a receivable by the Borrower in connection with
the Funds Withheld Account), as determined in accordance with applicable
statutory accounting principles, and

 

ii.                         Equals the aggregate market value of the Borrower’s
assets (excluding the Letter of Credit and including, for the avoidance of
doubt, any amounts recorded as a receivable by the Borrower in connection with
the Funds Withheld Account),

 

provided, that, (a) if such calculation results in an amount that is zero or a
negative number, then the Dividend Amount will be zero, and (b) if the annual
actual to expected lapse rate (such expected lapse rate as reasonably determined
by the Borrower in good faith consistent with the methodologies and processes
set forth in Appendix I attached hereto) is less than [****] percent ([****]%)
but greater than [****] percent ([****]%) in the relevant Experience Year, the
Dividend Amount payable will be [****] percent ([****]%) of the amount
calculated above.

 

The declaration and payment of a dividend shall be subject to the following
additional limitations:

 

i.                            The Dividend Amount declared and paid in any
Dividend Year shall not exceed the amount shown in Appendix II to this Schedule
2 for the applicable Dividend Year (“Dollar Threshold”); and

 

ii.                         Immediately following the payment of any dividend
for any Dividend Year other than the Dividend Years ending [****] and [****],
the Borrower shall maintain Modified Total Adjusted Capital at least equal to
[****] percent ([****]%) of the Borrower’s Company Action Level Risk Based
Capital, determined as of September 30 of the Dividend Year in respect of which
such dividend is paid, taking into account the payment of such dividend as if
paid on such September 30; and

 

iii.                      Immediately following the payment of any dividend for
the Dividend Year ending [****] or the Dividend Year ending [****], the Borrower
shall maintain Modified Total

 

Schedule 2 - 2

--------------------------------------------------------------------------------

 

                                  Adjusted Capital at least equal to [****]
percent ([****]%) of the Borrower’s Company Action Level Risk Based Capital,
determined as of September 30 of the Dividend Year in respect of which such
dividend is paid, taking into account the payment of such dividend as if paid on
such September 30; and

 

iv.                     The Dividend Amount shall be reduced by the amount by
which the Nominal Expense Cap (as defined in the Transaction Expense Support
Agreement) applicable as of September 30 for such Dividend Year exceeds the Base
Nominal Expense Cap (as defined in the Transaction Expense Support Agreement)
applicable as of September 30 for such Dividend Year, unless the Borrower elects
to waive such excess amount for purposes of calculating the applicable Nominal
Expense Cap; and

 

v.                        The Modified Total Adjusted Capital used for
calculation of the Dividend Amount for the Dividend Year ending [****] shall be
calculated as if a contribution of $[****] has been made to the Borrower during
such Dividend Year; and

 

vi.                     The amount of dividends permitted to be declared and
paid for the Dividend Year ending [****] shall be reduced to the extent the
Dividend Amount for such Dividend Year will be applied to reduce the Fourth
Scheduled Additional Contribution. If such calculation results in an amount that
is zero or a negative number, then the amount of dividends permitted to be
declared and paid for the Dividend Year ending [****] will be zero; and

 

vii.                  The Modified Total Adjusted Capital used for calculation
of the Dividend Amount for the Dividend Year ending [****] shall be calculated
shall be calculated as if a contribution of $[****] has been made to the
Borrower during such Dividend Year; and

 

viii.               The amount of dividends permitted to be declared and paid
for the Dividend Year ending [****] shall be reduced to the extent the Dividend
Amount for such Dividend Year will be applied to reduce the Fifth Scheduled
Additional Contribution. If such calculation results in an amount that is zero
or a negative number, then the amount of dividends permitted to be declared and
paid for the Dividend Year ending [****] will be zero; and

 

ix.                     No Dividend Amount shall be declared or paid for any
Dividend Year after the Dividend Year ending [****].

 

The Borrower shall provide the Issuing Lender with supporting information, in
reasonable detail, relating to the calculation of the Dividend Amount.

 

The foregoing provisions of this Schedule 2 shall not apply to any Special
Dividend.

 

Schedule 2 - 3

--------------------------------------------------------------------------------

 

APPENDIX I TO THE DIVIDEND FORMULA

 

DESCRIPTION OF METHODOLOGIES AND PROCESSES FOR CALCULATING
EXPECTED COVERED BENEFITS AND EXPECTED LAPSE RATES

 

--------------------------------------------------------------------------------

 

EXPERIENCE STUDY PROCESS

 

--------------------------------------------------------------------------------

 

Overview

 

Golden Gate III (“GGIII”) Experience Studies reflecting mortality and lapse
activity on the Reinsured Policies (as defined in the Indemnity Reinsurance
Agreement) will be produced on both quarterly and annual bases to satisfy
defined reporting obligations in the Indemnity Reinsurance Agreement and
Reimbursement Agreement.  The Experience Studies will also be used for purposes
of determining any payments due between West Coast Life and Protective Life
Insurance Company (“PLICO”) under the Aggregate Stop Loss Agreement as well as
any dividend payments due from GGIII to PLICO.  Actual/Expected calculations
will be performed quarterly on a year-to-date basis and on a cumulative basis
where required by the Transaction Documents.

 

·                  Experience Study exposure periods will be defined in two
ways:

·                  Experience Year Basis: 10/1/XX — 9/30/XX

·                  Used for calculation of mortality and lapse A/E ratios for
purposes of the Stop Loss and dividend payment calculations

·                  Any payment due from Protective Life Corporation (“PLC”) to
GGIII under the Catastrophic Loss Support Agreement will also be determined on
an Experience Year Basis

·                  For the initial year of the Transaction, the Experience Year
Basis begins on the Effective Date and ends on 9/30/10

·                  The quarterly Experience Studies required under Schedule
1, Item (c) of the Reimbursement Agreement will be calculated on an Experience
Year Basis

·                  Quarterly and Annual experience studies required under
Exhibit D of the Reinsurance Agreement will be provided on an Experience Year
Basis

·                  All studies will be on a YTD basis within an Experience Year

·                  Calendar Year Basis: 1/1/XX — 12/31/XX

·                  Used for calculation of quarterly and annual A/E calculations
outlined in Exhibit E of the Reinsurance Agreement

·                  For the initial year of the Transaction, the Calendar Year
Basis begins on the Effective Date and ends on 12/31/10

·                  All studies will be on a YTD basis within a calendar year

 

·                  All mortality and lapse studies are performed using
PolySystems Measure to calculate the exposure and expected claim information.

·                  PolySystems Measure is an industry standard software package
used to generate experience studies

 

Schedule 2 - 4

--------------------------------------------------------------------------------

 

·                  Controlled environment that is auditable at a policy level

 

·                  Data sources that feed exposure and expected calculations

·                  Valuation files:

·                  Provided to Measure Team by the financial reporting valuation
team on a quarterly basis.

·                  Contain all active and terminated policies for the reported
quarter.

·                  Policy Detail History (“PDH”, which is a compilation of
quarterly valuation files) files:

·                  Contain all history for policies that were in force or
terminated since the Effective Date through current date for the policies
reinsured to GGIII

·                  Created by taking the valuation files and appending them to
previous quarter’s PDH files.

·                  Contain policy characteristics such as sex, risk, face
amount, termination reason, termination date, issue date, issue age, etc.

·                  Serve as the input files for PolySystems Measure

·                  Controls to ensure accuracy

·                  Valuation files fall under SOX compliance.

·                  Compliance measures incorporated into quarterly SOX
certification as part of PLC’s broader public reporting requirements

·                  PDH files are reconciled each quarter. The following items
are reconciled to extracts from the administrative systems, including the death
claim system.

·                  All terminations and termination dates (deaths, lapses,
surrenders, conversions, maturities, expiries, & declined claims)

·                  Active policies

·                  Face amounts

·                  Issue age and issue dates

·                  Decrement totals (actual claims and lapses) from experience
studies are tied back to decrements from the reconciliation.

 

·                  Definition of exposure

·                  Uniform Distribution of Deaths: Exposure starts from the
Effective Date of the Transaction

·                  Actual inforce at the beginning of the respective time period
is used as a starting point to capture experience that occurred during the
period

·                  Exposure is calculated on a policy level basis within
PolySystems Measure

·                  Exposure on policies that do not terminate during the period
ends on the exposure end date

·                  For Mortality:

·                  Exposure on policies that terminate due to death during the
period ends on the next policy anniversary after the incurred date.

·                  If date of death is unknown at the time of study, notify date
is used until date of death is verified.

 

Schedule 2 - 5

--------------------------------------------------------------------------------

 

·                  Exposure on policies that terminate for reasons other than
death ends on the incurred date of the termination.

·                  Accounting method

·                  Exposure end date is defined as the date when the termination
was incurred (i.e., death claim reported on 11/30/2010 with a date of death of
6/30/2010 would have an exposure end date of 6/30/2010).

·                  No Lag

·                  Approach used for:

·                  Stop Loss A/E calculations

·                  Dividend Test (mortality calculations)

·                  Reimbursement Agreement reporting, Schedule 1, Item (c)

·                  Reinsurance Agreement Exhibit E: Dividend Year Basis
mortality studies

·                  Actuarial method

·                  Exposure end date is defined as the date when the termination
was incurred (i.e.  Death claim reported on 11/30/2010 with a date of death of
6/30/2010 would have an exposure end date of 6/30/2010)

·                  All studies using the Actuarial method will have a three
month lag.  This accounts for IBNR and lapse reinstatements.

