Document:

Exhibit 10.1

	 	 	 
	 	

	11425 West Lake Park Drive

Suite 900

Milwaukee, WI 53224-3025

Phone 414.973.4300

Fax: 414.973.4357

www.arinet.com

January 9, 2006

VIA HAND DELIVERY

Michael E. McGurk

18435 Le Chateau Drive

Brookfield, WI  53045

RE:

Severance Agreement

Dear Mike:

As we have told you, ARI Network Services, Inc. (“Company”) has made the decision to terminate your employment, effective today, January 9, 2006 (“Separation Date”).  This will confirm the Company’s offer regarding the separation of your employment with the Company.  In connection with the separation, the Company offers you the following benefits:

(1)

Unconditional Assistance Benefits.  Whether or not you choose to sign this agreement and accept the terms it contains or, having done so, exercise your rights to revoke your acceptance of these terms (described more fully in Paragraph 4(D), below), the following circumstances will apply to you:

(A)

By no later than the first Company pay date following the Separation Date, the Company will pay you, subject to normal deductions for income and employment taxes, your regular base salary (together with any vacation that you have accrued but not used) through the Separation Date;

(B)

You will retain all your vested rights, if any, as of the Separation Date in the Company’s 401(k) plan and will receive all payments due you under the terms of that plan;

(C)

You will retain your right to payment of the gross amount of $40,887.00 that you have earned as of the Separation Date under the Company’s executive bonus arrangements, and payment of this amount, subject to normal deductions for income and employment tax withholding, will be made in the paycheck to be issued to you by the Company on January 13, 2006.  Pursuant to the Company’s executive bonus arrangements, you forfeit all rights to any current year bonus for the fiscal quarter in which the Separation Date occurs and subsequent fiscal quarters and all rights to any long-term bonus not yet paid to you;

(D)

You and the Company are currently parties to one or more stock option agreements (“Option Agreements”) which will remain in full force and effect pursuant to their terms following the Separation Date.  The Option Agreements, together with each of their associated stock option plans (“Stock Option Plans”), provide you with the option to purchase certain shares of Company stock pursuant to their terms.  Your outstanding stock 

Michael E. McGurk

January 9, 2006

Page 2

options under the Option Agreements and Stock Option Plans will remain exercisable following the Separation Date as provided in the Option Agreements and Stock Option Plans governing any particular set of stock options.  You acknowledge and agree that, pursuant to the applicable Stock Option Agreements and Stock Option Plans, you will have ninety (90) days following the Separation Date to exercise the stock options granted to you under the Company’s 2000 Stock Option Plan and will forfeit all vested and unvested stock options on the Separation Date under the Company’s 1991 Stock Option Plan;

(E)

The Company will provide you with the right to participate, at your own expense, in the Company’s group health insurance plan in accordance with the mandates of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”);

(F)

The Company will make available to you a two (2) week outplacement service program from an outplacement service provider selected by the Company.  As noted in Paragraph 2(C), below, your ability to utilize these outplacement services may be extended beyond the two (2) week period specified in this Paragraph 1(F), if you accept this agreement and do not revoke your acceptance of it; and

(G)

You understand that within five (5) calendar days following the Separation Date, you must return to the Company all of its property and all of the property of its present and former officers, directors, stockholders, members, partners, agents, employees and customers which you possess or over which you have direct or indirect control, including, but not limited to, all monies, records, files, credit cards, keys, cellular telephones, beepers, and electronically encoded information such as computer disks, etc., and all copies of such Company property (collectively, “Company Property”).

(2)

Conditional Assistance Benefits. In consideration of your undertakings set forth in Paragraph 3, below, and conditioned upon (i) your acceptance of the terms contained in this agreement, and (ii) your decision not to exercise your revocation rights (described in Paragraph 4(D), below), you will receive the following additional assistance benefits:

(A)

The Company will pay you, as severance, a total of six (6) months of your regular base salary, at the regular base salary rate in effect on the Separation Date, payable in bi-weekly installments in accordance with the Company’s regular payroll practices and schedule, beginning on the first regular Company pay date that occurs at least five (5) business days following expiration of the Revocation Period (described below); provided, however, that these severance payments will be reduced by any gross earnings you may earn in each work week of the six (6) month period immediately following the Separation Date from any source, including, but not limited to, employers or independent contractor relationships (“Mitigation Earnings”).  You acknowledge and agree that the total gross amount of such severance pay under this Paragraph 2(A) is $69,444.96 less total Mitigation Earnings.  You agree to notify Mary Pierson, ARI Network Services, Inc., 11425 West 

Michael E. McGurk

January 9, 2006

Page 3

Lake Park Drive, Suite 900, Milwaukee, Wisconsin, 53224, (414) 973-4522 on a weekly basis (on the Friday of each work week of the six (6) month period immediately following the Separation Date) of the gross earnings you have earned in such work week.  The severance payments provided in this Paragraph 2(A) will be subject to normal deductions for income and employment tax withholding.  For unemployment compensation purposes, you agree and acknowledge that payments under this Paragraph 2(A) are allocated to the workweeks between January 13, 2006 and July 14, 2006, and that you may be ineligible to collect unemployment compensation benefits during that period;

(B)

Following expiration of the Revocation Period (described below), if you were covered by the Company’s group health insurance plan on the Separation Date and you elect COBRA coverage in a timely manner, the Company will pay the total cost of such COBRA coverage for the lesser of (i) the first six (6) months for which you are eligible for COBRA coverage or (ii) until you obtain other health insurance coverage.  Immediately following this period of Company-subsidized COBRA coverage, you will be solely responsible for payment of the entire cost of COBRA coverage if you choose to continue such coverage.  Within five (5) calendar days of your obtaining other health insurance coverage, you agree to inform the Company of such fact in writing; and

(C)

Following expiration of the Revocation Period (described below), the Company will make available to you a six (6) month outplacement service program (inclusive of the two (2) weeks of outplacement specified in Paragraph 1(F), above) from an outplacement service provider selected by the Company.  Once you have completed the outplacement program specified in this Paragraph 2(C), you will be solely responsible for payment of any additional costs incurred as a result of your use of such outplacement services.

