Document:

Exhibit 10.1

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Executive Employment
Agreement (“Agreement”) is entered into as of January 23, 2017 (the “Effective Date”), by
and between Lilis Energy, Inc. (the “Company”) and Joseph C. Daches (“Executive”). Executive
and the Company are each referred to individually as a “Party” and collectively as the “Parties.”

 

NOW, THEREFORE, in
consideration of the mutual covenants, representations, warranties and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1.                 
Employment. Executive’s employment with the Company is subject to the terms set forth herein.

 

2.                 
Term. Subject to the remaining terms of this Section 2, this Agreement shall be for an initial
term that begins on the Effective Date and continues in effect through December 31, 2017 (the “Initial Term”)
and, unless terminated sooner as herein provided, shall continue on a year-to-year basis after the Initial Term (each year, a “Renewal
Term,” and each Renewal Term together with the Initial Term, the “Term”). If either Party elects not
to renew this Agreement for a Renewal Term, such Party must give a written Notice of Termination to the other Party at least 180
days before the expiration of the then-current Initial Term or Renewal Term, as applicable. In the event that one Party provides
the other with a Notice of Termination pursuant to this Section 2, no further automatic extensions shall occur and
this Agreement shall terminate at the end of the then-existing Initial Term or Renewal Term, as applicable, and such Termination
shall not result in any entitlement to compensation pursuant to Section  6 or otherwise.

 

3.                 
Position. During the Term, Executive shall be employed as and hold the title of Executive Vice President,
Chief Financial Officer and Treasurer of the Company, with such duties and responsibilities that are customary in that position
for public companies. Executive’s principal place of employment shall be at the main business offices of Company in Fort
Worth, Texas.

 

4.                 
Scope of Services. During the Term, Executive shall devote substantially all of Executive’s business
time, energy and best efforts to carry out Executive’s responsibilities with respect to the business and affairs of the Company
and its affiliates. In addition, the Parties acknowledge that Executive may (i) engage in and manage Executive’s passive
personal investments, (ii) engage in charitable and civic activities and (iii) engage in such other activities that the Parties
mutually agree to; provided, however, that such activities shall be permitted so long as such activities do not conflict
with the business and affairs of the Company or interfere with the performance of Executive’s duties hereunder.

 

5.                 
Compensation and Benefits. In each case during the Term:

 

5.1             
Base Salary. The Company shall pay, or cause to be paid, to Executive a base salary (the “Base Salary”)
as established by or pursuant to authority granted by the Board at the following rates:

 

(a)               
$300,000 for services rendered from the Effective Date to the one-year anniversary of the Effective Date;

 

(b)              
$350,000 for services rendered from the one-year anniversary of the Effective Date to the two-year anniversary of the Effective
Date; and

 

(c)               
$375,000 for services rendered following the two-year anniversary of the Effective Date.

 

The Base Salary shall
be reviewed annually by or pursuant to authority granted by the Board in connection with its annual review of executive compensation
to determine if such Base Salary should be increased (but not decreased) for the following year in recognition of services to the
Company. The Base Salary shall be payable at such intervals in conformity with the Company’s prevailing practice as such
practice shall be established or modified from time to time.

 

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5.2             
Cash Incentive Bonus. Executive shall receive a lump-sum cash payment if and to the extent that during the
period between the Effective Date and the one-year anniversary of the Effective Date (the “Measurement Period”),
any of the following conditions set forth in Section 5.3.1 are satisfied, provided that, in addition, at least one
of the conditions set forth in Section 5.3.2 is also satisfied (the “Incentive Bonus”), in each case
as determined by the Board in its sole discretion, to be paid within 30 days after achievement of such conditions:

 

5.2.1

 

(a)               
Executive shall be granted a bonus equal to 50% of Base Salary in the event that, during the Measurement Period, the Company
has determined that its annualized gross production average for a consecutive 90-day period is equal to or exceeds 1,500 barrels
of oil equivalent (“BOE”) per day;

 

(b)              
without duplication of the amount described in the preceding clause (a), Executive shall be granted a bonus equal to 100%
of Base Salary in the event that, during the Measurement Period, the Company has determined that its annualized gross production
average for a consecutive 90-day period is equal to or exceeds 2,000 BOE per day;

 

(c)               
without duplication of the amounts described in the preceding clauses (a) and (b), Executive shall be granted a bonus equal
to 150% of Base Salary in the event that, during the Measurement Period, the Company has determined that its annualized gross production
average for a consecutive 90-day period is equal to or exceeds 3,000 BOE per day;

 

(d)              
without duplication of the amounts described in the preceding clauses (a), (b) and (c), Executive shall be granted a bonus
equal to 200% of Base Salary in the event that, during the Measurement Period, the Company has determined that its annualized gross
production average for a consecutive 90-day period is equal to or exceeds 4,000 BOE per day;

 

(e)               
without duplication of the amounts described in the preceding clauses (a), (b), (c) and (d), Executive shall be granted
a bonus equal to 300% of Base Salary in the event that, during the Measurement Period, the Company has determined that its annualized
gross production average for a consecutive 90-day period is equal to or exceeds 5,000 BOE per day; and

 

(f)               
without duplication of the amounts described in the preceding clauses (a), (b), (c), (d) and (e), Executive shall be granted
a bonus equal to 400% of Base Salary in the event that, during the Measurement Period, the Company has determined that its annualized
gross production average for a consecutive 90-day period is equal to or exceeds 6,000 BOE per day.

 

5.2.2

 

(a)               
The Company’s common stock maintains a 10-consecutive-day volume weighted average price of:

 

(1)              
$2.30 per Share upon 1,500 BOE per day;

 

(2)              
$3.00 per Share upon 2,000 BOE per day;

 

(3)              
$4.50 per Share upon 3,000 BOE per day;

 

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(4)              
$6.00 per Share upon 4,000 BOE per day;

 

(5)              
$7.50 per Share upon 5,000 BOE per day; or

 

(6)              
$9.00 per Share upon 6,000 BOE per day.

 

(b)              
The Company maintains an aggregate debt to earnings before interest, taxes, depreciation, depletion, amortization and exploration
expenses (“EBITDAX”) ratio of 4.5 to 1. EBITDAX shall be calculated by multiplying the Company’s 90-day
EBITDAX during the applicable period set forth in Section 5.3.1 by 4.

 

(c)               
The Company maintains cash on hand (or equivalents) and/or availability of 10 times (i) the Incentive Bonus payable to Executive
plus (ii) any substantially similar incentive bonuses payable to any other service providers of the Company.

 

5.3             
Performance Bonus. Executive will be granted a cash bonus equal to $50,000 when the Company succeeds in timely
filing its annual report on Form 10-K with the United States Securities and Exchange Commission for the year ended December 31,
2016.

 

5.4             
Annual Bonuses; Additional Compensation. Without limitation of Section 5.1, Executive shall be
eligible to receive bonuses and awards of equity and non-equity compensation and to participate in annual and long-term compensation
plans of the Company in accordance with any plan or decision that the Board, or any committee or other person authorized by the
Board, may in its sole discretion determine from time to time. The target annual bonus for Executive as of the Effective Date shall
be 250,000 shares of restricted stock.

 

5.5             
Welfare and Benefit Plans. (i) Executive shall be entitled to participate in all savings and retirement
plans, practices, policies and programs of the Company and (ii) Executive and Executive’s family, as the case may be,
shall be eligible to participate in, and shall receive all benefits under, all welfare benefit plans, practices, policies and programs
provided by the Company (including, to the extent provided, medical, prescription, dental, vision, disability, life, accidental
death and travel accident insurance plans and programs) (all such plans, practices, policies and programs, the “Plans”),
in each case pursuant to all terms and conditions of the Plans. Except as provided herein, the Company shall not be required to
establish or continue the Plans or take any action to cause Executive to be eligible for any Plans on a basis more favorable than
that applicable to its other executive-level employees generally.