·                  Approach used for:

·                  Reinsurance Agreement Exhibit E: Calendar Year Basis
mortality studies

 

·                  For Lapse:

·                  Uses the Actuarial method outlined above

·                  Exposure on policies that terminate due to lapse during the
period ends on the next policy anniversary after the incurred date.

·                  Exposure on policies that terminate for reasons other than
lapse ends on the incurred date of the termination

·                  Lapses are based on premium mode periods.  A policy has to
complete one premium period to be included in the study.  Exposure is based on
completed modal periods (i.e., monthly premium mode policy will show up in a
study after one month of exposure.  An annual mode policy would show up after
completing one year of exposure.)

·                  Approach used for:

·                  Dividend Test lapse calculations

·                  Reimbursement Agreement reporting, Schedule 1, Item (c)

·                  Reinsurance Agreement Exhibit E: Dividend Year and Calendar
Year lapse studies

 

·                  Source of Actual Claims and IBNR

·                  Ledger:

·                  Actual deaths claims in the report come from the ledger.

·                  Totals are provided to the Measure Team by PLC’s Accounting
Department

 

Schedule 2 - 6

--------------------------------------------------------------------------------

 

·                  Totals are imported into Access database with Expected totals
and reported in an Excel pivot table.

·                  IBNR:

·                  Will be included in the actual death claims

·                  Source will be the ledger

·                  IBNR estimation process:

·                  Annually, updated historical claims information is obtained
from the claims system.

·                  Claims are reviewed, including date of death and date of
notification, and that information is used to update a claims lag study which
identifies the level of claims that were incurred but not reported as of
historical valuation dates.

·                  The average IBNR claim amount is the basis for the updated
IBNR reserve that is held, which is expressed as a percentage of net amount at
risk (defined as the death benefit inforce less Statutory reserve)

·                  During the course of the year, IBNR reserves change in
proportion to change in net amount at risk.

·                  The IBNR reserve percentage is reviewed annually, and
adjusted if necessary, based on updated claims experience

·                  Annual report (Reinsurance Agreement Exhibit E) death claims
will be provided by PolySystems.  These deaths are reconciled back to the death
claim administrative system.

 

·                  Calculation of Expected Mortality

·                  For the Original Block, expected mortality calculations use
the same assumptions outlined in the Milliman Chicago actuarial report dated
December 3, 2009 (“Milliman Report”), which are also attached within Exhibit A
to this appendix; these rates vary by duration

·                  For the UILIC Block, irrespective of whether the policy is
actively paying premium or has moved to the extended term insurance status,
expected mortality calculations use the same assumptions outlined in the Towers
Watson actuarial report dated June 5, 2013 (“Towers Report”), which are also
attached within Exhibit A of this appendix.

·                  Quarterly adjustments to the inforce starting point are made
to reflect actual mortality and lapse experience during the period.

·                  Source of Mortality Rate of Death (“Qx”):  The Qx for the
experience studies is coded in PolySystems to mirror the mortality assumptions
used in the Milliman Report or the Towers Report, as applicable.  The coding is
maintained by the valuation team and is employed by the Measure Team when
conducting experience studies.

·                  Qx factors increase on policy anniversary date; this
methodology is consistently applied in both the Milliman and Towers Watson
modeling, as applicable, and PolySystems coding

·                  Application to exposure:

·                  Calculated by PolySystems

 

Schedule 2 - 7

--------------------------------------------------------------------------------

 

·                  Exposure is always based on face amount less YRT reinsurance,
if any.

·                  In the case of policies that end in death, the exposure is
defined to continue until the next policy anniversary.

·                  In the case of policies that end in lapse, the exposure ends
on the effective date of the lapse.

·                  In the event of lapse and subsequent reinstatement, the
exposure is considered to be continuous.

·                  Policies that do not terminate during the study get full
exposure for the exposure period.

·                  Face Amount Exposure (“FAE”) is calculated on a policy
duration basis; mathematically, FAE equals:

·                  (Direct Face Amount — YRT Ceded Face Amount, if any) * Policy
Exposure

·                  Where, Policy Exposure = Number of Months in Exposure Period

·                  Months may be either integers or fractional amounts depending
on policy issue date and anniversary date

·                  PolySystems Measure assumes 360 day calendar year

·                  PolySystems Measure translates the annual Qx (“aqx”) to a
monthly Qx (“mqx”)

·                  mqx = aqx/12

·                  PolySystems Measure calculates exposure according to exposure
begin and end date

·                  Formulaic Calculation of Expected Mortality

·                  Expected mortality is calculated at a policy level; policy
level results are added together to create the aggregate expected mortality
result

·                  Expected Mortality (Policy Level) = mqx * FAE

·                  Expected Mortality (Aggregate Level) =

 

[g196611ki17i001.jpg]

 

·                  However, if the policy changes from duration “D” to duration
“D+1” (i.e., passes an anniversary) during the Experience Year or Partial
Experience Year, the Expected Mortality (Aggregate Level) =:

 

[g196611ki17i002.jpg]

 

·                  Calculations are performed on an Experience Year-to-date
basis (or Calendar Year-to-date basis, depending on the intended purpose) to
account for policies in grace that ultimately lapsed and late reported deaths

·                  Reporting of total expected

·                  PolySystems Measure produces output files that contain policy
level detail information which includes exposure, expected, claim count, and
exposed count.

 

Schedule 2 - 8

--------------------------------------------------------------------------------

 

·                  These output files are summed together in an Access database
and linked to by an Excel pivot table.

 

·                  Calculation of Actual Mortality

·                  Tracked on an incurred basis using the Accounting method
outlined above

·                  Actual Mortality = Paid Claims + DIBNR + DPending Liability
(includes Pended and Resisted claims)

·                  Pended claims include reported but not paid claims

·                  Calculated net of Existing YRT Reinsurance (as defined in the
Indemnity Reinsurance Agreement)

 

·                  Calculation of Expected Lapse

·                  For the Original Block, expected lapse calculations use the
same assumptions outlined in the Milliman Report and also attached within
Exhibit B to this appendix; these rates vary by duration

·                  For the UILIC Block, expected lapse calculations use the same
assumptions outlined in the Towers Report, which are also attached within
Exhibit B to this appendix; these rates vary by duration

·                  Quarterly adjustments to the inforce starting point are made
to reflect actual mortality and lapse experience during the period (i.e. grace
policies that lapsed and late reported deaths)

·                  Source of Lapse Rates:  The lapse rates for experience
studies are coded in PolySystems to mirror the lapse assumptions used in the
Milliman Report or the Towers Report, as applicable.  The coding is maintained
by the valuation team and employed by the Measure Team when conducting
experience studies.

·                  Application to exposure:

·                  Calculated by PolySystems

·                  Exposure is calculated on a policy duration basis; the
mathematical FAE calculation is identical to the one outlined above

·                  PolySystems Measure assumes 360 day calendar year

·                  PolySystems Measure translates annual lapse rates (La)
provided in the Milliman Report to monthly lapse rates (Lm)

·                  Lm = La/12

·                  PolySystems Measure calculates exposure according to exposure
begin and end date

·                  Formulaic Calculation of Expected Lapse

·                  Expected lapse is calculated at a policy level; policy level
results are added together to create the aggregate expected lapse result

·                  Expected Lapse (Policy Level) = Lm * Exposure

·                  Expected Lapse (Aggregate Level) =

 

[g196611ki17i003.jpg]

 

·                  However, if the policy changes from duration “D” to duration
“D+1” (i.e., passes an anniversary) during the Experience Year or Partial
Experience Year, the Expected Lapse (Aggregate Level) =:

 

Schedule 2 - 9

--------------------------------------------------------------------------------

 

[g196611ki17i004.jpg]

 

·                  Calculations are performed on an Experience Year-to-date
basis (or Calendar Year-to-date basis, depending on the intended purpose)

·                  Reporting of total expected

·                  PolySystems Measure produces output files that contain policy
level detail information which includes exposure, expected, lapse count, and
exposed count.

·                  These output files are summed together in an Access database
and linked to by an Excel pivot table.

