Document:

usallianceex101.htm

EXHIBIT 10.1

 

LEASE AGREEMENT

OFFICE BUILDING

 

This Lease Agreement is made the day last signed by and between

 

US Alliance Corporation, hereinafter referred to as "Tenant" and

 

Lindemuth Inc., dba Gage Center, hereinafter referred to as "Landlord".

 

Lease Summary:

Certain lease provisions are presented in this initial portion of this lease agreement (referred to as "Summary" or "Lease Summary") to facilitate convenient reference by the parties hereto, subject to further definition and elaboration in the respective Sections and elsewhere in this Lease, and these provisions are incorporated into the respective Sections.

 

	
Notice Address: (Section 23)

Tenant:

US Alliance Corporation

Attn: Jack Brier

4123 SW Gage Center Drive Suite 240

Topeka, KS 66604

Phone: 785-273-5578

Fax: 785-228-1038

	
Landlord:

Lindemuth Inc, dba Gage Center

CIO KS Commercial Real Estate Services, Inc.

4125 SW Gage Center Dr., Suite 200

Topeka, KS 66604

Phone: 785-272-2525

Fax: 785-272-2507

 

Premises (Section 1): Cobblestone, 4123 SW Gage Center Dr., Suite 240, containing approximately 4067 square feet. Permitted Uses (Section 5): Professional Office

 

Lease Term (Section 2): Three (3) years, Two (2) Months and Twenty (20) days (Lease Term) beginning October 11, 2011 (Commencement Date) and ending December 31St 2014 (Termination Date).

 

Minimum Rent (Section 4):

 

	
Period:

	
Rent Per Month:

	10/11/11 — 12/31/11	
$0.00

	01/01/12 — 12/31/14	
$2,000.0

 

Security Deposit (Section 25): Tenant shall pay upon lease execution $4,000.00 in cash or its equivalent, of which $2,000.00 shall be applied toward the first rent due and $2,000.00 shall remain on deposit.

 

Agency Disclosure (Section 33):

 

Agent:                                      Company:                                                            Relationship:

Ken Schmanke                      KS Commercial Real Estate Services Inc.    Transaction Broker

 

Additional Lease Terms:

 

Landlord's Work: Landlord shall, at Landlord's sole expense, perform the following work with said work to begin upon the effective date of this Lease Agreement and complete within 25 days after the effective date of this Lease Agreement, provided that if a written report signals a major issues, then adequate time be allowed to make further repairs which shall be diligently pursued until completed;

	
1)  

	
Repair Roof Leaks

	
2)  

	
Replace damages or stained ceiling tiles,

	
3)  

	
HVAC system; replace filters, clean ceiling air registers, clean ductwork if inspection of the ductwork determines that cleaning is necessary, make repairs, adjustments or additions as necessary to provide sufficient heating and cooling throughout the premises and adequate to accommodate a training room in the SE room of the premises,

	
4)  

	
Lights: Replace lights bulbs or repair fixtures to provide tenant with all existing lights in proper operating condition. Tenant shall be responsible for light bulbs and fixtures after this initial work is performed by Landlord,

 

  

  

  

 

Tenant's Work: Tenant shall, at Tenant's sole expense;

 

	
1)  

	
Replace Carpet throughout the Premises,

	
2)  

	
Paint the interior of the Premises,

	
3)  

	
Install window blinds,

	
4)  

	
Be responsible for janitorial service and minor interior maintenance within the premises after occupancy.

 

Signage: Tenant, at Tenant's sole expense, shall be allowed to install vinyl letter signage on the glass above the first floor entry door.

 

Exhibits: The following Exhibits are attached to this Lease Agreement.

Rules & Regulations (Exhibit A)

Floor Plan (Exhibit B)

 

 

1) PREMISES: Landlord, in consideration of the rent and covenants contained does hereby rent to Tenant and Tenant does hereby rent from Landlord the office space as per the Lease Summary herein referred to as the "Premises" or "Demised Premises".

 

2) BASE TERM: The original term of this Lease shall be for a period per the Lease Summary provided unless sooner terminated hereby. Said term, and Tenant's obligation to pay rent and other charges herein required to be paid by Tenant, other than the security deposit, shall commence per the Lease Summary. In the event the Commencement Date does not occur on the first day of the month the Tenant shall pay rent for the fractional month (calculated on the basis of a thirty day month) until the first day of the month when the term commences. Thereafter, the minimum rent shall be paid in equal monthly installments in advance on the first day of each month during the term of this Lease. The term of this Lease shall end and terminate per the Lease Summary. In the event of Landlord's inability to deliver possession of leased Premises ready for occupancy at the commencement of the Lease term, Landlord shall not be liable for any damage caused thereby, nor shall this Lease be void or voidable by Tenant, but in such event, no rental shall be payable by Tenant to Landlord prior to actual delivery to Tenant of possession of leased Premises ready for occupancy by Tenant.

 

3) PRIOR INSTALLATION: Tenant prior to the commencement of the term shall, with the prior written consent of Landlord, be permitted to install fixtures and equipment on the demised premises. Any work done in a manner as will not interfere with the progress of the work by Landlord of completing Landlord's Work, and Landlord shall have no liability or responsibility for loss of, or any damage to fixtures, equipment or other property of Tenant so installed or placed on the premises.

 

4) BASE RENT: Tenant shall pay rent to Landlord for the use and occupancy of the leased Premises Base Rent payable in monthly installments as per the Lease Summary in advance, on the first (1st) day of each month during the term hereof. Base rent and all other sums (whether designated additional rent or otherwise) payable to Landlord under this Lease (all hereinafter sometimes called "Rent"), shall be payable at the address per the Lease Summary or at such other place as Landlord may from time to time designate in writing. All rent payable under this Lease shall be paid by Tenant without notice or demand, both of which are expressly waived by Tenant. Rent and other monies due Landlord under this Lease not paid when due shall bear interest at the rate of eighteen percent (18%) annually the same is die until paid. In the event Tenant shall fail to pay rent by the Fifth (5th) of the month in which rent is due, Landlord may charge Tenant a monthly service charge in an amount equal to ten percent (10%) of the amount rent due. Such service charge shall then become due and payable immediately along with the delinquent rent. In the event the commencement date of this Lease does not occur on the 1st day of the month, then the rental for any period less that a full month shall be prorated for that month based upon the number of day in that month.

 

5) USE: Tenant shall use the leased Premises as per the Lease Summary and for no other purpose without the prior written consent of Landlord. Tenant will not use or occupy the leased Premises for any unlawful purpose and will comply with all present and future laws, ordinances, regulations and orders of the United States of America, the state in which the leased Premises are located, and all other governmental units or agencies having jurisdiction over the leased premises. Tenant agrees to operate its business in the leased Premises during their entire term and to conduct its business in a reputable manner.

 

6) QUIET ENJOYMENT: No use shall be made of Premises, which is illegal, unlawful, or which will increase the existing rate of insurance or cause cancellation of insurance upon Premises. Tenant shall not commit or allow to be committed any waste upon Premises or any public or private nuisance or other act or thing which disturbs the quiet enjoyment of any other tenant in Premises or inhibits Landlord in leasing other parts of the Premises, nor shall Tenant, without the written consent of the Landlord, use any apparatus, machinery or device in or about the Premises which shall cause any substantial noise or

 

  

  

  

 

vibration. If any of Tenants office machines and equipment should disturb the quiet enjoyment of any other Tenant in Premises or inhibit Landlord in leasing the other parts of the Premises, the Tenant shall immediately provide adequate insulation, or take such other action as may be necessary to eliminate the disturbance. Tenant shall immediately provide adequate insulation, or take such other action as may be necessary to eliminate the disturbance. Tenant shall immediately provide adequate insulation, or take such other action as may be necessary to eliminate the disturbance. Tenant shall observe such reasonable rules and covenants as set forth in EXHIBIT A or which may be adopted and published from time to time by Landlord for the safety, care and cleanliness of Building, Premises and preservation of good order therein.

 

7) SERVICES BY LANDLORD: As long as Tenant is not in default under any of the covenants or provisions of this Lease, Landlord shall maintain Premises and the public and common areas of the Building, such as lobbies, stairs, atriums, landscaping, corridors and restrooms, in good order and condition except for damage occasioned by the act of Tenant, its employees, agents or invitees, and Landlord shall also provide the following services during reasonable and usual business hours for the term of this lease as follows:

 

a) During reasonable and usual business hours, heat and air conditioning, water and electricity for lighting and for operation of normal office machines, excluding certain computer equipment, but not to exceed 6 watts per square foot of leased premises. Landlord reserves the right to charge for electricity used in excess of 6 watts per square foot of leased space at a rate equal to the annual average K.W.H. cost paid by the building. Additional electricity and chilled water necessary for operation of additional cooling equipment will be charged for at a predetermined rate prior to authorization to install the equipment. Additional circuits and additional piping for chilled water costs will be borne by the Tenant.

 

b) The failure to furnish heat, air conditioning, water, electricity, elevator service, or cleaning resulting from causes beyond the Landlord's control shall not render Landlord liable for damages to persons or property nor work as cause for rent abatement nor cause for nonfulfillment of the provisions.

 

c) Water for drinking, lavatory and toilet purposes from the regular Building supply through fixtures installed by Landlord (or by Tenant with Landlord's written consent)

 

d) Janitorial service and supplies for the common area restroom and common hall.

 

e) Taxes and insurance on the Premises, except as otherwise provided herein.

 

f) Landlord agrees to maintain the exterior and interior of the Premises to include lawn and shrub care, snow removal, maintenance of the structure roof, mechanical and electrical equipment, architectural finish, and so on, excluding only those items specifically excepted elsewhere in this lease.

 

Landlord shall make reasonable effort to provide the foregoing services but in any event shall not be liable for damages, nor shall the rental herein reserved be abated for failure to furnish or any delay in furnishing any of the foregoing service when there are disturbances or labor disputes of any character, or by inability to secure electricity, fuel, supplies, machinery, equipment or labor, or by the making of necessary repairs or improvements to Premises nor shall the temporary failure to furnish any of such services be construed as an eviction of Tenant or by making of necessary repairs or improvements to Premises nor shall the temporary failure to furnish any of such labor, or by the making of necessary repairs or improvements to Premises nor shall the temporary failure to furnish any of such services be construed as an eviction of Tenant or relieve Tenant from the duty of observing and performing any of the provisions services be construed as an eviction of Tenant or relieve Tenant from the duty of observing and performing any of the provisions of this lease.

 

8) Intentionally Omitted

 

9) REPAIRS AND ALTERATIONS: Tenant agrees that it will take good care of premises, and the same will not be altered or changed without the written consent of the Landlord and Tenant agrees to indemnify and save harmless Landlord from all liens, claims or demands arising out of any work performed, materials furnished, or obligations incurred by or for Tenant upon said Premises during said term in the manner prescribed by Landlord. Tenant hereby waives any right to make repairs at Landlord's expense. Tenant shall not make changes to locks on doors or add, disturb or in any way change any plumbing or wiring without first obtaining written consent of Landlord. All damage or injury done to Premises by Tenant or by any persons who may be in or upon Premises with the consent of Tenant shall be paid for by Tenant and Tenant shall pay for all damage to the Premises caused by Tenant's misuse of Premises or the appurtenances thereto. Tenant shall pay for the replacement of doors of windows of Premises which are marred, cracked or broken by Tenant, its employees, agents, vendors or invitees, and Tenant shall not put any curtains, draperies or other hanging on or beside the windows in or on the outside of Premises without first obtaining Landlord's written consent. Landlord may make any alterations or improvements which Landlord may deem necessary for preservation, safety or improvement of the Premises. At the termination of this lease, all alterations, additions and improvements, except fixtures installed by Tenant and which are removable by Tenant without damage to Premises shall become the property of Landlord. Tenant shall, at the termination of this lease by the

 

  

  

  

 

expiration of time, otherwise, surrender and deliver up Premises to Landlord in as good condition as when received by Tenant from Landlord, reasonable use and wear and damage by fire or other casualty accepted.

 

10) ENTRY AND INSPECTION: Tenant shall permit Landlord and its agents to enter into and upon Premises at any and all reasonable times for the purpose of inspecting the same or for the purpose of cleaning, repairing, altering or improving the Premises and when reasonably necessary, Landlord may close entrance doors, corridors, elevators or other facilities without liability to Tenant by reason of such closure and without such action by Landlord being construed as an eviction of Tenant or relieving the Tenant from the duty of observing and performing any of the provisions of this lease. Landlord shall have the right to enter Premises for the purpose of showing Premises to prospective tenants during a period of 180 days prior to the expiration of the lease term.

