Document:

I

Exhibit 10.2

QUOTA SHARE 

REINSURANCE AGREEMENT

between

STANDARD SECURITY LIFE INSURANCE COMPANY OF NEW YORK

New York, New York

(herein referred to as the "Company")

and

INDEPENDENCE AMERICAN INSURANCE COMPANY

F.K.A. FIRST STANDARD SECURITY INSURANCE COMPANY 

a Delaware corporation

(herein referred to as the "Reinsurer")

___________________________________________________________________________

In consideration of the promises set forth in this Agreement, the parties agree as follows:

Article I  -

SCOPE OF AGREEMENT

As a condition precedent to the Reinsurer's obligations under this Agreement, the Company shall cede to the Reinsurer the business described in this Agreement, and the Reinsurer shall accept such business as reinsurance from the Company.

This Agreement is comprised of General Articles I through XX and the Exhibit(s) listed below and each Exhibit which may be made a part of this Agreement.  The terms of the General Articles and of the Exhibit(s) shall determine the rights and obligations of the parties.  The terms of the General Articles shall apply to each Exhibit unless specifically amended therein.  In the event of termination of all the Exhibits made a part of this Agreement, the General Articles shall automatically terminate when the liability of the Reinsurer under said Exhibits ceases.

EXHIBIT A

Business Produced by CFE Management LLC

EXHIBIT B

Business Produced by Cox Insurance Group

EXHIBIT C

Business Produced by IndependenceCare Underwriting Services – Minneapolis LLC

EXHIBIT D 

Business Produced by IndependenceCare Underwriting Services – Southwest L.L.C.

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EXHIBIT E

Business Produced by National Underwriting Services

EXHIBIT F

Business Produced by Risk Assessment Strategies

EXHIBIT G

Business Produced by TRU Services LLC

EXHIBIT H

Business Produced by Voorhees Risk Management, LLC d.b.a. Marlton Risk Group

EXHIBIT I

Business Produced by Risk Based Solutions

EXHIBIT J

Business Produced by Majestic Underwriters, Inc.

EXHIBIT K

Business Produced by Medical Excess Underwriters LLC

EXHIBIT L

Business Produced by Medical Alliance Partnership

EXHIBIT M

Business Produced by IndependenceCare Underwriting Services – Tennessee LLC

EXHIBIT N

Business Produced by Olde City Underwriters

EXHIBIT O

Business Produced by ASG Risk Management, Inc.

EXHIBIT P

Business Produced by J.B. Murphy Associates LLC

EXHIBIT Q

Business Providing Benefits under the New York State Disability Benefits Law 

EXHIBIT R

Business Produced by Niagara Re, Inc.

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EXHIBIT S

Business Produced by the Company

EXHIBIT T

Business Produced by Cap Risk LLC 

EXHIBIT U

Business Produced by Paradigm Insurance Group, Inc.

EXHIBIT V

Business Produced by Insurers Administrative Corporation

EXHIBIT W

Business Produced by Health Plan Administrators, Inc.

EXHIBIT X

Business Produced by Fringe Insurance Benefits, Inc.

EXHIBIT Y

Business Produced by Employers Direct Health, Inc.

EXHIBIT Z

Business Produced by Phoenix Excess Risk Underwriters, LLC

EXHIBIT AA

Business Produced by EyeMed VISION CARE, LLC

EXHIBIT BB

Business Produced by Group Benefit Services, Inc.

EXHIBIT CC

Business Produced by Insurance Mass Marketing Systems, Inc.

EXHIBIT DD

Business Produced by Alliance Underwriters, LLC

EXHIBIT EE

Business Produced by FCE Benefits

EXHIBIT FF

Company’s liability as defined in Section 1 of Exhibit FF

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Article II  -

PARTIES TO THE AGREEMENT

This Agreement is solely between the Company and the Reinsurer.  Performance of the obligations of each party under this Agreement shall be rendered solely to the other party. However, if the Company becomes insolvent, the liability of the Reinsurer shall be modified to the extent set forth in the article entitled INSOLVENCY OF THE COMPANY.  In no instance shall any insured of the Company or any claimant against an insured of the Company have any rights under this Agreement.  This Agreement shall be binding upon the parties hereto, their heirs and successors, if any.

Article III  -

BASIS OF REINSURANCE

Automatic reinsurance as provided in this Agreement shall apply to benefits payable under all Policies issued according to the rates and underwriting rules in use by the Company and approved by the Reinsurer.  Any subsequent modifications must be acceptable to both the Company and the Reinsurer.

Subject to any limitations listed in this Article, the liabilities of the Reinsurer to the Company shall be determined in accordance with the Company's original Policies issued in connection with the coverage giving rise to reinsurance.  Upon request, the Company shall furnish the Reinsurer with a copy of the Policies under which reinsurance may be ceded under this Agreement.  The Company shall advise the Reinsurer of any changes in such Policy form that would increase or adversely affect the Reinsurer's liability.  The Reinsurer's approval shall be required before any such changes take effect.  The Reinsurer shall have the right to accept or exclude the change from coverage under the terms and conditions of this Agreement.  However, the Reinsurer must provide coverage and may not disapprove a change in such Policy form if such change is required for the Company to comply with legal requirements.

The Company will have final underwriting and binding authority on all business produced and covered hereunder.

Article IV  -

GENERAL DEFINITIONS

(a)

The term “Policy” or “Policies” shall mean aggregate and specific stop loss insurance, provider excess insurance, and any other contracts issued to managed care organizations. 

(b)

The term “Agreement Year” shall have the meaning set forth in the applicable Exhibit.

Article V  -

TERRITORY

This Agreement shall only apply to Policies issued to insureds domiciled in the United States of America, its territories and possessions, Puerto Rico, and the District of Columbia.

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Article VI  -

REINSURANCE PREMIUM REPORTS AND REMITTANCES

The monthly reinsurance premium due the Reinsurer for reinsurance provided under this Agreement shall be as set forth in the section entitled REINSURANCE PREMIUM of each Exhibit attached hereto. The Reinsurer’s proportionate share of the Gross Collected Premium shall equal the fixed proportion percentage as indicated in Section 4 of each Exhibit.

Within 60 days after the end of each month, the Company shall report the premium due the Reinsurer, segregated by Exhibit and by Agreement Year.  The premium due the Reinsurer shall be submitted with this report.

Article VII  -

ACCOUNTS AND SETTLEMENTS

The Company will furnish the Reinsurer with a summary account within 60 days after the close of each month showing, for each Exhibit and each Agreement Year:

(a)

Gross Written Premium

Premium for the business reinsured by the applicable Exhibit as stated in the Policy;

(b)

Gross Collected Premium

Gross Written Premium remitted to the Company to date;

(c)

Return Premium  

Any premium returned to the employer group excluding premium refund.

(d)

Net Risk Premium  

Gross Collected Premium less all Return Premium less ceding allowance.

(e)

Company Fee

Fee on Gross Collected Premium collected for each Agreement Year;

(f)

Losses and Loss Adjustment Expenses

Losses and loss adjustment expenses paid by the Company;

(g)

Claims Fund Balances

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Net Risk Premium withheld for the funding of losses between monthly settlement periods in accordance with the section entitled CLAIMS FUND of the applicable Exhibit;

(h)

Incurred Losses  

Losses and Loss Adjustment Expenses plus Loss Development Reserves plus Outstanding Loss Reserves.

(i)

Interest Earned on Claims Fund

Investment income credited to the Reinsurer by the Company for its proportional share of case balances held by the Company in accordance with the section entitled CLAIMS FUND of the applicable Exhibit.  For purposes of this Agreement, interest income will be determined by the actual interest earned on the account;

(j)

Loss Development Reserves

Reserves, including incurred but not reported losses for the current Agreement Year;

(k)

Outstanding Loss Reserves

Reserves for losses in the course of settlement and pended for the current Agreement Year;

In addition, the Company shall furnish such other information as may be required by the Reinsurer for the completion of the Reinsurer's monthly and annual statements.

Article VIII  -

RESERVED

Article IX  -

CLAIMS

All claims paid by the Company within the terms of its Policies, and otherwise within the terms of this Agreement, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay its proportion of each such claim in accordance with the provisions of the applicable Exhibit, and strictly subject to the terms and conditions of this Agreement.

In the event of a claim against a Policy reinsured hereunder, the Reinsurer shall be liable for a share of claims adjustment expenses incurred by the Company in connection therewith proportionate to the Reinsurer's share of the loss (including litigation expenses and interest on judgments, but not including office expenses or salaries of the Company's regular employees).

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Recoveries from subrogation, coordination of benefits, or similar means other than recoveries from underlying quota share reinsurance the Company may purchase on the amount it retains under this Agreement, shall first be deducted in determining the amount of loss subject to this Agreement.

In no event, except as for in the following sentence, shall the Reinsurer participate in ex gratia payments made by the Company.  The Company shall notify the Reinsurer of its intent to make an ex gratia payment as soon as practical.  The Reinsurer then has the obligation to notify the Company, in writing, of its decision to concur or not concur in the Company's intention.  If the Reinsurer concurs with the Company's intention, 100% of the ex gratia payment shall be considered a subject loss hereunder, and payment thereof will be shared by the Company and the Reinsurer in the proportions which govern this Agreement.