·                  Three month lag is used to account for policies in grace that
ultimately lapsed and late reported deaths

 

·                  Calculation of Actual Lapse

·                  Actual lapses will come from PolySystems

·                  All lapse decrements and lapse face amounts are verified
against the administrative system

·                  Do not include any policies that are in the “Grace” period

·                  Shock lapses will be shown separately from level period
lapses

·                  Three month lag is used to account for policies in grace that
ultimately lapsed and late reported deaths

·                  For example, a lapse report using 9/30/11 inforce data will
include actual lapse activity that occurred during the four quarters beginning
7/1/10 through 6/30/11

 

Schedule 2 - 10

--------------------------------------------------------------------------------

 

APPENDIX I (continued)

Exhibit A

 

Mortality Assumptions

 

Original Block

 

On the Original Closing Date, each party received two (2) copies of a CD with
identical contents detailing the mortality assumptions.  Each CD contained three
Microsoft Excel Files: [****]

 

On the Amendment Closing Date, each party received two (2) copies of a CD
containing the three Microsoft Excel files, of which the first two are the same
as listed above: [****]

 

[****]

 

Schedule 2 - 11

--------------------------------------------------------------------------------

 

UILIC Block

 

On the Amendment Effective Date, each party will receive two (2) copies of a CD
with identical contents detailing the mortality assumptions.  Each CD contains
three Microsoft Excel Files: [****]

 

[****]

 

Schedule 2 - 12

--------------------------------------------------------------------------------

 

APPENDIX I (continued)

 

Exhibit B

 

Lapse Assumptions

 

Original Block

 

(a)         Lapse rates expressed in percentage terms

(b)         [****]

(c)          [****]

(d)         [****]

(e)          [****]

(f)           Risk Classification Key:

 

SPF = Select Preferred

PF = Preferred

ST = Standard

NT = Non-Tobacco

TB = Tobacco

 

WCL -10

 

 

 

 

 

Face < $250K

 

Face >= $250K

Issue

 

Policy

 

SPF

 

PF

 

ST

 

PF

 

ST

 

SPF

 

PF

 

ST

 

PF

 

ST

Age

 

Year

 

NT

 

NT

 

NT

 

TB

 

TB

 

NT

 

NT

 

NT

 

TB

 

TB

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

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Schedule 2 - 13

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[****]

 

[****]

 

WCL -15

 

 

 

 

 

Face < $250K

 

Face >= $250K

Issue

 

Policy

 

SPF

 

PF

 

ST

 

PF

 

ST

 

SPF

 

PF

 

ST

 

PF

 

ST

Age

 

Year

 

NT

 

NT

 

NT

 

TB

 

TB

 

NT

 

NT

 

NT

 

TB

 

TB

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

Schedule 2 - 14

--------------------------------------------------------------------------------

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

WCL-20

 

 

 

 

 

Face < $250K

 

Face >= $250K

Issue

 

Policy

 

SPF

 

PF

 

ST

 

PF

 

ST

 

SPF

 

PF

 

ST

 

PF

 

ST

Age

 

Year

 

NT

 

NT

 

NT

 

TB

 

TB

 

NT

 

NT

 

NT

 

TB

 

TB

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

Schedule 2 - 15

--------------------------------------------------------------------------------

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

WCL-25 These rates are an average of the WCL 20- and 30-year rates.

 

 

 

 

 

Face < $250K

 

Face >= $250K

Issue

 

Policy

 

SPF

 

PF

 

ST

 

PF

 

ST

 

SPF

 

PF

 

ST

 

PF

 

ST

Age

 

Year

 

NT

 

NT

 

NT

 

TB

 

TB

 

NT

 

NT

 

NT

 

TB

 

TB

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

Schedule 2 - 16

--------------------------------------------------------------------------------

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

WCL 30

 

 

 

 

 

Face < $250K

 

Face >= $250K

Issue

 

Policy

 

SPF

 

PF

 

ST

 

PF

 

ST

 

SPF

 

PF

 

ST

 

PF

 

ST

Age

 

Year

 

NT

 

NT

 

NT

 

TB

 

TB

 

NT

 

NT

 

NT

 

TB

 

TB

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

Schedule 2 - 17

--------------------------------------------------------------------------------

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

--------------------------------------------------------------------------------

[****] CONTENTS OF TABLES BELOW OMITTED

 

Schedule 2 - 18

--------------------------------------------------------------------------------

 

Policy Month

 

Schedule 2 - 19

--------------------------------------------------------------------------------

 

UILIC Block

 

(a)         Lapse rates are as shown in the table below (rates expressed in
percentage terms).

(b)         [****]

(c)          [****]

(d)         [****]

 

 

 

Issue Age Band

Policy
Year

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

[****]

 

1.                                      Policies remain on extended term
insurance for the following length of time:

 

Issue Age of Policy

 

Length of ETI Period

[****]

 

[****]

[****]

 

[****]

[****]

 

[****]

 

2.                                      During the extended term insurance
period, lapse rates are [****]%.

3.                                      The discount rate is [****]%.

 

Schedule 2 - 20

--------------------------------------------------------------------------------

 

APPENDIX II TO THE DIVIDEND FORMULA

 

DOLLAR THRESHOLD

 

Dividend Year

 

Dollar Threshold

[****]

 

[****]

[****]

 

[****]

[****]

 

[****]

[****]

 

[****]

[****]

 

[****]

[****]

 

[****]

[****]

 

[****]

[****]

 

[****]

 

Schedule 2 - 21

--------------------------------------------------------------------------------

 

SCHEDULE 3

 

SCHEDULED LOC AMOUNT

 

Scheduled LOC Adjustment
Date

 

Scheduled LOC Amount

 

Scheduled LOC Adjustment
Amount

 

Amendment Closing Date

 

$

710,000,000

 

 

 

December 15, 2013

 

715,000,000

 

5,000,000

 

March 15, 2014

 

715,000,000

 

—

 

June 15, 2014

 

715,000,000

 

—

 

September 15, 2014

 

715,000,000

 

—

 

December 15, 2014

 

715,000,000

 

—

 

March 15, 2015

 

715,000,000

 

—

 

June 15, 2015

 

715,000,000

 

—

 

September 15, 2015

 

715,000,000

 

—

 

December 15, 2015

 

720,000,000

 

5,000,000

 

March 15, 2016

 

720,000,000

 

—

 

June 15, 2016

 

720,000,000

 

—

 

September 15, 2016

 

720,000,000

 

—

 

December 15, 2016

 

720,000,000

 

—

 

March 15, 2017

 

715,000,000

 

(5,000,000

)

June 15, 2017

 

710,000,000

 

(5,000,000

)

September 15, 2017

 

685,000,000

 

(25,000,000

)

December 15, 2017

 

685,000,000

 

—

 

March 15, 2018

 

680,000,000

 

(5,000,000

)

June 15, 2018

 

680,000,000

 

—

 

September 15, 2018

 

675,000,000

 

(5,000,000

)

December 15, 2018

 

670,000,000

 

(5,000,000

)

March 15, 2019

 

665,000,000

 

(5,000,000

)

June 15, 2019

 

660,000,000

 

(5,000,000

)

September 15, 2019

 

630,000,000

 

(30,000,000

)

December 15, 2019

 

625,000,000

 

(5,000,000

)

March 15, 2020

 

615,000,000

 

(10,000,000

)

June 15, 2020

 

605,000,000

 

(10,000,000

)

September 15, 2020

 

595,000,000

 

(10,000,000

)

December 15, 2020

 

585,000,000

 

(10,000,000

)

March 15, 2021

 

570,000,000

 

(15,000,000

)

June 15, 2021

 

560,000,000

 

(10,000,000

)

September 15, 2021

 

545,000,000

 

(15,000,000

)

December 15, 2021

 

535,000,000

 

(10,000,000

)

March 15, 2022

 

520,000,000

 

(15,000,000

)

June 15, 2022

 

505,000,000

 

(15,000,000

)

September 15, 2022

 

490,000,000

 

(15,000,000

)

December 15, 2022

 

475,000,000

 

(15,000,000

)

March 15, 2023

 

465,000,000

 

(10,000,000

)

 

Schedule 3 - 1

--------------------------------------------------------------------------------

 

Scheduled LOC Adjustment
Date

 

Scheduled LOC Amount

 

Scheduled LOC Adjustment
Amount

 

June 15, 2023

 

450,000,000

 

(15,000,000

)

September 15, 2023

 

435,000,000

 

(15,000,000

)

 

Schedule 3 - 2

--------------------------------------------------------------------------------

 

SCHEDULE 4

 

RESTRICTED LIST

 

The restricted list includes each of the following companies and their
affiliates.

 

[****]

 

Schedule 4 - 1

--------------------------------------------------------------------------------

 

SCHEDULE 5

 

FINANCIAL AND ACTUARIAL PROJECTIONS AND MODELING INFORMATION

 

Original Block

 

The Actuarial Report, dated December 3, 2009, prepared by Milliman USA’s Chicago
office with respect to the Reinsured Policies comprising the Original Block

 

Responses to Milliman NY Information Request 10/8/2009

1)             Premium rate information for [****]

2)             YRT premium and pool percentage information [****]

3)             Mortality rate factor assumptions for WCL C1-C3 products

4)             Seriatim in-force policy inventory information as of 12/31/2008

5)             Historical Mortality and Lapse Studies covering Reinsured
Policies

6)             Post Level Term Lapse Studies

7)             WCL pricing mortality comparison

8)             PLC memo dated 10/14/2009 regarding underwriting

9)             Third-Party Reinsurer audit reports produced during 2006 — 2009

10)      External consultant underwriting audit reports 2006 — 2009

11)      PLC  memo dated 10/14/2009 [****]

12)      PLC memo dated 10/13/2009 [****]

 

Responses to Milliman NY Information Request 10/15/2009

1)             PLC memo dated 10/27/2009 [****]

2)             PLC memo dated 10/16/2009 [****]

 

Response to Milliman NY Information Request 11/22/2009

1)             PLC memo dated 11/23/2009 [****]

 

Responses to Milliman NY Information Request 11/24/2009

1)             PLC memo dated 10/29/2009 [****]

2)             PLC memo dated 11/24/2009 [****]

 

Information submitted to UBS via FTP

1)             Information regarding economic reserve calculation methodology

2)             Historical mortality and lapse studies using data as of March 31,
2009

3)             Historical business mix reports covering the Original Block

4)             Historical Financial Statements of GG, PLICO, and WCL for fiscal
years 2006, 2007 and 2008

5)             Seriatim inforce policy inventory information as of 12/31/2008
and 9/30/2009

6)             Third-Party Reinsurer Audits of WCL

7)             Spreadsheet titled “GG3 Inforce Business Mix 2009 12.xlsx”
comparing December 31, 2009 inforce policy inventory to Milliman Report
projections

 

Schedule 5 - 1

--------------------------------------------------------------------------------

 

Information provided to [****] in association with [****] December 2009
underwriting audit

1)             GG/WCL claims information

2)             Seriatim in-force policy inventory information as of 9/30/2009

3)             WCL underwriting guidelines

4)             Third-Party Reinsurer Audits

5)             External consultant underwriting audits

6)             Retention and Binding Amounts for WCL C1-C3 policies

7)             [****]

 

UILIC Block (Information provided in an email or via FTP related to items
mentioned below will be provided on a CD on the Amendment Effective Date)

 

The Actuarial Report, dated June 5, 2013, prepared by Towers Watson with respect
to the Reinsured Policies comprising the UILIC Block.