 

5.6             
Reimbursement. The Company shall reimburse Executive (or, in the Company’s sole discretion, shall pay
directly), upon presentation of vouchers and other supporting documentation as the Company may reasonably require, for reasonable
out-of-pocket expenses incurred by Executive relating to the business or affairs of the Company or the performance of Executive’s
duties hereunder, including reasonable expenses with respect to mileage, entertainment, travel and similar items, dues for membership
in professional organizations, and similar professional development expenses, provided that the incurring of such expenses
shall have been approved in accordance with the Company’s regular reimbursement procedures and practices in effect from time
to time.

 

5.7             
Vacation. In addition to statutory holidays, Executive shall be entitled to no less than 20 days of paid vacation
each calendar year during the Term. Vacation shall accrue pursuant to the Company’s vacation accrual policy applicable to
all employees of the Company, provided that no more than 20 vacation days may be carried over from one calendar year to
a subsequent calendar year.

 

5.8             
Reservation of Rights. The Company reserves the right to modify, suspend or discontinue any and all of its
employee benefit plans, practices, policies and programs at any time in its sole discretion without recourse by Executive so long
as such changes are similarly applicable to executive employees at a similar level.

 

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6.                 
Payments upon Termination.

 

6.1             
Accrued but Unpaid Salary and Bonus. In the event of a Termination for any reason during the Term, the Company
shall pay to Executive (or, in the event of Executive’s death, to Executive’s estate or named beneficiary) (a) any
Base Salary, vacation pay and expense reimbursements that are accrued but unpaid as of the date of Termination and (b) (except
upon a Termination by the Company for Cause) any earned but unpaid bonus for any prior or current year.

 

6.2             
Severance.

 

(a)               
Upon an Involuntary Termination during the Term and either prior to a Change in Control or more than one year following
a Change in Control, contingent upon Executive’s execution, delivery and non-revocation of a release in form and substance
satisfactory to the Company and consistent with the Company’s standard release agreement, which contains a full release of
all claims against the Company and certain other provisions, including a reaffirmation of the covenants in Section 12
and Section 13 (the “Release Agreement”), Executive shall be entitled to (1) a lump sum severance
payment in an amount equal to 12 months of Base Salary in effect immediately prior to the date of Termination and (2) a lump sum
payment equal to 12 months of COBRA premiums based on the terms of Company’s group health plan and Executive’s coverage
under such plan as of the date of Termination (regardless of any COBRA election actually made by Executive or the actual COBRA
coverage period under the Company’s group health plan).

 

(b)              
Upon an Involuntary Termination during the Term and within one year following a Change in Control, contingent upon Executive’s
execution, delivery and non-revocation of the Release Agreement, Executive shall be entitled to (1) a lump sum severance payment
in an amount equal to 24 months of Base Salary in effect immediately prior to the date of Termination and (2) a lump sum payment
equal to 24 months of COBRA premiums based on the terms of Company’s group health plan and Executive’s coverage under
such plan as of the date of Termination (regardless of any COBRA election actually made by Executive or the actual COBRA coverage
period under the Company’s group health plan).

 

(c)               
Upon a Termination due to Disability during the Term, contingent upon Executive’s execution, delivery and non-revocation
of the Release Agreement, Executive shall be entitled to a lump sum payment equal to six months of COBRA premiums based on the
terms of the Company’s group health plan and Executive’s coverage under such plan as of the date of Termination (regardless
of any COBRA election actually made by Executive or the actual COBRA coverage period under the Company’s group health plan).

 

(d)              
The Company’s obligations under this Section 6.2 are subject to the requirements and time periods set
forth in this Section 6.2 and in the Release Agreement. Prior to receiving the payments described in this Section 6.2,
Executive shall execute the Release Agreement on or before the date 21 days (or such longer period to the extent required by law)
after the date of Termination. If Executive fails to timely execute and remit the Release Agreement, Executive waives any right
to the payments provided under this Section 6.2. Payments under this Section 6.2 shall be made within fifteen
15 days of Executive’s execution and delivery of the Release Agreement, provided that Executive does not revoke the
Release Agreement.

 

(e)               
Executive’s rights following a Termination under the terms of any Plan, whether tax-qualified or not, which are not
specifically addressed in this Agreement, shall be subject to the terms of such Plan, and this Agreement shall have no effect upon
such terms except as specifically provided herein.

 

(f)               
Except as specifically provided under Section 6.1 and Section 6.2, the Company shall have no further
obligations to Executive under this Agreement following a Termination. Without limitation of the foregoing, Executive shall not
be entitled to any severance benefits under this Agreement in the event of a Termination other than an Involuntary Termination
(except as provided in Section 6.1). The foregoing shall not limit any of Executive’s rights with regard to any
rights to indemnification, advancement or payment of legal fees and costs, and coverage under directors and officers liability
insurance.

 

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(g)               
Notwithstanding anything in this Agreement to the contrary, the Company shall have the right to terminate all payments and
benefits owing to Executive pursuant to Section 6.2 upon the Company’s discovery of any material breach by Executive
of Executive’s obligations under the Release Agreement or Section 12 or Section 13.

 

7.                 
Definitions. Capitalized terms used in this Agreement but not otherwise defined herein shall have the meaning
hereby assigned to them as follows:

 

7.1             
“Cause” means a determination by the Board that Executive has:

 

(a)               
in the performance of Executive’s duties with respect to the Company or any of its affiliates, engaged in reckless
or willful misconduct or has violated the law, provided that no act or failure to act shall be deemed “willful”
unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that Executive’s action
or omission was in the best interest of the Company;

 

(b)              
refused without proper legal reason to perform Executive’s duties and responsibilities to the Company or any of its
affiliates, which continues after notice from the Company to perform such duties and responsibilities (for the purposes of this
clause, the phrase “proper legal reason” shall include Executive’s delivery of a Notice of Termination for Good
Reason where the assertion by Executive of Termination for Good Reason is for an event that constitutes Good Reason under the terms
of this Agreement);

 

(c)               
willfully and materially breached any material provision of this Agreement;

 

(d)              
committed an act of fraud, embezzlement or breach of a fiduciary duty to the Company or an affiliate of the Company (including
the unauthorized disclosure of material confidential or proprietary information of the Company or an affiliate of the Company);

 

(e)               
been convicted of (or pleaded no contest to) a felony (other than a crime involving the operation of a motor vehicle not
involving a serious injury or death to an individual); or

 

(f)               
entered into a cease and desist order with the U.S. Securities and Exchange Commission alleging violation of U.S. or foreign
securities laws.

 

Executive shall have
30 days from the date on which Executive receives the Company’s Notice of Termination for Cause under clause (a), (b) or
(c) above to remedy any such occurrence otherwise constituting Cause under such clause.

 

In connection with
a determination of Cause, a majority of the Board shall make such determination at a meeting of the Board called and held for such
purpose (after reasonable notice to Executive and an opportunity for Executive, together with counsel, to be heard before the Board).

 

A Termination for Cause
shall be deemed to include a determination by the Board following a Termination that circumstances existing prior to the Termination
would have entitled the Company to have terminated Executive’s service for Cause.

 

All rights Executive
has or may have under this Agreement shall be suspended automatically during the pendency of any investigation by the Board, or
during any negotiations between the Board and Executive, regarding any actual or alleged act or omission by Executive of the type
described in this definition of Cause.

 

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7.2             
“Change in Control” has the meaning given to such term in the Lilis Energy, Inc. 2016 Omnibus
Incentive Plan.

 

7.3             
“Disability” means, if, during the Term, Executive is unable to perform substantially and continuously
the duties assigned to him due to a disability (as such term is defined or used for purposes of the Company’s long-term disability
plan then in effect, or, if no such plan is in effect, by virtue of ill health or other disability for more than 180 consecutive
or non-consecutive days out of any consecutive 12-month period).

