Document:

Exhibit 10.52

 

TRUST AGREEMENT

 

This TRUST
AGREEMENT, dated as of April 15, 2004 (this “Trust Agreement”), among Union
Fidelity Life Insurance Company, an insurance company organized under the Laws
of the State of Illinois (the “Grantor”), GE Capital Life Assurance Company of
New York, an insurance company organized under the laws of the State of New
York (the “Beneficiary”), and The Bank of New York a New York corporation (the
“Trustee”) (the Grantor, the Beneficiary and the Trustee are hereinafter each sometimes
referred to individually as a “Party” and collectively as the “Parties”).  All terms not defined herein shall have the same meanings as set
forth in the Coinsurance Agreement (as hereinafter defined).

 

WITNESSETH:

 

WHEREAS, pursuant to a Coinsurance
Agreement of even date herewith between the Beneficiary and the Grantor, the
Beneficiary is ceding to the Grantor, and the Grantor is reinsuring on a
coinsurance basis, certain of the Beneficiary’s liabilities arising under
structured settlement annuities, pursuant to a Reinsurance Agreement, also of
even date herewith between the Beneficiary and the Grantor, the Beneficiary is
ceding to the Grantor, and the Grantor is reinsuring on a modified coinsurance
basis (with respect to separate account liabilities), and on a coinsurance
basis (with respect to general account liabilities), certain of the
Beneficiary’s liabilities arising under variable annuities, and pursuant to a
Retrocession Agreement, also of even date herewith between the Beneficiary and
the Grantor, the Beneficiary is ceding to the Grantor, and the Grantor is
reinsuring on a coinsurance basis, certain of the Beneficiary’s liabilities
arising under certain long term care policies (collectively, the “Coinsurance
Agreements”).

 

WHEREAS,
the Grantor desires to transfer to the Trustee for deposit to a trust account
(the “Trust Account”) certain assets as security for the payment and
performance by the Grantor of its obligations under the Coinsurance Agreements;
and

 

WHEREAS,
the Trustee has agreed to act as Trustee hereunder, and to hold such assets in
trust in the Trust Account for the sole use and benefit of the Beneficiary for
such purposes in accordance with the terms and conditions of this Trust
Agreement; and

 

WHEREAS,
this Trust Agreement is made for the sole use and benefit of the Beneficiary
and for the purpose of setting forth the duties and powers of the Trustee with
respect to the Trust Account;

 

NOW,
THEREFORE, for and in consideration of the premises
and for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Parties hereby agree as follows:

 

 

Section
1.  Deposit of Assets to the Trust
Account.

 

(a)           The
Grantor hereby establishes the Trust Account with the Trustee for the sole use
and benefit of the Beneficiary, under the terms set forth herein.  The Trustee shall administer the Trust
Account in its name as Trustee for the sole benefit of the Beneficiary.  The Trust Account shall be subject to
withdrawal by the Beneficiary solely as provided herein.  The Trustee hereby accepts the Trust Account
upon the terms set forth in this Trust Agreement.

 

(b)           The
Grantor shall transfer to the Trustee, for deposit to the Trust Account, such
assets as may be required from time to time pursuant to the Coinsurance Agreements
(all such assets are herein referred to individually as an “Asset” and
collectively as the “Assets”).  The
Trustee is authorized and shall have power to receive the Assets from the
Grantor and to hold, invest, reinvest and dispose of the same for the uses and
purposes of and according to the provisions herein set forth.  All Assets shall be maintained by the
Trustee in the Trust Account separate and distinct from all other assets on the
books of the Trustee and in accordance with the terms of this Trust
Agreement.  The Assets shall consist
only of Eligible Securities (as hereinafter defined).  In the event of any payment default as to any Asset in the Trust
Account or in the event that any Asset no longer is an Eligible Security, the
Grantor shall, within five (5) business days after receiving notice from the
Trustee pursuant to Section 19 or the Grantor having knowledge of such default
or ineligibility, substitute other Assets which meet the requirements of an
Eligible Security and having a statutory book value equal to the statutory book
value of such Asset, which has a payment default or no longer meets the
requirements for an Eligible Security, on the last statement provided by the
Trustee.

 

(c)           The Grantor hereby represents and warrants (i) that, to
the extent practicable, any Assets transferred by the Grantor to the Trustee
for deposit to the Trust Account will be in such form that the Beneficiary
whenever necessary may, and the Trustee upon direction by the Beneficiary will,
negotiate any such Assets without consent or signature from the Grantor or any
other person or entity in accordance with the terms of this Trust Agreement,
(ii) that all Assets transferred by the Grantor to the Trustee for deposit into
the Trust Account consist only of Eligible Securities, and (iii) that Grantor
has at the time of transfer into this Trust Account good and marketable title
to the Assets to be so transferred and each such Asset shall be at the time of
transfer free and clear of all claims, liens, interests and encumbrances (other
than those arising under this Trust Agreement).

 

(d)           Prior
to depositing the Assets into the Trust Account, and from time to time
thereafter as required, the Grantor shall execute assignments, endorsement in
blank, or transfer legal title to the Trustee of all shares, obligations or
other Assets requiring assignments, so that, to the extent practicable, the
Beneficiary whenever necessary may, and the Trustee upon the direction by the
Beneficiary will, negotiate any such Assets without the consent or signature
from the Grantor or any other person or entity.  The Grantor shall give all notices and take all actions as the
Trustee deems appropriate in order to cause payments due or that become due on
any Asset within the Trust Account to be paid to the Trustee.  The Grantor shall not make or consent to any
waiver, amendment or restriction on transfer with respect to any Asset in the
Trust Account, in each case without the Beneficiary’s prior written consent.  In connection with the deposit of Assets
into the Trust Account, the Grantor shall furnish to the Trustee all original
documentation evidencing the Grantor’s ownership thereto.

 

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(e)           The
parties recognize that certain Assets will not be readily negotiable and that
certain notices, opinions of counsel, representations and/or consents will be
required for the Beneficiary to obtain good and marketable title to such
Assets.

 

Section 2.  Withdrawal of
Assets from the Trust Account.

 

(a)           Without
notice to the Grantor, the Beneficiary shall have the right, at any time and
from time to time, to withdraw from the Trust Account, upon notice to the
Trustee in the form of a certificate substantially in the form of Exhibit A-1
attached hereto (the “Beneficiary Certificate”), signed by a duly authorized
officer of the Beneficiary, accompanied by a request for withdrawal
substantially in the form of Exhibit A-2 hereto (the “Beneficiary Request for
Withdrawal”), signed by a duly authorized officer of the Beneficiary, such
Assets as are specified in such Beneficiary Request for Withdrawal.  The Beneficiary Request for Withdrawal may
designate a third party (the “Beneficiary Designee”), including the Grantor, to
whom Assets specified therein shall be delivered.  The Beneficiary shall not be required to present any other
statement or document in addition to a Beneficiary Certificate and a
Beneficiary Request for Withdrawal in order to withdraw any Assets, except that
the Beneficiary shall acknowledge receipt of any such Assets withdrawn upon
request by the Trustee.

 

(b)           Upon
receipt of a Beneficiary Certificate and a Beneficiary Request for Withdrawal,
subject to the provision by the Beneficiary of any required notices, opinions
of counsel and representations, the Trustee and the Grantor shall use
commercially reasonable efforts to transfer absolutely and unequivocally all
right, title and interest in the Assets specified in such Beneficiary Request
for Withdrawal and shall deliver physical custody (or such other form as is
necessary to complete the transfer) of such Assets to or for the account of the
Beneficiary or such Beneficiary Designee, as specified in such Beneficiary
Request for Withdrawal.  The Trustee
shall notify the Grantor and Beneficiary within three (3) business days
following each withdrawal from the Trust Account.

 

(c)           Subject
to Section 4, in the absence of a Beneficiary Certificate and a Beneficiary
Request for Withdrawal, the Trustee shall allow no substitution or withdrawal
of any Asset from the Trust Account.

 

(d)           The
Trustee shall notify the insurance regulator in the state where the Beneficiary
is domiciled within three (3) business days after all the assets in the Trust
Account are withdrawn.  At the Trustee’s
request, the Beneficiary shall provide to the Trustee the address of the
insurance regulator in the state where the Beneficiary is domiciled.

 

Section
3.  Application of Assets.  The Beneficiary shall be permitted to
withdraw Assets from the Trust Account only for the purposes set forth in the
Coinsurance Agreements.

 

Section 4.  Redemption,
Investment and Substitution of  Assets.

