Exhibit 10.11

 

CONFIDENTIAL

ATTORNEY-CLIENT PRIVILEGE

 

 

Coinsurance Agreement

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between

 

American Life & Security Corporation

Lincoln, Nebraska

(hereinafter referred to as “Ceding Company”)

 

and

 

US Alliance Life and Security Company

Topeka, Kansas

(hereinafter referred to as “Reinsurer”)

 

 

effective September 30, 2017

 

 

Treaty Number 1

 

 

 

 

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CONFIDENTIAL

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Table of Contents

 

Article 1 — COINSURANCE AGREEMENT

1

1.1

Parties to the Agreement

1

1.2

Effective Date

1

Article 2 – DEFINITIONS

2

2.1

Defined Terms

2

2.2

Other Definitional Provisions

5

Article 3 — COVERAGE

7

3.1

Scope

7

3.2

Basis of Reinsurance

7

3.3

Retention

7

3.4

Existing Reinsurance

7

3.5

Reinstatement

7

3.6

Misstatement of Fact

8

3.7

Credited Rates and Nonguaranteed Elements

8

3.8

Internal Replacements

8

3.9

Recapture

8

Article 4 – REINSURANCE PREMIUMS

9

4.1

Reinsurance Premiums

9

4.2

Initial Consideration

9

4.3

Ceding Commission

9

4.4

Premium Taxes

9

Article 5 – REINSURANCE BENEFITS AND EXPENSES

10

5.1

Policy Claims

10

5.2

Commissions

10

5.3

Expenses

10

Article 6 – ADMINISTRATION

11

6.1

Administrator

11

6.2

Record Keeping

11

Article 7 – REPORTING AND SETTLEMENTS

12

7.1

Initial and Monthly Reporting

12

7.2

Quarterly and Annual Reporting

12

7.3

Settlements

12

Article 8 – CREDIT FOR REINSURANCE

13

8.1

Reserves

13

8.2

Form of Security

13

Article 9 – TERM AND TERMINATION

14

9.1

Duration of Agreement

14

9.2

Termination for Non-Payment

14

9.3

Termination for Material Breach

14

9.4

Termination for Insolvency of Reinsurer

14

9.5

Termination Payment

15

9.6

Rescission

15

9.7

Survival

15

Article 10 – ERRORS AND OMISSIONS

16

 

 

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Article 11 – DISPUTE RESOLUTION

17

11.1

Negotiation

17

11.2

Arbitration

17

11.3

Waiver of Trial by Jury

18

Article 12 – INSOLVENCY

19

Article 13 – REPRESENTATIONS, WARRANTIES AND COVENANTS

20

13.1

Representations and Warranties of Ceding Company

20

13.2

Covenants of Ceding Company

21

13.3

Representations and Warranties of Reinsurer

21

Article 14 – MISCELLANEOUS

23

14.1

Currency

23

14.2

Interest

23

14.3

Right of Setoff and Recoupment

23

14.4

No Third Party Beneficiaries

23

14.5

Amendment

23

14.6

Notices

24

14.7

Consent to Jurisdiction

25

14.8

Service of Process

25

14.9

Inspection of Records

25

14.10

Confidentiality

25

14.11

Indemnification

26

14.12

Reinsurance Brokers

26

14.13

Successors

26

14.14

Entire Agreement

26

14.15

Severability

26

14.16

Construction

26

14.17

Non-Waiver

26

14.18

Further Assurances

27

14.19

Governing Law

27

14.20

Counterparts

27

 

 

 

Schedules

 

Schedule A – Reinsured Policies

 

Exhibits

 

Exhibit A – Monthly Accounting Report

 

 

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Article 1 — COINSURANCE AGREEMENT

 

1.1     Parties to the Agreement

 

This coinsurance agreement for indemnity reinsurance (the “Agreement”) is
entered into on the ______ day of September, 2017 (the “Agreement Date”) by and
between American Life & Security Corporation, a Nebraska domiciled insurance
company with executive offices in Lincoln, Nebraska (“Ceding Company”), and US
Alliance Life and Security Company (“Reinsurer”), a Kansas domiciled insurance
company with executive offices in Topeka, Kansas, collectively referred to as
the “parties”.

 

Performance of the obligations of each party under this Agreement shall be
rendered solely to the other party. The acceptance of risks under this Agreement
will create no right or legal relationship between Reinsurer and the insured,
owner, or beneficiary of any insurance policy or other contract of Ceding
Company.

 

The Agreement will be binding upon Ceding Company and Reinsurer and their
respective successors and assigns.

 

1.2     Effective Date

 

The Effective Date of this Agreement is September 30, 2017. Hereinafter, the
Effective Date shall mean midnight Central Time on this date.

 

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Article 2 – DEFINITIONS

 

2.1     Defined Terms

 

As used in this Agreement, the following terms shall have the following
meanings:

 

“Adjusted Net Reserves” shall be calculated as Net Reserves, less Net Due and
Deferred Premiums, less Net Policy Loans, plus Advanced Premiums.

 

“Administrator” shall mean the Ceding Company from the effective date to
December 31, 2017 and after December 31, 2017 shall mean the Reinsurer.

 

“Advance Premiums” shall mean premiums received in advance calculated in
accordance with SAP, net of Existing Reinsurance, which would have been or
should have been reported by Ceding Company on its NAIC Convention Blank as of
the date of calculation with respect to the Reinsured Policies as if this
Agreement were not in effect.

 

“Affiliate” shall mean, with respect to any person, any other person that
directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such specified person; provided,
that “control” (including, with correlative meanings, “controlled by” and “under
common control with”), as used with respect to any person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such person, whether through the ownership of voting
securities, by agreement or otherwise.

 

“Agreement” shall have the meaning as specified in Article 1.1.

 

“Agreement Date” shall have the meaning as specified in Article 1.1.

 

“Basic Policy Data” shall mean, with respect to active Reinsured Policies,
policy number, plan code, issue date, issue age, gender, risk class, policy
units, face amount, in force amount, annual premium, modal premium, premium
mode, paid-to date, policy status, expiry date (in the case of extended term
insurance), amount of accidental death benefit, direct statutory reserve, direct
statutory net valuation premium, direct accidental death benefit reserve, loan
value, annuity fund value, annuity cash value, and annuity reserve. With respect
to orphaned annuity riders associated with inactive Reinsured Policies, such
data shall mean policy number, plan code, issue date, issue age, gender, risk
class, policy status, annuity fund value, annuity cash value, and annuity
reserve.

 

“Business Day” shall mean any day other than a Saturday, Sunday or any other day
on which banking institutions are authorized or required by law or executive
order to close in Lincoln, Nebraska or Topeka, Kansas.

 

“Ceded Reserves” shall have the meaning as specified in Article 8.2.

 

“Ceding Company” shall have the meaning as specified in Article 1.1.

 

“Ceding Commission” shall mean $1,850,000.00 payable as set forth in Article
4.3.