Article X  -

CLAIMS AUDIT

The Company and the Reinsurer may, at any time, elect to appoint an independent auditor. This appointment shall be subject to approval by the Reinsurer.  Upon approval, the Reinsurer agrees to pay its proportionate share of the cost of such audit as well as its proportionate share of the final claim.

In the event that a claim may be recoverable hereon and the Company does not elect to appoint an independent auditor, the Reinsurer reserves the right to appoint an independent auditor to investigate the potential claim.  Should the Reinsurer appoint an independent auditor, all costs of this audit shall be borne by the Reinsurer.  The Company agrees that the amount of any claim subsequently recovered upon shall be based entirely on the audited figures irrespective of whether or not the independent auditor has reduced the initial claim.

Article XI  -

OFFSET

The Company or the Reinsurer shall have, and may exercise at any time and from time to time, the right to offset any balance or balances, whether on account of premiums or on account of losses or otherwise, due from one party to the other under the terms of this Agreement or, in the event of the Insolvency of the Company.  However, in the event of the insolvency of either party hereto, offset will only be allowed in accordance with applicable state law.

Article XII  -

INSPECTION OF RECORDS

The Company shall allow the Reinsurer to inspect, at reasonable times, the records of the Company relevant to the business reinsured under this Agreement, including the Company's files concerning claims, losses, or legal proceedings which involve or are likely to involve the Reinsurer.  The Reinsurer's right of inspection shall continue after the termination of this Agreement.

Article XIII  -

EXTRA CONTRACTUAL OBLIGATIONS

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In no event, except as for in the following paragraph, shall the Reinsurer participate in punitive or compensatory damages or statutory penalties (hereinafter called "Extra Contractual Obligations") which are awarded against the Company as a result of an act, omission, or course of conduct committed by or on behalf of the Company in connection with the insurance reinsured under this Agreement.

The Company shall notify the Reinsurer of any impending claim likely to involve Extra Contractual Obligations as soon as practical after the Company has been notified of such claim, and such notification shall include a suggested course of action or inaction for the Reinsurer's review.  The Reinsurer then has the obligation to notify the Company, in writing, of its decision to concur or not concur in the Company's suggested actions to be taken, or not taken.  If the Reinsurer concurs with the Company's action, 100% of the Extra Contractual Obligations shall be added to the Company's loss, if any, under the Policy involved, and payment of such awarded damages will be shared by the Company and the Reinsurer in the proportions which govern this Agreement.

The Company shall not participate in extra-contractual damages which are awarded as a result of an act, omission, or course of conduct committed solely by the Reinsurer in connection with the insurance reinsured under this Agreement.

For purposes of this provision, the following definitions shall apply:

(a)

"Punitive damages" are those damages awarded as a penalty, the amount of which is not governed nor fixed by statute.

(b)

"Statutory penalties" are those amounts which are awarded as a penalty but fixed in amount by statute.

(c)

"Compensatory damages" are those amounts awarded to compensate for the actual damages sustained and are not awarded as a penalty nor fixed in amount by statute.

The language of this Article shall be deemed effective only as and to the extent permitted by the law of any applicable jurisdiction.

An Extra Contractual Obligation shall be deemed to have occurred on the same date as the loss covered or alleged to be covered under the Policy.

Notwithstanding anything stated herein, this Agreement shall not apply to any Extra Contractual Obligation incurred by the Company as a result of any fraudulent and/or criminal act by a member of the board of directors, or by any officer, director or other employee of the Company acting individually or collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense, or settlement of any claim covered hereunder.

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Article XIV  -

ERRORS AND OMISSIONS

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 delay, error or omission will be rectified as soon as possible after discovery.

Article XV  -

CURRENCY

All retentions and limits hereunder are expressed in United States dollars and all premium and loss payments shall be made in United States currency.

Article XVI  -

INSOLVENCY OF THE COMPANY

In the event of Insolvency of the Company, all reinsurance 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 on the Company under the Policy or Policies reinsured 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 insolvent Company shall given written notice of 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 statutory successor.

Article XVII  -

ARBITRATION

All unresolved differences of opinion between the Company and the Reinsurer relating to this Agreement, including its formation and validity, shall be submitted to arbitration consisting of one arbitrator chosen by the Company, one arbitrator chosen by the Reinsurer, and a third arbitrator chosen by the first two arbitrators.

The party demanding arbitration shall communicate its demand for arbitration to the other party by registered or certified mail, identifying the nature of the dispute and the name of its arbitrator, and the other party shall then be bound to name its arbitrator within 60 days after receipt of the demand.

Failure or refusal of the other party to so name its arbitrator shall empower the demanding party to name the second arbitrator.  If the first two arbitrators are unable to agree upon a third arbitrator after the second arbitrator is named, each arbitrator shall name three candidates, two of whom shall be declined by the other arbitrator, and the choice shall be made between the two remaining candidates by drawing lots.  The arbitrators shall be impartial and shall be active or retired officers of life and/or health insurance or reinsurance companies.

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The arbitrators shall adopt their own rules and procedures and are relieved from judicial formalities.  In addition to considering the rules of law and the customs and practices of the insurance and reinsurance business, the arbitrators shall make their award with a view to effecting the intent of this Agreement.

The decision of the majority of the arbitrators shall be in writing and shall be final and binding upon the parties.

Each party shall bear the cost of its own arbitrator and shall jointly and equally bear with the other party the expense of the third arbitrator and other costs of the arbitration.  In the event both arbitrators are chosen by one party, the fees of all arbitrators shall be equally divided between the parties.

The arbitration shall be held in New York at the times agreed upon by the arbitrators.

Article XVIII  

SEVERABILITY

If any part, term, or provision of this Agreement shall be held void, illegal, or unenforceable, the validity of the remaining portion or portions shall not be affected thereby.

Article XIX  -

CONFIDENTIALITY

Except as otherwise provided herein, the Company and the Reinsurer each agree that all information communicated to it by the other, whether before the effective date or during the term of this Agreement, shall be used only for purposes of this Agreement, shall be received in strict confidence, and that no such information shall be disclosed by the recipient party, its agent or employees without the prior written consent of the other party.  Each party agrees to take all reasonable precautions to prevent the disclosure to outside parties of such information, except as may be necessary by reason of legal, accounting or regulatory requirements beyond the reasonable control of the Company or the Reinsurer as the case may be and except for disclosure to the Reinsurer's retrocessionaires.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate,

this 11th day of November 2007,

STANDARD SECURITY LIFE INSURANCE

COMPANY OF NEW YORK

/s/ David T. Kettig

Authorized Signatory

Attest: /s/ Alison Galante

and this 11th day of November 2007,

INDEPENDENCE AMERICAN INSURANCE

COMPANY

F.K.A FIRST STANDARD SECURITY 

INSURANCE COMPANY

/s/ David T. Kettig

Authorized Signatory

Attest: /s/ Alison Galante

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EXHIBIT A

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by CFE Management LLC.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each January 1st through December 31st.  The first Agreement Year under this Agreement shall be the period from January 1, 2002 through December 31, 2002.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on January 1, 2002, and remain in force for until December 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of December 31, 2002 or any December 31 thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

A-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [1/1/02 to 12/31/02 5%, 1/1/03 to 12/31/03 15%]  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

A-2

 

EXHIBIT B

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by Cox Insurance Group.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each January 1st through December 31st.  The first Agreement Year under this Agreement shall be the period from January 1, 2002 through December 31, 2002.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on January 1, 2002, and remain in force for until December 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of December 31, 2002 or any December 31 thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

B-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [1/1/02 to 12/31/02 5%, 1/1/03 to 12/31/04 15%, 1/1/05 to 12/31/07 25%].  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

B-2

 

EXHIBIT C

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by IndependenceCare Underwriting Services – Minneapolis LLC.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each January 1st through December 31st.  The first Agreement Year under this Agreement shall be the period from January 1, 2002 through December 31, 2002.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on January 1, 2002, and remain in force for until December 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of December 31, 2002 or any December 31 thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

C-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [1/1/02 to 12/31/02 10%, 1/1/03 to 12/31/04 15%, 1/1/05 to 12/31/06 25%, 1/1/08 to12/31/09 30%].  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

C-2

 

EXHIBIT D

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by IndependenceCare Underwriting Services – Southwest L.L.C.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each January 1st through December 31st.  The first Agreement Year under this Agreement shall be the period from January 1, 2002 through December 31, 2002.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on January 1, 2002, and remain in force until December 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of December 31, 2002 or any December 31 thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

D-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [1/1/02 to 12/31/02 10%, 1/1/03 to 12/31/04 15%, 1/1/05 to 12/31/06 25%].  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

D-2

 

EXHIBIT E

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by National Underwriting Services, Inc.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each January 1st through December 31st.  The first Agreement Year under this Agreement shall be the period from January 1, 2002 through December 31, 2002.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on January 1, 2002, and remain in force until December 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of December 31, 2002 or any December 31 thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

E-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [1/1/02 to 12/31/02 5%, 1/1/03 to 12/31/04 15%, 1/1/05 to 12/31/08 25%]. 