 

Responses to Milliman NY UILIC Block Information Request 4/25/2013

1)             Seriatim in-force policy inventory as of 12/31/2012 and 3/31/2013

2)             Static validation information produced by Towers Watson

3)             Projection results (baseline and sensitivities) provided in an
email dated 6/5/2013

4)             Premium rates and actuarial/tax assumption files

5)             UILIC Block policy form

6)             Towers Watson assumption recommendation memorandum

7)             Historical mortality and lapse experience information

8)             Policy termination listing for 2010-2012

 

Responses to Milliman NY UILIC Block Information Request 4/29/2013

1)             Information on marketing/distribution/demographics

2)             Towers Watson memorandum [****]

3)             Towers Watson memorandum containing analysis of 2010-2012 death
claims

4)             Towers Watson memorandum containing analysis of 2010-2012
lapses/expiries

5)             Towers Watson memorandum and spreadsheet examples [****]

6)             Towers Watson memorandum [****]

 

Responses to Milliman NY UILIC Block Information Request 5/1/2013

1)             Towers Watson spreadsheet examples [****]

2)             Towers Watson memorandum [****]

3)             Expense allowance information used for Towers Watson modeling
purposes

4)             Economic reserve calculation methodology information

 

Responses to Milliman NY UILIC Block Information Request 5/6/2013

1)             Confirmatory information on underlying actuarial table
information

2)             PLC memorandum [****]

3)             Towers Watson memorandum and spreadsheet example [****]

4)             Towers Watson memorandum and spreadsheet containing static
validation of tax reserves and dynamic validation of premiums and death benefits

5)             PLC memorandum containing confirmatory information on seriatim
file field interpretation

6)             Confirmatory information on the schedule of extended term
insurance benefits as set forth in the policy form provided in connection with
the 4/25/2013 request

 

Schedule 5 - 2

--------------------------------------------------------------------------------

 

Responses to Milliman NY UILIC Block Information Request 5/14/2013

1)             Towers Watson memorandum [****]

2)             Towers Watson acquisition appraisal dated 4/20/2010

3)             Confirmatory information regarding interpretation of the policy
termination listing for 2010-2012 provided in connection with the 4/25/2013
request

 

Responses to Milliman NY UILIC Block Information Request 5/20/2013

1)             Towers Watson memoranda [****]

2)             Towers Watson memorandum [****]

 

Responses to Milliman NY UILIC Block Information Request 5/28/2013

1)             Confirmatory information regarding interpretation of the policy
termination listing for 2010-2012 provided in connection with the 4/25/2013
request

 

Responses to Milliman NY UILIC Block Information Request 5/29/2013

1)             Confirmatory information regarding mortality assumptions

 

Responses to Milliman NY UILIC Block Information Request 6/3/2013

1)             Confirmatory information regarding tax reserve calculation bases

 

[****]

 

Schedule 5 - 3

--------------------------------------------------------------------------------

 

EXHIBIT A

 

DRAW CERTIFICATION NOTICE

 

FORM OF DRAW CERTIFICATION NOTICE

 

To:             UBS AG, Stamford Branch

299 Park Avenue, 26th Floor

New York, NY 10171

Attention:  Letter of Credit Services

 

Re: Reimbursement Agreement, dated as of April 23, 2010, as amended, restated,
modified or supplemented from time to time (the “Reimbursement Agreement”),
between Golden Gate III Vermont Captive Insurance Company, a special purpose
financial captive insurance company incorporated under the laws of the State of
Vermont (the “Borrower”) and UBS AG, Stamford Branch, as issuing lender (the
“Issuing Lender”).

 

This Draw Certification Notice (this “Notice”) is delivered by the undersigned
West Coast Life Insurance Company or any successor by operation of law thereof,
including, without limitation, any liquidator, rehabilitator, receiver or
conservator (the “Ceding Company”) under the Issuing Lender’s Letter of Credit
No. [·], in connection with a draw requested by the Reinsurance Trustee, as
beneficiary under the Letter of Credit (the “Beneficiary”).  Unless otherwise
defined herein, terms defined in the Reimbursement Agreement and used herein
shall have the meanings given to them in the Reimbursement Agreement.

 

The Beneficiary is drawing $[·] under the Letter of Credit (the “Requested
Amount”) in connection with this Notice.

 

The undersigned, by [Name], as [Title]1 of the Ceding Company, hereby certifies
to the Issuing Lender that as of the date hereof:

 

(i)            The Requested Amount is required to be obtained by the
Beneficiary for the payment of Covered Benefits or Claims Expenses (each as
defined in the Reinsurance Agreement) now due and payable under the Reinsurance
Agreement.

 

(ii)           All assets in the Reinsurance Trust Account and any funds held in
any account established pursuant to Section 6.9 or Section 7.3 of the
Reinsurance Agreement have previously been used to satisfy amounts due and
payable under the Reinsurance Agreement or released pursuant to the Reinsurance
Agreement or Section 2 of the Reinsurance Trust Agreement.

 

--------------------------------------------------------------------------------

1                   Officer must be a Responsible Officer of the Ceding Company,
i.e. the Chief Executive Officer, President, Chief Financial Officer, Chief
Accounting Officer, Treasurer, Assistant Treasurer or Controller.

 

Exhibit A - 1

--------------------------------------------------------------------------------

 

(iii)          No assets remain in the Surplus Account.

 

(iv)          Since the date that is one calendar year prior to the date hereof,
no assets with a Market Value in excess of $[****] have been transferred from
the Surplus Account other than to the extent permitted to be transferred
pursuant to the Priority of Payments, unless (A) despite such assets being
transferred in the incorrect order of priority, such transfer would have been
otherwise permitted pursuant to the Priority of Payments at the time of such
transfer or at any subsequent time thereafter or (B) such impermissibly
transferred assets have been returned to the Surplus Account or replaced in the
Surplus Account with Eligible Assets having a Market Value equal to those that
were impermissibly transferred on or prior to the date hereof.

 

(v)           Since the Original Closing Date, the Borrower has existed and, as
of the date hereof, exists, as a separate entity and has not been substantively
consolidated with another entity.

 

(vi)          As of the date hereof, the Reinsurance Agreement remains in full
force and effect.

 

(vii)         As of the date hereof, there is no continuing failure by PLC to
pay any amount in excess of $[****] payable to or explicitly required to be paid
on behalf of the Borrower under the Tax Sharing Agreement or the Special Tax
Allocation Agreement within thirty (30) calendar days from the date on which
such payment was due and payable.

 

(viii)        Since the Original Closing Date, there has been no amendment of
the Tax Sharing Agreement or the Special Tax Allocation Agreement and there has
not been a termination of the Special Tax Allocation Agreement or a termination
of the rights of the Borrower with respect to PLC and the obligations of PLC
with respect to the Borrower under the Tax Sharing Agreement, in each case,
without the prior written consent of the Issuing Lender (such consent not to be
unreasonably withheld or delayed) if such amendment or termination adversely
affects, in any material respect, the rights, remedies or obligations of the
Borrower under such agreement.

 

Exhibit A - 2

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned has executed and delivered this Notice as of
the          day of         ,         .

 

West Coast Life Insurance Company,

as the Ceding Company

 

 

By:

 

 

Name:

 

Title:

 

 

Exhibit A - 3

--------------------------------------------------------------------------------

 

EXHIBIT B

 

INVESTMENT GUIDELINES

 

All assets held in the Regulatory Account shall be invested solely in Cash or
Cash Equivalents.

 

All assets (other than the Letter of Credit) held in the Surplus Account and the
Reinsurance Trust Account shall be invested solely in Eligible Assets (as
defined below).

 

“Eligible Assets” means, subject to the limitations set forth below and except
as otherwise agreed between the Ceding Company and the Issuing Lender, [****].

 

“Cash” mean immediately available funds denominated in U.S. Dollars.

 

“Cash Equivalents” means commercially reasonable overnight repurchase agreements
fully collateralzed by the United States Treasury or any agency of the United
States Government, the obligations of which are backed by the full faith and
credit of the United States Government.