 

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“Claims” shall mean, with respect to the contractual provisions and obligations
of the Reinsured Policies incurred on or after the Effective Date, all death
benefits, maturity or endowment benefits, full surrender benefits, partial
surrender or withdrawal benefits, loan proceeds, accrued interest, accrued
credits or other nonguaranteed elements, annuitizations, benefits under
Supplementary Contracts, and other contractual benefits, as further described in
Article 5.1, net of Existing Reinsurance, where surrender or withdrawal benefits
are net of applicable surrender or withdrawal charges, if any. Claims shall not
include any Excluded Liabilities or any liabilities other than the Reinsured
Liabilities.

 

“Contested Claim” shall have the meaning as specified in Article 5.1.

 

 

“Effective Date” shall have the meaning as specified in Article 1.2.

“Excluded Liabilities” shall mean

“Existing Reinsurance” shall mean, for FWL, reinsurance under an automatic
reinsurance agreement with Optimum Re Insurance Company, Number 2537-12AY05,
dated May 1, 2012, and subsequent amendments, and for GPL, reinsurance under an
automatic reinsurance agreement with Optimum Re Insurance Company, Number
2516-10AY01, dated January 4, 2010, and subsequent amendments, and for both FWL
and GPL, bulk reinsurance agreements with Optimum Re Insurance Company covering
accidental death benefit riders associated with the Reinsured Policies.

 

“Extra-Contractual Obligations” shall mean any liabilities or obligations not
arising under the express terms and conditions of, or in excess of the
applicable policy limits of, the Reinsured Policies, which arise from the
handling of any claim with respect to the Reinsured Policies, including
liabilities or obligations for fines, penalties, fees, forfeitures, compensatory
damages, and punitive, special, treble, bad faith, tort, exemplary or other
forms of extracontractual damages awarded against or paid by Ceding Company,
which liabilities or obligations arise from any act, error or omission committed
by Ceding Company, relating to (a) the investigation, defense, trial, settlement
or handling of claims, benefits or payments under the Reinsured Policies, or (b)
the failure to pay, the delay in payment, or errors in calculating or
administering the payment of benefits, claims or any other amounts due or
alleged to be due under or in connection with the Reinsured Policies; however
excluded from “Extra-Contractual Obligations” are any liabilities or obligations
arising out of fraud or any act of a member of the Ceding Company’s officers or
board of directors

 

“Factual Information” shall have the meaning as specified in Article 13.1.

 

“FWL” shall mean First Wyoming Life Insurance Company, NAIC Company Code 14086,
prior to its merger into Ceding Company on September 1, 2016.

 

“GPL” shall mean Great Plains Life Assurance Company, NAIC Company Code 13561,
prior to its merger into Ceding Company on December 1, 2016.

 

“Initial Consideration” shall have the meaning as specified in Article 4.2.

 

“Monthly Accounting Period” shall have the meaning as specified in Article 7.1.

 

“Monthly Accounting Report” shall have the meaning as specified in Article 7.1.

 

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“Net Due and Deferred Premiums” shall mean net due and deferred premiums
calculated in accordance with SAP, net of Existing Reinsurance, which would have
been or should have been reported by Ceding Company on its NAIC Convention Blank
as of the date of calculation with respect to the Reinsured Policies as if this
Agreement were not in effect.

 

“Net Policy Loans” shall mean contract loans originating under provisions
contained in the Reinsured Policies calculated in accordance with SAP, net of
Existing Reinsurance, which would have been or should have been reported by
Ceding Company on its NAIC Convention Blank as of the date of calculation with
respect to the Reinsured Policies as if this Agreement were not in effect.

 

“Net Reserves” shall be calculated as Statutory Reserves, net of Statutory
Reserves for Existing Reinsurance, which would have been or should have been
reported by Ceding Company on its NAIC Convention Blank as of the date of
calculation with respect to the Reinsured Policies as if this Agreement were not
in effect.

 

“Non-Payment Event” shall have the meaning as specified in Article 9.2.

 

“Non-Public Personal Information” shall mean personally identifiable medical,
financial, and other personal information about proposed, current and former
applicants, policy owners, contract holders, insureds, annuitants, claimants,
and beneficiaries of Reinsured Policies or contracts issued by Ceding Company,
and their representatives, that is not publicly available. Non-Public Personal
Information does not include de-identified personal data, i.e., information that
does not identify, or could not reasonably be associated with, an individual.

 

“Person” shall mean and include an individual, a corporation, a partnership, an
association, a trust, an unincorporated organization or a government or
political subdivision thereof.

 

“Proprietary Information” shall include, but not be limited to, underwriting
manuals and guidelines, applications, contract forms, agent lists and premium
rates and allowances of Reinsurer and Ceding Company, but shall not include the
existence of this Agreement and the identity of the parties. Additionally,
Proprietary Information may be shared by either party on a need-to-know basis
with its officers, directors, employees, Affiliates, third party service
providers, auditors, consultants or retrocessionaires, or in connection with the
dispute process specified in this Agreement.

 

“Receiver” shall have the meaning as specified in Article 9.5.

 

“Reinsurance Premiums” shall have the meaning as specified in Article 4.1.

 

“Reinsured Liabilities” shall mean, with respect to the contractual provisions
and obligations of the Reinsured Policies, the liabilities incurred or accrued
by Ceding Company that relate to death benefits, maturity or endowment benefits,
full surrender benefits, partial surrender or withdrawal benefits, accrued
interest, accrued credits or other nonguaranteed elements, annuitizations,
benefits under Supplementary Contracts, and other contractual benefits, net of
Existing Reinsurance, provided that in no case shall Reinsured Liabilities
include any Excluded Liabilities.

 

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“Reinsured Policies” shall mean all policies and riders, including any
amendments or endorsements attached thereto, and all Supplementary Contracts in
force as of the Effective Date originally issued by FWL, which through merger of
FWL into Ceding Company became contracts of Ceding Company, and GPL, which
through merger of GPL into Ceding Company became contracts of Ceding Company,
and as listed by policy number in Schedule A, excluding policies and riders
terminated subsequent to the listing date (June 30, 2017) and prior to the
Effective Date. Any riders, amendments, or endorsements issued by Ceding Company
on Reinsured Policies or increase in benefits on Reinsured Policies subsequent
to the effective date shall be reinsured under the terms of this Agreement.

 

“Reinsured Policies Report” shall have the meaning as specified in Article 7.1.

 

“Reinsurer” shall have the meaning as specified in Article 1.1.

 

“Relevant Regulatory Authority” shall mean the insurance regulatory authority of
Ceding Company’s state of domicile.

 

 

“SAP” shall mean the statutory accounting principles and practices prescribed or
permitted for life insurance companies domiciled in Ceding Company’s state of
domicile.

“Statutory Reserves” shall mean reserves and claim liabilities, including in
course of settlement and incurred but not reported, calculated in accordance
with SAP. Such reserves shall be calculated in good faith on a seriatim basis by
Ceding Company (for calculation dates prior to December 31, 2017) or by
Reinsurer (for calculation dates on or after December 31, 2017), but shall not
include (a) additional actuarial reserves as used in connection with SAP, if
any, established by Ceding Company as a result of its annual cash flow testing,
(b) any asset valuation reserves as used in connection with SAP established by
Ceding Company, or (c) any other reserve not directly attributable to the
Reinsured Policies.

 

“Supplementary Contracts” shall mean all supplementary contracts or settlement
options, whether with or without life contingencies, issued by Ceding Company in
exchange for a Reinsured Policy.