 

11) PARTIAL DESTRUCTION: In the event of the partial destruction of the building or improvements located on the demised premises by fire or any other casualty in which the cost of the restoration or repair are less than 30% of the building's (within which the demised premises are located) fair market value and in which said restoration or repairs can be completed within 120 days after the occurrence of the partial destruction, Landlord shall diligently restore or repair said buildings and improvements (exclusive of Tenant's improvements hereon described to be made by Tenant). Landlord shall repair or restore improvements (exclusive of Tenant's improvements hereon described to be made by Tenant) to the conditions they were in immediately prior to the date of the partial destruction. A just and proportionate part of the rent and other charges payable by Tenant to the extent that such damage or destruction renders the demised premises untenable shall abate from the date of such damage or destruction until such demised premises are repaired or restored by Landlord. Tenant shall thereafter, or simultaneously therewith, diligently repair any damage to Tenant's improvements, fixtures and property.

 

12) SUBSTANTIAL DESTRUCTION: If the demised premises shall be so damaged by fire or other casualty of happening in which the cost of the restoration or repair are greater than 30% of the building's (within which the demised premises are located) fair market value or said restoration or repairs cannot be completed within 120 days after the occurrence of the damage, then either party shall have the option to terminate this Lease by giving the other party written notice within 30 days after such substantial destruction, and any unearned rent shall be apportioned and returned to Tenant. If either party does not elect to cancel this Lease as aforesaid, then the same shall remain in full force and affect, and Landlord shall proceed with all reasonable diligence to repair and replace the demised premises to the condition they were in prior to the date of such destruction (exclusive of Tenant's improvements herein described to be made by Tenant), and during the time demised premises are so destroyed and untenability, the rent and other charges shall be abated in proportion to the extent and duration of untenability.

 

13) DEFAULTS: Upon the occurrence of any one or more of the following events, Landlord may terminate this lease by giving Tenant notice in writing of its election to do so and, if such notice is given this lease shall expire ten (10) days after the request or notification.

 

	
(i)  

	
If Tenant files a voluntary petition in bankruptcy, or for reorganization under the bankruptcy laws, or is adjudged a bankrupt by a court of competent jurisdiction;

 

	 	
(ii)  

	
If Tenant makes an assignment for the benefit of creditors;

 

	 	
(iii)  

	
If a receiver is appointed by a court of competent jurisdiction for Tenant's business;

 

	 	
(iv)  

	
If Tenant abandons Premises.

 

Tenant shall be liable for rent as detailed in the following paragraph in the event of the termination of the lease by Landlord.

 

14) DEFAULT AND RE-ENTRY: Except for a default under the preceding paragraph, for which right of termination is given to Landlord, if Tenant fails to pay any installment of rent within ten (10) days after written notice, whether or not legally demanded, or to perform any other covenant under this lease within thirty (30) days after written notice, whether or not legally demanded, or to perform any other covenant under this lease within thirty (30) days after written notice from Landlord stating the nature of the default or if the nature of such default other than for nonpayment of rent is such that the same cannot be reasonably cured within such thirty (30) day period and Tenant has not within such period commenced such cure and thereafter diligently prosecuted the same to completion, then Landlord may cancel this lease and re-enter and take possession of the Premises using all necessary force to do so. Notwithstanding such retaking of possession by Landlord, Tenant's liability for the rent provided herein shall not be extinguished for the balance of the term of this lease. Upon such re-entry Landlord may elect (i) to terminate this lease, in which event Tenant shall immediately pay to Landlord a sum equal to any and all rent payments that are then due and which will become due under this lease for the balance of the term of (ii) without terminating this lease, to relet all or any part of the Premises as the agent of and for the account of Tenant upon such terms and conditions as Landlord may deem advisable, in which event the rents received on such reletting shall be applied

 

  

  

  

 

first to the expenses of reletting and collection, including necessary renovation and alteration of the Premises, reasonable attorney's fees and real estate commission paid, and thereafter to make payment of all sums due or to become due Landlord hereunder, and if a sufficient sum shall not be thus realized to pay such sum and other charges, Tenant shall pay Landlord any deficiency monthly, and Landlord may bring and action therefore as such monthly deficiency shall arise.

 

In the event of any such retaking of possession of Premises by Landlord as herein provided, Tenant, if requested by Landlord, shall remove all personal property located therein and, upon failure to do so on demand, the Landlord may re-enter the premises by force, summary proceedings or otherwise, and remove all persons and their effects therefrom without being liable to prosecution therefore and may hold the Premises as if the lease had not been made.

 

15) LIABILITY OF LANDLORD: The Landlord shall not in any event be responsible for loss of property from or for damage to person or property occurring in or about the leased Premises, however caused, not the intentional and willful act of the Landlord, and particularly not for any damage from steam, gas, electricity, water, plumbing, rain, snow, leakage, breakage or overflow, whether originating in the leased Premises, premises of other tenants or any part of the building whatsoever.

 

Tenant shall defend and indemnify Landlord and save it harmless from and against any and all liability, damages, costs or expenses, including attorney fees, arising from any accident, injury or damage, howsoever and by whomsoever caused, to any person or property, occurring in or about leased Premises, provided that the foregoing provision shall not be construed to make Tenant responsible for loss, damage, liability or expense resulting from injuries to third parties caused by the negligence of Landlord, or of any officer, contractor, licensee, agent, servant, employee, guest, invitee, or visitor of Landlord. Whether the loss or damage is due to the negligence of either of said parties, their agents or employees, or any other cause, Landlord and Tenant do each herewith and hereby release and relieve the other from responsibility for, and waive their entire claim of recovery for (i) any loss or damage to the real or personal property of either located anywhere in leased Premises an including, without limitations, any structures therein, arising out of or incident to the occurrence of any of the perils which may be covered by the fire and lightening insurance policy, with extended coverage endorsement, in common use of the State of Kansas, if (ii) loss resulting from business interruption at Premises or loss of rental income from Premises arising out of or incident to the occurrence of any of the perils which may be covered by the fire and lightning insurance policy, with coverage endorsement, in common use in the locality, to the extent that such risks under (i) and (ii) are in fact covered by insurance. Each party shall cause its insurance carrier to consent to such waiver all rights of subrogation against the other party.

 

16) INSURANCE: Tenant agrees to procure and maintain, at Tenant's sole cost and expense, a policy of Comprehensive Liability and Property Damage Insurance under which the Landlord and Tenant are named as insured and under which the Insurer agrees to indemnify Landlord to hold it harmless from and against all costs, demands, causes of action, suits or judgments including expenses and/or liability arising out of or incurred in connection therewith, for death or injuries to persons or for loss of or damage to property arising out of or in connection with the use and occupancy of the demised premises by Tenant, its agents, employees or invitees. Each such policy shall be in standard form generally in use in the State of Kansas with insurance companies having a "Best" rating of A+ Class X and authorized to do business in said state. Each such policy and each renewal thereof shall be non-cancelable with respect to Landlord except upon thirty (30) days written notice to Landlord and a Certificate of Insurance thereof shall be delivered to Landlord. The minimum limits of such insurance shall be at least $500,000 per person and $1,000,000 per accident for injuries or damages to persons, and not less than $500,000 damage or destruction of property

 

17) SURRENDER OF POSSESSION: Upon expiration of the term of this lease, whether by lapse of time or otherwise, Tenant shall promptly and peacefully surrender Premises to Landlord. In the event Tenant remains in possession of the herein leased Premises after the expiration of the tenancy created hereunder, and without the execution of a new lease, it shall be deemed to be occupying said Premises as a tenant from month-to-month, at twice the fixed monthly base rent at the time of termination of the lease, subject to all other conditions, provisions and obligations of this lease insofar as the same are applicable to a month-to-month tenancy.

 

18) COSTS AND ATTORNEY'S FEES: If Tenant or Landlord shall bring any action for any relief against the other, declaratory or otherwise, arising out of this lease, including any suit by Landlord for the recovery of rent or possession of Premises the losing party shall pay the successful party a reasonable sum for attorney's fees shall be deemed to have accrued on the commencement of such action.

 

19) NON-WAIVER: Waiver by Landlord of any breach of any term, covenant or condition herein contained or attached hereto as an Exhibit shall not be deemed to be a waiver of such term, covenant, or condition, or of any subsequent breach of the same or any other term, covenant for condition herein contained. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant, or condition of this lease, other than the failure of Tenant to pay the particular rental so accepted regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent.

 

  

  

  

                                 .

 

20) ASSIGNMENT AND SUBLETTING: Tenant shall not assign, transfer or encumber this Lease, or any interest therein, or sublet the Leased Premises or any part thereof, or allow any other occupant to come in with or under Tenant, without first obtaining the prior written consent of Landlord. If Tenant is a corporation, then any transfer of this lease by merger, consolidation or liquidation or any changes in the ownership of, or power to vote the majority of its outstanding voting stock, shall constitute an assignment for purposes of this article, Consent to any such assignment or subletting shall not operate as a waiver of the necessity for a consent to any subsequent assignment of subletting, and the terms of such consent shall be binding upon any person holding by, under or through Tenant.

 

If Tenant shall request Landlord's consent to an assignment of this Lease or to a subletting of the whole or any part of the Leased Premises, Tenant shall submit to Landlord with such request the name of the proposed assignee or subtenant, such information concerning its business, financial responsibility and standing as Landlord may reasonably require, and the consideration to be paid for and the effective date of the proposed assignment of subletting. Upon receipt of such request and all such information, Landlord shall have the right, exercisable by notice in writing within fourteen (14) days thereafter, (i) to cancel and terminate this Lease if the request is for an assignment or a subletting or a subletting of all the Leased Premises, or (ii) if such request is to sublet a portion of the Leased Premises only, to cancel and terminate this Lease with respect to such portion. If Landlord exercises its rights hereunder, the effective date of the proposed assignment or subletting nor later than ninety (90) days thereafter.

 

Further, Tenant shall continue to pay the rent specified in Section (4) hereof to Landlord until the effective date of cancellation, on which date it will surrender possession of the Leased Premises or the position thereof subject to the right of cancellation. If this Lease shall be canceled as to a portion of the Leased Premises only, the rent specified in said Section (4) shall be abated proportionately.

 

If Tenant shall request Landlord's consent to an assignment or subletting of the Lease, and Landlord shall consent thereto, an amount equal to any consideration paid Tenant by the assignee or subtenant shall be payable by Tenant to Landlord. If Tenant requests Landlord's consent to a subletting of the Leased Premises or any part thereof and Landlord shall consent thereto, the monthly base rent to be paid Landlord by Tenant for the premises sublet shall be the greater of the monthly base rent payable under Section (4) hereof or that monthly rental paid Tenant by its subtenant for such premises.

 

If Tenant wishes to assign or sublet the Leased Premises, or any portion thereof, and wishes to use a real estate broker to secure an assignee or subtenant, Tenant agrees to use the real estate broker then representing Landlord in as Tenant's exclusive agent for such purposes, and to continue to use such broker so long as it is diligently seeking an assignee or subtenant.

 

Tenant shall not permit the Lease or the leasehold estate created hereby to become vested in or owned by any person, firm or corporation by operation of law and otherwise. Any assignment or attempted assignment or any sublease or attempted sublease of this Lease without the prior written consent of Landlord shall constitute a breach hereof, and Landlord may, at its option, at any time thereafter, declare Tenant to be in default.

 

All of the covenants, agreements, terms and conditions contained in this Lease, shall apply to and be binding upon Landlord and Tenant and their respective heirs, executors and administrators, successors and assigns.

 

21) PRIORITY: Tenant agrees that his lease shall be junior and subordinate to any and all ground lease which may now or hereafter be made with respect to the Premises and to any and all renewals, replacements and extensions thereof. Tenant further agrees that this lease shall be junior and subordinate to any and all first mortgages and deeds of trust which may now or hereafter be made with respect to the Premises, including any interest thereon and all renewals, replacements and extensions such first mortgagee or ground Landlord or both may require in order to evidence the priority over such lease of the mortgage or deed of trust. In addition, Tenant hereby agrees to execute any estoppel certificates that may from time to time be required by such ground Landlord or mortgagee or both. In the event a sale under the power of sale granted by any mortgage or deed or trust covering the Premises, or the foreclosure by suit or any such mortgage or deed of trust or the surrender, expiration, cancellation or other termination of the ground lease results in the termination by operation of law or otherwise of Tenant's interest under this lease, then upon the request of the successor in interest to Landlord's interest in the leased Premises, Tenant covenants and agrees to execute an instrument in writing satisfactory to such successor in interest whereby Tenant attorn to such successor in interest.

 

22) CONDEMNATION: If any part of the demised Premises be condemned for a public or quasi-public use by right of eminent domain, with or without litigation, or transferred by agreement in connection with such public or quasi-public use, this lease, as to the part so taken shall terminate as of the date title shall vest in the condemnor, and the rent payable hereunder shall be adjusted so that Tenant shall be required to pay for the remainder of the term only such portion of such rent as the value of the part remaining after condemnation bears to the value of the entire Premises at the date of condemnation; but in either such event Landlord shall have the option to terminate this lease as of the date when title to the part so condemned shall belong and be paid to Landlord. However, nothing herein shall be deemed to give Landlord any interest in or to require

 

  

  

  

 

Tenant to assign to Landlord any award made to Tenant for the taking of personal property or fixtures belonging to Tenant, for the interruption of or damage to Tenant's business or for Tenant's moving expenses.

