Document:

exv10w4

 

Exhibit 10.4

LEASE AGREEMENT

THIS LEASE (“Lease”) made as
of the 25th day of June 2003, by

CHRISTOPHER S. VERNON, EILEEN VERNON, and MARK CORCORAN

c/o Mercer Management and Development Co.

PO Box 5471

Trenton, New Jersey 08638
     
hereinafter called “Landlord”

 
-and-
 

YARDVILLE NATIONAL BANK

2465 Kuser Road

Hamilton, New Jersey 08690
     
hereinafter called “Tenant”

ARTICLE I

Basic Lease Provisions

     In consideration of the rents, covenants and agreements hereafter reserved
and contained on the part of the Tenant to be observed and performed, the
Landlord leases to the Tenant, and the Tenant rents from Landlord, 8,350 square
feet (“Leased Premises”) in the basement floor of the building located at 4573
South Broad Street, Hamilton, New Jersey (“Building”). The total square
footage of office space (not including the attic) in the Building is 24,730.

     All facilities furnished by Landlord and which are part of the Building,
but not part of the Leased Premises, including without limitation sidewalks,
parking areas and landscaping are under the sole control of Landlord and may be
changed or reconfigured by Landlord. Tenant only has a license to use such
common areas, which Landlord may revoke at any time without liability to
Tenant, provided that Landlord will provide adequate nonexclusive parking
during the entire term of this Lease and any renewal term.

     The term of this Lease shall be month-to-month commencing on June 25,
2003. Tenant will take possession on June 25, 2003.

ARTICLE II

Rent

     Base Rent. The monthly base rent shall be for the amounts set forth and
for the periods set forth in the rent schedule marked as Exhibit “A” attached
hereto and made a part hereof. The monthly rent set forth in the rent schedule
shall be paid by the Tenant on or before the first day of each month in
advance, at the office of the Landlord or at such other place designated by
Landlord on Exhibit “A”, without any deduction or set-off whatsoever.

 

     Utilities & Maintenance.

	 	a.	 	Utilities. The following utilities shall be available to the
Tenant in conjunction with Tenant’s leased area: gas, electricity,
water and sewer. Landlord consents and agrees that all such
utilities shall be available to the demised premises at the
commencement date, and shall provide Tenant with separate meters
where possible for Tenant’s leased area. All utilities used by
Tenant in conjunction with Tenant’s leased area shall be paid by
Landlord except for electricity, which shall be paid by Tenant.
	 
	 	b.	 	Maintenance. Tenant shall be responsible for all
nonstructural maintenance of the leased area, including the interior
of the building. Landlord shall maintain the public areas, roof and
exterior walls in good condition; make all structural repairs unless
these repairs are made necessary by the act or neglect of the Tenant
or Tenant’s employees; make necessary replacements of the plumbing,
cooling, heating and electrical systems, except when made necessary
by the act or neglect of Tenant or Tenant’s employees; and maintain
the elevators in the building, if any.

ARTICLE III

Construction of Leased Premises

     Tenant’s Work. Tenant may not make any changes, modifications, alterations
or improvements to the Leased Premises or to the exterior of the Leased
Premises, including installation of signs, awnings, advertising material and/or
exterior lighting without first obtaining the approval of the Landlord.

     Changes and Additions to Building. Landlord hereby reserves the right at
any time to perform maintenance operations and to make repairs, alterations, or
additions to the Building in which the Leased Premises are contained and to any
building adjoining or adjacent to the same. Landlord also reserves the right
to construct other buildings or improvements, including, but not limited to,
structures for motor vehicle parking from time to time and to make alterations
thereof or additions thereto and to build additional stories on any such
building or buildings and to build adjoining same. Tenant agrees to cooperate
with Landlord permitting Landlord to accomplish any such maintenance, repairs,
alterations, additions or construction, all of the same with no abatement or
reduction of rent provided such repairs, alterations, additions or construction
do not interfere with Tenant’s business.

ARTICLE IV

Conduct of Business by Tenant

     Tenant shall use the Leased Premises for the purpose of storage and
maintenance work. If the Township disallows this use, the Lease is null and
void.

ARTICLE V

Triple Net-Additional Rent

 

     Tenant shall pay, as additional rent, its “proportionate share”, as
hereinafter defined, of “triple nets” over the “base rent”; due and payable
with respect to the Building in which the Leased Premises are located and the
land underlying said Building.

     Landlord’s “operating costs” shall be those of operating and maintaining
the Building in a manner deemed by Landlord reasonable and appropriate and for
the best interests of the tenants in the Building, including without
limitation, the following:

	 	1.	 	Real estate taxes or any other tax imposed in lieu of real
estate taxes assessed on the Building and the land underlying same.
	 
	 	2.	 	All costs and expenses directly related to the Building of
managing, operating, repairing, lighting, cleaning, insurance,
removing snow, ice and debris, policing and regulating traffic in
the area immediately adjacent to the Building and depreciation of
machinery and equipment used for such operation.
	 
	 	3.	 	All costs and expenses of replacing paving, curbs, walkways,
landscaping (including replanting and replacing flowers and other
planting), drainage and lighting facilities in the Building and area
immediately adjacent thereto.
	 