 

“Termination Effective Date” shall have the meaning as specified in Article 9.5.

 

“Terminal Accounting Period” shall have the meaning as specified in Article 7.1.

 

“Third Party Administrative Services Agreement” shall have the meaning as
specified in Article 6.1.

 

2.2     Other Definitional Provisions

 

For purposes of this Agreement, the words “hereof,” “herein,” “hereby” and other
words of similar import refer to this Agreement as a whole, including all
Schedules and Exhibits to this Agreement, unless otherwise indicated.

 

Whenever the singular is used herein, the same shall include the plural, and
whenever the plural is used herein, the same shall include the singular, where
appropriate.

 

The term “including” means “including but not limited to.”

 

Whenever used in this Agreement, the masculine gender shall include the feminine
and neutral genders and vice versa.

 

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The Schedules and Exhibits hereto are hereby incorporated by reference into the
body of this Agreement.

 

All references herein to Articles, Exhibits and Schedules shall be deemed
references to Articles of and Exhibits and Schedules to this Agreement unless
the context shall otherwise require.

 

All terms defined in this Agreement shall have the defined meaning when used in
any Schedule, Exhibit, report or other documents attached hereto or made or
delivered pursuant hereto unless otherwise defined therein.

 

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Article 3 — COVERAGE

 

3.1     Scope

 

Ceding Company agrees to transfer to Reinsurer and Reinsurer agrees to accept
and indemnify risk on all Reinsured Policies, subject in all respects to the
terms, clauses, conditions, stipulations, waivers and modifications of the
Reinsured Policies, provided, however, that Reinsurer acknowledges and agrees
that Ceding Company shall submit this Agreement to the Nebraska Department of
Insurance and the parties will negotiate in good faith any amendments to this
Agreement requested thereby. In the event the parties are unable to so agree on
any such amendments within ten (10) Business Days following notice to both
parties of such request, this Agreement shall be rescinded according to the
provisions set forth in Article 9.

 

Ceding Company and Reinsurer acknowledge the existence of a signed letter of
intent dated August 31, 2017, which set forth the general terms and conditions
leading to the execution of this Agreement, and agree that such letter of intent
is both generally consistent with and fully replaced by this Agreement.

 

3.2     Basis of Reinsurance

 

Reinsurer shall accept, on a first dollar quota share coinsurance basis, one
hundred percent (100%) of all risks and liabilities associated with the
Reinsured Policies, subject in all respects to the terms, clauses, conditions,
stipulations, waivers, modifications, and cancellations of the Reinsured
Policies, and Extra-Contractual Obligations arising therefrom, but in no event
shall Reinsurer be liable for Extra-Contractual Obligations unless Reinsurer
shall have received notice in writing of and concurred with the actions taken or
not taken by Ceding Company which led to its liability. Subject to the terms,
conditions and limits of this Agreement, Reinsurer shall follow the fortunes and
settlements of Ceding Company, and to that end, Reinsurer’s liability for the
Reinsured Policies shall be identical to that of Ceding Company and shall be
subject to the same risks, terms, conditions, interpretations, waivers,
modifications, alterations and cancellations as the respective insurances of
Ceding Company, subject in each case to Ceding Company’s duty to adhere to its
obligations pursuant to Article 6 and to Reinsurer’s duty to adhere to its
obligations pursuant to the same Article 6.

 

3.3     Retention

 

Ceding Company shall retain zero percent (0%) of the liabilities with respect to
each of the Reinsured Policies.

 

3.4     Existing Reinsurance

 

Reinsurance under this Agreement shall be subject to Existing Reinsurance
associated with the Reinsured Policies. The total reinsurance recoverable under
Existing Reinsurance and reinsurance under this Agreement shall not exceed
Ceding Company’s total contractual liability on any Reinsured Policy less Ceding
Company’s retention under the respective reinsurance agreements.

 

3.5     Reinstatement

 

If a Reinsured Policy that has lapsed or surrendered is reinstated in accordance
with its terms and in accordance with Ceding Company’s rules and procedures for
reinstatement, Reinsurer will, upon notification, reinstate reinsurance coverage
for such Reinsured Policy. Upon reinstatement of reinsurance coverage, Ceding
Company shall pay to Reinsurer all applicable Reinsurance Premiums, if any, plus
accrued interest for the period and at the interest rate for which it receives
premiums in arrears.

 

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3.6     Misstatement of Fact

 

In the event of a change in the amount payable under a Reinsured Policy due to
an applicant’s or policy owner’s misstatement in fact on the application for the
Reinsured Policy, Reinsurer’s liability with respect to such Reinsured Policy
will change proportionately to the change in amount payable under the Reinsured
Policy. If the Ceding Company has misstated facts otherwise correct on the
application which results in the incorrect amount of premium being collected,
the Ceding Company will reimburse the Reinsurer for the correct amount of
premium. Should this misstatement result in the over collection of premium, the
Ceding Company will work the the Reinsurer to refund the excess premium to the
policyowner.

 

3.7     Credited Rates and Nonguaranteed Elements

 

Subsequent to the Effective Date, Reinsurer shall have ultimate discretion and
control for determining credited interest rates and other nonguaranteed elements
of the Reinsured Policies, provided that Reinsurer shall consider in good faith
any recommendations provided by Ceding Company regarding credited interest rates
and other nonguaranteed elements of the Reinsured Policies for a period of ten
(10) years subsequent to the Effective Date.

 

3.8     Internal Replacements

 

Ceding Company shall not solicit, directly or indirectly, contract holders of
the Reinsured Policies in connection with the replacement of a Reinsured Policy
with any other policy not reinsured by the Reinsurer.

 

3.9     Recapture

 

Reinsurance under this Agreement is not eligible for recapture by Ceding Company
unless mutually agreed by the parties.

 

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Article 4 – REINSURANCE PREMIUMS

 

4.1     Reinsurance Premiums

 

 

Reinsurer shall be entitled to 100% of all premiums due and collected subsequent
to the Effective Date under the terms of all Reinsured Policies, including modal
loadings and policy fees, less agent commissions and premium taxes. Reinsurance
premiums are on the same mode as direct premiums.

 

4.2     Initial Consideration

 

On the Effective Date, Ceding Company shall pay to Reinsurer the Initial
Consideration in an amount equal the Adjusted Net Reserves calculated
immediately prior to the application of this Agreement and as of the Effective
Date, less the Ceding Commission.

 

4.3     Ceding Commission

 

The Ceding Commission due Ceding Company on the Effective Date shall be paid to
Ceding Company by Reinsurer by means of Ceding Company retaining said amount
from the Adjusted Net Reserves transferred to Reinsurer as set forth in Article
4.2.

 

4.4     Premium Taxes

 

Premium taxes that first become due to state or local taxing authorities on or
after the Effective Date with respect to the Reinsured Policies shall be paid or
reimbursed by Reinsurer.

 

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Article 5 – REINSURANCE BENEFITS AND EXPENSES

 

5.1     Policy Claims

 

Reinsurer shall pay or reimburse Ceding Company for all Claims incurred on or
after the Effective Date in accordance with the terms and conditions of the
Reinsured Policies, applicable law, and Article 7.3.

