**APPENDIX A****MASTER AGREEMENT****By and Among****PRUDENTIAL SELECT LIFE INSURANCE COMPANY OF AMERICA*,****WILTON REINSURANCE BERMUDA LIMITED,****ANNUITY AND LIFE REASSURANCE AMERICA, INC.,****and****ANNUITY AND LIFE REASSURANCE, LTD.****August 10, 2005**      * To be renamed Wilton Reassurance Company. Not affiliatedwith The Prudential Insurance Company of America.
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**MASTER AGREEMENT**     **THIS MASTER AGREEMENT**(“Agreement”), dated asof August 10, 2005, is entered into by and among**PRUDENTIAL SELECT LIFE INSURANCE COMPANY OF AMERICA**, aMinnesota insurance company (to be renamed Wilton ReassuranceCompany) (“Wilton America”), **WILTON REINSURANCEBERMUDA LIMITED**, a Bermuda insurance company (“WiltonBermuda” and, together with Wilton America, the“Retrocessionaires”), **ANNUITY AND LIFE REASSURANCEAMERICA, INC.**, a Connecticut insurance company (“ALRAmerica”), and **ANNUITY AND LIFE REASSURANCE, LTD.**, aBermuda insurance company (“ALR Bermuda,” and, withALR America, each a “Company” and together the“Companies”).     **WHEREAS,** the Companies are the reinsurers orretrocessionaires under the Treaties (as definedherein); and     **WHEREAS,** the Companies desire to transfer, assign, cedeand retrocede, as the case may be, their contractual rights,interests, liabilities, obligations and risks under the Treatiesand the Ancillary Agreements (as defined herein) to theRetrocessionaires, and the Retrocessionaires desire to purchase,acquire, assume and reinsure such contractual rights, interests,liabilities, obligations and risks pursuant to the terms of theCoinsurance Agreements (as defined herein) and to seek novationsof the Treaties to the Retrocessionaires on the terms statedherein; and     **WHEREAS,** the Retrocessionaires wish for the Companies toprovide certain administrative and support services with respectto the Treaties for a period of time and, thereafter, theRetrocessionaires shall undertake and assume full responsibilityfor such administrative and support services pursuant to theprovisions of the Coinsurance Agreements; and     **WHEREAS,**in connection with any approvals that theCompanies or their affiliates must obtain from their respectivesecurity holders in connection with the transactionscontemplated by this Agreement, the Retrocessionaires andcertain significant shareholders of ALR Holdings (as definedherein) have entered into certain voting agreements dated thedate hereof (the “Voting Agreements”), which providethat such shareholders will vote in favor of the transactionscontemplated hereby.     **NOW, THEREFORE,** in consideration of the mutual promisesand covenants set forth herein, and in reliance upon therepresentations, warranties, conditions and covenants hereincontained, and intending to be legally bound hereby, theCompanies and the Retrocessionaires do hereby agree as follows:ARTICLE IDefinitions     Capitalized terms used in this Agreement, but not defined inthis Article  I, shall have the meaning given them inthe other articles of this Agreement. The following capitalizedwords and terms shall have the following meanings when used inthis Agreement:     1.1     *ALR Holdings.* Annuityand Life Re (Holdings), Ltd., a Bermuda holding company.     1.2     *Ancillary AgreementAssignment.* With respect to any Ancillary Agreement that isassigned or novated to a Retrocessionaire, the assignment ornovation agreement to be entered into between the relevantCompany, the relevant Retrocessionaire, and the counter-party orcounter-parties to such Ancillary Agreement in accordance withSection 5.9 of this Agreement (which assignment or novationagreement shall be substantially in one of the forms attached as**Exhibit A**hereto).     1.3     *Ancillary Agreements.*Each contract or agreement identified on **Schedule 1.3**hereof between one or more of the Companies (or affiliatesthereof) and the counterparties as to any Treaty relating to theadministration or management of one or more of the Treaties.     1.4     *Assumed Liability.* Anyliability expressly assumed or reinsured by eitherRetrocessionaire pursuant to this Agreement, a NovationAmendment, an Ancillary Agreement Assignment or an ExistingRetrocession Agreement Assignment.
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     1.5     *Books and Records.* Allfiles and records, in whatever form, in the possession of eitherCompany or ALR Holdings related to the Treaties, the AncillaryAgreements, the Existing Retrocession Agreements or theadministration of any of the foregoing, including, but notlimited to Treaty files, correspondence files, claims files andunderwriting files, reinsurance and policy records,administrative records, compliance records, files and recordsrelating to regulatory matters related to the Treaties or any ofthe policies or contracts covered thereby or the administrationof any of the foregoing, and actuarial, operational andfinancial data and information developed or utilized by therelevant Company or on its behalf with respect to the Treaties;provided, however, that if any such records contain informationwhich does not relate to the Treaties, such information shallnot constitute “Books and Records” and may be redactedfrom the “Books and Records” as the relevant Companyreasonably deems appropriate. Books and Records shall exclude(a) any original books and records relating to any CompanyExtracontractual Liabilities or required to be retained by anyapplicable laws, and (b) any records that are subject toattorney-client privilege.     1.6     *Business Day.* Any dayother than a Saturday, Sunday or other day on which commercialbanks in New York or Bermuda are required or authorized by lawto be closed.     1.7     *Cedent.* The cedent underany Treaty.     1.8     *Closing.* The closing ofthe transactions contemplated by Article II of thisAgreement, which shall take place at the offices of ALR Holdingsin Hamilton, Bermuda, unless otherwise agreed by the parties.     1.9     *Closing Date.* TheClosing shall take place at 10:00 a.m., Atlantic Standardtime, on (a) the first Business Day of the first calendarmonth beginning at least five (5) Business Days after thedate on which the last of the conditions set forth inArticle VI is satisfied or waived by the party or partiesentitled to waive the same or (b) such other date uponwhich the parties may mutually agree.     1.10     *Coinsurance Agreements.*The coinsurance agreements to be entered into between(i) Wilton America and ALR America and (ii) WiltonBermuda and ALR Bermuda, in each case pursuant to the provisionsof Section 2.1 of this Agreement. Each such coinsuranceagreement shall be in substantially the form attached as**Exhibit B**hereto.     1.11     *Coinsurance EffectiveDate.* 11:59 p.m. Eastern time on June 30, 2005.     1.12     *Company ExtracontractualLiabilities.* All liabilities for consequential, exemplary,punitive or similar extracontractual damages or statutorypenalties, whether owing to Cedents, governmental authorities orany other person relating to the Treaties, which liabilitiesarise from any action, act of bad faith, error or omission byeither Company, any of their affiliates, or any Representativeof either Company or any of their affiliates, in each caseexcluding any action taken or failure to take any action at thewritten direction or with the express consent of eitherRetrocessionaire; provided, however, that CompanyExtracontractual Liabilities shall exclude, with respect to agiven Treaty, those liabilities arising pursuant to the expressterms of such Treaty.     1.13     *Company Statements.* Thefinancial statements of each of the Companies as of and for theyear ended December 31, 2004, and, as to ALR America, thequarter ended March 31, 2005.     1.14     *ConfidentialityAgreement.* The Confidentiality Agreement by and betweenAnnuity and Life Re (Holdings), Ltd. and Wilton Re Services,Inc., dated April 6, 2005.     1.15     *EnforceabilityExceptions.* The exceptions identified as such inSection 3.1.     1.16     *Excluded Liability.* Anyliability that (i) represents a Company ExtracontractualLiability or (ii) is not expressly assumed by eitherRetrocessionaire pursuant to this Agreement, a CoinsuranceAgreement, a Novation Amendment or an Existing RetrocessionAgreement Assignment.     1.17     *Existing RetrocessionAgreement.* Any contract, agreement or treaty between eitherCompany and any retrocessionaire thereof that (a) is inforce as of the Coinsurance Effective Date and (b) coversany risks associated with any Treaty, each as specificallyidentified on **Schedule 1.17**, including, as respectsALR America, retrocession agreements with ALR Bermuda.
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     1.18     *Existing RetrocessionAgreement Assignment.* With respect to any ExistingRetrocession Agreement that is assigned or novated to aRetrocessionaire in connection with any Treaty, the assignmentor novation agreement to be entered into between the relevantCompany, the relevant Retrocessionaire and the relevantThird-Party Retrocessionaire in accordance with Section 5.9of this Agreement (which assignment or novation agreement shallbe substantially in one of the forms attached as**Exhibit C**hereto) pursuant to which such Companyshall assign or novate to the relevant Retrocessionaire, andsuch Retrocessionaire shall assume, all of such Company’srights and obligations with respect to such ExistingRetrocession Agreement as the same relate to the Treaty.     1.19     *GAAP.* United Statesgenerally accepted accounting principles.     1.20     *Expense ReimbursementAmount.* The aggregate amount of expense reimbursements paidby ALR Holdings or its affiliates to affiliates of theRetrocessionaires through the Closing Date in connection withthe transactions contemplated hereby, as contemplated by anelectronic mail message from Chris C. Stroup to John F. Burkedated June 20, 2005.     1.21     *Knowledge of theCompanies.* The actual knowledge after due investigation ofthe individuals identified in **Schedule 1.21.**     1.22     *Knowledge of theRetrocessionaires.* The actual knowledge after dueinvestigation of the individuals identified in**Schedule 1.22.**     1.23     *Material AdverseEffect.* A material adverse effect on the business, condition(financial or otherwise), or results of operations with respectto either (x) the block of business represented by theBermuda Treaties or (y) the block of business representedby the U.S. Treaties; provided, however, that adverseeffects caused primarily by any one or more of the followingshall be excluded from the definition of “Material AdverseEffect” and from any determination as to whether a MaterialAdverse Effect has occurred: (i) any adverse changes ingeneral economic or market conditions, including, withoutlimitation, changes in interest rates or currency valuations;(ii) any adverse change in the life insurance industry orfinancial services industry generally; and (iii) any changein law, rule or regulation, including, without limitation,changes in tax law, accounting rules or reserving requirements.     1.24     *Novated Treaty.* EachTreaty that has been assumed by one of the Retrocessionairespursuant to the terms of a Novation Amendment or, prior toClosing, as to which each of the relevant Cedent and therelevant Company has executed a Novation Amendment that willbecome effective upon execution by the relevant Retrocessionaireand the consummation of the Closing.     1.25     *Novation Amendment.* Anamendment of a Treaty in substantially the form attached as**Exhibit D**hereto under which Wilton Bermuda orWilton America, as the case may be, will be contractuallysubstituted for ALR Bermuda and ALR America, respectively, asrespects such Treaty.     1.26     *Representatives.* Withrespect to any party hereto, its officers, directors, employees,agents and other representatives (including legal counsel,investment bankers, consultants, independent public accountants,and actuaries).     1.27     *Required Closing DateApprovals.* The approvals set forth on **Schedules 3.2**and **4.2.**     1.28     *RetrocessionaireExtracontractual Liability.* All liabilities forconsequential, exemplary, punitive or similar extracontractualdamages or statutory penalties, whether owing to Cedents,governmental authorities or any other person relating to theTreaties, which liabilities arise from any action, act of badfaith, error or omission by either Retrocessionaire, any oftheir affiliates, or any Representative of eitherRetrocessionaire or any of their affiliates, in each caseexcluding any action taken or failure to take any action at thewritten direction or with the express consent of either Company.     1.29     *SAP.* As to eitherCompany, the statutory accounting practices prescribed by theinsurance regulatory authorities of the jurisdiction in whichsuch Company is domiciled.     1.30     *Settlement Amount.*$91,600,000.00 less (i) the book value of the aggregatefunds withheld balances maintained as of the CoinsuranceEffective Date by Cedents in connection with the Treaties or
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Ancillary Agreements set forth on **Schedule 1.30(i) **hereto, less (ii) the Transferred InvestmentAsset Amount, less (iii) the Expense Reimbursement Amount,plus (iv) interest on such net amount determined at theSettlement Rate for the period from but excluding June 30,2005, to and including the Closing Date, plus (v) theTransferred Investment Asset Interest Amount.     1.31     *Settlement Rate.* Fivepercent (5%) per annum, compounded quarterly.     1.32     *Third-PartyRetrocessionaire.* Any retrocessionaire under an ExistingRetrocession Agreement.     1.33     *Transferred InvestmentAsset Amount.* The sum of the market values of the investmentassets identified on **Schedule 1.33**(the“Transferred Investment Assets”) as of the date uponwhich the asset was purchased by the relevant Company (with themarket value being deemed for purposes of this Agreement to bethe purchase price paid therefor, including but not limited to“due and accrued interest”). Schedule 1.33 shallbe subject to modification, change and addition at any timeprior to the Closing Date to reflect assets purchased prior tothe Closing Date in joint agreement by the relevantRetrocessionaire and the relevant Company. At Closing,Schedule 1.33 shall list the date of purchase and purchaseprice (including the due and accrued interest component thereof)of each asset purchased, along with the Transferred InvestmentAsset Interest Amount with respect to each such asset.     1.34     *Transferred InvestmentAsset Interest Amount.* As to Transferred Investment Assetspurchased after June 30, 2005, an amount determined by(i) applying interest at an annualized rate of threepercent (3%) to the purchase price of each such asset as shownon Schedule 1.33 from but excluding June 30, 2005, toand including the date on which such asset was purchased and(ii) aggregating such interest for all TransferredInvestment Assets purchased after June 30, 2005.     1.35     *Transition Date.* Thedate that is the later of (i) the first day of the firstcalendar month beginning at least twenty-eight (28) daysfollowing the Closing Date or (ii) November 1, 2005.     1.36     *Treasury Rate.* Theannual yield rate, on the Closing Date, of actively tradedU.S. Treasury securities having a remaining time tomaturity of six (6) months, as such rate is published under“Treasury Constant Maturities” in Federal ReserveStatistical Release H.15(519).     1.37     *Treaties.* Thereinsurance treaties identified on **Schedule 1.37**hereto. For purposes of this Agreement, the term “BermudaTreaties” shall mean those Treaties as to which ALR Bermudais party as an assuming reinsurer and the term“U.S. Treaties” means those Treaties as to whichALR America is party as an assuming reinsurer.     1.38     *Treaty-Specific HistoricalFinancial Information.* Collectively, the materials providedby the Companies to the Retrocessionaires and attached hereto as**Schedule 1.38.**     1.39     *Treaty-Specific ProjectedFinancial Information.* The materials provided by theCompanies to the Retrocessionaires and attached hereto as**Schedule 1.39**summarizing projected financialinformation concerning the Treaties.ARTICLE IIClosing     2.1     *Coinsurance and Novation ofTreaties on the Closing Date.* Subject to the terms andconditions of this Agreement, on the Closing Date, each of theCompanies and the Retrocessionaires shall enter into the(i) Novation Amendments as to each of the Treaties as towhich counterparties shall have prior to such date executed anddelivered Novation Amendments in form and substance reasonablyacceptable to the relevant Company and Retrocessionaire, and(ii) Coinsurance Agreements pursuant to which theRetrocessionaires shall reinsure the Companies’ retainedrisk (i.e., net of risk retroceded under Existing RetrocessionAgreements) under the Treaties (other than Novated Treaties) ona coinsurance basis, and the Companies shall pay to theRetrocessionaires the Settlement Amount in accordance withSection 2.3 hereof. The reinsurance under the CoinsuranceAgreements shall be effective as of the Coinsurance EffectiveDate. The Settlement Amount shall be allocated according to thepercentages set forth on **Schedule 2.1.**
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     2.2     *Transfer of Books andRecords.* On the Transition Date, for no additionalconsideration, the Companies shall transfer (i) originalversions of all Books and Records relating to each NovatedTreaty and to each Existing Retrocession Agreement and AncillaryAgreement that has been assigned or novated to aRetrocessionaire, subject to the Companies’ right to retaincopies of any such Books and Records, and (ii) copies ofall Books and Records relating to Treaties coinsured under theCoinsurance Agreements and to any Existing RetrocessionAgreements and Ancillary Agreements that have not been assignedor novated to a Retrocessionaire.     2.3     *Closing Deliveries.*(a) On the Closing Date, the Companies shall deliver to theRetrocessionaires the following:          (i) the Coinsurance Agreements, each executed by the    appropriate Company;           (ii) any Novation Amendments agreed to by the applicable    Cedent prior to the Closing in accordance with Section 5.9    of this Agreement, each executed by the appropriate Company and    the applicable Cedent;           (iii) any Ancillary Agreement Assignment that may be agreed    to by the parties thereto in accordance with Section 5.9 of    this Agreement, each in form and substance reasonably acceptable    to the Retrocessionaires and executed by the appropriate Company;           (iv) any Existing Retrocession Agreement Assignment that    may be agreed to by the applicable Third-Party Retrocessionaire    in accordance with Section 5.9 of this Agreement, each    executed by the appropriate Company;           (v) evidence in form reasonably satisfactory to the    Retrocessionaires that the Required Closing Date Approvals, if    any, required to be obtained by the Companies have been obtained;           (vi) two certificates, one for each Company, executed by an    officer of such Company and certifying that the closing    conditions set forth in Section 6.1.2 of this Agreement    have been satisfied;           (vii) the Transferred Investment Assets, together with such    transfer documentation as may be reasonably acceptable to the    Retrocessionaires; and           (viii) the Settlement Amount.     (b) On the Closing Date, the Retrocessionaires shalldeliver to the Companies the following:          (i) the Coinsurance Agreements, each executed by the    appropriate Retrocessionaire;           (ii) any Novation Amendment agreed to by the applicable    Cedent prior to the Closing in accordance with Section 5.9    of this Agreement, each executed by the appropriate    Retrocessionaire;           (iii) any Ancillary Agreement Assignment that may be agreed    to by the parties thereto in accordance with Section 5.9 of    this Agreement, each in form and substance reasonably acceptable    to the Companies and executed by the appropriate    Retrocessionaire;           (iv) any Existing Retrocession Agreement Assignment that    may be agreed to by the applicable Third-Party Retrocessionaire,    each executed by the appropriate Retrocessionaire;           (v) evidence in form reasonable satisfactory to the    Companies that the Required Closing Date Approvals, if any,    required to be obtained by the Retrocessionaires have been    obtained; and           (vi) two certificates, one for each Retrocessionaire,    executed by an officer of such Retrocessionaire and certifying    that the closing conditions set forth in Section 6.2.2 have    been satisfied.     2.4     *Cash Transfers.* All cashrequired to be transferred on the Closing Date will betransferred by wire transfer of immediately available funds inU.S. Dollars in the amounts and to the bank accountsdesignated in writing by the Retrocessionaires at least three(3) Business Days prior to the Closing Date.