	 	4.	 	Electricity used in lighting common areas of the Building,
water including water used in fire prevention equipment and sewer.
	 
	 	5.	 	Maintenance, replacement, repair of mechanical and electrical
equipment including heating, ventilating and air-conditioning
equipment in the Building.
	 
	 	6.	 	Maintenance of common areas of the Building.
	 
	 	7.	 	Painting, decoration and carpeting of all common areas in the
Building.
	 
	 	8.	 	All other expenses which would be considered as an expense of
maintaining, operating or repairing the Building under sound
accounting principals.
	 
	 	9.	 	All costs and expenses associated with insuring the Building.
	 
	 	10.	 	All utility expenses associated with the Building and
property which are not paid by the Tenant.
	 
	 	11.	 	Tenant’s proportionate share of operating costs for any
fiscal year of the Lease shall be determined as follows: the amount
of operating costs shall be multiplied by a fraction, the numerator
of which is the total number of square feet of the Leased Premises
and the denominator of which is the total number of square feet of
the Building, with the result being the percentage of all operating
costs payable by Tenant.
	 
	 	12.	 	Tenant shall have the right to audit the operating cost of
the Landlord on a yearly basis to determine if they are reasonable
and customary.

 

ARTICLE VI

Insurance

     Liability Insurance. Tenant shall, during the entire term hereof, keep in
full force and effect, property damage and comprehensive public liability
insurance with respect to the Leased Premises for the combined single coverage
of not less than $1,000,000. The policy shall name Tenant as insured and
Landlord as additional insured, and shall contain a clause that the insurer
will not cancel or change the insurance without first giving the Landlord
thirty (30) days prior written notice. The insurance shall be placed with an
insurance company rated by Best as B or better and a copy of the policy or a
certificate of insurance shall be delivered to the Landlord prior to
commencement of this lease. The policy shall contain a provision stating that
the insurer may not deny coverage or payment to Landlord or Tenant, as
applicable, due to the negligent acts of the other.

     Property Insurance.

	 	a.	 	Tenant agrees to carry insurance against fire, vandalism,
malicious mischief and other such perils as are from time to time
included in a standard extended coverage endorsement, insuring
Tenant’s merchandise, trade fixtures, furnishings, equipment and all
other items of personal property of Tenant located on or within the
Leased Premises, in an amount equal to but not less than eighty
percent (80%) of the actual replacement cost thereof and to furnish
Landlord with a certificate evidencing such coverage. The policy
shall have a provision whereby the insurer waives subrogation
against Landlord.
	 
	 	b.	 	Tenant shall not carry any stock of goods or do anything in
or about the Leased Premises which will in any way tend to increase
the insurance rates on the Leased Premises and/or the Building of
which they are a part. If Tenant installs any electrical equipment
that overloads the lines in the Leased Premises, Tenant shall at its
own expense make whatever changes are necessary to comply with the
requirements of the insurance underwriters and governmental
authorities having jurisdiction.

ARTICLE VII

Attornment, Subordination

     Tenant agrees that its rights hereunder are subordinate to the lien of any
mortgage, ground lease or any other method of financing or refinancing now or
hereafter placed against the land and/or the Leased Premises and to any and all
advances made or to be made thereunder and to the interest thereon and to all
renewals, replacements, consolidations and extensions thereof. This paragraph
shall be self-operative and no further instrument of subordination shall be
required. Tenant agrees that Tenant will attorn to any mortgages or ground
lessor or purchaser at a foreclosure sale if requested to do so.

ARTICLE VIII

Assignment and Subletting

 

     Tenant agrees not to assign, mortgage, pledge or encumber this Lease, in
whole or in any part or any interest therein, or sublet the whole or any part
of the Leased Premises or permit the use of the whole or any part of the Leased
Premises by any licensee or concessionaire or any other occupant, without first
obtaining the written consent of Landlord, which consent shall not be
unreasonably withheld. If Tenant is a corporation, and if ownership of
fifty-one (51%) percent or more of its voting stock changes at any time during
the term hereof, or Tenant merges with a third party, such events shall be
deemed to be an assignment which is permitted under this Agreement.

ARTICLE IX

Destruction of Leased Premises

     If the Building and/or Leased Premises shall be damaged by fire, the
elements, unavoidable accident or other casualty, in such a way which makes the
Lease Premises untenable, Landlord shall have the right, to be exercised by
notice to Tenant within six (6) months after said occurrence, to elect not to
repair such damage and to cancel and terminate this Lease effective and
retroactive to the date of the casualty. Should the Leased Premises be
rendered wholly or 50% or more untenable by reason of such occurrence, the
fixed gross rent shall be abated in whole or in proportion pursuant to such
untenability until the Leased Premises are again tenable.