 

(a)           The
Trustee shall surrender for payment all maturing Assets and all Assets called
for redemption, and deposit the principal amount of the proceeds of any such
payment to the Trust Account.

 

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(b)           The
Grantor, subject to the prior written approval of the Beneficiary, may retain
(and pay the service fees of ) a professional asset manager (the “Asset
Manager”) to manage and make investment decisions with regard to the Assets
held by the Trustee in the Trust Account. 
From time to time, at the written order and direction of the Grantor or
the Asset Manager, the Trustee shall invest Assets in the Trust Account in Eligible
Securities.

 

(c)           From
time to time, subject to the prior written approval of the Beneficiary, the
Grantor or the Asset Manager may direct the Trustee to substitute Assets of
equal statutory book value for other Assets presently held in the Trust Account.
The Trustee shall have no responsibility whatsoever to determine the value of
such substituted Assets or that such substituted Assets constitute Eligible
Securities.

 

(d)           All
investments and substitutions of securities referred to in Sections 4(b) and
4(c) above shall be in compliance with the definition of “Eligible Securities”
in Section 12 of this Trust Agreement. 
Any instruction or order concerning such investments or substitutions of
securities shall be referred to herein as an “Investment Order”. The Trustee
shall execute Investment Orders and settle securities transactions by itself or
by means of an agent or broker.  The
Trustee shall not be responsible for any act or omission, or for the solvency,
of any such agent or broker, except as set forth in Section 7.

 

(e)           From
time to time, upon notice to the Beneficiary, the Trustee may withdraw any
Asset in the Trust Account upon the call or maturity of such Asset provided
that the proceeds from such call or maturity are deposited into the Trust Account.

 

(f)            When
the Trustee is directed to deliver Assets against payment, delivery will be
made in accordance with generally accepted market practice.

 

(g)           Any
loss incurred from any investment pursuant to the terms of this Section 4 shall
be borne exclusively by the Trust Account.

 

(h)           The Trustee shall not foreclose
on, or direct or consent to the foreclosure of, any real property securing a
commercial loan constituting an Asset or take title to such property by
deed-in-lieu of foreclosure or other means without the prior written consent of
the Grantor and the Beneficiary.  The
Trustee shall not provide any consent or direction with respect to any such
commercial loan except at the written direction of the Grantor.

 

Section
5.  The Income Account. All payments
of interest, dividends and other income in respect to Assets in the Trust
Account shall be the property of the Grantor and shall be deposited by the
Trustee subject to deduction of the Trustee’s compensation and expenses as
provided in Section 9 of this Agreement, in a separate account (the “Income
Account”) established and maintained by the Grantor at an office of the
Trustee.  The Grantor may withdraw
amounts from the Income Account at any time and from time to time.

 

Section
6.  Right to Vote Assets.  The Trustee shall forward all annual and
interim stockholder reports and all proxies and proxy materials relating to the
Assets in the Trust Account to the Grantor within a reasonable period of time
following the Trustee’s receipt thereof. 
The Grantor shall have the full and unqualified right to vote any Asset
in the Trust Account.

 

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Section 7.  Additional Rights
and Duties of the Trustee.

 

(a)           Before
accepting any Asset for deposit to the Trust Account, the Trustee shall
determine that such Asset is in such form that, to the extent practicable, the
Beneficiary whenever necessary may, or the Trustee upon direction by the
Beneficiary will, negotiate such Asset without consent or signature from the Grantor
or any person or entity other than the Trustee in accordance with the terms of
this Trust Agreement.

 

(b)           The
Trustee shall be under no obligation to determine whether or not any
instructions given by the Grantor and Beneficiary are contrary to any provision
of law.  It is understood and agreed
that the Trustee’s duties are solely those set forth herein and that the
Trustee shall have no duty to take any other action unless specifically agreed
to by the Trustee in writing.  Without
limiting the generality of the foregoing, the Trustee shall not have any duty
to advise, manage, supervise or make recommendations with respect to the
purchase, retention or sale of Assets with respect to any Assets in the Trust
Account as to which a default in the payment of principal or interest has
occurred or to be responsible for the consequences of insolvency or the legal
inability of any broker, dealer, bank or other agent employed by the Grantor or
Trustee with respect to the Assets except to the extent that the Trustee was
negligent, engaged in misconduct or acted in bad faith in the selection of any
such person or entity.

 

(c)           The
Trustee shall accept and open all mail directed to the Grantor or the
Beneficiary in care of the Trustee.

 

(d)           The
Trustee shall have no responsibility whatsoever to determine that any Assets in
the Trust Account are or continue to be Eligible Securities.

 

(e)           The
Trustee shall furnish to the Grantor and the Beneficiary a statement of all
Assets in the Trust Account upon the inception of the Trust Account and at the
end of each calendar month thereafter. 
The statement shall include a description of the Assets in the Trust
Account and shall be delivered within five (5) business days following the end
of such calendar month.

 

(f)            The
Trustee shall keep full and complete records of the administration of the Trust
Account in accordance with all applicable law. 
Upon the request of the Grantor or the Beneficiary, the Trustee shall
promptly permit the Grantor or the Beneficiary, their respective agents,
employees, independent auditors and regulatory authorities to examine, audit,
excerpt, transcribe and copy, during the Trustee’s normal business hours, any
books, documents, papers and records relating to the Trust Account or the
Assets.

 

(g)           Unless
otherwise provided in this Trust Agreement, the Trustee is authorized to follow
and rely upon all instructions given by officers of the Grantor or the
Beneficiary and by attorneys-in-fact acting under written authority furnished
to the Trustee by the Grantor or the Beneficiary, including, without
limitation, instructions given by letter, facsimile transmission or electronic
media, if the Trustee believes such instructions to be genuine and to have been
signed, sent or presented by the proper party or parties.  In the absence of negligence, the Trustee
shall not incur any liability to anyone resulting from actions taken by the
Trustee in reliance in good faith on such instructions.  The Trustee shall not incur any liability in
executing instructions (i)

 

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from any attorney-in-fact prior to receipt by it of notice of the
revocation of the written authority of the attorney-in-fact or (ii) from any
officer of the Grantor or the Beneficiary.

 

(h)           The
duties and obligations of the Trustee shall only be such as are specifically
set forth in this Trust Agreement, as it may from time to time be amended, and
no implied duties or obligations shall be read into this Trust Agreement
against the Trustee.

 

(i)            No
provision of this Trust Agreement shall require the Trustee to take any action
which, in the Trustee’s reasonable judgment, would result in any violation of
this Trust Agreement or any provision of law.

 

(j)            The
Trustee may confer with counsel of its own choice in relation to matters
arising under this Trust Agreement and shall have full and complete
authorization from the other Parties for any action taken or suffered by it
under this Trust Agreement or in respect of any transaction contemplated hereby
in good faith and in accordance with the opinion of such counsel.

 

(k)           The
Trustee shall notify the Grantor and Beneficiary in writing of any payment
default occurring as to any Asset within three (3) business days after Trustee
receives notice of such default.  In the
event of a delinquency of a timely payment in regard to any of the Assets, the
Trustee shall inform the Grantor and the Beneficiary immediately upon Trustee’s
receipt of notice of such delinquency.

 

(l)            Notwithstanding
any provision of this Agreement to the contrary, the Trustee shall be liable
for (i) subject to Section 7(n), the safekeeping of the Assets and
administering the Trust Account in accordance with the provisions of this Trust
Agreement and (ii) its own negligence, willful misconduct or lack of good faith
in performing its duties under this Trust Agreement.  The Trustee shall exercise the standard of care with respect to
the Assets that a professional trustee, engaged in the banking or trust company
industry, having professional expertise in financial and securities processing
transactions and custody would observe in such affairs.  The Trustee shall be strictly liable for
physical loss of or damage to Assets under its care, custody, possession or
control or the care, custody, possession or control of its subcustodians, other
agents or nominee(s), including but not limited to loss due to fire, burglary,
robbery, theft or mysterious disappearance. 
In the event of loss or damage to the Assets under the care, custody,
possession or control of Trustee or its subcustodians, other agents or
nominee(s), Trustee shall, upon demand of the Grantor or Beneficiary, promptly
replace such Assets with like kind and quality together with, all rights and
privileges pertaining to the Assets (by among other methods, posting
appropriate security or bond with the issuer of the Assets to obtain reissue of
such Assets, or, if acceptable to the Grantor, deliver cash equivalent to the
market value of the Assets as of the date of the discovery of the loss or
damage).  Nothing contained in any
contract between Trustee and any entity authorized to hold Assets, as defined
herein, shall diminish or otherwise alter the liability of Trustee to the
Grantor or Beneficiary.  The provisions
of this paragraph shall not affect the burden of proof under applicable law
with respect to the assertions of liability in any claim, action or dispute
alleging any breach of or failure to observe such standard of care.