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ARTICLE IIICompany Representations and Warranties     The Companies hereby represent and warrant, severally and notjointly, to the Retrocessionaires as follows (it beingunderstood that each Company hereby makes only thoserepresentations and warranties that specifically relate to it orto the Treaties to which it is a party):     3.1     *Corporate Existence andAuthority.* Each Company is a stock life insurance companyorganized, existing and in good standing under the laws of itsjurisdiction of domicile. Each Company has full corporate powerand authority to execute and to deliver this Agreement and theCoinsurance Agreement, the Novation Amendments, the AncillaryAgreement Assignments and the Existing Retrocession AgreementAssignments to which it is a party, and the execution, deliveryand, subject to obtaining the Required Closing Date Approvals,performance of those agreements by such Company have been dulyauthorized by all necessary corporate action on the part of suchCompany. This Agreement has been, and the Coinsurance Agreement,the Novation Amendments, the Ancillary Agreement Assignments andthe Existing Retrocession Agreement Assignments to which suchCompany is a party will at Closing be, duly and validly executedand delivered to the Retrocessionaires by such Company andconstitute, or will at Closing constitute, the valid and legallybinding obligations of such Company, enforceable in accordancewith their terms except (i) as the same may be limited byapplicable bankruptcy, insolvency, rehabilitation, moratorium orsimilar laws of general application relating to or affectingcreditors’ rights, including, without limitation, theeffect of statutory or other laws regarding fraudulentconveyances and preferential transfers, and (ii) for thelimitations imposed by general principles of equity (theexceptions identified in the foregoing clauses (i) and(ii) being referred to as the **“EnforceabilityExceptions”**). The execution, delivery and performanceby such Company of this Agreement and the Coinsurance Agreement,the Novation Amendments, the Ancillary Agreement Assignments andthe Existing Retrocession Agreement Assignments to which suchCompany is a party do not and will not:          3.1.1     Conflict with or result in    any breach or violation of or any default under (or give rise to    any right of termination, cancellation or acceleration under)    the bylaws, certificate of incorporation or similar    organizational documents of such Company or any note, bond,    mortgage, indenture, lease, license, permit, agreement or other    instrument or obligation to which such Company is a party or by    which such Company is or may be bound.           3.1.2     Subject to obtaining any    Required Closing Date Approvals, violate any law, order, rule or    regulation applicable to such Company.     3.2     *Required Consents andApprovals.* Except for the consents of Cedents for thenovation of Treaties and as set forth on**Schedule 3.2**, no consent, approval or authorizationof, or declaration, filing or registration with, anygovernmental authority or any other person is required to bemade or obtained by either Company in connection with theexecution, delivery and performance of this Agreement or theCoinsurance Agreements or the consummation of the transactionscontemplated hereby and thereby.     3.3     *Financial Statements.*(a) The Company Statements of each Company (i) presentfairly, in all material respects, the financial condition andresults of operations of such Company as of and for the periodstherein specified, and (ii) were prepared in accordancewith SAP consistently applied, each except as expressly setforth within the Company Statements, including the notesthereto; provided, that the unaudited quarterly statutorystatements of ALR America for the calendar quarter endedMarch 31, 2005 are subject to normal recurring year-endadjustments.     (b) The Treaty-Specific Historical Financial Information:(i) was prepared from information consistent in allmaterial respects with the Books and Records of the relevantCompany, and (ii) except as set forth on**Schedule 3.3(b)** hereto, to the extent suchTreaty-Specific Historical Financial Information consists ofhistorical quarterly balance sheet and income statementinformation, was prepared on a basis consistent with GAAP orSAP, as appropriate, and presents fairly, in all materialrespects, the financial status of and results with respect toeach of the Treaties as of and for the periods therein specified.
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     (c) The Treaty specific reserve balances reflected in theTreaty-Specific Historical Financial Information (i) weredetermined in accordance with generally accepted actuarialprinciples, consistently applied, (ii) were based onactuarial assumptions that were reasonable in relation torelevant policy and contract provisions, (iii) areconsistent with balances relating to the Treaties included inthe Company Statements (after consideration of differencesbetween SAP and GAAP reserve requirements), and (iv) weredetermined on a basis consistent with GAAP or SAP, asappropriate; it being understood by the Retrocessionaires thatin making the representation and warranty in thisSection 3.3(c) that the Companies are not representing orwarranting that the reserves referred to therein have been orwill be sufficient or adequate for the purposes for which theywere established.     (d) To the Knowledge of the Companies, there is no reasonto believe that the Treaty-Specific Projected FinancialInformation does not represent a reasonable projection in allmaterial respects of the expected financial results with respectto the Treaties, considered in the aggregate; however, neitherCompany represents or warrants that the Treaties, eitherindividually or in the aggregate, will achieve any resultsprojected in the Treaty-Specific Projected Financial Information.     3.4     *Treaties.* (a) TheCompanies have made available to the Retrocessionaires true andcomplete copies of the Treaties, the Ancillary Agreements andall amendments thereto.     (b) Except as set forth on **Schedule 3.4(b)**hereto, (i) no Cedent has given notice of termination(provisional or otherwise) to either of the Companies in respectof any Treaty or Ancillary Agreement; (ii) no Cedent has apresent right to recapture any of the risks ceded under any suchTreaty; (iii) neither Company nor, to the Knowledge of theCompanies, the Cedent is in default in any material respectunder any Treaty or Ancillary Agreement; (iv) each Treatyand Ancillary Agreement is in full force and effect and is validand enforceable in accordance with its terms subject to theEnforceability Exceptions; and (v) no Treaty or AncillaryAgreement contains any provision under which any Cedent mayterminate such Treaty or Ancillary Agreement or take any otheraction by reason of the transactions contemplated by thisAgreement.     (c) Except as set forth on **Schedule 3.4(c)**hereto, each Treaty involves coverage only of contracts forindividual life insurance or annuities and does not involve anyreinsurance of guaranteed minimum death benefits, guaranteedminimum income benefits, guaranteed minimum accumulationbenefits, secondary guarantees, long term care, health,disability or group insurance.     (d) All obligations of either Company to make payments withrespect to or under the Treaties and the Existing RetrocessionAgreements (including, without limitation, payments to anybroker, agent, reinsurance intermediary or other producer withrespect to any Treaty or Existing Retrocession Agreement) thatwere due under the terms of the Treaties and ExistingRetrocession Agreements as of the Coinsurance Effective Datehave been paid in full. Except as set forth on**Schedule 3.4(d)**hereto, no broker, agent,reinsurance intermediary or other producer with respect to anyTreaty or Existing Retrocession Agreement is entitled to receiveany payments based upon collected renewal premiums.     3.5     *Existing RetrocessionAgreements; Ancillary Agreements.* (a) The Companieshave made available to the Retrocessionaires true and completecopies of the Existing Retrocession Agreements and AncillaryAgreements and all amendments thereto.     (b) Other than the Existing Retrocession Agreements, thereis no agreement under which any risk assumed under the Treatiesis retroceded or is eligible to be automatically retroceded byeither of the Companies. Other than the Ancillary Agreements,there is no agreement to which either Company is a party that isdirectly related to any Treaty.     No retrocessionaire has given notice of termination (provisionalor otherwise) in respect of any Existing Retrocession Agreement.Neither Company nor, to the Knowledge of the Companies, theretrocessionaire under any Existing Retrocession Agreement is indefault in any material respect under any Existing RetrocessionAgreement. Each Existing Retrocession Agreement is in full forceand effect and is valid and enforceable in accordance with itsterms, subject to the Enforceability Exceptions. Except as setforth on **Schedule 3.5(b)** hereto, no ExistingRetrocession Agreement contains any provision (i) underwhich the retrocessionaire may terminate such agreement byreason of, or (ii) that would be violated by, or that
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constitutes a condition that would not be satisfied as a resultof, the transactions contemplated by this Agreement (includingwithout limitation, the execution and delivery of theCoinsurance Agreements or the performance of obligationsthereunder).     3.6     *Accuracy of Books andRecords.* All of the Books and Records are current, completeand accurate in all material respects.     3.7     *Compliance with Law.* Asrespects the marketing, issuance and administration of theTreaties, the Ancillary Agreements and the Existing RetrocessionAgreements, each Company has conducted its business in materialcompliance with all applicable laws (including, withoutlimitation, insurance laws and federal and state laws),statutes, ordinances, rules, governmental regulations, writs,injunctions, judgments, decrees or orders of any governmentalinstrumentality or court.     3.8     *Litigation or RegulatoryActions.* Except as disclosed on **Schedule 3.8**hereto, there are no actions, suits, investigations orregulatory proceedings pending or (to the Knowledge of theCompanies) threatened against either Company at law or inequity, in, before, or by any person or entity (a) thatinvolve any of the Treaties or any producer or eitherCompany’s marketing or sales activities, (b) that mayresult in the revocation, cancellation, suspension or nonrenewalof any permit held or required to be held by either Company inconnection with the Treaties, the Ancillary Agreements and theExisting Retrocession Agreements, or (c) that individuallyor in the aggregate have or may reasonably be expected to have aMaterial Adverse Effect or a material adverse effect on thevalidity or enforceability of this Agreement, the CoinsuranceAgreements, the Novation Amendments, the Ancillary AgreementAssignments, the Existing Retrocession Agreement Assignments orthe transactions contemplated hereby and thereby.     3.9     *Company Brokers.* Exceptfor the persons or entities identified on **Schedule 3.9**hereto (and for whose compensation the Companies shall besolely responsible), no broker or finder has acted directly orindirectly for the Companies, nor has either Company incurredany obligation to pay any brokerage or finder’s fee orother commission in connection with this Agreement and thetransactions contemplated hereby, and all actions by or onbehalf of Companies have been carried out by the Companiesdirectly with the Retrocessionaires, without the intervention ofany person acting on behalf of the Companies in such a manner asto give rise to any valid claim by any other person against theRetrocessionaires for payment of a finder’s fee, brokeragecommission or similar payment.     3.10     *Investment Company.*Neither Company is an investment company subject to registrationand regulation under the Investment Company Act of 1940, asamended.     3.11     *Absence of Certain Changesand Events.* (a) Except (i) as disclosed in**Schedule 3.11**, or (ii) as expresslycontemplated by this Agreement, since December 31, 2004 thebusiness consisting of the Treaties and the administrationthereof and the accounting therefore and other businessactivities related thereto have been conducted in the ordinarycourse of business consistent with past practices (including,without limitation, with regard to underwriting, pricing,actuarial and investment policies generally) and there has beenno material change in the financial, underwriting, pricing,claims, risk retention, retrocession, investment or accountingpolicies of the Companies related to such business or anychange, event or circumstance that, individually or in theaggregate with all other changes, events or circumstances, hashad or would reasonably be expected to have a Material AdverseEffect.     (b) Without limiting the generality ofSection 3.11(a), since December 31, 2004, there hasbeen no change to the claims payment or cash settlementpractices of either Company relating in any way to theadministration of the Treaties or the Existing RetrocessionAgreements.
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ARTICLE IVRetrocessionaire Representations and Warranties     The Retrocessionaires hereby represent and warrant, severallyand not jointly, to the Companies as follows (it beingunderstood that each Retrocessionaire hereby makes only thoserepresentations and warranties that specifically relate to it):     4.1     *Corporate Existence andAuthority.* Each Retrocessionaire is a stock life insurancecompany organized, existing and in good standing under the lawsof its jurisdiction of domicile. Each Retrocessionaire has fullcorporate power and authority to execute and to deliver thisAgreement and the Coinsurance Agreement, the NovationAmendments, the Ancillary Agreement Assignments and ExistingRetrocession Agreement Assignments to which it is a party, andthe execution, delivery and, subject to obtaining the RequiredClosing Date Approvals, performance of those agreements by suchRetrocessionaire have been duly authorized by all necessarycorporate action on the part of such Retrocessionaire. ThisAgreement has been, and the Coinsurance Agreement, the NovationAmendments, the Ancillary Agreement Assignments and ExistingRetrocession Agreement Assignments to which suchRetrocessionaire is a party will at Closing be, duly and validlyexecuted and delivered to such Companies by theRetrocessionaires and constitute, or will at Closing constitute,the valid and legally binding obligations of suchRetrocessionaire, enforceable in accordance with their termsexcept (i) as the same may be limited by the EnforceabilityExceptions. The execution, delivery and performance by suchRetrocessionaire of this Agreement and the CoinsuranceAgreement, the Novation Amendments, the Ancillary AgreementAssignments and Existing Retrocession Agreement Assignments towhich such Retrocessionaire is a party do not and will not:          4.1.1     Conflict with or result in    any breach or violation of or any default under (or give rise to    any right of termination, cancellation or acceleration under)    the bylaws, certificate of incorporation or similar    organizational documents of such Retrocessionaire or any note,    bond, mortgage, indenture, lease, license, permit, agreement or    other instrument or obligation to which such Retrocessionaire is    a party or by which such Retrocessionaire is or may be bound.           4.1.2     Subject to obtaining any    Required Closing Date Approvals, violate any law, order, rule,    or regulation applicable to such Retrocessionaire.     4.2     *Required Consents andApprovals.* Except for the consents of Cedents for thenovation of Treaties and as set forth on**Schedule 4.2**, no consent, approval or authorizationof, or declaration, filing or registration with, anygovernmental authority or any other person is required to bemade or obtained by either Retrocessionaire in connection withthe execution, delivery and performance of this Agreement or theCoinsurance Agreements or the consummation of the transactionscontemplated hereby and thereby.     4.3     *Permits.***Schedule 4.3** contains a true and complete list ofall material permits issued to the Retrocessionaires as of thedate of this Agreement. Except as set forth on**Schedule 4.3**, (i) each Retrocessionaire has allmaterial permits required by applicable law for the operation ofits business (including without limitation the business to bereinsured as contemplated by this Agreement) and is in materialcompliance with the terms of such permits, (ii) all suchpermits are in full force and effect, (iii) there is noproceeding pending or threatened to revoke or suspend any suchpermit, and (iv) the Retrocessionaires have not receivedany written notice from any governmental authority of thefailure to have any required permit. Except as set forth in**Schedule 4.3**, as of the date of this Agreement thereis no suit, proceeding or investigation potentially involvingthe revocation, cancellation, suspension or nonrenewal of anysuch permit which is pending or, to the Knowledge of theRetrocessionaires, threatened in writing.     4.4     *Litigation AgainstRetrocessionaires.* There are no actions, suits,investigations or regulatory proceedings pending or (to theKnowledge of the Retrocessionaires) threatened against eitherRetrocessionaire at law or in equity, in, before, or by anyperson, that individually or in the aggregate have or mayreasonably be expected to have a material adverse effect on thevalidity or enforceability of this Agreement, the CoinsuranceAgreements, the Novation Amendments, the Ancillary AgreementAssignments, the Existing Retrocession Agreement Assignments orthe transactions contemplated hereby and thereby.