 

Eligible Assets will be subject to the following limitations:

 

 

 

[****]

 

[****]

 

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

 

[****]

 

[****]

[****]

 

[****]

 

[****]

 

Where:

 

(i)            “Maximum Sector Limit” means the maximum ratio (expressed as a
percentage) of the book value of the relevant Eligible Asset to the book value
of all Eligible Assets at the time of the relevant Eligible Asset purchase,

 

(ii)           “Maximum Tenor Limit” means the relevant date occurring the
stated number of years from the Amendment Closing Date, and

 

(iii)          “United States Agency Debentures” means U.S. government agency
debentures limited to senior U.S. dollar-denominated, nonmortgage-backed direct
obligations of Federal National Mortgage Association (FNMA), Federal Home Loan
Mortgage Corporation (FHLMC), Federal Home Loan Bank (FHLB) and Federal Farm
Credit Bank (FFCB) rated no lower than the highest rating assigned by Moody’s
and S&P to U.S. Treasury securities.

 

Exhibit B - 1

--------------------------------------------------------------------------------

 

In a given year, the weighted average modified duration of all assets will be
subject to the following limits:

 

Year

 

Maximum
Modified
Duration

2013

 

[****]

2014

 

[****]

2015

 

[****]

2016

 

[****]

2017

 

[****]

2018

 

[****]

2019

 

[****]

2020

 

[****]

2021

 

[****]

2022

 

[****]

2023

 

[****]

 

Exhibit B - 2

--------------------------------------------------------------------------------

 

EXHIBIT C

 

REINSURANCE AGREEMENT

 

 

Exhibit C - 1

--------------------------------------------------------------------------------

 

EXHIBIT D

 

FORM OF LETTER OF CREDIT

 

ISSUING LENDER:

 

 

 

UBS AG, STAMFORD BRANCH

 

 

 

299 PARK AVENUE, 26TH FLOOR

 

FOR INTERNAL IDENTIFICATION PURPOSES ONLY

 

NEW YORK, NY 10171

ATTENTION: LETTER OF CREDIT SERVICES

 

 

 

 

 

APPLICANT:

 

 

 

Golden Gate III Vermont Captive Insurance Company

 

BENEFICIARY:

 

 

 

REINSURANCE TRUSTEE

 

 

 

THE BANK OF NEW YORK MELLON

 

 

 

101 BARCLAY STREET

 

 

 

MAILSTOP: 101-0850

 

 

 

NEW YORK, NEW YORK 10286

 

 

 

ATTENTION: INSURANCE TRUST & ESCROW GROUP

 

 

 

 

 

 

 

IRREVOCABLE LETTER OF CREDIT NO. [·]

 

 

 

 

DEAR SIR OR MADAM:

 

WE, UBS AG, STAMFORD BRANCH, HEREBY ESTABLISH THIS LETTER OF CREDIT (“LETTER OF
CREDIT” OR “CREDIT”), AT THE REQUEST OF GOLDEN GATE III VERMONT CAPTIVE
INSURANCE COMPANY (“ACCOUNT PARTY”), IN YOUR FAVOR AS BENEFICIARY, EFFECTIVE AT
THE ISSUE DATE, FOR DRAWINGS UP TO THE SCHEDULED LOC AMOUNT (AS DEFINED BELOW).
THIS LETTER OF CREDIT IS ISSUED BY UBS AG, STAMFORD BRANCH AND IS PRESENTABLE
AND PAYABLE AT OUR OFFICE AT 299 PARK AVENUE, 26TH FLOOR, NEW YORK, NEW YORK
10171, ATTENTION LETTER OF CREDIT SERVICES AND EXPIRES AT OUR CLOSE OF BUSINESS
ON THE EXPIRY DATE (AS DEFINED BELOW). THIS CREDIT CANNOT BE REDUCED OR REVOKED
WITHOUT THE BENEFICIARY’S CONSENT, EXCEPT AN AUTOMATIC ADJUSTMENT IN ACCORDANCE
WITH THE TERMS HEREOF.  THE AMOUNT AVAILABLE FOR PAYMENT UNDER THIS LETTER OF
CREDIT AT ANY TIME SHALL BE THE SCHEDULED LOC AMOUNT AT SUCH TIME MINUS THE SUM
OF ALL PAYMENTS MADE HEREUNDER TO THE BENEFICIARY.

 

THE TERM “BENEFICIARY” INCLUDES ANY SUCCESSOR BY OPERATION OF LAW OF THE NAMED
BENEFICIARY INCLUDING, WITHOUT LIMITATION, ANY LIQUIDATOR, REHABILITATOR,
RECEIVER OR CONSERVATOR.

 

Exhibit D - 1

--------------------------------------------------------------------------------

 

THE “SCHEDULED LOC AMOUNT” FOR ANY PERIOD SHALL BE THE SCHEDULED LOC AMOUNT SET
FORTH IN THE ATTACHED ANNEX I FOR SUCH PERIOD; PROVIDED THAT IF WE, UBS AG,
STAMFORD BRANCH, SEND TO THE BENEFICIARY A NON-INCREASE NOTICE AS HEREINAFTER
PROVIDED, THE “SCHEDULED LOC AMOUNT” SHALL BE AND REMAIN THEREAFTER THE
SCHEDULED LOC AMOUNT SET FORTH IN THE ATTACHED ANNEX I AS IN EFFECT DURING THE
PERIOD IN WHICH THE NON-INCREASE NOTICE WAS SENT, REGARDLESS OF FURTHER
INCREASES TO SCHEDULED LOC AMOUNTS SET FORTH IN THE ATTACHED ANNEX I; PROVIDED,
HOWEVER, THAT THE BENEFICIARY ACKNOWLEDGES AND AGREES, AS OF THE DATE HEREOF,
THAT THE SCHEDULED LOC AMOUNT SHALL AUTOMATICALLY DECREASE TO THE SCHEDULED LOC
AMOUNT SET FORTH IN ANNEX I FOR SUCH PERIOD IF SUCH SCHEDULED LOC AMOUNT IS LESS
THAN THE THEN-CURRENT SCHEDULED LOC AMOUNT.

 

WE, UBS AG, STAMFORD BRANCH, HAVE THE OPTION TO SEND TO THE BENEFICIARY A
NON-INCREASE NOTICE, SUBSTANTIALLY IN THE FORM OF SCHEDULE A HERETO, WHICH SHALL
HAVE THE EFFECT OF MAINTAINING THE THEN-CURRENT SCHEDULED LOC AMOUNT, SUBJECT TO
THE FUTURE DECREASES AS DESCRIBED ABOVE.  SUCH NOTICE SHALL BE DELIVERED TO AND
RECEIVED BY THE BENEFICIARY AT LEAST FIVE (5) CALENDAR DAYS PRIOR TO THE END OF
THE PERIOD FOR THE THEN-CURRENT SCHEDULED LOC AMOUNT.

 

WE HEREBY UNDERTAKE TO PROMPTLY HONOR YOUR SIGHT DRAFT(S) DRAWN ON
US, INDICATING OUR LETTER OF CREDIT NO. [·], FOR ALL OR ANY PART OF THIS CREDIT
UPON PRESENTATION OF (A) YOUR SIGHT DRAFT(S) DRAWN ON US AND (B) A DRAW
CERTIFICATION NOTICE EXECUTED BY WEST COAST LIFE INSURANCE COMPANY IN THE
FORM OF SCHEDULE B HERETO, WHICH MUST BE COMPLETED AS APPROPRIATE, DATED THE
DATE OF SUCH SIGHT DRAFT, IN EACH CASE AT OUR OFFICE SPECIFIED IN THE FIRST
PARAGRAPH HEREOF, OR BY FACSIMILE TO (212) 821-6707, ON OR BEFORE THE EXPIRY
DATE HEREOF.  IF THE APPLICABLE EXPIRY DATE IS NOT A BUSINESS DAY, DRAWING
MAY BE MADE NOT LATER THAN THE NEXT IMMEDIATELY FOLLOWING BUSINESS DAY.  ONLY
THE BENEFICIARY MAY MAKE DRAWINGS UNDER THIS LETTER OF CREDIT AND ALL SIGHT
DRAFTS MUST BE MARKED: “DRAWN UNDER UBS AG, STAMFORD BRANCH, LETTER OF CREDIT
NO. [·]”.  OTHER THAN YOUR SIGHT DRAFT(S) AND THE DRAW CERTIFICATION
NOTICE(S) EXECUTED BY WEST COAST LIFE INSURANCE COMPANY, NO OTHER
DOCUMENT(S) NEED BE PRESENTED BY THE BENEFICIARY.

 

EXCEPT AS EXPRESSLY STATED HEREIN, THIS UNDERTAKING IS NOT SUBJECT TO ANY
AGREEMENT, REQUIREMENT OR QUALIFICATION. THE OBLIGATION OF UBS AG, STAMFORD
BRANCH UNDER THIS LETTER OF CREDIT IS THE INDIVIDUAL OBLIGATION OF UBS AG,
STAMFORD BRANCH, AND IS IN NO WAY CONTINGENT UPON REIMBURSEMENT WITH RESPECT
THERETO OR UPON OUR ABILITY TO PERFECT A LIEN, SECURITY OR ANY OTHER
REIMBURSEMENT.

 

Exhibit D - 2

--------------------------------------------------------------------------------

 

THIS LETTER OF CREDIT SETS FORTH IN FULL THE TERMS OF OUR UNDERTAKING, AND THIS
UNDERTAKING SHALL NOT IN ANY WAY BE MODIFIED, AMENDED, AMPLIFIED OR LIMITED BY
REFERENCE TO ANY DOCUMENT, INSTRUMENT OR AGREEMENT REFERRED TO HEREIN OR IN
WHICH THIS LETTER OF CREDIT IS REFERRED TO OR TO WHICH THIS LETTER OF CREDIT
RELATES, AND ANY SUCH REFERENCE SHALL NOT BE DEEMED TO INCORPORATE HEREIN BY
REFERENCE ANY DOCUMENT, INSTRUMENT OR AGREEMENT.