 

Reinsurer may request that Ceding Company investigate, contest, compromise or
litigate any Claim involving a Reinsured Policy (any such claim, a “Contested
Claim”), consent thereto shall not be unreasonably withheld, conditioned or
delayed. Ceding Company may authorize Reinsurer to act on its behalf in such
matter. Administrator shall provide to the other party all relevant information
and documents, as such become available, pertaining to Contested Claim and will
promptly report any developments during the review. Subject to limitations
relating to Excluded Liabilities, Reinsurer shall bear the expenses, or
reimburse Ceding Company for the reasonable expenses, of any contest or
compromise of a Claim, and will be entitled to any reduction of liability.

 

If Reinsurer so elects, it may discharge its liability with respect to any
Contested Claim by paying to Ceding Company its share of such Claim as
originally presented to Ceding Company and, thereafter, will have no obligation
to Ceding Company for reimbursement of expenses related to the contest of such
Claim and will not share in any subsequent reduction in liability relating to
such Claim.

 

5.2     Commissions

 

Commissions due on or after the Effective Date under the terms of valid agents’
contracts existing as of the Effective Date shall be paid or reimbursed by
Reinsurer. Reinsurer shall not be responsible for any uncollectible agent debit
balances.

 

5.3     Expenses

 

Expenses associated with the administration and reporting of the Reinsured
Policies on or after the Effective Date shall be paid or reimbursed by Reinsurer
after December 31, 2017. Ceding Company agrees to administer the Reinsured
Policies through December 31, 2017 at no cost to Reinsurer. Provided, however,
if Ceding Company is requested to provide administrative services after December
31, 2017, Reinsurer agrees to pay for those services at $100 per policy per
annum, prorated for the period during which such administrative services are are
provided.

 

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Article 6 – ADMINISTRATION

 

6.1     Administrator

 

Administrator shall perform all appropriate administrative, claims and other
services customarily performed by a direct company in the life insurance
industry, including reporting under Article 7, as well as duties customarily
performed by an assuming company in the reinsurance industry, such services to
include all required and necessary policyholder service, premium billing and
collection, commission processing, claim adjudication, insurance accounting,
valuation of statutory reserves and other liabilities, and valuation of assets
(Administrative Services). Administrator agrees to use reasonable care in its
administration, conform with law, and use all reasonable efforts to preserve the
value of the Reinsured Policies.

 

Neither party shall outsource any administrative functions or claims
administration with respect to the Reinsured Policies without the consent of the
other party, such consent not to be unreasonably withheld. Prior to any such
outsourcing, the right to audit and inspect the party performing such outsourced
services shall be secured.

 

All monetary considerations for such Administrative Services are explicitly
reflected in the Ceding Commission or Reinsurance Premiums with no further
monetary considerations owed to Ceding Company or Reinsurer.

 

 

6.2     Record Keeping

 

Administrator shall maintain all records and correspondence for services
performed under Article 6.1 in accordance with industry standards of insurance
record keeping. In addition, such records shall be made available for
examination, audit, and inspection by the department of insurance of any state
within whose jurisdiction Ceding Company or Reinsurer operates. Administrator
further agrees that in the event of the termination of this Agreement, any such
records in the possession of the Administrator shall promptly be duplicated and
forwarded to the other party unless otherwise instructed.

 

Administrator shall establish and maintain an adequate system of internal
controls and procedures for financial reporting relating to the Reinsured
Policies, including associated documentation and shall make such documentation
available for examination and inspection by the other party. All reports
provided by the Administrator pursuant to Article 7 shall be prepared in
accordance with such system and procedures and shall be consistent with the
Administrator’s books and records.

 

6.3     Administrative Account

 

Administrator shall maintain with sufficient funds, at its own expense, and
Ceding Company shall cooperate in the establishment and maintenance of a
checking account in the name of Ceding Company in a bank insured by the Federal
Deposit Insurance Corporation for the purpose of facilitating Administrator’s
performance of Administrative Services, including receiving premium and paying
claims (“Administrative Account”).

 

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Article 7 – REPORTING AND SETTLEMENTS

 

7.1     Initial and Monthly Reporting

 

Within ten (10) Business Days following the Effective date and within ten (10)
Business Days following the end of each Monthly Accounting Period thereafter,
Administrator shall deliver to the other party a report of the Reinsured
Policies (a “Reinsured Policies Report”) similar in form to the report set forth
on Schedule A, along with seriatim information in electronic format containing
Basic Policy Data with respect to each of the Reinsured Policies.

 

Within ten (10) Business Days following the end of each calendar month, the
Administrator shall deliver to the other party an accounting report (a “Monthly
Accounting Report”) prepared in accordance with SAP and substantially in the
form set forth in Exhibit A for the immediately preceding calendar month (a
“Monthly Accounting Period”) or, in the case of termination, the period from the
end of the immediately preceding Monthly Accounting Period to the date on which
this Agreement is terminated (the “Terminal Accounting Period”), as applicable.

 

7.2     Quarterly and Annual Reporting

 

Ceding Company shall deliver to Reinsurer and Reinsurer shall deliver to Ceding
Company (a) a copy of its unaudited annual statement (Blue Book) within five (5)
Business Days following the filing thereof with the Relevant Regulatory
Authority but no later than March 5 of each year, (b) a copy of its audited
annual statutory financial statements within five (5) Business Days following
the filing thereof with the Relevant Regulatory Authority but no later than June
5 of each year and (c) a copy of its unaudited quarterly statutory financial
statements within five (5) Business Days following the filing thereof with the
Relevant Regulatory Authority but no later than fifty (50) calendar days after
the end of each calendar quarter.

 

Upon request, Administrator shall promptly provide the other party with any
additional information related to the Reinsured Policies that the other party
reasonably requires to complete its financial statements.

 

Administrator acknowledges that timely and correct compliance with the reporting
requirements of this Agreement are material elements of the Administrator’s
responsibilities hereunder and an important basis of the other party’s ability
to assess the risks hereunder. Material noncompliance with reporting
requirements, including extended delays, will constitute a material breach of
the terms of this Agreement.

 

7.3     Settlements

 

Administrator shall calculate a Monthly Settlement Amount on the first Business
Day of each calendar month on the basis of Reinsurance Premiums received during
the previous calendar month and Claims paid during the previous calendar month.
On the first Business Day of each month, Administrator shall effectuate the
payment of the Settlement Amount by paying Reinsurance Premiums to Reinsurer and
collecting amounts paid for Claims from Reinsurer, consistent with Article 14.3.

 

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Article 8 – CREDIT FOR REINSURANCE

 

8.1     Admitted Reinsurer

 

Reinsurer represents that it is an admitted insurance company licensed in the
state of Nebraska, Ceding Company’s state of domicile.

 

8.2     Reserves

 

Reinsurer shall establish reserves in respect to the Reinsured Policies (“Ceded
Reserves”) in an amount equal to Adjusted Net Reserves.

 

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Article 9 – TERM AND TERMINATION

 

9.1     Duration of Agreement

 

Subject to Article 9.2, this Agreement shall be in effect until all assumed
liabilities have been fully satisfied. Subject to Articles 4.1 and 9.2, all
Reinsured Policies in force as of the Effective Date will remain Reinsured
Policies until the expiration thereof and Reinsurer shall remain liable thereon.