(3)

Your Undertakings.  In exchange for the benefits provided to you under Paragraph 2, above, you agree as follows:

(A)

You agree, on behalf of yourself, your heirs, successors and assigns, to release the Company, its affiliates and subsidiaries and their respective past and present officers, directors, stockholders, members, partners, agents and employees (“Released Parties”) from any claims arising on or before the date you sign this agreement.  This includes, but is not limited to, giving up any claims related in any way to your employment by the Company, the decision to terminate your employment, termination of our employment relationship, and wages and other remuneration, including, but not limited to, any current or former bonus or other incentive plans or programs offered by the Company.  This release of claims includes any claims, whether they are presently known or unknown, or anticipated or unanticipated by you.  Because you are age 40 or older, your acceptance of this agreement also will release any and all claims under the federal Age Discrimination in Employment Act.  You should not construe this reference to age discrimination claims as in 

Michael E. McGurk

January 9, 2006

Page 4

any way limiting the general and comprehensive nature of the release of claims provided under this Paragraph 3(A).  You agree to waive and give up any benefit conferred on you by any order or judgment issued in connection with any proceeding filed against the Released Parties regarding any claim released in this agreement;

(B)

You represent and warrant that as of the date of your signing of this agreement, you do not have within your possession or control any Company Property (defined above);

(C)

You agree not to engage at any time in any form of conduct or make any statements or representations, or direct any other person or entity to engage in any conduct or make any statements or representations, that disparage, criticize or otherwise impair the reputation of the Company or any of the Released Parties (defined above).  Nothing contained in this Paragraph 3(C) shall preclude you from providing truthful testimony pursuant to subpoena or other legal process; and

(D)

You agree that for two (2) years following the Separation Date you will not directly or indirectly encourage any Company employee to terminate his/her employment with the Company or solicit such an individual for employment outside the Company in any manner which would end or diminish that employee’s services to the Company.

(4)

Acceptance Procedures.  The Company wishes to ensure that you voluntarily agree to the terms contained in this agreement and do so only after you fully understand them.  Accordingly, the following procedures shall apply:

(A)

You agree and acknowledge that you have read this agreement, understand its contents, and may agree to the terms of this agreement by signing and dating it and returning the signed and dated agreement, via mail, overnight delivery or hand delivery, so that it is received by Mary Pierson, ARI Network Services, Inc., 11425 West Lake Park Drive, Suite 900, Milwaukee, Wisconsin, 53224, on or before 5:00 p.m. Central time on the 25th calendar date following your receipt of this agreement.  The sooner you sign and return this agreement to the Company, the sooner you will receive the benefits described in Paragraph 2, above;

(B)

You agree and acknowledge that you have been advised by the Company to consult with an attorney prior to signing this agreement;

(C)

You understand that this agreement, at Paragraph 3(A), above, inclu­des a final general release, including a release of all claims under the Age Discrimination in Employment Act;

Michael E. McGurk

January 9, 2006

Page 5

(D)

You understand that you have seven (7) calendar days after signing this agreement within which to revoke your acceptance of it (“Revocation Period”).  Such revocation will not be effective unless written notice of the revocation is, via mail, overnight delivery or hand delivery, directed to and received by Mary Pierson, ARI Network Services, Inc., 11425 West Lake Park Drive, Suite 900, Milwaukee, Wisconsin, 53224, on or before 5:00 p.m. Central time on the first work day following the end of the Revocation Period;

(E)

This agreement will not be binding or enforceable unless you have signed and delivered it as provided in Paragraph 4(A), above, and have chosen not to exercise your revocation rights, as described in Paragraph 4(D), above.  If you give timely notice of your intention to revoke your acceptance of the terms set forth in this agreement, it shall become null and void, and all rights and claims of the parties which would have existed, but for the acceptance of this agreement’s terms, shall be restored; and

(F)

You represent and warrant to the Company that, in the event, you choose to accept the terms of this agreement by signing it, the date and time appearing above your name on the last page of this agreement shall be the actual date and time on which you have signed the agreement.

(5)

Miscellaneous.  Should you accept the terms of this agreement, its terms will be governed by the following:

(A)

This agreement constitutes the complete understanding between you and the Company concerning all matters affecting your employment with the Company and the termination thereof.  If you accept this agreement, it supersedes all prior agreements, understandings and practices concerning such matters, including, but not limited to, any Company personnel documents, handbooks, policies, incentive or bonus plans or programs (including any executive bonus arrangements and the May 20, 1999 Change of Control Agreement between you and the Company), and any prior customs or practices of the Company; provided, however, that this Paragraph 5(A) does not apply to the Stock Option Agreements, the Stock Option Plans or any confidentiality, non-competition or other restrictive covenant obligations that you owe to the Company (including the January 20, 1997 Confidentiality Agreement between you and the Company) which shall survive and remain in full force and effect following the Separation Date;

Michael E. McGurk

January 9, 2006

Page 6

(B)

If any court of competent jurisdiction determines that any of the provisions of Paragraph 3(D), above, are invalid or unenforceable, then such invalidity or unenforceability shall have no effect on the other provisions of Paragraph 3(D) or this agreement which shall remain valid, binding and enforceable and in full force and effect, and, to the extent allowed by law, such invalid or unenforceable provision shall be construed in a manner so as to give the maximum valid and enforceable effect to the intent of the parties expressed therein;

(C)

Nothing in the release contained in this agreement should be construed as an admission of wrongdoing or liability on the part of the Company.  The Company denies any liability to you.  Such provision is included merely to wrap up all loose ends between us;

(D)

This document and its interpretation shall be governed and construed in accordance with the laws of the State of Wisconsin and shall be binding upon the parties hereto and their respective successors and assigns;

(E)

In the event that you breach any provision of this agreement, you agree that the Company may suspend all additional payments under this agreement, recover any damages suffered as a result of such breach and recover from you any reasonable attorneys’ fees and costs it incurs as a result of your breach.  In addition, you agree that the Company may seek injunctive or other equitable relief as a result of a breach by you of any provisions of this agreement; and

(F)

You understand and acknowledge, that pursuant to law, a copy of this agreement will be filed with the United States Securities and Exchange Commission (“SEC”) and that, as a result, the terms of this agreement will be public.

This agreement is intended to resolve all outstanding issues between you and the Company in a comprehensive manner.  Although the agreement contains language releasing the Company from claims, the Company maintains, and you understand and acknowledge that the Company maintains, that you have no such claims against the Company or any of the parties covered by the release contained in Paragraph 3(A), above.

Michael E. McGurk

January 9, 2006

Page 7

Should you have any questions, please feel free to contact Mary Pierson.

Very truly yours,

ARI NETWORK SERVICES, INC.

By:

   /s/ Brian E. Dearing                            

Brian E. Dearing

Chairman and Chief Executive Officer

I agree with and accept the terms contained in 

this agreement and agree to be bound by them.  

Dated this 13th day of January, 2006.

Time:   1:30 p.m._______________________

/s/ Michael E. McGurk__________________

Michael E. McGurk

Severance Summary Sheet

Michael E. McGurk

January 9, 2006

The following summarizes the terms of the severance agreement that ARI Network Services, Inc. (“ARI”) has offered to you today.  This summary of terms does not purport to include all the provisions or language contained in the severance agreement.  Furthermore, this summary does not constitute an agreement or contract between you and ARI.  With the exception of those items that you are entitled to by law, in order for a binding severance agreement to exist between you and ARI and in order for you to receive the benefits offered to you in the severance agreement, both you and ARI must execute the severance agreement pursuant to its terms, and the Revocation Period (defined in the severance agreement) must expire.