 

WE UNDERTAKE TO HONOR ANY SIGHT DRAFT(S) PRESENTED UNDER THIS LETTER OF CREDIT,
PROVIDED SUCH DRAFT(S) AND ACCOMPANYING DRAW CERTIFICATION NOTICE(S) CONFORM TO
THE TERMS AND CONDITIONS HEREOF.

 

THE “EXPIRY DATE” OF THIS LETTER OF CREDIT SHALL BE OCTOBER 1, 2023. OR SUCH
EARLIER DATE TO WHICH THE EXPIRATION OF THIS LETTER OF CREDIT IS ACCELERATED
PURSUANT TO THE FOLLOWING SENTENCE.  WE, UBS AG, STAMFORD BRANCH, HAVE THE
OPTION TO SEND TO THE BENEFICIARY AN ACCELERATION NOTICE, SUBSTANTIALLY IN THE
FORM OF SCHEDULE C HERETO, WHICH ACCELERATES THE EXPIRY DATE OF THIS LETTER OF
CREDIT TO (1) APRIL 1, 2015, IN THE CASE OF AN ACCELERATION NOTICE DELIVERED
PRIOR TO MARCH 1, 2014, (2) APRIL 1, 2018, IN THE CASE OF AN ACCELERATION NOTICE
DELIVERED PRIOR TO JANUARY 10, 2018 OR (3) APRIL 1, 2020, IN THE CASE OF AN
ACCELERATION NOTICE DELIVERED PRIOR TO JANUARY 10, 2020.  ALL SUCH ACCELERATION
NOTICES SHALL BE DELIVERED BY REGISTERED MAIL, REPUTABLE COURIER OR HAND
DELIVERY.

 

THIS LETTER OF CREDIT IS SUBJECT TO AND GOVERNED BY THE UNIFORM CUSTOMS AND
PRACTICE FOR DOCUMENTARY CREDIT (2007 REVISION), INTERNATIONAL CHAMBER OF
COMMERCE, PUBLICATION NO. 600 (“UCP”) AS INTERPRETED UNDER THE LAWS OF THE STATE
OF NEW YORK; PROVIDED, HOWEVER, THAT NOTWITHSTANDING THE PROVISIONS OF
ARTICLE 36 OF THE UCP, IF THIS LETTER OF CREDIT EXPIRES DURING AN INTERRUPTION
OF BUSINESS (AS DESCRIBED IN ARTICLE 36 OF THE UCP), UBS AG, STAMFORD BRANCH
AGREES TO EFFECT PAYMENT UNDER THIS LETTER OF CREDIT IF A DRAWING WHICH STRICTLY
CONFORMS TO THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT IS MADE WITHIN
THIRTY (30) CALENDAR DAYS AFTER THE RESUMPTION OF BUSINESS.

 

Exhibit D - 3

--------------------------------------------------------------------------------

 

VERY TRULY YOURS,

UBS AG, STAMFORD BRANCH

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

Exhibit D - 4

--------------------------------------------------------------------------------

 

ANNEX 1

 

Letter of Credit Number:             

 

SCHEDULED LOC AMOUNT

 

Period Starting

 

Period Ending

 

Scheduled LOC Amount

Amendment Closing Date

 

December 14, 2013

 

710,000,000

December 15, 2013

 

March 14, 2014

 

715,000,000

March 15, 2014

 

June 14, 2014

 

715,000,000

June 15, 2014

 

September 14, 2014

 

715,000,000

September 15, 2014

 

December 14, 2014

 

715,000,000

December 15, 2014

 

March 14, 2015

 

715,000,000

March 15, 2015

 

June 14, 2015

 

715,000,000

June 15, 2015

 

September 14, 2015

 

715,000,000

September 15, 2015

 

December 14, 2015

 

715,000,000

December 15, 2015

 

March 14, 2016

 

720,000,000

March 15, 2016

 

June 14, 2016

 

720,000,000

June 15, 2016

 

September 14, 2016

 

720,000,000

September 15, 2016

 

December 14, 2016

 

720,000,000

December 15, 2016

 

March 14, 2017

 

720,000,000

March 15, 2017

 

June 14, 2017

 

715,000,000

June 15, 2017

 

September 14, 2017

 

710,000,000

September 15, 2017

 

December 14, 2017

 

685,000,000

December 15, 2017

 

March 14, 2018

 

685,000,000

March 15, 2018

 

June 14, 2018

 

680,000,000

June 15, 2018

 

September 14, 2018

 

680,000,000

September 15, 2018

 

December 14, 2018

 

675,000,000

December 15, 2018

 

March 14, 2019

 

670,000,000

March 15, 2019

 

June 14, 2019

 

665,000,000

June 15, 2019

 

September 14, 2019

 

660,000,000

September 15, 2019

 

December 14, 2019

 

630,000,000

December 15, 2019

 

March 14, 2020

 

625,000,000

March 15, 2020

 

June 14, 2020

 

615,000,000

June 15, 2020

 

September 14, 2020

 

605,000,000

September 15, 2020

 

December 14, 2020

 

595,000,000

December 15, 2020

 

March 14, 2021

 

585,000,000

March 15, 2021

 

June 14, 2021

 

570,000,000

June 15, 2021

 

September 14, 2021

 

560,000,000

September 15, 2021

 

December 14, 2021

 

545,000,000

December 15, 2021

 

March 14, 2022

 

535,000,000

March 15, 2022

 

June 14, 2022

 

520,000,000

June 15, 2022

 

September 14, 2022

 

505,000,000

September 15, 2022

 

December 14, 2022

 

490,000,000

December 15, 2022

 

March 14, 2023

 

475,000,000

March 15, 2023

 

June 14, 2023

 

465,000,000

June 15, 2023

 

September 14, 2023

 

450,000,000

September 15, 2023

 

October 1, 2023

 

435,000,000

 

Exhibit D - 5

--------------------------------------------------------------------------------

 

SCHEDULE A

 

Letter of Credit Number:                 

 

FORM OF NON-INCREASE NOTICE

 

REINSURANCE TRUSTEE:

THE BANK OF NEW YORK MELLON

ATTENTION: INSURANCE TRUST & ESCROW GROUP

101 BARCLAY STREET

MAILSTOP: 101-0850

NEW YORK, NEW YORK 10286

 

NON-INCREASE NOTICE

 

THE UNDERSIGNED, UBS AG, STAMFORD BRANCH (THE “BANK”), BY AN AUTHORIZED
REPRESENTATIVE THEREOF, HEREBY CERTIFIES TO YOU (THE “BENEFICIARY”) THAT THE
BANK HAS NOT RECEIVED THE OFFICER’S CERTIFICATE OF GOLDEN GATE III VERMONT
CAPTIVE INSURANCE COMPANY SUBSTANTIALLY IN THE FORM SET FORTH IN SCHEDULE D OF
THAT CERTAIN IRREVOCABLE LETTER OF CREDIT NO.                (THE “LETTER OF
CREDIT”) ISSUED BY THE BANK IN FAVOR OF THE BENEFICIARY.

 

ACCORDINGLY, THE BANK HEREBY NOTIFIES THE BENEFICIARY WITH REFERENCE TO THE
LETTER OF CREDIT, THAT THE SCHEDULED LOC AMOUNT (AS DEFINED IN THE LETTER OF
CREDIT) SHALL REMAIN AT THE CURRENT SCHEDULED LOC AMOUNT OF USD               ,
SUBJECT TO ANY FUTURE DECREASES IN THE LETTER OF CREDIT.

 

 

 

VERY TRULY YOURS,

 

 

 

UBS AG, STAMFORD BRANCH

 

 

 

 

 

BY:

 

 

 

NAME:

 

 

TITLE:

 

 

 

 

 

 

 

BY:

 

 

 

NAME:

 

 

TITLE:

 

Exhibit D - 6

--------------------------------------------------------------------------------

 

SCHEDULE B

 

Letter of Credit Number:                  

 

FORM OF DRAW CERTIFICATION NOTICE

 

To:             UBS AG, Stamford Branch

299 Park Avenue, 26th Floor

New York, NY 10171

Attention:  Letter of Credit Services

 

Re: Reimbursement Agreement, dated as of April 23, 2010, as amended, restated,
modified or supplemented from time to time (the “Reimbursement Agreement”),
between Golden Gate III Vermont Captive Insurance Company, a special purpose
financial captive insurance company incorporated under the laws of the State of
Vermont (the “Borrower”) and UBS AG, Stamford Branch, as issuing lender (the
“Issuing Lender”).

 

This Draw Certification Notice (this “Notice”) is delivered by the undersigned
West Coast Life Insurance Company or any successor by operation of law thereof,
including, without limitation, any liquidator, rehabilitator, receiver or
conservator (the “Ceding Company”) under the Issuing Lender’s Letter of Credit
No. [·], in connection with a draw requested by the Reinsurance Trustee, as
beneficiary under the Letter of Credit (the “Beneficiary”).  Unless otherwise
defined herein, terms defined in the Reimbursement Agreement and used herein
shall have the meanings given to them in the Reimbursement Agreement.

