Document:

snfc8k122007ex10-4.htm

    
      

      

    

    

    

    

    

    

    

    REINSURANCE
      AGREEMENT

    

    Between

    

    SECURITY
      NATIONAL LIFE INSURANCE COMPANY

    

    of
      Salt Lake City, Utah

    

    and

    

    CAPITAL
      RESERVE LIFE INSURANCE COMPANY

    

    

    of
      Jefferson City, Missouri

    

    

    

    

    

    

    

    

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    TABLE
      OF
      CONTENTS

    

    

    
      	
              ARTICLES

            
	 	 	 
	
              I.

            	
              GENERAL
                PROVISIONS

            	
               1

            
	 	 	 
	
              II.

            	
              DURATION
                OF RISK

            	
               4

            
	 	 	 
	
              III.

            	
              PREMIUMS
                AND CONSIDERATIONS

            	
               4

            
	 	 	 
	
              IV.

            	
              BENEFIT
                PAYMENTS

            	
               5

            
	 	 	 
	
              V.

            	
              ACCOUNTING
                AND SETTLEMENTS

            	
               5

            
	 	 	 
	
              VI.

            	
              ARBITRATION

            	
               6

            
	 	 	 
	
              VII.

            	
              INSOLVENCY

            	
               7

            
	 	 	 
	
              VIII.

            	
              DAC
                TAX PROVISION

            	
               8

            
	 	 	 
	
              IX.

            	
              MISCELLANEOUS
                PROVISIONS

            	
               9

            
	 	 	 
	
              X.

            	
              EXECUTION
                AND EFFECTIVE DATE

            	
               10

            
	 	 	 
	
              SCHEDULES

            
	 	 	 
	
              A.

            	
              POLICIES
                AND RISKS REINSURED

            	 
	 	 	 
	
              B.

            	
              REINSURANCE
                PREMIUMS

            	 
	 	 	 
	
              C.

            	
              COMMISSION
                AND EXPENSE ALLOWANCE

            	 
	 	 	 
	
              D.

            	
              MONTHLY
                REPORT OF ACTIVITY AND SETTLEMENTS

            	 
	 	 	 
	 	 	 
	
              EXHIBITS

            
	 	 	 
	
              1.

            	
              TRUST
                AGREEMENT

            	 

    

     

     

     

     

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    REINSURANCE
      AGREEMENT

    

    THIS
      AGREEMENT (the "Agreement") is made and entered into, effective this 17th
      day of
      December, 2007 (“Effective Date”), by and between SECURITY NATIONAL LIFE
      INSURANCE COMPANY, a Utah domiciled insurance company (hereinafter referred
      to
      as the “Reinsurer”) and CAPITAL RESERVE LIFE INSURANCE COMPANY, a Missouri
      domiciled insurance company (hereinafter referred to as the
“Company”).

    

    The
      Company and the Reinsurer mutually agree to reinsure on the terms and conditions
      stated herein.  This Agreement is an indemnity reinsurance agreement
      solely between the Company and the Reinsurer and performance of the obligations
      of each party under this Agreement shall be rendered solely to the other
      party.

    

    ARTICLE
      I

    

    GENERAL
      PROVISIONS

    

    1.         Contracts
      and Risks
      Reinsured.  The Reinsurer agrees to indemnify and the Company
      agrees to transfer risk to the Reinsurer, according to the terms and conditions
      hereof, the risks described in Schedule A hereto, which are in force on the
      Effective Date of this Agreement; subject, however, to the same rights, offsets,
      counterclaims, crossclaims and defenses as are available to the
      Company.  No such offsets, counterclaims, crossclaims or defenses are
      waived but the same are expressly preserved, and Reinsurer is and shall be
      fully
      subrogated thereto, either in its own name or in the name of the Company, and
      whether the name be now known to exist or may hereafter be
      discovered.

    

    

    2.         Coverages
      and
      Exclusions.   Only risks under the life insurance policies
      referred to in Schedule A, are reinsured under this
      Agreement.    New policies issued by the Company after the
      Effective Date of this Agreement will be reinsured under the terms of this
      Agreement.

    

    3.         Plan
      of
      Reinsurance.   This indemnity reinsurance shall be on the
      coinsurance plan.  The Company and the Reinsurer shall establish,
      maintain, and place all assets held in relation to the reserves in trust in
      accordance with the terms of a certain Trust Agreement, a copy of which is
      attached hereto as Exhibit 1 and by this reference is made a part
      hereof.  The assets are to be accounted for using statutory accounting
      principles of the state of domicile of the Reinsurer.  On the
      Effective Date of this Agreement, the book value of the assets transferred
      to
      the Reinsurer shall be equal to the amount of reserves transferred
      thereunto.

