Document:

Modified Coinsurance Agreement, dated December 1, 2003

 Exhibit 10.(b) 
  
 Amended Filing Date: October 31, 2003 
 Original Filing Date: October 17, 2003 
  
 MODIFIED COINSURANCE AGREEMENT 
  
 Between 
  
 FARMERS NEW WORLD LIFE INSURANCE
COMPANY 
  
 And 
  
 KEMPER INVESTORS LIFE INSURANCE COMPANY 
  
 Dated as of December 1, 2003 
  

 TABLE OF CONTENTS 
  

					
	 ARTICLE I
	  	 DEFINITIONS
	  	4
	 Section 1.1
	  	 Definitions
	  	4
			
	 ARTICLE II
	  	 BASIS OF COINSURANCE AND BUSINESS COINSURED
	  	8
	 Section 2.1
	  	 Post-Closing Contracts
	  	8
	 Section 2.2
	  	 Modified Coinsurance
	  	9
	 Section 2.3
	  	 Certain Contract Elements
	  	9
	 Section 2.4
	  	 Assets and Reserves
	  	9
	 Section 2.5
	  	 Contract and Reserve Assumption Changes
	  	9
			
	 ARTICLE III
	  	 ACCOUNTINGS AND RESERVE ADJUSTMENTS
	  	10
	 Section 3.1
	  	 Ceding Commission
	  	10
	 Section 3.2
	  	 Payments by the Company and the Reinsurer
	  	10
	 Section 3.3
	  	 Contract Administration
	  	10
	 Section 3.4
	  	 Books and Records
	  	10
	 Section 3.5
	  	 Quarterly Accountings and Payments
	  	10
	 Section 3.6
	  	 General Account Reserve Adjustment
	  	11
	 Section 3.7
	  	 Delayed Payments
	  	11
	 Section 3.8
	  	 Offset Rights
	  	11
			
	 ARTICLE IV
	  	 REGULATORY MATTERS
	  	12
	 Section 4.1
	  	 Regulatory Matters
	  	12
			
	 ARTICLE V
	  	 OVERSIGHTS
	  	12
	 Section 5.1
	  	 Oversights
	  	12
			
	 ARTICLE VI
	  	 CONDITIONS PRECEDENT
	  	12
	 Section 6.1
	  	 Conditions Precedent
	  	12
			
	 ARTICLE VII
	  	 DUTY OF COOPERATION
	  	12
	 Section 7.1
	  	 Cooperation
	  	12
			
	 ARTICLE VIII
	  	 DAC TAX
	  	13
	 Section 8.1
	  	 Election
	  	13
			
	 ARTICLE IX
	  	 INDEMNIFICATION AND RECAPTURE
	  	14
	 Section 9.1
	  	 Reinsurer’s Obligation to Indemnify
	  	14
	 Section 9.2
	  	 Company’s Obligation to Indemnify
	  	14
	 Section 9.3
	  	 Certain Definitions and Procedures.
	  	15
	 Section 9.4
	  	 Recapture Rights
	  	15
			
	 ARTICLE X
	  	 ARBITRATION
	  	17
	 Section 10.1
	  	 Arbitration
	  	17
	 Section 10.2
	  	 Arbitration Procedures
	  	17
			
	 ARTICLE XI
	  	 INSOLVENCY
	  	18

  

 i 

					
	 Section 11.1
	  	 Insolvency Clause
	  	18
			
	 ARTICLE XII
	  	 DURATION
	  	19
	 Section 12.1
	  	 Duration
	  	19
	 Section 12.2
	  	 Survival
	  	19
			
	 ARTICLE XIII
	  	 MISCELLANEOUS
	  	19
	 Section 13.1
	  	 Notices
	  	19
	 Section 13.2
	  	 Confidentiality
	  	20
	 Section 13.3
	  	 Entire Agreement
	  	20
	 Section 13.4
	  	 Waivers and Amendments
	  	20
	 Section 13.5
	  	 No Third Party Beneficiaries
	  	20
	 Section 13.6
	  	 Assignment
	  	21
	 Section 13.7
	  	 Governing Law; Venue
	  	21
	 Section 13.8
	  	 Counterparts
	  	21
	 Section 13.9
	  	 Severability
	  	21
	 Section 13.10
	  	 Schedules, Exhibits and Paragraph Headings
	  	21
	 Section 13.11
	  	 Expenses
	  	21
	 Section 13.12
	  	 No Prejudice
	  	21
	 Section 13.13
	  	 Waiver of Defenses
	  	21

  

 ii 

 INDEX OF EXHIBITS 
  

			
	 Exhibit A
	 	 Recapture Fee Formula

	 Exhibit B
	 	 Procedures for Indemnification Claims

	 Exhibit C
	 	 List of Contracts Reinsured - Amended

	 Exhibit D
	 	 Commission & Expense Allowance - Amended

  
  

 iii 

 MODIFIED COINSURANCE AGREEMENT 
  
 THIS MODIFIED COINSURANCE AGREEMENT (this “Agreement”) is made and entered into as of December 1,
2003, by and between Farmers New World Life Insurance Company, a Washington domiciled stock life insurance company (the “Company”) and Kemper Investors Life Insurance Company, an Illinois domiciled stock life insurance
company (the “Reinsurer”). 
  
 RECITALS

  
 WHEREAS, the Company has issued the Contracts (as
defined below); and 
  
 WHEREAS, the Company has agreed to
cede and transfer to the Reinsurer all liabilities arising under the Contracts (which include annuity contracts written by the Company after the Effective Date) for the consideration specified herein, and the Reinsurer has agreed to reinsure such
liabilities on the terms and conditions set forth herein. 
  
 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
Reinsurer agree as follows: 
  
 ARTICLE I 
 DEFINITIONS 
  
 Section 1.1 Definitions. The following terms shall have the respective meanings specified below throughout this Agreement: 
  
 “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. 
  
 “Applicable Law” means any domestic or foreign federal, state or local statute, law, ordinance or code, or any written rules,
regulations or administrative interpretations issued by any Governmental Authority pursuant to any of the foregoing, and any order, writ, injunction, directive, judgment or decree of a court of competent jurisdiction applicable to the parties
hereto. 
  
 “Books and Records” means the
originals or copies of all customer lists, policy information, policy forms and rating plans, disclosure and other documents and filings, including statutory filings, required under all Applicable Laws, administrative records, reinsurance records,
claim records, sales records, underwriting records, financial records, Tax records and compliance records in the possession or control of the Company and relating principally to the Contracts including, without limitation, any database, magnetic or
optical media (to the extent not subject to licensing restrictions) and any other form of recorded, computer generated or stored information or process, but excluding: (a) the Company’s original certificate of incorporation, bylaws, corporate
seal, licenses to do business, minute books and other corporate records relating to corporate organization and capitalization; (b) original Tax and corporate accounting records relating to the Business; (c) any original books and records relating to
the Retained Liabilities; and (d) any records that are subject to attorney-client privilege. 
  

 4 

 “Business” means the marketing, issuing and administering the Contracts in the
United States and the other business activities reasonably related thereto. 
  
 “Business Day” means any day on which banking institutions in the State of Washington and Illinois are open for normal business. 
  
 “Ceding Commission” means the aggregate ceding allowance payable by the Reinsurer to the Company in
connection with the reinsurance of the Contracts hereunder. 
  
 “Closing” means the closing of the transactions contemplated by this Agreement. 
  
 “Closing Date” means the date and time as of which the Closing actually takes place. 
  
 “Code” means the Internal Revenue Code of 1986, as
amended, and the rules and regulations thereunder. 
  
 “Commissions” means all commissions, expense allowances, benefit credits and other fees and compensation payable to Producers. 
  

“Company Indemnified Parties” shall have the meaning set forth in Section 9.1. 
  
 “Contracts” means (a) all annuity contracts issued on
the forms identified on Exhibit C hereto, to the extent that such contracts are in effect as of the Effective Date, and all certificates and participation agreements in effect as of the Effective Date issued in accordance with the terms of such
contracts (including all supplements, endorsements, riders and ancillary agreements in connection therewith) and (b) all Post-Closing Contracts. Also included in the definition of “Contracts” are any such contracts and certificates that
have lapsed and that otherwise would be eligible for inclusion herein, subject to reinstatement pursuant to reinstatement procedures contained in such contracts and certificates. 
  
 “Contractholders” means contractholders, insureds and assignees under the Contracts. 
  
 “Control” including the terms
“Controlling,” “Controlled by” and “under common Control with” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the
ownership of voting securities, the holding of policyholders’ proxies by contract other than a commercial contract for goods or non-management services, or otherwise, unless the power is the result of an official position with or corporate
office held by the Person. Except as provided otherwise in this Agreement, Control is presumed to exist if any Person, directly or indirectly, owns, controls, holds with the power to vote, or holds shareholders’ proxies representing majority or
more of the voting securities of any other Person, or holds or controls sufficient policyholders’ proxies, or is entitled by contract or otherwise, to nominate, appoint or to elect the majority of the board of directors or comparable governing
body of any other Person. 
  

 5 

 “Effective Date” means 12:01a.m. Pacific time on December 1, 2003.

