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RESEARCH PAPER

thousand dollars ($100,000) for any one Agreement Year.
If the amount due to the Company for the Reinsurers' liability hereunder is in excess of
fifty thousand dollars ($50,000), the Reinsurers will, upon receipt of proof of loss,
remit the amount due within ten (10) working days.
ARTICLE VII - OFFSET
The Company or the Reinsurer shall have, and may exercise at any time and from time to
time, the right to offset any balance or balances, whether on account of premiums or on
account of losses or otherwise, due from one party to the other under the terms of this
Agreement.
ARTICLE VII - CASH CALLS
A. In the event a negative balance results in any one month (claims exceed premiums
collected), and/or in the event the claims fund (if any) is depleted, the Company may
make an immediate cash call upon the Reinsurer. The Reinsurer agrees to make payment to
the Company within five (5) business days after the Reinsurer's receipt of the cash call.

B. The Company may also make an immediate cash call upon the Reinsurer in the event the
Company is presented with any single claim in excess of the then current balance of the
claims fund, regardless of when the claim is presented to the Company. The Reinsurer
agrees to make payment to the Company within five (5) business days after the claim has
been reviewed and approved by the Company and/or the Reinsurer.
ARTICLE VII - TERRITORY
This Agreement shall only apply to policies issued to insured's domiciled in the United
States, its territories and possessions.
ARTICLE VII- ERRORS AND OMISSIONS
Inadvertent delays, errors or omissions made in connection with this Agreement or any
transaction hereunder shall not relieve either party from any liability which would have
attached had such delay, error or omission not occurred, provided always that such delay,
error or omission will be rectified as soon as possible after discovery.
ARTICLE VII- ACCESS TO RECORDS
The Reinsurer and the Company, or its duly appointed representatives, shall have the
right at any reasonable time to examine all records in the possession of the Companyeach
other and/or the Manager referring to business effected hereunder.
ARTICLE VII - SERVICE OF SUIT
(Applicable if the Reinsurer is not domiciled in the United States of America and/or is
not authorized in any state, territory, or district of the United States where
authorization is required by insurance regulatory authorities.)
1. 1. It is agreed that in the event the Reinsurer fails to pay any amount claimed to be
due hereunder, the Reinsurer, at the request of the Company, will submit to the
jurisdiction of any court of competent jurisdiction within the United States. Nothing in
this Article constitutes or should be understood to constitute a waiver of the
Reinsurer's rights to commence an action in any court of competent jurisdiction in the
United States, to remove an action to a United States District Court, or seek a transfer
of a case to another court as permitted by the laws of the United States or of any state
of the United States.
2. 2. Further, pursuant to any statute or regulation of any state, territory, or district
of the United States which makes provision therefore, the Reinsurer hereby designates the
Superintendent, Commissioner, or Director of Insurance, or any other officer specified
for that purpose in the statute, or his successor or successors in office, as its true
and lawful attorney upon whom may be served any lawful process in any action, suit, or
proceeding instituted by or on behalf of the Company or any beneficiary hereunder arising
out of this Agreement.
ARTICLE VII - INSOLVENCY
Company Insolvency
In the event of the insolvency of the Company, this reinsurance shall be payable directly
to the Company, or to its liquidator, receiver, conservator or statutory successor
immediately upon demand, with reasonable provision for verification, on the basis of the
liability of the Company without diminution because of the insolvency of the Company or
because the liquidator, receiver, conservator or statutory successor of the Company has
failed to pay all or a portion of any claim. It is agreed, however, that the liquidator,
receiver, conservator or statutory successor of the Company shall give written notice to
the Reinsurers of the pendency of a claim against the Company indicating the policy or
reinsurance reinsured which claim would involve a possible liability on the part of the
Reinsurer(s) within a reasonable time after such that claim is filed in the conservation
or liquidation proceeding or in the receivership, and that during the pendency of such
that claim, the Reinsurer(s) may investigate such claim and interpose, at its own
expense, in the proceeding where such that claim is to be adjudicated, any defense(s) or
defenses that it they may deem available to the Company or its liquidator, receiver,
conservator or statutory successor. Theis expense thus incurred by the Reinsurer shall be
chargeable, subject to the court approval, of the Court, against the Company as part of
the expense of conservation or liquidation to the extent of a pro rata share of the
benefit which may accrue to the Company solely as a result of the defense undertaken by
the Reinsurer(s).
It is further understood and agreed that, in the event of the insolvency of the Company,
the reinsurance under this Agreement shall be payable directly by the Reinsurer to the
Company or to its liquidator, receiver or statutory successor, except (a) where this
Agreement specifically provides another payee of such reinsurance in the event of the
insolvency of the Company or (b) where the Reinsurer with the consent of and in
accordance with all of the requirements of the Insurance Department of the Company's
state of domicile and the direct insured or insured has assumed such policy obligations
of the Company as direct obligations of the Reinsurer to the payees under such policies
and in substitution for the obligations of the Company to such payees.