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

E-2

 

EXHIBIT F

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by Risk Assessment Strategies.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each January 1st through December 31st.  The first Agreement Year under this Agreement shall be the period from January 1, 2002 through December 31, 2002.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on January 1, 2002, and remain in force for until December 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of December 31, 2002 or any December 31 thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

F-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [1/1/02 to 12/31/02 5%, 1/1/03 to 12/31/03 15%, 1/1/04 to 12/31/04 25%, 1/1/05 to 12/31/05 28%, 1/1/06 to 12/31/11 30%; (except for business produced on behalf of Peoples Benefit Life Insurance Company which proportion shall be 20% effective 7/1/02 to 12/31/04, 23% effective 1/1/05 to 12/31/11)].  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

F-2

 

EXHIBIT G

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by TRU Services LLC.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each January 1st through December 31st.  The first Agreement Year under this Agreement shall be the period from January 1, 2002 through December 31, 2002.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on January 1, 2002, and remain in force until December 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of December 31, 2002 or any December 31 thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

G-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [1/1/02 to 12/31/02 5%, 1/1/03 to 12/31/12 15% (except for 1) business produced on behalf of Blue Shield of California which proportion shall be 11.25% effective 1/1/07 to 12/31/07, and 10%, effective 1/1/08 to 8/31/09 and 2) business produced by Gerber Life Ins. Co. which proportion shall be 10% effective 1/1/11 to 12/31/12 ]. 

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

G-2

 

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

G-3

 

EXHIBIT H

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by IHC Risk Solutions, LLC as  successor to Voorhees Risk Management, LLC d.b.a. Marlton Risk Group, Inc.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each January 1st through December 31st.  The first Agreement Year under this Agreement shall be the period from March 1, 2002 through February 28, 2003. The second Agreement Year under this Exhibit shall be the period from March 1, 2003 to December 31, 2003.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on March 1, 2002, and remain in force until December 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of December 31, 2003 or any December 31st thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

H-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [3/1/02 to 2/28/03 12.50%, 3/1/03 to 12/31/04 15%, 1/1/05 to 12/31/12 30% (except for business produced on behalf of Peoples Benefit Life Insurance Company which proportion shall be 15% effective 9/1/02 to 8/31/03.  For business produced by Fidelity Security Life Insurance Company such proportion shall be 15% effective 9/1/02 to 8/31/03].  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

H-2

 

EXHIBIT  I

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by Risk Based Solutions.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each July 1st through June 30th.  The first Agreement Year under this Agreement shall be the period from July 1, 2002 through June 30, 2003.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on July 1, 2002, and remain in force until June 30, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of June 30, 2003 or any June 30th thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

I-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 15%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [7/1/02 to 6/30/04 15%]. 

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

I-2

 

EXHIBIT  J

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by Majestic Underwriters, Inc.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each  July 1st  through June 30th .  The first Agreement Year under this Agreement shall be the period from  July 1, 2002 through June 30, 2003.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on July 1, 2002, and remain in force until December  31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of  June 30, 2003 or at any  December 31st  thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

J-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [7/1/02 to 6/30/05 15%, 7/1/05 to 12/31/11 20%, except for business produced by TIG Insurance Company which proportion shall be 15% effective 1/1/02 to 12/31/02]. 

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

J-2

 

EXHIBIT  K

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by Medical Excess Underwriters, LLC.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each February 1st through January 31st.  The first Agreement Year under this Agreement shall be the period from February 1, 2002 through January 31, 2003.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on February 1, 2002, and remain in force until January 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of January 31, 2003 or any January 31 thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

K-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [2/1/02 to 1/31/03 5%, 2/1/03 to 12/31/06 15%]  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

K-2

 

EXHIBIT  L

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by Medical Alliance Partnership.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each January 1st through December 31st.  The first Agreement Year under this Agreement shall be the period from January 1, 2002 through December 31, 2002.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on January 1, 2002, and remain in force until January 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of December 31, 2002 or any December 31 thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

L-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [1/1/02 to 12/31/02 5%, 1/1/03 to 12/31/04 15%, 1/1/05 to 12/31/06 25%] 

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

L-2

 

EXHIBIT  M

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by IndependenceCare Underwriting Services - Tennessee LLC.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each January 1st through December 31st.  The first Agreement Year under this Agreement shall be the period from January 1, 2002 through December 31, 2002.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on January 1, 2002, and remain in force until December 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of December 31, 2002 or any December 31 thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

M-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [1/1/02 to 12/31/02 10%, 1/1/03 to 12/31/04 15%, 1/1/05 to 12/31/07 25%] 

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

M-2

 

EXHIBIT  N

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by Olde City Underwriters.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each March 1st through February 28th (February 29th in leap years).  The first Agreement Year under this Agreement shall be defined as the period from March 1, 2002 through February 28, 2003.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on March 1, 2002, and remain in force until February 28, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of February 28, 2003 or any February 28th  (or February 29th in leap years) thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

N-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 15%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [3/1/02 to 2/28/03 12.5%]  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

N-2

 

EXHIBIT  O

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by ASG Risk Management, Inc.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each June1st through May 31st.  The first Agreement Year under this Agreement shall be defined as the period from June 1, 2004 through May 31, 2005.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on June 1, 2004, and remain in force until May 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of May 31, 2005 or any May 31st thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

O-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [6/1/04 to 5/31/09 20%] 

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

O-2

 

EXHIBIT  P

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by J. B. Murphy Associates LLC.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each May 1st through April 30th.  The first Agreement Year under this Agreement shall be defined as the period from May 1, 2004 through April 30, 2005.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on May 1, 2004, and remain in force until December  31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of any December 31st thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

P-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [5/1/04 to 12/31/09 30%] 

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

P-2

 

EXHIBIT  Q

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Notwithstanding anything in the Agreement to the contrary, the following shall apply to business subject to this Exhibit.

 

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company’s liability in connection with policies providing benefits under the New York State Disability Benefits Law.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

(a)

The term “Agreement Year” shall mean the twelve consecutive months commencing each July 1st through June 30th.  The first Agreement Year under this Agreement shall be defined as the period from July 1, 2004 through June 30, 2005.

(b)

The term “Policy” or “Policies” shall mean policies covering benefits under the New York State Disability Benefits Law (“DBL”). 

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on July 1, 2004, and remain in force until June 30, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of June 30, 2005 or any June 30th thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

Q-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

On a quarterly basis, the Reinsurer obligates itself to accept a [up to 30%] quota share cession of all incurred losses, including Incurred But Not Reported (IBNR) claims, and any adjustments made thereto as determined by the Company for business covered herein as follows: [7/1/04 to 6/30/12 20%].  Within 15 days following the end of each quarter, the Company will supply the Reinsurer with a report showing the incurred losses and IBNR to date. 

Section 5 – ACCOUNTS AND SETTLEMENTS

The Company will furnish the Reinsurer with a summary account within 15 days after the close of each month showing:

(a)

Gross Collected Premium

Gross Premium remitted to the Company to date;

(b)

Incurred Losses  

Losses and Loss Adjustment Expenses plus Loss Development Reserves plus Outstanding Loss Reserves.

(d)

Loss Development Reserves

Reserves, including incurred but not reported losses for the current Agreement Year;

(e)

Outstanding Loss Reserves

Reserves for losses in the course of settlement and pended for the current Agreement Year;

In addition, the Company shall furnish such other information as may be required by the Reinsurer for the completion of the Reinsurer's monthly and annual statements.

Q-2

 

Section 6  -  REINSURANCE PREMIUM, REPORTS

This Section 6 amends in its entirety Article VI – Reinsurance Premium Reports and Remittances.

On a quarterly basis, the Company shall pay to the Reinsurer its quota share of the premium collected for the business covered herein.  In addition, the Company shall report to the Reinsurer all premiums that are due but not yet collected.  Within 15 days following the end of each quarter, the Company will supply the Reinsurer with a report showing all premium collected as well as all premium due. 

Section 7  -  CEDING ALLOWANCE

The Reinsurer shall allow the sum of (i) a ceding allowance to the Company of no more than 7% of Gross Collected Premium, (ii) taxes and assessments of 4% of Gross Collected Premium (or actual if higher) and (iii) actual Producer commissions paid by the Company.  

Q-3

 

EXHIBIT  R

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by Niagara Re, Inc.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each January 1st through December 31st.  The first Agreement Year under this Agreement shall be defined as the period from January 1, 2005 through December 31, 2005.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on January 1, 2005, and remain in force until December 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of December 31, 2005 or any December 31st thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

R-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [1/1/05 to 12/31/09 25%]  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

R-2

 

EXHIBIT  S

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by the Company.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each January 1st through December 31st.  The first Agreement Year under this Agreement shall be defined as the period from January 1, 2005 through December 31, 2005.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on January 1, 2005, and remain in force until December 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of December 31, 2005 or any December 31st thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

S-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [1/1/05 to 12/31/06 25%].

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

S-2

 

EXHIBIT  T

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by the Cap Risk LLC.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each April 1st through December 31st.  The first Agreement Year under this Agreement shall be defined as the period from April 1, 2002 through March 31, 2003.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on April 1, 2002, and remain in force until December 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of December 31, 2005 or any December 31st thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

T-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [4/1/02 to 3/31/03 10%, 4/1/03 to 12/31/06 15%].  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

T-2

 

EXHIBIT  U

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by the Paradigm Insurance Group, Inc.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each April 1st through March 31st.  The first Agreement Year under this Agreement shall be defined as the period from April 1, 2002 through March 31, 2003.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on April 1, 2002, and remain in force until December 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of the end of any Agreement Year thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

U-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 20%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [4/1/02 to 2/28/03 15%, 3/1/03 to 2/29/04 20%] .