 

6

 

(m)          The
Trustee shall not be responsible for the existence, genuineness or value of any
of the Assets, for the validity, perfection, priority or enforceability of the
liens in or with respect to any of the Assets, for the validity of title to the
Assets, for insuring the Assets, for the payment of taxes, charges, assessments
or liens upon or with respect to the Assets, for any obligations under any
agreements or other documents evidencing or related to any of the Assets (other
than this Trust Agreement), or for the compliance of the Assets with any laws,
including any Environmental Law (as hereinafter defined). The Trustee shall
have no responsibility for the recording, filing or registration (or for the
rerecording, refiling or reregistration) of any instrument or notice, including
any financing or continuation statement or any tax or securities form, at any
time in any public office or elsewhere for the purpose of perfecting,
maintaining the perfection of or otherwise making effective any lien upon or
with respect to any of the Assets.

 

(n)           The Parties
acknowledge and agree that certain of the Assets are and will continue to be
subject to servicing and custodial agreements in effect on the date hereof (as
amended or otherwise modified from time to time, including any replacements
thereof, the “Servicing/Custodial Agreements”). The Grantor and the Beneficiary
acknowledge and agree that (i) the Trustee shall have no liability under this
Trust Agreement for any action or omission of any of the parties to the
Servicing/Custodial Agreements, including with respect to any of the Assets at
any time during which such Assets are under the care, custody, possession or
control of any of the parties to the Servicing/Custodial Agreements or any of
their respective depositories, subcustodians, other agents or nominees (and,
solely for the purposes of limiting the liability and determining the duties of
the Trustee under Section 7(l),  none of
such Persons shall be considered to be the depositories, subcustodians, agents
or nominees of the Trustee), (ii) the performance by the Trustee of any of its
obligations under this Trust Agreement may be delayed, limited or otherwise
affected by the actions or omissions of any of the parties to the
Servicing/Custodial Agreements or as a result of the Assets being subject to
the Servicing/Custodial Agreements and (iii) the Trustee shall have no
liability under this Trust Agreement as a result of the Trustee’s failure to
perform any of its obligations under this Trust Agreement as a result of the
actions or omissions of any of the parties to the Servicing/Custodial
Agreements or as a result of the Assets being subject to the
Servicing/Custodial Agreements.

 

Section 8.  Representations,
Warranties and Covenants of the Trustee. 
The Trustee represents, warrants and covenants to the Grantor and
Beneficiary that:

 

(a)           The
Trustee is a Qualified United States Financial Institution;

 

(b)           In
the ordinary course of its business, the Trustee maintains securities accounts
for others and is acting in that capacity in this Trust Agreement;

 

(c)           The
Trust Account is and at all times shall be maintained at an office of the
Trustee in the United States of America;

 

(d)           The
Trustee is not an Affiliate of the Grantor or the Beneficiary.

 

Section 9.  The Trustee’s
Compensation; Expenses.

 

(a)           The
Grantor shall pay the Trustee, as compensation for its services under this
Trust Agreement, a fee computed at rates determined by the Trustee from time to
time and

 

7

 

communicated in writing to the Grantor.  The Grantor shall pay or reimburse the Trustee for all of the
Trustee’s expenses and disbursements in connection with its duties under this
Trust Agreement (including reasonable attorney’s fees and expenses), except any
such expense or disbursement as may arise from the Trustee’s negligence,
willful misconduct, lack of good faith or failure to administer the Trust
Account in accordance with the terms of this Trust Agreement.  The Trustee shall be entitled to deduct its
compensation and expenses from payments of dividends, interest and other income
in respect of the Assets held in the Trust Account prior to the deposit thereof
to the Income Account as provided in Section 5 of this Agreement.  The Grantor also hereby indemnifies the
Trustee for, and holds it harmless against, any loss, liability, costs or
expenses (including reasonable attorney’s fees and expenses) incurred or made
without negligence, willful misconduct or lack of good faith on the part of the
Trustee, arising out of or in connection with the performance of its
obligations in accordance with the provisions of this Trust Agreement (which
shall be the sole obligation of the Trustee), including any loss, liability,
costs or expenses arising out of or in connection with the status of the Trustee
and its nominee as the holder of record of the Assets.  The Grantor hereby acknowledges that the
foregoing indemnities shall survive the resignation of the Trustee or the
termination of this Trust Agreement and hereby grants the Trustee a lien, right
of set-off and security interest in the funds in the Income Account for the
payment of any claim for compensation, reimbursement or indemnity hereunder.

 

(b)           No
Assets shall be withdrawn from the Trust Account or used in any manner for
paying compensation to, or reimbursement or indemnification of, the Trustee.

 

(c)           In
addition to, and without limiting, the Grantor’s indemnification obligations
set forth in Section 9(a), to the extent resulting from or in connection with
the execution, delivery, enforcement, performance, or administration of this
Trust Agreement, the Grantor shall defend, indemnify, and hold harmless the
Trustee and its employees, officers, directors and agents from and against any
claims, demands, penalties, fines, liabilities, settlements, damages, costs, or
expenses of whatever kind or nature, known or unknown, contingent or otherwise,
arising out of, or in any way related to, (i) the presence, disposal, release,
or threatened release of any Hazardous Materials which are on, from, or affecting
soil, water, vegetation, buildings, personal property, persons, animals, or
otherwise; (ii) any personal injury (including wrongful death), property damage
(real or personal) or natural resource damage arising out of or related to such
Hazardous Materials; (iii) any third party claim brought or threatened,
settlement reached, or government order, or any policies or requirements of the
Trustee, which are based upon or in any way related to such Hazardous
Materials, including, without limitation, attorney and consultant fees and
expenses, investigation and laboratory fees, court costs, and litigation
expenses, and (iv) any violations of Environmental Law, except, in each
instance, to the extent arising from the negligence, willful misconduct or lack
of good faith of the Trustee. The Grantor hereby acknowledges that the
foregoing indemnities shall survive the resignation of the Trustee or the
termination of this Trust Agreement and hereby grants the Trustee a lien, right
of set-off and security interest in the funds in the Income Account for the
payment of any claim for compensation, reimbursement or indemnity
hereunder.  For purposes hereof:

 

“Hazardous
Materials” means, without limit, any pollutant, contaminant or hazardous,
toxic, medical, biohazardous, or dangerous waste, substance, constituent or
material, defined or regulated as such in, or for the purpose of, any
applicable Environmental Law, including, without

 

8

 

limitation, any asbestos,
any petroleum, oil (including crude oil or any fraction thereof), any
radioactive substance, any polychlorinated biphenyls, any toxin, chemical,
disease-causing agent or pathogen, and any other substance that gives rise to
liability under any applicable Environmental Law; and

 

“Environmental Law” means the Comprehensive Environmental Response,
Compensation and Liability Act, as amended (“CERCLA”), the Resource
Conservation and Recovery Act of 1976, as amended, and any other applicable
federal, state, local, or foreign statute, rule, regulation, order, judgment,
directive, decree, permit, license or common law as in effect now, previously,
or at any time during the term of this Trust Agreement, and regulating,
relating to, or imposing liability or standards of conduct concerning air
emissions, water discharges, noise emissions, the release or threatened release
or discharge of any Hazardous Material into the environment, the use,
manufacture, production, refinement, generation, handling, treatment, storage,
transport or disposal of any Hazardous Material or otherwise concerning
pollution or the protection of the outdoor or indoor environment, or human
health or safety in relation to exposure to Hazardous Materials.

 

Section 10.  Resignation or
Removal of the Trustee.

 

(a)           The
Trustee may resign at any time upon delivery of a written notice thereof to the
Beneficiary and to the Grantor effective not less than 90 days after receipt by
the Beneficiary and the Grantor of such notice.  The Trustee may be removed by prior written notice executed by
Grantor and Beneficiary.  No such
resignation or removal shall become effective until a successor Trustee has
been appointed and approved by the Beneficiary and the Grantor and all Assets
in the Trust Account have been duly transferred to the successor Trustee in
accordance with paragraph (b) of this Section 10.