 

23) NOTICES: All notices under this lease shall be in writing and delivered in person or sent by registered or certified mail, postage paid by Landlord and to Tenant as per the Lease Summary at or to such other new address as either party shall designate by written notice sent by registered or certified mail, postage paid to the other party.

 

24) CONSTRUCTION: The titles to paragraphs and/or section of this lease are not a part of this lease and shall have no effect upon the construction or interpretation of any part thereof. This lease shall be construed and governed by the law of the State of Kansas and if any provision or provisions of this lease shall be unlawful then such provision or provisions shall be null and void, but the remainder of the lease shall remain in full force and effect and binding on both the Landlord and the Tenant.

 

25) SECURITY DEPOSIT: Concurrently with its execution of this lease. Tenant shall deliver to Landlord a sum equal to the monthly amount per the Lease Summary, as security for the performance by Tenant of every covenant and condition of this lease. Said deposit may be commingled with other funds of Landlord and shall bear no interest. If Tenant shall default with respect to any covenant or condition of this lease, including but not limited to the payment of rent, Landlord may apply the whole or any part of such security deposit to the payment of any sum in default or any other sum which Landlord may be required to spend by reason of Tenant's default. Should Tenant comply with all of the covenants and conditions of this lease, the security deposit or any balance thereof shall be returned to Tenant at the expiration of the term thereof. In the event of foreclosure or deed in lieu of foreclosure, the holder of the first mortgage shall not be liable to the Tenant, its successors or assigns, for any security deposit required by Landlord.

 

26) FORCE MAJEURE: Landlord shall be excused from performing any obligation or undertaking provided in this lease in the event and/or so long as the performance of any such obligation is prevented or delayed, retarded or hindered by Act of God, fire, earthquake, floods, explosion, actions of the elements, war, invasion, insurrection, riot, mob violence, sabotage, inability to procure equipment, facilities, materials or supplies in the open market, failure of power, failure of transportation, strikes, lockouts, action of labor unions, condemnation, requisition, laws, orders of government or civil or military authorities, or any other cause, whether similar or dissimilar to the foregoing, not within the reasonable control of Landlord.

 

27) TRANSFER OF LANDLORD'S INTEREST: The term "Landlord" as used in this lease, so far as covenants or obligations on the part of Landlord are concerned, shall be limited to mean and include only the Owners at the time in question of the Landlord's interest to the Premises, and in the event of transfer of said Landlord's interest, then the party conveying said Landlord's interest shall be automatically relieved after the date of such transfer, of all personal liability as respects the performance of any obligations on the part of Landlord contained in this lease arising out of acts thereafter occurring or covenants thereafter to be performed, it being intended hereby that all the obligations contained in this lease on the part of the Landlord shall be binding upon Landlord.

 

28) REVISIONS, ADDENDUMS, AND RELEASES: Any revisions, addendums, or releases must be in writing and executed by both parties, thereby becoming a part of this Lease in order to be binding.

 

29) ESTOPPEL CERTIFICATES: Tenant agrees, at any time and from time to time, upon not less than ten (10) days prior written notice by Landlord to execute, acknowledge, and deliver to Landlord a statement in writing (i) certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the Lease is in full force and effect as modified and stating the modifications), (ii) stating the dates to which the rent and other charges hereunder have been paid by Tenant (iii) stating whether or not to the best knowledge of Tenant, Landlord is in default in the performance of any covenant, agreement, or condition contained in this Lease, and if so, specifying any such default of which Tenant should be sent pursuant to Section (23) of this Lease. Any such statement delivered pursuant hereto may be relied upon by any owner of the building and/or the leased Premises, any prospective purchaser of the building and/or leased Premises, any mortgagee or prospective mortgagee of the building and/or leased Premises or of Landlord's interest hereunder, any prospective assignee of any such mortgage or any purchaser or Landlord, actual or prospective, of the underlying land upon which the building and leased Premises are located.

 

30) ATTORNMENT: Tenant agrees that in the event of a sale, transfer or assignment of the landlord's interest in the building or any part thereof, including the leased Premises, or in the event that any proceedings are brought for the foreclosure of or for the exercise of any posting for sale under any mortgage or Deed of Trust made by Landlord covering the building or any part thereof, including the leased Premises, or in the event of a cancellation or termination of any ground or underlying lease covering the building or any part thereof, including the leased Premises, to attorn to and to recognize such transferee, purchaser, ground or underlying Landlord or mortgagee as landlord under this Lease.

 

31) NO PARTNERSHIP: Nothing contained in this Lease shall be deemed or construed to create a partnership or a joint venture of or between Landlord and Tenant, or to create any other relationship between the parties hereto other than that of Landlord and Tenant.

 

  

  

  

 

	
32)  

	
NO REPRESENTATIONS BY LANDLORD: Neither Landlord nor any agent or employee of Landlord has made any representations or promises with respect to the leased Premises or building except as herein expressly set forth, and no rights, privileges, easements or licenses are required by Tenant as except as herein expressly set forth. The Tenant, by taking possession of the leased Premises, shall accept the same "as is" unless otherwise specified in this Lease, in such taking of possession shall be conclusive evidence that the leased Premises in the building are in good and satisfactory condition at the time of such taking of possession.

 

	
33)  

	
DISCLOSURE: THE FOLLOWING DISCLOSURE IS MADE IN COMPLIANCE WITH KANSAS REAL STATE LAWS AND RULES AND REGULATIONS. The following real estate brokerage relationships are available in Kansas. The brokerage relationships offered by KS Commercial Real Estate Services, Inc. are Transaction Broker and Seller/Landlord Agency in limited situations such as properties managed By KS Commercial Real Estate Services, Inc. KS Commercial Real Estate Services, Inc. and any cooperating broker have disclosed to both Landlord and Tenant their brokerage relationship per the Lease Summary. The Landlord and Tenant acknowledge that this disclosure was previously given to them.

 

	
a)  

	
Seller/Landlord Agency Only. (Buyer/Tenant not represented) Listing Broker and Listing/Selling Agent are acting as agent for Seller/Landlord only ("Seller's Agent") and not as agent for Buyer/Tenant. Buyer/Tenant is not represented.

 

	
b)  

	
Buyer/Tenant Agency Only. (Seller/Landlord not represented) Selling Broker and Selling Agent are acting as agents for Buyer/Tenant only ("Buyer's Agents") and not as agent for Seller/Landlord. Seller/Landlord is not represented.

 

	
c)  

	
Separate Single Agency. (Seller/Landlord and Buyer/Tenant each have separate agents) Listing Broker and Listing Agent are acting as agent for Seller/Landlord only ("Seller's Agents") and not as agent for Buyer/Tenant. Selling Broker and Selling Agent are acting as agent for Buyer/Tenant only ("Buyer's Agents") and not as agent for Seller/Landlord.

 

	
d)  

	
Seller/Landlord Sub-Agency. (Buyer/Tenant not represented) Listing Broker and Listing Agent are acting as agent for Seller/Landlord only ("Seller's Agents") and not as agent for Buyer/Tenant. Selling Broker and Selling Agent are acting as agent for Seller/Landlord only ("Seller's Sub-Agents") in cooperating with Listing Broker and Listing Agent and not as agent for Buyer/Tenant. Buyer is not represented.

 

	
e)  

	
Designated Agency. Listing Agent is acting as agent for Seller/Landlord only ("Seller's Agent") and not as agent for Buyer/Tenant. Selling Agent has been designated by Broker to act as legal agent for Buyer/Tenant only ("Designated Agent") and not as agent for Seller/Landlord. Broker is acting in a limited capacity.

 

	
f)  

	
Transaction Broker. Broker and his/her affiliated licensees assist one more parties without being an agent for advocate for the interests of any party to the transaction. A broker, acting as a Transaction Broker, is not an agent for either Landlord or Tenant and does not advocate the interests of either party, but is responsible for assisting both parties in closing the transaction. A Transaction Broker has the following rights and obligations:

 

	
  

	
A) MATTERS THAT CAN BE DISCLOSED. Except as provided in B below, licensees acting as a Transaction Broker regarding the lease of commercial property may disclose the following information unless prohibited by the parties:

 

(1) That a Tenant is willing to pay more than the lease rate offered for the property;

 

(2) That a Landlord is willing to accept less than the lease rate for the property;

 

(3) What motivating factors are for any party leasing the property; or

 

(4) That a Landlord or Tenant will agree to financing terms other than those offered.

 

	
  

	
B) MATTERS THAT CANNOT BE DISCLOSED. Licensees acting as a transaction Broker shall not disclose any information or personal confidences about a party to the transaction which might place the other party at an advantage over the party unless the disclosure is required by law or failure to disclose such information would constitute fraudulent misrepresentation.

 

	
  

	
C) NO DUTY TO INVESTIGATE. Licensees acting as a Transaction Broker have no duty to conduct an independent inspection of the property for the benefit of any party to the transaction; to independently verify the accuracy or completeness of statements made by the Landlord, Tenant or qualified third party inspectors; to conduct an independent investigation of the Tenant's financial condition; or to verify the accuracy or completeness of any statement made by the either party.

 

 

  

  

  

 

	
  

	
D) DUTY TO DISCLOSE MATERIAL FACTS. Licensees acting as a Transaction Broker have the same duty to disclose material facts as a seller's, Landlord's or Tenant's agent.

 

34) SEVERABILITY OF PROVISIONS: If any clause or provision of this Lease shall be determined to be illegal, invalid, or unenforceable under the present or future laws effective during the term hereof, then and in that event it is agreed by the parties hereto that the remainder of this Lease shall not be effected thereby and it is also agreed that in place of any such clause or provision there be added as a part of this Lease a clause or provision and similar in terms to such illegal, invalid, or unenforceable clause or provision as may be possible and be legal, valid, and enforceable.

 

35) BENEFITS AND BURDENS: The provisions of this Lease shall be binding upon, and shall inure to the benefit of, the parties hereto and each of their respective representatives, permitted successors and permitted assigns. Landlord shall have the right, at any time and from time to time, to freely and fully assign any or any part of its interest under this Lease, for any purposes whatsoever. Neither Landlord nor any owner of any interest in Landlord, whether disclosed or undisclosed, shall be under any personal liability with respect to any of the provisions of this Lease. If Landlord is in breach or default with Landlord's obligations under or in connection with this Lease or otherwise, Tenant shall look solely to the equity of the Landlord in the leased Premises for the satisfaction of the Tenant's remedies.

 

36) MODIFICATIONS TO LEASE: Any Lease modification, by either Landlord or Tenant, including, but not limited to, changes, revisions, deletions or amendments must be in writing and executed by both the Landlord and Tenant.

 

SIGNATURE

 

This Lease Agreement and the Exhibits, Addendums, or other attachments as per the Lease Summary, constitutes the entire agreement between the parties, and no modification of this Lease shall be binding upon the parties unless evidenced by an agreement in writing signed by the Landlord and the Tenant after the date hereof. If there is more than one Tenant named herein, the provisions of this Lease shall be applicable to and binding upon such Tenants, jointly and severally. This Lease Agreement is entered into and effective on the date last signed. THIS CONTRACT IS A LEGALLY BINDING DOCUMENT. IF NOT UNDERSTOOD SEEK THE ADVICE OF ANY ATTORNEY.

 

 

LANDLORD:

 

 

Lindemuth, Inc.

 

 

/s/ Kent Lindemuth    Date: October 12, 2011

By:  Kent Lindemuth, President

 

 

TENANT:

 

 

US Alliance Corporation

 

 

/s/ Jack H. Brier    Date: October 12, 2011

By:  Jack H. Brier, President

 

  

  

  

 

EXHIBIT A

 

RULES AND REGULATIONS

 

1. Tenant shall not inscribe any inscription or post, place, or in any manor display any sign, notice, picture, placard or poster, or any advertising matter whatsoever, anywhere in or about Premises at places visible (either directly as an outline or shadow on a glass pane) from anywhere outside of the Premises or from public and common areas within Premises without first obtaining Landlord's written consent thereto and Landlord shall specify the color, size, style and material to be used. No showcase shall be placed in front of or in the lobbies or corridors of the Premises and Landlord reserves the right to remove all showcases so placed and all signs other than those above provided for, without notice and at the expense of the Tenant responsible.

 

2. All exterior and interior signs on corridor doors must be installed by Landlord or someone designated by it and the actual cost thereof shall be paid by the Tenant and all such signs are so placed at the risk of the Tenant.

 

3. If a Tenant desires telegraphic or telephonic connections, the Landlord will direct the electricians as to where the wires are to be introduced and without such direction no boring or cutting of wires shall be permitted.

 

4. The Landlord retains the power to prescribe the weight and proper position of safes and mechanical equipment. All safes, furniture, boxes and bulky articles and packages shall be moved into or out of said building or from one part of the building to another under supervision of Landlord and at such times and according to such regulations as may be designated from time to time by Landlord and at the entrance designated by the Landlord and each tenant shall be responsible for all damage to the walls, floors or other parts of the building caused by or connected with any moving or delivery into or removal from the building of any safe, furniture, boxes or bulky articles while in the building at Tenant's insistence but no moving out shall occur without the written consent of the Landlord in each instance. The premises shall not be overloaded. No engine or boiler or other machinery shall be put upon the premises by any Tenant.