 

7.4             
“Good Reason” means the occurrence of any of the following events without Executive’s consent:

 

(a)               
a material diminution in Executive’s Base Salary; or

 

(b)              
a material diminution in Executive’s authority, duties or responsibilities as an officer, or the Board fails to re-nominate
Executive for election to the Board if Executive is a Board member as of the Effective Date or becomes a Board member thereafter;

 

(c)               
the relocation of Executive’s principal place of employment by more than 25 miles from the location of Executive’s
principal place of employment as of the Effective Date; or

 

(d)              
a material breach by the Company of a material provision of this Agreement.

 

Notwithstanding the foregoing provisions
of this Section 7.4 or any other provision in this Agreement to the contrary, any assertion by Executive of a Termination
for Good Reason shall not be effective unless all of the following conditions are satisfied: (1) Executive provides written notice
to the Company of such condition within 45 days of Executive gaining knowledge of the initial existence of the condition, (2) the
condition specified in the notice remains uncured for 30 days after receipt of the notice by the Company and (3) the date of Termination
occurs within 30 days after the expiration of the cure period set forth in (2) immediately above.

 

7.5             
“Involuntary Termination” means a Termination by the Company without Cause or by Executive for
Good Reason.

 

7.6             
“Notice of Termination” means a written notice delivered by either Party to the other Party indicating
the specific Termination provision in this Agreement relied upon for Termination and the date of Termination, and that sets forth
in reasonable detail the facts and circumstances claimed to provide a basis for Termination under the provision so indicated.

 

7.7             
“Termination” means termination of Executive’s employment with the Company and all affiliates.

 

8.                 
Removal from any Boards and Positions. Unless otherwise agreed to in writing by the Parties at the time of
Termination, upon a Termination, Executive shall be deemed to resign (i) if a member, from the Board and the board of directors
of any affiliate and any other board to which Executive has been appointed or nominated by or on behalf of the Company or an affiliate,
(ii) from each position with the Company and any affiliate, including as an officer of the Company or an affiliate and (iii) as
a fiduciary of any employee benefit plan of the Company and any affiliate.

 

9.                 
Adjustments to Payments.

 

9.1             
Notwithstanding anything in this Agreement to the contrary, in the event that any payment or distribution by the
Company to Executive or for Executive's benefit (whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise) (the “Payments”) would be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986 (the “Code”), or any interest or penalty is incurred by Executive with
respect to such excise tax (such excise tax, together with any such interest and penalties, the “Excise Tax”),
then the Payments shall be reduced (but not below zero) if and to the extent that such reduction would result in Executive retaining
a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the imposition of the Excise
Tax), than if Executive received all of the Payments. The Company shall reduce or eliminate the Payments, by first reducing or
eliminating the portion of the Payments that are not payable in cash and then by reducing or eliminating cash payments, in each
case in reverse order beginning with payments or benefits that are to be paid the farthest in time from the determination.

 

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9.2             
All determinations required to be made under this Section 9, including whether and when an adjustment
to any Payments is required and, if applicable, which Payments are to be so adjusted, shall be made by an independent accounting
firm selected by the Company from among the four largest accounting firms in the United States or any nationally recognized financial
planning and benefits consulting company (the “Accounting Firm”), which shall provide detailed supporting calculations
to both Parties within 15 business days of the receipt of notice from Executive that there has been a Payment, or such earlier
time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the relevant change in control, Executive shall appoint another nationally recognized accounting firm
to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder).
All fees and expenses of the Accounting Firm shall be borne solely by the Company. If the Accounting Firm determines that no Excise
Tax is payable by Executive, it shall furnish Executive with a written opinion that failure to report the Excise Tax on Executive's
applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by
the Accounting Firm shall be binding upon the Parties.

 

10.             
Clawback. Notwithstanding anything in this Agreement to the contrary, if any provision of this Agreement or
any applicable statute, law, regulation or regulatory interpretation or other guidance legally requires the Company or any affiliate
to seek or demand repayment or return of any payments made to Executive for any reason, Executive shall repay to the Company the
aggregate amount of any such payments, with such repayment to occur no later than 30 days following Executive’s receipt of
a written notice from the Company indicating that payments received by Executive are subject to repayment or return under this
Section 10.

 

11.             
Withholding. The Company may withhold from Executive’s compensation, under this Agreement or otherwise,
all applicable amounts required by law.

 

12.             
Non-Competition; Non-Solicitation; Anti-Raiding.

 

12.1         
Executive hereby covenants that during the period of Executive’s employment by the Company, and for a period
of six months following a Termination, Executive shall not, without the prior written consent of the Board, accept a position to
perform duties similar to those performed by Executive while at the Company, directly or indirectly (whether as proprietor, stockholder,
director, partner, employee, agent, independent contractor, consultant, trustee or in any other capacity), with respect to any
property, drilling program, oil or gas leasehold, project or field, in which the Company participates, or has any investment or
other business interest in, within five miles of the boundary of any existing Company leasehold in the United States in which the
Company has conducted business at any time within the one-year period immediately preceding Termination (a “Competing
Enterprise”); provided, however, that Executive shall not be deemed to be participating or engaging in
a Competing Enterprise solely by virtue of Executive’s ownership of not more than 4.9% of any class of stock or other securities
which are publicly traded on a national securities exchange or in a recognized over-the-counter market.

 

12.2         
Executive may not avoid the purpose and intent of Section 12.1 by engaging in conduct within the geographically
limited area from a remote location through means such as telecommunications, written correspondence, computer-generated or assisted
communications or other similar methods.

 

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13.             
Confidential Information.

 

13.1         
For the purposes of this Agreement, “Confidential Information” means all proprietary information,
data, knowledge and know-how relating, directly or indirectly, to the Company and its business, including: (a) business plans
and strategies, prospect information, financial information, investment plans, marketing plans and strategies and financial plans
and strategies; (b) confidential personnel or human resources data; (c) technical and business information, whether patentable
or not, which is of a confidential, trade secret or proprietary character; (d) the identity of customers; (e) existing or prospective
oil or gas properties, investors, participation agreements, working, royalty or other interests; (f) contract terms; (g) bidding
information and strategies; (h) pricing methods or information; (i) computer software; (j) computer software methods and documentation;
(k) hardware; (l) methods of operation; (m) procedures, forms and techniques used in servicing accounts or properties; (n) seismic,
geophysical, petrophysical or geological data; (o) well logs and other well data; and (p) any other documents, information or data
that the Company requires to be maintained in confidence for the Company’s business success or that constitutes material
non-public information. The list set forth above is not intended by the Company to be a comprehensive list of Confidential Information.
All Confidential Information shall be treated as Confidential Information regardless of whether it pertains to the Company or its
customers and regardless of whether it is stamped as “confidential.”

 

13.2         
Executive acknowledges that the success of the Company depends in large part on the protection of the Confidential
Information. Executive further acknowledges that in the course of Executive’s employment with the Company, Executive will
become familiar with the Company’s Confidential Information. Executive recognizes and acknowledges that the Confidential
Information is a valuable, special and unique asset of the Company’s business, access to and knowledge of which are essential
to the performance of Executive’s duties hereunder. Executive acknowledges that use or disclosure of the Confidential Information
outside the performance of Executive’s job duties for the Company would cause harm and/or damage to the Company.

 

13.3         
Both during and after the Term, Executive shall not, except in the ordinary course of Executive’s employment
with the Company, disclose any Confidential Information to any person, firm, business, company, corporation, association or any
other entity for any reason or purpose whatsoever. Executive shall not make use of any Confidential Information for Executive’s
own purposes or for the benefit of any person, firm, business, company, corporation or any other entity (except the Company) under
any circumstances during or after the Term. Executive shall consider and treat as confidential all Confidential Information in
any way relating to the Company’s business and affairs, whether created by Executive or otherwise coming into Executive’s
possession before, during, or after the Term. Executive shall secure and protect the Confidential Information in a manner designed
to prevent all access and uses thereof contrary to the terms of this Agreement. Executive shall use Executive’s best efforts
to assist the Company in identifying and preventing any use or disclosure of the Confidential Information contrary to this Agreement.

