EXECUTION COPY
REINSURANCE AGREEMENT
BETWEEN
HARTFORD LIFE INSURANCE COMPANY,
AND
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY,
DATED AS OF: JANUARY 1, 2013
TABLE OF CONTENTS
PAGE
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Article I DEFINITIONS 1
Section 1.1 Definitions 1
Article II BASIS OF REINSURANCE AND BUSINESS REINSURED 12
Section 2.1 Reinsurance 12
Section 2.2 Separate Accounts 13
Section 2.3 Non-Guaranteed Elements 13
Section 2.4 Reserves and Liabilities Reporting 13
Section 2.5 Insurance Contract Changes 13
Section 2.6 Follow the Fortunes 15
Article III TRANSFER OF ASSETS; PAYMENTS; SETTLEMENTS;
ADMINISTRATION AND ACCOUNTING 16
Section 3.1 Payments by the Ceding Company 16
Section 3.2 Assignment of Recoverables 18
Section 3.3 Payments by the Reinsurer 19
Section 3.4 Net Settlement 19
Section 3.5 Delayed Payments 20
Section 3.6 Offset and Recoupment Rights 20
Section 3.7 Administration and Accounting 20
Section 3.8 Certain Reports 20
Article IV LICENSES; REINSURANCE CREDIT 22
Section 4.1 Licenses 22
Section 4.2 Security 22
Section 4.3 Trust Account and Settlements 24
Section 4.4 Valuation Method and Investment of Trust Assets 25
Section 4.5 Deposit of Assets 25
Section 4.6 Adjustment of Security and Withdrawals 25
Section 4.7 Valuation of Assets 27
Section 4.8 Reserve Credit 28
Section 4.9 Actions Following Reinvestment Event,
Triggering Event or Reserve Credit Event 29
Section 4.10 Trust Withdrawal Event 30
Section 4.11 Cure of Triggering Event or Reserve Credit Event 30
Article V OVERSIGHTS; COOPERATION; REGULATORY MATTERS 31
Section 5.1 Oversights 31
Section 5.2 Cooperation 31
Section 5.3 Regulatory Matters 31
Article VI INSOLVENCY 31
Section 6.1 Insolvency of the Ceding Company 31
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Article VII DURATION; RECAPTURE 34
Section 7.1 Duration 34
Section 7.2 Survival 34
Section 7.3 Recapture 34
Section 7.4 Recapture Payments 35
Article VIII INDEMNIFICATION; DISCLAIMER 35
Section 8.1 Reinsurer's Obligation to Indemnify 35
Section 8.2 Ceding Company's Obligation to Indemnify 35
Section 8.3 Notice of Claim; Defense 36
Section 8.4 No Duplication; Exclusive Remedy 37
Section 8.5 Limitation on Set-off 38
Section 8.6 Recovery by Indemnified Party 38
Section 8.7 Right to Indemnification 38
Section 8.8 Cost of Enforcement 39
Section 8.9 Waiver of Duty of Utmost Good Faith 39
Article IX MISCELLANEOUS 39
Section 9.1 Remedies 39
Section 9.2 Governing Law 39
Section 9.3 Jurisdiction; Venue 40
Section 9.4 Jury Waiver 40
Section 9.5 Notices 40
Section 9.6 Successors and Assigns; No Third-Party Beneficiaries 42
Section 9.7 Entire Agreement; Amendments 42
Section 9.8 Interpretation 42
Section 9.9 Waivers 44
Section 9.10 Expenses 44
Section 9.11 Partial Invalidity 44
Section 9.12 Execution in Counterparts 45
Section 9.13 Treatment of Confidential Information 45
SCHEDULES:
SCHEDULE 1.1(a) Covered Insurance Policies
SCHEDULE 1.1(b) Separate Accounts
EXHIBITS:
EXHIBIT A Form of Trust Agreement
EXHIBIT B-1 Form of General Account Settlement Statement
EXHIBIT B-2 Form of Separate Account Settlement Statement
EXHIBIT C Investment Guidelines
EXHIBIT D Termination Settlement under Section 7.4
EXHIBIT E Form of Trust Withdrawal Event Notice
EXHIBIT F Form of Trust Withdrawal Event Acknowledgment
EXHIBIT G Form of Cure Notice
EXHIBIT H Form of Cure Acknowledgment
EXHIBIT I Schedule of Plan Administrative Service Agreements
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REINSURANCE AGREEMENT
THIS
REINSURANCE AGREEMENT (this "Agreement"), is made and entered into on
January 1, 2013 and effective as of the Effective Time by and between HARTFORD
LIFE INSURANCE COMPANY, a life insurance company domiciled in the State of
Connecticut (the "Ceding Company") and MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY, a mutual life insurance company domiciled in the Commonwealth of
Massachusetts ("Buyer" or the "Reinsurer"). For purposes of this Agreement, the
Ceding Company and the Reinsurer shall each be deemed a "Party."
WHEREAS, Hartford Life, Inc. has agreed to sell, and Buyer has agreed to
purchase, the Business and certain assets of Hartford Life, Inc. and its
Affiliates pursuant to a Purchase and Sale Agreement, dated as of September 4,
2012 (the "Purchase Agreement");
WHEREAS, as contemplated by the Purchase Agreement, the Ceding Company wishes to
cede to the Reinsurer, and the Reinsurer wishes to reinsure, on a one hundred
percent (100%) indemnity reinsurance basis, on the terms and conditions set
forth herein, certain liabilities in respect of the Covered Insurance Policies
(as hereinafter defined);
WHEREAS, in connection with the Closing, the Ceding Company and the Reinsurer
have entered into the Trust Agreement, pursuant to which the trustee thereunder
shall hold assets as security for the satisfaction of the obligations of the
Reinsurer to the Ceding Company under this Agreement; and
WHEREAS, simultaneously with their entry into this Agreement on the date hereof,
the Ceding Company and the Reinsurer are entering into, among other agreements,
(i) the Administrative Services Agreement, pursuant to which the Reinsurer, in
its capacity as the Administrator, shall provide, or cause the provision of,
certain administrative services on behalf of the Ceding Company with respect to
the Covered Insurance Policies and the related Plan ASAs; and (ii) the
Transition Services Agreement, pursuant to which the Ceding Company and/or one
or more of its Affiliates shall provide or cause the provision of certain
transitional services to the Reinsurer and its Affiliates with respect to the
Business.
NOW, THEREFORE, in consideration of the mutual and several promises and
undertakings herein contained, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Ceding Company
and the Reinsurer agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. Any capitalized term used but not defined herein shall
have the meaning set forth in the Purchase Agreement. The following terms have
the respective meanings set forth below throughout this Agreement:
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"Accounting Period" means each calendar quarter during the term of this
Agreement or any fraction thereof ending on the Recapture Date or the date this
Agreement is otherwise terminated in accordance with Section 7.1, as applicable.
"Administrative Services Agreement" means that certain Administrative Services
Agreement dated as of the date hereof by and between the Ceding Company and the
Reinsurer.
"Administrator" has the meaning set forth in the Administrative Services
Agreement.
"Agreement" has the meaning set forth in the preamble.
"Assets" has the meaning set forth in the Trust Agreement.
"Assignment" has the meaning set forth in Section 3.2(a).
"Ceding Company" has the meaning set forth in the preamble.
"Ceding Company Extra Contractual Obligations" means all Liabilities and
obligations to any Person either existing as of the Effective Time or arising
out of or relating to events, acts or omissions occurring, or disclosures made,
prior to the Effective Time relating to the Business or the Covered Insurance
Policies (other than Liabilities or obligations arising under the express terms
and conditions, and within the limits, of the Covered Insurance Policies),
including any Liability for fines, penalties, Taxes, fees, forfeitures,
compensatory, punitive, exemplary, special, treble, bad faith, tort or any other
form of extra contractual damages, including all legal fees and expenses
relating thereto, which Liabilities or obligations arise from any act, error or
omission, whether intentional, negligent or in bad faith, arising out of (i) the
form, sale, marketing, underwriting, production, issuance, cancellation or
administration of the Covered Insurance Policies, (ii) the investigation,
defense, trial, settlement or handling of claims, benefits, or payments under
the Covered Insurance Policies, or (iii) the failure to pay or the delay in
payment or errors in calculating or administering the payment of benefits,
claims or any other amounts due or alleged to be due under or in connection with
the Covered Insurance Policies, including any fines, penalties, Taxes, fees,
forfeitures, compensatory, punitive, exemplary, special, treble, bad faith, tort
or any other form of extra contractual damages, including all legal fees and
out-ofpocket expenses relating thereto related to escheat or unclaimed property
Liabilities to the extent that the Liability to pay amounts with respect to the
relevant Covered Insurance Policy to any Governmental Body relates to property
deemed abandoned (as determined pursuant to Applicable Law) prior to the
Effective Time. For the avoidance of doubt, (A) any Liabilities includable in
(iii) above which relate to any escheat or abandoned property audits or
examinations by a Governmental Body initiated prior to the Effective Time shall
be included within the definition of Ceding Company Extra Contractual
Obligations to the extent such audits or examinations relate to property deemed
abandoned (as determined pursuant to Applicable Law) prior to the Effective Time
and (B) any Liability to the extent arising out of or relating to events, acts
or omissions occurring, or disclosures made, on or following the Effective Time
in connection with the management, operation or conduct of the Business by the
Reinsurer and its Affiliates shall not be a Ceding Company Extra Contractual
Obligation, even if such event, act, omission or disclosure is consistent with
the practices and procedures followed by the Ceding Company and its Affiliates
prior to the Effective Time.
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"Ceding Company Indemnified Parties" has the meaning set forth in Section 8.1.
"Claim Notice" has the meaning set forth in Section 8.3(a).
"Closing Date" means January 1, 2013.
"Company Action Level RBC" means, at any date of determination, two hundred
percent (200%) of the authorized control level risk based capital of the
Reinsurer determined in accordance with the Applicable Law of the state of
domicile of the Reinsurer.
"Confidential Information" means all documents and information concerning one
Party, any of its Affiliates, any Distributor, any mutual fund organization that
has its mutual funds offered as funding vehicles for one or more Separate
Accounts, the Business or the Covered Insurance Policies, including any
information relating to any Person insured directly or indirectly under, or any
Plan sponsor in respect of, the Covered Insurance Policies, furnished to the
other Party or such other Party's Affiliates or Representatives in connection
with this Agreement or the transactions contemplated hereunder, except that
Confidential Information does not include information which: (a) at the time of
disclosure or thereafter is generally available to and known by the public other
than by way of a disclosure by the receiving Party hereunder or by any
Representative or Affiliate of such Party hereto; (b) was in the possession of,
or becomes available to, the receiving Party or such Party's Representatives or
Affiliates on a non-confidential basis, directly or indirectly, from a source
other than the disclosing Party or its Representatives, provided, that such
source is not and was not known to the receiving Party or its Representatives or
Affiliates to be prohibited from transmitting the information by a contractual,
legal, fiduciary, or other obligation of confidentiality by the disclosing
Party; or (c) was independently developed without violating any obligations
under this Agreement and without the use of any other Confidential Information
or any derivative thereof.
"Covered Insurance Policies" means (i) any and all binders, endorsements,
riders, policies, certificates, group annuity contracts, group funding
agreements, maturity funding contracts, contracts of insurance and supplementary
contracts issued or renewed by the Ceding Company in connection with the
Business set forth on Schedule 1.1(a); and (ii) the New Insurance Policies.
"Cure Acknowledgment" has the meaning set forth in Section 4.11.
"Cure Event" has the meaning set forth in Section 4.11.
"Cure Notice" has the meaning set forth in Section 4.11.
"Effective Time" means 12:00:01 a.m. (New York time) on January 1, 2013.
"Eligible Assets" has the meaning set forth in Section 4.4.
"Estimated Premium Increase" has the meaning set forth in Section 8.6(a).
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"Excluded Liabilities" means the Liabilities that are not reinsured by Reinsurer
as Reinsured Liabilities, including the following liabilities and contractual
and other obligations of the Ceding Company and its Affiliates:
(i) Ceding Company Extra Contractual Obligations; and
(ii) any increased Liabilities of the Ceding Company under, arising out of or
relating to the Covered Insurance Policies, to the extent caused by (a) any
failure by the Ceding Company to implement or otherwise put into effect the
Reinsurer's recommendations with respect to Non-Guaranteed Elements in
accordance with Section 2.3, other than to the extent that following such
recommendation would have violated any Applicable Law, generally accepted and
applicable Actuarial Standards of Practice or the terms of any Covered Insurance
Policy, (b) an action or omission of the Ceding Company in breach of Section
2.5, (c) any action taken by the Ceding Company with respect to the Covered
Insurance Policies in breach of this Agreement or the Administrative Services
Agreement or (d) any action taken by the Ceding Company pursuant to Section 4.02
of the Administrative Services Agreement other than to the extent such action
was required by Applicable Law or the terms and conditions of the Covered
Insurance Policies.
"Fair Market Value" means the fair market value of such Asset as calculated by
the Reinsurer. In providing this calculation, the Reinsurer shall use prices
published by a nationally recognized pricing service for assets for which such
prices are available, and for assets for which such prices are not available,
the Reinsurer shall use methodologies consistent with those which it uses for
determining the fair market value of assets held in its own general account
(other than the Assets) in the ordinary course of business.
"General Account Liabilities" means:
(i) all gross Liabilities, obligations and expenses arising under the Covered
Insurance Policies, other than the Separate Account Liabilities, including:
(a) all Liabilities resulting under the terms and conditions of the Covered
Insurance Policies for claims and benefits (including lump sum payments,
annuitization payments, deferred payments, discontinuance disbursements,
payments in respect of market value adjustments, rights to purchase additional
coverage and any other settlement options), claim expenses, interest on claims
or unearned premiums, withdrawals, surrenders, amounts payable for returns or
refunds of premiums, guaranteed minimum death benefits, including any payments
of any of the above to any Governmental Body whether for tax withholding,
escheat, unclaimed property or otherwise;
(b) all Liabilities arising out of any changes to the terms and conditions of
the Covered Insurance Policies mandated by Applicable Law or initiated by the
applicable Plan sponsor or Plan participant pursuant to the terms of the
applicable Covered Insurance Policy; and
(c) all Liabilities that relate to any amounts held in the general account of
the Ceding Company pending transfer to the Separate Accounts; and
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(ii) the following Liabilities, obligations, expenses and Premium taxes:
(a) taxes due in respect of Premiums received or accrued by the Ceding Company
(other than such taxes for which the Ceding Company is liable under the Purchase
Agreement); provided that, for the avoidance of doubt, the amount of any such
Premium taxes shall be determined without regard to any credits, deductions or
offsets to such Premium taxes available to the Ceding Company;
(b) Fees and other amounts payable by the Ceding Company in respect of the
Covered Insurance Policies and Plan ASAs;
(c) Compensation and other servicing and administration fees relating to the
Covered Insurance Policies payable by the Ceding Company or HSD to or for the
benefit of the Distributors; and
(d) all Reinsurer Extra Contractual Obligations; and
(iii) the following Liabilities, obligations, excise taxes and expenses:
(a) assessments and similar charges in connection with participation by either
Ceding Company or Reinsurer, whether voluntary or involuntary, in any guaranty
association established or governed by any Governmental Body to the extent
related to Premiums earned on or after the Effective Time after taking into
consideration any credits, deductions or offsets available to the Ceding Company
relative to such assessments and charges;
(b) all Liabilities to the extent relating to acts, errors or omissions
occurring on or after the Effective Time that relate to one or more Separate
Accounts that are not payable out of the assets of the Separate Accounts,
including any loss to a fund or product resulting from pricing errors, expense
calculation errors or missing fund activity; and
(c) all excise taxes imposed with respect to the administration of the Covered
Insurance Policies on or after the Effective Time.
"General Account Reserves" means the aggregate amount of general account
reserves, deposits, due and unpaid amounts and incurred but not reported
liabilities, in each case with respect to the Covered Insurance Policies,
calculated consistent with the reserve requirements, statutory accounting rules
and actuarial principles applicable to the Ceding Company under Applicable Law;
provided, the term "General Account Reserves" does not include the Separate
Account Reserves.
"General Account Settlement Statement" has the meaning set forth in Section
3.4(a).
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"Indemnified Party" has the meaning set forth in Section 8.3(a).
"Indemnifying Party" has the meaning set forth in Section 8.3(a).
"Intercompany Services Agreement" has the meaning set forth in Section 3.1(d).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or any successor thereto.
"Net Settlement" has the meaning set forth in Section 3.4(a).
"New Insurance Policies" means the binders, endorsements, riders, policies,
certificates, group annuity contracts, group funding agreements, maturity
funding contracts and contracts of insurance and supplementary contracts issued
by the Administrator in the name of the Ceding Company following the Closing
Date in accordance with the Administrative Services Agreement.
"Non-Guaranteed Elements" has the meaning set forth in Actuarial Standard of
Practice 1 -- Non-Guaranteed Charges or Benefits for Life Insurance Policies and
Annuity Contracts in effect as of the Effective Time and any successor rules for
such Non-Guaranteed Elements as in effect from time to time.
"Party" has the meaning set forth in the preamble.
"Payee" has the meaning set forth in Section 6.1(a).
"Plan ASA" means each administrative services agreement between the Ceding
Company and any Plan sponsor related to a Covered Insurance Policy. A list of
all Plan ASAs is attached hereto as Exhibit I.
"Premiums" means premiums, considerations, deposits, loan repayments and other
receipts received in respect of the Covered Insurance Policies, including any
amounts received under any Plan ASA.
"Purchase Agreement" has the meaning set forth in the recitals.
"RBC Ratio" means, with respect to the Reinsurer, the percentage equal to (i)
the quotient of the Total Adjusted Capital of the Reinsurer DIVIDED BY the
Company Action Level RBC, MULTIPLIED BY(ii) 100.
"RBC Reporting Deadline" means, as of any date, the date that is either: (i)
sixty (60) calendar days after the end of each calendar year, or (ii) forty-five
(45) calendar days after the end of any calendar quarter other than the calendar
quarter ending on December 31.
"Recapture Date" has the meaning set forth in Section 7.3(a).
"Recapture Triggering Event" means either of the following occurrences:
(a) the Reinsurer becomes insolvent or is placed into liquidation,
rehabilitation, conservation, supervision, receivership or similar proceedings
(whether voluntary or involuntary), or there is instituted against it
proceedings for the appointment of a receiver, liquidator, rehabilitator,
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conservator, or trustee in bankruptcy, or other agent known by whatever name, to
take possession of its assets or assume control of its operations; or
(b) the Reinsurer's RBC Ratio as of any quarter-end falls below 175%, 150%,
125%, 100%, 75%, 50%, 25% or 0% and the Reinsurer has not cured such shortfall
as of the applicable RBC Reporting Deadline to the lowest incremental percentage
listed above that the Reinsurer's RBC Ratio exceeded as of the immediately
preceding RBC Reporting Deadline; provided, that in the event there is a
material change in the factors and formulae prescribed by the insurance
regulatory authority in the Reinsurer's state of domicile with respect to the
components of and methodologies contained in such calculation, the Parties shall
amend this Agreement to incorporate an alternate calculation that is reasonably
equivalent to the components of and methodologies contained in the calculation
of the Reinsurer's RBC Ratio in effect as of the Effective Time within thirty
(30) calendar days after the implementation of such change, and if the Parties
cannot agree on any such alternative, the Reinsurer shall continue to calculate
its RBC Ratio as if such material change had not occurred.
7
"Recoverables" has the meaning set forth in Section 3.1(b).
"Reinsured Liabilities" means the General Account Liabilities and the Separate
Account Liabilities; provided that in no event shall any Excluded Liability be a
Reinsured Liability.
"Reinsurer" has the meaning set forth in the preamble.
"Reinsurer Extra Contractual Obligations" means all Liabilities and obligations
to any Person arising out of or relating to events, acts or omissions occurring,
or disclosures made, on or after the Effective Time relating to the Business or
the Covered Insurance Policies (other than Liabilities or obligations arising
under the express terms and conditions, and within the limits, of the Covered
Insurance Policies), including any Liability for fines, penalties, Taxes, fees,
forfeitures, compensatory, punitive, exemplary, special, treble, bad faith, tort
or any other form of extra contractual damages, including all legal fees and
expenses relating thereto, which Liabilities or obligations arise from any act,
error or omission, whether intentional, negligent or in bad faith, arising out
of (i) the form, sale, marketing, underwriting, production, issuance,
cancellation or administration of the Covered Insurance Policies, (ii) the
investigation, defense, trial, settlement or handling of claims, benefits, or
payments under the Covered Insurance Policies, or (iii) the failure to pay or
the delay in payment or errors in calculating or administering the payment of
benefits, claims or any other amounts due or alleged to be due under or in
connection with the Covered Insurance Policies, including any fines, penalties,
Taxes, fees, forfeitures, compensatory, punitive, exemplary, special, treble,
bad faith, tort or any other form of extra contractual damages, including all
legal fees and out-of-pocket expenses relating thereto related to escheat or
unclaimed property Liabilities to the extent that the Liability to pay amounts
with respect to the relevant Covered Insurance Policy to any Governmental Body
relates to property deemed abandoned (as determined pursuant to Applicable Law)
on or after the Effective Time. For the avoidance of doubt, any Liability to the
extent arising out of or relating to events, acts or omissions occurring, or
disclosures made, on or following the Effective Time in connection with the
management, operation or conduct of the Business by the Reinsurer and its
Affiliates shall be a Reinsurer Extra Contractual Obligation, even if such
event, act, omission or disclosure is consistent with the practices and
procedures followed by the Ceding Company and its Affiliates prior to the
Effective Time.
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"Reinsurer Indemnified Parties" has the meaning set forth in Section 8.2.
"Required Balance" means an amount equal to one hundred percent (100%) of the
General Account Reserves.
"Reinvestment Event" means any of the following occurrences at any time
following a Trust Withdrawal Event:
(a) the numerical value of the Required Balance exceeds $250,000,000;
(b) a Triggering Event; or
(c) a Reserve Credit Event.
"Reserve Credit" means full Statutory Financial Statement credit for the
reinsurance ceded to the Reinsurer with respect to the General Account
Liabilities under this Agreement in the Ceding Company's NAIC Annual Statement
Blank and in all Statutory Financial Statements of the Ceding Company required
to be filed with the Governmental Body charged with supervision of insurance
companies in the State of
Connecticut.
"Reserve Credit Event" means any event that would cause the Ceding Company to
not be permitted to receive Reserve Credit on any of its Statutory Financial
Statements provided that such event has not been remedied prior to the last
calendar day of the calendar quarter in which such event occurs.
"S&P" means Standard & Poor's Ratings Services, a Standard & Poor's Financial
Services LLC business, or any successor thereto.
"SAP" means the statutory accounting principles prescribed or permitted by the
insurance regulatory authorities of the State of
Connecticut or other applicable
jurisdictions.
"Separate Account Liabilities" means all Liabilities, obligations, expenses and
Premium and excise taxes arising under the Covered Insurance Policies, whether
incurred before, at or after the Effective Time, to the extent payable out of
the Separate Accounts.
"Separate Account Reserves" means the aggregate amount of reserves and deposits
of the Ceding Company attributable to the Separate Account Liabilities,
calculated consistent with the reserve requirements, statutory accounting rules
and actuarial principles applicable to the Ceding Company under Applicable Law.
"Separate Account Settlement Statement" has the meaning set forth in Section
3.4(a).
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"Separate Accounts" means the registered and unregistered separate accounts or
sub-accounts of the Ceding Company applicable to the Covered Insurance Policies
as identified in Schedule 1.1(b) hereto.
"Statutory Book Value" shall mean, with respect to any Eligible Asset, the
dollar amount thereof stated on the Statutory Financial Statements as admitted
assets of the Reinsurer, as determined in accordance with the statutory
accounting requirements in the Reinsurer's state of domicile, but disregarding
any prescribed or permitted practices applicable to the Reinsurer.
"Statutory Financial Statements" means, with respect to any Party, the annual
and quarterly statutory financial statements of such Party filed with the
Governmental Body charged with supervision of insurance companies in the
jurisdiction of domicile of such Party to the extent such Party is required by
Applicable Law to prepare and file such financial statements.
"Terminal Accounting Period" means the Accounting Period during which the
Recapture Date occurs.
"Terminal Settlement" has the meaning set forth in Section 7.4.
"Terminal Settlement Statement" has the meaning set forth in Section 7.4.
"Third Party Appraiser" means a nationally recognized independent appraisal firm
which is mutually acceptable to the Reinsurer and the Ceding Company or, if the
Reinsurer and the Ceding Company are unable to agree on such an appraisal firm,
an independent appraisal firm selected by mutual agreement of the Reinsurer's
and the Ceding Company's independent accountants.
"Third-Party Claim" has the meaning set forth in Section 8.3(a).
"Total Adjusted Capital" means, with respect to any insurance company, its total
adjusted capital as calculated in accordance with the most current formula for
calculating such amount adopted by the insurance regulatory authority in such
insurance company's state of domicile.
"Transaction Agreements" means the Purchase Agreement and each of the Ancillary
Agreements other than this Agreement.
"Treasury Regulations" means the Treasury Regulations (including temporary and
proposed Treasury Regulations) promulgated by the United States Department of
Treasury with respect to the Code or other United States federal Tax statutes.
"Triggering Event" means either of the following occurrences:
(a) the Reinsurer's RBC Ratio falls below 300% as of a quarter-end and the
Reinsurer has not cured such shortfall as of the applicable RBC Reporting
Deadline; provided, that in the event there is a material change in the factors
and formulae prescribed by the insurance regulatory authority in the Reinsurer's
state of domicile with respect to the components of and methodologies contained
in such calculation, the Parties shall amend this Agreement to incorporate an
alternate calculation that is reasonably equivalent to the components of and
methodologies contained in the calculation of the Reinsurer's RBC Ratio in
effect as of the Effective Time within thirty (30) calendar days after the
implementation of such change, and if the Parties cannot agree on any such
alternative, the Reinsurer shall continue to calculate its RBC Ratio as if such
material change had not occurred; or
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(b) at any time following a Trust Withdrawal Event, the financial strength
rating of the Reinsurer falls below "BBB" as rated by S&P and "Baa2" as rated by
▇▇▇▇▇'▇.
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"Trust Account" means the reserve trust account established by the Reinsurer and
the Ceding Company for the benefit of the Ceding Company under the Trust
Agreement.
"Trust Agreement" means that certain Trust Agreement dated as of December 31,
2012 by and among the Reinsurer, the Ceding Company and Citibank N.A., as
trustee, substantially in the form of Exhibit A hereof.
"Trust Withdrawal Event" has the meaning set forth in Section 4.10.