 

5. No Tenant shall do or permit anything to be done in said Premises which will be dangerous to life, or limb, or which will tend to create a nuisance or injure the reputation of the building or use anything except that which is provided by or approved by Landlord in lighting or heating said Premises; or bring into the premises or keep therein any heating or lighting apparatus other than that provided by Landlord; or install any air conditioning or air cooling apparatus without the written consent of Landlord; or in any way injure or annoy other Tenants, or conflict with the laws relating to fire safety, or with the regulations of the Fire Department, or with any insurance policy upon said building or any part hereof, or conflict with any of the laws, rules or regulations of any government agency or municipality having jurisdiction, or use the premises for an illegal or immoral purpose, and no beer, wine or intoxicating liquor shall be sold in said building without the written consent of the Landlord in each instance.

 

6. The sidewalk, passages, lobbies, corridors, elevators and stairways shall not be obstructed by Tenant, or used except for ingress and egress from and to offices or store room.

 

7. The doors, skylights, windows and transoms that reflect or admit light into passageways or into any place in said building shall not be covered or obstructed by Tenant. The water closets and other apparatus shall not be used for any purpose other than those for which they were constructed, and no sweepings, rubbish, rags or other substances shall be thrown therein. Any damage resulting to them from misuse shall be borne by Tenant who shall cause it.

 

8. Tenant and its employees and guests are not to injure or deface the building nor the woodwork, nor the walls of the premises, nor to carry on upon the premises any noisome, noxious, noisy or offensive business nor conduct any auction therein; nor interfere in any way with the other Tenants or those having business with them.

 

9. No room or rooms shall be occupied or used as sleeping or lodging apartments.

 

10. Tenant shall, when leaving premises at close of business, or unoccupied at any time, lock doors and for any default or carelessness in this respect shall make good all injury sustained by other Tenants and by the Landlord or by either of them, for damages resulting from such default or carelessness.

 

11. No animal or bird shall be allowed in any part of the building without the consent of the Landlord.

 

12. Any person or persons, other than the janitor or janitress of Landlord, who shall be employed for the purpose of cleaning premises shall be employed at Tenant's cost and Landlord shall in no way be responsible for any loss of property on

  

  

  

 

or from the premises, however occurring, or any damage done to the furniture by the janitor or janitress furnished by the Tenant or anyone under him. Tenant will report any lack of attention in the service of the building to the Landlord.

 

13. No Tenant shall accumulate or store in the premises covered by this lease any waste paper, discarded records, paper files, sweepings, rags, rubbish or other combustible matter and Tenant shall surrender such matter to Landlord without compensation to be handled and disposed by Landlord. Nothing shall be thrown by Tenant, their employees or guests, out of the windows or doors or down the passages or skylights or over balcony rails of the building.

 

14. The Landlord reserves the right to exclude from the building all drunken persons, idlers and diseased persons, peddlers, solicitors and generally persons of a character or conduct to create disturbance and persons entering in crowds or in such unusual numbers as to cause inconvenience to the tenants of the building.

 

15. Tenant shall be bound by the covenants, if any, binding upon the property upon which the building is situated.

 

16. Tenant and Tenant's agents, guests, employees, and contractors shall park in designated tenant and visitor parking areas only and shall adhere to parking rules and regulations as stipulated from time to time by Landlord. Any and all fines incurred as a result of illegal parking are the responsibility of Tenant or Tenant's agents, employees or invitees and in no way may be deducted from rental payments. Landlord is not responsible for damage or loss of vehicle or vehicle's contents while located in Landlord's parking facilities.

 

17. No parking will be permitted on drives or public dedicated streets in the office complex or in other than designated tenant and visitor parking areas.

 

18. Tenant shall obtain Landlord's permission at least twenty-four (24) hours prior to moving furnishings and/or equipment through hallways and on elevators.

 

19. Landlord reserves the right to change these rules and to make such other and further reasonable rules and regulations either as it affects one or all tenants as in its judgment may from time to time be needed for the safety, care and cleanliness of the premises, for the preservation of good order therein or for any other cause and when such changes are made or modified the new rules shall be deemed a part hereof, with the same effect as if written herein, when a copy shall have been delivered to the Tenant or left with some person in charge of the demised premises.

 

  

  

  

 

Intentionally blank

 

  

  

  

 

 

Exhibit B — Floor Plan

 

 

4120 SW Gage Center Drive

 

Cobblestone Building

 

Suite 240

 

 

  

  

  

FIRST AMENDMENT TO COMMERCIAL LEASE AGREEMENT

 

THIS FIRST AMENDMENT TO COMMERCIAL LEASE AGREEMENT is made this 3rd day of August, 2014 by and between LINDEMUTH INC. DBA GAGE CENTER (hereinafter referred to as LANDLORD ) and US ALLIANCE CORPORATION (hereinafter referred to as TENANT").

 

WITNESSETH:

 

WHEREAS, LANDLORD and TENANT executed and entered into a Lease which commenced on October 11, 2011, for property located at 4123 SW Gage Center Dr. Suite 240 —Topeka. Kansas 66604 as the same has subsequently been renewed (hereinafter collectively referred to as "Lease") for those Premises consisting of approximately 4.067 +/- square feet located at 4123 Slit Gage Center Dr. Suite 240 - Topeka, Kansas 66604 (“Premises”).

 

WHEREAS, LANDLORD and TENANT desire to extend the term and amend the Lease as hereinafter set forth:

 

NOW, THEREFORE, in consideration of the promises and other good and valuable consideration, the sufficiency of which is hereby acknowledged, LANDLORD and TENANT hereby agree that the term of the Lease is amended as follows:

 

1)            LEASE TERM: Tenant hereby desires to extend its lease term for three (3) years starting 01/01/15 through 12/31/17 at a monthly base rent of $2,250.00.

 

2)            OPTION TO RENEW: Tenant shall have the option to extend the lease term for one (1) year starting 01/01/18 through 12/31/18 at a monthly base rent of $2,250.00.

 

"All other terms and conditions of the original Lease which commenced on October 11th, 2011 shall remain unchanged and in full force and effect".

 

IN WITNESS WHEREOF, the parties have executed this instrument the day and year first above written.

 

LANDLORD:

 

 

Lindemuth, Inc.

 

 

/s/ Shannon Lindemuth    Date: August 27, 2014

By:  Kent Lindemuth, President

 

 

TENANT:

 

 

US Alliance Corporation

 

 

/s/ Jack H. Brier    Date: August 26, 2014

By:  Jack H. Brier, Presidentusallianceex102.htm

EXHIBIT 10.2

 

Gen Re

 

Automatic Yearly Renewable Term

Reinsurance Agreement

 

between

 

US Alliance Life & Security Company

Topeka, Kansas

 

(hereinafter referred to as the "Company")

 

and

 

General Re Life Corporation

Stamford, Connecticut

 

(hereinafter referred to as the "Reinsurer")

 

Effective July 1, 2014

 

Agreement # U169-100-000

  

  

  

 

U169-100-000

 

TABLE OF CONTENTS

 

 

Article 1                     PREAMBLE ................................................................................................................................................................................4

 

1.1 Parties to this Agreement

 

1.2 Compliance

 

1.3 Governing Law

 

1.4 Entire Agreement

 

1.5 Severability

 

1.6 Office of Foreign Assets Control

 

Article 2                     AUTOMATIC REINSURANCE ...............................................................................................................................................6

 

2.1 General Conditions

 

2.2 Coverages

 

Article 3                     FACULTATIVE REINSURANCE ............................................................................................................................................7

 

3.1 Procedure

 

3.2 Continuing Notice Obligation

 

Article 4                     LIABILITY ...................................................................................................................................................................................8

 

4.1 Automatic Reinsurance

 

4.2 Facultative Reinsurance

 

4.3 Conditional Receipt

 

4.4 Retained Amounts

 

Article 5                     REINSURANCE BENEFIT AMOUNTS ..................................................................................................................................9

 

5.1 Life

 

5.2 Disability Waiver of Premium

 

5.3 Accidental Death Benefit

 

Article 6                     REDUCTIONS, TERMINATIONS AND CHANGES .........................................................................................................10

 

6.1 General Conditions

 

6.2 Reductions and Terminations

 

6.3 Non-Contractual Increases

 

6.4 Risk Classification Changes

 

6.5 Non-Forfeiture Benefits

 

6.6 Reinstatement

 

Article 7                     CONVERSIONS, EXCHANGES AND REPLACEMENTS ..............................................................................................12

 

Article 8                     PREMIUM ACCOUNTING ....................................................................................................................................................13

 

8.1 Payment of Premiums

 

8.2 Delayed Payment

 

8.3 Failure to Pay Premiums

 

8.4 Premium Rate Guarantee

 

8.5 Administration

 

8.6 Foreign Account Tax Compliance Act

 

 

  

  

  

U169-100-000

 

Article 9                     CLAIMS ..................................................................................................................................................................................14

 

9.1 Coverage

 

9.2 Notice

 

9.3 Liability

 

9.4 Proof of Loss

 

9.5 Settlement

 

9.6 Contested Claims

 

9.7 Extra Contractual Damages

 

9.8 Misstatement

 

9.9 Misrepresentation or Suicide

 

9.10 Change in Policy or Process

 

Article 10                  RETENTION LIMIT CHANGES .........................................................................................................................................18

 

Article 11                  RECAPTURE ..........................................................................................................................................................................19

 

Article 12          GENERAL PROVISIONS ....................................................................................................................................................20

 

12.1 Currency

 

12.2 Premium Tax

 

12.3 Inspection of Records

 

12.4 Errors and Omissions

 

12.5 Offset

 

12.6 Company Data

 

12.7 Coverage

 

Article 13                  FORMS, MANUALS AND ISSUE RULES ........................................................................................................................22

 

Article 14                  WARRANTIES AND REPRESENTATIONS ...................................................................................................................23

 

Article 15                  DAC TAX ................................................................................................................................................................................24

 

Article 16                  INSOLVENCY ........................................................................................................................................................................25

 

16.1 Definition of Insolvency

 

16.2 Insolvency of the Company

 

16.3 Insolvency of the Reinsurer

 

Article 17                  ARBITRATION .....................................................................................................................................................................26

 

Article 18                  CONFIDENTIALITY .............................................................................................................................................................28

 

Article 19         DURATION OF AGREEMENT.............................................................................................................................................29

 

Article 20                  EXECUTION ...........................................................................................................................................................................30

 

Exhibit A                    PLANS, RETENTION AND BINDING LIMITS ...............................................................................................................31

 

Exhibit B                    REINSURANCE PREMIUMS ..............................................................................................................................................32

 

Exhibit C                    REPORTING METHOD .......................................................................................................................................................34

 

 

  

  

  

U169-100-000

 

Article 1

PREAMBLE

 

1.1 Parties to this Agreement

This is an agreement for indemnity reinsurance (the "Agreement") solely between US Alliance Life and Security Company, of Kansas (the "Company") and General Re Life Corporation, of Connecticut (the "Reinsurer"). The Company and the Reinsurer may be referred to individually as a "Party" or collectively as the "Parties". The performance of the obligations of each Party under this Agreement shall be rendered solely to the other Party.

 

The acceptance of risks under this Agreement shall create no right or legal relation whatsoever between the Reinsurer and the insured, owner, or beneficiary of any insurance policy or other contract of the Company.

 

1.2 Compliance

This Agreement applies only to the issuance of insurance by the Company in a jurisdiction in which it is properly licensed. The Company represents that to the best of its knowledge, it is in compliance with all state and federal laws applicable to the business reinsured under this Agreement. In the event that the Company is found to be in non-compliance with any law material to this Agreement, the Agreement shall remain in effect and the Company shall indemnify the Reinsurer for any direct loss the Reinsurer suffers as a result of non-compliance, and shall seek to remedy the non-compliance.

 

1.3 Governing Law

This Agreement shall be construed in accordance with the laws of the State of Connecticut.

 

1.4 Entire Agreement

This Agreement shall constitute the entire agreement between the Parties with respect to the business reinsured hereunder. There shall be no understanding between the Parties other than that expressed in this Agreement. Any change or modification to this Agreement shall be null and void unless made by written amendment to this Agreement and signed by both Parties.

 

1.5 Severability

If any provision of this Agreement is determined to be invalid or unenforceable, such determination shall not impair or affect the validity or the enforceability of the remaining provisions of this Agreement.

 

1.6 Office of Foreign Assets Control

The Company represents that, to the best of its knowledge, it is, and shall use best efforts to continue to be, in compliance with all laws, regulations, judicial and administrative orders (collectively "laws") applicable to the reinsured policies under this Agreement, including but not limited to, sanctions or laws administered by the U.S. Treasury Department's Office of Foreign Assets Control ("OFAC"), as such laws may be amended from time to time. Neither the Company nor the Reinsurer shall be required to take any action under this Agreement that would result in it being in violation of said laws, including, but not limited to, making any payments in violation of the law. Should either Party discover a reinsurance payment has been made in violation of the law, it shall notify the other Party and the Parties shall cooperate in 

 

4

  

  

order to take all necessary corrective actions including, but not limited to, the return of the payment to the Reinsurer, unless prohibited by law.