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

U-2

 

EXHIBIT V

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business produced by IHC Health Solutions, Inc. as successor to Insurers Administrative Corporation.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

(a)

The term “Agreement Year” shall mean such period as the parties may from time to time determine; provided the first Agreement Year under this Agreement shall be the period from January 1, 2005 through December 31, 2005.

(b)

The term “Policy” or “Policies” shall mean policies providing employer small group major medical benefits.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on January 1, 2005, and remain in force until December  31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of the end of any Agreement Year  thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the 

V-1

 

Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [1/1/05 to 12/31/21 10% (except for (1) MUST I business which proportion shall be 15% effective 1/1/09 to 12/31/12, and (2) business produced by Companion Life Insurance Company which proportion shall be 5% effective 1/1/06 to 12/30/12)].  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

V-2

 

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all dividends, commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

V-3

 

EXHIBIT W

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by Health Plans Administrators, Inc.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

(a)

The term “Agreement Year” shall mean such period as the parties may from time to time determine; provided the first Agreement Year under this Agreement shall be the period from March 1, 2005 through February 28, 2006.

(b)

The term “Policy” or “Policies” shall mean policies providing individual short term major medical benefits.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on March 1, 2005, and remain in force until February  28, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of the end of any Agreement Year  thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the 

W-1

 

Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [3/1/05 to 12/31/12 10%].  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all dividends, commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

W-2

 

EXHIBIT X

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by Fringe Insurance Benefits, Inc.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

(a)

The term “Agreement Year” shall mean such period as the parties may from time to time determine; provided the first Agreement Year under this Agreement shall be the period from July 1, 2006 through December 31, 2008.

(b)

The term “Policy” or “Policies” shall mean policies providing group limited benefit medical benefits.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on July 1, 2006, and remain in force until December 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of the end of any Agreement Year  thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the 

X-1

 

Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [7/1/06 to 12/31/12 10%].  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all dividends, commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

X-2

 

EXHIBIT Y

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by Employers Direct Health, Inc.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

(a)

The term “Agreement Year” shall mean such period as the parties may from time to time determine; provided the first Agreement Year under this Agreement shall be the period from June  1, 2006 through December 31, 2006.

(b)

The term “Policy” or “Policies” shall mean policies providing group limited benefit medical benefits, aggregate and specific stop loss insurance, provider excess insurance, and any other contracts issued to managed care organizations.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on June 1, 2006, and remain in force until December  31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of the end of any Agreement Year  thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

Y-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 50%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [10/1/07 to 12/31/12 50%].  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all dividends, commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

Y-2

 

EXHIBIT  Z

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by the Phoenix Excess Risk Underwriters, LLC.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean the twelve consecutive months commencing each January 1st through December 31st.  The first Agreement Year under this Agreement shall be defined as the period from January 1, 2006 through December 31, 2006.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on January 1, 2006, and remain in force until December 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of December 31, 2006 or any December 31st thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

Z-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [1/1/06 to 12/31/12 15%; except for new and renewal business produced by Health Cost Solution utilizing the CIGNA network which proportion shall be 30%, effective 1/1/12 to 12/31/12].  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Z-2

 

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

Z-3

 

EXHIBIT AA

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by EyeMed VISION CARE, LLC.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

(a)

The term “Agreement Year” shall mean such period as the parties may from time to time determine; provided the first Agreement Year under this Agreement shall be the period from August 1, 2006 through December 31, 2007.

(b)

The term “Policy” or “Policies” shall mean policies providing group vision care benefits.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on August 1, 2006, and remain in force until December 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of the end of any Agreement Year  thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

AA-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 50%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [8/1/06 to 12/31/12 5%].  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all dividends, commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

AA-2

 

EXHIBIT BB

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by Group Benefit Services, Inc.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean such period as the parties may from time to time determine; provided the first Agreement Year under this Agreement shall be the period from April 1, 2008 through April 1, 2009.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on April 1, 2008, and remain in force until April 1, 2009, but the Reinsurer shall have the right to terminate this Exhibit as of the end of any Agreement Year  thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

BB-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [4/1/08 to 4/1/09 10%].  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all dividends, commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

BB-2

 

EXHIBIT CC

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by Insurance Mass Marketing Systems, Inc.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean such period as the parties may from time to time determine; provided the first Agreement Year under this Agreement shall be the period from October 1, 2007 through December 31, 2008.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on October 1, 2007, and remain in force until December 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of the end of any Agreement Year  thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

CC-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [[0%]].  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all dividends, commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

CC-2

 

EXHIBIT DD

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by Alliance Underwriters, LLC.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean such period as the parties may from time to time determine; provided the first Agreement Year under this Agreement shall be the period from January 1, 2011 through December 31, 2011.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on January 1, 2011, and remain in force until December 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of the end of any Agreement Year  thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

DD-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [1/1/11 to 12/31/11 15%].  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all dividends, commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

DD-2

 

EXHIBIT EE

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with business directly produced by FCE Benefits.

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean such period as the parties may from time to time determine; provided the first Agreement Year under this Agreement shall be the period from February 1, 2011 through December 31,  2012.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on February 1, 2011, and remain in force until December 31, 2014, but the Reinsurer shall have the right to terminate this Exhibit as of the end of any Agreement Year  thereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

EE-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of [up to 30%] of the Company's loss on the first $1,000,000 on behalf of the Company under each and every Policy subject to this Agreement, as follows: [2/1/11 to 12/31/12 10%].  

Section 5  -  REINSURANCE PREMIUM

The Reinsurer shall receive its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year. 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

Section 7  -  CEDING ALLOWANCE

Shall be as agreed to by the Reinsurer and the Company.  The ceding allowance includes provision for all dividends, commissions and taxes and all other expenses of whatever nature, except loss adjustment expenses.

EE-2

 

EXHIBIT FF

Attached to and made a part of

Agreement of Reinsurance

(the “Agreement”)

___________________________________________________________________________

Section 1  -  BUSINESS SUBJECT TO THIS EXHIBIT

This Exhibit shall solely apply to the Company's liability in connection with individual or group, fully insured or excess, medical, health, disability, vision, or dental insurance policies (“Policies” and each a “Policy”) either (i) issued by the Company or (ii) for which the Company is or becomes liable under one or more contracts of insurance or reinsurance.    

Section 2  -  DEFINITIONS

Except as otherwise defined in this Exhibit, defined terms used herein shall have the meanings ascribed thereto in the Agreement.

The term “Agreement Year” shall mean such period as the parties may from time to time determine; provided the first Agreement Year under this Agreement shall be the period from August 1, 2012 through July 31, 2013.

Section 3  -  COMMENCEMENT AND TERMINATION

This Exhibit shall apply to Policies issued or renewed by the Company or its representative at or after 12:01 A.M. Eastern Standard Time on August 1, 2012, and remain in force until December 31, 2019, but the Reinsurer shall have the right to terminate this Exhibit as of the end of any Agreement Year hereafter by giving at least 90 days written notice by certified or registered mail.

In the event either party terminates this Exhibit in accordance with the paragraph above, the Reinsurer shall participate in all Policies ceded within the terms of this Exhibit, including those written or renewed by the Company after receipt of notice of cancellation but prior to termination, and shall remain liable for all cessions in force at termination of this Exhibit.  However, the liability of the Reinsurer shall cease with respect to losses occurring subsequent to the first anniversary, natural expiration or cancellation of each Policy ceded, but not to extend beyond twelve months after such termination.

If any Policy issued by the Company and covered by this Exhibit is terminated, the reinsurance shall also be terminated with respect to such Policy, subject, however, to any liability of the Company under the terminated Policy not to extend beyond the contractual obligations of such Policy.

FF-1

 

In the event of non-payment of Reinsurance Premiums due under this Exhibit, the Reinsurer shall have the right to terminate reinsurance under this Exhibit.  If the Reinsurer elects to exercise its right of termination under such conditions, i.e., for nonpayment of premiums only, the Reinsurer shall give the Company 30 days' prior written notice by certified or registered mail of its intention to terminate such reinsurance.  If all Reinsurance Premiums in arrears, including any which may become due during the 30 day period are not received by the Reinsurer before the expiration of such period, this Exhibit will be considered terminated on the date for which premiums were last paid, and the liability of the Reinsurer shall cease with respect to losses occurring after such date.

Section 4  -  RETENTION AND LIMIT

The Reinsurer will accept a fixed proportion of up to 50% of the Company's loss on the first $1,250,000 on behalf of the Company under each and every Policy subject to this Exhibit, as follows:

A.

Policies issued by the Company in respect of business produced by:

1.

TRU Services, LLC

[15.0%]

2.

JB Murphy Associates LLC

  

[00.0%]

3.

IHC Risk Solutions, LLC

[30.0%]

4.

IHC Health Solutions, Inc.

[10.0%]

5.

IHC Administrative Services, Inc.

[10.0%]

6.