				
	 	Benefit

	Unconditional Benefit

	Conditional Benefit

	 	 	 	 
	 	Salary

	Through January 9, 2006

	Through July 14, 2006

	 	Vacation Pay

	35 days

	N/A

	 	2005 Bonus

	Paid on January 13, 2006

	N/A

	 	

Stock Options

	90 days for options from

2000 Stock Option Plan

	

N/A

	 	

Health Coverage

Continuation

	

February 2006 to August of

2007 at your own expense

	February 2006 to July

2006 at the Company’s

expense (continuation available

through August of 2007 at your own

expense)

	 	Outplacement

Service

	

2 weeks

	

6 monthsexv10w1

 

Exhibit 10.1

COINSURANCE AGREEMENT

Between

ANNUITY AND LIFE REASSURANCE AMERICA, INC.,

(referred to as the Company)

and

WILTON REASSURANCE COMPANY

(referred to as the Retrocessionaire)

Dated January 17, 2006

Effective June 30, 2005

 

 

COINSURANCE AGREEMENT

     THIS COINSURANCE AGREEMENT (the “Agreement”), is made and entered into this 17th day
of January, 2006, by and between ANNUITY AND LIFE REASSURANCE AMERICA, INC., a Connecticut
insurance company (the “Company”) and WILTON REASSURANCE COMPANY (f/k/a PRUDENTIAL SELECT
LIFE INSURANCE COMPANY OF AMERICA), a Minnesota insurance company (“Retrocessionaire”).

     WHEREAS, the Company, Annuity and Life Reassurance, Ltd., a Bermuda insurance company
(“ALR Bermuda”), Retrocessionaire and Wilton Reinsurance Bermuda Limited, a Bermuda
insurance company (“Wilton Bermuda,”) have entered into that certain Master Agreement,
dated August 10, 2005 (the “Master Agreement”) and attached as Exhibit A-1 hereto,
as amended by a Letter Agreement dated December 29, 2005 and attached as Exhibit A-2
hereto, pursuant to which the Company and ALR Bermuda have agreed to retrocede, and
Retrocessionaire and Wilton Bermuda have agreed to reinsure, certain reinsurance treaties;

     WHEREAS, as contemplated by the Master Agreement, the Company wishes to retrocede to the
Retrocessionaire, and the Retrocessionaire wishes to indemnity reinsure, on a one-hundred percent
(100%) coinsurance basis, the Covered Treaties in accordance with the terms and conditions of this
Agreement; and

     WHEREAS, following the Transition Date, the Company desires that the Retrocessionaire perform,
and the Retrocessionaire wishes to perform, administrative functions on behalf of the Company with
respect to the Covered Treaties as well as certain agreements related thereto.

     NOW, THEREFORE, in consideration of the mutual and several promises and undertakings herein
contained, and for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Company and the Retrocessionaire agree as follows:

ARTICLE I

BASIS OF COINSURANCE AND BUSINESS COINSURED

     1.01 Coinsurance.

     (a) Subject to the terms and conditions of this Agreement, the Company hereby retrocedes on a
coinsurance basis to the Retrocessionaire as of the Effective Time, and the Retrocessionaire hereby
accepts and agrees to assume and indemnity reinsure on a coinsurance basis as of the Effective
Time, one hundred percent (100%) of the Reinsured Liabilities. This is an Agreement for indemnity
reinsurance solely between the Company and the Retrocessionaire and shall not create any legal
relationship whatsoever between the Retrocessionaire and any Person other than the Company. The
reinsurance effected under this Agreement shall be maintained in force, without reduction, unless
such reinsurance is terminated or reduced as provided herein.

 

 

     (b) On and after the Effective Time, the Retrocessionaire will have the responsibility for
immediately paying on behalf of the Company, as and when due, all Reinsured Liabilities arising
under or attributable to the Covered Treaties.

     1.02 Reinsurance Coverage. In no event shall the reinsurance provided hereunder
with respect to a particular Covered Treaty be in force and binding at any time unless such Covered
Treaty was in force and binding as of the Effective Time and is not a Novated Treaty at such time.

     1.03 Reserves. On and after the Effective Time, the Retrocessionaire shall establish
and maintain as a liability on its statutory financial statements reserves for the Covered Treaties
retroceded hereunder, calculated in accordance with SAP.

ARTICLE II

ACCOUNTINGS AND TRANSFER OF ASSETS

     2.01 Reinsurance Premiums. (a) In connection with the Closing under the Master
Agreement, in order to effect the reinsurance on the Covered Treaties at the Effective Time, the
Company has paid to the Retrocessionaire an initial reinsurance premium the amounts described in
the Master Agreement.

     (b) The Retrocessionaire shall be entitled to receive, as additional reinsurance premium,
immediate payment of an amount equal to (i) Premiums received on and after the Effective Time
attributable to the Covered Treaties less (ii) Premiums paid by the Company to Third-Party
Retrocessionaires under any Existing Retrocession Agreements.

     (c) To the extent that the Company recovers amounts from any third party relating to the
Covered Treaties (including, without limitation, Premiums from any Ceding Company and litigation
recoveries, but excluding recoveries under Existing Retrocession Agreements that have not been
assigned or novated to Retrocessionaire), immediately upon receipt of any such amounts the Company
shall transfer such amounts to the Retrocessionaire and provide the Retrocessionaire with any
pertinent information that the Company may have relating thereto.

     (d) Notwithstanding anything to the contrary set forth in Section 2.01(b) and (c) of this
Agreement, any amounts paid, received or due by the Company thereunder prior to the Transition Date
shall be accounted for and paid pursuant to Section 5.2(b) and (c) of the Master Agreement.

     2.02 Delayed Payments. If there is a delayed settlement of any payment due hereunder,
interest will accrue on such payment on a daily compounded basis at an annual rate equal to the
Treasury Rate. For purposes of this Section 2.02, a payment will be considered overdue, and such
interest will begin to accrue, on the first day immediately following the date such payment is due.
For greater clarity, (i) a payment shall be deemed to be due hereunder on the last date on which
such payment may be timely made under the applicable provision, and (ii) interest will not accrue
on any payment due the Retrocessionaire hereunder unless the delayed

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settlement thereof was caused by the Company.

     2.03 Failure to Pay Reinsurance Premiums. The payment of reinsurance premiums is a
condition precedent to the continuing liability of the Retrocessionaire under this Agreement,
unless such failure is a result of any action or inaction of the Retrocessionaire or any of its
Representatives during the time it is administering the Covered Treaties pursuant to Article III of
this Agreement. If reinsurance premiums with respect to this Agreement are not paid when due, the
Retrocessionaire shall have the right to provide the Company 45 days’ prior written notice (the
“Initial Notice”) of its intent to terminate because of the Company’s failure to pay
reinsurance premiums. If such reinsurance premiums have not been paid within 45 days of the
delivery of the Initial Notice, the Retrocessionaire shall provide to the Company a second notice
(the “Second Notice”) of its intent to terminate because of the Company’s failure to pay
such premiums. The reinsurance hereunder of all Covered Treaties shall terminate as of the last
date upon which premiums with respect to such Covered Treaties were paid.