 

 

5

  

  

U169-100-000

 

Article 2

AUTOMATIC REINSURANCE

 

2.1 General Conditions

On or after 12:01 A.M. Eastern Standard Time on the Effective Date of this Agreement, reinsurance under this Agreement shall be in force and binding on the Reinsurer provided that the issuance of such insurance by the Company constitutes the transaction of business in a jurisdiction in which the Company is properly licensed, the insurance is issued on the lives of residents of the United States or Canada, and the reinsurance premiums continue to be paid in accordance with this Agreement.

 

2.2 Coverages

Life insurance and benefits under associated riders are the coverages reinsured automatically

 

under this Agreement, up to the limits shown in Exhibit A.

 

When the Company retains its maximum limit of retention with respect to a life, as shown in Exhibit A, the Company shall cede and the Reinsurer shall automatically accept as reinsurance under the terms and conditions of this Agreement, liability on individual life insurance on such life, together with all reinsured supplemental coverages, provided that the policies are issued directly by the Company on those plans of insurance shown in Exhibit A and fully underwritten by employees of the Company or a third party vendor approved by the Reinsurer in accordance with the Company's usual underwriting standards and requirements which the Reinsurer has acknowledged in writing.

 

Reinsurance shall not be ceded automatically to the Reinsurer on any risk if:

 

	
1.  

	
the amount of ultimate reinsurance causes the Binding Limit, shown in Exhibit A, to be exceeded; or

	
2.  

	
the amount of ultimate reinsurance causes the Jumbo Limit, as shown in Exhibit A, to be exceeded; or

 

	
3.  

	
the Company has submitted the risk for facultative underwriting consideration to any reinsurer, including the Reinsurer, within five (5) years except for any prior facultative submission that was solely for capacity and which may now be accommodated within the terms of this Agreement; or

 

	
4.  

	
the substandard mortality rating assessed to the risk exceeds Table P (500%) or its equivalent on an extra premium basis; or

	
5.  

	
the risk at the time of issue exceeds the maximum issue age shown in Exhibit A; or

	
6.  

	
the individual life insurance is to be issued on a professional athlete, politician, or diplomat.

 

6

  

  

U169-100-000

 

Article 3

FACULTATIVE COVERAGE

 

3.1 Procedure

When a risk does not qualify for automatic reinsurance or, if the Company so desires, the Company may request facultative consideration of any risk on those plans of insurance shown in Exhibit A by sending the Reinsurer a reinsurance application form, showing details of the risk together with copies of the original application and all information known to the Company pertaining to the insurability of the risk. The Reinsurer shall give the reinsurance application prompt consideration and shall notify the Company of its decision and risk classification. The Company shall notify the Reinsurer in writing of its unconditional acceptance of an offer during the lifetime of the insured.

 

After the first premium has been received by the Company on a policy that has been submitted to and unconditionally accepted by the Reinsurer on a facultative basis, the Company shall promptly report placement of the policy to the Reinsurer in the agreed upon format.

 

Unless specifically agreed to the contrary, the Reinsurer shall hold its offer on a pending case open for ninety (90) days, at the end of which time the Reinsurer shall, in the absence of written notification of case status, routinely close its file and consider the offer to reinsure as formally withdrawn.

 

3.2 Continuing Notice Obligation

Both prior to and subsequent to the Reinsurer's acceptance of a risk, the Company shall send to

 

the Reinsurer all information that is related to the insurability of such risk.

 

7

  

  

U169-100-000

 

Article 4

LIABILITY

 

4.1 Automatic Reinsurance

The liability of the Reinsurer on any automatic reinsurance covered under this Agreement shall

 

begin and end simultaneously with that of the Company, subject to the conditions of Article 2.

 

4.2 Facultative Reinsurance

For facultative reinsurance, the Reinsurer's liability shall commence at the same time as the Company's liability, provided that the Reinsurer has made an unconditional facultative offer and that unconditional offer was accepted in writing, during the lifetime of the insured, in accordance with the terms of this Agreement. The Reinsurer shall become liable for its share of the risk, provided that the policy has been delivered according to the usual procedures of the Company and that the Company has followed its facultative coverage rules for reinsurance placement.

 

4.3 Conditional Receipt

The Reinsurer shall accept liability on the Company's Conditional Receipt or Pre-paid business up to the amount shown in Exhibit A, provided that all procedures, terms and conditions of the Company's Conditional Receipt are followed. All Conditional Receipt forms in use by the Company, as well as any subsequent changes or modifications, must be approved in writing by the Reinsurer.

 

The Reinsurer's liability on automatic reinsurance shall begin and end with the Company's conditional receipt liability.

 

In the case where the conditional receipt is given for an amount less than the policy application, the Reinsurer shall not be liable for more than its proportionate share of the maximum limit as shown in the Company's conditional receipt.

 

4.4 Retained Amounts

The Company may not reinsure the amount it has retained on the business covered under this Agreement on any basis without the Reinsurer's written consent, which consent may be withheld for any reason.

 

8

  

  

U169-100-000

 

Article 5

REINSURANCE BENEFIT AMOUNTS

 

5.1 Life

The reinsured net amount at risk of the policy is defined as the policy face amount less the account value, less the amount retained by the Company, and for automatic policies, multiplied by the Reinsurers share as stated in Exhibit A. For variable amount plans, the reinsured net amount at risk is calculated using the account value in effect at the end of the monthly reinsurance billing period.

 

The Company's retention on the policy shall remain constant. Any change in the net amount at risk due to changes in the policy's cash value or account value shall be allocated to the reinsured amount.

 

5.2 Disability Waiver of Premium

Disability Waiver of Premium is not reinsured under this Agreement.

 

5.3 Accidental Death Benefit

Accidental Death Benefit is not reinsured under this Agreement.

 

9

  

  

U169-100-000

 

Article 6

REDUCTIONS, TERMINATIONS AND CHANGES

 

6.1 General Conditions

Whenever a change is made in the status, plan, amount or other material feature of a policy reinsured under this Agreement, the Reinsurer shall, upon receipt of notification of the change, provide appropriately adjusted reinsurance coverage. The Company shall notify the Reinsurer of any such change not more than sixty (60) days after its effective date.

 

6.2 Reductions and Terminations

In the event of the reduction, lapse or termination of insurance with the Company on a life, the Company shall reduce reinsurance proportionately. In the event that there is more than one reinsurer on the policy being reduced, the reduction in reinsurance shall be proportionate among the reinsurers. The Reinsurer shall refund any net unearned premiums. However, policy fees, if any, shall be deemed earned for a policy year if during any portion of such policy year, ceded insurance is exposed to risk.

 

6.3 Non-Contractual Increases

If the amount of insurance is increased as a result of a non-contractual change, the increase shall be underwritten by the Company in accordance with its customary standards and procedures and shall be considered new reinsurance under this Agreement. The Reinsurer's approval is required if the original policy was reinsured on a facultative basis or if the new amount shall cause the reinsured amount on the life to exceed either the Automatic Binding Limits or the Jumbo Limits shown in Exhibit A.

 

The Reinsurer shall assume its share of the entire amount in excess of the Company's applicable retention. Premiums for the additional reinsurance shall be point-in-scale from the original issue date.

 

6.4 Contractual Increases

For policies reinsured on an automatic basis, reinsurance of increases in amount resulting from contractual policy provisions shall be accepted only up to the Automatic Binding Limits shown in Exhibit A.

 

For policies reinsured on a facultative basis, reinsurance shall be limited to the ultimate amount shown in the Reinsurer's facultative offer.

 

For policies with increasing net amount at risk, the Reinsurer's ultimate risk amount is limited to its share of twice the initial face amount, not to exceed its share of the automatic binding limit. Reinsurance premiums for contractual increases shall be on a point-in-scale basis from the original issue age of the policy.

 

6.5 Risk Classification Changes

If the policyholder requests a table rating reduction or removal of a flat extra, such change shall be underwritten according to the Company's normal underwriting practices. Risk classification on facultative policies shall be subject to the Reinsurer's approval.

 

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6.6 Non Forfeiture Benefits

If the original policy lapses and extended term insurance is elected under the terms of the policy, reinsurance shall continue on the same basis as under the original policy until the expiry of the extended term period.

 

If the original policy lapses and reduced paid-up insurance is elected under the terms of the policy, the amount shall be reduced.

 

Reinsurance shall be reduced by the full amount of the reduction. The reinsurance premiums shall be calculated in the same manner as reinsurance premiums were calculated on the original policy. If the amount of reduction exceeds the risk amount reinsured, the reinsurance on the policy shall be terminated.

 

6.7 Reinstatement

If a policy that has lapsed or surrendered is reinstated in accordance with its terms and in accordance with Company rules and procedures, the Reinsurer shall, upon notification of reinstatement, reinstate the pre-existing reinsurance coverage. However, if the policy were facultatively reinsured with the Reinsurer, approval by the Reinsurer shall be required prior to the reinstatement of the reinsurance if the Company retained less than fifty (50) percent of the risk and the policy has been lapsed for more than ninety (90) days.

 

Upon reinstatement of the reinsurance coverage, the Company shall pay the reinsurance premiums which would have accrued had the policy not lapsed, together with interest at the same rate as the Company receives under its policy.

 

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Article 7

CONVERSIONS, EXCHANGES AND REPLACEMENTS

 

7.1 General Conditions

If a policy reinsured under this Agreement is converted, exchanged or replaced, the Company shall promptly notify the Reinsurer. Unless mutually agreed otherwise, policies that are not reinsured with the Reinsurer and that exchange or convert to a plan covered under this Agreement shall not be reinsured hereunder.

 

7.2 Conversions

The Reinsurer shall continue to accept reinsurance resulting from the contractual conversion of any policy reinsured under this Agreement, in an amount not to exceed the original amount reinsured hereunder. If the plan to which the original policy is converting is reinsured by the Reinsurer, either under this Agreement or under a different Agreement, reinsurance premium rates for the resulting converted policy shall be those contained in the Agreement that covers the plan to which the original policy is converting. However, if the Reinsurer does not reinsure the new plan, reinsurance premiums for a policy resulting from a contractual conversion shall use the rates shown in Exhibit B. Reinsurance premiums and any allowances for conversions shall be on a point-in-scale basis from the issue age of the original policy.

 

If the conversion results in an increase in the risk amount, the increase shall be underwritten by the Company in accordance with its customary standards and procedures. The Reinsurer shall accept its share of such increases, subject to the new business provisions of this Agreement. Reinsurance premiums and any allowances for increased risk amounts shall be first-year premiums at the agreed upon premium rate schedule.

 

7.3 Exchanges and Replacements

The Reinsurer shall consider exchanges and replacements to the plans reinsured under this

Agreement. First-year premium calculations shall apply to any policy on which:

the Company has obtained complete and current underwriting evidence on the full amount; and

the full normal commissions are paid for the new plan; and

the Suicide and Contestable provisions apply as if the policy were newly issued.

 

The Reinsurer's approval to exchange or replace the policy shall be required if the original policy were reinsured on a facultative basis.

 

If the Company's guidelines do not treat the policy as new business, the exchange or replacement shall continue to be ceded to the Reinsurer. The rates shall be based on the original issue age, underwriting class and duration since the issuance of the original policy.

 

Reinsurance premiums shall be the agreed upon exchange premiums.

 

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Article 8

PREMIUM ACCOUNTING

 

8.1 Payment of Reinsurance Premiums

Reinsurance premiums for life insurance, waiver of premium disability benefits and accidental death benefits shall be the premiums shown in Exhibit B. Reinsurance premiums are payable in accordance with the method outlined in Exhibit C.

 

8.2 Delayed Payment

Premium balances which remain unpaid for more than sixty (60) days shall incur interest from the due date, calculated from that date by using the 13-week Treasury Bill rate reported for the last working day of the calendar month in the "Money Rates" section of The Wall Street Journal or comparable publications.

 

8.3 Failure to Pay Premiums

The payment of reinsurance premiums shall be a condition precedent to the liability of the Reinsurer for reinsurance covered by this Agreement. In the event that reinsurance premiums are not paid when due, the Reinsurer shall have the right to terminate the reinsurance for all policies having reinsurance premiums in arrears. If the Reinsurer elects to exercise its right of termination, it shall give the Company thirty (30) days written notice of its intention to terminate said reinsurance. If all reinsurance premiums in arrears, including any which may become in arrears during the thirty (30) day period, are not paid before the expiration of said period, the Reinsurer shall be relieved of all liability. Policies on which reinsurance premiums subsequently fall due shall automatically terminate if reinsurance premiums are not paid. Terminated reinsurance may be reinstated, subject to approval by the Reinsurer, within sixty (60) days of the date of termination upon payment of all reinsurance premiums in arrears. The Reinsurer shall have no liability for any claims incurred between the date of termination and the date of the reinstatement of the reinsurance. The right to terminate reinsurance shall not prejudice the Reinsurer's right to collect premiums for the period reinsurance was in force prior to the expiration of the thirty (30) day notice.