"Trust Withdrawal Event Conditions" means:
(a) the financial strength rating of the Reinsurer is "BBB" or higher as rated
by S&P and "Baa2" or higher as rated by ▇▇▇▇▇'▇;
(b) the Reinsurer's RBC Ratio is greater than or equal to 300% as of the
immediately preceding quarter-end;
(c) the numerical value of the Required Balance is less than $250,000,000; and
(d) no Reserve Credit Event has occurred and is continuing.
"Trust Withdrawal Event Acknowledgment" has the meaning set forth in Section
4.10.
"Trust Withdrawal Event Notice" has the meaning set forth in Section 4.10.
ARTICLE II
BASIS OF REINSURANCE AND BUSINESS REINSURED
SECTION 2.1 REINSURANCE. Subject to the terms and conditions of this Agreement,
as of the Effective Time, the Ceding Company hereby cedes on an indemnity
reinsurance basis to the Reinsurer, and the Reinsurer hereby accepts and agrees
to assume and indemnity reinsure, one hundred percent (100%) of the General
Account Liabilities on a coinsurance basis and one hundred percent (100%) of the
Separate Account Liabilities on a modified coinsurance basis. This Agreement is
solely between the Ceding Company and the Reinsurer and shall not create any
legal relationship whatsoever between the Reinsurer and any Person other than
the Ceding Company. The reinsurance effected under this Agreement shall be
maintained in force, without reduction, unless such reinsurance is recaptured,
terminated or reduced as provided herein. On and after the Effective Time, in
accordance with the terms of this Agreement, the Reinsurer shall be obligated to
make payments to or on behalf of the Ceding Company, as and when due, of all
General Account Liabilities.
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SECTION 2.2 SEPARATE ACCOUNTS.
(a) For each of the Separate Accounts applicable to Covered Insurance Policies,
the amount to be invested in accordance with the terms of such Covered Insurance
Policy shall be held by the Ceding Company in the Separate Accounts, and all
Premiums with respect to such Covered Insurance Policy shall be deposited in the
Separate Accounts to the extent required to be deposited therein by such Covered
Insurance Policy. From and after the Effective Time, subject to the rights of
the Reinsurer as the Administrator, the Ceding Company shall retain, control and
own all assets contained in the Ceding Company's Separate Accounts and shall
hold the Separate Account Reserves with respect to the Covered Insurance
Policies that are funded, in whole or in part, by one or more of the Ceding
Company's Separate Accounts and such Separate Account Reserves shall be reported
by the Ceding Company on its Separate Account balance sheets, consistent with
SAP.
(b) For each of the Separate Accounts applicable to Covered Insurance Policies,
the amount to be paid with respect to surrenders, loans, annuitization payments,
death benefits or any other amounts payable under such Covered Insurance Policy
shall be paid out of the Separate Accounts to the extent required by such
Covered Insurance Policy. Any amounts required to be paid from assets of any
Separate Accounts pursuant to the terms of a Covered Insurance Policy shall be
paid from the relevant Separate Account and the Reinsurer shall not be required
to pay any such amounts out of its own general account. For purposes hereof, the
Reinsured Liabilities attributable to the Covered Insurance Policies shall be
apportioned between the General Account Liabilities and the Separate Account
Liabilities in a manner consistent with the terms and conditions of the
applicable Covered Insurance Policies.
SECTION 2.3 NON-GUARANTEED ELEMENTS. The Ceding Company shall set all
Non-Guaranteed Elements under the Covered Insurance Policies from and after the
Effective Time, taking into account the recommendations of the Reinsurer acting
in its capacity as Administrator under the Administrative Services Agreement
with respect thereto, which the Ceding Company shall only reject in good faith
and on a reasonable basis that such recommendations fail to comport with
Applicable Law, generally accepted and applicable Actuarial Standards of
Practice or the terms of any Covered Insurance Policy.
SECTION 2.4 RESERVES AND LIABILITIES REPORTING. Pursuant to the Administrative
Services Agreement and in accordance with the terms thereof, the Reinsurer
acting in its capacity as Administrator thereunder shall provide to the Ceding
Company information relating to the reserves and liabilities in respect of the
Covered Insurance Policies.
SECTION 2.5 INSURANCE CONTRACT CHANGES. Except as directed by the Reinsurer or
as performed by the Reinsurer (or its duly appointed assignee or delegatee)
acting on behalf of the Ceding Company in Reinsurer's capacity as Administrator,
the Ceding Company, on its own initiative, shall not change the terms or
conditions of any Covered Insurance Policy, other than for any change required
by the terms of any Covered Insurance Policies, any Governmental Body or
Applicable Law. Furthermore, the Ceding Company shall not object to or hinder
any efforts by the Reinsurer to effectuate any changes to any Covered Insurance
Policy, including increases to any fees or charges thereunder, as long as such
changes are not contrary to the terms and conditions of such Covered Insurance
Policy or this Agreement or in violation of any Applicable Law or Governmental
Order. If the Reinsured Liabilities under any of the Covered Insurance Policies
are changed (a) because of changes made on or after the Effective Time in the
terms and conditions of the Covered Insurance Policies effected by the Reinsurer
acting in its capacity as Administrator or at the direction of the Reinsurer, or
(b) pursuant to the terms of any Covered Insurance Policies or
13
required by any Governmental Body or Applicable Law, the Reinsurer will
participate, on the reinsurance basis set forth in Section 2.1, and assume one
hundred percent (100%) of all Liabilities and obligations resulting from such
changes and shall fully indemnify the Ceding Company and hold the Ceding Company
harmless with respect to such changes. With respect to any change that, despite
being required by the terms of any Covered Insurance Policies, any Governmental
Body or Applicable Law, the Administrator is not implementing, the Ceding
Company shall, to the extent practicable, prior to the effectiveness of any such
change, promptly notify the Reinsurer of such proposed change and afford the
Reinsurer, at the Reinsurer's expense, the opportunity to object to such change
under applicable administrative procedures (both formal and informal). In the
event the Reinsurer seeks to object as provided in the previous sentence, the
Reinsurer shall indemnify and hold the Ceding Company harmless for any Loss so
suffered by the Ceding Company in accordance with Article
14
VIII. Likewise, in the event the Ceding Company refuses to comply with any
request by the Reinsurer or the Administrator to implement a change or hinders
Reinsurer's or Administrator's efforts to implement a change and such change is
not contrary to the terms and conditions of the applicable Covered Insurance
Policy or this Agreement or in violation of any Applicable Law or Governmental
Order, the Ceding Company shall indemnify and hold the Reinsurer harmless for
any Loss so suffered by the Reinsurer in accordance with Article VIII.
SECTION 2.6 FOLLOW THE FORTUNES. Subject to the terms and conditions hereof, the
Reinsurer's Liability under this Agreement shall attach simultaneously with that
of the Ceding Company under the Covered Insurance Policies and the Reinsurer's
Liability under this Agreement shall be subject in all respects to the same
risks, terms, rates, conditions, interpretations, assessments, waivers,
proportion of Premiums paid to the Ceding Company without any deductions, and to
the same modifications, alterations, terminations and recaptures, as the
respective Covered Insurance Policies and Reinsured Liabilities to which
liability under this Agreement attaches, the true intent of this Agreement being
that the Reinsurer shall, subject to the terms, conditions, and limits of this
Agreement, follow the fortunes of the Ceding Company under the Covered Insurance
Policies, and the Reinsurer shall be bound, without limitation, by all payments
and settlements under the Covered Insurance Policies on or after the Effective
Time.
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ARTICLE III
TRANSFER OF ASSETS; PAYMENTS; SETTLEMENTS; ADMINISTRATION AND ACCOUNTING
SECTION 3.1 PAYMENTS BY THE CEDING COMPANY.
(a) As consideration for the Reinsurer's agreement to provide reinsurance
pursuant to this Agreement, the Ceding Company will transfer, on or prior to the
Closing Date, in accordance with the mechanics set forth in the Purchase
Agreement and in the Trust Agreement, to the Trust Account, Eligible Assets with
a Fair Market Value equal to the Net Transfer Amount. Such payment shall be
adjusted following the date hereof in accordance with the mechanics set forth
therefor in the Purchase Agreement.
(b) As additional consideration for the reinsurance provided herein, the
Reinsurer shall be entitled to one hundred percent (100%) of all of the
following amounts actually received by the Ceding Company, HSD or the Reinsurer,
whether in its role as reinsurer hereunder or as Administrator, with respect to
the Covered Insurance Policies that are either due and unpaid as of the
Effective Time or that arise on any date after the Effective Time (items (i)
through (v) below, collectively, the "Recoverables"):
(i) Premiums;
(ii) Litigation recoveries to the extent such recoveries relate to Reinsured
Liabilities;
(iii) Without duplication, all charges and fees, including per participant fees,
management fees, marketing fees, 12b-1 fees, record-keeping fees, policy loan
fees, mortality and expense risk charges, administrative expense charges, rider
charges, contract maintenance charges, back-end sales loads and other
considerations billed separately, and amounts for the pre-tax amount of any
expense reimbursement (other than "soft dollars"), indemnification,
revenue-sharing or other payments made to the Ceding Company or its Affiliates
by any mutual fund organization or other third party attributable to the use of
such organization's mutual funds as funding vehicles to the extent related to
the Covered Insurance Policies;
(iv) Without duplication, all other payments, collections, fees, credits,
releases of funds to the Ceding Company from any Separate Accounts established
by the Ceding Company and any and all recoveries relating to the Reinsured
Liabilities or the Covered Insurance Policies; and
(v) Any investment income actually received by HLIC or HSD relating to items (i)
through (iv) above.
Actual, direct receipt by the Reinsurer, including in its role as Administrator
under the Administrative Services Agreement, or any of its Affiliates of any
such amounts shall satisfy any obligation of the Ceding Company to transfer any
such amount to the Reinsurer hereunder.
(c) The Ceding Company hereby appoints the Reinsurer as its agent and
attorney-in-fact to collect all Recoverables in the Ceding Company's name. The
Ceding Company agrees and acknowledges that the Reinsurer and its permitted
assigns and delegatees are entitled to enforce, in the name of the Ceding
Company, all rights at law or in equity or good faith claims of the Ceding
Company with respect to all Recoverables. If necessary for such collection, the
Ceding Company shall reasonably cooperate, at the Reinsurer's expense, in any
litigation or other dispute resolution mechanism relating to such collection.
The Parties acknowledge and agree that the Reinsurer shall be responsible for
and has hereby assumed the financial risk of any uncollected or uncollectible
Recoverables. To the extent that the Ceding Company recovers any Recoverables
from any third party attributable to the Covered Insurance Policies, the Ceding
Company shall promptly (but no later than within ten (10) Business Days)
transfer such amounts to the Reinsurer, together with any pertinent information
that the Ceding Company may have relating thereto.
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(d) If during the term of this Agreement (i) that certain Intercompany Services
Agreement dated as of the date hereof between the Ceding Company and HSD (the
"Intercompany Agreement") is terminated, amended, modified, supplemented or
altered in any way without the prior written consent of the Reinsurer, or (ii)
HSD is unable to pay, receive and/or share any amount payable to the Ceding
Company, or otherwise fails to perform its obligations, under the Intercompany
Agreement, because it ceases to hold or maintain its FINRA membership or any
Governmental Permit or for any other reason, then the Reinsurer and the Ceding
Company shall enter into new contractual arrangements to give effect to the
transactions contemplated by the Intercompany Agreement and this Agreement,
including Section 3.1(b)(iii) hereof and to assure that HLIC's contractual
obligations are met. Such arrangements may include the appointment of an
Affiliate of Buyer as HLIC's agent or designee to receive compensation payable
by mutual fund organizations and an assignment of HSD's rights and obligations
under agreements with mutual fund organizations to such Affiliate of Buyer for
no additional consideration.
17
SECTION 3.2 ASSIGNMENT OF RECOVERABLES.
(a) The Ceding Company hereby assigns, transfers and conveys to the Reinsurer
and its successors and permitted assigns all of the Ceding Company's right,
title and interest in and to the Recoverables (the "Assignment"). The Reinsurer
hereby accepts the Assignment. The Reinsurer and the Ceding Company hereby agree
that, upon any recapture hereunder, all of the Reinsurer's right, title and
interest in and to the Recoverables shall be immediately assigned, transferred
and conveyed to the Ceding Company or its successors or permitted assigns. Each
Party, as reasonably requested by the other from time to time, shall take all
reasonably appropriate action and execute any reasonably necessary and
appropriate additional documents, instruments or conveyances of any kind which
may be reasonably necessary to carry out the provisions of this Section 3.2.
(b) The Parties intend that at all times prior to a recapture hereunder the
Reinsurer shall have a first priority, perfected security interest in the
Recoverables. The Ceding Company shall provide the Reinsurer with the requisite
power of attorney in order to allow the Reinsurer to execute and deliver UCC
financing statements with respect to any and all intangible assets assigned or
transferred to the Reinsurer hereunder that are deemed reasonably necessary by
the Reinsurer in order to perfect the security interest in the Recoverables. All
costs and expenses incurred in connection with obtaining a first priority
perfected security interest shall be paid by the Reinsurer.
(c) This Section 3.2 shall be binding upon each of the Ceding Company and the
Reinsurer and their successors and assigns and legal representatives. No right
or obligation
18
under this Section 3.2 may be directly or indirectly assigned or transferred by
any Party, in whole or in part, to any third party (other than to the Ceding
Company's successors and assigns), including any bankruptcy trustee, liquidator,
rehabilitator, receiver or conservator, by operation of law or otherwise,
whether voluntary or involuntary, without the prior written consent of the
Parties; provided, notwithstanding the foregoing or any other provision herein
to the contrary, the Reinsurer may assign its rights and obligations under this
Section 3.2 to an Affiliate
SECTION 3.3 PAYMENTS BY THE REINSURER. In consideration of the reinsurance by
the Ceding Company of the Covered Insurance Policies, the Reinsurer shall pay to
the Ceding Company, on the Closing Date, the Ceding Commission in the manner
contemplated in Section 3.3(b) of the Purchase Agreement. In addition, the
Reinsurer shall pay and discharge all General Account Liabilities which are or
which become due and payable at or at any time after the Effective Time. For the
avoidance of doubt, the Reinsurer shall be required to pay and discharge the
Separate Account Liabilities entirely with funds from the Separate Accounts and
solely to the extent there are such funds available. Notwithstanding anything to
the contrary in this Agreement or the Purchase Agreement, the Parties hereby
acknowledge that no portion of the Ceding Commission is being allocated to the
Covered Insurance Policy, dated as of March 1, 1982, issued by the Ceding
Company to HFIC for the benefit of certain employees of Hartford Life, Inc. and
its Affiliates.
SECTION 3.4 NET SETTLEMENT.
(a) During the term of this Agreement, a settlement amount between the Ceding
Company and the Reinsurer for the Reinsured Liabilities as of the last day of
each Accounting Period (the "Net Settlement") shall be calculated by the
Reinsurer in accordance with (i) in the case of General Account Liabilities,
Exhibit B-1 hereto and (ii) in the case of Separate Account Liabilities, Exhibit
B-2 hereto, and separate statements setting forth details of such calculation
with respect to the General Account Liabilities (the "General Account Settlement
Statement") in the form as set forth in Exhibit B-1 hereto and the Separate
Account Liabilities (the "Separate Account Settlement Statement") in the form
set forth in Exhibit B-2 hereto shall be delivered by the Reinsurer to the
Ceding Company in accordance with the Administrative Services Agreement. If the
amount of the Net Settlement for an Accounting Period is positive, the Ceding
Company shall pay such amount to the Reinsurer within five (5) Business Days of
its receipt of the General Account Settlement Statement and the Separate Account
Settlement Statement for such Accounting Period. If the amount of the Net
Settlement for an Accounting Period is negative, the Reinsurer shall pay the
absolute value of such amount to the Ceding Company at the time it delivers the
General Account Settlement Statement and the Separate Account Settlement
Statement for such Accounting Period to the Ceding Company.
(b) To the extent that the Reinsurer makes any direct payments to or on behalf
of the Ceding Company in respect of Reinsured Liabilities in respect of an
Accounting Period prior to the Net Settlement process, whether in its capacity
as the Administrator or otherwise, the amount of any such payments shall be
excluded from the Net Settlement. In addition, to the extent the Reinsurer
receives any Recoverables in respect of an Accounting Period prior to the Net
Settlement process, whether in its capacity as the Administrator or otherwise,
the amount of any such Recoverables received shall be excluded from the Net
Settlement.
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SECTION 3.5 DELAYED PAYMENTS. If there is a delayed settlement of any payment
due hereunder, interest will accrue on such payment at the then applicable prime
rate of interest, as reported by The Wall Street Journal (or, if The Wall Street
Journal has ceased or suspended regular publication, another nationally
distributed newspaper of general circulation reasonably selected by the Ceding
Company) until settlement is made. For purposes of this Section 3.5 a payment
will be considered overdue, and such interest will begin to accrue, on the first
day immediately following the date such payment is due. For greater clarity, (i)
a payment shall be deemed to be due hereunder on the last date on which such
payment may be timely made under the applicable provision, and (ii) interest
will not accrue on any payment due the Reinsurer hereunder unless the delayed
settlement thereof was caused by the Ceding Company.
SECTION 3.6 OFFSET AND RECOUPMENT RIGHTS. Any debits or credits incurred on or
after the Effective Time in favor of or against either the Ceding Company or the
Reinsurer with respect to this Agreement are deemed mutual debits or credits and
may be set off and recouped, and only the net balance shall be allowed or paid.
In the event of any insolvency, rehabilitation, conservatorship or comparable
proceeding by or against the Ceding Company or the Reinsurer, the rights of
offset and recoupment set forth in this Section 3.6 shall apply to the fullest
extent permitted by Applicable Law.
SECTION 3.7 ADMINISTRATION AND ACCOUNTING. Pursuant to the terms of the
Administrative Services Agreement, the Reinsurer, in its capacity as
Administrator, will administer the Covered Insurance Policies and the related
Plan ASAs.
SECTION 3.8 CERTAIN REPORTS.
(a) At each RBC Reporting Deadline, the Reinsurer shall provide to the Ceding
Company: (i) if such RBC Reporting Deadline pertains to a calendar year end, its
calculation of the RBC Ratio of the Reinsurer as of the last day of such
calendar year and (ii) if such RBC Reporting Deadline pertains to a calendar
quarter other than the calendar quarter ending on December 31, confirmation
that, in the good faith estimate of the Reinsurer, the RBC Ratio of the
Reinsurer is equal to or greater than 375% as of the last day of such calendar
quarter. Without limitation upon the Reinsurer's obligations pursuant to the
foregoing, if at any time the RBC Ratio of the Reinsurer falls below 375%, then
at the next RBC Reporting Deadline and for successive RBC Reporting Deadlines
thereafter until the Reinsurer's RBC Ratio rises above 375%, the Reinsurer shall
provide to the Ceding Company: (i) if such RBC Reporting Deadline pertains to a
calendar year end, its calculation of the RBC Ratio of the Reinsurer as of the
last day of such calendar year and (ii) if such RBC Reporting Deadline pertains
to a calendar quarter other than the calendar quarter ending on December 31, a
good faith estimate of its calculation of the RBC Ratio of the Reinsurer as of
the last day of such calendar quarter. If such calculation of the RBC Ratio of
the Reinsurer would result in a Triggering Event or a Recapture Triggering Event
if not cured by the Reinsurer by the applicable RBC Reporting Deadline, and such
shortfall in the RBC Ratio is actually cured by the Reinsurer on or prior to
such RBC Reporting Deadline, then the Reinsurer shall provide to the Ceding
Company (i) a description of the manner in which such shortfall was cured and
(ii) an updated calculation of the RBC Ratio of the Reinsurer as of such RBC
Reporting Deadline.
(b) The Reinsurer shall provide written notice to the Ceding Company within two
(2) Business Days of (i) the occurrence of any Triggering Event or Recapture
Triggering Event and (ii) its calculation of the RBC Ratio which would result in
a Triggering Event or a Recapture Triggering Event (assuming such calculation
had been as of a quarter-end and not taking into account any applicable cure
period). In addition, the Reinsurer shall cooperate fully with the Ceding
Company and promptly respond to the Ceding Company's reasonable inquiries from
time to time concerning the
20
determination of whether a Triggering Event or a Recapture Triggering Event has
occurred.
(c) Each Party shall provide the other with a copy of its annual and quarterly
Statutory Financial Statements and a copy of its annual audited Statutory
Financial Statements along with the audit report thereon.
21
ARTICLE IV
LICENSES; REINSURANCE CREDIT
SECTION 4.1 LICENSES. At all times during the term of this Agreement, (i) the
Reinsurer shall hold and maintain all licenses and authorizations required under
Applicable Law to perform its obligations hereunder and (ii) the Ceding Company
shall hold and maintain all licenses and authorizations required under
Applicable Law to perform its obligations hereunder.
SECTION 4.2 SECURITY.
(a) In accordance with the Purchase Agreement and the Trust Agreement, the Trust
Account has been created with respect to the General Account Liabilities with a
trustee reasonably acceptable to the Ceding Company, naming the Ceding Company
as sole beneficiary thereof. In connection with the execution of this Agreement,
the Trust Account has been funded with Eligible Assets in accordance with
Section 3.3(b) of the Purchase Agreement. In accordance with the requirements of
the Trust Agreement and subject to Section 4.9 and Section 4.10, the Reinsurer
shall ensure that (i) at all times prior to the occurrence of a Triggering Event
or a Reserve Credit Event, in accordance with the terms set forth herein and in
the Trust Agreement, the Trust Account holds assets with a Statutory Book Value
equal to the Required Balance and (ii) at all times following the occurrence of
a Triggering Event or a Reserve Credit Event, in accordance with the Terms of
the Trust Agreement, the Trust Account holds assets with a Fair Market Value
equal to the Required Balance. All transfers to and withdrawals from the Trust
Account shall be in accordance with and subject to the requirements set forth in
the Trust Agreement.
(b) Prior to the occurrence of a Reserve Credit Event (but not a Triggering
Event), the Ceding Company and the Reinsurer agree that the assets maintained in
the Trust Account may be withdrawn by the Ceding Company only after a default by
the Reinsurer in the performance of its monetary obligations hereunder, upon
delivery by the Ceding Company to the Reinsurer of a written notice thereof, and
solely to the extent required to cure such default and, notwithstanding any
other provision of this Agreement, shall be utilized and applied by the Ceding
Company or any successor by operation of law, including any liquidator,
rehabilitator, receiver or conservator of the Ceding Company, only to pay
amounts then due to the Ceding Company under this Agreement with respect to the
General Account Liabilities. The amount of any such withdrawal in excess of
amounts then due to the Ceding Company hereunder shall be deemed maintained in
constructive trust for the benefit of the Reinsurer and promptly returned to the
Reinsurer. The Ceding Company and the Reinsurer further agree that prior to the
occurrence of a Triggering Event or a Reserve Credit Event, the Reinsurer,
acting as Administrator, shall have the right to withdraw all or any part of the
cash and assets maintained in the Trust Account in order to pay any General
Account Liabilities provided that the aggregate Statutory Book Value of the
assets maintained in the Trust Account as of any Accounting Period end is equal
to or greater than the Required Balance as of such Accounting Period end.
(c) Following the occurrence of a Reserve Credit Event (but not a Triggering
Event), the Ceding Company may withdraw the assets held in the Trust Account at
any time and from time to time, notwithstanding any other provisions of this
Agreement, and assets withdrawn from such Trust Account shall be utilized and
applied by the Ceding Company (or any successor by operation of law of the
Ceding Company, including any liquidator, rehabilitator, receiver or conservator
of the Ceding Company), without diminution because of insolvency on the part of
the Ceding Company or the Reinsurer; provided, however, that following any such
withdrawal the Ceding Company (or any successor by operation of law of the
Ceding Company) may only apply such assets for one or more of the following
purposes:
22
(i) to pay, or reimburse the Ceding Company for payment of, Premiums received by
the Reinsurer hereunder which are to be returned to policyholders,
contractholders, Plan sponsors or Plan participants because of cancellations or
surrenders of Covered Insurance Policies reinsured hereunder;
(ii) to pay, or reimburse the Ceding Company for payment of, surrenders,
benefits, losses or other amounts payable pursuant to the provisions of the
Covered Insurance Policies reinsured hereunder or any other General Account
Liabilities;
23
(iii) to pay to the Reinsurer amounts held in the Trust Account in excess of the
amount necessary to secure the Reserve Credit; or
(iv) where the Ceding Company has received notification of termination of the
Trust Account and where the Reinsurer's entire obligations under this Agreement
remain unliquidated and undischarged ten (10) days prior to the termination
date, to withdraw amounts equal to the amount of Reinsured Liabilities and
deposit those amounts in a separate account, in the name of the Ceding Company
in any qualified United States financial institution apart from its general
assets, in trust for the uses and purposes specified in subparagraphs (i) to
(iii) of this Section 4.2(c).
SECTION 4.3 TRUST ACCOUNT AND SETTLEMENTS. The trustee shall hold assets in the
Trust Account pursuant to the terms of the Trust Agreement. All settlements of
account under the Trust Agreement between the Ceding Company and the Reinsurer
shall be made in United States dollars in cash or its equivalent.
24
SECTION 4.4 VALUATION METHOD AND INVESTMENT OF TRUST ASSETS.
(a) Prior to the occurrence of a Triggering Event or a Reserve Credit Event, the
assets held in the Trust Account shall be valued at their Statutory Book Value
as of the date as of which such assets are required to be valued.
(b) Following the occurrence of a Triggering Event or a Reserve Credit Event,
the assets held in the Trust Account shall be valued at their Fair Market Value
as of the date as of which such assets are required to be valued.
(c) The assets that may be held in the Trust Account shall consist of
investments of the type permitted by
Connecticut Insurance Regulations Section
Section 38a-88-6 and 38a88-7 or any successor provision and all other Applicable
Laws that would govern the permitted assets for the Trust Account; provided,
that (i) each such investment that is a security is issued by an institution
that is not the Reinsurer, the Ceding Company or an Affiliate of either Party
and (ii) such investments comply with the requirements specified by the
investment guidelines as set forth on Exhibit C (the assets pursuant to this
sentence being the "Eligible Assets").
SECTION 4.5 DEPOSIT OF ASSETS. Prior to depositing assets in the Trust Account,
the Reinsurer will, at its option, do one of the following: (i) execute
assignments or endorsements in blank in favor of the trustee pursuant to the
Trust Agreement or (ii) transfer legal title to the trustee, in either case, of
all shares, obligations or any other assets requiring assignments, in order that
the Ceding Company, or the trustee upon the direction of the Ceding Company, may
whenever necessary negotiate these assets without the consent or signature from
the Reinsurer or any other entity.