 

The Beneficiary is drawing $[·] under the Letter of Credit (the “Requested
Amount”) in connection with this Notice.

 

The undersigned, by [Name], as [Title]2 of the Ceding Company, hereby certifies
to the Issuing Lender that as of the date hereof:

 

(i)                                     The Requested Amount is required to be
obtained by the Beneficiary for the payment of Covered Benefits or Claims
Expenses (each as defined in the Reinsurance Agreement) now due and payable
under the Reinsurance Agreement.

 

(ii)                                  All assets in the Reinsurance Trust
Account and any funds held in any account established pursuant to Section 6.9 or
Section 7.3 of the Reinsurance Agreement have previously been used to satisfy
amounts due and payable under the Reinsurance Agreement or released pursuant to
the Reinsurance Agreement or Section 2 of the Reinsurance Trust Agreement.

 

(iii)                               No assets remain in the Surplus Account.

 

--------------------------------------------------------------------------------

2  Officer must be a Responsible Officer of the Ceding Company, i.e. the Chief
Executive Officer, President, Chief Financial Officer, Chief Accounting Officer,
Treasurer, Assistant Treasurer or Controller.

 

Exhibit D - 7

--------------------------------------------------------------------------------

 

(iv)                              Since the date that is one calendar year prior
to the date hereof, no assets with a Market Value in excess of $[****] have been
transferred from the Surplus Account other than to the extent permitted to be
transferred pursuant to the Priority of Payments, unless (A) despite such assets
being transferred in the incorrect order of priority, such transfer would have
been otherwise permitted pursuant to the Priority of Payments at the time of
such transfer or at any subsequent time thereafter or (B) such impermissibly
transferred assets have been returned to the Surplus Account or replaced in the
Surplus Account with Eligible Assets having a Market Value equal to those that
were impermissibly transferred on or prior to the date hereof.

 

(v)                                 Since the Original Closing Date, the
Borrower has existed and, as of the date hereof, exists, as a separate entity
and has not been substantively consolidated with another entity.

 

(vi)                              As of the date hereof, the Reinsurance
Agreement remains in full force and effect.

 

(vii)                           As of the date hereof, there is no continuing
failure by PLC to pay any amount in excess of $[****] payable to or explicitly
required to be paid on behalf of the Borrower under the Tax Sharing Agreement or
the Special Tax Allocation Agreement within thirty (30) calendar days from the
date on which such payment was due and payable.

 

(viii)                        Since the Original Closing Date, there has been no
amendment of the Tax Sharing Agreement or the Special Tax Allocation Agreement
and there has not been a termination of the Special Tax Allocation Agreement or
a termination of the rights of the Borrower with respect to PLC and the
obligations of PLC with respect to the Borrower under the Tax Sharing Agreement,
in each case, without the prior written consent of the Issuing Lender (such
consent not to be unreasonably withheld or delayed) if such amendment or
termination adversely affects, in any material respect, the rights, remedies or
obligations of the Borrower under such agreement.

 

Exhibit D - 8

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned has executed and delivered this Notice as of
the          day of         ,         .

 

West Coast Life Insurance Company,

as the Ceding Company

 

 

By:

 

 

Name:

 

Title:

 

 

Exhibit D - 9

--------------------------------------------------------------------------------

 

SCHEDULE C

 

Letter of Credit Number:                 

 

FORM OF ACCELERATION NOTICE

 

[DATE]

THE BANK OF NEW YORK MELLON

101 BARCLAY STREET

MAILSTOP: 101-0850

NEW YORK, NEW YORK 10286

ATTENTION: INSURANCE TRUST & ESCROW GROUP

 

ACCELERATION NOTICE

 

THE UNDERSIGNED, UBS AG, STAMFORD BRANCH (THE “BANK”), BY AN AUTHORIZED
REPRESENTATIVE THEREOF, HEREBY CERTIFIES TO YOU (THE “BENEFICIARY”) THAT THE
BANK HAS NOT RECEIVED THE OFFICER’S CERTIFICATE OF GOLDEN GATE III VERMONT
CAPTIVE INSURANCE COMPANY SUBSTANTIALLY IN THE FORM SET FORTH IN SCHEDULE E OF
THAT CERTAIN IRREVOCABLE LETTER OF CREDIT NO.                 (THE “LETTER OF
CREDIT”) ISSUED BY THE BANK IN FAVOR OF THE BENEFICIARY.

 

ACCORDINGLY, THE BANK HEREBY NOTIFIES THE BENEFICIARY WITH REFERENCE TO THE
LETTER OF CREDIT, THAT THE EXPIRATION DATE OF THE LETTER OF CREDIT WILL BE
ACCELERATED TO AN EXPIRY DATE OF [[APRIL 1, 2015]3/[APRIL 1, 2018]4/[APRIL 1,
2020]5].

 

 

UBS AG, STAMFORD BRANCH,

 

as Issuing Lender

 

 

 

 

 

By:

 

 

 

 

Name:

 

Title:

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

--------------------------------------------------------------------------------

3  Select with respect to an Acceleration Notice delivered prior to March 1,
2014.

4  Select with respect to an Acceleration Notice delivered prior to January 10,
2018.

5  Select with respect to an Acceleration Notice delivered prior to January 10,
2020.

 

Exhibit D - 10

--------------------------------------------------------------------------------

 

cc:

GOLDEN GATE III VERMONT CAPTIVE INSURANCE COMPANY

c/o Marsh Management Services, Inc.

100 Bank Street

Burlington, VT 05402

Fax: (802) 859-3550

 

Exhibit D - 11

--------------------------------------------------------------------------------

SCHEDULE D

 

Letter of Credit Number:                 

 

FORM OF OFFICER’S CERTIFICATE OF THE BORROWER

 

UBS AG, STAMFORD BRANCH

299 PARK AVENUE, 26TH FLOOR

NEW YORK, NY 10171

ATTENTION: LETTER OF CREDIT SERVICES

 

OFFICER’S CERTIFICATE OF THE BORROWER

 

THE UNDERSIGNED, GOLDEN GATE III VERMONT CAPTIVE INSURANCE COMPANY, A SPECIAL
PURPOSE FINANCIAL CAPTIVE INSURANCE COMPANY INCORPORATED UNDER THE LAWS OF THE
STATE OF VERMONT (THE “BORROWER”), BY AN AUTHORIZED REPRESENTATIVE THEREOF,
HEREBY CERTIFIES TO YOU (THE “BANK”) THAT, IN ACCORDANCE WITH SECTION 2.01(b) OF
THE SECOND AMENDED AND RESTATED REIMBURSEMENT AGREEMENT, DATED AS OF AUGUST 7,
2013, AS AMENDED, RESTATED, MODIFIED OR SUPPLEMENTED FROM TIME TO TIME (THE
“REIMBURSEMENT AGREEMENT”), BETWEEN THE BORROWER AND THE BANK, AS OF THE DATE
HEREOF, THE INCREASE CONDITIONS SET FORTH IN SECTIONS 5.02(a), (b) AND (c) OF
THE REIMBURSEMENT AGREEMENT (OTHER THAN THOSE THAT HAVE BEEN WAIVED IN WRITING
BY THE BANK) HAVE BEEN FULLY SATISFIED.

 

 

 

VERY TRULY YOURS,

 

 

 

GOLDEN GATE III VERMONT CAPTIVE INSURANCE

 

COMPANY

 

 

 

 

 

BY:

 

 

NAME:

 

TITLE:

 

Exhibit D - 12

--------------------------------------------------------------------------------

 

SCHEDULE E

 

Letter of Credit Number:                 

 

FORM OF OFFICER’S CERTIFICATE OF THE BORROWER

 

UBS AG, STAMFORD BRANCH

299 PARK AVENUE, 26TH FLOOR

NEW YORK, NY 10171

ATTENTION: LETTER OF CREDIT SERVICES

 

OFFICER’S CERTIFICATE OF THE BORROWER

 

THE UNDERSIGNED, GOLDEN GATE III VERMONT CAPTIVE INSURANCE COMPANY, A SPECIAL
PURPOSE FINANCIAL CAPTIVE INSURANCE COMPANY INCORPORATED UNDER THE LAWS OF THE
STATE OF VERMONT (THE “BORROWER”), BY AN AUTHORIZED REPRESENTATIVE THEREOF,
HEREBY CERTIFIES TO YOU (THE “BANK”) THAT, IN ACCORDANCE WITH
SECTION 2.01(c)[[(ii)]/[(iii)]/[(iv)]])6 OF THE SECOND AMENDED AND RESTATED
REIMBURSEMENT AGREEMENT, DATED AS OF AUGUST 7, 2013, AS AMENDED, RESTATED,
MODIFIED OR SUPPLEMENTED FROM TIME TO TIME (THE “REIMBURSEMENT AGREEMENT”),
BETWEEN THE BORROWER AND THE BANK:

 

(A) [THE [THIRD]/[FOURTH]/[FIFTH]7 REQUIRED ADDITIONAL CONTRIBUTION HAS BEEN
MADE AND WAS RECEIVED BY THE BORROWER ON [·]8]; AND

 

(B) NO EVENT THAT CONSTITUTES AN EVENT OF DEFAULT PURSUANT TO SECTIONS
8.01(l) OR (m) OF THE REIMBURSEMENT AGREEMENT HAS OCCURRED AND IS CONTINUING AS
OF THE DATE HEREOF.