  
 “Extra Contractual Obligations” means
all liabilities or obligations arising under or relating to the Contracts, exclusive of liabilities or obligations arising under the express terms and conditions of the Contracts and the other Liabilities, but including, without limitation, any
liability for fines, penalties, forfeitures, punitive, special, consequential, exemplary or other form of extra-contractual damages, which liabilities or obligations arise from any act, error or omission, whether or not intentional, negligent, in
bad faith or otherwise relating to: (a) the marketing, sale, underwriting, production, issuance, cancellation or administration of the Contracts; (b) the investigation, defense, trial, settlement or handling of claims, benefits, or payments under
the Contracts; or (c) the failure to pay, the delay in payment, or errors in calculating or administering the payment of benefits, claims or any other amounts due or alleged to be due under or in connection with the Contracts. 
  
 “Final and Binding” means with respect to any
determinations made in this Agreement that have the same preclusive effect for all purposes as if such determinations had been embodied in a final judgment, no longer subject to appeal, entered by a court of competent jurisdiction, and either the
Company or the Reinsurer may petition a court having jurisdiction over the parties and subject matter to reduce such decision to judgment. 
  
 “Governmental Authority” means any court, administrative or regulatory agency or commission, or other federal, state or local
governmental authority or instrumentality having jurisdiction over any party hereto. 
  
 “Liabilities” means all gross liabilities and obligations arising under or relating to the Contracts other than the Retained Liabilities. The Liabilities shall include, without limitation: (a)
the Reserves; (b) all liabilities for incurred but not reported claims, benefits, interest on claims or other payments arising under or relating to the Contracts, whether or not (i) included within the Reserves, or (ii) incurred before or after the
Effective Date; (c) all liabilities arising out of any changes to the terms and conditions of the Contracts mandated by Applicable Law whether or not incurred before or after the Effective Date; (d) liabilities for premium Taxes payable, incurred or
paid by the Company on or after the Effective Date (without giving effect to any credits due to the Company, other than credits for guaranty fund payments that were assessed after the Effective Date), and for all other Taxes arising out of or
relating to the Business payable on or after the Effective Date (except for income Taxes imposed on the Company under Subtitle A of the Code); (e) liabilities for assessments and similar charges in connection with participation by the Company or the
Reinsurer, whether voluntary or involuntary, in any guaranty association established or governed by any state or other jurisdiction assessed after the Effective Date; (f) liabilities for Commissions payable with respect to the Contracts to or for
the benefit of the Producers who marketed or produced the Contracts, in any case payable on or after the Effective Date; (g) all liabilities for amounts payable on or after the Effective Date for returns or refunds of Premiums, (h) all unclaimed
property liabilities arising under or relating to the Contracts; and (i) all liabilities relating to the Reinsurer’s establishment of Non-Guaranteed Elements. 
  

 6 

 “LIBOR” means a rate per annum equal to the [three-month] London Interbank
Offered Rate as published in The Wall Street Journal, Western Edition, in effect on the Closing Date. 
  
 “Loss” shall have the meaning set forth in Section 9.3. 
  
 “NAIC” means the National Association of Insurance Commissioners. 
  
 “Non-Guaranteed Elements” means cost of insurance
charges, loads and expense charges, credited interest rates, mortality and expense charges, administrative expense risk charges, as applicable, under the Contracts. 
  
 “Person” means any individual, corporation, partnership, firm, joint venture, association,
joint-stock company, limited liability company, trust, estate, unincorporated organization, governmental, judicial or regulatory body, business unit, division or other entity. 
  
 “Post-Closing Contracts” shall have the meaning set forth in Section 2.1(a). 
  
 “Premiums” means premiums, considerations, deposits
and similar receipts with respect to the Contracts. 
  
 “Producers” means all brokers, agents, general agents, producers or other Persons who market or produce the Contracts and who (a) have been appointed by the Company, and (b) are entitled to receive Commissions from
the Company. 
  
 “Quarterly Accounting”
shall mean an accounting prepared in accordance with Washington SAP and delivered by the Company to the Reinsurer in accordance with Section 3.5 hereof. 
  
 “Recapture Event” shall have the meaning set forth in Section 9.4. 
  
 “Recapture Fee” means the amount determined in accordance with the formula set forth on Exhibit A
hereto, which is payable by the Reinsurer or the Company, as the case may be, in connection with recapture of the Contracts by the Company pursuant to Section 9.4 hereof. 
  
 “Recapture Rights” means the right of the Company to recapture the Contracts pursuant to Section 9.4
hereof. 
  
 “Reinsurer Indemnified
Parties” shall have the meaning set forth in Section 9.2. 
  
 “Reserve Adjustment” shall have the meaning set forth in Section 3.6. 
  
 “Reserves” means the sum of all reserves and balance sheet liabilities required to be maintained by the Company for the Contracts
issued by it, calculated consistent with (a) the reserve requirements, statutory accounting rules and actuarial principles applicable to the Company under the Applicable Law of each state in which the Contracts were issued or delivered, and (b)
otherwise in accordance with the methodologies used by the Company to calculate the reserves and balance sheet liabilities for the Contracts in accordance with Washington SAP and sound actuarial principles and any valuation bases and methods of
determining reserves as provided in the forms of Contracts, as applicable. 
  

 7 

 “Retained Liabilities” means the liabilities of the Company arising solely from
any of the following: (a) premium Taxes and all other Taxes payable prior to the Effective Date; (b) amounts payable prior to the Effective Date for returns or refunds of Premiums; (c) Commissions payable with respect to the Contracts to or for the
benefit of Producers, in any case payable prior to the Effective Date; (d) assessments and similar charges in connection with participation by the Company, whether voluntary or involuntary, in any guaranty association established or governed by any
Governmental Authority, assessed before the Effective Date; (e) death claims under the Contracts which are reported prior to the Effective Date; (f) any litigation pending as of the Effective Date relating to the Contracts; and (g) Extra Contractual
Obligations. 
  
 “Taxes” (or
“Tax” as the context may require) means any tax, however denominated, imposed by any Governmental Authority having the power to levy taxes (a “Taxing Authority”), including, without limitation, any tax imposed under
Subtitle A of the Code and any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, gains, goods and services, production, documentary, recording, social security, unemployment, disability, workers’
compensation, estimated, ad valorem, value added, transfer, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, capital stock, occupation, personal or real property, environmental or windfall profit tax,
premiums, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest, penalty, addition to tax or additional amount imposed by any Taxing Authority relating thereto. 

 
 “Washington SAP” means the statutory accounting
principles and practices prescribed or permitted by the Insurance Department of the State of Washington. 
  
 ARTICLE II 
 BASIS OF COINSURANCE AND BUSINESS COINSURED 

 
 Section 2.1 Post-Closing Contracts. 
  
 (a) On and after the Effective Date, the Company may continue issuing
annuity contracts on the policy forms that would be included in the Contracts in effect immediately prior to the Effective Date, including without limitation the issuance of any annuity contract pursuant to any exchange or conversion option provided
under the terms of any Contract issued at any time by the Company (the “Post-Closing Contracts”), and such Post-Closing Contracts shall be reinsured by the Reinsurer pursuant to the terms of this Agreement. Either the Company
or the Reinsurer may terminate its obligations under this Section 2.1(a) at any time by providing written notice of such termination to the other party not later than 30 days prior to the effectiveness of such termination; provided that any such
termination shall not affect the reinsurance hereunder of any Contracts issued prior to the effective date of such termination. 
  

 8 

 Section 2.2 Modified Coinsurance 
  
 (a) Subject to the terms and conditions of this Agreement, the Company
hereby cedes on a modified coinsurance basis to the Reinsurer as of the Effective Date, and the Reinsurer hereby accepts and agrees to indemnity reinsure on a modified coinsurance basis as of the Effective Date, one hundred percent (100%) of all
Liabilities. This Agreement is an agreement for indemnity reinsurance solely between the Company and the Reinsurer and shall not create any legal relationship whatsoever between the Reinsurer and any Person other than the Company. The reinsurance
effected under this Agreement is subject to the same limitations and conditions specified in the Contracts and shall be maintained in force, without reduction, unless such reinsurance is terminated, reduced or recaptured as provided herein.

  
 (b) On and after the Effective Date, the Reinsurer shall have
the responsibility for reimbursing the Company for all Liabilities (other than Reserves) in connection with each quarterly settlement. The Reinsurer will accept the decision of the Company with respect to the determination and payment of such
Liabilities. For the avoidance of doubt, Reserves are intended to be addressed, without duplication, in Section 3.6. 
  
 Section 2.3 Certain Contract Elements. From and after the Effective Date, the Reinsurer shall have the right to set all Non-Guaranteed
Elements. The Reinsurer hereby acknowledges and agrees that any claim, liability or obligation that arises out of or relates to the Reinsurer’s establishment of Non-Guaranteed Elements is included within the Liabilities that the Reinsurer has
expressly assumed pursuant to this Agreement and for which the Reinsurer has agreed to indemnify the Company pursuant to Article IX of this Agreement. 
  