ARTICLE X

Eminent Domain

     If the whole or any part of the Premises shall be taken under the power of
eminent domain, this Lease Agreement shall terminate as to the part so taken on
the date Tenant is required to yield possession thereof to the condemning
authority. If twenty-five (25%) percent or more of the total rentable floor
area of the Building or the parking areas located on the common areas is taken
as aforesaid, then Landlord may terminate this Lease Agreement as of the date
of the taking. All compensation awarded for any taking of the leasehold and/or
the improvements thereon shall belong to and be the property of Landlord;
provided however, that nothing contained herein shall prevent Tenant from
applying for reimbursement from the condemning authority (if permitted by law)
for relocation expenses, or removal of Tenant’s furniture, business equipment
and such fixtures as Tenant is permitted to remove hereunder, if and only if
such action shall not reduce the amount of compensation otherwise recoverable
by Landlord from the condemning authority.

ARTICLE XI

Default of Tenant

     Events of Default. Upon the happening of one or more of the events as
expressed below in a. or b., the Landlord shall have any right and all rights
and remedies hereinafter set forth and as are available at law:

	 	a.	 	In the event Tenant should fail to pay one or more of said
monthly installments of rent, or any other sums required to be paid
hereunder, as and when same become due, after a ten (10) day grace
period.

 

	 	b.	 	In the event Tenant fails to keep, observe or perform any of
the other terms, conditions or covenants on the part of the Tenant
herein to be kept, observed, and performed for more than thirty (30)
days after written notice thereof is given by Landlord to Tenant
specifying the nature of such default.

     Remedies of Landlord. Upon Tenant’s default, Landlord shall have, in
addition to any other remedies available at law, the following remedies, all of
which are cumulative:

	 	a.	 	     Landlord may take possession of the Premises without notice,
which will not be deemed an acceptance of surrender of this Lease or
a waiver of any rights or remedies of Landlord. Landlord shall be
deemed to have used reasonable efforts to sublet the Premises, if
Landlord leases the whole or any part of the Premises, separately or
with other property, for any period equal to or less than, or
extending beyond, the remainder of the term, for any sum, or to any
person, or for use Landlord deems reasonable, satisfactory or
appropriate.
	 
	 	b.	 	     In the event of such default or material breach, the Landlord
shall have the right, at its option, to declare the Lease
terminated, and shall have the right, at its option, to request
payment in full of all unpaid rent to the date of default. Landlord
shall be obligated, however, to attempt to mitigate damages and
shall only be entitled to bring suit for unpaid rent of the
difference between the amount which Tenant would have owed under the
terms of this Lease Agreement, and the amount which Landlord
receives from a new tenant.
	 
	 	c.	 	     Landlord may bring suit against Tenant for specific
performance by Tenant of all of Tenant’s obligations and
responsibilities hereunder.
	 
	 	d.	 	     The Landlord, in addition to other rights and remedies it may
have, shall have the right to remove all or any part of the Tenant’s
property from the Leased Premises. Tenant hereby waives any and all
loss, destruction and/or damage or injury which may be occasioned by
any of the aforesaid acts.

     Waiver. The Landlord’s failure to act on any breach of any term,
condition or covenant herein contained shall not be a waiver of such term,
condition or covenant, or any subsequent breach of the same of any term,
condition or covenant herein contained. The consent or approval by Landlord to
or any act by Tenant requiring Landlord’s consent to approval shall not be
deemed to waive or render unnecessary Landlord’s consent to or approval of any
subsequent similar act by Tenant. No re-entry hereunder shall bar the recovery
of rents or damages for the breach of any of the terms, conditions or covenants
on the part of Tenant herein contained. The receipt of rents after breach or
condition broken, or delay on the part of the Landlord to enforce any right
hereunder, shall not be deemed a waiver of forfeiture, or a waiver of the right
of Landlord to annul this Lease or to re-enter said Leased Premises or to
re-let same.

     Legal Expenses. Should suit be brought by Landlord for the recovery of
possession of the Leased Premises, or for rent or any other sum due Landlord
under this Lease, or for the collection of unpaid rent due Landlord under this
Lease, Tenant shall pay the Landlord all expenses of such suit and any appeal
thereof, including a reasonable attorney’s fee.

 

ARTICLE XII

Access by Landlord

     Landlord and Landlord’s agent shall have the right to enter the Leased
Premises during normal business hours (except for emergency situations when
entry shall be permitted during non-business hours as well) to examine the same
and to show them to prospective purchasers or lessees of the Building and to
make such repairs, or alterations, improvements or additions as Landlord may
deem necessary or desirable. Nothing herein contained, however, shall be
deemed or construed to impose upon Landlord any obligation, responsibility or
liability whatsoever, for the care, maintenance or repair of the Building or
any part thereof except as otherwise herein specifically provided.

ARTICLE XIII

Holding Over Successors

     All rights and liabilities herein given to or imposed upon the respective
parties hereto shall extend to and bind any heirs, executors, administrators,
successors, and assigns of the said parties: and if there shall be more than
one Tenant, they shall be bound jointly and severally by the terms, covenants
and agreement herein. No rights, however, shall inure to the benefits of any
assignee of Tenant, unless the assignment to such assignee has been approved by
Landlord in writing as provided in this Lease. Nothing contained in this Lease
shall in any manner restrict Landlord’s right to assign or encumber this Lease,
and in the event Landlord sells or transfers its interest in the Building and
the purchaser or transferee assumes the Landlord’s obligation and covenants,
Landlord shall thereupon be relieved of all further obligations hereunder.