Health Plan Administrators, Inc.

[10.0%]

7.

Fringe Insurance Benefits, Inc.

[10.0%]

8.

Employers Direct Health, Inc.

[50.0%]

9.

Phoenix Excess Risk Underwriters, LLC

[terminated 12/31/13]

10.

EyeMed Vision Care, LLC

[5.00%]

11.

FCE Benefit Administrators, Inc.

[10.0%].

B.

Policies issued by the Company that provide benefits under the New York State Disability Benefits Law [20%].

C.

Policies for which the Company is or becomes liable under one or more contracts of insurance or reinsurance, as follows:

1.

Specific and Aggregate Medical Benefits Quota-Share Treaty Reinsurance Agreement, dated effective July 1 , 2012, by and among, inter alia, American Fidelity Assurance Company, BlueCross BlueShield of Mississippi and Standard Security Life Insurance Company of New York in respect of liability arising out of policies underwritten by TRU Services, LLC on behalf of American Fidelity Assurance Company or BlueCross BlueShield of Mississippi and administered by BlueCross BlueShield of Mississippi: [00.0%].

2.

Specific and Aggregate Medical Benefits Quota-Share Treaty Reinsurance Agreement, dated effective July 1 , 2012, by and among, inter alia, American Fidelity Assurance Company and Standard Security Life Insurance Company of 

FF-2

 

New York in respect of liability arising out of policies underwritten by TRU Services, LLC on behalf of American Fidelity Assurance Company and administered by BlueCross BlueShield of Mississippi: [10.0%].

3.

Specific and Aggregate Medical Benefits Quota-Share Treaty Reinsurance Agreement, dated effective January 1 , 2012, by and among, inter alia, American Fidelity Assurance Company and Standard Security Life Insurance Company of New York in respect of liability arising out of policies underwritten by TRU Services, LLC on behalf of American Fidelity Assurance Company: [15.0%].

4.

Specific and Aggregate Medical Benefits Quota-Share Treaty Reinsurance Agreement, dated effective January 1 , 2011, by and among, inter alia, Gerber Life Insurance Company and Standard Security Life Insurance Company of New York, as amended, in respect of liability arisiing out of policies underwritten by TRU Services, LLC on behalf of Gerber Life Insurance Company: [10.0%].

5.

Specific and Aggregate Medical Benefits Quota-Share Treaty Reinsurance Agreement, dated effective October 1, 2005, by and among, inter alia, Gerber Life Insurance Company and Standard Security Life Insurance Company of New York, as amended, in respect of liability arising out of policies underwritten by Phoenix Excess Risk Underwriters, LLC on behalf of Gerber Life Insurance Company: [terminated 12/31/13].

6.

Quota Share Reinsurance Contract – Companion Life Insurance Company, dated effective July 1, 2011, by and between Companion Life Insurance Company and Standard Security Life Insurance Company of New York, as amended, in respect of liability arising out of policies marketed and administered by IHC Health Solutions, Inc. on behalf of Companion Life Insurance Company: [10%].

Section 5  -  REINSURANCE PREMIUM AND CEDING ALLOWANCE

Within sixty (60) days of the close of each month, the Company shall pay the Reinsurer a reinsurance premium equal to  its proportionate share of the Gross Collected Premium received by the Company less all Return Premiums as respect Policies attaching during the Agreement Year and shall allow the Company a ceding commission allowance developed as follows:

Company fee:

up to 5.0% of the Reinsurer’s proportionate share of Gross Collected Premium

Manager/Administrator fee: up to 22% of the Reinsurer’s proportionate share of Gross Collected Premium annual average

Producer fee: up to 22% of the Reinsurer’s proportionate share of Gross Collected Premium annual average

Premium taxes and assessments: up to 2.75% of the Reinsurer’s share of Gross Collected Premium

FF-3

 

Section 6  -  CLAIMS FUND

The Company shall establish a Claims Fund account for each Agreement Year.  The Claims Fund account shall be funded by receiving monthly transfers of Net Risk Premium from the Premium account.  These transfers shall be in proportion to the split of risk between the Company and the Reinsurer.  If Net Risk Premium is deficient in any month, the Company will notify the Reinsurer of such deficiency and the Reinsurer shall remit sufficient amount into the Claims Fund account in order to bring the Claims Fund to its agreed upon amount.  The balance for this account shall be maintained at a level as determined by the Company.

Any interest earned and account charges incurred on this account shall be shared by the Company and the Reinsurer in proportion to their percentage of risk.

It is further agreed that in the event that the amount of Net Risk Premium in any given accounting period exceed the requirements of the Claims Fund account, such excess shall be forwarded by the Company to the Reinsurer according to the terms of this Agreement.

FF-4Exhibit 10.1

Exhibit 10.1

CONFIDENTIAL WAIVER AND RELEASE AGREEMENT

This Confidential Waiver and Release Agreement (“Confidential Waiver and Release”) is entered into by and between Kenneth Todd Evans (“Associate”) and Aaron’s, Inc. (the “Company”).  The term “Party” or “Parties” as used herein shall refer to Associate, the Company or both, as may be appropriate.  This Confidential Waiver and Release is entered into in accordance with the terms of the Executive Severance Pay Plan effective February 1, 2014 (“Executive Severance Plan”).
1.Last Day of Employment.  Associate's last day of employment with the Company is March 7, 2014 (“Termination Date”).  As of Associate’s Termination Date, Associate is relieved of all further duties and responsibilities and is no longer authorized to transact business or incur any expenses, obligations, or liabilities on behalf of Employer.  
2.    Consideration/Severance Pay Benefits.  In consideration for signing this Confidential Waiver and Release on or after Associate’s last day of employment and complying with its terms, and provided Associate does not subsequently revoke this Confidential Waiver and Release within the allotted time, the Company agrees to the following, in accordance with the Executive Severance Plan:
a.    Salary Continuation Benefits.  The Company shall continue to pay Associate his Annual Base Salary in the gross amount of $300,000.00, less applicable deductions for federal, state and local withholding and other taxes, for a period of 12 months following his Termination Date.  These salary continuation benefits shall be paid in accordance with the Company’s standard payroll schedule for the payment of base salary to executives, in substantially equal installments over a period of 12 months.  Payment will begin on the sixtieth (60th) day following Associate’s termination of employment, with a lump sum catch-up payment made at that time in an amount equal to the aggregate amount of payments that would have been paid through such date had payments commenced on Associate’s Termination Date. 
b.    COBRA.  The Company will pay Associate a lump sum payment in the gross amount of $10,967.76 which is equal to the monthly COBRA Charge, multiplied by 12 (the number of months during which the Associate is provided salary continuation payments). The lump sum payment for the COBRA premiums will be paid to Associate on the sixtieth (60th) day following Associate’s Termination Date. 
c.    Outstanding Stock Options.      Associate shall be entitled to exercise 3,750 stock options that were vested and exercisable as of February 23, 2014, grant ID # 3076, provided that Associate exercises such options within 30 days of the date of execution of this Confidential Waiver and Release.  Any such options not exercised by that date shall terminate.  All other options and Restricted Stock Units (“RSUs”) awarded to Associate shall terminate and expire effective as of the Termination Date. 

CONFIDENTIAL WAIVER AND RELEASE AGREEMENT
Page 2

If Associate is rehired by the Company or an affiliate of the Company while receiving benefits pursuant to this Confidential Waiver and Release, any remaining, unpaid Severance Pay Benefits shall be forfeited upon rehire, and no additional benefits shall be paid.
3.    No Consideration Absent Execution of this Agreement.  Associate understands and agrees that Associate would not receive the consideration specified in Section 2 above, except for Associate’s execution of this Confidential Waiver and Release and the fulfillment of the promises contained herein.

4.    General Waiver and Release of Claims.
a.    Associate, on behalf of Associate, Associate’s heirs, executors, administrators, representatives, successors and assigns knowingly and voluntarily releases and forever discharges the Company, including its affiliates, subsidiaries, divisions, predecessors, insurers, successors and assigns, and their current and former Associates, attorneys, officers, directors, board members and agents thereof, both individually and in their business capacities, and their Associate benefit plans and programs and their administrators and fiduciaries (collectively, the “Released Parties”), to the full extent permitted by law, of and from any and all claims, known and unknown, asserted and unasserted, which Associate has or may have against the Released Parties as of the date of execution of this Confidential Waiver and Release including, but not limited to, any alleged violation of:
Title VII of the Civil Rights Act of 1964;

The Civil Rights Act of 1991;

Sections 1981 through 1988 of Title 42 of the United States Code, as amended;

The Associate Retirement Income Security Act of 1974 (“ERISA”) (except for any vested benefits under any tax qualified benefit plan);

The Immigration Reform and Control Act;

The Americans with Disabilities Act of 1990 and the Americans with Disabilities Amendments Act of 2008;

The Age Discrimination in Employment Act of 1967 (“ADEA”);

The Workers Adjustment and Retraining Notification Act;

The Occupational Safety and Health Act;

The Sarbanes-Oxley Act of 2002;

CONFIDENTIAL WAIVER AND RELEASE AGREEMENT
Page 3

The Dodd-Frank Wall Street Reform and Consumer Protection Act;

The Federal Company Whistleblower Protection Act, 12 USC § 1790b;

The Fair Credit Reporting Act;

The Family and Medical Leave Act;

The Equal Pay Act;

The Genetic Information Non-Discrimination Act;

Any state or local employment laws or regulations;

Any state or local anti-discrimination or civil rights statutes;

Any state or local anti-retaliation or whistleblower statutes; 

Any  state or local wage payment or wage and hour laws; 

Any other federal, state or local civil or human rights laws or any other federal, state or local laws, regulations or ordinances;

Any public policy, contract, tort or common law claims; or

Any basis for recovering costs, fees or other expenses including attorneys’ fees incurred in these matters.

b.    Notwithstanding the foregoing, the Parties agree that this general waiver and release does not apply to any claims Associate may have for worker’s compensation benefits, unemployment insurance or indemnification as provided by state law as well as any other claims that cannot lawfully be released. The Company does not make any representation as to Associate’s eligibility for such benefits. 
c.    Notwithstanding the foregoing, the Parties agree that this general waiver and release does not apply to any benefits to which Associate may be entitled under the Company’s short and long term disability plans. Associate’s eligibility for such benefits are determined by the terms of such plans and the Company does not make any representation as to Associate’s eligibility for such benefits.