ARTICLE III

ADMINISTRATION

     3.01. Engagement. Commencing on the Transition Date and during the entire term of
this Agreement, the Company hereby exclusively engages the Retrocessionaire to render on behalf of
the Company all administrative and management services necessary and desirable to fully administer
and manage the Covered Treaties, the Ancillary Agreements and the Existing Retrocession Agreements
(collectively, the “Administrative Services”). The Retrocessionaire hereby accepts such
engagement and agrees to perform the Administrative Services in accordance with the terms and
conditions of this Agreement. The Administrative Services shall include, but not be limited to,
the following: (i) collecting Premiums and other amounts due under the Covered Treaties, provided
that the Company shall cooperate with the Retrocessionaire with respect to any dispute or
litigation with respect thereto by making available any information in the possession of the
Company necessary to respond to any such dispute or litigation on a timely basis; (ii) receiving,
processing, investigating, evaluating and paying claims filed or made by Ceding Companies; (iii)
defending any action brought upon a Covered Treaty (other than in respect of an Excluded
Liability), Existing Retrocession Agreement or Ancillary Agreement or in connection with Reinsured
Liabilities; (iv) providing usual and customary services for Ceding Companies to the extent
required under the terms of the Covered Treaties, Existing Retrocession Agreements, and Ancillary
Agreements; (v) paying amounts due to agents, brokers, reinsurance intermediaries, and other
Persons, as applicable, under the terms of any of the Covered Treaties, Existing Retrocession
Agreements, and Ancillary Agreements; (vi) preparing and providing to the Company all accounting
and actuarial information related to the Covered Treaties, Existing Retrocession Agreements, and
Ancillary Agreements that are necessary in order for the Company to timely meet statutory or tax
accounting requirements for periods commencing on or after the Transition Date; (vii) maintaining
appropriate books and records of all transactions related to the each of the Covered Treaties,
Existing Retrocession Agreements, and Ancillary Agreements, including, without limitation, those
books and records required by and in accordance with the Industry Standards; (viii) fully
administering Existing Retrocession Agreements, including, without limitation, paying all
reinsurance premiums and collecting all reinsurance recoverables due from or to the Company
thereunder; (ix) commencing any actions

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necessary to collect amounts due under the Existing Retrocession Agreements and Ancillary
Agreements; (x) fully administering Ancillary Agreements, including, without limitation, paying all
amounts due by the Company thereunder and collecting all amounts due the Company thereunder; and
(xi) providing any such additional services incident to the foregoing, including, without
limitation, those services as may be necessary or appropriate to fully and properly administer the
Covered Treaties, Existing Retrocession Agreements, and Ancillary Agreements in accordance with
Industry Standards. The Retrocessionaire shall provide the Administrative Services and perform its
other obligations under this Article III at its sole cost and expense and in accordance with
Industry Standards. It is acknowledged and agreed that payment of any amount under or with respect
to any Covered Treaty pursuant to this Section 3.01 (including without limitation the payment of
any Reinsured Liabilities) will constitute full and equivalent performance by Retrocessionaire of
its obligations with respect to such amount under Section 1.01.

     3.02. Facilities. The Retrocessionaire will furnish the facilities, including,
without limitation, physical facilities, trained personnel, and data processing hardware and
software, necessary or desirable to provide the Administrative Services.

     3.03. Safeguarding Data. The Retrocessionaire will provide the storage facilities for
its copies of books and records relating to the Covered Treaties, Existing Retrocession Agreements,
and Ancillary Agreements necessary or desirable and as required by Applicable Law. The
Retrocessionaire shall be responsible for ensuring that the quality and security of the storage
facilities is in accordance with Industry Standards. The Retrocessionaire shall establish
reasonable safeguards to protect such books and records, including, without limitation, the data
and data files of the Company and each Ceding Company, as the case may be, against unauthorized
distribution, loss or alteration. Without limiting the generality of the foregoing, the
Retrocessionaire shall provide for data recovery procedures and systems, including daily back-up of
records, which shall be stored at an off-site location reasonably acceptable to the Company. Upon
reasonable notice, the Company shall have the right to review and inspect such books, records and
procedures relating thereto.

     3.04. Bank Account. The Retrocessionaire shall establish and maintain a bank account
(the “Collections Account”) in the name of Company for the collection of and payment of all
amounts due in connection with each Covered Treaty, Existing Retrocession Agreement and Ancillary
Agreement. To the extent reasonably requested by the Retrocessionaire, the Company shall do all
things reasonably necessary to enable the Retrocessionaire to open and maintain the Collections
Account, including without limitation executing and delivering such board resolutions and other
documents as may be requested by the relevant bank. The Company shall direct that all amounts due
to the Company under the terms of any Covered Treaty, Existing Retrocession Agreement and Ancillary
Agreement be deposited directly into the Collections Account. The Retrocessionaire shall have the
right to draw on the Collections Account for the purpose of performing its obligations under this
Agreement. Schedule 3.04 sets forth a list of, and copies of incumbency certificates for,
the Retrocessionaire employees empowered to take any action with respect to the Collection Account.
The Retrocessionaire will notify the Company of the termination or replacement of any person
listed on Schedule 3.04 promptly, but in no event later than two business days after such
termination or replacement. The Company shall not, without the Retrocessionaire’s prior written
consent, make any changes to the

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authorized signatories on the Collections Account or attempt to withdraw any funds therefrom. As
between the Retrocessionaire and the Company, the Retrocessionaire shall own all funds deposited in
the Collections Account, shall be entitled to all interest thereon, and shall pay or reimburse the
Company for all taxes on such interest.

     3.05. Books and Records. The Retrocessionaire shall maintain at its principal
administrative office for the duration of this Agreement and six (6) years thereafter or such
longer period required by Applicable Law books and records (a) of all transactions between it, the
Company and the Ceding Companies, or (b) relating to or arising from any of the Covered Treaties,
Existing Retrocession Agreements and Ancillary Agreements. Such books and records shall be
maintained in accordance with Industry Standards. The commissioner of insurance or appropriate
governmental officer of any state or local authority with jurisdiction over the Company shall have
access to such books and records as required by Applicable Law. The Retrocessionaire shall give the
Company sixty (60) days’ advance written notice of the proposed disposal or destruction of such
books and records by or on behalf of the Retrocessionaire and shall make available for removal and
storage by the relevant Ceding Company, Third-Party Retrocessionaire, and/or the Company such books
and records during that sixty-day period. The storage and disposal/destruction of any books and
records so obtained by the Company shall thereafter be the sole responsibility of the Company.

     3.06. Right to Inspect and Audit. The Company and its Representatives shall have the
right to inspect and audit the Retrocessionaire during the Retrocessionaire’s normal business
hours with five (5) business days’ advance notice or upon other reasonable notice to evaluate the
internal controls and compliance with this Agreement with regard to the books and records
maintained by the Retrocessionaire pursuant to or in connection with this Agreement, including,
without limitation, records relating to the Collections Account, and all such books and records
shall be made available to the Company and its Representatives for review, audit, inspection, and
reproduction. The Company shall be fully responsible for the costs of such reviews, audits,
inspections and reproductions.