 

(b)           Upon
receipt by the proper Parties of the Trustee’s notice of resignation or the
Grantor’s and Beneficiary’s notice of removal, the Grantor and the Beneficiary
shall appoint a successor Trustee.  Any
successor Trustee shall be a bank that is a member of the Federal Reserve
System and a Qualified United States Financial Institution, and shall not be an
Affiliate of the Grantor or the Beneficiary. 
Upon the acceptance of the appointment as Trustee hereunder by a
successor Trustee and the transfer to such successor Trustee of all Assets in
the Trust Account, the resignation or removal of the Trustee shall become
effective.  Thereupon, such successor
Trustee shall succeed to and become vested with all the rights, powers,
privileges and duties of the resigning or removed Trustee, and the resigning or
removed Trustee shall be discharged from any future duties and obligations
under this Trust Agreement, but the resigning or removed Trustee shall continue
after such resignation or removal to be entitled to the benefits of the
indemnities provided herein for the Trustee.

 

Section 11.  Termination of
the Trust Account.

 

(a)           The
Trust Account and this Trust Agreement, except for the indemnities provided
herein, may be terminated only after the Grantor and Beneficiary mutually give
the Trustee written notice of their intention to terminate the Trust Account
(the “Notice of Intention”).  The Notice
of Intention shall specify the date on which the Parties intend the Trust
Account to terminate (the “Termination Date”).

 

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(b)           On
the Termination Date, the Trustee shall transfer to the Grantor all of the
Assets not previously withdrawn by the Beneficiary.

 

Section
12.  Definitions.  Except as the context shall otherwise
require, the following terms shall have the following meanings for purposes of
this Trust Agreement (the definitions to be applicable to both the singular and
the plural forms of each term defined if both forms of such term are used in
this Trust Agreement):

 

The term
“Affiliate” means any other Person that directly or indirectly controls, is
controlled by, or is under common control with, the first Person.

 

The term
“Beneficiary” shall include any successor of the Beneficiary by operation of
law including, without limitation, any liquidator, rehabilitator, receiver or
conservator.

 

The term
“Control” (including the related terms “controlled by” and “under common
control with”) shall mean the ownership, directly or indirectly, of more than
50% of the voting securities of a corporation.

 

The term
“Eligible Securities” shall mean and include certificates of deposit (issued by
a United States bank and payable in United States legal tender) and other
assets of the types specified on Exhibit B attached hereto.

 

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

 

The term
“Qualified United States Financial Institution” shall mean a bank designated as
such by the Securities Valuation Office of the National Association of
Insurance Commissioners (or any successor organization or regulatory agency
having similar duties).

 

Section
13.  Governing Law.  This Trust Agreement shall be subject to and
governed by the laws of the State of New York without regard to its conflict of
laws provision and the Trust Account created hereunder shall be administered in
accordance with the laws of said state.

 

Section
14.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES TRIAL BY
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE PARTIES TO ENTER INTO THIS AGREEMENT.

 

Section
15.  Successors and Assigns.  This Trust Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors,
permitted assigns and legal representatives. 
Neither this Trust Agreement, nor any right or obligation hereunder, may
be assigned by any Party without the prior written consent of the other Parties
hereto.  Any assignment in violation of
this Section 15 shall be void and shall have no force and effect.

 

10

 

Section
16.  Severability.  If any provision of this Trust Agreement is
held to be void or unenforceable, in whole or in part, (i) such holding shall
not affect the validity and enforceability of the remainder of this Trust
Agreement, including any other provision, paragraph or subparagraph, and (ii)
the Parties agree to attempt in good faith to reform such void or unenforceable
provision to the extent necessary to render such provision enforceable and to
carry out its original intent.

 

Section
17.  Entire Agreement.  Except for the Coinsurance Agreements, this
Trust Agreement constitutes the entire agreement among the Parties with respect
to the subject matter hereof, and there are no understandings or agreements,
conditions or qualifications relative to this Trust Agreement which are not
fully expressed in this Trust Agreement or the Coinsurance Agreements.

 

Section
18.  Amendments.  This Trust Agreement may be modified or
otherwise amended, and the observance of any term of this Trust Agreement may
be waived, only if such modification, amendment or waiver is in writing and
signed by the Parties.

 

Section
19.  Notices.  All notices, requests, demands and other
communications under this Trust Agreement must be in writing and will be deemed
to have been duly given or made as follows: 
(a) if sent by registered or certified mail in the United States return
receipt requested, upon receipt; (b) if sent by reputable overnight air
courier, two (2) business days after mailing; (c) if sent by facsimile
transmission, with a copy mailed on the same day in the manner provided in (a)
or (b) above, when transmitted and receipt is confirmed by telephone; or (d) if
otherwise actually personally delivered, when delivered, and shall be delivered
as follows:

 

If to the Grantor:

 

Union Fidelity Life Insurance Company

200 North Martingale Road

Schaumburg, IL 60173-2096

Facsimile: (847) 330-3404         

Attention: Chief Financial Officer

 

With a copy to:

 

Union Fidelity Life
Insurance Company

200 North Martingale Road

Schaumburg, IL 60173-2096

Facsimile:  (847) 605-3044

Attention:  General Counsel

 

If to the Beneficiary:

 

GE Capital Life Assurance Company of New York

6610 West Broad Street

Richmond, VA 23230

 

11

 

Facsimile:  (804) 281-6165

Attention:  Chief Executive Officer

 

 

With a copy to:

 

GE Capital Life Assurance Company of New York

6610 West Broad Street

Richmond, VA 23230

Facsimile:  (804) 281-6005

Attention:  General Counsel

 

If to the Trustee:

 

The Bank of New York

101 Barclay Street - 8W

New York, NY 10286

Facsimile:  (212) 815-5875

Attention:  Insurance Trust and Escrow
Unit

 

or to such other address or to
such other Person as a Party may have last designated by notice to the other
Parties.

 

Section
20.  Headings.  The headings of the Sections have been
inserted for convenience of reference only and shall not be deemed to
constitute a part of this Trust Agreement.

 

Section
21.  Counterparts.  This Trust Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall
constitute an original, but such counterparts together shall constitute but one
and the same Trust Agreement.

 

12

 

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

 

	
   

  	
  UNION FIDELITY LIFE INSURANCE

  
	
   

  	
  COMPANY, as Grantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Glenn Joppa

  	
   

  
	
   

  	
  Name: Glenn Joppa

  
	
   

  	
  Title:
  Senior Vice President and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GE CAPITAL LIFE ASSURANCE 

  COMPANY OF NEW YORK, as 

  Beneficiary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Gary T. Prizzia

  	
   

  
	
   

  	
  Name: Gary T. Prizzia

  
	
   

  	
  Title: Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK, as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Robert W. Rich

  	
   

  
	
   

  	
  Name: Robert W. Rich

  
	
   

  	
  Title: Vice President

  

 

13

 

Exhibit A-1

 

CERTIFICATE

 

The
undersigned, the [insert position] and a duly authorized officer of GE Capital
Life Assurance Company of New York, does hereby certify that, pursuant to
Section 2 of the Trust Agreement dated as of [               ] entered
into by and among GE Capital Life Assurance Company of New York, Union Fidelity
Life Insurance Company and [            
] (the “Trust Agreement”) and the 
Coinsurance Agreement dated as of [        ] between GE Capital Life Assurance Company of New York and
Union Fidelity Life Insurance Company, GE Capital Life Assurance Company of New
York is entitled to withdraw from the Trust Account established by  Union Fidelity Life Insurance Company for
the benefit of GE Capital Life Assurance Company of New York pursuant to the
Trust Agreement, assets with a current statutory book value equal to
$[                ]
for the purpose[s] specified in paragraph[s] [        ]
and [     ] of Section [  ] of the Coinsurance Agreement.

 

[Certification
to specify the basis for the withdrawal.]

 

This
Certificate is a “Beneficiary Certificate” within the meaning of Section 2(a)
of the Trust Agreement.

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

14

 

Exhibit A-2

 

REQUEST FOR WITHDRAWAL

 

 GE Capital Life Assurance
Company of New York (“GECLANY”) hereby requests that
[               ]
immediately transfer to GECLANY [/or [         ]]
all right, title and interest in those assets set forth on Schedule A attached
hereto (which assets have a statutory book value equal to
$[                   ])
from the Trust Account established by Union Fidelity Life Insurance Company
(“UFLIC”) for the benefit of GECLANY pursuant to the Trust Agreement dated as
of [      ,
       ] entered into by and among GECLANY,
UFLIC and [           ]
(the “Trust Agreement”).  [Insert
transfer instructions.]

 

This Request for Withdrawal is a “Beneficiary Request for Withdrawal”
within the meaning of Section 2(a) of the Trust Agreement, and is made in
conjunction with the attached Beneficiary Certificate.