SECTION 4.6 ADJUSTMENT OF SECURITY AND WITHDRAWALS. The amount of security
required to be provided by the Reinsurer shall be adjusted following the end of
each Accounting Period based on the Required Balance as of the end of such
Accounting Period (such amounts to be calculated by the Reinsurer and a report
thereof to be furnished to the Ceding Company no later than the twentieth (20th)
Business Day following the end of such Accounting Period) and the Statutory Book
Value or the Fair Market Value, as applicable, of Eligible Assets then in the
Trust Account and will be further adjusted as follows:
(a) Prior to the occurrence of a Triggering Event or a Reserve Credit Event:
(i) If the aggregate Statutory Book Value of the Eligible Assets held in the
Trust Account at the end of any Accounting Period is less than the Required
Balance, calculated based on the most recent Accounting Period report, the
Reinsurer shall, no later than five (5) calendar days following the date on
which the relevant report is required to be delivered pursuant to this Section
4.6, transfer additional Eligible Assets to the Trust Account so that the
aggregate Statutory Book Value of the Eligible Assets held in the Trust Account
is not less than the Required Balance.
(ii) Any Recoverables assigned to the Reinsurer pursuant to Section 3.2 shall be
paid directly to the Reinsurer.
(iii) If the aggregate Statutory Book Value of the Eligible Assets in the Trust
Account at the end of any Accounting Period exceeds one hundred and two percent
(102%) of the Required Balance, then the Reinsurer shall have the right to
withdraw the excess upon notice to the Ceding Company.
(b) Following the occurrence of a Triggering Event or a Reserve Credit Event:
(i) If the aggregate Fair Market Value of the Eligible Assets held in the Trust
Account at the end of any Accounting Period is less than the Required Balance,
calculated based on the most recent Accounting Period report, the Reinsurer
shall, no later than five (5) calendar days following the date on which the
relevant report is required to be delivered pursuant to this Section 4.6,
transfer additional Eligible Assets to the Trust Account so that the aggregate
Fair Market Value of the
25
Eligible Assets held in the Trust Account is not less than the Required Balance.
(ii) Any Recoverables assigned to the Reinsurer pursuant to Section
26
3.2 shall be deposited directly into the Trust Account to the extent the
aggregate Fair Market Value of the Eligible Assets held in the Trust Account is
less than the Required Balance.
(iii) If the aggregate Fair Market Value of the Eligible Assets in the Trust
Account at the end of any Accounting Period exceeds one hundred and two percent
(102%) of the Required Balance, then the Reinsurer shall have the right to
withdraw the excess upon notice to the Ceding Company; provided that if a
Reserve Credit Event has occurred and is continuing, then the Reinsurer shall
have the right to withdraw such excess only upon the prior written consent of
the Ceding Company, which consent shall not be unreasonably withheld, delayed or
conditioned.
SECTION 4.7 VALUATION OF ASSETS. The report required to be delivered by the
Reinsurer as described in this Section 4.7 shall include a listing of each asset
in the Trust Account and the Statutory Book Value or Fair Market Value, as
applicable, of each such asset as of the end of the relevant Accounting Period
and indicate if any such asset is not an Eligible Asset. In the event that the
Ceding Company disagrees with the calculation of the Statutory Book Value or
Fair Market Value of any Eligible Asset or whether any asset is an Eligible
Asset as set forth in such report, the Ceding Company shall within ten (10)
Business Days after its receipt of such report deliver written notice to the
Reinsurer of such disagreement and the Parties shall attempt in good faith to
resolve such disagreement. Any resolution agreed to in writing by the Parties
shall be final and binding upon the Parties. If the Parties are unable to
resolve any disagreement within ten (10) Business Days after the Ceding Company
delivers written notice of any such disagreement to the Reinsurer, the Parties
shall jointly request a Third Party Appraiser to determine the Statutory Book
Value or Fair Market Value, as applicable, of the disputed Eligible Asset or
whether the disputed asset is an Eligible Asset as of the relevant date. The
Third Party Appraiser's determination of the Statutory Book Value or Fair Market
Value, as applicable, of the disputed Eligible Asset or whether the disputed
asset is an Eligible Asset shall be final and binding upon the Parties. Each
Party shall pay one-half of the Third Party Appraiser's fees, costs and expenses
associated with the Third Party Appraiser's determination. After a final and
binding resolution of any dispute described in this Section 4.7 is reached, the
Parties agree to make any necessary adjustments under Section 4.6(a) or Section
4.6(b), as applicable, so that (i) prior to the occurrence of a Triggering Event
or a Reserve Credit Event, the aggregate Statutory Book Value or (ii) following
the occurrence of a Triggering Event or a Reserve Credit Event, the aggregate
Fair Market Value of the Eligible Assets held in the Trust Account is not less
than the Required Balance nor, absent the occurrence of a Triggering Event or a
Reserve Credit Event, greater than 102% of the Required Balance.
27
SECTION 4.8 RESERVE CREDIT. Should the Reinsurer fail to hold and maintain all
licenses and authorizations required under Applicable Law to enable the Ceding
Company to receive Reserve Credit, the Reinsurer shall, at its own expense, take
all steps (including the posting of letters of credit or other acceptable
security) necessary so as to permit the Ceding Company to obtain Reserve Credit.
In such event and at the request of the Reinsurer, the Ceding Company shall
cooperate in good faith to promptly amend this Agreement and the Trust
Agreement, or execute such other documents and papers, to include such
additional or alternate provisions to the extent necessary to enable the Ceding
Company to receive Reserve Credit. The Reinsurer shall promptly notify the
Ceding Company of any event or change or condition that results in a loss of
Reserve Credit.
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SECTION 4.9 ACTIONS FOLLOWING REINVESTMENT EVENT, TRIGGERING EVENT OR RESERVE
CREDIT EVENT.
(a) Upon the occurrence of a Reinvestment Event, the Reinsurer shall deposit
Eligible Assets in the Trust Account in accordance with the terms of the Trust
Agreement within five (5) Business Days of the occurrence of such Reinvestment
Event, which such Eligible Assets shall be valued at their applicable Fair
Market Value or Statutory Book Value in accordance with the provisions of
Section 4.4 and shall be sufficient to ensure that such Fair Market Value or
Statutory Book Value of the assets held in the Trust Account equals the Required
Balance.
(b) Upon the occurrence of a Triggering Event, including for the avoidance of
doubt, a Triggering Event that occurs following a Trust Withdrawal Event, the
Reinsurer shall deposit Eligible Assets, as necessary, in the Trust Account in
accordance with the terms of the Trust Agreement within five (5) Business Days
of the applicable RBC Reporting Deadline related to such Triggering Event,
sufficient to ensure that the Fair Market Value of the assets held in the Trust
Account equals the Required Balance.
(c) Upon the occurrence of a Reserve Credit Event, including for the avoidance
of doubt, a Reserve Credit Event that occurs following a Trust Withdrawal Event,
the Reinsurer shall deposit Eligible Assets, as necessary, in the Trust Account
in accordance with the terms of the Trust Agreement within five (5) Business
Days of the Reserve Credit Event, sufficient to ensure that the Fair Market
Value of the assets held in the Trust Account equals the Required Balance.
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SECTION 4.10 TRUST WITHDRAWAL EVENT. On any day on which the Trust Withdrawal
Event Conditions are satisfied, the Reinsurer shall have the right, but not the
obligation, to withdraw all or any portion of the assets in the Trust Account.
If the Reinsurer elects to make such withdrawal upon the Trust Withdrawal Event
Conditions being satisfied, the Reinsurer shall deliver to the Ceding Company
and the trustee pursuant to the Trust Agreement a Trust Withdrawal Event Notice
substantially in the form attached hereto as Exhibit E (a "Trust Withdrawal
Event Notice"), which shall (i) certify that each of the Trust Withdrawal Event
Conditions are satisfied as of the date thereof and (ii) provide documentation
that reasonably supports such certification. In the event that the Ceding
Company is reasonably satisfied upon receipt of the Trust Withdrawal Event
Notice that each of the Trust Withdrawal Event Conditions have been met, the
Ceding Company, within five (5) Business Days of its receipt of such Trust
Withdrawal Event Notice, shall deliver to the Reinsurer and the trustee pursuant
to the Trust Agreement written notice of the Ceding Company's acknowledgement
and agreement to such Trust Withdrawal Event Notice substantially in the form
attached hereto as Exhibit F (a "Trust Withdrawal Event Acknowledgment"), such
delivery of a Trust Withdrawal Event Acknowledgment by the Ceding Company shall
not be unreasonably withheld, conditioned or delayed. The delivery of a Trust
Withdrawal Event Acknowledgment to the trustee pursuant to the Trust Agreement
shall constitute a "Trust Withdrawal Event" for purposes of this Agreement.
Pursuant to the terms of the Trust Agreement, upon the occurrence of a Trust
Withdrawal Event, the Reinsurer shall be permitted to withdraw all Eligible
Assets then held in the Trust Account.
SECTION 4.11 CURE OF TRIGGERING EVENT OR RESERVE CREDIT EVENT. On any day
following the occurrence of a Triggering Event or a Reserve Credit Event on
which the events that caused the applicable Triggering Event or Reserve Credit
Event no longer exist, the Reinsurer shall have the right, but not the
obligation, to make an election to apply the terms and conditions of this
Agreement as modified by this Section 4.11. If the Reinsurer makes such an
election, the Reinsurer shall deliver to the Ceding Company and the trustee
pursuant to the Trust Agreement a Cure Notice substantially in the form attached
hereto as Exhibit G (a "Cure Notice"), which shall (i) certify that no
Triggering Event or Reserve Credit Event is occurring as of the date thereof and
(ii) provide documentation that reasonably supports such certification. In the
event that the Ceding Company is reasonably satisfied upon receipt of the Cure
Notice that no Triggering Event or Reserve Credit Event is occurring as of the
date thereof, the Ceding Company, within five (5) Business Days of its receipt
of such Cure Notice, shall deliver to the Reinsurer and the trustee pursuant to
the Trust Agreement written notice of the Ceding Company's acknowledgement and
agreement to such Cure Notice substantially in the form attached hereto as
Exhibit H (a "Cure Acknowledgment"), such delivery of a Cure Acknowledgment by
the Ceding Company shall not be unreasonably withheld, conditioned or delayed.
The delivery of a Cure Acknowledgment to the trustee pursuant to the Trust
Agreement shall constitute a "Cure Event" for purposes of this Agreement.
Immediately following the occurrence of a Cure Event and until the occurrence of
a subsequent Triggering Event or Reserve Credit Event, the Reinsurer and the
Ceding Company hereby agree to apply the terms and conditions of this Agreement
as if the applicable Triggering Event or Reserve Credit Event that has been
cured pursuant to the Cure Event did not occur.
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ARTICLE V
OVERSIGHTS; COOPERATION; REGULATORY MATTERS
SECTION 5.1 OVERSIGHTS. Unintentional or inadvertent delays, errors or omissions
made in connection with this Agreement or any transaction hereunder (i) shall
not relieve either Party from any Liability which would have attached had such
delay, error or omission not occurred; and (ii) both Parties shall be restored
as closely as possible to the positions they would have occupied if no delay,
error or omission had occurred, provided, that, in all cases, such error or
omission is rectified as soon as reasonably practicable after discovery by the
Party making such error or omission or responsible for such delay, and provided,
further, that said responsible Party shall be responsible for any additional
Liability which attaches as a result. If the failure of either Party to comply
with any provision of this Agreement is unintentional or the result of a
misunderstanding or oversight and such failure to comply is promptly rectified,
both Parties shall be restored as closely as possible to the positions they
would have occupied if no error or oversight had occurred. This Section 5.1
shall not be utilized to cede any obligation or liability that was not intended
to have been ceded in accordance with this Agreement, including any Excluded
Liabilities.
SECTION 5.2 COOPERATION. Each Party hereto shall cooperate fully with the other
in all reasonable respects in order to accomplish the objectives of this
Agreement.
SECTION 5.3 REGULATORY MATTERS. Solely to the extent not otherwise covered by
the Administrative Services Agreement, if the Ceding Company or the Reinsurer
receives notice of, or otherwise becomes aware of, any inquiry, investigation or
proceeding from or at the direction of a Governmental Body relating to or
affecting the Covered Insurance Policies that would reasonably be expected to
have an adverse effect on the other Party, the Ceding Company or the Reinsurer,
as applicable, shall promptly notify the other Party thereof, whereupon the
Parties, at their own expense, shall cooperate in good faith and use their
respective reasonable best efforts to resolve such matter in a mutually
satisfactory manner, in light of all the relevant business, regulatory and legal
facts and circumstances.
ARTICLE VI
INSOLVENCY
SECTION 6.1 INSOLVENCY OF THE CEDING COMPANY. Subject to Section 6.1(a), in the
event of the insolvency of the Ceding Company, all reinsurance made, ceded,
renewed or otherwise becoming effective under this Agreement with respect to the
General Account Liabilities shall be payable by the Reinsurer directly to the
Ceding Company or to its statutory liquidator, receiver or statutory successor
on the basis of the Liability of the Ceding Company under the Covered Insurance
Policies without diminution because of the insolvency of the Ceding Company. It
is understood, however, that in the event of the insolvency of the Ceding
Company, the liquidator, receiver or statutory successor of the Ceding Company
shall give written notice of the pendency of a General Account Liability claim
against the Ceding Company on a Covered Insurance Policy within a reasonable
period of time after such claim is filed in the insolvency proceedings and that
during the pendency of such claim the Reinsurer may investigate such claim and
interpose, at its own expense, in the proceeding where such claim is to be
adjudicated, any defense or defenses which it may deem available to the Ceding
Company or its liquidator, receiver or statutory
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successor. It is further understood that the expense thus incurred by the
Reinsurer shall be chargeable, subject to Applicable Law, against the Ceding
Company as part of the expense of liquidation to the extent of a proportionate
share of the benefit which may accrue to the Ceding Company solely as a result
of the defense undertaken by the Reinsurer.
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(a) In the event of the insolvency of the Ceding Company, subject to Applicable
Law, the Reinsurer shall pay any General Account Liabilities otherwise due and
payable by the Reinsurer to the Ceding Company hereunder directly to the named
insureds or their designees under the Covered Insurance Policies (the "Payee"),
in accordance with and subject to the terms, conditions, exclusions and
limitations of such Covered Insurance Policy. Any such payment by the Reinsurer
shall discharge the Ceding Company from its related payment obligation under the
subject Covered Insurance Policy and shall be treated as a payment by the Ceding
Company for all purposes of such Covered Insurance Policy and related
documentation and otherwise. In the event of any payment by the Reinsurer under
this Section 6.1(a), the Reinsurer shall have the right to mitigate loss or
otherwise to exercise any right of the Ceding Company with respect to the
applicable loss or claim under the Covered Insurance Policies.
(b) The Reinsurer shall have no obligation to indemnify the Ceding Company for
amounts paid or payable by the Ceding Company in respect of a Covered Insurance
Policy to the extent of any payments made by the Reinsurer to the applicable
Payee under such Covered Insurance Policy in accordance with Section 6.1(a), and
the Reinsurer shall be discharged of its payment obligations to the Ceding
Company, or to its statutory liquidator, receiver or statutory successor under
this reinsurance to the extent of such payments. The cut-through afforded by
Section 6.1(a) shall not be available pursuant to this Agreement if, under
Applicable Law, regulation, court rule or order or similar requirement either:
(i) the Reinsurer's direct payment to such Payee will not, to the extent
thereof, discharge the Reinsurer's obligations to the Ceding Company or its
legal representative, or (ii) the Reinsurer is required to make any payment to
the Ceding Company or its liquidator, receiver or statutory successor
notwithstanding the provisions of this Agreement. Nothing herein or in any
Covered Insurance Policy shall be construed to require the Reinsurer to make
duplicative payments or payments duplicative of payments that have been made by
the Ceding Company.
(c) It is the intent of the Parties that the cut-through provision of this
Section 6.1 complies with Section 38a-88-10 of the
Connecticut Insurance
Regulations and any successor statute or amendments thereto. At the Reinsurer's
option, the Ceding Company and the Reinsurer shall in good faith negotiate
amendments to the cut-through provision of this Section 6.1 and/or in good faith
negotiate other agreements or additional documents, as necessary, to assure that
the cut-through provision complies with Section 38a-88-10 of the
Connecticut
Insurance Regulations and any successor statute or amendments thereto. The
Reinsurer shall reimburse the Ceding Company for all costs and expenses related
to such amendments, agreements and documents, whether entered into or not. All
other terms and conditions of this Agreement shall remain in full force and
effect.
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(d) For the avoidance of doubt, the provisions of this Section 6.1 shall apply
only in connection with the General Account Liabilities.
(e) The Ceding Company covenants that it shall not, and shall not, directly or
indirectly, cause any third party to, challenge in any legal or regulatory
proceeding with respect to the matters set forth in this Section 6.1.
ARTICLE VII
DURATION; RECAPTURE
SECTION 7.1 DURATION. Without limiting any provision of the Purchase Agreement,
this Agreement shall commence at the Effective Time and continue in force until
such time as (a) the Ceding Company's Liability arising out of or related to all
Covered Insurance Policies reinsured hereunder is terminated in accordance with
their respective terms, or the Ceding Company has elected to recapture the
reinsurance of Covered Insurance Policies in full in accordance with Section
7.3, and (b) the Ceding Company has received payments which discharge such
Liability in full in accordance with Section 7.4.
SECTION 7.2 SURVIVAL. Notwithstanding the other provisions of this Article VII,
the terms and conditions of Articles I, VII and VIII and the provisions of
Sections 9.1, 9.5, 9.10, 9.11 and 9.12 shall remain in full force and effect
after the termination of this Agreement.
SECTION 7.3 RECAPTURE.
(a) Upon the occurrence of a Recapture Triggering Event, the Ceding Company
shall have the right (but not the obligation) within sixty (60) calendar days of
such event to recapture all, and not less than all, of the outstanding
reinsurance ceded under this Agreement as of the effective date of the
recapture, by providing the Reinsurer with written notice of its intent to
effect recapture. Recapture of the Covered Insurance Policies shall be effective
on the tenth (10th) day following the day on which the Ceding Company has
provided the Reinsurer with such notice (the "Recapture Date"). Upon a recapture
by the Ceding Company, the Ceding Company will only recapture Liabilities and
obligations arising under the express terms of the Covered Insurance Policies
and will not be liable for any Reinsurer Extra Contractual Obligations. For the
avoidance of doubt, the Ceding Company shall have the option to recapture in
accordance with this Section 7.3 upon each subsequent occurrence of a Recapture
Triggering Event and not only upon the initial occurrence of any Recapture
Triggering Event.
(b) Following a recapture pursuant to this Section 7.3, subject to the payment
obligations described in Section 7.4, both the Ceding Company and the Reinsurer
will be fully and finally released from all rights and obligations under this
Agreement other than with respect to any Reinsurer Extra Contractual Obligations
which will remain due to the Ceding Company. Following the consummation of the
recapture or termination, no additional Premiums or other amounts payable under
such Covered Insurance Policies shall be payable to the Reinsurer hereunder and
nor, for the avoidance of doubt, shall the Reinsurer have any further right to
receive any Recoverables.
(c) Notwithstanding the remedies contemplated by this Article VII or the
Transaction Agreements, the Ceding Company may, in its sole discretion, require
direct payment by the Reinsurer of any sum in default under this Agreement or
any Transaction Agreement in lieu of exercising the remedies in this Article
VII, and it shall be no defense to any such claim that the Ceding Company might
have had other recourse.
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SECTION 7.4 RECAPTURE PAYMENTS. In connection with a recapture pursuant to
Section 7.3, the Reinsurer shall prepare a settlement statement within fifteen
(15) calendar days of the Recapture Date (the "Terminal Settlement Statement")
setting forth the terminal settlement calculated in accordance with Exhibit D
for the Terminal Accounting Period (the "Terminal Settlement"). If the amount of
the Terminal Settlement for the Terminal Accounting Period is positive, the
Ceding Company shall pay such amount to the Reinsurer within five (5) calendar
days of its receipt of the Terminal Settlement Statement. If the amount of the
Terminal Settlement for the Terminal Accounting Period is negative, the
Reinsurer shall pay the absolute value of such amount to the Ceding Company at
the time it delivers the Terminal Settlement Statement to the Ceding Company. In
addition, following the Recapture Date, the Trust Account shall be terminated
and any remaining amounts or amount held in trust pursuant to Section 4.3 shall
be released to the Reinsurer after the full satisfaction of the Terminal
Settlement pursuant to the Terminal Settlement Statement.
ARTICLE VIII
INDEMNIFICATION; DISCLAIMER
SECTION 8.1 REINSURER'S OBLIGATION TO INDEMNIFY. From and after the Effective
Time, the Reinsurer shall indemnify, defend and hold harmless the Ceding
Company, its Affiliates and their respective Representatives and their
respective successors and permitted assignees (collectively the "Ceding Company
Indemnified Parties") from and against any Losses imposed on, sustained,
incurred or suffered by any of the Ceding Company Indemnified Parties to the
extent arising from, relating to or in connection with (i) any breach by the
Reinsurer of the covenants and agreements of the Reinsurer contained in this
Agreement, (ii) the Reinsured Liabilities and (iii) any Liabilities relating to
periods on or after the Effective Time relating to regulatory or similar matters
contemplated in Section 5.3. For the avoidance of doubt, the Reinsurer shall not
be required to indemnify the Ceding Company for Ceding Company Extra Contractual
Liabilities.
SECTION 8.2 CEDING COMPANY'S OBLIGATION TO INDEMNIFY. From and after the
Effective Time, the Ceding Company hereby agrees to indemnify, defend and hold
harmless the Reinsurer, its Affiliates and their respective Representatives and
their respective successors and permitted assignees (collectively, the
"Reinsurer Indemnified Parties") from and against any Losses imposed on,
sustained, incurred or suffered by any of the Reinsurer Indemnified Parties to
the extent arising from, relating to or in connection with (i) any breach by the
Ceding Company of the covenants and agreements of the Ceding Company contained
in this Agreement, and (ii) any Excluded Liability and (iii) any Liabilities
relating to periods prior to the Effective Time relating to regulatory or
similar matters contemplated in Section 5.3. For the avoidance of doubt, the
Ceding Company shall not be required to indemnify the Reinsurer for Reinsurer
Extra Contractual Liabilities.
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SECTION 8.3 NOTICE OF CLAIM; DEFENSE.
Subject to the terms of Article X of the Administrative Services Agreement:
(a) If (i) any non-affiliated third party or Governmental Body institutes,
threatens or asserts any Action that may give rise to Losses for which a Party
(an "Indemnifying Party") may be liable for indemnification under this Article
VIII (a "Third-Party Claim") or (ii) any Person entitled to indemnification
under this Agreement (an "Indemnified Party") shall have a claim to be
indemnified by an Indemnifying Party that does not involve a Third-Party Claim,
then the Indemnified Party shall promptly send to the Indemnifying Party a
written notice specifying the nature of such claim and to the extent practicable
based on then-available information, a good faith estimate of the amount of all
related Losses (a "Claim Notice"); provided, however, that the failure to
provide such notice shall not release the Indemnifying Party from any of its
indemnification obligations under this Article VIII except to the extent that
the Indemnifying Party is actually prejudiced by the failure of the Indemnified
Parties to provide a timely and adequate Claim Notice.
(b) The Indemnifying Party shall not be entitled to assume or maintain control
of the defense of any Third-Party Claim and shall pay the reasonable fees and
expenses of counsel retained by the Indemnified Party if (i) the Third-Party
Claim relates to or arises in connection with any criminal proceeding, action,
indictment, allegation or investigation against the Indemnified Party or (ii)
the Third-Party Claim would reasonably be expected to result in an injunction or
equitable relief against the Indemnified Party that would, in each case, have a
material effect on the operation of the business of such Indemnified Party or
any of its Affiliates.
(c) Subject to Section 8.3(b), in the event of a Third-Party Claim, the
Indemnifying Party may elect to assume, at its own expense, the defense of a
Third-Party Claim and retain counsel reasonably acceptable to the Indemnified
Parties to represent such Indemnified Parties in connection with such
Third-Party Claim. Subject to Section 8.3(b), the Indemnified Parties may
participate, at their own expense and through separate legal counsel of their
choice, in the defense of any such Third-Party Claim; provided, however, that
the Indemnifying Party shall (i) control the defense of the Indemnified Parties
in connection with such Action and (ii) bear the reasonable fees, costs and
expenses of such separate counsel if an actual or potential conflict of interest
makes representation by the same counsel inappropriate. The Indemnifying Party
shall be liable for the fees and expenses of counsel employed by the Indemnified
Party for any period during which the Indemnifying Party has not assumed the
defense of a Third-Party Claim to the extent that such Third-Party Claim is
subject to indemnification by the Indemnifying Party under this Article VIII. If
the Indemnifying Party chooses to assume the defense of any Third-Party Claim,
the Reinsurer or the Ceding Company (as the case may be) shall, and shall cause
each of its Affiliates and Representatives to, reasonably cooperate (including,
upon the reasonable request of the other Party, making
36
reasonably available books, records and personnel with respect to the subject
matter of such Third-Party Claim) with the Indemnifying Party in the defense of
such Third-Party Claim. All costs and expenses incurred in connection with such
reasonable cooperation shall be borne by the Indemnifying Party. If the
Indemnifying Party has assumed the defense of any Third-Party Claim, the
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party, consent to a settlement, compromise or discharge of, or the
entry of any judgment arising from, any Third-Party Claim; provided, however,
that no such consent shall be required if (i) such settlement, compromise,
discharge or entry of any judgment (A) does not involve any finding or admission
of any violation of Applicable Law or admission of any wrongdoing or any
violation of the rights of any Person and does not include a statement or
admission of fault, culpability or failure to act by or on behalf of any
Indemnified Party, and (B) does not subject the Indemnified Party to any
injunctive relief or other equitable remedy and does not encumber any of the
assets of any Indemnified Party or result in any restriction or condition that
would apply to or affect any Indemnified Party or the conduct of any Indemnified
Party's business and (ii) (A) the Indemnifying Party pays or causes to be paid
all amounts arising out of such settlement or judgment concurrently with the
effectiveness of such settlement or judgment (unless otherwise provided in such
settlement or judgment) and (B) such settlement, compromise, discharge or entry
of judgment includes a complete and unconditional release of each Indemnified
Party from any and all Liabilities in respect of such Third-Party Claim. If the
Indemnifying Party has assumed the defense of a Third-Party Claim, and is in
compliance with its obligations under this Section 8.3(c), the Indemnified Party
shall not settle, compromise or consent to the entry of any judgment with
respect to such Third-Party Claim or admit to any liability with respect to such
Third-Party Claim without the prior written consent of the Indemnifying Party
(which shall not be unreasonably withheld, delayed or conditioned). If the
Indemnifying Party elects not to defend the Indemnified Party against a
Third-Party Claim, then the Indemnified Party shall have the right to assume its
own defense (without in any way waiving or otherwise affecting the Indemnified
Party's rights to indemnification pursuant to this Agreement), and the fees,
charges and disbursements of no more than one such counsel per jurisdiction
selected by the Indemnified Party shall be reimbursed by the Indemnifying Party.