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     4.5     *Compliance with Law.* TheRetrocessionaires have conducted their business in materialcompliance with all applicable laws (including, withoutlimitation, insurance laws and federal and state laws),statutes, ordinances, rules, governmental regulations, writs,injunctions, judgments, decrees or orders of any governmentalinstrumentality or court.     4.6     *RetrocessionaireBrokers.* Except for the persons or entities identified on**Schedule 4.6**hereto (and for whose compensation theRetrocessionaires shall be solely responsible), no broker orfinder has acted directly or indirectly for theRetrocessionaires, nor has either Retrocessionaire incurred anyobligation to pay any brokerage or finder’s fee or othercommission in connection with this Agreement and thetransactions contemplated hereby, and all actions by or onbehalf of the Retrocessionaires have been carried out by theRetrocessionaires, without the intervention of any person actingon behalf of the Retrocessionaires in such a manner as to giverise to any valid claim by any other person against theCompanies for payment of a finder’s fee, brokeragecommission or similar payment.     4.7     *Investment Company.*Neither Retrocessionaire is an investment company subject toregistration and regulation under the Investment Company Act of1940, as amended.ARTICLE VCovenants     5.1     *Conduct of Business.*Except as (i) set forth on **Schedule 5.1**,(ii) otherwise expressly provided in this Agreement or theCoinsurance Agreements, (iii) consented to in writing bythe Retrocessionaires, or (iv) reasonably required toprepare for and facilitate the consummation of the transactionscontemplated hereby, during the period from the date hereofthrough the earlier of (i) the date upon which the lastTreaty expires or is terminated in accordance with its terms or(ii) the date upon which the last Treaty is novated to oneof the Retrocessionaires in accordance with Section 5.7,each of the Companies, with respect to the business related tothe Treaties:     (a) shall exercise its commercially reasonable efforts tomaintain itself at all times in all material respects as acorporation duly organized, validly existing, in good standing,and duly qualified and licensed to conduct such business;     (b) shall exercise its commercially reasonable efforts toprevent any material breach of or default under any Treaty orAncillary Agreement or fail to comply in any material respectwith any applicable law;     (c) shall not pay, discharge or satisfy any claims,liabilities or obligations related to the Treaties, theAncillary Agreements, or the Existing Retrocession Agreements(absolute, asserted or unasserted, contingent or otherwise)other than the payment, discharge or satisfaction, in theordinary course of business consistent with past practice and inaccordance with the terms of the Treaties, the AncillaryAgreements and the Existing Retrocession Agreements;     (d) shall not terminate, modify, amend or waive compliancewith, any provision of any of the Treaties, Ancillary Agreementsor the Existing Retrocession Agreements and shall fully complywith all of the terms and provisions of such agreements;     (e) shall not enter into any new retrocession agreements orancillary agreements relating to the Treaties;     (f) shall not change any financial, underwriting, reservingmethods or assumptions, pricing, claims, risk retention,retrocession, investment or accounting policies related theretounless required to do so by applicable law, rule or regulationor as a result of any change to GAAP or SAP; and     (g) shall not authorize or enter into an agreement orarrangement of any kind to do any of the foregoing.     5.2     *Accountings.*(a) Cash flows arising out of the Treaties, the AncillaryAgreements, the Existing Retrocession Agreements and theTransferred Investment Assets from the Coinsurance EffectiveDate to but excluding the Closing Date shall be calculated in anaccounting delivered by the Companies no later than five(5) Business Days after the Closing Date (the**“Post-Effective Time Accounting”**). ThePost-Effective Time
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Accounting will be in the form attached as**Schedule 5.2(a)**hereto. The Post-Effective TimeAccounting shall be accompanied by a certification of the chieffinancial officer of each of the Companies that all itemsreflected in the Post-Effective Time Accounting were calculatedin good faith by such Company for the period from theCoinsurance Effective Date to but excluding the Closing Date,based upon the relevant Books and Records of the Company, andcalculated consistent with the past practices of the Company,including, without limitation, its claims payment and cashsettlement practices. Each Company shall supply theRetrocessionaires with a copy of all bank statements, computerruns, work papers and supporting data relating to the cash flowsarising out of the Treaties or otherwise used in preparing thePost-Effective Time Accounting. If the Post-Effective TimeAccounting reflects a balance due to either Retrocessionaire,such balance shall be paid by the appropriate Company to suchRetrocessionaire by wire transfer of immediately available fundsin U.S. dollars, in the amounts and to the bank accountsdesignated in writing by the Retrocessionaire, simultaneouslywith the delivery of the Post-Effective Time Accounting. If thePost-Effective Time Accounting reflects a balance due to eitherCompany, such balance shall be paid by the appropriateRetrocessionaire to such Company by wire transfer of immediatelyavailable funds in U.S. dollars, in the amounts and to thebank accounts designated in writing by such Company, not laterthan three (3) Business Days following theRetrocessionaires’ receipt of the Post-Effective TimeAccounting. In either case, the amount paid shall be the balancedue as shown on the Post-Effective Time Accounting plus interestfor the period from the Coinsurance Effective Date to butexcluding the Closing Date at an annual rate of three percent (3%) on one-half of such balance due.     (b) Cash flows arising out of the Treaties, the AncillaryAgreements, the Existing Retrocession Agreements and theTransferred Investment Assets from and including the ClosingDate to but excluding the Transition Date shall be calculated inan accounting delivered by the Companies no later than five(5) Business Days after the Transition Date (the**“Post-Transition Accounting”**). ThePost-Transition Accounting will be in the same form as thePost-Effective Time Accounting. The Post-Transition Accountingshall be accompanied by a certification of the chief financialofficer of each of the Companies that all items reflected in thePost-Transition Accounting were calculated in good faith by suchCompany for the period from and including the Closing Date tobut excluding the Transition Date, based upon the relevant Booksand Records of the Company, and calculated consistent with thepast practices of the Company, including, without limitation,its claims payment and cash settlement practices. Each Companyshall supply the Retrocessionaires with a copy of all computerruns, work papers and supporting data used in preparing thePost-Transition Accounting. If the Post-Transition Accountingreflects a balance due to either Retrocessionaire, such balanceshall be paid by the appropriate Company to suchRetrocessionaire by wire transfer of immediately available fundsin U.S. dollars in the amounts and to the bank accountsdesignated in writing by the Retrocessionaire, simultaneouslywith the delivery of the Post-Transition Accounting. If thePost-Transition Accounting reflects a balance due to eitherCompany, such balance shall be paid by the appropriateRetrocessionaire to such Company by wire transfer of immediatelyavailable funds in U.S. dollars, in the amounts and to thebank accounts designated in writing by such Company, not laterthan three (3) Business Days following theRetrocessionaires’ receipt of the Post-TransitionAccounting. In either case, the amount paid shall be the balancedue as shown on the Post-Transition Accounting plus interest forthe period from and including the Closing Date to but excludingthe Transition Date at an annual rate of three percent (3 %) onone-half of such balance due.     (c) The Retrocessionaires shall give written notice (an**“Objection Notice”**) to the Companies of anyobjections to the calculations shown in the Post-Effective TimeAccounting or the Post-Transition Accounting within180 days after the receipt by the Retrocessionaires of thePost-Transition Accounting. Such Objection Notice will set forththe Retrocessionaires’ proposal as to each item to whichthe Retrocessionaires objects together with appropriate supportfor such objections. If the Retrocessionaires do not deliver anObjection Notice within such 180-day period, the Post-EffectiveTime Accounting and the Post-Transition Accounting shall bedeemed to be conclusive, final and binding on the parties. Anydisputes regarding the amounts calculated by the Companiespursuant to this Section 5.2 shall be submitted toPricewaterhouseCoopers LLP (the “IndependentAccountant”), which shall be the exclusive means for theresolution of any such disputes. The parties shall provide tothe Independent Accountant the Post-Effective Time Accountingand/or the Post-Transition Accounting, as applicable, and theappropriate Objection Notice, as well as any documenta-
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tion they believe will assist the Independent Accountant inresolving the disputes, together with such documentation as maybe requested by the Independent Accountant. The parties shallinstruct the Independent Accountant to resolve such disputes andissue a written report with respect thereto within 45 daysfollowing its receipt of such documentation. The determinationof the Independent Accountant will, with respect to each item indispute, be limited to the range for such item proposed by theCompanies in the Post-Effective Time Accounting or thePost-Transition Accounting, as applicable, and theRetrocessionaires in the appropriate Objection Notice. Thedecision of the Independent Accountant will be final and bindingon the parties with the same effects as if the issues in disputehad been resolved by arbitration pursuant to Section 10.9of this Agreement. The fees and expenses of the IndependentAccountant will be allocated between the parties in accordancewith the Independent Accountant’s assessment of the meritsof the parties’ positions with respect to the matters indispute.     5.3     *Pre-Closing Access.*Between the date of this Agreement and the Closing Date, subjectto any applicable law relating to antitrust, employment orprivacy issues, the Companies shall afford to theRetrocessionaires and their Representatives access, uponreasonable notice and during normal business hours, to allcontracts, documents and information of or relating to theassets, liabilities, business, operations and other aspects ofthe business related to the Treaties, the Ancillary Agreementsor the Existing Retrocession Agreements. The Companies shall,and shall cause their respective employees to, cooperate withthe Retrocessionaires and their Representatives in theirinvestigation of matters relating to the transactionscontemplated hereby; provided, however,**that theRetrocessionaires’ investigation shall be conducted in amanner which does not unreasonably interfere with the normaloperations of the Companies. Without limiting any of the termsthereof, the terms of the Confidentiality Agreement shall governthe Retrocessionaires’ and their Representatives’obligations with respect to all confidential information madeavailable to the Retrocessionaires or their Representativespursuant to this Section 5.3.     5.4     *Transition Services.*(a) Between the Coinsurance Effective Date and theTransition Date, the Companies shall continue to service theTreaties, Existing Retrocession Agreements and AncillaryAgreements (including without limitation any of such agreementsthat have been assigned or novated to either Retrocessionaire)in a manner consistent with their current practices.     (b) Within thirty (30) days following the end of eachcalendar month ending between the Coinsurance Effective Date andthe Transition Date, the Companies will provide to theRetrocessionaires the information needed by theRetrocessionaires for reporting the Treaties on theRetrocessionaires’ statutory financial statements. Thereport will be in a form mutually agreed upon by the parties.     (c) From the date of this Agreement to the Transition Date,the Companies shall use commercially reasonable efforts toassist the Retrocessionaires in preparing to transition theadministration of the Treaties from the Companies to theRetrocessionaires on the Transition Date.     (d) As consideration for the services provided by theCompanies pursuant to this Section 5.4 (the**“Company Services”**), the Retrocessionairesshall pay or reimburse the Companies: (i) $30,000 permonth, prorated for any portion of a month, for Company Servicesprovided by the Company, and (ii) for Company Servicesprovided by third parties not affiliated with either Company, atthe actual costs charged by such third parties, provided thatthe provision of such services by a third party (including anappropriate adjustment of the monthly fee contemplated byclause (i) above) is approved in advance by theRetrocessionaires. The Retrocessionaires acknowledge that, whilea reduction in the monthly fee contemplated by clause (i)above is appropriate in the event any Company Service currentlyprovided by the Companies (or an affiliate of the Companies) ismoved to a third party, there may be circumstances in which theaggregate amount paid by the Retrocessionaires for CompanyServices may exceed $30,000. For as long as the Companies areobligated to perform any Company Services, not later than twenty(20) days following the end of each calendar month, theCompanies shall submit to the Retrocessionaires in writing aninvoice for the Company Services performed by the Companiesduring the preceding month that sets forth, in reasonabledetail, costs for services provided by unaffiliated thirdparties. The Retrocessionaires shall pay the aggregate amountshown on each such invoice no later than ten (10) daysafter receipt of the invoice, and any monthly payment that isnot so paid shall bear interest from such due date until thedate paid at the Treasury Rate.
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     5.5     *Continued Access to Booksand Records Transferred to the Retrocessionaires.* On andafter the Transition Date, the Retrocessionaires shall providethe Companies with access to all information in the possessionor control of the Retrocessionaires which the Companiesreasonably request in connection with the Treaties relating tothe preparation or examination of the Companies’ taxreturns and financial statements, the review of payment andclaims procedures, the adequacy of established reserves, thecompliance by the Retrocessionaires with any obligations theyhave under this Agreement or the Coinsurance Agreements, and theconduct of any litigation or regulatory dispute resolution,whether pending or threatened, concerning the Treaties or theservicing of the Treaties by the Retrocessionaires following theTransition Date. Such access shall be provided by theRetrocessionaires during normal business hours of theRetrocessionaires upon forty-eight (48) hours advancenotice or such shorter period if reasonably required in thecircumstances. The Retrocessionaires shall maintain all books,records, files and other information related to the Treaties forsuch period of time as specified by applicable laws andregulations regulating the preservation of books and records.     5.6     *Notice of ActionsReceived.* On and after the date of this Agreement, theCompanies and the Retrocessionaires shall promptly provide eachother with notice of the receipt of any demand letter, summons,complaint, petition or notice of litigation, and any complaint,notice, inquiry or other correspondence from any insuranceregulatory authority with respect to any of the Treaties.     5.7     *Systems Support.* Fromthe date of this Agreement to the Transition Date, and in orderto facilitate the transfer of the Books and Records on theTransition Date, the Companies shall cooperate with theRetrocessionaires and their respective designees in convertingthe Books and Records from the Companies’ systems to theRetrocessionaires’ systems. Historical treaty, accounting,claims, policy master file, retrocession and financial andactuarial information concerning the Treaties, the AncillaryAgreements and the Existing Retrocession Agreements will beprovided to the Retrocessionaires in formats reasonablydesignated thereby with file layouts and mapping documents asreasonably designated thereby. Any third-party expense incurredby the Companies in connection with providing any suchinformation in the formats designated shall be reimbursed by theRetrocessionaires. The Companies will make appropriate personnelavailable to respond to questions from theRetrocessionaires’ systems personnel in order to enable theRetrocessionaires to understand the data and file layouts andeffectuate a transfer of the Books and Records.     5.8     *Maintenance of ExistingRetrocession Agreements.* From and after the date of thisAgreement, unless otherwise agreed by the Retrocessionaires,each of the Companies shall maintain the Existing RetrocessionAgreements related to any Treaty coinsured under the CoinsuranceAgreements in full force and effect without any waiver ormodification of the terms thereof or any rights or obligationsthereunder.     5.9     *Novations andAssignments.* (a) From and after the date of thisAgreement, the Retrocessionaires and the Companies shallcooperate with each other and use commercially reasonableefforts to procure the consent of (i) the relevant Cedentto the novation of each of the Treaties to the Retrocessionairespursuant to a Novation Amendment, (ii) the relevantretrocessionaire to the execution and delivery of an ExistingRetrocession Agreement Assignment as to each of the ExistingRetrocession Agreements, and (iii) the appropriate Personto the assignment or novation to and assumption by the relevantRetrocessionaire of each of the Ancillary Agreements other thanthe Deposit Agreement identified on Schedule 1.3. In noevent shall the obligation to use “commercially reasonableefforts” pursuant to the foregoing sentence require(i) the Companies or the Retrocessionaires to make anyadditional payment or concession to any Cedent or Third PartyRetrocessionaire, (ii) the Companies to execute or delivera Novation Amendment with respect to a Treaty if any riskassumed thereunder is currently retroceded to ALR Bermuda underan Existing Retrocession Agreement and Wilton America does notagree to retrocede such risk to Wilton Bermuda, or(iii) the Retrocessionaires or the Companies to execute ordeliver a Novation Amendment with respect to any Treaty unlesseach Third-Party Retrocessionaire now assuming any risk as tosuch Treaty under an Existing Retrocession Agreement hasexecuted an Existing Retrocession Agreement Assignment withrespect thereto.     (b) The Companies shall execute any (i) NovationAmendment executed by the relevant Retrocessionaire and therelevant Cedent, (ii) Ancillary Agreement Assignmentexecuted by the relevant counter-party or counter-parties, and(iii) Existing Retrocession Agreement Assignment executedby the relevant Third Party Retrocessionaire, in each case inthe forms attached hereto as exhibits and provided that suchNovation
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Amendment and Existing Retrocession Agreement Assignments do notrequire the Companies to make any payment to a third party.     (c) In the event that the Companies and theRetrocessionaires are unable to obtain any consent required fromany counter-party in order to assign any Ancillary Agreement toa Retrocessionaire, (i) the Companies shall usecommercially reasonable efforts in cooperation with the relevantRetrocessionaire to (A) provide or cause to be provided tosuch Retrocessionaire the benefits of such Ancillary Agreementand (B) enforce for the benefit of such Retrocessionaireany rights of either Company arising from such AncillaryAgreement, and (ii) such Retrocessionaire shall usecommercially reasonable efforts to perform the obligations ofthe relevant Company under such Ancillary Agreement. If and whenany such required consent to the assignment of an AncillaryAgreement is obtained, the relevant Company shall promptlyassign all of its rights and obligations thereunder to therelevant Retrocessionaire without the payment of furtherconsideration therefore, and such Retrocessionaire shall assumesuch rights and obligations.     (d) If a Treaty is novated to a Retrocessionaire pursuantto a Novation Amendment following the Transition Date, therelevant Company shall transfer all Books and Records relatingto such Treaty to the relevant Retrocessionaire, subject to suchCompany’s right to retain copies of any such Books andRecords.     (e) Notwithstanding anything in this Section 5.9 tothe contrary, on the Closing Date, each Existing RetrocessionAgreement under which ALR America retrocedes to ALR Bermudarisks assumed under any of the other Treaties (an“Inter-Affiliate Agreement”) will be novated in part,by means of a bifurcation of such Inter-Affiliate Agreement, tosubstitute Wilton America for ALR America and Wilton Bermuda forALR Bermuda as to each Treaty that is a Novated Treaty on theClosing Date. Following the Closing Date, at such time as anyTreaty is novated to Wilton America, each Inter-AffiliateAgreement covering such Treaty will be further novated in partto substitute Wilton America for ALR America and Wilton Bermudafor ALR Bermuda as to such Treaty. The documentation effectingthe partial novations contemplated by this Section 5.9(e)shall be in a form reasonably satisfactory to the partieshereto. Regardless of whether any Treaties have not yet beennovated at the time in question, the Inter-Affiliate Agreementsshall be finally and completely novated to substitute WiltonAmerica for ALR America and Wilton Bermuda for ALR Bermudaeffective either (i) the last day of the sixth calendarmonth following the month in which the Closing Date falls, or(ii) the last day of such earlier calendar month as theRetrocessionaires shall elect in their sole discretion.     (f) Prior to the Closing Date, (i) ALR America and ALRBermuda will terminate the Deposit Agreement identified onSchedule 1.3, and (ii) ALR America will cause allfunds on deposit pursuant to such agreement to be returned toALR Bermuda.     5.10     *Letters of Credit orSimilar Collateral.* (a) Following the date of thisAgreement, the Companies and the Retrocessionaires will usetheir commercially reasonable efforts to arrange to replace anyletters of credit required to be maintained by the Companiesunder any Treaty (each, a “Collateralized Treaty”)with letters of credit provided by the Retrocessionaires, withsuch replacement to be effectuated on the Closing Date or aspromptly thereafter as practicable. As to any letters of creditthe Companies continue to maintain following the Closing, theRetrocessionaire reinsuring the applicable Collateralized Treatyshall reimburse the applicable Company for (i) all amountspaid or incurred by such Company for such letter of credit afterthe Closing Date (excluding letter of credit facility commitmentfees or other similar amounts not specifically relating to theletter of credit in question), and, (ii) in the event ofany draw against any such letter of credit securing aCollateralized Treaty following the Closing Date, includingwithout limitation a draw resulting from the non-renewal of suchletter of credit, an amount equal to the amount of such draw. Ifthe Retrocessionaire is obligated to make any payment underclause (ii) of the preceding sentence, the Companyreceiving such payment shall, upon receipt of such payment,assign to the Retrocessionaire all of its right, title andinterest in and to the return of such collateral under the termsof the applicable Collateralized Treaty. Any payment to eitherCompany required pursuant to this Section 5.10(a) shall bemade to such Company within five (5) days of theappropriate Retrocessionaire’s receipt of notice of theevent giving rise to such payment, and any payment not so madeto the appropriate Company shall bear interest from such duedate until the date paid at the Treasury Rate.