 

	
   

  	
  GE CAPITAL LIFE ASSURANCE 

  COMPANY OF NEW YORK

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated: 

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
						

 

15

 

Exhibit
B

 

ELIGIBLE SECURITIES

 

Assets of the
types for which an Illinois-domiciled life insurance company could obtain full
statutory reserve credit under statutory accounting practices prescribed or
permitted by the Director of Insurance of the State of Illinois.

 

16Exhibit 10.53

 

TRUST AGREEMENT

 

This TRUST
AGREEMENT, dated as of April 15, 2004 (this “Trust Agreement”), among Union
Fidelity Life Insurance Company, an insurance company organized under the Laws
of the State of Illinois (the “Grantor”), First Colony Life Insurance Company,
an insurance company organized under the laws of the Commonwealth of Virginia
(the “Beneficiary”), and The Bank of New York, a New York corporation (the
“Trustee”) (the Grantor, the Beneficiary and the Trustee are hereinafter each
sometimes referred to individually as a “Party” and collectively as the
“Parties”).  All terms not defined herein shall
have the same meanings as set forth in the Coinsurance Agreement (as
hereinafter defined).

 

WITNESSETH:

 

WHEREAS, pursuant to a Coinsurance Agreement
of even date herewith between the Beneficiary and the Grantor, the Beneficiary
is ceding to the Grantor, and the Grantor is reinsuring on a coinsurance basis,
certain of the Beneficiary’s liabilities arising under structured settlement
annuities (the “Coinsurance Agreement”); and

 

WHEREAS, the Grantor
desires to transfer to the Trustee for deposit to a trust account (the “Trust
Account”) certain assets as security for the payment and performance by the
Grantor of its obligations under the Coinsurance Agreement; and

 

WHEREAS, the Trustee
has agreed to act as Trustee hereunder, and to hold such assets in trust in the
Trust Account for the sole use and benefit of the Beneficiary for such purposes
in accordance with the terms and conditions of this Trust Agreement; and

 

WHEREAS, this Trust
Agreement is made for the sole use and benefit of the Beneficiary and for the
purpose of setting forth the duties and powers of the Trustee with respect to
the Trust Account;

 

NOW, THEREFORE, for
and in consideration of the premises and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Parties hereby
agree as follows:

 

Section 1.  Deposit of Assets
to the Trust Account.

 

(a)           The Grantor hereby establishes the Trust Account with the
Trustee for the sole use and benefit of the Beneficiary, under the terms set
forth herein.  The Trustee shall
administer the Trust Account in its name as Trustee for the sole benefit of the
Beneficiary.  The Trust Account shall be
subject to withdrawal by the Beneficiary solely as provided herein.  The Trustee hereby accepts the Trust Account
upon the terms set forth in this Trust Agreement.

 

 

(b)           The Grantor shall transfer to the Trustee, for deposit to
the Trust Account, such assets as may be required from time to time pursuant to
the Coinsurance Agreement (all such assets are herein referred to individually
as an “Asset” and collectively as the “Assets”).  The Trustee is
authorized and shall have power to receive the Assets from the Grantor and to
hold, invest, reinvest and dispose of the same for the uses and purposes of and
according to the provisions herein set forth. 
All Assets shall be maintained by the Trustee in the Trust Account
separate and distinct from all other assets on the books of the Trustee and in
accordance with the terms of this Trust Agreement.  The Assets shall consist only of Eligible Securities (as
hereinafter defined).  In the event of
any payment default as to any Asset in the Trust Account or in the event that
any Asset no longer is an Eligible Security, the Grantor shall, within five (5)
business days after receiving notice from the Trustee pursuant to Section 19 or
the Grantor having knowledge of such default or ineligibility, substitute other
Assets which meet the requirements of an Eligible Security and having a
statutory book value equal to the statutory book value of such Asset, which has
a payment default or no longer meets the requirements for an Eligible Security,
on the last statement provided by the Trustee.

 

(c)           The Grantor hereby represents and
warrants (i) that, to the extent practicable, any Assets transferred by the
Grantor to the Trustee for deposit to the Trust Account will be in such form
that the Beneficiary whenever necessary may, and the Trustee upon direction by
the Beneficiary will, negotiate any such Assets without consent or signature
from the Grantor or any other person or entity in accordance with the terms of
this Trust Agreement, (ii) that all Assets transferred by the Grantor to the
Trustee for deposit into the Trust Account consist only of Eligible Securities,
and (iii) that Grantor has at the time of transfer into this Trust Account good
and marketable title to the Assets to be so transferred and each such Asset
shall be at the time of transfer free and clear of all claims, liens, interests
and encumbrances (other than those arising under this Trust Agreement).

 

(d)           Prior to depositing the Assets into
the Trust Account, and from time to time thereafter as required, the Grantor
shall execute assignments, endorsement in blank, or transfer legal title to the
Trustee of all shares, obligations or other Assets requiring assignments, so
that, to the extent practicable, the Beneficiary whenever necessary may, and
the Trustee upon the direction by the Beneficiary will, negotiate any such
Assets without the consent or signature from the Grantor or any other person or
entity.  The Grantor shall give all
notices and take all actions as the Trustee deems appropriate in order to cause
payments due or that become due on any Asset within the Trust Account to be
paid to the Trustee.  The Grantor shall
not make or consent to any waiver, amendment or restriction on transfer with
respect to any Asset in the Trust Account, in each case without the
Beneficiary’s prior written consent.  In
connection with the deposit of Assets into the Trust Account, the Grantor shall
furnish to the Trustee all original documentation evidencing the Grantor’s
ownership thereto.

 

(e)           The parties recognize that certain Assets will not be readily
negotiable and that certain notices, opinions of counsel, representations
and/or consents will be required for the Beneficiary to obtain good and
marketable title to such Assets.

 

2

 

Section 2.  Withdrawal of
Assets from the Trust Account.

 

(a)           Without notice to the Grantor, the Beneficiary shall have
the right, at any time and from time to time, to withdraw from the Trust
Account, upon notice to the Trustee in the form of a certificate substantially in
the form of Exhibit A-1 attached hereto (the “Beneficiary Certificate”), signed
by a duly authorized officer of the Beneficiary, accompanied by a request for
withdrawal substantially in the form of Exhibit A-2 hereto (the “Beneficiary
Request for Withdrawal”), signed by a duly authorized officer of the
Beneficiary, such Assets as are specified in such Beneficiary Request for
Withdrawal.  The Beneficiary Request for
Withdrawal may designate a third party (the “Beneficiary Designee”), including
the Grantor, to whom Assets specified therein shall be delivered.  The Beneficiary shall not be required to
present any other statement or document in addition to a Beneficiary
Certificate and a Beneficiary Request for Withdrawal in order to withdraw any
Assets, except that the Beneficiary shall acknowledge receipt of any such
Assets withdrawn upon request by the Trustee.

 

(b)           Upon receipt of a Beneficiary Certificate and a
Beneficiary Request for Withdrawal, subject to the provision by the Beneficiary
of any required notices, opinions of counsel and representations, the Trustee
and the Grantor shall use commercially reasonable efforts to transfer
absolutely and unequivocally all right, title and interest in the Assets
specified in such Beneficiary Request for Withdrawal and shall deliver physical
custody (or such other form as is necessary to complete the transfer) of such
Assets to or for the account of the Beneficiary or such Beneficiary Designee,
as specified in such Beneficiary Request for Withdrawal.  The Trustee shall notify the Grantor and
Beneficiary within three (3) business days following each withdrawal from the
Trust Account.

 

(c)           Subject to Section 4, in the absence of a Beneficiary
Certificate and a Beneficiary Request for Withdrawal, the Trustee shall allow
no substitution or withdrawal of any Asset from the Trust Account.

 

(d)           The Trustee shall notify the insurance regulator in the
state where the Beneficiary is domiciled within three (3) business days after
all the assets in the Trust Account are withdrawn.  At the Trustee’s request, the Beneficiary shall provide to the
Trustee the address of the insurance regulator in the state where the
Beneficiary is domiciled.

 

Section 3.  Application of
Assets.  The Beneficiary shall be
permitted to withdraw Assets from the Trust Account only for the purposes set
forth in the Coinsurance Agreement.

 

Section 4.  Redemption,
Investment and Substitution of  Assets.

 

(a)           The Trustee shall surrender for payment all maturing
Assets and all Assets called for redemption, and deposit the principal amount
of the proceeds of any such payment to the Trust Account.