 Section 2.4 Assets and Reserves. Notwithstanding anything in this Agreement to the contrary, the Company shall continue to invest and
maintain all assets held in support of the Reserves and other Liabilities backing the Contracts reinsured hereunder. Such assets will be segregated to permit the investment results of the assets to be segregated from the other investments of the
Company. On and after the Effective Date, the Company shall maintain Reserves for the Contracts ceded hereunder in accordance with applicable statutory and regulatory requirements. The Reserves shall be calculated consistent with (a) the reserve
requirements, statutory accounting rules and actuarial principles applicable to the Company under Applicable Law; and (b) otherwise in accordance with the methodologies used by the Company to calculate the Reserves for the Contracts in accordance
with Washington SAP and sound actuarial principles and any valuation bases and methods of determining Reserves as provided in the forms of the Contracts. 
  
 Section 2.5 Contract and Reserve Assumption Changes. The Company shall not change (a) the terms and conditions of any Contracts or (b) the
assumptions and methods used to establish the Reserves except as required by Applicable Law. 
  

 9 

 ARTICLE III 
 ACCOUNTING AND RESERVE ADJUSTMENTS 
  
 Section 3.1 Ceding Commission. Subject to the terms and conditions of this Agreement, the Reinsurer shall pay to the Company on the Closing Date a Ceding Commission in an amount equal to $36,500,000 plus
interest on such amount from and including the Effective Date to but not including the Closing Date, computed at LIBOR.  
  
 Section 3.2 Payments by the Company and the Reinsurer 
  
 (a) To effect the reinsurance of the Contracts on the Effective Date, the Company has paid on the Closing Date to the
Reinsurer an initial reinsurance premium equal to the Reserves attributable to the Polices as of the Effective Date. 
  
 (b) Simultaneously with the payment of the initial reinsurance premium pursuant to Section 3.2(a), the Reinsurer has paid the Company on the Closing Date
an initial reserve adjustment equal to the Reserves as of the Effective Date. 
  
 (c) The Reinsurer shall be entitled as reinsurance premium to receive payment of the Premiums received on and after the Effective Date attributable to the Contracts net of any refunds which may be made to
Contractholders or others. 
  
 (d) To the extent that the Company
recovers amounts from any third party relating to the Contracts (including, without limitation, Premiums in arrears from a Contractholder with respect to a reinstated Contract, expense reimbursement, indemnification) upon receipt of any such amounts
the Company shall transfer such amounts to the Reinsurer, as applicable, and provide the Reinsurer with any pertinent information that the Company may have relating thereto. 
  
 Section 3.3 Contract Administration The Company will administer the Contracts reinsured hereunder and will
perform all accounting for such Contracts. Claims and benefit payment or settlement made by the Company in good faith including compromise shall be unconditionally binding on the Reinsurer. In consideration of the administrative services provided by
the Company with respect to the Contracts following the Effective Date, the Reinsurer shall pay to the Company, through the Quarterly Accounting for each calendar quarter, an expense allowance as set forth in Exhibit D.  
  
 Section 3.4 Books and Records The Company shall maintain
and retain title to and ownership of the Books and Records and shall be entitled to keep and maintain copies of all Books and Records relating to the administration of the Contracts after the Effective Date. The Books and Records shall be made
available to the Reinsurer, its auditors or other designees, during normal business hours and at any time on reasonable notice, for review, inspection, and examination, and for reproduction to the extent necessary to comply with Applicable Laws,
financial reporting obligations, and audit requirements, at the Company’s expense. 
  
 Section 3.5 Quarterly Accountings and Payments (a) Beginning with and after the 
  

 10 

 
first calendar quarter following the Closing Date, the Company shall provide the Reinsurer with a Quarterly Accounting as of the end of each calendar
quarter, no later than thirty (30) Business Days after the end of such quarter; provided, however, that in the event that subsequent data or calculations require revision of any Quarterly Accounting, the required revision and any appropriate
payments shall be made in cash by the parties within five (5) Business Days after they mutually agree as to the appropriate revision. The Company shall provide such Quarterly Accounting in a mutually agreeable format which shall include without
limitation payments contemplated by Sections 2.2(b), 3.2, 3.3 and 3.6. 
  
 (b) If a Quarterly Accounting reflects a balance due to the Reinsurer, the amount(s) shown as due shall be paid by the Company within five (5) Business Days of the delivery of the Quarterly Accounting. If (i) a Quarterly Accounting reflects
a balance due to the Company and (ii) the Reinsurer does not object to the Quarterly Accounting within five (5) Business Days of its delivery, the amount(s) shown as due shall be paid by the Reinsurer within seven (7) Business Days after the date on
which the Quarterly Accounting was delivered. Amounts due from either party pursuant to this Agreement shall be paid net of amounts due from the other party.  
  
 Section 3.6 Reserve Adjustment (a) The “Reserve Adjustment” for any calendar quarter shall be an
amount equal to (i) the Reserves at the end of such Calendar Quarter, minus (ii) the Reserves at the end of the calendar quarter immediately preceding such calendar quarter, minus (iii) the sum of all net investment income and capital gains and
losses, realized and unrealized, including amortization of Interest Maintenance Reserve, with respect to assets held by the Company in support of the Reserves relating to the Contracts during such calendar quarter. On a quarterly basis, commencing
with the first calendar quarter following the Closing Date, an amount equal to the Reserve Adjustment will be shown as an amount due to the Reinsurer on the Quarterly Accountings if the foregoing formula yields a negative amount, or as an amount due
to the Company on such Quarterly Accountings if the formula yields a positive amount. 
  
 Section 3.7 Delayed Payments If there is a delayed settlement of any payment due hereunder, interest will accrue on such payment at LIBOR. For purposes of this Section 3.7, a payment will be considered
overdue, and such interest will begin to accrue, on the date that is five (5) Business Days after 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 Reinsurer hereunder unless the delayed settlement thereof was caused by the Company. 
  
 Section 3.8 Offset Rights 
  
 (a) Any debits or credits incurred on and after the Effective Date in favor of or against either the Company or the
Reinsurer with respect to this Agreement are deemed mutual debits or credits and shall be set off, and only the balance shall be allowed or paid. The right of offset will not be affected or diminished because of the insolvency of either party.

  
 (b) Notwithstanding anything to the contrary in this
Agreement, each of the parties hereto acknowledges and agrees that it shall have no right hereunder or pursuant to law to set off any amounts due or owing (or to become due or owing) to any other party under this Agreement against any amounts due or
owing by such other party or any of its subsidiaries or Affiliates under any other agreement, contract or understanding. 
  

 11 

 ARTICLE IV 
 REGULATORY MATTERS 
  
 Section 4.1 Regulatory Matters. If the Company or the Reinsurer receives notice of, or otherwise becomes aware of, any inquiry, investigation or proceeding from or at the direction of a Governmental Authority relating to the
Contracts, the Company or the Reinsurer, 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. 
  
 ARTICLE V 
 OVERSIGHTS 
  
 Section 5.1 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. 
  
 ARTICLE VI 
 CONDITIONS PRECEDENT 
  
 Section 6.1 Conditions Precedent. This Agreement shall not become effective unless and until all Governmental Authorities whose approval is required shall have approved this Agreement or is deemed
approved by Applicable Law, in each case on or prior to December 31, 2003. 
  
 ARTICLE VII 
 DUTY OF COOPERATION 
  
 Section 7.1 Cooperation. Each party hereto shall cooperate
fully with the other in all reasonable respects in order to accomplish the objectives of this Agreement. 
  

 12 

 ARTICLE VIII 
 DAC TAX 
  
 Section 8.1 Election. In accordance with Treasury Regulations Section 1.848-2(g)(8), the Company and the Reinsurer hereby elect to determine specified Contract acquisition expenses with respect to this Agreement without regard
to the general deductions limitation of Section 848(c)(1) of the Code. 
  
 (a) All uncapitalized terms used herein shall have the meanings set forth in the regulations under Section 848 of the Code. 
  
 (b) The party with net positive consideration under this Agreement for each taxable year shall capitalize specified Contract acquisition expenses with
respect to this Agreement without regard to the general deductions limitation of Section 848(c)(1) of the Code. 
  
 (c) Both parties agree to exchange information pertaining to the amount of net consideration under this Agreement each year to ensure consistency.

  
 (d) The Company shall submit a schedule to the Reinsurer 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 Company stating that
the Company shall report such net consideration in its federal income tax return for the preceding taxable year. 
  
 (e) The Reinsurer may contest such calculation by providing an alternative calculation to the Company in writing within thirty (30) calendar days after
the date on which the Reinsurer receives the Company’s calculation. If the Reinsurer does not so notify the Company, the Reinsurer shall report the net consideration under this Agreement as determined by the Company in the Reinsurer’s
federal income tax return for the preceding taxable year. 
  
 (f)
(i) If the Reinsurer contests the Company’s calculation of the net consideration under this Agreement, the parties shall act in good faith to reach an agreement as to the correct amount of net consideration within thirty (30) calendar days
after the date on which the Reinsurer submits its alternative calculation. If the Company and the Reinsurer 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. 
  