 

9.2     Termination for Non-Payment

 

Either party may terminate this Agreement as to all Reinsured Policies if the
other party fails to pay any amounts due under this Agreement within thirty (30)
calendar days following written notice of non-payment from the non-defaulting
party (a “Non-Payment Event”); provided, that reinsurance that is terminated due
to non-payment by Ceding Company may be reinstated by Ceding Company, subject to
Reinsurer’s approval, within sixty (60) calendar days of the date of
termination, and upon payment of all amounts in arrears including any interest
accrued thereon; provided, further, that Reinsurer shall have no liability for
the payment of any Claims under the Reinsured Policies that are incurred between
the date of termination and the date of the reinstatement of the reinsurance.

 

9.3     Termination for Material Breach

 

In addition to all other rights and remedies available under this Agreement,
either party may terminate this Agreement as to all Reinsurance Policies by
providing the other party with a minimum of thirty (30) calendar days prior
written notice (except in the case of a Non-Payment Event, in which case notice
may be given immediately) in the event the other party commits a material breach
of any provision of this Agreement (including any failure by Reinsurer, within
Reinsurer’s control, that causes Ceding Company not to receive full credit for
the reinsurance effected hereunder on its statutory financial statements filed
in Ceding Company’s state of domicile), which notice shall specify the nature of
such material breach. The breaching party shall have twenty (20) calendar days
from the date of the breaching party's receipt of the foregoing notice to cure
such material breach to the reasonable satisfaction of the non-breaching party.
If the breach is cured, the other party shall provide written notice to the
curing party that the breach has been adequately cured. In the event the
breaching party fails to cure the material breach within such twenty (20)
calendar day period, then, at the option of the non-breaching party and upon
notice, this Agreement will terminate upon expiration of the thirty (30)
calendar day notice period. Notwithstanding the foregoing, the parties shall
cooperate with each other to effect a cure of any breach of the terms of this
Agreement.

 

9.4     Termination for Insolvency of Reinsurer

 

Ceding Company may terminate this Agreement as to all Reinsured Policies in the
event that Reinsurer becomes insolvent (as set forth in Article 12) by promptly
providing Reinsurer or its Authorized Representative with written notice of
termination, to be effective as of the date on which Reinsurer’s insolvency is
established by the authority responsible for such determination. Any requirement
for a notification period prior to the termination of this Agreement shall not
apply under such circumstances.

 

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9.5     Termination Payment

 

In the event that this Agreement is terminated as to all Reinsured Policies,
including if this Agreement is rejected by any liquidator, receiver,
rehabilitator, trustee or similar person acting on behalf of Ceding Company (a
“Receiver”), a net accounting and settlement as to any balance due under this
Agreement will be undertaken by Ceding Company in accordance with Article 7. In
addition, on the date of delivery of the Monthly Accounting Report related to
such termination, Reinsurer shall transfer to Ceding Company, within fifteen
(15) Business Days after receipt of the Monthly Accounting Report, an amount
equal to the Ceded Reserves as of the Termination Effective Date.

 

Reinsurer’s right to terminate the reinsurance provided hereunder will not
prejudice its right to collect Reinsurance Premiums, if any, and applicable
interest as specified in Article 14.2, for the period during which such
reinsurance was in force, through and including any notice period.

 

9.6     Rescission

 

If this Agreement is rescinded pursuant to Article 3.1, the parties agree to
cooperate in good faith and use all reasonable efforts to return each party to
an economic position that is substantially similar to the economic position it
was in immediately prior to the date of this Agreement, after the satisfaction
of which this Agreement shall be extinguished and neither party shall have any
further liability to the other party hereunder.

 

9.7     Survival

 

All provisions of this Agreement will survive any termination of this Agreement
to the extent necessary to carry out its purpose.

 

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Article 10 – ERRORS AND OMISSIONS

 

Any unintentional or accidental failure to comply with the terms of this
Agreement that can be shown to be the result of an oversight or clerical error
relating to the administration of reinsurance by either party will not
constitute a breach of this Agreement. Upon discovery, the error will be
promptly corrected so that both parties are restored to the position they would
have occupied had the oversight or clerical error not occurred. In the event a
payment is corrected, the party receiving the payment shall be entitled to
interest in accordance with Article 14.2. Should it not be possible to restore
both parties to this position, the party responsible for the oversight or
clerical error will be responsible for any resulting liabilities and expenses.

 

If Ceding Company has failed to cede reinsurance as provided under this
Agreement or has failed to comply with reporting requirements with respect to
business ceded hereunder, Reinsurer may require Ceding Company to audit its
records for similar errors and take reasonable actions necessary to correct
errors and avoid similar errors. Failing prompt correction, Reinsurer may limit
its liability to the correctly reported Reinsured Policies.

 

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Article 11 – DISPUTE RESOLUTION

 

11.1     Negotiation

 

Within fifteen (15) calendar days after Reinsurer or Ceding Company has given
the other party written notification of a specific dispute arising out of or
relating to this Agreement, each party will appoint a designated officer of its
company to attempt to resolve such dispute. The officers will meet at a mutually
agreeable location as soon as reasonably possible and as often as reasonably
necessary in order to gather and furnish the other with all appropriate and
relevant information concerning the dispute. The officers will discuss the
matter in dispute and will negotiate in good faith without the necessity of
formal arbitration proceedings. During the negotiation process, all reasonable
requests made by one officer to the other for information will be honored. The
specific format for such discussions will be decided by the designated officers.

 

If the officers cannot resolve the dispute within thirty (30) calendar days of
their first meeting, the dispute will be submitted to formal arbitration
pursuant to Article 11.2, unless the parties agree in writing to extend the
negotiation period for an additional thirty (30) calendar days.

 

11.2     Arbitration

 

It is the intention of Reinsurer and Ceding Company that the customs and
practices of the insurance and reinsurance industry will be given full effect in
the operation and interpretation of this Agreement. The parties agree to act in
all matters with the utmost good faith. However, if Reinsurer and Ceding Company
cannot mutually resolve a dispute that arises out of or relates to this
Agreement, including, without limitation, the rights and obligations arising
under, formation, interpretation, and/or validity of this Agreement, and the
dispute cannot be resolved through the negotiation process, then, the dispute
shall be submitted to arbitration in accordance with the provisions of this
Article 11.2.

 

To initiate arbitration, either Ceding Company or Reinsurer will notify the
other party by certified mail of its desire to arbitrate, stating the nature of
the dispute and the remedy sought. Each party shall select an arbitrator within
thirty (30) days of the written request for arbitration. If either party refuses
or neglects to appoint an arbitrator withing thirty (30) days of the written
request for arbitration, the other party may appoint the second arbitrator. The
two arbitrators shall select an umpire within thirty (30) days of the
appointment of the second arbitrator. If the two arbitrators fail to agree on
the selection of the umpire withing thirty (30) days of the appointment of the
second arbitrator, each arbitrator shall submit to the other a list of three
umpire candidates, each arbitrator shall select one name from the list submitted
by the other and the umpire shall be selected from the two names chosen by a lot
drawing procedure to be agreed upon by the arbitrators.