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     (b) Each of the Companies shall provide notice ofnon-renewal to the issuer of each letter of credit it maintainswith respect to a Collateralized Treaty on(i) November 15, 2005, if the Closing takes place onor prior to such date, or (ii) the date that is45 days prior to the termination of such letter of creditif the Closing does not take place on or prior toNovember 15, 2005. Neither Company shall provide any noticeof non-renewal of any letter of credit it maintains with respectto a Collateralized Treaty prior to the date specified in thisSection 5.10(b). In the event of a draw under a letter ofcredit by the Cedent under a Collateralized Treaty as a resultof a non-renewal of such letter of credit, the obligation of theRetrocessionaire reinsuring such Collateralized Treaty toreimburse the relevant Company for amounts paid or incurred bysuch Company with respect to such letter of credit pursuant toSection 5.10(a) shall cease immediately upon thereimbursement by such Retrocessionaire of the amount so drawn.     5.11     *Regulatory Filings,Consents and Approvals.* The Retrocessionaires and theCompanies shall cooperate and use commercially reasonableefforts to obtain as promptly as practicable all approvals,authorizations and clearances of governmental and regulatoryauthorities to consummate the transactions contemplated by thisAgreement and the Coinsurance Agreements, and shall cooperatewith each other and provide such information and communicationsto such governmental and regulatory authorities as the partyresponsible for obtaining such approvals may reasonably request.The Retrocessionaires and the Companies will provide each otherand their counsel the opportunity to review in advance andcomment on all such filings with any governmental and regulatoryauthorities and will keep each other informed of the status ofmatters relating to obtaining the required regulatory approvals.It is expressly understood by the parties hereto that each partyhereto shall use commercially reasonable efforts to ensure thatrepresentatives of both parties shall have the right to attendand participate in any hearing, proceeding, meeting, conferenceor similar event before or with a governmental authorityrelating to this Agreement. In the case of a meeting, conferenceor similar event related in part to this Agreement and in partto other matters, the parties shall cooperate in good faith toensure that each of the parties is able to participate in theportion of such meeting, conference or similar event thatrelates solely to this Agreement; provided, however, that eitherparty shall have the right to exclude the other party from allor any portion of any meeting, conference or similar event notrelating to this Agreement. In furtherance of the foregoing,each party shall provide each other reasonable advance notice ofany such hearing, proceeding, meeting, conference or similarevent.     5.12     *Other Consents andApprovals.* The parties shall cooperate and use commerciallyreasonable efforts to obtain all consents, approvals andagreements of, and to give and make all notices and filingswith, any other Person (other than governmental and regulatoryauthorities, which are covered under Section 5.11 of thisAgreement) required in connection with the execution anddelivery of this Agreement or the consummation of thetransactions contemplated hereby, including without limitation,Cedents and Third-Party Retrocessionaires. Without limiting thegenerality of the foregoing, Wilton Bermuda will cause allshares as to which it holds proxies granted pursuant to theVoting Agreements to be voted in favor of the transactionscontemplated by this Agreement at any meeting of theshareholders of ALR Holdings. The Retrocessionaires and theCompanies will keep each other informed of the status of mattersrelating to obtaining the required approvals. It is expresslyunderstood by the parties hereto that each party hereto shalluse commercially reasonable efforts to ensure thatrepresentatives of both parties shall have the right to attendand participate in any meeting, conference or similar eventinvolving any Cedent or Third-Party Retrocessionaire relating tothis Agreement. In furtherance of the foregoing, each partyshall provide each other reasonable advance notice of any suchmeeting, conference or similar event.     5.13     *HSR Act Filings.* Ifrequired by law, the parties shall, as promptly as practicable,file Notification and Report Forms under the Hart-Scott-RodinoAntitrust Improvements Act of 1976, as amended (the**“HSR Act”**), and the rules of the Federal TradeCommission **(“FTC”)**thereunder, with the FTC andthe Antitrust Division of the U.S. Department of Justice(the **“Antitrust Division”**) in connection withthe transactions contemplated by this Agreement and theCoinsurance Agreements, and shall use commercially reasonableefforts to respond as promptly as practicable to all inquiriesreceived from the FTC or the Antitrust Division for additionalinformation or documentation.     5.14     *Notification of CertainMatters.* From the date of this Agreement to the ClosingDate, (a) the Companies shall use commercially reasonableefforts to conduct their affairs in such a manner so that the
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representations and warranties of the Companies contained inArticle III hereof shall continue to be true and correct inall material respects on and as of the Closing Date as if madeon and as of the Closing Date; (b) the Retrocessionairesshall use their respective commercially reasonable efforts toconduct their affairs in such a manner so that therepresentations and warranties of the Retrocessionairescontained in Article IV hereof shall continue to be trueand correct in all material respects on and as of the ClosingDate as if made on and as of the Closing Date; (c) theCompanies shall notify the Retrocessionaires promptly of anyevent, condition or circumstance that would reasonably beexpected to give rise to the inability of the Companies tosatisfy any of the conditions precedent to the Closing set forthin Article 6 hereof; and (d) the Retrocessionairesshall notify the Companies promptly of any event, condition orcircumstance that would reasonably be expected to give rise tothe inability of the Retrocessionaires to satisfy any of theconditions precedent to Closing set forth in Article 6hereof. No notification pursuant to this Section 5.14 shallbe deemed to cure any breach for any purpose under thisAgreement.     5.15     *Further Assurances.*Each of the parties hereto shall execute such documents andother papers and perform such further acts as may be reasonablyrequired to carry out the provisions hereof and the transactionscontemplated hereby. Each such party shall, at or prior to theClosing Date, use its commercially reasonable efforts to fulfillor obtain the fulfillment of the conditions precedent to theconsummation of the transactions contemplated hereby, includingthe execution and delivery of any documents, certificates,instruments or other papers that are reasonably required for theconsummation of the transactions contemplated hereby. On andafter the Transition Date, the Companies and their respectiveaffiliates will hold any and all payments received under theTreaties, the Ancillary Agreements or any Existing RetrocessionAgreement that has been assigned to the Retrocessionaires asreceived thereby for the benefit of the relevantRetrocessionaire pending remittance thereto. Each of theCompanies shall, upon any request by Retrocessionaires, take anyand all actions reasonably required or appropriate thereby tofurther establish, substantiate or perfect the interests createdhereby in favor of the Retrocessionaires, including, withoutlimitation, the execution and delivery of trust or otheragreements reasonably requested by the Retrocessionaires inorder to further establish, substantiate or perfect theinterests created hereby.     5.16     *Use by theRetrocessionaires of the Companies’ Names, Logos or ServiceMarks.* Except as otherwise agreed in writing, theRetrocessionaires have not acquired by means of this Agreementor the Coinsurance Agreements or by any other means, the rightto use the names of either of the Companies or any of theCompanies’ service marks, trademarks, designs or logosrelated to that name. The Retrocessionaires agree that they willnot use such name, service marks, trademarks, designs or logosunless the relevant Company shall have agreed in writing to suchuse; provided, however, that the Retrocessionaires may utilizethe names of the Companies as may be necessary or appropriatefor its administration of the Treaties pursuant to theCoinsurance Agreements.     5.17     *Communications with Cedentsand Third Party Retrocessionaires.* (a) Before theClosing Date, all communications with Cedents and Third PartyRetrocessionaires by either the Companies or theRetrocessionaires in connection with the proposed novation orreinsurance of the Treaties by the Retrocessionaires ascontemplated by this Agreement shall be in such form as shall bemutually agreed upon by the parties hereto prior to any releasethereof, except for communications with Cedents and Third PartyRetrocessionaires, as the case may be, as required to administerthe Treaties and the Existing Retrocession Agreements in theordinary course of business. The Company and theRetrocessionaires shall cooperate fully and promptly regardingthe preparation and distribution of any such communications toCedents.     (b) The Retrocessionaires shall send to each Cedent awritten notice from the Companies advising that theRetrocessionaire has been appointed by the Companies to provideadministrative services relating to the Treaties on and afterthe Transition Date, and directing that future payments by theCedent should be made to the Collections Account (as defined inthe Coinsurance Agreements). The Retrocessionaires shall sendsuch notice at their own expense by first class U.S. mailpromptly after the Closing Date, but in no event later than theTransition Date.     5.18     *Expenses.* Except asotherwise specifically provided in this Agreement, and exceptfor the Expense Reimbursement Amount, the parties hereto shalleach bear their own respective expenses incurred in
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connection with the preparation, execution and performance ofthis Agreement, the Coinsurance Agreements, the NovationAmendments, the Existing Retrocession Agreement Assignments, theAncillary Agreement Assignments and all other documentationrelated hereto and thereto, including without limitation allfees and expenses of counsel, actuaries and accountants.     5.19     *Intercompany Balances.*At the Closing, the Companies shall provide theRetrocessionaires with a reconciliation of any outstandingbalances that were owing between ALR Bermuda and ALR Americaunder any Existing Retrocession Agreement as of the CoinsuranceEffective Date.     5.20     *Competing AcquisitionProposals.* (a) Subject to Sections 5.20(b) through(d) below, from and after the date of this Agreement untilthe earlier of the termination of this Agreement in accordancewith its terms or the Closing Date, none of ALR Holdings, theCompanies or any of their respective Representatives shall (andeach of ALR Holdings and the Companies shall cause theirrespective Representatives not to), directly or indirectly,(i) initiate, solicit, encourage or otherwise facilitateany inquiries or the making of any proposal or offer thatconstitutes, is intended to result in, or could be expected tolead to any Competing Acquisition Proposal (as defined below) or(ii) engage in negotiations or discussions concerning theTreaties or any Company with, or provide any confidentialinformation with respect to the Treaties or any Company to, anyperson making or proposing to make any Competing AcquisitionProposal. Each of ALR Holdings and each Company will immediatelycease and cause to be terminated any existing activities,discussions or negotiations with any parties conductedheretofore with respect to any Competing Acquisition Proposal,and will take the necessary steps to promptly inform suchparties of the obligations undertaken in this Section 5.20.     (b) Notwithstanding anything to the contrary contained inthe foregoing Section 5.20(a), nothing herein shallprohibit ALR Holdings, prior to the receipt of the approval ofits shareholders of the transactions contemplated by thisAgreement (as provided for on Schedule 3.2), (i) fromcomplying with Rule 14e-2 and Rule 14d-9 under theSecurities Exchange Act of 1934, as amended, with regard to abona fide tender offer or exchange offer, or (ii) fromparticipating in negotiations or discussions with or furnishinginformation to any person in connection with an unsolicited bonafide Competing Acquisition Proposal that is submitted in writingby such Person to the Board of Directors of ALR Holdings afterthe date of this Agreement and prior to the receipt of theapproval of ALR Holdings’ shareholders of the transactionscontemplated by this Agreement, provided that, prior toparticipating in any such discussions or negotiations orfurnishing any information (A) ALR Holdings shall promptlyprovide the Retrocessionaires with notice of the receipt of anycommunication regarding a potential Competing AcquisitionProposal, including the identity of the person making orproposing to make such Competing Acquisition Proposal and thematerial terms thereof, (B) ALR Holdings shall havereceived from such person an executed confidentiality agreementon terms not less favorable to ALR Holdings than theConfidentiality Agreement, a copy of which shall be providedonly for informational purposes to the Retrocessionaires,(C) the Board of Directors of ALR Holdings shall haveconcluded in good faith, after obtaining the advice of itsoutside financial advisors, that such Competing AcquisitionProposal is reasonably likely to be or to result in a SuperiorProposal (as defined below), and (D) the Board of Directorsof ALR Holdings shall have concluded in good faith, afterobtaining the advice of its outside legal advisors, thatparticipating in such negotiations or discussions or furnishingsuch information is required in order for the Board of Directorsof ALR Holdings to fulfill its fiduciary duties to itsshareholders. The Board of Directors of ALR Holdings shallpromptly notify the Retrocessionaires of any material changes oramendment to the primary terms of such Competing AcquisitionProposal.     (c) In the event that, prior to the receipt of the approvalof its shareholders of the transactions contemplated by thisAgreement (as provided for on Schedule 3.2), the Board ofDirectors of ALR Holdings determines in good faith, afterconsultation with its financial advisor, that such CompetingAcquisition Proposal is a Superior Proposal, and that, afterconsultation with outside legal counsel, the failure to acceptsuch Superior Proposal would be inconsistent with the fiduciaryduties of the Board of Directors of ALR Holdings, the Board ofDirectors of ALR Holdings may accept such Superior Proposal andthe Companies may terminate this Agreement in accordance withSection 9.1.3(b) of this Agreement; provided, however, thatprior to any such acceptance of the Superior Proposal andtermination of this Agreement, ALR Holdings shall(i) notify the Retrocessionaires in writing that it intendsto enter into an agreement relating to a Superior Proposal,which notice shall include the most recent draft of the relevantacquisition agreement (and which
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notice shall give the Retrocessionaires the immediate right toterminate this Agreement in accordance withSection 9.1.2(b) of this Agreement), (ii) during thefive Business Days following receipt by the Retrocessionaires ofsuch notice, ALR Holdings shall have offered theRetrocessionaires the opportunity to make such adjustments tothe terms and conditions of this Agreement such that anyCompeting Acquisition Proposal is no longer a Superior Proposal,and (iii) the Board of Directors of ALR Holdings shall haveconcluded, after termination of the five Business Day period,that the Competing Acquisition Proposal giving rise to ALRHoldings’ obligations to provide notice hereunder continuesto be a Superior Proposal. ALR Holdings and the Companies maynot terminate this Agreement under Section 9.1.3(b) inconnection with a Superior Proposal unless ALR Holdings pays tothe Retrocessionaires in immediately available funds theTermination Fee pursuant to Section 9.2 of this Agreement.ALR Holdings agrees that it will not enter into a bindingagreement relating to a Superior Proposal until at least thesixth Business Day after it has provided the notice to theRetrocessionaires described above. ALR Holdings further agreesthat it shall notify the Retrocessionaires promptly if ALRHoldings has changed its intention with respect to entering intothe agreement identified in the notice provided hereunder,whether as a result of the Retrocessionaires modifying theiroffer or otherwise.     (d) For purposes of this Agreement, “CompetingAcquisition Proposal” means any inquiry, proposal or offerfrom any person relating to (x) any direct or indirectsale, transfer, pledge, disposition, reinsurance, novation, bulkreinsurance or other conveyance of rights or interests withrespect to the Treaties other than a transaction expresslyprovided for herein, (y) a direct or indirect sale of anyof the outstanding shares of, or other securities issued by,either Company or ALR Holdings or (z) a merger,consolidation, business combination, reorganization, shareexchange, recapitalization, liquidation, dissolution or similartransaction involving any Company other than a transactionexpressly provided for herein; provided, however, that any suchinquiry, proposal or offer that relates to a transaction thatwould, by its terms, be consummated following the consummationof the transactions contemplated by this Agreement shall not beconsidered a Competing Acquisition Proposal so long as suchtransaction would not interfere with the Retrocessionaires’rights hereunder. For purposes of this Agreement, “SuperiorProposal” means any Competing Acquisition Proposal withrespect to which any required financing is committed or, in thegood faith judgment of the Board of Directors of ALR Holdings,based on the advice of its outside financial advisors, isreasonably capable of being financed by the person making theproposal and, with respect to which the Board of Directors ofALR Holdings shall have concluded in good faith is reasonablycapable of being completed, taking into account all legal,financial, regulatory and other aspects of the CompetingAcquisition Proposal and the person making the proposal, andwould, if consummated, result in a transaction more favorable toALR Holding’s shareholders from a financial point of viewthan the transactions contemplated by this Agreement.ARTICLE VIClosing Conditions     6.1     *Conditions to theRetrocessionaires’ Obligations to Close.* The obligationof the Retrocessionaires to close the transactions contemplatedunder this Agreement shall be subject to the fulfillment of thefollowing conditions, any one or more of which may be waived bythe Retrocessionaires to the extent permitted by law:     6.1.1     *Receipt of All RequiredClosing Date Approvals.* All Required Closing Date Approvalsshall have been received, and each Company shall have deliveredto the Retrocessionaires a copy of any Required Closing DateApproval issued to such Company.     6.1.2     *Representations,Warranties and Covenants.* The representations and warrantiesof each Company contained in this Agreement that are notqualified by “materiality” or a “Material AdverseEffect” qualifier shall have been true and correct in allrespects on and as of the date of this Agreement and shall betrue and correct in all material respects on and as of theClosing Date (unless such representation or warranty isexpressly made as of an earlier date). The representations andwarranties of each Company contained in this Agreement that arequalified by “materiality” or a “Material AdverseEffect” qualifier shall have been true and correct in allrespects on and as of the date of this Agreement and shall betrue and correct in all respects on and as of the Closing Date(unless such representation or warranty is expressly made as ofan earlier date).