 

13.4         
Executive represents and warrants that, upon Termination (whether during or after the Term), and without any request
by the Company, Executive shall return to Company any and all property, documents and files (including all recorded media, such
as papers, computer disks or other data storage devices, copies, photographs, maps, transparencies and microfiche) that contain
Confidential Information or relate in any way to the Company or its business. To the extent Executive possesses any files, data
or information relating in any way to the Company or its business on any personal computer, Executive shall delete such files,
data or information (and shall retain no copies in any form). Executive also shall return any Company tools, equipment, calling
cards, credit cards, access cards or keys, any keys to any filing cabinets or vehicles and all other Company property in any form
prior to Termination (whether during or after the Term).

 

14.             
Equitable Remedies. The services to be rendered by Executive and the Confidential Information entrusted to
Executive as a result of Executive’s employment by the Company are of a unique and special character, and, notwithstanding
anything in this Agreement to the contrary, any breach by Executive of this Agreement, including a breach of Section 12
or Section 13, will cause the Company immediate and irreparable injury and damage, for which monetary relief would
be inadequate or difficult to quantify. The Company shall be entitled to, in addition to all other remedies available to it, injunctive
relief, specific performance or any other equitable relief to prevent a breach and to secure the enforcement of the provisions
of this Agreement. The provisions of Section 12 and Section 13 are separate from and independent of the
remainder of this Agreement and these provisions are specifically enforceable by the Company notwithstanding any claim made by
Executive against the Company. Injunctive relief may be granted immediately upon the commencement of any such action, and the Company
need not post a bond to obtain temporary or permanent injunctive relief.

 

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15.             
Business Opportunities. Executive shall promptly disclose to the Company all business ideas, prospects, proposals
and other opportunities pertaining to any aspect of the Company’s business that are originated by any third parties and brought
to the attention of Executive after the Effective Date and before Termination.

 

16.             
Representations and Warranties. Executive hereby represents and warrants to the Company, and acknowledges,
as follows.

 

16.1         
The success of the Company’s business depends in large part on the protection of the Confidential Information
and trade secrets.

 

16.2         
Executive’s access to the Confidential Information, coupled with the personal relationships and goodwill between
the Company and its customers, would enable Executive to compete unfairly against the Company.

 

16.3         
Executive has full power, authority and capacity to enter into this Agreement and to perform Executive’s obligations
hereunder.

 

16.4         
This Agreement has been voluntarily executed by Executive and constitutes a valid and binding agreement of Executive.

 

16.5         
Executive has read this Agreement and has had the opportunity to have this Agreement reviewed by Executive’s
legal counsel.

 

16.6         
Given the nature of the business in which the Company is engaged, the restrictions in Section 12 and
Section 13, including their geographic scope and duration, are reasonable and necessary to protect the legitimate business
interests of the Company.

 

16.7         
Executive’s continued employment with the Company is sufficient consideration for this Agreement.

 

16.8         
Executive is among the Company’s executive personnel, management personnel or officers and employees who constitute
professional staff to executive and management personnel.

 

16.9         
This Agreement is intended to protect the Company’s trade secrets and Confidential Information.

 

16.10     
To the best of Executive’s knowledge, Executive’s employment with the Company will not (a) conflict with
or result in a breach of, (b) constitute a default under, (c) result in the violation of, (d) give any third party the right to
terminate or to accelerate any obligation under, or (e) require any authorization, consent, approval, execution or other action
by or notice to any court or other governmental body under, the provisions of any other agreement or instrument to which Executive
is a party.

 

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16.11     
Executive has not previously and shall not in the future disclose to the Company any proprietary information, trade
secrets or other confidential information belonging to any previous employer.

 

16.12     
Executive shall notify business partners and future employers of Executive’s obligations under this Agreement.

 

17.             
Waivers and Amendments. The respective rights and obligations of the Parties under this Agreement may be waived
(either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time
or indefinitely) or amended only with the written consent of a duly authorized representative of the Parties. The waiver by either
Party of a breach of any provision of this Agreement by the other Party shall not operate or be construed as a waiver of any subsequent
breach by such other Party. The failure of either Party to insist upon strict performance of any of the terms or conditions of
this Agreement shall not constitute a waiver of any of such Party’s rights hereunder.

 

18.             
Successors and Assigns. The provisions hereof shall inure to the benefit of, and be binding upon and assignable
to, successors of the Company by way of merger, consolidation or sale. Executive may not assign or delegate to any third person
Executive’s obligations under this Agreement. The rights and benefits of Executive under this Agreement are personal to Executive
(or, in the event of Executive’s death or Disability, Executive’s personal representative, heirs or beneficiaries),
and no such right or benefit shall be subject to voluntary or involuntary alienation, assignment or transfer.

 

19.             
Entire Agreement. This Agreement constitutes the full and entire understanding and agreement of the Parties
with regard to the subjects hereof and supersedes and cancels in its entirety all other or prior or contemporaneous agreements,
whether oral or written, with respect thereto, including any prior employment agreements between Executive and the Company in their
entirety.

 

20.             
Notices. Any notices, consents or other communications required to be sent or given hereunder by either of
the Parties shall in every case be in writing and shall be deemed properly served if (i) delivered personally, (ii) sent by registered
or certified mail, in all such cases with first class postage prepaid, return receipt requested, or (iii) delivered by a nationally
recognized overnight courier service to the Parties at the following addresses: if to the Company, to its principal headquarters;
and if to Executive, to Executive’s current address listed in the Company’s records.

 

21.             
Governing Law; Consent to Jurisdiction; Consent to Venue; Service of Process. This Agreement shall be construed
and interpreted in accordance with the internal laws of the State of New York without regard to principles of conflicts of law
thereof, or principles of conflicts of laws of any other jurisdiction that could cause the application of the laws of any jurisdiction
other than the State of New York. For purposes of resolving any dispute that arises directly or indirectly from the relationship
of the Parties evidenced by this Agreement, the Parties hereby submit to and consent to the exclusive jurisdiction of the State
of New York and agree that any related litigation shall be conducted solely in the courts of New York County, New York or the federal
courts for the United States for the Southern District of New York, where this Agreement is made and/or to be performed, and no
other courts. Each Party may be served with process in any manner permitted under State of New York law, or by United States registered
or certified mail, return receipt requested.

 

22.             
Waiver of Jury Trial. EACH OF THE PARTIES HEREBY VOLUNTARILY AND IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY ACTION OR OTHER PROCEEDING BROUGHT IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY.

 

    10 

     

    

 

23.             
Code Section 409A. It is intended that this Agreement comply with Code Section 409A (“Section 409A”),
to the extent applicable. This Agreement shall be administered in a manner consistent with this intent, and any provision that
would cause this Agreement to fail to satisfy Section 409A shall have no force or effect until amended to comply with Section 409A.
Notwithstanding anything in this Agreement to the contrary, in the event any payment or benefit hereunder is determined to constitute
nonqualified deferred compensation subject to Section 409A, then to the extent necessary to comply with Section 409A, such payment
or benefit shall not be made, provided or commenced until six months after Executive’s separation from service. Lump sum
payments shall be made, without interest, as soon as administratively practicable following the six-month delay. Any installments
otherwise due during the six-month delay shall be paid in a lump sum, without interest, as soon as administratively practicable
following the six-month delay, and the remaining installments shall be paid in accordance with the original schedule. For purposes
of Section 409A, the right to a series of installment payments shall be treated as a right to a series of separate payments. Each
separate payment in the series of separate payments shall be analyzed separately for purposes of determining whether such payment
is subject to, or exempt from compliance with, the requirements of Section 409A. Notwithstanding anything in this Agreement to
the contrary, to the extent required in order to avoid accelerated taxation and/or additional taxes under Section 409A, amounts
reimbursable to Executive under this Agreement shall be paid to Executive on or before the last day of the year following the year
in which the expense was incurred and the amount of expenses eligible for reimbursement (and in-kind benefits provided to Executive)
during any one year may not effect amounts reimbursable or provided in any subsequent year. The Company makes no representations
or warranties that the payments provided under this Agreement comply with, or are exempt from, Section 409A, and in no event shall
the Company be liable for any portion of any taxes, penalties, interest or other expenses that may be incurred by Executive on
account of non-compliance with Section 409A.