     3.07 Regulatory Reporting; Quarterly Reports.

     (a) The Retrocessionaire shall provide to the Company all information with respect to the
Covered Treaties, Existing Retrocession Agreements and Ancillary Agreements required by the Company
to satisfy all current and future informational reporting and any other requirements imposed upon
it by any governmental entity. Upon the reasonable request of the Company, the Retrocessionaire
shall timely provide all information necessary to prepare such reports and summaries as may be
necessary to satisfy any requirements imposed by a governmental entity upon the Company with
respect to Covered Treaties, Existing Retrocession Agreements and Ancillary Agreements, and
promptly provide to the Company copies of all existing records relating to the Covered Treaties,
Existing Retrocession Agreements and Ancillary Agreements (including, with respect to records
maintained in machine readable form, hard copies) necessary to satisfy such requirements.

     (b) Within a time period mutually agreeable to the Company and the Retrocessionaire, but in no
event more than 30 days following the end of each calendar quarter after the Transition Date, the
Retrocessionaire will provide to the Company the information

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needed by the Company for reporting the Covered Treaties, Existing Retrocession Agreements and
Ancillary Agreements on statutory or GAAP financial statements, tax returns, or other financial
reports required to be filed by the Company. The form of the report (the “Retrocessionaire
Quarterly Report”) and the information to be provided is set forth on Schedule 3.07
attached hereto. If net cash is due to the Company, the amount due will accompany the
Retrocessionaire Quarterly Report. If net cash is due to the Retrocessionaire, the Company will
pay such amount to the Retrocessionaire promptly upon its receipt of the Retrocessionaire Quarterly
Report.

     3.08 Insurance. The Retrocessionaire shall maintain (a) commercial general liability
and/or office premises liability insurance, including premises liability and contractual liability,
for claims of bodily injury, personal injury and property damage with a business personal property
limit of not less than $1,000,000, and an office premises liability of not less than $1,000,000 per
occurrence, $2,000,000 general aggregate, $1,000,000 for fire damage, any one fire, and $10,000 for
medical expense, any one person; and (b) while any of the Retrocessionaire’s employees are based on
the premises of the Company, workers compensation insurance in compliance with statutory
requirements.

ARTICLE IV

REGULATORY MATTERS

     4.01 Regulatory Matters. If the Company or the Retrocessionaire receives notice of,
or otherwise becomes aware of, any regulatory inquiry, investigation or proceeding relating to the
Covered Treaties, the Company or the Retrocessionaire, as applicable, shall promptly notify the
other party thereof, whereupon the parties shall cooperate in good faith and use their respective
commercially reasonable efforts to resolve such matter in a mutually satisfactory manner, in light
of all the relevant business, regulatory and legal facts and circumstances.

     4.02 Licenses. At all times during the term of this Agreement, the Retrocessionaire
shall hold and maintain all licenses, certificates of authority and authorizations required under
Applicable Law or otherwise take all action that may be necessary or desirable (i) for the Company
to obtain full financial credit for the Covered Treaties in the jurisdiction in which it is
domiciled as of the Effective Date, and (ii) to perform its obligations hereunder.

     4.03 Notice of Litigation. On and after the date of this Agreement, the Company and
the Retrocessionaire shall promptly notify the other upon receipt of any demand letter, summons,
complaint, petition or notice of litigation, arbitration, or other dispute resolution proceedings
from any Person, and any complaint, notice, inquiry or other correspondence from any insurance
regulatory authority relating to this Agreement, any Covered Treaty, Existing Retrocession
Agreement, or Ancillary Agreement, or the subject matter hereof or thereof.

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ARTICLE V

CERTAIN COVENANTS

     5.01 Cooperation. Each party hereto shall cooperate fully with the other in all
reasonable respects in order to accomplish the objectives of this Agreement, including, without
limitation, the conveyance of the benefits of the Covered Treaties, Ancillary Agreements and the
Existing Retrocession Agreements, each in accordance with the terms of such agreements. In the
event and to the extent that the parties are unable to obtain any required consents, approvals or
agreements of any such Person as may be required to convey such benefits (i) the Company shall use
commercially reasonable efforts in cooperation with the Retrocessionaire to (A) provide or cause to
be provided to the Retrocessionaire the benefits of each of the Covered Treaties, Ancillary
Agreements and the Existing Retrocession Agreements, and (B) enforce for the account of the
Retrocessionaire any rights of the Company arising from any such agreement, and (ii) the
Retrocessionaire shall use commercially reasonable efforts to perform the obligations of the
Company arising under all such agreements. If and when any such consent, approval or agreement
shall be obtained, the Company shall promptly assign all of its rights and obligations thereunder
to the Retrocessionaire without the payment of further consideration and the Retrocessionaire
shall, without the payment of any further consideration therefor, assume such rights and
obligations and the Company shall be relieved of any and all obligation or liability hereunder.

     5.02 Further Assurances. Each of the parties hereto shall execute such documents and
other papers and perform such further acts as may be reasonably required to carry out the
provisions hereof and the transactions contemplated hereby. Without limiting the generality of the
foregoing, (i) the Company shall grant to the Retrocessionaire a power of attorney to authorize the
Retrocessionaire, to the greatest extent possible, to act on behalf of the Company in administering
the Covered Treaties, the Existing Retrocession Agreements, and the Ancillary Agreements, and (ii)
the parties shall cooperate with each other by furnishing any additional information and executing
and delivering any additional documents as may be reasonably requested by the other to further
perfect or evidence the consummation of, or otherwise implement, any transaction contemplated by
this Agreement, or to aid in the preparation of any regulatory filing, financial statement or Tax
return; provided, however, that any such additional documents must be reasonably satisfactory to
each of the parties and not impose upon either party any material liability, risk, obligation,
loss, cost or expense not contemplated by this Agreement.

     5.03 Oversights. Inadvertent delays, errors or omissions made in connection with this
Agreement or any transaction hereunder shall not relieve either party from any liability which
would have attached had such delay, error or omission not occurred, provided always that such error
or omission is rectified as soon as possible after discovery, and provided that the party making
such error or omission or responsible for such delay shall be responsible for any additional
liability which attaches as a result.

     5.04 No Amendments or Waivers. Following the execution of this Agreement, the
Company shall not terminate, modify, amend or waive compliance with any provision of any of the
Covered Treaties, Ancillary Agreements or Existing Retrocession Agreements and shall fully comply
with all of the terms and provisions of such agreements.

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ARTICLE VI

DAC TAX

     6.01 Election.

     (a) All uncapitalized terms used herein shall have the meanings set forth in the regulations
under Section 848 of the Code.

     (b) Each of the Company and the Retrocessionaire acknowledges that it is subject to taxation
under Subchapter L of the Code and hereby makes the election contemplated by Section 1.848-2(g)(8)
of the Treasury Regulations with respect to this Agreement. Each of the Company and the
Retrocessionaire (i) agrees that such election is effective for the taxable year of each party that
includes the Effective Date and for all subsequent years during which this Agreement remains in
effect and (ii) warrants that it will take no action to revoke the election.