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Each Company shall have performed and complied in all materialrespects with all agreements, covenants, obligations andconditions required by this Agreement to be so performed orcomplied with by such Company at or before the Closing. On theClosing Date, each Company shall have delivered to theRetrocessionaires a certificate dated as of the Closing Date andsigned by a senior officer of such Company, to the effectcontemplated by this Section 6.1.2.     6.1.3     *Secretary’sCertificates.* Each Company shall have delivered to theRetrocessionaires a certificate of the secretary or assistantsecretary thereof, dated as of the Closing Date, as to theresolutions of the Board of Directors (or other similargoverning body) of such Company authorizing the execution,delivery and performance of this Agreement and the otheragreements contemplated hereby to which it is a party, as to thestatus and signature of each of its officers who executed anddelivered this Agreement and such other agreements and any otherdocument delivered by it in connection with the transactionscontemplated by this Agreement and such other agreements.     6.1.4     *Injunction andLitigation.* There shall be in effect no injunction, writ,preliminary restraining order or other order issued by any courtof competent jurisdiction directing that the transactionscontemplated by this Agreement or the Coinsurance Agreements notbe consummated as herein or therein provided.     6.1.5     *Third-PartyRetrocessionaires.* Each Third-Party Retrocessionaire thathas accepted any risk arising under any Novated Treaty shallhave, as to the Existing Retrocession Agreement applicable tosuch Novated Treaty, either (i) executed an ExistingRetrocession Agreement Assignment or (ii) on terms approvedby the Retrocessionaires, which approval shall not beunreasonably withheld, confirmed in writing to theRetrocessionaires that it will continue to provide coverage withrespect to such Novated Treaty under the terms of the relevantExisting Retrocession Agreement for the duration of the termthereof.     6.1.6     *Cedents.* Either(a) the Cedent under each Treaty shall have provided to theRetrocessionaires a confirmation in the form of**Exhibit E** hereto indicating that the informationtherein is correct, and such information shall have beendetermined to be, in the reasonable judgment of theRetrocessionaires, consistent in all material respects with(i) information contained in the Books and Records of therelevant Company and (ii) information provided prior to thedate of this Agreement by the Companies to the Retrocessionairesor (b) the Retrocessionaires shall have otherwise receivedthe information called for by Exhibit E with respect toeach Treaty, and such information shall have been determined tobe, in the reasonable judgment of the Retrocessionaires,consistent in all material respects with (x) informationcontained in the Books and Records of the relevant Company and(y) information provided prior to the date of thisAgreement by the Companies to the Retrocessionaires.     6.2     *Conditions to theCompany’s Obligations to Close.* The obligation of theCompanies to close the transactions contemplated under thisAgreement shall be subject to the fulfillment of the followingconditions, any one or more of which may be waived by theCompanies to the extent permitted by law:     6.2.1     *Receipt of All RequiredClosing Date Approvals.* All Required Closing Date Approvalsshall have been received, and each Retrocessionaire shall havedelivered to the Companies a copy of any Required Closing DateApproval issued to such Retrocessionaire.     6.2.2     *Representations,Warranties and Covenants.* The representations and warrantiesof each Retrocessionaire contained in this Agreement that arenot qualified by “materiality” or a “MaterialAdverse Effect” qualifier shall have been true and correctin all respects on and as of the date of this Agreement andshall be true and correct in all material respects on and as ofthe Closing Date (unless such representation or warranty isexpressly made as of an earlier date). The representations andwarranties of each Retrocessionaire contained in this Agreementthat are qualified by “materiality” or a“Material Adverse Effect” qualifier shall have beentrue and correct in all respects on and as of the date of thisAgreement and shall be true and correct in all respects on andas of the Closing Date (unless such representation or warrantyis expressly made as of an earlier date).Each Retrocessionaireshall have performed and complied in all material respects withall agreements, covenants, obligations and conditions requiredby this Agreement to be so performed or complied with by suchRetrocessionaire at or before the Closing. On the Closing Date,each Retrocessionaire shall have
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delivered to the Companies a certificate dated as of the ClosingDate and signed by a senior officer of such Retrocessionaire, tothe effect contemplated by this Section 6.2.2.     6.2.3     *Secretary’sCertificates.* Each Retrocessionaire shall have delivered tothe Companies a certificate of the secretary or assistantsecretary thereof, dated as of the Closing Date, as to theresolutions of the Board of Directors (or other similargoverning body) of such Retrocessionaire authorizing theexecution, delivery and performance of this Agreement and theother agreements contemplated hereby to which it is a party, asto the status and signature of each of its officers who executedand delivered this Agreement and such other agreements and anyother document delivered by it in connection with thetransactions contemplated by this Agreement and such otheragreements.     6.2.4     *Injunction andLitigation.* There shall be in effect no injunction, writ,preliminary restraining order or other order issued by any courtof competent jurisdiction directing that the transactionscontemplated by this Agreement or the Coinsurance Agreements notbe consummated as herein or therein provided.ARTICLE VIISurvival of Representations and Warranties     Except for the representations and warranties made by theCompanies in Section 3.1 and those made by theRetrocessionaires in Section 4.1, each of which shallsurvive the Closing indefinitely, the representations andwarranties made by the Companies and the Retrocessionaires inthis Agreement or in any certificate delivered by the Company orthe Retrocessionaires pursuant hereto, shall survive for aperiod of eighteen (18) months following the Closing Date.All claims for inaccuracy or breach of any representation orwarranty will be deemed waived unless notice of such inaccuracyor breach shall have been given to the breaching party prior tothe expiration of the survival period set forth in thisArticle VII, in which case such representation or warrantyshall survive to the extent of the claim referred to in suchnotice until such claim has been resolved.ARTICLE VIIIIndemnification     8.1     *Indemnification by theCompanies.* Subject to the limitations set forth inArticle VII and elsewhere in this Article VIII, eachCompany, severally and not jointly, shall indemnify, defend andhold harmless each Retrocessionaire, each of its affiliates, andeach of their respective directors, officers and employees (the“Retrocessionaire Indemnified Parties”) from andagainst all costs and expenses (including reasonableattorneys’, accountants’ and actuaries’ fees anddisbursements, and any other costs and expenses incident to anysuit, action or proceeding), damages, losses, charges,deficiencies, liabilities, obligations, claims or judgments(“Loss” or “Losses”) arising or resultingfrom:     (a) any breach of any representation or warranty made bysuch Company in this Agreement or from any misrepresentation inany certificate furnished hereunder by such Company;     (b) any breach of any covenant of such Company in thisAgreement;     (c) any Excluded Liability; and     (d) any successful enforcement of the obligations containedin this Section 8.1 against either Company.     8.2     *Indemnification by theRetrocessionaires.* Subject to the limitations set forth inArticle VII and elsewhere in this Article VIII, eachRetrocessionaire, severally and not jointly, shall indemnify,defend and hold harmless each Company, each of its affiliates,and each of their respective directors, officers and employees(the “Company Indemnified Parties”) from and againstall costs and expenses (including reasonable attorneys’,accountants’ and actuaries’ fees and disbursements,and any other costs and expenses
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incident to any suit, action or proceeding), damages, losses,charges, deficiencies, liabilities, obligations, claims orjudgments (“Loss” or “Losses”) arising orresulting from:     (a) any breach of any representation or warranty made bysuch Retrocessionaire in this Agreement or from anymisrepresentation in any certificate furnished hereunder by suchRetrocessionaire;     (b) any breach of any covenant of such Retrocessionaire inthis Agreement;     (c) any Assumed Liability;     (d) any Retrocessionaire ExtracontractualLiability; and     (e) any successful enforcement of the obligations containedin this Section 8.2 against either Retrocessionaire.     8.3     *Limitations.*(a) Notwithstanding anything in Section 8.1(a) to thecontrary, (i) the Companies shall have no liability to theRetrocessionaire Indemnified Parties with respect to the mattersdescribed in Section 8.1(a) unless and until the total ofall Losses with respect to such matters exceeds $25,000.00, andthen only for the amount by which such Losses exceed $25,000.00;and (ii) in no event shall the Companies’ obligationsunder Section 8.1(a) exceed $2,000,000.00 in the aggregate.     (b) Notwithstanding anything in Section 8.2(a) to thecontrary, (i) the Retrocessionaires shall have no liabilityto the Company Indemnified Parties with respect to the mattersdescribed in Section 8.2(a) unless and until the total ofall Losses with respect to such matters exceeds $25,000.00, andthen only for the amount by which such Losses exceed $25,000.00;and (ii) in no event shall the Retrocessionaires’obligations under Section 8.2(a) exceed $2,000,000.00 inthe aggregate.     8.4     *Notice of Claim.* As soonas reasonably practicable, but in no event subsequent to thefirst to occur of the expiration of the relevant survival periodof a representation or warranty (as set forth inArticle VII) or thirty (30) days after receipt by anindemnified party hereunder of written notice of any demand,claim or circumstances which, upon the lapse of time, would giverise to a claim or the commencement (or threatened commencement)of any action, proceeding or investigation (a “Claim”)that may result in a Loss, such indemnified party shall givenotice thereof (“Claims Notice”) to the indemnifyingparty. The Claims Notice shall describe the Claim in reasonabledetail, and shall indicate the amount (if quantifiable andestimated, if necessary) of the Loss that has been or may besuffered by such indemnified party. The failure of theindemnified party to give the Claims Notice within in the timeprovided for herein shall not affect the indemnifyingparty’s obligation under this Article VIII except if,and then only to the extent that, such failure prejudices theindemnifying party or its ability to defend such Claim.     8.5     *Opportunity to Defend.*Within thirty (30) days of receipt of any Claims Noticegiven pursuant to Section 8.4, the indemnifying party shallnotify the indemnified party in writing of the acceptance of orobjection to the Claim and whether the indemnifying party willindemnify the indemnified party and, in the case of a Claim by athird party, defend the same at the expense of the indemnifyingparty with counsel selected by the indemnifying party (who shallbe approved in writing by the indemnified party, such approvalnot to be unreasonably withheld); provided that the indemnifiedparty shall at all times have the right to fully participate inthe defense of any third-party Claim at its own expense or, asprovided herein below, at the expense of the indemnifying party.Failure by the indemnifying party to object in writing withinsuch thirty (30) day period shall be deemed to beacceptance of the Claim by the indemnifying party. In the eventthat the indemnifying party objects to a third-party Claimwithin said thirty (30) day period or does not object butfails to vigorously defend and appears to be unable or unwillingto meet its indemnification obligations hereunder, theindemnified party shall have the right, but not the obligation,to undertake the defense, and to compromise and/or settle (inthe exercise of reasonable business judgment) such Claim. Exceptas provided in the preceding sentence, the indemnified partyshall not compromise and/or settle any third-party Claim withoutthe prior written consent of the indemnifying party. If athird-party Claim is one that cannot by its nature be defendedsolely by the indemnifying party, the indemnified party shallmake available all information and assistance that theindemnifying party may reasonably request, provided that anyassociated expense shall be paid by the indemnifying party.
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     8.6     *Exclusive Remedy; AdditionalLimitations.* If the Closing occurs, the indemnificationremedies provided in this Article VIII shall be theexclusive remedies available to the Company Indemnified Partiesand the Retrocessionaire Indemnified Parties with respect to anybreach of representation, warranty, covenant or other obligationunder this Agreement or any document or instrument deliveredunder this Agreement (other than the Coinsurance Agreement, anyNovation Amendment, Existing Retrocession Agreement Assignmentor any Ancillary Agreement Assignment) or otherwise arising outof, resulting from or related to the transactions contemplatedby this Agreement. Neither party shall be entitled toindemnification unless the party seeking indemnification makesclaim therefor pursuant to the procedures set forth inSection 8.4 of this Agreement. In addition, for purposes ofdetermining any indemnifiable amount under this Agreement or theagreements contemplated hereby, the amount of a Loss shall bereduced by any net tax benefit to the indemnified party from theLoss and any insurance proceeds or indemnity, contribution orsimilar payments recoverable by the indemnified party from anythird party with respect to the Loss. Except as otherwiseexpressly set forth in this Agreement with respect to anyCompany Extracontractual Liability or RetrocessionaireExtracontractual Liability, in no event shall the indemnifyingparty under this Article VIII have liability to theindemnified party for any consequential, special, incidental,indirect, or punitive damages, lost revenue, profits or income,diminution in value, loss of business reputation or opportunityor similar items; provided, that the term “Loss” shallbe deemed to include, and the Retrocessionaires shall beentitled to recover, lost revenue, profits or income under theTreaties, the Existing Retrocession Agreements and the AncillaryAgreements.     8.7     *Maintenance of StatutoryCapital and Surplus.* (a) During the period ending onthe later of the date (i) that is eighteen (18) monthsfollowing the Closing Date or (ii) on which all outstandingClaims by the Retrocessionaire Indemnified Parties forindemnification with respect to the matters described inSection 8.1(a) of this Agreement are finally resolved (the**“Capital and Surplus Maintenance Period”**), eachCompany shall maintain statutory capital and surplus equal to atleast $2,000,000.00.     (b) During the Capital and Surplus Maintenance Period, ALRHoldings shall not take any action, and shall not cause theCompanies to take any action, including, without limitation, thedeclaration and payment of any dividend or distribution, thatwould reduce the statutory capital and surplus of either Companybelow the levels set forth in Section 8.7(a) of thisAgreement.ARTICLE IXTermination     9.1     *Termination.* ThisAgreement may be terminated as provided in this Section 9.1.     9.1.1     This Agreement may beterminated at any time before the Closing, by mutual writtenagreement of the Companies and the Retrocessionaires.     9.1.2     The Retrocessionaires mayterminate this Agreement at any time prior to Closing:     (a) for material breach by either of the Companies of anyof the terms or conditions of this Agreement or for failure ofany condition to Closing, the satisfaction of which is solelywithin the Companies’ control; provided, however, that theCompanies shall have ten (10) days to cure any such breachor satisfy any such condition after receipt of notice thereof bythe Companies from the Retrocessionaires; or     (b) if ALR Holdings provides the Retrocessionaires withnotice pursuant to Section 5.20(c)(i) that it intends toenter into a binding written agreement for a Superior Proposal(in which case ALR Holdings shall promptly pay to theRetrocessionaires the Termination Fee in accordance withSection 9.2(iv)(A) below).     9.1.3     The Companies may terminatethis Agreement at any time prior to Closing:     (a) for material breach by the Retrocessionaires of any ofthe terms or conditions of this Agreement or for failure of anycondition to Closing, the satisfaction of which is solely withinthe Retrocessionaires’ control; provided, however, that theRetrocessionaires shall have ten (10) days to cure any suchbreach or satisfy any such condition after receipt of noticethereof by the Retrocessionaires from the Companies; or
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     (b) if (i) the Board of Directors of ALR Holdingsauthorizes ALR Holdings, subject to complying with the terms ofthis Agreement, to enter into a binding written agreementconcerning a transaction that constitutes a Superior Proposal,(ii) ALR Holdings notifies the Retrocessionaires in writingpursuant to Section 5.20(c)(i) that it intends to enterinto such an agreement, and (iii) ALR Holdings, prior tosuch termination, pays to the Retrocessionaires the fee requiredto be paid pursuant to Section 9.2(iv)(B) of this Agreement.     9.1.4     Either the Companies or theRetrocessionaires may terminate this Agreement at any time priorto Closing for failure of any condition to Closing, thesatisfaction of which is not within either the Companies’or the Retrocessionaires’ control, or otherwise is not theresult of any act or omission on the part of any party;provided, however, that in the event this Agreement isterminated by either party due to the failure of ALRHoldings’ shareholders, at a meeting duly held, to approvethe transactions contemplated hereby, the Retrocessionairesshall be entitled to receive from ALR Holdings the aggregateamount of all out-of-pocket expenses incurred byRetrocessionaires and their affiliates in connection with thetransactions contemplated by this Agreement (including but notlimited to the fees and expenses of outside counsel, accountantsand actuaries) not previously reimbursed by the Companies (the“Unreimbursed Expense Amount”), as set forth inSection 9.2 of this Agreement.     9.1.5     Either the Company or theRetrocessionaires may terminate this Agreement if Closinghereunder has not occurred on or prior to January 2, 2006.     9.2     *Effect of Termination.*If this Agreement is terminated pursuant to Section 9.1hereof, notice of termination shall be given pursuant to thenotice provisions herein, and the transactions contemplated bythis Agreement shall be terminated without further action by anyparty except that (i) the provisions of Sections 5.18,10.1, 10.6, 10.7 and 10.8 shall remain in full force and effect,(ii) such termination shall not in any way limit orrestrict the rights and remedies of any party hereto against anyother party which has breached any of the representations,warranties, covenants, agreements or other provisions of thisAgreement prior to termination hereof, (iii) anyconfidentiality obligations of the parties (arising under thisAgreement or under the Confidentiality Agreement) shall survivesuch termination, and (iv) (A) in the event that thisAgreement is terminated by the Retrocessionaires pursuant toSection 9.1.2(b), then ALR Holdings shall promptly, but inno event later than three (3) Business Days after theRetrocessionaires have provided notice of termination inaccordance with this Section 9.2, pay to theRetrocessionaires a single, lump-sum termination fee (the“Termination Fee”) equal to the sum of(x) $500,000 plus (y) the Unreimbursed Expense Amount,(B) in the event that this Agreement is terminated by theRetrocessionaires pursuant to Section 9.1.4 due to thefailure of ALR Holdings’ shareholders, at a meeting dulyheld, to approve the transactions contemplated hereby, then ALRHoldings shall promptly, but in no event later than three(3) Business Days after the Retrocessionaires have providednotice of termination in accordance with this Section 9.2,pay to the Retrocessionaires the Unreimbursed Expense Amount,(C) in the event that this Agreement is to be terminated byALR Holdings and the Companies pursuant toSection 9.1.3(b), then ALR Holdings shall promptly, but inno event later than the time it delivers to theRetrocessionaires notice of termination in accordance with thisSection 9.2, pay the Termination Fee to theRetrocessionaires, and (D) in the event that this Agreementis to be terminated by ALR Holdings and the Companies pursuantto Section 9.1.4 due to the failure of ALR Holdings’shareholders, at a meeting duly held, to approve thetransactions contemplated hereby, then ALR Holdings shallpromptly, but in no event later than three (3) BusinessDays after it delivers to the Retrocessionaires notice oftermination in accordance with this Section 9.2, pay to theRetrocessionaires the Unreimbursed Expense Amount. Any paymentspursuant to this Section 9.2 shall be made by wire transferof same day funds to an account or accounts designated inwriting by the party entitled to such payment.ARTICLE XMiscellaneous Provisions     10.1     *Notice.* Any and allnotices and other communications required or permitted underthis Agreement shall be in writing and shall be deemed to havebeen duly given when (a) received by the receiving