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5.    Acknowledgements and Affirmations.
a.    Associate affirms that Associate has not filed or caused to be filed and is not a party to any claim, complaint or action against any of the Released Parties in any forum or form, except Associate’s claim for workers’ compensation benefits.
b.    Associate also affirms that Associate has been paid or has received all compensation, wages, bonuses, commissions and benefits to which Associate may be entitled and that no other compensation, wages, bonuses, commissions or benefits are due to Associate, except as specifically otherwise provided in this Agreement.
c.    Associate further affirms that Associate has no known workplace injuries or occupational diseases.
d.    Associate also affirms that Associate has not been retaliated against for reporting any allegations of wrongdoing by the Company or any of its officers, directors or Associates including, but not limited to, allegations of fraud.
e.    Associate further affirms that all of the Company’s decisions regarding Associate’s pay and benefits through the date of Associate’s execution of this Confidential Waiver and Release were not discriminatory based on age, disability, race, color, sex, religion, national origin, or any other classification protected by law.
f.    The Parties acknowledge that this Confidential Waiver and Release does not limit either Party’s right, where applicable, to file or participate in any investigative proceeding of any federal, state or local government agency.  To the extent permitted by law, Associate agrees that if such an administrative charge is made, Associate shall not be entitled to recover any individual monetary relief or other individual remedies.
6.    Confidentiality.
a.    Associate agrees that he will not publicize or disclose or cause or knowingly permit or authorize the publicizing or disclosure of the fact of this Confidential Waiver and Release, the contents of this Confidential Waiver and Release or of any negotiations leading up to it (hereafter collectively referred to as “Confidential Information”) to any person, firm, organization or entity of any and every type, public or private, for any reason, at any time, without the prior written consent of the Company unless otherwise compelled by operation of law.  The Parties acknowledge their intention that the provisions of this Section create no liability for disclosures made: (i) by persons from public information released prior to Associate’s execution of this Confidential Waiver and Release; (ii) to enforce the terms of this Confidential Waiver and Release; or (iii) as otherwise compelled by operation of law.
b.    The foregoing notwithstanding, Associate acknowledges that the confidentiality provisions of this Section constitute a material inducement to the Company to enter into this Confidential Waiver and Release and represent that Associate 

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has not directly or indirectly disclosed any Confidential Information to any third party prior to Associate’s execution of this Confidential Waiver and Release.
c.    Associate is permitted to disclose the Confidential Information to Associate’s attorneys, accountants and health care providers.  However, each such person to whom Associate discloses Confidential Information shall first agree to be bound to the confidentiality provisions hereof and any disclosure of Confidential Information by any such person so informed shall constitute a breach by Associate of Paragraph 6(a) above.  Associate also is permitted to disclose the amount of consideration set forth in Section 2 above, as required by law, to governmental taxing authorities.  In response to inquiries from third parties which would require the disclosure of Confidential Information, Associate only will state that Associate cannot talk about it.
d.    It is agreed that in the event of a breach of the provisions of this Section 6 by Associate, it would be impractical or extremely difficult to fix actual damages to the Company.  Therefore, Associate agrees that in the event of such a breach, Associate shall pay to the Company, as liquidated damages, and not as penalty, the sum of 25% of the amount paid in Section 2, per breach which represents reasonable compensation to the Company for the loss incurred because of such a breach.  
7.    Return of Company Property/Information; Pre-Existing Agreements and Restrictive Covenants.
a.    Within seven (7) calendar days of Associate’s last day of employment, Associate will return all Company documents and other property currently in Associate’s possession including, but without limitation, any and all work, notes, reports, files, memoranda, records, cardkey passes, door and file keys, safe combinations,  computers, computer access codes, cellular or smart phones, electronic media, instructional or personnel manuals, and other physical or personal property that Associate received or prepared or helped to prepare in connection with Associate’s employment with the Company (collectively, “Company Property”). Associate will not retain copies of any business, proprietary or confidential information in any form, including electronic. 
b.    Associate acknowledges and agrees that in the course of Associate’s employment with the Company,  Associate has acquired: (i) confidential information including without limitation information received by the Company from third parties, under confidential conditions; (ii) other technical, product, business, financial or customer  information from the Company, the use or disclosure of which reasonably might be construed to be contrary to the interest of the Company; or (iii) any other proprietary information or data, including but not limited to customer lists, which Associate may have acquired during Associate’s employment (collectively, “Company  Information”).  Associate understands and agrees that such Company Information was disclosed to Associate in confidence and for use only by the Company.  Associate understands and agrees that Associate: (i) will keep such Company Information confidential at all times, (ii) will not disclose or communicate Company Information to any third party, and (iii) will not make use of Company Information on Associate’s own behalf, or on behalf of any third 

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party. These restrictions on use of Company Information will last for trade secrets as long as such information remains protected and for confidential information which is not trade secrets, for two (2) years from Associate’s last day of employment or for as long as such information is protected from by law.  Associate agrees that any unauthorized disclosure to third parties of Company Information or other violation, or threatened violation, of this Confidential Waiver and Release would cause irreparable damage to the confidential or trade secret status of Company Information and to the Company, and that, therefore, the Company shall be entitled to an injunction prohibiting Associate from any such disclosure, attempted disclosure, violation or threatened violation.
c.    The Parties acknowledge and agree that the terms and conditions set forth in any prior agreement entered into by Associate and the Company regarding proprietary and confidential information shall in no way be altered, modified, enhanced, diminished or amended by this Confidential Waiver and Release, except to the extent that the definition of “Competitive Services” in section 9(b)(i) of this Confidential Waiver and Release shall apply to all such prior agreements and shall supersede and replace any prior definition set forth therein.  In addition, except in regards to the definition of Competitive Services, to the extent that any protections of such prior agreement(s) are lesser than those in Section 7b, 8, and 9 herein, then the terms of this Confidential Waiver and Release shall control.  The agreement(s) and all restrictive covenants contained therein and/or referenced these Sections shall survive the termination of this Confidential Waiver and Release or other arrangements contained in this Confidential Waiver and Release.
d.    Associate also affirms that Associate is in possession of all of Associate’s property that Associate had at the Company’s premises and that the Company is not in possession of any of Associate’s property.
8.    Non-Disparagement.  The Parties agree that they shall not, for a period of one (1) year following the execution of this Agreement, directly or indirectly, for themselves or on behalf of, or in conjunction with, any other person, company, partnership, corporation, business entity or otherwise make any statements that are disparaging or slanderous, to Associate or to Employer, its products, services or associates, including management personnel and board members, including making anonymous electronic postings or use of social media, except as necessary in any legal proceedings or as might be required by law.  For purposes of this paragraph a “disparaging” statement is one that is negative to Employer, its products, services, officers or associates, or negative to Associate.
9.    Restrictive Covenants
a.    Acknowledgments.
(i)    Access to Confidential Information:  Associate acknowledges and agrees that Associate has been provided and entrusted with Confidential Information (as that term is defined below) during Associate’s employment with the Company, including highly confidential information that is subject to extensive measures to maintain its secrecy within the Company, is not known in the trade or disclosed to the public, and would materially harm 