     (c) Pursuant to Section 1.848-2(g)(8) of the Treasury Regulations, each of the Company and the
Retrocessionaire hereby agrees (i) to attach a schedule to its federal income tax return for its
first taxable year ending on or after the Effective Date that identifies this Agreement as a
reinsurance agreement for which the joint election under Section 1.848-2(g)(8) has been made, (ii)
that the party with net positive consideration for this Agreement for each taxable year will
capitalize its specified policy acquisition expenses with respect to this Agreement without regard
to the general deductions limitation of Section 848(c)(1) of the Code, and (iii) to exchange
information pertaining to the amount of net consideration under this Agreement each year to ensure
consistency or as otherwise required by the Internal Revenue Service. The Retrocessionaire shall
prepare and execute duplicate copies of the schedule described in the preceding sentence as soon as
possible after the Effective Date and submit them to the Company for execution. The Company shall
execute the copies and return one of them to the Retrocessionaire within thirty (30) days of the
receipt of such copies.

     (d) The Retrocessionaire shall submit a schedule to the Company by May 1 of each year of its
calculation of the net consideration under this Agreement for the preceding taxable year. This
schedule of calculations shall be accompanied by a statement signed by an authorized representative
of the Retrocessionaire stating that the Retrocessionaire will report such net consideration in its
federal income tax return for the preceding taxable year.

     (e) The Company may contest such calculation by providing an alternative calculation to the
Retrocessionaire in writing within thirty (30) days after the date on which the Company receives
the Retrocessionaire’s calculation. If the Company does not so notify the Retroessionaire, the
Company will report the net consideration under this Agreement as determined by the
Retrorocessionaire in the Company’s federal income tax return for the preceding taxable year.

     (f) If Company contests the Retrocessionaire’s calculation of the net consideration under this
Agreement, the parties shall act in good faith to reach an agreement as to the correct

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amount of net consideration within thirty (30) days after the date on which the Company submits its
alternative calculation. If Retrocessionaire and the Company reach agreement as to the amount of
net consideration under this Agreement, each party shall report such amount in its federal income
tax return for the preceding taxable year.

     If, during such period, Retrocessionaire and the Company are unable to reach agreement, they
shall promptly thereafter cause PricewaterhouseCoopers LLP (or another mutually-agreed
nationally-recognized firm of certified public accountants) promptly to review (which review shall
commence no later than five (5) days after the selection of such independent accountants) this
Agreement and the calculations of Retrocessionaire and the Company for the purpose of calculating
the net consideration under this Agreement. In making such calculation, such independent
accountants shall consider only those items or amounts in the Company’s calculation as to which the
Retrocessionaire has disagreed.

     Such independent accountants shall deliver to Retrocessionaire and the Company, as promptly as
practicable (but no later than thirty (30) days after the commencement of their review), a report
setting forth such calculation, which calculation shall result in a net consideration between the
amount thereof shown in the Company’s calculation delivered and the amount thereof shown in
Retrocessionaire’s calculation. Such report shall be final and binding upon Retrocessionaire and
the Company. The fees, costs and expenses of such independent accountant shall be borne (i) by the
Company if the difference between the net consideration as calculated by the independent
accountants and the Company’s calculation is greater than the difference between the net
consideration as calculated by the independent accountants and Retrocessionaire’s calculation, (ii)
by the Retrocessionaire if the first such difference is less than the second such difference, and
(iii) otherwise equally by Retrocessionaire and the Company.

ARTICLE VII

ARBITRATION

     7.01 Arbitration. (a) After the Closing Date, any dispute between the parties
relating in any way to this Agreement (other than disputes relating to calculations relating to DAC
tax, which shall be resolved in accordance with Article VI hereof, and any dispute arising in
connection with the Post-Effective Time Accounting or the Post-Transition Accounting contemplated
by Section 5.2 of the Master Agreement, which shall be resolved in accordance with Section 5.2(c)
of the Master Agreement), shall be decided through negotiation and, if necessary, arbitration as
set forth in Schedule 7.01 hereto. 

     (b) The parties intend this Section 7.01 to be enforceable in accordance with the Federal
Arbitration Act (9 U.S.C., Section 1) including any amendments to that Act which are subsequently
adopted. In the event that either party refuses to submit to arbitration as required by Section
7.01(a), the other party may request the court specified in Section 12.04 to compel arbitration in
accordance with the Federal Arbitration Act.

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ARTICLE VIII

INSOLVENCY

     8.01 Insolvency of the Company. In the event of the insolvency of the Company, all
coinsurance made, retroceded, renewed or otherwise becoming effective under this Agreement shall be
payable by the Retrocessionaire directly to the Company or to its liquidator, receiver or statutory
successor on the basis of the liability of the Company under the Covered Treaties without
diminution because of the insolvency of the Company. It is understood, however, that in the event
of the insolvency of the Company, the liquidator or receiver or statutory successor of the Company
shall give written notice of the pendency of a claim against the Company on a Covered Treaty within
a reasonable period of time after such claim is filed in the insolvency proceedings and that during
the pendency of such claim the Retrocessionaire may investigate such claim and interpose, at its
own expense, in the proceeding where such claim is to be adjudicated any defense or defenses which
it may deem available to the Company or its liquidator or receiver or statutory successor. It is
further understood that the expense thus incurred by the Retrocessionaire shall be chargeable,
subject to court approval, against the Company as part of the expense of liquidation to the extent
of a proportionate share of the benefit which may accrue to the Company solely as a result of the
defense undertaken by the Retrocessionaire.

ARTICLE IX

DURATION

     9.01 Duration. This Agreement shall continue in force (a) with respect to each
Covered Treaty until such time as (i) such Covered Treaty becomes a Novated Treaty, or (ii) if such
Covered Treaty does not become a Novated Treaty, (1) all the Company’s liability with respect to
such Covered Treaty is terminated in accordance with its terms, and (2) the Company has received,
or the Retrocessionaire has made on behalf of the Company, payments that discharge such liability
in full; (b) each Existing Retrocession Agreement and Ancillary Agreement until such time as (i)
each such agreement is assigned to and assumed by the Retrocessionaire, or, (ii) if such agreement
is not so assigned or assumed, (1) all the Company’s liability with respect to each such agreement
is terminated in accordance with its terms, and (2) the Company has received, or the
Retrocessionaire has made on behalf of the Company, payments that discharge such liability in full.
This Agreement shall terminate following the satisfaction of the requirements of the foregoing
subsections (a) and (b) with respect to the last non-Novated Treaty, Existing Retrocession
Agreement or Ancillary Agreement then in force. In no event shall the interpretation of this
Section 9.01 imply a unilateral right of the Retrocessionaire to terminate this Agreement.

     9.02 Survival. Notwithstanding the other provisions of this Article IX, the terms and
conditions of Articles VI, X and XI shall remain in full force and effect after the date on which
this Agreement is terminated in accordance with the terms and conditions of this Article IX.