Under no circumstances will the Indemnifying Party have any liability in
connection with any settlement of any Action that is entered into without its
prior written consent (not to be unreasonably withheld, conditioned or delayed).
SECTION 8.4 NO DUPLICATION; EXCLUSIVE REMEDY.
(a) Any Liability for indemnification hereunder or under any Transaction
Agreement shall be determined without duplication of recovery by reason of the
same Loss.
(b) Except as provided under (i) the provisions hereof providing for equitable
remedies or (ii) the provisions of any Transaction Agreement, from and after the
Closing, the exclusive remedy of the Reinsurer, the Reinsurer Indemnified
Parties, the Ceding Company and the Ceding Company Indemnified Parties in
connection with a breach of this Agreement (and any certificate or instrument
delivered hereunder) and the transactions contemplated hereby (whether under
this Agreement or arising under Applicable Law) shall be, in the absence of
willful misconduct, willful and material breach or fraud, as provided in this
Article VIII and Article IX.
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SECTION 8.5 LIMITATION ON SET-OFF. Neither the Reinsurer nor the Ceding Company
shall have any right to set off any unresolved indemnification claim pursuant to
this Article VIII against any payment due pursuant to Article III or Section 7.4
or any Transaction Agreement.
SECTION 8.6 RECOVERY BY INDEMNIFIED PARTY.
(a) In any case where an Indemnified Party recovers from a third party not
affiliated with such Indemnified Party any amount in respect of any Loss for
which an Indemnifying Party has actually reimbursed it pursuant to this Article
VIII, such Indemnified Party shall promptly pay over to the Indemnifying Party
the amount so recovered (net of any outof-pocket expenses incurred by such
Indemnified Party in collecting such amount and net of such Indemnified Party's
estimated increase in such Person's and its Affiliates' next annual insurance
premium arising out of such Loss (the "Estimated Premium Increase"), but not in
excess of (x) the sum of (i) any amount previously paid by the Indemnifying
Party to or on behalf of the Indemnified Party in respect of such claim and (ii)
any amount expended by the Indemnifying Party in pursuing or defending any claim
arising out of such matter, minus (y) the amount of the Estimated Premium
Increase. If a payment by an Indemnified Party to an Indemnifying Party is made
pursuant to the immediately preceding sentence and the actual increase in such
Indemnified Party's and its Affiliates' next annual insurance premium arising
out of the applicable Loss is more than or less than the amount of the Estimated
Premium Increase, the Indemnifying Party or the Indemnified Party, respectively,
shall pay to the other the amount by which the actual increase exceeds, or is
less than, as applicable, the Estimated Premium Increase.
(b) If any portion of Losses to be reimbursed by the Indemnifying Party pursuant
to this Article VIII would reasonably be expected to be recoverable from a third
party not affiliated with the relevant Indemnified Party (including under any
applicable third-party insurance coverage) based on the underlying claim or
demand asserted against such Indemnifying Party, then the Indemnified Party
shall reasonably promptly after becoming aware of such fact give notice thereof
to the Indemnifying Party and, upon the request of the Indemnifying Party, shall
use its reasonable best efforts as directed by the Indemnifying Party to collect
the amount recoverable from such third party, in which event the Indemnifying
Party shall reimburse the Indemnified Party for all costs and expenses incurred
in connection with such collection. If any portion of Losses actually paid by
the Indemnifying Party pursuant to this Article VIII would reasonably be
expected to have been recoverable from a third party not affiliated with the
relevant Indemnified Party (including under any applicable third-party insurance
coverage) based on the underlying claim or demand asserted against such
Indemnifying Party, then the Indemnified Party shall transfer, to the extent
transferable, such of its rights to proceed against such third party as are
necessary to permit the Indemnifying Party to recover from such third party any
amount actually paid by the Indemnifying Party pursuant to this Article VIII.
SECTION 8.7 RIGHT TO INDEMNIFICATION. Notwithstanding any other provision in
this Agreement to the contrary, the rights of the Indemnified Parties under this
Article VIII shall not be affected by any investigation conducted, or any
knowledge acquired (or capable of being acquired), at any time, whether before
or after the execution and delivery of this Agreement or the Effective Time,
including with respect to any information provided under Section 7.3 of the
Purchase Agreement. The waiver of any condition based on the performance of or
compliance with any covenant, agreement, condition and obligation set forth in
this Agreement, shall not affect the right to indemnification or other remedy
based on such representations, warranties, covenants, agreements, conditions and
obligations.
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SECTION 8.8 COST OF ENFORCEMENT. If any claim for indemnification is brought by
a Party to this Agreement under this Article VIII, the prevailing Party in any
such claim for indemnification shall be reimbursed by the other Party for all of
its reasonable attorneys' fees and costs and expenses incurred in connection
with enforcement of such claim, in addition to any other relief to which such
prevailing Party may be entitled. For purposes of the foregoing, (a) "prevailing
Party" means (i) in the case of the Party initiating the enforcement of rights
or remedies, that it recovered substantially all of its claims, and (ii) in the
case of the Party defending against such enforcement, that it successfully
defended substantially all of the claims made against it, and (b) if neither
Party is a "prevailing Party" within the meaning of the foregoing, then neither
Party will be entitled to recover its reasonable attorneys' fees, costs and
expenses from the other Party.
SECTION 8.9 WAIVER OF DUTY OF UTMOST GOOD FAITH. In recognition that each Party
has consummated the transactions contemplated by this Agreement and the
Transaction Agreements to which it is a party, based on mutually negotiated
representations, warranties, covenants, remedies and other terms and conditions
as are fully set forth herein and therein, the Ceding Company and the Reinsurer
absolutely and irrevocably waive resort to the duty of "utmost good faith" or
any similar principle in connection with the formation or performance of this
Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 REMEDIES. Each Party agrees that any failure to perform, or breach
of its obligations under this Agreement will result in irreparable injury to the
other Party, that the remedies available to such other Party at law alone will
be an inadequate remedy for such failure or breach and that, in addition to any
other legal or equitable remedies that such other Party may have, such other
Party may seek to enforce its rights in court by an Action for specific
performance and the Parties expressly waive the defense that a remedy in damages
will be adequate or that an award of specific performance is not an appropriate
remedy for any reason at law or equity. Any Party seeking an order or injunction
to prevent or cure breaches of this Agreement and to enforce specifically the
terms and provisions of this Agreement shall not be required to provide any bond
or other security in connection with any such order or injunction. The Parties
further agree that (a) by seeking any remedy provided for in this Section 9.1, a
Party shall not in any respect waive its right to seek any other form of relief
that may be available to such Party under this Agreement and (b) nothing
contained in this Section 9.1 shall require any Party to institute any action
for (or limit any Party's right to institute any action for) specific
performance under this Section 9.1 before exercising any other right under this
Agreement.
SECTION 9.2 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of
Connecticut (without regard to conflict
of laws principles that might lead to the application of the laws of another
jurisdiction).
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SECTION 9.3 JURISDICTION; VENUE. Each of the Parties hereto irrevocably agrees
that any and all Actions arising out of, relating to or in connection with this
Agreement or the transactions contemplated by this Agreement or the formation,
breach, termination or validity of this Agreement brought by any other Party or
its successors or assigns, shall be brought and determined exclusively in any
district court of the United States of America located in the State of
Connecticut, or, in the event that such courts do not have subject matter
jurisdiction over such Action, in the courts of the State of
Connecticut. Each
of the Parties agrees that mailing of process or other papers in connection with
any such Action in the manner provided in Section 9.5, or in such other manner
as may be permitted by Applicable Law, will be valid and sufficient service
thereof. Each of the Parties hereby irrevocably submits with regard to any such
Action for itself and in respect of its property, generally and unconditionally,
to the personal jurisdiction of the aforesaid courts and agrees that it will not
bring any Action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court or tribunal other than the aforesaid
courts. Each of the Parties hereby irrevocably waives, and agrees not to assert,
by way of motion, as a defense, counterclaim or otherwise, in any Action with
respect to this Agreement or the transactions contemplated by this Agreement or
the formation, breach, termination or validity of this Agreement (a) any claim
that it is not personally subject to the jurisdiction of the above named courts
for any reason other than the failure to serve process in accordance with this
Agreement, (b) any claim that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process commenced in such
courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise)
and (c) to the fullest extent permitted by Applicable Law, any claim that (i)
the Action should be dismissed on the basis of FORUM NON CONVENIENS, (ii) the
venue of such Action is improper or (iii) this Agreement, or the subject matter
hereof, may not be enforced in or by such courts.
SECTION 9.4 JURY WAIVER. EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND WHETHER MADE BY CLAIM,
COUNTERCLAIM, THIRD-PERSON CLAIM OR OTHERWISE. EACH PARTY HERETO ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS IN THIS SECTION 9.4.
SECTION 9.5 NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given (a) on the date of service if served personally on the Party to whom
notice is to be given, (b) on the day of transmission if sent via facsimile
transmission to the facsimile number given below, and telephonic confirmation of
receipt is obtained promptly after completion of transmission, (c) on the day of
transmission if sent via electronic mail to the email address given below, and
telephonic confirmation of receipt is obtained promptly after completion of
transmission, or (d) on the second Business Day after delivery to an overnight
courier (such as Federal Express) or an overnight mail service (such as the
Express Mail service) maintained by the United States Postal Service, to the
Party as follows:
40
(a) If to the Reinsurer, to:
Massachusetts Mutual Life Insurance Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
with copies to (which shall not constitute notice):
Massachusetts Mutual Life Insurance Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
J. ▇▇▇▇▇▇▇▇▇ ▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇▇.▇▇▇@▇▇▇▇▇▇▇.▇▇▇
(b) If to the Ceding Company, to:
Hartford Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Ceded Reinsurance & General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
with copies to (which shall not constitute notice):
The Hartford Financial Services Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Ceded Reinsurance & General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
or to such other address as such Party may indicate by a notice delivered to the
other Parties hereto in accordance with this Section 9.5.
SECTION 9.6 SUCCESSORS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES.
(a) The rights and obligations of a Party under this Agreement shall not be
assignable or delegable by such Party without the written consent of the other
Parties.
(b) This Agreement shall be binding upon and inure to the benefit of the Parties
hereto and their successors and permitted assigns. Except as otherwise provided
in Article VIII, nothing in this Agreement, expressed or implied, is intended or
shall be construed to confer upon any Person other than the Parties and their
respective successors and assigns permitted by this Section 9.6 any right,
remedy or claim under or by reason of this Agreement.
SECTION 9.7 ENTIRE AGREEMENT; AMENDMENTS.
(a) This Agreement, the Exhibits and Schedules referred to herein, and the
Transaction Agreements contain the entire understanding of the Parties hereto
with regard to the subject matter contained herein or therein, and supersede all
other prior representations, warranties, agreements, understandings or letters
of intent between or among any of the Parties, which representations,
warranties, agreements, understandings or letters of intent shall be of no force
or effect for any purpose, and shall be interpreted without reference to any
prior drafts hereof.
(b) This Agreement may not be amended, modified or supplemented except by a
written instrument signed by an authorized Representative of each of the Parties
or their respective successors in interest.
SECTION 9.8 INTERPRETATION. The table of contents, articles, titles and headings
to sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement. The Schedules and Exhibits referred to herein shall be construed with
and as an integral part of this Agreement to the same extent as if they were set
forth verbatim herein. All references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." Unless the context otherwise requires, the words
"hereof," "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. All terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. Subject to Section
9.5, all references to "written notice" herein shall include notice by print,
fax or electronic mail. All references to a "willful and material breach" refer
to an action or omission that the breaching Party takes or omits to take with
the intent of breaching this Agreement. The definitions in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine genders of such term. Except as otherwise
set forth herein, any agreement or instrument defined or referred to herein or
any agreement or instrument that is referred to herein means such agreement or
instrument as from time to time amended, modified or supplemented, including by
waiver or consent, and references to all attachments thereto and
42
instruments incorporated therein. Any statute or regulation referred to herein
means such statute or regulation as amended, modified, supplemented or replaced
from time to time (and, in the case of any statute, includes any rules and
regulations promulgated under such statute), and references to any section of
any statute or regulation include any successor to such section. Any agreement
referred to herein shall include reference to all Exhibits, Schedules and other
documents or agreements attached thereto. References to dollars or "$" shall
mean U.S. dollars. This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the Party
drafting or causing any instrument to be drafted. Each representation, warranty,
covenant, agreement and condition contained in this Agreement shall have
independent significance.
43
SECTION 9.9 WAIVERS. Any term or provision of this Agreement may be waived, or
the time for its performance may be extended, in writing at any time by the
Party or Parties entitled to the benefit thereof. Any such waiver shall be
validly and sufficiently authorized for the purposes of this Agreement if, as to
any Party, it is authorized in writing by an authorized Representative of such
Party. The failure of any Party hereto to enforce at any time any provision of
this Agreement shall not be construed to be a waiver of such provision, nor in
any way to affect the validity of this Agreement or any part hereof or the right
of any Party thereafter to enforce each and every such provision. No waiver of
any breach of this Agreement shall be held to constitute a waiver of any
preceding or subsequent breach.
SECTION 9.10 EXPENSES. Except as otherwise expressly set forth in this Agreement
(including in Article VIII) and the Transaction Agreements, each Party hereto
will pay all costs and expenses incident to its negotiation and preparation of
this Agreement and the Transaction Agreements and to its performance and
compliance with all agreements and conditions contained herein or therein on its
part to be performed or complied with, including the fees, expenses and
disbursements of its counsel and independent public accountants.
SECTION 9.11 PARTIAL INVALIDITY. Wherever possible, each provision hereof shall
be interpreted in such manner as to be effective and valid under Applicable Law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality or unenforceability without invalidating the remainder of
such invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, so long as the economic or legal substance of the
transactions contemplated by this Agreement is not affected in any manner
adverse to any Party. Upon such determination that any provision is invalid,
illegal or unenforceable, the Parties shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the Parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement be consummated as originally contemplated to the
greatest extent possible.
44
SECTION 9.12 EXECUTION IN COUNTERPARTS. This Agreement may be executed in one or
more counterparts, including by facsimile or by electronic delivery in .pdf
format, each of which shall be considered an original instrument, but all of
which shall be considered one and the same agreement, and shall become binding
when one or more counterparts have been signed and delivered by each of the
Parties hereto.
SECTION 9.13 TREATMENT OF CONFIDENTIAL INFORMATION. The Parties agree that,
other than as contemplated by this Agreement or any Transaction Agreement and to
the extent permitted or required to implement the transactions contemplated by
this Agreement and the Transaction Agreements, the Parties will keep
confidential and will not use or disclose the other Party's Confidential
Information and the terms and conditions of this Agreement, including the
exhibits and schedules hereto, except (x) as otherwise required by Applicable
Law or any order or ruling of any state insurance regulatory authority or any
other Governmental Body, (y) as may be required to be disclosed in the financial
statements of such Party or any of its Affiliates or (z) such disclosure as may
be required in connection with any dispute resolution proceeding between the
Parties in respect hereof.
[The rest of this page intentionally left blank.]
45
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
effective .
HARTFORD LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Sr. Vice President
[Signatures Continue onto Next Page]
Reinsurance Agreement Signature Page
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
Reinsurance Agreement Signature Page
SCHEDULE 1.1(A)
COVERED INSURANCE POLICIES
[SEE ATTACHED]
SCHEDULE 1.1(B)
SEPARATE ACCOUNTS
SEPARATE ACCOUNTS REGISTERED AS INVESTMENT COMPANIES:
GOVERNMENT/TAX-EXEMPT SEGMENT
Hartford Life Insurance Company DC Variable Account I
Hartford Life Insurance Company Separate Account Two **
Hartford Life Insurance Company Separate Account Eleven
Hartford Life Insurance Company Separate Account Twelve
SEPARATE ACCOUNTS NOT REGISTERED IN RELIANCE ON SECTION 3(C)(11) OF THE
INVESTMENT COMPANY ACT OF 1940 AND SECTION 3(A)(2) OF THE SECURITIES ACT OF
1933:
GOVERNMENT/TAX-EXEMPT SEGMENT
Hartford Life Insurance Company Separate Account Fourteen
Hartford Life Insurance Company Separate Account 457
Hartford Life Insurance Company DC Variable Account III
Hartford Life Insurance Company DC Variable Account IV
Hartford Life Insurance Company DC Variable Account V
Hartford Life Insurance Company DC Variable Account VI
Hartford Life Insurance Company Separate Account UFC
CORPORATE 401(K) SEGMENT
Hartford Life Insurance Company Group Annuity Separate Account K
Hartford Life Insurance Company Group Annuity Separate Account K-1
Hartford Life Insurance Company Group Annuity Separate Account K-2
Hartford Life Insurance Company Group Annuity Separate Account K-3
Hartford Life Insurance Company Group Annuity Separate Account K-4
Hartford Life Insurance Company Group Annuity Separate Account TK
Hartford Life Insurance Company Group Annuity Separate Account TK-1
Hartford Life Insurance Company Group Annuity Separate Account TK-2
Hartford Life Insurance Company Group Annuity Separate Account TK-3
Hartford Life Insurance Company Group Annuity Separate Account TK-4
Hartford Life Insurance Company Group Annuity Separate Account UK
Hartford Life Insurance Company Group Annuity Separate Account UK-2
Hartford Life Insurance Company Group Annuity Separate Account UK-3
Hartford Life Insurance Company Group Annuity Separate Account UK-4
Hartford Life Insurance Company Group Annuity Separate Account ▇▇
▇▇▇▇▇▇▇▇ Life Insurance Company Group Annuity Separate Account VK-1
Hartford Life Insurance Company Group Annuity Separate Account VK-2
Hartford Life Insurance Company Group Annuity Separate Account VK-3
Hartford Life Insurance Company Group Annuity Separate Account VK-4
Hartford Life Insurance Company Separate Account 401
Hartford Life Insurance Company Separate Account A
Hartford Life Insurance Company Separate Account 9
** HLIC Separate Account Two is used by both Retirement and Individual Annuity
lines of business.
EXHIBIT A
FORM OF TRUST AGREEMENT
[SEE ATTACHED]
EXHIBIT A
RESERVE TRUST AGREEMENT
BY AND AMONG
HARTFORD LIFE INSURANCE COMPANY,
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY,
AND
CITIBANK N.A.
Dated as of: December 31, 2012
TABLE OF CONTENTS
PAGE
--------------------------------------------------------------------------------
Section 1. Deposit of Assets to the Reserve Trust Account 2
Section 2. Withdrawal of Assets from the Reserve Trust Account 6
Section 3. Procedure for Withdrawals of Assets; Certain Covenants 7
Section 4. Redemption, Investment and Substitution of Assets 9
Section 5. The Income Account 10
Section 6. Taxes; Right to Vote Assets 10
Section 7. Additional Rights and Duties of the Trustee 11
Section 8. The Trustee's Compensation, Expenses and Indemnification 13
Section 9. Resignation of the Trustee 14
Section 10. Triggering Event 14
Section 11. Reserve Credit Event 17
Section 12. Termination of the Reserve Trust Account 19
Section 13. Definitions 19
Section 14. Remedies 24
Section 15. Governing Law 24
Section 16. Jurisdiction; Venue 25
Section 17. Jury Waiver 25
Section 18. Notices 25
Section 19. Successors and Assigns; No Third-Party Beneficiaries 27
Section 20. Entire Agreement; Amendments 27
Section 21. Interpretation 28
Section 22. Waivers 28
Section 23. Expenses 29
Section 24. Partial Invalidity 29
Section 25. Execution in Counterparts 29
EXHIBITS
A -- Initial Transferred Assets
B-1 -- Form of Beneficiary Withdrawal Notice
B-2 -- Form of Grantor Withdrawal Notice
B-3 -- Form of Grantor Withdrawal Notice Consent
B-4 -- Form of Trust Withdrawal Event Notice
B-5 -- Form of Trust Withdrawal Event Acknowledgment
C -- Investment Guidelines
D -- Form of Cure Notice
E -- Form of Cure Acknowledgment
Appendix 1 -- Reserve Trust Account Opening Letters
Appendix 2 -- Asset Transfer Notification
i
RESERVE TRUST AGREEMENT
THIS RESERVE TRUST AGREEMENT, dated as of December 31, 2012 (this "Agreement"),
is by and among MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, a mutual life
insurance company domiciled in the Commonwealth of Massachusetts (hereinafter
the "Grantor"), HARTFORD LIFE INSURANCE COMPANY, a life insurance company
domiciled in the State of
Connecticut (such insurer and its successors by
operation of law, including, without limitation, any liquidator, rehabilitator,
receiver or conservator thereof, being hereinafter referred to as the
"Beneficiary"), and Citibank N.A. as trustee, for the benefit of the Beneficiary
(such bank, in its capacity as trustee, being referred to as the "Trustee").
RECITALS
WHEREAS, pursuant to a
Reinsurance Agreement dated the date hereof between the
Grantor and the Beneficiary (the "
Reinsurance Agreement"), the Beneficiary is
ceding to the Grantor, and the Grantor is reinsuring, on an indemnity
reinsurance basis, the General Account Liabilities and, on a modified
coinsurance basis, the Separate Account Liabilities under the Covered Insurance
Policies (as such terms are defined in the
Reinsurance Agreement) issued by the
Beneficiary pursuant to the terms and conditions thereof;
WHEREAS, pursuant to Section 4.2 of the
Reinsurance Agreement, the Grantor and
the Beneficiary desire to establish with the Trustee trust accounts with account
numbers 240146, 240147, 240148 and 30920211 (collectively, the "Reserve Trust
Account"), and transfer to the Trustee for deposit in the Reserve Trust Account
Assets (as hereinafter defined) to be made subject to this Agreement in order to
secure payments of amounts due the Beneficiary with respect to the General
Account Liabilities under the
Reinsurance Agreement and to instruct the Trustee
to establish one or more bookkeeping accounts in connection with the Reserve
Trust Account;
WHEREAS, the Grantor and Beneficiary acknowledge and agree that as further
described in and subject to the features set forth in those certain letters of
the Grantor attached hereto as Appendix 1, the Reserve Trust Account shall
initially be established and owned by and in the name of the Beneficiary
(subject to the change in ownership of the account at the Effective Time
pursuant to Section 1 of this Agreement);
WHEREAS, the Trustee is a qualified United States financial institution (as
defined in Section 38a-87(b) of the Connecticut Insurance Code);
WHEREAS, the Trustee has agreed to act as Trustee hereunder and, in accordance
with the terms hereof, to hold Assets in trust in the Reserve Trust Account on
the terms herein set forth; and
WHEREAS, this Agreement is made for the benefit of the Beneficiary and for the
purpose of setting forth the duties and powers of the Trustee with respect to
the Reserve Trust Account.
1
NOW, THEREFORE, for and in consideration of the premises and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereby agree as follows:
SECTION 1. DEPOSIT OF ASSETS TO THE RESERVE TRUST ACCOUNT.
(a) Concurrently with the execution and delivery of this Agreement, the Grantor
and the Beneficiary hereby establish a Reserve Trust Account owned by and in the
name of the Beneficiary, and the Trustee hereby accepts the Reserve Trust
Account herein created and declared upon the terms provided herein and shall
administer the Reserve Trust Account as Trustee for the benefit of the
Beneficiary. The Beneficiary shall establish and the Trustee shall maintain the
Reserve Trust Account as a securities account at its offices in New York, NY;
provided, that, upon receipt by the Trustee of written confirmation of the
Beneficiary and the Grantor substantially in the form attached hereto as
Appendix 2 notifying the Trustee that all asset transfers to be effected prior
to the Effective Time pursuant to this Agreement have occurred, the Reserve
Trust Account shall automatically and irrevocably, without any further action by
any party, become an account owned by the Grantor effective as of the Effective
Time and shall thereafter be in the name of the Grantor. The Trustee and its
lawfully appointed successors are authorized and shall have power to receive
such Eligible Assets as the Grantor transfers to or vests in the Trustee or
places under the Trustee's possession and control, and to hold, invest,
reinvest, manage and dispose of the same for the uses and purposes and in the
manner and according to the provisions hereinafter set forth. All such trusteed
Eligible Assets shall be maintained in the Reserve Trust Account, separate and
distinct from all other assets of the Trustee, and shall be continuously
maintained by the Trustee.
(b) Prior to the Effective Time, the Beneficiary shall transfer or cause to be
transferred to the Trustee, for deposit to the Reserve Trust Account, the assets
listed on Exhibit A hereto as of the date hereof, and, on and after the
Effective Time, the Grantor may transfer to the Trustee, for deposit to the
Reserve Trust Account, Eligible Assets as it may from time to time be required
to deposit by this Agreement or otherwise (all such Eligible Assets and proceeds
thereof in the Reserve Trust Account are "Assets"). The Grantor, prior to
depositing Eligible Assets with the Trustee, shall, at its option, do one of the
following: (i) execute or cause to be executed assignments or endorsements in
blank in favor of the Trustee or (ii) transfer legal title to the Trustee, in
each case, of all shares, obligations or any other assets requiring assignment,
in order that the Beneficiary or the Trustee, upon the direction of the
Beneficiary, may whenever necessary negotiate any such Eligible Assets without
the consent of or signature from the Grantor or any other entity. Except as
otherwise set forth in paragraph (g) of this Section 1 and subject to the
security interest in the Assets granted by the Grantor to the Beneficiary
pursuant to this Agreement, on and after the Effective Time the Beneficiary
shall cease to be the owner of the Assets transferred to the Trustee for deposit
to the Reserve Trust Account by the Beneficiary prior to the Effective Time and
the Grantor shall be the sole owner of all Assets transferred to the Trustee for
deposit to the Reserve Trust Account including assets transferred by the Grantor
at any time or by the Beneficiary prior to the Effective Time.
(c) The Grantor hereby represents, warrants and covenants (i) that any assets
transferred by the Grantor to the Trustee for deposit to the Reserve Trust
Account (other than those assets transferred by the Beneficiary prior to the
Effective Time in accordance with Section
2
3.3(b) of the Purchase Agreement) will be in such form that the Beneficiary
whenever necessary may, and the Trustee upon direction by the Beneficiary will,
negotiate any such assets without consent or signature from the Grantor or any
person in accordance with the terms of this Agreement; and (ii) that all assets
transferred by the Grantor to the Trustee for deposit to the Reserve Trust
Account will consist only of Eligible Assets.