The Reinsurer shall be liable only for the amounts reinsured and shall not be or become
liable for any amounts or reserves to be held by the Company on policies reinsured under
this Agreement.
When two (2) or more Reinsurers are involved in the same claim and a majority in interest
elect to interpose a defense or defenses to that claim, the expense shall be apportioned
in accordance with the terms of the reinsurance agreement as though that expense had been
incurred by the Company.
This insolvency clause shall not preclude the Reinsurer(s) from asserting any excuse or
defense to payment of reinsurance other than the excuses or defenses on the insolvency of
the Company and the failure of the Company's liquidator, receiver, conservator or
statutory successor to pay all or portion of any claim. 
Reinsurer Insolvency
In the event of the insolvency, bankruptcy, receivership, conservation, rehabilitation or
dissolution of one or more Reinsurer, the Company may retain all or any portion of any
amount then due the Reinsurer(s) or which may become due to the Reinsurer(s) under this
Agreement and use such amounts for the purposes of paying any and all liabilities of the
Reinsurer(s) incurred under this Agreement. When all such liability hereunder has been
discharged, the Company shall pay the Reinsurer, its liquidator, receiver, conservator or
statutory successor the balance of such amounts withheld.
If the Reinsurer is unauthorized in the State of Missouri, the Reinsurer hereby agrees to
voluntarily submit to the jurisdiction of an alternate dispute resolution panel or court
of competent jurisdiction within the United States and/or the State of Missouri and
further agrees to comply with all requirements necessary to give the panel or court
jurisdiction. The Reinsurer hereby warrants that it has designated an agent upon whom
service of process may be effected and agrees to abide by the final decision of the panel
or court.
ARTICLE VII - ARBITRATION
As a condition precedent to any right of action hereunder, any dispute arising out of the
interpretation, performance or breach of this Agreement, including the formation or
validity thereof, shall be submitted for decision to a panel of three (3) arbitrators.
Notice requesting arbitration shall be in writing and sent certified or registered mail,
return receipt requested.
One arbitrator shall be chosen by each party and the two (2) arbitrators shall, before
instituting the hearing, choose an impartial third arbitrator who shall preside at the
hearing. If either party fails to appoint its arbitrator within thirty (30) days after
being requested to do so by the other party, the latter, after ten (10) days notice by
certified or registered mail, return receipt requested, of its intention to do so, may
appoint the second arbitrator. If the two (2) arbitrators fail to agree upon the third
arbitrator within thirty (30) days following their appointment, each arbitrator shall
nominate three (3) candidates within ten (10) days thereafter, two (2) of whom the other
shall decline, and the decision shall be made be drawing lots. All arbitrators shall be
disinterested active or former executive officers of insurance or reinsurance companies
or Underwriters at Lloyd's, London.
Within thirty (30) days after notice of appointment of all arbitrators, the panel shall
meet and determine timely periods for briefs, discovery procedures and schedules for
hearings. The panel shall be relieved of all judicial formality and shall not be bound by
the strict rules of procedure and evidence. Unless the panel agrees otherwise,
arbitration shall take place in the state of domicile, but the venue may be changed when
deemed by the panel to be in the best interest of the arbitration proceeding. Insofar as
the arbitration panel looks to substantiate law, it shall consider the law of the state
of domicile. The decision of any two (2) arbitrators when rendered in writing shall be
final and binding. The panel is empowered to grant interim relief as it may deem
appropriate.
The panel shall interpret this Agreement as an honorable engagement rather than as merely
as a legal obligation and shall make its decision considering the custom and practice of
the applicable insurance and reinsurance business as promptly as possible following the
termination of the hearings. Judgement upon the award may be entered in any court having
jurisdiction thereof.
Each party shall bear the expense of its own arbitrator and shall jointly and equally
bear with the other party the cost of the third arbitrator. The remaining costs of the
arbitration shall be allocated by the panel. The panel may, at its discretion, award such
further costs and expenses as it considers appropriate, including but not limited to
attorney's fees, to the extent permitted by law.
A. Resolution of disputes as a condition precedent to any right of action arising
hereunder, in the event og any dispute between the Reinsurer (or its successor in
interest) and the Company (or its successors in interest), arising out of or relating to
provisions of this Agreement, shall be submitted to arbitration in the manner set forth
below.
B. One arbitrator shall be chosen by the Company, the other by the Reinsurer, and an
Umpire shall be chosen by the two (2) arbitrators before they enter upon arbitration, all
of whom shall be active or retired disinterested executive officers of insurance or
reinsurance companies. In the event that either party should fail to choose an arbitrator
within thirty (30) days following a written request by the other party to do so, the
requesting party may choose two (2) arbitrators who shall in turn choose an Umpire before
entering upon arbitration. If the two (2) arbitrators fail to agree upon the selection of
an Umpire within thirty (30) days following their appointment, each arbitrator shall
nominate three (3) candidates within ten (10) days thereafter, two (2) of whom the other
shall decline, and the decision shall be made by drawing lots.