 

The Company may not withhold premiums in order to force termination under the provisions of this Article and to avoid the provisions regarding recapture in Article 11.

 

8.4 Premium Rate Guarantee

The Reinsurer guarantees the current life reinsurance premium rates for one policy year. Thereafter, the rates shall not exceed the maximum of the YRT net premiums computed using 100% of the 2001 CSO ultimate, sex distinct, smoker/ nonsmoker mortality table including multiples for substandard ratings of the reinsured policy, or the premium rates in Schedule B, or the guaranteed premium rates the Company may charge its policyholders including multiples for substandard ratings of the reinsured policy.

 

If the Reinsurer increases reinsurance premium rates without a corresponding increase in rates by the Company to its policyholders, the Company shall have the right to recapture the reinsured business without a penalty or a recapture fee. The Reinsurer shall provide 180 days advance notice to the Company prior to the rate increase becoming effective.

 

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8.5 Administration

The Company shall administer the business using an electronic format acceptable to the Reinsurer. All policies must be reported to the Reinsurer as soon as possible after policy issue and in no event shall the reporting be after twelve (12) months from policy issue. Any policy that is reported more than twelve (12) months after issue shall be subject to facultative review by the Reinsurer.

 

If any termination of a policy is reported more than two (2) years after the date of termination, then the Reinsurer shall reimburse premium on a pro rata basis, but in no event shall the Reinsurer reimburse greater than two (2) years of premium.

 

8.6 Foreign Account Tax Compliance Act (FATCA)

Prior to the payment of the first premium due hereunder, the Company shall provide to the Reinsurer the documentation required by FATCA (such as a valid IRS Form W-8BEN-E or Form W-9, as the case may be, or valid substitute forms, hereinafter "FATCA Documentation") confirming that the Company is not subject to any tax withholding.

 

In the event that the Company fails to provide the Reinsurer with FATCA Documentation in accordance with paragraph one above, the Reinsurer shall delay payment of any profit commission otherwise due to the Company for a period of up to thirty (30) days and shall notify the Company accordingly. If the Company fails to provide FATCA Documentation during this thirty (30) day period, the Reinsurer shall deduct and withhold 30% of such payment and pay the remaining amount to Company.

 

Interest shall not be assessed against the Reinsurer with respect to any payment made after the due date hereunder as a result of the Company's failure to timely provide FATCA Documentation; and such amounts shall not be subject to offset under the Offset Article.

 

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Article 9

CLAIMS

 

9.1 Coverage

Claims covered under this Agreement include only death claims, which are those due to the death of the insured on a policy reinsured under this Agreement, and any additional benefits specified in Exhibit A, which are provided by the underlying policy and are reinsured under this Agreement.

 

9.2 Notice

The Company shall notify the Reinsurer, as soon as possible, after it receives a claim on a policy reinsured under this Agreement. If proof of claim approved by the Company or proof of claim payment made by the Company is not provided to the Reinsurer within twelve (12) calendar months from the date such proof of claim is approved or paid, whichever is earlier, then the Reinsurer shall be relieved of all liability.

 

9.3 Liability

Whenever a claim is made on a policy reinsured under this Agreement, the Reinsurer shall consider its liability to the Company to be for the amount of reinsurance for that policy as determined in Article 5 and Exhibit A. If the Company has been paying premium to the Reinsurer on an estimated reinsured net amount at risk, the Reinsurer's claim liability shall not exceed that amount provided by the Company. The Reinsurer shall accept the good faith decision of the Company in settling a claim under strict policy conditions and shall pay the amount of its liability in effect at the time of settlement, including its proportionate share of any interest paid to the claimant.

 

If the Company has retained either a) less than its full retention or b) fifty (50) percent or less of the risk, the Company shall consult with the Reinsurer before making an admission of liability on any claim on which death has occurred during the contestable period. If the Company chooses to pay such a claim that the Reinsurer believes should be contested, then the dispute may be submitted to arbitration.

 

9.4 Proof of Loss

In every case of loss, the Company shall provide the Reinsurer with copies of all proofs of loss, underwriting papers, investigation reports and a statement showing the amount paid on the claim by the Company, plus any information the Reinsurer may request.

 

9.5 Settlement

For life insurance claims, the Reinsurer shall pay its share of death benefits in a lump sum

regardless of the form of claim settlement by the Company.

 

For an approved Waiver of Premium benefit claim, the Reinsurer shall pay its share of the gross premium waived by the Company, and the Company shall continue to pay the total reinsurance premium, excluding the corresponding waiver premium. If the policy is subject to recapture, the reinsurance premium shall be appropriately adjusted. For Universal Life products, the gross premium waived shall be the cost of insurance premium waived by the Company. The Reinsurer may pay Waiver of Premium claims in one payment per year regardless of the mode of premium payment specified in the policy.

 

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9.6 Contested Claims

The Company shall notify the Reinsurer of its intention to contest or compromise a claim. The Company shall notify the Reinsurer of any lawsuit made against the Company on a policy reinsured under this Agreement. Unless agreed otherwise, all contestable claims shall be routinely investigated. If the Reinsurer chooses not to participate in a contested claim, it shall pay its full amount of reinsurance liability on such claim and shall thereby be relieved of all future liability with respect to such contested claim.

 

If the Reinsurer joins the Company in a contest or compromise, the Reinsurer shall participate in the same proportion that the amount at risk reinsured with the Reinsurer bears to the total amount at risk to the Company on the claim and shall share in the reduction in liability in the same proportion. The Reinsurer shall pay its share of "routine expenses" which are considered to be investigative or administrative expenses incurred by the Company that are customarily incurred with respect to most claims. Participation in "unusual expenses" shall require written consent by the Reinsurer. Unusual expenses shall include, but not be limited to, fees of outside attorneys, investigators or consultants. The Reinsurer shall not reimburse expenses or compensation of salaried officers and employees of the Company or any subsidiary or any affiliate of the Company, or expenses incurred by the Company as a result of a dispute arising out of conflicting claims of entitlement to policy proceeds or benefits.

 

9.7 Extra Contractual Damages

The Reinsurer shall not participate in Punitive or Compensatory Damages or Statutory Penalties that are awarded against the Company as a result of an act, omission or course of conduct committed solely by the Company, its agents, or representatives in connection with claims covered under this Agreement. The Reinsurer shall, however, pay its share of Statutory Penalties awarded against the Company in connection with claims covered under this Agreement if the Reinsurer elected in writing to join in the contest of the coverage in question.

 

The Parties recognize that circumstances may arise in which equity would require the Reinsurer, to the extent permitted by law, to share proportionately in Punitive and Compensatory damages. Such circumstances are difficult to define in advance, but would generally be those situations in which the Reinsurer was an active party and, in writing, recommended or consented to, in advance, the act or course of conduct of the Company that would result in the assessment of the Extra Contractual Damages. In such situations, the Reinsurer and the Company shall share such damages so assessed, in equitable proportions.

 

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

	
n

	
Punitive Damages are those damages awarded as a penalty, the amount of which is neither governed nor fixed by statute.

	
n

	
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.

 

	
n

	
Statutory Penalties are those amounts awarded as a penalty, but are fixed in amount by statute.

 

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9.8 Misstatement

In the event of an increase or decrease in the amount of the Company's liability on a policy reinsured hereunder because of a misstatement of age, sex, or other risk classification, which is established after the death of the insured, the Company and the Reinsurer shall share in the change in amount in proportion to its respective net liability prior to the change. The reinsurance premium for all policy years shall be recalculated on the basis of the adjusted amount using premiums and reserves at the correct risk classification, and the adjustment for the difference in reinsurance premiums shall be made without interest.

 

9.9 Misrepresentation or Suicide

If the Company returns premiums to the policyholder or beneficiary as a result of misrepresentation or suicide of the insured, the Reinsurer shall refund net reinsurance premiums received on that policy without interest to the Company in lieu of any other form of reinsurance benefit payable under this Agreement.

 

9.10 Change In Policy or Process

In the event of any change in the claims policy or process of the Company including, but not limited to, a change in the principal claims personnel, or the delegation of the claim settlement to a third party, or the decision to close to new business, the Company shall inform the Reinsurer without delay and the Reinsurer shall have the right to review and adjust the claims authority with immediate effect by giving written notice of such change to the Company.

 

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Article 10

RETENTION LIMIT CHANGES

 

If the Company changes its maximum retention limits as shown in Exhibit A, it shall provide the Reinsurer with written notice of the intended changes ninety (90) days in advance of the effective date.

 

A change to the Company's maximum retention limits shall not affect the reinsured policies in force except as specifically provided elsewhere in this Agreement. Furthermore, unless agreed between the Parties, an increase in the Company's retention schedule shall not affect an increase in the total risk amount that it may automatically cede to the Reinsurer.

 

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Article 11

RECAPTURE

 

Whenever the Company increases its maximum retention limits over the maximum retention limits set forth in Exhibit A, the Company has the option to recapture certain risk amounts. If the Company has maintained its maximum stated retention (not a special retention limit) for the plan and insured's age, sex, and mortality classification, it may apply its increased retention limits to reduce the amount of reinsurance in force as follows.

	
1.  

	
The Company must give the Reinsurer thirty (30) days written notice prior to its intended date of the commencement of recapture.

 

	
2.  

	
The reduction of reinsurance on affected policies shall become effective on the policy anniversary date immediately following the notice of election to recapture; however, no reduction shall be made until a policy has been in force for at least [insert number of years] years.

	
3.  

	
If any reinsured policy is recaptured, all reinsured policies eligible for recapture under the provisions of this Article must be recaptured up to the Company's new maximum retention limits in a consistent manner and the Company must increase its total amount of insurance on each reinsured life. The Company may not revoke its election to recapture for policies becoming eligible at future anniversaries.

 

If portions of the reinsured policy have been ceded to more than one reinsurer, the Company must allocate the reduction on reinsurance so that the amount reinsured by each reinsurer after the reduction is proportionately the same as if the new maximum dollar retention limits had been in effect at the time of issue.

 

The amount of reinsurance eligible for recapture is based on the current amount at risk as of the date of recapture. For a policy issued as a result of exchange, conversion, or re-entry, the recapture terms of the reinsurance Agreement covering the original policy shall apply, and the duration for the purpose of recapture shall be measured from the effective date of the reinsurance on the original policy.

 

If there is a reinsured waiver of premium claim in effect when recapture takes place, the Reinsurer shall continue to pay its share of the waiver claim until it terminates. The Reinsurer shall not be liable for any other benefits, including the basic life risk, that are eligible for recapture. All such eligible benefits shall be recaptured as if there were no waiver claim in effect.

 

After the effective date of recapture, the Reinsurer shall not be liable for any reinsured policies or portions of such reinsured policies eligible for recapture that the Company has overlooked.

 

The terms and conditions for the Company to recapture reinsured policies, as made necessary by the insolvency of the Reinsurer, are set forth in Article 16.

 

No recapture shall be permitted if the Company has either obtained or increased stop loss reinsurance coverage as justification for the increase on retention limits.

 

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Article 12

GENERAL PROVISIONS

 

12.1 Currency

All payments under this Agreement shall be made in United States currency.

 

12.2 Premium Tax

The Reinsurer shall not reimburse the Company for premium taxes on reinsurance premiums.

 

12.3 Inspection of Records

The Reinsurer, or its duly authorized representatives, shall have the right at any reasonable time to inspect, at the office of the Company, all data and records relating, directly or indirectly, to any business reinsured under this Agreement.

 

12.4 Errors and Omissions

This provision applies only to errors relating to the administration of reinsurance covered by this Agreement. This provision does not apply to the administration of the insurance provided by the Company to its insured or any other errors or omissions committed by the Company with regard to the policy reinsured hereunder. If through unintentional clerical error, oversight, omission or misunderstanding, collectively referred to as "errors", the Reinsurer or the Company fails to comply with the terms of this Agreement and if, upon discovery of the error by either Party, the other is promptly notified, each thereupon shall be restored to the position it would have occupied if the error had not occurred.

 

If it is not possible to restore each Party to the position it would have occupied if the error had not occurred, the Parties shall endeavor in good faith to promptly resolve the situation in a manner that is fair and reasonable, and most closely approximates the intent of the Parties as evidenced by this Agreement.

 

If either Party discovers that the Company has failed to cede reinsurance as provided in this Agreement, or failed to comply with its reporting requirements, the Reinsurer, in its sole discretion, shall require the Company to audit its records for similar errors and to take all reasonable actions necessary to avoid similar errors in the future.

 

12.5 Offset

Upon notice to the other Party, the Company or the Reinsurer may offset any undisputed balance(s) due from one Party to the other from premiums, allowances, claims, or any other amount(s) due under this Agreement. The right of offset shall not be affected or diminished because of the insolvency of either Party.