 

The arbitratrors and umpire shall all be disinterested, ARIAS-certified
arbitrators, who are current or former executive officers of a life insurance or
life reinsurance company other than the parties to this Agreement, their
Affiliates or subsidiaries. The arbitrator shall be familiar with the prevailing
customs and practices for reinsurance in the life insurance and life reinsurance
industry in the United States.

 

Each arbitration hearing under this Agreement will be held on the dates set by
the umpire in Topeka, Kansas or other mutually agreed upon location. As soon as
possible, the arbitrator shall establish arbitration procedures as warranted by
the facts and issues of the particular case. Notwithstanding Article 14.19, the
arbitration and this Article 11.2 shall be governed by Title 9 (Arbitration) of
the United States Code.

 

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The arbitration panel shall interpret this Agreement as an honorable engagement
rather than merely as a legal obligation and shall make its decision considering
the terms and conditions of this Agreement and the customs and practices of the
insurance and reinsurance industries with a view to effecting the general
purpose of the Agreement. The arbitration panel is released from judicial
formalities and shall not be bound by strict interpretation of the law.

 

The decision of a majority of the arbitration panel shall be final and binding
on both parties, except to the extent otherwise provided in the Federal
Arbitration Act. The arbitration panel shall render its award in writing.
Judgment upon the award may be entered in any court having jurisdiction,
pursuant to the Federal Arbitration Act.

 

The parties agree that the federal courts in either party’s state of domicile
have jurisdiction to hear any matter relating to compelling arbitration or
enforcing the judgment of an arbitral panel, and the parties hereby consent to
such jurisdiction. Each party hereby waives, to the fullest extent permitted by
law, any objection it may have to such venue, or any claim that a proceeding
brought in federal court in either party’s state of domicile has been brought in
an inconvenient forum. In addition, Ceding Company and Reinsurer hereby consent
to service of process out of such courts at the addresses set forth in Article
14.6.

 

Unless the arbitration panel decides otherwise, each party will bear the expense
of its own arbitration activities, including the fees and expenses of its own
arbitrator, and any outside attorney and witness fees. The parties will jointly
bear an equal share of the fees and expenses of the umpire and of the other
expenses of the arbitration.

 

11.3     Waiver of Trial by Jury

 

Reinsurer and Ceding Company hereby waive any and all rights to trial by jury in
any matter arising out of or relating to this Agreement.

 

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Article 12 – INSOLVENCY

 

A party to this Agreement will be deemed “insolvent” when: (a) a receiver,
rehabilitator, conservator, liquidator or statutory successor is appointed; (b)
it is adjudicated as bankrupt or insolvent; (c) it files or consents to the
filing of a petition in bankruptcy, seeks reorganization or an arrangement with
creditors or takes advantage of any bankruptcy, dissolution, liquidation,
rehabilitation, conservation or similar law or statute; or (d) it becomes the
subject of an order of rehabilitation or an order of liquidation as defined by
the insurance code of the jurisdiction of the party’s domicile.

 

In the event of the insolvency of either party, the rights or remedies of this
Agreement will remain in full force and effect.

 

In the event of the insolvency of Ceding Company, the following three paragraphs
shall apply:

 

The reinsurance provided under this Agreement will be payable by Reinsurer
directly to Ceding Company or to its liquidator, receiver, conservator,
statutory successor, or other authorized representative on the basis of the
reported claims allowed against Ceding Company by any court of competent
jurisdiction or by the liquidator, receiver, conservator, statutory successor,
or other authorized representative having authority to allow such claims,
without diminution because of such insolvency, or because the liquidator,
receiver, conservator, statutory successor, or other authorized representative
failed to pay all or a portion of any claims. It is agreed, however, that the
liquidator, receiver, conservator, statutory successor, or other authorized
representative shall give prompt written notice to Reinsurer of the pendency of
a claim against Ceding Company within a reasonable time after such claim is
filed in the receivership, conservation, insolvency or liquidation proceeding
and that during the lendency of such claim, Reinsurer may investigate such Claim
and interpose, at its own expense, in the proceedings where the Claim is to be
adjudicated, any defense or defenses which it may deem available to Ceding
Company or its Authorized Representative. Under no circumstances shall Reinsurer
have any obligation to the policy owner of any Reinsured Policy.

 

Reinsurer will be liable only for benefits reinsured as benefits become due
under the terms of the Reinsured Policies and will not be or become liable for
any amounts or reserves to be held by Ceding Company as to the Reinsured
Policies or for any damages or payments resulting from the termination or
restructuring of the Reinsured Policies that are not otherwise expressly covered
by this Agreement.

 

The expense incurred by Reinsurer will be chargeable, subject to court approval,
against Ceding Company as part of the expense of its insolvency proceedings to
the extent of a proportionate share of the benefit which may accrue to Ceding
Company solely as a result of the defense undertaken by Reinsurer. Where two or
more reinsurers are involved in the same Claim and a majority in interest elect
to interpose a defense to such Claim, the expense will be apportioned in
accordance with the terms of this Agreement as though such expense had been
incurred by Ceding Company.

 

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Article 13 – REPRESENTATIONS, WARRANTIES AND COVENANTS

 

13.1     Representations and Warranties of Ceding Company

 

Ceding Company hereby represents and warrants to Reinsurer as follows:

 

 

(a)

Organization and Qualification. Ceding Company is a corporation duly
incorporated, validly existing and in good standing under the laws of Ceding
Company’s state of domicile and has all requisite corporate power and authority
to operate its business as now conducted, and is duly qualified as a foreign
corporation to do business, and, to the extent legally applicable, is in good
standing, in each jurisdiction where the character of its owned, operated or
leased properties or the nature of its activities makes such qualification
necessary, except for failures to be so qualified or be in good standing that,
individually or in the aggregate, do not have, and would not reasonably be
expected to have, a material adverse effect on Ceding Company’s ability to
perform its obligations under this Agreement.

 

 

(b)

Authorization. Ceding Company has all requisite corporate power to enter into,
consummate the transactions contemplated by and carry out its obligations under,
this Agreement. The execution and delivery by Ceding Company of this Agreement,
and the consummation by Ceding Company of the transactions contemplated by, and
the performance by Ceding Company of its obligations under, this Agreement have
been duly authorized by all requisite corporate action on the part of Ceding
Company. This Agreement has been duly executed and delivered by Ceding Company,
and (assuming due authorization, execution and delivery by Reinsurer) this
Agreement constitutes the legal, valid and binding obligation of Ceding Company,
enforceable against it in accordance with its terms, subject to the effect of
any applicable bankruptcy, reorganization, insolvency, moratorium, or similar
laws relating to or affecting creditors’ rights generally.

 

 

(c)

No Conflict. The execution, delivery and performance by Ceding Company of, and
the consummation by Ceding Company of the transactions contemplated by, this
Agreement do not and will not (i) violate or conflict with the organizational
documents of Ceding Company, (ii) conflict with or violate any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit
or license of any governmental authority applicable to Ceding Company or by
which it or its properties or assets is bound or subject, or (iii) result in any
breach of, or constitute a default (or event which, with the giving of notice or
lapse of time, or both, would become a default) under, or give to any Person any
rights of termination, acceleration or cancellation of, any agreement, lease,
note, bond, loan or credit agreement, mortgage, indenture or other instrument,
obligation or contract of any kind to which Ceding Company or any of its
subsidiaries is a party or by which Ceding Company or any of its subsidiaries or
any of their respective properties or assets is bound or affected, except, in
the case of clause (iii), any such conflicts, violations, breaches, loss of
contractual benefits, defaults or rights that, individually or in the aggregate,
do not have, and would not reasonably be expected to have, a material adverse
effect on Ceding Company’s ability to perform its obligations under this
Agreement.