(d) To secure the performance of the Grantor's obligations to the Beneficiary
under the Reinsurance Agreement with respect to the General Account Liabilities,
the Grantor hereby grants to the Beneficiary a security interest in and
continuing lien on all of the Grantor's right, title and interest in, to and
under the following property, whether now owned or existing or hereafter
acquired or arising, and wherever located (the "Collateral"): (i) the Reserve
Trust Account and the Assets; (ii) all Assets credited to the Reserve Trust
Account; (iii) all Security Entitlements related to the Reserve Trust Account;
and (iv) all proceeds of any of the foregoing. Any amounts withdrawn by the
Beneficiary from the Reserve Trust Account in accordance with Section 2(a) shall
be automatically released from, and withdrawn free and clear of, any security
interest created herein. Pursuant to the terms of Sections 4.2(b) and (c) of the
Reinsurance Agreement and Section 2 hereof, the Beneficiary is intended to have
control of the Assets and the Reserve Trust Account for the purpose of
perfecting the interest granted hereby. The Grantor hereby authorizes the
Beneficiary to file UCC-1 Financing Statements with respect to the Collateral.
The Trustee shall at the written direction of the Beneficiary, file the
completed UCC1 Financing Statements delivered to the Trustee by the Beneficiary
with respect to the Collateral. Upon the occurrence of a default by the Grantor
in the performance of its monetary obligations under the Reinsurance Agreement,
and upon delivery by the Beneficiary to the Grantor of a written notice thereof
in accordance with Section 2(a) of this Agreement, the Beneficiary may pursue
any remedy available at law (including those available under the provisions of
the UCC), or in equity to collect, enforce or satisfy any obligations of the
Grantor to the Beneficiary then owing with respect to the General Account
Liabilities, solely to the extent required to cure such default.
(e) The Trustee hereby confirms and agrees that:
(i) the Trustee shall not change the name or account number of the Reserve Trust
Account without the prior written consent of the Beneficiary;
(ii) the Trustee confirms and agrees that the Reserve Trust Account is a
"securities account" within the meaning of Section 8-501 of the UCC and that the
Trustee is acting in the capacity of a "securities intermediary" within the
meaning of Section 8102(a)(14) of the UCC with respect to the Reserve Trust
Account;
(iii) all securities or other property that take the form of an instrument or
certificated security underlying any financial assets credited to the Reserve
Trust Account comply with the second sentence of Section 1(b) hereof; and
(iv) each item of property (whether investment property, financial asset,
security, instrument or cash) credited to the Reserve Trust Account shall be
treated as a "financial asset" within the meaning of Section 8-102(a)(9) of the
UCC.
(f) For purposes of perfecting the security interest in the Reserve Trust
Account, the Grantor hereby represents and warrants to the Beneficiary, and
covenants for the benefit of the Beneficiary, as follows:
(i) As of the date hereof, the Grantor is (and, for the past five (5) years, has
been) a mutual insurance company organized under the laws of the Commonwealth of
Massachusetts. For the past five (5) years and as of the date hereof, the chief
executive office of the Grantor was located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇. The Grantor shall not change its jurisdiction of organization or
its chief executive office except upon ten (10) calendar days' prior written
notice to the Beneficiary. As of the date hereof, the Grantor's exact legal
name, as reflected in its
3
organization documents of record in the Commonwealth of Massachusetts, is (and,
for the past five (5) years, has been) that set forth in the preamble hereto.
(ii) As of the Effective Time and at all times thereafter, the Grantor will own
its interest in the assets in the Reserve Trust Account free and clear of any
security interest in, or lien or adverse claim on, such assets, other than the
security interest in favor of the Beneficiary created hereunder; provided that
the Grantor makes no representation that the assets transferred by the
Beneficiary prior to the Effective Time in accordance with Section 3.3(b) of the
Purchase Agreement were, at the time of such transfer, free and clear of any
security interest in, or lien or adverse claim on, such assets. From and after
the date hereof, the Grantor shall not authorize the filing of any other
financing statement with respect to any asset in the Reserve Trust Account, nor
authorize the granting of "control" (solely for purposes of this paragraph, as
defined in the UCC) over any of such asset to any Person other than the
Beneficiary. During the term of this Agreement, the Grantor shall not, and shall
direct that the Trustee shall not, grant or cause or permit to be created or
granted in favor of any third person any security interest whatsoever in any of
the Assets in the Reserve Trust Account or in the residual interest therein.
(iii) The Grantor shall do, execute or otherwise authenticate, acknowledge and
deliver, or cause to be done, executed or otherwise authenticated, acknowledged
and delivered, such instruments of transfer or other records, and take such
other steps or actions, as the Beneficiary may reasonably deem necessary to
create, perfect or preserve the security interest granted to the Beneficiary by
Section 1(d) or to ensure that such security interest remains prior to any and
all other security interests, liens or other interests of any other Person; and
the Grantor hereby authorizes the Beneficiary to take, or cause to be taken, any
of the foregoing steps or actions upon any failure by the Grantor to perform or
comply with any written request of the Beneficiary that Grantor so perform or
comply with Grantor's obligations under this Section 1(f)(iii).
(g) Notwithstanding anything in this Agreement, including without limitation,
Sections 1 and 12 hereof, in the event the Reinsurance Agreement fails to become
effective as of the Effective Time for any reason whatsoever, the Trustee shall,
upon receipt of written instructions signed by both the Grantor and the
Beneficiary, promptly remove all Assets transferred by the Beneficiary in
accordance with Section 3.3(b) of the Purchase Agreement for deposit to the
Reserve Trust Account, and transfer all such Assets to an account of the
4
Beneficiary as directed by the Beneficiary. The Trustee shall, if necessary,
execute assignments or endorsements in blank in favor of the Beneficiary in
order to transfer the Assets, including all legal title thereto, to the
Beneficiary. Notwithstanding anything herein to the contrary, it is understood
and agreed that this Agreement shall be deemed terminated and the Trustee's
obligations shall cease upon the transfer by the Trustee of all the Assets
transferred by the Beneficiary in accordance with Section 3.3(b) of the Purchase
Agreement for deposit to the Reserve Trust Account in accordance with the
instructions of the Beneficiary and the transfer of all Assets held in the
Reserve Trust Account. In the event that this Agreement is so terminated in
accordance with this Section 1, all fees, expenses and costs of the Trustee in
connection with the establishment of the Reserve Trust Account and the receipt
and delivery of any Assets contemplated in this Section 1 and under any other
provision of this Agreement, shall be promptly paid by the Grantor upon demand.
It is understood and agreed that the provisions of Section 8 shall survive the
termination of this Agreement.
5
SECTION 2. WITHDRAWAL OF ASSETS FROM THE RESERVE TRUST ACCOUNT.
(a) Pursuant to Section 4.2(b) of the Reinsurance Agreement, the Beneficiary
shall have the right to withdraw Assets from the Reserve Trust Account upon
written notice to the Trustee and the Grantor substantially in the form attached
hereto as Exhibit B-1 (a "Beneficiary Withdrawal Notice") only after a default
by the Grantor in the performance of its monetary obligations under the
Reinsurance Agreement (i) which default has not been cured by the Grantor or
(ii) for which the Grantor has not provided a reasonable written explanation of
the reasons for non-payment thereof, in either case within three Business Days
following the receipt of a specific written notice thereof delivered by the
Beneficiary; provided that with respect to defaults for which the Grantor has
provided a reasonable written explanation of the reasons for non-payment
referred to in (ii) above and subject to the Beneficiary's ultimate authority
under Section 4.02 of the Administrative Services Agreement, the Beneficiary
will act at the direction of the Grantor in resolving such matters pursuant to
the Grantor's authority under the Administrative Services Agreement. Pursuant to
Section 4.2(b) of the Reinsurance Agreement, any such withdrawals shall be
utilized and applied by the Beneficiary or any successor by operation of law
(including any liquidator, rehabilitator, receiver or conservator of the
Beneficiary) only to pay amounts then due to the Beneficiary under the terms and
conditions of the Reinsurance Agreement. The Beneficiary shall be permitted to
direct the Trustee to withdraw Assets from the Reserve Trust Account not in
excess of the amount the Beneficiary is permitted to withdraw from the Reserve
Trust Account under the preceding two sentences. The Beneficiary Withdrawal
Notice shall specify the invested Assets or cash amount to be withdrawn. The
Beneficiary may designate in the Beneficiary Withdrawal Notice a third party
(the "Designee") to whom Assets specified therein shall be delivered and may
condition delivery of such Assets to such Designee upon receipt and deposit to
the Reserve Trust Account of other Assets specified in such Beneficiary
Withdrawal Notice.
(b) If the aggregate Statutory Book Value of the Eligible Assets in the Reserve
Trust Account at the end of any Accounting Period exceeds one hundred and two
percent (102%) of the Required Balance, the Grantor may provide notice to the
Beneficiary, with a copy to the Trustee, of its desire to withdraw Assets from
the Reserve Trust Account in an amount not to exceed such excess, specifying the
amount and type of Assets to be withdrawn. Within five (5) Business Days
following its delivery of such notice to the Beneficiary, the
6
Grantor shall be permitted, without further notice to, or consent of, the
Beneficiary, to direct the Trustee to withdraw Assets from the Reserve Trust
Account in excess of the amount necessary to maintain such Required Balance as
of the end of the applicable Accounting Period, which notice shall be
substantially in the form attached hereto as Exhibit B-2 (a "Grantor Withdrawal
Notice"). The Grantor Withdrawal Notice shall specify the invested Assets or
cash amount to be withdrawn.
(c) At any time and from time to time, the Grantor may withdraw, upon providing
to the Beneficiary and the Trustee the Grantor Withdrawal Notice, such Assets
from the Reserve Trust Account as are specified in such Grantor Withdrawal
Notice for the sole purpose of (i) paying the General Account Liabilities under
the Covered Insurance Policies; provided, the aggregate Statutory Book Value of
the Assets maintained in the Reserve Trust Account as of any Accounting Period
end is equal to or greater than the Required Balance as of such Accounting
Period end; or (ii) paying the Terminal Settlement (as such term is defined in
the Reinsurance Agreement) to the Beneficiary pursuant to Section 7.4 of the
Reinsurance Agreement. The Grantor need present no statement or document other
than a Grantor Withdrawal Notice in order to withdraw any Assets.
(d) Upon receipt by the Trustee of a Trust Withdrawal Event Notice substantially
in the form attached hereto as Exhibit B-4 (a "Trust Withdrawal Event Notice"),
which Trust Withdrawal Event Notice has been agreed to and acknowledged by the
Beneficiary as evidenced by its execution and delivery to the Trustee and
Grantor of a Trust Withdrawal Event Acknowledgment substantially in the form
attached hereto as Exhibit B-5 (a "Trust Withdrawal Event Acknowledgment"), the
Grantor may withdraw all or a portion of the Assets from the Reserve Trust
Account by delivering a Grantor Withdrawal Notice to the Trustee.
Notwithstanding the foregoing, the Reserve Trust Account created hereunder shall
continue in existence following the withdrawal of all Assets pursuant to this
Section 2(d).
(e) The Grantor, the Beneficiary and the Trustee agree that the Trustee shall
comply with instructions (including Entitlement Orders) originated by the
Beneficiary without further consent by the Grantor or any other Person.
SECTION 3. PROCEDURE FOR WITHDRAWALS OF ASSETS; CERTAIN COVENANTS.
(a) Following receipt of a Beneficiary Withdrawal Notice, Grantor Withdrawal
Notice or a Trust Withdrawal Event Notice and in accordance with Section 2, the
Trustee shall promptly take any and all steps necessary to transfer, absolutely
and unequivocally, all right, title and interest to the invested Assets or cash
amount specified in such Beneficiary Withdrawal Notice, Grantor Withdrawal
Notice or Trust Withdrawal Event Notice, as applicable, and shall deliver such
invested Assets or cash amount as specified in such notice. The Trustee shall be
protected in relying conclusively upon any written demand, instruction,
direction, acknowledgment, statement, notice, resolution, request, consent,
order, certificate, report, appraisal, opinion, telegram, cablegram, facsimile,
electronic mail, radiogram, letter, or other communication (collectively,
"Communications") of the Beneficiary or the Grantor for any such withdrawal that
on its face conforms to requirements of this Agreement.
(b) Subject to Section 4, Section 10 and Section 11 of this Agreement, in the
absence of a Beneficiary Withdrawal Notice, a Grantor Withdrawal Notice or a
Trust Withdrawal Event Acknowledgment, the Trustee shall allow no substitutions
or withdrawals of any Asset from the Reserve Trust Account.
(c) The Grantor shall neither use, nor attempt to use, the Assets to satisfy any
of its debts, contracts or liabilities to others, except its obligations to the
Beneficiary as provided herein. The Trustee may neither take, nor consent to the
taking of, any action which would or could result in the placement of any lien
on any of the Reserve Trust Account's Assets except as stated under this
Agreement.
7
In addition, the Trustee shall have no authority to assign, transfer, pledge, or
set off any of the Reserve Trust Account's Assets except as expressly permitted
herein. Neither the Grantor, nor the Trustee, nor their respective successors
and assigns, shall alienate, sell, transfer, assign, encumber or otherwise
impair any of the Reserve Trust Account's Assets except as stated under this
Agreement. Any attempt to do so is void and of no force or effect.
8
SECTION 4. REDEMPTION, INVESTMENT AND SUBSTITUTION OF ASSETS.
(a) The Grantor or its designated investment advisor shall surrender for payment
all maturing Assets and all Assets called for redemption and deposit the
principal amount of the proceeds of any such payment to the Reserve Trust
Account and will provide notice thereof to the Beneficiary.
(b) From time to time, the Grantor or its designated investment advisor shall
invest and reinvest the Assets in the Reserve Trust Account in Eligible Assets.
The Trustee shall have no responsibility whatsoever to determine that such
designated investments constitute Eligible Assets, and may rely on the decision
of the Grantor or its designated investment advisor.
(c) From time to time, without prior notice to or consent of the Beneficiary,
the Grantor may direct the Trustee to substitute Assets, provided, that at the
time of such substitution, the withdrawn Assets are replaced with other Eligible
Assets having a Statutory Book Value at least equal to the Statutory Book Value
of the Assets withdrawn. The Trustee shall have no responsibility whatsoever to
determine the value of such substituted Assets or that such substituted Assets
constitute Eligible Assets.
(d) All investments and substitutions of Assets referred to in paragraphs (b)
and (c) of this Section 4 shall be in compliance with the definition of
"Eligible Assets" in Section 13. Any instruction or order concerning such
investments or substitutions of Assets shall be referred to herein as an
"Investment Order." The Trustee shall execute Investment Orders and settle
securities transactions by itself or by means of an agent or broker. The Trustee
shall not be responsible for any act or omission, or for the solvency, of any
such agent or broker.
(e) When the Trustee is directed to deliver Assets against payment, delivery
will be made in accordance with generally accepted market practice. The Trustee
is not required to make advances of cash, securities or any other property on
behalf of the Reserve Trust Account, or permit overdrafts in the Reserve Trust
Account in connection with the acquisition or disposition of Assets; provided,
however, that if the Trustee chooses to make such advance or permit such an
overdraft, such advance or overdraft shall be deemed an extension of credit by
the
9
Trustee to the Grantor, which extension of credit shall be payable on demand and
shall bear interest at the Trustee's customary rate for similar extensions of
credit. The Grantor will be solely responsible for repayment of such extension
of credit and any interest thereon.
(f) Any loss incurred from any investment pursuant to the terms of this Section
4 shall be borne exclusively by the Reserve Trust Account. The Trustee shall not
be liable for any loss due to changes in market rates or penalties for early
redemption.
SECTION 5. THE INCOME ACCOUNT.
All payments of interest, dividends and other income in respect of Assets,
including all monies representing tax or other escrow deposits and all other
amounts that do not relate to payment of principal or amortization
(collectively, "Income") shall be deposited by the Trustee, subject to deduction
of the Trustee's compensation and expenses as provided in Section 8, in a
separate account (the "Income Account") established and maintained by the
Trustee on behalf of the Grantor at an office of the Trustee in New York, NY.
Any Income automatically credited on the payment date to the Income Account
which is not subsequently received by the Trustee shall be reimbursed by the
Grantor to the Trustee and the Trustee may debit the Income Account for this
purpose. Any amounts deposited in the Income Account are not part of the Assets
in the Reserve Trust Account and as such are not subject to the terms and
conditions of this Agreement with respect to the Assets in the Reserve Trust
Account; provided, however, notwithstanding anything herein to the contrary, it
is understood and agreed that the break-down or allocation of all such monies
received or credited as Income shall be provided by the Grantor or its
designated agent, and the Trustee may conclusively rely on such break-down and
information provided to it and shall have no duty to question or otherwise
confirm such break-down or allocations as provided by the Grantor or its
designated agent. The Beneficiary hereby acknowledges and agrees that the
Trustee may rely on any such break-down and information provided to it by the
Grantor, and the Beneficiary shall have no right to dispute the Trustee's
reliance on such any such break-down and information; provided, however, nothing
in this Section 5 shall constitute a waiver by the Beneficiary of its right to
dispute with the Grantor any break-down or allocation of any such monies. For
the avoidance of doubt, all amounts paid in respect of Assets that relate to
payment of principal or amortization shall be transferred by the Grantor or its
agent to the Reserve Trust Account.
SECTION 6. TAXES; RIGHT TO VOTE ASSETS.
(a) The Grantor shall pay, prior to delinquency, all taxes, assessments and
other charges levied upon the Assets or the Reserve Trust Account and shall
discharge all liens against the Assets and the Reserve Trust Account; provided,
however, that unless and until foreclosure, distraint, levy, sale or similar
proceedings shall have been commenced, the Grantor need not pay any such tax,
assessment or other charge so long as the validity thereof is contested in good
faith and by appropriate proceedings diligently conducted and so long as
security sufficient to pay such tax, assessment or other charge (and any
interest and penalties which may be applicable thereon) has been provided to the
Trustee to protect the Beneficiary and the Trustee. In the event that the
Grantor shall fail to pay any such tax, assessment or other charge (and shall
not be so contesting it) or to discharge any such lien, the Beneficiary may, at
its option, but shall not be required to, make any payments necessary to pay
such tax, assessment or other
10
charge and/or to discharge such lien, and the Grantor shall, upon demand,
reimburse the Beneficiary for the full amount of such payments (together with
interest from the date paid to but not including the date reimbursed at, a
fluctuating rate per annum equal to the prime rate as announced by the Trustee
from time to time). The Trustee shall not be responsible for paying any taxes,
assessments or other charges or discharging liens on the Reserve Trust Account
or any of the Assets thereof.
(b) The parties hereto intend that at and after the Effective Time the Reserve
Trust Account be classified for United States federal income tax purposes as a
grantor trust (pursuant to sections 671 through 677 of the Internal Revenue Code
of 1986, as amended). Each party hereto agrees at and after the Effective Time
to treat the Reserve Trust Account as a grantor trust and the Grantor as the
owner of the Assets for all United States federal, state and local tax purposes
and, thus, any and all income derived from the Assets held in the Reserve Trust
Account shall constitute income or gain of the Grantor as owner of such Assets.
The Trustee shall not be authorized or empowered to do anything that would cause
the Reserve Trust Account to fail to qualify as a grantor trust or the Grantor
to fail to be treated as the owner of the Assets for such tax purposes at and
after the Effective Time. The Grantor shall be responsible for any tax reporting
(including filing of any income tax returns and, if applicable, obtaining tax
identification numbers) required on behalf of the Reserve Trust Account with
respect to all periods beginning at and after the Effective Time and shall
notify the Trustee of the tax identification number of the Reserve Trust
Account.
(c) The Trustee will transmit to the Grantor and or its designee upon receipt,
and will instruct any entities authorized to hold Assets in accordance with the
terms hereof to transmit to the Grantor upon receipt, all financial reports,
stockholder communications, notices, proxies and proxy soliciting materials
received from issuers of Assets, and all information relating to exchange or
tender offers received from offerors with respect to such Assets. The Grantor
and/or its designee shall have the full unqualified right to vote and execute
consents, amendments and waivers and to exercise any and all proprietary rights
not inconsistent with this Agreement with respect to any securities or other
property forming a part of the Reserve Trust Account.
SECTION 7. ADDITIONAL RIGHTS AND DUTIES OF THE TRUSTEE.
(a) The Trustee shall furnish to the Grantor and the Beneficiary a statement of
all Assets in the Reserve Trust Account upon the inception of the Reserve Trust
Account and at the end of each calendar month thereafter (the "Monthly
Statement"). The Monthly Statement shall list all of the Assets and shall be
given as soon as practicable, but in no event later than ten (10) Business Days
after the end of the calendar month most recently concluded. The Trustee shall
also provide the Grantor and the Beneficiary with access to the Trustee's
on-line electronic account reporting system to allow them to view the status of
and activities in the Reserve Trust Account.
(b) Before accepting any asset for deposit to the Reserve Trust Account, the
Trustee shall determine that such asset is in such form that the Beneficiary
whenever necessary may, or the Trustee upon written direction by the Beneficiary
may, negotiate such asset without consent or signature from the Grantor or any
other Person.
(c) The Trustee shall notify the Grantor and the Beneficiary, within ten (10)
days, of any deposits to or withdrawals from the Reserve Trust Account. The
Trustee will be deemed to have delivered the notices of deposits to or
withdrawals from the Reserve Trust Account if such notice is available on one or
more of the Trustee's systems to deliver electronic media.
(d) All Assets shall be safely held by the Trustee in its office in the United
States, except that the Trustee may hold any Asset that is in book-entry form as
of the date it is credited to the Reserve Trust Account (a "Book-Entry Asset")
through the book-entry account maintained by the Trustee with the related
depository for such Book-Entry Asset (such a depository being referred to herein
as a "Depository"). A Book-Entry Asset may be held in the name of a nominee
maintained by the Depository.
11
(e) The Trustee shall accept and may open all mail directed to the Grantor or
the Beneficiary in care of the Trustee. The Trustee shall promptly forward all
mail to the addressee whether or not opened.
(f) The Trustee shall keep full and complete records of the administration of
the Reserve Trust Account. Upon the reasonable written request of the Grantor or
the Beneficiary, the Trustee shall promptly permit the Grantor or the
Beneficiary, their respective agents, employees or independent auditors to
examine, audit, excerpt, transcribe and copy, at their own expense, during the
Trustee's normal business hours any books, documents, papers and records
relating to the Reserve Trust Account or the Assets.
(g) The Trustee is authorized to rely conclusively upon all Communications
(including, without limitation, Investment Orders, Beneficiary Withdrawal
Notices, Grantor Withdrawal Notices and Termination Notices) given by officers,
agents and/or employees named in letters and incumbency certificates furnished
to the Trustee from time to time by the Grantor or the Beneficiary and by
attorneys-in-fact acting under written authority furnished to the Trustee by the
Grantor or the Beneficiary (collectively "Instructions"), including Instructions
given by letter, facsimile transmission or electronic mail or other electronic
media, if the Trustee reasonably believes such Instructions to be genuine and to
have been signed, sent or presented by the proper party or parties. The Trustee
shall not incur any liability to anyone resulting from actions taken by the
Trustee in reliance in good faith without negligence or willful misconduct on
such Instructions. The Trustee shall not incur any liability in executing
Instructions prior to receipt by it of (i) notice of the revocation of the
written authority of the individual(s) named therein or (ii) notice from any
officer, agent or employee of the Grantor or the Beneficiary named in a letter
or incumbency certificate delivered hereunder prior to receipt by it of a more
current certificate.
(h) The duties and obligations of the Trustee shall only be such as are
specifically set forth in this Agreement, as it may from time to time be amended
in accordance with the terms hereof, and no implied duties or obligations shall
be read into this Agreement against the Trustee. The Trustee shall be liable
only for its own negligence, willful misconduct or lack of good faith. Subject
to the preceding sentence, the Trustee is not liable (i) for acting in
accordance with or relying upon any instruction, notice, demand, certificate or
document
12
contemplated by and given in accordance with this Agreement from the Grantor or
the Beneficiary, or (ii) for any consequential, punitive or special damages.
(i) No provision of this Agreement shall require the Trustee to take any action
which, in the Trustee's reasonable judgment, would result in any violation of
this Agreement or any provision of law. The Trustee shall exercise the same due
care that is expected of a fiduciary with the responsibility for the
safeguarding of the Assets in the Reserve Trust Account and for compliance with
all provisions of this Agreement, whether or not the Assets are in the Trustee's
possession.
(j) The Trustee may confer with a nationally recognized outside law firm of its
selection in relation to matters arising under this Agreement. The written
opinion of such law firm shall be full and complete authority and protection for
the Trustee with respect to any action taken, omitted or suffered by it in good
faith and in accordance with the opinion of such law firm.
(k) The parties hereto acknowledge that nothing in this Agreement shall obligate
the Trustee to extend credit, grant financial accommodation or otherwise advance
moneys for the purpose of making any payments or part thereof or otherwise
carrying out any Instructions, including, without limitation, any Investment
Order.
(l) The Trustee hereby waives any right of counterclaim, banker's lien, liens or
perfection rights as securities intermediary with respect to the Assets and the
Reserve Trust Account.
SECTION 8. THE TRUSTEE'S COMPENSATION, EXPENSES AND INDEMNIFICATION.
(a) The Grantor shall pay the Trustee, as compensation for its services under
this Agreement, a fee computed at its usual and customary rates for services of
this sort, as determined in good faith by the Trustee from time to time and
communicated to and agreed to in writing by the Grantor. The Grantor shall also
pay or reimburse the Trustee for all of the Trustee's expenses and disbursements
in connection with its duties under this Agreement (including reasonable
attorneys' fees and expenses and reasonable accounting and consulting fees and
expenses, in addition to the legal and administrative expenses and fees related
to the preparation, filing and maintenance of the UCC financing statements
referred to in Section 1(d) above), except any such expense or disbursement as
may arise from the Trustee's negligence, willful misconduct or lack of good
faith. The Trustee shall be entitled to deduct its compensation and expenses
solely from payments of dividends and interest in respect of the assets held in
the Income Account as provided in Section 5 of this Agreement.
(b) The Grantor hereby indemnifies the Trustee for, and holds it harmless
against, any losses (including reasonable attorneys' fees and expenses and
reasonable consulting and accountants' fees and expenses) incurred or paid
(other than as a result of the Trustee's negligence, willful misconduct or lack
of good faith), arising out of or in connection with the performance of its
duties and obligations under this Agreement, including without limitation any
loss arising out of or in connection with the status of the Trustee in
connection with the performance of its duties and any nominee as the holder of
record of any of all of the Assets. In addition to and not in limitation of the
foregoing, the Beneficiary hereby indemnifies the Trustee
13
for, and holds it harmless against, any loss, liability, costs or expenses
(including attorney's fees and expenses) incurred or made without negligence,
willful misconduct or lack of good faith on the part of the Trustee, arising out
of or in connection with actions taken by the Trustee pursuant to any written
instruction from the Beneficiary to perform any such action. The Grantor and the
Beneficiary each hereby acknowledge that the foregoing indemnities shall survive
the resignation of the Trustee or the termination of this Agreement.
