mutual covenants hereinafter contained
and upon the terms and conditions hereinafter set forth, the Company and
Reinsurer agree as follows:
ARTICLE I - INTERCOMPANY FACULTATIVE REINSURANCE
1.1
THE COMPANY HEREBY CEDES AS REINSURANCE TO THE REINSURER AND THE REINSURER
HEREBY ACCEPTS AS REINSURANCE FROM THE COMPANY THE SHARE OF EACH POLICY THAT IS
SPECIFIED AND AGREED TO BY THE PARTIES IN A FACULTATIVE CERTIFICATE (SUCH
REINSURANCE IS REFERRED TO INDIVIDUALLY AND COLLECTIVELY HEREIN AS "INTERCOMPANY
FACULTATIVE REINSURANCE").
THE TERMS OF EACH INTERCOMPANY FACULTATIVE
REINSURANCE (INCLUDING, WITHOUT LIMITATION, THE PREMIUM, RETENTION AND LIMITS
THEREOF) WILL BE DETERMINED BY THE COMPANY AND THE REINSURER ON A
POLICY-BY-POLICY BASIS AND EVIDENCED BY A DULY EXECUTED FACULTATIVE CERTIFICATE
BETWEEN THE REINSURER AND THE COMPANY.
IN ALL CASES, COMPANY AND REINSURER
HEREBY ACKNOWLEDGE THAT A FULL-TIME EMPLOYEE OR OFFICER OF COMPANY WILL RETAIN
FINAL DECISION MAKING AUTHORITY WITH RESPECT TO ALL REINSURANCE CEDED HEREUNDER.
1.2
ON EACH INTERCOMPANY FACULTATIVE REINSURANCE, THE REINSURER AGREES TO
REIMBURSE THE COMPANY FOR ITS SHARE OF THE FOLLOWING:
1.2.1
ALL LOSS PAYMENTS MADE BY THE COMPANY ON THE POLICY
CEDED PURSUANT TO SUCH INTERCOMPANY FACULTATIVE REINSURANCE; AND
1.2.2
ALLOCATED LOSS EXPENSE WITH RESPECT TO SUCH POLICY.
1.3
SUBJECT TO THE TERMS, CONDITIONS AND LIMITATIONS OF THIS AGREEMENT, THE
INTERCOMPANY FACULTATIVE REINSURANCE PROVIDED WITH RESPECT TO A POLICY CEDED
HEREUNDER SHALL BE IN EFFECT CONCURRENTLY WITH SUCH POLICY, UNLESS OTHERWISE
PROVIDED IN THE FACULTATIVE CERTIFICATE RELATING TO SUCH POLICY.
TO THE EXTENT
OF ITS INTEREST, THE REINSURER SHALL FOLLOW THE FORTUNES OF THE COMPANY IN ALL
MATTERS COMING WITHIN THE SCOPE OF THIS AGREEMENT, WHICH SHALL BE LIBERALLY
CONSTRUED.
ARTICLE II - COMMENCEMENT AND TERMINATION
2.1
THIS AGREEMENT SHALL BE EFFECTIVE AS OF THE DATE HEREOF AND SHALL REMAIN IN
EFFECT UNLESS TERMINATED IN ACCORDANCE WITH THIS ARTICLE.
2.2
EITHER PARTY TO THIS AGREEMENT MAY ELECT TO TERMINATE ITS PARTICIPATION IN
THIS AGREEMENT ON THIRTY (30) DAYS' PRIOR WRITTEN NOTICE TO THE OTHER PARTY.
2.3
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, ANY PARTY MAY
TERMINATE THIS AGREEMENT IMMEDIATELY UPON WRITTEN NOTICE TO THE OTHER PARTY IN
THE EVENT THAT THE OTHER PARTY (I) BECOMES INSOLVENT OR BANKRUPT, OR ADMITS IN
WRITING ITS INABILITY TO PAY ITS DEBTS AS THEY BECOME DUE, OR MAKES AN
ASSIGNMENT FOR THE BENEFIT OF CREDITORS, OR APPLIES FOR OR CONSENTS TO THE
APPOINTMENT OF A TRUSTEE OR RECEIVER FOR THE MAJOR PART OF ITS PROPERTY;
(II) BECOMES THE SUBJECT OF BANKRUPTCY, REORGANIZATION, REARRANGEMENTS,
INSOLVENCY OR LIQUIDATION PROCEEDINGS, OR OTHER PROCEEDINGS FOR RELIEF OF
CREDITORS AND SUCH PROCEEDINGS ARE NOT STAYED OR DISCHARGED WITHIN NINETY (90)
DAYS AFTER BEING COMMENCED; (III) IS ACQUIRED BY ANOTHER ENTITY, UNLESS SUCH
ACQUIRING ENTITY IS WHOLLY OWNED, DIRECTLY OR INDIRECTLY, BY ACE LIMITED;
(IV) FAILS TO OBTAIN OR MAINTAIN ANY LICENSES, PERMITS OR OTHER QUALIFICATIONS
THAT ARE REQUIRED BY LAW TO FULFILL ITS OBLIGATIONS UNDER THIS AGREEMENT AND
SUCH FAILURE REMAINS UNCURED AFTER FIFTEEN (15) DAYS; OR (V) COMMITS
ABANDONMENT, FRAUD OR WILLFUL MISCONDUCT IN CONNECTION WITH THE PROVISION