 (ii) If, during such
30-day period, the Reinsurer and the Company are unable to reach agreement, they shall promptly thereafter cause independent accountants mutually agreed to by the Reinsurer and the Company (who shall not have any material relationship with the
Reinsurer or the Company) promptly to review (which review shall commence no later than five (5) calendar days after the selection of such independent accountants) this Agreement and the calculations of the Reinsurer and the Company for the

  

 13 

 
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 Reinsurer’s calculation as to which the Company has disagreed. Such independent accountants shall deliver to the Reinsurer and the Company, as promptly as practicable (but no later than sixty (60) calendar 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 Reinsurer’s calculation delivered pursuant to Section 8.1(d) and the amount
thereof shown in the Company’s calculation delivered pursuant to Section 8.1(e). Such report shall be Final and Binding upon the Reinsurer and the Company. The fees, costs and expenses of such independent accountant shall be borne (i) by the
Reinsurer if the difference between the net consideration as calculated by the independent accountants and the Reinsurer’s calculation delivered pursuant to Section 8.1(d) is greater than the difference between the net consideration as
calculated by the independent accountants and the Company’s calculation delivered pursuant to Section 8.1(e), (ii) by the Company if the first such difference is less than the second such difference, and (iii) otherwise equally by the Reinsurer
and the Company. 
  
 (g) This election shall be effective for the
2003 taxable year ending December 31, 2003 and for all subsequent taxable years for which this Agreement remains in effect. 
  
 (h) Both parties agree to attach a schedule to their respective federal income tax returns for the first taxable year ending after the date on which this
election becomes effective which identifies this Agreement as a reinsurance agreement for which an election has been made under Treasury Regulations Section 1.848-2(g)(8). 
  
 ARTICLE IX 
 INDEMNIFICATION AND RECAPTURE 
  
 Section 9.1 Reinsurer’s Obligation to Indemnify. The Reinsurer hereby agrees to indemnify, defend and hold harmless the Company and its current, former and future directors, officers, employees, representatives (excluding
the Producers), Affiliates, successors and permitted assigns (collectively, the “Company Indemnified Parties”) from and against all Losses (as defined below) asserted against, imposed upon or incurred by any Company
Indemnified Party arising from: (i) the Liabilities; (ii) any breach or nonfulfillment by the Reinsurer of, or any failure by the Reinsurer to perform, any of the covenants, terms or conditions of, or any of its duties or obligations under, this
Agreement; or (iii) any enforcement of this indemnity. 
  
 Section 9.2 Company’s Obligation to Indemnify. The Company hereby agrees to indemnify, defend and hold harmless the Reinsurer and its current, former and future directors, officers, employees, representatives (excluding
the Producers), Affiliates, successors and permitted assigns (collectively, the “Reinsurer Indemnified Parties”) from and against all Losses asserted against, imposed upon or incurred by any Reinsurer Indemnified Party
arising from: (i) the Retained Liabilities; (ii) any breach or nonfulfillment by the Company of, or any failure by the Company to perform, any of the covenants, terms or conditions of, or any of its duties or obligations under, this Agreement; or
(iii) any enforcement of this indemnity. 
  

 14 

 Section 9.3 Certain Definitions and Procedures. For purposes of this Article IX,
“Loss” or “Losses” shall mean actions, claims, losses, liabilities, damages, costs, expenses (including reasonable attorneys’ fees), interest and penalties. In the event either the Reinsurer or
the Company shall have a claim for indemnity against the other party under the terms of this Agreement, the parties shall follow the procedures set forth in Exhibit B. 
  
 Section 9.4 Recapture. 
  
 (a) Recapture Events. From and after the Effective Date, any of the following occurrences shall constitute an
event that obligates the Company to exercise the recapture remedy set forth in this Section 9.4 (individually or collectively, as the context indicates, a “Recapture Event”): 
  
 (i) the Reinsurer ceases to maintain (A) an A.M. Best
Company rating of at least [B+], (B) a Standard & Poor’s Corporation insurer financial strength rating of at least [BB+], or (C) a Moody’s Investors Services, Inc. claims-paying ability rating of at least [Ba1]; or

  
 (ii) the Reinsurer fails to (A) maintain a
ratio of (i) Total Adjusted Capital (as defined in the Risk-Based Capital (RBC) Model Act or in the rules and procedures prescribed by the NAIC with respect thereto) to (ii) the Company Action Level RBC (as defined in the Risk-Based Capital (RBC)
Model Act or in the rules and procedures prescribed by the NAIC with respect thereto) of at least one hundred sixty percent (160%); or (B) maintain a Standard & Poor’s Corporation’s capital adequacy ratio (calculated in accordance with
the rules and procedures in effect on the date on which this Agreement is executed) of at least one hundred percent (100%); or 
  
 (iii) a petition for insolvency, rehabilitation, conservation, supervision, liquidation or similar proceeding is filed by or against the
Reinsurer or its statutory representative in any jurisdiction; 
  
 (iv) if the Company shall, for any reason, not be entitled to all relevant statement credit for the cession of reinsurance hereunder in its annual statement as filed with its domiciliary state: or 
  
 (v) if any Person other than one of the Affiliates of the
Reinsurer in existence on the Closing Date acquires or assumes (A) Control of the Reinsurer, whether by merger, consolidation, stock acquisition, or otherwise (including, without limitation, the acquisition or assumption of the power to direct the
Reinsurer’s management and policies by means of a management or services agreement or other contractual arrangement) or (B) all or substantially all of the assets or liabilities of the Reinsurer by reinsurance (whether indemnity or assumption)
or otherwise. 
  

 15 

 (b) Notice to the Company. The Reinsurer shall provide the Company with: 
  
 (i) notice of any downgrade in the Reinsurer’s A. M.
Best Company rating or its Standard & Poor’s Corporation insurer financial strength rating or its Moody’s Investors Services, Inc. claims-paying ability rating within three (3) Business Days after the Reinsurer’s receipt of notice
of such adjustment; 
  
 (ii) a written report of
the calculation of the Reinsurer’s Total Adjusted Capital and Authorized Control Level RBC (based on the Risk-Based Capital (RBC) Model Act and/or the rules and procedures) and Standard & Poor’s Corporation’s capital adequacy
ratio (based on the rules and procedures in effect on the date on which this Agreement is executed) as of the end of each calendar quarter within fifteen (15) Business Days after the end of such quarter; 
  
 (iii) notice of the occurrence of any Recapture Event within
two (2) Business Days after its occurrence; and 
  
 (iv) not less than annually, a written report, in form reasonably satisfactory to the Company, certifying that no Recapture Event has occurred during the period covered by such report or is continuing as of the last day of such period,
together with the appropriate calculations and back up reasonably necessary to substantiate the basis of the Reinsurer’s certification. 
  
 The Company may, at its own expense, review the Reinsurer’s books and records to confirm the risk based capital calculations provided by the Reinsurer pursuant to
Section 9.4(b)(ii). In addition, the Reinsurer shall (A) cooperate fully with the Company and promptly respond to the Company’s inquiries from time to time concerning the Reinsurer’s financial condition, operating results and any events,
occurrences or other matters which arise on and after the Effective Date and which reasonably relate to the Business or Reinsurer’s ability to perform and discharge its obligations under this Agreement and (B) provide to the Company such
financial statements, reports, internal control letters and reports prepared by auditors and other third parties, and other documents of the Reinsurer as the Company may reasonably request from time to time. 
  
 (c) Recapture. Upon the occurrence of any Recapture Event, the
Company shall recapture all of the Contracts ceded hereunder. 
  
 (d) Recapture Fee. Any recapture by the Company shall not be deemed to have been consummated until the Company or the Reinsurer, as the case may be, has received payment of the entire Recapture Fee as determined in accordance
with Exhibit A hereto. The relevant party shall promptly pay the full amount of the Recapture Fee. Following the consummation of the recapture of Contracts pursuant to this Section 9.4(d), no additional Premiums, deposits or other amounts payable
under such Contracts shall be ceded to the Reinsurer hereunder. 
  
 (e) Certain Remedies. The Company and the Reinsurer acknowledge that any damage caused to the Company by reason of the breach by the Reinsurer or any of its successors in interest of this Section 9.4 could not be adequately
compensated for in monetary damages alone; therefore, each party agrees that, in addition to any other remedies at law or 
  

 16 

 
otherwise, the Company shall be entitled to specific performance of this Section 9.4 or an injunction to be issued by a court of competent jurisdiction
pursuant to Section 13.7 hereof restraining and enjoining any violation of this Section 9.4, in addition to such other equitable or legal remedies as such court may determine. The Company and the Reinsurer hereby release, waive and discharge any and
all claims and causes of action asserting in any way that the Company’s recapture remedy hereunder is not valid, binding or enforceable. The Company and the Reinsurer are forever estopped and barred from making any such assertion in any context
or forum whatsoever. 
  
 ARTICLE X 
 ARBITRATION 
  
 Section 10.1 Arbitration. 
  
 (a) After the Effective Date, any dispute between the parties under or with respect to this Agreement (other than disputes relating to calculations
relating to DAC Tax, which shall be resolved in accordance with Article VIII hereof) shall be decided through negotiation and, if necessary, arbitration as set forth in Section 10.2. 
  
 (b) The parties intend this Section 10.1 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 10.1(a), the other party may request the court specified in Section 13.7 to compel
arbitration in accordance with the Federal Arbitration Act. 
  
 Section 10.2 Arbitration Procedures. 
  