 

(b)           The Grantor, subject to the prior written approval of the
Beneficiary, may retain (and pay the service fees of ) a professional asset
manager (the “Asset Manager”) to manage and make investment decisions with
regard to the Assets held by the Trustee in the Trust Account.  From time to time, at the written order and
direction of the Grantor or the Asset Manager, the Trustee shall invest Assets
in the Trust Account in Eligible Securities.

 

3

 

(c)           From time to time, subject to the prior written approval
of the Beneficiary, the Grantor or the Asset Manager may direct the Trustee to
substitute Assets of equal statutory book value for other Assets presently held
in the Trust Account.  The Trustee shall
have no responsibility whatsoever to determine the value of such substituted
Assets or that such substituted Assets constitute Eligible Securities.

 

(d)           All investments and substitutions of securities referred
to in Sections 4(b) and 4(c) above shall be in compliance with the definition
of “Eligible Securities” in Section 12 of this Trust Agreement.  Any instruction or order concerning such
investments or substitutions of securities shall be referred to herein as an
“Investment Order”.  The Trustee shall
execute Investment Orders and settle securities transactions by itself or by
means of an agent or broker.  The
Trustee shall not be responsible for any act or omission, or for the solvency,
of any such agent or broker, except as set forth in Section 7.

 

(e)           From time to time, upon notice to the Beneficiary, the
Trustee may withdraw any Asset in the Trust Account upon the call or maturity
of such Asset provided that the proceeds from such call or maturity are
deposited into the Trust Account.

 

(f)            When the Trustee is directed to deliver Assets against
payment, delivery will be made in accordance with generally accepted market
practice.

 

(g)           Any loss incurred from any investment pursuant to the
terms of this Section 4 shall be borne exclusively by the Trust Account.

 

(h)           The Trustee shall not foreclose on,
or direct or consent to the foreclosure of, any real property securing a
commercial loan constituting an Asset or take title to such property by
deed-in-lieu of foreclosure or other means without the prior written consent of
the Grantor and the Beneficiary.  The
Trustee shall not provide any consent or direction with respect to any such
commercial loan except at the written direction of the Grantor.

 

Section 5.  The Income
Account. All payments of interest, dividends and other income in respect to
Assets in the Trust Account shall be the property of the Grantor and shall be
deposited by the Trustee subject to deduction of the Trustee’s compensation and
expenses as provided in Section 9 of this Agreement, in a separate account (the
“Income Account”) established and maintained by the Grantor at an office of the
Trustee.  The Grantor may withdraw amounts
from the Income Account at any time and from time to time.

 

Section 6.  Right to Vote
Assets.  The Trustee shall forward
all annual and interim stockholder reports and all proxies and proxy materials
relating to the Assets in the Trust Account to the Grantor within a reasonable
period of time following the Trustee’s receipt thereof.  The Grantor shall have the full and
unqualified right to vote any Asset in the Trust Account.

 

Section 7.  Additional Rights
and Duties of the Trustee.

 

(a)           Before accepting any Asset for deposit to the Trust Account,
the Trustee shall determine that such Asset is in such form that, to the extent
practicable, the Beneficiary whenever necessary may, or the Trustee upon
direction by the Beneficiary will, negotiate such 

 

4

 

Asset without consent or
signature from the Grantor or any person or entity other than the Trustee in
accordance with the terms of this Trust Agreement.

 

(b)           The Trustee shall be under no obligation to determine
whether or not any instructions given by the Grantor and Beneficiary are
contrary to any provision of law.  It is
understood and agreed that the Trustee’s duties are solely those set forth
herein and that the Trustee shall have no duty to take any other action unless
specifically agreed to by the Trustee in writing.  Without limiting the generality of the foregoing, the Trustee
shall not have any duty to advise, manage, supervise or make recommendations
with respect to the purchase, retention or sale of Assets with respect to any
Assets in the Trust Account as to which a default in the payment of principal
or interest has occurred or to be responsible for the consequences of
insolvency or the legal inability of any broker, dealer, bank or other agent
employed by the Grantor or Trustee with respect to the Assets except to the
extent that the Trustee was negligent, engaged in misconduct or acted in bad
faith in the selection of any such person or entity.

 

(c)           The Trustee shall accept and open all mail directed to the
Grantor or the Beneficiary in care of the Trustee.

 

(d)           The Trustee shall have no responsibility whatsoever to
determine that any Assets in the Trust Account are or continue to be Eligible
Securities.

 

(e)           The Trustee shall furnish to the Grantor and the
Beneficiary a statement of all Assets in the Trust Account upon the inception
of the Trust Account and at the end of each calendar month thereafter.  The statement shall include a description of
the Assets in the Trust Account and shall be delivered within five (5) business
days following the end of such calendar month.

 

(f)            The Trustee shall keep full and complete records of the
administration of the Trust Account in accordance with all applicable law.  Upon the request of the Grantor or the
Beneficiary, the Trustee shall promptly permit the Grantor or the Beneficiary,
their respective agents, employees, independent auditors and regulatory
authorities to examine, audit, excerpt, transcribe and copy, during the
Trustee’s normal business hours, any books, documents, papers and records relating
to the Trust Account or the Assets.

 

(g)           Unless otherwise provided in this Trust Agreement, the
Trustee is authorized to follow and rely upon all instructions given by
officers of the Grantor or the Beneficiary and by attorneys-in-fact acting
under written authority furnished to the Trustee by the Grantor or the
Beneficiary, including, without limitation, instructions given by letter,
facsimile transmission or electronic media, if the Trustee believes such
instructions to be genuine and to have been signed, sent or presented by the
proper party or parties.  In the absence
of negligence, the Trustee shall not incur any liability to anyone resulting
from actions taken by the Trustee in reliance in good faith on such
instructions.  The Trustee shall not incur
any liability in executing instructions (i) from any attorney-in-fact prior to
receipt by it of notice of the revocation of the written authority of the
attorney-in-fact or (ii) from any officer of the Grantor or the Beneficiary.

 

5

 

(h)           The duties and obligations of the Trustee shall only be
such as are specifically set forth in this Trust Agreement, as it may from time
to time be amended, and no implied duties or obligations shall be read into
this Trust Agreement against the Trustee.

 

(i)            No provision of this Trust Agreement shall require the
Trustee to take any action which, in the Trustee’s reasonable judgment, would
result in any violation of this Trust Agreement or any provision of law.

 

(j)            The Trustee may confer with counsel of its own choice in
relation to matters arising under this Trust Agreement and shall have full and
complete authorization from the other Parties for any action taken or suffered
by it under this Trust Agreement or in respect of any transaction contemplated
hereby in good faith and in accordance with the opinion of such counsel.

 

(k)           The Trustee shall notify the Grantor and Beneficiary in
writing of any payment default occurring as to any Asset within three (3)
business days after Trustee receives notice of such default.  In the event of a delinquency of a timely
payment in regard to any of the Assets, the Trustee shall inform the Grantor
and the Beneficiary immediately upon Trustee’s receipt of notice of such
delinquency.

 

(l)            Notwithstanding any provision of this Agreement to the
contrary, the Trustee shall be liable for (i) subject to Section 7(n), the
safekeeping of the Assets and administering the Trust Account in accordance
with the provisions of this Trust Agreement and (ii) its own negligence,
willful misconduct or lack of good faith in performing its duties under this
Trust Agreement.  The Trustee shall
exercise the standard of care with respect to the Assets that a professional trustee,
engaged in the banking or trust company industry, having professional expertise
in financial and securities processing transactions and custody would observe
in such affairs.  The Trustee shall be
strictly liable for physical loss of or damage to Assets under its care,
custody, possession or control or the care, custody, possession or control of
its subcustodians, other agents or nominee(s), including but not limited to
loss due to fire, burglary, robbery, theft or mysterious disappearance.  In the event of loss or damage to the Assets
under the care, custody, possession or control of Trustee or its subcustodians,
other agents or nominee(s), Trustee shall, upon demand of the Grantor or
Beneficiary, promptly replace such Assets with like kind and quality together
with, all rights and privileges pertaining to the Assets (by among other
methods, posting appropriate security or bond with the issuer of the Assets to
obtain reissue of such Assets, or, if acceptable to the Grantor, deliver cash
equivalent to the market value of the Assets as of the date of the discovery of
the loss or damage).  Nothing contained
in any contract between Trustee and any entity authorized to hold Assets, as
defined herein, shall diminish or otherwise alter the liability of Trustee to
the Grantor or Beneficiary.  The provisions
of this paragraph shall not affect the burden of proof under applicable law
with respect to the assertions of liability in any claim, action or dispute
alleging any breach of or failure to observe such standard of care.