 

24.             
Severability. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby.
In the event any provision is held invalid, illegal or unenforceable, such provision shall be limited or revised by a court of
competent jurisdiction so as to give effect to the provision to the fullest extent permitted by applicable law. If any of the covenants
in Section 12 are held to be unreasonable, arbitrary or against public policy, such covenants shall be considered divisible
with respect to scope, time and geographic area, and in such lesser scope, time and geographic area, shall be effective, binding
and enforceable against Executive to the greatest extent possible.

 

25.             
Construction. In this Agreement, unless otherwise stated, the following uses apply: (i) references to
a statute or law refer to the statute or law and any amendments and any successor statutes or laws, and to all valid and binding
governmental regulations, court decisions and other regulatory and judicial authority issued or rendered thereunder, as amended,
or their successors, as in effect at the relevant time; (ii) in computing periods from a specified date to a later specified
date, the words “from” and “commencing on” (and the like) mean “from and including,” and the
words “to,” “until” and “ending on” (and the like) mean “to and including”; (iii) indications
of time of day shall be based upon the time applicable to the location of the principal headquarters of the Company; (iv) the
words “include,” “includes” and “including” (and the like) mean “include, without limitation,”
“includes, without limitation” and “including, without limitation” (and the like), respectively; (v) all
references to articles and sections are to articles and sections in this Agreement; (vi) all words used shall be construed
to be of such gender or number as the circumstances and context require; (vii) the captions and headings of articles and sections
have been inserted solely for convenience of reference and shall not be considered a part of this Agreement, nor shall any of them
affect the meaning or interpretation of this Agreement or any of its provisions; (viii) any reference to an agreement, plan,
policy, form, document or set of documents, and the rights and obligations of the parties under any such agreement, plan, policy,
form, document or set of documents, shall mean such agreement, plan, policy, form, document or set of documents as amended from
time to time, and any and all modifications, extensions, renewals, substitutions or replacements thereof; and (ix) all accounting
terms not specifically defined shall be construed in accordance with generally accepted accounting principles.

 

26.             
Survival. The provisions of Section 12 and Section 13 shall survive the termination
of this Agreement.

 

    11 

     

    

 

27.             
Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed
an original, and all of which together shall constitute one and the same Agreement.

 

IN WITNESS WHEREOF,
the Parties hereto have executed this Agreement on the date first above specified.

 

	COMPANY	 	EXECUTIVE
	 	 	 	 	 
	Sign Name: 	/s/ Abraham Mirman	 	Sign Name:	/s/ Joseph C. Daches
	 	 	 	 	 
	Print Name:  	Abraham Mirman	 	Print Name: 	Joseph C. Daches
	 	 	 	 	 
	Title: 	Chief Executive Officer	 	 	 

 

    12Exhibit

EXHIBIT 10. 1

REINSURANCE AGREEMENT
between
ALLSTATE ASSURANCE COMPANY
and
ALLSTATE LIFE INSURANCE COMPANY
RECITALS
This Reinsurance Agreement dated January 19, 2017 (hereinafter “Agreement”) is made and entered into by and between ALLSTATE ASSURANCE COMPANY, a life insurance company domiciled in the State of Illinois (hereinafter the “Ceding Company”) and ALLSTATE LIFE INSURANCE COMPANY, a life insurance company domiciled in the State of Illinois (hereinafter the “Reinsurer”).
WHEREAS, Ceding Company and the Reinsurer desire to enter this Agreement, whereby the Ceding Company will cede on a coinsurance basis to the Reinsurer a proportionate amount of any and all liabilities of the Ceding Company arising under the Policies as shown in Exhibit A.
NOW THEREFORE, in consideration of the above stated premises and the promises and the mutual agreements set forth below the Ceding Company and the Reinsurer agree as follows.
ARTICLE I 
DEFINITIONS
Unless otherwise defined herein, as used in this Agreement the following terms shall have the meanings ascribed to them below:
		
	A.
	“Affiliate” shall mean, with respect to any person, any other person controlling, controlled by or under common control with such person.  For purposes of the foregoing, “control” including the terms “controlling”, “controlled by”, and “under common control with” shall mean the possession, direct or indirect, of the power to direct or cause direction of the management and policies of a person, whether through the ownership of voting securities, by contract, as trustee or executor or otherwise.

		
	B.
	“AG 48” shall mean Actuarial Guideline XLVIII, as amended from time to time or any successor requirement.

		
	C.
	“Code” shall mean the Internal Revenue Code of 1986, as amended.

1

		
	D.
	“Effective Date” shall mean the effective date of this Agreement, which shall be 12:01 a.m., Central Time, on January 1, 2017.

		
	E.
	“Extra-Contractual Obligations” shall mean all liabilities and obligations in respect of the Policies for consequential, extra-contractual, exemplary, punitive, special or similar damages or any other amounts due or alleged to be due (other than those arising under the express terms and conditions of the Policies) which arise from any real or alleged act, error or omission, whether or not intentional, in bad faith or otherwise, including without limitation, any act, error or omission relating to:  (i) the underwriting, production, issuance, cancellation or administration of the Policies; (ii) the handling of claims or disputes in connection with the Policies; or (iii) the failure to pay or the delay in payment of benefits or claims under or in connection with the Policies.

		
	F.
	 “Interest Maintenance Reserve Adjustment” shall mean the interest maintenance reserve balance arising from the past and present dispositions of the assets associated with the Policies or recapture Policies as well as the balance that would result if the remaining assets associated with the Policies or recapture Policies were to be sold.  The Interest Maintenance Reserve Adjustment shall be zero if the Statutory Reserves are 1% or less of the Ceding Company’s, or in the case of recapture, the Reinsurer’s general account liabilities, Page 3, Line 26 of the NAIC Annual Statement Blank (2015 format; or if the line numbers are changed pursuant to relevant guidance from the NAIC, the successor to such line numbers).

		
	G.
	“Net Benefits” shall mean the actual amounts paid or incurred by the Ceding Company with respect to the Policies.

		
	H.
	“Net Ceded Liabilities” shall mean the Reinsurance Percentage of any and all liabilities of the Ceding Company arising under or related to the Policies net of other ceded reinsurance to non-Affiliates, but shall not include any Extra-Contractual Obligations.

		
	I.
	“Policy or Policies” shall mean the policies and riders defined in Exhibit A.

		
	J.
	“Recapture Assets and Liabilities” shall have the meaning set forth in the Recapture clause, Article XIV C. of this Agreement.

		
	K.
	“Statutory Reserves” means the statutory reserves of the Ceding Company with respect to the Policies determined pursuant to accounting practices prescribed by applicable regulatory authorities and in accordance with sound actuarial practices, as such reserves would have been included in lines 1, 3 and 4.1 of the NAIC Annual Statement Blank Page 3 (2015 format; or if the line numbers are changed pursuant to relevant guidance from the NAIC, the successor to such line numbers).