ARTICLE XIV

Quiet Enjoyment

     Upon payment by the Tenant of the rents herein provided, and upon the
observance and performance of all the covenants, terms and conditions on
Tenant’s part to be observed and performed, Tenant shall peaceably and quietly
hold and enjoy the Leased Premises for the term hereby demised without
hindrance or interruption by Landlord or any other person or persons lawfully
or equitably claiming by, through or under the Landlord, subject nevertheless
to the terms and conditions of this Lease.

ARTICLE XV

Miscellaneous

     Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a
lesser amount than the monthly rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated rent, nor shall any
endorsement or statement on any check or any letter accompanying the check or
payment as rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord’s right to recover the
balance of such rent or pursue any other remedy in the Lease provided.

     Entire Agreement. This Lease and the exhibits and rider, if any, attached
hereto and forming a part hereof, set forth all covenants, promises,
agreements, conditions, and understandings between Landlord and Tenant
concerning the Leased Premises and there are no

 

covenants, promises, conditions or understandings, either oral or written,
between them other than are herein set forth. Except as herein otherwise
provided, no subsequent alteration, change or addition to this Lease shall be
binding upon Landlord or Tenant unless reduced to writing and signed by them.

     Notices.

	 	a.	 	     All notices shall be in writing.
	 
	 	b.	 	Any notice by Tenant to Landlord must be served by certified
mail, postage prepaid, addressed to Landlord at the following
address:

	 	 	 
	 	 	
Christopher S. Vernon
	 	 	
c/o Mercer Management
	 	 	
PO Box 5471
	 	 	
Trenton, New Jersey 08638

		
	     Any notice by Landlord to Tenant must be served by certified mail,
postage prepaid, addressed to Tenant at the following address:

	 	 	 
	 	 	
Yardville National Bank
	 	 	
2465 Kuser Road
	 	 	
Hamilton, New Jersey 08690
	 	 	
Attn: Frank Durand

     Captions and Section Numbers. The captions, section numbers, article
numbers and index appearing in this Lease are inserted only as a matter of
convenience and in no way define, limit, construe or describe the scope or
intent of such sections or articles of this Lease nor in any way affect this
Lease.

     Recording. Tenant shall not record this Lease or any memorandum thereof
without the written consent of Landlord.

     Estoppel Statement. Tenant shall, within ten (10) days after written
request from Landlord, execute, acknowledge and deliver to Landlord a statement
in writing as may be requested by Landlord certifying (i) that this Lease is
unmodified and in full force and effect (or, modified, stating the nature of
such modification and certifying that this Lease, as so modified is in full
force and effect); (ii) confirming the commencement and expiration dates of the
term of the Lease; (iii) the dates to which the rental and other charges are
paid in advance, if any; and (iv) that there are not, to Tenant’s knowledge,
any uncured defaults on the part of Landlord hereunder, or specifying such
defaults if any are claimed. In addition, such statement shall provide
whatever other information and facts Landlord may reasonably require. Any such
statement may be relied upon by any prospective purchaser, ground lessor or
encumbrancer of all or any portion of the Building as well as by any of their
assignees.

     Corporate Authority. If Tenant or Landlord is a corporation, each
individual executing this Lease on behalf of said corporation represents and
warrants that he is duly authorized to execute and deliver this Lease on behalf
of said corporation, in accordance with a duly adopted

 

resolution of the Board of Directors of said corporation, and that this
Lease is binding upon said corporation in accordance with its terms.

     Attachments. Exhibit “A” which is attached to the Lease is a part of this
Lease and is incorporated as if fully set forth herein.

     IN WITNESS WHEREOF, Landlord and Tenant have signed and sealed this Lease
as of the day and year first above written.

	 	 	 	 
	ATTEST:	 	
LANDLORD:
	 	 	 	 
	 	 	
By:	 
	
	 	 	

Christopher S. Vernon
	 	 	 	 
	 	 	
By:	 
	
	 		

Eileen Vernon
	 	 	 	 
	 	 	
By:	 
	
	 	 	

Mark Corcoran
	 	 	 	 
	WITNESS/ATTEST	 	
TENANT:
	 	 	 	 
	 	 	
YARDVILLE NATIONAL BANK
	 	 	 	 
	 	 	
By:	 
	
	 	 	

 

EXHIBIT “A” — BASE RENT

     The monthly rent set forth below shall be paid by the Tenant on or before
the first day of each month in advance, at the following address:

	 	 	 
	 	 	
Mercer Management and Development Co.
	 	 	
PO Box 5471
	 	 	
Trenton, New Jersey 08638

BASE RENTAL:

	 	 	 	 	 	 	 	 	 
	$/S.F.	 	Monthly Rent	 	Annual Base Rent
	
	 	
	 	

	$4.00/S.F.
	 	$	2,783.00	 	 	$	33,396.00<PAGE>

                                                                    EXHIBIT 10.3

                      SETTLEMENT AND COMMUTATION AGREEMENT

        This SETTLEMENT AND COMMUTATION AGREEMENT (the "Agreement") is dated as
of November 4, 2003, by and among XL LIFE LTD ("XL"), XL RE LTD, formerly known
as XL MidOcean Reinsurance Ltd ("XL Re"), ANNUITY AND LIFE REASSURANCE, LTD.
("ALRe"), and ANNUITY AND LIFE RE (HOLDINGS), LTD. ("Holdings").