(c) No Assets shall be withdrawn from the Reserve Trust Account or used in any
manner for paying compensation to, or reimbursement or indemnification of, the
Trustee except as set forth in Section 5.
(d) The Trustee hereby waives any and all rights of offset, counterclaim and
recoupment against the Beneficiary and Reserve Trust Account, and waives any
lien (statutory or otherwise) that it may assert against the Reserve Trust
Account.
SECTION 9. RESIGNATION OF THE TRUSTEE.
(a) The Trustee may resign at any time by giving not less than ninety (90) days'
written notice thereof to the Beneficiary and to the Grantor, such resignation
to become effective on the acceptance of appointment by a successor trustee and
the transfer to such successor trustee of all Assets in the Reserve Trust
Account in accordance with paragraph (b) of this Section 9. The Grantor and the
Beneficiary jointly also may remove the Trustee at any time, without assigning
any reason therefor, on fifteen (15) days' prior written notice thereof to the
Trustee.
(b) Upon receipt of the Trustee's notice of resignation or notice to the Trustee
of removal, the Grantor and the Beneficiary shall promptly appoint a successor
trustee. Any successor trustee shall be a bank that is a member of the Federal
Reserve System and shall not be a parent, a subsidiary or an affiliate of the
Grantor or the Beneficiary. If a successor trustee has not accepted such
appointment within thirty (30) days after the notice of resignation or removal,
the Trustee may, in its sole discretion, apply at the expense of the Grantor to
a court of competent jurisdiction for the appointment of a successor trustee or
for other appropriate relief. The costs and expenses (including reasonable
attorneys' fees and expenses) incurred by the Trustee in connection with such
proceeding shall be paid by, and be deemed an obligation of, the Grantor. Upon
the acceptance of the appointment as trustee hereunder by a successor trustee,
such successor trustee shall succeed to and become vested with all the rights,
powers, privileges and duties of the Trustee, and the Trustee shall be
discharged from any future duties and obligations under this Agreement, but the
Trustee shall continue after its resignation to be entitled to the benefits of
the indemnities provided herein for a Trustee.
SECTION 10. TRIGGERING EVENT.
(a) Notwithstanding anything in this Agreement to the contrary, in the event
that the Beneficiary provides a written certification to the Trustee of the
occurrence of a Triggering Event, upon receipt of such certification by the
Trustee, the provisions of Sections 2(b), 2(c) and 4(c) hereof shall no longer
be effective and shall be replaced with the following provisions, effective
immediately without any further action by any party:
14
(i) Section 2(b) shall be replaced with the following:
If the aggregate Fair Market Value of the Eligible Assets in the
Reserve Trust Account at the end of any Accounting Period exceeds one
hundred and two percent (102%) of the Required Balance, the Grantor
may provide notice to the Beneficiary, with a copy to the Trustee, of
its desire to withdraw Assets from the Reserve Trust Account in an
amount not to exceed such excess, specifying the amount and type of
Assets to be withdrawn. Within five (5) Business Days following its
delivery of such notice to the Beneficiary, the Grantor shall be
permitted, without further notice to, or consent of, the Beneficiary,
to direct the Trustee to withdraw Assets from the Reserve Trust
Account in excess of one hundred and two percent (102%) of the amount
necessary to maintain such Required Balance as of the end of the
applicable Accounting Period, which notice shall be substantially in
the form attached hereto as Exhibit B-2 (a "Grantor Withdrawal
Notice"). The Grantor Withdrawal Notice shall specify the invested
Assets or cash amount to be withdrawn.
(ii) Section 2(c) shall be replaced with the following:
At any time and from time to time, the Grantor may withdraw, upon
providing to the Beneficiary and the Trustee the Grantor Withdrawal
Notice, such Assets from the Reserve Trust Account as are specified in
such Grantor Withdrawal Notice for the sole purpose of paying the
General Account Liabilities under the Covered Insurance Policies;
provided, the aggregate Fair Market Value of the Assets maintained in
the Reserve Trust Account as of any Accounting Period end is equal to
or greater than the Required Balance. The Grantor need present no
statement or document other than a Grantor Withdrawal Notice in order
to withdraw any Assets.
(iii) Section 4(c) shall be replaced with the following:
From time to time, and upon the prior written notice to the
Beneficiary, the Grantor may direct the Trustee to substitute Assets,
provided, that at the time of such substitution, the withdrawn Assets
are replaced with other Eligible Assets having a Fair Market Value at
least equal to the Fair Market Value of the Assets withdrawn. The
Trustee shall have no responsibility whatsoever to determine the value
of such substituted Assets or that such substituted Assets constitute
Eligible Assets.
(b) Notwithstanding the foregoing, the Reserve Trust Account created hereunder
shall continue in existence following the occurrence of a Triggering Event.
Following the occurrence of a Triggering Event, the Grantor shall ensure that
the Assets in the Reserve Trust Account have an aggregate Fair Market Value at
least equal to the Required Balance within five (5) Business Days following the
applicable RBC Reporting Deadline related to such Triggering Event.
(c) Notwithstanding anything in this Agreement to the contrary, in the event
that the Grantor provides a Cure Notice substantially in the form attached
hereto as Exhibit D (a "Cure Notice") to the Trustee and the Beneficiary, which
Cure Notice has been agreed to and acknowledged by the Beneficiary, such
agreement and acknowledgment not to be unreasonably withheld, conditioned or
delayed, as evidenced by its execution and delivery to the Trustee and the
Grantor of a Cure Acknowledgment substantially in the form attached hereto as
Exhibit E (a "Cure Acknowledgment"), then upon receipt of such Cure
Acknowledgment by the Trustee, the provisions
15
of Sections 2(b), 2(c) and 4(c) hereof shall revert back to their original form
effective immediately without any further action by any party, such that the
replacements effected pursuant to Section 10(a) shall no longer be effective.
(d) If the Beneficiary shall dispute the Grantor's valuation of any Asset, and
the parties are unable to resolve such dispute within ten (10) days, the Fair
Market Value of such Asset shall be the amount determined by a Third Party
Appraiser and the parties shall be bound by such valuation. All fees, costs and
expenses relating to the foregoing work by any Third Party Appraiser shall be
shared equally by the Beneficiary and the Grantor.
16
SECTION 11. RESERVE CREDIT EVENT
(a) Notwithstanding anything in this Agreement to the contrary, in the event
that the Beneficiary provides a written certification to the Trustee of the
occurrence of a Reserve Credit Event, upon receipt of such certification by the
Trustee, the provisions of Sections 2(a), 2(b) and 4(c) hereof shall no longer
be effective and shall be replaced with the following provisions, effective
immediately without any further action by any party:
(i) Section 2(a) shall be replaced with the following:
The Beneficiary shall have the right to withdraw Assets from the
Reserve Trust Account at any time and from time to time, without
notice to the Grantor, subject only to delivery of written notice to
the Trustee (the "Beneficiary Withdrawal Notice") in a form attached
hereto as Exhibit B-1, specifying the invested Assets or cash amount
to be withdrawn. The Beneficiary may designate in the Beneficiary
Withdrawal Notice a third party (the "Designee") to whom Assets
specified therein shall be delivered and may condition delivery of
such Assets to such Designee upon receipt and deposit to the Reserve
Trust Account of other Assets specified in such Beneficiary Withdrawal
Notice. The Beneficiary need present no statement or document other
than the Beneficiary Withdrawal Notice in order to withdraw any
Assets, provided, the Beneficiary may be requested to acknowledge
receipt of such withdrawn Assets. The Beneficiary may only use and
apply invested Assets or amounts drawn upon the Reserve Trust Account,
without diminution because of the insolvency of the Beneficiary or the
Grantor for one or more of the purposes set forth in Section 4.2(c) of
the Reinsurance Agreement.
17
(ii) Section 2(b) shall be replaced with the following:
If the aggregate Fair Market Value of the Eligible Assets in the
Reserve Trust Account at the end of any Accounting Period exceeds one
hundred and two percent (102%) of the Required Balance, the Grantor
may, with the prior written consent of the Beneficiary substantially
in the form attached hereto as Exhibit B-3 (the "Grantor Withdrawal
Consent Notice"), provide notice to the Trustee of its desire to
withdraw Assets from the Reserve Trust Account in an amount not to
exceed such excess, specifying the amount and type of Assets to be
withdrawn. Within five (5) Business Days following its delivery of
such notice to the Beneficiary and the Trustee and the receipt by the
Trustee of the Grantor Withdrawal Consent Notice, the Grantor shall be
permitted to direct the Trustee to withdraw Assets from the Reserve
Trust Account in excess of one hundred and two percent (102%) of the
amount necessary to maintain such Required Balance as of the end of
the applicable Accounting Period, which notice shall be substantially
in the form attached hereto as Exhibit B-2 (a "Grantor Withdrawal
Notice"). The Grantor Withdrawal Notice shall specify the invested
Assets or cash amount to be withdrawn.
(iii) Section 4(c) shall be replaced with the following:
From time to time, subject to the prior written approval of the
Beneficiary, the Grantor may direct the Trustee to substitute Assets,
provided, that at the time of such substitution, the withdrawn Assets
are replaced with other Eligible Assets having a Fair Market Value at
least equal to the Fair Market Value of the Assets withdrawn. The
Trustee shall have no responsibility whatsoever to determine the value
of such substituted Assets or that such substituted Assets constitute
Eligible Assets.
(iv) Section 2(c) shall be deleted in its entirety.
(b) Notwithstanding the foregoing, the Reserve Trust Account created hereunder
shall continue in existence following the occurrence of a Reserve Credit Event.
Following the occurrence of a Reserve Credit Event, the Grantor shall ensure
that the Assets in the Reserve Trust Account have an aggregate Fair Market Value
at least equal to the Required Balance within five (5) Business Days following
the Reserve Credit Event.
(c) Notwithstanding anything in this Agreement to the contrary, in the event
that the Grantor provides a Cure Notice to the Trustee and the Beneficiary,
which Cure Notice has been agreed to and acknowledged by the Beneficiary, such
agreement and acknowledgment not to be unreasonably withheld, conditioned or
delayed, as evidenced by its execution and delivery to the Trustee and the
Grantor of a Cure Acknowledgment, then upon receipt of such Cure Acknowledgment
by the Trustee, the provisions of Sections 2(a), 2(b), 2(c) and 4(c) hereof
shall revert back to their original form effective immediately without any
further action by any party, such that the replacements effected pursuant to
Section 11(a) shall no longer be effective.
(d) If the Beneficiary shall dispute the Grantor's valuation of any Asset, and
the parties are unable to resolve such dispute within ten (10) days, the Fair
Market Value of such Asset shall be the amount determined by a Third Party
Appraiser and the parties shall be bound
18
by such valuation. All fees, costs and expenses relating to the foregoing work
by any Third Party Appraiser shall be shared equally by the Beneficiary and the
Grantor.
SECTION 12. TERMINATION OF THE RESERVE TRUST ACCOUNT.
(a) The Reserve Trust Account and this Agreement, except for the indemnities
provided herein, which shall survive termination, may be terminated, other than
pursuant to an order of a court having jurisdiction, only after (i) the Grantor
has given the Trustee written notice of its intention to terminate the Reserve
Trust Account (the "Notice of Intention"), and (ii) the Trustee has given the
Grantor and the Beneficiary the written notice specified in paragraph (b) of
this Section 12. The Notice of Intention shall specify the date on which the
Grantor intends the Reserve Trust Account to terminate (the "Proposed Date").
(b) Within ten (10) Business Days following receipt by the Trustee of the Notice
of Intention, the Trustee shall give at least thirty (30) days written notice
(the "Termination Notice") to the Beneficiary and the Grantor of the date (the
"Termination Date") on which the Reserve Trust Account shall terminate. The
Termination Date shall be (a) the Proposed Date (or if not a Business Day, the
next Business Day thereafter), if the Proposed Date is at least thirty (30) days
but no more than forty-five (45) days subsequent to the date the Termination
Notice is given, (b) thirty (30) days subsequent to the date the Termination
Notice is given (or if not a Business Day, the next Business Day thereafter), if
the Proposed Date is less than thirty (30) days subsequent to the date the
Termination Notice is given; or (c) forty-five (45) days subsequent to the date
the Termination Notice is given (or if not a Business Day, the next Business Day
thereafter), if the Proposed Date is more than forty-five (45) days subsequent
to the date the Termination Notice is given.
(c) On the Termination Date, after satisfaction of any outstanding Beneficiary
Withdrawal Notices, and upon receipt of written certification of the Beneficiary
that it consents to such termination, the Trustee shall transfer any Assets
remaining in the Reserve Trust Account to the Grantor, at which time all duties
and obligations of the Trustee with respect to such Assets shall cease.
SECTION 13. DEFINITIONS.
Except as the context shall otherwise require, the following terms shall have
the following meanings for all purposes of this Agreement (the definitions to be
applicable to both the singular and the plural forms of each term defined if
both such forms of such term are used in this Agreement):
The term "Accounting Period" shall mean each calendar quarter during the term of
this Agreement or any fraction thereof ending on the Termination Date.
The term "Action" shall mean any claim, litigation, action, suit, investigation,
inquiry, hearing, charge, complaint, demand, arbitration or proceeding by or
before any Governmental Body.
The term "Administrative Services Agreement" shall mean the administrative
services agreement being entered into by the Grantor and the Beneficiary as of
January 1, 2013.
19
The term "Affiliate" with respect to any Person shall mean any other Person that
directly or indirectly controls, is controlled by or is under common control
with such Person. As used in this definition, the term "controls" (including the
terms "controlled by" and "under common control with") means the relevant Person
has possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
The term "Agreement" shall have the meaning specified in the preamble.
The term "Applicable Law" shall mean any law, treaty, convention, code, statute,
ordinance, directive, rule, regulation, common law, decree or binding agency
requirement imposed by any Governmental Body applicable to the Person, place or
situation in question.
The term "Assets" shall have the meaning specified in Section 1(b) of this
Agreement.
The term "Beneficiary" shall have the meaning specified in the preamble.
The term "Beneficiary Withdrawal Notice" shall have the meaning specified in
Section 2(a) of this Agreement.
The term "Book-Entry Asset" shall have the meaning specified in Section 7(d) of
this Agreement.
The term "Business" shall have the meaning specified in the Purchase Agreement.
The term "Business Day" shall mean any day that is not a Saturday, Sunday, legal
holiday or other day on which commercial banks in New York, New York are
authorized or required by Applicable Law to be closed.
The term "Collateral" shall have the meaning specified in Section 1(d) of this
Agreement.
The term "Communications" shall have the meaning specified in Section 3(a) of
this Agreement.
The term "Company Action Level RBC" shall mean, at any date of determination,
two hundred percent (200%) of the authorized control level risk based capital of
the Grantor determined in accordance with the Applicable Law of the state of
domicile of the Grantor.
The term "Connecticut Insurance Code" shall mean Title 38a of the General
Statutes of Connecticut.
The term "Connecticut Insurance Regulations" shall mean Title 38a of the
Regulations of Connecticut State Agencies.
The term "Cure Acknowledgment" shall have the meaning specified in Section 10(c)
of this Agreement.
20
The term "Cure Notice" shall have the meaning specified in Section 10(c) of this
Agreement.
The term "Depository" shall have the meaning specified in Section 7(d) of this
Agreement.
The term "Designee" shall have the meaning specified in Section 2(a) of this
Agreement.
The term "Effective Time" shall mean 12:00:01 a.m., New York City time, on
January 1, 2013.
The term "Eligible Assets" shall mean cash, certificates of deposit issued by a
United States bank and payable in United States dollars and investments of the
type permitted by Connecticut Insurance Regulations Section Section 38a-88-6 and
38a-88-7 or any successor provision (or the relevant provisions of such other
state in which the Beneficiary is domiciled at a given time) and all other
Applicable Laws that would govern the permitted assets for the Reserve Trust
Account; provided, that (i) each such investment that is a security is issued by
an institution that is not the Beneficiary, the Grantor or an Affiliate of
either party, and (ii) such investments comply with the requirements specified
by the Investment Guidelines.
The term "Entitlement Order" shall mean "entitlement order" as defined in the
UCC.
The term "Fair Market Value" shall mean the fair market value of such Asset as
calculated by the Grantor. In providing this calculation, the Grantor shall use
prices published by a nationally recognized pricing service for assets for which
such prices are available, and for assets for which such prices are not
available, the Grantor shall use methodologies consistent with those which it
uses for determining the fair market value of assets held in its own general
account (other than the Assets) in the ordinary course of business.
The term "Governmental Body" shall mean any foreign, federal, state, local or
other governmental, legislative, judicial, administrative or regulatory
authority, agency, commission, board, body, court or entity or any
instrumentality thereof or any self-regulatory body or arbitral body or
arbitrator.
The term "Grantor" shall have the meaning specified in the preamble.
The term "Grantor Withdrawal Consent Notice" shall have the meaning specified in
Section 2(b) of this Agreement.
The term "Grantor Withdrawal Notice" shall have the meaning specified in Section
2(b) of this Agreement.
The term "Income" shall have the meaning specified in Section 5 of this
Agreement.
21
The term "Income Account" shall have the meaning specified in Section 5 of this
Agreement.
The term "Instructions" shall have the meaning specified in Section 7(g) of this
Agreement.
The term "Investment Guidelines" shall mean the Investment Guidelines attached
hereto as Exhibit C.
The term "Investment Order" shall have the meaning specified in Section 4(d) of
this Agreement.
The term "Monthly Statement" shall have the meaning specified in Section 7(a) of
this Agreement.
The term "Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc., or any successor
thereto.
The term "Notice of Intention" shall have the meaning specified in Section 12(a)
of this Agreement.
The term "Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or Governmental Body or other entity.
The term "Purchase Agreement" shall mean the Purchase and Sale Agreement, dated
September 4, 2012, pursuant to which Hartford Life, Inc. has agreed to sell, and
the Grantor has agreed to purchase, the Business and certain assets of Hartford
Life, Inc. and its Affiliates.
The term "Proposed Date" shall have the meaning specified in Section 12(a) of
this Agreement.
The term "RBC Ratio" shall mean, with respect to the Grantor, the percentage
equal to (i) the quotient of the Total Adjusted Capital of the Grantor DIVIDED
by the Company Action Level RBC, MULTIPLIED by (ii) 100.
The term "RBC Reporting Deadline" shall mean, as of any date, the date that is
either: (i) sixty (60) calendar days after the end of each calendar year, or
(ii) forty-five (45) calendar days after the end of any calendar quarter other
than the calendar quarter ending on December 31.
The term "Reinsurance Agreement" shall have the meaning specified in the
preamble.
The term "Representative" of a Person shall mean the directors, officers,
employees, advisors, agents, consultants, independent accountants, investment
bankers, counsel or other representatives of such Person and of such Person's
Affiliates.
22
The term "Reserve Trust Account" shall have the meaning specified in the
preamble.
The term "Reserve Credit" means full statutory financial statement credit for
the reinsurance ceded to the Grantor under the Reinsurance Agreement in the
Beneficiary's NAIC Annual Statement Blank and in all statutory financial
statements of the Beneficiary required to be filed with the Governmental Body
charged with supervision of insurance companies in the State of Connecticut.
The term "Reserve Credit Event" means any event that would cause the Beneficiary
to not be permitted to receive Reserve Credit on any of its statutory financial
statements provided that such event has not been remedied prior to the last
calendar day of the calendar quarter in which such event occurs.
The term "S&P" shall mean Standard & Poor's Ratings Services, a Standard &
Poor's Financial Services LLC business, or any successor thereto.
The term "Security Entitlement" shall mean "security entitlement" as defined in
the UCC.
The term "Statutory Book Value" shall mean, with respect to any Eligible Asset,
the dollar amount thereof stated on the statutory financial statements as
admitted assets of the Grantor, as determined in accordance with the statutory
accounting requirements in the Grantor's state of domicile, but disregarding any
prescribed or permitted practices applicable to the Grantor.
The term "Termination Date" shall have the meaning specified in Section 12(b) of
this Agreement.
The term "Termination Notice" shall have the meaning specified in Section 12(b)
of this Agreement.
The term "Third Party Appraiser" shall mean a nationally recognized independent
appraisal firm which is mutually acceptable to the Grantor and the Beneficiary
or, if the Grantor and the Beneficiary are unable to agree on such an appraisal
firm, an independent appraisal firm selected by mutual agreement of the
Grantor's and the Beneficiary's independent accountants.
The term "Triggering Event" shall mean means either of the following
occurrences:
(a) the Grantor's RBC Ratio falls below 300% as of a quarter-end and the Grantor
has not cured such shortfall as of the applicable RBC Reporting Deadline;
provided, that in the event there is a material change in the factors and
formulae prescribed by the insurance regulatory authority in the Grantor's state
of domicile with respect to the components of and methodologies contained in
such calculation, the parties hereto shall amend this Agreement to incorporate
an alternate calculation that is reasonably equivalent to the components of and
methodologies contained in the calculation of the Grantor's RBC Ratio in effect
as of the date of execution of this Agreement within thirty (30) calendar days
after
23
the implementation of such change, and if the parties hereto cannot agree on any
such alternative, the Grantor shall continue to calculate its RBC Ratio as if
such material change had not occurred; or
(b) on any day occurring after a Trust Withdrawal Event Notice has been
delivered to the Trustee, the financial strength rating of the Grantor falls
below "BBB" as rated by S&P and "Baa2" as rated by Moody's.
The term "Total Adjusted Capital" shall mean, with respect to any insurance
company, its total adjusted capital as calculated in accordance with the most
current formula for calculating such amount adopted by the insurance regulatory
authority in such insurance company's state of domicile.
The term "Trustee" shall have the meaning specified in the preamble.
The term "Trust Withdrawal Event Acknowledgment" shall have the meaning
specified in Section 2(d) of this Agreement.
The term "Trust Withdrawal Event Notice" shall have the meaning specified in
Section 2(d) of this Agreement.
The term "UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the Beneficiary's state of domicile.
SECTION 14. REMEDIES.
Each party agrees that any failure to perform, or breach of its obligations
under this Agreement will result in irreparable injury to the other party, that
the remedies available to such other party at law alone will be an inadequate
remedy for such failure or breach and that, in addition to any other legal or
equitable remedies that such other party may have, such other party may seek to
enforce its rights in court by an Action for specific performance and the
parties expressly waive the defense that a remedy in damages will be adequate or
that an award of specific performance is not an appropriate remedy for any
reason at law or equity. Any party seeking an order or injunction to prevent or
cure breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement shall not be required to provide any bond or other
security in connection with any such order or injunction. The parties further
agree that (a) by seeking any remedy provided for in this Section 14, a party
shall not in any respect waive its right to seek any other form of relief that
may be available to such party under this Agreement and (b) nothing contained in
this Section 14 shall require any party to institute any action for (or limit
any party's right to institute any action for) specific performance under this
Section 14 before exercising any other right under this Agreement.
SECTION 15. GOVERNING LAW.
This Agreement and the Reserve Trust Account shall be governed by and construed
in accordance with the laws of the State of Connecticut (without regard to
conflict of laws principles that might lead to the application of the laws of
another jurisdiction). Regardless of any provision in any other agreement, for
purposes of the UCC, the State of New York shall
24
be deemed to be the "securities intermediary's jurisdiction" (as defined in
Section 8-110(e) of the UCC) of the Trustee.
SECTION 16. JURISDICTION; VENUE.
Each of the parties hereto irrevocably agrees that any and all Actions arising
out of, relating to or in connection with this Agreement or the transactions
contemplated by this Agreement or the formation, breach, termination or validity
of this Agreement brought by the other party hereto or its successors or
assigns, shall be brought and determined exclusively in the in any district
court of the United States of America located in the State of Connecticut, or,
in the event that such courts do not have subject matter jurisdiction over such
Action, in the courts of the State of Connecticut. Each of the parties agrees
that mailing of process or other papers in connection with any such Action in
the manner provided in Section 18, or in such other manner as may be permitted
by Applicable Law, will be valid and sufficient service thereof. Each of the
parties hereto hereby irrevocably submits with regard to any such Action for
itself and in respect of its property, generally and unconditionally, to the
personal jurisdiction of the aforesaid courts and agrees that it will not bring
any Action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court or tribunal other than the aforesaid courts. Each of
the parties hereto hereby irrevocably waives, and agrees not to assert, by way
of motion, as a defense, counterclaim or otherwise, in any Action with respect
to this Agreement or the transactions contemplated by this Agreement or the
formation, breach, termination or validity of this Agreement (a) any claim that
it is not personally subject to the jurisdiction of the above named courts for
any reason other than the failure to serve process in accordance with this
Agreement, (b) any claim that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process commenced in such
courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise)
and (c) to the fullest extent permitted by Applicable Law, any claim that (i)
the Action should be dismissed on the basis of FORUM NON CONVENIENS, (ii) the
venue of such Action is improper or (iii) this Agreement, or the subject matter
hereof, may not be enforced in or by such courts.
SECTION 17. JURY WAIVER.
EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION ARISING OUT OF OR
RELATING TO THIS AGREEMENT, AND WHETHER MADE BY CLAIM, COUNTERCLAIM,
THIRD-PERSON CLAIM OR OTHERWISE. EACH PARTY HERETO ACKNOWLEDGES THAT IT AND THE
OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS IN THIS SECTION 17.
SECTION 18. NOTICES.
All notices, requests, demands and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given (a) on the date
of service if served personally on the party to whom notice is to be given, (b)
on the day of transmission if sent via facsimile transmission to the facsimile
number given below, and telephonic confirmation
25
of receipt is obtained promptly after completion of transmission, (c) on the day
of transmission if sent via electronic mail to the email address given below,
and telephonic confirmation of receipt is obtained promptly after completion of
transmission, or (d) on the second Business Day after delivery to an overnight
courier (such as Federal Express) or an overnight mail service (such as the
Express Mail service) maintained by the United States Postal Service, to the
party as follows:
(a) If to the Grantor, to:
Massachusetts Mutual Life Insurance Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
with copies to (which shall not constitute notice):
Massachusetts Mutual Life Insurance Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
J. ▇▇▇▇▇▇▇▇▇ ▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇▇.▇▇▇@▇▇▇▇▇▇▇.▇▇▇
(b) If to the Beneficiary, to:
Hartford Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Ceded Reinsurance & General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
with a copy to (which shall not constitute notice):
Sidley Austin LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
26
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
(c) If to the Trustee, to:
Citibank, N.A.
Insurance Trust Product Management
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇'▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇.▇'▇▇▇@▇▇▇▇.▇▇▇
with a copy to (which shall not constitute notice):
Citibank, N.A.