 

 

(d)

Factual Information Relating to the Reinsured Policies. The information relating
to the business reinsured under this Agreement that was supplied by or on behalf
of Ceding Company to Reinsurer or any of Reinsurer’s representatives in
connection with this Agreement (such information, the “Factual Information”), as
of the date supplied (or if later corrected or supplemented prior to the date
hereof, as of the date corrected or supplemented), was true and correct in all
material respects.

 

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13.2     Covenants of Ceding Company

 

 

(a)

Investigations. To the extent permitted by applicable law or regulation, Ceding
Company will notify Reinsurer within five (5) Business Days after notice
thereof, in writing, of any and all investigations of Ceding Company conducted
by any federal or state governmental authority commencing after the date hereof,
which relates in any way whatsoever to the business reinsured under this
Agreement.

 

 

(b)

Governmental Notices. Ceding Company shall provide Reinsurer, within five (5)
Business Days after receipt thereof, copies of any written notice or report from
any governmental authority that relates in any way whatsoever to the business
reinsured under this Agreement and a written summary of any material oral
communication with any governmental authority that relates in any way whatsoever
to the business reinsured under this Agreement.

 

13.3     Representations and Warranties of Reinsurer

 

Reinsurer hereby represents and warrants to Ceding Company as follows:

 

 

(a)

Organization and Qualification. Reinsurer is a corporation duly incorporated,
validly existing and in good standing under the laws of Reinsurer’s state of
domicile and has all requisite corporate power and authority to operate its
business as now conducted, and is duly qualified as a foreign corporation to do
business, and, to the extent legally applicable, is in good standing, in each
jurisdiction where the character of its owned, operated or leased properties or
the nature of its activities makes such qualification necessary, except for
failures to be so qualified or be in good standing that, individually or in the
aggregate, do not have, and would not reasonably be expected to have, a material
adverse effect on Reinsurer’s ability to perform its obligations under this
Agreement.

 

 

(b)

Authorization. Reinsurer has all requisite corporate power to enter into,
consummate the transactions contemplated by and carry out its obligations under,
this Agreement. The execution and delivery by Reinsurer of this Agreement, and
the consummation by Reinsurer of the transactions contemplated by, and the
performance by Reinsurer of its obligations under, this Agreement have been duly
authorized by all requisite corporate action on the part of Reinsurer. This
Agreement has been duly executed and delivered by Reinsurer, and (assuming due
authorization, execution and delivery by Ceding Company) this Agreement
constitutes the legal, valid and binding obligation of Reinsurer, enforceable
against it in accordance with its terms, subject to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium, or similar laws relating to
or affecting creditors’ rights generally.

 

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(c)

No Conflict. The execution, delivery and performance by Reinsurer of, and the
consummation by Reinsurer of the transactions contemplated by, this Agreement do
not and will not (i) violate or conflict with the organizational documents of
Reinsurer, (ii) conflict with or violate any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
governmental authority applicable to Reinsurer or by which it or its properties
or assets is bound or subject, or (iii) result in any breach of, or constitute a
default (or event which, with the giving of notice or lapse of time, or both,
would become a default) under, or give to any Person any rights of termination,
acceleration or cancellation of, any agreement, lease, note, bond, loan or
credit agreement, mortgage, indenture or other instrument, obligation or
contract of any kind to which Reinsurer or any of its subsidiaries is a party or
by which Reinsurer or any of its subsidiaries or any of their respective
properties or assets is bound or affected, except, in the case of clause (iii),
any such conflicts, violations, breaches, loss of contractual benefits, defaults
or rights that, individually or in the aggregate, do not have, and would not
reasonably be expected to have, a material adverse effect on Reinsurer’s ability
to perform its obligations under this Agreement.

 

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Article 14 – MISCELLANEOUS

 

14.1     Currency

 

All payments due under this Agreement will be made in U.S. Dollars.

 

14.2     Interest

 

All amounts due and payable by Ceding Company or Reinsurer under this Agreement
that remain unpaid for more than fifteen (15) calendar days from the date due
hereunder will incur interest from the date due hereunder. Except as otherwise
set forth in this Agreement, such interest shall accrue at a rate equal to the
greater of six percent (6%) or 300 basis points over LIBOR, calculated on a
30/360 basis.

 

14.3     Right of Setoff and Recoupment

 

Each of Ceding Company and Reinsurer shall have, and may exercise at any time
and from time to time, the right to setoff or recoup any undisputed balance or
balances, whether on account of Reinsurance Premiums, allowances, credits,
Claims or otherwise, due from one party to the other under this Agreement and
may setoff or recoup such balance or balances against any balance or balances
due to the former from the latter under this Agreement.

 

The rights provided under this Article 14.3 are in addition to any rights of
setoff that may exist at common law. The parties’ setoff rights may be enforced
notwithstanding any other provision of this Agreement including, without
limitation, the provisions of Article 12.

 

14.4     No Third Party Beneficiaries

 

This Agreement is an indemnity reinsurance agreement solely between Ceding
Company and Reinsurer. The acceptance of risks under this Agreement by Reinsurer
will create no right or legal relation between Reinsurer and the insured, owner,
beneficiary, or assignee of any insurance policy of Ceding Company. In addition,
nothing in this Agreement is intended to relieve or discharge the obligation or
liability of any third party to any party to this Agreement.

 

14.5     Amendment

 

This Agreement may not be changed or modified or in any way amended except by a
written instrument duly executed by the proper officers of both parties to this
Agreement and any change or modification to this Agreement will be null and void
unless made by amendment to this Agreement and duly executed by the proper
officers of both parties to this Agreement.

 

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14.6     Notices

 

All demands, notices, reports and other communications provided for herein shall
be delivered by the following means: (i) hand delivery, (ii) overnight courier
service (e.g., FedEx, Airborne Express, or DHL); (iii) registered or certified
U.S. mail, postage prepaid and return receipt requested; or (iv) facsimile
transmission or e-mail provided that the fax or e-mail is confirmed by delivery
using one of the three methods identified in clauses (i) through (iii). All such
demands, notices, reports and other communications shall be delivered to the
parties as follows:

 

if to Ceding Company:

 

American Life & Security Corporation

2900 South 70th Street, Suite 400

Lincoln, NE 68506

Attention: Mark A. Oliver, Chairman and CEO

Phone: 402-489-8266

Email: _______________________________

 

with a copy to:

_____________________________________

_____________________________________

_____________________________________

Attention: ____________________________

Phone: _______________________________

Email: _______________________________

 

if to Reinsurer:

 

US Alliance Life and Security Company

4123 SW Gage Center Drive, Suite 240

Topeka, KS 66604

Attention: Jack H. Brier, Chairman and CEO

Phone: 785-228-0200

Email: _______________________________

 

with a copy to:

_____________________________________

_____________________________________

_____________________________________

Attention: ____________________________

Phone: _______________________________

Email: _______________________________

 

Either party hereto may change the names or addresses where notice is to be
given by providing notice to the other party of such change in accordance with
this Article 14.6.