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party if mailed via United States registered or certified mail,return receipt requested, (b) received by the receivingparty if mailed by United States overnight express mail,(c) sent by facsimile or telecopy machine, followed byconfirmation mailed by United States first-class mail orovernight express mail, or (d) delivered in person or bycommercial courier against proof of receipt to the parties atthe following addresses:     If to the Retrocessionaires, to:     Wilton Reinsurance Bermuda Limited     Par La Ville Place     14 Par la Ville Road     P.O. Box HM 3379     Hamilton HM PX Bermuda     Attention: Chief Executive Officer     Fax: (441) 295-6821      Wilton Reassurance Company     187 Danbury Road     Riverview Building, 3rd Floor     Wilton, Connecticut 06897     Attention: Chief Executive Officer     Fax: (203) 762-4445     With a concurrent copy to each of:     Wilton Services, Inc.     187 Danbury Road     Riverview Building, 3rd Floor     Wilton, Connecticut 06897     Attention: General Counsel     Fax: (203) 762-4445      David A. Massey, Esq.     Sutherland Asbill & Brennan LLP     1275 Pennsylvania Ave., NW     Washington, DC 20004-2415     Fax: (202) 637-3593     If to the Companies, to:     Annuity and Life Reassurance America, Inc.     124 Palasido Avenue     Windsor, Connecticut 06095     Attention: Chief Executive Officer     Fax: (860) 285-0233      Annuity and Life Reassurance, Ltd.     Cumberland House     1 Victoria Street     Hamilton, Bermuda HM 11     Attention: Chief Executive Officer     Fax: (441) 296-7665     With a concurrent copy to each of:     Annuity and Life Re (Holdings), Ltd.     Cumberland House     1 Victoria Street     Hamilton, Bermuda HM 11
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     Attention: Chief Executive Officer     Fax: (441) 296-7665      Robert C. Juelke, Esq.     Drinker, Biddle & Reath LLP     One Logan Square     18th and Cherry Streets     Philadelphia, PA 19103-6996     Fax: (215) 988-2757     Any party may change the names or addresses where notice is tobe given by providing notice to the other party of such changein accordance with this Section 10.1.     10.2     *Entire Agreement.* ThisAgreement, including the Exhibits and Schedules hereto, theCoinsurance Agreements, and the other agreements entered into orto be entered into in connection herewith constitute the soleand entire agreement between the parties hereto with respect tothe subject matter hereof, and supersedes all prior discussionsand agreements between the parties with respect to the subjectmatter hereof, which are merged with and into this Agreement.     10.3     *Assignment.* ThisAgreement shall not be assigned by either of the parties heretowithout the prior written consent of the other party.     10.4     *Waivers and Amendments.*Any term or condition of this Agreement may be waived at anytime by the party that is entitled to the benefit thereof. Suchwaiver must be in writing and must be executed by an executiveofficer of such party. A waiver on one occasion will not bedeemed to be a waiver of the same or any other term or conditionon a future occasion. This Agreement may be modified or amendedonly by a writing duly executed by an executive officer of eachof the Companies and each of the Retrocessionaires.     10.5     *No Third PartyBeneficiaries.* Except as provided in Article VIII, theterms and provisions of this Agreement are intended solely forthe benefit of the Companies and the Retrocessionaires and theirpermitted successors and assigns, and it is not the intention ofthe parties to confer rights as a third-party beneficiary tothis Agreement upon any other person.     10.6     *Public Announcements.*At all times at or before the Closing, the Companies, on the onehand, and the Retrocessionaires, on the other hand, will consultwith the other before issuing or making any reports, statementsor releases to the public with respect to this Agreement or thetransactions contemplated hereby and will use good faith effortsto obtain the other party’s approval of the form, contentand timing of any public report, statement or release to be madesolely on behalf of a party. If the Companies and theRetrocessionaires are unable to agree upon or approve the form,content and timing of any such public report, statement orrelease and such report, statement or release is, in the opinionof legal counsel to the party wishing to make such report,statement or release, required by law or by legal disclosureobligations, then such party may make or issue the legallyrequired report, statement or release.     10.7     *Confidentiality.* Eachof the Companies, on the one hand, and the Retrocessionaires, onthe other hand, will hold, and will cause its respectiveRepresentatives to hold, in strict confidence, unless compelledto disclose by judicial or administrative process (including,without limitation, in connection with obtaining any RequiredClosing Date Approval) or by other requirements of law, allconfidential documents and confidential information concerningthe other party furnished to it by the other party or such otherparty’s Representatives in connection with this Agreementor the transactions contemplated hereby (“ConfidentialInformation”), except to the extent that such documents orinformation can be shown to have been (a) previouslylawfully known by the party receiving such documents orinformation, (b) in the public domain through no fault ofthe receiving party, or (c) later acquired by the receivingparty from other sources not themselves bound by, and in breachof, a confidentiality agreement. Neither the Companies, on theone hand, nor the Retrocessionaires, on the other hand, willdisclose or otherwise provide any such Confidential Informationto any other person, except to that party’s respectiveauditors, actuaries, attorneys, financial advisors and otherconsultants who need access to such Confidential Information inconnection with this Agreement and the transactions contemplatedhereby. If this Agreement is terminated pursuant toArticle IX, each of the parties will return to
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the other party all Confidential Information furnished to thatparty by the other party, and retrieve and destroy all copies ofsuch Confidential Information distributed to any other person,provided that the Retrocessionaires shall be entitled tomaintain one copy solely for archival purposes.     10.8     *Governing Law andJurisdiction.* This Agreement shall be governed by andconstrued in accordance with the laws of the State of New Yorkapplicable to contracts entered into therein, without referenceto principles of choice of law or conflicts of laws of that orany other jurisdiction. Each party hereto irrevocably andunconditionally submits to the exclusive jurisdiction of anyState or Federal Court sitting in New York, over any suit,action or proceeding arising out of or relating to thisAgreement. Each party hereto agrees that service of any process,summons, notice or document by U.S. registered mailaddressed to such party shall be effective service of processfor any action, suit or proceeding brought against such party insuch court. Each party hereto irrevocably and unconditionallywaives any objection to the laying of venue of any such suit,action or proceeding brought in any such court and any claimthat any such action, suit or proceeding brought in any suchcourt has been brought in an inconvenient forum. Each partyhereto agrees that final judgment in any such action, suit orproceeding brought in any such court shall be conclusive andbinding upon such party and may be enforced in any other courtsto whose jurisdiction such party may be subject, by suit uponsuch judgment.     10.9     *Arbitration.*(a) Except as provided in Section 5.2(c) of thisAgreement, after the Closing Date, any dispute between theparties relating in any way to this Agreement, the NovationAmendments, the Existing Retrocession Agreement Assignments, theAncillary Agreement Assignments or the transactions contemplatedhereby and thereby (including without limitation any disputerelating to the formation of a contract) shall be decidedthrough negotiation and, if necessary, arbitration as set forthin **Schedule 10.9**hereto.     (b) The parties intend this Section 10.9 to beenforceable in accordance with the United States FederalArbitration Act (9 U.S.C., Section 1) including anyamendments to that Act which are subsequently adopted. In theevent that either party refuses to submit to arbitration asrequired by Section 10.9(a), the other party may requestthe court specified in Section 10.8 to compel arbitrationin accordance with the Federal Arbitration Act.     10.10     *Counterparts.* ThisAgreement may be executed by the parties hereto in separatecounterparts, each of which when so executed and delivered shallbe an original, but all such counterparts shall togetherconstitute one and the same instrument. Each counterpart mayconsist of a number of copies hereof each signed by less thanall, but together signed by all of the parties hereto. Eachcounterpart may be delivered by facsimile transmission, whichtransmission shall be deemed delivery of an originally executeddocument.     10.11     *Headings.* The headingsin this Agreement have been inserted for convenience and do notconstitute matter to be construed or interpreted in connectionwith this Agreement.     10.12     *Severability.* If anyprovision of this Agreement other than any provision ofArticle II, Article III or Article VIII is heldto be illegal, invalid or unenforceable under any present orfuture law or is determined by a court of competent jurisdictionto be unenforceable, and if the rights or obligations of theCompanies or the Retrocessionaires under this Agreement will notbe materially and adversely affected thereby, such provisionshall be fully severable, and this Agreement will be construedand enforced as if such illegal, invalid or unenforceableprovision had never comprised a part of this Agreement, and theremaining provisions of this Agreement shall remain in fullforce and effect and will not be affected by the illegal,invalid or unenforceable provision or by its severance herefrom.**[Signature pages follow]**
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     **IN WITNESS WHEREOF**, the parties hereto have executed thisAgreement as of the date first written above. **PRUDENTIAL SELECT LIFE INSURANCE COMPANY OF AMERICA**      /s/ Perry H. Braun       By:   Perry H. Braun Title:     Senior Vice President **WILTON REINSURANCE BERMUDA LIMITED**      /s/ Michael N. Smith       By:   Michael N. Smith Title:     Chief Executive Officer **ANNUITY AND LIFE REASSURANCE AMERICA, INC.**      /s/ John W. Lockwood       By:   John W. Lockwood Title:     Chief Financial Officer **ANNUITY AND LIFE REASSURANCE, LTD.**      /s/ John F. Burke       By:   John F. Burke Title:     Chief Executive Officer     Annuity and Life Re (Holdings), Ltd. hereby executes thisAgreement solely for the purposes of Sections 5.20, 8.7(b)and 9.2 hereof. **ANNUITY AND LIFE RE (HOLDINGS), LTD.**      /s/ John F. Burke       By:   John F. Burke Title:     Chief Executive Officer
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**EXHIBIT A-1*****[To be used if counterparty will novate]*****FORM OF ANCILLARY AGREEMENT NOVATION AGREEMENT**     **THIS NOVATION AGREEMENT**(this**“Agreement”**), is made and entered into as of[                    ]by and among **ANNUITY AND LIFE REASSURANCE AMERICA, INC.**,a Connecticut insurance company **(“Transferor”)**,**PRUDENTIAL SELECT LIFE INSURANCE COMPANY OF AMERICA***, aMinnesota insurance company **(“Transferee”)**, andthe counterparties identified on the signature page hereto(collectively, the **“Counterparties”** and each a**“Counterparty”**).**RECITALS**     **WHEREAS,** pursuant to the Master Agreement (the**“Master Agreement”**), dated as of[                    ],2005, by and between Transferor, Annuity and Life Reassurance,Ltd., a Bermuda insurance company (**“ALR Bermuda”**and, together with Transferor, the **“ALRCompanies”**), Transferee, and Wilton Re Bermuda Limited,a Bermuda insurance company (**“Wilton Bermuda”**and together with Transferee the **“WiltonCompanies”**), the ALR Companies have agreed to reinsurethe Treaties (as defined in the Master Agreement) with, and/ornovate the Treaties to, the relevant Wilton Companies;     **WHEREAS,** there are certain agreements ancillary to theTreaties, including the[                    ]agreement between Transferor and the Counterparties, a true andcorrect copy of which, together with all amendments thereto, isattached as Exhibit A hereto (the **“AncillaryAgreement”**);     **WHEREAS,**Transferor desires to novate to the Transferee,and Transferee desires to assume from Transferor, the AncillaryAgreement in accordance with the terms hereof and to substituteTransferee for Transferor for all purposes as a party to theAncillary Agreement with respect to all rights and obligationsof Transferor under such agreement; and     **WHEREAS,**each Counterparty is willing to agree to suchnovation of the Ancillary Agreement;     **NOW THEREFORE,** in consideration of the foregoingrecitals, and of other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, andintending to be legally bound hereby, the parties hereto agreeas follows:     Section 1.01     *Novation*.(a) Effective as of 11:59 p.m. Eastern time on[                    ](the “Effective Time”), Transferee agrees withTransferor to perform the Ancillary Agreement, to be bound byall of the terms and conditions of the Ancillary Agreement, andto perform all of Transferor’s duties, obligations andliabilities under the Ancillary Agreement to the same extent asif Transferee were an original party to the Ancillary Agreementinstead of Transferor, provided that Transferee shall enjoy allof Transferor’s rights under the Ancillary Agreement.     (b) Effective at the Effective Time, each Counterpartyaccepts the liability of Transferee under the AncillaryAgreement in lieu of the liability of Transferor, agrees toTransferee being bound by all of the terms and conditions of theAncillary Agreement, and to Transferee performing all ofTransferor’s duties, obligations and liabilities under theAncillary Agreement to the same extent as if Transferee were aparty to the Ancillary Agreement instead of Transferor, andagrees that Transferee shall enjoy all of Transferor’srights under the Ancillary Agreement.     (c) Effective at the Effective Time, each Counterpartyreleases and forever discharges Transferor from any liabilityunder the Ancillary Agreement, from performing the AncillaryAgreement and any of its terms and conditions, from all ofTransferor’s duties, obligations and liabilities under theAncillary Agreement, and from all claims, demands actions andcauses of actions which such Counterparty ever had, now has ormay      * To be renamed Wilton Reassurance Company. Not affiliatedwith The Prudential Insurance Company of America.
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hereafter have against Transferor in any way arising out of,resulting from or related to the Ancillary Agreement.     Section 1.02     *ContinuedEffectiveness*. Transferee and each Counterparty herebyratify and confirm that the Ancillary Agreement shall continueamong them in full force and effect and the terms and conditionsof this Agreement shall form part of the Ancillary Agreement.     Section 1.03     *TransferredRights, Duties and Obligations*. All rights, duties,obligations and liabilities transferred to Transferee pursuantto this Agreement shall apply whether the right, duty,obligation or liability arose prior to or after the EffectiveTime.
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     **IN WITNESS WHEREOF,** the parties hereto have executed thisAgreement this           dayof[                    ],2005. **PRUDENTIAL SELECT LIFE INSURANCE COMPANY OF AMERICA**       By:     Title:  **ANNUITY AND LIFE REASSURANCE AMERICA, INC.**       By:     Title:  **COUNTERPARTIES:**  **[COUNTERPARTY]**       By:     Title:  **[COUNTERPARTY]**       By:     Title:
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**EXHIBIT A-2*****[To be used if counterparty will not novate]*****FORM OF ANCILLARY AGREEMENT ASSIGNMENT AGREEMENT**     **THIS ASSIGNMENT AGREEMENT**(this**“Agreement”**), is made and entered into as of[                    ]by and among **ANNUITY AND LIFE REASSURANCE AMERICA, INC.**,a Connecticut insurance company **(“Transferor”)**and **PRUDENTIAL SELECT LIFE INSURANCE COMPANY OF AMERICA***,a Minnesota insurance company **(“Transferee”)**.**RECITALS**     **WHEREAS,** pursuant to the Master Agreement (the**“Master Agreement”**), dated as of[                    ],2005, by and between Transferor, Annuity and Life Reassurance,Ltd., a Bermuda insurance company (**“ALR Bermuda”**and, together with Transferor, the **“ALRCompanies”**), Transferee, and Wilton Re BermudaLimited, a Bermuda insurance company (**“WiltonBermuda”**and together with Transferee the**“Wilton Companies”**), the ALR Companies haveagreed to reinsure the Treaties (as defined in the MasterAgreement) with, and/or novate the Treaties to, the relevantWilton Companies;     **WHEREAS,** there are certain agreements ancillary to theTreaties, including the[                    ]agreement between Transferor and the counterparties identifiedon the signature page hereto (collectively, the**“Counterparties”** and each a**“Counterparty”**), a true and correct copy ofwhich, together with all amendments thereto, is attached asExhibit A hereto (the **“AncillaryAgreement”**);     **WHEREAS,**Transferor desires to assign to the Transferee,and Transferee desires to assume from Transferor, the AncillaryAgreement in accordance with the terms hereof; and     **WHEREAS,**the Transferor and Transferee desire that eachCounterparty consent, and each Counterparty is willing toconsent, to such assignment and assumption of the AncillaryAgreement;     **NOW THEREFORE,** in consideration of the foregoingrecitals, and of other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, andintending to be legally bound hereby, the parties hereto agreeas follows:     Section 1.01     *Assignmentand Assumption*. Transferor hereby assigns to Transferee, andits successors and permitted assigns, as of the11:59 Eastern time on[                    ](the “Effective Time”), its respective rights,interests, liabilities and obligations in the AncillaryAgreement, and Transferee hereby accepts such transfer andassignment and assumes, and releases and discharges Transferorand its affiliates, and their respective successors and assigns,from, and agrees to pay, perform, discharge and be bound by allthe terms, covenants, conditions and obligations in and under,the Ancillary Agreement.     Section 1.02     *TransferredRights, Duties and Obligations*. All rights, duties,obligations and liabilities transferred to Transferee pursuantto this Agreement shall apply whether the right, duty,obligation or liability arose prior to or after the EffectiveTime.      * To be renamed Wilton Reassurance Company. Not affiliatedwith The Prudential Insurance Company of America.
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     **IN WITNESS WHEREOF,** the parties hereto have executed thisAgreement this           dayof[                    ],2005. **PRUDENTIAL SELECT LIFE INSURANCE COMPANY OF AMERICA**       By:     Title:  **ANNUITY AND LIFE REASSURANCE AMERICA, INC.**       By:     Title:**CONSENT:**     The undersigned counterparties hereby consent to the foregoingassignment by the Transferor to the Transferee; provided, thatsuch assignment shall not relieve the Transferor of anyobligation or liability under the Ancillary Agreement. **[COUNTERPARTY]**       By:     Title:  **[COUNTERPARTY]**       By:     Title:
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**EXHIBIT B****COINSURANCE AGREEMENT****Between****ANNUITY AND LIFE REASSURANCE AMERICA, INC.,****(referred to as the Company)****and****PRUDENTIAL SELECT LIFE INSURANCE COMPANY OF AMERICA*,****(referred to as the Retrocessionaire)****Dated[                    ],2005****Effective June 30, 2005**      * To be renamed Wilton Reassurance Company. Not affiliatedwith The Prudential Insurance Company of America.