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the Company’s legitimate business interests if it was disclosed or used in violation of this Agreement.  
(ii)    Valuable Customer, Franchisee and Associate Relationships:  Associate acknowledges and agrees that the Company’s relationships and goodwill with its current and prospective customers and franchisees and its Associates are critical to the Company’s long-term success.
(iii)    Potential Unfair Competition:  Associate acknowledges and agrees that as a result of Associate’s employment with the Company, knowledge of and access to Confidential Information, and relationships with the Company’s customers, franchisees and Associates, Associate would have an unfair competitive advantage if Associate were to engage in activities in violation of the covenants set forth in this Agreement.  Associate further acknowledges and agrees that such covenants are reasonable and necessary to protect the Company’s legitimate business interests.
(iv)    No Undue Hardship:  Associate acknowledges and agrees that Associate possesses marketable skills and abilities that will enable Associate to find suitable employment without violating the covenants set forth in this Agreement.  
b.    Definitions.  The following capitalized terms used in this Confidential Waiver and Release shall have the meanings assigned to them below, which definitions shall apply to both the singular and the plural forms of such terms:
(i)    “Competitive Services” means (1) renting, leasing and/or selling new or reconditioned residential furniture, consumer electronics, computers (including hardware, software and accessories), appliances, household goods and home furnishings; provided, however, that for the purposes of this Confidential Waiver and Release “Competitive Services” shall not include selling new goods or merchandise by Associate or on behalf of or as an employee of any entity or individual that has no involvement in rental, leasing, rent-to-own, or similar activity related to such goods or merchandise either on its own, through a subsidiary or affiliated entity or person, or in partnership with any other entity or person; (2) designing, manufacturing and/or reconditioning of residential furniture of a type especially suited to the leasing, rental and sales business; and (3) providing any other activities, products, or services of the type conducted, authorized, offered, or provided by the Company as of Associate’s Termination Date, or during the one (1) year period immediately prior to Associate’s Termination Date.
(ii)    “Competitor” means any Person other than the Company engaged, in whole or in part, in Competitive Services, including, but not by way of limitation, the following entities which Associate acknowledges and agrees directly compete with the Company:  Rent-A-Center, Inc. (including, but not limited to, Colortyme); Easyhome, Inc.; Premier Rental-Purchase, Inc.; Discover Rentals; New Avenues, LLC; and Bi-Rite Co., d/b/a Buddy’s Home Furnishings, or any other parent, owner, or affiliated corporate entity or person with any of the listed Companies or trade names above.

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(iii)    “Confidential Information” means any and all data and information relating to the Company, its activities, business, or clients that (1) is disclosed to Associate or of which Associate becomes aware as a consequence of Associate’s employment with the Company; (2) has value to the Company; and (3) is not generally known outside of the Company.  “Confidential Information” shall include, but is not limited to the following types of information regarding, related to, or concerning the Company: trade secrets (as defined by O.C.G.A. § 10-1-761); financial plans and data; management planning information; business plans; operational methods; market studies; marketing plans or strategies; rate and pricing information; product development techniques or plans, including, but not limited to, information on the development, maintenance and use of unique techniques, concepts and knowledge with respect to renting, leasing, and selling practices; and information relating to the machinery, equipment, and processes by which Aaron’s manufactures products for its business; customer lists; customer files, data and financial information; details of customer contracts; current and anticipated customer requirements; information dealing with the nature of customers’ accounts, including the dates on which agreements between Aaron’s and such customers will end and be subject to renewal; identifying and other information pertaining to business referral sources; past, current and planned research and development; computer aided systems, software, strategies and programs; business acquisition plans; management organization and related information (including, without limitation, data and other information concerning the compensation and benefits paid to officers, directors, Associates and management); personnel and compensation policies; new personnel acquisition plans; and other similar information.  In addition to data and information relating to the Company, “Confidential Information” also includes any and all data and information relating to or concerning a third party that otherwise meets the definition set forth above, that was provided or made available to the Company by such third party, and that the Company has a duty or obligation to keep confidential.  This definition shall not limit any definition of “confidential information” or any equivalent term under state or federal law.  “Confidential Information” shall not include information that has become generally available to the public by the act of one who has the right to disclose such information without violating any right or privilege of the Company.
(iv)    “Material Contact” means contact between Associate and a customer or potential customer of the Company, or between Associate and a franchisee or potential franchisee of the Company, (1) with whom Associate has or had dealings on behalf of the Company; (2) whose dealings with the Company are or were coordinated or supervised by Associate; (3) about whom Associate obtains Confidential Information in the ordinary course of business as a result of Associate’s employment with the Company; or (4) who receives products or services of the Company, the sale or provision of which results or resulted in compensation, commissions, or earnings for Associate within the one (1) year prior to Associate’s Termination Date.
(v)    “Person” means any individual or any corporation, partnership, joint venture, limited liability company, association or other entity or enterprise.

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(vi)    “Principal or Representative” means a principal, owner, partner, shareholder, joint venturer, investor, member, trustee, director, officer, manager, Associate, agent, representative or consultant.
(vii)    “Protected Customer” means any Person to whom the Company has sold its products or services or actively solicited to sell its products or services, and with whom Associate has had Material Contact on behalf of the Company during Associate’s employment with the Company.
(viii)    “Protected Franchisee” means any Person who is a franchisee of the Company, and with whom Associate has had Material Contact on behalf of the Company during Associate’s employment with the Company.
(ix)    “Protected Work” means any and all ideas, inventions, formulas, source codes, object codes, techniques, processes, concepts, systems, programs, software, software integration techniques, hardware systems, schematics, flow charts, computer data bases, client lists, trademarks, service marks, brand names, trade names, compilations, documents, data, notes, designs, drawings, technical data and/or training materials, including improvements thereto or derivatives therefrom, whether or not patentable, and whether or not subject to copyright or trademark or trade secret protection, conceived, developed or produced by Associate, or by others working with Associate or under Associate’s direction, during the period of Associate’s employment, or conceived, produced or used or intended for use by or on behalf of the Company or its customers. 
(x)    “Restricted Period” means any time during Associate’s employment with the Company, as well as one (1) year from Associate’s Termination Date.
(xi)    “Restricted Territory” means the geographic area within fifty (50) miles of any location where Company or a franchisee of Company provides Competitive Services and where Associate worked on behalf of the Company, or for which Associate had responsibility as a manager of the Company, during the one (1) year period preceding the Termination Date (as defined herein).
(xii)    “Restrictive Covenants” means the restrictive covenants contained in Sections b through f hereof.
(xiii)    “Termination” means the termination of Associate’s employment with the Company, for any reason, whether with or without cause, upon the initiative of either party.
(xiv)    “Termination Date” means the date of Associate’s Termination.
c.    Restriction on Disclosure and Use of Confidential Information.  Associate agrees that Associate shall not, directly or indirectly, use Confidential Information on Associate’s own behalf or on behalf of any Person other than Company, or reveal, divulge, or disclose any Confidential Information to any Person not expressly authorized by the Company to receive Confidential Information.  This obligation shall remain 

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in effect for as long as the information or materials in question retain their status as Confidential Information set forth in Section 7 above.  Associate further agrees that Associate shall fully cooperate with the Company in maintaining the Confidential Information to the extent permitted by law. The parties acknowledge and agree that this Agreement is not intended to, and does not, alter either the Company’s rights or Associate’s obligations under any state or federal statutory or common law regarding trade secrets and unfair trade practices.  Anything herein to the contrary notwithstanding, Associate shall not be restricted from disclosing information that is required to be disclosed by law, court order or other valid and appropriate legal process; provided, however, that in the event such disclosure is required by law, Associate shall provide the Company with prompt notice of such requirement so that the Company may seek an appropriate protective order prior to any such required disclosure by Associate.
d.    Non-Competition.  Associate agrees that, during the Restricted Period, Associate will not, without prior written consent of the Company’s Chief Executive Officer, directly or indirectly (i) carry on or engage in any of the Competitive Services which Associate engaged in as an Associate of the Company within the Restricted Territory on Associate’s own behalf or on behalf of any Competitor, or (ii) own, manage, operate, join, control or participate in the ownership, management, operation or control, of any business, whether in corporate, proprietorship or partnership form or otherwise which business is a Competitor engaged in the provision of Competitive Services within the Restricted Territory.  
e.    Non-Solicitation of Protected Customers.  Associate agrees that, during the Restricted Period, Associate shall not, without the prior written consent of the Company’s Chief Executive Officer, directly or indirectly, on Associate’s own behalf or as a Principal or Representative of any Person, solicit, divert, take away, or attempt to solicit, divert, or take away a Protected Customer for the purpose of engaging in, providing, or selling Competitive Services.  
f.    Non-Recruitment of Associates.  Associate agrees that, during the Restricted Period, Associate shall not, directly or indirectly, whether on Associate’s own behalf or as a Principal or Representative of any Person, solicit or induce, or attempt to solicit or induce, any Associate of the Company to terminate Associate’s employment relationship with the Company or to enter into employment with the Associate or any other Person. 
g.    Non-Recruitment of Protected Franchisees.  Associate agrees that, during the Restricted Period, Associate shall not, directly or indirectly, whether on Associate’s own behalf or as a Principal or Representative of any Person, solicit or induce, or attempt to solicit or induce, any Protected Franchisee of the Company to terminate its relationship with the Company or to provide Competitive Services on behalf of a Competitor.
h.    Rights and Remedies Upon Breach:  The parties specifically acknowledge and agree that the remedy at law for any breach of the Restrictive Covenants will be inadequate, and that in the event Associate breaches, or threatens to breach, any of the Restrictive Covenants, the Company shall have the right and remedy, without the 