 

(m)          The Trustee shall not be responsible for the existence,
genuineness or value of any of the Assets, for the validity, perfection,
priority or enforceability of the liens in or with respect to any of the
Assets, for the validity of title to the Assets, for insuring the Assets, for
the payment of taxes, charges, assessments or liens upon or with respect to the
Assets, for any obligations 

 

6

 

under any agreements or
other documents evidencing or related to any of the Assets (other than this
Trust Agreement), or for the compliance of the Assets with any laws, including
any Environmental Law (as hereinafter defined). The Trustee shall have no
responsibility for the recording, filing or registration (or for the
rerecording, refiling or reregistration) of any instrument or notice, including
any financing or continuation statement or any tax or securities form, at any
time in any public office or elsewhere for the purpose of perfecting,
maintaining the perfection of or otherwise making effective any lien upon or
with respect to any of the Assets.

 

(n)           The Parties acknowledge and agree that certain of
the Assets are and will continue to be subject to servicing and custodial
agreements in effect on the date hereof (as amended or otherwise modified from
time to time, including any replacements thereof, the “Servicing/Custodial
Agreements”). The Grantor and the Beneficiary acknowledge and agree that (i)
the Trustee shall have no liability under this Trust Agreement for any action
or omission of any of the parties to the Servicing/Custodial Agreements,
including with respect to any of the Assets at any time during which such
Assets are under the care, custody, possession or control of any of the parties
to the Servicing/Custodial Agreements or any of their respective depositories,
subcustodians, other agents or nominees (and, solely for the purposes of
limiting the liability and determining the duties of the Trustee under Section
7(l),  none of such Persons shall be
considered to be the depositories, subcustodians, agents or nominees of the
Trustee), (ii) the performance by the Trustee of any of its obligations under
this Trust Agreement may be delayed, limited or otherwise affected by the
actions or omissions of any of the parties to the Servicing/Custodial
Agreements or as a result of the Assets being subject to the
Servicing/Custodial Agreements and (iii) the Trustee shall have no liability
under this Trust Agreement as a result of the Trustee’s failure to perform any
of its obligations under this Trust Agreement as a result of the actions or
omissions of any of the parties to the Servicing/Custodial Agreements or as a
result of the Assets being subject to the Servicing/Custodial Agreements.

 

Section 8.  Representations,
Warranties and Covenants of the Trustee. 
The Trustee represents, warrants and covenants to the Grantor and
Beneficiary that:

 

(a)           The Trustee is a Qualified United States Financial
Institution;

 

(b)           In the ordinary course of its business, the Trustee
maintains securities accounts for others and is acting in that capacity in this
Trust Agreement;

 

(c)           The Trust Account is and at all times shall be maintained
at an office of the Trustee in the United States of America;

 

(d)           The Trustee is not an Affiliate of the Grantor or the
Beneficiary.

 

Section 9.  The Trustee’s
Compensation; Expenses.

 

(a)           The Grantor shall pay the Trustee, as compensation for its
services under this Trust Agreement, a fee computed at rates determined by the
Trustee from time to time and communicated in writing to the Grantor.  The Grantor shall pay or reimburse the
Trustee for all of the Trustee’s expenses and disbursements in connection with
its duties under this Trust Agreement (including reasonable attorney’s fees and
expenses), except any such expense or disbursement as may arise from the
Trustee’s negligence, willful misconduct, lack of good faith

 

7

 

or failure to administer the
Trust Account in accordance with the terms of this Trust Agreement.  The Trustee shall be entitled to deduct its
compensation and expenses from payments of dividends, interest and other income
in respect of the Assets held in the Trust Account prior to the deposit thereof
to the Income Account as provided in Section 5 of this Agreement.  The Grantor also hereby indemnifies the
Trustee for, and holds it harmless against, any loss, liability, costs or
expenses (including reasonable attorney’s fees and expenses) incurred or made
without negligence, willful misconduct or lack of good faith on the part of the
Trustee, arising out of or in connection with the performance of its
obligations in accordance with the provisions of this Trust Agreement (which
shall be the sole obligation of the Trustee), including any loss, liability,
costs or expenses arising out of or in connection with the status of the
Trustee and its nominee as the holder of record of the Assets.  The Grantor hereby acknowledges that the
foregoing indemnities shall survive the resignation of the Trustee or the
termination of this Trust Agreement and hereby grants the Trustee a lien, right
of set-off and security interest in the funds in the Income Account for the
payment of any claim for compensation, reimbursement or indemnity hereunder.

 

(b)           No Assets shall be withdrawn from the Trust Account or
used in any manner for paying compensation to, or reimbursement or
indemnification of, the Trustee.

 

(c)           In addition to, and without limiting, the Grantor’s
indemnification obligations set forth in Section 9(a), to the extent resulting
from or in connection with the execution, delivery, enforcement, performance,
or administration of this Trust Agreement, the Grantor shall defend, indemnify,
and hold harmless the Trustee and its employees, officers, directors and agents
from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs, or expenses of whatever kind or nature, known or
unknown, contingent or otherwise, arising out of, or in any way related to, (i)
the presence, disposal, release, or threatened release of any Hazardous
Materials which are on, from, or affecting soil, water, vegetation, buildings,
personal property, persons, animals, or otherwise; (ii) any personal injury
(including wrongful death), property damage (real or personal) or natural resource
damage arising out of or related to such Hazardous Materials; (iii) any third
party claim brought or threatened, settlement reached, or government order, or
any policies or requirements of the Trustee, which are based upon or in any way
related to such Hazardous Materials, including, without limitation, attorney
and consultant fees and expenses, investigation and laboratory fees, court
costs, and litigation expenses, and (iv) any violations of Environmental Law,
except, in each instance, to the extent arising from the negligence, willful
misconduct or lack of good faith of the Trustee. The Grantor hereby
acknowledges that the foregoing indemnities shall survive the resignation of
the Trustee or the termination of this Trust Agreement and hereby grants the Trustee
a lien, right of set-off and security interest in the funds in the Income
Account for the payment of any claim for compensation, reimbursement or
indemnity hereunder.  For purposes
hereof:

 

“Hazardous
Materials” means, without limit, any pollutant, contaminant or hazardous,
toxic, medical, biohazardous, or dangerous waste, substance, constituent or
material, defined or regulated as such in, or for the purpose of, any
applicable Environmental Law, including, without limitation, any asbestos, any
petroleum, oil (including crude oil or any fraction thereof), any radioactive
substance, any polychlorinated biphenyls, any toxin, chemical, disease-causing
agent or pathogen, and any other substance that gives rise to liability under
any applicable Environmental Law; and

 

8

 

“Environmental
Law” means the Comprehensive Environmental Response, Compensation and Liability
Act, as amended (“CERCLA”), the Resource Conservation and Recovery Act of 1976,
as amended, and any other applicable federal, state, local, or foreign statute,
rule, regulation, order, judgment, directive, decree, permit, license or common
law as in effect now, previously, or at any time during the term of this Trust
Agreement, and regulating, relating to, or imposing liability or standards of
conduct concerning air emissions, water discharges, noise emissions, the
release or threatened release or discharge of any Hazardous Material into the
environment, the use, manufacture, production, refinement, generation,
handling, treatment, storage, transport or disposal of any Hazardous Material
or otherwise concerning pollution or the protection of the outdoor or indoor
environment, or human health or safety in relation to exposure to Hazardous
Materials.

 

Section 10.  Resignation or
Removal of the Trustee.

 

(a)           The Trustee may resign at any time upon delivery of a
written notice thereof to the Beneficiary and to the Grantor effective not less
than 90 days after receipt by the Beneficiary and the Grantor of such
notice.  The Trustee may be removed by
prior written notice executed by Grantor and Beneficiary.  No such resignation or removal shall become
effective until a successor Trustee has been appointed and approved by the
Beneficiary and the Grantor and all Assets in the Trust Account have been duly
transferred to the successor Trustee in accordance with paragraph (b) of this
Section 10.

 

(b)           Upon receipt by the proper Parties of the Trustee’s notice
of resignation or the Grantor’s and Beneficiary’s notice of removal, the
Grantor and the Beneficiary shall appoint a successor Trustee.  Any successor Trustee shall be a bank that
is a member of the Federal Reserve System and a Qualified United States
Financial Institution, and shall not be an Affiliate of the Grantor or the
Beneficiary.  Upon the acceptance of the
appointment as Trustee hereunder by a successor Trustee and the transfer to
such successor Trustee of all Assets in the Trust Account, the resignation or
removal of the Trustee shall become effective. 
Thereupon, such successor Trustee shall succeed to and become vested
with all the rights, powers, privileges and duties of the resigning or removed
Trustee, and the resigning or removed Trustee shall be discharged from any
future duties and obligations under this Trust Agreement, but the resigning or
removed Trustee shall continue after such resignation or removal to be entitled
to the benefits of the indemnities provided herein for the Trustee.