    

    4.         Reserves.   The
      expression net reserves, prior to the application of this treaty, whenever
      used,
      shall mean the statutory reserves, net of existing reinsurance ceded under
      all
      treaties in effect excluding this treaty, which would have been reported by
      the
      Company on its NAIC Convention Blank as of September 30, 2007, with respect
      to
      the policies reinsured hereunder, as if this treaty were not in
      effect.

    

    

    
      
        
          
          

        

        
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    The
      expression net due and deferred premiums, prior to the application of this
      treaty, shall mean the due and deferred premiums, net of existing reinsurance
      ceded under all treaties in effect excluding this treaty, which would have
      been
      held by the Company on its NAIC Convention Blank as of September 30, 2007,
      with
      respect to the policies reinsured hereunder, as if this treaty were not in
      effect.

    

    The
      expression net policy loans, prior to the application of this treaty, shall
      mean
      the policy loans, net of existing reinsurance ceded under all treaties in effect
      excluding this treaty, which would have been reported by the Company on its
      NAIC
      Convention Blank as of September 30, 2007, with respect to the policies
      reinsured hereunder, as if this treaty were not in effect.

    

    The
      expression advance premiums, prior to the application of this treaty, shall
      mean
      the advance premiums, net of existing reinsurance ceded under all treaties
      in
      effect excluding this treaty, which would have been reported by the Company
      on
      its NAIC Convention Blank as of September 30, 2007, with respect to the policies
      reinsured hereunder, as if this treaty were not in effect.

    

    5.         Commission
      and Expense
      Allowance.    There is to be a commission and expense
      allowance equal to actual premium taxes paid, actual sales commission paid
      and
      other administrative expenses, in accordance with Schedule C.

    

    6.         Extracontractual
      Damages.   In no event shall the Reinsurer indemnify nor
      be liable for any extracontractual damages or liability of any kind whatsoever
      resulting from, but not limited to, the Company’s negligent, reckless or
      intentional wrongs, fraud, oppression, bad faith or strict
      liability.  The Reinsurer shall indemnify the Company for any
      extracontractual damages or liability of any kind whatsoever resulting from
      the
      Reinsurer’s or its agents’ neglect, reckless or intentional wrong, fraud,
      oppression, bad faith or strict liability.  The following liabilities
      are examples of liabilities that would be considered
      extracontractual:  compensatory damages, damages for emotional
      distress, and punitive or exemplary damages.

    

    7.         Contract
      Administration.   The Reinsurer shall administer the
      contracts reinsured hereunder and shall perform all accounting, collection
      and
      all other administrative functions at the expense of the
      Reinsurer.  The Company shall make the use of its name available in
      such administration and shall otherwise make available all records and other
      material needed in such administration.

    

    8.         Inspection.   At
      any reasonable time, the Reinsurer may inspect, during normal business hours,
      at
      the principal office of the Company, the papers and any and all other books
      or
      documents of the Company relating to reinsurance under this
      Agreement.  At any reasonable time, the Company may inspect, during
      normal business hours, at the principal office of the Reinsurer, the papers
      and
      any and all other books or documents of the Reinsurer relating to reinsurance
      under this Agreement.  Neither the Company nor the Reinsurer will use
      any information obtained through any inspection pursuant to this section for
      purposes not relating to reinsurance under this Agreement.

    

    

    
      
        
          
          

        

        
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    9.         Condition.   The
      reinsurance hereunder is subject to the same limitations and conditions as
      the
      contracts written by the Company that are reinsured hereunder, except as
      otherwise provided in this Agreement.

    

    10.       Misunderstandings
      and
      Oversights.   If any failure to pay amounts due or to
      perform any other act required by this Agreement is unintentional and caused
      by
      misunderstanding and oversight, the Company and the Reinsurer will adjust the
      situation to what it would have been had the misunderstanding or oversight
      not
      occurred.

    

    11.       Age
      Adjustment.   If the Company’s liability under any of the
      contracts reinsured under this Agreement is changed because of a misstatement
      of
      age, the Reinsurer will share in the change proportionately to the amount
      reinsured hereunder, and the Company and the Reinsurer will make any and all
      proportional adjustments thereunto.

    

    12.       Reinstatements.   If
      a contract reinsured hereunder that was reduced, terminated, or lapsed, and
      is
      subsequently reinstated, the reinsurance for such contract under this Agreement
      will be reinstated automatically to the amount that would be in force if the
      contract had not been reduced, terminated, or lapsed.  The Company
      will pay to the Reinsurer the Reinsurer’s proportionate share of all amounts
      collected from, or charged to, the insured.