 

12.6 Company Data

The Company agrees to keep the Reinsurer informed of the identity and terms of its policies, riders and contracts reinsured under this Agreement, as well as any special programs affecting reinsurance hereunder, with copies of its application forms, policy forms, supplementary agreements, rate books, plan codes and all other materials relevant to the coverages reinsured.

 

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Further, the Company agrees to furnish the Reinsurer with all underwriting manuals or criteria, requirements, and retention schedules affecting reinsurance ceded and to keep the Reinsurer fully informed of all subsequent changes to said materials.

 

12.7 Coverage

This Agreement applies only to policies written directly by the Company. Policies where liability is assumed by the Company through reinsurance, acquisition, mergers or portfolio transfers are not reinsured under this Agreement.

 

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Article 13

FORMS, MANUALS AND ISSUE RULES

 

It is the Company's obligation to ensure that business ceded under this Agreement does not deviate from the underwriting criteria:

	
1.  

	
the Preferred Criteria for business ceded under this Agreement is included in Exhibit A;

	
2.  

	
the age and amount requirements for business ceded under this Agreement are included in Exhibit A;

	
3.  

	
the underwriting manual used for the classification of risk business ceded under this Agreement is General Re Life Corporation;

	
4.  

	
the application for insurance and conditional receipt or temporary insurance agreement is on file with the Reinsurer.

 

The Company's retention schedule, premium rates and policy forms applicable to the reinsured policies and in use as of the Effective Date of this Agreement have been supplied to the Reinsurer. If the underwriting manual has not been supplied, the Company has informed the Reinsurer of the manual in use.

 

The Company shall promptly notify the Reinsurer of any proposed changes to the above or any changes that shall alter the risk profile of business reinsured under this Agreement. This Agreement shall not extend to any policies issued pursuant to any changes unless the Reinsurer has consented in writing to accept policies with such changes.

 

This Agreement shall not provide automatic reinsurance where a policy has been issued contrary to the agreed upon underwriting criteria. The following list is meant to provide examples, but is not intended to be all-inclusive:

	
1.  

	
the risk should have been declined, postponed, or additional information obtained based on the underwriting manual cited above;

	
2.  

	
a risk that exceeds the agreed upon limits or capacity;

	
3.  

	
not obtaining age and amount requirements;

	
4.  

	
reducing ratings outside approved guidelines;

	
5.  

	
business decisions.

 

If a policy is issued at an underwriting classification different from the underwriting classification in the agreed upon underwriting manual and guidelines, then:

	
1.  

	
absent any knowledge by the Company of a claim on the policy, the Reinsurer shall receive the appropriate premium, together with interest, based on the appropriate underwriting rate per the agreed upon underwriting guidelines. The Reinsurer's liability remains unchanged.

	
2.  

	
in all other cases, the Reinsurer's liability shall be reduced to the same proportion as the reinsurance premiums credited to the Reinsurer bear to the reinsurance premiums based on the appropriate underwriting rating per the agreed upon underwriting guidelines.

 

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Article 14

WARRANTIES AND REPRESENTATIONS

 

The Company warrants and represents to the Reinsurer as a continuing warranty and representation that all information supplied by the Company to the Reinsurer in connection with this Agreement prior to this Agreement's Effective Date and the date of its execution, is to the best of the knowledge and belief of the Company true, complete and accurate in all respects.

 

The Company is not aware of any facts or circumstances that have not been disclosed to the Reinsurer which, in the reasonable opinion of the Reinsurer, might have adversely affected the Reinsurer's decision in considering whether or on what terms and conditions to provide reinsurance to the Company, had such facts or circumstances been disclosed.

 

The Company acknowledges that the Reinsurer has relied upon the information supplied by the Company prior to the execution date of the Agreement in deciding whether or not to enter into this Agreement.

 

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Article 15

DAC TAX

 

The Company and the Reinsurer hereby agree to the following pursuant to Section 1.848­2(g)(8) of the Income Tax Regulations issued December 29, 1992, under Section 848 of the Internal Revenue Code of 1986, as amended. This election shall be effective for all taxable years for which this Agreement remains in effect.

 

	
1.  

	
The term "Party" shall refer to either the Company or the Reinsurer, as appropriate.

 

	
2.  

	
The terms used in this Article are defined by reference to Regulation Section 1.848-2 in effect as of December 29, 1992.

 

	
3.  

	
The Party with the net positive consideration for this Agreement for each taxable year shall capitalize specified policy acquisition expense with respect to this Agreement without regard to the general deductions limitation of Section 848 (c)(1).

 

	
4.  

	
The Company and the Reinsurer agree to exchange information pertaining to the amount of the net consideration under this Agreement each year to ensure consistency or as otherwise required by the Internal Revenue Service.

 

	
5.  

	
The Company shall submit a schedule to the Reinsurer by June 1 of each year of its calculation of the net consideration for the preceding calendar year. This schedule of calculations shall be accompanied by a statement signed by an officer of the Company stating that the Company shall report such net consideration in its tax return for the preceding calendar year.

 

	
6.  

	
The Reinsurer may contest such calculation by providing an alternative calculation to the Company in writing within thirty (30) days of the Reinsurer's receipt of the Company's calculation. If the Reinsurer does not so notify the Company, the Reinsurer shall report the net consideration as determined by the Company in the Reinsurer's tax return for the previous calendar year.

 

	
7.  

	
If the Reinsurer contests the Company's calculation of the net consideration, the Parties shall act in good faith to reach an agreement as to the correct amount within thirty (30) days of the date the Reinsurer submits its alternative calculation. If the Reinsurer and the Company reach agreement on an amount of net consideration, each Party shall report such amount in their respective tax returns for the previous calendar year.

 

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Article 16

INSOLVENCY

 

16.1 Definition of Insolvency

A Party to this Agreement shall be deemed insolvent when it:

	
1.  

	
applies for or consents to the appointment of a receiver, rehabilitator, conservator liquidator or statutory successor of its properties or assets; or

	
2.  

	
is adjudicated as bankrupt or insolvent; or

	
3.  

	
files or consents to the filing of a petition in bankruptcy, seeks reorganization to avoid insolvency or makes formal application for any bankruptcy, dissolution, liquidation or similar law or statute; or

	
4.  

	
becomes the subject of an order to rehabilitate or an order to liquidate as defined by the insurance code of the jurisdiction of the Party's domicile.

 

16.2 Insolvency of the Company

In the event of insolvency of the Company, all payments due the Company by the Reinsurer shall be payable directly to the Company, its liquidator, receiver or statutory successor on the basis of the liability of the Company under the policies reinsured without diminution because of insolvency of the Company.

 

In the event of insolvency of the Company, the liquidator, receiver or statutory successor shall give the Reinsurer written notice of the pendency of a claim on a policy reinsured within a reasonable time after the claim is filed in the solvency proceeding. During the pendency of the claim, the Reinsurer may investigate the claim and, in a proceeding where the claim is to be adjudicated, the Reinsurer may, at the Reinsurer's own expense, interpose in the name of the Company, its liquidator, receiver or statutory successor, any defense or defenses which the Reinsurer may deem available to the Company or its liquidator, receiver or statutory successor.

 

Subject to court approval, the expense thus incurred by the Reinsurer shall be chargeable against the Company as part of the expense of liquidation to the extent of the proportionate share of the benefit which may accrue to the Company solely as a result of the defense undertaken by the Reinsurer. Where two (2) or more reinsurers participate in the same claim and a majority in interest elects to interpose a defense to the claim, the expense shall be apportioned in accordance with the terms of the reinsurance agreements as if the expense had been incurred by the Company.

 

16.3 Insolvency of the Reinsurer

In the event of the insolvency of the Reinsurer, the Company may retain all or any portion of any amount then due or which may become due the Reinsurer under this Agreement and use such amounts for the purposes of paying any and all liabilities of the Reinsurer incurred under this Agreement. When all such liability hereunder has been discharged, the Company shall pay the Reinsurer, its receiver, or statutory successor, the balance of such amounts withheld as may remain.

 

In the event of the insolvency of the Reinsurer, the Company may, upon ninety (90) days written notice to the Reinsurer, its liquidator, receiver or statutory successor, recapture, without penalty, the entire amount of reinsurance under this Agreement.

 

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Article 17

ARBITRATION

 

It is the intention of the Reinsurer and the Company that the customs and practices of the life insurance and reinsurance industry shall be given full effect in the operation and interpretation of this Agreement. The Parties agree to act in all matters with the highest good faith. However, if the Reinsurer and the Company cannot mutually resolve a dispute that arises out of or relates to this Agreement, and the dispute cannot be resolved through a dispute resolution process, the dispute shall be decided through arbitration as a precedent to any right of action hereunder.

 

To initiate arbitration, either the Company or the Reinsurer shall notify the other Party in writing of its desire to arbitrate, stating the nature of its dispute and the remedy sought. The Party to which the notice is sent shall respond to the notification in writing within fifteen (15) days of its receipt.

 

There shall be three arbitrators who shall be current or former officers of United States domiciled life insurance or life reinsurance companies other than the Parties to this Agreement, their affiliates or subsidiaries. Each of the Parties shall appoint one of the arbitrators and these two arbitrators shall select the third. If either Party refuses or neglects to appoint an arbitrator within sixty (60) days of the initiation of the arbitration, the other Party may appoint the second arbitrator. If the two arbitrators do not agree on a third arbitrator within thirty (30) days of the appointment of the second arbitrator, each of them shall name three individuals, of whom the other shall decline two, and the decision as to the third arbitrator shall be determined by drawing lots.

 

Once chosen, the arbitrators are empowered to select the site of the arbitration and decide all substantive and procedural issues by a majority of votes. As soon as possible, the arbitrators shall establish arbitration procedures as warranted by the facts and issues of the particular case. The arbitrators shall have the power to determine all procedural rules of the arbitration, including but not limited to inspection of documents, examination of witnesses and any other matter relating to the conduct of the arbitration. The arbitrators may consider any relevant evidence; they shall weigh the evidence and consider any objections. Each Party may examine any witnesses who testify at the arbitration hearing.

 

The arbitrators shall base their decision on the terms and conditions of this Agreement and the customs and practices of the life insurance and reinsurance industries rather than on strict interpretation of the law. The decision of the arbitrators shall be made by majority rule and shall be submitted in writing. The arbitrators shall have no authority to award exemplary or punitive damages or attorney's fees or costs. The decision shall be final and binding on both Parties and there shall be no appeal from the decision. Either Party to the arbitration may petition any court having jurisdiction over the Parties to reduce the decision to judgment.

 

Each Party shall bear the expense of its own arbitration activities, including its appointed arbitrator and any outside attorney and witness fees. The Parties shall jointly and equally bear the expense of the third arbitrator and other costs of the arbitration.

 

26

  

  

This Article shall survive termination of this Agreement.

 

27

  

  

U169-100-000

 

Article 18

CONFIDENTIALITY

 

The Company and the Reinsurer agree that Customer and Proprietary Information shall be treated as confidential. Customer Information includes, but is not limited to, medical, financial, and other personal information about proposed, current, and former policy owners, insureds, applicants, and beneficiaries of policies issued by the Company. Proprietary Information includes, but is not limited to, business plans and trade secrets, mortality and lapse studies, underwriting manuals and guidelines, applications and contract forms, and specific terms and conditions of this Agreement.

 

Customer and Proprietary Information shall not include information that:

 

	
1.  

	
is or becomes available to the general public through no fault of the Party receiving the Customer or Proprietary Information (the "Recipient");

	
2.  

	
is independently developed by the Recipient;

	
3.  

	
is acquired by the Recipient from a third party not covered by a confidentiality agreement; or

	
4.  

	
is disclosed under a court order, law, or regulation.

 

The Parties shall not disclose such information to any other parties unless agreed to in writing, except as necessary for retrocession purposes, as requested by external auditors, as required by court order, or as required or allowed by law or regulation.

 

The Company acknowledges that the Reinsurer can aggregate data with other companies reinsured with the Reinsurer as long as the data cannot be identified as belonging to the Company.

 

28

  

  

U169-100-000

 

Article 19

DURATION OF AGREEMENT

 

This Agreement shall be effective at July 1, 2014 ("Effective Date") and is indefinite as to its duration.

 

The Company or the Reinsurer may terminate this Agreement with respect to the reinsurance of new business by giving ninety (90) days written notice of termination to the other Party, sent by certified mail. The first day of the notice period is deemed to be the date the document is postmarked.

 

During the notification period, the Company shall continue to cede and the Reinsurer shall continue to accept policies covered under the terms of this Agreement. Reinsurance coverage on all reinsured policies shall remain in force until the termination or expiry of the policies or until the contractual termination of reinsurance under the terms of this Agreement, whichever occurs first.

 

29

  

  

U/69-100-000

 

Article 20

EXECUTION

 

This Agreement represents the entire contract between the Reinsurer and the Company and supersedes any prior oral or written agreements.

 

IN WITNESS WHEREOF, the Parties hereto by their respective duly authorized representatives have executed this Agreement No. U169-100-000 in duplicate at the dates and places indicated below.