Trust and Custody Operations
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
or to such other address as such party may indicate by a notice delivered to the
other party hereto in accordance with this Section 18.
SECTION 19. SUCCESSORS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES.
(a) The rights and obligations of a party under this Agreement shall not be
assignable or delegable by such party without the written consent of the other
parties.
(b) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended or shall be construed to confer
upon any Person other than the parties and their respective successors and
assigns permitted by this Section 19 any right, remedy or claim under or by
reason of this Agreement.
SECTION 20. ENTIRE AGREEMENT; AMENDMENTS.
(a) This Agreement, the Exhibits referred to herein and the Reinsurance
Agreement contain the entire understanding of the parties hereto with regard to
the subject matter contained herein or therein, and supersede all other prior
representations, warranties, agreements, understandings or letters of intent
between or among any of the parties which representations,
27
warranties, agreements, understandings or letters of intent shall be of no force
or effect for any purpose and shall be interpreted without reference to any
prior drafts hereof.
(b) This Agreement may not be amended, modified or supplemented except by a
written instrument signed by an authorized Representative of each of the parties
hereto or their respective successors in interest.
SECTION 21. INTERPRETATION.
The table of contents, titles and headings to sections herein are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement. The Exhibits referred to herein
shall be construed with and as an integral part of this Agreement to the same
extent as if they were set forth verbatim herein. All references herein to
Sections and Exhibits shall be construed to refer to Sections of, and Exhibits
to, this Agreement. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." Unless the context otherwise requires, the words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein. Subject to Section 18, all
references to "written notice" herein shall include notice by print, fax or
electronic mail. The definitions in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine genders of such term. Except as otherwise set forth herein,
any agreement or instrument defined or referred to herein or any agreement or
instrument that is referred to herein means such agreement or instrument as from
time to time amended, modified or supplemented, including by waiver or consent,
and references to all attachments thereto and instruments incorporated therein.
Any statute or regulation referred to herein means such statute or regulation as
amended, modified, supplemented or replaced from time to time (and, in the case
of any statute, includes any rules and regulations promulgated under such
statute), and references to any section of any statute or regulation include any
successor to such section. Any agreement referred to herein shall include
reference to all Exhibits, Schedules and other documents or agreements attached
thereto. References to dollars or "$" shall mean U.S. dollars. This Agreement
shall be construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting or causing any
instrument to be drafted. Each representation, warranty, covenant, agreement and
condition contained in this Agreement shall have independent significance.
SECTION 22. WAIVERS.
Any term or provision of this Agreement may be waived, or the time for its
performance may be extended, in writing at any time by the party or parties
entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if, as to any party,
it is authorized in writing by an authorized Representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every
28
such provision. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any preceding or subsequent breach.
SECTION 23. EXPENSES.
Except as otherwise expressly set forth in this Agreement (including in Section
1(d), Section 8 and Section 9), each party hereto will pay all costs and
expenses incident to its negotiation and preparation of this Agreement and to
its performance and compliance with all agreements and conditions contained
herein on its part to be performed or complied with, including the fees,
expenses and disbursements of its counsel and independent public accountants.
Notwithstanding the foregoing in this Section 23 or in Section 8 above, the
Beneficiary agrees that it shall promptly reimburse the Grantor for 50% of all
fees, expenses and costs of the Trustee in connection with the termination of
the Reserve Trust Account pursuant to Section 1(g) that are paid or reimbursed
to the Trustee by the Grantor.
SECTION 24. PARTIAL INVALIDITY.
Wherever possible, each provision hereof shall be interpreted in such manner as
to be effective and valid under Applicable Law, but in case any one or more of
the provisions contained herein shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such provision shall be ineffective to
the extent, but only to the extent, of such invalidity, illegality or
unenforceability without invalidating the remainder of such invalid, illegal or
unenforceable provision or provisions or any other provisions hereof, so long as
the economic or legal substance of the transactions contemplated by this
Agreement is not affected in any manner adverse to any party. Upon such
determination that any provision is invalid, illegal or unenforceable, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated by this Agreement
be consummated as originally contemplated to the greatest extent possible.
SECTION 25. EXECUTION IN COUNTERPARTS.
This Agreement may be executed in one or more counterparts, including by
facsimile or by electronic delivery in .pdf format, each of which shall be
considered an original instrument, but all of which shall be considered one and
the same agreement, and shall become binding when one or more counterparts have
been signed and delivered by each of the parties hereto.
29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the day and year first above written.
HARTFORD LIFE INSURANCE
COMPANY
By:
Name:
Title:
[Signatures Continue onto Next Page]
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By:
Name:
Title:
[Signatures Continue onto Next Page]
CITIBANK N.A., as Trustee
By:
Name:
Title:
EXHIBIT A
INITIAL TRANSFERRED ASSETS
[SEE ATTACHED]
EXHIBIT B-1
FORM OF BENEFICIARY WITHDRAWAL NOTICE
From: Hartford Life Insurance Company ("Beneficiary")
To: Citibank N.A. (the "Trustee")
Date: [ ]
Re: Trust Agreement dated as of December 31, 2012 among Massachusetts Mutual
Life Insurance Company (the "Grantor"), the Beneficiary, and the Trustee (as
amended, modified or supplemented from time to time, the "Trust Agreement")
Dear Sirs:
We hereby give you notice pursuant to Section 2(a) of the Trust Agreement that
the Beneficiary is entitled to withdraw the [sum of $ ] [following
Assets] from the Reserve Trust Account[, for the following purposes permitted
under Section 2(a) of the Trust Agreement: [SPECIFY BASIS FOR ISSUANCE OF
BENEFICIARY WITHDRAWAL NOTICE]]
[SPECIFY LIST OF ASSETS TO BE WITHDRAWN].
Payment or delivery should be immediately made to [INSERT ACCOUNT INFORMATION]
by the following method: [DESCRIBE METHOD OF CASH TRANSFER AND/OR ASSETS TO BE
WITHDRAWN AND DELIVERY INSTRUCTIONS].
Yours faithfully,
[ ]
For and on behalf of Hartford Life Insurance Company
EXHIBIT B-2
FORM OF GRANTOR WITHDRAWAL NOTICE
From: Massachusetts Mutual Life Insurance Company ("Grantor")
To: Citibank N.A. (the "Trustee") Hartford Life Insurance Company
("Beneficiary")
Date: [ ]
Re: Trust Agreement dated as of December 31, 2012 among the Grantor, the
Beneficiary and the Trustee (as amended, modified or supplemented from time
to time, the "Trust Agreement")
Dear Sirs:
We hereby give you notice pursuant to Section 2[(b)][(c)][(d)] of the Trust
Agreement that the Grantor is entitled to withdraw the [sum of $ ]
[following Assets] from the Reserve Trust Account for the following purposes
permitted under Section 2[(b)][(c)][(d)] of the Trust Agreement:
[SPECIFY BASIS FOR ISSUANCE OF GRANTOR WITHDRAWAL NOTICE]
[SPECIFY LIST OF ASSETS TO BE WITHDRAWN].
[The Grantor hereby certifies to the Trustee and the Beneficiary that the
[Statutory Book Value][Fair Market Value] of the Assets held in the Reserve
Trust Account following such withdrawal will not be less than one hundred and
two percent (102%) of the Required Balance.]
Payment or delivery should be immediately made to [INSERT ACCOUNT INFORMATION]
by the following method: [DESCRIBE METHOD OF CASH TRANSFER AND/OR ASSETS TO BE
WITHDRAWN AND DELIVERY INSTRUCTIONS].
Yours faithfully,
[ ]
For and on behalf of Massachusetts Mutual Life Insurance Company
EXHIBIT B-3
FORM OF GRANTOR WITHDRAWAL CONSENT NOTICE
[TO BE UTILIZED ONLY AFTER A RESERVE CREDIT EVENT]
From: Hartford Life Insurance Company ("Beneficiary")
To: Citibank N.A. (the "Trustee") Massachusetts Mutual Life Insurance Company
("Grantor")
Date: [ ]
Re: Trust Agreement dated as of December 31, 2012 among the Grantor, the
Beneficiary and the Trustee (as amended, modified or supplemented from time
to time, the "Trust Agreement")
Dear Sirs:
Pursuant to that certain Grantor Withdrawal Notice dated as of [ ],
we hereby consent to the withdrawal as further described therein.
Yours faithfully,
[ ]
Hartford Life Insurance Company
EXHIBIT B-4
FORM OF
TRUST WITHDRAWAL EVENT NOTICE
From: Massachusetts Mutual Life Insurance Company ("Reinsurer")
To: Hartford Life Insurance Company ("Ceding Company")
cc: Citibank N.A.
Date: [ ]
Re: Trust Withdrawal Event Notice
Dear Sirs:
We are writing in connection with the Reinsurance Agreement dated as of January
1, 2013 between the Reinsurer and the Ceding Company (as amended, modified or
supplemented from time to time, the "Reinsurance Agreement"). Capitalized terms
used in this letter but not defined herein shall have their respective meanings
in the Reinsurance Agreement.
The Reinsurer hereby certifies to the Ceding Company that as of the date hereof
the Trust Withdrawal Event Conditions are satisfied as follows:
(i) the financial strength of the Reinsurer is [ ] as rated by S&P and [ ] as
rated by ▇▇▇▇▇'▇;
(ii) the Reinsurer's RBC Ratio as of the quarter end immediately preceding the
date of this letter was [ ]%;
(iii) the numerical value of the Required Balance is [ ]; and
(iv) no Reserve Credit Event has occurred and is continuing.
[Trust Withdrawal Event Notice to include reasonable supporting documentation.]
This letter shall constitute a "Trust Withdrawal Event Notice" for purposes of
Section 4.10 of the Reinsurance Agreement.
Yours faithfully,
[ ]
-----------------------
For and on behalf of
Massachusetts Mutual Life Insurance Company
EXHIBIT B-5
FORM OF TRUST WITHDRAWAL EVENT ACKNOWLEDGMENT
From: Hartford Life Insurance Company ("Ceding Company")
To: Massachusetts Mutual Life Insurance Company ("Reinsurer")
cc: Citibank N.A.
Date: [ ]
Re: Trust Withdrawal Event Acknowledgment
Dear Sirs:
We are writing in connection with the Reinsurance Agreement dated as of January
1, 2013 between the Reinsurer and the Ceding Company (as amended, modified or
supplemented from time to time, the "Reinsurance Agreement"). Capitalized terms
used in this letter but not defined herein shall have their respective meanings
in the Reinsurance Agreement.
We hereby acknowledge and agree with your certification provided in that certain
Trust Withdrawal Event Notice dated as of [ ] that the Trust Withdrawal Event
Conditions are satisfied as of the date of such Trust Withdrawal Event Notice.
Pursuant to Section 4.10 of the Reinsurance Agreement, the Reinsurer is entitled
to withdraw all or any portion of the assets in that certain reserve trust
account established by the Reinsurer for the benefit of the Ceding Company under
the Trust Agreement dated as of December 31, 2012, by and among Citibank N.A.,
the Reinsurer and the Ceding Company.
Yours faithfully,
[ ]
For and on behalf of Hartford Life Insurance Company
EXHIBIT C
TRUST ACCOUNT INVESTMENT GUIDELINES
The following Trust Account Investment Guidelines are effective at all times and
will be monitored monthly. Any changes to the Trust Account Investment
Guidelines must be agreed upon in writing by Beneficiary (as defined below) and
Grantor (as defined below). Reference is made to that certain Reserve Trust
Agreement, dated as of December 31, 2012 (the "Reserve Trust Agreement"), by and
among Massachusetts Mutual Life Insurance Company ("Grantor"), Hartford Life
Insurance Company ("Beneficiary") and Citibank N.A. ("Trustee"). Capitalized
terms used herein shall have the meaning set forth in the Reserve Trust
Agreement.
TRUST ACCOUNT GUIDELINES
- DURATION
The effective duration will be managed to be within a duration of +/- 1.0 years
of a fixed duration target to be provided by Grantor. Grantor shall provide to
the Beneficiary, annually, a report regarding its fixed duration target as well
as an analysis as to the most efficient duration to manage the Trust Account.
Such fixed duration target is subject to Beneficiary's approval (such approval
not to be unreasonably withheld).
While within this permissible duration range, asset duration does not
necessarily need to be actively rebalanced towards the specified duration
target.
- KEY RATE DURATION
A significant portion of the Trust Account will seek to ladder its maturities so
that the assets are managed consistent with liability key rates or specific key
rate duration targets. The key rate duration gaps will remain within 1.0 years
of their targets.
- CONVEXITY
Convexity will be positive.
- ACCOUNT VALUE
Account Value shall mean, prior to a Triggering Event or Reserve Credit Event,
Statutory Book Value, and from and after a Triggering Event or Reserve Credit
Event, Fair Market Value, in each case, as defined in the Reserve Trust
Agreement.
- CREDIT QUALITY
Restrictions on aggregate Account Value exposure by quality are as follows:
EXPOSURE: MAXIMUM:
---------------------------------------------------------------------------------------------------------
"▇-" ▇▇▇ ▇▇▇▇▇ ("▇▇▇▇ ▇") 100% of ▇▇▇▇▇▇▇▇
"▇▇▇▇", "▇▇▇", "▇▇▇-" ("▇▇▇▇ ▇") 35% of Exposure
▇▇▇▇▇ "▇▇▇-" (▇▇▇) ("▇▇▇▇ ▇" ▇▇ ▇▇▇▇▇) 10% of Exposure, to be reduced by 1% annually
beginning as of January 1, 2013 to 5% of Exposure
not later than January 1, 2017
5% of Exposure after January 1, 2017
Non-Rated (exclusive of Alternative 5% of Exposure
Assets, Common Equity, Real Estate
Debt, Cash and Cash Equivalents)
Alternative Assets (inclusive of Common 5% of Exposure
Equity)
Non-Rated Real Estate Debt 20% of Exposure
Maximum exposures by credit quality will be based on NAIC rating or, if
unavailable, an equivalent rating based on Grantor's internal rating system.
If NAIC rating is not available, maximum exposure will be measured by Grantor
based on effective rating as calculated by Grantor's analytical system. At the
time of writing of this document, a security's effective rating is determined as
follows:
- If rated by all of ▇▇▇▇▇'▇, S&P, and Fitch, the median rating will prevail.
- If rated by only two rating agencies, the lower rating will prevail.
- If rated by only one rating agency, that agency's rating will be used.
- If not rated by any agency, Grantor's internal rating will be used.
- SECTOR ALLOCATION GUIDELINES
The table below outlines the permissible sector maximums for the Trust Account
based on percentage of exposure on Account Value basis. Investments in any
assets not included in the Sector Allocation table below are prohibited. All
holdings are to be US Dollar denominated, except for the non-US Dollar
denominated private placement investments set forth in ANNEX A hereto. Use of
leverage is prohibited.
PERMISSIBLE
SECTOR: MAXIMUM:
--------------------------------------------------------------------------------
Alternative Assets (Hedge Funds, Private Equity Funds, and
common equity) 5%
Asset Backed Securities, Collateralized Loan Obligations and
Collateralized Debt Obligations 15%
Bank Loans 5%
Cash and Cash Equivalents 100%
Commercial Mortgage Backed Securities 15%
Commercial Mortgages (excluding B-Notes and Mezzanine Debt
Financing, other than holdings transferred at Closing) 20%
Emerging Markets Debt 5%
High Yield Corporate Debt 5%
Investment Grade Corporate Debt 80%
Municipal Bonds (Tax Exempt) & Sovereign Bonds 10%
Residential Mortgage Backed Securities 20%
US Agency Securities 100%
US Treasury Securities (including STRIPS/TIPS) 100%
There may also be times when allowable asset classes may be held in LLC, LP or
other legal forms. In such cases, if the economics of the asset class are
equivalent to the economics of direct ownership, the alternative ownership form
will be permitted and will be aggregated against the limit for the underlying
assets, provided, however, that the asset owned by the Trust is designated "NAIC
1" or "NAIC 2".
- ISSUER LIMITS
Investments in the obligations of any single issuer, other than Governments or
Government Agencies (which, for the purposes of the Trust Account Investment
Guidelines, shall only include U.S. Treasuries, Resolution Trust Corporation
(Refcorp) bonds and obligations issued by GNMA, FNMA, FHLMC and FHA), shall not
exceed an Account Value equal to the greater of 2% of the aggregate Account
Value of the Trust Account and $15 million.
- ILLIQUID ASSETS
Total exposure to the following sectors will be no greater than 50% of the
exposure on an Account Value basis of the Trust Account:
- Non-AAA or Non-Senior Asset Backed Securities
- Non-AAA or Non-Senior Commercial Mortgage Backed Securities
- Collateralized Debt Obligations
- Collateralized Loan Obligations
- Private Emerging Markets (excluding 144a and Reg S securities)
- Private High Yield Corporates (excluding 144a and Reg S securities)
- Private Investment Grade Corporates (excluding 144a and Reg S securities)
- Alternative Assets
- Bank Loans
- Commercial Mortgages
In any event, no more than 40% of the Account Value of the Trust Account will be
classified Level 3 Fair Value as defined by FASB Accounting Standards
Codification 820, FAIR VALUE MEASUREMENT.
VIOLATION RESOLUTION PROCESS
- PRIOR TO A TRIGGERING EVENT OR RESERVE CREDIT EVENT
Upon identification of a violation of the Trust Account Investment Guidelines,
Grantor will determine if the violation is passive or active. A passive
violation may result from changes in the Account Value of the account, a
downgrade of a security or the restructuring of an asset by a person other than
Grantor or its Affiliates. If the Trust Account Investment Guidelines are
passively violated, sales will not be required to bring the Trust Account back
into compliance. Purchases, however, cannot be made that cause the Trust Account
to further violate the Trust Account Investment Guidelines. Grantor will report
the passive violation to Beneficiary no later than five (5) business days after
identification of the violation. Grantor will correct the violation within
ninety (90) days of such violation or receive approval from Beneficiary to allow
an existing violation to remain for a certain period of time that is greater
than ninety (90) days.
Violations (active) may also result from actions on the part of Grantor. Upon
identification of an active violation of the Trust Account Investment
Guidelines, Grantor will notify Beneficiary no later than two (2) Business Days
following identification of the violation. Grantor will correct the violation
within five (5) Business Days of such violation or receive approval from
Beneficiary to allow an existing violation to remain uncured for a certain
period of time that is greater than five (5) Business Days.
- SUBSEQUENT TO A TRIGGERING EVENT OR RESERVE CREDIT EVENT
Upon identification of a violation of the Trust Account Investment Guidelines,
Grantor will notify Beneficiary no later than two (2) Business Days following
identification of the violation. Grantor will correct the violation within five
(5) Business Days of such violation or receive
approval from Beneficiary to allow an existing violation to remain uncured for a
certain period of time that is greater than five (5) Business Days.
REPORTING REQUIREMENTS
On a quarterly basis, Grantor will provide Beneficiary with a summary document
reflecting investments held in the Trust Account relative to the Trust Account
Investment Guidelines. At such time, Grantor will also provide a certification
from an executive officer of Grantor that the management of the Trust Account
during the preceding quarter was in compliance with all of the Trust Account
Investment Guidelines, or, in the alternative, an explanation set forth in
reasonable detail of the nature and extent of any violation of the Trust Account
Investment Guidelines and how such violation was corrected or will be corrected
in accordance with the terms hereof.
Grantor will provide the following Trust Account data for each holding and for
the Trust Account in aggregate to Beneficiary in both PDF and Microsoft Excel
form, which data will be reported on a quarterly basis:
HOLDING LEVEL DETAIL
- Statutory Book Yield
- Market Value
- Statutory Book Value
- Quality
- Duration
AGGREGATE TRUST ACCOUNT LEVEL DETAIL
- Trade Summary
- Sector Summary
- Subsector Summary
- Duration, convexity and key rate durations
- Quality rating summary
- Target Duration
ANNEX A
NON-US DOLLAR DENOMINATED PRIVATE PLACEMENT INVESTMENTS
PRIMARY BUS ID DESCRIPTION INST_CD SUBSECTOR SECTOR CURRENCY
------------------------------------------------------------------------------------------------------------------
G2624@AD5 DAIRY CREST GROUP PLC CORP Industrial IG CORP EUR
N2962#AA1 ENECO HOLDING NV CORP Utilities IG CORP EUR
Q7160#AC3 ORICA FINANCE LTD SENIOR UNSEC CORP Industrial IG CORP AUD
EXHIBIT D
FORM OF CURE NOTICE
From: Massachusetts Mutual Life Insurance Company ("Reinsurer")
To: Hartford Life Insurance Company ("Ceding Company")
cc: Citibank N.A.
Date: [ ]
Re: Cure Notice
Dear Sirs:
We are writing in connection with the Reinsurance Agreement dated as of January
1, 2013 between the Reinsurer and the Ceding Company (as amended, modified or
supplemented from time to time, the "Reinsurance Agreement"). Capitalized terms
used in this letter but not defined herein shall have their respective meanings
in the Reinsurance Agreement.
We hereby give you notice pursuant to Section 4.11 of the Reinsurance Agreement
that no Triggering Event or Reserve Credit Event is occurring as of the date
hereof and that the Triggering Event or Reserve Credit Event which was
previously outstanding was cured as follows:
[DESCRIBE APPLICABLE CURE AND INCLUDE REASONABLE SUPPORTING DOCUMENTATION.]
This letter shall constitute a "Cure Notice" for purposes of Section 4.11 of the
Reinsurance Agreement.
Yours faithfully,
[ ]
For and on behalf of Massachusetts Mutual Life Insurance Company
EXHIBIT E
FORM OF CURE ACKNOWLEDGMENT
From: Hartford Life Insurance Company ("Ceding Company")
To: Massachusetts Mutual Life Insurance Company ("Reinsurer")
cc: Citibank N.A.
Date: [ ]
Re: Cure Acknowledgment
Dear Sirs:
We are writing in connection with the Reinsurance Agreement dated as of January
1, 2013 between the Reinsurer and the Ceding Company (as amended, modified or
supplemented from time to time, the "Reinsurance Agreement"). Capitalized terms
used in this letter but not defined herein shall have their respective meanings
in the Reinsurance Agreement.
We hereby acknowledge and agree with your certification provided in that certain
Cure Notice dated as of [ ] that no Triggering Event or Reserve Credit Event is
occurring as of the date of such Cure Notice. Pursuant to Section 4.11 of the
Reinsurance Agreement, the delivery of this Cure Acknowledgment shall constitute
a "Cure Event".
This letter shall constitute a "Cure Acknowledgment" for purposes of Section
4.11 of the Reinsurance Agreement.
Yours faithfully,
[ ]
For and on behalf of Hartford Life Insurance Company
APPENDIX 1
RESERVE TRUST ACCOUNT OPENING LETTERS
[SEE ATTACHED]
Appendix 1-1
[LOGO]
MASSMUTUAL
FINANCIAL GROUP(SM)
PDF -- ORIGINALS VIA COURIER WHEN REQUESTED
▇▇▇▇ ▇▇▇▇▇▇▇▇
Citibank, NA
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇▇▇: December 7, 2012
Please open the domestic custody account listed below under Massachusetts Mutual
Life Insurance Company's TIN # ▇▇-▇▇▇▇▇▇▇ for the Reserve Trust.
ACCOUNT ID #
DOMESTIC CUSTODY ACCOUNT TITLE (FOR MM ONLY)
----------------------------------------------------------------------------------
240146 Massachusetts Mutual Life Insurance Company 50746
Reserve Trust -- RPG 401K and Tax Exempt
Mass Mutual will provide securities processing, cash management and banking
services instructions under the terms of the Reserve Trust Agreement. This
account will be associated for income transfers only with the new RPG DDA that
we are currently in the process of opening under the name of "Massachusetts
Mutual Life Insurance Company, BA 0034 Master".
Please provide the following services for this custody account:
- Include on all custody reports
- Include on CitiDirect for Securities under user group -- Client ID
MASSMUT
- Include under the CITIBANK SECURITY PROCEDURES FORM -- FACSIMILE
INSTRUCTIONS ON FILE
- Online wire initiation capability through CitiDirect for Securities
- MassMutual will work with ▇▇▇▇▇ ▇▇▇▇▇▇, Project Manager-Specialized
Projects Team, EB Client Services on setting up a new GXS SFTP Pull
for prior day BAI reporting
Please include this custody account on MassMutual's 822 analysis transmission
for Relationship #1637061 under Customer ID#▇▇▇▇▇▇▇. This account should be
credited with earnings credits calculated at the MassMutual relationship rate on
the average daily cash balance in the account. The account analysis statement
should include all bank charges with AFP service codes at the MassMutual agreed
pricing.
▇▇▇▇ ▇. ▇▇▇▇▇▇, Corporate Vice President and Treasurer and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Assistant Vice President and Associate Treasurer are the authorized signers for
this account. Any instructions to open, change or close this account are valid
if signed by either of the parties. We have enclosed the GENERAL SIGNING
AUTHORITY, BANKING RESOLUTION CERTIFICATE and CERTIFICATE OF INCUMBENCY for your
records.
Massachusetts Mutual Life Insurance Company - ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇▇
and affiliated companies
Citibank, NA
December 7, 2012
Page 2 -- RE: RPG 401K and Tax Exempt
Please confirm that this account is operational in all respects by sending an
email to ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇.
Please call ▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇-▇▇▇-▇▇▇▇) or email to ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇ or
▇▇▇▇▇ ▇▇▇▇▇▇▇ (860-562-5250) or email to ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇ if you have any
questions.
Sincerely,
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CTP
Assistant Vice President and
Associate Treasurer
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Corporate Vice President and
Treasurer
Cc: ▇▇▇▇▇ ▇▇▇▇▇▇, Citibank
▇▇▇▇▇▇▇ ▇▇▇▇, Citibank
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, MassMutual
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, MassMutual
Enclosures:
BANKING RESOLUTION CERTIFICATE
CERTIFICATE OF INCUMBENCY
CLIENT SECURITY PROCEDURES FORM
GENERAL SIGNING AUTHORITY
IRS W-9
RULE 14B
Massachusetts Mutual Life Insurance Company - ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇▇
and affiliated companies
[LOGO]
MASSMUTUAL
FINANCIAL GROUP(SM)
PDF -- ORIGINALS VIA COURIER WHEN REQUESTED
▇▇▇▇ ▇▇▇▇▇▇▇▇
Citibank, NA
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇▇▇: December 7, 2012
Please open the domestic custody account listed below under Massachusetts Mutual
Life Insurance Company's TIN # ▇▇-▇▇▇▇▇▇▇ for the Reserve Trust.
ACCOUNT ID #
DOMESTIC CUSTODY ACCOUNT TITLE (FOR MM ONLY)
----------------------------------------------------------------------------------
240147 Massachusetts Mutual Life Insurance Company 50749
Reserve Trust -- RPG On Benefit Annuity
Mass Mutual will provide securities processing, cash management and banking
services instructions under the terms of the Reserve Trust Agreement. This
account will be associated with the existing DDA #30510407 for income transfer
only.