 (a) Except as expressly provided otherwise in Section 10.1(a), the Company and the Reinsurer intend that any dispute between them under or with respect to this Agreement be resolved without resort to any litigation. Accordingly, the Company
and the Reinsurer agree that they will negotiate diligently and in good faith to agree on a mutually satisfactory resolution of any such dispute; provided, however, that if any such dispute cannot be so resolved by them within sixty
(60) calendar days (or such longer period as the parties may agree) after commencing such negotiations, the Company and the Reinsurer agree that they will submit such dispute to arbitration in the manner specified in, and such arbitration proceeding
will be conducted in accordance with, the Commercial Arbitration Rules of the American Arbitration Association. 
  
 (b) The arbitration hearing will be before a panel of three disinterested arbitrators, each of whom must be a present or former officer of a life
insurance or life reinsurance company familiar with the life insurance and reinsurance business. The Company and the Reinsurer will each appoint one arbitrator by written notification to the other party within thirty (30) calendar days after the
date of the mailing of the notification initiating the arbitration. These two arbitrators will then select the third arbitrator within thirty (30) calendar days after the date of the mailing of the notification initiating arbitration. 
  

 17 

 (c) If either the Company or the Reinsurer fails to appoint an arbitrator, or should the two arbitrators
be unable to agree upon the choice of a third arbitrator, the president of the American Arbitration Association or of its successor organization or (if necessary) the president of any similar organization designated by lot of the Company and the
Reinsurer within thirty (30) calendar days after the request will appoint the necessary arbitrators. 
  
 (d) The arbitrators shall base their decision on the terms and conditions of this Agreement. However, if the terms and conditions of this Agreement do not
explicitly dispose of an issue in dispute between the parties, the arbitrators may base their decision on the customs and practices of the life insurance and life reinsurance industry rather than solely on an interpretation of Applicable Law. The
arbitrators’ decision shall take into account the right to offset mutual debits and credits as provided in this Agreement. The vote or approval of a majority of the arbitrators will decide any question considered by the arbitrators. The place
of arbitration will be determined by the arbitrators. Each decision (including without limitation each award) of the arbitrators will be Final and Binding on all parties and will be nonappealable, and (at the request of either the Company and the
Reinsurer) any award of the arbitrators may be confirmed by a judgment entered by the court specified in Section 13.7. No such award or judgment will bear interest except to the extent applicable in Section 3.7. In no event, may the arbitrators
award punitive or exemplary damages. Each party will be responsible for paying (a) all fees and expenses charged by its respective counsel, accountants, actuaries, and other representatives in conjunction with such arbitration and (b) one-half of
the fees and expenses charged by each arbitrator. 
  
 ARTICLE XI

 INSOLVENCY 
  
 Section 11.1 Insolvency Clause. In the event of the insolvency of the Company, all coinsurance made, ceded, renewed or otherwise becoming
effective under this Agreement shall be payable by the Reinsurer directly to the Company or to its liquidator, receiver or statutory successor on the basis of the liability of the Company under the Contracts 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
Contract within a reasonable period of time after such claim is filed in the insolvency proceedings and that during the pendency of such claim 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 Company or its liquidator or receiver or statutory successor. It is further understood that the expense thus incurred by the Reinsurer 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 that may accrue to the Company solely as a result of the defense undertaken by the Reinsurer. 
  

 18 

 ARTICLE XII 
 DURATION 
  
 Section 12.1 Duration This Agreement shall continue in force until the first to occur of: (i) the Reinsurer’s liability with respect to all Contracts reinsured hereunder is terminated in accordance with their respective
terms and the Company has received payments that discharge such liability in full in accordance with the provisions of this Agreement; or (ii) the Contracts are recaptured in accordance with Section 9.4. In no event shall the interpretation of this
Section 12.1 imply a unilateral right of the Reinsurer to terminate this Agreement.  
  
 Section 12.2 Survival. Notwithstanding the other provisions of this Article XII, the terms and conditions of Article I, VIII, IX and X and Sections 13.2 and 13.11 shall remain in full force and effect
after this Agreement is terminated. 
  
 ARTICLE
XIII 
 MISCELLANEOUS 
  
 Section 13.1 Notices. Any notice or other communication required or permitted under this Agreement shall be in writing and shall be deemed
to have been duly given when (a) mailed by United States registered or certified mail, return receipt requested, (b) mailed by overnight express mail or other nationally recognized overnight or same-day delivery service or (c) delivered in person to
the parties at the following addresses: 
  
 If to the Company, to:

  
 Farmers New World Life Insurance Company 
 Attention: President 
  
 With copies (which shall not constitute notice) to: 
  
 Farmers New World Life Insurance Company 
 C/O - General Counsel Office 
 4680 Wilshire Boulevard 
 Los Angeles CA 90010-3807 
  
 Los Angeles – Corporate Office 
 4680
Wilshire Boulevard 
 Los Angeles CA 90010-3807 
  

 19 

 If to the Reinsurer, to: 
  
 Kemper Investors Life Insurance Company 
 Attention: General Counsel 
  
 With copies (which shall not constitute notice) to: 
  
 Kemper Investors Life Insurance Company 
 C /O David A. Bowers 
 1400 American Lane, 
 Schaumburg, IL 60196

  
 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 13.1. 
  
 Section 13.2 Confidentiality Each of the parties shall maintain the confidentiality of all information related to the Contracts and all other information denominated as confidential by the other party
provided to it in connection with this Agreement, and shall not disclose such information to any third parties without prior written consent of the other party, which shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the
foregoing, each party hereto (and each employee, representative or other agent of each such party) may disclose to any and all persons, without limitation of any kind, the U.S. tax treatment and U.S. tax structure of this Agreement and the
transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to any such party relating to such U.S. tax treatment and U.S. tax structure. However, any such information relating to the
tax treatment or tax structure is required to be kept confidential to the extent necessary to comply with any applicable federal or state securities laws.  
  
 Section 13.3 Entire Agreement. This Agreement and the Exhibits and the Schedules hereto and thereto contain
the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements, written or oral, with respect thereto. 
  
 Section 13.4 Waivers and Amendments. 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 waiver on one occasion shall 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 Reinsurer, respectively. 
  
 Section 13.5 No Third Party Beneficiaries. This Agreement constitutes an indemnity reinsurance agreement solely between the Company and the
Reinsurer, and is intended solely for the benefit of the parties hereto and their permitted successors and assigns, and it is not the intention of the parties to confer any rights as a third-party beneficiary to this Agreement upon any other Person
as to any term, condition or provision of this Agreement. 
  

 20 

 Section 13.6 Assignment. This Agreement shall not be assigned by either of the parties
hereto without the prior written approval of the other party, and any attempted assignment in violation of this Section shall be void ab initio. 
  
 Section 13.7 Governing Law; Venue. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WASHINGTON,
WITHOUT REGARD TO ITS CONFLICTS OF LAW DOCTRINE. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF GENERAL AND COMPETENT JURISDICTION LOCATED WITHIN THE STATE OF WASHINGTON, WITH RESPECT TO ANY
LEGAL ACTION OR PROCEEDING ARISING OUT OF OR CONNECTED WITH THIS AGREEMENT. 
  
 Section 13.8 Counterparts. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, but all of which shall 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, the parties hereto. 
  
 Section 13.9 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future
Applicable Law or if determined by a court of competent jurisdiction to be unenforceable, and if the rights or obligations of the Company or the Reinsurer 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 been included in 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. 
  
 Section 13.10 Schedules, Exhibits and Paragraph Headings. Schedules and Exhibits attached hereto are made
a part of this Agreement. Paragraph headings are provided for reference purposes only and are not made a part of this Agreement. 
  
 Section 13.11 Expenses. Except as explicitly provided to the contrary herein, each party shall be solely responsible for all expenses it
incurs in connection with this Agreement or in consummating the transactions contemplated hereby or performing the obligations imposed hereby, including, without limitation, the cost of its attorneys, accountants and other professional advisors.

  
 Section 13.12 No Prejudice. The parties agree
that this Agreement has been jointly negotiated and drafted by the parties hereto and that the terms hereof shall not be construed in favor of or against any party on account of its participation in such negotiations and drafting. 
  
 Section 13.13 Waiver of Defenses The Reinsurer hereby releases,
waives and discharges any and all claims under this Agreement asserting in any way that issuance and delivery of a Contract was not in compliance with the Applicable Laws of all jurisdictions or with the issuing insurance company’s corporate
charter. The Reinsurer is forever estopped and barred from making any such assertion in any context or forum regarding this Agreement.  
  

 21 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first set
forth above, to be effective as of the Effective Date, subject to Article VI and the other terms and conditions of this Agreement. 
  

	
	 FARMERS NEW WORLD LIFE INSURANCE
 COMPANY

	
	 /s/ C. PAUL PATSIS

	 C. Paul Patsis

	 President and Chief Executive Officer

	
	 KEMPER INVESTORS LIFE INSURANCE
 COMPANY

	
	 /s/ DIANE C. DAVIS

	 Diane C. Davis

	 President and Chief Executive Officer

  
  

 22 

 Exhibit A 
  

Recapture Fee Formula 
  
 The amount of the Recapture Fee payable by the Company or the Reinsurer shall be determined in accordance with the formula set forth below by an actuary
mutually agreed to by the Company and the Reinsurer (the “Actuary”). 
  
