Exhibit 2.3
NOVATION AGREEMENT
THIS NOVATION AGREEMENT is made as of December 31, 2002 (the "Novation
Date") among Annuity and Life Reassurance, Ltd ("ALRe"), XL Life Ltd ("XL"), and
Valley Forge Life Insurance Company ("Ceding Company").
WHEREAS, ALRe and Ceding Company are parties to a reinsurance agreement
(the "Subject Agreement") set forth in Schedule A hereto; and
WHEREAS, as of December 31, 2002, the parties to this Novation Agreement
have agreed to novate the Subject Agreements by substituting XL for ALRe as
reinsurer thereunder, such that XL will assume all of ALRe's interests, rights,
duties, obligations, and liabilities under the Subject Agreements and that ALRe
shall be released and discharged from any further liability or obligations
whatsoever thereunder; and
WHEREAS, Ceding Company wishes to consent and agree to such novation.
NOW, THEREFORE, in consideration of the foregoing and of the following
mutual terms, conditions, covenants, and agreements, the parties agree that on
the Novation Date, but effective as to the Subject Agreement on the inception
date of such Subject Agreement, XL is hereby substituted as the Reinsurer under
the Subject Agreement in place and instead of ALRe. XL and Ceding Company hereby
ratify and confirm that the Subject Agreement shall be treated as always having
been an agreement solely between them. In implementation and not in limitation
of the foregoing, the parties further agree as follows:
1. From and after the Novation Date, but effective as to the Subject
Agreement on the inception date thereof, XL hereby assumes all of
ALRe's interests, rights, duties, obligations, and liabilities under
the Subject Agreement, and XL shall be bound by all terms and
conditions of the Subject Agreement.
2. Performance and/or breach prior to the Novation Date by ALRe shall
after the Novation Date be treated for all purposes as having been
performance or breach by XL.
3. Effective as of the Novation Date, Ceding Company hereby releases and
discharges ALRe from and against any and all duties, obligations,
and/or liabilities whatsoever, express or implied, under or in
connection with the Subject Agreement and shall look solely to XL for
performance thereof.
4. From and after the Novation Date, the Ceding Company shall have no
further duties, obligations, and/or liabilities whatsoever, express or
implied, to ALRe under or in connection with the Subject Agreement,
but any such duties, obligations, and/or liabilities theretofore
existing shall continue as duties, obligations, and/or liabilities of
the Ceding Company to XL.
5. Notwithstanding anything contained in this Novation Agreement or in
the Subject Agreement, the Ceding Company shall not have the right to
cede any policies under the Subject Agreement with an issue date after
the date hereof.
6. Each party agrees to do all things as may be necessary to give full
effect to this Novation Agreement.
7. This Novation Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns.
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8. This Novation Agreement shall be subject to the arbitration provisions of
the Subject Agreement and shall be governed by and construed in accordance
with the laws applicable to the Subject Agreement.
9. The Ceding Company agrees to reduce to $1.1 million the amount it is
entitled to as beneficiary to the Citibank Letter of Credit as provided by
ALRe in accordance with the Subject Agreement by providing written notice
of such to the issuing bank simultaneously with its receipt of the Letter
of Credit referred to in paragraph 12 below.
10. This Novation Agreement may be executed and delivered in counterparts
(including by facsimile transmission), each of which will be deemed and
original.
11. This Novation Agreement will become effective when it has been executed in
Bermuda by XL after having been executed by ALRe and the Ceding Company.
12. The Novation Date will not occur unless and until the Ceding Company shall
have received (including by facsimile transmission) a letter of credit (the
"Letter of Credit") in the amount of $82.5 Million substantially the form
of Exhibit A hereto issued by the banks listed in Exhibit B and XL shall
have received in Bermuda (including by facsimile transmission) a receipt
for the Letter of Credit in the form of Exhibit B hereto, provided that if
these conditions to the occurrence of the Novation Date are satisfied, the
Novation Date shall be December 31, 2002.
IN WITNESS WHEREOF the parties have executed this Novation Agreement as of
December 31, 2002.
ANNUITY AND LIFE REASSURANCE, LTD.
By: /s/ R Xxxxx By: /s/ Xxx Xxxxxx
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Title: SVP & CU Title: VP
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DATE: 12/31/2002 DATE: 12/31/02
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VALLEY FORGE LIFE INSURANCE COMPANY
By: /s/ [Signature Illegible] By: /s/ [Signature Illegible]
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Title: SR VICE PRESIDENT Title: SR VICE PRESIDENT
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DATE: 12/28/2002 DATE: 12/28/2002
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XL LIFE LTD
By: /s/ Xxxx Xxxxxxxx By: /s/ [Signature Illegible]
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Title: Secretary Title: Vice President
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Date: 31 Dec 2002 Date: 31 Dec 2002
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Schedule A
Automatic Reinsurance Agreement CALR018
Between
Valley Forge Life Insurance Company
And
XL Life Ltd., as amended, Amendments One through Nine
(Annuity & Life Reassurance (Bermuda) Ltd., prior to Novation)