 

 

VERY TRULY YOURS,

 

 

 

GOLDEN GATE III VERMONT CAPTIVE INSURANCE

 

COMPANY

 

 

 

BY:

 

 

NAME:

 

TITLE:

 

--------------------------------------------------------------------------------

6  Select as applicable.

7  Select as applicable.

8  Insert date.

 

Exhibit D - 13

--------------------------------------------------------------------------------

 

EXHIBIT E

 

FORM OF ASSIGNMENT AND ACCEPTANCE

 

Reference is made to the Reimbursement Agreement, dated as of April 23, 2010 and
amended and restated as of August 7, 2013 (as the same has been and may be
amended, restated, modified or supplemented from time to time, the “Agreement”),
by and between Golden Gate III Vermont Captive Insurance Company (the
“Borrower”) and UBS AG, Stamford Branch, (the “Issuing Lender”).  Unless
otherwise defined herein, terms defined in the Agreement and used herein shall
have the meanings given to them in the Agreement.

 

The Assignor identified on Schedule l hereto (the “Assignor”) and the Assignee
identified on Schedule l hereto (the “Assignee”) agree as follows:

 

1.     The Assignor hereby irrevocably sells and assigns to the Assignee without
recourse to the Assignor, and the Assignee hereby irrevocably purchases and
assumes from the Assignor without recourse to the Assignor, as of the Effective
Date (as defined below), the interest in and to the Assignor’s rights and
obligations under the Agreement in a principal amount as set forth on Schedule 1
hereto (the “Assigned Interest”).

 

2.     The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Agreement or with respect to the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Agreement, any other Transaction Document or any other instrument or document
furnished pursuant thereto, other than that the Assignor has not created any
adverse claim upon the interest being assigned by it hereunder and that such
interest is free and clear of any such adverse claim and (b) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower, any of its Affiliates or any other obligor
or the performance or observance by the Borrower, any of its Affiliates or any
other obligor of any of their respective obligations under the Agreement or any
other Transaction Document or any other instrument or document furnished
pursuant hereto or thereto.

 

3.     The Assignee (a) represents and warrants that it is legally authorized to
enter into this Assignment and Acceptance and (b) confirms that it has received
a copy of the Agreement, together with copies of the financial statements
delivered pursuant to Section 6.01(d) thereof and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (c) agrees that it will,
independently and without reliance upon the Assignor or the Issuing Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Agreement, the other Transaction Documents or any other instrument or
document furnished pursuant hereto or thereto; and (d) agrees that it will be
bound by the provisions of the Agreement and will perform in accordance with its
terms all the obligations which by the terms of the Agreement are required to be
performed by it pursuant to Sections 9.05(b) or (c), as applicable, of the
Agreement.

 

4.     The effective date of this Assignment and Acceptance shall be the
Effective Date of Assignment described in Schedule 1 hereto (the “Effective
Date”).  Following the execution of

 

Exhibit E - 1

--------------------------------------------------------------------------------

 

this Assignment and Acceptance, it will be delivered to the Issuing Lender for
acceptance and recording by it pursuant to the Agreement, effective as of the
Effective Date (which shall not, unless otherwise agreed to by the Issuing
Lender, be earlier than five (5) Business Days after the date of such acceptance
and recording by the Issuing Lender).

 

5.     Upon such acceptance and recording, from and after the Effective Date,
the Issuing Lender shall make all payments in respect of the Assigned Interest
(including payments of fees and other amounts) to the Assignor for amounts which
have accrued to the Effective Date and to the Assignee for amounts which have
accrued subsequent to the Effective Date.

 

6.     From and after the Effective Date, (a) the Assignee shall be a party to
the Agreement and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of the Issuing Lender thereunder and under the
other Transaction Documents and shall be bound by the provisions thereof and
(b) the Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Agreement.

 

7.     This Assignment and Acceptance 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 (other than Sections 5-1401 and 5-1402
of the General Obligations Law of the State of New York).

 

IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule 1 hereto.

 

Exhibit E - 2

--------------------------------------------------------------------------------

 

Schedule 1
to Assignment and Acceptance with respect to
the Reimbursement Agreement,

dated as of April 23, 2010 and amended and restated as of August 7, 2013,
between Golden Gate III Vermont Captive Insurance Company (the “Borrower”),

and UBS AG, Stamford Branch, (the “Issuing Lender”)

 

Name of Assignor:

 

Name of Assignee:

 

Effective Date of Assignment:

 

Principal Amount of

 

 

Commitment Assigned

 

Commitment Percentage Assigned

 

 

 

$      

 

      %

 

 

 

[Name of Assignee]

 

[Name of Assignor]

 

 

 

 

 

 

By:

 

 

By:

 

Name:

 

Name:

Title:

 

Title:

 

 

 

Accepted for Recordation in the Register:

 

Required Consents (if any):

 

 

 

UBS AG, Stamford Branch, as

 

[                      ]

Issuing Lender

 

 

 

 

 

By:

 

 

By:

 

Name:

 

Name:

Title:

 

Title:

 

 

 

By:

 

 

UBS AG, Stamford Branch, as

Name:

 

Issuing Lender

Title:

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Exhibit E - 3

--------------------------------------------------------------------------------

 

EXHIBIT F

 

FORM OF OFFICER’S CERTIFICATE OF THE BORROWER

 

UBS AG, STAMFORD BRANCH

677 WASHINGTON BOULEVARD

STAMFORD, CT 06901

 

OFFICER’S CERTIFICATE OF THE BORROWER

 

THE UNDERSIGNED, AN AUTHORIZED REPRESENTATIVE OF GOLDEN GATE III VERMONT CAPTIVE
INSURANCE COMPANY, A SPECIAL PURPOSE FINANCIAL CAPTIVE INSURANCE COMPANY
INCORPORATED UNDER THE LAWS OF THE STATE OF VERMONT, (THE “BORROWER”), HEREBY
CERTIFIES TO YOU (THE “BANK”) THAT, IN ACCORDANCE WITH SECTION 2.01(b) OF THE
SECOND AMENDED AND RESTATED REIMBURSEMENT AGREEMENT, DATED AS OF AUGUST 7, 2013,
AS AMENDED, RESTATED, MODIFIED OR SUPPLEMENTED FROM TIME TO TIME (THE
“REIMBURSEMENT AGREEMENT”), BETWEEN THE BORROWER AND THE BANK, AS OF THE DATE
HEREOF, THE INCREASE CONDITIONS SET FORTH IN SECTIONS 5.02(a), (b) AND (c) OF
THE REIMBURSEMENT AGREEMENT (OTHER THAN THOSE THAT HAVE BEEN WAIVED IN WRITING
BY THE BANK) HAVE BEEN FULLY SATISFIED.

 

 

VERY TRULY YOURS,

 

 

 

GOLDEN GATE III VERMONT CAPTIVE INSURANCE COMPANY

 

 

 

BY:

 

 

NAME:

 

TITLE:

 

Exhibit F - 1

--------------------------------------------------------------------------------

 

EXHIBIT G

 

FORM OF OFFICER’S CERTIFICATE OF THE BORROWER

 

UBS AG, STAMFORD BRANCH

677 WASHINGTON BOULEVARD

STAMFORD, CT 06901

 

OFFICER’S CERTIFICATE OF THE BORROWER

 

THE UNDERSIGNED, AN AUTHORIZED REPRESENTATIVE OF GOLDEN GATE III VERMONT CAPTIVE
INSURANCE COMPANY, A SPECIAL PURPOSE FINANCIAL CAPTIVE INSURANCE COMPANY
INCORPORATED UNDER THE LAWS OF THE STATE OF VERMONT, (THE “BORROWER”), HEREBY
CERTIFIES TO YOU (THE “BANK”) THAT, IN ACCORDANCE WITH SECTION
2.01(c)[(ii)]/[(iii)]/[(iv)])9 OF THE SECOND AMENDED AND RESTATED REIMBURSEMENT
AGREEMENT, DATED AS OF AUGUST 7, 2013, AS AMENDED, RESTATED, MODIFIED OR
SUPPLEMENTED FROM TIME TO TIME (THE “REIMBURSEMENT AGREEMENT”), BETWEEN THE
BORROWER AND THE BANK:

 

(A) [THE [[THIRD]/[FOURTH]/[FIFTH]]10 REQUIRED ADDITIONAL CONTRIBUTION HAS BEEN
MADE AND WAS RECEIVED BY THE BORROWER ON [·]11]; AND

 

(B) NO EVENT THAT CONSTITUTES AN EVENT OF DEFAULT PURSUANT TO SECTIONS
8.01(l) OR (m) OF THE REIMBURSEMENT AGREEMENT HAS OCCURRED AND IS CONTINUING AS
OF THE DATE HEREOF.

 

 

VERY TRULY YOURS,

 

 

 

GOLDEN GATE III VERMONT CAPTIVE INSURANCE COMPANY

 

 

 

BY:

 

 

NAME:

 

TITLE:

 

--------------------------------------------------------------------------------

9  Select as applicable.

10  Select as applicable.

11  Insert date.

 

Exhibit G - 1

--------------------------------------------------------------------------------

 

EXHIBIT H

 

PLICO REINSURANCE AGREEMENT

 

Exhibit H - 1

--------------------------------------------------------------------------------