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ARTICLE X

INDEMNIFICATION

     10.01 Retrocessionaire’s Obligation to Indemnify. The Retrocessionaire hereby agrees
to indemnify, defend and hold harmless the Company and its Affiliates and their respective
directors, officers and employees (collectively, the “Company Indemnified Parties”) from
and against all losses, liabilities, claims, expenses (including reasonable attorneys’ fees and
expenses) and damages (“Losses”) incurred by the Company to the extent arising from (i) any
breach of any covenant or obligation of the Retrocessionaire contained in this Agreement, (ii)
fraud, theft or embezzlement by directors, officers, employees, agents, subcontractors, successors
or assigns of the Retrocessionaire in connection with the performance of the Retrocessionaire’s
obligations under Article III of this Agreement, (iii) any Reinsured Liability, or (iv) any
Retrocessionaire Extracontractual Liability, provided, however, that no indemnification shall be
due under Sections 10.01(i) or (ii) to the extent that Losses are attributable to acts, omissions
or conduct of a person who is a director, officer, employee, agent, representative, successor, or
permitted assign of the Company or any of its Affiliates (other than the Retrocessionaire or any of
its Representatives acting as an agent, representative, successor or permitted assign of the
Company or any of its Affiliates), unless such acts, omissions or conduct were committed at the
written direction of the Retrocessionaire.

     10.02 Company’s Obligation to Indemnify. The Company hereby agrees to indemnify,
defend and hold harmless the Retrocessionaire and its Affiliates and their respective directors,
officers and employees (collectively, the “Retrocessionaire Indemnified Parties”) from and
against all Losses incurred by the Retrocessionaire to the extent arising from (i) any breach of
any covenant or obligation of the Company contained in this Agreement, (ii) fraud, theft or
embezzlement by directors, officers, employees, agents, subcontractors, successors or assigns of
the Company in connection with the performance of the Company’s obligations under Article III of
this Agreement, (iii) any Excluded Liability; provided, however, that no indemnification shall be
due under Sections 10.02(i) or (ii) to the extent that Losses are attributable to acts, omissions
or conduct of a person who is a director, officer, employee, agent, representative, successor, or
permitted assign of the Retrocessionaire or any of its Affiliates (other than the Company or any of
its Representatives acting as an agent, representative, successor or permitted assign of the
Retrocessionaire or any of its Affiliates), unless such acts, omissions or conduct were committed
at the written direction of the Company.

ARTICLE XI

DEFINITIONS

     11.01 Definitions. Any capitalized term used but not defined herein shall have the
meaning set forth in the Master Agreement. The following terms shall have the respective meanings
set forth below throughout this Agreement:

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"Affiliate” means, with respect to any Person, at the time in question, any other Person
controlling, controlled by or under common control with such Person.

"Agreement” has the meaning set forth in the preamble.

"Ancillary Agreements” means each contract or agreement identified on Schedule
11.01(a) hereto between the Company (or any Affiliate thereof) and a Ceding Company or other
counterparty relating to the administration or management of one or more of the Covered Treaties.

"Applicable Law” means any federal, state, local or foreign law (including common law),
statute, ordinance, rule, regulation, order, writ, injunction, judgment, permit, governmental
agreement or decree applicable to a Person or any such Person’s subsidiaries, properties, assets,
or to such Person’s officers, directors, managing directors, employees or agents in their capacity
as such.

"Business Day” means any day other than a Saturday, Sunday or other day on which commercial
banks in New York or Bermuda are required or authorized by law to be closed.

"Ceding Company” means the ceding company under any Covered Treaty.

"Company” has the meaning set forth in the preamble.

"Company Extracontractual Liabilities” means all liabilities for consequential, exemplary,
punitive or similar extracontractual damages or statutory penalties, whether owing to Ceding
Companies, governmental authorities or any other person relating to the Covered Treaties, which
liabilities arise from any action, act of bad faith, error or omission by the Company, any of its
Affiliates, or any Representative of the Company or any of its Affiliates, in each case excluding
any action taken or failure to take any action at the written direction or with the express consent
of the Retrocessionaire; provided, however, that Company Extracontractual Liabilities shall
exclude, with respect to a given Covered Treaty, those liabilities arising pursuant to the express
terms of such Covered Treaty.

"Covered Treaty” means each reinsurance agreement identified on Exhibit B hereto.

"Effective Date” means June 30, 2005.

"Effective Time” means 11:59 p.m. Eastern time on June 30, 2005.

"Excluded Liability” means any liability that (i) represents a Company Extracontractual
Liability, or (ii) is not expressly assumed by the Retrocessionaire pursuant the Master Agreement,
a Coinsurance Agreement (as defined in the Master Agreement), a Novation Amendment, an Existing
Retrocession Agreement Assignment (as defined in the Master Agreement) or an Ancillary Agreement.

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"Existing Retrocession Agreement” at any time means any Existing Retrocession Agreement (as
defined in the Master Agreement) that (a) was in force and effect as of the Effective Time, (b)
covers any risk associated with any Covered Treaty, and (c) has not been assigned or novated to
Retrocessionaire at or prior to such time.

"GAAP” means United States generally accepted accounting principles.

"Industry Standards” as to any Administrative Service shall mean the performance of such
service (i) with the skill, diligence and expertise commonly expected from experienced and
qualified personnel performing such duties in the life reinsurance industry and (ii) in accordance
with Applicable Law and the terms of each Covered Treaty, Existing Retrocession Agreement, and
Ancillary Agreement, as applicable.

"Master Agreement” has the meaning set forth in the preamble.

"Novated Treaty” means, at any time, each Covered Treaty that has been assumed by the
Retrocessionaire pursuant to the terms of a Novation Amendment at such time.

"Novation Amendment” means an amendment of a Covered Treaty in substantially the form
attached as Exhibit D to the Master Agreement under which the Retrocessionaire will be
contractually substituted for the Company as respects such Covered Treaty.

"Person” means any individual, corporation, limited liability company, partnership, limited
partnership, firm, joint venture, association, joint stock company, trust, unincorporated
organization, governmental, judicial or regulatory body or other entity.

"Premiums” means premiums, considerations, deposits and similar amounts due from Ceding
Companies or to Third-Party Retrocessionaires with respect to the Covered Treaties.

"Reinsured Liabilities” means all net retained liabilities of the Company, whether incurred
before or after the Effective Time, arising under the Covered Treaties (net of all liabilities with
respect to the Covered Treaties retroceded by the Company under any Existing Retrocession Agreement
that has not been assigned or novated to the Retrocessionaire, except to the extent any retroceded
liability to a non-Affiliate of the Company under an Existing Retrocession Agreement cannot be
collected, in which case such liability shall be reinsured by the Retrocessionaire hereunder),
including any amounts payable to any broker, agent or reinsurance intermediary identified on
Schedule 11.01(b) hereto but excluding any Excluded Liability. For the avoidance of doubt,
Reinsured Liabilities does not include any premium tax liability or any obligation to pay any
guaranty fund assessment by any jurisdiction except to the extent any such liability or obligation
arises under the express terms of a Covered Treaty.

"Representatives” means, with respect to any party hereto, its officers, directors,
employees, agents and other representatives (including legal counsel, investment bankers,
consultants, independent public accountants and actuaries).