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**COINSURANCE AGREEMENT**     **THIS COINSURANCE AGREEMENT**(the “Agreement”),is made and entered into this[     ] day of[                    ],2005, by and between **ANNUITY AND LIFE REASSURANCE AMERICA,INC.**, a Connecticut insurance company (the“Company”) and **PRUDENTIAL SELECT LIFE INSURANCECOMPANY OF AMERICA,** a Minnesota insurance company(“Retrocessionaire”).     **WHEREAS,** the Company, Annuity and Life Reassurance, Ltd.,a Bermuda insurance company (“ALR Bermuda”),Retrocessionaire and Wilton Reinsurance Bermuda Limited, aBermuda insurance company (“Wilton Bermuda,”) haveentered into that certain Master Agreement, datedAugust [     ], 2005 (the“Master Agreement”) and attached as **Exhibit A**hereto, pursuant to which the Company and ALR Bermuda haveagreed to retrocede, and Retrocessionaire and Wilton Bermudahave agreed to reinsure, certain reinsurance treaties;     **WHEREAS,** as contemplated by the Master Agreement, theCompany wishes to retrocede to the Retrocessionaire, and theRetrocessionaire wishes to indemnity reinsure, on a one-hundredpercent (100%) coinsurance basis, such reinsurancetreaties; and     **WHEREAS,** following the Transition Date, the Companydesires that the Retrocessionaire perform, and theRetrocessionaire wishes to perform, administrative functions onbehalf of the Company with respect to the Covered Treaties aswell as certain agreements related thereto.     **NOW, THEREFORE,** in consideration of the mutual andseveral promises and undertakings herein contained, and forother good and valuable consideration, the receipt and adequacyof which are hereby acknowledged, the Company and theRetrocessionaire agree as follows:ARTICLE IBasis of Coinsurance and Business Coinsured     1.01     *Coinsurance.*     (a) Subject to the terms and conditions of this Agreement,the Company hereby retrocedes on a coinsurance basis to theRetrocessionaire as of the Effective Time, and theRetrocessionaire hereby accepts and agrees to assume andindemnity reinsure on a coinsurance basis as of the EffectiveTime, one hundred percent (100%) of the Reinsured Liabilities.This is an Agreement for indemnity reinsurance solely betweenthe Company and the Retrocessionaire and shall not create anylegal relationship whatsoever between the Retrocessionaire andany Person other than the Company. The reinsurance effectedunder this Agreement shall be maintained in force, withoutreduction, unless such reinsurance is terminated or reduced asprovided herein.     (b) On and after the Effective Time, the Retrocessionairewill have the responsibility for immediately paying on behalf ofthe Company, as and when due, all Reinsured Liabilities arisingunder or attributable to the Covered Treaties.     1.02     *Reinsurance Coverage.*In no event shall the reinsurance provided hereunder withrespect to a particular Covered Treaty be in force and bindingat any time unless such Covered Treaty was in force and bindingas of the Effective Time and is not a Novated Treaty at suchtime.     1.03     *Reserves.* On and afterthe Effective Time, the Retrocessionaire shall establish andmaintain as a liability on its statutory financial statementsreserves for the Covered Treaties retroceded hereunder,calculated in accordance with SAP.
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ARTICLE IIAccountings and Transfer of Assets     2.01     *Reinsurance Premiums.*(a) In connection with the Closing under the MasterAgreement, in order to effect the reinsurance on the CoveredTreaties at the Effective Time, the Company has paid to theRetrocessionaire an initial reinsurance premium equal to [insertallocable portion of Master Agreement consideration].     (b) The Retrocessionaire shall be entitled to receive, asadditional reinsurance premium, immediate payment of an amountequal to (i) Premiums received on and after the EffectiveTime attributable to the Covered Treaties less(ii) Premiums paid by the Company to Third-PartyRetrocessionaires under any Existing Retrocession Agreements.     (c) To the extent that the Company recovers amounts fromany third party relating to the Covered Treaties (including,without limitation, Premiums from any Ceding Company andlitigation recoveries, but excluding recoveries under ExistingRetrocession Agreements that have not been assigned or novatedto Retrocessionaire), immediately upon receipt of any suchamounts the Company shall transfer such amounts to theRetrocessionaire and provide the Retrocessionaire with anypertinent information that the Company may have relating thereto.     (d) Notwithstanding anything to the contrary set forth inSection 2.01(b) and (c) of this Agreement, any amountspaid, received or due by the Company thereunder prior to theTransition Date shall be accounted for and paid pursuant toSection 5.3(b) and (c) of the Master Agreement.     2.02     *Delayed Payments.* Ifthere is a delayed settlement of any payment due hereunder,interest will accrue on such payment on a daily compounded basisat an annual rate equal to the Treasury Rate. For purposes ofthis Section 2.02, a payment will be considered overdue,and such interest will begin to accrue, on the first dayimmediately following the date such payment is due. For greaterclarity, (i) a payment shall be deemed to be due hereunderon the last date on which such payment may be timely made underthe applicable provision, and (ii) interest will not accrueon any payment due the Retrocessionaire hereunder unless thedelayed settlement thereof was caused by the Company.     2.03     *Failure to Pay ReinsurancePremiums.* The payment of reinsurance premiums is a conditionprecedent to the continuing liability of the Retrocessionaireunder this Agreement, unless such failure is a result of anyaction or inaction of the Retrocessionaire or any of itsRepresentatives during the time it is administering the CoveredTreaties pursuant to Article III of this Agreement. Ifreinsurance premiums with respect to this Agreement are not paidwhen due, the Retrocessionaire shall have the right to providethe Company 45 days’ prior written notice (the“Initial Notice”) of its intent to terminate becauseof the Company’s failure to pay reinsurance premiums. Ifsuch reinsurance premiums have not been paid within 45 daysof the delivery of the Initial Notice, the Retrocessionaireshall provide to the Company a second notice (the “SecondNotice”) of its intent to terminate because of theCompany’s failure to pay such premiums. The reinsurancehereunder of all Covered Treaties shall terminate as of the lastdate upon which premiums with respect to such Covered Treatieswere paid.ARTICLE IIIAdministration     3.01.     *Engagement.* Commencingon the Transition Date and during the entire term of thisAgreement, the Company hereby exclusively engages theRetrocessionaire to render on behalf of the Company alladministrative and management services necessary and desirableto fully administer and manage the Covered Treaties, theAncillary Agreements and the Existing Retrocession Agreements(collectively, the “Administrative Services”). TheRetrocessionaire hereby accepts such engagement and agrees toperform the Administrative Services in accordance with the termsand conditions of this Agreement. The Administrative Servicesshall include, but not be limited to, the following:(i) collecting Premiums and other amounts due under the
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Covered Treaties, provided that the Company shall cooperate withthe Retrocessionaire with respect to any dispute or litigationwith respect thereto by making available any information in thepossession of the Company necessary to respond to any suchdispute or litigation on a timely basis; (ii) receiving,processing, investigating, evaluating and paying claims filed ormade by Ceding Companies; (iii) defending any actionbrought upon a Covered Treaty (other than in respect of anExcluded Liability), Existing Retrocession Agreement orAncillary Agreement or in connection with Reinsured Liabilities;(iv) providing usual and customary services for CedingCompanies to the extent required under the terms of the CoveredTreaties, Existing Retrocession Agreements, and AncillaryAgreements; (v) paying amounts due to agents, brokers,reinsurance intermediaries, and other Persons, as applicable,under the terms of any of the Covered Treaties, ExistingRetrocession Agreements, and Ancillary Agreements;(vi) preparing and providing to the Company all accountingand actuarial information related to the Covered Treaties,Existing Retrocession Agreements, and Ancillary Agreements thatare necessary in order for the Company to timely meet statutoryor tax accounting requirements for periods commencing on orafter the Transition Date; (vii) maintaining appropriatebooks and records of all transactions related to the each of theCovered Treaties, Existing Retrocession Agreements, andAncillary Agreements, including, without limitation, those booksand records required by and in accordance with the IndustryStandards; (viii) fully administering Existing RetrocessionAgreements, including, without limitation, paying allreinsurance premiums and collecting all reinsurance recoverablesdue from or to the Company thereunder; (ix) commencing anyactions necessary to collect amounts due under the ExistingRetrocession Agreements and Ancillary Agreements; (x) fullyadministering Ancillary Agreements, including, withoutlimitation, paying all amounts due by the Company thereunder andcollecting all amounts due the Company thereunder; and(xi) providing any such additional services incident to theforegoing, including, without limitation, those services as maybe necessary or appropriate to fully and properly administer theCovered Treaties, Existing Retrocession Agreements, andAncillary Agreements in accordance with Industry Standards. TheRetrocessionaire shall provide the Administrative Services andperform its other obligations under this Article III at itssole cost and expense and in accordance with Industry Standards.It is acknowledged and agreed that payment of any amount underor with respect to any Covered Treaty pursuant to thisSection 3.01 (including without limitation the payment ofany Reinsured Liabilities) will constitute full and equivalentperformance by Retrocessionaire of its obligations with respectto such amount under Section 1.01.     3.02.     *Facilities.* TheRetrocessionaire will furnish the facilities, including, withoutlimitation, physical facilities, trained personnel, and dataprocessing hardware and software, necessary or desirable toprovide the Administrative Services.     3.03.     *Safeguarding Data.* TheRetrocessionaire will provide the storage facilities for itscopies of books and records relating to the Covered Treaties,Existing Retrocession Agreements, and Ancillary Agreementsnecessary or desirable and as required by Applicable Law. TheRetrocessionaire shall be responsible for ensuring that thequality and security of the storage facilities is in accordancewith Industry Standards. The Retrocessionaire shall establishreasonable safeguards to protect such books and records,including, without limitation, the data and data files of theCompany and each Ceding Company, as the case may be, againstunauthorized distribution, loss or alteration. Without limitingthe generality of the foregoing, the Retrocessionaire shallprovide for data recovery procedures and systems, includingdaily back-up of records, which shall be stored at an off-sitelocation reasonably acceptable to the Company. Upon reasonablenotice, the Company shall have the right to review and inspectsuch books, records and procedures relating thereto.     3.04.     *Bank Account.* TheRetrocessionaire shall establish and maintain a bank account(the “Collections Account”) in the name of Company forthe collection of and payment of all amounts due in connectionwith each Covered Treaty, Existing Retrocession Agreement andAncillary Agreement. To the extent reasonably requested by theRetrocessionaire, the Company shall do all things reasonablynecessary to enable the Retrocessionaire to open and maintainthe Collections Account, including without limitation executingand delivering such board resolutions and other documents as maybe requested by the relevant bank. The Company shall direct thatall amounts due to the Company under the terms of any CoveredTreaty, Existing Retrocession Agreement and Ancillary Agreementbe deposited directly into the Collections Account. TheRetrocessionaire shall have the right to draw on the CollectionsAccount for the purpose of performing its
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obligations under this Agreement. **Schedule 3.04**setsforth a list of, and copies of incumbency certificates for, theRetrocessionaire employees empowered to take any action withrespect to the Collection Account. The Retrocessionaire willnotify the Company of the termination or replacement of anyperson listed on Schedule 3.04 promptly, but in no eventlater than two business days after such termination orreplacement. The Company shall not, without theRetrocessionaire’s prior written consent, make any changesto the authorized signatories on the Collections Account orattempt to withdraw any funds therefrom. As between theRetrocessionaire and the Company, the Retrocessionaire shall ownall funds deposited in the Collections Account, shall beentitled to all interest thereon, and shall pay or reimburse theCompany for all taxes on such interest.     3.05.     *Books and Records.* TheRetrocessionaire shall maintain at its principal administrativeoffice for the duration of this Agreement and six (6) yearsthereafter or such longer period required by Applicable Lawbooks and records (a) of all transactions between it, theCompany and the Ceding Companies, or (b) relating to orarising from any of the Covered Treaties, Existing RetrocessionAgreements and Ancillary Agreements. Such books and recordsshall be maintained in accordance with Industry Standards. Thecommissioner of insurance or appropriate governmental officer ofany state or local authority with jurisdiction over the Companyshall have access to such books and records as required byApplicable Law. The Retrocessionaire shall give the Companysixty (60) days’ advance written notice of theproposed disposal or destruction of such books and records by oron behalf of the Retrocessionaire and shall make available forremoval and storage by the relevant Ceding Company, Third-PartyRetrocessionaire, and/or the Company such books and recordsduring that sixty-day period. The storage anddisposal/destruction of any books and records so obtained by theCompany shall thereafter be the sole responsibility of theCompany.     3.06.     *Right to Inspect andAudit.* The Company and its Representatives shall have theright to inspect and audit the Retrocessionaire during theRetrocessionaire’s normal business hours withfive(5) business days’ advance notice or upon otherreasonable notice to evaluate the internal controls andcompliance with this Agreement with regard to the books andrecords maintained by the Retrocessionaire pursuant to or inconnection with this Agreement, including, without limitation,records relating to the Collections Account, and all such booksand records shall be made available to the Company and itsRepresentatives for review, audit, inspection, andreproduction.. The Company shall be fully responsible for thecosts of such reviews, audits, inspections and reproductions     3.07     *Regulatory Reporting;Monthly Reports.*     (a) The Retrocessionaire shall provide to the Company allinformation with respect to the Covered Treaties, ExistingRetrocession Agreements and Ancillary Agreements required by theCompany to satisfy all current and future informationalreporting and any other requirements imposed upon it by anygovernmental entity. Upon the reasonable request of the Company,the Retrocessionaire shall timely provide all informationnecessary to prepare such reports and summaries as may benecessary to satisfy any requirements imposed by a governmentalentity upon the Company with respect to Covered Treaties,Existing Retrocession Agreements and Ancillary Agreements, andpromptly provide to the Company copies of all existing recordsrelating to the Covered Treaties, Existing RetrocessionAgreements and Ancillary Agreements (including, with respect torecords maintained in machine readable form, hard copies)necessary to satisfy such requirements.     (b) Within a time period mutually agreeable to the Companyand the Retrocessionaire, but in no event more than 30 daysfollowing the end of each calendar month after the TransitionDate, the Retrocessionaire will provide to the Company theinformation needed by the Company for reporting the CoveredTreaties, Existing Retrocession Agreements and AncillaryAgreements on statutory or GAAP financial statements, taxreturns, or other financial reports required to be filed by theCompany. The form of the report (the “RetrocessionaireMonthly Report”) and the information to be provided is setforth on **Schedule 3.07**attached hereto. If net cashis due to the Company, the amount due will accompany theRetrocessionaire Monthly Report. If net cash is due to theRetrocessionaire, the Company will pay such amount to theRetrocessionaire promptly upon its receipt of theRetrocessionaire Monthly Report.     3.08     *Insurance.* TheRetrocessionaire shall maintain (a) commercial generalliability and/or office premises liability insurance, includingpremises liability and contractual liability, for claims ofbodily injury,
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personal injury and property damage with a business personalproperty limit of not less than $1,000,000, and an officepremises liability of not less than $1,000,000 peroccurrence, $2,000,000 general aggregate, $1,000,000 for firedamage, any one fire, and $10,000 for medical expense, any oneperson; and (b) while any of the Retrocessionaire’semployees are based on the premises of the Company, workerscompensation insurance in compliance with statutory requirements.ARTICLE IVRegulatory Matters     4.01     *Regulatory Matters.* Ifthe Company or the Retrocessionaire receives notice of, orotherwise becomes aware of, any regulatory inquiry,investigation or proceeding relating to the Covered Treaties,the Company or the Retrocessionaire, as applicable, shallpromptly notify the other party thereof, whereupon the partiesshall cooperate in good faith and use their respectivecommercially reasonable efforts to resolve such matter in amutually satisfactory manner, in light of all the relevantbusiness, regulatory and legal facts and circumstances.     4.02     *Licenses.* At all timesduring the term of this Agreement, the Retrocessionaire shallhold and maintain all licenses, certificates of authority andauthorizations required under Applicable Law or otherwise takeall action that may be necessary or desirable (i) for theCompany to obtain full financial credit for the Covered Treatiesin the jurisdiction in which it is domiciled as of the EffectiveDate, and (ii) to perform its obligations hereunder.     4.03     *Notice of Litigation.*On and after the date of this Agreement, the Company and theRetrocessionaire shall promptly notify the other upon receipt ofany demand letter, summons, complaint, petition or notice oflitigation, arbitration, or other dispute resolution proceedingsfrom any Person, and any complaint, notice, inquiry or othercorrespondence from any insurance regulatory authority relatingto this Agreement, any Covered Treaty, Existing RetrocessionAgreement, or Ancillary Agreement, or the subject matter hereofor thereof.ARTICLE VCertain Covenants     5.01     *Cooperation.* Each partyhereto shall cooperate fully with the other in all reasonablerespects in order to accomplish the objectives of thisAgreement, including, without limitation, the conveyance of thebenefits of the Covered Treaties, Ancillary Agreements and theExisting Retrocession Agreements, each in accordance with theterms of such agreements. In the event and to the extent thatthe parties are unable to obtain any required consents,approvals or agreements of any such Person as may be required toconvey such benefits (i) the Company shall use commerciallyreasonable efforts in cooperation with the Retrocessionaire to(A) provide or cause to be provided to the Retrocessionairethe benefits of each of the Covered Treaties, AncillaryAgreements and the Existing Retrocession Agreements, and(B) enforce for the account of the Retrocessionaire anyrights of the Company arising from any such agreement, and(ii) the Retrocessionaire shall use commercially reasonableefforts to perform the obligations of the Company arising underall such agreements. If and when any such consent, approval oragreement shall be obtained, the Company shall promptly assignall of its rights and obligations thereunder to theRetrocessionaire without the payment of further considerationand the Retrocessionaire shall, without the payment of anyfurther consideration therefor, assume such rights andobligations and the Company shall be relieved of any and allobligation or liability hereunder.     5.02     *Further Assurances.*Each of the parties hereto shall execute such documents andother papers and perform such further acts as may be reasonablyrequired to carry out the provisions hereof and the transactionscontemplated hereby. Without limiting the generality of theforegoing, (i) the Company shall grant to theRetrocessionaire a power of attorney to authorize theRetrocessionaire, to the greatest extent possible, to act onbehalf of the Company in administering the Covered Treaties, theExisting Retrocession