        WHEREAS, XL and ALRe entered into a Master Agreement dated as of
December 31, 2002 (the "Master Agreement") setting forth, among other things,
the terms under which ALRe would novate certain reinsurance agreements (the
"Novated Contracts");

        WHEREAS, XL and ALRe entered into a retrocession agreement dated as of
December 31, 2002 (the "December 31 Retrocession Agreement") under which XL
retroceded 50% of the business covered by certain of the Novated Contracts (the
"Novated Viva Contracts") to ALRe;

        WHEREAS, XL and ALRe entered into a Reinsurance Administration Agreement
dated as of December 31, 2002 (the "Administration Agreement") for purposes of
facilitating the administration of the Novated Contracts;

        WHEREAS, the Administration Agreement and the December 31 Retrocession
Agreement have been terminated pursuant to a Notice of Termination dated August
5, 2003 delivered to ALRe by XL;

        WHEREAS, XL Re entered into a retrocession agreement effective as of
December 17, 1999 (the "35% Old Mutual Agreement") under which XL Re retroceded
certain reinsurance business to ALRe;

        WHEREAS, XL Re entered into a retrocession agreement effective as of
December 17, 1999 (the "15% Old Mutual Agreement," and, together with the 35%
Old Mutual Agreement the "Old Mutual Agreements" and, together with the December
31 Retrocession Agreement, the "Retrocession Agreements") under which XL Re
retroceded certain reinsurance business to ALRe;

        WHEREAS, XL and ALRe entered into a letter of intent with a stated
effective date of January 1, 2002 (the "TransAmerica LOI") with respect to
Lifetime Minimum Interest Guarantee losses incurred by ALRe under its
reinsurance agreement with TransAmerica Occidental Life Insurance Company;

        WHEREAS, XL and ALRe entered into a letter of intent dated as of
February 28, 2002 (the "Catastrophic Excess of Loss Cover LOI", and, together
with the Transamerica LOI the "Letters of Intent") with respect to certain
losses incurred by ALRe under its reinsurance agreements with certain U.S. and
Canadian insurance companies;

<PAGE>

        WHEREAS, XL, XL Re and ALRe disagree as to and have engaged in extensive
negotiations with respect to, their respective obligations under and in
connection with the Retrocession Agreements, the Master Agreement and the
TransAmerica LOI;

        WHEREAS, ALRe is a wholly-owned subsidiary of Holdings;

        WHEREAS, the board of directors of each of the parties hereto having
approved the terms of this Agreement, the parties hereto now wish to fully and
finally determine and settle all liabilities and obligations of XL, XL Re and
ALRe under the Retrocession Agreements, the Master Agreement, the Administration
Agreement and the Letters of Intent;

        NOW, THEREFORE, in consideration of the mutual covenants contained
herein and the payments to be made hereunder, the parties agree as follows:

                                   ARTICLE I
                         REPRESENTATIONS AND WARRANTIES

       A. The parties hereto expressly warrant and represent (as to themselves
and their affiliates, but not as to the other party):

                (i) that the execution of this Agreement is fully authorized by
        each of them;

                (ii) that the person or persons executing this Agreement have
        the necessary and appropriate authority to do so;

                (iii) that this Agreement is valid, binding and enforceable in
        accordance with its terms;

                (iv) that no consent of any government entity is required to
        make this Agreement valid and binding upon them;

                (v) that the execution of this Agreement does not conflict with,
        result in a breach or violation or imposition of any lien, charge or
        encumbrance upon any property or assets of the parties or any of their
        respective subsidiaries pursuant to, (a) the charter or by-laws or other
        organizational document of the parties or any of their respective
        subsidiaries, (b) the terms of any indenture, contract, lease, mortgage,
        deed of trust, note agreement, loan agreement or other agreement,
        obligation, condition, covenant or instrument to which the parties or
        any of their respective subsidiaries is a party or bound or to which its
        or their respective property is subject, or (c) any statute, law, rule,
        regulation, judgment, order or decree applicable to the parties or any
        of their respective subsidiaries of any court, regulatory body,
        administrative agency, governmental body, arbitrator or other authority
        having jurisdiction over the parties or any of their respective
        subsidiaries or any of their respective properties; and

                (vi) that none of the claims being released pursuant to this
        Agreement have been previously assigned or transferred in any way to any
        person.