		
	L.
	“Reinsurance Percentage” means the coinsurance percentage as shown in Exhibit A.

		
	M.
	“Transfer Assets and Liabilities” shall have the meaning set forth in Article V of this Agreement.

2

ARTICLE II     
BASIS OF REINSURANCE
The Ceding Company agrees to cede, and the Reinsurer agrees to accept, the Net Ceded Liabilities.  The reinsurance provided hereunder shall be on a coinsurance basis at the Reinsurance Percentage.
ARTICLE III     
LIABILITY OF REINSURER; COINSURANCE PROVISIONS
		
	A.
	All of the Net Ceded Liabilities shall be reinsured pursuant to the terms of this Agreement as of the Effective Date.

		
	B.
	The liability of the Reinsurer with respect to Policies in force on the Effective Date will begin on the Effective Date.  The liability of the Reinsurer with respect to any application received or any Policy issued after the Effective Date and reinsured hereunder are the actual amounts payable by the Ceding Company to the policyholder, less any amounts payable to the Ceding Company by any other reinsurer with respect to the Policy. Such liability will begin simultaneously with that of the Ceding Company.  The Reinsurer’s liability with respect to any Policy will terminate on the earlier of (i) date the Ceding Company’s liability on such contract terminates or (ii) the recapture of such liabilities pursuant to Article XIV, Paragraph C.  However, termination of this Agreement will not terminate the Reinsurer’s liability for Net Benefits paid or incurred by the Ceding Company on or after the Effective Date and prior to the date of termination.  If any of the Policies are reduced or terminated by payment of a death benefit, withdrawal or surrender, the reinsurance will be reduced proportionately or terminated.

		
	C.
	The reinsurance provided under this Agreement is subject to the same limitations and conditions as set forth in the Policies.

		
	D.
	The Ceding Company shall not make any changes after the Effective Date in the provisions and conditions of any Policy except with the Reinsurer’s prior written consent, including, but not limited to any changes to comply with any applicable law, rule or regulation.  Such consent shall not be unreasonably withheld.

		
	E.
	The Ceding Company shall not make any changes or modifications to any of its underwriting, claims or administrative practices, procedures, or systems for the Policies, nor waive or exercise any of its rights under any of the Policies without the prior written consent of the Reinsurer.  

		
	F.
	Policies that elect conversion or exchange to or replacement with policies listed in Exhibit A are reinsured under this Agreement.  Policies that elect conversion or exchange to or replacement with policies not listed in Exhibit A are not reinsured under this Agreement, unless agreed to in writing by the Reinsurer.

3

		
	G.
	In the event of a change in the amount of the Ceding Company’s liability on a Policy due to a misstatement of age or sex, the Reinsurer’s liability will be changed proportionately.

ARTICLE IV     
EXTRA-CONTRACTUAL OBLIGATIONS 
The Reinsurer shall not be liable to pay the Ceding Company for any Extra-Contractual Obligations except to the extent such liabilities or obligations arise directly from and are proximately caused by the gross negligence or willful acts or omissions of the Reinsurer, its agents, contractors or employees in the performance of the Reinsurer’s duties and obligations under this Agreement.
ARTICLE V     
RESERVE TRANSFERS 
Within sixty (60) days of the later of the Effective Date or the date the Ceding Company has received approval from all necessary regulatory authorities to enter into this Agreement (the “Settlement Date”), assets consisting of cash and investments at market value, and accrued investment income net of unearned investment income, shall be transferred by the Ceding Company to the Reinsurer with the amount calculated as of the Effective Date equal to (i) the Required Level of Primary Security as set forth in AG 48 as of the Effective Date plus reserves as of such date for claims incurred and outstanding (whether reported or unreported) calculated in accordance with the laws of the State of Illinois as reported in the Life and Accident and Health Annual Statement page 3 line 4.1 (2015 Statement references) plus (ii) the positive or negative Interest Maintenance Reserve Adjustment. In addition, the “Transfer Assets and Liabilities” shall be transferred.  The Ceding Company shall also pay to the Reinsurer interest on such amount at the rate of four percent (4%) per annum, simple rate, beginning on the Effective Date and ending on the Settlement Date.
The Transfer Assets and Liabilities shall include all account balances (both assets and liabilities) related to the Policies.  Transfer Assets and Liabilities shall include, but are not limited to, uncollected premiums, deferred premiums, and premiums received in advance, in each case to the extent attributable to the Policies.  The Transfer Assets and Liabilities shall also include amounts in respect of the Policies that are paid to or received by the Reinsurer on behalf of the Ceding Company after the Effective Date but prior to the Settlement Date.
ARTICLE VI     
SETTLEMENT AND REPORTING
		
	A.
	While this Agreement is in effect, the Ceding Company shall pay to the Reinsurer no less frequently than quarterly, with respect to the Policies, a reinsurance premium equal to Items (a) less (b) below, where:

4

		
	(a)
	equals gross premiums collected by the Ceding Company during the settlement period net of reinsurance premiums paid with respect to the Policies, and

		
	(b)
	equals gross premiums refunded by the Ceding Company during the settlement period to policyholders of the Policies.

		
	B.
	While this Agreement is in effect, the Reinsurer shall pay to the Ceding Company no less frequently than quarterly, a benefit and expense allowance equal to the sum of Items (a), (b), (c) and (d), as applicable for the period since the last settlement period, where:

		
	(a)
	equals the Net Benefits paid or incurred by the Ceding Company with respect to the Policies.

		
	(b)
	equals commissions and other sales compensation paid or incurred by the Ceding Company with respect to the Policies.

		
	(c)
	equals insurance taxes, licenses and fees (including allocated taxes, licenses and fees, but excluding income taxes) paid or incurred by the Ceding Company with respect to the Policies.

		
	(d)
	equals general insurance expenses (including allocated expenses) paid or incurred by the Ceding Company with respect to the Policies.

		
	C.
	The Ceding Company will provide the Reinsurer with accounting reports on a time schedule determined by the Reinsurer, which schedule shall be no less frequently than quarterly within fifteen (15) business days following the end of each calendar quarter.  These reports will contain sufficient information about the Policies to enable the Reinsurer to prepare its quarterly and annual financial reports.

		
	D.
	Settlements as set out in Article VI, Paragraphs A and B will occur on a time schedule determined by the Reinsurer, which schedule shall be within sixty (60) days following the end of each calendar quarter.

ARTICLE VII     
TAX MATTERS 
With respect to this Agreement, the Ceding Company and the Reinsurer hereby make the election as set forth in Exhibit B and as provided for in section 1.848-2(g)(8) of the Treasury Regulations.  Each of the parties hereto agrees to take such further actions as may be necessary to ensure the effectiveness of such election.
ARTICLE VIII     
RESERVE CREDIT

5

The Reinsurer shall agree in good faith to take any other steps necessary, pursuant to the requirements of Illinois, for the Ceding Company to take statutory credit for reinsurance ceded to an unadmitted, unauthorized or unaccredited reinsurer, up to the full amount of the reserve that the Ceding Company would have established for the Policies if it had retained the Policies.
ARTICLE IX     
OVERSIGHTS
Unintentional clerical errors, oversights, omissions or misunderstandings in the administration of this Agreement by either the Ceding Company or the Reinsurer shall not be deemed a breach of this Agreement provided the clerical error, oversight, omission or misunderstanding is corrected promptly after discovery.  Both the Ceding Company and the Reinsurer shall be restored to the positions they would have occupied had such error, oversight, omission, or misunderstanding not occurred.
ARTICLE X     
INSPECTION OF RECORDS
Either party, their respective employees or authorized representatives, may audit, inspect and examine, during regular business hours, at the home office of either party, any and all books, records, statements, correspondence, reports and their related documents or other documents that relate to the Policies covered under this Agreement.  The audited party agrees to provide a reasonable workspace for such audit, inspection or examination and to cooperate fully and to faithfully disclose the existence of and produce any and all necessary and reasonable materials requested by such auditors, investigators, or examiners.  The party performing a routine audit shall provide no less than five (5) working days advance notice to the other party.  The expense of the respective party’s employee(s) or authorized representative(s) engaged in such activities will be borne solely by such party.
ARTICLE XI     
INSOLVENCY
		
	A.
	The portion of any risk or obligation reinsured by the Reinsurer under this Agreement, when such portion is ascertained, shall be payable on demand of the Ceding Company at the same time as the Ceding Company shall pay its net retained portion of such risk or obligation, and the reinsurance shall be payable by the Reinsurer on the basis of the liability of the Ceding Company under the Policies without diminution because of the insolvency of the Ceding Company.  In the event of the insolvency of the Ceding Company and the appointment of a conservator, liquidator or statutory successor of the Ceding Company, such portion shall be payable to such conservator, liquidator or statutory successor immediately upon demand, on the basis of claims allowed against the Ceding Company by any court of competent 

6

jurisdiction or, by any conservator, liquidator or statutory successor of the Ceding Company having authority to allow such claims, without diminution because of such insolvency or because such conservator, liquidator or statutory successor has failed to pay all or a portion of any claims.  Payments by the Reinsurer as above set forth shall be made directly to the Ceding Company or its conservator, liquidator or statutory successor.
		
