AGREEMENT AND PLAN OF COMPLETE LIQUIDATION OF SECURITY NATIONAL LIFE INSURANCE COMPANY OF LOUISIANA INTO SECURITY NATIONAL LIFE INSURANCE COMPANY
EXHIBIT 10.1
AGREEMENT
AND PLAN OF COMPLETE LIQUIDATION OF
SECURITY
NATIONAL LIFE INSURANCE COMPANY OF LOUISIANA
INTO
SECURITY NATIONAL LIFE INSURANCE COMPANY
THIS
AGREEMENT AND PLAN OF COMPLETE LIQUIDATION (this “Agreement”) is made and
entered into effective this 18th day
of September 2009, by and between SECURITY NATIONAL LIFE INSURANCE COMPANY OF
LOUISIANA, a Louisiana domiciled insurance company, formerly known as Paramount
Security Life Insurance Company (“Security National Life of Louisiana”) and
SECURITY NATIONAL LIFE INSURANCE COMPANY, a Utah corporation ("Security National
Life").
WITNESSETH:
WHEREAS,
on March 16, 2004, Security National Life completed the purchase of all of the
outstanding shares of Security National Life of Louisiana and, as a result,
Security National Life of Louisiana became a wholly owned subsidiary of Security
National Life;
WHEREAS,
both corporations are involved in the same line of business, and it has been
determined by the Boards of Directors of both Security National Life of
Louisiana and Security National Life that it will be more efficient and
profitable to have Security National Life of Louisiana liquidated into Security
National Life;
WHEREAS,
the Boards of Directors of both Security National Life of Louisiana and Security
National Life do for said reasons and for the general welfare of said
corporations and their respective stockholders, deem it advisable that Security
National Life of Louisiana be liquidated into Security National Life;
and
WHEREAS,
this Agreement has been approved and authorized by resolutions adopted by the
sole shareholder of Security National Life of Louisiana and the directors of
each party.
NOW
THEREFORE, in consideration of the premises and for the purposes of setting
forth and prescribing the terms and conditions of such complete liquidation and
the manner of carrying the same into effect, the parties hereto do hereby adopt
the following plan of complete liquidation and agree as follows:
AGREEMENT
Section
1
It is
intended that Security National Life of Louisiana be liquidated into Security
National Life in essentially the same manner as the liquidation described in
Private Letter Ruling 9847027 in order to achieve the same tax treatment and
consequences under Section 332 of the Internal Revenue Code of 1986 and other
applicable provisions described in said Letter Ruling.
Section
2
The
liquidation of Security National Life of Louisiana and transfer of its business
to Security National Life shall be accomplished as follows:
(1) Prior
to December 31, 2009, but after the date of adoption of this Agreement, Security
National Life shall exercise its right of recapture pursuant to Article II,
Section 3 of the Reinsurance Agreement dated November 30, 2008, between Security
National Life and Capital Reserve to recapture all of the policies and risks
reinsured under that Reinsurance Agreement and, as a result, Security National
Life will become primarily liable for the liabilities on the insurance contracts
and annuities originally issued by Capital Reserve to its
policyholders. The assets transferred to Security National Life
pursuant to such right of recapture shall have a fair market value equal to the
assumed liabilities.
(2) Simultaneously
with the transfer of assets and liabilities made pursuant to the recapture in
paragraph (1) above, all of the other assets of Capital Reserve not transferred
in such recapture, as they exist at that time (except for Capital Reserve’s
corporate charter, insurance licenses, and the minimum capital, if any,
including cash and investments necessary to preserve its corporate existence
(“Retained Assets”)), shall be distributed by Capital Reserve to Security
National Life, and Security National Life shall assume all of the liabilities of
every kind and description of Capital Reserve existing at that
time. Security National Life has no plan or intention to dispose of
such assets. The fair market value of Capital Reserve’s assets
transferred to Security National Life pursuant to the recapture will equal its
liabilities (including any amounts owed to Security National Life) immediately
prior to the Final Liquidating Distribution, as defined below. After
this distribution, Security National Life will continue to own all of the stock
of Capital Reserve, and Capital Reserve will be a corporate shell holding only
the Retained Assets.
(3) The
simultaneous distributions described in paragraphs (1) and (2) above of this
Section 2 will constitute the “First Liquidating
Distribution.” Within twelve months of the First Liquidating
Distribution, Security National Life will either (i) sell the Capital Reserve
stock to an unrelated business entity, or (ii) distribute the remaining assets
to Security National Life in complete liquidation of Capital Reserve, which will
constitute the “Second Liquidating Distribution.” After such
distribution, Capital Reserve will cease to exist.
(4) Security
National Life will file the statement described in Treasury Regulations, Section
332-6(b) and, if applicable, both Security National Life and Capital Reserve
will file the statement described in Treasury Regulations, Section
381(b)-1(b)(3).
(5) In
implementing this Agreement, Security National Life and Capital Reserve shall
each be responsible to comply with all regulatory requirements applicable to
it.
Section
3
Capital
Reserve will make all deeds, conveyances, assignments, bills of sale or
assurances as are necessary or desirable to vest in Security National Life the
title to any property or rights of Capital Reserve or to evidence such vesting,
and will do all things as may be necessary, proper or appropriate to accomplish
same. It is agreed and intended by the parties that all such deeds,
conveyances, assignments, bills of sale and assurances will be executed and
delivered as part of the liquidating distributions described in Section
2.
Section
4
This
Agreement shall be signed on behalf of each party hereto by its
President. Each party to this Agreement agrees to comply with laws
applicable to it in connection with this Agreement.
2
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.
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CAPITAL
RESERVE LIFE INSURANCE COMPANY,
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a
Missouri corporation
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Attest:
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By: /s/
Xxxxx X.
Xxxxx
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Xxxxx X. Xxxxx, President
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/s/
Xxxxxxx X.
Xxxxxxxx
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Xxxxxxx
X. Xxxxxxxx, Secretary
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SECURITY
NATIONAL LIFE INSURANCE COMPANY, a Utah corporation
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Attest:
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By: /s/
Xxxxx X.
Xxxxx
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Xxxxx X. Xxxxx, President
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/s/
Xxxxxxx X. Xxxxxxxx
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Xxxxxxx
X. Xxxxxxxx, Secretary
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