Please provide the following services for this custody account:
- Include on all custody reports
- Include on CitiDirect for Securities under user group -- Client ID
MASSMUT
- Include under the CITIBANK SECURITY PROCEDURES FORM -- FACSIMILE
INSTRUCTIONS ON FILE
- Wire initiation capability through CitiDirect for Securities
- MassMutual will work with ▇▇▇▇▇ ▇▇▇▇▇▇, Project Manager- Specialized
Projects Team, EB Client Services on setting up a new GXS SFTP Pull
for prior day BAI reporting
Please include this custody account on MassMutual's 822 analysis transmission
for Relationship #1637061 under Customer ID#▇▇▇▇▇▇▇. This account should be
credited with earnings credits calculated at the MassMutual relationship rate on
the average daily cash balance in the account. The account analysis statement
should include all bank charges with AFP service codes at the MassMutual agreed
pricing.
▇▇▇▇ ▇. ▇▇▇▇▇▇, Corporate Vice President and Treasurer and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Assistant Vice President and Associate Treasurer are the authorized signers for
this account. Any instructions to open, change or close this account are valid
if signed by either of the parties. We have enclosed the GENERAL SIGNING
AUTHORITY, BANKING RESOLUTION CERTIFICATE and CERTIFICATE OF INCUMBENCY for your
records.
Massachusetts Mutual Life Insurance Company - ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇▇
and affiliated companies
Citibank, NA
December 7, 2012
Page 2 -- RE: RPG On Benefit Annuity
Please confirm that this account is operational in all respects by sending an
email to ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇.
Please call ▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇-▇▇▇-▇▇▇▇) or email to ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇ or
▇▇▇▇▇ ▇▇▇▇▇▇▇ (860-562-5250) or email to ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇ if you have any
questions.
Sincerely,
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CTP
Assistant Vice President and
Associate Treasurer
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Corporate Vice President and
Treasurer
Cc: ▇▇▇▇▇ ▇▇▇▇▇▇, Citibank
▇▇▇▇▇▇▇ ▇▇▇▇, Citibank
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, MassMutual
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, MassMutual
Enclosures:
BANKING RESOLUTION CERTIFICATE
CERTIFICATE OF INCUMBENCY
CLIENT SECURITY PROCEDURES FORM
GENERAL SIGNING AUTHORITY
IRS W-9
RULE 14B
Massachusetts Mutual Life Insurance Company - ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇▇
and affiliated companies
[LOGO]
MASSMUTUAL
FINANCIAL GROUP(SM)
PDF -- ORIGINALS VIA COURIER WHEN REQUESTED
▇▇▇▇ ▇▇▇▇▇▇▇▇
Citibank, NA
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇▇▇: December 7, 2012
Please open the domestic custody account listed below under Massachusetts Mutual
Life Insurance Company's TIN # ▇▇-▇▇▇▇▇▇▇ for the Reserve Trust.
ACCOUNT ID #
DOMESTIC CUSTODY ACCOUNT TITLE (FOR MM ONLY)
----------------------------------------------------------------------------------
240148 Massachusetts Mutual Life Insurance Company 50748
Reserve Trust -- Ambassador Funds
Mass Mutual will provide securities processing, cash management and banking
services instructions under the terms of the Reserve Trust Agreement. This
account will not be associated with any DDA; principal and interest cash will
remain in this account.
Please provide the following services for this custody account:
- Include on all custody reports
- Include on CitiDirect for Securities under user group -- Client ID
MASSMUT
- Include under the CITIBANK SECURITY PROCEDURES FORM -- FACSIMILE
INSTRUCTIONS ON FILE
- Wire initiation capability through CitiDirect for Securities
- MassMutual will work with ▇▇▇▇▇ ▇▇▇▇▇▇, Project Manager- Specialized
Projects Team, EB Client Services on setting up a new GXS SFTP Pull
for prior day BAI reporting.
Please include this custody account on MassMutual's 822 analysis transmission
for Relationship #1637061 under Customer ID#▇▇▇▇▇▇▇. This account should be
credited with earnings credits calculated at the MassMutual relationship rate on
the average daily cash balance in the account. The account analysis statement
should include all bank charges with AFP service codes at the MassMutual agreed
pricing.
▇▇▇▇ ▇. ▇▇▇▇▇▇, Corporate Vice President and Treasurer and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Assistant Vice President and Associate Treasurer are the authorized signers for
this account. Any instructions to open, change or close this account are valid
if signed by either of the parties. We have enclosed the GENERAL SIGNING
AUTHORITY, BANKING RESOLUTION CERTIFICATE and CERTIFICATE OF INCUMBENCY for your
records.
Massachusetts Mutual Life Insurance Company - ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇▇
and affiliated companies
Citibank, NA
December 7, 2012
Page 2 -- RE: Ambassador Funds
Please confirm that this account is operational in all respects by sending an
email to ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇.
Please call ▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇-▇▇▇-▇▇▇▇) or email to ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇ or
▇▇▇▇▇ ▇▇▇▇▇▇▇ (860-562-5250) or email to ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇ if you have any
questions.
Sincerely,
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CTP
Assistant Vice President and
Associate Treasurer
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Corporate Vice President and
Treasurer
Cc: ▇▇▇▇▇ ▇▇▇▇▇▇, Citibank
▇▇▇▇▇▇▇ ▇▇▇▇, Citibank
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, MassMutual
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, MassMutual
Enclosures:
BANKING RESOLUTION CERTIFICATE
CERTIFICATE OF INCUMBENCY
CLIENT SECURITY PROCEDURES FORM
GENERAL SIGNING AUTHORITY
IRS W-9
RULE 14B
Massachusetts Mutual Life Insurance Company - ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇▇
and affiliated companies
APPENDIX 2
ASSET TRANSFER NOTIFICATION
From: Massachusetts Mutual Life Insurance Company (the "Grantor") and Hartford
Life Insurance Company (the "Beneficiary")
To: Citibank N.A. (the "Trustee")
Date: December 31, 2012
Re: Asset Transfer Notification
Dear Sirs:
We are writing in connection with the Trust Agreement dated as of December 31,
2012 among the Grantor, the Beneficiary and the Trustee (as amended, modified or
supplemented from time to time, the "Trust Agreement"). Capitalized terms used
in this letter but not defined herein shall have their respective meanings in
the Trust Agreement.
We hereby give you notice pursuant to 1(a) of the Trust Agreement that all asset
transfers to be effected prior to the Effective Time pursuant to the Agreement
have occurred and the Reserve Trust Account shall automatically and irrevocably
become an account owned by the Grantor effective as of the Effective Time and
shall hereafter be in the name of the Grantor.
Yours faithfully,
[ ]
-----------------------
For and on behalf of Massachusetts Mutual Life Insurance Company
[ ]
-----------------------
For and on behalf of
Hartford Life Insurance Company
Appendix 2-1
EXHIBIT B-1
FORM OF
GENERAL ACCOUNT SETTLEMENT STATEMENT
[SEE ATTACHED]
EXHIBIT B-1
GENERAL ACCOUNT SETTLEMENT STATEMENT
REFLECTS ALL ACTIVITY FOR ACCOUNTING PERIOD [ ]:
PAID OR RECEIVED
BY REINSURER AS
DESCRIBED IN
SECTION 3.4(B) OF
TOTAL THE AGREEMENT NET
-----------------------------------------------------------------------------------------------------------------------------------
1. RECOVERABLES -- SECTION 3.1(B)
(i) Premiums (premiums, considerations, deposits, loan repayments and other
receipts received in respect of the Covered Insurance Policies, including
any amounts received under any Plan ASA) $ $ $
(ii) Litigation recoveries to the extent such recoveries relate to Reinsured
Liabilities $ $ $
(iii) Charges, fees and other payments described in Section 3.1(b) (iii) of the
Agreement to the extent related to the Covered Insurance Policies $ $ $
(iv) All other payments, collections, fees, credits, releases of funds to the
Ceding Company from any Separate Accounts established by the Ceding Company
and any and all recoveries relating to the Reinsured Liabilities or the
Covered Insurance Policies $ $ $
(v) Investment income actually received relating to items (i) through (iv) above $ $ $
TOTAL RECOVERABLES = (i) + (ii) + (iii) + (iv) + (v) $ $ $
2. GENERAL ACCOUNT LIABILITIES
(i) All gross Liabilities, obligations and expenses arising under the Covered
Insurance Policies (excluding Separate Account Liabilities)
(a) Liabilities resulting under the terms and conditions of the Covered $ $ $
Insurance Policies as described in subpart (i)(a) of the definition of
"General Account Liabilities" set forth in Article I of the Agreement
(b) Liabilities arising under changes to the terms and conditions of the Covered $ $ $
Insurance Policies as described in subpart (i)(b) of the definition of
"General Account Liabilities" set forth in Article I of the Agreement
(c) Liabilities that relate to any amounts held in the general account of the $ $ $
Ceding Company pending transfer to the Separate Accounts
TOTAL (i) = (a) + (b) + (c) $ $ $
(ii) The following Liabilities, obligations, expenses and Premium taxes
(a) Premium taxes as described in subpart (ii)(a) of the definition of "General $ $ $
Account Liabilities" set forth in Article I of the Agreement
(b) Fees and other amounts payable in respect of the Covered Insurance Policies $ $ $
and Plan ASAs
(c) Compensation and other servicing and administration fees payable with $ $ $
respect to the Covered Insurance Policies payable by the Ceding Company or
HSD to or for the benefit of the Distributors
(d) Reinsurer Extra Contractual Obligations $ $ $
TOTAL (ii) = (a) + (b) + (c) + (d) $ $ $
(iii) The following Liabilities, obligations, excise taxes and expenses
(a) Guaranty association assessments and similar charges to the extent related $ $ $
to Premiums earned on or after the Effective Time as described in subpart
(iii)(a) of the definition of "General Account Liabilities" set forth in
Article I of the Agreement
(b) Liabilities to the extent relating to periods on or after the Effective Time $ $ $
that relate to the Separate Accounts that are not payable out of the assets
of Separate Accounts as described in subpart (iii)(b) of the definition of
"General Account Liabilities" set forth in Article I of the Agreement
(c) excise taxes imposed with respect to the administration of the Covered $ $ $
Insurance Policies on or after the Effective Time
TOTAL (iii) = (a) + (b) + (c) $ $ $
TOTAL GENERAL ACCOUNT LIABILITIES = (i) + (ii) + (iii) $ $ $
3. NET SETTLEMENT = (1) - (2) $
EXHIBIT B-2
FORM OF SEPARATE ACCOUNT SETTLEMENT STATEMENT
[SEE ATTACHED]
EXHIBIT B-2
SEPARATE ACCOUNT SETTLEMENT STATEMENT
REFLECTS ALL ACTIVITY FOR ACCOUNTING PERIOD [ ]:
TOTAL
--------------------------------------------------------------------------
1 SEPARATE ACCOUNT LIABILITIES
All Liabilities, obligations, expenses and Premium and
excise taxes arising under the Covered Insurance Policies to
the extent payable out of the Separate Accounts $
EXHIBIT C
TRUST ACCOUNT INVESTMENT GUIDELINES
The following Trust Account Investment Guidelines are effective at all times and
will be monitored monthly. Any changes to the Trust Account Investment
Guidelines must be agreed upon in writing by Beneficiary (as defined below) and
Grantor (as defined below). Reference is made to that certain Reserve Trust
Agreement, dated as of December 31, 2012 (the "Reserve Trust Agreement"), by and
among Massachusetts Mutual Life Insurance Company ("Grantor"), Hartford Life
Insurance Company ("Beneficiary") and Citibank N.A. ("Trustee"). Capitalized
terms used herein shall have the meaning set forth in the Reserve Trust
Agreement.
TRUST ACCOUNT GUIDELINES
- DURATION
The effective duration will be managed to be within a duration of +/- 1.0 years
of a fixed duration target to be provided by Grantor. Grantor shall provide to
the Beneficiary, annually, a report regarding its fixed duration target as well
as an analysis as to the most efficient duration to manage the Trust Account.
Such fixed duration target is subject to Beneficiary's approval (such approval
not to be unreasonably withheld).
While within this permissible duration range, asset duration does not
necessarily need to be actively rebalanced towards the specified duration
target.
- KEY RATE DURATION
A significant portion of the Trust Account will seek to ladder its maturities so
that the assets are managed consistent with liability key rates or specific key
rate duration targets. The key rate duration gaps will remain within 1.0 years
of their targets.
- CONVEXITY
Convexity will be positive.
- ACCOUNT VALUE
Account Value shall mean, prior to a Triggering Event or Reserve Credit Event,
Statutory Book Value, and from and after a Triggering Event or Reserve Credit
Event, Fair Market Value, in each case, as defined in the Reserve Trust
Agreement.
- CREDIT QUALITY
Restrictions on aggregate Account Value exposure by quality are as follows:
EXPOSURE: MAXIMUM:
------------------------------------------------------------------------------
"▇-" ▇▇▇ ▇▇▇▇▇ ("▇▇▇▇ ▇") 100% of ▇▇▇▇▇▇▇▇
"▇▇▇▇", "▇▇▇", "▇▇▇-" ("▇▇▇▇ ▇") 35% of Exposure
▇▇▇▇▇ "▇▇▇-" (▇▇▇) ("▇▇▇▇ ▇" ▇▇ ▇▇▇▇▇) 10% of Exposure, to be reduced by 1%
annually beginning as of January 1,
2013 to 5% of Exposure not later than
January 1, 2017
5% of Exposure after January 1, 2017
Non-Rated (exclusive of Alternative 5% of Exposure
Assets, Common Equity, Real Estate
Debt, Cash and Cash Equivalents)
Alternative Assets (inclusive of 5% of Exposure
Common Equity)
Non-Rated Real Estate Debt 20% of Exposure
Maximum exposures by credit quality will be based on NAIC rating or, if
unavailable, an equivalent rating based on Grantor's internal rating system.
If NAIC rating is not available, maximum exposure will be measured by Grantor
based on effective rating as calculated by Grantor's analytical system. At the
time of writing of this document, a security's effective rating is determined as
follows:
- If rated by all of ▇▇▇▇▇'▇, S&P, and Fitch, the median rating will prevail.
- If rated by only two rating agencies, the lower rating will prevail.
- If rated by only one rating agency, that agency's rating will be used.
- If not rated by any agency, Grantor's internal rating will be used.
- SECTOR ALLOCATION GUIDELINES
The table below outlines the permissible sector maximums for the Trust Account
based on percentage of exposure on Account Value basis. Investments in any
assets not included in the Sector Allocation table below are prohibited. All
holdings are to be US Dollar denominated, except for the non-US Dollar
denominated private placement investments set forth in Annex A hereto. Use of
leverage is prohibited.
SECTOR: PERMISSIBLE MAXIMUM:
-----------------------------------------------------------------------------------------
Alternative Assets (Hedge Funds, Private Equity Funds, and common
equity) 5%
Asset Backed Securities, Collateralized Loan Obligations and
Collateralized Debt Obligations 15%
Bank Loans 5%
Cash and Cash Equivalents 100%
Commercial Mortgage Backed Securities 15%
Commercial Mortgages (excluding B-Notes and Mezzanine Debt
Financing, other than holdings transferred at Closing) 20%
Emerging Markets Debt 5%
High Yield Corporate Debt 5%
Investment Grade Corporate Debt 80%
Municipal Bonds (Tax Exempt) & Sovereign Bonds 10%
Residential Mortgage Backed Securities 20%
US Agency Securities 100%
US Treasury Securities (including STRIPS/TIPS) 100%
There may also be times when allowable asset classes may be held in LLC, LP or
other legal forms. In such cases, if the economics of the asset class are
equivalent to the economics of direct ownership, the alternative ownership form
will be permitted and will be aggregated against the limit for the underlying
assets, provided, however, that the asset owned by the Trust is designated "NAIC
1" or "NAIC 2".
- ISSUER LIMITS
Investments in the obligations of any single issuer, other than Governments or
Government Agencies (which, for the purposes of the Trust Account Investment
Guidelines, shall only include U.S. Treasuries, Resolution Trust Corporation
(Refcorp) bonds and obligations issued by GNMA, FNMA, FHLMC and FHA), shall not
exceed an Account Value equal to the greater of 2% of the aggregate Account
Value of the Trust Account and $15 million.
- ILLIQUID ASSETS
Total exposure to the following sectors will be no greater than 50% of the
exposure on an Account Value basis of the Trust Account:
- Non-AAA or Non-Senior Asset Backed Securities
- Non-AAA or Non-Senior Commercial Mortgage Backed Securities
- Collateralized Debt Obligations
- Collateralized Loan Obligations
- Private Emerging Markets (excluding 144a and Reg S securities)
- Private High Yield Corporates (excluding 144a and Reg S securities)
- Private Investment Grade Corporates (excluding 144a and Reg S securities)
- Alternative Assets
- Bank Loans
- Commercial Mortgages
In any event, no more than 40% of the Account Value of the Trust Account will be
classified Level 3 Fair Value as defined by FASB Accounting Standards
Codification 820, FAIR VALUE MEASUREMENT.
VIOLATION RESOLUTION PROCESS
- PRIOR TO A TRIGGERING EVENT OR RESERVE CREDIT EVENT
Upon identification of a violation of the Trust Account Investment Guidelines,
Grantor will determine if the violation is passive or active. A passive
violation may result from changes in the Account Value of the account, a
downgrade of a security or the restructuring of an asset by a person other than
Grantor or its Affiliates. If the Trust Account Investment Guidelines are
passively violated, sales will not be required to bring the Trust Account back
into compliance. Purchases, however, cannot be made that cause the Trust Account
to further violate the Trust Account Investment Guidelines. Grantor will report
the passive violation to Beneficiary no later than five (5) business days after
identification of the violation. Grantor will correct the violation within
ninety (90) days of such violation or receive approval from Beneficiary to allow
an existing violation to remain for a certain period of time that is greater
than ninety (90) days.
Violations (active) may also result from actions on the part of Grantor. Upon
identification of an active violation of the Trust Account Investment
Guidelines, Grantor will notify Beneficiary no later than two (2) Business Days
following identification of the violation. Grantor will correct the violation
within five (5) Business Days of such violation or receive approval from
Beneficiary to allow an existing violation to remain uncured for a certain
period of time that is greater than five (5) Business Days.
- SUBSEQUENT TO A TRIGGERING EVENT OR RESERVE CREDIT EVENT
Upon identification of a violation of the Trust Account Investment Guidelines,
Grantor will notify Beneficiary no later than two (2) Business Days following
identification of the violation. Grantor will correct the violation within five
(5) Business Days of such violation or receive approval from Beneficiary to
allow an existing violation to remain uncured for a certain period of time that
is greater than five (5) Business Days.
REPORTING REQUIREMENTS
On a quarterly basis, Grantor will provide Beneficiary with a summary document
reflecting investments held in the Trust Account relative to the Trust Account
Investment Guidelines. At such time, Grantor will also provide a certification
from an executive officer of Grantor that the management of the Trust Account
during the preceding quarter was in compliance with all of the Trust Account
Investment Guidelines, or, in the alternative, an explanation set forth in
reasonable detail of the nature and extent of any violation of the Trust Account
Investment Guidelines and how such violation was corrected or will be corrected
in accordance with the terms hereof.
Grantor will provide the following Trust Account data for each holding and for
the Trust Account in aggregate to Beneficiary in both PDF and Microsoft Excel
form, which data will be reported on a quarterly basis:
HOLDING LEVEL DETAIL
- Statutory Book Yield
- Market Value
- Statutory Book Value
- Quality
- Duration
AGGREGATE TRUST ACCOUNT LEVEL DETAIL
- Trade Summary
- Sector Summary
- Subsector Summary
- Duration, convexity and key rate durations
- Quality rating summary
- Target Duration
ANNEX A
NON-US DOLLAR DENOMINATED PRIVATE PLACEMENT INVESTMENTS
PRIMARY BUS ID DESCRIPTION INST_CD SUBSECTOR SECTOR CURRENCY
-----------------------------------------------------------------------------------------------------
G2624@AD5 DAIRY CREST GROUP PLC CORP Industrial IG CORP EUR
N2962#AA1 ENECO HOLDING NV CORP Utilities IG CORP EUR
Q7160#AC3 ORICA FINANCE LTD SENIOR UNSEC CORP Industrial IG CORP AUD
EXHIBIT D
TERMINAL SETTLEMENT UNDER SECTION 7.4
1. Amounts payable by the Ceding Company to the Reinsurer pursuant to Section
3.1(b) as of the Recapture Date, LESS
2. Amounts payable by the Reinsurer to the Ceding Company for the Reinsured
Liabilities pursuant to Section 3.3 as of the Recapture Date, LESS
3. General Account Reserves as of the Recapture Date, PLUS
4. Any amounts withheld by the Ceding Company in accordance with Section 4.8
as of the Recapture Date and any assets of the Trust Account that are
released to the Ceding Company upon the direction of the Reinsurer on the
Recapture Date, PLUS
5. (A) If the Recapture Date occurs prior to the date that is ten (10) years
following the Closing Date, an amount equal to A MINUS B, where "A" is
equal to the Ceding Commission reduced on a straight line basis over ten
(10) years and "B" is equal to any costs and expenses related to the
transition of the servicing of the Covered Insurance Policies (but not the
actual costs and expenses of such servicing) from the Ceding Company to the
Reinsurer or (B) if the Recapture Date occurs on or after the date that is
ten (10) years following the Closing Date, an amount equal to zero. For the
avoidance of doubt, the amount calculated pursuant to (A) above shall not
be negative.
EXHIBIT E
FORM OF TRUST WITHDRAWAL EVENT NOTICE
From: Massachusetts Mutual Life Insurance Company ("Reinsurer")
To: Hartford Life Insurance Company ("Ceding Company")
cc: Citibank N.A.
Date: [ ]
Re: Trust Withdrawal Event Notice
Dear Sirs:
We are writing in connection with the Reinsurance Agreement dated as of January
1, 2013 between the Reinsurer and the Ceding Company (as amended, modified or
supplemented from time to time, the "Reinsurance Agreement"). Capitalized terms
used in this letter but not defined herein shall have their respective meanings
in the Reinsurance Agreement.
The Reinsurer hereby certifies to the Ceding Company that as of the date hereof
the Trust Withdrawal Event Conditions are satisfied as follows:
(i) the financial strength of the Reinsurer is [ ] as rated by S&P and [ ] as
rated by ▇▇▇▇▇'▇;
(ii) the Reinsurer's RBC Ratio as of the quarter end immediately preceding the
date of this letter was [ ]%;
(iii) the numerical value of the Required Balance is [ ]; and
(iv) no Reserve Credit Event has occurred and is continuing.
[Trust Withdrawal Event Notice to include reasonable supporting documentation.]
This letter shall constitute a "Trust Withdrawal Event Notice" for purposes of
Section 4.10 of the Reinsurance Agreement.
Yours faithfully,
[ ]
For and on behalf of
Massachusetts Mutual Life Insurance Company
EXHIBIT F
FORM OF TRUST WITHDRAWAL EVENT ACKNOWLEDGMENT
From: Hartford Life Insurance Company ("Ceding Company")
To: Massachusetts Mutual Life Insurance Company ("Reinsurer")
cc: Citibank N.A.
Date: [ ]
Re: Trust Withdrawal Event Acknowledgment
Dear Sirs:
We are writing in connection with the Reinsurance Agreement dated as of January
1, 2013 between the Reinsurer and the Ceding Company (as amended, modified or
supplemented from time to time, the "Reinsurance Agreement"). Capitalized terms
used in this letter but not defined herein shall have their respective meanings
in the Reinsurance Agreement.
We hereby acknowledge and agree with your certification provided in that certain
Trust Withdrawal Event Notice dated as of [ ] that the Trust Withdrawal Event
Conditions are satisfied as of the date of such Trust Withdrawal Event Notice.
Pursuant to Section 4.10 of the Reinsurance Agreement, the Reinsurer is entitled
to withdraw all or any portion of the assets in that certain reserve trust
account established by the Reinsurer for the benefit of the Ceding Company under
the Trust Agreement dated as of December 31, 2012, by and among Citibank N.A.,
the Reinsurer and the Ceding Company.
Yours faithfully,
[ ]
For and on behalf of Hartford Life Insurance Company
EXHIBIT G
FORM OF CURE NOTICE
From: Massachusetts Mutual Life Insurance Company ("Reinsurer")
To: Hartford Life Insurance Company ("Ceding Company")
cc: Citibank N.A.
Date: [ ]
Re: Cure Notice
Dear Sirs:
We are writing in connection with the Reinsurance Agreement dated as of January
1, 2013 between the Reinsurer and the Ceding Company (as amended, modified or
supplemented from time to time, the "Reinsurance Agreement"). Capitalized terms
used in this letter but not defined herein shall have their respective meanings
in the Reinsurance Agreement.
We hereby give you notice pursuant to Section 4.11 of the Reinsurance Agreement
that no Triggering Event or Reserve Credit Event is occurring as of the date
hereof and that the Triggering Event or Reserve Credit Event which was
previously outstanding was cured as follows:
[DESCRIBE APPLICABLE CURE AND INCLUDE REASONABLE SUPPORTING DOCUMENTATION.]
This letter shall constitute a "Cure Notice" for purposes of Section 4.11 of the
Reinsurance Agreement.
Yours faithfully,
[ ]
For and on behalf of Massachusetts Mutual Life Insurance Company
EXHIBIT H
FORM OF CURE ACKNOWLEDGMENT
From: Hartford Life Insurance Company ("Ceding Company")
To: Massachusetts Mutual Life Insurance Company ("Reinsurer")
cc: Citibank N.A.
Date: [ ]
Re: Cure Acknowledgment
Dear Sirs:
We are writing in connection with the Reinsurance Agreement dated as of January
1, 2013 between the Reinsurer and the Ceding Company (as amended, modified or
supplemented from time to time, the "Reinsurance Agreement"). Capitalized terms
used in this letter but not defined herein shall have their respective meanings
in the Reinsurance Agreement.
We hereby acknowledge and agree with your certification provided in that certain
Cure Notice dated as of [ ] that no Triggering Event or Reserve Credit Event is
occurring as of the date of such Cure Notice. Pursuant to Section 4.11 of the
Reinsurance Agreement, the delivery of this Cure Acknowledgment shall constitute
a "Cure Event".
This letter shall constitute a "Cure Acknowledgment" for purposes of Section
4.11 of the Reinsurance Agreement.
Yours faithfully,
[ ]
For and on behalf of Hartford Life Insurance Company
EXHIBIT I
SCHEDULE OF PLAN ADMINISTRATIVE SERVICE AGREEMENTS
[SEE ATTACHED]