    

    13.       Amendments.   This
      Agreement shall be amended only by written agreement of the
      parties.

    

    14.       Policies,
      Contracts.   The words policy or policies, and contract or
      contracts as used herein shall have the same meaning.  The Company
      hereby warrants and represents that the contracts reinsured hereunder comply
      with all applicable laws and regulations, including federal income tax
      regulations, and have so complied since the date of issuance.

    

    15.       Policyholder
      Information.   The Company shall not sell, distribute or
      in any way use the policyholder information on contracts reinsured hereunder
      without the prior approval of the Reinsurer.

    

    16.       Reinsurance
      With Other
      Companies.   Existing reinsurance with other insurance
      companies on the policies specified in Schedule A shall be retained by the
      Company, except as agreed upon in writing by Reinsurer and
      Company.  Any amounts paid to other reinsurance companies shall be
      fully reimbursed by the Reinsurer.  Any amounts received by the
      Company from other insurance companies will be paid to the
      Reinsurer.

    

    

    
      
        
          
          

        

        
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    ARTICLE
      II

    

    DURATION
      OF
      RISK

    

    1.         Duration.   The
      initial term of this Agreement shall be for a period of three (3) years from
      the
      effective date of this Agreement.  Subsequent to the three (3) year
      term, this Agreement shall be automatically renewed unless either the Company
      or
      the Reinsurer notifies the other of its intention not to renew in writing,
      no
      less than one hundred eighty (180) days prior to the expiration of the then
      current agreement.  Each automatic renewal period of this Agreement
      shall be for a term of three (3) years.

    

    

    2.         Reinsurer’s
      Liability.   The liability of the Reinsurer with respect
      to any contract reinsured hereunder will begin simultaneously with that of the
      Company, but not prior to the Effective Date of this Agreement.  The
      Reinsurer’s liability with respect to any contract reinsured hereunder will
      terminate with that of the Company on the date the Company’s liability on such
      contract is terminated.

    

    3.         Recapture.  Contracts
      reinsured under this Agreement are not eligible for recapture.

    

    4.         Contract
      Changes.   The Company will not make any contract changes
      in any policies reinsured hereunder except as required by law or as mutually
      agreed to by the Company and the Reinsurer.

    

    

    ARTICLE
      III

    

    PREMIUM
      AND
      CONSIDERATIONS

    

    1.         Net
      Reserves.   On the Effective Date of this Agreement, the
      Company agrees to pay the Reinsurer as a reserve transfer an amount equal to
      the
      adjusted net reserves, on the Effective Date of this Agreement with respect
      to
      the liabilities reinsured as of such date and described in Schedule A. Adjusted
      net reserves are calculated as net reserves, prior to the application of this
      treaty, minus net due and deferred premiums, prior to the application of this
      treaty, minus policy loans, prior to the application of this treaty, plus
      advance premiums, prior to the application of this treaty.

    

    2.         Ceding
      Allowance.   On the Effective Date of this Agreement, the
      Reinsurer agrees to pay the Company a ceding allowance equal to one million
      seven hundred and thirty eight thousand dollars ($1,738,000) in cash by
      certified funds or wire transfer and other good and valuable
      consideration.

    

    3.         Reinsurance
      Premiums.   The Company agrees to pay the Reinsurer
      reinsurance premiums in accordance with Schedule B.  For each
      contract, the amount of reinsurance premium will be the amount which corresponds
      to the portion of the contract reinsured.  The Company makes
      representations and warrants that it will make all reasonable efforts to keep
      the reinsured business in force.

    

    

    

    
      
        
          
          

        

        
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    ARTICLE
      IV

    

    BENEFIT
      PAYMENTS

    

    1.         Notice.   The
      Reinsurer will notify the Company promptly after receipt of any information
      as
      to a claim on a policy to the extent reinsured hereunder.  The
      reinsurance claim form and any copies of notifications, claim papers and proofs
      will be furnished to the Company as soon as possible.

    

    2.         Liability
      and
      Payment.   The Company will accept the decision of the
      Reinsurer on payment of a claim or surrender on a policy reinsured
      hereunder.  The Reinsurer agrees to utilize to the extent possible the
      claims practices of the Company.  The Reinsurer will pay its
      proportionate share of such claim based upon the form of claim settlement
      determined.  These amounts shall be paid within 15 business days after
      the end of each calendar month.  In no instance shall anyone other
      than the Company or the Reinsurer have any rights under this Agreement, and
      the
      Company shall be and remain solely liable to any insured, policyowner, or
      beneficiary under any policy reinsured hereunder, unless said liability is
      caused by the actions of the Reinsurer, and in that instance, Reinsurer will
      be
      liable and defend any litigation at its own cost.