 

	
US ALLIANCE LIFE & SECURITY COMPANY

 

	
GENERAL RE LIFE COPORATION

	
By: /s/ Jeff Brown         

	
By: /s/ James M. Greenwood   

	
Title:  EVP & COO         

	
Title: Senior Vice President   

	
Date: January 7, 2015        

	
Date: November 24, 2014   

	
Attest: /s/ Jack H. Brier       

Title: President         

	
Attest: /s/ Kathy Gollbach   

Title:  Second Vice President   

 

 

 

____________________________________________            _________________________________________

 

 

30

  

  

U169-100-000

 

EXHIBIT A

PLANS, RETENTION AND BINDING LIMITS

 

A.1. Reinsured Plans and Riders

 

	
Base Plan and Effective Date

	
Reinsured Riders

	
2014 Level Term Series

	
Primary Insured Rider

	
Additional Insured Rider

 

The reinsured business shall be yearly renewable term, excess the Company's maximum retention of $25,000.

 

A. 2 Reinsurer's Share

 

	
Effective Date

	
Reinsurer’s Share

	
7/1/2014

	
100%

 

A.3 Retention

 

	
Issue Age

	
Standard to Table 4

	
Table 1 — Table 6

	
Table 7 — Table 8

	
18 — 65

	
$25,000

	
$25,000

	
$25,000

 

A.4 Automatic Binding Limits

Not applicable under this Agreement.

 

A.5 Conditional Receipt Limit

The Reinsurer's proportionate share of the $100,000 maximum conditional receipt limit.

 

A.6 Minimum Cession

For automatic business, the minimum cession shall be $10,000.

Cessions $2,500 or less will be automatically terminated and not reinsured with the Reinsurer again.

 

A.7 Jumbo Limits

Not applicable under this Agreement.

 

A.8 Conversions

Conversions from a term plan to a permanent plan for an amount not exceeding the face amount are allowed to the end of the level term period or until age 65, whichever occurs first. Conversions are not allowed after the initial level term period. Conversion rates shall be point-in-scale rates.

 

31

  

  

U169-100-000

 

EXHIBIT B

REINSURANCE PREMIUMS

 

B.1 Life Reinsurance Premium

Reinsurance rates shall be 0% in the first policy year.

 

Reinsurance renewal rates shall be at the factors shown below times the 2001 VBT Select and Ultimate ALB, Sex Distinct, Smoker Distinct Mortality Table.

 

The Post Level and Conversion premium rates in the following tables are subject to change should the direct premium rates change.

 

	
MALE RATES

	
15YT

	
20YT

	
25YT

	
30YT

	
 

	
 

	
UW Class

	
Issue Ages

	
Dur 2-5

	
Dur 6-15

	
Dur 2-5

	
Dur 6-20

	
Dur 2-5

	
Dur 6-25

	
Dur 2-5

	
Dur 6-30

	
Post Level and Conversions

	
Preferred Plus NT

	
18-29

	
72%

	
72%

	
64%

	
64%

	
62%

	
58%

	
62%

	
56%

	
125%

	
30-39

	
46%

	
46%

	
45%

	
42%

	
45%

	
39%

	
45%

	
37%

	
150%

	
40-49

	
44%

	
40%

	
44%

	
36%

	
44%

	
35%

	
44%

	
35%

	
175%

	
50-59

	
46%

	
38%

	
46%

	
37%

	
46%

	
37%

	
46%

	
37%

	
225%

	
60-65

	
47%

	
47%

	
47%

	
47%

	
N/A

	
N/A

	
N/A

	
N/A

	
275%

	
Preferred NT

	
18-29

	
90%

	
90%

	
80%

	
80%

	
78%

	
72%

	
78%

	
69%

	
150%

	
30-39

	
63%

	
63%

	
62%

	
58%

	
62%

	
53%

	
62%

	
50%

	
200%

	
40-49

	
62%

	
56%

	
62%

	
50%

	
62%

	
48%

	
62%

	
47%

	
225%

	
50-59

	
63%

	
52%

	
63%

	
49%

	
63%

	
49%

	
63%

	
49%

	
250%

	
60-65

	
64%

	
63%

	
64%

	
63%

	
N/A

	
N/A

	
N/A

	
N/A

	
300%

	
Standard NT

	
18-29

	
111%

	
111%

	
98%

	
98%

	
97%

	
89%

	
97%

	
85%

	
175%

	
30-39

	
80%

	
80%

	
80%

	
74%

	
80%

	
68%

	
80%

	
64%

	
250%

	
40-49

	
80%

	
72%

	
80%

	
64%

	
80%

	
61%

	
80%

	
60%

	
275%

	
50.59

	
84%

	
69%

	
84%

	
64%

	
83%

	
64%

	
83%

	
64%

	
320%

	
60-65

	
90%

	
88%

	
90%

	
88%

	
N/A

	
N/A

	
N/A

	
N/A

	
320%

	
Standard Tb

	
18-29

	
79%

	
79%

	
74%

	
74%

	
71%

	
71%

	
71%

	
71%

	
175%

	
30-39

	
77%

	
69%

	
77%

	
66%

	
77%

	
63%

	
76%

	
61%

	
300%

	
40-49

	
84%

	
71%

	
84%

	
66%

	
83%

	
66%

	
83%

	
66%

	
320%

	
50-59

	
92%

	
79%

	
92%

	
76%

	
92%

	
75%

	
92%

	
75%

	
320%

	
60-65

	
96%

	
87%

	
96%

	
87%

	
N/A

	
N/A

	
N/A

	
N/A

	
320%

32

  

  

U169-100-000

 

	
FEMALE RATES

	
15YT

	
20YT

	
25YT

	
30YT

	
 

	
 

	
UW Class

	
Issue Ages

	
Dur 2-5

	
Dur 6-15

	
Dur 2-5

	
Dur 6-20

	
Dur 2-5

	
Dur 6-25

	
Dur 2-5

	
Dur 6-30

	
Post Level and Conversions

	
Preferred Plus NT

	
18-29

	
59%

	
51%

	
59%

	
50%

	
59%

	
50%

	
59%

	
49%

	
225%

	
30-39

	
52%

	
50%

	
52%

	
46%

	
52%

	
42%

	
52%

	
40%

	
225%

	
40-49

	
41%

	
40%

	
41%

	
37%

	
41%

	
36%

	
41%

	
36%

	
225%

	
50-59

	
42%

	
42%

	
42%

	
42%

	
42%

	
42%

	
42%

	
42%

	
250%

	
60-65

	
52%

	
52%

	
52%

	
52%

	
N/A

	
N/A

	
N/A

	
N/A

	
300%

	
Preferred NT

	
18-29

	
72%

	
62%

	
72%

	
62%

	
72%

	
61%

	
72%

	
60%

	
250%

	
30-39

	
68%

	
65%

	
68%

	
59%

	
68%

	
54%

	
68%

	
51%

	
250%

	
40-49

	
55%

	
52%

	
55%

	
48%

	
55%

	
47%

	
55%

	
47%

	
250%

	
50-59

	
56%

	
56%

	
56%

	
56%

	
56%

	
56%

	
56%

	
56%

	
275%

	
60-65

	
68%

	
68%

	
68%

	
68%

	
N/A

	
N/A

	
N/A

	
N/A

	
300%

	
Standard NT

	
18-29

	
100%

	
85%

	
100%

	
85%

	
           100%

	
85%

	
100%

	
83%

	
275%

	
30-39

	
89%

	
85%

	
89%

	
77%

	
89%

	
70%

	
89%

	
67%

	
325%

	
40-49

	
73%

	
69%

	
73%

	
63%

	
73%

	
63%

	
73%

	
63%

	
325%

	
50-59

	
73%

	
73%

	
73%

	
73%

	
73%

	
73%

	
73%

	
73%

	
325%

	
60-65

	
86%

	
86%

	
86%

	
86%

	
N/A

	
N/A

	
N/A

	
N/A

	
325%

	
Standard Tb

	
18-29

	
84%

	
62%

	
84%

	
62%

	
84%

	
62%

	
83%

	
62%

	
275%

	
30-39

	
81%

	
73%

	
81%

	
67%

	
81%

	
62%

	
81%

	
61%

	
325%

	
40-49

	
72%

	
72%

	
72%

	
69%

	
72%

	
68%

	
72%

	
68%

	
325%

	
50-59

	
92%

	
92%

	
86%

	
86%

	
86%

	
86%

	
86%

	
86%

	
325%

	
60-65

	
116%

	
113%

	
116%

	
113%

	
N/A

	
N/A

	
N/A

	
N/A

	
325%

B.2 Substandard Ratings

Premiums shall be increased by 25% per Table (150% - 500%). Allowances shall be the same as those for life benefits.

 

B.3 Flat Extras

In the event that a risk is accepted and ceded with a flat extra premium, the total premium remitted to the Reinsurer shall include the flat extra premium minus the allowances shown below.

 

	
Type of Flat Extra Premium

	
First Year

	
Renewal Years

	
Temporary Flat Extra (1-5 years)

	
10%

	
10%

	
Permanent Flat Extra (6 years and greater)

	
75%

	
10%

33

  

  

U169-100-000

 

EXHIBIT C

REPORTING METHOD

SELF ADMINISTRATION

 

C.1 Reporting Method

As soon as possible after a reinsured policy is placed in force, the Company shall show it on its

 

reinsurance report giving the details as described in Exhibit C.3.

 

C.2 Premium Accounting

Reinsurance premiums are payable annually in advance. Within thirty (30) days after the end of the month, the Company shall send the Reinsurer a statement showing reinsurance premiums due for that period together with payment as indicated on the statement.

 

If an amount is due the Company, the Reinsurer shall remit such amount within a reasonable time after receipt of the Company's statement.

 

Arrangements can also be made to accommodate the payment of funds by means of Electronic Funds Transfer or wire transfer.

 

C.3 Self-Administered Reporting

Bulk Reporting requirements are listed below.

 

Report formats may differ in style; however, the required data must be provided in order to

properly administer the business reinsured.The Company shall submit a copy of its bulk

reporting format for review by the Reinsurer prior to the completion of the formal Agreement.

 

Each self-administered report should be broken down into the following report details, with Automatic and Facultative business shown separately for each detail.

1. NEW BUSINESS

2. FIRST YEAR - OTHER THAN NEW BUSINESS

3. RENEWAL YEAR

4. CHANGES/TERMINATIONS

5. ACCOUNTING INFORMATION

6. RESERVE INFORMATION

7. POLICY EXHIBIT INFORMATION

8. QUARTERLY INFORCE

 

Below is a brief description of each requested report detail:

	
  

	
1. NEW BUSINESS - New issues* only, first time policy is reported to the Reinsurer. Policies appear only once in this detail and should include the following information: policy number, name of insured, DOB, age, sex, policy date, tobacco use, reinsured amount and NAR, table rate, flat extra rate, and premium.

 

	
  

	
* Policies which are new, but result from replacements or conversions from other plans covered under other agreements with the Reinsurer should be clearly identified; these policies should not be reported as new issues. The Reinsurer suggests these policies be identified with a transaction code and be reported in the "Changes Detail". The original policy date and duration should also be reported.

 

34

  

  

U169-100-000

 

 

Policies previously ceded to the Reinsurer under an individual cession treaty require special handling. The Reinsurer shall continue reinsurance administration.

 

	
2.  

	
FIRST YEAR, OTHER THAN NEW BUSINESS - Policies previously reported on the new business detail, and are still in their first duration or policies involved in first year premium adjustments.

 

	
3.  

	
RENEWAL YEAR - All renewal policies.

 

	
4.  

	
CHANGES/TERMINATIONS - Polices involved in a change during the current reporting period. Type of change or termination activity must be clearly identified for each policy.

 

The Reinsurer suggests separate listings for Terminations/Reinstatements, Changes, Conversions/Replacements or the use of Transaction/Reason code to describe activity.

 

Conversions/Replacements - The Reinsurer requires the reporting of the original policy date, as well as the current date of issue. This data is expected in the "Change Detail" when the conversion is reported and continued in the "Renewal Detail" as the policy continues to be reported.

 

	
5.  

	
ACCOUNTING INFORMATION - Premiums summarized for Life, ADB, Waiver, and Other by the following categories: Automatic /Facultative, First Year/Renewal Year, and Allowances where applicable.

 

	
6.  

	
RESERVE INFORMATION - Quarterly, a report of reinsured amounts in force and Policy reserves summarized by Life, ADB, Waiver, and Deficiency. Annually, an actuarial opinion prepared by a qualified actuary certifying ceded in force and reserves, a detailed description of the reserving assumptions including X-factors and the Company's actuarial report in support of its X-factor opinion.

 

	
7.  

	
POLICY EXHIBIT INFORMATION - Summary of the current period's activity and year-to-date totals, reporting the number of policies and reinsurance amount.

 

	
8.  

	
QUARTERLY INFORCE - Quarterly detail report of all policies in force including reserve information.

 

 

35

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