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Agreements, and the Ancillary Agreements, and (ii) theparties shall cooperate with each other by furnishing anyadditional information and executing and delivering anyadditional documents as may be reasonably requested by the otherto further perfect or evidence the consummation of, or otherwiseimplement, any transaction contemplated by this Agreement, or toaid in the preparation of any regulatory filing, financialstatement or Tax return; provided, however, that any suchadditional documents must be reasonably satisfactory to each ofthe parties and not impose upon either party any materialliability, risk, obligation, loss, cost or expense notcontemplated by this Agreement.     5.03     *Oversights.* Inadvertentdelays, errors or omissions made in connection with thisAgreement or any transaction hereunder shall not relieve eitherparty from any liability which would have attached had suchdelay, error or omission not occurred, provided always that sucherror or omission is rectified as soon as possible afterdiscovery, and provided that the party making such error oromission or responsible for such delay shall be responsible forany additional liability which attaches as a result.     5.04     *No Amendments orWaivers.* Following the execution of this Agreement, theCompany shall not terminate, modify, amend or waive compliancewith any provision of any of the Covered Treaties, AncillaryAgreements or Existing Retrocession Agreements and shall fullycomply with all of the terms and provisions of such agreements.ARTICLE VIDac Tax     6.01     *Election.*     (a) All uncapitalized terms used herein shall have themeanings set forth in the regulations under Section 848 ofthe Code.     (b) Each of the Company and the Retrocessionaireacknowledges that it is subject to taxation under Subchapter Lof the Code and hereby makes the election contemplated bySection 1.848-2(g)(8) of the Treasury Regulations withrespect to this Agreement. Each of the Company and theRetrocessionaire (i) agrees that such election is effectivefor the taxable year of each party that includes the EffectiveDate and for all subsequent years during which this Agreementremains in effect and (ii) warrants that it will take noaction to revoke the election.     (c) Pursuant to Section 1.848-2(g)(8) of the TreasuryRegulations, each of the Company and the Retrocessionaire herebyagrees (i) to attach a schedule to its federal income taxreturn for its first taxable year ending on or after theEffective Date that identifies this Agreement as a reinsuranceagreement for which the joint election underSection 1.848-2(g)(8) has been made, (ii) that theparty with net positive consideration for this Agreement foreach taxable year will capitalize its specified policyacquisition expenses with respect to this Agreement withoutregard to the general deductions limitation ofSection 848(c)(1) of the Code, and (iii) to exchangeinformation pertaining to the amount of net consideration underthis Agreement each year to ensure consistency or as otherwiserequired by the Internal Revenue Service. The Retrocessionaireshall prepare and execute duplicate copies of the scheduledescribed in the preceding sentence as soon as possible afterthe Effective Date and submit them to the Company for execution.The Company shall execute the copies and return one of them tothe Retrocessionaire within thirty (30) days of the receipt ofsuch copies.     (d) The Retrocessionaire shall submit a schedule to theCompany by May 1 of each year of its calculation of the netconsideration under this Agreement for the preceding taxableyear. This schedule of calculations shall be accompanied by astatement signed by an authorized representative of theRetrocessionaire stating that the Retrocessionaire will reportsuch net consideration in its federal income tax return for thepreceding taxable year.     (e) The Company may contest such calculation by providingan alternative calculation to the Retrocessionaire in writingwithin thirty (30) days after the date on which the Companyreceives the Retrocessionaire’s calculation. If the Companydoes not so notify the Retrocessionaire, the Company will reportthe net
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consideration under this Agreement as determined by theRetrocessionaire in the Company’s federal income tax returnfor the preceding taxable year.     (f) If Company contests the Retrocessionaire’scalculation of the net consideration under this Agreement, theparties shall act in good faith to reach an agreement as to thecorrect amount of net consideration within thirty (30) daysafter the date on which the Company submits its alternativecalculation. If Retrocessionaire and the Company reach agreementas to the amount of net consideration under this Agreement, eachparty shall report such amount in its federal income tax returnfor the preceding taxable year.     If, during such period, Retrocessionaire and the Company areunable to reach agreement, they shall promptly thereafter causePricewaterhouseCoopers LLP (or another mutually-agreednationally-recognized firm of certified public accountants)promptly to review (which review shall commence no later thanfive (5) days after the selection of such independentaccountants) this Agreement and the calculations ofRetrocessionaire and the Company for the purpose of calculatingthe net consideration under this Agreement. In making suchcalculation, such independent accountants shall consider onlythose items or amounts in the Company’s calculation as towhich the Retrocessionaire has disagreed.     Such independent accountants shall deliver to Retrocessionaireand the Company, as promptly as practicable (but no later thanthirty (30) days after the commencement of their review), areport setting forth such calculation, which calculation shallresult in a net consideration between the amount thereof shownin the Company’s calculation delivered and the amountthereof shown in Retrocessionaire’s calculation. Suchreport shall be final and binding upon Retrocessionaire and theCompany. The fees, costs and expenses of such independentaccountant shall be borne (i) by the Company if thedifference between the net consideration as calculated by theindependent accountants and the Company’s calculation isgreater than the difference between the net consideration ascalculated by the independent accountants andRetrocessionaire’s calculation, (ii) by theRetrocessionaire if the first such difference is less than thesecond such difference, and (iii) otherwise equally byRetrocessionaire and the Company.ARTICLE VIIArbitration     7.01     *Arbitration.*(a) After the Closing Date, any dispute between the partiesrelating in any way to this Agreement (other than disputesrelating to calculations relating to DAC tax, which shall beresolved in accordance with Article VI hereof, and anydispute arising in connection with the Post-Effective TimeAccounting or the Post-Transition Accounting contemplated bySection 5.2 of the Master Agreement, which shall beresolved in accordance with Section 5.2(c) of the MasterAgreement), shall be decided through negotiation and, ifnecessary, arbitration as set forth in Schedule 7.01 hereto.     (b) The parties intend this Section 7.01 to beenforceable in accordance with the Federal Arbitration Act(9 U.S.C., Section 1) including any amendments to thatAct which are subsequently adopted. In the event that eitherparty refuses to submit to arbitration as required bySection 7.01(a), the other party may request the courtspecified in Section 12.04 to compel arbitration inaccordance with the Federal Arbitration Act.ARTICLE VIIIInsolvency     8.01     *Insolvency of theCompany.* In the event of the insolvency of the Company, allcoinsurance made, retroceded, renewed or otherwise becomingeffective under this Agreement shall be payable by theRetrocessionaire directly to the Company or to its liquidator,receiver or statutory successor on the basis of the liability ofthe Company under the Covered Treaties without diminutionbecause of the insolvency of the Company. It is understood,however, that in the event of the insolvency of the Company, theliquidator or receiver or statutory successor of the Companyshall give written notice of the pendency of a claim against the
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Company on a Covered Treaty within a reasonable period of timeafter such claim is filed in the insolvency proceedings and thatduring the pendency of such claim the Retrocessionaire mayinvestigate such claim and interpose, at its own expense, in theproceeding where such claim is to be adjudicated any defense ordefenses which it may deem available to the Company or itsliquidator or receiver or statutory successor. It is furtherunderstood that the expense thus incurred by theRetrocessionaire shall be chargeable, subject to court approval,against the Company as part of the expense of liquidation to theextent of a proportionate share of the benefit which may accrueto the Company solely as a result of the defense undertaken bythe Retrocessionaire.ARTICLE IXDuration     9.01     *Duration.* ThisAgreement shall continue in force (a) with respect to eachCovered Treaty until such time as (i) such Covered Treatybecomes a Novated Treaty, or (ii) if such Covered Treatydoes not become a Novated Treaty, (1) all theCompany’s liability with respect to such Covered Treaty isterminated in accordance with its terms, and (2) theCompany has received, or the Retrocessionaire has made on behalfof the Company, payments that discharge such liability in full;(b) each Existing Retrocession Agreement and AncillaryAgreement until such time as (i) each such agreement isassigned to and assumed by the Retrocessionaire, or,(ii) if such agreement is not so assigned or assumed,(1) all the Company’s liability with respect to eachsuch agreement is terminated in accordance with its terms, and(2) the Company has received, or the Retrocessionaire hasmade on behalf of the Company, payments that discharge suchliability in full. This Agreement shall terminate following thesatisfaction of the requirements of the foregoing subsections(a) and (b) with respect to the last non-NovatedTreaty, Existing Retrocession Agreement or Ancillary Agreementthen in force. In no event shall the interpretation of thisSection 9.01 imply a unilateral right of theRetrocessionaire to terminate this Agreement.     9.02     *Survival.*Notwithstanding the other provisions of this Article IX,the terms and conditions of Articles VI, X and XI shallremain in full force and effect after the date on which thisAgreement is terminated in accordance with the terms andconditions of this Article IX.ARTICLE XIndemnification     10.01     *Retrocessionaire’sObligation to Indemnify.* The Retrocessionaire hereby agreesto indemnify, defend and hold harmless the Company and itsAffiliates and their respective directors, officers andemployees (collectively, the “Company IndemnifiedParties”) from and against all losses, liabilities, claims,expenses (including reasonable attorneys’ fees andexpenses) and damages (“Losses”) incurred by theCompany to the extent arising from (i) any breach of anycovenant or obligation of the Retrocessionaire contained in thisAgreement, (ii) fraud, theft or embezzlement by directors,officers, employees, agents, subcontractors, successors orassigns of the Retrocessionaire in connection with theperformance of the Retrocessionaire’s obligations underArticle III of this Agreement, (iii) any ReinsuredLiability, or (iv) any Retrocessionaire ExtracontractualLiability, provided, however, that no indemnification shall bedue under Sections 10.01(i) or (ii) to the extent thatLosses are attributable to acts, omissions or conduct of aperson who is a director, officer, employee, agent,representative, successor, or permitted assign of the Company orany of its Affiliates (other than the Retrocessionaire or any ofits Representatives acting as an agent, representative,successor or permitted assign of the Company or any of itsAffiliates), unless such acts, omissions or conduct werecommitted at the written direction of the Retrocessionaire.     10.02     *Company’s Obligationto Indemnify.* The Company hereby agrees to indemnify, defendand hold harmless the Retrocessionaire and its Affiliates andtheir respective directors, officers and employees(collectively, the “Retrocessionaire IndemnifiedParties”) from and against all Losses incurred by theRetrocessionaire to the extent arising from (i) any breachof any covenant or obligation of the Company contained in thisAgreement, (ii) fraud, theft or embezzlement by directors,officers, employees, agents,
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subcontractors, successors or assigns of the Company inconnection with the performance of the Company’sobligations under Article III of this Agreement,(iii) any Excluded Liability; provided, however, that noindemnification shall be due under Sections 10.02(i) or(ii) to the extent that Losses are attributable to acts,omissions or conduct of a person who is a director, officer,employee, agent, representative, successor, or permitted assignof the Retrocessionaire or any of its Affiliates (other than theCompany or any of its Representatives acting as an agent,representative, successor or permitted assign of theRetrocessionaire or any of its Affiliates), unless such acts,omissions or conduct were committed at the written direction ofthe Company.ARTICLE XIDefinitions     11.01     *Definitions.* Anycapitalized term used but not defined herein shall have themeaning set forth in the Master Agreement. The following termsshall have the respective meanings set forth below throughoutthis Agreement:     *“Affiliate”*means, with respect to any Person,at the time in question, any other Person controlling,controlled by or under common control with such Person.     *“Agreement”*has the meaning set forth in thepreamble.     *“Ancillary Agreements”*means each contract oragreement identified on **Schedule 11.01(a)** heretobetween the Company (or any Affiliate thereof) and a CedingCompany or other counterparty relating to the administration ormanagement of one or more of the Covered Treaties.     *“Applicable Law”*means any federal, state,local or foreign law (including common law), statute, ordinance,rule, regulation, order, writ, injunction, judgment, permit,governmental agreement or decree applicable to a Person or anysuch Person’s subsidiaries, properties, assets, or to suchPerson’s officers, directors, managing directors, employeesor agents in their capacity as such.     *“Business Day”*means any day other than aSaturday, Sunday or other day on which commercial banks in NewYork or Bermuda are required or authorized by law to be closed.     *“Ceding Company”*means the ceding company underany Covered Treaty.     *“Company”*has the meaning set forth in thepreamble.     *“Company Extracontractual Liabilities”*meansall liabilities for consequential, exemplary, punitive orsimilar extracontractual damages or statutory penalties, whetherowing to Ceding Companies, governmental authorities or any otherperson relating to the Covered Treaties, which liabilities arisefrom any action, act of bad faith, error or omission by theCompany, any of its Affiliates, or any Representative of theCompany or any of its Affiliates, in each case excluding anyaction taken or failure to take any action at the writtendirection or with the express consent of the Retrocessionaire;provided, however, that Company Extracontractual Liabilitiesshall exclude, with respect to a given Covered Treaty, thoseliabilities arising pursuant to the express terms of suchCovered Treaty.     *“Covered Treaty”*means each reinsuranceagreement identified on **Exhibit B** hereto.     *“Effective Date”*means June 30, 2005.     *“Effective Time”*means 11:59 p.m. Easterntime on June 30, 2005.     *“Excluded Liability”*means any liability that(i) represents a Company Extracontractual Liability,(ii) is not expressly assumed by the Retrocessionairepursuant the Master Agreement, a Coinsurance Agreement (asdefined in the Master Agreement), a Novation Amendment, anExisting Retrocession Agreement Assignment (as defined in theMaster Agreement) or an Ancillary Agreement.     *“Existing Retrocession Agreement”*at any timemeans any Existing Retrocession Agreement (as defined in theMaster Agreement) that (a) was in force and effect as ofthe Effective Time, (b) covers any risk
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associated with any Covered Treaty, and (c) has not beenassigned or novated to Retrocessionaire at or prior to such time.     *“GAAP”*means United States generally acceptedaccounting principles.     *“Industry Standards”*as to any AdministrativeService shall mean the performance of such service (i) withthe skill, diligence and expertise commonly expected fromexperienced and qualified personnel performing such duties inthe life reinsurance industry and (ii) in accordance withApplicable Law and the terms of each Covered Treaty, ExistingRetrocession Agreement, and Ancillary Agreement, as applicable.     *“Master Agreement”*has the meaning set forth inthe preamble.     *“Novated Treaty”*means, at any time, eachCovered Treaty that has been assumed by the Retrocessionairepursuant to the terms of a Novation Amendment at such time.     *“Novation Amendment”*means an amendment of aCovered Treaty in substantially the form attached asExhibit D to the Master Agreement under which theRetrocessionaire will be contractually substituted for theCompany as respects such Covered Treaty.     *“Person”*means any individual, corporation,limited liability company, partnership, limited partnership,firm, joint venture, association, joint stock company, trust,unincorporated organization, governmental, judicial orregulatory body or other entity.     *“Premiums”*means premiums, considerations,deposits and similar amounts due from Ceding Companies or toThird-Party Retrocessionaires with respect to the CoveredTreaties.     *“Reinsured Liabilities”*means all net retainedliabilities of the Company, whether incurred before or after theEffective Time, arising under the Covered Treaties (net of allliabilities with respect to the Covered Treaties retroceded bythe Company under any Existing Retrocession Agreement that hasnot been assigned or novated to the Retrocessionaire, except tothe extent any retroceded liability to a non-Affiliate of theCompany under an Existing Retrocession Agreement cannot becollected, in which case such liability shall be reinsured bythe Retrocessionaire hereunder), including any amounts payableto any broker, agent or reinsurance intermediary identified on**Schedule 11.01(b)**hereto but excluding any ExcludedLiability. For the avoidance of doubt, Reinsured Liabilitiesdoes not include any premium tax liability or any obligation topay any guaranty fund assessment by any jurisdiction except tothe extent any such liability or obligation arises under theexpress terms of a Covered Treaty.     *“Representatives”*means, with respect to anyparty hereto, its officers, directors, employees, agents andother representatives (including legal counsel, investmentbankers, consultants, independent public accountants andactuaries).     *“Retrocessionaire”*has the meaning set forth inthe preamble.     *“Retrocessionaire Extracontractual Liability”*means all liabilities for consequential, exemplary, punitiveor similar extracontractual damages or statutory penalties,whether owing to Ceding Companies, governmental authorities orany other person relating to the Covered Treaties, whichliabilities arise from any action, act of bad faith, error oromission by the Retrocessionaire, any of its Affiliates, or anyRepresentative of the Retrocessionaire or any of its Affiliates,in each case excluding any action taken or failure to take anyaction at the written direction or with the express consent ofthe Company.     *“SAP”*means the statutory accounting practicesprescribed or permitted by the insurance regulatory authoritiesof the jurisdiction in which the Retrocessionaire is domiciled.     *“Third-Party Retrocessionaire”*shall mean anyretrocessionaire under an Existing Retrocession Agreement.     *“Treasury Rate”*means the annual yield rate, onthe Closing Date, of actively traded U.S. Treasurysecurities having a remaining time to maturity of six(6) months, as such rate is published under “TreasuryConstant Maturities” in Federal Reserve Statistical ReleaseH.15(519).
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ARTICLE XIIMiscellaneous     12.01 *Notices.* Any and all notices and othercommunications required or permitted under this Agreement shallbe in writing and shall be deemed to have been duly given when(a) received by the receiving party if mailed via UnitedStates registered or certified mail, return receipt requested,(b) received by the receiving party if mailed by UnitedStates overnight express mail, (c) sent by facsimile ortelecopy machine, followed by confirmation mailed by UnitedStates first-class mail or overnight express mail, or(d) delivered in person or by commercial courier to theparties at the following addresses:       (i)     If to the Company to:       Annuity and Life Reassurance America, Inc.