"Retrocessionaire” has the meaning set forth in the preamble.

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"Retrocessionaire Extracontractual Liability” means all liabilities for consequential,
exemplary, punitive or similar extracontractual damages or statutory penalties, whether owing to
Ceding Companies, governmental authorities or any other person relating to the Covered Treaties,
which liabilities arise from any action, act of bad faith, error or omission by the
Retrocessionaire, any of its Affiliates, or any Representative of the Retrocessionaire or any of
its Affiliates, in each case excluding any action taken or failure to take any action at the
written direction or with the express consent of the Company.

"SAP” means the statutory accounting practices prescribed or permitted by the insurance
regulatory authorities of the jurisdiction in which the Retrocessionaire is domiciled.

"Third-Party Retrocessionaire” shall mean any retrocessionaire under an Existing
Retrocession Agreement.

"Treasury Rate” means the annual yield rate, on the Closing Date, of actively traded U.S.
Treasury securities having a remaining time to maturity of six (6) months, as such rate is
published under “Treasury Constant Maturities” in Federal Reserve Statistical Release H.15(519).

ARTICLE XII

MISCELLANEOUS

     12.01 Notices. Any and all notices and other communications required or permitted
under this Agreement shall be in writing and shall be deemed to have been duly given when (a)
received by the receiving party if mailed via United States registered or certified mail, return
receipt requested, (b) received by the receiving party if mailed by United States overnight express
mail, (c) sent by facsimile or telecopy machine, followed by confirmation mailed by United States
first-class mail or overnight express mail, or (d) delivered in person or by commercial courier to
the parties at the following addresses:

     (i) If to the Company to:

Annuity and Life Reassurance America, Inc.

124 Palasido Avenue

Windsor, Connecticut 06095

Attention: Chief Executive Officer

Fax: (860) 285-0233

With a concurrent copy to each of:

Annuity and Life Re (Holdings), Ltd.

Cumberland House

1 Victoria Street

Hamilton, Bermuda HM 11

Attention: Chief Executive Officer

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Fax: (441) 296-7665

Robert C. Juelke, Esq.

Drinker, Biddle & Reath LLP

One Logan Square

18th and Cherry Streets

Philadelphia, PA 19103-6996

Fax: (215) 988-2757

     (ii) If to Retrocessionaire to:

Wilton Reassurance Company

187 Danbury Road

Riverview Building, 3rd Floor

Wilton, Connecticut 06897

Attention: Chief Executive Officer

Fax: (203) 762-4445

With a concurrent copy to each of:

Wilton Services, Inc.

187 Danbury Road

Riverview Building, 3rd Floor

Wilton, Connecticut 06897

Attention: General Counsel

Fax: (203) 762-4445

Sutherland Asbill & Brennan LLP

1275 Pennsylvania Ave., N.W.

Washington, D.C., 20004

Attn: David A. Massey

Fax: (202) 637-3593

Either party may change the names or addresses where notice is to be given by providing notice to
the other party of such change in accordance with this Section 12.01.

     12.02 Entire Agreement. This Agreement, including the Schedules hereto, and the
Master Agreement constitute the sole and entire agreement between the parties hereto with respect
to the subject matter hereof and thereof, and supersede all prior discussions and agreements
between the parties with respect to the subject matter hereof, which are merged with and into this
Agreement. In the even of a conflict between this Agreement and the Master Agreement, this
Agreement shall control.

     12.03 Waivers and Amendments; Preservation of Remedies. Any term or condition of this
Agreement may be waived at any time by the party that is entitled to the benefit thereof. Such
waiver must be in writing and must be executed by an executive officer of such party. A

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waiver on one occasion will not be deemed to be a waiver of the same or any other term or
condition on a future occasion. This Agreement may be modified or amended only by a writing duly
executed by an executive officer of the Company and the Retrocessionaire.

     12.04 Governing Law and Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut applicable to contracts entered
into therein, without reference to principles of choice of law or conflicts of laws of that or any
other jurisdiction. Each party hereto irrevocably and unconditionally submits to the exclusive
jurisdiction of any State or Federal Court sitting in Connecticut, over any suit, action or
proceeding arising out of or relating to this Agreement. Each party hereto agrees that service of
any process, summons, notice or document by U.S. registered mail addressed to such party shall be
effective service of process for any action, suit or proceeding brought against such party in such
court. Each party hereto irrevocably and unconditionally waives any objection to the laying of
venue of any such suit, action or proceeding brought in any such court and any claim that any such
action, suit or proceeding brought in any such court has been brought in an inconvenient forum.
Each party hereto agrees that final judgment in any such action, suit or proceeding brought in any
such court shall be conclusive and binding upon such party and may be enforced in any other courts
to whose jurisdiction such party may be subject, by suit upon such judgment.

     12.05 Assignment. This Agreement shall not be assigned by either of the parties
hereto without the prior written consent of the other party.

     12.06 No Third Party Beneficiaries. Except as expressly provided in this Agreement,
the terms and provisions of this Agreement are intended solely for the benefit of the Company and
the Retrocessionaire and their permitted successors and assigns, and it is not the intention of the
parties to confer rights as a third-party beneficiary to this Agreement upon any other person.

     12.07 Expenses. Except as otherwise specifically provided in this Agreement, the
parties hereto shall each bear their own respective expenses incurred in connection with the
preparation, execution and performance of this Agreement and all documentation related hereto,
including without limitation all fees and expenses of counsel, actuaries and accountants.

     12.08 Counterparts. This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument. Each counterpart may consist
of a number of copies hereof each signed by less than all, but together signed by all of the
parties hereto. Each counterpart may be delivered by facsimile transmission, which transmission
shall be deemed delivery of an originally executed document.

     12.9 Headings. The headings in this Agreement have been inserted for convenience and
do not constitute matter to be construed or interpreted in connection with this Agreement.

     12.10 Severability. If any provision of this Agreement other than any provision of
Article I, Article II, or Article X is held to be illegal, invalid or unenforceable under any
present or future law or is determined by a court of competent jurisdiction to be unenforceable,
and if the

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rights or obligations of the Company or the Retrocessionaire under this Agreement will not be
materially and adversely affected thereby, such provision shall be fully severable, and this
Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had
never comprised a part of this Agreement, and the remaining provisions of this Agreement shall
remain in full force and effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom.

     12.11 Offset Rights. Any debits or credits incurred on and after the Effective Time
in favor of or against either the Company or Retrocessionaire with respect to this Agreement,
Section 5.2 of the Master Agreement and any Ancillary Agreement are deemed mutual debits or
credits, as the case may be, and shall be set off, and only the net balance shall be allowed or
paid.

[Remainder of page intentionally left blank; signature page follows.]

-17-

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on this 17th day
of January, 2006.

ANNUITY AND LIFE REASSURANCE AMERICA, INC.

By: /s/ John W. Lockwood

Name: John W. Lockwood

Title: President

WILTON REASSURANCE COMPANY

By: /s/ Chris C. Stroup

Name: Chris C. Stroup

Title: Chairman and CEO

-18-

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