                                      -2-
<PAGE>

       B. ALRe and Holdings each hereby expressly warrants, represents and
covenants that (before and after giving effect to this Agreement):

                (i) it is a company incorporated in Bermuda;

                (ii) the fair value of its assets and the assets of its
        subsidiaries taken as a whole, at a fair valuation, exceeds and is
        expected to exceed their debts and liabilities, subordinated, contingent
        or otherwise;

                (iii) the present fair salable value of its property and the
        property of its subsidiaries taken as a whole is and is expected to be
        greater than the amount that is expected to be required to pay their
        probable liability on their debts and other liabilities, subordinated,
        contingent, or otherwise, as such debts and other liabilities become
        absolute and matured;

                (iv) it and its subsidiaries taken as a whole are and are
        expected to be able to pay their debts and liabilities, subordinated,
        contingent or otherwise, as such debts and liabilities become absolute
        and matured;

                (v) it and its subsidiaries taken as a whole do not and are not
        expected to have unreasonably small capital with which to conduct the
        businesses in which they are engaged as such businesses are now
        conducted and are presently proposed to be conducted following the date
        hereof;

                (vi) as of the date hereof there is no insolvency proceeding of
        any character, voluntary or involuntary, relating to ALRe, Holdings or
        any of their subsidiaries, which is pending or, to the best of its
        knowledge, threatened (except for possible threats that were disclosed
        to XL in writing on November 2, 2003); neither ALRe, Holdings nor any of
        their subsidiaries has made any assignment for the benefit of creditors
        or taken any action with a view to, or which would constitute a basis
        for, the institution of an insolvency proceeding;

                (vii) it is not insolvent under Bermuda law;

                (viii) all known claims under the Novated Contracts in respect
        of deaths before December 31, 2002 (after due inquiry) have been
        disclosed fully and accurately to XL; and

                (ix) all expectations and all statements regarding contingent
        liabilities in the foregoing representations and warranties are held in
        good faith and ALRe and Holdings have a reasonable basis therefor.

                                   ARTICLE II
                    PAYMENTS; PREPAYMENTS; EVENTS OF DEFAULT

        A. Payments. In full settlement and commutation of all obligations and
liabilities, known and unknown, under the Retrocession Agreements, the Master
Agreement, the Administration Agreement and the TransAmerica LOI, ALRe agrees to
pay XL the sum of US

                                      -3-
<PAGE>

$7,000,000 (Seven Million Dollars). Said funds are to be paid in an installment
of $750,000 on the date hereof and the balance in equal monthly installments of
$250,000 on the 15th day of each month beginning November 15, 2003. Such
payments to XL shall be made by wire transfer to the account of XL at Citibank
NA, ABA# 021000089, CHIPS# 0008, SWIFT CITIUS33, For further credit to: The Bank
of Bermuda Limited, CHIPS UID# 005584, SWIFT Code BBDA BMHM, Account Number:
10921671, For further credit to: Account Name: XL Life Ltd. - Lighthouse,
Account Number: 1510 816253

        B. Mandatory Prepayments. Amounts owed to XL pursuant to paragraph A
above shall be mandatorily prepayable in an amount equal to 100% of the proceeds
of any indebtedness for borrowed money or the equivalent incurred by ALRe,
Holdings or any of their subsidiaries unless such indebtedness is expressly
subordinated to such amounts owed to XL on terms satisfactory to XL.

        C. Optional Prepayments. Amounts owed to XL pursuant to paragraph A
above shall be prepayable at any time at the option of ALRe. Prior to November
15, 2003, ALRe may at its option elect to pay to XL $6,000,000 (Six Million
Dollars), less any other amounts paid to XL hereunder, in full satisfaction of
the amounts due under Article II.A above.

        D. No Penalty. There shall be no prepayment penalties for any mandatory
or optional prepayments made by ALRe to XL pursuant to this Article II.

        E. Application of Prepayments. Any mandatory or optional prepayments
made pursuant to this Article II shall be applied in inverse order to the
installments then due pursuant to paragraph A above.

        F. Events of Default. Each of the following is an "Event of Default:"

                (i) the default by ALRe for more than ten (10) business days in
        the payment when due of any installment set forth in paragraph A above;

                (ii) the failure by ALRe or Holdings to comply with any of the
        other agreements set forth herein;

                (iii) the institution of any bankruptcy, rehabilitation,
        liquidation, conservation or other delinquency or insolvency
        proceedings, including, without limitation, the filing of any scheme of
        arrangement, concerning ALRe, Holdings or any of their affiliates;
        provided that, in the case of any such institution or filing that is
        involuntary, if not dismissed within 60 days.

                (iv) ALRe shall cease to be a wholly-owned subsidiary of
        Holdings.

        G. Remedies. Upon the occurrence of an Event of Default set forth in
clause F(iii) above, all outstanding amounts owed pursuant to this Article II
shall become due and payable immediately without further action or notice by XL.
Upon the occurrence of any other Event of Default, XL may declare all
outstanding amounts owed pursuant to this Article II due and payable upon
written notice to ALRe.

        H. Business Days. If any payment would otherwise be due on a day that is
not a business day it shall be paid on the next business day. A business day is
a day on which banks in New York and Bermuda are open for business.

                                      -4-
<PAGE>

                                  ARTICLE III
                   TERMINATION AND COMMUTATION OF AGREEMENTS

        A. As of the date hereof, the Master Agreement and the TransAmerica LOI
are terminated with all past, present and future obligations or liabilities of
any of the parties thereto being extinguished; provided that Section 6.3 of the
Master Agreement is hereby amended to read as set forth on Exhibit A attached
hereto and (together with the relevant defined terms from the Master Agreement)
shall remain in full force and effect as so amended.