C. Each party shall present its case to the arbitrator within thirty (30) days following
the date of appointment of the Umpire. The arbitrators shall consider this agreement as
an honorable engagement rather than merely a legal obligation and they are relieved of
all judicial formalities and may abstain from following the strict rules of law. The
decision of the arbitrators shall be final and binding on both parties; but filing to
agree, they shall call in the Umpire and the decision of the majority shall be final and
binding upon both parties. Judgment upon the final decision of the arbitrators may be
entered in any court of competent jurisdiction.
D. If more than one reinsurer is involved in the same dispute, all such reinsurers shall
constitute and act as one party for purposes of this Article and communications shall be
made by the Company to each of the reinsurers constituting one party, provided, however,
that nothing herein shall impair the rights of such reinsurer to assert several, rather
than joint, defenses or claims, nor be construed as changing the liability of the
reinsurer participating under the terms of this Agreement from several to joint.
E. Any arbitration proceedings shall take place at Kaknsas City, Missouri, with all
proceedings pursuant hereto governed by the law of the State of Missouri.
F. Each party shall pay the fee and expenses of its own arbitrator and equally bear the
fee and expenses of the third arbitrator. All other expenses of the arbitration shall be
equally divided between the parties. The panel may, at its discretion, award such further
costs and expenses as it considers appropriate, including, but not limited to, attorney's
fees, to the extent permitted by law. 
G. This Article shall survive the cancellation expiration of this Agreement.
ARTICLE VII - FEDERAL AND STATE MANDATE
In the event any provision of this Agreement is deemed by the Company to be in conflict
with any federal or state regulators, statute or code, the provision in question will
automatically be modified to be in compliance and any such modification will become part
of this Agreement.
ARTICLE VII- CONTROLLING LAW
This Agreement shall be governed by and construed in accordance with the laws of the
state of domicile of the Company.
ARTICLE VII - SEVERABILITY
If any part, term, or provision of this Agreement shall be held void, illegal, or
unenforceable, the validity of the remaining portion or portions shall not be affected
thereby.
ARTICLE XXV - UNAUTHORIZED REINSURERS
1. Clean, irrevocable and unconditional Letters of Credit issued and confirmed, if
confirmation is required by the insurance regulatory authorities involved, by a bank or
banks meeting the NAIC Securities Valuation Office credit standards for issuers of
Letters of Credit and acceptable to said insurance regulatory authorities; and/or
2. Escrow accounts for the benefit of the Company; and/or
3. Cash advances;
Without such funding, a penalty would accrue to the Company on any financial statement it
is required to file with the insurance regulatory authorities involved. The Reinsurer, at
its sole option, may fund in other than cash if its method and form of funding are
acceptable to the insurance regulatory authorities involved.
With regard to funding in whole or in part by Letters of Credit, it is agreed that each
Letter of Credit will be in a form acceptable to the insurance regulatory authorities
involved, will be issued for a term of at least one year, and will include an evergreen
clause, which automatically extends the term for at least one additional year at each
expiration date unless written notice of non-renewal is given to the Company not less
than thirty (30) days prior to said expiration date. The Company and the Reinsurer
further agree, notwithstanding anything to the contrary in this Agreement, that said
Letters of Credit may be drawn upon by the Company or its successors in interest at any
time, without diminution because of the insolvency of the Company or the Reinsurer, but
only for one or more of the following purposes:
1. To reimburse the Company for the Reinsurer's share of unearned premiums returned to
the Company on account of the cancellation of the original policy(policies), unless paid
in cash by the Reinsurer.
2. To reimburse the Company for the Reinsurer's share of any other losses and/or loss
adjustment expenses paid under the terms of the original policy(policies), unless paid in
cash by the Reinsurer.
3. To reimburse the Company for the Reinsurer's share of any other amounts claimed to be
due hereunder, unless paid in cash by the Reinsurer.
4. To fund a cash account in an amount equal to the Reinsurer's share of any ceded
unearned premium and/or losses outstanding and loss adjustment expenses reserves
(including IBNR) funded by means of a Letter of Credit which is under non-renewal notice,
if said Letter of Credit has not been renewed or replaced by the Reinsurer Ten (10) days
prior to its expiration date.
5. To refund to the Reinsurer any sum in excess of the actual amount required to fund the
Reinsurer's share of the Company's ceded unearned premium and/or losses outstanding and
loss adjustment expense reserves (including IBNR), if so requested by the Reinsurer.
In the event that the amount drawn by the Company on any Letter of Credit is in excess of
the actual amount required for Items 1., 2., or 4. above, or in the case of Item 3., the
actual amount determined to be due, the Company shall promptly return to the Reinsurer
the excess amount so drawn.
ARTICLE VII - TAXES
In consideration of the terms under which this Agreement is issued, the Company
undertakes not to claim any deduction of the premium hereon when making Canadian tax
returns or when making tax returns, other than income or profit tax returns, to any state
or territory of the United States of America or to the District of Columbia.