    

    3.         Contract
      Claims.   The Company will not contest, compromise or
      litigate a claim involving a policy reinsured hereunder without the prior
      approval of the Reinsurer.  The Reinsurer will pay to the Company any
      litigation and investigative expenses incurred on contested claims. Any expenses
      will be paid on a monthly basis as described in Article V.

    

    

    ARTICLE
      V

    

    ACCOUNTING
      AND
      SETTLEMENT

    

    1.         Agreement
      Accounting
      Period.   This Agreement shall be on a monthly accounting
      period for all accounting settlements.

    

    2.         Monthly
      Accounting
      Reports.   Accounting reports shall be submitted to the
      Reinsurer by the Company and by the Reinsurer to the Company, not later than
      15
      business days after the end of each calendar month.  Such reports
      shall include information on the amount of reinsurance premiums, policy loans
      and policy loan interest, the commission and expense allowance, claims, and
      reserves on the contract reinsured for the preceding calendar
      month.

    

    3.         Monthly
      Accounting
      Period.   The monthly accounting shall be on a
      calendar-month basis, except that the initial monthly accounting period shall
      run from the Effective Date of this Agreement, after the initial accounting
      has
      occurred, through the last day of the calendar month in which the Effective
      Date
      of this Agreement falls.  The final monthly accounting period shall
      run from the end of the preceding calendar month until the termination of this
      Agreement, but prior to actual termination of this Agreement.

    

    

    
      
        
          
          

        

        
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    4.         Monthly
      Settlements.  Within 15 business days after the end of each
      calendar month, the Company will pay the Reinsurer the sum of: (i) the
      reinsurance premiums for the preceding month, determined in accordance with
      Article III, plus (ii) the
      policy
      loan repayments and policy loan interest paid in the preceding month, plus (iii) any
      amounts received from other reinsurance companies. The Monthly Settlement Report
      is attached as Schedule D.

    

    5.         Amounts
      Due
      Monthly.  Except as otherwise specifically provided in this
      Agreement, all amounts due to be paid to either the Company or the Reinsurer
      under this Agreement on a monthly basis shall be determined on a net basis
      as of
      the last day of each calendar month and shall be due and payable as of such
      date.

    

    6.         Estimations.   If
      the amounts, as defined in Paragraph 4 above, cannot be determined at such
      dates
      as defined in Paragraph 5 above, on an exact basis, such payments will be paid
      in accordance with a mutually agreeable formula which will approximate the
      actual payments.

    

    7.         Delayed
      Payments.   For purposes of Paragraph 5 above, if there is
      a delayed settlement of a payment due, there will be an interest penalty at
      an
      interest rate equal to one-half of one percent (.5%) per month, for the period
      that the amount is overdue.  For purposes of this paragraph, a payment
      shall be considered delayed 30 days after the date such payment is
      due.

    

    8.         Offset
      of
      Payments.   All monies due to either the Company or the
      Reinsurer under this Agreement may be offset against each other, dollar for
      dollar, regardless of any insolvency of either party, in accordance with
      Missouri law.

    

    9.         Accounting
      Reports.   Annual reports shall be submitted to the
      Company by the Reinsurer not later than 45 business days after the end of each
      calendar year. Such reports shall include information for the analysis of
      increase in reserves and the exhibit of life insurance of the NAIC Convention
      Blank based on the contracts reinsured hereunder.  Quarterly
      accounting reports shall be submitted to the Reinsurer by the Company not later
      than 45 business days after the end of each calendar quarter and shall include
      information for pages 2, 3, 4, and 5 of the NAIC Quarterly Blank.

    

    ARTICLE
      VI

    

    ARBITRATION

     

    

    
      
        
          
          

        

        
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      1.         General.   All
        disputes and differences between the Company and the Reinsurer on which an
        agreement cannot be reached will be decided by arbitration.  The
        arbitrators will regard this Agreement from the standpoint of practical business
        and equitable principles rather than that of strict law.

       

      2.         Method.   Three
        arbitrators will decide any differences.  They must be officers of
        life insurance companies other than the two parties to this Agreement or
        any
        Company owned by, or affiliated with, either party.  One of the
        arbitrators is to be appointed by the Reinsurer, another by the Company,
        and
        they shall select a third before arbitration begins. Should one of the two
        parties decline to appoint an arbitrator or should the two arbitrators not
        be
        able to agree upon the choice of a third arbitrator, the appointment(s) shall
        be
        left to the President of the American Council of Life Insurance or its
        successors.  The arbitrators are not bound by any rules of
        evidence.  They shall decide by a majority of votes and their decision
        will be final and binding.  The cost of arbitration, including the
        fees of the arbitrators, shall be shared equally by the parties unless the
        arbitrators decide otherwise.