        B. ALRe acknowledges that (i) the Catastrophic Excess of Loss Cover LOI
has not been in effect since December 31, 2002 and (ii) the December 31
Retrocession Agreement and the Administration Agreement were validly and
effectively terminated by notice dated August 5, 2003 but the parties agree
that, for their mutual convenience, such terminations shall be deemed to have
occurred as of July 1, 2003. The parties to the Catastrophic Excess of Loss
Cover LOI, the December 31 Retrocession Agreement and the Administration
Agreement agree that all past, present and future obligations or liabilities of
any of the parties thereto are extinguished; provided that Section 5.D of the
December 31 Retrocession Agreement shall be amended by adding the words "50% of"
before the words "such Federal Excise Tax Liability" and, as so amended, shall
remain in full force and effect.

        C. The parties agree that the Old Mutual Agreements are terminated with
all past, present and future obligations or liabilities of any of the parties
thereto being extinguished but the parties agree that, for their mutual
convenience, such terminations shall be deemed to have occurred as of July 1,
2003.

        D. This Agreement supercedes all of the provisions of the other
documents referred to this Article III including without limitation the
arbitration provisions thereof.

                                   ARTICLE IV
                                 MUTUAL RELEASES

        A. In consideration of the agreements of ALRe and Holdings hereunder, XL
and XL Re release and forever discharge ALRe and Holdings, their subsidiaries,
predecessors, successors and assigns, and each of their respective officers,
directors and affiliates (the "ALRe Related Parties") from any and all
liabilities and obligations of the ALRe Related Parties arising under or related
to the Retrocession Agreements, the Administration Agreement, the Master
Agreement and the Letters of Intent, whether known or unknown, reported or
unreported and whether currently existing or arising in the future, including,
but not limited to, all claims, debts, demands, causes of action, duties, sums
of money, covenants, contracts, controversies, agreements, promises, doings,
omissions, damages, judgments, costs, expenses, and losses whatsoever (including
without limitation any claims based on fraud, bad faith or extracontractual
liabilities). XL and XL Re further acknowledge that the provisions of this
Agreement are in complete accord, satisfaction, settlement and commutation of
ALRe's liabilities and obligations under the Retrocession Agreements, the
Administration Agreement, the Master Agreement and the Letters of Intent;
provided that, for the avoidance of doubt, nothing in this Agreement shall be
construed to (i) release or relieve ALRe or Holdings from any indemnification
obligation that it owes or may owe in the future to any of its directors that
are officers, directors, or designees of, or otherwise related to, XL, (ii)
release or relieve ALRe or Holdings from any obligation that it may have, now or
in the future, to any affiliate of XL as a shareholder or warrantholder of

                                      -5-
<PAGE>

Holdings, (iii) release any party from its obligations under this Agreement or
(iv) preclude XL from making any claims or cross-claims in connection with
existing or future shareholder lawsuits against Holdings.

        B. In consideration of the agreements of XL and XL Re hereunder, ALRe
and Holdings hereby release and forever discharge XL and XL Re, their
subsidiaries , predecessors, successors and assigns, and each of their
respective officers, directors and affiliates (the "XL Related Parties") from
any and all liabilities and obligations of the XL Related Parties arising under
or related to the Retrocession Agreements, the Administration Agreement, the
Master Agreement, and the Letters of Intent, whether known or unknown, reported
or unreported, and whether currently existing or arising in the future,
including, but not limited to, all claims, debts, demands, causes of action,
duties, sums of money, covenants, contracts, controversies, agreements,
promises, doings, omissions, damages, judgments, costs, expenses, and losses
whatsoever (including without limitation all claims based on fraud, bad faith or
extracontractual liabilities). ALRe and Holdings further acknowledge that the
provisions of this Agreement are in complete accord, satisfaction, settlement
and commutation of XL's and XL Re's liabilities and obligations under the
Retrocession Agreements, the Master Agreement and the Letters of Intent,
provided that nothing in this Agreement shall be construed to release any party
from its obligations under this Agreement.

        C. In the event that a court of Bermuda, the United States or any state
of the United States (i) avoids or does not enforce or give full effect to the
releases given by any party herein or (ii) avoids or does not give full effect
to any payment or obligation made or required to be made by any party hereunder,
then this Agreement and the releases herein by the parties shall, at the option
of XL if the party referred to in (i) or (ii) is ALRe or Holdings or at the
option of ALRe if the party referred to in (i) is XL or XL Re, be null and void.

        D. Each of the parties agrees and covenants that it will not file or
cause to be filed any lawsuit, arbitration or other proceeding asserting any
claim released by the release executed by it. In the event a party files any
such lawsuit, arbitration or other proceeding, the party so filing will
indemnify the other parties for all costs incurred in defending against such
proceeding, including attorneys' fees.

        E. The parties shall not seek to reopen, set aside or otherwise dispute
the effectiveness of this Agreement on any grounds whatsoever, including without
limitation, (i) that this Agreement is void or voidable on the grounds of
intentional fraud, misrepresentation, mistake of law, mistake of fact or any
other basis (it being understood that neither party has relied on any statement
of any other party not set forth as an express warranty herein and that there is
no fact that is or could be known to one party the disclosure of which would
have caused the other party not to enter into this Agreement), (ii) that any of
the parties in the future becomes aware of any mistake of law (including such
mistake arising as a result of a subsequent change of law, which shall include,
without limitation, a settled understanding of the law which is subsequently
departed from by judicial decision) and/or (iii) any mistake of fact in any way
whatsoever connected with this Agreement.