 The Recapture Fee formula shall consist of the following: 
  
 (a) Payment by the Reinsurer to the Company of the amount of the fees and costs the Company must pay (as estimated by the Actuary if necessary) to the
Actuary for calculating the Recapture Fee and to any attorneys or other outside consultants advising the Company in connection with the recapture; 
  
 (b) Payment by the Reinsurer or the Company, as the case may be, of the Quarterly Accounting settlement as provided in Section 3.5 determined as of the
effective date of Recapture (the “Recapture Date”); 
  
 (c) Payment by the Company to the Reinsurer of a terminal reserve adjustment equal to the Reserves on the Contracts determined as of the Recapture Date; 
  
 (d) Payment by the Reinsurer to the Company of a terminal reinsurance premium equal to the Reserves on the Contracts
determined as of the Recapture Date; and 
  
 (e) Payment by the
Company to the Reinsurer of the Appraisal Value of the Contracts subject to recapture (the “Recaptured Business”). 
  
 Appraisal Value. The Appraisal Value of the Contracts subject to recapture shall be equal to the expected present value (calculated at an
interest rate equal to LIBOR plus [6.50]%) as of the Recapture Date of the following values for the Recaptured Business: (a) Statutory Profits, plus (b) Interest on Required Surplus, minus or plus (c) the increase or decrease in
Required Surplus, minus (d) the Required Surplus as of the Recapture Date. 
  
 For these purposes, Required Surplus shall be calculated on the assumption that the ratio of Total Adjusted Capital to Company Action Level RBC, in each case with respect to the Recaptured Business, shall be 200 percent. Both Total Adjusted
Capital and Company Action Level RBC shall be determined as provided in the Risk-Based Capital (RBC) Model Act or the NAIC’s rules with respect thereto. In fixing the other values required by the above formula, the Actuary shall use its best
estimates of future mortality, lapses and surrenders, premium persistency, producer compensation, other taxes, licenses and fees; provided, however, that the Actuary shall assume that the unit cost of providing administrative services for the
Recaptured Business shall be the amount that would be charged by an unaffiliated third-party administrator and shall increase by an annual rate equal to LIBOR over the estimated cost of such services for the twelve months immediately following the
Recapture Date.  
  
  

 Exhibit A 

 Exhibit B 
  

Procedures for Indemnification Claims 
  
 Section 1. Claims Notice. 
  
 (a) In the event that either party to this Agreement wishes to assert a claim for indemnification under this Agreement (including, but not limited to,
claims arising from a claim or demand made, or an action, proceeding or investigation instituted, by any Person not a party to this Agreement that may result in a Loss for which indemnification is claimed by a party under this Agreement (a
“Third Party Claim”)), such party seeking indemnification (the “Indemnified Party”) shall give written notice (a “Claims Notice”) to the other party (the
“Indemnifying Party”). Such Claims Notice shall be delivered to the Indemnifying Party as promptly as practicable, specifying in detail the facts constituting the basis for, and the amount of, the claim asserted. The failure
by any Indemnified Party to notify the Indemnifying Party as promptly as practicable shall relieve any Indemnifying Party from its indemnification obligations only to the extent such failure or other actions taken by the Indemnified Party in
response to such claim shall actually prejudice an Indemnifying Party. 
  
 (b) Subject to the provisions of Section 1(c), upon receipt of a Claims Notice the Indemnifying Party shall have the right to assume the defense and control of Third Party Claims. In the event the Indemnifying Party exercises such rights to
assume the defense and control of a Third Party Claim, the Indemnified Party shall have the right but not the obligation reasonably to participate in (but not control) the defense of Third Party Claims with its own counsel and at its own expense.
Any election by an Indemnifying Party whether to assume the defense of a Third Party Claim must be received by the Indemnified Party within a reasonable time period after receipt of the Indemnified Party’s Claims Notice, and failure to send
such notice within a reasonable time shall be deemed an election not to defend. If the Indemnifying Party elects to assume the defense of a Third Party Claim, the Indemnifying Party shall select counsel, contractors and consultants of recognized
standing and competence after consultation with the Indemnified Party; shall take all steps necessary in the defense or settlement of such Third Party Claims; and shall at all times diligently and promptly pursue the resolution of such Third Party
Claims. The Indemnified Party shall, and shall cause each of its directors, officers, employees, agents, representatives, Affiliates and permitted assigns to, cooperate fully with the Indemnifying Party in the defense of any Third Party Claim
defended by the Indemnifying Party, which cooperation shall include, without limitation, designating a liaison counsel to whom the Indemnifying Party may direct notices and other communications, using reasonable efforts to make witnesses available,
and providing records and documents to the extent such witnesses, records and documents are relevant to the Third Party Claim. 
  
 (c) The Indemnifying Party shall be authorized to consent to a settlement of, or the entry of any judgment arising from, any Third Party Claim as to which
the Indemnifying Party has assumed the defense in accordance with the terms of Section 1(b), without the consent of any Indemnified Party, but only to the extent that such settlement or entry of judgment (i) provides solely for the payment of money
by the Indemnifying Party at its own expense without any right of reimbursement from the Indemnified Party, and (ii) provides a complete release of, or dismissal with prejudice of claims against, any Indemnified Party potentially 
  

 Exhibit B 

 
affected by such Third Party Claim from all matters that were or could have been asserted in connection with such claims. Except as provided above,
settlement or consent to entry of judgment shall require the prior approval of the Indemnified Party, such approval not to be unreasonably withheld. If requested by the Indemnifying Party, the Indemnified Party will cooperate with the Indemnifying
Party and its counsel in contesting any Third Party Claim, or, if appropriate and related to the Third Party Claim in question, in making any counterclaim or cross-complaint against any Person (other than the Indemnified Party or its directors,
officers, employees, agents, representatives, Affiliates, successors and permitted assigns). Unless and until the Indemnifying Party elects to defend the Third Party Claim, the Indemnified Party shall have the right, at its option and at the
Indemnified Party’s expense to do so in such manner as it reasonably deems appropriate; provided, however, that the Indemnified Party shall not settle or compromise any Third Party Claim for which it seeks indemnification hereunder
without the prior written consent of the Indemnifying Party (which shall not be unreasonably withheld). 
  
 Section 2. Procedures for Direct Claims. In the event any Indemnified Party shall have a claim for indemnity against any Indemnifying Party that does not involve a Third Party Claim, the Indemnified
Party shall deliver written notice of such claim with reasonable promptness to the Indemnifying Party specifying in detail the facts constituting the basis for, and the amount of, the claim asserted. Provided that notice is delivered prior to the
termination of any applicable statute of limitations, the failure by any Indemnified Party so to notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability that it may have to such Indemnified Party with respect to any
claim made pursuant to this Section 2. 
  
  

 Exhibit B 

 Amended Filing Date: October 31, 2003 
 Original Filing Date: October 17, 2003 
  
 Amended Exhibit C 
  
 List of Contracts Reinsured 
  
 The policy plans subject to reinsurance coverage are the non-qualified issues of the following: 
  

							
	 Plans

	  	Tax Status

	  	Policy Form(s)

	  	 Policy Issue Dates
 From/Until

	 Individual Flexible Payment Deferred Annuity
	  	Non-qualified	  	1975-491
1981-492
1994-396
1988-493
1994-393
2003-193	  	1-1-75/12-31-81
1-1-82/12-1-01
9-1-94/current
4-1-89/current
9-1-94/current
2-1-2004/current
				
	 Individual Single Premium Deferred Annuity
	  	Non-qualified	  	1991-494-495
1994 –394-395
2003-194-195	  	10-1-91/current
9-1-94/current
2-1-2004/current

  
  

 Exhibit C 

 Amended Filing Date: October 31, 2003 
 Original Filing Date: October 17, 2003 
  
 Amended Exhibit D 
  
 Expense Allowance 
  
 The expense allowance
shall consist of the following: 
  

			
	 	  	 Payment

	 	  	 $78 per policy on policies issued after 09/30/2003

		
	 plus
	  	 4.84% of first-year premiums after 09/30/2003

		
	 plus
	  	 $3 per policy in force at the beginning of each month during the first year of the contract
 Increased by 2% for inflation at the beginning of each succeeding year.

		
	 plus
	  	 0.01% of total account values in force at the beginning of each month

  
  

 Exhibit DBristol-Myers Squibb Company Executive Performance Incentive Plan

 EXHIBIT 10d 
  

BRISTOL-MYERS SQUIBB COMPANY 
 EXECUTIVE PERFORMANCE INCENTIVE PLAN 
  
 1. Purpose: The
purpose of the Executive Performance Incentive Plan (the “Plan”) is to promote the interests of the Bristol-Myers Squibb Company (the “Company”) and its stockholders by providing additional compensation as incentive to certain
key executives of the Company and its Subsidiaries and Affiliates who contribute materially to the success of the Company and such Subsidiaries and Affiliates. 
  

2. Definitions: The following terms when used in the Plan shall, for the purposes of the Plan, have the following meanings: 
  
 (a) “Affiliate” shall mean any entity in which the Company has an
ownership interest of at least 20%. 
  
 (b) “Code”
shall mean the Internal Revenue Code of 1986, as amended. 
  
 (c)
“Company” shall mean the Bristol-Myers Squibb Company, its subsidiaries and affiliates. 
  