    

    

    

    ARTICLE
      VII

    

    INSOLVENCY

     

     

     

    
 

     

     

     

     

    
 

    

    
      
        
          
          

        

        
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      1.         General.   In
        the event of the Company’s insolvency, liquidation, entry into rehabilitation,
        bankruptcy, or other significant adverse financial event, this Agreement
        will be
        deemed to convert to an Assumption Reinsurance Agreement as of the day prior
        to
        such insolvency, change of control, or other adverse event, subject to the
        provisions of 375.1280-375.1294 RSMo.  Following such conversion, the
        Reinsurer is hereby empowered without any need of action on the part of the
        Company, to take all other steps necessary for such conversion including
        the
        issuance of assumption certificates.   Notwithstanding the
        forgoing, the Reinsurer may elect not to have such automatic conversion
        occur.  In the event the Reinsurer elects not to have such automatic
        conversion to assumption reinsurance, then the Reinsurer’s contractual liability
        on contracts reinsured hereunder shall continue to be determined by all the
        terms, conditions and limitations under this Agreement, but the Reinsurer
        will
        make settlement (i) directly to the Company’s liquidator, receiver or statutory
        successor, and (ii) without increase or diminution because of the Company’s
        insolvency.  The liquidator, receiver or statutory successor of the
        Company shall give the Reinsurer written notice of the pendency of a claim
        against the Company on any contract reinsured within reasonable time after
        such
        claim is filed in the insolvency proceeding.  During the pendency of
        any such claim, the Reinsurer shall investigate such claim and interpose
        in the
        Company’s name (or in the name of the Company’s liquidator, receiver or
        statutory successor) in the proceeding where such claim is to be adjudicated,
        any defense or defenses that the Reinsurer may deem available to the Company
        or
        its liquidator, receiver or statutory successor.  The expense thus
        incurred by the Reinsurer shall be chargeable, subject to court approval,
        against the Company as a part of the expense of liquidation to the extent
        of a
        proportionate share of the benefit which may accrue to the Company solely
        as a
        result of the defense undertaken by the Reinsurer.

      

      2.         Capital
        and Surplus
        Priority.   In the event that any person or entity obtains
        a judgment against the Company that would reduce the Company’s Capital and
        Surplus below the minimum required by the State of Missouri, the policy holders
        of the Company would have priority over the judgment and a first lien on
        the
        minimum Capital and Surplus and Reserves of the Company.

      
 

    

    ARTICLE
      VIII

    

    DAC
      TAX
      PROVISION

    

    1.         The
      Company and Reinsurer hereby agree to abide by Section 1.848-2(g)(8) of the
      Income Tax Regulations under Section 848 of the Internal Revenue Code of 1986,
      as amended. The terms used in this Article are defined by reference to
      Regulation 1.848-2. The term “net consideration” will refer to either net
      consideration as defined in Regulation Section 1.848-2(f) or gross amount of
      premium and other considerations as defined in Regulation Section 1.848-3(b),
      as
      appropriate.

     

     

    
      
        
        

      

      
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    2.         Each
      party shall attach a schedule to its federal income tax return that identifies
      the relevant reinsurance agreements for which the joint election under the
      Regulation has been made.

    

    3.         The
      party with net positive consideration, as defined in the Regulation promulgated
      under Code Section 848, for such Agreement for each taxable year, shall
      capitalize specified policy acquisition expenses with respect to such Agreement
      without regard to the general deductions limitation of Section 848
      (c)(1).

    

    4.         Each
      party agrees to exchange information pertaining to the amount of net
      consideration under such Agreement each year to ensure consistency.

    

    5.         This
      election shall be effective for the year that the Agreement was entered into
      and
      for all subsequent years that such Agreement remains in effect.

    

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

    

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

    

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

    

    
      ARTICLE
        IX

      

      MISCELLANEOUS
        PROVISIONS

      

      1.         All
        Schedules referred to in this Agreement are attached hereto and incorporated
        herein by reference.

      

      2.         Neither
        this Agreement nor any reinsurance under this Agreement shall be sold, assigned
        or transferred by the Company without prior written consent of the Reinsurer.
        Such approval shall not unreasonably be withheld. The provisions of this
        section
        are not intended to preclude the Reinsurer from retroceding the reinsurance
        on
        an indemnity basis.