 

If either party hereto becomes aware of any change in applicable law restricting
the transmission of notices or other information in accordance with the
foregoing, such party shall notify the other party hereto of such change in law
and such resulting restriction.

 

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14.7     Consent to Jurisdiction

 

Subject to the terms and conditions of Article 11, Reinsurer (a) submits to the
jurisdiction of any court of competent jurisdiction in the State of Nebraska for
the adjudication of any issues arising out of this Agreement, (b) agrees to
comply with all requirements necessary to give such court jurisdiction, and (c)
will abide by the final decision of such court or of any appellate court in the
event of an appeal. This Article 14.7 is not intended to conflict with or
override Article 11.

 

14.8     Service of Process

 

Reinsurer hereby designates the Insurance Commissioner of the State of Nebraska
as its true and lawful attorney upon whom may be served any lawful process in
any action, suit or proceeding instituted by or on behalf of Ceding Company. A
copy of any such process shall be delivered to Reinsurer in accordance with
Article 14.6. This Article 14.8 is not intended to conflict with or override
Article 7.

 

14.9     Inspection of Records

 

Provided that the requesting party is current on all amounts owing to the other
party (other than amounts that are being disputed in accordance with the terms
and conditions of this Agreement), upon giving at least five (5) Business Days’
prior written notice, the requesting party, or its duly authorized
representatives, will have the right to audit, examine and copy, during regular
business hours, at the home office of the other party, any and all books,
records, statements, correspondence, reports, and other documents that relate to
the Reinsured Policies or this Agreement, subject to the confidentiality
provisions contained in this Agreement. In the event the requesting party
exercises its inspection rights, the other party must provide a reasonable work
space for such audit, examination or copying, cooperate fully and faithfully,
and produce any and all materials reasonably requested to be produced, subject
to confidentiality provisions contained in this Agreement. The administrative
expenses, including expenses relating to copying, phone, fax and providing work
space to the requesting party shall be borne by the requesting party; provided
that if any material breach of this Agreement by the other party has occurred,
the expenses relating to all such inspections shall be borne by the
non-breaching party.

 

The requesting party’s right of access as specified above will survive until all
of the requesting party’s obligations under this Agreement have terminated or
been fully discharged.

 

14.10     Confidentiality

 

The parties agree to keep confidential and not disclose or make competitive use
of any shared Proprietary Information, unless: (a) the information becomes
publicly available or is obtained other than through unauthorized disclosure by
the party seeking to disclose or use such information; (b) the information is
independently developed by the recipient; (c) the disclosure is required by law,
provided that, if applicable, the party required to make such disclosure will
allow the other party to seek an appropriate protective order.

 

In addition, Reinsurer agrees to protect the confidentiality and security of
Non-Public Personal Information by: (a) holding all Non-Public Personal
Information in strict confidence; (b) maintaining appropriate measures that are
designed to protect the security, integrity and confidentiality of Non-Public
Personal Information; and (c) disclosing and using Non-Public Personal
Information received under this Agreement for purposes of carrying out
Reinsurer’s obligations under this Agreement, for purposes of retrocession, or
as may be required or permitted by law.

 

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14.11     Indemnification

 

Reinsurer shall indemnify Ceding Company against the Reinsured Liabilities
strictly in accordance with the terms and conditions set forth in this
Agreement.

 

14.12     Reinsurance Brokers

 

The parties acknowledge that no broker or finder has acted directly or
indirectly for Ceding Company or Reinsurer, nor has Ceding Company or Reinsurer
incurred any obligation to pay any brokerage or finder’s fee or other
commission, in connection with this Agreement and the transactions contemplated
hereby.

 

14.13     Successors

 

This Agreement will be binding upon the parties hereto and their respective
successors and assigns including any Authorized Representative of either party.
Neither party may effect any novation of this Agreement without the other
party’s prior written consent.

 

14.14     Entire Agreement

 

This Agreement and the Schedules and Exhibits hereto constitute the entire
agreement between the parties with respect to the Reinsured Policies hereunder
and supersede any and all prior representations, warranties, prior agreements or
understandings between the parties pertaining to the subject matter of this
Agreement. There are no understandings between the parties other than as
expressed in this Agreement and the Schedules and Exhibits hereto. In the event
of any express conflict between this Agreement and the Schedules and Exhibits
hereto, the Schedules and Exhibits hereto will control.

 

14.15     Severability

 

Determination that any provision of this Agreement is invalid or unenforceable
will not affect or impair the validity or the enforceability of the remaining
provisions of this Agreement.

 

14.16     Construction

 

This Agreement will be construed and administered without regard to authorship
and without any presumption or rule of construction in favor of either party.
This Agreement is between sophisticated parties, each of which has reviewed this
Agreement and is fully knowledgeable about its terms and conditions.

 

14.17     Non-Waiver

 

Neither the failure nor any delay on the part of Ceding Company or Reinsurer to
exercise any right, remedy, power, or privilege under this Agreement shall
operate as a waiver thereof. No single or partial exercise of any right, remedy,
power or privilege shall preclude the further exercise of that right, remedy,
power or privilege or the exercise of any other right, remedy, power or
privilege. No waiver of any right, remedy, power or privilege with respect to
any occurrence shall be construed as a waiver of that right, remedy, power or
privilege with respect to any other occurrence. No prior transaction or dealing
between the parties will establish any custom, sage or precedent waiving or
modifying any provision of this Agreement. No waiver shall be effective unless
it is in writing and signed by the party granting the waiver.

 

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14.18     Further Assurances

 

From time to time, as and when requested by a party hereto, the other party
hereto shall execute and deliver all such documents and instruments and shall
take all actions as may be reasonably necessary to consummate the transactions
contemplated by this Agreement.

 

14.19     Governing Law

 

Subject to Article 11.2, this Agreement will be governed by and construed in
accordance with the laws of the State of Nebraska without giving effect to any
principles of conflicts of law thereof that are not mandatorily applicable by
law and would permit or require the application of the laws of another
jurisdiction.

 

14.20     Counterparts

 

This Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. When this Agreement has
been fully executed by Ceding Company and Reinsurer, it will become effective as
of the Effective Date.

 

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The parties hereto have caused this Agreement to be executed effective as of the
Effective Date.

 

American Life & Security Corporation      US Alliance Life and Security
Company                        By: /s/ Mark A. Oliver   By: /s/ Jack H. Brier  
(signature)   (signature)             Mark A. Oliver     Jack H. Brier    
(print or type name)     (print or type name)           Title: CEO   Title:
President                   Date: 9-28-17   Date: 9.29.17                  
Location: Lincoln, NE   Location: Topeka, Kansas                   Attest: /s/
Todd C Boeve   Attest: /s/ Jeff Brown   (signature)   (signature)          
Title: VP & COO   Title: EVP & COO  

 

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Schedule A – Policies Reinsured

[scheda1.jpg]

 

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[scheda2.jpg]

 

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[scheda3.jpg]

 

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[scheda4.jpg]

 

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[scheda5.jpg]

 

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Exhibit A – Monthly Accounting Report

 

 

 

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