 

Section 11.  Termination of
the Trust Account.

 

(a)           The Trust Account and this Trust Agreement, except for the
indemnities provided herein, may be terminated only after the Grantor and
Beneficiary mutually give the Trustee written notice of their intention to
terminate the Trust Account (the “Notice of Intention”).  The Notice of Intention shall specify the
date on which the Parties intend the Trust Account to terminate (the
“Termination Date”).

 

(b)           On the Termination Date, the Trustee shall transfer to the
Grantor all of the Assets not previously withdrawn by the Beneficiary.

 

9

 

Section 12.  Definitions.  Except as the context shall otherwise
require, the following terms shall have the following meanings for purposes of
this Trust Agreement (the definitions to be applicable to both the singular and
the plural forms of each term defined if both forms of such term are used in
this Trust Agreement):

 

The term
“Affiliate” means any other Person that directly or indirectly controls, is
controlled by, or is under common control with, the first Person.

 

The term
“Beneficiary” shall include any successor of the Beneficiary by operation of
law including, without limitation, any liquidator, rehabilitator, receiver or
conservator.

 

The term
“Control” (including the related terms “controlled by” and “under common
control with”) shall mean the ownership, directly or indirectly, of more than
50% of the voting securities of a corporation.

 

The term
“Eligible Securities” shall mean and include certificates of deposit (issued by
a United States bank and payable in United States legal tender) and other
assets of the types specified on Exhibit B attached hereto.

 

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

 

The term
“Qualified United States Financial Institution” shall mean a bank designated as
such by the Securities Valuation Office of the National Association of
Insurance Commissioners (or any successor organization or regulatory agency
having similar duties).

 

Section 13.  Governing Law.  This Trust Agreement shall be subject to and
governed by the laws of the State of New York without regard to its conflict of
laws provision and the Trust Account created hereunder shall be administered in
accordance with the laws of said state.

 

Section 14.  WAIVER OF JURY
TRIAL.  EACH PARTY HERETO HEREBY
WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.  THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS AGREEMENT.

 

Section 15.  Successors and
Assigns.  This Trust Agreement shall
be binding upon and inure to the benefit of the Parties and their respective
successors, permitted assigns and legal representatives.  Neither this Trust Agreement, nor any right
or obligation hereunder, may be assigned by any Party without the prior written
consent of the other Parties hereto. 
Any assignment in violation of this Section 15 shall be void and shall
have no force and effect.

 

Section 16.  Severability.  If any provision of this Trust Agreement is
held to be void or unenforceable, in whole or in part, (i) such holding shall
not affect the validity and enforceability of the remainder of this Trust
Agreement, including any other provision, paragraph or subparagraph, and (ii)
the Parties agree to attempt in good faith to reform such void or

 

10

 

unenforceable
provision to the extent necessary to render such provision enforceable and to
carry out its original intent.

 

Section 17.  Entire Agreement.  Except for the Coinsurance Agreement, this
Trust Agreement constitutes the entire agreement among the Parties with respect
to the subject matter hereof, and there are no understandings or agreements,
conditions or qualifications relative to this Trust Agreement which are not
fully expressed in this Trust Agreement or the Coinsurance Agreement.

 

Section 18.  Amendments.  This Trust Agreement may be modified or
otherwise amended, and the observance of any term of this Trust Agreement may
be waived, only if such modification, amendment or waiver is in writing and
signed by the Parties.

 

Section 19.  Notices.  All notices, requests, demands and other
communications under this Trust Agreement must be in writing and will be deemed
to have been duly given or made as follows: 
(a) if sent by registered or certified mail in the United States return
receipt requested, upon receipt; (b) if sent by reputable overnight air
courier, two (2) business days after mailing; (c) if sent by facsimile
transmission, with a copy mailed on the same day in the manner provided in (a)
or (b) above, when transmitted and receipt is confirmed by telephone; or (d) if
otherwise actually personally delivered, when delivered, and shall be delivered
as follows:

 

If
to the Grantor:

 

Union Fidelity Life
Insurance Company

200 North Martingale Road

Schaumburg, IL 60173-2096

Facsimile: (847) 330-3404  

Attention: Chief Financial Officer

 

With a copy to:

 

Union
Fidelity Life Insurance Company

200 North Martingale Road

Schaumburg, IL 60173-2096

Facsimile:  (847) 605-3044

Attention:  General Counsel

 

 

If to the Beneficiary:

 

First Colony Life Insurance
Company

700 Main Street

Lynchburg, VA 24504

Facsimile:  (434) 948-5064

Attention:  Chief Executive Officer

 

11

 

With a copy to:

 

First Colony Life Insurance
Company

700 Main Street

Lynchburg, VA 24504

Facsimile:  (434) 948-5819

Attention:  General Counsel

 

If to the Trustee:

 

The
Bank of New York

101 Barclay Street - 8W

New York, NY 10286

Facsimile:  (212) 815-5875

Attention:  Insurance Trust and Escrow
Unit

 

or to such
other address or to such other Person as a Party may have last designated by
notice to the other Parties.

 

Section 20.  Headings.  The headings of the Sections have been
inserted for convenience of reference only and shall not be deemed to
constitute a part of this Trust Agreement.

 

Section 21.  Counterparts.  This Trust Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall
constitute an original, but such counterparts together shall constitute but one
and the same Trust Agreement.

 

12

 

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

 

	
   

  	
  UNION FIDELITY LIFE INSURANCE 

  COMPANY, as Grantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ 
  Glenn Joppa

  	
   

  
	
   

  	
  Name: Glenn Joppa

  
	
   

  	
  Title: Senior Vice President and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FIRST COLONY LIFE INSURANCE 

  COMPANY, as Beneficiary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ 
  Gary T. Prizzia

  	
   

  
	
   

  	
  Name: Gary T. Prizzia

  
	
   

  	
  Title: Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK, as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ 
  Robert W. Rich

  	
   

  
	
   

  	
  Name: Robert W. Rich

  
	
   

  	
  Title: Vice President

  

 

13

 

Exhibit A-1

 

CERTIFICATE

 

The
undersigned, the [insert position] and a duly authorized officer of First
Colony Life Insurance Company, does hereby certify that, pursuant to
Section 2 of the Trust Agreement dated as of [  ] entered into by and among First Colony Life Insurance Company,
Union Fidelity Life Insurance Company and [ 
] (the “Trust Agreement”) and the 
Coinsurance Agreement dated as of [ 
] between First Colony Life Insurance Company and Union Fidelity Life
Insurance Company,  First Colony Life
Insurance Company is entitled to withdraw from the Trust Account established by
Union Fidelity Life Insurance Company for the benefit of First Colony Life
Insurance Company pursuant to the Trust Agreement, assets with a current statutory
book value equal to
$[               ]
for the purpose[s] specified in paragraph[s] [     ]
and [     ] of Section [  ] of the Coinsurance Agreement.

 

[Certification to specify the basis for the
withdrawal.]

 

This
Certificate is a “Beneficiary Certificate” within the meaning of Section 2(a)
of the Trust Agreement.

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

14

 

Exhibit A-2

 

REQUEST FOR WITHDRAWAL

 

First Colony Life Insurance Company (“FCL”) hereby requests that [               ]
immediately transfer to FCL [/or
[         ]] all right, title and
interest in those assets set forth on Schedule A attached hereto (which assets
have a statutory book value equal to
$[                     ])
from the Trust Account established by Union Fidelity Life Insurance Company
(“UFLIC”) for the benefit of FCL pursuant to the Trust Agreement dated as of
[      ,
       ] entered into by and among FCL,
UFLIC and [           ]
(the “Trust Agreement”).  [Insert
transfer instructions.]

 

This Request for Withdrawal is a “Beneficiary Request for Withdrawal”
within the meaning of Section 2(a) of the Trust Agreement, and is made in
conjunction with the attached Beneficiary Certificate.

 

	
   

  	
  FIRST COLONY LIFE INSURANCE 

  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated: 

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						

 

15

 

Exhibit
B

 

ELIGIBLE SECURITIES

 

Assets of the types for which an Illinois-domiciled life insurance
company could obtain full statutory reserve credit under statutory accounting
practices prescribed or permitted by the Director of Insurance of the State of
Illinois.

 

16

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