      

    

    

    

    
      
        
          
          

        

        
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    3.           
      This Agreement, including any of the schedules and amendments, constitutes
      the
      entire agreement between the parties with respect to the business being
      reinsured hereunder, and there are no understandings between the parties other
      than as expressed in this Agreement. Any changes in this Agreement shall be
      null
      and void unless such changes are made by written amendment to this Agreement,
      signed by both parties.

    

    4.           
      Any notice or notification required under this Agreement requires written notice
      or notification mailed or delivered to the Reinsurer at its administrative
      office in Salt Lake City, Utah, or to the Company at its home office in
      Jefferson City, Missouri.

    

    5.           
      If any provision of this Agreement is determined to be invalid or unenforceable,
      such determination will not impair or affect the validity or the enforceability
      of the remaining provisions of the Agreement.

    

    

    

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      rest
      of this page is left blank intentionally]

    

     

    ARTICLE
      X

    

    EXECUTION
      AND EFFECTIVE
      DATE

    

    This
      Agreement shall be effective on the Effective Date.  In the event of a
      death or other occurrence giving rise to a claim under one of the policies,
      which death or occurrence occurred prior to the Effective Date, regardless
      of
      whether the death claim or occurrence is reported prior to or subsequent to
      the
      Effective Date, the Company shall be solely liable for the payment of any claim
      made on account of any such death or occurrence and Reinsurer shall pay to
      the
      Company the amount of the reserve of the policy with respect to which the claim
      is paid, to the extent that such reserve is reduced as a result of such
      payment.

    

    IN
      WITNESS of the above, this Agreement is executed effective as of this 17th
      day of
      December, 2007.

     

    
      

      

      
        
          
            
            

          

          
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    CAPITAL
      RESERVE LIFE INSURANCE COMPANY (Company)

    

    

    By:  
      /s/ Scott M.
      Quist

    Title:  President

    Date:
      December 17, 2007

    

    Attest:
      /s/ Andrew
      Quist

    Title:
      Legal
      counsel

    Date:
      December 17, 2007

    

    

    SECURITY
      NATIONAL LIFE INSURANCE COMPANY (Reinsurer)

    

    

    By:  
      /s/ Scott M.
      Quist

    Title:   President

    Date:   December
      17, 2007

    

    Attest:
      /s/ Andrew
      Quist

    Title:  Legal
      counsel

    Date:  December
      17, 2007

     

     

     

     

     

     

     

     

     

    
 

    
      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

    

    

    SCHEDULE
      A

    

    POLICIES
      AND RISKS
      REINSURED

    

    The
      business reinsured under this Agreement is 100% of the liabilities of the
      policies identified on an attached compact disk entitled, “Capital Reserve
      reinsured policies 12/17/07.”

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    SCHEDULE
      B

    

    REINSURANCE
      PREMIUMS

    

    1.         Reinsurance
      Premiums.  The Company shall pay the Reinsurer a reinsurance
      premium on all policies in effect from time to time under this Agreement in
      an
      amount equal to the gross premium charged
      by the Company corresponding to the amount and policies reinsured
      hereunder.

    

    2.         Mode
      of
      Payment.   The Premium paid to the Reinsurer by the
      Company will be paid as collected by the Company.

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    SCHEDULE
      C

    

    COMMISSIONS
      AND EXPENSE
      ALLOWANCE

    

    1.  Ceding
      Commission Fee on
      Individual Life Insurance as a Percentage of Collected
      Premiums

    

    Plan
      Description Ceding
      Commission Fee

    

    

    

    

    Calculation
      of Ceding
      Commission Fee

    

    
      	 	 	
              Premium

            	 	 	
              Reserve
                Amount

            	 
	 	 	 	 	 	 	 	 	 
	
              Total
                Collected Premium

            	 	$	 	 	 	$	 	 
	 	 	 	 	 	 	 	 	 
	
              Percentage
                Reinsured

            	 	$	100%	 	 	$	100%	 
	 	 	 	 	 	 	 	 	 
	
              Reinsured
                Collected Premiums

            	 	$	 	 	 	$	 	 
	 	 	 	 	 	 	 	 	 
	
              Ceding
                Commission Fee Percentage

            	 	$	0%	 	 	$	0%	 
	 	 	 	 	 	 	 	 	 
	
              Ceding
                Commission Fee

            	 	$	 	 	 	$	 	 

    

    

    

    2.         Monthly
      Commission and
      Expense Allowance.

    

    A
      commission and expense allowance for any period the Company performs contract
      administration functions in an amount to be mutually agreed upon by the
      parties.

    

    3.         Premium
      Taxes, including all
      other Licenses and Fees based on Premium.

    

    The
      commission and expense allowance shall be equal to actual premium taxes and
      actual sales commissions paid.