 (d) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. 
  
 (e) “Retirement” shall mean termination of the employment of an employee with the Company or a Subsidiary or
Affiliate on or after 
  
 (i) the employee’s 65th birthday

  
 or 
  
 (ii) the employee’s 55th birthday having completed 10 years of service
with the Company. 
  
 (f) “Subsidiary” shall mean any
corporation which at the time qualifies as a subsidiary of the Company under the definition of “subsidiary corporation” in Section 424 of the Code. 
  
 3. Administration: The Plan shall be administered under the supervision of the Board of Directors of the Company (the “Board”) which shall exercise its
powers, to the extent herein provided, through the agency of a Compensation and Management Development Committee (the “Committee”) which shall be appointed by the Board. The Committee shall consist of not less than three (3) members of the
Board who meet the definition of “outside director” under the provisions of Section 162(m) of the Code and the definition of “non-employee director” under the provisions of the Exchange Act or the regulations or rules promulgated
thereunder. 
  
 The Committee, from time to time, may adopt rules and regulations
(“Regulations”) for carrying out the provisions and purposes of the Plan and make such determinations, not inconsistent with the terms of the Plan, as the Committee shall deem appropriate. The Committee may alter, amend or revoke any
Regulation adopted. The interpretation and construction of any provision of the Plan by the Committee shall, unless otherwise determined by the Board, be final and conclusive. 
  
 The Committee may delegate its responsibilities for administering the Plan to a committee of key executives as the Committee deems
necessary. Any awards under the Plan to members of this committee and to such other of the Participants as may be determined from time to time by the Board or the Committee shall be referred to the Committee or Board for approval. However, the
Committee may not delegate its responsibilities under the Plan relating to any executive who is subject to the provisions of Section 162(m) of the Code or in regard to the issuance of any stock under Paragraph 6(c). 
  
 4. Participation: “Participants” in the Plan shall be such key executives of
the Company as may be designated by the Committee to participate in the Plan with respect to each fiscal year. 
  
 5. Performance Incentive Awards: 
  

	 	(a)	For each fiscal year of the Company, the Committee shall determine the following: 

  

	 	(i)	The Company, Subsidiaries and/or Affiliates to participate in the Plan for such fiscal year. 

  

	 	(ii)	The executives who will participate in the Plan for such fiscal year. 

  

	 	(iii)	The basis(es) for determining the maximum amount of the Awards to such Participants will be dependent upon the attainment by the Company or any Subsidiary or Affiliate or
subdivision thereof of any specified 

 performance goal or objective. Performance measures established by the Committee may relate to the Total
Company or a business unit. Performance measures may be set at a specific level or may be expressed as relative to the comparable measures at comparison companies or a defined index. Performance criteria for Awards under the Plan may include one or
more of the following operating performance measures: 
  

							
	a.	 	Earnings	 	e.	 	Financial return ratios
	b.	 	Revenue	 	f.	 	Total shareholder return
	c.	 	Operating or net cash flows	 	g.	 	Market share
	d.	 	Research and development milestones	 	h.	 	Product commercialization milestones

  

	 	(iv)	For Participants subject to 162(m) of the Code, the Committee shall establish one or more objectively determinable performance measures based on the criteria described above no
later than 90 days after the beginning of the fiscal year and at a time when the achievement of such measure (or measures) is substantially uncertain. No award shall be paid to a Participant unless the Committee determines that the performance
measures applicable to that Participant have been achieved. 

  

	 	(v)	For any Participant not subject to Section 162(m) of the Code, other performance measures or objectives, whether quantitative or qualitative, may be established. The Committee shall
establish the specific targets for the selected measures. These targets may be set at a specific level or may be expressed as relative to the comparable measure at comparison companies or a defined index. 

  
 The Committee may, in its discretion, reduce the award payable to any
Participant below the amount determined by the objective performance measures established for that Participant. The Committee’s discretion may not be exercised to increase the award payable to any Participant subject to Section 162(m) of the
Code above the amount determined by the applicable performance measure. In addition, the exercise of the Committee’s discretion to reduce the award payable to any Participant may not increase the award payable to any other executive subject to
Section 162(m) of the Code. 
  

	 	(vi)	The Committee may require or a Participant may request the Committee to approve deferred payment of a percentage (not less than 25%) of an Award (the “Deferred Portion”).
Any Award or portion of Award which the Committee does not require deferral of or the Participant does not request deferral of shall be paid subject to the provisions of Paragraph 6 (the “Current Portion”). Any Award which includes a
Deferred Portion shall be subject to the terms and conditions stated in Paragraph 9 and in any Regulations established by the Committee. 

  
 (b) At any time after the commencement of a fiscal year for which Awards have been determined, but prior to the close thereof, the Committee may, in its
discretion, eliminate or add Participants, or increase or decrease the Award of any Participant; but the Committee may not alter any election made relative to establishing a Deferred Portion of an Award or which would cause any Award to lose
deductibility under Section 162(m) of the Code. Any changes or additions with respect to Awards of members of any committee established to oversee the Plan shall be referred to the Board or Committee, as appropriate, for approval. 
  
 6. Payment of Current Portion of Performance Incentive Awards: 
  
 (a) Subject to such forfeitures of Awards and other conditions as are
provided in the Plan, the Awards made to Participants shall be paid to them or their beneficiaries as follows: 
  

	 	(i)	As soon as practicable after the end of the fiscal year, the Committee shall determine the extent to which Awards have been earned on the basis of the actual performance in relation
to the established performance objectives as established for that fiscal year. Such Awards are only payable to the extent that the Participant has performed their duties to the satisfaction of the Committee. 

  

	 	(ii)	While no Participant has an enforceable right to receive a Current Portion until the end of the fiscal year as outlined in (i) above, payments on account of the Current Portion may
be provisionally made in accordance with the Regulations, based on tentative estimates of the amount of the Award. A Participant shall be required to refund any portion or all of such payments in order that the total payments may not exceed the
Current Portion as finally determined, or if the Participant shall forfeit their Award for any reason during the fiscal year. However, any Participant subject to Section 162(m) of the Code may not receive such provisional payments.

  

 E-10-2 

 (b) There shall be deducted from all payments of Awards any taxes required to be withheld by any
government entity and paid over to any such government in respect of any such payment. Unless otherwise elected by the Participant, such deductions shall be at the established Withholding Tax Rate. Participants may elect to have the deduction of
taxes cover the amount of any Applicable Tax (the amount of Withholding Tax plus the incremental amount determined on the basis of the highest marginal tax rate applicable to such Participant). 
  
 (c) Form of Payment. The Committee shall determine whether payment with
respect to the Current Portion of an Award, or to the payment of a Deferred Portion made under the provisions of Paragraph 9, shall be made entirely in cash, entirely in Common Stock of the Company, or partially in cash and partially in Common
Stock. Further, if the Committee determines that payment should be made in the form of Restricted Shares of Common Stock of the Company, the Committee shall designate the restrictions which will be placed upon the Common Stock and the duration of
those restrictions. For any fiscal year, the Committee may not cause Awards to be made under this provision which would result in the issuance, either on a current or restricted basis, of more than two-tenths of one percent of the number of shares
of Common Stock of the Company issued and outstanding as of January 1 of the fiscal year relating to the payment. 
  
 7. Maximum Payments Under the Plan: Payments under the Plan shall be subject to the following maximum levels. 
  
 (a) Total Payments. The total amount of Awards paid under the Plan
relating to any fiscal year may not exceed two percent of the operating pretax earnings for the Company in that fiscal year. 
  
 (b) Maximum Individual Award. The maximum amount which any individual Participant may receive relating to any fiscal year may not exceed 0.15
percent of the operating pretax earnings for the Company in that fiscal year. 
  
 8. Conditions Imposed on Payment of Awards: Payment of each Award to a Participant or to the Participant’s beneficiary shall be subject to the following provisions and conditions: 
  
 (a) Rights to Awards. No Participant or any person claiming under or
through the Participant shall have any right or interest, whether vested or otherwise, in the Plan or in any Award thereunder, contingent or otherwise, unless and until all of the terms, conditions and provisions of the Plan and the Regulations that
affect such Participant or such other person shall have been complied with. Nothing contained in the Plan or in the Regulations shall require the Company to segregate or earmark any cash, shares or stock or other property. Neither the adoption of
the Plan nor its operation shall in any way affect the rights and power of the Company or of any Subsidiary or Affiliate to dismiss and/or discharge any employee at any time. 
  
 (b) Assignment or Pledge of Rights of Participant. No rights under the Plan, contingent or otherwise, shall be
assignable or subject to any encumbrance, pledge or charge of any nature except that a Participant may designate a beneficiary for the Deferred Portion of an Award pursuant to the provisions of Paragraph 10. 
  
 (c) Rights to Payments. No absolute right to any Award shall be
considered as having accrued to any Participant prior to the close of the fiscal year with respect to which an Award is made and then such right shall be absolute only with respect to any Current Portion thereof; the Deferred Portion will continue
to be forfeitable and subject to all of the conditions of the Plan. No Participant shall have any enforceable right to receive any Award made with respect to a fiscal year or to retain any payment made with respect thereto if for any reason (death
included) the Participant, during such entire fiscal year, has not performed their duties to the satisfaction of the Company. 
  