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necessity of proving actual damage or posting any bond, to enjoin, preliminarily and permanently, Associate from violating or threatening to violate the Restrictive Covenants and to have the Restrictive Covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of the Restrictive Covenants would cause irreparable injury to the Company and that money damages would not provide an adequate remedy to the Company.  Associate understands and agrees that if Associate violates any of the obligations set forth in the Restrictive Covenants, the period of restriction applicable to each obligation violated shall cease to run during the pendency of any litigation over such violation, provided that such litigation was initiated during the period of restriction.  Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Company at law or in equity.  Associate understands and agrees that the Company will be entitled, in addition to any other remedy, to recover from Associate its reasonable costs and attorneys’ fees incurred in enforcing such covenants.
i.    Severability and Modification of Covenants:  Associate acknowledges and agrees that each of the Restrictive Covenants is reasonable and valid in time and scope and in all other respects.  The parties agree that it is their intention that the Restrictive Covenants be enforced in accordance with their terms to the maximum extent permitted by law.  Each of the Restrictive Covenants shall be considered and construed as a separate and independent covenant.  Should any part or provision of any of the Restrictive Covenants be held invalid, void, or unenforceable, such invalidity, voidness, or unenforceability shall not render invalid, void, or unenforceable any other part or provision of this Agreement or such Restrictive Covenant.  If any portion of any of the Restrictive Covenants is found to be invalid or unenforceable because its duration, geographic territory, scope of activities, or information covered is considered to be unreasonable in scope, the invalid or unenforceable term shall be redefined, or a new enforceable term provided, such that the intent of the Company and Associate in agreeing to the provisions of this Agreement will not be impaired and the provision in question shall be enforced to the fullest extent permitted by law.
10.    Nonadmission of Wrongdoing.  The Parties agree that neither this Confidential Waiver and Release nor the furnishing of the consideration for this Confidential Waiver and Release shall be deemed or construed at any time for any purpose as an admission by the Released Parties of wrongdoing or evidence of any liability or unlawful conduct of any kind.
11.    Job References.  Associate shall direct all individuals inquiring about Associate’s employment with the Company to the “Work Number” at 1-800-367-5690, which will follow the Company’s policy by responding with only Associate’s last position and dates of employment.  The Company’s Code for the Work Number is 70106.  
		
	12.
	Consideration and Revocation Periods - Notice.

a.    Associate acknowledges that Associate has been advised to consult with an attorney of Associate’s own choosing before signing this Confidential Waiver and Release, in which Associate waives important rights, including those under the Age Discrimination in Employment Act.

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b.    By executing this Confidential Waiver and Release, Associate also acknowledges that Associate has been afforded 21 calendar days to consider the meaning and effect of this Confidential Waiver and Release and to discuss the contents and meaning of this Confidential Waiver and Release, as well as the alternatives to signing this Confidential Waiver and Release, with an attorney of Associate’s choosing.  Associate agrees that the 21-day consideration period began on the date this Confidential Waiver and Release first was delivered to Associate and that if the Company changes any of the terms of the offer contained in this Confidential Waiver and Release (whether the changes are material or not), the 21-day consideration period shall not be restarted but shall continue without interruption.  If the last day of the consideration period falls on a day when the Company’s offices are closed, the consideration period will end the on the next business day. 
c.    Associate understands that the releases contained in this Confidential Waiver and Release do not extend to any rights or claims that Associate has under the Age Discrimination in Employment Act that first arise after execution of this Confidential Waiver and Release.
d.    If Associate signs this Confidential Waiver and Release before the 21-day consideration period expires, the 7-day revocation period (described in Section 12(d) below) immediately shall begin.  If Associate signs this Confidential Waiver and Release before the 21-day consideration period expires, Associate agrees that Associate knowingly and voluntarily has accepted the shortening of the 21-day consideration period and that the Company has not promised Associate anything or made any representations that are not contained in this Confidential Waiver and Release.  In addition, if Associate signs this Confidential Waiver and Release before the 21-day consideration period expires, Associate acknowledges and affirms that the Company has not threatened to withdraw or alter the offer contained in this Confidential Waiver and Release prior to the expiration of the 21-day consideration period.
e.    Associate may revoke this Confidential Waiver and Release for a period of seven (7) calendar days following the date Associate executes this Confidential Waiver and Release.  Any revocation during this period must be submitted in writing and state, “I hereby revoke my acceptance of our Confidential Waiver and Release and General Release of All Claims.”  The revocation must be directed to Chad Strickland, VP Associate Resources, 309 East Paces Ferry Road, Atlanta, Georgia 30305 and received within seven (7) calendar days after Associate’s execution of this Confidential Waiver and Release.  If the last day of the revocation period falls on a day when the Company’s offices are closed, the revocation period will end on the next business day. The foregoing notwithstanding, this Confidential Waiver and Release shall not become effective and enforceable until the seven-day revocation period has expired.  
13.    Liens and Attorneys’ Fees/Indemnification.
a.    Associate acknowledges that Associate solely is responsible for any liens made in connection with any services performed on Associate’s behalf by any attorney, consultant, health care providers or other third parties.

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b.    Associate further acknowledges and agrees that Associate will indemnify the Released Parties for any and all costs any of them incur as a result of any claims made by any attorneys, consultants, health care providers or other third parties to recover monies from the amounts payable to Associate under this Confidential Waiver and Release.
14.    Governing Law, Choice of Forum and Interpretation.  This Confidential Waiver and Release shall be governed and conformed in accordance with the laws of the State of Georgia, however, that parole evidence shall not be admissible to alter, vary or supplement the term of this Confidential Waiver and Release.  In the event of a breach of any provision of this Confidential Waiver and Release, either Party may institute an action specifically to enforce any term or terms of this Confidential Waiver and Release or seek damages for breach exclusively in the state or federal court within Georgia.  Should any provision of this Confidential Waiver and Release be declared illegal or unenforceable by a court of competent jurisdiction and cannot be modified to be enforceable, excluding the general release language, such provision immediately shall become null and void, leaving the remainder of this Confidential Waiver and Release in full force and effect.
15.    Rights and Remedies Upon Breach.  In addition to any other remedies identified or otherwise referenced in the Waiver and Release Agreement, Associate acknowledges and agrees that in accordance with the terms of the Executive Severance Plan, if Associate violates any of the provisions in the Waiver and Release Agreement, Associate shall immediately forfeit his right to receive any Severance Pay Benefits, the Company shall have no further obligation to make any payment of Severance Pay Benefits to Associate, and Associate shall be obligated to repay any Severance Pay Benefits already paid pursuant to the Plan.
16.    Amendment.  This Confidential Waiver and Release may not be modified, altered or changed except in writing and signed by both Parties wherein specific reference is made to this Confidential Waiver and Release.
17.    Miscellaneous.
a.    This Confidential Waiver and Release may be signed in counterparts, both of which shall be deemed an original, but both of which, taken together shall constitute the same instrument.  A signature made on a faxed or electronically mailed copy of the Confidential Waiver and Release or a signature transmitted by facsimile or electronic mail shall have the same effect as the original signature.
b.    The section headings used in this Confidential Waiver and Release are intended solely for convenience of reference and shall not in any manner amplify, limit, modify or otherwise be used in the interpretation of any of the provisions hereof.
c.    This Confidential Waiver and Release was the result of negotiations between the Parties and was prepared in accordance with the Executive Severance Pay Plan.  In the event of vagueness, ambiguity or uncertainty, this Confidential Waiver and Release shall not be construed against the Party preparing it, but shall be construed as if both Parties prepared it jointly.

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d.    If Associate or the Company fails to enforce this Confidential Waiver and Release or to insist on performance of any term, that failure does not mean a waiver of that term or of the Confidential Waiver and Release.  The Confidential Waiver and Release remains in full force and effect anyway.
e.    The amount of the Consideration set forth in Paragraph 2 payable to Associate that are exempt from Section 409A of the Internal Revenue Code of 1986 may be reduced, in the sole discretion of the Company, by any outstanding debt of Associate to the Company arising out of the employment relationship between Associate and the Company.
f.    To the extent Associate has any vested and/or unvested stock options, Associate’s unvested stock options will be forfeited upon separation of employment.  Associate’s stock options which have vested may be exercised in accordance with the applicable Stock Option and Incentive Award Plan Award Agreements.
18.    Entire Agreement.  This Confidential Waiver and Release sets forth the entire agreement between the Parties hereto, and fully supersedes any prior agreements or understandings between the Parties hereto, except those specifically identified in Paragraph 7(c), which are incorporated herein by reference.  Associate acknowledges that Associate has not relied on any representations, promises or agreements of any kind made to Associate in connection with Associate’s decision to accept this Confidential Waiver and Release, except for those set forth in this Confidential Waiver and Release.

HAVING ELECTED TO EXECUTE THIS CONFIDENTIAL WAIVER AND RELEASE, TO FULFILL THE PROMISES AND TO RECEIVE THE CONSIDERATION SET FORTH IN SECTION 2 ABOVE, ASSOCIATE FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO THIS CONFIDENTIAL WAIVER AND RELEASE INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS ASSOCIATE HAS OR MIGHT HAVE AGAINST THE RELEASED PARTIES AS OF THE EXECUTION OF THIS CONFIDENTIAL WAIVER AND RELEASE.

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IN WITNESS WHEREOF, the Parties hereto knowingly and voluntarily executed this Confidential Waiver and Release as of the date set forth below:

	
		
	Executed 4/2/2014
	/s/ Kenneth T. Evans

	 
	Kenneth Todd Evans

	 
	Associate 

	 
	 

    

AARON’S, INC.

	
		
	Executed 4/14/2014
	/s/ D. C. Strickland

	 
	David Chad Strickland

	 
	Vice President,

	 
	Associate Resources

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