    

    

    

    

    

    

    

    

    

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      D

    

    MONTHLY
      SETTLEMENT

    

    FROM

    SECURITY
      NATIONAL LIFE INSURANCE COMPANY

    TO
      CAPITAL RESERVE LIFE INSURANCE COMPANY

    AND
      FROM

    CAPITAL
      RESERVE LIFE INSURANCE COMPANY

    TO

    SECURITY
      NATIONAL LIFE INSURANCE COMPANY

    

    Reporting
      Month:  ____________/ _________/ __________

    Date
      Report Completed: ________________/ ____________/ ___________

    

    
      	
              1)

            	
              Direct
                Premiums

            	
              ____________

            
	 	
              Less
                Reinsurance Premiums Paid

            	
              ____________

            
	 	
              Net
                Premiums

            	
              ____________

            
	 	 	 
	
              2)

            	
              Policy
                Loans

            	 
	 	
              Policy
                Loans Repaid

            	
              ____________

            
	 	 	 
	 	
              Policy
                Loan Interest Paid in Cash

            	
              ____________

            
	 	
              Total

            	
              ____________

            

    

     

    
      	
              3)

            	
              Benefits

            	 
	 	
              Surrenders                              
                

            	
              ____________

            
	 	
              Deaths

            	
              ____________

            
	 	
              Other

            	
              
                ____________

              

            
	 	
              Less
                Reinsurance Recoveries

            	
              ____________

            
	 	
              Total

            	
              ____________

            

    

     

    
      	
              4)

            	
              Commissions
                and Expense Allowance (Schedule C)

            	
              ____________

            
	 	
              Less
                Allowances on Reinsured Ceded

            	
              ____________

            
	 	
              Net
                Commission and Expense Allowance

            	
              ____________

            
	 	 	
               

            
	
              5)

            	
              New
                Policy Loans Paid Out in Cash

            	
              ____________

            
	 	 	
               

            
	 	
              Net
                due Equals (1) + (2) – (3) – (4) – (5) =

            	
              ____________

            

    

     

     

    
 

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    SCHEDULE
      D CONTINUED

    Supplemental
      Information

    

    Direct

    

    
      	 	 	
              #
                of
                Policies

            	 	
              PolicyReserves

            	 	
              Face
                Amount

            
	
              Beg.
                of Period

            	 	
              ___________

            	 	
              ____________

            	 	
              _____________

            
	
              +Additions

            	 	
              ___________

            	 	
              ____________

            	 	
              _____________

            
	
              -Terminations

            	 	
              ___________

            	 	
              ____________

            	 	
              _____________

            
	
              End
                of Period

            	 	
              ___________

            	 	
              ____________

            	 	
              _____________

            

    

    

    Reinsurance
      Ceded

    

    
      	 	 	
              #
                of
                Policies

            	 	
              PolicyReserves

            	 	
              Face
                Amount

            
	
              Beg.
                of Period

            	 	
              ___________

            	 	
              ____________

            	 	
              _____________

            
	
              +Additions

            	 	
              ___________

            	 	
              ____________

            	 	
              _____________

            
	
              -Terminations

            	 	
              ___________

            	 	
              ____________

            	 	
              _____________

            
	
              End
                of Period

            	 	
              ___________

            	 	
              ____________

            	 	
              _____________

            

    

    

    
      	
              Direct

            	 	
              Gross

            	 	
              Net

            
	
              Deferred
                Premiums:

            	 	
              _____________

            	 	
              _____________

            
	
              Due
                Premiums:

            	 	
              _____________

            	 	
              _____________

            
	
              Advance
                Premiums:

            	 	
              _____________

            	 	 
	 	 	
              _____________

            	 	 
	
              Reinsurance
                Ceded

            	 	
              _____________

            	 	 
	
              Deferred
                premiums:

            	 	
              _____________

            	 	
              _____________

            
	
              Due
                Premiums:

            	 	
              _____________

            	 	
              _____________

            
	
              Advance
                Premiums:

            	 	
              _____________

            	 	 
	 	 	 	 	 
	
              Coinsurance
                Allowances
                on Reinsurance Ceded

            	 	 	 	 
	
              Deferred
                Premium

            	 	
              _____________

            	 	 
	
              Due
                Premium

            	 	 	 	
              _____________

            
	
              Advance
                Premium

            	 	 	 	
              _____________

            
	
              Policy
                Loan Interest Due:

            	 	
              _____________

            	 	 
	
              Policy
                Loan Interest Accrued:

            	 	
              _____________

            	 	 
	
              Policy
                Loan Interest Unearned:

            	 	
              _____________

            	 	 
	
              Policy
                Loan Beginning of Period:

            	 	
              _____________

            	 	 
	
              +
                New Loans Paid in Cash:

            	 	
               

            	 	
              _____________

            
	
              +
                New Loans to Cover Interest:

            	 	 	 	
              _____________

            
	
              +
                New Loans to Pay Premiums:

            	 	 	 	
              _____________

            
	
              -
                Loans Paid Off:

            	 	 	 	
              _____________

            
	
              Policy
                Loans End of Period:

            	 	 	 	
              _____________

            
	
              Policy
                Loans Interest Paid in Cash:

            	 	 	 	
              _____________

            
	
              Policy
                Loans Interest Added to Loan:

            	 	 	 	
              _____________

            
	 	 	 	 	 
	
              Total
                Policy Loan Interest:

            	 	 	 	
              _____________

            

    

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    EXHIBIT
      1

    

    TRUST
      AGREEMENTExhibit 10.24

 

COMMITMENT AND ACCEPTANCE

 

This Commitment and
Acceptance is dated to be effective as of November 6, 2007, and is
executed by American Crystal Sugar Company, a Minnesota cooperative corporation
(“Borrower”), and CoBank, ACB (“Lender”).

 

RECITALS

 

Borrower and Lender are
parties to a certain Amended and Restated Loan Agreement dated July 31,
2006, as amended from time to time (the “Loan Agreement”).  All capitalized terms not defined herein
shall have the meanings set forth in the Loan Agreement.  Pursuant to the Loan Agreement, Lender has
provided Borrower a Revolving Loan up to the principal amount of
$360,000,000.  According to Section 2.1(f) of
the Loan Agreement, Borrower may request that a Loan be increased by up to the
aggregate amount of $100,000,000 (the “accordion provision”) in accordance with
the terms and conditions thereof.  Borrower wishes to utilize $30,000,000 of the
$100,000,000 accordion provision to increase the Revolving Loan from $360,000,000
to $390,000,000 from November 6, 2007 through June 1, 2008.  Borrower has given a Loan Increase Notice to
Lender requesting such increase in accordance with the Loan Agreement.  Lender has notified Borrower confirming such increase
pursuant to the Loan Agreement.  This
Commitment and Acceptance is executed in connection with such increase as
required by the Loan Agreement.

 

NOW, THEREFORE, in
consideration of the foregoing and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by each party, the
parties agree to the following:

 

1.             Revolving Loan Increase.  Lender hereby confirms an increase in the
Revolving Loan Amount of $30,000,000 (“Revolving Loan Increase”) effective as
of November 6, 2007 through June 1, 2008.  Therefore, the Revolving Loan Amount shall
not at any time be greater than Three Hundred Ninety Million Dollars
($390,000,000) from November 6, 2007 through June 1, 2008.  Otherwise, the Revolving Loan Amount shall be
defined as set forth in the Loan Agreement. 
Borrower hereby accepts the Revolving Loan Increase from November 6,
2007 through June 1, 2008.  The
Revolving Loan Increase shall be evidenced by and repayable in accordance with
Borrower’s Revolving Note dated November 3, 2006 in the principal amount
of $400,000,000.  Borrower shall pay
additional Revolving Loan Fees with respect to the Revolving Loan Increase in
the amount of $15,000.00 in accordance with Section 2.14(a) of the
Loan Agreement, which fees are payable on the date of this Commitment and
Acceptance and are not refundable to Borrower.

 

2.             Representations and Warranties.  Borrower restates, represents and warrants
the representations and warranties set forth in Article IV of the
Loan Agreement as of the date of this Commitment and Acceptance.

 

 

3.             Loan Agreement.  This Commitment and Acceptance is executed
pursuant to the Loan Agreement and hereby constitutes a Loan Document executed
under the Loan Agreement.  In the event
any provision of this Commitment and Acceptance is inconsistent with any
provision of the Loan Agreement, the provision of the Loan Agreement shall
control.

 

IN
WITNESS WHEREOF, the parties have executed this Commitment and Acceptance to be
effective as of the day and year first above written.

 

	
   

  	
  AMERICAN
  CRYSTAL SUGAR COMPANY,

  
	
   

  	
  a
  Minnesota cooperative corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Samuel S. M. Wai 

  	
   

  
	
   

  	
  Name

  	
  Samuel
  S. M. Wai

  	
   

  
	
   

  	
  Title

  	
  Treasurer

  	
   

  

 

 

	
   

  	
  CoBANK,
  ACB

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Michael Tousignant 

  	
   

  
	
   

  	
  Name

  	
  Michael
  Tousignant

  	
   

  
	
   

  	
  Title

  	
  Vice
  President

  	
   

  

 

2

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