                                      -6-
<PAGE>

                                   ARTICLE V
                               FURTHER ASSURANCES

        The parties hereto agree to do or cause to be done such further acts and
things and deliver or cause to be delivered to the other parties such additional
assignments, agreements, powers and instruments as such parties may reasonably
require or deem advisable to carry into effect the purposes of this Agreement or
to better assure and confirm unto the other parties hereto the rights, powers
and remedies of each hereunder.

                                   ARTICLE VI
                                    EXPENSES

        All expenses incurred in connection with this Agreement (including the
fees and disbursements of legal, actuarial, accounting and other advisors
incurred on or before the date hereof) shall be paid by the party incurring such
expenses.

                                  ARTICLE VII
                                   SUCCESSORS

        The rights, duties and obligations of this Agreement shall be binding
upon and inure to the benefit of any and all successors, assigns, parents,
shareholders, affiliates, officers, directors, employees, liquidators,
rehabilitators, receivers, or trustees of the parties hereto.

                                  ARTICLE VIII
                                ENTIRE AGREEMENT

        A. This Agreement shall constitute the entire agreement between the
parties hereto related to the subject matter hereof. All discussions and
agreements previously entertained between the parties concerning the subject
matter of this settlement and commutation are merged into this Agreement. This
Agreement may not be amended, nor any of its provisions waived, except by
written amendment or waiver executed by all of the parties.

        B. This Agreement may be executed and delivered in multiple
counterparts, each of which, when so executed and delivered, shall be an
original, but such counterparts shall together constitute but one and the same
instrument and agreement.

                                      -7-
<PAGE>

                                   ARTICLE IX
                    GOVERNING LAW AND EXCLUSIVE JURISDICTION

        This Agreement shall be governed by and construed in accordance with the
substantive laws of the State of New York that would be applicable to agreements
made and to be performed entirely within such state without regard to the
principals of conflicts of law thereof and the parties hereto submit to the
exclusive jurisdiction of any state or federal court sitting in the borough of
Manhattan, State of New York in respect of any dispute, action, proceeding or
counterclaim hereunder. The parties hereto hereby irrevocably waive, to the
fullest extent they may effectively do so under applicable law, any objection
which they may now or hereafter have to the laying of the venue of any such
suit, action or proceeding brought in any such court and any claim that any such
suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. The parties hereby agree and consent that service of process
shall be effective if served in any manner permitted by the New York Civil
Practice Law and Rules or the United States Federal Rules of Civil Procedure or
by any form of mail requiring a return receipt at the addresses set forth below:

        If to be served on XL or XL Re:

               c/o XL Capital Ltd
               XL House
               One Bermudiana Road
               Hamilton, Bermuda  HM 11

        If to be served on ALRe or Holdings:

               c/o Annuity and Life Reassurance, Ltd.
               Cumberland House
               One Victoria Street
               Hamilton, Bermuda  HM 11

                                      -8-
<PAGE>

        IN WITNESS WHEREOF, the parties have executed this Agreement by their
respective authorized officers.

Signed in Hamilton, Bermuda,          XL LIFE LTD
this 4th day of November, 2003

                                      By:     /s/ Paul S. Giordano
                                         ---------------------------------------
                                      Name:  Paul S. Giordano
                                      Title: EVP & Secretary

Signed in Hamilton, Bermuda,          XL RE LTD
this 4th day of November, 2003

                                      By:     /s/ Paul S. Giordano
                                         ---------------------------------------
                                      Name:  Paul S. Giordano
                                      Title: EVP & Secretary

Signed in Hamilton, Bermuda,          ANNUITY AND LIFE REASSURANCE, LTD.
this 4th day of November, 2003

                                      By:       /s/ John F. Burke
                                         ---------------------------------------
                                      Name:  John F. Burke
                                      Title:  CEO & CFO

Signed in Hamilton Bermuda,           ANNUITY AND LIFE RE (HOLDINGS), LTD.
this 4th day of November, 2003

                                      By:       /s/ John F. Burke
                                         ---------------------------------------
                                      Name:  John F. Burke
                                      Title:  CEO & CFO

<PAGE>

                                                                       EXHIBIT A

        A. 6.3 Success Fee.

        If (i) ALRe and/or Annuity and Life Re (Holdings) Ltd. complete one or
more equity and/or debt financings during the eighteen (18) months following the
Closing Date in an aggregate amount of at least $35.0 million and (ii) at any
time during such eighteen month period, the trading price of the common shares
of Annuity and Life Re (Holdings) Ltd. is at or above $2.00 per share for at
least twenty (20) out of any thirty (30) consecutive trading days, then, in
recognition of XL's and its Affiliates' participation in the Transactions and
the contribution that such participation has made to the ability of ALRe to
complete such debt and/or equity financings, to pay to XL $2.0 million in cash
(or, in the sole discretion of XL, the equivalent thereof).

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