 9. Deferral of Payments: Any portion of an Award deemed the Deferred Portion under Paragraph 5(a)(vi) shall be subject to the following: 
  
 (a) The Committee will, in its sole discretion, determine whether or not a
Deferred Portion may be elected by the Participant under an Award or if a Deferred Portion shall be required. If a Deferred Portion election is permitted for an Award, the Committee will establish guidelines regarding the date by which such deferral
election by the Participant must be made in order to be effective. 
  
 (b) Concurrent with the establishment of a Deferred Portion for any Award, the Participant shall determine, subject to the approval of the Committee, the portion of any Participant’s Deferred Portion that is to be valued by reference
to the Performance Incentive Fixed Income Fund (hereinafter referred to as the “Fixed Income Fund”), the portion that is to be valued by reference to the Performance Incentive Equity Fund (hereinafter referred to as the “Equity
Fund”), the portion that is to be valued by reference to the Performance Incentive Company Stock Fund (hereinafter referred to as the “Stock Fund”) and the portion that shall be valued by reference to any other fund(s) which may be
established by the Committee for this purpose. 
  
 (c) Prior to
the beginning of each fiscal year, the Committee shall determine if the Fund(s) used to value the account of any Participant may be changed from the Fund currently used to any other Fund established for use under this Plan. Any such determination
relating to a member of the Committee shall be referred to the Board (or such Committee of the Board as may be designated by the Board) for approval. 
  

 E-10-3 

 (d) Payment of the total amount of a Participant’s Deferred Portions shall be made to the
Participant, or, in case of the death of the Participant prior to the commencement of payments on account of such total amount, to the Participant’s beneficiary, in installments commencing as soon as practical after the Participant shall cease,
by reason of death or otherwise, to be an employee of the Company. In case of the death of any Participant after the commencement of payments on account of the total of the Deferred Portions, the then remaining unpaid balance thereof shall continue
to be paid in installments, at such times and in such manner as if such Participant were living, to the beneficiary(ies) of the Participant. However, the Committee shall possess absolute discretion to accelerate the time of payment of any remaining
unpaid balance of the Deferred Portions to any extent that it shall deem equitable and desirable under circumstances where the Participant at the time of payment shall no longer be an employee of the Company or shall have died. 
  
 (e) Conduct of Participant Following Termination of Employment. If,
following the date on which a Participant shall cease to be an employee of the Company, the Participant shall at any time either disclose to unauthorized persons confidential information relative to the business of the Company or otherwise act or
conduct themselves in a manner which the Committee shall determine is inimical or contrary to the best interest of the Company, the Company’s obligation to make any further payment on account of the Deferred Portions of such Participant shall
forthwith terminate. 
  
 (f) Assignment of Rights by
Participant or Beneficiary. If any Participant or beneficiary of a Participant shall attempt to assign their rights under the Plan in violation of the provisions thereof, the Company’s obligation to make any further payments to such
Participant or beneficiary shall forthwith terminate. 
  
 (g)
Determination of Breach of Conditions. The determination of the Committee as to whether an event has occurred resulting in a forfeiture or a termination or reduction of the Company’s obligation in accordance with the foregoing provisions of
this Paragraph 9 shall be conclusive. 
  
 (h) Fund Composition
and Valuation. Deferred Portions of Awards under the Plan shall be valued and maintained as follows: 
  

	 	(i)	In accordance with the provisions, and subject to the conditions, of the Plan and the Regulations, the Deferred Portion as established by the Committee shall be valued in reference
to the Participants’ account(s) in the Equity Fund, in the Fixed Income Fund, in the Company Stock Fund, and in any other Fund established under this Plan. Account balances shall be maintained as dollar values, units or share equivalents as
appropriate based upon the nature of the fund. For unit or share-based funds, the number of units or shares credited shall be based upon the established unit or share value as of the last day of the quarter preceding the crediting of the Deferred
Portion. 

  

	 	(ii)	Investment income credited to Participants’ accounts under the Fixed Income Fund shall be determined by the Committee based upon the prevailing rates of return experienced by
the Company. The investment income credited to participants under the Equity Fund shall be established based upon the performance of a specific basket of equity investments. The Company shall advise Participants of the specific measures used and the
current valuations of these Funds as appropriate to facilitate deferral decisions, investment choices and to communicate payout levels. The Company Stock Fund shall consist of units valued as one share of Common Stock of the Company (par value
$.10). 

  

	 	(iii)	Nothing contained in the Fund definitions in Paragraphs 9(h)(i) and 9(h)(ii) shall require the Company to segregate or earmark any cash, shares, stock or other property to determine
Fund values or maintain Participant account levels. 

  

	 	(iv)	Alternative Funds. The establishment of the “Fixed Income Fund”, the “Equity Fund” and the “Stock Fund” as detailed in Paragraphs 9(h)(i) and 9(h)(ii)
shall not preclude the right of the Committee to direct the establishment of additional investment funds (“Funds”). 

  
 In establishing such Funds, the Committee shall determine the criteria to be used for determining the value of such Funds. 
  

	 	(v)	Accelerated Distributions. The Committee may, at its sole discretion, allow for the early payment of a Participant’s Deferred Portion(s) in the event of an “unforeseeable
emergency”. An “unforeseeable emergency” is defined as an unanticipated emergency caused by an event beyond the control of the Participant that would result in severe financial hardship if the distribution were not permitted. Such
distributions shall be limited to the amount necessary to sufficiently address the financial hardship. Any distributions under this provision shall be consistent with all rules and regulations established under the Code. 

  

 E-10-4 

 10. Designation of Beneficiary for Deferred Portion: A Participant may name a beneficiary to receive any Deferred
Portion under Paragraph 5(a)(vi) to which the Participant may be entitled under the Plan in the event of their death, on a form to be provided by the Committee. A Participant may change their beneficiary from time to time in the same manner.

  
 If no designated beneficiary is living on the date on which
any Deferred Portion becomes payable to a Participant’s beneficiary, such payment will be payable to the person or persons in the first of the following classes of successive preference: 
  

	(a)	Widow or Widower, if then living 

  

	(b)	Surviving children, equally 

  

	(c)	Surviving parents, equally 

  

	(d)	Surviving brothers and sisters, equally 

  

	(e)	Executors or administrators 

  
 and the term “beneficiary” as used in the Plan shall include such person or persons. 
  
 11. Miscellaneous: 
  
 (a) By accepting any benefits under the Plan, each Participant and each person claiming under or through him shall be conclusively deemed to have
indicated acceptance and ratification of, and consent to, any action taken or made to be taken or made under the Plan by the Company, the Board, the Committee or any other committee appointed by the Board. 
  
 (b) Any action taken or decision made by the Company, the Board, the
Committee, or any other committee appointed by the Board arising out of or in connection with the construction, administration, interpretation or effect of the Plan or of the Regulations shall lie within its absolute discretion, as the case may be,
and shall be conclusive and binding upon all Participants and all persons claiming under or through any Participant. 
  
 (c) No member of the Board, the Committee, or any other committee appointed by the Board shall be liable for any act or failure to act of any other
member, or of any officer, agent or employee of such Board or Committee, as the case may be, or for any act or failure to act, except on account of their own acts done in bad faith. The fact that a member of the Board shall then be, shall
theretofore have been or thereafter may be a Participant in the Plan shall not disqualify them from voting at any time as a director with regard to any matter concerning the Awards, or in favor of or against any amendment or alteration of the Plan,
provided that such amendment or alteration shall provide no benefit for directors as such and provided that such amendment or alteration shall be of general application. 
  
 (d) The Board, the Committee, or any other committee appointed by the Board may rely upon any information supplied to them
by any officer of the Company or any Subsidiary and may rely upon the advice of counsel in connection with the administration of the Plan and shall be fully protected in relying upon such information or advice. 
  
 (e) Notwithstanding anything to the contrary in the Plan, neither the Board
nor the Committee shall have any authority to take any action under the Plan where such action would affect the Company’s ability to account for any business combination as a “pooling of interests.” 
  
 12. Amendment or Discontinuance: The Board may alter, amend, suspend or discontinue
the Plan, but may not, without approval of the holders of a majority of the Company’s Common Stock ($0.10 par value) and $2.00 Convertible Preferred Stock ($1 par value) make any alteration or amendment thereof which would permit the total
payments under the Plan for any year to exceed the limitations provided in Paragraph 7 hereof or to allow for the issuance of Company Common Stock in excess of the limitation provided in Paragraph 6(c). 
  
 13. Effective Date: The Plan will be effective for all fiscal years beginning with
2003 by action of the Board of Directors conditioned on and subject to approval of the Plan, by a vote of the holders of a majority of the shares of Common Stock and $2.00 Convertible Preferred Stock of the Company present in person or by proxy at a
duly held stockholders meeting at which a quorum representing a majority of all outstanding voting stock is present. The Committee may exercise its discretion to make no award payments to Participants subject to Section 162(m) of the Code in respect
of the 2007 fiscal year or any later fiscal year (other than awards properly deferred from earlier fiscal years) if the Plan has not been reapproved by the Company’s stockholders at the first meeting of stockholders during 2007, if necessary
for compliance with Section 162(m) of the Code. 
  

 E-10-5

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