Document:

Exhibit 10.50

 

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 Life and Annuity Assurance
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 Agreements
(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, and 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 (collectively, the “Coinsurance Agreements”); 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 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.

 

(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.

 

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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.

 

(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.

 

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(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

 

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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) 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.

 

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(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

 

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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

 

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“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.

 

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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 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 Life and Annuity Assurance Company

6610 West Broad Street

Richmond, VA 23230

Facsimile:  (804) 281-6165

Attention:  Chief Executive Officer

 

11

 

With a copy to:

GE Life and Annuity Assurance Company

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 LIFE AND ANNUITY ASSURANCE

  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 GE Life and Annuity Assurance Company, does hereby
certify that, pursuant to Section 2 of the Trust Agreement dated as of
[               ]
entered into by and among GE Life and Annuity Assurance Company,  Union Fidelity Life Insurance Company and
[             ]
(the “Trust Agreement”) and the 
Coinsurance Agreement dated as of
[        ] between GE Life and Annuity
Assurance Company and Union Fidelity Life Insurance Company, GE Life and
Annuity Assurance Company is entitled to withdraw from the Trust Account
established by Union Fidelity Life Insurance Company for the benefit of GE Life
and Annuity Assurance 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

 

GE Life and Annuity Assurance Company
(“GELAAC”) hereby requests that
[               ]
immediately transfer to GELAAC [/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 GELAAC pursuant to the Trust Agreement dated as of
[      ,        ]
entered into by and among GELAAC, 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 LIFE AND ANNUITY ASSURANCE

  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.

 

16Exhibit 10.51

 

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”), Federal Home 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:

 

Federal
Home Life Insurance Company

6620 West Broad Street

Richmond, VA 23230

Facsimile:  (804) 662-2414

Attention:  Chief Executive Officer

 

11

 

With
a copy to:

 

Federal
Home 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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FEDERAL HOME 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 Federal
Home Life Insurance Company, does hereby certify that, pursuant to Section 2 of
the Trust Agreement dated as of
[               ]
entered into by and among Federal Home Life Insurance Company, Union Fidelity
Life Insurance Company and
[               ]
(the “Trust Agreement”) and the 
Coinsurance Agreement dated as of
[               ]
between  Federal Home Life Insurance
Company and Union Fidelity Life Insurance Company, Federal Home Life Insurance
Company is entitled to withdraw from the Trust Account established by Union
Fidelity Life Insurance Company for the benefit of Federal Home 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

 

Federal
Home Life Insurance Company (“FHL”) hereby requests that
[               ]
immediately transfer to FHL [/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 FHL pursuant to the Trust Agreement dated as of
[         ,         ]
entered into by and among FHL, 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.

 

FEDERAL
HOME 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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