	B.
	Further, in the event of the insolvency of the Ceding Company, the liquidator, receiver or statutory successor of the insolvent Ceding Company shall give written notice to the Reinsurer of the pendency of any obligation of the insolvent Ceding Company on any Net Ceded Liability, whereupon the Reinsurer 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 Ceding Company or its liquidator or statutory successor.  The expense thus incurred by the Reinsurer shall be chargeable, subject to court approval, against the insolvent Ceding Company as part of the expenses of liquidation to the extent of a proportionate share of the benefit which may accrue to the Ceding Company solely as a result of the defense undertaken by the Reinsurer.

		
	C.
	In the event of the Reinsurer’s insolvency, any payments due the Reinsurer from the Ceding Company pursuant to the terms of this Agreement will be made directly to the Reinsurer or its conservator, liquidator, receiver or statutory successor.

ARTICLE XII     
ARBITRATION
		
	A.
	Prior to initiation of arbitration, the Reinsurer and the Ceding Company agree that they will first negotiate diligently and in good faith to agree on a mutually satisfactory resolution of any dispute.  Provided, however that if any such dispute cannot be resolved within sixty (60) days (or such longer period as the parties may agree) after written notice invoking the negotiation period of this Article is delivered by either party, the Reinsurer and the Ceding Company agree that they will submit this dispute to arbitration as described below.

		
	B.
	The Reinsurer and the Ceding Company intend that any and all disputes between them under or with respect to this Agreement be resolved without resort to any litigation.  Any and all disputes or differences between the Ceding Company and the Reinsurer arising out of this Agreement, including, but not limited to, disputes or differences relating to the interpretation or performance of this Agreement, its formation or validity, or any transaction under this Agreement, whether arising before or after termination, shall be submitted to arbitration.  Arbitration shall be the sole method of dispute resolution, regardless of the insolvency of either party, unless the conservator, receiver, liquidator or statutory successor is specifically exempted from arbitration proceeding by applicable state law of the insolvency.

		
	C.
	Arbitration shall be initiated by the delivery of written notice of demand for arbitration (“Arbitration Notice”) by one party to another.  Such written notice shall contain a brief 

7

statement of the issue(s), remedies sought, and the failure of the parties to reach amicable agreement as provided in Paragraph A above.
		
	D.
	Each party shall appoint an individual as arbitrator and the two so appointed shall then appoint the umpire.  If either party refuses or neglects to appoint an arbitrator within thirty (30) days after delivery of the Arbitration Notice, the other party may appoint the second arbitrator.  If the two arbitrators do not agree on an umpire within thirty (30) days of the appointment of the second appointed arbitrator, each of the two arbitrators shall nominate three individuals.  Each arbitrator shall then decline two of the nominations presented by the other arbitrator.  The umpire shall be chosen from the remaining two nominations by drawing lots.  The arbitrators and umpire shall be present or former disinterested officers of life reinsurance or insurance companies other than the two parties to this Agreement or any company owned by, or affiliated with, either party.

		
	E.
	The arbitration hearings shall be held in the city in which the Reinsurer’s head office is located or any such other place as may be mutually agreed.  Each party shall submit its case to the arbitrators and umpire within one hundred and eighty (180) days of the selection of the umpire or within such longer period as may be agreed.

		
	F.
	The arbitration panel shall make its decision with regard to the custom and usage of the insurance and reinsurance business.  The arbitration panel shall interpret this Agreement as an honorable engagement; they are relieved of all judicial formalities and may abstain from following strict rules of law.  The arbitration panel shall be solely responsible for determining what evidence shall be considered and what procedure they deem appropriate and necessary in the gathering of such facts or data to decide the dispute.

		
	G.
	The decision in writing of the majority of the arbitration panel shall be final and binding upon the parties.  Judgment may be entered upon the final decision of the arbitration panel in any court having jurisdiction.

		
	H.
	The jointly incurred costs of the arbitration are to be borne equally by both parties.  Jointly incurred costs are specifically defined as any costs that are not solely incurred by one of the parties (e.g., attorneys’ fees, expert witness fees, travel to the hearing site, etc.).  Costs incurred solely by one of the parties shall be borne by that party.  Once the panel has been selected, the panel shall agree on one billable rate for each of the arbitrators and umpire and that sole cost shall be disclosed to the parties and become payable as a jointly incurred cost as described above.

ARTICLE XIII     
PARTIES TO AGREEMENT
This Agreement is solely between the Ceding Company and the Reinsurer.  Except as otherwise provided herein, the terms and provisions of this Agreement are intended solely for the benefit of the parties hereto, and their respective successors or permitted assigns, and it is not the intention of 

8

the parties to confer third-party beneficiary rights upon any other person, and no such rights shall be conferred upon any person or entity not a party to this Agreement.  The Ceding Company shall be and remain directly and solely liable to any insured, contract owner, or beneficiary under any Policy reinsured hereunder.
ARTICLE XIV     
DURATION OF AGREEMENT AND TERMINATION
		
	A.
	Duration.  This agreement will be effective as of the Effective Date, and will be unlimited as to its duration.

		
	B.
	Termination for New Business.  This agreement may be terminated for new business by either party with sixty (60) days prior written notice to the other party.

		
	C.
	Recapture.  The Ceding Company may recapture a proportionate share of up to 100% of the Net Ceded Liabilities.  The parties shall agree on the effective date of the recapture (the “Recapture Date”).  Any such recapture shall apply to all Policies reinsured under this Agreement on a pro rata basis.

The Reinsurer shall be liable for the Net Benefits associated with recapture amounts, as well as for other claims as specified in Article IV, for Extra-Contractual Obligations, each as incurred prior to the effective date of the recapture.
Within sixty (60) days of the Recapture Date (the “Recapture Settlement Date”), assets consisting of cash and investments at market value, and accrued investment income net of unearned investment income, shall be transferred by the Reinsurer to the Ceding Company with the amount as of the Recapture Date equal to (i) the Required Level of Primary Security as set forth in Actuarial Guideline XLVIII as of the Effective Date (net of reserves for any non-affiliate reinsurance agreements) related to the recapture Policies plus reserves as of such date for claims incurred and outstanding (whether reported or unreported) calculated in accordance with the laws of the State of Illinois as reported in the Life and Accident and Health Annual Statement page 3 line 4.1 (2015 Statement references) plus (ii) the positive or negative Interest Maintenance Reserve Adjustment. In addition, the “Recapture Assets and Liabilities” shall be transferred.  The Reinsurer shall also pay to the Ceding Company interest on such amount at the rate of four percent (4%) per annum, simple rate, beginning on the Recapture Date and ending on the Recapture Settlement Date. 
The Recapture Assets and Liabilities shall include all account balances (both assets and liabilities) related to the recapture Policies and ceded by the Ceding Company to the Reinsurer.  Recapture Assets and Liabilities shall include, but are not limited to, uncollected premiums, deferred premiums and premiums received in advance, in each case to the extent attributable to the recapture Policies.  The Recapture Assets and Liabilities shall also include amounts in respect of the recapture Policies that are paid to or received by the Reinsurer on behalf of the Ceding Company after the Recapture Date but prior to the Settlement Date.

9

ARTICLE XV     
GENERAL PROVISIONS
		
	A.
	Entire Agreement.  This Agreement supersedes any and all prior discussions and understandings between the parties and constitutes the entire Agreement between the Reinsurer and the Ceding Company with respect to the Policies.  There are no understandings between the parties other than as expressed in this Agreement.

		
	B.
	Notices.  Any notice or communication given pursuant to this Agreement must be in writing and (1) delivered personally, (2) sent by facsimile transmission, (3) delivered by overnight express, or (4) sent by registered or certified mail, postage prepaid, to such address or addresses each party may designate from time to time for receipt of notices or communications.  The initial notice addresses are as follows:

	
			
	 
	If to the Ceding Company:
	Allstate Assurance Company
3075 Sanders Rd
Northbrook, Illinois 60062
Attn:  Chief Financial Officer
Facsimile No.:  (847) 326-7065

	 
	If to the Reinsurer:
	Allstate Life Insurance Company
3075 Sanders Rd
Northbrook, Illinois 60062
Attn:  Chief Financial Officer
Facsimile No.:  (847) 326-7065

All notices and other communications required or permitted under the terms of this Agreement that are addressed as provided in this Article XV shall:  (1) if delivered personally or by overnight express, be deemed given upon delivery; (2) if delivered by facsimile transmission, be deemed given when electronically confirmed; and (3) if sent by registered or certified mail, be deemed given when received.  Any party from time to time may change its address for notice purposes by giving a similar notice specifying a new address, but no such notice shall be deemed to have been given until it is actually received by the party sought to be charged with the contents thereof.
		
	C.
	Expenses.  Except as may be otherwise expressly provided in this Agreement, whether or not the transactions contemplated hereby are consummated, each of the parties hereto shall pay its own costs and expenses incident to preparing for, entering into and carrying out this Agreement and the consummation of the transactions contemplated hereby.

		
	D.
	Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties.

10

		
	E.
	Amendment.  Any modification or modification to this Agreement shall be null and void unless made by a written instrument executed by both parties hereto.

		
	F.
	Assignment; Binding Effect.  Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by either of the parties hereto without the prior written consent of the other party, which consent shall not be unreasonably withheld, and any such assignment that is attempted without such consent shall be null and void.  Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties and their respective successors and permitted assigns.

		
	G.
	Invalid Provisions.  If any provision of this Agreement is held to be illegal, invalid, or unenforceable under any present or future law, and if the rights or obligations of the parties hereto under this Agreement will not be materially and adversely affected thereby, (1) such provision shall be fully severable; (2) this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part hereof; and (3) the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance herefrom.

		
	H.
	Waiver.  Any term or condition of this Agreement may be waived in writing at any time by the party that is entitled to the benefit thereof.  A waiver on one occasion shall not be deemed to be a waiver of the same or any other breach or nonfulfillment on a future occasion.  All remedies, either under the terms of this Agreement, or by law or otherwise afforded, shall be cumulative and not alternative, except as otherwise provided by law.

		
	I.
	Headings, etc.  The headings used in this Agreement have been inserted for convenience and do not constitute matter to be construed or interpreted in connection with this Agreement.  Unless the context of this Agreement otherwise requires, (1) words using the singular or plural number also include the plural or singular number, respectively; (2) the terms “hereof,” “herein,” “hereby,” “hereto,” “hereunder,” and derivative or similar words refer to this entire Agreement (including the exhibits hereto); (3) the term “Article” refers to the specified Article of this Agreement; (d) the term “Exhibit” refers to the specified Exhibit attached to this Agreement; and (e) the term “party” means, on the one hand, the Ceding Company, and on the other hand, the Reinsurer.

		
	J.
	Offset.  Any debits or credits incurred after the Effective Date in favor of or against either the Ceding Company or the Reinsurer with respect to this Agreement are deemed mutual debits or credits, as the case may be, and shall be set off against each other dollar for dollar.

		
	K.
	Compliance with Laws.  The parties hereto shall at all times comply with all applicable laws in performing their obligations under this Agreement.

11

		
	L.
	Survival.  All provisions of this Agreement shall survive its termination to the extent necessary to carry out the purposes of this Agreement or to ascertain and enforce the parties’ rights or obligations hereunder existing at the time of termination.

		
	M.
	Calendar Days.  Unless otherwise specified, all references to “day” in this Agreement shall mean calendar days.

		
	N.
	Governing Law.  This Agreement shall be governed by the laws of the state of Illinois.

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IN WITNSS HEREOF, the parties to this Agreement have caused it to be duly executed in duplicate by their respective officers on the dates shown below.

ALLSTATE ASSURANCE COMPANY

By    /s/ Mario Imbarrato     
    
Title    Vice President and Chief Financial Officer    
Date    January 19, 2017    

ALLSTATE LIFE INSURANCE COMPANY
 
By    /s/ Samuel H. Pilch     
    
Title    Senior Group Vice President and Controller
Date    January 19, 2017    

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EXHIBIT A

ELIGIBLE POLICIES

Policies covered under this Agreement are TrueFit term policies and any accompanying additional riders issued on or after January 1, 2015 and before January 1, 2018.

COINSURANCE PERCENTAGE

The coinsurance percentage shall be 100%.

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EXHIBIT B 
TAX ELECTION
The Ceding Company and the Reinsurer hereby make an election pursuant to Treasury Regulations Section 1.848-2(g)(8).  This election shall be effective for the tax year during which the Effective Date falls and all subsequent taxable years for which this Agreement remains in effect.  Unless otherwise indicated, the terms used in this Exhibit are defined by reference to Treasury Regulations Section 1.848-2 as in effect on the date hereof.  As used below, the term “party” or “parties” shall refer to the Ceding Company or the Reinsurer, or both, as appropriate.
		
	1.
	The party with the Net Positive Consideration (as defined in Section 848 of the Code and related Treasury Regulations) with respect to the transactions contemplated under this Agreement for any taxable year covered by this election will capitalize specified policy acquisition expenses with respect to such transactions without regard to the general deductions limitation of Section 848(c)(1) of the Code.

		
	2.
	The parties agree to exchange information pertaining to the amount of Net Consideration (as defined in Section 848 of the Code and related Treasury Regulations) under this Agreement each year to ensure consistency or as is otherwise required by the Internal Revenue Service.  The exchange of information each year will follow the procedures set forth below:

		
	(a)
	By April 1 of each year, the Ceding Company will submit a schedule to the Reinsurer of its calculation of the Net Consideration for the preceding calendar year.  This schedule of calculations will be accompanied by a statement signed by an authorized representative of the Ceding Company stating the amount of the Net Consideration the Ceding Company will report in its tax return for the preceding calendar year.

		
	(b)
	Within thirty (30) days of the Reinsurer’s receipt of the Ceding Company’s calculation, the Reinsurer may contest such calculation by providing an alternative calculation to the Ceding Company in writing.  If the Reinsurer does not notify the Ceding Company that it contests such calculation within said 30-day period, the calculation will be presumed correct and the Reinsurer shall also report the Net Consideration as determined by the Ceding Company in the Reinsurer’s tax return for the preceding calendar year.

		
	(c)
	If the Reinsurer provides an alternative calculation of the Net Consideration pursuant to clause (b), the parties will act in good faith to reach an agreement as to the correct amount of Net Consideration within thirty (30) days of the date the Ceding Company receives the alternative calculation from the Reinsurer.  When the Ceding Company and the Reinsurer reach agreement on an amount of Net Consideration, each party shall report the applicable amount in their respective tax returns for the preceding calendar year.

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